Savaria Corp T.SIS

Alternate Symbol(s): SISXF

Industrials

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 Mar 16, 2023 8:11am

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Post# 35341908

TD

Currently have a $20.00 target and maintaining a cautious approach. GLTA

Savaria Corp.

(SIS-T) C$16.11

Q4/22 First Look: Solid Execution, Strong Organic Revenue Growth

Event

Savaria reported its full Q4/22 results last night. Recall that the company already pre-released consolidated revenue/adjusted EBITDA ($212mm/$33.3mm) on February 13.

Impact: NEUTRAL

Savaria's share are up 6% (even after yesterday's 3.7% drop on general market weakness) since the company released its preliminary Q4/22 results on February 13, which we would attribute to the solid revenue beat and 2023 revenue guidance being almost 4% higher than consensus estimates. Consequently, we are not expecting any material movement in the share price today, based on these results. Key highlights from the full Q4/22 results include:

Accessibility: Reported 8.7% organic growth (vs. our 10% estimate), driven by strong demand in both residential and commercial sectors, price increases, and Handicare cross-selling synergies. However, lingering supply- chain inflationary pressure (especially in Europe) did push adjusted EBITDA margin down ~100bps y/y. We were looking for a modest 40bps improvement.
Patient Care: Reported 8.7% organic growth (vs. our 20% estimate) stemming from new contracts and price increases. This is still a strong result, highlighted by two-year stacked growth of 26%, albeit down from the >20% y/y growth over the past several quarters as the segment laps the post-pandemic pent-up demand. Handicare synergies, better cost absorption (due to strong sales growth), and pricing drove better-than-expected EBITDA margin expansion.
Adapted Vehicles: Organic revenue increased by 62.1% (excluding -9.1% FX impact), while margin was materially higher y/y, driven by an increase in the higher-margin police/ambulance vehicles adaptations in Norway tied to contract timing. However, on March 1, Savaria announced an agreement to sell this Norwegian vehicle adaptation business to Cognia AS, which is expected to close later this month or in early April.
Better-than-expected deleveraging progress: Pro forma leverage fell to 3.1x, down 0.6x from 3.7x LY, and ahead of management's targeted 0.5x reduction.

The conference call is at 8:30 a.m. today (647-484-0477). We believe that the main focus will be on visibility around supply-chain pressure and any positive signs of easing. That said, our view remains that despite the pressure, efforts around on-shoring, cost control, and further pricing initiatives, combined with operating leverage, should drive margin expansion in 2023.