Release Details

Revenue                                                                         

$152 million

Net Income                                                                   

$14.7 million

Adjusted EBITDA⁽¹⁾                                                               

$51 million

Adjusted EBITDA Margin⁽¹⁾                                        

33.6 %

Adjusted Free Cash Flow⁽¹⁾⁽²⁾                                    

$7.3 million

Full Year 2024

Revenue

$170 million  

-

$185 million 

Net Income

$15 million  

-

$21 million 

Adjusted EBITDA⁽¹⁾

$50 million  

-

 $58.5 million

Adjusted EBITDA Margin⁽¹⁾

29 %

-

32 %

Adjusted Free Cash Flow⁽¹⁾⁽²⁾

$20 million  

-

$25.5 million 

(1)

Adjusted EBITDA, Adjusted EBITDA Margin, and Adjusted Free Cash Flow are non-GAAP financial measures. See "Non-GAAP Financial Measures" at the end of this release for a discussion of reconciliations to the most directly comparable financial measures calculated and presented in accordance with U.S. generally accepted accounting principles ("GAAP").

(2)

Adjusted Free Cash Flow defined as Adjusted EBITDA less Gross Capital Expenditures. 

What:   

Drilling Tools International 2023 Full Year Earnings Conference Call

When:   

Thursday, March 28, 2024 at 11:00 a.m. Eastern Time / 10:00 a.m. Central Time

How:       

Live via phone – By dialing 1- 201-389-0869 and asking for the DTI call at least 10 minutes prior 
to the start time, or Live Webcast – By logging onto the webcast at the address below

Where:     

https://investors.drillingtools.com/news-events/events

Drilling Tools International Corp.

Consolidated Statement of Operations and Comprehensive Income

(In thousands of U.S. dollars and rounded)

(Unaudited)

Twelve Months Ended December 31,

2023

2022

Revenue, net:

Tool rental

$                  119,239

$                    99,018

Product sale

32,795

30,538

Total revenue, net

152,034

129,556

Operating costs and expenses:

Cost of tool rental revenue

30,960

27,581

Cost of product sale revenue

4,559

5,423

Selling, general, and administrative expense

68,264

51,566

Depreciation and amortization expense

20,352

19,709

Total operating costs and expenses

124,135

104,279

Operating income

27,899

25,277

Other expense, net:

Interest expense, net

(1,103)

(477)

Gain on sale of property

101

127

Loss on asset disposal

(489)

—

Unrealized gain (loss) on equity securities

(255)

234

Other expense, net

(6,359)

(384)

Total other expense, net

(8,105)

(500)

Income before income tax expense

19,794

24,777

Income tax expense

(5,046)

(3,698)

Net income

$                    14,748

$                    21,080

Accumulated dividends on redeemable convertible preferred stock

314

1,189

Net income available to common shareholders

$                    14,434

$                    19,891

Basic earnings  per share

$                        0.67

$                        1.66

Diluted earnings per share

$                        0.59

$                        1.07

Basic weighted-average common shares outstanding*

21,421,610

11,951,137

Diluted weighted-average common shares outstanding*

25,131,010

19,677,507

Comprehensive income:

Net income

$                    14,748

$                    21,080

Foreign currency translation adjustment, net of tax

(114)

173

Net comprehensive income

$                    14,634

$                    21,253

* Shares of legacy redeemable convertible preferred stock and legacy common stock have been retroactively restated to give effect to the Merger.

Drilling Tools International Corp.

Consolidated Statement of Operations and Comprehensive Income

(In thousands of U.S. dollars and rounded)

(Unaudited)

Three Months Ended December 31,

2023

2022

Revenue, net:

Tool rental

$                    28,600

$                    28,741

Product sale

6,589

7,919

Total revenue, net

35,189

36,660

Operating costs and expenses:

Cost of tool rental revenue

7,175

7,003

Cost of product sale revenue

904

1,638

Selling, general, and administrative expense

17,265

15,142

Depreciation and amortization expense

5,317

4,927

Total operating costs and expenses

30,661

28,710

Operating income

4,528

7,950

Other expense, net:

Interest expense, net

(108)

(436)

Gain on sale of property

33

20

Loss on asset disposal

(489)

—

Unrealized gain (loss) on equity securities

(107)

309

Other expense, net

(189)

(175)

Total other expense, net

(860)

(282)

Income before income tax expense

3,668

7,668

Income tax expense

155

(851)

Net income

$                      3,823

$                      6,817

Accumulated dividends on redeemable convertible preferred stock

—

306

Net income available to common shareholders

$                      3,823

$                      6,511

Basic earnings  per share

$                        0.13

$                        0.54

Diluted earnings per share

$                        0.13

$                        0.35

Basic weighted-average common shares outstanding*

29,768,568

11,951,137

Diluted weighted-average common shares outstanding*

29,768,568

19,677,507

Comprehensive income:

Net income

$                      3,823

$                      6,817

Foreign currency translation adjustment, net of tax

3

259

Net comprehensive income

$                      3,826

$                      7,076

* Shares of legacy redeemable convertible preferred stock and legacy common stock have been retroactively restated to give effect to the Merger.

Drilling Tools International Corp.

Consolidated Balance Sheets

(In thousands of U.S. dollars and rounded)

(Unaudited)

December 31,

December 31,

2023

2022

ASSETS

Current assets

Cash

$                      6,003

$                      2,352

Accounts receivable, net

29,929

28,998

Inventories, net

5,034

3,281

Prepaid expenses and other current assets

4,553

4,381

Investments - equity securities, at fair value

888

1,143

Total current assets

46,408

40,155

Property, plant and equipment, net

65,800

44,154

Operating lease right-of-use asset

18,786

20,037

Intangible assets, net

216

263

Deferred financing costs, net

409

226

Deposits and other long-term assets

879

383

Total assets

$                  132,498

$                  105,218

LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND
   SHAREHOLDERS' EQUITY

Current liabilities

Accounts payable

$                      7,751

$                      7,281

Accrued expenses and other current liabilities

10,579

7,299

Current portion of operating lease liabilities

3,958

3,311

Revolving line of credit

—

18,349

Total current liabilities

22,288

36,240

Operating lease liabilities, less current portion

14,893

16,691

Deferred tax liabilities, net

6,627

3,185

Total liabilities

43,808

56,116

Commitments and contingencies (See Note 14)

Redeemable convertible preferred stock

Series A redeemable convertible preferred stock*, par value $0.01;
   nil shares and 30,000,000 shares authorized at December 31, 2023 and
   December 31, 2022, respectively; nil shares and 6,719,641 shares issued
   and outstanding at December 31, 2023 and December 31, 2022, respectively

—

17,878

Shareholders' equity

Common stock*, par value $0.0001; 500,000,000 shares and 65,000,000 shares
   authorized at December 31, 2023 and December 31, 2022, respectively;
   29,768,568 shares and 11,951,137 shares issued and outstanding at December 31,
   2023 and December 31, 2022, respectively
  

3

1

Preferred stock, par value $0.0001; 10,000,000 and nil shares authorized at
   December 31, 2023 and December 31, 2022, respectively; nil shares issued
   and outstanding at December 31, 2023 and December 31, 2022, respectively

—

—

Additional paid-in-capital

95,218

52,388

Accumulated deficit

(6,306)

(21,054)

Less treasury stock, at cost; nil shares at December 31, 2023 and  December 31, 2022

—

—

Accumulated other comprehensive loss

(225)

(111)

Total shareholders' equity

88,690

31,224

Total liabilities, redeemable convertible preferred stock and shareholders' equity

$                  132,498

$                  105,218

* Shares of legacy redeemable convertible preferred stock and legacy common stock have been retroactively restated to give effect to the Merger.

Drilling Tools International Corp.

Consolidated Statement of Cash Flows

(In thousands of U.S. dollars and rounded)

(Unaudited)

Twelve Months Ended December 31,

2023

2022

Cash flows from operating activities:

Net income

$                                   14,748

$                                   21,080

Adjustments to reconcile net income to net cash from operating activities:

Depreciation and amortization

20,352

19,709

Amortization of deferred financing costs

139

94

Amortization of debt discount

—

58

Non-cash lease expense

4,515

4,139

Provision for excess and obsolete inventory

75

45

Provision for excess and obsolete property and equipment

122

510

Loss on asset disposal

489

—

Bad debt expense

117

307

Deferred tax expense

3,443

1,080

Gain on sale of property

(101)

(127)

Unrealized (gain) loss on equity securities

255

(234)

Unrealized (gain) loss on interest rate swap

—

(1,423)

Realized loss on interest rate swap

4

—

Gross profit from sale of lost-in-hole equipment

(16,686)

(16,813)

Stock-based compensation expense

3,986

—

Changes in operating assets and liabilities:

Accounts receivable, net

(1,048)

(9,268)

Prepaid expenses and other current assets

519

(3,476)

Inventories, net

(1,716)

(906)

Deposits and other long-term assets

(496)

17

Operating lease liabilities

(4,415)

(4,174)

Accounts payable

(1,552)

(1,432)

Accrued expenses and other current liabilities

583

4,808

Net cash from operating activities

23,334

13,994

Cash flows from investing activities:

Proceeds from sale of property and equipment

202

1,042

Purchase of property, plant and equipment

(43,750)

(24,688)

Proceeds from sale of lost-in-hole equipment

19,684

21,116

Net cash from investing activities

(23,864)

(2,530)

Cash flows from financing activities:

Proceeds from Merger and PIPE Financing, net of transaction costs

23,162

—

Payment of deferred financing costs

(324)

(251)

Proceeds from revolving line of credit

73,050

108,594

Payments on revolving line of credit

(91,399)

(116,670)

Payments on long-term debt

—

(1,000)

Payments on finance leases

—

(10)

Payments to holders of DTIH redeemable convertible preferred stock in connection with
   retiring their DTI stock upon the Merger

(194)

—

Net cash from financing activities

4,295

(9,337)

Effect of Changes in Foreign Exchange Rate

(114)

173

Net Change in Cash

3,651

2,300

Cash at Beginning of Period

2,352

52

Cash at End of Period

$                                    6,003

$                                     2,352

Supplemental cash flow information:

Cash paid for interest

$                                    1,174

$                                        340

Cash paid for income taxes

$                                    3,006

$                                        723

Non-cash investing and financing activities:

ROU assets obtained in exchange for lease liabilities

$                                    3,264

$                                     7,907

Purchases of inventory included in accounts payable and accrued expenses and other
   current liabilities

$                                       601

$                                          79

Purchases of property and equipment included in accounts payable and accrued expenses and other
   current liabilities

$                                    1,422

$                                        372

Non-cash directors and officers insurance

$                                       695

$                                           —

Non-cash Merger financing

$                                    2,000

$                                           —

Exchange of DTIH redeemable convertible preferred stock for DTIC Common Stock in connection
   with Merger

$                                     7,193

$                                           —

Issuance of DTIC Common Stock to former holders of DTIH redeemable convertible
   preferred stock in connection with Exchange Agreements

$                                   10,805

$                                           —

Accretion of redeemable convertible preferred stock to redemption value

$                                        314

$                                      1,189

Drilling Tools International Corp.

Reconcilation of GAAP to Non-GAAP Measures (Unaudited)

(In thousands of U.S. dollars and rounded)

Three Months Ended December 31,

2023

2022

Net income

$                                 3,823

$                                 6,817

Add (deduct):

Income tax expense

(155)

851

Depreciation and amortization

5,317

4,927

Interest expense, net

108

436

Stock option expense

—

—

Management fees

357

155

Gain on sale of property

(33)

(20)

Loss on asset disposal 

489

—

Unrealized gain (loss) on equity securities

107

(309)

Transaction expense

16

—

ERC credit received

—

—

Other expense, net

173

175

Adjusted EBITDA

$                               10,202

$                               13,032

Drilling Tools International Corp.

Reconcilation of GAAP to Non-GAAP Measures (Unaudited)

(In thousands of U.S. dollars and rounded)

Twelve Months Ended December 31,

2023

2022

Net income

$                               14,748

$                               21,080

Add (deduct):

Income tax expense

5,046

3,698

Depreciation and amortization

20,352

19,709

Interest expense, net

1,103

477

Stock option expense

1,661

—

Management fees

1,130

449

Gain on sale of property

(101)

(127)

Loss on asset disposal 

 ` 

—

Unrealized gain (loss) on equity securities

255

(234)

Transaction expense

5,979

—

ERC credit received

—

(4,272)

Other expense, net

380

384

Adjusted EBITDA

$                               51,042

$                               41,163

Drilling Tools International Corp.

Reconcilation of GAAP to Non-GAAP Measures (Unaudited)

(In thousands of U.S. dollars and rounded)

Twelve Months Ended December 31,

2023

2022

Net income

$                               14,748

$                               21,080

Add (deduct):

Income tax expense

5,046

3,698

Depreciation and amortization

20,352

19,709

Interest expense, net

1,103

477

Stock option expense

1,661

—

Management fees

1,130

449

Gain on sale of property

(101)

(127)

Loss on asset disposal 

489

—

Unrealized gain (loss) on equity securities

255

(234)

Transaction expense

5,979

—

ERC credit received

—

(4,272)

Other expense, net

380

384

Gross capital expenditures

(43,750)

(24,688)

Adjusted Free Cash Flow

$                                 7,292

$                               16,476

Drilling Tools International Corp.

Reconcilation of GAAP to Non-GAAP Measures (Unaudited)

(In thousands of U.S. dollars and rounded)

Three Months Ended December 31,

2023

2022

Net income

$                                 3,823

$                                 6,817

Add (deduct):

Income tax expense

(155)

851

Depreciation and amortization

5,317

4,927

Interest expense, net

108

436

Stock option expense

—

—

Management fees

357

155

Gain on sale of property

(33)

(20)

Loss on asset disposal 

489

—

Unrealized gain (loss) on equity securities

107

(309)

Transaction expense

16

—

ERC credit received

—

—

Other expense, net

173

175

Gross capital expenditures

(6,974)

(8,453)

Adjusted Free Cash Flow

$                                 3,228

$                                 4,579

Drilling Tools International Corp.

Reconciliation of Estimated Consolidated Net Income to Adjusted EBITDA

(In thousands of U.S. dollars and rounded)

(Unaudited)

Twelve Months Ended December 31, 2024

Low

High

Net Income

$           15,000

$           21,000

Add (deduct)

Interest expense, net

2,000

2,300

Income tax expense

5,500

6,000

Depreciation and amortization

22,000

22,500

Management fees

600

1,000

Other expense

2,000

2,200

Stock option expense

2,100

2,300

Transaction expense

800

1,200

Adjusted EBITDA

$         50,000

$         58,500

Revenue

170,000

185,000

Adjusted EBITDA Margin

29 %

32 %

Drilling Tools International Corp.

Reconciliation of Estimated Consolidated Net Income to Adjusted Free Cash Flow

(In thousands of U.S. dollars and rounded)

(Unaudited)

Twelve Months Ended December 31, 2024

Low

High

Net Income

$           15,000

$           21,000

Add (deduct)

Interest expense, net

2,000

2,300

Income tax expense

5,500

6,000

Depreciation and amortization

22,000

22,500

Management fees

600

1,000

Other expense

2,000

2,200

Stock option expense

2,100

2,300

Transaction expense

800

1,200

Gross capital expenditures

(30,000)

(33,000)

Adjusted Free Cash Flow

$         20,000

$         25,500