Innovex International, Inc. 10-Q

Item 3. Quantitative and Qualitative Disclosures About Market Risk The Company is currently exposed to certain market risks related to interest rate changes on its short-term investments and fluctuations in foreign exchange rates. The Company does not engage in any material hedging transactions, forward contracts or currency trading which could mitigate the market risks inherent in such transactions. There have been no material changes in market risks for the Company since December 31, 2020. Foreign Exchange Rate Risk The Company has operations in various countries around the world and conducts business in a number of different currencies. Our significant foreign subsidiaries may also have monetary assets and liabilities not denominated in their functional currency. These monetary assets and liabilities are exposed to changes in currency exchange rates which may result in non-cash gains and losses primarily due to fluctuations between the U.S. dollar and each subsidiary's functional currency. The Company experienced a foreign currency pre-tax gain of approximately $0.5 million and a pre-tax loss of approximately $0.9 million, respectively, during the three and six months ended June 30, 2021. During the three and six months ended June 30, 2020, the Company experienced a foreign currency pre-tax loss of approximately $0.8 million and a pre-tax gain of approximately $2.4 million, respectively. The Company does not engage in any material hedging transactions, forward contracts or currency trading which could mitigate the effects and risks inherent in such transactions. Additionally, there is no assurance that the Company will be able to protect itself against currency fluctuations in the future.