Is the Growth Flattening for Savaria?…

Savaria is one of the global leaders in the accessibility industry. The company manufactures products that help people maintain their personal mobility. Its large product portfolio includes home elevators, commercial lifts, stairlifts, ceiling lifts and adapted vehicles. Savaria also offers medical beds and therapeutic surfaces. The company has manufacturing facilities in North America, Europe and China. It operates a sales network of dealers worldwide.

Savaria operates through Savaria Concord Lifts Inc., Savaria Huizhou, Span America/ Span Medical Products and Garaventa Lift divisions. The company manages its operations under three reportable segments, Accessibility (accounting for more than 70% of total six months’ revenue in 2020), Patient Handling (24%) and Adapted Vehicles (~5%). By region, the US is the largest and accounted for ~58% of total six-months’ revenue, followed by Canada (22%), the EU region (15%) and others (4%).

Investment Data

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Revenue Growth & Market Exposure

With three decades of extensive experience and innovative technology, Savaria is well-positioned to understand its customers’ needs and design customized products for their needs. The company has one of the most comprehensive product lines in the market. It helps customers stay mobile and independent in their homes as well as workspace. Savaria deals in both home and commercial accessibility products including straight and curved airlift, vertical/ inclined platform lift, through-the floor lift and home elevators. The company is known for pioneering new products from the ground up including its range of patient lifts, innovative ceiling lifts and a new lift for bariatric needs.

Savaria’s revenues are diversified and includes revenues from the medical market as well. The company deals in pressure management products for the medical market, as well as an extensive line of medical equipment and solutions for the safe handling of patients. In addition, Savaria converts vehicles to be wheelchair accessible. The company exited its low margin custom products business within the Span-America subsidiary to focus on patient handling and better profitability. The acquisition of Silvalea further strengthened Savaria’s patient handling segment and the acquisition of Florida Lifts back in 2019 opened up an attractive market of aging population, luxury properties and commercial accessibility needs
for seniors.

Savaria’s Q2 revenues declined by more than 9% YoY due to an economic slowdown, as a result of the global COVID-19 pandemic. The company’s margins, however, improved due to a better product mix and the continued realization of Garaventa Lift integration-related synergies in the Accessibility segment. Savaria has a sound track record of successful acquisitions and integrations. Its revenues have grown at a 35% CAGR in the last five years.

Dividends

Savaria Corporation is a Dividend Aristocrat having increased its dividend from 20 cents in 2015 to 46 cents in 2019. It has an annual dividend yield of 2.99% and a payout ratio of ~83% currently. Recently, the company raised its dividends by 4.3% to 48 cents. It pays a monthly dividend. The company’s dividends have clocked an impressive growth rate of 30%+ CAGR in the last decade and have continued to maintain a double-digit CAGR growth rate even in the recent years. Dividends paid in the second quarter and first half of 2020 amounted to $5.8 million and 11.6 million, respectively.

Savaria has a strong balance sheet with little debt. The company’s revenues are well diversified between mobility products and medical equipment. Savaria is well-positioned to benefit from a number of positive market dynamics across various market segments including a drive for safe patient handling, increasing global aging population and growing residential elevator market. Savaria provides a host of accessibility solutions for the physically challenged to increase their comfort, mobility and independence. The company focuses on expanding geographical reach for its products as well as adding new products to its existing portfolio and opening new distribution channels for future growth.

Competition

Savaria operates in a competitive industry. The company competes with other elevator and lift companies like Nationwide Lifts, Acorn Stairlifts, Access Elevator & LIfts, Orona, BraunAbility, etc. In the therapeutic and pressure management products business, Savaria’s chief competitors include Joerns Healthcare, Inc., Medline Industries, Inc., Drive DeVilbiss Healthcare, Inc., Invacare Corporation, GF Health Products, Inc., etc. For the Span segment, larger and well-established competitors dominate the market. Providing innovative and effective products at a lower cost remains its major USP.

Bottom Line

The demand for Savaria’s products should continue to grow following the shift in the nation’s demographics and a growing residential market. According to the U.S. Census Bureau, Stats Canada, it is estimated that over 20% of the population in North America will be 65+ by 2030. The global patient lifting equipment market is projected to reach $5.4 billion in 2024 from US $3 billion in 2019, at CAGR of 12.7%. Given, its extensive product portfolio, sharp consumer-focus, and large geographic footprint Savaria should continue its dividend-payment streak into the future.