Drilling Tools International (DTI) - 2025 Q1 - Quarterly Report

Revenue Performance - Total revenue for the three months ended March 31, 2025, was $42.88 million, a 16$36.97 million in the same period of 2024[190] - Tool rental revenues accounted for 81% of total revenues, while product sales contributed 19%, consistent with the previous year[180] - Western Hemisphere revenue increased by $2.89 million, or 8$41.2 million, driven by the addition of the Diamond Products Division[191] - Eastern Hemisphere revenue surged by $3.8 million, or 305$5.1 million, primarily due to acquisitions in the rental business[192] - 29.0% of total revenue in Q1 2025 was generated from two customers, slightly down from 30.0% in Q1 2024[216] Operating Income and Expenses - Total operating income decreased by 36% to $3.3 million, impacted by rising corporate expenses and interest costs[190] - Interest expense rose significantly by 619$1.3 million, attributed to new loans and credit facility draws[194] - Adjusted EBITDA for the three months ended March 31, 2025, was $10.75 million, slightly down from$10.89 million in the prior year[199] Cash Flow and Liquidity - Cash and cash equivalents stood at $2.8 million as of March 31, 2025, with sufficient liquidity expected for the next 12 months[200] - Net cash provided by operating activities for Q1 2025 was$2.4 million, down from $3.3 million in Q1 2024, driven by a net loss of$1.7 million[206] - Net cash used in investing activities for Q1 2025 was $7.3 million, including$5.0 million for property, plant, and equipment purchases and $5.6 million for the acquisition of Titan[207] - Net cash provided by financing activities for Q1 2025 was$1.4 million, compared to a net cash outflow of $24.6 million in Q1 2024[209] Market Conditions - The average U.S. rig count in the Western Hemisphere decreased to 930 from 995 year-over-year, while the Eastern Hemisphere count increased to 757 from 725[187] - U.S. oil production reached a record high of 13.5 million barrels per day, but crude oil prices fell from$78.41 to $71.84 per barrel[186] Risks and Challenges - Cash and cash equivalents may exceed insurance limits, posing a concentration risk[215] - The company has not entered into hedging arrangements to mitigate foreign currency exchange rate fluctuations, which may impact future cash flows[217] - Rising international tariffs could adversely affect the company's business and results of operations[219] - The company has established a cybersecurity incident response plan, but there is no assurance that it will fully mitigate cybersecurity risks[222]