Mr. Shawn Wilson reports

BUILDDIRECT REPORTS FOURTH QUARTER AND YEAR ENDED DECEMBER 31, 2023 FINANCIAL RESULTS

Builddirect.com Technologies Inc. has released its financial results for the fourth quarter (Q4 2023) and full-year audited financial results for the year ended Dec. 31, 2023 (FY 2023). All monetary amounts are in United States dollars.

"We are pleased to announce Q4 2023 results, which further solidifies the progress the team has made with respect to profitability and strategic growth," said Shawn Wilson, chief executive officer of Builddirect.com. "Over all, Builddirect achieved strong financial performance as highlighted by its adjusted EBITDA of $3.55-million for the FY 2023, for an increase of $2.27-million as compared to the previous fiscal year."

Fourth quarter and full-year 2023 financial results conference call

Builddirect.com will host a conference call to discuss the company's financial results at 1:30 p.m. (PDT)/4:30 p.m. (EDT) on Monday, April 29, 2024. To access the conference call, participants need to register on-line.

The replay will be available approximately 24 hours after the completion of the conference call. In addition, an archived replay will be available on the investor relations section of the company's website.

Among other things, Builddirect.com will discuss long-term financial outlook on the conference call and related materials will be available on the company's website. Investors should carefully review the factors, assumptions, risks and uncertainties included in such related materials concerning such long-term financial outlook.

Q4 2023 and FY 2023 highlights

1. Revenue

Total revenue was $16.9-million for Q4 2023, a decrease of 8.2 per cent and 22.1 per cent sequentially quarter-over-quarter and year-over-year, respectively. Over all, total revenue for FY 2023 was $72.3-million, a decrease of 21.6 per cent from prior year ended Dec. 31, 2022 (FY 2022), revenue of $92.2-million. The decrease follows from the company's strategy to temporarily scale down e-commerce operations to facilitate its platform migration and enhancements initiative. This initiative lowered systems operating costs and helped to create positive adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) results to date.

2. Gross margin

Gross margin was $6-million and $27.8-million for Q4 2023 and FY 2023, respectively, representing a decrease of 24.1 per cent and 13.1 per cent from Q4 FY 2022 and FY 2022, respectively. The decrease can be attributed to the company's strategy noted in revenue above. Although gross margin as a percentage of revenue increased to 38.5 per cent from 34.7 per cent in FY 2023 from FY 2022, respectively, for an increase of 380 basis points year-over-year. This can be attributed to the company's strategy noted in Revenue above and the company's continued focus on the more profitable Pro customer base.

3. Adjusted EBITDA

Adjusted EBITDA was $730,000 and $3.55-million for Q4 2023 and FY 2023, respectively, representing eight consecutive quarters of positive adjusted EBITDA. This can largely be attributed to the temporary scale-down of the company's e-commerce business, improved gross margins and lower operating expenses.

As at Dec. 31, 2023, working capital was $2.8-million compared with $1.7-million as at Dec. 31, 2022, for an increase of $1.1-million. This increase can largely be attributed to the increase in cash from operating activities.

On Sept. 28, 2023, the company announced the amendment of secured notes issued by Builddirect Operations Ltd., a wholly owned subsidiary of the company, to: (a) Deans Knight Capital Management Ltd. in its capacity as portfolio manager on behalf and for the benefit of two fully managed accounts in March, 2018; and (b) Pelecanus Investments Ltd., Lyra Growth Partners Inc. and Beedie Investments Ltd. in June, 2022.

• The 2018 notes were amended such that (a) the maturity date was extended to Sept. 30, 2025; (b) the interest rate applicable to the 2018 notes was decreased to 12 per cent effective Oct.1, 2023; (c) Builddirect Operations agreed to continue to make certain quarterly payments toward the aggregate outstanding principal amount of the 2018 notes commencing Dec. 31, 2023; and (d) a fee in the amount of 6 per cent of the aggregate outstanding principal amount of the 2018 notes (after the payment of the September principal payment, described below) was added to the aggregate outstanding principal amount of the 2018 notes and will be paid by Builddirect Operations as part of such principal amount in accordance with the 2018 notes as amended. As conditions of the above noted amendments Builddirect Operations also made the following payments to the Deans Knight noteholders on or about Sept. 30, 2023: (i) an approximately $1.5-million payment toward the outstanding principal amount of the 2018 notes (the September principal payment); and (ii) accrued quarterly interest on the 2018 notes as of Sept. 30, 2023; and (iii) a fee equal to 6 per cent of the September principal payment.
• The 2022 notes were amended such that (a) the maturity date of the 2022 notes was extended to April 1, 2026; (b) the interest rate applicable to the 2022 notes was decreased to 12 per cent effective Oct. 1, 2023; and (c) a commitment fee payable in relation to the 2022 notes was, effective Sept. 30, 2023, increased to a total of 2 per cent of the aggregate principal amount of the 2022 notes and which fee is payable upon repayment of the 2022 notes.

2024 outlook

Currently, the company remains focused on growth through the pursuit of strategic acquisitions of pro and business-to-business-focused retailers. Postacquisition, the company aims to optimize operations and drive value through acquisitions by leveraging procurement and marketing synergies.

In addition, the company is also piloting organic growth strategies through which it seeds target markets through initial e-commerce expansion, deploys local in-market sales teams to solidify its presence, and then establishes new Pro centres in-market while transitioning to local e-commerce fulfilment and potentially expanding its product offerings and services. As previously announced, the launch of the company's Pro centre in Richmond, B.C., aims to serve as a blueprint for potential future Builddirect Pro centres across the United States. By initiating with robust sales and localized service, these Pro centres aim to enhance Builddirect.com's engagement with professionals in each market.

As previously announced, the company has also introduced value-added service packages for Pro customers featuring customized e-commerce platforms, white-label branded flooring options, complimentary flooring samples and tailored fulfilment services. These pilot initiatives open the path for Builddirect.com to build a potential recurring revenue stream.

Further, actual results may differ materially from Builddirect.com's financial outlook. Builddirect.com's audited consolidated financial statements for the years ended Dec. 31, 2023, and Dec. 31, 2022, and management's discussion and analysis for the three and 12 months ended Dec. 31, 2023, and 2022, are available on the company's website and on the company's SEDAR+ profile.

About Builddirect.com Technologies Inc.

Builddirect.com is a growing omnichannel building material retailer. Builddirect.com connects North American home improvement B2B and business-to-consumer organizations, and homeowners with quality building materials and services through its robust global supply chain network. Builddirect.com'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.

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