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 Nov 15, 2021 8:15am

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Post# 34126256

TD

Savaria Corp.

(SIS-T) C$20.63

Making a Strong Case for Continued Growth Event

Following Q3/21 conference call, we fine-tuned our model with only small changes to estimates. Our BUYrecommendationand $26.00 target price are unchanged.

Impact: POSITIVE

Highlights from Q3/21 results include: Accessibility: 1) significant Handicare contribution; 2) 3% organic revenue growth driven by strength in residential segment; and 3) strong cost-containment efforts partially offset by reduced benefits from CEWS. Patient Handling: 1) significant Handicare contribution and 2) strongest organic growth (+11%) since Q1/19, driven by the economic recovery from the pandemic. Management reaffirmed guidance of +$100mm in EBITDA in 2021, driven by benefits from Handicare integration, a decrease in freight costs, price increases, and ongoing strength in bookings and its current backlog.

Strong organic revenue growth is still expected, driven by solid residential bookings. We expect the gradual easing of restrictions to benefit organic commercial sales, although the segment remains challenged for now. Longer term, cross-selling opportunities from the Handicare acquisition are starting to come into focus (i.e., North American curved stairlift sales). Additionally, price increases put into effect across all segments (and another round expected in Q1/22) should help offset margin pressure and supports management's +$100mm 2021 EBITDA guidance.

Management reiterated that it expected $1bln in sales by 2025 (almost entirely organically. Based on the early successes, we believe this is achievable, implying a ~10% CAGR over that period. We are assuming an ~11% CAGR through 2023.
Estimated run-rate synergies of $12mm (i.e., ~30% of HANDI’s LTM EBITDA) within two years of the transaction close is unchanged. This compares with the ~50% run-rate synergies SIS achieved with the Garaventa Lift acquisition.

TD Investment Conclusion

Overall, we believe that share price is still not fully reflecting a business that should now, after the HANDI acquisition, generate double the revenue and eventually double the profits. Integration will likely be the focus going forward, and we expect the shares to react favourably to signs of increased synergy capture, further deleveraging, and a strong recovery in organic revenue growth