Good morning, afternoon, and evening. My name is Cecilia, and I will be your conference operator today. At this time, I would like to invite everyone to the Savaria Corporation's Q1 2022 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. If you would like to ask a question during this time, simply press the star one on your telephone keypad. If you would like to withdraw your question, please press the star two. This call may contain forward-looking statements, which are subject to disclosure statements contained in Savaria's most recent press release issued on May 11, 2022, with respect to its Q1 2022 results. Thank you. Mr. Bourassa, you may begin your conference.
Thank you very much, Cecilia. Hi, gentlemen. Okay. That's always interesting to have you on the call this morning. That was a special quarter. I would call that special, okay? Because we had COVID, we had the war. That creates uncertainty , okay. One thing the people don't like, okay, it's uncertainty, okay. They are not ready, okay, to put more money in the market, okay. They may take out some money from the market, okay. But Savaria is a stock, okay. You know me, okay, for, I don't know, 25 years, okay, that I started , okay, in Savaria. But right now, okay, we have over 2,000 members of Savaria. That's great, okay? Because this company, okay, is resilient, okay.
Because the people, you have a war or you have COVID, okay, you need, okay, one time, okay, you will need product like Savaria. Savaria offers the largest number of products , okay, to help the mobility of the people. For sure, it's more, okay, the aging of the population is the base, okay, of our company. Everybody in the world, okay, should have access, okay, to the, to be the mobility, okay, for the stair, okay, and for all kind of other product that you need in the house or in the church or at work. We have a complete line, okay. We are the only company in the world, okay, that offer such a complete line .
That's why I was excited 25 years ago, but I am excited this morning because, one, the stock market is very difficult. Yesterday night and this morning, I was looking at the analyst. Thank you to the analyst. You do a great job to support Savaria. We present you the fact. The fact is we will have a tremendous year. We are very satisfied, more than satisfied about the Q1. The sales of CAD 184 million in this quarter. It's very important that will push us maybe to exceed our sales that we project. I will pass and go organic growth.
You know, we make CAD 12 million of organic growth. Well, when I look at the stats of April, the organic growth is there, and it is very important. You take our number, and you are better than me in mathematics. I wish. You see that our projection, it's very realistic to say, "Hey, we are in good position." We are in good position. You will have the same guy who will speak our products. Everybody I think is very enthusiastic. We have some new things that we will say to you on the call, like a new factory in Mexico. That's very exciting. We have Mexico. We have China.
That will make it easier to manage inventory levels a little bit higher when we've been projecting down there. What is important right now, you don't want to miss stuff. Just CAD 2 million of difference that makes a big difference in a quarter of our delivering products. For me, I will thank you to be there. Thank you for supporting me. I will pass the phone to Steve, our CFO.
Thank you, Marcel, and good morning, everyone. I will begin with some remarks regarding our Q1 2022 consolidated financial metrics. For the quarter, the corporation generated revenue of CAD 183.5 million, up CAD 71.5 million or 63.8% compared to Q1 2021 due to the acquisition of Handicare in March 2021 and also due to strong organic growth of 12%. Q1 2022 will be the last quarter showing any acquisition growth attributable to Handicare. Gross profit and gross margin stood at CAD 58.5 million and 31.9% respectively, compared to CAD 37.4 million and 33.4% for Q1 2021. The increase in gross profit was mainly attributable to the addition of Handicare.
The decrease in gross margin was primarily due to inflationary pressures on supply chain, including increased shipping costs. Adjusted EBITDA and adjusted EBITDA margin stood at CAD 24.4 million and 13.3% respectively, compared to CAD 17.3 million and 15.4% in 2021. The increase in adjusted EBITDA dollars is again due to the addition of Handicare. The decrease in adjusted EBITDA margin is due most notably to inflationary pressures on the supply chain, including increased shipping costs, as well as a reduction in Government of Canada COVID employment retention subsidies. Total subsidies received for Q1 2022 was CAD 0.2 million versus CAD 1.1 million in 2021, reflecting a decrease of CAD 0.9 million year over year. Now I will move on to our segment results.
Revenue from our accessibility segment was CAD 130.3 million in Q1 2022, an increase of CAD 49.8 million or 61.7% compared to the same period in 2021. The increase in revenue was mainly attributable to the acquisition of Handicare, which provided 53.4% growth. In addition, the segment experienced organic growth of 8.7%, which continues to be driven by strong demand in the residential sector. Adjusted EBITDA and adjusted EBITDA margin, both before head office costs for the accessibility segment, stood at CAD 20.5 million and 15.7% respectively, compared to CAD 13.9 million and 17.2% for the same period in 2021. The improvement in adjusted EBITDA is mainly due to the acquisition of Handicare.
The reduction in adjusted EBITDA margin is mainly attributable to inflationary pressures on the supply chain, including increased shipping costs. Revenue from our patient care segment was CAD 41.7 million for the quarter, an increase of CAD 16.2 million or 63.5% when compared to Q1 2021. Revenue growth was driven by the acquisition of Handicare, which contributed 41.5%. In addition, the segment saw 22.2% of organic growth for the quarter, which was driven in large part by the easing of pandemic restrictions and improved access to long-term care facilities versus last year. Adjusted EBITDA and adjusted EBITDA margin for the patient care segment, both before head office costs, stood at CAD 5.3 million and 12.8% respectively compared to CAD 3.7 million and 14.5% for Q1 2021.
The increase in adjusted EBITDA was mainly due to the acquisition of Handicare and additional organic revenue coming from the easing of pandemic restrictions and increased access to long-term care facilities. The reduction in adjusted EBITDA margin is primarily due to the aforementioned additional costs in the supply chain. Revenue from the adapted vehicles segment was CAD 11.5 million, an increase of CAD 5.5 million or 92.2% when compared to Q1 2021. The Handicare vehicle division based in Norway provided 83.6% of our acquisition growth for the quarter. The Canadian divisions experienced organic growth of 12.9% in the quarter, driven mainly by some pent-up demand from last year.
Adjusted EBITDA and adjusted EBITDA margin, both before head office costs for the adapted vehicles segment, finished at CAD 0.6 million and 4.9% respectively compared to CAD 0.6 million and 10.4% for Q1 2021. The decrease in both metrics was mainly due to a reduction in the Government of Canada's COVID-19 employment retention subsidies and the aforementioned inflationary pressures on the supply chain, as well as delays in sourcing key materials. For the quarter, net finance costs amounted to CAD 1.4 million, which is stable when compared to Q1 2021 net finance costs of CAD 1.5 million. Interest on long-term debt was higher by CAD 0.9 million due to the financing of the Handicare acquisition.
However, this was offset by prior year having a loss of CAD 1.8 million on a foreign exchange contract, which was used to help secure the Handicare acquisition. Net earnings were CAD 5.3 million or CAD 0.08 per diluted share for the quarter, compared to CAD 3.8 million or CAD 0.07 per diluted share for Q1 2021. Net earnings was largely impacted by amortization of intangible assets related to the Handicare acquisition. Adjusted net earnings, excluding amortization of intangible assets related to acquisitions, reached CAD 11 million or CAD 0.17 per diluted share, compared to CAD 8.8 million or CAD 0.16 per diluted share for Q1 2021. This reflects an increase of 25.7% or 6% on a diluted share basis. Turning now to capital resources and liquidity.
Savaria generated cash flows from operating activities of CAD 13 million for the quarter compared to CAD 27.9 million in Q1 2021. In the prior year, there was a one-time favorable increase to net earnings to net changes in non-cash operating items of CAD 7 million based on the initial consolidation of Handicare results. In addition, strategic investments in inventory were made this year, which further decreased cash flow from operations. As at March 31, 2022, Savaria had a net interest-bearing debt position of CAD 317.7 million and was in compliance with all of its covenants. On a trailing twelve-month adjusted EBITDA basis, Savaria's net debt to adjusted EBITDA ratio was approximately 3.7. This represents a decrease of 0.05 versus Q4 2021. Savaria has funds available of approximately CAD 128 million to support working capital, investments and other growth opportunities.
Looking forward, unpredictable changes in the macroeconomic environment continue to make it difficult to predict future performance. However, considering our recent financial performance and our strategic integration plan with Handicare, we are confident that for fiscal 2022, we will generate revenue in excess of CAD 775 million, with adjusted EBITDA in the range of CAD 120 million-CAD 130 million. With that, this completes my prepared remarks. I will turn the call back over to Marcel.
Steve, thank you very much. Okay. I see, okay, that you mentioned great number, okay? What is important, we have the cash flow to make acquisitions, small acquisition in some place in the world that we are not there or with some products. Early this year, okay, we bought a company that was manufacturing our controller, and we have great people in this company. So I am more than happy, okay, right now, okay, about controller. We protect ourselves a little bit , okay, by acquiring this great company. So, the people in this company is great. Handicare, okay, you know, something as a presence in Europe, okay, they will take care of the division of Garaventa in Europe, okay? We do the same thing for us, okay?
We take care here in Toronto of their products in the United States and Canada. It's just great. You see the patient handling. We have one guy at the top. That's a new guy. This is Patrick, he has a tremendous experience and working with Les and Phil. They put this kind of number that Steve gave you. It's just good and very good. We are ready for your question. Cecilia.
Thank you. If you wish to ask a question at this time, please press star one on your telephone keypad. Please ensure the mute function on your telephone is switched off to allow your signal to reach our equipment. We will now take our first question from Michael Glen from Raymond James. Please go ahead.
Hey. Good morning, guys.
Bonjour.
Hey, guys. Nice quarter on the organic growth. The first question I wanted to ask is really on some of the margin compression that we saw in the quarter. You know, I'm assuming, you know. Well, I'll first say that a lot of the companies that, you know, we've been covering have been seeing similar pressures. I'm assuming some of the headwinds here are gonna moderate going forward, especially as you get a little bit more price. I'm just trying to piece maybe some of the moving parts here, and I was wondering if you can help us, you know, maybe put together expectations for Q2 margins, whether we should see a step up there or if it's more gradual for the balance of the year.
You will see a step up, okay, in Q2 for sure, okay? Because our increase of price, okay, is there, okay? You will see that our volume, okay, like our backlog, okay, in Toronto for North America, okay, and for the products that we make, okay, it's three times what it was last year. That's something to have a backlog like that, okay? We have just to do what we are supposed to do, okay? That would be a great quarter, okay? A great year. I will ask Steve, okay, that if he can comment on that, please.
Yeah, absolutely. Thanks. Thanks, Marcel. Good to talk to you, Michael. The price increases that went into effect across the business, we didn't see a large impact in Q1. We are expecting a more significant impact in Q2. Our goal continues to be to increase margins, definitely above where we're seeing in Q1. We are expecting more of an impact in Q2 and we'll expect an increase for the remainder of the year.
That's helpful. Thanks, guys. I guess the second question, maybe a little bit of a bigger picture question, probably for Sébastien. You know, let's view the Chinese facility as a competitive advantage for Savaria. It's given you a cost advantage, it's given you vertical integration. I'm assuming you want something similar here with Mexico, but it does feel like a significant shift for the company. I guess my question is, you know, is Mexico intended to support additional growth or transition manufacturing capacity? I guess, what advantages are you looking for longer term here?
Bash.
Thank you. Thank you, Michael. Yeah. I think, no, don't forget, Savaria has 20 years experience in China, and China has been, I think, very good for the company. It's very stable, very reliable. In the last 2 years, it takes a bit longer to get container and a bit more disruption. Yeah. Now we have a target of CAD 1 billion by 2025, so we have to create some capacity. We thought that Mexico was closer to North America, was making sense. It is attractive, okay, to produce something at a reasonable cost. Definitely, now we have a bigger team, and we have more experience. I think, yeah, we will be open in September this year, in a few months.
When we are putting a lot of effort in our planning and we'll make sure that we have the right resources to support this. I don't expect a huge impact this year, but I think differently from the next year, we will see some good impact, okay, to help us to increase the output in our factories in North America by supplying some standard parts and sub-assembly from there. That is, it will be a great adventure for us.
Yeah, that makes a ton of sense, I guess, given the dynamics. I guess just as a quick follow-up before I turn it over, just potential costs around the construction and the ramp up and inventory trends that we should expect, as it relates to that.
For, for-
Are you done?
Go ahead, Marcel.
No, you know what? That we rent down there, okay? It's not our building. For sure we will do the same thing that we do in China. They will buy some project from us outside and assemble that. Okay, that's the beginning, okay? We can see, okay, for 2022, 2023, and after that we will see if we have to have some machinery down there, some equipment. So the cost is not very high, okay? I think that's a big plus to have something, the project that can arrive here in one week, okay, by truck directly to Toronto. Instead, okay, of passing three months on the ocean and on the rail. That's a diversification.
I can assure you that it's you are very important for us, you continue to be very important, but we need a little diversification, and Mexico is a great diversification. We know some companies down there, okay? We make a little bit some effort and people, okay, from CDPQ, okay, that is a shareholder, help us on that too, because they are partnering with us. We have great people, and we are already visit some companies that they are in Mexico since like BRP, okay, some years and years and years, and they are very successful. Congratulations for them. We will continue, okay, begin with our experience in China, okay?
We will do the same but closer than for us. That is a great transaction.
Thanks very much, guys.
We will now take our next question from Frederic Tremblay from Desjardins. Please go ahead.
Hello, Frederic.
Thank you.
Bonjour Marcel. Morning, everyone. First question is on the patient care segment. Obviously you're benefiting from some pent-up demand with the, you know, increased access to long-term care facilities. Was just wondering if you had any visibility on maybe how long that positive effect from pent-up demand could last. Obviously, we've had about two years of underinvestment in that, you know, from long-term care facilities. Is that something that you would expect to last for several quarters, or was it mostly limited to-
No, several quarters .
Twenty-one.
After that, several quarters. Again, I would pass the line to within one minute to Nicolas. You know that our backlog down there is a level that was never before. That gives us some caution for our next projection for many quarters. We have a better group than ever that we have in this division that I said before. We have right now Patrick, and with Patrick with Les and Phil, we have a winning combination. Our specialist in that is Nicolas. Nicolas, can you continue and say it a little differently than me ?
Yeah. Thanks. Thanks, Marcel, and thanks, Fred. I guess as Marcel indicated there, I think we feel very confident about the team that we have in place. It starts at the top, so we have a very strong team there. As you'd indicated, we are, you know, I guess, taking advantage of some of this rebound spending exiting COVID. What you saw there in the first quarter at whatever it was, I think 22% of organic growth, that builds off of in Q4, I think we're at 17% of organic growth. I believe even double-digit organic growth in Q3 of last year. I think it's a continuation of this trend as we're really kind of exiting this more of a lockdown environment. Some of it is related to facility access for sure.
Some of it is capital spending that's happening now that had kind of been allocated towards, you know, other more needy areas during the COVID time. We are seeing a rebound from that. I think we're also seeing some market share gains. Our team has been very good at winning, you know, a lot of these projects that have been put on the market. Will we have 22% organic growth for the next five years? No, probably not, but I would say over the next several quarters, we do expect to have, you know, similar kind of this kind of double-digit growth within the patient care segment. Also longer term, I mean, some of these trends that we're seeing, you know, coming out of COVID is years of under-investment.
You know, here in Canada, for example, there's, you know, a lot of these new build activity which is kind of boosting much of our sales here in Canada, and that's something that we should see, you know, over the next several years. I would say yes, right now we are in a kind of an advantage situation here exiting COVID, but I do think longer term there's still some very positive trends as it relates to the organic growth potential of that segment.
Great. Maybe a question for Steve on the capital allocation priorities in the near term. Can you just maybe update us on, you know, CapEx expectations and de-leveraging for 2022?
Yeah. We are.
We're committed to delivering at least half a turn this year. You know Q1 is typically for us, our seasonally worst quarter. It's our weakest quarter. We did delever slightly in Q1, but we will delever more in Q2, Q3, and Q4. I am expecting to exceed that half a turn this year, but you know, as far as our published guidance, we're sticking with half a turn. We are remaining diligent with CapEx spend. We are tightening where we can and we're gonna be spending under our budget this year. Even with the Mexico investment, we will be spending less than initially planned.
Great. Thank you.
Our next question is from Zachary Evershed from National Bank Financial. Please go ahead.
Bonjour, Zachary.
Bonjour, Marcel. Good morning, everyone. Thanks for taking my questions. When the flow of goods starts to get better as we see logistics kind of unsnarl, do you think there's pricing risk where prices could come back, or are you pretty settled at current levels?
Sebastien?
I think Zach, if you remember, we have multiple brands, okay, between Handicare, Garaventa Lift, Span, and Savaria. I think when we say we make some price increase or there's inflation, I think a different brand has different seasonality when they make new price increase. I think this year we have reset on most of our brands. Again, if there's some effect during the year on inflation, on the incoming material, definitely we need to review, okay, what needs to be done. I think it's an ongoing project, let's call it this way. Gotcha.
With the backlog up three times from where it was last year, are you happy with your current labor force, or would you prefer to ramp up even ahead of the Mexico facility in September?
We are ramped up, okay, because we have a good team in Toronto, okay? Maybe I'll always want to have more and more, okay? We have a good team, okay? You will see the number of Q2, okay? We have a good start with April. We have a good start, but we have more booking than we were at the beginning of the month, okay, in April, okay? I think, okay, Mexico will help us, okay, to do a little bit faster. It's very interesting, okay, to begin a month or right now we are over roughly CAD 20 million, okay, of booking, okay, to do. We never had that in our life. Never had that, okay?
We are working hard, okay, to deliver as soon as possible. That's why I see until the end of the year very, very busy.
Marcel, just to add one thing, Zach. No, don't forget in Q1, okay, we have lost 7% of our production hours in four of our main factories in Brampton, St. Louis and Heerhugowaard in Netherlands. That did not help our output. If we will ever get all those hours, I think we'll have receive some better organic growth, right?
Absolutely. Makes sense. Just if you could drill down for me on where exactly in the supply chain you're seeing pinch points and how you see that evolving over the course of the year.
Sebastien?
Yeah. I think right now, Zach, okay, China, for now, we did not lose a week of shipping since the beginning of the year. Our two factory in Xiamen and then Wuzhou, they have been able to perform. Yes, we have a few supplier in Shanghai area where they had a month lockdown, maybe, but just a few small parts. I think it's just like it's a worldwide issue right now. Even if you have a local supplier or a supplier in Europe, they might get some small components in different place. I think electronics is maybe one of those which is a bit harder. I think the acquisition of Ultron has been pretty key for us so far.
Right away from the start, they have been able to manufacture some PCB in-house so that we can eliminate some of our potential challenge. I think it's important we control our process. We do a lot of parts in-house in our different factory, so that helps us a bit turn around some of the supply chain issue, sometimes.
That's helpful. Thanks. I'll turn it over.
Thank you.
We will now take our next question from Nick Agostino from Laurentian Bank. Please go ahead.
Hi, Nick.
Yes. Good morning. Morning. I guess, first, Steve, one point of clarification. You said earlier that all the pricing increases will have the full benefit in Q2. Then I thought you mentioned something about the rest of 2022. Were there any more planned pricing increases or for the time being this is it?
No. Excuse me, Steve. Right now when we see our results of Q1, we see the result on the first month of Q2. We're not talking about adjusting pricing from our Savaria division. Handicare would be a little bit different. Us, we want a fair price to the consumer, to the dealers and to the manufacturer, us. Everybody has his point. They have to have the products and our dealer has to make money. Right now, when I see the number that we take out, I think we have done what we have to done. Don't forget that sometimes they buy in advance. Many other manufacturers will say, "Oh, your price is no more good." No.
Yes, okay, you have a price and we stick with our price, okay. I see some revenue, okay, at the end of the Q2, okay, and Q3, we will see some elevators that will be done and shipped, okay. Then after that, okay, it's just the new price, okay, will be in. It takes some time, but what is important, we are satisfied where we are right now in terms of percentage. Can you add something, Steve?
Thanks. I was just gonna echo Sébastien's earlier comment about, and you touched on this too, Marcel, is that, you know, we do have different divisions, different business units, across different markets. You know, yes, some of the price increases and some of those businesses are done, and we haven't seen the full impact of those, and we will throughout Q2 and the rest of the year. Some of the other divisions we're continuing to evaluate. Yeah, just wanted to add that.
Very good. Very good.
Okay, yeah. Then my next question is just going back to the Mexico. It sounds like it's more of a sourcing of products similar to China as opposed to just a pure assembly plant. I'm just wondering if you look at the competitive landscape, thinking more, obviously you've acquired Handicare and Arjo's still out there. I'm just thinking when it comes to lead times, you guys are obviously strengthening your position within the North American market. Can you just speak to what you're seeing out of Arjo in their abilities when it comes to lead times? Are they also getting better or you think that their infrastructure doesn't support what you've done?
Maybe Steve, any color on what sort of margin benefit you guys anticipate out of that Mexican facility when you capture lead times, workforce, lower cost base, reduced shipping costs. If we look out to 2023, what sort of margin lift can we think about from the Mexican plant?
Sébastien, you begin. I will finish.
Okay. I think for sure the impact on the margins, Nick, I think it's too soon to comment on it. I think first we have to finish our year to set all our set over there. Definitely we are doing it for a reason, which is to have some cost benefit and the most important, to be able to attract some talent and to be able to deliver on this 1 billion capacity that we need to have. I think in terms of lead time, you know, Savaria has always been good at lead time across our different brands, okay? If we look at the lead time at Span, okay, it's just extremely quick. And again, massive project on Sterling lift, very often it's the planning, but if we need a quick turnaround, we are really, really good.
Elevator is, yes, right now it's a bit longer, but again, the customer, they know it, they have time to plan it when they make renovation on new housing. Sterling, okay, that's why we bought Handicare. They are the best at lead time. Right now with the development we have brought back in Toronto for manufacturing, by the end of Q2, we should have the, probably the best lead time in the industry. I think lead time is still a key for us. I think the Mexico is more to rebalance our supply chain, to lower inventory over time. What we have on water with China, that's a bit. That we might answer. Nick, maybe Marcel, you want to add something?
No, Steve, you want to add something?
No. I mean, Sébastien touched on our margin expectations. It is a little bit early to sort of give guidance on that. Yes, we will save shipping costs clearly, but there's also another savings, and that's on working capital. Bringing some of this production closer to our largest market as being North America, you know, we will be able to save working capital investment dollars and be able to allocate that elsewhere.
Yeah. That's good. Very good. Just a second, just to give you an example, what we are doing in Toronto. We manufacture the FreeCurve. What is very important, in July, we will be able to deliver this product in 1 week's time. The best in the industry. We work with this acquisition that this purchase we have made with Handicare helps us, that partnership that we took. We believe we believe that we can be the best in North America. Come to Toronto and see our manufacturing in Toronto.
You will be amazed, okay, when you say, "I don't know what is your presence in Toronto," but you can see, okay, that we are more robotic than before, okay? What we want to do to the dealer and to customer, deliver a project as soon as possible when you make the order. We are gaining on that, okay? We are gaining a lot, okay? Thanks to my people, okay, to work on that. Thanks, okay, to continue to follow us after how many years to follow us?
Oh, it's, I think it's been about 8 years, give or take. 7, 8 years.
I see. Yeah. Okay.
Just one last question on the Ultron acquisition. Obviously, you're acquiring one of your controller manufacturer, and controllers are obviously a key component across your entire product set. Similar question to Mexico, what sort of margin benefit do you think you can get given the fact that these controllers are everywhere in your products?
Sébastien, okay. You want to answer that? I can, but answer that. You take care of that.
Nick, for this year, for sure when we have given guidance, we knew we were closing this acquisition, so I don't think there's a change for this year. It was more than just pricing. It was more to make sure we have the parts, we control our supply chains, we're vertically integrated. To make sure that right now we have different brands, different type of electronics for similar products. Over time, we want to streamline our PCB to make sure we have more of the latest technology in our elevator, like a Bluetooth, Wi-Fi, name it, okay. It's important for us. We need to be ahead of the competition. By designing our things in-house, we should be able to have the best product in terms of electronics in our different products.
Okay, great. Thank you. I'll pass it on.
Thank you.
As a reminder, to ask a question, please press star one. We will now take our next question from Derek Lessard from TD Securities. Please go ahead.
Yeah, good morning, everybody.
Bonjour, ça va?
Ça va très bien. Yes, we are very happy that you are on the call again. Okay, Derek.
Curious if any of that was being driven by customers looking to lock in prices ahead of any price increases that were coming up.
I missed the beginning of your sentence. I don't know if it's just me, okay. Sébastien, do you hear all the question?
No, we have missed the beginning. Derek, do you mind to start over the questions?
Yeah, sure. I was just curious about any of the strong organic growth that you experienced. Was that being driven by customers looking to lock in prices, you know, sort of ahead of any price increases that you were putting through?
That's a very good question. Okay. I am sure, okay, a little, at least maybe 20%, okay, it's for that, okay? It's the reality, okay, our booking is very aggressive, but a little part is for that. They want to reserve their price, okay. We want to be, we check the name, okay. They don't order to order. We need the name of the customer. We need some information. Okay. That is a fake order. We check the name.
Okay. I mean, that's fair. What I found, as well, in the MD&A is that you did single out in the accessibility division synergies with Handicare as one of the drivers of the organic growth. Maybe if you can just talk about what you're seeing on that side in terms of synergies.
Okay, Sébastien.
Yeah. I think if you remember, Derek, at the beginning a year ago, we said that we'd have CAD 12 million of synergies, okay. I think by the end of this year. I think we're on track with that. This is moving correctly. Some of the key projects that we added was to close the Stockholm office. This has been done. After that, if we talk, was bringing back the manufacturing of FreeCurve in North America. That has been done. It was to start the distribution of our straight stairlift, okay, from 1 location, service center within Greenville now, and to merge the team. Right now, if we want to order a straight stairlift in North America by the team of Handicare and Savaria have merged together, they work together.
I think a lot of those initiatives are on the way, but again, there's some that is still on the agenda for this year. I would say that I am quite happy with the progress we're having. Right now that the travel has eased a bit, definitely our teams are mixing together. We are coming here. A good example of a small project, like last month, I had four people from Handicare here to work with us. Okay, how can we revamp one of our assembly line here in Toronto where we are super busy, get some idea from the inside of the company. Again, the team of Pete has done a good job, okay, to come and re-challenge the way we do elevator for the last 20 years.
I think that's just an example of synergy that we are always working on something.
Okay. Maybe a few more for me in terms of the Mexican initiative. Just maybe if you can comment on what you're seeing in terms of labor availability and maybe the workforce quality in Mexico.
That's right. I think, yeah, definitely, I think in terms of labor pricing, so far as of, we did our due diligence, and it seemed that Mexico is a little bit more attractive than China versus the labor cost per hour. I guess that's good news. The labor availability seems to be there. I think the chances when you start from scratch, okay, you can decide to hire the person that you want. We are going to start definitely with a good staff that has good technical knowledge in the office and that can speak English and Spanish. Definitely. I think the people would be happy to work for a foreign company right now.
If you look at the company we're setting up over there, it will be like, I would say, dream factory. You know, we'll have a good showroom to show them, show you exactly what we do, that they understand exactly. We're expecting to be a world-class manufacturer over there.
Okay. Maybe just one final one for me. I'm curious if you have any visibility or if you're seeing any relief right now maybe on the freight side or shipping side of the supply chain.
Yeah, the freight, okay, for sure it's not like last summer. Last summer was more like a $25,000 a container. Right now, in the first quarter, we saw some $18,000-$20,000 per container. I think it is similar to Q4, but it's not the same as it was last summer, so it's a bit better. It still takes a lot of time to come on the ocean, but in terms of pricing, it's a bit better than it was last summer.
Okay.
Sébastien, a little question, okay. Just to answer where we are going, okay, with the manufacturing the FreeCurve, okay. Now we have the FreeCurve is coming, okay, from Europe, okay. In August, we will have the equipment, okay, here. We will save how much, Sébastien, per month of shipping that will be right now?
Yeah, just to specify. Yes, we are manufacturing some FreeCurve in Toronto, but still we have a few parts that is still coming from Europe. We're expecting that from this summer, we should be able to save CAD 200,000 per month. That, that's an example of synergies which is going to help us for the second half of the year.
Awesome. Thanks for that. That's good color. Thank you.
As there are no further questions at this time, I'd like to turn the call back to your speakers for any additional or closing remarks.
Okay. Thank you very much, Cecilia. Thanks for the people, okay, that listened to us this morning. We are very enthusiastic, and you will see that we will try very, very hard, okay, and we will succeed, okay, to meet our guidelines. That's what is important. Thank you from my team, and see you at the next quarter. Thank you.
Thank you. That will conclude today's conference call. Thank you for your participation. Ladies and gentlemen, you may now disconnect.