Earnings call transcript: Savaria Corporation Q1 2025 sees revenue growth

Savaria Corporation, a company known for its consistent dividend payments over 21 consecutive years, reported its Q1 2025 earnings with revenues reaching $220.2 million, marking a 5.2% increase year-over-year. The company’s earnings per share (EPS) fell short of expectations at $0.17, compared to a forecast of $0.18. Despite missing revenue forecasts slightly, the stock price increased by 2.86% to $18.84 in after-hours trading, reflecting positive investor sentiment. According to InvestingPro, the company has raised its dividend for 9 consecutive years, demonstrating strong commitment to shareholder returns.

Key Takeaways

• Revenue increased by 5.2% year-over-year to $220.2 million.
• EPS was $0.17, slightly below expectations.
• Stock price rose by 2.86% in after-hours trading.
• EBITDA margin improved to 18.5%, up 190 basis points from the previous year.
• The company maintained its 2025 revenue guidance of approximately $925 million.

Company Performance

Savaria Corporation demonstrated solid growth in Q1 2025, with revenues rising 5.2% year-over-year. The company benefited from strong performance in its North American Accessibility segment, which grew by 11.8%. However, the European market faced slight declines. Savaria’s continued focus on innovation and expansion, including the launch of new products and increased manufacturing capacity, contributed to its positive performance.

Financial Highlights

• Revenue: $220.2 million, up 5.2% year-over-year
• Adjusted EBITDA: $40.6 million, up 17% year-over-year
• EBITDA Margin: 18.5%, an increase of 190 basis points
• Gross Margin: 37.8%, an increase of 180 basis points
• Debt Ratio: 1.49, improved from 1.63

Earnings vs. Forecast

Savaria’s Q1 2025 EPS of $0.17 fell short of the forecasted $0.18, while revenue came in slightly below the expected $222.13 million. The EPS miss was minor, reflecting the company’s ongoing strategic investments and market conditions.

Market Reaction

Following the earnings release, Savaria’s stock price increased by 2.86% to $18.84 in after-hours trading. The positive reaction suggests investor confidence in the company’s strategic direction and future growth prospects, despite the slight earnings miss. Based on InvestingPro’s Fair Value analysis, the stock appears to be trading above its Fair Value, suggesting investors might want to wait for a better entry point. The stock remains well-positioned within its 52-week range of $14.97 to $23.92.

Outlook & Guidance

Savaria maintained its 2025 revenue guidance of approximately $925 million and expects to achieve an EBITDA margin between 17% and 20%. The company aims to reach the top end of this guidance through continued focus on operational improvements and potential acquisitions.

Executive Commentary

CEO Sebastien Barossa stated, "We are getting closer to the goal of Savaria one, which was to be at 20%." CFO Steve highlighted, "Our backlog remains very strong and we have quite a few direct stores in North America." These comments underscore the company’s strategic focus on growth and operational efficiency.

Risks and Challenges

• European market performance: Slight declines could impact overall growth.
• Supply chain disruptions: Potential challenges in maintaining product availability.
• Currency fluctuations: Foreign exchange impacts could affect profitability.
• Competition: Increased competition in the accessibility and patient care markets.
• Regulatory changes: Compliance with international standards and regulations.

Q&A

During the earnings call, analysts inquired about potential tariff impacts, to which executives responded that compliance with the USMCA minimizes risks. Questions also focused on the company’s backlog in elevators and patient care, with management expressing confidence in their strong order book and ongoing localization efforts.

Full transcript - Savaria Corporation (SIS) Q1 2025:

Victor, Conference Operator: Good day. My name is Victor, and I’ll be your conference operator today. At this time, I would like everyone to I would like to welcome everyone to Savaria Corporation’s First Quarter twenty twenty five Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question and answer session.

To ask a question during the session, you’re going to press 11 on your telephone. You’ll then hear an automated message advising your hand is raised. To withdraw your question, please press 11 again. This call may contain forward looking statements, which are subject to the disclosure statement contained in Savaria’s most recent press release issued on 05/07/2025, with respect to its quarter first quarter twenty twenty five results. Thank you.

Mr. Barossa, you may begin your conference.

Sebastien Barossa, CEO, Savaria Corporation: Thanks, Victor, and good morning, everyone. So today, we’ll start with a small recap of our Q1 results, then Steve will update us on financial, and GP will do an update on several one, then follow that with a Q and A session. So once again, I’m very proud of our q one results. It showed that the transformation is stable for fifth good quarter in a row in an environment where uncertainty where all our product are UMSC compliant, meaning that there’s no duty applicable on all our finished products. So some of the key highlights for the first quarter.

So fantastic performance at 18.5% of EBITDA in our weakest quarter, which is always Q1 due to winter, the numbers of working days, quite proud of our Q1. Looking back at the mirror, we can see that the last twelve months, okay, we’re trading at 19% of EBITDA, which really showed the improvement on the Savara one, which GP is going to highlight later. And we are getting closer to the goal of Savara one, which was to be at 20%. As you can see in our MD and A, we did not change our guidance due to economic uncertainty and tariff noise, but just remain assured that we want to finish at the top of the bracket. So growth in North America was once again strong, 11.8%, while in Europe was slightly negative.

I think the reset is almost done. And patient care had a modest growth of 2.1% after a fantastic q four last year. We know it’s important to grow, and this is part of the pillar for 2025. And we’re confident we’ll be able to achieve that because of new product launch, a growing share of wallet with our dealer and onboarding some new dealer as well. So talking about new product, we started to assemble our Lumar home elevator at our factory in Mexico, which we expect sales to in the coming month to be able to ramp up as we train our dealer and our sales team.

Product is looking outstanding. It’s a product that will be sell worldwide, easy to install, stockable for the dealer that are that want to stock it, so bring a lot of key advantage to a dealer. Debt ratio finished at 1.5 in Q1. Now we have available fund or at least before last night of €254,000,000 at the March ’31, which put us in very good position to make some investment or acquisition. So talking of acquisition, you can see this morning, we have closed a small tuck in Western Elevator.

It was one of our long term dealer in BC, Canada. And it was strategic for us as it’s continued to solidify a position in the BC area with their own direct store of Garaventa and their own direct store with Western. That’s going also to add to bring some additional volume as they were not buying other products from sub area. Their annual sales were approximately 7,500,000.0 Canadian. So welcome to all the new employee in BC.

And as also you can see in our press release, we decided to invest $30,000,000 Canadian in Greenville to expand our factory there so that we have a new 55,000 square foot available in the second half of next year. This is on top of the 60,000 square foot that we have free up in the last quarter in Q1, and we have started to assemble our Eclipse or elevator as of April 4. As we do, we’ll say regardless of tariff, we wanted to assemble more in The US, and that’s what we have done in the first quarter. So thank you very much to the team in Greenville and Toronto for the speed of execution. That was an outstanding launch.

So on that, thanks to all our employees in Savaria and our dealers for the fantastic Q1. Steve, financial, please?

Steve, CFO, Savaria Corporation: Thank you, Sebastien, and good morning, everyone. I’m excited to share some remarks regarding our Q1 twenty twenty five consolidated financial metrics. So the key highlights for the quarter include a record first quarter for EBITDA by a wide margin. Our EBITDA grew by CAD6 million or about 17% to CAD40.6 million for the quarter. As Sebastian mentioned, Q1 is typically a soft quarter for us and yet in spite of the external context and threat of tariffs, our results are very strong.

Revenue growth of 5.2% with particularly strong results of 11.8% growth in North America accessibility. Part of the benefit here is favorable FX rate movement, but this also shows that we’re well diversified. In addition, gross margin increased by 180 basis points to 37.8% and our EBITDA margins increased 190 basis points to 18.5%. These are very strong results for Q1. Our trailing 12 adjusted EBITDA margin is now 19%.

And lastly, strong cash flow with operating cash flows of up 18% versus last year. Thanks to our financial discipline and improvement in working capital performance, we were able to lower our leverage ratio of net debt to adjusted EBITDA to 1.49 from 1.63 at the end of twenty twenty four. So now starting with consolidated revenues for the quarter, we generated revenues of $220,200,000 an increase of 5.2% versus last year. This growth is driven by 0.8% organic growth, positive foreign exchange impact of 3.3% and an acquisition impact of 1.1%. Our accessibility segment had growth of 6.1% in the quarter driven by an 11.8% growth in North America, partially offset by a contraction of 2.8% in Europe.

North America was able to deliver constant revenues in a more uncertain market environment. We’ve made a number of changes to our sales strategy in Europe in Q1 of twenty twenty four so we have tough comparables but we are very excited for the future especially as we introduce new products into the market including the new Luma and the Multi Lift. Patient Care had modest growth of 2.1% in the quarter and came off of a very strong Q4 twenty twenty four. This business is significantly project based and can be lumpy and positive news that our backlog also grew significantly during the quarter, which bodes very well for future quarterly sales. The net acquisition impact as mentioned of 1.1% was driven by the Maytop branded dumbwaiters and material lifts, which we acquired in April of twenty twenty four.

As previously stated, our consolidated gross margin for the quarter was 37.8%. This performance represents a marked improvement of 180 basis points over prior year and a 10 basis point improvement over Q4 twenty twenty four, driven by continued operational efficiencies realized under Severia one. Both accessibility and patient care segments contributed to this improvement, underscoring the effectiveness of our ongoing initiatives to streamline operations, enhance margin quality and drive sustainable growth. This gross margin improvement is possible due to Severe’s vertically integrated operating model and therefore more protected from inflationary pressures as well as Severe one initiatives that are improving all aspects of the business. Adjusted EBITDA was $40,600,000 for the quarter, representing the fourth quarter in a row above the $40,000,000 threshold.

Adjusted EBITDA margin finished at 18.5% for the quarter. This represents an improvement of 190 basis points over Q1 twenty twenty four and as noted earlier, our trailing twelve months adjusted EBITDA margin is now 19%. Both accessibility and patient care saw improvements in adjusted EBITDA margin. This performance enhancement is primarily driven from the improvements in gross margin We incurred $4,700,000 in strategic initiative expenses for the quarter in line with our expectations.

And these fees are mainly consulting fees similar to last year and will repeat for the next three quarters but will end in Q4 of twenty twenty five. Finance costs were 3,500,000.0 for the quarter compared to 2,300,000.0 last year. Interest on long term debt decreased by $1,400,000 due to reduced interest rates on our debt as well as a lower overall debt balance versus last year. The driver of the year over year increase in total finance cost is a larger unrealized gain that we had in Q1 of twenty twenty four last year versus a smaller gain in Q1 of twenty twenty five this year, the difference being 2,400,000.0. I’m now going to look at and discuss the balance sheet and cash flow.

So cash flow from operations in Q1 was 31,300,000.0, which is an increase of 4,700,000.0 versus last year coming from higher EBITDA. We reduced working capital by $2,200,000 in the quarter coming mainly from higher trade payables. CapEx for the quarter finished at $4,700,000 which is 2.2% of sales and in our target range of 2% to 2.5% of sales. Free cash flow after debt related costs and dividends was £10,300,000 for the year sorry for quarter, which is £3,800,000 or 58% higher than prior year. The strong free cash flow contributed to repayment of debt of 7,500,000 and reduced our leverage ratio to 1.49 and better prepares us for any opportunities that lie ahead.

With regards to our guidance, due to continued uncertainty regarding tariffs we’re keeping our 2025 guidance unchanged with projected revenues of approximately $925,000,000 and an expected adjusted EBITDA margin between 1720%. And with that, this completes my prepared remarks. I’ll now turn the call over to Jean Philippe, our CTO, to provide further details on how we’re progressing with Sabreo One.

Jean Philippe (JP), CTO, Savaria Corporation: Thank you, Steve. Good morning, everyone. As said and Steve mentioned, our adjusted EBITDA this quarter was 6,000,000 or 17% higher than last year. This is particularly impressive given the context and the uncertainties that lie around it. Most of the improvements can be tracked back to Savari one initiatives and those are balanced between commercial initiatives and cost reductions.

Our top line has been growing in North America in particular, thanks to the efforts we put in improving our operations in Brampton, in Surrey and Mexico, as well as the sales growth efforts that paid off. On the cost side, we benefited from many improvements implemented last year. So what’s happening with Savaria One? By the end of Q1, we had implemented more than three fifty improvement initiatives across the business. Yet, in Q1 alone, we added 130 new initiatives to our Savaria One pipeline.

Not all of those have associated benefits, but those that do added millions of dollars to our projections. Some examples of the successes we had in Q1 are the following. One is we innovated in the fabrication process of our free curve stairlift, where the welded parts used to ensure a good alignment and coupling of the rails during the installation of the stairlift is now using a new technology in process. It’s called the HandyBlock, and it ensures better alignment of the rails, a smoother ride for users, but also a simplified fabrication process requiring about a dozen less welders in Hero Boulevard. We transferred part of the bed frame parts production to our Mexico facility.

We still assemble our long term care beds in Beansville, Ontario, but over the past months, we have been leveraging our Mexico facility to produce bed frame parts, which not only reduces our overall bed fabrication costs, but also frees up capacity in Beansville for us to grow sales when demand is strong, like it happened in Q1 this year. We completed about 20 different procurement initiatives across all our businesses. In the majority of those, we either renegotiated price with an incumbent supplier through a competitive process or use an existing supplier at a new factory. Also, we took a hard look at our IT license cost across the globe and scrubbed those either for redundancies or better rates, and we’re not finished. While the impact is not always easy to see, we are making progress with self growth initiatives.

For example, we added about 50 new dealers to our network across Siberia and Garaventa in North America. In Europe, we won major new accounts this year for Handicare stairlifts. And in patient care, our backlog is as high as it’s ever been. So some of these impacts are offset by other factors, but we are on track. These are just some examples, but in total, we implemented about 50 initiatives in Q1 this year.

We also made substantial progress on three strategic fronts in Q1. The first is we launched a new through the floor elevator named LUMA. The LUMA is a product we developed in house to sell in North America and in Europe. It will be manufactured in our Mexico facility for distribution worldwide. We think the Luma is a very attractive product, thanks to its slick design, its robust yet elegant construction, and the fact that it is simpler to install than competitor products.

We are now starting to offer it to selected dealers in both North America and in Europe. The second is in Europe, on top of the Lumma, we are now introducing the SEVERIA Multi Lift. So it’s the same Multi Lift we had in North America, but adapted for European standards. This porch lift will further enhance our portfolio and be another product that our Garaventa direct stores can sell in Europe, making us less reliant on third party products. We can therefore now offer a much broader range of products for customers and dealers in Europe, as well as aligned to our one stop shop vision.

Finally, in our patient care division, Q1 twenty twenty five was the second quarter where we shipped our new Savaria M Series clinical ceiling lift. The essential model was the one most sold in Q4 last year, and this year we started selling more of the clinical version, which includes number of features like the tree down feature. We believe we now have the best ceiling lift on the market, and yet we will continue to upgrade it and launch innovative accessories in the coming months. So what’s next for Savari one? We have our work cut out for ourselves this year and plan to continue to execute our pipeline of initiatives in the coming months.

We still have more to come on material cost reductions, on productivity improvements, and most importantly, on sales growth, as well as a couple interesting product innovations in the pipeline for this year. Given the health of our Savaria One pipeline and with the caveat that we are always subject to external market forces, That’s why Seb and Steve mentioned, we still maintain our guidance, and we’re aiming for the high end of it. So thank you for your attention. I will hand it over back to Seb for closing remarks.

Sebastien Barossa, CEO, Savaria Corporation: Okay. Thank you, JP and Steve. I think very good update on Savara one. As you see, we still have some traction on it, and it’s very well structured, and we are ready to be independent this year, okay, by ourselves so that going forward, all that we have learned in the last two years, we should be able to continue to apply that in the on future business. So I guess, Victor, we are ready for q and a session, please.

Victor, Conference Operator: Thank you. Our first question will come from the line of Derek Lessard from TD Cowen. Your line is open.

Steve, CFO, Savaria Corporation: Yes, good morning everybody and congrats on the quarter and the acquisition.

Sebastien Barossa, CEO, Savaria Corporation: Thanks, Eric.

Steve, CFO, Savaria Corporation: Sebastian, I just maybe I just had actually one question for me this morning. Could you maybe talk about the efforts to repatriate manufacturing back to The U. S? I guess, where you guys are right now? Maybe an update on some of the capacity you’ve got there?

And ultimately, what could this look like in in a few years down the road when when you’ve built this out?

Sebastien Barossa, CEO, Savaria Corporation: Thank you, Derek. Very good question and a very good report. You did this also this morning. So basically, yeah, US, okay, Yes. Right now, we have been lucky all our product or UMSC compliance.

So all our finished products, they are not impacted by duty. But we wanted to be closer to our market in The US, so we have we had some extra capacity in a in a building of Greenville. We have 200,000 square foot. We have decided to free up 60,000 square foot. We more condensed on the patient care.

And we have started, okay, in April 4 to do our Eclipse home elevator, which is our best seller in North America. So, basically, we’re in production since the April with this product, so that’s closer to the market. So that’s the good news. And right now, we do some production in The US, some in Canada, but that was our first product. The the straight stairlift, they were always with from Greenville, so they discontinued.

And now we still have a lot of square footage available. But we always try to think about the mid long term. Right? So that’s why this investment of 60,000 square foot will bring up here 115,000 square foot of manufacturing capacity for the accessibility. Now we have two big factory in Surrey and Vancouver in Surrey, Vancouver and Toronto.

We’re always about to think about the future, but definitely, as we expand, think we can have a second, third line of products that we’ll be able to make locally for certain. And the success, now we have 12 factory worldwide. Sometimes they sell to each other. We do some subcomponents in Mexico and China and Canada. That’s what made the success of Savara to be local but worldwide at the same time.

Yeah.

Steve, CFO, Savaria Corporation: Thanks, Sebastien. Very helpful. That’s it

Jean Philippe (JP), CTO, Savaria Corporation: for me, and, congrats again. Thanks. Thank

Victor, Conference Operator: you. One moment for our next question. Our next question will come from the line of Michael Glenn from Raymond James. Your line is open.

Michael Glenn, Analyst, Raymond James: Hey, good morning. Good morning. So just looking for an update as to stairlift sales in North America. Have you been able to make any gains with market share, with dealer penetration? Just looking for an update as to how how you see that business evolving over the coming year.

Sebastien Barossa, CEO, Savaria Corporation: K. Very good question. So for sure, yeah, we brought back the manufacturing of Curves Stir Lift in North America in the last since the acquisition of Endicare. So now we are fully manufacturing in Toronto with the Curve Stirlift with the distribution of straight from Canada or from The US depending where is the customer. And this scenario where we could be better, yes, we have 11% organic growth in North America.

I would say home elevator has been maybe the best segment out of that. Unfortunately, we don’t disclose the sales per product, but definitely, Stirley is an area where we are good. We have very good design, good products, and this is something in North America that we wish to be better in the future.

Michael Glenn, Analyst, Raymond James: And what can you just give some idea? Like, what what do you need to do better in stairlift? Is it is it marketing? Is it adding dealers? Just trying to get some sense as to what you can do better to, boost market share there.

Sebastien Barossa, CEO, Savaria Corporation: Unfortunately, it’s always very important for our dealers. We’ll definitely to give them some leads to add them to sell our products. I would say that would be a good answer, a good way to support them on that so that we can have more more sales.

Michael Glenn, Analyst, Raymond James: Okay. And then on elevators in North America, you just gave an indication that it was the better performing product in the period. Are you seeing any change in demand patterns out of US buyers? Have you seen any softness in the market just given some of the some of the housing data that we’re that we’ve been seeing?

Sebastien Barossa, CEO, Savaria Corporation: I would say it’s too soon to talk on that. You know, we don’t receive cancellation of project. We see, with our configurator, co builder, the normal the activity coating is still quite good. The number of drying people make is good. But don’t forget one thing.

You know, we are lucky. We’re in a good industry. The aging population, whatever. When you’re aging, you’re aging, you you need to stay at home. So you will probably do the your exclusivity product first before you do some other luxury it’d be expensive.

So I think this is good. Architect, contractor, or professional is one of the things we’re quite strong with the we’re working on these with them. The density of the population, you know, there’s a lot of townhouse in North America, 3, 4 floor. So it’s not just a pure aging that we’ll think about putting an elevator. So I would say from now, again, it’s too soon to talk, and the person who has worked to put in the elevator just got his permits even though the economy was uncertain in last two, three months.

I think we’d probably continue with this project. So so far, no cancellation activity is good. So maybe Steve, you want to add something?

Steve, CFO, Savaria Corporation: Yes. Just to add hey, Michael, just to add on this, our backlog remains very strong and we have quite a few direct stores in North America, not just in The U. S. That give us really good insight into what’s happening in the market because they’re booking jobs out anywhere from six months to two years, right? So our backlog has actually increased at our direct stores, so that gives us really good indication that the market is still healthy.

Mean, we do see the same headlines that you’re seeing, but in our business and the shortage in housing and the products that we’re selling, we’re still able to build our backlog right now. So, sort of despite that noise in the headlines, we still feel positive about, feel very positive about what the future is going bring.

Michael Glenn, Analyst, Raymond James: Okay, excellent. Thank you.

Victor, Conference Operator: Thank you. One moment for our next question. Our next question will come from the line of Justin Keywood from Stifel. Your line is open.

Justin Keywood, Analyst, Stifel: Good morning. Thanks for taking my call. Nice to see the results. Just a question on the guidance maintained adjusted EBITDA margins of 17% to 20%. Just trying to understand that a bit because 18.5% in Q1 and the mention of most of Safarios products being USMCA compliant.

Is that just being overly conservative, the guidance? Is there any anticipated headwinds that we should know about?

Sebastien Barossa, CEO, Savaria Corporation: Very good question, Justin, and good morning. You know in the last few months, there has been drama one week after the other. You have no idea how much time me, GP and Steve and the team have worked on a tariff situation. We had tariff, no tariff, there’s a deadline, no deadline. Right now, again, it is UMSC compliant.

Are they going to renegotiate the agreement in the next year or so? I think nobody knows when it could happen. But I think it’s just extra conservativeness. Again, I don’t like it. We are we like to have a good budget, and then we have said that the target has always been 20% of server one.

We maintain that. But because of the economy, tariff situation, we keep the bracket. And I think as we would go during the year, if we the situation remain the same, for sure, we’ll try to narrow down a bit the guidance. But for now, yes, we have decided to keep it a bit wide to be conservative.

Justin Keywood, Analyst, Stifel: Understood. And then just on M and A, balance sheet, obviously, healthy, 1.5 times. We saw the tuck in deal in Western Canada. Could you just describe the pipeline and is there an opportunity for additional M and A or do you think you’re going to be a bit conservative just given with everything that’s going on?

Sebastien Barossa, CEO, Savaria Corporation: I’m gonna I we are our phone line is always open for acquisition. Okay. We are we visit. And you know it takes time. Right?

So I think we will for sure, tuck in is always key. Again, we can absorb that without too much effort, okay, especially after a surveillance structure. So definitely dealer, we have done that in the past where by one or two, be very selective. So, again, could we see some more tuck in this year? Like, last year was made a very strategic product that is very complementary.

Now that we’re fully manufacturing in house in Toronto, we are going to have a growing the size of Meta this year. So we need to continue to do a small talk in. I think that’s something that will help also for organic growth. Right? So, yeah, let’s see the next few months.

If we are able to do some more, we’ll if the phone line is open for sure.

Justin Keywood, Analyst, Stifel: Great. Thank you very much.

Victor, Conference Operator: One moment for next question. Our next question comes from the line of Frederic Tremblay from Desjardins Capital Markets. Your line is open.

Frederic Tremblay, Analyst, Desjardins Capital Markets: Thanks. Good morning. Just with the what we’re seeing with the trade dynamics in The U. S, I was wondering if you had any comments on the competitive environment in that country, especially as several competes with some local manufacturers there. Have you noticed any sort of changes on that front or no meaningful changes so far?

Victor, Conference Operator: It’s

Sebastien Barossa, CEO, Savaria Corporation: always a bit difficult, Fred, because we are the only public company into accessibility. So I think it’s the same competitive environment. We again, we are lucky it’s a good industry. There’s good competitor. We all respect each other.

So I would say there’s no big change of dynamics into the industry. And I think we are definitely the most active, at least that’s what I think, by bringing new products, making tuck in acquisition, doing more things for dealers. So I think that’s why Sabahat remain a great partner because we bring value to a dealer.

Frederic Tremblay, Analyst, Desjardins Capital Markets: Moving to Europe. Obviously, there’s been some efforts on margin improvement there lately, which have been successful. I was wondering if there’s any additional potential margin upside coming from the new products that you’re introducing over there and maybe your thoughts on how that can contribute to both revenue growth and and margin going forward.

Jean Philippe (JP), CTO, Savaria Corporation: Yeah. So so you mean the the Luma and the multi lift, right, Fred? Just to be

Frederic Tremblay, Analyst, Desjardins Capital Markets: so Yeah. The Luma and any other any other product that you would introduce in Europe in the next year or two as well?

Jean Philippe (JP), CTO, Savaria Corporation: Yeah. So so to answer your question, yes. So those products come in with a they’re they’re gonna be margin accretive. Right? So they have good margins and because as you you may remember, so we’re fully integrated vertically.

So we we make the products from almost from scratch. So we get the manufacturing margin, but also margin as we distribute it in Europe. So yes, those should help. We also have still a number of initiatives to improve the margins in Europe, right? Whether it’s in our sales and marketing costs or sometimes the products that we’re we’re continuing to innovate even in our products, and we have pretty large opportunities coming up.

I won’t reveal the details, but it will come later this year. But we have, yes, we have a path to increase the margin still over there.

Sebastien Barossa, CEO, Savaria Corporation: Definitely, GP and Fred. Okay. The one stop shop has been a key in North America. It’s a that’s why our dealer likes to work with us in Europe. Before, we just have a stair lift now with Endicar and Garaventa.

We have incline platform. Now with Savara, we have the porch lift. We have the Lumo. We have the Vuelift. And, again, you can imagine that all new r and d products we are going to launch are going to be worldwide from the day number one.

But I think the catch up game to have the one stop shop in Europe will finish in the next year, and then we should be in a position to have growth again in Europe.

Frederic Tremblay, Analyst, Desjardins Capital Markets: Great. And last question for me. Apologies if I missed it. I joined a little late to call. But on patient care, can you talk about the backlog there and maybe your thoughts on your efforts to sell like a full package?

I think you were calling it selling the room. Maybe just an update on how that’s going.

Sebastien Barossa, CEO, Savaria Corporation: Thank you, Fred. You did not miss patient care question. You’re the first one to ask. So I think, yeah, patient care, definitely, and the backlog is good. The backlog is high.

You know, it’s always a bit lumpy from one quarter to the other, but right now, we are going to get some growth this year and for sure. Like, again, maybe the one stop shop. We do we try to sell the bed, the mattresses, and the ceiling lift, and, sometimes the floor lift as well. So, definitely, we have a good product offering, and this is something that, you know, over time, we want to continue to expand because we have a good sales force. We have 50 sales rep in North America.

We’re not going out of doors. So definitely, if we have additional products to sell that that can be beneficial.

Jean Philippe (JP), CTO, Savaria Corporation: And maybe just one or two things to add, Seth. So so in the last month, we refreshed our case goods line. So we have a partnership where we have a set of brand new case goods, which is helping to sell the room. I think our beds, we don’t talk about it much, but our beds, we keep innovating in the beds. We have some incremental improvements and we’re still working on more major improvements.

One thing I cannot, I don’t have the specifics, but I know a number of our competitors import beds from China. Okay. So just keep that in mind. It’s it’s it may help us, right, because of the tariff situation. So our beds are still strong.

So in terms of selling the room, like owning the room, like like you said, we still have ways to go, but, you know, we feel good about what we have right now. And with the new ceiling lift, UK’s goods, decent deadline up that we keep improving, I think we’re already making good progress. Super.

Frederic Tremblay, Analyst, Desjardins Capital Markets: Great. Congrats on the quarter.

Sebastien Barossa, CEO, Savaria Corporation: Thank you.

Victor, Conference Operator: Thank you. One moment for our next question. Our next question will come from the line of Zachary Evershed from National Bank Financial. Your line is open.

Jean Philippe (JP), CTO, Savaria Corporation: Hi, Zach. Good morning, everyone. Congrats on the quarter.

Frederic Tremblay, Analyst, Desjardins Capital Markets: Thank you.

Zachary Evershed, Analyst, National Bank Financial: Could we, jump into the details of that planned, 30,000,000 facility expansion? By the time that you’re bringing that online, do you think that you’ll have enough backlog to instantly fill it, or will it be more of a a slow ramp with shuffling of capacity from different locations?

Sebastien Barossa, CEO, Savaria Corporation: Well, Zach, you know, us, again, we’re to repeat a bit You know, we look on the mid long term. No? Right now, our footprint worldwide is 1,000,050. This is going to bring us to 1,100,000 square foot of manufacturing potential worldwide. And now if we look at the next five years, we’re in a growing business.

We’ll have more additional volume. We’re we like to make the acquisition and example, the Metat. We bought the the line of product. We brought it back within our footprint. So I think in the next few years, there will be enough project, okay, that we can use this space in The US and continue to have a good footprint in Canada.

So it’s not that we’re going to move everything from The US to Canada. From Canada to US, now we want to manufacture more locally, rebalance a better supply chain. Example, we have opened in Mexico. We balance with China in Mexico, but that’s the same with The US. We really want to rebalance a bit North America that we have capacity for the future.

I think that’s the that’s the key message. And regardless of tariff or not or what will happen next year to manufacture locally, I think it’s always a benefit to be closer to your customer. I think a a 30,000,000, yes, is a bit of manufacture of the building that we are expanding, 55,000 square foot, and that’s our own buildings. That’s always good. But there’s some machinery as well because we like to make parts.

As Barry said, we like to be vertical integrated.

Zachary Evershed, Analyst, National Bank Financial: Good color. Thank you. And then just quickly touching on the Western Elevator acquisition. Could you tell us about how that came about, whether it’s a a standard playbook and what kind of multiple you’re paying for tuck ins these days?

Sebastien Barossa, CEO, Savaria Corporation: Thank you. No. We I think we’re right now, we have approximately 30 direct store worldwide. So, again, that that will be number 31. So I think, yes, the playbook is, I think, quite well established, okay, what we can improve on the on the short term to have a better synergy and to make sure we can leverage on that to that we have the same practice a bit across all our direct store.

So, definitely, the team is very it’s a well known game, so I’m not worried about the game plan. And, also, what’s nice is that the team over there is very stable. The two owner are staying with us for for a certain time, so I think that’s very positive. So there will be very good stability. So that will be a bit my answer.

Zachary Evershed, Analyst, National Bank Financial: Thank you very much. I’ll turn it over.

Sebastien Barossa, CEO, Savaria Corporation: Thank you.

Victor, Conference Operator: Thank you. One moment for our next question. Our next question will come from the line of Jonathan Goldman from Scotiabank. Your line is open.

Sebastien Barossa, CEO, Savaria Corporation: Hi, Jonathan.

Jonathan Goldman, Analyst, Scotiabank: Hi. Hi. Good morning, guys. Thanks for taking my questions. Really nice quarter.

Most of them have already been asked, and I apologize if I missed this because I joined late. But really nice margins in the quarter, 18.5%. It looks like a record for Q1 by at least 200 basis points. I think the original Severia one target was for 20% EBITDA margins. But how are you thinking about that target, maybe in the mid to long term given the results you just had and all the initiatives that are still ongoing?

Sebastien Barossa, CEO, Savaria Corporation: Janta, very good question. But I think on now the last twelve months, we’re at 19%. So I think the 20%, we can see it. I think that’s definitely a target. And I think for the Savaria two point o, we need to wait a little bit to to set up the new bar.

But, definitely, you can see that once you reach 20%, if you’re able to bring additional sales, but, I guess, we should be able to continue to to expand a bit on that. But I think we need to wait a bit to make a new commitment.

Jonathan Goldman, Analyst, Scotiabank: I’m sure JP has a bunch of initiatives to go.

Jean Philippe (JP), CTO, Savaria Corporation: Yeah. I’m speak with you.

Sebastien Barossa, CEO, Savaria Corporation: I think Jonathan, you should look

Jean Philippe (JP), CTO, Savaria Corporation: at our business. Right? Like some parts of the business are more virtually vertically integrated than others. So you can imagine the the more we go, the more we wanna drive towards that. So where we have more vertical integration, like in North America, we have better margins.

Frederic Tremblay, Analyst, Desjardins Capital Markets: So that’s that’s a bit how we’re thinking about it.

Jonathan Goldman, Analyst, Scotiabank: No. Fair enough. That’s it for me. I’ll get back in queue. Thanks for the color,

Michael Glenn, Analyst, Raymond James: guys. One

Victor, Conference Operator: moment for our next question. Our next question will come from the line of Michael Glenn from Raymond James. Your line is open.

Sebastien Barossa, CEO, Savaria Corporation: Hey, Michael. Hey.

Michael Glenn, Analyst, Raymond James: Just wondering if you have any view or any of the volume that you saw in Q1 was related to some customers buying ahead related to potential tariffs.

Sebastien Barossa, CEO, Savaria Corporation: A very good question. But, you know, all our products are really custom made, the case. So, again, this come from a a true order that it is designed for us with the curved stairlift. So except some straight stairlift that you can maybe stock a bit, but I would not see a massive spike in the on that. But I think now people have really take they have take delivery of what they were supposed to take.

Again, is there maybe a million more that people took? Maybe the answer is yes, but it’s not dozen of millions because, again, it’s difficult to to stock, okay, too much custom product or to pull too much forward. So and we still have a good backlog, so it’s not like we have eight everything in the in the first quarter. So I don’t think it was that.

Michael Glenn, Analyst, Raymond James: Okay. That’s that’s a great explanation, Sebastian. Thank you.

Victor, Conference Operator: Thanks. Thank you. Once again, that’s star one one for questions. Star one one. And I’m not showing any further questions at this time.

I would now like to turn it back over to Sebastien for any closing remarks.

Sebastien Barossa, CEO, Savaria Corporation: Well, thank you very much and thanks to the analysts that follow us. I think you know well the story. Your reports are good. You have good questions. So thank you very much for that.

On that, I think we had good results. I think that’s pretty clear to all the documents. But any question, but you can always come see us today at the Annual Assembly Montreal at 11:00. Otherwise, we’ll see you there in q two. Thank you very much.

Victor, Conference Operator: Thank you for your participation in today’s conference. This does conclude the program. You may now disconnect. Everyone, have a great day.

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