Oct 30, 2026 earnings call — Subsea wins and Venezuela re-entry
Innovex reported Q3 revenue of $265 million and adjusted EBITDA of $55 million, with adjusted EBITDA margin of 21%.
Revenue $0.3B (est $0.3B) · EPS $0.37 (est $0.39)
Key quotes
"In U.S. offshore, we successfully installed the first of our 20,000 BigBore IIe subsea wellhead systems for a major IOC with more scheduled in the coming weeks."
"We put in the presentation that we dropped overnight that we've seen about $50-ish million worth of tender activity."
"Free cash flow for the quarter was $32 million, representing 58% of adjusted EBITDA."
Analyst Q&A 6
Venezuela revenue and setup needs
Q (Scott Gruber · Citi): The analyst asked how Innovex should think about 2027 growth versus the market and then drilled into Venezuela: how big could Venezuela be in 2–3 years and what investments or local footprint are needed?
A: Management said 2027 revenue could be up roughly 10% versus 2026 under certain assumptions. For Venezuela, they listed awarded offshore OD tubulars, small tools to be delivered Ex Works Houston, and many wellhead quotes. They said they see about $50-ish million of tender activity, expect maybe $10-ish million in 2027 if things go well, and that only a light local footprint and modest CapEx (preparing the Anaco facility) is needed.
"Next year, I would say, hey, we'll probably be double-digit million dollars all going well, maybe $10-ish million is how we think about it next year with the potential to grow pretty meaningfully from there." — Kendal Reed (CFO)
Profit margins and improvement plan
Q (Derek Podhaizer · Piper Sandler): The analyst asked where margins stand, how management can reach the longer-term 25% target, and what incrementals to expect on a roughly 10% revenue gain. He also asked about Middle East share gains and direct sales.
A: Management said they are pleased with recent progress and have been in the low-20s EBITDA margins over the last few quarters. They expect incrementals around the mid-30s (about 35%) as revenue grows and plan efficiency moves: consolidating subsea manufacturing in Singapore and expanding downhole capacity in Vietnam to lower costs and serve the Eastern Hemisphere. On the Middle East, they highlighted local manufacturing in Saudi, a first direct NOC contract there, and growing presence across conventional, offshore, gas, and unconventional wells.
"But in general, we've seen pretty consistent incrementals in the kind of mid-30s range." — Adam Anderson (CEO)
Asia subsea orders and M&A progress
Q (Keith Beckmann · Pickering Energy Partners): The analyst asked where the biggest Asia subsea opportunities and order lead times are. He also asked how the recent DIS and TCO acquisitions are trending and whether there are more M&A chances.
A: Management said Asia has been a strong recent success with projects including subsea wellhead work with OneSubsea, a tension leg platform expansion, and a large Indonesia award that is a 5-year project providing gradual revenue each year. They said some bigger projects will give a meaningful revenue slug next year and more opportunities are expected in 2028. On M&A, they said the pipeline is active, integration of the recent deals has gone well, and TCO contributed about $15 million in Q3 as expected; cross-selling is early but promising.
"we're starting to get the kind of the revenue contribution, let's say, from TCO that we expected in Q3 was basically in line with the $15 million that we talked about." — Kendal Reed (CFO)
Cross-selling and offshore project types
Q (Donald Crist · Johnson Rice): The analyst asked how cross-selling is progressing after the recent M&A and whether offshore awards are long-term program wins or one-off projects. He also asked about the 20,000 psi wellhead opportunity in the Gulf of America.
A: Management said cross-selling has been very good but is hard to quantify, citing a Permian cementing tool win that came from DWS relationships and noting TCO cross-selling is early with longer sales cycles (more 2027–28). For offshore, they said some big Asia projects are discrete while the Indonesia award is multi-year and more continuous; they noted relationships like OneSubsea could lead to longer-term growth. On the 20,000 psi wellhead, they clarified this was the first for that operator (not the company's first), and they said they have leading technology in that space.
"This is the first one for this particular operator who is really ramping up activity there." — Adam Anderson (CEO)
U.S. Lower 48 activity and freight costs
Q (Joshua Jayne · Daniel Energy Partners): The analyst asked who might drive incremental Lower 48 activity in 2027 and which geographies could grow faster. He also asked about the impact of higher freight and logistics costs and when that might ease.
A: Management said they have strong market share in the Lower 48 and recent wins include one large IOC and one large independent, giving a balanced customer mix; they expect some of the bigger companies may add rigs next year. On freight and logistics, they said costs jumped since Q2, quantified roughly $1.5 million in the quarter, and estimated about $1 million a quarter of drag that could return to the bottom line once the conflict is resolved.
"So it's kind of in that universe, maybe $1 million or so a quarter that when the conflict gets resolved probably is able to come back to the bottom line." — Adam Anderson (CEO)
Subsea margins and Venezuela timing
Q (Edward Kim · Barclays): The analyst asked whether recent subsea awards are accretive to margins versus a year ago and whether margin improvement is coming. He also asked about Innovex's prior Venezuela presence, which product lines they served, and whether $20 million of Venezuela revenue is possible in 2027.
A: Management said recent subsea backlog work is generally in line with, or slightly better than, current consolidated gross margins and not like some early-2026 dilutive awards; they expect similar incrementals on that work. On Venezuela, they said reentry comes through legacy Dril-Quip assets (the TIW business that supplied liner hangers), they retained the mothballed facility and are reinvigorating it, have about $50-ish million of tenders quoted, already have a $5 million order for large OD tubulars to deliver in 2027, and they think about $10 million in 2027 with upside; $20 million in 2027 is possible but a stretch and $20 million in 2028 is credible if trends continue.
"And I think '27, we'd be thinking about a $10 million, maybe some upside to that." — Adam Anderson (CEO)