DIRTT ENVIRONMENTAL SOLUTIONS LTD
For the period ended Dec 31, 2025. Filed Feb 25, 2026.
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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.
FY2025 · Filed Feb 25, 2026
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What changed in Management’s Discussion and Analysis?
Read the current filingPrevious 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 OperationsCurrent report: 10-K
Period ended 2025-12-31; filed 2026-02-25.
0001193125-26-072003
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 189 previous paragraphs and 187 current paragraphs.
71 unchanged; 58 reworded; 56 added; 56 removed; 4 previous and 2 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 (56)
Current report
Revenue for the fourth quarter of 2025 was $50.9 million, an increase of $2.0 million or 4% from $48.9 million for the same period in 2024 and in line with the expected guidance range of $48.0 million to $52.0 million provided in the third quarter of 2025. Volumes have returned to normal following higher than normal push out rates earlier in the year, and revenue has also benefited from the 5% price increase and 3.5% tariff surcharge announced in the first quarter of 2025.
Current report
Net loss after tax for the fourth quarter of 2025 was $3.7 million compared to $4.0 million net income after tax for the same period of 2024. The decrease in net income is primarily the result of one-time impairment charges of $2.9 million largely relating to the termination of the Rock Hill, South Carolina manufacturing facility (the “Rock Hill Facility”) lease, an increase in foreign exchange loss of $2.4 million, and an increase in reorganization expense of $1.8 million, and a $1.5 million increase in other operating expenses, partially offset by a $1.1 million increase in gross profit.
Current report
Cash on hand decreased by $5.8 million in the fourth quarter of 2025 to $20.3 million, compared to a $5.7 million increase in cash in the fourth quarter of 2024. The decrease in cash in the fourth quarter of 2025 was driven by $4.3 million of net cash flows used by operating activities, $1.2 million used in investing activities, and $0.3 million used in financing activities. We experienced a negative cash flow from operating activities due to an $6.5 million decrease in working capital which arose from record sales occurring in December 2025 as well as a $1.0 million lease termination payment associated with the exit of the Rock Hill Facility lease.
Current report
On November 4, 2025, the Company entered into the Fifth Extended RBC Facility (as defined herein), which matures on November 30, 2026.
Current report
On November 26, 2025, the Company announced two strategic short-term appointments of board members Scott Robinson and Adrian Zarate as Executive Chairman of the Board and Chief Transformation Officer, respectively, to accelerate the Company’s transformation plan.
Current report
On December 11, 2025, we entered into an agreement with Business Development Bank of Canada (“BDC”) pursuant to which BDC committed to lending the Company up to C$15.0 million subject to the satisfaction of certain conditions. The conditions were amended on January 30, 2026 and February 6, 2026 (see “– Liquidity and Capital Resources”).
Current report
On January 5, 2026, the Company announced that it entered into an agreement for an early termination of the lease at its former Rock Hill Facility, effective December 30, 2025. The Company recognized a one-time, non-cash impairment expense related to leasehold improvements of $2.3 million.
Current report
On January 12, 2026, the Company announced that Richard Hunter, President and Chief Operating Officer, departed from the Company and Aaron Merkin joined the Company as the Chief Technology Officer, both effective January 12, 2026.
Current report
On January 31, 2026, the Company repaid the principal amount of the Company’s issued and outstanding 6.00% convertible unsecured subordinated debentures (the “January Debentures”) of C$16.6 million ($12.1 million).
Current report
On February 2, 2026, the Company’s 8-week trial against Falkbuilt Ltd. (“Falkbuilt”), Messrs. Smed and Loberg and several other former DIRTT employees alleging breaches of restrictive covenants, fiduciary duties, employment duties and confidentiality (the “Falkbuilt Litigation”) commenced. 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 11, 2026, in connection with the financing from BDC, the Company entered into a priority agreement with RBC and BDC, and amended the Fifth Extended RBC Facility (as defined herein).
Current report
On February 13, 2026, the Company received financing of C$5.5 million ($4.0 million) from BDC to refinance the outstanding January Debentures, which were repaid on January 31, 2026.
Current report
On February 17, 2026, the Company announced that it had entered into a support and standstill agreement, effective February 13, 2026, (the “2026 Support Agreement”) with 22NW Fund, L.P. (“22NW”), DIRTT’s largest shareholder, and 726 BF LLC and 726 BC LLC (collectively, the “726 Entities”), which amends the support and standstill agreement previously entered into by the Company, 22NW and WWT Opportunity #1 LLC in respect of certain matters.
Current report
On February 17, 2026, the Company also announced that Jeremy Gold, a Managing Director at the Briger Family Office, was appointed to the Board of Directors effective February 13, 2026, under the terms of the 2026 Support Agreement.
Current report
Revenues for the year ended December 31, 2025, were $168.9 million, a decrease of $5.5 million or 3% from $174.3 million for the year ended December 31, 2024. The decrease in revenue, as compared to 2024, was primarily the result of higher than normal order delays in the second and third quarters of the year related to macroeconomic uncertainty and specific job site readiness.
Current report
During the year ended December 31, 2025, various tariffs were levied by the U.S. and Canadian governments. We incurred $6.8 million (4.0% of total revenue) in tariffs and costs related to tariff mitigation actions. DIRTT is most impacted by the 25% tariff levied on Canadian aluminum exports to the United States which increased to 50% in June 2025. In the third and fourth quarters of 2025, costs relating to existing tariffs were substantially mitigated through price increases and other actions taken earlier in the year.
Current report
Net loss after tax for the year ended December 31, 2025, was $14.4 million compared to $14.8 million net income after tax for the year ended December 31, 2024. The decrease in net income after tax was primarily the result of a $8.9 million decrease in gross profit, a $3.8 million increase in reorganization expenses, one-time impairment charges and gain on disposal of lease of $1.6 million, a $10.4 million decrease in gain on extinguishment of convertible debt, a $4.7 million increase in foreign exchange loss, a $1.2 million increase in other operating expenses, and a $0.6 million decrease in interest income, partially offset by a $2.1 million decrease in interest expense.
Current report
On June 12, 2025, we began trading on the OTCQX under the symbol “DRTTF.” The Company previously traded on, and upgraded to OTCQX from, the OTC Pink® Market.
Current report
Price Increases and Impact of Tariffs
Current report
Commencing in February 2025, the U.S. government proposed and enacted various tariffs. Refer to “Risk Factors” for further discussion on these tariffs. As of the date of this report, the following tariffs are currently in effect that materially affect DIRTT:
Current report
On March 12, 2025, a 25% tariff was levied on steel and aluminum imports from Canada into the U.S. As disclosed in this report, DIRTT manufactures aluminum components, which are machined and processed in Calgary, Alberta as well as Savannah, Georgia. Aluminum costs represent approximately 9% of our total product revenue. This tariff impacts aluminum exports from our Calgary plants to our U.S. customers.
Current report
On March 13, 2025, Canada responded to the U.S. tariffs by announcing reciprocal tariffs. Approximately 89% of DIRTT’s raw materials are sourced in North America and certain products are imported from the U.S. to Canada. We incurred costs on these reciprocal tariffs but note that the scope of these tariffs has fluctuated over time, and to the extent these tariffs are meaningfully maintained, we will look into seeking exemptions or alternative suppliers to mitigate their impact.
Current report
On April 9, 2025, tariffs of 145% were levied on imports from China into the U.S. On June 11, 2025, China and the U.S. agreed to reduce overall tariffs by 115% to a rate of 30%. On November 4, 2025, the tariff rate was reduced by a further 10% to 20%. The Company imports certain raw materials from China (approximately 7% of total raw material spend, representing 2% of total product revenue). In response, we increased the price of certain hardware by 10%, effective June 5, 2025.
Current report
On June 3, 2025, the U.S. government announced a tariff increase, raising duties on all steel and aluminum imports from 25% to 50%. In response, we added a surcharge of 3.5% on all orders placed after June 20, 2025.
Current report
If further tariff changes are announced, we will consider the impact of such changes to our business. The most significant tariff impacting DIRTT at present is the 50% aluminum and steel tariff. We expect to continue mitigating the impact of prevailing tariffs through pricing actions, surcharges and various other internal tariff mitigation strategies. In February 2026, we announced an additional 1% price surcharge to mitigate rising aluminum prices.
Current report
December 2025 was our highest revenue-grossing month in two years, culminating in $50.9 million of revenue and $6.2 million of Adjusted EBITDA for the fourth quarter of 2025, consistent with our guidance of $48.0 million to $52.0 million of revenue and $5.0 million to $7.0 million of Adjusted EBITDA.
Current report
The broader macroeconomic backdrop remains supportive, as the Dodge Momentum Index increased through year-end and, despite a slight decline in January 2026, remained well above its January 2025 level.
Current report
Concurrent with these industry and macroeconomic developments, we have continued to transform and optimize our business. In early 2025, the Company established a transformation office to accelerate the execution of strategic initiatives focused on streamlining processes, supporting the Construction Services team, and improving productivity across the organization (the “Transformation Office”). To support these efforts, the Company announced two short-term strategic leadership appointments. Scott Robinson was appointed Executive Chairman of the Board and Adrian Zarate was appointed Chief Transformation Officer, each effective November 26, 2025. These leaders are working closely with the executive team to implement operational and financial elements of the Company’s transformation plan. Refer to Note 5 of the consolidated financial statements for costs related to these initiatives. The program is expected to be completed in 2026.
Current report
The Company’s balance sheet remains strong, with $32.1 million of liquidity, consisting of unrestricted cash and available borrowing capacity, and modest indebtedness of $23.4 million.
Current report
In addition, the Company is currently involved the Falkbuilt Litigation. The trial commenced on February 2, 2026 and remains ongoing. 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
Revenue for the year ended December 31, 2025, was $168.9 million, a decrease of $5.5 million or 3% from the year ended December 31, 2024, primarily due to delays in project start dates. The delays in projects were largely related to market uncertainties as well as specific job site readiness. When project delays occur, the project is typically deferred 1-12 months from the original planned start date. For the year ended December 31, 2025, we recorded $1.9 million in revenue related to the 3.5% surcharge on orders placed on or after June 20, 2025. The 5% price increase on orders placed on or after March 18, 2025 has been reflected in revenue. See “Price Increases and Impact on Tariffs.”
Current report
Commercial sales decreased by 19% for the year ended December 31, 2025, primarily due to higher than normal order delays due to job sites not being ready. Healthcare revenues increased by 90% in the year ended December 31, 2025, from the prior year, primarily due to a higher volume of projects at a higher value with four large projects being shipped in the fourth quarter of 2025. 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 continue to invest in growing healthcare through expanding product offerings and targeted business development efforts. Government sales decreased by 34% from the prior year due to lower value projects in 2025 compared to 2024. Education sales in 2025 increased by 52% from the prior year, primarily due to higher value projects in 2025 compared to 2024.
Current report
General and administrative expenses increased $3.7 million to $23.6 million for the year ended December 31, 2025, from $19.9 million for the year ended December 31, 2024. The increase was primarily driven by a $2.0 million legal provision (refer to Note 22 of our Consolidated Financial Statements for additional information), a $0.8 million increase in professional services costs, primarily as a result of litigation costs related to the Falkbuilt Litigation, a $0.5 million increase in board fees, a $0.4 million bad debt expense related to the write off of Phoenix sublease income (refer to Note 8 of our Consolidated Financial Statements for additional information), a $0.4 million increase in salaries and benefits costs, and a $0.2 million increase in communication costs. These increases were offset by a $0.5 million decrease in building and infrastructure costs, and a $0.2 million decrease in depreciation and amortization expenses.
Current report
Stock-based compensation expense is dependent on share price in a period for fair value adjustments made on cash-settled deferred share units (“DSUs”) awards and grants, exercises, expirations or forfeitures made on other awards.
Current report
Impairment charge
Current report
Effective December 30, 2025, the Company entered into an agreement for an early termination of the lease at the Rock Hill Facility. As such, the remaining leasehold improvements were measured at the lower of the net book value versus the fair value less cost to sell resulting in an impairment charge of $2.3 million during 2025.
Current report
Additionally, the Company incurred an impairment charge of $0.7 million related to impairment of right-of-use assets at our Phoenix Facility in the fourth quarter of 2025.
Current report
Gain on disposal of lease
Current report
On December 30, 2025, the Company entered an early termination agreement for its Rock Hill Facility lease. As a result, the Company recognized a $0.9 million gain on the derecognition of the lease liability and ROU asset associated with this terminated lease.
Current report
Interest income decreased to $0.9 million for the year ended December 31, 2025, compared to $1.6 million in the year ended December 31, 2024, primarily the result of declining interest rates yielded on lower cash balances in the year ended December 31, 2025.
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Removed paragraphs (56)
Previous 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.
Previous report
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 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 .
Previous 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.
Previous 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.
Previous 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.
Previous 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).
Previous 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.
Previous 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.
Previous 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.
Previous 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.
Previous 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.
Previous 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.
Previous 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.
Previous 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.
Previous 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.
Previous 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.
Previous 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.
Previous 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.
Previous 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.
Previous 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.
Previous 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.
Previous report
2025 Revenue: $194 to 209 million
Previous report
2025 Adjusted EBITDA: $18 to 25 million
Previous 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.
Previous 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.
Previous report
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 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.
Previous report
Impairment charge on Rock Hill Facility
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Related party expense
Previous report
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 report
Pursuant to the Debt Settlement Agreement, the Company agreed to repay the 22NW Debt by either, or a combination of (i) a payment in cash by the Company to the 22NW Group, and/or (ii) the issuance of equity securities of the Company to the 22NW Group.
Previous report
In connection with the Debt Settlement Agreement, on March 15, 2023, the Company entered into a share issuance agreement with the 22NW Group, pursuant to which the Company agreed to repay the 22NW Debt with the issuance to the 22NW Group of 3,899,745 common shares at a deemed price of $0.40 per common share, subject to approval by shareholders.
Previous report
At the annual general and special meeting of shareholders held on May 30, 2023, shareholders voted to approve the issuance of common shares, and on June 2, 2023, the Company issued 3,899,745 common shares to 22NW Group as repayment for the 22NW Debt. Upon settlement, the debt was revalued at the higher of the deemed price of $0.40 per common share and the May 30, 2023, market price of $0.38 per common share, resulting in a recovery from the balance recorded at March 31, 2023 which had been valued at a price of $0.53 per common share.
Previous report
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 report
Government subsidies
Previous report
The Company was not eligible and did not receive any new government subsidies in the year ended December 31, 2024. The Company received $0.2 million of interest with the collection of the Employee Retention Credit (“ERC”) during the year ended December 31, 2023.
Previous report
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 report
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 report
Net income after tax
Showing the first 40 of 56 passages. Open the source sections for the rest.
Reworded paragraphs (58)
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 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.
Current wording
DIRTT’s proprietary design integration software, ICE® (“ICE Software”), translates the vision of architects and designers into a 3D model that also acts as manufacturing information. ICE Software 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 ICE Software that is used by AWI.
Previous wording
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 wording
Gross profit and gross profit margin for the fourth quarter of 2025 was $18.6 million or 36.6% of revenue, an increase from $17.5 million or 35.9% of revenue for the same period of 2024. Adjusted Gross Profit and Adjusted Gross Profit Margin (see “– Non-GAAP Financial Measures”) for the fourth quarter of 2025 was $19.7 million or 38.7% of revenue. This represents an increase in Adjusted Gross Profit from $19.0 million, but a decrease compared to Adjusted Gross Profit Margin of 38.8% of revenue in the fourth quarter of 2024. The slight decreases in Adjusted Gross Profit Margin despite higher revenue is the result of tariff costs.
Previous 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.
Current wording
Adjusted EBITDA (see “– Non-GAAP Financial Measures”) for the fourth quarter of 2025 was $6.2 million, or 12.1% of revenue, an improvement of $0.7 million from $5.5 million or 11.2% of revenue for the fourth quarter of 2024. Higher Adjusted EBITDA was mainly driven by the increased Adjusted Gross Profit discussed above. Adjusted EBITDA for the fourth quarter of 2025 was in line with the expected guidance range of $5.0 to $7.0 million provided in the third quarter of 2025.
Previous wording
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 wording
On December 18, 2025, the Company announced the renewal of the Shares NCIB (as defined herein) which commenced on December 22, 2025 and will terminate on December 21, 2026 (the “Renewed Shares NCIB”). The Renewed Shares NCIB permits DIRTT to acquire up to 9,593,878 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 Renewed Shares NCIB will be immediately cancelled.
Previous wording
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 wording
Gross profit and gross profit margin for the year ended December 31, 2025, was $55.4 million or 32.8% of revenue, a decrease from $64.4 million or 36.9% of revenue for the year ended December 31, 2024. Adjusted Gross Profit (see “– Non-GAAP Financial Measures”) for the year ended December 31, 2025, was $59.5 million, a decrease from $68.3 million for the year ended December 31, 2024. Adjusted Gross Profit Margin (see “– Non-GAAP Financial Measures”) for the year ended December 31, 2025, was 35.2%, a decrease from 39.2% for the year ended December 31, 2024. The decreased Adjusted Gross Profit and Adjusted Gross Profit Margin are the result of a decline in revenues as well as $6.8 million in tariff-related costs incurred beginning in March 2025.
Previous 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.
Current wording
Adjusted EBITDA (see “– Non-GAAP Financial Measures”) for the year ended December 31, 2025 was $7.4 million or 4.4% of revenue, a decrease of $8.0 million from $15.4 million or 8.8% of revenue for the year ended December 31, 2024, for the above noted reasons.
Previous wording
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 wording
On February 5, 2025, the US District Court for the Northern District of Utah dismissed DIRTT’s lawsuit against Falkbuilt Ltd. in Utah on procedural grounds. In DIRTT’s similar lawsuit against Falkbuilt in Canada, an eight-week trial, which commenced on February 2, 2026. DIRTT is pursuing damages and losses it suffered in Canada, the United States, and abroad in the Court of King's Bench of Alberta.
Previous wording
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 wording
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 from NGEN (the “Share Repurchase”). The purchase price 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 Share Repurchase closed on February 14, 2025.
Previous wording
On August 28, 2024, the Debentures NCIB commenced and will terminate no later than August 27, 2025. Under the Debentures NCIB, DIRTT is permitted 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 had been acquired through the Debentures NCIB, respectively. As at December 31, 2024, C$16.6 million ($11.6 million) principal amount of the January Debentures and C$15.2 million ($10.6 million) principal amount of the December Debentures were outstanding.
Current wording
On August 26, 2025, the Company announced the renewal of the normal course issuer bid for the Company’s outstanding January Debentures and December Debentures (as defined herein) (the “Renewed Debentures NCIB”), which commenced on August 28, 2025 and permits DIRTT to acquire up to C$1,656,900 principal amount of the January Debentures and C$1,493,500 principal amount of the December Debentures. As at December 31, 2025, C$0.01 million and C$nil principal amounts of the December Debentures and January Debentures were acquired through the Renewed Debentures NCIB, respectively. For the year ended December 31, 2025, C$0.4 million principal amount of the December Debentures, and C$0.1 million principal amount of the January Debentures, had been acquired through the Debentures NCIB and Renewed Debentures NCIB, collectively. On January 31, 2026, the Company repaid the January Debentures on maturity.
Previous wording
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 wording
The table below presents our qualified leads and twelve-month forward pipeline as at January 1, 2026 and January 1, 2025. 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. There can be no assurance that our estimated qualified leads is accurate or that such qualified leads will deliver the revenue we expect.
Previous wording
As of January 1, 2025, our twelve-month forward pipeline increased by 3% from January 1, 2024, illustrated in the table below.
Current wording
As of January 1, 2026, our twelve-month forward pipeline increased by 20% from January 1, 2025, illustrated in the table below.
Previous wording
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 wording
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 rising raw material costs.
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, 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.
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), tax consequences, reorganization expense, unusual or infrequent charges or gains (such as gain on sale of software and patents, gain on extinguishment of convertible debt, gain on disposal of lease, 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 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 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.
Current wording
Government subsidies, depreciation and amortization, stock-based compensation expense, reorganization expense, foreign exchange gains and losses, gain on extinguishment of convertible 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, related party expense, gain on disposal of lease, and legal provisions 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
Revenue reflects sales to our Construction Partners for resale to their clients and, in limited circumstances, our direct sales to clients. Our revenue is generally affected by the timing of when orders are executed, particularly large orders, which can add variability to our financial results and shift revenue between quarters.
Current wording
Revenue reflects sales to our Construction Partners for resale to their clients and, in limited circumstances, our direct sales to clients through Construction Services. Our revenue is generally affected by the timing of when orders are executed, particularly large orders, which can add variability to our financial results and shift revenue between quarters.
Previous 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.
Current wording
Installation and other services revenue was $4.8 million for the year ended December 31, 2025, compared to $4.7 million in the year ended December 31, 2024. This revenue primarily reflects services performed by our technology teams for third parties. Except in limited circumstances, historically our Construction Partners, rather than the Company, perform installation services. As we work on developing our Construction Services offerings, we expect to see a modest increase in installation and other services revenue.
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, 2024, we had 71 (2023 - 72) Construction Partners servicing multiple locations.
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, 2025, we had 66 (2024 - 71) Construction Partners servicing multiple locations. We also continue to work on developing our Construction Services offerings and partnering with our Construction Partner network to drive revenue for DIRTT.
Previous 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.
Current wording
In 2025, 12% of revenue was from Canada, as compared to 14% in 2024. Historically, approximately 11-15% and 85-89% of revenues are derived from sales to Canada and the United States, respectively.
Previous wording
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 wording
Sales and marketing expenses decreased by $2.3 million to $20.6 million for the year ended December 31, 2025, from $22.9 million for the year ended December 31, 2024. The decrease was primarily comprised of a $1.1 million decrease in commissions and pass through charges as a result of lower revenues, a $0.4 million decrease in travel, meals and entertainment expenses, a $0.2 million decrease in professional services costs, a $0.2 million decrease in salaries and benefits costs, a $0.3 million decrease in depreciation and amortization expenses, a $0.1 million decrease in marketing and tradeshow expenses, and a $0.1 million decrease in office costs.
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 $7.4 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.
Current wording
Operations support is comprised primarily of our Construction Services team, project managers, order entry and other professionals that facilitate the integration of our Construction Partner and other customers’ project execution and our manufacturing operations. Operations support expenses of $7.9 million in 2025 increased $0.5 million from $7.4 million in 2024. The increase was largely driven by a $0.2 million increase in salaries and benefits costs, a $0.2 million increase in marketing and tradeshows expenses, and a $0.2 million increase in product research and development costs. The increase was offset by a $0.1 million decrease in travel, meals and entertainment expenses.
Previous 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.
Current wording
Technology and development expenses decreased by $0.7 million to $4.6 million for the year ended December 31, 2025, compared to $5.3 million for the year ended December 31, 2024. The decrease was primarily related to a $0.8 million decrease in salaries and benefits costs, a $0.3 million loss on disposal of a previously capitalized software development project in 2024 not repeated in 2025, and a $0.1 million decrease in communication costs. The decrease was offset by a $0.5 million increase in professional services costs.
Previous wording
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 wording
Stock-based compensation expense for the year ended December 31, 2025, was $3.0 million, consistent with prior year.
Previous 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.
Current wording
For the year ended December 31, 2025, we incurred $4.9 million of reorganization costs compared to $1.1 million during the year ended December 31, 2024. Reorganization expenses for the year ended December 31, 2025 primarily relate to termination and consultant costs associated with our transformation plan (refer to Note 5 of our Consolidated Financial Statements for additional information), while the reorganization costs in the year ended December 31, 2024 relate to the movement of inventory and equipment from the Rock Hill Facility for use at our facility in Calgary, Alberta.
Previous wording
During the year ended December 31, 2024, C$43.4 million ($31.8 million) in principal amount of Debentures was repurchased for cancellation through the Issuer Bid, Debenture Repurchase, and Debentures NCIB which triggered an extinguishment of debt. The gain on extinguishment of $10.4 million for the year ended December 31, 2024, was calculated as the difference between the repayment and the net carrying value of the extinguished principal less unamortized issuance costs of C$1.2 million ($0.9 million) (refer to Note 7 of our Consolidated Financial Statements for additional information).
Current wording
During the year ended December 31, 2024, C$43.4 million ($31.8 million) in principal amount of Debentures was repurchased for cancellation through the Issuer Bid, Debenture Repurchase, and Debentures NCIB which triggered an extinguishment of debt. The gain on extinguishment of $10.4 million for the year ended December 31, 2024, was calculated as the difference between the repayment and the net carrying value of the extinguished principal less unamortized issuance costs (refer to Note 7 of our Consolidated Financial Statements for additional information).
Previous 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.
Current wording
In the year ended December 31, 2025, we had a foreign exchange loss of $1.7 million compared to a gain of $3.0 million in the year ended December 31, 2024, due to the strengthening of the Canadian dollar relative to the U.S. dollar throughout 2025 as compared to 2024.
Previous wording
Interest expense decreased by $0.9 million from $4.9 million for the year ended December 31, 2023, to $4.0 million for the year ended December 31, 2024. This decrease is largely due to repayment of debt throughout the year ended December 31, 2024, offset by $0.9 million of unamortized issuance costs related to Debentures that were expensed as a result of the repurchase and cancellation of such debt.
Current wording
Interest expense decreased by $2.1 million from $4.0 million for the year ended December 31, 2024, to $1.9 million for the year ended December 31, 2025. This decrease is largely due to repayment of debt throughout the years ended December 31, 2024 and 2025, reducing the interest payable on current and long-term debt.
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, 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.
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, 2025, was $0.5 million, compared to $0.4 million for the same period of 2024. For the year ended December 31, 2025, the Company recorded valuation allowances of $1.0 million (2024 - $3.8 million utilized) 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, 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.
Current wording
As at December 31, 2025, we had C$117.0 million of loss carry-forwards in Canada and $48.2 million in the United States. These loss carry-forwards will begin to expire in 2032.
Previous wording
Our fourth quarter revenue was $48.9 million, a decrease of $2.0 million or 4% from $50.9 million for the same period in 2023. Historically, our fourth quarter revenue is lower than second and third quarter revenues due to seasonality. The fourth quarter of 2023 had a higher commercial volume of commercial projects, offset by the benefit from four large commercial projects that were completed in the fourth quarter of 2024.
Current wording
Our fourth quarter revenue was $50.9 million, an increase of $2.0 million or 4% from $48.9 million for the same period in 2024. The fourth quarter of 2025 had a higher volume of healthcare projects at a higher value, partially offset by the benefit from four large commercial projects that were completed in the fourth quarter of 2024.
Previous wording
For the year ended December 31, 2024, gross profit and gross profit margin increased to $65.0 million or 36.9% from $59.5 million or 32.7% for the prior year. Adjusted Gross Profit and Adjusted Gross Profit Margin increased $68.3 million or 39.2% for the year ended December 31, 2024, from $65.1 million or 35.8% for the year ended December 31, 2023.
Current wording
For the year ended December 31, 2025, gross profit and gross profit margin decreased to $55.4 million or 32.8% from $64.4 million or 36.9% for the prior year. Adjusted Gross Profit and Adjusted Gross Profit Margin decreased to $59.5 million or 35.2% for the year ended December 31, 2024, from $68.3 million or 39.2% for the year ended December 31, 2024.
Previous 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:
Current wording
The following table presents a reconciliation for the results of 2025, 2024 and 2023 of EBITDA and Adjusted EBITDA to our net (loss) income, and of Adjusted EBITDA Margin to net (loss) income margin, which are the most directly comparable GAAP measures for the years presented:
Previous wording
Reorganization expenses, the gain on sale of software and patents, the gain on extinguishment of convertible debt, the impairment charge on the Rock Hill Facility, related party expense and government subsidies are not core to our business and are therefore excluded from the Adjusted EBITDA calculation (refer to Note 4, Note 5, Note 6 and Note 7 of the consolidated financial statements).
Current wording
Reorganization expenses, the gain on sale of software and patents, the gain on extinguishment of convertible debt, the impairment charge, legal provision, the Phoenix sublease write-off, the gain on disposal of lease, related party expense and government subsidies are not core to our business and are therefore excluded from the Adjusted EBITDA calculation (refer to Note 4, Note 5, Note 6, Note 7, Note 8, Note 22, and Note 24 of the Consolidated Financial Statements).
Previous wording
For the year ended December 31, 2024, Adjusted EBITDA and Adjusted EBITDA Margin increased by $7.5 million to $15.4 million or 8.8% of revenue from $7.9 million or 4.4% of revenue in the same period of 2023. This reflects a $3.3 million increase in Adjusted Gross Profit, discussed above, a $1.9 million decrease in salaries and benefits costs, a $1.7 million decrease in pass through charge and commissions as a result of lower revenues, a $1.2 million decrease in building and infrastructure costs, a $1.0 million decrease in office costs, offset by a $1.3 million increase in professional services as a result of the SRP Meeting held in the third quarter as well as costs associated with the Debenture Repurchase, the Support Agreement, the Shares NCIB, the Debentures NCIB and a $0.3 million net increase in individual costs.
Current wording
For the year ended December 31, 2025, Adjusted EBITDA and Adjusted EBITDA Margin decreased by $8.0 million to $7.4 million or 4.4% of revenue from $15.4 million or 8.8% of revenue in the same period of 2024. This reflects an $8.8 million decrease in Adjusted Gross Profit, discussed above, a $0.4 million decrease in salaries and benefits costs, a $1.1 million decrease in pass through charge and commissions as a result of lower revenues, a $0.5 million decrease in building and infrastructure costs, a $0.5 million decrease in travel, meals and entertainment, offset by a $2.0 million legal provision (refer to Note 22 of our Consolidated Financial Statements for additional information), a $1.0 million increase in professional services costs, a $0.5 million in board fees, a $0.2 million increase in research and development costs, a $0.2 million increase in marketing and tradeshow costs, and a $0.1 million increase in communication costs.
Previous 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:
Current wording
The following table presents a reconciliation for the results of three months ended December 31, 2025, 2024 and 2023 of EBITDA and Adjusted EBITDA to our net (loss) income after tax, and of Adjusted EBITDA Margin to net (loss) income margin, which are the most directly comparable GAAP measures for the years presented:
Previous wording
Reorganization expenses, the gain on sale of software and patents, the gain on extinguishment of convertible debt, the impairment charge on the Rock Hill Facility and government subsidies are not core to our business and are therefore excluded from the Adjusted EBITDA calculation (refer to Note 4, Note 5, Note 6 and Note 7 of the consolidated financial statements).
Current wording
Reorganization expenses, the gain on sale of software and patents, the gain on extinguishment of convertible debt, the impairment charge, and the Phoenix sublease write-off, the gain on disposal of lease are not core to our business and are therefore excluded from the Adjusted EBITDA calculation (refer to Note 4, Note 5, Note 6, Note 7 and Note 22 of the Consolidated Financial Statements).
Previous wording
We have assessed the Company’s liquidity as at December 31, 2024, taking into account our sales outlook for the next twelve months, our existing cash balances and available credit facilities. Based upon this analysis, we believe the Company has sufficient liquidity to remain a going concern for at least the next twelve months.
Current wording
We have assessed the Company’s liquidity as at December 31, 2025, taking into account our sales outlook for the next twelve months, our budget, forecast and expected cash outflows and our existing cash balances, debt and available credit facilities. Based upon this analysis, we believe the Company has sufficient liquidity to remain a going concern for at least the next twelve months. We note that the January Debentures amounting to C$16.6 million ($12.1 million) as at December 31, 2025 were due and paid in full on January 31, 2026 and have therefore been classified as current on our balance sheet. Another C$14.8 million ($10.8 million) of principal is due under the December Debentures, which mature on December 31, 2026. We are evaluating whether we will settle or refinance this debt.
Previous wording
To the extent that existing cash and cash equivalents and available facilities are not sufficient to fund future activities, we may seek to raise additional funds through equity or debt financings. If additional funds are raised through the incurrence of indebtedness, such indebtedness may have rights that are senior to holders of our Debentures and our equity securities or contain instruments that may be dilutive to our existing shareholders. Any additional equity or debt financing may be dilutive to our existing shareholders. While we believe we can access capital markets when needed or under acceptable terms, there can be no assurance we will be able to do so.
Current wording
To the extent that existing cash and cash equivalents and available facilities are not sufficient to fund future activities, we may seek to raise additional funds through equity or debt financings. If additional funds are raised through the incurrence of indebtedness, such indebtedness may have rights that are senior to holders of our December Debentures and our equity securities or contain instruments that may be dilutive to our existing shareholders. Any additional equity or debt financing may be dilutive to our existing shareholders. While we believe we can access capital markets when needed or under acceptable terms, there can be no assurance that we will be able to do so, particularly in light of recent market conditions.
Previous wording
The Issuer Bid, Debenture Repurchase, Debentures NCIB and Shares NCIB were initiated after careful consideration of cash flow, and the Company continues to evaluate uses of cash on hand. As discussed in the “Risk Factors” section, proposed tariffs on Canadian exports into the United States may have a material impact on future cash flows and liquidity, which the Company will continue to monitor.
Current wording
During 2025, we continued to execute on various debt and share buyback programs. The Issuer Bid, Debenture Repurchase, Debentures NCIB, Renewed Debentures NCIB, Shares NCIB, Renewed Shares NCIB, and the Share Repurchase (each as defined herein) were initiated after careful consideration of cash flow, and the Company continues to evaluate uses of cash on hand. As discussed in the “Part I, Item 1A. Risk Factors” section and elsewhere of this Annual Report, proposed and implemented tariffs on Canadian exports into the United States, and vice versa, may have a material impact on future cash flows and liquidity, which the Company will continue to monitor.
Previous 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.
Current wording
In January 2021, we issued C$40.3 million principal amount of the January Debentures for net proceeds after costs of C$37.6 million ($29.5 million). The January Debentures accrued interest at a rate of 6.00% per annum and were convertible into common shares of DIRTT at an exercise price of C$4.65 per common share, or if not converted, would mature and be repayable on January 31, 2026. Interest and principal were payable in cash or shares at the option of the Company.
Previous 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.
Current wording
On December 1, 2021, we issued C$35.0 million principal amount of convertible unsecured subordinated debentures (the “December Debentures”, and collectively 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. Interest and principal are payable in cash or shares at the option of the Company.
Showing the first 40 of 58 pairs. Open the source sections for the rest.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
During the year ended December 31, 2025, C$0.5 million ($0.3 million) principal amount of Debentures was repurchased for cancellation through the Debentures NCIB and Renewed Debentures NCIB, in aggregate, which triggered an extinguishment of debt. The gain on extinguishment of debentures of $0.02 million for the year ended December 31, 2025, was calculated as the difference between the repayment and the net carrying value of the extinguished principal less unamortized issuance costs (refer to Note 7 of our Consolidated Financial Statements for additional information).
Current report — wording carried from elsewhere
On November 4, 2025, the Company extended the Fourth Extended RBC Facility (the “Fifth Extended RBC Facility”). The Fifth Extended RBC Facility expires November 30, 2026 and is subject to the same borrowing base terms as the previous facility, with the borrowing base calculation based on accounts receivable balances to a maximum of C$25.0 million. Interest is calculated as the Canadian or U.S. prime rate plus 50 basis points or at the Term CORRA Rate as adjusted by the Term CORRA Adjustment or Term SOFR plus the Term SOFR Adjustment, in each case plus 175 basis points. At December 31, 2025, available borrowings were C$16.3 million ($11.8 million) (December 31, 2024 – C$14.4 million ($10.0 million) of available borrowings), calculated in the same manner as the RBC Facility described above, of which no amounts have been drawn.
Rearranged previous paragraphs (4)
Previous report — wording carried elsewhere
Gain on sale of software and patents
Previous report — wording carried elsewhere
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 report — wording carried elsewhere
On February 20, 2025, the Company entered into the Fourth Extended RBC Facility. The Fourth Extended RBC Facility is subject to the borrowing base calculation based on accounts receivable balances to a maximum of C$25.0 million and matures on November 30, 2025. Interest is calculated as the Canadian or U.S. prime rate plus 50 basis points or at the Term CORRA Rate as adjusted by the Term CORRA Adjustment or Term SOFR plus the Term SOFR Adjustment, in each case plus 175 basis points. The Fourth Extended RBC Facility also includes a new letter of credit facility guaranteed by the Export Development of Canada of C$5 million. The Company has also entered into a bonding facility with Great Midwest Insurance Company, and any other company that is part of or added to Skyward, which allows access to a $15 million bonding facility subject to an individual maximum of $5 million. Under the terms of the facility with Skyward, any bonds issued will be secured through Letters of Credit issued pursuant to the Fourth Extended RBC Facility.
Previous report — wording carried elsewhere
The Company did not make any draws on the Leasing Facilities during the years ended December 31, 2024 and 2023.