Company Provides 2024 Full Year
Outlook
Estimated adjusted free cash flow to more
than double in 2024
HOUSTON,
March 27,
2024 /PRNewswire/ -- Drilling Tools International
Corp., (NASDAQ: DTI) ("DTI" or the "Company"), a global oilfield
services company that manufactures and provides a differentiated,
rental-focused offering of tools for use in onshore and offshore
horizontal and directional drilling operations, today reported its
2023 full year results and provided its 2024 full year outlook.
2023 Full Year Highlights
|
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
|
Wayne Prejean, CEO
of DTI, stated, "We are pleased to report that after only eight
months as a public company, we are successfully implementing the
strategic plans we outlined during our public offering. On top of
reporting robust results for 2023, we have been extremely active
since year end by: 1) entering into a definitive agreement to
acquire Superior Drilling Products, Inc. (NYSE American: SDPI)
("SDP"); 2) closing the acquisition of Deep Casing Tools; and 3)
improving liquidity and strengthening our balance sheet by amending
and extending our ABL Credit Facility. This provides for a
revolving line of credit in a principal amount of up to
$80 million and a single draw term
loan in a principal amount of $25
million, both maturing in March
2029, to further support our growth strategy.
"As a market leader in providing downhole tool
rentals for both North American land and Gulf of Mexico deepwater drilling operations,
DTI's extensive rental model, broad distribution capabilities and
diverse customer base across multiple basins provides us with a
significant competitive advantage and through-cycle outperformance,
especially during volatile commodity price cycles. In contrast to
larger capital-intensive equipment companies in the oilfield
services sector, our rental tools are easily deployable to various
locations to serve our clients' needs. We believe the ability to
scale our operations as needed across our extensive footprint
allows us to better support customers in the field, and, with over
65,000 rental tools in our fleet, we are well positioned to support
our customers' complex drilling and producing activities."
Prejean continued, "Additionally, we have
established an M&A framework and robust M&A pipeline that
will allow us to selectively and strategically consolidate the
oilfield service rental tool industry. Our recent acquisition of
Deep Casing Tools and our pending acquisition of SDP are
outstanding examples of how we are expanding DTI's growth
opportunities, both domestically and internationally, with a
particular focus on our presence in Europe and the Middle East. We are confident that these and
future acquisitions will drive innovation, expand our footprint and
addressable market, enhance our product offerings, and, as a
result, increase shareholder value."
Selected 2023 Financial and Operating
Results
DTI generated total consolidated revenue of
$152 million in 2023, an increase of
17.4% compared to 2022.
2023 Tool Rental net revenue was $119.2 million, an increase of 20.4% compared to
2022 due to a strong first half performance and maintaining a solid
market share despite a declining rig count in the second half of
2023.
2023 Product Sales net revenue totaled
$32.8 million, an increase of 7.4%
compared to 2022. The increase was driven by a strong first half as
well as ongoing tool recovery revenue which occurs as part of the
rental tool lifecycle.
2023 operating expenses were $124.1 million compared to $104.3 million in 2022, resulting from the added
costs of going public as well as additional administrative and
compliance expenses.
2023 operating income was $27.9 million, compared to $25.3 million in 2022.
2023 Adjusted EBITDA(1) was
$51.0 million, compared to
$41.2 million in 2022.
2023 Adjusted free cash flow(1)(2) was
$7.3 million, compared to
$16.5 million in 2022. The decrease
was primarily due to approximately $19
million more capital expenditure dollars spent in 2023
compared to 2022. This increased investment was needed to
meet customer demand for new products and future growth.
2023 fourth quarter results reflected the
industry's continued second half rig count and market activity
declines. DTI was able to scale back on capital expenditures
in order to meet its adjusted free cash flow target of $6 to $8 million,
defined as Adjusted EBITDA less Gross Capital Expenditures, which
is a unique lever at its disposal to generate returns in lieu of
growth. Management views this metric as a good measure of the
overall performance of its business.
At December 31,
2023, DTI had $6 million of
cash and cash equivalents and no debt.
Subsequent to year end, on March 18, 2024, DTI announced that it completed
an amendment to its existing Amended and Restated Senior Secured
Asset‑Based Revolving Credit, Security and Guaranty Agreement, with
PNC Business Credit, a division of PNC Bank. This ABL Amendment,
among other provisions, increased the borrowing capacity from
$60 million to $80 million, improved its interest rate and
removed certain restrictive financial covenants. The maturity date
of the ABL Credit Facility was extended to March 2029. Additionally, DTI entered into a new
$25 million term loan with PNC to
further support its growth strategy. The Term Loan also matures in
March 2029.
2024 Outlook
"Looking forward, we are excited about our market
opportunities and expect to more than double our adjusted free cash
flow in 2024 as we prepare for increased market-driven demand for
our rental tools and services for the remainder of the decade,"
added Prejean. "Additionally, while our growth has historically
been tied to rig count, we have aligned our business to be
positively impacted by the trend of longer laterals being drilled
in multi-well pads. Our customers benefit from efficiencies and
lower drilling costs when using our proprietary and technologically
advanced rental tools.
"Our full-year 2024 outlook below includes the
recent Deep Casing Tools acquisition's estimated impact on 2024
results, but does not include any contribution from the pending
acquisition of Superior Drilling Products. We will update 2024
guidance to include SDP once we close the transaction," concluded
Prejean.
|
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.
|
2023 Full Year and Fourth Quarter Conference
Call Information
DTI confirmed today that the Company's live
conference call can be accessed via dial-in or webcast on
Thursday, March 28, 2024 at
11:00 a.m. Eastern Time (10:00 a.m.
Central Time).
|
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
|
For those who cannot listen to the live call, a
replay will be available through April 4,
2024, and may be accessed by dialing 1-201-612-7415 and
using passcode 13744642#. 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 now operates from 16 service and support
centers across North America and
maintains 8 international service and support centers across
Europe and the Middle East.
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 remain the sole North American
distributor of the Drill-N-Ream; (4) DTI's ability to employ and
retain a sufficient number of skilled and qualified workers,
including its key personnel; (5) DTI's ability to source tools and
raw materials at a reasonable cost; (6) DTI's ability to market its
services in a competitive industry; (7) DTI's ability to execute,
integrate and realize the benefits of acquisitions, and manage the
resulting growth of its business; (8) 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; (9) DTI's ability to obtain
additional capital; (10) 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; (12) DTI's ability to comply
with applicable laws, regulations and rules, including those
related to the environment, greenhouse gases and climate change;
(13) DTI's ability to maintain an effective system of disclosure
controls and internal control over financial reporting; (14) the
potential for volatility in the market price of DTI's common stock;
(15) the impact of increased legal, accounting, administrative and
other costs incurred as a public company, including the impact of
possible shareholder litigation; (16) the potential for issuance of
additional shares of DTI's common stock or other equity securities;
(17) DTI's ability to maintain the listing of its common stock on
Nasdaq; and (18) other risks and uncertainties separately provided
to you and indicated from time to time described in filings and
potential filings by DTI with the Securities and Exchange
Commission (the "SEC"). You should carefully consider the risks and
uncertainties described in the definitive proxy
statement/prospectus/consent solicitation statement with the SEC by
the Company on May 12, 2023 (the
"Proxy Statement"), and the information presented in DTI's annual
report on Form 10-K filed March 29,
2024 (the "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. Actual
results could differ materially from those contemplated by the
forward-looking statements as a result of certain factors detailed
in the Proxy Statement or the 10-K. 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. Forward-looking statements are subject to numerous
conditions, many of which are beyond the control of each of DTI,
including those set forth in the Risk Factors section of the Proxy
Statement and described in the 10-K. The Company undertakes no
obligation to update these statements for revisions or changes
after the date of this release, except as required by law.
Tables to Follow
|
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
|
Non-GAAP Financial Measures
This release includes Adjusted EBITDA and
Adjusted Free Cash Flow 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).
The following tables present a reconciliation of
the non-GAAP financial measures of Adjusted EBITDA and Adjusted
Free Cash Flow to the most directly comparable GAAP financial
measures for the periods indicated:
|
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
|
View original
content:https://www.prnewswire.com/news-releases/drilling-tools-international-corp-reports-2023-full-year-and-fourth-quarter-results-302101539.html
SOURCE Drilling Tools International Corp.
