Innovex International, Inc (INVX)

Return on total capital

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Earnings before interest and tax (EBIT)	US$ in thousands	145,242	99,462	76,963	15,850	-61,428
Long-term debt	US$ in thousands	—	—	—	—	—
Total stockholders’ equity	US$ in thousands	958,156	328,921	251,280	180,551	1,041,530
Return on total capital		15.16%	30.24%	30.63%	8.78%	-5.90%

December 31, 2024 calculation

Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $145,242K ÷ ($—K + $958,156K)
= 15.16%

The data indicates that Innovex International, Inc. experienced a notable fluctuation in its return on total capital over the period from December 31, 2020, to December 31, 2024. Specifically, the company's return on total capital was negative at -5.90% at the end of 2020, reflecting potential challenges or inefficiencies in generating profits relative to its total capital base during that period.

In 2021, the return improved significantly to 8.78%, transitioning into positive territory and suggesting an enhancement in operational efficiency or profitability. The upward trend continued impressively in 2022, with the return reaching 30.63%, indicative of substantial profit generation relative to the company's total capital. This sharp increase may suggest successful strategic initiatives, increased operational performance, or favorable market conditions during that year.

However, in 2023, the return slightly decreased but remained high at 30.24%, maintaining strong profitability margins relative to total capital, albeit with a minor decline from the previous year. This stabilization indicates sustained operational strength but signals the need to monitor for potential factors that could influence future performance.

By 2024, the return on total capital diminished to 15.16%, demonstrating a significant reduction from the prior two years. While still positive and above the levels seen in 2020, this decline may point to increased competition, capital investments that have yet to yield proportional returns, or other operational challenges.

Overall, the trend from negative in 2020 to a peak around 2022-2023, followed by a moderate decline in 2024, illustrates the company's period of recovery and growth, with recent performance suggesting a potential normalization or adjustment phase. This pattern warrants further analysis into the company's strategic initiatives, capital structure, and market conditions to better understand the drivers behind these fluctuations.