BuildDirect.com Technologies Inc. Q2 2023 Shareholder Letter

Dear Shareholders, Employees, and Customers,

It’s been a busy summer. The BuildDirect team has been focused on completing a variety of operational projects that are intended to improve profitability and scalability and enable future growth. However, before I review the specifics of the last quarter, I’d like to revisit BuildDirect’s Go-To-Market strategy for those new to our story.

BuildDirect has two organizational components – the corporate team and its operating divisions. The corporate team handles finance, legal, audit and overarching strategy, while our operating divisions consist of independently operating businesses that each have their own growth and profitability plans. Meaningful synergies exist across the businesses (as they are all based in the flooring industry), and the teams work together to take advantage of synergies as part of their day-to-day operations.

Since coming into the organization, a year prior to this upcoming September, we’ve worked to significantly reduce the size of the corporate team and ensure resources were situated in each of our operating divisions. To date, we’ve substantially lowered operating expenses without hampering our ability to support our businesses and reducing unnecessary redundancies and layers.

Next, I’d like to review each of our operating divisions:

First, our E-Commerce platform is where we provide flooring materials to professional customers. As previously announced, this legacy division has faced some challenges with tech, marketing, and third-party warehousing costs. Over the past several months, we have made significant progress addressing each of these areas – and are expected to reach profitability for this division. We believe there is considerable sales and profitability upside for our E-Commerce platform including providing ARR-generating services to our existing and new customers.

Second, our Brick & Mortar operations provide flooring materials in local markets to a mix of professional customers. This division is comprised of acquired wholly owned subsidiaries. We believe there is tremendous potential upside with this division, especially leveraging synergies with our E-Commerce platform.

Collectively, BuildDirect’s operating divisions have benefited from synergies including:

• Product & Service Sourcing
• Shared Warehousing and Fulfillment
• Freight Consolidation
• E-Commerce & Marketing Services

In addition to the growth plans for our existing operating divisions, we are evaluating businesses that can be added to our corporate platform to provide incremental value to the organization as a whole. We’re mainly interested in flooring companies that have long-term local relationships with professional customers and provide materials only to their customers. We have a sharp management and board team that is creative and frugal with equity – whichever path we take, our focus is to drive value to our shareholders.

Lastly, I’d like to address why our sales have softened in 2023 vs. 2022. Concisely stated, we worked to eliminate the unprofitable segments of our sales – which were mostly on the BuildDirect.com E-Commerce side. Our intent is to eliminate unprofitable business and build back a profitable business. It’s just as simple as that.

To Recap:

1. The BuildDirect.com legacy division is targeted to be profitable on its own, which required reducing/eliminating unprofitable sales.
2. The corporate platform costs have been cut to save money going forward and simplify reporting.
3. Synergies and growth opportunities will continue to be pursued between the BuildDirect e-commerce division and the B&M units.

In closing, I’d like to thank our stakeholders for their commitment and partnership with the organization. The substantial turnaround of this company took a village and I’m thrilled that we’re repositioning for profitable growth. 

Sincerely,
Shawn Wilson
CEO of BuildDirect.com Technologies Inc.

About BuildDirect

BuildDirect (TSXV: BILD “BuildDirect” or the “Company”) 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.

Source: BuildDirect.com Technologies Inc.