Savaria Corporation (SIS) Earnings Call Transcript & Summary

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[Foreign Language] Steve, all yours.

Thanks, Sylvain. Good morning, everyone. We're going to start with the 2021 financial review. 2021 was a transformative year for Savaria. During the year, the corporation acquired all of the outstanding shares of Handicare Group AB for a total consideration of $448 million. This was financed through a combination of cash on hand, a new revolving credit facility as well as proceeds from 2 concurrent private placements. Correspondingly, the consolidated results of the corporation have materially changed from prior year. Our balance sheet at December 31, 2021, indicates strong financial health. On the working capital side, current assets ended the year at $320.7 million, including a cash balance of $63.5 million. Current assets finished the year at $166.4 million for a total net working capital of $154.3 million, an increase of $40.7 million or 35.8% compared to prior year. This net increase is primarily driven by the addition of Handicare. The ratio of current assets to current liabilities finished 2021 at 1.93 versus 2.67 in 2020. Long-term assets, including fixed assets, right-of-use assets, intangible assets and goodwill have all increased significantly year-over-year due to the acquisition of Handicare. As previously noted, the increase in long-term debt is the result of the new credit facility required to finance the purchase of Handicare. The increases across other liability account balances in 2021 versus 2020 was also due to the acquisition of Handicare. The increase in total equity from prior year is the result of shares issued by a private placement to fund the acquisition of Handicare. Taking a look at our earnings for 2021. The company generated revenues of $661 million in 2021, an increase of $306.5 million or 86.5% over 2020, primarily due to the acquisition of Handicare. Gross profit and gross margin were $215.5 million and 32.6%, respectively, in 2021 compared to $122.1 million and 34.5% in 2020. The increase in gross profit is in line with the increase in revenues and is mainly attributable to the acquisition of Handicare. Gross margin as a percentage of revenues decreased primarily due to additional costs related to the supply chain, including shipping costs and a reduction of subsidies from the COVID-19 employment retention government of Canada program. Adjusted EBITDA and adjusted EBITDA margin for the year were $100.3 million and 15.4%, respectively, compared to $59.8 million and 16.9% for the same period in 2020. The increase in adjusted EBITDA is mainly attributable to the acquisition of Handicare and the decrease in adjusted EBITDA margin is mainly attributable to the same factors described above as for the gross margin. Now taking a look at the first quarter results ended March 31, 2022. The company generated revenues of $183.5 million, an increase of $71.5 million or 63.8% over the same period in 2021 primarily due to the acquisition of Handicare and strong organic growth of 12%. The Accessibility segment saw organic growth of 8.7%, which was driven by continued strong demand in the residential sector. The patient care segment saw organic growth of 22.2%, which was attributable to the easing of pandemic restrictions and increased access to long-term care facilities. Gross profit and gross margin were $58.5 million and 31.9%, respectively, compared to $37.4 million and 33.4% for the same period in 2021. The increase in gross profit was mainly attributable to the acquisition of Handicare and the decrease in gross margin was mainly due to inflationary pressures on the supply chain, including increased shipping costs. Adjusted EBITDA and adjusted EBITDA margin for the quarter were $24.4 million and 13.3%, respectively, compared to $17.3 million and 15.4% for the same period of 2021. The increase in adjusted EBITDA is due to the acquisition of Handicare, and the decrease in adjusted EBITDA margin was mainly attributable to the same factors described above for gross margin. I will now pass the microphone to our President and CEO, Mr. Marcel Bourassa.

[Foreign Language], Steve. Thank you very much. Okay. Very well done. So you can see that Savaria is moving, right, [Foreign Language] and moving in the right direction. So we wanted to be a leader in accessibility, and we are the worldwide leader. That's incredible. Starting from nothing and now, we are the leader in the world, that's quite impressive. So I want to begin the presentation with the house. The house is the first presentation -- page. As you see, in our house, we are the only one in the world that can offer this kind of products at the same place. It's why when we go to see somebody, we say, "Oh, you can buy all at the same place." This is very impressive and very interesting how it's important that should we have a new dealer across the world and we say, "Hey, we are the leader." So -- and the bank, the shareholder, many people and people inside the company, people outside the company and our shareholder, it's because of you. So it's teamwork, what is very important. Okay. Page #2, the geographic. Yes. Thank you, [ Alison ]. Coming from [ Alison ] that I should speak French. [Foreign Language] It's not the day-to-day operation. It's we have to be confident, okay, but it takes time. [Foreign Language]

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Okay. Okay. [Foreign Language] So we still are there. What is very important, what -- I switch sometimes just to prove you that I can speak a little English, too. So just to -- the people see what we can do in terms of process that helps the people in wheelchair and the people who need our products. We take our products -- and with Handicare, that's a major acquisition that we made. Handicare with their people would just sell production. It's just teamwork. And teamwork, that's the only thing that keeps it together at some place. We have to do a teamwork. And that's exactly -- when we buy a company, we have to team up with them, and that's exactly what we happened. So congratulations to my people. If we go to the past results, what's going to be [Foreign Language]? [Foreign Language]. The present result you see, [Foreign Language]. Always one thing, teamwork, teamwork, teamwork. [Foreign Language] What is important? Why we are so lucky? It's not that I'm a genius. I said that [ 6 years ago ], no genius in me. So -- but we see that the only thing that is fair -- not maybe, just the only one who is fair in the world [Foreign Language] We have this page. This page is Savaria. Why is it going so well? Why will it grow so much? Why will it be the billion? It's because of that. The people want to stay on but they need the mobility equipment. That's exactly what we do. So that's it for my presentation. Excuse me [Foreign Language]

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[Foreign Language] We will deliver what we have to deliver. [Foreign Language]

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