DIRTT Reports Second Quarter 2025 Financial Results

Executive Summary

• DIRTT Environmental Solutions reported a net loss of $6.6 million ($0.03 per share) for Q2 2025, a significant deterioration from the $0.6 million net income recorded in the same period of 2024.
• Revenue declined 6% year-over-year to $38.9 million, driven by macroeconomic headwinds, project delays, and a 5.1% revenue hit from new U.S. and Canadian tariffs (specifically on aluminum exports).
• The company reported negative Adjusted EBITDA of $(2.0) million for the quarter, with management expecting a return to positive Adjusted EBITDA by Q4 2025 as tariff mitigation strategies take effect.

Key Details

• Financial Performance (Q2 2025):
  • Revenue: $38.9 million (down 6% from $41.2 million in Q2 2024).
  • Gross Profit: $10.8 million (margin of 27.8%, down from 37.3% in Q2 2024).
  • Net Loss: $6.6 million (margin of 17.0%), compared to a net income of $0.6 million (1.4%) in Q2 2024.
  • Adjusted EBITDA: $(2.0) million (margin of -5.2%), compared to $3.2 million (7.7%) in Q2 2024.
  • Net Loss Per Share: $(0.03) basic and diluted.
• Tariff Impact:
  • Incurred $2.0 million (5.1% of revenue) in tariffs and mitigation costs in Q2 2025.
  • Heavily impacted by the 25% tariff on Canadian aluminum exports to the U.S., which increased to 50% in June 2025.
  • Tariffs decreased Adjusted Gross Profit Margin by 512 basis points.
• Operational Metrics:
  • Twelve-month forward pipeline increased 7% from April 1, 2025, crossing the $300 million mark.
  • Integrated Solutions pipeline increased by 20% from the beginning of the year.
  • Liquidity stood at $31.1 million (unrestricted cash and available borrowings) at June 30, 2025, down from $39.3 million at December 31, 2024.
• Expense Breakdown:
  • Sales and Marketing: $5.3 million (down $0.8 million YoY).
  • General and Administrative: $5.7 million (up $1.4 million YoY, primarily due to $0.7 million in litigation costs for the Falkbuilt trial).
  • Stock-Based Compensation: $0.6 million (up from $0.4 million YoY).
  • Foreign Exchange Loss: $1.9 million (vs. a $0.4 million gain in Q2 2024) due to CAD strengthening against USD.
• Outlook & Guidance:
  • Management anticipates Q3 financial results to reflect similar tariff pressures to Q2.
  • Expects to return to positive Adjusted EBITDA by Q4 2025.
  • Anticipates order conversion to return to typical levels in the next two quarters.
  • C$16.6 million ($12.2 million) principal under January Debentures matures on January 31, 2026; company is evaluating settlement or refinancing.
• Corporate Updates:
  • Began trading on the OTCQX under symbol "DRTTF" on June 12, 2025, upgrading from the OTC Pink Market.

Notable Quotes

• Benjamin Urban, CEO: "Our key focus areas are revenue expansion and product innovation to unlock more scope and opportunities... 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, CFO: "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... 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."