Innovex International, Inc. Q4 FY2025 earnings call

Adam Anderson recognized the team's efforts since the merger, talked about the no Barriers Culture. Highlighted continued market share gains, synergy capture from acquisitions, customer-led product innovation. In U.S. land, outperformed activity levels with revenue synergies from Citadel and DWS acquisitions. In offshore and international markets, solid execution with global alliance with OneSubsea, successful XPak installations, progress in various regions.

Fourth quarter revenue totaled $274 million, up 14% sequentially. Driven by Subsea business. NAM land revenue increased sequentially by 5% to a record level of $139 million. International and Offshore revenues increased sequentially by 25%. Full year 2025 adjusted EBITDA was $188 million, resulting in margins of 19%. Free cash flow was $156 million for full year 2025. Converted approximately 83% of adjusted EBITDA into free cash flow in both quarter and full year 2025.

Expects Q1 2026 revenue in the range of $225 million to $235 million and adjusted EBITDA of $38 million to $42 million. Anticipates margin improvement as 2026 progresses, with ongoing share gains and M&A pipeline active.

Q4 margins impacted by lower-margin legacy subsea projects and Eldridge facility exit costs. Seasonal free cash flow lowest in Q1. Subsea deliveries timing causing quarter-to-quarter volatility.

Q: Maybe just to start, hoping to unpack the first quarter margin guide a little bit further...

A: Derek, thanks for the question. So first, I would say, hey, point you to Q4, and we had a really strong result in the quarter...

Q: It's been about 15 months or so since you closed Dril-Quip. And I know a lot of investors probably don't realize the kind of length of order schedule on the offshore side...

A: Yes. Don, thanks for the question. Yes. So to be clear, like I wouldn't -- some of the contracts, these are long-term 4-, 5-year contracts, some of which are very attractive...

Q: I just kind of wanted to hit around the M&A side of things again. I wanted to know if you could give us a little bit of a better sense on maybe the current M&A landscape you see...

A: Yes. Thanks, Keith. So as you know, M&A is definitely a core part of our strategy. So we're constantly looking for opportunities to grow and improve the business through acquisitions...

Q: We don't get too much detail on the magnitude of your Subsea product bookings. But just curious if you could share even just directionally how 2025 Subsea product bookings trended versus '24 levels?...

A: Yes. Eddie, yes, fair question. We probably in '25 in aggregate subsea orders would have been down a little bit versus '24, but it's pretty lumpy. So the first half was down a little bit...

Q: Adam, I feel like you've been one of the more balanced with respect to offshore outlooks as we work through this white space period over the last 12 to 18 months from a rig activity standpoint. But I'm curious if you've seen enough things announced recently with respect to term on some contracts and maybe the subsea tree awards that we've seen where you could provide more of an outlook outside of Q1 on the Subsea side...

A: Yes. Josh, Well, yes, fair question. We can be probably qualitative in how we respond to that. We're not putting out quantitative guidance beyond Q1...

Q: If you've referenced this before, I apologize what the cycle times you highlighted. But when you think about shortening your cycle times from order to delivery on the subsea side of the business, could you remind me what your initial targets were?...

A: Yes. So I think with respect to specifically from the time line from order to delivery, that has not changed too much. I mean it varies to some extent, but rule of thumb, I would say, for a subsea order, we're generally getting that a year or so before delivery, plus or minus.