DIRTT ENVIRONMENTAL SOLUTIONS LTD
For the period ended Mar 31, 2026. Filed May 6, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2026 · Filed May 6, 2026
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What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-09-30; filed 2025-11-06.
0001193125-25-267458
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-05-06.
0001193125-26-209310
Item 2. 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 141 previous paragraphs and 119 current paragraphs.
39 unchanged; 55 reworded; 24 added; 45 removed; 2 previous and 1 current paragraphs rearranged.
Tables are not compared: 10 previous and 10 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 (24)
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.
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 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 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”), who collectively own approximately 15% of the Company’s outstanding common shares. Under the 2026 Support Agreement, each of 22NW and the 726 Entities is subject to certain standstill and voting obligations, including voting in favor of the management nominees at the Company’s 2026 annual general meeting (the “2026 Meeting”), and, provided certain minimum shareholdings are maintained, each of 22NW and the 726 Entities has the right to designate a director nominee at the 2026 Meeting. The Support Agreement terminates on the date which is 90 days following the 2026 Meeting.
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
Throughout 2025 and into 2026, the U.S. Government proposed and enacted various tariffs, as disclosed in our Annual Report on Form 10-K. As of the date of this report, tariff revisions were announced effective April 6, 2026. We are reviewing the impact of these revisions on our business. Since we released our Annual Report on Form 10-K, conflict in the Middle East, including Iran, has resulted in rising oil and aluminum prices which are compressing our gross margin. In response, we have implemented an 8% freight and 1% aluminum price surcharge. We continue to monitor and mitigate the impact of tariffs and raw material costs through pricing actions, surcharges, and other operational strategies.
Current report
On February 20, 2026, the U.S. Supreme Court issued a decision invalidating tariffs imposed under the International Emergency Economic Powers Act. As a result of this ruling, we may be eligible for a refund of certain tariffs previously paid on imported goods. The financial impact of these events is uncertain, as it is unclear to what extent tariff payments will be refunded, what processes will govern such refunds, or if we can fully collect amounts previously paid. We are evaluating the impact of these developments on our business and financial statements. No adjustments have been recorded in the accompanying interim condensed consolidated financial statements as the recoverability and timing of any such refund remains uncertain and we cannot reasonably predict or estimate the financial impact.
Current report
As we progress further into 2026, DIRTT is building on the momentum engendered in the second half of 2025. While macroeconomic and industry-related headwinds persist - including trade policy-related volatility, uncertainty around project timing, and delayed capital expenditure decisions - their impact on our business has diminished materially as mitigation actions have been implemented and industry participants have adjusted to the revised trade environment.
Current report
The tariff response initiated in early 2025 is now fully implemented. What began as a defensive measure has been embedded into our operating model, evolving into a structural advantage and providing manufacturing flexibility on both sides of the border that few competitors in industrialized construction possess.
Current report
Our pipeline reflects these improving dynamics. The twelve‑month forward‑looking pipeline is approximately $338 million, representing an increase of 16% compared to the first quarter of 2025. The scheduling delays and suppressed award activity we identified early last year have continued to normalize. We are seeing renewed alignment between partners and clients around defined project schedules, while cancellations and losses remain de minimis – consistent with demand having been deferred rather than foregone.
Current report
Construction Services continues to develop as a revenue channel, accounting for approximately $55 million of the pipeline. In contrast to traditional product-led opportunities, Construction Services engagements are typically governed by contractual arrangements that provide greater commercial visibility once awarded and tend to convert to revenue more consistently. As this channel evolves, it supports broader sales coverage and should improve pipeline-to-revenue conversion. These results reflect continued execution of the Company’s transformation initiatives, including operating model-driven process standardization, cost optimization, partner enablement, and enhanced go-to-market coverage. Collectively, these efforts strengthen DIRTT’s ability to convert pipeline into revenue and earnings. As a result, the Company is better positioned to translate demand into execution and profitability than at any point in its recent history.
Current report
With ample liquidity, a growing pipeline, improving conversion trends, and a streamlined operating model, DIRTT remains focused on disciplined execution and long-term value creation for shareholders, partners, and employees.
Current report
Revenue for the three months ended March 31, 2026 was $42.4 million, an increase of $1.1 million compared to $41.3 million in the comparative period of 2025. The first quarter is our seasonally slowest quarter and was relatively flat compared to the same quarter in the prior year. See “Price Increases and Impact of Tariffs.” for a discussion on pricing increases announced in the quarter.
Current report
Sales and marketing expenses decreased by $0.1 million to $5.0 million for the three months ended March 31, 2026, compared to $5.2 million for the three months ended March 31, 2025.
Current report
General and administrative expenses were $5.4 million for the three months ended March 31, 2026, a minor decrease from $5.5 million for the three months ended March 31, 2025.
Current report
Foreign exchange gain (loss)
Current report
Net loss after tax
Current report
On December 11, 2025, the Company entered into a letter agreement (the “Letter”) with BDC, pursuant to which BDC committed to lending the Company up to C$15.0 million (the “Loan”) subject to the satisfaction of certain conditions. The Letter was subsequently amended on January 30, 2026, February 9, 2026 and March 9, 2026. Following the satisfaction of the conditions precedent set forth in the Letter, the Company received an initial disbursement of C$5.5 million on February 13, 2026 and, following satisfaction of certain additional conditions, a secondary disbursement of C$4.5 million on March 11, 2026. Subject to certain conditions, it is expected that BDC will make a third disbursement of C$5.0 million in the second half of 2026.
Current report
On February 11, 2026 and in connection with the Loan, the Company entered into the Seventh Amended RBC Facility and the Priority Agreement (each as defined herein). The Seventh Amended RBC Facility matures on November 30, 2026 and is subject to the same borrowing base terms as the previous facility. The Seventh Amended RBC Facility allows the Company to incur indebtedness to BDC of C$15 million under the Loan and incorporates permitting specific encumbrances to BDC and the Priority Agreement. The Seventh Amended RBC Facility releases certain mortgage collateral held by RBC.
Current report
On March 11, 2026, the Company entered into the Waiver and Eighth Amendment to Loan Agreement (the “Eighth Amended RBC Facility”), which matures on November 30, 2026. The Eighth Amended RBC Facility is subject to the same borrowing base terms stated in the Seventh Amended RBC Facility. The Eighth Amended RBC Facility includes a customary “Restricted Payments” covenant that prohibits us from, among other things, repurchasing our common shares and paying dividends, unless we have satisfied certain conditions (the “Payment Conditions”). The Payment Conditions include conditions that, after giving effect to the relevant Restricted Payment, the Company has a net borrowing availability of at least C$5.0 million over the preceding 30-day period, and our fixed charge coverage ratio (“FCCR”) be at least 1.10 to 1.00 on a trailing 12-month basis. In February 2026, we and RBC determined that our purchases of our common shares under our NCIB in December 2025 did not comply with the Restricted Payments covenant because our FCCR was below 1.10 to 1.00. The Eighth Amended RBC Facility provided a waiver in connection with the foregoing.
Current report
On February 11, 2026 and in connection with the Loan, the Company amended the Fifth Extended RBC Facility (the “Seventh Amended RBC Facility”) and entered into a priority agreement with RBC and BDC (the “Priority Agreement”). The Seventh Amended RBC Facility matures on November 30, 2026 and is subject to the same borrowing base terms as the previous facility. The Seventh Amended RBC Facility allows the Company to incur indebtedness to BDC of C$15 million under the Loan and incorporates permitting specific encumbrances to BDC and the Priority Agreement. The Seventh Amended RBC Facility also releases certain mortgage collateral held by RBC.
Current report
On March 11, 2026, the Company entered into the Waiver and Eighth Amendment to Loan Agreement (the “Eighth Amended RBC Facility”), which matures on November 30, 2026. The Eighth Amended RBC Facility is subject to the same borrowing base terms stated in the Seventh Amended RBC Facility. The Eighth Amended RBC Facility includes a customary “Restricted Payments” covenant that prohibits us from, among other things, repurchasing our common shares and paying dividends, unless we have satisfied certain conditions (the “Payment Conditions”). The Payment Conditions include conditions that, after giving effect to the relevant Restricted Payment, the Company has a net borrowing availability of at least C$5.0 million over the preceding 30-day period, and our FCCR be at least 1.10 to 1.00 on a trailing 12-month basis. In February 2026, we and RBC determined that our purchases of our common shares under our NCIB in December 2025 did not comply with the Restricted Payments covenant because our FCCR was below 1.10 to 1.00. The Eighth Amended RBC Facility provided a waiver in connection with the foregoing.
Current report
In addition to the contractual obligations disclosed in the “Management’s Discussion and Analysis of Financial Condition and results of Operations - Contractual Obligations” in our Annual Report on Form 10-K, we received gross proceeds of C$10.0 million ($7.2 million) from BDC. .Monthly principal repayments of the Loan commence in May 2026 and additional monthly interest payments are due on the last day of each month, beginning on March 31, 2026. The Loan matures on April 30, 2032. Refer to Note 7 in our condensed consolidated interim financial statements.
Current report
Critical Accounting Policies and Estimates
Removed paragraphs (45)
Previous report
On August 26, 2025, the Company announced the renewal of the Debentures NCIB (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 September 30, 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 three and nine months ended September 30, 2025, C$0.1 million and C$0.3 million principal amount of the December Debentures, respectively, and C$0.01 million and C$0.06 million principal amount of the January Debentures, respectively, had been acquired through the Debentures NCIB and Renewed Debentures NCIB, collectively.
Previous report
On October 28, 2025, we entered into a non-binding term sheet with the Business Development Bank of Canada (“BDC”) for proposed financing of up to C$15.0 million. We expect to use the proceeds to partially settle the January Debentures. The remaining January Debentures (C$1.6 million) will be settled through our cash balances. Advancement of funds remains subject to, among other things, completion of due diligence by BDC (see “– Liquidity and Capital Resources”).
Previous report
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 report
Commencing in February 2025, the U.S. government proposed and enacted various tariffs. Refer to “Outlook” and “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:
Previous report
On March 12, 2025, a 25% tariff was levied on steel and aluminum imports from Canada into the U.S. As disclosed in our Annual Report on Form 10-K, 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.
Previous report
On March 13, 2025, Canada responded to the U.S. tariffs by announcing reciprocal tariffs. As disclosed in our Annual Report on Form 10-K, approximately 92% 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 Canadian government has put a six month pause on these tariffs, effective April 15, 2025, which was extended an additional two months on October 17, 2025. If these tariffs are maintained, we will look into seeking exemptions or alternative suppliers to mitigate this tariff impact.
Previous report
On April 9, 2025, tariffs of 145% were levied on imports from China into the U.S., which were subsequently reduced on May 12, 2025, to 30% for 90 days. On June 11, 2025, China and the U.S. agreed to reduce overall tariffs by 115%. 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.
Previous 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.
Previous 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. Going into the fourth quarter, we expect the impact of prevailing tariffs to be substantially mitigated through our price increases, surcharges and various other internal tariff mitigation strategies.
Previous report
Business is returning to normal and we returned to positive Adjusted EBITDA in the third quarter of 2025 as the effects of tariffs on gross profit have been substantially mitigated through price and other tariff mitigation actions taken by the Company earlier in the year. For the fourth quarter of 2025, we expect to report revenues between $48.0 to $52.0 million and Adjusted EBITDA of $5.0 to $7.0 million.
Previous report
Our twelve-month forward pipeline has grown 7.2% to $333 million from July 1, 2025 to October 1, 2025. Our revenue growth is attributable to our Construction Partners as well as our new Construction Services team (formerly known as Integrated Solutions). As our revenue outlook improves, we are looking to transform our business. In early 2025, DIRTT’s leadership team established a transformation office to accelerate the strategic transformation of our business by streamlining the Company’s processes and procedures, supporting the Construction Services team and improving productivity across the Company (the “Transformation Office”). We are restructuring certain aspects of the business as disclosed in Note 4 of our interim condensed consolidated financial statements and will continue to look for cost improvements to grow Adjusted EBITDA. The program is expected to be completed in 2026.
Previous report
Construction Services opportunities are growing and we have almost doubled the number of persons on that team since the beginning of the year. Our manufacturing capacity is approximately $400 million and we will benefit from fixed cost leverage as our revenue grows.
Previous report
Our balance sheet is strong, including $32.3 million of liquidity (comprising of unrestricted cash and available borrowings). Despite lower revenue in the third quarter, cash flow increased by $3.0 million this quarter due to improved margins, cost containment and limited Shares NCIB activity. There is C$16.6 million ($11.9 million) principal due under the January Debentures (as defined herein), which mature on January 31, 2026. We are pleased to announce we recently entered a preliminary non-binding term sheet with BDC for financing of up to C$15.0 million. We expect to use the proceeds to partially settle the January Debentures. The remaining January Debentures (C$1.6 million) will be settled through our cash balances. Advancement of funds remains subject to, among other things, completion of due diligence by BDC (see “– Liquidity and Capital Resources”).
Previous report
Revenue for the three months ended September 30, 2025 was $37.7 million, a decrease of $5.7 million compared to $43.4 million in the comparative period of 2024. Similar to the second quarter of 2025, revenue was adversely impacted by delays in project start dates. In the previous quarters, we believe that the delays were largely related to broader market uncertainties whereas in the third quarter of 2025, they were specific to job site readiness. When project delays occur, is typically deferred 1-12 months from the original planned start date. Revenue for the nine months ended September 30, 2025 was $117.9 million, a decrease from $125.4 million in the comparative period of 2024 for the same reasons explained above. For the quarter ended September 30, 2025, we recorded $0.8 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 begun to be reflected in revenue. See “Price Increases and Impact of Tariffs.”
Previous report
Sales and marketing expenses decreased by $0.4 million to $4.8 million for the three months ended September 30, 2025 from $5.2 million for the three months ended September 30, 2024. The decrease was driven by a $0.3 million decrease in commissions as a result of lower revenues, a $0.1 million decrease in marketing and tradeshow costs, a $0.1 million decrease in depreciation and amortization expenses, and a $0.1 million decrease in travel, meals and entertainment costs. The decrease was partially offset by a $0.3 million increase in salaries and benefits costs.
Previous report
Sales and marketing expenses decreased by $1.9 million to $15.3 million for the nine months ended September 30, 2025 from $17.2 million for the nine months ended September 30, 2024. The decrease was primarily driven by a $0.8 million decrease in termination benefits, a $0.6 million decrease in commissions as a result of lower revenues, a $0.2 million decrease in pass through charges, a $0.2 million decrease in professional services costs, a $0.2 million decrease in depreciation and amortization expenses, and a $0.1 million decrease in other costs. The decrease was partially offset by a $0.2 million increase in salaries and benefits costs.
Previous report
General and administrative expenses decreased by $1.4 million to $4.4 million for the three months ended September 30, 2025, from $5.8 million for the three months ended September 30, 2024. The decrease was primarily related to a $1.2 million decrease in professional services costs largely due to insurance recoveries, lower litigation costs, and costs related to the Debenture Repurchase and the support and standstill agreement with 22NW Fund, LP (“22NW”) and WWT Opportunity #1 LLC that occurred in the third quarter of 2024 which were not repeated in 2025, a $0.2 million decrease in building and infrastructure costs, a $0.1 million decrease in public company costs, and a $0.1 million decrease in depreciation and amortization expenses. The decrease was offset by a $0.1 million increase in board fees, and a $0.1 million increase in communication costs.
Previous report
General and administrative expenses increased by $0.9 million to $15.7 million for the nine months ended September 30, 2025, from $14.8 million for the nine months ended September 30, 2024. The increase was primarily related to a $0.7 million increase in salaries and benefits costs, a $0.5 million increase in professional services costs as a result of litigation costs related to the Falkbuilt Litigation, and a $0.4 million increase in board fees. The increase was partially offset by a $0.6 million decrease in building and infrastructure costs and a $0.1 million decrease in other costs.
Previous report
Operations support expenses increased by $0.2 million for the nine months ended September 30, 2025 to $5.7 million, from $5.5 million for the comparative period of 2024. The increase was primarily related to a $0.2 million increase in research and development costs, a $0.1 million increase in marketing and tradeshow costs, and a $0.1 million increase in other costs. The increase was offset by a $0.1 million decrease in travel, meals and entertainment costs, and a $0.1 million loss on disposal in the third quarter of 2024 not repeated in 2025.
Previous report
Technology and development expenses decreased by $0.5 million to $3.5 million for the three months ended September 30, 2025 from $4.0 million for the comparative period of 2024. The decrease was primarily related to a $0.5 million decrease in salaries and benefits costs, and a $0.3 million loss on disposal of a software development project in 2024 not repeated in 2025. The decrease was partially offset by a $0.4 million increase in professional services costs.
Previous report
Stock-based compensation expense for the nine months ended September 30, 2025 was $2.1 million, compared to $1.9 million in the same periods of 2024. The increase in expense was largely due to an increase in RSU expense as a result of a full quarter of expense on an August 31, 2024 grant in the third quarter of 2025 compared to one month of the expense on the same August 31, 2024 grant in the third quarter of 2024, offset by a decrease in DSU expense caused by a recovery on cash-settled DSU expense from a lower share price as at September 30, 2025 compared to December 31, 2024.
Previous report
Impairment charge on Rock Hill Facility
Previous report
On September 27, 2023, the Company decided to permanently close the Rock Hill Facility. 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 such quarter.
Previous report
The Company had $nil impairment charges in the three and nine months ended September 30, 2025.
Previous report
During the three and nine months ended September 30, 2025 C$0.1 million ($0.1 million) and C$0.4 million ($0.3 million), respectively, principal amount of Debentures was repurchased for cancellation through the Debentures NCIB and Renewed Debentures NCIB which triggered an extinguishment of debt. The gain on extinguishment of debentures of $0.01 million and $0.02 million for the three and nine months ended September 30, 2025, respectively, was calculated as the difference between the repayment and the net carrying value of the extinguished principal less unamortized issuance costs (refer to Note 5 of our interim condensed consolidated financial statements for additional information).
Previous report
During the first nine months of 2024, C$43.1 million ($31.7 million) in principal amount of Debentures was repurchased for cancellation through the Issuer Bid, a private repurchase, and the Debentures NCIB, which triggered an extinguishment of debt. The gain on extinguishment of $7.5 million and $10.4 million for the three and nine months ended September 30, 2024, respectively, was calculated as the difference between the repayment and the net carrying value of the extinguished principal less unamortized issuance costs. (refer to Note 8 of our interim condensed consolidated financial statements for additional information).
Previous report
Foreign exchange (loss) gain
Previous report
Foreign exchange loss or gain decreased from a gain of $0.9 million for the nine months ended September 30, 2024 to a loss of $1.4 million for the same period of 2025. The decrease is primarily related to the strengthening of the Canadian dollar relative to the U.S. dollar over the twelve months ended September 30, 2025. The majority of our revenue is collected in U.S. dollars (approximately 90%), and approximately 70% of the costs incurred in the three and nine months ended September 30, 2025, were denominated in Canadian dollars.
Previous report
Net (loss) income after tax
Previous report
Net loss after tax was $10.7 million or $0.06 net loss per share, basic and diluted, for the nine months ended September 30, 2025, a decrease of $21.5 million from net income after tax of $10.7 million or $0.06 and $0.05 net income per share, basic and diluted, respectively, for the nine months ended September 30, 2024. The decrease in net income is primarily the result of a $10.4 million gain on extinguishment of debt resulting from the Debenture Repurchase in the nine months ended September 30, 2024 not repeated in the same period of 2025, a $10.0 million decrease in gross profit, a $2.3 million decrease in foreign exchange gain, a $2.0 million increase in reorganization expenses, a $0.6 million decrease in interest income, and a $0.1 million increase in income taxes. The decrease was partially offset by a $2.1 million decrease in interest expense, a $1.7 million decrease in other operating expenses, and a $0.1 million decrease in income tax expense.
Previous report
Adjusted Gross Profit and Adjusted Gross Profit Margin for the Three and Nine months ended September 30, 2025 and 2024
Previous report
For the nine months ended September 30, 2025, gross profit margin decreased to 31.2%, compared to 37.3% in the prior year period. Adjusted Gross Profit Margin was 33.8%, compared to 39.3% in the same period of 2024. The year-to-date margin decline reflects the same underlying factors observed in the third quarter, including a $7.5 million reduction in revenue. Tariff-related costs for the nine months ended September 30, 2025 were $4.5 million. We began to realize the benefits of our tariff mitigation efforts in the third quarter of 2025, as explained above.
Previous report
For the nine months ended September 30, 2025, Adjusted EBITDA decreased by $8.7 million to $1.3 million from $9.9 million and Adjusted EBITDA Margin decreased to 1.1% from 7.9%, for the same period of 2024. This reflects a $9.5 million decrease in Adjusted Gross Profit, a $0.7 million increase in professional services costs largely associated with higher litigation costs related to the Falkbuilt Litigation, a $0.5 million increase in public company costs and board fees, and a $0.2 million increase in marketing and tradeshow expenses, partially offset by a $0.6 million decrease in commissions from lower revenue, a $0.6 million decrease in building and infrastructure costs, a decrease of $0.4 million in salaries and benefits costs, a decrease of $0.2 million in travel, meals, and entertainment costs, and a $0.4 million decrease in other costs.
Previous report
On October 28, 2025, we entered into a non-binding term sheet with the BDC for proposed financing of up to C$15.0 million, the net proceeds of which are expected to be used to further strengthen our balance sheet and partially repay the January Debentures. The remaining January Debentures (C$1.6 million) are expected to be repaid using cash on hand. DIRTT continues to consider, evaluate, and negotiate a definitive agreement with respect to the proposed financing with BDC. Any advancement of funds is subject to, among other things, BDC’s due diligence and the negotiation and execution of binding definitive documentation. There can be no assurance that a definitive agreement will be reached or that the proposed financing will be completed on the terms in the non-binding term sheet or at all, and the Company may ultimately determine not to proceed with the financing or use any net proceeds of such financing for the repayment of the January Debentures.
Previous report
On November 21, 2023, the Company announced a rights offering, which closed on January 9, 2024, for aggregate gross proceeds of C$30.0 million (net proceeds of $21.3 million) (the “Rights Offering”). As a result of the Rights Offering, the conversion price was adjusted to C$4.03 per common share for the January Debentures, and C$3.64 per common share for the December Debentures.
Previous report
On February 15, 2024, the Company announced a substantial issuer bid and tender offer (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 report
On August 2, 2024, the Company entered into an agreement with 22NW Fund LP (“22NW”), to purchase for cancellation an aggregate of C$18,915,000 principal amount of the January Debentures at a purchase price of C$684.58 per C$1,000 principal amount of January Debentures and C$13,638,000 principal amount of the December Debentures at a purchase price of C$665.64 per C$1,000 principal amount of December Debentures, for an aggregate purchase price of C$22,104,591.45, inclusive of a cash payment for all accrued and unpaid interest up to, but excluding, the date on which such Debentures were purchased by the Company (the “Debenture Repurchase”). The purchase price of each series of Debentures (excluding the cash payment for accrued and unpaid interest) represented a discount of approximately 4% to the average trading price of the applicable series of Debentures on the TSX for the 20 trading days preceding August 2, 2024. As a result of the Debenture Repurchase, 22NW no longer holds any Debentures.
Previous report
On February 12, 2021, the Company 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 up to 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. Interest is calculated at the Canadian or U.S. prime rate plus 30 basis points or at the Canadian Dollar Offered Rate or LIBOR plus 155 basis points. Under the RBC Facility, if the “Aggregate Excess Availability”, defined as the Borrowing Base less any loan advances or letters of credit or guarantee and if undrawn including unrestricted cash is less than C$5.0 million, the Company is subject to a fixed charge coverage ratio (“FCCR”) covenant of 1.10:1 on a trailing twelve-month basis. Additionally, if the FCCR has been below 1.10:1 for the three immediately preceding months, the Company is required to maintain a reserve account equal to the aggregate of one year of payments on outstanding loans on the Canada Leasing Facility and a leasing facility in the United States that is no longer available (together, the “Leasing Facilities”). Should an event of default occur or the Aggregate Excess Availability be less than C$6.25 million for five consecutive business days, the Company would enter a cash dominion period whereby the Company’s bank accounts would be blocked by RBC and daily balances will set-off any borrowings and any remaining amounts made available to the Company.
Previous report
On February 9, 2023, the Company extended the RBC Facility (the “Extended RBC Facility”). The Extended RBC Facility has a maximum borrowing base of C$15.0 million and a one-year term. Interest is calculated as at the Canadian or U.S. prime rate plus 75 basis points or at the Canadian Dollar Offered Rate or LIBOR plus 200 basis points. Under the Extended RBC Facility, until such time that the trailing twelve-month FCCR is above 1.25 for three consecutive months, a cash balance equivalent to one-year’s worth of Leasing Facilities payments must be maintained.
Previous report
On February 9, 2024, the Company extended the Extended RBC Facility (the “Second Extended RBC Facility”). The maximum availability under the Second Extended RBC Facility is subject to the borrowing base calculation to a maximum of C$15.0 million and a one-year term. Interest is calculated as at the Canadian or U.S. prime rate plus 75 basis points or at the Canadian Dollar Offered Rate or Adjusted Term CORRA or Term SOFR plus the Term SOFR Adjustment, in each case, plus 200 basis points. The Second Extended RBC Facility removed the three-month FCCR covenant, which resulted in the release of $0.1 million of restricted cash during the first quarter of 2024 (the Company had $0.4 million restricted cash as at December 31, 2023). 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.
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Previous wording
The following discussion and analysis of our financial condition and results of operations should be read together with our unaudited interim condensed consolidated financial statements and related notes and other financial information appearing in this Quarterly Report. This discussion contains forward-looking statements reflecting our current expectations and estimates and assumptions concerning events and financial trends that may affect our future operating results or financial position. Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors, including those described under the headings “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements” appearing elsewhere in this Quarterly Report.
Current wording
The following discussion and analysis of our financial condition and results of operations should be read together with our unaudited interim condensed consolidated financial statements and related notes and other financial information appearing in this Quarterly Report on Form 10-Q for the quarter ended March 31, 2026 (this “Quarterly Report”). This discussion contains forward-looking statements reflecting our current expectations and estimates and assumptions concerning events and financial trends that may affect our future operating results or financial position. Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors, including those described under the headings “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements” appearing elsewhere in this Quarterly Report.
Previous wording
Key Third Quarter Highlights and Other Recent Developments
Current wording
Key First Quarter Highlights and Other Recent Developments
Previous wording
Revenue for the quarter ended September 30, 2025 was $37.7 million, a decrease of $5.7 million or 13%, from $43.4 million for the same period of 2024. We entered the third quarter of 2025 with twelve-month forward pipeline 18% higher as compared to July 1, 2024. We experienced higher than normal order delays due to job sites not being ready, which contributed to lower revenue this quarter.
Current wording
Revenue for the quarter ended March 31, 2026 was $42.4 million, an increase of $1.1 million or 3%, from $41.3 million for the same period of 2025. We entered the first quarter of 2026 with twelve-month forward pipeline 20% higher as compared to January 1, 2025. The first quarter is historically a low revenue quarter due to seasonality.
Previous wording
Gross profit and gross profit margin for the quarter ended September 30, 2025 were $11.5 million or 30.4% of revenue compared to $16.8 million or 38.8% of revenue for the quarter ended September 30, 2024. Sequentially, gross profit margin increased from 27.8% in the second quarter of 2025 as tariff mitigation actions began to take effect. Adjusted Gross Profit (see “– Non-GAAP Financial Measures”) for the three months ended September 30, 2025 was $12.5 million, a decrease from $17.6 million Adjusted Gross Profit for the third quarter of 2024. Adjusted Gross Profit Margin (see “– Non-GAAP Financial Measures”) was 33.1% in the third quarter of 2025, a decrease from 40.7% in the comparative period of 2024. Gross profit and Adjusted Gross Profit for the quarter ended September 30, 2025 were negatively impacted due to the decline in revenues as well as tariff-related costs that commenced in March 2025.
Current wording
Gross profit and gross profit margin for the quarter ended March 31, 2026 were $13.0 million or 30.6% of revenue compared to $14.5 million or 35.2% of revenue for the quarter ended March 31, 2025. Adjusted Gross Profit (see “– Non-GAAP Financial Measures”) for the three months ended March 31, 2026 was $13.9 million, a decrease from $15.5 million Adjusted Gross Profit for the first quarter of 2025. Adjusted Gross Profit Margin (see “– Non-GAAP Financial Measures”) was 32.9% in the first quarter of 2026, a decrease from 37.5% in the comparative period of 2025. Gross profit and Adjusted Gross Profit for the quarter ended March 31, 2026 were negatively impacted by rising aluminum costs, lower margins on installation projects, and tariff costs. We incurred $2.0 million of tariff costs in the first quarter of 2026 compared to $0.6 million tariff mitigation costs in the first quarter of 2025.
Previous wording
During the first nine months of 2025, various tariffs were levied by the U.S. and Canadian governments. We incurred $1.9 million (5.1% of total revenue) and $4.5 million (3.8% of total revenue) in tariffs and costs related to tariff mitigation actions for the three and nine months ended September 30, 2025, respectively. DIRTT is most impacted by the 25% tariff levied on Canadian aluminum exports to the United States which increased to 50% in June 2025. We believe that going into the fourth quarter of 2025, costs relating to existing tariffs will be substantially mitigated through price and other actions taken earlier in the year.
Current wording
During the first three months of 2025, various tariffs were levied by the U.S. and Canadian governments. We incurred $2.0 million (4.7% of total revenue) in tariffs and costs related to tariff mitigation actions for the three months ended March 31, 2026 compared to $0.6 million tariff mitigation costs incurred in the three months ended March 31, 2025. DIRTT is most impacted by the 50% tariff levied on Canadian aluminum exports to the U.S. which increased from 25% in June 2025. DIRTT is evaluating the impact of tariff announcements issued by the U.S. Government on April 6, 2026.
Previous wording
During the nine months ended September 30, 2025, the Company undertook activities associated with the deployment of its Transformation Office (as defined herein). $2.6 million of associated costs were recognized as reorganization expenses in the three months ended September 30, 2025.
Current wording
During the three months ended March 31, 2026, the Company undertook activities associated with the deployment of its Transformation Office (as defined herein). An aggregate of $2.4 million of associated costs were recognized as reorganization expenses in the three months ended March 31, 2026 primarily related to termination benefits.
Previous wording
Net loss after tax and net loss margin for the third quarter of 2025 was $3.5 million and 9.2% of revenue, respectively, compared to $7.1 million net income after tax and net income margin of 16.3% for the same period of 2024. The decrease in net income is primarily the result of a $5.3 million decrease in gross profit, a $2.0 million increase in reorganization expenses, a $7.5 million decrease in gain on extinguishment of convertible debentures, offset by a $2.5 million decrease in other operating expenses, a $1.1 million decrease in interest expense, and a $1.0 million increase in foreign exchange gain.
Current wording
Net loss after tax and net loss margin for the first quarter of 2026 was $3.3 million and 7.7% of revenue, respectively, compared to $0.7 million net loss after tax and net loss margin of 1.6% for the same period of 2025. The increase in net loss is primarily the result of a $1.5 million decrease in gross profit, a $2.2 million increase in reorganization expenses, offset by a $0.8 million decrease in other operating expenses, and a $0.5 million increase in foreign exchange gain.
Previous wording
Adjusted EBITDA (see “– Non-GAAP Financial Measures”) for the third quarter of 2025 was $1.2 million, or 3.1% of revenue, a decrease of $2.9 million from $4.1 million, or 9.4% of revenue, for the third quarter of 2024. Lower Adjusted EBITDA was mainly driven by a $5.2 million decrease in Adjusted Gross Profit, offset by the decrease in operating expenses discussed above.
Current wording
Adjusted EBITDA (see “– Non-GAAP Financial Measures”) for the first quarter of 2026 was $1.4 million, or 3.3% of revenue, a decrease of $0.7 million from $2.1 million, or 5.1% of revenue, for the first quarter of 2025. Lower Adjusted EBITDA was mainly driven by a $1.6 million decrease in Adjusted Gross Profit, offset by the decrease in other operating expenses discussed above.
Previous wording
Cash on hand increased by $3.0 million in the third quarter of 2025 to $26.1 million, compared to a $15.9 million decrease in cash in the third quarter of 2024. The increase in cash in the third quarter of 2025 was driven by $4.4 million of net cash flows provided by operating activities, offset by $0.8 million in capital expenditures, an aggregate of $0.2 million in common share repurchases from the Shares NCIB (as defined herein) and repurchase of convertible debt through the Debentures NCIB (as defined herein) and the Renewed Debentures NCIB (as defined herein), $0.1 million in employee tax payments on vesting of RSUs, and $0.1 million in repayment of long-term debt. The decrease in cash for the third quarter of 2024 was mainly due to $16.2 million repayment of long-term debt.
Current wording
Cash on hand decreased by $5.3 million in the first quarter of 2026 to $15.0 million, compared to a $0.8 million decrease in cash in the first quarter of 2025. The decrease in cash in the first quarter of 2026 was driven by $12.1 million in repayment of 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) on January 31, 2026, $0.7 million in capital expenditures, $0.4 million in employee tax payments on vesting of RSUs, offset by $6.9 million net proceeds received on long-term debt through Business Development Bank of Canada (“BDC”), and $1.2 million of net cash flows provided by operating activities,
Previous wording
Our 8-week trial against Falkbuilt Ltd., Messrs. Smed and Loberg and several other former DIRTT employees alleging breaches of restrictive covenants, fiduciary duties, employment duties and confidentiality is due to start on February 2, 2026 (the “Falkbuilt Litigation”). 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 2, 2026, the Company’s 10-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 U.S., and abroad in the Court of King’s Bench of Alberta. The trial is in progress and additional dates have been reserved in July 2026,
Previous wording
The table below presents our qualified leads and twelve-month forward pipeline as at October 1, 2025, January 1, 2025 and October 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, delayed contracts and slowed construction schedules driven by changing tariff policies and potential recessionary impacts on construction projects.
Current wording
The table below presents our qualified leads and twelve-month forward pipeline as at April 1, 2026, January 1, 2026, and April 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.
Previous wording
As of October 1, 2025, our twelve-month forward pipeline increased by 31% year-over-year and by 20% from January 1, 2025, illustrated in the table below.
Current wording
As of April 1, 2026, our twelve-month forward pipeline increased by 16% year-over-year and by 1% from January 1, 2026, illustrated in the table below.
Previous wording
As a result, we also provide financial information in this Quarterly 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 extinguishment of debt, and impairment charges), stock-based compensation, and government subsidies. We remove the impact of foreign exchange gain (loss) from Adjusted EBITDA. Foreign exchange gains and losses can vary significantly period-to-period due to the impact of changes in the U.S. and Canadian dollar exchange rates on foreign currency denominated monetary items on the balance sheet and are not reflective of the underlying operations of the Company. In 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 Quarterly 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 extinguishment of debt), stock-based compensation, and government subsidies. We remove the impact of foreign exchange gain (loss) from Adjusted EBITDA. Foreign exchange gains and losses can vary significantly period-to-period due to the impact of changes in the U.S. and Canadian dollar exchange rates on foreign currency denominated monetary items on the balance sheet and are not reflective of the underlying operations of the Company. In 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 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
Depreciation and amortization, stock-based compensation expense, reorganization expense, foreign exchange gains and losses, gain on extinguishment of debt, impairment charges, net interest income on cash deposits, interest expense on outstanding debt and debt facilities, and tax expense are excluded from our non-GAAP financial measures because management considers them to be outside of the Company’s core operating results, even though some of those receipts and expenses may recur, and because management believes that each of these items can distort the trends associated with the Company’s ongoing performance. We believe that excluding these receipts and expenses provides investors and management with greater visibility to the underlying performance of the business operations, enhances consistency and comparativeness with results in prior periods that do not, or future periods that may not, include such items, and facilitates comparison with the results of other companies in our industry.
Current wording
Depreciation and amortization, stock-based compensation expense, reorganization expense, foreign exchange gains and losses, gain on extinguishment of debt, net interest income on cash deposits, interest expense on outstanding debt and debt facilities, and tax expense are excluded from our non-GAAP financial measures because management considers them to be outside of the Company’s core operating results, even though some of those receipts and expenses may recur, and because management believes that each of these items can distort the trends associated with the Company’s ongoing performance. We believe that excluding these receipts and expenses provides investors and management with greater visibility to the underlying performance of the business operations, enhances consistency and comparativeness with results in prior periods that do not, or future periods that may not, include such items, and facilitates comparison with the results of other companies in our industry.
Previous wording
Three and Nine Months Ended September 30, 2025, Compared to the Three and Nine Months Ended September 30, 2024
Current wording
Three Months Ended March 31, 2026, Compared to the Three Months Ended March 31, 2025
Previous wording
Revenue mainly reflects sales to our construction partners (“Construction Partners”) for resale to their clients and, in limited circumstances, our direct sales to clients. We are investing in our Construction Services team to grow revenue and increase direct sales to clients where such opportunities are not available to our Construction Partners. 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 mainly reflects sales to our construction partners (“Construction Partners”) for resale to their clients and, in some circumstances, our direct sales to clients. We are investing in our Construction Services channel to grow revenue and increase direct sales to clients where such opportunities are not available to our Construction Partners. 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 $1.0 million for the quarter ended September 30, 2025 compared to $0.9 million in the quarter ended September 30, 2024, and $3.2 million for the nine months ended September 30, 2025 compared to $3.7 million in the same period of 2024. This revenue primarily reflects services performed by our ICE teams for third parties. Except in limited circumstances, historically our Construction Partners, rather than the Company, perform installation services. As our Construction Services team grows, we expect to see a modest increase in installation services.
Current wording
Installation and other services revenue was $1.6 million for the quarter ended March 31, 2026 compared to $0.9 million in the quarter ended March 31, 2025. Historically, this revenue primarily reflects services performed by our ICE teams for third parties. Except in limited circumstances, historically our Construction Partners, rather than the Company, perform installation services. For the quarter ended March 31, 2026, our Construction Services channel was involved in a higher number of installation projects resulting in a 70% growth in that revenue stream.
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 September 30, 2025, we had 69 Construction Partners (September 30, 2024: 74; December 31, 2024: 71) servicing multiple locations. We also continue to work on developing our Construction Services team and partnering with our Construction Partner network to drive revenue for DIRTT.
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 March 31, 2026, we had 60 Construction Partners (March 31, 2025: 69; December 31, 2025: 66) servicing multiple locations. We also continue to work on developing our Construction Services team and partnering with our Construction Partner network to drive revenue for DIRTT.
Previous wording
Commercial sales decreased by 22% for the third quarter of 2025 from the third quarter of 2024. The quarter ended September 30, 2025 had fewer large commercial projects compared to the quarter ended September 30, 2024. Healthcare revenues increased by 24% in the third quarter of 2025 from the same period of 2024, primarily due to the third quarter of 2025 having a larger volume of high value projects than those in the same period of 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 healthcare and life science construction projects. Government sales in the third quarter of 2025 decreased by 45% from the third quarter of 2024 primarily due to one key project shipping in the third quarter of 2024 and the projects in 2025 having smaller value than those in the same period of 2024. Education sales in the third quarter of 2025 increased by 10% from the same period of 2024 due to a larger volume of high value projects in 2025 compared to the same period of 2024.
Current wording
Commercial sales decreased by 12% for the first quarter of 2026 from the first quarter of 2025. The quarter ended March 31, 2026 had fewer large commercial projects compared to the quarter ended March 31, 2025. Healthcare revenues increased by 67% in the first quarter of 2026 compared to the same period of 2025, primarily due to the first quarter of 2026 having a larger volume of projects than those in the same period 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 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 healthcare and life science construction projects. Government sales in the first quarter of 2026 decreased by 1% compared to the first quarter of 2025 primarily due to the projects in 2026 having smaller value than those in the same period of 2025. Education sales in the first quarter of 2026 decreased by 39% from the same period of 2025 due to a lower volume of high value projects in 2026 compared to the same period of 2025.
Previous wording
Revenue continues to be derived almost exclusively from projects in North America and predominantly from the United States. The following table presents our revenue dispersion by geography:
Current wording
Revenue continues to be derived almost exclusively from projects in North America and predominantly from the U.S. The following table presents our revenue dispersion by geography:
Previous wording
For the three months ended September 30, 2025, 9% of revenue was from Canada, as compared to 18% for the three months ended September 30, 2024. Historically, approximately 10-15% and 85-90% of revenues are derived from sales to Canada and the United States, respectively. We expect the historical split to continue.
Current wording
For the three months ended March 31, 2026, 14% of revenue was from Canada, as compared to 17% for the three months ended March 31, 2025. Historically, approximately 10-15% and 85-90% of revenues are derived from sales to Canada and the United States, respectively. We expect the historical split to continue.
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, our manufacturing operations, and support staff for the Construction Services team. Operations support expenses decreased by $0.1 million for the three months ended September 30, 2025 to $1.8 million compared to $1.9 million for the comparative period of 2024. The decrease was related to a $0.2 million decrease in salaries and benefits costs, offset by a $0.1 million increase in research and development costs.
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, our manufacturing operations, and support staff for the operational processes team. Operations support expenses decreased by $0.4 million for the three months ended March 31, 2026 to $1.6 million from $2.0 million for the comparative period of 2025 primarily due to a $0.3 million decrease in salaries and benefits costs.
Previous wording
Technology and development expenses relate to non-capitalizable costs associated with our product and software development teams, and are primarily comprised of salaries and benefits of technical staff. Technology and development expenses decreased $0.5 million to $0.8 million for the three months ended September 30, 2025 compared to $1.3 million for the three months ended September 30, 2024. The decrease is primarily related to a $0.5 million decrease in salaries and benefits costs.
Current wording
Technology and development expenses relate to non-capitalizable costs associated with our product and software development teams, and are primarily comprised of salaries and benefits of technical staff. Technology and development expenses decreased $0.3 million to $0.9 million for the three months ended March 31, 2026 compared to $1.2 million for the three months ended March 31, 2025. The decrease is primarily related to a $0.2 million decrease in salaries and benefits costs.
Previous wording
Stock-based compensation expense for the three months ended September 30, 2025 was $0.7 million compared to $0.8 million in the same period of 2024. The decrease in expense was largely due to a decrease in DSU expense as a result of a lower number of DSUs granted in the third quarter of 2025 compared to the third quarter of 2024, slightly offset by higher restricted share units (“RSUs”) expense due to a full quarter of expense on an August 31, 2024 grant in the third quarter of 2025 compared to one month of the expense in the third quarter of 2024.
Current wording
Stock-based compensation expense for the three months ended March 31, 2026 was $0.9 million compared to $0.7 million in the same period of 2025. The increase in expense was largely due to an increase in performance share units (“PSUs”) expense, slightly offset by a decrease in DSU expense in the first quarter of 2026, compared to the first quarter of 2025.
Previous wording
Reorganization expenses for the three and nine months ended September 30, 2025 were $2.6 million and $3.0 million, respectively, compared to $0.6 million and $0.9 million in the three and nine months ended September 30, 2024, respectively. Reorganization expenses for the three and nine months ended September 30, 2025, primarily relate to one-time termination and consultant costs associated with the establishment of the Transformation Office, as described in Note 4 of our interim condensed consolidated financial statements, while the reorganization costs for the three and nine months ended September 30, 2024 were largely made up of movement of inventory and equipment from the facility at Rock Hill, South Carolina (the “Rock Hill Facility”) for use at the Calgary facility.
Current wording
Reorganization expenses for the three months ended March 31, 2026 were $2.4 million, compared to $0.2 million in the three months ended March 31, 2025. Reorganization expenses for the three months ended March 31, 2026, primarily relate to termination benefit costs and consultant costs associated with our transformation plan, as described in Note 4 of our interim condensed consolidated financial statements, while the reorganization costs for the three months ended March 31, 2025 were largely made up of movement of inventory and equipment from the facility at Rock Hill, South Carolina (the “Rock Hill Facility”) for use at the Calgary facility.
Previous wording
Foreign exchange loss or gain increased from a loss of $0.4 million for the three months ended September 30, 2024 to a gain of $0.6 million for the same period of 2025. The increase is primarily related to the weakening of the Canadian dollar over the three months ended September 30, 2025.
Current wording
Foreign exchange loss or gain increased from a loss of $0.1 million for the three months ended March 31, 2025 to a gain of $0.3 million for the same period of 2026. The increase is primarily related to the weakening of the Canadian dollar over the three months ended March 31, 2026.
Previous wording
Interest income for the three and nine months ended September 30, 2025 was $0.2 million and $0.7 million compared to $0.3 million and $1.3 million for the comparative periods of 2024. The decreased interest income is due to declining prime rates that determine interest yields on the Company’s lower cash equivalents during the three and nine months ended September 30, 2025 compared to the same periods of 2024.
Current wording
Interest income for the three months ended March 31, 2026 was $0.1 million compared to $0.3 million for the comparative period of 2025. The decreased interest income is due to declining prime rates on the Company’s lower cash equivalents during the three months ended March 31, 2026 compared to the same period of 2025.
Previous wording
Interest expense decreased by $1.1 million from $1.5 million in the quarter ended September 30, 2024 to $0.5 million for the three months ended September 30, 2025, and by $2.1 million from $3.5 million for the nine months ended September 30, 2024, to $1.4 million for the nine months ended September 30, 2025. This decrease is largely due to repayment of debt throughout the year ended December 31, 2024 and during the first nine months of 2025, reducing the interest payable on current and long-term debt.
Current wording
Interest expense decreased by $0.1 million from $0.5 million in the quarter ended March 31, 2025 to $0.4 million for the three months ended March 31, 2026. This decrease is largely due to repayment of the 6% January Debentures on January 31, 2026. The BDC loan of C$10 million was advanced during February and March 2026 and bears an interest rate of 5.8% .
Previous wording
Income tax expense for the three months ended September 30, 2025 increased to $0.2 million from $0.02 million in the three months ended September 30, 2024. Income tax expense for the nine months ended September 30, 2025 decreased to $0.3 million from $0.4 million in the nine months ended September 30, 2024. The current tax expense represents the income tax provision after the utilization of non-capital loss carry forwards against current period taxable income. The provision for income taxes comprises U.S. and Canadian federal, state and provincial taxes based on pre-tax income. Despite positive indications of future profitability, including the strength of our pipeline, the Company has determined that it is unlikely that a deferred tax asset will be recognized. Given the history of losses, the Company plans to maintain a valuation allowance against the deferred tax asset. As at September 30, 2025, the Company had a valuation allowance of $29.8 million (December 31, 2024: $30.0 million) against deferred tax assets. The Company plans to continue to evaluate indicators on whether a valuation allowance continues to be needed. For the quarter ended September 30, 2025, the Company utilized a balance of its non-capital loss carry-forwards in Canada and the United States. As at September 30, 2025, we had C$108.7 million of non-capital loss carry-forwards in Canada and $46.2 million of non-capital loss carry-forwards in the United States. These loss carry-forwards will begin to expire in 2037.
Current wording
Income tax expense for the three months ended March 31, 2026 increased to $0.1 million from $0.04 million in the three months ended March 31, 2025. The current tax expense represents the income tax provision after the utilization of non-capital loss carry forwards against current period taxable income. The provision for income taxes comprises U.S. and Canadian federal, state and provincial taxes based on pre-tax income. Despite positive indications of future profitability, including the strength of our pipeline, the Company has determined that it is unlikely that a deferred tax asset will be recognized. Given the history of losses, the Company plans to maintain a valuation allowance against the deferred tax asset. As at March 31, 2026, the Company had a valuation allowance of $31.2 million (December 31, 2025: $30.9 million) against deferred tax assets. The Company plans to continue to evaluate indicators on whether a valuation allowance continues to be needed. As at March 31, 2026, we had C$115.9 million of non-capital loss carry-forwards in Canada and $41.8 million of non-capital loss carry-forwards in the United States. These loss carry-forwards will begin to expire in 2037.
Previous wording
Net loss after tax was $3.5 million or $0.02 net loss per share, basic and diluted, in the three months ended September 30, 2025, a decrease of $10.6 million from net income after tax of $7.1 million or $0.04 and $0.03 net income per share, basic and diluted, respectively, for the three months ended September 30, 2024. The decrease in net income is primarily the result of a $7.5 million gain on extinguishment of debt resulting from the Debenture Repurchase in the quarter ended September 30, 2024 not repeated in the same period of 2025, a $5.3 million decrease in gross profit, a $2.0 million increase in reorganization expenses, a $0.1 million increase in income taxes, and a $0.1 million decrease in interest income. The decrease was partially offset by a $2.5 million decrease in other operating expenses, a $1.1 million decrease in interest expense, and a $1.0 million increase in foreign exchange gain.
Current wording
Net loss after tax was $3.3 million or $0.02 net loss per common share, basic and diluted, in the three months ended March 31, 2026, a decrease of $2.6 million from net loss after tax of $0.7 million or $0.00 net loss per common share, basic and diluted, for the three months ended March 31, 2025. The increase in net loss is primarily the result of a $2.2 million increase in reorganization expenses, a $1.5 million decrease in gross profit, and a $0.2 million decrease in interest income. The decreases were offset by a $0.8 million decrease in other operating expenses, and a $0.5 million increase in foreign exchange gains.
Previous wording
The following table presents a reconciliation for the three and nine months ended September 30, 2025 and 2024 of Adjusted Gross Profit to our gross profit and Adjusted Gross Profit Margin to gross profit margin, which are the most directly comparable GAAP measures for the periods presented:
Current wording
The following table presents a reconciliation for the three months ended March 31, 2026 and 2025 of Adjusted Gross Profit to our gross profit and Adjusted Gross Profit Margin to gross profit margin, which are the most directly comparable GAAP measures for the periods presented:
Previous wording
For the quarter ended September 30, 2025, gross profit margin decreased to 30.4% compared to 38.8% for the same period of 2024. Adjusted Gross Profit Margin was 33.1% for the third quarter of 2025, down from 40.7% in the comparative period of 2024. The decrease in Adjusted Gross Profit Margin was primarily attributable to the $5.7 million reduction in revenue. Tariff-related costs for the third quarter of 2025 were $1.9 million and were substantially mitigated through price and other actions taken earlier in the year.
Current wording
For the quarter ended March 31, 2026, gross profit margin decreased to 30.6% compared to 35.2% for the same period of 2025. Adjusted Gross Profit Margin was 32.9% for the first quarter of 2026, down from 37.5% in the comparative period of 2025. The decrease in Adjusted Gross Profit Margin was primarily attributable to higher aluminum prices, lower margins on higher installation projects, and higher tariff costs. With respect to higher aluminum prices, we have put in place a 1% tariff surcharge on orders placed after March 18, 2026 to help mitigate the impact of rising aluminum prices.
Previous wording
EBITDA and Adjusted EBITDA for the Three and Nine months ended September 30, 2025 and 2024
Current wording
EBITDA and Adjusted EBITDA for the Three months ended March 31, 2026 and 2025
Previous wording
The following table presents a reconciliation for the results for the three and nine months ended September 30, 2025 and 2024 of EBITDA and Adjusted EBITDA to our net (loss) income after tax, and of Adjusted EBITDA Margin to net (loss) income margin, which are the most directly comparable GAAP measures for the periods presented:
Current wording
The following table presents a reconciliation for the results for the three months ended March 31, 2026 and 2025 of EBITDA and Adjusted EBITDA to our net (loss) after tax, and of Adjusted EBITDA Margin to net (loss) margin, which are the most directly comparable GAAP measures for the periods presented:
Previous wording
(1) Net (loss) income after tax divided by revenue.
Current wording
(1) Net (loss) after tax divided by revenue.
Previous wording
(2) Reorganization expenses, the gain on extinguishment of convertible debentures and the impairment charge on the Rock Hill Facility (refer to Note 4 and Note 5 of the interim condensed consolidated financial statements) are not core to our business and are therefore excluded from the Adjusted EBITDA calculation.
Current wording
(2) Reorganization expenses (refer to Note 4 of the interim condensed consolidated financial statements) and the gain on extinguishment of convertible debentures are not core to our business and are therefore excluded from the Adjusted EBITDA calculation.
Previous wording
For the three months ended September 30, 2025, Adjusted EBITDA decreased by $2.9 million to $1.2 million from $4.1 million and Adjusted EBITDA Margin decreased to 3.1% from 9.4% for the same period of 2024. This decrease is attributed to the $5.2 million decrease in Adjusted Gross Profit (explained above) offset by a decrease in operating expenses (excluding reorganization expense and stock-based compensation) of $2.4 million.
Current wording
For the three months ended March 31, 2026, Adjusted EBITDA decreased by $0.7 million to $1.4 million from $2.1 million and Adjusted EBITDA Margin decreased to 3.3% from 5.1% for the same period of 2025. This decrease is attributed to the $1.6 million decrease in Adjusted Gross Profit (explained above) offset by a decrease in operating expenses (excluding reorganization expense and stock-based compensation) of $0.9 million.
Previous wording
As at September 30, 2025, the Company had $26.1 million of cash on hand and C$8.7 million ($6.2 million) of available borrowings, compared to $29.3 million of cash on hand and C$14.4 million ($10.0 million) of available borrowings as at December 31, 2024. Through the first nine months of 2025, the Company used $3.2 million of cash primarily due to the payment of $4.2 million to repurchase common shares under the Shares NCIB and Share Repurchase and $2.7 million for capital expenditures, offset by $4.1 million of net cash flows provided by operating activities.
Current wording
As at March 31, 2026, the Company had $15.0 million of cash on hand and C$14.0 million ($10.1 million) of available borrowings, compared to $20.3 million of cash on hand and C$16.3 million ($11.8 million) of available borrowings as at December 31, 2025. Through the first three months of 2026, the Company used $5.3 million of cash primarily for the repayment of $12.1 million outstanding January Debentures, $0.7 million for capital expenditures, $0.4 million for tax payments on vesting restricted share units (“RSUs”), $0.1 million to repurchase common shares and debentures under the Renewed Shares NCIB and Renewed Debentures NCIB (as defined herein), offset by $6.9 million net proceeds received from the BDC loan and $1.2 million of net cash flows provided by operating activities.
Previous wording
We have assessed the Company’s liquidity as at September 30, 2025, taking into account our sales outlook for the next twelve months, our budget, forecast and expected cash outflows and 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. We note that the January Debentures amounting to C$16.6 million ($11.9 million) as of September 30, 2025 are due on January 31, 2026 and have therefore been classified as current on our balance sheet. Another C$14.9 million ($10.7 million) of principal is due under the December Debentures (as defined herein), which mature on December 31, 2026 (and therefore not yet classified as current). We are evaluating whether we will settle or refinance this debt.
Current wording
We have assessed the Company’s liquidity as at March 31, 2026, taking into account our sales outlook for the next twelve months, our budget, forecast and expected cash outflows, 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. We note that the outstanding principal balance of the December Debentures (as defined herein) amounting to C$14.8 million ($10.6 million) as of March 31, 2026 are due on December 31, 2026 and have therefore been classified as current on our balance sheet. We are evaluating whether we will settle or refinance this debt.
Previous wording
On November 4, 2025, the Company entered into the Fifth Extended RBC Facility (as defined herein), which matures on November 30, 2026. The Fifth Extended RBC Facility 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. The Company will be in default under the Fifth Extended RBC Facility if the January Debentures are not paid in full or refinanced on terms and conditions satisfactory to RBC by January 31, 2026.
Current wording
On November 4, 2025, the Company entered into the Fifth Extended RBC Facility (as defined herein), which matures on November 30, 2026. The Fifth Extended RBC Facility 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.
Showing the first 40 of 55 pairs. Open the source sections for the rest.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Adjusted Gross Profit and Adjusted Gross Profit Margin for the Three months ended March 31, 2026 and 2025
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
On November 4, 2025, the Company entered into the Fifth Extended RBC Facility (as defined herein), which matures on November 30, 2026.
Previous report — wording carried elsewhere
Gain on extinguishment of convertible debentures