SYS-CON MEDIA Authors: Carmen Gonzalez, Pat Romanski, Elizabeth White, Yeshim Deniz, Glenn Rossman

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DIRTT Reports Fourth Quarter and Year-End 2013 Results

CALGARY, ALBERTA -- (Marketwired) -- 03/17/14 -- DIRTT Environmental Solutions ("DIRTT" or the "Company") (TSX: DRT), a leading technology-enabled designer, manufacturer and installer of fully customized, prefabricated interiors, today announced its financial results for the three- and 12-month periods ended December 31, 2013.

The following financial information should be read in conjunction with the Company's financial statements and management's discussion and analysis for the three- and 12-month periods ended December 31, 2013, which will be available at www.sedar.com and http://ir.dirtt.net/financial-reports/.

This news release contains references to Canadian dollars and United States dollars. Canadian dollars are referred to as "$" and United States dollars are referred to as "US$".

Selected Highlights

In the fourth quarter of 2013 the Company:


--  Completed an initial public offering (the "IPO") for gross proceeds of
    $45.0 million ($39.8 million net of fees) and issued 15.0 million of its
    Common Shares (the "Common Shares");
--  Converted its Class A preferred shares (the "Preferred Shares") and its
    convertible notes issued in June 2012 (the "June 2012 Notes") to Common
    Shares; and
--  Repaid 50% of the US$20.0 million of convertible notes issued in
    December 2012 (the "December 2012 Notes"), which reduced exposure to the
    fluctuations in the US dollar against the Canadian dollar.

In addition to the highlights reported in the fourth quarter of 2013, during calendar 2013 the Company:


--  Successfully completed the largest project in the Company's history in
    early 2013;
--  Strengthened its Distribution Partner ("DP") network by providing more
    training to existing DPs. This was supported by further investment on
    the part of selected DPs in their own Green Learning Centers ("GLCs")
    and DIRTT-dedicated staff; and
--  Launched the new i-Cube software in June 2013 adding fully customizable
    millwork (shelves, cabinets, etc.) to its proprietary 3D design,
    configuration and manufacturing software ("ICE" or the "ICE Software").

Subsequent to year-end the Company:


--  Announced receipt of letters of intent and contracts from five companies
    totalling $12 million with three of the projects scheduled to be
    delivered in the first half of 2014.

"In the fourth quarter of 2013 we completed our initial public offering which allowed us to tidy up our balance sheet and provided us with the capital to fund an array of growth initiatives that include new product development, targeting additional opportunities in markets and verticals where we do business today, as well as regions and sectors outside of our current operational base," said Scott Jenkins, President of DIRTT. "Our Distribution Partners share our commitment to growth and together we intend to further invest in training, staff and Green Learning Centers in 2014 with an eye to showcasing the high value our customized solutions bring to the interior construction industry."

"Our solid results in the fourth quarter were supported by higher than normal activity levels through the holiday season, which we saw extend into the early part of 2014," said Mogens Smed, CEO of DIRTT. "In the first quarter we announced a series of five agreements totalling some $12 million, well in excess of our average job value, that we expect will contribute revenue both in the first half of the year and beyond as the solutions are delivered."


Summary Financial Results
----------------------------------------------------------------------------
                                                  Twelve  Fifteen    Twelve
                                Three months      months   months    months
                                    ended          ended    ended     ended
----------------------------------------------------------------------------
                              December December December December September
($ thousands, except per      31, 2013 31, 2012 31, 2013 31, 2012  30, 2011
 share amounts)                      $        $        $        $         $
----------------------------------------------------------------------------
Revenue                         34,202   34,661  139,795  173,566   114,823
Gross profit                    12,603   12,525   53,296   60,701    41,312
Gross profit %                    36.8%    36.1%    38.1%    35.0%     36.0%
Adjusted Gross profit % (1)       38.4%    37.8%    39.5%    36.6%     37.4%
Selling, general and
 administrative                 14,724   13,288   56,727   65,070    41,931
IPO transaction costs              836        -      836        -         -
Operating loss                  (2,957)    (763)  (4,267)  (4,369)     (619)
Debt settlement expense          4,560        -    4,560        -         -
Finance costs                    1,133      882    5,224    4,037     2,958
Adjusted EBITDA (1)                 82    1,833    5,525    6,980     6,376
Net loss                       (10,151)    (419) (16,495)  (7,144)   (4,813)
Net loss attributable to
 common shareholders -basic
 and diluted share:              (0.25)   (0.01)   (0.42)   (0.21)    (0.12)
----------------------------------------------------------------------------
Note:
  1. See "Non-IFRS Measures"

Financial Results

Revenue

Revenue decreased by $0.5 million or 1.3% in the three months ended December 31, 2013 compared with the same period in 2012. Revenue decreased by $33.8 million or 19.5% in the 12 months ended December 31, 2013 compared to the 15 months ended December 31, 2012, primarily due to a 12-month reporting period versus a 15-month reporting period along with the substantial completion of a large project for a Fortune 500 company in 2012 (12 months ended December 31, 2013 - $0.5 million, 15 months ended December 31, 2012 - $12.6 million). The decrease was partially offset by higher demand from energy, healthcare and financial services clients as well as the strengthening of the US dollar during 2013.

Growth in energy, healthcare and financial services is due in large part to the continued efforts to strengthen the network of DPs. As existing DPs are developed and reassessed, and new DPs are added, DIRTT's exposure and success in new and growing markets increases. Additional or stronger DPs translate into greater resources in the sales territories promoting DIRTT and generating sales opportunities for future periods. On average, new DPs require up to two years to establish themselves in their market. At December 31, 2013, DIRTT had 98 DPs compared with 100 at December 31, 2012; and 91 at September 30, 2011. As at December 31, 2013, DIRTT increased its DP locations to 172, selling in eight countries.

Gross Profit / Adjusted Gross Profit

Gross profit as a percentage of revenue increased by 0.7% in the three months ended December 31, 2013 when compared to the same period in 2012. The increase was due to improved efficiencies on transportation costs, and an increase in higher margin software revenue. Gross profit as a percentage of revenue increased by 3.1% in the 12 months ended December 31, 2013 compared to the 15 months ended December 31, 2012. Due to the significant size of the project substantially completed for a Fortune 500 company in 2012, a discount was provided during the period, which contributed to the overall lower gross profit percentage in the 15 months ended December 31, 2012 compared to the 12 months ended December 31, 2013. In addition, there were some final positive adjustments at the conclusion of this project that contributed to the higher gross profit percentage in the 12 months ended December 31, 2013.

Adjusted gross profit as a percentage of revenue increased by 0.6% in the three months ended December 31, 2013 when compared to the same period in 2012 and by 2.9% in the 12 months ended December 31, 2013 compared to the 15 months ended December 31, 2012 for the same reasons noted above.

Selling, General and Administrative ("SG&A") Expenses

SG&A expenses increased by $1.4 million or 10.8% in the three months ended December 31, 2013 when compared to the same period in 2012. The change was the result of increases in salaries and benefits of $1.5 million and commission expense of $0.3 million, and was partially offset by decreases in travel and marketing costs of $0.2 million, stock-based compensation expense of $0.1 million, and $0.1 million in other miscellaneous items. Salary cost increases reflect personnel additions focused on generating and supporting higher business volumes.

SG&A expenses decreased by $8.3 million or 12.8% in the 12 months ended December 31, 2013 compared to the 15 months ended December 31, 2012. Of the $8.3 million overall decrease, $12.1 million was related to the additional three months of operations being reported in 2012, partially offset by a $3.8 million increase in 2013. The majority of the increase for the 12 months ended December 31, 2013 was the result of hiring additional sales and support personnel as DIRTT continues to grow in North America and pursue clients in new geographic markets outside of North America, which increased salaries and benefits by $3.5 million; a revised commission plan which increased commissions by $1.0 million; and higher rent costs of $0.7 million, primarily due to the sale and leaseback of the Company's Calgary office building in October 2012. This was partially offset by a reduction in travel and marketing expenses of $0.7 million, a decrease in professional services fees of $0.4 million, and a reduction in miscellaneous office expenses of $0.3 million.

IPO Transaction Costs

Upon completion of the IPO on November 28, 2013, the Company issued 15,000,000 Common Shares at $3.00 per share for gross proceeds of $45.0 million. Total transaction costs incurred on the IPO were $5.2 million, of which $4.4 million (incremental costs directly attributable to issuing new shares) was recognized as a reduction in equity as at December 31, 2013 and $0.8 million (costs that relate to the listing of existing shares) was recognized as IPO transaction costs for the three and 12 months ended December 31, 2013.

Transaction costs consisted of underwriters' commission and fees, plus audit, legal, filing, printing, translation and miscellaneous fees. Transaction costs that relate to both new share issuance and listing of existing shares were allocated between those functions based on the number of shares involved.

Debt Settlement Expense

During the 12 months ended December 31, 2013, DIRTT incurred debt settlement expense of $4.6 million in connection with the 50% repayment of the original US$20.0 million December 2012 Notes. As per the terms of the first and second amendment agreements to the Note purchase agreement dated October 21, 2013, DIRTT exercised its option to repay US$10.0 million ($10.5 million) of the December 2012 Notes from the proceeds of the IPO in November 2013. As a result of the $10.5 million prepayment, the Company incurred a prepayment premium of US$3.5 million ($3.8 million), as well as a non-cash charge of $0.8 million upon the derecognition of the liability since the carrying value at time of payment was $9.7 million. The non-cash charge of $0.8 million represents the un-accreted interest expense associated with the $10.5 million in principal, which had not yet been accreted up to face value at the time of prepayment.

Finance Costs

Finance costs increased by $0.2 million in the three months ended December 31, 2013 compared to the same period in 2012. Finance costs for the three months ended December 31, 2013 were comprised of $0.7 million non-cash and $0.4 million cash as compared to $0.4 million and $0.5 million for the same period in 2012, respectively. The higher non-cash interest expense in the 2013 period reflects three months of accretion expense associated with the December 2012 notes compared to one month of accretion expense in the 2012 period, partially offset by a reduction in accretion expense related to the debt component of the Preferred Shares as a result of conversion to Common Shares in November 2013.

Finance costs increased by $1.2 million for the 12 months ended December 31, 2013 when compared to the 15 months ended December 31, 2012. Finance costs for the 12 months ended December 31, 2013 were comprised of $3.2 million non-cash and $2.0 million cash compared to $2.0 million and $2.0 million for the 15 months ended December 31, 2012, respectively. The increase in non-cash interest in the 2013 period was mainly due to 12 months of accreted interest attributed to the December 2012 Notes compared to one month of accretion expense in the 2012 period, partially offset by the repurchase of the debentures in June 2012 and a reduction in the accretion expense from the debt component of the Preferred Shares as result of conversion to Common Shares in November 2013.

Adjusted EBITDA

Adjusted EBITDA decreased by $1.8 million in the three months ended December 31, 2013 compared with the same period in 2012. The decrease was mainly due to a reduction in revenue of $0.5 million, an increase in SG&A costs of $1.4 million, and was partially offset by improved adjusted gross profit percentage from 37.8% to 38.4%.

Adjusted EBITDA decreased by $1.5 million in the 12 months ended December 31, 2013 compared to the 15 months ended December 31, 2012. The decrease was mainly due to a reduction in revenue of $33.8 million resulting from a 12-month reporting period versus a 15-month reporting period, and partially offset by a decrease in SG&A of $8.3 million and improved adjusted gross profit percentage from 36.6% to 39.5%.

Outlook

Construction is a major global industry and consists of building new structures, making additions and modifications to existing structures, as well as conducting maintenance, repair and leasehold improvements on existing structures. As an example, the total US construction market was US$899 billion in 2013, of which US$562 billion was attributable to non-residential building (Source: US Census Bureau). This includes both new building and renovation projects. Total US non-residential construction spending is forecast to grow to US$714 billion in 2017 (Source: FMI US Markets Construction Overview 2014). DIRTT believes conventional construction activities are fraught with challenges including cost overruns, quality issues and time delays and increasingly organizations are looking for a better way to build out their interior spaces, whether for new buildings or renovations. DIRTT's growing roster of repeat clients is a strong testament to the benefits of technology enabled prefabricated solutions.

DIRTT's growth strategy consists of five key pillars: (1) increase penetration of existing markets by providing continued support and increased investment to existing DPs throughout North America; (2) continue to invest in ICE and new innovative interior construction solutions; (3) capitalize on recent and continued investment in new industry verticals such as healthcare; (4) capitalize on recent and continued investment alongside new international DPs such as those in the Middle East; and (5) penetrate new industries such as the hospitality and residential sectors.

Management believes DIRTT Solutions, including DIRTT Walls, DIRTT Power, DIRTT Networks, DIRTT Millwork and DIRTT Floors, are a superior alternative to conventional construction in all sectors of the construction industry, and that a continued increase in construction activity can be expected to result in an ongoing improvement in Company revenues. DIRTT plans to invest additional resources, including the further development of ICE and the development of new DIRTT Solutions and test projects, in order to pursue existing opportunities in healthcare, education and government, and new opportunities in the hospitality and residential sectors of the construction industry. The Company's product development team has been, and will continue to be, expanded to address industry specific challenges and opportunities.

Liquidity and Capital Resources

At December 31, 2013, DIRTT had $34.4 million in cash and cash equivalents as compared to $8.8 million in cash and restricted cash as at December 31, 2012. Upon completion of the IPO on November 28, 2013, DIRTT received net proceeds of $39.8 million, of which $30.0 million was held in short-term, liquid deposits at December 31, 2013. In November 2013, the Company used a portion of the proceeds to repay US$10.0 million ($10.5 million) of the December 2012 Notes as well as US$3.5 million ($3.8 million) prepayment penalty in accordance with the terms of the December 2012 Notes.

As at December 31, 2013, DIRTT had drawn $4.9 million from its US$5.0 million capital financing facility, had fully drawn its US$2.5 million term facility, and had drawn $nil from its US$18.0 million revolving operating facility. DIRTT currently has sufficient productive capacity to satisfy near-term growth.

Looking forward to 2014, management expects to make continued investments in product and software development to further expand the Company product offerings, as well as in certain manufacturing equipment to support this development. Management also expects to further invest in its existing GLCs to ensure that each location is showcasing the latest DIRTT Solutions. DIRTT is also investing in a new GLC in Toronto, Ontario, to better serve and support the significant market in Central Canada.

Non-IFRS Measures

Adjusted gross profit and adjusted gross profit %, EBITDA and Adjusted EBITDA are non-IFRS measures used by management to assess DIRTT's performance and financial condition. Consequently, they do not have a standard meaning as prescribed by IFRS, and are therefore unlikely to be comparable to similar measures presented and calculated by other companies. Management believes that the non-IFRS measures are useful supplemental measures that may assist investors in assessing the financial performance and the cash anticipated to be generated by DIRTT's business. The non-IFRS measures should not be considered as the sole measure of the Company's performance and should not be considered in isolation from, or as a substitute for, analysis of the Company's financial statements.

Adjusted gross profit and adjusted gross profit %

Adjusted gross profit is defined as gross profit before the deduction of the depreciation of equipment and tooling for manufacturing-related assets that is included in cost of goods sold. Adjusted gross profit % is calculated as adjusted gross profit divided by revenue. DIRTT uses this measure as an indicator of cash generated from the production of goods and services that it sells.

The following table reconciles adjusted gross profit to the audited consolidated statements of comprehensive loss.


----------------------------------------------------------------------------
                                                            Twelve  Fifteen
                                          Three months      months   months
                                              ended          ended    ended
----------------------------------------------------------------------------
                                        December December December December
                                        31, 2013 31, 2012 31, 2013 31, 2012
($ in thousands, except %)                     $        $        $        $
----------------------------------------------------------------------------
Revenues                                  34,202   34,661  139,795  173,566
Cost of goods sold                        21,599   22,136   86,499  112,865
----------------------------------------------------------------------------
Gross profit                              12,603   12,525   53,296   60,701
Gross profit %                              36.8%    36.1%    38.1%    35.0%

Add back:
Depreciation included in cost of goods
 sold                                        520      582    1,936    2,770
----------------------------------------------------------------------------
Adjusted gross profit                     13,123   13,107   55,232   63,471
Adjusted gross profit %                     38.4%    37.8%    39.5%    36.6%
----------------------------------------------------------------------------

EBITDA and Adjusted EBITDA

EBITDA represents an indication of the entity's capacity to generate income from operations before taking into account management's financing decisions and costs of consuming tangible and intangible capital assets, which vary according to their vintage, technological currency, and management's estimate of their useful life. Accordingly, EBITDA is earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA is EBITDA plus non-cash foreign exchange gains or losses on debt revaluation; gains or losses on disposal of property, plant and equipment and intangible assets; write-off of property, plant and equipment and intangible assets; stock-based compensation expense; transaction costs; and any other non-recurring gains or losses. Management uses these measures to assess the Company's ability to generate cash flows, service debt, pay current taxes, and fund capital expenditures. Readers are cautioned that EBITDA should not be considered as an alternative to profit as determined in accordance with IFRS.

The following table reconciles EBITDA and Adjusted EBITDA to the audited consolidated statements of comprehensive loss.


----------------------------------------------------------------------------
                                                            Twelve  Fifteen
                                          Three months      months   months
                                              ended          ended    ended
----------------------------------------------------------------------------
                                        December December December December
                                        31, 2013 31, 2012 31, 2013 31, 2012
($ thousands)                                  $        $        $        $
----------------------------------------------------------------------------
Net loss for the period                  (10,151)    (419) (16,495)  (7,144)

Add back (deduct):
Finance costs                              1,133      882    5,224    4,037
Current tax (recovery) expense              (106)    (136)     455     (761)
Deferred tax expense (recovery)            1,069     (697)     841     (417)
Depreciation included in cost of goods
 sold                                        520      582    1,936    2,770
Depreciation and amortization included
 in selling, general and administrative    1,708    1,624    6,322    7,899
----------------------------------------------------------------------------
EBITDA                                    (5,827)   1,836   (1,717)   6,384
IPO transaction costs                        836        -      836        -
Debt settlement expense                    4,560        -    4,560        -
Stock-based compensation                      54      177      395      681
Non-cash foreign exchange loss on debt
 revaluation                                 459        -    1,259        -
Write-off of property, plant and
 equipment                                     -        -      192        -
Gain on sale of property, plant and
 equipment                                     -     (180)       -      (85)
----------------------------------------------------------------------------
Adjusted EBITDA                               82    1,833    5,525    6,980
----------------------------------------------------------------------------

Conference Call Details

DIRTT will host a conference call and webcast on Monday, March 17, 2014 at 7 a.m. MT (9 a.m. ET) to discuss its fourth quarter and year-end results in greater detail. President Scott Jenkins and CFO Derek Payne will participate.

To access the conference call by telephone dial 647.427.7450 (Toronto and international callers) or 1.888.231.8191 (toll-free in North America). Please call 10 minutes prior to the start of the call. In addition, a live webcast (listen only mode) of the conference call will be available at: http://www.newswire.ca/en/webcast/detail/1317551/1455071

Investors are invited to submit questions by email before and during the conference call. Please send them to [email protected].

A replay of the conference call will be available at 416.849.0833 or 1.855.859.2056, passcode 9755754, from noon (ET) Monday, March 17, 2104 to midnight (ET) Monday, March 24, 2014 or through the webcast archives at http://www.newswire.ca or on DIRTT's website at http://ir.dirtt.net/.

Financial Statements


DIRTT Environmental Solutions Ltd.
Consolidated Statements of Loss and Comprehensive Loss
(Stated in thousands of Canadian dollars, except per share amounts)

----------------------------------------------------------------------------
                                          For the                   For the
                              twelve months ended      fifteen months ended
                                December 31, 2013         December 31, 2012
                                                $                         $
----------------------------------------------------------------------------

Revenues                                  139,795                   173,566
Cost of goods sold                         86,499                   112,865
Gross profit                               53,296                    60,701

Selling, general and
 administrative                            56,727                    65,070
IPO transaction costs                         836                         -
----------------------------------------------------------------------------
Operating loss                             (4,267)                   (4,369)

Foreign exchange loss                       1,148                         1
Gain on sale of
 property, plant and
 equipment                                      -                       (85)
Debt settlement expense                     4,560                         -
Finance costs                               5,224                     4,037
----------------------------------------------------------------------------
Loss before tax                           (15,199)                   (8,322)

Current tax expense
 (recovery)                                   455                      (761)
Deferred tax expense
 (recovery)                                   841                      (417)
----------------------------------------------------------------------------
Net loss for the period                   (16,495)                   (7,144)

Other comprehensive
 income (loss)
Exchange differences on
 translation of foreign
 operations, net of tax
 of $nil (2012 - $nil)                      1,611                    (1,281)
----------------------------------------------------------------------------
Total comprehensive loss
 for the period                           (14,884)                   (8,425)
----------------------------------------------------------------------------

Net loss for the period
 attributable to:
Equity holders of the
 Company                                  (16,495)                   (7,480)
Non-controlling interest                        -                       336
----------------------------------------------------------------------------
                                          (16,495)                   (7,144)
----------------------------------------------------------------------------
Total comprehensive loss
 for the period
 attributable to:
Equity holders of the
 Company                                  (14,884)                   (8,771)
Non-controlling interest                        -                       346
----------------------------------------------------------------------------
                                          (14,884)                   (8,425)
----------------------------------------------------------------------------
Loss per share
Basic and diluted                           (0.42)                    (0.21)
----------------------------------------------------------------------------

DIRTT Environmental Solutions Ltd.
Consolidated Statements of Financial Position
(Stated in thousands of Canadian dollars)

----------------------------------------------------------------------------
                                                       2013            2012
As at December 31                                         $               $
----------------------------------------------------------------------------
ASSETS
Current assets
Cash and cash equivalents                            34,373           7,826
Restricted cash                                           -           1,000
Trade and other receivables                          17,166          18,601
Inventory                                            11,376           8,062
Prepaids and other current assets                     1,058             985
----------------------------------------------------------------------------
                                                     63,973          36,474
Non-current assets
Long-term deposits                                      522             540
Property, plant and equipment                        29,986          31,498
Intangible assets                                    10,112           8,909
Notes receivable                                        486             494
Deferred tax assets                                   1,967           2,920
Goodwill                                              1,845           1,845
----------------------------------------------------------------------------
                                                     44,918          46,206
----------------------------------------------------------------------------
Total Assets                                        108,891          82,680
----------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Trade accounts payable and accrued                   12,550          12,638
 liabilities
Customer deposits                                     8,370           8,604
Current portion of long-term debt                     2,419             784
Provisions                                              469             346
Current tax liabilities                                 314             227
----------------------------------------------------------------------------
                                                     24,122          22,599
Non-current liabilities
Deferred tax liabilities                                592             744
Long-term debt                                        5,673           2,074
Convertible notes                                     9,904          16,279
Debt component of preferred shares                        -          14,253
----------------------------------------------------------------------------
                                                     16,169          33,350
Shareholders' Equity
Common share capital                                123,127          54,268
Preferred share capital                                   -           8,604
Warrants                                              1,101           1,101
Equity component of convertible notes                    57           4,003
Contributed surplus                                   6,192           5,748
Accumulated other comprehensive income                1,293            (318)
 (loss)
Accumulated deficit                                 (63,170)        (46,675)
----------------------------------------------------------------------------
                                                     68,600          26,731
----------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity          108,891          82,680
----------------------------------------------------------------------------

DIRTT Environmental Solutions Ltd.
Consolidated Statements of Cash Flows
(Stated in thousands of Canadian dollars)

----------------------------------------------------------------------------
                                               For the              For the
                                   twelve months ended fifteen months ended
                                     December 31, 2013    December 31, 2012
                                                     $                    $
----------------------------------------------------------------------------
Cash flows from operating
 activities:
Net loss for the period                        (16,495)              (7,144)
Items not affecting cash:
Depreciation included in cost of
 goods sold                                      1,936                2,770
Depreciation and amortization
 included in selling, general and
 administrative                                  6,322                7,899
Stock-based compensation                           395                  681
Write-off of property, plant and
 equipment                                         192                    -
Gain on sale of property, plant
 and equipment                                       -                  (85)
Loss on derecognition of liability                 832                    -
Non-cash issue of warrants                           -                   37
Non-cash deferred tax adjustment                   841                 (601)
Non-cash foreign exchange loss on
 debt revaluation                                1,259                    -
Non-cash foreign exchange loss
 (gain)                                            439                 (387)
----------------------------------------------------------------------------
                                                (4,279)               3,170
Net change in non-cash working
 capital relating to operating
 activities                                     (1,623)               6,221
Interest accretion                               3,180                2,045
----------------------------------------------------------------------------
Net cash flows (used in) from
 operating activities                           (2,722)              11,436
----------------------------------------------------------------------------

Cash flows from investing
 activities:
Purchase of property, plant and
 equipment                                      (3,066)              (6,695)
Proceeds from sale of property,
 plant and equipment                                 9                8,500
Capital expenditures on internally
 generated intangible assets                    (3,953)              (4,742)
Repayment (issue) of notes
 receivable                                          8                   (4)
----------------------------------------------------------------------------
Net cash flows used in investing
 activities                                     (7,002)              (2,941)
----------------------------------------------------------------------------

Cash flows from financing
 activities:
Decrease in bank indebtedness                        -               (3,775)
Issuance of share capital on IPO                45,000                    -
Share capital issuance costs                    (4,448)                   -
Issuance of share capital on
 exercise of stock options                          18                   22
Proceeds (repayment) of long-term
 debt, net                                       5,152               (8,402)
Retirement of convertible
 debentures                                          -               (9,670)
(Repayment) proceeds of
 convertible notes                             (10,451)              21,951
----------------------------------------------------------------------------
Net cash flows from financing
 activities                                     35,271                  126
----------------------------------------------------------------------------

Net increase in cash and cash
 equivalents and restricted cash                25,547                8,621
Cash and cash equivalents and
 restricted cash, beginning of
 period                                          8,826                  205
----------------------------------------------------------------------------
Cash and cash equivalents and
 restricted cash, end of period                 34,373                8,826
----------------------------------------------------------------------------

Cash and cash equivalents and
 restricted cash consists of:
Cash                                             4,372                7,826
Temporary investments                           30,001                    -
Restricted cash                                      -                1,000
----------------------------------------------------------------------------
                                                34,373                8,826
----------------------------------------------------------------------------

About DIRTT

DIRTT Environmental Solutions (Doing It Right This Time) uses its proprietary 3D software to design, manufacture and install fully customized prefab interiors. DIRTT's customers in the corporate, government, education and healthcare sectors benefit from the Company's precise design and costing; rapid lead times with the highest levels of customization and flexibility; and faster, cleaner construction.

To find out more about DIRTT (TSX: DRT) please visit our website www.dirtt.net or contact us at [email protected].

Forward-Looking Statements

This news release contains forward-looking statements about expected future events and financial and operating performance of DIRTT. Any statements that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions or future events or performance (often, but not always, through the use of words or phrases such as "will likely result", "are expected to", "will continue", "is anticipated", "believes", "estimated", "intends", "plans", "projection" and "outlook"), are not historical facts and may be forward-looking. Actual results or outcomes may differ materially from those expressed in the forward-looking information contained herein as a result of various factors. There can be no assurance that forward-looking information will prove to be accurate, and readers should not place undue reliance on the forward-looking information.

With respect to forward-looking information contained in this new release, assumptions have been made regarding, among other things:


--  DIRTT's ability to manage its growth;
--  competition in the Company's industry;
--  the Company's ability to enhance current products and develop and
    introduce new products;
--  the Company's ability to obtain components and products from suppliers
    on a timely basis and on favourable terms;
--  the Company's ability to obtain qualified staff and equipment in a
    timely and cost-efficient manner;
--  the regulatory framework governing taxes in Canada and the United States
    and any other jurisdictions in which DIRTT may conduct its business in
    the future;
--  future development plans for the Company's assets unfolding as currently
    envisioned;
--  future capital expenditures to be made by the Company;
--  future sources of funding for the Company's capital program;
--  the intentions of the board of directors of DIRTT with respect to the
    compensation plans;
--  the impact of increasing competition on the Company; and
--  the Company's success in identifying other risks to its business.

Readers are cautioned that the foregoing lists of factors are not exhaustive. Further, forward-looking information is made as of the date hereof, and DIRTT undertakes no obligation to update forward-looking information to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events, except as required by law. New factors emerge from time to time, and it is not possible for management to predict all of these factors and to assess in advance the impact of each such factor on the Company's business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in forward-looking information.

For a detailed description of the risks and uncertainties facing the Company and its business and affairs, readers should refer to the Company's annual financial statements and management's discussion and analysis for the 12 months ended December 31, 2013, both of which are available at www.sedar.com.

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