Thank you for standing by. This is your conference operator. Welcome to the DIRTT Environmental Solutions second quarter 2024 financial results conference call. As a reminder, all participants are in listen-only mode, and the conference is being recorded. I would now like to turn the conference over to Shauna Mason, Director of Corporate Affairs. Please go ahead.
Thank you, operator, and good morning, everyone. Welcome to today's call to discuss DIRTT's second quarter 2024 results. Joining me on the call today will be Benjamin Urban, CEO, and Fareeha Khan, CFO. Today's call will include forward-looking statements within the meaning of applicable Canadian and United States securities laws. These statements are based on the company's current intent, expectations, and projections. They are not guarantees of future performance. In addition, this call will reference non-GAAP results, excluding special items. Please reference our Form 10-Q, as filed on August 7, 2024, with the Securities and Exchange Commission, or SEC, and other reports and filings with the SEC for information regarding forward-looking statements and reconciliations of non-GAAP results to GAAP results. I will also remind you that this webcast is being recorded, and a replay will be available early next week. I now turn the call over to Benjamin.
Thank you, Shauna, and good morning, everyone. This quarter marks DIRTT's fifth consecutive positive adjusted EBITDA quarter since the leadership change in 2022. Our 12-month pipeline has grown 20% year-on-year, and our full pipeline has grown even more. I'm confident in our strategic direction and continued progress in support of our growth. We have a strong team in place and are focused on leveraging our custom standard offering on a 2-week standard lead time with price certainty. On today's call, we'll take you through our financial results for Q2, some key positive developments that occurred last week, and then I will highlight some key business and operational updates. I'll now hand it over to Fareeha to discuss the financials.
Thank you, Benjamin, and good morning, all. Please note that we have issued a press release discussing our second quarter results, which is available on our website. We have also provided additional analysis in a supplemental presentation, which is now posted on our website. Revenues for the second quarter were $41.2 million, down 8% compared to the same period in 2023. The decrease in revenue was largely due to two healthcare projects and one key education project that occurred in 2023 and did not repeat in 2024, as well as certain typical construction schedule-related project start delays or pushouts that are still anticipated to order within the year. Healthcare sales tend to be larger individual projects and are subject to timing due to a typically longer sales cycle, resulting in a variability in sales levels. On gross profits, we continue to maintain strong margins.
Compared to the second quarter of 2023, gross profit margin increased from 32.5%- 37.3% in the second quarter of 2024. Adjusted gross profit margin, which excludes the impact of depreciation, increased from 36.2% in the second quarter of 2023 to 39.4% in the second quarter of 2024. Consistent with what we have shared before, the improved margin is primarily due to improved material optimization and cost reduction initiatives. As Benjamin noted, our twelve-month forward sales pipeline, excluding leads at July 1, 2024, was $263 million, growing 20% compared to $220 million at July 1, 2023. We regularly scrutinize our pipeline and are pleased to see our increased pipeline converting into revenue growth.
Operating expenses for the second quarter were $14.4 million, a $2.5 million or 15% decrease from the same quarter last year. This is in line with our initiatives to reduce costs in the business. Adjusted EBITDA for the second quarter was $3.2 million, an improvement of $1.3 million from a $1.9 million Adjusted EBITDA during the second quarter of 2023. This improvement is driven by the reduced operating expenses just described. As Benjamin mentioned, this is now DIRTT's fifth consecutive quarter of positive Adjusted EBITDA, and we are pleased with the success of operational efficiencies implemented over the past two years. Our net income after tax for the second quarter of 2024 was $0.6 million, compared to a $2.2 million profit for the same period of 2023.
Apart from the Adjusted EBITDA gains discussed above, we benefited from a $0.8 million increase in gross profit, $2.5 million decrease in operating expenses, $0.4 million higher interest income, $0.3 million decreased interest expense, and a $1 million increase in foreign exchange gain due to the devaluing Canadian dollar. I will now turn to our balance sheet and discuss some Q2 events and last week's press release. The quarter finished with $39.5 million in unrestricted cash, up $14.8 million from $24.8 million at December 31, 2023, and up $0.5 million from March 31, 2024. Cash provided by operations was $1.6 million, while cash used in investing activities, mainly capital expenditures, was $0.9 million for the quarter. Our working capital continues to improve.
Net working capital at the end of the quarter was $47.6 million, up $17.8 million from December 2023, primarily due to net proceeds of $21.3 million from the rights offering and improved operational results, offset by the $5.2 million repayment on debt principal under the issuer bid. Liquidity, which includes $10.6 million availability under our ABL credit facility, was $50.1 million as of June 30, 2024. We have not drawn on the ABL facility to date. This concludes our section on the Q2 results. I would like to update our listeners on a press release we issued last week. On August 2, 2024, we announced three agreements.
First, we entered into an agreement with 22NW Fund LP, or 22NW, DIRTT's largest shareholder, to purchase for cancellation approximately CAD 32.6 million of DIRTT debentures, which are due in January and December 2026, for an aggregate purchase price of approximately CAD 22 million, inclusive of a cash payment for accrued and unpaid interest up to the date of August 2. Through this repurchase, DIRTT will record a gain on extinguishment of debt of approximately CAD 10.5 million in the third quarter. Subsequent to this transaction, DIRTT's long-term debt has reduced from $56.1 million at December 31, 2023, to $24 million, and our annual interest expense will halve to about $1.5 million.
We believe this transaction puts DIRTT in a position to achieve a debt-to-adjusted EBITDA ratio of 1x or lower in 2025, signaling DIRTT's financial strength. DIRTT will continue further future options on either paying off or refinancing its remaining January 2026 and December 2026 debentures when they come due. On August 2, 2024, the board of directors also adopted an amended and restated shareholder rights plan, which supersedes the plan adopted on March 22, 2024. The company also entered into a support and standstill agreement with 22NW, DIRTT's largest shareholder, and WWT Opportunity #1 LLC, DIRTT's second-largest shareholder. The support agreement replaces the previously announced support and standstill agreement entered into with 22NW on March 22, 2024.
For more details on these agreements, please refer to our press release dated August 2, 2024. Looking forward, we have provided forecasted revenue and Adjusted EBITDA figures for the remainder of 2024 and 2025 in our outlook. Details, as well as our cautionary advisory on forward-looking statements, can be found in the Outlook section of our press release and the 10-Q. I will now turn it back to Benjamin to discuss DIRTT's business updates.
Thank you, Fareeha. As a result of our continued focus on revenue growth, we are pleased to highlight several new clients, including TIAA, Fluor, and Chevron Phillips. Clients are also taking occupancy and celebrating their new spaces with two marquee DIRTT projects last quarter in the United States: Google's New York headquarters and Visa's Mission Rock office, which both pushed innovation in construction, utilizing nearly all of the solutions in our product offerings. In the supplemental presentation, which is now posted on our website, we have provided a link to videos, including the Google headquarters. We also have a strong pipeline of new projects with clients including Brown-Forman, Samsung, Cy-Fair Independent School District, Bank of America, and Fisher Phillips, to name a few. Our construction partner base is healthy and continues to grow.
We added two new large partners last quarter in the Midwest with Intereum and Interior Investments, both now part of a larger conglomerate. We are projecting further expansion into other underpenetrated markets throughout 2024 with new partners. Our commercial diversification strategy has also already begun showing returns, with immediate pipeline growth in 2024 and 2025. One example of success through this diversification has allowed us to secure a three-year MOU with one of the largest private nonprofit healthcare organizations in the United States. Our strategy also includes expansion into new markets for DIRTT through other prefabrication and modular contractors. An example is with Integrity Built, an Oklahoma specialty contractor who provides innovative commercial prefabricated bathroom pods, structural panels, and now DIRTT as part of their solutions.
These prefabricators are also able to augment resources and add expertise to our national partner network to pursue unique and challenging projects together. DIRTT is operating in a multi-billion dollar interior construction industry, with end customers looking for ways to save money, save time, and meet their sustainability goals. We believe our business proposition of a better, more sustainable way to build is becoming even more relevant as prioritizing economic, social, and governance issues becomes a focus for companies across North America. This need for sustainable construction was ever present during the Canadian Climate Investor Conference that DIRTT presented at in Toronto last quarter. Over time, our goal is for DIRTT to gain market share and outpace the growth of the construction industry. We continue to innovate by identifying the needs of the market and our customers through collaborating with world-class firms to solve industry problems.
This was clear and present in Q2. At ConneX, our flagship event in June, we transformed our DIRTT Experience Center in Chicago with new and improved products throughout the space, none more anticipated than the Cove. The Cove is DIRTT's solution to the problems faced in emergency departments across the U.S. At just one-third the size of a typical treatment room, the Cove increases capacity and efficiency without compromising the patient experience. This groundbreaking innovation is just one example of how DIRTT continually evolves with the market by listening to needs and developing best-in-class solutions. Other product highlights recently introduced include the double-pane version of our sleek Spectra door, curved glass corners as a standard, a telescoping wall for optimal space division and event flexibility, and a Class A timber solution that reduces restrictions across building types. Technology remains a key component of both our innovation and growth strategy.
We are continually looking to diversify our sales channels, and in Q2, we achieved this for our casework offering through our ICE software platform. This offering is highly complementary when sold with other DIRTT products in a full solution or as a standalone short-cycle sale. So our team focused on building out the casework catalog and better automating the process for both our distribution partners and operations team. More than 120 of the most frequently ordered casework configurations were added in Q2, which will support increased sales. We have also leveraged our software to drive accuracy and efficiency in procurement, planning, and reporting. Our software team has been hard at work on modernizing the ICE platform. The new ICE Manager and purpose-built design editor application was released earlier this week.
The modernization project will streamline the ICE user experience, eliminating the need to download and install ICE and product catalogs separately after every new release. Starting in August, the new ICE Manager will handle this in the background, eliminating disruption to workflows and enabling better project management. From an operational standpoint, we continue on our journey to zero defects, zero missed deliveries, and 0 recordable incidents. For Q2 2024, we reduced our external defects per $1 million of revenue to 10.5, a 7% improvement from Q2 2023, and an 11% improvement from last quarter. Our on-time performance for Q2 2024 was 99.7%, which is the highest in DIRTT's history. Our total recordable incident frequency at the end of Q2 2024 was 0.99, which is 78% below the industry average.
Safety excellence is a core value, and we take pride in maintaining our position as a world-class leader in safety performance. Additionally, with efficient supply chain management, we have reduced DIRTT inventory significantly by 23.2% from Q2 2023, and current inventory valuations are the lowest in the past five years. DIRTT has significant untapped manufacturing capacity that can serve a multiple of our current revenue base without major capital investment, and we have successfully finished documenting our playbook to operate in higher revenue levels. With our costs streamlined and a fixed cost leverage, DIRTT's margins will benefit exponentially as we grow revenue. And finally, we continue to invest in our incredibly talented employees as they are a key pillar of our success. DIRTT is proud to have a long average employee tenure, so we want to nurture and develop our talent into leaders.
In June, we initiated a series of comprehensive leadership workshops to equip our team with the skills and insights necessary to drive our strategic initiatives forward. Our next session is scheduled for November, ensuring continuous growth and development across our leadership ranks. We continue to champion diversity and inclusiveness across our staff. A standout DE&I initiative is our long-standing partnership with Chrysalis from the Alberta Society for Citizens with Disabilities. Chrysalis is dedicated to providing personalized services tailored to the needs of individuals with disabilities, promoting their growth and fostering community inclusion. Recently, we had the privilege of attending the Dream Big Gala, hosted by Chrysalis, a heartwarming event celebrating their impactful work. We are proud to have employed and supported a group of employees from Chrysalis at our timber and metal factory, some since 2010, and to sponsor organizations that champion diversity and empower individuals.
We are also proud to announce the launch of a new volunteer initiative for our Calgary employees. In July, the team embarked on our first volunteer project, assisting less fortunate community members. This program fosters community engagement and allows the team to offer their time and skills to support various charitable activities. By fostering volunteerism, we aim to make a meaningful impact on our community and demonstrate our commitment to corporate social responsibility. With respect to the Falkbuilt litigation, we continue to see positive acceleration in both the United States and Canada lawsuits, as we have strong confidence in the outcome of our cases. In the U.S., following motion practice and over defendant's initial objection, the court entered a scheduling order providing for discovery to end in 2025 and a pretrial in the fall of 2025. Discovery is proceeding consistent with the order.
In Canada, as a potential alternative to the summary judgment application on liability, DIRTT recently took advantage of a new pilot project introduced by the Alberta Court of King's Bench to seek a full trial on both liability and damages in an effort to expedite the matter to conclusion. That application is scheduled for August thirtieth, 2024. These are just some of the highlights that are fueling our continued momentum. We are excited about our trajectory and the impact we are making on the construction industry. Thank you all for joining us today.