Revenue Growth and Composition - Revenue increased by 340%, from $35 million in 2012 to $154 million in 2024[18]. - Directional Tool Rentals (DTR) accounted for approximately 50% of total revenue in 2024, with a fleet of over 23,000 tools[17][20]. - Premium Tools Division (PTD) contributed approximately 17% of total revenue in 2024, with a fleet of approximately 1,000,000 feet of drill pipe[20]. - Wellbore Optimization Tools (WOT) represented approximately 21% of total revenue in 2024, featuring tools that enhance drilling efficiency[20]. - New acquisitions accounted for approximately 10% of total revenue in 2024, including Casing Technologies Group Limited and Superior Drilling Products[21]. - Approximately 46% of the company's 2024 revenue comes from diversified oilfield service companies, while E&P operators account for about 48%[31]. - The company generated revenue from tool rentals and product sales of $154.4 million for the year ended December 31, 2024, compared to $152.0 million for 2023, indicating a slight increase in revenue[194]. Operational Expansion - The company expanded its customer base from less than 10% to over 45% revenue derived from exploration and production (E&P) operators from 2014 to 2024[27]. - The company established 16 service and support centers in North America and 11 additional international centers across Europe, the Middle East, and Asia-Pacific[18]. - In 2024, the company expanded its international operations by completing 2 acquisitions, increasing its service and support centers from 4 to 11[28]. - The company operates a large rental tool fleet concentrated in the Permian Basin, which is critical for securing large contracts across multiple geographic locations[29]. - The company operates from 16 locations in North America and maintains 11 international stocking points in Europe, the Middle East, and Asia-Pacific[35]. Financial Performance and Profitability - The net income for the company was $3.0 million for the year ended December 31, 2024, down from $14.7 million in 2023, reflecting a significant decrease in profitability[194]. - The accumulated deficit as of December 31, 2024, was $3.6 million, improved from $6.3 million in 2023, showing a reduction in historical losses[194]. - The company is experiencing rising costs due to global inflation, which is expected to impact profitability in the near term[205]. Safety and Compliance - The company has reduced its total recordable incident rate from 2.3 in 2018 to 1.15 in 2024, which is lower than the industry average, demonstrating a commitment to employee safety[34]. - Compliance with environmental laws and regulations may increase operational costs and affect demand for products and services[121]. - The company is subject to regulatory changes, including potential restrictions on federal oil and gas leasing practices, which could adversely affect operations and revenue[82]. Strategic Initiatives - The company aims to maximize the profitability of its core rental tool business and expand geographically[26]. - The company has a strategy to execute accretive mergers and acquisitions, having completed four transactions in 2024[26]. - The company completed a merger with ROC Energy Acquisition Corp. on June 20, 2023, which may impact future operational strategies and market positioning[190]. Risks and Challenges - The company faces risks related to dependence on a small number of customers and potential challenges in obtaining necessary permits for operations[43]. - The company experienced a significant reliance on a small number of customers, with 28% and 39% of total revenue coming from its two largest customers in 2024 and 2023, respectively[64]. - The company is dependent on the oil and gas industry's activity levels, which are influenced by crude oil and natural gas prices, and any downturn could adversely affect demand for its products and services[59]. - The company may face significant competition in the oil and gas drilling tool rental industry, which could lead to price competition and reduced utilization rates[85]. - The company may incur additional indebtedness to support its long-term growth strategy, which could reduce profitability[102]. Cybersecurity and IT Management - The company has a cybersecurity Risk Management Policy in place to identify and manage cybersecurity risks[169]. - Cybersecurity incidents could damage the company's reputation, disrupt operations, and impact revenues[180]. - The company utilizes third-party services for cybersecurity support and conducts annual risk assessments[173][175]. - The Chief Financial Officer and VP of Finance are responsible for overseeing cybersecurity threats and risks, reporting to the Board of Directors[179]. Market Conditions and Economic Factors - The monthly average rig count in the Western Hemisphere decreased by 10% from 1,040 rigs in 2023 to 940 rigs in 2024[25]. - The WTI oil price was approximately $72.44 per barrel as of December 31, 2024, reflecting ongoing volatility in the oil market[200]. - Henry Hub natural gas spot prices increased from an average of $2.52 per MMBtu in December 2023 to $3.01 per MMBtu in December 2024, indicating a rebound in natural gas prices[202]. Shareholder and Financial Governance - The company has broad discretion over its cash usage, with no current plans to pay cash dividends on common stock, potentially limiting returns for shareholders[55]. - There are no current plans to pay cash dividends on the Common Stock for the foreseeable future, which may limit returns for investors[161]. - The company's sole material asset is its direct equity interest in DTIH, making it dependent on distributions from DTIH for financial obligations[162]. - The Nasdaq Capital Market may delist the Common Stock, which could adversely affect trading and liquidity[163].
ROC ENERGY ACQUI(ROC) - 2024 Q4 - Annual Report