DIRTT ENVIRONMENTAL SOLUTIONS LTD
For the period ended Dec 31, 2024. Filed Feb 26, 2025.
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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Feb 26, 2025
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What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-02-21.
0000950170-24-018049
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-02-26.
0000950170-25-027896
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 168 previous paragraphs and 189 current paragraphs.
78 unchanged; 49 reworded; 61 added; 40 removed; 1 previous and 1 current paragraphs rearranged.
Tables are not compared: 16 previous and 16 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (61)
Current report
Revenues for the fourth quarter of 2024 were $48.9 million, a decrease of $2.0 million or 4.0% from $50.9 million for the same period in 2023. The decrease in revenue, as compared to the same period of 2023, was primarily the result of a higher volume of large projects completed in the fourth quarter of 2023.
Current report
Gross profit and gross profit margin for the fourth quarter of 2024 was $17.5 million or 35.9% of revenue, a decrease from $19.2 million or 37.8% of revenue for the same period of 2023. Adjusted Gross Profit and Adjusted Gross Profit Margin (see “– Non-GAAP Financial Measures”) for the fourth quarter of 2024 was $19.0 million or 38.8% of revenue. This represents a decrease from $20.1 million or 39.5% of revenue in the fourth quarter of 2023. These decreases in Adjusted Gross Profit Margin are the result of lower revenues and a $0.7 million increase to our inventory obsolescence provision.
Current report
Cash on hand increased by $5.7 million in the fourth quarter of 2024 to $29.5 million, compared to a $2.7 million increase in cash in the fourth quarter of 2023. The increase in cash in the fourth quarter of 2024 was driven by $6.2 million of cash flows from operations and a positive impact of $0.3 million foreign exchange gain, offset by $0.7 million in capital expenditures and $0.1 million from repayment of debt and other financing activities .
Current report
On November 26, 2024, the Company announced that Holly Hess Groos joined our board of directors (“Board” or “Board of Directors”) and was appointed as the Chair of the Audit Committee.
Current report
On December 18, 2024, the Company announced a normal course issuer bid for its common shares (the “Shares NCIB”), which commenced on December 20, 2024 and will terminate no later than December 19, 2025. The Shares NCIB permits DIRTT to acquire up to 7,515,233 of its common shares. All purchases will be made on the open market through the facilities of the Toronto Stock Exchange (“TSX”) at the market price of common shares at the time of acquisition. Any common shares acquired through the Shares NCIB will be immediately cancelled.
Current report
On February 5, 2025, the US District Court for the Northern District of Utah dismissed DIRTT’s lawsuit against Falkbuilt Ltd. (“Falkbuilt”) in Utah on procedural grounds. In DIRTT’s similar lawsuit against Falkbuilt in Canada, the Court of King’s Bench of Alberta has scheduled an eight-week trial to commence February 2, 2026. With the Canadian trial commencing less than a year away, DIRTT is pursuing damages and losses it suffered in Canada, the United States, and abroad in the Court of King's Bench of Alberta.
Current report
On February 13, 2025, the Company entered into a share repurchase with NGEN III, LP (“NGEN”) pursuant to which the Company purchased for cancellation 3,920,844 common shares of DIRTT at a purchase price of $0.80 per common share purchased from NGEN (the “Share Repurchase”). The purchase of $0.80 per share was a 1% discount to the closing price of the common shares on the TSX on January 27, 2025 (converted into U.S. Dollars using the February 13, 2025 closing exchange rate published by the Bank of Canada). The common shares repurchased under the Share Repurchase were counted against DIRTT’s annual normal course issuer bid share limit (the “NCIB Annual Limit”). Following completion of the Share Repurchase, the Company’s outstanding NCIB Annual Limit was reduced to 3,422,494. The Share Repurchase closed on February 14, 2025.
Current report
Revenues for the year ended December 31, 2024, were $174.3 million, a decrease of $7.6 million or 4% from $181.9 million for the year ended December 31, 2023. The decrease in revenue, as compared to the same period of 2023, was primarily the result of three large healthcare projects, one key education project and a larger volume of commercial projects that were completed in 2023 and were not repeated in 2024. Annual revenue was in line with the expected guidance range of $165 million to $175 million provided in the second quarter of 2024.
Current report
Gross profit and gross profit margin for the year ended December 31, 2024, was $64.4 million or 36.9% of revenue, an increase from $59.5 million or 32.7% of revenue for the year ended December 31, 2023. Adjusted Gross Profit (see “– Non-GAAP Financial Measures”) for the year ended December 31, 2024, was $68.3 million, an increase from $65.1 million for the year ended December 31, 2023. Adjusted Gross Profit Margin (see “– Non-GAAP Financial Measures”) for the year ended December 31, 2024, was 39.2%, an improvement from 35.8% for the year ended December 31, 2023. The improved Adjusted Gross Profit and Adjusted Gross Profit Margin are the result of improved material optimization to offset the inflationary impacts on material costs. Fixed costs decreased $2.3 million compared to 2023 as we aligned overhead costs and support costs with current operations after having finalized the decision to close the Rock Hill Facility in the third quarter of 2023.
Current report
Net income after tax for the year ended December 31, 2024, was $14.8 million compared to a $14.6 million net loss after tax for the year ended December 31, 2023. The increase in net income after tax was the result of a $4.8 million increase in gross profit, a $15.9 million decrease in operating expenses (which includes an $8.2 million decrease in impairment charge on the Rock Hill Facility and a decrease of $1.9 million in reorganization expenses), a $10.4 million gain on extinguishment of debt relating to the Issuer Bid, Debenture Repurchase and the Debentures NCIB (each as defined herein), a $1.1 million increase in interest income, a $0.9 million decrease in interest expense and a $3.6 million increase in foreign exchange gain, offset by a $7.1 million gain on software sale from 2023 not repeated in 2024, and a $0.2 million decrease in government subsidies.
Current report
On January 9, 2024, the Company announced the completion of the rights offering to its common shareholders, resulting in the issuance of 85,714,285 common shares at a price of C$0.35 ($0.26) per whole common share for aggregate gross proceeds of C$30.0 million ($22.4 million) (the “Rights Offering”). DIRTT issued an aggregate of 67,379,471 common shares pursuant to the Basic Subscription Privilege and 18,334,814 common shares pursuant to the Additional Subscription Privilege. As a result of the common shares issued under the Basic Subscription Privilege and Additional Subscription Privilege, no common shares were available for issuance pursuant to the Standby Purchase Agreement (each as defined in Note 16 to our Consolidated Financial Statements).
Current report
On February 15, 2024, the Company commenced a substantial issuer bid and tender offer (the “Issuer Bid”), for our Debentures. Upon expiration of the Issuer Bid on March 22, 2024, DIRTT purchased C$4.7 million aggregate principal amount of its January Debentures and C$5.8 million aggregate principal amount of its December Debentures, representing approximately 11.66% of the January Debentures and 16.50% of the December Debentures issued and outstanding at the time. The Company took up all the Debentures tendered pursuant to the Issuer Bid for aggregate consideration of C$7.0 million (including interest of C$0.1 million) resulting in a $2.9 million gain on extinguishment of debt.
Current report
On June 30, 2024, then-Chair of the Board of Directors Mr. Ken Sanders retired from the Board of Directors. On July 1, 2024, the Company announced that the Board of Directors elected Mr. Scott Robinson to serve as Board Chair to replace Mr. Sanders.
Current report
On August 2, 2024, the Company and 22NW Fund, L.P. (“22NW”) closed the Debenture Repurchase in which the Company purchased for cancellation an aggregate of C$18.9 million ($14.0 million) principal amount of the January Debentures and C$13.6 million ($10.1 million) principal amount of the December Debentures from 22NW. As at December 31, 2024, C$16.6 million ($11.6 million) principal amount of the January Debentures and C$15.3 million ($10.6 million) principal amount of the December Debentures remained outstanding, and 22NW no longer held any Debentures.
Current report
On August 2, 2024, the Board of Directors adopted the Amended and Restated SRP, which superseded the previous Shareholder Rights Plan adopted on March 22, 2024. The Amended and Restated SRP was approved by the Company’s shareholders at a special meeting held on September 20, 2024 (the “SRP Meeting”). The Company also entered into a support and standstill agreement (the “Support Agreement”) with 22NW, DIRTT’s largest shareholder, and WWT Opportunity #1 LLC (“WWT”), DIRTT’s second largest shareholder. The Support Agreement replaces the previously announced support and standstill agreement entered into with 22NW on March 22, 2024.
Current report
On August 28, 2024, the Company commenced the Debentures NCIB, which permits DIRTT to acquire up to C$1,664,200 principal amount of the January Debentures and C$1,558,700 principal amount of the December Debentures. As at December 31, 2024, C$0.3 million ($0.2 million) and C$0.01 million ($0.01 million) principal amounts of the December Debentures and January Debentures, respectively, had been acquired through the Debentures NCIB.
Current report
The table below presents our qualified leads and twelve-month forward pipeline as at January 1, 2025 and January 1, 2024. We define qualified leads as the quantity of projects being pursued as of the date presented, and define our pipeline as the estimated potential revenue from qualified leads where a client has engaged DIRTT and is assessing DIRTT as a potential provider of prefabricated interior solutions. We believe these metrics are helpful to estimate near-term performance, particularly given the macroeconomic factors that affect our operating environment, including labor availability, interest rate changes, and potential recessionary impacts on construction projects.
Current report
As of January 1, 2025, our twelve-month forward pipeline increased by 3% from January 1, 2024, illustrated in the table below.
Current report
The January 1, 2024 pipeline included a large commercial project awarded to us in the first quarter of 2024, but the project was phased over a three-year period. As a result, the twelve-month forward pipeline decreased by $22.9 million while the project value remained in the full pipeline. After accounting for this phasing, the twelve-month pipeline increased by $31.3 million.
Current report
We believe our pipeline has higher integrity and has more projects further along the process, and therefore we are maintaining our revenue guidance for 2025 at $194 million to $209 million.
Current report
The segment of construction that DIRTT operates in represents a $40 billion addressable market with increasing expansion opportunities. DIRTT continues to capture more market share by solving construction’s key challenges through innovative product development, technology-enabled efficiency, and a simplified installation process. Adoption of offsite, prefabricated construction is accelerating due to sustainability goals, trade labor shortages, and rising costs. DIRTT pioneered its unique construction method over 20 years ago and remains able to deliver schedule acceleration, cost certainty, unlimited aesthetic customization, and an end product that can be repurposed and reused to minimize waste. Everything we manufacture is de-mountable and infinitely re-configurable to adapt to the ever-changing needs of our customers.
Current report
Last quarter, we shared our strategic priorities through 2027, including revenue growth, continued expansion of DIRTT’s proprietary ICE software, accelerated innovation, and investment in talent. In the fourth quarter of 2024, we continued mapping our path to growth with a focus on innovating how we go to market. Our primary source of revenue remains our extensive network of independent DIRTT Construction Partners (“Construction Partners” or “Partners”). While we continue to develop and expand this network, including advancing 15 Partners to a higher status tier in 2025, we are also mapping additional growth paths to unlock greater pipeline. For example, we believe there are geographic areas of North America that lack sufficient coverage by our existing network into which we can expand and we are also expanding our offering to include more estimating, pre-construction, and installation services, both directly and through Partners. In 2024, we launched an additional go-to-market channel called Integrated Solutions. This team provides sales, design, estimating, and project delivery services with our Construction Partners and DIRTT sales representatives. Integrated Solutions increases our sales network’s capacity as well as targets revenues in channels without existing coverage. There are three key opportunity areas Integrated Solutions is focusing on; diversifying our customer profile, increasing volumes in smaller markets, and expanding into new sectors. Through these efforts, Integrated Solutions aims to simplify our go-to-market strategy and increase access to DIRTT’s portfolio of products.
Current report
Raw material prices continue to increase and on February 11, 2025, we announced a price increase of 5% on all orders placed after March 18, 2025, and price adjustments on certain products in response to market feedback and to mitigate the impact of these rising costs.
Current report
We continue to advance our ICE offering, including the addition of several new features that streamline processes and reduce customer inquiries. In response to user feedback, we optimized the ICE Manager application to improve the interface and added an “Early Access” feature to allow beta testers and developers to access applications for further testing and improvement. An update in December 2024 introduced itemized part pricing and automated casework plan details, saving DIRTT 50 to 75 hours per week in designer time and improving efficiency for customers. We continue to evaluate artificial intelligence (“AI”) for software development, including catalogue creation. DIRTT is evaluating a code generative AI resource to develop a web-based freight quoting tool, with the potential to save approximately 200 hours of development time and remove a manual touch-point for our customers.
Current report
DIRTT has made significant strides with product innovation and partnerships. For example, the COVE™, our low-acuity solution for emergency departments, officially launched in November 2024 and is already earning significant industry recognition. In addition to previously announced product awards from the 2024 Healthcare Facilities Symposium and Expo, we were recently awarded the Gold Touchstone Award from the Center for Health Design, and will be recognized in March at the 2025 International Summit & Exhibition on Health Facility Planning, Design & Construction PDC Summit. In the fourth quarter of 2024, we also released curved solid corners for our solid wall solution, which is already seeing strong demand with active project quotes in the market. We are also innovating our market approach through strategic partnerships. In December 2024, DIRTT joined the Siemen’s Xcelerator program to further drive our digital transformation in the construction sector by leveraging automation, Internet of Things and digital twin technology to seamlessly connect our physical assets with their digital counterparts. This will help enable continuous monitoring, predictive maintenance, optimized space utilization, and enhanced process efficiency.
Current report
We have a bold operations goal of zero defects, missed deliveries, and workplace injuries. In 2024, DIRTT's on time in full (OTIF) delivery performance was 99.1%, the highest in our history. We also achieved a total recordable incident rate (TRIF) of 0.82 for 2024, which is 80% below the industry average.
Current report
Through the fourth quarter of 2024, the US economy continued its economic expansion post-COVID with inflation reaching closer to the Federal Reserve 2% target. The recent pause in interest rate cuts by the Federal Reserve highlights a commitment to reaching a 2% target. The new administration in the United States has expressed support for deregulation, lower taxes, and creating a favorable economic climate for businesses in America. Return to office mandates have increased, with financial services and technology leading the way. Additionally, a favorable environment for mergers and acquisitions will be an additional demand driver for interior construction. The Kastle Systems weekly occupancy index continues to trend upwards. On the other hand, recent reports of Department of Government Efficiency suggests there may be decreased demand on our General Services Administration Contract, which represented less than 0.6% of our revenues in 2024. The impact of these various developments on our business is uncertain.
Current report
We see continued demand growth in our healthcare segment with national spending growing significantly since pre-COVID and are dedicating resources to capture this trend. Similarly, national education construction spending surpassed its pre-COVID highs in 2024. Overall, excluding the tariff risk described below, we are observing a supportive macro-economic environment in the United States that we believe will support increasing demand of our products.
Current report
The announcement in February 2025 of a 25% tariff on all Canadian imports into the U.S., and Canada’s subsequent announcement of retaliatory tariffs on U.S. good imported into Canada, has created uncertainty across multiple sectors, including the construction industry. While Canada and the U.S. have agreed to delay the imposition of such tariffs until March 6, 2025, the ultimate extent and duration of such tariffs is unknown, and significant uncertainty continues to exist in respect of future tariffs or other trade barriers in general. In addition, on February 10, 2025, an Executive Order was issued by the White House imposing 25% tariffs on steel and aluminum entering the U.S., effective March 12, 2025. As at the date hereof, the outcome and extent of these tariffs is uncertain. 92% of DIRTT’s raw materials are from North America, and DIRTT has manufacturing facilities both in the U.S. and Canada. Our Canadian facilities import some raw materials from the U.S., and our U.S. facilities import some raw materials from Canada. While tariffs would have a cost impact on our business, we believe our presence in both Canada and the U.S. provides us with strategic flexibility. We have been, and continue to be, proactively preparing for potential tariffs and we believe that we have multiple paths to mitigate the impact of tariffs on our business, including alternative material sourcing and manufacturing locations.
Current report
We are maintaining our previously provided 2025 guidance, which is set forth below. Given the significant uncertainty surrounding tariffs, our 2025 guidance may not be realized should any significant tariff impacts arise subsequent to the date hereof.
Current report
2025 Revenue: $194 to 209 million
Current report
2025 Adjusted EBITDA: $18 to 25 million
Current report
We finalized our 2025 budget in early January 2025. We plan to increase our capital expenditure by more than 50% from 2024, as we continue to invest in improving efficiencies in our plants, investing in our DXC footprint and investments in ICE.
Current report
Revenue for the year ended December 31, 2024, was $174.3 million, a decrease of $7.6 million or 4% from the year ended December 31, 2023, primarily due to three healthcare projects, one key education project and a larger volume of high value commercial projects that were completed in 2023 and were not repeated in 2024.
Current report
Sales and marketing expenses decreased by $2.3 million to $22.9 million for the year ended December 31, 2024, from $25.2 million for the year ended December 31, 2023. The decrease was largely made up of a $1.0 million decrease in pass through charges, a $0.9 million decrease in building and infrastructure costs, a $0.7 million decrease in commissions, and a $0.3 million decrease in office costs and communication costs. The decreases were offset by an increase of $0.3 million in salaries and benefits and a $0.3 million increase in marketing and tradeshows costs related to the “Partner Camp” event hosted by the Company for our Construction Partners held at the end of the third quarter of 2024.
Current report
General and administrative expenses decreased $1.8 million to $19.9 million for the year ended December 31, 2024, from $21.7 million for the year ended December 31, 2023. The decrease was driven by a $0.9 million decrease in salaries and benefits, a $0.9 million decrease in office costs, a $0.3 million decrease in depreciation, a $0.3 million decrease in communication costs, a $0.2 million decrease in public company costs, a $0.1 million decrease in travel and entertainment, a $0.1 million decrease in building and infrastructure costs, and a $0.1 million increase in gain on disposal. These decreases were offset by a $1.2 million increase in professional legal fees as a result of the SRP Meeting, the Debenture Repurchase, the Support Agreement and the Debentures NCIB which occurred in the third quarter of 2024, and the Shares NCIB that we commenced in the fourth quarter of 2024.
Current report
Stock-based compensation expense for the year ended December 31, 2024, was $3.0 million compared to $2.3 million in 2023. The increase was due to fair value adjustments on cash settled DSU awards as a result of the increased share price between December 31, 2023 and December 31, 2024.
Current report
The Company finalized the decision to close the Rock Hill Facility in the third quarter of 2023. The Company’s reassessment of the useful lives of the manufacturing equipment at the Rock Hill Facility resulted in an $8.7 million impairment charge in the twelve months ended December 31, 2023.
Current report
Certain assets, including manufacturing equipment, which met held-for-sale criteria at that time were reclassified from property, plant and equipment. At March 31, 2024, we determined that the assets held for sale balance of $0.5 million was to be reduced to $nil, resulting in a $0.5 million impairment charge for the first quarter of 2024. We were not able to determine the likelihood of recoverability based on the current market interest in the equipment.
Current report
Gain on extinguishment of convertible debt
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Previous report
Revenues for the fourth quarter of 2023 were $50.9 million, an increase of $8.5 million or 20% from $42.4 million for the same period in 2022. The fourth quarter of 2023 benefited from several large projects compared to the fourth quarter of 2022.
Previous report
Gross profit and gross profit margin for the fourth quarter of 2023 was $19.2 million or 37.8% of revenue, an increase from $11.6 million or 27.3% of revenue for the same period of 2022.
Previous report
Adjusted Gross Profit and Adjusted Gross Profit Margin (see “– Non-GAAP Financial Measures”) for the fourth quarter of 2023 was $20.1 million or 39.5% of revenue. This represents an improvement from $13.6 million or 32.0% of revenue in the fourth quarter of 2022. The increase in Adjusted Gross Profit and Adjusted Gross Profit Margin compared to the comparative quarter is due to having better leverage over fixed costs through price increases and reorganization initiatives, which have been designed to align our cost structure with current expected levels of demand.
Previous report
The Company generated approximately $10.1 million of cash through operations in the fourth quarter of 2023 compared to $3.2 million in the same period of 2022. During the fourth quarter of 2023, the Company received $1.0 million on the sale of software to offset cash used for investing activities and repaid outstanding equipment leases related to the Rock Hill Facility of $7.8 million.
Previous report
On November 21, 2023, we announced the Rights Offering (as defined herein) to our common shareholders. The Rights Offering closed on January 9, 2024 with gross proceeds of C$30.0 million.
Previous report
Revenues for the year ended December 31, 2023, were $181.9 million, an increase of $9.8 million or 6% from $172.2 million for the year ended December 31, 2022, driven primarily by the pricing actions over the past two years.
Previous report
Gross profit and gross profit margin for the year ended December 31, 2023, was $59.5 million or 32.7% of revenue, an increase from $28.2 million or 16.4% of revenue for the year ended December 31, 2022.
Previous report
Adjusted Gross Profit (see “– Non-GAAP Financial Measures”) for the year ended December 31, 2023, was $65.1 million or 35.8% of revenue, an increase from $38.9 million or 22.6% of revenue for the year ended December 31, 2022. Adjusted Gross Profit Margin (see “– Non-GAAP Financial Measures”) for the year ended December 31, 2023, was 35.8%, a 13% improvement from 22.6% for the year ended December 31, 2022. The improved Adjusted Gross Profit and Adjusted Gross Profit Margin is due to having better leverage over fixed costs through price increases and reduced fixed costs. Product cost of sales in 2023 included $2.0 million of idle facility costs related to the Rock Hill Facility ($0.5 million in the year ended December 31, 2022). We are pursuing options to sublease the Rock Hill Facility to offset these costs in 2024 and beyond.
Previous report
Management has taken steps to align our manufacturing footprint and salaried workforce with our current activity levels as well as cost reduction and profitability initiatives. During the third quarter of 2023, we announced the intention to permanently close the Rock Hill Facility. With annual production capacity at DIRTT facilities in Savannah, Georgia and Calgary, Alberta, of approximately $400 million in annual revenue, the closure is part of DIRTT’s ongoing focus on realigning the organization, increasing efficiency, and improving profitability. Non-cash impairment charges related to the Rock Hill Facility equipment of $8.7 million has been recorded in the year ended December 31, 2023. During the fourth quarter, we initiated the process to move certain equipment to our Calgary Facility and sell various other assets at the Rock Hill Facility. We expect to receive $1.6 million for the sale of the assets in the next 12 months.
Previous report
Net loss after tax for the year ended December 31, 2023, was $14.6 million compared to $55.0 million for the year ended December 31, 2022. The decrease in net loss is primarily the result of the above noted increase in gross profit of $31.4 million. Other items that decreased the net loss in 2023 included a $11.1 million decrease in operating expenses (which includes an $8.7 million impairment charge and $1.5 million of related party expense in the current year), a $7.1 million gain on software sale, $0.4 million increase in interest income and a $0.2 million decrease in interest expense. These increases were offset by a $7.5 million decrease in government subsidies, a $2.1 million decrease in foreign exchange, and a $0.3 million increase in income tax expense.
Previous report
In the first quarter of 2023, we changed our methodology for calculating and disclosing our forward twelve month pipeline. We are now disclosing qualified leads, defined as quantity of projects being pursued, and our pipeline, defined as working with an engaged client on assessment of DIRTT as a prefabricated interior solution provider. We began using these new measures as we believe they better measure expected near term performance given that our operating environment has been prone to change due to macroeconomic factors such as worksite labor availability, interest rate changes, and potential recessionary impacts on construction projects.
Previous report
As of January 1, 2024, our twelve-month forward pipeline has grown 9.5% year-over-year and has contracted 4.6% since the previous quarter. We are focused on refilling our pipeline after achieving above trend revenue in the fourth quarter of 2023.
Previous report
We continue to focus on pipeline and forecasting integrity as our ten-day lead time is one of DIRTT’s key value propositions. The ability to produce and ship products in that time frame requires close attention to sales & operational planning.
Previous report
Our Commercial segment continues to benefit from post-COVID return-to-office policies in addition to focusing our strategy on premium quality products for large corporations. Due to the success of our Healthcare segment in 2023 and the long sales cycle inherent in Healthcare construction, our pipeline has contracted since the beginning of the year, but continues to grow from our previous quarter.
Previous report
Our Government and Education segments continue to provide stability and diversity to our revenues from our more volatile segments. We are closely monitoring the U.S. Federal Government’s budgeting process and the impact it may have on our revenue levels.
Previous report
We achieved an annual revenue of $181.9 million, a 6% increase over 2022 revenue of $172.2 million. We are pleased to report another consecutive year of revenue growth since the COVID-19 pandemic, and despite the volatility in the tech and banking sectors in early 2023. Our revenue for the fourth quarter of 2023 was the highest quarterly revenue since 2019.
Previous report
During 2023, we built on our successes in 2022 with further balance sheet improvement ($24.7 million vs. $10.8 million cash and cash equivalents at year end), expansion of our Gross Profit Margin (32.7% vs. 16.4%) and Adjusted Gross Profit Margins (35.8% vs. 22.6%), reductions of our net loss after tax from $(55.0) million to $(14.6) million and expansion of our Adjusted EBITDA Margins (4.4% vs. (15.2%)). In 2023, we saw macroeconomic factors stabilize our supply chains and input costs. Our focus on sales and operational planning as well as process efficiencies allowed us to achieve significant improvement in our adjusted gross margins. These actions also led to reductions in labor and inventory carrying costs during 2023. Further, we reduced expenses in our back office and general and administrative overhead to levels commensurate with our current and expected revenue levels.
Previous report
In the year ahead, we anticipate continued pipeline and revenue growth, but we also remain cautious about macroeconomic uncertainty and remain focused on preparing the Company for a variety of economic scenarios. The unprecedented pace of the US Federal Reserve’s interest rate hikes as well as geopolitical volatility in the Middle East and Asian Pacific have encouraged us to pay close attention to our fixed cost footprint and supply chain resiliency. The upcoming presidential election in the United States adds to this uncertainty and may impact the capital expenditure budgets of our clients. As noted in last quarter’s outlook, the first quarter of the year is typically our seasonally slowest quarter.
Previous report
As post-pandemic workplaces continue to evolve, the ability of DIRTT’s solutions to anticipate and respond to an uncertain future is at the core of our value proposition. Encouraging access to our full product offering unlocks workplace transformations with more flexible and adaptable environments. Our sustainable product offerings, featuring low carbon footprint, high recycled content, and minimal waste, also enable our Commercial, Government, Healthcare, and Education clients to make meaningful progress toward their environmental commitments and goals.
Previous report
On January 9, 2024 we successfully closed a C$30 million Rights Offering. As previously disclosed, we expect to use the proceeds of the Rights Offering for general corporate purposes, which may include investments in our business, funding potential future cash needs or operating losses, funding working capital and capital expenditure needs, or reductions to our outstanding indebtedness. We plan to use some of the funds to invest in our commercial business in all verticals, especially Healthcare, and are looking at additional opportunities and partnerships to support our revenue growth.
Previous report
In line with our objectives for the Rights Offering, on February 15, 2024, we announced a Substantial Issuer Bid for our convertible debentures of C$15 million, intended to strengthen our balance sheet by reducing debt. For additional information, please see Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources.”
Previous report
Beginning in 2020, we experienced significant increases in nearly all of our material input costs, including raw materials, shipping materials, labor, and freight. This led to significant gross margin compression in 2021 and 2022. Effective November 16, 2021, DIRTT increased product and transportation prices on new projects by approximately 6.5%. On February 17, 2022, we announced a further price increase of 5% that came into effect June 1, 2022. On June 21, 2022, an additional price increase of 10% was announced effective July 21, 2022. The increases have improved revenue and profitability through better recovery of the material input costs previously discussed.
Previous report
Revenue for the year ended December 31, 2023, was $181.9 million, an increase of $9.8 million or 6% from the year ended December 31, 2022. Revenue in early 2023 was impacted by macroeconomic conditions, including layoffs in the technology sector and rising interest rates, both of which have affected our pipeline. For example, one large project with a customer in the technology sector that was originally scheduled for the first quarter of 2023 was deferred indefinitely. Our fourth quarter revenue was $50.9 million, an increase of $8.5 million or 20% from $42.4 million for the same period in 2022. Historically, our fourth quarter revenue is lower than second and third quarter revenues due to seasonality. However, we benefited from two large healthcare projects that were completed in the quarter and from a project delayed earlier in the year that pushed into the fourth quarter. Macroeconomic conditions showed signs of improvement in late 2023, which also benefited the fourth quarter.
Previous report
Sales and marketing expenses decreased by $1.7 million to $25.2 million for the year ended December 31, 2023, from $27.0 million for the year ended December 31, 2022. The decrease was largely related to a realignment of back-office support, territory coverage and cost structure with current demand levels. The decrease was largely made up of a $1.7 million decrease in salaries and benefits, a $0.8 million decrease in travel and entertainment costs, a $0.5 million decrease in marketing and tradeshow costs and the benefit of offsetting our lease costs by subleasing our Dallas DXC during the year. The decreases were offset by a $1.5 million increase in commissions expenses, a $0.2 million increase in communications costs, and a $0.2 million increase in professional services related to consulting services.
Previous report
General and administrative expenses decreased $3.8 million to $21.7 million for the year ended December 31, 2023, from $25.5 million for the year ended December 31, 2022. The decrease was driven by a $3.2 million decrease in professional fees made up of legal and outside consulting costs, a $0.8 million decrease in depreciation costs, and a $0.6 million decrease in office and communications costs. These decreases were slightly offset by a $0.4 million increase in building costs related to higher costs to operate in our existing facilities and $0.2 million higher travel and entertainment costs.
Previous report
Stock-based compensation expense for the year ended December 31, 2023, was $2.3 million compared to $4.3 million in 2022. The decrease in this expense was largely due to RSU grants in lieu of cash compensation to the Company’s interim Chief Executive Officer in 2022, which were not repeated in 2023. DSUs were granted to the Board of Directors but were offset by the impact of fair value adjustments on cash settled awards as a result of our share price decreasing during the twelve months ended December 31, 2023.
Previous report
On September 27, 2023, the Company announced our intention to permanently close the Rock Hill Facility in South Carolina. For the year ended December 31, 2023, certain assets located at the Rock Hill Facility that were classified as property, plant and equipment, were reclassified as assets held for sale. Certain Rock Hill Facility assets had been approved by management for sale and had committed to a formal plan to market these assets, which is expected to be completed within the next twelve months. These were measured at the lower of the fair value less costs to sell and their net book value, which resulted in an $8.7 million impairment charge in the year ended December 31, 2023.
Previous report
Foreign Exchange (loss) gain
Previous report
Interest expense decreased by $0.2 million from $5.2 million for the year ended December 31, 2022, to $4.9 million for the year ended December 31, 2023, mostly related to the weaker Canadian dollar relative to the U.S dollar on our interest expense on Canadian convertible debentures.
Previous report
Net Loss after tax
Previous report
For the year ended December 31, 2023, Adjusted EBITDA and Adjusted EBITDA Margin increased by $34.1 million to $7.9 million or 4.4% from a $26.2 million loss or (15.2)% in the same period of 2022. This reflects a $26.1 million increase in Adjusted Gross Profit, discussed above, a $4.2 million decrease in salary and wage expenses, reflecting the impact of headcount reductions resulting from reorganization initiatives, $3.2 million of decreased professional fees, and $0.9 million decrease in other operating expenses as a result of continued evaluation of our fixed cost structure and overhead costs.
Previous report
Net loss divided by revenue.
Previous report
We have implemented multiple price increases during the past two years to mitigate the impact of inflation on raw materials, costs and improve liquidity. These actions have resulted in a meaningful improvement in our gross profit margins and have served to reduce our cash usage to operate the business. Gross profit for the year ended December 31, 2023, was $59.5 million, or 32.7% of revenue, compared to the same period in 2022, which generated gross profit of $28.2 million, or 16.4% of revenue.
Previous report
On November 21, 2023, the Company announced a rights offering to common shareholders for aggregate gross proceeds of C$30.0 million (the “Rights Offering”). The Rights Offering closed on January 9, 2024, for aggregate gross proceeds of C$30.0 million.
Previous report
The Company intends to fund the Issuer Bid with a portion of the proceeds from the Company’s previously completed rights offering to its common shareholders, which closed in January 2024 for aggregate gross proceeds of C$30.0 million.
Previous report
While we are encouraged by the improved profitability and cash flow, we have continued to evaluate our fixed cost structure and overhead in light of recent macroeconomic uncertainty. We have implemented multiple reorganization initiatives designed to align our cost structure with current expected levels of demand. In addition, the Company has reduced headcount by approximately 10%, from January 2022 through December 2023.
Previous report
Net cash flows provided by operating activities were $14.8 million for the year ended December 31, 2023, compared to $44.3 million used by operating activities for the year ended December 31, 2022. The improvement in cash flows used in operations is largely due to the $34.1 million increase in Adjusted EBITDA and a $10.5 million decrease in reorganization costs. We achieved positive operating cash flows through the realization of price increases and reorganization initiatives which have been designed to align our cost structure with current expected levels of demand.
Previous report
We currently expect to fund anticipated future investments with available cash, proceeds from the Rights Offering and drawings on the Second Extended RBC Facility. As of December 31, 2023, our strategic initiatives have generated cash through proceeds from the Private Placement in November 2022, the receipt of $7.3 million of government subsidy through the ERC application during the year ended December 31, 2023, and proceeds of $12.8 million received in 2023 through the AWI transaction. We continue to evaluate properties we own for sale and lease back and opportunities to sub-lease available spaces. Apart from cash flow from operations, issuing equity and debt has been our primary source of capital to date. Additional debt or equity financing may be pursued in the future as we deem appropriate. We may also use debt or pursue equity financing depending on the price of our common shares at the time, interest rates, and nature of the investment opportunity and economic climate. No assurance can be given that any of these actions will be successful or will be sufficient for our needs.
Previous report
As part of RBC’s consent to the AWI transaction, one of the Canadian lease agreements of $1.6 million was fully settled using proceeds from the AWI transaction. This resulted in the release of $0.4 million of restricted cash associated with the one year of payments on this lease.
Previous report
As at December 31, 2021, the fair value of goodwill did not exceed the carrying value of its net assets and, accordingly, the entire $1.4 million balance of goodwill was impaired as at December 31, 2021. There was no impairment charge for the year ended December 31, 2023, or December 31, 2022.
Reworded paragraphs (49)
Previous wording
DIRTT’s proprietary design integration software, ICE® (“ICE” or “ICE software”), translates the vision of architects and designers into a 3D model that also acts as manufacturing information. ICE is also licensed to unrelated companies and Construction Partners of the Company. As of May 9, 2023, AWI owns a 50% interest in the rights, title and interest in certain intellectual property rights in the Applicable ICE Code, including a 50% interest in the patent rights that relate to the Applicable ICE Code.
Current wording
DIRTT’s proprietary design integration software, ICE® (“ICE” or “ICE software”), translates the vision of architects and designers into a 3D model that also acts as manufacturing information. ICE is also licensed to our Construction Partners and certain third parties, including Armstrong World Industries, Inc. (“AWI”) which owns a 50% interest in the rights, title and interests in certain intellectual property rights in a portion of the ICE software that is used by AWI.
Previous wording
Key Fourth Quarter 2023 Highlights
Current wording
Key Fourth Quarter 2024 Highlights and Other Recent Developments
Previous wording
Net income after tax for the fourth quarter of 2023 was $1.0 million compared to a $5.9 million net loss after tax for the same period of 2022. The increase in net income is primarily the result of the higher gross profit margin, explained above, of $7.6 million. Other items that impacted net income in the period included a $1.5 million increase in operating expenses (includes a $1.0 million reduction in reorganization expenses and a decrease in the fair value less costs to sell related to the Rock Hill Facility assets held for sale, which resulted in an additional $0.8 million impairment charge), receipt of $1.0 million on the sale of software due to the completion of the knowledge transfer to AWI, and a $0.2 million increase in interest income. These increases were offset by a $0.2 million increase in the foreign exchange loss, a $0.1 million increase in interest expense, and a $0.3 million increase in tax expense.
Current wording
Net income after tax for the fourth quarter of 2024 was $4.0 million compared to a $1.0 million net income after tax for the same period of 2023. The increase in net income is primarily the result of a $2.0 million decrease in operating expenses (operating expenses in the fourth quarter of 2023 included a $0.8 million impairment charge on the Rock Hill Facility which was not repeated in the fourth quarter of 2024), a $2.6 million increase in foreign exchange gain, a $0.8 million decrease in interest expense and a $0.3 million decrease in tax expense. These benefits were offset by a $1.7 million decrease in gross profit, and a $1.0 million decrease of gain on sale of software and patents that resulted from the completion of the knowledge transfer to AWI that occurred in the fourth quarter of 2023 and was not repeated in 2024.
Previous wording
Adjusted EBITDA (see “– Non-GAAP Financial Measures”) for the fourth quarter of 2023 was $4.3 million or 8.5% of revenue, an improvement of $3.7 million from $0.6 million or 1.4% of revenue for the fourth quarter of 2022.
Current wording
Adjusted EBITDA (see “– Non-GAAP Financial Measures”) for the fourth quarter of 2024 was $5.5 million, or 11.2% of revenue, an improvement of $1.2 million from $4.3 million or 8.5% of revenue for the fourth quarter of 2023. Higher Adjusted EBITDA was mainly driven by the decrease in operating expenses, offset by the decrease in Adjusted Gross Profit due to the above noted reasons.
Previous wording
Adjusted EBITDA (see “– Non-GAAP Financial Measures”) for the year ended December 31, 2023 was $7.9 million or 4.4% of revenue, an improvement of $34.1 million from a $26.2 million loss or (15.2)% of revenue for the year ended December 31, 2022, for the above noted reasons.
Current wording
Adjusted EBITDA (see “– Non-GAAP Financial Measures”) for the year ended December 31, 2024 was $15.4 million or 8.8% of revenue, an improvement of $7.5 million from $7.9 million or 4.4% of revenue for the year ended December 31, 2023, for the above noted reasons. Adjusted EBITDA for the year ended December 31, 2024 exceeded the guidance range of $12 to $15 million.
Previous wording
As a result, we also provide financial information in this Annual Report 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), the impact of under-utilized capacity on gross profit, tax consequences, reorganization expense, one-time non-recurring charges or gains (such as gain on sale of software and patents), and stock-based compensation. We remove the impact of all foreign exchange 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. We remove the impact of under-utilized capacity from gross profit, and fixed production overheads are allocated to inventory on the basis of normal capacity of the production facilities. 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.
Current wording
As a result, we also provide financial information in this Annual Report 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), the impact of under-utilized capacity on gross profit, tax consequences, reorganization expense, unusual or infrequent charges or gains (such as gain on sale of software and patents, gain on extinguishment of debt and impairment charges), stock-based compensation, related party expense, 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.
Previous wording
Government subsidies, depreciation and amortization, stock-based compensation expense, reorganization expenses, foreign exchange gains and losses and impairment charges 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.
Current wording
Government subsidies, depreciation and amortization, stock-based compensation expense, reorganization expense, foreign exchange gains and losses, gain on extinguishment of debt, impairment charges, gain on sale of software and patents, net interest income on cash deposits, interest expense on outstanding debt and debt facilities, tax expense and related party 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.
Previous wording
The following table sets forth the contribution to revenue of our DIRTT Solutions and related offerings.
Current wording
The following table sets forth the contribution to revenue of our product and service offerings.
Previous wording
Installation and other services revenue was $5.0 million for the year ended December 31, 2023, compared to $5.9 million in the year ended December 31, 2022. This revenue primarily reflects services performed by our ICE and design teams for third parties. Except in limited circumstances, our Construction Partners, rather than the Company, perform installation services.
Current wording
Installation and other services revenue was $4.7 million for the year ended December 31, 2024, compared to $5.0 million in the year ended December 31, 2023. This revenue primarily reflects services performed by our ICE design teams for third parties. Except in limited circumstances, our Construction Partners, rather than the Company, perform installation services.
Previous wording
Our success is partly dependent on our ability to profitably develop our Construction Partner network to expand our market penetration and ensure best practices are shared across local markets. At December 31, 2023, we had 72 (2022 - 67) Construction Partners servicing multiple locations. During the year ended December 31, 2023, we announced the expansion of seven of our DIRTT Construction Partners into new markets, as we expand the reach of DIRTT products, predominantly in North America.
Current wording
Our success is partly dependent on our ability to profitably develop our Construction Partner network to expand our market penetration and ensure best practices are shared across local markets. At December 31, 2024, we had 71 (2023 - 72) Construction Partners servicing multiple locations.
Previous wording
We periodically analyze our revenue growth by vertical markets in the defined markets of commercial, healthcare, government and education. The following table presents our product and transportation revenue by vertical market.
Current wording
We periodically analyze our revenue growth by vertical markets in the defined markets of commercial, healthcare, government and education.
Previous wording
Commercial revenues for the year ended December 31, 2023 were consistent with the prior year. Healthcare revenues increased by 72% in the year ended December 31, 2023, from the prior year, which included $12.1 million from two large projects. Sales in the healthcare sector tend to be larger individual projects and are subject to timing due to a typically longer sales cycle, resulting in variability in sales levels. Education sales in 2023 decreased by 15% from the prior year and government revenues in 2023 decreased by 19% from 2022. Both the government and education sectors include a higher volume of smaller projects as compared to fiscal year 2022.
Current wording
Commercial sales increased by 4% for the year ended December 31, 2024. Healthcare revenues decreased by 38% in the year ended December 31, 2024, from the prior year, primarily due to three large healthcare projects which were completed in 2023 and did not repeat in 2024. Sales in the healthcare sector tend to be larger individual projects and are subject to timing due to a typically longer sales cycle, resulting in variability in sales levels. We have made several investments in new product solutions (such as COVE and Applied Headwalls) and additions to the business development team to increase product placement in future construction projects. This had led to multiple project commitments set to commence in 2025. Those investments continue in 2025 and are expected to expand into life sciences. Government sales increased by 27% from the prior year. Similar to healthcare, government revenues tend to be larger individual projects. We plan to update our government agreements in 2025 and expect an expansion in the number of our state government agreements. Education sales in 2024 decreased by 24% from the prior year, primarily due to one $1.4 million education project that was completed in 2023. Our sales team has focused on southern markets with high public funding activity to build a stronger education pipeline.
Previous wording
In 2023, 11% of revenue was from Canada, as compared to 15% in 2022. Historically, approximately 11-15% and 85-89% of revenues are derived from sales to Canada and the United States, respectively.
Current wording
In 2024, 14% of revenue was from Canada, as compared to 11% in 2023. Historically, approximately 11-15% and 85-89% of revenues are derived from sales to Canada and the United States, respectively.
Previous wording
Operations support is comprised primarily of project managers, order entry and other professionals that facilitate the integration of our Construction Partner project execution and our manufacturing operations. Operations support expenses of $7.8 million in 2023 decreased $1.7 million from $9.5 million in 2022. The decrease was largely driven by a $1.4 million decrease in salaries and benefits and a $0.2 million reduction in travel and entertainment costs related to planned headcount reductions and the reorganization initiatives undertaken.
Current wording
Operations support is comprised primarily of project managers, order entry and other professionals that facilitate the integration of our Construction Partner project execution and our manufacturing operations. Operations support expenses of $7.4 million in 2024 decreased $0.4 million from $7.8 million in 2023. The decrease was largely driven by a $0.6 million decrease in salaries and benefits and was slightly offset by a $0.1 million increase in travel and entertainment costs.
Previous wording
Technology and development expenses decreased by $1.7 million to $5.8 million for the year ended December 31, 2023, compared to $7.6 million for the year ended December 31, 2022. The decrease was primarily related to a $1.1 million decrease in salaries and benefits costs, a $0.2 million decrease in office and communication costs, a $0.2 million decrease in professional fees related to outside consulting services and a $0.2 million decrease in other expenses.
Current wording
Technology and development expenses decreased by $0.6 million to $5.3 million for the year ended December 31, 2024, compared to $5.8 million for the year ended December 31, 2023. The decrease was primarily related to a $0.7 million decrease in salaries and benefits costs, a $0.2 million decrease in building and infrastructure costs, and a $0.1 million decrease in depreciation expense. These decreases were offset by a $0.3 million write off of a previously capitalized software development project, and a $0.1 million increase in professional services costs.
Previous wording
For the year ended December 31, 2023, we incurred $3.0 million of reorganization costs compared to $13.5 million during the year ended December 31, 2022. Fiscal year 2023 costs related primarily to costs associated with the Rock Hill Facility suspension and subsequent closure, and termination costs associated with actions taken to streamline our back office and operational support functions, as discussed herein. Reorganization costs in 2022 were driven by the closure of the Phoenix Facility, the one-time costs associated with reductions of salaried workforce throughout 2022, and changes in management.
Current wording
For the year ended December 31, 2024, we incurred $1.1 million of reorganization costs compared to $3.0 million during the year ended December 31, 2023. Reorganization expenses for the year ended December 31, 2024 primarily relate to the movement of inventory and equipment from the Rock Hill Facility for use at our facility in Calgary, Alberta, while the reorganization costs in the year ended December 31, 2023 were largely made up of termination costs associated with actions taken to streamline our back office and operational support functions.
Previous wording
On March 15, 2023, the Company entered into a Debt Settlement Agreement (the “Debt Settlement Agreement”) with 22NW Fund, LP (“22NW”) and Aron English, 22NW’s principal and a director of DIRTT, (together, the “22NW Group”) who, collectively, beneficially owned approximately 19.5% of the Company’s issued and outstanding common shares at such time. Pursuant to the Debt Settlement Agreement, the Company agreed to reimburse the 22NW Group for the costs incurred by the 22NW Group in connection with the contested director election at the annual and special meeting of shareholders of the Company held on April 26, 2022, being $1.6 million (the “22NW Debt”).
Current wording
On March 15, 2023, the Company entered into a Debt Settlement Agreement (the “Debt Settlement Agreement”) with 22NW and Aron English, 22NW’s principal and a director of DIRTT, (together, the “22NW Group”) who, collectively, beneficially owned approximately 19.5% of the Company’s issued and outstanding common shares at such time. Pursuant to the Debt Settlement Agreement, the Company agreed to reimburse the 22NW Group for the costs incurred by the 22NW Group in connection with the contested director election at the annual and special meeting of shareholders of the Company held on April 26, 2022, being $1.6 million (the “22NW Debt”).
Previous wording
In the year ended December 31, 2023, we had a foreign exchange loss of $0.6 million compared to a gain of $1.4 million in the year ended December 31, 2022, due to fluctuations of the Canadian dollar relative to the U.S. dollar.
Current wording
In the year ended December 31, 2024, we had a foreign exchange gain of $3.0 million compared to a loss of $0.6 million in the year ended December 31, 2023, due to the weakening of the Canadian dollar relative to the U.S. dollar.
Previous wording
Interest income increased to $0.5 million for the year ended December 31, 2023, compared to $0.1 million in the year ended December 31, 2022, as we benefited from higher interest rates on higher cash balances.
Current wording
Interest income increased to $1.6 million for the year ended December 31, 2024, compared to $0.5 million in the year ended December 31, 2023, as we benefited from higher interest rates on higher cash balances.
Previous wording
On May 9, 2023, we entered into the AWI Agreement and Partial Patent Assignment Agreement with AWI. The agreements provided for a cash payment from AWI to the Company of $10.0 million in exchange for the partial assignment to AWI and resulting co-ownership of a 50% interest in the rights, title and interests in certain intellectual property rights in the Applicable ICE Code, including a 50% interest in the patent rights that relate to the Applicable ICE Code. Pursuant to the AWI Agreement, we also provided AWI a transfer of knowledge concerning the source code of the Applicable ICE Code. In exchange for completing the knowledge transfer, we received an additional cash payment of $1.0 million in the fourth quarter of 2023. The AWI Agreement provides that we and AWI have separate exclusive fields of use and restrictive covenants with respect to the Applicable ICE Code and related intellectual property, which survive until either party elects to separate from its relationship with the other and for five years thereafter. We concurrently entered into the ARMSA with AWI, under which AWI has also prepaid for certain development services to be provided by DIRTT. The ARMSA will automatically terminate if the AWI Agreement is terminated or expires and may also be terminated if either party breaches the exclusive fields of use or restrictive covenants in the AWI Agreement.
Current wording
On May 9, 2023, we entered into a Co-Ownership Agreement and a Partial Patent Assignment agreement (collectively, the “AWI Agreements”) with AWI. The AWI Agreements provided for a cash payment from AWI to the Company of $10.0 million in exchange for the partial assignment to AWI and resulting co-ownership of a 50% interest in the rights, title and interests in certain intellectual property rights in the Applicable ICE Code, including a 50% interest in the patent rights that relate to the Applicable ICE Code. Pursuant to the AWI Agreements, we also provided AWI a transfer of knowledge concerning the source code of the Applicable ICE Code. In exchange for completing the knowledge transfer, we received an additional cash payment of $1.0 million in the fourth quarter of 2023. The AWI Agreements provide that we and AWI have separate exclusive fields of use and includes certain restrictive covenants with respect to the Applicable ICE Code and related intellectual property, which survive until either party elects to separate from its relationship with the other and for five years thereafter. We concurrently entered into an Amended and Restated Master Services Agreement (the “ARMSA”) with AWI, under which AWI has also prepaid for certain development services to be provided by DIRTT. The ARMSA will automatically terminate if the AWI Agreement is terminated or expires and may also be terminated if either party breaches the exclusive fields of use or restrictive covenants in the AWI Agreement.
Previous wording
The $11.0 million of proceeds on the sale of the 50% interest in the Applicable ICE code, pursuant to the AWI Agreement, was received during the year ended December 31, 2023. In accordance with GAAP, the proceeds were first applied to the net book value of the related cost of software of $2.9 million and patents (other assets) of $0.9 million. The residual amount of $7.1 million was recognized as a gain in the consolidated statement of operations. Further, $1.8 million was received as a prepayment under the ARMSA, which is recognized into revenue as the performance obligation is met. During the year ended December 31, 2023, $1.6 million of the $1.8 million payment was received into revenue, and $0.2 million remains in customer deposits to be received as revenue in 2024. Part of the proceeds of this transaction were used to settle one of our equipment leases of $1.6 million and resulted in the release of $0.4 million of restricted cash (refer to Note 14 to our Consolidated Financial Statements for additional information).
Current wording
The $11.0 million of proceeds on the sale of the 50% interest in the Applicable ICE code, pursuant to the AWI Agreement, was received during the second quarter of 2023. In accordance with GAAP, the proceeds were first applied to the net book value of the related costs of software of $2.9 million and patents (other assets) of $0.9 million. The residual amount of $7.1 million was recognized as a gain in the consolidated statement of operations. Further, $1.8 million was received during 2023 as a prepayment under the ARMSA, which payment was recognized into revenue during 2023 and the first quarter of 2024. Part of the proceeds of this transaction were used to settle one of our equipment leases of $1.6 million and resulted in the release of $0.4 million of restricted cash.
Previous wording
The provision for income taxes comprises U.S. and Canadian federal, state and provincial taxes based on pre-tax income. Income tax expense for the year ended December 31, 2023, was $0.3 million, compared to $0.02 million for the same period of 2022. For the year ended December 31, 2023, the Company recorded valuation allowances of $4.2 million (2022 - $13.6 million) against deferred tax assets incurred during the year as the Company has experienced cumulative losses in recent years. Due to the Company’s three-year history of negative earnings, it is not more likely than not that the Company’s deferred tax assets will be utilized in the near term.
Current wording
The provision for income taxes comprises U.S. and Canadian federal, state and provincial taxes based on pre-tax income. Income tax expense for the year ended December 31, 2024, was $0.4 million, compared to $0.3 million for the same period of 2023. For the year ended December 31, 2024, the Company recorded valuation allowances of $3.8 million (2023 - $4.2 million) against deferred tax assets incurred during the year as the Company has experienced cumulative losses in recent years. Due to the Company’s history of negative earnings, it is not more likely than not that the Company’s deferred tax assets will be utilized in the near term.
Previous wording
As at December 31, 2023, we had C$114.1 million of loss carry-forwards in Canada and $55.5 million in the United States. These loss carry-forwards will begin to expire in 2032.
Current wording
As at December 31, 2024, we had C$86.1 million of loss carry-forwards in Canada and $51.3 million in the United States. These loss carry-forwards will begin to expire in 2032.
Previous wording
Net loss after tax decreased to $14.6 million or $0.13 net loss after tax per share in the year ended December 31, 2023, from a net loss after tax of $55.0 million or $0.55 net loss after tax per share for the year ended December 31, 2022. The decreased loss is primarily the result of a $31.4 million increase in gross profit and a $11.1 million decrease in operating expenses (which includes a $10.5 million decrease in reorganization expenses, $8.7 million of impairment charges on the Rock Hill Facility and a $1.5 million related party expense), a $0.4 million increase in interest income and a $0.2 million decrease in interest expense, offset by a $7.5 million decrease in government subsidies, a $2.1 million decrease in foreign exchange gain, and a $0.3 million increase in income tax expense.
Current wording
Net income after tax increased to $14.8 million or $0.07 net income after tax per share (diluted) in the year ended December 31, 2024, from a net loss after tax of $14.6 million or $0.13 net loss after tax per share in the year ended December 31, 2023. The increased income is primarily the result of a $4.8 million increase in gross profit and a $15.9 million decrease in operating expenses (which includes an $8.2 million decrease in impairment charge on the Rock Hill Facility and a decrease of $1.9 million in reorganization expenses), a $10.4 million gain on extinguishment of debt relating to the Issuer Bid, Debenture Repurchase and the Debentures NCIB, a $1.1 million increase in interest income, a $0.9 million decrease in interest expense and a $3.6 million increase in foreign exchange gain, offset by a $7.1 million gain on sale of software and patents from the AWI sale in 2023 that did not repeat in 2024, and a $0.2 million decrease in government subsidies.
Previous wording
For the year ended December 31, 2023, gross profit and gross profit margin increased to $59.5 million or 32.7% from $28.2 million or 16.4% for the prior period. Adjusted Gross Profit and Adjusted Gross Profit Margin increased 67% to $65.1 million or 35.8% for the year ended December 31, 2023, from $38.9 million or 22.6% for the year ended December 31, 2022. Gross profit for the year ended December 31, 2022, included $2.1 million of accelerated depreciation and amortization arising from the change in useful lives of the Phoenix Facility’s equipment. The improvement in Adjusted Gross Profit was due to having better leverage over fixed costs through price increases and reduced fixed costs. Labor costs decreased $3.4 million and fixed costs decreased $2.7 million in 2023 compared to 2022 as a result of initiatives to align our fixed costs with anticipated demand. Actions taken that impacted our overheads included the closure of our Phoenix Facility during the second quarter of 2022 and the temporary suspension of operations at our Rock Hill Facility in the third quarter of 2022. Idle facility costs incurred since the suspension of operations at the Rock Hill Facility were $2.0 million for the year ended December 31, 2023, compared to $0.5 million for the previous year, and are included in cost of sales. We are pursuing options to sublease the Rock Hill Facility to offset idle facility costs in 2024 and beyond.
Current wording
The improvement in Adjusted Gross Profit was a result of material optimization to offset the inflationary impacts on material costs. Fixed costs decreased $2.3 million compared to 2023 as we aligned overhead costs and support with current operations after having finalized the decision to close the Rock Hill Facility in the third quarter of 2023. Idle facility costs incurred since the suspension of operations at the Rock Hill Facility were $1.7 million for the year ended December 31, 2024, compared to $2.0 million for the previous year, and are included in cost of sales. We are pursuing options to sublease the Rock Hill Facility to offset idle facility costs in 2025 and beyond.
Previous wording
The following table presents a reconciliation for the results of 2023, 2022 and 2021 of EBITDA and Adjusted EBITDA to our net loss, which is the most directly comparable GAAP measure for the years presented, and of Adjusted EBITDA Margin to net loss margin:
Current wording
The following table presents a reconciliation for the results of 2024, 2023 and 2022 of EBITDA and Adjusted EBITDA to our net income (loss), and of Adjusted EBITDA Margin to net income (loss) margin, which are the most directly comparable GAAP measures for the years presented:
Previous wording
Net loss divided by revenue.
Current wording
Net income (loss) divided by revenue.
Previous wording
The following table presents a reconciliation for the three months ended December 31, 2023, 2022, and 2021 of Adjusted Gross Profit to our gross profit, and Adjusted Gross Profit Margin to gross profit margin, which is the most directly comparable GAAP measure for the periods presented:
Current wording
The following table presents a reconciliation for the three months ended December 31, 2024, 2023, and 2022 of Adjusted Gross Profit to our gross profit, and Adjusted Gross Profit Margin to gross profit margin, which is the most directly comparable GAAP measures for the periods presented:
Previous wording
The following table presents a reconciliation for the three months ended results of 2023, 2022 and 2021 of EBITDA and Adjusted EBITDA to our net income (loss), which is the most directly comparable GAAP measure for the periods presented, and of Adjusted EBITDA Margin to net income (loss) margin:
Current wording
The following table presents a reconciliation for the results of three months ended December 31, 2024, 2023 and 2022 of EBITDA and Adjusted EBITDA to our net income (loss) after tax, and of Adjusted EBITDA Margin to net income (loss) margin, which are the most directly comparable GAAP measures for the years presented:
Previous wording
As at December 31, 2023, the Company had $24.7 million of cash on hand and C$13.6 million ($10.3 million) of available borrowings, compared to $10.8 million of cash on hand and C$7.2 million ($5.3 million) of available borrowings as at December 31, 2022. Through the year ended December 31, 2023, the Company generated $14.8 million in cash flow from operations, compared to a cash usage of $44.3 million over fiscal year 2022. The Company benefited from the receipt of $7.3 million of government subsidies during 2023.
Current wording
As at December 31, 2024, the Company had $29.3 million of cash on hand and C$14.4 million ($10.0 million) of available borrowings, compared to $24.7 million of cash on hand and C$13.6 million ($10.3 million) of available borrowings as at December 31, 2023. Through the year ended December 31, 2024, the Company generated $4.4 million in cash flows compared to $10.9 million over fiscal year 2023. Gross profit for the year ended December 31, 2024, was $65.0 million, or 36.9% of revenue, compared to the same period in 2023, which generated gross profit of $59.5 million, or 32.7% of revenue. Cash flows were increased in 2024 by the proceeds of the Rights Offering (as defined herein) of $21.3 million and improved operational results, offset by a $21.5 million repayment of debt under the Issuer Bid, Debenture Repurchase and Debentures NCIB. In 2023, the Company benefited from the receipt of $11.0 million of cash from the AWI sale (no similar transaction occurred in 2024), and a receipt of the $7.3 million of government subsidies.
Previous wording
Over the same period, we have executed upon several initiatives to improve liquidity. First, in May 2023, we entered into an agreement with AWI resulting in the receipt of $12.8 million of cash throughout 2023. Second, in March 2023, we entered into an agreement to sublease our Dallas “DXC” to one of our Construction Partners in that region. Under the sublease agreement, the subtenant has assumed responsibility for the monthly rent, utilities, maintenance, taxes and other costs as of April 1, 2023, through December 31, 2024, providing us annualized savings of approximately $1 million. We are continuing to evaluate other properties for sale and leaseback or sublease opportunities, including our Rock Hill Facility, and expect these initiatives to result in positive cash inflows in 2024. Third, we completed a private placement of 8,667,449 common shares in November 2022 for aggregate gross proceeds of $2.8 million (the “Private Placement”), with certain significant shareholders and directors and officers of the Company to bridge cash requirements before the completion and closing of the noted strategic transactions. The Company entered into irrevocable subscription agreements with its two largest shareholders, 22NW and 726 BC LLC and 726 BF (together “726” (which subsequently transferred its holdings to WWT)) and all the directors and officers of the Company on November 14, 2022, to issue 8.7 million shares for gross consideration of $2.8 million. The Private Placement closed on November 30, 2022.
Current wording
We have executed upon several initiatives to improve liquidity over the last two years. In May 2023, we entered into an agreement with AWI resulting in the receipt of $12.8 million of cash throughout 2023. In May 2024, we extended our agreement to sublease our Plano DXC to one of our Construction Partners in that region. Under the sublease agreement, the subtenant has assumed responsibility for the monthly rent, utilities, maintenance, taxes and other costs as of April 1, 2023, through October 31, 2028, providing us annualized savings of approximately $1.0 million. In September 2024, we entered into an agreement to sublease the remainder of our facility in Phoenix. Under the sublease agreement, the subtenant has assumed responsibility for the monthly rent, utilities, maintenance, taxes and other costs as of October 1, 2024, through March 31, 2027, providing us annualized savings of approximately $0.6 million. We are continuing to pursue sublease opportunities for the Rock Hill Facility and expect these initiatives to result in positive cash inflows in 2025.
Previous wording
In January 2021, we issued C$40.3 million of 6.00% convertible unsecured subordinated debentures due January 31, 2026 (the “January Debentures”) for net proceeds after costs of C$37.6 million ($29.5 million). The January Debentures accrue interest at a rate of 6.00% per annum and are convertible into common shares of DIRTT at an exercise price of C$4.65 per common share, or if not converted will mature and be repayable on January 31, 2026. As a result of the Rights Offering, the conversion price was adjusted to C$4.03 per common share. Interest and principal are payable in cash or shares at the option of the Company. As at December 31, 2023, C$18.9 million of the January Debentures are held by a related party, 22NW. 22NW holds approximately 30.1% of our issued and outstanding common shares as of February 16, 2024. Aron English, manager of 22NW Fund GP, LLC, the general partner of 22NW, is a director of the Company.
Current wording
In January 2021, we issued C$40.3 million of January Debentures for net proceeds after costs of C$37.6 million ($29.5 million). The January Debentures accrue interest at a rate of 6.00% per annum and are convertible into common shares of DIRTT at an exercise price of C$4.65 per common share, or if not converted will mature and be repayable on January 31, 2026. As a result of the Rights Offering, the conversion price was adjusted to C$4.03 per common share. Interest and principal are payable in cash or shares at the option of the Company.
Previous wording
On December 1, 2021, we issued C$35.0 million of 6.25% convertible unsecured subordinated debentures due December 31, 2026 (the “December Debentures” and together with the January Debentures, the “Debentures”) for net proceeds after costs of C$32.7 million ($25.6 million). The December Debentures accrue interest at a rate of 6.25% per annum and are convertible into common shares of DIRTT at an exercise price of C$4.20 per common share, or if not converted, will mature and be repayable on December 31, 2026. As a result of the Rights Offering, the conversion price was adjusted to C$3.64 per common share. Interest and principal are payable in cash or shares at the option of the Company. As at December 31, 2023, C$13.6 million of the December Debentures are held by a related party, 22NW.
Current wording
On December 1, 2021, we issued C$35.0 million of the December Debentures for net proceeds after costs of C$32.7 million ($25.6 million). The December Debentures accrue interest at a rate of 6.25% per annum and are convertible into common shares of DIRTT at an exercise price of C$4.20 per common share, or if not converted, will mature and be repayable on December 31, 2026. As a result of the Rights Offering, the conversion price was adjusted to C$3.64 per common share. Interest and principal are payable in cash or shares at the option of the Company.
Previous wording
On February 15, 2024, the Company announced a substantial issuer bid and tender offer (the "Issuer Bid"), under which the Company will offer to repurchase for cancellation: (i) up to C$6,000,000 principal amount of its issued and outstanding January Debentures") (or such larger principal amount as the Company, in its sole discretion, may determine it is willing to take-up and pay for, subject to applicable law) at a purchase price of C$720 per C$1,000 principal amount of January Debentures; and (ii) up to C$9,000,000 principal amount of its issued and outstanding 6.25% convertible unsecured subordinated debentures due December 31, 2026 (the "December Debentures", and, together with the January Debentures, the “Debentures” or the “convertible debentures”) (or such larger principal amount as the Company, in its sole discretion, may determine it is willing to take-up and pay for, subject to applicable law) at a purchase price of C$600 per C$1,000 principal amount of December Debentures. Holders of Debentures who validly tender and do not withdraw their Debentures will receive the applicable purchase price, plus a cash payment for all accrued and unpaid interest up to, but excluding, the date on which such Debentures are taken up by the Company. The applicable purchase price will be denominated in Canadian dollars and payments of amounts owed to holders of deposited Debentures, including for interest, will be made in Canadian dollars. The Issuer Bid will remain open for acceptance until 5:00 p.m. (Eastern Standard Time) on March 22, 2024, unless withdrawn or extended by the Company. If the aggregate principal amount of the Debentures properly tendered and not withdrawn under the Issuer Bid exceeds C$6,000,000 for the January Debentures or C$9,000,000 for the December Debentures, the Company will purchase a pro-rated portion of the January Debentures or the December Debentures so tendered, as applicable (with adjustments to maintain C$1,000 minimum denominations of Debentures). DIRTT will return all Debentures not purchased under the Issuer Bid, including Debentures not purchased because of pro-ration. Debentures taken up and paid for by the Company will be immediately cancelled.
Current wording
On February 15, 2024, the Company announced the Issuer Bid, under which the Company offered to repurchase for cancellation: (i) up to C$6,000,000 principal amount of the January Debentures at a purchase price of C$720 per C$1,000 principal amount of January Debentures; and (ii) up to C$9,000,000 principal amount of the December Debentures at a purchase price of C$600 per C$1,000 principal amount of December Debentures. Holders of Debentures who validly tendered and did not withdraw their Debentures received the applicable purchase price, plus a cash payment for all accrued and unpaid interest up to, but excluding, the date on which such Debentures were taken up by the Company. The applicable purchase price was denominated in Canadian dollars and payments of amounts owed to holders of deposited Debentures, including for interest, were made in Canadian dollars. The Issuer Bid expired on March 22, 2024 and DIRTT purchased C$4.7 million ($3.5 million) aggregate principal amount of the January Debentures and C$5.8 million ($4.3 million) aggregate principal amount of the December Debentures, representing approximately 11.66% of the January Debentures and 16.50% of the December Debentures issued and outstanding at that time. The Company took up all the Debentures tendered pursuant to the Issuer Bid for aggregate consideration of C$7.0 million ($5.2 million) (comprised of C$6.9 million ($5.1 million) repayment on principal and interest of C$0.1 million ($0.1 million)).
Previous wording
On February 4, 2024, the Company entered into a Litigation Funding Agreement with a third party for the funding of up to $4.0 million of litigation costs in respect of specific claims against Falkbuilt, Inc., Falkbuilt Ltd. and Henderson. In return, the Company has agreed to pay from any proceeds received from the settlement of such claims, a reimbursement of funded amounts plus diligence and underwriting costs, plus a multiple of such funded amount based on certain milestones.
Current wording
On February 4, 2024, the Company entered into a Litigation Funding Agreement with a third party for the funding of up to $4.0 million of litigation costs in respect of specific claims against Falkbuilt, Inc., Falkbuilt Ltd. and Henderson. In return, the Company has agreed to pay from any proceeds received from the settlement of such claims, a reimbursement of funded amounts plus diligence and underwriting costs, plus a multiple of such funded amount based on certain milestones. As part of this agreement, the Company is subject to a general security arrangement over its assets. The agreement was terminated in December 2024. The Company is currently considering whether to pursue further litigation funding, as we believe we have sufficient funds to finance the litigation. There is additional timeline certainty as the Canadian litigation trial date has been set for February 2, 2026.
Previous wording
In February 2021, we entered into a loan agreement governing a C$25.0 million senior secured revolving credit facility with the Royal Bank of Canada (“RBC”), as lender (the “RBC Facility”). Under the RBC Facility, the “Borrowing Base” is a maximum of 90% of investment grade or insured accounts receivable plus 85% of eligible accounts receivable plus the lesser of 75% of the book value of eligible inventory and 85% of the net orderly liquidation value of eligible inventory less any reserves for potential prior ranking claims. On February 9, 2023, the Company extended the RBC Facility. The maximum availability under the Extended RBC Facility is subject to the borrowing base calculation to a maximum of C$15 million and a one-year term. Available borrowings under the Extended RBC Facility as at December 31, 2023, were C$13.6 million ($10.3 million).
Current wording
In February 2021, we entered into a loan agreement governing a C$25.0 million senior secured revolving credit facility with the Royal Bank of Canada (“RBC”), as lender (the “RBC Facility”). Under the RBC Facility, the “Borrowing Base” is a maximum of 90% of investment grade or insured accounts receivable plus 85% of eligible accounts receivable plus the lesser of 75% of the book value of eligible inventory and 85% of the net orderly liquidation value of eligible inventory less any reserves for potential prior ranking claims. On February 9, 2023, the Company extended the RBC Facility. The maximum availability under the Extended RBC Facility was subject to the borrowing base calculation to a maximum of C$15 million and a one-year term. Effective October 2023, inventory was scoped out of the Borrowing Base. On February 9, 2024, the Company extended the Extended RBC Facility (the “Second Extended RBC Facility”). The Second Extended RBC Facility is subject to the borrowing base calculation to a maximum of C$15 million and a one-year term. Available borrowings under the Extended RBC Facility as at December 31, 2024, were C$14.4 million ($10.0 million). On February 11, 2025, the Company extended the Second Extended RBC Facility (the “Third Extended RBC Facility”) for a period of two weeks up to February 25, 2025 whilst the Company and RBC completed negotiations.
Previous wording
The Company has a C$5.0 million equipment leasing facility in Canada (the “Canada Leasing Facility”) of which C$4.4 million ($3.4 million) has been drawn and C$3.8 million ($2.9 million) has been repaid, and a $14.0 million equipment leasing facility in the United States of which $13.3 million has been drawn and repaid (the “U.S. Leasing Facility” and, together with the Canada Leasing Facility, the “Leasing Facilities”) with RBC, and one of its affiliates. The Canada Leasing Facility has a seven-year term and bears interest at 4.25%. In connection with the Company’s decision to close the Rock Hill Facility, we settled the liability related to the U.S. Leasing Facility ($7.8 million). The U.S. Leasing Facility is no longer available to be drawn on. With the settlement of this liability, we released $2.6 million of restricted cash.
Current wording
The Company has a C$5.0 million equipment leasing facility in Canada (the “Canada Leasing Facility”) of which, as of December 31, 2024, C$4.4 million ($3.1 million) has been drawn and C$3.9 million ($2.7 million) has been repaid, and a $14.0 million equipment leasing facility in the United States of which $13.3 million has been drawn and repaid, as of December 31, 2024, (the “U.S. Leasing Facility” and, together with the Canada Leasing Facility, the “Leasing Facilities”) with RBC, and one of its affiliates. The Canada Leasing Facility has a seven-year term and bears interest at 4.25%. In connection with the Company’s decision to close the Rock Hill Facility, we settled the liability related to the U.S. Leasing Facility ($7.8 million). The U.S. Leasing Facility is no longer available to be drawn on. With the settlement of this liability, we released $2.6 million of restricted cash during 2023.
Previous wording
Cash flows provided by investing activities during the year ended December 31, 2023, benefited from $11.0 million of proceeds from the AWI transaction.
Current wording
Cash flows provided by investing activities during the year ended December 31, 2023, benefited from $11.0 million of proceeds from the AWI transaction which was not repeated in 2024.
Previous wording
We invested $1.2 million in property, plant and equipment during the year ended December 31, 2023, compared to $2.4 million during the year ended December 31, 2022. Expenditures consisted of $0.3 million of information technology investments, $0.4 million of DXC refreshes and $0.5 million of manufacturing upgrades for the year ended December 31, 2023. We invested $1.8 million on capitalized software during the year ended December 31, 2023, compared to $1.7 million for the year ended December 31, 2022.
Current wording
We invested $1.4 million in property, plant and equipment during the year ended December 31, 2024, which was consistent with the prior year’s investment in property, plant and equipment of $1.2 million. Expenditures consisted of $0.5 million of leasehold improvements, $0.2 million of marketing investments, $0.3 million of information technology investments and $0.4 million of manufacturing upgrades for the year ended December 31, 2024. We invested $1.6 million on capitalized software during the year ended December 31, 2024, compared to $1.8 million for the year ended December 31, 2023.
Previous wording
For the year ended December 31, 2023, $11.6 million of cash was used in financing activities, comprising $2.2 million of scheduled repayments and $9.4 million of early repayments under the U.S. Leasing Facility and the Canada Leasing Facility. For the year ended December 31, 2022, $0.9 million of cash was used in financing activities mainly driven by the scheduled repayments under the Leasing Facilities, offset by the receipt of $2.0 million net proceeds from the Private Placement and a draw of C$0.9 million ($0.7 million) under the Canada Leasing Facility.
Current wording
For the year ended December 31, 2024, $0.4 million of cash was used in financing activities, comprising $21.5 million repayment of debt under the Issuer Bid, Debenture Repurchase, Debentures NCIB and $0.2 million relating to employee tax payments on vesting RSUs, $0.1 million of scheduled repayments under the Canada Leasing Facility, offset by $21.3 million of proceeds received from the Rights Offering. For the year ended December 31, 2023, $11.6 million of cash was used in financing activities mainly driven by $2.2 million of scheduled repayments and $9.4 million of early repayments under the U.S. Leasing Facility and the Canada Leasing Facility.
Showing the first 40 of 49 pairs. Open the source sections for the rest.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Net income (loss) divided by revenue.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
On May 9, 2023, we entered into the Co-Ownership Agreement and Partial Patent Assignment Agreement with AWI. We concurrently entered into the Amended and Restated Master Services Agreement (the “ARMSA”) with AWI, under which AWI has also prepaid certain development services to be provided by DIRTT. Through these arrangements, we received $12.8 million of cash and recognized a gain on the sale of software and patents of $7.1 million during the year ended December 31, 2023.