Innovex Announces First Quarter 2025 Results
HOUSTON--(BUSINESS WIRE)--May 06, 2025--
Innovex International, Inc. (NYSE: INVX) ("Innovex," the "Company" or "we") today announced financial and operating results for the first quarter of 2025.
First Quarter Highlights
-- Revenue of $240 million, down 4% quarter over quarter
-- Net Income of $15 million, net income margin of 6%
-- Adjusted EBITDA1 of $46 million and Adjusted EBITDA Margin1 of 19%
-- Net Cash Provided by Operating Activities of $31 million
-- Free Cash Flow1 of $24 million
-- Income from Operations of $22 million
-- Return on Capital Employed1 of 12%
-- Closed on acquisition of SCF Machining Corporation ("SCF")
-- Completed first successful installation of VXTeTM Self-Orientating
Vertical Tree
Key Subsequent Events
-- Entered into a definitive agreement to sell the legacy Dril-Quip Eldridge
facility for $95 million.
-- As of May 5, 2025, we have repurchased 395,234 shares of Innovex common
stock at an average price of $14.94 per share
(1) 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, 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, "We made substantial progress toward our vision to transform the legacy Dril-Quip business in the first quarter. The expected sale of the Eldridge facility will free up $95 million of capital and be a key enabler of the next step-change in margins and operational performance for the subsea business. The DWS business, our recent acquisition in Q4 2024, continued to gain market share in the quarter, driving revenue growth in the North American Land market. Although activity declined more than anticipated in Mexico during the first quarter, the team did an excellent job of responding to changing market conditions. We founded Innovex with the belief that cycles are a feature, not a bug of the business model. We have a well-worn playbook for industry cycles, and are ready to take advantage of volatility, should it persist."
Kendal Reed, CFO continued, "Our net-cash balance sheet, soon to be bolstered by the sale of the Eldridge facility, allows us to take advantage of accretive M&A and our recently announced share buyback program. Despite activity being lower than anticipated, we were able to maintain margins, highlighting the resilience of our capital-light business model. Importantly, we converted approximately 52% of our Adjusted EBITDA into Free Cash Flow, which further strengthened the balance sheet."
Financial Summary
-----------------
(in thousands)
Three Months Ended
--------------------------------------------
March 31, December 31, March 31,
2025 2024 2024
------------ ---------------- ------------
Revenue $240,415 $ 250,687 $127,997
Net Income $ 14,757 $ 31,789 $ 16,417
Net Income Margin 6% 13% 13%
Adjusted EBITDA
(1) $ 45,921 $ 49,063 $ 32,505
Adjusted EBITDA
Margin (1) 19% 20% 25%
Net cash provided
by operating
activities $ 31,090 $ 36,345 $ 12,605
Free Cash Flow
(1) $ 24,034 $ 28,718 $ 10,183
Income from
operations $ 21,850 $ 26,912 $ 22,311
Twelve Months Ended
--------------------------------------------
March 31, December 31, March 31,
2025 2024 2024
------------ ---------------- ------------
ROCE (1) 12% 12% 20%
(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.
Operational & Financial Results
Kendal Reed, CFO commented, "Softness in the Mexico market resulted in weaker revenues than originally anticipated. The NAM Land business grew 17% sequentially despite the US rig count staying relatively flat. This was due primarily to the inclusion of a full quarter of the DWS acquisition--which exemplifies the type of inorganic growth we pursue: high margin, high returns, and highly accretive. We continue to see an active M&A pipeline of companies that similarly fit our qualitative and quantitative requirements--including returns on capital of 20% or greater. Aside from M&A, we now also have a competing use of capital through our recently authorized $100 million share repurchase program. As of May 5, 2025, we have repurchased approximately 395,234 shares at an average price of $14.94."
Adam Anderson, CEO concluded, "We remain focused on identifying new synergies and new market opportunities to support organic growth. Our flexible supply chain model and "small ticket, big impact" product proposition gives us the adaptability and margin resilience to navigate a wide range of macro environments. We don't claim to predict commodity prices or activity levels with precision--but we work hard to stay closely aligned with our customers' evolving needs. Downcycles are an inherent part of our business; we use them to our advantage to create value for our shareholders--particularly during periods of uncertainty or low activity."
Balance Sheet, Debt, Cash Flow & Other
Net cash provided by operating activities was $31 million and capital expenditures were $7 million (approximately 3% of revenue) for the first quarter of 2025.
Innovex generated free cash flow of $24 million during the first quarter of 2025 and ended the quarter with $68 million of cash and cash equivalents and $25 million of total debt. Innovex's net cash balance was $43 million dollars at the end of the quarter, with $103 million of availability under its revolving credit facility.
Innovex maintains conservative levels of leverage and ample liquidity to maximize strategic flexibility and to capitalize on M&A opportunities that meet our stringent quantitative and qualitative characteristics.
Return on Capital Employed ("ROCE")
Innovex's efficient capital allocation and capital-light business model enable the Company to generate strong returns on our invested capital. Income from operations for the twelve months ended March 31, 2025 was $49 million. Return on Capital Employed ("ROCE") for the twelve months ended March 31, 2025 was 12%. We remain focused on capital efficiency, which we believe is a key driver of sustainable value creation for our stockholders.
Q2 2025 Guidance
Looking to the second quarter of 2025, Innovex expects to generate $225 - $235 million in total revenue, assuming continued softness in Mexico and slight activity declines in the NAM land market. Innovex expects to generate Adjusted EBITDA of $40 - $45 million in the second quarter of 2025.
Conference Call Details
Management will host a conference call and a webcast to discuss the financial results on May 7, 2025, at 10:00 a.m. Eastern Daylight Time / 9:00 a.m. Central Daylight Time. The presentation is open to all interested parties and may include forward-looking information.
To access the call, please dial in approximately ten minutes before the start of the call.
Conference Call and Webcast Details
Date / Time: May 7, 2025 - 9:00 AM Central Time
Webcast: https://events.q4inc.com/attendee/852779315
U.S. Toll-Free Dial-In: (800) 715-9871
International Dial-In: +1 (646) 307-1963
Conference ID: 1774704
For those unable to participate in the live call, an audio replay will be available following the call through midnight Wednesday, May 14, 2025. To access the replay, please call (800) 770-2030 or +1 (609) 800-9909 (International) and enter playback ID 1774704 followed by the # key. A replay of the webcast will also be archived shortly after the call and can be accessed on the Company's website.
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, including without limitation statements regarding timing and ability to complete the sale of the Eldridge facility and the expected benefits of such sale. 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 Company's merger and acquisition activities, including the ultimate outcome and results of integrating operations, the effects of the Company's merger and acquisition activities (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 mergers and acquisitions, expected benefits from mergers and 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, operating hazards, natural disasters, weather-related delays, casualty losses and other matters beyond our control; acts of terrorism, war or political or civil unrest in the United States or elsewhere; loss or corruption of our information or a cyberattack on our computer systems; the risks related to economic conditions 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
------------------------------------------
March 31, December 31, March 31,
2025 2024 2024
------------ ------------ --------------
Revenues $ 240,415 $ 250,687 $ 127,997
Cost of revenues 163,911 165,817 78,907
Selling, general
and
administrative
expenses 32,349 38,278 21,337
(Gain) loss on
sale of assets 148 (167) (124)
Depreciation and
amortization 14,945 12,039 4,793
Impairment of
long-lived
assets 2,924 - -
Acquisition and
integration
costs 4,288 7,808 773
---------------- ---------- ---------- ----------
Income from
operations $ 21,850 $ 26,912 $ 22,311
Interest expense 700 375 719
Other expense
(income), net (214) 700 520
Equity method
earnings - (386) (468)
Reduction of
bargain
purchase - 6,847 -
Gain on
consolidation
of equity
method
investment - (8,037) -
---------------- ---------- ---------- ----------
Income
before
income
taxes $ 21,364 $ 27,413 $ 21,540
Income tax
expense
(benefit) 6,607 (4,376) 5,123
---------------- ---------- ---------- ----------
Net income $ 14,757 $ 31,789 $ 16,417
================ ========== ========== ==========
Foreign currency
translation
adjustment 4,616 (10,607) 1,030
---------------- ---------- ---------- ----------
Comprehensive
income $ 19,373 $ 21,182 $ 17,447
================ ========== ========== ==========
Earnings per
common share
Basic $ 0.21 $ 0.47 $ 0.53
Diluted $ 0.21 $ 0.47 $ 0.51
Weighted average
common shares
outstanding
Basic 69,290,100 67,889,524 30,978,328
Diluted 69,477,519 68,044,174 32,292,887
Innovex International, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(Unaudited)
March 31, December 31, March 31,
2025 2024 2024
---------- -------------- -----------
Assets
Current assets
Cash and cash
equivalents $ 68,116 $ 73,278 $ 7,635
Trade receivable, net 236,020 239,506 121,339
Inventories, net 269,251 271,173 144,466
Other current assets 59,251 57,434 20,992
-------------------------- --------- ---------- -------
Total current
assets 632,638 641,391 294,432
Noncurrent assets
Property and
equipment, net 188,426 190,786 55,485
Equity method
investment - - 19,435
Goodwill and net
intangibles 180,314 168,539 63,733
Right of use leases -
operating, net 56,960 54,873 30,895
Deferred tax asset,
net 128,992 134,540 14,694
Other long-term assets 8,673 7,354 2,140
-------------------------- --------- ---------- -------
Total noncurrent
assets 563,365 556,092 186,382
Total assets $1,196,003 $ 1,197,483 $ 480,814
========================== ========= ========== =======
Liabilities and
stockholders' equity
Current liabilities
Accounts payable $ 76,391 $ 65,201 $ 36,149
Accrued expenses 37,116 60,593 23,853
Operating lease
liabilities 11,535 10,547 7,162
Other current
liabilities 15,221 15,850 552
Current portion of
long-term debt and
finance lease
obligations 5,556 10,467 10,482
-------------------------- --------- ---------- -------
Total current
liabilities 145,819 162,658 78,198
Noncurrent liabilities
Long-term debt and
finance lease
obligations 19,679 24,901 32,760
Operating lease
liabilities 45,962 45,153 25,522
Other long-term
liabilities 6,167 6,615 29
-------------------------- --------- ---------- -------
Total noncurrent
liabilities 71,808 76,669 58,311
-------------------------- --------- ---------- -------
Total Liabilities $ 217,627 $ 239,327 $ 136,509
Total
stockholders'
equity $ 978,376 $ 958,156 $ 344,305
Total liabilities
and stockholders'
equity $1,196,003 $ 1,197,483 $ 480,814
========================== ========= ========== =======
Innovex International, Inc.
Condensed Consolidated Statement of Cash Flows
(in thousands, except share and per share amounts)
(Unaudited)
Three Months Ended
--------------------------------------
March 31, December 31, March 31,
2025 2024 2024
--------- -------------- -----------
Cash flows from
operating
activities
Net Income $ 14,757 $ 31,789 $ 16,417
Adjustments to
reconcile net
income to net
cash provided by
operating
activities 29,045 9,782 7,567
Changes in
operating assets
and liabilities,
net of amounts
related to
acquisitions (12,712) (5,226) (11,379)
--------------------- ------- --------- -------
Net cash
provided by
operating
activities $ 31,090 $ 36,345 $ 12,605
Cash flows used in
investing
activities
Payments on
acquisitions,
net of cash
acquired $(17,413) $ (65,521) $ -
Capital
expenditures (7,056) (7,627) (2,422)
Proceeds from
sale of property
and equipment 1,003 1,194 194
Equity method
investment - - -
Cash acquired in
stock based
business
combination - - -
-------------------- ------- --------- -------
Net cash used
in investing
activities $(23,466) $ (71,954) $ (2,228)
Cash flows provided
by financing
activities
Net Borrowings
(Repayments) on
line of credit $ 1,600 $ 14,000 $ (7,200)
Net Repayments on
term loan (11,429) (1,249) (1,250)
Payments on
Finance Leases (1,630) (1,561) (1,336)
Dividend payment - - -
Other Financing (1,940) (50) (471)
--------------------- ------- --------- -------
Net cash
provided by
(used in)
financing
activities $(13,399) $ 11,140 $(10,257)
Effect of exchange
rate changes on cash
and cash
equivalents 613 (2,148) 109
Net change in cash
and cash
equivalents $ (5,162) $ (26,617) $ 229
--------------------- ------- --------- -------
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 and integration 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
--------------------------------------------
March 31, December 31, March 31,
2025 2024 2024
------------ ---------------- ------------
Revenue $240,415 $ 250,687 $127,997
Net Income $ 14,757 $ 31,789 $ 16,417
Interest expense 700 375 719
Income tax expense 6,607 (4,376) 5,123
Depreciation and
amortization 14,945 12,039 4,793
------------------- ------- -------- -------
EBITDA $ 37,009 $ 39,827 $ 27,052
Other non-operating
(income) expense,
net (1) (214) 700 520
(Gain)/Loss on sale
of assets 148 (167) (124)
Impairment of
long-lived assets 2,924 - -
Acquisition and
integration costs
(2) 4,288 7,808 773
Equity Method
Adjustment (3) - 661 831
(Gain on) reduction
of bargain
purchase - 6,847 -
Gain on
consolidation of
equity method
investment - (8,037) -
Stock based
compensation 1,766 1,424 468
IPO Preparation
Expenses (4) - - 2,985
------------------- ------- -------- -------
Adjusted EBITDA $ 45,921 $ 49,063 $ 32,505
Net Income (Loss) %
Revenue 6% 13% 13%
Adjusted EBITDA
Margin 19% 20% 25%
(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, DWS and
SCF. These Acquisition and integration 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 unconsolidated investment in DWS.
(4) Reflects legal, consulting and accounting fees and expenses related to
IPO preparation.
Innovex International, Inc.
Reconciliation of Income from Operations to ROCE
(in thousands)
(Unaudited)
Twelve Months Ended
--------------------------------------------
March 31, December 31, March 31,
2025 2024 2024
------------ ---------------- ------------
Income from
operations $ 48,614 $ 49,075 $ 97,228
Plus: Acquisition
and integration
costs 36,815 33,300 2,554
Less: Income tax
expense (3,971) (2,487) (24,709)
------------------- ------- -------- -------
Adjusted income
from operations,
after tax $ 81,458 $ 79,888 $ 75,073
Beginning debt $ 43,242 $ 50,390 $ 82,799
Beginning equity 344,305 328,921 270,771
Ending debt 25,235 35,368 43,242
Ending equity 978,376 958,156 344,305
------------------- ------- -------- -------
Average capital
employed $695,579 $ 686,418 $370,559
ROCE 12% 12% 20%
Innovex International, Inc.
Reconciliation of Net Cash from Operations to Free Cash Flow
(in thousands)
(Unaudited)
Three Months Ended
------------------------------------------
March 31, December 31, March 31,
2025 2024 2024
----------- -------------- -------------
Net cash provided by
(used in) operating
activities $ 31,090 $ 36,345 $ 12,605
Capital expenditures $ (7,056) $ (7,627) $ (2,422)
--------------------- ------ --------- ------
Free Cash Flow $ 24,034 $ 28,718 $ 10,183
Innovex International, Inc.
Geographic Revenue Details
(in thousands)
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