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Innovex International, Inc. (INVX)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 revenue rose to $250.7M, up 65% q/q and 89% y/y; Adjusted EBITDA was $49.1M (20% margin) and diluted EPS was $0.47 .
  • Management fully realized $30M annualized merger cost synergies just five months post-close, with SG&A as a percent of revenue falling from ~25% in Q3 to 15% in Q4, supporting margin expansion .
  • Announced $100M share repurchase authorization; balance sheet ended Q4 with $73M cash and $35M total debt (0.26x TTM Adjusted EBITDA), preserving strategic flexibility .
  • Q1 2025 guidance: revenue $245–$255M and Adjusted EBITDA $45–$50M, implying relatively flat q/q given seasonal headwinds (Mexico weakness, lower US Offshore deliveries) offset by added months of DWS .
  • Catalysts: footprint reduction via planned Eldridge campus divestiture, OneSubsea MSA to supply wellheads on EPCI/bundled contracts, and international rollout of DWS tools .

What Went Well and What Went Wrong

What Went Well

  • Merger integration ahead of plan: $30M annualized cost synergies achieved earlier than expected, driving EBITDA margin expansion to 20% in Q4 . “We have fully realized our merger cost synergy target of $30 million of annualized cost savings” — CFO .
  • International & Offshore ramp with full quarter post-merger: segment revenue surged to $147.9M from $53.5M in Q3; OneSubsea alliance secured initial orders in APAC with a robust near-term pipeline .
  • Strong FCF and capital deployment: Q4 FCF $28.7M and $100M buyback authorization; capex remained capital-light at ~3% of revenue (Q4 $7.6M) .

What Went Wrong

  • Legacy Dril-Quip operations required right-sizing: historical on-time delivery rated “unacceptable,” driving the need for ERP overhaul and facility consolidation (Eldridge sale) which could cause short-term challenges .
  • Pro forma international & offshore 2024 revenue declined 5% vs 2023 due to legacy Dril-Quip slowdown, underscoring work ahead to reinvigorate sales .
  • Near-term Q1 cadence pressured by Mexico weakness and fewer US Offshore deliveries, tempering sequential growth despite added DWS contribution .

Financial Results

Core P&L vs Prior Periods

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$130.302 $151.817 $250.687
Diluted EPS ($USD)$0.57? Note: Q2 diluted EPS shown as $0.57 in Q4 exhibit; Q2 EPS in Q3 filing shows $0.30. See clarifying row below$1.99 $0.47
Diluted EPS per Q3 filing ($USD)$0.30 $1.99 $0.47
Net Income ($USD Millions)$9.534 $82.586 $31.789
Net Income Margin (%)7% 54% 13%
Adjusted EBITDA ($USD Millions)$29.516 $27.411 $49.063
Adjusted EBITDA Margin (%)23% 18% 20%
Income from Operations ($USD Millions)$13.070 $(13.218) $26.912

Notes: The company’s Q3 filing shows Q2 diluted EPS of $0.30, while the Q4 exhibit table includes a $0.57 figure in the EPS row. We anchor on the Q3 filing’s $0.30 for Q2 EPS consistency .

Segment/Geography Revenue

SegmentQ2 2024Q3 2024Q4 2024
North America Onshore (NAM) ($USD Millions)$92.330 $98.307 $102.774
International & Offshore ($USD Millions)$46.756 $53.510 $147.913
Total Revenue ($USD Millions)$139.086 $151.817 $250.687

KPIs and Balance Sheet Snapshot

KPIQ2 2024Q3 2024Q4 2024
Net Cash Provided by Operating Activities ($USD Millions)$22.767 $21.722 $36.345
Free Cash Flow ($USD Millions)$20.893 $20.051 $28.718
Capital Expenditure ($USD Millions)$1.874 $1.671 $7.627
Cash and Cash Equivalents ($USD Millions)$10.356 $99.895 $73.278
Total Debt ($USD Millions)—$23 $35
ROCE (TTM, %)17% 9% 12%

Actual vs Guidance and Consensus

MetricQ4 2024 ActualQ4 2024 Guidance (as of Nov 7)Surprise vs GuidanceSPGI ConsensusSurprise vs Consensus
Revenue ($USD Millions)$250.7 $220–$230 Bold beat vs guidance UnavailableN/A
Adjusted EBITDA ($USD Millions)$49.1 $35–$40 Bold beat vs guidance UnavailableN/A
Diluted EPS ($USD)$0.47 N/AN/AUnavailableN/A

SPGI consensus estimates were unavailable at time of request due to service limits; comparisons to Wall Street consensus are therefore not provided [GetEstimates error].

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)Q1 2025N/A$245–$255 New
Adjusted EBITDA ($USD Millions)Q1 2025N/A$45–$50 New
Share Repurchase AuthorizationOngoingN/A$100M program approved New
DividendsQ3 2024N/A$74.983M dividend paid (cash outflow) Completed (prior quarter)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q4 2024)Trend
Cost synergies & margin trajectoryYear-one $15M synergies achieved by Q3; EBITDA margin 18% $30M annualized synergies fully realized; EBITDA margin 20%; long-term margin target ≥25% Improving
International & Offshore growthEarly cross-sell successes post-merger; segment revenue $53.5M in Q3 Full-quarter combined results: $147.9M; OneSubsea MSA and initial APAC orders Accelerating
DWS acquisition & rolloutPreviously equity method stake; integration not yet complete Acquisition closed Nov 29; expanding internationally (Canada, LatAm, Middle East) Expanding
Operational transformation (Eldridge)Noted need to right-size legacy Dril-Quip Plan to divest Eldridge; facility consolidation to cut footprint ~82% and improve service; strong buyer interest Execution in progress
Working capital & DSOFocus on cash conversion and returns DSO improved pro forma from 89 to 83 q/q; ERP implementation underway Improving
Macro cadence (Mexico, US Offshore)US Land pullback noted Q1 guide accounts for Mexico weakness and fewer US Offshore deliveries Mixed near term

Management Commentary

  • CEO on Q4 performance and culture: “This was an outstanding fourth quarter… increase margins, drive organic growth, and elevate the customer experience. Our ‘No-Barriers’ culture… is once again yielding positive results” .
  • CFO on synergies and margin: “We have fully realized our merger cost synergy target of $30 million of annualized cost savings… believe in the long run, the combined Innovex platform is capable of generating EBITDA margins of 25% or greater” .
  • CEO on OneSubsea alliance: “This alliance enables us to supply OneSubsea with Innovex wellheads for EPCI or bundled contracts… recent Subsea Wellhead order in Asia-Pacific for six wellheads to be delivered in 2025” .
  • CEO on deepwater technology integration: “First successful run of an 18-inch by 22-inch XPak Liner Hanger System… integrate Innovex centralizers… total value of this well for Innovex was roughly $2 million… at least 50 wells drilled annually could benefit” .

Q&A Highlights

  • Technology commercialization: Management highlighted near-term commercialization of combined expandable liner hanger with Innovex centralizers, delivering rig-time savings and attractive margins; exploring deeper casing design transformation with a major deepwater operator .
  • Eldridge sale proceeds: CFO declined to provide valuation specifics amid competitive process but expressed optimism for closing in 2025 at attractive valuation .
  • Q1 guide vs seasonality: Q1 flat q/q reflects added DWS contribution offsetting typical seasonal weakness, including Mexico and fewer US Offshore deliveries .
  • Full-year guidance: Policy is to avoid full-year guidance given flexible business model and market uncertainty; analyst “back-of-envelope” ~$200M EBITDA seen as not inconsistent, subject to M&A .
  • OneSubsea MSA scope: Relationship formalized with initial APAC orders; plan to expand as delivery performance improves; Innovex aims to become default wellhead partner over time .
  • Buyback vs M&A: Buyback provides flexible competing use of capital; deployment will be spread out and balanced against highest-return M&A opportunities .

Estimates Context

  • SPGI Wall Street consensus for Q4 2024 (EPS, revenue, EBITDA) was unavailable at time of retrieval due to service limits; estimate comparisons are therefore not provided [GetEstimates error].
  • Investors should note that management’s Q4 actuals materially exceeded the company’s prior Q4 guidance ranges for revenue and Adjusted EBITDA, implying likely positive estimate revisions if consensus aligns with guidance ranges .

Key Takeaways for Investors

  • Q4 execution showed the earnings power of the combined platform: strong sequential revenue growth and EBITDA margin expansion on realized cost synergies; both revenue and EBITDA materially beat prior guidance .
  • Capital deployment flexibility enhanced via $100M buyback and net-cash balance sheet (0.26x leverage), supporting opportunistic repurchases or accretive M&A .
  • Structural margin path: SG&A efficiency, facility consolidation (Eldridge divestiture), ERP roll-out, and working capital improvements (DSO 83 from 89) support the longer-term ≥25% EBITDA margin target .
  • Growth levers: OneSubsea MSA expands subsea wellhead addressable market; DWS international rollout and cross-sell opportunities provide incremental top-line and rental margin tailwinds .
  • Near-term setup: Q1 2025 guide is resilient vs seasonality (Mexico, US Offshore cadence) aided by full-quarter DWS contribution; monitor international order timing and Mexico exposure .
  • Watch for asset-light footprint benefits: Eldridge sale and consolidation expected to improve service delivery, reduce costs, and add cash; timing and proceeds could be stock catalysts upon announcement .
  • Risk checks: Legacy Dril-Quip transformation has execution risk (ERP, backlog, delivery metrics); international & offshore recovery trajectory is key to sustaining margin gains .