Calgary’s DIRTT aims to update construction
CALGARY• As the American home construction industry rebounds, one Calgary- based interior design and manufacturing company is looking to break in.
DIRTT Environmental Solutions Ltd., a company that uses proprietary software to streamline interior design and office space projects, is targeting renewed growth in the U.S. construction sector to enter the residential market.
“We’re going head- on into the construction industry, which hasn’t had much technological innovation since drywall, which is celebrating its 100th birthday this year,” DIRTT’s chief financial officer, Derek Payne, said.
Instead of drywall, Payne said the Calgary- based company designs and then manufactures customizable walls and office spaces that allow buyers to manipulate the space as their offices shrink or grow.
After initially targeting the corporate office market, DIRTT has since grown its business by doing interior renovations and new- builds at hospitals and clinics, as well as schools and colleges.
Now, as DIRTT is trying to push into residential construction, Payne said the sector’s rapid growth in the U.S. is an incentive. “For us, it’s the next reasonable step,” he said.
The National Association of Home Builders, a large U.S. industry group, released data this week showing that single- family housing starts are now up their highest levels since 2007, when the sector peaked and then fell as a result of the Great Re- cession beginning in 2008.
“As the U.S. economy firms, job creation continues and mortgage rates remain low, we should see further growth in housing production moving forward,” NAHB chief economist David Crowe said in a Wednesday release.
Payne said the company does not expect to post “meaningful” revenues from residential construction and renovation projects for a few years.
DIRTT pulled in $ 64 million in revenues in the fourth quarter, a 12- per- cent gain on its $ 57- million revenue figure from the same period a year earlier. At the same time, its net income grew to $ 9.1 million, which is up 39 per cent from the same quarter in 2014.
Raymond James analyst David Quezada said even a “minuscule slice” of the U. S. home- construction market could be meaningful for DIRTT. “The company has suggested it could eventually be as large as the existing non- residential business,” Quezada said.
The company’s software, called ICE, allows users to design office or residential spaces while ICE tabulates the total price of the products, which arrive within three weeks.
Normally, Payne said, “custom costs more money, but with DIRTT custom is standard.”
While the company hopes its software will give it an edge entering the residential market, it’s also fighting to keep competitors out of the office market. DIRTT is suing Iowa- based Allsteel Inc., which is countersuing, for wilful patent infringement, and indicated it would launch additional lawsuits as necessary.
“We have t he balance sheet, the strength and the resolve, and we will protect our intellectual property,” DIRTT president Scott Jenkins said on Thursday’s conference call.
DIRTT’s shares rose 5.7 per cent on Thursday, closing $5.95 in Toronto.
WE’RE GOING HEAD-ON INTO THE ( BUILDING) INDUSTRY.