- Delivered adjusted EBITDA of $1.37 million for Q3 2023; the Company has delivered seven consecutive quarters of positive adjusted EBITDA.
- Delivered gross margins of 39.8% for Q3 2023, an increase of 840 bps year-over-year and 10 bps quarter-over-quarter.
- Working capital increased by $7.1 million quarter-over-quarter to a positive $2.6 million in Q3 2023.
Vancouver, BC, November 23, 2023--(T-Net)--BuildDirect.com Technologies Inc. (TSXV: BILD) a leading omnichannel building material retailer, today announced its financial results for the Third Quarter of 2023.
BuildDirect reports in US dollars and in accordance with IFRS. All references to dollars herein are in United States dollars ($) unless otherwise specified.
Shawn Wilson, Chief Executive Officer, BuildDirect
"During Q3 2023, BuildDirect reported an adjusted EBITDA of $1.37 million and continued to improve its profitability," said Shawn Wilson, CEO of BuildDirect. "Our growth strategy remains focused on increasing the number of brick-and-mortar Pro-Centers, throughout North America (referred to as independent retailers in our financials) and accelerating our E-Commerce business."
Shawn added, "The Company currently has five Pro Centers located in Michigan which generate approximately $55 million in revenue on an annualized basis (combined). As previously announced, the Company also recently launched a Pro Center in Richmond, British Columbia. Of the Top 50 Markets in North America, we currently have Pro-Centers in only two - leaving potentially significant opportunities for growth. By establishing a sizable physical and digital footprint, we will be well-positioned to increase our share of the over $70 billion North American. flooring market. As a reminder, our Pro-Centers operate together with our E-Commerce business. We import products from manufacturers across the globe into our Pro-Centers. From there we sell those products and services to local Pros and also leverage the Pro-Centers to fulfill our E-Commerce orders."
"As we pursue the growth of our Pro-Center footprint we anticipate that our E-Commerce business becomes even more competitive," continued Shawn. "During Q3 2023, BuildDirect successfully completed a migration and enhancements to its e-commerce platform. The changes have allowed the Company to lower its overall fixed costs associated with the e-commerce business the impact of which cost reductions we anticipate will become more evident in the Company's Q4 2023 and into 2024. More importantly, the enhancements will allow the team to re-focus its energy on profitable growth initiatives within the e-commerce division going forward."
Third Quarter 2023 Financial Highlights
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Q3 2023 |
Q2 2023 |
% Change (Q3 2023 & Q2 2023)
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Q3 2022 |
%Change (Q3 2023 & Q3 2022)
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|
|
|
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|
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Revenue |
$18.4 million |
$19.1 million |
(3.6)% |
$22.0 million |
(16.3)% |
Gross Profit |
$7.3 million |
$7.6 million |
(3.4)% |
$6.9 million |
5.8% |
Gross Margin |
39.8% |
39.7% |
10 bps |
31.4% |
840 bps |
Adjusted EBITDA1 |
$1.37 million |
$1.06 million |
28.8% |
$0.29 million |
365.4% |
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.
- Total revenue was $18.4 million for Q3 2023, a decrease of 16.3% and 3.6%, year-over-year and quarter-over-quarter, respectively. The decrease in revenues is a result of a temporary scale down of the Company's e-commerce operations in 2022 to facilitate its platform migration and enhancements initiative which lowered its systems operating costs and helped create consistent positive adjusted EBITDA results to date.
- Gross margin was 39.8% for Q3 2023, an increase of 840 bps year-over-year and 10 bps quarter-over-quarter. The increase in gross margin percentage can be attributed to the improvements to BuildDirect's e-commerce product margin with a shift in pricing strategy from "everyday low prices" to a "high-low pricing" strategy, improvements to the Company's independent retailer product margin as we source more product directly through BuildDirect's direct to manufacturer procurement model, and the reduction in inbound freight costs.
- Pro revenue was $16.6 million for Q3 2023, which represents 91.6% of the Company's total revenue during the third quarter of 2023, an increase in the share of revenue of 3.5% year-over-year. The increase in the percentage of Pro Revenue is a result of the Company temporarily scaling down its e-commerce operations, which operations generate some of its revenues from Homeowner.
- Adjusted EBITDA was $1.37 million for Q3 2023, an increase of approximately $1.08 million (or approximately 365%) year-over-year and $0.31 million (or approximately 29%) quarter-over-quarter, largely attributed to the temporary scale down of the e-commerce business, reduced operating costs and the improved gross margins.
- Cash flow from operations was $1.2 million for Q3 2023 as compared to -$1.0 million in the prior year comparable, an increase of approximately $2.3 million year-over-year. The increase in cash flow from operations can be attributed to an increase in gross margins and a temporary scale down of the Company's e-commerce operations at the end of Q2 2022, which decreased marketing spend, administration, and research and development expenses.
- As of September 30, 2023 current assets were $15.8 million, which exceeded current liabilities totaling $13.2 million. The Company has a cash balance of $2.9 million as of September 30, 2023.
- As previously announced on September 28, 2023, payments totaling approximately CAD$1.5 million were made toward the outstanding principal of certain secured notes. Net External Debt decreased by $1.8 million as of September 30, 2023 as compared December 31, 2022. The Company's working capital was $2.6 million as of September 30, 2023, an increase of $7.4 million as compared to -$4.9 million as of June 30, 2023.
Third Quarter 2023 Operational Highlights
- On September 7, 2023, BuildDirect announced that it completed its e-commerce platform migration and enhancements, delivering the following results:
- The Company expects to achieve a combined total of approximately US$850,000 in annual cost savings, which includes software and fulfillment expenses
- Enhanced ERP for more efficient management of finance, inventory and order fulfillment
- Upgraded e-commerce site for merchandising and marketing to enable potential revenue growth
- On September 28, 2023, BuildDirect announced the amendment to secured notes issued by BuildDirect Operations Limited, a wholly owned subsidiary of the Company to: (a) Deans Knight Capital Management Ltd. in its capacity as portfolio manager on behalf and for the benefit of two fully managed accounts in March 2018 as amended (the "2018 Notes"); and (b) Pelecanus Investments Ltd., Lyra Growth Partners Inc. and Beedie Investments Ltd. in June 2022 as amended (the "2022 Notes"). Among the amendments to the subject Notes were the following:
- The maturity dates of the 2018 and 2022 Notes were extended to September 30, 2025 and April 1, 2026, respectively, and
- Approximately CAD$1.5 million was paid toward the outstanding principal of the 2018 Notes; and
- Interest rates for these Notes decreased to 12%, enabling the Company to achieve approximately $350,000 in interest cost savings annually.
Subsequent events to Third Quarter of 2023
- On October 5, 2023, BuildDirect announced the launch of new service offerings that are designed for 'Pro' customers, including customized e-commerce sites, white-label branded flooring products, free flooring samples, and fulfillment services that meet the Pro customers' needs. These offerings open the path for BuildDirect to build a potential recurring revenue stream.
- On October 19, 2023, BuildDirect announced the launch of its sixth brick-and-mortar Pro Center, via an existing Company facility in Richmond, British Columbia, which aims to service flooring professionals in the Greater Vancouver market as well as the Seattle and Spokane markets in the state of Washington. The Company aims to use the Richmond location as a template for future potential BuildDirect Pro Centers across the United States. By starting with a solid foundation of sales, the establishment of Pro Centers is intended to help elevate BuildDirect's impact on the Pros in a local market.
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.
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 and in the news releases of the Company dated November 17, 2021, September 7, 2023, September 28, 2023, October 5, 2023 and October 19, 2023. 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, 2023 and September 30, 2022 (together with the news releases of the Company dated November 17, 2021, September 7, 2023, September 28, 2023, October 5, 2023 and October 19, 2023), are available on the Company's website at www.BuildDirect.com and on the Company's SEDAR profile available at www.sedarplus.ca.
Reference is made in this press release to the following non-GAAP measures: Adjusted EBITDA. This non-GAAP measure is commonly used by investors and other interested parties to evaluate the Company's financial performance and is employed by the Company to measure its operating and economic performance and to assist in business decision-making. This non-GAAP measure does not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other issuers. This measure is provided as additional information to complement those IFRS measures by providing further understanding of the results of operations from management's perspective. Accordingly, this measure should not be considered in isolation nor as a substitute for analysis of the financial information reported under IFRS. Refer also to appendix tables and the "Third Quarter 2023 Financial Highlights" of this press release as well as our Management's Discussion and Analysis (for the three and nine months ended September 30, 2023 and September 30, 2022) for definitions and reconciliations of non-IFRS measures to the nearest IFRS measures. The disclosure under such Management's Discussion and Analysis is incorporated by reference into this news release.
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.
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. [ MORE ]
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 ability to take advantage of trends in home improvement investment, its innovative digital and heavyweight supply chain platform and ability to leverage the same, the omni-channel experience to be offered to customers; realization of synergies and overall integration of Superb's operations with BuildDirect (including, but not limited to, Superb's ability to improve service to its existing customers as well as increase Superb's market share in the state of Michigan and BuildDirect's ability to increase its Pro customer base and improve the end-to-end experience for its customers); capturing of additional Pro customer market share; quality service and products; future acquisitions; Superb's potential growth; and the Company's ability to make future payments in connection with the purchase of Superb.
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.
Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. 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. There may be other risks, uncertainties and factors that cause results not to be as anticipated, estimated or intended and such changes could be material. 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.
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