0001193125-26-095973
SEC filingDrilling Tools International Corp. reported FY 2025 revenue of $159.6 million, a 3% increase year-over-year. However, the company recorded a net loss of $3.8 million, a significant decline from a net income of $3.0 million in FY 2024. The net loss was driven by a goodwill impairment charge of $1.9 million, increased depreciation and amortization expense of $27.3 million (up 15% YoY), and higher interest expense of $5.1 million (up 50% YoY). Segment performance was mixed: Western Hemisphere revenue declined 3% to $148.6 million due to lower customer activity, while Eastern Hemisphere revenue grew 78% to $23.5 million primarily from acquisitions. The company generated strong operating cash flow of $19.9 million, but cash decreased by $2.5 million due to significant investing activities including $20.1 million in capital expenditures and a $5.6 million acquisition. Management believes existing liquidity sources are sufficient for at least the next twelve months.
Drilling Tools International Corp. reported FY 2025 revenue of $159.6 million, representing a 3% increase from $154.4 million in FY 2024. However, the company swung to a net loss of $3.8 million from net income of $3.0 million in the prior year, a $6.8 million deterioration. The net loss was primarily driven by a goodwill impairment charge of $1.9 million, increased depreciation and amortization expense of $27.3 million (up 15% YoY), and higher interest expense of $5.1 million (up 50% YoY). Basic and diluted earnings per share were -$0.00 for both periods. The company reported net comprehensive loss of $1.2 million, which includes a $2.5 million foreign currency translation adjustment.
Revenue growth of 3% to $159.6 million was driven by divergent segment performance. Western Hemisphere revenue declined 3% to $148.6 million due to lower tool rental revenue resulting from reduced customer activity levels. Eastern Hemisphere revenue increased 78% to $23.5 million, primarily driven by acquisitions of tool rental businesses. The company operates in two geographic segments: Western Hemisphere (North and South America) and Eastern Hemisphere (Europe, Middle East, and Asia-Pacific). Revenue mix consisted of 81% from tool rentals and 19% from product sales in FY 2025, compared to 76% and 24% respectively in FY 2024.
Gross profit margin remained stable at approximately 74.1% for both FY 2025 and FY 2024, calculated from revenue of $159.6 million and cost of revenue (exclusive of depreciation and amortization) of $41.3 million. Operating income was not explicitly stated but can be derived as a loss before considering non-operating items. The company reported segment EBITDA of $50.0 million, a 5% decrease from $52.8 million in FY 2024. Adjusted EBITDA was $39.3 million compared to $40.1 million in the prior year. Profitability was negatively impacted by the $1.9 million goodwill impairment charge, increased depreciation from acquired assets, and higher interest expense.
The company generated strong operating cash flow of $19.9 million in FY 2025, a significant increase from $6.1 million in FY 2024. Free cash flow (operating cash flow minus capital expenditures) was approximately $6.6 million. Investing activities used $13.3 million, primarily for $20.1 million in property, plant and equipment purchases, $1.7 million in intangible asset purchases, and a $5.6 million business acquisition, partially offset by $14.2 million from sale of lost-in-hole equipment. Financing activities used $9.3 million for net debt repayments and treasury stock purchases. Total assets were $222.2 million with total liabilities of $99.3 million, resulting in equity of $122.9 million. Cash decreased by $2.5 million to $3.6 million.
Management believes existing cash on hand, cash generated from operations, and available borrowings under the Credit Facility Agreement will be sufficient for at least the next twelve months to meet working capital requirements and anticipated capital expenditures. The company expects costs to continue rising in the near term due to global inflation impacts on personnel costs and goods/services prices, which will impact profitability. The company has federal net operating loss carryforwards that are expected to substantially reduce cash tax payments over the next several years. Market factors affecting future performance include oil and gas prices, drilling rig activity levels, and customer capital spending decisions.