In This Article:
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Revenue: $42.9 million, a 16% increase year-over-year.
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Tool Rental Revenue: Approximately $34.5 million.
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Product Sales Revenue: $8.3 million.
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Operating Expenses: $39.6 million.
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Operating Income: $3.3 million.
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Adjusted EBITDA: $10.8 million, an 18% increase year-over-year.
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Adjusted Free Cash Flow: $5.7 million.
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Cash and Cash Equivalents: Approximately $2.8 million.
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Net Debt: $52.1 million.
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Goodwill Impairment: $1.9 million noncash write-down.
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Eastern Hemisphere Revenue Contribution: 11% of total revenue.
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Maintenance CapEx: Approximately 10% of total revenue.
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2025 Revenue Guidance: $145 million to $165 million.
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2025 Adjusted EBITDA Guidance: $32 million to $42 million.
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2025 Gross Capital Expenditures Guidance: $18 million to $23 million.
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2025 Adjusted Free Cash Flow Guidance: $14 million to $19 million.
Release Date: May 14, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Drilling Tools International Corp (NASDAQ:DTI) reported a 16% year-over-year revenue growth in the first quarter of 2025.
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Adjusted EBITDA grew nearly 18% year over year, demonstrating strong financial performance despite industry challenges.
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DTI has implemented a cost reduction program expected to save approximately $6 million annually.
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The company has a diverse manufacturing base in North America and sources a significant amount of made-in-America steel, providing flexibility in uncertain markets.
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DTI's Board of Directors approved a share buyback authorization of up to $10 million, indicating confidence in the company's undervalued stock price.
Negative Points
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DTI faces increased volatility and uncertainty in the marketplace due to tariffs, potential recession, and OPEC+'s decision to increase production.
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The company recorded a noncash goodwill impairment of approximately $1.9 million, impacting its Vernal, Utah bit repair operations and deep casing tools unit.
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Pricing pressure, product mix, and activity declines have impacted DTI's margins, with expectations of continued pressure throughout 2025.
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The anticipated rig count drop in the US poses a challenge to service providers, including DTI.
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DTI has adjusted its 2025 guidance to reflect a further decline in North American land rig counts, indicating a down market for the remainder of the year.
Q & A Highlights
Q: Can you discuss how Drilling Tools International (NASDAQ:DTI) plans to maintain free cash flow despite a challenging second half of the year? A: David Johnson, CFO, explained that DTI is focusing on cost reductions to preserve EBITDA margins and aligning CapEx spending with projected activity levels to maintain free cash flow.