Innovex International, Inc. · NYSE:INVX
Innovex International — PEP Energy Conference 2024
23 slides from Innovex International's conference presentation, Sep 17, 2024
Slide 1: Innovex: A Unique Energy Industrial Platform
Innovex: A Unique Energy Industrial Platform September 2024 Highly Confidential | 1
Slide 2: Disclaimer
Disclaimer Important Information and Disclaimers This disclaimer applies to this document and the verbal or written comments of any person presenting it. This document, taken together with any such verbal or written comments, is referred to herein as the “Presentation.” Historical financial results
Slide 3: Disclaimer (Cont'd)
Disclaimer (Cont’d) Industry Information We obtained the industry, market and competitive position data used throughout this Presentation from our own internal estimates and research, as well as from independent industry publications, government publications and other published independent sources.
Slide 4: Vision + Culture = Results
Vision + Culture = Results Legacy Innovex has a strong track record of success as a private company Leading Top Line Growth Consistently High Margins1 (2016 - 2023 Revenue per Share CAGR) (Historical Adj. EBITDA Margins) 2023 Total Debt / Adjusted EBITDA: 45 % 0.4x 0.0x 1.9x 0.9x 0.5x 2.9x 1.5x 1.5x
Slide 5: We Generate Real Cash and Actual Returns by Leveraging our Platform
We Generate Real Cash and Actual Returns by Leveraging our Platform We curate our portfolio based on underlying economic potential, not pitchbook logic The Innovex Approach Typical OFS Playbook Invest in small ticket, big impact products Aggregate EBITDA Drive organic growth through customer f
Slide 6: Innovex will Transform Legacy Dril-Quip via Our Proven Playbook
Innovex will Transform Legacy Dril-Quip via Our Proven Playbook No Barriers culture will drive focus on margins & market share through a differentiated management approach Summary Significant Margin Opportunity(1) • Margins: Implied $58mm incremental Adjusted EBITDA 30% opportunity assuming Legacy D
Slide 7: Pro Forma Financials
Pro Forma Financials Legacy Innovex Legacy Dril-Quip Pro Forma Innovex Revenue ($mm) $253 $257 $264 $259 $251 $238 $136 $148 $139 $133 $130 $128 $118 $125 $126 $110 $120 $109 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Adj. EBITDA ($mm)
Slide 8: Upside Relative to Peer Group and Recent M&A
Upside Relative to Peer Group and Recent M&A Steep discount to public comps despite superior returns and growth Trading Multiples Peer Comparison – Total Enterprise Value (TEV) / Adjusted EBITDA (TTM as of Q2 2024) Implied multiple at SLB merger 12.0x announcement 10.5x 10.5x 10.1x 10.0x 8.0x 5.7x 6
Slide 9: We use the cycle to drive growth
We use the cycle to drive growth Current market conditions present opportunity Up-Cycle Mid-Cycle Down-Cycle • Prioritize execution to drive market • Maintain balance sheet strength • Invest while competitors struggle share capture • Optimize margins and focus on • Unwind working capital to bolster
Slide 10: Innovex is Building a Unique Energy Industrial Platform
Innovex is Building a Unique Energy Industrial Platform Our VISION is to create the global leader in well-centric products and technologies through organic, customer-linked innovations and disciplined acquisitions to drive returns for our investors 1 Curated Portfolio of Complementary, Mission Criti
Slide 11: Appendix: Supplemental Materials
Appendix: Supplemental Materials 11
Slide 12: A Resilient Portfolio of Products With Diverse Geographic End Markets
A Resilient Portfolio of Products With Diverse Geographic End Markets 2023 Pro Forma Revenue1 ($mm) 2023 Pro Forma Adjusted EBITDA1 ($mm) $30 Innovex Innovex $478 $1,034 $556 $59 $221 Dril-Quip Dril-Quip $132 Synergies 2023 Pro Forma Revenue by End Market 2023 Pro Forma Revenue by Offering
Slide 13: A Complementary Portfolio of Curated, High Margin Offshore Products & Services
A Complementary Portfolio of Curated, High Margin Offshore Products & Services Core products represent ~4%1 of the cost of an average offshore well Our Deepwater Subsea Wellbore Complimentary Business Model Product Legend Big Impact, Small Ticket Single use / consumable products Sustained
Slide 14: A Complementary Portfolio of Curated, High Margin Onshore Products & Services
A Complementary Portfolio of Curated, High Margin Onshore Products & Services Represents ~2%1 of the cost of an average North American land well Our Onshore Wellbore Complimentary Business Model Product Legend Big Impact, Small Ticket Wellhead Penetrator Single use / consumable products Du
Slide 15: Magnet for Customer Led Innovation
Magnet for Customer Led Innovation Unique No Barriers culture underpins relentless, proven innovation cycle The Technology Feedback Loop Recent Results of Innovation Model Engineering + R&D Prototyping + Customer Rapid Response Feedback Manufacturing Direct-to-End Technical Sales User Product / Fiel
Slide 16: Pro Forma Reconciliation to Non-GAAP Metrics
Pro Forma Reconciliation to Non-GAAP Metrics Net Income to Adjusted EBITDA 2023 Dril-Quip lnnovex Cost Synergies Pro Forma ($ in millions) Net Income $1 $74 $24 $98 (+) Net Interest Expense (8) 6 – (3) (+) Income Tax Provision 13 20 6 40 (+) Depreciation and Amortization Expense 30 23 – 53 1 3 (-) O
Slide 17: Legacy Innovex Reconciliation to Non-GAAP Metrics
Legacy Innovex Reconciliation to Non-GAAP Metrics Adjusted EBITDA and Adjusted EBITDA Margin 2 2 2 2023 2022 2021 2020 2019 2018 ($ in millions) Revenue $556 $467 $295 $189 $325 $277 Net Income 74 63 10 (5) 32 35 Interest Expense 6 4 2 2 4 4 Income Tax Expense 20 10 4 2 9 (4) Depreciation and Amorti
Slide 18: Legacy Innovex Reconciliation to Non-GAAP Metrics
Legacy Innovex Reconciliation to Non-GAAP Metrics Quarterly Net Income to Adjusted EBITDA ($ in millions) Q1’23 Q2’23 Q3’23 Q4’23 Q1’24 Q2’24 Net Income $20 $21 $15 $18 $16 $10 (+) Net Interest Expense 1 2 2 1 1 1 (+) Income Tax Provision 1 7 8 5 5 4 (+) Depreciation and Amortization Expense 5 5 6 6
Slide 19: Legacy Innovex Reconciliation to Non-GAAP Metrics
Legacy Innovex Reconciliation to Non-GAAP Metrics Quarterly Free Cash Flow ($ in millions) Q1’23 Q2’23 Q3’23 Q4’23 Q1’24 Q2’24 Cash Flow from Operating Activities $9 $14 $32 $21 $13 $23 Purchase of Property, Plant, and Equipment (2) (7) (6) (1) (2) (2) Free Cash Flow $6 $7 $26 $20 $10 $21 19
Slide 20: Legacy Innovex Reconciliation to Non-GAAP Metrics
Legacy Innovex Reconciliation to Non-GAAP Metrics Return on Capital Employed (ROCE) 2023 2022 2021 2020 2 2019 2 2018 2 ($ in millions) Income From Operations $97 $77 $14 ($1) $44 $35 Income Tax Expense 20 10 4 2 9 (4) Operating Profit After Tax $77 $67 $10 ($3) $34 $39 Beginning Debt 90 39 26 65 83
Slide 21: Legacy Dril-Quip Reconciliation to Non-GAAP Metrics
Legacy Dril-Quip Reconciliation to Non-GAAP Metrics Adjusted EBITDA and Adjusted EBITDA Margin ($ in millions) 2023 2022 2021 2020 2019 2018 Revenue $478 $362 $322 $365 $415 $385 Net Income 1 (2) (128) (31) 2 (96) Interest Expense, Net (8) (4) 0 (2) (8) (8) Income Tax Provision 13 6 3 (31) 9 (19) De
Slide 22: Legacy Dril-Quip Reconciliation to Non-GAAP Metrics
Legacy Dril-Quip Reconciliation to Non-GAAP Metrics Quarterly Net Income to Adjusted EBITDA ($ in millions) Q1’23 Q2’23 Q3’23 Q4’23 Q1’24 Q2’24 Net Income $2 $3 $(7) $2 $(20) $(2) Interest Expense, Net (3) (2) (2) (1) (2) (2) Income Tax Provision 4 2 3 4 3 (1) Depreciation & Amortization 7 7 8 8 8 8
Slide 23: Legacy Dril-Quip Reconciliation to Non-GAAP Metrics
Legacy Dril-Quip Reconciliation to Non-GAAP Metrics Quarterly Free Cash Flow ($ in millions) Q1’23 Q2’23 Q3’23 Q4’23 Q1’24 Q2’24 Cash Flow from Operating Activities $(53) $11 $24 $26 $(4) $(9) Purchase of Property, Plant, and Equipment (5) (10) (5) (12) (5) (6) Free Cash Flow $(58) $1 $18 $15 $(9) $