Innovex International, Inc. — Third Quarter 2026 Earnings Summary

Financial Performance:

• Revenue was $265.1 million, representing an 8% increase quarter-over-quarter and a 10% increase year-over-year compared to $240.0 million.
• Net income was $26.3 million, with a net income margin of 10%, down from 16% in the prior year period ($39.2 million).
• Adjusted EBITDA was $55.4 million, up from $43.6 million in the prior year, resulting in an Adjusted EBITDA margin of 21% (vs. 18% prior year).
• Net cash provided by operating activities was $38.8 million, compared to $48.4 million in the prior year.
• Free Cash Flow was $32.4 million, compared to $36.5 million in the prior year.
• Income from operations for the twelve months ended September 30, 2026, was $70.1 million.
• Return on Capital Employed (ROCE) for the twelve months ended September 30, 2026, was 10%, compared to 13% in the prior year.
• Capital expenditures totaled $6.4 million (approximately 2.4% of revenue).
• The company ended the quarter with $188.8 million in cash and cash equivalents and no bank debt.

Guidance and Future Outlook:

• For the fourth quarter of 2026, the company expects revenue between $260 million and $270 million.
• Adjusted EBITDA for the fourth quarter of 2026 is expected to be between $53 million and $58 million.
• Management anticipates the subsea backlog growth will translate into meaningful growth in 2027 and beyond.
• The company expects direct awards to increase in the coming quarters, bypassing local agents to expand margins.

Business Segments and Product Lines:

• U.S. Land business benefited from increased activity and modest share gains, particularly in the cementing tool business.
• Subsea backlog continued to grow during the quarter.
• The Middle East business delivered a solid quarter despite regional disruptions related to the ongoing conflict in Iran.
• The company re-entered Venezuela as activity began to recover.
• New awards included a $30+ million subsea wellhead contract with a major international operator in Indonesia.
• Additional $9+ million in subsea work was awarded through the OneSubsea Alliance.
• The company secured two follow-on subsea awards in Malaysia and a significant fishing contract in the North Sea displacing the incumbent supplier.
• The company secured its first direct corporate purchase agreement with a major national oil company in the Middle East.
• Successfully began the installation of a 20K psi wellhead system for a major operator Offshore US.

Market and Competitive Landscape:

• Innovex expanded its leading market share position in cementing tools in the Lower 48 with meaningful awards from two large operators.
• The company is entering a new phase where its global platform increasingly enables technology deployments across geographies, applications, and customers.
• Management noted that the capital-light business model allows participation in growth in countries like Venezuela without significant fixed investments.

Risks and Challenges:

• Project timing and geopolitical uncertainty may continue to create quarter-to-quarter variability.
• Regional disruptions related to the ongoing conflict in Iran impacted the Middle East business.
• Forward-looking statements are subject to risks including M&A integration, operating hazards, natural disasters, cyberattacks, and uncertainties pertaining to the Impulse litigation.

Management Commentary and Tone:

• CEO Adam Anderson stated the company delivered a strong third quarter driven by investments in technology and global operating platforms, expressing encouragement regarding momentum and market share gains.
• CFO Kendal Reed highlighted the strength of the capital-light business model and disciplined capital allocation, noting the strong balance sheet provides flexibility for organic and inorganic growth.
• Management emphasized a focus on converting advantages into sustainable, profitable growth while maintaining discipline around execution and capital allocation.

Other Key Points:

• The company is actively focusing on M&A opportunities with strong quantitative and qualitative characteristics.
• The company is a Houston-based entity established in 2024 following the merger of Dril-Quip, Inc. and Innovex Downhole Solutions, Inc.
• The company incurred acquisition and integration costs of $0.9 million and a provision for legal settlement of $1.8 million in the quarter.
• The company paid $63.3 million in payments on acquisitions, net of cash acquired, during the quarter.
• No dividends were paid in the current or prior year quarters.
• The company maintains a strong liquidity position with $189 million in cash and no bank debt.