DIRTT Sheds $10.5M Lease, Eyes $1.6M Annual Savings in Leaner Strategy

CALGARY, Alberta – January 05, 2026 – DIRTT Environmental Solutions Ltd. has finalized a strategic exit from its former manufacturing facility in Rock Hill, South Carolina, a move the company projects will unlock significant long-term financial benefits. The leader in industrialized construction announced it had secured an early lease termination, effective December 30, 2025, relieving it of approximately $10.5 million in future rent obligations.

The agreement, which required a one-time payment of $1.0 million, is a cornerstone of the company's ongoing operational overhaul. It is expected to generate recurring annual cost savings of $1.6 million beginning this month. This decisive action underscores a broader corporate strategy focused on streamlining operations and enhancing profitability in a dynamic market.

“This action represents an important step in rationalizing DIRTT’s real estate footprint and is expected to deliver recurring annual cost savings,” said Benjamin Urban, CEO of DIRTT. “As part of our volume- and margin-focused transformation, we remain committed to revisiting and optimizing all aspects of our business.”

The Financial Calculus of Consolidation

The financial engineering behind the lease termination involves a calculated trade-off: absorbing short-term costs for long-term gains. While the $1.0 million termination fee paid to PDM US, LLC—the facility's new owner—represents an immediate cash outlay, it pales in comparison to the estimated $10.5 million in undiscounted rent obligations that remained on the books as of November 30, 2025.

In conjunction with the exit, DIRTT expects to recognize a one-time, non-cash impairment expense of approximately $2.3 million in the current reporting period. This accounting charge relates to leasehold improvements made to the Rock Hill property that can no longer be utilized. While this will negatively impact reported net income for the period, it does not affect the company's cash position. Financial filings from September 30, 2025, listed the right-of-use asset for the lease at $5.9 million and the corresponding lease liability at $7.7 million. By eliminating this liability, the company strengthens its balance sheet for future periods.

Company management has emphasized that despite the impairment charge, the transaction is expected to be accretive to earnings in the future. The $1.6 million in annual savings drops directly to the bottom line, providing a significant boost to operating margins at a time when the company is navigating market headwinds. Recent quarterly reports have indicated revenue and margin pressures, partially attributed to tariffs, making such cost-saving initiatives particularly critical.

A Strategic Retreat from an Ambitious Expansion

The Rock Hill facility represents a significant chapter in DIRTT's recent history and a valuable lesson in corporate agility. The company entered into a 15-year build-to-suit lease for the state-of-the-art plant in 2019, an ambitious move to expand its manufacturing capacity in the southeastern United States. However, shifting market dynamics and an evolving corporate strategy led to the facility's permanent closure in September 2023, just four years into its operational life.

The decision to close the plant was part of what the company calls its “volume- and margin-focused transformation.” Production capacity was consolidated and shifted to DIRTT’s established manufacturing hub in Calgary, Alberta. This move suggests a strategic pivot from geographic expansion to operational depth, focusing on maximizing the efficiency of its core assets rather than managing a wider, and potentially underutilized, footprint.

The cost of carrying an inactive, high-rent facility became a clear target for optimization. The successful negotiation to terminate the lease more than a decade early marks the final step in correcting course, turning a significant financial liability into a source of future strength and operational focus.

Optimizing the Footprint for Industrialized Construction

This real estate rationalization aligns with broader trends within the industrialized construction sector, where efficiency, adaptability, and cost control are paramount. DIRTT’s system, which combines physical products with proprietary digital tools, aims to provide clients in the workplace, healthcare, and education sectors with greater certainty on cost and schedule. To deliver on that promise, the company’s own manufacturing and supply chain operations must be models of efficiency.

With the Rock Hill chapter closed, DIRTT's North American manufacturing network is now more concentrated. It consists of four specialized facilities in Calgary, which handle casework, timber, metal, and finishes, alongside a major production plant in Savannah, Georgia. This consolidation allows the company to better leverage its investments in automation, talent, and process improvement within a more manageable operational scope.

By shedding the financial burden of the South Carolina plant, DIRTT frees up capital and management attention to reinvest in its core business, including product innovation and enhancing its ICE software platform. The move demonstrates a disciplined approach to asset management, ensuring the company’s physical infrastructure is fully aligned with current market demand and its long-term strategy for profitable growth.