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BuildDirect Reports Fourth Quarter and Year End 2021 Financial Results

V.BILD

Achieves revenue of $90.7 million, growing year-over-year by 74%
Pro customer revenue increases to 63% of full year revenues, up 210% from the previous year

BuildDirect reports in US dollars and in accordance with IFRS

VANCOUVER, BC, May 2, 2022 /PRNewswire/ - BuildDirect.com Technologies Inc. (TSXV: BILD) ("BuildDirect" or the "Company") a growing omnichannel building material retailer, today announced its financial results for the Q4 2021 ("Q4 2021") and full-year audited financial results for the year ended December 31, 2021 ("Full Year 2021").

BuildDirect.com Technologies Inc (CNW Group/BuildDirect.com Technologies Inc.)

"I am very proud of what we achieved in 2021." said David Lazar, interim CEO of BuildDirect. "In addition to reaching $90.7 million of revenue for the year, we have integrated the FloorSource acquisition into our broader operations and closed the acquisition of Superb Flooring & Design. Our team's dedication and ability to adapt quickly to market trends has helped us respond to challenges presented by COVID and global supply chain pressures. Looking forward, we continue to focus on the growing Pro customer market with its higher average basket recurring purchases."

Q4 and Full Year 2021 Financial Highlights

USD$

(unless otherwise noted)

Q42021

Q3 2021

% Change

Full Year 2021

Revenue

$24.0 million

$22.4 million

7.1%

$90.7 million

Gross Profit

$7.6 million

$8.1 million

(6.2)%

$31.8 million

Gross Margin

31.5%

36.4%

(4.9)%

35.1%

Adjusted EBITDA1

($3.2) million

($0.6) million

(433.3)%

$(4.0) million



1

Adjusted 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.

Q4 and Full Year 2021 Highlights

  • Achieved Full Year 2021 revenue of $90.7 million driven by strategic acquisitions of FloorSource and Superb Flooring & Design, and increasing customer demand. Compared to the previous quarter, Q4 2021 revenue increased by 7.1% to $24.0 million.
  • Full Year 2021 Pro revenue reached $57.1 million, representing 63% of total revenue at the year end and year-over-year growth of 210%, which was largely driven by acquisition.
  • Gross profit decreased 6.2% to $7.6 million in Q4 2021 over the previous quarter, with Full Year 2021 gross profit reaching $31.8 million, an increase of 59% year-over-year. The improvement was driven by increased revenues and partially offset by higher than expected product costs.
  • Gross margin in Q4 2021 decreased by 490bps to 31.5% compared to Q3 2021 due to higher product costs. Full Year 2021 gross margin reached 35.1%, and is expected to improve in 2022 as BuildDirect increases pricing to offset increased product cost.
  • Adjusted EBITDA in Q4 2021 came to ($3.2 million), a 433% decrease from the previous quarter, and ($4.0 million) for the Full Year 2021. While this decrease is attributable to higher product, fulfilment, and marketing costs, adjusted EBITDA is expected to improve in Q1 2022 as we increase prices, and reduce fixed-costs and paid marketing attributable to homeowner customers.
  • Continue to integrate the acquisition of FloorSource, and closed the acquisition of Superb Flooring & Design, which increased Pro revenues, brought installation and delivery services, expanded assortment, and improved product availability.
  • Successfully completed a reverse takeover transaction to go public following $20.5 million private placement.
  • Appointed experienced omnichannel retail executives, David Lazard as interim CEO, and Peg Hunter and Henry Lees-Buckley to the Board of Directors.

Post-Quarter Highlights

  • On February 15, 2022, BuildDirect announced the closing of 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.
  • 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.

2022 Outlook

The outlook for the home improvement sector remains optimistic, supported by a consistently strong North American housing and real estate market. Whilst the consistent and resilient demand for home improvement and construction is encouraging, broader macro uncertainty remains around the impact of inflation, supply chain pressures, and evolving customer habits.

Looking to 2022, BuildDirect's growth strategy focuses primarily on expanding its foothold in the Pro customer market through four key strategic pillars:

  1. Reallocation of resources to focus on serving the Pro customer
  2. Drive synergies from acquired independent retailers
  3. Leveraging heavy weight delivery capabilities to maximize customer service offering
  4. Expanding Pro share of wallet through our omnichannel strategy

In addition to driving revenue growth, the Company is undertaking a number of key initiatives including shifting our focus more strongly towards Pro revenues, passing increased product costs on to the customer, and maximizing acquisition synergies to drive margin expansion with the goal of delivering profitability.

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 drive fixed-costs down. In Q1 2022, we are estimating revenues to be over $24 million and we're estimating to achieve positive Adjusted EBITDA. In addition, our cash balance has improved from year-end 2021 and at the end of Q1 2022 our cash balance is estimated to be over $5 million."

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, 2020 and December 31, 2021 and Management's Discussion and Analysis for the three and twelve months ended December 31, 2020 and 2021 are available on the Company's website at www.BuildDirect.com. and on the Company's SEDAR profile available at www.sedar.com.

Fourth Quarter and Full Year 2022 Financial Results Conference Call

BuildDirect will host a conference call and webcast to discuss the Company's financial results at 9:30 am ESTon Monday, May 2, 2022. To access the telephonic version of the conference call, participants can dial (888) 664-6392 (North America Toll-Free) or (416) 764-8659. Upon entering the confirmation ID: 56210850, participants will be entered directly into the conference.

Alternatively, the webcast will be available live on the Investor Relations section of BuildDirect's website at https://ir.builddirect.com/events-and-presentation

Among other things, BuildDirect will discuss long-term financial outlook on the conference call and webcast, and related materials will be made available on the Company's website at https://ir.builddirect.com/events-and-presentation. Investors should carefully review the factors, assumptions, risks and uncertainties included in such related materials concerning such long-term financial outlook.

An audio replay of the call will be available approximately two hours after the completion of the live call until 8:59 pm EST on May 9, 2022. The audio replay will be accessed by dialing (888) 390-0541 (North America Toll-Free) or (416) 764-8677 (Toronto) with entry code: 210850. In addition, an archived webcast will be available on the Investor Relations section of the Company's website at https://ir.builddirect.com/events-and-presentation.

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. For more information, visit www.BuildDirect.com.

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 growth and growth strategy, the strength of the home renovation and real estate markets; BuildDirect's 2022 outlook and ability to achieve the pillars listed under the "2022 Outlook" section and pass increased product costs on to the customer; margin expansion; profitability; investment in accretive Pro market assets; expected financial and operational synergies from our acquisitions; BuildDirect's ability to drive costs down; BuildDirect's robust omnichannel customer retail experience and heavy weight delivery capabilities; the redirection and reshaping of operations to focus on the Pro customers market; gross margin increases and adjusted EBITDA improvements; BuildDirect's ability to adapt to market trends; and BuildDirect's acquisition pipeline and maximization of acquisition synergies.

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, inflation, 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 and other factors referenced under the "Risks and Uncertainties" section of our MD&A. These forward-looking statements may be affected by risks and uncertainties in the business of the Company and general market conditions, including COVID-19.

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. 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.

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 and " Q4 and Full Year 2021 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.

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
December 31

For the year ended
December 31

Adjusted EBITDA

2021

2020

2021

2020






Gain (Loss) for the period

2,599,558

(2,131,803)

(10,327,659)

(4,559,236)

Income tax expense

(912,446)

-

371,091

-

Depreciation and amortization

220,875

460,190

2,967,113

1,074,610

Interest

530,556

343,057

2,295,715

841,657

EBITDA

2,438,543

(1,328,556)

(4,693,740)

(2,642,969)






EBITDA adjustments






Stock-based compensation

(967,833)

-

282,281

172,561


Foreign exchange (gain)/loss

197,301

520,120

187,402

137,525


Foreign currency translation differences

(34,123)

-

(34,123)

-

Fair value adjustment of convertible debt and warrants

(4,872,492)

-

(3,417,864)

-


Impact of fair value adjustment of Inventory in FloorSource acquisition1

-

-

528,552

-


Significant bad debt expense2

-

-

257,891

-


Finance costs3

-

-

1,475,886

-


Listing expenses4

-

-

1,017,659

-


Other expenses related to TSXV listing5

-

-

409,211

-








Adjusted EBITDA

(3,207,463)

(808,436)

(3,986,845)

(2,332,883)


Adjusted EBITDA %

(13)%

(5)%

(4)%

(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 totaling 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 the non-recurring legal and accounting expenses required to bring the company to public company standards.

Condensed Consolidated Interim Statement of Financial Position
(Expressed in United States dollars)
December 31, 2021 and 2020



2021


2020




Restated (Note 4)

Assets










Current assets:






Cash and cash equivalents

$

1,719,986

$

5,416,511


Short-term investments


118,000


118,000


Trade and other receivables


4,420,994


2,727,955


Advances to vendors


1,979,061


391,641


Inventories


7,452,570


5,446,940


Prepaid materials, expenses and deposits


424,137


994,597


Total current assets


16,111,748


15,095,644

Non-current assets:






Property and equipment


599,232


835,921


Intangible assets


12,650,528


7,164,516


Right-of-use assets


4,305,647


900,834


Non-current advances to vendors


1,141,805


567,284


Goodwill


4,280,165


2,530,622


Deferred tax asset


364,329


-

Total Assets

$

39,453,454

$

27,094,821






Liabilities and Shareholders' Equity (Deficiency)










Current liabilities:






Accounts payable and accrued liabilities

$

7,619,937

$

5,903,080


Current portion of lease liabilities


1,286,775


458,841


Deferred revenue


2,460,498


1,531,960


Current portion of promissory note


1,021,161


831,993


Current portion of deferred consideration payable


2,484,571


372,226


Loan payable


3,828,971


3,927,113


Income taxes payable


735,420


-



Total current liabilities


19,437,333


13,025,213






Non-current liabilities:






Deferred consideration payable


553,732


1,006,961


Lease liabilities


3,929,806


1,476,044


Convertible notes


-


12,120,679


Warrants


823,090


480,321


Promissory note


3,386,300


4,409,615






Shareholders' equity (deficiency):






Share capital


119,075,245


92,459,612


Share based payment reserve


10,854,968


10,395,737


Deficit


(118,607,020)


(108,279,361)



11,323,193


(5,424,012)

Total Liabilities and Equity

$

39,453,454

$

27,094,821

Condensed Consolidated Interim Statement of Operations and Comprehensive Loss
(Audited)
(Expressed in United States dollars)






Years ended December 31, 2021 and 2020












2021


2020






Revenue

$

90,667,936

$

52,110,155






Cost of goods sold


58,833,238


32,083,225






Gross Profit


31,834,698


20,026,930






Operating expenses:






Fulfillment costs


8,975,684


8,729,026


Selling and marketing


11,700,348


7,407,773


Administration


15,299,126


6,763,441


Research and development


1,629,447


310,079


Depreciation and amortization


2,967,113


1,074,610



40,571,718


24,284,929






Loss from operations


(8,737,020)


(4,257,999)






Other income (expense):






Interest income


96,166


123,997


Interest expense and other transaction cost


(2,391,881)


(965,654)


Finance costs


(1,475,886)


-


Fair value adjustment of convertible debt and warrants


3,417,864


-


Rental income


222,416


404,203


Foreign exchange loss


(187,402)


(137,525)


Listing expenses


(900,825)


-


Gain on lease adjustments


-


273,742









(1,219,548)


(301,237)






Loss before income taxes


(9,956,568)


(4,559,236)






Income tax expense


(371,091)


-






Total loss and comprehensive loss for the year

$

(10,327,659)

$

(4,559,236)






Loss per share






Basic and diluted loss per share

$

(0.41)

$

(0.21)

Condensed Consolidated Interim Statement of Cash Flows
(Audited)
(Expressed in United States dollars)

Years ended December 31, 2021 and 2020






2021


2020









Cash provided by (used in):





Operating activities:







Loss for the year

$

(10,327,659)

$

(4,559,236)



Add (deduct) items not affecting cash:








Depreciation and amortization


2,967,113


1,074,610




Income tax expense


371,091


-




Stock-based compensation expense


459,231


230,082




Interest paid on leases


317,282


311,203




Other interest and finance cost


2,074,598


654,451




Interest earned on lease receivables


(96,166)


(123,997)




Fair value adjustment on convertible debt and warrants


(3,417,864)


-




Finance costs


1,475,886


-




Listing expenses


900,825


-




Gain on lease adjustments


-


(273,742)




Debt financing transaction costs


-


195,195




Unrealized foreign exchange


16,238


110,683






(5,259,425)


(2,380,751)



Changes in non-cash operating working capital:








Short-term investments


-


(83,000)




Trade and other receivables


(402,880)


(60,174)




Inventories


(1,453,263)


(35,188)




Prepaid materials, expenses and deposits


570,460


1,119,735




Advances to vendors


(2,161,941)


276,665




Accounts payable and accrued liabilities


1,302,915


360,914




Deferred revenue


613,006


250,913



Total operating activities


(6,791,128)


(550,886)

Investing activities:







Purchase of property and equipment


(109,998)


(105,508)



Principal received on lease receivables


223,090


230,958



Acquisition of business, net of cash acquired and assumed debt


(9,429,166)


(8,475,800)



Total investing activities


(9,316,074)


(8,377,350)

Financing activities:







Subscription receipts proceeds


16,592,133


-



Subscription receipts issuance costs


(1,475,886)


-



Proceeds from convertible debt


-


12,601,000



Financing and listing transaction costs


(34,040)


(195,195)



Principal lease payment


(1,110,304)


(689,048)



Interest paid


(225,745)


(841,657)



Proceeds from exercise of stock options


20,901


3,500



Promissory note repayment


(1,245,000)


-



Loan repayment


(114,382)


-


Total financing activities


12,407,677


10,878,600

Effects of currency translation on cash and cash equivalents


-


8,633









Increase (decrease) in cash and cash equivalents


(3,699,525)


1,958,998

Cash and cash equivalents, beginning of year


5,416,511


3,457,513

Cash and cash equivalents, end of year

$

1,716,986

$

5,416,511

Cision View original content to download multimedia:https://www.prnewswire.com/news-releases/builddirect-reports-fourth-quarter-and-year-end-2021-financial-results-301536827.html

SOURCE BuildDirect.com Technologies Inc.