Cover Page
Cover Page | 12 Months Ended |
Dec. 31, 2023 | |
Document Information [Line Items] | |
Document Type | S-4/A |
Entity Registrant Name | DRILLING TOOLS INTERNATIONAL CORPORATION |
Entity Incorporation, State or Country Code | DE |
Entity Tax Identification Number | 87-2488708 |
Entity Address, Address Line One | 3701 Briarpark Drive |
Entity Address, Address Line Two | Suite 150 |
Entity Address, City or Town | Houston |
Entity Address, State or Province | TX |
Entity Address, Postal Zip Code | 77042 |
City Area Code | 832 |
Local Phone Number | 742-8500 |
Entity Filer Category | Non-accelerated Filer |
Entity Small Business | true |
Entity Emerging Growth Company | true |
Entity Ex Transition Period | false |
Entity Central Index Key | 0001884516 |
Amendment Flag | true |
Entity Primary SIC Number | 1389 |
Amendment Description | Amendment No. 1 |
Business Contact [Member] | |
Document Information [Line Items] | |
Entity Address, Address Line One | 3701 Briarpark Drive |
Entity Address, Address Line Two | Suite 150 |
Entity Address, City or Town | Houston |
Entity Address, State or Province | TX |
Entity Address, Postal Zip Code | 77042 |
City Area Code | 832 |
Local Phone Number | 742-8500 |
Contact Personnel Name | R. Wayne Prejean |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 | Dec. 31, 2022 |
Assets, Current [Abstract] | |||
Cash | $ 14,050,000 | $ 6,003,000 | $ 2,352,000 |
Accounts receivable, net | 35,730,000 | 29,929,000 | 28,998,000 |
Inventories, net | 11,441,000 | 5,034,000 | 3,281,000 |
Prepaid expenses and other current assets | 3,231,000 | 4,553,000 | 4,381,000 |
Investments - equity securities, at fair value | 1,137,000 | 888,000 | 1,143,000 |
Total current assets | 65,589,000 | 46,408,000 | 40,155,000 |
Property, plant and equipment, net | 70,596,000 | 65,800,000 | 44,154,000 |
Operating lease right-of-use asset | 18,296,000 | 18,786,000 | 20,037,000 |
Goodwill | 2,556,000 | 0 | |
Intangible assets, net | 8,058,000 | 216,000 | 263,000 |
Deferred financing costs, net | 864,000 | 409,000 | 226,000 |
Deposits and other long-term assets | 992,000 | 879,000 | 383,000 |
Total assets | 166,951,000 | 132,498,000 | 105,218,000 |
Current liabilities | |||
Accounts payable | 16,736,000 | 7,751,000 | 7,281,000 |
Accrued expenses and other current liabilities | 8,442,000 | 10,579,000 | 7,299,000 |
Current portion of operating lease liabilities | 3,965,000 | 3,958,000 | 3,311,000 |
Current maturities of long-term debt | 5,000,000 | 0 | |
Revolving line of credit | 0 | 18,349,000 | |
Total current liabilities | 34,143,000 | 22,289,000 | 36,240,000 |
Operating lease liabilities, less current portion | 14,402,000 | 14,893,000 | 16,691,000 |
Long-term debt | 20,000,000 | 0 | |
Deferred tax liabilities, net | 6,893,000 | 6,627,000 | 3,185,000 |
Total liabilities | 75,438,000 | 43,809,000 | 56,116,000 |
Commitments and contingencies (See Note 15) | |||
Redeemable convertible preferred stock | |||
Series A redeemable convertible preferred stock*, par value $0.01; nil shares and 30,000,000 shares authorized at December 31, 2023 and December 31, 2022, respectively; nil shares and 6,719,641 shares issued and outstanding at December 31, 2023 and December 31, 2022, respectively | 0 | 17,878,000 | |
Shareholders' equity | |||
Common stock, $0.0001 par value, shares authorized 500,000,000 as of March 31, 2024 and December 31, 2023, 29,768,568 issued and outstanding as of March 31, 2024 and December 31, 2023 | 3,000 | 3,000 | 1,000 |
Preferred stock, par value $0.0001; 10,000,000 and nil shares authorized at December 31, 2023 and December 31, 2022, respectively; nil shares issued and outstanding at December 31, 2023 and December 31, 2022, respectively | 0 | 0 | |
Additional paid-in-capital | 95,426,000 | 95,218,000 | 52,388,000 |
Accumulated deficit | (3,180,000) | (6,306,000) | (21,054,000) |
Less treasury stock, at cost; nil shares at December 31, 2023 and December 31, 2022 | 0 | 0 | |
Accumulated other comprehensive loss | (736,000) | (225,000) | (111,000) |
Total shareholders' equity | 91,513,000 | 88,690,000 | 31,224,000 |
Total liabilities and shareholders' equity | $ 166,951,000 | $ 132,498,000 | $ 105,218,000 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Mar. 31, 2024 | Dec. 31, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | |||
Series A redeemable convertible preferred stock, par value | $ 0.01 | $ 0.01 | |
Series A redeemable convertible preferred stock, shares authorized | 0 | 30,000,000 | |
Series A redeemable convertible preferred stock, shares issued | 0 | 6,719,641 | |
Series A redeemable convertible preferred stock, shares outstanding | 0 | 6,719,641 | |
Common stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 500,000,000 | 500,000,000 | 65,000,000 |
Common stock, shares issued | 29,768,568 | 29,768,568 | |
Common stock, shares outstanding | 29,768,568 | 29,768,568 | 11,951,137 |
Preferred stock, par value | $ 0.0001 | $ 0.0001 | |
Preferred stock, shares authorized | 10,000,000 | 0 | |
Preferred stock, shares issued | 0 | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 | |
Treasury stock, shares | 0 | 0 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | ||
Revenue, net: | |||||
Revenue, net | $ 36,974 | $ 40,799 | $ 152,034 | $ 129,556 | |
Operating costs and expenses: | |||||
Selling, general, and administrative expense | 17,942 | 18,423 | 68,264 | 51,566 | |
Depreciation and amortization expense | 5,365 | 5,015 | 20,352 | 19,709 | |
Total operating costs and expenses | 31,844 | 32,878 | 124,135 | 104,279 | |
Income (loss) from operations | 5,130 | 7,921 | 27,899 | 25,277 | |
Other expense, net: | |||||
Interest expense, net | (182) | (573) | (1,103) | (477) | |
Gain (loss) on sale of property | 0 | 69 | 101 | 127 | |
Loss on asset disposal | (9) | 0 | (489) | 0 | |
Unrealized gain (loss) on equity securities | 249 | (33) | (255) | 234 | |
Other expense, net | (6,359) | (384) | |||
Other income (expense), net | (1,125) | 40 | |||
Total other expense, net | (1,067) | (497) | (8,105) | (500) | |
Income before income tax expense | 4,063 | 7,424 | 19,794 | 24,777 | |
Income tax expense | (937) | (1,723) | (5,046) | (3,698) | |
Net income | 3,126 | 5,701 | 14,748 | 21,080 | |
Accumulated dividends on redeemable convertible preferred stock | 0 | 314 | 314 | 1,189 | |
Net income available to common shareholders | $ 3,126 | $ 5,387 | $ 14,434 | $ 19,891 | |
Basic earnings per share | $ 0.11 | $ 0.45 | $ 0.67 | $ 1.66 | |
Diluted earnings per share | $ 0.11 | $ 0.29 | $ 0.59 | $ 1.07 | |
Basic weighted-average common shares outstanding | [1] | 29,768,568 | 11,951,137 | 21,421,610 | 11,951,137 |
Diluted weighted-average common shares outstanding | [1] | 29,768,568 | 19,677,507 | 25,131,024 | 19,677,507 |
Comprehensive income: | |||||
Net income | $ 3,126 | $ 5,701 | $ 14,748 | $ 21,080 | |
Foreign currency translation adjustment, net of tax | (511) | 0 | (114) | 173 | |
Net comprehensive income | 2,615 | 5,701 | 14,634 | 21,253 | |
Tool Rental | |||||
Revenue, net: | |||||
Revenue, net | 29,966 | 32,276 | 119,239 | 99,018 | |
Operating costs and expenses: | |||||
Operating costs and expenses | 7,001 | 8,137 | 30,960 | 27,581 | |
Product Sale | |||||
Revenue, net: | |||||
Revenue, net | 7,008 | 8,523 | 32,795 | 30,538 | |
Operating costs and expenses: | |||||
Operating costs and expenses | $ 1,536 | $ 1,303 | $ 4,559 | $ 5,423 | |
[1]Shares of legacy redeemable convertible preferred stock and legacy common stock have been retroactively restated to give effect to the Merger. |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE CONVERTIBLE PREFERRED STOCK AND SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | Total | As Previously Reported | Redeemable Convertible Preferred Stock | Redeemable Convertible Preferred Stock As Previously Reported | Redeemable Convertible Preferred Stock Revision of Prior Period, Adjustment | Common Stock | Common Stock As Previously Reported | Common Stock Revision of Prior Period, Adjustment | Treasury Stock | Treasury Stock As Previously Reported | Treasury Stock Revision of Prior Period, Adjustment | Additional Paid-In Capital | Additional Paid-In Capital As Previously Reported | Additional Paid-In Capital Revision of Prior Period, Adjustment | Accumulated Deficit | Accumulated Deficit As Previously Reported | Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss As Previously Reported |
Temporary equity, beginning balance at Dec. 31, 2021 | $ 16,689 | $ 16,689 | ||||||||||||||||
Temporary equity, beginning balance, shares at Dec. 31, 2021 | 6,719,641 | 20,370,377 | (13,650,736) | |||||||||||||||
Beginning balance at Dec. 31, 2021 | $ 11,160 | $ 11,160 | $ 1 | $ 532 | $ (531) | $ (933) | $ 933 | $ 53,577 | $ 53,979 | $ (402) | $ (42,134) | $ (42,134) | $ (284) | $ (284) | ||||
Beginning balance, shares at Dec. 31, 2021 | 11,951,137 | 53,175,028 | (41,223,891) | (811,156) | 811,156 | |||||||||||||
Accretion of redeemable convertible preferred stock to redemption value | $ 1,189 | |||||||||||||||||
Accretion of redeemable convertible preferred stock to redemption value | (1,189) | (1,189) | ||||||||||||||||
Foreign currency translation adjustment, net of tax | 173 | 173 | ||||||||||||||||
Net income | $ 21,080 | 21,080 | ||||||||||||||||
Temporary equity, ending balance at Dec. 31, 2022 | $ 17,878 | $ 17,878 | ||||||||||||||||
Temporary equity, ending balance, shares at Dec. 31, 2022 | 6,719,641 | 6,719,641 | 20,370,377 | (13,650,736) | ||||||||||||||
Ending balance at Dec. 31, 2022 | $ 31,224 | 31,224 | $ 1 | $ 532 | $ (531) | $ (933) | $ 933 | 52,388 | 52,790 | (402) | (21,054) | (21,054) | (111) | (111) | ||||
Ending balance, shares at Dec. 31, 2022 | 11,951,137 | 53,175,028 | (41,223,891) | (811,156) | 811,156 | |||||||||||||
Accretion of redeemable convertible preferred stock to redemption value | $ 314 | |||||||||||||||||
Accretion of redeemable convertible preferred stock to redemption value | (314) | (314) | ||||||||||||||||
Net income | 5,701 | 5,701 | ||||||||||||||||
Temporary equity, ending balance at Mar. 31, 2023 | $ 6,719,641 | |||||||||||||||||
Temporary equity, ending balance, shares at Mar. 31, 2023 | 18,192 | |||||||||||||||||
Ending balance at Mar. 31, 2023 | $ 36,611 | $ 1 | $ 0 | 52,074 | (15,353) | (111) | ||||||||||||
Ending balance, shares at Mar. 31, 2023 | 11,951,137 | 0 | ||||||||||||||||
Temporary equity, beginning balance at Dec. 31, 2022 | $ 17,878 | $ 17,878 | ||||||||||||||||
Temporary equity, beginning balance, shares at Dec. 31, 2022 | 6,719,641 | 6,719,641 | 20,370,377 | (13,650,736) | ||||||||||||||
Beginning balance at Dec. 31, 2022 | $ 31,224 | 31,224 | $ 1 | $ 532 | $ (531) | $ (933) | $ 933 | 52,388 | 52,790 | $ (402) | (21,054) | (21,054) | (111) | (111) | ||||
Beginning balance, shares at Dec. 31, 2022 | 11,951,137 | 53,175,028 | (41,223,891) | (811,156) | 811,156 | |||||||||||||
Accretion of redeemable convertible preferred stock to redemption value | $ 314 | |||||||||||||||||
Accretion of redeemable convertible preferred stock to redemption value | $ (314) | (314) | ||||||||||||||||
Net exercise of stock options by DTIH stockholder, shares | 132,375 | 36,163 | ||||||||||||||||
Exchange of DTIH redeemable convertible preferred stock for DTIC Common Stock | $ (18,192) | |||||||||||||||||
Exchange of DTIH redeemable convertible preferred stock for DTIC Common Stock, shares | (6,719,641) | |||||||||||||||||
Exchange of DTIH redeemable convertible preferred stock for DTIC Common Stock | $ 7,193 | $ 1 | 7,192 | |||||||||||||||
Exchange of DTIH redeemable convertible preferred stock for DTIC Common Stock, shares | 6,719,641 | |||||||||||||||||
Issuance of DTIC Common Stock to former holders of DTIH redeemable convertible preferred stock in connection with Exchange Agreements | 10,805 | 10,805 | ||||||||||||||||
Issuance of DTIC Common Stock to former holders of DTIH redeemable convertible preferred stock in connection with Exchange Agreements, shares | 2,042,181 | |||||||||||||||||
Merger, net of redemptions and transaction costs | (8,838) | $ 1 | (8,839) | |||||||||||||||
Merger, net of redemptions and transaction costs, shares | 5,711,721 | |||||||||||||||||
Issuance of DTIC Common Stock in connection with the consummation of the PIPE Financing | 30,000 | 30,000 | ||||||||||||||||
Issuance of DTIC Common Stock in connection with the consummation of the PIPE Financing, shares | 2,970,296 | |||||||||||||||||
Stock-based compensation | 3,986 | 3,986 | ||||||||||||||||
Stock-based compensation | 337,429 | |||||||||||||||||
Foreign currency translation adjustment, net of tax | (114) | (114) | ||||||||||||||||
Net income | $ 14,748 | 14,748 | ||||||||||||||||
Temporary equity, ending balance, shares at Dec. 31, 2023 | 0 | |||||||||||||||||
Ending balance at Dec. 31, 2023 | $ 88,690 | $ 88,690 | $ 3 | 95,218 | $ 95,218 | (6,306) | $ (6,306) | (225) | $ (225) | |||||||||
Ending balance, shares at Dec. 31, 2023 | 29,768,568 | 29,768,568 | ||||||||||||||||
Stock-based compensation | 208 | 208 | ||||||||||||||||
Foreign currency translation adjustment, net of tax | (511) | (511) | ||||||||||||||||
Net income | 3,126 | 3,126 | ||||||||||||||||
Ending balance at Mar. 31, 2024 | $ 91,513 | $ 95,426 | $ (3,180) | $ (736) | ||||||||||||||
Ending balance, shares at Mar. 31, 2024 | 29,768,568 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | |
Cash flows from operating activities: | ||||
Net income | $ 3,126 | $ 5,701 | $ 14,748 | $ 21,080 |
Adjustments to reconcile net income to net cash from operating activities: | ||||
Depreciation and amortization | 5,365 | 5,015 | 20,352 | 19,709 |
Amortization of deferred financing costs | 56 | 19 | 139 | 94 |
Amortization of debt discount | 0 | 58 | ||
Non-cash lease expense | 1,111 | 1,140 | 4,515 | 4,139 |
Provision for excess and obsolete inventory | 0 | 17 | 75 | 45 |
Provision for excess and obsolete property and equipment | 66 | 117 | 122 | 510 |
Provision for Credit Losses | (135) | 334 | 117 | 307 |
Deferred tax expense | 266 | 1,116 | 3,443 | 1,080 |
Gain on sale of property | 0 | 69 | (101) | (127) |
Loss on asset disposal | 9 | 0 | 489 | 0 |
Unrealized loss (gain) on equity securities | (249) | 33 | 255 | (234) |
Unrealized loss on interest rate swap | 0 | 105 | 0 | (1,423) |
Gross profit from sale of lost-in-hole equipment | (2,799) | (4,535) | (16,686) | (16,813) |
Stock-based compensation expense | 208 | 0 | 3,986 | 0 |
Realized loss on interest rate swap | 4 | 0 | ||
Changes in operating assets and liabilities: | ||||
Accounts receivable, net | (1,839) | (1,675) | (1,048) | (9,268) |
Prepaid expenses and other current assets | 1,723 | 713 | 519 | (3,476) |
Inventories, net | 2,836 | 116 | (1,716) | (906) |
Deposits and other long-term assets | (496) | 17 | ||
Operating lease liabilities | (1,067) | (1,086) | (4,415) | (4,174) |
Accounts payable | (2,848) | 3,208 | (1,552) | (1,432) |
Accrued expenses and other current liabilities | (2,517) | (3,180) | 583 | 4,808 |
Net cash flows from operating activities | 3,312 | 7,089 | 23,334 | 13,994 |
Cash flows from investing activities: | ||||
Acquisition of a business, net of cash acquired | (18,261) | 0 | ||
Proceeds from sale of property and equipment | 0 | 80 | 202 | 1,042 |
Purchase of property, plant and equipment | (6,228) | (7,067) | (43,750) | (24,688) |
Proceeds from sale of lost-in-hole equipment | 4,904 | 5,819 | 19,684 | 21,116 |
Net cash from investing activities | (19,585) | (1,168) | (23,864) | (2,530) |
Cash flows from financing activities: | ||||
Payment of deferred financing costs | (389) | 0 | (324) | (251) |
Proceeds from revolving line of credit | 73,050 | 108,594 | ||
Proceeds from Merger and PIPE Financing, net of transaction costs | 23,162 | 0 | ||
Payments on long-term debt | 0 | (1,000) | ||
Payments on finance leases | 0 | (10) | ||
Payments to holders of DTIH redeemable convertible preferred stock in connection with retiring their DTI stock upon the Merger | (194) | 0 | ||
Proceeds from revolving line of credit | 0 | 34,043 | ||
Payments on revolving line of credit | 0 | (41,496) | (91,399) | (116,670) |
Proceeds from Term Loan | 25,000 | 0 | ||
Net cash from financing activities | 24,611 | (7,453) | 4,295 | (9,337) |
Effect of changes in foreign exchange rates | (291) | 0 | (114) | 173 |
Net change in cash | 8,047 | (1,532) | 3,651 | 2,300 |
Cash at beginning of period | 6,003 | 2,352 | 2,352 | 52 |
Cash at end of period | 14,050 | 820 | 6,003 | 2,352 |
Supplemental cash flow information: | ||||
Cash paid for interest | 58 | 444 | 1,174 | 340 |
Cash paid for income taxes | 153 | 0 | 3,006 | 723 |
Non-cash investing and financing activities: | ||||
ROU assets obtained in exchange for lease liabilities | 314 | 1,360 | 3,264 | 7,907 |
Fair value of CTG liabilities assumed in CTG Acquistion | 2,636 | 0 | ||
Purchases of inventory included in accounts payable and accrued expenses and other current liabilities | 5,018 | 1,575 | 601 | 79 |
Purchases of property and equipment included in accounts payable and accrued expenses and other current liabilities | 4,482 | 4,369 | 1,422 | 372 |
Undeclared dividends | 0 | 314 | ||
Non-cash directors and officers insurance | 327 | 0 | 695 | 0 |
Non-cash Merger financing | 2,000 | 0 | ||
Exchange of DTIH redeemable convertible preferred stock for DTIC Common Stock in connection with Merger | 7,193 | 0 | ||
Issuance of DTIC common stock to former holders of DTIH redeemable convertible preferred stock in connection with Exchange Agreements | 10,805 | 0 | ||
Deferred financing fees included in accounts payable | $ 122 | $ 0 | ||
Accretion of redeemable convertible preferred stock to redemption value | $ 314 | $ 1,189 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Accounting Policies [Abstract] | ||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 –SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization and Nature of Operations Drilling Tools International Corporation, a Delaware corporation (“DTIC” or the “Company”), is a global oilfield services company that designs, engineers, manufactures and provides a differentiated, rental-focused offering of tools for use in onshore and offshore horizontal and directional drilling operations, as well as other cutting-edge solutions across the well life cycle. On June 20, 2023 (the “Closing Date”), a merger transaction between Drilling Tools International Holdings, Inc. (“DTIH”), ROC Energy Acquisition Corp (“ROC”), and ROC Merger Sub, Inc., a directly, wholly owned subsidiary of ROC (“Merger Sub”), was completed (the “Merger”) pursuant to the initial merger agreement dated February 13, 2023 and subsequent amendment to the merger agreement dated June 5, 2023 collectively, (the “Merger Agreement”). In connection with the closing of the Merger, ROC changed its name to Drilling Tools International Corporation. The common stock of DTIC (“DTIC Common Stock” or the “Company’s Common Stock”) commenced trading on the Nasdaq Stock Market LLC (“Nasdaq”) under the symbol “DTI” on June 21, 2023. On March 15, 2024 (the “CTG Acquisition Date”), we entered into a Share Purchase Agreement (the “Share Purchase Agreement”) with Casing Technologies Group Limited (“CTG”), certain shareholders of CTG, and a representative of CTG. Pursuant to the terms of the Share Purchase Agreement, the Company acquired one hundred percent (100%) of the shares of CTG (the “CTG Acquisition”), which wholly owns Deep Casing Tools Limited (“Deep Casing”), an energy technology development company, for approximately £16.2 million, or $20.9 million, based on the British pound sterling to United States dollar exchange rate on the CTG Acquisition Date. For further details regarding the acquisition, refer to Note 3, “Business Combinations.” The Company’s United States (“U.S.”) operations have locations in Texas, California, Louisiana, Oklahoma, Pennsylvania, North Dakota, New Mexico, Utah, and Wyoming. The Company’s international operations are located in Canada, Scotland, Germany, Ukraine, UAE, and Saudi Arabia. Operations outside the U.S. are subject to risks inherent in operating under different legal systems and various political and economic environments. Among the risks are changes in existing tax laws and possible limitations on foreign investment. The Company does not engage in hedging activities to mitigate its exposure to fluctuations in foreign currency exchange rates. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) as set forth by the Financial Accounting Standards Board (“FASB”) and pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”). References to US GAAP issued by the FASB in these notes to the accompanying unaudited condensed consolidated financial statements are to the FASB Accounting Standards Codifications (“ASC”) and Accounting Standards Update (“ASUs”). Unaudited Interim Financial Information The accompanying interim unaudited condensed consolidated financial statements included in this quarterly report have been prepared in accordance with U.S. GAAP and, in the opinion of the Company, contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of its financial position as of March 31, 2024, and its results of operations for the three months ended March 31, 2024 and 2023, and cash flows for the three months ended March 31, 2024 and 2023. The condensed consolidated balance sheet at December 31, 2023, was derived from the audited annual financial statements but does not contain all of the footnote disclosures from the annual financial statements. Emerging Growth Company Section 102(b)(1) of the Jumpstart Our Business Startups Act (“JOBS Act”) exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging Use of Estimates The preparation of the unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenue and expenses and the disclosure of contingent assets and liabilities in the Company’s unaudited condensed consolidated financial statements and accompanying notes as of the date of the unaudited condensed consolidated financial statements. These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. Actual results may differ materially and adversely from these estimates. In the current macroeconomic and business environment affected by the Russia-Ukraine and Israel-Hamas conflicts and inflationary pressures, these estimates require increased judgment and carry a higher degree of variability and volatility. As events continue to evolve and additional information becomes available, these estimates may change materially in future periods. Principles of Consolidation The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated on consolidation. Further, the basis of consolidation incorporates the financial statements of our foreign entity, Casing Technologies Group Limited, which operates under UK Generally Accepted Accounting Principles (“UK GAAP”). Those financial statements are translated into US GAAP for consolidation purposes. The translation process adheres to established accounting standards and guidelines to ensure consistency and comparability across our consolidated financial statements. This approach enables us to accurately reflect the financial position, results of operations, and cash flows of our consolidated operations. Foreign Currency Translation and Transactions The Company has determined that the functional and reporting currency for its operations across the globe is the functional currency of the Company’s international subsidiaries. Accordingly, all foreign balance sheet accounts have been translated into United States dollars using the rate of exchange at the respective balance sheet date. Components of the unaudited condensed consolidated statements of income and comprehensive income have been translated at the average rates during the reporting period. Translation gains and losses are recorded in accumulated other comprehensive loss as a component of stockholders’ equity. Gains or losses arising from currency exchange rate fluctuations on transactions denominated in a currency other than the local functional currency are included in the unaudited condensed consolidated statements of income and comprehensive income. For the three months ended March 31, 2024 and 2023, the unrealized foreign currency fluctuation impacts on transactions included in the unaudited condensed consolidated statements of income and comprehensive income totaled approximately $28 thousand of gains and nil in losses, respectively. Revenue Recognition The Company recognizes revenue in accordance with Topic 842 (which addresses lease accounting) and Topic 606 (which addresses revenue from contracts with customers). The Company derives its revenue from two revenue types, tool rental services and product sales. Tool Rental Services Tool rental services consist of rental services, inspection services, and repair services. Tool rental services are accounted for under Topic 842. Owned tool rentals represent the most significant revenue type and are governed by the Company’s standard rental contract. The Company accounts for such rentals as operating leases. The lease terms are included in the contracts, and the determination of whether the Company’s contracts contain leases generally does not require significant assumptions or judgments. The Company’s lease revenues do not include material amounts of variable payments. Owned tool rentals represent revenue from renting tools that the Company owns. The Company does not generally provide an option for the lessee to purchase the rented equipment at the end of the lease. The Company recognizes revenues from renting tools on a straight-line basis. The Company’s rental contract periods are daily, monthly, or per well. As part of this straight-line methodology, when the equipment is returned, the Company recognizes as incremental revenue the excess, if any, between the amount the customer is contractually required to pay, which is based on the rental contract period applicable to the actual number of days the drilling tool was out on rent, over the cumulative amount of revenue recognized to date. In any given accounting period, the Company will have customers return the drilling tool and be contractually required to pay the Company more than the cumulative amount of revenue recognized to date under the straight-line methodology. Additionally, the Company has rental contracts that are based on usage, either on a per footage or per well basis. As these types of rental contracts primarily consist of variable lease payments, which are unknown at commencement, revenue is recognized when the changes in the factor on which the contingent lease payments are based occur. When the customer returns the rental equipment and the footage or usage becomes known, the Company recognizes revenue. The Company records the amounts billed to customers in excess of recognizable revenue as deferred revenue on its unaudited condensed consolidated balance sheet. As noted above, the Company is unsure of when the customer will return rented drilling tools. As such, the Company cannot provide a maturity analysis of future lease payments as it is unknown when the tool will be returned and what the customer will owe upon return of the tool. The Company’s drilling tools are generally rented for short periods of time (significantly less than a year). Lessees do not provide residual value guarantees on rented equipment. The Company expects to derive significant future benefits from its drilling tools following the end of the rental term. The Company’s rentals are generally short-term in nature, and its tools are typically rented for the majority of the time that the Company owns them. Product Sales Product sales consist of charges for rented tools that are damaged beyond repair, charges for lost-in-hole, lost-in-transit Revenue is recognized when control of promised goods or services is transferred to a customer in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To determine revenue recognition for its arrangements with customers, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company accounts for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance, and collectability of consideration is probable. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in the revenue standard. The transaction price is measured as consideration specified in a contract with a customer and excludes any sales incentives and taxes or other amounts collected on behalf of third parties. As each of the Company’s contracts with customers contain a single performance obligation to provide a product sale, the Company does not have any performance obligations requiring allocation of transaction prices. The performance obligation for made to order product sales is satisfied and revenue is recognized at a point in time when control of the asset transfers to the customer, which typically occurs upon delivery of the product or when the product is made available to the customer for pickup at the Company’s shipping dock. Additionally, pursuant to the contractual terms with the Company’s customers, the customer must notify the Company of, and purchase from the Company, any rented tools that are damaged beyond repair, lost-in-hole, lost-in-transit The Company does not have any revenue expected to be recognized in the future related to remaining performance obligations or contracts with variable consideration related to undelivered performance obligations. There was no revenue recognized in the current period from performance obligations satisfied in previous periods. Revenue per geographic location Revenue generated was concentrated within the United States. For the three months ended March 31, 2024 and 2023, the revenue generated within the United States was $32.3 million and $36.6 million, respectively, or 87% and 90% of total revenue. For the three months ended March 31, 2024 and 2023, the revenue generated outside of the United States, in Canada and International, was $4.7 million and $4.2 million, respectively, or 13% and 10% of total revenue. Contract Assets and Contract Liabilities Contract assets represent the Company’s rights to consideration for work completed but not billed. As of March 31, 2024 and December 31, 2023, the Company had contract assets of $4.6 million and $4.2 million, respectively. Contract assets were recorded in accounts receivable, net in the accompanying unaudited condensed consolidated balance sheets. Contract liabilities consist of fees invoiced or paid by the Company’s customers for which the associated services have not been performed and revenue has not been recognized based on the Company’s revenue recognition criteria described above. As of March 31, 2024 and December 31, 2023, the Company did not have any material contract liabilities. All deferred revenues are expected to be recognized during the following 12 months, and they were recorded in accrued expenses and other current liabilities in the accompanying unaudited condensed consolidated balance sheets. Cash and Cash Equivalents The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. The Company did not have any cash equivalents as of March 31, 2024 and December 31, 2023. Accounts Receivable, net The Company’s accounts receivable consists principally of uncollateralized amounts billed to customers. These receivables are generally due within 30 to 60 days of the period in which the corresponding sales or rentals occur and do not bear interest. They are recorded at net realizable value less an allowance for doubtful accounts and are classified as accounts receivable, net on the unaudited condensed consolidated balance sheets. Allowance for Credit Losses The Company considers both current conditions and reasonable and supportable forecasts of future conditions when evaluating expected credit losses for uncollectible receivable balances. In our determination of the allowance for credit losses, we pool receivables by days outstanding and apply an expected credit loss percentage to each pool. The expected credit loss percentage is determined using historical loss data adjusted for current conditions and forecasts of future economic conditions. Current conditions considered include predefined aging criteria, as well as specified events that indicate the balance due is not collectible. Reasonable and supportable forecasts used in determining the probability of future collection consider publicly available macroeconomic data and whether future credit losses are expected to differ from historical losses. As of March 31, 2024 and December 31, 2023, the allowance for credit losses totaled $1.4 million and $1.5 million, respectively. Business Combinations The Company applies the acquisition method of accounting for business combinations, which requires us to make use of estimates and judgments to allocate the purchase price paid for acquisitions to the fair value of the assets and liabilities acquired. We account for contingent assets and liabilities at fair value on the acquisition date, and record changes to fair value associated with these assets and liabilities as a period cost as incurred. We use established valuation techniques and engage reputable valuation specialists to assist us with these valuations. We use a reasonable measurement period to record any adjustment related to the opening balance sheet (generally, less than one year). After the measurement period, changes to the opening balance sheet can result in the recognition of income or expense as period costs. To the extent these items stem from contingencies that existed at the balance sheet date, but are contingent upon the realization of future events, the cost is charged to expense at the time the future event becomes known. Inventories, net Inventories are stated at the lower of cost or net realizable value. Cost is determined by using the specific identification method or the first-in-first-out Property, Plant and Equipment, net Property, plant and equipment purchased by the Company are recorded at cost less accumulated depreciation. Depreciation is recorded using the straight-line method based on the estimated useful lives of the depreciable property or, for leasehold improvements, the remaining term of the lease, whichever is shorter. Assets not yet placed in use are not depreciated. Property, plant and equipment acquired as part of a business acquisition is recorded at acquisition date fair value with subsequent additions at cost. The cost of refurbishments and renewals are capitalized when the value of the property, plant or equipment is enhanced for an extended period. Expenditures to maintain and repair property, plant and equipment, which do not improve or extend the life of the related assets, are charged to operations when incurred. When property, plant and equipment is retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in operations. Leases The Company adopted ASC 842, Leases use-of-hindsight non-lease The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from a lease. ROU assets and operating lease liabilities are recognized at the commencement date based on the present value of the future minimum lease payments over the lease term. Operating lease ROU assets also include the impact of any lease incentives. An amendment to a lease is assessed to determine if it represents a lease modification or a separate contract. Lease modifications are reassessed as of the effective date of the modification using an incremental borrowing rate based on the information available at the commencement date. For modified leases the Company also reassess the lease classification as of the effective date of the modification. The interest rate used to determine the present value of the future lease payments is the Company’s incremental borrowing rate because the interest rate implicit in the Company’s leases is not readily determinable. The incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments, and in economic environments where the leased asset is located. The Company’s lease terms include periods under options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option in the measurement of its ROU assets and liabilities. The Company considers contractual-based factors such as the nature and terms of the renewal or termination, asset-based factors such as physical location of the asset and entity-based factors such as the importance of the leased asset to the Company’s operations to determine the lease term. The Company generally uses the base, noncancelable, lease term when determining the ROU assets and lease liabilities. The right-of-use Property, Plant, and Equipment. Lessor Accounting Our leased equipment primarily consists of rental tools and equipment. Our agreements with our customers for rental equipment contain an operating lease component under ASC 842 because (i) there are identified assets, (ii) the customer has the right to obtain substantially all of the economic benefits from the use of the identified asset throughout the period of use and (iii) the customer directs the use of the identified assets throughout the period of use. Our lease contract periods are daily, monthly, per well or based on footage. Lease revenue is recognized on a straight-line basis based on these rates. We do not provide an option for the lessee to purchase the rented tools at the end of the lease and the lessees do not provide residual value guarantees on the rented assets. We recognized operating lease revenue within “Tool rental” on the unaudited condensed consolidated statements of income and comprehensive income. Intangible Assets Intangible assets with finite useful lives include customer relationships, trade name, patents, non-compete Goodwill Goodwill represents the excess of purchase price paid over the fair value of the net assets of acquired businesses. We evaluate Goodwill at least annually for impairment. Goodwill is considered impaired if the carrying amount of the reporting unit exceeds its estimated fair value. We conduct our annual assessment of the recoverability of goodwill as of December 31 of each year. We first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the goodwill impairment test. If the qualitative assessment indicates that it is more likely than not that the fair value of the reporting unit is less than its carrying amount or we elect not to perform a qualitative assessment, the quantitative assessment of goodwill test is performed. The goodwill impairment test is also performed whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If it is necessary to perform the quantitative assessment to determine if our goodwill is impaired, we will utilize a discounted cash flow analysis using management’s projections that are subject to various risks and uncertainties of revenues, expenses and cash flows as well as assumptions regarding discount rates, terminal value and control premiums. Estimates of future cash flows and fair value are highly subjective and inherently imprecise. These estimates can change materially from period to period based on many factors. Accordingly, if conditions change in the future, we may record impairment losses, which could be material to any particular reporting period. Accounting for Impairment of Long-lived Assets Long-lived assets with finite lives include property, plant and equipment and acquired intangible assets. The Company evaluates long-lived assets, including acquired intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets held and used is measured by comparison of the carrying amount of an asset or an asset group to estimated undiscounted future net cash flows expected to be generated by the asset or asset group. If the carrying amount of an asset exceeds these estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the assets exceeds the fair value of the asset or asset group. For the three months ended March 31, 2024 and 2023, management determined that there were no triggering events necessitating impairment testing of property, plant, and equipment or intangible assets. Investments - Equity Securities Equity securities are stated at fair value. Unrealized gains and losses are reflected in the unaudited condensed consolidated statements of income and comprehensive income. The Company periodically reviews the securities for other than temporary declines in fair value below cost and more frequently when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. As of March 31, 2024 and December 31, 2023, the Company believes the cost of the securities was recoverable in all material respects. Redeemable Convertible Preferred Stock Prior to the closing of the Merger, there were outstanding shares of DTIH Series A redeemable convertible preferred stock (the “Redeemable Convertible Preferred Stock”), which was classified outside of permanent equity in mezzanine equity on the unaudited condensed consolidated balance sheets as it was redeemable on a fixed date. Upon the closing of the Merger, all of the Redeemable Convertible Preferred Stock was canceled in exchange for DTIC common stock and the right to receive cash. Accordingly, there was no Redeemable Convertible Preferred Stock outstanding as of March 31, 2024 or December 31, 2023. Preferred Stock As of the closing of the Merger, the Board of Directors have expressly granted authority to issue shares of preferred stock, in one or more series, and to fix for each such series such voting powers, full or limited, and such designations, preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof as shall be stated and expressed in the resolution or resolutions adopted by the Board of Directors providing for the issue of such series and as may be permitted by the Delaware General Corporation Law. The number of authorized shares of preferred stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the voting power of all of the then outstanding shares of the capital stock of the corporation entitled to vote generally in the election of directors, voting together as a single class, without a separate vote of the holders of the preferred stock, or any series thereof, unless a vote of any such holders is required pursuant to any preferred stock designation. The Board of Directors of the Company has not issued any shares of any classes or series of preferred stock as of March 31, 2024, and through the date these financial statements were available to be issued. Cost of Revenue The Company recorded all operating costs associated with its product sales and tool rental revenue streams in cost of product sale revenue and cost of tool rental revenue, respectively, in the unaudited condensed consolidated statements of income and comprehensive income. All indirect operating costs, including labor, freight, contract labor and others, are included in selling, general, and administrative expense in the unaudited condensed consolidated statements of income and comprehensive income. Stock-Based Compensation The Company recognizes stock-based compensation expenses over the requisite service period. The Company historically granted stock-based compensation awards with performance based vesting conditions. These options all vested upon the closing of the merger with ROC. Subsequent to the closing of the merger with ROC, the Company’s stock-based compensation awards are subject only to service based vesting conditions. Pursuant to ASC 718-10-35-8, of the award as if the award was, in-substance, Earnings Per Share Basic earnings per share is computed by dividing the net income (loss) by the weighted-average number of common shares outstanding for the period. Diluted earnings is computed by adjusting net income (loss) to reallocate undistributed earnings based on the potential impact of dilutive securities. Diluted earnings is computed by dividing the diluted net income (loss) by the weighted-average number of common shares outstanding for the period, including potential dilutive common stock. For the purposes of this calculation, outstanding stock options and Redeemable Convertible Preferred Stock are considered potential dilutive common stock and are excluded from the computation of net loss per share if their effect is anti-dilutive. The Redeemable Convertible Preferred Stock did not contractually entitle its holders to participate in profits or losses. As such, it was not treated as a participating security in periods of net income or net loss. Income Taxes Income taxes are provided for the tax effects of transactions reported in the unaudited condensed consolidated financial statements and consist of taxes currently due plus deferred taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the unaudited condensed consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred income tax expense represents the change during the period in the deferred tax assets and liabilities. The Company is subject to state income taxes in various jurisdictions. The Company follows guidance issued by the FASB in accounting for uncertainty in income taxes. This guidance clarifies the accounting for income taxes by prescribing the minimum recognition threshold an income tax position is required to meet before being recognized in the unaudited condensed consolidated financial statements and applies to all income tax positions. Each income tax position is assessed using a two-step Company believes there are no tax positions taken or expected to be taken that would significantly increase or decrease unrecognized tax benefits within twelve months of the reporting date. The Company records income tax related interest and penalties, if applicable, as a component of the provision for income tax expense. However, there were no amounts recognized relating to interest and penalties in the unaudited condensed consolidated statements of income and comprehensive income for the three months ended March 31, 2024 and 2023. Derivative Financial Instruments From time to time, the Company may enter into derivative instruments to manage exposure to interest rate fluctuations. During 2016, the Company entered into an interest swap agreement with respect to amounts outstanding under its revolving line of credit. The Company’s interest rate swap is a pay-fixed, This arrangement was designed to manage exposure to interest rate fluctuations by effectively exchanging existing obligations to pay interest based on floating rates for obligations to pay interest based on a fixed rate. These derivatives are marked-to-market For the three months ended March 31, 2023, the Company recognized an unrealized gain due to the change in fair value of its interest rate swap of approximately $0.1 million. The interest swap agreement was settled on July 10, 2023. No new interest swaps were entered into subsequently or during the three months ended March 31, 2024. Fair Value Measurements Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between marke | NOTE 1 – SUMMARY OF SIFNICIANT ACCOUNTING POLICIES Organization and Structure Drilling Tools International Corporation, a Delaware corporation (“DTIC” or the “Company”), manufactures, rents, inspects, and refurbishes downhole drilling tools primarily to companies in the oil and natural gas industry for bottom hole assemblies used in onshore and offshore horizontal and directional drilling. On June 20, 2023 (the “Closing Date”), a merger transaction between Drilling Tools International Holdings, Inc. (“DTIH”), ROC Energy Acquisition Corp (“ROC”), and ROC Merger Sub, Inc., a directly, wholly owned subsidiary of ROC (“Merger Sub”), was completed (the “Merger”, see Note 3, Merger Merger The Company’s United States (“U.S.”) operations have locations in Texas, California, Louisiana, Oklahoma, Pennsylvania, North Dakota, New Mexico, Utah, and Wyoming. The Company’s international operations are located in Canada with additional stocking points in Europe and the Middle East. Operations outside the U.S. are subject to risks inherent in operating under different legal systems and various political and economic environments. Among the risks are changes in existing tax laws and possible limitations on foreign investment. The Company does not engage in hedging activities to mitigate its exposure to fluctuations in foreign currency exchange rates. Basis of Presentation The accompanying consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) as set forth by the Financial Accounting Standards Board (“FASB”) and pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”). References to US GAAP issued by the FASB in these notes to the accompanying consolidated financial statements are to the FASB Accounting Standards Codifications (“ASC”) and Accounting Standards Update (“ASU”). COVID-19 As a response to the COVID-19 ERC benefits of nil and $4.3 million were included in selling, general, and administrative expense as an offset to the related compensation expenses in the consolidated statements of income and comprehensive income for the year ended December 31, 2023 and 2022, respectively. ERC benefits receivable of nil and $2.1 million were included in prepaid expenses and other current assets in the accompanying consolidated balance sheet as of December 31, 2023, and 2022, respectively. The Company received all ERC benefits receivables in January 2023, resulting in the ERC benefits receivable balance to be nil as December 31, 2023. Laws and regulations concerning government programs, including the ERC, are complex and subject to varying interpretations. Claims made under these programs may also be subject to retroactive audit and review. While the Company does not believe there is a basis for estimation of an audit or recapture risk at this time, there can be no assurance that regulatory authorities will not challenge the Company’s claim to the ERC in a future period. Emerging Growth Company Section 102(b)(1) of the Jumpstart Our Business Startups Act (“JOBS Act”) exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenue and expenses and the disclosure of contingent assets and liabilities in the Company’s consolidated financial statements and accompanying notes as of the date of the consolidated financial statements. These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. Actual results may differ materially and adversely from these estimates. In the current macroeconomic and business environment affected by the Russia-Ukraine and Israel-Hamas conflicts and inflationary pressures, these estimates require increased judgment and carry a higher degree of variability and volatility. As events continue to evolve and additional information becomes available, these estimates may change materially in future periods. Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated on consolidation. Foreign Currency Translations and Transactions The Company has determined that the functional and reporting currency for its operations across the globe is the functional currency of the Company’s international subsidiaries. Accordingly, all foreign balance sheet accounts have been translated into United States dollars using the rate of exchange at the respective balance sheet date. Components of the consolidated statements of income and comprehensive income have been translated at the average rates for the year of the reporting period. Translation gains and losses are recorded in accumulated other comprehensive loss as a component of stockholders’ equity. Gains or losses arising from currency exchange rate fluctuations on transactions denominated in a currency other than the local functional currency are included in the consolidated statements of income and comprehensive income. For the year ended December 31, 2023, the aggregate foreign currency exchange rate fluctuations on transactions included in the consolidated statements of income and comprehensive income totaled approximately $0.1 million in losses. For the year ended December 31, 2022, the aggregate foreign currency exchange rate fluctuations on transactions included in the consolidated statements of income and comprehensive income totaled $0.2 million in gains, respectively. Concentration of Credit Risk The Company’s customer concentration may impact its overall credit risk, either positively or negatively, in that these entities may be similarly affected by changes in economic or other conditions affecting the oil and gas industry. For the year ended December 31, 2023, the Company generated approximately 39% of its revenue from three customers. For the year ended December 31, 2022, the Company generated approximately 28% of its revenue from two customers. Amounts due from these customers included in accounts receivable at December 31, 2023 and 2022, were approximately $11.1 million and $8.6 million, respectively. For the year ended December 31, 2023, the Company had two vendors that represented approximately 23% of its vendor purchases. For the year ended December 31, 2022, the Company had one vendor that represented approximately 12% of its vendor purchases. Amounts due to these vendors included in accounts payable at December 31, 2023 and 2022 were approximately $0.3 million and $0.9 million, respectively. Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash. The Company maintains accounts in federally insured financial institutions in excess of federally insured limits. Management believes the Company is not exposed to significant credit risk due to the financial position of the depository institutions in which these deposits are held and of the money market funds in which these investments are made. Revenue Recognition The Company recognizes revenue in accordance with Topic 842 (which addresses lease accounting) and Topic 606 (which addresses revenue from contracts with customers). The Company derives its revenue from two revenue types, tool rental services and product sales. Tool Rental Services Tool rental services consist of rental services, inspection services, and repair services. Tool rental services are accounted for under Topic 842. Owned tool rentals represent the most significant revenue type and are governed by the Company’s standard rental contract. The Company accounts for such rentals as operating leases. The lease terms are included in the contracts, and the determination of whether the Company’s contracts contain leases generally does not require significant assumptions or judgments. Owned tool rentals represent revenue from renting tools that the Company owns. The Company does not generally provide an option for the lessee to purchase the rented equipment at the end of the lease. The Company recognizes revenues from renting tools on a straight-line basis. The Company’s rental contract periods are daily, monthly, or per well. As part of this straight-line methodology, when the equipment is returned, the Company recognizes as incremental revenue the excess, if any, between the amount the customer is contractually required to pay, which is based on the rental contract period applicable to the actual number of days the drilling tool was out on rent, over the cumulative amount of revenue recognized to date. In any given accounting period, the Company will have customers return the drilling tool and be contractually required to pay the Company more than the cumulative amount of revenue recognized to date under the straight-line methodology. Additionally, the Company has rental contracts that are based on usage, either on a per footage or per well basis. As these types of rental contracts primarily consist of variable lease payments, which are unknown at commencement, revenue is recognized when the changes in the factor on which the contingent lease payments are based occur. When the customer returns the rental equipment and the footage or usage becomes known, the Company recognizes revenue. The Company records the amounts billed to customers in excess of recognizable revenue as deferred revenue on its consolidated balance sheet. As noted above, the Company is unsure of when the customer will return rented drilling tools. As such, the Company cannot provide a maturity analysis of future lease payments as it is unknown when the tool will be returned and what the customer will owe upon return of the tool. The Company’s drilling tools are generally rented for short periods of time (significantly less than a year). Lessees do not provide residual value guarantees on rented equipment. The Company expects to derive significant future benefits from its drilling tools following the end of the rental term. The Company’s rentals are generally short-term in nature, and its tools are typically rented for the majority of the time that the Company owns them. Product Sales Product sales consist of charges for rented tools that are damaged beyond repair, charges for lost-in-hole, lost-in-transit Revenue is recognized when control of promised goods or services is transferred to a customer in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To determine revenue recognition for its arrangements with customers, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company accounts for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance, and collectability of consideration is probable. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in the revenue standard. The transaction price is measured as consideration specified in a contract with a customer and excludes any sales incentives and taxes or other amounts collected on behalf of third parties. As each of the Company’s contracts with customers contain a single performance obligation to provide a product sale, the Company does not have any performance obligations requiring allocation of transaction prices. The performance obligation for made to order product sales is satisfied and revenue is recognized at a point in time when control of the asset transfers to the customer, which typically occurs upon delivery of the product or when the product is made available to the customer for pickup at the Company’s shipping dock. Additionally, pursuant to the contractual terms with the Company’s customers, the customer must notify the Company of, and purchase from the Company, any rented tools that are damaged beyond repair, lost-in-hole, lost-in-transit The Company does not have any revenue expected to be recognized in the future related to remaining performance obligations or contracts with variable consideration related to undelivered performance obligations. There was no revenue recognized in the current period from performance obligations satisfied in previous periods. Contract Assets and Liabilities Contract assets represent the Company’s rights to consideration for work completed but not billed. As of December 31, 2023 and 2022, the Company had contract assets of $4.2 million and $4.8 million, respectively. Contract assets were recorded in accounts receivable, net in the accompanying consolidated balance sheets. Contract liabilities consist of fees invoiced or paid by the Company’s customers for which the associated services have not been performed and revenue has not been recognized based on the Company’s revenue recognition criteria described above. As of December 31, 2023 and 2022, the Company did not have any material contract liabilities. All deferred revenue were expected to be recognized during the following 12 months, and they were recorded in accrued expenses and other current liabilities in the accompanying consolidated balance sheets. Cash and Cash Equivalents The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. The Company did not have any cash equivalents as of December 31, 2023 and 2022. Accounts Receivable and Allowance for Credit Losses The Company’s accounts receivable consists principally of uncollateralized amounts billed to customers. These receivables are generally due within 30 to 60 days of the period in which the corresponding sales or rentals occur and do not bear interest. They are recorded at net realizable value less an allowance for credit losses and are classified as account receivable, net on the consolidated balance sheets. The Company adopted ASU 2016-13, Financial Instruments - Credit Losses DTI considers both current conditions and reasonable and supportable forecasts of future conditions when evaluating expected credit losses for uncollectible receivable balances. In our determination of the allowance for credit losses, we pool receivables by days outstanding and apply an expected credit loss percentage to each pool. The expected credit loss percentage is determined using historical loss data adjusted for current conditions and forecasts of future economic conditions. Current conditions considered include predefined aging criteria, as well as specified events that indicate the balance due is not collectible. Reasonable and supportable forecasts used in determining the probability of future collection consider publicly available macroeconomic data and whether future credit losses are expected to differ from historical losses. The Company is not party to any off-balance The beginning accounts receivable balance as of January 1, 2022 was $20.0 million. The changes in the allowance for credit losses for the year ended December 31, 2023 were as follows (in thousands): Allowance for credit losses Balance at December 31, 2021 $ (1,222 ) Cumulative effect adjustments upon adoption of ASU 2016-13 — Additions during 2022 (336 ) Utilization of allowance for credit losses 60 Balance at December 31, 2022 (1,498 ) Additions during 2023 (117 ) Utilization of allowance for credit losses 157 Balance at December 31, 2023 (1,458 ) Inventories, net Inventories are stated at the lower of cost or net realizable value. Cost is determined by using the specific identification method. Inventory that is obsolete or in excess of forecasted usage is written down to its net realizable value based on assumptions regarding future demand and market conditions. Inventory write-downs are charged to operating costs and establish a new cost basis for the inventory. Inventory includes raw material and finished goods. Property, Plant and Equipment Property, plant and equipment purchased by the Company are recorded at cost less accumulated depreciation. Depreciation is recorded using the straight-line method based on the estimated useful lives of the depreciable property or, for leasehold improvements, the remaining term of the lease, whichever is shorter. Assets not yet placed in use are not depreciated. Property, plant and equipment acquired as part of a business acquisition is recorded at acquisition date fair value with subsequent additions at cost. The cost of refurbishments and renewals are capitalized when the value of the property, plant or equipment is enhanced for an extended period. Expenditures to maintain and repair property, plant and equipment, which do not improve or extend the life of the related assets, are charged to operations when incurred. When property, plant and equipment is retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in operations. Impairment of Long-Lived Assets Long-lived assets with finite lives include property, plant and equipment and acquired intangible assets. The Company evaluates long-lived assets, including acquired intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The recoverability of assets held and used is measured by comparison of the carrying amount of an asset or an asset group to estimated undiscounted future net cash flows expected to be generated by the asset or asset group. If the carrying amount of an asset exceeds these estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the assets exceeds the fair value of the asset or asset group. For the year ended December 31, 2023 and 2022, management determined that there were no triggering events necessitating impairment testing of property, plant, and equipment or intangible assets. Leases The Company adopted ASC 842, Leases use-of-hindsight non-lease The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from a lease. ROU assets and operating lease liabilities are recognized at the commencement date based on the present value of the future minimum lease payments over the lease term. Operating lease ROU assets also include the impact of any lease incentives. An amendment to a lease is assessed to determine if it represents a lease modification or a separate contract. Lease modifications are reassessed as of the effective date of the modification using an incremental borrowing rate based on the information available at the commencement date. For modified leases the Company also reassess the lease classification as of the effective date of the modification. The interest rate used to determine the present value of the future lease payments is the Company’s incremental borrowing rate because the interest rate implicit in the Company’s leases is not readily determinable. The incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments, and in economic environments where the leased asset is located. The Company’s lease terms include periods under options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option in the measurement of its ROU assets and liabilities. The Company considers contractual-based factors such as the nature and terms of the renewal or termination, asset-based factors such as physical location of the asset and entity-based factors such as the importance of the leased asset to the Company’s operations to determine the lease term. The Company generally uses the base, noncancelable, lease term when determining the ROU assets and lease liabilities. The right-of-use Property, Plant, and Equipment. Lessor Accounting Our leased equipment primarily consists of rental tools and equipment. Our agreements with our customers for rental equipment contain an operating lease component under ASC 842 because (i) there are identified assets, (ii) the customer has the right to obtain substantially all of the economic benefits from the use of the identified asset throughout the period of use and (iii) the customer directs the use of the identified assets throughout the period of use. Our lease contract periods are daily, monthly, per well or based on footage. Lease revenue is recognized on a straight-line basis based on these rates. We do not provide an option for the lessee to purchase the rented tools at the end of the lease and the lessees do not provide residual value guarantees on the rented assets. We recognized operating lease revenue within “Tool rental” on the consolidated statements of income and comprehensive income. Intangibles Intangible assets with finite useful lives include customer relationships, trade name, patents, non-compete Investment - Equity Securities Equity securities are stated at fair value. Unrealized gains and losses are reflected in the consolidated statements of income and comprehensive income. The Company periodically reviews the securities for other than temporary declines in fair value below cost and more frequently when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For the year ended December 31, 2023 and 2022, the Company believes the cost of the securities was recoverable in all material respects. Derivative Financial Instruments From time to time, the Company may enter into derivative instruments to manage exposure to interest rate fluctuations. During 2016, the Company entered into an interest swap agreement with respect to amounts outstanding under its revolving line of credit. The Company’s interest rate swap is a pay-fixed, This arrangement was designed to manage exposure to interest rate fluctuations by effectively exchanging existing obligations to pay interest based on floating rates for obligations to pay interest based on a fixed rate. These derivatives are marked-to-market For the year ended December 31, 2022, the Company recognized an unrealized gain due to the change in fair value of its interest rate swap of $1.4 million. The interest swap agreement was settled on July 10, 2023. Upon settlement, the swap had a fair value of $0.4 million. For the year ended December 31, 2023, the settlement resulted in a realized loss of $4 thousand. The realized losses are included in other expense, net in the consolidated statements of income and comprehensive income. Fair Value Measurements Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. There is a hierarchy based upon the transparency of inputs used in the valuation of an asset or liability. Classification within the hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The valuation hierarchy contains three levels: Level 1 Level 2 Level 3 The asset or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. In determining the appropriate levels, the Company performs a detailed analysis of the assets and liabilities that are measured and reported on a fair value basis. At each reporting period, all assets and liabilities for which the fair value measurement is based on significant unobservable inputs are classified as Level 3. Asset and liabilities measured at fair value are summarized as follows (in thousands): Assets at Fair Value as of December 31, 2023 Level 1 Level 2 Level 3 Total Investments, equity securities $ 888 $ — $ — $ 888 Total assets at fair value $ 888 $ — $ — $ 888 Assets at Fair Value as of December 31, 2022 Level 1 Level 2 Level 3 Total Investments, equity securities $ 1,143 $ — $ — $ 1,143 Interest rate swap — 476 — 476 Total assets at fair value $ 1,143 $ 476 $ — $ 1,619 As of December 31, 2023 and 2022, the Company did not have any Level 3 assets or liabilities. Fair Value of Financial Instruments The Company’s financial instruments consist primarily of cash, accounts receivable, and accounts payable. The carrying amount of such instruments approximates fair value due to their short-term nature. Redeemable Convertible Preferred Stock Prior to the closing of the Merger, there were outstanding shares of DTIH Series A redeemable convertible preferred stock (the “redeemable convertible preferred stock”), which was classified outside of permanent equity in mezzanine equity on the consolidated balance sheets as it was redeemable on a fixed date. Upon the closing of the Merger, all of the redeemable convertible preferred stock was canceled in exchange for DTIC Common Stock and the right to receive cash. Accordingly, there was no redeemable convertible preferred stock outstanding as of December 31, 2023. As of December 31, 2022, the carrying value of the redeemable convertible preferred stock outstanding was $17.9 million. Preferred Stock As of the closing of the Merger, the Board have expressly granted authority to issue shares of preferred stock, in one or more series, and to fix for each such series such voting powers, full or limited, and such designations, preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof as shall be stated and expressed in the resolution or resolutions adopted by the Board providing for the issue of such series and as may be permitted by the Delaware General Corporation Law. The number of authorized shares of preferred stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the voting power of all of the then outstanding shares of the capital stock of the corporation entitled to vote generally in the election of directors, voting together as a single class, without a separate vote of the holders of the preferred stock, or any series thereof, unless a vote of any such holders is required pursuant to any preferred stock designation. The Board of the Company has not issued any shares of any classes or series of preferred stock as of December 31, 2023, and through the date these financial statements were available to be issued. Cost of Revenue The Company recorded all operating costs associated with its product sales and tool rental revenue streams in cost of product sale revenue and cost of tool rental revenue, respectively, in the consolidated statements of income and comprehensive income. All indirect operating costs, including labor, freight, contract labor and others, are included in selling, general, and administrative expense in the consolidated statements of income and comprehensive income. Stock-Based Compensation The Company accounts for stock-based compensation in accordance with ASC 718, Compensation—Stock Compensation (“ASC 718”). ASC 718 requires that the cost of awards of equity instruments offered in exchange for employee services, including employee stock options and restricted stock awards, be measured based on the grant- date fair value of the award. The Company determines the fair value of stock options granted using the Black-Scholes- Merton option-pricing model (“Black-Scholes model”) and recognizes the cost over the period during which an employee is required to provide service in exchange for the award, generally the vesting period, with forfeitures accounted for as they occur. For any stock options granted prior to the Company’s common stock being publicly traded on June 21, 2023, the Company estimated the fair value of its common stock as of the grant date and used these estimates as inputs into the Black-Scholes model. The Board considered numerous objective and subjective factors to determine the fair value of the Company’s common stock at each meeting in which awards were approved. The factors considered include, but were not limited to: (i) the results of contemporaneous independent third-party valuations of the Company’s common stock; (ii) the prices, rights, preferences, and privileges of the redeemable convertible preferred stock relative to those of its common stock; (iii) the lack of marketability of the Company’s common stock; (iv) actual operating and financial results; (v) current business conditions and projections; (vi) the likelihood of achieving a liquidity event, such as an initial public offering or sale of the Company, given prevailing market conditions; and (vii) precedent transactions involving the Company’s shares. For the year ended December 31, 2023, the Company did not grant any stock options. For any grants of stock options subsequent to the Company being publicly traded, the Company will use the quoted market price as of the grant date as an input into the Black-Scholes model. Earnings Per Share Basic earnings per share is computed by dividing the net income (loss) by the weighted-average number of common shares outstanding for the period. Diluted earnings is computed by adjusting net income (loss) to reallocate undistributed earnings based on the potential impact of dilutive securities. Diluted earnings is computed by dividing the diluted net income (loss) by the weighted-average number of common shares outstanding for the period, including potential dilutive common stock. For the purposes of this calculation, outstanding stock options and redeemable convertible preferred stock are considered potential dilutive common stock and are excluded from the computation of net loss per share if their effect is anti-dilutive. The redeemable convertible preferred stock did not contractually entitle its holders to participate in profits or losses. As such, it was not treated as a participating security in periods of net income or net loss. Income Taxes Income taxes are provided for the tax effects of transactions reported in the consolidated financial statements and consist of taxes currently due plus deferred taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred income tax expense represents the change during the period in the deferred tax assets and liabilities. The Company is subject to state income taxes in various jurisdictions. The Company follows guidance issued by the FASB in accounting for uncertainty in income taxes. This guidance clarifies the accounting for income taxes by pre |
REVISION OF PREVIOUSLY ISSUED F
REVISION OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Prior Period Adjustment [Abstract] | ||
REVISION OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS | NOTE 2 – Revision of Previously Issued Financial Statements During the preparation of its unaudited condensed consolidated financial statements as of and for the three months ended March 31, 2024, the Company identified certain errors in its previously issued unaudited condensed consolidated statements of cash flows for the three months ended March 31, 2023. The errors identified had no impact on the unaudited condensed consolidated balance sheets, statements of income and comprehensive income, and statements of changes in redeemable convertible preferred stock and shareholders’ equity. As described further below, the Company has revised its previously issued unaudited condensed consolidated statement of cash flows for the three months ended March 31, 2023 within this Quarterly Report on Form 10-Q Statement of cash flow errors related to leases The Company determined that the previously reported amount of $2.5 million in ROU assets obtained in exchange for lease liabilities disclosed within the non-cash Also, with respect to leases, the Company determined that the previously reported amount of non-cash non-cash In addition, the Company determined that the previously reported amount of $0.3 million for operating lease liabilities within the changes in operating assets and liabilities section of the unaudited condensed consolidated statement of cash flows was calculated incorrectly. The previously reported amount was calculated as solely the change in the operating lease liability from December 31, 2022 to March 31, 2023 without taking into account the fact that the change in the operating lease liability is also impacted by the non-cash Statement of cash flow errors related to inventory and property, plant, and equipment The Company determined that the previously reported amount of inventories of negative $1.4 million within the changes in operating assets and liabilities section of the unaudited condensed consolidated statement of cash flows for the three months ended March 31, 2023 was calculated incorrectly. The calculation of the amount previously reported in the unaudited condensed consolidated statement of cash flows incorrectly included the non-cash In addition, the Company determined that the previously reported amount of inventories of negative $1.4 million and accounts payable of positive $5.8 million within the changes in operating assets and liabilities section of the unaudited condensed consolidated statement of cash flows for the three months ended March 31, 2023 were not adjusted for the impact of the amount of purchases of inventory that were not paid in cash during the three months ended March 31, 2023. The previously reported amounts were calculated as solely the changes in inventories and accounts payable from December 31, 2022 to March 31, 2023 without taking into account the fact that the changes in both inventories and accounts payable are also impacted by the amount of inventory that has not yet been paid in cash at period end. The Company determined that the previously reported amount of proceeds from sale of lost-in-hole non-cash Furthermore, the Company determined that the previously reported amount of purchases of property, plant and equipment of negative $10.8 million within the investing activities section of the unaudited condensed consolidated statement of cash flows for the March 31, 2023 was calculated incorrectly. The Company determined that the previously reported amount of purchases of property, plant and equipment was calculated using an incorrect amount for the additions to property, plant and equipment that were not paid for in cash during the March 31, 2023. Additionally, the Company determined that the previously reported amount of accounts payable of positive $5.8 million within the operating activities section of the unaudited condensed consolidated statement of cash flows for the three months ended March 31, 2023 was not adjusted for the impact of the purchases of property, plant and equipment that were not paid for in cash during the three months ended March 31, 2023. Also, with respect to inventory and property, plant and equipment, the Company determined that the previously disclosed non-cash The Company evaluated the errors described above (and quantified in the table below), both qualitatively quantitatively unaudited consolidated financial statements presented herein as of and for the three months ended March 31, 2023 have been revised to correct the errors described above in accordance with SEC SAB Topic 1.M, as codified in ASC 250. For the three months ended March 31, Unaudited Condensed Consolidated Statement of As Previously Adjustment As Non-cash $ (220 ) $ 1,360 $ 1,140 Provision for excess and obsolete inventory — 17 17 Provision for excess and obsolete property and equipment — 117 117 Inventories, net (1,442 ) 1,558 116 Operating lease liabilities 274 (1,360 ) (1,086 ) Accounts payable 5,765 (2,557 ) 3,208 Accrued Expenses 207 (3,387 ) (3,180 ) Purchase of property, plant and equipment (10,815 ) 3,748 (7,067 ) Proceeds from sale of lost-in-hole 5,315 504 5,819 ROU assets obtained in exchange for lease liabilities 2,516 (1,156 ) 1,360 Purchases of inventory included in accounts payable and accrued expenses and other current liabilities — 1,575 1,575 Purchases of property and equipment included in accounts payable and accrued expenses and other current liabilities — 4,369 4,369 | NOTE 2 - REVISIONS OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS During the preparation of its consolidated financial statements as of and for the year ended December 31, 2023, the Company identified certain errors in its previously issued consolidated statements of cash flows for the year ended December 31, 2022 and the three months ended March 31, 2023. The errors identified had no impact on the consolidated balance sheets, statements of operations/income and comprehensive income (loss), and statements of changes in redeemable convertible preferred stock and shareholders’ equity for the year ended December 31, 2022 and the three months ended March 31, 2023. As described further below, the Company has revised its previously issued consolidated statement of cash flows for the year ended December 31, 2022 within this Annual Report on Form 10-K. months ended March 31, 2023 in its future filing of its Quarterly Report on Form 10-Q Statement of cash flow errors related to leases The Company determined that the previously reported amount of $9.5 million in ROU assets obtained in exchange for lease liabilities disclosed within the non-cash Also, with respect to leases, the Company determined that the previously reported amount of non-cash non-cash In addition, the Company determined that the previously reported amount of $3.7 million for operating lease liabilities within the changes in operating assets and liabilities section of the consolidated statement of cash flows was calculated incorrectly. The previously reported amount was calculated as solely the change in the operating lease liability from December 31, 2021 to December 31, 2022 without taking into account the fact that the change in the operating lease liability is also impacted by the non-cash Statement of cash flow errors related to inventory and property, plant, and equipment The Company determined that the previously reported amount of inventories of negative $1.0 million within the changes in operating assets and liabilities section of the consolidated statement of cash flows for the year ended December 31, 2022 was calculated incorrectly. The calculation of the amount previously reported in the consolidated statement of cash flows incorrectly included the non-cash In addition, the Company determined that the previously reported amount of inventories of negative $1.0 million and accounts payable of negative $1.0 million within the changes in operating assets and liabilities section of the consolidated statement of cash flows for the year ended December 31, 2022 were not adjusted for the impact of the amount of purchases of inventory that were not paid in cash during the year ended December 31, 2022. The previously reported amounts were calculated as solely the changes in inventories and accounts payable from December 31, 2021 to December 31, 2022 without taking into account the fact that the changes in both inventories and accounts payable are also impacted by the amount of inventory that has not yet been paid in cash at period end. The Company determined that the previously reported amount of proceeds from sale of lost-in-hole non-cash for excess and obsolete property, plant and equipment should have been presented within the reconciliation of net income to net cash flows from operating activities on the consolidated statement of cash flows for the year ended December 31, 2022. Furthermore, the Company determined that the previously reported amount of purchases of property, plant and equipment of negative $23.8 million within the investing activities section of the consolidated statement of cash flows for the year ended December 31, 2022 was calculated incorrectly. The Company determined that the previously reported amount of purchases of property, plant and equipment was calculated using an incorrect amount for the additions to property, plant and equipment that were not paid for in cash during the year ended December 31, 2022. Additionally, the Company determined that the previously reported amount of accounts payable of negative $1.0 million within the operating activities section of the consolidated statement of cash flows for the year ended December 31, 2022 was not adjusted for the impact of the purchases of property, plant and equipment that were not paid for in cash during the year ended December 31, 2022. Also, with respect to inventory and property, plant and equipment, the Company determined that the previously disclosed non-cash The Company evaluated the errors described above (and quantified in the table below), both qualitatively and quantitatively, in accordance with Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin (“SAB”) Topic 1.M, Materiality, codified in ASC 250, Accounting Changes and Error Corrections, and concluded that the errors were not material to the previously issued financial statements taken as a whole. The consolidated financial statements presented herein as of and for the years ended December 31, 2023 and 2022 have been revised to correct the errors described above in accordance with SEC SAB Topic 1.M, as codified in ASC 250. The following table presents (in thousands) the effects of the corrections of the errors described above: For the year ended December 31, 2022 Consolidated Statement of Cash Flows As Previously Adjustment As Revised Non-cash $ (3,768 ) $ 7,907 $ 4,139 Provision for excess and obsolete inventory — 45 45 Provision for excess and obsolete property and equipment — 510 510 Inventories, net (940 ) 34 (906 ) Operating lease liabilities 3,733 (7,907 ) (4,174 ) Accounts payable (981 ) (451 ) (1,432 ) Purchase of property, plant and equipment (23,753 ) (935 ) (24,688 ) Proceeds from sale of lost-in-hole 20,319 797 21,116 ROU assets obtained in exchange for lease liabilities 9,451 (1,544 ) 7,907 Purchases of inventory included in accounts payable and accrued expenses and other current liabilities — 79 79 Purchases of property and equipment included in accounts payable and accrued expenses and other current liabilities — 372 372 |
BUSINESS COMBINATION
BUSINESS COMBINATION | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Business Combinations [Abstract] | ||
BUSINESS COMBINATION | NOTE 3 – BUSINESS COMBINATION On the CTG Acquisition Date, the Company’s wholly owned subsidiary, Drilling Tools International, Inc., entered into and The £16.2 million, or approximately $20.9 million, gross cash purchase consideration was used on the CTG Acquisition Date to (i) settle Deep Casing’s outstanding debt of £15.3 million, or approximately $19.8 million; (ii) pay Deep Casing’s legacy shareholders £0.3 million, or approximately $0.3 million, in accordance with the Share Purchase Agreement; and (iii) pay Deep Casing’s acquisition-related costs of £0.6 million, or approximately $0.8 million. The CTG Acquisition has been accounted for as a business combination in accordance with ASC 805, Business Combinations (“ ”) The assets acquired and liabilities assumed in connection with the CTG Acquisition were recorded at their fair values on the CTG Acquisition Date as follows (in thousands): Assets Cash $ 2,674 Accounts receivable, net 3,781 Inventories, net 4,282 Prepaid expenses and other current assets 189 Property, plant and equipment , net 1,647 Operating lease ROU asset 315 Intangible assets, net 8,065 Goodwill 2,618 Total assets acquired $ 23,571 Liabilities Accounts payable 2,656 Accrued expenses and other current liabilities (295 ) Current portion of operating lease liabilities 95 Operating lease liabilities, less current portion 180 Total liabilities assumed $ 2,636 Total consideration transferred $ 20,935 The excess of the purchase price over the fair values of the net identifiable tangible and intangible assets acquired has been assigned to goodwill. Goodwill represents the future benefits as a result of the acquisition that will enhance the services available to both new and existing customers and increase the Company’s competitive position. Goodwill will be evaluated for impairment at least annually. Goodwill attributable to the CTG Acquisition is not deductible for tax purposes. The following table sets forth the amounts allocated to the identified intangible assets, the estimated useful lives of those intangible assets as of the CTG Acquisition Date, and the methodologies used to determine the fair values of those intangible assets ($ in thousands): Fair value Useful life Fair value methodology Intangible assets Trade names $ 819 15 Relief from royalty method Developed Technology 3,269 20 Relief from royalty method Customer relationships 3,977 20 Multi-period excess earnings method of the income approach Total intangible assets $ 8,065 The intangible assets acquired are expected to be amortized over their useful lives on a straight-line basis. The Company incurred acquisition-related costs of $0.3 million during the three months ended March 31, 2024, which are included in other income (expense), net in the condensed consolidated statement of income and comprehensive income. The Company’s condensed consolidated statement of income and comprehensive income for the three months ended March 31, 2024 includes CTG’s revenues of $0.8 million and net income of $0.2 from the CTG Acquisition Date through March 31, 2024. Supplemental Pro Forma Information The unaudited supplemental pro forma financial results below for the three months ended March 31, 2024 and 2023, combine the consolidated results of the Company and CTG, giving effect to the CTG Acquisition as if it had been completed on January 1, 2023. This unaudited supplemental pro forma financial information is presented for informational purposes only and is not indicative of future operations or results had the acquisition been completed as of January 1, 2023, or any other date. Three months ended (in thousands) 2024 2023 Pro forma revenue $ 40,333 $ 45,308 Pro forma net income $ 2,420 $ 6,287 The unaudited supplemental pro forma financial information in the table above contains material nonrecurring pro forma adjustments to remove interest expense on CTG’s debt as it is assumed that the business combination occurred and the debt was paid off on January 1, 2023. | NOTE 3 – MERGER As discussed in Note 1 - S ummary of significant accounting Policies • Each share of DTIH common stock issued and outstanding immediately prior to the closing of the Merger, which totaled 52,363,876 shares (other than the shares described for the net exercise of the option and as compensation pursuant to the TSA), was exchanged for the right to receive 0.2282 shares of DTIC Common Stock (the “Common Exchange Ratio”) resulting in the issuance of 11,951,137 shares of DTIC Common Stock. • Each share of DTIH redeemable convertible preferred stock issued and outstanding immediately prior to the closing of the Merger, which totaled 20,370,377 shares, was exchanged for the right to receive 0.3299 shares of DTIC Common Stock (the “Preferred Exchange Ratio”) resulting in the issuance of 6,719,641 shares of DTIC Common Stock. • Each non-redeemable one-for-one • Each share of ROC common stock subject to possible redemption that was not redeemed prior to the closing of the Merger, which totaled 158,621 shares, was exchanged for, on a one-for-one • Each of ROC’s public rights and private rights outstanding immediately prior to the closing of the Merger, which totaled 20,700,000 and 796,000, respectively, were exchanged for, on a ten-for-one • Prior to the closing of the Merger, one DTIH stock option holder elected to net exercise all of such holder’s options, resulting in the issuance of 158,444 shares of DTIH common stock, which upon the closing of the Merger, were canceled and exchanged for the right to receive 0.2282 shares of DTIC Common Stock per share of DTIH common stock, which resulted in the issuance of 36,163 shares of DTIC Common Stock. • DTIH entered into a transaction services agreement (the “TSA”) with Hicks Holdings Operating LLC (“HHLLC”) on January 27, 2012, as amended February 13, 2023, pursuant to which DTIH must pay HHLLC a transaction fee equal to 1.5% of any subsequent transaction, as defined in the TSA. The Merger constitutes a subsequent transaction per the TSA and, therefore, the Board authorized DTIH to issue 1,149,830 shares of DTIH common stock to HHLLC and 328,611 shares of DTIH common stock to a stockholder of DTIH who is affiliated with HHLLC, immediately prior to the closing of the Merger. The DTIH common stock was issued immediately prior to the closing of the Merger and the issuance resulted in the recognition of $2.3 million of stock-based compensation expense within other expense on the consolidated statements of income and comprehensive income for the year ended December 31, 2023. The shares of DTIH common stock issued were exchanged for 337,429 shares of DTIC Common Stock as of the date of the closing of the Merger in accordance with the Common Exchange Ratio. The $2.3 million of stock-based compensation was recorded by taking the $6.95 quoted market price of the Company’s common stock as of the date and time of the closing of the Merger and multiplying this price by the 337,429 shares of DTIC Common Stock Issued. • In connection with the Merger, certain holders of DTIH redeemable convertible preferred stockholders entered into exchange agreements (the “Exchange Agreements”) wherein the DTIH redeemable convertible preferred stockholders exchanged their rights to receive a portion of the $11.0 million Aggregate Company Cash Consideration (as defined within the Merger Agreement) for the rights to receive shares of DTIC Common Stock. Immediately following the effectiveness of the Exchange Agreements, which became effective as of the closing of the Merger, the holders of DTIH redeemable convertible preferred stock that participated in the Exchange Agreements held 2,042,181 shares of DTIC Common Stock as a result of their participation in the Exchange Agreements. In addition, the holders of DTIH redeemable convertible preferred stock that did not participate in the Exchange Agreements were paid $0.2 million from the Aggregate Company Cash Consideration in exchange for the cancellation of their DTIH redeemable convertible preferred stock in connection with the closing of the Merger. • In connection with the Merger, ROC entered into subscription agreements (the “Subscription Agreements”) with certain accredited investors (which were related parties of ROC due to their affiliation with ROC Energy Holdings, LLC, which is ROC’s sponsor (“Sponsor” or “ROC Sponsor”)) (the “PIPE Investors”) for an aggregate of 2,970,296 shares of DTIC Common Stock at a price of $10.10 per share, for a total of $30.0 million (the “PIPE Financing”). Upon the closing of the PIPE Financing (which closed in connection with the closing of the Merger), the Company received $25.9 million in cash and $4.1 million worth of shares from the PIPE Financing were used to settle related party promissory notes issued by ROC to the ROC Sponsor and an affiliate of ROC Sponsor. The proceeds received by the Company from the Merger and PIPE Financing, net of transaction costs, totaled $23.2 million. The Merger was accounted for as a reverse recapitalization in accordance with U.S. GAAP. Under this method of accounting, ROC was treated as the acquired company for financial reporting purposes (see Note 1, Summary of Significant Accounting Policies The following table presents the total DTIC Common Stock outstanding immediately after the closing of the Merger: Exchange of ROC common stock not subject to possible redemption for DTIC Common Stock upon Merger 3,403,500 Conversion of ROC Public Rights into shares of DTIC Common Stock 2,070,000 Conversion of ROC Private Rights into shares of DTIC Common Stock 79,600 Exchange of ROC common stock subject to possible redemption that was not redeemed for DTIC Common Stock 158,621 Subtotal - Merger, net of redemptions 5,711,721 Issuance of DTIC Common Stock in connection with PIPE Financing 2,970,296 Exchange of DTIH common stock outstanding as of December 31, 2022 for DTIC Common Stock 11,951,137 Exchange of DTIH redeemable convertible preferred stock outstanding as of December 31, 2022 for DTIC Common Stock 6,719,641 Issuance of shares as stock-based compensation to former DTIH stockholders as 337,429 Issuance of DTIC Common Stock to former holders of DTIH redeemable 2,042,181 Net exercise of stock options by DTIH stockholder 36,163 Total - DTIC Common Stock outstanding as a result of Merger, PIPE Financing, 29,768,568 |
INVESTMENTS - EQUITY SECURITIES
INVESTMENTS - EQUITY SECURITIES | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Investments, Debt and Equity Securities [Abstract] | ||
INVESTMENTS - EQUITY SECURITIES | NOTE 4 – INVESTMENTS – EQUITY SECURITIES The following table shows the cost and fair value of the Company’s investments in equity securities (in thousands): Cost Unrealized Fair March 31, 2024 $ 999 $ 138 $ 1,137 Cost Unrealized Fair December 31, 2023 $ 999 $ (111 ) $ 888 Unrealized holding gains on equity securities for the three months ended March 31, 2024 were approximately $0.2 million. Unrealized holding losses on equity securities for the three months ended March 31, 2023 were approximately $33 thousand. | NOTE 4 - INVESTMENTS – EQUITY SECURITIES The following table shows the cost and fair value of the Company’s investments in equity securities (in housands Cost Unrealized Fair Value December 31, 2023 $ 999 $ (111 ) $ 888 Cost Unrealized Fair Value December 31, 2022 $ 999 $ 144 $ 1,143 Unrealized holding losses on equity securities for the year ended December 31, 2023 were $0.3 million where |
BALANCE SHEET DETAILS - CURRENT
BALANCE SHEET DETAILS - CURRENT ASSETS AND CURRENT LIABILITIES | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
BALANCE SHEET DETAILS - CURRENT ASSETS AND CURRENT LIABILITIES | NOTE 5 – BALANCE SHEET DETAILS - CURRENT ASSETS AND CURRENT LIABILITIES Inventories, net The following table shows the components of inventory (in thousands): March 31, 2024 December 31, 2023 Raw materials $ 8,823 $ 5,022 Finished goods 2,673 16 Total inventories 11,496 5,038 Allowance for obsolete inventory (55 ) (4 ) Inventories, net $ 11,441 $ 5,034 Prepaid expenses and other current assets The following table shows the components of prepaid e xp March 31, 2024 December 31, 2023 Prepaid expenses: Deposits on inventory $ 1,437 $ 2,146 Prepaid income tax 362 362 Prepaid insurance 530 1,110 Prepaid rent 399 372 Prepaid equipment 331 331 Prepaid other 172 214 Other current assets: Other $ — $ 18 Total $ 3,231 $ 4,553 Accrued expenses and other current liabilities The following table shows the components of accrued expenses and other current liabilities (in thousands): March 31, 2024 December 31, 2023 Accrued expenses: Accrued compensation and related benefits $ 3,878 $ 4,999 Accrued insurance 435 978 Accrued transaction advisory fees 1,000 1,000 Accrued professional services 72 189 Accrued interest 126 58 Accrued property taxes 314 60 Accrued monitoring fees 373 373 Other 760 147 Other current liabilities: Income tax payable $ 1,757 $ 1,586 Sales tax payable (413 ) 71 Unbilled lost-in-hole 96 76 Deferred revenue 44 1,042 Total accrued expenses and other current liabilities $ 8,442 $ 10,579 | NOTE 5 – BALANCE SHEET DETAILS - CURRENT ASSETS AND CURRENT LIABILITIES Inventories, net The following table shows the components of inventory (in thousands): December 31, 2023 December 31, 2022 Raw materials $ 5,022 $ 3,377 Finished goods 16 115 Total inventories 5,038 3,492 Allowance for obsolete inventory (4 ) (211 ) Inventories, net 5,034 3,281 Prepaid expenses and other current assets The following table shows the components of prepaid expenses and other current assets (in thousands): December 31, 2023 December 31, 2022 Prepaid expenses: ERC benefits receivable $ — $ 2,117 Deposits on inventory 2,146 680 Prepaid income tax 362 — Prepaid insurance 1,110 358 Prepaid rent 372 381 Prepaid equipment 331 179 Prepaid other 214 173 Other current assets: Interest rate swap asset $ — $ 476 Other 18 17 Total $ 4,553 $ 4,381 Accrued expenses and other current liabilities The following table shows the components of accrued expenses and other current liabilities (in thousands): December 31, 2023 December 31, 2022 Accrued expenses: Accrued compensation and related benefits $ 4,999 $ 3,392 Accrued insurance 978 525 Accrued transaction advisory fees 1,000 — Accrued professional services 189 509 Accrued interest 58 62 Accrued property taxes 60 41 Accrued monitoring fee 373 Other 147 38 Other current liabilities: Income tax payable $ 1,586 $ 1,780 Sales tax payable 71 587 Unbilled lost-in-hole 76 282 Deferred revenue 1,042 83 Total accrued expenses and other current liabilities $ 10,579 $ 7,299 |
PROPERTY, PLANT AND EQUIPMENT,
PROPERTY, PLANT AND EQUIPMENT, NET | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Property, Plant and Equipment [Abstract] | ||
PROPERTY, PLANT AND EQUIPMENT, NET | NOTE 6 – PROPERTY, PLANT AND EQUIPMENT, NET The following table shows the component of property, plant and equipment, net (in thousands): Estimated Useful March 31, December 31, Rental tools and equipment 5-10 195,460 188,949 Buildings and improvements 5-40 6,686 6,672 Office furniture, fixtures and equipment 3-5 2,269 2,389 Transportation and equipment 3-5 783 793 Total property, plant and equipment 205,198 198,803 Less: accumulated deprecation (134,602 ) (133,003 ) Property, plant and equipment, net (excluding construction in progress) 70,596 65,800 Construction in progress — — Property, plant and equipment, net $ 70,596 $ 65,800 Total depreciation expense for the three months ended March 31, 2024 and 2023 was approximately $5.3 million and $5.0 million, respectively. The Company has not acquired any property, plant and equipment under financing leases. Property, plant and equipment, net, is concentrated within the United States. As of March 31, 2024 and December 31, 2023, property, plant and equipment, net held within the United States was $65.9 million and $63.0 million, respectively, or 93% and 96% of total property, plant and equipment, net. As of March 31, 2024 and December 31, 2023, property, plant and equipment, net held outside of the United States, in Canada and Internationally, was $4.7 million and $2.8 million, respectively, or 7% and 4% of total property, plant and equipment, net. | NOTE 6 – PROPERTY, PLANT AND EQUIPMENT, NET The following table shows the component of property, plant and equipment, net (in thousands): Estimated Useful December 31, December 31, Rental tools and equipment 5-10 188,949 160,973 Buildings and improvements 5-40 6,672 5,781 Office furniture, fixtures and equipment 3-5 2,389 2,101 Transportation and equipment 3-5 793 827 Total property, plant and equipment 198,803 169,682 Less: accumulated depreciation (133,003 ) (125,537 ) Property, plant and equipment, net (excluding construction in progress) 65,800 44,145 Construction in progress — 9 Property, plant and equipment, net $ 65,800 $ 44,154 Total depreciation expense for the year ended December 31, 2023 and 2022 was approximately $20.3 million and $19.7 million, respectively. The Company has not acquired any property, plant and equipment under capital leases. Property, plant and equipment, net, were concentrated within the United States. As of December 31, 2023 and 2022, property, plant and equipment, net held within the United States was $63.0 million and $41.8 million, respectively, or 96% and 95% of total property, plant and equipment, net, respectively. As of December 31, 2023 and 2022, property, plant and equipment, net held outside of the United States, in Canada, was $2.8 million and $2.3 million, or 4% and 5% of total property, plant and equipment net for both periods. |
INTANGIBLE ASSETS, NET
INTANGIBLE ASSETS, NET | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
INTANGIBLE ASSETS, NET | NOTE 7 – INTANGIBLE ASSETS, NET The following table shows the components of intangible assets, net (in thousands): Useful Lives March 31, 2024 December 31, 2023 Trade name 10-15 $ 2,079 $ 1,280 Developed Technology 13-20 3,462 270 Customer Relationships 20 3,882 — Total intangible assets 9,423 1,550 Less: accumulated amortization (1,365 ) (1,334 ) Intangible assets, net $ 8,058 $ 216 Total amortization expense for the three months ended March 31, 2024 and 2023 was approximately $31 thousand and $12 thousand, respectively. | NOTE 7 -INTANGIBLES, NET The following table shows the components of intangible assets, net (in thousands): Useful Lives December 31, 2023 December 31, 2022 Trade name 10-13 $ 1,280 $ 1,280 Technology 13 270 270 Total intangible assets 1,550 1,550 Less: accumulated amortization (1,334 ) (1,287 ) Intangible assets, net $ 216 $ 263 Total amortization expense for the year ended December 31, 2023 and 2022 was approximately $47 thousand and $0.1 million respectively. |
LEASES
LEASES | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Leases [Abstract] | ||
LEASES | NOTE 13 – LEASES The Company leases various facilities and vehicles under noncancelable operating lease agreements. The remaining lease terms for our leases range from 1 month to 14 years. These leases often include options to extend the term of the lease which may be for periods of up to 5 years. When it is reasonably certain that the option will be exercised, the impact of the renewal term is included in the lease term for purposes of determining total future lease payments and measuring the ROU asset and lease liability. We apply the short-term lease policy election, which allows us to exclude from recognition leases with an original term of 12 months or less. We have not entered into any finance leases as of March 31, 2024. For the three months ended March 31, 2024, the components of the Company’s lease expense were as follows (in thousands): Three months ended Three months ended Operating Lease Cost $ 1,482 $ 1,518 Short-term Lease Cost 35 30 Variable Lease Cost 88 84 Sublease Income — (46 ) Total Lease Cost $ 1,605 $ 1,586 Supplemental balance sheet information related to leases was as follows (in thousands): Three months ended Weighted-average remaining lease term (in years) 6.45 Weighted average discount rate 5.86 % Three months ended Cash paid for amounts included in the measurement of lease liabilities 1,350 Future undiscounted cash flows for each of the next five years and thereafter and reconciliation to the lease liabilities recognized on the unaudited condensed consolidated balance sheet as of March 31, 2024 were as follows (in thousands): 2024 $ 3,759 2025 4,244 2026 3,719 2027 2,540 2028 1,978 Thereafter 5,677 Total lease payments $ 21,917 Less: imputed interest (3,550 ) Present value of lease liabilities $ 18,367 The Company leases downhole drilling tools to companies in the oil and natural gas industry. Such leases are accounted for in accordance with ASC 842. For the three months ended March 31, 2024 and 2023, tool rental revenue for leases of downhole drilling tools was approximately $30.0 million and $32.3 million, respectively. Our lease contract periods are short-term in nature and are typically daily, monthly, per well, or footage based. Due to the short-term nature of the contracts, no maturity table is presented. | NOTE 8 – LEASES The Company leases various facilities and vehicles under noncancelable operating lease agreements. The remaining lease terms for our leases range from 1 month to 14 years. These leases often include options to extend the term of the lease, which may be for periods of up to 5 years. When it is reasonably certain that the option will be exercised, the impact of the renewal term is included in the lease term for purposes of determining total future lease payments and measuring the ROU asset and lease liability. We apply the short-term lease policy election, which allows us to exclude from recognition leases with an original term of 12 months or less. We have not entered into any finance leases as of December 31, 2023. For the year ended December 31, 2023 and 2022, the components of the Company’s lease expense were as follows (in thousands): Year Ended Year Ended Operating Lease Cost $ 6,077 $ 5,722 Short-term Lease Cost 130 143 Variable Lease Cost 320 319 Sublease Income (76 ) (183 ) Total Lease Cost $ 6,451 $ 6,001 Supplemental balance sheet information related to leases was as follows (in thousands): Year Ended Year Ended Weighted-average remaining lease term (in years) 6.55 7.53 Weighted average discount rate 5.80 % 5.34 % Year Ended Year Ended Cash paid for amounts included in the measurement of lease liabilities 5,538 5,003 Future undiscounted cash flows for each of the next five years and thereafter and reconciliation to the lease liabilities recognized on the consolidated balance sheet as of December 31, 2023 were as follows (in thousands): 2024 $ 4,923 2025 4,089 2026 3,522 2027 2,439 2028 1,939 Thereafter 5,605 Total lease payments $ 22,517 Less: imputed interest (3,666 ) Present value of lease liabilities $ 18,851 The Company leases downhole drilling tools to companies in the oil and natural gas industry. Such leases are accounted for in accordance with ASC 842. For the year ended December 31, 2023 and 2022, tool rental revenue was approximately $119.2 million and $99.0 million, respectively. Our lease contract periods are short-term in nature and are typically daily, monthly, per well, or footage based. Due to the short-term nature of the contracts, no maturity table is presented. |
REVOLVING CREDIT FACILITY AND T
REVOLVING CREDIT FACILITY AND TERM LOAN | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Line of Credit Facility [Abstract] | ||
REVOLVING CREDIT FACILITY AND TERM LOAN | NOTE 8 – REVOLVING CREDIT FACILITY AND TERM LOAN In December 2015, the Company entered into a credit facility with PNC Bank, National Association (the “Credit Facility”). The facility provided for a revolving line of credit with a maximum borrowing amount totaling $60.0 million. On March 15, 2024, the Company refinanced its revolving credit facility (the “Refinancing”) by entering into a Second Amended and Restated Revolving Credit, Term Loan and Security and Guaranty Agreement (the “Credit Facility”) with certain of the Company’s subsidiaries and PNC Bank, National Association as lender and as agent. Pursuant to the terms of the Credit Facility, the Company will be provided a revolving line of credit in a principal amount up to $80.0 million and a single draw term loan ( the “Term Loan”) in a principal amount of $25.0 million. The Credit Facility and the Term Loan matures in March 2029 For the three months ended March 31, 2024, the interest on the term loan was based on SOFR or the bank’s base lending rate plus applicable margin (approximately 9.28% at March 31, 2024). The Credit Facility is collateralized by substantially all the assets of the Company and matures March 15, 2029. As of March 31, 2024, there were no amounts drawn against the line of credit. The Company is subject to various restrictive covenants associated with these borrowings including, but not limited to, a leverage ratio and a fixed charge ratio. As of March 31, 2024, the Company was in compliance with all restrictive covenants. Contingent Interest Embedded Derivative Liability Under the Credit Facility Agreement, the interest rate will reset (the ‘Default Rate’) upon the event of a default and an additional 2% will be added to the base rate. The Company analyzed the Default Rate feature of the Credit Facility for derivative accounting consideration under ASC 815, Derivatives and Hedging 815-15, The Default Rate Derivative is treated as a liability, initially measured at fair value with subsequent changes in fair value recorded in earnings. Management has assessed the probability of occurrence for a non-credit | NOTE 9 – REVOLVING CREDIT FACILITY In December 2015, the Company entered into a credit facility with PNC Bank, National Association (the “Credit Facility”). The facility provides for a revolving line of credit with a maximum borrowing amount totaling $60.0 million, as of December 31, 2023 and 2022. On June 20, 2023, the Company entered into the Amended and Restated Revolving Credit, Security and Guaranty Agreement among Drilling Tools International, Inc., certain of its subsidiaries, Drilling Tools International Corporation and PNC Bank, National Association (the “Credit Facility Agreement”) that modified the terms of its previous agreement and related amendments. This amended agreement modified certain defined terms in the previous agreement, removed the $20.0 million unfunded capital expenditures requirement, removed the $9.0 million sublimit to the Company’s Canadian entity and changed the legal debtor from DTIH to DTIC. See Note 3, Merger For the year ended December 31, 2023, the interest on the amount drawn was based on SOFR or the bank’s base lending rate plus applicable margin (approximately 8.4% at December 31, 2023). The Credit Facility is collateralized by substantially all the assets of the Company and matures December 31, 2025. As of December 31, 2023, there were no amounts drawn against the line of credit. The Company is subject to various restrictive covenants associated with these borrowings including, but not limited to, a fixed charge ratio, and a minimum amount of undrawn availability. As of December 31, 2023, the Company was in compliance with all restrictive covenants. Contingent Interest Embedded Derivative Liability Under the Credit Facility Agreement, the interest rate will reset (the ‘Default Rate’) upon the event of a default and an additional 2% will be added to the base rate. The Company analyzed the Default Rate feature of the Credit Facility for derivative accounting consideration under ASC 815, Derivatives and Hedging 815-15, The Default Rate Derivative is treated as a liability, initially measured at fair value with subsequent changes in fair value recorded in earnings. Management has assessed the probability of occurrence for a non-credit therefore |
REVENUE
REVENUE | 12 Months Ended |
Dec. 31, 2023 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE | NOTE 10 – REVENUE Revenue generated was concentrated within the United States. For the year ended December 31, 2023 and 2022, the revenue generated within the United States was $138.3 million and $118.3 million, respectively, or 91% and 91% of total revenues, respectively. For the year ended December 31, 2023 and 2022, the revenue generated outside of the United States, in Canada and International, was $13.7 million and $11.3 million, respectively, or 9% and 9% of total revenues, respectively. The Company derives its revenue from two revenue types, tool rental services and product sales. The following table represents our revenues disaggregated by category: Year Ended Year Ended Tool Rental Services $ 119,239 $ 99,018 Product Sales 32,795 30,538 Total Revenue $ 152,034 $ 129,556 |
INCOME TAXES
INCOME TAXES | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Income Tax Disclosure [Abstract] | ||
INCOME TAXES | NOTE 9 – INCOME TAXES The Company recorded income tax expense on the unaudited condensed consolidated statements of income and comprehensive income of $0.9 million and $1.7 million for the three months ended March 31, 2024 and 2023, respectively. The income tax expense for the three months ended March 31, 2024 was calculated using a discrete approach. This methodology was used because changes in the Company’s results of operations and acquisitions can materially impact the estimated annual effective tax rate. The Company’s effective tax rate for the three months ended March 31, 2024 and 2023 were provisions of 23.1% and 23.2%, respectively. Such rates differed from the Federal Statutory rate of 21.0% primarily due to the state taxes, foreign income taxes on the Company’s international operations, and permanent differences. The Company records deferred tax assets and liabilities for the future tax benefit or expense that will result from differences between the carrying value of its assets for income tax purposes and for financial reporting purposes, as well as for operating loss and tax credit carryovers. A valuation allowance is recorded to bring the net deferred tax assets to a level that is more likely than not to be realized in the foreseeable future. This level will be estimated based on a number of factors, especially the amount of net deferred tax assets of the Company that are actually expected to be realized, for tax purposes, in the foreseeable future. There was no significant change to the valuation allowance during the three months ended March 31, 2024 and 2023. The Company is still evaluating the tax impact of the CTG Acquisition, including the impact of the transaction costs. Additionally, the Company continues to evaluate the deferred tax assets and liabilities and corresponding valuation allowance in connection with the CTG Acquisition. | NOTE 11 – INCOME TAXES For the years ended December 31, 2023, and 2022, income from continuing operations before taxes consisted of amounts related to U.S. operations and income associated with the Company’s foreign operations predominantly in Canada. The geographical breakdown of the Company’s income before provision for income taxes was as follows (in thousands): Year Ended December 31, 2023 2022 Domestic $ 17,352 $ 19,094 International 2,442 5,683 Profits before provision for income taxes $ 19,794 $ 24,777 Income tax expense attributable to income from continuing operations consists of (in thousands): Year Ended December 31, 2023 2022 Current provision for income taxes: Federal $ 162 $ 702 Foreign 656 1,444 State 785 472 Total current 1,603 2,618 Deferred tax expense (benefit): Federal 3,826 574 Foreign 34 488 State (417 ) 18 Total deferred tax expense: 3,443 1,080 Total provision for income taxes $ 5,046 $ 3,698 Tax rate reconciliation The following table presents a reconciliation of the federal statutory rate to the Company’s effective tax rate: Year Ended December 31, 2023 2022 U.S. federal tax benefit at statutory rate 21.0 % 21.0 % State taxes, net of federal benefit 1.9 % 2.1 % Permanent differences 3.6 % 2.0 % Foreign rate differential 0.2 % 0.5 % Valuation allowance 0.0 % -2.1 % Other -1.2 % -9.0 % Effective tax rate 25.5 % 14.5 % The effective tax rate impact of other category for the year ended December 31, 2023 is primarily made up of prior year true-ups Significant components of deferred taxes The tax effects of temporary differences and carryforwards that give rise to significant portions of the deferred tax assets and deferred tax liabilities as of December 31, 2023 and 2022 are presented below (in thousands): Year Ended December 31, 2023 2022 Deferred tax assets Net operating loss carryforward $ 1,544 $ 3,378 Allowance for doubtful accounts 333 323 Share-based compensation 1,451 941 Bonus accrual 440 599 Inventory 130 53 Intangible assets 1,129 1,152 Other — 140 Gross deferred tax assets 5,028 6,587 Valuation allowance — — Net deferred tax assets 5,028 6,587 Deferred tax liabilities Depreciation on property, plant, and equipment (11,391 ) (8,958 ) Withholding tax on unremitted earnings (264 ) (72 ) Other — (742 ) Deferred tax liabilities (11,655 ) (9,772 ) Net deferred liabilities $ (6,627 ) $ (3,185 ) At December 31, 2023 and 2022, the Company had federal net operating loss carryforward of approximately $4.1 million and $15.1 million, respectively, which may be carried forward indefinitely and state and local net operating loss carryforward of approximately $8.8 million and $9.8 million, respectively, which expire at various dates. The utilization of the Company’s net operating losses may be subject to a limitation due to the “change in ownership provisions” under Section 382 of the Internal Revenue Code and similar state and foreign provisions. Such limitations may result in the expiration of the net operating loss carryforwards before their utilization. The Company is subject to income taxes in the U.S. federal jurisdiction, various state jurisdictions as well as Canada. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. The Company’s tax years remain open for examination by all tax authorities since inception and carryover attributes remain open to adjustment by the U.S. and state authorities. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | ||
STOCK-BASED COMPENSATION | NOTE 10 – STOCK-BASED COMPENSATION On June 20, 2023, the Company adopted the Drilling Tools International Corporation 2023 Omnibus Incentive Plan (the 2023 Plan). The 2023 Plan became effective on the closing of the Merger, which also occurred on June 20, 2023. The 2023 Plan provides for the issuance of shares of Common Stock up to ten percent (10%) of the shares of outstanding Common Stock as of the closing of the Merger (which equated to 2,976,854 shares as of December 31, 2023) and automatically increases on the first trading day of each calendar year by the number of shares of Common Stock equal to three percent (3%) of the total number of outstanding Common Stock on the last day of the prior calendar year. The 2023 Plan allows for awards to be issued to employees, non-employee In connection with the Merger, all outstanding options to purchase shares of DTIH common stock were canceled and exchanged for options to purchase shares of DTIC Common Stock (“Company Options”). The number of Company Options issued and the associated exercise prices were adjusted using the Common Exchange Ratio used for the Merger. As a result of the Merger, the Company issued options to purchase a total of 2,361,722 shares of the Company’s Common Stock to former holders of the DTIH stock options. The vesting schedules, remaining term, and provisions (other than the adjusted number of underlying shares and exercise prices) of the Company Options issued, are identical to the vesting schedules, remaining term, and other provisions of the DTIH stock options that were exchanged. Per a post-closing amendment, Company Options currently held by former holders of DTIH stock options are no longer subject to employment considerations. The fair value of each stock option award is estimated on the date of grant using a Black-Scholes option valuation model. Expected volatilities are based on comparable public company data. The Company uses future estimated employee termination and forfeiture rates of the options within the valuation model. The expected term of options granted is derived using the “plain vanilla” method due to the lack of history and volume of option activity at the Company. The risk-free rate is based on the approximate U.S. Treasury yield rate in effect at the time of grant. The Company’s calculation of share price involves the use of different valuation techniques, including a combination of an income and market approach. The Company used the quoted market price as of the grant date as an input into the Black-Scholes model. During the three months ended March 31, 2024, there were 2,600,000 options granted under the 2023 plan. During the three months ended March 31, 2024, there were no exercises or forfeitures. Non-vested During the three months ended March 31, 2024 and 2023, there was $208 thousand and nil stock-based compensation expense recognized, respectively. As of March 31, 2024 and March 31, 2023, there was $4.4 million and $1.6 million, respectively, of unrecognized compensation expense. The unrecognized expense as of March 31, 2023 related to previously non-vested shares | NOTE 12 – STOCK-BASED COMPENSATION On June 20, 2023, the Company adopted the Drilling Tools International Corporation 2023 Omnibus Incentive Plan (the “2023 Plan”). The 2023 Plan became effective on the closing of the Merger, which also occurred on June 20, 2023. The 2023 Plan provides for the issuance of shares of Common Stock up to ten percent (10%) of the shares of outstanding Common Stock as of the closing of the Merger (which equates to 0 shares as of December 31, 2023) and automatically increases on the first trading day of each calendar year by the number of shares of Common Stock equal to three percent (3%) of the total number of outstanding Common Stock on the last day of the prior calendar year. The 2023 Plan allows for awards to be issued to employees, non-employee In connection with the Merger, all outstanding options to purchase shares of DTIH common stock were canceled and exchanged for options to purchase shares of DTIC Common Stock (“Company Options”). The number of Company Options issued and the associated exercise prices were adjusted using the Common Exchange Ratio used for the Merger (see Note 3, Merger The fair value of each stock option award is estimated on the date of grant using a Black-Scholes option valuation model. Expected volatilities are based on comparable public company data. The Company uses future estimated employee termination and forfeiture rates of the options within the valuation model. The expected term of options granted is derived using the “plain vanilla” method due to the lack of history and volume of option activity at the Company. The risk-free rate is based on the approximate U.S. Treasury yield rate in effect at the time of grant. The Company’s calculation of share price involves the use of different valuation techniques, including a combination of an income and market approach. For any grants of stock options subsequent to the Company being publicly traded, the Company will use the quoted market price as of the grant date as an input into the Black-Scholes model. Determination of the fair value is a matter of judgment and often involves the use of estimates and assumptions. In June of 2023 and prior to the closing of the Merger, one holder of DTIH stock options elected to exercise all of such holder’s 580,000 stock options. The holder elected to net exercise, whereby the exercise price is paid in shares and additional shares are withheld for income taxes. The net exercise of the options resulted in 158,444 shares of DTIH common stock being issued prior to the Merger and subsequently canceled and exchanged for a total of 36,163 shares of DTIC Common Stock as of the date of the Merger. The following table summarizes options outstanding, as well as activity for the year ended December 31, 2023 (prior year amounts have been converted using the conversion ratio of 0.2282 applied in the Merger): Shares Weighted Weighted Average Aggregate OUTSTANDING, December 31, 2022 2,494,097 $ 4.04 3.93 $ 11,687 Granted — — — — Exercised (132,375 ) 5.04 — — Forfeited — — — — OUTSTANDING, December 31, 2023 2,361,722 4.02 3.37 — UNVESTED, December 31, 2023 — — — — EXERCISABLE, December 31, 2023 2,361,722 4.02 3.37 — The aggregate intrinsic value is calculated as the difference between the exercise price and the estimated fair value of the Company’s common stock as of December 31, 2023 and 2022. Due to the exercise price of the stock options exceeding the current market price of the Company’s common stock as of December 31, 2023, no intrinsic value has been realized from the exercise of stock options during the period. During the year ended December 31, 2023, the Company recognized $1.7 million of stock-based compensation expense within selling, general, and administrative expense on the consolidated statements of income and comprehensive income related to the accelerated vesting of an executive’s 534,063 performance-based stock options. The performance conditions were satisfied upon completion of the Merger and all 534,063 performance-based stock options vested on June 20, 2023. During the year ended December 31, 2023, the Company recognized $2.3 million of stock-based compensation expense within other expense, net on the consolidated statements of income and comprehensive income as a result of the issuance of shares in accordance with the TSA with HHLLC (see Note 3 - Merger During the year ended December 31, 2022, there was no stock-based compensation expense recognized. |
OTHER EXPENSES, NET
OTHER EXPENSES, NET | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Other Income and Expenses [Abstract] | ||
OTHER EXPENSES, NET | NOTE 11 – OTHER EXPENSES, NET The following table shows the components of other expenses, net for the three months ended March 31, 2024 and 2023 (in thousands): Three Months Ended Three Months Ended Transaction fees $ (889 ) $ — Other, net (247 ) (7 ) Interest income 11 47 Other expense, net $ (1,125 ) $ 40 | NOTE 13 – OTHER EXPENSE, NET The following table shows the components of other expenses, net for the years ended December 31, 2023, and 2022 (in thousands): Year Ended Year Ended HHLLC stock-based compensation $ (2,339 ) $ — Transaction fees (3,640 ) — Other, net (428 ) (436 ) Interest income 48 52 Other expense, net $ (6,359 ) $ (384 ) |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Related Party Transactions [Abstract] | ||
RELATED PARTY TRANSACTIONS | NOTE 12 – RELATED PARTY TRANSACTIONS Management fees For the three months ended March 31, 2024 and 2023, management fees paid to Hicks Holdings Operating LLC, a shareholder of the Company, were approximately $0.2 million and $0.2 million, respectively. Management fees paid to a shareholder are included in selling, general and administrative expense in the accompanying unaudited condensed consolidated statements of income and comprehensive income. Director fees For the three months ended March 31, 2024 and 2023, director fees paid to Board of Directors were approximately $85 thousand and $45 thousand , respectively. Management fees paid to a shareholder are included in selling, general and administrative expense in the accompanying unaudited condensed consolidated statements of income and comprehensive income. Leases For the three months ended March 31, 2024 and 2023, the Company paid rent expense to Cree Investments, LLC, a shareholder of the Company, of approximately $13 thousand and $13 thousand, respectively, relating to the lease of a building. Future minimum lease payments related to this lease are included in the future minimum lease schedule in Note 13 - Leases | NOTE 14 – RELATED PARTY TRANSACTIONS Management fees For the years ended December 31, 2023 and 2022, management fees paid to Hicks Holdings Operating LLC, a shareholder of the Company, were approximately $1.1 million and $0.4 million, respectively. Management fees paid to the shareholder are included in selling, general and administrative expense in the accompanying consolidated statements of income and comprehensive income. Director fees For the years ended December 31, 2023 and 2022, director fees paid to our Board of Directors were approximately $0.2 million and $0.1 million, respectively. Director fees are included in selling, general and administrative expense in the accompanying consolidated statements of income and comprehensive income. Leases For the years ended December 31, 2023 and 2022, the Company paid rent expense to Cree Investments, LLC, a shareholder of the Company, of approximately $51 thousand and $51 thousand, respectively, relating to the lease of a building. Future minimum lease payments related to this lease are included in the future minimum lease schedule in Note 7, Leases Tools For the years ended December 31, 2022, the Company paid $4 thousand to Heath Woodrum, a shareholder of the Company, for tools. Promissory Notes Upon consummation of the Merger on June 20, 2023, the Company issued shares of DTIC Common Stock in connection with the PIPE Financing to payoff convertible promissory notes which were issued to an affiliate of the ROC Sponsor on December 6, 2022 and March 2, 2023, respectively. The notes did not bear interest and were in the amounts of $2.1 million and $2.1 million, respectively. Working Capital Loan Prior to the Merger on June 20, 2023, ROC paid the remaining outstanding principal amount owed to an affiliate of the ROC Sponsor in the amount of $0.4 million for a loan to fund working capital deficiencies and finance transaction costs in connection with the Merger. The loan did not bear interest. |
EMPLOYEE BENEFITS
EMPLOYEE BENEFITS | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Defined Benefit Plan [Abstract] | ||
EMPLOYEE BENEFITS | NOTE 14 – EMPLOYEE BENEFITS The Company has a defined contribution plan that complies with Section 401(k) of the Internal Revenue Code. All employees are auto enrolled at a 3% contribution, unless they opt out, beginning on the first plan entry date following six months of service. Plan entry dates are the first day of January and July. In March of 2020, the Company suspended any employee contribution match effective immediately and through the end of 2021. The match was reinstated on January 1, 2022. For 2022, the Company matched employee contributions 150% of the first 3% of employee contributions, not to exceed $2 thousand per participant per calendar year. Employees vest in employer contributions over six years. The contribution is limited to the maximum contribution allowed under the Internal Revenue Service Regulations. The total expense for the three | NOTE 16 – EMPLOYEE BENEFIT PLANS The Company has a defined contribution plan that complies with Section 401(k) of the Internal Revenue Code. All employees are auto enrolled at a 3% contribution, unless they opt out, beginning on the first plan entry date following six months of service. Plan entry dates are the first day of January and July. For 2022, the Company matched employee contributions 150% of the first 3% of employee contributions, not to exceed $2 thousand per participant per calendar year. Employees vest in employer contributions over six years. The contribution is limited to the maximu |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | ||
COMMITMENTS AND CONTINGENCIES | NOTE 15 – COMMITMENTS AND CONTINGENCIES The Company maintains operating leases for various facilities and vehicles. See Note 13— Leases Litigation From time to time, the Company may become involved in various legal proceedings in the ordinary course of its business and may In the normal course of business, the Company may agree to indemnify third parties with whom it enters into contractual relationships, including customers, lessors, and parties to other transactions with the Company, with respect to certain matters. The Company has agreed, under certain conditions, to hold these third parties harmless against specified losses, such as those arising from a breach of representations or covenants, other third-party claims that the Company’s products when used for their intended purposes infringe the intellectual property rights of such other third parties, or other claims made against certain parties. It is not possible to determine the maximum potential amount of liability under these indemnification obligations due to the Company’s limited history of prior indemnification claims and the unique facts and circumstances that are likely to be involved in each particular claim. Management Fee The Company is required to pay a monthly management fee to a shareholder. The fee is based upon a percentage of the Company’s trailing twelve months, earnings before interest, taxes and accumulated depreciation amount, as defined in the management agreement. See Note 12 – Related Party Transactions, for further information. | NOTE 15 – COMMITMENTS AND CONTINGENCIES The Company maintains operating leases for various facilities and vehicles. See Note 13, Leases Litigation From time to time, the Company may become involved in various legal proceedings in the ordinary course of its business and may be subject to third-party infringement claims. In the normal course of business, the Company may agree to indemnify third parties with whom it enters into contractual relationships, including customers, lessors, and parties to other transactions with the Company, with respect to certain matters. The Company has agreed, under certain conditions, to hold these third parties harmless against specified losses, such as those arising from a breach of representations or covenants, other third-party claims that the Company’s products when used for their intended purposes infringe the intellectual property rights of such other third parties, or other claims made against certain parties. It is not possible to determine the maximum potential amount of liability under these indemnification obligations due to the Company’s limited history of prior indemnification claims and the unique facts and circumstances that are likely to be involved in each particular claim. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Earnings Per Share [Abstract] | ||
EARNINGS PER SHARE | NOTE 15 – EARNINGS PER SHARE Basic earnings per share is computed using the weighted-average number of common shares outstanding for the period. Diluted earnings per share is computed using the weighted-average number of common shares outstanding for the period plus dilutive potential common shares, including performance share awards, using the treasury stock method. Performance share awards are included based on the number of shares that would be issued as if the end of the reporting period was the end of the performance period and the result was dilutive. The following table sets forth the computation of the Company’s basic and diluted earnings per share for the three months ended March 31, 2024 and 2023 (in thousands except share and per share data): Three months ended March 31, 2024 2023 Numerator: Net income $ 3,126 $ 5,701 Less: Redeemable Convertible Preferred Stock dividends — (314 ) Net income attributable to common shareholders — basic $ 3,126 $ 5,387 Add: Redeemable Convertible Preferred Stock dividends — 314 Net income attributable to common shareholders — diluted $ 3,126 $ 5,701 Denominator Weighted-average common shares used in computing earnings per share — basic 29,768,568 11,951,137 Weighted-average effect of potentially dilutive securities: Effect of potentially dilutive time-based stock options — 1,006,729 Effect of potentially dilutive performance-based stock options — — Effect of potentially dilutive redeemable convertible preferred stock — 6,719,641 Weighted-average common shares outstanding — diluted 29,768,568 19,677,507 Earnings per share — basic $ 0.11 $ 0.45 Earnings per share — diluted $ 0.11 $ 0.29 As of March 31, 2024, the Company’s potentially dilutive securities consisted of options to purchase common stock. As of March 31, 2023, the Company’s potentially dilutive securities consisted of redeemable convertible preferred stock and options to purchase common stock. Based on the amounts outstanding as of the three months ended March 31, 2024 and 2023, the Company excluded the following potential common shares from the computation of diluted earnings per share because including them would have had an anti-dilutive effect. The options excluded from the diluted earnings per share calculations were as follows: Three months ended 2024 2023 Time-based options outstanding 4,427,659 140,135 Total 4,427,659 140,135 Our performance-based stock options were excluded from the diluted earnings per share calculations for the three months ended March 31, 2024 because including them would have had an anti-dilutive effect. Our performance- based stock options were excluded from the diluted earnings per share calculations for the three months ended March 31, 2024 because including them would have had an anti-dilutive effect. Our performance-based stock options were also excluded from the diluted earnings per share calculations for the three months ended March 31, 2023 because all necessary performance conditions were not satisfied by March 31, 2023. The options excluded from the diluted earnings per share calculations were as follows: Three months ended 2024 2023 Performance-based options outstanding 534,063 534,063 Total 534,063 534,063 | NOTE 17 – EARNINGS PER SHARE Basic earnings per share is computed using the weighted-average number of common shares outstanding for the period. Diluted earnings per share is computed using the weighted-average number of common shares outstanding for the period plus dilutive potential common shares, including performance share awards, using the treasury stock method. Performance share awards are included based on the number of shares that would be issued as if the end of the reporting period was the end of the performance period and the result was dilutive. The following table sets forth the computation of the Company’s basic and diluted net earnings per share for the years ended December 31, 2023 and 2022 (in thousands, except share and per share data): Year Ended December 31, 2023 2022 Numerator: Net income $ 14,748 $ 21,080 Less: Redeemable convertible preferred stock (314 ) (1,189 ) Net income attributable to common $ 14,434 $ 19,891 Add: Redeemable convertible preferred stock 314 1,189 Net income attributable to common $ 14,748 $ 21,080 Denominator Weighted-average common shares used in 21,421,610 11,951,137 Weighted-average effect of potentially dilutive Effect of potentially dilutive time-based stock 488,997 1,006,729 Effect of potentially dilutive performance-based 45,202 — Effect of potentially dilutive redeemable convertible 3,175,215 6,719,641 Weighted-average common shares outstanding 25,131,024 19,677,507 Earnings per share — basic $ 0.67 $ 1.66 Earnings per share — diluted $ 0.59 $ 1.07 As of December 31, 2023, the Company’s potentially dilutive securities consisted of options to purchase common stock. As of December 31, 2022, the Company’s potentially dilutive securities consisted of redeemable convertible preferred stock and options to purchase common stock. The Company excluded the following potential common shares, presented based on amounts outstanding at each period end, from the computation of diluted net income per share for the periods presented because including them would have had an anti-dilutive effect: Year Ended December 31, 2023 2022 Time-based options outstanding 140,135 140,135 Total 140,135 140,135 Our performance-based stock options were excluded from the diluted earnings per share calculations for the years ended December 31, 2022 because all necessary performance conditions were not satisfied by December 31, 2022. Our performance-based stock options excluded from diluted earnings per share for the year ended December 31, 2022 were as follows: Year Ended December 31, 2023 2022 Performance-based options outstanding — 534,063 Total — 534,063 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Subsequent Events [Abstract] | ||
SUBSEQUENT EVENTS | NOTE 16 – SUBSEQUENT EVENTS The Company has evaluated all events occurring through the date on which the unaudited condensed consolidated financial statements were issued. The Company did not identify any subsequent events that would have required adjustment or disclosure in the unaudited condensed consolidated financial statements. | NOTE 18 – SUBSEQUENT EVENTS Acquisition of Casing Technologies Group Limited On March 18, 2024, the Company announced its entry into a share purchase agreement (the “CTG Purchase Agreement”) to acquire one hundred percent (100%) of the shares of Casing Technologies Group Limited, a Scottish limited company (“CTG”). CTG wholly owns Deep Casing Tools Limited, an energy technology development company. The initial accounting for this business combination is in process which includes conducting a valuation analysis to value the assets and liabilities assumed as a result of the transaction. As such, the impact on the consolidated financial statements cannot be estimated at this time. Issuance of Stock Options On February 14, 2024, the Company issued stock options to members of the Company’s management team, including: (i) 1,000,000 stock options to Robert Prejean, President and Chief Executive Officer (the “Prejean 2024 Stock Options”), (ii) 380,000 stock options to David Johnson, Chief Financial Officer (the “Johnson 2024 Stock Options”), and (iii) 300,000 stock options to Michael Domino, President of the Directional tool Rentals Division (the “Domino 2024 Stock Options,” and together with the Prejean 2024 Stock Options and the Johnson 2024 Stock Options, the “2024 Stock Options”). Each of the 2024 Stock Options vest in substantially equal installments on each of the first three (3) anniversaries of the grant date. The 2024 Stock Options are exercisable at a price of $3.02 per share. Credit Agreement On March 15, 2024, the Company refinanced its revolving credit facility by entering into a second amended and restated revolving credit and term loan facility with PNC Bank, National Association (the “Credit Facility”). The Credit Facility provides for a revolving line of credit in a principal amount of up to $80,000,000 and a single draw term loan in a principal amount of $25,000,000 and matures in March 2029 Acquisition of Superior Drilling Products, Inc. On March 6, 2024, the Company announced its entry into an Agreement and Plan of Merger (the “SDPI Merger Agreement”) with Superior Drilling Products, Inc. (“SDPI”), DTI Merger Sub I, Inc. (“Merger Sub I”), and DTI Merger Sub II, LLC (“Merger Sub II”), pursuant to which, among other things, on the terms and subject to the conditions set forth in the SDPI Merger Agreement, (i) Merger Sub I will be merged with and into SDPI (the “First Event”), with SDPI continuing as the surviving corporation (the “Initial Surviving Corporation”), (ii) the Initial Surviving Corporation will be merged with Merger Sub II (the “Second Event,” and together with the First Event, the “SDPI Merger”), with Merger Sub II continuing as the surviving limited liability company (the “Surviving Company”), and (iii) following the consummation of the SDPI Merger, all of the property, rights, powers, privileges, and franchises of SDPI, the Initial Surviving Company, and the Surviving Company shall be vested in the Surviving Company as a wholly owned subsidiary of the Company. The consummation of the SDPI Merger is subject to certain customary mutual conditions, including the approval of SDPI’s shareholders holding at least a majority of the outstanding shares of SDPI common stock entitled to vote on the adoption of the SDPI Merger Agreement. The initial accounting for this business combination is in process which includes conducting a valuation analysis to value the assets and liabilities assumed as a result of the transaction. As such, the impact on the consolidated financial statements cannot be estimated at this time. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Accounting Policies [Abstract] | ||
Organization and Nature of Operations | Organization and Nature of Operations Drilling Tools International Corporation, a Delaware corporation (“DTIC” or the “Company”), is a global oilfield services company that designs, engineers, manufactures and provides a differentiated, rental-focused offering of tools for use in onshore and offshore horizontal and directional drilling operations, as well as other cutting-edge solutions across the well life cycle. On June 20, 2023 (the “Closing Date”), a merger transaction between Drilling Tools International Holdings, Inc. (“DTIH”), ROC Energy Acquisition Corp (“ROC”), and ROC Merger Sub, Inc., a directly, wholly owned subsidiary of ROC (“Merger Sub”), was completed (the “Merger”) pursuant to the initial merger agreement dated February 13, 2023 and subsequent amendment to the merger agreement dated June 5, 2023 collectively, (the “Merger Agreement”). In connection with the closing of the Merger, ROC changed its name to Drilling Tools International Corporation. The common stock of DTIC (“DTIC Common Stock” or the “Company’s Common Stock”) commenced trading on the Nasdaq Stock Market LLC (“Nasdaq”) under the symbol “DTI” on June 21, 2023. On March 15, 2024 (the “CTG Acquisition Date”), we entered into a Share Purchase Agreement (the “Share Purchase Agreement”) with Casing Technologies Group Limited (“CTG”), certain shareholders of CTG, and a representative of CTG. Pursuant to the terms of the Share Purchase Agreement, the Company acquired one hundred percent (100%) of the shares of CTG (the “CTG Acquisition”), which wholly owns Deep Casing Tools Limited (“Deep Casing”), an energy technology development company, for approximately £16.2 million, or $20.9 million, based on the British pound sterling to United States dollar exchange rate on the CTG Acquisition Date. For further details regarding the acquisition, refer to Note 3, “Business Combinations.” The Company’s United States (“U.S.”) operations have locations in Texas, California, Louisiana, Oklahoma, Pennsylvania, North Dakota, New Mexico, Utah, and Wyoming. The Company’s international operations are located in Canada, Scotland, Germany, Ukraine, UAE, and Saudi Arabia. Operations outside the U.S. are subject to risks inherent in operating under different legal systems and various political and economic environments. Among the risks are changes in existing tax laws and possible limitations on foreign investment. The Company does not engage in hedging activities to mitigate its exposure to fluctuations in foreign currency exchange rates. | Organization and Structure Drilling Tools International Corporation, a Delaware corporation (“DTIC” or the “Company”), manufactures, rents, inspects, and refurbishes downhole drilling tools primarily to companies in the oil and natural gas industry for bottom hole assemblies used in onshore and offshore horizontal and directional drilling. On June 20, 2023 (the “Closing Date”), a merger transaction between Drilling Tools International Holdings, Inc. (“DTIH”), ROC Energy Acquisition Corp (“ROC”), and ROC Merger Sub, Inc., a directly, wholly owned subsidiary of ROC (“Merger Sub”), was completed (the “Merger”, see Note 3, Merger Merger The Company’s United States (“U.S.”) operations have locations in Texas, California, Louisiana, Oklahoma, Pennsylvania, North Dakota, New Mexico, Utah, and Wyoming. The Company’s international operations are located in Canada with additional stocking points in Europe and the Middle East. Operations outside the U.S. are subject to risks inherent in operating under different legal systems and various political and economic environments. Among the risks are changes in existing tax laws and possible limitations on foreign investment. The Company does not engage in hedging activities to mitigate its exposure to fluctuations in foreign currency exchange rates. |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) as set forth by the Financial Accounting Standards Board (“FASB”) and pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”). References to US GAAP issued by the FASB in these notes to the accompanying unaudited condensed consolidated financial statements are to the FASB Accounting Standards Codifications (“ASC”) and Accounting Standards Update (“ASUs”). | Basis of Presentation The accompanying consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) as set forth by the Financial Accounting Standards Board (“FASB”) and pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”). References to US GAAP issued by the FASB in these notes to the accompanying consolidated financial statements are to the FASB Accounting Standards Codifications (“ASC”) and Accounting Standards Update (“ASU”). |
Unaudited Interim Financial Information | Unaudited Interim Financial Information The accompanying interim unaudited condensed consolidated financial statements included in this quarterly report have been prepared in accordance with U.S. GAAP and, in the opinion of the Company, contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of its financial position as of March 31, 2024, and its results of operations for the three months ended March 31, 2024 and 2023, and cash flows for the three months ended March 31, 2024 and 2023. The condensed consolidated balance sheet at December 31, 2023, was derived from the audited annual financial statements but does not contain all of the footnote disclosures from the annual financial statements. | |
COVID-19 Related Credits and Relief | COVID-19 As a response to the COVID-19 ERC benefits of nil and $4.3 million were included in selling, general, and administrative expense as an offset to the related compensation expenses in the consolidated statements of income and comprehensive income for the year ended December 31, 2023 and 2022, respectively. ERC benefits receivable of nil and $2.1 million were included in prepaid expenses and other current assets in the accompanying consolidated balance sheet as of December 31, 2023, and 2022, respectively. The Company received all ERC benefits receivables in January 2023, resulting in the ERC benefits receivable balance to be nil as December 31, 2023. Laws and regulations concerning government programs, including the ERC, are complex and subject to varying interpretations. Claims made under these programs may also be subject to retroactive audit and review. While the | |
Emerging Growth Company | Emerging Growth Company Section 102(b)(1) of the Jumpstart Our Business Startups Act (“JOBS Act”) exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging | Emerging Growth Company Section 102(b)(1) of the Jumpstart Our Business Startups Act (“JOBS Act”) exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging |
Use of Estimates | Use of Estimates The preparation of the unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenue and expenses and the disclosure of contingent assets and liabilities in the Company’s unaudited condensed consolidated financial statements and accompanying notes as of the date of the unaudited condensed consolidated financial statements. These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. Actual results may differ materially and adversely from these estimates. In the current macroeconomic and business environment affected by the Russia-Ukraine and Israel-Hamas conflicts and inflationary pressures, these estimates require increased judgment and carry a higher degree of variability and volatility. As events continue to evolve and additional information becomes available, these estimates may change materially in future periods. | Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenue and expenses and the disclosure of contingent assets and liabilities in the Company’s consolidated financial statements and accompanying notes as of the date of the consolidated financial statements. These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. Actual results may differ materially and adversely from these estimates. In the current macroeconomic and business environment affected by the Russia-Ukraine and Israel-Hamas conflicts and inflationary pressures, these estimates require increased judgment and carry a higher degree of variability and volatility. As events continue to evolve and additional information becomes available, these estimates may change materially in future periods. |
Principles of Consolidation | Principles of Consolidation The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated on consolidation. Further, the basis of consolidation incorporates the financial statements of our foreign entity, Casing Technologies Group Limited, which operates under UK Generally Accepted Accounting Principles (“UK GAAP”). Those financial statements are translated into US GAAP for consolidation purposes. The translation process adheres to established accounting standards and guidelines to ensure consistency and comparability across our consolidated financial statements. This approach enables us to accurately reflect the financial position, results of operations, and cash flows of our consolidated operations. | Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated on consolidation. |
Foreign Currency Translation and Transactions | Foreign Currency Translation and Transactions The Company has determined that the functional and reporting currency for its operations across the globe is the functional currency of the Company’s international subsidiaries. Accordingly, all foreign balance sheet accounts have been translated into United States dollars using the rate of exchange at the respective balance sheet date. Components of the unaudited condensed consolidated statements of income and comprehensive income have been translated at the average rates during the reporting period. Translation gains and losses are recorded in accumulated other comprehensive loss as a component of stockholders’ equity. Gains or losses arising from currency exchange rate fluctuations on transactions denominated in a currency other than the local functional currency are included in the unaudited condensed consolidated statements of income and comprehensive income. For the three months ended March 31, 2024 and 2023, the unrealized foreign currency fluctuation impacts on transactions included in the unaudited condensed consolidated statements of income and comprehensive income totaled approximately $28 thousand of gains and nil in losses, respectively. | Foreign Currency Translations and Transactions The Company has determined that the functional and reporting currency for its operations across the globe is the functional currency of the Company’s international subsidiaries. Accordingly, all foreign balance sheet accounts have been translated into United States dollars using the rate of exchange at the respective balance sheet date. Components of the consolidated statements of income and comprehensive income have been translated at the average rates for the year of the reporting period. Translation gains and losses are recorded in accumulated other comprehensive loss as a component of stockholders’ equity. Gains or losses arising from currency exchange rate fluctuations on transactions denominated in a currency other than the local functional currency are included in the consolidated statements of income and comprehensive income. For the year ended December 31, 2023, the aggregate foreign currency exchange rate fluctuations on transactions included in the consolidated statements of income and comprehensive income totaled approximately $0.1 million in losses. For the year ended December 31, 2022, the aggregate foreign currency exchange rate fluctuations on transactions included in the consolidated statements of income and comprehensive income totaled $0.2 million in gains, respectively. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue in accordance with Topic 842 (which addresses lease accounting) and Topic 606 (which addresses revenue from contracts with customers). The Company derives its revenue from two revenue types, tool rental services and product sales. Tool Rental Services Tool rental services consist of rental services, inspection services, and repair services. Tool rental services are accounted for under Topic 842. Owned tool rentals represent the most significant revenue type and are governed by the Company’s standard rental contract. The Company accounts for such rentals as operating leases. The lease terms are included in the contracts, and the determination of whether the Company’s contracts contain leases generally does not require significant assumptions or judgments. The Company’s lease revenues do not include material amounts of variable payments. Owned tool rentals represent revenue from renting tools that the Company owns. The Company does not generally provide an option for the lessee to purchase the rented equipment at the end of the lease. The Company recognizes revenues from renting tools on a straight-line basis. The Company’s rental contract periods are daily, monthly, or per well. As part of this straight-line methodology, when the equipment is returned, the Company recognizes as incremental revenue the excess, if any, between the amount the customer is contractually required to pay, which is based on the rental contract period applicable to the actual number of days the drilling tool was out on rent, over the cumulative amount of revenue recognized to date. In any given accounting period, the Company will have customers return the drilling tool and be contractually required to pay the Company more than the cumulative amount of revenue recognized to date under the straight-line methodology. Additionally, the Company has rental contracts that are based on usage, either on a per footage or per well basis. As these types of rental contracts primarily consist of variable lease payments, which are unknown at commencement, revenue is recognized when the changes in the factor on which the contingent lease payments are based occur. When the customer returns the rental equipment and the footage or usage becomes known, the Company recognizes revenue. The Company records the amounts billed to customers in excess of recognizable revenue as deferred revenue on its unaudited condensed consolidated balance sheet. As noted above, the Company is unsure of when the customer will return rented drilling tools. As such, the Company cannot provide a maturity analysis of future lease payments as it is unknown when the tool will be returned and what the customer will owe upon return of the tool. The Company’s drilling tools are generally rented for short periods of time (significantly less than a year). Lessees do not provide residual value guarantees on rented equipment. The Company expects to derive significant future benefits from its drilling tools following the end of the rental term. The Company’s rentals are generally short-term in nature, and its tools are typically rented for the majority of the time that the Company owns them. Product Sales Product sales consist of charges for rented tools that are damaged beyond repair, charges for lost-in-hole, lost-in-transit Revenue is recognized when control of promised goods or services is transferred to a customer in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To determine revenue recognition for its arrangements with customers, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company accounts for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance, and collectability of consideration is probable. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in the revenue standard. The transaction price is measured as consideration specified in a contract with a customer and excludes any sales incentives and taxes or other amounts collected on behalf of third parties. As each of the Company’s contracts with customers contain a single performance obligation to provide a product sale, the Company does not have any performance obligations requiring allocation of transaction prices. The performance obligation for made to order product sales is satisfied and revenue is recognized at a point in time when control of the asset transfers to the customer, which typically occurs upon delivery of the product or when the product is made available to the customer for pickup at the Company’s shipping dock. Additionally, pursuant to the contractual terms with the Company’s customers, the customer must notify the Company of, and purchase from the Company, any rented tools that are damaged beyond repair, lost-in-hole, lost-in-transit The Company does not have any revenue expected to be recognized in the future related to remaining performance obligations or contracts with variable consideration related to undelivered performance obligations. There was no revenue recognized in the current period from performance obligations satisfied in previous periods. Revenue per geographic location Revenue generated was concentrated within the United States. For the three months ended March 31, 2024 and 2023, the revenue generated within the United States was $32.3 million and $36.6 million, respectively, or 87% and 90% of total revenue. For the three months ended March 31, 2024 and 2023, the revenue generated outside of the United States, in Canada and International, was $4.7 million and $4.2 million, respectively, or 13% and 10% of total revenue. | Revenue Recognition The Company recognizes revenue in accordance with Topic 842 (which addresses lease accounting) and Topic 606 (which addresses revenue from contracts with customers). The Company derives its revenue from two revenue types, tool rental services and product sales. Tool Rental Services Tool rental services consist of rental services, inspection services, and repair services. Tool rental services are accounted for under Topic 842. Owned tool rentals represent the most significant revenue type and are governed by the Company’s standard rental contract. The Company accounts for such rentals as operating leases. The lease terms are included in the contracts, and the determination of whether the Company’s contracts contain leases generally does not require significant assumptions or judgments. Owned tool rentals represent revenue from renting tools that the Company owns. The Company does not generally provide an option for the lessee to purchase the rented equipment at the end of the lease. The Company recognizes revenues from renting tools on a straight-line basis. The Company’s rental contract periods are daily, monthly, or per well. As part of this straight-line methodology, when the equipment is returned, the Company recognizes as incremental revenue the excess, if any, between the amount the customer is contractually required to pay, which is based on the rental contract period applicable to the actual number of days the drilling tool was out on rent, over the cumulative amount of revenue recognized to date. In any given accounting period, the Company will have customers return the drilling tool and be contractually required to pay the Company more than the cumulative amount of revenue recognized to date under the straight-line methodology. Additionally, the Company has rental contracts that are based on usage, either on a per footage or per well basis. As these types of rental contracts primarily consist of variable lease payments, which are unknown at commencement, revenue is recognized when the changes in the factor on which the contingent lease payments are based occur. When the customer returns the rental equipment and the footage or usage becomes known, the Company recognizes revenue. The Company records the amounts billed to customers in excess of recognizable revenue as deferred revenue on its consolidated balance sheet. As noted above, the Company is unsure of when the customer will return rented drilling tools. As such, the Company cannot provide a maturity analysis of future lease payments as it is unknown when the tool will be returned and what the customer will owe upon return of the tool. The Company’s drilling tools are generally rented for short periods of time (significantly less than a year). Lessees do not provide residual value guarantees on rented equipment. The Company expects to derive significant future benefits from its drilling tools following the end of the rental term. The Company’s rentals are generally short-term in nature, and its tools are typically rented for the majority of the time that the Company owns them. Product Sales Product sales consist of charges for rented tools that are damaged beyond repair, charges for lost-in-hole, lost-in-transit Revenue is recognized when control of promised goods or services is transferred to a customer in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To determine revenue recognition for its arrangements with customers, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company accounts for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance, and collectability of consideration is probable. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in the revenue standard. The transaction price is measured as consideration specified in a contract with a customer and excludes any sales incentives and taxes or other amounts collected on behalf of third parties. As each of the Company’s contracts with customers contain a single performance obligation to provide a product sale, the Company does not have any performance obligations requiring allocation of transaction prices. The performance obligation for made to order product sales is satisfied and revenue is recognized at a point in time when control of the asset transfers to the customer, which typically occurs upon delivery of the product or when the product is made available to the customer for pickup at the Company’s shipping dock. Additionally, pursuant to the contractual terms with the Company’s customers, the customer must notify the Company of, and purchase from the Company, any rented tools that are damaged beyond repair, lost-in-hole, lost-in-transit The Company does not have any revenue expected to be recognized in the future related to remaining performance obligations or contracts with variable consideration related to undelivered performance obligations. There was no revenue recognized in the current period from performance obligations satisfied in previous periods. |
Contract Assets and Liabilities | Contract Assets and Contract Liabilities Contract assets represent the Company’s rights to consideration for work completed but not billed. As of March 31, 2024 and December 31, 2023, the Company had contract assets of $4.6 million and $4.2 million, respectively. Contract assets were recorded in accounts receivable, net in the accompanying unaudited condensed consolidated balance sheets. Contract liabilities consist of fees invoiced or paid by the Company’s customers for which the associated services have not been performed and revenue has not been recognized based on the Company’s revenue recognition criteria described above. As of March 31, 2024 and December 31, 2023, the Company did not have any material contract liabilities. All deferred revenues are expected to be recognized during the following 12 months, and they were recorded in accrued expenses and other current liabilities in the accompanying unaudited condensed consolidated balance sheets. | Contract Assets and Liabilities Contract assets represent the Company’s rights to consideration for work completed but not billed. As of December 31, 2023 and 2022, the Company had contract assets of $4.2 million and $4.8 million, respectively. Contract assets were recorded in accounts receivable, net in the accompanying consolidated balance sheets. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. The Company did not have any cash equivalents as of March 31, 2024 and December 31, 2023. | Cash and Cash Equivalents The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. The Company did not have any cash equivalents as of December 31, 2023 and 2022. |
Accounts Receivable, net | Accounts Receivable, net The Company’s accounts receivable consists principally of uncollateralized amounts billed to customers. These receivables are generally due within 30 to 60 days of the period in which the corresponding sales or rentals occur and do not bear interest. They are recorded at net realizable value less an allowance for doubtful accounts and are classified as accounts receivable, net on the unaudited condensed consolidated balance sheets. | |
Allowance for Credit Losses | Allowance for Credit Losses The Company considers both current conditions and reasonable and supportable forecasts of future conditions when evaluating expected credit losses for uncollectible receivable balances. In our determination of the allowance for credit losses, we pool receivables by days outstanding and apply an expected credit loss percentage to each pool. The expected credit loss percentage is determined using historical loss data adjusted for current conditions and forecasts of future economic conditions. Current conditions considered include predefined aging criteria, as well as specified events that indicate the balance due is not collectible. Reasonable and supportable forecasts used in determining the probability of future collection consider publicly available macroeconomic data and whether future credit losses are expected to differ from historical losses. As of March 31, 2024 and December 31, 2023, the allowance for credit losses totaled $1.4 million and $1.5 million, respectively. | Accounts Receivable and Allowance for Credit Losses The Company’s accounts receivable consists principally of uncollateralized amounts billed to customers. These receivables are generally due within 30 to 60 days of the period in which the corresponding sales or rentals occur and do not bear interest. They are recorded at net realizable value less an allowance for credit losses and are classified as account receivable, net on the consolidated balance sheets. The Company adopted ASU 2016-13, Financial Instruments - Credit Losses DTI considers both current conditions and reasonable and supportable forecasts of future conditions when evaluating expected credit losses for uncollectible receivable balances. In our determination of the allowance for credit losses, we pool receivables by days outstanding and apply an expected credit loss percentage to each pool. The expected credit loss percentage is determined using historical loss data adjusted for current conditions and forecasts of future economic conditions. Current conditions considered include predefined aging criteria, as well as specified events that indicate the balance due is not collectible. Reasonable and supportable forecasts used in determining the probability of future collection consider publicly available macroeconomic data and whether future credit losses are expected to differ from historical losses. The Company is not party to any off-balance The beginning accounts receivable balance as of January 1, 2022 was $20.0 million. The changes in the allowance for credit losses for the year ended December 31, 2023 were as follows (in thousands): Allowance for credit losses Balance at December 31, 2021 $ (1,222 ) Cumulative effect adjustments upon adoption of ASU 2016-13 — Additions during 2022 (336 ) Utilization of allowance for credit losses 60 Balance at December 31, 2022 (1,498 ) Additions during 2023 (117 ) Utilization of allowance for credit losses 157 Balance at December 31, 2023 (1,458 ) |
Business Combinations | Business Combinations The Company applies the acquisition method of accounting for business combinations, which requires us to make use of estimates and judgments to allocate the purchase price paid for acquisitions to the fair value of the assets and liabilities acquired. We account for contingent assets and liabilities at fair value on the acquisition date, and record changes to fair value associated with these assets and liabilities as a period cost as incurred. We use established valuation techniques and engage reputable valuation specialists to assist us with these valuations. We use a reasonable measurement period to record any adjustment related to the opening balance sheet (generally, less than one year). After the measurement period, changes to the opening balance sheet can result in the recognition of income or expense as period costs. To the extent these items stem from contingencies that existed at the balance sheet date, but are contingent upon the realization of future events, the cost is charged to expense at the time the future event becomes known. | |
Inventories, net | Inventories, net Inventories are stated at the lower of cost or net realizable value. Cost is determined by using the specific identification method or the first-in-first-out | Inventories, net Inventories are stated at the lower of cost or net realizable value. Cost is determined by using the specific identification method. Inventory that is obsolete or in excess of forecasted usage is written down to its net realizable value based on assumptions regarding future demand and market conditions. Inventory write-downs are charged to operating costs and establish a new cost basis for the inventory. Inventory includes raw material and finished goods. |
Property, Plant and Equipment, net | Property, Plant and Equipment, net Property, plant and equipment purchased by the Company are recorded at cost less accumulated depreciation. Depreciation is recorded using the straight-line method based on the estimated useful lives of the depreciable property or, for leasehold improvements, the remaining term of the lease, whichever is shorter. Assets not yet placed in use are not depreciated. Property, plant and equipment acquired as part of a business acquisition is recorded at acquisition date fair value with subsequent additions at cost. The cost of refurbishments and renewals are capitalized when the value of the property, plant or equipment is enhanced for an extended period. Expenditures to maintain and repair property, plant and equipment, which do not improve or extend the life of the related assets, are charged to operations when incurred. When property, plant and equipment is retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in operations. | Property, Plant and Equipment Property, plant and equipment purchased by the Company are recorded at cost less accumulated depreciation. Depreciation is recorded using the straight-line method based on the estimated useful lives of the depreciable property or, for leasehold improvements, the remaining term of the lease, whichever is shorter. Assets not yet placed in use are not depreciated. Property, plant and equipment acquired as part of a business acquisition is recorded at acquisition date fair value with subsequent additions at cost. The cost of refurbishments and renewals are capitalized when the value of the property, plant or equipment is enhanced for an extended period. Expenditures to maintain and repair property, plant and equipment, which do not improve or extend the life of the related assets, are charged to operations when incurred. When property, plant and equipment is retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in operations. |
Leases | Leases The Company adopted ASC 842, Leases use-of-hindsight non-lease The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from a lease. ROU assets and operating lease liabilities are recognized at the commencement date based on the present value of the future minimum lease payments over the lease term. Operating lease ROU assets also include the impact of any lease incentives. An amendment to a lease is assessed to determine if it represents a lease modification or a separate contract. Lease modifications are reassessed as of the effective date of the modification using an incremental borrowing rate based on the information available at the commencement date. For modified leases the Company also reassess the lease classification as of the effective date of the modification. The interest rate used to determine the present value of the future lease payments is the Company’s incremental borrowing rate because the interest rate implicit in the Company’s leases is not readily determinable. The incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments, and in economic environments where the leased asset is located. The Company’s lease terms include periods under options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option in the measurement of its ROU assets and liabilities. The Company considers contractual-based factors such as the nature and terms of the renewal or termination, asset-based factors such as physical location of the asset and entity-based factors such as the importance of the leased asset to the Company’s operations to determine the lease term. The Company generally uses the base, noncancelable, lease term when determining the ROU assets and lease liabilities. The right-of-use Property, Plant, and Equipment. Lessor Accounting Our leased equipment primarily consists of rental tools and equipment. Our agreements with our customers for rental equipment contain an operating lease component under ASC 842 because (i) there are identified assets, (ii) the customer has the right to obtain substantially all of the economic benefits from the use of the identified asset throughout the period of use and (iii) the customer directs the use of the identified assets throughout the period of use. Our lease contract periods are daily, monthly, per well or based on footage. Lease revenue is recognized on a straight-line basis based on these rates. We do not provide an option for the lessee to purchase the rented tools at the end of the lease and the lessees do not provide residual value guarantees on the rented assets. We recognized operating lease revenue within “Tool rental” on the unaudited condensed consolidated statements of income and comprehensive income. | Leases The Company adopted ASC 842, Leases use-of-hindsight non-lease The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from a lease. ROU assets and operating lease liabilities are recognized at the commencement date based on the present value of the future minimum lease payments over the lease term. Operating lease ROU assets also include the impact of any lease incentives. An amendment to a lease is assessed to determine if it represents a lease modification or a separate contract. Lease modifications are reassessed as of the effective date of the modification using an incremental borrowing rate based on the information available at the commencement date. For modified leases the Company also reassess the lease classification as of the effective date of the modification. The interest rate used to determine the present value of the future lease payments is the Company’s incremental borrowing rate because the interest rate implicit in the Company’s leases is not readily determinable. The incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments, and in economic environments where the leased asset is located. The Company’s lease terms include periods under options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option in the measurement of its ROU assets and liabilities. The Company considers contractual-based factors such as the nature and terms of the renewal or termination, asset-based factors such as physical location of the asset and entity-based factors such as the importance of the leased asset to the Company’s operations to determine the lease term. The Company generally uses the base, noncancelable, lease term when determining the ROU assets and lease liabilities. The right-of-use Property, Plant, and Equipment. Lessor Accounting Our leased equipment primarily consists of rental tools and equipment. Our agreements with our customers for rental equipment contain an operating lease component under ASC 842 because (i) there are identified assets, (ii) the customer has the right to obtain substantially all of the economic benefits from the use of the identified asset throughout the period of use and (iii) the customer directs the use of the identified assets throughout the period of use. Our lease contract periods are daily, monthly, per well or based on footage. Lease revenue is recognized on a straight-line basis based on these rates. We do not provide an option for the lessee to purchase the rented tools at the end of the lease and the lessees do not provide residual value guarantees on the rented assets. We recognized operating lease revenue within “Tool rental” on the consolidated statements of income and comprehensive income. |
Intangible Assets | Intangible Assets Intangible assets with finite useful lives include customer relationships, trade name, patents, non-compete | Intangibles Intangible assets with finite useful lives include customer relationships, trade name, patents, non-compete |
Goodwill | Goodwill Goodwill represents the excess of purchase price paid over the fair value of the net assets of acquired businesses. We evaluate Goodwill at least annually for impairment. Goodwill is considered impaired if the carrying amount of the reporting unit exceeds its estimated fair value. We conduct our annual assessment of the recoverability of goodwill as of December 31 of each year. We first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the goodwill impairment test. If the qualitative assessment indicates that it is more likely than not that the fair value of the reporting unit is less than its carrying amount or we elect not to perform a qualitative assessment, the quantitative assessment of goodwill test is performed. The goodwill impairment test is also performed whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If it is necessary to perform the quantitative assessment to determine if our goodwill is impaired, we will utilize a discounted cash flow analysis using management’s projections that are subject to various risks and uncertainties of revenues, expenses and cash flows as well as assumptions regarding discount rates, terminal value and control premiums. Estimates of future cash flows and fair value are highly subjective and inherently imprecise. These estimates can change materially from period to period based on many factors. Accordingly, if conditions change in the future, we may record impairment losses, which could be material to any particular reporting period. | |
Accounting for Impairment of Long-lived Assets | Accounting for Impairment of Long-lived Assets Long-lived assets with finite lives include property, plant and equipment and acquired intangible assets. The Company evaluates long-lived assets, including acquired intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets held and used is measured by comparison of the carrying amount of an asset or an asset group to estimated undiscounted future net cash flows expected to be generated by the asset or asset group. If the carrying amount of an asset exceeds these estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the assets exceeds the fair value of the asset or asset group. For the three months ended March 31, 2024 and 2023, management determined that there were no triggering events necessitating impairment testing of property, plant, and equipment or intangible assets. | Impairment of Long-Lived Assets Long-lived assets with finite lives include property, plant and equipment and acquired intangible assets. The Company evaluates long-lived assets, including acquired intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The recoverability of assets held and used is measured by comparison of the carrying amount of an asset or an asset group to estimated undiscounted future net cash flows expected to be generated by the asset or asset group. If the carrying amount of an asset exceeds these estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the assets exceeds the fair value of the asset or asset group. For the year ended December 31, 2023 and 2022, management determined that there were no triggering events necessitating impairment testing of property, plant, and equipment or intangible assets. |
Investments - Equity Securities | Investments - Equity Securities Equity securities are stated at fair value. Unrealized gains and losses are reflected in the unaudited condensed consolidated statements of income and comprehensive income. The Company periodically reviews the securities for other than temporary declines in fair value below cost and more frequently when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. As of March 31, 2024 and December 31, 2023, the Company believes the cost of the securities was recoverable in all material respects. | Investment - Equity Securities Equity securities are stated at fair value. Unrealized gains and losses are reflected in the consolidated statements of income and comprehensive income. The Company periodically reviews the securities for other than temporary declines in fair value below cost and more frequently when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For the year ended December 31, 2023 and 2022, the Company believes the cost of the securities was recoverable in all material respects. |
Redeemable Convertible Preferred Stock | Redeemable Convertible Preferred Stock Prior to the closing of the Merger, there were outstanding shares of DTIH Series A redeemable convertible preferred stock (the “Redeemable Convertible Preferred Stock”), which was classified outside of permanent equity in mezzanine equity on the unaudited condensed consolidated balance sheets as it was redeemable on a fixed date. Upon the closing of the Merger, all of the Redeemable Convertible Preferred Stock was canceled in exchange for DTIC common stock and the right to receive cash. Accordingly, there was no Redeemable Convertible Preferred Stock outstanding as of March 31, 2024 or December 31, 2023. | Redeemable Convertible Preferred Stock Prior to the closing of the Merger, there were outstanding shares of DTIH Series A redeemable convertible preferred stock (the “redeemable convertible preferred stock”), which was classified outside of permanent equity in mezzanine equity on the consolidated balance sheets as it was redeemable on a fixed date. Upon the closing of the Merger, all of the redeemable convertible preferred stock was canceled in exchange for DTIC Common Stock and the right to receive cash. Accordingly, there was no redeemable convertible preferred stock outstanding as of December 31, 2023. As of December 31, 2022, the carrying value of the redeemable convertible preferred stock outstanding was $17.9 million. |
Preferred Stock | Preferred Stock As of the closing of the Merger, the Board of Directors have expressly granted authority to issue shares of preferred stock, in one or more series, and to fix for each such series such voting powers, full or limited, and such designations, preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof as shall be stated and expressed in the resolution or resolutions adopted by the Board of Directors providing for the issue of such series and as may be permitted by the Delaware General Corporation Law. The number of authorized shares of preferred stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the voting power of all of the then outstanding shares of the capital stock of the corporation entitled to vote generally in the election of directors, voting together as a single class, without a separate vote of the holders of the preferred stock, or any series thereof, unless a vote of any such holders is required pursuant to any preferred stock designation. The Board of Directors of the Company has not issued any shares of any classes or series of preferred stock as of March 31, 2024, and through the date these financial statements were available to be issued. | Preferred Stock As of the closing of the Merger, the Board have expressly granted authority to issue shares of preferred stock, in one or more series, and to fix for each such series such voting powers, full or limited, and such designations, preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof as shall be stated and expressed in the resolution or resolutions adopted by the Board providing for the issue of such series and as may be permitted by the Delaware General Corporation Law. The number of authorized shares of preferred stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the voting power of all of the then outstanding shares of the capital stock of the corporation entitled to vote generally in the election of directors, voting together as a single class, without a separate vote of the holders of the preferred stock, or any series thereof, unless a vote of any such holders is required pursuant to any preferred stock designation. The Board of the Company has not issued any shares of any classes or series of preferred stock as of December 31, 2023, and through the date these financial statements were available to be issued. |
Cost of Revenue | Cost of Revenue The Company recorded all operating costs associated with its product sales and tool rental revenue streams in cost of product sale revenue and cost of tool rental revenue, respectively, in the unaudited condensed consolidated statements of income and comprehensive income. All indirect operating costs, including labor, freight, contract labor and others, are included in selling, general, and administrative expense in the unaudited condensed consolidated statements of income and comprehensive income. | Cost of Revenue The Company recorded all operating costs associated with its product sales and tool rental revenue streams in cost of product sale revenue and cost of tool rental revenue, respectively, in the consolidated statements of |
Stock-Based Compensation | Stock-Based Compensation The Company recognizes stock-based compensation expenses over the requisite service period. The Company historically granted stock-based compensation awards with performance based vesting conditions. These options all vested upon the closing of the merger with ROC. Subsequent to the closing of the merger with ROC, the Company’s stock-based compensation awards are subject only to service based vesting conditions. Pursuant to ASC 718-10-35-8, of the award as if the award was, in-substance, | Stock-Based Compensation The Company accounts for stock-based compensation in accordance with ASC 718, Compensation—Stock Compensation (“ASC 718”). ASC 718 requires that the cost of awards of equity instruments offered in exchange for employee services, including employee stock options and restricted stock awards, be measured based on the grant- date fair value of the award. The Company determines the fair value of stock options granted using the Black-Scholes- Merton option-pricing model (“Black-Scholes model”) and recognizes the cost over the period during which an employee is required to provide service in exchange for the award, generally the vesting period, with forfeitures accounted for as they occur. For any stock options granted prior to the Company’s common stock being publicly traded on June 21, 2023, the Company estimated the fair value of its common stock as of the grant date and used these estimates as inputs into the Black-Scholes model. The Board considered numerous objective and subjective factors to determine the fair value of the Company’s common stock at each meeting in which awards were approved. The factors considered include, but were not limited to: (i) the results of contemporaneous independent third-party valuations of the Company’s common stock; (ii) the prices, rights, preferences, and privileges of the redeemable convertible preferred stock relative to those of its common stock; (iii) the lack of marketability of the Company’s common stock; (iv) actual operating and financial results; (v) current business conditions and projections; (vi) the likelihood of achieving a liquidity event, such as an initial public offering or sale of the Company, given prevailing market conditions; and (vii) precedent transactions involving the Company’s shares. For the year ended December 31, 2023, the Company did not grant any stock options. For any grants of stock options subsequent to the Company being publicly traded, the Company will use the quoted market price as of the grant date as an input into the Black-Scholes model. |
Earnings Per Share | Earnings Per Share Basic earnings per share is computed by dividing the net income (loss) by the weighted-average number of common shares outstanding for the period. Diluted earnings is computed by adjusting net income (loss) to reallocate undistributed earnings based on the potential impact of dilutive securities. Diluted earnings is computed by dividing the diluted net income (loss) by the weighted-average number of common shares outstanding for the period, including potential dilutive common stock. For the purposes of this calculation, outstanding stock options and Redeemable Convertible Preferred Stock are considered potential dilutive common stock and are excluded from the computation of net loss per share if their effect is anti-dilutive. The Redeemable Convertible Preferred Stock did not contractually entitle its holders to participate in profits or losses. As such, it was not treated as a participating security in periods of net income or net loss. | Earnings Per Share Basic earnings per share is computed by dividing the net income (loss) by the weighted-average number of common shares outstanding for the period. Diluted earnings is computed by adjusting net income (loss) to reallocate undistributed earnings based on the potential impact of dilutive securities. Diluted earnings is computed by dividing the diluted net income (loss) by the weighted-average number of common shares outstanding for the period, including potential dilutive common stock. For the purposes of this calculation, outstanding stock options and redeemable convertible preferred stock are considered potential dilutive common stock and are excluded from the computation of net loss per share if their effect is anti-dilutive. The redeemable convertible preferred stock did not contractually entitle its holders to participate in profits or losses. As such, it was not treated as a participating security in periods of net income or net loss. |
Income Taxes | Income Taxes Income taxes are provided for the tax effects of transactions reported in the unaudited condensed consolidated financial statements and consist of taxes currently due plus deferred taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the unaudited condensed consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred income tax expense represents the change during the period in the deferred tax assets and liabilities. The Company is subject to state income taxes in various jurisdictions. The Company follows guidance issued by the FASB in accounting for uncertainty in income taxes. This guidance clarifies the accounting for income taxes by prescribing the minimum recognition threshold an income tax position is required to meet before being recognized in the unaudited condensed consolidated financial statements and applies to all income tax positions. Each income tax position is assessed using a two-step Company believes there are no tax positions taken or expected to be taken that would significantly increase or decrease unrecognized tax benefits within twelve months of the reporting date. The Company records income tax related interest and penalties, if applicable, as a component of the provision for income tax expense. However, there were no amounts recognized relating to interest and penalties in the unaudited condensed consolidated statements of income and comprehensive income for the three months ended March 31, 2024 and 2023. | Income Taxes Income taxes are provided for the tax effects of transactions reported in the consolidated financial statements and consist of taxes currently due plus deferred taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred income tax expense represents the change during the period in the deferred tax assets and liabilities. The Company is subject to state income taxes in various jurisdictions. The Company follows guidance issued by the FASB in accounting for uncertainty in income taxes. This guidance clarifies the accounting for income taxes by prescribing the minimum recognition threshold an income tax position is required to meet before being recognized in the consolidated financial statements and applies to all income tax positions. Each income tax position is assessed using a two-step The Company records income tax related interest and penalties, if applicable, as a component of the provision for income tax expense. However, there were no amounts recognized relating to interest and penalties in the consolidated statements of income and comprehensive income for the year ended December 31, 2023 and 2022. |
Derivative Financial Instruments | Derivative Financial Instruments From time to time, the Company may enter into derivative instruments to manage exposure to interest rate fluctuations. During 2016, the Company entered into an interest swap agreement with respect to amounts outstanding under its revolving line of credit. The Company’s interest rate swap is a pay-fixed, This arrangement was designed to manage exposure to interest rate fluctuations by effectively exchanging existing obligations to pay interest based on floating rates for obligations to pay interest based on a fixed rate. These derivatives are marked-to-market For the three months ended March 31, 2023, the Company recognized an unrealized gain due to the change in fair value of its interest rate swap of approximately $0.1 million. The interest swap agreement was settled on July 10, 2023. No new interest swaps were entered into subsequently or during the three months ended March 31, 2024. | Derivative Financial Instruments From time to time, the Company may enter into derivative instruments to manage exposure to interest rate fluctuations. During 2016, the Company entered into an interest swap agreement with respect to amounts outstanding under its revolving line of credit. The Company’s interest rate swap is a pay-fixed, This arrangement was designed to manage exposure to interest rate fluctuations by effectively exchanging existing obligations to pay interest based on floating rates for obligations to pay interest based on a fixed rate. These derivatives are marked-to-market For the year ended December 31, 2022, the Company recognized an unrealized gain due to the change in fair value of its interest rate swap of $1.4 million. The interest swap agreement was settled on July 10, 2023. Upon settlement, the swap had a fair value of $0.4 million. For the year ended December 31, 2023, the settlement resulted in a realized loss of $4 thousand. The realized losses are included in other expense, net in the consolidated statements of income and comprehensive income. |
Fair Value Measurements | Fair Value Measurements Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. There is a hierarchy based upon the transparency of inputs used in the valuation of an asset or liability. Classification within the hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The valuation hierarchy contains three levels: Level 1 Level 2 Level 3 The asset or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. In determining the appropriate levels, the Company performs a detailed analysis of the assets and liabilities that are measured and reported on a fair value basis. At each reporting period, all assets and liabilities for which the fair value measurement is based on significant unobservable inputs are classified as Level 3. Asset and liabilities measured at fair value are summarized as follows (in thousands): Assets at Fair Value as of March 31, 2024 Level 1 Level 2 Level 3 Total Investments, equity securities $ 1,137 $ — $ — $ 1,137 Total assets at fair value $ 1,137 $ — $ — $ 1,137 Assets at Fair Value as of December 31, 2023 Level 1 Level 2 Level 3 Total Investments, equity securities $ 888 $ — $ — $ 888 Total assets at fair value $ 888 $ — $ — $ 888 As of March 31, 2024 and December 31, 2023, the Company did not have any Level 2 or 3 assets or liabilities. | Fair Value Measurements Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. There is a hierarchy based upon the transparency of inputs used in the valuation of an asset or liability. Classification within the hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The valuation hierarchy contains three levels: Level 1 Level 2 Level 3 The asset or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. In determining the appropriate levels, the Company performs a detailed analysis of the assets and liabilities that are measured and reported on a fair value basis. At each reporting period, all assets and liabilities for which the fair value measurement is based on significant unobservable inputs are classified as Level 3. Asset and liabilities measured at fair value are summarized as follows (in thousands): Assets at Fair Value as of December 31, 2023 Level 1 Level 2 Level 3 Total Investments, equity securities $ 888 $ — $ — $ 888 Total assets at fair value $ 888 $ — $ — $ 888 Assets at Fair Value as of December 31, 2022 Level 1 Level 2 Level 3 Total Investments, equity securities $ 1,143 $ — $ — $ 1,143 Interest rate swap — 476 — 476 Total assets at fair value $ 1,143 $ 476 $ — $ 1,619 As of December 31, 2023 and 2022, the Company did not have any Level 3 assets or liabilities. |
Fair value of Financial Instruments | Fair value of Financial Instruments The Company’s financial instruments consist of cash, accounts receivable, and accounts payable. The carrying amount of such instruments approximates fair value due to their short-term nature. | Fair Value of Financial Instruments The Company’s financial instruments consist primarily of cash, accounts receivable, and accounts payable. The carrying amount of such instruments approximates fair value due to their short-term nature. |
Concentration of Credit Risk and Other Risks and Uncertainties | Concentration of Credit Risk and Other Risks and Uncertainties The Company’s customer concentration may impact its overall credit risk, either positively or negatively, in that these entities may be similarly affected by changes in economic or other conditions affecting the oil and gas industry. During the three months ended March 31, 2024 and 2023, the Company generated approximately 30.0% and 31.0%, respectively, of its revenue from 2 customers. Amounts due from these customers included in accounts receivable at March 31, 2024 and December 31, 2023 were approximately $6.6 million and $9.3 million, respectively. During the three months ended March 31, 2024, the Company had 2 vendor that represented approximately 30% of its vendor purchases. During the three months ended March 31, 2023, the Company had 1 vendor that represented approximately 11% of its vendor purchases. Amounts due to these vendors included in accounts payable at March 31, 2024 and December 31, 2023 were approximately $3.7 million and $3.4 million, respectively. Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash. The Company maintains accounts in federally insured financial institutions in excess of federally insured limits. Management believes the Company is not exposed to significant credit risk due to the financial position of the depository institutions in which these deposits are held and of the money market funds in which these investments are made. | Concentration of Credit Risk The Company’s customer concentration may impact its overall credit risk, either positively or negatively, in that these entities may be similarly affected by changes in economic or other conditions affecting the oil and gas industry. For the year ended December 31, 2023, the Company generated approximately 39% of its revenue from three customers. For the year ended December 31, 2022, the Company generated approximately 28% of its revenue from two customers. Amounts due from these customers included in accounts receivable at December 31, 2023 and 2022, were approximately $11.1 million and $8.6 million, respectively. For the year ended December 31, 2023, the Company had two vendors that represented approximately 23% of its vendor purchases. For the year ended December 31, 2022, the Company had one vendor that represented approximately 12% of its vendor purchases. Amounts due to these vendors included in accounts payable at December 31, 2023 and 2022 were approximately $0.3 million and $0.9 million, respectively. Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash. The Company maintains accounts in federally insured financial institutions in excess of federally insured limits. Management believes the Company is not exposed to significant credit risk due to the financial position of the depository institutions in which these deposits are held and of the money market funds in which these investments are made. |
Operating Segment | Operating Segment Operating segments are identified as components of an enterprise about which discrete financial information is available for evaluation by the chief operating decision-maker (“CODM”) in deciding resource allocation and assessing performance. The Company’s Chief Executive Officer is the CODM. The Company’s CODM reviews financial information presented on a consolidated basis for the purposes of making operations decisions, allocating resources and evaluating financial performance. Consequently, the Company has determined it operates in one operating and reportable segment. | Operating Segment Operating segments are identified as components of an enterprise about which discrete financial information is available for evaluation by the chief operating decision-maker (“CODM”) in deciding resource allocation and assessing performance. The Company’s Chief Executive Officer works as the CODM. The Company’s CODM reviews financial information presented on a consolidated basis for the purposes of making operations decisions, allocating resources and evaluating financial performance. Consequently, the Company has determined it operates in one operating and reportable segment. |
Accounting Standards Issued But Not Yet Effective | Accounting Standards Issued But Not Yet Effective In December 2023, FASB issued Accounting Standard Update (“ASU”) 2023-09, In November 2023, FASB issued ASU 2023-07, | Accounting Standards Issued Not Yet Effective In December 2023, FASB issued Accounting Standard Update (“ASU”) 2023-09, In November 2023, FASB issued ASU 2023-07, |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Accounting Policies [Abstract] | ||
Schedule of Allowance For Credit Losses | The beginning accounts receivable balance as of January 1, 2022 was $20.0 million. The changes in the allowance for credit losses for the year ended December 31, 2023 were as follows (in thousands): Allowance for credit losses Balance at December 31, 2021 $ (1,222 ) Cumulative effect adjustments upon adoption of ASU 2016-13 — Additions during 2022 (336 ) Utilization of allowance for credit losses 60 Balance at December 31, 2022 (1,498 ) Additions during 2023 (117 ) Utilization of allowance for credit losses 157 Balance at December 31, 2023 (1,458 ) | |
Summary of Asset and Liabilities Measured at Fair Value | Asset and liabilities measured at fair value are summarized as follows (in thousands): Assets at Fair Value as of March 31, 2024 Level 1 Level 2 Level 3 Total Investments, equity securities $ 1,137 $ — $ — $ 1,137 Total assets at fair value $ 1,137 $ — $ — $ 1,137 Assets at Fair Value as of December 31, 2023 Level 1 Level 2 Level 3 Total Investments, equity securities $ 888 $ — $ — $ 888 Total assets at fair value $ 888 $ — $ — $ 888 | Asset and liabilities measured at fair value are summarized as follows (in thousands): Assets at Fair Value as of December 31, 2023 Level 1 Level 2 Level 3 Total Investments, equity securities $ 888 $ — $ — $ 888 Total assets at fair value $ 888 $ — $ — $ 888 Assets at Fair Value as of December 31, 2022 Level 1 Level 2 Level 3 Total Investments, equity securities $ 1,143 $ — $ — $ 1,143 Interest rate swap — 476 — 476 Total assets at fair value $ 1,143 $ 476 $ — $ 1,619 |
REVISION OF PREVIOUSLY ISSUED_2
REVISION OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Prior Period Adjustment [Abstract] | ||
Summary of Effects of Corrections of Errors | The Company evaluated the errors described above (and quantified in the table below), both qualitatively quantitatively unaudited consolidated financial statements presented herein as of and for the three months ended March 31, 2023 have been revised to correct the errors described above in accordance with SEC SAB Topic 1.M, as codified in ASC 250. For the three months ended March 31, Unaudited Condensed Consolidated Statement of As Previously Adjustment As Non-cash $ (220 ) $ 1,360 $ 1,140 Provision for excess and obsolete inventory — 17 17 Provision for excess and obsolete property and equipment — 117 117 Inventories, net (1,442 ) 1,558 116 Operating lease liabilities 274 (1,360 ) (1,086 ) Accounts payable 5,765 (2,557 ) 3,208 Accrued Expenses 207 (3,387 ) (3,180 ) Purchase of property, plant and equipment (10,815 ) 3,748 (7,067 ) Proceeds from sale of lost-in-hole 5,315 504 5,819 ROU assets obtained in exchange for lease liabilities 2,516 (1,156 ) 1,360 Purchases of inventory included in accounts payable and accrued expenses and other current liabilities — 1,575 1,575 Purchases of property and equipment included in accounts payable and accrued expenses and other current liabilities — 4,369 4,369 | The following table presents (in thousands) the effects of the corrections of the errors described above: For the year ended December 31, 2022 Consolidated Statement of Cash Flows As Previously Adjustment As Revised Non-cash $ (3,768 ) $ 7,907 $ 4,139 Provision for excess and obsolete inventory — 45 45 Provision for excess and obsolete property and equipment — 510 510 Inventories, net (940 ) 34 (906 ) Operating lease liabilities 3,733 (7,907 ) (4,174 ) Accounts payable (981 ) (451 ) (1,432 ) Purchase of property, plant and equipment (23,753 ) (935 ) (24,688 ) Proceeds from sale of lost-in-hole 20,319 797 21,116 ROU assets obtained in exchange for lease liabilities 9,451 (1,544 ) 7,907 Purchases of inventory included in accounts payable and accrued expenses and other current liabilities — 79 79 Purchases of property and equipment included in accounts payable and accrued expenses and other current liabilities — 372 372 |
BUSINESS COMBINATION (Tables)
BUSINESS COMBINATION (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Business Combinations [Abstract] | ||
Summary of Assets Acquired and Liabilities Assumed in Connection with Acquisition | The assets acquired and liabilities assumed in connection with the CTG Acquisition were recorded at their fair values on the CTG Acquisition Date as follows (in thousands): Assets Cash $ 2,674 Accounts receivable, net 3,781 Inventories, net 4,282 Prepaid expenses and other current assets 189 Property, plant and equipment , net 1,647 Operating lease ROU asset 315 Intangible assets, net 8,065 Goodwill 2,618 Total assets acquired $ 23,571 Liabilities Accounts payable 2,656 Accrued expenses and other current liabilities (295 ) Current portion of operating lease liabilities 95 Operating lease liabilities, less current portion 180 Total liabilities assumed $ 2,636 Total consideration transferred $ 20,935 | |
Summary of Identified Intangible Assets, Estimated Useful Lives and Methodologies Used to Determine Fair Values | The following table sets forth the amounts allocated to the identified intangible assets, the estimated useful lives of those intangible assets as of the CTG Acquisition Date, and the methodologies used to determine the fair values of those intangible assets ($ in thousands): Fair value Useful life Fair value methodology Intangible assets Trade names $ 819 15 Relief from royalty method Developed Technology 3,269 20 Relief from royalty method Customer relationships 3,977 20 Multi-period excess earnings method of the income approach Total intangible assets $ 8,065 | |
Summary of Unaudited Supplemental Pro Forma Financial Information | The unaudited supplemental pro forma financial results below for the three months ended March 31, 2024 and 2023, combine the consolidated results of the Company and CTG, giving effect to the CTG Acquisition as if it had been completed on January 1, 2023. This unaudited supplemental pro forma financial information is presented for informational purposes only and is not indicative of future operations or results had the acquisition been completed as of January 1, 2023, or any other date. Three months ended (in thousands) 2024 2023 Pro forma revenue $ 40,333 $ 45,308 Pro forma net income $ 2,420 $ 6,287 | |
Summary of Common Stock Outstanding Immediately after Merger | The following table presents the total DTIC Common Stock outstanding immediately after the closing of the Merger: Exchange of ROC common stock not subject to possible redemption for DTIC Common Stock upon Merger 3,403,500 Conversion of ROC Public Rights into shares of DTIC Common Stock 2,070,000 Conversion of ROC Private Rights into shares of DTIC Common Stock 79,600 Exchange of ROC common stock subject to possible redemption that was not redeemed for DTIC Common Stock 158,621 Subtotal - Merger, net of redemptions 5,711,721 Issuance of DTIC Common Stock in connection with PIPE Financing 2,970,296 Exchange of DTIH common stock outstanding as of December 31, 2022 for DTIC Common Stock 11,951,137 Exchange of DTIH redeemable convertible preferred stock outstanding as of December 31, 2022 for DTIC Common Stock 6,719,641 Issuance of shares as stock-based compensation to former DTIH stockholders as 337,429 Issuance of DTIC Common Stock to former holders of DTIH redeemable 2,042,181 Net exercise of stock options by DTIH stockholder 36,163 Total - DTIC Common Stock outstanding as a result of Merger, PIPE Financing, 29,768,568 |
INVESTMENTS - EQUITY SECURITI_2
INVESTMENTS - EQUITY SECURITIES (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Investments, Debt and Equity Securities [Abstract] | ||
Summary of Cost and Fair Value of Investments in Equity Securities | The following table shows the cost and fair value of the Company’s investments in equity securities (in thousands): Cost Unrealized Fair March 31, 2024 $ 999 $ 138 $ 1,137 Cost Unrealized Fair December 31, 2023 $ 999 $ (111 ) $ 888 | The following table shows the cost and fair value of the Company’s investments in equity securities (in housands Cost Unrealized Fair Value December 31, 2023 $ 999 $ (111 ) $ 888 Cost Unrealized Fair Value December 31, 2022 $ 999 $ 144 $ 1,143 |
BALANCE SHEET DETAILS - CURRE_2
BALANCE SHEET DETAILS - CURRENT ASSETS AND CURRENT LIABILITIES (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Summary of Inventories, Net | The following table shows the components of inventory (in thousands): March 31, 2024 December 31, 2023 Raw materials $ 8,823 $ 5,022 Finished goods 2,673 16 Total inventories 11,496 5,038 Allowance for obsolete inventory (55 ) (4 ) Inventories, net $ 11,441 $ 5,034 | Inventories, net The following table shows the components of inventory (in thousands): December 31, 2023 December 31, 2022 Raw materials $ 5,022 $ 3,377 Finished goods 16 115 Total inventories 5,038 3,492 Allowance for obsolete inventory (4 ) (211 ) Inventories, net 5,034 3,281 |
Summary of Prepaid Expenses and Other Current Assets | Prepaid expenses and other current assets The following table shows the components of prepaid e xp March 31, 2024 December 31, 2023 Prepaid expenses: Deposits on inventory $ 1,437 $ 2,146 Prepaid income tax 362 362 Prepaid insurance 530 1,110 Prepaid rent 399 372 Prepaid equipment 331 331 Prepaid other 172 214 Other current assets: Other $ — $ 18 Total $ 3,231 $ 4,553 | Prepaid expenses and other current assets The following table shows the components of prepaid expenses and other current assets (in thousands): December 31, 2023 December 31, 2022 Prepaid expenses: ERC benefits receivable $ — $ 2,117 Deposits on inventory 2,146 680 Prepaid income tax 362 — Prepaid insurance 1,110 358 Prepaid rent 372 381 Prepaid equipment 331 179 Prepaid other 214 173 Other current assets: Interest rate swap asset $ — $ 476 Other 18 17 Total $ 4,553 $ 4,381 |
Summary of Accrued Expenses and Other Current Liabilities | Accrued expenses and other current liabilities The following table shows the components of accrued expenses and other current liabilities (in thousands): March 31, 2024 December 31, 2023 Accrued expenses: Accrued compensation and related benefits $ 3,878 $ 4,999 Accrued insurance 435 978 Accrued transaction advisory fees 1,000 1,000 Accrued professional services 72 189 Accrued interest 126 58 Accrued property taxes 314 60 Accrued monitoring fees 373 373 Other 760 147 Other current liabilities: Income tax payable $ 1,757 $ 1,586 Sales tax payable (413 ) 71 Unbilled lost-in-hole 96 76 Deferred revenue 44 1,042 Total accrued expenses and other current liabilities $ 8,442 $ 10,579 | Accrued expenses and other current liabilities The following table shows the components of accrued expenses and other current liabilities (in thousands): December 31, 2023 December 31, 2022 Accrued expenses: Accrued compensation and related benefits $ 4,999 $ 3,392 Accrued insurance 978 525 Accrued transaction advisory fees 1,000 — Accrued professional services 189 509 Accrued interest 58 62 Accrued property taxes 60 41 Accrued monitoring fee 373 Other 147 38 Other current liabilities: Income tax payable $ 1,586 $ 1,780 Sales tax payable 71 587 Unbilled lost-in-hole 76 282 Deferred revenue 1,042 83 Total accrued expenses and other current liabilities $ 10,579 $ 7,299 |
PROPERTY, PLANT AND EQUIPMENT_2
PROPERTY, PLANT AND EQUIPMENT, NET (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Property, Plant and Equipment [Abstract] | ||
Summary of Component of Property, Plant and Equipment, Net | The following table shows the component of property, plant and equipment, net (in thousands): Estimated Useful March 31, December 31, Rental tools and equipment 5-10 195,460 188,949 Buildings and improvements 5-40 6,686 6,672 Office furniture, fixtures and equipment 3-5 2,269 2,389 Transportation and equipment 3-5 783 793 Total property, plant and equipment 205,198 198,803 Less: accumulated deprecation (134,602 ) (133,003 ) Property, plant and equipment, net (excluding construction in progress) 70,596 65,800 Construction in progress — — Property, plant and equipment, net $ 70,596 $ 65,800 | The following table shows the component of property, plant and equipment, net (in thousands): Estimated Useful December 31, December 31, Rental tools and equipment 5-10 188,949 160,973 Buildings and improvements 5-40 6,672 5,781 Office furniture, fixtures and equipment 3-5 2,389 2,101 Transportation and equipment 3-5 793 827 Total property, plant and equipment 198,803 169,682 Less: accumulated depreciation (133,003 ) (125,537 ) Property, plant and equipment, net (excluding construction in progress) 65,800 44,145 Construction in progress — 9 Property, plant and equipment, net $ 65,800 $ 44,154 |
INTANGIBLE ASSETS, NET (Tables)
INTANGIBLE ASSETS, NET (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Summary of Components of Intangible Assets, Net | The following table shows the components of intangible assets, net (in thousands): Useful Lives March 31, 2024 December 31, 2023 Trade name 10-15 $ 2,079 $ 1,280 Developed Technology 13-20 3,462 270 Customer Relationships 20 3,882 — Total intangible assets 9,423 1,550 Less: accumulated amortization (1,365 ) (1,334 ) Intangible assets, net $ 8,058 $ 216 | The following table shows the components of intangible assets, net (in thousands): Useful Lives December 31, 2023 December 31, 2022 Trade name 10-13 $ 1,280 $ 1,280 Technology 13 270 270 Total intangible assets 1,550 1,550 Less: accumulated amortization (1,334 ) (1,287 ) Intangible assets, net $ 216 $ 263 |
LEASES (Tables)
LEASES (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Leases [Abstract] | ||
Summary of Components of Lease Expense | For the three months ended March 31, 2024, the components of the Company’s lease expense were as follows (in thousands): Three months ended Three months ended Operating Lease Cost $ 1,482 $ 1,518 Short-term Lease Cost 35 30 Variable Lease Cost 88 84 Sublease Income — (46 ) Total Lease Cost $ 1,605 $ 1,586 | For the year ended December 31, 2023 and 2022, the components of the Company’s lease expense were as follows (in thousands): Year Ended Year Ended Operating Lease Cost $ 6,077 $ 5,722 Short-term Lease Cost 130 143 Variable Lease Cost 320 319 Sublease Income (76 ) (183 ) Total Lease Cost $ 6,451 $ 6,001 |
Summary of Supplemental Balance Sheet Information Related to Leases | Supplemental balance sheet information related to leases was as follows (in thousands): Three months ended Weighted-average remaining lease term (in years) 6.45 Weighted average discount rate 5.86 % Three months ended Cash paid for amounts included in the measurement of lease liabilities 1,350 | Supplemental balance sheet information related to leases was as follows (in thousands): Year Ended Year Ended Weighted-average remaining lease term (in years) 6.55 7.53 Weighted average discount rate 5.80 % 5.34 % Year Ended Year Ended Cash paid for amounts included in the measurement of lease liabilities 5,538 5,003 |
Summary of Future Undiscounted Cash Flows | Future undiscounted cash flows for each of the next five years and thereafter and reconciliation to the lease liabilities recognized on the unaudited condensed consolidated balance sheet as of March 31, 2024 were as follows (in thousands): 2024 $ 3,759 2025 4,244 2026 3,719 2027 2,540 2028 1,978 Thereafter 5,677 Total lease payments $ 21,917 Less: imputed interest (3,550 ) Present value of lease liabilities $ 18,367 | Future undiscounted cash flows for each of the next five years and thereafter and reconciliation to the lease liabilities recognized on the consolidated balance sheet as of December 31, 2023 were as follows (in thousands): 2024 $ 4,923 2025 4,089 2026 3,522 2027 2,439 2028 1,939 Thereafter 5,605 Total lease payments $ 22,517 Less: imputed interest (3,666 ) Present value of lease liabilities $ 18,851 |
REVENUE (Tables)
REVENUE (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Summary of Disaggregation of Revenues by Category | The following table represents our revenues disaggregated by category: Year Ended Year Ended Tool Rental Services $ 119,239 $ 99,018 Product Sales 32,795 30,538 Total Revenue $ 152,034 $ 129,556 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income (Loss) Before Provision for (Benefit From) Income Taxes | he geographical breakdown of the Company’s income before provision for income taxes was as follows (in thousands): Year Ended December 31, 2023 2022 Domestic $ 17,352 $ 19,094 International 2,442 5,683 Profits before provision for income taxes $ 19,794 $ 24,777 |
Summary of Income Tax Expense Attributable to Income From Continuing Operations | Income tax expense attributable to income from continuing operations consists of (in thousands): Year Ended December 31, 2023 2022 Current provision for income taxes: Federal $ 162 $ 702 Foreign 656 1,444 State 785 472 Total current 1,603 2,618 Deferred tax expense (benefit): Federal 3,826 574 Foreign 34 488 State (417 ) 18 Total deferred tax expense: 3,443 1,080 Total provision for income taxes $ 5,046 $ 3,698 |
Schedule of Reconciliation of Federal Statutory Rate to Company's Effective Tax Rate | The following table presents a reconciliation of the federal statutory rate to the Company’s effective tax rate: Year Ended December 31, 2023 2022 U.S. federal tax benefit at statutory rate 21.0 % 21.0 % State taxes, net of federal benefit 1.9 % 2.1 % Permanent differences 3.6 % 2.0 % Foreign rate differential 0.2 % 0.5 % Valuation allowance 0.0 % -2.1 % Other -1.2 % -9.0 % Effective tax rate 25.5 % 14.5 % |
Schedule of Deferred Tax Assets and Deferred Tax Liabilities | The tax effects of temporary differences and carryforwards that give rise to significant portions of the deferred tax assets and deferred tax liabilities as of December 31, 2023 and 2022 are presented below (in thousands): Year Ended December 31, 2023 2022 Deferred tax assets Net operating loss carryforward $ 1,544 $ 3,378 Allowance for doubtful accounts 333 323 Share-based compensation 1,451 941 Bonus accrual 440 599 Inventory 130 53 Intangible assets 1,129 1,152 Other — 140 Gross deferred tax assets 5,028 6,587 Valuation allowance — — Net deferred tax assets 5,028 6,587 Deferred tax liabilities Depreciation on property, plant, and equipment (11,391 ) (8,958 ) Withholding tax on unremitted earnings (264 ) (72 ) Other — (742 ) Deferred tax liabilities (11,655 ) (9,772 ) Net deferred liabilities $ (6,627 ) $ (3,185 ) |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Summary of Options Outstanding | The following table summarizes options outstanding, as well as activity for the year ended December 31, 2023 (prior year amounts have been converted using the conversion ratio of 0.2282 applied in the Merger): Shares Weighted Weighted Average Aggregate OUTSTANDING, December 31, 2022 2,494,097 $ 4.04 3.93 $ 11,687 Granted — — — — Exercised (132,375 ) 5.04 — — Forfeited — — — — OUTSTANDING, December 31, 2023 2,361,722 4.02 3.37 — UNVESTED, December 31, 2023 — — — — EXERCISABLE, December 31, 2023 2,361,722 4.02 3.37 — |
OTHER EXPENSES, NET (Tables)
OTHER EXPENSES, NET (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Other Income and Expenses [Abstract] | ||
Summary of Components of Other Expenses, Net | The following table shows the components of other expenses, net for the three months ended March 31, 2024 and 2023 (in thousands): Three Months Ended Three Months Ended Transaction fees $ (889 ) $ — Other, net (247 ) (7 ) Interest income 11 47 Other expense, net $ (1,125 ) $ 40 | The following table shows the components of other expenses, net for the years ended December 31, 2023, and 2022 (in thousands): Year Ended Year Ended HHLLC stock-based compensation $ (2,339 ) $ — Transaction fees (3,640 ) — Other, net (428 ) (436 ) Interest income 48 52 Other expense, net $ (6,359 ) $ (384 ) |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Earnings Per Share [Abstract] | ||
Summary of Computation of The Company's Basic and Diluted Earnings Per Share | The following table sets forth the computation of the Company’s basic and diluted earnings per share for the three months ended March 31, 2024 and 2023 (in thousands except share and per share data): Three months ended March 31, 2024 2023 Numerator: Net income $ 3,126 $ 5,701 Less: Redeemable Convertible Preferred Stock dividends — (314 ) Net income attributable to common shareholders — basic $ 3,126 $ 5,387 Add: Redeemable Convertible Preferred Stock dividends — 314 Net income attributable to common shareholders — diluted $ 3,126 $ 5,701 Denominator Weighted-average common shares used in computing earnings per share — basic 29,768,568 11,951,137 Weighted-average effect of potentially dilutive securities: Effect of potentially dilutive time-based stock options — 1,006,729 Effect of potentially dilutive performance-based stock options — — Effect of potentially dilutive redeemable convertible preferred stock — 6,719,641 Weighted-average common shares outstanding — diluted 29,768,568 19,677,507 Earnings per share — basic $ 0.11 $ 0.45 Earnings per share — diluted $ 0.11 $ 0.29 | The following table sets forth the computation of the Company’s basic and diluted net earnings per share for the years ended December 31, 2023 and 2022 (in thousands, except share and per share data): Year Ended December 31, 2023 2022 Numerator: Net income $ 14,748 $ 21,080 Less: Redeemable convertible preferred stock (314 ) (1,189 ) Net income attributable to common $ 14,434 $ 19,891 Add: Redeemable convertible preferred stock 314 1,189 Net income attributable to common $ 14,748 $ 21,080 Denominator Weighted-average common shares used in 21,421,610 11,951,137 Weighted-average effect of potentially dilutive Effect of potentially dilutive time-based stock 488,997 1,006,729 Effect of potentially dilutive performance-based 45,202 — Effect of potentially dilutive redeemable convertible 3,175,215 6,719,641 Weighted-average common shares outstanding 25,131,024 19,677,507 Earnings per share — basic $ 0.67 $ 1.66 Earnings per share — diluted $ 0.59 $ 1.07 |
Summary of Company's Potentially Dilutive Securities Excluded | As of March 31, 2024, the Company’s potentially dilutive securities consisted of options to purchase common stock. As of March 31, 2023, the Company’s potentially dilutive securities consisted of redeemable convertible preferred stock and options to purchase common stock. Based on the amounts outstanding as of the three months ended March 31, 2024 and 2023, the Company excluded the following potential common shares from the computation of diluted earnings per share because including them would have had an anti-dilutive effect. The options excluded from the diluted earnings per share calculations were as follows: Three months ended 2024 2023 Time-based options outstanding 4,427,659 140,135 Total 4,427,659 140,135 Our performance-based stock options were excluded from the diluted earnings per share calculations for the three months ended March 31, 2024 because including them would have had an anti-dilutive effect. Our performance- based stock options were excluded from the diluted earnings per share calculations for the three months ended March 31, 2024 because including them would have had an anti-dilutive effect. Our performance-based stock options were also excluded from the diluted earnings per share calculations for the three months ended March 31, 2023 because all necessary performance conditions were not satisfied by March 31, 2023. The options excluded from the diluted earnings per share calculations were as follows: Three months ended 2024 2023 Performance-based options outstanding 534,063 534,063 Total 534,063 534,063 | As of December 31, 2023, the Company’s potentially dilutive securities consisted of options to purchase common stock. As of December 31, 2022, the Company’s potentially dilutive securities consisted of redeemable convertible preferred stock and options to purchase common stock. The Company excluded the following potential common shares, presented based on amounts outstanding at each period end, from the computation of diluted net income per share for the periods presented because including them would have had an anti-dilutive effect: Year Ended December 31, 2023 2022 Time-based options outstanding 140,135 140,135 Total 140,135 140,135 Our performance-based stock options were excluded from the diluted earnings per share calculations for the years ended December 31, 2022 because all necessary performance conditions were not satisfied by December 31, 2022. Our performance-based stock options excluded from diluted earnings per share for the year ended December 31, 2022 were as follows: Year Ended December 31, 2023 2022 Performance-based options outstanding — 534,063 Total — 534,063 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) £ in Millions | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||
Mar. 31, 2024 USD ($) shares | Mar. 31, 2024 GBP (£) | Mar. 31, 2024 USD ($) Segment shares | Mar. 31, 2023 USD ($) | Dec. 31, 2023 USD ($) shares | Dec. 31, 2022 USD ($) shares | Mar. 15, 2024 | Dec. 31, 2021 USD ($) | |
Accounting Policies [Line Items] | ||||||||
Percentage of refundable tax credit against certain employment taxes equal to qualified wages paid | 50% | |||||||
Maximum wages per employee annually paid under employee retention credit | $ 10,000 | |||||||
Percentage of refundable tax credit against certain employment taxes extended and expanded qualified wage caps to qualified wages paid | 70% | |||||||
Maximum wages per employee per quarterly paid under employee retention credit | $ 10,000 | |||||||
Foreign currency translation adjustment, net of tax | $ (511,000) | $ 0 | (114,000) | $ 173,000 | ||||
Cash equivalents | $ 0 | 0 | 0 | 0 | ||||
Contract assets | 4,600,000 | 4,600,000 | 4,200,000 | 4,800,000 | ||||
Accounts receivable | 35,730,000 | 35,730,000 | 29,929,000 | $ 28,998,000 | $ 20,000,000 | |||
Allowance for credit losses | $ 1,400,000 | $ 1,400,000 | $ 1,500,000 | |||||
Redeemable convertible preferred stock, shares outstanding | shares | 0 | 6,719,641 | ||||||
Carrying value of redeemable convertible preferred stock outstanding | $ 0 | $ 17,878,000 | ||||||
Preferred stock, shares issued | shares | 0 | 0 | 0 | 0 | ||||
Number of operating segment | Segment | 1 | |||||||
Number of reportable segment | Segment | 1 | |||||||
Minimum percentage of unrecognized tax benefits that would impact effective tax rate | 50% | 50% | ||||||
Unrecognized tax benefits | $ 0 | $ 0 | $ 0 | $ 0 | ||||
Unrecognized tax benefits accrued for interest and penalties | 0 | 0 | 0 | 0 | ||||
Realized loss on settlement of interest swap | 4,000 | 0 | ||||||
Assets fair value | 1,137,000 | 1,137,000 | 888,000 | 1,619,000 | ||||
Liabilities fair value | 0 | 0 | 0 | |||||
Unrealized foreign currency gain loss | 28,000 | 0 | ||||||
Revenue | $ 36,974,000 | $ 40,799,000 | $ 152,034,000 | $ 129,556,000 | ||||
CTG | ||||||||
Accounting Policies [Line Items] | ||||||||
Business acquisition percentage | 100% | |||||||
Casing Technologies Group Limited | ||||||||
Accounting Policies [Line Items] | ||||||||
Revenue | 800,000 | |||||||
Casing Technologies Group Limited | Deep Casing Tools Limited | ||||||||
Accounting Policies [Line Items] | ||||||||
Purchase consideration | 20,900,000 | £ 16.2 | ||||||
Redeemable Convertible Preferred Stock | ||||||||
Accounting Policies [Line Items] | ||||||||
Redeemable convertible preferred stock, shares outstanding | shares | 0 | |||||||
Customer Concentration Risk | Sales Revenue | Two Customers | ||||||||
Accounting Policies [Line Items] | ||||||||
Concentration risk percentage | 30% | 31% | 28% | |||||
Customer Concentration Risk | Sales Revenue | Three Customers | ||||||||
Accounting Policies [Line Items] | ||||||||
Concentration risk percentage | 39% | |||||||
Customer Concentration Risk | Vendor Purchases | One Vendor | ||||||||
Accounting Policies [Line Items] | ||||||||
Concentration risk percentage | 11% | 12% | ||||||
Customer Concentration Risk | Vendor Purchases | Two Vendors | ||||||||
Accounting Policies [Line Items] | ||||||||
Concentration risk percentage | 30% | 23% | ||||||
Customer Concentration Risk | Accounts Receivable | ||||||||
Accounting Policies [Line Items] | ||||||||
Receivables from customers | $ 11,100,000 | $ 8,600,000 | ||||||
Customer Concentration Risk | Accounts Receivable | One Vendor | ||||||||
Accounting Policies [Line Items] | ||||||||
Receivables from customers | 6,600,000 | $ 6,600,000 | 9,300,000 | |||||
Customer Concentration Risk | Accounts Payable | ||||||||
Accounting Policies [Line Items] | ||||||||
Amounts due to vendors | 300,000 | 900,000 | ||||||
Customer Concentration Risk | Accounts Payable | One Vendor | ||||||||
Accounting Policies [Line Items] | ||||||||
Amounts due to vendors | 3,700,000 | $ 3,700,000 | 3,400,000 | |||||
Interest Rate Swap | ||||||||
Accounting Policies [Line Items] | ||||||||
Unrealized gain (loss) due to change in fair value | $ 100,000 | $ 400,000 | 1,400,000 | |||||
Interest swap agreement settlement date | Jul. 10, 2023 | Jul. 10, 2023 | ||||||
Realized loss on settlement of interest swap | $ (4,000) | |||||||
Level 3 | ||||||||
Accounting Policies [Line Items] | ||||||||
Assets fair value | $ 0 | $ 0 | 0 | 0 | ||||
Liabilities fair value | 0 | 0 | ||||||
Prepaid Expenses and Other Current Assets | ||||||||
Accounting Policies [Line Items] | ||||||||
Employee retention credit benefits receivables | 0 | 2,100,000 | ||||||
Selling, General, and Administrative Expenses | ||||||||
Accounting Policies [Line Items] | ||||||||
Employee retention credit benefits | 0 | 4,300,000 | ||||||
United States | ||||||||
Accounting Policies [Line Items] | ||||||||
Revenue | $ 32,300,000 | $ 36,600,000 | $ 138,300,000 | $ 118,300,000 | ||||
Percentage of revenue | 87% | 90% | 91% | 91% | ||||
Canada | ||||||||
Accounting Policies [Line Items] | ||||||||
Revenue | $ 4,700,000 | |||||||
International | ||||||||
Accounting Policies [Line Items] | ||||||||
Revenue | $ 4,200,000 | |||||||
Percentage of revenue | 13% | 10% |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Schedule of Allowance For Credit Losses (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Beginning balance | $ (1,498) | $ (1,222) |
Addition during the period | (117) | (336) |
Utilization of allowance for credit losses | 157 | 60 |
Ending balance | $ (1,458) | (1,498) |
Cumulative effect adjustment upon adoption of ASU 2016-13 | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Beginning balance | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Summary of Asset and Liabilities Measured at Fair Value (Details) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 | Dec. 31, 2022 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Investments, equity securities | $ 1,137,000 | $ 888,000 | $ 1,143,000 |
Total assets at fair value | 1,137,000 | 888,000 | 1,619,000 |
Interest Rate Swap | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Interest rate swap | 476,000 | ||
Level 1 | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Investments, equity securities | 1,137,000 | 888,000 | 1,143,000 |
Total assets at fair value | 1,137,000 | 888,000 | 1,143,000 |
Level 1 | Interest Rate Swap | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Interest rate swap | 0 | ||
Level 2 | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Investments, equity securities | 0 | 0 | 0 |
Total assets at fair value | 0 | 0 | 476,000 |
Level 2 | Interest Rate Swap | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Interest rate swap | 476,000 | ||
Level 3 | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Investments, equity securities | 0 | 0 | 0 |
Total assets at fair value | $ 0 | $ 0 | 0 |
Level 3 | Interest Rate Swap | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Interest rate swap | $ 0 |
REVISION OF PREVIOUSLY ISSUED_3
REVISION OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2022 | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||||
Right-of-use assets obtained in exchange for new operating lease liabilities | $ 314,000 | $ 1,360,000 | $ 3,264,000 | $ 7,907,000 | |
Non-cash lease expense | 1,111,000 | 1,140,000 | 4,515,000 | 4,139,000 | |
Operating lease liabilities | (1,067,000) | (1,086,000) | (4,415,000) | (4,174,000) | |
Accounts payable | (2,848,000) | 3,208,000 | (1,552,000) | (1,432,000) | |
Proceeds from sale of lost-in-hole equipment | 4,904,000 | 5,819,000 | 19,684,000 | 21,116,000 | |
Purchase of property, plant and equipment | $ 6,228,000 | 7,067,000 | $ 43,750,000 | 24,688,000 | |
As Previously Reported | |||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||||
Right-of-use assets obtained in exchange for new operating lease liabilities | 2,516,000 | 9,451,000 | |||
Non-cash lease expense | (220,000) | $ 3,800,000 | (3,768,000) | ||
Operating lease liabilities | 274,000 | 3,733,000 | |||
Inventories of negative | 1,400,000 | 1,000,000 | |||
Accounts payable | 5,765,000 | (981,000) | |||
Proceeds from sale of lost-in-hole equipment | 5,315,000 | 20,319,000 | |||
Purchase of property, plant and equipment | $ 10,815,000 | 23,753,000 | |||
Account Payable | $ 1,000 |
REVISION OF PREVIOUSLY ISSUED_4
REVISION OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS - Summary of Effects of Corrections of Errors (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2022 | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||||
Non-cash lease expense | $ 1,111 | $ 1,140 | $ 4,515 | $ 4,139 | |
Provision for excess and obsolete inventory | 0 | 17 | 75 | 45 | |
Provision for excess and obsolete property and equipment | 66 | 117 | 122 | 510 | |
Inventories, net | 2,836 | 116 | (1,716) | (906) | |
Operating lease liabilities | (1,067) | (1,086) | (4,415) | (4,174) | |
Accounts payable | (2,848) | 3,208 | (1,552) | (1,432) | |
Accrued Expenses | (2,517) | (3,180) | 583 | 4,808 | |
Purchase of property, plant and equipment | (6,228) | (7,067) | (43,750) | (24,688) | |
Proceeds from sale of lost-in-hole equipment | 4,904 | 5,819 | 19,684 | 21,116 | |
ROU assets obtained in exchange for lease liabilities | 314 | 1,360 | 3,264 | 7,907 | |
Purchases of inventory included in accounts payable and accrued expenses and other current liabilities | 5,018 | 1,575 | 601 | 79 | |
Purchases of property and equipment included in accounts payable and accrued expenses and other current liabilities | $ 4,482 | 4,369 | $ 1,422 | 372 | |
As Previously Reported | |||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||||
Non-cash lease expense | (220) | $ 3,800 | (3,768) | ||
Provision for excess and obsolete inventory | 0 | 0 | |||
Provision for excess and obsolete property and equipment | 0 | 0 | |||
Inventories, net | (1,442) | (940) | |||
Operating lease liabilities | 274 | 3,733 | |||
Accounts payable | 5,765 | (981) | |||
Accrued Expenses | 207 | ||||
Purchase of property, plant and equipment | (10,815) | (23,753) | |||
Proceeds from sale of lost-in-hole equipment | 5,315 | 20,319 | |||
ROU assets obtained in exchange for lease liabilities | 2,516 | 9,451 | |||
Purchases of inventory included in accounts payable and accrued expenses and other current liabilities | 0 | 0 | |||
Purchases of property and equipment included in accounts payable and accrued expenses and other current liabilities | 0 | 0 | |||
Adjustment | |||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||||
Non-cash lease expense | 1,360 | 7,907 | |||
Provision for excess and obsolete inventory | 17 | 45 | |||
Provision for excess and obsolete property and equipment | 117 | 510 | |||
Inventories, net | 1,558 | 34 | |||
Operating lease liabilities | (1,360) | (7,907) | |||
Accounts payable | (2,557) | (451) | |||
Accrued Expenses | (3,387) | ||||
Purchase of property, plant and equipment | 3,748 | (935) | |||
Proceeds from sale of lost-in-hole equipment | 504 | 797 | |||
ROU assets obtained in exchange for lease liabilities | (1,156) | (1,544) | |||
Purchases of inventory included in accounts payable and accrued expenses and other current liabilities | 1,575 | 79 | |||
Purchases of property and equipment included in accounts payable and accrued expenses and other current liabilities | $ 4,369 | $ 372 |
BUSINESS COMBINATION (Details)
BUSINESS COMBINATION (Details) $ in Thousands, £ in Millions | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||
Mar. 15, 2024 USD ($) Patent | Mar. 15, 2024 GBP (£) Patent | Mar. 31, 2024 USD ($) | Mar. 31, 2024 GBP (£) | Mar. 31, 2024 USD ($) | Mar. 31, 2023 USD ($) | Dec. 31, 2023 USD ($) | Dec. 31, 2022 USD ($) | |
Business Acquisition [Line Items] | ||||||||
Acquisition-related costs | $ 300 | |||||||
Revenue | 36,974 | $ 40,799 | $ 152,034 | $ 129,556 | ||||
Net income | $ 3,126 | $ 5,701 | $ 14,748 | $ 21,080 | ||||
Casing Technologies Group Limited | ||||||||
Business Acquisition [Line Items] | ||||||||
Revenue | $ 800 | |||||||
Net income | 200 | |||||||
Casing Technologies Group Limited | CTG Purchase Agreement | ||||||||
Business Acquisition [Line Items] | ||||||||
Business acquisition percentage | 100% | 100% | ||||||
Gross cash purchase consideration | $ 20,900 | £ 16.2 | ||||||
Number of intellectual property rights patent | Patent | 60 | 60 | ||||||
Casing Technologies Group Limited | Deep Casing | ||||||||
Business Acquisition [Line Items] | ||||||||
Gross cash purchase consideration | $ 20,900 | £ 16.2 | ||||||
Settlement of outstanding debt | $ (19,800) | £ (15.3) | ||||||
Payment to legacy shareholders | 300 | 0.3 | ||||||
Acquisition-related costs | $ 800 | £ 0.6 |
BUSINESS COMBINATION - Summary
BUSINESS COMBINATION - Summary of Assets Acquired and Liabilities Assumed in Connection with Acquisition (Details) - USD ($) | Mar. 31, 2024 | Mar. 15, 2024 | Dec. 31, 2023 | Jun. 20, 2023 |
Business Acquisition [Line Items] | ||||
Goodwill | $ 2,556,000 | $ 0 | $ 0 | |
Casing Technologies Group Limited | ||||
Business Acquisition [Line Items] | ||||
Cash | $ 2,674,000 | |||
Accounts receivable, net | 3,781,000 | |||
Inventories, net | 4,282,000 | |||
Prepaid expenses and other current assets | 189,000 | |||
Property, plant and equipment , net | 1,647,000 | |||
Operating lease ROU asset | 315,000 | |||
Intangible assets, net | 8,065,000 | |||
Goodwill | 2,618,000 | |||
Total assets acquired | 23,571,000 | |||
Accounts payable | 2,656,000 | |||
Accrued expenses and other current liabilities | (295,000) | |||
Current portion of operating lease liabilities | 95,000 | |||
Operating lease liabilities, less current portion | 180,000 | |||
Total liabilities assumed | 2,636,000 | |||
Total consideration transferred | $ 20,935,000 |
BUSINESS COMBINATION - Summar_2
BUSINESS COMBINATION - Summary of Identified Intangible Assets, Estimated Useful Lives and Methodologies Used to Determine Fair Values (Details) - Casing Technologies Group Limited $ in Thousands | Mar. 15, 2024 USD ($) |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Intangible assets, fair value | $ 8,065 |
Trade Names | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Intangible assets, fair value | $ 819 |
Intangible assets, useful life | 15 years |
Developed Technology | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Intangible assets, fair value | $ 3,269 |
Intangible assets, useful life | 20 years |
Customer Relationships | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Intangible assets, fair value | $ 3,977 |
Intangible assets, useful life | 20 years |
BUSINESS COMBINATION - Summar_3
BUSINESS COMBINATION - Summary of Unaudited Supplemental Pro Forma Financial Information (Details) - Casing Technologies Group Limited - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Business Acquisition [Line Items] | ||
Pro forma revenue | $ 40,333 | $ 45,308 |
Pro forma net income | $ 2,420 | $ 6,287 |
BUSINESS COMBINATION - Summar_4
BUSINESS COMBINATION - Summary of Common Stock Outstanding Immediately after Merger (Details) - shares | Mar. 31, 2024 | Dec. 31, 2023 | Jun. 20, 2023 | Dec. 31, 2022 |
Business Acquisition [Line Items] | ||||
Total - DTIC Common Stock outstanding as a result of Merger, PIPE Financing, DTIH for DTIC share exchanges, transaction services agreement, Exchange Agreements, and exercise of stock options | 29,768,568 | 29,768,568 | 11,951,137 | |
Merger Agreement | ||||
Business Acquisition [Line Items] | ||||
Exchange of ROC common stock not subject to possible redemption for DTIC Common Stock upon Merger | 3,403,500 | |||
Conversion of ROC Public Rights into shares of DTIC Common Stock | 2,070,000 | |||
Conversion of ROC Private Rights into shares of DTIC Common Stock | 79,600 | |||
Exchange of ROC common stock subject to possible redemption that was not redeemed for DTIC Common Stock | 158,621 | |||
Subtotal - Merger, net of redemptions | 5,711,721 | |||
Issuance of DTIC Common Stock in connection with PIPE Financing | 2,970,296 | |||
Exchange of DTIH common stock outstanding as of December 31, 2022 for DTIC Common Stock | 11,951,137 | |||
Exchange of DTIH redeemable convertible preferred stock outstanding as of December 31, 2022 for DTIC Common Stock | 6,719,641 | |||
Issuance of shares as stock-based compensation to former DTIH stockholders as part of transaction services agreement upon the Merger | 337,429 | |||
Issuance of DTIC Common Stock to former holders of DTIH redeemable convertible preferred stock in connection with Exchange Agreements | 2,042,181 | |||
Net exercise of stock options by DTIH stockholder | 36,163 | |||
Total - DTIC Common Stock outstanding as a result of Merger, PIPE Financing, DTIH for DTIC share exchanges, transaction services agreement, Exchange Agreements, and exercise of stock options | 29,768,568 |
MERGER (Details)
MERGER (Details) | 3 Months Ended | 12 Months Ended | ||||||
Jun. 20, 2023 USD ($) $ / shares shares | Jun. 19, 2023 $ / shares shares | Feb. 13, 2023 shares | Mar. 31, 2024 USD ($) | Mar. 31, 2023 USD ($) | Dec. 31, 2023 USD ($) $ / shares | Dec. 31, 2022 USD ($) | Mar. 02, 2023 shares | |
Business Acquisition [Line Items] | ||||||||
Common stock exchange ratio | 0.2282 | |||||||
Common stock shares issued in exchange | 36,163 | |||||||
Aggregate gross proceeds | $ | $ 30,000,000 | |||||||
Goodwill | $ | $ 0 | $ 2,556,000 | 0 | |||||
Other intangible assets | $ | 0 | |||||||
Proceeds received from the Merger and PIPE Financing, net of transaction costs | $ | $ 23,200,000 | |||||||
Stock-based compensation expense | $ | $ 208,000 | $ 0 | $ 0 | |||||
Other Expense | ||||||||
Business Acquisition [Line Items] | ||||||||
Stock-based compensation expense | $ | 2,300,000 | |||||||
Hicks Holdings Operating LLC | ||||||||
Business Acquisition [Line Items] | ||||||||
Percentage on transaction amount as services agreement transaction fee | 1.50% | |||||||
Stock-based compensation expense | $ | (2,339,000) | $ 0 | ||||||
Exchange Agreements | ||||||||
Business Acquisition [Line Items] | ||||||||
Issuance of shares after conversion of stock | 2,042,181 | |||||||
Cash consideration in exchange for cancellation | $ | $ 200,000 | |||||||
Common Stock | Hicks Holdings Operating LLC | ||||||||
Business Acquisition [Line Items] | ||||||||
Number of common stock authorized to issue | 1,149,830 | |||||||
Common Stock | Affiliated with HHLLC | ||||||||
Business Acquisition [Line Items] | ||||||||
Number of common stock authorized to issue | 328,611 | |||||||
Common Stock | Exchange Agreements | ||||||||
Business Acquisition [Line Items] | ||||||||
Cash consideration related to merger | $ | $ 11,000,000 | |||||||
DTIH | Employee Stock Option | ||||||||
Business Acquisition [Line Items] | ||||||||
Common stock cancelled due to exercise | $ / shares | $ 158,444 | |||||||
DTIH | Redeemable Convertible Preferred Stock | ||||||||
Business Acquisition [Line Items] | ||||||||
Stock issued and outstanding | 20,370,377 | |||||||
DTIH | Common Stock | ||||||||
Business Acquisition [Line Items] | ||||||||
Stock issued and outstanding | 52,363,876 | 337,429 | ||||||
DTIC | ||||||||
Business Acquisition [Line Items] | ||||||||
Common stock conversion basis | ten-for-one basis | |||||||
Stock-based compensation expense | $ | $ 2,300,000 | |||||||
Quoted market price | $ / shares | $ 6.95 | |||||||
DTIC | PIPE Financing | ||||||||
Business Acquisition [Line Items] | ||||||||
Aggregate gross proceeds | $ | $ 4,100,000 | |||||||
Amount received in cash in PIPE Financing | $ | $ 25,900,000 | |||||||
DTIC | Employee Stock Option | ||||||||
Business Acquisition [Line Items] | ||||||||
Common stock exchange ratio | 0.2282 | |||||||
Common stock shares issued in exchange | 36,163 | |||||||
DTIC | Public Rights | ||||||||
Business Acquisition [Line Items] | ||||||||
Right outstanding | 2,070,000 | |||||||
DTIC | Private Rights | ||||||||
Business Acquisition [Line Items] | ||||||||
Right outstanding | 79,600 | |||||||
DTIC | Redeemable Convertible Preferred Stock | ||||||||
Business Acquisition [Line Items] | ||||||||
Stock issued and outstanding | 6,719,641 | |||||||
Preferred exchange ratio | 0.3299 | |||||||
DTIC | Non-redeemable Share | ||||||||
Business Acquisition [Line Items] | ||||||||
Common stock conversion basis | one-for-one basis | |||||||
DTIC | Common Stock | ||||||||
Business Acquisition [Line Items] | ||||||||
Stock issued and outstanding | 337,429 | |||||||
Common stock exchange ratio | 0.2282 | |||||||
Issuance of shares after conversion of stock | 11,951,137 | |||||||
Common stock conversion basis | one-for-one basis | |||||||
DTIC | Common Stock | PIPE Financing | ||||||||
Business Acquisition [Line Items] | ||||||||
Stock issued | 2,970,296 | |||||||
Aggregate gross proceeds | $ | $ 30,000,000 | |||||||
Stock issued, shares price per share | $ / shares | $ 10.1 | |||||||
ROC | Public Rights | ||||||||
Business Acquisition [Line Items] | ||||||||
Right outstanding | 20,700,000 | |||||||
ROC | Private Rights | ||||||||
Business Acquisition [Line Items] | ||||||||
Right outstanding | 796,000 | |||||||
ROC | Non-redeemable Share | ||||||||
Business Acquisition [Line Items] | ||||||||
Stock issued and outstanding | 3,403,500 | |||||||
ROC | Common Stock | ||||||||
Business Acquisition [Line Items] | ||||||||
Redeemable convertible preferred stock issued and outstanding | 158,621 |
INVESTMENTS - EQUITY SECURITI_3
INVESTMENTS - EQUITY SECURITIES - Summary of Cost and Fair Value of Investments in Equity Securities (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2024 | Dec. 31, 2023 | Dec. 31, 2022 | |
Net Investment Income [Line Items] | |||
Cost | $ 999 | $ 999 | $ 999 |
Unrealized gain (Loss) | 138 | (111) | 144 |
Fair value | $ 1,137 | $ 888 | $ 1,143 |
INVESTMENTS - EQUITY SECURITI_4
INVESTMENTS - EQUITY SECURITIES (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | |
Investments, Debt and Equity Securities [Abstract] | ||||
Unrealized gain loss on equity securities | $ 200 | $ 33,000 | $ (300) | $ 200 |
BALANCE SHEET DETAILS - CURRE_3
BALANCE SHEET DETAILS - CURRENT ASSETS AND CURRENT LIABILITIES - Summary of Inventories, Net (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 | Dec. 31, 2022 |
Inventory, Net [Abstract] | |||
Raw materials | $ 8,823 | $ 5,022 | $ 3,377 |
Finished goods | 2,673 | 16 | 115 |
Total inventories | 11,496 | 5,038 | 3,492 |
Allowance for obsolete inventory | (55) | (4) | (211) |
Inventories, net | $ 11,441 | $ 5,034 | $ 3,281 |
BALANCE SHEET DETAILS - CURRE_4
BALANCE SHEET DETAILS - CURRENT ASSETS AND CURRENT LIABILITIES - Summary of Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 | Dec. 31, 2022 |
Prepaid expenses: | |||
ERC benefits receivable | $ 0 | $ 2,117 | |
Deposits on inventory | $ 1,437 | 2,146 | 680 |
Prepaid income tax | 362 | 362 | 0 |
Prepaid insurance | 530 | 1,110 | 358 |
Prepaid rent | 399 | 372 | 381 |
Prepaid equipment | 331 | 331 | 179 |
Prepaid other | 172 | 214 | 173 |
Other current assets: | |||
Interest rate swap asset | 0 | 476 | |
Other | 0 | 18 | 17 |
Total | $ 3,231 | $ 4,553 | $ 4,381 |
BALANCE SHEET DETAILS - CURRE_5
BALANCE SHEET DETAILS - CURRENT ASSETS AND CURRENT LIABILITIES - Summary of Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 | Dec. 31, 2022 |
Accrued expenses: | |||
Accrued compensation and related benefits | $ 3,878 | $ 4,999 | $ 3,392 |
Accrued insurance | 435 | 978 | 525 |
Accrued transaction advisory fees | 1,000 | 1,000 | 0 |
Accrued professional services | 72 | 189 | 509 |
Accrued interest | 126 | 58 | 62 |
Accrued property taxes | 314 | 60 | 41 |
Accrued monitoring fees | 373 | 373 | |
Other | 760 | 147 | 38 |
Other current liabilities: | |||
Income tax payable | 1,757 | 1,586 | 1,780 |
Sales tax payable | (413) | 71 | 587 |
Unbilled lost-in-hole revenue | 96 | 76 | 282 |
Deferred revenue | 44 | 1,042 | 83 |
Total accrued expenses and other current liabilities | $ 8,442 | $ 10,579 | $ 7,299 |
PROPERTY, PLANT AND EQUIPMENT_3
PROPERTY, PLANT AND EQUIPMENT, NET - Summary of Component of Property, Plant and Equipment, Net (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 | Dec. 31, 2022 |
Property, Plant and Equipment [Line Items] | |||
Total property, plant and equipment | $ 205,198 | $ 198,803 | $ 169,682 |
Less: accumulated deprecation | (134,602) | (133,003) | (125,537) |
Property, plant and equipment, net (excluding construction in progress) | 70,596 | 65,800 | 44,145 |
Construction in progress | 0 | 0 | 9 |
Property, plant and equipment, net | 70,596 | 65,800 | 44,154 |
Rental Tools and Equipment | |||
Property, Plant and Equipment [Line Items] | |||
Total property, plant and equipment | $ 195,460 | $ 188,949 | 160,973 |
Rental Tools and Equipment | Minimum | |||
Property, Plant and Equipment [Line Items] | |||
Estimated useful lives (in years) | 5 years | 5 years | |
Rental Tools and Equipment | Maximum | |||
Property, Plant and Equipment [Line Items] | |||
Estimated useful lives (in years) | 10 years | 10 years | |
Buildings and Improvements | |||
Property, Plant and Equipment [Line Items] | |||
Total property, plant and equipment | $ 6,686 | $ 6,672 | 5,781 |
Buildings and Improvements | Minimum | |||
Property, Plant and Equipment [Line Items] | |||
Estimated useful lives (in years) | 5 years | 5 years | |
Buildings and Improvements | Maximum | |||
Property, Plant and Equipment [Line Items] | |||
Estimated useful lives (in years) | 40 years | 40 years | |
Office Furniture, Fixtures and Equipment | |||
Property, Plant and Equipment [Line Items] | |||
Total property, plant and equipment | $ 2,269 | $ 2,389 | 2,101 |
Office Furniture, Fixtures and Equipment | Minimum | |||
Property, Plant and Equipment [Line Items] | |||
Estimated useful lives (in years) | 3 years | 3 years | |
Office Furniture, Fixtures and Equipment | Maximum | |||
Property, Plant and Equipment [Line Items] | |||
Estimated useful lives (in years) | 5 years | 5 years | |
Transportation and Equipment | |||
Property, Plant and Equipment [Line Items] | |||
Total property, plant and equipment | $ 783 | $ 793 | $ 827 |
Transportation and Equipment | Minimum | |||
Property, Plant and Equipment [Line Items] | |||
Estimated useful lives (in years) | 3 years | 3 years | |
Transportation and Equipment | Maximum | |||
Property, Plant and Equipment [Line Items] | |||
Estimated useful lives (in years) | 5 years | 5 years |
PROPERTY, PLANT AND EQUIPMENT_4
PROPERTY, PLANT AND EQUIPMENT, NET (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | |
Property, Plant and Equipment [Line Items] | ||||
Depreciation expense | $ 5,300 | $ 5,000 | $ 20,300 | $ 19,700 |
Property, plant and equipment, net | 70,596 | 65,800 | 44,154 | |
United States | ||||
Property, Plant and Equipment [Line Items] | ||||
Property, plant and equipment, net | $ 65,900 | $ 63,000 | $ 41,800 | |
Property, plant and equipment net, Percentage | 93% | 96% | 95% | |
Canada | ||||
Property, Plant and Equipment [Line Items] | ||||
Property, plant and equipment, net | $ 2,800 | $ 2,300 | ||
Property, plant and equipment net, Percentage | 4% | 5% | ||
Canada and Internationally | ||||
Property, Plant and Equipment [Line Items] | ||||
Property, plant and equipment, net | $ 4,700 | $ 2,800 | ||
Property, plant and equipment net, Percentage | 7% | 4% |
INTANGIBLE ASSETS, NET - Summar
INTANGIBLE ASSETS, NET - Summary of Components of Intangible Assets, Net (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 | Dec. 31, 2022 |
Indefinite-Lived Intangible Assets [Line Items] | |||
Total intangible assets | $ 9,423 | $ 1,550 | $ 1,550 |
Less: accumulated amortization | (1,365) | (1,334) | (1,287) |
Intangible assets, net | 8,058 | 216 | 263 |
Trade Name | |||
Indefinite-Lived Intangible Assets [Line Items] | |||
Total intangible assets | $ 2,079 | $ 1,280 | 1,280 |
Trade Name | Maximum | |||
Indefinite-Lived Intangible Assets [Line Items] | |||
Useful lives (in years) | 15 years | 13 years | |
Trade Name | Minimum | |||
Indefinite-Lived Intangible Assets [Line Items] | |||
Useful lives (in years) | 10 years | 10 years | |
Technology | |||
Indefinite-Lived Intangible Assets [Line Items] | |||
Total intangible assets | $ 270 | $ 270 | |
Useful lives (in years) | 13 years | ||
Developed Technology | |||
Indefinite-Lived Intangible Assets [Line Items] | |||
Total intangible assets | $ 3,462 | $ 270 | |
Developed Technology | Maximum | |||
Indefinite-Lived Intangible Assets [Line Items] | |||
Useful lives (in years) | 20 years | ||
Developed Technology | Minimum | |||
Indefinite-Lived Intangible Assets [Line Items] | |||
Useful lives (in years) | 13 years | ||
Customer Relationships | |||
Indefinite-Lived Intangible Assets [Line Items] | |||
Total intangible assets | $ 3,882 | $ 0 | |
Useful lives (in years) | 20 years |
INTANGIBLE ASSETS, NET (Details
INTANGIBLE ASSETS, NET (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | |
Indefinite-Lived Intangible Assets [Line Items] | ||||
Amortization expense | $ 31 | $ 12 | $ 47 | $ 100 |
LEASES (Details)
LEASES (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | |
Lessee, Lease, Description [Line Items] | ||||
Operating lease description | The Company leases various facilities and vehicles under noncancelable operating lease agreements. The remaining lease terms for our leases range from 1 month to 14 years. | The Company leases various facilities and vehicles under noncancelable operating lease agreements. The remaining lease terms for our leases range from 1 month to 14 years. | ||
Operating lease, existence of option to extend | true | true | ||
Operating lease option to extend | These leases often include options to extend the term of the lease which may be for periods of up to 5 years. | These leases often include options to extend the term of the lease, which may be for periods of up to 5 years. | ||
Operating lease renewl term | 5 years | 5 years | ||
Tool rental revenue | $ 30 | $ 32.3 | $ 119.2 | $ 99 |
Minimum | ||||
Lessee, Lease, Description [Line Items] | ||||
Remaining lease term | 1 month | 1 month | ||
Maximum | ||||
Lessee, Lease, Description [Line Items] | ||||
Remaining lease term | 14 years | 14 years |
LEASES - Summary of Components
LEASES - Summary of Components of Lease Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | |
Lease, Cost [Abstract] | ||||
Operating Lease Cost | $ 1,482 | $ 1,518 | $ 6,077 | $ 5,722 |
Short-term Lease Cost | 35 | 30 | 130 | 143 |
Variable Lease Cost | 88 | 84 | 320 | 319 |
Sublease Income | 0 | (46) | (76) | (183) |
Total Lease Cost | $ 1,605 | $ 1,586 | $ 6,451 | $ 6,001 |
LEASES - Summary of Supplementa
LEASES - Summary of Supplemental Balance Sheet Information Related to Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2024 | Dec. 31, 2023 | Dec. 31, 2022 | |
Leases [Abstract] | |||
Weighted-average remaining lease term (in years) | 6 years 5 months 12 days | 6 years 6 months 18 days | 7 years 6 months 10 days |
Weighted average discount rate | 5.86% | 5.80% | 5.34% |
Cash paid for amounts included in the measurement of lease liabilities | $ 1,350 | $ 5,538 | $ 5,003 |
LEASES - Summary of Future Undi
LEASES - Summary of Future Undiscounted Cash Flows (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Lessee, Operating Lease, Liability, to be Paid, Fiscal Year Maturity [Abstract] | ||
2024 | $ 3,759 | |
2025 | 4,244 | $ 4,923 |
2026 | 3,719 | 4,089 |
2027 | 2,540 | 3,522 |
2028 | 1,978 | 2,439 |
2028 | 1,939 | |
Thereafter | 5,677 | |
Thereafter | 5,605 | |
Total lease payments | 21,917 | 22,517 |
Less: imputed interest | (3,550) | (3,666) |
Present value of lease liabilities | $ 18,367 | $ 18,851 |
REVOLVING CREDIT FACILITY AND_2
REVOLVING CREDIT FACILITY AND TERM LOAN (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||
Mar. 31, 2024 | Mar. 31, 2024 | Dec. 31, 2023 | Mar. 15, 2024 | Jun. 20, 2023 | Dec. 31, 2022 | Dec. 31, 2015 | |
Line of Credit Facility [Line Items] | |||||||
Line of credit | $ 0 | $ 18,349,000 | |||||
Revolving Credit Facility | |||||||
Line of Credit Facility [Line Items] | |||||||
Revolving line of credit | $ 60,000,000 | $ 80,000,000 | $ 60,000,000 | $ 60,000,000 | |||
Unfunded capital expenditures requirement removed | $ 20,000,000 | ||||||
Sublimit removed | $ 9,000,000 | ||||||
Credit Facility, collateral | The Credit Facility is collateralized by substantially all the assets of the Company and matures March 15, 2029. | The Credit Facility is collateralized by substantially all the assets of the Company and matures December 31, 2025. | |||||
Line of credit | $ 0 | $ 0 | $ 0 | ||||
Line of credit | $ 25,000,000 | ||||||
Date the credit facility matures | Mar. 31, 2029 | ||||||
Revolving Credit Facility | SOFR | |||||||
Line of Credit Facility [Line Items] | |||||||
Basis spread on variable rate (as a percent) | 9.28% | 8.40% | |||||
Revolving Credit Facility | Base Rate | |||||||
Line of Credit Facility [Line Items] | |||||||
Basis spread on variable rate (as a percent) | 2% | 2% |
REVENUE - (Details)
REVENUE - (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | |
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 36,974 | $ 40,799 | $ 152,034 | $ 129,556 |
United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 32,300 | $ 36,600 | $ 138,300 | $ 118,300 |
Percentage of revenue | 87% | 90% | 91% | 91% |
Canada and International | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 13,700 | $ 11,300 | ||
Percentage of revenue | 9% | 9% |
REVENUE - Summary of Disaggrega
REVENUE - Summary of Disaggregation of Revenues by Category (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | |
Disaggregation of Revenue [Line Items] | ||||
Revenue from Contract with Customer, Excluding Assessed Tax | $ 36,974 | $ 40,799 | $ 152,034 | $ 129,556 |
Tool Rental Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from Contract with Customer, Excluding Assessed Tax | 29,966 | 32,276 | 119,239 | 99,018 |
Product Sales | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from Contract with Customer, Excluding Assessed Tax | $ 7,008 | $ 8,523 | $ 32,795 | $ 30,538 |
INCOME TAXES - Schedule of Inco
INCOME TAXES - Schedule of Income (Loss) Before Provision for (Benefit From) Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | ||||
Domestic | $ 17,352 | $ 19,094 | ||
International | 2,442 | 5,683 | ||
Profits before provision for income taxes | $ 4,063 | $ 7,424 | $ 19,794 | $ 24,777 |
INCOME TAXES - Summary of Incom
INCOME TAXES - Summary of Income Tax Expense Attributable to Income From Continuing Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | |
Current provision for income taxes: | ||||
Federal | $ 162 | $ 702 | ||
Foreign | 656 | 1,444 | ||
State | 785 | 472 | ||
Total current | 1,603 | 2,618 | ||
Deferred tax expense (benefit): | ||||
Federal | 3,826 | 574 | ||
Foreign | 34 | 488 | ||
State | (417) | 18 | ||
Total deferred tax expense: | $ 266 | $ 1,116 | 3,443 | 1,080 |
Total provision for income taxes | $ 937 | $ 1,723 | $ 5,046 | $ 3,698 |
INCOME TAXES - Schedule of Reco
INCOME TAXES - Schedule of Reconciliation of Federal Statutory Rate to Company's Effective Tax Rate (Details) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | ||||
U.S. federal tax benefit at statutory rate | 21% | 21% | 21% | |
State taxes, net of federal benefit | 1.90% | 2.10% | ||
Permanent differences | 3.60% | 2% | ||
Foreign rate differential | 0.20% | 0.50% | ||
Valuation allowance | 0% | (2.10%) | ||
Other | (1.20%) | (9.00%) | ||
Effective tax rate | 23.10% | 23.20% | 25.50% | 14.50% |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | |
Schedule Of Income Taxes Reconciliation [Line Items] | ||||
Decrease in effective impact of othe rcategory income tax rate percentage | 1.20% | 10.60% | ||
Decrease in effective impact of othe rcategory income tax rate value | $ 239 | $ 2,600 | ||
Operating loss carryforwards | 4,100 | 15,100 | ||
Income tax expense | $ 937 | $ 1,723 | $ 5,046 | $ 3,698 |
Effective tax rate | 23.10% | 23.20% | 25.50% | 14.50% |
Federal Statutory rate | 21% | 21% | 21% | |
Change to the valuation allowance | $ 0 | |||
State and Local Jurisdiction | ||||
Schedule Of Income Taxes Reconciliation [Line Items] | ||||
Operating loss carryforwards | $ 8,800 | $ 9,800 |
INCOME TAXES - Schedule of Defe
INCOME TAXES - Schedule of Deferred Tax Assets and Deferred Tax Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Deferred tax assets | ||
Net operating loss carryforward | $ 1,544 | $ 3,378 |
Allowance for doubtful accounts | 333 | 323 |
Share-based compensation | 1,451 | 941 |
Bonus accrual | 440 | 599 |
Inventory | 130 | 53 |
Intangible assets | 1,129 | 1,152 |
Other | 0 | 140 |
Gross deferred tax assets | 5,028 | 6,587 |
Valuation allowance | 0 | 0 |
Net deferred tax assets | 5,028 | 6,587 |
Deferred tax liabilities | ||
Depreciation on property, plant, and equipment | (11,391) | (8,958) |
Withholding tax on unremitted earnings | (264) | (72) |
Other | 0 | (742) |
Deferred tax liabilities | (11,655) | (9,772) |
Net deferred liabilities | $ (6,627) | $ (3,185) |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details) | 3 Months Ended | 12 Months Ended | |||||
Jun. 20, 2023 | Jun. 19, 2023 shares | Mar. 31, 2024 USD ($) shares | Mar. 31, 2023 USD ($) | Dec. 31, 2023 USD ($) shares | Dec. 31, 2022 USD ($) shares | Dec. 31, 2021 shares | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||
Number of options exercised | 580,000 | 132,375 | |||||
Common stock canceled in exchange for options | 158,444 | ||||||
Common stock exchange ratio | 0.2282 | ||||||
Intrinsic value | $ | $ 0 | ||||||
Common stock shares issued in exchange | 36,163 | ||||||
Share-Based Payment Arrangement, Expense | $ | $ 208,000 | $ 0 | $ 0 | ||||
Share-based compensation arrangement by share-based payment award, options, outstanding, number | 2,361,722 | 2,361,722 | 2,494,097 | ||||
Stock options granted | 0 | ||||||
Number of options forfeited | 0 | ||||||
Non-vested shares | 0 | ||||||
Unrecognized compensation expense | $ | $ 4,400,000 | $ 1,600,000 | |||||
Selling, General, and Administrative Expenses | |||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||
Share-Based Payment Arrangement, Expense | $ | $ 1,700,000 | ||||||
Other Expense | |||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||
Share-Based Payment Arrangement, Expense | $ | $ 2,300,000 | ||||||
Performance-based Stock Options | |||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||
Number of accelerated vesting stock options | 534,063 | ||||||
Number of stock options vested | 534,063 | ||||||
Time Based Shares | |||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||
Non-vested shares | 2,600,000 | 0 | |||||
2023 Plan | |||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||
Maximum percentage of common stock issuable in accordance with outstanding Common stock | 10% | ||||||
Annual increase in percentage of common stock issuable in accordance with outstanding common stock | 3% | ||||||
Issued options to purchase shares of the common stock | 2,976,854 | ||||||
Shares of common stock available for issuance | 1,269,910 | 2,976,854 | |||||
Stock options granted | 2,600,000 | ||||||
Number of options forfeited | 0 | ||||||
Share based payment award shares issued in period | 0 |
STOCK-BASED COMPENSATION - Summ
STOCK-BASED COMPENSATION - Summary of Options Outstanding (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Jun. 19, 2023 | Mar. 31, 2024 | Dec. 31, 2023 | Dec. 31, 2022 | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Outstanding [Roll Forward] | ||||
OUTSTANDING, December 31, 2022 | 2,361,722 | 2,494,097 | ||
Number of shares granted | 0 | |||
Number of shares exercised | (580,000) | (132,375) | ||
Number of shares forfeited | 0 | |||
OUTSTANDING, December 31, 2023 | 2,361,722 | 2,361,722 | ||
UNVESTED, December 31, 2023 | 0 | |||
EXERCISABLE, December 31, 2023 | 2,361,722 | |||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract] | ||||
Weighted average exercise price, beginning balance | $ 4.02 | $ 4.04 | ||
Weighted average exercise price, Granted | $ 0 | |||
Weighted average exercise price, Exercised | 5.04 | |||
Weighted average exercise price, Forfeited | 0 | |||
Weighted average exercise price, ending balance | 4.02 | |||
Weighted average exercise price, Unvested | 0 | |||
Weighted average exercise price, Exercisable | $ 4.02 | |||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Additional Disclosures [Abstract] | ||||
Weighted Average Remaining Contractual Life (in Years) | 3 years 4 months 13 days | 3 years 11 months 4 days | ||
Weighted average remaining contractual life (in years), exercisable | 3 years 4 months 13 days | |||
Aggregate Intrinsic Value | $ 0 | $ 11,687 | ||
Aggregate intrinsic value, exercisable | $ 0 |
OTHER EXPENSES, NET - Summary o
OTHER EXPENSES, NET - Summary of Components of Other Expenses, Net (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | |
Schedule Of Other Expenses [Line Items] | ||||
Stock-based compensation | $ 208,000 | $ 0 | $ 0 | |
Transaction Fees | (889,000) | 0 | $ (3,640,000) | 0 |
Other, net | (247,000) | (7,000) | (428,000) | (436,000) |
Interest income | 11,000 | 47,000 | 48,000 | 52,000 |
Other expense, net | $ (1,125,000) | $ 40,000 | (6,359,000) | (384,000) |
Hicks Holdings Operating LLC | ||||
Schedule Of Other Expenses [Line Items] | ||||
Stock-based compensation | $ (2,339,000) | $ 0 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||
Jun. 20, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | Mar. 02, 2023 | Dec. 06, 2022 | |
Related Party Transaction [Line Items] | |||||||
Working capital loan amount | $ 400 | ||||||
PIPE Financing | |||||||
Related Party Transaction [Line Items] | |||||||
Payoff convertible promissory notes issued | $ 2,100 | $ 2,100 | |||||
Board of Directors | |||||||
Related Party Transaction [Line Items] | |||||||
Director fees paid | $ 85 | $ 45 | $ 200 | $ 100 | |||
Hicks Holdings Operating LLC | |||||||
Related Party Transaction [Line Items] | |||||||
Management fees paid to shareholder | 200 | 200 | 1,100 | 400 | |||
Cree Investments, LLC | |||||||
Related Party Transaction [Line Items] | |||||||
Rent expense paid to shareholder | $ 13 | $ 13 | $ 51 | 51 | |||
Heath Woodrum | |||||||
Related Party Transaction [Line Items] | |||||||
Payments for tools | $ 4 |
EMPLOYEE BENEFITS (Details)
EMPLOYEE BENEFITS (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | |
Defined Benefit Plan [Abstract] | ||||
Maximum annual contributions per employee, percent | 3% | |||
Employer matching contribution, percent of match | 150% | |||
Defined contribution per employee | $ 2,000 | |||
Total expense | $ 300,000 | $ 200,000 | $ 500,000 | $ 400,000 |
Defined contribution plan nature and effect of change, description | All employees are auto enrolled at a 3% contribution, unless they opt out, beginning on the first plan entry date following six months of service. Plan entry dates are the first day of January and July. In March of 2020, the Company suspended any employee contribution match effective immediately and through the end of 2021. The match was reinstated on January 1, 2022. For 2022, the Company matched employee contributions 150% of the first 3% of employee contributions, not to exceed $2 thousand per participant per calendar year. Employees vest in employer contributions over six years. The contribution is limited to the maximum contribution allowed under the Internal Revenue Service Regulations. | The Company has a defined contribution plan that complies with Section 401(k) of the Internal Revenue Code. All employees are auto enrolled at a 3% contribution, unless they opt out, beginning on the first plan entry datefollowing six months of service. Plan entry dates are the first day of January and July. For 2022, the Company matched employee contributions 150% of the first 3% of employee contributions, not to exceed $2 thousand per participant per calendar year. Employees vest in employer contributions over six years. The contribution is limited to the maximum contribution allowed under the Internal Revenue Service Regulations. |
EARNINGS PER SHARE - Summary of
EARNINGS PER SHARE - Summary of Computation of Company's Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | ||
Numerator: | |||||
Net income | $ 3,126 | $ 5,701 | $ 14,748 | $ 21,080 | |
Less: Redeemable Convertible Preferred Stock dividends | 0 | (314) | (314) | (1,189) | |
Net income attributable to common shareholders - basic | 3,126 | 5,387 | 14,434 | 19,891 | |
Add: Redeemable Convertible Preferred Stock dividends | 0 | 314 | 314 | 1,189 | |
Net income attributable to common shareholders - diluted | $ 3,126 | $ 5,701 | $ 14,748 | $ 21,080 | |
Denominator | |||||
Weighted-average common shares used in computing earnings per share - basic | [1] | 29,768,568 | 11,951,137 | 21,421,610 | 11,951,137 |
Weighted-average effect of potentially dilutive securities: | |||||
Effect of potentially dilutive redeemable convertible preferred stock | 0 | 6,719,641 | 3,175,215 | 6,719,641 | |
Weighted-average common shares outstanding - diluted | [1] | 29,768,568 | 19,677,507 | 25,131,024 | 19,677,507 |
Earnings per share - basic | $ 0.11 | $ 0.45 | $ 0.67 | $ 1.66 | |
Earnings per share - diluted | $ 0.11 | $ 0.29 | $ 0.59 | $ 1.07 | |
Time-based Stock Options | |||||
Weighted-average effect of potentially dilutive securities: | |||||
Effect of potentially dilutive stock options | 0 | 1,006,729 | 488,997 | 1,006,729 | |
Performance-based Stock Options | |||||
Weighted-average effect of potentially dilutive securities: | |||||
Effect of potentially dilutive stock options | 0 | 0 | 45,202 | 0 | |
[1]Shares of legacy redeemable convertible preferred stock and legacy common stock have been retroactively restated to give effect to the Merger. |
EARNINGS PER SHARE - Summary _2
EARNINGS PER SHARE - Summary of Company's Potentially Dilutive Securities Excluded - Time-based Options Outstanding (Details) - shares | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | |
Time-based Options Outstanding | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total | 4,427,659 | 140,135 | 140,135 | 140,135 |
EARNINGS PER SHARE - Summary _3
EARNINGS PER SHARE - Summary of Company's Potentially Dilutive Securities Excluded - Performance-based Options Outstanding (Details) - shares | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | |
Performance-based Options Outstanding | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total | 534,063 | 534,063 | 0 | 534,063 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - USD ($) | 1 Months Ended | ||||||||
Mar. 15, 2024 | Mar. 06, 2024 | Feb. 14, 2024 | Mar. 31, 2024 | Mar. 18, 2024 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 06, 2022 | Dec. 31, 2015 | |
Subsequent Event [Line Items] | |||||||||
Common stock, shares issued | 29,768,568 | 29,768,568 | 11,951,137 | ||||||
Credit Facility | |||||||||
Subsequent Event [Line Items] | |||||||||
Revolving line of credit | $ 80,000,000 | $ 60,000,000 | $ 60,000,000 | $ 60,000,000 | |||||
Line of credit | 25,000,000 | ||||||||
Date the credit facility matures | Mar. 31, 2029 | ||||||||
Subsequent Event | Credit Facility | |||||||||
Subsequent Event [Line Items] | |||||||||
Revolving line of credit | 80,000,000 | ||||||||
Line of credit | $ 25,000,000 | ||||||||
Date the credit facility matures | Mar. 31, 2029 | ||||||||
Subsequent Event | Prejean 2024 Stock Options | |||||||||
Subsequent Event [Line Items] | |||||||||
Common stock, shares issued | 1,000,000 | ||||||||
Subsequent Event | Johnson 2024 Stock Options | |||||||||
Subsequent Event [Line Items] | |||||||||
Common stock, shares issued | 380,000 | ||||||||
Subsequent Event | Domino 2024 Stock Options | |||||||||
Subsequent Event [Line Items] | |||||||||
Common stock, shares issued | 300,000 | ||||||||
Subsequent Event | 2024 Stock Options | |||||||||
Subsequent Event [Line Items] | |||||||||
Option vest | 3 years | ||||||||
Exercisable price per share | $ 3.02 | ||||||||
Casing Technology Group Limited | CTG Purchase Agreement | |||||||||
Subsequent Event [Line Items] | |||||||||
Percentage acquired | 100% | ||||||||
Casing Technology Group Limited | Subsequent Event | CTG Purchase Agreement | |||||||||
Subsequent Event [Line Items] | |||||||||
Percentage acquired | 100% | ||||||||
Superior Drilling Products, Inc | Subsequent Event | |||||||||
Subsequent Event [Line Items] | |||||||||
Date of Acquisition | Mar. 06, 2024 |