Hello, everyone, and thank you all for joining us during the Lytham Partners Fall 2026 Investor Conference. My name is Ben Shamsian, Vice President of Lytham Partners, and today, Shawn Wilson, CEO of BuildDirect, will be taking us through a brief slide presentation. BuildDirect trades under BILD on the TSX Venture Exchange and BDTCF on the OTC. Let's get started. Shawn, welcome. I'll turn the floor over to you for your presentation.
Yeah, sounds great. Our strategy really is just our ticker. We're buying profitable fragmented businesses at great multiples, integrating into our platform, really leveraging a few items, especially around cross-selling and import, and delivering value along the way. So great story, great team, and we're having a lot of success here with our model. To start us off, the main platform is really geared towards acquiring specialty distributors, which is mostly in the flooring business today, which we'll talk about in a moment, as well as a few adjacent categories as well that really help expand the TAM opportunity. Simply stated, we are acquiring these businesses, we're pulling them onto our platform, and leveraging our systems, procurement, and operating expertise. So it's a good model, very clean, and we're making a lot of progress towards our goal.
Really to zoom out, our company initially started as an e-commerce play over 20 years ago. BuildDirect was a company that was geared towards heavy building materials and having an e-commerce experience to help facilitate suppliers and mostly pro customers. Then over time, really narrowed in on flooring as being a great category within the broader segment. With that, we pivoted the company back in 2021, 2022 to really focus on bolting on a brick-and-mortar business to support the e-commerce business. Today, we've taken that and really supercharged it as an acquisition engine that's targeting specialty distribution, that's brick-and-mortar for the most part. There's some digital opportunities as well that we've taken advantage of. Then with that, just building out that footprint across the U.S. and eventually also into parts of Canada. So our back office is really tech-first.
This is more and more relevant this day and age. We're very tech forward, not only for our industry, but just in general. So think about that in terms of how we operate the business, how we acquire businesses, integrate them, things like that. Second, our supplier network is deep and very mature. We have great relationships across all categories importing across the globe, and we have a lot of very strong supply partners, great term arrangements. In some cases, we have consignment programs also that we run. So that's a pretty big asset for us. Our business is run by folks who are from the industry, including myself. I spent most of my career in the flooring industry and major manufacturing at Home Depot, et cetera. So for us, we have a deep level of category expertise.
Intuitively, with our brick-and-mortar and e-commerce approach, the omnichannel advantage is real and definitely not something that is very common in building materials. Consumables or personal items definitely are more common. But in heavy materials like flooring, having that approach and that model is pretty unique. Just to zoom out a bit and talk about the flooring industry, it is a fantastic industry. Been in it my entire life. It is highly fragmented and showing no signs of consolidation by a major big box. There are over 15,000 independent flooring businesses. Look, the 65%-70% being held by small mom and pops. It has been that way for a very long time. Typically, when you think about flooring, it is like siding, roofing, windows, so on and so forth. There is a heavy install service component that goes with it, and with that, helps keep the category very fragmented.
Really, it is about having local presence, relationships, and then a broad product selection with great fulfillment that enables you to win in these pro focus categories. As the line at the bottom really highlights, this is not a disruptive story. This is literally a market waiting to be consolidated. With that, we have quite a few targets to go after. I get asked quite often, "Why flooring?" I have been in flooring, as I mentioned, my entire career, and it is a great industry. Flooring is mostly driven by residential remodels. Think of someone redoing one or two rooms of their house, maybe their bathroom and hallway. It is effectively just a day in, day out business. It is not nearly as tied to the construction cycles of roofing or cabinets, countertops. That is much more heavily tied to construction cycles.
Flooring is a massive TAM with really low innovation, which is good. It helps create a lot of stability in your product mix. With that, it is mostly tied to, as I mentioned, renovation or modeling. The average flooring project these days is like the cost of a couch. In good times, it is good, and in bad times, it is just not as good, but never all that bad. So it is a pretty good space to have a platform to roll up in. Really, why now? This is a great opportunity, not just in flooring, but also in other categories that are tied to a service component. Look, it is the same old story. Owners are retiring.
That is a huge opportunity of wealth transfer and very few competitive buyers, especially if you are in a space like ours or flooring, where there is not preset intrinsic value to a truckload of flooring. You would really need to have a business model and other outlets for inventory. We find that there are very few, if any competitive buyers in the running for the businesses that we go after and look to acquire. With that, as I mentioned, it is highly fragmented. I think people really underestimate how fragmented industries like this really are. Because of that, you are able to buy great high-quality businesses for 1x-3x EBITDA. Our biggest risk is not another competitor outbidding us. It is typically the business just not selling or closing up. That has happened a few times.
Great businesses who just literally closed because they went through the hassle of selling, is not worth it on their end. Definitely a huge opportunity for those who are interested in businesses like this and can work with owners who are retiring, who have not built and sold many businesses and potentially do not have systems or process that might be a lot more conducive for private equity. How we buy, we built our model based on the opportunity, and then making it very easy and simple. Most of our deal flow is coming from just organic. We are very well known in the industry. 20+ years of cocktail parties will do that. Then with that, we have a great flow coming in literally every week. We understand the business. We can talk the language.
There is a very high probability we already know the owners or are connected with one or two degrees of separation. Then with that, we are able to go in and look at the business from both sides, getting plugged into whatever systems they have and doing a ground-up assessment. This is a very unique approach. For example, we do not look at inventory logs with book value and SKU numbers and age and try to make sense of it. We know what we are buying. We are a very strategic and very detail-oriented acquirer, and we are effectively going in and doing a ground-up assessment of what the assets are, what the replacement value is to us, and then how we can facilitate a transaction to be easy and smooth for the owners.
I should mention, a lot of times businesses like this, there is property involved, like let us say a 40,000 sq ft or 100,000 sq ft warehouse that the business is operating out of today. We do not buy real estate as a company. We lease it. But a lot of times these owners do own the real estate, and so one of the biggest concerns they have is just having a stable company come in, transition them out of the business in a way that is smooth and easy, and low risk, and then intuitively, lease back the property, if they do not want to sell it. It is a pretty common model and very familiar story for us. For us on the integration side, we also excel here quite a bit.
You find companies who try to do integration, they take forever, they are wildly expensive, and you have lots of fees involved. Not us.
We have a very smooth process. We effectively get the business plugged in immediately. Most of the due diligence and integration starts before we close, and so when we close, we hit the ground running and are converting the systems very, very fast. We have a unique approach, which I will not get into on this call, but we have a unique approach to making the change management remarkably easy for the staff of the company that we are acquiring. Then along with that, most of our synergies are coming from procurement on our direct procurement model, which is very unusual for the flooring space for sure, and we are able to achieve that relatively fast. For us, it is all about quick integration, and unlocking EBITDA as fast as possible and also working down working capital as well.
But as I mentioned before, we effectively established those plans and opportunity during the due diligence process, not after. Our platform scales pretty well, so we report our financials in a way that makes it very easy to model. If you want to take our financials and model out, what do you look like when you are at CAD 250 million or CAD 300 million in revenue? We split out our corporate platform, which scaled very well relative to our growth. Effectively, these businesses, as I have mentioned a few times here, there is not a lot of innovation, there is not a lot of R&D, not a lot of CapEx that is required. Once we buy them, integrate them, that moat you have is typically 20, 30, some cases longer.
Imagine that in a local market and the social capital you have with the pro customers, which we have first-hand experience how difficult that is to establish. But it does not require constant reinvestment in these businesses. We are able to have a very lean corporate platform that scales very well along the way. With that, the model is pretty simple. When we have capital that we are deploying, we are effectively putting it into buying the working capital of one of our targets. When I say, for example, we buy something for one or three times EBITDA, that is inclusive of working capital, which is mostly inventory, quality inventory that we have assessed. If it is one times EBITDA, it was probably less inventory. If it was three times, it was probably more. So that is more of a function of what we are buying.
In a perfect world, we buy for one to three times EBITDA, with that being fully covered with working capital, which is, as I mentioned, effectively inventory. With that, we do have a lot of overlap with vendors. The industry has a lot of common vendors that you can leverage. With that, as we buy businesses, we are also able to normalize our inventory levels and unlock some working capital because we have that ability of sharing inventory. The long term, most of the EBITDA can just flow right back on the cash flow side. So great EBITDA cash conversion. Along with that, there is some work that we do typically around AR and AP to tighten things up. It is very uncommon for a lot of these businesses to have extended terms or consignment terms like we do with some of our key vendors.
There are also ways of unlocking working capital in that way as well. We target a 25% EBITDA uplift, and we model that out very specifically during due diligence and then measure ourselves on how fast we can unlock that post-acquisition. The spotlight we want to look at today, Tile Outlets of America, was our first entry into the tile space. Tile is around 40%-50% of the flooring industry, and historically, it was not a category that we did much in. So this is a great buy for us. The business was at around CAD 20 million in revenue, had three Florida showrooms. We bought it for a net of $3.7 million for around five or so million in assets. It was a great company, great inventory, great value, great team, just a phenomenal team, which is really what attracted us to the business.
And we were able to effectively establish a second beachhead in West Florida. The Southeast is a really important market for us for growth. And intuitively, this business, it is tile, but there are other categories. Customers that walk in looking for wood, carpet, vinyl plank, others. So we are able to bring those categories into these businesses for the cross-selling opportunity. The question I get asked every now and then is, "Well, couldn't they have already done that?" Sure. At what cost? You have to add the working capital. But when you already have that working capital footprint across those categories as part of your platform, it is much easier to leverage a lot more better return. So for us, we fashion ourselves to be the most capital-efficient acquisition engine in the building materials space. As I mentioned before, primarily focused on flooring.
We do a bit now with cabinets as well, and we are expanding into other categories that are related through acquisition. So as we pick up net new categories, we take those and then run back across the existing locations where they make sense and have a very fast payback along the way. So really highly accretive deals with a very efficient platform. Our cap structure is pretty tightly held. We have three main family offices that are listed here, Pellicano, [TERA], and DD. And then with that, we have a lot of the remainder with the management team, and then a very kind of small list of others. So very tightly held company. We have a bit of debt that is friendly with the insiders, and then a facility also with RBC, which is backed by Export Development Canada.
So it is a very solid capital structure and overall book.
From a team perspective, look, we love flooring, love what we are doing. The team has been put together, specially crafted for the play we are running. So we know the industry, know the business, know the people. We can work both on this side, raising awareness of our company as well as working with the entrepreneurs on a very local level. So we have a team that is really geared for this play, and then also board members who are tied into our family offices who are also very supportive of the company. So that is our story.
Okay. Well, thank you, Shawn. Thank you to everyone for watching. If you have any questions or would like to schedule a meeting with BuildDirect, please send me an email at shamsian@lythampartners.com. That is S-H-A-M-S-I-A-N at lythampartners.com. If you would like to learn more about Lytham Partners, you can visit our website, follow us on LinkedIn or YouTube to stay connected about future events. We hope you all enjoy the rest of the conference, and have a great day.