Release Date: May 08, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue for Q1 2025 increased by 1% compared to the same period in 2024, driven by higher volume of large projects.
- The 12-month forward sales pipeline increased by 5% to $292 million, indicating strong future business prospects.
- DIRTT Environmental Solutions Ltd (DRTTF, Financial) was named number one in manufacturing on Fast Company's list of the world's most innovative companies of 2025.
- The company completed significant projects, including phase 2 of the South Bay Family Justice Center, showcasing its capability in large-scale projects.
- DIRTT Environmental Solutions Ltd (DRTTF) maintained a high on-time and in-full delivery rate of 98.8%, demonstrating operational efficiency.
Negative Points
- Gross profit margin decreased from 35.9% in Q1 2024 to 35.2% in Q1 2025, reflecting cost pressures.
- Net loss after tax for Q1 2025 was $0.7 million, a significant decline from a net income of $3 million in the same period of 2024.
- The company faced challenges from a 25% tariff on aluminum and a 145% tariff on Chinese imports, impacting costs.
- Adjusted EBITDA decreased by $0.6 million compared to Q1 2024, due to increased operating expenses.
- DIRTT Environmental Solutions Ltd (DRTTF) withdrew its annual 2025 revenue and earnings guidance due to market uncertainties.
Q & A Highlights
Q: Can you provide more details on the impact of tariffs on your supply chain and how you plan to mitigate these effects?
A: Fareeha Khan, CFO: The 25% tariff on aluminum and the 145% tariff on Chinese imports have impacted us, as 10% of our raw materials are aluminum and 6% of our hardware comes from China. We are leveraging our Savannah plant, which is also an aluminum facility, to balance loads and mitigate these impacts. Our gross profit numbers include $0.6 million of costs related to these tariffs. We have discussed further mitigation strategies in our 10Q.
Q: What are the key drivers behind the increase in your sales pipeline and leads?
A: Fareeha Khan, CFO: Our 12-month forward sales pipeline increased by 5% to $292 million, and leads increased by 47%. This growth is due to our investments in revenue growth and strategic initiatives to expand our market presence, particularly in sectors like healthcare, life sciences, and commercial offices.
Q: How is DIRTT addressing the challenges posed by the current economic environment?
A: Benjamin Urban, CEO: Despite market headwinds, we are focusing on growth through innovation and transformation. We have established a transformation office to apply lean manufacturing principles to our operations, reducing manual touchpoints and deploying AI and automation. We are also diversifying revenue streams and expanding our integrated solutions team.
Q: Can you elaborate on the recent projects and client wins that DIRTT has achieved?
A: Benjamin Urban, CEO: We completed phase 2 of the South Bay Family Justice Center in San Diego, a significant project in the U.S. We also secured a $5.2 million project at one of the largest airports in the U.S., marking our largest win in the integrated solutions group. These projects highlight our ability to deliver flexible and innovative solutions.
Q: What are the future prospects for DIRTT's proprietary ICE software and its role in the company's growth?
A: Benjamin Urban, CEO: Our ICE software is a key enabler of innovation and efficiency. We continue to invest in its development to enhance our capabilities and revenue potential. ICE commercialization has opened new avenues for us, and we showcased it at major industry conferences, which helps us tap into complementary sectors.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
