Q2 2026 BuildDirect.com Technologies Earnings Call

August 26, 2026

Speaker #2: My name is Bob Chen, and I'll be moderating today's call. On the call today are Sean Wilson, Chief Executive Officer; Kerry Biggs, Chief Financial Officer; and Jay Allen, President, Digital and Commercial.

Speaker #2: Before we begin, I would like to remind everyone that today's presentation contains forward-looking statements within the meaning of applicable Canadian securities laws, including statements regarding the company's growth strategies, acquisition plans, integration objectives, margin targets, and business outlook.

Speaker #2: These statements are based on management's current expectations and assumptions, and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially.

Speaker #2: Please refer to advisors on Slide 2 of today's presentation and to the risk factors described in the company's continuous disclosure filings available on SEDAR+.

Moderator: Please refer to advisories on slide 2 of today's presentation and to the risk factors described in the company's continuous disclosure filings available on SEDAR+. The company undertakes no obligation to update forward-looking statements except as required by law. If you have any questions during the call, please send them in using the Zoom Q&A function at the bottom of your screen or email them to ir@builddirect.com. We will address these questions during the Q&A session. A replay of this call will be available approximately 24 hours after the conclusion of this conference call and will be posted on the investor relations section of our website at ir.builddirect.com. With that, I will turn the call over to BuildDirect CEO, Shawn Wilson. Shawn?

Operator: Please refer to advisories on slide two of today's presentation and to the risk factors described in the company's continuous disclosure filings available on SEDAR+. The company undertakes no obligation to update forward-looking statements except as required by law. If you have any questions during the call, please send them in using the Zoom Q&A function at the bottom of your screen or email them to ir@builddirect.com. We will address these questions during the Q&A session. A replay of this call will be available approximately 24 hours after the conclusion of this conference call and will be posted on the investor relations section of our website at ir.builddirect.com. With that, I will turn the call over to BuildDirect CEO, Shawn Wilson. Shawn?

Speaker #2: The company undertakes no obligation to update forward-looking statements, except as required by law. If you have any questions during the call, please send them in using the Zoom Q&A function at the bottom of your screen, or email them to ir@builddirect.com.

Speaker #2: We'll address these questions during the Q&A session. A replay of this call will be available approximately 24 hours after the conclusion of this conference call and will be posted on the Investor Relations section of our website at ir.builddirect.com.

Speaker #2: With that, I'll turn the call over to BuildDirect CEO, Sean Wilson. Sean?

Speaker #3: Great, thanks, Bob, and good afternoon, everyone. We appreciate you joining us. The second quarter was a strong quarter for BuildDirect, and strong in the way we've been telling the market to measure.

Shawn Wilson: Great. Thanks, Bob, and good afternoon, everyone. We appreciate you joining us. Q2 was a strong quarter for BuildDirect and strong in the way we have been telling the market to measure. We grew, we stayed disciplined, generated cash while doing it. Revenue increased 16% year-over-year to CAD 19.7 million. Gross profit increased to CAD 14.7 million, with the gross margin holding at 39.2% despite the mix shift that comes with the acquisitions. We report a net loss of CAD 0.19 million, Adjusted EBITDA of CAD 0.39 million, and a positive operating cash flow of CAD 0.45 million. Just as important is the shape of the quarter against Q1. Q1 was soft, as we said at the time. In Q2, our revenue increased 34% sequentially, well ahead of the normal seasonal lift, and Adjusted EBITDA swung from -CAD 0.34 million to +CAD 0.39 million.

Speaker #3: We grew, we stayed disciplined, and generated cash while doing it. Revenue increased 16% year over year to $19.7 million. Gross profit increased 14% to $7.7 million, with a gross margin holding at 39.2% despite the mix shift that comes with the acquisitions.

Speaker #3: We reported a net loss of $0.19 million, adjusted EBITDA of $0.39 million, and a positive operating cash flow of $0.45 million—just as important as the shape of the quarter against the first quarter.

Speaker #3: Q1 was soft, as we said at the time, and in Q2 our revenue increased 34% sequentially—well ahead of the normal seasonal lift—and adjusted EBITDA swung from negative $0.34 million to positive $0.39 million.

Speaker #3: The net loss narrowed from $1.8 million to $0.2 million, and that rebound reflects the contribution of the business we acquired and reflects the execution of the cross-locations we already owned.

Shawn Wilson: The net loss narrowed from CAD 1.8 million to CAD 0.2 million. Net rebound reflects the contribution of the business we acquired and reflects the execution across locations we already owned. I want to be straightforward about the composition of our growth because straightforward is how we want to be measured. Acquired businesses contributed roughly CAD 3.4 million of Q2 revenue. Excluding acquisitions, same-store revenue declined about 4%. Soft demand is real across the flooring industry. We are not going to pretend otherwise, but our answer to a soft market is not hope. It is the two engines you see this quarter, buying great businesses well and running everything we owned with increased discipline. I will now turn the call over to Carey, who will discuss our Q2 and H1 2026 financial results.

Shawn Wilson: The net loss narrowed from CAD 1.8 million to CAD 0.2 million. Net rebound reflects the contribution of the business we acquired and reflects the execution across locations we already owned. I want to be straightforward about the composition of our growth because straightforward is how we want to be measured. Acquired businesses contributed roughly CAD 3.4 million of Q2 revenue. Excluding acquisitions, same-store revenue declined about 4%. Soft demand is real across the flooring industry. We are not going to pretend otherwise, but our answer to a soft market is not hope. It is the two engines you see this quarter, buying great businesses well and running everything we owned with increased discipline. I will now turn the call over to Kerry, who will discuss our Q2 and H1 2026 financial results.

Speaker #3: All right. I want to be straightforward about the composition of our growth, because straightforward is how we want to be measured. Acquired businesses contributed roughly $3.4 million in second quarter revenue. Excluding acquisitions,

Speaker #3: Same-store revenue declined about 4%. Soft demand is real across the flooring industry. We're not going to pretend otherwise, but our answer to a soft market is not hope.

Speaker #3: It's the two engines we see this quarter: buying great businesses well and running everything we own with increased discipline. I'll now turn the call over to Kerry, who will discuss our Q2 and first half 2026 financial results.

Speaker #4: Great. Thank you, Sean, and good afternoon to everyone on the call. Starting with the consolidated second quarter of '26, revenue was $19.7 million, up from $16.9 million in Q2 of 2025.

Kerry Biggs: Great. Thank you, Shawn, and good afternoon to everyone on the call. Starting with the consolidated Q2 of 2026. Revenue was CAD 19.7 million, up CAD 16.6 million from CAD 16.9 million in Q2 of 2025. Gross profit was CAD 7.7 million, up 14.7% from prior year, and gross margin was down slightly 70 basis points to 39.2%. Decline reflects acquisition mix rather than pricing erosion. Both segments maintained pricing discipline overall. Adjusted EBITDA was CAD 0.39 million compared to CAD 0.6 million a year ago for the same quarter, reflecting business and sales mix and softer legacy business demand. I would note the CAD 1.08 million bargain purchase gain on Tile Outlets of America is a non-cash item, which you will see in our P&L, and excluded from Adjusted EBITDA, along with restructuring and other items detailed in the reconciliation in our MD&A for the EBITDA.

Speaker #4: Gross profit was $7.7 million, up 14.7% from the prior year, and gross margin was down slightly, 70 basis points, to 39.2%. The decline reflects acquisition mix rather than pricing erosion.

Speaker #4: Both segments maintained pricing discipline overall. Adjusted EBITDA was $0.39 million, compared to $0.6 million a year ago for the same quarter, reflecting business and sales mix and softer legacy business demand.

Speaker #4: I would note the $1.08 million bargain purchase gain on TOA as a non-cash item, which you'll see in our P&L, and it's excluded from adjusted EBITDA.

Speaker #4: Along with restructuring and other items detailed in the reconciliation in our MD&A for the EBITDA, operating cash flow was positive—$0.45 million for the quarter—through two integrations, and cash at June 30 was $4.1 million.

Kerry Biggs: Operating cash flow was +CAD 0.45 million for the quarter through two integrations, and cash at 30 June was CAD 4.1 million. Just talking H1 of 2026. Overall revenue was CAD 34.3 million, up 7.2% from CAD 31.9 million in the H1 of 2025. Gross profit was CAD 13.6 million for the H1 of 2026 at a 39.6% gross margin. Adjusted EBITDA for the H1 was CAD 0.06 million, mainly driven by the soft Q1, which Shawn noted, which had a -CAD 0.34 million Adjusted EBITDA. But again, recovered positive for Q2. On to the segment level. By segment for Q2 2026, e-commerce revenue grew, was actually at CAD 4.5 million for the quarter, up 22.8% year over year, driven by the Garrison Collection acquisition, which closed in February.

Speaker #4: So, just talking first half of '26, overall revenue was $34.3 million, up 7.2% from $31.9 million in the first half of '25. Gross profit was $13.6 million.

Speaker #4: For the first half of '26, at a 39.6% gross margin. Adjusted EBITDA for the first half was $0.06 million, mainly driven by the soft first quarter, which Sean noted.

Speaker #4: Which had a negative adjusted EBITDA of $0.34 million, but again, recovered positive for Q2. On to the segment level. By segment, for Q2 2026, e-commerce revenue was actually $4.5 million for the quarter, up 22.8% year over year, driven by the Grain acquisition, which closed in February.

Speaker #4: Excluding grain, e-commerce revenue declined approximately 12% on a same-store basis, reflecting softer demand and lower-quality inbound lead flow during the quarter. Gross margin remained very strong at 48.3%, our highest margin segment, while adjusted EBITDA was flat in the quarter versus a positive $0.03 million for the overall first half.

Kerry Biggs: Excluding Garrison Collection, e-commerce revenue declined approximately 12% on a same store basis, reflecting softer demand and lower quality inbound lead flow during the quarter. Gross margin remained very strong, 48.3%, our highest margin segment, while Adjusted EBITDA was flat in the quarter versus a +CAD 0.03 million for the overall H1. Moving on to the next slide. For the Pro Centers, Q2 2026, Pro Center revenue was CAD 15.2 million, up 14.9%, representing 77% of consolidated revenue overall for the business. If we exclude Tile Outlets of America, same store Pro Center revenue declined roughly 2%, primarily reflecting softness in our Michigan locations. Pro Center gross margin was 36.5% for the quarter, and segment Adjusted EBITDA grew to CAD 1.55 million in the Q2 and CAD 2.17 million overall for the H1, as noted earlier.

Speaker #4: Moving on to the next slide. For the Pro Centers, in Q2 2026, Pro Center revenue was $15.2 million, up 14.9%, representing 77% of consolidated revenue overall for the business.

Speaker #4: If we exclude Tile of America (TOA), same-store Pro Center revenue declined roughly 2%, primarily reflecting softness in our Michigan locations. Pro Center gross margin was 36.5% for the quarter, and segment adjusted EBITDA grew to $1.55 million in the second quarter, and $2.17 million overall for the first half, as noted earlier.

Speaker #4: Finally, on the balance sheet and liquidity side, cash ended the quarter at $4.1 million, down from $8.2 million at year-end, primarily reflecting the deliberate deployment of capital into the TOA acquisition and related working capital.

Kerry Biggs: Finally, on the balance sheet and liquidity side, cash ended the quarter CAD 4.1 million, down from CAD 8.2 million at year-end, primarily reflecting the deliberate deployment of capital into the Tile Outlets of America acquisition and related working capital. Again, partially offset by positive operating cash flow. Total acquisition cash outlays for the H1 of the year were approximately CAD 4.5 million across the two transactions that we have noted. Our revolving credit facility was drawn to CAD 4.8 million at quarter end, compared to CAD 3.6 million at year-end, reflecting acquisition-related working capital, as well as the timing of certain quarter end working capital payments. Finally, total assets increased CAD 9 million to CAD 47.2 million, largely reflecting the acquired businesses and associated working capital that came along with them.

Speaker #4: Again, partially offset by positive operating cash flow. Total acquisition cash outlays for the first half of the year were approximately $4.5 million, across the two transactions that we've noted.

Speaker #4: Our revolving credit facility was drawn to $4.8 million at quarter-end, compared to $3.6 million at year-end, reflecting acquisition-related working capital as well as the timing of certain quarter-end working capital payments.

Speaker #4: And finally, total assets increased $9 million to $47.2 million, largely reflecting the acquired businesses and associated working capital that came along with them. Our focus in the second half is working capital optimization across our inventory, payables, and disciplined capital deployment, while maintaining appropriate liquidity to support the ongoing needs of the business.

Kerry Biggs: Our focus in the H2 is working capital optimization across our inventory and payables to discipline capital deployment and maintaining appropriate liquidity to support the ongoing needs of the business. So appreciate the time. With that, I will hand it back over to Shawn.

Speaker #4: So, I appreciate the time. With that, I'll hand it back over to Sean.

Speaker #3: Okay, great. That brings me to what I think is the most important story of this quarter: the acquisition platform is working. We closed two acquisitions in the first half—Grain Custom Wood in February, which added premium custom hardwood and national big box marketplace channels for our cover segment.

Shawn Wilson: Okay, great. That brings me to what I think is the most important story this quarter. The acquisition platform is working. We closed two acquisitions in the H1. Garrison Custom Wood in February added premium custom hardwood and national big box marketplace channels to recover a segment. Demand sources we did not previously reach fulfilled through logistics infrastructure that we already owned. Tile Outlets of America in May, which added three established profitable tile showrooms in Tampa, Sarasota, and Fort Myers, and anchored in a Florida cluster alongside our current existing operations there. Look, we bought them well. Tile Outlets of America was acquired far below the fair value of net assets, roughly 78 cents paid per dollar of net assets, producing a CAD 1.08 million bargain purchase gain, which should be clear to be excluded from the Adjusted EBITDA.

Speaker #3: Demand sources we did not previously reach, but filled the logistics infrastructure that we already owned. Tile Outlet of America in May, which added three established, profitable tile showrooms in Tampa, Sarasota, and Fort Myers, and anchored in a Florida cluster alongside our current existing operations there.

Speaker #3: And look, we bought them well. TOA was acquired far below the fair value of net assets—roughly 78 cents paid per dollar of net assets—producing a $1.08 million bargain purchase gain, which, to be clear, we excluded from the adjusted EBITDA.

Speaker #3: Grain acquired only a modest working capital true-up in the quarter, and both were funded from operating cash flow and our revolving facility on their last equity raise.

Shawn Wilson: Garrison required only a modest working capital true-up in the quarter, and both were funded from operating cash flow in our evolving facility on their last equity raise. This is the model. Profitable flooring businesses bought with discipline, folded into a shared infrastructure, all made better on our platform. Looking further out, we see a long runway of highly accretive growth. The flooring industry is large, fragmented, and full of succession-driven sellers. Exactly the conditions the consolidator is built for. As a recent acquisition season, we are approaching a meaningful annualized revenue milestone and believe the same playbook that got us here scales well beyond it. Carey will now take us through our acquisition playbook and the Garrison and Tile Outlets of America case studies.

Speaker #3: This is the model: profitable flooring businesses bought with discipline, folded into a shared infrastructure, all made better on our platform. Looking further out, we see a long runway of highly accretive growth.

Speaker #3: The flooring industry is large, fragmented, and full of succession-driven sellers. Exactly the conditions, rather, the consolidator is built for. As a recent acquisition season, we are approaching a meaningful annualized revenue milestone and believe the same playbook that got us here.

Speaker #3: Scales well beyond it. TOA will now take us through our acquisition playbook and the Grain and TOA case studies.

Speaker #1: Thanks, Sean. Good afternoon, everyone. On the next three slides, I'll walk through how we're applying our acquisition strategy in practice: what we're looking for, how we're underwriting the transactions, and how we're integrating each of the businesses onto our BuildDirect platform.

Jay Allen: Thanks, Sean. Good afternoon, everyone. On the next three slides, I will walk through how we are applying our acquisition strategy and practice, what we are looking for, how we are underwriting the transactions, and how we are integrating each of the businesses onto our BuildDirect platform. We are targeting profitable specialty flooring retailers and distributors with strong local customer relationships and established operating economics. These are often founder or family-owned businesses that are facing a succession decision. The opportunity can include both physical showroom networks and e-commerce or marketplace-type platforms. Price discipline is central to our strategy. Tile Outlets of America is a really good example of this. We paid approximately CAD 3.9 million for preliminary net identifiable assets valued at approximately CAD 5 million, or about 78 cents for each dollar of net assets acquired. That resulted in a CAD 1 million non-cash bargain purchase gain.

Jay Allen: Thanks, Shawn. Good afternoon, everyone. On the next three slides, I will walk through how we are applying our acquisition strategy and practice, what we are looking for, how we are underwriting the transactions, and how we are integrating each of the businesses onto our BuildDirect platform. We are targeting profitable specialty flooring retailers and distributors with strong local customer relationships and established operating economics. These are often founder or family-owned businesses that are facing a succession decision. The opportunity can include both physical showroom networks and e-commerce or marketplace-type platforms. Price discipline is central to our strategy. Tile Outlets of America is a really good example of this. We paid approximately CAD 3.9 million for preliminary net identifiable assets valued at approximately CAD 5 million, or about 78 cents for each dollar of net assets acquired. That resulted in a CAD 1 million non-cash bargain purchase gain.

Speaker #1: We're targeting profitable specialty flooring retailers and distributors with strong local customer relationships and established operating economics. These are often founder- or family-owned businesses that are facing a succession decision.

Speaker #1: So, the opportunity can include both physical showroom networks and e-commerce or marketplace-type platforms. Price discipline is central to our strategy. Tile Outlets of America is a really good example of this.

Speaker #1: We paid approximately $3.9 million for preliminary net identifiable assets valued at approximately $5 million, or about 78 cents for each dollar of net assets acquired.

Speaker #1: So, that resulted in a $1 million non-cash bargain purchase gain. Our acquisitions are funded prudently using available cash, operating cash flow, and our revolving credit facility.

Jay Allen: Our acquisitions are funded prudently using available cash, operating cash flow, and our revolving credit facility. We are underwriting each based on its existing cash flows and asset value with the expectation that it will be accretive, not on any assumptions that the market needs to recover. Once a transaction closes, we apply a standard integration playbook using common systems and reporting, consolidating purchasing, aligning our merchandising, and sharing back-office resources. Our goal is to add acquired revenue while keeping corporate overhead largely stable. Regional density also matters. Clustering locations allows us to share inventory, management resources, and freight lanes. As our purchasing volume grows, we also expect to create opportunities for improved profit margins across our platform. Garrison Custom Wood is a good illustration of the e-commerce side of this strategy. We acquired Garrison on 2 February.

Speaker #1: We're underwriting each based on its existing cash flows and asset value, with the expectation that it will be accretive—not on any assumptions that the market needs to recover.

Speaker #1: Once a transaction closes, we apply a standard integration playbook: using common systems and reporting, consolidating purchasing, aligning our merchandising, and sharing back-office resources. Our goal is to add acquired revenue while keeping corporate overhead largely stable.

Speaker #1: Regional density also matters. Clustering locations allows us to share inventory management resources and freight lanes. As our purchasing volume grows, we also expect to create opportunities for improved profit margins across our platform.

Speaker #1: Grain Custom Wood is a good illustration of the e-commerce side of this strategy. We acquired Grain on February 2. The business added premium custom hardwood products and access to national big box marketplace channels.

Jay Allen: The business added premium custom hardwood products and access to national big box marketplace channels. This is customer demand that we did not previously reach directly. Garrison is a capital-light addition because its orders can be fulfilled through warehouse and logistics infrastructure that BuildDirect already operates. It also diversifies our e-commerce segment beyond demand generated through BuildDirect.com and paid search marketing. Garrison contributed approximately CAD 1.3 million of Q2 revenue. Based on our internal operating results, it was accretive to the e-commerce segment during the H1. The business was onboarded onto BuildDirect systems and fulfillment processes during the Q1 of ownership. We have also seen improved gross margins as fulfillment and purchasing have moved onto our logistics network and supplier programs. Overall, I think Garrison demonstrates how we can add new products and sales channels and leverage the infrastructure we already have in place.

Speaker #1: This is customer demand that we did not previously reach directly. Grain is a capital-light addition because its orders can be fulfilled through warehouse and logistics infrastructure that BuildDirect already operates.

Speaker #1: It also diversifies our e-commerce segment beyond demand generated through BuildDirect.com and paid search marketing. Grain contributed approximately $1.3 million of second quarter revenue. Based on our internal operating results, it was accretive to the e-commerce segment during the first half.

Speaker #1: The business was onboarded onto the BuildDirect systems and fulfillment processes during the first quarter of ownership. We've also seen improved gross margins as fulfillment and purchasing have moved onto our logistics network and supplier programs.

Speaker #1: Overall, I think Grain demonstrates how we can add new products and sales channels and leverage the infrastructure we already have in place. Tile Outlets demonstrates the showroom side of this strategy.

Jay Allen: Tile Outlets demonstrates the showroom side of this strategy. We completed the Tile Outlets acquisition on 12 May, adding three established Florida locations in Tampa, Sarasota, and Fort Myers. The approximately CAD 3.9 million cash purchase brought us roughly CAD 5.4 million of inventory together with the showroom operations and their associated lease arrangements. TOA contributed approximately CAD 2.2 million of revenue during the roughly seven weeks between the acquisition date and quarter end. Based on our internal operating data, its gross margin was approximately 46% compared with 36.5% for the overall Pro Centers segment in the quarter. That made TOA margin accretive to the segment from the outset. Integration is now underway. We are moving systems, reporting, and merchandising, and purchasing onto our Pro Centers platform, and we are connecting the three showrooms with our existing Florida operations.

Speaker #1: We completed the Tile Outlets acquisition on May 12th, adding three established Florida locations in Tampa, Sarasota, and Fort Myers. The approximately $3.9 million cash purchase brought us roughly $5.4 million of inventory.

Speaker #1: Together with the showroom operations and their associated lease arrangements, TOA contributed approximately $2.2 million of revenue during the roughly seven weeks between the acquisition date and quarter end.

Speaker #1: Based on our internal operating data, its gross margin was approximately 46%, compared with 36.5% for the overall gross in our segment in the quarter.

Speaker #1: So that means TOA is margin accretive to the segment from the outset. Integration is now underway. We're moving systems, reporting, and merchandising and purchasing onto our ProCenter platform, and we're connecting the three showrooms with our existing Florida operations.

Speaker #1: As purchasing is consolidated onto BuildDirect supplier programs, management is targeting an improvement in TOA's gross margin from approximately 46% towards 50%. That's a forward-looking management target, not guidance, and it depends on purchasing integration, product mix, and volumes.

Jay Allen: As purchasing is consolidated onto BuildDirect's supplier programs, management is targeting an improvement in TOA's gross margin from approximately 46% towards 50%. That is a forward-looking management target, not guidance, and it depends on purchasing integration, product mix, and volumes. I think this shows that we have two different businesses we acquired, but they demonstrated the same underlying model by profitable flooring businesses with discipline, integrate them into the shared infrastructure, and use the combined platform to create operating leverage for the business. With that, I will turn it back to Shawn to discuss our long-term outlook.

Speaker #1: So, I think this shows that we have two different businesses we acquired, but they demonstrated the same underlying model: buy profitable flooring businesses with discipline, integrate them into the shared infrastructure, and use the combined platform to create operating leverage for the business.

Speaker #1: With that, I'll turn it back to Sean to discuss our long-term outlook.

Speaker #2: Okay, great. Let me close on how we think about the path from here, because the quarter matters less than the pattern. The framework we manage is pretty simple.

Shawn Wilson: Okay, great. Let me close on how we think about the path from here, because the quarter matters less than the pattern. The framework we manage is pretty simple. We buy profitable flooring businesses at 1 to 2x post synergy EBITDA, largely backed by inventory and hard assets. We run acquired locations for 12% to 15% 4-wall EBITDA over our ownership period, and we hold carpet costs largely flat as acquired revenue lands. Operating leverage, not financial engineering, is what compounds. Those management targets are not committed targets, not guidance. The assumptions behind them are reflected in today's materials. Our priorities for the balance of 2026 are the ones on the slide. Integrate what we bought, rebuild the organic demand engine, and stay disciplined on the next acquisition.

Speaker #2: We buy profitable flooring businesses at one to two times post-energy EBITDA, largely backed by inventory and hard assets. We'd run acquired locations for 12 to 15 percent of all EBITDA over our ownership period, and we hold corporate costs largely flat with acquired revenue land.

Speaker #2: So, the operating leverage is not financial engineering—it's what compounds. Those management targets are not guidance. The assumptions behind them are what's in today's materials.

Speaker #2: Our priority is for the balance of 2026. Our goal is on the slide: integrate what we bought, rebuild the organic demand engine, and stay disciplined on the next acquisition.

Speaker #2: We maintain regular, ongoing discussions with potential partners and will update the market if and when there's a definitive transaction to announce. I want to thank our teams across every location, including the people who joined us from Grain and Tile Outlets of America this year.

Shawn Wilson: We maintain regular, ongoing discussions with potential partners and we will update the market if and when there is a definitive transaction to announce. I want to thank our teams across every location, including the people who joined us from Garrison Collection and Tile Outlets of America this year, for a quarter that shows what this platform can do. With that, Bob, let us open it up for any questions.

Speaker #2: For a quarter, that shows what this platform can do. And with that, Bob, let's open it up for any questions.

Speaker #3: Thank you, Sean. We'll now begin the Q&A session. For those who have not submitted their questions, please submit them using the Zoom Q&A function at the bottom of your screen, or you can send an email to ir@builddirect.com.

Moderator: Thank you, Shawn. We will now begin the Q&A session. For those who have not submitted their questions, please submit them using the Zoom Q&A function at the bottom of your screen, or you can send an email to ir@builddirect.com. The first question we have here: Your previous acquisitions were smaller, single store or e-commerce acquisitions, but TOA was a sizable, high-quality business you purchased at a bargain price. Are there other acquisitions like TOA's quality and size in the funnel?

Operator: Thank you, Shawn. We will now begin the Q&A session. For those who have not submitted their questions, please submit them using the Zoom Q&A function at the bottom of your screen, or you can send an email to ir@builddirect.com. The first question we have here: Your previous acquisitions were smaller, single store or e-commerce acquisitions, but TOA was a sizable, high-quality business you purchased at a bargain price. Are there other acquisitions like TOA's quality and size in the funnel?

Speaker #3: So the first question we have here: Your previous acquisitions were smaller single-store or e-commerce acquisitions, but TOA was a sizable, high-quality business you purchased at a bargain price?

Speaker #3: Are there other acquisitions like TOA's, in terms of quality and size, in the funnel?

Speaker #2: Absolutely. And I've commented on this in the past. TOA acquisition is a good indication of what's out there. The part that I would just think about a bit more, basically—except for the Grain acquisition, which was obviously more of a marketplace with a great opportunity.

Shawn Wilson: Absolutely. I have commented on this in the past. The Tile Outlets of America acquisition is a good indication of what is out there. The part that I would just think about a bit more basically, except for the Garrison Collection acquisition, which was obviously more of a marketplace with a great opportunity we saw to leverage. If you buy one of these locations or five, the economics are relatively the same. Intuitively, it is a bit easier to process a handful at a time versus one at a time. That is really more of our target base. So when you think about what we find with the sweet spot, it is CAD 20 to CAD 40 million companies with anywhere from three to five or six locations that are clustered. That is the ideal target. As I mentioned, really now for a while, we will run out of time before there is a lack of targets in that range.

Speaker #2: We saw a leverage if you buy one of these locations or five, the economics are relatively the same. Intuitively, it's a bit easier to process a handful at a time versus one at a time.

Speaker #2: That's really more of our target base. So, when you think about what we find as the sweet spot, it's $20 to $40 million companies with anywhere from three to five or six locations.

Shawn Wilson: That is really more of our target base. So when you think about what we find with the sweet spot, it is CAD 20 to CAD 40 million companies with anywhere from three to five or six locations that are clustered. That is the ideal target. As I mentioned, really now for a while, we will run out of time before there is a lack of targets in that range.

Speaker #2: That are clustered. That's the ideal target. And as I mentioned, really now for a while, we'll run out of time before there's a lack of targets in that range.

Shawn Wilson: Yeah, very much the case.

Speaker #2: And yeah, that's very much the case.

Shawn Wilson: Yeah, very much the case.

Speaker #3: Another question we have here: Can you expand on the TOA margin target?

Moderator: Another question we have here: Can you expand on the Tile Outlets of America margin target?

Operator: Another question we have here: Can you expand on the Tile Outlets of America margin target?

Shawn Wilson: It is kind of a vague question. Anything else to add on that one or are you referring to, like, just the bridge up?

Speaker #2: It's kind of a vague question, Bob, on that one. Are you just referring to just the bridge up, or...?

Speaker #3: Yeah, it's—what can you expect? Can you expand on the TOA margin target?

Moderator: Yeah. Can you expand on the TOA margin target?

Operator: Yeah. Can you expand on the TOA margin target?

Speaker #2: Okay, I'm going to assume the question is pertaining to where our margins are now and where they're forecasted to go. Jay, do you want to take that one?

Shawn Wilson: Okay. I'm going to assume the question's pertaining to where margins are now and where they're forecasted to go. Jay, do you want to take that one? Probably a mix of

Speaker #2: Probably a mix of a few assortment items, along with the pricing and product line structure, and things like that.

Jay Allen: Sure

Shawn Wilson: a few assortment items along with the pricing and product line structure, things like that.

Speaker #1: That's a yes, that's exactly how I would interpret it, and that's how I would explain it. I think there are a couple of things going on.

Jay Allen: Yes. That's exactly how I would interpret it, and that's how I would explain it. I think there's a couple of things going on. One is we were able to take advantage of some pricing opportunities and increase margins pretty much right out of the gate. We continue to see some opportunities there. The second big piece in my mind is our supply chain and utilizing our supply chain to both bring in BuildDirect core items into that business, and then also optimize how they're bringing product in as well and gain some margin opportunities there. I think those are really the two big pieces we see working for us.

Speaker #1: One is, we were able to take advantage of some pricing opportunities and increase margins pretty much right out of the gate. We continue to see some opportunities there.

Speaker #1: The second big piece in my mind is our supply chain and utilizing our supply chain to both bring in BuildDirect core items into that business, and then also optimize how they're bringing product in as well and gain some margin opportunities there.

Speaker #1: I think those are really the two big pieces we see working for us.

Speaker #2: Okay, great. All right, Bob, anything else?

Shawn Wilson: Okay, great. All right, Bob, anything else?

Speaker #3: How is the M&A progressing on the pipeline? Was this last quarter? Is it about the same, or is there an increasing pipeline?

Moderator: How is the M&A progressing on the pipeline versus last quarter? Is it about the same, or is there an increasing pipeline?

Operator: How is the M&A progressing on the pipeline versus last quarter? Is it about the same, or is there an increasing pipeline?

Speaker #2: Yeah, I would say with that, our play is to buy, integrate, and then continue on. And so we don't, obviously, comment on things aside from the fact that we're constantly maintaining and talking to partners.

Shawn Wilson: Yeah, I would say with that, our play is to buy, integrate, and then continue on. We do not obviously comment on things aside from we are constantly maintaining and talking to partners. We also do not plan on just sitting on our hands. One thing I could say, the Garrison Collection acquisition and integration went very well. It was obviously wrapped up and finished before we bought. The next one, Tile Outlets, which that one is likely to be on the tail end of any kind of remaining integration work. There are obviously always improvement ideas and opportunities, and those carry both ways, I should mention. We buy great businesses with great team members that have really great ideas, and so we find synergies that we kind of identify going into the business.

Speaker #2: We also don't plan on just sitting on our hands. So, one thing I could say: the grain acquisition and integration went very well. It was obviously wrapped up and finished before we bought.

Speaker #2: The next one, Tile Outlets, which—that one is likely to be on the tail end of any kind of remaining integration work. There's obviously always improvement ideas and opportunities.

Speaker #2: And those carry both ways, I should mention. We buy great businesses with great team members. They have really great ideas, and so we find synergies that we kind of identified going into the business. But then, candidly, in both cases, we found things that, frankly, they were doing much better than our core was, that we then started pulling back through.

Shawn Wilson: But then candidly, in both cases, we found things that, frankly, they were doing much better than our core was, that we then started pulling back through. That is a continuous synergy process that will give, just kind of keeps on rolling. When it comes to integration, our teams will be relatively free to process the next one from a bandwidth perspective, and our intent is to keep the machine, keep the pattern rolling.

Speaker #2: So that's a continuous synergy process that we'll get to—kind of keeps on rolling. But when it comes to integration, our teams will be relatively free.

Speaker #2: To process the next one from a bandwidth perspective, our intent is to keep the machine and keep the pattern rolling.

Speaker #3: Our next question: What is the state of the flooring industry today versus even 12 months ago? And how does this impact the M&A landscape?

Moderator: The next question: What is the state of the flooring industry today versus even 12 months ago, and how does this impact the M&A landscape?

Speaker #2: Yeah, I would say just kind of address that one. You guys could fill in any details if you'd like. But I would say, so first off, the overall industry looked to have had a really bad year.

Shawn Wilson: Yeah, I would say just to kind of address that one, you guys can fill in any details if you would like. But I would say, first off, the overall industry, look, in a really bad year, it is a bit off, in a really great year, there is a bit of a tailwind. It does not have wild swings like other categories like cabinets, roofing, siding do, and that is mainly because flooring is highly concentrated with residential remodeling, which is why it is, in my opinion, a great industry for a strategic roll-up. A lot of stability there. You do have swings in some spots. So for example, in new home construction, that is what it is. Housing turnover, when it increases, it is a tailwind to the industry. People are moving, they change floors, sell their house, and then people change floors when they buy houses.

Speaker #2: It's a bit off in a really great year. There's a bit of a tailwind. It doesn't have wild swings like other categories, like cabinets, roofing, and siding do.

Speaker #2: And that's mainly because flooring is highly concentrated within residential remodeling, which is why, in my opinion, it's a great industry for a strategic roll-up. I lost stability there.

Speaker #2: You do have swings in some spots. So, for example, in new home construction, that is what it is. Housing turnover—when it increases, it's a tailwind for the industry.

Speaker #2: People are moving. They change floors, sell their house, and then people change floors and they buy houses. So you definitely don't see a lot of that happening right now.

Shawn Wilson: So you definitely do not see a lot of that happening right now. And look, we get asked what is our forward view on what rates are going to do. I do not know. Who knows? Not something we think about or waste time with. We just focus on what we can control, and right now it is not causing that big of an issue. If anything, just having us focus on commercial flooring opportunities more so than onboarding just net new builders, for sure. When it comes to what is it doing to the industry, I would say fatigue. So you have a lot of folks you talk to, they rode out the COVID time, the PPP funding, all these great programs, and a lot of volumes, and the real estate appreciated quite a bit on the commercial side. So a building they bought for CAD 1 million is now worth CAD 5 million.

Speaker #2: And look, we get asked, what's our forward view on what rates are going to do? I don't know. Who knows? It's not something we think about or waste time with.

Speaker #2: We just focus on what we can control, and right now, it's not causing that big of an issue. If anything, it's just having us focus on commercial flooring opportunities more so than onboarding just net new builders.

Speaker #2: For sure. When it comes to what it's doing to the industry, I would say fatigue. So, you have a lot of folks you talk to, they rode out the COVID time, the PPP funding, all these great programs, and a lot of volumes, and the real estate appreciated quite a bit on the commercial side.

Speaker #2: So, the building they bought for a million dollars is now worth $5 million. And the noise with the tariffs and housing turnover and so on and so forth, we perceive it definitely has caused just fatigue and a desire to transition for those who might have been on the fence.

Shawn Wilson: And the noise with the tariffs and housing turnover, so on and so forth, we perceive it definitely has caused just fatigue and a desire to transition for those who might have been on the fence otherwise. That was part of our thesis, kind of going after this play a few years back. I did not think it would be this hectic on the tariff side. For example, the new ones that were announced with Canada. But I would say, if anything, it has just caused a bit of fatigue there, which is fine for us. We are well equipped to work through process and compete in that kind of environment. And definitely built for it, for sure. So that is some of my thoughts there.

Speaker #2: Otherwise, that was part of our thesis—kind of going after this play a few years back. I mean, we didn't think it would be this hectic on the tariff side.

Speaker #2: For example, the new ones that were announced with Canada. But I'd say if anything, it's just caused a bit of fatigue there, which is fine for us.

Speaker #2: We're well-equipped to work through process and compete in that kind of environment, and definitely built for it, for sure. So that's kind of my thoughts there.

Speaker #3: I don't think we have any more questions, so that concludes today's Q&A session. I'll now turn the call back to Sean for any final remarks before we end this conference call.

Moderator: I don't think we have any more questions, so that concludes today's Q&A session. I will now turn the call back to Shawn for any final remarks before we end this conference call.

Operator: I don't think we have any more questions, so that concludes today's Q&A session. I will now turn the call back to Shawn for any final remarks before we end this conference call.

Speaker #2: I just want to thank everyone for joining, following the story, and for your support. As I've said a few times, we're just getting started. It's going to be a great play.

Shawn Wilson: I just want to thank everyone for joining, following the story, your support. As I have said a few times, we are just getting started. It is going to be a great play, and we are having a blast doing it. So take care all, and we will see you next time.

Speaker #2: We're having a blast doing it. So take care, all, and we'll see you next time.

Speaker #3: Thank you, Sean. This concludes BuildDirect's Q2 2026 conference call. A replay will be available on the company's investor relations website. Thank you, everyone.

Moderator: Thank you, Shawn. This concludes BuildDirect's Q2 2026 conference call. A replay will be available on the company's investor relations website. Thank you, everyone.

Operator 2: Goodbye

Operator 2: Goodbye.