Drilling Tools International Corporation (DTI Quick QuoteDTI - Free Report) is reshaping its growth profile by expanding outside North America. The company’s rising international mix is helping reduce reliance on U.S. land markets as drilling activity normalizes. 

That shift matters in 2026, when management expects a soft first half and improvement in the second half. Investors will be watching whether international execution can provide the next leg of steadier growth.

DTI’s International Mix Is Rising for a Reason

DTI is reducing dependence on U.S. land markets by growing internationally, with the Eastern Hemisphere contributing about 14% of 2025 revenue, up from around 8% in 2024. The company’s Eastern Hemisphere segment spans Europe, the Middle East, and Asia-Pacific, and it is central to the diversification strategy.

The increase is being driven by new service centers across Europe, the Middle East, Africa, and Asia-Pacific, recent acquisitions, and expanding adoption of the company’s tools in those markets. A larger international footprint is intended to smooth cyclicality as activity normalizes.

Drilling Tools’ EMEA and APAC Adoption Signals to Watch

International traction is tied to DTI’s differentiated tool portfolio, including proprietary offerings such as ClearPath, Drill-N-Ream, and RotoSteer, alongside recently added capabilities like Deep Casing Tools, Titan Tools, and European Drilling Projects. Management has highlighted growing international adoption of ClearPath stabilizers, Drill-N-Ream, and Deep Casing solutions.

The opportunity is strongest in complex drilling applications, where tool performance and reliability can support better utilization and more durable pricing. DTI’s in-house manufacturing, inspection, repair, and refurbishment capabilities also support quality and fleet readiness, which can matter when customers demand consistent performance across multiple basins.

DTI’s Service-Center Strategy and Deployment Execution

Service-center expansion is a key lever because it improves deployment speed, supports inspection and repair, and helps keep a large rental fleet working efficiently across regions. DTI’s model is built around tool rentals supported by a network of service centers and integrated capabilities. 

Execution is the swing factor. Management has warned that rapid activity increases can strain supply chains and delay deployments, which can interrupt project timing and utilization. As the company pushes further into international markets, consistent delivery and operational cadence will be as important as demand.

Drilling Tools’ Cash Flow Funds the Expansion Plan

A major support for the international plan is DTI’s ability to generate cash while maintaining spending discipline. Adjusted free cash flow increased to $19.2 million in 2025, including $6.1 million in fourth-quarter 2025.

For 2026, management guided to $17–$22 million of adjusted free cash flow on capital expenditures of $18–$23 million. That cash generation, supported by a rental-heavy model and operating discipline, provides flexibility to fund selective growth initiatives while also supporting balance-sheet progress.

DTI’s Consolidation Angle in a Fragmented Industry

DTI’s international strategy is also supported by consolidation in a highly fragmented industry, where the company sees a robust pipeline of acquisition opportunities. Reflecting this momentum, its shares have risen more than 30% over the past three months. Since 2023, DTI has completed four deals and integrated them under its “One DTI” platform.

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Integration is not just a back-office exercise. DTI achieved 100% of targeted $4.5 million synergies tied to Superior Drilling Products Inc., with additional upside identified. With more than 325 customer agreements and a broad facility network, the company aims to scale newly acquired products more quickly across markets, including internationally.

Drilling Tools’ 2026 Timing: Why H2 Execution Matters More

The timing framework for 2026 is clear: activity is expected to be flat in the first half and improve slightly in the second half. That cadence raises the bar for proof points in the back half of the year.

Validation for the international thesis would show up through continued mix gains outside North America, steady utilization trends supported by complex-application demand, and pricing stability as adoption broadens across EMEA and Asia-Pacific. Investors will also want to see sustained synergy capture and smooth deployments, since those factors underpin the expected improvement as the year progresses.

DTI Risks: Middle East Timing and Cyclical Pressure

International momentum depends on stable Middle East programs and timely tenders. Management excluded potential international catalysts such as Saudi rig reactivations and broader Middle East tenders from its 2026 outlook, which limits upside if those catalysts do not materialize on schedule.

DTI also remains exposed to cyclicality. Global rig counts declined nearly 7% year over year in 2025, and customers can press for pricing concessions in weaker markets, which can pressure utilization and margins. In that backdrop, peers such as NCS Multistage Holdings (NCSM Quick QuoteNCSM - Free Report) and Core Laboratories (CLB Quick QuoteCLB - Free Report) provide a useful read-through on broader Oil and Gas - Field Services conditions, where customer spending discipline and bargaining power can shape the operating environment.

With DTI carrying a Zacks Rank #1 (Strong Buy), the setup hinges on whether international mix, utilization, and execution improve as expected in the second half of 2026. You can see the complete list of today’s Zacks #1 Rank stocks here.