Earnings call transcript: Savaria Corporation Q1 2026 beats EPS forecast amid strong growth

Savaria Corporation reported its Q1 2026 earnings, surpassing EPS expectations with an actual EPS of CAD 0.31 against a forecast of CAD 0.2997, reflecting a 3.44% surprise. The company also exceeded revenue forecasts, reporting CAD 235.55 million compared to the expected CAD 234.55 million. Despite these positive results, Savaria’s stock fell by 1.59% in the immediate aftermath, closing at 29.61 CAD.

Savaria Corporation demonstrated robust performance in Q1 2026, with consolidated revenues increasing by 7% year-over-year. This growth was primarily driven by organic expansion and strategic acquisitions. The company’s operational excellence program, Savaria One, continues to yield significant improvements in profitability and efficiency.

Savaria exceeded analyst expectations with an EPS of CAD 0.31, surpassing the forecast of CAD 0.2997. The revenue also came in higher than anticipated, contributing to a positive earnings surprise. This performance aligns with the company’s historical trend of outperforming its previous year results.

Despite the earnings beat, Savaria’s stock price fell by 1.59% to 29.61 CAD. This decline could be due to broader market conditions or investor expectations for future growth not being fully met. The stock remains within its 52-week range, indicating relative stability.

Savaria’s forward guidance remains optimistic, with continued emphasis on operational improvements and strategic expansions. The company plans to launch new products in the European and North American markets, enhancing its competitive position.

CEO Marcel Bourassa highlighted the success of the Savaria One program, stating, "Our commitment to operational excellence has driven significant improvements in our financial performance, positioning us well for future growth."

During the earnings call, analysts inquired about the impact of foreign exchange rates on future earnings and the company’s strategy to mitigate these risks. Management emphasized their natural hedging strategies and focus on operational efficiencies to navigate potential challenges.

Rory, Conference Operator: Morning. My name is Rory, and I will be your conference operator today. At this time, I would like to welcome everyone to Savaria Corporation’s Q1 2026 conference call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question-and-answer session. To ask a question during the session, please press star one one on your telephone. You will hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. This call may contain forward-looking statements which are subject to the disclosure statement contained in Savaria’s most recent press release issued on May 6, 2026, with respect to its Q1 2026 results. Thank you. Mr. Barasa, you may begin your conference.

Sébastien Barasa, Chief Executive Officer, Savaria Corporation: Thanks, Rory. Good morning, everyone. Today I will start with a small recap of our Q1 results. Steve will update us on financial, and JP will provide us an update on Savaria One and Europe, followed by Q&A. Once again, I’m very proud, and it seems that I repeat always that I’m proud. In the last 10 years or 40 quarters, 39 out of the 40 we have beat the previous year. I think for me, it’s very good proof that we should work very consistent in our results. With all the learning we have done in the Savaria One, I think we have create a good path for the future.

With sales of CAD 235 million up versus last year, and right away in EBITDA in the first quarter of 20.4% of EBITDA, our KPI improving. Steve will go more in detail later. Quite happy with that. A few things that I would like to highlight today. First, thank you again for all team member at Savaria to continue to be diligent in your approach towards Savaria One, to act as a one company, and continue to have a bottom-up approach to bring good idea on how can we be better. This mentality of continuous improvement is part of our DNA now, and it will continue to help us to make us better. Second, growth.

We talked about that during the Investor Day a few weeks ago, but continue the effort to develop the market in North America for home elevators is a priority, and we see some traction. The increase of effort into a stairlift in North America continue to expand the Matot, Domware material lift lineup. The business development activity are going to continue to put us as a market leader. Expand the one-stop shop in Europe, example, the Luma, the VPL, and the incline lift. I think we start to see some traction. To be the partner of choice in stairlift, I think JP will talk later, but we have a very good traction in Europe in the last 6 months, quite happy with the turnaround we have done there. Patient care to own the room and continue to develop the long-term care.

I think we have some good traction there also. Also a Greenville building expansion to be more diversified in terms of manufacturing in North America is progressing well, and the expansion should be complete in the fourth quarter of this year. Third, acquisition. As we said during the Investor Day, we have the ambition to do some acquisition in the next five years for approximately CAD 200 million from small to midsize. As we said earlier, we like some of our dealer distribution network, very natural. Buy some small product lineup, small manufacturer to bring some better products and to improve our one-stop shop. I think it’s always a priority.

I will say with our net debt EBITDA ratio of now 0.92 and liquidity available of CAD 224 million, excuse me, for capital allocation and M&A, I think we’re in a very good position. To conclude, I’m quite happy with the start of 2026. As we unveiled during the Investor Day, we have the ambition to grow the business at 12% per year, a mix of organic growth and acquisition, to maintain our margins over 20%. If we do our job, that will ultimately lead us to some sales of CAD 1.6 billion and an EBITDA of CAD 320 million, and an EBITDA per share of CAD 4.25 by 2030. Thanks again to all the employees for the effort in this new chapter of growth.

Steve, financial, please.

Steve, Chief Financial Officer, Savaria Corporation: Thank you, Sébastien, good morning to everyone on the call. I’m now gonna provide some further detail and commentary regarding our first quarter results. The key highlights for the quarter include, firstly, revenue growth of 7% over last year, driven by growth in both segments and all regions. Adjusted EBITDA margin reached 20.4% in Q1, which is especially great since Q1 is typically our seasonally weakest quarter. Lastly, our leverage ratio is now under 1 at 0.92 times. Now looking at consolidated revenues for the quarter. We generated revenue of CAD 235.5 million, an increase of CAD 15.3 million versus last year.

This is driven by organic growth of 5.7%, revenue contribution from the acquisitions of Baxter and Western Direct Stores of 0.7%, and a positive foreign exchange impact of 0.6%. Our accessibility segment saw growth of 7.9%, driven by strong growth in stairlifts in Europe as well as increased sales in Canada. Patient care achieved revenue growth of 3.8%, driven by strong organic growth of 6.5%, partially offset by a negative foreign exchange impact of 2.7% on the US dollar currency. Our consolidated gross margin for the quarter was 38.9% compared to 37.8% in 2025, and our operating income increased by CAD 11.7 million versus last year.

This is especially important to note since this demonstrates that we are continuing to improve the performance of the business post Savaria One. The gross margin improvement is mainly driven by operating leverage, improved pricing, and procurement benefits. Furthermore, operating income excuse me, further benefited from the termination of strategic initiative expenses. Q1 adjusted EBITDA reached CAD 48.1 million for the quarter, representing a margin of 20.4% compared to 18.5% in 2025. That’s an improvement of 190 basis points. Accessibility adjusted EBITDA margin was 22.4% versus 20.1%, so up 2.3% year-over-year, 230 basis points, and we saw improvements in both of our key regions. Patient care adjusted EBITDA margin stood at 19.5% compared to 18.8% last year. Moving on to finance costs.

They were CAD 3.1 million for the quarter, compared to CAD 3.5 million last year. Interest on long-term debt decreased by CAD 1.2 million due to an overall lower debt balance and decreased interest rates. We also had impact from an unrealized foreign currency loss of CAD 0.4 million this year versus a gain of CAD 0.4 million last year, causing an CAD 800,000 year-over-year swing. Net earnings were CAD 22.7 million for the quarter, compared to CAD 12.5 million last year, representing an increase of 82%. Correspondingly, EPS reached CAD 0.31 for the quarter versus CAD 0.17 last year. I’m now gonna provide some comments on our cash flow and balance sheet.

Cash flow from operating activities in Q1 was CAD 35.8 million, driven by the strong net earnings, partially offset by higher working capital and higher income taxes paid. Our working capital remains healthy, and while it has increased in terms of dollars, we have reduced our working capital days from last year. CapEx was CAD 6 million for the quarter, which represents 2.5% of sales. This is in line with our guidance, this includes approximately CAD 1 million for the building expansion in Beamsville. We also dispersed CAD 2.1 million for business acquisitions, largely attributable to Baxter Residential Elevators, our new direct store just outside Dallas, Texas. We have now CAD 324 million of funds available under our current credit facility as of March 31st.

As previously stated, our leverage ratio has reduced to under 1.92 times. On April 14th, 2026, at our Investor Day, we unveiled our plan for the next five years. Savaria targets a top-line increase of approximatel