DIRTT Reports Second Quarter 2025 Financial Results
Rhea-AI Summary
DIRTT Environmental Solutions (OTCQX:DRTTF), a leader in industrialized construction, reported challenging Q2 2025 financial results. Revenue decreased 6% to $38.9 million compared to Q2 2024, while gross profit margin declined to 27.8% from 37.3%. The company reported a net loss of $6.6 million, compared to net income of $0.6 million in Q2 2024.
Performance was significantly impacted by increased U.S. tariffs on Canadian aluminum, which rose to 50% in June 2025, resulting in $2.0 million (5.1% of revenue) in tariff-related costs. Despite these challenges, the company's twelve-month pipeline has exceeded $300 million, up 7% from April 2025, with the Integrated Solutions pipeline increasing by 20% since the beginning of the year.
Management expects to return to positive Adjusted EBITDA by Q4 2025 through various tariff mitigation strategies, including price adjustments and manufacturing footprint modifications. The company maintains strong liquidity of $31.1 million but faces C$16.6 million in debt maturity in January 2026.
Positive
- Twelve-month pipeline exceeded $300 million, increasing 7% from April 2025
- Integrated Solutions pipeline grew 20% since the beginning of 2025
- Strong liquidity position of $31.1 million
- Introduction of new products including one-hour fire-rated wall expanding market reach
- Sales and marketing expenses decreased by $0.8 million through cost optimization
Negative
- Revenue declined 6% to $38.9 million year-over-year
- Net loss of $6.6 million compared to $0.6 million profit in Q2 2024
- Gross profit margin decreased to 27.8% from 37.3% year-over-year
- Tariff costs of $2.0 million (5.1% of revenue) impacting margins
- C$16.6 million debt maturity approaching in January 2026
- Negative cash flows from operations in Q2 2025
News Market Reaction
On the day this news was published, DRTTF declined 10.75%, reflecting a significant negative market reaction.
Data tracked by StockTitan Argus on the day of publication.
CALGARY, Alberta, July 30, 2025 (GLOBE NEWSWIRE) -- DIRTT Environmental Solutions Ltd. (“DIRTT”, the “Company”, “we”, “our”, “us” or “ours”) (TSX: DRT; OTCQX: DRTTF), a leader in industrialized construction, today announced its financial results for the three and six months ended June 30, 2025. All financial information in this news release is presented in U.S. dollars, unless otherwise stated.
Second Quarter 2025 Highlights and Recent Developments
- Revenue of
$38.9 million in the second quarter of 2025, a decrease of6% , from the second quarter of 2024. - Gross profit margin decreased to
27.8% of revenue in the second quarter of 2025 from37.3% in the second quarter of 2024. Gross profit was negatively impacted by tariff related costs amounting to5.1% of revenue. - During the first six months of 2025, various tariffs have been levied by the U.S. and Canadian governments. We incurred
$2.0 million (5.1% of total revenue) in tariffs and costs related to tariff mitigation actions for the three months ended June 30, 2025. DIRTT is most impacted by the25% tariff levied on Canadian aluminum exports to the United States which increased to50% in June 2025. - Net loss after tax and net loss margin for the second quarter of 2025 was
$6.6 million and17.0% , respectively, compared to a net income after tax and net income margin of$0.6 million and1.4% , respectively, in the second quarter of 2024. - Adjusted EBITDA(1) was
$(2.0) million , or (5.2% ) of revenue, in the second quarter of 2025, compared to$3.2 million , or7.7% of revenue, in the second quarter of 2024. - Liquidity, comprising of unrestricted cash and available borrowings, was
$31.1 million at June 30, 2025, compared to$39.3 million at December 31, 2024. - On June 12, 2025, we began trading on the OTCQX under the symbol “DRTTF.” The Company previously traded on, and upgraded to OTCQX from, the OTC Pink® Market.
(1) See “Non-GAAP Financial Measures”
Management Commentary
Benjamin Urban, chief executive officer, remarked “Project and order delays related to the macroeconomic landscape continued into the second quarter of 2025. Despite these headwinds, DIRTT remains focused on our transformation and growth strategies and we are seeing positive trends. Our key focus areas are revenue expansion and product innovation to unlock more scope and opportunities. Our Integrated Solutions team is contributing significantly to our pipeline through projects executed with partners or in geographic markets where we lack coverage. The introduction of new products, such as our one-hour fire-rated wall, allows us to capture more comprehensive healthcare and life sciences scope, and expand into previously unavailable market sectors including hospitality and multi-family housing. All of this is contributing to our strongest twelve-month pipeline in more than two years. While we anticipate more macroeconomic challenges ahead, we are optimistic about our path for growth.”
Fareeha Khan, chief financial officer, added “As anticipated, our revenue this quarter was lower than originally expected as we continued to see delays in construction investment decisions. Margins were impacted by tariffs, including an additional
Second Quarter 2025 Results
Second quarter 2025 revenue was
Gross profit and gross profit margin for the quarter ended June 30, 2025 were
Sales and marketing expenses decreased by
General and administrative expenses increased by
Operations support is comprised primarily of project managers, order entry and other professionals that facilitate the integration of our Construction Partner project execution, our manufacturing operations, and support staff for the Integrated Solutions team. Operations support expenses slightly increased by
Technology and development expenses relate to non-capitalizable costs associated with our product and software development teams, and are primarily comprised of salaries and benefits of technical staff. Technology and development expenses slightly increased
Stock-based compensation expense for the three months ended June 30, 2025 was
Foreign exchange loss or gain decreased from a gain of
Interest income for three months ended June 30, 2025 was
Interest expense decreased by
Net loss after tax was
For the three months ended June 30, 2025, Adjusted EBITDA decreased by
Outlook
DIRTT continued to experience challenges related to macroeconomic uncertainty in the second quarter of 2025, primarily driven by the United States’ changing tariff policy. In the second quarter of 2025, revenue was under pressure and lower than expected due to delayed contracts and slowed construction schedules, despite winning work. This trend is evidenced by our revenue declining
The imposition of tariffs decreased Adjusted Gross Profit Margin by 512 basis points in the second quarter of 2025. In June 2025, an additional
The construction industry continues to face challenges such as labor shortages and supply chain pressures and DIRTT’s value proposition is even more relevant. Markets seem to be accepting the tariff situation and we hope for normalcy to return to our order conversion in the next two quarters. We are focusing on growth and transforming our business to compete more directly with conventional construction by expanding our commercial channels, innovating our product offering, and increasing operational excellence. For the first time in two years, our twelve-month forward pipeline has crossed the
Our balance sheet is strong, including
Conference Call and Webcast Details
A conference call and webcast for the investment community is scheduled for July 31, 2025 at 08:00 a.m. MDT (10:00 a.m. EDT). The call and webcast will be hosted by Benjamin Urban, chief executive officer, and Fareeha Khan, chief financial officer.
The call is being webcast live on the Company’s website at dirtt.com. Alternatively, click here to listen to the live webcast. The webcast is listen-only.
A webcast replay of the call will be available on DIRTT’s website.
Statement of Operations
(Unaudited - Stated in thousands of U.S. dollars)
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||
| Product revenue | 37,741 | 40,176 | 78,087 | 79,215 | |||||||||||
| Service revenue | 1,181 | 1,025 | 2,130 | 2,833 | |||||||||||
| Total revenue | 38,922 | 41,201 | 80,217 | 82,048 | |||||||||||
| Product cost of sales | 27,362 | 25,389 | 53,718 | 50,381 | |||||||||||
| Service cost of sales | 742 | 437 | 1,139 | 1,644 | |||||||||||
| Total cost of sales | 28,104 | 25,826 | 54,857 | 52,025 | |||||||||||
| Gross profit | 10,818 | 15,375 | 25,360 | 30,023 | |||||||||||
| Expenses | |||||||||||||||
| Sales and marketing | 5,293 | 6,062 | 10,470 | 11,982 | |||||||||||
| General and administrative | 5,743 | 4,391 | 11,223 | 8,957 | |||||||||||
| Operations support | 1,872 | 1,841 | 3,902 | 3,616 | |||||||||||
| Technology and development | 1,480 | 1,436 | 2,708 | 2,687 | |||||||||||
| Stock-based compensation | 594 | 427 | 1,333 | 1,102 | |||||||||||
| Reorganization | 174 | 202 | 384 | 340 | |||||||||||
| Impairment charge on Rock Hill facility | - | - | - | 530 | |||||||||||
| Total operating expenses | 15,156 | 14,359 | 30,020 | 29,214 | |||||||||||
| Operating (loss) income | (4,338 | ) | 1,016 | (4,660 | ) | 809 | |||||||||
| Gain on extinguishment of convertible debentures | 7 | - | 14 | 2,931 | |||||||||||
| Foreign exchange (loss) gain | (1,912 | ) | 358 | (2,024 | ) | 1,277 | |||||||||
| Interest income | 232 | 482 | 494 | 971 | |||||||||||
| Interest expense | (485 | ) | (945 | ) | (936 | ) | (1,999 | ) | |||||||
| (2,158 | ) | (105 | ) | (2,452 | ) | 3,180 | |||||||||
| Net (loss) income before tax | (6,496 | ) | 911 | (7,112 | ) | 3,989 | |||||||||
| Income taxes | |||||||||||||||
| Current and deferred income tax expense | 106 | 315 | 151 | 348 | |||||||||||
| Net (loss) income after tax | (6,602 | ) | 596 | (7,263 | ) | 3,641 | |||||||||
| Net (loss) income per share | |||||||||||||||
| Net (loss) income per share − basic | (0.03 | ) | 0.00 | (0.04 | ) | 0.02 | |||||||||
| Net (loss) income per share − diluted | (0.03 | ) | 0.00 | (0.04 | ) | 0.02 | |||||||||
| Weighted average number of shares outstanding (in thousands) | |||||||||||||||
| Basic | 190,537 | 192,031 | 190,597 | 187,849 | |||||||||||
| Diluted | 190,537 | 310,088 | 190,597 | 305,869 | |||||||||||
Non-GAAP Financial Measures
Our interim condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). These GAAP financial statements include non-cash charges and other charges and benefits that we believe are unusual or infrequent in nature or that we believe may make comparisons to our prior or future performance difficult.
As a result, we also provide financial information in this news release that is not prepared in accordance with GAAP and should not be considered as an alternative to the information prepared in accordance with GAAP. Management uses these non-GAAP financial measures in its review and evaluation of the financial performance of the Company. We believe that these non-GAAP financial measures also provide additional insight to investors and securities analysts as supplemental information to our GAAP results and as a basis to compare our financial performance period-over-period and to compare our financial performance with that of other companies. We believe that these non-GAAP financial measures facilitate comparisons of our core operating results from period to period and to other companies by removing the effects of our capital structure (net interest income on cash deposits, interest expense on outstanding debt and debt facilities, or foreign exchange movements), asset base (depreciation and amortization), tax consequences, reorganization expense, unusual or infrequent charges or gains (such as gain on extinguishment of debt, and impairment charges), stock-based compensation, and government subsidies. We remove the impact of foreign exchange gain (loss) from Adjusted EBITDA. Foreign exchange gains and losses can vary significantly period-to-period due to the impact of changes in the U.S. and Canadian dollar exchange rates on foreign currency denominated monetary items on the balance sheet and are not reflective of the underlying operations of the Company. In periods where production levels are abnormally low, unallocated overheads are recognized as an expense in the period in which they are incurred. In addition, management bases certain forward-looking estimates and budgets on non-GAAP financial measures, primarily Adjusted EBITDA. We have not reconciled forward-looking non-GAAP measures, including Adjusted EBITDA guidance, to its corresponding GAAP measures due to the high variability and difficulty in making accurate forecasts and projections, particularly with respect to non-operating income and expenditures, which are difficult to predict and subject to change.
Depreciation and amortization, stock-based compensation expense, reorganization expense, foreign exchange gains and losses, gain on extinguishment of debt, impairment charges, net interest income on cash deposits, interest expense on outstanding debt and debt facilities, and tax expense are excluded from our non-GAAP financial measures because management considers them to be outside of the Company’s core operating results, even though some of those receipts and expenses may recur, and because management believes that each of these items can distort the trends associated with the Company’s ongoing performance. We believe that excluding these receipts and expenses provides investors and management with greater visibility to the underlying performance of the business operations, enhances consistency and comparativeness with results in prior periods that do not, or future periods that may not, include such items, and facilitates comparison with the results of other companies in our industry.
The following non-GAAP financial measures are presented in this news release, and a description of the calculation for each measure is included.
| Adjusted Gross Profit | Gross profit before deductions for depreciation and amortization |
| Adjusted Gross Profit Margin | Adjusted Gross Profit divided by revenue |
| EBITDA | Net income before interest, taxes, depreciation, and amortization |
| Adjusted EBITDA | EBITDA adjusted to remove foreign exchange gains or losses; impairment charges; reorganization expenses; stock-based compensation expense; unusual or infrequent charges (such as gain on extinguishment of debt); and any other non-core gains or losses |
| Adjusted EBITDA Margin | Adjusted EBITDA divided by revenue |
You should carefully evaluate these non-GAAP financial measures, the adjustments included in them, and the reasons we consider them appropriate for analysis supplemental to our GAAP information. Each of these non-GAAP financial measures has important limitations as an analytical tool due to exclusion of some but not all items that affect the most directly comparable GAAP financial measures. You should not consider any of these non-GAAP financial measures in isolation or as substitutes for an analysis of our results as reported under GAAP. You should also be aware that we may recognize income or incur expenses in the future that are the same as, or similar to, some of the adjustments in these non-GAAP financial measures. Because these non-GAAP financial measures may be defined differently by other companies in our industry, our definitions of these non-GAAP financial measures may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.
The following table presents a reconciliation for the results for the three and six months ended June 30, 2025 and 2024 of EBITDA and Adjusted EBITDA to our net (loss) income after tax, and of Adjusted EBITDA Margin to net (loss) income margin, which are the most directly comparable GAAP measures for the periods presented:
(Unaudited - Stated in thousands of U.S. dollars)
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||
| ($ in thousands) | ($ in thousands) | ||||||||||||||
| Net (loss) income after tax for the period | (6,602 | ) | 596 | (7,263 | ) | 3,641 | |||||||||
| Add back (deduct): | |||||||||||||||
| Interest expense | 485 | 945 | 936 | 1,999 | |||||||||||
| Interest income | (232 | ) | (482 | ) | (494 | ) | (971 | ) | |||||||
| Income tax expense | 106 | 315 | 151 | 348 | |||||||||||
| Depreciation and amortization | 1,547 | 1,521 | 3,027 | 3,055 | |||||||||||
| EBITDA | (4,696 | ) | 2,895 | (3,643 | ) | 8,072 | |||||||||
| Foreign exchange loss (gain) | 1,912 | (358 | ) | 2,024 | (1,277 | ) | |||||||||
| Stock-based compensation | 594 | 427 | 1,333 | 1,102 | |||||||||||
| Reorganization expense(2) | 174 | 202 | 384 | 340 | |||||||||||
| Gain on extinguishment of convertible debentures(2) | (7 | ) | - | (14 | ) | (2,931 | ) | ||||||||
| Impairment charge on Rock Hill facility(2) | - | - | - | 530 | |||||||||||
| Adjusted EBITDA | (2,023 | ) | 3,166 | 84 | 5,836 | ||||||||||
| Net (Loss) Income Margin(1) | (17.0 | )% | 1.4 | % | (9.1 | )% | 4.4 | % | |||||||
| Adjusted EBITDA Margin | (5.2 | )% | 7.7 | % | 0.1 | % | 7.1 | % | |||||||
| (1) | Net (loss) income after tax divided by revenue. | |
| (2) | Reorganization expenses, the gain on extinguishment of convertible debentures (refer to Note 4 of the interim condensed consolidated financial statements) and the impairment charge on the Rock Hill facility are not core to our business and are therefore excluded from the Adjusted EBITDA calculation. |
The following table presents a reconciliation for the three and six months ended June 30, 2025 and 2024 of Adjusted Gross Profit to our gross profit and Adjusted Gross Profit Margin to gross profit margin, which are the most directly comparable GAAP measures for the periods presented:
(Unaudited - Stated in thousands of U.S. dollars)
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||
| ($ in thousands) | ($ in thousands) | ||||||||||||||
| Gross profit | 10,818 | 15,375 | 25,360 | 30,023 | |||||||||||
| Gross profit margin | 27.8 | % | 37.3 | % | 31.6 | % | 36.6 | % | |||||||
| Add: Depreciation and amortization expense | 1,007 | 845 | 1,964 | 1,689 | |||||||||||
| Adjusted Gross Profit | 11,825 | 16,220 | 27,324 | 31,712 | |||||||||||
| Adjusted Gross Profit Margin | 30.4 | % | 39.4 | % | 34.1 | % | 38.7 | % | |||||||
Special Note Regarding Forward-Looking Statements
Certain statements contained in this news release are “forward-looking statements” within the meaning of “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934 and “forward-looking information” within the meaning of applicable Canadian securities laws. All statements, other than statements of historical fact included in this news release, regarding our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this news release, the words “anticipate,” “believe,” “expect,” “estimate,” “intend,” “plan,” “project,” “outlook,” “may,” “will,” “should,” “would,” “could,” “can,” “continue,” the negatives thereof, variations thereon and other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. In particular and without limitation, this news release contains forward-looking information pertaining to the effect of our strategic priorities on increasing value creation; the impacts of macroeconomic conditions on the Company’s business; the Company’s pipeline; forecast operating and financial results and the impact of certain cost-saving measures, including the development, timing and success of strategic accounts; the competitiveness of the Company’s solutions; the liquidity and capital resources of the Company; the outcome and effects that current claims and litigation against the Company; financial condition, results of operations and growth prospects; the effect of tariffs and economic uncertainty on our business, including on our 2025 guidance, and our ability to mitigate any such effects and timing thereof; our beliefs about future revenue and Adjusted EBITDA, and the timing thereof; project delivery and the timing thereof; capital expenditures and allocation; general economic conditions; our ability to weather economic conditions; and DIRTT's ability to support its partners, grow its business and invest in long-term growth.
Forward-looking statements are based on certain estimates, beliefs, expectations, and assumptions made in light of management’s experience and perception of historical trends, current conditions and expected future developments, as well as other factors that may be appropriate.
Forward-looking statements necessarily involve unknown risks and uncertainties, which could cause actual results or outcomes to differ materially from those contained in, or expressed or implied by such statements. Due to the risks, uncertainties, and assumptions inherent in forward-looking information, you should not place undue reliance on forward-looking statements. Factors that could have a material adverse effect on our business, financial condition, results of operations and growth prospects include, but are not limited to, risks described under the section titled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the U.S. Securities and Exchange Commission and applicable securities commissions or similar regulatory authorities in Canada on February 26, 2025 as supplemented by our Quarterly Report on Form 10-Q for the quarter ended June 30, 2025 filed with the SEC and applicable securities commissions or similar regulatory authorities in Canada on July 30, 2025.
Our past results of operations are not necessarily indicative of our future results. You should not place undue reliance on any forward-looking statements, which represent our beliefs, assumptions and estimates only as of the dates on which they were made, as predictions of future events. We undertake no obligation to update these forward-looking statements, even though circumstances may change in the future, except as required under applicable securities laws. We qualify all of our forward-looking statements by these cautionary statements.
About DIRTT Environmental Solutions
DIRTT is a leader in industrialized construction. DIRTT’s system of physical products and digital tools empowers organizations, together with construction and design leaders, to build high-performing, adaptable, interior environments. Operating in the workplace, healthcare, education, and public sector markets, DIRTT’s system provides total design freedom, and greater certainty in cost, schedule, and outcomes. DIRTT’s interior construction solutions are designed to be highly flexible and adaptable, enabling organizations to easily reconfigure their spaces as their needs evolve. Headquartered in Calgary, AB Canada, DIRTT trades on the Toronto Stock Exchange under the symbol “DRT” and on the OTCQX under the symbol "DRTTF".
FOR FURTHER INFORMATION PLEASE CONTACT ir@dirtt.com
FAQ
What were DIRTT's (DRTTF) key financial results for Q2 2025?
How did tariffs impact DIRTT's Q2 2025 performance?
What is DIRTT's current pipeline and growth outlook?
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What new products did DIRTT introduce in Q2 2025?
