DIRTT today announced its financial results for the three months and twelve months ended December 31, 2019. All financial information in this news release is presented in U.S. dollars, unless otherwise stated.
Fourth Quarter 2019
Revenue of $53.2 million
Gross Profit Margin of 25.3%
Adjusted Gross Profit Margin1 of 33.4%
Net loss of $7.5 million or $(0.09)/share
Net loss margin of (14.2)%
Adjusted EBITDA1 of $(3.4) million
Adjusted EBITDA Margin1 of (6.4)%
Revenue of $247.7 million
Gross Profit Margin of 34.9%
Adjusted Gross Profit Margin1 of 39.5%
Net loss of $4.4 million or $(0.05)/share
Net loss margin of (1.8)%
Adjusted EBITDA1 of $18.2 million
Adjusted EBITDA Margin1 of 7.4%
Notes: (1) See “Non-GAAP Financial Measures”. We have revised our calculations of Adjusted Gross Profit Margin and Adjusted EBITDA for the periods presented.
“2019 was a strategically important year for DIRTT but also one that included challenges,” stated Kevin O’Meara, chief executive officer. “While we are confidently moving forward with the many sales and marketing and operational initiatives laid out in our strategic plan, we are still in the early stages of implementing that plan and continue to experience the effects of disruption in sales activity levels stemming from the distraction of significant management changes during 2018 on a long sales cycle combined with the immature and transitional state of our sales and marketing function. This adversely affected revenue in the fourth quarter, which was down sequentially from the third quarter of 2019. We have been experiencing a similar sequential percentage decrease in the first two months of 2020 relative to the first two months of the fourth quarter of 2019. Given the slower start to the year, 2020 may be a lower revenue year than 2019.
“We have a strong group of Distribution Partners that understand the road map and are dedicating time, money and effort behind our strategic plan. This is evidenced by the seven existing Distribution Partners with whom we recently developed a comprehensive plan to expand geographically and address currently underserved markets. These are strong partners who, in aggregate, generated 14% of DIRTT’s sales in 2019. Further, the majority of our extensive partner network is well positioned to continue driving small- to mid-size projects while we establish the internal capabilities that we expect, over time, will drive growth for us and our Distribution Partners through a pipeline of larger projects.
“In addition, we are encouraged by the results to date of our targeted approach to growing strategic national accounts, including discussions with new and existing accounts. The opportunities from these accounts often entail a multi-year sales effort and generally start with smaller projects, growing over time as the commercial relationship strengthens. We expect several small projects from new strategic accounts to commence in the second half of 2020. Finally, within our commercial function, we are hiring within our sales and marketing organization and remain committed to achieving our goal of filling all open positions by the end of 2020.
“Although it remains too early to quantify the impact that our progress will have on revenues for 2020, we are intently focused on exiting the year with the organizational foundation in place to support our strategic plan and achieve our financial targets for 2023, which call for revenue of $450 million to $550 million and an Adjusted EBITDA Margin of 18% - 22%.”
Steve Parry, board chair, added, “While the type of organizational transformation DIRTT is undergoing requires time and patience to execute, the Board is enthusiastic about the comprehensive strategic plan the company is implementing. We are confident that it is the right plan with the right management team to deliver on DIRTT’s significant potential within the interior construction market.”
DIRTT is a global leader in industrialized construction. Its system of physical products and digital tools empowers organizations, together with construction and design leaders, to build high-performing, adaptable, interior environments. Operating in the commercial, healthcare, education, and public sector markets, DIRTT’s system provides total design freedom, and greater certainty in cost, schedule, and outcomes. Headquartered in the US and Canada, DIRTT trades on Nasdaq under the symbol “DRTT” and on the Toronto Stock Exchange under the symbol “DRT”.