On August 6, 2024, Drilling Tools International Corp (DTI, Financial) released its 8-K filing detailing its second quarter earnings for 2024. Drilling Tools International Corp manufactures, rents, inspects, and refurbishes downhole drilling tools primarily to companies in the oil and natural gas industry for bottom hole assemblies used in onshore and offshore horizontal and directional drilling. The Company's United States operations have locations in Texas, California, Louisiana, Oklahoma, Pennsylvania, North Dakota, New Mexico, Utah, and Wyoming. The Company's international operations are located in Canada with additional stocking points in Europe and the Middle East.
Performance Overview
Drilling Tools International Corp (DTI, Financial) reported total revenue of $37.5 million for Q2 2024, which is relatively flat compared to the $37.9 million reported in the same quarter last year. This figure falls short of the analyst estimate of $45.47 million. The company's earnings per share (EPS) came in at $0.01, significantly below the analyst estimate of $0.15.
Key Financial Metrics
DTI's tool rental net revenue was $28.3 million, while product sales net revenue totaled $9.2 million. Operating expenses for the quarter were $35.3 million, resulting in an operating income of $2.2 million. Adjusted EBITDA for the quarter was $9.0 million. The company also reported an improvement in adjusted free cash flow, which increased by $3.2 million from ($4.3) million in Q2 2023 to ($1.1) million in Q2 2024.
Acquisition and Strategic Initiatives
DTI announced the acquisition of Superior Drilling Products, Inc. (SDP) for approximately $32.2 million in cash and stock. This acquisition is expected to bring significant synergies, including $4.5 million in SG&A synergies and realizable NOL tax benefits. The integration of SDP’s patented Drill-N-Ream® well bore conditioning tool into DTI’s portfolio is anticipated to expand geographic market potential, lower capital requirements, and improve operational efficiencies.
Wayne Prejean, CEO of DTI, stated, “We are pleased to announce the closing of the SDP acquisition and are excited to welcome SDP’s talented team to the DTI family and add SDP’s world-class manufacturing expertise into our broad-reaching and expanding global sales channels.”
Income Statement Highlights
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Total Revenue | $37.5 million | $37.9 million |
| Operating Income | $2.2 million | $6.6 million |
| Net Income | $0.365 million | $0.937 million |
| EPS | $0.01 | $0.07 |
Balance Sheet and Cash Flow
As of June 30, 2024, DTI reported total assets of $166.9 million, up from $132.5 million at the end of 2023. The company’s cash position improved to $6.8 million from $6.0 million. Accounts receivable increased to $35.1 million, and inventories rose to $14.6 million. On the liabilities side, total liabilities stood at $74.1 million, up from $43.8 million at the end of 2023.
Updated 2024 Full Year Outlook
DTI has updated its full-year guidance, projecting revenue between $155 million and $170 million, adjusted net income between $9.9 million and $13.5 million, and adjusted EBITDA between $41 million and $47 million. The company maintains its adjusted free cash flow outlook of $20 million to $25 million.
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Explore the complete 8-K earnings release (here) from Drilling Tools International Corp for further details.
