Drilling Tools International Corporation

Greetings. Welcome to Drilling Tools International First Quarter 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Ken Dennard. Thank you, Mr. Dennard. You may begin.

Thank you, Operator, and good morning, everyone. We appreciate your joining us for Drilling Tools International's 2026 First Quarter Conference Call and Webcast. With me today are Wayne Prejean, Chairman and Chief Executive Officer, and David Johnson, Chief Financial Officer. Following my remarks, management will provide a review of the first quarter results and 2026 outlook before opening the call for your questions. There'll be a replay of today's call. It'll be available by webcast on the company's website at drillingtools.com. And there'll also be a telephonic recorded replay available until May 15th. Please note that information reported on this call speaks only as of today, May 8th, 2026. And therefore, you're advised that time-sensitive information may no longer be accurate as of the time of any replay listing or transcript reading. Also, comments on this call will contain forward-looking statements within the meaning of the United States federal securities laws. These forward-looking statements reflect the current views of DTI's management. However, various risks and uncertainties and contingencies could cause actual results, performance, or achievements to differ materially from those expressed in the statements made by management. The listener or reader is encouraged to read the annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K to understand certain of those risks, uncertainties, and contingencies. The comments today will also include certain non-GAAP financial measures, including but not limited to adjusted EBITDA and adjusted free cash flow. The company provides these non-GAAP results for informational purposes and they should not be considered in isolation from the most directly comparable GAAP measures. A discussion of why we believe these non-GAAP measures are useful to investors, certain limitations of using these measures, and the reconciliation to the most directly comparable GAAP measures can be found in our earnings release and our filings with the SEC. And now with that behind me, I'd like to turn the call over to Wayne Prejean, DTI's Chairman and Chief Executive Officer. Wayne.

Thanks, Ken, and good morning, everyone. I will provide some opening remarks before handing the call over to David to review the financials and touch on our outlook. I'll then come back and provide a few additional thoughts before we open it up for questions. Our first quarter results came in largely as anticipated. As we discussed in our year-end call in March, we expected activity to remain relatively soft through the first half of the year, with the possibility for improvement in the back half of 2026, driven by several potential catalysts across multiple geographies. The quarter played out consistently with that framework. Despite a softer start to the year, we generated total consolidated revenue of $38 million and adjusted EBITDA of $7.5 million. Importantly, our outlook for the full year remains intact. and we are reaffirming our 2026 guidance ranges today. There were a few distinct factors that shaped our first quarter. North American land activity continued to be flat to slightly down. The earlier than expected spring breakup in Canada pulled some typical second quarter seasonality into the first quarter. While this compressed Q1 results It also means the post-breakup rebound should begin earlier than usual. And we expect that to be a tailwind as we move into the second quarter. In the Middle East, the ongoing regional conflict has created some operational disruption that has muted what would otherwise have been a stronger first quarter contribution. That said, and this is an important point, our experience in the region is different from public statements expressed by the larger diversified service companies. Due to our more targeted footprint and specialized product focus, we have continued to see rising demand for our tools in the Middle East, even through this volatility. Our tide is still rising in that market. The geopolitical backdrop has simply suppressed the slope. Offsetting these headwinds, we saw very encouraging momentum in our international offshore markets. Our ClearPath stabilizer technology continues to gain traction as customers adopt it for high-value offshore and land projects around the world. And the drilling ream is making steady progress in the Middle East, providing solutions for complex wellbore challenges, including micro doglegs, tortuosity, and getting casing to bottom. Our deep casing tools product line, which saw utilization bottom out in 2024, has continued its recovery with a notable rebound in product sale purchase orders, particularly from the Middle East customers who have worked through their owned inventories. Together, these unique and value-based product lines are enhancing our eastern hemisphere growth and support our confidence in our full-year outlook. Looking ahead, we are confident that the forward price of oil is higher rather than lower for the foreseeable future. And we believe a more constructive commodity backdrop will gradually help relieve the pricing compression that has characterized the last several quarters. In North America, there is a real disconnect today between available rig capacity and the fracturing horsepower capacity needed to convert drill wells into production, which tempers our near-term enthusiasm for a significant NAM recovery. But we are seeing steady traction in the Gulf of America, the North Sea, and offshore markets in other parts of the world. Our differentiated portfolio is positioning us well to capture that work. Before I turn it over to David, I want to highlight an important milestone achieved during the first quarter. Our primary private equity sponsor, HHEP, completed the distribution of its remaining DTI shares to its limited partners. This is an event which we have been signaling to the market since going public in 2023. and it materially increases our public float and our trading liquidity. This distribution event, together with the recent refreshment of our board of directors, represents a significant transition for DTI into a fully independent public company with broader ownership and strengthened governance aligned with our next phase of growth. Now I'll pass it over to David to take you through the results in greater detail and provide an update on our 2026 outlook.