Company Reaffirms 2024 Outlook HOUSTON, May 9, 2024 /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 2024 first quarter results and reaffirmed its 2024 full year outlook. DTI generated total consolidated revenue of $37 million in the first quarter of 2024.  First quarter Tool Rental net revenue was approximately $30 million and Product Sales net revenue totaled $7 million. First quarter operating expenses were $31.8 million and operating income was $5.1 million. Net Income and Adjusted Net Income(1) for the first quarter were $3.1 million and $3.8 million, respectively. First quarter Adjusted EBITDA(1) was $10.9 million and Adjusted Free Cash Flow(1)(2) was $4.7 million. As of March 31, 2024, DTI had approximately $14 million of cash and cash equivalents, net debt of $11 million, and an undrawn $80 million ABL Credit Facility. Wayne Prejean, CEO of DTI, stated, "We are pleased to report first quarter results that were in line with our expectations despite the current competitive and flat rig count environment. Highlights for the first quarter included entering into a definitive agreement to acquire Superior Drilling Products, Inc. (NYSE:SDPI) ("SDP"); the closing of our Deep Casing Tools acquisition; and boosting our balance sheet by securing a new $25 million Term Loan, which was fully drawn as of March 31, 2024, and amending and extending our ABL Credit Facility. We are very excited about our growth opportunities organically and through acquisitions, both domestically and internationally, throughout 2024 and into 2025." Prejean added, "We are reaffirming our full-year 2024 outlook. As we disclosed in our 2023 year-end earnings release, our current 2024 outlook includes our recent Deep Casing Tools acquisition's estimated impact on 2024 results but does not include any contributions from the pending acquisition of Superior Drilling Products. We will update 2024 guidance to include SDP once we close the transaction."  2024 Full Year Outlook Revenue $170 million - $185 million Adjusted Net Income(1) $15.6 million - $21.9 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 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. 2024 First Quarter Conference Call Information DTI's first quarter conference call can be accessed live via dial-in or webcast on Friday, May 10, 2024 at 11:00 a.m. Eastern Time (10:00 a.m. Central Time) by dialing 1- 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 17 by dialing 1-201-612-7415 and using passcode 13745745#.  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 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 7 international service and support centers across Europe and the Middle East. To learn more about DTI, please visit: www.drillingtools.com. Contact:DTI Investor RelationsKen Dennard / Rick 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) Three Months Ended March 31, 2024 2023 Revenue, net: Tool rental $         29,966 $         32,276 Product sale 7,008 8,523 Total revenue, net 36,974 40,799 Operating costs and expenses: Cost of tool rental revenue 7,001 8,137 Cost of product sale revenue 1,536 1,303 Selling, general, and administrative expense 17,942 18,423 Depreciation and amortization expense 5,365 5,015 Total operating costs and expenses 31,844 32,878 Income (loss) from operations 5,130 7,921 Other expense, net: Interest expense, net (182) (573) Gain (loss) on sale of property — 69 Loss on asset disposal  (9) — Unrealized gain (loss) on equity securities 249 (33) Other income (expense), net (1,125) 40 Total other expense, net (1,067) (497) Income before income tax expense 4,063 7,424 Income tax expense (937) (1,723) Net income $           3,126 $           5,701 Accumulated dividends on redeemable convertible preferred stock — 314 Net income available to common shareholders $           3,126 $           5,387 Basic earnings  per share $             0.11 $             0.45 Diluted earnings per share $             0.11 $             0.29 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 $           3,126 $           5,701 Foreign currency translation adjustment, net of tax (511) — Net comprehensive income  $           2,615 $           5,701 * 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) March 31, December 31, 2024 2023 ASSETS Current assets Cash $   14,050 $           6,003 Accounts receivable, net 35,730 29,929