Drilling Tools International Corp. — Second Quarter 2026 Earnings Summary

Financial Performance

• Total consolidated revenue for the second quarter of 2026 was $38.1 million, down from $39.4 million in the same period in 2025.
• Tool Rental revenue was $29.6 million, compared to $32.8 million in Q2 2025.
• Product Sales revenue was approximately $8.5 million, up from $6.7 million in Q2 2025.
• Net loss attributable to common stockholders was approximately $1.8 million ($0.05 per share), compared to a net loss of $2.4 million ($0.07 per share) in Q2 2025.
• Adjusted Net Loss was $575,000 ($0.02 per share), compared to an Adjusted Net Loss of $626,000 ($0.02 per share) in Q2 2025.
• Adjusted EBITDA was $8.4 million, down from $9.3 million in Q2 2025.
• Adjusted Free Cash Flow was $4.1 million, up from $1.8 million in Q2 2025.
• As of June 30, 2026, the company held $2.5 million in cash and cash equivalents, with Net Debt of $51.7 million.
• For the six months ended June 30, 2026, total revenue was $76.0 million compared to $82.3 million in the prior year period.

Guidance and Future Outlook

• The company reaffirmed its full-year 2026 guidance ranges, representing growth at the midpoint compared to 2025 results.
• Full-year 2026 Revenue guidance is $155 million to $170 million.
• Full-year 2026 Adjusted EBITDA guidance is $35 million to $45 million.
• Full-year 2026 Adjusted EBITDA Margin guidance is 23% to 26%.
• Full-year 2026 Adjusted Free Cash Flow guidance is $17 million to $22 million.
• Management expects a strong second half of 2026 driven by early signs of recovery in key operating regions.

Business Segments and Product Lines

• U.S. land rig count increased steadily, adding over 20 rigs in June and nearly 19 in July, with bottom-hole assembly rig additions outpacing broader market growth.
• Canada rig count built through June to finish the quarter above prior-year levels after early quarter softness.
• ClearPath stabilizer technology is gaining traction in offshore markets in Europe and the Gulf of America, with new awards expected to drive a material step-up in European contribution in the second half of the year.
• Demand for tools in the Middle East remained steady through a disruptive period due to a targeted footprint and specialized product lines.
• Recent acquisitions have strengthened the company's foundation as it continues to penetrate new markets in the Eastern Hemisphere.

Market and Competitive Landscape

• The company noted softer North American land activity and disruption in the Middle East during the quarter.
• Price-focused customers are returning to the company as they recognize the value delivered in the field.
• The company's differentiated technology portfolio is enabling it to win new business on improving commercial terms.

Risks and Challenges

• The press release identifies general risks including dependence on oil and gas industry activity levels, customer retention, ability to source materials, and competition.
• Specific risks mentioned include potential liability from tool operations, ability to obtain capital, political and regulatory disruptions, IT system dependence, and compliance with environmental laws.
• Forward-looking statements note that actual results could differ materially due to factors detailed in the company's Forms 10-K, 10-Q, and 8-K.

Management Commentary and Tone

• Wayne Prejean, Chairman and CEO, expressed pleasure with the quarter's performance, citing operational resilience, geographic diversification, and the durability of the business platform.
• Management highlighted that Adjusted Free Cash Flow improved considerably on both a sequential and year-over-year basis.
• The tone was confident regarding the strength of the differentiated business model and disciplined execution creating future earnings power.
• Management stated they are well-positioned to benefit from recent activity trends and will continue to strategically evaluate accretive acquisitions.

Other Key Points

• The company operates from 15 service and support centers in North America and 11 international centers across EMEA and APAC regions.
• During the six months ended June 30, 2026, the company purchased treasury stock for $706,000 and received $101,000 from the exercise of stock options.
• Net cash flows provided by financing activities for the six months ended June 30, 2026, were $7.97 million.
• The company reported a gain on the sale of lost-in-hole equipment of $7.2 million for the six months ended June 30, 2026.
• Stock-based compensation expense was $1.6 million for the six months ended June 30, 2026.