In This Article:
Release Date: February 27, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Dirtt Environmental Solutions Ltd (DRTTF) ended 2024 with annual revenue and adjusted EBITDA on the higher end of guidance provided earlier in the year.
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The company has a strong 12-month forward sales pipeline of $278 million, showing an increase from the previous year.
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Dirtt's net income after tax for Q4 2024 was $4 million, a significant increase from $1 million in the same period of 2023.
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The company reduced its long-term debt significantly from $56.1 million at the end of 2023 to $22.4 million at the end of 2024.
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Dirtt achieved an on-time and full delivery performance of 99.1% in 2024, the highest in its history, and maintained a total recordable incident rate significantly below the industry average.
Negative Points
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Revenues for the fourth quarter were $48.9 million, down 4% compared to the same period in 2023.
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Gross profit margin decreased from 37.8% in Q4 2023 to 35.9% in Q4 2024 due to lower revenue volumes and an inventory provision.
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The ongoing threat of a 25% tariff on Canadian imports into the United States creates significant uncertainty for the business.
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Operating expenses for the fourth quarter were $15.3 million, although lower than the previous year, still impacted by professional fees and event costs.
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The litigation against Falkbuilt remains unresolved, with a trial scheduled in Canada for 2026, potentially involving damages exceeding $50 million.
Q & A Highlights
Q: Can you provide more details on the impact of tariffs on DIRTT's operations and how the company plans to mitigate these effects? A: Benjamin Urban, CEO, explained that the ongoing threat of a 25% tariff on Canadian imports into the U.S. creates uncertainty. DIRTT sources 92% of its raw materials from North America, and the company is preparing for potential tariffs by leveraging its dual presence in Canada and the U.S. to mitigate impacts through strategic material sourcing and manufacturing locations.
Q: What are the key factors contributing to the decrease in revenue for the fourth quarter of 2024? A: Fareeha Khan, CFO, noted that the 4% decrease in revenue compared to the same period in 2023 was primarily due to a higher volume of large projects completed in the fourth quarter of 2023. Additionally, there was an inventory provision of $0.7 million affecting gross profit margins.
Q: How is DIRTT addressing the rising raw material costs impacting the construction industry? A: Fareeha Khan, CFO, mentioned that DIRTT announced a 5% price increase on February 11, 2025, to counteract rising raw material costs. The company also adjusted pricing on certain products based on customer feedback to mitigate these impacts.