36 slides from Dirtt Environmental Solutions's proxy contest presentation, Mar 29, 2022
Slide 1: Investor presentation concerning DIRTT Environmental Solutions Ltd.
22NW 22NW F UND , LP Investor presentation concerning DIRTT Environmental Solutions Ltd. March 2022
Slide 2: Table of Contents
2 22NW • Table of Contents – Executive Summary – Background to the Solicitation – The Case for Change at DIRTT – 22NW’s Outstanding Nominees – Transition Plan
Slide 3: Executive Summary
3 22NW • 22 NW is a Seattle - based investment manager founded in 2015 . We focus on long duration capital and make multi - year investments in undervalued securities, often in turnaround situations . We currently own approximately 18 . 9 % of DIRTT Environmental Solutions Ltd . ’s (“ DIRTT ” or the
Slide 4: Background to the Solicitation
4 22NW Background to the Solicitation
Slide 5: Background to the Solicitation: DIRTT's Shareholder Unfriendly Board
5 22NW Background to the Solicitation: DIRTT’s Shareholder Unfriendly Board • 22 NW is the Company’s largest shareholder, owning approximately 18 . 9 % of DIRTT’s stock . In August 2021 , we first approached the Board to discuss obtaining shareholder representation of one board seat . We believed th
Slide 6: Background to the Solicitation: 22NW is Forced to Requisition a Meeting
6 22NW Background to the Solicitation: 22NW is Forced to Requisition a Meeting • Throughout the fall of 2021 , 22 NW was patient and attempted to work collaboratively with the Board to respect its process, until DIRTT pulled long - term guidance, oversaw additional destruction of value with a second
Slide 7: Background to the Solicitation: Board Ignores Shareholder Votes
7 22NW Background to the Solicitation: Board Ignores Shareholder Votes • Surprisingly, the Board did not contact 22 NW after we delivered the Requisition and instead continued to pursue a defensive entrenchment campaign that apparently first began in August 2021 , before we even requested Board repr
Slide 8: The Board's Frivolous and Futile Complaint to the Alberta Securities Commission
8 22NW Background to the Solicitation: The Board’s Apparently Frivolous and Futile Complaint to the Alberta Securities Commission • As DIRTT’s Chairman, we contend that Mr . Lillibridge must take ultimate responsibility for submitting the wasteful complaint to the ASC against 22 NW and DIRTT’s secon
Slide 9: The Case for Change at DIRTT
9 22NW The Case for Change at DIRTT
Slide 10: The Case for Change at DIRTT: Four CEOs in Four Years
10 22NW • We believe DIRTT’s legacy Board members oversaw and were responsible for the value - destructive situation involving Mogens Smed . • Through their contributions to the CEO Search Committee in 2018 , as well as their roles on the Nomination & Governance and Compensation Committees, the lega
Slide 11: The Case for Change at DIRTT: Freefalling Revenues and Profit
11 22NW (all figures quarterly) The Case for Change at DIRTT: Freefalling Revenues and Profit $14,116 $4,450 Sep-17 Dec-21 $67,218 $41,317 Sep-17 Dec-21 DIRTT total revenues 1 DIRTT healthcare revenues 1 1 Company SEDAR and SEC filings. Values in $thousand USD. CAD to USD converted at 1.25 CAD for 1
Slide 12: The Case for Change at DIRTT: TSR Severely Underperforming
12 22NW The Case for Change at DIRTT: TSR Severely Underperforming DRT.TO stock has severely underperformed its self - selected peer group and the broader market indices over all relevant time periods. 1 As of 3/18/22… 6 month 1 year 2 year 3 year Since Todd's addition Since Denise's addition DIRTT
Slide 13: The Case for Change at DIRTT: Misaligned Compensation Packages
13 22NW • We believe DIRTT’s executive compensation packages are not in line with market standards and do not properly align management’s interests with DIRTT’s performance . • Mr . Lillibridge and Ms . Karkkainen were members of the Compensation Committee from 2018 to 2021 and oversaw the establish
Slide 14: The Case for Change at DIRTT: Apparent Lack of Responsibility
14 22NW The Case for Change at DIRTT: Apparent Lack of Responsibility • The Board responded to 22 NW’s good faith proposal for three director seats in December 2021 by publicly and falsely accusing 22 NW and another large shareholder of illegally operating as an undisclosed group and filing an appli
Slide 15: The Case for Change at DIRTT: Difficulties with Regulators
15 22NW The Case for Change at DIRTT: Difficulties with Regulators • In connection with the Board’s complaint against 22 NW, staff of the ASC commented as follows in its submission to the ASC panel : • “ While Staff unequivocally defers to the Panel’s assessment of the merits of the Applicant’s [DIR
Slide 16: The Case for Change at DIRTT: Difficulties with Regulators
16 22NW The Case for Change at DIRTT: Difficulties with Regulators • In rejecting the Board’s complaint against 22 NW, the ASC concluded as follows : • “ Lastly, we express our dismay that this Application was brought at all . There was a paucity of circumstantial evidence that fell well short of es
Slide 17: 22NW's Outstanding Nominees
17 22NW 22NW’s Outstanding Nominees
Slide 18: 22NW's Outstanding Nominees
18 22NW Prefabricated Construction Architecture / Design Commercial Real Estate Financial Executive Leadership Other Public Board / Industry Investor Ken Sanders x x x Mary Garden x x x x x Scott Robinson x x x x x Douglas Edwards x x Scott Ryan x x Cory Mitchell x x Aron English x x x 22NW’s Outsta
Slide 19: 22NW's Outstanding Nominees: Ken Sanders
19 22NW Prefabricated Construction Architecture / Design Commercial Real Estate Financial Executive Leadership Other Public Board / Industry Investor Ken Sanders x x x 22NW’s Outstanding Nominees: Ken Sanders • Ken Sanders, FAIA, brings valuable architecture and engineering experience that the Compa
Slide 20: 22NW's Outstanding Nominees: Mary Garden
20 22NW Prefabricated Construction Architecture / Design Commercial Real Estate Financial Executive Leadership Other Public Board / Industry Investor Mary Garden x x x x x 22NW’s Outstanding Nominees: Mary Garden • Mary Garden has a long history of value creation as a fiduciary . Most recently mergi
Slide 21: 22NW's Outstanding Nominees: Scott Robinson
21 22NW 22NW’s Outstanding Nominees: Scott Robinson • Scott Robinson is a successful real estate investor with extensive experience in the areas of real estate finance and construction . Mr . Robinson has C - suite experience in the modular construction industry as well as public board experience in
Slide 22: 22NW's Outstanding Nominees: Douglas Edwards
22 22NW 22NW’s Outstanding Nominees: Douglas Edwards • Douglas Edwards is a seasoned executive, with extensive experience serving in leadership positions in the health insurance, real estate and telecommunications sectors . Mr . Edwards is currently Senior Vice President of Enterprise Associate & Bu
Slide 23: 22NW's Outstanding Nominees: Scott Ryan
23 22NW 22NW’s Outstanding Nominees: Scott Ryan • Scott Ryan is a lawyer and seasoned arbiter specializing in construction disputes . He is currently the founding partner of FR Law Group , a litigation and commercial transaction firm specializing in development, construction, corporate compliance, r
Slide 24: 22NW's Outstanding Nominees: Cory Mitchell, CFA
24 22NW 22NW’s Outstanding Nominees: Cory Mitchell, CFA • Cory Mitchell has been a professional investor since 2012 and has been with 22 NW since 2018 . He began his investment career as a research analyst for D . A . Davidson covering exclusively engineering and construction as well as building mat
Slide 25: 22NW's Outstanding Nominees: Aron English, CFA
25 22NW 22NW’s Outstanding Nominees: Aron English, CFA • Aron English has been a professional investor since 2006 and founded 22 NW in 2015 . He has extensive experience evaluating businesses, strategic plans, and operating results across all industries in the US and Canada . 22 NW has long - term c
Slide 26: Transition Plan
26 22NW Transition Plan
Slide 27: Transition Plan: First Days
27 22NW Transition Plan: First 90 Days • 22 NW’s nominees for election as directors have regularly met to formulate their action plan if elected at the Meeting . • The first element of the plan is to embark immediately on a comprehensive due diligence review, envisioned to be performed from DIRTT’s
Slide 28: Transition Plan: Grow DIRTT's Revenue
28 22NW 22NW’s Transition Plan: Grow DIRTT’s Revenue • 22 NW pushed management to disclose greater visibility and key performance i ndicators on its sales pipeline . We believe recent disclosures clearly show how ineffective the Board has been at generating revenue growth . • We have identified mult
Slide 29: Transition Plan: Listening to Key Stakeholders
29 22NW Transition Plan: Listening to Key Stakeholders • In our view, the Board has failed to appropriately motivate DIRTT’s employee base and retain key talent . 22 NW has identified several cultural problems at DIRTT . E xtensive interviews with DIRTT’s employees will be conducted to correct addit
Slide 30: Transition Plan: Improve DIRTT's ESG Score
30 22NW Transition Plan: Improve DIRTT’s ESG Score • While improving DIRTT’s operations will be the highest priority of our Board nominees, there are additional important steps that can be taken to improve DIRTT’s valuation and trading dynamics . We believe the Board’s lack of capital markets experi
Slide 31: Transition Plan: The Risk is the Status Quo
31 22NW Transition Plan: The Risk is the Status Quo • At the core, we believe the Board has severely mismanaged DIRTT and impaired its balance sheet . • Mr . Lillibridge fired almost a fifth of DIRTT’s work force just days into the job despite having no experience running a company comparable to DIR
Slide 32: Source links to press releases
32 22NW DIRTT on 11/17/21: https://www.dirtt.com/news/2021 - dirtt - announces - receipt - of - shareholder - meeting - requisition/ DIRTT 12/7/21: https://www.dirtt.com/news/2021 - dirtt - announces - adoption - of - shareholder - rights - plan/ DIRTT 12/7/21: https://www.dirtt.com/news/2021 - dirt
Slide 33: Source links to press releases and filings
33 22NW DIRTT on 1/18/22: https://www.dirtt.com/news/2022 - dirtt - announces - ceo - transition/ DIRTT on 1/20/22: https://www.dirtt.com/news/2022 - dirtt - provides - updates - regarding - conduct - of - activist/ DIRTT on 2/22/22: https://www.dirtt.com/news/2022 - dirtt - announces - multiple - i
Slide 34: Disclaimer – Important Information
34 22NW Disclaimer – Important Information The materials contained herein (the “Materials”) represent the opinions of 22 NW Fund, LP and the other participants named in its proxy solicitation (collectively, “ 22 NW”) and are based on publicly available information with respect to DIRTT Environmental
Slide 35: Disclaimer – Continued
35 22NW Disclaimer – Continued The Materials contain forward - looking statements . All statements contained herein that are not clearly historical in nature or that necessarily depend on future events are forward - looking, and the words “anticipate,” “believe,” “expect,” “potential,” “opportunity,
Slide 36: Contact
36 22NW www.englishcap.com info@englishcap.com