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DTI Q3 Earnings Miss Estimates on Higher Costs Despite Sales Growth
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Key Takeaways
DTI posted a Q3 adjusted loss of 1 cent per share, missing estimates, while $40.65M in revenues fell short.
Tool rental revenues rose 8% sequentially, while product sales jumped 24.7% year over year to $8.68 million.
DTI raised its 2026 capex outlook to $22M-$23M, cutting adjusted free cash flow guidance to $13M-$22M.
Drilling Tools International Corporation (DTI - Free Report) reported an adjusted loss of 1 cent per share for the third quarter of 2026 missing the Zacks Consensus Estimate of earnings of 3 cents per share by 133.33%.
The Houston, TX-based oilfield services company's total revenues of $40.65 million missed the consensus estimate of $41 million by 0.43%. Results reflected improving North American drilling activity and international offshore contributions, offset by higher expenses. Tool rental gross margin improved to approximately 77%.
Drilling Tools International Corp. Price, Consensus and EPS Surprise
Tool rental revenues totaled $31.97 million, largely flat compared with $31.86 million in the year-ago quarter. However, revenues increased approximately 8% sequentially, supported by improving North American land activity, stronger equipment utilization and contributions from recent offshore investments.
The average U.S. rig count increased more than 6% sequentially to 589 rigs. Canadian drilling activity also rebounded following the seasonal spring breakup, with the average rig count rising more than 40% from the second quarter. Management noted that firmer commercial terms and higher utilization supported rental profitability as drilling activity strengthened throughout the period.
Product sales increased 24.7% year over year to $8.68 million from $6.96 million. Management attributed the improvement primarily to higher tool recovery revenues as increased drilling activity resulted in more equipment being lost downhole or damaged beyond repair.
September was particularly strong for tool recovery activity. Management expects improving demand for its specialized products to support operating leverage as revenues increase. The company's Drill-N-Ream and Deep Casing Tools product lines also continued contributing to its international operations.
DTI Costs Rise While Adjusted EBITDA Advances
Selling, general and administrative expenses increased to $21.40 million from $20.41 million a year earlier. Depreciation and amortization expenses totaled $6.97 million, compared with $6.83 million, while net interest expenses declined to $1.14 million from $1.34 million.
Adjusted EBITDA increased 4.3% year over year to $9.50 million from $9.12 million. The adjusted EBITDA margin reached approximately 23%, benefiting from stronger rental utilization and improved commercial terms. However, net loss attributable to shareholders widened to $2.64 million from $0.90 million, including approximately $2.15 million in transaction expenses, primarily associated with the pending Saltire acquisition and related financing.
Drilling Tools Expands Its International Presence
DTI's Eastern Hemisphere operations accounted for approximately 19% of third-quarter revenues, excluding intercompany eliminations, compared with approximately 18% in the preceding quarter. New offshore contracts in Europe began generating meaningful revenues, supported by investments in the company's ClearPath stabilizer technology.
September marked the first month of full run-rate revenues under the new European ClearPath contracts. In the Gulf of America, the technology continued gaining traction in technically demanding offshore wells. Meanwhile, Middle Eastern activity remained relatively flat amid regional disruptions, although management anticipates modest improvement during the fourth quarter.
DTI Advances Saltire Acquisition Plans
DTI announced an agreement to acquire Saltire Energy Limited and Foxley Energy Limited, with the transaction expected to close in the first quarter of 2027, subject to necessary approvals and customary closing conditions.
The transaction involves approximately $80 million in cash, subject to adjustments, and 17.4 million DTI shares. Management expects the combination to increase the Eastern Hemisphere's contribution to approximately 40% of pro forma revenues. Saltire is also expected to enhance adjusted EBITDA margins and adjusted free cash flow per share during the first year following closing, excluding potential synergies.
Drilling Tools Cash Flow and Debt Position
Adjusted free cash flow declined to $3.78 million from $5.57 million a year earlier. Capital expenditures increased to $5.73 million from $3.54 million, reflecting targeted ClearPath investments in European offshore markets and equipment additions supporting U.S. land drilling activity.
DTI ended September with approximately $3 million in cash and cash equivalents and net debt of $47.4 million, down $4.3 million sequentially. The debt reduction was supported by approximately $4 million in proceeds from a sale-leaseback transaction involving an existing product line.
DTI Revises Cash Flow Guidance for 2026
The Zacks Rank #5 (Strong Sell) company maintained its full-year 2026 revenue guidance of $155 million to $170 million and adjusted EBITDA projection of $35 million to $45 million. Management expects both metrics to finish toward the lower ends of their respective ranges.
However, the company raised its capital expenditure outlook to $22 million to $23 million to reflect targeted growth investments. Consequently, adjusted free cash flow guidance was revised downward to $13 million to $22 million from the previous range of $17 million to $22 million. Management expects free cash flow near the lower end of the revised range while anticipating continued operating momentum into 2027.
While we have discussed DTI’s third-quarter results in detail, let us take a look at three other key reports in this space.
Kinder Morgan, Inc. (KMI - Free Report) reported third-quarter 2026 adjusted earnings of 35 cents per share, beating the Zacks Consensus Estimate of 33 cents by 6.1%. Earnings increased 20.7% from 29 cents in the year-ago quarter.
Revenues increased 9.3% year over year to $4.53 billion from $4.15 billion. Revenues surpassed the consensus estimate of $4.38 billion by 3.4%.
Strong quarterly results benefited from higher natural gas transportation and gathering volumes, alongside improved contributions from the Terminals and CO2 businesses.
As of Sept. 30, 2026, cash and cash equivalents totaled $918 million, compared with $63 million at 2025-end. Net debt stood at $32.23 billion.
Phillips 66 (PSX - Free Report) reported third-quarter 2026 adjusted earnings of $14.08 per share, up 458.7% from $2.52 a year ago. The bottom line surpassed the Zacks Consensus Estimate of $11.97 by 17.6%.
Total revenues and other income increased 47.2% to $51.51 billion from $34.98 billion a year earlier. The top line beat the consensus estimate of $33.72 billion by 52.7%.
Stronger refining margins and higher processed volumes supported the results. Refining crude capacity utilization reached 98%, while clean product yield was 86%.
As of Sept. 30, 2026, total debt stood at $18.53 billion, down from $20.57 billion at the end of June. Net debt declined to $12.68 billion at the end of the quarter. Cash and cash equivalents totaled $5.85 billion, while the net debt-to-capital ratio improved to 26%.
NOV Inc. (NOV - Free Report) reported third-quarter 2026 earnings of 25 cents per share, beating the Zacks Consensus Estimate of 24 cents by 4.17%. The bottom line increased 127.3% from the year-ago quarter's 11 cents, supported by improved operational execution and cost efficiencies.
The oil and gas equipment and services company's revenues of $2.23 billion surpassed the Zacks Consensus Estimate of $2.2 billion by 1.2%. Revenues increased 2.3% year over year, driven by growth in Energy Products and Services. Energy Equipment's capital equipment bookings totaled $577 million, representing a book-to-bill ratio of 91%.
As of Sept. 30, 2026, NOV had cash and cash equivalents of $1.06 billion and total debt of $1.71 billion. The company also had $1.5 billion available under its revolving credit facility.
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DTI Q3 Earnings Miss Estimates on Higher Costs Despite Sales Growth
Key Takeaways
Drilling Tools International Corporation (DTI - Free Report) reported an adjusted loss of 1 cent per share for the third quarter of 2026 missing the Zacks Consensus Estimate of earnings of 3 cents per share by 133.33%.
The Houston, TX-based oilfield services company's total revenues of $40.65 million missed the consensus estimate of $41 million by 0.43%. Results reflected improving North American drilling activity and international offshore contributions, offset by higher expenses. Tool rental gross margin improved to approximately 77%.
Drilling Tools International Corp. Price, Consensus and EPS Surprise
Drilling Tools International Corp. price-consensus-eps-surprise-chart | Drilling Tools International Corp. Quote
DTI Tool Rental Revenues Improve With Activity
Tool rental revenues totaled $31.97 million, largely flat compared with $31.86 million in the year-ago quarter. However, revenues increased approximately 8% sequentially, supported by improving North American land activity, stronger equipment utilization and contributions from recent offshore investments.
The average U.S. rig count increased more than 6% sequentially to 589 rigs. Canadian drilling activity also rebounded following the seasonal spring breakup, with the average rig count rising more than 40% from the second quarter. Management noted that firmer commercial terms and higher utilization supported rental profitability as drilling activity strengthened throughout the period.
Drilling Tools Product Sales Register Strong Growth
Product sales increased 24.7% year over year to $8.68 million from $6.96 million. Management attributed the improvement primarily to higher tool recovery revenues as increased drilling activity resulted in more equipment being lost downhole or damaged beyond repair.
September was particularly strong for tool recovery activity. Management expects improving demand for its specialized products to support operating leverage as revenues increase. The company's Drill-N-Ream and Deep Casing Tools product lines also continued contributing to its international operations.
DTI Costs Rise While Adjusted EBITDA Advances
Selling, general and administrative expenses increased to $21.40 million from $20.41 million a year earlier. Depreciation and amortization expenses totaled $6.97 million, compared with $6.83 million, while net interest expenses declined to $1.14 million from $1.34 million.
Adjusted EBITDA increased 4.3% year over year to $9.50 million from $9.12 million. The adjusted EBITDA margin reached approximately 23%, benefiting from stronger rental utilization and improved commercial terms. However, net loss attributable to shareholders widened to $2.64 million from $0.90 million, including approximately $2.15 million in transaction expenses, primarily associated with the pending Saltire acquisition and related financing.
Drilling Tools Expands Its International Presence
DTI's Eastern Hemisphere operations accounted for approximately 19% of third-quarter revenues, excluding intercompany eliminations, compared with approximately 18% in the preceding quarter. New offshore contracts in Europe began generating meaningful revenues, supported by investments in the company's ClearPath stabilizer technology.
September marked the first month of full run-rate revenues under the new European ClearPath contracts. In the Gulf of America, the technology continued gaining traction in technically demanding offshore wells. Meanwhile, Middle Eastern activity remained relatively flat amid regional disruptions, although management anticipates modest improvement during the fourth quarter.
DTI Advances Saltire Acquisition Plans
DTI announced an agreement to acquire Saltire Energy Limited and Foxley Energy Limited, with the transaction expected to close in the first quarter of 2027, subject to necessary approvals and customary closing conditions.
The transaction involves approximately $80 million in cash, subject to adjustments, and 17.4 million DTI shares. Management expects the combination to increase the Eastern Hemisphere's contribution to approximately 40% of pro forma revenues. Saltire is also expected to enhance adjusted EBITDA margins and adjusted free cash flow per share during the first year following closing, excluding potential synergies.
Drilling Tools Cash Flow and Debt Position
Adjusted free cash flow declined to $3.78 million from $5.57 million a year earlier. Capital expenditures increased to $5.73 million from $3.54 million, reflecting targeted ClearPath investments in European offshore markets and equipment additions supporting U.S. land drilling activity.
DTI ended September with approximately $3 million in cash and cash equivalents and net debt of $47.4 million, down $4.3 million sequentially. The debt reduction was supported by approximately $4 million in proceeds from a sale-leaseback transaction involving an existing product line.
DTI Revises Cash Flow Guidance for 2026
The Zacks Rank #5 (Strong Sell) company maintained its full-year 2026 revenue guidance of $155 million to $170 million and adjusted EBITDA projection of $35 million to $45 million. Management expects both metrics to finish toward the lower ends of their respective ranges.
However, the company raised its capital expenditure outlook to $22 million to $23 million to reflect targeted growth investments. Consequently, adjusted free cash flow guidance was revised downward to $13 million to $22 million from the previous range of $17 million to $22 million. Management expects free cash flow near the lower end of the revised range while anticipating continued operating momentum into 2027.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Important Earnings at a Glance
While we have discussed DTI’s third-quarter results in detail, let us take a look at three other key reports in this space.
Kinder Morgan, Inc. (KMI - Free Report) reported third-quarter 2026 adjusted earnings of 35 cents per share, beating the Zacks Consensus Estimate of 33 cents by 6.1%. Earnings increased 20.7% from 29 cents in the year-ago quarter.
Revenues increased 9.3% year over year to $4.53 billion from $4.15 billion. Revenues surpassed the consensus estimate of $4.38 billion by 3.4%.
Strong quarterly results benefited from higher natural gas transportation and gathering volumes, alongside improved contributions from the Terminals and CO2 businesses.
As of Sept. 30, 2026, cash and cash equivalents totaled $918 million, compared with $63 million at 2025-end. Net debt stood at $32.23 billion.
Phillips 66 (PSX - Free Report) reported third-quarter 2026 adjusted earnings of $14.08 per share, up 458.7% from $2.52 a year ago. The bottom line surpassed the Zacks Consensus Estimate of $11.97 by 17.6%.
Total revenues and other income increased 47.2% to $51.51 billion from $34.98 billion a year earlier. The top line beat the consensus estimate of $33.72 billion by 52.7%.
Stronger refining margins and higher processed volumes supported the results. Refining crude capacity utilization reached 98%, while clean product yield was 86%.
As of Sept. 30, 2026, total debt stood at $18.53 billion, down from $20.57 billion at the end of June. Net debt declined to $12.68 billion at the end of the quarter. Cash and cash equivalents totaled $5.85 billion, while the net debt-to-capital ratio improved to 26%.
NOV Inc. (NOV - Free Report) reported third-quarter 2026 earnings of 25 cents per share, beating the Zacks Consensus Estimate of 24 cents by 4.17%. The bottom line increased 127.3% from the year-ago quarter's 11 cents, supported by improved operational execution and cost efficiencies.
The oil and gas equipment and services company's revenues of $2.23 billion surpassed the Zacks Consensus Estimate of $2.2 billion by 1.2%. Revenues increased 2.3% year over year, driven by growth in Energy Products and Services. Energy Equipment's capital equipment bookings totaled $577 million, representing a book-to-bill ratio of 91%.
As of Sept. 30, 2026, NOV had cash and cash equivalents of $1.06 billion and total debt of $1.71 billion. The company also had $1.5 billion available under its revolving credit facility.