Financial Data and Key Metrics Changes - In 2024, the company achieved consolidated revenue of 117.9 million and product sales of 10.1 million, with adjusted diluted EPS at 40.1 million, and adjusted free cash flow was 39.8 million, with tool rental revenue at approximately 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 163 million and 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]
Drilling Tools International (DTI) - 2024 Q4 - Earnings Call Transcript