Key Takeaways DTI is expanding internationally to reduce reliance on U.S. land markets as activity normalizes.Drilling Tools International's Eastern Hemisphere revenue rose to 14% in 2025 from 8% in 2024.DTI expects flat H1 2026 activity, with H2 improvement hinging on execution and international growth.Drilling Tools International Corporation (DTI) is reshaping its growth profile by expanding outside North America. The company’s rising international mix is helping reduce reliance on U.S. land markets as dr ...

Key Takeaways DTI's rental-led model with 65,000 tools supports cash flow in softer drilling markets.DTI generated $172M in 2025 revenue, with 80% from rentals; Q4 EBITDA rose 11% despite a sales dip.DTI guides 2026 revenue of $155-$170M and EBITDA of $35-$45M, with flat H1 and modest H2 growth.Drilling Tools International Corporation (DTI) supplies downhole tools used in horizontal and directional drilling. The company’s model is built to keep a large fleet working, supported by in-house manufacturing, ins ...

Key Takeaways Drilling Tools targets 2026 revenue of $155-$170M and EBITDA of $35-$45M after a soft first half.DTI's rental-heavy model drives cash flow, with $17-$22M FCF and an 11%-13% margin outlook.Drilling Tools' international mix rose to 14%, aiming to reduce reliance on U.S. land cycles.Drilling Tools International Corporation (DTI) is trying to prove it can be more than a U.S.-land cycle play. The core pitch is simple: a rental-led model that throws off cash, plus a growing international footprint t ...

Core Insights - Three stocks with strong momentum and buy rankings are highlighted for investors: Drilling Tools International Corporation, Ciena Corporation, and Astronics Corporation [1][2][3] Company Summaries Drilling Tools International Corporation (DTI) - DTI is an oilfield services company with a Zacks Rank of 1 - The Zacks Consensus Estimate for its current year earnings increased by 26.7% over the last 60 days - DTI's shares gained 36.5% over the last three months, while the S&P 500 declined by 1% - The company has a Momentum Score of A [1] Ciena Corporation (CIEN) - Ciena is a network technology company with a Zacks Rank of 1 - The Zacks Consensus Estimate for its current year earnings increased by 11.1% over the last 60 days - Ciena's shares gained 65.5% over the last three months, compared to the S&P 500's decline of 1% - The company has a Momentum Score of B [2] Astronics Corporation (ATRO) - Astronics is an aerospace and defense company with a Zacks Rank of 1 - The Zacks Consensus Estimate for its current year earnings increased by 6.1% over the last 60 days - Astronics' shares gained 26.5% over the last three months, while the S&P 500 declined by 1% - The company has a Momentum Score of B [3]

Core Viewpoint - Investors are evaluating Drilling Tools International Corp. (DTI) and Core Laboratories (CLB) to determine which stock offers better value opportunities in the Oil and Gas - Field Services sector [1] Valuation Metrics - DTI has a Zacks Rank of 1 (Strong Buy), indicating a positive earnings outlook, while CLB has a Zacks Rank of 3 (Hold) [3] - DTI's forward P/E ratio is 19.21, compared to CLB's forward P/E of 20.80, suggesting DTI may be undervalued [5] - DTI's PEG ratio is 2.13, while CLB's PEG ratio is significantly higher at 14.25, indicating DTI's expected earnings growth is more favorable [5] - DTI's P/B ratio stands at 1.05, whereas CLB's P/B ratio is 2.72, further supporting DTI's valuation advantage [6] - Based on these metrics, DTI holds a Value grade of B, while CLB has a Value grade of C, reinforcing DTI as the superior value option [6]

Revenue and Growth - Revenue growth of 357% from $35 million in 2012 to $160 million projected in 2025[18] - For the year ended December 31, 2025, the company derived 81% of total revenues from tool rentals and 19% from product sales, compared to 76% and 24% in 2024, respectively[161] - Total revenue for the year ended December 31, 2025, was $159.6 million, an increase of $5.2 million, or 3%, compared to 2024[174] Market Position and Operations - Market leader in North American land drilling, with active tool rentals on over 50% of working locations[18] - Expanded service centers from 3 to 15 in North America and established 11 international centers across Europe, Middle East, and Asia-Pacific[18] - The company operates from 15 locations in North America and maintains 11 international service and support centers[34] Customer and Revenue Sources - E&P operators now account for over 45% of revenue, up from less than 10% in 2014[26] - For the years ended December 31, 2025 and 2024, 27% and 28% of total revenue was earned from 2 customers, with accounts receivable from these customers at approximately $6.4 million and $6.3 million respectively[208] Industry Challenges - Demand for the company's products and services is heavily influenced by oil and gas prices, which have historically been volatile, potentially affecting capital spending by customers[45] - The cyclical nature of the oil and gas industry has led to periodic downturns, resulting in reduced demand for the company's services and downward pressure on pricing[46] - Growth in U.S. drilling activity could be constrained by equipment, labor, or pipeline capacity issues, adversely impacting demand for the company's products[48] Financial Performance and Costs - Total segment EBITDA decreased by $2.7 million, or 5%, to $50.0 million, reflecting declines in both hemispheres[174] - Corporate and other expenses decreased by $1.6 million, or 10%, to $13.9 million due to reallocation of expenses[178] - Interest expense increased by $1.6 million, or 50%, to $5.1 million due to a full year of interest on the credit facility[180] Risks and Liabilities - The company is exposed to significant liabilities from equipment failures, which could lead to claims for personal injury and environmental contamination[74][75] - The company relies on a limited number of customers, and the loss of a significant customer could materially affect its financial condition[49] - The company faces risks related to labor shortages and rising wage costs, which could hinder its ability to meet customer demands[54] Regulatory and Compliance Issues - Compliance with environmental laws and regulations may adversely affect the company's operations and financial results, particularly in the oil and gas industry[94] - The company is required to invest resources to comply with environmental regulations, which could increase operational costs and impact profitability[95] - The company anticipates ongoing legal, accounting, and compliance costs due to regulations such as the Sarbanes-Oxley Act, impacting management's focus on revenue-generating activities[115] Market and Economic Conditions - Political, regulatory, and economic disruptions in international markets could adversely affect demand for the company's products and services[81][82] - The company faces uncertainties due to global economic conditions, including inflation and geopolitical tensions, which could disrupt market stability[91] - Inflation has led to increased costs for freight, materials, and labor, although the company has managed to pass some of these costs onto customers[63] Shareholder and Capital Management - There are no current plans to pay cash dividends on Common Stock for the foreseeable future, meaning returns depend on selling shares at a higher price[125] - The company may issue additional shares of Common Stock or other equity securities without shareholder approval, which could dilute ownership interests[123] - The potential for Nasdaq to delist the Common Stock could limit trading and subject the company to additional restrictions[126] Technology and Innovation - Secured distribution rights for the RotoSteer system, which has shown strong adoption since its 2023 launch[27] - New technology in the industry may enhance competition, and the company may struggle to acquire advanced tools, impacting market share[73] Operational Performance - Monthly average rig count in the Western Hemisphere decreased by 8% from 940 in 2024 to 867 in 2025[23] - Monthly average rig count in the Eastern Hemisphere decreased by 7% from 961 in 2024 to 896 in 2025[23] - The average WTI oil price decreased by 14% to $65.46 per barrel in 2025, while the natural gas price increased by 61% to $3.53 per MMBtu[167][169] Cybersecurity and Risk Management - The company has a cybersecurity Risk Management Policy in place to identify and manage risks, but cannot assure that future incidents will not materially affect operations[134] - Cybersecurity risks are managed by a dedicated committee, with regular updates provided to the Board of Directors[144]

Financial Data and Key Metrics Changes - The company generated total rental revenues of $129.6 million and total product sales revenues of $30.1 million, totaling $159.6 million on a consolidated basis for 2025 [7] - Adjusted net income for 2025 was $3.4 million, with adjusted diluted EPS of $0.10 per share [8] - Adjusted EBITDA for 2025 was $39.3 million, and adjusted free cash flow was $19.2 million, marking a record year for free cash flow generation [12][18] - As of December 31, 2025, the company had $3.6 million in cash and cash equivalents, net debt of $42.2 million, and a net leverage ratio of 1.1x, down from 1.2x a year ago [13] Business Line Data and Key Metrics Changes - The Eastern Hemisphere operations saw a revenue growth of 78% year-over-year, contributing approximately 14% of total revenue [9] - The Western Hemisphere operations experienced a low single-digit revenue decline compared to 2024 due to softer North American drilling and completions activity [9] Market Data and Key Metrics Changes - The global rig count declined by 7% year-over-year, yet the company managed to produce resilient results and generate significant free cash flow [6] - The company anticipates a positive baseline of activity in the Middle East, with expectations for oil capacity expansion and strategic gas development [10] Company Strategy and Development Direction - The company is focused on enhancing shareholder value through disciplined capital allocation, including debt reduction and share buybacks [8][16] - The ongoing synergy program called One DTI aims to streamline workflows and enhance accountability, positioning the company for future growth [19] - The company is actively evaluating additional M&A opportunities that align with its strategic and financial objectives [19] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the momentum building across the organization and the attractive opportunities on the horizon, despite near-term softness expected in the first half of 2026 [20] - The company is prepared to navigate the ongoing conflict in the Middle East, with minimal disruption to operations reported thus far [21][23] Other Important Information - The company completed its fourth acquisition in January 2025 since going public and has focused on reducing net debt [8] - The 2026 revenue guidance is expected to be in the range of $155 million to $170 million, with adjusted EBITDA projected between $35 million and $45 million [17] Q&A Session Summary Question: What drove the strong EBITDA margin this quarter? - Management noted that the strong margin was due to a combination of reduced seasonal softness and cost reductions implemented earlier in the year [25][28] Question: What is the outlook for free cash flow and debt reduction in 2026? - Management indicated that the majority of free cash flow would likely be allocated to debt reduction, with the potential to accelerate paydowns depending on market conditions [70][71] Question: What opportunities exist in the Eastern Hemisphere, particularly in APAC? - Management highlighted ongoing opportunities in Africa and the Middle East, as well as traction gained in the Asia-Pacific region with new technologies [51] Question: How is the company positioned regarding the recent turmoil in the Middle East? - Management stated that operations have continued with minimal disruption and that the company is prepared to adapt to changing market conditions [59][60]

Financial Data and Key Metrics Changes - The company generated total rental revenues of $129.6 million and total product sales revenues of $30.1 million, totaling $159.6 million on a consolidated basis for 2025 [7] - Adjusted net income for 2025 was $3.4 million, with adjusted diluted EPS at $0.10 per share [8] - Adjusted EBITDA for 2025 was $39.3 million, and adjusted free cash flow was $19.2 million, marking a record year for free cash flow generation [8][12] - As of December 31, 2025, the company had $3.6 million in cash and cash equivalents, net debt of $42.2 million, and a net leverage ratio of 1.1 times, down from 1.2 times a year ago [13] Business Line Data and Key Metrics Changes - The Eastern Hemisphere operations saw a revenue growth of 78% year-over-year, contributing approximately 14% of total revenue [9] - Western Hemisphere operations experienced a low single-digit revenue decline compared to 2024 due to softer North American drilling and completions activity [9] Market Data and Key Metrics Changes - The global rig count declined by 7% year-over-year, yet the company managed to produce resilient results and generate significant free cash flow [6] - The company anticipates a positive baseline of activity in the Middle East, with expectations for growth driven by oil capacity expansion and strategic gas development [10] Company Strategy and Development Direction - The company is focused on enhancing shareholder value through disciplined capital allocation, including debt reduction and share buybacks [8][16] - The ongoing synergy program called One DTI aims to streamline workflows and enhance accountability, positioning the company for future growth [19] - The company is actively evaluating additional M&A opportunities that align with its strategic and financial objectives [19] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the momentum building across the organization and the potential for growth in the Eastern Hemisphere, particularly in Saudi Arabia and other international markets [20] - The company is prepared to navigate the challenges posed by the ongoing conflict in the Middle East, with minimal disruption to operations reported thus far [21][23] Other Important Information - The company completed its fourth acquisition in January 2025 since going public, reflecting its commitment to growth through strategic acquisitions [8] - The company has launched a crisis response plan to support team members in the Middle East amid the ongoing conflict [22] Q&A Session Summary Question: What drove the strong EBITDA margin this quarter? - Management indicated that the strong margin was due to a combination of reduced seasonal softness and cost reductions implemented earlier in the year [25][28] Question: What is the outlook for free cash flow and debt reduction in 2026? - Management stated that the majority of free cash flow would likely be allocated to debt reduction, with the potential to accelerate pay down depending on market conditions [70] Question: What opportunities exist in the Eastern Hemisphere, particularly in APAC? - Management highlighted opportunities in Africa and the Middle East, as well as traction gained in the Asia Pacific region with new technologies [51] Question: How is the company positioned regarding the recent turmoil in the Middle East? - Management expressed confidence in the company's ability to adapt to the situation, noting that operations have continued with minimal disruption [59][61]

Financial Data and Key Metrics Changes - Drilling Tools International (DTI) reported total rental revenues of $129.6 million and total product sales revenues of $30.1 million for 2025, resulting in consolidated revenues of $159.6 million [5] - Adjusted net income for 2025 was $3.4 million, with adjusted diluted EPS at $0.10 per share [6] - The company generated adjusted EBITDA of $39.3 million and adjusted free cash flow of $19.2 million for 2025 [6][12] - For Q4 2025, consolidated revenue was $38.5 million, with tool rental revenue at $30.4 million and product sales revenue at $8.1 million [12] Business Line Data and Key Metrics Changes - The Eastern Hemisphere operations saw a revenue growth of 78% year-over-year, contributing approximately 14% of total revenue [7][14] - Western Hemisphere operations experienced a low single-digit revenue decline compared to 2024 due to softer North American drilling and completions activity [8] Market Data and Key Metrics Changes - The global rig count declined by 7% year-over-year, yet DTI managed to produce resilient results and significant free cash flow [5] - The company anticipates a positive baseline of activity in the Middle East, with expectations for oil capacity expansion and strategic gas development [9] Company Strategy and Development Direction - DTI is focused on enhancing shareholder value through disciplined capital allocation, including debt reduction and share buybacks [6][14] - The company is actively evaluating additional M&A opportunities that align with its strategic and financial objectives [17] - DTI's strategy includes integrating operating divisions into streamlined systems to enhance efficiency and accountability [17] Management Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's foundation and commitment to operational excellence, despite expected near-term softness in the first half of 2026 [18] - The company is prepared to navigate the evolving geopolitical landscape, particularly in the Middle East, with minimal disruption to operations reported thus far [19][20] Other Important Information - DTI completed its fourth acquisition in January 2025 since going public and reduced net debt by over $11 million in the second half of 2025 [6] - The company expects 2026 revenue to be in the range of $155 million to $170 million, with adjusted EBITDA projected between $35 million and $45 million [15] Q&A Session Summary Question: What drove the strong EBITDA margin this quarter? - Management noted that the strong margin was due to a combination of reduced seasonal softness and cost reductions implemented earlier in the year [23][26] Question: What is the outlook for M&A opportunities? - Management confirmed a healthy pipeline of M&A opportunities and emphasized a focus on the most accretive and strategic options [43] Question: What are the opportunities in the Eastern Hemisphere? - Management highlighted growth opportunities in Africa and the Middle East, despite ongoing conflicts, and noted the traction of new technologies in the Asia Pacific region [49] Question: How is the company positioned regarding the recent turmoil in the Middle East? - Management stated that operations are currently minimally disrupted and that the company is prepared to adapt to changing market conditions [56][60]

NASDAQ: DTI Industry, Market Data and Partnerships: In this presentation, DTI relies on and refers to certain information and statistics regarding the markets and industries in which DTI competes. Such information and statistics are based on management's estimates and/or obtained from third-party sources, including reports by market research firms and company filings. While DTI believes such third-party information is reliable, there can be no assurance as to the accuracy or completeness of the indicated in ...