Savaria Q2 2026 Earnings Report

Savaria EPS Results

• Actual EPS: C$0.35
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Savaria Revenue Results

• Actual Revenue: $245.78 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Savaria Announcement Details

• Quarter: Q2 2026
• Date: 8/5/2026
• Time: After Market Closes
• Conference Call Date: Thursday, August 6, 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 Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Record Q2 revenue reached CAD 245.8 million, up 8.4% year over year, including 6.6% organic growth across both Accessibility and Patient Care.
• Positive Sentiment: Adjusted EBITDA margin improved to 21.1% from 20.6%, while net earnings rose 54.4% to CAD 25.2 million, or CAD 0.34 per diluted share, supported by gross-margin expansion and lower finance costs.
• Negative Sentiment: Patient Care adjusted EBITDA margin declined to 18.4% from 20.9% because of inflation in materials such as foam and aluminum; management expects mid-year price increases to support improvement by Q4.
• Positive Sentiment: Savaria reported CAD 333.4 million of available liquidity and a leverage ratio below 1.0x, supporting its acquisition strategy; the company acquired Italian lift maker Vipal for approximately CAD 13 million after quarter-end.
• Positive Sentiment: Management reaffirmed its long-term targets of approximately 12% annual revenue growth through 2030 and adjusted EBITDA margins of at least 20%, with Greenville expansion and new products intended to support capacity and market growth.

Presentation

[Operator]

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

[Sébastien Bourassa, CEO at Savaria Corporation]

Thanks, Stephanie, and good morning, everyone. Today I will start with a small recap of our Q2 results. Stephen Reitknecht will update us on financial, and JP will provide an update on Savaria One, followed by a Q&A session. Again, I'm very proud of the results of Q2 as it is our highest revenue ever at CAD 246 million, with a growth of 8.4% that is well-balanced between patient care and accessibility. We achieve an EBITDA margins of 21%. Which really show that the Savaria One success over the last few years continue to be present, and I'm very thankful to our team for all their hard work that they make those great results quarter after quarter. Today there's three things that I would like to highlight. First, the growth.

[Sébastien Bourassa, CEO at Savaria Corporation]

I'm happy that we have a third good quarter in a row in terms of growth, which show that some good incentive that we have put in place for the next five years is starting to work. In North America, we continue to develop the market of home elevator with architect, builder, contractor and of course our dealers. We increase our sales, focused on stairlift. Matot dumbwaiter and material lift continue to have a push with architect and builder, and our good lead time is really helping this product line. We added a state-of-the-art paint shop in Greenville for the manufacturing of a wood cabin, which was starting to be in operation in the third quarter for a direct store and will be launched for a dealer in October. That will really help us complete the best product offering feature for a dealer.

[Sébastien Bourassa, CEO at Savaria Corporation]

Also a building expansion is on plan to open in Q4 this year. In Europe, we expand a one-stop shop with Klíma, the VPL in Klein, and now with the VPL product line is pretty much a complete product portfolio. That will really help us for the future, and we continue to be the partner of choice on stairlift. In patient care, growth has been good since the beginning of the year, margins are slightly behind what we desire as there's been a bit more inflation in this division than others. We did a mid-year price increase, and I'm hopeful that by the end of the year, in the fourth quarter, you will see an improvement on the margins as before. The strategy to own the room and continue to develop the long-term care continue to be the core of activity of this division.

[Sébastien Bourassa, CEO at Savaria Corporation]

Second, best growth margins ever at 39.6%, which really show that we continue to improve, we continue to have good initiative, despite the small contraction we had in the patient care in that second quarter. 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, some small mid-size tuck-in that will help us in some area where we see some more potential or bring some new products to our distribution network to continue the best product portfolio with a one-stop shop. So far this year, we did Baxter Elevator in Texas, which show that we want to grow our presence in this booming market in Texas.

[Sébastien Bourassa, CEO at Savaria Corporation]

In July, we closed Vipal, a small manufacturer of home lift and low rise commercial in Italy to help us to develop the Europe with some code compliant products. With our net debt-to-EBITDA ratio at 0.87 at the end of the second quarter, our liquidity continue to grow and now at CAD 333 million available for capital allocation, we are in very good position. To conclude, I'm quite happy with the first six months of this year. As we announced in the investor day, we have the ambition to grow the business at 12% per year for the next five years and maintain our margins at 20+, which ultimately will lead us to CAD 1.6 billion of sales with an EBITDA over CAD 220 million by 2030.

[Sébastien Bourassa, CEO at Savaria Corporation]

Thanks to all the people at Savaria that follow the next chapter of growth, and thanks for the analysts for your good works. Steve, financial, please.

[Stephen Reitknecht, CFO at Savaria Corporation]

Thank you, Sébastien. Good morning, everyone. I'll now provide some additional detail on our second quarter results. Key highlights for the quarter include firstly, revenue grew by 8.4% in Q2, driven by organic growth of 6.6%. Year-to-date revenues reached CAD 481.3 million, representing 7.7% growth on a year-to-date basis. Secondly, adjusted EBITDA margin reached 21.1%. That's a 50 basis point improvement over prior year, driven by continued gross margin expansion across the business. Finally, our leverage ratio continued to improve, sitting at 0.87 times as at June 30th, giving us significant flexibility to support our growth strategy, including acquisitions and planned capital expenditures. Turning now to consolidated revenues. We generated CAD 245.8 million in the quarter.

[Stephen Reitknecht, CFO at Savaria Corporation]

That's an increase of 19 million or 8.4%, as I mentioned, over last year. This includes organic growth of 6.6%, also a 0.8% contribution from the acquisitions of Baxter earlier this year and Western Elevator last year, and as well as a positive foreign exchange impact of 1%. Accessibility revenue reached 8.7% growth to sorry, increased by 8.7% to 192 million, mainly driven by organic growth of 6.4%. Sales increased in both Canada and the United States, while Europe continued to deliver another strong quarter, supported by continued growth in stairlift sales. Patient care revenue increased by 7.3% to 53.7 million, entirely driven by organic growth. This reflected higher U.S. sales and continued growth in the U.K. Now looking at gross margin operating income.

[Stephen Reitknecht, CFO at Savaria Corporation]

Consolidated gross margin was 39.6%, compared with 39% in Q2 2025. That's an increase of 60 basis points. Gross profit increased 8.8 million year-over-year, providing testament to the continued success and ongoing benefits of Savaria One. Operating income increased by 9.1 million, or 34.1% to 35.8 million, representing a margin of 14.6%, compared with 11.8% in Q2 2025. The increase was driven by higher revenue, gross margin expansion, lower other expenses, and the termination of strategic initiative expenses following the completion of Savaria One last year. This was partially offset by higher selling and admin as we invest for growth. Adjusted EBITDA reached 51.8 million, representing a margin of 21.1%, compared with 46.7 million and 20.6% last year. Accessibility adjusted EBITDA margin reached 23.6%. That's 170 basis points over last year's 21.9% margin. Patient care adjusted EBITDA was 18.4%, compared with 20.9% last year.

[Stephen Reitknecht, CFO at Savaria Corporation]

Net finance costs were 1.7 million in the quarter, compared with 4.7 million last year. Interest on long-term debt decreased by 1.2 million, mainly due to a lower debt balance. We recorded a foreign currency gain of 0.6 million compared to a loss last year of 0.5 million, and a net gain of 0.1 million this year on financial instruments, compared to a loss of 0.7 million last year. Correspondingly, net earnings increased by 54.4% to 25.2 million, or CAD 0.34 per diluted share, compared with 16.3 million or CAD 0.23 per diluted share in Q2 2025. Now taking a look at cash flow and liquidity. Cash flow from operating activities was 33.3 million, compared with 30.3 million in Q2 last year. The increase was mainly driven by higher net earnings and a favorable unrealized foreign exchange gain, partially offset by higher income taxes paid this year.

[Stephen Reitknecht, CFO at Savaria Corporation]

Cash used in investing activities was 13.4 million, compared with 3.6 million last year. We invested 12.5 million in fixed and intangible assets in the quarter, including 5.3 million for the Greenville building expansion and related equipment for that site. As of June 30th, available funds were 333.4 million, compared to 311.7 million at year-end, and net debt decreased to 172.8 million from 191.5 million at year-end. After quarter end, on July 1st, 2026, we acquired all outstanding shares of Vipal S.p.A., a manufacturer of residential lifts and elevators based in Ferentillo, Italy. Total consideration was CAD 13 million, or EUR 8 million, subject to customary adjustments for net financial position and net working capital. Our Q2 results support our long-term outlook. Revenue grew by 8.4%, including 6.6% organic growth, and adjusted EBITDA margin reached 21.1%.

[Stephen Reitknecht, CFO at Savaria Corporation]

Building on this momentum, we continue to target annual revenue growth of approximately 12% through 2030, while maintaining adjusted EBITDA margins of at least 20%. With that, this concludes my prepared remarks. I will now turn the call over to JP for additional comments. JP?

[Company Representative at Savaria Corporation]

Thank you, Steve, and good morning, everyone. Today I will speak about three things: how Savaria One is fueling growth, how Savaria One is also helping us with better margins, and a little bit about Vipal acquisition. For me, the key message is that year-to-date, we are on track with our objectives of organic growth for the business as well as profitability across the board. For example, the fact that both segments grew 7%-8% in Q2 is a big success, and the growth we see is balanced across product segments as well as across geographies. A lot of this is due to some efforts we did in the recent past and in the last two years. I will give you a few examples.

[Company Representative at Savaria Corporation]

In the patient care business, we had a lot of success in Q2 installing ceiling lifts, but that is in part due to the fact that we upgraded our ceiling lift lineup with the M-Series and started selling it about a year ago. With that, we won bids that we installed in Q2. Also, in Silvalea in the U.K., this is a smaller part of our business, but still strategic. We moved to a new factory about a year and a half ago, which allowed us to have better production capacity, and now we are selling into the NHS. We are able to grow this business because we can produce more at a good price. We also revamped our lineup of slings for Silvalea, that is also helping the business grow.

[Company Representative at Savaria Corporation]

Another thing that is important in patient care is that we did improvements in the sling manufacturing of St. Louis and also worked with external partners to have more capacity for the disposable slings. Now we had a good growth in sling sales, which we were able to ship thanks to all these efforts we did in the past. Finally, it is worth noting that we also established a dual assembly line, so we can now assemble the M-Series ceiling lifts, both in Canada and in the U.S. in St. Louis. In the current context, we can really assemble close to the market. In Accessibility North America, as Sébastien mentioned in his address, we had great growth again across the board.

[Company Representative at Savaria Corporation]

This has been a consistent theme for North America, but one of the highlights for me is the growth we had in our direct stores, where we made deliberate efforts for years to develop our referral networks, to do education with architects, to also go and work with contractors and promoters of multi-unit residential projects who now spec our lifts in their offer, and that pays us. Now our direct stores have orders for multi-unit projects that are very substantial. Finally, when we bought Matot, we spent a ton of efforts to insource production in Brampton to make the production process also faster and leaner, and this is paying off because now we are growing Matot sales, but we're also able to produce and ship in much shorter lead times than we used to in the past, and that's helping our sales.

[Company Representative at Savaria Corporation]

Finally, we also migrated our website to a new domain this quarter. The website has been redesigned to provide us better domain authority as well as enable better AI search visibility, which is critical in the current world. In Europe, we reengaged with growth by winning back historical dealer relationships, thanks to our consistent efforts in improving product quality. We also expanded cross-selling of platform lifts, so we're now selling our Tiro and X3 platform lifts across all markets in Europe, including in our own direct stores in the U.K. and Netherlands. We also continue to drive growth in the largest direct markets by having innovative commercial strategies and just great delivery overall consistently. We also see that now not only are we recognized for better quality, but we are starting to introduce new product innovations.

[Company Representative at Savaria Corporation]

For example, we introduced the Savaria K2 stair lift earlier this year, and just now we changed our new outdoor rail for Handicare 4000. That's a new offering that we think is going to have some traction. Finally, we made a number of small commercial changes that make it simpler to do business with us. The overall message for me is that we are rigorously managing growth initiatives in Savaria One, just like we focused a lot on cost initiatives in the past. This being said, we continue to also improve our cost, and you can see it in the expansion of gross profit and the expansion of the bottom line results. Each month, we continue to implement initiatives. For example, in Q2, we implemented at least 50 new initiatives, and a lot of those relate to procurement to reduce the cost of goods sold.

[Company Representative at Savaria Corporation]

You can see that that shows in our financials. This is especially relevant in today's world because we know there is inflationary pressures across the board. In most of our businesses, we're able to offset those with either efficiency gains in production or material cost reductions, thanks to our initiatives. The only exception this quarter is patient care, where, as Sébastien mentioned, we had some great pressures from some commodity cost inflation that we now need to counter with some price increases mid-year. Our focus as a business continues to be on growth, and this is where most of our attention and our efforts are oriented towards. People working in the factories and people working in the offices on procurement continue to innovate, continue to improve our business nevertheless, so we can improve our cost position.

[Company Representative at Savaria Corporation]

Finally, the last highlight for me from Savaria One is the capacity expansion in Greenville, as Sébastien mentioned. I'll be brief, but the fact that we already were assembling Eclipse in Greenville for months, but every quarter, every month, we are expanding the capabilities over there. We also had investments of new machinery. We commissioned the paint line, which is very critical to have a high-quality cabin built and shipped in the U.S. Over time, we are shifting more and more orders from Canada production to U.S. production for the U.S. market. Third topic for me is the Vipal acquisition. Just a bit more details on that business. We closed the acquisition in early July.

[Company Representative at Savaria Corporation]

It is a strategic acquisition for us because of the know-how of this team at Vipal in the lift business, because the fabrication process is largely in-house, and because the technology is well known and renowned in Europe. What happened is, very shortly after, two weeks later, we had a large group of our global leaders, including myself and Sébastien, who went there to kick off the integration plan. We already are in motion to integrate the business. In fact, I am speaking to you from Italy, where I'm doing a roadshow with the sales team at Vipal this week to meet our top dealers and their top dealers. We're definitely in motion, and we are already seizing opportunities to cross-sell in both ways. Meaning we can cross-sell our products to their dealers and vice versa. We can sell Vipal to our dealers.

[Company Representative at Savaria Corporation]

This is going to be an integration that will take years with different steps. We are very excited about the acquisition. We got a lot of ambitions for Vipal, but of course, we'll go step by step, first by selling the products that they have today and over time, improving the operations, improving the products, and really integrating them in our business. In conclusion, we see good performance year to date and in Q2, and that comforts us that there's a clear link between our efforts in Savaria One and the results we see in the business. Thank you. That's it for me. Sébastien, over to you for closing words.

[Sébastien Bourassa, CEO at Savaria Corporation]

Thank you, JP. A very good color on the Savaria One improvements. I guess we are ready for questions. Stephanie, can we open the queue, please? Thank you.

[Operator]

Yes. Thank you. At this time, we'll conduct the question and answer session. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced.

[Operator]

To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from Frédérick Tremblay from Desjardins Capital Markets. Your line is now open.

[Frédérick Tremblay, Analyst at Desjardins Capital Markets]

Thank you. Good morning.

[Sébastien Bourassa, CEO at Savaria Corporation]

Go ahead.

[Frédérick Tremblay, Analyst at Desjardins Capital Markets]

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

[Sébastien Bourassa, CEO at Savaria Corporation]

The best person to answer is JP, because JP, you're in Italy this week meeting dealers, right?

[Company Representative at Savaria Corporation]

Yeah, exactly. I met five already, and I have five, a couple more tomorrow. Honestly, the reaction was very positive on both sides, and you're always a bit apprehensive when you do something like this, but I was pleasantly surprised. Everybody's excited. I think their dealers are excited because they see Savaria as an established, well-structured company, and they also are now curious. They're learning about our products because what happens is most of Vipal's dealers are lifting companies that do mostly lifts or residential lifts and sometimes, we call it ascensori in Italian, but it's faster, larger lifts. They always have a small part of their business, which is platform lifts or some requests for stair lifts.

[Company Representative at Savaria Corporation]

Now many of them have been happy to see that we have this offering, and we already received some orders from dealers that said, okay, I might as well work with you. I like Vipal, so why not work with Savaria? That's been their reaction, and on our side, many of our dealers, especially in Italy, knew about Vipal. When many of them, again, in the accessibility space, it's the opposite. They tend to have a small part of their business, which is selling home lifts. Now we're introducing Vipal to them, and the reaction was very positive. They like Savaria. What they recognize in Savaria is the quality of the support and customer service and technical support they get.

[Company Representative at Savaria Corporation]

They are now keen to see, okay, maybe they can try the Vipal products, and if we can provide the same support, they'd be excited to work with us. That's the feedback I'm getting.

[Frédérick Tremblay, Analyst at Desjardins Capital Markets]

Yeah, that's great. Maybe just to get a sense of the opportunity, just wondering if you could remind us how many dealers and direct stores Savaria has in Europe, and how does that compare to the number of dealers that Vipal currently has?

[Company Representative at Savaria Corporation]

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

[Frédérick Tremblay, Analyst at Desjardins Capital Markets]

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

[Sébastien Bourassa, CEO at Savaria Corporation]

Well, good question, Fred. Yes, very happy with that. I think it shows again the strength of Savaria to be vertical integrated. Now we have factory in China and Mexico and everywhere where we operate, we have machine, we make parts by ourselves. There's 32% of our sales, which is in our direct market. The rest is with partner distributor. I think, again, the proof in the vertical integration is quite important. It's good. After that, product mix. Every year we bring new products with good margins. I think it's always contributing to that. The 20%, I think is for sure is, I hope it's sustainable, but we have to be careful because when we make acquisition, they are lower than that, so it might play a bit in the average.

[Sébastien Bourassa, CEO at Savaria Corporation]

I think if we go back four months ago, we said that in the next few years, we want to be at 20%+ for the consolidated Savaria. You can see that there's still good opportunity.

[Frédérick Tremblay, Analyst at Desjardins Capital Markets]

Great. Thank you and congrats on a strong quarter.

[Sébastien Bourassa, CEO at Savaria Corporation]

Thank you, Fred.

[Operator]

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

[Sébastien Bourassa, CEO at Savaria Corporation]

Hi, Cheryl.

[Cheryl Zhang, Analyst at TD Cowen]

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

[Sébastien Bourassa, CEO at Savaria Corporation]

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

[Sébastien Bourassa, CEO at Savaria Corporation]

I think maybe at the end of the year, we can judge a bit if it was just a quarter or it's a year issue.

[Cheryl Zhang, Analyst at TD Cowen]

Okay, that's very helpful color. On accessibility, obviously very strong organic growth. Could you maybe expand on what you're seeing in terms of consumer demand and where your backlog is?

[Sébastien Bourassa, CEO at Savaria Corporation]

Our backlog is still good. Unfortunately, we don't give color on our backlog, but no, in our direct office, I think JP said we have healthy backlogs, would give us good visibility. In our factory, okay, for sure, we always want to have good lead time, so our backlog is usually consistent. No, I'm quite happy with that. I think new product that we launched, for example, the Luma, new through the floor that will be the first year we have that. We're coming out with some new option, okay, this fall for the through the floor elevator. Definitely also the new product are helping, like Matot. Now we're doing pretty good in manufacturing in term of lead time, so that's helping to grow the business. Again, the beauty of Savaria is the diversification of the products. That's really helping us to maintain this growth.

[Cheryl Zhang, Analyst at TD Cowen]

Okay. Thank you very much.

[Operator]

Thank you. Our next question is from Razi Hasan of Paradigm Capital. Your line is now open.

[Razi Hasan, Analyst at Paradigm Capital]

Good morning. Thanks for taking my question.

[Sébastien Bourassa, CEO at Savaria Corporation]

Morning.

[Razi Hasan, Analyst at Paradigm Capital]

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

[Sébastien Bourassa, CEO at Savaria Corporation]

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

[Razi Hasan, Analyst at Paradigm Capital]

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

[Stephen Reitknecht, CFO at Savaria Corporation]

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

[Stephen Reitknecht, CFO at Savaria Corporation]

Our guidance is above 20%. We're confident that we can continue to increase the underlying margin in our existing businesses.

[Razi Hasan, Analyst at Paradigm Capital]

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

[Sébastien Bourassa, CEO at Savaria Corporation]

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

[Razi Hasan, Analyst at Paradigm Capital]

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

[Operator]

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

[Sébastien Bourassa, CEO at Savaria Corporation]

Morning, Zach.

[Zachary Evershed, Analyst at National Bank of Canada Capital Markets]

Good morning. Congrats on the quarter.

[Sébastien Bourassa, CEO at Savaria Corporation]

Thank you.

[Zachary Evershed, Analyst at National Bank of Canada Capital Markets]

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

[Sébastien Bourassa, CEO at Savaria Corporation]

We got to be careful. Again, if we go back to our press release that we did a year ago, we wanted to make an investment of CAD 30 million. A portion is for the building, a portion is for equipment, a portion is for inventory. Again, we started last year, so it's ongoing, and maybe it's going to take a bit more time, but no, I think the range of CAD 30 million will probably finish a bit lower, but I think it's a good target, but maybe will take a bit more time. This year-

[Zachary Evershed, Analyst at National Bank of Canada Capital Markets]

Got you. Thanks

[Sébastien Bourassa, CEO at Savaria Corporation]

the building is going to be finalized. In the future is maybe more inventory or machinery that we would like to add.

[Zachary Evershed, Analyst at National Bank of Canada Capital Markets]

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

[Sébastien Bourassa, CEO at Savaria Corporation]

The paint line is amazing. It's fully automated. Again, most of our cabin in North America are made in wood. Typically, you can have some melamine, wood veneer, but this new equipment give us the ability to do some enhanced cab, which are very high-end quality of paint, fully automatic. This is something we're going to be able to differentiate ourselves to have a better offering for our customer to upscale the elevator. We're quite excited with that. It went live in the second quarter. Now we're making some tests with our direct office to make sure it is perfect, and we'll be live with our dealer in the fourth quarter. Very exciting.

[Zachary Evershed, Analyst at National Bank of Canada Capital Markets]

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

[Sébastien Bourassa, CEO at Savaria Corporation]

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

[Company Representative at Savaria Corporation]

Yeah. We had the discussion internally, not later than yesterday, and my point of view is we have the capacity to take more than one, because the reality is we have different First of all, we are in different markets, right? When we make an acquisition in a market, if we need to integrate the commercial aspect, we can ask the local team to integrate, and then from a functional standpoint, we have a pretty good team. I think we can have multiple acquisitions concurrent. Yeah.

[Zachary Evershed, Analyst at National Bank of Canada Capital Markets]

Thank you very much. I will turn it over.

[Operator]

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

[Justin Keywood, Analyst at Stifel]

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

[Sébastien Bourassa, CEO at Savaria Corporation]

Okay, very good question this morning. I guess you came to the investor day, huh? Yeah, Savaria Link is a very nice feature. Again, if we go back in time, we bought an electronic company a few years ago in U.K. called Ultron. We design our own electronics, and that give us the ability to put some nice feature. Yes, we have a new version, improved. We did Wi-Fi monitoring for many years, but this year we have launched a new improved version. We start to drive it across most of our products. Definitely, this is something that is helping to monitor the status of the elevators and the stair lifts. I think definitely this bring a good future in terms of that. Right now, again, it's part of our product offering, we don't upscale the sales for that. It's included in the product.

[Sébastien Bourassa, CEO at Savaria Corporation]

That give the tools to a customer, again, to know what's happening with their product, the dealers, I mean, to know what's happening, to be easier to troubleshoot, to make sure you want to work with the Savaria product. That's the feature. In terms of service revenue, Steve, which percentage total we are right now, approximately 15% of our total service revenue. Again, when we have direct office, that's an opportunity for us to improve the service and maintenance. That's quite interesting.

[Justin Keywood, Analyst at Stifel]

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

[Sébastien Bourassa, CEO at Savaria Corporation]

Well, unfortunately, we don't disclose the margins per product or per segment, but definitely for sure, when you have the chance to capture some recurring revenue for maintenance to be able to service it, yeah. Yes, it's quite interesting. That's the beauty of Savaria. That's why you see the very good margins in accessibility. Again, we can have also this additional bag with the service and maintenance.

[Justin Keywood, Analyst at Stifel]

Thank you. Just finally, is there a target percentage of sales as far as services revenue to get to, let's say, on the 2030 target of CAD 1.6 billion in overall sales?

[Sébastien Bourassa, CEO at Savaria Corporation]

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

[Justin Keywood, Analyst at Stifel]

Got it. Thank you very much.

[Sébastien Bourassa, CEO at Savaria Corporation]

Thank you, Justin.

[Operator]

Thank you. At this time, we do have a few moments for additional questions. If you'd like to ask a question, you'll need to press star one one on your telephone and wait for your name to be announced. We could hold for a moment to see if we do have any additional questions. I am showing no further questions at this time, I would now like to turn it back to Sébastien for closing remarks.

[Sébastien Bourassa, CEO at Savaria Corporation]

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

[Operator]

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

Participants

Executives

• Sébastien Bourassa, CEO
• Stephen Reitknecht, CFO
• Company Representative

Analysts

• Frédérick Tremblay, Analyst at Desjardins Capital Markets
• Cheryl Zhang, Analyst at TD Cowen
• Razi Hasan, Analyst at Paradigm Capital
• Zachary Evershed, Analyst at National Bank of Canada Capital Markets
• Justin Keywood, Analyst at Stifel