Scott Jenkins PRESIDENT

Transcription

1 LTD. Scott Jenkins PRESIDENT FEBRUARY 2015 Disclaimer In this presentation, all amounts are in Canadian dollars, unless otherwise indicated. Certain information and statements contained in this presentation constitute forward-looking information and forward-looking statements (collectively, Forward-Looking Information ) as defined under applicable Canadian securities laws and DIRTT Environmental Solutions Ltd. ( DIRTT or the Company ) hereby cautions investors about important factors that could cause the Company s actual results or outcomes to differ materially from those projected in any Forward-Looking Information contained in this presentation. 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 and may involve estimates, assumptions and uncertainties which could cause actual results or outcomes to differ materially from those expressed in such Forward-Looking Information. In particular and without limitation, this presentation contains Forward-Looking Information pertaining to the following: the business plans and objectives of DIRTT; estimates of domestic and international economics; and growth strategy and opportunities. With respect to Forward-Looking Information contained in this presentation, assumptions have been made regarding, among other things: the Company 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 the Company 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 impact of increasing competition on the Company; and the Company s success in identifying other risks to its business and managing the risks mentioned below. The Company s actual results or outcomes could differ materially from those expressed in the Forward-Looking Information as a result of the risks normally encountered in its industry such as: maintaining and managing growth; history of losses; risks related to the global financial crisis; risks related to new technology; competition risk; operating results and financial condition fluctuations on a quarterly and annual basis; risks related to intellectual property; risks related to additional capital requirements; customer base and market acceptance; software and product defects and design risks; availability of key supplies; dependence on key personnel and consultants; commodity price risk; risks related to restricted covenants; credit risk; the effect of government regulation; risks related to international expansion; risks related to physical facilities; legal risks; foreign currency and fiscal matters; risks related to future acquisitions; risks related to Forward-Looking Information; reliance on third parties; and conflicts of interest. Since actual results or outcomes could differ materially from those expressed in the Forward-Looking Information provided by or on behalf of the Company, investors and others should not place undue reliance on any such Forward-Looking Information. DIRTT cautions that the foregoing lists of factors are not exhaustive. Further, Forward-Looking Information is made as of the date hereof and the Company 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 applicable Canadian securities laws. 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. No assurance can be given that these expectations will prove to be correct and such Forward-Looking Information contained in this presentation should not be unduly relied upon. In addition, this presentation may contain Forward-Looking Information attributed to third party industry sources. The Forward-Looking Information contained in this presentation is expressly qualified by the foregoing cautionary statements. This presentation shall not constitute an offer to sell or the solicitation of any offer to buy any of DIRTT s securities in any jurisdiction. The securities of DIRTT have not been and will not be registered under the United States Securities Act of 1933, as amended (the U.S. Securities Act ) or any state securities laws and may not be offered or sold in the United States except in certain transactions exempt from the registration requirements of the U.S. Securities Act and applicable state securities laws. 2

2 Non-IFRS Measures The term Adjusted EBITDA and Adjusted Gross Profit % are financial measures used by DIRTT that are not standard measures under International Financial Reporting Standards ( IFRS ) as adopted by the Canadian Institute of Chartered Accountants. DIRTT s method of calculating Adjusted EBITDA and Adjusted Gross Profit % may differ from the methods used by other issuers. Therefore, DIRTT s Adjusted EBITDA and Adjusted Gross Profit % may not be comparable to the same measure presented by other issuers. Adjusted EBITDA refers to net earnings (loss) determined in accordance with IFRS, before interest, taxes, depreciation and amortization, non-cash foreign exchange gains or losses on debt revaluation, non-cash gains or losses on disposal of capital assets, write-off of capital assets, non-cash stock-based compensation expense, transaction costs, and any other non-recurring gains or losses. Adjusted EBITDA is used by Management and many investors to determine the ability of an issuer to generate cash from operations. Management believes Adjusted EBITDA is a useful supplemental measure from which to determine the Company s ability to generate cash available for debt service, working capital, capital expenditures, income taxes and dividends. 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. The Company uses this measure as an indicator of cash generated from the production of goods and services that it sells. For a reconciliation of Adjusted EBITDA and Adjusted Gross Profit % see DIRTT s annual audited financial statements and interim financial statements, complete copies of which are available on the Company s website and SEDAR. 3 Delivering Mass Customization to Interior Construction DIRTT provides sustainable, custom, modular prefab interiors. DIRTT is a leading technology-driven manufacturer of highly customized interiors. Every building project DIRTT manufactures is tailored to the end user. Whether the interiors support healthcare, schools or commercial offices DIRTT is customized to suit the space dimensionally, functionally and aesthetically, both for today and tomorrow. HOSPITAL DIALYSIS UNIT JEDDAH, SAUDI ARABIA 4

3 Tipping Point in an Archaic Industry Speed. Cost certainty. Sustainability. Value. VENTURE CAPITAL FIRM WASHINGTON 5 Mass Customization of High-quality Sustainable Interior Construction LARGE MARKET Technology, prefabrication, preassembly and modularization driving growth in large US non-residential construction market (US$562 billion in 2013 (1) ) PROPRIETARY TECHNOLOGY ICE Software automates conventional requirements for design, quotation, manufacturing and delivery, in a single comprehensive software application MASS CUSTOMIZATION End-to-end design and manufacturing solution enables customized and high-quality prefabricated interior construction ROBUST DISTRIBUTION 99 Distribution Partners (177 locations) with 560+ staff driving DIRTT sales to over 3,300 clients, including 171 Fortune 500 companies CULTURE Proven entrepreneurial leadership with significant employee and Distribution Partner ownership (1) Source: US Census Bureau DIRTT Doing It Right This Time 6

4 The traditional drivers of demand are strengthening. Source: AIA Economics & Market Research Group CUSTOM CONSTRUCTION Inability to scale, expensive 8

5 CUSTOM CONSTRUCTION MASS PRODUCTION Sacrifices customization and craftsmanship 9 CUSTOM CONSTRUCTION MASS PRODUCTION Revolutionizing interior commercial construction through mass customization 10

6 CUSTOM CONSTRUCTION MASS PRODUCTION Revolutionizing interior commercial construction through mass customization 11 ICE Software 12

7 Competitive Advantage 1: Customization ICE3D Final project Craftsmanship quality, mass production precision 13 Competitive Advantage 2: Rapid Turnaround CONVENTIONAL APPROACH Sales Order DIRTT APPROACH 3 week target (or better) Engineering Manufacturing Delivery Reduces downtime and disruption 14

8 Approach to Market Leveraging Distribution Partner relationships to accelerate adoption of DIRTT solutions 15 Market Access: Extensive Network of Distribution Partners 560+ DIRTTbags currently employed by Distribution Partners Each partner required to invest in a: DIRTT Champion DIRTT Project Manager DIRTT Designer ICE Software Package Green Learning Center UNIVERSITY EDUCATION PENNSYLVANIA Building market and brand awareness at no cost to DIRTT 16

9 Established and Distributed Manufacturing 4 manufacturing facilities diversified manufacturing base 528 production employees significant employee ownership $350 million installed capacity improved lead times Proximity to key domestic markets and export terminals and Beyond Increase penetration of existing markets Expand into new geographies Target new industry verticals Develop new products and solutions TECHNOLOGY COMPANY Y CALIFORNIA 18

10 Investment in Sales Active Distribution Partners (Main Offices Only) DIRTTbags Employed by Distribution Partners DIRTT IPO 378 October 2013 December Internal Sales DIRTTbags (Sales, Sales Support, Business Development) Distribution Partner Green Learning Center Investments Investments (Fiscal Year): $1,391, Investments (Fiscal Year): $1,022, Total Investments (2006 to date): $7,724, Grow Penetration of Existing Markets; Same DP Sales LARGE CLIENTS REPEAT CLIENTS SMALLER CLIENTS Allina Health Calgary BMW City of Surprise Cold Climate Housing Research Center Evergreen Hospital Field LLP Fraser Health Authority Goodsill Anderson Logix Federal Credit Unions MNP LLP NuSkin Polaris Pharmaceuticals Region 7 Environmental Protection Agency SAIT Polytechnic Seattle Children's Hospital Snow College The Star Group ACCESSIBLE PRICE POINT $78,000 average project size (Q3 2014) Drive repeat business 20

11 Foundation for Growth EXISTING VERTICALS KEY GROWTH VERTICALS Education Financial Services 9% CAGR 7% CAGR 4% CAGR 11% CAGR Government Healthcare $41B $57B* $79B $102B* $14B $17B* $337B $506B* *FMI US Markets Construction Overview 2014 Manufacturing Military E Healthcare E Education B Hospitality B Residential Non-Profit NEW GEOGRAPHICAL MARKETS Oil & Gas Professional Services Retail Technology Kuwait Saudi Arabia UAE India Singapore South Korea ARAB HEALTHCARE SHOW 2014 Investing in large growing opportunities beyond existing commercial verticals 21 Investing In New Products And Solutions Design in ICE Final Project ICE 3D 22

12 Q vs. Q Revenue (millions) Adjusted Gross Profit % Adjusted EBITDA (millions) $36.7 $ % 42.3% $5.3 $1.6 Q Q Q Q Q Q Up 27% Up 7% Up 3X 23 Q3 YTD 2014 vs. Q3 YTD 2013 Revenue (millions) Adjusted Gross Profit % Adjusted EBITDA (millions) $ % 42.2% $10.1 $105.6 $5.4 Q3 YTD 2013 Q3 YTD 2014 Q3 YTD 2013 Q3 YTD 2014 Q3 YTD 2013 Q3 YTD 2014 Up 23% Up 6% Up 2X 24

13 Market and Capital Data Ticker TSX:DRT Shares Outstanding (At Jan 30, 2015) 76.6 million Fully Diluted Shares Outstanding (At Jan 30, 2015) 82.5 million Recent Share Price (Jan 30, 2015) $ Week Range $2.35-$4.74 Market Capitalization $343.2 million dirtt.net Cash and Cash Equivalents (At Sept 30, 2014) Working Capital (At Sept 30, 2014) Debt (At Sept 30, 2014): Current Portion Long-term Portion $25.0 million $39.7 million $ 2.4 million $ 4.0 million 25 Robust Intellectual Property Across Software and Solutions EMERGENCY HEALTHCARE MICHIGAN granted pending Canada United States European Union Patent Cooperation Treaty - 23 Integrated Reconfigurable Wall System US patent 8,024,901/Canadian patent 2,516,083 Design Software Incorporating Efficient 3D Rendering US patent 7,249,005/Canadian patent 2,577,205 Capturing a User s Design Intent Using Resolvable Objects US patent 7,277,830/Canadian patent 2,577,202 Integrating Object-Oriented Design Software with Record-Base CAD Software US patent 7,908,296 Moveable Walls for On-Site Construction US patent 8,015,766/US patent 8,176,707 Multiple barriers-to-entry 26

14 Extensive Industry Experience and Entrepreneurial Leadership Management Mogens Smed Founder & CEO Former Founder & CEO, SMED International Scott Jenkins President Former CFO, Pure Technologies Derek Payne CFO Former VP Finance & Treasurer, WestJet Airlines Geoff Gosling Founder & VP Product Development Former Director of Product Development, Evans Consoles Barrie Loberg Founder & VP Software Development Former Director of Solutions & Technology, Evans Consoles Tracy Baker Chief Operating Officer Former Consultant, TSX Venture Exchange and CGG Veritas Board of Directors Steve Parry Chairman Executive Chairman, Grenville Strategic Royalty Corp (Toronto, ON) Former Managing Partner, NGEN Partners (Goleta, CA) Gregory F. Burke President & CEO, Lane Office Furniture (New York, NY) Lawrence D. Fairholm President, Fairholm Management (Montréal, QC) James A. Gosling Inventor, Java & Former VP, Sun Microsystems (Redwood City, CA) Scott Jenkins (Calgary, AB) Christine McGinley Former Senior VP Operations, Canwest Broadcasting (Calgary, AB) Diana Propper de Callejon Managing Director, Cranemere Inc. (New York, NY) Mogens Smed (Calgary, AB) 27 INFUSION THERAPY CLINIC CALIFORNIA 28

15 LTD. Scott Jenkins PRESIDENT FEBRUARY 2015