BuildDirect.com Technologies, Inc.: BuildDirect Reports First Quarter 2023 Financial Results

• 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.
• Company to host First Quarter 2023 earnings conference call on Wednesday, May 17, 2023, at 10:00 AM (PST) / 1:00 PM (EST).

BuildDirect reports in US dollars and in accordance with IFRS.

Vancouver, British Columbia--(Newsfile Corp. - May 17, 2023) - BuildDirect.com Technologies Inc. (TSXV: BILD) ("BuildDirect" or the "Company") a leading omnichannel building material retailer, today announced its financial results for the First Quarter 2023 ("Q1 2023").

"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 Financial Results Conference Call

BuildDirect will host a conference call to discuss the Company's financial results at 10:00 AM (PST) / 1:00 PM (EST) on Wednesday, May 17, 2023. To access the conference call, participants need to register at https://us02web.zoom.us/webinar/register/WN_ROakbKeORZ6vEO5A2ymagg.

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 at https://ir.builddirect.com/events-and-presentation.

Among other things, BuildDirect will discuss the long-term financial outlook on the conference call and related materials will be 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.

First Quarter 2023 Highlights

	Q1 2023	Q4 2022	Change (Q1 2023 & Q4 2022)	Q1 2022	Change (Q1 2023 & Q1 2022)
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	35.8%	340 bps
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."

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.

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. 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 Company's successful implementation of efficiency initiatives in relation to its e-commerce business, the profitable growth of the Company's e-commerce business, the Company's scaling of its brick and mortar operations and expansion of its product suite to include value added services for Pro customers, the identification of additional operational efficiencies and optimization of resource utilization (including, without limitation, the integration of fulfillment operations for the Company's e-commerce business into acquired brick-and-mortar locations and the corresponding reduction in fulfillment costs and increase in inventory utilization), the improvement of the Company's bottom line, and the Company's expansion of its business and streamlining of its operations to improve our overall profitability.

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 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.

For further information: Matt Alexander, Interim CFO, 1.778.382.7748; BuildDirect Investor Relations, [e-mail], 1.905.347.5569

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 March 31
Adjusted EBITDA			2023			2022
Gain (Loss for the period)			(343,661	)		(1,721,809	)
Income tax expense			195,000			212,575
Depreciation and amortization			917,869			1,007,551
Interest			511,636			420,690
EBITDA			1,280,844			(80,993	)
EBITDA adjustments
	Stock-based compensation		42,443			97,635
	Foreign exchange (gain)/loss		(259,127	)		577,714
	Fair value adjustment of warrants		(21,704	)		(683,982	)
	Impact of fair value adjustment of Inventory in acquisition1		-			137,400
	Adjusted EBITDA		1,042,456			47,774
	Adjusted EBITDA %2		6%			0%

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 Adjusted EBITDA % is a ratio of Adjusted EBITDA divided by Total Revenue

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

			As at March 31, 2023			As at December 31, 2022
			$			$
Assets
Current assets:
	Cash and cash equivalents		4,810,913			4,107,754
	Short-term investments		318,000			318,000
	Trade and other receivables		3,790,128			4,000,121
	Income taxes receivable		-			171,502
	Inventories		6,479,597			6,657,450
	Prepaid materials, expenses, and deposits		2,056,565			1,696,828
	Total current assets		17,455,203			16,951,655
Non-current assets:
	Property and equipment		583,989			591,880
	Intangible assets		7,545,832			8,155,769
	Right-of-use assets		3,273,165			3,566,442
	Non-current deposits		968,989			987,216
	Goodwill		2,530,622			2,530,622
	Deferred tax asset		1,207,110			1,207,110
	Total non-current assets		16,109,707			17,039,039
Total Assets			33,564,910			33,990,694
Liabilities and Shareholders' Equity
Current liabilities:
	Accounts payable and accrued liabilities		5,498,192			5,475,426
	Income taxes payable		23,498			-
	Current portion of lease liabilities		1,466,423			1,441,420
	Deferred revenue		2,603,431			1,767,136
	Loan payable		3,461,513			3,691,672
	Current portion of promissory note		1,079,502			1,065,131
	Current portion of deferred consideration payable		1,971,527			1,903,731
	Warrants		6,678			28,382
	Total current liabilities		16,110,764			15,372,898
Non-current liabilities:
	Deferred consideration payable		-			701,611
	Lease liabilities		2,483,636			2,859,607
	Loan payable		5,160,726			4,974,463
	Promissory note		2,357,065			2,634,573
	Total non-current liabilities		10,001,427			11,170,254
Shareholders' equity:
	Share capital		123,109,599			122,803,204
	Share based payment reserve		11,164,228			11,121,785
	Deficit		(126,821,108	)		(126,477,447	)
Total Shareholders' equity			7,452,719			7,447,542
Total Liabilities and Equity			33,564,910			33,990,694

Condensed Consolidated Interim Statements of Operations and Comprehensive Loss
(Unaudited)
For the three months ended March 31, 2023 and 2022

		March 31, 2023			March 31, 2022
		$			$
Revenue		17,846,299			24,396,076
Cost of goods sold		10,853,858			15,671,680
Gross Profit		6,992,441			8,724,396
Operating expenses:
Fulfillment costs		1,159,656			2,146,838
Selling and marketing		1,331,809			2,319,546
Administration		3,440,035			4,034,351
Research and development		122,598			467,393
Depreciation and amortization		917,869			1,007,550
Total operating expenses		6,971,967			9,975,678
Profit (Loss) from operations		20,474			(1,251,282	)
Other income (expense):
Interest income		15,128			15,263
Interest expense		(526,764	)		(435,953	)
Rental income		61,670			56,471
Fair value adjustment of warrants		21,704			683,982
Foreign exchange gain (loss)		259,127			(577,714	)
Total Other income (expense)		(169,135	)		(257,951	)
Loss before income taxes		(148,661	)		(1,509,233	)
Income tax expense		195,000			212,575
Total loss and comprehensive loss for the period		(343,661	)		(1,721,808	)
Loss per share
Basic and diluted loss per share		(0.01	)		(0.06	)

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

For the three months ended March 31, 2023 and 2022

			March 31, 2023			March 31, 2022
			$			$
Cash provided by (used in):
Operating activities:
	Loss for the year		(343,661	)		(1,721,808	)
	Add (deduct) items not affecting cash:
	Depreciation and amortization		917,869			1,007,550
	Income tax expense		195,000			212,574
	Stock-based compensation expense		42,443			97,635
	Interest paid on leases		58,779			76,565
	Other interest and finance cost		467,985			359,388
	Interest earned on lease receivables		(15,128	)		(15,263	)
	Fair value adjustment on warrants		(21,704	)		(683,982	)
	Unrealized foreign exchange		(2,455	)		89,890
			1,299,128			(577,451	)
	Income taxes paid		-			-
	Changes in non-cash operating working capital:
	Trade and other receivables		145,493			407,350
	Inventories		177,853			(28,437	)
	Prepaid materials, expenses and deposits		(341,510	)		597,428
	Accounts payable and accrued liabilities		22,766			1,235,509
	Deferred revenue		836,295			(269,078	)
Total operating activities			2,140,025			1,859,039
Investing activities:
	Purchase of property and equipment		(6,764	)		(3,011	)
	Principal received on lease receivables		64,501			58,969
	Total investing activities		57,737			55,958
Financing activities:
	Private placement proceeds		306,395			-
	Interest paid		(236,075	)		(253,512	)
	Principal lease payments		(350,968	)		(319,752	)
	Promissory note repayment		(311,250	)		(311,250	)
	Deferred consideration repayment		(675,000	)		(675,000	)
	Loan repayment		(227,705	)		-
	Loan proceeds		-			3,000,000
	Total financing activities		(1,494,603	)		1,440,486
Increase (decrease) in cash and cash equivalents			703,159			3,355,483
Cash and cash equivalents, beginning of period			4,107,754			1,716,986
Cash and cash equivalents, end of period			4,810,913			5,072,469

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