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 Nov 03, 2022 9:04am

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Post# 35069181

TD

Have a $20.00 target. GLTA

Savaria Corp.

(SIS-T) C$13.00

Q3/22 First Look: Impressive Organic Revenue Growth Event

Savaria reported Q3/22 revenue/adj. EBITDA of $201mm/$31.0mm, slightly above/below consensus estimate of $197mm/$32.2mm. We were looking for $198mm/$32.0mm.
Management maintained its 2022 sales and EBITDA guidance of $775 million and $120 million-$130 million, respectively. However, they are now guiding to the lower end of the EBITDA range, which is right in line with consensus of $121mm.
The conference call is today at 8:30 am (647-484-0258).

Impact: SLIGHTLY POSITIVE

Savaria's share price is down 7% in the last week, which we think was tied to downward analyst EBITDA revisions over the same period. However, there were no meaningful changes to revenue expectations, where Savaria outperformed despite FX headwinds. Consequently, we expect a positive share price reaction. While the MD&A is light on some details, the important highlights were:

Revenue (modest consensus beat): FX headwinds (mostly from the weakening GBP and EUR particularly in the Accessibility) impacted revenue by ~$7mm in Q3. However, given record organic revenue growth of ~16% (highlighted with double-digit growth in all three segments), Savaria was able to squeeze out a modest 2% beat on consolidated revenues. Management pointed to ongoing pent- up demand, price increases, and new contract wins in the Patient Care segment.
Adjusted EBITDA (modest consensus miss): Excluding a $1mm impact stemming from unfavourable FX movements, EBITDA would have been right in line with expectations, albeit previously lowered. Pressures on the supply chain in Europe pushed up input costs faster than price increases could cover, leading to a small EBITDA miss in the Accessibility segment. However, we would argue that there were more positives than negatives, including solid operating leverage, lower y/y freight costs, and while not quantified, synergies with Handicare (largely through the rationalization of product overlap) appears driving meaningful margin improvement particularly in the Patient Care segment (+500bps y/y).

Savaria shares are trading at ~9.0x forward consensus EBITDA, well below its 2-year average of 12.1x. We believe the shares are undervalued for a company executing this well, is generating double digit organic revenue growth, is deleveraging, and is expected to generate an almost 20% CAGR in EBITDA over the next three years.