BuildDirect Technologies Reports First Quarter 2023 Financial Results, Q1 Revenue Falls 26.8% YoY to $17.8 Million
- Delivered adjusted EBITDA of $1.04 million for Q1 2023, the highest level achieved in one quarter as a public company.
- Delivered gross margins of 39.2% for Q1 2023, an increase of 340 bps year-over-year and 280 bps quarter-over-quarter.
- Pro revenue as a percentage of total revenue was 86.1% for Q1 2023, an increase of 9.6% year-over-year.
BuildDirect reports in US dollars and in accordance with IFRS.
Vancouver, BC, May 24, 2023--(T-Net)--BuildDirect.com Technologies Inc. (TSXV: BILD) a leading omnichannel building material retailer, today announced its financial results for the First Quarter 2023 ("Q1 2023").
Shawn Wilson, Chief Executive Officer, BuildDirect
"During Q1 2023, BuildDirect produced strong financial results, as highlighted by our fifth consecutive quarter of positive adjusted EBITDA, which increased to $1.04 million for the three months ended March 31, 2023," said Shawn Wilson, CEO of BuildDirect.
First Quarter 2023 Highlights
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Q1 2023 |
Q4 2022 |
Change (Q1 2023 & Q4 2022) |
Q1 2022 |
Change (Q1 2023 & Q1 2022) |
|
|
|
|
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Revenue |
$17.8 million |
$21.7 million |
(21.6)% |
$24.4 million |
(26.8)% |
Gross Profit |
$7.0 million |
$7.9 million |
(11.5)% |
$8.7 million |
(19.6)% |
Gross Margin |
39.2% |
36.4% |
280 bps
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35.8% |
340 bps
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Adjusted EBITDA1 |
$1.04 million |
$0.41 million |
154% |
$0.05 million |
2082% |
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 $17.8 million for Q1 2023, a decrease of 26.8% year-over-year and 21.6% quarter-over-quarter. The decrease in revenue year-over-year is primarily driven by BuildDirect's e-commerce business. Historically, BuildDirect's e-commerce business has produced negative EBITDA, which was offset by strong positive EBITDA from its brick-and-mortar businesses. In Q2 2022, BuildDirect scaled-back its e-commerce business and began implementing efficiency initiatives to improve the profitability of the e-commerce model.
The decrease in revenue quarter-over-quarter is due to more in-transit e-commerce sales at quarter-end and the timing of installation projects moving into Q2 2023. BuildDirect's Q1 deferred revenue has grown quarter-over-quarter and the Company expects this to decrease in Q2. At this point, BuildDirect believes it is close to completing its efficiency initiatives and will soon be ready to grow its e-commerce business profitably.
- Gross margin was 39.2% for Q1 2023, an increase of 340 bps year-over-year and 280 bps quarter-over-quarter. The increase in gross margin is mostly the result of significant improvements BuildDirect made in the business including operational efficiency initiatives for the e-commerce operations.
- Pro revenue as a percentage of total revenue was 86.1% for Q1 2023, an increase of 9.6% year-over-year. The increase in Pro revenue as a percentage of total revenue was driven by an overall shift in strategy to focus on the more profitable Pro customer base.
- Adjusted EBITDA was $1.04 million for Q1 2023, an increase of approximately $1.0 million year-over-year. The increase is largely attributed to the Company's focus on profitability and running efficient operations.
First Quarter 2023 Operational Highlights
- On January 3, 2023, BuildDirect announced the close of the second tranche of the non-brokered private placement of common shares (each a "Common Share" and collectively "Common Shares") as previously announced on December 30, 2022. In connection with the second tranche, the Company issued a total of 1,121,622 Common Shares at a price of $0.37 per Common Share for total gross proceeds of $415,000.
- On January 24, 2023, BuildDirect announced that its wholly owned U.S. subsidiary, Superb Flooring Covering, LLC has integrated RFMS Inc.'s Enterprise Resource Planning software.
- On January 26, 2023, BuildDirect announced that the Company has entered into a marketing partnership with Maverick Design, the award-winning interior design studio at Wedgewood Homes, a division of Wedgewood LLC to launch a white-label marketing program for a collection of quality Maverick-branded engineered wood floors - The Maverick Design Wood Flooring Collection.
- On February 6, 2023, BuildDirect announced that it appointed Eyal Ofir to its Audit Committee. With over 20 years of investment banking and capital markets experience, Eyal Ofir is currently a Director of BuildDirect, having been appointed in March 2022.
Subsequent Events to First Quarter 2023
- On April 3, 2023, BuildDirect announced that it has appointed Jay Allen as General Manager. Mr. Allen has 25 years of experience in building e-commerce and digital divisions across fashion, home goods and flooring and consumables companies such as Starbucks, Lowe's and STAINMASTER.
- On April 6, 2023, BuildDirect confirmed that it will hold its 2023 Annual General and Special Meeting of Shareholders on June 8, 2023.
"We are looking to scale our e-commerce and brick-and-mortar operations, and potentially expand our product suite to include value-added services that are designed to serve Pros in growing their respective businesses," continued Shawn Wilson.
"In addition, we intend to continue identifying areas in our business where we can achieve more operational efficiencies and ensure optimal resource utilization to improve our overall bottom line. Most notably, we plan to explore opportunities to integrate the fulfillment operations for our e-commerce business into our acquired brick-and-mortar locations, which could potentially reduce fulfillment costs and increase inventory utilization by sharing inventory between our e-commerce platform and brick-and-mortar locations."
Mr. Wilson added, "We remain optimistic on our growth outlook for the remainder of 2023 as we will continue to pursue expansion of our business while streamlining our operations to improve our overall 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.
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 months ended March 31, 2023 and 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 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, "First Quarter 2023 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.
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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