Earnings call transcript: BuildDirect Q2 2025 shows growth in revenue

BuildDirect Technologies Inc. reported its financial results for the second quarter of 2025, revealing a modest increase in revenue and a return to profitability. The company’s stock saw a slight uptick in response, with a 1.63% rise, reflecting investor confidence in its strategic initiatives and operational improvements. According to InvestingPro data, BuildDirect’s stock has demonstrated strong momentum with a 16.6% return over the past six months, trading near its 52-week high of $28.33.

Key Takeaways

• BuildDirect’s Q2 2025 revenue rose by 4.2% year-over-year to $16.9 million.
• The company achieved a net income of $138,000, reversing a loss from the previous year.
• E-commerce revenue grew by 12.2%, highlighting the strength of the digital channel.
• Pro Center revenue, which constitutes a significant portion of the business, increased by 2.2%.
• Strategic expansions include new locations and a revamped e-commerce platform.

Company Performance

BuildDirect demonstrated solid performance in Q2 2025, with revenue growth driven by both e-commerce and Pro Center segments. The company’s strategic focus on enhancing its digital platform and expanding its pro network has begun to yield results. Despite a challenging market environment with high interest rates affecting retail flooring sales, BuildDirect’s flexible supply chain and competitive positioning have helped it navigate these challenges effectively. With a market capitalization of $5.54 million and operating with moderate debt levels as noted by InvestingPro, the company maintains financial flexibility for its growth initiatives.

Financial Highlights

• Revenue: $16.9 million, up 4.2% year-over-year
• Adjusted EBITDA: $600,000, compared to $578,000 in the previous year
• Gross Profit: $6.7 million with a margin of 39.9%, up from 38.2%
• Net Income: $138,000, compared to a loss of $517,000 in the previous year
• E-commerce Revenue: $3.66 million, up 12.2% year-over-year
• Pro Center Revenue: $13.2 million, up 2.2% year-over-year

Outlook & Guidance

BuildDirect is focused on pursuing growth through three main strategies: organic e-commerce expansion, bolt-on acquisitions of pro centers, and selective larger division expansions. The company aims to increase its e-commerce run rate by 2-3 times the current level and achieve EBITDA margins above 50% in this segment. A recent private placement of CAD $7 million is expected to support these initiatives. InvestingPro analysis reveals additional insights about BuildDirect’s potential, with over 10 exclusive ProTips available to subscribers, covering everything from market correlation patterns to valuation metrics.

Executive Commentary

CEO Sean Wilson emphasized the company’s growth ambitions, stating, "Our focus is growth. We’ve done the work to set up the platform, and now it’s just time to lean into expansion and momentum." CFO Kerry Biggs highlighted the sustainability of margins through direct import and flexible sourcing strategies.

Risks and Challenges

• High interest rates may continue to pressure the retail flooring market.
• The company’s expansion plans could be challenged by integration risks from acquisitions.
• Supply chain disruptions and tariff changes could impact procurement costs.
• Competition in the digital channel remains intense, requiring continuous innovation.

BuildDirect’s Q2 2025 results reflect a company on the path to growth, leveraging its strategic initiatives to capture market opportunities despite external challenges. The market’s positive reaction underscores investor confidence in its direction and execution. For investors seeking deeper insights, BuildDirect is among the 1,400+ US equities covered by comprehensive Pro Research Reports, available exclusively through InvestingPro, offering detailed analysis of the company’s financial health, which currently maintains a "GOOD" overall rating.

Full transcript - Builddirect.com Tehcnologies Inc (BILD) Q2 2025:

Prit Singh, Moderator, BuildDirect: Hi, everyone. Welcome to Q2 twenty twenty five Financial Results Conference Call. For those who are unfamiliar, BuildDirect trades on the TSXV under the ticker BILD, that’s B I L D and on the OTCQB under the ticker BDCTF. My name is Prit Singh and I’ll be the moderator for today’s call. Before we begin, I would like to note that some of the 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 the company has 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 unless otherwise stated.

On today’s call, we will be covering BuildDirect’s Q2 twenty twenty five financial and operational highlights as well as its growth outlook for the remainder of 2025. Following comments from BuildDirect’s management, the call will be open for questions. Questions can be sent using the Zoom Q and A function at the bottom of your screen. If you are calling in to listen to the webinar today, please email us your questions directly to irbuilddirect dot com. Again, that’s irbuilddirect dot com.

Our presenters today will be the CEO of BuildDirect, Sean Wilson CFO, Kerry Biggs and COO, I O, Jay Allen. I will now turn the conference call over to Sean.

Sean Wilson, CEO, BuildDirect: Thanks, Britt. And for those joining for the first time, welcome. Let me start with the industry picture. The North America retail flooring market is about 90,000,000,000 in size and growing at a steady rate. One of the big shifts is how pro customers are buying.

They’re looking for reliable supply, stronger service and integrated solutions, not just product. That’s where BuildDirect is positioned differently with direct procurement, pro centers and e commerce all working together. Now the broad industry has faced some pressure. Some estimates have industry wide sales down roughly 2% to 5% with higher interest rates and tighter consumer spending weighing on demand. Tariffs add another layer of pressure in markets like Michigan where the economy is heavily tied to auto manufacturing.

We saw those tariffs impact the local macro environment. However, our business held up very well despite the headwinds, and I’ve never been more excited about what we’re building. Companies with the strongest model are positioned to win, and we think that’s BuildDirect. In Q2, we expanded our pro network with a new build in Santa Fe Springs, California and a bolt on acquisition in Orlando, Florida. These strengthen our coverage in two important regions and building a model we’ve proven elsewhere.

The strategy is straightforward: bring inventory close to the customer, provide hands on pro support, and tie it directly to our e commerce engine. That’s what makes each pro center more than a store. It becomes a growth hub. Now let’s shift to e commerce. Our e commerce business has been fully overhauled.

We’ve streamlined the assortment, shifted fulfillment into our pro centers and moved sample distribution to Michigan from Richmond, D. C. To cut tariffs and improve delivery speed. The platform is now leaner, faster and built to scale. With that, I’ll hand over to Jay.

Jay Allen, COO, BuildDirect: Thanks, Sean. Our view is that The U. S. Digital channel represents a massive opportunity for our organic growth. What we see in customer behavior and competitor activity suggest a meaningful headroom for growth.

With a $15,000,000 current run rate, we believe our e commerce business has the cost position and the structure to scale well beyond that using our direct import model and ProCenter integration to deliver more value than distributor dependent competitors. We are intently focused on this channel. I’ll now turn it over to Carey for the detailed financial review.

Kerry Biggs, CFO, BuildDirect: Great. Thanks, Jay. I’m very pleased with the progress we’ve achieved in 2025. So looking at our performance for the quarter ended 06/30/2025, the key highlights are summarized here on Slide eight. Adjusted EBITDA was approximately $600,000 removing the non operating tax credit compared to $578,000 last year, reflecting continued gross margin strength and disciplined cost management.

Revenue was approximately 16,900,000.0 up 4.2% compared to $16,200,000 the prior quarter 2024 last year. Gross profit was $6,700,000 with a 39.9% margin compared to $6,200,000 and a 38.2% margin last year, an increase of $500,000 in gross profit. Operating expenses were $6,900,000 up $500,000 year over year, primarily due to the opening of our new Orlando Pro Center. Excluding this new Pro Center, expenses were essentially flat with the same period last year. And again, EBITDA was approximately $1,470,000 This is including the cash tax rebate compared to $573,000 last year.

And again, this increase is attributed to that $1,200,000 employee retention tax credit as well as the gross margin strength that we noted earlier. Net income overall was $138,000 compared to a loss of $517,000 in 2024. And working capital was very strong at 06/30/2025, up $700,000 from the prior year. So just moving to the next slide. As I noted, our consolidated revenue in 2025 was $16,900,000 up $700,000 or 4.2% versus 2024.

If we just look at this by segment, e commerce revenue for Q2 twenty twenty five was $3,660,000 compared to 3,260,000.00 the same period last year. So an increase of 12.2% for our e commerce segment. Gross profit was $1,820,000 with a margin of 50%, slightly lower than the 52.4% margin last year due to sales mix, driven by slightly less non core inventory sales. On the ProCentre side, the bricks and mortar revenue was $13,200,000 for 2025, up from $12,900,000 in 2024. So an increase of 2.2% year over year.

Gross profit in this segment grew to $4,900,000 with a margin expanding to 37.1% compared to 34.6% last year, supported by incremental sales from our new Orlando Pro Center and favorable inventory mix that we sold. So together, as I noted, they resulted in a consolidated gross profit of 6,700,000.0 up 8.7% year over year and a margin improvement of 170 basis points to 39.9%. On the OpEx side, operating expenses were $6,900,000 for 2025, up from $6,400,000 in ’4, again, largely driven by the new expenses from Orlando Pro Center. Excluding these expenses, operating expenses were generally flat year over year, so a good sign. On the fulfillment side, fulfillment costs decreased 10.2% to $905,000 in ’5, thanks to lower in house fulfillment costs.

Selling and marketing expenses rose modestly by 5.9% to $1,500,000 Admin costs increased to $3,800,000 in ’5 from $3,300,000 in the same period prior year. And that’s where we saw the incremental expenses of our new Orlando operation. Excluding those new expenses from Orlando, overall costs were fairly flat year over year. Depreciation and amortization was 741,000 up slightly from last year’s $700,000 So overall, our operating expense ratio in Q2 twenty five saw a slight increase year over year, again showing our strong commitment to cost management. Just moving down on the other income side, I’ll go through a couple of the key items here.

Interest expense rose to $407,000 versus $322,000 the prior year. Again, majority of that is non cash related to the insider notes and the larger accrued balances. We recorded a non cash warrant fair value loss of $116,000 compared to a gain of $24,000 the same period prior year. Again, included in here, we received a $1,200,000 cash from the U. S.

IRS under a prior employee retention tax credit program and restructuring costs were $37,000 in e commerce related to severance and headcount reduction. Finally, we had a noncash foreign exchange loss of $126,000 compared to a small gain the prior year of $42,000 So overall adjusted EBITDA was around $600,000 again slightly above last year’s $578,000 So moving on to Slide 10 on the balance sheet, very pleased with the state of our balance sheet and our working capital position. At 06/30/2025, current assets totaled $19,500,000 Overall current liabilities were $15,900,000 so resulting in a current ratio of 1.2 times and working capital of approximately $3,600,000 at June 2025 quarter end compared to 2,700,000 at December 31, ’twenty four and then $2,900,000 at Q2 ’twenty four the same period prior year. Overall, our cash balance was $4,100,000 at June 30, up $1,700,000 from both the prior quarter and the year end ’twenty four. So we’re in a great place as we speak.

Moving on to Slide 11, I’ll quickly walk you through the cash flow summary. So on the operating activity side, changes in non cash working capital, we had cash provided of $529,000 for 2025 compared to $89,000 the prior year, same quarter Q2 ’twenty four, an improvement of over $440,000 reflecting stronger operating income, partially offset by larger working capital changes with our inventory build that occurred in Q2. Investing activities used $33,000 compared to cash provided of $53,000 last year, reflecting modest equipment purchases offset by a small asset sale in 2025. Finally, financing activities provided $84,000 of cash compared to a small outflow the prior year of $36,000 last year. Overall, this included net advances on our revolving credit facility to fund working capital, insider borrowing offset by a loan receivable, scheduled lease payments, prom note payments as well as interest payments on our line of credit.

Overall, ended Q2 with a stronger cash position, improved operating cash flow. With that, I will turn the call back over to Sean.

Sean Wilson, CEO, BuildDirect: Okay, great. Thanks, Carey. On August 1, we closed a non brokered private placement of approximately CAD 7,000,000. This financing involved the issuance of just over 6,000,000 common shares at a price of $1.15 per share. The financing was led by Sun Mountain Partners and IFCM MicroCap.

In addition, our three largest shareholders and several insiders, including myself, also participated in the financing. This capital further strengthens our balance sheet and positions us to execute on our growth strategy. On that note, Jay will update us on our most recent acquisition.

Jay Allen, COO, BuildDirect: Thanks. Earlier this year, we acquired a $6,000,000 revenue business in Orlando with a strong niche in institutional flooring. Since then, we’ve moved the operation into a better facility at minimal cost, migrated all of their systems onto our ERP, and consolidated our Georgia 3PL e commerce fulfillment into that location. We’ve also launched a retailer program in the Orlando market, and the next step is rolling program, which will further leverage our shared inventory.

Sean Wilson, CEO, BuildDirect: It’s a great example of what we mean by a bolt on acquisition, one that not only expands our footprint in a high growth region, but also in the institutional segment and also enhances efficiency across multiple channels.

Jay Allen, COO, BuildDirect: So looking ahead, our growth plan runs on three tracks. Organic growth will come from scaling e commerce. We’re targeting two to three times its current run rate, expanding the commercial spec and quote pipeline, and launching a pro marketing funnel focused on value added services. While the exact size of online flooring isn’t formally reported, we view it as a significant growing channel where we have a strong advantage.

Sean Wilson, CEO, BuildDirect: Yeah, thanks Jay. Track two is our bolt on acquisition program. We buy smaller pro focus locations and convert them into build direct pro centers. And then track three is larger division expansions. These are selective opportunities that add capabilities like new categories, contractor networks and create clear synergies.

These three tracks give us flexibility, different paths to grow while keeping capital efficiency at the forefront. With that, I’ll turn the call back over to Prit to begin the Q and A session.

Prit Singh, Moderator, BuildDirect: Thanks, Sean. Thanks, Carrie. Thanks, Jay. Thank you, everyone. We will now begin the Q and A session.

As a reminder to our audience here, you can submit your questions using the Zoom Q and A function at the bottom of your screen. If you’re listening into the call today, please email us your questions directly to irbuilddirect dot com. Again, that is irbuilddirect dot com. First question, your gross margins expanded to nearly 40% this quarter. Can you discuss the sustainability of this margin profile and whether you see additional levers to further expand margins going forward?

Sean Wilson, CEO, BuildDirect: Yes, it’s a great question. So we’re in a pretty unique position. We have our direct import and that really complements what we also buy from like space side distribution to balance out the working capital requirement for our inventory. So like when things like the tariffs happen, the noise and all the different changes, having both lines of sight was really important. You can leverage existing inventory, it’s already here as well as have clarity on like the actual practical implication of what those tariffs are, whereas others who don’t have those two lines are really held captive, right.

So for example, we source from multiple countries and the ability to have that flexibility, I mean, who would have known, right, like it was kind of a surprise for lot of companies, but that really helped us protect it. And then with that, so for us, we track our penetration of what we sell to our network from direct import versus other distribution. It’s a key metric that we watch and keep working towards increasing. So I would say on the margin front, there definitely is room for further expansion. And then for us, ensuring that we have multiple supply chains and really make sure we’re focusing the pro segment, which is a very profitable segment, relatively speaking, is how we continue to win there on the gross margin side and how we continue to intend on increasing it.

Prit Singh, Moderator, BuildDirect: Okay, fantastic. With Pro Centers now accounting for approximately 80% of your overall revenue, How do you continue to balance e commerce investment with accelerating pro center expansion?

Sean Wilson, CEO, BuildDirect: Hey Jay, you can take that one.

Jay Allen, COO, BuildDirect: Yeah, I’ll jump in here. Well, I think on the e commerce side, we’ve already made the big investments in systems and processes and kind of the hard decisions to give us a good platform to grow from, and I think we feel great about the growth there. Further expansion just requires us to invest in some marketing spend and inventory, which also benefit the Pro Center side. So I think overall, I would say we’re in a good place to grow both e commerce and the pro centers without having to make without having to starve one channel or another to do it.

Sean Wilson, CEO, BuildDirect: Very good.

Prit Singh, Moderator, BuildDirect: Perfect. Thank you. Can you provide some color on the current M and A pipeline?

Sean Wilson, CEO, BuildDirect: Yes. So on the pipeline, I would say going back to our three tracks. So Jay touched on the biggest one for our organic side. The especially on track to the industry is very dense on targets. And so a lot of that is also just like with the tariff, the noise, the up and down, so on and so forth.

You have a lot of smaller distributors or pro focus locations who are having trouble kind of working through like what that means. Often it’s because their supply chain is tied to like a distributor who might have been adversely impact or maybe has taken advantage of the noise on pricing. And so we’re finding a pretty significant amount of inbound on that track. I won’t get into too much detail the call, but like for us, even we have a pretty good marketing program that’s running to help bring those to light. On track to the larger acquisitions, right, so there’s a lot of companies who are in the flooring business that have adjacent categories, for example, countertops, cabinets, so on and so forth, relatively kind of relatively common.

And so I’d say on those, we’re being a bit more selective, making sure they make more sense because intuitively those have been more on the goodwill side versus Track two is really just here the assets with some reasonable expectations on earn outs potentially. But I would say for us, the pipeline of targets is not a limiting factor for us. It’s pretty healthy on both those fronts.

Prit Singh, Moderator, BuildDirect: Okay. Thank you. Just next question here. How much of your revenue growth this quarter was a result of new acquisitions and Pro Centers coming online? Did you also see same store sales growth across existing Pro Center locations?

Sean Wilson, CEO, BuildDirect: Yes, I’ll actually take that one and then Jay can add to it or Carrie can add to it. So in Q2, the structure for when we did the Orlando acquisition was effectively neutral, ARAAP neutral. And there’s a buildup period for institutional flooring. So that what I’m trying to say there is the short answer is no. The on the revenue side, Q2 is not really where that started showing up.

Anything you’d like to add to that?

Kerry Biggs, CFO, BuildDirect: Yes. I think I’d just echo that, Sean. So generally speaking, we’re going to see the run rate of Orlando, you know, moving forward, you know, kind of starting now as we speak, right. So the majority of the revenue in Q2 was, you know, kind of current operations, a little bit of it was Orlando as it ramped up. Happy to kind of get into the specific numbers offline through Prit.

But yes, the majority of our current Q2 revenue was kind of current operations with a small portion of Orlando.

Sean Wilson, CEO, BuildDirect: Yes, which is why we really believe we the model held up well for two reasons. I’d say, first and foremost, majority of our current revenue outside of e commerce is concentrated in Michigan. And Michigan, the macro environment got hit pretty hard, right, with all the noise of all the states you can have a lot of volume in. And then for us to stand up well and our dislocations to do very well in that environment was really encouraging. Also, I think a testament to the team and as well the model that we’re running in addition to that.

So it’s interesting to see. So if you look at the overall industry with estimates, kind of what we’ve said earlier, potentially down 2% to 5%, that’s going be a lot sharper. And some of those areas are heavily impacted. And for us to stand up where we did was pretty exciting.

Prit Singh, Moderator, BuildDirect: Great. It’s a two part question. It sounds like you would like to double e commerce business over the next few years. When do you think we’ll start to see higher growth rates, this year or next year? And what type of EBITDA margins do you target for e commerce?

Sean Wilson, CEO, BuildDirect: Yes, AJ, do you want to take that one to start off and I can fill in?

Jay Allen, COO, BuildDirect: Sure. On the e commerce side, we’re targeting higher growth rates really starting now in the fourth quarter of this year and we are investing in order to grow that business now and then into 2026. And then on the e commerce side, we target EBITDA margins, I mean, we target product margin above 50%.

Sean Wilson, CEO, BuildDirect: Yes. And then from there, that product margin bleeds down a little bit with the fulfillment costs. But I would say, I think like maybe like the root question there is, hey, if you double e commerce, like, what does that do to your financials? So I’d say if you look at like the contribution margin, you know, take, you know, 25% somewhere in there, that’s like a pretty good, you know, number. That business model is highly leveraged highly leverageable.

So for example, if you were to pick up another $10,000,000 in sales, a whole lot of that flows down the bottom line.

Prit Singh, Moderator, BuildDirect: Perfect, thank you. Should we expect you to pursue additional equity raises moving forward or will future growth be funded through your debt facility and operating cash flow?

Sean Wilson, CEO, BuildDirect: Yes. So that one, have few thoughts and Carrie, free to fill in. Like look, we’ve said this before, and I think we’ve probably find more so than others like we treat equity as one of those viable assets, of course, we have. And so for us, we’re primarily interested in growth and doing it in a way that’s most far on track one. Track two, you have deals that are you can they’re mostly inventory, AR, things like that.

So we tend to prefer those types of growth strategies that you can intuitively use debt for. And then when it comes comes to to things like way outside of that, like potentially, could look at the need to use equity. But I think like frugality there on the equity side is a good characteristic of how we think about our team and our bias on how we structure deals. So Carey, any thoughts you want to have on that in addition to it?

Kerry Biggs, CFO, BuildDirect: Yes. No, I think echo what you just said, right? So we have a lot of dry powder right now on the equity side. Our debt facility as well provides a significant liquidity and capacity. So in the near term, even the medium term, we have absolutely no thoughts on new equity, right?

So we have lots of runway here to use what we have, and we’re very excited. So yes, no immediate needs for new equity.

Sean Wilson, CEO, BuildDirect: Yes.

Prit Singh, Moderator, BuildDirect: Okay, great. For our viewers again, if you have any other questions, please do submit them to the Q and A function at the bottom of your screen. Alternatively, you can email us at irbuilddirect dot com, that’s irbuilddirect dot com. Okay. I guess there’s no further questions.

Thank you to our attendees. Thank you, Sean, Carrie and Jay today. That is it for the Q and A function today. Before we end the conference call, Sean, do you have any closing comments you would like to share with our audience?

Sean Wilson, CEO, BuildDirect: Yes. I want to say thank you. We really appreciate folks coming along with us on the journey. It’s been a lot of fun really for the rest of the 2025. Our focus is growth.

We’ve done the work to set up the platform, and now it’s just time to lean into expansion and momentum. I just want to say thanks for your time. And as always, we’re happy to share more feedback or answer questions offline as well. So thanks for tuning in and we appreciate you all very much.

Prit Singh, Moderator, BuildDirect: Thank you. And for our viewers again, BILD trades on the TSXV under the ticker BILD, B I L D and on the OTCQB under the ticker BDCTF. For those that couldn’t attend, the recording of today’s earnings call will be uploaded onto BuildDirect’s Investor Relations website. If you have any additional questions that were not addressed during the call, please do send them in to irbuilddirect dot com. I would like to thank everyone for joining us today.

Have a good day. Thanks, Alf.

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