Company Overview - Drilling Tools International Corp. (DTI) is a global oilfield services company specializing in the design, engineering, manufacturing, and rental of tools for horizontal and directional drilling operations [1][3] - The company has been operational since 1984 and has 16 service and support centers in North America, along with 11 international centers in the EMEA and APAC regions [3] Upcoming Financial Results - DTI plans to report its first quarter financial results for 2025 on May 14, 2025, prior to a live conference call [1] - The conference call will be accessible via phone and webcast, starting at 10:00 a.m. Eastern Time [2] Conference Call Details - Participants can join the call by dialing 1-201-389-0869 or through the webcast link provided [2] - A replay of the call will be available until May 21, 2025, and an archive of the webcast will be accessible for 90 days after the event [2]

Financial Data and Key Metrics Changes - In 2024, the company achieved consolidated revenue of $154.4 million, with tool rental revenues of $117.9 million and product sales of $36.5 million, reflecting strong revenue growth despite industry challenges [12][11] - Adjusted net income for 2024 was $10.1 million, with adjusted diluted EPS at $0.31 per share, exceeding guidance [12][11] - Adjusted EBITDA for 2024 was $40.1 million, and adjusted free cash flow was $17.2 million, more than double the previous year's figure [12][11] Business Line Data and Key Metrics Changes - Fourth quarter consolidated revenue was $39.8 million, with tool rental revenue at approximately $31.5 million and product sales revenue at $8.3 million [24] - Tool rental activity saw a surge due to new technologies gaining traction, while product sales were impacted by reduced activity in Saudi Arabia and PEMEX [62][64] - The company experienced a 13% year-over-year increase in fourth quarter revenue despite a 4% global rig count decline [25] Market Data and Key Metrics Changes - The company noted softness in rig counts in the US land, US Gulf, and Middle Eastern markets, impacting overall performance [11] - Despite the challenges, the company maintained a diversified geographic footprint, which contributed to revenue resilience [25] Company Strategy and Development Direction - The company aims to be the premier drilling tools rental solutions provider, focusing on international expansion and technology ownership through acquisitions [14][15] - In 2024, the company acquired three companies and closed a fourth acquisition in early 2025, enhancing its geographical footprint and technological capabilities [15][37] - The company plans to report results in two segments, Eastern Hemisphere and Western Hemisphere, starting in 2025 to better align operations with growth objectives [33][35] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the medium to long-term natural gas demand outlook, particularly with new LNG capacity expected to come online in 2025 and 2026 [19] - The company is well-positioned to capitalize on energy market recoveries and believes there are meaningful consolidation opportunities in the sector [18][39] - Management highlighted a commitment to safety, achieving a 6.5% improvement year-over-year in safety metrics [20][21] Other Important Information - The company plans to maintain a focus on M&A opportunities while managing its balance sheet effectively, with a net debt of approximately $47 million at year-end [50][52] - The company expects 2025 revenue to range between $163 million and $183 million, with adjusted EBITDA projected between $40 million and $50 million [32] Q&A Session Summary Question: Current trends in the M&A market - Management indicated a steady pipeline of opportunities and expressed optimism about the number of potential deals in the market [46][48] Question: Importance of deleveraging this year - Management stated that while they are mindful of the balance sheet, there is no immediate urgency to pay down debt at the expense of M&A opportunities [50][56] Question: Tool rental growth despite flat US land drilling - Management attributed the growth in tool rentals to new technologies gaining traction and a general increase in activity, despite challenges in specific markets [61][64] Question: Higher CapEx expectations for 2025 - Management explained that the increase in CapEx is primarily related to growth initiatives in the Eastern Hemisphere following recent acquisitions [65][67] Question: M&A opportunities in Eastern vs. Western Hemisphere - Management confirmed that they are actively pursuing opportunities in both hemispheres and are evaluating potential deals as they arise [79][81] Question: Impact of tariffs on international operations - Management noted that a diversified supplier and manufacturing base are effective strategies to mitigate tariff risks, and they are monitoring the situation closely [84][86]

Revenue Growth and Financial Performance - Revenue growth of 340% from $35 million in 2012 to $154 million in 2024[17] - For the years ended December 31, 2024 and 2023, the company generated revenue from tool rentals and product sales of $154.4 million and $152.0 million, respectively, with a net income of $3.0 million and $14.7 million[187] - The accumulated deficit as of December 31, 2024 and 2023 was $3.6 million and $6.3 million, respectively[187] - The company anticipates total costs of tool rental and product sales revenue to increase in absolute dollars, corresponding to revenue growth and headcount increases[211] Business Segments and Contributions - Directional Tool Rentals (DTR) division accounted for approximately 50% of 2024 revenue, with a fleet of over 23,000 tools[17] - Premium Tools Division (PTD) contributed approximately 17% to 2024 revenue, with a fleet of about 1,000,000 feet of drill pipe[19] - Wellbore Optimization Tools (WOT) division represented approximately 21% of 2024 revenue, focusing on tools that enhance drilling efficiency[19] - New acquisitions, including Casing Technologies Group Limited and Superior Drilling Products, accounted for approximately 10% of total revenue in 2024[20] Market Position and Customer Base - Market share in North American land drilling significantly increased, with active tool rentals on more than 50% of working locations[17] - Percentage of revenue from exploration and production (E&P) operators grew from less than 10% in 2014 to over 45% in 2024[26] - The customer base includes diversified OSCs (46% of 2024 revenue), E&P operators (48% of 2024 revenue), and oil and gas equipment manufacturers (6% of 2024 revenue)[31] Operational Expansion and Strategy - Company expanded service and support centers from 3 to 16 in North America and established 11 additional international centers[17] - The company expanded its international operations from 4 to 11 service and support centers through 2 acquisitions in 2024, aiming to increase revenue from outside North America[28] - The company aims to maximize profitability through strategic acquisitions and partnerships with leading drilling tool producers[25] Safety and Compliance - The total recordable incident rate improved from 2.3 in 2018 to 1.15 in 2024, indicating a strong commitment to employee safety[34] - Compliance with various domestic and international regulations poses risks that could adversely impact business operations and financial condition[106] Risks and Challenges - The company faces risks related to dependence on a small number of customers and potential challenges in obtaining necessary permits for operations[41] - The company experienced a significant reliance on a small number of customers, with 28% and 39% of total revenue coming from its two largest customers in 2024 and 2023, respectively[61] - The company is dependent on the oil and gas industry, which is influenced by crude oil and natural gas prices, and any downturn in this sector could adversely affect demand for its products and services[56] - The company may face challenges in sourcing tools and equipment due to supply chain disruptions and rising costs, which could impact its operational efficiency[74] Financial Management and Capital Structure - The company has broad discretion over its cash usage, which may not align with shareholder interests, and there are no current plans to pay cash dividends[53] - The company may incur additional indebtedness to execute its long-term growth strategy, which could reduce profitability[98] - Future capital needs may require the sale of additional equity or debt securities, potentially diluting existing shareholders[140] Market and Economic Conditions - The cyclical nature of the oil and gas industry may lead to periodic downturns, negatively impacting the company's business and financial condition[58] - Rising international tariffs could materially and adversely affect the company's business and results of operations, particularly in trade with China, Mexico, and Canada[112] - Increased regulatory scrutiny regarding greenhouse gas emissions and climate change could negatively impact demand for the company's products and services[116] Cybersecurity and IT Risks - The company relies on its IT systems, particularly COMPASS, for efficient operations, making it vulnerable to cyberattacks and IT failures[101] - Cybersecurity incidents could damage the company's reputation, disrupt operations, and impact revenues[173] - The company has a cybersecurity Risk Management Policy in place to identify and manage cybersecurity risks[162] Management and Governance - The management team has significant industry experience, with the CEO having a career in the oil and gas sector since 1979, contributing to the company's competitive advantage[29] - Past performance of the management team is not indicative of future performance, and historical results should not be relied upon for future investment decisions[149]

Core Insights - Drilling Tools International Corp. (DTI) reported quarterly earnings of $0.02 per share, exceeding the Zacks Consensus Estimate of $0.01 per share, but down from $0.13 per share a year ago, indicating a 84.6% year-over-year decline [1] - The company achieved an earnings surprise of 100% for the quarter, following a previous surprise of 133.33% when it reported earnings of $0.14 per share against an expectation of $0.06 per share [1][2] - DTI's revenues for the quarter ended December 2024 were $39.85 million, surpassing the Zacks Consensus Estimate by 0.63% and reflecting a year-over-year increase from $35.19 million [2] Earnings Performance - Over the last four quarters, DTI has surpassed consensus EPS estimates two times [2] - The current consensus EPS estimate for the upcoming quarter is $0.08, with expected revenues of $40.95 million, while the estimate for the current fiscal year is $0.41 on revenues of $171.79 million [7] Market Position - DTI shares have declined approximately 13.2% since the beginning of the year, contrasting with the S&P 500's decline of 4.8% [3] - The Zacks Industry Rank for Oil and Gas - Field Services, to which DTI belongs, is currently in the top 31% of over 250 Zacks industries, indicating a favorable industry outlook [8] Future Outlook - The sustainability of DTI's stock price movement will largely depend on management's commentary during the earnings call and the trends in earnings estimate revisions [3][4] - The current estimate revisions trend for DTI is mixed, resulting in a Zacks Rank 3 (Hold), suggesting that the shares are expected to perform in line with the market in the near future [6]

Revenue Performance - For the full year 2024, Drilling Tools International Corp. generated total consolidated revenue of $154.4 million, with tool rental revenue of approximately $117.9 million and product sales revenue totaling $36.5 million, representing a 1.6% increase in total revenue compared to 2023[3]. - In Q4 2024, total consolidated revenue was $39.8 million, with tool rental revenue of approximately $31.5 million and product sales revenue of $8.3 million, showing a 13.5% increase in total revenue compared to Q4 2023[4]. - The company expects consolidated revenue for 2025 to be between $163 million and $183 million, with adjusted EBITDA projected between $40 million and $50 million, reflecting anticipated growth in international revenue[6]. - Estimated revenue for the twelve months ending December 31, 2025, is projected to be between $163,000,000 and $183,000,000[38]. Profitability and Income - The company reported a net income of $3.0 million for 2024, down from $14.7 million in 2023, resulting in diluted EPS of $0.09 compared to $0.59 in the previous year[3]. - DTI's comprehensive income for 2024 was $1.4 million, significantly lower than the $14.6 million reported in 2023, reflecting the impact of foreign currency translation adjustments[13]. - Net income for 2024 was $3,014 million, a decrease of 79.6% compared to $14,748 million in 2023[19]. - For the three months ended December 31, 2024, net loss was $1,345,000 compared to a net income of $3,823,000 in the same period of 2023[30]. - Adjusted Net Income for the three months ended December 31, 2024, was $600,000, a decrease of 84.4% from $3,840,000 in 2023[36]. - Adjusted Basic earnings per share for the year ended December 31, 2024, was $0.32, down from $0.88 in 2023[36]. Operational Performance - Adjusted EBITDA for 2024 was $40.1 million, with an adjusted free cash flow of $17.2 million, indicating a strong operational performance despite market challenges[3]. - Adjusted EBITDA is utilized to evaluate operating performance, excluding non-recurring items and reflecting ongoing business performance[22]. - Adjusted EBITDA for the year ended December 31, 2024, was $40,101,000, down 21.5% from $51,042,000 in 2023[30]. - Adjusted Free Cash Flow for the year ended December 31, 2024, increased to $17,209,000 from $7,292,000 in 2023, representing a 135.5% increase[33]. - The adjusted EBITDA margin for 2025 is expected to be between 25% and 27%, demonstrating a focus on maintaining profitability amid revenue growth[6]. Assets and Liabilities - Total assets increased to $222,431 million in 2024 from $132,498 million in 2023, representing a 67.8% growth[17]. - Total liabilities rose to $102,472 million in 2024, up from $43,808 million in 2023, marking an increase of 133.5%[17]. - As of December 31, 2024, DTI had approximately $6.2 million in cash and cash equivalents and net debt of $47.6 million, indicating a manageable debt level relative to its cash position[3]. - Cash flows from operating activities decreased to $6,058 million in 2024 from $23,334 million in 2023, a decline of 74.0%[19]. - Total shareholders' equity increased to $119,959 million in 2024 from $88,690 million in 2023, reflecting a growth of 35.3%[17]. Strategic Initiatives - DTI's CEO highlighted the success of their acquisition strategy, which included companies like Superior Drilling Products and Deep Casing Tools, positioning the company for future growth despite a flat market forecast[5]. - The company is actively pursuing additional acquisition targets to enhance scale, talent, and technology, aiming for geographic expansion and increased market presence[5]. - The acquisition of a business resulted in a cash outflow of $47,258 million in 2024, indicating a strategic expansion effort[19]. Capital Expenditures and Expenses - Gross capital expenditures for the twelve months ending December 31, 2025, are estimated to be between $(23,000,000) and $(29,000,000)[39]. - Transaction expenses for the year ended December 31, 2024, were $7,036,000, an increase from $5,979,000 in 2023[30]. - The company incurred cash paid for interest of $2,673 million in 2024, compared to $1,174 million in 2023, an increase of 127.6%[19]. - Proceeds from the revolving line of credit amounted to $38,618 million in 2024, compared to $73,050 million in 2023, indicating a decrease of 47.2%[19].

Core Insights - Drilling Tools International Corp. (DTI) anticipates continued growth in consolidated revenue, adjusted EBITDA, and adjusted free cash flow for 2025, with significant international revenue growth projected [1][4][31]. Financial Performance - For the year 2024, DTI reported total consolidated revenue of $154.4 million, with tool rental revenue at approximately $117.9 million and product sales revenue totaling $36.5 million [2][11]. - Total operating expenses for 2024 were $141.0 million, resulting in an income from operations of $13.4 million. The net income for the year was $3.0 million, with an adjusted net income of $10.1 million [2][12]. - The diluted earnings per share (EPS) for 2024 were $0.09, while the adjusted diluted EPS was $0.31 [2][12]. Quarterly Performance - In the fourth quarter of 2024, DTI generated total consolidated revenue of $39.8 million, with tool rental revenue of approximately $31.5 million and product sales revenue of $8.3 million [3][13]. - The total operating expenses for the fourth quarter were $38.0 million, leading to an income from operations of $1.8 million. The net loss for the quarter was ($1.3) million, with an adjusted net income of $0.6 million [3][13]. Future Outlook - DTI's CEO expressed confidence in the company's acquisition growth strategy and its ability to navigate a challenging demand environment, expecting to build upon 2024 results and significantly grow international revenue in 2025 [4][31]. - The company projects full-year 2025 revenue between $163 million and $183 million, with adjusted EBITDA expected to range from $40 million to $50 million [5][31]. Cash Flow and Debt - DTI reported adjusted free cash flow of $17.2 million for 2024, with cash and cash equivalents of approximately $6.2 million and net debt of $47.6 million as of December 31, 2024 [2][12][15]. - The company plans to continue analyzing additional acquisition targets to enhance scale and geographic expansion, which is expected to strengthen demand for its products and services [4][31].

Core Insights - Drilling Tools International Corp. (DTI) is actively participating in three investor conferences in March 2025, showcasing its commitment to engaging with investors and stakeholders [1][2][3][4]. Conference Participation - DTI will attend the 5th Annual Thrive Energy Conference on March 5-6, 2025, in Houston, where CEO Wayne Prejean will participate in a panel discussion [2]. - The company will also be present at the 37th Annual Roth Conference from March 16-18, 2025, in Dana Point, California, with one-on-one meetings hosted by Prejean and VP Jameson Parker [3]. - Additionally, DTI will take part in the Piper Sandler 25th Annual Energy Conference from March 17-19, 2025, in Las Vegas, featuring meetings led by CFO David Johnson and VP Christian Middleton [4]. Company Overview - DTI is a leading oilfield services company based in Houston, Texas, specializing in the manufacturing and rental of downhole drilling tools for horizontal and directional drilling [6]. - The company has a significant operational footprint with 16 service and support centers in North America and 11 international centers across the EMEA and APAC regions [6].

Core Insights - The article compares Drilling Tools International Corp. (DTI) and Archrock Inc. (AROC) to determine which stock is more attractive to value investors [1] Valuation Metrics - DTI has a forward P/E ratio of 7.19, while AROC has a forward P/E of 19.22 [5] - DTI's PEG ratio is 0.80, indicating better value relative to its expected earnings growth compared to AROC's PEG ratio of 1.60 [5] - DTI's P/B ratio is 0.85, significantly lower than AROC's P/B of 3.45, suggesting DTI is undervalued relative to its book value [6] Investment Grades - Both DTI and AROC have a Zacks Rank of 2 (Buy), indicating positive earnings estimate revisions [3] - DTI has earned a Value grade of A, while AROC has a Value grade of C, highlighting DTI's superior valuation metrics [6][7]

Core Viewpoint - Drilling Tools International Corp. (DTI) has updated its financial outlook for the full year 2024, indicating strong performance despite a challenging market environment in the oilfield services industry [2][6]. Financial Outlook - The company expects 2024 revenue to be at the high end of previously disclosed guidance [6]. - Adjusted EBITDA for 2024 is anticipated to be near the midpoint of previously disclosed guidance [6]. - Adjusted Net Income for 2024 is projected to be above the high end of previously disclosed guidance [6]. - Adjusted Free Cash Flow for 2024 is expected to be more than double compared to the prior year period [6]. Company Operations - DTI specializes in designing, engineering, manufacturing, and renting tools for horizontal and directional drilling operations [1][4]. - The company has successfully integrated its latest acquisitions and is realizing synergies to position itself for future growth [2]. - DTI operates 16 service and support centers across North America and maintains 11 international service and support centers in the EMEA and APAC regions [4]. Upcoming Events - DTI plans to report its fourth quarter and full year 2024 financial results on March 14, 2025, at 10:00 a.m. Eastern Time [3][7]. - The conference call will be accessible via dial-in or webcast, with a replay available until March 21, 2025 [3].

Group 1: Acquisition Overview - Drilling Tools International Corporation (DTI) has completed the acquisition of Titan Tools Services Ltd., enhancing its capabilities in downhole tool rental services and positioning DTI to provide comprehensive solutions for drilling operations [1] - The acquisition aligns with DTI's technical expertise and customer relationships, expanding its international footprint in the U.K. North Sea, Europe, and Africa [2] - DTI aims to integrate Titan's operations seamlessly, focusing on business continuity and leveraging combined strengths to enhance technological capabilities [2] Group 2: Recent Developments - DTI has also completed two major acquisitions: European Drilling Projects and Superior Drilling Products, which have further enhanced its technological capabilities and global influence [3] - The company secured $105 million in financing to support growth initiatives and international expansion, reinforcing its position as a market leader in the oil and gas industry [3] Group 3: Company Profile and Market Position - DTI manufactures and rents downhole drilling tools for horizontal and directional drilling of oil and natural gas wells, currently holding a Zacks Rank 3 (Hold) [4] - Investors may consider other energy sector stocks with better rankings, such as GeoPark Limited (Zacks Rank 1), ARC Resources Ltd. (Zacks Rank 2), and Flotek Industries, Inc. (Zacks Rank 2) [5]