ROC ENERGY ACQUI(ROC) - 2025 Q2 - Quarterly Results

News Release & Company Overview This section provides an overview of Drilling Tools International Corp.'s Q2 2025 financial performance and management's strategic commentary Q2 2025 Financial Highlights Drilling Tools International Corp. reported $39.4 million in Q2 2025 revenue, a net loss of $2.4 million, and achieved its first positive Adjusted Free Cash Flow for a second quarter Q2 2025 Key Financial Highlights | Metric | Amount (in millions USD) | | :-------------------------- | :----------------------- | | Total Consolidated Revenue | $39.4 | | Tool Rental Revenue | $32.8 | | Product Sales Revenue | $6.7 | | Net Loss | $(2.4) | | Adjusted Net Loss | $(0.7) | | Diluted EPS | $(0.07) | | Adjusted Diluted EPS | $(0.02) | | Adjusted EBITDA | $9.3 | | Adjusted Free Cash Flow | $1.8 | | Cash and Cash Equivalents | $1.1 | | Net Debt | $55.8 | - Achieved first positive Adjusted Free Cash Flow for any second quarter since becoming public[4] Management Commentary on Q2 Performance and Market Conditions Management highlighted solid Q2 performance exceeding forecasts, driven by strong Eastern Hemisphere growth despite market softness, while implementing cost-cutting measures - Q2 performance remained solid and exceeded internal forecasts despite lower commodity prices and reductions in rig count and customer activity, particularly on US land[4] - Eastern Hemisphere segment revenue grew by 46% quarter over quarter and contributed approximately 14% of total revenue in Q2 2025[5] - Consolidated Revenue and Adjusted EBITDA grew by 5% and 4% respectively compared to Q2 2024, despite market softness[5] - Implemented a program to cut expenses by approximately $6 million in 2025 and is on track to meet or exceed this goal, with contingency plans for additional cost cuts if the market deteriorates further[6] 2025 Full Year Outlook DTI is maintaining its previously disclosed full-year 2025 guidance ranges for Revenue, Adjusted EBITDA, Adjusted EBITDA Margin, and Adjusted Free Cash Flow, anticipating continued pricing pressures and margin compression in the second half of the year 2025 Full Year Outlook | Metric | Low (in millions USD) | High (in millions USD) | | :-------------------- | :-------------------- | :--------------------- | | Revenue | $145 | $165 | | Adjusted EBITDA | $32 | $42 | | Adjusted EBITDA Margin| 22% | 25% | | Adjusted Free Cash Flow| $14 | $19 | - Expects pricing pressures to compress margins in the back half of 2025[7] 2025 Second Quarter Conference Call Information Details for accessing Drilling Tools International Corp.'s Q2 2025 conference call, scheduled for August 14, 2025, at 10:00 a.m. Eastern Time, including dial-in and webcast options, as well as replay and archive availability - Conference call scheduled for Thursday, August 14, 2025, at 10:00 a.m. Eastern Time[10] - Access available via dial-in (201-389-0869) or live webcast (**https://investors.drillingtools.com/news-events/events**)[10](index=10&type=chunk) - Audio replay available through August 21, 2025, and webcast archive for 90 days[10] About Drilling Tools International Corp. Drilling Tools International Corp. (DTI) is a Houston, Texas-based global oilfield services company specializing in the design, engineering, manufacturing, and rental of downhole drilling tools for horizontal and directional drilling - DTI is a Houston, Texas-based global oilfield services company[11] - Specializes in manufacturing and renting downhole drilling tools for horizontal and directional drilling of oil and natural gas wells[11] - Operates from 15 service and support centers across North America and 11 international centers across the EMEA and APAC regions[11] Forward-Looking Statements This section provides a cautionary statement regarding forward-looking statements, highlighting various risks and uncertainties that could cause actual results to differ materially from projections - Forward-looking statements are subject to numerous conditions and risks, many beyond DTI's control[12] - Key risks include demand for products, customer retention, skilled worker availability, raw material costs, market competition, acquisition integration, and potential liabilities[12] - Additional risks cover capital access, political/regulatory disruptions, IT system dependence, compliance, stock price volatility, and increased costs as a public company[12] Consolidated Financial Statements (Unaudited) This section presents DTI's unaudited consolidated financial statements, including comprehensive income, balance sheets, and cash flows, for relevant periods Consolidated Statements of Comprehensive Income (Loss) - Three Months Ended June 30, 2025 & 2024 For the three months ended June 30, 2025, DTI reported a net loss of $2.407 million, a significant decline from a net income of $0.365 million in the prior year, despite a 5% increase in total revenue Consolidated Statements of Comprehensive Income (Loss) - Q2 2025 vs Q2 2024 | Metric (in thousands USD) | Q2 2025 | Q2 2024 | Change (YoY) | | :------------------------ | :------ | :------ | :----------- | | Total Revenue, net | $39,421 | $37,533 | +$1,888 (+5%)| | Cost of tool rental revenue | $7,402 | $6,998 | +$404 (+5.8%)| | Cost of product sale revenue | $2,494 | $3,000 | -$506 (-16.9%)| | Selling, general, and administrative expense | $21,023 | $19,619 | +$1,404 (+7.2%)| | Depreciation and amortization expense | $6,830 | $5,681 | +$1,149 (+20.2%)| | Interest expense, net | $1,336 | $811 | +$525 (+64.7%)| | Net income (loss) | $(2,407)| $365 | $(2,772) (-759%)| | Diluted earnings (loss) per share | $(0.07) | $0.01 | $(0.08) | - Net income (loss) decreased significantly from $365K in Q2 2024 to $(2,407)K in Q2 2025[14] - Total revenue increased by $1.888 million (5%) year-over-year[14] Consolidated Statements of Comprehensive Income (Loss) - Six Months Ended June 30, 2025 & 2024 For the six months ended June 30, 2025, DTI reported a net loss of $4.076 million, a reversal from a net income of $3.492 million in the same period of 2024, primarily due to increased expenses and a goodwill impairment charge Consolidated Statements of Comprehensive Income (Loss) - H1 2025 vs H1 2024 | Metric (in thousands USD) | H1 2025 | H1 2024 | Change (YoY) | | :------------------------ | :------ | :------ | :----------- | | Total Revenue, net | $82,301 | $74,507 | +$7,794 (+10.5%)| | Cost of tool rental revenue | $15,090 | $13,482 | +$1,608 (+11.9%)| | Cost of product sale revenue | $6,051 | $5,053 | +$998 (+19.7%)| | Selling, general, and administrative expense | $42,633 | $37,560 | +$5,073 (+13.5%)| | Depreciation and amortization expense | $13,552 | $11,047 | +$2,505 (+22.7%)| | Interest expense, net | $2,645 | $992 | +$1,653 (+166.6%)| | Goodwill impairment | $1,901 | — | +$1,901 | | Net income (loss) | $(4,076)| $3,492 | $(7,568) (-216.7%)| | Diluted earnings (loss) per share | $(0.11) | $0.12 | $(0.23) | - Net income (loss) decreased from $3.492 million in H1 2024 to $(4.076) million in H1 2025[16] - Total revenue increased by $7.794 million (10.5%) year-over-year[16] - Goodwill impairment of $1.901 million was recorded in H1 2025[16] Consolidated Balance Sheets - June 30, 2025 & December 31, 2024 As of June 30, 2025, DTI's total assets increased to $230.279 million from $222.431 million at December 31, 2024, driven by property, plant and equipment, and intangible assets, despite a decrease in cash Consolidated Balance Sheets - June 30, 2025 vs December 31, 2024 | Metric (in thousands USD) | June 30, 2025 | December 31, 2024 | Change | | :------------------------ | :------------ | :---------------- | :----- | | Cash | $1,145 | $6,185 | $(5,040) | | Accounts receivable, net | $41,557 | $39,606 | +$1,951 | | Inventories | $18,279 | $17,502 | +$777 | | Total current assets | $66,134 | $68,076 | $(1,942) | | Property, plant and equipment, net | $79,310 | $75,571 | +$3,739 | | Intangible assets, net | $40,666 | $37,232 | +$3,434 | | Goodwill, net | $14,704 | $12,147 | +$2,557 | | Total assets | $230,279 | $222,431 | +$7,848 | | Total current liabilities | $32,047 | $30,963 | +$1,084 | | Revolving line of credit | $33,140 | $27,142 | +$5,998 | | Long-term debt, less current portion | $17,485 | $19,676 | $(2,191) | | Total liabilities | $107,757 | $102,472 | +$5,285 | | Total shareholders' equity| $122,522 | $119,959 | +$2,563 | - Total assets increased by $7.848 million (3.5%) from December 31, 2024, to June 30, 2025[18] - Cash decreased by $5.040 million (81.5%) from $6.185 million at December 31, 2024, to $1.145 million at June 30, 2025[18] - Total liabilities increased by $5.285 million (5.2%) from December 31, 2024, to June 30, 2025, primarily due to an increase in the revolving line of credit[18] Consolidated Statements of Cash Flows - Six Months Ended June 30, 2025 & 2024 For the six months ended June 30, 2025, net cash from operating activities increased slightly, while net cash used in investing activities decreased, and net cash from financing activities saw a substantial reduction year-over-year Consolidated Statements of Cash Flows - H1 2025 vs H1 2024 | Metric (in thousands USD) | H1 2025 | H1 2024 | Change (YoY) | | :------------------------ | :------ | :------ | :----------- | | Net cash flows from operating activities | $4,626 | $4,393 | +$233 (+5.3%)| | Net cash flows from investing activities | $(12,141)| $(26,728)| +$14,587 (+54.6%)| | Net cash flows from financing activities | $2,448 | $23,495 | $(21,047) (-89.6%)| | Net change in cash | $(5,040)| $783 | $(5,823) | | Cash at end of period | $1,145 | $6,786 | $(5,641) | - Net cash from operating activities increased by $0.233 million (5.3%) year-over-year[20] - Net cash used in investing activities decreased by $14.587 million (54.6%), primarily due to lower acquisition spending[20] - Net cash from financing activities decreased by $21.047 million (89.6%), mainly due to the absence of term loan proceeds seen in 2024[20] Non-GAAP Financial Measures & Reconciliations This section defines and reconciles DTI's key non-GAAP financial measures, including Adjusted EBITDA, Adjusted Free Cash Flow, Net Debt, and Adjusted Net Income (Loss), to their most directly comparable GAAP measures Definition of Non-GAAP Financial Measures This section defines DTI's key non-GAAP financial measures, including Adjusted EBITDA, Adjusted Free Cash Flow, Net Debt, Adjusted Net Income (Loss), and Adjusted Basic/Diluted EPS, used to evaluate operating performance - Adjusted EBITDA is defined as net earnings (loss) before interest, taxes, depreciation, and amortization, further adjusted for specific non-recurring items[22] - Adjusted Free Cash Flow is defined as Adjusted EBITDA less Gross Capital Expenditures[24] - Net Debt is defined as total debt less cash and cash equivalents[25] - Adjusted Net Income (Loss) and Adjusted Basic/Diluted EPS are adjusted for non-recurring items and calculated using an effective tax rate on adjusted pre-tax income[26][27] Reconciliation of GAAP to Non-GAAP Measures - Adjusted EBITDA This section provides the reconciliation of Net Income (Loss) to Adjusted EBITDA for the three and six months ended June 30, 2025 and 2024, showing a slight increase in Adjusted EBITDA for both periods Adjusted EBITDA Reconciliation - Q2 2025 vs Q2 2024 | Metric (in thousands USD) | Q2 2025 | Q2 2024 | | :------------------------ | :------ | :------ | | Net income (loss) | $(2,407)| $365 | | Add (deduct): | | | | Income tax expense (benefit)| $746 | $(82) | | Depreciation and amortization | $6,830 | $5,681 | | Interest expense, net | $1,336 | $811 | | Stock option expense | $642 | $855 | | Management fees | $188 | $187 | | Loss (gain) on sale of property | $85 | $(51) | | Transaction expense | $215 | $2,020 | | Other operating and non-operating expense, net | $1,697 | $(341) | | Adjusted EBITDA | $9,332| $8,965| Adjusted EBITDA Reconciliation - H1 2025 vs H1 2024 | Metric (in thousands USD) | H1 2025 | H1 2024 | | :------------------------ | :------ | :------ | | Net income (loss) | $(4,076)| $3,492 | | Add (deduct): | | | | Income tax expense (benefit)| $587 | $854 | | Depreciation and amortization | $13,552 | $11,047 | | Interest expense, net | $2,645 | $992 | | Stock option expense | $1,183 | $1,064 | | Management fees | $375 | $375 | | Loss (gain) on sale of property | $71 | $(42) | | Goodwill impairment | $1,901 | — | | Transaction expense | $947 | $2,909 | | Other operating and non-operating expense, net | $2,900 | $(104) | | Adjusted EBITDA | $20,085| $19,858| - Adjusted EBITDA for Q2 2025 increased by $0.367 million (4.1%) to $9.332 million from $8.965 million in Q2 2024[30] - Adjusted EBITDA for H1 2025 increased by $0.227 million (1.1%) to $20.085 million from $19.858 million in H1 2024[30] Reconciliation of GAAP to Non-GAAP Measures - Adjusted Free Cash Flow This section reconciles Net Income (Loss) to Adjusted Free Cash Flow for the three and six months ended June 30, 2025 and 2024, demonstrating significant improvement in Adjusted Free Cash Flow for both periods Adjusted Free Cash Flow Reconciliation - Q2 2025 vs Q2 2024 | Metric (in thousands USD) | Q2 2025 | Q2 2024 | | :------------------------ | :------ | :------ | | Net income (loss) | $(2,407)| $365 | | Add (deduct): | | | | Income tax expense (benefit)| $746 | $(82) | | Depreciation and amortization | $6,830 | $5,681 | | Interest expense, net | $1,336 | $811 | | Stock option expense | $642 | $855 | | Management fees | $188 | $187 | | Loss (gain) on sale of property | $85 | $(51) | | Transaction expense | $215 | $2,020 | | Other operating and non-operating expense, net | $1,697 | $(341) | | Capital expenditures | $(7,551)| $(10,084)| | Adjusted Free Cash Flow| $1,781| $(1,119)| Adjusted Free Cash Flow Reconciliation - H1 2025 vs H1 2024 | Metric (in thousands USD) | H1 2025 | H1 2024 | | :------------------------ | :------ | :------ | | Net income (loss) | $(4,076)| $3,492 | | Add (deduct): | | | | Income tax expense (benefit)| $587 | $854 | | Depreciation and amortization | $13,552 | $11,047 | | Interest expense, net | $2,645 | $992 | | Stock option expense | $1,183 | $1,064 | | Management fees | $375 | $375 | | Loss (gain) on sale of property | $71 | $(42) | | Goodwill impairment | $1,901 | — | | Transaction expense | $947 | $2,909 | | Other operating and non-operating expense, net | $2,900 | $(104) | | Capital expenditures | $(12,594)| $(16,312)| | Adjusted Free Cash Flow| $7,491| $3,545| - Adjusted Free Cash Flow for Q2 2025 was $1.781 million, a positive change from $(1.119) million in Q2 2024[32] - Adjusted Free Cash Flow for H1 2025 increased by $3.946 million (111.3%) to $7.491 million from $3.545 million in H1 2024[32] Reconciliation of GAAP to Non-GAAP Measures - Adjusted Net Income (Loss) & EPS This section provides the reconciliation of Net Income (Loss) to Adjusted Net Income (Loss) and Adjusted EPS for the three and six months ended June 30, 2025 and 2024, indicating a decrease in adjusted profitability Adjusted Net Income (Loss) & EPS Reconciliation - Q2 2025 vs Q2 2024 | Metric (in thousands USD) | Q2 2025 | Q2 2024 | | :------------------------ | :------ | :------ | | Net income (loss) | $(2,407)| $365 | | Transaction expense | $215 | $2,020 | | Restructuring charges | $629 | — | | Software implementation | $316 | — | | Income tax expense (benefit)| $746 | $(82) | | Adjusted Income Before Tax| $(501) | $2,303 | | Adjusted Income tax expense (benefit)| $225 | $(666) | | Adjusted Net Income (loss)| $(726)| $2,968| | Adjusted Basic earnings (loss) per share | $(0.02) | $0.10 | | Adjusted Diluted earnings (loss) per share | $(0.02) | $0.10 | Adjusted Net Income (Loss) & EPS Reconciliation - H1 2025 vs H1 2024 | Metric (in thousands USD) | H1 2025 | H1 2024 | | :------------------------ | :------ | :------ | | Net income (loss) | $(4,076)| $3,492 | | Transaction expense | $947 | $2,909 | | Goodwill impairment | $1,901 | — | | Restructuring charges | $998 | — | | Software implementation | $448 | — | | Income tax expense (benefit)| $587 | $854 | | Adjusted Income Before Tax| $805 | $7,255 | | Adjusted Income tax expense (benefit)| $(135) | $1,426 | | Adjusted Net Income (loss)| $940 | $5,829| | Adjusted Basic earnings (loss) per share | $0.03 | $0.20 | | Adjusted Diluted earnings (loss) per share | $0.03 | $0.19 | - Adjusted Net Income (loss) for Q2 2025 was $(0.726) million, a decrease from $2.968 million in Q2 2024[34] - Adjusted Diluted EPS for H1 2025 was $0.03, down from $0.19 in H1 2024[34] Reconciliation of Estimated Consolidated Net Income to Adjusted EBITDA (Full Year 2025 Outlook) This section provides the reconciliation of estimated consolidated net income to Adjusted EBITDA for the full year 2025 outlook, projecting Adjusted EBITDA between $32 million and $42 million 2025 Full Year Outlook - Adjusted EBITDA Reconciliation | Metric (in thousands USD) | Low | High | | :------------------------ | :------ | :------ | | Net income (loss) | $(8,500)| $(3,000)| | Add (deduct): | | | | Interest expense, net | $4,600 | $5,300 | | Income tax expense | $(500) | $500 | | Depreciation and amortization | $26,900 | $28,000 | | Management fees | $700 | $800 | | Other expense | $3,600 | $4,300 | | Stock option expense | $2,400 | $2,900 | | Goodwill impairment | $1,900 | $2,000 | | Transaction expense | $900 | $1,200 | | Adjusted EBITDA | $32,000| $42,000| | Revenue | $145,000| $165,000| | Adjusted EBITDA Margin | 22% | 25% | - Full year 2025 Adjusted EBITDA is projected to be between $32 million and $42 million[35] - Full year 2025 Adjusted EBITDA Margin is projected to be between 22% and 25%[35] Reconciliation of Estimated Consolidated Net Income to Adjusted Free Cash Flow (Full Year 2025 Outlook) This section provides the reconciliation of estimated consolidated net income to Adjusted Free Cash Flow for the full year 2025 outlook, projecting Adjusted Free Cash Flow between $14 million and $19 million 2025 Full Year Outlook - Adjusted Free Cash Flow Reconciliation | Metric (in thousands USD) | Low | High | | :------------------------ | :------ | :------ | | Net income (loss) | $(8,500)| $(3,000)| | Add (deduct): | | | | Interest expense, net | $4,600 | $5,300 | | Income tax expense | $(500) | $500 | | Depreciation and amortization | $26,900 | $28,000 | | Management fees | $700 | $800 | | Other expense | $3,600 | $4,300 | | Stock option expense | $2,400 | $2,900 | | Goodwill impairment | $1,900 | $2,000 | | Transaction expense | $900 | $1,200 | | Gross capital expenditures| $(18,000)| $(23,000)| | Adjusted Free Cash Flow| $14,000| $19,000| | Adjusted Free Cash Flow Margin | 10% | 12% | - Full year 2025 Adjusted Free Cash Flow is projected to be between $14 million and $19 million[36] - Full year 2025 Adjusted Free Cash Flow Margin is projected to be between 10% and 12%[36]