Savaria Corporation

Thank you very much, Cecilia. Hi, gentlemen.

That's always interesting to make - to have you on the call this morning. And that was a special quarter.

I would call that special because we had COVID, we had the war. That creates uncertainty and one the people don't like is uncertainty.

They are not ready to put more money in the market. They maybe take up some money from the market, but Savaria is a stock and you me for 25 years that I start in Savaria, but right now, we have over 2,000 members of Savaria, and that's great because this company is resilient because the people, you have a war or you have COVID.

You need one time - you will need projects like Savaria. And Savaria offer the biggest number of projects to help the mobility of the people.

For sure, it's more the aging of the population is the base of our company, and everybody in the world should have access to the mobility for the stair and for all kind of other project that you need in the house or in the church or at work. So, we have a complete client.

We're the only company in the world that offer a line complete like that. So, it's why I was exciting 25 years ago, but I am excited this morning because one, the stock market is very difficult.

And yesterday night I was - and this morning I was looking at the analysts. Thank you, the analysts.

So, you make a great job to support Savaria, but we present you the fact. The fact is we will have a tremendous year.

We are very satisfied, more than satisfied about Q1. The sales of $184 million in this quarter, it’s very important.

That will push us maybe to exceed ourselves that we project. So, I will pass - and organic growth.

Just, we make $12 million of growth. Well, when I look at like the stats of April, the organic growth is there and it is very important.

So, you take our number and you are better than me in mathematics, I wish, then - and you see that our project stream, it's very realistic to say, hey, we are in good position. We are in good position.

And you will have the same guy who will speak our products and everybody I think is very enthusiastic. We have some new things that we will say to you on the call, like a new factory in Mexico.

That's very exciting. So, we have Mexico.

We have China. So, that will be more easy to - maybe the inventory level can be a little bit higher when we’ll be in production down there.

But what is important right now, you don't want to miss stuff. Just a couple of millions difference - that make a big difference in the quarter of our delivering products.

So, for me I will thank you to be there. Thank you to support me.

I will pass the phone to Steve, our CFO.

Thank you, Marcel, and good morning, everyone. I will begin with some remarks regarding our Q1 2022 consolidated financial metrics.

For the quarter. The corporation generated revenue of $183.5 million, up $71.5 million or 63.8% compared to Q1 2021, due to the acquisition of Handicare in March of 2021, and also due to strong organic growth of 12%.

Q1 2022 will be the last quarter showing any acquisition growth attributable to Handicare. Gross profit and gross margins stood at $58.5 million and 31.9%, respectively, compared to $37.4 million and 33.4% for Q1 2021.

The increase in gross profit was mainly attributable to the addition of Handicare. The decrease in gross margin was primarily due to inflationary pressures on supply chain, including increased shipping costs.

Adjusted EBITDA and adjusted EBITDA margin stood at $24.4 million and 13.3%, respectively, compared to $17.3 million and 15.4% in 2021. The increase in adjusted EBITDA dollars is, again, due to the addition of Handicare.

The decrease in adjusted EBITDA margin is due most notably to inflationary pressures on the supply chain, including increased shipping costs, as well as a reduction in government of Canada COVID employment retention subsidies. Total subsidies received for Q1 2022 was $0.2 million versus $1.1 million in 2021, reflecting a decrease of $0.9 million year-over-year.

Now I will move on to our segment results. Revenue from our Accessibility segment was $130.3 million in Q1 2022, an increase of $49.8 million or 61.7% compared to the same period in 2021.

The increase in revenue was mainly attributable to the acquisition of Handicare, which provided 53.4% growth. In addition, this segment experienced organic growth of 8.7%, which continues to be driven by strong demand in the residential sector.

Adjusted EBITDA adjusted EBITDA margin, both before head office costs for the Accessibility segment, stood at $20.5 million and 15.7%, respectively, compared to $13.9 million and 17.2% for the same period in 2021. The improvement in adjusted EBITDA is mainly due to the acquisition of Handicare.

The reduction in adjusted EBITDA margin is mainly attributable to inflationary pressures on the supply chain, including increased shipping costs. Revenue from our Patient Care segment was $41.7 million for the quarter, an increase of $16.2 million or 63.5% when compared to Q1 2021.

Revenue growth was driven by the acquisition of Handicare, which contributed 41.5%. In addition, the segment saw 22.2% of organic growth for the quarter, which was driven in large part by the easing of pandemic restrictions and improved access to long-term care facilities versus last year.

Adjusted EBITDA and adjusted EBITDA margin for the Patient Care segment, both before head office costs, stood at $5.3 million and 12.8%, respectively, compared to $3.7 million and 14.5% for Q1 2021. The increase in adjusted EBITDA was mainly due to the acquisition of Handicare and additional organic revenue coming from the easing of pandemic restrictions and increased access to long-term care facilities.

And the reduction in adjusted EBITDA margin is primarily due to the aforementioned additional costs in the supply chain. Revenue from the Adapted Vehicle segment was $11.5 million, an increase of $5.5 million or 92.2% when compared to Q1 2021.

The Handicare vehicle division based in Norway, provided 83.6% of our acquisition growth for the quarter. The Canadian divisions experienced organic growth of 12.9% in the quarter, driven mainly by some pent-up demand from last year.

Adjusted EBITDA and adjusted EBITDA margin, both before head office costs for the Adapted Vehicle segment, finished at $0.6 million and 4.9%, respectively, compared to $0.6 million and 10.4% for Q1 2021. The decrease in both metrics was mainly due to a reduction in the government of Canada's COVID-19 employment retention subsidies, and the aforementioned inflationary pressures on the supply chain, as well as delays in sourcing key materials.

For the quarter, net finance costs amounted to $1.4 million, which is stable when compared to Q1 2021 net finance costs of $1.5 million. Interest on long-term debt was higher by $0.9 million due to the financing of the Handicare acquisition.

However, this was offset by prior year having a loss of $1.8 million on a foreign exchange contract, which was used to help secure the Handicare acquisition. Net earnings were $5.3 million or $0.08 per diluted share for the quarter, compared to $3.8 million or $0.07 per diluted share for Q1 2021.

Net earnings was largely impacted by amortization of intangible assets related to the Handicare acquisition. Adjusted net earnings, excluding amortization of intangible assets related to acquisitions, reached $11 million or $0.17 per diluted share, compared to $8.8 million or $0.16 per diluted share for Q1 2021.

This reflects an increase of 25.7% or 6% on a diluted share basis. Turning now to capital resources and liquidity.

Savaria generated cashflows from operating activities of $13 million for the quarter, compared to $27.9 million in Q1 2021. In the prior year, there was a one-time favorable increase to net earnings to net changes in non-cash operating items of $7 million, based on the initial consolidation of Handicare results.

In addition, strategic investments in inventory were made this year, which further decreased cashflow from operations As at March 31, 2022, Savaria had a net interest-bearing debt position of $317.7 million, and was in compliance with all of its covenants. On a trailing 12-month adjusted EBITDA basis, Savaria’s net debt to adjusted EBITDA ratio was approximately 3.7 This represents a decrease of 0.05 versus Q4 2021.

Savaria has funds available of approximately $128 million to support working capital investments and other growth opportunities. Looking forward, unpredictable changes in the macroeconomic environment continue to make it difficult to predict future performance.

However, considering our recent financial performance and our strategic integration plan with Handicare, we are confident that for fiscal 2022, we will generate revenue in excess of $775 million, with adjusted EBITDA in the range of $120 million to $130 million. And with that, this completes my prepared remarks.

I will turn the call back over to Marcel.

Steve, thank you very much. I see that you mentioned great numbers.

And what is important, we have the cashflow to make acquisitions, small acquisitions in some place in the world that we are not there or with some products. Early this year, we buy a company that was manufacturing our controller, and we have great people located in this company.

So, I am more than happy right now about controller. We a little bit protect ourself by acquiring this great company.

So, and the people in this company is great. Handicare, you know something, as a (indiscernible), they will take care of the division of Garaventa and Span, and we do the same thing from us.

We take care here in Toronto of their products in the United States and Canada. And it's just great, and you see the patient handling.

We have one guy at the top that's a new guy. This is Patrick.

He has tremendous experience, and working with Les and Phil. They put this kind of number that Steve gave you.

So, it's just good and very good. So, we are ready for your questions.

Cecilia?

Hey, good morning, guys. Nice quarter on the organic growth.

The first question I wanted to ask is really on some of the margin compression that we saw in the quarter. And I'm assuming, well, our first day, a lot of the companies that we've been covering have been seeing similar pressures, and I'm assuming some of the headwinds here are going to moderate going forward, especially as you get a little bit more price.

I'm just trying to piece maybe some of the moving parts here. And I was wondering if you can help us maybe put together expectations for Q2 margins, whether we should see a step-up there, or if it's more gradual for the balance of the year.

You will see a step-up in Q2, for sure, because our increase of price is there. And you will see that our volume, like our backlog, in Toronto for North America and for the product that we make, it's three times what it was last year.

That's something to have a backlog like that. So, we are just to do what we are supposed to do, and that will be a great quarter and a great year.

So, I will ask Steve that if he can make comments on that, please.

Absolutely. Thanks, Marcel.

So, good to talk to you, Michael. The price increases that went into effect across the business, we didn't see a large impact in Q1.

We are expecting a more significant impact in Q2. Our goal continues to be to increase margins definitely above where we're seeing in Q1.

So, we are expecting more of an impact in Q2 and we'll expect an increase for the remainder of the year.

That's helpful. Thanks, guys.

And I guess the second question, maybe a little bit of a bigger picture question probably for Sebastien. If I view the Chinese facility as a competitive advantage for Savaria, it's given you a cost advantage.

It's given you vertical integration. I'm assuming you want something similar here with Mexico, but it does feel like a significant shift for the company.

So, I guess my question is, is Mexico intended to support additional growth for transition manufacturing capacity? And I guess, what advantages are you looking for longer-term here?

Sebastien?

Yes. Thank you, Michael.

Yes. So, I think - don't forget, Savaria has 20 years’ experience in China and China has been, I think, very good for the company.

It's very stable, very reliable, but in the last two years, it takes a bit longer to get container and a bit more disruption. So, yes, and now we have a target of $1 billion by 2025.

So, we have to create some capacity and we thought that Mexico was closer to North America, was making sense. It is attractive to produce something at a reasonable cost.

So, definitely, and now we have a bigger team and we have more experience. So, I think yes, we will be open in September this year in a few months.

So, we are putting a lot of effort in our planning, and we'll make sure that we have the right resources to support this. I don't expect a huge impact this year, but I think definitely from the next year, we will see some good impact to help us to increase the output in our factories in North America by supplying some standard parts in the sub-assembly from there.

And I think that would be a great adventure for us.

Yes. That makes a ton of sense, I guess, given the dynamics.

I guess, just as a quick follow-up before I turn it over, just potential costs around the construction and the ramp-up in inventory trends that we should expect as related to that.

Go ahead, Marcel.

No, but you know that we rent down there. So, it's not our building.

And for sure, we will do the same thing that we do in China. So, they will buy some project from us outside and ask about that.

That's the beginning we can see for ‘22, ‘23. And after that, we will see if we have to have some machine read on there, some equipment, but the - so the cost is not very high.

And I think that's a big plus to have something, the project that can arrive here in one week by truck directly to Toronto and instead of passing three months on the ocean and on the rail. So, that's a diversification, and I can - my people, my friend in China, I can assure you that it's - you are very important for us and you will be - you continue to be very important, but we need a little diversification and Mexico is a great diversification.

And we know some company down there. We'll make a little bit some effort and people from like (indiscernible) that is a shareholder help us on that too, because they are partner with us.

So, and we have great people and we are already visit some company that they are in Mexico since like BRP and years and years and years. And they are very successful to come get that solution for them.

So, we will continue, begin with our experience in China. We will do the same but closer for us.

So, that is a great transaction.

Thanks very much, guys.

Good morning, everyone. First question is on the Patient Care segment.

Obviously, you're benefiting from some pent-up demand with the increased access to long-term care facilities. Was just wondering if you had any visibility on maybe how long that positive side from pent-up demand could last?

Obviously, we’ve had about two years of underinvestment in that from long-term care facilities. So, is that something that you would expect to last for several quarters or was it mostly limited to Q1?

No, no. Frederic, several quarters, and I will pass the line to - in one minute, to Nicolas.

But you know that our backlog down there, it's a level that was never before. So, that's give us some caution for our next projection for many quarters.

And we have a group - a better group than ever that we have (indiscernible) that I see before. We have right now, Patrick.

And one with Patrick with Les and Phil, we have a winning combination. So, our specialist in that is Nicolas.

Nicolas, can you continue and say a bit different than me?

Yes. Thanks, Marcel, and thanks, Fred.

I guess as Marcel indicated, there were - I think we feel very confident about the team that we have in place. So, it starts at the top.

So, we have a very strong team there. As you'd indicated, we are, I guess, taking advantage of some of this rebound spending exiting COVID.

So, what you saw there in the first quarter, whatever it was, I think 22% of organic growth, that builds off of - in Q4 I think we were at 17% of organic growth, and I believe even double-digit organic growth in Q3 of last year. So, I think it's a continuation of this trend as we're really kind of exiting this more of a lockdown environment.

Some of it is related to facility access, for sure. Some of it is capital spending that's happening now that had kind of been allocated towards other more needy areas during the COVID time.

So, we are seeing a rebound from that. I think we also are seeing some market share gains.

Our team has been very good at winning a lot of these projects that have been put on the market. So, will we have 20% organic growth for the next five years?

Probably not, but I would say over the next several quarters, we do expect to have similar kind of double-digit growth within the Patient Care segment. But also, longer term, I mean, some of these trends that we're seeing coming out of COVID, is years of underinvestment.

Here in Canada, for example, there's a lot of these new build activity, which is kind of boosting much of our sales here in Canada. And that's something that we should see over the next several years.

So, I would say yes, right now we are in kind of an advantaged situation here exiting COVID, but I do think longer-term, there are still some very positive trends as it relates to the organic growth potential of that segment.

Great. And then maybe a question for Steve on the capital allocation priorities in the near term.

Can you just maybe update us on CapEx expectations and deleveraging for 2022?

Yep. So, we're committed to delevering at least half a turn this year.

Q1 is typically for us our seasonally worst quarter. It's our weakest quarter.

So, we will - we did delever slightly in Q1, but we will delever more in Q2, Q3, and Q4. I am expecting to exceed that half a turn this year, but as far as our published guidance, we’re sticking with half a turn.

We are remaining diligent with CapEx spend. We are tightening where we can, and we’re going to be spending under our budget this year.

So, even with the Mexico investment, we will be spending less than initially planned.

Great. Thank you.

Good morning, everyone. Thanks for taking my questions.

When the flow of good starts to get better, as we see logistics kind of unsnarl, do you think there's pricing risk where prices could come back, or you’re pretty settled at current levels?

Sebastien?

I think Zach, if you don't - if you remember, we have a multiple (granularity) between Handicare, Garaventa, Span and Savaria, and I think when we still make some price increase or there's inflation, I think it's a different brand has different seasonality when they make new price increase. I think this year, we have reset on most of our grants.

But again, if there's some effect during the year on inflation on the incoming material differently, we need to review what needs to be done. I think it’s an ongoing project, let's call it this way.

Got you. And with the backlog up three times from where it was last year, are you happy with your current labor force, or would you prefer to ramp up even ahead of the New Mexico facility in September?

We’ll ramp up, because we have a good team in in Toronto. Maybe I'll always want to have more and more.

But we have a good team, and you will see the number of Q2. We have a good start with April.

So - but we have a good start, but we have more booking than we were at the beginning of the month in April. So, I think Mexico will help us to do a little bit faster and - but it's very, very interesting to begin a month.

Right now, we are over roughly $20 million of bookings to do. We never had that in our life.

Never, never, never had that. And so, we are working hard to deliver as soon as possible.

So, it's why I see until the end of the year very, very busy.

And Marcel, just to add one thing, Zach, no, don't forget in Q1, I think we have lost 7% of our production hours in four of our manufacturing in Brampton, St. Louis and Heerhugowaard in Netherlands.

That did not help our output. If we will have get to all those hours, I think we'll have received some better organic growth, right?

Absolutely makes sense. And then just, if you could drill down for me on where exactly in the supply chain you're seeing pinch points and how you see that evolving over the course of the year.

Sebastien?

Yes. I think right now, Zach, China, for now, we did not lose a week of shipping since the beginning of the year or two factory in China.

And then we generally have been able to perform. Yes, we have a few suppliers in Shanghai where they had a month lockdown maybe, but just a few small parts.

So, I think it's just like it's a worldwide issue right now. Even if you have a local supplier or a supplier in Europe, you might get some small components in different place.

I think electronics is maybe one of those which is a bit harder. And I think the acquisition of Handicare has been pretty key for us so far.

Right away from the start, we have been able to manufacture some PCB in-house so that we can even make some of our potential challenge. So, I think it's important we control our process.

We do a lot of parts in our different factories. So, that help us a bit turn around some of the supply chain issue sometimes.

That's helpful. Thanks.

I'll turn it over.

Good morning. I guess, first, Steve, one point of clarification.

You said earlier that all the pricing increases will have the full benefit in Q2. And then, I thought you mentioned something about the rest of 2022.

Were there any more planned pricing increases, or for the time being this is it?

No.

Just - excuse me, Steve, but right now, when we see our result of Q1, we see the result on the first month of Q2, we’re not talking about adjusting pricing from our survey decision. And scale would be a little bit different.

But us, we want a fair price to the consumer, to the dealers, and to the manufacturer, us. Everybody has his point.

They have to have the products and then our dealer has to make money. So, right now, when I see the number that we took out, I think we have done what we have to done.

And don't forget that sometime maybe buy in advance. And many other manufacturing will say, oh, your price is no more good.

No. us, you have a price and we stick with our price.

So, I see some - even at the end of the Q2 and Q3, we will see some inventories that will be done and shipped. And then after that, it is just a new price will be in.

So, it takes some time, but we ask what is important. We are satisfied where we are right now in terms of percentage.

Can you add something, Steve?

Thanks. I was just going to echo Sebastien's earlier comment about - and you touched on this too, Marcel, is that we do have different divisions, different business units across different markets.

So, yes, some of the price increases and some of those businesses will be done, are done, and we haven't seen the full impact of those, and we will throughout Q2 and the rest of the year. But some of the other divisions, we're continuing to evaluate.

Yes, I just wanted to add that.

Very good.

And then my next question, just going back to the Mexican, it sounds like it's more of a sourcing of products similar to China, as opposed to just a pure assembly plant. And I'm just wondering, if you look at the competitive landscape thinking more - obviously you've acquired Handicare and Arjo is still out there.

And I'm just thinking, when it comes to lead times, you guys are obviously strengthening your position within the North American market. Can you just speak to what you're seeing out of Arjo and their abilities when it comes to lead times?

Are they also getting better or you think that their infrastructure doesn't support what you've done? And then maybe Steve, any color on what sort of margin benefit you guys anticipate out of that Mexican facility when you capture lead times, workforce, lower cost base, reduced shipping costs.

If we look at 2023, what sort of margin lift can we think about from the Mexican plant?

Sebastien, you'll begin and I will finish.

Okay. So, I think for sure the impact on the margins, Nick, I think it's too soon to comment on it.

I think first we have to finish our year to settle all ourself over there, but definitely we're doing it for a reason, which is to have some cost benefit, and the most important, to be able to attract some talent and to be able to deliver on this $1 billion capacity that we need to have. And I think in term of lead time, Savaria has always been good at lead time across the different brands.

If we look at the lead time of Span, it's just extremely quick. And again, massive project on sitting lift.

Very often it's the planning, but if we need a quick turnaround, we are usually good. Elevators, yes, right now it's a bit longer, but again, the customer, they know it.

They have time to plan it when they make renovation on new housing and install lifts. That's why we bought Handicare.

They are the best at lead time. And right now, with the development we have brought back in Toronto for manufacturing, by the end of Q2, we should have probably the best lead time in the industry.

So, I think lead time is still a key for us. I think the Mexican is more to rebalance our supply chain, to lower inventory over time.

What we have on water with China, that's a bit that we might answer on it. Maybe, Marcel, you want to add something?

Steve, you want to add something?

I mean, Sebastien touched on our margin expectations. It is a little bit early to sort of give guidance on that.

Yes, we will save shipping costs clearly, but there's also another savings and that's on working capital. So, bringing some of this production closer to our largest market and being North America, we will be able to save working capital investment dollars and be able to allocate that elsewhere.

That's good there. Very good.

Just one second, just to give you an example what we're doing in Toronto. So, we manufacture the figure.

And what is very important, in July, we will be able to deliver this project in one week’s times. The best in the industry.

And so, we work with this association at this purchasing we have make with Handicare, help us that partnership that we take, we believe that we can be the best in North America. So, come in Toronto and see our manufacturing that we see in Toronto.

You will be amazed. Where is - I don't know what is your residence in Toronto, but you can see that we are more open than before, and what we want to the dealer and to customer, deliver a project as soon as possible when you make the order.

And we are gaining on that. We're gaining a lot.

And so, thanks for my people to work on that. So, and thanks to continue to follow us after how many years to follow us?

I think it's been about eight years, give or take, seven, eight years.

I see. Yes.

Just one last question on the Ultron acquisition. Obviously, you're acquiring one of your controller manufacturer, and controllers are obviously a key component across your entire product set.

Similar question to Mexico, what sort of margin benefit do you think you can get given the fact that these controllers are everywhere in your products?

Sebastien, you want to answer that? I can, but answer that.

You take care of that.

I think, Nick, for this year, for sure, when we were giving guidance, we knew we weren’t using this acquisition. So, I don't think there's a change for this year, but it was more than just pressing.

It was more to make sure we have the parts, we control our supply chain to be vertical integrated. And after that, to make sure that right now we have different brands, different type of electronics for similar products.

So, over time we want to streamline our PCB to make sure we have more, the latest technology in our elevator, like a Bluetooth, Wi-Fi, name it. It's important for us.

We need to be ahead of the competition. So, by designing our things in-house, we should be able to have the best product in terms of electronics in our different products.

Okay, great. Thank you.

I'll pass it on.

Yes. Good morning, everybody.

Hey, Derek, and very happy that you're on the call again. Okay, Derek.

Curious if any of that was being driven by customers looking to lock in prices ahead of any price increases that were coming up.

I missed the beginning of your sentence. I don't know.

It's not just me, or. Sebastien, did we hear all the question?

No, we have missed the beginning. Derek, do you mind to start over the questions?

Yes, sure. I was just, I was curious of any of the strong organic growth that you experienced, was that being driven by customers looking to lock in prices sort of ahead of any price increases that you were putting through?

That's a very good question. I am sure a little, at least maybe 20%, it's for that.

But that - it's - in reality, our booking is very - but a little part is for that they want to reserve their price. We want to be - we check the game.

They don't order to order. We need a name of the customer.

We need some information that it is a fake order. We check the game.

Okay. I mean, and that's fair.

What I found as well in the MD&A is that you did single out in the Accessibility division, synergies with Handicare as one of the drivers of the organic growth. Maybe if you can just talk about what you're seeing on that side in terms of synergies.

Sebastien?

Yes. So, I thank if you remember, Derek, at the beginning a year ago, we said that we'll have $12 million of synergies I think by the end of this year.

I think we’re on track with that. This is moving correctly.

And some of the key project that we added was to close the Sweden stock office. This has been done.

After that, if we talk while bringing back the manufacturing of free curb in North America. That has been done.

It was to start the distribution of (indiscernible) from one location, service centers in Greenville now, and to merge the team. Right now, if we want to order Straight Stairlifts in North America by the team of Handicare and Savaria have merged together.

They work together. So, I think a lot of those initiative are on the way, but again, there's some that is still on the agenda for this year.

So, I would say that I am quite happy with the progress we're having, and right now that the travel has eased a bit. Definitely, our teams are mixing together earlier.

We are coming here. And a good example of a small project, like last month I had four people from Handicare here to work with us, how can we revamp one of our assembly line here in Toronto, where we are super busy, get some idea from the inside of the company.

Again, the team of Peter has done a good job to come and re-challenge the way we do elevator for the last 20 years. So, I think as just an example of synergy that we are always working on something.

Okay. And maybe a few more for me.

In terms of the Mexican initiative, just maybe if you can comment on what you're seeing in terms of labor availability and maybe the workforce quality in Mexico.

Sebastien, go ahead.

So, I think yes, definitely, I think in term of labor pricing so far, we did our due diligence and it seemed that Mexico is bit more attractive than China versus the labor cost per hour. So, I guess that's good news.

The labor ability seems to be there. And I think the chance is when you start from scratch, you can decide to hire the person that you want.

So, we are going to start definitely with a good staff that has good technical knowledge in the office, and that can speak in English and and Spanish. So, definitely, and I think that people will be happy to work for a foreign company.

Right now, if we look at the company we're setting up over there, it will be like we said, dream factory. We'll have a good showroom to show our employees exactly what we do that they understand exactly.

So, we’re expecting to be a world class manufacturer over there.

Okay. And maybe just one final one for me is, I was curious if you have any visibility or if you're seeing any relief right now maybe on the freight side or shipping side of the supply chain.

Sebastien?

Yes. The freight, for sure it's not like last summer.

Last summer was more like $25,000 a container. Right now, in the first quarter, we saw some $18,000 to $20,000 per container.

So, I think it is similar to Q4, but it's not the same as it was last summer. So, it's a bit better.

It still take a lot of time to come on the ocean, but in term of pricing, it's a bit better than it was last summer.

And Sebastien, the question, okay, just to answer where we are going with the manufacturing of free curve, now we have the current piece coming from Europe. But in August, we'll have the equipment here, and we will save, how much, Sebastien, per month of shipping that we pay right now?

Yes, just as far - so yes, we are the manufacturing some free cover in Toronto, but instead we have a few parts that is still coming from Europe. So, we're expecting that from this summer, we should be about to save $200,000 per month.

So, that's an example of synergies which is going to help us for the second half of the year.

Awesome. Thanks for that.

That's good color. Thank you.

Okay. Thank you very much, Cecilia.

Thanks for the people that listen to us this morning. We're very enthusiastic, and you will see that we will try very, very hard and we will succeed to meet our guidelines.

That's what is important. So, thank you for my team and see you at the next quarter.

Thank you.