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    INVX
    Earnings call· Jun 2026(Q2 FY26)

    Innovex International Q2 FY26 earnings call INVX

    Aug 4, 2026 Source

    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

    3
    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

    4
    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
    		————

    Operational metrics

    8
    Adjusted EBITDA
    $48 million
    Q2 FY26

    At the high end of guidance ranges.

    Adjusted EBITDA Margin
    20%vs 21% in Q1 FY26 and Q2 FY25
    Q2 FY26

    Compared to 21% in Q1 2026 and Q2 2025.

    Cost of Sales (excluding D&A)
    $161 million
    Q2 FY26

    Gross margins remained healthy, reflecting product portfolio strength, disciplined pricing, and operational execution.

    SG&A Sequential Decrease
    $3 millionsequentially
    Q2 FY26

    SG&A decreased by approximately $3 million sequentially to $39 million.

    Capital Expenditures
    $7 million
    Q2 FY26

    In line with historical target of 2-3% of revenue.

    Cash and Cash Equivalents
    $222 million
    Q2 FY26

    Ended the quarter with approximately $222 million of cash and cash equivalents and no bank debt.

    Return on Capital Employed
    12%
    LTM ended Q2 FY26

    ROCE is reduced by net balance sheet cash position. Focused on achieving high-teens ROCE via margin expansion, high return M&A, and shareholder returns.

    Middle East Increased Freight Expense
    $1.5 million
    Q2 FY26

    Related to air freight or additional costs of moving things around due to conflict, weighing on Q2 margins.

    Industry KPIs

    4
    MetricValueDetails
    FCF CAPEX leverageFCF $30 million; Capex $7 million; Net Debt $0USD
    M a integration progressTCO Group acquired for $95 millionUSD
    Orders bookings by segment—
    Segment adjusted EBITDA margin20%%

    Deals & partnerships

    2
    TCO GroupAcquisition 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 SolutionsAcquisition 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

    2
    Increased logistics costs due to Middle East conflictQ2 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

    5

    Middle East Logistics Cost Impact

    next quarter
    Current$1.5 million in Q2 FY26
    TargetReduction 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.

    Q&A highlights

    7

    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 read5 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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.

    04

    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.

    05

    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%.

    AI-generated summary of the company’s earnings call. Not investment advice.