Savaria Corporation

Savaria Corporation

March 31, 2005 08:00 ET

Savaria Increases Sales by 26% and Achieves Net Earnings of $2.1 Million in 2004


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: SAVARIA CORPORATION

TSX SYMBOL: SIS

MARCH 31, 2005 - 08:00 ET

Savaria Increases Sales by 26% and Achieves Net
Earnings of $2.1 Million in 2004

LAVAL, QUEBEC--(CCNMatthews - March 30, 2005) - Savaria Corporation
(TSX: SIS), one of North America's leading accessibility companies for
the physically challenged, is pleased to announce its financial results
for the fiscal year ended December 31, 2004.

The Company recorded sales of $22.1 million in 2004, up 26.0% over $17.6
million in 2003. U.S. sales amounted to $13.4 million in 2004, compared
with $10.7 million in 2003, an increase of 24.8%. Canadian sales rose
26.6% to $8.1 million in 2004, up from $6.4 million in 2003. Sales
outside North America amounted to $564,513, up 46.0% over $386,602 in
2003. Sales outside Canada accounted for 63% of sales in both 2004 and
2003.

"Consistent with our strategy, our sales improved significantly in 2004.
We achieved organic growth of 13% or $2.3 million, which added to the
revenues of $2.2 million generated by the companies acquired during the
year (Robertson Custom Elevators in April 2004 and Weber Accessibility
Systems Inc. in June 2004). What's more, if it were not for the
appreciation in the Canadian dollar in relation to the U.S. dollar, we
would have posted an organic growth of 20%," said Marcel Bourassa,
Chairman of the Board, President and Chief Executive Officer of Savaria.

Gross profit totalled $7.8 million for fiscal 2004, compared with $6.4
million for fiscal 2003. The gross profit margin worked out to 35.1%,
versus 36.6% the previous year. Despite certain productivity gains,
profitability was adversely affected by the increase in the price of
some components, especially steel for which prices considerably
increased in 2004.

Selling and administrative expenses rose 53.0% from $3.6 million in 2003
to $5.5 million in 2004. These expenses represented 20.3% of sales in
2003, compared with 24.7% in 2004. This sharp rise is due mainly to the
growth strategy implemented by management. "To strengthen our revenues,
we expanded our sales and marketing force, and took a number of
initiatives to raise Savaria's profile and increase its products'
visibility," added the Company's President. "We also consolidated our
management team to foster the search for and integration of
acquisitions, and to further monitor acquired businesses. Our
investments have started to yield benefits, as reflected by our sales
growth."

Despite the increase in sales, operating income fell from $2.5 million
in 2003 to $1.8 million in 2004. This decrease of 28.8% is attributable
primarily the sharp rise in selling and administrative expenses and to
the slight decline in the gross margin.

Considering the appreciation in the value of the Canadian dollar in
relation to the U.S. dollar, forward exchange contracts purchased in
2003 yielded exchange gains of $1.6 million in 2004, $1.4 million of
which was included in deferred revenues as at January 1, 2004 and
recorded as an exchange gain on hedging relationships in earnings for
the year, and $260,000 represented the variation in the fair value of
the forward exchange contracts recorded as an exchange gain on cash
balances for the year. In 2003, the total exchange gain related to
forward exchange contracts amounted to $444,510.

Net earnings attributable to common shares amounted to $2.1 million or
$0.13 per share ($0.10 on a diluted basis) in 2004, compared with $1.7
million or $0.12 per share ($0.09 on a diluted basis) a year earlier.
The net profit margin fluctuated very little, standing at 9.3% in 2004,
versus 9.9% in 2003. Cash flows from operating activities amounted to
$2.9 million or $0.19 per share (basic) during fiscal 2004, compared
with $2.2 million or $0.15 per share (basic) for fiscal 2003.

The weighted average number of outstanding common shares grew by 7.1% to
15,722,110 shares in 2004, up from 14,685,312 shares in 2003, the
difference being attributable to the issue of 2,222,500 units
(consisting of one share and one warrant) in June 2003. It should also
be noted that the Company purchased and cancelled 247,600 shares at an
average cost of $1.69 per share during the year.

FOURTH QUARTER OF FISCAL 2004

The Company achieved revenues of $6.3 million for the quarter ended
December 31, 2004, up 30.3% over $4.8 million for the same quarter a
year earlier. This increase is attributable to organic growth and the
recognition of the revenues of the companies acquired in the second
quarter of 2004.

The Canadian dollar appreciated more than 5% over the U.S. dollar
between September 30, 2004 and December 31, 2004. Accordingly, the gross
margin was 31.5%, versus 35.3% in the last quarter of fiscal 2003.
Selling and administrative expenses amounted to $1.7 million, up from
$810,000 in the fourth quarter of fiscal 2003. These two factors,
combined with the reduction in the Company's forward exchange contracts,
had a temporary adverse impact on its profitability. Net earnings thus
fell to $6,000, down from $485,000 in the last quarter the previous
year. "We lost no time taking the measures needed to boost our profit
margin. Among others, we raised our product prices by 8% on March 1,
2005, a trend followed by our North American competitors in light of the
increase in steel prices. We also embarked on a study to improve our
plant's productivity, What's more, we are increasingly purchasing our
components from Asian suppliers who are paid in U.S. dollars. We are
confident that our initiatives will yield benefits as of the first
quarter of this year," indicated Mr. Bourassa.

FINANCIAL POSITION

Savaria still benefited from an excellent financial position in both the
short and long term as at December 31, 2004. Cash and cash equivalents
amounted to $6.1 million, up from $3.7 million a year earlier. Working
capital totalled $7.9 million, versus $6.7 million at the end of fiscal
2003, corresponding to current ratios of 2.86 and 3.54 respectively.
Furthermore, the Company was virtually free of long-term debt and had
shareholders' equity of $13.1 million or $0.58 per share at the end of
fiscal 2004, compared with $10.9 million or $0.48 per share a year
earlier.

OUTLOOK

Since its listing on the stock market in the first quarter of 2002, the
Company has secured a private placement of $5.0 million, built new
facilities, strengthened its sales and marketing team, and acquired two
retailers of accessibility equipment. These initiatives have been
successful as its sales have increased by 35.2% within the last two
years.

The President added: "To keep up our momentum, we have taken a number of
initiatives that will ultimately enable us to take full advantage of our
new manufacturing capacity. Besides eventually launching new products,
we intend to expand our distribution network by consolidating our own
sales force, setting up distribution centres to shorten our delivery
times and optimize the quality of our after-sales service, and adding
new retailers, especially in Florida and on the U.S. West Coast. To
strengthen our distribution network, we remain on the lookout for
acquisitions that will allow us to better serve promising
under-exploited regions. We are confident that the economies of scale
arising from our higher business volume, combined with the initiatives
taken to increase our profit margin, will enable us to improve the
Company's profitability within the next few years," concluded Mr.
Bourassa.

$5 MILLION TERM LOAN

Savaria has obtained a $5 million term loan from the National Bank of
Canada to complete its acquisition projects. This loan, secured by a
first mortgage on property, land and equipment held by Savaria, brings
the Company's cash to about $11 million.

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.

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. It assembles all its products in its new Laval, Quebec
facilities, which could generate some $40 million in revenues without
any major additional investments. Its products are sold through a
network of over 300 retailers and come from the United States (61%),
Canada (37%) and Europe (2%). Savaria employs more than 100 people and
its shares are listed on the Toronto Stock Exchange under the ticker
symbol SIS. For further information: www.savaria.com.

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.

Complete financial statements for the fiscal year ended December 31,
2004 are available on Savaria's web site (www.savaria.com) and have been
filed on SEDAR (www.sedar.com).



FINANCIAL HIGHLIGHTS

---------------------------------------------------------------------
Fiscal Fiscal 4th 4th
year year Quarter Quarter
2004 2003 2004 2003
---------------------------------------------------------------------
Sales (000s) $22,109 $17,553 $6,266 $4,810
---------------------------------------------------------------------
Gross margin 35.1% 36.6% 31.5% 35.3%
---------------------------------------------------------------------
Selling and administrative
expenses (000s) $5,455 $3,565 $1,713 $810
---------------------------------------------------------------------
Selling and administrative
expenses/sales ratio 24.7% 20.3% 27.3% 16.8%
---------------------------------------------------------------------
Operating income (000s) $1,805 $2,534 $62 $728
---------------------------------------------------------------------
Operating margin 8.2% 14.4% 1.0% 15.1%
---------------------------------------------------------------------
Gain (loss) on exchange
(000s) $1,358 $48 $163 $54
---------------------------------------------------------------------
Net earnings applicable
to common shares (000s) $2,064 $1,743 $6 $485
---------------------------------------------------------------------
Net earnings per common
share (basic) $0.13 $0.12 $0.000 $0.031
---------------------------------------------------------------------
Net earnings per common
share (diluted) $0.10 $0.09 $0.007 $0.028
---------------------------------------------------------------------
Average number of common
shares outstanding
- issued (000s) 15,722 14,685 15,709 15,714
---------------------------------------------------------------------
Average number of common
shares outstanding
- diluted (000s) 23,026 22,021 23,013 23,161
---------------------------------------------------------------------

As at Dec. As at Dec.
31, 2004 31, 2003
---------------------------------------------------------------------
Total assets (000s) 17,590 13,796
---------------------------------------------------------------------
Long-term debt (000s) 24 6
---------------------------------------------------------------------
Shareholders' equity
(000s) 13,065 10,934
---------------------------------------------------------------------


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Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    Savaria Corporation
    Mr. Marcel Bourassa
    Chairman, President and Chief Executive Officer
    1-800-931-5655
    www.savaria.com
    or
    Savaria Corporation
    Mr. Gary Perkins
    Investors Relations
    1-800-225-2744
    garyperkins@rogers.com