Earnings call transcript: Savaria’s Q2 2025 Earnings Beat EPS Forecast

Savaria Corporation’s Q2 2025 earnings report revealed a significant earnings per share (EPS) beat, with actual EPS of $0.29 surpassing the forecasted $0.2267 by 27.92%. Despite a slight revenue miss, with actual revenue at $226.7 million compared to the forecasted $228.57 million, the company demonstrated strong financial performance. Following the earnings announcement, Savaria’s stock price increased by 2.85%, reflecting investor optimism. According to InvestingPro data, the company maintains robust financial health with a current ratio of 4.37, indicating strong liquidity and ability to meet short-term obligations.

Key Takeaways

• EPS of $0.29 exceeded expectations by 27.92%.
• Revenue was slightly below forecast at $226.7 million.
• Stock price rose by 2.85% post-earnings announcement.
• Savaria achieved a record EBITDA margin of 20.6%.
• The company continues to innovate with new product launches.

Company Performance

Savaria Corporation reported a robust performance for Q2 2025, with revenue increasing by 2.4% year-over-year. The company’s strategic focus on product innovation and operational efficiency contributed to a 43% rise in net earnings, reaching $16.3 million. Savaria’s commitment to expanding its product portfolio and optimizing its manufacturing processes has positioned it well within the growing accessibility and patient care markets. InvestingPro analysis reveals the company has maintained dividend payments for 21 consecutive years and raised dividends for 9 consecutive years, demonstrating consistent shareholder returns. For deeper insights into Savaria’s financial health and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.

Financial Highlights

• Revenue: $226.7 million, up 2.4% YoY
• Earnings per share: $0.23, up 44% YoY
• Adjusted EBITDA: $46.7 million
• EBITDA Margin: 20.6%
• Gross Margin: 39%, up 150 basis points YoY

Earnings vs. Forecast

Savaria’s Q2 2025 EPS of $0.29 significantly surpassed the forecast of $0.2267, marking a surprise of 27.92%. This performance contrasts with a slight revenue miss, as the actual revenue of $226.7 million was 0.8% below the forecast. The magnitude of the EPS beat highlights the company’s ability to manage costs and drive profitability.

Market Reaction

Following the earnings release, Savaria’s stock price increased by 2.85%, closing at $20.90. This upward movement reflects positive investor sentiment, bolstered by the company’s strong EPS performance and strategic initiatives. The stock remains within its 52-week range, suggesting further potential for growth as Savaria continues to execute its business strategy. InvestingPro data shows the stock generally trades with low price volatility, with a beta of just 0.06, making it an potentially attractive option for risk-averse investors. Based on InvestingPro’s Fair Value analysis, the stock currently appears to be trading near its fair value.

Outlook & Guidance

Savaria’s forward guidance for 2025 projects revenue of approximately $925 million, with an EBITDA margin of around 20%. The company plans to advance its Savaria One Phase 2 strategy, focusing on organic growth and potential mergers and acquisitions. Continued investment in research and development is expected to drive future product innovations.

Executive Commentary

CEO Sebastian Barassa expressed satisfaction with the company’s performance, stating, "We have achieved 20.6% [EBITDA], so congratulations to all Savaria employees." CFO Steve highlighted the company’s focus on maintaining margins, noting, "We’re not going to be growing margin at the same pace that we have over the last couple of years." Operational Executive JP emphasized the importance of organic growth, saying, "We’re putting more attention on how we grow the top line organically."

Risks and Challenges

• Market softness in Europe due to government spending and subsidies.
• Potential supply chain disruptions impacting production efficiency.
• Competitive pressures in the accessibility and patient care markets.
• Economic uncertainties that could affect consumer spending.
• Execution risks associated with the Savaria One Phase 2 strategy.

Q&A

During the earnings call, analysts inquired about the market reception of the new Luma elevator, to which executives responded positively, citing dealer excitement. Questions also focused on the company’s comfort with current market conditions and the potential for operating leverage as sales grow. Executives reiterated their commitment to margin improvement and top-line growth.

Full transcript - Savaria Corporation (SIS) Q2 2025:

Sarah, Conference Operator: Good morning. My name is Sarah, and I will be your conference operator today. At this time, I would like to welcome everyone to Savaria Corporation’s Q2 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 will need to press star one and one on your telephone. You will then hear an automated message advising your hand is raised. This call may contain forward looking statements, which are subject to the disclosure statement contained in Savaria’s most recent press release issued on the 08/06/2025 with respect to its Q2 twenty twenty five results. Thank you. Mr.

Barassa, you may begin your conference.

Sebastian Barassa, CEO, Savaria Corporation: Thanks, Sarah, and good morning, everyone. So today, will start with a small recap of our Q2 results, then Steve will update us on financial and GP on Savara one, and then we’ll follow-up with a Q and A session. First, I’m very proud of our Q2 results as we have reached an important milestone of Savara One with margins over 20%. We have achieved 20.6%. So congratulations to all Savara employees and thank you for your dedication in this Savara One program.

Results show that our transformation is stable with the sixth good quarter in a row in an environment of uncertainty where all our products remain UMSC compliant, meaning that there’s no duty applicable on our finished products. For some of the key highlights, fantastic performance of 20.6% for the entire business with accessibility at 21.9% combination of Europe and North America and patient care at 20.9%, which is mostly due to some improvement in Savar One program, which GP will talk a bit later. With those results, we decided to update our guidance for 2025 with 20% EBITDA approximately and some size of around $925,000,000, which is the same as before. So growth has not been fantastic in the second quarter for accessibility, but we think it’s mostly largely due to a market context, which is temporary. We remain confident to resume growth, especially with some of the launch of the new products such as Eluma, which people are very excited about it.

Our dealer are happy they like it, so we see a good future with that. And to grow market share with dealer and onboard new dealer remain a priority. In Europe, we have a slight negative growth, which is due to some mostly government spending in UK, which we think is very temporary. And in Italy, there was some cutback last year in the third quarter and it still did not came back. So the sales in Europe are a bit weaker, mostly due to some subsidies, but again with some new products we’re bringing on board in Europe, we’re confident to be in growth very soon.

In North America, it was again a good quarter, but for sure, if we look more at a year to date, 7.7% growth, which is more in line with what we target. And last year, Q2 was a bit against a strong quarter. So I think the game plan still remain good. We focus on Lima, the meta, dumb weather. We start to have more traction and introduce it to other dealers.

So I’m happy with the progress on that. Patient Care, 4.4% growth, maybe a bit lower than what we would like. But the good news is we have a strong backlog in the Patient Care. And I think we’re in very good position to for the second half of the year. And also we have launched the M Series ceiling lift, which is performing well, helping us to win project.

So I remain very confident with that. So overall, I remain very confident with our growth potential as we have the best product portfolio in the industry and we continue to improve it with all the research and development we do. We have 50 people dedicated for improving existing product, launching some new one, which is important. Also, have launched our second phase of Savara One, which is to develop a strategy for the next three years that we are hoping to unveil at the next Investor Day next spring. Our debt ratio continues to improve now at 1.34 with the available fund of $275,000,000, which is put us in good position to make investment or acquisition.

One of those latest investment was our project in Greenville, which we started in Q2 through the expansion of our accessibility products. Currently manufacture 30% of our Savarin home elevator in Greenville for The US market, which we saw in q two. Our building expansion is currently in final planning with the architect and permits, and we’re still on target to be operational in the second half of next year to continue to localize some production in The U. S, which is a very important market for us and also support a growth for the next few years. So on that, thank you very much for all the employees again and all the dealers for this front second quarter.

Steve, financial please.

Steve, CFO, Savaria Corporation: Thank you, Sebastien, and good morning, everyone. I’m excited to share with you today some remarks regarding our Q2 twenty twenty five consolidated financial metrics. Key highlights for the quarter include, first and foremost, achieving and surpassing our 20% adjusted EBITDA target. Our Q2 margin of 20.6 is a new high watermark for us and our trailing twelve months margin is now 19.5%. Gross margin increased year over year by 150 points to 39% in Q2 mainly through Savaria One.

Strong cash flow with operating cash flows up 28.4% this quarter compared to last year contributing to our Q2 ending leverage ratio of 1.34. And now looking at consolidated revenues for the quarter, we generated revenue of $226,700,000 an increase of 2.4% versus last year. This growth is driven by positive foreign exchange impact of 2.6%, which was primarily driven by the strengthening of the g GBP and euro versus CAD and to a lesser extent, the USD. Our acquisition of Western Elevator, a dealer in the Lower Mainland Of British Columbia during the quarter also provided some growth. Our accessibility segment had growth of 1.9%, including growth of 3.3% coming from North America, which was partially offset by a contraction of point 8% in Europe.

Patient care had growth of 4.4%, and the revenue growth there is mainly due to the completion of increased project work in the long term care sector in Canada during the quarter. As previously noted, our consolidated gross margin for the quarter was 39%. Performance represents a marked improvement of 150 basis points over prior year and 120 basis points over Q1 twenty twenty five, driven largely by continued operational efficiencies realized under Severia one as well as some operating leverage. Both segments contributed to this gross margin improvement underscoring the effectiveness of our ongoing initiatives to streamline operations, enhance margin quality and drive sustainable growth. Adjusted EBITDA was $46,700,000 for the quarter, representing our highest EBITDA quarter as well as the fifth quarter in a row above the $40,000,000 threshold.

Adjusted EBITDA margin finished at 20.6% for the quarter and includes 21.9% for accessibility and 20.9 for patient care. Accessibility margin improved 100 basis points while patient care improved three ninety basis points versus the same time last year. This performance enhancement in both segments was driven primarily from improvements in gross margin which have been powered by Severe one. During the quarter, we incurred $4,600,000 in strategic initiative expenses which was in line with our expectations. These fees are mainly consulting costs and will repeat for Q3 and Q4 of this year but will be finished thereafter.

The removal of these costs are going to add a significant boost to our cash flow in 2026. Finance costs were $4,700,000 for the quarter compared to $6,800,000 last year. Interest on long term debt decreased by 1,500,000.0 when compared to the same quarter last year due to reduced interest rates on our debt as well as a lower overall debt balance. Net earnings was 16,300,000.0 for the quarter compared to 11,400,000.0 last year, and earnings per share was 23¢ for the quarter, a 7¢ or 44% improvement over last year. So switching gears, I’m now going to talk about the balance sheet and cash flow.

Cash flow from operating activities in Q2 was 30,300,000 which is an increase of $6,700,000 versus last year coming from higher EBITDA. Working capital increased by 4,500,000.0 in in the quarter, mainly coming from decreased accounts payable and increased inventories. For the year, we are achieving our working capital targets. CapEx for the quarter finished at $4,800,000 which is 2.1% of sales and in our range of 2% to 2.5% of sales. This includes a mixture of maintenance and also some new expansionary CapEx projects, including new showrooms and new equipment.

Free cash flow after debt related costs and dividends was 9,400,000.0 for the quarter, which is a significant improvement of 6,300,000.0 or 204% when compared to last year. The strong free cash flow contributed to a debt repayment of 11,000,000 in the quarter and reduced our leverage ratio to 1.34 at June 30 compared to 1.63 at year end. This puts us in a very healthy position as we eye future growth plans and other opportunities that lie ahead. As Sebastian mentioned, with regards to our guidance, we’re still projecting approximately $925,000,000 of revenue for the year, but we have now tightened our EBITDA margin guidance to be approximately 20% for 2025. The margin target was achieved in Q2, and we expect it will be achieved for the remainder of 2025 based on the continued value of SEVERIA-one that we have in front of us.

And with that, this completes my prepared remarks. I’ll now turn the call over to JP to provide further details on how we’re progressing with SEVERIA-one.

JP, Operational Executive, Savaria Corporation: Thank you, Steve, and good morning, everyone.

Sebastian Barassa, CEO, Savaria Corporation: Sorry, it’s

JP, Operational Executive, Savaria Corporation: a bit of feedback. Thank you. So we continue to have very strong results with SEVERIA1 in Q2. While we face more challenging markets in some parts of the business, we’re on track with everything that’s in our control. We continue to generate recurring EBITDA improvements, including cost savings and material in back office costs and in marketing and sales costs.

We also maintain good pricing discipline and are growing the top line in parts of the business. As you saw, we managed to expand our EBITDA by 4,800,000 with more or less the same sales as this quarter last year. We expect that when sales grow again, we’ll further expand this improvement by having operating leverage. ZARIO-one is still going strong. We implemented more than 50 initiatives across the business in Q2 alone, and allow me to share some highlights by business segment.

In Europe, we continue to improve the efficiency of our factories. For example, you may remember that in Q1, we implemented a new fabrication method for our free curve stairlift rail named Handyblock. This reduced our welding team size and freed up a lot of space in our factory. So we used that space to reorganize the floor and bring a lot of work that was in the past conducted in the night shift to the day shift, reducing overtime, making the work environment better for our team, and simplifying our operations. Also in Europe, we’ve been working relentlessly on many fronts to improve the efficiency of our direct sales business in The UK and in The Netherlands.

We’ve been optimizing our marketing spend, improving the conversion rates on our leads, optimizing the back office costs, and improving the efficiency and work quality of our field engineers. All those efforts, combined with adjustments in our pricing strategies and upgrades to our sales team, had a massive impact on our performance in the direct business over there. In our patient care division, we had a successful combination of sales growth and cost reduction measures hit at the same time. One highlight on the sales side is that our teams have been working over the last two years at reorganizing our slings portfolio so to be complete and avoid duplications between our different brands like Silvody, Savaria and Handy Care. Now with our Clarified portfolio, it’s catching momentum, and the sales of that business has grown have been growing double digit for the past two years with a record quarter of linked sales this quarter.

Another highlight worth mentioning is that our backlog is at an all time high, and we believe that is in part driven by the fact that we introduced a new M Series ceiling lift at the end of last year, and that is catching up and generating new demand for sales that are recorded in our backlog because they typically are linked to projects that are a couple of months or one or two years out. On the cost side, we’ve been successfully transferring some production of our subassemblies of beds to Mexico and other vendors, which yielded substantial cost savings. We’ve also been scrutinizing our marketing and sales costs, in addition to which we finished spending on some major investments in the last year, including a new website and a new CRM system. Furthermore, we have been working with a 3PL to optimize our transportation routes and choice of carriers across both Canada and The US, and that is also showing great results. In North America accessibility, a highlight in Q2 was with our direct stores, which contributed significantly to our EBITDA growth versus last year.

Since the acquisition of Western Elevators, we now have about a dozen direct stores across Savaria and Garaventa brands in North America. Through Savaria One, we’ve been sharing best practices across our stores on topics like how to manage leads, handle the project pipeline, and organize our installation crews. We had a lot of management attention on our stores, and in the last year, it’s been really paying off. Another highlight is that we continue to save on material costs by harmonizing our specifications between factories to generate purchasing power. We also continue to automate our processes in the Garaventa factory with our welding robot and a new CNC machine that reduces our cost of metal fabrication.

In Brampton, we also continue to gain efficiency in fabrication and assembly lines by applying lean management. Our factories now have excellent lead times and a great cost position. So all these examples I shared, in our view, are recurring in nature, and that’s what gets us excited about the future as they will continue to accrue benefits. Finally, as we’re getting towards the end of scenario one, we are putting some time aside in the coming weeks, like Sebastian mentioned, to work on our plan for the next few years, and we expect to present this plan to our investors next year. Thank you all for your attention.

I’ll hand it over back to Sebastien for closing remarks.

Sebastian Barassa, CEO, Savaria Corporation: Well, thank you, JP and Steve, for your comments. So I guess, Sarah, we are ready for some questions with our analysts that are doing a very good job to cover Savaria.

Sarah, Conference Operator: Thank you. We will now take our first question from Mauric Lassard from TD Cowen. Please go ahead.

Derek, Analyst, TD Cowen: Yes. Good morning, Sebastian, congratulations to you and your team on really getting to that margin target well deserved. I think my first question, I was just wondering if you’ve seen any sort of consumer or commercial pressure just given the economy and sort of the uncertainty that’s out there?

Sebastian Barassa, CEO, Savaria Corporation: Thank you, Derek. And again, we’ve got to be careful. We are a public company and we need to report every quarter and sometimes make it a bit difficult. We are there for the mid long term. Think five years has been fantastic for very good growth.

And right now, again, it’s one quarter a bit softer in different pockets as we said a bit earlier. I think in Europe, there’s a bit of subsidies that has affect us. We have been more careful in the last year to sell at the right price or don’t sell. And R and D, we had a bit of product launch delayed. Example, the Lumo has finally launched at the end of the second quarter, we see a good traction.

So again, if we look at the mid long term vision, I am very comfortable with the the effort that are made and we’ll see some growth. And when we do M and A, we think about what would be M and A that would bring some synergies to the group. I think if we look at the aging population is still there and we’ll continue to be there. You look at the each city, the density, everything is IRI going higher and higher. Townhouse are three, four, four, they like to put home elevator because it add to sales to everybody.

So I’m not very concerned direct on the on the short term and for sure. Look at the first six months, was a tariff, no tariff, a bit of uncertainties on the stock market. But I think now it’s getting settled and we should be in good position for the future.

Derek, Analyst, TD Cowen: Absolutely. And I think investors do appreciate your how you manage the company for the long term. I guess one other one for myself is, I know you said you’ll give more details in April on an Investor Day, but I was wondering if you had any maybe preliminary ideas or opportunities that you could share with us on what you think some area one part two is gonna gonna look like or could entail?

Sebastian Barassa, CEO, Savaria Corporation: K. I think, again, on several one, okay, is getting to an end as GP said. Okay? Again, an end doesn’t mean there’s no more idea for the future. But again, it’s important when you have such an intense program for two years to reenergize a bit of project.

And I think, again, now all our team has learned a lot in the last two years with our consultant. Now we’re able to drive the show by ourselves. And I think we want to get some new idea. This idea that has not been implemented for the first two year. Let’s bring it back.

Let’s find some new one. And we have unlocked so much capacity in all our factories in the last two years. Now we can take much more volume. And again, but we need to be better at M and A, which shows to be very selective to make sure it brings strategic growth. And when we want to do M and A that they can receive that going down.

Again, where we wanna sit, which level, these things we want to clarify for investors. And at that r and d, and it’s super important, but which product you do, what it will bring in terms of growth. So again, make sure we have a good plan, okay, for the next three year three years on our r and d. That’s kind of things we would like to unveil a bit more in the scenario too.

Derek, Analyst, TD Cowen: Absolutely. And thanks for taking my questions. Congrats again.

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

Sarah, Conference Operator: Thank you. Next question is from Michael Glenn from Raymond James. Please go ahead.

Michael, Analyst, Raymond James: Hi, Michael. Hey, good morning. Sebastian, maybe just a follow-up on something you just said regarding unlocking a lot of capacity at the factory levels. Are you able to give an indication like level of sales opportunity you still you you would see within your current capacity right now?

Sebastian Barassa, CEO, Savaria Corporation: I would say right, most of our factory work on one shift. So again, is it optimal to just work on one shift and we have two shift as the volume grow? Right now, again, we are very happy with the footprint we have. Example, we have opened Mexico, I think three years ago already. Again, we still have so much more we can do.

A good example, when we if you will have come see us three years ago in Brampton and Toronto, we’ll ask Sebastian, how can you grow your business? You’re very tight in your space, but we have reorganized some of the space, find some new space, be more organized, be five best, be do some kinds of incentives. So I think all this together make us in very good shape that potentially, if there’s no acquisition, we could grow within within the same footprint the next two years growth. Right?

Michael, Analyst, Raymond James: Perfect. And then, so the way the sales guidance is structured, I know there were some moving parts around Q2, but your sales guide doesn’t does factor in an uptick in organic growth in the back half of the year. I’m just wondering how comfortable you are an expectation for uptick organic growth in the second half on sales.

Sebastian Barassa, CEO, Savaria Corporation: I would say, I was talking maybe the team can complete, but I will say, we see it in when we visit our division with all the Savara one and discussion. There’s some good initiative to find some new dealer to bring some more volumes to the factories. Lumo, I think right now we have a lot of quotation that that that have happened and then sometimes it takes time, okay, before we we sell some units. So we did a sales of Limon will have an impact over time. We have launched as a VPL multi lift in Iraq earlier this year.

Again, it takes some time to ramp up Western and BC. We just had six weeks of revenue in the second quarter, but now we’ll be, I guess, three months in the next quarter and there’s some additional volume they can bring to the factory. May top, we early time has not been perfect in the last year, but right now we’re getting on top of our production on the May top down weather. It is we do a lot of marketing with architect contractors, so it takes time to expect, but right now I think the the May top down weather is something we should go a bit earlier. We have some pocket of the world which is going quite well.

If we look at our sales in Germany, in Australia, I’m very confident with the future on that patient care. And we have a very healthy backlog. So I’m expecting a good second half of the year. We saw it last year in the fourth quarter. So I’m very positive about the

Steve, CFO, Savaria Corporation: second half of the year.

Michael, Analyst, Raymond James: Okay. And then just one more for me. Can you give an update in terms of stairlift penetration rates and market share in North America? Has that business had much growth over the past year or so?

Sebastian Barassa, CEO, Savaria Corporation: Unfortunately, we don’t have good stats in our industry, especially on Australia because it’s not a private pay. I will say for sure, nothing is perfect, but this is an area right now where the time is very good in Europe and in North America. So again, I think we can do a bit better in terms of sale of Stir Lift because right now it’s fully in production in North America. We have good return, good quality. So this is something that I hope in the server too.

We’ll be able to unlock some new idea on how we we are better with our strategy because definitely there’s opportunities.

Michael, Analyst, Raymond James: Excellent. Thank you for taking the questions.

Sarah, Conference Operator: Thank you. Next question is from Max Mielevskiy from Stifel Financial. Please go ahead.

Max, Analyst, Stifel Financial: Good morning, guys. This is Max on for Justin Keywood. Congrats on the margin in the quarter, solid results. I just wanted to ask a few questions, namely regarding you had flagged that input cost in procurement has been a bit of a benefit in the quarter. So I’m curious if you’ve seen any pricing friction emerge or should we expect gross margin going forward to kind of reflect what we saw in Q2 from that perspective?

Sebastian Barassa, CEO, Savaria Corporation: Again, will go start and maybe Steve can complete. I will say again, Nanaus, a new high in terms of gross margins. Again, could they remain a bit similar until the end of the year or if you pull slightly? I wish we still have a lot of incentive that we can do. Steve?

Steve, CFO, Savaria Corporation: Yes, no, I mean, we’re not to Sebastien’s point, we’re expecting that gross margin to maintain or continue to improve. So I mean, if you’re asking specifically, if we’re seeing price increases coming from suppliers, no, that’s not what we’re seeing and that’s not our expectation.

Max, Analyst, Stifel Financial: Okay. Thank you. And I guess on some of the strategic price adjustments that you’ve made, how amenable have customers been to that and how does that reconcile with the customer win back strategy that you guys have been sort of describing over the past few quarters?

Sebastian Barassa, CEO, Savaria Corporation: I think again our pricing adjustment, this is something we do once a year to between the first quarter and usually takes one quarter to flush with the backlog in different pocket. I would say in this year, again, it it has been very reasonable. So people are accepting what we have done earlier this year, which was more than a three ish percent approximately. And so I’m taking well, but what’s important is we always need to bring new services to the the customer, new products that again at the end, we’re the best partner to work with them. So I think as long as we continue to bring the best things there to our customer, but they will support the decision we have to do on that.

Max, Analyst, Stifel Financial: Great. And then just one more question. I mean, there was a bit of a slowdown in Europe and I know it was detailed a little bit better in the earlier in the call, but I guess, you know, could you shed a bit of light on how Handy Care is performing more materially and what sort of growth levers, if any, you expect to pull in Europe with respect to that precisely?

Sebastian Barassa, CEO, Savaria Corporation: Yeah. I I think, again, at the end of the year, yeah, Europe has been a bit tough on the growth. Okay? But performance wise, we actually unfortunately, we don’t disclose anymore just Europe and North America customer of EBITDA. But again, if we have achieved, I guess, 21.6% of EBITDA for the accessibility, our Europe has contributed a lot on that.

We’re quite happy. But Europe, not to forget, we are in the past, we were selling Stereo Lift and Incline platform. But now we’re bringing the one stop shop with the Luma, with the multi lift. So again, this all thing that would add for growth for the future. So and I remain very confident about the the the this part of the work.

So we have a good team, you know, what they they have to do. I was there last week. They present us all the game plan that they are working on. So I’m feeling quite good with that.

Max, Analyst, Stifel Financial: Thank you very much. Thank

Sarah, Conference Operator: you. Next question is from Zachary Evershed from National Bank Financial. Please go ahead.

Zach, Analyst, National Bank Financial: Congrats morning, on the quarter.

Sebastian Barassa, CEO, Savaria Corporation: So

Zach, Analyst, National Bank Financial: understandably, in March, you guys did have to cut guidance given all the tariff uncertainty. But with that cleared up and the strong first half that you put up, especially in q two,

Jonathan, Analyst, Scotiabank: is there is there a

Zach, Analyst, National Bank Financial: scenario in your mind where things could go wrong and you’d have to change guidance again? Like, what are the risks there?

Sebastian Barassa, CEO, Savaria Corporation: Again, I’m not a specialist, and I have a small crystal ball, Zach. But I think with what we see right now with what we control, okay, we’re feeling quite good about that. If there’s something external that happened, again, will not be just server, will be everybody. And I think we’ll need we’ll do what we have to do in due time. But right now, and if we go, we have make investment in The US, okay, we’re doing a bit to look at something there that we’re we have a mid long term vision.

Now if if they were still US and that seem compliant, I will not need to do that. As we think about mid long term, what is the right thing we should be doing? So that’s that’s been my answer for now, Zach. We control what we can control, what we don’t control, but wait and see, and we adjust over time.

Jonathan, Analyst, Scotiabank: Fair

Zach, Analyst, National Bank Financial: answer. And then if we look at your contract mix in accessibility in Europe, how’s the progress going on revamping that and dumping the lower merchant contracts, and how much for to go?

Sebastian Barassa, CEO, Savaria Corporation: JP, you don’t speak much. You wanna answer this one?

JP, Operational Executive, Savaria Corporation: Yeah. Sure. I think I think in terms of, revamping or, like, say, restructuring our our customer portfolio, for example, adjusting pricing, that’s behind us. Okay. So we we we I think we wrapped up most of that last year.

So this year, we’re what the situation has been, we stabilized that. We’re improving the business, and we’re working on growing it again from a much better basis. Right? So I I spoke about the improvements we did, for example, in the direct business. But now that we have a very profitable or much more profitable direct business than before, now we can grow again.

We can invest again. So that’s where our mind is at right now.

Zach, Analyst, National Bank Financial: Gotcha. Thank you. And last one for me. Could you go into what it is

Jonathan, Analyst, Scotiabank: about the Luma that dealers are excited about?

Sebastian Barassa, CEO, Savaria Corporation: Again, what is nice about the Luma, again, it’s a two floor elevator. So this is good for two floor. It’s a growing market. Again, we’re not the only one who has that this competition. Other dealer were requesting that to have this kind of product and we have developed it.

And what’s good about it is the installation time. And basically, it’s one day installed. I don’t think every product in the competition is one day installed. So I think it’s a very key advantage. If you look at the aesthetic is is amazing, people like it.

So again, this is something that takes time. We have to first train our people, train our dealer, put some units in different showroom, and then we’ll start to see some sales, okay, and they’re growing. So it has not been a it will not be a game changer in the third quarter, but I see the number of condition we are doing, the number of drawings. We are in production in Mexico. We think we have the right cost structure on that.

So it will be a winner for the future for sure. We’re not finished to talk about the business model.

Zach, Analyst, National Bank Financial: Good color. Thanks. I’ll turn it over.

Sebastian Barassa, CEO, Savaria Corporation: And and Zach, it is a worldwide product. Okay. So that that is very important also. So it’s not just an Artemica product. It is worldwide from the launch.

So I think it’s it’s very good.

Sarah, Conference Operator: Thank you. Next question is from Jonathan Goldman from Scotiabank. Please go ahead.

Jonathan, Analyst, Scotiabank: Hi, good morning team. Nice results. Thanks for taking my question. Maybe just to start off, how are you guys thinking about capital allocation priorities? I mean, leverage is pretty low.

I think it’s the lowest since you did the transformative deal of Handy Care, so you’ve got lots of options there. And if we drill down, on M and A, how are you thinking about the opportunity set there in terms of size or region or products that you may be looking at?

Sebastian Barassa, CEO, Savaria Corporation: So I think I will start first. And, Cap, no. We know we continue to invest in the business in terms of CapEx. It’s more 2%, 2.5% for GRP. Yeah.

Maybe before the Green Brick project, but two and a half, which is machinery to continue to bring the best machinery to a factory that we are more productive and we do good quality. R and D, we have 50 people in R and D. It’s important for us to continue to innovate. Yes. Now the leverage is going down a bit, but we were waiting a bit to see what’s happening with tariff error.

And again, before and to have to find in a Savara too, what are the best m and a we can do that can bring some synergies to the group. So I think, again, we’re very lucky where the leverage is going down, which has put us in a very good position for the for the future. Right?

Jonathan, Analyst, Scotiabank: Definitely. That makes a lot of sense. And I guess you teased us with the potential for severity 1.2 or two point o, but I know you’ll probably give more color on that. Good name. Need to have an encore here.

But what what are the areas of the business where you see the most opportunity to improve or maybe optimize whether that’s on the top line or the margin side? What are the different ways you can keep going after margin here?

Sebastian Barassa, CEO, Savaria Corporation: Mister, do you wanna go ahead first?

Steve, CFO, Savaria Corporation: Probably a question better suited for JP. I mean, think we’ve done a good job increasing margins of where we’re at right now at 20.6. I think, we have increased quite a bit over the last couple of years. I think while there’s definitely room to grow, we’re not going to be growing margin at the same pace that we have over the last couple of years. Maybe JP, you want to talk a bit about different areas where we still think there’s room in front of us?

JP, Operational Executive, Savaria Corporation: Yeah. I I just build on what Steve said, and, you know, we’ll continue to look at how we can improve margins. For example, in procurement, there’s still room to to improve. Right? And even in our production costs, we continue to have ideas on how we can improve our factories, for example, to reduce our unit costs.

So that’s that’s gonna keep on going. But I I guess what we’re putting more attention on now is gonna be how do we grow the top line organically. And Seb mentioned one way to do it is through have great products. So we were gonna put a lot of emphasis on the r and d pipeline and what we wanna bring to market next. And second thing is, I think it was a question on m and a.

So for sure, we’re gonna look at m and a. So we’re looking at all levers to grow the business. And at this stage, I wouldn’t provide any particular guidance on where it’s going to come from. Right? So we’re working on this.

We’re building the plans. We’ll present to you a plan when we have it, but expect there would be, our mind, at least our expectation is we keep looking at the margins, but we’re spending maybe a bit more energy on how we grow the top line.

Sebastian Barassa, CEO, Savaria Corporation: Maybe That’s

Zach, Analyst, National Bank Financial: great color.

Sebastian Barassa, CEO, Savaria Corporation: Maybe one

Steve, CFO, Savaria Corporation: thing to add, Jonathan, is just the operating leverage. Right? We’ve done a really good job on our fixed cost basis. And as we continue to grow the top line, you know, it has we we talked about it being a little bit soft right now. But as that grows, a lot of our cost cost base is fixed, and that’s gonna maintain.

So we’re gonna see gross margin improvement just through through operating leverage as we as we grow the top line, you know, whether it’s the back half of this year and into next year and years beyond. So we’re going to get some gross margin uptick that way.

Jonathan, Analyst, Scotiabank: Now that’s a really great point. Thanks for taking my questions guys.

Sebastian Barassa, CEO, Savaria Corporation: Thank you.

Sarah, Conference Operator: Thank you. As a reminder, if there are any further questions, please press star one and 1 on your telephone and wait for your name to be announced. We have one question coming through. Please stand by. Question is from Frederic Tremblay from Desjardins Capital Markets.

Please go ahead.

Sebastian Barassa, CEO, Savaria Corporation: Morning, Good morning.

Frederic, Analyst, Desjardins Capital Markets: Morning. Just wanted to come back on your comments on the strong backlog in patient care. Just given your optimism on the second half of this year, can you feel like based on the current backlog, you can generate the level of revenue that’s necessary to keep the margins and the high levels that we saw in Q2. I know volume played a big role in generating that margin.

Sebastian Barassa, CEO, Savaria Corporation: Again, it’s a bit always tough to answer, Fred, because again, there’s always a product mix aspect. But again, the patient care, they have they were over 20%. We know the recipe now for the patient care and this is something that they will expect for the second half of the year that they are at 20%. So are they going to be at both core at 20%? I think it’s too soon to answer, but I think the total of the two, I think could be a nice target.

Frederic, Analyst, Desjardins Capital Markets: Okay. Great. Maybe question for Steve on on just the pace of CapEx deployment on the the $30,000,000 project in South Carolina. How should we think about CapEx in the coming quarters? Is that 30,000,000 more of a 2026 expense?

Are we expecting a ramp up in the 2025?

Steve, CFO, Savaria Corporation: There will be some this year, but it’s going to be very light. Most of it’s going to come into next year. I mean, we’re in the planning phase right now, and we are incurring some costs. But with that said, we’re still going to we’re still planning on being in line with our 2025 budget of, you know, two to two and a half percent, closer to that two and a half mark for sure. But as we look at this project for next year, most of the spend will be in 2026, and we’ll we’ll be adjusting our CapEx plans at other sites to make sure that we have funding for this.

I mean, it’s not that it’s going be over and above our 2.5%. We’re going to be squeezing in certain areas to make sure that we’re not spending more than we absolutely need to. So to answer your question, it will be 2026 and as we go through the strap plan and budgeting process for next year, I’ll be able to give you a better idea of exactly what our plan is.

Frederic, Analyst, Desjardins Capital Markets: Okay. That’s all I had. Thanks and congrats on a great quarter.

Sebastian Barassa, CEO, Savaria Corporation: Thank

Sarah, Conference Operator: you. There are no further questions at this time. So I will hand the conference back to Mr. Barassa for closing comments.

Sebastian Barassa, CEO, Savaria Corporation: Thank you very much, Sarah. Thank you for all the analysts for your good question. So as you see this morning, let’s celebrate first the margins achievement. I think that was the highlight of the second quarter, which would work over the last two years. And next will be the growth and the start plan for the next three years.

So that’s what we’re going to work. So thank you very much for your confidence with us, Maria.

Sarah, Conference Operator: Thank you. This concludes today’s conference call. Thank you for participating. You may now disconnect.

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