Savaria Corporation
TSX : SIS

Savaria Corporation

August 11, 2005 08:01 ET

Savaria Raises Sales by 26% and Operating Income by 64% in the Second Quarter of 2005

LAVAL, QUEBEC--(CCNMatthews - Aug. 11, 2005) - Savaria Corporation (TSX:SIS)



Other second-quarter highlights:

- Signature of a letter of intent to acquire Concord
Elevator Inc.
(binding agreement signed on July 7, 2005)

- Acquisition of all the assets of Van-Action Inc.

- First dividend paid to shareholders ($0.025 per common
share)

- Conversion of preferred shares into common shares


Savaria Corporation (TSX: SIS), one of North America's leading accessibility companies that facilitates and ensures mobility for the physically challenged, recorded sales of $6.5 million for the quarter ended June 30, 2005, up 26.4% over $5.1 million in the second quarter of 2004. This performance is attributable to the June 2004 acquisition of Weber Accessibility Systems Inc., organic growth and an increase in selling prices effective March 1, 2005.

The Company achieved a gross profit of $2.3 million in the second quarter of 2005, compared with $1.9 million in the second quarter of 2004, an increase of 21.5%. That represents gross profit margins of 35.6% and 37.0% respectively. The slight decline in the profit margin is notably due to the rise in the value of the Canadian dollar in relation to the U.S. dollar, which was worth US$0.8141 as at June 30, 2005, versus US$0.7440 as at June 30, 2004.

Selling expenses and administrative expenses only rose 3.2%, from $1.26 million (24.7% of sales) in the second quarter of 2004 to $1.30 million (20.1% of sales) in the second quarter of the current fiscal year. Operating income totalled $863,000 in the second quarter of 2005, an increase of 63.9% over the operating income of $526,579 recorded in the second quarter of 2004.

"This quarter's sales and operating income represent record results," said Marcel Bourassa, Savaria's Chairman of the Board, President and Chief Executive Officer. "Despite the increase in the Canadian dollar in relation to the U.S. dollar, we improved the Company's operating profitability by raising our business volume, enhancing our plant's productivity, controlling our operating expenses, increasing our selling prices and carefully selecting our suppliers. We are very proud of this achievement which truly confirms our competitiveness across North America."

Savaria recorded other revenues of $231,000 in the second quarter of 2005, compared with $338,000 in the second quarter a year earlier, including exchange gains of $279,000 and $319,786 respectively.

Net earnings attributable to common shares amounted to $740,000 or $0.041 per share (basic), compared with $597,000 or $0.038 per share (basic) during the second quarter the previous year. Earnings per share rose to $0.032 on a diluted basis, up from $0.026 in the second quarter of 2004. The net profit margin fluctuated very little, at 11.4% versus 11.7% in the second quarter of 2004. Operating cash flows totalled $939,000 or $0.04 per share on a diluted basis, compared with $447,000 or $0.02 per share on a diluted basis in the second quarter of 2004.

It should be noted that on June 1, 2005, the Company converted 7,000,000 Series "A" preferred shares into 7,000,000 common shares. This conversion raised the weighted average number of common shares outstanding from 15,701,884 shares in the second quarter of 2004 to 17,995,612 shares in the second quarter of the current fiscal year. On a diluted basis, the weighted average number of common shares outstanding declined from 23,179,439 shares in the second quarter of 2004 to 22,954,408 shares in the second quarter of the current fiscal on account of Savaria's normal course issuer bid. Implemented on May 17, 2004, this program was renewed, allowing the Company to purchase and cancel up to 750,000 common shares between May 17, 2005 and May 16, 2006.

Result for the First Six Months

Savaria recorded sales of $12.9 million during the six-month period ended June 30, 2005, up 33.6% over $9.7 million in the first half of the previous year. This performance is due to the sharp rise in the Company's Canadian sales, the contribution of the acquisitions of Robertson Custom Elevators and Weber Accessibility Systems Inc. finalized in April and June 2004 respectively and, to a lesser extent, the selling price increases applied by the Company effective March 1, 2005.

The Company achieved a gross profit of $4.6 million for the first six months of the current fiscal year, up 29.4% overer $3.6 million in the first half of the previous year. Whereas sales grew by 33.6%, selling and administrative expenses only increased by 17.5%, from $2.3 million in the first six months of 2004 to $2.7 million in the first half of the current fiscal year.

Operating income rose 54.4% from $1.1 million in the first six months of 2004 to $1.6 million in the first half of the current fiscal year. Due to the increase in business volume and maintenance of selling and administrative expenses, the operating margin improved to 12.7% from 11.0% in the first six months of last year.

Net earnings attributable to common shares totalled $1.4 million or $0.083 per share (basic), up from $1.2 million or 0.079 per share (basic) in the first six months of the previous year. Earnings per share amounted to $0.061 on a diluted basis, compared with $0.054 in the first half of 2004. Operating cash flows rose to $1.8 million or $0.08 per share on a diluted basis, up from $914,000 or $0.04 per share on a diluted basis in the first six months of 2004. During the first half of the current fiscal year, the Company purchased and cancelled 157,000 shares at an average price of $1.49 per share.

Solid Financial Position

Two major transactions have affected the Company's balance sheet since the close of its last fiscal year: the contracting of a $5 million long-term loan and the acquisition of the assets of Van-Action. Cash and cash equivalents, accounts receivable and inventories therefore rose considerably, bringing Savaria's total assets to $22.3 million at the end of the second quarter of 2005, up from $17.6 million at fiscal 2004 year-end.

Liabilities totalled $8.4 million as at June 30, 2005, compared with $4.5 million at the end of last year. This change is attributable mainly to the increase in long-term debt, which went from $24,000 as at December 31, 2004 to $4.5 million as at June 30, 2005.

Savaria had working capital of $13.2 million as at June 30, 2005, versus $7.9 million at the close of fiscal 2004, corresponding to current ratios of 4.6 and 2.9 respectively. "We benefit from a solid financial position. We held cash and cash equivalents of $7.7 million at the end of the second quarter of 2005, up from $6.3 million as at June 30, 2004 and $6.1 million as at December 31, 2004. We therefore have the financial resources to pursue our sales growth, integrate our latest acquisitions and maintain our expansion-by-acquisition strategy," said Jean-Marie Bourassa, Savaria's Vice-President, Finance and Chief Financial Officer.

Positioned to Raise its Profitability

On the strength of its sustained and profitable growth over the past six quarters, Savaria is perfectly positioned to accelerate its sales growth. Given the acquisition of the assets of Van-Action in June 2005 and the fact the acquisition of Concord Elevator Inc. is scheduled to close by the end of August 2005, the Company will take on an entirely new magnitude as of the current quarter since the new operations will be fully or partially recognized effective July 1, 2005. The ratification of the acquisition of Concord will make Savaria the No. 2 player in the North American accessibility equipment industry, enabling the Company to bring the current fiscal year to a strong close and providing it with solid fundamentals to increase its profitability and create further shareholder value.

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.

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. Through Van-Action 2005, Savaria is also Canada's leader in converting and adapting automotive vehicles for the physically challenged. Savaria employs close to 200 people and its shares are listed on the Toronto Stock Exchange under the ticker symbol SIS. For further information: www.savaria.com.

Complete financial statements and the Interim Management's report for the quarter ended June 30, 2005 will soon be available on Savaria's web site and filed on SEDAR (www.sedar.com).



Financial Highlights

--------------------------------------------------------------------
Quarters Six-month periods
ended June 30, ended June 30,
--------------------------------------------------------------------
2005 2004 Change 2005 2004
--------------------------------------------------------------------
Sales (000s) $6,475 $5,121 26.4% $12,902 $9,658
--------------------------------------------------------------------
Gross margin 35.6% 37.0% n/a 35.8% 37.0%
--------------------------------------------------------------------
Selling and
administrative
expenses (000s) $1,302 $1,262 3.2% $2,716 $2,311
--------------------------------------------------------------------
Selling and
administrative
expenses/sales
ratio 20.1% 24.7% n/a 21.0% 23.9%
--------------------------------------------------------------------
Operating income
(000s) $863 $527 63.9% $41,636 $1,060
--------------------------------------------------------------------
Operating margin 13.3% 10.3% n/a 12.7% 11.0%
--------------------------------------------------------------------
Exchange gain
(000s) $279 $320 -12.8% $532 $697
--------------------------------------------------------------------
Net earnings
applicable to
common shares
(000s) $740 $597 23.7% $1,404 $1,240
--------------------------------------------------------------------
Net earnings
per common share
- basic $0.041 $0.038 8.2% $0.083 $0.079
--------------------------------------------------------------------
Net earnings
per common share
- diluted $0.032 $0.026 25.3% $0.061 $0.054
--------------------------------------------------------------------
Average number
of common shares
outstanding
- basic
(000s) 17,995,612 15,701,884 14.6% 16,855,746 15,707,451
--------------------------------------------------------------------
Average number
of common shares
outstanding
- diluted
(000s) 22,954,408 23,179,439 -1.0% 22,981,209 23,185,006
--------------------------------------------------------------------

As at June 30, As at June 30,
2005 2004
--------------------------------------------------------------------
Total
assets (000s) $22,287 $17,590
--------------------------------------------------------------------
Long-term
debt (000s) $4,516 $24
--------------------------------------------------------------------
Shareholders'
equity (000s) $13,855 $13,065
--------------------------------------------------------------------



Contact Information

  • 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