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 |
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 | For the nine months ended | ||||
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 % | |
1 The 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. |
2 The adjustment is a non-recurring activity, relating to a provision for an advance made to a former employee, which was deemed uncollectible in 2021. |
3 The adjustment relates to agents' commission and certain expenses of the private placement offering totalling CDN $1,326,273 in 2021. |
4 The adjustment relates to the consideration transferred in excess of the net assets acquired and certain expenses related to the reverse acquisition. |
5 The 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 |
| ||
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 | 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 | (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 | For the nine months ended | ||||
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 | |
SOURCE BuildDirect.com Technologies Inc.
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