Drilling Tools International Corporation — 2026 Third Quarter Earnings Summary

Financial Performance:

• Total consolidated revenue for the third quarter of 2026 was $40.6 million, compared to $38.8 million in the same period in 2025.
• Tool Rental revenue was $32.0 million, and Product Sales revenue was approximately $8.7 million.
• Net loss attributable to DTI shareholders was approximately $2.6 million, or $0.07 per share, compared to a loss of $0.9 million, or $0.03 per share, in the prior year quarter.
• Adjusted Net Loss was $433,000, and Adjusted Diluted EPS was a loss of $0.01 per share.
• Adjusted EBITDA was $9.5 million, representing a 14% sequential increase.
• Adjusted Free Cash Flow was approximately $3.8 million.
• As of September 30, 2026, the company held approximately $3.0 million in cash and cash equivalents.
• Net Debt was $47.4 million.

Guidance and Future Outlook:

• The company expects full-year 2026 Revenue to be between $155 million and $170 million.
• Full-year 2026 Adjusted EBITDA is expected to be between $35 million and $45 million, with an Adjusted EBITDA Margin of 23% to 26%.
• Full-year 2026 Capital Expenditures outlook was raised to $22 million to $23 million, up from previous guidance.
• Full-year 2026 Adjusted Free Cash Flow outlook was revised to $13 million to $22 million, down from the previous range of $17 million to $22 million.
• Management expects to finish the year toward the lower end of both revenue and Adjusted EBITDA ranges.
• The company anticipates closing the Saltire acquisition in the first quarter of 2027, subject to stockholder and regulatory approvals.
• The Saltire transaction is expected to be accretive to Adjusted EBITDA margin and Adjusted Free Cash Flow per share in the first year following closing, excluding synergies.

Business Segments and Product Lines:

• Sequential revenue growth was delivered across North America and key Eastern Hemisphere markets.
• North America performance was driven by rising U.S. rig counts and a sharp post-breakup rebound in Canada, leading to higher tool utilization.
• Commercial terms remained firm in North America as customers finalized 2027 budgets.
• ClearPath technology demand continues to build in both hemispheres.
• Significant new ClearPath contract awards in Europe began contributing full-run-rate revenue in September, supported by long-term rental agreements.
• ClearPath continues to gain traction in the Gulf of America as operators prioritize performance in technically demanding wells.
• Middle East activity was relatively flat due to regional conflict, though operators have largely adapted.
• The company recently rolled out a new unified DTI brand for all acquired businesses.

Market and Competitive Landscape:

• The second half of 2026 is showing improvement, with revenue up 7% and Adjusted EBITDA up 14% sequentially compared to the second quarter.
• September was the strongest month of the quarter, with Adjusted EBITDA reaching approximately $4 million.
• The acquisition of Saltire Energy Limited and Foxley Energy Limited is expected to increase the Eastern Hemisphere business to approximately 40% of pro forma revenue, creating a more balanced global position.

Risks and Challenges:

• The Saltire acquisition is subject to DTI stockholder approval, regulatory approvals, and other customary closing conditions; failure to obtain these could prevent the transaction.
• Risks include potential delays in realizing anticipated benefits of the Saltire acquisition, integration challenges, and dilution to existing stockholders from equity issuance.
• Increased indebtedness following the transaction may impact the company's ability to comply with debt terms and covenants.
• Geopolitical risks, including the ongoing conflict in the Middle East, and volatility in oil and natural gas prices remain factors.
• Forward-looking statements regarding future performance are subject to risks including changes in laws, regulations, and economic conditions.

Management Commentary and Tone:

• CEO Wayne Prejean expressed pleasure with the third-quarter performance, noting a healthy exit rate and strong momentum as the year closes.
• Management highlighted that results strengthened each month of the quarter.
• The tone indicates confidence in the second-half improvement and the strategic value of the Saltire acquisition for global diversification.
• Management expects the Saltire transaction to provide meaningful upside by bringing DTI technologies to Saltire's customer base.

Other Key Points:

• DTI announced an agreement to acquire Saltire Energy Limited and Foxley Energy Limited shortly after the quarter ended.
• The Saltire transaction will be funded through new debt financing and borrowings under the existing credit facility.
• The company raised its full-year capital expenditure outlook due to targeted growth investments for offshore Norway contracts and U.S. land activity.
• The company operates from 15 service and support centers in North America and 11 international centers across EMEA and APAC regions.
• Non-GAAP financial measures including Adjusted EBITDA, Adjusted Free Cash Flow, and Net Debt are used to evaluate performance.