Summary of Drilling Tools International (DTI) Q2 2026 Earnings Call

1Key Financial Results and Metrics

Revenue: $38.1 million, with tool rental revenue at $29.6 million and product sales at $8.5 million.

Adjusted EBITDA: $8.4 million.

Net Loss: $1.8 million (loss of $0.05 per share); adjusted net loss of $575,000 (loss of $0.02 per share).

Adjusted Free Cash Flow: $4.1 million.

Capital Expenditures: $4.2 million, down from $7.7 million in Q1 2026.

Cash and Cash Equivalents: $2.5 million; net debt increased to $51.7 million.

2Strategic Updates and Business Highlights

DTI experienced a resilient performance despite a nearly 4% decline in global rig count, largely due to geopolitical disruptions in the Middle East.

The North American rig count showed signs of recovery, with an increase to 777 rigs in July, up 10% from Q2 averages.

DTI's ClearPath Stabilizer technology is gaining traction in offshore markets, expected to contribute significantly to revenue in the second half of 2026.

The company is strategically reallocating capital from mature markets to higher-return international opportunities, particularly in Europe and North Africa.

3Forward Guidance and Outlook

DTI reaffirmed its 2026 guidance:

Revenue: $155 million to $170 million.

Adjusted EBITDA: $35 million to $45 million.

Adjusted Free Cash Flow: $17 million to $22 million.

Management anticipates improved results in the second half of 2026, driven by increased activity in Europe, North Africa, and a recovery in U.S. drilling.

4Bad News, Challenges, or Points of Concern

The company reported a net loss, indicating ongoing challenges despite revenue growth.

The Eastern Hemisphere operations faced disruptions due to geopolitical conflicts, particularly in the Middle East, which tempered potential contributions.

There remains uncertainty in the North American market, with fluctuations in rig counts and operator activity.

Pricing pressures in certain areas of the rental business persist, although management believes this has stabilized.

5Notable Q&A Insights

North American Activity: Management expressed optimism about a rebound in Canada and steady improvements in the U.S. rig count, although some fluctuations were noted.

ClearPath Stabilizer Success: The technology's rapid adoption is attributed to its performance in managed pressure drilling, enhancing operators' efficiency.

Capital Expenditures: Higher CapEx is expected to support new technology investments, which may limit free cash flow but are viewed as essential for long-term growth.

M&A Strategy: DTI remains focused on potential acquisitions that can enhance its technological capabilities and market position, with ongoing evaluations of various opportunities. Overall, DTI demonstrated resilience in Q2 2026 amidst challenging market conditions, with a strategic focus on technology and international growth positioning it for a stronger second half of the year.