Drilling Tools International (DTI) Q2 2024 earnings summary

Executive summary

• Completed acquisitions of Superior Drilling Products, Deep Casing Tools, and Casing Technologies Group in 2024, expanding proprietary technology, manufacturing, and international presence, especially in the Middle East.

• Implemented a $2.4 million annualized cost reduction program to address North American market softness while maintaining international growth initiatives.

• Identified over $4.5 million in SG&A synergies and $6.6 million in receivables reducing acquisition costs.

• Operates a fleet of 65,000+ rental tools from 16 North American and 10 international service centers, serving a blue-chip customer base.

• Maintains a robust M&A pipeline focused on international expansion and technology-driven acquisitions.

Financial highlights

• Q2 2024 consolidated revenue was $37.5 million; tool rental net revenue $28.3 million, product sales $9.2 million.

• Q2 2024 net income was $0.4 million ($0.01 per diluted share), down from $0.9 million in Q2 2023; adjusted net income was $3 million.

• Q2 2024 adjusted EBITDA was $9 million (23.9% margin), down from $13.3 million in Q2 2023; adjusted free cash flow was $(1.1) million, a $3.2 million improvement year-over-year.

• As of June 30, 2024: $6.8 million cash, $17.4 million net debt, $80 million undrawn ABL facility, $74.1 million total liabilities.

• For the six months ended June 30, 2024, revenue was $74.5 million and net income was $3.5 million.

Outlook and guidance

• 2024 revenue guidance is $155–$170 million; adjusted EBITDA $41–$47 million (26–28% margin); adjusted net income $9.9–$13.5 million.

• Adjusted free cash flow guidance for 2024 is $20–$25 million, more than double 2023.

• Gross CapEx expected at $21–22 million; majority incurred in first half of 2024.

• Anticipates North American softness through mid-2025, with international markets expected to be flat to up.