Company Description

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 lifecycle 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. The majority of our 2022 revenue came from product families that we believe hold a top three competitive position in their primary markets based on our total addressable market (“TAM”) estimates. We estimate that our TAM for our applicable products across the NAM (as defined herein) market was approximately $2.0 billion in 2022 and $1.6 billion in 2021. We have a growing presence across our International and Offshore (as defined herein) markets and estimate that the TAM for our applicable products across these regions was approximately $2.2 billion in 2022 and $2.0 billion in 2021. 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. Our business is high margin and capital-light, enabling us to generate strong returns on invested capital. We have a disciplined history of successfully sourcing and integrating strategic acquisitions. --- We are a global company, and in 2022, we sold products in approximately 65 countries. The U.S. and Canadian onshore market (together, “NAM”) made up approximately 71% of our 2022 revenue, while the international and offshore markets (together, “International and Offshore”) constituted 29%. Within the NAM market, we have a strong presence in the United States and a growing presence in Canada. The Permian Basin is our largest operating region within this market, making up over half of our 2022 NAM revenue. 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 the Company and has become our largest International and Offshore market. We also operate across Latin America, Europe and the U.S. Gulf of Mexico, 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. --- We are an innovator and have a development process and culture focused on creating proprietary products for our customers. Approximately 51% of our 2022 revenue was derived from products that we developed internally. We seek to work with our customers to solve their operational challenges. We believe that these collaborations have been a source of growth as they have allowed us to develop new products with anchor customers that have served as an initial revenue base from which to scale. We have a unique culture that we view as having been critical to our success in the commercialization of new products. We define our culture as “No Barriers.” Our goal is to remove internal barriers that slow the pace of innovation and empower our employees to be responsive to our customers’ needs, while maintaining a focus on returns for the Company. As a result of our culture and our commitment to customer responsiveness, we believe that we are more agile and able to innovate faster than our larger competitors based on publicly available information. Based on our TAM estimates, we believe that we have been successful in capturing market share across both of our geographic markets. In 2022, as compared to 2021, we estimate that we grew our NAM market share to 16% from 13%. Across the International and Offshore markets, we estimate our market share grew to 6% from 4% over the same time period. We believe that we are well positioned to continue to capture market share across both geographic markets and view the International and Offshore markets as a significant growth opportunity. Our organic growth has been complemented by a disciplined acquisition strategy. We view acquisitions as a core competency and have identified a rich opportunity set of acquisition targets that we believe are seeking to transact. We aim to execute a disciplined acquisition strategy for high-quality opportunities that meet our stringent investment criteria. We have a broad customer base, ranging from the largest international oil companies (“IOCs”), national oil companies (“NOCs”) and exploration and production (“E&P”) companies as well as multinational and regional oilfield service companies. Once a new product has been commercialized or acquired, our global sales and distribution infrastructure enables us to scale and drive customer adoption quickly. We were formed in 2016 through the combination of three consumable products companies with long operating histories. Since our inception, we have achieved strong financial results. Our revenues have grown from approximately $97.9 million in 2016 to $467.2 million in 2022, a compound annual growth rate (“CAGR”) of approximately 30%. Our business is high margin and capital-light, which enables us to generate strong returns on invested capital. In 2022, our net income, operating profit and Adjusted EBITDA were equivalent to approximately 14%, 16% and 22% of revenue, respectively. Over the same period, investments in property and equipment accounted for only approximately 2% of revenue, we earned approximately $76.6 million in income from operations and our Return on Capital Employed (“ROCE”), a metric which we utilize to assess the effectiveness of our capital allocation over time, was approximately 24%. 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. We believe that we can create value for our stockholders across the industry cycle and view our “through-cycle playbook” as having helped us outperform in all market environments. We prioritize protecting the long-term health of the Company through investments in research and development (“R&D”) and sustaining engineering in our existing portfolio in all market environments. We seek to maintain a conservative balance sheet to preserve operational and financial flexibility through the industry cycle. We believe that we have a strong track record of creating stockholder value by successfully sourcing, executing and integrating strategic acquisitions in all market environments, while preserving a strong balance sheet. --- Our principal executive offices are located at 19120 Kenswick Drive, Humble, Texas 77338, and our telephone number is (346) 398-0000. Following the closing of this offering, our website will be located at www.innovex-inc.com.