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 BuildDirect's first quarter 2022 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 this call. You can request a meeting or send your questions to investorrelations at ir at builddirect.com. Mr. Rudin, you may begin your conference.

Thank you, and good morning, everyone. Welcome to Bill Direct's call to present the company's first quarter 2022 earnings. 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, 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 filed with the 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 first quarter of 2022. This presentation is also available on our website. I'd now like to pass the call over to David Lazar, interim CEO of BuildDirect. Take it away, David. Thank you, Ethan.

I am planning to report that we achieved Q122 revenue of $24.4 million, almost a 2% increase Q over Q. Pro revenue grew by 15%, reaching $19 million, representing 77% of total revenue at the quarter end. This growth largely came from our acquisitions and our strategy to take pro customer market share. Q1 2022 gross profit reached almost $9 million, an increase of 15% quarter-over-quarter and 18% year-over-year, as demand remained consistent and we continued to execute our pro-focus strategy. As expected, gross margin increased by 430 basis points quarter-over-quarter to 35.8%. As we saw the positive impact flow through from increased product pricing, We achieved positive adjusted EBITDA, which reached $100,000, increasing 102% quarter-over-quarter and 154% year-over-year. We delivered this improvement by strategically reallocating resources to the pro market. As you are aware, we closed the secure debt financing in an aggregated amount of US $3 million in February, and we continue to explore additional debt financing to support our strategy, which we expect to update you on later in 2022. We are continuing to focus on increasing our share of the pro-customer market segment through four key pillars. To recap, they are one, the 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 cost and operational synergies from our acquisitions to expand margins. Three, leveraging our leading heavyweight delivery capabilities to maximize our customer service offering in these networks. Four, expanding our share of pro-market through our omnichannel offering, enabling an end-to-end quoting to installment solution. TAM is poised for disruption. Looking at our addressable market, The U.S. flooring market segment is about $70 billion. There are two relevant facts that make this market very attractive for BuildDirect. One, online penetration is only 4%, one of the lowest across all U.S. retail product categories, growing at 11%, three times the overall flooring growth rate. Two, very fragmented. Traditional big products only has a 24% share, with independent retailers dominating market segment share at 45%. However, they are missing the online channel. These brick and mortar 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 As we announced at the full year 2021 earnings, we're improving our margins and driving adjusted EBITDA in 2022 through key cost adjustments. As demand has continued to increase, product costs have risen sharply in parallel. While we cannot slow rise in product costs, we can use trend insights and work even faster to pass some off to the customer to improve margins. Two, to offset product cost pressure, we're continuing to maximize efficiencies in our cost-based buy, reviewing our product sourcing network to get the best products for the best prices, and leveraging purchasing synergies in our acquisitions to maximize relationships and buying power. Three, we're also 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. The results of these initiatives are now coming through as planned, with one, gross margin increasing by 430 basis points quarter over quarter, and two, adjusted EBITDA growth increasing 102% quarter over quarter, moving bill direct into break even. 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.