Drilling Tools International (US:DTI)2025-05-14 15:00Financial Data and Key Metrics Changes - The company reported a 16% year-over-year revenue growth, reaching $42.9 million, and an 8% increase compared to the fourth quarter of 2024 [5][12] - Adjusted EBITDA grew nearly 18% year-over-year, remaining flat sequentially at $10.8 million [6][12] - Adjusted free cash flow for the first quarter was $5.7 million, with net debt reported at $52.1 million [12][13] Business Line Data and Key Metrics Changes - Tool rental revenue was approximately $34.5 million, while product sales revenue was $8.3 million [12] - The Western Hemisphere segment remains steady, while the Eastern Hemisphere, which includes deep casing tools and European drilling projects, showed some volatility [14][15] - The Eastern Hemisphere accounted for 11% of total revenue in Q1, with expectations for growth as the year progresses [16] Market Data and Key Metrics Changes - Despite a 6% global rig count decline, the company managed to increase revenue, indicating resilience in its business model [12][19] - The company anticipates a further decline in North American land rig counts, adjusting its revenue and EBITDA guidance accordingly [18][19] Company Strategy and Development Direction - The company is executing a two-phase strategy to mitigate potential disruptions, including negotiating with suppliers and implementing a cost reduction program expected to save $6 million annually [6][11] - A share buyback authorization of up to $10 million has been approved, reflecting confidence in the company's stock valuation [11][12] Management's Comments on Operating Environment and Future Outlook - Management acknowledged increased volatility and uncertainty in the marketplace due to tariffs, potential recession, and OPEC+ production decisions [6][19] - The company has adjusted its 2025 revenue guidance to a range of $145 million to $165 million, with adjusted EBITDA expected between $32 million and $42 million [19] Other Important Information - A noncash goodwill impairment of approximately $1.9 million was recorded, which does not affect day-to-day operations or liquidity [13] - The company is focused on maintaining operational agility and identifying future cost reduction opportunities to enhance shareholder value [11][20] Q&A Session Summary Question: Insights on maintaining free cash flow amidst challenges - Management emphasized cost reductions and aligning CapEx with projected activity to preserve EBITDA margins [24][26] Question: Growth expectations in the Eastern Hemisphere - Management noted flat conditions in the Middle East but highlighted emerging technologies gaining traction, which could offset declines [27][28] Question: North American market outlook - Management indicated a slow downturn in the U.S. market, with regional variances based on oil prices and economic conditions [45][46] Question: Capital allocation and guidance - Management acknowledged the wide range in interest expense guidance due to potential debt reduction and share buyback considerations [39][40]