Yahoo Finance
Oct. 20, 2023
Q2. 2023 Data
Price: $0.46. Shares: 42m, Cap: $19m.
1. Business
(1) History
(1) History
The company was founded by Rob Banks and Jeff Booth in 1999 in Vancouver. It is an online seller of renovation products, mostly flooring materials. It had grown revenue to over 120m in 2014 but with heavy losses. It filed for credit protection in 2017 with $103m in debt. Both founders left the company during the course. Dan Parker succeeded Jeff Booth as the new CEO. In 2018, it emerged from CCAA protection with US$58 debt converted to shares and raised another US$43m. Mark Anthony Group(Pelecanus Investments Ltd.) became the biggest shareholder with 34.3% of shares.
In Dec. 2020, it acquired FloorSource for $15.7m. It is a wholesale floor business that is only open to Pro customers.
In 2021, it IPOed through a reverse merger. It raised around $20m during the IPO at $5.75/share. In Nov. 2021, it acquired Superb Flooring & Design, a flooring retailer, for US$10m. In 2021, the retail segment including both FloorSource and Superb generated US$39m in revenue while online revenue decreased slightly from US$52m to US$51m. It was still losing money up to this point.
CEO Dan Parker left the company in Dec. 2021. Since 2022, It started to cut down marketing expenses and focus its business on the retail segment. In Sept. 2022, the company hired its current CEO and CFO. Full-year 2022 online revenue is down from US$51m to $33m. Its retail revenue increased to 59m mainly from the addition of Superb. It achieved $1m in operating cash but it is still losing money. On Sept. 2022, issued $2.5m in shares at CAD$0.46/share. On Nov. 2022 & Jan. 2023, issued $1.5m in shares at CAD$0.37/share.
For the first half of 2023, both its online and retail revenue went down but real profit had gone up. It is able to make around 900k profit during the 2Q.
(2) Product & Business
The majority of its products are flooring materials. The company tries to focus on the Pro customers who are mostly the contractors performing the floor installations.
Besides the newly opened Pro center in Vancouver, there are 5 more in the U.S.
1. Flint MI, 1 hour to Detroit
2. Farmington Hills, MI, Midtown Detroit.
3. Madison Heights, MI, Midtown Detroit
4. Grand Rapids, MI, 2 hours to Detroit
2565 Industrial Row Dr, Troy, MI 48084, United States, 30m to Downtown Detroit
(3) Industry
The company is trying not to compete with the big box retailer.
(4) Employees
2. Management
(1) Management
CEO: Shawn Wilson, he joined the company in Sept. 2022. Before 2014, he had worked for Mohawk for 11 years. Since 2014, he has worked as CEO for Plum, an e-commerce DTC home service company for 4 years. and as COO for Romanoff Renovations for another 4 years. His annual salary should be around $400k.
CFO: Matthew Alexander, he joined the company in Dec. 2020. He was promoted to CFO in Sept. 2022.
(2) Ownership and Compensation
Mark Anthony Group: 15.7m shares 37%. Mark Anthony Group is owned by billionaire Anthony von Mandl. Tim Howley, CFO of Mark Anthony Group is a director of BILD.
Lyra Growth Partners: a Vancouver investment firm, owns 6m shares, 14%. Director Milan Roy is the CFO of Lyra.
Beedie Investment: 5.6m shares. 13%.
MDV venture: 4.86m shares. 12%.
Pender fund: 2.2m shares. 5%.
All major shareholders: over 70%.
3. Financial data
Notes: Debt and cash
On Q2 2023,
2018 notes: 15%(reduced to 12% in Q3 23, also paid down CAD$1.5m.). 3.2m outstanding.
2022 notes: 15%(reduced to 12% in Q3 23). 5.4m outstanding.
Promissory note: 5%. $3.2m outstanding. $1.3m payable per year.
Deferred consideration: $2m outstanding. $700k payable per year.
Notes: Share data
Shares: 42m shares outstanding.
Options: 2.85m at $0.29/share.
4. Valuation and comments
(1) Based on the 2019 and 2020 data, the online business is losing money heavily. It is hard to tell whether it is profitable on a standalone basis. I highly suspect that it is still losing money now. However, if managed well, it does provide a good opportunity to scale up without adding much administrative expense. It can be profitable with a larger revenue.
(1) Based on the 2019 and 2020 data, the online business is losing money heavily. It is hard to tell whether it is profitable on a standalone basis. I highly suspect that it is still losing money now. However, if managed well, it does provide a good opportunity to scale up without adding much administrative expense. It can be profitable with a larger revenue.
(2) Currently the company can generate close to $2m/year in real income based on the first half of 2023 result. However, it has to pay down $2m/year of the promissory note + deferred consideration. Also, it has to pay down its 2018 notes.
(3) Based on current profitability, the company price is quite cheap. The debt level is acceptable. As it continues to pay down its debt and lowers its interest, it will pay less interest and be in better shape.
(4) The current share price is less than 10 times its real earnings. Also, it is just 0.2 times its annual revenue. It is very cheap.
5. Risk
(1) The company had a pretty messy history before. It is not sure the current board will keep shareholders' interests in mind. The current CEO and CFO don't own much of the shares.
(1) The company had a pretty messy history before. It is not sure the current board will keep shareholders' interests in mind. The current CEO and CFO don't own much of the shares.
(2) The online and retail business might change very quickly. It is also subject to the real estate market circle.
(3) The management might shift strategies again with high expenses. The debt level might go up as well.
6. Conclusion
The company had turned around with some profit. The current price is very cheap. However, it is still early to confirm the trend. Need to watch it closely and shouldn't invest heavily.
7. Links
