Good day. My name is Mary, and I'll be your conference operator today. At this time, I would like to welcome everyone to Savaria Corporation's Q3 2022 Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star then the number one on your telephone keypad. If you would like to withdraw your question, please press the star then the number two. This call may contain forward-looking statements which are subject to the disclosure statement contained in Savaria's most recent press release issued on October 25th, 2022 with respect to its Q3 2022 results. Thank you. Mr. Bourassa, you may begin your conference. Thank you very much, Mary. My name is Marcel Bourassa. I am with Sébastien, Nicolas, and Stephen, our CFO. That's a pleasure to first of all speak to you about our Q3. I'm very proud of the number of Q3. Booking is strong. Don't forget we make our projection in February. If you take your life like 10 months or nine months back, it was a different world. Completely different world. The people don't like uncertainty. The people don't like that. We like stability. Then, after our projection, here comes the war, comes the inflation, comes the cost of container. Left and right, okay. Inflation was just terrible, okay. After that, the container that was not easy to come to the port in Toronto. We received okay to meet our EBITDA guidance, okay. Our EBITDA guidance, we were at the lower end of the range we proposed, okay, that would be near CAD 120 instead of the CAD 130. When you put that all together, okay, if I was in February, I will tell you, "Hey, we'll exceed our bracket," okay. The freight, everything is so expensive, okay. We have a very strong. My people work hard, okay. I think we have great numbers, okay. Thanks for the analysts who write to us, okay? I think you are very positive about Savaria. Thanks again. I am ready. My team is ready. First, we go to Steve, our CFO, that I think is making a tremendous job. Steve, can you take the floor please? Yep. Thank you, Marcel, and good morning, everyone. I will begin with some remarks regarding our Q3 2022 consolidated financial metrics. For the quarter, the corporation generated revenue of CAD 201.4 million, up CAD 20.6 million or 11.4% compared to Q3 2021. The increase was driven by strong organic growth of 15.7% and was somewhat offset by foreign exchange headwinds of 4.3% netting out to 11.4% growth overall. Gross profit and gross margin stood at CAD 64 million and 31.8% respectively, compared to CAD 58.6 million and 32.4% for Q3 2021. The increase in gross profit was mainly driven by higher sales volumes while the decrease in gross margin versus last year was mainly attributable to continued inflationary pressures on the supply chain, especially in the European region, causing material cost increases. These inflationary pressures were somewhat mitigated by initiatives taken to increase customer prices, reduce shipping costs, and also due to improved fixed cost absorption. Adjusted EBITDA and adjusted EBITDA margins stood at CAD 31 million and 15.4% respectively, compared to CAD 26.3 million and 14.6% in 2021. The increase in adjusted EBITDA dollars is primarily due to increased sales volumes, while the increase in adjusted EBITDA margin is mainly due to lower selling and admin costs as a percent of revenue, which offset the lower gross margin year over year. Now I'll move on to our segment results. Revenue from our Accessibility segment was CAD 145.4 million in Q3 2022, an increase of CAD 9.8 million or 7.2% compared to the same period in 2021. The increase in revenue was mainly attributable to organic growth of 13.3%, which was offset by a 6.1% revenue decline due to foreign currency impacts. The weakening of the euro and pound overshadowed the strength in the US dollar versus the Canadian dollar. Our revenue growth was fueled by both the residential and commercial sectors, as well as price and volume increases, and we continue to build our backlog. At September 30th, our Accessibility backlog was approximately 3% higher than Q2, which was already a record quarter for us. Adjusted EBITDA and adjusted EBITDA margin, both before head office costs, stood at CAD 26.1 million and 18% respectively, compared to CAD 24.7 million and 18.2% for the same period in 2021. The increase in adjusted EBITDA was mainly driven by higher sales volumes, while the slight decrease in adjusted EBITDA margin was mainly due to continued inflationary pressures on the supply chain, especially in the European region, causing material cost increases, which again was partially offset by better fixed cost absorption from the increased revenues. Revenue from our Patient Care segment was CAD 42.8 million for the quarter, an increase of CAD 8 million or 23% when compared to Q3 2021. Revenue growth included organic growth of 21.2%, which was driven in large part by pent-up demand from the last two years of the pandemic, new contracts won, and also price increases. Adjusted EBITDA and adjusted EBITDA margin, both before head office costs, stood at CAD 5.9 million and 13.8% respectively, compared to CAD 3.1 million and 8.8% for Q3 2021. The increase in both metrics was primarily due to the increase in revenues and improvements in gross margins, mainly explained by better cost absorption, price increases, and synergies with Handicare. Revenue generated from the Adapted Vehicles segment was CAD 13.2 million, an increase of CAD 2.9 million or 27.7% when compared to Q3 2021. Revenue growth for the Adapted Vehicles segment was driven by 28.8% organic growth and was partially offset by a negative foreign exchange impact of 1.1%. The strong organic growth was driven by increased police and ambulance vehicle adaptations despite continued vehicle supply chain disruptions. Adjusted EBITDA and adjusted EBITDA margin, both before head office costs, finished at CAD 0.8 million and 6% respectively, compared to CAD 0.6 million and 6.1% for Q3 2021. For the quarter, net finance costs amounted to CAD 2.5 million, essentially equivalent to the Q3 2021 amount. Finance costs in the quarter included CAD 4 million of interest on long-term debt, which was offset by a net foreign currency gain of CAD 2.2 million, most of which was unrealized in nature. Net earnings were CAD 10.6 million or CAD 0.16 per diluted share for the quarter, compared to CAD 4.8 million or CAD 0.07 per diluted share for Q3 2021. Adjusted net earnings, excluding amortization of intangible assets related to acquisitions, reached CAD 15.8 million or CAD 0.25 per diluted share, compared to CAD 10.5 million or CAD 0.16 per diluted share for Q3 2021. This reflects an increase of 49.4% or CAD 0.09 on a diluted share basis. Turning now to capital resources and liquidity. Savaria generated cash flows from operating activities of CAD 19.2 million for the quarter, compared to CAD 7.7 million in Q3 2021. This large increase was due to increased earnings and less of an investment in working capital than we saw last year as well as last quarter. We continued to make targeted increases in inventory while managing our receivables and payables. As at September 30th, 2022, Savaria had a net debt position of CAD 398.3 million and was in compliance with all of its covenants. On a trailing twelve-month adjusted EBITDA basis, Savaria's net debt to adjusted EBITDA ratio was 3.3 times. This represents a 0.4 decrease versus Q4 2021. Savaria has funds available of approximately CAD 102 million to support working capital, investments, and other growth opportunities. Looking forward, the current changing macro environment and movements in economic and political fields create uncertainties. However, considering our recent financial performance and our strategic integration plan with Handicare, for 2022, Savaria expects to generate revenue of approximately CAD 775 million with adjusted EBITDA in the low end of our previously stated range of CAD 120 million-CAD 130 million. With that, this completes my prepared remarks, and I'll turn the call back over to you, Marcel. Thank you very much, Steve. Okay. Good job. We can see that we have a fantastic quarter. I know that some of our people have some questions for us, so we're ready for the question. Mary? Ladies and gentlemen, if you do wish to ask a question at this time, please signal by pressing star one on your telephone keypad. Please ensure the mute function on your telephone is switched off to allow your signal to reach our equipment. Again, please press star one to ask a question. We'll take our first question now from Michael Glen of Scotiabank. Please go ahead. Hey, good morning, guys. Good morning. Michael. Good morning. Bonjour. A two-part question on Europe. I guess, you know, what's your confidence level here on sustaining strong profitability, you know, in the region? I ask, you know, in the near term, are you able to get more price to cover raw material and energy prices? In the medium term, you know, if demand weakens as the macro situation remains fluid, again, what's the confidence level there? We have for North America portion of Savaria. We have a new increase in January, roughly between 4% and 5%, depending on the products. In Europe, different country have the same thing. We will cover or exceed what will happen on this side of inflation. Sébastien or Stephen, you have something to add? Yeah, Marcel, I'll jump in here if I can. Thanks for the question, Michael. Just to touch on Europe, we are seeing very strong sales there. We saw double-digit sales growth in the quarter, that was negated significantly by foreign currency impacts. We're happy with the top line growth there. I mean, the inflationary pressures obviously we're continuing to work on and we're trying to mitigate where possible. But, you know, we're still confident in our performance there in the future. Bookings remain strong and revenue growth continues to be strong. Some challenges on the inflationary side, but those were somewhat expected. That's perfect. Okay. Thank you. And then maybe, you know, second question. Look, I think it's fair to assume that 2022 has been a tough year for effectively all manufacturers. You know, even if I assume the bottom end of the 2022 EBITDA guidance, Q4 EBITDA, you know, despite the favorable seasonality, should show some decent momentum from Q3, you know, presumably, I think, setting the tone for 2023. My question is on 2023 here. You know, obviously putting aside the macro discussion, you know, what do you think are some of the factors here that are in your control that give you the confidence that you can drive profits higher next year? Well, we're a beautiful industry, okay, Michael, okay. Just to know, okay, and it's for me, okay, plus because I turned 70, okay. People, okay, need our products around the globe, okay. It's, it is, okay. If it's not you need a product tomorrow, you will need one in six months, one year, two years, okay. This is why, okay, we have growth. We will continue to have growth. We are very confident, okay, of the growth because we are open a new factory in Mexico. Okay. That's important for us, okay, and to deliver quickly the products to our dealer. That's it. Okay. Thanks Sébastien to be there, okay, and to be able in 10 months, okay, to turn that we have a factory right now and we have some people already working, okay. We will see the impact on that, okay, in 2023. I am very optimistic about 2023. I'm very optimistic, okay, about our people. Our, I think, our marketing is great. We'll have order, okay, and we, I think, we will present, okay, better number for sure, okay, in 2023. Sébastien, you have something to add on that? I would just say, Michael, that no we always try to have action plan for all our divisions so that they can get better in terms of productivity, manufacturing, sourcing. I think we have a lot of project on the go for next year that should help us. Example, this year we have brought the manufacturing of the Freecurve into North America. We are just getting better in every day, so that should help us. Next year we have a second product of Handicare 4000, which also is going to be manufactured in Toronto, so that should help us a lot. Mexico, we talk a lot about it, but again, no expectation for this year. Next year, that should help us to achieve a growth for North America. That's some example of projects we have on the go with the different divisions, so. Thank you, Sébastien. Perfect. Thanks, guys. Okay. Thank you, Michael. We can now take our next question from Frédérick Tremblay of Desjardins. Please go ahead. Hello, Frédérick. Hello, Marcel. Good morning, everyone. Sébastien, you mentioned the Freecurve. I'm just questioning on that. Can you talk about the demand that you're seeing for that product from North American dealers? Has it been consistent with your initial expectations so far? What's sort of the outlook for that product specifically? Go ahead, Marcel. Just to say what is very important, that to sell a curved stairlift or a straight stairlift. Do you have the product? When can you install it? The delay of production and installation to the customer is very important. We will offer very soon, beginning of 2023, that we will have a lead time less than two weeks. That's something was missing because it was six weeks, eight weeks. Now we will be there with the Handicare supporting us, committed to Savaria to be quicker and quicker in the delivery. You will see a big increase of the number of sales because we are delivering, we will deliver faster. Sébastien, you have something to add? Yes. That was a good summary, Marcel. I think, Fred, you don't become an expert the next day, even though we have all the machinery. This year the team in Brampton went through a lot of training. I think our lead time is decreasing each month. Right now we are at 3.5 weeks, which is better. We target to be at two weeks at the end of the year as Marcel said. All the sales people have been cross-trained. Now they are doing some, you can sell elevator to stairlift in North America. All our dealers have been offered a curved stairlift for Handicare, the Freecurve. I think that's a good step, but we definitely should see some better growth in our curved stairlift in coming year with the manufacturing in Toronto. Great. That's helpful. Maybe Marcel, if you can speak on Q4 so far in terms of demand or, you know, shipments. Obviously, the bookings, as mentioned, were strong in Q3. How is that translating in Q4 so far? So far, so good. We have the bookings. I speak, like North America first, okay? We see the booking, okay? It's not like a service, okay, we install a couple of weeks after that, okay? Like on the residential elevator, the booking is there. Our highest booking ever, okay, on the residential elevator. That's very strong, okay? I see for sure, okay, that everything can change, okay, with some war or something, okay, that is just that we don't see, okay. Nobody know what would happen, okay, in the next until the end of the year, okay, or in 2023. I think what is important, okay, how Savaria is positioned, okay, to be able to deliver, okay, the product to our customer. That's a great industry. We have a nice competitor, okay, and I think they are very good, okay. But I think we're a little bit better, okay? I am more optimistic, okay, that we will meet, okay, what our latest guidance that we have, that and maybe exceed a little bit on sales. I wish that answers your question, Frédérick. Yep, that's perfect. Just maybe one last one quickly for Steve. On SG&A expenses, we've seen that come down both on a year-over-year and quarter-over-quarter basis. Anything in particular driving this trend? Have we sort of reached a normalized rate around CAD 45 million-CAD 46 million a quarter for SG&A, or is there more room for that to come down? It depends if you're looking with or without amortization or depreciation. We are seeing the intangible assets amortization related to acquisitions come down, and that will continue to come down as the Handicare acquisition assets amortize off the books. Generally speaking, Savaria has done a good job in most regions of keeping SG&A costs relatively flat and lower as a percent of sales. Keeping the cost base flat while we're growing the top line. It's normalized for the most part. The only piece that will continue to decrease is that amortization aspect. Fred. Great. Thank you. We can now take our next question from Derek Lessard of TD Securities. Please go ahead. Yeah, thanks. Good morning, everybody. Maybe this is one for Nick. Really strong results in Patient Care. Specifically interested, Nick, in you know, in the synergies that you're getting there from Handicare. What's left and sort of the sustainability of that? Yeah, no, I think it was a good quarter again in Q3, and thanks for the question. There's still quite a bit to go in terms of synergies. We're scratching the surface, especially as it relates to cross-selling. That's one where a big focus of ours has been over the past year. Again, it's a lot of training that's involved. It takes a while, you know, for some of the Span guys to learn how to sell, you know, a bath or vice versa. So kind of getting guys, you know, cross-training each other's products, and then organizing the sales territories. That's something that's kind of been ongoing. We have Pat and Phil been leading that initiative for us. That's one where we still think that there's a lot of upside with cross-selling. Otherwise, in terms of the end markets, you know, they've been good for us. I mean, you saw the 20% organic growth. You know, it's a continuation of a trend that we've seen over the past couple of quarters. There's good spending here in Canada, so good government spending in Canada. In the U.S., IDN spending, so that's hospital spending has been quite good for us. Those have been the two drivers of that business, of the growth of that business. Yeah. Thanks for that color. I'm just curious if there's in terms of the backlog. I know you gave it for the accessibility segment. Can you maybe comment on some of the backlog that you're seeing in your business? Well, the backlog here for Patient Care, it's more on the, I guess on the Handicare side of things, right? On the ceiling lift, the installation business that we have there is more project based. There is a bit more of a backlog associated with that than there is maybe on the legacy Span-America side. The backlog, it's still quite good. I think the order intake from the beginning of the year is what we're seeing here, some here in Q3. You know, some contracts that have been won and we're just delivering on those. There's been certain delays of some of these new builds that also is kind of pushing so some revenues out. That should hopefully, you know, impact us, you know, in a positive fashion, possibly, you know, whether it be in the back half of this year or last quarter of this year or going into next year, some stuff that's getting pushed out. otherwise- The backlog has been relatively strong there. The order intake possibly has come down a little bit here. I guess we can't expect 20% growth forever, but we do, you know, still anticipate some strong growth here in Q4 and going into next year things are quite, especially as you think about some of those cross-selling initiatives that I mentioned earlier, haven't quite taken hold yet and we're expecting that to kind of help boost growth going into 2023. Okay. Thanks. Thanks for that color, Nick. Maybe a broader one. Just curious if you've seen any improvements on the material cost side. I guess you pointed to Europe where you're seeing material increases, and I'm assuming that's from forex. Just wondering how much more room you guys might have to push on the pricing front there and what's your visibility look like? Sébastien? Yeah, maybe Marcel I'll take this one. You know, pricing is obviously something that we look at more from an isolated perspective. We look at our different markets and our different products. It's coming to the end of the year now. We've just announced some price increases for the North American market and obviously we're looking at our different markets. We have seen the inflationary pressures. We're looking at what we can source differently and how we can mitigate that. But obviously a big lever that we can pull on is price increases, and that's something that we are continually looking at. At this point I can't say what the increases are gonna be for the European region in particular, but that's something that obviously we're focused on and gonna be implementing for next year. Thanks, Steve. I wanna get everybody in. This is probably one for Sébastien. I'm just curious about where you are in terms of, I'd call it your onshoring strategy, in Mexico and Brampton. Just wondering if you're able to maybe give some indication of what you're expecting in terms of maybe some cost savings around the supply chain, where you are in lead times and when you expect Mexico to be fully ramped. Yes. Thanks for the question. Basically, as Marcel said in the press release, we signed our lease like seven months ago, and basically we move into a building in September, but we are starting operation since this week, November 1st, to do some sub-assembly and to do some finished products. In November, we are going to have some finished product going from Mexico to the U.S. I think there's no change for our guidance of this year. I think it has already a lot of have happened this year. Definitely next year, to build our growth for North America, we needed some additional capacity, so Mexico is going to serve well in terms of that aspect. I think lead time is key from a transit time from Mexico to North America. Definitely on the long term that should help us to maybe lower our inventory and hopefully to find some cost-saving initiative. First, okay, our mission was to rebalance a bit with Asia and North America. That was the main purpose of Mexico. Again, it's next year expectation. Thanks for that. That's it for me. Thank you. We can now take our next question from Zachary Evershed of National Bank Financial. Please go ahead. Good morning, Zachary. Good morning. It's actually Thomas calling in for Zach. Thanks for taking my question. I apologize. The line cracked early in the call. Would you mind repeating what the North American price increase will be in 2023, please? Okay. That's me. Okay. We put that, okay, for North America, okay. We increase, okay, from different products, okay, for an average maybe between 4% and 5%, okay, right at the start of the year. That would be not touching our backlog. That is quite high, okay. We can see in the future, okay, it's why we do that, okay, right at the beginning of the year, okay, for North America and our other friend, okay, in Canada, okay. They will do the same thing, okay, or they are doing the same thing. We are proactive, and we will continue to, I think, to deliver a great year, okay, in 2023. Just one little comment, Tom. You know what? We started this year when we announced the price increase because we have to be respectful with our dealer. We have a certain cycle, it takes up to certain time to flush the backlog. It's not because we have announced it that it is in effect in January, as a result with January first. I think we can expect more contribution of the price increase in North America to be more towards Q2 due to the high backlog. That's helpful. Thank you. Maybe one last one for me. Could you maybe talk about your next net exposure to interest rate fluctuations after swaps and what about your net effect exposure? How much hedging is in play? Thank you. Thank you. That's very interesting, but that's a very important question and we're a specialist, okay, on that, Steve. Thanks for the question, Thomas. On the interest rate side, we have a few cross-currency swaps in place that are favorably impacting our interest rates overall. We have US-based debt, and also we are benefiting from lower interest rates in Europe as well. Our net interest rate is lower than what you'd see published in the Canadian market. I think we're doing a decent job there. With regards to FX, I mean, if you're talking more on the top line or with regards to debt, but I mean, on the top line, we can see the FX impacts in the quarter, they are quite sizable for the euro and the pound. I mentioned earlier we saw double-digit growth in Europe, which we're quite happy about. That was negated by the decline in the euro and the pound versus the Canadian dollar. We are somewhat diversified there. We have the strength from the US dollar counteracting that, but the weakness in the pound and the euro was greater than the strength in the US dollar that we saw for the quarter. Thank you very much. We can now take our next question from Justin Keywood of Stifel. Please go ahead. Hi, good morning. Thanks for taking my call. Hey. I have two questions. One is, I'm curious how the curved stairlift is selling in North America, if it has been started because, you know, with Handicare, I know that was one of the key that could, you know, gain some traction here at home if you have any indication of how that's going so far. Sebastian? Thank you. Yes. Basically, Justin, I think we are happy with this year, okay. We have first website manufactured here in Toronto. We have trained all our sales people of Savaria to know about the Handicare product and to bring some Savaria dealer to buy the Handicare products. I think it's going in the right direction. We see a double-digit growth in our curved stairlift. I think as Marcel mentioned at the beginning of the call, as we get better with the lead time, that should help us to continue to have a accelerated growth in North America to the curved stairlift. I feel the beginning of integration onto the curved stairlift in North America. Great. Good to hear. Then my other question's a broader goal. I know late last year there was a new longer-term target, although it's becoming nearer term of Savaria expanding sales to CAD 1 billion by 2025, and if that goal is still on track. Oh, I will tell you, I will be disappointing a little bit if we're not better than 2025 at the end of the year. I think I'm very positive about that. Sébastien, our cross-selling that we do will help always about the internal growth. We are working that all our products meet the codes in Europe. I am very optimistic about that. We will by the end of 2025 exceed our objective. Our big objective to be at CAD 1 billion. We wish, you know, what is important to our EBITDA. That's a goal to reach 20%. We're there, and we push to our products. I am very happy that Sébastien finished the project to be in Mexico. We will develop at the same time this country and countries around there to sell direct. All this little things we add. I am very optimistic for our objective of 2025. That's good to hear. Just to clarify that the target would be 20% EBITDA margins at that scale level? Yeah. That's our objective. Okay? We know where we are right now, and we know exactly where we want to go. We have a target, okay, that's an aggressive target. You can imagine if we reach that, okay, the result, that would be the bottom line. Okay. I am positive. My people are positive. The people that will buy at the Handicare, okay, they are a great partner. For sure, okay, it's not easy, okay, right now in this environment that we are, okay, but we continue to work hard and we continue to deliver. Okay. What is important, okay, to continue to improve our products, okay, and just to sell, okay, the best product at the best price. Yes, I am very optimistic. Understood. That outlook is certainly compelling. Thank you very much for taking my questions. Oh, that's a pleasure. We can now take a follow-up question from Derek Lessard of TD Securities. Please go ahead. Yeah, thanks. Just a couple more for me. I was curious on if you could maybe talk about what you're seeing in terms of your innovation pipeline over the next maybe heading into next year, but as well as longer term. Are you something with it? Yeah, just say that we don't have a crystal ball, okay? The best crystal ball is the aging of the population around the globe, and it's there, okay, and I am more than optimistic, okay, about the sales, okay. For sure, okay, we have to deliver, okay, but I think we deliver, okay. Sébastien, you have something to add? I would just say that innovation is always very difficult to talk on the call because it's very, very confidential. What we have is we have 50 people on R&D working on improving existing product, developing new products, and this is all work that is done to support the growth. Right now, one thing we said on the previous call is that we want to bring some of the vertical product in Europe to make it CE compliant, to make sure we can have the one-stop shop in Europe. We'll say that's one of our key focus right now. No, that's helpful. I understand the competitive nature of it. Last one for me is how do you guys think about returning capital to shareholders, more specifically, buybacks versus dividend increases? That's a good question, okay? That's a question of policy, okay? We begin to deliver dividends, okay, many years ago, okay? More and more we have, with the increasing of the EBITDA, the portion of dividends is smaller than it was, and it will become a little bit smaller in the future too, and to offer always to our shareholder, okay, an increase, okay, every year. I think the potential of growth of our EBITDA will be higher than the percentage of increase of our dividends. That's our strategy. Sometimes it takes a little bit more time than I wish, but you know exactly my thinking on that. Thanks, guys. This is the Q&A session. I would now like to hand the call back to Mr. Marcel Bourassa for closing remarks. Thank you, Mary. Thank you for our analyst, okay? That's very important, okay? You do a great job about Savaria. I see all that you write yesterday night or. You are very positive, okay? Or at least more positive, okay, than we see, okay, in the stock exchange, okay? We have. You're right, okay? You know maybe Savaria more than other people, okay? That you say that our stock will be around CAD 20 bucks, okay? Or you suggest that that's the value can be around CAD 20 bucks, okay. It will be there. We have to continue to work. Our Patient Care and other company, okay, will continue to work hard too and to deliver the best products, okay, to the customer. Thanks to my employee, thanks to my analyst, okay. We'll see you at the beginning of next year. Thank you. Thank you, Mary. Thank you. This concludes today's call. Thank you all for your participation. You may now disconnect.