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spk00: Good morning, my name is Pam and I will be your conference operator today. At this time, I would like to welcome everyone to BuildDirect's Q4 and full year 2021 financial results conference call. All lines have been placed on mute to prevent any background noise. At this time, all participants are in a listen-only mode. Management will be available to take any questions in one-on-one meetings following the call. You can request a meeting or send your questions to ir at builddirect.com. Mr. Rudin, you may begin your conference.
spk02: Thank you, and good morning, everyone. Welcome to BuildDirect's call to present the company's fourth quarter and full year 2021 earnings. Please note that we'll be available to take any questions in one-on-one meetings following the call. You can rest the meeting or send your questions to investorrelations at ir.builddirect.com. Before we begin, I'd like to note that some of our comments today will contain forward-looking information and statements under applicable securities laws that reflect management's current views with respect to future events. Any such information and statements are subject to risks and certainties 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 that we have filed with Canadian securities regulators for a broader description of the 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 want to highlight that our discussion this morning will align with our earnings presentation for the fourth quarter and full year 2021. This presentation is also available on our website. I'd like to welcome David Lazar to his first earnings call with us, having joined Build2Ref as the interim CEO back in December. David, go ahead and introduce yourself before going into an overview of our financial and operational performance for Q4 and full year 2021. Thanks, Stephen.
spk01: It's a pleasure to present the key highlights of BuildDirect's Q4 and full year 21 earnings and the strategy and trends driving them. Before I dive into the details of this presentation, I'd like to start by thanking the board of directors for the trust they placed in me. It's an honor to serve as CEO of BuildDirect. I come from a background of building scale and driving brand and operational transformations at various e-commerce, subscription, and retail companies. Through these experiences, I saw firsthand how to shape a company like BuildDirect to drive real value and look forward to using my experience to help BuildDirect reach its full potential. 2021 operational highlights. 2021 was important for BuildDirect for the completion of the reverse takeover transaction, the successful integration of two acquisitions and key board appointments. Despite challenges presented by COVID, global supply chain pressures, and other macro pressures, I am pleased to report that our team successfully executed against the strategy laid out at the company's reverse takeover transaction in August 21. We closed the acquisition of Superb Flooring and Design in Q3 21, which increased our reach to a new builder-focused customer base, as well as pro-installation and project management capabilities. In addition, we have spent the last year integrating the four-source acquisition into the business, enhancing our pro-customer network, expanding assortment, and improving product availability. We have also continued to strengthen our board with new skill sets with the addition of seasoned home improvement directors Peg Hunter and Henry Lees-Buckley. We achieved our full-year 21 revenue of $91 million. This revenue growth came from consistent customer demand and our acquisitions of Floor, Source, and Superb. Full year 2021 per revenue reached $57 million, representing 63 of our total revenue at the year end, and year-over-year growth of 210%, which was largely driven by acquisitions. Full year 2021 gross profit reached $32 million, an increase of 59% year-over-year, which was driven by by increased revenues and partially offset by higher than expected product costs. Full year 2021 gross margin was impacted by acquisition costs and supply chain costs reaching 35%. We expect it to improve in 2022 as bill direct flows increase product costs through to product pricing. Adjusted even the decrease to negative $4 million due to investments and lower tax credits received. In a few moments, I will take you through our ongoing cost initiatives that will drive improved EBITDA. For your highlights, to date in 2022, we continue to advance our strategy and position BuildDirect to expand our pro-customer base. In addition, we have continued to refresh our board with the addition of Eyal Ofir, who brings over 20 years of investment banking and capital markets experience. We also announced the departure of John Farlinger and Andrew Elbaz, who joined the board from Velocity Capital during the RTO process last year. In addition, Build Direct closed the secure debt financing of 3 million US to support our strategy working capital needs. To continue to support our strategy, we are in the process of arranging additional debt financing and expect to uptake the market on this later in 2022. BuildDirect is now well positioned to continue our strategy to focusing our efforts and resources on the underserved flooring professional versus our legacy D2C customer. BuildDirect is advancing the strategy first outlined at the RTO. A natural evolution of that strategy and due to our acquisition of two independent retailers, we are increasing our focus on the pro customer market segment with its larger basket sizes and recurring purchases. With this in mind, our strategy comprises of four key pillars. One, reallocation of our resources to focus primarily on serving the pro segment. This includes curating products and services that will be attractive to the pro customer with the ultimate goal of using technology to drive more efficiency where it can be easily adopted by the trade. Two, continuing to drive costs and operational synergies from Superb and ProSource to improve margins. Three, leveraging our leading heavyweight delivery capabilities to maximize our customer service offering in these networks. And four, expanding our share of pro market through our omnichannel offering, enabling an end-to-end quoting to installment solution. Looking at our addressable market, the U.S. flooring segment is about $70 billion. There are two relevant facts that make this market very attractive for BuildDirect. One, one online penetration is about 4%, one of the lowest across all US retail product categories, growing at 11%, three times the overall flooring growth rate. Two, very fragmented. Traditional big box only has a 24% market share. with independent retailers dominating market segment share at 45%. However, they are missing the online channel. These B&M companies are very traditional, low-tech. While they want to close the gap here, they simply lack the focus on this channel and capital to make it happen. Realigning our costs to support our strategy. Looking forward, we intend to improve our margin and drive EBITDA in 2022 through key cost adjustments as demand has to continue to increase product costs have risen sharply in parallel while we cannot slow rising product costs we can use trending sites and work even faster to pass some off to the customer thus improving margins two to offset the pressure of rising product costs we are driving efficiencies in our cost base by one reviewing our product sourcing network to get the best products for the best prices, and two, leveraging purchasing synergies in our acquisitions to maximize relationships and our buying power. Another key initiative is ensuring that our operational costs align with our growth strategy. We have significantly reduced paid advertising budgets as the pro customer is much less receptive to paid advertising. We also know that the pro customer is still more likely to purchase products in person than online. So we're shifting investments into our pro focus efforts and services in response. I'd like to now hand the call over to Ethan who will take you through our financial performance and the drivers behind the numbers in a bit more detail.
spk02: Thank you, David. Here's our acquisition update today. Independent retailers represent half of the $70 billion flooring market, but they do not have the capabilities and know-how to grow in the digital channels and scale faster. What they do have, however, are very loyal and sticky pro customers, many exceeding 80% retention rates through their relationships, local market knowledge, and service. We have successfully acquired and integrated two of these independent retailers into the business. Michigan based superb and floor source, which have delivered a range of financial and operational synergies and a strong combined football hold on the mid U.S. Relationships with a network of home builders and construction pros and the opportunity to leverage our omnichannel offering to deliver an improved customer service experience for these pros. Michigan based superbs and established brand names serving pro customers brought strong relationships with home builders, condominium developers, and commercial and residential contractors. I'm pleased to report that we've achieved full-year 2021 revenue of $91 million, driven by acquisitions and our increasing demand. Full-year 2021 pro revenue reached $57 million, representing 63% of total revenue at the year-end and year-over-year growth of 210%, which was largely driven by our acquisitions. Full-year 2021 gross profit reached $32 million, an increase of 59%, year over year driven by increased revenues and partially offset by higher than expected product costs. Full year 2021 gross margin was impacted by acquisition costs and supply chain costs reaching 35%, and we expect it to improve in 2022. Additionally, given the proximity of this call on the calendar to the reporting of our Q1 results, we are also pleased to share that in Q1 2022, we're estimating our 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. At the end of Q1 2022, our cash balance is estimated to be at over $5 million. Strategic Outlook. Let me close by recapping our strategy, which focuses on relocating resources and operations to focus on the pro customer, driving cost and operational synergies from our acquisitions to enhance margins, leveraging our unique leading heavyweight delivery network and continuing to grow our share pro market through end-to-end omnichannel offering as a newly listed public company we're optimistic that we're taking all of the right steps for build direct's future as the real estate and home renovation market looks really strong thank you for your time today on this call as mentioned earlier we're available for one-on-one meetings and if you have follow-up questions after the call please email investorrelations at ir at buildirect.com. I'll now turn the call back over to the operator to close.
spk00: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Have a great day.
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