DTI 2026年第三季度业绩电话会：营收增长及Saltire收购最新进展

核心要点

• DTI公布2026年第三季度营收为4060万美元，环比增长约7%，同比增长5%，主要得益于北美业务活动改善以及欧洲海上合同开始贡献收入。
• 调整后EBITDA环比增长14%至950万美元，调整后EBITDA利润率约为23%。9月是DTI在2026年表现最强劲的月份，创造了约400万美元的调整后EBITDA。
• 尽管资本支出达570万美元（主要用于在挪威及其他海上市场部署ClearPath），公司调整后自由现金流仍达380万美元。
• 管理层维持全年营收指引在1.55亿至1.70亿美元、调整后EBITDA指引在3500万至4500万美元不变，同时预计两项业绩均将接近区间的低端。
• DTI将2026年资本支出预期上调至2200万至2300万美元，并将调整后自由现金流指引修正为1300万至2200万美元，预计业绩将接近该区间的低端。
• 拟议的Saltire Energy收购交易预计将于2027年第一季度完成，尚需获得股东及监管机构批准。管理层预计，在不考虑协同效应的情况下，该交易将在第一年增厚调整后EBITDA利润率及每股调整后自由现金流。

核心财务数据

业务与运营表现

北美业务活动在本季度出现复苏。美国平均钻机数量环比增长超6%至589台，而加拿大在春季解冻期结束后，平均钻机数量环比增长超40%。DTI表示，随着使用其工具的钻机数量与大盘同步增加，设备利用率有所提高。

在墨西哥湾，ClearPath继续取得进展，商业条款保持坚挺。管理层还表示，随着供需趋紧，价格压力有所缓解，从而增强了公司维持或强化商业条款的能力。

东半球业务贡献了第三季度约19%的营收，高于第二季度的约18%。欧洲新的海上合同开始产生显著贡献，其中包括在挪威及更广泛北海区域部署的ClearPath和专用工具。

受持续的地缘冲突影响，中东地区业务活动相对平稳。管理层预计第四季度将温和改善，并表示客户已基本调整好物流以应对干扰。

收购Saltire Energy

DTI同意以约8000万美元现金（视常规调整而定）加1740万股DTI普通股收购Saltire Energy。按截至2026年10月1日的20日成交量加权平均价计算，该交易对价约为Saltire预计年化调整后EBITDA的5.5倍。

管理层预计，Saltire将增加5040万美元的年化营收和2250万美元的调整后EBITDA，意味着调整后EBITDA利润率约为45%。这些测算不包含潜在的协同效应。

此次合并将使DTI在东半球的业务敞口增至备考营收的约40%。同时，租赁工具规模将从约6.3万件扩大到10万件以上，并使公司的目标钻机市场规模扩大一倍以上。

DTI预计交易完成时的备考净杠杆率约为过去12个月调整后EBITDA的2.2倍。管理层的目标是在24个月内将杠杆率降至约1倍，并将偿还债务与高回报增长投资列为自由现金流的首要用途。

该交易仍预计将于2027年第一季度完成，前提是获得DTI股东批准、必要的监管审批并满足惯常的交割条件。

管理层指引

管理层预计西半球和东半球业务在第四季度均将实现环比增长。按年末年化运行率计算，东半球业务占公司总营收的比例预计将超过20%。

公司预计，典型的年末业务活动放缓不会导致第四季度增速回落。管理层对第四季度及2027年上半年的业务活动表达了乐观态度，但未进一步预测增速会再度加快。

风险与关注重点

• 若未能获得股东批准、监管审批、融资或其他交割条件未达成，Saltire交易可能会被推迟或无法完成。
• 融资和整合风险可能影响合并后公司的预期效益及财务表现。
• 中东地区冲突的持续可能会对业务活动和物流造成干扰，不过管理层表示客户已基本适应当前局势。
• 较高的自主性增长支出拉低了2026年预期调整后自由现金流。公司表示，新增的ClearPath投资已在产生营收，但其未来回报仍取决于执行情况及客户业务活动。
• DTI预计收购完成后杠杆率将上升，并在交割后将削减债务置于股票回购之前。

分析师问答要点

管理层表示，在DTI推进Saltire交易期间，股票回购已暂停。鉴于公司的公众流通盘和交易量有限，管理层认为并购和对现有业务的投资是更高效的资本利用方式。在去杠杆之后，公司可能会根据流动性、流通盘和股价情况重新考虑股票回购。

在定价方面，管理层表示价格承压情况较前几个季度显著减轻。供需趋紧正在增强DTI维持或提升商业条款的能力，尽管客户在资本支出方面仍保持克制。

关于Saltire的协同效应，管理层指出，相比削减成本，商业和营收层面的协同具有更大的潜力。通过Saltire的国际客户网络交叉销售DTI技术是一个关键机遇，但交易公开的增厚预期中并未计入任何协同效应。

Saltire的主要管理团队预计将留任。其原股东也可能保留顾问职务，而在本次电话会议时尚未最终确定潜在的董事会席位安排。

财报电话会议完整实录

完整财报电话会议逐字稿

管理层陈述

Operator

Greetings. Welcome to the Drilling Tools International Third Quarter 2026 Earnings Conference Call.

[Operator Instructions]

Please note, this conference is being recorded. I will now turn the conference over to Ken Dennard, Investor Relations. Thank you, Ken. You may begin.

Ken Dennard

Thank you, operator, and good morning, everyone. We appreciate your joining us for DTI's 2026 third 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 third quarter results, an update on the pending acquisition of Saltire Energy, and the 2026 outlook before opening the call for questions.

There will be a replay of today's call, and it will be available by webcast on the company's investor website at investors.dti.inc. There will also be a telephonic recorded replay available until November 13. Please note that any information reported on this call speaks only as of today, November 6, 2026, and therefore, you are advised that time-sensitive information may no longer be accurate as of the time of any replay listening or transcript reading.

Also, comments on this call will contain forward-looking statements within the meaning of the United States federal securities laws, including statements regarding the proposed acquisition of Saltire Energy Limited and Foxley Energy Limited, together known as Saltire. The anticipated timing, completion, and benefits of the transaction-related financing and the expected financial impact and future operating performance of the combined company. These forward-looking statements reflect the current views of DTI's management. However, various risks, uncertainties, and contingencies could cause actual results, performance, or achievements to differ materially from those expressed in the statements made by management, 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, and integration risks.

The listener or reader is encouraged to read DTI's annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and the registration statement on Form S-4, including the section entitled Risk Factors therein, to understand certain of those risks, uncertainties, and contingencies. In connection with the proposed transaction, DTI has filed a registration statement on Form S-4 with the SEC that includes a preliminary proxy statement and prospectus. Investors and security holders are urged to read these documents carefully, including any amendments and the definitive proxy statement and prospectus documents when available because they contain important information about DTI, Saltire, and the proposed transaction. Free copies will be available on the SEC's website at sec.gov and on DTI's Investor Relations site.

DTI, Saltire, Foxley, and their respective directors and executive officers may be deemed participants in the solicitation of proxies from DTI stockholders in connection with the proposed transaction. Information about these participants and their interest is contained in the proxy statement and prospectus. DTI undertakes no obligation to update any forward-looking statement except as required by law.

The comments today will also include certain non-GAAP financial measures, including but not limited to adjusted EBITDA, adjusted EBITDA margin, adjusted free cash flow, adjusted net loss, adjusted loss per share, net debt, and with respect to Saltire, run-rate adjusted EBITDA. We provide these non-GAAP results for informational purposes and they should not be considered in isolation from most directly comparable GAAP measures. A discussion on why we believe these non-GAAP measures are useful to investors, certain limitations of the use of these measures, and reconciliations of DTI's historical non-GAAP measures to the most directly comparable GAAP measures can be found in the earnings release, which is available on the Investor Relations section of the website at investors.dti.inc and in the filings with the SEC.

Saltire's run-rate figures are management estimates based on Saltire's unaudited monthly financial information, have not been reviewed by DTI's auditors, and are not necessarily indicative of Saltire's results for any future period. 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.

Ken Dennard

Thanks, Ken, and good morning, everyone. I will provide some opening remarks before handing the call over to David to review the financials. I'll then come back and provide a few additional thoughts before we open it up for questions.

We are pleased with our third quarter performance. As we anticipated, the second half improvement is underway, and our results are building momentum heading into the fourth quarter. Rising rig counts in several of our key operating areas drove much of that progress, and utilization continues to improve as our tools gain traction in high-performance well applications. We generated $40.6 million of revenue, up approximately 7% sequentially and 5% year-over-year, and $9.5 million of adjusted EBITDA, up 14% from the second quarter, with adjusted EBITDA margin expanding to approximately 23%. We also generated $3.8 million of adjusted free cash flow, even as we continued our planned growth investments in Norway and other offshore markets.

Building on that momentum, shortly after quarter end, we announced the transformative acquisition of Saltire Energy, a pivotal step in DTI's growth story and one that is expected to significantly expand our international scale. I'll discuss more about this important event later in the call. Turning back to the quarter, we were encouraged to see that our results built steadily each month. Revenue grew sequentially across North America and in key Eastern Hemisphere markets, and margins improved across the business. September was our strongest month of the quarter and our first month of approximately $4 million of adjusted EBITDA in 2026, providing a healthy exit rate as we enter the fourth quarter.

Our average monthly adjusted EBITDA has stepped up each quarter this year, and we expect that progression to continue in the fourth quarter. Combined with a stable to growing rig count environment, that positions us well as we work toward our full-year goals. In North America, the recovery we began to see late in the second quarter carried through the third. The average U.S. rig count increased more than 6% sequentially to 589 rigs in the third quarter. And that momentum continued into October with the rig count surpassing 600 rigs for the first time in more than 2 years.

On U.S. land, our own activity rebound trailed the initial rig addition slightly. This 2- to 3-month lag is not uncommon in our business, but our activity caught up as the quarter progressed, and the number of rigs running DTI tools has grown alongside the broader rig count, supporting higher tool utilization in the largest part of our business. In Canada, activity rebounded sharply following the seasonal spring breakup, with the average rig count up more than 40% from the second quarter. That recovery built through September, and the Canadian rig count exited the quarter above 200 rigs and ahead of prior-year levels.

Offshore, our ClearPath technology continues to gain traction in the Gulf of Mexico. Commercial terms held firm throughout the quarter, and as our customers finalized their 2027 budgets and contract awards, we are focused on securing long-term agreements with attractive economics that reflect the value we deliver. We continue to win business on the strength of our reliability, service, and the specialized tools that today's high-performance wells demand. And our North American business, which remains the foundation of DTI, is growing again.

In the Eastern Hemisphere, we continue to make targeted investments in our ClearPath stabilizer technology during the third quarter to support significant new contracts in Europe, under which we are deploying a fleet of ClearPath and other specialized tools across Norway, the broader North Sea, and other offshore markets. These investments are backed by long-term rental agreements, and we expect them to generate attractive returns. In the Middle East, activity was relatively flat in the third quarter as the regional conflict persists. And we expect modest improvement there in the fourth quarter.

As I noted in our Saltire call last month, operators, service companies, and national oil companies have largely found ways to manage logistically around the ongoing disruptions. And on the ground, it is business as usual. Looking ahead, several of the industry's largest service companies have pointed to the Middle East as a key area of growth in 2027, and our own customer conversations support that view. Our Deep Casing Tools and Drill-N-Ream product lines continue to contribute to our growing Eastern Hemisphere story.

As I mentioned at the outset, last month we announced a definitive agreement to acquire Saltire Energy, an Aberdeen-based international downhole tool rental company with an established presence across the North Sea, the Middle East, Asia Pacific, and other key Eastern Hemisphere growth markets. This is a significant transaction for DTI and marks the beginning of an exciting new chapter for our company. For those of you who were unable to join our call last month, 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, and it does so in markets where we have long wanted to be at scale. These are two highly complementary businesses with similar operating models, distinct geographies, and limited customer overlap. Saltire dramatically accelerates an international growth strategy we have been executing for years. We have deliberately grown our Eastern Hemisphere business from about 8% of revenue in 2024 to 14% in 2025 and approximately 19% in the third quarter of this year.

Saltire takes that to approximately 40% of pro forma revenue in a single step. It grows our rental fleet from approximately 63,000 tools to a combined fleet of more than 100,000, more than doubles our addressable rig market, and gives us an established distribution network to bring technologies like ClearPath, Drill-N-Ream, and Deep Casing Tools to Saltire's international operator, OFS, and national oil company customers. Just as importantly, the combination leaves DTI well balanced across the global drilling market.

If disruption in the Middle East persists, we would expect higher commodity prices to continue supporting activity in North America, where we have a strong and growing position. If the region stabilizes, we expect international activity, led by the Middle East, to accelerate, and Saltire gives us the scale to capture it. Our tools and personnel are also highly mobile, allowing us to redeploy them wherever activity is strongest rather than carrying idle capacity in a slower market. Either way, we are positioned to benefit with meaningful revenue and earnings in both hemispheres and the flexibility to follow activity.

Financially, we expect the transaction to be immediately accretive. We expect it to be accretive to adjusted EBITDA margin and adjusted free cash flow per share in the first year following closing. And that expectation does not depend on cost or revenue synergies. Any synergies we realize would be incremental. Saltire's strong cash generation also gives the combined company a clear path to delever quickly, which David will walk through shortly.

Finally, the Loggie family's decision to take approximately 30% of the combined company in DTI common stock reflects our shared conviction that these businesses are stronger together and that the most meaningful value creation is still ahead of us. Since the announcement, I've met with numerous customers and Saltire employees throughout Europe and the Middle East. The Saltire employees I've met are excited about joining DTI and are looking forward to the opportunities that a diversified platform can offer. The customers we have spoken with have been equally encouraged by the prospect of a broader product offering and greater financial strength behind the service they rely on.

We are working through an amended Form S-4, the process is progressing as planned, and we look forward to the special meeting of stockholders in the coming months. We continue to expect the transaction to close in the first quarter of 2027, subject to DTI stockholder approval, any required regulatory approvals, and other customary closing conditions. In the meantime, we have already begun integration planning with teams from both companies working together on systems and processes so we are positioned to execute from day 1.

Lastly, I'd like to highlight an important moment for our identity as a public company. Late last month, we rolled out our new brand. While we have historically gone to market as Drilling Tools International, going forward, we will be known simply as DTI. Our new tagline, "At the Core of Drilling," captures what we have always done, delivering the mission-critical tools at the heart of every well we support. Our people and our tools are at the core of our customer success, and that is exactly where we intend to stay.

The rebrand is the natural next step in our One DTI initiative. As we have discussed on prior calls, our goal as we've grown through acquisitions has been to bring every business we've acquired under 1 roof with a common identity. The new brand is more than a new logo. It reflects who we have become, 1 company with 1 culture, and a shared commitment to safety, service, and our customers. We also see it as a catalyst to engage and unite our employees around a common purpose.

And the timing is deliberate. As we work toward closing the Saltire acquisition, One DTI gives us a clear framework for welcoming the Saltire team into the DTI organization. Now, I'll pass it over to David to take you through our results in great detail, provide an update on the Saltire acquisition, and discuss our 2026 outlook. David?

David Johnson

Thank you, Wayne. Please refer to yesterday's earnings release for a detailed breakdown of our third quarter financial results and the related financial tables. I will use this time to offer further insight into specific financial metrics, provide an update on the proposed Saltire acquisition, and discuss our 2026 guidance.

We generated total consolidated revenue of approximately $40.6 million during the third quarter, with tool rental revenue of $32 million and product sales revenue totaling $8.7 million. Net loss attributable to stockholders for the third quarter was approximately $2.6 million, or a loss of $0.07 per share, which includes approximately $2.2 million of transaction expenses, primarily related to the pending Saltire acquisition and related financing. Adjusted net loss was approximately $433,000, or an adjusted loss per share of $0.01. Third quarter adjusted EBITDA was $9.5 million, and adjusted free cash flow was approximately $3.8 million.

I'll offer a bit of color on the movement in revenue and margins. Tool rental revenue increased approximately 8% sequentially and was essentially flat year-over-year, reflecting improving North American land activity and the first meaningful returns on our growth investments in the prior quarter. Tool rental gross margin improved to approximately 77%, benefiting from improved utilization and firmer commercial terms.

Product sales revenue increased approximately 25% year-over-year, driven primarily by higher tool recovery revenue. As activity levels increase, we typically see more tools lost downhole or damaged beyond repair. And as a result, September was one of our strongest tool recovery months in some time. As our value-added product lines continue to gain traction with operators, we expect to benefit from operating leverage with improved margins alongside higher revenue.

Capital expenditures in the third quarter were approximately $5.7 million compared to $4.2 million in the second quarter, with the bulk of the increase reflecting our planned ClearPath investments in offshore markets. We also built some additional tools with specific geometry during the quarter to support rising activity on U.S. land. With those investments, we expect lower capital expenditures during the fourth quarter, and any incremental growth investments will be focused on high-demand tools to support momentum into 2027, guided by customer contracts and planned activity.

Maintenance CapEx for the third quarter remained approximately 12% of total revenue. As we always like to remind everyone on this topic, our maintenance CapEx is primarily funded by tool recovery revenue, which keeps our rental tool fleet relevant and sustainable regardless of market trends.

Turning to the balance sheet, as of September 30, 2026, we had $3 million of cash and cash equivalents and net debt of $47.4 million, a reduction of approximately $4.3 million from June 30, even with our targeted growth investments made during the quarter. In light of increased investments in the third quarter, that reduction primarily reflects our exit of an existing product line through a sale-leaseback to its original inventor with the approximately $4 million of proceeds used to immediately pay down debt.

Now turning to our Saltire acquisition. We are making good progress on securing financing for the proposed transaction. As we said at the transaction announcement, we expect to fund the cash portion of the transaction through new debt financing together with borrowings under our existing credit facility. We will provide additional details as soon as practical.

As a reminder of what we disclosed at the time of the transaction announcement on October 8, total consideration for Saltire consists of approximately $80 million in cash subject to customary adjustments and a fixed 17.4 million shares of DTI common stock, the value of which will fluctuate with our share price until closing. Using the 20-day volume-weighted average price as of October 1, 2026, this represented approximately 5.5x Saltire's run-rate adjusted EBITDA.

Based on management estimates derived from recent monthly performance updates at the announcement date, we expected Saltire to add approximately $50.4 million of run-rate revenue and $22.5 million of adjusted EBITDA, representing an adjusted EBITDA margin of approximately 45%. Importantly, this would increase DTI's adjusted free cash flow by more than 80% on a pro forma basis based on our guidance at the time of the transaction announcement. These figures do not include any synergies.

Also, as announced related to leverage, we expected pro forma net debt to trailing 12-month adjusted EBITDA of approximately 2.2x at closing. With the enhanced free cash flow of the combined company, we also expected to reduce net leverage to approximately 1x within 24 months of closing, an improvement of more than 50%. Until we reach that target, debt reduction will be our primary use of free cash flow alongside high-return growth investments consistent with how we have always managed this business.

In closing, as it relates to the Saltire acquisition, we expect to file a revised Form S-4 that will reflect improving financial metrics for both Saltire and DTI. So be on the lookout for that filing shortly.

Now turning to our geographic segment mix, our Eastern Hemisphere segment represented approximately 19% of DTI's total revenue in the third quarter compared to approximately 18% in the second quarter. The sequential increase was driven primarily by our new offshore contracts in Europe, which began generating substantial revenue in the third quarter. As outlined when we announced the transaction, Saltire is expected to take that figure to approximately 40% of pro forma revenue. We are confident that the Eastern Hemisphere will play an increasingly meaningful role in our future results.

For now, our Western Hemisphere segment continues to represent the bulk of our standalone business, and we are encouraged by the steady rig count additions we saw in the third quarter. Importantly, both hemispheres grew sequentially in the third quarter, and we expect both to grow again in the fourth quarter, with our Eastern Hemisphere expected to surpass 20% of total company revenue on a year-end run-rate basis.

Turning to our outlook, with September providing a supportive run rate heading into the fourth quarter, we continue to expect full-year 2026 revenue and adjusted EBITDA to be within our previously disclosed guidance ranges of $155 million to $170 million and $35 million to $45 million, respectively. We expect to finish the year toward the lower end of both ranges, consistent with what we have communicated throughout the year.

Separately, we are raising our full-year capital expenditure outlook to $22 million to $23 million to reflect the aforementioned targeted growth investments we made during the second and third quarters. As a result of this change to our capital expenditure outlook and expected lower end of our EBITDA range, we are also revising our full-year 2026 adjusted free cash flow range to $13 million to $22 million. And we expect to be near the low end of this revised range.

As we have discussed on prior calls and disclosed in our earnings materials, we have made targeted growth investments in our ClearPath technology to support new offshore contract awards, which will add approximately $4 million of capital expenditures above our original plan. Excluding the incremental discretionary ClearPath investment, we would have been within our original adjusted free cash flow guidance range. More importantly, these investments are already generating revenue, and we expect them to deliver attractive returns into 2027, which is why we maintain discretion when it comes to strategic investments.

That concludes my financial review and outlook section. I will now turn the call back over to Wayne for closing comments.

Ken Dennard

Thank you, David. We are entering the final quarter of 2026 with real momentum and at an important moment in DTI's history. The second half improvement we anticipated has begun to materialize. Our offshore investments in Europe are now contributing. And with Saltire, we have taken a transformational step to balance the global platform we have been building since going public, one that leaves us appropriately hedged across the global drilling market. We remain committed to consistent execution, technological innovation and differentiation, and operational excellence, and we will continue to prioritize profitable growth and long-term shareholder value.

Before we open the call for questions, I would like to highlight a few key takeaways. The second half improvement is underway. Revenue and adjusted EBITDA grew sequentially. September was our strongest month of the quarter, and we entered the fourth quarter with a supportive run rate toward our full-year revenue and adjusted EBITDA goals.

Our targeted offshore investments are nearly complete and already contributing. September was the first month of full run-rate revenue under our new European ClearPath contracts. And we expect these investments to continue generating attractive returns. Together with investments to support rising U.S. land activity, they bring full-year adjusted free cash flow below our original range, a deliberate high-return use of capital to carry our momentum into 2027.

Saltire positions DTI for its next chapter. It takes our Eastern Hemisphere business to approximately 40% of pro forma revenue, leaves us appropriately balanced across the global drilling market, and is expected to be accretive to adjusted EBITDA margin and adjusted free cash flow per share in the first year following closing, before any synergies. Our planned debt financing, together with borrowings under our existing credit facility, are expected to fund the cash consideration, and we expect the combined company's cash generation to provide a clear path to approximately 1x leverage within 24 months of closing.

Finally, we are bringing our business together under 1 name. Our new DTI brand unites every company we have acquired under a single identity and culture, and it gives us a clear framework for welcoming the Saltire team when the transaction closes. On prior calls, I said DTI remains a disciplined consolidator in a fragmented industry and that we would pursue only the opportunities that strengthen our platform and create lasting value for our shareholders. Saltire is exactly that kind of opportunity.

We remain very excited about the scale, financial strength, technology offering, and earnings power of the combined company. And we look forward to demonstrating the value of this combination to our customers and our shareholders. We will remain prudent and disciplined as we work to close the transaction and integrate our teams with an unwavering focus on free cash flow generation and debt reduction.

I want to thank every member of the DTI organization for their continued commitment to working in a safe, inspired, and productive manner, with special thanks to our personnel in the Middle East who continue to operate in a challenging environment. To the Saltire team, we look forward to closing this transaction and welcoming you to DTI. Our employees' commitment and dedication have been essential in navigating a constantly evolving energy landscape, and they are central to the success and future growth we are building together. Together, we are At the Core of Drilling.

With that, we will now take your questions. Operator?

Operator

Thank you. We will now be conducting a question-and-answer session.

[Operator Instructions]

Our first question comes from Steve Barger with Stephens Inc. Please go ahead. Thank you.

Unknown Speaker

Good morning, this is Alex on for Steve. Just to start us off, you described September as a supportive run rate into Q4. So, curious if you're expecting the typical year-end slowdown in activity from there, or will elevated WTI prices lessen the slowdown?

Ken Dennard

Thanks for that question. It's typically, historically through the shale plays, you've seen some spending compression and people kind of hit the end of their budgets, but that's not the case this year. We're seeing somewhat of an acceleration in activity taking shape in the second half. And there seems to be just steady-as-she-goes kind of activity. So I don't know if we're going to see more acceleration, but I do not believe we're going to see deceleration in the last quarter. We're optimistic about the last quarter into the first and second part of next year.

Unknown Speaker

Great context. Thank you. And then on capital allocation, I think some investors may have thought, given DTI's recent share price, a buyback would have been perhaps more optimal than an acquisition. What would you say to that? What are your thoughts on that?

Ken Dennard

So we were in the process of M&A and had to pause our share buyback activities because we were fully into developing this transaction. So we focused on M&A to try to get more scale going into next year. And what we see is an upcycle, so the limited float and amount of volume that we have, the ability to make an impact where share repurchases was, we believe, very limited. And that is something we can do down the road after we get a little bit larger and get a little bit more float. So that was kind of our decision tree on how we pivoted from our original strategy of buying back shares, albeit limited, to more M&A.

Unknown Speaker

Got it. And yes, so I guess given the solid cash flow you guys are generating, sounds like a buyback is something you might revisit following deleveraging?

Ken Dennard

So we're going to focus on deleveraging by having a net debt reduction as we move through the transaction going into next year. But that'll be our priority, is deleveraging. And as far as share repurchases, sometime down the road, we can probably revisit that, depending on how the stock's performing and what our liquidity and float situation is. But we believe the best use of cash today, or capital today, is to fund our existing business and find M&A opportunities while they exist. We still feel like the market is poised for us to take that action, particularly in the Eastern Hemisphere.

Unknown Speaker

Very helpful. Just a couple more. One quick one. How are you thinking about the pricing environment? Are we approaching a point where higher pricing could be on the table or help offset any inflationary pressures?

Ken Dennard

So we're seeing some relief of the price compression that existed in prior quarters, considerably, because supply and demand is tightening. And I think the ball is shifting towards increased ability, the ability to hold or increase your commercial terms or improve them. And we're seeing that. I think our customer base is still being disciplined with their capital spending, not going crazy, but they are taking advantage of these improved margins and improved economics due to higher commodity prices, and they're doing more activity. But they're being cautious. So I think it's an improved environment, and hopefully, it'll continue to improve. So we continue to hold firm on our commercial terms and materially create improvement over time.

Unknown Speaker

Thank you. Last one from us. I know it's early. You know, the market's volatile. We just completed the midterms. But could you talk a little bit about how you're preparing DTI for 2027?

Ken Dennard

Sure. We believe that the industry, although there's some concerns in the Middle East with the war and the conflict going there, we feel like this strategy we're deploying has us appropriately hedged for wherever the activity might rebound because there will be a supply gap forthcoming as a result of the war premium and transportation and shipping and logistics war premiums. So I think the world is going to pivot around and find where the best barrels can be produced and transported with the least amount of risk and lowest amount of cost. And I think there's going to be a geopolitical shift on energy security in different parts of the world. And with this new acquisition, we will be appropriately positioned in various markets with the Saltire acquisition to enable us to be positioned to be hedged in all these markets as they ebb and flow. So we think that's a good positioning move for us going forward.

Unknown Speaker

Great context. That's all from us. Thank you.

Ken Dennard

Okay, thank you.

Operator

Our next question comes from Peter Sidoti with Sidoti & Co. Please go ahead. Thank you.

分析师问答

Steve Ferazani

A lot of attention from Sidoti today. A quick question. You've been very careful about talking about synergies with Saltire on the revenue side and the expense side. I'm more interested, I think, on the revenue side. Is there the ability to cross-market? Is there the ability to expand, use their sales team more efficiently? What's your thought on the revenue side there?

Ken Dennard

So, thank you, we believe there are synergies that we can create operationally and commercially as a team, but stronger, we'll be a lot stronger as a company pulled together. As far as cost synergies, we were reluctant to bake too many of those in because the time and effort to go and unpack different facilities and things takes some time, and they don't have a large management team. So it's not like a big reduction of 2 replicated management teams, but the revenue and commercial synergies are what we think is a lot of upside. And with a little market participation and stability, we are highly confident we can execute well on those synergies.

Steve Ferazani

And I'm sorry, will any of the Saltire management be joining the Board of Directors?

Ken Dennard

So we're not sure. I think they have the right to have a board seat, but we're looking at how that might function. So it's undetermined yet, but there is an opportunity for them to be a part of the board, for sure. And the management team will be staying on, and the owner will continue to be an advisor and a supporter and a participant in the business to make sure we transition it effectively. But the main management team will continue because there's little replication for us in some of the areas we operate.

Steve Ferazani

And forgive my ignorance, but I assume that you've known the management of this company for a long time, long before you began acquisition talks.

Ken Dennard

Yes, absolutely.

Steve Ferazani

All right. Thank you very much.

Ken Dennard

Thank you.

Operator

We have reached the end of our question-and-answer session. I would now like to turn the floor back over to Mr. Prejean for closing comments.

Ken Dennard

Well, thank you, everyone, for your attention to DTI on this call. And I'll ask you to please pay attention to our subsequent filings that'll be forthcoming in support of this ongoing transaction and other matters. So we're pretty enthusiastic about what we're doing going forward, and our stock price notwithstanding is greatly undervalued. So it's a great opportunity at this point to see growth in that area. So please continue to watch what we're doing, and thank you for your interest. And that concludes our part of the call, operator.

Operator

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

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