BuildDirect Reports Third Quarter 2022 Financial Results

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Q3 2022 Pro revenue reached $19.4 million, representing 88.2% of total revenue at the quarter end.

Metadata

Provider:

PR Newswire

Retrieved on:

Wednesday, November 16, 2022

Information

Geotags:

BRITISH COLUMBIA, UNITED STATES, TORONTO

⚠ partially generated by AI ↴

Organisation:

BUILDDIRECT.COM TECHNOLOGIES, BUILDDIRECT.COM TECHNOLOGIES INC.

Stock Symbol:

TorontoVE:BILD

Summary

Key Points:

Q3 2022 Pro revenue reached $19.4 million, representing 88.2% of total revenue at the quarter end.
BuildDirect's unaudited condensed interim consolidated financial statements and accompanying notes, and the Management's Discussion and Analysis, for the three and nine months ended September 30, 2022 are available on theCompany's websiteat www.BuildDirect.com.
BuildDirect will host a conference call and webcast to discuss the Company's financial results at 9:30 am EST on Wednesday, November 16, 2022.
Refer also to appendix tables,"Third Quarter 2022 Financial Highlights" and "Q3 2022 Highlights" of this press release as well as our Management's Discussion and Analysis for definitions and reconciliations of non-IFRS measures to the nearest IFRS measures.

BuildDirect Reports Third Quarter 2022 Financial Results

Delivers positive adjusted EBITDA of $0.3 million up $0.9 million year-over-year
Pro customer revenue increases to 88.2% of third quarter revenues, up 5.6% quarter-over-quarter
and up 19.6% year-over-year

BuildDirect reports in US dollars and in accordance with IFRS

VANCOUVER, BC, Nov. 16, 2022 /PRNewswire/ - BuildDirect.com Technologies Inc. (TSXV: BILD) ("BuildDirect" or the "Company") a growing omnichannel building material retailer, today announced its financial results for the Third Quarter 2022 ("Q3 2022").

"I am pleased to report that BuildDirect continues to grow its Pro Customer base, increasing Pro revenue 5.6% quarter over quarter, and maintaining its positive adjusted EBITDA" said Shawn Wilson, CEO of BuildDirect. "Our strategic execution is delivering value with revenues reaching $22 million, of which 88.2% are Pro-based. We also recorded our third consecutive quarter of positive adjusted EBITDA, largely due to our push to reallocate resources to Pro customers and to drive acquisition synergies. Looking forward to the fourth quarter of 2022, we will continue to hone our fixed costs and marketing strategies to pursue continued improvement of the Company's overall profitability and growth prospects and leverage our omnichannel business to service growing industry segments and pursue product opportunities for our professional contractor customers."

"In Q3 2022 the Company made cost reductions which are expected to result in approximately US $2 million in annualized operating expense savings. The cost reductions were primarily focused within the BuildDirect ecommerce business as the Company continues to shift its focus to the Pro market segment. The cost reductions are not expected to significantly impact our Pro market segment and will improve overall profitability" said Matt Alexander, Interim-CFO of BuildDirect.

Third Quarter 2022 Financial Highlights

USD$ (unless otherwise noted)	Q3 2022	Q2 2022	% Change	Q3 2021
USD$ (unless otherwise noted)		Q2 2022	% Change	Q3 2021

Revenue	$22.0 million	$24.1 million	-8.5 %	$22.3 million
Gross Profit	$6.9 million	$8.4 million	-17.8 %	$8.1 million
Gross Margin	31.4 %	35.0 %	-3.5 %	36.4 %
Adjusted EBITDA¹	$0.3 million	$0.6 million	-52.4 %	($0.6) million

¹Adjusted EBITDA is a non-IFRS measure. See "Non-IFRS Measures" in the MD&A and the reconciliation to the most directly comparable IFRS measure below.

Q3 2022 Highlights

Q3 2022 Pro revenue reached $19.4 million, representing 88.2% of total revenue at the quarter end. Pro revenues grew 5.6% quarter-over-quarter and 19.6% year-over-year due to increased strategic focus on driving Pro market share.
Adjusted EBITDA in Q3 2022 reached $0.3 million, increasing $0.9M year-over-year. BuildDirect achieved improvements in the adjusted EBITDA primarily by reallocating resources to the Pro market.
In September 2022, BuildDirect completed a non-brokered private placement offering of 6,847,830 common shares issued at a price of CDN$0.46 per common share for total gross proceeds of USD2,469,916 (CDN$3,150,000).

Actual results may differ materially from BuildDirect's financial outlook as a result of, among other things, the factors described under "Forward-Looking Statements" below.

BuildDirect's unaudited condensed interim consolidated financial statements and accompanying notes, and the Management's Discussion and Analysis, for the three and nine months ended September 30, 2022 are available on the Company's website at www.BuildDirect.com. and on the Company's SEDAR profile available at www.sedar.com.

Third Quarter 2022 Financial Results Conference Call

BuildDirect will host a conference call and webcast to discuss the Company's financial results at 9:30 am EST on Wednesday, November 16, 2022. To access the telephonic version of the conference call, participants can dial (888) 664-6392 (North America Toll-Free) or (416) 764-8659. Upon entering the confirmation ID: 61124202, participants will be entered directly into the conference.

Alternatively, the webcast will be available live on the Investor Relations section of BuildDirect's website at https://ir.builddirect.com/events-and-presentation

Among other things, BuildDirect will discuss long-term financial outlook on the conference call and webcast, and related materials will be made available on the Company's website at https://ir.builddirect.com/events-and-presentation. Investors should carefully review the factors, assumptions, risks and uncertainties included in such related materials concerning such long-term financial outlook.

An audio replay of the call will be available approximately two hours after the completion of the live call until 8:59 pm EST on November 23, 2022. The audio replay will be accessed by dialing (888) 390-0541 (North America Toll-Free) or (416) 764-8677 (Toronto) with entry code: 124202#. In addition, an archived webcast will be available on the Investor Relations section of the Company's website at https://ir.builddirect.com/events-and-presentation.

Advisory Services

BuildDirect has retained Gilcrest Advisory Inc. ("Gilcrest") to broaden the Company's reach within the investment community and provide market making services to maintain orderly trading in the Company's securities. Gilcrest has been engaged for an initial three month period expiring on February 16, 2023, which may be extended by mutual agreement, and will be paid a monthly fee of $6,000 CAD plus applicable taxes. Gilcrest and the Company are unrelated and unaffiliated entities, but Gilcrest and/or its clients may have an interest, directly or indirectly, in the securities of the Company. Gilcrest is a Canadian advisory service firm offering advice and services on investor relations and market making synergies. Gilcrest has agreed to comply with all applicable securities laws and the policies of the TSXV in providing the above services.

About BuildDirect

BuildDirect (TSXV: BILD) is a growing omnichannel building material retailer. BuildDirect connects North American home improvement B2B and B2C organizations, and homeowners with quality building materials and services through its robust global supply chain network. BuildDirect's growth trajectory, strong product offering, and proprietary heavyweight delivery network are delivering value today, solidifying its position as an innovative player in the home improvement industry. For more information, visit www.BuildDirect.com.

Forward-Looking Information:

This press release contains statements which constitute "forward-looking statements" and "forward-looking information" within the meaning of applicable securities laws (collectively, "forward-looking statements"),including statements regarding the plans, intentions, beliefs and current expectations of the Company with respect to future business activities and operating performance. Forward-looking statements are often identified by the words "may", "would", "could", "should", "will", "intend", "plan", "anticipate", "believe", "estimate", "expect" or similar expressions. These statements reflect management's current beliefs and expectations and are based on information currently available to management as at the date hereof.

Forward-looking statements in this press release may include, without limitation, statements relating to the impact of resource reallocation and acquisition synergies, honing of fixed costs and marketing strategies, BuildDirect's overall profitability and growth prospects, the pursuit and servicing of growing industry segments and product opportunities, the impact of cost reductions including, without limitation, with respect to adjusted EBITDA, and the maintenance of positive adjusted EBITDA.

Forward-looking statements involve significant risk, uncertainties and assumptions. Many factors could cause actual results, performance or achievements to differ materially from the results discussed or implied in the forward-looking statements. Among those factors are changes in consumer spending, inflation, availability of mortgage financing and consumer credit, changes in the housing market, changes in trade policies, tariffs or other applicable laws and regulations both locally and in foreign jurisdictions, availability and cost of goods from suppliers, fuel prices and other energy costs, interest rate and currency fluctuations, retention of key personnel and changes in general economic, business and political conditions and other factors referenced under the "Risks and Uncertainties" section of our MD&A. These forward-looking statements may be affected by risks and uncertainties in the business of the Company and general market conditions, including COVID-19.

These factors should be considered carefully, and readers should not place undue reliance on the forward-looking statements. Although the forward-looking statements contained in this press release reflect the Company's expectations, estimates or projections concerning future results or events based on the opinions, assumptions and estimates of management considered reasonable at the date the statements are made, the Company cannot assure readers that actual results will be consistent with these forward-looking statements. These forward-looking statements are made as of the date of this press release, and BuildDirect assumes no obligation to update or revise them to reflect new events or circumstances, except as required by law.

Reference is made in this press release to the following non-GAAP measures: Adjusted EBITDA. These non-GAAP measures are commonly used by investors and other interested parties to evaluate our financial performance and are employed by the Company to measure its operating and economic performance and to assist in business decision-making. These non-GAAP measures do not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other issuers. These measures are provided as additional information to complement those IFRS measures by providing further understanding of the results of operations from management's perspective. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of the financial information reported under IFRS. Refer also to appendix tables, "Third Quarter 2022 Financial Highlights" and "Q3 2022 Highlights" of this press release as well as our Management's Discussion and Analysis for definitions and reconciliations of non-IFRS measures to the nearest IFRS measures.

Contact Information:

Matt Alexander, Interim CFO
BuildDirect IR
1-778-382-7748
[email protected]

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

NON-IFRS MEASURES

We define EBITDA as net income or loss before interest, income taxes and amortization. Adjusted EBITDA removes fair value adjustment of convertible debt and warrants, fair value adjustment of inventory, restructuring expenses, non-recurring bad debt expense, foreign exchange gains and losses, and share-based compensation items from EBITDA. We are presenting these measures because we believe that our current and potential investors, and many analysts, use them to assess our current and future operating results and to make investment decisions. Management uses these measures in managing the business and making decisions. EBITDA and adjusted EBITDA are not intended as substitutes for IFRS measures.

		For the three months ended September 30		For the nine months ended September 30
Adjusted EBITDA		2022	2021	2022	2021

Gain (Loss for the period)		(893,206)	673,240	(3,212,163)	(12,927,217)
Income tax expense		97,468	474,031	522,618	1,283,537
Depreciation and amortization		1,026,908	794,995	3,052,950	2,746,238
Interest		570,914	503,572	1,454,483	1,765,159
EBITDA		802,084	2,445,838	1,817,888	(7,132,283)

EBITDA adjustments
	Stock-based compensation	97,635	196,284	195,270	1,250,114
	Foreign exchange (gain)/loss	(746,084)	(98,063)	(678,502)	(9,899)
	Restructuring	148,097	0	148,097	0
	Fair value adjustment of convertible debt and warrants	(7,173)	(4,964,539)	(756,555)	1,455,090
	Impact of fair value adjustment of Inventory in acquisition¹	-	-	137,400	528,552
	Significant bad debt expense²	-	-	-	257,891
	Finance costs³	-	374,652	-	1,444,745
	Listing expenses⁴	-	1,017,659	-	1,017,659
	Other expenses related to TSXV listing⁵	-	409,211	-	409,211

	Adjusted EBITDA	294,559	(618,958)	863,598	(778,920)
	Adjusted EBITDA %	1 %	-3 %	1 %	-1 %

¹The adjustment for the impact of the fair value of FloorSource and Superb inventory relates to the impact on normal selling profit from the fact that IFRS requires the inventory be recorded at fair value on acquisition and not at historical cost. Earnings are impacted as this inventory was sold in the period.

²The adjustment is a non-recurring activity, relating to a provision for an advance made to a former employee, which was deemed uncollectible in 2021.

³The adjustment relates to agents' commission and certain expenses of the private placement offering totalling CDN $1,326,273 in 2021.

⁴The adjustment relates to the consideration transferred in excess of the net assets acquired and certain expenses related to the reverse acquisition.

⁵The adjustment relates to non-recurring legal and accounting expenses required to meet public company standards for TSXV listing.

Condensed Consolidated Interim Statement of Financial Position
(Unaudited)
(Expressed in United States dollars)

	September 30,	December 31,
	2022	2021
Assets

Current assets:
Cash and cash equivalents	$ 2,980,685	$ 1,716,986
Short-term investments	118,000	118,000
Trade and other receivables (note 4)	5,029,505	4,420,994
Advances to vendors	1,030,001	1,979,061
Inventories (note 5)	7,703,702	7,452,570
Prepaid materials, expenses and deposits	933,487	424,137
Total current assets	17,795,380	16,111,748
Non-current assets:
Property and equipment (note 6)	578,023	599,232
Intangible assets (note 7)	10,522,419	12,650,528
Right-of-use assets (note 8)	3,859,719	4,305,647
Non-current advances to vendors	467,773	1,141,805
Goodwill	4,280,165	4,280,165
Deferred tax asset	364,329	364,329
Total Assets	$ 37,866,808	$ 39,453,454

Liabilities and Shareholders' Equity

Current liabilities:
Accounts payable and accrued liabilities (note 9)	$ 6,260,611	$ 7,619,937
Income taxes payable	(102,963)	735,420
Current portion of lease liabilities (note 10)	1,416,829	1,286,775
Deferred revenue (note 11)	1,555,871	2,460,498
Loan payable (note 12)	8,323,512	3,828,971
Current portion of promissory note (note 14)	1,053,310	1,021,161
Current portion of deferred consideration payable	1,198,414	2,484,571
	19,705,584	19,437,333
Non-current liabilities:
Deferred consideration payable	1,383,519	553,732
Lease liabilities (note 10)	3,229,776	3,929,806
Warrants (note 13)	66,536	823,090
Promissory note (note 14)	2,592,298	3,386,300

Shareholders' equity:
Share capital (note 15)	121,560,405	119,075,245
Share based payment reserve	11,147,873	10,854,968
Deficit	(121,819,183)	(118,607,020)
	10,889,095	11,323,193
Total Liabilities and Equity	$ 37,866,808	$ 39,453,454

Condensed Consolidated Interim Statement of Operations and Comprehensive Loss
(Unaudited)
(Expressed in United States dollars)

	For the three months ended September 30		For the nine months ended September 30
	2022	2021	2022	2021

Revenue (note 16)	$ 22,007,379	$ 22,355,658	$ 70,455,764	$ 66,649,723

Cost of goods sold (note 5)	15,086,074	14,216,903	46,384,959	42,372,402

Gross Profit	6,921,305	8,138,755	24,070,805	24,277,321

Operating expenses:
Fulfillment costs	1,530,197	2,374,704	5,629,233	6,855,014
Selling and marketing	1,394,686	2,968,055	5,622,669	8,359,299
Administration	3,616,163	3,609,064	11,333,984	11,151,304
Research and development	239,806	472,539	1,123,404	1,298,102
Depreciation and amortization	1,026,908	794,995	3,052,950	2,746,238
	7,807,760	10,219,357	26,762,240	30,409,957

Loss from operations	(886,455)	(2,080,602)	(2,691,435)	(6,132,636)

Other income (expense):
Interest income	13,577	23,836	44,223	64,106
Interest expense	(584,491)	(527,408)	(1,498,706)	(1,829,265)
Finance costs (note 3)	-	(374,652)	-	(1,444,745)
Rental income	56,471	61,154	169,413	161,710
Fair value adjustment of convertible debt and warrants (note 13)	7,173	4,964,539	756,555	(1,455,090)
Foreign exchange gain	746,084	98,063	678,502	9,899
Restructuring costs	(148,097)		(148,097)
Listing expenses		(1,017,659)		(1,017,659)
	90,717	3,227,873	1,890	(5,511,044)

Loss before income taxes	(795,738)	1,147,271	(2,689,545)	(11,643,680)

Income tax expense	(97,468)	(470,031)	(522,618)	(1,283,537)

Total loss and comprehensive loss for the period	$ (893,206)	$ 673,240	$ (3,212,163)	$ (12,927,217)

Deficit, beginning of period	$ (120,925,977)	$ (121,879,818)	$ (118,607,020)	$ (108,279,361)

Deficit, end of period	$ (121,819,183)	$ (121,206,578)	$ (121,819,183)	$ (121,206,578)

Loss per share:
Basic and diluted loss per share (note 21)	(0.03)	0.02	(0.11)	(0.44)

Condensed Consolidated Interim Statement of Cash Flows
(Unaudited)
(Expressed in United States dollars)

	For the three months ended September 30			For the nine months ended September 30
	2022	2021 (note 2)	2022		2021 (note 2)

Cash provided by (used in):

Operating activities:
Loss for the period	$ (893,206)	$ 673,240	$ (3,212,163)		$ (12,927,217)
Add (deduct) adjustments and items not affecting cash:
Depreciation	1,015,908	794,995	3,041,951		2,746,238
Income tax expense	97,468	474,031	522,618		1,283,537
Stock-based compensation expense	97,635	196,284	292,905		1,250,114
Other interest and finance cost	515,025	428,276	1,278,009		1,516,191
Interest paid on leases	69,465	99,132	220,699		313,075
Interest earned on lease receivables and other	(13,577)	(23,836)	(44,223)		(64,106)
Fair value adjustment on convertible debt and warrants	(7,173)	(4,964,539)	(756,555)		1,455,090
Finance costs	-	374,652	-		1,444,745
Unrealized foreign exchange (gain) loss Listing expenses	(746,084) -	(106,672) 1,017,659	(678,503) -		(2,693) 1,017,659
	135,462	(1,036,778)	664,738		(1,967,367)
Interest paid	(234,006)	(431,864)	(581,808)		(1,471,445)
Income taxes paid	(50,000)	-	(1,361,000)		-
Changes in non-cash operating working capital:
Trade and other receivables	155,036	(248,624)	(789,458)		(496,573)
Inventories	(170,565)	(362,857)	(251,132)		(757,175)
Prepaid materials, expenses and deposits	(100,140)	29,693	(709,514)		179,483
Advances to vendors	752,913	(1,519,636)	1,624,092		(2,479,256)
Accounts payable and accrued liabilities	(1,351,763)	2,193,898	(968,270)		4,081,745
Deferred revenue	(411,251)	(433,406)	(904,627)		1,157,391
Total operating activities	(1,274,314)	(1,809,574)	(3,276,978)		(1,753,197)
Investing activities:
Purchase of property and equipment	(7,924)	(26,081)	(23,377)		(54,730)
Principal received on lease receivables	61,673	56,384	180,948		165,430
Interest received	-	23,836	-		64,106
Cash acquired from reverse acquisition	-	220,920	-		220,920
Total investing activities	53,749	275,059	157,571		395,726
Financing activities:
Subscription receipts proceeds	2,469,916	-	2,469,916		16,177,383
Restricted cash related to subscription receipts	-	15,032,370	-		(74,921)
Subscription receipts issuance costs	-	(374,652)	-		(1,444,745)
Proceeds from exercise of stock options	15,244	7,097	15,244		17,265
Principal lease payments	(339,200)	(234,520)	(993,304)		(744,902)
Loan repayment	-	-	-		(114,382)
Promissory note repayment	(311,250)	-	(933,750)		-
Deferred consideration repayment	-	-	(675,000)		-
Loan proceeds	-	-	4,500,000		-
Total financing activities	1,834,710	14,430,295	4,383,106		13,815,698
Increase/(Decrease) in cash and cash equivalents	614,145	12,895,780	1,263,699		12,458,227
Cash and cash equivalents, beginning of period	2,366,540	4,978,958	1,716,986		5,416,511
Cash and cash equivalents, end of period	$ 2,980,685	$ 17,874,738	$ 2,980,685		$ 17,874,738

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SOURCE BuildDirect.com Technologies Inc.