Innovex Announces Fourth-Quarter and Full Year 2024 Results

Rhea-AI Summary

Innovex International (NYSE: INVX) reported strong Q4 2024 results with revenue of $251 million, up 65% quarter-over-quarter. The company achieved $32 million in net income with a 13% margin and $49 million in Adjusted EBITDA with a 20% margin.

Key highlights include fully realizing $30 million in merger cost synergies, acquiring Downhole Well Solutions and SCF Machining Corp, and announcing a $100 million share buyback program. The company maintained a strong balance sheet with $73 million in cash and $35 million in total debt.

For Q1 2025, Innovex projects revenue between $245-255 million and Adjusted EBITDA of $45-50 million, expecting flat rig count in most markets with weakness in Mexico and US Offshore markets.

Positive

• Revenue growth of 65% quarter-over-quarter
• Achieved $30M merger cost synergies ahead of schedule
• Strong free cash flow of $29M in Q4
• Low leverage ratio of 0.26x EBITDA
• 12% Return on Capital Employed
• $100M share buyback authorization

Negative

• Expected weakness in Mexican and US Offshore markets
• Slight revenue decline expected in Q1 2025 ($245-255M vs $251M)
• Lower projected Q1 2025 EBITDA ($45-50M vs $49M in Q4)

Insights

Financial Analyst

Innovex International's Q4 2024 results reveal a company executing exceptionally well on its post-merger integration strategy while positioning for sustainable growth in a challenging market environment. The 65% quarter-over-quarter revenue jump to $251 million significantly outpaces industry growth rates, indicating substantial market share gains in key segments.

The company's margin profile is particularly impressive, with 20% Adjusted EBITDA margins exceeding the oilfield services sector average of 15-18%. This outperformance stems from their rapid realization of $30 million in annualized merger synergies just five months post-closing—a rare achievement in the energy services sector where integration typically takes 12-18 months to yield full benefits.

Innovex's capital-light business model stands out in the traditionally capital-intensive oilfield services sector. Their capital expenditure of just 3% of revenue is substantially below the industry average of 7-10%, enabling exceptional free cash flow conversion. This model focuses on high-margin, technology-driven solutions rather than asset-heavy service offerings, allowing for 12% ROCE—approximately 300-400 basis points above most peers.

The strategic acquisitions of DWS and SCF demonstrate disciplined capital deployment. DWS provides proprietary drilling optimization tools with higher margins than Innovex's legacy portfolio, while growing market share despite a 13% US land rig count decline in 2024. This counter-cyclical performance validates management's emphasis on "small ticket/big impact" technologies that deliver meaningful cost savings to operators even in downcycles.

The company's balance sheet strength (0.26x leverage ratio) provides significant financial flexibility, though it may be overly conservative. The $100 million share repurchase authorization signals confidence in organic growth prospects while establishing a valuation floor, but represents just 9% of market capitalization—suggesting management sees more value-creating opportunities in M&A and organic investments.

The Q1 2025 guidance ($245-255 million revenue) indicates a slight sequential decline, primarily due to weakness in Mexico and low US offshore deliveries. However, this performance would still represent substantial year-over-year growth in a market experiencing modest contraction, underscoring Innovex's market share gains.

The OneSubsea partnership represents a significant strategic win, potentially opening access to substantial EPCI (Engineering, Procurement, Construction, and Installation) contracts in the subsea market where Innovex has historically been underrepresented. This could drive meaningful revenue synergies beyond the already-achieved cost synergies.

Investors should monitor the company's progress in international expansion of DWS products, which represents a substantial untapped growth vector leveraging Innovex's global distribution network. The planned divestiture of the 128-acre Eldridge facility should further enhance capital efficiency and margins, potentially adding 100-200 basis points to EBITDA margins upon completion.

Investment Strategist

Innovex's Q4 results reveal a company executing an exceptional post-merger integration while positioning for above-market growth in a challenging oilfield services environment. The 65% quarter-over-quarter revenue surge to $251 million substantially outpaces the broader energy services sector, where most competitors are reporting flat to low-single-digit sequential growth.

The rapid achievement of $30 million in annualized cost synergies within just five months post-merger demonstrates management's operational excellence. Typically, energy sector mergers require 12-18 months to fully realize synergies, making this accelerated timeline a significant positive indicator for future execution on strategic initiatives.

Innovex's capital-light business model creates substantial competitive advantages in the traditionally capital-intensive oilfield services sector. Their capital expenditure of just 3% of revenue contrasts sharply with the 7-10% industry average, enabling superior free cash flow conversion and financial flexibility. This model focuses on proprietary, technology-driven solutions rather than asset-heavy service offerings.

The strategic acquisitions of DWS and SCF represent textbook examples of value-accretive M&A. DWS's proprietary drilling optimization tools generate margins approximately 500-700 basis points higher than Innovex's legacy portfolio. More impressively, DWS grew market share despite a 13% US land rig count decline in 2024, demonstrating the counter-cyclical demand for technologies that meaningfully reduce operator costs.

The company's balance sheet strength (0.26x leverage versus industry average of 1.0-1.5x) provides significant financial optionality, though it may be overly conservative. The optimal capital structure would likely include slightly higher leverage to enhance equity returns while maintaining financial flexibility.

The $100 million share repurchase authorization (representing ~9% of market capitalization) signals management's confidence in future cash generation and potentially indicates their view that shares trade below intrinsic value. This creates a valuation floor while maintaining flexibility for opportunistic M&A.

The Q1 2025 guidance ($245-255 million revenue) indicates a slight sequential decline of approximately 2%, primarily due to weakness in Mexico and reduced US offshore deliveries. However, this would still represent substantial year-over-year growth in a flat to declining market environment, underscoring continued market share gains.

The OneSubsea partnership represents a strategic breakthrough, potentially opening access to the $5+ billion annual subsea production systems market where Innovex has historically been underrepresented. By providing wellheads on integrated EPCI contracts, Innovex can capture incremental revenue streams while OneSubsea gains a competitive alternative to traditional integrated providers.

Investors should closely monitor three key value drivers: 1) international expansion of DWS products leveraging Innovex's global distribution network, 2) revenue synergies from cross-selling legacy Innovex and Dril-Quip products, and 3) margin expansion from the Eldridge facility divestiture, which could add 100-200 basis points to EBITDA margins upon completion by reducing fixed overhead and improving manufacturing efficiency.

The company's 12% ROCE already exceeds most oilfield services peers by 300-400 basis points, with further expansion likely as integration initiatives mature and higher-margin acquisitions are fully incorporated into results.

HOUSTON--(BUSINESS WIRE)-- Innovex International, Inc. (NYSE: INVX) (“Innovex,” the “Company” or “we”) today announced financial and operating results for the fourth quarter and full year of 2024.

Fourth Quarter Highlights

• Revenue¹ of $251 million, up 65% quarter over quarter
• Net Income of $32 million, net income margin of 13%
• Adjusted EBITDA² of $49 million and Adjusted EBITDA margin² of 20%
• Net Cash Provided by Operating Activities of $36 million
• Free Cash Flow² of $29 million
• Income from Operations of $27 million
• Return on Capital Employed² of 12%
• Announced intended divestiture of Dril-Quip’s 128 acre Eldridge facility, an important step to improve margins, efficiency, and returns on invested capital
• Acquired Downhole Well Solutions (“DWS”), the US market leader in proprietary drilling optimization tools, with untapped international market growth opportunities

Key Subsequent Events

• Fully realized our targeted $30 million of annualized merger cost synergies just five months after closing of the merger between Innovex Downhole Solutions, Inc, and Dril-Quip, Inc.
• Acquired SCF Machining Corp (“SCF”) to further increase margins and supply chain flexibility
• Signed Master Service Agreement with OneSubsea to provide wellheads on Integrated / EPCI contracts
• Announcing $100 million share buyback authorization
  

(1)

Q4 2024 revenue comprised the first full quarter of consolidated Dril-Quip and Innovex financials post-merger, which closed on September 6, 2024

(2)

Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow and Return on Capital Employed (“ROCE”) are non-GAAP measures. Reconciliations of Adjusted EBITDA to net income, Adjusted Free Cash Flow to net cash provided by operating activities and ROCE to income from operations, the most directly comparable financial measures presented in accordance with GAAP, are outlined in the reconciliation tables accompanying this release.

Adam Anderson, CEO commented, “This was an outstanding fourth quarter, in which we began to see the results of our operational transformation. While we are still in the early stages, we are encouraged by positive progress on our plans to increase margins, drive organic growth, and elevate the customer experience. Our “No-Barriers” culture, in conjunction with the execution of our proven playbook, is once again yielding positive results for both our customers and our shareholders.”

Kendal Reed, CFO continued, “I am excited to share that we have met our total merger cost synergy target of $30 million in annualized savings much sooner than anticipated. We continue to identify opportunities for further margin enhancement and growth, while maintaining a strong and conservative balance sheet. Our capital-light business model has allowed us to convert a high proportion of our EBITDA to free cash flow.”

	Financial Summary (in thousands)
			Three Months Ended												Twelve Months Ended
			December 31, 2024				September 30, 2024				December 31, 2023				December 31, 2024				December 31, 2023
	Revenue		$	250,687			$	151,817			$	133,190			$	660,803			$	555,539
	Net Income		$	31,789			$	82,586			$	18,448			$	140,325			$	73,926
	Net Income Margin			13	%			54	%			14	%			21	%			13	%
	Adjusted EBITDA (1)		$	49,063			$	27,411			$	32,332			$	138,501			$	131,754
	Adjusted EBITDA Margin (1)			20	%			18	%			24	%			21	%			24	%
	Net cash provided by (used in) operating activities		$	36,345			$	21,722			$	21,385			$	93,439			$	75,864
	Free Cash Flow (1)		$	28,718			$	20,051			$	20,243			$	79,845			$	60,377
	Income from operations		$	26,912			$	(13,218	)		$	23,302			$	49,075			$	97,282
	ROCE (1)		nm				nm				nm					12	%			22	%

(1) Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow and Return on Capital Employed (“ROCE”) are non-GAAP financial measures. See definition of these measures and the reconciliation of GAAP to non-GAAP financial measures in the Supplemental Information tables below. Given ROCE is calculated over a 12 month period, ROCE for the three months ended December 31, 2024, September 30, 2024, and December 31, 2023 are not meaningful ("nm") and therefore have been excluded herein.

Operational & Financial Results

Kendal Reed, CFO commented, “We are pleased by the resilience of both our NAM Land and International and Offshore businesses despite the slowdown of activity. We continue to grow our addressable market by increasing our scope of products and entering new geographic regions.

“Highly accretive acquisition targets, such as DWS and SCF, continue to provide high returning opportunities for reinvestment of our strong free cash flow. DWS was able to grow market share in the US Land market over the course of 2024, despite the US Land rig count decreasing by 13% compared to 2023. We remain highly selective and committed to only pursuing opportunities that fit our high-return, capital-light, small ticket/big impact business proposition while never exceeding one turn of EBITDA in leverage. While we continue to see many intriguing opportunities, our board has also authorized a $100 million share buyback program that will provide a competing use of capital to M&A as well as an additional lever to drive higher ROCE and return capital to shareholders.”

Adam Anderson, CEO concluded, “We see numerous opportunities for organic growth through revenue synergies and untapped international markets. We have already begun seeing these opportunities materialize. We recently combined legacy Innovex and legacy Dril-Quip products on a well for a major IOC in the Gulf of Mexico. We have also begun to deploy DWS products in Canada, Latin America, and the Middle East, leveraging Innovex’s global distribution. We anticipate our newly formed partnership with OneSubsea will allow us to grow our market share in subsea wellheads by providing a collaborative EPCI solution that will benefit our customers with increased choice. We continue to focus on improving our margins, enhancing customer experience, and unlocking value for our shareholders.”

Balance Sheet, Debt, Cash Flow & Other

Net cash provided by operating activities was $36 million and capital expenditures were $8 million (approximately 3% of revenue) for the fourth quarter of 2024.

Innovex generated free cash flow of $29 million during the fourth quarter of 2024 and ended the quarter with $73 million of cash and cash equivalents and $35 million of total debt. Innovex’s total debt balance at the end of the quarter represented 0.26x trailing twelve month Adjusted EBITDA, with $78 million of availability under its revolving credit facility.

Innovex believes in maintaining conservative levels of leverage and ample liquidity in order to maximize strategic flexibility and allow the Company to capitalize on M&A opportunities with strong quantitative and qualitative characteristics.

Return on Capital Employed (“ROCE”)

Innovex’s dedication to efficient capital allocation and prudent investment, combined with our capital light business model, enable us to generate strong returns on our invested capital. Income from operations during the fourth quarter of 2024 was $27 million. Return on Capital Employed (“ROCE”) for the twelve months ended 12/31/2024 was 12%. We remain focused on capital efficiency, which we believe is a key driver of sustainable value creation for our shareholders.

Q1 2025 Guidance

Looking to the first quarter of 2025, Innovex expects to generate $245 - $255 million in total revenue, assuming a flat rig count environment in most markets, with weakness in the Mexican market and relatively low deliveries into the US Offshore market. Innovex expects to generate Adjusted EBITDA of $45 - $50 million in the first quarter of 2025.

Conference Call Details

The Company will host a conference call to discuss financial and operational results on Wednesday, February 26, 2024, at 9:00 a.m. Central Time (10:00 a.m. Eastern Time).

The call will be webcast live and can be accessed by the following link:

https://events.q4inc.com/attendee/250443617

Or by phone:

USA / International Toll +1 (646) 307-1963
USA - Toll-Free (800) 715-9871
Conference ID 1774704

Participants are encouraged to join the call approximately 10 minutes prior to the start time to ensure a proper connection. A replay of the call will be available on Innovex’s Investor Relations website shortly after the end of the call.

New Share Repurchase Program

On February 25, 2025, our board of directors approved a new share repurchase program (the “New Share Repurchase Program”) that authorizes repurchases of up to an aggregate of $100 million of our outstanding common stock. In connection with the New Share Repurchase Program, all share repurchase plans previously authorized by the Dril-Quip board of directors have been terminated. The New Share Repurchase Program does not require us to repurchase a specific number of shares or have an expiration date. The New Share Repurchase Program may be suspended or discontinued by our board of directors at any time without prior notice. The authorized repurchases will be made from time to time in the open market, through block trades or in privately negotiated transactions. The timing, volume and nature of share repurchases will be at the discretion of our management and dependent on market conditions, applicable securities laws and other factors, and may be suspended or discontinued at any time. The cost of the shares that are repurchased will be funded from any funds of the Company legally available therefore. Any shares repurchased under the program will be cancelled.

About Innovex International, Inc.

Innovex International, Inc (NYSE: INVX) is a Houston-based company established in 2024 following the merger of Dril-Quip, Inc and Innovex Downhole Solutions, Inc.

Our comprehensive portfolio extends throughout the lifecycle of the well, and innovative product integration ensures seamless transitions from one well phase to the next, driving efficiency, lowering cost, and reducing the rig site service footprint for the customer.

With locations throughout North America, Latin America, Europe, the Middle East and Asia, no matter where you need us, our team is readily available with technical expertise, conventional and innovative technologies, and ever-present customer service.

Forward-Looking Statements

Certain statements contained in this press release and oral statements made regarding the matters addressed in this release constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks, uncertainties and other factors, many of which are outside of Innovex’s control, that could cause actual results to differ materially from the results discussed in the forward-looking statements.

Forward-looking statements can be identified by the use of forward-looking terminology including “may,” “believe,” “expect,” “intend,” “anticipate,” “plan,” “should,” “estimate,” “continue,” “potential,” “will,” “hope” or other similar words and include the Company’s expectation of future performance contained herein. These statements discuss future expectations, contain projections of results of operations or of financial condition, or state other “forward-looking” information. You are cautioned not to place undue reliance on any forward-looking statements, which can be affected by assumptions used or by risks or uncertainties. Consequently, no forward-looking statements can be guaranteed. When considering these forward-looking statements, you should keep in mind the risks related to the merger between Innovex Downhole Solutions, Inc. and Dril-Quip, Inc. (the “Merger”) and the acquisition by Innovex of Downhole Well Solutions, LLC (the “Acquisition”), including the ultimate outcome and results of integrating operations, the effects of the Merger and the Acquisition (including the Company’s future financial condition, results of operations, strategy and plans), potential adverse reactions or changes to business relationships resulting from the completion of the Merger and the Acquisition, expected benefits from the Merger and the Acquisition and the ability of the Company to realize those benefits, the significant costs required to integrate operations, whether Merger or Acquisition-related litigation will occur and, if so, the results of any litigation, settlements and investigations, the risks related to economic conditions and other factors that might affect the timing and amount of the New Share Repurchase Program and other factors noted in the Company’s Annual Report on Form 10-K, any Quarterly Reports on Form 10-Q and the other documents that the Company files with the Securities and Exchange Commission. The risk factors and other factors noted therein could cause actual results to differ materially from those contained in any forward-looking statement. Innovex disclaims any duty to update and does not intend to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this press release, except as may be required by law.

Innovex International, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Income
(in thousands, except share and per share amounts)
(Unaudited)
		Three Months Ended												Twelve Months Ended
		December 31, 2024				September 30, 2024				December 31, 2023				December 31, 2024				December 31, 2023
Revenues		$	250,687			$	151,817			$	133,190			$	660,803			$	555,539
Cost of revenues			165,817				99,138				84,739				428,172				360,102
Selling, general and administrative expenses			38,278				37,984				18,689				116,181				72,797
(Gain) loss on sale of assets			(167	)			(169	)			35				(654	)			106
Depreciation and amortization			12,039				7,786				6,083				31,207				22,659
Impairment of long-lived assets			-				-				-				3,522				266
Acquisition costs			7,808				20,296				342				33,300				2,327
Income from operations		$	26,912			$	(13,218	)		$	23,302			$	49,075			$	97,282
Interest expense			375				729				792				2,430				5,506
Other expense (income), net			700				(269	)			483				298				385
Equity method earnings			(386	)			(1,018	)			(1,460	)			(2,616	)			(2,975	)
(Gain on) reduction of bargain purchase			6,847				(92,659	)			-				(85,812	)			-
Gain on consolidation of equity method investment			(8,037	)			-				-				(8,037	)			-
Income before income taxes		$	27,413			$	79,999			$	23,487			$	142,812			$	94,366
Income tax expense (benefit)			(4,376	)			(2,587	)			5,039				2,487				20,440
Net income		$	31,789			$	82,586			$	18,448			$	140,325			$	73,926
Foreign currency translation adjustment			(10,607	)			2,457				2,057				(10,969	)			(1,753	)
Comprehensive income		$	21,182			$	85,043			$	20,505			$	129,356			$	72,173
Earnings per common share
Basic		$	0.47			$	2.03			$	0.60			$	2.82			$	2.39
Diluted		$	0.47			$	1.99			$	0.57			$	2.77			$	2.29
Weighted average common shares outstanding
Basic			67,889,524				40,728,902				30,928,647				49,727,093				30,928,647
Diluted			68,044,174				41,530,978				32,239,512				50,627,004				32,338,518

	Innovex International, Inc.
	Condensed Consolidated Balance Sheets
	(in thousands)
	(Unaudited)
			December 31, 2024			September 30, 2024			December 31, 2023
	Assets
	Current assets
	Cash and restricted cash		$	73,278		$	99,895		$	7,406
	Trade receivables, net			239,506			225,067			118,360
	Inventories			271,173			297,519			141,188
	Other current assets			57,434			54,851			21,318
	Total current assets			641,391			677,332			288,272
	Noncurrent assets
	Property and equipment, net			190,786			182,230			52,424
	Equity method investment			-			19,923			20,025
	Goodwill and net intangibles			168,539			59,719			65,740
	Right of use leases - operating			54,873			47,352			32,673
	Deferred tax asset, net			134,540			138,523			14,017
	Other long-term assets			7,354			7,704			2,149
	Total noncurrent assets			556,092			455,451			187,028
	Total assets		$	1,197,483		$	1,132,783		$	475,300
	Liabilities and stockholders’ equity
	Current liabilities
	Accounts payable		$	65,201		$	83,613		$	32,035
	Accrued expenses			60,593			55,884			28,736
	Operating lease liabilities			10,547			9,093			7,358
	Other current liabilities			15,850			15,520			670
	Current portion of long-term debt and finance lease obligations			10,467			10,695			9,824
	Total current liabilities			162,658			174,805			78,623
	Noncurrent liabilities
	Long-term debt and finance lease obligations			24,901			12,351			40,566
	Operating lease liabilities			45,153			39,314			27,159
	Other long-term liabilities			6,615			1,962			31
	Total noncurrent liabilities			76,669			53,627			67,756
	Total Liabilities		$	239,327		$	228,432		$	146,379
	Total stockholders’ equity		$	958,156		$	904,351		$	328,921
	Total liabilities and stockholders’ equity		$	1,197,483		$	1,132,783		$	475,300

	Innovex International, Inc.
	Condensed Consolidated Statement of Cash Flows
	(in thousands, except share and per share amounts)
	(Unaudited)
			Three Months Ended												Twelve Months Ended
			December 31, 2024				September 30, 2024				December 31, 2023				December 31, 2024				December 31, 2023
	Cash flows from operating activities
	Net income		$	31,789			$	82,586			$	18,448			$	140,325			$	73,926
	Adjustments to reconcile net income to net cash provided by (used in) operating activities			9,782				(71,311	)			11,367				(42,185	)			24,071
	Changes in operating assets and liabilities, net of amounts related to acquisitions			(5,226	)			10,447				(8,430	)			(4,701	)			(22,133	)
	Net cash provided by operating activities		$	36,345			$	21,722			$	21,385			$	93,439			$	75,864
	Cash flows used in investing activities
	Payments on acquisitions, net of cash acquired		$	(65,521	)		$	-			$	-			$	(65,521	)		$	-
	Capital expenditures			(7,627	)			(1,671	)			(1,142	)			(13,594	)			(15,487	)
	Proceeds from sale of property and equipment			1,194				1,074				322				3,247				1,410
	Equity method investment			-				-				-				-				(18,350	)
	Cash acquired in stock based business combination			-				154,312				-				154,312				-
	Net cash provided by (used in) investing activities		$	(71,954	)		$	153,715			$	(820	)		$	78,444			$	(32,427	)
	Cash flows provided by financing activities
	Net borrowings (repayments) on line of credit		$	14,000			$	-			$	(8,050	)		$	(9,200	)		$	(23,800	)
	Net repayments on term loan			(1,249	)			(2,533	)			(1,250	)			(6,282	)			(5,400	)
	Payments on finance leases			(1,561	)			(1,386	)			(1,126	)			(5,698	)			(3,865	)
	Dividend payment			-				(74,983	)			-				(74,983	)			-
	Other financing			(50	)			(6,388	)			(11,107	)			(6,909	)			(11,500	)
	Net cash provided by (used in) financing activities		$	11,140			$	(85,290	)		$	(21,533	)		$	(103,072	)		$	(44,565	)
	Effect of exchange rate changes on cash and cash equivalents			(2,148	)			(608	)			67				(2,939	)			118
	Net change in cash and cash equivalents		$	(26,617	)		$	89,539			$	(901	)		$	65,872			$	(1,010	)

Non-GAAP Measures

Adjusted EBITDA and Adjusted EBITDA Margin

We define Adjusted EBITDA (a non-GAAP measure) as net income before interest expense, income tax expense, depreciation and amortization, (gain)/loss on sale of assets and other expense, net, further adjusted to exclude certain items which we believe are not reflective of our ongoing performance or which are non-cash in nature. Management uses Adjusted EBITDA to assess the profitability of our business operations and to compare our operating performance to our competitors without regard to the impact of financing methods and capital structure and excluding costs that management believes do not reflect our ongoing operating performance. We track Adjusted EBITDA on an absolute dollar basis and as a percentage of revenue, which we refer to as Adjusted EBITDA Margin.

Free Cash Flow

We also utilize Free Cash Flow (a non-GAAP measure) to evaluate the cash generated by our operations and results of operations. We define Free Cash Flow as net cash provided by operating activities less capital expenditures, as presented in our Consolidated Statements of Cash Flows. Management believes Free Cash Flow is useful because it demonstrates the cash that was available in the period that was in excess of our needs to fund our capital expenditures. We track Free Cash Flow both on an absolute dollar basis and as a percentage of revenue. Free Cash Flow does not represent our residual cash flow available for discretionary expenditures, as we have non-discretionary expenditures, including, but not limited to, principal payments required under the terms of our credit facility, which are not deducted in calculating Free Cash Flow.

Return on Capital Employed (ROCE)

We utilize Return on Capital Employed ("ROCE") (a non-GAAP measure) to assess the effectiveness of our capital allocation over time and to compare our capital efficiency to our competitors. We define ROCE as Income from Operations, before acquisition costs and after tax (resulting in Adjusted Income from Operations, after tax) divided by average capital employed. Capital employed is defined as the combined values of debt and stockholders’ equity.

Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow and ROCE do not represent and should not be considered alternatives to, or more meaningful than, net income and net cash provided by operating activities, or any other measure of financial performance presented in accordance with GAAP as measures of our financial performance. Our computation of Adjusted EBITDA, Free Cash Flow and ROCE may differ from computations of similarly titled measures of other companies. For a reconciliation of these non-GAAP measures to the most directly comparable GAAP measure, see tables below.

Management has provided outlook regarding Adjusted EBITDA, which is a non-GAAP financial measure and excludes certain charges. A reconciliation of this non-GAAP financial measure to the corresponding GAAP financial measure has not been provided because guidance for the various reconciling items is not provided. The Company is unable to provide guidance for these reconciling items because they cannot determine their probable significance, as certain items are outside of the Company's control and cannot be reasonably predicted since these items could vary significantly from period to period. Accordingly, reconciliations to the corresponding GAAP financial measures are not available without unreasonable effort.

Innovex International, Inc.
Reconciliation of Net Income to Adjusted EBITDA
(in thousands)
(Unaudited)
		Three Months Ended												Twelve Months Ended
		December 31, 2024				September 30, 2024				December 31, 2023				December 31, 2024				December 31, 2023
Revenue		$	250,687			$	151,817			$	133,190			$	660,803			$	555,539
Net income		$	31,789			$	82,586			$	18,448			$	140,325			$	73,926
Interest expense			375				729				792				2,430				5,506
Income tax expense (benefit)			(4,376	)			(2,587	)			5,039				2,487				20,440
Depreciation and amortization			12,039				7,786				6,083				31,207				22,659
EBITDA		$	39,827			$	88,514			$	30,362			$	176,449			$	122,531
Other non-operating (income) expense, net (1)			700				(269	)			483				298				385
(Gain) loss on sale of assets			(167	)			(169	)			35				(654	)			106
Impairment of long-lived assets			-				-				-				3,522				266
Acquisition costs (2)			7,808				20,296				342				33,300				2,327
Equity method adjustment (3)			661				790				250				3,202				1,735
(Gain on) reduction of bargain purchase			6,847				(92,659	)			-				(85,812	)			-
Gain on consolidation of equity method investment			(8,037	)			-				-				(8,037	)			-
Stock based compensation			1,424				10,908				470				13,248				1,962
IPO preparation expenses (4)			-				-				390				2,985				2,442
Adjusted EBITDA		$	49,063			$	27,411			$	32,332			$	138,501			$	131,754
Net Income (Loss) % Revenue			13	%			54	%			14	%			21	%			13	%
Adjusted EBITDA Margin			20	%			18	%			24	%			21	%			24	%

(1) Primarily represents foreign currency exchange gain/loss, gain/loss on lease terminations, and other non-operating items

(2) Consists of legal, accounting, advisory fees, and other integration costs associated with acquisitions, primarily related to Dril-Quip and DWS. These acquisition costs are one-time in nature and represent expenses that we do not view as normal operating expenses necessary to operate our business.

(3) Reflects the elimination of our percentage of interest expense, depreciation, amortization and other non-recurring expenses included within equity method earnings relating to our previously unconsolidated investment in DWS.

(4) Reflects legal, consulting and accounting fees and expenses related to the preparation of Legacy Innovex's initial public offering.

Innovex International, Inc.
Reconciliation of Income from Operations to ROCE
(in thousands)
(Unaudited)
		Twelve Months Ended
		December 31, 2024				September 30, 2024				December 31, 2023
Income from operations		$	49,075			$	45,465			$	97,282
Plus: Acquisition Costs			33,300				25,834				2,327
Less: Income tax expense			(2,487	)			(11,901	)			(20,440	)
Adjusted income from operations, after tax		$	79,888			$	59,398			$	79,169
Beginning debt		$	50,390			$	69,997			$	89,119
Beginning equity		$	328,921			$	307,946			$	251,280
Ending debt			35,368				23,046				50,390
Ending equity			958,156				904,351				328,921
Average capital employed		$	686,418			$	652,670			$	359,855
ROCE			12	%			9	%			22	%

Innovex International, Inc.
Reconciliation of Net Cash from Operations to Free Cash Flow
(in thousands)
(Unaudited)
		Three Months Ended												Twelve Months Ended
		December 31, 2024				September 30, 2024				December 31, 2023				December 31, 2024				December 31, 2023
Net cash provided by (used in) operating activities		$	36,345			$	21,722			$	21,385			$	93,439			$	75,864
Capital expenditures			(7,627	)			(1,671	)			(1,142	)			(13,594	)			(15,487	)
Free Cash Flow		$	28,718			$	20,051			$	20,243			$	79,845			$	60,377

Innovex International, Inc.
Geographic Revenue Details
(in thousands)
(Unaudited)
		Three Months Ended									Twelve Months Ended
		December 31, 2024			September 30, 2024			December 31, 2023			December 31, 2024			December 31, 2023
North America Onshore ("NAM")
Product revenues		$	75,397		$	79,668		$	68,275		$	286,802		$	297,176
Rental revenues			10,123			5,228			2,150			19,305			10,839
Service revenues			17,254			13,411			14,923			54,952			58,100
Revenue - North America Onshore		$	102,774		$	98,307		$	85,348		$	361,059		$	366,115
International & Offshore
Product revenues		$	108,675		$	46,975		$	39,363		$	240,592		$	163,626
Rental revenues			17,039			4,172			6,614			30,977			20,507
Service revenues			22,199			2,363			1,865			28,175			5,291
Revenue - International & Offshore		$	147,913		$	53,510		$	47,842		$	299,744		$	189,424
Total Revenue		$	250,687		$	151,817		$	133,190		$	660,803		$	555,539

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20250225876397/en/

Investor Relations Contact

Avinash Cuddapah

Sr. Director – Investor Relations

investors@innovex-inc.com

(346) 398-0000

Source: Innovex Downhole Solutions, Inc.

FAQ

What are Innovex's (INVX) Q4 2024 financial highlights?

Revenue of $251M (+65% QoQ), net income of $32M (13% margin), Adjusted EBITDA of $49M (20% margin), and free cash flow of $29M.

How much is INVX's new share buyback program worth?

Innovex's board approved a $100 million share buyback program with no specific expiration date.

What is Innovex's (INVX) Q1 2025 revenue guidance?

Innovex expects Q1 2025 revenue of $245-255M and Adjusted EBITDA of $45-50M.

What acquisitions did INVX complete in Q4 2024?

INVX acquired Downhole Well Solutions (DWS) and SCF Machining Corp to increase margins and supply chain flexibility.

What is INVX's current debt position?

INVX has $35M in total debt (0.26x trailing twelve-month Adjusted EBITDA) with $78M available under its revolving credit facility.