Savaria Corp T.SIS

Alternate Symbol(s): SISXF

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Savaria Corporation is a Canada-based company engaged in the accessibility industry. The Company provides accessibility solutions for the physically challenged to increase their comfort, their mobility and their independence. Its segments include Accessibility and Patient Care. It 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. It operates a sales network of dealers worldwide and direct sales offices in North America, Europe (United Kingdom, The Netherlands, Switzerland, Italy, Germany, Poland and Czech Republic), Australia and China.

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Savaria Corp

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Post by retiredcfon May 12, 2022 12:58pm

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Post# 34678334

TD

Have a $22.00 target. GLTA

Savaria Corp.

(SIS-T) C$14.17

Q1/22 First Look: Impressive Org. Rev Growth Offset by Inflation Event

Savaria reported Q1/22 revenue/adjusted EBITDA of $184mm/$24.4mm vs. consensus of $183mm/$27.0mm. We were looking for revenue/EBITDA of $183mm/$27.3mm.
Major "on-shoring" initiative announced: Savaria said that it had signed a letter of intent to lease a building in Queretaro, Mexico. The facility is planning to provide sub-assembly for the accessibility products.
No change to 2022 sales and EBITDA guidance of $775 million and $120 million to $130 million, respectively.
The conference call is today at 8:30 am (888-254-3590).

Impact: MIXED

Savaria reported a similar global theme of strong demand-side trends, offset by supply-side challenges. Q1/22 highlights included:

Revenue (slight beat): In addition to a full-quarter contribution of Handicare, consolidated organic growth of 12% was the strongest it has been since Q1/19, with strength across all three segments. The company pointed to synergies, strong residential demand, easing of restrictions (and increased access to long-term care facilities), and pent-up demand (in Adapted Vehicles). Revenues would have been higher in the absence of the Omicron variant which management said resulted in the loss of roughly 7% of available production hours during the quarter. While January and February were the most impacted, management told us that production recovered quickly and March trends were significantly stronger.
Adjusted EBITDA (miss): The ~10% miss to consensus estimate was mainly attributable to inflationary supply chain pressures, including shipping costs and labour inefficiencies (due to absenteeism) which were not yet offset by price increases put through in Q1. Consequently, gross margin contracted by ~150bps y/y.
However, we would argue that the single most important highlight is around the planned initiative to "on-shore" sub-assembly for North America, beginning in September 2022. The project is expected to be capex-lite (i.e., no heavy equipment requirement) and deliver at least several benefits, including: 1) freight savings; 2) better inventory management (less working capital tied up on cargo ships for extended periods); 3) improved lead times (i.e., shipping from Mexico to North American facilities will take a week instead of months); and 4) production visibility. All of this should result in significantly more efficient operations longer term and limit future supply chain disruptions.