Innovex International, Inc. Q1 FY2026 earnings call

• Thanked teams for strong execution. - Discussed no-barriers culture unlocking combined team potential. - Highlighted strong first quarter performance with revenue and adjusted EBITDA exceeding guidance. - Mentioned benefits from favorable product mix and exit of legacy Eldridge facility. - Commercial performance healthy across core markets, with U.S. land outperforming, international/offshore securing project awards, and Middle East having recent commercial progress. - DIS acquisition brings differentiated production technologies complementing existing offerings.

First quarter revenue totaled $239 million, exceeding the high end of guidance range. Adjusted EBITDA totaled $49 million with a margin of 21%, well above guidance. U.S. land revenue was $137 million, flat sequentially. International and offshore revenue declined 24% sequentially to $102 million. Subsea business can generate margins above 20% with same discipline. DIS acquisition strengthened portfolio. U.S. land organic growth from cross-selling and new products. Secured two significant project awards in Asia over $20M, delivered first subsea wellhead order in Southeast Asia. Middle East first quarter activity softer due to project timing and conflict, but recent commercial progress.

• Expect second quarter 2026 revenue in range of $235 to $245 million and adjusted EBITDA of $43 to $48 million. - Guidance reflects less favorable product mix, potential sales disruptions, and higher costs from Middle East conflict. - Confident in margin improvement trajectory supported by share gains in U.S. lands, improving international activity, and growing subsea opportunity set.

• Patent infringement litigation with $49 million legal accrual related to jury verdict, disagree with verdict and intend to appeal. - Middle East conflict causing softness in first quarter and expected impact in second quarter, including offshore market impacts and logistical cost increases.

Q: About U.S. land growth outlook and product lines potential.

A: Expect slight rig count increase in North America land, benefit from all technologies with Diamondback partnership.

Q: About DIS acquisition, product line and commercial rationale.

A: DIS has gatekeeper and Sentinel valve products fitting with InnoVEX's float equipment and drilling enhancement businesses, great deal for both.

Q: About Middle East impact, inventory and second quarter.

A: Q1 had impact, Q2 to have more, offshore markets in Saudi impacted, logistical costs increase.

Q: About optimization and margins, milestones.

A: Q1 made progress on manufacturing efficiency, half margin improvement from product mix and efficiency, focus on exiting Eldridge in Q2.

Q: About Middle East work scopes and free cash flow.

A: Middle East work over work and fishing activity would boost business, Q1 free cash flow low due to seasonal payments, working capital expected to normalize.

Q: About M&A pipeline and macro environment.

A: M&A underwrite over long term, disciplined on valuation, private markets less volatile than public, impact on valuation and bid-ask spreads.