Drilling Tools International (DTI) Q1 2025 earnings summary

Executive summary

• Q1 2025 revenue was $42.9M, up 16% year-over-year and 7.6%–16% sequentially, driven by acquisitions and growth in both hemispheres.

• Net loss for Q1 2025 was $1.7M, primarily due to a $1.9M goodwill impairment and higher costs, while adjusted EBITDA was $10.8M, nearly flat year-over-year and up 18% year-over-year.

• Four acquisitions since March 2024 expanded global reach and technology portfolio, with integration and synergy realization ongoing.

• Board authorized a $10M share repurchase program in May 2025, citing undervalued stock price and long-term strategy confidence.

• Proactive cost reduction strategy underway, targeting $6M in annual savings for 2025.

Financial highlights

• Q1 2025 consolidated revenue was $42.9M: $34.5M from tool rentals (81%) and $8.3M from product sales (19%), both segments growing year-over-year.

• Operating expenses totaled $39.6M; operating income was $3.3M, down from $5.1M in Q1 2024.

• Adjusted EBITDA reached $10.8M; adjusted free cash flow was $5.7M, up from $4.7M in Q1 2024.

• Ended Q1 with $2.8M in cash and net debt of $52.1M; interest expense rose to $1.3M due to new term loan and credit facility.

• Diluted EPS was $(0.05); adjusted diluted EPS was $0.02.

Outlook and guidance

• 2025 revenue guidance updated to $145M–$165M; adjusted EBITDA expected at $32M–$42M with margins of 22%–25%.

• Adjusted free cash flow guidance is $14M–$19M, with margins of 10%–12%.

• Guidance reflects anticipated further decline in North American land rig counts, ongoing pricing pressure, and cost inflation.

• Full-year contributions from all four 2024 acquisitions expected; Eastern Hemisphere revenue contribution projected to double.

• Sufficient liquidity anticipated for at least the next 12 months, supported by cash, operations, and credit facility.