DIRTT Environmental Solutions Q4 2025 Earnings Report

DIRTT Environmental Solutions EPS Results

• Actual EPS: -C$0.01
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

DIRTT Environmental Solutions Revenue Results

• Actual Revenue: $69.89 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

DIRTT Environmental Solutions Announcement Details

• Quarter: Q4 2025
• Date: 2/25/2026
• Time: Before Market Opens
• Conference Call Date: Thursday, February 26, 2026
• Conference Call Time: 10:00AM ET

DIRTT Environmental Solutions (TSE:DRT) Ltd is a manufacturer of customized interiors. The company combines its (3D) design, configuration, and manufacturing software (ICE or ICE Software) with in-house manufacturing of its prefabricated interior construction solutions and a distribution partner (DP) network. It offers services to various sectors which include healthcare, education, commercial and other sectors. DIRTT operates its activity through the U.S and Canada of which, the United States generates a majority of revenue.

DIRTT Environmental Solutions Q4 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Q4 revenue of $50.9 million (up 4% YoY) and Adjusted EBITDA of $6.2 million$194M–$209M revenue and $26M–$31M Adjusted EBITDA, indicating expected recovery and growth.
• Positive Sentiment: Gross margin improved to 36.6% (from 35.9% YoY and 30.4% sequentially), attributed to realization of tariff-mitigation synergies.
• Negative Sentiment: Reported a $3.7 million net loss vs prior-year $4.0 million net income, driven primarily by $7.6 million of increased reorganization and impairment charges that weighed on GAAP results.
• Positive Sentiment: Strategic transformation progress — formalizing DIRTT Construction Services, optimizing the partner network, and securing enterprise wins (Google Toronto, U-Haul) — intended to broaden addressable market and improve project conversion.
• Neutral Sentiment: Balance sheet shows $20.3 million unrestricted cash and $32.1 million liquidity (including $11.8M undrawn ABL); received CAD 5.5M initial tranche of a proposed CAD 15M BDC facility, though cash declined $5.8M during the quarter.

Presentation

[Operator]

Good day. Thank you for standing by. Welcome to DIRTT's 2025 Q4 Financial Results Conference Call. At this time, all participants are in the listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone. You will hear an automated message advising you to raise your hand. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Adrian Zarate, Chief Transformation Officer. Please go ahead.

[Adrian Zarate, Chief Transformation Officer at DIRTT Environmental Solutions]

Thank you, operator. Good morning, everyone. Welcome to today's call to discuss DIRTT's Fourth Quarter 2025 Results. Joining me on the call today will be Benjamin Urban, CEO, and Fareeha Khan, CFO. Today's call will include forward-looking statements within the meaning of applicable Canadian and United States securities laws. These statements are based on the company's current intent, expectations, and projections. They are not guarantees of future performance. In addition, this call will reference non-GAAP results, excluding special items. Please reference our Form 10-K as filed on February 25, 2026, with the Securities and Exchange Commission, or SEC, and other reports and filings with the SEC for information regarding forward-looking statements and reconciliations of non-GAAP results to GAAP results. I will also remind you that this webcast is being recorded, and a replay will be available early next week.

[Adrian Zarate, Chief Transformation Officer at DIRTT Environmental Solutions]

I will now turn the call over to Benjamin.

[Benjamin Urban, CEO at DIRTT Environmental Solutions]

Thank you, Adrian, and good morning, everyone. As noted in our outlook, Q4 reflected a return to normalcy in terms of sales and earnings power or Adjusted EBITDA. Our transformation initiatives continue to gain traction, and we believe they will drive a structural improvement in our long-term revenue and earnings capacity. I will expound upon this later in the call, but first, we'll ask Fareeha to walk us through our Q4 financial results and next 12 months or fiscal year 2026 guidance.

[Fareeha Khan, CFO at DIRTT Environmental Solutions]

Thank you, Benjamin, and good morning, all. Please note that we have issued a press release discussing our fourth quarter 2025 results and fiscal year 2026 guidance. We have also provided additional analysis in a supplemental presentation. Both documents are available on our website. Revenues for the fourth quarter were $50.9 million, an increase of 4% compared to the same period in 2024. Gross profit margin increased from 35.9% of revenue in the fourth quarter of 2024 to 36.6% of revenue in the fourth quarter of 2025, and sequentially compared to Q3, 2025 grew from 30.4% to 36.6% due to the realization of tariff mitigation synergies.

[Fareeha Khan, CFO at DIRTT Environmental Solutions]

Operating expenses for the fourth quarter, excluding reorganization costs, stock-based compensation, impairment charges, legal provision, and other non-recurring operating expenses, were $14.1 million, consistent with the same quarter last year. Increases in professional fees and operating support expenses offset lower general and administrative and technology and development expenses. Our net loss after tax for the fourth quarter of 2025 was $3.7 million, compared to net income after tax of $4 million for the same period of 2024. Net loss after tax was primarily impacted by $7.6 million of increased general and administrative reorganization expenses and impairment charges, as well as a $0.9 million non-cash gain on the disposal of the Rock Hill facility lease and a $0.3 million foreign exchange loss due to the strengthening of the Canadian dollar relative to the US dollar.

[Fareeha Khan, CFO at DIRTT Environmental Solutions]

Adjusted EBITDA for the fourth quarter of 2025 was $6.2 million, an increase of $0.7 million from $5.5 million during the fourth quarter of 2024. With respect to our balance sheet, the quarter finished with $20.3 million in unrestricted cash, a decrease of $5.8 million from September 30, 2025. Cash used in operations was $4.3 million, while cash used in investing activities was $1.2 million. Cash used in financing activities was $0.3 million and primarily consisted of repayment of long-term debt, employee tax payments related to vested RSUs, and common share repurchases under the company's normal course issuer bid.

[Fareeha Khan, CFO at DIRTT Environmental Solutions]

Our working capital continues to improve, with DIO decreasing from 61.4 days to 53.7 days, and trailing three-month average cash conversion cycle stepping down to 47.2 days from 49 days in September 2025. Liquidity was $32.1 million as of December 31, 2025, including $11.8 millions of availability under our ABL credit facility. We have not drawn on this facility to date. This quarter, we had minimal activity in our debentures NCIB and shares NCIB program, but we repaid our January debentures with balance sheet cash in January 2026. Additionally, in the fourth quarter of 2025, we executed a letter of offer with BDC for up to CAD 15 million of total funds, of which the first tranche of CAD 5.5 million was received earlier this month.Looking forward to 2026, we are encouraged by the anticipated conversion of our pipeline into revenue. For fiscal year 2026, we are expecting revenue between $194 million and $209 million, and Adjusted EBITDA between $26 million and $31 million. Our guidance range reflects our current assessment of tariff impacts. Guidance does not reflect the potential impact of unforeseen tariffs or trade policy changes. We will update guidance if and when the impact becomes quantifiable.

[Benjamin Urban, CEO at DIRTT Environmental Solutions]

Thank you, Fareeha. While 2025 presented a myriad of macroeconomic challenges, we transcended adversity and advanced strategic priorities of year transformation efforts. In fact, we are coming off 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, compared to guidance of $48 million-$52 million of revenue and $5 million-$7 million of Adjusted EBITDA. We believe recent commercial wins, the scaling of our new distribution channel, an optimized partner network, and our new operating model collectively provide proof of concept for substantially improved revenue growth and earnings quality. Regarding commercial, we recently announced another project with a 10-year plus legacy client, Google, for their Toronto office, in addition to a major new contract with U-Haul.

[Benjamin Urban, CEO at DIRTT Environmental Solutions]

These engagements reflect the caliber of repeat and new enterprise relationships we continue to prioritize and expand. For distribution channels, we have evolved how we pursue and deliver projects. Last year, we established a team called Integrated Solutions to explore expanded revenue opportunities. During Q3, we formalized this team as DIRTT Construction Services to better reflect their full scope and capabilities. They provide pre-construction, design-build assistance, targeted estimating, self-perform installation, and more, elevating DIRTT from manufacturing to a multi-trade, prefabricated interior construction company. DIRTT Construction Services complements our existing partner distribution channel by allowing us to, one, provide more technical capabilities to help select partners bid and win larger projects. Two, help fill gaps a partner may have on their team. Three, pursue projects in markets without partner coverage, in sectors that require specific expertise, or for our existing national account strategy.

[Benjamin Urban, CEO at DIRTT Environmental Solutions]

We have also optimized our partner network to support future growth through greater stratification and targeted resource allocation. We remain committed to this channel strategy and have identified our highest potential partners and increased our investment in those relationships to drive pipeline expansion and improved conversion to revenue. As part of our transformation, we introduced a new operating model focused on process standardization and operational discipline. This approach is intended to reduce complexity and unlock capacity across the enterprise. Collectively, these actions are designed to expand our addressable market, augment operating leverage, and support structurally higher earnings power. With respect to the Falkbuilt litigation, the eight-week trial covering multiple allegations began on February 2, 2026, and remains underway. DIRTT is pursuing damages it suffered in Canada, the United States, and abroad.

[Benjamin Urban, CEO at DIRTT Environmental Solutions]

In closing, I would like to thank our entire DIRTT team for their dedication to continuous improvement and transformation, which requires reimagining how we do business and innovating to be steps ahead of the market and competition. This takes a highly strategic, collaborative process, and our team has risen to the challenge. Thank you for joining us today. I will now open the call to questions.

[Operator]

Thank you. At this time, we will conduct a question-and-answer session. CEO, Benjamin Urban, CFO, Fareeha Khan, and Chief Transformation Officer, Adrian Zarate, are available for Q&A. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. I'm not showing no questions at this time. I would now like to turn it back to Benjamin Urban for closing remarks.

[Benjamin Urban, CEO at DIRTT Environmental Solutions]

I have no further closing remarks. Thank you, everyone, for joining us today.

[Operator]

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Participants

Executives

• Adrian Zarate, Chief Transformation Officer
• Benjamin Urban, CEO
• Fareeha Khan, CFO