Innovex International, Inc. 10-Q

Item 3. Quantitative and Qualitative Disclosures About Market Risk Commodity Price Risk The market for our products and services is indirectly exposed to fluctuations in the prices of oil and natural gas to the extent such fluctuations impact drilling and completion activity levels and thus impact the activity levels of our customers in the exploration and production industries. Additionally, because we do not sell our products under long-term contracts, we believe that we are particularly exposed to short-term fluctuations in the prices of oil and natural gas. We do not currently intend to hedge our indirect exposure to commodity price risk. Interest Rate Risk We are primarily exposed to interest rate risk through the Revolver and Term Loan. As of September 30, 2024, we had $12.7 million in variable rate debt outstanding, consisting of $12.7 million under the Term Loan and no outstanding debt under the Revolver which bear interest at an adjusted SOFR rate plus an applicable margin or at the alternate base rate plus an applicable margin. We do not currently intend to hedge our exposure to interest rate risk. Credit Risk Our customers are primarily E&P operators. This concentration of counterparties operating in a single industry may increase our overall exposure to credit risk in that the counterparties may be similarly affected by changes in economic, regulatory or other conditions. We manage credit risk by analyzing the counterparties’ financial condition prior to accepting new customers and prior to adjusting existing credit limits.