Innovex Announces Fourth-Quarter and Full Year 2024 Results

Published: 2025-02-25 16:05:04 ET INVX

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

Key Subsequent Events

(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)

250,687

151,817

133,190

660,803

555,539

31,789

82,586

18,448

140,325

73,926

49,063

27,411

32,332

138,501

131,754

36,345

21,722

21,385

93,439

75,864

28,718

20,051

20,243

79,845

60,377

26,912

(13,218

)

23,302

49,075

97,282

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.

250,687

151,817

133,190

660,803

555,539

165,817

99,138

84,739

428,172

360,102

38,278

37,984

18,689

116,181

72,797

(167

)

(169

)

(654

)

106

12,039

7,786

6,083

31,207

22,659

3,522

266

7,808

20,296

342

33,300

2,327

26,912

(13,218

)

23,302

49,075

97,282

375

729

792

2,430

5,506

700

(269

)

483

298

385

(386

)

(1,018

)

(1,460

)

(2,616

)

(2,975

)

6,847

(92,659

)

(85,812

)

(8,037

)

(8,037

)

27,413

79,999

23,487

142,812

94,366

(4,376

)

(2,587

)

5,039

2,487

20,440

31,789

82,586

18,448

140,325

73,926

(10,607

)

2,457

2,057

(10,969

)

(1,753

)

21,182

85,043

20,505

129,356

72,173

0.47

2.03

0.60

2.82

2.39

0.47

1.99

0.57

2.77

2.29

67,889,524

40,728,902

30,928,647

49,727,093

30,928,647

68,044,174

41,530,978

32,239,512

50,627,004

32,338,518

73,278

99,895

7,406

239,506

225,067

118,360

271,173

297,519

141,188

57,434

54,851

21,318

641,391

677,332

288,272

190,786

182,230

52,424

19,923

20,025

168,539

59,719

65,740

54,873

47,352

32,673

134,540

138,523

14,017

7,354

7,704

2,149

556,092

455,451

187,028

1,197,483

1,132,783

475,300

65,201

83,613

32,035

60,593

55,884

28,736

10,547

9,093

7,358

15,850

15,520

670

10,467

10,695

9,824

162,658

174,805

78,623

24,901

12,351

40,566

45,153

39,314

27,159

6,615

1,962

76,669

53,627

67,756

239,327

228,432

146,379

958,156

904,351

328,921

1,197,483

1,132,783

475,300

31,789

82,586

18,448

140,325

73,926

9,782

(71,311

)

11,367

(42,185

)

24,071

(5,226

)

10,447

(8,430

)

(4,701

)

(22,133

)

36,345

21,722

21,385

93,439

75,864

(65,521

)

(65,521

)

(7,627

)

(1,671

)

(1,142

)

(13,594

)

(15,487

)

1,194

1,074

322

3,247

1,410

(18,350

)

154,312

(71,954

)

153,715

(820

)

78,444

(32,427

)

14,000

(8,050

)

(9,200

)

(23,800

)

(1,249

)

(2,533

)

(1,250

)

(6,282

)

(5,400

)

(1,561

)

(1,386

)

(1,126

)

(5,698

)

(3,865

)

(74,983

)

(74,983

)

(50

)

(6,388

)

(11,107

)

(6,909

)

(11,500

)

11,140

(85,290

)

(21,533

)

(103,072

)

(44,565

)

(2,148

)

(608

)

(2,939

)

118

(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.

250,687

151,817

133,190

660,803

555,539

31,789

82,586

18,448

140,325

73,926

375

729

792

2,430

5,506

(4,376

)

(2,587

)

5,039

2,487

20,440

12,039

7,786

6,083

31,207

22,659

39,827

88,514

30,362

176,449

122,531

700

(269

)

483

298

385

(167

)

(169

)

(654

)

106

3,522

266

7,808

20,296

342

33,300

2,327

661

790

250

3,202

1,735

6,847

(92,659

)

(85,812

)

(8,037

)

(8,037

)

1,424

10,908

470

13,248

1,962

390

2,985

2,442

49,063

27,411

32,332

138,501

131,754

(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.

49,075

45,465

97,282

33,300

25,834

2,327

(2,487

)

(11,901

)

(20,440

)

79,888

59,398

79,169

50,390

69,997

89,119

328,921

307,946

251,280

35,368

23,046

50,390

958,156

904,351

328,921

686,418

652,670

359,855

36,345

21,722

21,385

93,439

75,864

(7,627

)

(1,671

)

(1,142

)

(13,594

)

(15,487

)

28,718

20,051

20,243

79,845

60,377

Innovex International, Inc.

Geographic Revenue Details

(in thousands)

(Unaudited)

75,397

79,668

68,275

286,802

297,176

10,123

5,228

2,150

19,305

10,839

17,254

13,411

14,923

54,952

58,100

102,774

98,307

85,348

361,059

366,115

108,675

46,975

39,363

240,592

163,626

17,039

4,172

6,614

30,977

20,507

22,199

2,363

1,865

28,175

5,291

147,913

53,510

47,842

299,744

189,424

250,687

151,817

133,190

660,803

555,539

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