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DIRTT Environmental Solutions (TSE:DRT)
TSX:DRT
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DIRTT Environmental Solutions (DRT) AI Stock Analysis

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TSE:DRT

DIRTT Environmental Solutions

(TSX:DRT)

Rating:56Neutral
Price Target:
C$1.00
▲(23.46%Upside)
DIRTT Environmental Solutions has a moderate stock score. The primary concerns are inconsistent revenue growth, high leverage, and recent financial challenges highlighted in the earnings call. Positive corporate events and strategic initiatives provide some optimism, but the stock's overvaluation and bearish technical indicators underscore caution.

DIRTT Environmental Solutions (DRT) vs. iShares MSCI Canada ETF (EWC)

DIRTT Environmental Solutions Business Overview & Revenue Model

Company DescriptionDIRTT Environmental Solutions (DRT) is a leading provider of customizable, sustainable interior construction solutions. Operating in the construction and real estate sectors, the company specializes in the design and manufacture of modular, prefabricated interior components, which include walls, power networks, millwork, and floors. DIRTT's innovative approach allows for high levels of customization and rapid installation, catering to a wide range of industries including healthcare, education, commercial, and residential spaces.
How the Company Makes MoneyDIRTT Environmental Solutions generates revenue primarily through the sale of its modular interior construction products and services. The company designs and manufactures custom interior components that are sold to clients across various industries. Its revenue streams are bolstered by strategic partnerships with architectural and design firms, construction companies, and end clients who seek sustainable and flexible building solutions. Additionally, DIRTT's revenue model includes consulting services, where they provide expertise in the planning and implementation of their modular systems, ensuring a tailored solution for each project. This combination of product sales and consulting services forms the core of DIRTT's financial model.

DIRTT Environmental Solutions Earnings Call Summary

Earnings Call Date:Jul 30, 2025
(Q2-2025)
|
% Change Since: -10.00%|
Next Earnings Date:Nov 05, 2025
Earnings Call Sentiment Negative
The earnings call highlighted several positive developments such as an increase in the sales pipeline, expansion of product offerings, and improved operational efficiency. However, these were overshadowed by significant challenges including decreased revenue, profit margins, and a net loss after tax, primarily driven by tariff impacts and increased operating expenses.
Q2-2025 Updates
Positive Updates
Sales Pipeline Growth
The 12-month forward sales pipeline increased by 12% to $311 million compared to $278 million at the beginning of the year. This is the first time in over 2 years that the pipeline has crossed $300 million.
Expansion of Product Offerings
DIRTT unveiled a new One-Hour Fire-rated wall and expanded its offering of pod-based solutions, including freestanding office pods with louvered ceilings, to meet market demands.
On-Time Delivery Performance
Achieved an on-time in-full delivery performance of 99% in Q2, indicating improved operational efficiency.
Safety Recognition
DIRTT's safety record remains strong with a total recordable incident rate of 1.58, 62% lower than the industry average, earning them a spot as an excellence awardee for Canada's Safest Employers Awards.
Integrated Solutions Success
The integrated solutions pipeline increased by 20%, with successful projects such as a significant installation for a Fortune 200 client in the semiconductor space.
Negative Updates
Revenue and Profit Margin Decrease
Revenues for Q2 were $38.9 million, a decrease of 6% compared to 2024. Gross profit margin also decreased from 37.3% to 27.8%, impacted by tariffs and lower revenue volumes.
Net Loss After Tax
A net loss after tax of $6.6 million was reported for Q2 2025, compared to a net income after tax of $0.6 million for the same period in 2024.
Tariff Impact
The company faced significant tariff pressures, including a 50% tariff on aluminum and steel, affecting the gross profit margin and customer behavior.
Adjusted EBITDA Loss
Adjusted EBITDA for Q2 2025 was a $2 million loss, a decrease of $5.2 million from the $3.2 million adjusted EBITDA in Q2 2024.
Increased Operating Expenses
Operating expenses increased by 6% from the previous year, partly due to litigation costs, resulting in a $0.7 million increase quarter-over-quarter.
Company Guidance
In the second quarter of 2025, DIRTT Environmental Solutions faced several macroeconomic pressures that impacted their financial performance, including a 6% decrease in revenue to $38.9 million compared to the same period in 2024, and a drop in gross profit margin from 37.3% to 27.8%. The company attributed these declines to delays in customer orders and construction schedules, along with increased tariff costs. The 25% tariff on aluminum and steel, which rose to 50% in June, significantly affected their gross profit, contributing to a $2 million impact. Operating expenses increased by 6% to $15.2 million, and the company reported a net loss after tax of $6.6 million, a significant drop from the $0.6 million net income after tax in the second quarter of 2024. Adjusted EBITDA showed a $2 million loss, reflecting a $5.2 million decrease from the prior year's period. Despite these challenges, DIRTT's 12-month forward sales pipeline saw a 12% increase to $311 million, and the company anticipates returning to positive adjusted EBITDA by Q4 2025. Their strategic initiatives, including price adjustments and leveraging their Savannah aluminum plant, are expected to mitigate tariff impacts by the end of the year.

DIRTT Environmental Solutions Financial Statement Overview

Summary
DIRTT Environmental Solutions shows moderate financial performance with improved EBIT and EBITDA margins, indicating better operational efficiency. However, inconsistent revenue growth and high leverage with a debt-to-equity ratio of 1.31 pose risks. Strong cash flow performance provides a buffer against financial volatility.
Income Statement
63
Positive
DIRTT Environmental Solutions showed moderate improvement in financial performance. The gross profit margin for TTM stands at 36.76%, indicating efficient cost management relative to production costs. However, the net profit margin is modest at 6.33% for TTM, reflecting challenges in achieving higher profitability. Revenue growth has been inconsistent, with a recent decrease of 4.19% from 2023 to 2024 and a slight increase of 0.26% from 2024 to TTM, suggesting fluctuating demand or market conditions. EBIT and EBITDA margins have improved to 2.35% and 12.27% respectively for TTM, showing operational improvements.
Balance Sheet
55
Neutral
The balance sheet reveals a mixed financial stability picture. The debt-to-equity ratio is high at 1.31 for TTM, signaling potential leverage risks and reliance on debt financing. However, equity has improved, with a positive return on equity (ROE) of 28.22% for TTM, indicating effective utilization of shareholder funds. The equity ratio stands at 35.03%, reflecting a moderate level of equity financing relative to total assets, which could be strengthened further to enhance financial stability.
Cash Flow
70
Positive
Cash flow analysis shows positive trends, with a strong free cash flow growth rate of 138.12% from 2023 to 2024, and an operating cash flow to net income ratio of 1.18 for TTM, indicating effective cash generation relative to earnings. The free cash flow to net income ratio is 0.89 for TTM, highlighting solid conversion of profit into cash, which supports operational and strategic initiatives.
BreakdownDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue174.31M181.93M172.16M147.59M171.51M
Gross Profit64.38M59.54M28.16M23.46M53.28M
EBITDA25.79M-391.00K-37.77M-45.42M3.78M
Net Income14.77M-14.58M-54.96M-53.67M-11.30M
Balance Sheet
Total Assets118.22M124.32M143.65M199.44M183.14M
Cash, Cash Equivalents and Short-Term Investments29.29M24.74M10.82M60.31M45.85M
Total Debt52.32M89.75M98.86M104.12M47.22M
Total Liabilities75.63M117.22M125.66M131.67M66.61M
Stockholders Equity42.59M7.10M17.99M67.77M116.53M
Cash Flow
Free Cash Flow4.16M11.79M-48.33M-45.33M-7.63M
Operating Cash Flow7.34M14.82M-44.26M-31.21M12.48M
Investing Cash Flow-1.90M7.66M-4.02M-14.14M-19.39M
Financing Cash Flow-415.00K-11.61M-874.00K62.45M5.72M

DIRTT Environmental Solutions Technical Analysis

Technical Analysis Sentiment
Negative
Last Price0.81
Price Trends
50DMA
0.86
Negative
100DMA
0.92
Negative
200DMA
0.97
Negative
Market Momentum
MACD
<0.01
Positive
RSI
41.25
Neutral
STOCH
35.42
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:DRT, the sentiment is Negative. The current price of 0.81 is below the 20-day moving average (MA) of 0.88, below the 50-day MA of 0.86, and below the 200-day MA of 0.97, indicating a bearish trend. The MACD of <0.01 indicates Positive momentum. The RSI at 41.25 is Neutral, neither overbought nor oversold. The STOCH value of 35.42 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:DRT.

DIRTT Environmental Solutions Peers Comparison

Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
79
Outperform
C$1.60B15.9126.31%2.65%16.14%27.71%
71
Outperform
$1.76B23.1221.65%1.40%11.48%38.41%
62
Neutral
C$7.38B1.821.33%2.44%10.99%-6.19%
59
Neutral
C$53.97M50.00-0.16%18.02%-101.42%
56
Neutral
$156.07M53.2511.65%-2.68%
48
Neutral
C$1.22B48.062.78%3.93%20.53%74.96%
21
Underperform
C$7.05M6.9922.10%80.69%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
TSE:DRT
DIRTT Environmental Solutions
0.81
0.11
15.71%
TSE:BDGI
Badger Infrastructure Solutions
52.61
17.06
47.99%
TSE:BDT
Bird Construction
28.11
4.95
21.37%
TSE:MSP
Minaean SP Construction
0.06
0.04
200.00%
TSE:AEP
Atlas Engineered Products Ltd
0.81
-0.51
-38.64%
TSE:ARE
Aecon Group Inc.
19.34
3.39
21.25%

DIRTT Environmental Solutions Corporate Events

Executive/Board ChangesBusiness Operations and Strategy
DIRTT Environmental Solutions Appoints Adrian Zarate to Board of Directors
Positive
Jul 30, 2025

DIRTT Environmental Solutions has appointed Adrian Zarate to its Board of Directors, representing its largest shareholder, 22NW Fund, LP. This move is part of DIRTT’s ongoing efforts to strengthen its leadership and capture more market share, following a successful turnaround led by 22NW since 2022.

The most recent analyst rating on (TSE:DRT) stock is a Hold with a C$2.00 price target. To see the full list of analyst forecasts on DIRTT Environmental Solutions stock, see the TSE:DRT Stock Forecast page.

Business Operations and StrategyFinancial Disclosures
DIRTT Environmental Solutions Faces Tariff Challenges but Remains Optimistic for Future Growth
Negative
Jul 30, 2025

DIRTT Environmental Solutions reported a decline in revenue and gross profit margin for the second quarter of 2025, largely due to increased tariffs on Canadian aluminum exports to the United States. The company experienced a net loss and decreased liquidity, but remains optimistic about future growth through product innovation and market expansion. Despite macroeconomic challenges, DIRTT is focused on revenue growth and expects to return to positive Adjusted EBITDA by the fourth quarter of 2025.

The most recent analyst rating on (TSE:DRT) stock is a Hold with a C$2.00 price target. To see the full list of analyst forecasts on DIRTT Environmental Solutions stock, see the TSE:DRT Stock Forecast page.

Financial Disclosures
DIRTT Environmental Solutions to Release Q2 2025 Financial Results
Neutral
Jul 22, 2025

DIRTT Environmental Solutions announced it will release its second quarter 2025 financial results on July 30, 2025, after market close. The company will host a live webcast on July 31, 2025, to discuss the results, featuring CEO Benjamin Urban and CFO Fareeha Khan. This announcement is part of DIRTT’s ongoing efforts to maintain transparency with stakeholders and could impact its market positioning by providing insights into its financial health and operational performance.

The most recent analyst rating on (TSE:DRT) stock is a Hold with a C$2.00 price target. To see the full list of analyst forecasts on DIRTT Environmental Solutions stock, see the TSE:DRT Stock Forecast page.

Shareholder MeetingsBusiness Operations and Strategy
DIRTT Environmental Solutions Reports Positive Shareholder Meeting Outcomes
Positive
Jun 24, 2025

DIRTT Environmental Solutions announced the results of its annual general and special meeting of shareholders, where all nominated directors were elected with strong support. The approval of all other matters voted on at the meeting reflects shareholder confidence in the company’s strategic direction and leadership, potentially strengthening its position in the industrialized construction industry.

The most recent analyst rating on (TSE:DRT) stock is a Hold with a C$2.00 price target. To see the full list of analyst forecasts on DIRTT Environmental Solutions stock, see the TSE:DRT Stock Forecast page.

Delistings and Listing Changes
DIRTT Environmental Solutions Upgrades to OTCQX Best Market
Positive
Jun 11, 2025

DIRTT Environmental Solutions Ltd has announced its approval to trade on the OTCQX® Best Market, upgrading from the Pink® market. This move is expected to enhance the marketability of its securities and attract U.S.-based institutional investors, wealth advisors, and individual investors, potentially increasing trading volume and liquidity. The company will continue trading on the Toronto Stock Exchange under the symbol ‘DRT’.

The most recent analyst rating on (TSE:DRT) stock is a Hold with a C$2.00 price target. To see the full list of analyst forecasts on DIRTT Environmental Solutions stock, see the TSE:DRT Stock Forecast page.

Legal ProceedingsBusiness Operations and StrategyFinancial Disclosures
DIRTT Environmental Solutions Navigates Tariff Challenges with Strategic Growth Initiatives
Neutral
May 7, 2025

DIRTT Environmental Solutions reported a slight revenue increase to $41.3 million for the first quarter of 2025, despite facing challenges from tariffs affecting their profit margins. The company is navigating these economic pressures by expanding its partnerships and increasing its project pipeline, notably in healthcare and integrated solutions, while also pursuing legal actions and financial restructuring to bolster its market position.

Private Placements and FinancingBusiness Operations and StrategyFinancial Disclosures
DIRTT Environmental Solutions Navigates Tariff Challenges with Strategic Growth Initiatives
Neutral
May 7, 2025

DIRTT Environmental Solutions reported a slight increase in revenue to $41.3 million for the first quarter of 2025, despite facing challenges such as tariffs on Canadian aluminum exports and Chinese hardware imports. The company experienced a net loss of $0.7 million, influenced by these tariffs and related costs. However, DIRTT is actively pursuing growth strategies, including a partnership with HB Work Places and the establishment of a DIRTT Experience Centre in Houston. Additionally, the company has extended its credit facility with the Royal Bank of Canada, enhancing its financial flexibility.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Aug 02, 2025