Drilling Tools International Corp. Reports 2025 First Quarter Results

Board Authorizes a $10 Million Share Repurchase Program

HOUSTON, May 13, 2025 /PRNewswire/ -- Drilling Tools International Corp., (NASDAQ: DTI) ("DTI" or the "Company"), a global oilfield services company that designs, engineers, manufactures and provides a differentiated, rental-focused offering of tools for use in onshore and offshore horizontal and directional drilling operations, as well as other cutting-edge solutions across the well life cycle, today reported its results for the three months ended March 31, 2025.

DTI generated total consolidated revenue of $42.9 million in the first quarter of 2025. First quarter Tool Rental revenue was approximately $34.5 million and Product Sales revenue totaled $8.3 million. Total Operating Expenses were $39.6 million and Operating Income was $3.3 million. Net Loss for the first quarter was approximately $1.7 million and Adjusted Net Income((1)) for the quarter was $0.7 million. Diluted EPS and Adjusted Diluted EPS((1)) for the first quarter were a loss of $0.05 per share and an income of $0.02 per share, respectively. First quarter Adjusted EBITDA((1)) was $10.8 million and Adjusted Free Cash Flow((1)(2)) was $5.7 million. As of March 31, 2025, DTI had approximately $2.8 million of cash and cash equivalents and net debt of $52.1 million.

Wayne Prejean, President and Chief Executive Officer of DTI, stated, "We are pleased to report strong 2025 first quarter sequential and year-over-year revenue growth and solid Adjusted EBITDA results in spite of industry headwinds. Revenue grew 7.6% sequentially and 16% over last year's first quarter. Adjusted EBITDA was essentially flat sequentially and grew nearly 18% over the same period last year.

"Looking to the near term, we have yet to experience tangible disruptions to our forecast for our rental tools or the sale of our tools," added Prejean. "However, we do see increased volatility and uncertainty in the marketplace due to the potential impacts of tariffs, recession fears that could lower demand for hydrocarbons, and OPEC+'s decision to increase production, to name a few. In anticipation of any prospective disruptions, we have implemented a new program to cut expenses by approximately $6 million this year and have contingency plans to cut more costs if necessary.

"While we cannot control global economic forces, we do believe that our input costs are fairly insulated from the increase in the costs associated with any tariff risks for three reasons: 1) DTI has a strong US manufacturing base; 2) our international footprint and diverse supply chain allows us flexibility in the face of uncertainty; and 3) should a significant reduction in rig count come, we are prepared to significantly curtail planned growth capital expenditures," said Prejean. "We remain committed to identifying cost reduction opportunities and maintaining operational agility to quickly respond to a challenging environment, now or in the future, to enhance shareholder value.

"Based on this current volatility and market uncertainty, we feel it is prudent to adjust our annual Revenue, Adjusted EBITDA, and Adjusted Free Cash Flow guidance ranges as follows:

Updated 2025 Full Year Outlook


     
     Revenue                       
      
      $145 million 
      
      $165 million



     
     Adjusted EBITDA(1)             
      
      $32 million  
      
      $42 million



     
     Adjusted EBITDA Margin(1)                   22 %               25 %



     
     Adjusted Free Cash Flow(1)(2)  
      
      $14 million  
      
      $19 million




     (1)   Adjusted Net Income, 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.

Board Authorizes a $10 Million Repurchase Program

Prejean added, "Our disciplined capital allocation strategy prioritizes financial strength through maintenance and organic growth capital investment, strategic acquisitions, and now a return of capital program to enhance shareholder value. We firmly believe that our common stock is undervalued and is an attractive investment opportunity within our overall capital allocation strategy."

DTI announced today that its board of directors (the "Board") recently authorized a repurchase program under which the Company may repurchase its outstanding shares of its common stock up to $10 million. The Board's decision to initiate this program reflects its confidence in the Company's long-term strategy and financial health. By repurchasing shares, DTI aims to enhance shareholder value in several ways, including optimizing its capital structure and demonstrating a commitment to returning excess capital to shareholders, providing the Company with flexibility to manage its equity base efficiently. The Board will periodically review the program and may adjust the amount and timing of repurchases based on market conditions, business outlook, and other factors relevant to the Company's financial position and strategic priorities.

Under the share repurchase program, the Company intends to repurchase shares through open-market, round lot of block transactions, in privately negotiated, off-market purchases or otherwise in accordance with applicable federal and state securities laws, including Rule 10b-18 of the Securities Exchange Act of 1934 (the "Exchange Act"). Information regarding share repurchases will be available in the Company's periodic reports on Form 10-Q and 10-K filed with the Securities and Exchange Commission as required by the applicable rules of the Exchange Act.

2025 First Quarter Conference Call Information

DTI's 2025 first quarter conference call can be accessed live via dial-in or webcast on Wednesday, May 14, 2025 at 10:00 a.m. Eastern Time (9:00 a.m. Central Time) by dialing 201-389-0869 and asking for the DTI call at least 10 minutes prior to the start time, or via live webcast by logging onto the webcast at this URL address: https://investors.drillingtools.com/news-events/events. An audio replay will be available through May 21, 2025 by dialing 201-612-7415 and using passcode 13753220#. Also, an archive of the webcast will be available shortly after the call at https://investors.drillingtools.com/news-events/events for 90 days. Please submit any questions for management prior to the call via email to DTI@dennardlascar.com.

About Drilling Tools International Corp.

DTI is a Houston, Texas based leading oilfield services company that manufactures and rents downhole drilling tools used in horizontal and directional drilling of oil and natural gas wells. With roots dating back to 1984, DTI operates from 15 service and support centers across North America and maintains 11 international service and support centers across the EMEA and APAC regions. To learn more about DTI, please visit: www.drillingtools.com.

Contact:

DTI Investor Relations
Ken Dennard / Rick Black
InvestorRelations@drillingtools.com

Forward-Looking Statements

This press release may include, and oral statements made from time to time by representatives of the Company may include, "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements regarding the business combination and the financing thereof, and related matters, as well as all other statements other than statements of historical fact included in this press release are forward-looking statements. The words "anticipate," "believe," "continue," "could," "estimate," "expect," "intends," "may," "might," "plan," "possible," "potential," "predict," "project," "should," "will," "would" and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward looking. These forward-looking statements include, but are not limited to, statements regarding DTI and its management team's expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. Forward looking statements in this press release may include, for example, statements about: (1) the demand for DTI's products and services, which is influenced by the general level activity in the oil and gas industry; (2) DTI's ability to retain its customers, particularly those that contribute to a large portion of its revenue; (3) DTI's ability to employ and retain a sufficient number of skilled and qualified workers, including its key personnel; (4) DTI's ability to source tools and raw materials at a reasonable cost; (5) DTI's ability to market its services in a competitive industry; (6) DTI's ability to execute, integrate and realize the benefits of acquisitions, and manage the resulting growth of its business; (7) potential liability for claims arising from damage or harm caused by the operation of DTI's tools, or otherwise arising from the dangerous activities that are inherent in the oil and gas industry; (8) DTI's ability to obtain additional capital; (9) potential political, regulatory, economic and social disruptions in the countries in which DTI conducts business, including changes in tax laws or tax rates; (11) DTI's dependence on its information technology systems, in particular Customer Order Management Portal and Support System, for the efficient operation of DTI's business; (11) DTI's ability to comply with applicable laws, regulations and rules, including those related to the environment, greenhouse gases and climate change; (12) DTI's ability to maintain an effective system of disclosure controls and internal control over financial reporting; (13) the potential for volatility in the market price of DTI's common stock; (14) the impact of increased legal, accounting, administrative and other costs incurred as a public company, including the impact of possible shareholder litigation; (15) the potential for issuance of additional shares of DTI's common stock or other equity securities; (16) DTI's ability to maintain the listing of its common stock on Nasdaq; and (17) other risks and uncertainties separately provided to you and indicated from time to time described in in DTI's most recent Forms 10-K, 10-Q and 8-K filed with or furnished to the Securities and Exchange Commission (the "SEC"). You should carefully consider the risks and uncertainties including those described in Part I, Item 1A - "Risk Factors" of our Annual Report on Form 10-K filed on March 14, 2025 and in comparable "Risk Factor" sections of our Quarterly Reports on Form 10-Q filed after such Form 10-K. Such forward-looking statements are based on the beliefs of management of DTI, as well as assumptions made by, and information currently available to DTI's management and are subject to numerous conditions, many of which are beyond the control of DTI. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors detailed in DTI's most recent Forms 10-K, 10-Q and 8-K filed with or furnished to the SEC. All subsequent written or oral forward-looking statements attributable to the Company or persons acting on its behalf are qualified in their entirety by this paragraph. The Company undertakes no obligation to update these statements for revisions or changes after the date of this release, except as required by law.

                                          
              
                Drilling Tools International Corp.


                   
              
                Consolidated Statement of Operations and Comprehensive Income (Loss) (Unaudited)


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




                                                                                                                                       Three Months Ended March 31,


                                                                                                                                  2025             2024



     
                Revenue, net:



     Tool rental                                                                                                              $34,533          $29,966



     Product sale                                                                                                               8,347            7,008



     
                Total revenue, net                                                                                           42,880           36,974



     
                Operating costs and expenses:



     Cost of tool rental revenue                                                                                                7,688            6,484



     Cost of product sale revenue                                                                                               3,558            2,053



     Selling, general, and administrative expense                                                                              21,609           17,942



     Depreciation and amortization expense                                                                                      6,722            5,365



     
                Total operating costs and expenses                                                                           39,577           31,844



     
                Operating income                                                                                              3,303            5,130



     
                Other expense, net:



     Interest expense, net                                                                                                    (1,309)           (182)



     Gain on sale of property                                                                                                      13



     Loss on asset disposal                                                                                                                       (9)



     Gain (loss) on remeasurement of previously held equity interest                                                                              249



     Goodwill impairment                                                                                                      (1,901)



     Other income (expense), net                                                                                              (1,934)         (1,125)



     
                Total other expense, net                                                                                    (5,131)         (1,067)



     Income before income tax expense                                                                                         (1,828)           4,063



     Income tax benefit (expense)                                                                                                 159            (937)



     
                Net income (Loss)                                                                                          $(1,669)          $3,126



     Basic earnings  per share                                                                                                $(0.05)           $0.11



     Diluted earnings per share                                                                                               $(0.05)           $0.11



     Basic weighted-average common shares outstanding                                                                      35,592,737       29,768,568



     Diluted weighted-average common shares outstanding                                                                    35,592,737       29,768,568



     
                Comprehensive income:



     Net income (Loss)                                                                                                       $(1,669)          $3,126



     Foreign currency translation adjustment, net of tax                                                                          942            (511)



     
                Net comprehensive income (loss)                                                                              $(727)          $2,615

                                                                                                                                                                                                                 
              
                Drilling Tools International Corp.


                                                                                                                                                                                                               
              
                Consolidated Balance Sheets (Unaudited)


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




                                                                                                                                                                                                                                                                                            March 31,               December 31,


                                                                                                                                                                                                                                                                                      2025                 2024



     
                ASSETS



     
                Current assets



     Cash                                                                                                                                                                                                                                                                        $
       2,789            $
        6,185



     Accounts receivable, net                                                                                                                                                                                                                                                        42,381                 39,606



     Related party note receivable, current                                                                                                                                                                                                                                             909                    909



     Inventories, net                                                                                                                                                                                                                                                                18,250                 17,502



     Prepaid expenses and other current assets                                                                                                                                                                                                                                        3,045                  3,874



     
                Total current assets                                                                                                                                                                                                                                               67,374                 68,076



     Property, plant and equipment, net                                                                                                                                                                                                                                              80,863                 75,571



     Operating lease right-of-use asset                                                                                                                                                                                                                                              23,653                 22,718



     Intangible assets, net                                                                                                                                                                                                                                                          40,227                 37,232



     Goodwill                                                                                                                                                                                                                                                                        14,401                 12,147



     Deferred financing costs, net                                                                                                                                                                                                                                                      730                    817



     Related party note receivable, less current portion                                                                                                                                                                                                                              4,353                  4,262



     Deposits and other long-term assets                                                                                                                                                                                                                                              1,569                  1,608



     
                Total assets                                                                                                                                                                                                                                                 $
       233,169          $
        222,431



     
                LIABILITIES AND  SHAREHOLDERS' EQUITY



     
                Current liabilities



     Accounts payable                                                                                                                                                                                                                                                           $
       15,603           $
        11,983



     Accrued expenses and other current liabilities                                                                                                                                                                                                                                   9,031                  7,864



     Current portion of operating lease liabilities                                                                                                                                                                                                                                   4,258                  4,121



     Current maturities of long-term debt                                                                                                                                                                                                                                             5,908                  6,995



     
                Total current liabilities                                                                                                                                                                                                                                          34,801                 30,963



     Operating lease liabilities, less current portion                                                                                                                                                                                                                               19,644                 18,765



     Revolving line of credit                                                                                                                                                                                                                                                        30,000                 27,142



     Long-term debt, less current portion                                                                                                                                                                                                                                            18,961                 19,676



     Deferred tax liabilities, net                                                                                                                                                                                                                                                    7,067                  5,926



     
                Total liabilities                                                                                                                                                                                                                                                 110,473                102,472



     
                Commitments and contingencies



     
                Shareholders' equity



     Common stock, $0.0001 par value, shares authorized 500,000,000 as of March 31, 2025 and December 31, 2024, 35,592,737 issued and outstanding as of March 31, 2024 and 34,704,696 shares issued and outstanding as of December 31, 2024                                               4                      3



     Additional paid-in-capital                                                                                                                                                                                                                                                     128,878                125,415



     Accumulated deficit                                                                                                                                                                                                                                                            (5,251)               (3,582)



     Accumulated other comprehensive loss                                                                                                                                                                                                                                             (935)               (1,877)



     
                Total shareholders' equity                                                                                                                                                                                                                                        122,696                119,959



     
                Total liabilities and shareholders' equity                                                                                                                                                                                                                   $
       233,169          $
        222,431

                                                                              
        
              Drilling Tools International Corp.


                                                                       
             
         Consolidated Statement of Cash Flows (Unaudited)


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




                                                                                                                     Three months ended March 31,


                                                                                                                                             2025               2024



     
                Cash flows from operating activities:



     Net income (Loss)                                                                                                                           $
        (1,669)      $
        3,126



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



     Depreciation and amortization                                                                                                                       6,722             5,365



     Amortization of deferred financing costs                                                                                                               87                56



     Non-cash lease expense                                                                                                                              1,383             1,111



     Unrealized loss on currency remeasurement                                                                                                           (114)



     Provision for excess and obsolete inventory                                                                                                           418



     Provision for excess and obsolete property and equipment                                                                                               54                66



     Provision for credit losses                                                                                                                           217             (135)



     Deferred tax expense                                                                                                                                (750)              266



     Gain on sale of property                                                                                                                             (14)



     Loss on asset disposal                                                                                                                                 37                 9



     Unrealized (gain) loss on equity securities                                                                                                                          (249)



     Gross profit from sale of lost-in-hole equipment                                                                                                  (3,145)          (2,799)



     Stock-based compensation expense                                                                                                                      541               208



     Interest Income on related party note receivable                                                                                                     (91)



     Goodwill impairment                                                                                                                                 1,901



     Changes in operating assets and liabilities:



     Accounts receivable, net                                                                                                                            (670)          (1,839)



     Prepaid expenses and other current assets                                                                                                             572             1,723



     Inventories, net                                                                                                                                    2,540             2,836



     Operating lease liabilities                                                                                                                       (1,303)          (1,067)



     Accounts payable                                                                                                                                  (3,651)          (2,848)



     Accrued expenses and other current liabilities                                                                                                      (634)          (2,517)



     
                Net cash flows from operating activities                                                                                               2,431             3,311



     
                Cash flows from investing activities:



     Acquisition of a business, net of cash acquired                                                                                                   (5,619)         (18,261)



     Purchase of intangible assets                                                                                                                       (681)



     Proceeds from sale of property, plant, and equipment                                                                                                   14



     Purchase of property, plant, and equipment                                                                                                        (5,043)          (6,228)



     Proceeds from sale of lost-in-hole equipment                                                                                                        4,049             4,904



     
                Net cash flows from investing activities                                                                                             (7,280)         (19,585)



     
                Cash flows from financing activities:



     Payment of deferred financing costs                                                                                                                                  (389)



     Proceeds from Term Loan                                                                                                                                             25,000



     Repayment of Term Loan                                                                                                                            (1,250)



     Repayment of Promissory Note                                                                                                                        (216)



     Proceeds from revolving line of credit                                                                                                             19,349



     Repayment on revolving line of credit                                                                                                            (16,491)



     
                Net cash flows from financing activities                                                                                               1,392            24,611



     
                Effect of Changes in Foreign Exchange Rate                                                                                                61             (291)



     
                Net Change in Cash                                                                                                                   (3,396)            8,046



     
                Cash at Beginning of Period                                                                                                            6,185             6,003



     
                Cash at End of Period                                                                                                            $
        2,789      $
        14,049



Non-GAAP Financial Measures

This release includes Adjusted EBITDA, Adjusted Free Cash Flow, Net Debt and Adjusted Net Income measures. Each of the metrics are "non-GAAP financial measures" as defined in Regulation G of the Securities Exchange Act of 1934.

Adjusted EBITDA is a supplemental non-GAAP financial measure that is used by management and external users of our financial statements, such as industry analysts, investors, lenders and rating agencies. Adjusted EBITDA is not a measure of net earnings or cash flows as determined by GAAP. We define Adjusted EBITDA as net earnings (loss) before interest, taxes, depreciation and amortization, further adjusted for (i) goodwill and/or long-lived asset impairment charges, (ii) stock-based compensation expense, (iii) restructuring charges, (iv) transaction and integration costs related to acquisitions and (v) other expenses or charges to exclude certain items that we believe are not reflective of ongoing performance of our business.

We believe Adjusted EBITDA is useful because it allows us to supplement the GAAP measures in order to more effectively evaluate our operating performance and compare the results of our operations from period to period without regard to our financing methods or capital structure. We exclude the items listed above in arriving at Adjusted EBITDA because these amounts can vary substantially from company to company within our industry depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired. Adjusted EBITDA should not be considered as an alternative to, or more meaningful than, net income as determined in accordance with GAAP, or as an indicator of our operating performance or liquidity. Certain items excluded from Adjusted EBITDA are significant components in understanding and assessing a company's financial performance, such as a company's cost of capital and tax structure, as well as the historic costs of depreciable assets, none of which are components of Adjusted EBITDA. Our computations of Adjusted EBITDA may not be comparable to other similarly titled measures of other companies.

Adjusted Free Cash Flow is a supplemental non-GAAP financial measure, and we define Adjusted Free Cash Flow as Adjusted EBITDA less Gross Capital Expenditures. We use Adjusted Free Cash Flow as a financial performance measure used for planning, forecasting, and evaluating our performance. We believe that Adjusted Free Cash Flow is useful to enable investors and others to perform comparisons of current and historical performance of the Company. As a performance measure, rather than a liquidity measure, the most closely comparable GAAP measure is net income (loss).

Net Debt is a supplemental non-GAAP financial measure, and we define Net Debt as total debt less cash and cash equivalents. We use Net Debt to determine our outstanding debt obligations that would not be readily satisfied by our cash and cash equivalents on hand. We believe this metric is useful to analysts and investors in determining our leverage position since we have the ability to, and may decide to, use a portion of our cash and cash equivalents to reduce debt.

We define Adjusted Net Income (Loss) as consolidated net income (loss) adjusted for (i) goodwill and/or long-lived asset impairment charges, (ii) restructuring charges, (iii) transaction and integration costs related to acquisitions, (iv) income taxes expense which is calculated by applying our effective tax rate on unadjusted net income to adjusted pre-tax income, and (v) other expenses or charges to exclude certain items that we believe are not reflective of the ongoing performance of our business. We believe Adjusted Net Income (Loss) is useful because it allows us to exclude non-recurring items in evaluating our operating performance.

We define Adjusted Diluted Earnings (Loss) per share as the quotient of adjusted net income (loss) and diluted weighted average common shares. We believe that Adjusted Diluted Earnings (Loss) per share provides useful information to investors because it allows us to exclude non-recurring items in evaluating our operating performance on a diluted per share basis.

This release also includes certain projections of non-GAAP financial measures. Reconciliation of these items to net income include gains or losses on sale or consolidation transactions, accelerated depreciation, impairment charges, gains or losses on retirement of debt, variations in effective tax rate and fluctuations in net working capital, which are difficult to predict and estimate and are primarily dependent on future events.

The following tables present a reconciliation of the non-GAAP financial measures of Adjusted EBITDA, Adjusted Free Cash Flow and Adjusted Net Income to the most directly comparable GAAP financial measures for the periods indicated:

                                            
              
                Drilling Tools International Corp.


                                 
              
                Reconciliation of GAAP to Non-GAAP Measures (Unaudited)


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




                                                                                                                           Three months ended March 31,


                                                                                                                      2025                         2024



     Net income (loss)                                                                                           $(1,669)                      $3,126



     Add (deduct):



     Income tax expense (benefit)                                                                                   (159)                         937



     Depreciation and amortization                                                                                  6,722                        5,365



     Interest expense, net                                                                                          1,309                          182



     Stock option expense                                                                                             541                          208



     Management fees                                                                                                  188                          188



     Gain on sale of property                                                                                        (14)



     Loss on asset disposal                                                                                                                         9



     Gain on remeasurement of previously held equity interest                                                                                   (249)



     Goodwill impairment                                                                                            1,901



     Transaction expense                                                                                              732                          889



     Other expense, net                                                                                             1,203                          236



     Adjusted EBITDA                                                                                              $10,754                      $10,891

                                              
              
                Drilling Tools International Corp.


                                    
              
                Reconciliation of GAAP to Non-GAAP Measures (Unaudited)


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




                                                                                                                              Three months ended March 31,


                                                                                                                         2025                        2024



     Net income (loss)                                                                                              $(1,669)                     $3,126



     Add (deduct):



     Income tax expense (benefit)                                                                                      (159)                        937



     Depreciation and amortization                                                                                     6,722                       5,365



     Interest expense, net                                                                                             1,309                         182



     Stock option expense                                                                                                541                         208



     Management fees                                                                                                     188                         188



     Gain on sale of property                                                                                           (14)



     Loss on asset disposal                                                                                                                           9



     Loss (gain) on remeasurement of previously held equity interest                                                                              (249)



     Goodwill impairment                                                                                               1,901



     Transaction expense                                                                                                 732                         889



     Other expense, net                                                                                                1,203                         236



     Gross capital expenditures                                                                                      (5,043)                    (6,228)



     Adjusted Free Cash Flow                                                                                          $5,711                      $4,663

                                     
              
                Drilling Tools International Corp.


                          
              
                Reconciliation of GAAP to Non-GAAP Measures (Unaudited)


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




                                                                                                                      Three months ended March 31,


                                                                                                                 2025                        2024



     Net income (loss)                                                                                      $(1,669)                     $3,126



     Transaction expense                                                                                         732                         889



     Goodwill impairment                                                                                       1,901



     Income tax expense (benefit)                                                                              (159)                        937



     Adjusted Income Before Tax                                                                                 $805                      $4,952



     Adjusted Income tax expense                                                                                (70)                    (1,142)



     Adjusted Net Income                                                                                        $735                      $3,810



     Adjusted Basic earnings  per share                                                                        $0.02                       $0.13



     Adjusted Diluted earnings per share                                                                       $0.02                       $0.13



     Basic weighted-average common shares outstanding                                                     35,592,737                  29,768,568



     Diluted weighted-average common shares outstanding                                                   35,778,541                  29,768,568

                                         
            
                Drilling Tools International Corp.


                       
              
              Reconciliation of Estimated Consolidated Net Income to Adjusted EBITDA


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


                                           
              
                
                  (Unaudited)




                                                                                                       Three Months Ended March 31, 2025


                                                                                                Low                                         High



     Net Income                                                                      $
              (4,500)                                $
         (1,500)



     Add (deduct)



     Interest expense, net                                                                         3,700                                          5,000



     Income tax expense                                                                          (1,000)                                           500



     Depreciation and amortization                                                                26,500                                         28,000



     Management fees                                                                                 700                                            800



     Other expense                                                                                 1,500                                          3,000



     Stock option expense                                                                          2,500                                          3,000



     Goodwill impairment                                                                           1,800                                          2,000



     Transaction expense                                                                             800                                          1,200



     
                Adjusted EBITDA                                        $
              
                32,000                     $
              
           42,000



     Revenue                                                                                     145,000                                        165,000



     
                Adjusted EBITDA Margin                                                              22                                             25

                                                                                                        %                                             %

                                               
              
                Drilling Tools International Corp.


                         
              
                Reconciliation of Estimated Consolidated Net Income to Adjusted Free Cash Flow


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


                                                   
              
                
                  (Unaudited)




                                                                                                                    Three Months Ended March 31, 2025


                                                                                                             Low                                         High



     Net Income                                                                                   $
              (4,500)                                $
         (1,500)



     Add (deduct)



     Interest expense, net                                                                                      3,700                                          5,000



     Income tax expense                                                                                       (1,000)                                           500



     Depreciation and amortization                                                                             26,500                                         28,000



     Management fees                                                                                              700                                            800



     Other expense                                                                                              1,500                                          3,000



     Stock option expense                                                                                       2,500                                          3,000



     Goodwill impairment                                                                                        1,800                                          2,000



     Transaction expense                                                                                          800                                          1,200



     Gross capital expenditures                                                                              (18,000)                                      (23,000)



     
                Adjusted Free Cash Flow                                             $
              
                14,000                     $
              
           19,000



     
                Adjusted Free Cash Flow Margin                                                                   10                                             12

                                                                                                                     %                                             %

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SOURCE Drilling Tools International Corp.