Dirtt Environmental Solutions (DRTTF) 10-Q 7 Nov 19 2019 Q3 Quarterly report Financial data

Cover Page

Cover Page - shares	9 Months Ended
	Sep. 30, 2019	Oct. 31, 2019
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2019
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2019
Entity Registrant Name	DIRTT ENVIRONMENTAL SOLUTIONS LTD
Entity Central Index Key	0001340476
Entity Current Reporting Status	No
Entity Filer Category	Non-accelerated Filer
Entity Shell Company	false
Entity Small Business	false
Entity Emerging Growth Company	true
Entity Ex Transition Period	true
Entity Address, State or Province	AB
Entity Interactive Data Current	Yes
Trading Symbol	DRTT
Title of 12(b) Security	Common Shares
Security Exchange Name	NASDAQ
Entity Common Stock, Shares Outstanding		84,681,364

Interim Condensed Consolidated

Interim Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Current Assets
Cash and cash equivalents	$ 56,642	$ 53,412
Trade and other receivables, net of allowances for doubtful accounts of $0.1 million at both September 30, 2019 and December 31, 2018	27,532	43,873
Inventory	18,996	18,650
Prepaids and other current assets	4,257	2,217
Total Current Assets	107,427	118,152
Property, plant and equipment, net	38,166	36,728
Capitalized software, net	8,292	8,335
Operating lease right-of-use assets, net	21,530
Deferred tax assets, net	3,487	6,083
Goodwill	1,393	1,353
Other assets	5,472	5,260
Total Assets	185,767	175,911
Current Liabilities
Accounts payable and accrued liabilities	22,217	32,583
Other liabilities	4,393	5,523
Customer deposits	7,407	7,701
Current portion of lease liabilities	5,247
Current portion of long-term debt		2,500
Total Current Liabilities	39,264	48,307
Deferred tax liabilities, net		965
Other long-term liabilities	233
Long-term lease liabilities	17,021
Long-term debt		3,125
Total Liabilities	56,518	52,397
SHAREHOLDERS' EQUITY
Common shares, unlimited authorized without par value, 84,681,364 issued and outstanding at September 30, 2019 and 84,660,319 issued and outstanding at December 31, 2018	180,639	180,562
Additional paid-in capital	6,591	6,615
Accumulated other comprehensive loss	(19,558)	(22,092)
Accumulated deficit	(38,423)	(41,571)
Total Shareholders' Equity	129,249	123,514
Total Liabilities and Shareholders' Equity	$ 185,767	$ 175,911

Interim Condensed Consolidate_2

Interim Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions	Sep. 30, 2019	Dec. 31, 2018
Statement of Financial Position [Abstract]
Trade and other receivables, allowances for doubtful accounts	$ 0.1	$ 0.1
Common Stock,No Par Value	$ 0	$ 0
Common,Stock Shares Issued	84,681,364	84,660,319
Common Stock,Shares Outstanding	84,681,364	84,660,319

Interim Condensed Consolidate_3

Interim Condensed Consolidated Statement of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Revenues [Abstract]
Total revenue	$ 65,385	$ 73,913	$ 194,537	$ 200,241
Total cost of sales	40,451	43,828	121,578	120,851
Gross profit	24,934	30,085	72,959	79,390
Expenses
Sales and marketing	8,568	9,995	25,898	30,169
General and administrative	7,280	7,212	21,033	21,634
Operations support	2,419	1,937	7,771	5,933
Technology and development	1,718	922	5,881	3,048
Stock-based compensation	(2,389)	2,037	2,403	3,172
Impairment		6,098		6,098
Reorganization		2,236	2,639	4,646
Total operating expenses	17,596	30,437	65,625	74,700
Operating income (loss)	7,338	(352)	7,334	4,690
Foreign exchange (gain) loss	(198)	400	762	(805)
Interest income	(228)	(101)	(320)	(327)
Interest expense	3	98	77	301
Non Operating (income) loss	(423)	397	519	(831)
Income (loss) before tax	7,761	(749)	6,815	5,521
Income taxes
Current tax expense	818	1,145	1,906	2,733
Deferred tax expense (recovery)	1,141	(461)	1,761	381
Total income taxes	1,959	684	3,667	3,114
Net income (loss)	$ 5,802	$ (1,433)	$ 3,148	$ 2,407
Income (loss) per share
Basic and diluted income (loss) per share	$ 0.07	$ (0.02)	$ 0.04	$ 0.03
Weighted average number of shares outstanding
Basic	84,681	84,650	84,668	84,416
Diluted	85,257	84,650	84,888	84,980
Interim Condensed Consolidated Statement of Comprehensive Income (loss)
Net income (loss) for the period	$ 5,802	$ (1,433)	$ 3,148	$ 2,407
Exchange differences on translation	(838)	1,783	2,534	(3,801)
Comprehensive income (loss) for the period	4,964	350	5,682	(1,394)
Product [Member]
Revenues [Abstract]
Total revenue	63,324	71,720	188,437	193,378
Total cost of sales	38,947	42,202	116,117	115,941
Service [Member]
Revenues [Abstract]
Total revenue	2,061	2,193	6,100	6,863
Total cost of sales	$ 1,504	$ 1,626	$ 5,461	$ 4,910

Interim Condensed Consolidate_4

Interim Condensed Consolidated Statements of Changes in Shareholders' Equity - USD ($) $ in Thousands	Total	Common shares	Additional paid-in capital	Accumulated other comprehensive income	Accumulated deficit
Beginning Balance at Dec. 31, 2017	$ 126,519	$ 178,397	$ 7,355	$ (12,112)	$ (47,121)
Beginning Balance (in shares) at Dec. 31, 2017		84,224,527
Issued on exercise of stock options	1,538	$ 2,165	(627)
Issued on exercise of stock options (in shares)		435,792
Stock-based compensation	1,568		1,568
Stock option conversion to cash settled	(2,718)		(2,718)
Foreign currency translation adjustment	(3,801)			(3,801)
Net income (loss) for the period	2,407				2,407
Ending Balance at Sep. 30, 2018	125,513	$ 180,562	5,578	(15,913)	(44,714)
Ending Balance (in shares) at Sep. 30, 2018		84,660,319
Beginning Balance at Dec. 31, 2018	123,514	$ 180,562	6,615	(22,092)	(41,571)
Beginning Balance (in shares) at Dec. 31, 2018		84,660,319
Issued on exercise of stock options	76	$ 77	(1)
Issued on exercise of stock options (in shares)		21,045
Stock-based compensation modification adjustment	(23)		(23)
Foreign currency translation adjustment	2,534			2,534
Net income (loss) for the period	3,148				3,148
Ending Balance at Sep. 30, 2019	$ 129,249	$ 180,639	$ 6,591	$ (19,558)	$ (38,423)
Ending Balance (in shares) at Sep. 30, 2019		84,681,364

Interim Condensed Consolidate_5

Interim Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Cash flows from operating activities:
Net income (loss) for the period	$ 5,802	$ (1,433)	$ 3,148	$ 2,407
Adjustments:
Depreciation and amortization	2,925	3,544	9,260	10,342
Impairment		6,098		6,098
Stock-based compensation	(2,646)	1,200	(1,217)	2,335
Non-cash interest expense (income)	(9)		(55)
Deferred income tax expense (recovery)	1,141	(461)	1,761	381
Foreign exchange loss (gain)	(198)	400	762	(805)
Loss (gain) on disposal of property, plant and equipment		(1)	53	(15)
Changes in operating assets and liabilities:
Trade and other receivables	661	(9,516)	15,970	(24,255)
Inventory	(436)	(2,947)	4	(1,443)
Prepaid and other current assets	(2,043)	425	(2,001)	(731)
Other assets	76		80
Trade accounts payable and other liabilities	(2,151)	3,808	(8,560)	(815)
Lease liability	(127)		(375)
Customer deposits	(216)	(852)	(492)	(1,367)
Net cash flows provided by (used in) operating activities	2,998	208	17,881	(7,514)
Cash flows from investing activities:
Purchase of property, plant and equipment	(4,594)	(1,681)	(7,753)	(7,013)
Capitalized software development expenditures	(918)	(1,264)	(2,513)	(4,248)
Recovery of software development expenditures	89		194
Proceeds on sale of property, plant and equipment			55	66
Changes in accounts payable related to investing activities	349	(222)	(127)	(371)
Net cash flows used in investing activities	(5,074)	(3,167)	(10,144)	(11,566)
Cash flows from financing activities:
Cash received on exercise of stock options	61	163	77	1,537
Repayment of long-term debt		(684)	(5,561)	(2,620)
Net cash flows provided by (used in) financing activities	61	(521)	(5,484)	(1,083)
Effect of foreign exchange on cash and cash equivalents	(81)	97	977	(1,202)
Net increase (decrease) in cash and cash equivalents	(2,094)	(3,383)	3,230	(21,365)
Cash and cash equivalents, beginning of period	58,736	45,502	53,412	63,484
Cash and cash equivalents, end of period	56,642	42,119	56,642	42,119
Supplemental disclosure of cash flow information:
Interest paid	3	98	77	301
Income taxes paid	$ 953	$ 2,071	$ 1,403	$ 3,136

GENERAL INFORMATION

GENERAL INFORMATION	9 Months Ended
	Sep. 30, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]
GENERAL INFORMATION	1. GENERAL INFORMATION DIRTT Environmental Solutions Ltd. and its subsidiaries (“DIRTT” or the “Company”) is a leading technology-driven manufacturer of highly customized interiors. DIRTT combines its proprietary 3D design, configuration and manufacturing software (“ICE ® (“Distribution Partner”) . ICE provides accurate design, drawing, specification, pricing and manufacturing process information, allowing rapid production of high-quality custom solutions using fewer resources than traditional manufacturing methods. ICE is also licensed to unrelated companies and distribution partners of the Company. DIRTT is incorporated under the laws of the province of Alberta, Canada and its headquarters and registered office is located at 7303 – 30th Street S.E., Calgary, AB, Canada T2C 1N6. DIRTT trades on the Toronto Stock Exchange under the symbol “DRT ” and, effective October 9, 2019, trades on The Nasdaq Global Select Market under the symbol “DRTT”.

BASIS OF PRESENTATION

BASIS OF PRESENTATION	9 Months Ended
	Sep. 30, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]
BASIS OF PRESENTATION	2. BASIS OF PRESENTATION The accompanying unaudited interim condensed consolidated financial statements (the “Financial Statements”) have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X and, accordingly, the Financial Statements do not include all of the information and notes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of the Company, the Financial Statements contain all adjustments necessary, consisting of only normal recurring adjustments, for a fair statement of its financial position as of September n ine September , In these Financial Statements, unless otherwise indicated, all dollar amounts are expressed in United States (“U.S.”) dollars. DIRTT’s financial results are consolidated in Canadian dollars, the Company’s functional currency , Principles of consolidation The Financial Statements include the accounts of DIRTT and its subsidiaries. All intercompany balances, income and expenses, unrealized gains and losses and dividends resulting from intercompany transactions have been eliminated on consolidation. Basis of measurement These Financial Statements have been prepared on the historical cost convention except for certain financial instruments and stock-based compensation that are measured at fair value. Historical cost is generally based on the fair value of the consideration given in exchange for assets. The Company’s quarterly tax provision is based upon an estimated annual effective tax rate. Seasonality Sales of the Company’s products are driven by consumer and industrial demand for interior construction solutions. The timing of customer’s construction projects can be influenced by a number of factors including prevailing economic climate and weather. Seasonality of construction results in demand for the Company’s solutions to be typically stronger in the third and fourth quarters compared to the first and second quarter of its fiscal year.

ADOPTION OF NEW AND REVISED ACC

ADOPTION OF NEW AND REVISED ACCOUNTING STANDARDS	9 Months Ended
	Sep. 30, 2019
New Accounting Pronouncements and Changes in Accounting Principles [Abstract]
ADOPTION OF NEW AND REVISED ACCOUNTING STANDARDS	3. ADOPTION OF NEW AND REVISED ACCOUNTING STANDARDS In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842),” and issued subsequent amendments to the initial guidance in January 2018 within ASU No. 2018-01, in July 2018 within ASU Nos. 2018-10 and 2018-11, in December 2018 within ASU No. 2018-20, and in March 2019 within ASU No. 2019-01 (collectively, the standard). The standard requires lessees to recognize operating leases on the balance sheet as a right-of-use (“ROU”) asset and a lease liability. The liability is equal to the present value of the lease payments over the remaining lease term. The asset is based on the liability, subject to certain adjustments. Operating leases result in straight-line expense. The Company adopted the standard on January 1, 2019, and elected the transition method of adoption, which allowed the Company to apply the standard as of the beginning of the period of adoption, the comparative period presented is not adjusted and continues to be reported in accordance with the Company’s historical accounting policy. The Company opted to elect the package of practical expedients to not reassess prior conclusions related to contracts containing leases, lease classification and initial direct costs, and certain other practical expedients, including the use of hindsight to determine the lease term for existing leases and in assessing impairment of the right-of-use asset, and the exception for short-term leases. Adoption of the standard had a significant impact on the Company’s condensed consolidated balance sheet due to the recognition of a right-of-use asset and lease liability, as shown in Note 4, upon adoption.

LEASES

LEASES	9 Months Ended
	Sep. 30, 2019
Leases [Abstract]
LEASES	4. LEASES The Company leases office and factory space under various operating leases. The Company determines if an arrangement is a lease or contains a lease element at inception. The arrangement is a lease if it conveys the right to the Company to control the use of identified property, plant, or equipment for a period of time in exchange for consideration. Operating leases are separately disclosed as operating lease ROU assets, with a corresponding lease liability split between current and long-term components on the balance sheet. Operating leases with an initial term of 12 months or less are not included on the balance sheet. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. ROU assets represent the right to use an underlying asset for the lease term and operating lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The Company gives consideration to instruments with similar characteristics when calculating its incremental borrowing rate. The Company’s operating leases have remaining lease terms of 1 year to 12 years. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. For the three months and nine September cash paid for amounts included in the measurement of operating lease liabilities was $1.4 million and $4.2 million. The weighted average remaining lease term and weighted average discount rate at September nine September September 30, 2019 related to operating leases (in thousands): The following table includes ROU assets included on the balance sheet at September 30, 2019: ROU Assets Cost Accumulated Depreciation Net book value At January 1, 2019 22,571 — 22,571 Additions 1,701 — 1,701 Depreciation expense — (3,020 ) (3,020 ) Exchange differences 288 (10 ) 278 At September 30, 2019 24,560 (3,030 ) 21,530 The following table includes lease liabilities included on the balance sheet at September Opening balance (Note 3) 23,912 Addition s 1,673 Accretion 829 Repayment of lease liabilities (4,237 ) Lease cancellation (196 ) Exchange differences 287 22,268 Current lease liabilities 5,247 Long-term lease liabilities 17,021 The following table includes maturities of operating lease liabilities at September As at September 3 0 2019 1,326 2020 5,355 2021 5,357 2022 4,817 2023 2,987 Thereafter 5,893 Total 25,735 Current lease liability 5,247 Long term lease liability 17,021 Total lease liability 22,268 Difference between undiscounted cash flows and lease liability 3,467 Subsequent to September 30, 2019, the Company entered into a lease agreement, expected to commence in the second half of 2020, associated with the construction of a new combined tile and millwork facility in Rock Hill, South Carolina. Rent obligations associated with this lease are approximately $15.0 million.

LONG-TERM DEBT

LONG-TERM DEBT	9 Months Ended
	Sep. 30, 2019
Debt Disclosure [Abstract]
LONG-TERM DEBT	5. LONG-TERM DEBT The Company had an $18.0 million revolving operating facility which expired on June 30, 2019. During the first quarter of 2019, the Company repaid the outstanding principal and interest amounts of its long-term debt, totaling $5.6 million. On July 19, 2019, the Company entered into a C$50.0 million senior secured revolving credit facility with the Royal Bank of Canada (the “ RBC RBC As at September 30, 2019, the RBC Facility was undrawn and the Company was in compliance with all of the covenants of the RBC Facility.

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION	9 Months Ended
	Sep. 30, 2019
Share-based Payment Arrangement [Abstract]
STOCK-BASED COMPENSATION	6. STOCK-BASED COMPENSATION Stock-based compensation expense (recovery) For For September 30, 2019 2018 2019 2018 Stock options (2,573 ) 2,032 1,890 3,167 Performance Share Units 110 5 189 5 Deferred Share Units 74 — 324 — (2,389 ) 2,037 2,403 3,172 Stock Options For the three months ended September nin e September nine September 0.9 million 0.9 million September , On October 9, 2019, following its listing on The Nasdaq Global Select Market, the Company ceased cash-settlement of stock options and the associated liability accounting for stock options. The following summarizes options granted, exercised, surrendered, forfeited and expired during the periods: Number of Weighted ( ) Outstanding at December 31, 2017 5,553,393 5.31 Granted 3,327,525 6.40 Exercised (435,792 ) 4.78 Forfeited (643,849 ) 5.81 Expired (15,420 ) 6.01 Outstanding at September 7,785,857 5.84 Outstanding at December 31, 2018 6,858,376 5.88 Granted 1,359,824 7.51 Exercised (21,045 ) 4.81 Forfeited (243,761 ) 6.22 Surrendered for cash settlement (1,544,151 ) 4.95 Expired (119,336 ) 5.63 Outstanding at September 6,289,907 6.51 Exercisable at September 1,940,498 5.98 Range of exercise prices outstanding at September Options outstanding Options exercisable Range of exercise prices Number Weighted Weighted ( ) Number Weighted Weighted ( ) $5.01 – $6.00 806,638 2.1 5.76 479,389 2.1 5.76 $6.01 – $7.00 4,396,537 3.3 6.32 1,461,109 1.9 6.20 $7.01 – $7.84 1,086,732 4.6 4.84 — Total 6,289,907 1,940,498 Performance share units (“PSUs”) As at Se pte mber 85,728 0.2 0.1 long-term Deferred share units (“DSUs”) There were 92,889 September 25,962 current portion of Dilutive instruments For the three and nine s September

REVENUE

REVENUE	9 Months Ended
	Sep. 30, 2019
Revenue from Contract with Customer [Abstract]
REVENUE	7. REVENUE In the following table, revenue is disaggregated by major products and services lines and timing of revenue recognition. All revenue comes from contracts with customers. See Note 9 for the disaggregation of revenue by geographic region. For the three months ended For the nine months ended September 30, 2019 2018 2019 2018 Product 56,486 64,941 168,321 175,286 Transportation 6,429 6,184 18,644 16,368 Licenses 409 595 1,472 1,724 Total product revenue 63,324 71,720 188,437 193,378 Installation and other services 2,061 2,193 6,100 6,863 65,385 73,913 194,537 200,241 DIRTT sells its products and services pursuant to fixed-price contracts , For the three months ended For the nine months ended September 30, 2019 2018 2019 2018 At a point in time 62,915 71,125 186,965 191,654 Over time 2,470 2,788 7,572 8,587 65,385 73,913 194,537 200,241 Revenue recognized at a point in time represents the majority of the Company’s sales and revenue is recognized when a customer obtains legal title to the product, which is when ownership of products is transferred to, or services are delivered to the contract counterparty. Revenue recognized over time is limited to installation and other services provided to customers and is recorded as performance obligations which Contract Liabilities September 30, As at December 31, December 31, Customer deposits 6,296 6,746 5,675 Deferred revenue 1,111 955 701 Contract liabilities 7,407 7,701 6,376 Contract liabilities primarily relate to deposits received from customers and deferred revenue from license subscriptions. The balance of contract liabilities was consistent as at September s September Sales by Industry The Company periodically reviews the growth o f - For the three months ended For the nine months ended 2019 2018 2019 2018 Commercial 42,910 41,117 124,248 119,021 Healthcare 9,192 18,698 32,452 40,459 Government 3,855 4,634 12,267 17,408 Education 6,958 6,676 17,998 14,766 Licenses fees from Distribution Partners 409 595 1,472 1,724 Total product revenue 63,324 71,720 188,437 193,378 Installation and other services 2,061 2,193 6,100 6,863 65,385 73,913 194,537 200,241

INCOME TAX

INCOME TAX	9 Months Ended
	Sep. 30, 2019
Income Tax Disclosure [Abstract]
INCOME TAX	8. INCOME TAX The general provincial tax rate in Alberta, Canada was decreased on June 28, 2019 , % % % %

SEGMENT REPORTING

SEGMENT REPORTING	9 Months Ended
	Sep. 30, 2019
Segment Reporting [Abstract]
SEGMENT REPORTING	9. SEGMENT REPORTING The Company has one reportable and one Revenue from external customers For the three months ended For the nine months ended 2019 2018 2019 2018 Canada 8,956 11,627 24,795 29,998 U.S. 56,429 62,249 169,742 169,343 International — 37 — 900 65,385 73,913 194,537 200,241 Non-current assets ( 1) , excluding deferred tax assets As at September 30, December 31, Canada 47,536 36,323 U.S. 27,317 15,353 74,853 51,676 (1) Amounts include property, plant and equipment, capitalized software, operating lease ROU assets, goodwill and other assets.

TRANSACTIONS WITH RELATED PARTI

TRANSACTIONS WITH RELATED PARTIES	9 Months Ended
	Sep. 30, 2019
Related Party Transactions [Abstract]
TRANSACTIONS WITH RELATED PARTIES	10. TRANSACTIONS WITH RELATED PARTIES A DIRTT Distribution Partner, Lane Office Furniture Inc. (“Lane”), is owned by a former director of the Company, Gregory Burke. Effective June 26, 2018, Mr. Burke ceased to be a director of the Company. For the three and nine September n n During the three and nine September $ 0.2 million and $0.3 million .

COMMITMENTS

COMMITMENTS	9 Months Ended
	Sep. 30, 2019
Commitments and Contingencies Disclosure [Abstract]
COMMITMENTS	11. COMMITMENTS As at Septem ber

LEGAL PROCEEDINGS

LEGAL PROCEEDINGS	9 Months Ended
	Sep. 30, 2019
Commitments and Contingencies Disclosure [Abstract]
LEGAL PROCEEDINGS	12. LEGAL PROCEEDINGS On May 9, 2019, the Company commenced an action in the Court of Queen’s Bench of Alberta against two former executives, their company, Falkbuilt Ltd. (“Falkbuilt”), and other individuals, on the basis of, among other things, a breach of non-compete and non-solicit obligations. On November 5, 2019, Falkbuilt filed a Statement of Claim (the “Claim”) against the Company in the Court of Queen’s Bench of Alberta alleging that the Company has misappropriated and misused their alleged proprietary information in furtherance of the Company’s product development. The claim seeks monetary relief, including, among other things, damages of approximately C$30.0 million, disgorgement of profits, punitive damages, and attorneys’ fees, and an interim, interlocutory and permanent injunction of the Company’s use of the alleged proprietary information. The Company believes the Claim is without merit. The Company intends to defend it vigorously and to continue to pursue its legal remedies against the former employees.

BASIS OF PRESENTATION (Policies

BASIS OF PRESENTATION (Policies)	9 Months Ended
	Sep. 30, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Principles of consolidation	Principles of consolidation The Financial Statements include the accounts of DIRTT and its subsidiaries. All intercompany balances, income and expenses, unrealized gains and losses and dividends resulting from intercompany transactions have been eliminated on consolidation.
Basis of measurement	Basis of measurement These Financial Statements have been prepared on the historical cost convention except for certain financial instruments and stock-based compensation that are measured at fair value. Historical cost is generally based on the fair value of the consideration given in exchange for assets. The Company’s quarterly tax provision is based upon an estimated annual effective tax rate.
Seasonality	Seasonality Sales of the Company’s products are driven by consumer and industrial demand for interior construction solutions. The timing of customer’s construction projects can be influenced by a number of factors including prevailing economic climate and weather. Seasonality of construction results in demand for the Company’s solutions to be typically stronger in the third and fourth quarters compared to the first and second quarter of its fiscal year.

LEASES (Tables)

LEASES (Tables)	9 Months Ended
	Sep. 30, 2019
Leases [Abstract]
Schedule of ROU assets	The following table includes ROU assets included on the balance sheet at September 30, 2019: ROU Assets Cost Accumulated Depreciation Net book value At January 1, 2019 22,571 — 22,571 Additions 1,701 — 1,701 Depreciation expense — (3,020 ) (3,020 ) Exchange differences 288 (10 ) 278 At September 30, 2019 24,560 (3,030 ) 21,530
Schedule of lease liabilities	The following table includes lease liabilities included on the balance sheet at September Opening balance (Note 3) 23,912 Addition s 1,673 Accretion 829 Repayment of lease liabilities (4,237 ) Lease cancellation (196 ) Exchange differences 287 22,268 Current lease liabilities 5,247 Long-term lease liabilities 17,021
Schedule of maturities of operating lease liabilities	The following table includes maturities of operating lease liabilities at September As at September 3 0 2019 1,326 2020 5,355 2021 5,357 2022 4,817 2023 2,987 Thereafter 5,893 Total 25,735 Current lease liability 5,247 Long term lease liability 17,021 Total lease liability 22,268 Difference between undiscounted cash flows and lease liability 3,467

STOCK-BASED COMPENSATION (Table

STOCK-BASED COMPENSATION (Tables)	9 Months Ended
	Sep. 30, 2019
Share-based Payment Arrangement [Abstract]
Summary of stock-based compensation expense	Stock-based compensation expense (recovery) For For September 30, 2019 2018 2019 2018 Stock options (2,573 ) 2,032 1,890 3,167 Performance Share Units 110 5 189 5 Deferred Share Units 74 — 324 — (2,389 ) 2,037 2,403 3,172
Summary of options granted, exercised, surrendered, forfeited and expired	The following summarizes options granted, exercised, surrendered, forfeited and expired during the periods: Number of Weighted ( ) Outstanding at December 31, 2017 5,553,393 5.31 Granted 3,327,525 6.40 Exercised (435,792 ) 4.78 Forfeited (643,849 ) 5.81 Expired (15,420 ) 6.01 Outstanding at September 7,785,857 5.84 Outstanding at December 31, 2018 6,858,376 5.88 Granted 1,359,824 7.51 Exercised (21,045 ) 4.81 Forfeited (243,761 ) 6.22 Surrendered for cash settlement (1,544,151 ) 4.95 Expired (119,336 ) 5.63 Outstanding at September 6,289,907 6.51 Exercisable at September 1,940,498 5.98
Summary of options outstanding by range of exercise prices	Range of exercise prices outstanding at September Options outstanding Options exercisable Range of exercise prices Number Weighted Weighted ( ) Number Weighted Weighted ( ) $5.01 – $6.00 806,638 2.1 5.76 479,389 2.1 5.76 $6.01 – $7.00 4,396,537 3.3 6.32 1,461,109 1.9 6.20 $7.01 – $7.84 1,086,732 4.6 4.84 — Total 6,289,907 1,940,498

REVENUE (Tables)

REVENUE (Tables)	9 Months Ended
	Sep. 30, 2019
Revenue from Contract with Customer [Abstract]
Disaggregation of revenue by major products and services lines and timing of revenue recognition	In the following table, revenue is disaggregated by major products and services lines and timing of revenue recognition. All revenue comes from contracts with customers. See Note 9 for the disaggregation of revenue by geographic region. For the three months ended For the nine months ended September 30, 2019 2018 2019 2018 Product 56,486 64,941 168,321 175,286 Transportation 6,429 6,184 18,644 16,368 Licenses 409 595 1,472 1,724 Total product revenue 63,324 71,720 188,437 193,378 Installation and other services 2,061 2,193 6,100 6,863 65,385 73,913 194,537 200,241 For the three months ended For the nine months ended September 30, 2019 2018 2019 2018 At a point in time 62,915 71,125 186,965 191,654 Over time 2,470 2,788 7,572 8,587 65,385 73,913 194,537 200,241
Summary of contract liabilities	Contract Liabilities September 30, As at December 31, December 31, Customer deposits 6,296 6,746 5,675 Deferred revenue 1,111 955 701 Contract liabilities 7,407 7,701 6,376
Schedule of sales by industry	For the three months ended For the nine months ended 2019 2018 2019 2018 Commercial 42,910 41,117 124,248 119,021 Healthcare 9,192 18,698 32,452 40,459 Government 3,855 4,634 12,267 17,408 Education 6,958 6,676 17,998 14,766 Licenses fees from Distribution Partners 409 595 1,472 1,724 Total product revenue 63,324 71,720 188,437 193,378 Installation and other services 2,061 2,193 6,100 6,863 65,385 73,913 194,537 200,241

SEGMENT REPORTING (Tables)

SEGMENT REPORTING (Tables)	9 Months Ended
	Sep. 30, 2019
Segment Reporting [Abstract]
Schedule of revenue from external customers	Revenue from external customers For the three months ended For the nine months ended 2019 2018 2019 2018 Canada 8,956 11,627 24,795 29,998 U.S. 56,429 62,249 169,742 169,343 International — 37 — 900 65,385 73,913 194,537 200,241
Schedule of non-current assets, excluding deferred tax assets	Non-current assets ( 1) , excluding deferred tax assets As at September 30, December 31, Canada 47,536 36,323 U.S. 27,317 15,353 74,853 51,676 (1) Amounts include property, plant and equipment, capitalized software, operating lease ROU assets, goodwill and other assets.

LEASES - Schedule of ROU assets

LEASES - Schedule of ROU assets (Detail) $ in Thousands	9 Months Ended
	Sep. 30, 2019USD ($)
Operating Lease Right Of Use Assets Net Book Value [Abstract]
Net Book Value, At September 30, 2019	$ 21,530
Operating Lease [Member]
Operating Lease Right Of Use Assets Original Cost [Abstract]
Cost, At January 1, 2019	22,571
Cost, Additions	1,701
Cost, Exchange differences	288
Cost, At September 30, 2019	24,560
Operating Lease Right Of Use Assets Accumulated Depreciation [Abstract]
Accumulated Depreciation, Depreciation expense	(3,020)
Accumulated Depreciation, Exchange differences	(10)
Accumulated Depreciation, At September 30, 2019	(3,030)
Operating Lease Right Of Use Assets Net Book Value [Abstract]
Net Book Value, At January 1, 2019	22,571
Net Book Value, Additions	1,701
Net Book Value, Depreciation expense	(3,020)
Net Book Value, Exchange differences	278
Net Book Value, At September 30, 2019	$ 21,530

LEASES - Schedule of Lease Liab

LEASES - Schedule of Lease Liabilities (Detail) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2019USD ($)	Sep. 30, 2019USD ($)
Leases [Abstract]
Opening balance		$ 23,912
Additions		1,673
Accretion		829
Repayment of lease liabilities	$ (1,400)	(4,237)
Lease cancellation		(196)
Exchange differences		287
Ending Balance	22,268	22,268
Current lease liabilities	5,247	5,247
Long-term lease liabilities	$ 17,021	$ 17,021

LEASES - Schedule of Maturities

LEASES - Schedule of Maturities of Operating Lease Liabilities (Detail) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Leases [Abstract]
2019	$ 1,326
2020	5,355
2021	5,357
2022	4,817
2023	2,987
Thereafter	5,893
Total	25,735
Current lease liability	5,247
Long term lease liability	17,021
Total lease liability	22,268	$ 23,912
Difference between undiscounted cash flows and lease liability	$ 3,467

LEASES - (Additional Informatio

LEASES - (Additional Information) (Detail) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2019	Oct. 31, 2019	Dec. 31, 2018
Lessee, Lease, Description [Line Items]
Weighted average remaining lease term	12 years	12 years
Weighted average discount rate	4.60%	4.60%
Cash paid for operating lease	$ 1,400	$ 4,237
Operating lease rent obligations	$ 22,268	$ 22,268		$ 23,912
Maximum [Member]
Lessee, Lease, Description [Line Items]
Operating leases remaining lease terms	12 years	12 years
Minimum [Member]
Lessee, Lease, Description [Line Items]
Operating leases remaining lease terms	1 year	1 year
Subsequent Event [Member]
Lessee, Lease, Description [Line Items]
Operating lease rent obligations			$ 15,000

LONG-TERM DEBT - (Additional In

LONG-TERM DEBT - (Additional Information) (Detail)	Jul. 19, 2019CAD ($)	Mar. 31, 2019USD ($)	Sep. 30, 2018USD ($)	Sep. 30, 2019USD ($)	Sep. 30, 2018USD ($)	Jun. 30, 2019USD ($)
Debt Instrument [Line Items]
Repayments of outstanding principal and interest amounts of long-term debt			$ 684,000	$ 5,561,000	$ 2,620,000
Revolving Operating Facility [Member]
Debt Instrument [Line Items]
Revolving credit facility, maximum borrowing capacity						$ 18,000,000
Repayments of outstanding principal and interest amounts of long-term debt		$ 5,600,000
Senior Secured Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Revolving credit facility, maximum borrowing capacity	$ 50,000,000
Revolving credit facility, term	3 years
Revolving credit facility, additional term	2 years
Revolving credit facility, interest rate terms	Interest is calculated at theCanadian or U.S. prime rate with no adjustment,or the bankers' acceptance rate plus 125 basis points.
Revolving credit facility, basis spread on variable rate	1.25%
Debt instrument covenant terms	The RBC Facility is subject to a minimum fixed charge coverage ratio of 1.15:1 and a maximum debt to Adjusted EBITDA ratio of 3.0:1

STOCK-BASED COMPENSATION - (Add

STOCK-BASED COMPENSATION - (Additional Information) (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense (recovery)	$ (2,389)	$ 2,037	$ 2,403	$ 3,172
Securities excluded from calculation of net income (loss) per share	4,300,000	5,100,000	3,400,000	5,500,000
Employee Stock Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense (recovery)	$ (2,573)	$ 2,032	$ 1,890	$ 3,167
Payments on surrender of cash settled stock options	300	900	3,600	900
Share-based arrangements, liability	100		100		$ 1,800
Performance Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense (recovery)	$ 110	$ 5	$ 189	$ 5
Share based compensation, share units outstanding	295,216		295,216		85,728
Share-based arrangements, liability	$ 200		$ 200		$ 100
Deferred Share Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense (recovery)	$ 74		$ 324
Share based compensation, share units outstanding	92,889		92,889		25,962
Share-based arrangements, liability	$ 400		$ 400		$ 100

STOCK-BASED COMPENSATION - Summ

STOCK-BASED COMPENSATION - Summary of Stock-Based Compensation Expense (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ (2,389)	$ 2,037	$ 2,403	$ 3,172
Employee Stock Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	(2,573)	2,032	1,890	3,167
Performance Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	110	$ 5	189	$ 5
Deferred Share Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 74		$ 324

STOCK-BASED COMPENSATION - Su_2

STOCK-BASED COMPENSATION - Summary of Options Granted, Exercised, Surrendered, Forfeited and Expired (Detail) - Employee Stock Option [Member] - $ / shares	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of options, Outstanding at the beginning	6,858,376	5,553,393
Number of options, Granted	1,359,824	3,327,525
Number of options, Exercised	(21,045)	(435,792)
Number of options, Forfeited	(243,761)	(643,849)
Number of options, Surrendered for cash settlement	(1,544,151)
Number of options, Expired	(119,336)	(15,420)
Number of options, Outstanding at the end	6,289,907	7,785,857
Number of options, Exercisable	1,940,498
Weighted average exercise price, Outstanding at the beginning	$ 5.88	$ 5.31
Weighted average exercise price, Granted	7.51	6.40
Weighted average exercise price, Exercised	4.81	4.78
Weighted average exercise price, Forfeited	6.22	5.81
Weighted average exercise price, Surrendered for cash settlement	4.95
Weighted average exercise price, Expired	5.63	6.01
Weighted average exercise price, Outstanding at the end	6.51	$ 5.84
Weighted average exercise price, Exercisable	$ 5.98

STOCK-BASED COMPENSATION - Su_3

STOCK-BASED COMPENSATION - Summary of Options Outstanding by Range of Exercise Prices (Detail)	9 Months Ended
	Sep. 30, 2019$ / sharesshares
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Options outstanding, Number | shares	6,289,907
Options exercisable, Number | shares	1,940,498
Exercise Price Range $5.01 to $6.00 [Member]
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Range of exercise prices, Minimum	$ 5.01
Range of exercise prices, Maximum	$ 6
Options outstanding, Number | shares	806,638
Options outstanding, Weighted average remaining contractual years	2 years 1 month 6 days
Options outstanding, Weighted average exercise price	$ 5.76
Options exercisable, Number | shares	479,389
Options exercisable, Weighted average remaining contractual years	2 years 1 month 6 days
Options exercisable, Weighted average exercise price	$ 5.76
Exercise Price Range $6.01 to $7.00 [Member]
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Range of exercise prices, Minimum	6.01
Range of exercise prices, Maximum	$ 7
Options outstanding, Number | shares	4,396,537
Options outstanding, Weighted average remaining contractual years	3 years 3 months 18 days
Options outstanding, Weighted average exercise price	$ 6.32
Options exercisable, Number | shares	1,461,109
Options exercisable, Weighted average remaining contractual years	1 year 10 months 24 days
Options exercisable, Weighted average exercise price	$ 6.20
Exercise Price Range $7.01 to $7.84 [Member]
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Range of exercise prices, Minimum	7.01
Range of exercise prices, Maximum	$ 7.84
Options outstanding, Number | shares	1,086,732
Options outstanding, Weighted average remaining contractual years	4 years 7 months 6 days
Options outstanding, Weighted average exercise price	$ 4.84

REVENUE - Disaggregation of Rev

REVENUE - Disaggregation of Revenue by Major Products and Services Lines (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Disaggregation of Revenue [Line Items]
Revenues	$ 65,385	$ 73,913	$ 194,537	$ 200,241
Product [Member]
Disaggregation of Revenue [Line Items]
Revenues	56,486	64,941	168,321	175,286
Transportation [Member]
Disaggregation of Revenue [Line Items]
Revenues	6,429	6,184	18,644	16,368
Licenses [Member]
Disaggregation of Revenue [Line Items]
Revenues	409	595	1,472	1,724
Total product revenue [Member]
Disaggregation of Revenue [Line Items]
Revenues	63,324	71,720	188,437	193,378
Installation and other services [Member]
Disaggregation of Revenue [Line Items]
Revenues	$ 2,061	$ 2,193	$ 6,100	$ 6,863

REVENUE - Disaggregation of R_2

REVENUE - Disaggregation of Revenue by Timing of Revenue Recognition (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Disaggregation of Revenue [Line Items]
Revenues	$ 65,385	$ 73,913	$ 194,537	$ 200,241
At a point in time [Member]
Disaggregation of Revenue [Line Items]
Revenues	62,915	71,125	186,965	191,654
Over time [Member]
Disaggregation of Revenue [Line Items]
Revenues	$ 2,470	$ 2,788	$ 7,572	$ 8,587

REVENUE - Summary of Contract L

REVENUE - Summary of Contract Liabilities (Detail) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018	Dec. 31, 2017
Revenue from Contract with Customer [Abstract]
Customer deposits	$ 6,296	$ 6,746	$ 5,675
Deferred revenue	1,111	955	701
Contract liabilities	$ 7,407	$ 7,701	$ 6,376

REVENUE - Schedule of Sales by

REVENUE - Schedule of Sales by Industry (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Disaggregation of Revenue [Line Items]
Revenues	$ 65,385	$ 73,913	$ 194,537	$ 200,241
Commercial [Member]
Disaggregation of Revenue [Line Items]
Revenues	42,910	41,117	124,248	119,021
Healthcare [Member]
Disaggregation of Revenue [Line Items]
Revenues	9,192	18,698	32,452	40,459
Government [Member]
Disaggregation of Revenue [Line Items]
Revenues	3,855	4,634	12,267	17,408
Education [Member]
Disaggregation of Revenue [Line Items]
Revenues	6,958	6,676	17,998	14,766
Licenses fees from Distribution Partners [Member]
Disaggregation of Revenue [Line Items]
Revenues	409	595	1,472	1,724
Total product revenue [Member]
Disaggregation of Revenue [Line Items]
Revenues	63,324	71,720	188,437	193,378
Installation and other services [Member]
Disaggregation of Revenue [Line Items]
Revenues	$ 2,061	$ 2,193	$ 6,100	$ 6,863

REVENUE - (Additional Informati

REVENUE - (Additional Information) (Detail) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Revenue from Contract with Customer [Abstract]
Contract liabilities recognized as revenue	$ 7.5	$ 5.9

INCOME TAX - (Additional Inform

INCOME TAX - (Additional Information) (Detail) - USD ($) $ in Millions	3 Months Ended	6 Months Ended	12 Months Ended
	Jun. 30, 2019	Dec. 31, 2019	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Schedule of Income Tax [Line Items]
Reduction in deferred tax asset	$ 0.9
Canada [Member] | Forecast [Member]
Schedule of Income Tax [Line Items]
Provincial tax rate		11.00%	8.00%	9.00%	10.00%

SEGMENT REPORTING - (Additional

SEGMENT REPORTING - (Additional Information) (Detail)	9 Months Ended
	Sep. 30, 2019SegmentCountry
Segment Reporting [Abstract]
Number of reportable segments	1
Number of operating segments	1
Number of principal geographic locations | Country	3

SEGMENT REPORTING - Schedule of

SEGMENT REPORTING - Schedule of Revenue from External Customers (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue from external customers	$ 65,385	$ 73,913	$ 194,537	$ 200,241
Canada [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue from external customers	8,956	11,627	24,795	29,998
U.S. [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue from external customers	$ 56,429	62,249	$ 169,742	169,343
International [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue from external customers		$ 37		$ 900

SEGMENT REPORTING - Schedule _2

SEGMENT REPORTING - Schedule of Non-current Assets Excluding Deferred Tax Assets (Detail) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Revenues from External Customers and Long-Lived Assets [Line Items]
Non-current assets, excluding deferred tax assets	$ 74,853	$ 51,676
Canada [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Non-current assets, excluding deferred tax assets	47,536	36,323
U.S. [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Non-current assets, excluding deferred tax assets	$ 27,317	$ 15,353

TRANSACTIONS WITH RELATED PAR_2

TRANSACTIONS WITH RELATED PARTIES - (Additional Information) (Detail) - USD ($) $ in Millions	3 Months Ended	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2018
Lane Office Furniture Inc [Member]
Related Party Transaction [Line Items]
Revenue from related party transactions	$ 0	$ 3
Rebate on sales from related parties	0	0.1
Director [Member]
Related Party Transaction [Line Items]
Advisory and consulting services	$ 0.2	$ 0.3

COMMITMENTS - (Additional Infor

COMMITMENTS - (Additional Information) (Detail) $ in Millions	Sep. 30, 2019USD ($)
Inventory And Property Plant And Equipment [Member]
Long-term Purchase Commitment [Line Items]
Purchase obligation, outstanding	$ 7.7

LEGAL PROCEEDINGS - (Additional

LEGAL PROCEEDINGS - (Additional Information) (Detail) $ in Millions	Nov. 05, 2019CAD ($)
Falkbuilt [Member] | Subsequent Event [Member]
Loss contingency damages sought value	$ 30