INVX 10-K & 10-Q changes, risk factors and insider trading

Demand for most of our products and services depends primarily on the level of activity in the oil and natural gas industry in North America, the Middle East, Latin America and Europe, among other global markets. As a result, our operations are dependent on the levels of activity and capital spending in oil and natural gas exploration, development and production. A prolonged reduction in oil and natural gas prices would generally depress the level of oil and natural gas exploration, development, production, and well completion activity and would result in a corresponding decline in the demand for the products and services that we provide. The significant decline in oil and natural gas prices that occurred in 2020 caused a reduction in our customers’ spending and associated drilling and completion activities, which had an adverse effect on our revenue. While oil and natural gas prices have since increased, they remain volatile, and should prices again continue to decline, similar declines in our customers’ spending would have an adverse effect on our revenue. In addition, a worsening of these conditions may result in a material adverse impact on certain of our customers’ liquidity and financial position resulting in further spending reductions, delays in the collection of amounts owing to us and other similar impacts.

the continued threat of terrorism and the impact of military and other action, including military action in the Middle EastEast, the Russia-Ukraine war, and the Russia-Ukrainecurrent warpolitical situation in Venezuela;

These factors and the volatility of the energy markets make it extremely difficult to predict future oil and natural gas price movements with any certainty. A decline in oil and natural gas prices maycould have a material adverse effect on our business, results of operations and financial condition.

We derive our revenues from companies in the oil and natural gas exploration and production and oilfield services industry, a historically cyclical industry with levels of activity that are significantly affected by the levels and volatility of oil and natural gas prices. We have experienced, and may in the future experience, significant fluctuations in operating results as a result of the reactions of our customers to changes in oil and natural gas prices. For example, prolonged low commodity prices experienced by the oil and natural gas industry during 2015, 20162016, 2020 and more recently in 2020,2025, combined with adverse changes in the capital and credit markets, caused many exploration and production companies to reduce their capital budgets and drilling activity. This resulted in a significant decline in demand for oilfield services and products and adversely impacted the volume of products and services oilfield services companies could sell, and the prices oilfield services companies could charge for their products and services. In addition, a majority of the revenue we earn is based upon product sales at market pricing. By selling our products at market pricing, we are exposed to the risks of a rapid reduction in prices and resulting volatility in our revenues.

We are subject to risks relating to existing international operations and expansion into new geographicalgeographic markets.

terrorist threats or acts, warwar, anti-boycott regulations, military conflicts and civil disturbances;

export controls, economic sanctions, embargoes, anti-boycott regulations, import controls, duties and tariffs, and other trade restrictions;

If we are unable to successfully manage the risks associated with expanding our global business or adequately manage operational risks of our existing international operations, these risks could have a material adverse effect on our growth strategy into new geographical markets,ourmarkets, our reputation, our business, results of operations, financial condition and cash flows.

We often sell and rent products to IOCs and NOCs. Many IOCs and NOCs require products to undergo extensive registration and qualification processes before such product can be purchased or rented. This process can take several years to complete. We will seek to undergo these registration and qualification processes for our current and future products,products; andhowever, there is no guarantee that our products will successfully complete these processes, oror, if they do, that such IOCs or NOCs will purchase or rent such products in the future.

We conduct business globally, and our business activities and services are subject to import and export controls, as well as economic sanctions, embargoes, anti-boycott, and other international trade laws of the United States and other countries. We must comply with U.S. and other applicable export and import controls, economic sanctions, embargoes, anti-boycott, and other international trade laws, including the U.S. Commerce Department’s Export Administration Regulations andRegulations, economic sanctions administered by the U.S. Department of the Treasury’s Office of Foreign Assets Control and the U.S. Department of State.State, and import controls administered by the U.S. Customs and Border Protection. In addition, the movement of goods, services and technology subjects us to complex legal regimes governing international trade. Our import activities are governed by unique tariff and customsimport lawscontrols in each of the countries where we import. Further, we must comply with controls on the export or reexport of certain goods, services and technology, as well as economic sanctions that prohibit or restrict business activities in, with or involving certain persons, entities or countries. Moreover, we have a diverse supply chain that utilizes international vendors to provide certain services, including machining services, and source raw materials, component parts and finished products from countries other than that of the intended sale which can give rise to additional international trade risk. Although we have instituted policies and procedures designed to promote compliance with such controls and laws, violations of import or export controls, economic sanctions, embargoes, anti-boycott, or other international trade laws could result in negative consequences to us, including government investigations, sanctions, criminal or civil fines or penalties, more onerous compliance requirements, loss of authorizations or licenses needed to conduct aspects of our business, default under debt, reputational harm and other adverse consequences. Moreover, if any of our counterparties or jurisdictions where we do business becomes the target of economic sanctions or other trade restrictions, we may face an array of issues, including, but not limited to, having to abandon the related project or business, being unable to recoup prior invested time and capital or being subject to lawsuits, investigations or regulatory proceedings that could be time consuming and expensive to respond to, and which could lead to sanctions, criminal or civil fines or penalties, loss of authorizations or licenses needed to conduct aspects of our business, default under debt, reputational harm and other adverse consequences. Furthermore, the laws concerning import and export controls, including record keeping and reporting, economic sanctions, embargoes, anti-boycott, and other international trade laws are complex and constantly changing and we cannot predict how these laws or their interpretation, administration and enforcement will change over time. Moreover, they may be adopted, enacted, amended, enforced or interpreted in a manner that could materially impact our operations.

Our business, financial condition and results of operations may be affected by economic sanctionssanctions, embargoes, anti-boycott regulations, export and exportimport controls, and other trade restrictions, including those targeting Russia.

In response to Russia’s military action in Ukraine in 2022, the United States, the European Union and the United Kingdom, among others, have imposed significant economic sanctions and export control measures on Russia and others supporting Russia’s military and political actions in Ukraine, including, blocking or “asset freezing” sanctions on designated entities and individuals as well as secondary sanctions; restrictions on the Russian energy and financial sectors; blocking economic activity in certain areas of Ukraine not controlled by the Ukrainian government; prohibitions in relation to investment in Russia; prohibitions and restrictions relating to Russian origin oil and oil products; and export controls limiting the export of a wide range of goods and technical assistance to Russia. In response, Russia has implemented counter-sanctions, including restrictions on the divestment from Russian assets by foreign investors and restrictions on the payments of dividends and transfers of funds out of Russia by foreign investors. Although we have minimal operational exposure in Russia with no revenue for the year ended December 31, 2024,2025, and we do not intend to commit further capital towards projects in Russia, the full impact of the invasion of Ukraine, including economic sanctions and export controls or additional war or military conflict, as well as potential responses to them by Russia, is currently unknown and they could adversely affect oil and gas companies, including many of which are our customers, as well as the global supply chain.

Changes in government policies on international trade and investment can affect the demand for our products and services, impact the competitive position of our products and services or prevent us from being able to sell or purchase products and services in or from certain countries. Our business benefits from free trade agreements, and efforts to withdraw from, or substantially modify such agreements, in addition to the implementation of more restrictive trade policies, such as more detailed inspections, higher duties or tariffs, import or export licensing requirements, economic sanctions, anti-boycott laws, exchange controls or newtrade barriers to entry,barriers, could have a material adverse effect on our results of operations, financial condition or cash flows. For example, we are experiencing and/or may experience in the future increased duties or tariffs on certain of our products and product components from China, Mexico and Canada. We have planned and begun to implement various efforts in conjunction with our supply chain and end market partners to mitigate the impact of the increased duties and tariffs, but we cannot predict how the duties and tariffs and trade policies may change over time.

Moreover, the United States Congress, the Organization for Economic Co-operation and Development (“OECD”) and other government agencies in the other jurisdictions where we and our subsidiaries do business have had an extended focus on issues related to the taxation of multinational corporations. One example is in the area of “base erosion and profit shifting,” where payments are made between affiliates from a jurisdiction with high tax rates to a jurisdiction with lower tax rates. As a result, the tax laws in the United States and other countries in which we and our subsidiaries do business could change on a prospective or retroactive basis, and such changes could adversely affect us.

As of December 31, 2024,2025, we had an NOL carryforward of approximately $298.8$457.3 million, principally consisting of tax attributes acquired from Dril-Quip and Rubicon.Rubicon Oilfield International, LLC (“Rubicon”). The Rubicon NOLs are subject to a significant limitation,limitation. however,However, we do not believe the Merger resulted in an ownership change under Section 382, so the $149.5 million of NOLs acquired from Dril-Quip are not limited.

Our competitors may be able to respond more quickly to new or emerging technologies and services and changes in customer requirements. The amount of equipment available may exceed demand, which could result in active price competition. In addition, competition among oilfield equipment providers is affected by each provider’s reputation for safety and quality. We cannot assure that we will be able to maintain our competitive position.

We purchase raw materials, sub-assemblies and components for use in manufacturing operations, which exposes us to volatility in prices for certain commodities. Significant price increases for these commodities could adversely affect our operating profits. Even if we have multiple suppliers of a particular raw material, there are occasionally shortages which lead to price increases. The prices we pay for our raw materials may also be affected by, among other things, tariffs and duties on imported materials and foreign currency exchange rates. Any significant disruption in supply could affect our ability to obtain raw materials or satisfactory substitutes or could increase the cost of such raw materials or substitutes, which could have a material adverse effect on our liquidity, financial position and results of operations. Should our current suppliers be unable or unwilling to provide the necessary parts, raw materials or equipment or otherwise fail to deliver the products timely and in the quantities required, any resulting delays in the provision of our products could have a material adverse effect on our business, financial condition, results of operations and cash flows.

We are exposed to counterparty credit risk.risk, Nonpaymentincluding nonpayment and nonperformance by our customers, suppliers or vendorsvendors, which could adversely impact our operations, cash flows and financial condition.

Weak economic conditions, volatility in the banking sector and/or widespread financial distress could reduce the liquidity of our customers, suppliers or vendors making it more difficult for them to meet their obligations to us. Severe financial problems encountered by our customers, suppliers and vendors could limit our ability to collect amounts owed to us or to enforce the performance of obligations owed to us under contractual arrangements and/or limit our ability to enter into future contractual arrangements with such customers, suppliers or vendors. Certain of our customers finance their activities through cash flow from operations, the incurrence of debt or the issuance of equity. In an economic downturn, commodity prices typically decline, and the credit markets and availability of credit can be expected to be constrained. Additionally, certain of our customers’ equity values could decline. The combination of lower cash flow due to commodity prices, a reduction in borrowing bases under reserve-based credit facilities and the lack of available debt or equity financing may result in a significant reduction in our customers’ liquidity and ability to pay or otherwise perform on their obligations to us. Furthermore, some of our customers may be highly leveraged and subject to their own operating and regulatory risks, which increases the risk that they may default on their obligations to us. Any increase in the nonpayment and nonperformance by our customers could have an adverse impact on our operating results and could adversely affect our liquidity.Inliquidity. In the event that any of our customers was to enter into bankruptcy, we could lose all or a portion of the amounts owed to us by such customer, and we may be forced to cancel all or a portion of our contracts with such customer at significant expense to us.

Our manufacturing capacity is subject to equipment failures and the risk of catastrophic loss due to unanticipated events, such as fires, explosions and adverse weather conditions. Our manufacturing processes depend on critical pieces of equipment. Such equipment may, on occasion, be out of service as a result of unanticipated failures, which could require us to close part or all of the relevant manufacturing and production facility or cause us to reduce production on one or more of our product lines. Any interruption in manufacturing capability may require us to make significant and unanticipated capital expenditures to effect repairs,whichrepairs, which could have a negative effect on our profitability and cash flows. We carry extra expense coverage; however, recoveries under insurance coverage that we currently maintain or may obtain in the future may not be sufficient to completely offset the lost revenues or increased costs resulting from a disruption of our operations. A sustained disruption to our business could also result in delays to or cancellations of customer orders and contractual penalties, which may also negatively impact our reputation among our customers. Any or all of these occurrences could have a material adverse effect on our business, results of operations, financial condition and prospects.

We have pursued and intend to continue to pursue selected, accretive acquisitions of complementary assets and businesses, such as the Merger and the acquisition of DWS.DWS, SCF, and Citadel. Acquisitions involve numerous risks, including:

The failure to integrate successfully theintegrate businesses ofacquired Dril-Quipin our recent merger and Legacyacquisition Innovextransactions could adversely affect the Company’sour future results.

TheStrategic Mergermergers involvesand acquisitions are an important element of our growth strategy, and the success of any acquisition we make depends, in part, on our ability to integrate the acquired business and realize anticipated synergies. Our recent mergers and acquisitions involve the integration of two companies thatthat, prior to Septemberthe 6,respective 2024,acquisition or merger date, operated independently. The success of thethese Mergertransactions will depend – in large part – on theour ability of the Company to realize the anticipated benefits, including cost savings, among others, from combining the businesses of Dril-Quip and Legacy Innovex.businesses. To realize these anticipated benefits, the businesses of Dril-Quip and Legacy Innovex must be successfully integrated. This integration will be complex and time-consuming. The failure to successfully integrate successfully and to manage successfully the challenges presented by the integration process may result in the Company not achieving the anticipated benefits offrom thethese Merger.recent mergers and acquisitions.

Company managementManagement believes that theour Mergerrecent mergers and acquisitions will provide operational and financial scale, increasing free cash flow and enhancing the Company’sour corporate returns on invested capital. However, achieving these goals requires, among other things, realization of the targeted cost synergies expected from thethese Merger.recent transactions. The anticipated benefits of theour Mergerrecent mergers and acquisitions and actual operating, technological, strategic and revenue opportunities may not be realized fully or at all, or may take longer to realize than expected. If thewe Company isare not able to achieve these objectives and realize the anticipated benefits and synergies expected from theour Mergerrecent mergers and acquisitions within the anticipated timing or at all, the Company’sour business, financial condition and operating results may be adversely affected.

TheWe Company hashave also incurred and will continue to incur significant integration-related costs and there is potential for unknown liabilities, unforeseen expenses, delays associated with post-Mergerpost-acquisition integration activities and performance shortfalls of the Company as a result of the diversion of management’s attention caused by completing the Mergermergers and acquisitions, and integrating the companies’ operations. Many of the expenses that will be incurred, by their nature, are difficult to estimate accurately at the present time. Additionally, there are a large number of processes, policies, procedures, operations, technologies and systems that must be integrated, including accounting and finance, asset management, benefits, billing, international trade compliance, health, safety and environmental, human resources, maintenance, marketing, payroll and purchasing. The expenses of integrating these systems could, particularly in the near term, exceed the savings that thewe Company expectsexpect to achieve from the elimination of duplicative expenses and the realization of economies of scale and cost savings.

Inflation could adversely impactaffect the global economy, which could adversely affect our operating results and the global economy.results.

Global inflation significantly increased in 2022 and 2021 related to the COVID-19 economic recovery and associated disruptions in global demand, supply chains/logistics, and labor markets, as well as the war in Ukraine and related significant increase in energy costs. While the global inflation rate began to ease in 2023 and 2024 as a result of central bank policy tightening, core inflation has proved persistent as a result of the preceding factors, in addition to others such as the escalating number of significant geopolitical conflicts throughout the world.

We are subject to risk from fluctuating manufacturing costs of our products based on surging consumer demand. Prices of these manufacturing costs, including the components and materials of our products, may be affected by supply restrictions or other market factors from time to time. We cannot predict whether the countries in which the components and materials are sourced, or may be sourced in the future, will be subject to new or additional trade restrictions, including the likelihood, type or effect of any such restrictions. Trade restrictions, including embargoes, export and import controls, safeguards and customs restrictions against certain components and materials, as well as labor strikes and work stoppages or boycotts, could increase the cost or reduce or delay the supply of components and materials available to us and our vendors, which could delay or adversely affect the scope of our projects under develop mentor construction and adversely affect our business, financial condition or results of operations.

We have identified and may in the future identify additional material weaknesses in internal controls over financial reporting, which may not be remedied in a timely manner and could affect the reliability of our financial statements and have other adverse consequences.

Effective internal controls are necessary for the us to provide reliable financial reports, prevent fraud and operate successfully. As previously disclosed, we identified material weaknesses in the past that have been remedied. We cannot assure that we will notnot, in the futurefuture, have additional material weaknesses. Should new material weaknesses arise or be discovered in the future, material misstatements could occur and go undetected in our interim or annual consolidated financial statements. If we fail to remediate any future material weaknesses or maintain proper and effective internal control over financial reporting in the future, we may be required to restate our financial statements, experience delays in satisfying our reporting obligations or fail to comply with SEC rules and regulations, which could result in investigations and sanctions by regulatory authorities. Any of these results could adversely affect our business and the value of our common stock.

Our existing and future indebtedness, whether incurred in connection with acquisitions, operations or otherwise, and limited access to liquidity may adversely affect our operations and limit our growth, and we may have difficulty making debt service payments on such indebtedness as payments become due. Our level of indebtedness may affect our operations in several ways, including the following:

Furthermore, our debt agreements contain certain other operating and financial covenants, including the obligation to satisfy a certain fixed charge coverage ratio, a leverage ratio and a liquidity requirement. Our ability to comply with the covenants and restrictions contained in our debt agreements may be affected by events beyond our control, including prevailing economic, financial and industry conditions. If market or other economic conditions deteriorate, our ability to comply with these covenants may be impaired. If we violate any of the restrictions, covenants, ratios or tests in our debt agreements, all or a significant portion of our indebtedness may become immediately due and payable, and our lenders’ commitment to make further loans to us may terminate. We might not have, or be able to obtain, sufficient funds to make these accelerated payments. Our Credit Facility (as defined herein) is secured by liens on substantially all of our assets and certain of our future subsidiaries and guarantees from certain of our future subsidiaries, and any acceleration of our debt obligations could result in a foreclosure on the collateral securing such debt. Our debt agreements also require us to make mandatory prepayments in certain circumstances, including a requirement to make a prepayment of the term loans with a certain percentage of our excess cash flow each year. This excess cash flow payment, and other future required prepayments, will reduce our cash available for investment in our business. Any subsequent replacement of our debt agreements or any new indebtedness could have similar or greater restrictions. PleaseRefer seeto “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Credit Agreement.Agreement” for additional information.

Our and our customers’ operations are exposed to the risks inherent to our industry, such as equipment defects, vehicle accidents, fires, explosions, blowouts, surface cratering, uncontrollable flows of gas or well fluids, pipe or pipeline failures,failures abnormally pressured formations and various environmental hazards, such as oil spills and releases of, and exposure to, hazardous substances. In addition, our and our customers’ operations are exposed to potential natural disasters, including blizzards, tornadoes, storms, floods, other adverse weather conditions and earthquakes. The occurrence of any of these events could result in substantial losses to us or our customers due to injury or loss of life, severe damage to or destruction of property, natural resources and equipment, pollution or other environmental damage, clean-up responsibilities, regulatory investigations and penalties or other damage resulting in curtailment or suspension of our operations or our customers’ operations. The cost of managing such risks may be significant. The frequency and severity of such incidents may affect operating costs, insurability and relationships with customers, employees and regulators. Our customers may elect not to purchase our products and services if they view our environmental or safety record as unacceptable, which could cause us to lose customers and substantial revenues.

We provide products and systems to customers involved in oil and natural gas exploration, development and production. Some of our equipment is designed to operate in high-temperature and/ or high-pressure environments, and some equipment is designed for use in hydraulic fracturing operations. Because of applications to which our products are exposed, particularly those involving high pressure environments, a failure of such equipment, or a failure of our customers or their contractors to maintain or operate the equipment properly, could cause damage to the equipment, damage to the property of customers and others, personal injury and environmental contamination and could negatively impact customer relationships, which could subsequently have an adverse effect on our business, results of operations and cash flows.

Our customers typically assume responsibility for, including control and removal of, all pollution or contamination which may occur during operations, including that which may result from seepage or any other uncontrolled flow of drilling fluids. Losses due to catastrophic events, such as blowouts, are generally the responsibility of the customer. However, we may have liability in such cases if we are negligent or commit willful acts. In addition,weaddition, we typically have mutual indemnification agreements with customers on a “knock-for-knock” basis, which generally means that we and our customers assume liability for our respective personnel, subcontractors and property. As a result of this allocation of risk, we may be liable for certain losses, which could be substantial. Furthermore, despite the general allocation of risk whereby our customers have agreed to assume responsibility for or indemnify us against certain liabilities, we might not succeed in enforcing such contractual allocation or might incur an unforeseen liability falling outside the scope of such allocation. Litigation arising from a catastrophic occurrence at a location where our products and equipment are being used may result in our being named as a defendant in lawsuits asserting large claims. In addition, our customers may be unable to satisfy indemnification claims against them. As a result, we may incur substantial losses which could materially and adversely affect our financial condition and results of operations.

Our business could be negatively affected by climate-changeclimate change related physical changes or changes in weather patterns. Severe weather events affecting platforms or structures may result in a suspension of our customer’s exploration and production activities. In addition, impacts of climate change, such as sea level rise, coastal storm surge, inland flooding from intense rainfall and hurricane-strength winds may damage our facilities or those of our customers. An increase in severe weather patterns could result in damages to or loss of our equipment, impact our ability to conduct our operations and/or result in a disruption of our customers’ operations which could be material to our results of operations, financial position and cash flows.

Even if our estimates of our TAM estimatesand market growth are accurate or the markets in which we compete achieve the forecasted growth,accurate, our business could fail to grow atin similarline rates,with ifthe atmarket all.or could decline. Market estimates and growth forecasts, including those of Rystad Energy and our management, are uncertain and based on assumptions and estimates that may be inaccurate. The size of our TAM depends on a number of factors, including changes in the competitive landscape, technological changes, customer budgetary constraints, changes in business practices, changes in the regulatory environment, changes in economic conditions and the price we can charge for our products and services. Even if the markets in which we compete meet the size estimates and growth rates we estimate or forecast, our business could fail to grow at similar rates, if at all, which could cause the trading price of our common stock to decline or be volatile.

Long-lived assets, including property, plant and equipment and definite-lived intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. We evaluate our property and equipment and definite-lived intangible assets for impairment whenever changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. Should the review indicate that the carrying value is not fully recoverable, the amount of the impairment loss is determined by comparing the carrying value to the estimated fair value. We assess recoverability based on undiscounted future net cash flows. Estimating future net cash flows requires us to make judgments regarding long-term forecasts of future revenues and costs related to the assets subject to review. These forecasts are uncertain in that they require assumptions about our revenue growth, operating margins, capital expenditures, future market conditions and technological developments. If changes in these assumptions occur, our expectations regarding future net cash flows may change such that a material impairment could result. We incurred long-lived asset write-downs of approximately $3.5$3.4 million during the year ended December 31, 2024.2025. These charges are reflected as “Impairment of long-lived assets” in our Consolidated Statements of Operations and Comprehensive Loss.Income.

During 2024,2025, Brent crude oil prices fluctuated,generally withdeclined amid an oversupplied global oil market, falling from a monthly average high of $93.12approximately $79 per barrel,barrel in January to a monthly low of $70.31approximately $63 per barrel.barrel in December. According to the January 20252026 release of the Short-Term Energy Outlook published by the U.S. Energy Information Administration (EIA) of the U.S. Department of Energy,, Brent crude oil prices averaged approximately $81$69 per barrel in 2024,2025, and the price is forecasted to average $74approximately $56 per barrel in 20252026 and $66$54 per barrel in 2026.2027. Crude oil prices have fluctuated considerably in recent years, in large partyears due to thea ongoingvariety conflictof betweenfactors, Russiaincluding global supply and Ukraine.demand Theimbalances, conflictgeopolitical betweeninstability, Israelincluding in Latin America, OPEC+ production decisions, and Hamasconflicts mayin alsoregions havesuch anas impactEastern on energyEurope and commoditythe prices.Middle East. We are unable to predict the impact that future supplymarket andconditions, demandgeopolitical balances,events, weatherweather-related eventsdisruptions or conflictsother external factors may have on the global economy,energy our industrymarkets or on our business, financial condition, results of operations or cash flows. Further, continued volatility in market conditions or lower commodity prices may further deteriorate the financial performance or future prospects of our operations from current levels, which may result in an impairment of long-lived assets or inventory and negatively impact our financial results in the period of impairment.

Additionally, environmental, health and safety laws and regulations have changed in the past, and they may change in the future and become more stringent. Current and future claims and liabilities with respect to environmental, health and safety laws may have a material adverse effect on both us and our customers because of potential adverse outcomes, defense costs, diversion of management resources, unavailability of insurance coverage and other factors. If existing environmental, health and safety requirements or enforcement policies change, we may be required to make significant unanticipated operating expenditures. ForRefer more information, seeto “Business—Environmental, Health and Safety Regulation.Regulation” for additional information.

Climate change continues to attract considerable public and scientific attention. As a result, numerous proposals have been made and are likely to continue to be made at the international, national, regional and state levels of government to monitor and limit emissions of carbon dioxide, methane and other greenhouseGHGs. gasesSome (“GHGs”).of Thesethese efforts have included consideration of cap-and-trade programs, carbon taxes, GHG reporting and tracking programs and regulations that directly limit GHG emissions from certain sources. However, other regulatory measures are increasingly focused on easing GHG emission restrictions. For example, on February 12, 2026, the EPA issued a final rule rescinding the Endangerment Finding that established the Agency’s jurisdiction to regulate GHG emissions from motor vehicles and other sources. The final rule, which will become effective on April 20, 2026, also repealed regulations based on the Endangerment Finding. Some regulatory uncertainty remains, however, as immediate judicial challenges are expected. Additionally, opposing or conflicting measures may be taken at the international, regional, or state levels of government.

Separately, various states and groups of states have adopted or are considering adopting legislation, regulation or other regulatory initiatives that are focused on such areas as GHG cap and trade programs, carbon taxes, reporting and tracking programs, and restriction of emissions. For example, several states, including Pennsylvania and New Mexico, have adopted regulations restricting the emission of methane from exploration and production activities. At the international level, in December 2015, the United States participated in the 21st Conference of the Parties of the United Nations Framework Convention on Climate Change in Paris, France. The resulting “Paris Agreement” calls for the parties to undertake “ambitious efforts” to limit the average global temperature and requires member states to submit non-binding, individually determined reduction goals known as “Nationally Determined Contributions” every five years after 2020. In April 2021, President Biden announced a goal of reducing the U.S.’s emissions by 50-52% below 2005 levels by 2030. In November 2021, in connection with the 26th Conference of the Parties in Glasgow, ScotlandThough the United States andhas other world leaders made further commitments to reduce GHG emissions, including reducing global methane emissions by at least 30% by 2030 from 2020 levels. More than 150 countries have now signed on to this pledge. At the 28th Conference of the Parties in the United Arab Emirates, world leaders agreed to transition away from fossil fuels in a just, orderly and equitable manner and to triple renewables and double energy efficiency globally by 2030. Additionally, the Biden Administration announced a new climate target for the United States on December 19, 2024, which includes a 61-66% reduction in economy-wide net GHG emissions by 2035, as compared to 2005 levels. Though President Trump issued an executive order on January 20, 2025, directing the United States Ambassador to the United Nations to immediately withdrawwithdrawn from the Paris Agreement,Agreement (effective January 27, 2026), international, regional, and state actions to limit GHG emissions could reduce the demand for our products. Litigation risks are also increasing as a number of entities have sought to bring suit against various oil and natural gas companies in state or federal court, alleging among other things, that such companies created public nuisances by producing fuels that contributed to climate change or alleging that the companies have been aware of the adverse effects of climate change for some time but defrauded their investors or customers by failing to adequately disclose those impacts.

There are also increasing financial risks for fossil fuel producers as stockholders currently invested in fossil fuel energy companies may elect in the future to shift some or all of their investments into non-fossil fuel related sectors. Institutional lenders who provide financing to fossil fuel energy companies also have become more attentive to sustainable lending practices and some of them may elect not to provide funding for fossil fuel energy companies. There is also a risk that financial institutions will be required to adopt policies that have the effect of reducing the funding provided to the fossil fuel sector. Limitation of investments in and financing for fossil fuel energy companies could result in the restriction, delay or cancellation of drilling programs or development or production activities. Additionally, the SEC published final rules on March 28, 2024 relating to the disclosure of a range of climate-related risks. Several lawsuits have been filed challenging the rules. In April 2024, the SEC agreed to pause the rules to facilitate an orderly judicial resolution.resolution Weand in March 2025, the SEC voted to end its defense of the rules. Though the SEC climate disclosure rules are currentlysubject assessingto thisongoing rulelitigation butand atfinal thisagency timeaction weremains cannot predictpending, the costsSEC’s ofwithdrawal implementationconfirms orthe anyfederal potentialshift adverse impacts resultingaway from theclimate rule.and Environment Social Governance policies. To the extent thesimilar rules are implemented,implemented weat a national or ourstate customers could incur increased costs related to the assessment and disclosure of climate-related risks. In addition,level, enhanced climate disclosure requirements could accelerate the trend of certain stakeholders and lenders restricting or seeking more stringent conditions with respect to their investments in certain carbon intensive sectors.

Finally, many scientists have concluded that increasing concentrations of GHG in the atmosphere may produce climate changes that have significant physical effects, such as increased frequency and severity of storms, droughts, and floods and other climate events that could have an adverse effect on our and our customers’ operations.

Increased regulation and attention given to the hydraulic fracturing process could lead to greater opposition to, and litigation concerning, oil and natural gas production activities using hydraulic fracturing techniques. Additional legislation or regulation could also lead to operational delays for our customers or increased operating costs in the production of oil and natural gas, including from the developing shale plays, or could make it more difficult for our customers to perform hydraulic fracturing. The adoption of any additional laws or regulations regarding hydraulic fracturing or further restrictions on the availability of capital for hydraulic fracturing could potentially cause a decrease in the completion of new oil and natural gas wells, increased compliance costs and time and an associated decrease in demand for our products. Such a decrease could have a material adverse effect on our liquidity, consolidated results of operations, and consolidated financial condition. Moreover, the increased competitiveness of alternative energy sources (such as wind, solar, geothermal, nuclear, tidal and biofuels) or increased focus on reducing the use of combustion engines in transportation (such as governmental mandates that ban the sale of new gasoline-powered automobiles) could reduce demand for hydrocarbons and therefore for our products, which would lead to a reduction in our revenues and adversely affect our financial performance.

The following is management’s discussion and analysis of certain significant factors that have affected aspects of the Company’sour financial position, results of operations, comprehensive income (loss) and cash flows during the periods included in the accompanying consolidated financial statements. This discussion should be read in conjunction with theour Company’sConsolidated consolidatedFinancial financial statementsStatements and related notes thereto presented elsewhere in this Annual Report. The following discussion contains “forward-looking statements” that reflect our future plans, estimates, beliefs and expected performance. We caution that assumptions, expectations, projections, intentions or beliefs about future events may, and often do, vary from actual results and the differences can be material. Please see “Cautionary Statement Regarding Forward-Looking Statements” and “Part I, Item 1A. Risk Factors.”

We are a global company, and for the year ended December 31, 2024,2025, the NAM market made up approximately 55%52% of our revenuerevenue, while the International and Offshore markets constituted 45%.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 Mexico,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.

Our organic growth has been complemented by a disciplined and contrarian 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 IOCs, NOCs, and E&P companies as well asto 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.

Our business has produced strong returns on invested capital. PleaseRefer seeto “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 year ended December 31, 2024,2025, our net income, income from operations and Adjusted EBITDA were equivalent to approximately9%, 14% and 19% of revenue, respectively. Over the same period, capital expenditures accounted for 4% of revenue, and we earned $132.6 million in income from operations. For the year ended December 31, 2024, our net income, income from operations, and Adjusted EBITDA were equivalent to 21%, 7% and 21% of revenue, respectively. Over the same period, capital expenditures accounted for 2% of revenue, and we earned approximately $49.1 million in income from operations. For the year ended December 31, 2023, our net income, income from operations, and Adjusted EBITDA were equivalent to approximately 13%, 18% and 24% of revenue, respectively. Over the same period, capital expenditures accounted for only 3% of revenue, and we earned approximately $97.3 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. PleaseRefer seeto “How We Evaluate our Results of Operations” within this section for the definitions of Adjusted EBITDA, Adjusted EBITDA Margin, and Return on Capital Employed, and see “Non-GAAP Financial Measures” within this section for 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.

On February 27, 2025, we entered into the Third Amended and Restated Revolving Credit, Guaranty and Security Agreement, dated as of February 27, 2025,Agreement among the Company, and each party joined thereto from time to time as a guarantor, as guarantors, the financial institutions from time to time party thereto, as lenders, and PNC Bank, National Association, as the agent for lenders (the “New Credit Agreement”) to replace the Previous Credit Agreement (as defined herein). The New Credit Agreement provides for a $200 million senior secured revolving credit facility, subject to a borrowing base. The New Credit Agreement matures on February 27, 2030. The New Credit Agreement, among other things, (i) extended the maturity of the agreement from June 2026 to February 2030, (ii) increased the maximum revolving advance amount from $110 million to $200 million, which may, subject to certain conditions, be increased to $250 million, (iii) eliminated the term loan commitment and (iv) provided for an applicable margin for interest on the loans to be based on availability, effective as of April 1, 2025. The applicable margin under the New Credit Agreement will range from 0.50% to 1.00% for swing loans and alternate base rate revolving loans and 1.50% to 2.00% for term SOFR revolving loans.

Our business is driven by the number of oil and natural gas wells drilled worldwide, which, in turn,which is closely tied to theglobal levelexploration and production spending. As of globalJanuary spending23, of the oil and natural gas E&P industry.2026, Rystad Energy expects the Brent oil price to gradually decrease to $69 per barrel by 2026, and break the downward trend in 2027 with an average level of $74 per barrel. Consequently, global E&Pupstream capitalenergy spending, excluding Iran, Venezuela, Cuba, Russia and China, is expected to stay relatively flat through 2025. Rystad Energy also estimates thatover the annualnext few years. Approximately 32,000 wells were drilled in 2025, which number ofis globalexpected wellsto drilled,slightly excludingdecline Iran,in Venezuela, Cuba, Russia2026, and China,then will decrease 4% from approximately 34,000 in 2023recover to approximately 32,60032,000 inwells 2027.annually from 2027 through 2028. 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.

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. We expect that the growing energy demands of data centers, driven by the prevalence of Artificial Intelligence, will continue to contribute to the consumption of natural gas for power generation. 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.

Revenues.Revenues Our revenues are generated from product sales, renting tools and from providing services related to the utilization of our products. One of our measures of financial performance is the amount of revenue generated quarterly and annually as revenue is an indicator of overall business growth for the Company.

Operating Income.Income We track operating income on an absolute dollar basis and as a percentage of revenue. One of our measures of financial performance is the amount of operating income generated quarterly and annually, as operating income is an indicator of profit derived from our core business operations.

Net Income.Income We track net income on an absolute dollar basis and as a percentage of revenue. One of our measures of financial performance is the amount of net income generated quarterly and annually as net income is an indicator of overall profitability of the Company.

Adjusted EBITDA.EBITDA ManagementWe usesutilize Adjusted EBITDA (a non-GAAP measure) to assess the profitability of our business operations and to compare our operating performance to our competitors without regard to the impact of financing methods and capital structure and excluding costs that management believes do not reflect our ongoing operating performance, and for this reason we believe this measure will provide useful information to investors.

We track Adjusted EBITDA on an absolute dollar basis and as a percentage of revenue, which we refer to as Adjusted EBITDA Margin. We define Adjusted EBITDA as net income before interest expense, income tax expense, depreciation and amortization, (gain) loss on sale of assets, impairment of long-lived assets, and other expense (income), net, further adjusted to exclude certain items which we believe are not reflective of our ongoing performance or which are non-cash in nature. For a reconciliation of Adjusted EBITDA to net income (loss), the most directly comparable GAAP measure, seerefer to “—Non-GAAP Financial Measures” below.

Free Cash Flow.Flow We utilize Free Cash Flow (a non-GAAP measure) to evaluate the cash generated by our operations and results of operations. We define Free Cash Flow as net cash provided by (or used by) operating activities less capital expenditures, as presented in our Consolidated Statements of Cash Flows. Management believes Free Cash Flow is useful because it demonstrates the cash that was available in the period that was in excess of our needs to fund our capital expenditures. Free Cash Flow does not represent our residual cash flow available for discretionary expenditures, as we have non-discretionary expenditures, including, but not limited to, principal payments required under the terms of our Credit Facility, which are not deducted in calculating Free Cash Flow. For a reconciliation of Free Cash Flow to net cash provided by operating activities, the most directly comparable GAAP measure, seerefer to “Non-GAAP Financial Measures” below.

Return on Capital Employed.Employed We utilize Return on Capital Employed (“ROCE”) (a non-GAAP measure) to assess the effectiveness of our capital allocation over time and to compare our capital efficiency to our competitors, and for this reason we believe this measure will provide useful information to investors. We define ROCE as income from operations, before acquisition and integration costs and after tax (resulting in adjusted income from operations, after tax) divided by average capital employed. Capital employed is defined as the combined values of debt and stockholders’ equity. For a reconciliation of ROCE to income from operations, the most directly comparable GAAP measure, seerefer to “Non-GAAP Financial Measures” below.

Adjusted EBITDA, Free Cash Flow and ROCE do not represent and should not be considered alternatives to, or more meaningful than, net income, income from operations, net cash provided by operating activities or any other measure of financial performance presented in accordance with GAAP as measures of our financial performance. Our computation of Adjusted EBITDA, Free Cash Flow and ROCE may differ from computations of similarly titled measures of other companies. For a reconciliation of these non-GAAP measures to the most directly comparable GAAP measure, seerefer to “Non-GAAP Financial Measures” below.

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 resultsresults, is through strategic acquisitions. In August 2022, Legacy Innovex acquired Pride, a company that complemented our well production and intervention product group. 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’sour 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.

The following discussion and analysis of the results of operations, financial condition, and liquidity position of Innovex for the three and six months ended MarchJune 31,30, 2026 and 2025 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, 2025 included in our Annual Report.

We are a global company, and for the threesix months ended MarchJune 31,30, 2026, the U.S. and Canadian onshore (“NAM”) market made up approximately 57%55% of our revenue, while the international and offshore (“International and Offshore”) market constituted 43%.45%. 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, EuropeEurope, 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.

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 threesix months ended MarchJune 31,30, 2026, our net loss,income, lossincome from operations and Adjusted EBITDA were equivalent to approximately (7.0)%,1.7%, (9.1)%,2.5%, and 20.6%20.1% of revenue, respectively. Over the same period, capital expenditures accounted for 2.4%2.6% of revenue, and we recognized approximately $21.8$12.0 million in lossesincome from operations. For the six months ended June 30, 2025, our net income, income from operations and Adjusted EBITDA were equivalent to approximately 6.0%, 10.0%, and 20.0% of revenue, respectively. Over the same period, capital expenditures accounted for 3% of revenue, and we earned approximately $44.5 million in income from operations. During the threesix months ended MarchJune 31,30, 20262026, we established a legal contingency accrual due to the jury verdict in connection with the Impulse Litigation, which is a primary reason for the decrease in net income (loss) and income (loss) from operations for the threesix months ended MarchJune 31,30, 2026. For the three months ended March 31, 2025, our net income, income from operations and Adjusted EBITDA were equivalent to approximately 6.1%, 9.1%, and 19.1% of revenue, respectively. Over the same period, capital expenditures accounted for 2.9% of revenue, and we earned approximately $21.9 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.

On April 10, 2026, we acquired Drilling Innovative Solutions, LLC (“DIS”) for $11.5a total purchase consideration of $17.6 million, which includes $4 million inof cash,earnout obligations subject to post-closingthe adjustments,achievement of revenue targets over the next two years, resulting in DIS becoming a wholly owned subsidiary of Innovex. In addition, we have an earn-out obligation subject to the achievement of revenue targets that allow for payments to the previous owners of up to $4 million over the next two years. DIS manufactures and distributes unique patented products to the oil and gas industry, including float valves and plug cement retainers, with a proven track record of helping operators realize significant savings through innovative solutions. Through integrating DIS’ product offering and expertise into our broader platform, we expect to enhance our portfolio of “big-impact, small ticket” products, allowing us to deliver additional value to our global customer base.

Our business is driven by the number of oil and natural gas wells drilled worldwide, which is closely tied to global exploration and production spending. As of AprilJune 17,25, 2026, Rystad Energy expects global upstream energy spending, excluding Iran, Venezuela, Cuba, Russia, and China, to risedecline slightly by approximately 1% in 2026 before increasing by approximately 6% in 2027 and a further approximately 2% annually throughin 2028. Approximately 32,00033,000 wells were drilled in 2025, and that number is expected to declineremain modestlyrelatively tostable at approximately 31,000 in 2026 and gradually recover toward approximately 32,00033,000 wells annually bythrough 2028. 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.

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,instability climate(including, relatedmost recently, the Iran conflict), climate-related initiatives, OPEC+ actions, among others. We expect that the growing energy demands of data centers, driven by the prevalence of Artificial Intelligence, will continue to contribute to the consumption of natural gas for power generation. The global demand for oil and natural gas has consistently increased historically, and we believe that multiple years of under investmentunderinvestment in oil and natural gas development hashave 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.

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 February 2025, we acquired SCF Machining Corporation ("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 Casing Solutions, LLC ("Citadel"), a leading provider of differentiated downhole technologies. In April 2026, we acquired DIS, a leading supplier of niche downhole tools. In July 2026, we acquired TCO Group, a leading provider of advanced well completion 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’subsidiaries into our 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.

Three Months Ended MarchJune 31,30, 2026 Compared to Three Months Ended MarchJune 31,30, 2025

Revenues Our NAM market revenue for the three months ended MarchJune 31,30, 2026 was $136.7$131.4 million, an increase of $16.2$11.5 million from the three months ended MarchJune 31,30, 2025, primarily driven by an increase in market share and incremental business operations due to the acquisition of Citadel.Citadel in May of 2025. Our International and Offshore market revenue for the three months ended MarchJune 31,30, 2026,2026 was $102.3$113.5 million, aan decreaseincrease of $17.6$9.2 million from the three months ended MarchJune 31,30, 2025, primarily driven by aan decreaseincrease in business operations from our Europe,Latin Caspian,America region and Africathe ("ECAF")DIS geography.acquisition in April of 2026.

Cost of revenues, exclusive of depreciation and amortization Total cost of revenues for the three months ended MarchJune 31,30, 2026 was $154.5$161.2 million, aan decreaseincrease of $9.4$8.7 million from the three months ended MarchJune 31,30, 2025. The changeincrease in cost of revenues was primarily attributable to aan decreaseincrease in servicesales costs, driven by lower direct salaries and wages costs.activity.

Selling, general and administrative expenses Selling, general and administrative expense for the three months ended MarchJune 31,30, 2026 was $41.7$39.1 million, an increase of $9.4$10.3 million from the three months ended MarchJune 31,30, 2025. The change was attributable to an increase of $13.4 million in bonuses, commissions, IT costs, and other business costs primarily attributable to the Citadelrecovery acquisition,of as$13.6 wellmillion asof attorneyoutstanding andreceivables professionalfrom servicesour costsformer relatedagent toin Saudi Arabia during the Impulsethree Litigation,months ended June 30, 2025, which resulted in a reduction of bad debt expense during that period. This was offset by a decrease in salaries and wages of $4.2$3.8 million.million during the three months ended June 30, 2026.

(Gain) loss on sale of assetsassets, (net Gain) loss on sale of assetsassets, net for the three months ended MarchJune 31,30, 2026 and 2025 was $(2.0)$9.9 million, an increase of $9.4 million andfrom $0.1the million,three respectively.months ended June 30, 2025. The change was driven by the sale of our rental tool assets,assets and the sale of a building in Mineral Wells, TX, which resulted in a gain, offset by normal variations associated with the sale of property and equipment during the period.

Depreciation and amortization Total depreciation and amortization expense for the three months ended MarchJune 31,30, 2026 was $16.2 million, an increase of $1.3$1.2 million from the three months ended MarchJune 31,30, 2025. The change was primarily due to additional depreciation for assets acquired related to ourthe acquisitionCitadel ofand Citadel.DIS acquisitions.

Impairment of long-lived assets Long-lived asset impairment expense for the three months ended MarchJune 31,30, 2025 was $2.9$0.5 million and was primarily related to realthe estate in Mexico acquired as partimpairment of thea 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.lease. There was no impairment recognized during the three and six months ended MarchJune 31,30, 2026.

Acquisition and integration costs Acquisition and integration costs for the three months ended MarchJune 31,30, 2026 were $1.6 million, a decrease of $2.7$3.5 million from the three months ended MarchJune 31,30, 2025. The change was due to a reduction of costs incurredacquisitions in 20252026, attributableand therefore a reduction in costs due to the acquisition activity and theintegration Merger.activities as compared to 2025 and 2024.

Provision for legal settlement Provision for legal settlement expense for the three months ended MarchJune 31,30, 2026 was $48.8$2.8 million, an increase of $2.8 million andfrom the three months ended June 30, 2025. The change was entirely related to the Impulse Litigation, as discussed further in Note 16. Commitments and Contingencies.

Interest (income) expense, net Total interest (income) expense, net was $(0.40.7) million and $0.7$0.6 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively. Interest expense (income) expense varied slightly between the two periods due to ainterest changereceived inon theour mixcash of long-term debt and finance lease obligations.deposits.

Other expense (income),income, net Total other expense (income),income, net for the three months ended MarchJune 31,30, 2026 was $0.2$1.0 million, aan decreaseincrease of $0.4$0.9 million from the three months ended MarchJune 31,30, 2025. The change was primarily due to the net change in our foreign currency exchange gains (losses).

Income tax expense (benefit), net 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 benefitexpense for the three months ended MarchJune 31,30, 2026 was $4.9$10.4 million, aan decreaseincrease of $11.5$3.5 million from the three months ended MarchJune 31,30, 2025. The change was primarily driven by the discrete items recorded during the three months ended MarchJune 31,30, 2026.

Net income (loss) Net lossincome for the three months ended MarchJune 31,30, 2026 was $16.7$25.0 million, aan decreaseincrease of $31.5$9.7 million from the three months ended MarchJune 31,30, 2025, primarily as a result of the provision for legal settlement related to the Impulse Litigation recorded for the three months ended March 31, 2026 in addition to the other factors discussed above.

Our primary sources of liquidity are our existing cash, cash provided by operating activities, and borrowings under the Credit Agreement (as defined below). We have a share repurchase program in place and may repurchase shares from time to time based on management’s evaluation of market conditions, share price, and other factors. As of MarchJune 31,30, 2026, we had cash and restricted cash of $200.7$222.1 million and availability under the Credit Agreement of $155.0$156.5 million. Our total indebtedness, including finance lease obligations, was $24.2$25.1 million as of MarchJune 31,30, 2026.

We have certain obligations related to debt maturities, finance leases, and operating leases. As of MarchJune 31,30, 2026, we have $23.0$22.8 million of minimum non-cancelable lease obligations for the twelve months following MarchJune 31,30, 2026, comprised of $7.6$7.5 million of finance lease maturities and $15.4 million of operating lease obligations. We have an additional $70.5$68.1 million of minimum non-cancelable lease obligations for the periods after MarchJune 31,30, 2027, comprised of $23.0$23.9 million of finance lease maturities and $47.5$44.2 million of non-cancelable operating lease obligations. As of MarchJune 31,30, 2026, interest rates on our lease obligations range from 2.88% to 12.00%. In addition, all amounts borrowed, if any, under our Revolver (as defined below) become due and payable in 2030. There were no borrowings on the Credit Agreement as of MarchJune 31,30, 2026. 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. Refer to Note 10. Debt of our Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for additional information.

Operating Activities Net cash provided by operating activities for the threesix months ended MarchJune 31,30, 2026 was $19.8$56.9 million, a decrease of $11.3$33.4 million from the threesix months ended MarchJune 31,30, 2025. The change was primarily driven by the following:

changes in non-cash adjustments to net income from the comparative period, including an increase in (i) provision for legal settlement related to the Impulse Litigation of $48.8$51.6 million, (ii) gains on property, equipment disposals of $2.1$11.4 million, (iii) depreciation and amortization expense of $1.3$2.5 million, and (iv) stock-based compensation expense of $1.2$0.8 million, offset by a decrease in both deferred taxes due to timing differences of $2.6 million and impairment of long-lived assets of $2.9$3.4 million; and the movement in operating assets and liabilities, net of assets acquired as part of the acquisitions, with the change primarily driven by normal fluctuations in our working capital amounts.

Investing Activities Net cash used in investing activities for the threesix months ended MarchJune 31,30, 2026 was $5.6$18.8 million, a decrease of $17.8$67.5 million from the threesix months ended MarchJune 31,30, 2025. The change was primarily due to the cash used to fund the SCF acquisitionand Citadel acquisitions, net of $17.4cash acquired of $80.6 million for the threesix months ended MarchJune 31,30, 2025.2025 that was offset by the cash used to fund the DIS acquisition, net of cash acquired of $12.0 million for the six months ended June 30, 2026.

Financing Activities Net cash used in financing activities for the threesix months ended MarchJune 31,30, 2026 was $16.9$19.3 million, an increase of $3.5$8.3 million from the threesix months ended MarchJune 31,30, 2025. The change was primarily due to a decrease in Revolver borrowings, Revolver repayments, and term loan repayments of $9.8$3.6 million,million offset byand an increase in our common stock repurchases of $13.5$4.8 million for the threesix months ended MarchJune 31,30, 2026.2026 as compared to the six months ended June 30, 2025.

Amounts borrowed under the Credit Agreement are subject to an interest rate per annum equal to, at the Company’s option, either (a) an alternate base rate determined as the highest of (i) the base commercial lending rate of PNC Bank, National Association, (ii) the overnight federal funds rate plus 0.5%, and (iii) Daily Simple SOFR (as defined in the Credit Agreement) plus 1% (such base rate to be subject to a 0% floor) or (b) the forward-looking term rate based on the secured overnight financing rate (“SOFR”) for the applicable interest period two business days before such interest period divided by a number equal to 1.00 minus any SOFR reserve percentage (such term rate to be subject to a 0% floor), plus, in each case of clauses (a) and (b) above, an applicable margin based upon availability of the revolving credit line, of 0.50% to 1.00% for swing loans and alternate base rate revolving loans and 1.50% to 2.00% for term SOFR revolving loans. Interest is payable monthly for alternate base rate loans and at the end of the applicable interest period for term SOFR loans (or quarterly if the applicable interest period is longer than three months). The Credit Agreement provides for the issuance of letters of credit, limited to the lesser of total capacity or $10.0 million. As of MarchJune 31,30, 2026 and MarchJune 31,30, 2025, we had no letters of credit outstanding under the Credit Agreement.

As of MarchJune 31,30, 20252026 and MarchJune 31,30, 2026,2025, we had $15.6no borrowings outstanding and $29.0 million and noof borrowings outstanding under the Revolver, respectively.

(2) For the three and six months ended MarchJune 31,30, 2026, acquisition and integration costs consisted of legal, accounting, advisory fees, move, severance, and other integration costs associated with the recent acquisitions.acquisition activities. For the three and six months ended MarchJune 31,30, 2025, acquisition and integration costs consisted of legal, accounting, advisory fees, move, severance, and other integration costs associated with the Merger, the acquisition of the remaining equity interest in Downhole Well Solutions, LLC ("DWS"), the acquisition of SCF, and the acquisition of SCF.Citadel. 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.

(5) Reflects transaction costs associated with the secondary offering in February 2026.offering.

Adjusted EBITDA for the threesix months ended MarchJune 31,30, 2026 was $49.3$97.3 million, an increase of $3.4$4.7 million from the threesix months ended MarchJune 31,30, 2025.

We utilize Return on Capital Employed (“ROCE”) (a non-GAAP measure) to assess the effectiveness of our capital allocation over time and to compare our capital efficiency to our competitors, and for this reason we believe this measure will provide useful information to investors. We define ROCE as income from operations excluding acquisition and integration costs, litigation related expenses not reflective of our ongoing operating performance, and income tax expense (resulting in Adjusted Income from Operations, after tax) divided by average capital employed. Capital employed is defined as the combined values of debt and stockholders’ equity. WeIn the first quarter of 2026, we revised our definition of ROCE and Adjusted Income from Operations, after tax to exclude litigation related expenses not reflective of our ongoing operating performance, which for the twelve months ended MarchJune 31,30, 2026 is reflective of the costs related to the Impulse Litigation. In particular, we believe that the exclusion of the aforementioned litigation related expenses eliminated in calculating Adjusted Income from Operations, after tax and ROCE provides useful measures for period-to-period comparisons of our business. We did not revise prior years’ Adjusted Income from Operations, after tax or ROCE because there were no other charges similar in nature to these costs.

(1) As defined in our reconciliation of the GAAP financial measure of net income (loss) and net income (loss) as a percentage of revenue to Adjusted EBITDA and Adjusted EBITDA Margin above.

ROCE for the twelve months ended MarchJune 31,30, 2026 was 12%, remaininga unchangeddecrease from the twelve months ended MarchJune 31,30, 2025.

Free Cash Flow for the threesix months ended MarchJune 31,30, 2026 was $14.0$44.4 million, a decrease of $10.0$31.5 million from the threesix months ended MarchJune 31,30, 2025.

As of MarchJune 31,30, 2026, there have been no significant changes to our critical accounting estimates since our Annual Report.