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Innovex (INVX) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Energy· Aug 4, 2026

Source: earnings call transcript

Executive summary

Innovex Q2 FY26 — Strong Performance, TCO Acquisition, and International Growth

Innovex delivered a strong second quarter, exceeding revenue and EBITDA guidance, driven by international and offshore momentum and the strategic acquisition of TCO Group. The company is entering a new phase, leveraging its integrated platform and expanded technology portfolio to drive consistent, profitable growth, while maintaining disciplined capital allocation. Management highlighted ongoing integration efforts and market share gains as key to future performance.

Highlights

5

  • Revenue totaled $245 million, up 9% YoY and at the high end of guidance.

  • Adjusted EBITDA reached $48 million, with a 20% margin, also at the high end of guidance.

  • Free cash flow was $30 million, representing 63% of adjusted EBITDA.

  • Completed the acquisition of TCO Group for $95 million, adding differentiated, high-margin technologies.

  • International and offshore revenue increased 11% sequentially to $113 million, driven by strong activity and new subsea awards.

Concerns

3

  • NAMM land revenue decreased 4% sequentially to $131 million, primarily due to seasonally lower Q2 activity in Canada.

  • Adjusted EBITDA margin of 20% was down from 21% in Q1 FY26 and Q2 FY25.

  • Increased logistics costs of approximately $1.5 million due to Middle East conflict weighed on Q2 margins.

Guidance & targets

CategoryTargetConfidence
Revenue
$260 million to $270 million
high materiality
High
Adjusted EBITDA
$51 million to $57 million
high materiality
High
Return on Capital Employed (ROCE)
high-teens
medium materiality
Medium

Segment performance

SegmentRevenueYoYQoQMargin
Company-wide
Achieved high end of guidance ranges for both revenue and adjusted EBITDA.
$245 million9%2%—
NAMM Land
Resilience relative to underlying North American market conditions, including seasonally lower Q2 activity in Canada.
Q1 FY26 Revenue: $137 million
$131 million—-4%—
International and Offshore
Driven by continued strength across international portfolio and partially offset by normal project timing within offshore business.
$113 million—11%—
Canada (within NAMM Land)
Seasonally lower Q2 activity impacted NAMM land revenue.
Represents ~8% of overall businessRepresents ~15% of North America land business
————

Deals & partnerships

TCO Group Acquisition of a company specializing in laminated glass plugs for downhole barriers. $95 million

Completed on July 1st, 2026. Consideration: $65 million cash and $30 million InnoVex common stock. TCO's business is nearly 100% focused on international and offshore markets, with ~10% variability due to project timing. Strengthens presence in Norway and UAE.

Drilling Innovative Solutions Acquisition of a business maturing within the InnoVEX platform.

Acquired last quarter. Playbook designed to add differentiated technologies and leverage InnoVEX platform to accelerate growth.

Risks & headwinds

Increased logistics costs due to Middle East conflict Q2 FY26, ongoing into Q3 FY26

Approximately $1.5 million in Q2 FY26

Mitigation:Resolution of conflict would drive margin improvement; driving incrementals on new work.

Project timing variability (Offshore/TCO) Ongoing

TCO business has ~10% variability

Mitigation:Meaningful customer awards provide increasing visibility, expected to support attractive growth over next 1-2 years.

What to watch in Q3 FY26

Middle East Logistics Cost Impact

next quarter
Current $1.5 million in Q2 FY26
Target Reduction in costs

Why it matters

A reduction in these costs would directly improve company-wide margins and profitability.

I think we didn't hit on it specifically, but that did weigh on Q2 and we expect to weigh on Q3 is the increased logistics costs hitting the Middle East around this conflict that's going on. We had around $1.5 million of increased freight expense you know, related to air freight or just additional costs of moving things around.

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Q&A highlights

What is the game plan for Canadian wellheads, especially regarding Mexico and potential US market entry?

Management highlighted a strong position in Canada's thermal space with growing market share. Mexico is a good market for technical reasons, with established relationships and a first surface wellhead delivery. US land is being evaluated but is expected to be a slower area of growth compared to international opportunities.

“Mexico is a really good one for a variety of technical reasons, and then we are really well established there. And we're selling these to the service companies that we've had good experience with where we can create value in that relationship.”

asked by Dawn Christ · answered by Adam Anderson

2 min read 5 chapters

Detailed narrative

TCO Group Acquisition & Integration

Innovex completed the acquisition of TCO Group on July 1st for $95 million, comprising $65 million in cash and $30 million in InnoVex common stock. TCO specializes in laminated glass plugs, which create reliable gas-tight downhole barriers that can be opened without intervention, reducing cost, time, and risk. This acquisition strengthens Innovex's presence in key markets like Norway and the UAE, and the company expects to accelerate TCO's technologies across new customers, applications, and geographies, driving shareholder value.

Subsea Business Momentum

The subsea business demonstrated significant progress, securing an additional $20 million subsea tension riser package for an operator in Malaysia. The company also successfully completed the first XPAC trial with a major international operator in Asia Pacific after a multi-year qualification effort. These developments, along with other awards, reinforce growing momentum, with three large Asia projects totaling $60-$80 million in revenue anticipated to contribute meaningfully starting next year.

International Market Expansion

Innovex is seeing additional avenues for growth in several international markets. Activity in Mexico increased substantially, with completion activity through Q2 already surpassing the total for all of 2025. The Canadian wellhead team achieved its first surface wellhead delivery to Mexico, marking an important commercial milestone. In Saudi Arabia, Innovex gained market share in expandable liner hanger technologies and secured its first direct contract through its NFX Saudi entity, strengthening regional relationships.

Operational Efficiencies & Integration

The company is nearing the completion of its two-year DrillQuip integration journey, with facility consolidation finalized and an ERP conversion scheduled for later this year. Management noted that the integration, manufacturing optimization, and cultural transformation efforts are increasingly translating into commercial wins, differentiated technologies, and an expanding market position across its global platform. This positions Innovex for sustainable, profitable growth.

Capital Allocation & Balance Sheet Strength

Innovex ended the quarter with a strong balance sheet, holding $222 million in cash and cash equivalents with no bank debt. The TCO acquisition was highlighted as an attractive use of excess balance sheet cash, deploying capital into a high-quality, cash-generative business while preserving significant financial flexibility. Capital expenditures for the quarter were $7 million, representing 2.7% of revenue, aligning with the company's historical target of 2-3%.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.