Revenue Growth and Financial Performance - Revenue growth of 340% from 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 152.0 million, respectively, with a net income of 14.7 million[187] - The accumulated deficit as of December 31, 2024 and 2023 was 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]
Drilling Tools International (DTI) - 2024 Q4 - Annual Report