Release Date: May 30, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- BuildDirect.com Technologies Inc (BDCTF, Financial) reported a gross margin increase to 41.3% in Q1 2025, up from 39.1% in the same quarter last year.
- The company achieved a positive adjusted EBITDA of $650,000 in Q1 2025, reflecting strong operational efficiency.
- BuildDirect.com Technologies Inc (BDCTF) completed the acquisition of key assets from Anchor Yorkshire Flooring, expanding its footprint in the Southeast US.
- The company signed a supply agreement worth up to $200 million with a large North American customer in the sports, entertainment, and recreation sector.
- BuildDirect.com Technologies Inc (BDCTF) successfully transitioned from third-party logistics providers to its own facilities, reducing fulfillment costs and improving customer service.
Negative Points
- Revenue for Q1 2025 decreased to $15.1 million from $15.6 million in the same quarter last year, a decline of 3.2%.
- Sales were negatively impacted by adverse weather conditions in key markets, reducing customer traffic and delaying project timelines.
- The company incurred restructuring costs of approximately $120,000 in Q1 2025, related to severance from headcount reductions.
- Interest expense increased to $349,000 in Q1 2025, primarily due to higher accrued balances on insider loans and new credit facilities.
- Cash from operations decreased by $400,000 year-over-year, mainly due to changes in noncash working capital.
Q & A Highlights
Q: Could you provide more detail on the timeline for the planned new Pro Center openings in key US markets?
A: Shawn Wilson, CEO: We have a couple of potential locations in mind. Ideally, we aim to acquire $15 million to $20 million in revenue this year, with integration in Q4. However, we won't force deals; they must make sense and be structured correctly.
Q: Given your dual strategy of building new Pro Centers organically and acquiring existing firm retails, could you elaborate on why BuildDirect often prefers to acquire established locations?
A: Shawn Wilson, CEO: Acquiring established locations offers faster payback and market entry with an existing team and relationships. This allows us to quickly integrate procurement and marketing synergies, as seen with the Anchor Yorkshire acquisition.
Q: Can you discuss how you plan to integrate the recent acquisition in Florida operationally and commercially, and what synergies do you expect to realize?
A: Shawn Wilson, CEO: The integration of Anchor Yorkshire was swift, and we are now focusing on expanding product offerings. We expect to see improvements in Q3 and Q4, with potential synergies in new segments like medical and hospitality.
Q: How does the recent acquisition fit into your overall regional growth strategy in the Southeast US?
A: Shawn Wilson, CEO: The Southeast is a growing market, and the acquisition provides substantial freight savings and opens up nearby states. It is our first location in Florida, and we plan to expand our Pro Center network in the region.
Q: How is the transition from third-party warehouses to Pro Centers progressing, and what impact has it had on fulfillment costs and customer delivery times?
A: Shawn Wilson, CEO: The transition is complete, and we no longer use third-party logistics. This has significantly reduced fulfillment costs and improved customer service, with lower claim rates and faster shipping.
Q: Can you elaborate on the recent management loans secured by senior leadership and how they align with the company's incentive structure and shareholder interest?
A: Shawn Wilson, CEO: The management team now owns more equity, aligning interests with shareholders. Kerry Biggs, CFO: The company has a loan payable to Lyra and a loan receivable from management, resulting in no incremental leverage for the company.
Q: What are your plans to deepen penetration in the commercial segment, and how does this segment's margin profile compare with your residential business?
A: Kerry Biggs, CFO: We focus on product fulfillment for large projects, which offers excellent margins. The commercial segment is a priority, and we have expertise in direct sourcing from factories to project sites.
Q: Will you be releasing guidance for 2025, and can you speak to seasonality?
A: Shawn Wilson, CEO: We don't provide guidance due to our M&A strategy. Seasonality affects us mainly in Q4 and Q1, with softer performance due to weather and macroeconomic factors, particularly in Michigan.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
