Drilling Tools International Corp. Q1 FY2026 earnings call

• First quarter results consistent with anticipated softer first half, with potential improvement in second half. • North American land activity flat to slightly down; earlier Canadian spring breakup compressed Q1 results but post-breakup rebound expected. • Middle East regional conflict caused operational disruption but demand for tools remains. • ClearPath stabilizer technology gaining traction, deep casing tools recovering. • Primary private equity sponsor completed share distribution, increasing public float and trading liquidity. • Board of directors refreshed, marking transition to independent public company.

Total consolidated revenue was $38 million. Tool rental revenue was $28.9 million, product sales revenue was $9 million. Eastern hemisphere segment contribution is expected to grow as year progresses due to adoption of ClearPath technology, deep casing tools momentum, and rising drill and ream utilization in Middle East.

• Reaffirming 2026 guidance ranges: revenue $155 - $170 million, adjusted EBITDA $35 - $45 million, adjusted free cash flow $17 - $22 million. • Ranges reflect soft first half with improvement in second half. • Actively evaluating additional targeted investments for international growth, which may affect adjusted free cash flow range.

• Various risks and uncertainties could cause actual results to differ from forward-looking statements. • Geopolitical instability in Middle East could continue to impact operations. • Pricing pressure in certain segments of rental fleet. • Supply and demand dynamics in the industry could affect performance.

Q: Asked about factors impacting tool rental margins, Wayne and David discussed soft market conditions in US and early Canadian spring breakup, pricing pushback, and momentum in new products.

Q: Inquired about impact of early spring breakup and new product margins, Wayne responded about earlier softness and new technologies offsetting negativity.

Q: Asked about product adoption of ClearPath, deep casing tools, etc., Wayne talked about traction in offshore markets, Middle East rebound, and growth in various regions.

Q: Questioned about CapEx plans and offshore mix growth, Wayne and David discussed strategic investments and growing offshore mix.

Q: From Colby Sasso about evaluating investment opportunities across global portfolio, Wayne discussed highest return opportunities in different regions including North America, Middle East, Africa, Asia