Drilling Tools International Corp Leases Disclosure
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, 2025.
For the year ended December 31, 2025 and December 31, 2024, the components of the Company’s lease expense were as follows (in thousands):
|
|
Year Ended December 31, 2025 |
|
|
Year Ended December 31, 2024 |
|
||
Operating Lease Cost |
|
$ |
6,995 |
|
|
$ |
6,494 |
|
Short-term Lease Cost |
|
|
126 |
|
|
|
136 |
|
Variable Lease Cost |
|
|
440 |
|
|
|
382 |
|
Total Lease Cost |
|
$ |
7,561 |
|
|
$ |
7,012 |
|
Supplemental balance sheet information related to leases was as follows (in thousands):
|
|
Year Ended December 31, 2025 |
|
|
Year Ended December 31, 2024 |
|
||
Weighted-average remaining lease term (in years) |
|
|
7.85 |
|
|
|
7.11 |
|
Weighted average discount rate |
|
|
8.20 |
% |
|
|
7.57 |
% |
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, 2025 were as follows (in thousands):
2026 |
|
$ |
6,150 |
|
2027 |
|
|
5,036 |
|
2028 |
|
|
4,431 |
|
2029 |
|
|
3,655 |
|
2030 |
|
|
3,514 |
|
Thereafter |
|
|
12,762 |
|
Total lease payments |
|
$ |
35,548 |
|
Less: imputed interest |
|
|
(9,719 |
) |
Present value of lease liabilities |
|
$ |
25,829 |
|
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 6, 2026 | Showing above |
| 2024 | Mar 14, 2025 | |
| 2023 | Mar 28, 2024 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.