Savaria Corporation

Good day and thank you for standing by. Welcome to Savarius Corporation's Q2 2026 Investor and Analyst Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference call is being recorded. I would now like to hand the conference over to your first speaker today, Sebastien Bourassa, CEO.

Thanks, Stephanie, and good morning, everyone. So today I will start with a small recap of our Q2 results. Then Steve will update us on financials, and G2 will provide an update on summer one, followed by a Q&A session. So, again, I'm very proud of the results of Q2, as it is our highest revenue ever, at 246 million, with a growth of 8.4% that is well balanced between patient care and accessibility. And we achieved an EBITDA margins of 21%, which really showed that the 7-1 success of the last few years is fortunate to be present, and I'm very thankful to our team for all the hard work that they make those great results quarter after quarter. So today there's three things that I would like to highlight. First, the growth. Happy that we have a third good coroner role in tomorrow's growth, which shows that some good incentives that we have put in place for the next five years is starting to work. In North America, we continue to develop the market of home elevator with architect, builder, contractor, and of course, your dealers. We increase our size focus on stair lift, method, dumb weather, and material lift. We have a push with architect and builder, and our good lead time is is really helping this product line. We added a state-of-the-art paint shop in Greenville for the manufacturing of a wood cabin, which will be in operation, starting to be in operation in the third quarter for a direct store and will be launched for a dealer in October. And that will really help us complete the best product offering feature for a dealer. And also a building extension is on plan to open in Q4 this year. In Europe, we expand the one-stop shop We promote the VPL Incline and now with the VPAL product line, it's pretty much a complete product portfolio. So that will really help us for the future. And we continue to be the partner of choice on Sterlift. In patient care, growth has been good since the beginning of the year, but margin are slightly behind what we desire, as there's been a bit more inflation in this division than others. But within the mid-year, price increased. by the end of the year in the fourth quarter you will see an improvement on the margins as before. A strategy to underrun and continue to develop the long-term care continue to be the core of activity of this division. Second, best growth margins ever at 39.6% which really show that we continue to improve, continue to have good initiative despite the small contraction we had in the patient care in the second quarter. Third, acquisition. As we said during Investor Day, we have the ambition to do some acquisition in the next five years for approximately $200 million, some small mid-sized stocking that will help us in some area where we see some more potential, or bring some new products to our distribution network to continue the best product portfolio for the one-stop shop. So far this year, we did Baxter Laborator in Texas, which shows that we want to grow our presence in this booming market in Texas. and in July, we closed Vipal, a small manufacturer and low-rise commercial in Italy to help us to develop Europe with some product compliance products. With our net debt-to-bidder ratio at 0.7 at the end of the second quarter, our liquidity continued to grow and now at $333 million available for capital allocation, we are in a very good position. I'm quite happy with the first six months of this year. We have the ambition to grow the business at 12% per year for the next five years and maintain our margins at 20 plus, which ultimately will lead us to 1.6 billion of sales with an EBITDA of over $220 million by 2030. So thanks to all the people at Server that follow and accept our growth, and thanks to the analysts for your good works. Steve, financial, please.

Thank you, Sebastien. Good morning, everyone. I'll now provide some additional detail on our second quarter results. So key highlights for the quarter include, firstly, revenue grew by 8.4% in Q2, driven by organic growth of 6.6%. Year-to-date revenues reached $481.3 million, representing 7.7% growth on a year-to-date basis. Secondly, adjusted EBITDA margin reached 21.1%. That's a 50 basis point improvement over prior year. driven by continued gross margin expansion across the business. And finally, our leverage ratio continued to improve, sitting at 0.87 times as at June 30th, giving us significant flexibility to support our growth strategy, including acquisitions and planned capital expenditures. Turning now to consolidated revenues, we generated $245.8 million in the quarter. That's an increase of $19 million, or 8.4%, as I mentioned, over last year. This includes organic growth of 6.6%, also a 0.8% contribution from the acquisitions of Baxter earlier this year and Western Elevator last year, as well as a positive foreign exchange impact of 1%. Accessibility revenue increased by 8.7% to 192 million, mainly driven by organic growth of 6.4%. Sales increased in both Canada and the United States, while Europe continued to deliver another strong quarter, supported by continued growth in stairless sales. Patient care revenue increased by 7.3% to $53.7 million, entirely driven by organic growth. This reflected higher U.S. sales and continued growth in the U.K. Now looking at gross margin operating income, consolidated gross margin was 39.6%, compared with 39% in Q2 2025. That's an increase of 60 basis points. Gross profit increased 8.8 million year-over-year, providing testament to the continued success and ongoing benefits of Siberia 1. Operating income increased by 9.1 million or 34.1% to 35.8 million, representing a margin of 14.6% compared with 11.8% in Q2 2025. The increase was driven by higher revenue, gross margin expansion, lower other expenses, and the termination of strategic initiative expenses following the completion of Savaria 1 last year. This was partially offset by higher selling in NIN as we invest for growth. Adjusted EBITDA reached 51.8 million, representing a margin of 21.1% compared with 46.7 million and 20.6% last year. Accessibility adjusted EBITDA margin reached 23.6%. That's 170 basis points over last year's 21.9% margin. And patient care adjusted EBITDA was 18.4% compared with 20.9% last year. Net finance costs were $1.7 million in the quarter compared with $4.7 million last year. Interest on long-term debt decreased by $1.2 million, mainly due to a lower debt balance. We recorded a foreign currency gain of $0.6 million compared to a loss last year of $0.5 million, and a net gain of $0.1 million this year on financial instruments compared to a loss of $0.7 million last year. Correspondingly net earnings increased by 54.4% to $25.2 million or $0.34 per diluted share compared with $16.3 million or $0.23 per diluted share in Q2 2025. Now taking a look at cash flow and liquidity. Cash flow from operating activities was $33.3 million compared with $30.3 million in Q2 last year. The increase was mainly driven by higher net earnings and a favorable unrealized foreign exchange gain partially offset by higher income taxes paid this year. Cash used in investing activities was $13.4 million compared with $3.6 million last year. We invested $12.5 million in fixed and intangible assets in the quarter including $5.3 million for the Greenville building expansion and related equipment for that site. As of June 30th, available funds were $333.4 million compared to $311.7 million at year-end, and net debt decreased to $172.8 million from $191.5 million at year-end. After quarter-end, on July 1st, 2026, we acquired all outstanding shares of VPAL SPA, a manufacturer of residential lifts and Elevators based in Ferentillo, Italy. Total consideration was 13 million Canadian or 8 million euros, subject to customary adjustments for net financial position and net working capital. Our Q2 results support our long-term outlook. Revenue grew by 8.4%, including 6.6% organic growth and adjusted EBITDA margin reached 21.1%. Building on this momentum, we continue to target annual revenue growth of approximately 12% through 2030, while maintaining adjusted EBITDA margins of at least 20%. And with that, this concludes my prepared remarks. I'll now turn the call over to JP for additional comments. JP?

Yeah, thank you, Steve, and good morning, everyone. So today, I'll speak about three things, how SavariaOne is fueling growth, how SavariaOne is also helping us with better margins, and a little bit about PayPal acquisition. For me, the key message is that year-to-date, we're on track with our objectives of organic growth for the business as well as profitability across the board. For example, the fact that both segments grew 7% to 8% in Q2 is a big success. And the growth we see is balanced across product segments as well as across geographies. But a lot of this is due to some efforts we did in the recent past and in the last two years. So I'll give you a few examples. In the patient care business, we had a lot of success in Q2 installing ceiling lifts, but that is in part due to the fact that we upgraded our ceiling lift lineup with the M-series and started selling it about a year ago. And with that, we want this that we installed in Q2. Also in Silvally in the UK, this is a smaller part of our business, but still strategic. We moved to a new factory about a year and a half ago, which allowed us to have better production capacity. And now we are selling into the NHS. We're able to grow this business because we can produce more at a good price. We also revamped our lineup of frames for Silvally, so that's also helping the business grow. Another thing that's important in patient care is that we did improvements in the sling manufacturing of St. Louis and also worked with external partners to have more capacity for the disposable slings. And now we had a good growth in sling sales, which we were able to shift thanks to all these efforts we did in the past. Finally, it's worth noting that we also established a dual assembly line so we can now assemble the N-series ceiling lifts, both in Canada and in the U.S. in St. Louis. So in the current context, we can really assemble close to the market. Now in accessibility in North America, as Sebastien mentioned in his address, we had great growth again across the board. It's been a consistent theme for North America. But one of the highlights for me is the growth we had in our direct stores where we made deliberate efforts for years to develop our referral networks, to do education with architects, to also go and work with contractors and promoters of multi-unit residential projects who now And finally, when we bought Maytot, we spent a ton of efforts to insource production in Brampton to make the production process also faster and leaner. And this is paying off because now we are growing Maytot sales, but we're also able to produce and ship in much shorter lead times than we used to in the past, and that's helping our sales. Finally, we also migrated our website to a new domain this quarter and the website has been redesigned to provide us better domain authority as well as enable better AI search visibility, which is critical in the current world. In Europe, we re-engaged with growth by winning back historical dealer relationships thanks to our consistent efforts in improving product quality. We also expanded cross-selling as platform lists, so we're now selling Artera and X3 platform lists across all markets in Europe, including in our own direct stores in the UK and Netherlands. We also continue to drive growth in the largest direct markets by having innovative commercial strategies and just great delivery overall, consistently. We also see that now we not only are we recognized for better quality, but we are starting to introduce new product innovations, For example, we introduced the K2 stairlift earlier this year, and just now we changed our new outdoor rail for 4,000, so that's a new offering that we think is going to have some traction. And finally, we made a number of small commercial changes that make it simpler to do business with us. So the overall message for me is that we are rigorously managing growth initiatives in Safari 1, just like we focused a lot on cost initiatives in the past. This being said, we continue to also improve our costs and you can see it in the expansion of gross profit and the expansion of the bottom line results. Each month we continue to implement initiatives, so for example in Q2 we implemented at least 50 new initiatives and a lot of those relate to procurements to reduce the cost of goods sold and you can see that that shows in our financials and this is especially relevant In today's world, because we know there is inflationary pressures across the board, but in most of our businesses, we're able to offset those with either efficiency gains in production or material cost reductions, thanks to our initiatives. The only exception this quarter is patient care, where, as Sebastien mentioned, we have some great pressures from some commodity cost inflation that we now need to counter with some price increases mid-year. So our focus as a business continues to be on growth, and this is where most of our attention and our efforts are oriented towards, but people working in the factories and people working in the offices on procurement continue to innovate, continue to improve our business nevertheless, so we can improve our craft position. Finally, the last highlight for me from SAVARA 1 is the capacity expansion in Greenville. As Seb mentioned, so I'll be brief, but the fact that we now have, we already were assembling Eclipse in Greenville for months, but every quarter, every month, we are expanding the capabilities over there. We also had investments of new machinery. We commissioned the paint line, which is very critical to have a high-quality cabin built and shipped in the U.S. And over time, we are shifting more and more orders from Canada production to U.S. production. The third topic for me is the Zipal acquisition, so just a bit more details on that business. We closed the acquisition in early July. It is a strategic acquisition for us because of the know-how of this team at Zipal in the lift business, because the fabrication process is largely in-house, and because the technology is well-known and renowned in Europe. What happened is very shortly after, two weeks later, we had a large group of our global leaders, including myself and Sebastien, who went there to kick off the integration plan. So we already are in motion to integrate the business. And in fact, I am speaking to you from Italy, where I'm doing a roadshow with the sales team of Vittel this week to meet our top leaders and their top leaders. So we're definitely in motion. And we are already seizing opportunities to cross-sell in both ways. So meaning we can cross-sell Our products to their dealers and vice versa. We can sell vPanel to our dealers. And this is going to be an integration that will take years with different steps. So we are very excited about the acquisition. We've got a lot of ambitions for vPanel, but of course we'll go step by step. First by selling the products that they have today and over time improving the operations, improving the products and really integrating them in our business. So in conclusion, we see good performance year to date and in Q2. and that comforts us that there's a clear link between our efforts in Safari 1 and the results we see in the business. Thank you. That's it for me. Seb, over to you for closing words.

Thank you, GP. A very good call around the Safari 1 improvements. So I guess we are ready for questions. So Stephanie, can we open the queue, please? Thank you.

Yes. Thank you. At this time, we'll conduct the question and answer session. As a reminder, to ask a question, you will need to press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from Frederic Tremblay from Desjardins Capital Markets. Your line is now open.

Thank you. Good morning. Just maybe following up first on the Vipal, you mentioned already seizing opportunities to cross-sell. Just wondering, I guess, I think I know the answer, but what was the initial reaction from Vipal's dealers to Cyber01's acquisition of the company and how do you think about introducing your products to the Vipal dealers going forward?

It would be the best person to answer as JP because JP you are in Italy this week meeting dealers, right? Yeah, exactly.

So I met five already. I have five, a couple more tomorrow. But honestly, the reaction was very positive on both sides. And, you know, you're always a bit apprehensive when you do something like this. But I was pleasantly surprised. Everybody's excited. I think their dealers are excited because they see Savaria as an established, well-structured company. and they also are now curious, they're learning about our products because what happens is most of the V-PALS dealers are lifting companies that do mostly lifts or residential lifts and sometimes we call it ascensori in Italian but it's like faster, larger lifts but they always have a small part of their business which is platform lifts or some requests for stair lifts and now many of them have been happy We see that we have this offering and we already received some orders from dealers that said, okay, I might as well work with you, I like D-PAL, so why not work with Savaria? There's been their reaction, and on our side, many of our dealers, especially in Italy, knew about D-PAL, so many of them, again, in the accessibility space, it's the opposite. They tend to have a small part of their business, which is selling home lifts. So now we're introducing D-PAL to them, and the reaction was very positive. They like Savaria, what they recognize in Savaria and so on. So, it's the quality of the support and customer service and technical support they get. So, they are now keen to see if they can maybe try the detailed products and if we can provide the same support, they'd be excited to work with us. That's the feedback I'm getting.

Yeah, that's great. And maybe just to get a sense of the opportunity, just wondering if you could remind us how Dealers and direct stores that Berger has in Europe and how does that compare to the number of dealers that VPAL currently has?

Yeah, so high level, it's a tricky question because we have, I think, more than 325 dealers, if I recall, across Europe. But the reality is in each market, this is not all dealers are equal, right? So there's some dealers that are much larger than others. But in comparison, Vipal had, I think, less than 50 dealers. So that's the kind of size of the opportunity. And our dealers are across Europe. Vipal was much stronger in Italy than the rest of Europe. So there's a lot of opportunities for us to grow the business. And it turns out, the last thing to know is that there's not that much overlap between our dealers. So that was interesting, like a positive surprise for us that our networks are actually complementary. So a lot of the leaders are new to Savaria and vice versa.

Okay, great. And maybe just the last one for me quickly. I just studied that the margin in accessibility was really strong in the quarter at 23.6%. Just wondering if you could maybe if there's a couple of main drivers to highlight there behind that strength and just your thoughts on sort of the sustainability and potential to expand that accessibility margin further in the coming quarters and years.

Good question, Fred. Yes, I'm very happy with that, and I think it shows, again, the strength of Savaria to be vertical integrated. You know, we have factories in China, Mexico, and everywhere where we operate, we have machines, we make parts by ourselves. There's 33% of our sales, which is in our direct market. The rest is with the partner distributor. So I think, again, the show, the... The proof, okay, and the vertical integration is quite important. It's good. And after that, product mix. You know, every year we bring new products with good margins. So, I think it's always contributing to that. The 22%, I think, for sure, I hope it's sustainable, but we have to be careful because when we make acquisition, they are lower than that. It might appear a bit in the average. So, I think if we go back four months ago, we said that in the next few years we want to be at 20% plus when I consolidated Savaria. But you can see that it is still a good opportunity, right?

Great, thank you and congrats on this strong quarter.

Thank you Fred.

Thank you. Our next question comes from Cheryl Truong of TD Palin. Your line is now open.

Hi Cheryl. Hey, good morning Sebastien and Steve and JP. Thanks so much for taking my question. Congrats on the strong quarter. I wanted to start on patient care margin. In the prepared remarks, you called out the higher material costs and The mid-year price increases for medication. Just curious if you could expand on what the cost inflation was and the magnitude of the pricing that you're putting through.

Thank you, Cheryl, for the question. Again, we have to be careful, okay, because patient care, I think we're a bit tough with them, the score, okay. If we look, we had good growth in the beginning of the year. And, yes, there's been a bit more inflations due to some commodity, like, for example, foam and aluminum. But now that the theme came back, it's no, there's inflation. We have to pass it on to our customers. That was their suggestion to do a mid-year price increase. and basically I'm hoping that we get an additional 2% in the fourth quarter in terms of net increase. So I think it's temporary, but again, we need to be careful. It's just one quarter. What is sometimes more difficult is the growth and we know also in patient care, they typically have good fourth quarter. So I think maybe at the end of the year, we can judge if it was just a quarter or it's a year issue.

Okay, that's very helpful, Keller. And then on accessibility, Obviously, there's strong organic growth. Could you maybe expand on what you're seeing in terms of consumer demand and where your backlog is?

A backlog still goes on, unfortunately we don't give color on our backlog, but no, in our direct office, like JP said, we have a healthy backlog, so it gives us a good visibility. In our factory, okay, unfortunately we always want to have good lead time, so our backlog is usually consistent. But no, I'm quite happy with that, and I think new products that we launch, for example, the Luma, Thank you. Thank you.

Our next question is from Razi Hassan of Paradigm Capital. Your line is now open.

Good morning. Thanks for taking my question for JP on Europe. Can you maybe just talk about the M&A landscape and the quality of assets and multiples you're seeing for manufacturers and dealers there overall and any challenges you're seeing in Europe on the M&A landscape?

If it's okay, I will take the answer. So basically, I think we have disclosed in the document that in 45, we have paid 8 million. It was more or less 8 million of sales. So it was a one-to-one ratio with the sales. In terms of EBITDA ratio, again, it's just we don't disclose that usually, okay, how much we pay each division when it is some small token. So in terms of M&A landscape, I think, again, we like to balance our approach. It was a long time we did not do one in Europe, so I think now that we have the portfolio, but we'll see over time worldwide if there's some opportunity with dealer or against non-manufacturer validators that can complement the product portfolio.

Okay, thanks. And then maybe on Steve, you know, again, lots of talk about the accessibility segment. Maybe just talk about the puts and takes in operating leverage that you're seeing there and what's driving that.

Yeah, on the accessibility and the gross margin specifically, good uptick in both of our regions, both of our key regions, North America and Europe, both had really strong gross margin improvement over prior year that's driven by operating leverage. We feel we have enough capacity at our existing sites and then we have, obviously with some acquisitions like VPAL is a perfect example, we're expanding our footprint, which comes along with the acquisition, but it's not needed necessarily to support our growth. We're doing a good job of keeping our fixed costs fixed and stable while we're growing the top line. Some other benefits that we're seeing are procurement coming through and price increases. Those are continuing from previous quarters and previous years, and that's what's going to be continuing to drive our gross margin expansion. So, you know, our guidance is above 20%, but we're confident that we can continue to increase the underlying margin in our existing businesses.

Okay, great. And just lastly, just to confirm, the Greenville, are you guys expecting that to be in operations by Q4, or is that Q3? I think I missed that.

Again, we've got to be careful. In Greenville, we decided a year ago to start manufacturing one of our key products, the Eclipse, on the elevator. Right now, we manufacture 40% of our Eclipse in the U.S. Again, so we are in operation in Greenville. The only thing, we're expanding the building, and this expansion is planned to be ready in Q4 as planned earlier this year. Okay.

Okay, thanks for that. I'll pass the line.

Thank you. Our next question is from Zachary Evershed of National Bank of Canada Capital Markets. Your line is now open.

Morning, Zach. Morning. Congrats on the quarter.

Okay.

I asked a couple questions for you on Greenville. It does seem like that's going to come in well under budget. Is that the case?

We've got to be careful again. If we go back to our press release that we did a year ago, we wanted to make an investment of $30 million. So a portion is for the building, a portion is for equipment, a portion is for inventory. Now we are, again, we started last year, so it's ongoing. Maybe it's going to take a bit more time, but I think the range of $30 million, we'll probably finish a bit lower, but I think it's a good target. Maybe we'll take a bit more time. But this year, the building is finalized. in the future is maybe more inventory or machinery that we'd like to add.

Understood, thank you. And on that equipment, could you tell us a little bit more about what the paint line will be able to do?

The paint line is amazing. It's fully automated. And again, most of our cabins in North America are made in wood. So typically you can add some mylamine, wood veneer, but this new equipment give us the ability to do some Some NN Sky with very high-end quality of paint, fully automatic, and this is something we're going to be able to differentiate ourselves to have a better offering for our customer to upscale the elevator. So we're quite excited with that. It went live in the second quarter. Now we're making some tests with our direct office to make sure it is perfect, and we'll be live with our dealer in the fourth quarter. We're very excited.

Excellent. Thanks. And just one last one for me. From a human capital standpoint over in Europe, what's your capacity for concurrent M&A? Is there a limit there?

Well, JP has a very good team, but JP, you want to give a little bit more on that?

Yeah, so we had the discussion earlier, not later than yesterday, and my point of view is we have the capacity to take more than one, because the reality is we have different, first of all, we're in different markets, right? So when we make an acquisition in the market, If we need to integrate the commercial aspect, we can ask the local team to integrate. And then from a functional standpoint, we have a pretty good team. So I think we can have multiple acquisitions concurrent. Yeah.

Thanks very much. I'll turn it over.

Thank you. Our next question is from Justin Keywood of CFO. Your line is now open.

Hi, good morning. Thanks for taking my call. Nice to see the results. Are we able to have an update on Savaria Link and how that technology offering is going to drive services revenue? The percentage of services revenue as far as total sales would also be helpful in how you see that progressing. Thank you.

Hey, very good question this morning. I guess you came to the investor's day, huh? So, yes, I'm around it. So Saveronic is a very nice feature. Again, if you go back in time, we bought an electronic company a few years ago in the UK called Ultron. So we designed our own electronics, and that gave us the ability to have some nice features. So yes, we have a new version, improved. We did Wi-Fi monitoring for many years, but this year we have launched a new improved version. We started to have it across most of our products. and Diffinti, this is something that is helping to monitor the status of the elevators and the stair lifts, so I think Diffinti is bringing a good future in some of that. Right now, again, we are, it's part of our product offering, so we don't upscale the sales for that, it's into the new product, and that gives the tools to our customer, again, to know what's happening with the product, the dealers, I mean, to know what's happening, to be easier to troubleshoot, to make sure, you know, you want to work with the product, so that's a feature. In terms of service revenue, Steve, which percentage of total we are right now? Approximately 15% of our total service revenue. So again, when we have direct office, that's an opportunity for us to improve the service and maintenance. So that's quite interesting.

Thank you. And I assume there's some higher margin with the services revenue. Any context on what that margin profile is?

Thank you. And just finally, is there a target percentage of sales as far as services revenue to get to let's say on the

The 2030 target of 1.6 billion in overall sales?

No, I think we did not set up an exact target to the public on that, but for sure if we're at 15 now, you can expect that it could grow over time. Got it.

Thank you very much.

Thank you, Justin.

Thank you. At this time, we do have a few moments for additional questions if you'd like to ask a question. You'll need to press star 1-1 on your telephone and wait for your name to be announced. And you can hold for a moment to see if we do have any additional questions. Okay, I'm showing no further questions at this time, so I would now like to turn it back to Sebastien for closing remarks.

Thank you very much for all the questions from the analysts. You know well the story. You have some good questions. So thank you again for the support. I think it was a good quarter. Quite happy with that. And I guess we'll go back to work to open the third quarter to make sure we can continue to have those great results. Thanks again for the call this morning.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.