BuildDirect Reports First Quarter 2022 Financial Results, Q1 2022 Revenues Rise 1.6% to $24.4 Million, Net Loss Shrinks

Wednesday, June 1, 2022

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Q1 2022 revenues of $24.4 million, up 16.8% year-over-year
Delivers break even adjusted EBITDA of $0.1 million
Pro customer revenue increases to 76.6% of first quarter revenues, up 14.7% quarter-over-quarter

Vancouver, BC, June 1, 2022--(T-Net)--BuildDirect.com Technologies Inc. (TSXV: BILD) a growing omnichannel building material retailer, today announced its financial results for the First Quarter 2022.

BuildDirect reports in US dollars and in accordance with IFRS

"I am pleased to report that BuildDirect achieved the Q1 2022 guidance we outlined at the previous quarter," said David Lazar, interim CEO of BuildDirect. "Our strategic execution is delivering value with revenues reaching $24.4 million, growing by 1.6% quarter-over quarter, of which 76.6% are Pro-based. We also reached break even adjusted EBITDA, largely due to our push to reallocate resources to Pro and drive acquisition synergies. Looking forward to the second quarter, we will continue to focus our efforts on growing Pro customer market share to maximize value."

First Quarter 2022 Financial Highlights

USD$

(unless otherwise noted)

Q1 2022

Q4 2021

% Change

Q1 2021

Revenue

$24.4 million

$24.0 million

1.6%

$20.9 million

Gross Profit

$8.7 million

$7.6 million

15.4%

$7.4 million

Gross Margin

35.8%

31.5%

4.3%

35.4%

Adjusted EBITDA1

$0.1 million

($3.2) million

101.5%

($0.1) 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.

Q1 2022 Highlights

Q1 2022 revenues reaching $24.4 million, increasing 1.6% quarter-over-quarter and 16.8% year-over-year.
Q1 2022 Pro revenue reached $18.7 million, representing 76.6% of total revenue at the quarter end. Pro revenues grew 14.7% quarter-over-quarter due to increased strategic focus on driving Pro market share.
Gross profit at $8.7 million in Q1 2022, an increase of 15.4% over the previous quarter, and 18.1% year-over-year
Gross margin in Q1 2022 increased by 430bps to 35.8% compared to Q4 2021. The positive impact of price increases on margins was slightly offset due to lower margins from the Superb acquisition.
Adjusted EBITDA in Q1 2022 reached $0.1 million. BuildDirect achieved break even adjusted EBITDA primarily by reallocating resources to the Pro market.
In February 2022, the Company closed a secured debt financing pursuant to which it issued, via its wholly owned subsidiary BuildDirect Operations Limited, secured notes to Pelecanus Investments Ltd., Lyra Growth Partners Inc., and Beedie Investments Ltd. in an aggregated amount of US $3 million.

Post-Quarter Highlight

On April 4, 2022, BuildDirect announced that it appointed Eyal Ofir to its Board of Directors, and that John Farlinger and Andrew Elbaz had stepped down from their roles as Directors of the Board.

Ethan Rudin, CFO of BuildDirect said, "To execute on our strategy, we will continue to invest in the Pro market, extract financial and operational synergies from our acquisitions, and leverage our heavyweight omnichannel business model to drive Pro market share. Moving forward into the remainder of 2022, we expect to maintain positive adjusted EBITDA as Pro customer sector trends look set to continue."

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.

Condensed Consolidated Interim Statement of Financial Position

(Expressed in United States dollars)

March 31, 2022 and December 31, 2021

March 31,

December 31,

2022

2021

Assets

Current assets:

Cash and cash equivalents

$ 5,072,469

$ 1,716,986

Short-term investments

118,000

Trade and other receivables (note 4)

3,954,675

4,420,994

Advances to vendors

1,387,976

1,979,061

Inventories (note 5)

7,481,007

7,452,570

Prepaid materials, expenses and deposits

992,179

424,137

Total current assets

19,006,306

16,111,748

Non-current assets:

Property and equipment (note 6)

590,181

599,232

Intangible assets (note 7)

11,937,446

12,650,528

Right-of-use assets (note 8)

4,446,569

4,305,647

Non-current advances to vendors

567,420

1,141,805

Goodwill

4,280,165

Deferred tax asset (note 18)

364,329

Total Assets

$ 41,192,416

$ 39,453,454

Liabilities and Shareholders' Equity (Deficiency)

Current liabilities:

Accounts payable and accrued liabilities (note 9)

$ 9,349,164

$ 7,619,937

Current portion of lease liabilities (note 10)

1,370,097

1,286,775

Deferred revenue (note 11)

2,191,420

2,460,498

Current portion of promissory note (note 14)

1,023,106

1,021,161

Current portion of deferred consideration payable

1,851,331

2,484,571

Loan payable (note 12)

6,963,831

3,828,971

Income taxes payable (note 18)

947,994

735,420

Total current liabilities

23,696,943

19,437,333

Non-current liabilities

Deferred consideration payable

581,917

553,732

Lease liabilities (note 10)

3,950,060

3,929,806

Warrants (note 13)

139,108

823,090

Promissory note (note 14)

3,125,368

3,386,300

Shareholders' equity (deficiency):

Share capital (note 15)

119,075,245

Share-based payment reserve (note 15)

10,952,603

10,854,968

Deficit

(120,328,828)

(118,607,020)

9,699,020

11,323,193

Total Liabilities and Equity

$ 41,192,416

$ 39,453,454

Condensed Consolidated Interim Statement of Operations and Comprehensive Loss

(Unaudited)

(Expressed in United States dollars)

For the three months ended March 31, 2022 and 2021

March 31, 2022

March 31, 2021

Revenue

$ 24,396,076

$ 20,887,037

Cost of goods sold

15,671,680

13,502,232

Gross Profit

8,724,396

7,384,805

Operating expenses:

Fulfillment costs

2,146,838

2,110,000

Selling and marketing

2,319,546

2,726,290

Administration

4,034,351

3,271,263

Research and development

467,393

308,372

Depreciation and amortization

1,007,550

1,193,537

9,975,678

9,609,462

Loss from operations

(1,251,282)

(2,224,657)

Other income (expense):

Interest income

15,263

21,502

Interest expense and other transaction costs

(435,953)

(799,600)

Fair value adjustment of convertible

debt and warrant

683,982

(1,330,376)

Rental income

56,471

57,526

Foreign exchange loss

(577,714)

(39,525)

(257,951)

(2,090,473)

Loss before income taxes

(1,509,233)

(4,315,130)

Income tax expense

212,575

342,202

Total loss and comprehensive loss for the period

$ (1,721,808)

$ (4,637,332)

Loss per share

Basic and diluted loss per share (note 22)

$ (0.06)

$ (0.21)

Condensed Consolidated Interim Statement of Cash Flows

(Unaudited)

(Expressed in United States dollars)

For the three months ended March 31, 2022 and 2021

March 31, 2022

March 31, 2021

Cash provided by (used in):

Operating activities:

Loss for the period

$ (1,721,808)

$ (4,657,332)

Add (deduct) items not affecting cash:

Depreciation and amortization

1,007,550

1,193,536

Income tax expense

212,574

342,202

Stock-based compensation expense

97,635

99,256

Interest paid on leases

76,565

109,615

Other interest and finance cost

359,388

689,985

Interest earned on lease receivables

(15,263)

(21,502)

Fair value adjustment on convertible debt and warrants

(683,982)

1,330,376

Unrealized foreign exchange

89,890

47,602

(577,451)

(866,262)

Changes in non-cash operating working capital:

Trade and other receivables

407,350

(22,620)

Inventories

(28,437)

(321,512)

Prepaid materials, expenses and deposits

(568,042)

(253,699)

Advances to vendors

1,165,470

280,777

Accounts payable and accrued liabilities

1,729,227

478,687

Deferred revenue

(269,078)

1,357,026

Total operating activities

1,859,039

652,397

Investing activities:

Purchase of property and equipment

(3,011)

(3,520)

Principal received on lease receivables

58,969

53,912

Total investing activities

55,958

50,392

Financing activities:

Principal lease payments

(319,752)

(281,483)

Interest paid

(253,512)

(535,690)

Promissory note repayment

(311,250)

Deferred consideration repayment

(675,000)

Loan proceeds

3,000,000

Loan repayment

(114,382)

Total financing activities

1,440,486

(931,555)

Increase (decrease) in cash and cash equivalents

3,355,483

(228,766)

Cash and cash equivalents, beginning of period

1,716,986

5,416,511

Cash and cash equivalents, end of period

$ 5,072,469

$ 5,187,745

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.

BuildDirect's audited consolidated financial statements for the years ended December 31, 2020 and December 31, 2021 and the unaudited condensed interim consolidated financial statements and accompanying notes and the Management's Discussion and Analysis for the three months ended March 31, 2022 are available on the Company's website at www.BuildDirect.com. and on the Company's SEDAR profile available at www.sedar.com.

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, "First Quarter 2022 Financial Highlights" and "Q1 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.

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 March 31

Adjusted EBITDA

2022

2021

Gain (Loss for the period)

(1,721,808)

(4,657,332)

Income tax expense

212,575

342,202

Depreciation and amortization

1,007,550

1,193,538

Interest

420,690

778,099

EBITDA

(80,993)

(2,343,494)

EBITDA adjustments

Stock-based compensation

97,635

99,256

Foreign exchange (gain)/loss

577,714

39,524

Foreign currency translation differences

Fair value adjustment of convertible debt and warrants

(683,982)

1,330,376

Impact of fair value adjustment of Inventory in acquisition1

137,400

528,552

Significant bad debt expense2

257,891

Adjusted EBITDA

47,774

(87,896)

Adjusted EBITDA %

(5%)

1The adjustment for the impact of the fair value of FloorSource & Superb inventory relates to the impact on normal selling profit from the fact that IFRS requires that the inventory be recorded at fair value on acquisition and not at FloorSource and Superb's 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.

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

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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Company Snapshot

BuildDirect

Vancouver, BC (Other Tech Sectors)
100-499 Employees In BC (100-499 Employees Total)
Founded: 1999

BuildDirect is the first open network for heavyweight products. The network includes the: 1) BuildDirect Home Marketplace -- an online marketplace that offers buyers a wide selection of products at the best value, direct-to-home shipping, free...

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