Savaria Corp

TSX:SIS

Earnings Call Transcript 2020-Q4

[Operator]

Good morning. My name is James, and I will be your conference operator today. At this time, I'd like to welcome everyone to the Savaria Corporation's Q4 and Full Year 2020 Results 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 March 24, 2021, with respect to its Q4 and full year 2020 results. Thank you. Mr. Bourassa, you may begin your conference.

[Marcel Bourassa, President, CEO & Chairman]

Okay. Thank you, James. Hi, everybody. This is Marcel, I'm the CEO, and I was the CEO for the last 30 years of Savaria. And first of all, I have to thank you, gentlemen, to be here this morning. I was very anxious to speak to you and to thank you. Savaria and myself will not be at the level that we are today, a company with a market over $1.2 billion, sales in excess of $100 million this year. It's quite -- not a meeting, but an interesting realization. And if you were not there, I cannot do that. That you who speak with your guys, will write to us, write on us to the investor. After that, the investor put money, buying some share or -- and the bank. First, I want to thank you for your work to be dedicated to the success of Savaria. So that was the first thing I want to say this morning. After that, we do a major acquisition in Handicare. It was March 5. And we are very -- I am very happy. I was looking at this company for many years. And if I go little bit to the back, that was there, that was looking to buy us or discuss about us. But we finished the game that we buy them, and I am very happy about that. Very happy and very happy by the people that we meet at Handicare. So they are great quality people. And we will learn with them and they will learn a little bit from us. We are biggest -- bigger family than before. One thing is not improving is my English, but it is what it is. So thank you for your hard work, my team. But thank you, Handicare to take this translation so positively. In marketing, we will work with clear and with our team together. And after that in production, Sébastien and Peter, who can look at our production worldwide and be the best. And if we go after that, we are trending in North America, that's about working with Span and setting there and less occasion is there to work together. And we'll have a very good segment out together with [indiscernible]. So again thank you very much to participate with that. I am sure Garaventa will work together. Vince is a great guy. Thank you, Vince. And -- so gentlemen, here, we are 4 of us this morning with our Steve, our CFO is here. We have Mr. Rimbert, Nicolas, that is -- he was looking for a transaction with Handicare and make it terrific work. And he will speak about if you have some question on Span or on ceiling lift. So that is sporty and young adults division. After that, who will be here with us is Sébastien, my son and he can speak about the integration. What we have done. My team has done a tremendous work in the first 15 or 20 days since March 5, the weekend, they worked very hard. But for sure, if we sell our products in Europe, that will be not overnight. We will see more about 2022. But even without the synergy that will based in '22, that will be big. So we are very confident to make our -- over $100 million because I think we are back on good results and together on Q3, Q4 and Q1 look good. I am very, very optimistic about to exceed that what I say yesterday in my big network. So let's go for the question. No, no, before the question, Mr. Rimbert will like to add little bit an update what happened in 2020.

[Charles Nicolas Rimbert, Vice President of Corporate Development]

Actually, Steve will provide the financial update, Marcel.

[Marcel Bourassa, President, CEO & Chairman]

Okay.

[Stephen Reitknecht, Chief Financial Officer]

All right. Thanks, Nick, and thanks, and thanks Marcel. And good morning, everyone. I'll begin with some remarks regarding our 2020 fiscal year consolidated financial metrics. For the year, the corporation generated revenue of $354.5 million, down $19.8 million or 5.3% compared to 2019, mainly due to the economic slowdown caused by the global COVID-19 pandemic. Gross profit and gross margin stood at $122.1 million and 34.5%, respectively, compared to $125.3 million and 33.5% for 2019. The decrease in gross profit was attributable to the sales decline caused by the pandemic, while the increase in gross margin was mainly attributable to a more favorable product mix, continued realization of Garaventa Lift integration-related synergies derived from the Corporation's accessibility segment as well as some benefits from the Canadian wage subsidy program. Adjusted EBITDA and adjusted EBITDA margin overall stood at $59.8 million and 16.9%, respectively, compared to $55.6 million and 14.9% in 2019. The increases in adjusted EBITDA and adjusted EBITDA margin were mainly attributable to a better product mix, continued realization of Garaventa Lift-related synergies pertaining to our Accessibility segment, as previously noted, a $6.9 million COVID-19 employment retention, Government of Canada subsidy and corporation-wide cost containment efforts. Now I'll move on to our segment results. Revenue from our Accessibility segment was $257.3 million in 2020, a decrease of $8.4 million or 3.2% compared to 2019. Contraction in revenue was mainly attributable to the continued impact of the economic slowdown and repercussion of the global COVID-19 pandemic. While our residential sales remained strong throughout the year, we saw a decrease in our commercial sales, which caused the overall top line decline for the segment. Adjusted EBITDA and adjusted EBITDA margin, both before head office costs, stood at $51.1 million and 19.9%, respectively, compared to $44.2 million and 16.6% for 2019. The improvements in both metrics were due to a better product mix, continued realization of Garaventa Lift-related synergies and ongoing cost containment efforts. Revenue from our Patient Handling segment was $79.3 million for the year, a decrease of $7.5 million or 8.7% when compared to 2019. Organically, revenue contracted mainly attributable to reduced access to and reduced volume of sales from the long-term care market caused by COVID-19 pandemic, targeted lockdowns and restrictions. Adjusted EBITDA and adjusted EBITDA margin for the Patient Handling segment, both before head office costs, stood at $10.4 million and 13.1%, respectively, compared to $12.1 million and 14% for 2019. The decrease in both metrics was mainly due to the reduced volume of sales in the long-term care market, as previously noted, a suboptimal 2020 revenue product mix and lower fixed cost absorption in our Span business. This was partially offset by the contribution from our Silvalea acquisition made in Q3 of 2019. Revenue generated from the Adapted Vehicle segment was $17.9 million for the year, a decrease of $3.9 million or 18% when compared to the same period in 2019. Adjusted EBITDA and adjusted EBITDA margin, both before head office costs, finished at $0.6 million and 3.4%, respectively, compared to $0.9 million and 4% for 2019. The decreases in revenue and adjusted EBITDA when comparing 2020 to 2019 were mainly due to an economic slowdown, a repercussion of the global COVID-19 pandemic. Now turning to some financial liquidity metrics. The corporation ended the year with $54.2 million of cash, implying a positive net cash position of $4.4 million. A combination of strong earnings for the year and discipline in terms of working capital management and capital expenditures were key in continuing to improve our cash position, all while in the midst of the COVID-19 pandemic. And looking ahead, although it remains very difficult to quantify the continued impact of the current pandemic accurately based on the results to date during the first quarter of 2021 coupled with the corporation's confidence in the strategic integration plan with Handicare that is underway and strong underlying long-term growth fundamentals for our markets, management anticipates the Corporation will be able to achieve adjusted EBITDA in excess of $100 million during fiscal 2021. And with that, this completes my prepared remarks, and I'll turn the call back over to you, Marcel.

[Marcel Bourassa, President, CEO & Chairman]

Well, thank you very much, Steve. Thank you. You make a tremendous job. And it's always easy when we have a good number. But anyway, Steve, thank you very much. Let's go for the question.

[Operator]

[Operator Instructions] And our first question comes from the line of Michael Doumet with Scotiabank.

[Michael Doumet, Analyst]

So going back to the synergy opportunities highlighted in the initial press release, the $12 million. Any way you can break that out? Or help us better understand how much of that is cost related? And how much of that is revenue related. I guess my thinking is that the revenue synergies are likely to be realized or sizable, sorry, in this deal, but likely to be realized, I think you commented 2022 and beyond. So just some thinking around that, please?

[Marcel Bourassa, President, CEO & Chairman]

Okay. I would answer this one. We see that we'll make $100 million -- over $100 million. And it's coming from some plus and minus, plus and minus, at different segment that we are different time of the year. One would be weaker, but the other will go higher. So really, I prefer to have -- we will have more, say, about this question after the second quarter. Thank you very much.

[Michael Doumet, Analyst]

Okay. Fair enough. Fair enough. Yes, that's fine. So maybe sticking to maybe some of the near-term stuff. The vaccine has been widely disseminated a little more widely disseminated in the U.S. So far in Q1, especially amongst the senior population. Are you getting better access to customers in Patient Handling at this point? I mean -- and maybe just what variables to consider before expecting a full recovery in that business?

[Marcel Bourassa, President, CEO & Chairman]

Nicolas?

[Charles Nicolas Rimbert, Vice President of Corporate Development]

Sure. Yes, I mean, cautiously optimistic, I would say. As you'll note that the vaccine rollout has been a bit all over the place from country to country. In the U.S., to your point, yes, they have been quite successful in terms of the rollout to date. So in terms of what that means for us, as it relates to accessing long-term care facilities for our sales guys and I guess, service and installation teams. It is looking better. It is looking up. I would say that, again, light is at the end of the tunnel, it's been about 8 weeks or so, give or take, where we've seen some improvements there. So I think when we published our Q1 results, we should have a little bit more color as to how we ended the quarter. I'd say January and February is still kind of in the midst of it. But as we kind of get into margin, we finish off March. We're looking to have a strong finish to the quarter, and we should be able to provide a little bit more color as to what the rollout looks like when our Q1 comes out in May. We'll see how it progresses through the spring. But yes, it is improving. And so throughout 2021, we should see a pickup in volumes there for our Patient Handling business.

[Michael Doumet, Analyst]

Got you. And if I could squeeze in one more? Maybe a little bit of detail on the margin performance in patient handling from Q3 or from Q4 into Q3, just it got a little bit better there? And maybe just your thoughts on how to think about margins in that business in 2021, given some of the higher raw material prices and the potential impact to our own product?

[Charles Nicolas Rimbert, Vice President of Corporate Development]

Sure. Sure. The margin performance there in Q4 was quite strong. As you noted, there was a big jump from Q3 to Q4. I think we're at 15%, 15.7% in the fourth quarter. We did have a strong December, especially in Canada. So there was some good bed sales there in December. Silvalea also had a very, very strong December. So we had a good end of the year, I would say, within Patient Handling, contributing to that margin improvement that you saw in the numbers. Going forward, when we combine ourselves because we'll be reporting our Patient Handling along with Handicare going forward, Handicare, the Lift Up program that they implemented last year, I would say, had a pretty dramatic effect on the margins within their Patient Handling segment. They ended the year, I think it was 13.4% or so within their Patient Handling business in the fourth quarter, and that was kind of an uptick from their Q3 results where they were over 11%. So I guess when you think about us as combined, somewhere in that 14% is something that we would like to aim for, it'll depend again how kind of volumes pick up and how that fixed cost absorption is over to be achieved over the next few quarters, but that's something that we would strive for us to get back up on an annual basis. In that kind of 13%, 14% in building on that as volumes increase over the back half of 2021.

[Michael Doumet, Analyst]

Got you. And any consideration on the revenue Nick, just in terms of potential market impact?

[Charles Nicolas Rimbert, Vice President of Corporate Development]

The revenues, again, it's tricky because as we exit the COVID, how that growth is going to materialize, it's difficult to predict. And again, the rollout is very different from whether it be country to country or even state to state. So where some states are kind of more advanced in terms of their -- call it advance in their vaccine programs and also in terms of their loosening of certain movements and restrictions where there being facilities or elsewhere, it does have an impact. And again, our Patient Handling business, we do have a big portion of it is here in Canada. And as I think you'll test in Canada, the rollout hasn't been as fast and fluid as it has been in the states. So that's also to consider here that we do have a pretty big Canadian business within Patient Handling as well.

[Operator]

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

[Zachary Evershed, Analyst]

Congrats on the quarter.

[Marcel Bourassa, President, CEO & Chairman]

Thank you.

[Zachary Evershed, Analyst]

I was hoping you could give us a little bit more color about the progress of integration thus far, concrete steps that you've been able to take in the last 20 days or so, given the quick closing?

[Marcel Bourassa, President, CEO & Chairman]

Sébastien, do you want to answer that one?

[Sébastien Bourassa, VP of Operations & Integration and Director]

Yes, sure. Basically as you just said 20 days is very short. But so far, what we did a bit, we have created some committee for the Accessibility and for the Patient Handling. And to start to discuss about our different potential, what is your time line, who will be in charge of that? For sure, we cannot do everything at the same time. We have to go step by step. But the most important is people are very happy to contribute. We bring a lot of idea to the table. So I think it's a very good start. We are talking about cross-selling opportunity, especially in Europe. So we are training the people. That's a start. And what's interesting is Garaventa was already a customer when we carry new hub. The people already know about each other, so they are discussing can work more together. The delisting of the company is happening. Basically, it's happening tomorrow. So that's part of the integration as well. And one thing important, we have confirmed in the first 20 days that we are going to manufacture some curved stairlift into our factory in Toronto. So that's something that should start in Q4 and that will be very big because at the end, right now, we are shipping each stairlift to -- by air to North America. And so we're spending a lot of money by air each year. But the most important, that will give us a very good speed to the market to offer tremendously lead to -- lead time to our customer. So we are going to do that with a lot of automation for drawings, for machinery. So that would be very interesting to see what will happen on that in the future. So a great start in 20 days. And I'm sure in the next few quarters, you will see, in terms of dollar, what it means, but you can see the roll to $20 billion is started.

[Zachary Evershed, Analyst]

That's very helpful. In terms of your sales teams, will there be a bit of a ramp-up as they're trained on the new product lines? Or are they familiar enough already with the products that will be fairly smooth transition?

[Marcel Bourassa, President, CEO & Chairman]

Sébastien?

[Sébastien Bourassa, VP of Operations & Integration and Director]

Basically, Zach, for sure, I will say that, that will be a transition, and it takes time. We'll take an example of the Vuelift. If we go in a retrofit market, if you find a customer today, it might take 3 to 6 months. But if you talk about the new construction, it is 1 to 2 years. So the Handicare team are really excited about the Vuelift in Europe. I guess the answer is yes. But we have to go step by step. First, we have to train our sales team, after that the dealers or the direct location, and eventually, they will -- we get some marketing going. So it's just that, Marcel, was saying in 2022, we should start to see a lot of cross-selling because it takes time. It doesn't happen overnight. But definitely, the opportunity is fantastic. Same thing for the stairlift in North America. I'm sure some of our dealer will knock on the door of Handicare or Silvalea, because they want maybe to have access. But the first step is to train the people.

[Marcel Bourassa, President, CEO & Chairman]

Yes. And Sébastien just to complete that. Again, I put the attention that we will be, I think, productive on selling in Europe of our Vuelift. And that's a huge market. We just received an order for 2 in Germany, but 2 is nothing. But -- and we are not with Handicare, they have so many contacts. And they are very good at what they are doing. If we team up [indiscernible] we will be, as we would do, we will have a major step in our EBITDA in '22 because we will sell product of Savaria in Europe that we're not doing right now or very significantly sales. So that's the update that I want to do -- to make on that.

[Zachary Evershed, Analyst]

Great color. And just one last one for me. In terms of your leverage comfort zone following the transaction of Handicare, obviously, a big bite required some debt, but you guys were talking about the opportunity for growth projects and tuck-in transactions in your press release. I'm wondering if your leverage comfort zone has moved up?

[Charles Nicolas Rimbert, Vice President of Corporate Development]

I'll take this one, Marcel. I mean, yes, we're hopefully -- when we closed the deal with the Handicare deal, we're closing about 3.6x leverage. And yes, we do have additional credits available to us for small potential tuck-in acquisitions or future growth opportunities. I mean our focus is on Handicare and to integrate that business, first and foremost. I mean the 3.6x leverage that we are closing out is higher than where we have been clearly historically and higher than where we are than where we'd like to be. So our focus is going to be on delevering that fairly quickly.

[Marcel Bourassa, President, CEO & Chairman]

Yes. And just to complete that, I increased my volume that I hear you very well. Just to update. I think for years and years and years of that over 2x, that I am not comfortable. But suddenly, we are at 3.6x, 3.8x and I sleep very well every night since March 5. Why? Because I am so confident in the team down there that we meet, we speak and speak, and they want to act. And we know that the segment of ceiling lift, excuse me, but cannot be worse. So it will be a lot better. And in the car division, we know that it would be minimal, but it would be minimal and in '22, '23, '24, too. So I am very optimistic what we will see in '22 is why I can tolerate at 3.6x or 3.8x, no problem because we know that we have this cash flow at $100 million. But when will be at the $130 million, $150 million in a couple of years, then we will see that we can pay more debt and we will be back at 2x maybe in 4, 5 years, I think. But it's nothing. We have the expansion to do. It's why we're over $100 million that in excess of what we need to be sure that we can take some better acquisition or if we make expansion. Like in Brazil, we will not go right now, we will wait a little bit. But if we go there, it's a population over 200 million. So we will be there, and we will bring our curved stairlift because the success of this curved stairlift is to be near the market that we delivered. Air freight is expensive and will be more expensive in the future. So what we want? We go in China. We will have to have the equipment to make the curved stairlift directly on the territory. Example, we go in Brazil. [indiscernible] Brazil this morning, I don't know why, but [indiscernible] Brazil, 200 million. If we go there with a machine so we see that even though we are not modular, but we can deliver something like in 3 days. So it's high to be modular. We don't need the guy want to put an order, you don't need the straight or curved stair the next day. So modularity when we have the equipment in place, it's even better because I think we have a better drawing on the steps then if it's a modular product. So it's why I'm so enthusiast about that. And I will not look about major investment. Because right now, we are making a major one, and we can do so much improvement, but so much improvement that we will concentrate on that.

[Operator]

[Operator Instructions] Our next question comes from the line of Nick Agostino from Laurentian Bank Securities.

[Nick Agostino]

I guess, I just wanted to get a little bit more color on the EBITDA target for 2021. You mentioned Q1 performance, and you also highlighted growth prospects that you've seen to date? And I just wonder if you could provide some color as to what that performance has been like and where the growth prospects are coming from I guess, for the first 3 months? Any color you can provide there, specifically on the accessibility side of the market, what's driving the performance you're seeing thus far?

[Marcel Bourassa, President, CEO & Chairman]

Maybe as, Steve, or Sébastien can complete that. After that I should say we are very strong in Toronto on Accessibility products. Just an example, yes, yesterday, I was looking at the booking for residential elevators. And our backlog is 180 units, so we are very busy, very busy on that. And I think this trend will be good of the year. As I mentioned, I see it -- because I looked at my stats, so I see that on Span, more on U.S. side, they begin to have more order than they were having last year or early this year. So it's very good, and I'm very proud of that. So good work for the team down there. So that's I want to -- You know Garaventa, Garaventa I won't say as a tougher first quarter because they are very concentrated on commercial. And on Savaria, here in Toronto, we have a good mix of commercial and the residential, and then they are more commercial. So when the commercial will come back, example in school. In school -- the school is closed. We don't want to install a curve [indiscernible] by state government via curved platform. They will wait. So it will coming back. So we have so many little things right and left that will happen. When it will happen? It will happen soon. What is soon? We know that the accessibility is there, it's growing, people want stay home. And that people say, no, we are not going to this aging house. We know what's happened there. And where son can "mom, we will add up our house so that you'll stay with us" and that's great to have this kind of facility that we see more and more. So accessibility will be running, but I see other coming soon. That's why I'm very optimistic, but clearly, it's coming. When it's coming exactly on a span of 1 year. We know the first quarter is always slow. So that's the historic. So it is the same thing this year. But we are very optimistic that we will do. And later quarter, you will see exactly what the -- I mean, where it's coming, which quarter is strong and what it could happen. So after Q2, I will give you some more -- you will see some very good results. And you will see where it's coming the increase.

[Nick Agostino]

Okay. Appreciate that. That's great color. If I could -- my next question would be just on van conversion or adaptability. What I think last year, you announced the restructuring of that unit. I believe the goal was to get to somewhere around 10% EBITDA margins. Can you maybe give us an update where you are today in achieving that restructuring target?

[Marcel Bourassa, President, CEO & Chairman]

You have a next question? No, seriously, imagine in [indiscernible]. And even like in Québec, they have, I don't know, at 8 o'clock, we cannot go out. It's a very bad period for people [indiscernible], very bad. And if you need a taxi, man, what is in the [indiscernible] if I refer to Québec. So it's not easy. It was not easy, but I think we are looking this year to make a breakeven.

[Operator]

Our next question comes from the line of Louis Jutras from Desjardin Capital.

[Louis Jutras, Associate]

So today I'm here on behalf of Frederic Tremblay. My first question relates to the Vuelift. So last quarter, you indicated that you aim to reach sales of 600 units per year by the end of 2023. Can you comment on the progress you achieved on that front in Q4 and Q1?

[Marcel Bourassa, President, CEO & Chairman]

Yes, I will comment on that, but I have an expert here, Sébastien?

[Sébastien Bourassa, VP of Operations & Integration and Director]

Well, thank you. So basically, yes, we said earlier that we would like to do 600 units by 2023. And I would say right now, we are probably at the pace of 150, and I think we will exit the year at a pace of 200 units per year. And definitely, we see -- we do a lot of marketing, a lot of activity. We do a lot of R&D to improve the products. And now if you see compliance for Europe, I think Handicare is going to fuel a bit also this potential in Europe, so that will be very interesting. And Garaventa, we start to have a good push in Germany. Swiss and Italy are working hard to make some sales. So I think really, you will see that we will get there. But again, Vuelift, it's a product that takes time. Because sometimes you go in some certain house and many months or years of construction. We're also doing some quotation on some multi-unit project, and we measure a quote. So we know a bit that we are on the right trend to achieve our target in the next -- by 2023. So that will be your answer for today.

[Louis Jutras, Associate]

That's helpful. On my next question, in the past few months, have you seen cost inflation on raw materials, such as steel. And in a scenario where inflation would accelerate, can you talk about the levers that allow us to mitigate the potential impact on its margin profile?

[Marcel Bourassa, President, CEO & Chairman]

Sébastien?

[Sébastien Bourassa, VP of Operations & Integration and Director]

Yes. So definitely, for sure, there is a bitter inflation. I think it's hard to hide. But I think so far, we are kind of like here Asia price is relatively stable. We have good contracts with our suppliers. We have some inventory also. So it's not the price that is going up. And we always have cost-saving projects to try to offset some of the increase. We do a lot of products in house. So basically, it's due the raw material, which is a bit increasing on a ship metal. And from time to time, we always do some small increase to our customer. So I think if there's inflation, we think we, over time, we'll be able to push it out to our customers. So I think you should be able to see some continuity on the margins going forward. And there will be a smart bump in a quarter, but we don't see a big change going forward.

[Operator]

Our next question comes from the line of Michael Doumet with Scotiabank.

[Michael Doumet, Analyst]

So prior to being acquired, I believe Handicare was in the process of expanding its physical footprint in North America to build and sell stairlifts given you have some floor space, I just wanted to get your sense of thinking in terms of how you're going to build out that new capacity and any sense of time line? And then maybe if I can just squeeze in a quick follow-up there, just what CapEx expectations should be in '21?

[Marcel Bourassa, President, CEO & Chairman]

Yes. Sébastien?

[Sébastien Bourassa, VP of Operations & Integration and Director]

Yes. So basically, the footprint for curved stairlift was on the agenda of Handicare, but basically, instead of opening a new factory, where we have 15 factory, we have decided to make it in Toronto with the team of Handicare. Basically, now we are working on our layout. The layout is getting done. And we expect by Q4 to be in production, that's the target. In terms of CapEx, Steve, do you want to explain a bit where we are in terms of CapEx rate for the 2 company?

[Stephen Reitknecht, Chief Financial Officer]

Sure. Thanks. Typically, we see about 2% to 3% CapEx run rate. That's our normal rate for the underlying business for Savaria. We have a few projects in the pipeline this year for Handicare. So we'll be coming in a little bit above that for 2021, but afterwards, we expect to get back in line with sort of our 2% to 3% typical run rate.

[Operator]

Our next question comes from the line of Derek Lessard with TD Securities.

[Derek J. Lessard, Research Analyst]

[Foreign Language] So just pair of questions for me. Again, on the integration, you've had some time now since you announced the deal. I know you've put out your synergy target, and I'm not expecting you guys to change that. But I was just wondering if you've been able to identify other areas for items that could maybe make your original estimates, whether it's on the time line or amounts seem conservative? Or is there something that's gotten you even more excited than when you first announced the transaction?

[Marcel Bourassa, President, CEO & Chairman]

Yes. Should we tell you that. Ask me the same question after H2. I will be able to make an answer more direct based on some number. Now it's just some goal, some -- and you know something I prefer to -- I can answer to you what I prefer that I tell you that this is coming because we have some steps that show us what is coming.

[Derek J. Lessard, Research Analyst]

Okay. That's fair. And the last one for me is, I was wondering if you guys are able to -- and you've quantified it in the past, maybe the major buckets that drove the EBITDA in the quarter, whether it was the wage subsidy in the Garaventa synergies and cost containment?

[Marcel Bourassa, President, CEO & Chairman]

Steve, do you want to take this one?

[Stephen Reitknecht, Chief Financial Officer]

Sure. Yes. So we did have a few of those that you mentioned. We had the continued Garaventa synergies. There was some -- there was also some COVID Canadian wage subsidy come through as noted. We did have continued cost containment efforts that we've been seeing in the last few quarters. A lot of that with just raining and spending a little bit and tightening the buckle when it comes to, obviously, travel and discretionary spending. So really, it's a combination of those factors.

[Derek J. Lessard, Research Analyst]

Steve, are you able to -- what was the -- I guess, the COVID contribution?

[Stephen Reitknecht, Chief Financial Officer]

For the year, the -- on the wage subsidy, you mean?

[Derek J. Lessard, Research Analyst]

Yes, sorry, in the quarter, yes.

[Stephen Reitknecht, Chief Financial Officer]

In the quarter, it was $2.5 million.

[Operator]

And there are no further questions in queue at this time. I'd like to turn the call back over to our presenters.

[Marcel Bourassa, President, CEO & Chairman]

Okay. James, thank you very much. And thank you, everybody, to be there this morning. Thank you to team. And see you after the second quarter, so I see you in August.

[Operator]

And ladies and gentlemen, this does conclude today's conference call. You may now disconnect.