BuildDirect Reports Third Quarter 2021 Financial Results
Revenue of $22.4 million, with year-over-year revenue growth of 51%
Reiterates full year 2021 revenue guidance in the range of $90 - $98 million
BuildDirect reports in US dollars and in accordance with IFRS
VANCOUVER, BC, Nov. 18, 2021 /PRNewswire/ - BuildDirect.com Technologies Inc. (TSXV: BILD) ("BuildDirect" or the "Company"), an innovative platform for purchasing and selling building materials online, today announced its financial results for the three and nine months ended September 30, 2021.
"BuildDirect continues to benefit from ongoing investment in the home," said Dan Park, CEO of BuildDirect. "We remain committed to delivering on our strategy, which focuses on our differentiated omnichannel offering and infrastructure, as well as executing select accretive acquisitions to broaden our reach and accelerate our growth. Our solid third quarter performance combined with increasing investments in the home indicate that we are on pace to deliver on the full year revenue guidance of $90 - $98 million."
Ethan Rudin, CFO of BuildDirect added, "Our recently announced acquisition of U.S.-based Superb Flooring & Design aligns directly with our strategy to acquire B2B-focused targets, increasing our Pro customer base, driving larger basket sizes, and expanding our North American presence. We remain keenly positioned to realize BuildDirect's mission to accelerate the home renovation industry into the digital era with our distinct DiPhy (digital + physical) strategy, leveraging our robust technology and heavy weight delivery platform, which when combined with the local presence, trust and service of the best independent retailers, provides an unmatched end-to-end experience for the underserved Pro customer."
Third Quarter 2021 Financial Highlights
USD$ (unless otherwise noted) | Third Quarter 2021 | Third Quarter 2020 | % Change | YTD 2021 |
Revenue | $22.4 million | $14.8 million | 51% | $66.6 million |
Gross Profit | $8.1 million | $5.5 million | 48% | $24.3 million |
Gross Margin | 36.4% | 37.0% | (0.6%) | 36.4% |
Adjusted EBITDA1 | ($0.6 million) | ($0.1 million) | (400%) | ($0.8 million) |
1 | Adjusted 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. |
Third Quarter 2021 Financial and Operational Highlights
- Revenue of $22.4 million increased 51% compared to the third quarter of 2020, primarily driven by the December 31, 2020 acquisition of FloorSource, and an increase in customer demand for building supplies.
- Pro revenue increased by 216% compared to the third quarter of 2020 and represents 66% of total revenue in the third quarter of 2021.
- Gross profit increased 48% to $8.1 million compared to $5.5 million in the third quarter of 2020.
- Gross margin decreased by 60bps to 36.4% compared to the third quarter of 2020 due to slightly lower gross margin percentages from the FloorSource business and higher supply chain costs in 2021 compared to 2020.
- Adjusted EBITDA of ($0.60 million), a decrease as compared to the third quarter of 2020 due to investments in sales and marketing to accelerate sales growth, as well as lower government tax credits received to offset our research and development expenses.
Post Quarter Highlights
- On November 17, 2021, BuildDirect announced its agreement to acquire Superb Flooring & Design LLC for USD $10 million, expanding our Pro market segment share.
- The Company has kicked off the search to appoint a new CEO and is finalizing the transition plan to ensure a smooth handover.
- Appointed experienced home improvement executives, Peg Hunter and Henry Lees-Buckley, to the Board of Directors.
2021 Outlook
BuildDirect's business performance accelerated over the past year, as a result of significant growth in the home improvement products industry driven by a shift towards investment in the home, which has driven record breaking online growth in building material purchases. Over the long-term, BuildDirect intends to drive gross margin improvements through further alignment of unit economics and profitability in addition to enhancing revenue through its omnichannel platform and accretive acquisition pipeline. In 2021, BuildDirect anticipates revenue in the range of $90 - $98 million, representing significant year-over-year growth.
In line with the industry, BuildDirect experienced near-term challenges with our supply chain and products due to short-term headwinds. However, due to the hard work of our team and support of our partners, we were able minimize the impact and continue to provide great value and service as well as remain in-stock for our customers.
BuildDirect remains bullish as the Company continues to leverage its DiPhy (digital + physical) growth strategy and expands its reach into bricks and mortar independent retailers and captures the B2B professionals. The above guidance does not include the Superb acquisition or additional acquisitions, however BuildDirect maintains a strong funnel of actionable acquisition targets that fit within its well-defined investment criteria.
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 Management's Discussion and Analysis for the three and nine months ended September 30, 2021 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 2021 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 Thursday, November 18, 2021. 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: 56632983, 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 25th, 2021. The audio replay will be accessed by dialing (888) 390-0541 (North America Toll-Free) or (416) 764-8677 (Toronto) with entry code: 632983. 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.
About BuildDirect
BuildDirect (TSXV: BILD) is an innovative technology platform for purchasing and selling building materials online. The BuildDirect platform connects homeowners and home improvement professionals in North America with suppliers and sellers of quality building materials from around the world, including flooring, tile, decking and more. BuildDirect's growth, proprietary heavyweight delivery network, and digital reach have served to solidify its role as a ground-breaking player in the home improvement industry. For more information, visit http://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 BuildDirect's innovative technology and heavyweight platform and end to end experience for the Pro customer segment, BuildDirect's DiPhy strategy and acceleration of the home renovation industry into the digital era, BuildDirect increasing its Pro customer base, driving larger basket sizes, and expanding its North American presence, BuildDirect's accretive acquisition pipeline, potential growth, potential value for all stakeholders, expected growth margins, and expected revenues for 2021.
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, 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. 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.
For the three months ended September 30 | For the nine months ended September 30 | ||||
2021 | 2020 | 2021 | 2020 | ||
Adjusted EBITDA | |||||
Gain (Loss) for the period | $ 673,240 | $ (196,386) | $ (12,927,217) | $ (2,427,433) | |
Income tax expense | 474,031 | - | 1,283,537 | - | |
Depreciation and amortization | 794,995 | 168,970 | 2,746,238 | 614,420 | |
Interest | 503,572 | 147,819 | 1,765,159 | 498,600 | |
EBITDA | 2,445,839 | 120,403 | (7,132,283) | (1,314,413) | |
EBITDA adjustments | |||||
Stock-based compensation | $ 196,284 | $ 57,520 | $ 1,250,114 | $ 172,561 | |
Foreign exchange (gain)/loss | (98,063) | (301,735) | (9,899) | (382,595) | |
Fair value adjustment of | (4,964,539) | - | 1,455,090 | - | |
Impact of fair value adjustment of Inventory in | - | - | 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 | (618,958) | (123,812) | (778,920) | (1,524,447) | |
Adjusted EBITDA % | (3%) | (1%) | (1%) | (4%) | |
1 | The adjustment for the impact of the fair value of FloorSource inventory relates to the impact on normal selling |
2 | The adjustment is a non-recurring activity, relating to a provision for an advance made to a former employee, |
3 | The adjustment relates to agents' commission and certain expenses of the private placement offering totalling |
4 | The adjustment relates to the consideration transferred in excess of the net assets acquired and certain |
5 | The adjustment relates to the non-recurring legal and accounting expenses required to bring the company to |
Condensed Consolidated Interim Statement of Financial Position
(Unaudited)
(Expressed in United States dollars)
September 30, | December 31, | |||||
2021 | 2020 | |||||
Assets | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | 17,874,738 | $ | 5,416,511 | ||
Restricted cash | 74,921 | - | ||||
Short-term investments | 118,000 | 118,000 | ||||
Trade and other receivables | 3,059,098 | 2,727,955 | ||||
Advances to vendors | 2,870,902 | 391,641 | ||||
Inventories | 6,204,115 | 5,446,940 | ||||
Prepaid materials, expenses and deposits | 815,114 | 994,597 | ||||
Total current assets | 31,016,888 | 15,095,644 | ||||
Non-current assets: | ||||||
Property and equipment | 544,667 | 835,921 | ||||
Intangible assets | 9,621,692 | 11,326,135 | ||||
Right-of-use assets (note 8) | 3,376,327 | 900,834 | ||||
Non-current advances to vendors | 567,279 | 567,284 | ||||
Total Assets | $ | 45,126,853 | $ | 28,725,818 | ||
Liabilities and Shareholders' Equity (Deficiency) | ||||||
Current liabilities: | ||||||
Accounts payable and accrued liabilities | $ | 10,388,872 | $ | 6,834,980 | ||
Income taxes payable | 1,283,537 | - | ||||
Current portion of lease liabilities | 990,640 | 458,841 | ||||
Deferred revenue | 2,689,351 | 1,531,960 | ||||
Loan payable | 3,810,038 | 3,927,113 | ||||
Current portion of promissory note | 1,715,004 | 1,145,986 | ||||
Current portion of deferred consideration payable | 523,240 | 602,681 | ||||
21,400,682 | 14,501,561 | |||||
Non-current liabilities | ||||||
Deferred consideration payable | 1,242,379 | 1,018,555 | ||||
Lease liabilities | 3,370,647 | 1,476,044 | ||||
Convertible notes | - | 12,120,679 | ||||
Warrants | 1,517,051 | 480,321 | ||||
Promissory note | 4,197,089 | 4,552,670 | ||||
10,327,166 | 19,648,269 | |||||
Shareholders' equity (deficiency): | ||||||
Share capital | 122,959,732 | 92,459,612 | ||||
Share based payment reserve | 11,645,851 | 10,395,737 | ||||
Deficit | (121,206,578) | (108,279,361) | ||||
13,399,005 | (5,424,012) | |||||
Total Liabilities and Equity | $ | 45,126,853 | $ | 28,725,818 | ||
Condensed Consolidated Interim Statement of Operations and Comprehensive Loss
(Unaudited)
(Expressed in United States dollars)
For the three months | For the nine months | ||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||
Revenue | $ | 22,355,658 | $ | 14,819,622 | $ | 66,649,723 | $ | 37,059,011 | |||||
Cost of goods sold | 14,216,903 | 9,337,086 | 42,372,402 | 22,840,645 | |||||||||
Gross Profit | 8,138,755 | 5,482,536 | 24,277,321 | 14,218,366 | |||||||||
Operating expenses: | |||||||||||||
Fulfillment costs | 2,374,704 | 2,395,634 | 6,855,014 | 6,382,115 | |||||||||
Selling and marketing | 2,968,055 | 1,971,881 | 8,359,299 | 5,444,591 | |||||||||
Administration | 3,609,064 | 1,566,850 | 11,151,304 | 4,884,990 | |||||||||
Research and development | 472,539 | (222,797) | 1,298,102 | (310,015) | |||||||||
Depreciation and amortization | 794,995 | 168,970 | 2,746,238 | 614,420 | |||||||||
10,219,357 | 5,880,538 | 30,409,957 | 17,016,101 | ||||||||||
Loss from operations | (2,080,602) | (398,002) | (6,132,636) | (2,797,735) | |||||||||
Other income (expense): | |||||||||||||
Interest income | 23,836 | 36,004 | 64,106 | 92,592 | |||||||||
Interest expense | (527,408) | (183,823) | (1,829,265) | (591,192) | |||||||||
Finance costs) | (374,652) | - | (1,444,745) | - | |||||||||
Rental income | 61,154 | 47,700 | 161,710 | 357,159 | |||||||||
Fair value adjustment of convertible | 4,964,539 | - | (1,455,090) | - | |||||||||
Foreign exchange gain | 98,063 | 301,735 | 9,899 | 382,595 | |||||||||
Gain on sublease | - | - | - | 129,148 | |||||||||
Listing expenses | (1,017,659) | - | (1,017,659) | - | |||||||||
3,227,873 | 201,616 | (5,511,044) | 370,302 | ||||||||||
Income/(loss) before income taxes | 1,147,271 | (196,386) | (11,643,680) | (2,427,433) | |||||||||
Income tax expense | (474,031) | - | (1,283,537) | - | |||||||||
Net income/(loss) and comprehensive income/(loss) for the period | $ | 673,240 | $ | (196,386) | $ | (12,927,217) | $ | (2,427,433) | |||||
Deficit, beginning of period | $ | (121,879,818) | $ | (105,951,172) | $ | (108,279,361) | $ | (103,720,125) | |||||
Deficit, end of period | $ | (121,206,578) | $ | (106,147,558) | $ | (121,206,578) | $ | (106,147,558) | |||||
Loss per share (expressed in $ per share): | |||||||||||||
Basic loss per share | 0.02 | (0.01) | (0.44) | (0.11) | |||||||||
Diluted loss per share | 0.02 | (0.01) | (0.44) | (0.11) | |||||||||
Condensed Consolidated Interim Statement of Cash Flows
(Unaudited)
(Expressed in United States dollars)
For the three months ended | For the nine months ended | |||||||
2021 | 2020 | 2021 | 2020 | |||||
Cash provided by (used in): | ||||||||
Operating activities: | ||||||||
Net income (loss) for the period | $ | 673,240 | $ | (196,386) | $ | (12,927,217) | $ | (2,427,433) |
Add (deduct) adjustments and items not affecting cash: | ||||||||
Depreciation | 794,995 | 168,970 | 2,746,238 | 614,420 | ||||
Income tax expense | 474,031 | - | 1,283,537 | - | ||||
Stock-based compensation expense | 196,284 | 57,520 | 1,250,114 | 172,561 | ||||
Other interest and finance cost | 428,276 | 113,271 | 1,516,191 | 331,980 | ||||
Interest on leases | 99,132 | 70,552 | 313,075 | 259,212 | ||||
Interest earned on lease receivables and other | (23,836) | (36,005) | (64,106) | (92,592) | ||||
Fair value adjustment on convertible debt and warrants | (4,964,539) | - | 1,455,090 | - | ||||
Finance costs | 374,652 | - | 1,444,745 | - | ||||
Listing expenses | 1,017,659 | - | 1,017,659 | - | ||||
Unrealized foreign exchange (gain) loss | (106,672) | 86,201 | (2,693) | (101,301) | ||||
Gain on lease modification | - | - | - | (129,148) | ||||
(1,036,778) | 264,123 | (1,967,367) | (1,372,301) | |||||
Changes in non-cash operating working capital: | ||||||||
Short-term investments | - | - | - | (83,000) | ||||
Trade and other receivables | (248,624) | 64,327 | (496,573) | 62,519 | ||||
Inventories | (362,857) | 355,623 | (757,175) | (137,978) | ||||
Prepaid materials, expenses and deposits | 29,693 | (108,352) | 179,483 | 1,235,941 | ||||
Advances to vendors | (1,519,636) | (56,407) | (2,479,256) | 347,061 | ||||
Accounts payable and accrued liabilities | 2,193,898 | 1,394,718 | 4,081,745 | 2,158,478 | ||||
Deferred revenue | (433,406) | (1,945,101) | 1,157,391 | (678,864) | ||||
Total operating activities | (1,377,710) | (31,069) | (281,752) | 1,531,856 | ||||
Investing activities: | ||||||||
Purchase of property and equipment | (26,081) | (98,672) | (54,730) | (105,508) | ||||
Principal received on lease receivables | 56,384 | 51,548 | 165,430 | 151,241 | ||||
Interest received | 23,836 | 36,005 | 64,106 | 92,592 | ||||
Cash acquired from reverse acquisition | 220,920 | - | 220,920 | - | ||||
Total investing activities | 275,059 | (11,119) | 395,726 | 138,325 | ||||
Financing activities: | ||||||||
Subscription receipts proceeds | - | - | 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 | 7,097 | - | 17,265 | - | ||||
Principal lease payments | (234,520) | (153,198) | (744,902) | (517,046) | ||||
Interest paid | (431,864) | (183,823) | (1,471,445) | (591,192) | ||||
Loan repayment | - | - | (114,382) | - | ||||
Total financing activities | 13,998,431 | (337,021) | 12,344,253 | (1,108,238) | ||||
Increase/(Decrease) in cash and cash equivalents | 12,895,780 | (379,209) | 12,458,227 | 561,943 | ||||
Cash and cash equivalents, beginning of period | 4,978,958 | 4,398,665 | 5,416,511 | 3,457,513 | ||||
Cash and cash equivalents, end of period | $ | 17,874,738 | $ | 4,019,456 | $ | 17,874,738 | $ | 4,019,456 |
SOURCE BuildDirect.com Technologies Inc.
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