Employees at one of the fastest growing construction companies call themselves dirtbags.
The name stems from the company name DIRTT Environmental Solutions Ltd. DIRTT stands for Do It Right This Time.
All joking aside, this company has forged ahead since 2006 when the first contract was for a municipal building in Johnson County, Kansas.
DIRTT is a prefab manufacturer of building interiors from floor to ceiling and any other needs.
Using 3-D software and building on nearly 300 patents awarded or pending, the company does custom interiors with partners across the continent selling the project. DIRTT does the rest.
Advantages of the DIRTT prefab prices are numerous. The designs are environmentally sustainable, saving substantially on operating and maintenance costs over conventional building.
The company claims a 100-square foot interior development takes 12 weeks to complete with DIRTT, where conventional building takes up to 28 weeks. That represents a strong saving on cost and time.
Builders having their own input in the design process is a benefit. Another benefit is the proprietary processes using wood to build more attractive settings.
The company has three manufacturing plants in Alberta, Arizona and Georgia.
Co-founder Mogen Smed, who is a sharp craftsman and salesman, built a thriving office furniture company, SMED, in Calgary selling it to a U.S. competitor for $300 million, only to see the competitor shut SMED down a few years later.
DIRTT went public in 2013 when revenues were $137 million, boosting them to $356.7 million last year. Operations have been choppy over the years with an accumulated loss of $30 million.
The 2013 share offering of 25 million shares took share count to 74 million, and that only increased to 87.3 million as cash from operations funded expansion.
DIRTT counts all sorts of commercial and institutional sectors among clients that include 188 Fortune 500 companies.
The company has no debt, paying down the $7.7 million owed two years ago.
This year is critical. Sights are set on the $500 billion U.S. non-residential market with a three-year plan to expand.
Part of that plan requires broader awareness and shareholder base with a U.S. stock exchange listing as well as the Toronto Stock Exchange.
First quarter earnings were reduced by $3.5 million from one-time U.S. listing costs. Provisions for stock options, a sign of expected success by exercising options, also cut into earnings.
The company keeps option count at a reasonable five per cent of shares outstanding.
Directors own 3.3 per cent of DIRTT leaving it open to a possible takeover by another corporation.
At a recent price of $7.83 the stock is down from high of $9.30 set earlier this year. The price is fairly high — about 28 times expected 2019 earnings and 14 times estimated 2020 earnings — showing investor confidence and enthusiasm.
With experienced management and directors, strong financial position and more efficient building technology DIRTT looks like a winner. That appearance likely explains why the stock is priced at a premium.
Cautious investors might try and wait for a drop in price, if that happens.
CAUTION: Remember when investing, consult your adviser and do your homework before buying any security. Bizworld does not recommend investments.
Ron Walter can be reached at [email protected]
