BuildDirect Reports Second Quarter 2021 Financial Results

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Aug 23, 2021, 07:00 ET

Revenue of $23 million, with year-over-year recurring revenue growth of 368%
Successfully completed RTO raising CAD$20.5 million to support growth strategy

BuildDirect reports in US dollars and in accordance with IFRS

VANCOUVER, BC, Aug. 23, 2021 /PRNewswire/ - BuildDirect.com Technologies Inc. (TSXV: BILD) ("BuildDirect" or the "Company"), an innovative platform for purchasing and selling building materials online, today announced its financial results for the three and six months ended June 30, 2021.

"The home renovation industry is at a key inflection point with rising demand for building materials continuing unabated," said Dan Park, CEO of BuildDirect. "Our reverse takeover, raising C$20.5 million will be invested to enhance our differentiated omni-channel offering and infrastructure, as well as our robust pipeline of acquisition opportunities, to accelerate our growth. Our second quarter results highlight the strength of our business as we continue the positive momentum supported by our progress of capturing recurring revenue from our pro customers."

Dan Park, continued, "we remain focused on realizing BuildDirect's vision to transform and simplify the home renovation industry. With a large and growing total addressable market of $71 billion¹ in the US flooring market ripe for consolidation, we are confident that BuildDirect will capture an increasing share of the underserved Professional market to become a ground-breaking player in the home improvement industry."

"We are confident that our distinct DiPhy (digital + physical) strategy, robust technology, heavyweight delivery platform, and end-to-end flooring portfolio positions BuildDirect to drive significant value for all our stakeholders."

Second Quarter 2021 Financial Highlights

USD$ (unless otherwise noted)	Second Quarter 2021	Second Quarter 2020	% Change
Revenue	$23.4 million	$13.1 million	79%
Gross Profit	$8.8 million	$5.2 million	70%
Gross Margin	37.4%	39.3%	-5%
Adjusted EBITDA²	($0.07 million)	($0.16 million)	54%

¹Source: Floor Covering Weekly; Vol 69 No 16; July 27, 2020.

²Adjusted 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.

Second Quarter 2021 Financial and Operational Highlights

Revenue of $23.4 million increased 79% compared to the second quarter of 2020, primarily driven by the December 31, 2020 acquisition of FloorSource, and an increase in customer demand for building supplies.
Recurring revenue as a percentage of total revenue increased significantly by 368% to 51%.
Gross profit increased 70% to $8.8 million compared to $5.2 million in the second quarter of 2020.
Gross margin decreased by 5.0% to 37.4% compared to the second quarter of 2020 due to slightly lower gross margin percentages from the FloorSource business and higher supply chain costs in 2021 compared to 2020.
Adjusted EBITDA of ($0.07 million) improved 54% compared to the second quarter of 2020, primarily due to the incremental contribution from the acquisition of FloorSource.

Highlights Subsequent to the Second Quarter

Completed a successful RTO of VLCTY Capital Inc. on August 13, 2021. Concurrent with the RTO, BuildDirect raised total gross proceeds of C$20.5 million through a private placement of 3,487,000 subscription receipts at an issue price of C$5.75 per subscription receipt. Additionally, BuildDirect completed a non-brokered private placement offering of equity units at an issue price of C$5.75 per unit for gross process of C$0.5 million.
BuildDirect began trading on the TSX Venture Exchange on August 18, 2021 under the ticker symbol "BILD".

2021 Outlook
BuildDirect's business performance accelerated over the past year, as a result of significant growth in the home improvement products industry driven by a shift towards investment in the home, which has driven record breaking online growth in building material purchases. Driving this growth forward, BuildDirect intends to continue expanding gross margin through further alignment of unit economics and profitability in addition to enhancing revenue through its omnichannel platform. In 2021, BuildDirect anticipates revenue in the range of $90 - $98 million, representing significant year-over-year growth"

BuildDirect believes its best days are still ahead as the Company leverages its DiPhy (digital + physical) growth strategy and expands its reach into bricks and mortar independent retailers and captures the B2B professionals. The above guidance does not include additional acquisitions, however BuildDirect maintains a strong funnel of actionable acquisition targets that fit within its well-defined investment criteria.

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 Management's Discussion and Analysis for the three and six months ended June 30, 2021 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 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 the potential demand for building materials, potential growth, potential share of the US flooring market, potential value for all stakeholders, expected growth margins, and expected revenues for 2021, potential acquisitions.

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 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.

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.

Condensed Consolidated Interim Statement of Financial Position (Unaudited) (Expressed in United States dollars)

	June 30,		December 31,
	2021		2020
Assets

Current assets:
Cash and cash equivalents	$	4,978,958	$	5,416,511
Restricted cash (note 20)	15,107,291		-
Short-term investments	118,000		118,000
Trade and other receivables (note 3)	2,866,858		2,727,955
Advances to vendors	1,351,065		391,641
Inventories (note 4)	5,841,258		5,446,940
Prepaid materials, expenses and deposits	844,807		994,597
Total current assets	31,108,237		15,095,644
Non-current assets:
Property and equipment (note 5)	536,015		835,921
Intangible assets (note 6)	10,188,990		11,326,135
Right-of-use assets (note 7)	3,586,595		900,834
Non-current advances to vendors	567,480		567,284

Total Assets	$	45,987,317	$	28,725,818

Liabilities and Shareholders' Equity (Deficiency)

Current liabilities:
Accounts payable and accrued liabilities (note 8)	$	8,722,827	$	6,834,980
Income taxes payable	809,506		-
Current portion of lease liabilities (note 9)	969,742		458,841
Deferred revenue	3,122,757		1,531,960
Loan payable (note 10)	3,916,709		3,927,113
Current portion of promissory note (note 12)	1,394,097		1,145,986
Current portion of deferred consideration payable	508,623		602,681
Subscription receipts obligation (note 20)	16,177,384		-
	35,621,645		14,501,561
Non-current liabilities
Deferred consideration payable	1,207,675		1,018,555
Lease liabilities (note 9)	3,626,065		1,476,044
Convertible notes (note 11)	16,530,308		12,120,679
Warrants (note 11)	2,490,321		480,321
Promissory note (note 12)	4,471,774		4,552,670
	28,326,143		19,648,269
Shareholders' equity (deficiency):
Share capital	92,469,780		92,459,612
Share based payment reserve	11,449,567		10,395,737
Deficit	(121,879,818)		(108,279,361)
	(17,960,471)		(5,424,012)
Total Liabilities and Equity	$	45,987,317	$	28,725,818

Commitments and contingencies (note 16)

Subsequent events (note 20)

See accompanying notes to Condensed Consolidated Interim Financial Statements.

Condensed Consolidated Interim Statement 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
	2021		2020		2021		2020

Revenue (note 14)	$	23,407,028	$	13,095,742	$	44,294,065	$	22,239,389

Cost of goods sold (note 4)	14,653,267		7,939,334		28,155,499		13,503,559

Gross Profit	8,753,761		5,156,408		16,138,566		8,735,830

Operating expenses:
Fulfillment costs	2,370,310		2,430,478		4,480,310		3,986,481
Selling and marketing	2,664,954		1,967,048		5,391,244		3,472,710
Administration	4,270,977		1,627,940		7,542,240		3,318,140
Research and development	517,191		(397,550)		825,563		(87,218)
Depreciation and amortization	757,706		207,977		1,951,243		445,450
	10,581,138		5,835,893		20,190,600		11,135,563

Loss from operations	(1,827,377)		(679,485)		(4,052,034)		(2,399,733)

Other income (expense):
Interest income	18,768		26,156		40,270		56,588
Interest expense	(502,257)		(196,289)		(1,301,857)		(407,369)
Finance costs (note 20)	(1,070,093)		-		(1,070,093)		-
Rental income	43,030		129,781		100,556		309,459
Fair value adjustment of convertible debt and warrants	(5,089,253)		-		(6,419,629)		-
Foreign exchange (loss)/gain	(48,639)		(217,991)		(88,164)		80,860
Gain on sublease	-		129,148		-		129,148
	(6,648,444)		(129,195)		(8,738,917)		168,686

Loss before income taxes	(8,475,821)		(808,680)		(12,790,951)		(2,231,047)

Income tax expense	(467,304)		-		(809,506)		-

Total loss and comprehensive loss for the period	$	(8,943,125)	$	(808,680)	$	(13,600,457)	$	(2,231,047)

Deficit, beginning of period	$	(112,936,693)	$	(105,142,492)	$	(108,279,361)	$	(103,720,125)

Deficit, end of period	$	(121,879,818)	$	(105,951,172)	$	(121,879,818)	$	(105,951,172)

Loss per share (expressed in $ per share):
Basic loss per share	(0.07)		(0.01)		(0.11)		(0.02)
Diluted loss per share	(0.07)		(0.01)		(0.11)		(0.02)

See accompanying notes to Condensed Consolidated Interim Financial Statements.

Condensed Consolidated Interim Statement of Changes in Equity (Deficiency) (Unaudited) (Expressed in United States dollars)

For the six months ended June 30, 2021 and 2020

	Series 1 AA			Series 2 AA			Common shares			Share based payment reserve
	Number	Amount		Number	Amount		Number	Amount		Share based payment reserve		Deficit		Total
Balance – December 31, 2019	65,000,000	$	50,481,532	54,846,926	$	41,974,552	204	$	28	$	10,165,655	$	(103,720,125)	$	(1,098,358)
Loss and comprehensive loss for the period	–	–		–	–		–	–		–		(2,231,047)		(2,231,047)
Share-based compensation expense	–	–		–	–		–	–		115,041		–		115,041
Balance – June 30, 2020	65,000,000	$	50,481,532	54,846,926	$	41,974,552	204	$	28	$	10,280,696	$	(105,951,172)	$	(3,214,364)
Balance – December 31, 2020	65,000,000	$	50,481,532	44,642,845	$	34,165,332	10,229,285	$	7,812,748	$	10,395,737	$	(108,279,361)	$	(5,424,012)
Loss and comprehensive loss for the period	–	–		–	–		–	–		–		(13,600,457)		(13,600,457)
Share-based payment expense	–	–		–	–		–			1,053,830		–		1,053,830
Balance – June 30, 2021	65,000,000	$	50,481,532	44,642,845	$	34,165,332	10,229,285	$	7,822,916	$	11,449,567	$	(121,879,818)	$	(17,960,471)

See accompanying notes to Condensed Consolidated Interim Financial Statements.

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
	2021		2020		2021		2020

Cash provided by (used in):

Operating activities:
Loss for the period before income taxes	$	(8,475,821)	$	(808,680)	$	(12,790,951)	$	(2,231,047)
Add (deduct) items not affecting cash:
Depreciation	757,706		207,977		1,951,243		445,450
Stock-based compensation expense	954,574		57,521		1,053,830		115,041
Other interest and finance cost	397,929		107,667		1,087,914		218,709
Interest on leases	104,328		88,622		213,943		188,660
Interest earned on lease receivables and other	(18,768)		(26,156)		(40,270)		(56,588)
Fair value adjustment on convertible debt and warrants	5,089,253		-		6,419,629		-
Finance costs	1,070,093		-		1,070,093		-
Unrealized foreign exchange	56,377		137,853		103,978		(187,502)
Gain on lease modification	-		(129,148)		-		(129,148)
	(64,329)		(364,344)		(930,591)		(1,636,425)

Changes in non-cash operating working capital:
Short-term investments	-		(83,000)		-		(83,000)
Trade and other receivables	(225,329)		(113,235)		(247,949)		(1,808)
Inventories	(72,806)		(445,130)		(394,318)		(493,601)
Prepaid materials, expenses and deposits	(96,511)		104,526		149,790		1,344,293
Advances to vendors	(505,799)		634,766		(959,620)		403,468
Accounts payable and accrued liabilities	1,174,562		850,449		1,887,847		763,760
Deferred revenue	233,770		724,674		1,590,797		1,266,237
Total operating activities	443,558		1,308,705		1,095,956		1,562,923

Investing activities:
Purchase of property and equipment	(25,129)		(2,662)		(28,649)		(6,836)
Principal received on lease receivables	55,134		50,405		109,046		99,693
Interest received	18,768		26,156		40,270		56,588
Total investing activities	48,773		73,899		120,667		149,445

Financing activities:
Subscription receipts proceeds	16,177,384		-		16,177,384		-
Restricted cash related to subscription receipts	(15,107,291)		-		(15,107,291)		-
Subscription receipts issuance costs	(1,070,093)		-		(1,070,093)		-
Common shares issued upon exercise of stock options	10,168		-		10,168		-
Principal lease payments	(228,899)		(177,131)		(510,382)		(363,848)
Interest paid	(482,388)		(196,289)		(1,259,177)		(407,369)
Loan repayment	-		-		105,215		-
Total financing activities	(701,119)		(373,420)		(1,654,176)		(771,217)

Increase/(Decrease) in cash and cash equivalents	(208,788)		1,009,185		(437,553)		941,152

Cash and cash equivalents, beginning of period	5,187,746		3,389,480		5,416,511		3,457,513

Cash and cash equivalents, end of period	$	4,978,958	$	4,398,665	$	4,978,958	$	4,398,665
See accompanying notes to Condensed Consolidated Interim Financial Statements.





	For the three months ended June 30				For the six months ended June 30
Adjusted EBITDA	2021		2020		2021		2020

Loss for the period	$	(8,943,125)	$	(808,680)	$	(13,600,457)	$	(2,231,047)
Income tax expense	467,304		-		809,506		-
Depreciation and amortization	757,706		207,977		1,951,243		445,450
Interest	483,489		170,133		1,261,587		350,781
EBITDA	(7,234,626)		(430,570)		(9,578,121)		(1,434,816)

EBITDA adjustments
Stock-based compensation	$	954,574	$	57,520	$	1,053,830	$	115,041
Foreign exchange (gain)/loss	48,639		217,991		88,164		80,860
Fair value adjustment of convertible debt and warrants	5,089,253		-		6,419,629		-
Impact of fair value adjustment of Inventory in FloorSource acquisition¹					528,552		-
Significant bad debt expense²					257,891		-
Finance costs³	1,070,093		-		1,070,093		-

Adjusted EBITDA	(72,067)		(155,059)		(159,962)		(1,400,635)
Adjusted EBITDA %	0%		(1%)		(0%)		(6%)

¹The 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.

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.

³The adjustment relates to agents' commission and certain expenses of the private placement offering totalling CDN $1,326,273.

SOURCE BuildDirect.com Technologies Inc.