The economy might be just fine after all
In today's newsletter, the case for the economy heading in the right direction is growing.
What's on deck
Markets: Three big things Citadel interns will learn during their first week on the job.
Business: Online communities for helping people who were laid off are gaining steam.
But first, don't sweat it.
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The big story
Economic optimismIt turns out the economy might be fine after all.
After plenty of handwringing about what the future might hold, the hard data indicates an economy that's in decent shape.
The latest good news was May's better-than-expected jobs report. The 139,000 jobs added were more than the 126,000 economists had expected.
I don't mean to be too optimistic — when I mentioned this newsletter topic to my boss, they responded earnestly, "IS IT?" — but investors are also feeling a lot better about things.
The Leuthold Group wrote in a recent note that the market believes the US economy will keep growing and is trading like there's "no recession risk whatsoever," writes BI's Christine Ji.
The focal point of the investment firm's argument is the S&P 500 Cyclical/Defensive Ratio, which compares economically sensitive sectors to consumer staples. The higher the number, the more bullish investors are about the economy's prospects.
Last month, the ratio hit an all-time high of 1.19, meaning cyclical stocks have a 19% edge over defensive ones. Translation: Investors aren't sweating a downturn.
REUTERS/Lucas Jackson
That's not to say we're totally in the clear.
(You didn't think it would be all sunshine and rainbows, did you?)
Bank of America, for one, recently warned of two big sell signals in stocks that are close to flashing, writes BI's William Edwards.
One is the amount of money flowing into global stock funds: nearly 1% of their current assets under management within a four-week span. The other is that the vast majority of countries' indexes (84%) are trading higher than their moving targets. Both signals suggest investors could be getting too bullish for their own good.
But BofA's warning is like a lot of the concerns about the economy and market going around these days: things that could happen.
That's not to say those worries aren't valid. The uncertainty around tariffs remains a real question mark. And if the US posts a second-straight quarter of GDP contraction, it will be in a technical recession. Still, those issues haven't necessarily materialized in the economic data. Outside of last week's weaker-than-expected ADP jobs data, things are looking good. And Wednesday will be another chance to review the hard data with the monthly inflation report.
3 things in markets
1. Broke: Dr. Doom. Bespoke: Dr. Boom. Nouriel Roubini has been known as Wall Street's "Dr. Doom" for 17 years, but lately he's sounding pretty positive. Roubini has scaled back his recession call and thinks the US is headed for an investment boom — and he told BI why.
2. How to stand out in your Citadel internship. Head of campus recruiting Matt Mitro told BI the three keys to success that interns at Ken Griffin's hedge fund (and its market-making sister firm, Citadel Securities) learn in the first week.
3. Can JPMorgan be unionized? Dissatisfied staffers certainly hope so; they're organizing largely in response to the bank's RTO mandates. If a similar effort over at Wells Fargo is any indication, however, workers at Jamie Dimon's company have a long road ahead.
3 things in tech
1. Exclusive: Amazon freezes retail hiring budget for this year. The company said it will keep a "flat headcount opex," or operating expenses, according to a copy of an internal email obtained by BI. The company is still hiring, but holding the budget steady could encourage managers to get smarter with compensation expenses, BI's Eugene Kim reports.
2. Nvidia's challengers rise. Nvidia's costly and power-hungry chips are prompting competitors to seek more efficient solutions. Many of them are carving out a niche with chips for specific tasks, and industries, from high-frequency trading to sovereign AI, are already turning away from Nvidia.
3. Apple's big day may get awkward. The company's annual Worldwide Developers Conference is known for its flashy product announcements, drawing fanatics and investors to its headquarters. But this year, there will be some elephants in the room. BI's Peter Kafka broke down Tim Cook's problem.
3 things in business
1. A less colorful corporate Pride Month. Some companies are toning down their LGBTQ+ support amid cultural and political pressures. Regardless of how companies proceed, though, nobody seems happy.
2. Baker Tilly 🤝Moss Adams. As PE reshapes accounting, these former rivals are joining forces, merging to create the sixth-largest advisory CPA firm in the US. BI spoke with the CEOs about why they struck a deal.
3. Laid off? There's a support group for that. It's clear layoffs don't just impact "bad" employees. Now, online communities are helping remove the stigma and get people back on their feet. From Substack to Reddit, here's how the jobless are rallying.
In other news
Ai Weiwei made a piece of art out of plastic bricks that cost $280,000. I did it for $250.
Brookfield Properties lays off executives as it continues evolution from CRE giant to asset manager.
VC's new favorite guessing game: Who is Arfur Rock, the 'Gossip Girl of Silicon Valley?'
The latest TikTok trend: Saying your parent is a big-time business exec.
The Trump-Musk feud is painfully awkward for the GOP.
AI search tools might be as good as they ever will be, one AI founder says.
YouTube is testing a new feature to help videos travel around the world.
Diabetes startup Omada Health finally went public after 14 years. Here's who made bank.
A Big Four consulting giant tries to make accounting less boring with AI.
DeepWho? DeepSeek rolled out even more powerful, cheap AI tech. If you missed it, you're not alone.
What's happening today
Apple Annual Worldwide Developers Conference opens with keynote by CEO Tim Cook.
New US travel ban affecting 19 countries goes into effect.
It's Bill & Ted Day. Be excellent and party on, dudes.
The Insider Today team: Dan DeFrancesco, deputy editor and anchor, in New York (on parental leave). Hallam Bullock, senior editor, in London. Grace Lett, editor, in Chicago. Amanda Yen, associate editor, in New York. Lisa Ryan, executive editor, in New York. Lina Batarags, bureau chief, in Singapore. Ella Hopkins, associate editor, in London. Elizabeth Casolo, fellow, in Chicago.
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Business Wire
a minute ago
- Business Wire
Innovex Announces Second Quarter 2025 Results
HOUSTON--(BUSINESS WIRE)--Innovex International, Inc. (NYSE: INVX) ('Innovex,' the 'Company' or 'we') today announced financial and operating results for the second quarter of 2025. This quarter demonstrates the strength of our diversified portfolio and industrial platform. Adam Anderson, CEO Second Quarter Highlights Revenue of $224 million, down 7% quarter over quarter Net Income of $15 million, net income margin of 7% Adjusted EBITDA 1 of $47 million and Adjusted EBITDA Margin 1 of 21% Net Cash Provided by Operating Activities of $59 million Free Cash Flow 1 of $52 million Income from Operations of $58 million (twelve months ended June 30, 2025) Return on Capital Employed 1 of 13% Closed on acquisition of Citadel Casing Solutions, LLC ('Citadel') As of June 30, 2025, we have repurchased 624,531 shares of Innovex common stock at an average price of $14.89 per share (1) Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow and Return on Capital Employed ('ROCE') are non-GAAP measures. Reconciliations of Adjusted EBITDA to net income, Free Cash Flow to net cash provided by operating activities and ROCE to income from operations, the most directly comparable financial measures presented in accordance with GAAP, are outlined in the reconciliation tables accompanying this release. Expand Adam Anderson, CEO commented, 'This quarter demonstrates the strength of our diversified portfolio and industrial platform. Although revenues in the quarter were slightly below our expectations, we are pleased with our profitability and Free Cash Flow, which reflect the resilience of our portfolio and our flexible supply chain model. We followed our established downcycle playbook as we grew market share on US Land, generated strong Free Cash Flow and completed the Citadel acquisition, despite falling oil prices and macro uncertainty. Citadel brings us complementary cementing tool technologies and new, blue-chip customer relationships, which we expect will drive organic growth for our existing portfolio. Our market position in US Land grew organically, and we saw early wins on revenue synergies from both the DWS and Citadel acquisitions. We intend to build on this momentum in the coming quarters by leveraging our platform. Our net cash balance sheet allows us the flexibility to continue to evaluate inorganic opportunities, provided they fit within our disciplined M&A framework and our 'big impact, small ticket' value proposition. Our balance sheet, diversified supply chain, and low capex operating model is designed to exploit market volatility, and we are prepared to thrive across various commodity price scenarios.' Kendal Reed, CFO continued, 'Even after acquiring Citadel on May 30th in an all-cash $70 million transaction, we continue to maintain a net-cash balance sheet. The acquisition was highly accretive even before expected synergies and demonstrates strong transaction-level returns. Citadel was purchased at a valuation of 3.8x LTM Adjusted EBITDA and was 8% accretive to Innovex's EPS. Importantly, we are still targeting a Q3 2025 close on the sale of the Eldridge facility, which will further enhance our net cash position. Despite a decline in revenue, our capital-light business model enabled us to maintain margins and increase free cash flow, demonstrating the counter-cyclical cash flow profile of our businesses.' (1) Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow and Return on Capital Employed ('ROCE') are non-GAAP financial measures. See definition of these measures and the reconciliation of GAAP to non-GAAP financial measures in the Supplemental Information tables below. Expand Operational & Financial Results Kendal Reed, CFO continued, 'Excluding Citadel, our US land revenue was flat sequentially despite a rig count decline of approximately 7%. Our Drilling Enhancement product line, which primarily consists of the legacy DWS business, continued to grow market share, and revenues also benefited from one full month of contribution from Citadel. Both acquisitions highlight our disciplined approach to M&A. Although M&A remains a major focus for us, we still have significant capacity remaining on our $100 million share repurchase program as a competing use of capital. During the second quarter, we purchased 588,488 shares at an average price of $14.70.' Adam Anderson, CEO concluded, 'While our US Land business outperformed the market, activity and revenues were weaker than anticipated. We continue focusing on synergy opportunities to grow revenue, profit and free cash flow across our entire platform. We have seen encouraging signs of market share growth in our subsea business and look forward to growing our market position in the coming years. We expect to continue to enter new markets by leveraging our flexible supply chain and global distribution platform.' Balance Sheet, Debt, Cash Flow & Other Net cash provided by operating activities was $59 million and capital expenditures were $7 million (approximately 3% of revenue) for the second quarter of 2025. Innovex generated free cash flow of $52 million during the second quarter of 2025 and ended the quarter with $69 million of cash and cash equivalents and $41 million of total debt. Innovex ended the quarter with $110 million of availability under its revolving credit facility. Innovex maintains conservative levels of leverage and ample liquidity to maximize strategic flexibility and to capitalize on M&A opportunities that meet our stringent quantitative and qualitative characteristics. Return on Capital Employed ('ROCE') Innovex's efficient capital allocation and capital-light business model enable the Company to generate strong returns on our invested capital. Income from operations for the twelve months ended June 30, 2025 was $58 million. Return on Capital Employed ('ROCE') for the twelve months ended June 30, 2025 was 13%. We remain focused on capital efficiency, which we believe is a key driver of sustainable value creation for our stockholders. Q3 2025 Guidance Looking to the third quarter of 2025, Innovex expects to generate $230 - $240 million in total revenue. Innovex expects to generate Adjusted EBITDA of $40 - $45 million in the third quarter of 2025. Conference Call Details Management will host a conference call and a webcast to discuss the financial results on August 6, 2025, at 10:00 a.m. Eastern Daylight Time / 9:00 a.m. Central Daylight Time. The presentation is open to all interested parties and may include forward-looking information. To access the call, please dial in approximately ten minutes before the start of the call. Date / Time: August 6, 2025 - 9:00 AM Central Time Webcast: U.S. Toll-Free Dial-In: (800) 715-9871 International Dial-In: +1 (646) 307-1963 Conference ID: 1774704 For those unable to participate in the live call, an audio replay will be available following the call through midnight Wednesday, August 13, 2025. To access the replay, please call (800) 770-2030 or +1 (609) 800-9909 (International) and enter playback ID 1774704 followed by the # key. A replay of the webcast will also be archived shortly after the call and can be accessed on the Company's website. About Innovex International, Inc. Innovex International, Inc (NYSE: INVX) is a Houston-based company established in 2024 following the merger of Dril-Quip, Inc and Innovex Downhole Solutions, Inc. Our comprehensive portfolio extends throughout the lifecycle of the well, and innovative product integration ensures seamless transitions from one well phase to the next, driving efficiency, lowering cost, and reducing the rig site service footprint for the customer. With locations throughout North America, Latin America, Europe, the Middle East and Asia, no matter where you need us, our team is readily available with technical expertise, conventional and innovative technologies, and ever-present customer service. Forward-Looking Statements Certain statements contained in this press release and oral statements made regarding the matters addressed in this release constitute 'forward-looking statements' within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks, uncertainties and other factors, many of which are outside of Innovex's control, that could cause actual results to differ materially from the results discussed in the forward-looking statements. Forward-looking statements can be identified by the use of forward-looking terminology including 'may,' 'believe,' 'expect,' 'intend,' 'anticipate,' 'plan,' 'should,' 'estimate,' 'continue,' 'potential,' 'will,' 'hope' or other similar words and include the Company's expectation of future performance contained herein. These statements discuss future expectations, contain projections of results of operations or of financial condition, or state other 'forward-looking' information, including without limitation statements regarding timing and ability to complete the sale of the Eldridge facility and the expected benefits of such sale and of the Citadel acquisition. You are cautioned not to place undue reliance on any forward-looking statements, which can be affected by assumptions used or by risks or uncertainties. Consequently, no forward-looking statements can be guaranteed. When considering these forward-looking statements, you should keep in mind the risks related to the Company's merger and acquisition activities, including the ultimate outcome and results of integrating operations, the effects of the Company's merger and acquisition activities (including the Company's future financial condition, results of operations, strategy and plans), potential adverse reactions or changes to business relationships resulting from the completion of mergers and acquisitions, expected benefits from mergers and acquisition and the ability of the Company to realize those benefits, the significant costs required to integrate operations, whether merger or acquisition-related litigation will occur and, if so, the results of any litigation, settlements and investigations, operating hazards, natural disasters, weather-related delays, casualty losses and other matters beyond our control; acts of terrorism, war or political or civil unrest in the United States or elsewhere; loss or corruption of our information or a cyberattack on our computer systems; the risks related to economic conditions and other factors noted in the Company's Annual Report on Form 10-K, any Quarterly Reports on Form 10-Q and the other documents that the Company files with the Securities and Exchange Commission. The risk factors and other factors noted therein could cause actual results to differ materially from those contained in any forward-looking statement. Innovex disclaims any duty to update and does not intend to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this press release, except as may be required by law. Innovex International, Inc. Condensed Consolidated Balance Sheets (in thousands) (unaudited) June 30, 2025 March 31, 2025 June 30, 2024 Assets Current assets Cash and cash equivalents $ 68,781 $ 68,116 $ 10,356 Trade receivable, net 220,966 236,020 119,637 Inventories, net 278,495 269,251 146,690 Other current assets 101,863 59,251 18,299 Total current assets 670,105 632,638 294,982 Noncurrent assets Property and equipment, net 150,670 188,426 51,808 Equity method investment — — 19,615 Goodwill and net intangibles 218,864 180,314 61,726 Right of use leases - operating, net 56,512 56,960 26,214 Deferred tax asset, net 122,129 128,992 15,116 Other long-term assets 8,801 8,673 2,168 Total noncurrent assets 556,976 563,365 176,647 Total assets $ 1,227,081 $ 1,196,003 $ 471,629 Liabilities and stockholders' equity Current liabilities Accounts payable $ 65,321 $ 76,391 $ 36,708 Accrued expenses 48,556 37,116 25,486 Operating lease liabilities 12,341 11,535 6,942 Other current liabilities 13,589 15,221 1,262 Current portion of long-term debt and finance lease obligations 5,938 5,556 10,301 Total current liabilities 145,745 145,819 80,699 Noncurrent liabilities Long-term debt and finance lease obligations 34,780 19,679 14,451 Operating lease liabilities 45,634 45,962 23,954 Other long-term liabilities 5,369 6,167 28 Total noncurrent liabilities 85,783 71,808 38,433 Total Liabilities $ 231,528 $ 217,627 $ 119,132 Total stockholders' equity $ 995,553 $ 978,376 $ 352,497 Total liabilities and stockholders' equity $ 1,227,081 $ 1,196,003 $ 471,629 Expand Innovex International, Inc. Condensed Consolidated Statement of Cash Flows (in thousands, except share and per share amounts) (unaudited) Three months ended June 30, 2025 March 31, 2025 June 30, 2024 Cash flows from operating activities Net Income $ 15,345 $ 14,757 $ 9,534 Adjustments to reconcile net income to net cash provided by operating activities 29,375 29,045 11,777 Changes in operating assets and liabilities, net of amounts related to acquisitions 14,490 (12,712 ) 1,456 Net cash provided by operating activities $ 59,210 $ 31,090 $ 22,767 Cash flows used in investing activities Payments on acquisitions, net of cash acquired (63,256 ) (17,413 ) — Capital expenditures (7,297 ) (7,056 ) (1,874 ) Proceeds from sale of property and equipment 7,681 1,003 785 Net cash used in investing activities $ (62,872 ) $ (23,466 ) $ (1,089 ) Cash flows provided by financing activities Net Borrowings (Repayments) on line of credit 13,400 1,600 (16,000 ) Net Repayments on term loan — (11,429 ) (1,250 ) Payments on Finance Leases (1,869 ) (1,630 ) (1,415 ) Dividend payment — — — Other Financing (9,089 ) (1,940 ) — Net cash provided by (used in) financing activities $ 2,442 $ (13,399 ) $ (18,665 ) Effect of exchange rate changes on cash and cash equivalents 1,885 613 (292 ) Net change in cash and cash equivalents $ 665 $ (5,162 ) $ 2,721 Expand Non-GAAP Measures Adjusted EBITDA and Adjusted EBITDA Margin We define Adjusted EBITDA (a non-GAAP measure) as net income before interest expense, income tax expense, depreciation and amortization, (gain)/loss on sale of assets and other expense, net, further adjusted to exclude certain items which we believe are not reflective of our ongoing performance or which are non-cash in nature. Management uses Adjusted EBITDA 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. We track Adjusted EBITDA on an absolute dollar basis and as a percentage of revenue, which we refer to as Adjusted EBITDA Margin. Free Cash Flow We also 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 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. We track Free Cash Flow both on an absolute dollar basis and as a percentage of revenue. 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. Return on Capital Employed (ROCE) 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. 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. Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow and ROCE do not represent and should not be considered alternatives to, or more meaningful than, net income and 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, see tables below. Management has provided outlook regarding Adjusted EBITDA, which is a non-GAAP financial measure and excludes certain charges. A reconciliation of this non-GAAP financial measure to the corresponding GAAP financial measure has not been provided because guidance for the various reconciling items is not provided. The Company is unable to provide guidance for these reconciling items because they cannot determine their probable significance, as certain items are outside of the Company's control and cannot be reasonably predicted since these items could vary significantly from period to period. Accordingly, reconciliations to the corresponding GAAP financial measures are not available without unreasonable effort. Innovex International, Inc. (in thousands) (Unaudited) Three months ended March 31, 2025 June 30, 2024 Revenue $ 224,234 $ 240,415 $ 130,302 Net Income 15,345 14,757 9,534 Interest expense 551 700 607 Income tax expense 6,891 6,607 4,326 Depreciation and amortization 14,974 14,945 6,589 EBITDA $ 37,761 $ 37,009 $ 21,056 Other non-operating income, net (1) (92 ) (214 ) (653 ) (Gain)/Loss on sale of assets (419 ) 148 (194 ) Impairment of long-lived assets 503 2,924 3,522 Acquisition and integration costs (2) 5,131 4,288 4,423 Equity Method Adjustment (3) — — 916 Stock based compensation 3,758 1,766 448 Adjusted EBITDA $ 46,642 $ 45,921 $ 29,518 Net Income (Loss) % Revenue 7 % 6 % 7 % Adjusted EBITDA Margin 21 % 19 % 23 % (1) Primarily represents foreign currency exchange gain/loss, gain/loss on lease terminations, and other non-operating items (2) Consists of legal, accounting, advisory fees, and other integration costs associated with acquisitions, primarily related to Dril-Quip, DWS, SCF and Citadel. These costs are one-time in nature and represent expenses that we do not view as normal operating expenses necessary to operate our business. (3) Reflects the elimination of our percentage of interest expense, depreciation, amortization and other non-recurring expenses included within equity method earnings pertaining to our unconsolidated investment in DWS. Expand Innovex International, Inc. Reconciliation of Net Cash from Operations to Free Cash Flow (in thousands) (Unaudited) Three months ended June 30, 2025 March 31, 2025 June 30, 2024 Net cash provided by (used in) operating activities $ 59,210 $ 31,090 $ 22,767 Capital expenditures (7,297 ) (7,056 ) (1,874 ) Free Cash Flow $ 51,913 $ 24,034 $ 20,893 Expand Innovex International, Inc. Geographic Revenue Details (in thousands) (Unaudited) Three months ended June 30, 2025 March 31, 2025 June 30, 2024 North America Onshore ("NAM") Product revenues $ 77,368 $ 75,255 $ 65,073 Rental revenues 26,698 28,513 1,848 Service revenues 15,901 16,749 12,161 Revenue - North America Onshore 119,967 120,517 79,082 International & Offshore Product revenues 72,081 92,095 44,655 Rental revenues 17,305 9,491 4,796 Service revenues 14,881 18,312 1,769 Revenue - International & Offshore 104,267 119,898 51,220 Total Revenue $ 224,234 $ 240,415 $ 130,302 Expand
CNBC
2 minutes ago
- CNBC
Super Micro shares plunge 15% on weak results, disappointing guidance
Super Micro Computer shares slid 15% in extended trading on Tuesday after the server maker reported disappointing fiscal fourth-quarter results and issued weak quarterly earnings guidance. Here's how the company did in comparison with LSEG consensus: Super Micro's revenue increased 7.5% during the quarter, which ended on June 30, according to a statement. For the current quarter, Super Micro called for 40 cents to 52 cents in adjusted earnings per share on $6 billion to $7 billion in revenue for the fiscal first quarter. Analysts surveyed by LSEG were looking for 59 cents per share and $6.6 billion in revenue. For the 2026 fiscal year, Super Micro sees at least $33 billion in revenue, above the LSEG consensus of $29.94 billion. Super Micro saw surging demand starting in 2023 for its data center servers packed with Nvidia for handling artificial intelligence models and workloads. Growth has since slowed. The company avoided being delisted from the Nasdaq after falling behind on quarterly financial filings and seeing the departure of its auditor. As of Tuesday's close, Super Micro shares were up around 88% so far in 2025, while the S&P 500 index has gained 7%. Executives will discuss the results on a conference call starting at 5 p.m. ET.
Wall Street Journal
2 minutes ago
- Wall Street Journal
Service-Sector Data Brings Downbeat Day for Stocks
U.S. stocks edged lower Tuesday, taking a knock from a disappointing services-sector report. A day after posting strong gains, all three major indexes finished in the red. The S&P 500 fell 0.5% and the Dow Jones Industrial Average slipped 0.1%, while the Nasdaq composite lost 0.7%.
