Savaria Corp

TSX:SIS

Earnings Call Transcript 2024-Q3

[Operator]

Good morning. My name is Brittany Morgan, and I will be your conference operator today. At this time, I would like to welcome everyone to Savaria Corporation's Quarter 3, 2024 Conference Call. [Operator Instructions]

This call may contain forward-looking statements, which are subject to the disclosure statement contained in Savaria's most recent press release issued on November 6, 2024, with respect to its quarter 3, 2024 results.

Thank you. Mr. Bourassa, you may begin your conference.

[Sébastien Bourassa, executive]

Thank you, Brittany, and good morning, everyone. So today, I will start with a small recap of our Q3 results, then I will hand it to Steve for a financial update, and JP will then update us with Savaria One, and we will follow with a small Q&A session.

First, I need to say that I'm very proud of our Q3 results as it showed that the transformation is stable with a third good quarter in a row, and it continued to have marginal improvement towards our objective of $1 billion of sales and 20% of EBITDA by 2025.

So some of the key highlights. For the first time, we have reached 19.5% of EBITDA, which is slightly better than Q2 and it's our best quarter so far, which shows that we continue to have a good traction on our Savaria One transformation. And JP will talk more about it later.

So the full segment of Accessibility, Europe and North America together was at 21.3%. Patient Care stood at 17.4%, a little behind our target of 20%, but I'm pretty sure they will catch up soon. Q3 results, 0.5% away from 20% or approximately $1 million of EBITDA to reach that. So I'm pretty sure we still have enough juice in our transformation to get there. So we're feeling good about the 20%.

Growth. We had a good quarter in North America with 8% and the year is at 11.3%. So it showed that the demand remains very strong for residential sector in North America. Europe was down 6.6% in Q3, which is, of course, not fantastic. But this year, our main objective was to improve the EBITDA margins in Europe. You remember at our Investor Day in April, we were at 10% to 12% of EBITDA, and now we're at 15.6%. So a very good job from the team there. Thank you.

Definitely, we have been more selective this year on our contract on some of our partnership in Europe, and we have put some emphasis on margins. I'm very confident that soon we'll be back with some growth in Europe with some new products we are launching and a one-stop shop with the stairlift, the inclined platform and the vertical platform and some home elevators eventually. So the future is looking positive.

Patient Care was more or less flat, but order intake and backlog is very good. It's just a bit of delay on some execution of the project. I'm pretty sure we'll see a good Q4 and a good 2025 as we are launching some new products in this segment also and the sales team is making very good effort on the sales growth.

Overall, I remain very confident with our 8% to 10% of organic growth target for the Savaria One as we operate in a growing industry with the aging of the population, the density of the residential housing, which is helping home elevators, and the large product offering that we have that will make us a very attractive partner.

Also, the first part of the transformation was more operation, procurement, pricing as we needed to build the infrastructure of the company if we want to be able to expand our sales. I think now I'm quite happy with the development that we have done in the first half with the operation.

The second part of the transformation will be definitely more around sales growth, increasing our share of wallet with the existing and finding some new dealers, launching some new products with our team of 50 people dedicated on R&D.

Also, in this quarter, we have continued to deleverage. Now we have a net debt-to-EBITDA of 1.69 and available fund of $247 million. So we are very well positioned to do some small, midsized strategic acquisition that can bring some growth to Savaria. I need to say now that we are ready to make some acquisition again because the foundation of Savaria One and the team is better than ever.

So thank you again to all our dealers and employees for the success in the third quarter. So Steve, financial, please.

[Stephen Reitknecht, executive]

Thanks, Sebastien. Good morning, everyone, and thanks for joining our Q3 conference call. I'm pleased to share some remarks regarding our Q3 2024 financial results.

So key highlights for the quarter include continued improvements in profitability, both in gross margin and adjusted EBITDA margin, revenue growth of 8% in North America Accessibility coming mainly from elevators and lifts. Cash from operating activities increased liquidity by $35.8 million, with positive effects from working capital items, which has allowed us to repay $26 million of debt year-to-date and increase our funds available under our credit facility by $24 million this year.

And correspondingly, our ratio of net debt to adjusted EBITDA reached 1.69 at the end of the quarter, a decrease from 2.07 at year-end. So for the quarter, we generated revenue of $213.6 million, an increase of $3.5 million or 1.7% versus last year. Overall, the increase came from organic growth of 0.2% and the acquisition of Matot, partially offset by the divestitures of Van-Action and Freedom Motors earlier this year. We also experienced positive foreign exchange fluctuations.

I'm pleased to report that the corporation achieved an impressive quarterly adjusted EBITDA, surpassing the $40 million threshold for a second consecutive quarter, reaching $41.7 million in Q3. We also delivered strong gross profit and gross margin of $79.1 million and 37% compared to $72.6 million and 34.5% a year ago. The increase in gross profit of $6.6 million is explained by improved gross margins in both segments due to operating leverage, improved pricing and lower material costs.

Supported by Savaria One to fuel these strong results, we incurred $5.4 million in strategic initiative expenses this quarter, which is in line with the previously stated expectations at our Investor Day earlier this year. JP is going to provide more details on ongoing initiatives shortly.

Adjusted EBITDA and adjusted EBITDA margin finished at $41.7 million and 19.5% compared to $34.5 million and 16.4% last year. I'm pleased to report continued improvements in profitability in both segments, coming mainly from improved gross margins as we have seen the positive impacts from our procurement, pricing and operational initiatives under Savaria One.

Now if we look at our segmented results, revenue from our Accessibility segment was $169.8 million, an increase of $3.5 million or 2.1% compared to last year. The increase in revenue was due in part to organic growth of 0.6%, made up of 8% growth in North America and a contraction of 6.6% in Europe. The growth in North America came mainly from elevator and lift products as we have seen continued demand in both residential and commercial sectors, as well as from pricing benefits.

While the market remains challenging in Europe and we are reporting a contraction, I will say that we have seen improvements in pricing optimization. The focus continues to be on profitable revenue growth.

The Accessibility segment benefited from a positive foreign exchange impact of 1.8% for the quarter. Although we did have a negative impact on revenues from the divestment of the vehicle businesses in Q1, this was partially offset by contributions from the Matot brand we acquired earlier this year, bringing us both material lifts and dumbwaiters.

Adjusted EBITDA and adjusted EBITDA margin for Accessibility stood at $36.2 million and 21.3% compared to $29.9 million and 18% last year. The increased profitability was mainly due to slightly higher revenues, improved pricing and lower material costs in both regions. To offer additional insight in our regions, the adjusted EBITDA margin for North America was 25.5% for the quarter while the margin in Europe increased to 15.6%, so in line with our Q2 performance and both materially improved versus a year ago.

Turning to our Patient Care segment. We saw our revenues reach $43.9 million for the quarter, which is stable when compared to last year. We have observed balancing effects of increased medical bed frame and mattress revenues and lower sales from ceiling lift packages due to a slowdown in new long-term care build activity caused by timing and project delays.

As a reminder to our listeners today, our Patient Care business is more affected by project-based sales than our Accessibility segment. And while the quarter and year-to-date growth in Patient Care has remained relatively flat, we are expecting to see some growth in Q4 as we have a healthy and growing backlog.

Adjusted EBITDA and adjusted EBITDA margin for Patient Care stood at $7.6 million and 17.4% compared to $6.1 million and 14% last year. The increased profitability was mainly due to pricing initiatives, favorable product mix on certain projects and lower material costs, partially offset by higher selling expenses.

And now on a consolidated basis, net finance costs were $4.4 million compared to $5.5 million last year. Interest on long-term debt decreased by $1.7 million due to the reduced balance of debt and a reduction in the variable interest rates. During the quarter, we had a net gain on financial instruments and a net loss on foreign currency exchange, which netted to an overall unrealized gain of $0.5 million, impacting finance costs for the quarter.

Net earnings were $13 million or $0.18 per diluted share for the quarter compared to $12.1 million or $0.18 per diluted share last year. The increase in net earnings was mainly due to higher adjusted EBITDA and lower net finance costs, partially offset by strategic initiative expenses and higher net income tax expense.

Turning now to capital resources and liquidity. For the quarter, cash flows from operations before working capital impacts reached $30.5 million compared to $26.9 million last year, attributed to the increased EBITDA, but partially offset by higher strategic initiative expenses. Net changes in working capital items increased liquidity by $5.3 million compared to a decrease of $1.6 million a year earlier. The favorable change was driven by reduced trade receivables and prepaid expenses, partially offset by higher inventories and lower deferred revenues.

As a result, cash generated from our operating activities in Q3 stood at $35.8 million compared to $25.3 million last year, which is an over $10 million increase. While DIO, days of inventory on hand slightly increased, our days of sales outstanding remained stable and days payable outstanding improved versus Q2, in line with our initiatives to enhance working capital management across the business. We remain committed to being diligent about investments in working capital as we grow.

Cash used in investing activities was $5.9 million compared to $4.5 million last year. We disbursed $6 million for fixed and intangible assets in the quarter compared to $4.6 million in Q2 2023. Some of the larger CapEx investments in this most recent quarter include a new welding machine robot and investments in our paint line in our Surrey facility to enhance production efficiency, as well as a new bending machine in Europe.

To foster business growth, we anticipate capital expenditures to remain within our historical range of 2% to 2.5% of revenue for the year for 2024. Cash used in financing activities was $15.4 million compared to $20.7 million last year. In Q3, we saw a reimbursement on our revolving facility of $3.3 million. Interest paid was $3.6 million, and that was $2.6 million lower than prior year, and dividends amounted to $9.2 million versus $8.4 million in the prior year.

Overall, as at September 30, 2024, our net debt was $259.1 million, and as mentioned, the ratio of net debt-to-adjusted EBITDA stood considerably improved at 1.69 in comparison to 1.88 at Q2 and 2.07 at the end of last year.

And now looking forward with regards to guidance, as stated on the Q2 call, Savaria is not providing guidance for fiscal 2024 as we focus on the achievement of our targets of approximately $1 billion of revenue and 20% adjusted EBITDA margin by 2025. The global team is focusing on delivering these 2025 objectives, and it remains difficult to pinpoint where we will finish 2024 and individual quarters therein.

Savaria's future prospects are promising, driven by strong demand, macroeconomic tailwinds and the progress of Savaria One. Our strong cash generation and deleveraging increases our future ability and willingness for acquisitions as we look to wrap up Savaria One in 2025.

And with that, this completes my prepared remarks. I will now turn the call over to JP to provide further details on how we're progressing with Savaria One.

[Jean-Philippe Montigny, executive]

Thank you, Steve, and good morning, everyone. Before I dive in, I just want to take a moment to thank the hundreds of colleagues at Savaria who are contributing to Savaria One. The results we can speak about today are the results of a team effort.

In Q3 2024, as you just heard, Savaria delivered very strong results again, $41.7 million of adjusted EBITDA, which is almost the same as in Q2, while revenues were about $8 million lower in Q3 than in Q2, which is quite an achievement to maintain the same profitability with $8 million less revenues. We all preferred to report growing sales, but given those, we continued to improve our profitability this quarter.

Our EBITDA percentage continued to increase from 19% to 19.5% versus the prior quarter, well ahead of last year. We're very happy with those results as it shows we continue to improve the efficiency of our business and we are well set up to generate more profitable growth when sales are up again. In fact, we view Q3 as the second quarter where we can clearly measure the impact of Savaria One on the business and in our results.

The recurring monthly gains delivered by Savaria One's initiatives continued to grow as we implemented several millions of dollars of improvements in the quarter. Yet this improvement in run rate and in-quarter benefits was limited by the negative impact of sales. We shared earlier this year during the Investor Day our plan to grow from $130 million EBITDA in 2023 to $200 million in 2025.

Overall, we implemented a bit more than half of the value of the initiatives defined for this initial goal by now, and we keep adding new initiatives and ideas to our pipeline regularly. But in principle, we passed the half mark.

Let me share a few examples. So in Q3, we implemented about 15 different procurement initiatives. Those include raw material negotiations using competitive quotes, but also switching parts between suppliers or substituting parts, as well as consolidating purchases between sites and negotiating with suppliers on basis of benchmarks. And all of our sites benefited from that.

We also succeeded in transferring production between sites within our network to reduce our overall manufacturing cost. For example, we transferred the assembly of elevator controllers to our Mexico facility or we also transferred the assembly of the drive box of our inclined platform to our Italian factory.

Finally, we continued to improve our factories. For example, Steve mentioned it, that we upgraded our paint line in Surrey, which both -- which reduces the manpower needed to operate it, but also reduces the paint usage and increases the recycling, on top of enhancing paint quality. We also implemented other improvements, including a full process in the assembly line of our beds manufacturing facility in Beamsville, which increases throughput per shift.

Similarly, in field operations, we made major improvements to the productivity of the installation and field operations teams in Europe. To date, we had more success on cost reduction and revenue growth efforts, but I want to specify that this does not mean that we did not put any efforts in sales growth or made improvements to our business practices or systems. We implemented many changes, including equipping our sales associates with better tools and information, providing training and onboarding new reps across the business.

We also have clear plans to cross-sell and bring more dealers on board by leveraging our strong value proposition. Naturally, it takes more time for those changes to materialize. We also think markets were softer or slower than usual this summer due to factors outside of our control and not related to Savaria One. So we're still very optimistic about sales growth going forward.

At this point in time, our factories are better organized, more efficient and have capacity available to take on more orders. We also improved the quality and safety of our operations worldwide so we're better equipped than ever to supply high-quality products to our end customers and our dealers.

In any case, our priority for the coming future is to continue to grow sales, and we have plans to do so in each business. This being said, we also continue to pursue initiatives to reduce our cost of material, our manufacturing and overhead costs, so we will be pursuing those in parallel.

Furthermore, it's important to know that we have a strong product innovation pipeline, and we are preparing for new product introductions in the coming months. For example, our new M-Series clinical ceiling lift is being launched at the moment. It's an impressive product that has lithium-ion batteries as opposed to lead acid, thus 4x more powerful and 4x lighter. It has digital menu and diagnostics, Bluetooth connectivity, proprietary and patented 3-function emergency down function. And with that, we are launching an innovative carry bar with integrated Class III weight scale. We have more product upgrades and new product launches coming up to support our growth aspirations for 2025, but this was just one example.

Furthermore, the Matot integration is going well. We started to produce the dumbwaiters in Brampton with 3 units produced here in September and 6 in October, on track with our plan to produce 100% of dumbwaiters in Brampton in Q1 2025. Also, QuoteBuilder is now set up to process orders of Matot dumbwaiters.

In conclusion, we're happy with our fundamental progress on Savaria One in Q3 and look forward to see the results continue to compound and accelerate, especially when sales growth resumes.

Thank you for your attention. Let me hand it over back to Sebastien for closing remarks.

[Sébastien Bourassa, executive]

Okay. Thank you, JP and Steve, for those color on the Savaria One and on the financials. So I guess, Brittany, we are ready with some questions with our analysts.

[Operator]

[Operator Instructions] Our first question comes from the line of Derek Lessard with TD Cowen.

[Derek Lessard, analyst]

I just -- maybe just want to start on. You gave some good color on your innovation pipeline. Can we just maybe talk about how you think about the incremental margin contribution from new product introductions? Is it higher than your 20% target? And maybe on that note, is it maybe a little too early to start thinking about you guys potentially exceeding that 20% target goal over time?

[Sébastien Bourassa, executive]

I guess I will start. So for sure R&D -- there's a mix of things. Now we're always looking to improve current products to make sure they're up to code, to make sure we improve the design, the aesthetic and get a little bit of cost savings on our product as well. But for sure, when we launch some new products, we launch it at the right margins or we don't launch it. That's one thing for sure.

After that -- right now, I think the 20% EBITDA target, I think we can see it is achievable. Hopefully, next year we'll be there. But to say that -- what is the next after the 20%, I think we'll need to wait a bit the next guidance or the next Investor Day to see what is the next milestone. But definitely, the R&D is helping to improve the margins. And the most important, the R&D is helping to launch new products that we can get some growth.

[Derek Lessard, analyst]

Okay. That's fair. And maybe just on M&A. Could you maybe just talk about what are some of the criteria you're looking for? Is it product fill? Is it expanding geographies, capacity expansion? What is it exactly that you might be targeting?

[Sébastien Bourassa, executive]

I think if we look at the past, like without talking too much for the future. But really in the past what has been good for us, Derek -- some of our dealers that want to retire, no second generation, we're a natural buyer to those distribution centers looking to the sales service and maintenance. After that, the complementary product that can help us to generate growth and make sure we remain one of the best source of one-stop shop.

Example, the Matot in April was a strategic acquisition that we can bring in new products and maybe use our supply chain, which is pretty strong, to improve the cost on this product line. So definitely, dealer opportunity, if someone wants to retire, a strategic acquisition that can bring some product mix to help Europe and North America is definitely what we're looking for. And small, midsize, that's a bit what we can look for.

[Operator]

Our next question comes from the line of Michael Glen with Raymond James.

[Michael Glen, analyst]

So I recall you spoke to your stairlift business in both Europe and North America during the Investor Day. Can you just frame -- are you able to frame for us the opportunity in North America for the stairlift business now that you have the product line that you want in the region? I'm just trying to understand what is the size of the opportunity for stairlifts in North America for Savaria?

[Sébastien Bourassa, executive]

It's a good question. So I'll say, for sure, when we acquired Handicare, we brought back some manufacturing for curve stairlifts in North America. Now in our Brampton facilities, we manufacture 2 products. One is the 4000, which is a 2 tube system. And one which is the free curve, is a single tube. And I will say right now, our lead times are outstanding on the curve stairlift, okay? We can do a curve stairlift within a week. And I think that gives us a very key advantage.

For sure, unfortunately, we don't disclose really the growth per product. So maybe one day that's something we should do if people have interest. But definitely, we look at North America, we had a good year so far, 11% growth. So I think definitely the stairlift is a key element where we want to be better. In terms of market size, I think it's a bit difficult to give perfect data. But definitely, stairlift, we can be much better in North America because now we manufacture locally.

[Michael Glen, analyst]

And are you able to give an indication like the size of our -- the size of your European stairlift business relative to the size of your North American stairlift business. Is there a number there?

[Stephen Reitknecht, executive]

I would say -- just to jump in here, Michael, I would say -- I mean, our Europe business is primarily a stairlift business, right? And our legacy North America business is primarily elevators and lifts. So with that being said, the biggest opportunity for us is to grow within our existing dealer base in North America, grow with them through stairlift sales.

And we look to add products such as the Matot line, which we added in with dumbwaiters and material lifts. I mean that gives us one more product in the portfolio and it gives us a bit more leverage on getting share of wallet with our existing dealer base to increase the stairlift portion of that.

So we have -- we are a market leader in North America on the elevators and lifts and stairlift is the focus. But we think now with -- Sebastien mentioned the lead times and the production here. With that and the complete offering that we have a good opportunity. But for sure our -- I mean, our stairlift sales in Europe, I would say, are significantly larger than our sales in North America.

[Michael Glen, analyst]

Okay. And I just want to circle in on the pricing initiatives that you're going after as well. So I recognize there's likely a lot of complexity to how you price product, and it's probably not as easy as saying you're just like 5% below where you should be. But I'm just wondering if you can share any notable takeaways that you've seen as you dig into how you price relative to your peers right now? I know it might be a little bit competitive sensitive, but any insight there will be interesting.

[Stephen Reitknecht, executive]

I mean, generally, on pricing, we -- we're not a -- we're a market leader. We're not a market follower. We try to be respectful of our dealers and try at the same time to make sure that we're having a good margin come through to the bottom line. So our price increases are different by each region depending on the factors in that local market. So for example, the price increases that we target in Europe are different than what we're doing in North America.

I will say that we have had good benefits from the pricing impacts. It's not just from increasing pricing in both markets. It's also from being more diligent around discounting and ensuring that we're not participating in sort of those races to the bottom when it comes to some opportunities that -- although they come in front of us, they are a low-margin sale. So we're not necessarily going after that. We're being focused on -- focusing on the more profitable sales. And so it's both elements of increasing price, but also making sure that we're not discounting just to get the volume. Hope that provides...

[Operator]

Our next question comes from the line of Frederic Tremblay with Desjardins Capital Markets.

[Frederic Tremblay, analyst]

On the margin in Europe, it's 15% -- over 15% now over the past 2 quarters. Do you feel like you've reached the -- I guess, the maximum effect from your pricing discipline there? And if so, can you maybe go through some of the other drivers that could potentially lead Europe to a higher margin over time?

[Jean-Philippe Montigny, executive]

Yes. So I'll take this one, Fred. So I don't think we've reached the limit at all, okay? So what we've done to date is improve our cost of goods sold. A lot of sourcing initiatives have flown through. We've been a bit more, let's say, lean in our operations and in our staff. So we did improvements in the factories. We looked at our staff in the headquarters. But there is more to come, okay?

And if you think about what could make a big difference for us is now with the new cost structure we have, any incremental sale is very profitable. So one thing we're working on in Europe now is growing again now that we've kind of reset the foundations and the infrastructure, like Sebastien was mentioning before. So any incremental sale, as you can imagine, will increase our margin overall and the average margin.

We also have many opportunities to bring products to Europe. So we're working on certifying our products for Europe now, the ones that we make in North America. And that will use the same infrastructure of salespeople, the same infrastructure of manufacturing, as you can imagine, right, the same -- whereas the same supply chain. But we can get more revenues from these products that tend to be high-margin products. So we still see room for growth in margins in Europe.

[Frederic Tremblay, analyst]

Okay. Great. And just on those new product introductions into Europe, do you have any comments on the timing of that? Is it the first half of '25 or second half? What are we looking at for that?

[Sébastien Bourassa, executive]

Good question, Fred. So I always touch a bit to talk about the R&D launch thing that are not public yet. But definitely, we are working on it. And I will say definitely in the first half of next year, we should be able to have some vertical platform for porch lift very early next year. And we should have probably home elevator in the first half of next year. So I think definitely those will add to get some growth. And I think the team is really looking for it because the one-stop shop has been one of the success of Savaria so far.

[Frederic Tremblay, analyst]

Okay. Great. Maybe switching to Patient Care. A bit of a slower growth profile in recent quarters, but I think you did mention that Q4 is shaping up nicely there. Can you maybe just go through some of the factors that are leading to your confidence on that? Is it some of the delayed projects starting to start up? Or is there something else there that's sort of making you optimistic on the Q4?

[Stephen Reitknecht, executive]

Fred, I will just say for Patient Care without giving too much away, I mean, we were -- Q4 is typically the strongest quarter. I mean, with that being said, we are expecting it to be a little bit stronger this year. Q1, 2 and 3 were a little bit disappointing, to be honest. And we have been building the backlog really throughout those quarters. So we're going to see some of that come through in Q4. So some of it's timing on projects, some of it's just stuff that we have in the pipeline. But yes, we are expecting Patient Care to be turning a corner.

[Operator]

Our next question comes from the line of Zachary Evershed with National Bank Financial.

[Zachary Evershed, analyst]

Congrats on the quarter. So just to dive back into Patient Care there on those project delays, anything to flag? Or is it just normal construction hiccups?

[Sébastien Bourassa, executive]

I think I saw a nice report from an analyst not too long ago, Zach, about the potential of the Patient Care and the beds. So I would say good report. So again, definitely, the Patient Care, sometimes there's lumpiness from one quarter to the other. And I think you will see some -- we have launched some new products this year. We have improved some new products. So I think definitely you will see some growth in the coming quarter.

[Zachary Evershed, analyst]

Got you. And then switching to politics. One of your competitive advantages is sourcing and preassembly in China. Can you tell us about your potential exposure to tariffs given the results of the American election?

[Sébastien Bourassa, executive]

Zach, politics is super important. And I will say we are always reviewing the news to make sure we know things when they become available. But we try to be neutral between one side or the other. And I will say that the beauty of Savaria, we are vertical integrated in many places. We know we have opened a new factory in Mexico 2 years ago to be a bit diversified. We know we manufacture some parts into a key factory in North America in Vancouver and Toronto.

So we think we're in a pretty good position if the rules of the game change. And after that, okay, you always have the exchange rate, that, sometimes if some tariff become available, maybe the exchange rate will help us as well. We don't know the future. We will adapt as we can. And I think on the Patient Care, our 2 factories are really made in USA. So I think that can play in our advantage also.

[Zachary Evershed, analyst]

Got you. And then last one for me. Just as you're ramping up Savaria One, are you seeing any diverging trends between your direct store initiatives versus dealer sales? Any difference in your growth or profitability strategies there?

[Jean-Philippe Montigny, executive]

I don't think so. This is JP. So I'm trying to reflect on -- so we had a good success with our direct stores this year. They're not all equal, to be fair. So I don't see much difference. It looks that both businesses are improving. Yes. And it's not consistent between one direct store to another either, but in general, we're improving, so. Yes, I don't think there's any particular insight on this one. I'm sorry.

[Operator]

Our next question comes from the line of Justin Keywood with Stifel.

[Justin Keywood, analyst]

Just wondering if there's any change on the competitive dynamics in any of your segments, if there's been perhaps some exits in the industry or some competitors perhaps getting a bit more aggressive on pricing or other competitive aspects?

[Sébastien Bourassa, executive]

That's a tough question this morning. But I will say, yes, competitors are okay. We are lucky we are in a good industry. There is some healthy competition. Again, as Steve said a little bit earlier, we don't do the race at the bottom to grow, grow, grow and eventually make margins. And everybody has his own territory. We have different product offering, different strength. We think we're the consolidator of the industry. We're in a better position.

But yes, some of our competitors are owned by PE. So sometimes they change from one end to the other. We saw that maybe some of the dealer, they tried to expand. So they might buy another dealer from time to time. But I don't think I will speak more about my competitor today, no. It's a good industry.

[Justin Keywood, analyst]

Okay. And then just on -- another question. With the incoming U.S. administration, any potential impact on the Patient Care segment within the U.S.?

[Sébastien Bourassa, executive]

Again, I think it's a bit similar to the answer before. I think it's a bit too early to say. Again, without talking too much, we know in the past the Trump administration has been quite good with the VA. So maybe that's one segment that we could benefit from it. But other than that, I think it's way too early to say. But again, we have people who need more long-term care, we need more beds. The population in Canada and U.S. has grown a lot in the last few years. There's probably some shortage of beds. So definitely, we should be in a good position for the future.

[Justin Keywood, analyst]

And just on the exposure to Canada, what is the overall percentage of sales? Is it still relatively very minor?

[Stephen Reitknecht, executive]

Just in Patient Care? Or you're talking our total sales within Canada?

[Justin Keywood, analyst]

Both, if you have that.

[Stephen Reitknecht, executive]

I mean it is minor. So sales is about 20%. It's about -- 20% of our total sales are in Canada.

[Justin Keywood, analyst]

And of that, which -- how much would be attributed to Patient Care?

[Stephen Reitknecht, executive]

So I can speak to the numbers in the quarter and the numbers year-to-date. So in the quarter, of the total $44 million of Patient Care sales, $16 million came in Canada.

[Justin Keywood, analyst]

Okay. So sizable in that regard.

[Operator]

I am showing no further questions at this time. I would now like to turn it back to Sebastien Bourassa for closing remarks.

[Sébastien Bourassa, executive]

Okay. Thank you, Brittany. And I will say good questions this morning from all the analysts that cover us. You're very important to help the promotion of Savaria. So thank you. And I will say thank you for the quarter. It was a good quarter in Q3. I will go back to work to make sure we have a good Q4. So thank you, Brittany.

[Operator]

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.