DIRTT Environmental Solutions Ltd. (“DIRTT”, the “Company”, “we” or “us”) (Nasdaq: DRTT, TSX: DRT), an interior construction company that uses proprietary software to design, manufacture and install fully customizable environments, today announced its financial results for the three months ended June 30, 2021. All financial information in this news release is presented in U.S. dollars, unless otherwise stated.
Second Quarter 2021
- Revenue of $41.1 million
- Gross profit margin of 22.4%
- Adjusted Gross Profit Margin1 of 27.4%
- Net loss of $9.7 million
- Net loss margin of (23.7%)
- Adjusted EBITDA1 of ($6.8) million
- Adjusted EBITDA Margin1 of (16.6%)
- Cash balance of $58.3 million
Note: (1) See “Non-GAAP Financial Measures”
“Second quarter revenue was nearly forty percent higher than first quarter revenue, strengthening our conviction that the first quarter of 2021 represented the trough of our pandemic-impacted revenue,” stated Kevin O’Meara, chief executive officer. “We are pleased with the progress we have been making in implementing our strategic plan, but the environment in which we are working continues to be uncertain. We are closely monitoring potential surges in COVID infection rates and the resulting impact on demand, labor availability, supply chains and our own operations.
“While there has been a broad resumption in non-residential construction activity, many of our clients are experiencing long schedule delays due to a combination of permitting backlogs and material and labor challenges in conventional construction. Our ability to deliver on short lead times is a distinct advantage, helping our clients offset some of these delays, but as DIRTT is installed in the final stages of a project, the delays are negatively impacting the timing of our project delivery, shifting some of them from the second half of 2021 into 2022. As a result, we are now expecting a slower pace of revenue growth recovery in the second half of 2021, with third quarter revenue anticipated to be similar to the second quarter.
“Despite the slower-than-anticipated return to year-over-year revenue growth, we remain encouraged by sales activity levels within the business. We are capitalizing on the increasing interest in flexible, adaptable spaces and prefabricated offsite construction as companies emerge from the pandemic, reoccupy their space and explore new ways of working together. We have strengthened our network of distribution partners, adding 3 new partners during the quarter and are finalizing the onboarding of two general contractors that we expect will join our distribution partner network in the third quarter. Client tours, both virtual and in-person, at our DIRTT Experience Centers (DXCs) hit a 30-month high in June and we continue to expand our strategic account relationships in various stages of development. We have been successful on a number of large strategic account requests for proposal, which we define as being projects exceeding $2 million, with delivery dates beginning in 2022.”
Mr. O’Meara concluded, “We believe our success in prudently executing our strategic plan has positioned us to capitalize on growing sales opportunities as non-residential construction recovers from the COVID-19 pandemic. Our enhanced commercial and manufacturing capabilities are building the foundation for what we believe will be long term, profitable and sustainable revenue growth. We look forward to continuing to leverage the increased brand strength from our strategic marketing initiatives by resuming our annual sales event, Connext, in Chicago in October and by showcasing an inspiring experience of the full scope of the DIRTT solution at the grand opening of our new Dallas DXC late in the third quarter.”
DIRTT is a building process powered by technology. We use our proprietary 3D software to help design, manufacture, and install fully customized interior environments. This same software provides clients with certainty around cost, schedule, and the final outcome. With modular components and a streamlined construction process, complete interior spaces are constructed faster, cleaner, and more sustainably. The Company works with over 70 partners throughout North America. DIRTT trades on Nasdaq under the symbol “DRTT” and on the Toronto Stock Exchange under the symbol “DRT”.
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