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 11, 2023 8:36am

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Post# 35442688

TD

Potential here for them to increase their current $20.00 target. GLTA

Savaria Corp.

(SIS-T) C$17.10

Q1/23 First Look: Cross-Selling Synergies Delivered Solid Beat Event

Savaria reported Q1/23 revenue/adj. EBITDA of $212mm/$31.2mm, an ~5% beat to consensus estimate of $202mm/$29.7mm. We were looking for $198mm/ $29.3mm.
Management reaffirmed its 2023 guidance of 8%-10% organic revenue growth and ~16% adj. EBITDA margin.

Impact: POSITIVE

We think that the shares should react positively to these strong results, albeit somewhat tempered by the fact that they are already up 22% YTD. Initial highlights include:

Accessibility: Reported 14.4% organic growth (vs. our 8.0% estimate), due to strong demand in both residential and commercial sectors and Handicare cross-selling synergies. Management noted that the backlog is still growing as demand continues to outpace production capacity. However, lingering material/labour cost inflation and the lag in pricing pass-through continued to pressure adjusted EBITDA margin (down ~20bps y/y), especially in Europe given a more competitive market and larger vendor cost increases. We were looking for 125bps improvement.
Patient Care: Reported 13.2% organic growth (vs. our 9.5% estimate) despite lapping a 22% comp LY, driven mostly by cross-selling synergies stemming from Handicare integration and to a lesser extent, modest (low-single-digit) price increases, and new healthcare facility contracts. Also, management still believes that it is gaining market share, we think on the back of more focused sales efforts and wider product offering. Handicare synergies, more favourable product mix, better cost absorption (due to strong sales growth), and pricing also drove EBITDA margin ahead of our expectations by a substantial ~580bps.
Solid progress in deleveraging: Leverage fell to 2.83x, down 0.24x vs. Q4/22 (in part supported by the Norwegian divestiture), and well on track to meet management's targeted 0.5x reduction by YE2023.

The conference call is at 8:30 a.m. today (855-513-1368 / 844-543-0451). We will look for more colour around the strong Patient Care EBITDA margin expansion (and its sustainability), as well as inflationary pressures in Europe and potential signs of easing. Overall, our view remains that ongoing demand momentum and cross-selling synergies should support healthy top line growth, while on-shoring efforts, cost control, pricing initiatives, and operating leverage should drive meaningful margin expansion in 2023.