Innovex International, Inc. 2026 Q3 Earnings Call

Thanks, Jason. Good morning, and thank you for joining us today. First off, I want to begin by thanking our employees for another quarter of strong commercial, operational, and financial execution. Our teams continue to serve our customers exceptionally well, develop innovations that address their needs, and work across the Innovex platform to drive organic growth. That collaboration reflects our no-barriers culture and shapes how we operate every day. On today's call, I'll begin with our third quarter performance and then walk through several important commercial developments across our North American, offshore, and international businesses before turning the call over to Kendal for a more detailed review of our financial results, capital allocation priorities, and outlook for the fourth quarter. Starting with performance. We delivered a strong third quarter. Revenue totaled $265 million, and adjusted EBITDA totaled $55 million, representing an adjusted EBITDA margin of 21%.

Our investments in technology, our global platform, and acquisitions are helping us win new businesses and grow faster. Four things stood out to me this quarter. First, our North America land business performed very well, driving modest market share gains. Second, our offshore order book continues to grow, which sets us up nicely for 2027 and 2028. Third, the Middle East delivered a good quarter in a really challenging environment, where we continue to invest in local infrastructure and new product qualifications. Fourth, Venezuela is rapidly developing, and we believe the opportunity there could be meaningful for Innovex across our portfolio. In North America, our U.S. land business had a very strong quarter, with share gains driven by our cementing tool business.

We secured two significant awards in the Permian Basin, one that expands our market share with a large independent, and a second displaces a competitor with a large IOC we've not previously done significant work for. Together, these wins are expected to add approximately $1 million of monthly revenue beginning late in Q4. Turning to offshore. Our subsea business continued to build commercial momentum. In U.S. offshore, we successfully installed the first of our 20K BigBore IIe subsea wellhead systems for a major IOC, with more scheduled in the coming weeks. Our work for this operator demonstrates the power of our no-barriers culture, with 100% on-time deliveries and 99% uptime across more than 4,500 hours of offshore operations for them during the quarter.

In Malaysia, we secured follow-on awards for the subsea tension riser package we announced last quarter, along with the subsea wellhead award covering an additional nine to 10 wells. This second example demonstrates how our strategic alliance with OneSubsea creates opportunities we would not have been able to access otherwise. In Indonesia, we were awarded a five-year subsea wellhead contract with a major IOC valued at more than $30 million. In the North Sea, we signed a global master service agreement for fishing equipment with a major drilling contractor, displacing the incumbent supplier. We expect that agreement to significantly improve our market share in the North Sea for this product line. Our Middle East business delivered a solid quarter despite disruptions across the region. We signed our first direct corporate purchase agreement with a major national oil company.

Direct sales to one of the largest operators in the world without the use of a local agent, simplifying our business and bringing us closer to the customer. While we delivered solid results, activity in the region has been impacted by the regional conflict, and we now expect reduced activity and higher freight and logistics costs to impact our results next quarter. Despite these short-term impacts, we continue to invest in new product qualifications in both Saudi Arabia and Abu Dhabi, and expect these investments to position us for sustained long-term growth in the region. In Latin America, we're particularly encouraged by Venezuela. As international investment returns, we expect activity there to increase significantly. During the third quarter, we re-entered the market with an award of more than $5 million for large-diameter tubulars and connectors supporting an offshore development.

Looking ahead, we see a very exciting opportunity in thermal wellheads. Much of Venezuela's production comes from heavy oil, which requires thermal wellhead systems, an area where our legacy Great North team and product line is well-established. We expect that demand to generate a significant amount of work for us in the future. While these opportunities have not yet translated into meaningful revenue, we believe we are well-positioned to participate as activity builds through 2027 and 2028. Importantly, our capital-light business model allows us to participate in that recovery without committing significant fixed assets in the country. Stepping back, this quarter showed what the Innovex platform can do. We are winning share and scaling the technologies we have acquired, all while moving closer to our customers by investing and expanding our platform.

Even as we grow, we continue to focus on the same playbook we have followed since we founded the company. We continue to invest in differentiated technologies and provide a delightful customer experience. We continue to focus on consumable products that have high gross margins, low capital requirements, and fit our big impact, small ticket value proposition. We believe this approach positions Innovex to continue gaining share, growing profitability, and generating cash flow for our shareholders. I will now turn the call over to Kendall to review our financial results and outlook in more detail.

Thanks, Adam, and good morning, everyone. I would now like to review our third quarter 2026 financial results. For the third quarter of 2026, revenue totaled $265 million, up 8% sequentially from the second quarter of 2026, and up 10% year-over-year. Adjusted EBITDA totaled $55 million, resulting in an adjusted EBITDA margin of 21%, compared to 20% in Q2 2026 and 18% in Q3 2025. We were pleased to deliver revenue at the midpoint and adjusted EBITDA in the upper half of our guidance range. We are encouraged by the trajectory of our margins as the benefits of our operating model and commercial execution continue to build. NAM land revenue for the third quarter was $146 million, up 11% sequentially from $131 million in the second quarter.

As Adam mentioned, this strong quarter-over-quarter growth reflects the revenue impact of increased drilling and completion activity levels, as well as continued incremental market share gains in U.S. land. We are very pleased with the trajectory and competitive position of our North America business heading into 2027. International and offshore revenue was $119 million, an increase of 5% sequentially, driven primarily by the addition of TCO, partially offset by a decrease in subsea deliveries in the Eastern Hemisphere due to project timing. Importantly, our subsea business continues to secure additional project awards, increasing our confidence in a positive trend over the next two years. For example, we secured follow-on awards on three subsea projects in the Far East during the quarter, bringing our total expected revenue on those projects over the next 12 months to approximately $53 million, up from $41 million at the end of Q2.

For context, we have recognized less than $2 million of revenue to date on these three projects combined, illustrating the earnings potential currently being built within this product line. Although project timing will create some quarter-to-quarter variability in our reported revenues, we remain very positive on the outlook for our international and offshore business in 2027 and 2028, driven by the expected strength of our subsea product line, contributions from new markets such as Venezuela, and a return to growth in the Middle East. Cost of sales, excluding depreciation and amortization, was approximately $169 million during the quarter. Gross margins continued their positive trajectory, with Q3 margins of 36%, representing a slight increase from the first half of 2026 and a significant step-up from 2025 levels.