Savaria Corporation
TSX : SIS

Savaria Corporation

November 14, 2006 14:45 ET

Savaria Increases Sales by 34% and Cash Flows by 36% in the Third Quarter of 2006

LAVAL, QUEBEC--(CCNMatthews - Nov. 14, 2006) - Savaria Corporation (TSX:SIS), the second largest company in the accessibility industry in North America, achieved a 34.2% increase in sales during the third quarter ended September 30, 2006, reaching $14.1 million, versus $10.5 million in the third quarter of fiscal 2005. This strong growth is due primarily to the acquisition of Concord Elevator Holdings Inc. ("Concord") on September 14, 2005. For this third quarter, the Corporation recorded net earnings of $581,620 or $0.020 per share on a diluted basis, compared with $644,374 or $0.027 per share in the third quarter of the previous fiscal year. Moreover, it generated cash flows of $1.2 million, up from $898,077 in the third quarter of fiscal 2005.

Sales in Canada, the United States and outside North America amounted to $5.4 million, $7.6 million and $1.1 million respectively during the third quarter of 2006. U.S. sales were recognized at an average conversion rate of 1.1216 in the third quarter of 2006, whereas this rate was 1.2014 in the third quarter of 2005.

Gross profit totalled $3.6 million for the third quarter of 2006, up from $3.1 million in the third quarter a year earlier. The gross profit margin fell to 25.8% from 29.3% in the same period the previous year. This decline is due primarily to the lower gross profit of Concord's operations and the appreciation in the Canadian dollar in relation to the U.S. dollar.

Net earnings attributable to common shareholders totalled $581,620, or $0.020 per share on a diluted basis, in the third quarter of 2006, compared with $644,374 or $0.027 per share in the third quarter of fiscal 2005. The net profit margin fell to 4.1% from 6.1% in the third quarter a year earlier.

Operating cash flows amounted to $1.2 million ($0.041 per share on a diluted basis) in the third quarter of 2006, up from $898,077 ($0.038 per share on a diluted basis) in the third quarter the previous year. This 35.6% increase is due primarily to the recognition of future income taxes of $291,293 arising from the utilisation of Concord's loss carry-forward in the third quarter of 2006.

The weighted average number of issued and outstanding common shares totalled 29,529,170 for the third quarter of 2006, up from 23,371,429 shares in the equivalent quarter of fiscal 2005. This 26.3% increase is primarily a result of 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.

Nine-Month Period Ended September 30, 2006

Savaria's revenues rose 90.7% to $44.6 million in the nine- month period ended September 30, 2006, up from $23.4 million in the first nine months of the previous year. This strong growth is due primarily to the acquisition of Van-Action's assets on June 20, 2005 and Concord's shares on September 14, 2005.

Gross profit totalled $12.0 million for the first nine months of fiscal 2006, up from $7.7 million in the same period a year earlier. The gross profit margin fell to 26.8% from 32.9% in the first nine months of the previous year. The decline in the profit margin is due mainly to the lower gross profitability of the operations acquired in 2005 and the increase in the Canadian dollar in relation to the U.S. dollar.

Net earnings attributable to common shareholders stood at $1.2 million or $0.041 per share on a diluted basis for the first nine months of 2006, compared with $2.0 million or $0.088 per share in the same period of fiscal 2005. The net profit margin fell to 2.7% from 8.8% for the first nine months a year earlier. Operating cash flows totalled $3.3 million ($0.110 per share on a diluted basis) for the first nine months of 2006, versus $2.7 million ($0.115 per share on a diluted basis) in the same period a year earlier. The numerous non-cash items for the first nine months of the current fiscal year mainly include: future income taxes of $696,187 arising from the utilisation of Concord's loss carry-forward; depreciation and amortization expenses of $806,495 related notably to the newly acquired assets; and a write-off of intangible assets of $196,871 mainly due to the discontinuance of direct sales in Florida.

The weighted average number of issued and outstanding common shares totalled 29,654,630 for the first nine months of 2006, up from 19,027,640 shares for the corresponding period of fiscal 2005. This 55.9% increase is attributable primarily to the conversion of 7,000,000 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.

Financial Position

As of September 30, 2005 and 2006, Savaria's working capital stood at $19.0 million, corresponding to current ratios of 2.79 and 2.82 respectively. Total liabilities amounted to $15.5 million as at September 30, 2006, compared with $17.1 million as at December 31, 2005. This decline is due primarily to the reduction in accounts payable, which were lowered from $9.7 million at the close of fiscal 2005 to $7.0 million as at September 30, 2006. During the same period, long-term debt went from $6.1 million to $4.5 million, to which were added current portions of $681,429 and $2.3 million respectively. Finally, shareholders' equity totalled $26.4 million or $0.91 per share at the end of the third quarter of 2006, compared with $26.8 million or $0.90 per share at the close of the previous fiscal year.

Outlook

With the integration of Concord's operations, Savaria now benefits from an extensive distribution network in North America, consisting of some 600 retailers and installers of accessibility equipment. Management intends to capitalize on this strength in order to further improve the Corporation's profitability. "In June 2006, we decided to discontinue all direct sales, except in the Montreal area and thereby fully support our distributors. Moreover, a program enabling distributors to offer consumers financing for the purchase of the Corporation's products was launched in collaboration with GE Money in October 2006," said Marcel Bourassa, President et Chief Executive Officer of the Corporation. "Now that we have benefited from sales growth from acquisitions, the focus can be placed on cost reengineering and improving efficiencies within the group. We also intend to continue to outsource the manufacture of a larger number of parts in order to lower our production costs." concluded Marcel Bourassa.

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's annualized sales of close to $65 million rely on a network of over 600 retailers in North America. The Corporation records close to 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, 2006 will soon be available on Savaria's website and filed on SEDAR (www.sedar.com).



Financial Highlights

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Quarters Ended
September 30,
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2006 2005 Change
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Sales (000s) $14,081 $10,494 34.2%
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Gross profit margin 25.8% 29.3% n/a
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Selling and administrative
expenses (000s) $2,693 $1,789 50.5%
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Selling and administrative
expenses/ sales ratio 19.1% 17.0% n/a
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Write-off of intangible assets (000s) - - n/a
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Operating earnings (000s) $698 $1,118 -37.6%
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Operating margin 5.0% 10.7% n/a
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Gain (loss) on exchange (000s) $46 $(243) 118.8%
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Net earnings applicable to
common shares (000s) $582 $644 -9.7%
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Net earnings per common share --
basic $0.020 $0.028 -28.6%
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Net earnings per common share --
diluted $0.020 $0.027 -25.9%
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Operating cash flows (000s) $1,218 $898 35.6%
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Operating cash flows per share -
diluted $0.041 $0.038 7.9%
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Average number of common shares
outstanding -- issued 29,529,170 23,371,429 26.3%
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Average number of common shares
outstanding -- diluted 29,718,662 23,753,725 25.1%
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Nine-Month Periods Ended
September 30,
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2006 2005 Change
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Sales (000s) $44,624 $23,396 90.7%
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Gross profit margin 26.8% 32.9% n/a
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Selling and administrative
expenses (000s) $8,778 $4,505 94.9%
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Selling and administrative
expenses/ sales ratio 19.7% 19.3% n/a
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Write-off of intangible assets (000s) $197 - n/a
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Operating earnings (000s) $2,178 $2,755 -20.9%
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Operating margin 4.9% 11.8% n/a
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Gain (loss) on exchange (000s) $(47) $289 -116.4%
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Net earnings applicable to
common shares (000s) $1,212 $2,048 -40.8%
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Net earnings per common share --
basic $0.041 $0.108 -62.0%
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Net earnings per common share --
diluted $0.041 $0.088 -53.4%
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Operating cash flows (000s) $3,279 $2,660 23.3%
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Operating cash flows per share -
diluted $0.110 $0.115 -4.3%
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Average number of common shares
outstanding -- issued 29,654,360 19,027,640 55.9%
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Average number of common shares
outstanding -- diluted 29,864,145 23,298,825 28.2%
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As at September 30, As at December 31,
2006 2005
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Total assets (000s) $41,870 $43,862
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Long-term debt (000s) $4,475 $6,136
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Shareholders' equity
(000s) $26,381 $26,766
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Contact Information

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