Savaria Corporation
TSX : SIS

Savaria Corporation

May 11, 2006 15:28 ET

Savaria Increases Sales by 137% in the First Quarter of 2006

LAVAL, QUEBEC--(CCNMatthews - May 11, 2006) - Savaria Corporation (TSX:SIS), the second largest company in the accessibility equipment industry in North America, achieved a 137.3% increase in sales during the first quarter of fiscal 2006 compared to the first quarter of 2005. This strong growth is mainly due to the acquisitions made in 2005.

Savaria's revenues totalled $15.2 million in the first quarter of 2006, up from $6.4 million in the first quarter a year earlier. This strong improvement is due to the contribution of Van-Action's and Concord's operations which generated combined revenues of $8.5 million during the first quarter of the current fiscal year, combined with internal growth of $357,630. The proportion of revenues from outside Canada nevertheless fluctuated very little, standing at 61.1% of total revenues, compared with 60.3% in the first quarter the previous year.

Gross profit amounted to $4.0 million for the first quarter of 2006, up from $2.3 million during the first quarter a year earlier. The gross profit margin thus stood at 26.1%, versus 36.1% the previous year. This decline is due to the lower gross profitability of the operations acquired in 2005, combined with the appreciation in the Canadian dollar in relation to the U.S. dollar.

Selling and administrative expenses increased by 108.8% to $3.0 million in the first quarter of the current fiscal year, up from $1.4 million in the first quarter of 2005. Such expenses as a percentage of sales totalled just 19.4% in the first quarter of 2006 versus 22.0% during the first quarter a year ago.

Savaria recorded operating earnings of $752,658 in the first quarter of 2006, compared with $773,051 during the first quarter the previous year. The operating margin fell to 4.9% from 12.0% during the first quarter of 2005.

Other revenues and expenses fell to $43,172 for the first quarter of 2006, from $267,152 during the first quarter of 2005. Consisting primarily of interest and exchange gains, this item declined significantly as a result of the complete elimination of forward foreign exchange contracts, which had yielded a $253,078 gain during the first quarter of 2005.

All in all, net earnings attributable to common shareholders totalled $543,591 or $0.02 per share during the first quarter of 2006, compared with $664,288 or $0.04 per share in the first quarter of fiscal 2005. Consequently, the net profit margin fell to 3.6%, from 10.3% in the first quarter last year.

Operating cash flows, corresponding to net earnings to which non-cash items were added, amounted to $900,201 or $0.03 per share on a diluted basis in the first quarter of 2006, versus $823,353 or $0.04 per share on a diluted basis during the first quarter the previous year. The legal structure allowing the Corporation to fully benefit from Concord's loss carry-forwards of $18 million will be put into place in the second quarter of 2006, thereby leading to a sharp increase in cash flows in the coming fiscal years.

The weighted number of issued and outstanding common shares totalled 29,739,001 for the first quarter of 2006, up from 15,715,879 for the corresponding quarter of fiscal 2005. This 89.2% growth can primarily be explained by the conversion of 7 million preferred shares into common shares on June 1, 2005, the issue of 4,249,984 shares in connection with the acquisition of Concord on September 14, 2005, and the issue of 2,786,000 shares pursuant to private placements in November and December 2005.

Annual General and Special Meeting of Shareholders

You are cordially invited to attend the Corporation's Annual General and Special Meeting of Shareholders which will be held at 11:00 a.m. on Tuesday, May 16, 2006, at the Marriott Chateau Champlain Hotel, Viger A Room, 1 Place du Canada, Montreal, Quebec.

Outlook

The acquisition of Concord definitely reinforces Savaria's industry positioning. Benefiting from enhanced manufacturing capabilities, an expanded product selection and a strengthened sales force, the Corporation is thus better equipped to deal with the rising value of the Canadian dollar.

"We are striving intensely to optimize the use of our manufacturing capabilities, to drive cross-selling and to build upon Savaria's and Concord's respective strengths. With the mobilization and expertise of the Corporation's 400 employees, we are confident we will achieve the objectives set for this year, which are to record sales of approximately $65 million and to improve our gross profit margin in the upcoming quarters as further operation efficiencies will be derived from the acquired businesses," says Marcel Bourassa Savaria's Chairman of the Board, President and Chief Executive Officer.

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.

Savaria Corporation (www.savaria.com) is Canada's leader and the second largest accessibility company in North America. The Corporation designs, manufactures and distributes products, meeting the needs of people with mobility challenges, mainly stairlifts, vertical and inclined platform lifts, as well as elevators for residential and commercial use. Savaria annualized sales of close to $65 million rely on a network of some 600 retailers in North America. The Corporation records over 60% of its sales outside Canada and employs close to 400 people.

Complete financial statements and the management's report for the quarter ended March 31, 2006, will soon be available on Savaria's website and filed on SEDAR (www.sedar.com).



Financial Highlights

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Quarters ended March 31,
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2006 2005 Change
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Sales (000s) $15,249 $6,427 137.3%
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Gross margin 26.1% 36.1% n/a
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Selling and administrative
expenses (000s) $2,951 $1,413 108.8%
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Selling and administrative
expenses/ sales ratio 19.4% 22.0% n/a
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Operating income (000s) $753 $773 -2.6%
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Operating margin 4.9% 12.0% n/a
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Exchange gain (000s) $31 $253 -87.8%
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Net earnings applicable
to common shares (000s) $544 $664 -18.2%
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Net earnings per common
share - basic $0.018 $0.042 -57.1%
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Net earnings per common
share - diluted $0.018 $0.029 -37.9%
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Cash flows (000) $900 $823 9.3%
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Cash flows per share
(diluted) $0.030 $0.036 -16.4%
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Average number of
common shares
outstanding - basic 29,739,001 15,715,879 89.2%
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Average number of
common shares
outstanding - diluted 29,961,710 22,901,129 30.8%
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Contact Information

  • Savaria Corporation
    Mr. Marcel Bourassa
    Chairman, President and Chief Executive Officer
    1 (800) 931-5655
    www.savaria.com