Innovex Swings to Profit as Legal Charge Fades, Adds TCO Deal
Innovex International returned to profitability with $25 million in net income in the second quarter, as a sharply smaller legal provision reversed the prior quarter's loss.
Innovex International (INVX), the oilfield-equipment and services provider, posted $25 million in net income in the second quarter, a 10% margin, reversing a $17 million loss in the first quarter. Revenue rose to $245 million, up 2% from the prior quarter and up 9% from a year earlier, extending a recovery from the first quarter's 13% sequential decline.
The swing to profit was driven largely by a smaller charge tied to the Impulse Litigation. The company recorded a $2.8 million legal settlement provision in the second quarter, down from $48.8 million in the first quarter, even as the underlying accrual on the balance sheet grew to $51.6 million from $48.8 million. The net income line has swung sharply over the past five quarters — from 7% of revenue a year ago to 16% in the third quarter of 2025 on a one-time facility-sale gain, down to 5%, then to a first-quarter loss, and now back to 10% — a pattern the company attributed largely to one-time items rather than a shift in underlying operations.
Profitability measures further from the legal-charge swing told a steadier story. Adjusted EBITDA held roughly flat at $48.0 million versus $49.3 million in the first quarter and $46.6 million a year earlier, though the margin slipped to 20% from 21% in both comparison periods. Free cash flow more than doubled sequentially to $30.4 million from $14.0 million, though it remained below the $51.9 million generated in the second quarter of 2025. Trailing-twelve-month return on capital employed improved to 12% as of June 30 from 10% at year-end 2025, but stayed below the 13% posted a year earlier.
The International & Offshore segment carried the quarter's growth, with revenue rising 11% sequentially to $113.5 million and 9% from a year earlier. North America Onshore moved the other direction, falling 4% sequentially to $131.4 million even as it remained up 10% from a year ago.
Innovex closed its acquisition of TCO Group AS for $95 million in cash and stock on July 1, its third deal in five quarters following the $16 million DIS acquisition in the first quarter and the $70 million Citadel deal a year earlier. Third-quarter guidance of $260 million to $270 million in revenue and $51 million to $57 million in Adjusted EBITDA is the company's first outlook to build in a completed acquisition's contribution, since TCO closed after the quarter ended.
Cash climbed to $222 million with no bank debt, up from $201 million at the end of the first quarter and up sharply from $69 million a year earlier, capacity the company built ahead of the TCO purchase. Share repurchases stopped in the second quarter after the company bought back $14.1 million of stock at $24.59 a share in the first quarter. Capital expenditures held near 2.7% of revenue, little changed from about 3% a year earlier and consistent with the company's capital-light model.