Drilling Tools International Corporation Common Stock M&A announcement

Thank you, operator, and good morning, everyone. We appreciate you joining us today for Drilling Tools International's conference call to discuss the announced acquisition of Saltire Energy. With me today are Wayne Prejean, DTI's Chairman and Chief Executive Officer, David Johnson, DTI's Chief Financial Officer, and Mike Loggie, Saltire's Founder and CEO. Also joining for the Q&A portion of the call is Jameson Parker, Vice President of Corporate Development. Prior to this call, DTI issued a press release, furnished an investor presentation, and filed related material on Form 8-K announcing that it has entered into a definitive agreement to acquire Saltire Energy Limited and Foxley Energy Limited, commonly known as Saltire. Copies of those materials are available in the investor relations section of the website. DTI intends to file the transcript of this call with the SEC pursuant to Rule 425 as a written communication related to the proposed transaction.

Following my remarks, management will discuss the transaction before opening the line for questions. There will be a replay of today's call that will be available by webcast on the company's website at drillingtools.com, and there will also be a telephonic recorded replay available until October 15. Please note that the information reported on this call speaks only as of today, October 8, 2026, and therefore, you are advised that any time-sensitive information may no longer be accurate at the time of any replay listening or transcript reading. Comments on this call will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding the proposed acquisition of Saltire, the anticipated timing, completion, and the benefits of the transaction, and the expected financial impact and future operating performance of the combined company.

These statements reflect current views of DTI's management and speak only as of October 8, 2026. Actual results may differ materially because of the risks, uncertainties, and contingencies, including the possibility that the transaction may not be completed on the anticipated terms or timing or at all, the failure to satisfy closing conditions or obtain required approvals, financing risks, integration risks, market conditions, and other facts. Please review the risk factors and cautionary statements in DTI's annual reports on Form 10-K, quarterly reports on Form 10-Q, Form 8-Ks, the press release and investor presentation, and when available, the registration statement on Form S-4 and related proxy statement/prospectus relating to the transaction to understand certain of those risks, uncertainties, and contingencies. Nothing on this call will be read as an assurance that the transaction will close or that any closing condition will be satisfied.

DTI undertakes no obligation to update these statements except as required by law. In connection with the proposed transaction, DTI intends to file a registration statement on Form S-4 with the SEC that will include a proxy statement/prospectus. Investors and security holders are urged to read the registration statement, proxy statement/prospectus, and other relevant documents filed with the SEC carefully when they become available because they will contain important information about DTI, Saltire, and the proposed transaction. Free copies will be available through the SEC's website at www.sec.gov and DTI's investor relations website at investors.drillingtools.com. DTI, Saltire, Foxley, and their respective directors and executive officers may be deemed participants in the solicitation of proxies from DTI's stockholders in connection with the proposed transaction.

Information about the persons who may be deemed participants, including their direct and indirect interests, will be set forth in the Form S-4 and proxy statement/prospectus when filed and in DTI's other SEC filings. This call and the related materials are not an offer to sell or a solicitation of an offer to buy securities and are not intended to be a solicitation of any vote or approval. Any solicitation of proxies will be made only pursuant to the proxy statement/prospectus. No offering of securities will be made except by the means of a prospectus meeting the requirements of Section 10 of the Securities Act. The comments today may include adjusted EBITDA, adjusted EBITDA margin, and adjusted free cash flow, each of which is a non-GAAP financial measure as defined in Regulation G of the Securities Exchange Act.

These measures should not be considered in isolation from or as a substitute for, the most directly comparable GAAP measures. The press release and investor presentation include the applicable definitions, limitations, and reconciliations to the most directly comparable GAAP measures. For forward-looking non-GAAP measures, they will also explain when a reconciliation cannot be provided without unreasonable efforts. Now with that behind me, I will turn the call over to Wayne Prejean, DTI's Chairman and Chief Executive Officer.

Wayne? Thanks, Zach, and good morning, everyone.

I'm joining you this morning from Abu Dhabi in the United Arab Emirates, where I'm with Mike Loggie, Saltire's founder, and we are here to share this transformative news with his employees together and in person.

As outlined in our press release, we have entered into a definitive agreement to acquire Saltire Energy, an international downhole tool rental company with an established presence across the North Sea, the Middle East, and other key Eastern Hemisphere growth markets. Total consideration consists of approximately $80 million in cash and 17.4 million shares of DTI common stock. The share consideration is fixed, but its market value will vary with DTI's share price. Saltire's business closely mirrors our own. Like DTI, Saltire rents the mission-critical downhole tools operators depend on, including bottom hole assembly components, pipe and tubulars, and pressure control equipment. They do it very well in markets where DTI has wanted to be at scale. This transaction brings together two highly complementary businesses to create a larger, more balanced, and more resilient global platform. We are building for the future, and this partnership further solidifies our foundation.

As we look at this combination, several key drivers have us excited, and together they make a compelling case for the transaction. Strategically, the combination of DTI and Saltire is a natural fit. Both companies have similar operating models across distinct geographies with limited customer overlap. In terms of scale, it's transformational. The combination creates a truly global, more diversified platform with exposure to some of the most attractive international growth markets. Financially, the transaction is immediately enhancing. We expect it to be accretive to adjusted EBITDA margin and adjusted free cash flow per share from day one. The economics also stand on their own. The investment case does not depend on synergies. From a balance sheet perspective, the combined company's strong free cash flow generation gives us a clear path to de-lever and to do so quickly.

Finally, the Loggie family is retaining a significant ownership stake in the combined company, which creates real long-term alignment and demonstrates their conviction in the value we can create together. Let me start with geography, because that's the heart of this deal. Over the last few years, we've deliberately grown our Eastern Hemisphere business from about 8% of revenue in 2024 to 14% in 2025 and approximately 18% in the second quarter of this year. Saltire takes that to approximately 40% of pro forma revenue in a single step. That kind of international scale and those established customer relationships would take many years to build organically. That exposure matters for three key reasons. First, according to Spears & Associates, the Eastern Hemisphere is a large and growing market with approximately 910 active rigs and $69 billion of drilling and completion spending expected in 2026.

Drilling and completion spending in the region is projected to reach approximately $88 billion by 2030. The Middle East is expected to lead that growth with the fastest rig count growth of any region. Second, these markets reward reliability, technical capabilities, and service quality, which supports higher and more consistent margins. You can see that in Saltire's financial profile. Third, the transaction would provide an opportunity to deploy DTI technologies using Saltire's platform. Operators in the Middle East are drilling more unconventional shale-style wells, and offshore operators are placing a premium on performance. That plays right into our strengths, and we see a real opportunity to bring technologies like ClearPath, Drill-N-Ream, and our Deep Casing Tools technology to Saltire's customers through Saltire's established distribution network. For customers, the combination creates a global one-stop shop by bringing DTI's and Saltire's product offerings and geographic relationships together.

We share select large service company customers, while Saltire brings established relationships with international operators and National Oil Companies that DTI has not historically served at scale. Our objective is not to change what's working at Saltire. It's to preserve those relationships and give customers on both sides access to more products, more technology, and greater financial strength. Together, our rental fleet grows from approximately 63,000 tools to more than 100,000 tools. The result is a better-balanced company. It pairs the stability and cash generation of our North American business with direct exposure to international markets that we believe will be an increasingly important source of growth. We also gain a proven team with deep expertise in some of the most technically challenging drilling environments in the world. All members of Saltire's management team will remain with the combined company following closing.