0000950170-24-037792 | 10-K | XBRL Viewer | Drilling Tools International Corp

STOCK-BASED COMPENSATION

12 Months Ended

Dec. 31, 2023

Share-Based Payment Arrangement [Abstract]

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 directors, and consultants in the form of options, stock appreciation rights, restricted shares, restricted stock units, performance based awards, other share-based awards, other cash-based awards, or a combination of the foregoing. As of December 31, 2023, there were 2,976,854 shares of Common Stock available for issuance under the 2023 Plan.

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). 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. 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 Average Exercise Price		Weighted Average Remaining Contractual Life (in Years)		Aggregate Intrinsic Value
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 EXPENSE, NET - Summary of Components of Other Expenses, Net (Details) - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Schedule Of Other Expenses [Line Items]
Stock-based compensation		$ 0
Transaction Fees	$ (3,640,000)	0
Other, net	(428,000)	(436,000)
Interest income	48,000	52,000
Other expense, net	(6,359,000)	(384,000)
Hicks Holdings Operating LLC
Schedule Of Other Expenses [Line Items]
Stock-based compensation	$ (2,339,000)	$ 0

INTANGIBLE, NET (Tables)

12 Months Ended

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 (in Years)	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

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Assets, Current [Abstract]
Cash	$ 6,003	$ 2,352
Accounts receivable, net	29,929	28,998
Inventories, net	5,034	3,281
Prepaid expenses and other current assets	4,553	4,381
Investments - equity securities, at fair value	888	1,143
Total current assets	46,408	40,155
Property, plant and equipment, net	65,800	44,154
Operating lease right-of-use asset	18,786	20,037
Intangible assets, net	216	263
Deferred financing costs, net	409	226
Deposits and other long-term assets	879	383
Total assets	132,498	105,218
Current liabilities
Accounts payable	7,751	7,281
Accrued expenses and other current liabilities	10,579	7,299
Current portion of operating lease liabilities	3,958	3,311
Revolving line of credit	0	18,349
Total current liabilities	22,288	36,240
Operating lease liabilities, less current portion	14,893	16,691
Deferred tax liabilities, net	6,627	3,185
Total liabilities	43,808	56,116
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
Shareholders' equity
Common stock*, par value $0.0001; 500,000,000 shares and 65,000,000 shares authorized at December 31, 2023 and December 31, 2022, respectively; 29,768,568 shares and 11,951,137 shares issued and outstanding at December 31, 2023 and December 31, 2022, respectively	3	1
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
Additional paid-in-capital	95,218	52,388
Accumulated deficit	(6,306)	(21,054)
Less treasury stock, at cost; nil shares at December 31, 2023 and December 31, 2022	0	0
Accumulated other comprehensive loss	(225)	(111)
Total shareholders' equity	88,690	31,224
Total liabilities, redeemable convertible preferred stock and shareholders' equity	$ 132,498	$ 105,218

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Cash flows from operating activities:
Net income	$ 14,748	$ 21,080
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization	20,352	19,709
Amortization of deferred financing costs	139	94
Amortization of debt discount	0	58
Non-cash lease expense	4,515	4,139
Provision for excess and obsolete inventory	75	45
Provision for excess and obsolete property and equipment	122	510
Loss on asset disposal	489	0
Bad debt expense	117	307
Deferred tax expense	3,443	1,080
Gain on sale of property	(101)	(127)
Unrealized (gain) loss on equity securities	255	(234)
Unrealized (gain) loss on interest rate swap	0	(1,423)
Realized loss on interest rate swap	4	0
Gross profit from sale of lost-in-hole equipment	(16,686)	(16,813)
Stock-based compensation expense	3,986	0
Changes in operating assets and liabilities:
Accounts receivable, net	(1,048)	(9,268)
Prepaid expenses and other current assets	519	(3,476)
Inventories, net	(1,716)	(906)
Deposits and other long-term assets	(496)	17
Operating lease liabilities	(4,415)	(4,174)
Accounts payable	(1,552)	(1,432)
Accrued expenses and other current liabilities	583	4,808
Net cash flows from operating activities	23,334	13,994
Cash flows from investing activities:
Proceeds from sale of property and equipment	202	1,042
Purchase of property, plant and equipment	(43,750)	(24,688)
Proceeds from sale of lost-in-hole equipment	19,684	21,116
Net cash from investing activities	(23,864)	(2,530)
Cash flows from financing activities:
Proceeds from Merger and PIPE Financing, net of transaction costs	23,162	0
Payment of deferred financing costs	(324)	(251)
Proceeds from revolving line of credit	73,050	108,594
Payments on revolving line of credit	(91,399)	(116,670)
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
Net cash from financing activities	4,295	(9,337)
Effect of Changes in Foreign Exchange Rate	(114)	173
Net Change in Cash	3,651	2,300
Cash at Beginning of Period	2,352	52
Cash at End of Period	6,003	2,352
Supplemental cash flow information:
Cash paid for interest	1,174	340
Cash paid for income taxes	3,006	723
Non-cash investing and financing activities:
ROU assets obtained in exchange for lease liabilities	3,264	7,907
Purchases of inventory included in accounts payable and accrued expenses and other current liabilities	601	79
Purchases of property and equipment included in accounts payable and accrued expenses and other current liabilities	1,422	372
Non-cash directors and officers insurance	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
Accretion of redeemable convertible preferred stock to redemption value	$ 314	$ 1,189

BALANCE SHEET DETAILS - CURRENT ASSETS AND CURRENT LIABILITIES - Summary of Inventories, Net (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Inventory, Net [Abstract]
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

OTHER EXPENSE, NET

12 Months Ended

Dec. 31, 2023

Other Income and Expenses [Abstract]

OTHER EXPENSE, NET

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 December 31, 2023			Year Ended December 31, 2022
HHLLC stock-based compensation	$	(2,339	)	$	—
Transaction fees		(3,640	)		—
Other, net		(428	)		(436	)
Interest income		48			52
Other expense, net	$	(6,359	)	$	(384	)

STOCK-BASED COMPENSATION (Details)			12 Months Ended
STOCK-BASED COMPENSATION (Details)	Jun. 20, 2023	Jun. 19, 2023 shares	Dec. 31, 2023 USD ($) shares	Dec. 31, 2022 USD ($) shares
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of shares 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 \| $				$ 0
Share-based compensation arrangement by share-based payment award, options, outstanding, number			2,361,722	2,494,097
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
Hicks Holdings Operating LLC
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Share-Based Payment Arrangement, Expense \| $			$ (2,339,000)	$ 0
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
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	10.00%
Annual increase in percentage of common stock issuable in accordance with outstanding common stock	3.00%
Common stock issuable in accordance with outstanding Common stock			0
Shares of common stock available for issuance			2,976,854

INCOME TAXES - Schedule of Reconciliation of Federal Statutory Rate to Company's Effective Tax Rate (Details)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Income Tax Disclosure [Abstract]
U.S. federal tax benefit at statutory rate	21.00%	21.00%
State taxes, net of federal benefit	1.90%	2.10%
Permanent differences	3.60%	2.00%
Foreign rate differential	0.20%	0.50%
Valuation allowance	0.00%	(2.10%)
Other	(1.20%)	(9.00%)
Effective tax rate	25.50%	14.50%

MERGER

12 Months Ended

Dec. 31, 2023

Business Combinations [Abstract]

MERGER

NOTE 3 – MERGER

As discussed in Note 1 - Summary of significant accounting Policies, on June 20, 2023, the Company completed the Merger. Upon the closing of the Merger, the following occurred:

•

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 share of ROC common stock issued and outstanding immediately prior to the closing of the Merger, which totaled 3,403,500 shares, was exchanged for, on a one-for-one basis, shares of DTIC Common Stock.

•

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 basis, shares of DTIC Common Stock.

•

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 basis, 2,070,000 and 79,600 shares of DTIC Common Stock, respectively.

•

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 for further details. Accordingly, for accounting purposes, the Merger was treated as the equivalent of the Company issuing shares for the net assets of ROC, accompanied by a recapitalization. The net assets of ROC were stated at historical cost with no goodwill or other intangible assets recorded.

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 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

PROPERTY, PLANT AND EQUIPMENT, NET - Summary of Component of Property, Plant and Equipment, Net (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Property, Plant and Equipment [Line Items]
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	0	9
Property, plant and equipment, net	65,800	44,154
Rental Tools and Equipment
Property, Plant and Equipment [Line Items]
Total property, plant and equipment	$ 188,949	160,973
Rental Tools and Equipment \| Minimum
Property, Plant and Equipment [Line Items]
Estimated useful lives (in years)	5 years
Rental Tools and Equipment \| Maximum
Property, Plant and Equipment [Line Items]
Estimated useful lives (in years)	10 years
Buildings and Improvements
Property, Plant and Equipment [Line Items]
Total property, plant and equipment	$ 6,672	5,781
Buildings and Improvements \| Minimum
Property, Plant and Equipment [Line Items]
Estimated useful lives (in years)	5 years
Buildings and Improvements \| Maximum
Property, Plant and Equipment [Line Items]
Estimated useful lives (in years)	40 years
Office Furniture, Fixtures and Equipment
Property, Plant and Equipment [Line Items]
Total property, plant and equipment	$ 2,389	2,101
Office Furniture, Fixtures and Equipment \| Minimum
Property, Plant and Equipment [Line Items]
Estimated useful lives (in years)	3 years
Office Furniture, Fixtures and Equipment \| Maximum
Property, Plant and Equipment [Line Items]
Estimated useful lives (in years)	5 years
Transportation and Equipment
Property, Plant and Equipment [Line Items]
Total property, plant and equipment	$ 793	$ 827
Transportation and Equipment \| Minimum
Property, Plant and Equipment [Line Items]
Estimated useful lives (in years)	3 years
Transportation and Equipment \| Maximum
Property, Plant and Equipment [Line Items]
Estimated useful lives (in years)	5 years

LEASES (Details) - USD ($) $ in Millions	12 Months Ended
LEASES (Details) - USD ($) $ in Millions	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.
Operating lease, existence of option to extend	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.
Operating lease renewl term	5 years
Tool rental revenue	$ 119.2	$ 99.0
Minimum
Lessee, Lease, Description [Line Items]
Remaining lease term	1 month
Maximum
Lessee, Lease, Description [Line Items]
Remaining lease term	14 years

STOCK-BASED COMPENSATION (Tables)

12 Months Ended

Dec. 31, 2023

Share-Based Payment Arrangement [Abstract]

Summary of Options Outstanding


	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in Years)		Aggregate Intrinsic Value
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		—

REVISIONS OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS (Tables)

12 Months Ended

Dec. 31, 2023

Prior Period Adjustment [Abstract]

Summary of Effects of Corrections of Errors

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 Reported			Adjustment			As Revised
Non-cash lease expense	$	(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 equipment		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

REVISIONS OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS - Summary of Effects of Corrections of Errors (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Non-cash lease expense	$ 4,515	$ 4,139
Provision for excess and obsolete inventory	75	45
Provision for excess and obsolete property and equipment	122	510
Inventories, net	(1,716)	(906)
Operating lease liabilities	(4,415)	(4,174)
Accounts payable	(1,552)	(1,432)
Purchase of property, plant and equipment	(43,750)	(24,688)
Proceeds from sale of lost-in-hole equipment	19,684	21,116
ROU assets obtained in exchange for lease liabilities	3,264	7,907
Purchases of inventory included in accounts payable and accrued expenses and other current liabilities	601	79
Purchases of property and equipment included in accounts payable and accrued expenses and other current liabilities	$ 1,422	372
As Previously Reported
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Non-cash lease expense		(3,768)
Provision for excess and obsolete inventory		0
Provision for excess and obsolete property and equipment		0
Inventories, net		(940)
Operating lease liabilities		3,733
Accounts payable		(981)
Purchase of property, plant and equipment		(23,753)
Proceeds from sale of lost-in-hole equipment		20,319
ROU assets obtained in exchange for lease liabilities		9,451
Purchases of inventory included in accounts payable and accrued expenses and other current liabilities		0
Purchases of property and equipment included in accounts payable and accrued expenses and other current liabilities		0
Adjustment
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Non-cash lease expense		7,907
Provision for excess and obsolete inventory		45
Provision for excess and obsolete property and equipment		510
Inventories, net		34
Operating lease liabilities		(7,907)
Accounts payable		(451)
Purchase of property, plant and equipment		(935)
Proceeds from sale of lost-in-hole equipment		797
ROU assets obtained in exchange for lease liabilities		(1,544)
Purchases of inventory included in accounts payable and accrued expenses and other current liabilities		79
Purchases of property and equipment included in accounts payable and accrued expenses and other current liabilities		$ 372

EARNINGS PER SHARE - Summary of Company's Potentially Dilutive Securities Excluded - Performance-based Options Outstanding (Details) - shares	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Performance-based Options Outstanding
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total	0	534,063

SUBSEQUENT EVENTS

12 Months Ended

Dec. 31, 2023

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

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 (the “Refinancing”).

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.

INVESTMENTS - EQUITY SECURITIES

12 Months Ended

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 Loss			Fair Value
December 31, 2023	$	999	$	(111	)	$	888


	Cost		Unrealized Gain		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 unrealized holding gains on equity securities for the year ended December 31, 2022 were $0.2 million.

SUBSEQUENT EVENTS (Details) - USD ($)	Mar. 15, 2024	Mar. 06, 2024	Feb. 14, 2024	Mar. 18, 2024	Dec. 31, 2023	Dec. 31, 2022
Subsequent Event [Line Items]
Common stock, shares issued					29,768,568	11,951,137
Credit Facility
Subsequent Event [Line Items]
Revolving line of credit					$ 60,000,000	$ 60,000,000
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 \| Subsequent Event \| CTG Purchase Agreement
Subsequent Event [Line Items]
Percentage acquired				100.00%
Superior Drilling Products, Inc \| Subsequent Event
Subsequent Event [Line Items]
Date of Acquisition		Mar. 06, 2024

SUMMARY OF SIGNIFICIANT 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

INTANGIBLE, NET (Details) - USD ($) $ in Thousands	12 Months Ended
INTANGIBLE, NET (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Indefinite-Lived Intangible Assets [Line Items]
Amortization expense	$ 47	$ 100

INVESTMENTS - EQUITY SECURITIES - Summary of Cost and Fair Value of Investments in Equity Securities (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Net Investment Income [Line Items]
Cost	$ 999	$ 999
Unrealized gain (Loss)	(111)	144
Fair value	$ 888	$ 1,143

INTANGIBLE, NET - Summary of Components of Intangible Assets, Net (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Indefinite-Lived Intangible Assets [Line Items]
Total intangible assets	$ 1,550	$ 1,550
Less: accumulated amortization	(1,334)	(1,287)
Intangible assets, net	216	263
Trade Name
Indefinite-Lived Intangible Assets [Line Items]
Total intangible assets	$ 1,280	1,280
Trade Name \| Maximum
Indefinite-Lived Intangible Assets [Line Items]
Useful lives (in years)	13 years
Trade Name \| Minimum
Indefinite-Lived Intangible Assets [Line Items]
Useful lives (in years)	10 years
Technology
Indefinite-Lived Intangible Assets [Line Items]
Total intangible assets	$ 270	$ 270
Useful lives (in years)	13 years

EARNINGS PER SHARE

12 Months Ended

Dec. 31, 2023

Earnings Per Share [Abstract]

EARNINGS PER SHARE

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 dividends		(314	)		(1,189	)
Net income attributable to common shareholders — basic	$	14,434		$	19,891
Add: Redeemable convertible preferred stock dividends		314			1,189
Net income attributable to common shareholders — diluted	$	14,748		$	21,080
Denominator
Weighted-average common shares used in computing earnings per share — basic		21,421,610			11,951,137
Weighted-average effect of potentially dilutive securities:
Effect of potentially dilutive time-based stock options		488,997			1,006,729
Effect of potentially dilutive performance-based stock options		45,202			—
Effect of potentially dilutive redeemable convertible preferred stock		3,175,215			6,719,641
Weighted-average common shares outstanding — diluted		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

INCOME TAXES - Summary of Income Tax Expense Attributable to Income From Continuing Operations (Details) - USD ($) $ in Thousands	12 Months Ended
	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:	3,443	1,080
Total provision for income taxes	$ 5,046	$ 3,698

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2023

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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) 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. See Note 3, Merger for further discussion.

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 Related Credits and Relief

As a response to the COVID-19 outbreak, the U.S. government enacted the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) and provided an Employee Retention Credit (“ERC”) which is a refundable tax credit against certain employment taxes equal to 50% of qualified wages paid, up to $10 thousand per employee annually for wages paid. Additional relief provisions were passed by the United States government, which extended and expanded the qualified wage caps on these credits to 70% of qualified wages paid, up to $10 thousand per employee per quarter, through December 31, 2021. In November 2021, the Infrastructure Investment and Jobs Act was signed into law and ended the employee retention credit early, making wages paid after December 31, 2021, ineligible for the credit.

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 growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard, until such time the Company is no longer considered to be an emerging growth company. At times, the Company may elect to early adopt a new or revised standard. As such, the Company’s financial statements may not be comparable to companies that comply with public company effective dates.

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, and charges for lost-in-transit while in the care, custody or control of the Company’s customers, and other charges for made to order product sales. Product sales are accounted for under Topic 606.

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, or lost-in-transit while in the care, custody or control of the Company’s customers. Revenue is recognized for these products at a point in time upon the customer’s notification to the Company of the occurrence of one of these noted events.

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, on December 31, 2022, which was retroactively applied as of the first day of fiscal year 2022. This accounting standard requires companies to measure expected credit losses on financial instruments based on the total estimated amount to be collected over the lifetime of the instrument. Prior to the adoption of this accounting standard, the Company recorded incurred loss reserves against receivable balances based on current and historical information.

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 sheet arrangements that would require an allowance for credit losses in accordance with this accounting standard.

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 (“ASC 842”) as of January 1, 2022 using the modified retrospective transition approach, with no restatement of prior periods or cumulative adjustments to retained earnings. Upon adoption, the Company elected the package of transition practical expedients, which allowed it to carry forward prior conclusions related to whether any expired or existing contracts are or contain leases, the lease classification for any expired or existing leases and initial direct costs for existing leases. The Company elected the use-of-hindsight to reassess lease term. The Company elected not to recognize leases with an initial term of 12 months or less within the consolidated balance sheets and to recognize those lease payments on a straight-line basis in the consolidated statements of income and comprehensive income over the lease term. The new lease accounting standard also provides practical expedients for an entity’s ongoing accounting. The Company elected the practical expedient to not separate lease and non-lease components for all leases.

The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets and current operating lease liabilities and operating lease liabilities, net of current portion on the consolidated balance sheets. The Company recognizes lease expense for its operating leases on a straight-line basis over the term of the lease.

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 asset is tested for impairment in accordance with ASC Topic 360, 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 agreements and a supply agreement. These intangible assets are amortized either on a straight-line basis over the asset’s estimated useful life or on a basis that reflects the pattern in which the economic benefits of the intangible are realized.

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, receive-variable interest rate swap based on SOFR swap rate. The SOFR swap rate is observable at commonly quoted intervals for the full term of the swap and therefore is considered a Level 2 item. For interest rate swaps in an asset position, the credit standing of the counterparty is analyzed and factored into the fair value measurement of the asset. The impact of the Company’s creditworthiness has also been factored into the fair value measurement of the interest rate swap in a liability position. For the years ended December 31, 2023 and 2022, the application of valuation techniques applied to similar assets and liabilities has been consistent.

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 at the end of each quarter and the realized/unrealized gain or loss is recorded as interest expense.

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 – Valuation inputs are unadjusted quoted market prices for identical assets or liabilities in active markets.

Level 2 – Valuation inputs are quoted prices for identical assets or liabilities in markets that are not active, quoted market prices for similar assets and liabilities in active markets and other observable inputs directly or indirectly related to the assets or liabilities being measured.

Level 3 – Valuation inputs are unobservable and significant to the fair value measurement.

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 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 process. A determination is first made as to whether it is more likely than not that the income tax position will be sustained, based upon technical merits and upon examination by the taxing authorities. If the income tax position is expected to meet the more likely than not criteria,

the benefit recorded in the consolidated financial statements equals the largest amount that is greater than 50% likely to be realized upon its ultimate settlement. The Company has no uncertain tax positions at December 31, 2023 and 2022. The 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 consolidated statements of income and comprehensive income for the year ended December 31, 2023 and 2022.

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 Not Yet Effective

In December 2023, FASB issued Accounting Standard Update (“ASU”) 2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures, which requires enhanced income tax disclosures that reflect how operations and related tax risks, as well as how tax planning and operational opportunities, affect the tax rate and prospects for future cash flows. This standard is effective for the Company beginning January 1, 2025 with early adoption permitted. The Company is evaluating the effects of adopting this new accounting guidance on its disclosures but does not currently expect adoption will have a material impact on the Company’s consolidated financial statements. The Company does not intend to early adopt this ASU.

In November 2023, FASB issued ASU 2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures, which includes requirements for more robust disclosures of significant segment expenses and measures of a segment’s profit and loss used in assessing performance. This standard is effective for the Company’s annual period beginning January 1, 2024 and interim periods beginning January 1, 2025 with early adoption permitted. The Company is still evaluating the effects of adopting this new accounting guidance on its disclosures.

MERGER - Summary of Common Stock Outstanding Immediately after Merger (Details) - shares	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		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

LEASES - Summary of Future Undiscounted Cash Flows (Details) $ in Thousands	Dec. 31, 2023 USD ($)
Lessee, Operating Lease, Liability, to be Paid, Fiscal Year Maturity [Abstract]
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

LEASES - Summary of Components of Lease Expense (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Lease, Cost [Abstract]
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

BALANCE SHEET DETAILS - CURRENT ASSETS AND CURRENT LIABILITIES

12 Months Ended

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):


	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 revenue		76		282
Deferred revenue		1,042		83
Total accrued expenses and other current liabilities	$	10,579	$	7,299

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 December 31, 2023		Year Ended December 31, 2022
Tool Rental Services	$	119,239	$	99,018
Product Sales		32,795		30,538
Total Revenue	$	152,034	$	129,556

PROPERTY, PLANT AND EQUIPMENT, NET (Tables)

12 Months Ended

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 Lives (in Years)	December 31, 2023			December 31, 2022
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

INVESTMENTS - EQUITY SECURITIES (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Investments, Debt and Equity Securities [Abstract]
Unrealized holding gain (loss) on equity securities	$ (255)	$ 234

LEASES (Tables)

12 Months Ended

Dec. 31, 2023

Leases [Abstract]

Summary of Components of Lease Expense

For the year ended December 31, 2023 and 2022, the components of the Company’s lease expense were as follows (in thousands):


	Year Ended December 31, 2023			Year Ended December 31, 2022
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):


	Year Ended			Year Ended
	December 31, 2023			December 31, 2022
Weighted-average remaining lease term (in years)		6.55		7.53
Weighted average discount rate		5.80	%		5.34	%


	Year Ended		Year Ended
	December 31, 2023		December 31, 2022
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 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

INCOME TAXES

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

INCOME TAXES

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 resulting in a decrease of 1.2% or $239 thousand. The effective tax rate impact of the other category for the year ended December 31, 2022, is primarily made up of tax basis balance sheet adjustments resulting in a decrease of 10.6% or $2.6 million. The offsetting impacts to the tax rate were individually immaterial.

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.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480990/946-20-50-13

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 235
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(h)(2))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org//740/tableOfContent

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 14
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482685/740-10-50-14

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 21
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482685/740-10-50-21

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 270
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482526/740-270-50-1

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 17
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482685/740-10-50-17

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SAB TOPIC 6.I.5.Q1)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479360/740-10-S99-1

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 2
-Subparagraph (SAB Topic 11.C)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479360/740-10-S99-2

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 30
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482603/740-30-50-2

+ Details

REVENUE - (Details) - USD ($) $ in Thousands	12 Months Ended
REVENUE - (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Disaggregation of Revenue [Line Items]
Revenue	$ 152,034	$ 129,556
United States
Disaggregation of Revenue [Line Items]
Revenue	$ 138,300	$ 118,300
Percentage of revenue	91.00%	91.00%
Canada and International
Disaggregation of Revenue [Line Items]
Revenue	$ 13,700	$ 11,300
Percentage of revenue	9.00%	9.00%

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References + Details

- Definition

Amount, excluding tax collected from customer, of revenue from satisfaction of performance obligation by transferring promised good or service to customer. Tax collected from customer is tax assessed by governmental authority that is both imposed on and concurrent with specific revenue-producing transaction, including, but not limited to, sales, use, value added and excise.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 924
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SAB Topic 11.L)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479941/924-10-S99-1

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 5
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-5

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 30
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-30

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 42
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-42

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 22
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-22

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 32
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-32

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 40
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-40

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 22
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-22

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 32
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-32

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 41
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-41

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 4
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-4

+ Details

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE CONVERTIBLE PREFERRED STOCK AND SHAREHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Previously Reported	Redeemable Convertible Preferred Stock	Redeemable Convertible Preferred Stock Previously Reported	Redeemable Convertible Preferred Stock Revision of Prior Period, Adjustment	Common Stock	Common Stock Previously Reported	Common Stock Revision of Prior Period, Adjustment	Treasury Stock Previously Reported	Treasury Stock Revision of Prior Period, Adjustment	Additional Paid-In Capital	Additional Paid-In Capital Previously Reported	Additional Paid-In Capital Revision of Prior Period, Adjustment	Accumulated Deficit	Accumulated Deficit Previously Reported	Accumulated Other Comprehensive Loss	Accumulated Other Comprehensive Loss 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 prior to closing of the Merger				$ 1,189
Accretion of redeemable convertible preferred stock to redemption value prior to closing of the Merger	(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
Temporary equity, ending balance, shares at Dec. 31, 2022	6,719,641		6,719,641
Ending balance at Dec. 31, 2022	$ 31,224					$ 1					52,388			(21,054)		(111)
Ending balance, shares at Dec. 31, 2022						11,951,137
Accretion of redeemable convertible preferred stock to redemption value prior to closing of the Merger			$ 314
Accretion of redeemable convertible preferred stock to redemption value prior to closing of the Merger	$ (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
Ending balance at Dec. 31, 2023	$ 88,690					$ 3					$ 95,218			$ (6,306)		$ (225)
Ending balance, shares at Dec. 31, 2023						29,768,568

REVOLVING CREDIT FACILITY (Details) - USD ($)	12 Months Ended
REVOLVING CREDIT FACILITY (Details) - USD ($)	Dec. 31, 2023	Jun. 20, 2023	Dec. 31, 2022
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		$ 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 December 31, 2025.
Line of credit	$ 0
Revolving Credit Facility \| SOFR
Line of Credit Facility [Line Items]
Basis spread on variable rate (as a percent)	8.40%
Revolving Credit Facility \| Base Rate
Line of Credit Facility [Line Items]
Basis spread on variable rate (as a percent)	2.00%

REVISIONS OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Right-of-use assets obtained in exchange for new operating lease liabilities	$ 3,264	$ 7,907
Non-cash lease expense	4,515	4,139
Operating lease liabilities	(4,415)	(4,174)
Accounts payable	(1,552)	(1,432)
Proceeds from sale of lost-in-hole equipment	19,684	21,116
Purchase of property, plant and equipment	$ (43,750)	(24,688)
Previously Reported
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Right-of-use assets obtained in exchange for new operating lease liabilities		9,451
Non-cash lease expense		(3,768)
Operating lease liabilities		3,733
Inventories of negative		1,000
Accounts payable		(981)
Proceeds from sale of lost-in-hole equipment		20,319
Purchase of property, plant and equipment		$ (23,753)

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References + Details

BALANCE SHEET DETAILS - CURRENT ASSETS AND CURRENT LIABILITIES (Tables)

12 Months Ended

Dec. 31, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Summary of Inventories, Net

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 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):


	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 revenue		76		282
Deferred revenue		1,042		83
Total accrued expenses and other current liabilities	$	10,579	$	7,299

MERGER (Tables)

12 Months Ended

Dec. 31, 2023

Business Combinations [Abstract]

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 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

REVISIONS OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS

12 Months Ended

Dec. 31, 2023

Prior Period Adjustment [Abstract]

REVISIONS OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS

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. The Company will revise its consolidated statement of cash flows for the three months ended March 31, 2023 in its future filing of its Quarterly Report on Form 10-Q as of and for the three months ended March 31, 2024. The following paragraphs describe the errors in the previously issued consolidated statements of cash flows for the year ended December 31, 2022 and the table following these paragraphs presents the quantitative impact of the errors described in the paragraphs below.

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 investing and financing activities 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 amounts for Canadian leases that were excluded from the consolidated balance sheet due to their being immaterial. In addition, the calculation incorrectly included amounts for ROU assets obtained in exchange for lease liabilities whereby the leases had terminated.

Also, with respect to leases, the Company determined that the previously reported amount of non-cash lease expense of negative $3.8 million within the operating activities section of the consolidated statement of cash flows for the year ended December 31, 2022 was calculated incorrectly. The previously reported amount was calculated as solely the change in ROU assets from December 31, 2021 to December 31, 2022 without taking into account the fact that the change in ROU assets is also impacted by the non-cash ROU assets obtained in exchange for lease liabilities.

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 ROU assets obtained in exchange for lease liabilities described above.

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 amounts expensed on the income statement for the provision for excess and obsolete inventory. The provision for excess and obsolete inventory should have been presented separately within the reconciliation of net income to net cash flows from operating activities in the consolidated statement of cash flows for the year ended December 31, 2022.

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 equipment of $20.3 million within the investing activities 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 amounts expensed on the income statement for the provision for excess and obsolete property, plant and equipment. The amount for the provision 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 investing and financing activities section incorrectly failed to disclose the amounts of purchases of inventory and property, plant and equipment remaining in accounts payable as of December 31, 2022.

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 Reported			Adjustment			As Revised
Non-cash lease expense	$	(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 equipment		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

REVENUE - Summary of Disaggregation of Revenues by Category (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Disaggregation of Revenue [Line Items]
Total Revenue	$ 152,034	$ 129,556
Tool Rental Services
Disaggregation of Revenue [Line Items]
Total Revenue	119,239	99,018
Product Sales
Disaggregation of Revenue [Line Items]
Total Revenue	$ 32,795	$ 30,538

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References + Details

- Definition

+ References

+ Details

INVESTMENTS - EQUITY SECURITIES (Tables)

12 Months Ended

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 Loss			Fair Value
December 31, 2023	$	999	$	(111	)	$	888


	Cost		Unrealized Gain		Fair Value
December 31, 2022	$	999	$	144	$	1,143

COMMITMENTS AND CONTINGENCIES

12 Months Ended

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, for further information.

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.

RELATED PARTY TRANSACTIONS

12 Months Ended

Dec. 31, 2023

RELATED PARTY TRANSACTIONS

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.

- Definition

The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480990/946-20-50-2

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
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-Name Accounting Standards Codification
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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Reference 10: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
-Section 50
-Paragraph 6
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483326/850-10-50-6

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Topic 850
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483326/850-10-50-1

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Topic 850
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483326/850-10-50-1

+ Details

EARNINGS PER SHARE - Summary of Computation of Company's Basic and Diluted Net Earnings Per Share (Details) - USD ($)
$ / shares in Units, $ in Thousands

12 Months Ended

Dec. 31, 2023

Dec. 31, 2022

Numerator:

Net income

$ 14,748

$ 21,080

Less: Redeemable convertible preferred stock dividends

(314)

(1,189)

Net income available to common shareholders

14,434

19,891

Add: Redeemable convertible preferred stock dividends

314

1,189

Net income attributable to common shareholders - diluted

$ 14,748

$ 21,080

Denominator

Weighted-average common shares used in computing earnings per share - basic

^[1]

21,421,610

11,951,137

Weighted-average effect of potentially dilutive securities:

Effect of potentially dilutive redeemable convertible preferred stock

3,175,215

6,719,641

Weighted-average common shares outstanding - diluted

^[1]

25,131,024

19,677,507

Earnings per share - basic

$ 0.67

$ 1.66

Earnings per share - diluted

$ 0.59

$ 1.07

Time-based Stock Options

Weighted-average effect of potentially dilutive securities:

Effect of potentially dilutive stock options

488,997

1,006,729

Performance-based Stock Options

Weighted-average effect of potentially dilutive securities:

Effect of potentially dilutive stock options

45,202

[1]	Shares of legacy redeemable convertible preferred stock and legacy common stock have been retroactively restated to give effect to the Merger.

RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands		12 Months Ended
	Jun. 20, 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		$ 200	$ 100
Hicks Holdings Operating LLC
Related Party Transaction [Line Items]
Management fees paid to shareholder		1,100	400
Cree Investments, LLC
Related Party Transaction [Line Items]
Rent expense paid to shareholder		$ 51	51
Heath Woodrum
Related Party Transaction [Line Items]
Payments for tools			$ 4

STOCK-BASED COMPENSATION - Summary of Options Outstanding (Details) - USD ($)		12 Months Ended
	Jun. 19, 2023	Dec. 31, 2023	Dec. 31, 2022
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Outstanding [Roll Forward]
OUTSTANDING, December 31, 2022		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	2,494,097
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		$ 4.04
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	$ 4.04
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

Document and Entity Information - USD ($) $ in Millions	12 Months Ended
Document and Entity Information - USD ($) $ in Millions	Dec. 31, 2023	Mar. 28, 2024	Jun. 30, 2023
Cover [Abstract]
Document Type	10-K
Amendment Flag	false
Document Annual Report	true
Document Transition Report	false
Document Period End Date	Dec. 31, 2023
Entity File Number	001-41103
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 Well-known Seasoned Issuer	No
Entity Voluntary Filers	Yes
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
ICFR Auditor Attestation Flag	false
Entity Shell Company	true
Entity Public Float			$ 128
Entity Common Stock, Shares Outstanding		29,768,568
Entity Central Index Key	0001884516
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	FY
Title of 12(b) Security	Common Stock, par value $0.0001 per share
Trading Symbol	DTI
Security Exchange Name	NASDAQ
Auditor Name	Weaver and Tidwell, L.L.P.
Auditor Location	Oklahoma
Auditor Firm ID	410
Document Financial Statement Error Correction [Flag]	false
Documents Incorporated by Reference [Text Block]	DOCUMENTS INCORPORATED BY REFERENCE List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) Any annual report to security holders; (2) Any proxy or information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or (c) under the Securities Act of 1933. The listed documents should be clearly described for identification purposes (e.g., annual report to security holders for fiscal year ended December 24, 1980)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Accounting Policies [Line Items]
Percentage of refundable tax credit against certain employment taxes equal to qualified wages paid	50.00%
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	70.00%
Maximum wages per employee per quarterly paid under employee retention credit	$ 10,000
Foreign currency translation adjustment, net of tax	(114,000)	$ 173,000
Cash equivalents	0	0
Contract assets	4,200,000	4,800,000
Accounts receivable	$ 29,929,000	$ 28,998,000	$ 20,000,000
Redeemable convertible preferred stock, shares outstanding		6,719,641
Carrying value of redeemable convertible preferred stock outstanding	$ 0	$ 17,878,000
Preferred stock, shares issued
Stock options granted	0
Minimum percentage of unrecognized tax benefits that would impact effective tax rate	50.00%
Unrecognized tax benefits	$ 0	$ 0
Unrecognized tax benefits accrued for interest and penalties	0	0
Realized loss on settlement of interest swap	$ 4,000	0
Derivative, Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration]	Other Nonoperating Expense
Assets fair value	$ 888,000	$ 1,619,000
Redeemable Convertible Preferred Stock
Accounting Policies [Line Items]
Redeemable convertible preferred stock, shares outstanding	0
Customer Concentration Risk \| Sales Revenue \| Two Customers
Accounting Policies [Line Items]
Concentration risk percentage		28.00%
Customer Concentration Risk \| Sales Revenue \| Three Customers
Accounting Policies [Line Items]
Concentration risk percentage	39.00%
Customer Concentration Risk \| Vendor Purchases \| One Vendor
Accounting Policies [Line Items]
Concentration risk percentage		12.00%
Customer Concentration Risk \| Vendor Purchases \| Two Vendors
Accounting Policies [Line Items]
Concentration risk percentage	23.00%
Customer Concentration Risk \| Accounts Receivable
Accounting Policies [Line Items]
Receivables from customers	$ 11,100,000	$ 8,600,000
Customer Concentration Risk \| Accounts Payable
Accounting Policies [Line Items]
Amounts due to vendors	300,000	900,000
Interest Rate Swap
Accounting Policies [Line Items]
Unrealized gain (loss) due to change in fair value	$ 400,000	1,400,000
Interest swap agreement settlement date	Jul. 10, 2023
Realized loss on settlement of interest swap	$ (4,000)
Level 3
Accounting Policies [Line Items]
Assets fair value	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

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	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		30,000,000
Series A redeemable convertible preferred stock, shares issued		6,719,641
Series A redeemable convertible preferred stock, shares outstanding		6,719,641
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	500,000,000	65,000,000
Common stock, shares issued	29,768,568	11,951,137
Common stock, shares outstanding	29,768,568	11,951,137
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	10,000,000
Preferred stock, shares issued
Preferred stock, shares outstanding
Treasury stock, shares

MERGER (Details)				12 Months Ended
MERGER (Details)	Jun. 20, 2023 USD ($) $ / shares shares	Jun. 19, 2023 $ / shares shares	Feb. 13, 2023 shares	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
Other intangible assets \| $	0
Proceeds received from the Merger and PIPE Financing, net of transaction costs \| $	$ 23,200,000
Stock-based compensation expense \| $					$ 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

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME - USD ($)
$ in Thousands

12 Months Ended

Dec. 31, 2023

Dec. 31, 2022

Revenue, net:

Revenue, net

$ 152,034

$ 129,556

Operating costs and expenses:

Selling, general, and administrative expense

68,264

51,566

Depreciation and amortization expense

20,352

19,709

Total operating costs and expenses

124,135

104,279

Operating income

27,899

25,277

Other expense, net:

Interest expense, net

(1,103)

(477)

Gain on sale of property

101

127

Loss on asset disposal

(489)

Unrealized gain (loss) on equity securities

(255)

234

Other expense, net

(6,359)

(384)

Total other expense, net

(8,105)

(500)

Income before income tax expense

19,794

24,777

Income tax expense

(5,046)

(3,698)

Net income

14,748

21,080

Accumulated dividends on redeemable convertible preferred stock

314

1,189

Net income available to common shareholders

$ 14,434

$ 19,891

Basic earnings per share

$ 0.67

$ 1.66

Diluted earnings per share

$ 0.59

$ 1.07

Basic weighted-average common shares outstanding

^[1]

21,421,610

11,951,137

Diluted weighted-average common shares outstanding

^[1]

25,131,024

19,677,507

Comprehensive income:

Net income

$ 14,748

$ 21,080

Foreign currency translation adjustment, net of tax

(114)

173

Net comprehensive income

14,634

21,253

Tool Rental

Revenue, net:

Revenue, net

119,239

99,018

Operating costs and expenses:

Operating costs and expenses

30,960

27,581

Product Sale

Revenue, net:

Revenue, net

32,795

30,538

Operating costs and expenses:

Operating costs and expenses

$ 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.

EARNINGS PER SHARE - Summary of Company's Potentially Dilutive Securities Excluded - Time-based Options Outstanding (Details) - shares	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Time-based Options Outstanding
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total	140,135	140,135

BALANCE SHEET DETAILS - CURRENT ASSETS AND CURRENT LIABILITIES - Summary of Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Accrued expenses:
Accrued compensation and related benefits	$ 4,999	$ 3,392
Accrued insurance	978	525
Accrued transaction advisory fees	1,000	0
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 revenue	76	282
Deferred revenue	1,042	83
Total accrued expenses and other current liabilities	$ 10,579	$ 7,299

EMPLOYEE BENEFIT PLANS (Details) - USD ($)	12 Months Ended
EMPLOYEE BENEFIT PLANS (Details) - USD ($)	Dec. 31, 2023	Dec. 31, 2022
Defined Benefit Plan [Abstract]
Maximum annual contributions per employee, percent		3.00%
Employer matching contribution, percent of match		150.00%
Defined contribution per employee		$ 2,000
Total expense	$ 500,000	$ 400,000
Defined contribution plan nature and effect of change, description	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 maximum contribution allowed under the Internal Revenue Service Regulations.

PROPERTY, PLANT AND EQUIPMENT, NET

12 Months Ended

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 Lives (in Years)	December 31, 2023			December 31, 2022
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.

PROPERTY, PLANT AND EQUIPMENT, NET (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Property, Plant and Equipment [Line Items]
Depreciation expense	$ 20,300	$ 19,700
Property, plant and equipment, net	65,800	44,154
United States
Property, Plant and Equipment [Line Items]
Property, plant and equipment, net	$ 63,000	$ 41,800
Property, plant and equipment net, Percentage	96.00%	95.00%
Canada
Property, Plant and Equipment [Line Items]
Property, plant and equipment, net	$ 2,800	$ 2,300
Property, plant and equipment net, Percentage	4.00%	5.00%

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)

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 December 31, 2023		Year Ended December 31, 2022
Tool Rental Services	$	119,239	$	99,018
Product Sales		32,795		30,538
Total Revenue	$	152,034	$	129,556

- Definition

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 9
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-9

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 10
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-10

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 15
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-15

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-12

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-12

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-12

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-12

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12
-Subparagraph (e)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-12

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Subparagraph (b)(2)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-13

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Name Accounting Standards Codification
-Topic 606
-Publisher FASB
-URI https://asc.fasb.org//606/tableOfContent

+ Details

LEASES - Summary of Supplemental Balance Sheet Information Related to Leases (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Leases [Abstract]
Weighted-average remaining lease term (in years)	6 years 6 months 18 days	7 years 6 months 10 days
Weighted average discount rate	5.80%	5.34%
Cash paid for amounts included in the measurement of lease liabilities	$ 5,538	$ 5,003

INCOME TAXES - Schedule of Income (Loss) Before Provision for (Benefit From) Income Taxes (Details) - USD ($) $ in Thousands	12 Months Ended
	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	$ 19,794	$ 24,777

- Definition

Amount of income (loss) from continuing operations, including income (loss) from equity method investments, before deduction of income tax expense (benefit), and income (loss) attributable to noncontrolling interest.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 944
-SubTopic 220
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.7-04(11))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483586/944-220-S99-1

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 22
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-22

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 30
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-30

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+ Details

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

12 Months Ended

Dec. 31, 2023

Accounting Policies [Abstract]

Schedule of Allowance For Credit Losses

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 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

OTHER EXPENSE, NET (Tables)

12 Months Ended

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 years ended December 31, 2023, and 2022 (in thousands):


	Year Ended December 31, 2023			Year Ended December 31, 2022
HHLLC stock-based compensation	$	(2,339	)	$	—
Transaction fees		(3,640	)		—
Other, net		(428	)		(436	)
Interest income		48			52
Other expense, net	$	(6,359	)	$	(384	)

INTANGIBLE, NET

12 Months Ended

Dec. 31, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

INTANGIBLE, NET

NOTE 7 -INTANGIBLES, NET

The following table shows the components of intangible assets, net (in thousands):


	Useful Lives (in Years)	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

12 Months Ended

Dec. 31, 2023

Leases [Abstract]

LEASES

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 December 31, 2023			Year Ended December 31, 2022
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
	December 31, 2023			December 31, 2022
Weighted-average remaining lease term (in years)		6.55		7.53
Weighted average discount rate		5.80	%		5.34	%


	Year Ended		Year Ended
	December 31, 2023		December 31, 2022
Cash paid for amounts included in the measurement of lease liabilities		5,538		5,003


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.

EMPLOYEE BENEFIT PLANS

12 Months Ended

Dec. 31, 2023

Defined Benefit Plan [Abstract]

EMPLOYEE BENEFITS

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 maximum contribution allowed under the Internal Revenue Service Regulations. The total expense for the years ended December 31, 2023 and 2022 was approximately $0.5 million and $0.4 million, respectively.

BALANCE SHEET DETAILS - CURRENT ASSETS AND CURRENT LIABILITIES - Summary of Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Prepaid expenses:
ERC benefits receivable	$ 0	$ 2,117
Deposits on inventory	2,146	680
Prepaid income tax	362	0
Prepaid insurance	1,110	358
Prepaid rent	372	381
Prepaid equipment	331	179
Prepaid other	214	173
Other current assets:
Interest rate swap asset	0	476
Other	18	17
Total	$ 4,553	$ 4,381

INCOME TAXES (Details) - USD ($) $ in Thousands	12 Months Ended
INCOME TAXES (Details) - USD ($) $ in Thousands	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
State and Local Jurisdiction
Schedule Of Income Taxes Reconciliation [Line Items]
Operating loss carryforwards	$ 8,800	$ 9,800

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Dec. 31, 2023

Accounting Policies [Abstract]

Organization and Structure

Basis of Presentation

COVID-19 Related Credits and Relief

Emerging Growth Company

Use of Estimates

Principles of Consolidation

Foreign Currency Translations and Transactions

Concentration of Credit Risk

Revenue Recognition

Tool Rental Services

Tool rental services consist of rental services, inspection services, and repair services. Tool rental services are accounted for under Topic 842.

The Company records the amounts billed to customers in excess of recognizable revenue as deferred revenue on its consolidated balance sheet.

Product Sales

Contract Assets and Liabilities

Cash and Cash Equivalents

Accounts Receivable and Allowance for Credit Losses

The Company is not party to any off-balance sheet arrangements that would require an allowance for credit losses in accordance with this accounting standard.

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

Property, Plant and Equipment

Property, plant and equipment acquired as part of a business acquisition is recorded at acquisition date fair value with subsequent additions at cost.

Impairment of Long-Lived Assets

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

Lessor Accounting

We recognized operating lease revenue within “Tool rental” on the consolidated statements of income and comprehensive income.

Intangibles

Investments - Equity Securities

Investment - Equity Securities

Derivative Financial Instruments

Fair Value Measurements

Level 1 – Valuation inputs are unadjusted quoted market prices for identical assets or liabilities in active markets.

Level 3 – Valuation inputs are unobservable and significant to the fair value measurement.

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

Redeemable Convertible Preferred Stock

Preferred Stock

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

Stock-Based Compensation

Earnings Per Share

Income Taxes

The Company is subject to state income taxes in various jurisdictions.

Operating Segment

Accounting Standards Issued Not Yet Effective

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Summary of Asset and Liabilities Measured at Fair Value (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investments, equity securities	$ 888	$ 1,143
Total assets at fair value	888	1,619
Interest Rate Swap
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Interest rate swap		476
Level 1
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investments, equity securities	888	1,143
Total assets at fair value	888	1,143
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
Total assets at fair value	0	476
Level 2 \| Interest Rate Swap
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Interest rate swap		476
Level 3
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investments, equity securities	0	0
Total assets at fair value	$ 0	0
Level 3 \| Interest Rate Swap
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Interest rate swap		$ 0

- Definition

Fair value, after the effects of master netting arrangements, of a financial asset or other contract with one or more underlyings, notional amount or payment provision or both, and the contract can be net settled by means outside the contract or delivery of an asset. Includes assets not subject to a master netting arrangement and not elected to be offset.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 210
-Name Accounting Standards Codification
-Section 50
-Paragraph 12
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-URI https://asc.fasb.org//1943274/2147480524/946-210-50-12

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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Reference 3: http://www.xbrl.org/2003/role/exampleRef
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 5: http://www.xbrl.org/2003/role/disclosureRef
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Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
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Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
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Reference 14: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Schedule of Income (Loss) Before Provision for (Benefit From) Income Taxes

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

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


	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	)

EARNINGS PER SHARE (Tables)

12 Months Ended

Dec. 31, 2023

Earnings Per Share [Abstract]

Summary of Computation of The Company's Basic and Diluted Net Earnings Per Share


	Year Ended December 31,
	2023			2022
Numerator:
Net income	$	14,748		$	21,080
Less: Redeemable convertible preferred stock dividends		(314	)		(1,189	)
Net income attributable to common shareholders — basic	$	14,434		$	19,891
Add: Redeemable convertible preferred stock dividends		314			1,189
Net income attributable to common shareholders — diluted	$	14,748		$	21,080
Denominator
Weighted-average common shares used in computing earnings per share — basic		21,421,610			11,951,137
Weighted-average effect of potentially dilutive securities:
Effect of potentially dilutive time-based stock options		488,997			1,006,729
Effect of potentially dilutive performance-based stock options		45,202			—
Effect of potentially dilutive redeemable convertible preferred stock		3,175,215			6,719,641
Weighted-average common shares outstanding — diluted		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


	Year Ended December 31,
	2023		2022
Time-based options outstanding		140,135		140,135
Total		140,135		140,135


	Year Ended December 31,
	2023		2022
Performance-based options outstanding		—		534,063
Total		—		534,063

REVOLVING CREDIT FACILITY

12 Months Ended

Dec. 31, 2023

Line of Credit Facility [Abstract]

REVOLVING CREDIT FACILITY

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 further discussion of the 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, and determined the Default Rate met the definition of a derivative as it is a contingent interest feature. The Company also noted that the Default Rate feature (the 'Default Rate Derivative') required bifurcation from the host contract and was to be accounted for at fair value. In accordance with ASC 815-15, the Company bifurcated the Default Rate feature of the note and determined the derivative is liability classified.

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 default event and determined the likelihood of a referenced event to be remote. Therefore, the estimated fair value of the Default Rate Derivative was negligible as of December 31, 2023 and 2022 and, therefore, no amounts were recorded as of December 31, 2023 and 2022.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References

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+ Details