DIRTT ENVIRONMENTAL SOLUTIONS LTD 8-K

What Happened

• DIRTT Environmental Solutions Ltd. filed an 8-K (Jan 5, 2026) announcing that its subsidiary terminated a 15‑year lease for a build‑to‑suit facility at 2225 Williams Industrial Blvd, Rock Hill, SC.
• The lease termination became effective December 30, 2025. In exchange for release from future rent obligations (approximately US$10.5 million undiscounted as of Nov 30, 2025), the tenant paid an early termination fee of US$1.0 million to PDM US, LLC.
• The company previously closed the Rock Hill manufacturing facility in September 2023 and entered the termination agreement on Nov 12, 2025 (contingent on the purchaser’s closing).

Key Details

• Lease originally entered in 2019; building provided ~130,000 sq. ft. of manufacturing space.
• Remaining undiscounted rent obligations as of Nov 30, 2025: ~US$10.5 million. Early termination fee paid: US$1.0 million (paid to PDM).
• Accounting impact: right‑of‑use asset was US$5.9 million and lease liability was US$7.7 million as of Sept 30, 2025; company expects a one‑time, non‑cash impairment expense of ~US$2.3 million related to leasehold improvements.
• Expected recurring savings: approximately US$1.6 million per year beginning January 2026 (per CEO Benjamin Urban).

Why It Matters

• The termination removes a significant future lease obligation (~US$10.5M), improving ongoing cash flow and reducing recurring operating costs by an estimated US$1.6M annually starting Jan 2026.
• There will be a near‑term negative impact on reported results from a one‑time non‑cash impairment (~US$2.3M), but the move is intended to be accretive to earnings in future periods as part of DIRTT’s cost and margin optimization.
• This action is a material real‑estate and cost‑structure change investors should note when assessing liquidity, operating expenses, and near‑term reported earnings.