Drilling Tools International Corp. Q4 FY2025 earnings call

• Wayne Prejean opened by discussing strong full year results, including adjusted net income of $3.4 million, adjusted diluted EPS of $0.10 per share, adjusted EBITDA of $39.3 million, and adjusted free cash flow of $19.2 million. • Completed fourth acquisition in January 2025, reduced net debt, and returned free cash flow to shareholders via share buyback. • Eastern Hemisphere operations grew by 78% and contributed 14% of total revenue. • Discussed Synergy program 'OneDTI' to align operations and integrate acquisitions. • Addressed Middle East situation, with personnel sheltered in place and minimal business disruption.

For 2025, total rental revenues were $129.6 million and total product sales revenues were $30.1 million, totaling $159.6 million consolidated. Eastern Hemisphere revenue grew by 78% year over year and contributed approximately 14% of total revenue. Western Hemisphere operations saw a low single-digit revenue decline in 2025. Fourth quarter consolidated revenue was $38.5 million, with tool rental revenue at $30.4 million and product sales revenue at $8.1 million.

• 2026 revenue expected to be in range of $155 to $170 million. • Adjusted EBITDA expected to be $35 to $45 million. • Capital expenditures expected to be $18 to $23 million. • Adjusted free cash flow expected to be $17 to $22 million, with assumption of activity flat in first half 2026 and improving in second half.

• Various risks and uncertainties could cause actual results to differ from forward-looking statements, including market softness, rig count fluctuations, and geopolitical issues like Middle East conflict. • Impact of Middle East conflict on business operations and revenue if disruptions increase.

• Q: About strong EBITDA margin in quarter, A: Combination of not seeing typical Q4 softness and cost reductions, with product sale impact on margin. • Q: About free cash flow and leverage, A: Durable free cash flow generation, healthy M&A pipeline, and focus on debt service, M&A, buybacks depending on market. • Q: About Eastern Hemisphere opportunities, A: Opportunities in Africa, Middle East, Asia-Pac with new technologies gaining traction. • Q: About revenue per active rig in US, A: Steady state with opportunistic realities as new technologies gain traction. • Q: About Middle East developments, A: Minimally disruptive so far, team performing well with crisis management playbook. • Q: About 2026 guidance pre-Iran events, A: Guidance created pre-Iran events, focus on debt reduction and deployment across geo markets. • Q: About turmoil impact, A: Flexible to capitalize on opportunities if supply disruption occurs, positioned to deal with dynamic situation. • Q: About customer discussions given pricing backdrop, A: Efficient in middle to upper tier of pricing range, waiting for activity increase to impact pricing.