• Total Revenue for 2024: $154.4 million
• Rental Revenues: $117.9 million
• Product Sales: $36.5 million
• Adjusted Net Income for 2024: $10.1 million
• Adjusted Diluted EPS for 2024: $0.31 per share
• Adjusted EBITDA for 2024: $40.1 million
• Adjusted Free Cash Flow for 2024: $17.2 million
• Cash and Cash Equivalents as of December 31, 2024: $6.2 million
• Net Debt as of December 31, 2024: $47.6 million
• Fourth Quarter Revenue: $39.8 million
• Fourth Quarter Tool Rental Revenue: $31.5 million
• Fourth Quarter Product Sales Revenue: $8.3 million
• Fourth Quarter Operating Expenses: $38 million
• Fourth Quarter Income from Operations: $1.8 million
• Fourth Quarter Net Loss: $1.3 million
• Fourth Quarter Adjusted Net Income: $600,000
• Fourth Quarter Diluted EPS: Loss of $0.04 per share
• Fourth Quarter Adjusted Diluted EPS: Profit of $0.02 per share
• Fourth Quarter Adjusted EBITDA: $9.1 million
• Fourth Quarter Adjusted Free Cash Flow: $5.9 million
• 2025 Revenue Outlook: $163 million to $183 million
• 2025 Adjusted EBITDA Outlook: $40 million to $50 million
• 2025 Gross Capital Expenditures Outlook: $23 million to $29 million
• 2025 Adjusted Free Cash Flow Outlook: $17 million to $21 million

• Warning! GuruFocus has detected 4 Warning Signs with DTI.

Release Date: March 14, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Drilling Tools International Corp (NASDAQ:DTI) achieved 2024 revenue growth at the high end of their guidance, with adjusted EBITDA near the midpoint.
• The company more than doubled its prior year adjusted free cash flow, demonstrating strong financial management.
• DTI successfully completed four acquisitions, expanding its international presence and technological capabilities.
• The company reported a significant improvement in safety metrics, with a 6.5% year-over-year reduction in total recordable incident rate.
• DTI's diversified geographic footprint and business model showed resilience, with a 13% increase in fourth-quarter revenue despite a global rig count decline.

Negative Points

• DTI faced industry-wide headwinds, including rig count softness in key markets such as the US and Middle East.
• The company reported a net loss of $1.3 million for the fourth quarter, with a diluted EPS loss of $0.04 per share.
• Pricing pressure and changes in product mix due to acquisitions impacted gross profit margins.
• Fourth-quarter adjusted free cash flow was slightly below expectations, partly due to deferred CapEx decisions.
• The decline in activity in Saudi Arabia and PEMEX markets negatively affected product sales and momentum.

Q & A Highlights

Q: Can you discuss current trends in the M&A market and your level of optimism regarding opportunities? A: Wayne Prejean, CEO: We have a steady pipeline of opportunities and continue to evaluate deals strategically. The industry has seen several deals, which helps align buyer and seller expectations. We remain optimistic about opportunities this year.

Q: How important is deleveraging this year, and how do you plan to use your free cash flow? A: David Johnson, CFO: We ended the year with net debt primarily due to acquisitions. Our free cash flow will support CapEx and potentially pay down debt or fund further M&A, depending on opportunities. We are well-positioned on the balance sheet and will make strategic decisions based on M&A opportunities.

Q: What drove the sequential growth in tool rentals despite flat US land drilling? A: Wayne Prejean, CEO: The growth was due to international expansion and the deployment of new technologies at higher pricing, which helped offset fluctuations in activity.

Q: Why is CapEx expected to be higher in 2025 compared to the second half of 2024? A: David Johnson, CFO: The increase is primarily due to growth in the Eastern Hemisphere following acquisitions and supporting new technologies. We are investing in new product lines and expanding our roster.

Q: Can you provide insights into the international market and any successes from acquisitions? A: Wayne Prejean, CEO: We are seeing synergies and cost savings from acquisitions, particularly in the Middle East. Despite some softness in Saudi Arabia, our new technologies are gaining traction globally, and we are optimistic about future growth.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.