DIRTT Confirms Early Termination of Lease Agreement for Former Rock Hill Facility

Executive Summary

• DIRTT entered into a lease termination agreement for its former Rock Hill, SC manufacturing facility, paying a reduced early‑termination fee of $1.0 million and eliminating future rent obligations.
• The termination is expected to generate recurring annual cost savings of $1.6 million beginning Jan 2026 and be accretive to earnings in future periods.
• A one‑time, non‑cash impairment expense of approximately $2.3 million related to leasehold improvements will be recognized, negatively impacting the current period’s results.

Key Details

• Termination Fee: $1.0 million (reduced from estimated remaining rent obligations of ~$10.5 million).
• Annual Savings: Expected recurring cost reduction of $1.6 million starting Jan 2026.
• Impairment Charge: One‑time, non‑cash impairment expense of ~ $2.3 million for leasehold improvements.
• Lease Accounting (as of Sep 30 2025): Right‑of‑use asset = $5.9 million; Lease liability = $7.7 million.
• Operational Impact: Facility permanently closed in Sep 2023; production capacity shifted to Calgary facilities.
• Strategic Rationale: Part of a broader “volume‑ and margin‑focused transformation” aimed at rationalizing the real‑estate footprint and optimizing operating costs.

Notable Quotes

“This action represents an important step in rationalizing DIRTT’s real estate footprint and is expected to deliver recurring annual cost savings of $1.6 million beginning in January 2026,” – Benjamin Urban, CEO

Materiality Assessment: Material – Positive (the lease termination delivers significant future cost savings and earnings accretion, offsetting a modest one‑time impairment.)