DIRTT Environmental Solutions Ltd.

Ladies and gentlemen, thank you for standing by, and welcome to the DIRT's 2026 Q3 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise, and after the speaker's remarks, we will conduct a question and answer session. If you'd like to ask a question at that time, please press star, then the number one on your telephone keypad to raise your hand and enter the queue. If you would like to withdraw your question at any time, you can press star 1 again. I will now turn the call over to Adrian Zarate. You may begin.

Thank you, operator, and good morning, everyone. Welcome to today's call to discuss DIRT's third quarter 2026 financial results. Joining me on the call today are Benjamin Urban, our chief executive officer, and Fareeha Khan, our chief financial officer. Today's call will include forward-looking statements within the meaning of applicable Canadian and United States securities laws. These statements are based on our current expectations and are not guarantees of future performance. Actual results may differ materially from those expressed or implied by these statements. We will also reference non-GAAP measures during this call, including adjusted EBITDA and adjusted gross profit. Reconciliations of these measures to the most directly comparable GAAP measures can be found in our quarterly filing and supplemental materials. With that, I'll turn the call over to Fareeha to review our financial results.

Thank you, Adrian, and good morning, everyone. Revenue for the third quarter of 2026 was $44.7 million, compared to $37.7 million in the prior period, representing a growth of approximately 19% year-over-year. Product revenue totalled $41.5 million, compared to $36.7 million in the prior period. while service revenue was $3.2 million compared to $1 million in the prior year period. Commercial activity remained the largest contributor to product revenue during the quarter and we also saw strong year-over-year growth in government revenue and in Canada. Gross profit for the quarter was $15.7 million compared to $11.5 million in the third quarter of 2025. Gross margin increased to 35.1% compared to 30.4% in the prior year period. The improvement was primarily due to lower tariff and tariff mitigation costs and higher volumes, partially offset by increasing material costs. Tariff and tariff mitigation costs were 0.3 million in the quarter compared with 1.9 million in the prior year period. Adjusted gross profit was 16.6 million compared to 12.5 million in the prior year period. while adjusted gross profit margin improved to 37.1% compared to 33.1% in the third quarter of 2025. Total operating expenses were $11.3 million, down from $15.2 million in the prior year period. The decrease reflects lower spending across sales and marketing, operations support, and the technology and development functions. as well as lower stock-based compensation and reorganization expenses, partially upset by slightly higher general and administrative expenses. Excluding stock-based compensation, depreciation and amortization, and reorganization expenses, operating expenses also declined year over year, reflecting actions taken to simplify the organization, improve operating efficiency, and better align our cost structure with the needs of the business. Reorganization expense was approximately $0.3 million during the quarter compared to $2.6 million in the prior year period and reflects continued actions associated with the company's transformation initiatives. Operating income for the quarter was $4.4 million compared to an operating loss of $3.7 million in the third quarter of 2025. Net income after tax was $17.1 million compared to a net loss after tax of $3.7 million in the prior year period. During the quarter, we recognized a $13.1 million deferred tax asset primarily related to net operating loss carry-forwards, resulting in a non-cash income tax benefit of $13.1 million. The asset was recognized based on sustained profitability supporting the conclusion that the related tax benefits are more likely than not to be realized. Adjusted EBITDA was 6.5 million or 14.6% of revenue compared to 1.2 million or 3.1% of revenue in the prior period. Turning to liquidity, net cash provided by operating activities was 3.1 million during the quarter compared to 4.4 million in the third quarter of 2025. We ended the quarter with approximately $19.3 million of cash and cash equivalents, up from $14.8 million at June 30, 2026. For the first nine months of 2026, revenue was $127.5 million compared to $117.9 million in the prior year period, an increase of approximately 8%. Gross profit was 42.7 million or 33.5% of revenue compared to 36.8 million or 31.2% of revenue in the prior year period. Adjusted gross profit increased approximately 14% to 45.5 million or 35.7% of revenue compared to 39.8 million or 33.8% of revenue in the prior year period. Adjusted EBITDA for the nine months was 12.7 million or 9.9% of revenue compared to 1.3 million or 1.1% of revenue in the prior year period. Net income after tax was 14.9 million compared to a net loss after tax of 10.7 million in the prior year period. Year to date, service revenue totaled 6.2 million compared with 3.2 million in the comparable period of 2025. For the third quarter, service revenue increased 207% to 3.2 million from 1 million, reflecting a higher number of installation projects through our construction services channel, including two large healthcare projects and one large technology project in progress during the first nine months of 2026. With a strengthened balance sheet and a streamlined operating model, we remain confident in the underlying health of the business, our ability to continue expanding profitability and our capacity to create meaningful long-term value for shareholders. With that, I'll turn the call over to Benjamin.