Innovex International, Inc.

Previous wording

The following discussion and analysis of the results of operations, financial condition and liquidity position of Innovex for the three months ended March 31, 2025 and 2024 should be read in conjunction with (i) the accompanying unaudited condensed consolidated financial statements and the related notes included in Part I, Item 1 of this Quarterly Report and (ii) the audited consolidated financial statements and related notes for the year ended December 31, 2024 included in our Annual Report. The following discussion and analysis contains forward-looking statements that are based on management’s current expectations, estimates and projections about Innovex’s business and operations, and involves risks and uncertainties. Actual results may differ materially from those currently anticipated and expressed in such forward-looking statements because of various factors, including those described in the sections titled “Risk Factors” in our Annual Report and “Cautionary Statement Regarding Forward- Looking Statements,” “Risk Factors” and elsewhere in this Quarterly Report, all of which are difficult to predict. Innovex does not undertake any obligation to publicly update any forward-looking statements except as otherwise required by applicable law. References in this section to “Innovex,” the “Company,” the “Combined Company,” “we,”“us” and “our” are to Innovex International, Inc.(formerly known as Dril-Quip, Inc.) and its consolidated subsidiaries after giving effect to the Merger and related transactions, unless the context otherwise requires or as otherwise indicated. Except as otherwise indicated, references herein to “Dril-Quip” are to Dril-Quip, Inc. prior to the completion of the Merger.

Current wording

The following discussion and analysis of the results of operations, financial condition and liquidity position of Innovex for the three and six months ended June 30, 2025 and 2024 should be read in conjunction with (i) the accompanying unaudited Condensed Consolidated Financial Statements and the related notes included in Part I, Item 1 of this Quarterly Report and (ii) the audited Consolidated Financial Statements and related notes for the year ended December 31, 2024 included in our Annual Report. The following discussion and analysis contains forward-looking statements that are based on management’s current expectations, estimates and projections about Innovex’s business and operations, and involves risks and uncertainties. Actual results may differ materially from those currently anticipated and expressed in such forward-looking statements because of various factors, including those described in the sections titled “Risk Factors” in our Annual Report and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2025 and “Cautionary Statement Regarding Forward- Looking Statements” and elsewhere in this Quarterly Report, all of which are difficult to predict. Innovex does not undertake any obligation to publicly update any forward-looking statements except as otherwise required by applicable law. References in this section to “Innovex,” the “Company,” the “Combined Company,” “we,”“us” and “our” are to Innovex International, Inc.(formerly known as Dril-Quip, Inc.) and its consolidated subsidiaries after giving effect to the Merger and related transactions, unless the context otherwise requires or as otherwise indicated. Except as otherwise indicated, references herein to “Dril-Quip” are to Dril-Quip, Inc. prior to the completion of the Merger.

Previous wording

Innovex designs, manufactures, sells and rents mission critical engineered products to the global oil and natural gas industry. Our vision has been to create a global leader in well-centric products and technologies through organic, customer-linked innovations and disciplined acquisitions to drive leading returns for our investors. Our products are used across the life cycle of the well (during the construction, completion, production and intervention phases) and are typically utilized downhole and consumable in nature. Our products perform a critical well function, and we believe they are chosen due to their reliability and capacity to save our customers time and lower costs during the well lifecycle. We believe that our products have a significant impact on a well’s performance and economic profile relative to the price we charge, creating a“Big Impact, Small Ticket”value proposition. Many of our products can be used in a significant portion of our customers’ wells globally, with our most advanced products providing mission critical solutions for some of the most challenging and complex wells in the world. We have a track record of developing proprietary products to address our customers’ evolving needs, and we maintain an active pipeline of potential new products across various stages of development.

Current wording

Innovex designs, manufactures, sells and rents mission critical engineered products to the global oil and natural gas industry. Our vision has been to create a global leader in well-centric products and technologies through organic, customer-linked innovations and disciplined acquisitions to drive leading returns for our investors. Our products are used across the life cycle of the well (during the construction, completion, production and intervention phases) and are typically utilized downhole and are consumable in nature. Our products perform a critical well function, and we believe they are chosen due to their reliability and capacity to save our customers time and lower costs during the well lifecycle. We believe that our products have a significant impact on a well’s performance and economic profile relative to the price we charge, creating a“Big Impact, Small Ticket”value proposition. Many of our products can be used in a significant portion of our customers’ wells globally, with our most advanced products providing mission critical solutions for some of the most challenging and complex wells in the world. We have a track record of developing proprietary products to address our customers’ evolving needs, and we maintain an active pipeline of potential new products across various stages of development.

Previous wording

We are a global company, and forthe three months ended March 31, 2025, the U.S. and Canadian onshore (“NAM”) market made up approximately 50% of our revenue while the international and offshore (“International and Offshore”) markets constituted 50%. Within the NAM market, we have a strong presence in both the United States and Canada. The NAM market is core to us, and we maintain a robust sales and distribution infrastructure across the region. Our products have broad applicability in this market, particularly for horizontal or unconventional wells that have become prevalent methods of oil and natural gas development across the region. We are focused on significantly increasing our revenue from the International and Offshore markets, as these regions are typically subject to long-cycle investment horizons and exhibit relatively less cyclicality than the NAM market. The Middle East, and in particular Saudi Arabia, has been a key source of growth for Innovex. We also operate across Asia, Latin America, Europe and the Gulf of America, among other regions. To enhance our global reach, we have complemented our locations across these markets with a network of strategic distribution, sales and manufacturing partners.

Current wording

We are a global company, and forthe six months ended June 30, 2025, the U.S. and Canadian onshore (“NAM”) market made up approximately 52% of our revenue while the international and offshore (“International and Offshore”) markets constituted 48%. Within the NAM market, we have a strong presence in both the United States and Canada. The NAM market is core to us, and we maintain a robust sales and distribution infrastructure across the region. Our products have broad applicability in this market, particularly for horizontal or unconventional wells that have become prevalent methods of oil and natural gas development across the region. We are focused on significantly increasing our revenue from the International and Offshore markets, as these regions are typically subject to long-cycle investment horizons and exhibit relatively less cyclicality than the NAM market. The Middle East, and in particular Saudi Arabia, has been a key source of growth for Innovex. We also operate across Asia, Latin America, Europe and the Gulf of America, among other regions. To enhance our global reach, we have complemented our locations across these markets with a network of strategic distribution, sales and manufacturing partners.

Previous wording

Our business has produced strong returns on invested capital. Please see “Non-GAAP Financial Measures” within this section for Return on Capital Employed, which is how we assess the effectiveness of our capital allocation over time. For the three months ended March 31, 2025, our net income, income from operations and Adjusted EBITDA were equivalent to approximately 6%, 9% and 19% of revenue, respectively. Over the same period, capital expenditures accounted for only 3% of revenue, and we earned approximately $21.9 million in income from operations. For the three months ended March 31, 2024, our net income, income from operations and Adjusted EBITDA were equivalent to approximately 13%, 17% and 25% of revenue, respectively. Over the same period, capital expenditures accounted for only 2% of revenue, and we earned approximately $22.3 million in income from operations. We believe that our global sales and distribution network, as well as our manufacturing capacity and vendor network, position us well to drive revenue growth and margin expansion. Please see “Non-GAAP Financial Measures” within this section for the definitions of Adjusted EBITDA, Adjusted EBITDA Margin, and Return on Capital Employed, as well as a reconciliation of Adjusted EBITDA, Adjusted EBITDA Margin, and Return on Capital Employed to our most directly comparable financial measures calculated and presented in accordance with GAAP.

Current wording

Our business has produced strong returns on invested capital. Refer to “Non-GAAP Financial Measures” within this section for Return on Capital Employed, which is how we assess the effectiveness of our capital allocation over time. For the six months ended June 30, 2025, our net income, income from operations and Adjusted EBITDA were equivalent to approximately 6%, 10% and 20% of revenue, respectively. Over the same period, capital expenditures accounted for only 3% of revenue, and we earned approximately $44.5 million in income from operations. For the six months ended June 30, 2024, our net income, income from operations and Adjusted EBITDA were equivalent to approximately 10%, 14% and 24% of revenue, respectively. Over the same period, capital expenditures accounted for only 2% of revenue, and we earned approximately $35.4 million in income from operations. We believe that our global sales and distribution network, as well as our manufacturing capacity and vendor network, position us well to drive revenue growth and margin expansion. Refer to “Non-GAAP Financial Measures” within this section for the definitions of Adjusted EBITDA, Adjusted EBITDA Margin, and Return on Capital Employed, as well as a reconciliation of Adjusted EBITDA, Adjusted EBITDA Margin, and Return on Capital Employed to our most directly comparable financial measures calculated and presented in accordance with GAAP.

Previous wording

For information with respect to the Merger and the acquisitions of DWS and SCF, see Note 3. Mergers and Acquisitions to our consolidated financial statements included elsewhere in this Quarterly Report.

Current wording

Refer to Note 3. Mergers and Acquisitions of our Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for additional information with respect to the Merger and the Company's recent acquisitions.

Previous wording

Our business is driven by the number of oil and natural gas wells drilled worldwide, which, in turn, is tied to the level of global spending of the oil and natural gas E&P industry. Rystad Energy, as of April 17, 2025, expects global upstream energy spending, excluding Iran, Venezuela, Cuba, Russia and China, to stay relatively flat through 2025, with spending forecasted to increase by 3% in 2027. Rystad Energy also estimates that the annual number of global wells drilled, excluding Iran, Venezuela, Cuba, Russia and China, will increase from approximately 31,700 in 2024 to approximately 32,300 in 2027. The pace of development activity is driven by expected well profitability and returns, which, in turn, are influenced by several factors, including current global oil and natural gas supply and demand balances, current and expected future prices for oil and natural gas and the perceived stability and sustainability of these commodity prices over time.

Current wording

Our business is driven by the number of oil and natural gas wells drilled worldwide, which, in turn, is tied to the level of global spending of the oil and natural gas E&P industry. Rystad Energy, as of July 14, 2025, expects global upstream energy spending, excluding Iran, Venezuela, Cuba, Russia and China, to stay relatively flat through 2027, with approximately 32,000 wells being drilled annually. The pace of development activity is driven by expected well profitability and returns, which, in turn, are influenced by several factors, including current global oil and natural gas supply and demand balances, current and expected future prices for oil and natural gas and the perceived stability and sustainability of these commodity prices over time.

Previous wording

The oil and natural gas industry has historically been characterized by volatility in commodity prices and in the level of drilling and production activity, which are driven by a variety of market forces, including geopolitical instability, climate related initiatives, OPEC+ actions, among others. Theglobal demand for oil and natural gas has consistently increased historically, and we believe that multiple years of under investment in oil and natural gas development has left the industry with a limited amount of spare production capacity. Additionally, public E&P operators have adopted a more conservative approach to capital spending in response to stockholders’ desire for increased return of capital. We believe that these factors have laid a foundation to support oil and natural gas prices and will lead to a sustained spending cycle and stable activity levels by our customers in the near and medium-term.

Current wording

The oil and natural gas industry has historically been characterized by volatility in commodity prices and in the level of drilling and production activity, which are driven by a variety of market forces, including geopolitical instability, climate related initiatives, OPEC+ actions, among others. The global demand for oil and natural gas has consistently increased historically, and we believe that multiple years of under investment in oil and natural gas development has left the industry with a limited amount of spare production capacity. Additionally, public E&P operators have adopted a more conservative approach to capital spending in response to stockholders’ desire for increased return of capital. We believe that these factors have laid a foundation to support oil and natural gas prices and will lead to a sustained spending cycle and stable activity levels by our customers in the near and medium-term.

Previous wording

Gain/loss on sale of assets represents profit recognized on the sale of property and equipment, net.

Current wording

Gain on sale of assets represents profit recognized on the sale of property and equipment, net, including any associated inventory determined to be included in the disposal group.

Previous wording

Depreciation and amortization expense consists of depreciation related to our tangible assets, including investments in property and equipment, and amortization of intangible assets, including identified intangible assets related to acquisition purchase price accounting.

Current wording

Depreciation and amortization expense consists of depreciation related to our tangible assets, including investments in property and equipment, and amortization of our finance leases and intangible assets, including identified intangible assets related to acquisition purchase price accounting.

Previous wording

Other income/expense, net consists of foreign exchange transaction gains or losses resulting from a change in exchange rates between the functional currency and the currency in which a foreign currency transaction is denominated and other non-operating items.

Current wording

Other income, net consists of foreign exchange transaction gains or losses resulting from a change in exchange rates between the functional currency and the currency in which a foreign currency transaction is denominated, gains or losses on lease terminations, and other non-operating items.

Previous wording

Equity method earnings consist of our proportional share of the earnings of our previous equity method investee, DWS, along with the associated amortization of our proportional share of the step up in fair value of the intangible assets acquired. The minority interest requiring equity method accounting treatment was acquired on May 1, 2023. On November 29, 2024, we purchased the remaining equity interest in DWS and therefore, the earnings of DWS after November 29, 2024 are fully consolidated as part of the Company. See “Gain on consolidation of equity method investment” below.

Current wording

Equity method earnings consist of our proportional share of the earnings of our previous equity method investee, DWS, along with the associated amortization of our proportional share of the step up in fair value of the intangible assets acquired. The minority interest requiring equity method accounting treatment was acquired on May 1, 2023. On November 29, 2024, we purchased the remaining equity interest in DWS and therefore, the earnings of DWS after November 29, 2024 are fully consolidated as part of the Company.

Previous wording

We are subject to income taxes in both the United States and foreign jurisdictions in which we operate. Differences between our effective tax rate and the U.S. federal statutory tax rate are primarily due to state taxes, foreign jurisdiction rate differences, permanent differences between book and tax income and changes in the valuation allowance.

Current wording

We are subject to income taxes in both the United States and foreign jurisdictions in which we operate. Differences between our effective tax rate and the U.S. federal statutory tax rate are primarily due to state taxes, foreign jurisdiction rate differences, permanent differences between book and tax income and changes in the valuation allowance. On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. We are currently assessing its impact on our Condensed Consolidated Financial Statements.

Previous wording

Our historical financial condition and results of operations for the periods presented may not be comparable, either from period to period or going forward, due to recent and future acquisitions. One way in which we have grown, and will continue to grow, our operations and financial results is through strategic acquisitions. In May 2023, Legacy Innovex acquired 20% of DWS, a company that manufactures and rents engineered downhole tools designed to improve the performance of directional and horizontal drilling operations. In March of 2024, Legacy Innovex entered into the Merger Agreement with Dril-Quip, and the Merger was consummated on September 6, 2024. In November of 2024, we acquired the remaining 80% equity interest in DWS. In February 2025, we acquired SCF, a Canadian-domiciled entity and parent company to SCF Machining Corporation Vietnam Company Limited, a Vietnam-based company. As a general matter, following an acquisition, our results of operations are affected by the results of the newly acquired business or operations, the purchase accounting for the acquisition, any debt incurred in connection with the acquisition and expenditures made to integrate the newly acquired business or operations. As a result of our acquisitions and the consolidation of our operating subsidiaries’ into the Company’s financial results, the periods presented in our historical financial statements may not be comparable to one another and our future results of operations and financial results may differ. Additionally, as a result of the Merger, we expect to incur recurring administrative expenses related to being a publicly traded corporation that are not reflected in the historical Legacy Innovex’s financial statements.

Current wording

Our historical financial condition and results of operations for the periods presented may not be comparable, either from period to period or going forward, due to recent and future acquisitions. One way in which we have grown, and will continue to grow, our operations and financial results is through strategic acquisitions. In May 2023, Legacy Innovex acquired 20% of DWS, a company that manufactures and rents engineered downhole tools designed to improve the performance of directional and horizontal drilling operations. In March of 2024, Legacy Innovex entered into the Merger Agreement with Dril-Quip, and the Merger was consummated on September 6, 2024. In November of 2024, we acquired the remaining 80% equity interest in DWS. In February 2025, we acquired SCF, a Canadian-domiciled entity and parent company to SCF Machining Corporation Vietnam Company Limited, a Vietnam-based company. In May 2025, we acquired Citadel, a leading provider of differentiated downhole technologies. As a general matter, following an acquisition, our results of operations are affected by the results of the newly acquired business or operations, the purchase accounting for the acquisition, any debt incurred in connection with the acquisition and expenditures made to integrate the newly acquired business or operations. As a result of our acquisitions and the consolidation of our operating subsidiaries’ into the Company’s financial results, the periods presented in our historical financial statements may not be comparable to one another and our future results of operations and financial results may differ. Additionally, as a result of the Merger, we expect to incur recurring administrative expenses related to being a publicly traded corporation that are not reflected in the historical Legacy Innovex’s financial statements.

Previous wording

Revenues. Our NAM market revenue for the three months ended March 31, 2025 was $120.5 million, an increase of $39.6 million from $80.9 million for the three months ended March 31, 2024, primarily driven by an increase in market share and incremental business operations due to the Merger and the acquisitions of DWS and SCF. This was offset by a reduction in drilling activity in North America due to a decline in the North America land rig count during the comparative period. Our International and Offshore market revenue for the three months ended March 31, 2025, was $119.9 million, an increase of $72.7 million from $47.1 million for the three months ended March 31, 2024, primarily driven by increased business operations due to the Merger.

Current wording

Revenues. Our NAM market revenue for the three months ended June 30, 2025 was $120.0 million, an increase of $40.9 million from the three months ended June 30, 2024, primarily driven by an increase in market share and incremental business operations due to the Merger and the acquisitions of DWS, SCF and Citadel. This was offset by a reduction in drilling activity in North America due to a decline in the North American onshore rig count during the comparative period. Our International and Offshore market revenue for the three months ended June 30, 2025, was $104.3 million, an increase of $53.0 million from the three months ended June 30, 2024, primarily driven by increased business operations due to the Merger.

Previous wording

Cost of revenues, exclusive of depreciation and amortization. Total cost of revenues for the three months ended March 31, 2025 was $163.9 million, an increase of $85.0 million from $78.9 million for three months ended March 31, 2024. The change was primarily attributable to a $41.4 million increase in product cost of goods sold, a $27.3 million increase in personnel expense due to increased activity levels due to the Merger, and a $9.0 million increase in supplies and general manufacturing expenses. This change was offset by a decrease of a net $4.5 million in variance, scrap and absorption expense due to reduced costing in lower cost geographies along with increased inventory absorption costs due to the Merger. The remaining difference is attributable to increases in facilities costs, inventory reserves, property taxes, and other miscellaneous costs.

Current wording

Cost of revenues, exclusive of depreciation and amortization. Total cost of revenues for the three months ended June 30, 2025 was $152.5 million, an increase of $68.2 million from the three months ended June 30, 2024. The change was primarily attributable to a $29.7 million increase in personnel expense due to increased activity levels due to the Merger and a $7.7 million increase in supplies and general manufacturing expenses, with the remainder primarily attributable to our product costs.

Previous wording

Selling, general and administrative expenses. Selling, general and administrative expense for the three months ended March 31, 2025 was $32.3 million, an increase of $11.0 million from $21.3 million for the three months ended March 31, 2024. The change is primarily attributable to a $11.2 million increase in salaries, wages and other payroll costs caused by an increased headcount due to the Merger.

Current wording

Selling, general and administrative expenses. Selling, general and administrative expense for the three months ended June 30, 2025 was $28.8 million, an increase of $10.3 million from the three months ended June 30, 2024. The change is primarily attributable to an $18.3 million increase in salaries, wages and other payroll costs and a $4.1 million increase in IT, facility, and other business costs caused by an increase in headcount attributable to the Merger, offset by a $13.3 million decrease in bad debt, including the recoveries of outstanding receivables from our prior agent in Saudi Arabia.

Previous wording

(Gain)/loss on sale of assets. (Gain)/loss on sale of assets for the three months ended March 31, 2025 and 2024 was $0.1 million and $(0.1) million, respectively. The change during the two periods was due to normal variations in property and equipment sales activity.

Current wording

Gain on sale of assets. Gain on sale of assets for the three months ended June 30, 2025 and 2024 was $0.4 million and $0.2 million, respectively. The change was due to the sale of our Subsea Tree assets for total consideration of $10 million, resulting in a gain, offset by normal variations associated with the sale of property and equipment during the period.

Previous wording

Depreciation and amortization. Total depreciation and amortization expense for the three months ended March 31, 2025 was $14.9 million, an increase of $10.1 million from $4.8 million for the three months ended March 31, 2024. The change in depreciation and amortization was primarily due to additional depreciation for assets acquired related to the Merger.

Current wording

Depreciation and amortization. Total depreciation and amortization expense for the three months ended June 30, 2025 was $15.0 million, an increase of $8.4 million from the three months ended June 30, 2024. The change was primarily due to additional depreciation for assets acquired related to the Merger and our other acquisitions.

Previous wording

Acquisition and integration costs. Acquisition and integration costs for the three months ended March 31, 2025 was $4.3 million, an increase of $3.5 million from $0.8 million for the three months ended March 31, 2024. The change in acquisition and integration costs was due to the costs incurred in connection with the Merger and the acquisition of DWS and SCF.

Current wording

Acquisition and integration costs. Acquisition and integration costs for the three months ended June 30, 2025 were $5.1 million, an increase of $0.7 million from the three months ended June 30, 2024. The change was due to the costs incurred in connection with the Merger and the acquisition of DWS, SCF and Citadel.

Previous wording

Interest expense. Total interest expense was $0.7 million for the three months ended March 31, 2025 and 2024. Interest expense is comparable during both periods due to lower long-term debt balances during the three months ended March 31, 2025, offset by increased finance lease interest due to an increase in finance leases during the comparative periods.

Current wording

Interest expense. Total interest expense was $0.6 million for the three months ended June 30, 2025 and 2024. Interest expense is comparable during both periods due to lower average long-term debt balances during the three months ended June 30, 2025, offset by increased finance lease interest due to an increase in finance leases during the comparative periods.

Previous wording

Other (income) expense. Total other (income) expense for the three months ended March 31, 2025 was $(0.2) million, a decrease of $0.7 million from $0.5 million for the three months ended March 31, 2024, with the change primarily being due to the net change in our foreign currency exchange gains (losses).

Current wording

Other income. Total other income for the three months ended June 30, 2025 was $0.1 million, a decrease of $0.6 million from the three months ended June 30, 2024, with the change primarily being due to the net change in our foreign currency exchange gains (losses).

Previous wording

Equity method earnings. Equity method earnings consist of the net earnings in DWS, along with the amortization of our proportional ownership interest in the step up of the fair value of the intangible assets acquired, during the period that DWS was accounted for as an equity method investee. With the purchase of the remaining 80% equity interest in DWS on November 29, 2024, the Company will not recognize equity method earnings in 2025. Total equity method earnings, excluding the amortization of the step up in fair value, for the three months ended March 31, 2024 was $0.8 million. The amortization of the step up in the fair value of the intangible assets acquired for the three months ended March 31, 2024 was $0.4 million.

Current wording

Equity method earnings. Equity method earnings consist of the net earnings in DWS, along with the amortization of our proportional ownership interest in the step up of the fair value of the intangible assets acquired, during the period that DWS was accounted for as an equity method investee. With the purchase of the remaining 80% equity interest in DWS on November 29, 2024, we did not recognize equity method earnings in 2025. Total equity method earnings, excluding the amortization of the step up in fair value, for the three months ended June 30, 2024 was $1.1 million. The amortization of the step up in the fair value of the intangible assets acquired for the three months ended June 30, 2024 was $0.4 million.

Previous wording

Income tax expense. Our operations are subject to U.S. federal income tax at an entity level, as well as various state income and franchise taxes. In addition, our operations located in international jurisdictions are subject to local country income taxes. Income tax expense for the three months ended March 31, 2025 was $6.6 million, an increase of $1.5 million from $5.1 million for the three months ended March 31, 2024. The change was primarily driven by changes in mix of income before income taxes by geography and tax jurisdiction, discrete items recorded in the quarter, and other non-deductible expenses. For the three months ended March 31, 2025, income before income taxes was $21.4 million, representing a decrease of $0.1 million from $21.5 million for the three months ended March 31, 2024 primarily due to the factors discussed above.

Current wording

Income tax expense. Our operations are subject to U.S. federal income tax at an entity level, as well as various state income and franchise taxes. In addition, our operations located in international jurisdictions are subject to local country income taxes. Income tax expense for the three months ended June 30, 2025 was $6.9 million, an increase of $2.6 million from the three months ended June 30, 2024. The change was primarily driven by changes in our mix of income before income taxes by geography and tax jurisdiction, discrete items recorded in the quarter, and other non-deductible expenses. For the three months ended June 30, 2025, income before income taxes was $22.2 million, an increase of $8.3 million from the three months ended June 30, 2024.

Previous wording

Net income. Net income for the three months ended March 31, 2025 was $14.8 million, a decrease of $1.6 million from net income of $16.4 million for the three months ended March 31, 2024, as a result of the factors discussed above.

Current wording

Net income. Net income for the three months ended June 30, 2025 was $15.3 million, an increase of $5.8 million from the three months ended June 30, 2024, as a result of the factors discussed above.

Previous wording

Long-lived asset impairments. Long-lived asset impairment expense for the three months ended March 31, 2025 was $2.9 million, an increase of $2.9 million from $0.0 million for the three months ended March 31, 2024. The impairment expense in 2025 was related to a land and building in Mexico acquired as part of the Merger, that is held for sale at March 31, 2025 and being marketed at an amount that is lower than the net book value, which ultimately resulted in an impairment expense of $2.9 million.

Current wording

Long-lived asset impairments. Long-lived asset impairment expense for the six months ended June 30, 2025 was $3.4 million, a decrease of $0.1 million from the six months ended June 30, 2024. The impairment expense was related to (i) land and a building in Mexico acquired as part of the Merger, that was held for sale at March 31, 2025 and marketed at an amount that was lower than the net book value, which ultimately resulted in an impairment expense of $2.9 million and (ii) declining market conditions associated with our anticipated sub-lease of the prior Dril-Quip corporate office.

Previous wording

Our primary sources of liquidity are our existing cash, cash provided by operating activities, and borrowings under the Credit Facility. The Company maintains an open market share repurchase program under our existing share repurchase authorization and may repurchase shares from time to time based on management’s evaluation of market conditions, share price and other factors. As of March 31, 2025, we had cash and restricted cash of $68.1 million and availability under the Revolver (as defined herein) of $103.3 million. Our total indebtedness was $25.2 million as of March 31, 2025.

Current wording

Our primary sources of liquidity are our existing cash, cash provided by operating activities, and borrowings under the Credit Facility. The Company maintains an open market share repurchase program under our existing share repurchase authorization and may repurchase shares from time to time based on management’s evaluation of market conditions, share price and other factors. As of June 30, 2025, we had cash and restricted cash of $68.8 million and availability under the Revolver (as defined herein) of $110.4 million. Our total indebtedness was $40.7 million as of June 30, 2025.

Previous wording

We have certain obligations related to debt maturities, finance leases and operating leases. As of March 31, 2025, we have $20.8 million of minimum non-cancelable lease obligations for the twelve months following March 31, 2025, comprised of $6.1 million of finance lease maturities and $14.7 million of operating lease obligations. We have an additional $62.1 million of minimum non-cancelable lease obligations for the periods after March 31, 2025, comprised of $5.4 million of finance lease maturities and $56.7 million of non-cancelable operating lease obligations. As of March 31, 2025, interest rates on our lease obligations range from 2.88% to 13.09%. In addition, as of March 31, 2025, all amounts borrowed under our Revolver become due and payable in 2030. For the three months ended March 31, 2024, the Company’s effective interest rate on the term loan was approximately 8.60% For the three months ended March 31, 2025 and 2024, the effective interest rate on the Revolver was approximately 8.25% and 8.52%, respectively. See Note 10. Debt to our consolidated financial statements included elsewhere in this Quarterly Report for additional information.

Current wording

We have certain obligations related to debt maturities, finance leases and operating leases. As of June 30, 2025, we have $22.2 million of minimum non-cancelable lease obligations for the twelve months following June 30, 2025, comprised of $6.7 million of finance lease maturities and $15.5 million of operating lease obligations. We have an additional $63.7 million of minimum non-cancelable lease obligations for the periods after June 30, 2026, comprised of $7.8 million of finance lease maturities and $56.0 million of non-cancelable operating lease obligations. As of June 30, 2025, interest rates on our lease obligations range from 2.88% to 12.00%. In addition, as of June 30, 2025, all amounts borrowed under our Revolver become due and payable in 2030. For the three months ended June 30, 2024, the Company’s effective interest rate on the term loan was approximately 9.95%. For the three and six months ended June 30, 2025, the effective interest rate on the Revolver was approximately 5.63% and 6.94%, respectively. For the three and six months ended June 30, 2024, the effective interest rate on the Revolver was approximately 11.71% and 9.69%, respectively. Refer to Note 10. Debt of our Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for additional information.

Previous wording

Net cash provided by operating activities for the three months ended March 31, 2025 was $31.1 million, an increase of $18.5 million from the three months ended March 31, 2024. The change in cash provided by operations for the comparative periods was primarily driven by the following:

Current wording

Operating Activities. Net cash provided by operating activities for the six months ended June 30, 2025 was $90.3 million, an increase of $54.9 million from the six months ended June 30, 2024. The change was primarily driven by the following:

Previous wording

a decrease in net income of $1.6 million;

Current wording

an increase in net income of $4.1 million;

Previous wording

changes in non-cash adjustments to net income from the comparative period as a result of a $10.1 million increase in depreciation and amortization, in connection with the increased size of the business primarily due to the Merger and other acquisitions between April 1, 2024 and March 31, 2025, a $6.2 million increase in deferred taxes due to timing differences, a $2.9 million increase in impairment of long-lived assets related to land and buildings in Mexico designated as assets held for sale, and a $1.3 million increase in stock compensation expense, primarily due to the accelerated vesting of equity based awards; and

Current wording

changes in non-cash adjustments to net income from the comparative period as a result of a $18.5 million increase in depreciation and amortization, in connection with the increased size of the business primarily due to the Merger and other acquisitions between July 1, 2024 and June 30, 2025, a $14.2 million increase in deferred taxes due to timing differences, and a $2.2 million increase in amortization of operating lease right-of-use assets; and

Previous wording

changes in operating assets and liabilities, net of assets acquired as part of the acquisitions, totaled $1.3 million.

Current wording

the remaining change is primarily due to the changes in operating assets and liabilities, net of assets acquired as part of the acquisitions.

Previous wording

Net cash used in investing activities for the three months ended March 31, 2025 was $23.5 million, a decrease of $21.2 million from the three months ended March 31, 2024. The change in cash used in investing activities was primarily due to a $17.4 million payment for the acquisition of SCF.

Current wording

Investing Activities. Net cash used in investing activities for the six months ended June 30, 2025 was $86.3 million, an increase of $83.0 million from the six months ended June 30, 2024. The change was primarily due to the cash used to fund both the SCF and Citadel acquisitions.

Previous wording

Net cash used in financing activities for the three months ended March 31, 2025 was $13.4 million, a decrease of $3.1 million from the three months ended March 31, 2024. The change in cash used in financing activities was primarily due to an increase of $1.4 million in net repayments of long term debt due to cash generated from positive operating cash flows and debt issuance costs incurred in connection with the Credit Agreement.

Current wording

Financing Activities. Net cash used in financing activities for the six months ended June 30, 2025 was $11.0 million, a decrease of $18.0 million from the six months ended June 30, 2024. The change was primarily due to a decrease in net repayments of long term debt of $29.3 million, offset by common stock repurchases of $9.3 million for the six months ended June 30, 2025.

Previous wording

Legacy Innovex, Tercel Oilfield Products USA L.L.C., Top-Co Inc. and Pride (collectively, the “Original Borrowers”) entered into the Second Amended and Restated Revolving Credit, Term Loan, Guaranty and Security Agreement in June 2022 (as amended in November 2022, April 2023, December 2023, and June 2024, the “Previous Credit Agreement”), with PNC Bank, National Association, as agent, and the lenders party thereto. On September 6, 2024, the Company and TIW Corporation (collectively and together with the Original Borrowers, the “Borrowers”) joined the Credit Agreement as borrowers thereunder. The Previous Credit Agreement provided for (i) a term loan tranche in a principal amount of the lesser of $25.0 million and a certain amount determined based, in part, on appraised values of certain assets of Legacy Innovex and certain of its subsidiaries (the “Term Loan”) and (ii) a revolving credit facility of up to $110.0 million with a $5.0 million sublimit for letters of credit and an $11.0 million swing loan (collectively, the “Previous Revolver” and, together with the Term Loan, the “Previous Credit Facility”).

Current wording

Legacy Innovex, Tercel Oilfield Products USA L.L.C., Top-Co Inc. and Pride Energy Services, LLC (collectively, the “Original Borrowers”) entered into the Second Amended and Restated Revolving Credit, Term Loan, Guaranty and Security Agreement in June 2022 (as amended in November 2022, April 2023, December 2023, and June 2024, the “Previous Credit Agreement”), with PNC Bank, National Association, as agent, and the lenders party thereto. On September 6, 2024, the Company and TIW Corporation (collectively and together with the Original Borrowers, the “Borrowers”) joined the Credit Agreement as borrowers thereunder. The Previous Credit Agreement provided for (i) a term loan tranche in a principal amount of the lesser of $25.0 million and a certain amount determined based, in part, on appraised values of certain assets of Legacy Innovex and certain of its subsidiaries (the “Term Loan”) and (ii) a revolving credit facility of up to $110.0 million with a $5.0 million sublimit for letters of credit and an $11.0 million swing loan (collectively, the “Previous Revolver” and, together with the Term Loan, the “Previous Credit Facility”).

Previous wording

The Company, as the borrower, entered into the Credit Agreement, dated as of February 27, 2025, to replace the Previous Credit Agreement and provide for a revolving credit facility of up to $200.0 million (the “Revolver” and, together with the Term Loan, the “Credit Facility”). The Credit Agreement, among other things, (a) extended the maturity of the agreement from June 10, 2026 to February 27, 2030, (b) increased the maximum revolving amount from $110 million to $200 million, which may, subject to certain conditions, be increased to $250 million, (c) eliminated the term loan commitment and (d) provided for an applicable margin for interest on the loans to be based on availability, effective as of April 1, 2025. See Note 10. Debt to our consolidated financial statements included elsewhere in this Quarterly Report.

Current wording

The Company, as the borrower, entered into the Credit Agreement, dated as of February 27, 2025, to replace the Previous Credit Agreement and provide for a revolving credit facility of up to $200.0 million (the “Revolver” and, together with the Term Loan, the “Credit Facility”). The Credit Agreement, among other things, (a) extended the maturity of the agreement from June 10, 2026 to February 27, 2030, (b) increased the maximum revolving amount from $110 million to $200 million, which may, subject to certain conditions, be increased to $250 million, (c) eliminated the term loan commitment and (d) provided for an applicable margin for interest on the loans to be based on availability, effective as of April 1, 2025. Refer to Note 10. Debt of our Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for additional information.

Previous wording

The obligations under the Credit Agreement are secured by liens on substantially all of the assets of the Company and certain current and future subsidiaries of the Company and guarantees from certain current and future subsidiaries of the Company (the Company together with such subsidiaries, the “Loan Parties”). The Credit Agreement requires the Company to make mandatory prepayments on the outstanding amount of (i) the Credit Facility if any Loan Party issues debt other than certain permitted debt and (ii) the Revolver with the proceeds of received with respect to certain insurance or condemnation claims.

Current wording

The obligations under the Credit Agreement are secured by liens on substantially all of the assets of the Company and certain current and future subsidiaries of the Company and guarantees from certain current and future subsidiaries of the Company (the Company together with such subsidiaries, the “Loan Parties”). The Credit Agreement requires the Company to make mandatory prepayments on the outstanding amount of (i) the Credit Facility if any Loan Party issues debt other than certain permitted debt and (ii) the Revolver with the proceeds received from certain insurance or condemnation claims.

Previous wording

As of March 31, 2024, we had $16.5 million of borrowings outstanding under the Term Loan. As of March 31, 2025 and March 31, 2024, we had $15.6 million, and $16.0 million, respectively, of borrowings under the applicable revolving credit facility.

Current wording

As of June 30, 2024, we had $15.2 million of borrowings outstanding under the Term Loan. As of June 30, 2025 we had $29.0 million of borrowings under the applicable revolving credit facility.

Previous wording

For the three months ended March 31, 2025, acquisition and integration costs consisted of legal, accounting, advisory fees, and other integration costs associated with the Merger, the acquisition of the remaining equity interest in DWS, and the acquisition of SCF. For the three months ended March 31, 2024, acquisition and integration costs consisted of legal, accounting, advisory fees, and other integration costs associated with the acquisition of ownership interest in DWS and facility shut-down and integration costs for Rubicon facilities after the acquisition. These acquisition and integration costs are one-time in nature and represent expenses that we do not view as normal operating expenses necessary to operate our business.

Current wording

(2) For the three and six months ended June 30, 2025, acquisition and integration costs consisted of legal, accounting, advisory fees, and other integration costs associated with the Merger, the acquisition of the remaining equity interest in DWS, and the acquisitions of SCF and Citadel. For the three and six months ended June 30, 2024, acquisition and integration costs consisted of legal, accounting, advisory fees, and other integration costs associated with the acquisition of ownership interest in DWS and facility shut-down and integration costs for Rubicon facilities after the acquisition. These acquisition and integration costs are one-time in nature and represent expenses that we do not view as normal operating expenses necessary to operate our business.

Previous wording

ROCE for the twelve months ended March 31, 2025 was 12%, a decrease from 20% for the twelve months ended March 31, 2024. The primary reason for the decrease was an increase in average capital employed of $325.0 million for thetwelve months ended March 31, 2025 as compared to thetwelve months ended March 31, 2024, driven by an increase in average equity of $353.8 million primarily due to the effect of the Merger and the acquisitions of DWS and SCF.

Current wording

ROCE for the twelve months ended June 30, 2025 was 13%, a decrease from the twelve months ended June 30, 2024.

Previous wording

Refer to Note 2. Summary of Significant Accounting Policies to our unaudited Condensed Consolidated Financial Statements for a discussion of the recent accounting pronouncements issued by the Financial Accounting Standards Board.

Current wording

Refer to Note 2. Summary of Significant Accounting Policies of our Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for a discussion of the recent accounting pronouncements issued by the Financial Accounting Standards Board.