Savaria Corporation
TSX : SIS

Savaria Corporation

November 13, 2008 15:45 ET

Savaria Announces Q3 2008 Financial Results

LAVAL, QUEBEC--(Marketwire - Nov. 13, 2008) - Savaria Corporation (TSX:SIS), the second largest company in the accessibility industry in North America, announces its financial results for the quarter ended September 30, 2008.

Third-Quarter Highlights

- Sales of $14.7 million, up 6% over the second quarter of 2008 and up 1% over the third quarter of 2007;

- Operating earnings of $796,000, up 41% over the third quarter of 2007;

- Net earnings of $631,000 or 2.3 cents per share;

- EBITDA of $1.4 million or 5 cents per share; and

- New stairlift called the "Step Saver Plus" ready for launch.

A Word from the President

"Our third-quarter results reflect significant improvements in operating earnings. This performance was achieved despite the unfavourable impact we sustained due to the devaluation of the U.S. dollar in relation to the Canadian dollar. Furthermore, in order to be better able to measure our operating earnings at this time of great Canadian and U.S. dollar volatility, the Corporation entered into foreign exchange contracts of $27 million at an average rate of 1.0515 for the period from November 2008 to December 2009 and of $18 million at an average rate of 1.0821 for the period from January 2010 to September 2010," indicated Marcel Bourassa, Chairman of the Board, President and Chief Executive Officer.

"I am also very pleased with our distributors' reaction to the October 28th launch of our new "Step Saver Plus" stairlift at the Medtrade show in Atlanta. The distribution of this new product will begin in January 2009.

In addition, on October 23rd, to carry on our expansion, our financial institution granted us a financing arrangement in the amount of $6 million for a five-and-a-half-year term.

I remain highly confident that the demand for accessibility products will continue growing given the aging population. However, in the short-term, I foresee a decrease in sales of residential and commercial Elevators due to the slowdown in the American real-estate market.

Nevertheless, I am confident that our Corporation will continue to perform well during this period of economic uncertainty" concluded Mr. Bourassa.

Operating Results

Sales

Sales rose to $14.7 million in the third quarter of 2008, up 1.1% over $14.5 million in the equivalent quarter of 2007. Sales in Canada, the United States and outside North America amounted to $6.2 million, $7.7 million and $0.8 million respectively. Sales in U.S. dollars were recognized at an average translation rate of 1.0289, whereas this rate was 1.0711 in the third quarter of the previous year. If sales in U.S. dollars had been translated into Canadian dollars using the same exchange rates as in 2007, sales for the third quarter of 2008 would have been $347,000 higher; excluding the impact of exchange rates, sales were therefore up 3.4% over the same period of 2007.

For the nine-month period, sales totalled $40.6 million, compared with $43.5 million for the same period of fiscal 2007. This 6.8% decrease is attributable to the increase in the value of the Canadian dollar and a reduction in the sales volume during the first quarter of 2008. Sales in U.S. dollars were recognized at an average translation rate of 1.0151, whereas this rate was 1.1190 in the first nine months of the previous year.

Operating Earnings

Operating earnings amounted to $796,000 or 5.4% of sales in the third quarter of 2008, compared with $565,000 or 3.9% of sales in the corresponding quarter of 2007. Excluding the negative impact of the exchange rates used in the third quarter of 2008 compared with those used in the same period of 2007, operating earnings would have been $338,000 higher and would hence stand at $1.1 million.

For the nine-month period, operating earnings totalled $165,000, down from $2 million for the first nine months of 2007. This change is due largely to the unfavourable impact of the exchange rate ($1.9 million) and the reduction in the sales volume during the first quarter of 2008.

Net Earnings

The Corporation posted net earnings of $631,000 ($0.023 per share) for the third quarter, compared with $14,000 ($0 per share) for the same period of the previous year.

For the first nine months, net earnings amounted to $1.7 million ($0.062 per share), up from $563,000 ($0.020 per share) for the corresponding period of 2007. This change is due mostly to the $1.7 million gain realized on the disposal of the Laval property in the second quarter of 2008. However, this favourable impact was reduced by the additional writedown of $149,000 after taxes recorded in the first quarter of 2008 on asset-backed commercial paper and the unfavourable impact of $129,000 after taxes stemming from the increase in the value of the Canadian dollar for the nine-month period.

Capital Stock

Due to the share repurchase and cancellation program which ended on May 31, 2008, the average number of common shares outstanding (diluted) totalled 27,297,878 in the third quarter of 2008, compared with 28,437,714 shares in the same quarter of the previous year.

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.

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.

Savaria Corporation (www.savariaconcord.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, primarily stairlifts, vertical and inclined platform lifts, as well as elevators for residential and commercial use. Through its subsidiary Van-Action (2005) Inc., Savaria also converts and adapts automotive vehicles for the disabled. Its sales rely on a network of some 600 retailers in North America. Savaria records approximately 60% of its sales outside Canada and employs some 400 people.

Complete financial statements and the management's report for the quarter ended September 30, 2008 will shortly be available on the Corporation's website and on SEDAR (www.sedar.com).



Financial Highlights

------------------------------------------------------------------------
(in thousands, except
per-share amounts, Nine-Month
percentages and Quarters Ended Periods Ended
exchange rate) September 30, September 30,
------------------------------------------------------------------------
2008 2007 Change 2008 2007 Change
------------------------------------------------------------------------
Average effective
exchange rate(1) 1.0289 1.0711 -3.9% 1.0151 1.1190 -9.3%
------------------------------------------------------------------------
Sales $14,681 $14,527 1.1% $40,557 $43,514 -6.8%
------------------------------------------------------------------------
Gross profit as a %
of sales 24.6% 24.9% n/a 21.7% 24.5% n/a
------------------------------------------------------------------------
Selling and
administrative
expenses $2,630 $2,775 -5.2% $8,018 $7,915 1.3%
------------------------------------------------------------------------
Selling and
administrative
expenses as
a % of sales 17.9% 19.1% n/a 19.8% 18.2% n/a
------------------------------------------------------------------------
Operating earnings $796 $565 40.9% $165 $1,977 -91.7%

Operating earnings
as a % of sales 5.4% 3.9% n/a 0.4% 4.5% n/a
------------------------------------------------------------------------
Earnings before
interest, income
taxes and
amortization
(EBITDA)(2) $1,357 $452 200.2% $3,232 $1,668 93.8%
------------------------------------------------------------------------
EBITDA per share -
diluted $0.050 $0.016 212.5% $0.118 $0.059 100%
------------------------------------------------------------------------
Exchange gain (loss) $400 $(387) 203.4% $611 $(1,096) 155.7%
------------------------------------------------------------------------
Net earnings $631 $14 4,407% $1,696 $563 201.2%
------------------------------------------------------------------------
Net earnings per
share - diluted $0.023 $0.0 2,296% $0.062 $0.020 210%
------------------------------------------------------------------------
Dividends declared
per share - - n/a $0.063 $0.082 -23.2%
------------------------------------------------------------------------
Weighted average
number of common
shares outstanding
- diluted 27,298 28,438 -4.0% 27,414 28,629 -4.2%
------------------------------------------------------------------------
As at Sept. As at Dec.
30, 2008 31, 2007
----------------------------------------------
Total assets $33,539 $38,705
----------------------------------------------
Total liabilities $11,679 $16,082
----------------------------------------------
Shareholders'
equity $21,860 $22,623
----------------------------------------------
----------------------------------------------

(1) Calculated considering foreign exchange contracts used 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 EBITDA with Net Earnings

------------------------------------------------------------------------
Quarters Ended Nine-Month Periods
(in thousands of dollars) September 30, Ended September 30,
------------------------------------------------------------------------
2008 2007 2008 2007
------------------------------------------------------------------------
Net earnings $631 $14 $1,696 $563
------------------------------------------------------------------------
Plus:

Interest on long-term debt $3 $70 $13 $219
------------------------------------------------------------------------
Interest expense and
banking fees $68 $25 $249 $92
------------------------------------------------------------------------
Income taxes $486 $134 $734 $235

Amortization of fixed assets $73 $130 $276 $389
------------------------------------------------------------------------
Amortization of deferred
development costs $70 $32 $210 $177
------------------------------------------------------------------------
Amortization of intangible assets $38 $107 $114 $204
------------------------------------------------------------------------
Less:

Interest and dividend income $12 $60 $60 $211
------------------------------------------------------------------------
Earnings before interest, income
taxes and amortization (EBITDA) $1,357 $452 $3,232 $1,668
------------------------------------------------------------------------

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