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BuildDirect Reports Fourth Quarter and Year End 2022 Financial Results
Wednesday, April 19, 2023Company Profile | Follow Company
Vancouver, BC, April 15, 2023--(T-Net)--BuildDirect.com Technologies Inc. (TSXV: BILD) a leading omnichannel building material retailer, today announced its financial results for the Q4 2022 and full-year audited financial results for the year ended December 31, 2022.
The company reported revenue of $92.1 million and a total loss and comprehensive loss for the year of $7.87 million (down from $10.3 million in the prior year).
Shawn Wilson, Chief Executive Officer, BuildDirect
"We announced Q4 2022 results, which further strengthens the progress the collective team has made to achieve profitability and structured, strategic growth which started in Q2 of 2022," said Shawn Wilson, CEO of BuildDirect. "Overall, BuildDirect demonstrated a strong financial performance as highlighted by its adjusted EBITDA of $1.3 million for the full year of 2022, up $5.3 million as compared to the previous fiscal year."
Q4 and Full Year 2022 Highlights
USD$ (unless otherwise noted) |
Q4 2022 |
Q3 2022 |
% Change |
Full Year 2022 |
Revenue |
$21.7 million |
$22.0 million |
(1.4) % |
$92.2 million |
Gross Profit |
$ 7.9 million |
$6.9 million |
14.1 % |
$32.0 million |
Gross Margin |
36.4 % |
31.4 % |
5.0 % |
34.7 % |
Adjusted EBITDA1 |
$0.4 million |
$0.3 million |
39.8 % |
$1. 3 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. |
Subsequent Events to Fiscal Year 2022
2023 Outlook
The Company aims to advance its current strategy of growing the more profitable 'Pro' customer base, which includes a focus on brick-and-mortar operations and providing additional value-added services that are designed specifically for Pros. Furthermore, the Company intends to assess opportunities for accretive acquisitions of Pro-focused independent retailers across North America that have extensive client networks, in addition to reviewing incremental strategies to extend the BuildDirect brand and generate operating leverage.
Pro customers provide higher long-term values as compared to other consumer segments due to their recurring large purchase orders.1 They consist of home builders, realtors, multi-family and commercial real estate development companies, flooring contractors and other types of home improvement professionals.
In addition, the Company also intends to streamline its operations by unlocking operational synergies across all business units to improve its profitability.
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.
Consolidated Statements of Financial Position
(Expressed in United States dollars)
As at December 31, 2022 |
As at December 31, 2021 |
|
Assets |
||
Current assets: |
||
Cash and cash equivalents |
$ 4,107,754 |
$ 1,716,986 |
Short-term investments |
318,000 |
118,000 |
Trade and other receivables (note 5) |
4,000,121 |
4,420,994 |
Income taxes receivable |
171,502 |
- |
Inventories (note 6) |
6,657,450 |
7,452,570 |
Prepaid materials, expenses and deposits |
1,696,828 |
2,371,114 |
Total current assets |
16,951,655 |
16,079,664 |
Non-current assets: |
||
Property and equipment (note 7) |
591,880 |
599,232 |
Intangible assets (note 8) |
8,155,769 |
12,650,528 |
Right-of-use assets (note 9) |
3,566,442 |
4,305,647 |
Non-current deposits |
987,216 |
1,173,889 |
Goodwill (note 8) |
2,530,622 |
4,280,165 |
Deferred tax asset (note 20) |
1,207,110 |
364,329 |
Total non-current assets |
17,039,039 |
23,373,790 |
Total Assets |
$ 33,990,694 |
$ 39,453,454 |
Liabilities and Shareholders' Equity |
||
Current liabilities: |
||
Accounts payable and accrued liabilities (note 10) |
$ 5,475,426 |
$ 6,205,690 |
Income taxes payable |
- |
735,420 |
Current portion of lease liabilities (note 11) |
1,441,420 |
1,286,775 |
Deferred revenue (note 12) |
1,767,136 |
3,874,745 |
Loan payable (note 13) |
3,691,672 |
3,828,971 |
Current portion of promissory note (note 15) |
1,065,131 |
1,021,161 |
Current portion of deferred consideration payable (note 4) |
1,903,731 |
2,484,571 |
Total current liabilities |
15,344,516 |
19,437,333 |
Non-current liabilities: |
||
Deferred consideration payable (note 4) |
701,611 |
553,732 |
Lease liabilities (note 11) |
2,859,607 |
3,929,806 |
Loan payable (note 13) |
4,974,463 |
- |
Warrants (note 14) |
28,382 |
823,090 |
Promissory note (note 15) |
2,634,573 |
3,386,300 |
Total non-current liabilities |
11,198,636 |
8,692,928 |
Shareholders' equity: |
||
Share capital (note 17) |
122,803,204 |
119,075,245 |
Share based payment reserve |
11,121,785 |
10,854,968 |
Deficit |
(126,477,447) |
(118,607,020) |
Total Shareholders' equity |
7,447,542 |
11,323,193 |
Total Liabilities and Equity |
$ 33,990,694 |
$ 39,453,454 |
Consolidated Statements of Operations and Comprehensive Loss
(Expressed in United States dollars)
Years ended December 31, 2022 and 2021
2022 |
2021 |
|
Revenue (note 18) |
$ 92,150,276 |
$ 90,667,936 |
Cost of goods sold (note 6) |
60,181,861 |
58,833,238 |
Gross Profit |
31,968,415 |
31,834,698 |
Operating expenses: |
||
Fulfillment costs |
7,384,139 |
8,975,684 |
Selling and marketing |
6,832,947 |
11,700,348 |
Administration |
15,764,515 |
15,299,126 |
Research and development |
1,341,668 |
1,629,447 |
Depreciation and amortization |
4,069,070 |
2,967,113 |
Total operating expenses |
35,392,338 |
40,571,718 |
Loss from operations |
(3,423,923) |
(8,737,020) |
Other income (expense): |
||
Interest income |
62,472 |
96,166 |
Interest expense |
(2,097,405) |
(2,391,881) |
Finance costs (note 3) |
- |
(1,475,886) |
Rental income |
225,887 |
222,416 |
Fair value adjustment of convertible debt |
- |
(3,333,311) |
Fair value adjustment of warrants (note 14) |
794,708 |
6,750,503 |
Foreign exchange loss |
(104,596) |
(187,402) |
Restructuring costs |
(218,374) |
- |
Listing expenses (note 3) |
- |
(900,153) |
Impairment loss on intangible assets and goodwill (note 8) |
(3,385,373) |
- |
Loss on extinguishment of debt (note 13) |
(107,524) |
- |
Total Other income (expense) |
(4,830,207) |
(1,219,548) |
Loss before income taxes |
(8,254,130) |
(9,956,568) |
Income tax expense (note 20) |
383,703 |
(371,091) |
Total loss and comprehensive loss for the year |
$ (7,870,427) |
$ (10,327,659) |
Loss per share |
||
Basic and diluted loss per share (note 24) |
$ (0.25) |
$ (0.41) |
Consolidated Statement of Cash Flows
(Expressed in United States dollars)
Years ended December 31, 2022 and 2021
2022 |
2021 |
|
Cash provided by (used in): |
||
Operating activities: |
||
Loss for the year |
$ (7,870,427) |
$ (10,327,659) |
Add (deduct) items not affecting cash: |
||
Depreciation and amortization |
4,069,070 |
2,967,113 |
Income tax expense |
(383,703) |
371,091 |
Stock-based compensation expense |
266,817 |
459,231 |
Loss on disposal of property and equipment |
7,000 |
- |
Interest paid on leases |
284,868 |
317,282 |
Other interest and finance cost |
1,812,537 |
2,074,598 |
Interest earned on lease receivables |
(62,472) |
(96,166) |
Loss on extinguishment of debt |
107,524 |
- |
Impairment loss on intangible assets and goodwill |
3,385,374 |
- |
Fair value adjustment on convertible debt and warrants |
(794,708) |
(3,417,192) |
Finance costs |
86,447 |
1,475,886 |
Listing expenses |
- |
900,153 |
Unrealized foreign exchange |
44,991 |
16,238 |
Income taxes paid |
(1,366,000) |
- |
Changes in non-cash operating working capital: |
||
Short term investments |
(200,000) |
- |
Trade and other receivables |
176,855 |
(402,880) |
Inventories |
795,120 |
(1,453,263) |
Prepaid materials, expenses and deposits |
860,959 |
(1,591,481) |
Accounts payable and accrued liabilities |
(973,665) |
1,302,915 |
Deferred revenue |
(2,107,609) |
613,006 |
Total operating activities |
(1,861,022) |
(6,791,128) |
Investing activities: |
||
Purchase of property and equipment |
(47,256) |
(109,998) |
Principal received on lease receivables |
244,019 |
223,090 |
Acquisition of business, net of cash acquired and |
- |
(9,429,166) |
Total investing activities |
196,763 |
(9,316,074) |
Financing activities: |
||
Subscription receipts proceeds |
3,712,715 |
16,592,133 |
Subscription receipts issuance costs |
(14,143) |
(1,475,886) |
Financing and listing transaction costs |
- |
(34,040) |
Debt financing transaction costs |
(50,174) |
- |
Interest paid |
(1,092,438) |
(225,745) |
Principal lease payments |
(1,338,882) |
(1,110,304) |
Proceeds from exercise of stock options |
15,244 |
20,901 |
Promissory note repayment |
(933,750) |
(1,245,000) |
Loan repayment |
- |
(114,382) |
Deferred consideration repayment |
(675,000) |
- |
Loan proceeds |
4,500,000 |
- |
Total financing activities |
4,123,572 |
12,407,677 |
Effects of currency translation on cash and cash equivalents |
(68,545) |
- |
Increase (decrease) in cash and cash equivalents |
2,390,768 |
(3,699,525) |
Cash and cash equivalents, beginning of year |
1,716,986 |
5,416,511 |
Cash and cash equivalents, end of year |
$ 4,107,754 |
$ 1,716,986 |
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 audited consolidated financial statements for the years ended December 31, 2021 and December 31, 2022 and Management's Discussion and Analysis for the three and twelve months ended December 31, 2021 and 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 the Company's 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, "Q4 and Full Year 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.
1. Internal company estimates
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 |
For the year ended December 31 |
||||
Adjusted EBITDA |
2022 |
2021 |
2022 |
2021 |
|
Income (Loss for the period) |
(4,658,265) |
2,599,558 |
(7,870,427) |
(10,327,659) |
|
Income tax expense |
(485,258) |
(912,446) |
(383,703) |
371,091 |
|
Depreciation and amortization |
1,016,120 |
220,875 |
4,069,070 |
2,967,113 |
|
Interest |
580,450 |
530,556 |
2,034,933 |
2,295,715 |
|
EBITDA |
(3,968,016) |
2,438,543 |
(2,150,127) |
(4,693,740) |
|
EBITDA adjustments |
|||||
Stock-based compensation |
71,547 |
(967,833) |
266,817 |
282,281 |
|
Foreign exchange (gain)/loss |
783,099 |
197,301 |
104,596 |
187,402 |
|
Foreign currency translation |
- |
(34,123) |
- |
(34,123) |
|
Restructuring costs |
70,277 |
- |
218,374 |
- |
|
Fair value adjustment of convertible |
(38,153) |
(4,872,282) |
(794,708) |
(3,417,192) |
|
Impact of fair value adjustment of |
- |
- |
137,400 |
528,552 |
|
Significant bad debt expense2 |
- |
- |
- |
257,891 |
|
Finance costs3 |
- |
- |
- |
1,475,886 |
|
Listing expenses4 |
- |
- |
- |
1,017,659 |
|
Other expenses related to TSXV |
- |
- |
- |
409,211 |
|
Loss on extinguishment of debt6 |
107,524 |
- |
107,524 |
- |
|
Impairment loss on intangible assets |
3,385,374 |
- |
3,385,374 |
- |
|
Adjusted EBITDA |
411,651 |
(3,238,394) |
1,275,249 |
(3,986,173) |
|
Adjusted EBITDA %8 |
2 % |
-13 % |
1 % |
-4 % |
1 The adjustment for the impact of the fair value of FloorSource 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's 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 $1,796,748. |
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. |
6 The adjustment relates to the requirement under IFRS 9 to recognize a gain or loss on extinguishment of a loan due to a significant modification to the 2018 Notes' terms. |
7 The impairment loss relates to impairment of goodwill and a portion of intangible assets related to the Superb CGU |
8 Adjusted EBITDA % is a ratio of Adjusted EBITDA divided by Total Revenue |
Forward-Looking Information
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