Savaria Corporation
TSX : SIS

Savaria Corporation

August 06, 2009 14:24 ET

Savaria Announces its Results for the Second Quarter of 2009

LAVAL, QUEBEC--(Marketwire - Aug. 6, 2009) - Savaria Corporation (TSX:SIS), the second largest company in the accessibility industry in North America, today discloses its financial results for the second quarter ended June 30, 2009.

Second-Quarter Highlights

- Sales grew by 34% to total $14.8 million compared to $11 million in the previous quarter and by 6.8% compared to $13.9 million in the corresponding quarter of 2008;

- Best operating profit since the beginning of operations, in the amount of $1.14 million, compared with operating earnings of $81,000 for the corresponding period of 2008 (excluding the gain on the sale of the Laval building in the second quarter of 2008), representing an increase of $1.06 million;

- Substantial improvement in gross margin, which rose from 21.2% in the second quarter of 2008 to 28.1% in the same quarter this year;

- Cash flows from operations of $1.3 million or $0.05 per share outstanding, compared with $0.01 per share in the corresponding quarter of 2008.

Results Stemming from Rigorous Management

"We recognize that our second quarter 2009 performance reflects the efforts of our managers who, within the last year, have successfully increased our productivity, effectively controlled our cost management, and developed synergies between our divisions, among others by increasing purchases from our plant in China. That has led to a significant improvement in our gross margin within the past four quarters. Furthermore, the great diversity of our product line, namely elevators, accessibility products and adapted vehicles, will allow us to penetrate new markets," explained Marcel Bourassa, Chairman of the Board, President and Chief Executive Officer.

Operating results

Sales

The Corporation recorded sales of $14.813 million in the second quarter of 2009, up 34.2% over $11.041 million in the first quarter of 2009, representing an increase of 6.8% over the second quarter of fiscal 2008. The Adapted Transportation segment posted its best quarter ever, with revenues of $3.1 million, up by $823,000 or 37% over the second quarter of 2008. Conversely, the number of units sold in the Accessibility segment was down from the same quarter of last year. This decrease is due to the current housing market situation in the United States, which had an adverse impact on the Corporation's sales.

Second-quarter sales in Canada, the United States and outside North America amounted to $7 million, $6.8 million and $1 million respectively. U.S. sales, which decreased as a percentage of total sales from 53.5% in 2008 to 46% in 2009, were recognized at an average translation rate of 1.0638, whereas this rate was 1.01 in the second quarter of 2008.
For the first six months, sales were similar to the same period of last year, at $25.854 million in 2009 versus $25.876 million in 2008. During this period, the number of units sold in the Accessibility segment declined, whereas sales in the Adapted Transportation segment increased by 29.4%.

Gross Profit

Gross profit improved to $4.165 million or 28.1% of sales in the second quarter of 2009, up from $2.933 million or 21.2% of sales a year earlier, which works out to a 6.9% increase in the gross margin. For the six-month period, gross profit rose from $5.223 million or 20.2% of sales in 2008 to $6.942 million or 26.8% of sales in 2009. This growth is due to greater cost control and the improvement in productivity. The increase in purchases from the subsidiary Savaria Huizhou, located in China, also contributed to improve the gross margin.

Operating Earnings

Operating earnings for the second quarter of 2009 reached $1.14 million, representing the best operating profit ever achieved by the Corporation, if the sale of the Laval building in the second quarter of 2008 is excluded. Excluding the $2,032 million gain realized on this sale, the 2009 figure compares with operating earnings of $81,000 for the corresponding period of 2008, representing an increase of $1.059 million. For the first half of 2009, operating earnings totalled $1 million, compared with an operating loss of $631,000 for the first six months of 2008, again excluding the $2,032 million gain realized on the sale of the Laval building.

Net Earnings

The Corporation posted second-quarter net earnings of $663,000 or 2.5 cents per share, compared with $1.653 million or 6.1 cents per share in the same period of 2008. For the first six months, net earnings totalled $1.217 million or 4.5 cents per share, up from $1.064 million or 3.9 cents per share in 2008. An after-tax gain of $616,000 related to a put option had a positive impact on first-half net earnings, whereas an after-tax gain of $1.7 million realized on the sale of the Laval building had a favourable effect on net earnings for the first half of 2008.

Capital Stock

Due to the repurchase of shares for cancellation pursuant to the normal course issuer bid, the average number of diluted common shares outstanding totalled 26,887,764 in the second quarter of 2009, compared with 27,296,697 shares in the same quarter of 2008.

Forward-Looking Statements

Certain statements in this press release may be forward-looking. Forward-looking statements involve known and unknown risks, uncertainties or other factors that may cause the Corporation's actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The reader is warned against the risk of giving excessive credibility to these forward-looking statements.

Compliance with Canadian Generally Accepted Accounting Principles

The information appearing in this press release has been prepared in accordance with Canadian generally accepted accounting principles ("GAAP"). However, the Corporation uses earnings before interest, income taxes and amortization ("EBITDA") for analysis purposes to measure its financial performance. This measure has no standardized definition in accordance with GAAP and is therefore regarded as a non-GAAP measure. This measure may therefore not be comparable to similar measures reported by other companies. A reconciliation between net earnings and EBITDA is provided in the Financial Highlights section below.

Savaria Corporation (www.savariaconcord.com) is Canada's leader and the second largest accessibility company in North America responding to the needs of people with mobility challenges. The Corporation designs, manufactures and distributes primarily elevators for residential and commercial use, as well as stairlifts and vertical and inclined platform lifts. Through its subsidiary Van-Action, Savaria converts and adapts automotive vehicles for the disabled and offers scooters and motorised wheelchairs as well. Its line of products, one of the world's most comprehensive, enables Savaria to stand out by proposing an integrated and customized solution for its disabled and elderly customers' mobility needs. Savaria records approximately 60% of its sales outside Canada, primarily in the United States, and is currently penetrating the Chinese market. The Corporation has a network of some 600 retailers in North America and employs more than 370 people at its plants in Ville St-Laurent (Quebec), Brampton (Ontario) and Huizhou (China).

Complete financial statements and the management's report for the quarter ended June 30, 2009 will shortly be available on Savaria's website and on SEDAR (www.sedar.com).



Financial Highlights

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(in thousands, except
per-share amounts,
percentages and exchange Quarters Ended Six-Month Periods Ended
rates - unaudited) June 30, June 30,
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2009 2008 Change 2009 2008 Change
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Average effective
exchange rate (1) 1.0638 1.0100 0.0538 1.0654 1.0081 0.0573
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Sales $14,813 $13,866 6.8% $25,854 $25,876 (0.1)%
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Gross profit as
a % of sales 28.1% 21.2% n/a 26.8% 20.2% n/a
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Selling and
administrative
expenses $2,824 $2,651 6.5% $5,538 $5,435 1.9%
Selling and
administrative
expenses as
a % of sales 19.1% 19.1% n/a 21.4% 21% n/a
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Operating earnings
(loss) $1,140 $2,113 (46)% $1,003 $1,401 (28.4)%
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Operating
earnings (loss)
as a % of sales 7.7% 15.2% n/a 3.9% 5.4% n/a
EBITDA (2) $1,309 $2,263 (42.2)% $2,406 $1,875 28.3%
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EBITDA per share $0.049 $0.083 (41)% $0.089 $0.069 29%
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Exchange gain
(loss) $89 $(66) 235% $155 $211 (26.5)%
Net earnings $663 1,653 (59.9)% $1,217 $1,064 14.4%
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Net earnings per
share -
basic and diluted $0.025 $0.061 (59)% $0.045 $0.039 15.4%
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Dividends declared
per share - $0.063 n/a $0.03 $0.063 n/a
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Weighted average
number of common
shares outstanding
- diluted 26,888 27,297 (1.5)% 27,061 27,382 (1.2)%
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As at June 30, 2009 As at Dec. 31, 2008
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Total assets $40,899 $40,683
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Total liabilities $20,139 $22,844
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Shareholders' equity $20,760 $17,839
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(1) Calculated considering hedge accounting applied to foreign exchange
contracts that matured during the period.
(2) Reconciliation of EBITDA with net earnings provided in the following
table


Although EBITDA is not recognized according to GAAP, it is used by management, investors and analysts to assess the Corporation's financial and operating performance.

Reconciliation of Earnings before Interest, Income Taxes and Amortization ("EBITDA") with Net Earnings



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(in thousands of Quarters Ended Six-Month Periods Ended
dollars - unaudited) June 30, June 30,
2009 2008 2009 2008
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Net earnings $663 $1,652 $1,218 $1,064
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Plus:
Interest on long-term
debt $75 $31 $152 $66
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Interest expense and
banking fees $39 $33 $69 $126
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Income taxes $331 $361 $596 $247
Amortization of fixed
assets $90 $93 $182 $203
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Amortization of deferred
development costs $77 $70 $150 $141
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Amortization of
intangible assets $34 $38 $68 $76
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Less:
Interest income and
dividends - $15 $29 $48
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Earnings before interest,
income taxes and
amortization
("EBITDA") $1,309 $2,263 $2,406 $1,875
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Contact Information

  • Savaria Corporation
    Marcel Bourassa
    Chairman of the Board, President and Chief Executive Officer
    1-800-931-5655
    or
    Savaria Corporation
    Helene Bernier, CA
    Vice-President, Finance
    1-800-931-5655
    www.savariaconcord.com