BuildDirect.Com Technologies Inc.

Good morning. My name is Pam, and I will be your conference operator today. At this time, I'd like to welcome everyone to the BuildDirects third quarter conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, please press star, then the number two. Thank you. I'd now like to turn the conference over to Ms. Ashley Newell. You may begin your conference.

Thank you and good morning, everyone. Welcome to BuildDirect's first conference call as a public company to present the company's third quarter 2021 earnings. Joining us on the call today is Dan Park, Chief Executive Officer, and Ethan Rudin, Chief Financial Officer of BuildDirect. Following their prepared remarks, the call will be open for questions from the analyst community. If we're unable to get to your questions during the call, please email investorrelations at ir at builddirect.com. Before we begin, I would like to note that some of our comments today will contain forward-looking information and statements under applicable securities law that reflect management's current views with respect to future events. Any such information and statements are subject to risks, uncertainties, and assumptions that could cause actual results to differ materially from those projected in the forward-looking information and statements. Please refer to the various materials we have filed with Canadian securities regulators for a broader description of operational and risk factors that could affect the company's performance. In addition, please note that all dollar amounts mentioned in this presentation are in U.S. dollars. Finally, I wanted to highlight that our discussion this morning will align with our earnings presentation for the third quarter 2021, and this presentation will be available on our website. Now, let me turn the call over to Dan.

Thank you, Ashley, and good morning, everyone. We appreciate your participation in our call this morning. Today, I will cover the key highlights of our third quarter 2021 earnings results and the strategy, strength, and catalysts driving them. Ethan will go through our financial performance in more detail and speak about what we can expect for the full year 2021. As Ashley mentioned, we will then open the call for your questions. For those of you who are new to Build Rec, I'd like to kick off our inaugural earnings call by briefly running through our key investment highlights. Our unique digital platform and heavyweight supply chain infrastructure is positioning us as a new omni-channel leader in the North American home improvement market. Given the highly fragmented competitive landscape, we are well positioned to acquire high-quality independent retailers and their pro-relationships through immediately accretive acquisitions, like the superb acquisition we announced yesterday. Between acquisitions and acceleration of organic growth through our digital and physical platform, or DiFi, we will grow and scale rapidly in this total addressable market that is ripe for consolidation and disruption. Thanks to our team's hard work and dedication, BuildDirect delivered a solid third quarter performance. We delivered strong growth across key metrics, including revenue growth, pro-revenue growth, and gross profit. Our strategy is paying off, and we continue to serve our pros and homeowners with superior customer service and end-to-end flooring solutions. Despite supply chain and inflationary challenges, through our digital platform and heavyweight supply chain. Our strategic execution paid off as year-over-year revenues increased by 51%, pro revenues grew by 216%, and gross profit rose by 47% for Q3 2021. This growth can largely be attributed to floor source, as well as continued strong customer demand for building supplies. Like the rest of the industry, we experienced supply chain pressure on a gross margin, which decreased by 60 basis points year-over-year, which our team is working hard to mitigate. Due to strategic investments in sales, marketing, and technology, and receiving lower tax credits, adjusted EBITDA decreased to a loss of minus 0.6 million. A solid Q3 performance combined with our continuing ability to execute positions bill direct to drive growth, and we expect to deliver on our full-year revenue guidance. As investment in the home continued, we remain committed to delivering on our strategy. As we announced just yesterday, our acquisition of Michigan-based superb flooring and design aligns directly with our strategy to acquire B2B-focused targets. The deal allows us to serve a network of pro builder customers across the US Midwest. This segment of the market tends to be more concentrated and larger in both size and scale in terms of order size, which plays to our advantage as a national heavyweight delivery retailer. We're also partnering with Dolly, a heavyweight same day delivery specialist. This partnership extends our last mile footprint and improves the delivery experience for our customers even more through improved on-time delivery, order tracking, damage rates, and white glove delivery services. And as you may already know, I'll be transitioning from the role of CEO to chairperson of the board. Boarding Canada, a leading executive search firm, is in the process of identifying a new, highly experienced CEO to drive our heavyweight omni-channel strategy. We're also pleased to welcome seasoned home improvement executives, Peg Hunter, and Henry Lee Buckley, who are board of directors. They bring deep industry knowledge and experience to support our aggressive growth objective, and we're thrilled with their involvement to date. Build Direct continues to execute on the growth strategy we originally laid out at our RTO in August. Our strategy focuses on four key pillars to deliver long-term value creation. First, we will leverage our leading position as a first-to-market and fully dedicated digital and heavyweight delivery platform focused on the flooring space. Second, we will acquire independent retailers to grow our local presence and acquire pro revenues with very high repeat rates. Third, we will leverage the best of our digital platform and physical presence to deliver a differentiated, omni-channel experience to increase our share of the pro customer market segment. And finally, we will continue to invest in new capabilities such as digital B2B payments, seamless quoting and reordering, and digital marketing services for the pros. I've discussed this before, but the heavy goods e-commerce model is known for its inherent challenges, which is why the penetration has traditionally been low online. Specifically, the extreme weight and bulk of these products result in very expensive supply chain costs, high damage rates, and often disappointed customers. In addition, the high transaction price and complicated nature of the product results in a longer buying cycle. For these reasons, the online penetration has been low in flooring and building materials generally. However, online has been growing already and saw unprecedented growth last year. Due to the pandemic, we view building materials after groceries as the last frontier of low online penetration within a very large market segment poised to grow very fast. Initially, we are focused on the US foreign market segment with a total addressable market of 71 billion. While just 4% of that market is online, online sales are growing at 11% annually, which is nearly three times the rate of the total growth rate. The other thing that's interesting is that independent retailers make up nearly half of the $71 billion market segment. These independent retailers, as I've described before, like e-commerce capability or any digital expertise for that matter, and do not have any obvious partners to help them bridge that gap, although they're very successful at what they do today in their lane. So the complicated nature of the flooring e-commerce journey, low online penetration of the flooring market segment, and the low digital know-how of these independent retailers provides BuildDirect with an immense opportunity to drive consolidation and disruption in this fragmented, traditionally brick-and-mortar-led market segment. BuildDirect was first to market with key investments to become the leading online flooring supplier in North America. Our competitive advantages include our best in industry assortment breadth and hard surface flooring, our proprietary gateway supply chain solution that can deliver flooring to 90% of the country, in three days or less, with half the industry's damage rates. Our best in industry sample program, where we mail free samples within 24 hours, our great brand recognition and SEO, leading to high traffic, and industry-leading customer service and support. I'd now like to hand the call over to Ethan, who will take you through our financial performance and the drivers behind the numbers a bit more in detail.