DIRTT Environmental to exit its Rock Hill lease

Executive Summary

• DIRTT Environmental Solutions Ltd. has entered into an agreement to early terminate the lease for its former Rock Hill, S.C., manufacturing facility, effective December 30, 2025.
• The termination is contingent upon the closing of a purchase and sale agreement between PDM US, LLC and the landlord, SP Rock Hill Legacy East #1, LLC.
• DIRTT will pay a reduced early termination fee of $1.0 million to be relieved of remaining rent obligations estimated at $10.5 million, resulting in expected annual cost savings of $1.6 million starting January 2026.

Key Details

• Lease Termination Terms: DIRTT entered into a lease termination and release agreement with PDM US, LLC, contingent on the closing of the facility's sale.
• Financial Impact:
  • Termination Fee: $1.0 million paid to PDM US, LLC.
  • Liability Relief: Relief from remaining undiscounted rent obligations of approximately $10.5 million as of November 30, 2025.
  • Cost Savings: Expected recurring annual cost savings of $1.6 million beginning in January 2026.
  • Accounting Impact: Recognition of a one-time, non-cash impairment expense related to leasehold improvements of approximately $2.3 million.
  • Balance Sheet Items (as of Sept 30, 2025): Right-of-use asset of $5.9 million and lease liability of $7.7 million.
• Operational Context: The Rock Hill facility was permanently closed in September 2023 as part of broader operational initiatives, with capacity shifted to Calgary manufacturing facilities.
• Future Outlook: The CEO states this action rationalizes the real estate footprint and supports the company's volume- and margin-focused transformation.

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," said Benjamin Urban, chief executive officer of DIRTT. "As part of our volume- and margin-focused transformation, we remain committed to revisiting and optimizing all aspects of our business."