Drilling Tools International Corporation · NASDAQ:DTI
Drilling Tools International — Q3 2024 Earnings Presentation
39 slides from Drilling Tools International's earnings presentation, Nov 14, 2024
Slide 1: Investor Presentation Winter 2024
Exhibit 99.1 Investor Presentation Winter 2024 www.drillingtools.com
Slide 2: Forward Looking Statements
Forward Looking Statements General: Drilling Tools International Corporation (“DTI”) is making this presentation available in connection with the release of its financial results for the three months ended September 30, 2024. The information contained in this presentation does not purport to be all-
Slide 3: DTI is a Leading Rental Provider of Mission Critical Drilling Tools
DTI is a Leading Rental Provider of Mission Critical Drilling Tools A platform developed and designed to keep up with ever-changing customer needs ~65,000+ Global ~40 years 6 Product Lines DTI manages & DTI has sales and DTI’s history began in DTI’s differentiated maintains a fleet of distribution c
Slide 4: Expansive Offering to Supply Drilling Tools Required in a Typical Horizontal Job
Expansive Offering to Supply Drilling Tools Required in a Typical Horizontal Job Differentiated and extensive inventory of tools to address the wide-ranging needs of oil & gas customers across all regions Represents Key DTI Rental Product Currently Not Supplied by DTI Crossover Subs Spiral Drill Col
Slide 5: Significant Industry Tailwinds & Supportive Macro Backdrop
Significant Industry Tailwinds & Supportive Macro Backdrop A combination of commodity prices, rig count and capital spending creates a highly constructive market backdrop (1) (2) Historical Rig Count Industry Analysis North American Rest of World Drilling Tools Market to Grow from $7.85 2,500 Billio
Slide 6: 2024 Financial Outlook
2024 Financial Outlook Delivering Adjusted Free Cash Flow Throughout The Cycle DTI continues to execute its M&A strategy with ~5 near-term priority targets identified ✓ DTI expects a mostly stable rig count in North America for the rest of 2024, after a 20% decline in 2023 ✓ FY 2024 guidance include
Slide 7: Sustainable Growth – Executing on Plan
Sustainable Growth – Executing on Plan (1) Revenue Adjusted EBITDA ($ in millions) ($ in millions) $145.0 - $155.0 $51.0 $152.0 $38.0 - $43.0 $41.2 $129.6 (2) (2) 2022 2023 2024E 2022 2023 2024E (1) (1) Adjusted Net Income Adjusted Free Cash Flow ($ in millions) ($ in millions) $18.0 - $21.0 $21.1 $
Slide 8: Components of Adjusted EBITDA
Components of Adjusted EBITDA Increased Growth Capital spending in 2023 now supports stronger Adj. Free Cash Flow in 2024+ Commentary Smart Capital Expenditures ($ Millions) (1) Adj. Free Cash Flow can be directly influenced by Growth $7.3 CapEx strategy $16.5 $18.0 – $21.0 $24.1 Growth CapEx $3.6 i
Slide 9: Peer Adj. Free Cash Flow Margin Comparisons
(1) Peer Adj. Free Cash Flow Margin Comparisons (2) 2023 Actual 2024 Estimates 35% 35% 30% 30% 25% 25% 20% 20% 15% 15% 10% 10% 5% 5% 0% 0% Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 DTI Peer 1 DTI Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Tool recovery revenue, also known as lost or damaged eq
Slide 10: Peer Leading Return on Capital Employed (ROCE)
Peer Leading Return on Capital Employed (ROCE) 2023 Actual 30% 25% 20% 15% 10% 5% 0% DTI Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 EV/EBITDA 2.69x 12.75x 2.79x 4.14x 12.34x 4.43x 6.24x 4.83x Multiple ‒ Peer group includes BKR, BOOM, OIS, RES, RNGR, WHD, and XPRO ‒ ROCE is defined as EBIT divi
Slide 11: About Us
(RILLING TOOLS* INTERNATIONAL About Us
Slide 12: A Market Leader in Downhole Tools for the Oil & Gas Industry
A Market Leader in Downhole Tools for the Oil & Gas Industry A highly competitive suite of differentiated products Core Product and Service Offering Directional Tools Rental Wellbore Optimization Tools Premium Tools 61% of 2023 Revenue 19% of 2023 Revenue 17% of 2023 Revenue TM ⚫ Rental tools used i
Slide 13: Presence Across All Major Basins in North America
Presence Across All Major Basins in North America Expanding footprint in Europe, Middle East, North Africa & Asia Nisku, Alberta 64,000+ Tool Rental Fleet Williston, ND 6 Differentiated Product Lines Charleroi, PA Casper, WY Vernal, UT Global Services Footprint including Bakersfield, CA all Major US
Slide 14: Blue-Chip Customer Base Across E&Ps & OFS Companies
Blue-Chip Customer Base Across E&Ps & OFS Companies ✓ First-call supplier for leading oilfield service providers in North America ✓ DTI has actively expanded its customer base to further diversify its customer mix Select DTI Customers / / 13
Slide 15: Executing Our Strategic Plan & Delivering Improved Results
Executing Our Strategic Plan & Delivering Improved Results DTI achievements since becoming a public company in June 2023 (1) Reported 2023 growth; 17% y/y Revenue & 24% y/y Adjusted EBITDA growth Acquired Superior Drilling Products, Deep Casing Tools and European Drilling Projects Announced Acquisit
Slide 16: Why Do Customers Rent Downhole Tools?
Why Do Customers Rent Downhole Tools? Complex drilling, completions, and workover programs lead most operators and service providers to focus on core competencies while preferring to rely on third-parties for rental tool support. Operators prefer renting these tools to gain the benefits of: Outsourc
Slide 17: Key Operational Differentiators
Key Operational Differentiators Modern Manufacturing and Repair Facility ✓ Machine and repair equipment ensures product quality, increases product life and improves fleet utilization ✓ Ability to manufacture most of our rental tools enables cost reduction & control of supply chain Raw Materials From
Slide 18: Organic Growth Drivers
Organic Growth Drivers ✓ DTI scale, leveraging global footprint of distribution and sales channel ✓ Expanding scope of tools & services in existing product lines through technological advancements ✓ Further customer penetration, growing rentals due to expanded capabilities, new tools and services ✓
Slide 19: M&A Growth Strategy: Significant Consolidation Upside
M&A Growth Strategy: Significant Consolidation Upside Established framework and robust pipeline to strategically consolidate the oilfield service rental tool industry Overview of DTI’s M&A Framework M&A Pipeline Large Fragmented Large universe of potential targets – primarily smaller, Large speciali
Slide 20: Strategic Rationale: European Drilling Projects and Titan Tools Services
(1) Strategic Rationale: European Drilling Projects ✓ Enhances Technological Advancement & Global Expansion Efforts ✓ Adds key personnel, industry expertise and customer relationships ® ✓ Adds cutting-edge tools, such as the Fixedblade stabilizer, to DTI’s industry leading technology portfolio (2) S
Slide 21: Strategic Rationale: Superior Drilling Products
Strategic Rationale: Superior Drilling Products ✓ Enhances vertical integration of differentiated technology TM ✓ Cost savings on Drill-N-Ream tool ✓ Synergies - eliminates duplicative public company costs ✓ Adds significant precision manufacturing capacity ✓ Enhances horizontal opportunities ✓ Expa
Slide 22: Strategic Rationale: Deep Casing Tools
Strategic Rationale: Deep Casing Tools ✓ Adds to DTI’s technology platform ✓ Expands intellectual property portfolio by over 60 patents ✓ Adds strong international customer relationships ✓ ADNOC / ARAMCO / PEMEX / PETROBRAS / PETRONAS ✓ Accretive to DTI’s earnings and Adj. Free Cash Flow profile ✓ O
Slide 23: The DTI Leadership Team – Experience Matters!
The DTI Leadership Team – Experience Matters! Experienced, talented, and committed management team with history of success 22
Slide 24: DTI's Differentiated Growth Strategy Creates a Compelling Investment Profile
DTI’s Differentiated Growth Strategy Creates a Compelling Investment Profile A Market Leader in Downhole Tools for the Oil & Gas Industry Blue Chip Customers Strategic Model Delivering Through-Cycle Outperformance Proven Growth: Organic & M&A in Fragmented Industry Strong Balance Sheet / Low Leverag
Slide 25: Supplemental Information
Supplemental Information 24
Slide 26: ESG + Safety Are Integral to Our Success
ESG + Safety Are Integral to Our Success DTI is committed to environmental stewardship ✓ Continuous evaluations and control measures to ensure minimization of waste ✓ Pursuing highest levels of operational proficiency to reduce rework, and use of chemicals and waste Environmental ✓ Actively promotin
Slide 27: Overview of Directional Tool Rentals
Overview of Directional Tool Rentals Key Equipment Stabilizers Reduces drill string vibration and torque… Drill Collars Adds weight to the BHA to increase rate of penetration (“ROP”) and reduce vibration… Subs and Other Equipment Variety of subs, crossovers and handling tools used in the drill strin
Slide 28: Overview of Wellbore Optimization Tools
Overview of Wellbore Optimization Tools Specialty tools division with focused field sales and service professionals providing rig site visits and customer service, enabling consistent product performance and customer satisfaction Products Offered Substantial Improvements in Wellbore Quality ⚫ Patent
Slide 29: Overview of Premium Tools
Overview of Premium Tools Key Equipment DTI offers a wide array of premium tubulars for drilling, workover and completion operations, API blowout preventers and pressure control accessories as well as a comprehensive suite of related handling tools Tubulars Handling Tools API BOPs and Pressure Contr
Slide 30: Other Products and Services
Other Products and Services Products Offered Internal Support Services and Emerging Products ⚫ Independent inspection services equipment of all DTI divisions and select external customers Downhole ⚫ Critical to efficient operations Inspection Solutions ⚫ Services across North America including netwo
Slide 31: Third Quarter 2024 Income Statement
Third Quarter 2024 Income Statement Drilling Tools International Corp. Consolidated Statement of Operations and Comprehensive Income (In thousands of U.S. dollars and rounded) (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Revenue, net: Tool rental $
Slide 32: Third Quarter 2024 Balance Sheet
Third Quarter 2024 Balance Sheet Drilling Tools International Corp. Consolidated Balance Sheets (In thousands of U.S. dollars and rounded) (Unaudited) September 30, December 31, 2024 2023 ASSETS Current assets Cash $ 11,961 $ 6 ,003 Accounts receivable, net 3 3,152 29,929 Related party note receivab
Slide 33: Third Quarter 2024 Cash Flow Statement
Third Quarter 2024 Cash Flow Statement Drilling Tools International Corp. Consolidated Statement of Cash Flows (In thousands of U.S. dollars and rounded) (Unaudited) Nine Months Ended September 30, 2024 2023 Cash flows from operating activities: $ 4,359 $ 1 0,925 Net income Adjustments to reconcile
Slide 34: Reconciliation of Third Quarter 2024 Adjusted EBITDA
Reconciliation of Third Quarter 2024 Adjusted EBITDA Drilling Tools International Corp. Reconciliation of GAAP to Non-GAAP Measures (Unaudited) (In thousands of U.S. dollars and rounded) Three Months Ended September 30, 2024 2023 Net income (loss) $ 867 $ 4,287 Add (deduct): Income tax expense/(bene
Slide 35: Reconciliation of Third Quarter 2024 Adjusted Free Cash Flow
Reconciliation of Third Quarter 2024 Adjusted Free Cash Flow Drilling Tools International Corp. Reconciliation of GAAP to Non-GAAP Measures (Unaudited) (In thousands of U.S. dollars and rounded) Three Months Ended September 30, 2024 2023 Net income (loss) $ 867 $ 4 ,287 Add (deduct): Income tax expe
Slide 36: Reconciliation of Third Quarter 2024 Adjusted Net Income
Reconciliation of Third Quarter 2024 Adjusted Net Income Drilling Tools International Corp. Reconciliation of GAAP to Non-GAAP Measures (Unaudited) (In thousands of U.S. dollars and rounded) Three Months Ended September 30, 2024 2023 Net income (loss) $ 867 $ 4,287 Transaction expense 1,857 124 Inco
Slide 37: Reconciliation of 2024 Outlook – Adjusted EBITDA
Reconciliation of 2024 Outlook 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 $ 2,500 $ 4 ,500 Add (deduct) Interest expense, ne
Slide 38: Reconciliation of 2024 Outlook – Adjusted Free Cash Flow
Reconciliation of 2024 Outlook 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 $ 2 ,500 $ 4,500 Add (deduct) Interest exp
Slide 39: Reconciliation of 2024 Outlook – Adjusted Net Income
Reconciliation of 2024 Outlook Drilling Tools International Corp. Reconciliation of Estimated Consolidated Net Income to Adjusted Net Income (In thousands of U.S. dollars and rounded) (Unaudited) Twelve Months Ended December 31, 2024 Low High Net income (loss) $ 2,500 $ 4,500 Transaction expense $ 5
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