Fiscal 2010 Off to an Excellent Start at Savaria With 18% Sales Growth in the 1st Quarter

LAVAL, QUEBEC--(Marketwire - May 11, 2010) - Savaria Corporation (TSX: SIS), Canada’s leader in the accessibility industry, today announced its results for the first quarter of 2010.

First-Quarter Highlights

 -- Sales growth of 18.4% over the first quarter of 2009; -- Operating earnings up by $717,000 over the first quarter of 2009; -- Declaration of a dividend of 8.4 cents ($0.084) per common share; -- Closing of the acquisition of Concord Elevator (London) Ltd. (“Concord London”), the leading Canadian retailer specializing in the installation and maintenance of elevators and platform lifts. 

A Word from the President

“Our results for the first quarter of 2010 are most satisfactory, considering that the first quarter is historically the least profitable of the year. Sales increased by 18.4% and operating earnings rose to $580,000, compared with a loss of $137,000 in the first quarter of 2009,” indicated Marcel Bourassa, President and Chief Executive Officer of Savaria.

“On February 1st, 2010, we closed the strategic acquisition of Concord London, which will enable us to better serve the Toronto area. Also, our balance sheet remains as solid as ever and will allow the Corporation to achieve its growth objectives,” added Mr. Bourassa.

Operating Results

Sales

The Corporation recorded sales of $13.2 million during the first quarter of 2010, compared with $11.2 million in the corresponding quarter of fiscal 2009, an increase of 18.4%. Of this growth, $684,000 or 6.1% came from the two-month contribution in operations of the new subsidiary Concord London. During the first quarter, the number of units sold in the Accessibility segment grew by 20% for accessibility products, as opposed to a slight decline for elevators. The Adapted Transportation segment’s first-quarter revenues remained stable.

Gross Profit

Gross profit grew by $944,000 for the first quarter of 2010 over the same period of 2009. The strong sales growth and various measures, including enhanced productivity and a significant increase in purchases from the Chinese subsidiary Savaria Huizhou and other Chinese suppliers, enabled the Corporation to raise its gross margin to 27.7%, up from 24.3% in the first quarter of 2009.

Operating Earnings

Operating earnings improved by $717,000 in the first quarter 2010 over the first quarter of 2009, from a loss of $137,000 to a profit of $580,000. This favourable variation is due to the growth in gross profit, less the increase in selling and administrative expenses stemming from the addition of the new subsidiary Concord London.

Net Earnings

Net earnings fell from $555,000 in the first quarter of 2009 to $179,000 in the same quarter of 2010, a decrease of $376,000 primarily reflecting the unfavourable variation of $998,000 in a put option related to restructured notes and of $252,000 in exchange gains and losses.

Cash Flows

The Corporation’s operating activities generated cash flows of approximately $507,000 during the first quarter, as opposed to cash outflow of $172,000 in the corresponding quarter of 2009.

Cautionary Notice Regarding Forward-Looking Statements

Certain information in this press release may constitute “forward-looking statement” regarding Savaria, including, without being limited thereto, understanding of the elements that might affect the Corporation’s future, relating to its financial or operating performance, the costs and schedule of future acquisitions, supplementary capital expenditure requirements and legislative matters. Most frequently, but not invariably, forward-looking statements are identified by the use of such terms as “plan”, “expect”, “should”, “could”, “budget”, “expected”, “estimated” “forecast”, “intend”, “anticipate”, “believe”, variants thereof (including negative variants) or statements that certain events, results or actions “could”, “should” or “will” occur or be achieved. Such statements involve known and unknown risks, uncertainties and other factors liable to cause Savaria’s actual results, performance or achievements to differ materially from those set forth in or underlying the forward-looking statements. Such factors notably include general, economic, competitive, political and social uncertainties. Although Savaria has attempted to identify the key elements liable to cause actual measures, events or results to differ from those described in the forward-looking statements, other factors could have an impact on the reality and produce unexpected results. The forward-looking statements contained herein are valid at the date of this press release. As there can be no assurance that these forward-looking statements will prove accurate, actual future results and events could differ materially from those anticipated therein. Accordingly, readers are strongly advised not to unduly rely on these forward-looking statements.

Compliance with Canadian Generally Accepted Accounting Principles

The information appearing in this press release has been prepared in accordance with Canadian generally accepted accounting principles (“GAAP”). However, the Corporation uses earnings before interest, income taxes and amortization (“EBITDA”) for analysis purposes to measure its financial performance. This measure has no standardized definition in accordance with GAAP and is therefore regarded as a non-GAAP measure. This measure may therefore not be comparable to similar measures reported by other companies. A reconciliation between net earnings and EBITDA is provided in the Financial Highlights section below.

Savaria Corporation (savariaconcord.com) is Canada’s leader and the second largest North American company in the accessibility industry focused on meeting the needs of people with mobility challenges. Savaria designs, manufactures and distributes primarily elevators for residential and commercial use, as well as stairlifts and vertical and inclined platform lifts. Through its subsidiary Van-Action, the Corporation converts and adapts automotive vehicles for the disabled and also offers scooters and motorized wheelchairs. Its line of products, one of the world’s most comprehensive, enables Savaria to stand out by proposing an integrated and customized solution for its disabled and elderly customers’ mobility needs. Its operations in China have substantially grown since 2006 and the collaboration with the other Canadian facilities increases the Corporation’s competitive edge on the market. Savaria records approximately 60% of its sales outside Canada, primarily in the United States. The Corporation has a network of some 600 retailers in North America and employs 400 people at its head office in Laval and at its plants in Ville Saint-Laurent (Quebec), Brampton and London (Ontario) and Huizhou (China).

Complete financial statements and the management’s report for the first quarter ended March 31, 2010 will be available on Savaria’s website and on SEDAR (www.sedar.com).

Financial Highlights

 (in thousands, except per-share amounts, percentages and exchange rates) Quarters Ended March 31, ------------------------------------------------------------------------ 2010 2009 Change ------------------------------------------------------------------------ ------------------------------------------------------------------------ Average effective exchange rate (1) 1.0849 1.0670 1.7% ------------------------------------------------------------------------ Sales $ 13,243 $ 11,186 18.4% ------------------------------------------------------------------------ Gross profit as a % of sales 27.7% 24.3% n/a ------------------------------------------------------------------------ Selling and administrative expenses $ 2,841 $ 2,659 6.8% Selling and administrative expenses as a % of sales 21.5% 23.8% n/a ------------------------------------------------------------------------ Operating earnings $ 580 $ (137) 523% Operating earnings as a % of sales 4.4% (1.2)% n/a ------------------------------------------------------------------------ EBITDA (2) $ 641 $ 1,097 (41.6)% ------------------------------------------------------------------------ EBITDA per share $ 0.029 $ 0.04 (27.5)% ------------------------------------------------------------------------ Exchange gain (loss) $ (186) $ 66 (382)% ------------------------------------------------------------------------ Net earnings $ 179 $ 555 (67.7)% ------------------------------------------------------------------------ Net earnings per share - basic and diluted $ 0.008 $ 0.02 (60)% ------------------------------------------------------------------------ Dividends declared per share $ 0.084 $ 0.03 n/a ------------------------------------------------------------------------ Weighted average number of common shares outstanding - diluted 22,143 27,279 (18.8)% ------------------------------------------------------------------------ ------------------------------------------------------------------------ As at March 31, 2010 As at Dec. 31, 2009 -------------------------------------------------------------------------- Total assets $ 42,438 $ 39,888 -------------------------------------------------------------------------- Total liabilities $ 23,262 $ 19,099 -------------------------------------------------------------------------- Shareholders’ equity $ 19,176 $ 20,789 -------------------------------------------------------------------------- -------------------------------------------------------------------------- (1)Calculated considering foreign exchange contracts applied to the periods in question (2) Reconciliation of EBITDA with net earnings provided in the following table 

Although EBITDA is not recognized according to GAAP, it is used by management, investors and analysts to assess the Corporation’s financial and operating performance.

Reconciliation of Earnings before Interest, Income Taxes and Amortization (“EBITDA”) with Net Earnings

 --------------------------------------------------------------- Quarters Ended (in thousands of dollars) March 31, ------------------------ 2010 2009 --------------------------------------------------------------- Net earnings $ 179 $ 555 --------------------------------------------------------------- Plus: Interest on long-term debt 90 77 --------------------------------------------------------------- Interest expense and banking fees 40 30 --------------------------------------------------------------- Income taxes 117 265 --------------------------------------------------------------- Amortization of fixed assets 111 92 --------------------------------------------------------------- Amortization of intangible assets 133 107 --------------------------------------------------------------- Less: Interest income and dividends 29 29 --------------------------------------------------------------- EBITDA $ 641 $ 1,097 ---------------------------------------------------------------