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II

Innovex International, Inc. (INVX)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 revenue was $224M, down 7% sequentially, with net income of $15M (7% margin); Adjusted EBITDA was $47M (21% margin), and Free Cash Flow reached $52M, reflecting strong cash conversion despite softer top-line .
  • Management guided Q3 2025 revenue to $230–$240M and Adjusted EBITDA to $40–$45M, flagging a temporary margin step-down tied to low-margin deliveries, consolidation costs, and ERP integration in Q3 before re-accelerating longer term .
  • Q2 underperformance stemmed from international/offshore delivery deferrals and short-term regional headwinds; US Land revenue was flat sequentially and grew market share despite a ~7% rig count decline .
  • Citadel acquisition closed (all-cash $70M at 3.8x LTM Adjusted EBITDA; ~8% EPS accretive) and Eldridge facility divestiture ($95M expected Q3 close) strengthen the net-cash balance sheet and optionality (M&A vs buybacks) .
  • Near-term stock reaction is likely driven by Q3 margin step-down guidance and international/offshore softness; medium-term catalysts include synergy execution (DWS + Citadel), subsea share gains, and capital deployment (buybacks/M&A) .

What Went Well and What Went Wrong

What Went Well

  • Strong cash generation: Net cash from operations $59M and Free Cash Flow $52M in Q2, with capex disciplined at ~$7M (~3% of revenue) .
  • Profitability resilience: Adjusted EBITDA of $47M (21% margin) despite revenue softness; mix benefits and cost control improved margins sequentially .
  • Strategic M&A execution: Closed Citadel ($70M, 3.8x LTM Adjusted EBITDA, ~8% EPS accretion); early revenue synergies across DWS and Citadel; “big impact, small ticket” model reiterated .
  • Quote (CEO): “Our market position in US Land grew organically, and we saw early wins on revenue synergies from both the DWS and Citadel acquisitions.”
  • Quote (CFO): “Even after acquiring Citadel... we continue to maintain a net-cash balance sheet... highly accretive even before expected synergies.”

What Went Wrong

  • Top-line miss vs guidance: Q2 revenue of $224M came in slightly below prior guidance ($225–$235M), driven by international/offshore delivery deferrals and regional activity declines .
  • International/offshore softness: Sequential decline (~13%) from Middle East and Asia Pacific headwinds and deferred revenue recognition on project deliveries .
  • Anticipated Q3 margin step-down: Management guided near-term margin pressure from low-margin project mix, consolidation costs, and ERP integration, temporarily depressing Q3 EBITDA margins .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$250.7 $240.0 $224.0
Net Income ($USD Millions)$31.8 $15.0 $15.0
Net Income Margin (%)13% 6% 7%
Adjusted EBITDA ($USD Millions)$49.1 $46.0 $47.0
Adjusted EBITDA Margin (%)20% 19% 21%
Cash from Operations ($USD Millions)$36.3 $31.0 $59.0
Free Cash Flow ($USD Millions)$28.7 $24.0 $52.0
Capital Expenditure ($USD Millions)$7.6 $7.0 $7.0
Cash & Equivalents ($USD Millions)$73.3 $68.0 $69.0
Total Debt ($USD Millions)$35.4 $25.0 $41.0

Segment/KPI details (Q2 2025):

KPIQ2 2025
NAM Land Revenue ($USD Millions)$120
International & Offshore Revenue ($USD Millions)$104
Sequential Change (NAM Land)Flat q/q
Sequential Change (Intl & Offshore)-13% q/q
Share Repurchases (Q2)588,488 shares at $14.70 avg
YTD Repurchases through Q2624,531 shares at $14.89 avg
Revolver Availability (end-Q2)$110M
ROCE (TTM to 6/30/25)13%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent Guidance/ActualChange
Revenue ($USD Millions)Q2 2025$225–$235 $224 (Actual) Lower vs guide (miss low end)
Adjusted EBITDA ($USD Millions)Q2 2025$40–$45 $47 (Actual) Raised vs guide (beat)
Revenue ($USD Millions)Q3 2025N/A$230–$240 New
Adjusted EBITDA ($USD Millions)Q3 2025N/A$40–$45 New

Other Q2 press releases/events:

  • Eldridge campus divestiture announced: $95M sale price, expected Q3 close; short-term lease to ensure no delivery disruption .
  • M&A: Closed Citadel ($70M, 3.8x LTM Adjusted EBITDA, ~8% EPS accretion) .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
M&A/Portfolio build (DWS, SCF, Citadel)DWS/SCF highly accretive; $30M annualized synergy realized; “small ticket/big impact” reiterated Citadel closed; early revenue synergies; disciplined M&A framework Positive, continuing
US Land market shareDWS drove NAM Land growth despite flat rig count US Land revenue flat q/q; share gains despite ~7% rig count decline Resilient
International/OffshoreSubsea margin improvement plan; OneSubsea partnership; deliveries lumpy ~13% seq decline; deferrals in ME/APAC; expect back-half recovery; subsea franchise strong Near-term weaker; medium-term improving
Supply chain/capex disciplineCapital-light model; capex ~3% of revenue Capex ~3% of revenue; flexible supply chain leveraged Stable
Cash returns/Buybacks$100M authorization announced Significant capacity remaining; buybacks as capital alternative Ongoing
Facility transformationEldridge exit to improve subsea margins and delivery performance $95M sale agreement; Q3 close expected; 82% footprint reduction in Houston Executing

Management Commentary

  • CEO (Q2): “Although revenues in the quarter were slightly below our expectations, we are pleased with our profitability and Free Cash Flow… Citadel brings complementary cementing tool technologies and new, blue-chip customer relationships, which we expect will drive organic growth.”
  • CFO (Q2): “The acquisition was highly accretive… purchased at a valuation of 3.8x LTM Adjusted EBITDA and was 8% accretive to Innovex’s EPS… we are still targeting a Q3 2025 close on the sale of the Eldridge facility.”
  • CEO (Q1): “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… DWS… continued to gain market share in the quarter.”
  • CFO (Q1): “Despite activity being lower than anticipated, we were able to maintain margins… converted ~52% of Adjusted EBITDA into Free Cash Flow.”
  • Call themes: Q3 margin step-down expected; subsea business “lumpy” but healthy; international/offshore momentum to return; trench-foot technology trials expected in Middle East .

Q&A Highlights

  • International/offshore outlook: Management expects modest sequential improvement in Q3, noting lumpiness in subsea and deferred deliveries, with healthier demand into the back half .
  • Margin cadence: Explicitly flagged temporary Q3 EBITDA margin step-down from mix and integration costs, reaffirming long-term ≥25% non-GAAP margin target .
  • Technology adoption: DWS cementing tools cross-selling wins in Permian; trench-foot technology trials slated for Middle East by year end .
  • US Land dynamics: Volatility expected to persist; share gains offset rig declines; Canada seasonality acknowledged .
  • Capital deployment: Balance sheet flexibility to weigh M&A opportunities against remaining buyback capacity .

Estimates Context

  • Wall Street consensus from S&P Global for Q2 2025 and Q3 2025 was unavailable at the time of retrieval; therefore, comparisons to consensus cannot be made. Innovex’s Q2 actuals were below prior revenue guidance ($224M vs $225–$235M) and above prior Adjusted EBITDA guidance ($47M vs $40–$45M), indicating better-than-expected profitability despite revenue softness .
  • Consensus FY/Q estimates via S&P Global were unavailable when queried; any estimates-based comparisons will need to be updated once coverage is established.

Key Takeaways for Investors

  • Cash generation is a standout: Q2 Free Cash Flow of $52M on $47M Adjusted EBITDA underscores robust cash conversion and the capital-light model .
  • Near-term headwinds are largely timing/mix: International/offshore deferrals and low-margin project deliveries drive a temporary Q3 margin step-down before normalizing; structural demand remains intact .
  • M&A flywheel: Citadel and DWS synergize across land cementing/drilling tools; expect incremental cross-sell and international adoption, with disciplined returns (3.8x LTM EBITDA purchase) .
  • Subsea transformation: Eldridge exit (expected Q3 close) reduces footprint and enhances on-time delivery; partnership with OneSubsea positions for subsea wellhead share gains .
  • Capital allocation optionality: Net-cash balance sheet, $110M revolver availability, and remaining buyback capacity create flexibility to balance buybacks with accretive M&A .
  • Trading setup: Watch Q3 print for margin trough and international/offshore re-acceleration; a beat on Q3 revenue with clearer Q4 margin normalization could be a positive catalyst .
  • Update estimates when available: S&P Global consensus was unavailable; revisit positioning once Street models incorporate Q3 margin step-down and back-half recovery trajectory.

Sources: Q2 2025 8-K press release and exhibits ; Q1 2025 8-K press release ; Q4 2024 8-K press release ; Eldridge divestiture 8-K/press release –; Q2 2025 earnings call transcript (Motley Fool/Nasdaq) .