Savaria Corporation
TSX : SIS

Savaria Corporation

May 12, 2005 08:01 ET

Savaria Increases Sales by 42% and Operating Income by 45% in the First Quarter of 2005

LAVAL, QUEBEC--(CCNMatthews - May 12, 2005) - Savaria Corporation (TSX:SIS), one of North America's leaders in accessibility equipment for people with mobility problems, posted sales of $6.4 million for the quarter ended March 31, 2005, an increase of 41.6% over the sales of $4.5 million recorded in the first quarter of 2004. Organic growth grew by $763,000, up 17% over the sales recorded for the first quarter of 2004, while the contribution to sales by the two acquisitions which were made in 2004 added $1.1 million. U.S. sales reached $3.7 million, up 27.5% over $2.9 million in the first quarter the previous year. Canadian sales grew by 62.5%, from $1.6 million in the first quarter of 2004 to $2.6 million in the first quarter of the current fiscal year. Sales outside Canada therefore accounted for 59.8% of total sales volume in the first quarter of 2005, versus 64.6% in the corresponding quarter a year earlier.

Gross profit totalled $2.3 million, compared with $1.7 million in the first quarter of 2004, corresponding to gross profit margins of 36.1% and 37.0% respectively.

"We are very proud of Savaria's performance, especially since the first quarter is usually somewhat slower than the others. Our sales rose sharply and our gross profit margin showed a definite improvement over the margin of 31.5% posted in the fourth quarter of last year. This return to the Company's historic profitability is notably attributable to the increase of about 8% in our prices which were implemented during the last month of the quarter," stated Jean-Marie Bourassa, Savaria's Chief Financial Officer.

Selling and administrative expenses rose 34.7%, from $1.0 million (23.1% of sales) in the first quarter of 2004 to $1.4 million (22.0% of sales) in the first quarter 2005. This sharp rise is due to the integration and operation of the two businesses acquired in 2004. "Management does not expect selling and administrative expenses to fluctuate significantly in the coming quarters of this year", said Mr. Jean-Marie Bourassa, CFO.

Operating income totalled $773,000 in the first quarter of 2005, up 45.0% over the first quarter of 2004 and setting a new record for the Company. Operating margins fluctuated very little, standing at 12.0% and 11.8% in the first quarters of 2005 and 2004 respectively. The operating margin posted in the first quarter of 2005 showed a definite improvement over the margin for the last quarter of 2004, which was adversely affected by a decrease in the gross margin and an increase in selling and administrative expenses.

Net earnings totalled $664,000 or $0.029 per diluted share, compared with $643,000 or $0.028 per diluted share during the first quarter last year. The net profit margin was 10.3%, compared to 14.2% in the first quarter of 2004. The weighted average number of outstanding common shares on a fully diluted basis stood at 22,901,129 in the first quarter of 2005, versus 23,012,747 shares in the first quarter of fiscal 2004. This reduction is notably attributable to the share redemption and cancellation program pursuant to the normal course issuer bid implemented on May 14, 2004.

FINANCIAL POSITION

As at March 31, 2005, Savaria maintained an excellent financial position in both the short and long term, with working capital of $8.6 million for a current ratio of 3.4:1. In addition, the Company was virtually long-term debt-free and had a total of $13.8 million in shareholders' equity. Savaria contracted a term loan of $5 million shortly after the end of the first quarter of 2005, bringing its current cash to over $10 million.

OUTLOOK

To increase its sales and profitability, Savaria plans to expand its product mix and distribution network through a combination of dynamic organic growth and targeted acquisitions. "On April 25th, we announced the signing of a letter of intent to acquire Concord Elevator Inc., which would broaden both our product mix and distribution network, while doubling our sales. Subject to due diligence we expect to close this transaction by late June 2005," indicated Marcel Bourassa, Savaria's Chairman of the Board, President and Chief Executive Officer. "We are confident our sales growth and recent increase in selling prices will allow us to improve our earnings during the current fiscal year. Furthermore, we wish to step up the pace and will therefore use part of the $10 million in available cash to grow our sales and make further synergistic acquisitions."

ANNUAL GENERAL MEETING OF SHAREHOLDERS

You are cordially invited to attend the Annual General Meeting of Shareholders of Savaria Corporation which will be held at the Company's head office at 4150 Highway 13, Laval, on Friday, May 27, 2005, at 10:00 a.m.

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 Company'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.

ABOUT SAVARIA

Savaria Corporation is one of North America's leading accessibility companies. The Company designs, manufactures and distributes eight products meeting the needs of people with mobility problems, including stairlifts, vertical and inclined platform lifts, and elevators for residential use. Its products are sold through a network of over 300 retailers and come from the United States, Canada and Europe. Savaria employs close to 150 people and its shares are listed on the Toronto Stock Exchange under the ticker symbol SIS. For further information: http://www.savaria.com.

Complete financial statements and the Interim Management's report for the quarter ended March 31, 2005 will soon be available on Savaria's web site and filed on SEDAR (www.sedar.com).



FINANCIAL HIGHLIGHTS

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Quarters ended March 31, 2005 2004 Variation
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Sales (000s) $6,427 $4,537 41.6%
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Gross margin 36.1% 37.0% s.o.
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Selling and administrative
expenses (000s) $1,413 $1,049 34.7%
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Selling and administrative
expenses/sales ratio 22.0% 23.1% s.o.
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Operating income (000s) $773 $533 45.0%
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Operating margin 12.0% 11.8% s.o.
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Gain (loss) on exchange
(000s) $253 $377 -32.8%
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Income taxes (000s) $376 $289 30.0%
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Net earnings applicable to
common shares (000s) $664 $643 3.3%
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Net earnings per common
share (basic) $0.042 $0.041 3.4%
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Net earnings per common
share (diluted) $0.029 $0.028 3.6%
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Average number of common
shares outstanding -
issued (000s) 15,715,879 15,716,666 -0.5%
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Average number of common
shares outstanding -
diluted (000s) 22,901,129 23,012,747 -0.5%
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As at March As at Dec.
31 2005 31 2004
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Total assets (000s) $17,613 $17,590 0.1%
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Long-term debt (000s) $20 $24 -17.6%
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Shareholders' equity (000s) $13,781 $13,065 5.5%
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