Innovex International (INVX) Q2 2024 earnings summary

Executive summary

• Revenue for Q2 2024 increased 34.3% year-over-year to $120.3 million, driven by the Great North acquisition, international growth, and strong Subsea and Well Construction performance.

• Net loss for Q2 2024 was $1.8 million, compared to net income of $3.5 million in Q2 2023, primarily due to higher SG&A, foreign currency losses, and merger-related costs; net loss improved from $20.0 million in the previous quarter.

• Adjusted EBITDA for Q2 2024 was $16.5 million, up from $8.8 million in Q2 2023 and $6.3 million sequentially, with margin expansion to 13.7%.

• The pending merger with Innovex is expected to close in Q3 2024, creating Innovex International, Inc., with Dril-Quip shareholders owning 52% of the combined company and anticipated accretive impact.

Financial highlights

• Q2 2024 revenue: $120.3 million, up from $89.6 million in Q2 2023; six-month revenue: $230.6 million, up from $180.5 million.

• Q2 2024 net loss: $1.8 million; six-month net loss: $21.8 million, compared to net income of $5.8 million in the prior year period.

• Adjusted EBITDA for Q2 2024 was $16.5 million, up $7.7 million year-over-year; margin expanded to 13.7%.

• Cost of sales as a percentage of revenue decreased to 69.2% in Q2 2024 from 73.3% in Q2 2023; cost of sales increased to $83.2 million year-over-year.

• Cash, cash equivalents, and restricted cash at June 30, 2024 were $189.2 million.

Outlook and guidance

• The Innovex merger is expected to close in Q3 2024, with anticipated synergies and expanded market reach.

• Revenue is expected to remain at or above current levels in the second half of 2024, with strong bookings in subsea wellheads and connectors.

• No updated earnings guidance due to the pending Innovex merger.

• Brent crude oil prices are forecast to average $89 per barrel for the remainder of 2024, supporting continued industry activity.

• Management expects current operating cash flows to be sufficient for ordinary business needs over the next twelve months.