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BuildDirect Reports Second Quarter 2023 Financial Results
Thursday, August 31, 2023Company Profile | Follow Company
Vancouver, BC, August 31, 2023--(T-Net)--BuildDirect.com Technologies Inc. (TSXV: BILD) a leading omnichannel building material retailer, today announced its financial results for the Second Quarter 2023 ("Q2 2023").
BuildDirect reports in US dollars and in accordance with IFRS.
Shawn Wilson, Chief Executive Officer, BuildDirect
"During Q2 2023, BuildDirect continued to produce strong financial results, as highlighted by our sixth consecutive quarter of positive adjusted EBITDA, which increased to $1.06 million for the three months ended June 30, 2023," said Shawn Wilson, CEO of BuildDirect.
"As part of our growth strategy, we continue to expand our e-commerce platform and scale our brick-and-mortar operations with a focus on serving Pro customers," continued Shawn Wilson. "With the goal of driving profitability, we aim to maximize cost efficiencies by implementing additional operational initiatives, including insourcing our fulfillment operations in other locations and integrating our technology infrastructure across all business units while minimizing disruption to productivity."
Second Quarter 2023 Financial Highlights
|
Q2 2023 |
Q1 2023 |
% Change |
Q2 2022 |
%Change |
|
|
|
|
|
|
Revenue |
$19.1 million |
$17.8 million |
7.1% |
$24.1 million |
(20.6)% |
Gross Profit |
$7.6 million |
$7.0 million |
8.3% |
$8.4 million |
(10.1)% |
Gross Margin |
39.7% |
39.2% |
50 bps |
35.0% |
470 bps |
Adjusted EBITDA1 |
$1.06 million |
$1.04 million |
2.1% |
$0.62 million |
72.0% |
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 $19.1 million for Q2 2023, a decrease of 20.6% year-over-year and an increase of 7.1% 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 independent retailer 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 increase in revenue quarter-over-quarter is due to E-Commerce beginning to scale back up. At this point, BuildDirect believes it is close to completing its efficiency initiatives and will soon be ready to grow its e-commerce business more aggressively.
Gross margin was 39.7% for Q2 2023, an increase of 470 bps year-over-year and 50 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 was $17.4 million for Q2 2023, which represents 88.8% of the Company's total revenue during the second quarter of 2023, an increase of 6.3% year-over-year. The increase in Pro revenue was driven by an overall shift in strategy to focus on the more profitable Pro customer base.
Adjusted EBITDA was $1.06 million for Q2 2023, an increase of approximately $0.44 million year-over-year. The increase is largely attributed to the Company's focus on profitability and running efficient operations.
Cash flow from operations was $1.7 million in the first six months of 2023 as compared to -$2.0 million in the prior year comparable, an increase of $3.7 million year-over-year.
Loan payable and promissory note repayments totaling $0.5 million were made in Q2 2023. Net External Debt decreased by $0.9 million as of June 30, 2023 as compared December 31, 2022.
Second Quarter 2023 Operational Highlights
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 six months ended June 30, 2023 and June 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.
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.
NON-IFRS MEASURES
The Company defines 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. The Company is presenting these measures because it believes that its 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 June 30 | For the six months ended June 30 | |||||||||||
Adjusted EBITDA | 2023 | 2022 | 2023 | 2022 | ||||||||
Gain (Loss for the period) | (975,778 | ) | (597,149 | ) | (1,319,440 | ) | (2,318,957 | ) | ||||
Income tax expense | 195,000 | 212,575 | 390,000 | 425,150 | ||||||||
Depreciation and amortization | 919,035 | 1,018,492 | 1,836,904 | 2,026,042 | ||||||||
Interest | 498,098 | 462,879 | 1,009,734 | 883,569 | ||||||||
EBITDA | 636,335 | 1,096,797 | 1,917,198 | 1,015,804 | ||||||||
EBITDA adjustments | ||||||||||||
Stock-based compensation | 74,286 | 97,635 | 116,729 | 195,270 | ||||||||
Foreign exchange (gain)/loss | 250,720 | (510,131 | ) | (8,407 | ) | 67,583 | ||||||
Fair value adjustment of convertible debt and warrants | 153 | (65,400 | ) | (21,551 | ) | (749,382 | ) | |||||
Impact of fair value adjustment of Inventory in acquisition1 | - | - | - | 137,400 | ||||||||
Software Implementation Expenses2 | 103,042 | - | 103,042 | - | ||||||||
Adjusted EBITDA | 1,064,555 | 618,901 | 2,107,011 | 666,674 | ||||||||
Adjusted EBITDA % | 6% | 3% | 6% | 1% |
Condensed Consolidated Interim Statements of Financial Position
(Unaudited)
(Expressed in United States dollars)
As at June 30, 2023 | As at December 31, 2022 | |||||
$ | $ | |||||
Assets | ||||||
Current assets: | ||||||
Cash and cash equivalents | 3,776,659 | 4,107,754 | ||||
Short-term investments | 318,000 | 318,000 | ||||
Trade and other receivables (note 3) | 4,319,643 | 4,000,121 | ||||
Income taxes receivable | - | 171,502 | ||||
Inventories (note 4) | 7,193,364 | 6,657,450 | ||||
Prepaid materials, expenses, and deposits | 1,428,250 | 1,696,828 | ||||
Total current assets | 17,035,916 | 16,951,655 | ||||
Non-current assets: | ||||||
Property and equipment (note 5) | 585,329 | 591,880 | ||||
Intangible assets (note 6) | 6,935,795 | 8,155,769 | ||||
Right-of-use assets (note 7) | 2,979,892 | 3,566,442 | ||||
Non-current deposits | 969,139 | 987,216 | ||||
Goodwill (note 6) | 2,530,622 | 2,530,622 | ||||
Deferred tax asset | 1,207,110 | 1,207,110 | ||||
Total non-current assets | 15,207,887 | 17,039,039 | ||||
Total Assets | 32,243,803 | 33,990,694 | ||||
Liabilities and Shareholders' Equity | ||||||
Current liabilities: | ||||||
Accounts payable and accrued liabilities (note 8) | 6,345,690 | 5,475,426 | ||||
Income taxes payable | 23,998 | - | ||||
Current portion of lease liabilities (note 9) | 1,488,950 | 1,441,420 | ||||
Deferred revenue (note 10) | 1,940,273 | 1,767,136 | ||||
Loan payable (note 11) | 8,644,016 | 3,691,672 | ||||
Current portion of promissory note (note 13) | 1,096,816 | 1,065,131 | ||||
Current portion of deferred consideration payable (note 14) | 2,014,435 | 1,903,731 | ||||
Warrants (note 12) | 6,831 | 28,382 | ||||
Total current liabilities | 21,561,009 | 15,372,898 | ||||
Non-current liabilities: | ||||||
Deferred consideration payable (note 14) | - | 701,611 | ||||
Lease liabilities (note 9) | 2,104,212 | 2,859,607 | ||||
Loan payable (note 11) | - | 4,974,463 | ||||
Promissory note (note 13) | 2,027,356 | 2,634,573 | ||||
Total non-current liabilities | 4,131,568 | 11,170,254 | ||||
Shareholders' equity: | ||||||
Share capital (note 15) | 123,109,599 | 122,803,204 | ||||
Share based payment reserve | 11,238,514 | 11,121,785 | ||||
Deficit | (127,796,887 | ) |
(126,477,447 | ) |
||
Total Shareholders' equity | 6,551,226 | 7,447,542 | ||||
Total Liabilities and Equity | 32,243,803 | 33,990,694 |
Condensed Consolidated Interim Statements of Operations and Comprehensive Loss
(Unaudited)
(Expressed in United States dollars)
For the three months ended June 30 | For the six months ended June 30 | |||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||
Revenue (note 16) | $ | 19,104,525 | $ | 24,052,309 | $ | 36,950,824 | $ | 48,448,385 | ||||
Cost of goods sold (note 5) | 11,529,055 | 15,627,205 | 22,382,913 | 31,298,885 | ||||||||
Gross Profit | 7,575,470 | 8,425,104 | 14,567,911 | 17,149,500 | ||||||||
Operating expenses: | ||||||||||||
Fulfillment costs | 1,404,869 | 1,952,198 | 2,564,525 | 4,099,036 | ||||||||
Selling and marketing | 1,390,105 | 1,908,436 | 2,721,915 | 4,227,982 | ||||||||
Administration | 3,804,933 | 3,683,470 | 7,244,968 | 7,717,821 | ||||||||
Research and development | 150,005 | 416,205 | 272,603 | 883,598 | ||||||||
Depreciation and amortization | 919,035 | 1,018,492 | 1,836,904 | 2,026,042 | ||||||||
7,668,947 | 8,978,801 | 14,640,915 | 18,954,479 | |||||||||
Loss from operations | (93,477 | ) | (553,697 | ) | (73,004 | ) | (1,804,979 | ) | ||||
Other income (expense): | ||||||||||||
Interest income | 20,852 | 15,383 | 35,980 | 30,646 | ||||||||
Interest expense | (518,950 | ) | (478,262 | ) | (1,045,714 | ) | (914,215 | ) | ||||
Rental income | 61,670 | 56,471 | 123,340 | 112,942 | ||||||||
Fair value adjustment of |
(153 | ) | 65,400 | 21,551 | 749,382 | |||||||
convertible debt and warrants | ||||||||||||
(note 13) | ||||||||||||
Foreign exchange gain | (250,720 | ) | 510,131 | 8,407 | (67,583 | ) | ||||||
(687,301 | ) | 169,123 | (856,436 | ) | (88,828 | ) | ||||||
Loss before income taxes | (780,778 | ) | (384,574 | ) | (929,440 | ) | (1,893,807 | ) | ||||
Income tax expense | (195,000 | ) | (212,575 | ) | (390,000 | ) | (425,150 | ) | ||||
Total loss and comprehensive loss for the period | $ | (975,778 | ) | $ | (597,149 | ) | $ | (1,319,440 | ) | $ | (2,318,957 | ) |
Deficit, beginning of period | $ | (126,821,108 | ) | $ | (120,328,828 | ) | $ | (126,477,447 | ) | $ | (118,607,020 | ) |
Deficit, end of period | $ | (127,796,887 | ) | $ | (120,925,977 | ) | $ | (127,796,887 | ) | $ | (120,925,977 | ) |
Loss per share: | ||||||||||||
Basic and diluted loss per share (note 21) | (0.02 | ) | (0.02 | ) | (0.03 | ) | (0.08 | ) |
Condensed Consolidated Interim Statement of Cash Flows
(Unaudited)
(Expressed in United States dollars)
For the three months ended June 30 | For the six months ended June 30 | ||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||
Cash provided by (used in): | |||||||||||||
Operating activities: | |||||||||||||
Loss for the period | $ | (975,778 | ) | $ | (597,149 | ) | $ | (1,319,440 | ) | $ | (2,318,957 | ) | |
Add (deduct) adjustments and items not affecting cash: | |||||||||||||
Depreciation | 919,037 | 1,018,493 | 1,836,906 | 2,026,043 | |||||||||
Income tax expense | 195,000 | 212,575 | 390,000 | 425,150 | |||||||||
Stock-based compensation expense | 74,286 | 97,635 | 116,729 | 195,270 | |||||||||
Other interest and finance cost | 465,655 | 403,592 | 933,641 | 762,982 | |||||||||
Interest paid on leases | 53,296 | 74,669 | 112,075 | 151,234 | |||||||||
Interest earned on lease receivables and other | (20,852 | ) | (15,383 | ) | (35,980 | ) | (30,646 | ) | |||||
Fair value adjustment on convertible debt and warrants | 153 | (65,400 | ) | (21,551 | ) | (749,382 | ) | ||||||
Unrealized foreign exchange (gain) loss | 15,556 | (151,697 | ) | 13,101 | (61,808 | ) | |||||||
726,351 | 977,335 | 2,025,481 | 399,886 | ||||||||||
Interest paid | (260,923 | ) | (234,720 | ) | (496,998 | ) | (488,234 | ) | |||||
Income taxes paid | (194,500 | ) | (1,311,000 | ) | (194,500 | ) | (1,311,000 | ) | |||||
Changes in non-cash operating working capital: | |||||||||||||
Trade and other receivables | (595,478 | ) | (1,351,843 | ) | (449,985 | ) | (944,493 | ) | |||||
Inventories | (713,767 | ) | (52,130 | ) | (535,914 | ) | (80,567 | ) | |||||
Prepaid materials, expenses, and deposits | 628,165 | (195,190 | ) | 286,655 | 402,238 | ||||||||
Accounts payable and accrued liabilities | 847,500 | (1,216,345 | ) | 870,264 | 512,882 | ||||||||
Deferred revenue | (663,158 | ) | (224,298 | ) | 173,137 | (493,376 | ) | ||||||
Total operating activities | (225,810 | ) | (3,608,191 | ) | 1,678,140 | (2,002,664 | ) | ||||||
Investing activities: | |||||||||||||
Purchase of property and equipment | (17,067 | ) | (12,442 | ) | (23,831 | ) | (15,453 | ) | |||||
Principal received on lease receivables | 65,963 | 60,306 | 130,464 | 119,275 | |||||||||
Total investing activities | 48,896 | 47,864 | 106,663 | 103,822 | |||||||||
Financing activities: | |||||||||||||
Private placement proceeds | - | - | 306,395 | - | |||||||||
Principal lease payments | (356,897 | ) | (334,352 | ) | (707,865 | ) | (654,104 | ) | |||||
Loan repayment | (189,193 | ) | - | (416,898 | ) | - | |||||||
Promissory note repayment | (311,250 | ) | (311,250 | ) | (622,500 | ) | (622,500 | ) | |||||
Deferred consideration repayment | - | - | (675,000 | ) | (675,000 | ) | |||||||
Loan proceeds | - | 1,500,000 | - | 4,500,000 | |||||||||
Total financing activities | (857,340 | ) | 854,398 | (2,115,868 | ) | 2,548,396 | |||||||
Increase/(Decrease) in cash and cash equivalents | (1,034,254 | ) | (2,705,929 | ) | (331,095 | ) | 649,554 | ||||||
Cash and cash equivalents, beginning of period | 4,810,913 | 5,072,469 | 4,107,754 | 1,716,986 | |||||||||
Cash and cash equivalents, end of period | $ | 3,776,569 | $ | 2,366,540 | $ | 3,776,569 | $ | 2,366,540 | |||||
See accompanying notes to Condensed Consolidated Interim Financial Statements. |
Forward-Looking Information
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