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Summary of Significant Accounting Policies (Policies) | 9 Months Ended
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Sep. 30, 2024
Accounting Policies [Abstract] |
Impairment of Long-lived Assets | Impairment of Long-lived Assets The Company performs reviews for impairment of long-lived assets, including property and equipment, intangible assets with definite lives and operating lease right of use assets, whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Long-lived assets are grouped at the lowest level for which there are identifiable cash flows that are largely independent of the cash flows of other groups of assets. The carrying value of an asset group is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. When an impairment is identified, the carrying amount of the asset is reduced to its estimated fair value. In the second quarter of 2024, Legacy Innovex identified a significant decrease in the market price of a right of use asset related to a building lease and a company owned building. Legacy Innovex determined the carrying values were not recoverable and exceeded their fair values. Legacy Innovex then measured the impairment losses by comparing the book values with current third-party quoted market prices, resulting in a total impairment of $3.5 million. As a result of the Merger, the Company further adopted the following significant accounting policies:
Restricted Cash | Restricted Cash As of September 30, 2024 and December 31, 2023 the Company had a restricted cash balance of $4.0 million and $0.3 million, respectively. This balance primarily consists of a cash collateral account with JPMorgan Chase Bank, N.A., to facilitate the Company's existing letters of credit. The Company is required to maintain a balance equal to the outstanding letters of credit plus 5% at all times which is considered restricted cash and is included in “Cash and restricted cash” in our condensed consolidated balance sheet at September 30, 2024. Withdrawals from this cash collateral account are only allowed when a given letter of credit has expired or has been cancelled.
Revenue Recognition | Revenue Recognition The Company uses the over time method on long-term project contracts that have the following characteristics: • the contracts call for products which are designed to customer specifications; • the structural designs are unique and require significant engineering and manufacturing efforts; • product requirements cannot be filled directly from the Company’s standard inventory; and • the Company has an enforceable right to payment for any work completed to date and the enforceable payment includes a reasonable profit margin. For each project in which revenue is recognized under the over time method, which is typically consistent of product sales of our subsea trees, the Company prepares a detailed analysis of estimated costs, profit margin, completion date and risk factors which include availability of material, production efficiencies and other factors that may impact the project. On a quarterly basis, management reviews the progress of each project, which may result in revisions of previous estimates, including revenue recognition. The Company calculates the percentage complete and applies the percentage to determine the revenues earned and the appropriate portion of total estimated costs to be recognized. Losses, if any, are recorded in full in the period they become known. Historically, the Company’s estimates of total costs and costs to complete have approximated actual costs incurred to complete the project. Under the over time method, billings may not correlate directly to the revenue recognized. Based upon the terms of the specific contract, billings may be in excess of the revenue recognized, in which case the amounts are included in "Contract liabilities" as a liability in our condensed consolidated balance sheets. Likewise, revenue recognized may exceed customer billings in which case the amounts are reported in "Contract assets" in our condensed consolidated balance sheets. At September 30, 2024, Contract assets totaled $8.1 million related to products accounted for using the over time method of accounting. For the three and nine months ended September 30, 2024, there were 6 projects representing approximately 0.2% of the Company’s total revenues and approximately 0.2% of its product revenues, and 6 projects representing approximately 0.1% of the Company’s total revenues and approximately 0.1% of it s product revenues, respectively, which were accounted for using the over time method of accounting.
Reclassifications | Reclassifications In conjunction with the Merger, the Company made the following reclassification in the prior year presentation to conform to the current year presentation: • The Company reclassified $0.8 million and $2.0 million for the three and nine months ended September 30, 2023 to "Acquisition costs", which were previously presented within "Selling, general and administrative expenses" on the Condensed Consolidated Statements of Operations and Comprehensive Income.
Recent Accounting Pronouncements | Recent Accounting Pronouncements Segment Reporting (Topic 280). In November 2023, the Financial Accounting Standards Board ("FASB") issued ASU 2023-07, Segment Reporting—Improvements to Reportable Segment Disclosures (Topic 280). The amendments in this update require a public entity to report, for each reportable segment, a measure of the segment’s profit or loss that its chief operating decision maker uses to assess segment performance and make decisions about resource allocation. Although information about a segment’s revenue and measure of profit or loss is disclosed in an entity’s financial statements under the current requirements, there generally is limited information disclosed about a segment’s expenses and, therefore, investors supported enhanced expense disclosures. Accordingly, the ASU requires public entities to provide investors with additional, more detailed information about a reportable segment’s expenses and is intended to improve the disclosures about a public entity’s reportable segments. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. A public entity should apply the amendments in this ASU 2023-07 retrospectively to all prior periods presented in the financial statements. Upon transition, the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption. The Company is currently assessing the impact of ASU 2023-07 on its disclosures. Income Tax Disclosures (ASC 740) In December 2023, the FASB issued ASU 2023-09 which updated accounting guidance related to income tax disclosures. The updated accounting guidance, among other things, requires additional disclosures primarily related to the tax rate reconciliation and income taxes paid. ASU 2023-09 is effective for annual periods beginning after December 15, 2024. The Company is currently assessing the impact of ASU 2023-09 on its disclosures.

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- Definition Entity's cash and cash equivalents accounting policy with respect to restricted balances. Restrictions may include legally restricted deposits held as compensating balances against short-term borrowing arrangements, contracts entered into with others, or company statements of intention with regard to particular deposits; however, time deposits and short-term certificates of deposit are not generally included in legally restricted deposits. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 942 -SubTopic 210 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.9-03(1)(a)) -Publisher FASB -URI https://asc.fasb.org/1943274/2147478546/942-210-S99-1 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Name Accounting Standards Codification -Topic 230 -SubTopic 10 -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482913/230-10-50-1 + Details
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- Definition Disclosure of accounting policy for recognizing and measuring the impairment of long-lived assets. An entity also may disclose its accounting policy for long-lived assets to be sold. This policy excludes goodwill and intangible assets. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 360 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 5.CC) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480091/360-10-S99-2 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Name Accounting Standards Codification -Section 05 -Paragraph 4 -SubTopic 10 -Topic 360 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482338/360-10-05-4 + Details
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