Savaria Q1 2026 Earnings Report

Savaria EPS Results

• Actual EPS: C$0.31
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Savaria Revenue Results

• Actual Revenue: $235.55 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Savaria Announcement Details

• Quarter: Q1 2026
• Date: 5/6/2026
• Time: After Market Closes
• Conference Call Date: Thursday, May 7, 2026
• Conference Call Time: 8:30AM ET

Savaria (TSE:SIS) ( savaria.com ) is a global leader in the accessibility industry. It provides accessibility solutions for the physically challenged to increase their comfort, their mobility and their independence. Its product line is one of the most comprehensive on the market. Savaria designs, manufactures, distributes and installs accessibility equipment, such as stairlifts for straight and curved stairs, vertical and inclined wheelchair lifts and elevators for home and commercial use. It also manufactures and markets a comprehensive selection of pressure management products for the medical market, medical beds for the long-term care market, as well as an extensive line of medical equipment and solutions for the safe handling of patients, including ceiling lifts and slings. In addition, Savaria converts and adapts vehicles for personal and commercial uses.

Savaria Q1 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Strong Q1 financials — revenue of CAD 235.5 million (up ~7%), adjusted EBITDA margin of 20.4% (up 190 bps), net earnings of CAD 22.7 million (+82%) and EPS of CAD 0.31; leverage reduced to 0.92x.
• Positive Sentiment: Savaria One is delivering material savings — ~40 initiatives launched in Q1 and management estimates about CAD 7 million of EBITDA improvement in the quarter, with ~200 initiatives still in flight.
• Positive Sentiment: Clear growth and capital plan — management targets ~12% per year growth to reach CAD 1.6 billion by 2030, plans ~CAD 200 million of acquisitions over five years and says liquidity/net-debt position supports M&A and capex.
• Neutral Sentiment: Regional and product momentum is mixed — Europe showed strong stairlift-led organic growth and improved profitability while North America had traction in home elevators but U.S. growth was muted by FX; newer products (Luma, VPL, straight stairlift, Matot) are gaining traction but remain small and will take months to become material.
• Negative Sentiment: Near-term risks include seasonality (Q1 is typically weakest), FX swings that pressured patient care, modest spare‑parts exposure to recent tariff changes (management says finished goods are largely compliant), and slightly higher CapEx for the Greenville expansion that may modestly raise near-term cash needs.

Presentation

[Operator]

Morning. My name is Rory, and I will be your conference operator today. At this time, I would like to welcome everyone to Savaria Corporation's Q1 2026 conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. To ask a question during the session, please press star one one on your telephone. You will hear an automated message advising your hand is raised. To withdraw your question, please press star one one 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 May 6th, 2026, with respect to its Q1 2026 results. Thank you. Mr. Bourassa, you may begin your conference.

[Sébastien Bourassa, President and CEO at Savaria Corporation]

Thanks, Rory. Good morning, everyone. Today I will start with a small recap of our Q1 results. Steve will update us on financial, and JP will provide us an update on Savaria One and Europe, followed by Q&A. Once again, I'm very proud, and it seems that I repeat always that I'm proud. In the last 10 years or 40 quarters, 39 out of the 40 we have beat the previous year. I think for me, it's very good proof that we should work very consistent in our results. With all the learning we have done in the Savaria One, I think we have create a good path for the future.

[Sébastien Bourassa, President and CEO at Savaria Corporation]

With sales of CAD 235 million up versus last year, and right away in EBITDA in the first quarter of 20.4% of EBITDA, our KPI improving. Steve will go more in detail later. Quite happy with that. A few things that I would like to highlight today. First, thank you again for all team member at Savaria to continue to be diligent in your approach towards Savaria One, to act as a one company, and continue to have a bottom-up approach to bring good idea on how can we be better. This mentality of continuous improvement is part of our DNA now, and it will continue to help us to make us better. Second, growth.

[Sébastien Bourassa, President and CEO at Savaria Corporation]

We talked about that during the Investor Day a few weeks ago, but continue the effort to develop the market in North America for home elevators is a priority, and we see some traction. The increase of effort into a stairlift in North America continue to expand the Matot dumbwaiters material lift lineup. The business development activity are going to continue to put us as a market leader. Expand the one-stop shop in Europe, example, the Luma, the VPL, and the incline lift. I think we start to see some traction. To be the partner of choice in stairlift, I think JP will talk later, but we have a very good traction in Europe in the last six months, quite happy with the turnaround we have done there. Patient Care to own the room and continue to develop the long-term care.

[Sébastien Bourassa, President and CEO at Savaria Corporation]

I think we have some good traction there also. Also a Greenville building expansion to be more diversified in terms of manufacturing in North America is progressing well, and the expansion should be complete in the fourth quarter of this year. Third, acquisition. As we said during the Investor Day, we have the ambition to do some acquisition in the next five years for approximately CAD 200 million from small to midsize. As we said earlier, we like some of our dealer distribution network, very natural. Buy some small product lineup, small manufacturer to bring some better products and to improve our one-stop shop. I think it's always a priority.

[Sébastien Bourassa, President and CEO at Savaria Corporation]

I will say with our net debt EBITDA ratio of now 0.92x and liquidity available of CAD 224 million, excuse me, for capital allocation and M&A, I think we're in a very good position. To conclude, I'm quite happy with the start of 2026. As we unveiled during the Investor Day, we have the ambition to grow the business at 12% per year, a mix of organic growth and acquisition, to maintain our margins over 20%. If we do our job, that will ultimately lead us to some sales of CAD 1.6 billion and an EBITDA of CAD 320 million, and an EBITDA per share of CAD 4.25 by 2030. Thanks again to all the employees for the effort in this new chapter of growth.

[Sébastien Bourassa, President and CEO at Savaria Corporation]

Steve, financial, please.

[Steve Reitknecht, CFO at Savaria Corporation]

Thank you, Sébastien, good morning to everyone on the call. I'm now gonna provide some further detail and commentary regarding our first quarter results. The key highlights for the quarter include, firstly, revenue growth of 7% over last year, driven by growth in both segments and all regions. Adjusted EBITDA margin reached 20.4% in Q1, which is especially great since Q1 is typically our seasonally weakest quarter. Lastly, our leverage ratio is now under 1x at 0.92x. Now looking at consolidated revenues for the quarter. We generated revenue of CAD 235.5 million, an increase of CAD 15.3 million versus last year.

[Steve Reitknecht, CFO at Savaria Corporation]

This is driven by organic growth of 5.7%, revenue contribution from the acquisitions of Baxter and Western Direct Stores of 0.7%, and a positive foreign exchange impact of 0.6%. Our Accessibility segment saw growth of 7.9%, driven by strong growth in stairlifts in Europe as well as increased sales in Canada. Patient Care achieved revenue growth of 3.8%, driven by strong organic growth of 6.5%, partially offset by a negative foreign exchange impact of 2.7% on the U.S. dollar currency. Our consolidated gross margin for the quarter was 38.9% compared to 37.8% in 2025, and our operating income increased by CAD 11.7 million versus last year.

[Steve Reitknecht, CFO at Savaria Corporation]

This is especially important to note since this demonstrates that we are continuing to improve the performance of the business post Savaria One. The gross margin improvement is mainly driven by operating leverage, improved pricing, and procurement benefits. Furthermore, operating income, excuse me, further benefited from the termination of strategic initiative expenses. Q1 adjusted EBITDA reached CAD 48.1 million for the quarter, representing a margin of 20.4% compared to 18.5% in 2025. That's an improvement of 190 basis points. Accessibility adjusted EBITDA margin was 22.4% versus 20.1%, so up 2.3% year-over-year, 230 basis points, and we saw improvements in both of our key regions. Patient Care adjusted EBITDA margin stood at 19.5% compared to 18.8% last year. Moving on to finance costs.

[Steve Reitknecht, CFO at Savaria Corporation]

They were CAD 3.1 million for the quarter, compared to CAD 3.5 million last year. Interest on long-term debt decreased by CAD 1.2 million due to an overall lower debt balance and decreased interest rates. We also had impact from an unrealized foreign currency loss of CAD 0.4 million this year versus a gain of CAD 0.4 million last year, causing an CAD 800,000 year-over-year swing. Net earnings were CAD 22.7 million for the quarter, compared to CAD 12.5 million last year, representing an increase of 82%. Correspondingly, EPS reached CAD 0.31 for the quarter versus CAD 0.17 last year. I'm now gonna provide some comments on our cash flow and balance sheet.

[Steve Reitknecht, CFO at Savaria Corporation]

Cash flow from operating activities in Q1 was CAD 35.8 million, driven by the strong net earnings, partially offset by higher working capital and higher income taxes paid. Our working capital remains healthy, and while it has increased in terms of dollars, we have reduced our working capital days from last year. CapEx was CAD 6 million for the quarter, which represents 2.5% of sales. This is in line with our guidance, this includes approximately CAD 1 million for the building expansion in Greenville. We also dispersed CAD 2.1 million for business acquisitions, largely attributable to Baxter Residential Elevators, our new direct store just outside Dallas, Texas. We have now CAD 324 million of funds available under our current credit facility as of March 31st.

[Steve Reitknecht, CFO at Savaria Corporation]

As previously stated, our leverage ratio has reduced to under 1x to 0.92x. On April 14th, 2026, at our Investor Day, we unveiled our plan for the next five years. Savaria targets a top-line increase of approximately 12% per year for the next five years, derived from organic and acquisition growth. This will bring Savaria to approximately CAD 1.6 billion in revenue at the end of 2030 while maintaining adjusted EBITDA margins of at least 20%. With that, this completes my prepared remarks, and I'll now turn the call over to JP to provide updates and details on Savaria One in Europe. JP?

[JP DeMontigny, Chief Transformation Officer at Savaria Corporation]

Yeah. Thank you, Steve. Good morning, everyone. On April 14, we provided a lot of information on what happened in the last two years with Savaria One. Today I'll focus on what happened in Q1 and what to expect next given what's cooking. Let me start with what happened in Q1 regarding Savaria One. If you recall, since we started the program, we had about 400 initiatives completed. Well, today we still have about 200 initiatives that are in flight. We're still very active with Savaria One, and there's more to come. In Q1 itself, we implemented about 40 new initiatives, all internally generated and internally driven. Those generated CAD millions of new savings that will accrue to our results in the coming months. In addition, we continue momentum.

[JP DeMontigny, Chief Transformation Officer at Savaria Corporation]

We continue to have the rigorous cadence of implementation across all functions and all parts of the business, and we still have millions of dollars of initiatives being implemented and being worked on. In Q1 itself, when we measure our results internally and we sum up all the initiatives, we find approximately CAD 7 million of EBITDA improvement, which is also what we see in our P&L EBITDA improvement, right? We have a pretty good still accuracy of the measure we do internally and what we see in our results, which gives us great confidence that the program is still well and alive. In terms of Q1, I have five specific highlights I thought I would share this morning in terms of what are some of the successes that fueled our results. Let me start first in Europe.

[JP DeMontigny, Chief Transformation Officer at Savaria Corporation]

As you saw, we had good growth in Europe, and the biggest contributor to that was some wins we had with our dealer sales. We had some dealers returning to Savaria after not working with us for a few years. We had some new wins, but most importantly, we had some large dealers that shifted a large share of their wallet towards us. The main reasons they did that is the overall value proposition is very strong. What I mean by this is the quality of our products keeps improving. We have competitive prices because we have a competitive supply chain in the first place. We have, we are a reliable supplier with short lead times and, you know, we deliver on our promise. We have good freight partners, for example.

[JP DeMontigny, Chief Transformation Officer at Savaria Corporation]

Finally, we have what is known to be the best measurement tool in the industry for everything about stairlifts and platform lifts. I think our overall value proposition is very strong, and our dealers are recognizing this and doing more and more business with us. The second highlight for me was the bed business. We make our long-term care beds in Beamsville, and what happened is in the last two years, we made a lot of efforts to improve our operations, to deploy lean practices, to do kaizens in the factory, but also to make versus buy decisions. We used to make a lot of things in-house in Beamsville, and now we started to leverage our global supply chain to manufacture some parts, so we can have more freed up capacity in Beamsville.

[JP DeMontigny, Chief Transformation Officer at Savaria Corporation]

That was very timely and useful in Q1 because in Canada there were a lot of public tenders in the last couple of months, and we won a number of them. The fact that our factory was now more efficient and had more capacity allowed us to increase sales materially, and our Beamsville facility is now performing extremely well. Another highlight for us was the direct stores in North America and Europe. Our direct stores are doing really well, and there are pockets of excellence. For example, Australia is really growing fast as an office, and we expanded recently to a new location.

[JP DeMontigny, Chief Transformation Officer at Savaria Corporation]

The U.K. has always been a large direct store for us in Europe, and now the U.K., thanks to our efforts in the last years, is really performing well in terms both of profitability but also growth. We're innovating with our marketing strategies, our sales force is more effective than ever, and our field engineers are more efficient than they've ever been in the past. We're doing really well in our direct stores, and on top of that, we had some acquisitions like Western that happened last year that is adding to our results. Another one for us is Matot. About two years ago, we acquired Matot, and that was really a great example of a well-executed but, you know, it took time, integration.

[JP DeMontigny, Chief Transformation Officer at Savaria Corporation]

The first thing that happened is we had to integrate the operations and actually close the Matot factory, and really internalize it in Brampton. That took a lot of time and effort from our engineering team and our operations team in Brampton. Now we're able to produce Matot dumbwaiters at a good rate, and we actually reduced the lead times to make those units versus what Matot used to have in the past. We have a better value proposition to the market. In parallel, last year we made a lot of efforts in our commercial team to advertise and to explain what the Matot value prop is to our dealers, but also to specifiers and architects. What we see now is the order intake from Matot is very strong, and we're able to grow that business.

[JP DeMontigny, Chief Transformation Officer at Savaria Corporation]

That's for us, a great success and we intend to keep building on it. Finally, the last one that we wanted to share this morning is Ultron. As you probably know, we have our own in-house electronics, let's say, business unit that has the expertise to design power circuit boards. What this does for us is we can both reduce our costs 'cause we're able to redesign some of our power boards across a different product range. Also when there are emergencies or crises, and you may read in the news that there are shortages of chips and stuff like this, well, we have the expertise in-house to first of all, make sure we buy in advance and stock in advance, but also when there are shortages, we can substitute parts.

[JP DeMontigny, Chief Transformation Officer at Savaria Corporation]

We've been pretty much protected from all these different difficulties that maybe some of our competitors have because we have this, our own electronics department. These are some of the highlights from Q1. What's still being worked on for Q2 that's material for us? First, we just launched our website in North America, and we're very proud of it. We think it's a great website because it's also designed to optimize for our search engines, but also for AI search. We're working on replicating that in Europe, so that's very important for us in Q2. Also, we continue to make efforts in Europe to cross-sell our different products. We are largely stairlift business in Europe, and now we're making real efforts to develop our platform business outside of Italy, which is the core.

[JP DeMontigny, Chief Transformation Officer at Savaria Corporation]

In North America, one of our focuses is the construction in Greenville, which is very strategic for us. Not just because of the space, but also the different capabilities we'll have in-house once that is built. Another one in Patient Care is the innovation. You may have heard during the Investor Day, but we have a lot of new product innovations that are important to grow the business. In the past we developed a new ceiling lift lineup with the M-Series. Now we just launched a new APM surface bed, essentially. A mattress, sorry. Now we're about to finalize the new bed lineup. Beamsville is not only doing great today, but it will have new beds to sell, which are more modern, more interesting for the patients and for their caregivers.

[JP DeMontigny, Chief Transformation Officer at Savaria Corporation]

In Europe, we have a number of product launches at the moment. We are launching a new straight stairlift in the coming weeks or days. We also have field trials for a number of different products, including platform lifts and stairlifts. There's a lot happening still in Q2, and we're optimistic that this is going to help us continue to fuel growth. In conclusion, as you probably saw, Europe had a very strong Q1 because of some of these reasons I just mentioned. We also had a good jump in profitability. That is both due to the efficiency initiatives we drove in the past, but also the fact that we have some operating leverage with the growth. I think one of the reasons we're successful is that our factories are able to follow.

[JP DeMontigny, Chief Transformation Officer at Savaria Corporation]

We had very good order intake in Q1, but what's great is that our factories were able to increase the throughput because they are more efficient and more effective than before. We're very, very Yeah, good momentum in Europe in conclusion. All this to say, I think we have good tailwinds overall as a business. We have a lot of initiatives in the hopper. Some were recently implemented, some are still to be implemented, but we see a good momentum, and we're looking forward to see the results in the coming months. Thank you. Closing word for Sébastien?

[Sébastien Bourassa, President and CEO at Savaria Corporation]

Yeah. Thank you, JP. Very exciting. I guess, Rory, we are ready for some questions.

[Operator]

Thank you. At this time, we will conduct a question and answer session. Our first question comes from the line of Cheryl Zhang of TD Cowen. Please go ahead.

[Cheryl Zhang, Analyst at TD Cowen]

Hey, good morning, Sébastien, Steve, and JP. Great to hear from you. Thanks for taking my questions.

[Sébastien Bourassa, President and CEO at Savaria Corporation]

Morning.

[Cheryl Zhang, Analyst at TD Cowen]

Morning. My first question is on the Accessibility segment. I'm curious that in the MD&A, you mentioned that increased bookings in Canada. What's driving that? Is there any notable changes in demand from consumers or from dealers?

[Sébastien Bourassa, President and CEO at Savaria Corporation]

A good question. Again, I think it's always difficult when we look at this, okay, from one quarter to the other. You know, we are there for the mid long term. For sure, in Canada, okay, we have a new baby, which is Western. Now it's part of the results, so you see a bit of the results in Canada. Also, now we have been doing quite good, okay, in term of housing, home elevators. I think that's going to go well.

[Cheryl Zhang, Analyst at TD Cowen]

Okay. Thank you. On Patient Care, U.K. business is still small, but could you highlight on what's driving the increased sales there?

[Sébastien Bourassa, President and CEO at Savaria Corporation]

Yeah. Definitely. Thanks for asking. Patient Care in the U.K. and in Europe, you know, I think we have been very long time historically that we are Silvalea with manufacturing some sling. That's something we have expand on the one-stop shop, okay? To be able to offer some ceiling lift, some carry stock, and I think the team of Gary and Silvalea is doing quite well in expanding their territory. I think, no, I think we'll continue to see some good growth over there. And also, we have been able to list across our sales offering on some different organization like NHS contracts. I think that has helped us with the group.

[Cheryl Zhang, Analyst at TD Cowen]

Okay. Maybe just follow up on the NHS contract. I wonder if you could share a little bit about, like, what's the length of the contract and what the scope is looking like.

[Sébastien Bourassa, President and CEO at Savaria Corporation]

I think, sorry, Cheryl, I think on that again, it's multiple years listing. We are listed in many different contract across the world, in North America, Europe. I think we don't disclose on first two years contract one by one. No, that's a very positive thing that we have been listed. That's opening the eyes, okay, for more sales in Europe and U.K.

[Cheryl Zhang, Analyst at TD Cowen]

Okay. Thanks very much. I'll re-queue.

[Sébastien Bourassa, President and CEO at Savaria Corporation]

Thank you.

[Operator]

Thank you. One moment for our next question. Our next question comes from the line of Frederic Tremblay of Desjardins Capital Markets. Please go ahead.

[Frederic Tremblay, Analyst at Desjardins Capital Markets]

Thanks. Good morning.

[Sébastien Bourassa, President and CEO at Savaria Corporation]

Frederic, good morning.

[Frederic Tremblay, Analyst at Desjardins Capital Markets]

One of the areas that was highlighted in Patient Care for the quarter was home care. I was wondering if you could maybe remind us of the strategy to gain market share in that specific sector.

[Sébastien Bourassa, President and CEO at Savaria Corporation]

I think, again, home care, I think we talked a bit during the Investor Day. Yes, we are there in the long term care. That's our preferred, not preferred, that's our biggest segment, also in acute care. Home care is definitely an area where we wanna be better. I think as the best of my knowledge, I don't think there's any numbers in the MD&A or financial, no, it's part of our strategy to be better in home care, to have the right offer.

[Frederic Tremblay, Analyst at Desjardins Capital Markets]

Okay. Just moving forward, can you talk about some of the early trends that you're seeing in Q2 in Accessibility? Have you seen some continuation of the positive Q1 trends into April in both Europe and North America?

[Sébastien Bourassa, President and CEO at Savaria Corporation]

I think without making big forward-looking statement, I think the good news, Frederic, again, where our backlog is good. I think things are continuing to go well. Like the attraction we had in Europe, I think is continuing, so that's very positive. In North America, again, Q1 is always historically a bit lower in North America, but in Q2 the construction is good and the winter is over. I'm expecting to see a good second quarter. No, a good year, I would say that.

[Frederic Tremblay, Analyst at Desjardins Capital Markets]

Okay. I'll get back in the queue. Congrats on a solid quarter.

[Sébastien Bourassa, President and CEO at Savaria Corporation]

[Non-English content]

[Operator]

Thank you. One moment for our next question. Our next question comes from the line of Michael Glen of Raymond James. Please go ahead.

[Michael Glen, Analyst at Raymond James]

Hey, good morning. Hey, to start from my standpoint, when I take a look at your, what are your incremental margins on EBITDA in Accessibility? They are tracking very high. Like, your incremental EBITDA on each dollar of sales is quite high. Is there any reason why you're highlighting all these initiatives with Savaria One still coming into play. Is there any reason why you believe or we should think that that rate of incremental change will change in the coming quarters?

[Sébastien Bourassa, President and CEO at Savaria Corporation]

Maybe I will start and Steve will complete. I think Michael, what is good is everything we have done in the last two years is usually sustainable. I think that's a positive. Now that the team is always driven, initiative, we do R&D, we launch some new product. I think the incremental business is continue to be quite good. I hope that the margin in the legacy business will continue to expand. For sure, at one point, it would expand a bit slower. I think if for sure, maybe if your next question is why we have kept this 20%+ EBITDA guidance instead of raising this up.

[Sébastien Bourassa, President and CEO at Savaria Corporation]

Not to forget is when we do acquisition, and we want to do acquisition, typically they are a bit lower in terms of EBITDA, and it takes 2-3 years to bring back to the right level. I think a mix of all that will make us successful in the future. Yes, I'm hopeful that we can still continue to improve the legacy business, but again, it will be at a slower pace maybe over the last two years. After that, you know, there's maybe there's a bit of noise at different place with inflation, freight this, that, but all those good initiatives make us be successful to offset the little negative that sometimes is happening. Maybe Steve, anything you want to complement?

[Steve Reitknecht, CFO at Savaria Corporation]

I think that was comprehensive.

[Michael Glen, Analyst at Raymond James]

Okay, perfect. Then just regarding the recent Section 232 revisions, I know that you were largely able to avoid any impact that came from these changes. Has this revision created any discussion regarding a further shift of production or assembly down to the U.S.?

[Sébastien Bourassa, President and CEO at Savaria Corporation]

Again, as of right now, things can change every day, but as of right now, we have done a lot of work in the last few weeks to make sure we're good. All our finished goods remain all compliant. We don't pay tariff. Is there some small noise on some small spare parts? The answer is yes, but that we're able to offset the noise, and we have action for those also. No, we have decided to invest in Greenville a year ago because we were tired to discuss about that. No, we are very committed right now. We do approximately 60% of our own elevator Eclipse in the U.S., and we're adding some new capability with the expansion to increase our offerings.

[Sébastien Bourassa, President and CEO at Savaria Corporation]

I think, no, we'll be able to flex with this U.S. manufacturing to make us less dependent on the border. I think that's the objective.

[Michael Glen, Analyst at Raymond James]

Okay. can you remind us, Stephen, maybe you said it, sorry I missed it, but the full year CapEx you're expecting, and on top of that, would you be expecting a working capital ramp in the back half as well as you ramp up Greenville?

[Steve Reitknecht, CFO at Savaria Corporation]

On the working capital piece, no. I mean, as we ramp up Greenville, we already have product there because there already is operations there on the Accessibility side. As we ramp up Greenville, we're probably gonna be taking working capital out of other areas, so there shouldn't be a net overall impact to the business. On the CapEx front, typically, we've been 2%-2.5% of sales. This year is gonna be slightly higher because of Greenville. The expansion, we had CAD 1 million come through in Q1, we were at 2.5% of sales. We're gonna be slightly higher than 2.5% this year. That's all gonna be due just to the Greenville expansion.

[Steve Reitknecht, CFO at Savaria Corporation]

We're gonna be lower than 3%, but likely above 2.5%.

[Sébastien Bourassa, President and CEO at Savaria Corporation]

Michael, I think just to add on that, I think it's a very good news because we are very committed, okay, to continue to be better. Every year, we have project to invest in machinery, to have the best machine, to be more efficient, and after that, to have the best factory that we can have, capacity for the next few years. We'll continue to do research and development. We have over 60 people in research and development to improve the existing product, to develop some new one, to help us for organic growth. I think this commitment of CapEx is very important for me to be able to continue to grow the business.

[Michael Glen, Analyst at Raymond James]

Yeah, I just, you know, given the dynamics surrounding the border, I'm just thinking if you're wondering if you should be doing more of this, rather pulling it forward just to mitigate risk, any future risk. I know it's uncertain.

[Steve Reitknecht, CFO at Savaria Corporation]

Okay.

[Michael Glen, Analyst at Raymond James]

That's it for me.

[Sébastien Bourassa, President and CEO at Savaria Corporation]

Okay, thank you very much. Appreciate it.

[Operator]

Our next question comes from the line of Razi Hasan of Paradigm Capital. Please go ahead.

[Razi Hasan, Analyst at Paradigm Capital]

Good morning. Thanks for taking my questions. Maybe for Steve, can you just remind us on the impact of seasonality on EBITDA margin?

[Steve Reitknecht, CFO at Savaria Corporation]

Yeah. Q1 is always our weakest quarter. I mean, looking back years, it is our weakest quarter out of all four. We did come in at 20.4% this quarter, which is where we finished last year. We're really pleased with that, I think, you know, the fact that Q1 is typically weak, we're expecting, you know, higher margins through the remaining quarters.

[Sébastien Bourassa, President and CEO at Savaria Corporation]

Just one thing I would like to add also. Europe, since Europe has been better, I know the last few years has been a bit more difficult. There's a bit less seasonality in the stairlift business than there is in home elevator because it's, you don't need construction to make stairlift. It's hard a bit to compare the seasonality all the previous year. It has been good. We hope the next quarter will be better. We just need to take it with a grain of salt. With a better performance in Europe, that really adds for the group, right.

[Razi Hasan, Analyst at Paradigm Capital]

Okay. No, that's helpful. Then maybe could you talk about a little bit about the levers for operating leverage through the remainder of the year, Steve?

[Steve Reitknecht, CFO at Savaria Corporation]

Levers for operating leverage? I mean, we started to see some operating leverage come through in Q1. We're expecting more operating leverage, especially as we, you know, came out with our guidance for 2023. Our SG&A is growing at a slower rate than sales. Our cost of material is decreasing, and our cost of the remaining COGS is growing at a slower rate than sales. I mean, we're starting to see that with the revenue growth. We're expecting that to continue, Razi.

[Razi Hasan, Analyst at Paradigm Capital]

Okay, that's very helpful. Then maybe just one for JP. Obviously, strong results in Europe. Could you maybe just qualify that in regards to, you know, is the region progressing ahead or in line with your expectations?

[JP DeMontigny, Chief Transformation Officer at Savaria Corporation]

I'd say in line. First of all, we have a budget, but also I'm a very ambitious leader, no, it's in line. Like, we have good, great results. We're very proud of them. Like, Sébastien said that at this moment, we see that as a sustainable result.

[Sébastien Bourassa, President and CEO at Savaria Corporation]

I think new products also, in our one-stop shop, we beat it often, but I don't think it's been affecting the results yet. All the effort on the Luma, the VPL, the incline lift, I think that could also help us in the future to continue to fuel a bit this growth in Europe.

[JP DeMontigny, Chief Transformation Officer at Savaria Corporation]

Yeah. With the new straight stairlift.

[Sébastien Bourassa, President and CEO at Savaria Corporation]

Yes. Very good news.

[Razi Hasan, Analyst at Paradigm Capital]

Okay, thanks very much. I'll pass the line.

[Sébastien Bourassa, President and CEO at Savaria Corporation]

Thanks.

[Operator]

Thank you. One moment for our next question. Our next question comes from the line of Justin Keywood of Stifel. Please go ahead.

[Justin Keywood, Analyst at Stifel]

Good morning. Thanks for taking my call. Nice to see the Europe organic growth rebound. Also seem that Canada was up nicely, but the U.S. was relatively flat. Just wondering if there was anything to account for that in the quarter.

[Steve Reitknecht, CFO at Savaria Corporation]

Yeah. I mean, U.S., we did have headwinds on FX, right? We saw that in both businesses. I mean, unfortunately, Patient Care, they had really strong organic growth, but that was almost half of it was offset by FX. Clearly, we see that in the Accessibility business. Overall for Accessibility, there is positive FX impact because of the strength of the euro and the pound versus the Canadian dollar. You know, U.S. is a huge opportunity for us. It's a massive market. Our backlog remains really strong. You know, we're looking positively for the next few quarters.

[Justin Keywood, Analyst at Stifel]

Are you able to parse out the volume growth without the FX in the U.S. market?

[Steve Reitknecht, CFO at Savaria Corporation]

I mean, we Yeah, we don't give that level of detail, Justin. I mean, we disclose the total growth by market, then we disclose total by segment. We don't disclose that level of detail. We do I mean, I can give you some further commentary. The price increases this year in the North American market have been relatively modest in the sort of 2%-3% range. They were slightly lower than that in Patient Care.

[Justin Keywood, Analyst at Stifel]

Should we expect rebounding organic growth quarters in the U.S. for the rest of the year? Or is Europe and Canada gonna be the main drivers?

[Sébastien Bourassa, President and CEO at Savaria Corporation]

My U.S. is our main market, okay? I think no need to be worried about that. There's enough initiative, okay, as I disclosed in my statement and during the Investor Day. No, I don't think U.S. is a concern. It's still very good for us. Again, it's just some FX noise. Sometimes, no, what's good about Savaria is we have multiple currency. Sometimes you win on one, but you lose on the other. At the end, that make us a bit of natural hedging.

[Justin Keywood, Analyst at Stifel]

Okay, good. Great to hear. My next question is just on Savaria Link, the software, and if we could just describe how the overall services or aftermarket services is progressing and if there's any other details around that. Thank you.

[Sébastien Bourassa, President and CEO at Savaria Corporation]

I will take this one. I think Savaria Link for us, again, JP mentioned it a bit earlier, the fact that we manufacture our own electronics, okay, and that's an acquisition we did a few years ago, but it's important because we're able to have similar electronics across all our products. Now we have Savaria Link for many, many years, but we did recently a major update on it. Right now, that really help us to monitor the products that you can see from the back office. If Mrs. Smith, okay, stairlift is not working in the morning, you will be able to call her before she call you.

[Sébastien Bourassa, President and CEO at Savaria Corporation]

After that, to make it easier for installer and technician, if you go on a job site and you can find the issue a bit faster, to troubleshoot the units. That's, it's key because you save some time. You're more productive. I think definitely that's something that will really help us in the future, and we want to change a bit the way we technician are able to troubleshoot the unit. I think it's very interesting. For sure, for us, yes, we have a service per part. That's a small portion of our business. It's more important we are direct, but if we can bring these tools to our dealer and make their life easier, at the end, we will win.

[Justin Keywood, Analyst at Stifel]

Thank you. I assume the services revenue has a greater margin contribution?

[Sébastien Bourassa, President and CEO at Savaria Corporation]

The big key service and parts is very, is interesting, yes.

[Justin Keywood, Analyst at Stifel]

Okay, great. Thank you for taking my questions.

[Sébastien Bourassa, President and CEO at Savaria Corporation]

Thank you, Justin.

[Operator]

Thank you. One moment for our next question. Our next question comes from the line of Nathan Po of National Bank Capital Markets. Please go ahead.

[Nathan Po, Analyst at National Bank Capital Markets]

Good morning, guys. Thanks for taking my question. Accessibility in Europe showed some impressive year-over-year growth, and stairlifts was mostly called out in the commentary. When do you expect to see contributions from Luma and Multilift sales and actually the straight stairlift as well?

[JP DeMontigny, Chief Transformation Officer at Savaria Corporation]

Yeah. I mean, we are selling those already. Okay, just so you understand, but it's small numbers now. Okay. If your question is, when is that gonna be material? It will take, probably, several months still. 'Cause for these products, we, it takes time to build. Now we have great interest, for example, for Luma. Our dealers started to install it in their showrooms, right? We now have it in our showrooms, in their showrooms.

[JP DeMontigny, Chief Transformation Officer at Savaria Corporation]

I think by the end of the year, we'll start to see some more material orders for that, for example. Multilift is also still relatively small, so we've got work to do to grow that business. To me, if you think about the next two years, that will be adding to our results. The real bulk, like, what will really move the needle is still the traditional products, just because the size of the installed base, the size of the market we can tackle there is much bigger for us at the moment.

[Nathan Po, Analyst at National Bank Capital Markets]

All right. Thank you for the color. Can you walk us through at a high level the impact of rising energy costs across your cost base and your strategy to manage this, especially given your international supply chain?

[Sébastien Bourassa, President and CEO at Savaria Corporation]

Yeah. For sure, again, our margin has been up in the first quarter, so I think we have been able to absorb them somehow. I think JP mentioned a bit earlier, we still have a lot of initiative in procurement efficiency. I think so somehow we are able to offset most of them, and some of them is the freight, and the freight is usually when it is ex works effectively the dealer pay, the customer pay for that, so that may be not affecting so much of business. The fact that we remain very vertically integrated. We make parts by ourselves. Again, that's our factory, that's our machine, that's our employees. I think that's really helping us to control our costs. So far, we are looking good.

[Nathan Po, Analyst at National Bank Capital Markets]

Good color. Thank you. Do you have any view on the potential impact of Section 301 tariffs?

[Sébastien Bourassa, President and CEO at Savaria Corporation]

I think as I mentioned a bit earlier to a previous question, I think we have done our work in the last few weeks. Right now all our finished goods, they are tariff exempt, so we do not pay tariff. Is there some small noise on spare parts? The answer is yes, but we have countermeasure to improve that. I think so far our results are embedded with what's happening.

[Nathan Po, Analyst at National Bank Capital Markets]

Okay. Great to hear. One last one for me. You spoke about wanting to own the room in Patient Care. Can you walk us through any gaps you see in your current portfolio and maybe take us through a decision on whether you wanna build or acquire your way to that?

[JP DeMontigny, Chief Transformation Officer at Savaria Corporation]

To some extent I can speak to it. Well, I won't go into too much details 'cause this can be strategic, right? If you think about owning the room today, we have in long-term care we have a lot of products already. One place where we did some expansion through Savaria One is to work on the case goods, for example, 'cause if you think about the room, we have the bed, we have the surface, we can do ceiling lifts even in long-term care. We didn't have necessarily all the accessories around it, so like the case goods, for example, and we currently distribute some other products like floor lift. This is where our attention is, okay, to make sure we have a better offering for all these adjacent products.

[JP DeMontigny, Chief Transformation Officer at Savaria Corporation]

In the acute care business, we're still thinking about it. It's more complicated. We have ceiling lifts, which are very important, but the rest of the equipments are highly specialized. This is something we're discussing internally, we're looking at, but we don't have necessarily something to disclose at this time.

[Sébastien Bourassa, President and CEO at Savaria Corporation]

Historically, we like to manufacture what we sell, okay? Patient Care is a bit more special because to own the room, but at the end, long-term strategy, we want to manufacture our own products.

[Nathan Po, Analyst at National Bank Capital Markets]

Thank you very much. I'll turn it over.

[Operator]

Thank you. One moment for our next question. Our next question comes from the line of Jonathan Goldman of Scotiabank. Please go ahead.

[Jonathan Goldman, Analyst at Scotiabank]

Hey, good morning, team. Thanks for taking my questions. Just one from me. I noticed you didn't break out Accessibility organic growth between Europe and North America this quarter. I just wanna get some background on the rationale for that. Maybe you can help us, you know, give a little more color on the trends in those respective businesses. You know, over the past, I guess, few years, North America has been doing great, growing above your targeted range. Europe has been a bit slow, but part of that was a concerted effort, you know, to possibly focus on higher margin business. Maybe you can give us how those trends have developed, you know, in Q1 or any way you wanna talk about it.

[Sébastien Bourassa, President and CEO at Savaria Corporation]

Thanks, Jonathan. I wanna start and see Steve complete. Yes, again, we have two segments, which is Patient Care and Accessibility. Now within the last two years, yeah, we have breakdown Europe and North America. Now that Europe is back to contribute a similar amount as North America, we decided to stop that because we don't break our sales for Asia, for Europe, for this, for that, and it started to be a bit too complex. This is the organic growth, this is the effect, this is acquisition growth. We have decided to simplify the information for the reader, this is a permanent change, and we're going to continue like that. At the end, what's important, we want to achieve our CAD 1.6 billion by 2030.

[Sébastien Bourassa, President and CEO at Savaria Corporation]

That's why we have decided to make this change. Steve?

[Steve Reitknecht, CFO at Savaria Corporation]

Just to add some commentary. I mean, you know, yes, you're right. North America has been relatively strong for the last couple years and while we had that weakness in Europe has since rebounded, we have both regions that are doing quite well right now. You know, we had extra focus on Europe over the last couple years, That's why maybe there was some additional commentary there. Now that both divisions are performing quite well, we're, that's also one of the reasons why we're not disclosing it separately.

[Jonathan Goldman, Analyst at Scotiabank]

Makes sense, and sounds good. Thanks for taking my question, guys.

[Sébastien Bourassa, President and CEO at Savaria Corporation]

Thank you, Jonathan.

[Operator]

Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. I am showing no further questions at this time. I would now like to turn the call back to Mr. Bourassa for closing remarks.

[Sébastien Bourassa, President and CEO at Savaria Corporation]

Well, thank you to all the analysts. You have some very interesting questions as usual, and I think you understand well the story of Savaria. Again, thanks for all the reports that you put on the company. Again, very proud of Q1 results. I think it's fantastic. With the Investor Day of a few weeks ago, I think we have put a lot of information available that you can know why we think we'll win in the next few years. Thanks for the confidence and thanks for the call, everybody. I guess we will go back to work, guys. Thank you.

[Operator]

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

Participants

Executives

• JP DeMontigny, Chief Transformation Officer
• Steve Reitknecht, CFO
• Sébastien Bourassa, President and CEO

Analysts

• Cheryl Zhang, Analyst at TD Cowen
• Frederic Tremblay, Analyst at Desjardins Capital Markets
• Jonathan Goldman, Analyst at Scotiabank
• Justin Keywood, Analyst at Stifel
• Michael Glen, Analyst at Raymond James
• Nathan Po, Analyst at National Bank Capital Markets
• Razi Hasan, Analyst at Paradigm Capital