Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Savaria Corp (SISXF, Financial) achieved a record EBITDA margin of 19.5% in Q3 2024, showing continued improvement and stability in their transformation efforts.
- North American operations saw an 8% revenue growth in Q3, with a year-to-date growth of 11.3%, driven by strong demand in the residential sector.
- The company successfully reduced its net debt-to-EBITDA ratio to 1.69, down from 2.07 at the end of the previous year, indicating improved financial health.
- Savaria Corp (SISXF) has a strong innovation pipeline, including new product launches like the M-Series clinical ceiling lift, which is expected to drive future growth.
- The company has increased its available funds to $247 million, positioning it well for potential strategic acquisitions to further enhance growth.
Negative Points
- European operations experienced a 6.6% revenue decline in Q3, highlighting challenges in that market despite improvements in EBITDA margins.
- The patient care segment showed flat revenue growth, with delays in project execution impacting performance, although a stronger Q4 is anticipated.
- Savaria Corp (SISXF) faced a decrease in overall revenue growth, with only a 1.7% increase compared to the previous year, partly due to divestitures.
- The company incurred $5.4 million in strategic initiative expenses in Q3, which, while expected, impacted net earnings.
- Savaria Corp (SISXF) is not providing specific guidance for fiscal 2024, creating uncertainty about short-term financial performance.
Q & A Highlights
Q: Can you discuss the incremental margin contribution from new product introductions and whether it might exceed your 20% target?
A: Sebastien Bourassa, President and CEO, explained that R&D efforts focus on improving current products and launching new ones at the right margins. While the 20% EBITDA target is achievable, future guidance will determine if they can exceed this target. R&D is crucial for margin improvement and growth.
Q: What criteria are you considering for M&A opportunities?
A: Sebastien Bourassa noted that they are looking for opportunities with dealers who want to retire, strategic acquisitions that complement their product mix, and small to midsize acquisitions that can enhance their one-stop-shop offering in Europe and North America.
Q: Can you frame the opportunity for the stairlift business in North America now that you have the desired product line?
A: Sebastien Bourassa highlighted that manufacturing in North America has improved lead times for curved stairlifts, providing a competitive advantage. While specific growth figures aren't disclosed, the stairlift business is a key area for improvement, with North America showing 11% growth this year.
Q: Have you reached the maximum effect from pricing discipline in Europe, and what other drivers could lead to higher margins?
A: Jean-Philippe De Montigny, Chief Transformation Officer, stated that there is still room for margin growth in Europe. Improvements in cost of goods sold and operational efficiency have been made, and incremental sales with the new cost structure will be very profitable. They are also working on certifying North American products for the European market.
Q: What factors are leading to confidence in Q4 growth for the patient care segment?
A: Stephen Reitknecht, CFO, mentioned that Q4 is typically the strongest quarter, and they expect it to be stronger this year due to a backlog built over previous quarters. The timing of projects and pipeline developments are contributing to this optimism.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
