Savaria (TSX:SIS) reported third-quarter financial results on Thursday. The transcript from the company’s third-quarter earnings call has been provided below.
This transcript is brought to you by Benzinga APIs. For real-time access to our entire catalog, please visit https://www.benzinga.com/apis/ for a consultation.
View the webcast at https://edge.media-server.com/mmc/p/4rzdczxqx/
Summary
Savaria Corporation reported strong Q3 2026 results with record EBITDA of $52.1 million and EBITDA margins at 21.2%.
The Accessibility segment showed 9.1% growth, driven by home elevator and stairlift sales, with significant contributions from factories in China and Mexico.
The Luma L model received enthusiastic responses in major exhibitions and will be available in North America and Europe soon, indicating positive future growth.
The Patient Care segment grew by 9% but faced EBITDA margin challenges due to material costs, with improvements expected in Q4 following price adjustments.
Savaria completed acquisitions of Baxter Elevator in Texas and VPAL in Italy, expanding its European presence, supported by a healthy net debt ratio of 0.85 and liquidity of $338 million.
Revenue grew by 9% in Q3 with 6.8% organic growth, while operating income increased by 28.6%, reflecting improved gross margins and elimination of strategic initiative expenses.
Future guidance aims for 12% annual growth over the next five years, targeting $1.6 billion in sales and maintaining EBITDA margins above 20%.
Strategic initiatives focus on expanding home elevator sales, improving operational efficiencies, and launching new products like the Luma L and Artera model.
Savaria’s Greenville facility expansion is on track to be completed by the end of Q4 2026, contributing to future operational capacity.
Management remains optimistic about achieving long-term growth targets through strategic acquisitions and organic growth initiatives.
Full Transcript
OPERATOR (Moderator)
Hi, welcome to Savaria Corporation’s Q3 2026 Investor and Analyst Call. At this time, all participants are in a listen-only mode. After the speakers’ presentations, there will be a question-and-answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today’s conference is being recorded.
I will now hand the call over to our first speaker today, Sebastien Bourassa, CEO and President of Savaria Corporation. Please go ahead.
Sebastien Bourassa (Chief Executive Officer)
Thank you, Angela, and good morning, everyone. Today I’m happy to present our Q3 results, which show that we have good momentum across the business and a new process and culture that we have developed during Savaria One is well established, and this is why we have realized our best EBITDA dollars so far at 52.1 million at 21.2% EBITDA margins. First, Accessibility, with a growth of 9.1% and an EBITDA of 24.2, it showed that in our main division we still have a lot of initiatives that are getting implemented and that we can offset some of the inflation we received this year.
Our vertical strategy is paying off. As you know, we design and manufacture our own electronic PCB in the UK. We have good contribution from our China and Mexico factories, and we have made significant investment in machinery in the last few years in our local factory so that we can be more productive and we can make some custom product with good lead time. The core product line of home elevator and stairlift remains the main driver of this growth, and we continue to build our product roadmap with our 62 people in R&D across all the business segments.
Here are a few examples of what excites me about the future growth: the new Luma L. We have received an enthusiastic dealer response at the NEC Exhibition in September with the launch of our new larger model of Luma. We also introduced it at the Grand Design Show in the UK, and we have really good interest from the designers and home elevator. The larger cabin can accommodate many styles of mobility device. The Luma L is now available in North America from October and will be available in Europe in January 2027.
The through-the-floor lift category should be a strong area for the coming years for growth and is really an elegant product that is easy to install and can be a retrofit application. VPAL—we talked a lot about VPAL in the last few months, but again, the strong product offering and code-compliant product in Europe will really help us to develop the sales of home elevator in Europe in the coming years. Another exciting thing, the new Precision Cab for home elevator that was introduced at the NEC also was very well received.
The style and color are very trendy, which will be a big one for the contractor, designer, and customers. The quality of those wood cabs that can be produced at our factory in Greenville are outstanding. They can be sold in multi-units, project custom home elevator, and really differentiate ourselves on our home elevator from our competitor and hopefully earn our fair share of projects. Regarding Greenville, we continue to manufacture approximately 50% of our home elevator, and our building expansion is on plan and should be ready by the end of Q4 of this year.
Second, Patient Care—happy with a growth of 9%, but for sure the EBITDA percentage is not where we want. The team of Patient Care is very aware and are working on it, and as we discussed during the last conference call, we did a mid-year price adjustment, which we hope to have a better result in Q4 starting from Q4. Still, I would like to highlight the performance in Europe and the rest of the world—so good job Gary and the team in the UK. Third, Acquisition—as we said during the investor day, we have the ambition to do some acquisitions in the next five years for around 200 million. Those are small to mid-sized acquisitions in some areas that we underperform or can bring some new products, or new dealer network to expand our product portfolio and also the one-stop shop. So far this year, we did Baxter Elevator in Texas, where it’s a booming market, and in July we closed the VPAL with a small arm lift lineup and a low-rise commercial elevator in Italy to help develop Europe in the coming years.
With our net debt ratio of 0.85 at the end of Q3 and our liquidity that continues to grow at 338 million, we are in very good position for capital allocation to continue to make investment in this business. To conclude, I’m very happy with the first nine months of the year, and as we unveiled during the investor day, we have the ambition to grow the business at 12% per year in the next five years and maintain our EBITDA margins at 20 plus, which ultimately will lead us to a $1.6 billion of sales with over 220 million of EBITDA. Thanks to all the people at Savaria for their efforts in the next chapter of growth. Steve, financials, please.
Stephen Reitknecht (Chief Financial Officer)
Thank you, Sebastien, and good morning, everyone. I’ll now provide some additional details on our third quarter results, starting with the key financial highlights for the quarter. Firstly, revenue grew by 9% in Q3, including 6.8% organic, which is in line with our guidance. Year to date, revenue is up 8.1%, reaching $726.4 million at the end of Q3. Secondly, operating income increased by 28.6% in Q3 and has increased by 38% on a year-to-date basis, reaching 104.4 million, which is driven by improved gross margins as well as the elimination of strategic initiative expenses.
And lastly, as it relates to capital allocation, we acquired VPAL, an elevator manufacturer in Italy, in July and invested in the expansion of our Greenville facility while decreasing our debt leverage ratio and ending the quarter with available funds of $337.7 million to support our future growth plans. Now turning to consolidated revenue, we generated $245 million in the quarter, an increase of $20.3 million, or 9%, over last year. This includes organic growth of 6.8%, a 1.4% contribution from the acquisitions of Baxter and VPAL, as well as a positive foreign exchange impact of 0.8%, mainly driven by the strengthening of the USD versus CAD. Looking at the segments, Accessibility revenue increased by 9.1% to $196.5 million, mainly driven by organic growth of 6.6%.
Sales increased in all regions, with Europe delivering another strong quarter. Patient Care revenue increased by 8.6% to $48.6 million, including organic growth of 7.5%. This reflects higher project sales in North America and continued growth from our UK location, which was partially offset by a softer bed market. Now looking at gross margin and operating income, consolidated gross margin was 39.3% compared with 39.2% in Q3 2025, representing a 10 basis point increase. Gross profit increased by 8.2 million year over year. This demonstrates our ability to continue to increase gross margins under the current tariff environment. Operating income increased by 7.9 million, or 28.6%, to 35.6 million, representing a margin of 14.5% compared with 12.3% last year. The drivers of the increased operating income are increased revenues, gross margin expansion, lower other expenses, and the termination of strategic initiative expenses.
Adjusted EBITDA reached a record 52.1 million, representing a margin of 21.2% compared with 47.6 million and 21.2% last year. Accessibility adjusted EBITDA margin reached 24.2% compared with 23.5% last year, an increase of 70 basis points, and again that’s driven by improvements in both of our key geographical regions. Patient Care adjusted EBITDA margin was 16.2% compared with 18.3% in Q3 2025, reflecting higher selling and admin costs, an unfavorable product and project mix, and higher material costs.
We are working towards improving the Patient Care margins in Q4 of this year. Net finance costs were 4.4 million compared with 2.2 million last year. Interest on long-term debt continues to decrease and decreased by 0.9 million, mainly due to a lower debt balance. However, this was more than offset by a foreign currency loss of 1.9 million compared with a gain of 1.1 million last year, the majority of which is unrealized. Net earnings increased by 18.4% to 23.1 million, or $0.32 per diluted share, compared with 19.5 million, or $0.27 per diluted share, last year.
Now looking at cash flow and liquidity. Cash flow from operating activities was 36.8 million compared with 41.5 million last year. Cash flow before changes in non-cash operating items increased by 4 million to 41.9, but working capital used 5.1 million compared to an inflow of 3.6 million last year. The largest driver of increased working capital in the quarter was inventory, which we expect to decrease substantially in the fourth quarter ahead of year-end.
Cash used in investing activities was 18.8 million compared with 5.4 million last year. We invested 9.7 million in fixed and intangible assets, including 3.1 million for Greenville on a cash basis for the Greenville building expansion and related equipment, and 9.1 million for the acquisition of VPAL. As at September 30, the available funds were 337.7 million compared with 311.7 at year-end, and our net debt decreased to 173.2 million from 191 million.
In closing, our Q3 results demonstrate good progress on achieving our long-term guidance. The underlying business is seeing strong growth which is being helped along by strategic acquisitions. Our EBITDA margin remains strong and our balance sheet continues to improve. This concludes my prepared remarks. I’ll now turn the call over to JP for additional comments on our ongoing transformation efforts across the group. JP.
Jean-Philippe De Montigny (President, Accessibility – EU, UK & Rest of World)
Yeah, thank you, Steve, and good morning, everyone. As Steve mentioned, this is the third quarter since we communicated our new strategy, and we continue to make steady progress on both top line and EBITDA, which are in line with expectations. So let me speak a bit more about how Q3 sales growth across segments and geographies links to our strategic actions. I’ll start with North America. Growth in North America was fueled mostly by home elevator sales, and if you recall, our strategy is to expand home elevator sales in low-penetration regions.
By bringing best practices to our dealers and by engaging with national builders, we are making great progress on all fronts. We’re also continuing to grow our direct stores and professionalize them with great results. Also, our dumbwaiter and material lifts brand continues to grow well thanks to our combined operational and sales efforts. In patient care, growth in Q3 is coming mostly from ceiling lifts sales and installation. We are reaping the benefits today of our product innovation with the M Series and the associated sales efforts. Furthermore, we see strong ceiling lifts and bed order intake in Q3, so even if Steve was mentioning we had lower bed sales in Q3, we finished the quarter with a strong order book. Finally, Silvalea continues to be successful in growing sales and reducing costs in the UK.
In Europe, organic growth is partly driven by the success of our commercial actions in B2B. So with our dealer business as well as in our largest direct store in the UK, we are accelerating cross-selling of platform lifts, especially in the UK and NL too, markets in which we traditionally focused on stairlifts. In Q3 we also launched the Outdoor 4000 rail, a new version of that outdoor rail, sorry, which has been a big commercial success. Finally, we are accelerating growth in rest of world, and like Steve and Seb mentioned, we now have VPAL with us, which is adding to our sales in Q3.
Beyond sales growth, we’re continuing to improve our value proposition, our operations, and our costs. Let me share some examples from Q3. So in Greenville, as Seb mentioned, we commissioned a new paint line so we can build precision home elevator cabs in-house. This has the dual objective on one side to reduce our cost by bringing this activity in-house, but also to master our quality, and we had great reception from the first dealers that saw it.
Today in Wuxi, our China facility, we commissioned a new metal fabrication shop with some laser cutters, press brake, and bending capabilities. This allows us to sustain the growth of our business with some in-house fabrication in a low-cost country. In the stairlift business we commonized the drawing platforms in Europe for our stairlifts, which allows us to share workload across teams, reducing our lead times and our costs in the long run. In Beamsville we redesigned the QD1000 bed frame.
The QD1000 is our mainstream entry-level bed, so it’s now simpler to manufacture, the quality is better, and also we reduced our costs. We did our first batch production in Q3 and now we’re ramping up production in Q4. In St. Louis, we set up a new assembly line for the clinical M Series lift to be assembled in the US, for us to manufacture locally a product for US customers. Finally, in the UK direct business, we improved the service level of our call center while reducing the reliance and the cost for external third-party support.
So all these are just examples of things we’re continuing to do to improve our costs and our competitiveness in each market. Now, there’s also things that are still in motion and that we expect to materialize and come to fruition in Q4 and early 2027. Let me just mention a few. So Seb talked about the Luma L. This has been well received at NAC, at Grand Designs in the UK, and REHACARE in Germany, and we’re planning to launch this product shortly. We’re also planning to launch a new Artera model which is currently on track and going through field trials in Europe. In patient care, we are continuing to expand the accessories and lineup for ceiling lifts and beds.
You heard about Vipal? So Vipal has been acquired in July and we’re planning to start selling now to our European dealers in the next few months. We also have a lot of procurement initiatives that are still in flight either to mitigate the risks of price increases or to reduce our costs. Finally, we continue to have a number of supply chain and operational improvement initiatives across all of our factories. So all this to say, in spite of the challenging external environment, we continue to show resilience and to execute our strategy successfully.
So now, back over to you, Seb.
Sebastien Bourassa (Chief Executive Officer)
Thank you, JP and Steve, for those colors. So first, before we pass it back to Angela, I just want to say thank you to all the analysts that cover Savaria. You do a very good job and you’re well aware of the story. So Angela, I think we are ready for questions.
OPERATOR (Moderator)
Thank you. At this time, we will conduct the question-and-answer session. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. First question comes from Frédéric Tremblay of Desjardins Capital Markets. Your line is now open.
Frederick Tremblay (Analyst at Desjardins Capital Markets)
Thank you. Good morning. Good morning, all. Just maybe starting with patient care, you mentioned that you’re working towards improving the margin there in Q4. Can you maybe break that down a little bit more across the key factors? What are your thoughts on how cost of materials, project mix, and pricing should evolve from Q3 to Q4?
Sebastien Bourassa (Chief Executive Officer)
Well, good question. So for sure, patient care, again, we had good growth this year, and we know again we said in April, the next few years the growth will grow as our main objective. But yes, we are a bit tough with patient care today. Look at the last three years with the 19.1% of EBITDA in 2024, 19.4 in 2025, and year to date we’re at 18.1. But yes, there’s been a bit more inflation at that division with the foam and aluminum. So I think we’re working to offset that.
We did a mid-year price increase, which is typically not something we do. So yeah, I’m confident the margins will come back better in the coming quarter. So that will be a bit my answer.
Frederick Tremblay (Analyst at Desjardins Capital Markets)
Okay, thanks for that color. And maybe sticking with margins, but accessibility very strong at over 24% in the quarter. I think historically margins in North America were higher than Europe. Without getting into specific numbers, can you just provide maybe a general update on how margins are trending in each geography?
Sebastien Bourassa (Chief Executive Officer)
I think again, without getting too specific, I think the success a bit, as I said a bit earlier in my remark, is we are vertically integrated. We do a lot of things by ourselves, some parts. We are always very active with procurement, try to improve when we do R&D, and we try to launch it at the right price. I will say on all the legacy, all business, things continue to still happen, and unfortunately when we make some acquisition in that division that’s a bit lower than the average, but over time we have enough projects to be able to bring this up.
So no, it’s very positive, again it’s our best margins so far. I think we go one quarter at a time.
Frederick Tremblay (Analyst at Desjardins Capital Markets)
Great, I’ll get back in the queue, thanks.
OPERATOR (Moderator)
Thank you, Craig. Thank you. Our next question comes from the line of Zachary Evershed of National Bank. Your line is now open.
Sebastien Bourassa (Chief Executive Officer)
Morning, Zach.
Zachary Evershed (Analyst at National Bank Financial)
Good morning. Organic growth, I think, has been accelerating for at least the last four quarters if we look at it year over year. And so if we think about all the work you’re doing with your initiatives, European dealers, timing of product launches, what are your hopes for 2027 for consolidated organic growth?
Sebastien Bourassa (Chief Executive Officer)
Good question. So I think I will need to refer to the investor day of April. I think we said that we had the ambition of doing 7% to 8% per year, and I think again, we did not even finish one year since the investor day. So no, I think that will be a nice target to continue in that, and for sure new product is super important. I think we did a lot of work the last two years to be more efficient with our R&D, to launch product at the right time, to have a good sequence of events, and I think we’re starting to see some positive of that.
So again we have some good action time with the sales team on which area of the world where we can be better. So now I’m quite confident about the organic growth for the next few years.
Zachary Evershed (Analyst at National Bank Financial)
Gotcha. Thanks. Then flipping to the other side of the growth equation, how’s the pipeline looking for M&A?
Sebastien Bourassa (Chief Executive Officer)
So far we did two this year. Okay. And we know historically we did three or four. So I think we need to see over time. But no, I think we still have some good opportunity. But again we are very selective and very diligent in our approach. Again, we want also to see what’s happening with the economy, with the tariff and so on. But definitely we want to do 4% to 5% of acquisitions per year. So if we look at the five-year strategy, I’m quite confident we will achieve it.
But again, it might be lumpy, for one year a bit less, the other one a bit more. But over, if we look on a five-year period, we will achieve it.
Zachary Evershed (Analyst at National Bank Financial)
Gotcha. Thanks. Then just one last quick one. With the Greenville expansion wrapping up in Q4, where do you think your capex is going to fall for the quarter?
Stephen Reitknecht (Chief Financial Officer)
Yeah, so it is. Greenville is going to be, the new addition is going to be open and ready early December. So it’s really within the next few weeks. Capex for this year, as you know, is trending up. We’re kind of in the high three, 3 point I think range right now year to date. We’re probably going to be ending the year at around that range. And then next year, next year, Zach, is going to be back more in the 2.5% range of revenue. But what you’re seeing year to date, that’s going to continue for Q4.
Zachary Evershed (Analyst at National Bank Financial)
Understood. Thanks. I’ll turn it over.
OPERATOR (Moderator)
Thank you. Our next question comes from Jonathan Goldman of Scotiabank. Your line is now open.
Jonathan Goldman (Analyst at Scotiabank)
Hey, good morning, team. Good morning, guys. Thanks for taking my questions. I was wondering if you can just talk about the strengths you’re seeing in home elevator sales. I mean, it seems to be different than what we’re reading about in new home starts in the US and kind of sluggishness in Canada as well. But it seems like you guys are growing and selling a lot of units. Is that a function of something you’re doing internally, whether share gains, new products, or is it maybe a market dynamic that I’m missing?
Sebastien Bourassa (Chief Executive Officer)
Again, I think if we go back, okay, there’s not enough home elevator in terms of percentage that are sold into a new house, and I think all the efforts that we have been doing the last 10, 15 years to train people, I think people are more thinking about that. So I think even if there was less construction, it doesn’t mean we could not sell more home elevator. And I think also the fact that again we work hard on our options, new cab, touchscreen COP, and so on.
Okay, again we are trying to gain our market share. Again, Texas is a place where we bought Baxter because we saw a good opportunity to be better over there. So I think we are making some right effort with our sales distribution channel and also with our product lineup that we can continue to grow this segment. And also, again, the Lumo, you could argue, fits a bit in the through-the-floor and the home elevator market. Against the through-the-floor, it’s a retrofit most of the time application, but maybe more cost-attractive for customers. So definitely I think all this segment of home elevator should continue to be good in the next few years for Savaria.
Jonathan Goldman (Analyst at Scotiabank)
That’s interesting color. And then maybe I think you guys alluded to this in the prepared remarks on the cross-selling in patient care in Europe. Is that mainly related to NHS, or is there other sort of product lines that you’re expanding beyond that and selling to different sort of channels?
Jean-Philippe De Montigny (President, Accessibility – EU, UK & Rest of World)
For sure, to have success there’s always a few different categories. Yes, NHS has been a super positive one to help, but also we look at Sealing Lift Oyster kit. This is something that we introduced a few years ago. Now we start to have more and more traction with that. And again, we moved into a new factory two years ago in the UK that has really helped us to be more efficient, to be better. And I think definitely we could see some growth in the future in the UK and across Europe.
Sebastien Bourassa (Chief Executive Officer)
I would say backlog is quite stable. Again, if we look at people, they know early time. They place the order right on time, when they will get it, when they need it. I think we have taught a lot of dealers in the last few years to order on time and to get the delivery when they need. Because again, our production factor, we are very stable in lead time. It’s very rare if we are late. So I think it’s a question of education. But yes, the backlog remains healthy.
So we’re quite happy with that. Thank you.
OPERATOR (Moderator)
Thank you. Next question comes from the line of Justin Keywood of Stifel. Your line is now open.
Justin Keywood (Analyst at Stifel)
Good morning. Hi. Great to see the results. I want to ask on the services or recurring revenue of the business and how Savaria Link is progressing. If we’re able to have an update just on the percentage of overall revenue that’s recurring, and if there’s a target in either the near or medium term. Thank you.
Sebastien Bourassa (Chief Executive Officer)
Good question. So for sure, service and maintenance is super important again. Right now we’re at 10 to 15% of our top line is service and maintenance, and for sure when we have a direct store, we have a chance to have also the service with the end user, so that’s good. When it is a dealer, the dealer has the maintenance contract, and also we can have maybe some spare parts after the warranty. And I think the more units we put on the market, the better chance we have to increase this percentage.
And again, Savaria Link is just—we’re at the beginning, and I think we talked about the incentive for the next five years. Yes, we see a good benefit of that to have the best tools for dealers to troubleshoot their products, to see what’s happening in the different units. So again, installation time, service time is super important, so our team will become more efficient. I think definitely the Savaria Link will continue to help us on that aspect in the future.
Justin Keywood (Analyst at Stifel)
Thank you. And I assume there’s higher implied margins within the services revenue. Are you able to detail what that is on a gross or EBITDA basis?
Stephen Reitknecht (Chief Financial Officer)
Unfortunately, we don’t go per product or margins, but definitely the service and maintenance usually is a good one. So that’s really helping for the total contribution for sure.
Justin Keywood (Analyst at Stifel)
Understood. So that could be accretive to margins as that services proportion increases overall going forward. Is that a fair characterization?
Stephen Reitknecht (Chief Financial Officer)
I think that’s a good assumption, yes.
Justin Keywood (Analyst at Stifel)
Okay, great. Thank you for taking my questions.
OPERATOR (Moderator)
Thank you. Next question comes from the line of Cheryl Hang of TD Cowen. Your line is now open.
Cheryl Hang (Analyst at TD Cowen)
Good morning, everyone. Thanks for taking questions and the color so far. Maybe I’ll start with a question for JP. I think last quarter you pointed to over 50 new initiatives implemented that helped reduce costs, and it sounds like there’s a lot more in Q3. Wondering if you can help us get a sense of how much cost savings these initiatives are generating.
Jean-Philippe De Montigny (President, Accessibility – EU, UK & Rest of World)
Yes, so maybe just to answer your question. First, we continue to have more or less the same amount of initiatives that are implemented each quarter. In terms of how much costs are going to be saved, I prefer not to give you exact numbers on this call, if that’s okay. But it’s always a similar proportion, right? So it’s at least a third of our impacts or cost reductions. So we continue to drive that, but I cannot give you an exact number.
Cheryl Hang (Analyst at TD Cowen)
Okay, understood. That’s helpful and thank you. And it sounds like you’re putting through pricing in Patient Care and maybe a bit in Accessibility as well, as you pointed to improved pricing. Curious what you’re seeing in terms of competitive activity in each market as you put through pricing.
Sebastien Bourassa (Chief Executive Officer)
Oh, I’m sure some competitors are on the call. I will not answer for them. But again, for us, yes, it’s a discipline to do some price increases every year because again there’s inflation, we add some features on our products, we give increases to employees. I think it’s normal to have some price increase every year. And again, we have a job to do, we have to remain competitive. It’s up to them to do what they want to do.
Cheryl Hang (Analyst at TD Cowen)
Okay, understood. Maybe just lastly, is the inflation pressure still focused just on foam and aluminum? Are you seeing inflation in other areas as well? And do you lock in the prices for key materials or do you always purchase at market price?
Sebastien Bourassa (Chief Executive Officer)
That’s a good question. I would say for sure that the fuel cost had an impact on many different types of material this year. But again, why we have been able to continue to improve the margins is because we had enough positive projects to offset some of the negatives that we might have. And maybe this is where Accessibility went a bit more and then Patient Care. Again, yes, foam is a very big part of our purchasing. Yes, we have been impacted. Regarding annual contracts or market, I would say again we take a different strategy in global procurement. Maybe different vendors or different products might be different strategies. It always depends on what the vendors are allowing us to do.
Cheryl Hang (Analyst at TD Cowen)
Okay, got it. Thanks very much.
OPERATOR (Moderator)
Thank you. Next person for questions comes from the line of Rasi Hassan of Paradigm Capital. Your line is now open.
Rasi Hassan (Analyst at Paradigm Capital)
Thanks. Good morning. Thanks for taking my questions. Maybe just first one for Steve, just following up on the Patient Care margin. Is there more operating leverage to capture with future price increases in the segment?
Stephen Reitknecht (Chief Financial Officer)
I mean, yes, there is. To be honest about what we saw in Q3, we were hoping for more operating leverage. They were able to maintain the gross margins relatively flat; we were hoping that they were going to increase. The reason why we didn’t see that increase was because of the cost pressures that Sebastien alluded to on foam and aluminum. But we are seeing operating leverage across all of our business, not just in Patient Care.
Rasi Hassan (Analyst at Paradigm Capital)
Okay, fair enough. Thanks. And then maybe a question for JP just in regards to Europe. Are there certain countries where you’re seeing stronger growth in the region at all, or is it just across the board?
Jean-Philippe De Montigny (President, Accessibility – EU, UK & Rest of World)
And you mean for our business or from the market standpoint?
Rasi Hassan (Analyst at Paradigm Capital)
For your business specifically?
Jean-Philippe De Montigny (President, Accessibility – EU, UK & Rest of World)
Yeah, for sure. So we have different levels of growth by country. I cannot get into the details of which ones. I won’t say it because that’s competitive information. But yeah, we are more successful in some countries than others. And that suggests to me that there’s more potential for the future to catch up in the other places where we’re maybe not growing as fast as in some other countries.
Rasi Hassan (Analyst at Paradigm Capital)
Okay, that’s helpful. And then maybe just on M&A in the region, is your focus on dealers and manufacturers, or either? Any thoughts there? And then maybe just valuations you’re seeing there?
Sebastien Bourassa (Chief Executive Officer)
I think the mix of both has been a bit of success so far. Again, a new product is always superb because we can improve our one-stop shop, and then I have a thousand dealers that are excited about it. So definitely when there’s opportunity on product or small manufacturers, we look at it. And a dealer for us—again, we have some dealers sometimes that want to retire. We’re a very natural buyer, so that’s always interesting. In terms of multiples, I would say again, we always pay the right price for a business.
I don’t think people call us because they are in distress and they need to sell at a discount. I think usually we pay the fair price.
Rasi Hassan (Analyst at Paradigm Capital)
Okay, great. And maybe just lastly, when you talk about Europe and Rest of World, what percentage of that does Europe make? I’m assuming it’s the bulk of it. But do you guys break down what percentage Europe is in that segment?
Stephen Reitknecht (Chief Financial Officer)
It’s combined together. Yeah, Europe and Rest of World is combined. Sorry, was that your question, Rasi? How much? Yeah, exactly. We don’t get into that level of disclosure.
Rasi Hassan (Analyst at Paradigm Capital)
Okay, fair enough. Thanks for taking my questions. I’ll leave it there.
OPERATOR (Moderator)
Thank you. The next question comes from the line of Michael Glenn of Raymond James. Your line is now open.
Sebastien Bourassa (Chief Executive Officer)
Hi, Michael.
Michael Glenn (Analyst at Raymond James)
Hey. Hello, Sebastien. Maybe just curious if you could provide any insight into organic within your direct network versus the dealer network in Accessibility in North America.
Sebastien Bourassa (Chief Executive Officer)
Okay, good question for sure. Again, it’s always a balance. And what is interesting when we have direct stores, we can always test our marketing ideas. We can test a few products to make sure things work. Then we’re able to teach a dealer how to improve also. So the key for us in the success is a mixed combination between direct store and dealer. Unfortunately, we don’t disclose the growth in one or the other. That would start to be a bit too much detail.
But I would say it’s a combination of the two that has made the success.
Michael Glenn (Analyst at Raymond James)
Okay. And I just want to come back to the inflation question, and I just want to focus again on Accessibility and steel and aluminum input prices in that segment, how you are managing those costs.
Sebastien Bourassa (Chief Executive Officer)
Again, to go back over the answer earlier, yes, there has been some inflation across the globe. But I think we have done enough effort to have positive projects to be able to offset some of the inflation. Yes, container prices are up, transport is up. Yes, some of the inputs are up. But I think at the end we had enough positive projects this year to offset things. And also, don’t forget in China again things are relatively stable. There’s less inflation than maybe we had in North America.
Michael Glenn (Analyst at Raymond James)
And last one for me. In the past couple of years Patient Care has had a bit of a Q4 bump on its top line. I’m just wondering if that would be expected this year, or we might see a different trend.
Sebastien Bourassa (Chief Executive Officer)
I can, for certain. Patient Care, there’s some end of the quarter that is some government fiscal year and so on. So yes, I will be disappointed if they don’t have a good Q4.
Michael Glenn (Analyst at Raymond James)
Okay, thank you.
OPERATOR (Moderator)
I am not showing any further questions at this time. I would now like to turn the call back over to Sebastien for closing remarks.
Sebastien Bourassa (Chief Executive Officer)
Thank you, Angela, and thank you to all the analysts for your good questions. It’s always interesting to talk about Savaria. Again, we have a growing story with the aging population. People want to stay at home. So I think definitely we’re in a good segment, a good business that we can continue for the next few years. So thank you, Angela. We’ll see you next quarter in March. Thank you.
OPERATOR (Moderator)
Thank you for your participation in today’s conference. This concludes the program. You may now disconnect.
Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company’s SEC filings and official press releases. Corporate participants’ and analysts’ statements reflect their views as of the date of this call and are subject to change without notice.