CALGARY, Alberta, July 30, 2025 (GLOBE NEWSWIRE) — DIRTT Environmental Solutions Ltd. (“DIRTT”, the “Company”, “we”, “our”, “us” or “ours”) (TSX:DRT, OTCQX:DRTTF), a leader in industrialized construction, today announced its financial results for the three and six months ended June 30, 2025. All financial information in this news release is presented in U.S. dollars, unless otherwise stated.
Second Quarter 2025 Highlights and Recent Developments
- Revenue of $38.9 million in the second quarter of 2025, a decrease of 6%, from the second quarter of 2024.
- Gross profit margin decreased to 27.8% of revenue in the second quarter of 2025 from 37.3% in the second quarter of 2024. Gross profit was negatively impacted by tariff related costs amounting to 5.1% of revenue.
- During the first six months of 2025, various tariffs have been levied by the U.S. and Canadian governments. We incurred $2.0 million (5.1% of total revenue) in tariffs and costs related to tariff mitigation actions for the three months ended June 30, 2025. DIRTT is most impacted by the 25% tariff levied on Canadian aluminum exports to the United States which increased to 50% in June 2025.
- Net loss after tax and net loss margin for the second quarter of 2025 was $6.6 million and 17.0%, respectively, compared to a net income after tax and net income margin of $0.6 million and 1.4%, respectively, in the second quarter of 2024.
- Adjusted EBITDA(1) was $(2.0) million, or (5.2%) of revenue, in the second quarter of 2025, compared to $3.2 million, or 7.7% of revenue, in the second quarter of 2024.
- Liquidity, comprising of unrestricted cash and available borrowings, was $31.1 million at June 30, 2025, compared to $39.3 million at December 31, 2024.
- On June 12, 2025, we began trading on the OTCQX under the symbol “DRTTF.” The Company previously traded on, and upgraded to OTCQX from, the OTC Pink® Market.
(1) See “Non-GAAP Financial Measures”
Management Commentary
Benjamin Urban, chief executive officer, remarked “Project and order delays related to the macroeconomic landscape continued into the second quarter of 2025. Despite these headwinds, DIRTT remains focused on our transformation and growth strategies and we are seeing positive trends. Our key focus areas are revenue expansion and product innovation to unlock more scope and opportunities. Our Integrated Solutions team is contributing significantly to our pipeline through projects executed with partners or in geographic markets where we lack coverage. The introduction of new products, such as our one-hour fire-rated wall, allows us to capture more comprehensive healthcare and life sciences scope, and expand into previously unavailable market sectors including hospitality and multi-family housing. All of this is contributing to our strongest twelve-month pipeline in more than two years. While we anticipate more macroeconomic challenges ahead, we are optimistic about our path for growth.”
Fareeha Khan, chief financial officer, added “As anticipated, our revenue this quarter was lower than originally expected as we continued to see delays in construction investment decisions. Margins were impacted by tariffs, including an additional 25% tariff announced on aluminum and steel in early June 2025. We have put in place actions to mitigate the tariff impact and expect to return to positive Adjusted EBITDA in the fourth quarter of this year. Our twelve-month forward pipeline is up 7% from April 1, 2025 and has crossed the $300 million mark as we focus on revenue growth. As the markets in which DIRTT operates adjust to the implementation of tariffs, we anticipate our order conversion to return to typical levels in the next two quarters.”
Second Quarter 2025 Results
Second quarter 2025 revenue was $38.9 million, a decrease of $2.3 million or 6%, from $41.2 million for the same period of 2024. We entered the second quarter of 2025 with an 8% higher twelve-month forward pipeline as compared to April 1, 2024. However, we started experiencing above-trend scheduling delays and below-trend signed awards driven by macroeconomic conditions, including the imposition of additional tariffs, which we believe are unrelated to DIRTT, resulting in lower revenue this quarter.
Gross profit and gross profit margin for the quarter ended June 30, 2025 were $10.8 million or 27.8% of revenue compared to $15.4 million or 37.3% of revenue for the quarter ended June 30, 2024. Adjusted Gross Profit (see “Non-GAAP Financial Measures”) for the three months ended June 30, 2025 was $11.8 million, a decrease from $16.2 million Adjusted Gross Profit for the second quarter of 2024. Adjusted Gross Profit Margin (see “Non-GAAP Financial Measures”) was 30.4% for the second quarter of 2025, a decrease from 39.4% in the comparative period of 2024. Gross profit and Adjusted Gross Profit for the quarter ended June 30, 2025 were negatively impacted by the tariffs implemented in 2025. We incurred $2.0 million (5.1% of revenue) in tariffs and costs related to tariff mitigation actions in the three months ended June 30, 2025.
Sales and marketing expenses decreased by $0.8 million to $5.3 million for the three months ended June 30, 2025 from $6.1 million for the three months ended June 30, 2024. The decrease was driven by a $0.4 million decrease in salary and benefits costs, $0.2 million lower commission costs as a result of lower revenues, a $0.2 million decrease in travel, meals and entertainment costs, and a $0.1 million decrease in other costs, partially offset by a $0.1 million increase in marketing and tradeshow expenses.
General and administrative expenses increased by $1.4 million to $5.7 million for the three months ended June 30, 2025, from $4.4 million for the three months ended June 30, 2024. The increase was primarily related to a $0.7 million increase in professional services costs as a result of litigation costs as we prepare for the trial in DIRTT’s litigation with Falkbuilt Ltd., Messrs. Smed and Loberg and their associates (the “Falkbuilt trial”), a $0.5 million increase in salaries and benefits costs, a $0.2 million increase in board fees and expenses, and a $0.1 million increase in public company costs, partially offset by a $0.1 million decrease in building and infrastructure costs.
Operations support is comprised primarily of project managers, order entry and other professionals that facilitate the integration of our Construction Partner project execution, our manufacturing operations, and support staff for the Integrated Solutions team. Operations support expenses slightly increased by $0.03 million for the three months ended June 30, 2025 to $1.9 million, compared to $1.8 million for the comparative period of 2024.
Technology and development expenses relate to non-capitalizable costs associated with our product and software development teams, and are primarily comprised of salaries and benefits of technical staff. Technology and development expenses slightly increased $0.04 million to $1.5 million for the three months ended June 30, 2025, compared to $1.4 million for the three months ended June 30, 2024.
Stock-based compensation expense for the three months ended June 30, 2025 was $0.6 million, compared to $0.4 million in the comparative period of 2024. Stock-based compensation expense is dependent on share price in a period for fair value adjustments made on cash-settled DSU awards and grants, exercises, expirations or forfeitures made on other awards. The increase in expense was largely due to an increase in RSU expense as a result of a higher number of RSUs granted and outstanding for the quarter ended June 30, 2025 compared to the same period of 2024, partially offset by a decrease in DSU expenses as a result of decreasing share prices during the second quarter of 2025.
Foreign exchange loss or gain decreased from a gain of $0.4 million for the three months ended June 30, 2024 to a loss of $1.9 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 three months ended June 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 months ended June 30, 2025, were denominated in Canadian dollars.
Interest income for three months ended June 30, 2025 was $0.2 million compared to $0.5 million for the comparative period 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 months ended June 30, 2025 compared to the same period of 2024.
Interest expense decreased by $0.5 million from $0.9 million in the quarter ended June 30, 2024, to $0.5 million for the three months ended June 30, 2025. This decrease is largely due to repayment of debt throughout the year ended December 31, 2024 and during the first six months of 2025, reducing the interest payable on current and long-term debt.
Net loss after tax was $6.6 million or $0.03 net loss per share, basic and diluted, in the three months ended June 30, 2025, a decrease of $7.2 million from net income after tax of $0.6 million or $0.00 net income per share, basic and diluted, for the three months ended June 30, 2024. The decrease in net income is primarily the result of a $4.6 million decrease in gross profit, a $0.8 million increase in operating expenses, a $2.3 million decrease in foreign exchange gain, and a $0.3 million decrease in interest income, partially offset by decreases of $0.5 million in interest expense and $0.2 million in income tax expense.
For the three months ended June 30, 2025, Adjusted EBITDA decreased by $5.2 million to a $2.0 million loss from $3.2 million and Adjusted EBITDA Margin decreased to (5.2%) from 7.7% for the same period of 2024. This reflects a $4.4 million decrease in Adjusted Gross Profit, a $0.5 million increase in salaries and benefits costs as we invest in our business, a $0.9 million increase in professional services costs largely due to litigation costs relating to the Falkbuilt trial, and a $0.3 million increase in public company costs and board fees, offset by a $0.2 million decrease in commissions as a result of lower revenue, a $0.3 million decrease in travel, meals and entertainment costs, a decrease of $0.3 million from loss on disposal, and a $0.1 million decrease in other costs.
Outlook
DIRTT continued to experience challenges related to macroeconomic uncertainty in the second quarter of 2025, primarily driven by the United States’ changing tariff policy. In the second quarter of 2025, revenue was under pressure and lower than expected due to delayed contracts and slowed construction schedules, despite winning work. This trend is evidenced by our revenue declining 6% from the first quarter of 2025 to the second quarter of 2025. Despite this decline, our twelve-month forward pipeline increased 7% from April 1, 2025 compared to July 1, 2025.
The imposition of tariffs decreased Adjusted Gross Profit Margin by 512 basis points in the second quarter of 2025. In June 2025, an additional 25% tariff was levied on aluminum and steel imports into the United States. Whilst we cannot predict the go-forward policy, we have implemented a variety of tariff mitigation strategies, including price adjustments, strategic sourcing, and manufacturing footprint adjustments to preserve margins. We expect there to be a lag between the date the tariffs were incurred and when our mitigation strategies will be realized. Our third quarter financial results are currently expected to reflect similar tariff pressures to the second quarter. We expect to return to positive Adjusted EBITDA by the fourth quarter of 2025.
The construction industry continues to face challenges such as labor shortages and supply chain pressures and DIRTT’s value proposition is even more relevant. Markets seem to be accepting the tariff situation and we hope for normalcy to return to our order conversion in the next two quarters. We are focusing on growth and transforming our business to compete more directly with conventional construction by expanding our commercial channels, innovating our product offering, and increasing operational excellence. For the first time in two years, our twelve-month forward pipeline has crossed the $300 million level. Our Integrated Solutions pipeline has increased by 20% from the beginning of the year. With the introduction of fire-rated walls and other product innovations this quarter, DIRTT is now able to capture more scope on projects than before (i.e. healthcare and life sciences) and is also now able to expand into previously untapped markets such as hospitality and multi-family housing.
Our balance sheet is strong, including $31.1 million of liquidity (comprising of unrestricted cash and available borrowings), although we experienced negative cash flows from operations in the three months ended June 30, 2025. There is C$16.6 million ($12.2 million) principal due under the January Debentures (as defined herein), which mature on January 31, 2026, and we are evaluating whether we will settle or refinance this debt.
Conference Call and Webcast Details
A conference call and webcast for the investment community is scheduled for July 31, 2025 at 08:00 a.m. MDT (10:00 a.m. EDT). The call and webcast will be hosted by Benjamin Urban, chief executive officer, and Fareeha Khan, chief financial officer.
The call is being webcast live on the Company’s website at dirtt.com. Alternatively, click here to listen to the live webcast. The webcast is listen-only.
A webcast replay of the call will be available on DIRTT’s website.
Statement of Operations
(Unaudited – Stated in thousands of U.S. dollars)
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||
| Product revenue | 37,741 | 40,176 | 78,087 | 79,215 | |||||||||||
| Service revenue | 1,181 | 1,025 | 2,130 | 2,833 | |||||||||||
| Total revenue | 38,922 | 41,201 | 80,217 | 82,048 | |||||||||||
| Product cost of sales | 27,362 | 25,389 | 53,718 | 50,381 | |||||||||||
| Service cost of sales | 742 | 437 | 1,139 | 1,644 | |||||||||||
| Total cost of sales | 28,104 | 25,826 | 54,857 | 52,025 | |||||||||||
| Gross profit | 10,818 | 15,375 | 25,360 | ||||||||||||