This meeting is being recorded. Hi, everyone. We'll begin momentarily. We're just waiting for a few more attendees to arrive. Okay, let's get started. Hello, everyone. Welcome to BuildDirect's Q2 fiscal 2023 earnings conference call. For those that are unfamiliar, BuildDirect trades on the TSXV under the ticker Build, B-I-L-D. My name is Prit Singh, and I will 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, 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 forward-looking statements and information. 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. Please note that all dollar amounts mentioned in the presentation today are in US dollars. On today's call, we will be covering BuildDirect's Q2 fiscal 2023 financial and operational highlights, as well as its growth outlook for the remainder of 2023. Following BuildDirect management's comments, the call will be open for questions. Questions can be sent using the Zoom Q&A function at the bottom of your screen. Alternatively, if you are calling in to listen to this webinar today, please email your questions directly to ir@builddirect.com. Again, that is ir@builddirect.com. Our presenters today will be the CEO of BuildDirect, Shawn Wilson, and CFO of BuildDirect, Matthew Alexander. I will now turn the conference call over to Shawn Wilson, CEO of BuildDirect. Thank you, Prit. For first-time viewers, BuildDirect operates e-commerce and brick-and-mortar stores that provide flooring products and services to home improvement professionals. Our aim is simple, to become a leading provider of flooring to the Pro Customer in North America. Here's a quick glance at our financial highlights for Q2 fiscal 2023, which will be covered in greater detail by Matt during today's call. For the three months ending June 30th, 2023, we generated $19.1 million in total revenue, while producing a gross margin of roughly 39.7%. Lastly, we generated a total Adjusted EBITDA of roughly $1.06 million. We have now achieved our second consecutive quarter of Adjusted EBITDA results in excess of $1 million in 2023, which highlights our ongoing efforts to improve our profitability while driving growth across our e-commerce platform and brick-and-mortar operations. I'll now turn the call over to Matt, who will discuss our second quarter financial results in greater detail. Thank you, Shawn. I'll now speak to the key financial highlights for the three months ended June 30, 2023. Total revenue was $19.1 million for the second quarter. As expected, this was a decrease of $4.9 million or 20.6% year-over-year. However, total revenue increased sequentially quarter-over-quarter by $1.3 million or 7.1%. The drop in year-over-year revenue is due to the shift in strategy. Historically, BuildDirect's e-commerce business had produced negative EBITDA, which was offset by strong positive EBITDA from its independent or brick-and-mortar businesses. In Q2 2023, BuildDirect scaled back its e-commerce business and began implementing efficiency initiatives to improve the profitability of the e-commerce model. The increase in revenue quarter-over-quarter is due to the increase in demand from our independent retailers or brick-and-mortar businesses, and the reduction in deferred revenue from our e-commerce business, as less product was in transit at the end of Q2 compared to Q1 2023. At this point, BuildDirect believes it's close to completing its efficiency initiatives and will soon be ready to grow its e-commerce business more aggressively. Looking to the right-hand graph, I'm happy to report that our continued focus on the Pro Customer segment can be seen in our Pro revenue results, which reached $17.4 million in Q2 2023. Pro revenue, as a percentage of the company's total revenue in the second quarter, increased by 2.5% sequentially quarter-over-quarter, and now represents 88.8% of our total revenue in Q2 2023. Moving down the PNL, our gross margin percentage in Q2 was 39.7%, an increase of 470 basis points year-over-year and 50 basis points sequentially quarter-over-quarter. Both the year-over-year and quarter-over-quarter changes are driven by, firstly, improvement to the BuildDirect's e-commerce product margin, with a shift in pricing strategy from everyday low pricing to a high-low pricing strategy. Secondly, improvements in our independent retailer product margin as we source more product directly through BuildDirect's direct to manufacturing procurement model. And lastly, we're seeing benefits from the reduction in the inbound freight costs.... Moving to the expenses. In prior calls, we have discussed scaling back the expenses in our e-commerce business, which started at the end of Q2, 2022. The results can be seen in our Q2 2023 results, as expenses for the three months ended decreased by $1.3 million, or 14.6% compared to the same period in 2022. As noted in prior calls, the cost reductions at the end of Q2 2022 have allowed the company to recognize over $2 million in annualized operating expense savings, primarily focused within the BuildDirect e-commerce business. One second here. As noted, I'm pleased to report we've achieved total adjusted EBITDA of $1.06 million for the three months ended June 30, 2023, an increase of $445,000 year-over-year, and $22,000 sequentially quarter-over-quarter. This is our sixth consecutive quarter of positive adjusted EBITDA results, and is the second quarter of a positive adjusted EBITDA results in excess of $1 million. I'm happy to report this is our highest Adjusted EBITDA since becoming a public company. Moving over to the balance sheet. As of June 30, 2023, our current assets primarily consisted of cash, cash equivalents, receivables, and inventory, totaling approximately $17 million. Our current liabilities primarily consisted of accounts payables, accrued liabilities, and loans payables, promissory notes, and deferred considerations totaling $21.6 million. A couple other notes on the balance sheet. Our inventory continues to decrease as at June 30, 2023, it was a total of $6.5 million, a decrease of $200,000 compared to December 31, 2022. For our financing activities in the quarter, we have paid down the following principal payments. Paid down $311,000 of promissory notes, $189,000 of loans payable. In addition to these principal debt payments, we have made approximately $261,000 in interest payments during the quarter. Due to the financing outflows, the company has a cash balance of $3.8 million as at June thirtieth, 2023, as compared to $4.1 million as at December thirty-first, 2022. Overall, I'm happy to see another quarter of positive Adjusted EBITDA. With predictable profitability, we'll be turning our attention to refinancing outstanding debt and improving interest rates. Now I'll turn the call back over to Shawn, who will go over the operational highlights for the company. Thanks, Matt. As a reminder, BuildDirect is currently focused on the U.S. flooring industry, which is worth roughly $70 billion and consists of mainly independent retailers. It's a fragmented market with only a limited number of large competitors. Therefore, we believe there is significant market opportunity for us to capture, given our omni-channel strategy, which includes both e-commerce and brick-and-mortar. BuildDirect completed in-sourcing warehouse and operations for our Midwest and Northeast business, improving both service, inventory positioning, and substantially reducing costs. The team has made substantial progress in reducing the company's cost-heavy technology stack and updating its systems and website to better serve its pro-focused business needs. In addition, the team is piloting initial value-added e-commerce services with select customers. Long-term, BuildDirect intends to expand its platform to offer value-add services to its pro customer base, which could represent opportunities for the company to generate annual recurring revenues. Regarding growth, the team is in a strong position. We have completed most of the operational overhaul projects and have made substantial improvements across the board. The company has a clear focus to become a leading provider of flooring products and services to Pro Customer in North America, leveraging our omni-channel approach. We understand who the Pro Customer is and how to better serve them in a way that's uniquely different from our small and large competitors. With a total addressable market of $70 billion, we have substantial opportunity to seize, however, we're going about it the right way. We're doing that by pursuing organic growth opportunities. Second, targeting potential M&A opportunities, including Canadian as well as U.S. companies. And lastly, maintaining a disciplined approach to capital allocation all around. I'll now turn the call over to Prit, who will moderate the Q&A session. Thanks, Shawn. Thanks, Matt. For our viewers today, if you are calling in, you can email us at ir@builddirect.com if you have any questions. Alternatively, if you're here on Zoom, you can submit your questions to the Q&A function at the bottom of the Zoom screen. First question: I really like this company as I think it is undervalued. Can you give us a breakdown of where your operations are based? I know the U.S. is the hotspot, but are there plans to expand into Canada? Sure. I'll handle that one, Matt. So our operations for e-commerce business, which primarily sells into the U.S., are based out of Vancouver, British Columbia. We have remainder of our teams located in the States. In regards to sales, you know, the vast majority, you know, over 95% today are coming from the United States. However, as mentioned previously, we are looking at opportunities in Canada as well. Part of that is gonna be enabled by our e-commerce platform changes, as well as looking for the right types of fit in businesses to layer in, in both Canada and also the U.S. Okay, great. Next question. You did touch on this a bit, but can you tell us what your plans are on paying off the debt obligations? Based on what I have read, there's only one small portion of debt that is a concern. The rest is vendor take-back loans and insider friendly. Matt, I think this is a question for yourself. Yeah, I can jump in here. So yeah, I think now that we've produced again the sixth consecutive quarter of positive Adjusted EBITDA, I feel like we're in a good position to refinance the debt that's of concern. So we're looking to do that throughout the remainder of this quarter. So hope to have some more news on that shortly, but we're looking, we're comfortable that we'll be able to deal with that debt before it becomes due at the end of this year. Good. Thank you. It looks like you may not have enough cash on hand. How will you be able to do future M&A with today's high interest rates? Matt, do you want to handle that one, or should I handle that? Yeah, I think... I mean, I can start off. I think a lot of our acquisition strategy looks at distributing cash payments. We're not making the payments upfront, so we use a series of vendor take-back loans and deferred consideration. So I think that's a major component to the strategy, is that we're not needing 100% of the acquisition or the cash upfront to make these acquisitions, and that we can spread the cash payments and use the earnings from the businesses that we're looking to acquire. So I think that's how I'd answer that. Shawn, you might have something to add there too. Yeah. So what I'd add there is we have a, you know, in an industry that's highly fragmented, we have a unique level of expertise in operating. And so in structures where they are more like vendor take-back in nature, a key requisite of that is having operational discipline and expertise in the space to be able to work those deals. In environments like that, candidly, the rates don't. It's not nearly as much of an issue or a concern because there's a broader issue and considerations for those, you know, for those plays. So when I think about M&A and we're saying that we're going about expanding the business in the right way, that's what I'm referring to. Not being reckless, but rather increasing shareholder value through the right types of deals. And then also would add, as we've demonstrated in the past, when you pull in our operational synergies from what we have today on both the import, logistics, e-commerce, and existing brick-and-mortar, we layer in substantial opportunities, very, very quickly. And we demonstrated that now a couple of times. So, that's how I'd address that, just to augment, Matt, what you said. Okay, perfect. Thank you. As a reminder to our viewers, if you do have any questions, you can submit them to the Zoom function, Zoom Q&A function at the bottom of your screen. Alternatively, if you're calling in today, you can email us at ir@builddirect.com. Next question: As the business finishes up on enhancing the e-commerce business, what level do you expect gross margins to reach past completion? You know, it arguably over 40% is probably a good, kind of good estimate. But there definitely is a substantial upside on the gross margin side. Okay, great. And just as a quick follow-up to that, following the completion of streamlining the e-commerce operations, how do you expect the split in revenues between independent retailers and BuildDirect.com to look? Yeah. So, you know, short term, probably a 70/30 split. That's probably, you know, the best, the best guess I would give. You know, long term, it's interesting. Our e-commerce platform, the regearing, restructuring we've done, has effectively been able so to enable growth that doesn't require, candidly, much investment as it scales, the scales up. That's always the-- that's always the goal. So our e-commerce platform is based off marketing strategies, you know, continuing to staff up, sales teams, you know, flowing product through, could very easily reach north of $100 million in of its, of itself. And so our intent has been to initially pull back that business, regear it, enable it to be able to be then scaled up without requiring much, much more from there. So, as far as some kind of future number there, we're not providing that, that guidance intuitively, 'cause that, that business, there's really no constraints, once the remaining, system and new platform, projects are complete. Pretty excited about that one. That one is, definitely, you know, our legacy business, kind of where the company started and getting that business, you know, really operating well and humming is gonna be, gonna be quite exciting. Thank you. Do you plan to continue cost reductions in future quarters? On a yearly basis, what percentage of sales do you expect the larger expense items such as administration, sales, and marketing to be? Yeah. So, Matt, maybe I'll touch on a couple of these, and you can, you can touch as well. So look, you know, we, we have a discipline that we've put in place as a company to, to really always look for ways to, to optimize the business. You know, having a culture that's, you know, very much focused on, lean operations, intelligent capital allocations, expense management, things like that, so that we can invest in the right, in the right places. You know, we do expect, you know, R&D administration as a% of revenue to decrease, especially as we complete our ERP integration. And, you know, really from there, just, you know, continue on, down the train, addressing some remaining, you know, third-party logistics operations. And, you know, for the most part, you know, sales and marketing spends as a percent of revenue should stay, you know, pretty, pretty consistent as that, as that business scales up. But, yeah, I would mention that, you know, the team is, you know, definitely very much geared towards looking at ways of being very efficient really in all, all that we do. And so, you know, as you're working through projects, there's always, you know, opportunity that kinds of, that pop up, and if they're meaningful, we take advantage of them kind of on the spot. Matt, anything to add to that? Yeah, I think maybe just an easy way to look at this as well is we're looking to have double-digit EBITDA percentages. So we're looking to pull and optimize on the R&D and administration side and get ourselves in a position where we're posting north of 10% EBITDA margins from a revenue perspective. So I think that's probably an easy way to kind of just gauge how the profit should grow as the revenue moves up. Okay, thank you. So if you have any questions... let's see, a few questions here. Apologies. Can you explain the strategy for growing your e-commerce businesses profitably? What tactics will be used that were not used previously? So, it's a pretty big, it's a pretty big question, so I'm gonna kind of break it up into components. So, you know, first and foremost, having a tech stack that scales well is, you know, really what's at the root of all the technology, ERP, other projects that we've been working through. So when you think about efficiently being able to, you know, operate an e-commerce store, you have, of course, the front side part of that. You also have the back-end logistics, shipping, and things like that. And so if you look at that model, kind of historically, it was based on a lot of, like, custom tech and very heavy tech. And, you know, a lot of innovation has happened in that space, you know, really, really since then. So, you know, first and foremost, we've absolutely shifted to, you know, leveraging, you know, tools, platforms out there that really fit our, e-commerce needs, and that's a very big change from the past. The second I'd mention when it comes to pricing strategy, so flooring is, it's not an everyday, purchase, right? Like, you don't, you know, buy your allotment of flooring each and every day, each and every week. It's an inspirational or sometimes aspirational purchase that consumers are making. I believe that the team, including myself, is uniquely positioned to understand, based on our past experience, what the category is all about, and how to, leverage pricing strategies, to really optimize, A, the shopping experience and also return, you know, great, great margins. Whereas in the past, you know, mentality in a lot of businesses like, or, you know, based on e-commerce is more of an EDLP, every day low price, type of mentality, which doesn't really meet, you know, like, meet the, the way the products are bought. So I'd probably start off with that. On the fulfillment logistics side, so historically, the company's leveraged third-party logistics providers, which, I won't get into the detail on the call, but, you got to be careful on how those, how those scale. And so, you know, recently, we, as I mentioned before, we, have insourced operations for the Midwest and Northeast, which was, you know, a substantial part of our U.S., sales. And what that means is we don't use a 3PL for those areas. We provide those services ourselves. Then also, of course, intuitively have inventory in our control, customer service, you know, order fulfillment, quality has intuitively also improved. You know, we have opportunities locally to sell that product as well. And so when you think about how we're viewing even the logistics part of it, we're also, you know, building something to last. So we take those components and kind of pull them together, and that's really a major difference for how BuildDirect's e-commerce business goes to market. And that's also what's been showing up in our financials. The improvements we've had, you know, really over the last several quarters has been kind of a result of that. We, you know, as far as, you know, working through those projects, as we mentioned, we're, you know, relatively close to wrapping this up, and we'll be sure to PR any updates there as they come out. Thank you. For our attendees, if you do have any other questions, please do submit them to the Q&A function at the bottom of your screen. Should you be calling in today, please email us at ir@builddirect.com. That's ir@builddirect.com. Now that earnings are released, is the blackout period over for insiders? Matt, you want to grab that one? Yeah. Our trading policy is that we've got. I believe it's two full days after earnings release. I might need to confirm with our legal counsel on that, but my understanding, it's two days after the earnings release that the blackout is clear for insiders and employees. Okay, great. So just as a follow-up to an earlier question, now that the efficiencies initiatives are complete, and this was such a large focus over the past year, are you planning on providing a longer-term strategy moving forward to 2025, 2026? Yeah, so I would say, you know, if you think about growth. You know, our e-commerce and brick-and-mortar operations, you know, really in themselves have organic growth plans to increase both revenue and profitability without much additional investment. In addition, we're reviewing potential opportunities to expand through acquisition, through M&A versus organic, you know, really where the conditions make the most sense. So when you think about, you know, our business, each of our e-commerce and also brick-and-mortar into the ways and grow, you can have our e-commerce business scale up, you know, post all the, you know, the system and tech stack improvements. And then on the brick-and-mortar side, you know, that can grow through a combination of, you know, hey, look, converting our 3 field locations into more of a store warehouse kind of format, servicing e-commerce. We're also selling locally. That's, you know, one example of how that business can grow organically. You know, also, as I mentioned, where it makes sense, picking up businesses that have strong local pro relationships, where we can add significant kind of synergies. Regarding modeling, so, that's the best way to think about us. Me, personally, my focus is on, you know, really, you know, maximizing shareholder value, making sure we run lean operations and produce, you know, create EBITDA, as Matt mentioned, getting into the double digits. That's how, you know, candidly, we think about things here, which is, you know, perhaps a departure from other companies and or even maybe ourselves in the past, looking to march to a beat and model things, you know, further out. So I'm very opportunistic in nature. Look for effectively to keep the company in great shape, healthy, at any point, able to just go run when the opportunity presents itself. And so that's the best way you could think about, think about us, kind of moving forward on the growth side. Okay, thank you. Do you have any financial institutions that cover BuildDirect? I think the question is referencing analyst coverage. No, we don't, we don't have any analyst coverage at this point. Okay. Just a reminder to our attendees, if you do have any additional questions, please do submit them to the Q&A function at the bottom of your screen. Alternatively, you can call us—sorry, email us directly at ir@builddirect.com. That's ir@builddirect.com. Okay, so last question: What are some catalysts investors can expect in the next 6-12 months? This is both for Shawn and Matt. Matt, why don't you take that? Yeah, I'll start off. I, yeah, reiterate what I've been saying throughout the call here today, but with predictable EBITDA, we'll be turning our attention to options to refinance that outstanding loans payable. So we're really looking to extend those terms and improve our cost of capital. I think with that, those short-term liabilities moving into a long-term position and showing a clear path to being able to pay those off, I think that's gonna improve our balance sheet and really help improve our focus on those growth strategies going forward. So I think, yeah, that's really the number one catalyst in my mind. Nothing to add. Go ahead. Sorry, Shawn. No, nothing to add. Yeah, that's good at this point. Okay, well- Yeah, quick, quick note there. Yeah, it's two full trading days after, after earnings release that the blackout comes off on the insiders. So just wanted... I've got confirmation on that, that question. Okay, and that was in reference to a question on whether, when, insiders were out of blackout, so thanks for that, Matt. Yeah. Okay. Well, if there's no further questions, that is all for the Q&A session today. I would like to thank everyone for joining us today. Shawn and Matt, thank you. Just as a reminder to those who are unfamiliar with BuildDirect, the company does trade on the TSXV under the ticker Build, B-I-L-D. And in terms of the earnings call today, it will be uploaded onto BuildDirect's investor relations site within 24 hours. If you do have any additional questions that were not addressed during the call today, please do email us at ir@builddirect.com. That's ir@builddirect.com. Shawn, Matt, thank you, and thank you for everyone for attending today. Very good. Thank you.