Drilling Tools International (DTI) - 2024 Q3 - Quarterly Report

Financial Performance - Total revenue for the three months ended September 30, 2024, was $40.1 million, a 5.1$38.1 million in the same period of 2023[184]. - Net income for the three months ended September 30, 2024, was $0.9 million, down 79.8$4.3 million in the same period of 2023[184]. - Adjusted EBITDA for the three months ended September 30, 2024, was $11,125, down from$12,729 in 2023, representing a decline of approximately 12.6%[235]. - For the nine months ended September 30, 2024, net cash provided by operating activities was $9.7 million, compared to$17.5 million in 2023, reflecting a decrease of 44.5%[242]. - Total cash and cash equivalents as of September 30, 2024, were $12.0 million, with expectations that existing cash and cash flows will be sufficient for at least the next 12 months[236]. Revenue Breakdown - Tool rental revenue for the three months ended September 30, 2024, was$28.1 million, a decrease of 4.2% from $29.4 million in the same period of 2023[201]. - Product sales revenue for the three months ended September 30, 2024, increased by 36.5$12.0 million from $8.8 million in the same period of 2023[201]. - Tool rental revenue decreased by$4.2 million, or 5%, to $86.4 million for the nine months ended September 30, 2024, compared to$90.6 million for the same period in 2023[222]. - Product sale revenue decreased by $2.0 million, or 8$28.2 million for the nine months ended September 30, 2024, compared to $26.2 million for the same period in 2023[223]. Cost and Expenses - Total costs and expenses for the three months ended September 30, 2024, were$35.8 million, an increase of 15.5% from $31.0 million in the same period of 2023[201]. - Selling, general, and administrative expenses for the three months ended September 30, 2024, were$19.9 million, up 19.0% from $16.6 million in the same period of 2023[201]. - Cost of tool rental revenue decreased by$3.3 million, or 44%, to $4.1 million for the three months ended September 30, 2024, compared to$7.3 million for the same period in 2023[216]. - Cost of product sale revenue increased by $3.9 million, or 216$5.7 million for the three months ended September 30, 2024, compared to $1.8 million for the same period in 2023[217]. - Interest expense increased by$965 thousand, or 1322%, to $1.0 million for the three months ended September 30, 2024, compared to$0.1 million for the same period in 2023[220]. - Depreciation and amortization for the nine months ended September 30, 2024, was $17,232, compared to$15,035 in 2023, indicating an increase of approximately 14.6%[236]. Cash Flow Activities - Net cash used in investing activities for the nine months ended September 30, 2024, was $46.1 million, significantly higher than$20.0 million in 2023[244]. - Net cash provided by financing activities for the nine months ended September 30, 2024, was $43.4 million, a substantial increase from$4.3 million in 2023[246]. Market Conditions - The WTI oil price as of September 30, 2024, was approximately $68.75 per barrel, reflecting ongoing volatility in the oil market[189]. - Henry Hub natural gas spot prices decreased from an average of$2.64 per MMBtu in September 2023 to $2.28 per MMBtu in September 2024, a decline of 13.6$19.6 million for property, plant, and equipment during the nine months ended September 30, 2024[244]. - The company has available federal net operating loss carryforwards that are expected to substantially reduce cash tax payments over the next several years[240].