Savaria Corporation's (SISXF) CEO Marcel Bourassa on Q1 2019 Results - Earnings Call Transcript

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About: Savaria Corporation (SISXF)
by: SA Transcripts
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Earning Call Audio

Savaria Corporation (OTCPK:SISXF) Q1 2019 Earnings Conference Call May 16, 2019 8:30 AM ET

Company Participants

Marcel Bourassa – Chairman , President and Chief Executive Officer

Nicolas Rimbert – Vice President, Corporate Development

Sebastien Bourassa – Vice President Operations & Integrations

Conference Call Participants

Stephen Harris – GMP Securities

Maggie MacDougall – Cormark Securities

Nick Agostino – Laurentian Bank Securities

Operator

Good morning. My name is Jessica and I will be your conference operator today. At this time, I would like to welcome everyone to the Savaria First Quarter 2019 Results Webcast and Conference Call. All lines have been placed on mute to prevent any background noise.

After the speaker's remarks, there will be a question-and-answer session. [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 May 15, 2019 with respect to 2019 first quarter results.

Thank you, Mr. Marcel Bourassa, President and CEO, you may begin your conference.

Marcel Bourassa

Thank you, Jessica. To present you the Q1 2019 that I think internally that was a great quarter. So I will pass to Mr. Nicolas Rimbert to see what we have done in this first quarter.

Nicolas Rimbert

Thank you Marcel and good morning everyone. Just before I provide the highlights for the financial performance in Q1, I would invite participants to review our full financial statements and MD&A posted on SEDAR as well as on our website at savaria.com.

So, in terms of revenue, Savaria’s consolidated revenue during the first quarter of fiscal 2019 was $87.5 million, an increase of $30.9 million or 54.6% over the same period in fiscal 2018. The increase was attributable to acquisitions, namely that of Garaventa Lift in August 2018, and to a lesser extent that of H.E.S. in April, 2018 and Florida Lifts in March, 2019, with the remainder coming from organic growth.

Within our Accessibility segment, revenues grew up 120% in Q1 reaching $61.3 million, acquisitions contributed $31.4 millions to Q1 results. Removing the impact of acquisitions, Savaria’s accessibility revenues grew by 7.6% in the first quarter.

I’ll now provide some highlights in relations with Savaria’s core Accessibility business. So, the Greater New York area makes a very strong dealer market for us. Another region that performed particularly well in Q1 was the Pacific Northwest where we've recently added a new dedicated sales rep.

From a product perspective, sales of commercial and residential elevators were strong with unit growth of 17% in first quarter. Vuelift sales are also trending nicely and were up 54% in Q1. In addition, we are in the process of launching a smaller Vuelift for the European market with sales slated to begin in Q3.

And finally, although it only contributed one month in the quarter, we're pleased with the performance of Florida Lifts to-date which turned in a strong month of March. We have now merged Florida Lifts with Garaventa's direct offices in Florida and should begin to see synergies during the current quarter.

Within our Adapted Vehicles segment revenue declined by 20% in first quarter to $5.6 million. The weakness in the segment is owing to noticeable decline in taxi business, partly related to recent regulatory changes and the continued rise of ride sharing services.

However, to note, we have begun to sell our new Toyota Sienna conversion and expect sales to gradually ramp up throughout the year as this new product is introduced to the market.

Within Span revenue decreased by $1.2 million or 5.4% to $20.9 million in Q1 versus $22.1 million in the comparable period of 2018. Within the Medical segment, the year-over-year comparison was particularly difficult due to three large contracts representing US$1.3 million that fell in Q1 of last year. Other the base business within the medical segment has been stable. It is difficult to pinpoint the timing of large institutional orders, which can add a significant impact quarter-to-quarter as was the case in Q1.

Turning to Ceiling Lifts. We've seen a significant uptick in sales which reached $773,000 in the first quarter. We're encouraged by the momentum we are seeing in this product category and expect continued strength throughout the rest of the year. To that end we’ve recently received our largest institutional order to-date, which was for 240 lifts.

Now on gross margins, Savaria’s consolidated gross margin in Q1 was 30.9% a decrease from 33.1% in Q1 of 2018 but in-line with the fourth quarter of 2018. The decline in the gross margin percentage and Q1 is attributable to the lower contribution of Garaventa lift, which has a lower gross margin than Savaria.

For reference Garaventa Lifts, gross margin in Q1 was 26.4%. Now excluding Garaventa Lifts the Savaria’s consolidated gross margin would have been 33.4% in the first quarter. Note that Span’s gross margin increased to 31.5% during the quarter compared with 31.1% in Q1 2018 and 29.7% for the full fiscal year 2018.

The improvement is primarily attributable to better efficiencies in purchasing as well as the price increase that was implemented during Q3 of last year.

Moving on to EBITDA. Savaria’s consolidated adjusted EBITDA in the first quarter was $10.4 million, an increase of 31.1% over the first quarter of 2018. As a percentage of revenue adjusted EBITDA decreased to 12% in Q1 compared with 14% in Q1 of 2018. The decrease in adjusted EBITDA as a percentage of revenue is mainly due to the previously mentioned acquisition of Garaventa Lift, which has a lower margin profile than Savaria.

Within our Accessibility segment, the adjusted EBITDA margin decreased to 13% in Q1 versus 18.9% in Q1 of 2018. Removing the impact of acquisitions and the implementation of IFRS 16 to various adjusted EBITDA margins within the Accessibility segment would've been 18% in Q1, which is in line with our adjusted EBITDA margins for the first quarter.

The adjusted EBITDA margin within the Adapted Vehicles segment decreased 5.2% in Q1 versus 7.2% in Q1 of 2018. The decrease in adjusted EBITDA of $210,000 in the first quarter was mainly due to the decrease in revenue within this segment.

The adjusted EBITDA margin within Span decreased to 10.6% in Q1 versus 11.4% in the comparable period of 2018 much of this decrease is attributable to lower sales volumes in the quarter, primarily within the Medical segment. However, despite the drop in sales Span was able to maintain an adjusted EBITDA margin above 10% owing to significant efforts being made within the group to improve operational efficiencies.

In addition, the upward trend in Patient Lift sales will also have a positive impact on Span’s EBITDA margin in 2019 as it becomes a more meaningful division within the group. Finally, just in terms of liquidity and in our cash position, Savaria’s cash balance at the end of the first quarter was $13.9 million.

The Company's net debt taking into consideration, the aforementioned cash position was $112.3 million at the end of Q1. Following the quarter in May 2019 Savaria completed a bought deal private placement raising gross proceeds of $71 million after giving effect to this financing on a pro forma basis, the various net debt positions would have been approximately $45 million.

That concludes our prepared remarks regarding the financial results of the first quarter of 2019 and with that I'll pass it back over to Marcel.

Marcel Bourassa

Thank you Nicolas. That was very well done. I don't know if you will lose your job, but we'll have a new CFO that would be announced next week.

And two things that I want to add I want this information can be carried by everyone. We have right now at Span at least two million of contract that mainly is three big contract including the one that Nicolas was talking.

So Span, it is a star to have some quite interesting contract and that would be as fun. I wish that should continue. And after that on Vuelift, right now we have 50 Vuelifts that the we should deliver, we'll say 50 contracts that we should deliver until the end of this year. And plus some that would come in the coming weeks that we can deliver before the end of 2019. So again Nicolas I wish was there. And Jessica back to – next step is for you.

Question-and-Answer Session

Operator

Thank you. [Operator Instructions] Your first question comes from the line of a [Marsha] from A.Capital. Please go ahead.

Unidentified Analyst

Yes. Hey, good morning guys. Congrats on the quarter. First question from me, so obviously, Q1 was a seasonally weak and then you had the cold winter. Just wondering like for the rest of the year, in terms of segments and just in general, where do you see the biggest catch up.

Marcel Bourassa

Just before, I just want to thank people of Savaria and I think this was very well done and thank you very much. And I will pass the answer to Nicolas Rimbert.

Nicolas Rimbert

Yes. So, just in terms of catch-up, I mean, I don't necessarily like to categorize this catch-up and we have, I want to think we’ve kind of predicted out there as that Q1 is always going to be our seasonally weakest quarter.

I think we're seeing some good potential, in the Accessibility business in particular is going well. And we should see continued strength throughout the rest of the year. As Marcel mentioned, with Span there as well, very difficult to time some of these large projects – these large contracts on the institutional side.

However, the base business there is, and it does remain stable. So, I think that's something as well that you'll see throughout the rest of the year. As these contracts fall in the coming quarters, we should be able to, like to say catch-up, throughout the rest of the year.

Unidentified Analyst

Okay, fair enough. Good color. And then, onto Garaventa, so just wondering, I think last time you had said that, I think you were ahead of schedule in some of the synergy targets. Just wondering if can give some color on a where you see that progressing for the rest of the year and find out, I don't know if you have any updated targets or anything like that. But will be good to get some color on that front if possible.

Marcel Bourassa

Yes, very good question. And I’ll give this to Sebastien, to answer, who worked very hard on this division. So Sebastien?

Sebastien Bourassa

Yes. I think our progression with Garaventa is going well. If you remember last September was the first year we’d have two million of synergy, the second year with four million. I think we have already a pretty much complete the four million of synergies and you can see that in the first quarter. Some of this synergy is implemented for sure. It takes time, more we see more in the next quarter but definitely Garaventa had a much better quarter in 2019 compared to 2018. And that put us in good position for the rest of the year to achieve the target that we wanted to achieve with Garaventa.

Unidentified Analyst

Sebastien give me a number please.

Sebastien Bourassa

A number, basically Garaventa in the first quarter was around $2 million of EBITDA compared to the previous year, which was around 400. So, it's a big scrap for Garaventa, so we can see we are in right direction and we're not finished. Like just another example, Florida was challenging for Garaventa in the past two years with the acquisition of Florida Lifts it gave us the opportunity to merge the two store together. And that's effective since May.

So, that's was to make sure we resolve at each site one by one. Germany was another place where we had some challenge in the first quarter. And we did a general management change in the past week. So, we expect that Germany will be about to go back in a good direction and it was positive in Germany. We have a very good backlog, so we just have to work on our execution.

Marcel Bourassa

So thank you, Sebastien. If I would something, it's just that whether you be about – and because of that we'll work hard as explained the right supplier. It's $0.05. It was the other ways $0.05, so it's recurrent. So that's a good work Sebastien.

Unidentified Analyst

Yes, that's great. Just one more follow up from me. I was just wondering in terms of acquisition pipeline, is it fair to still assume that you guys are thinking, some tuck-ins for the rest of the year?

Marcel Bourassa

Yes, so for sure we have some acquisition. And is that, and that is one of the percent on that case. So you have to work a little bit. We’ll make small acquisitions through the end of the year, on some territory, on some new products that’s what we work. Because it's very complimentary. That's what you will see on, until the end of the year. And we don't think okay that will make a major acquisition before 2020.

Unidentified Analyst

Great. Great color. Thanks. I’ll turn it back.

Operator

Your next question comes from the line [indiscernible] Capital Markets. Please go ahead.

Unidentified Analyst

Hi, good morning. I'm just wondering, first question, what's driving the very strong volume growth of 17% in the elevator category, have you seen a change in your competitive environment? Did you introduce some innovation in the market or is the pricing just a driver of that.

Nicolas Rimbert

Yes. What’s adding to growth, I mean for sure you saw the 54% increase in Vuelift sales. I mean that given the price point of Vuelift that’s on the sales side in terms of unit volumes as well, we're seeing some uptick there. But just in general, we've been very strong, I would say on the commercial elevators as well. So that's where we've seen some strength. That's our, our LULA elevators. So those are actually doing very well for us.

And at the same time we liked that because those are some higher margin elevator products. So, I would say that two of the main drivers, I guess behind the elevators is the commercial and the Vuelift

Marcel Bourassa

If you remember when we go to our exhibition in the States, we always bring the Vuelift and it really bring a lot more traction to our boat and that people are excited. And at the end when we meet the customer, we always offer a complete range. You can view the Vuelift, an Eclipse or an Infinity. So we offer many choice to the customer. So, I think it's really the Vuelift is really a thing or growth also in home elevators.

But that a little bit cautious at that number, but that exhibit we increase the lead by 40%, that's major 40% of it more lead. Because the guy, if he's looking at the Vuelift and when you go more in detail, was it, maybe I don't have the money to buy a Vuelift, but I will buy an Eclipse. So that's very important. You go on your show and go out, with 40% more lead.

Unidentified Analyst

That's great. On Span I just wanted to get an update on the implementation of the price increase.

Nicolas Rimbert

Yes, I'll handle that one. So, with Span the price increases is kind of on a rolling basis. There were some large contracts that rolled over at the beginning of the year. So, we'll see how that progresses, it’s only been call it three, four months since that went into effect, in for those contracts. But I would say, again, Span the weakness in the quarter comes revenue there's no shying away from it.

But we've talked with the sales guys on the ground, none of them have kind of come back to us and pushed back on the price increase. And that's not necessarily a cost for the, at least from what our sales guys are informing us. That's not really the cost or any sort of drop in volume.

It was just like I mentioned previously, some of these contracts, plus on the institutional side where they get most of their business, it could be very lumpy. So, very difficult to project month-to-month or quarter-to-quarter and how some of these contracts are going to fall. And unfortunately it did have an effect, a significant effect in Q1.

Marcel Bourassa

I want to say two things again. And as Sebastien is, because Sebastien is our guy for valuation, but he is very close with Garaventa, ready to make a tremendous work with his people. In that space in the new Garaventa and after that we have to understand that. Nicolas is going more and more often at the Span. We should actually have on the same page. Again down there we have the President and CFO or the VP Finance and GM. Thank you. Thank you very much for your participation in the Savaria to be the leader in the world.

Unidentified Analyst

And just to comment on that, we're doing a lot with Span on the cost side. So it was what I would say, pretty weak quarter on the revenue side and again, the numbers speak for themselves there. But whereas last year, in the weak quarter you could see those EBITDA margins going into the 8%, 9%. Now for weak quarter we're still above 10%, as it relates to our EBITDA margins there.

So a lot of our efforts are focused on costs and trying to remove as much costs we can from Span. So that's kind of working in tandem with price increases and worked on the sales front, but also making sure that we're being a bit more efficient on purchasing and being a bit more efficient in terms of our overhead and cost structure there at Span. So those are things that both Sebastien and I are working quite heavily on. Sebastian, [indiscernible] closer to myself down in Greenville.

Unidentified Analyst

Sounds great. Thank you everyone.

Operator

Your next question comes from the line of Stephen Harris from GMP Securities. Please go ahead.

Stephen Harris

I just want to talk a little bit about the integration with China, and how that's progressing. You know, it's been an important contributor to your success, through the traditional Savaria operations. And just wondering if you could sort of spell a bit of a roadmap for us is to where you hope to get to both through Garaventa Europe and BC operations.

Sebastien Bourassa

Good morning Steve. So, basically, we have already merged Shanghai factory to Huizhou factory at the end of last year. And now really this year we are working on some product integration like last conference call we talked about a fire door. So fire door now is in production at Garaventa. And we have worked on a few other small parts on some kits, on some preassembly. So every month, some new small assembly has come to Vancouver. And more or less now I think we shipped more or less one container from China every month to Vancouver. So I think it's a start.

Stephen Harris

Okay and how about in Europe?

Nicolas Rimbert

All right, we shipped some preassembly also to Italy that we ship maybe one container every two months and more or less we have started to sell our straight stairlifts that we imported directly from China into Europe. And we are now in production in Italy with our curved stairlifts, so we import some parts from China and we manufacture all the curved rail in Italy, so that a thicker integration in Europe is going well, and the Vuelift we are going to launch, start to shipping in Q3 into Europe, so that’s truly at the product margins over there.

Stephen Harris

And do you have a sense of when it would be, but that you could get the same kind of integration that you have in Brampton in both BC and in Italy.

Nicolas Rimbert

We have been working with general for over 10 years, so it takes a lot of time, but definitely we are going to accentuate that much faster in Vancouver because now we have more experience. We have a solid team in China, but I think by the end of next year, we should be in a pretty good position.

Stephen Harris

Perfect. And if I could change topic a little bit, it would be just how should we think of the adapted vehicles segment going forward? Was the Q1 is that kind of an aberration quarter and we should still think of that as sort of a flat revenue business maybe at the average of last year? Or do you think the deterioration may be a little more permanent?

Marcel Bourassa

I would handle this one, even if I don’t like it. But that’s a reality that our division has the tough time in the first quarter. That's not the first time, but before it was less tougher. So right now, we have residential van and we have van that’s make conversions for commercial taxi. The taxi in Toronto is just that. We received minimal orders. And with Uber, it's not easy. And in Montreal, we need to get the money from the government for this division and the government is supposedly have some money, but not a lot of people in wheelchair. So, I understood that we will review that very soon because people in wheelchair has the same right as the other people in this world. So it's still right now. So we're going to bake you at in Q2.

Stephen Harris

Okay, thank you.

Marcel Bourassa

Thank you very much. Jessica?

Operator

[Operator Instructions] Your next question comes from the line of Maggie MacDougall from Cormark Securities. Please go ahead.

Maggie MacDougall

Good morning.

Marcel Bourassa

Good morning, Maggie.

Maggie MacDougall

Excuse me. I'm wondering if you could just comment on an updated outlook for Span in terms of where you think or maybe even quantify the amount of synergies you think you will ultimately get there versus your original expectation when you made that acquisition. And then if you're able to break them out between opportunities for cost saving or where sales of higher margin products would be the balance of the synergy. Thanks.

Marcel Bourassa

Nicolas?

Nicolas Rimbert

Yeah. So Span, as we mentioned on the – I guess on the last call regarding Q4 where we were at 12% EBITDA margin there in the quarter and we said that that would be a good result for 2019 for the full year 2019. And that's still the expectation for us there. So for sure given some of the lumpiness and institutional business there, there's going to be quarters where we're at 10%, 10.6% as was the case in Q1. But then that also means that there are to be quarters where we're above 12%. So I think that’s how we’re looking at the year. There's going to be quarters where we're kind of very optimistic that Q1 was going to be kind of the bottom end for Span if you look at 2019.

And there again some of the cost savings that we're implementing was difficult to quantify the amount. But it will enable us to kind of bottom out at 10% and not 8%. And so for 2019 in particular, and again, knowing that the season lifts are kind of ramping up, that’s going to be an impact that’s going to be gradual over the course of the year, we're very confident that 12% is kind of what we're aiming for there. So you look at where spend was before in the kind of 10% range historically, we're looking at 12%. That's kind of the improvement that we're expecting from Span.

And then in terms of going forward as new products that you mentioned could be introduced into that market, I mean, the big one is the Patient Lifts, right. So that's a great business with 40 plus percent gross margins. So as that kind of becomes more meaningful division with Span, we would like to see Span growth from 12% to 14% in 2020. That would be kind of the progression that we would like to see there.

Maggie MacDougall

What was the percentage of Patient Lifts sales in that division you need to get to in order to reach those goals?

Nicolas Rimbert

What was the percentage, right? When you think about Spans business, it's about US$75 million, call it CD$100 million or so. So right now the Patient Lift business we're expecting that is probably to be in kind of that high-single digits for the year, maybe 6%, 7%, right, to call it six million, seven million of sales potentially for this year. Where we can grow that, I don't necessarily want to broadcast where exactly we think that's going to get to, but it's going to have to be higher for sure. But don't expect it to be 20% of sales, right. But for sure we would like to get it to above where it is, where we're forecasting it to be for this year.

Marcel Bourassa

And Maggie, what is important with that – Maggie?

Maggie MacDougall

Yes.

Marcel Bourassa

What is important in that is our EBITDA. So what can you provide us and that’s bringing the EBITDA 30%. So year after, year after, you will see that will change.

Maggie MacDougall

Yes.

Marcel Bourassa

For Spans.

Maggie MacDougall

Okay, great.

Marcel Bourassa

In terms of the products, Maggie you have the list themselves. I'm sure you're quite familiar that we do have the sling business that we're looking to grow more from and we made certain investments there in Greenville to grow that sling business. So these are things that are coming together. I mean there's a lot of work that was done last year. Like I mentioned on the last call in terms of that groundwork, [indiscernible], in terms of the training, but also in terms of the product category.

So those are things that are evolving. And we are seeing a nice uptick in selling and are seeing the sales again going from a small base, but we are very confident in that business and for 2019 we do expect some good results there.

Maggie MacDougall

Okay. So what I'm trying to understand on Span is how much of the improvement to a 12% margin for the full year could be attributed to your car savings initiatives and other synergies in that category? And how much is dependent on selling the Patient Lift?

Marcel Bourassa

It goes hand in hand I mean they're both going to be contributing factors there. I would say the patient lives more when you're looking to get that 12% to 14% where mutations would move for next year. For this year a lot of the work has already been done, right. I mean these are the things that we're working on, purchasing is one, freight is another thing that we're working on, we're looking at how's the staff is structured, so operational efficiencies on that end.

So those are all ongoing projects. It's difficult for us to give you an exact dollar amount. These are projects that we're working on that have an annualized cost savings. But knowing exactly what month they fall is going to impact how much of that savings we're going to see in 2019 versus kind of on an annualized basis for next year. So it's very difficult for me to give you an exact number, but just know that the cost savings are an important factor for us having an improved EBITDA margin there for Span.

Nicolas Rimbert

And Maggie, I’m Nicolas. I think while looking at case to be 15% to 20% of the sales of Span we’ll be sharing the information and other projects we’re just selling here for the year of 2020.

Maggie MacDougall

Okay, thanks Marcel. That was helpful. Moving on to trade, lot of headlines around the U.S. and China and this is a bigger picture question, but I was wondering if you could give us a bit of your view on how the trade situation may impact your business now that you've got more global operations with Europe, your existing China footprint and then your operations in both the U.S. and Canada? Thanks.

Marcel Bourassa

Thank you, Maggie. That's a good question, okay. And I’ll give that to Sebastien, okay. He heads our guidance operations. And please Sebastien, give us number.

Sebastien Bourassa

Okay, thank you, Maggie. So far okay, we have been lucky because, yes, we buy a lot of parts from China for SC division or we buy subassembly. So at the end, we do much more custom parts at our factory in Toronto or Vancouver. So at the end when we ship a product are made in Canada, so they are not subject to tariff. The only subject to tariff was last year was there a straight stairlift and we have changed our business model, if you remember to ship it from China to the States directly so that the transfer price is different and that was the only project – that product was affected last year. And as of today is pretty much the same story.

Maggie MacDougall

Okay.

Sebastien Bourassa

And for your – okay, it doesn't change anything. So for now we think we are in a good position.

Maggie MacDougall

Okay. Thanks very much guys.

Marcel Bourassa

Thank you.

Sebastien Bourassa

Thanks Maggie.

Operator

Your next question comes from the line of Nick Agostino from Laurentian Bank Securities. Please go ahead.

Marcel Bourassa

Good morning, Nick.

Nick Agostino

Good morning. Good morning. So I guess a few questions. First, can you guys speak to the bookings run rate that you would have seen in Q1? What was the bookings level and also how do the orders come in through Q1 and any color you can provide as far as Q2 is concerned?

Marcel Bourassa

Okay. So I see Sebastien is writing something. So Sebastien?

Sebastien Bourassa

No, this is – Nick, we don't necessarily disclose booking numbers. So it's not something that we can really comment too much on. I mean, yes, I would say just to kind of move back up because we can give a bit of color but I don't want to give you specific numbers as it relates to bookings and where its streaming. But for sure in Q1, January wasn't a good one, right. And so we're confident and that's why exits in Q1, we had a very strong kind of in the February and March was very good.

So the bookings kind of going out of the quarter are looking quite nicely for us. And so that would give us confidence when you think about it in terms of maintaining our guidance for the year and maintaining what we expect for Q2 and going forward. But we don't have a specific booking number that we're able to disclose, it’s not something that we disclose whether here or in any form.

Marcel Bourassa

Yes, our booking, okay, is not like some people have some booking for two years, okay, depending on the industry, ours I think we delivers in five of six week. Okay. It's why our booking is always around 5 million. Okay. But – and that's it, that's our industry and everybody in our industry is like that.

Nick Agostino

Okay.

Sebastien Bourassa

The bookings at the factory and at Span it is kind of pretty short-term. As you know, maybe on a direct store they might have more of a backlog if you will than what we might have in the factory. But for sure at the factory and even within Span, its pretty short-term that we have in terms of visibility. Like if you think about just our actual bookings in hand, as Marcel just mentioned.

Nick Agostino

Okay. I guess, we could call it order flow instead of bookings, but I think the color you provide as far as January, February and March. That was essentially what I was looking for. And then just talking on the adaptive vehicles, I know Uber has been mentioned a few times or at least ride-sharing programs. Is that – I think in the past that was a potential market or client for you, is that a customer that if the taxi markets continue to deteriorate and ride-sharing continues to become popular, is that an opportunity that you guys are starting to see open up to you as far as van conversions or is that something that that may be when it comes to ride-sharing it just not going to happen as far as that the vehicles are concerned?

Marcel Bourassa

Okay. Yes. Uber can be a very good customer for us. Okay. But right now, they were more busy, okay, to go on the stock exchange, okay, to speak to us. One thing okay, that can be very good for van action. We just finished the graph, to see now a short entry, short sight entry. And this is products that can have some potential in Canada and maybe in the U.S. So we are studying that gap, okay. But I can see some weakness again as I mentioned before on the Q2, but for sure Uber, okay and we make a little short program with them last year and because they have to offer van, okay, that can be accessible okay for people who share.

And right now, it's not that pretty okay for them. But I wish that the people would call Uber and will say, hey, you just get paid billion, okay, so can we be a bit more careful of the people in wheelchair? They have the same right that all of the other people in this world. So we'll see if they receive some pressure from the people.

Nick Agostino

Okay. And then just the last question on the Span foam pricing; obviously, something that impacts your gross margins. Can you maybe talk about what you saw in Q1 and what you're seeing into Q2? And I'll leave it there. Thanks.

Marcel Bourassa

Yes. No, in terms of the foam, we didn't want to talk too much about foam. That was kind of the word of 2018 as it relates to Span, but no. So foam pricing as I mentioned to you guys on the last call, it has come down a bit. We haven't seen much change there. There's – everybody discusses, they ask us what is it, how is it correlated, how we can track it. I have mentioned in the past the price of the oil or something, which is also another factor that comes into play. And so it's not just the price of oil as you think of in terms of a correlation there, there's also the volume, right?

So when you think about these foamers, they're out there. The biggest volumes come from the automotive and the furniture industry. So as those are a bit weaker in North America, the foamers – volume of the foamers is actually quite low at the moment. So that also has a pretty big impact in terms of their willingness to raise prices. So I would say at the moment, there hasn't been much of a change there and we'll see how it progresses throughout the year. But – and it's kind of similar to where we were in the beginning – at the beginning of the year.

Nick Agostino

Okay, great. Thank you.

Operator

Your next question comes from the line of Zachary Evershed from National Bank Financial. Please go ahead.

Unidentified Analyst

Good morning guys. Thomas here, calling in for Zach. Thank you for taking my question. Everything has been answered, but maybe one last. Last year we see an accessibility adjusted EBITDA of 18.9%. You mentioned that extra events that it would have been 18%. Could you maybe provide a bit of color of on where that 90 basis points – what happened to the 90 basis points?

Marcel Bourassa

Okay. You’re referring to the 18% versus the 18.9%?

Unidentified Analyst

Yes, exactly.

Marcel Bourassa

There again, I mean, it's difficult to really give you exactly what the cause is there. As you know the sales there in the first quarter, they weren't up to par, right, so that’s for sure. So that has a small impact there. But, no – there's no real explanation 18%, 18.9%. When you think about the accessibility division, we always kind of look at it on an annual basis and on an annual basis we’d like to think of it being a 20%-plus business. Last year it was 22% and it's going to be some quarters where it's 23%, 24%, some quarters where it's 18%. So here between 18%, 18.9%, there wasn't anything in particular that I could point you towards for that difference.

Unidentified Analyst

Okay, perfect. That's it for me. Thank you.

Marcel Bourassa

Okay. Thank you very much.

Operator

There are no further questions at this time. So I turn the call back over to you gentlemen for closing remarks.

Marcel Bourassa

Thank you very much, Jessica. And don't forget like I said before that we are a primitive industry based on the aging of the population. So next question of the price, or goal or no, it’s the aging of the population and it's the same that's what is very fair for everybody around the world, okay. We have an aging population. So, thank you for guys and woman to participate in this call for Q1. See you in Q2. And thank you very much, Jessica.

Operator

Thank you. This concludes today's conference call. You may now disconnect.