Cactus Announces Third Quarter 2020 Results

HOUSTON–(BUSINESS WIRE)–Cactus, Inc. (NYSE: WHD) (“Cactus” or the “Company”) today announced financial and operating results for the third quarter of 2020.

Third Quarter Highlights

  • Revenue of $59.8 million;
  • Income from operations of $12.6 million;
  • Net income of $10.9 million(1) and diluted earnings per Class A share of $0.13(1);
  • Net income, as adjusted(2) of $9.5 million and diluted earnings per share, as adjusted(2) of $0.13;
  • Adjusted EBITDA(3) and related margin(4) of $24.6 million and 41.1%, respectively;
  • Cash flow from operations of $18.9 million;
  • Reduced 2020 net capital expenditure guidance to between $17.5 and $22.5 million;
  • Cash balance of $273.9 million and no bank debt outstanding as of September 30, 2020; and
  • The Board of Directors declared a quarterly cash dividend of $0.09 per share.

Financial Summary

Three Months Ended

September 30,

June 30,

September 30,

2020

2020

2019

(in thousands)

Revenues

$

59,789

$

66,548

$

160,808

Income from operations

$

12,556

$

8,875

$

47,123

Operating income margin

21.0

%

13.3

%

29.3

%

Net income(1)

$

10,886

$

9,095

$

35,833

Net income, as adjusted(2)

$

9,517

$

7,367

$

36,097

Adjusted EBITDA(3)

$

24,550

$

22,483

$

58,819

Adjusted EBITDA margin(4)

41.1

%

33.8

%

36.6

%

(1)

Net income during the third quarter of 2020 is inclusive of $1.9 million in expense related to the revaluation of the tax receivable agreement liability. Net income during the second quarter of 2020 is inclusive of $0.9 million in non-routine charges related to severance and $1.3 million in additional income related to the revaluation of the tax receivable agreement liability. Net income during the third quarter of 2019 is inclusive of $4.1 million in additional tax expenses related to the write-off of foreign tax credits and the reduction in expected future state tax benefits.

(2)

Net income, as adjusted and diluted earnings per share, as adjusted are non-GAAP financial measures. These figures assume Cactus, Inc. held all units in Cactus Wellhead, LLC (“Cactus LLC”), its operating subsidiary, at the beginning of the period. Additional information regarding net income, as adjusted and diluted earnings per share, as adjusted and the reconciliation of GAAP to non-GAAP financial measures are in the Supplemental Information tables.

(3)

Adjusted EBITDA is a non-GAAP financial measure. See definition of Adjusted EBITDA and the reconciliation of GAAP to non-GAAP financial measures in the Supplemental Information tables.

(4)

The percentage of Adjusted EBITDA to Revenues.

Scott Bender, President and CEO of Cactus, commented, “The third quarter once again showcased our ability to outperform the U.S. rig count while maintaining strong margins during what we believe was the bottom of the current U.S. industry cycle. Cactus achieved record Product market share(1) of approximately 38% during the third quarter, highlighting the resiliency of our customer base and our track record of winning new customers. I am also pleased to report that Cactus has now generated positive free cash flow in all eleven quarters since going public in early 2018.

Looking to the fourth quarter, we expect further gains in rigs followed and associated market share will benefit our Product business. While the near-term focus for our Rental business will continue to be on returns and margins, we are encouraged by the recent improvement in industry completion activity. We believe that total Company quarterly revenues have bottomed and expect an improvement going forward.”

Mr. Bender concluded, “Cactus has proven its ability to generate significant free cash flow and income through the downcycle. In the same vein, management has also further reduced its full year 2020 net capital expenditure budget. We believe the industry’s most pronounced activity decline in decades is behind us and we are now turning our attention to the recovery. This team is excited to see the potential benefits that greater operating leverage provides our business as activity levels increase, both in the U.S. and internationally.”

(1)

Additional information regarding market share and rigs followed is located in the Supplemental Information tables.

Revenue Categories

Product

Three Months Ended

September 30,

June 30,

September 30,

2020

2020

2019

(in thousands)

Product revenue

$

35,857

$

40,893

$

92,582

Gross profit

$

15,978

$

14,931

$

34,814

Gross margin

44.6

%

36.5

%

37.6

%

Third quarter 2020 product revenue decreased $5.0 million, or 12.3%, sequentially, as sales of wellhead and production related equipment decreased primarily due to lower drilling activity in the U.S., which was partially offset by market share gains. Gross profit increased $1.0 million, or 7.0%, sequentially, with margins increasing 810 basis points driven largely by $5.4 million in credits related to tariff refunds, up from $3.1 million during the second quarter of 2020.

Rental

Three Months Ended

September 30,

June 30,

September 30,

2020

2020

2019

(in thousands)

Rental revenue

$

9,881

$

11,535

$

35,528

Gross profit

$

234

$

860

$

18,334

Gross margin

2.4

%

7.5

%

51.6

%

Third quarter 2020 rental revenue decreased $1.7 million, or 14.3%, sequentially, as our customers’ level of completion activity was lower during the quarter. Gross profit decreased $0.6 million sequentially and margins decreased 510 basis points due largely to depreciation expense representing a higher percentage of revenue during the period.

Field Service and Other

Three Months Ended

September 30,

June 30,

September 30,

2020

2020

2019

(in thousands)

Field service and other revenue

$

14,051

$

14,120

$

32,698

Gross profit

$

4,728

$

2,634

$

7,323

Gross margin

33.6

%

18.7

%

22.4

%

Third quarter 2020 field service and other revenue decreased $0.1 million, or 0.5%, sequentially, as lower customer activity drove a slight decrease in associated billable hours and ancillary services. Gross profit increased $2.1 million, or 79.5%, sequentially, with margins increasing by 1,490 basis points sequentially due to lower depreciation, tooling and payroll-related expenses, improved labor and equipment utilization and the rationalization of the Company’s field service vehicle fleet.

Selling, General and Administrative Expenses (“SG&A”)

SG&A for the third quarter of 2020 was $8.4 million (14.0% of revenues), compared to $8.7 million (13.1% of revenues) for the second quarter of 2020 and $13.3 million (8.3% of revenues) for the third quarter of 2019. The sequential decrease was primarily due to lower payroll expenses.

Liquidity, Capital Expenditures and Other

As of September 30, 2020, the Company had $273.9 million of cash and no bank debt outstanding. Operating cash flow was $18.9 million for the third quarter of 2020. During the third quarter, the Company made dividend payments and associated distributions of $6.8 million. The Company also made tax receivable agreement payments and associated distributions of $22.6 million during the third quarter stemming from 2019 imputed tax liabilities.

Net cash used in investing activities represented a cash inflow of $0.1 million during the third quarter of 2020 as capital expenditures were more than offset by proceeds from the sale of assets. The Company reduced its full year 2020 net capital expenditure guidance to between $17.5 and $22.5 million.

During the third quarter, Cactus recognized $6.0 million in refunds pursuant to tariff exclusions granted by the U.S. Trade Representative. The refunds reduced cost of revenue during the period. As previously disclosed, a majority of the Company’s tariff exclusions were not extended past August 2020.

Quarterly Dividend

The Board of Directors (the “Board”) has approved the payment of a cash dividend of $0.09 per share of Class A common stock to be paid on December 17, 2020 to holders of record of Class A common stock at the close of business on November 30, 2020. A corresponding distribution of up to $0.09 per CW Unit has also been approved for holders of CW Units of Cactus Wellhead, LLC.

Conference Call Details

The Company will host a conference call to discuss financial and operational results tomorrow, Thursday, November 5, 2020 at 9:00 a.m. Central Time (10:00 a.m. Eastern Time).

The call will be webcast on Cactus’ website at www.CactusWHD.com. Institutional investors and analysts may participate by dialing (866) 670-2203. International parties may dial (630) 489-9861. The access code is 9195227. Please access the webcast or dial in for the call at least 10 minutes ahead of start time to ensure a proper connection.

An archived webcast of the conference call will be available on the Company’s website shortly after the end of the call.

About Cactus, Inc.

Cactus designs, manufactures, sells and rents a range of highly engineered wellhead and pressure control equipment. Its products are sold and rented principally for onshore unconventional oil and gas wells and are utilized during the drilling, completion and production phases of its customers’ wells. In addition, it provides field services for all its products and rental items to assist with the installation, maintenance and handling of the wellhead and pressure control equipment. Cactus operates service centers in the United States, which are strategically located in the key oil and gas producing regions, including the Permian, SCOOP/STACK, Marcellus, Utica, Haynesville, Eagle Ford and Bakken, among other areas, and in Eastern Australia.

Cautionary Statement Concerning Forward-Looking Statements

Certain statements contained in this press 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 Cactus’ 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,” “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. You are cautioned not to place undue reliance on any forward-looking statements, which can be affected by assumptions used or by known risks or uncertainties. Consequently, no forward-looking statements can be guaranteed. When considering these forward-looking statements, you should keep in mind the risk factors 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.

Cactus, Inc.

Condensed Consolidated Statements of Income

(unaudited)

Three Months Ended
September 30,

Nine Months Ended
September 30,

2020

2019

2020

2019

(in thousands, except per share data)

Revenues

Product revenue

$

35,857

$

92,582

$

163,781

$

273,716

Rental revenue

9,881

35,528

57,579

113,601

Field service and other revenue

14,051

32,698

59,116

100,859

Total revenues

59,789

160,808

280,476

488,176

Costs and expenses

Cost of product revenue

19,879

57,768

101,976

168,303

Cost of rental revenue

9,647

17,194

39,661

54,435

Cost of field service and other revenue

9,323

25,375

44,620

79,105

Selling, general and administrative expenses

8,384

13,348

30,739

39,268

Severance expenses

1,864

Total costs and expenses

47,233

113,685

218,860

341,111

Income from operations

12,556

47,123

61,616

147,065

Interest income, net

218

373

851

489

Other income (expense), net

(1,865

)

558

(555

)

(484

)

Income before income taxes

10,909

48,054

61,912

147,070

Income tax expense

23

12,221

8,833

22,041

Net income

$

10,886

$

35,833

$

53,079

$

125,029

Less: net income attributable to non-controlling interest

4,653

16,494

21,835

57,475

Net income attributable to Cactus, Inc.

$

6,233

$

19,339

$

31,244

$

67,554

Earnings per Class A share – basic

$

0.13

$

0.41

$

0.66

$

1.53

Earnings per Class A share – diluted (a)

$

0.13

$

0.41

$

0.64

$

1.50

Weighted average shares outstanding – basic

47,510

47,095

47,406

44,260

Weighted average shares outstanding – diluted (a)

75,622

47,322

75,427

75,337

(a)

Dilution for the three and nine months ended September 30, 2020 includes $4.7 million and $23.2 million, respectively, of additional pre-tax income attributable to non-controlling interest adjusted for a corporate effective tax rate of 25.5%, and 27.9 million weighted average shares of Class B common stock plus the dilutive effect of restricted stock unit awards. Dilution for the three months ended September 30, 2019 excludes 28.0 million shares of Class B common stock as the effect would be anti-dilutive. Dilution for the nine months ended September 30, 2019 includes an additional $60.1 million of pre-tax income attributable to non-controlling interest adjusted for a corporate effective tax rate of 24%, and 30.8 million weighted average shares of Class B common stock plus the dilutive effect of restricted stock unit awards.

Cactus, Inc.

Condensed Consolidated Balance Sheets

(unaudited)

September 30,

December 31,

2020

2019

(in thousands)

Assets

Current assets

Cash and cash equivalents

$

273,941

$

202,603

Accounts receivable, net

40,290

87,865

Inventories

87,702

113,371

Prepaid expenses and other current assets

9,961

11,044

Total current assets

411,894

414,883

Property and equipment, net

148,696

161,748

Operating lease right-of-use assets, net

24,167

26,561

Goodwill

7,824

7,824

Deferred tax asset, net

217,659

222,545

Other noncurrent assets

1,248

1,403

Total assets

$

811,488

$

834,964

Liabilities and Equity

Current liabilities

Accounts payable

$

15,573

$

40,957

Accrued expenses and other current liabilities

14,565

22,067

Current portion of liability related to tax receivable agreement

8,902

14,630

Finance lease obligations, current portion

4,009

6,735

Operating lease liabilities, current portion

4,948

6,737

Total current liabilities

47,997

91,126

Deferred tax liability, net

792

1,348

Liability related to tax receivable agreement, net of current portion

194,616

201,902

Finance lease obligations, net of current portion

2,286

3,910

Operating lease liabilities, net of current portion

19,237

20,283

Total liabilities

264,928

318,569

Equity

546,560

516,395

Total liabilities and equity

$

811,488

$

834,964

Cactus, Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited)

Nine Months Ended September 30,

2020

2019

(in thousands)

Cash flows from operating activities

Net income

$

53,079

$

125,029

Reconciliation of net income to net cash provided by operating activities

Depreciation and amortization

31,262

28,264

Deferred financing cost amortization

126

126

Stock-based compensation

6,436

5,257

Provision for expected credit losses

341

255

Inventory obsolescence

3,376

1,708

(Gain) loss on disposal of assets

(1,810

)

820

Deferred income taxes

5,182

15,072

(Gain) loss from revaluation of liability related to tax receivable agreement

555

(558

)

Changes in operating assets and liabilities:

Accounts receivable

48,190

(8,326

)

Inventories

19,188

(14,513

)

Prepaid expenses and other assets

1,127

4,032

Accounts payable

(23,753

)

(4,334

)

Accrued expenses and other liabilities

(7,607

)

4,694

Payments pursuant to tax receivable agreement

(14,207

)

(9,335

)

Net cash provided by operating activities

121,485

148,191

Cash flows from investing activities

Capital expenditures and other

(21,908

)

(40,526

)

Proceeds from sale of assets

5,414

2,811

Net cash used in investing activities

(16,494

)

(37,715

)

Cash flows from financing activities

Payments on finance leases

(4,298

)

(5,660

)

Dividends paid to Class A common stock shareholders

(12,847

)

Distributions to members

(15,560

)

(5,853

)

Repurchase of shares

(1,385

)

(1,529

)

Net cash used in financing activities

(34,090

)

(13,042

)

Effect of exchange rate changes on cash and cash equivalents

437

(730

)

Net increase in cash and cash equivalents

71,338

96,704

Cash and cash equivalents

Beginning of period

202,603

70,841

End of period

$

273,941

$

167,545

Cactus, Inc. – Supplemental Information

Reconciliation of GAAP to non-GAAP Financial Measures

Net income, as adjusted and diluted earnings per share, as adjusted

(unaudited)

Net income, as adjusted and diluted earnings per share, as adjusted are not measures of net income as determined by GAAP. Net income, as adjusted and diluted earnings per share, as adjusted are supplemental non-GAAP financial measures that are used by management and external users of the Company’s consolidated financial statements. Cactus defines net income, as adjusted as net income assuming Cactus, Inc. held all units in Cactus LLC, its operating subsidiary, at the beginning of the period, with the resulting additional income tax expense related to the incremental income attributable to Cactus, Inc. Net income, as adjusted, also includes certain other adjustments described below. Cactus defines diluted earnings per share, as adjusted as net income, as adjusted divided by weighted average shares outstanding, as adjusted. The Company believes this supplemental information is useful for evaluating performance period over period.

Three Months Ended

September 30,

June 30,

September 30,

2020

2020

2019

(in thousands, except per share data)

Net income

$

10,886

$

9,095

$

35,833

Adjustments:

Severance expenses, pre-tax (1)

857

Other non-operating (income) expense, pre-tax (2)

1,865

(1,310

)

(558

)

Income tax expense differential (3)

(3,234

)

(1,275

)

822

Net income, as adjusted

$

9,517

$

7,367

$

36,097

Diluted earnings per share, as adjusted

$

0.13

$

0.10

$

0.48

Weighted average shares outstanding, as adjusted (4)

75,622

75,367

75,340

(1)

Represents non-routine charges related to severance benefits.

(2)

Represents non-cash adjustments for the revaluation of the liability related to the tax receivable agreement.

(3)

Represents the increase or decrease in tax expense as though Cactus, Inc. owned 100% of Cactus LLC at the beginning of the period, calculated as the difference in tax expense recorded during each period and what would have been recorded, adjusted for pre-tax items listed above, based on a corporate effective tax rate of 25.5% on income before income taxes for the three months ended September 30, 2020, 26.0% for the three months ended June 30, 2020 and 24.0% for the three months ended September 30, 2019.

(4)

Reflects 47.5, 47.4, and 47.1 million weighted average shares of basic Class A common stock and 27.9, 27.9 and 28.0 million of additional shares for the three months ended September 30, 2020, June 30, 2020 and September 30, 2019, respectively, as if the weighted average shares of Class B common stock were exchanged and canceled for Class A common stock at the beginning of the period, plus the effect of dilutive securities.

Cactus, Inc. – Supplemental Information

Reconciliation of GAAP to non-GAAP Financial Measures

EBITDA and Adjusted EBITDA

(unaudited)

EBITDA and Adjusted EBITDA are not measures of net income as determined by GAAP. EBITDA and Adjusted EBITDA are supplemental non-GAAP financial measures that are used by management and external users of the Company’s consolidated financial statements, such as industry analysts, investors, lenders and rating agencies. Cactus defines EBITDA as net income excluding net interest, income tax and depreciation and amortization. Cactus defines Adjusted EBITDA as EBITDA excluding the other items outlined below.

Cactus management believes EBITDA and Adjusted EBITDA are useful because they allow management to more effectively evaluate the Company’s operating performance and compare the results of its operations from period to period without regard to financing methods or capital structure, or other items that impact comparability of financial results from period to period. EBITDA and Adjusted EBITDA should not be considered as alternatives to, or more meaningful than, net income or any other measure as determined in accordance with GAAP. The Company’s computations of EBITDA and Adjusted EBITDA may not be comparable to other similarly titled measures of other companies. Cactus presents EBITDA and Adjusted EBITDA because it believes they provide useful information regarding the factors and trends affecting the Company’s business.

Three Months Ended

Nine Months Ended

September 30,

June 30,

September 30,

September 30,

2020

2020

2019

2020

2019

(in thousands)

(in thousands)

Net income

$

10,886

$

9,095

$

35,833

$

53,079

$

125,029

Interest income, net

(218

)

(223

)

(373

)

(851

)

(489

)

Income tax expense

23

1,313

12,221

8,833

22,041

Depreciation and amortization

9,762

10,520

10,007

31,262

28,264

EBITDA

20,453

20,705

57,688

92,323

174,845

Severance expenses (1)

857

1,864

Other non-operating (income) expense (2)

1,865

(1,310

)

(558

)

555

(558

)

Secondary offering related expenses

1,042

Stock-based compensation

2,232

2,231

1,689

6,436

5,257

Adjusted EBITDA

$

24,550

$

22,483

$

58,819

$

101,178

$

180,586

(1)

Represents non-routine charges related to severance benefits.

(2)

Represents non-cash adjustments for the revaluation of the liability related to the tax receivable agreement.

Cactus, Inc. – Supplemental Information

Depreciation and Amortization by Category

(unaudited)

Three Months Ended

Nine Months Ended

September 30,

June 30,

September 30,

September 30,

2020

2020

2019

2020

2019

(in thousands)

(in thousands)

Cost of product revenue

$

802

$

863

$

884

$

2,693

$

2,411

Cost of rental revenue

6,936

7,121

6,384

21,399

17,867

Cost of field service and other revenue

1,803

2,286

2,558

6,474

7,486

Selling, general and administrative expenses

221

250

181

696

500

Total depreciation and amortization

$

9,762

$

10,520

$

10,007

$

31,262

$

28,264

Cactus, Inc. – Supplemental Information

Estimated Market Share

(unaudited)

Market share represents the average number of active U.S. onshore rigs Cactus followed (which Cactus defines as the number of active U.S. onshore drilling rigs to which it was the primary provider of wellhead products and corresponding services during drilling) as of mid-month for each of the three months in the applicable quarter divided by the Baker Hughes U.S. onshore rig count quarterly average. Cactus believes that comparing the total number of active U.S. onshore rigs to which it was providing its products and services at a given time to the number of active U.S. onshore rigs during the same period provides Cactus with a reasonable approximation of its market share with respect to wellhead products sold and the corresponding services it provides.

Three Months Ended

September 30,

June 30,

September 30,

2020

2020

2019

Cactus U.S. onshore rigs followed

91

112

256

Baker Hughes U.S. onshore rig count quarterly average

240

378

894

Market share

37.9

%

29.6

%

28.6

%

 

HOUSTON–()–Cactus, Inc. (NYSE: WHD) (“Cactus” or the “Company”) today announced that it will issue its third quarter 2020 earnings release after market close on Wednesday, November 4, 2020. The Company will host a conference call to discuss financial and operational results on Thursday, November 5, 2020 at 9:00 a.m. Central Time (10:00 a.m. Eastern Time).

The call will be webcast on Cactus’ website at www.CactusWHD.com. Institutional investors and analysts may participate by dialing (866) 670-2203. International parties may dial (630) 489-9861. The access code is 9195227. Please access the webcast or dial in for the call at least 10 minutes ahead of start time to ensure a proper connection.

An archived webcast of the conference call will be available on the Company’s website shortly after the end of the call.

About Cactus, Inc.

Cactus designs, manufactures, sells and rents a range of highly engineered wellhead and pressure control equipment. Its products are sold and rented principally for onshore unconventional oil and gas wells and are utilized during the drilling, completion and production phases of its customers’ wells. In addition, it provides field services for all its products and rental items to assist with the installation, maintenance and handling of the wellhead and pressure control equipment. Cactus operates service centers in the United States, which are strategically located in the key oil and gas producing regions, including the Permian, SCOOP/STACK, Marcellus, Utica, Eagle Ford and Bakken, among other areas, and in Eastern Australia.

HOUSTON–()–Cactus, Inc. (NYSE: WHD) (“Cactus” or the “Company”) today announced financial and operating results for the second quarter of 2020.

Second Quarter Highlights

  • Revenue of $66.5 million;
  • Income from operations of $8.9 million;
  • Net income of $9.1 million(1) and diluted earnings per Class A share of $0.11(1);
  • Net income, as adjusted(2) of $7.4 million and diluted earnings per share, as adjusted(2) of $0.10;
  • Adjusted EBITDA(3) and related margin(4) of $22.5 million and 33.8%, respectively;
  • Cash flow from operations of $57.4 million;
  • Cash balance of $270.7 million and no debt outstanding as of June 30, 2020; and
  • The Board of Directors declared a quarterly cash dividend of $0.09 per share.

Financial Summary

 

Three Months Ended

 

June 30,

 

March 31,

 

June 30,

 

2020

 

2020

 

2019

 

(in thousands)

Revenues

$

66,548

 

 

$

154,139

 

 

$

168,493

 

Income from operations

$

8,875

 

 

$

40,185

 

 

$

51,450

 

Operating income margin

13.3

%

 

26.1

%

 

30.5

%

Net income(1)

$

9,095

 

 

$

33,098

 

 

$

40,750

 

Net income, as adjusted(2)

$

7,367

 

 

$

30,785

 

 

$

39,173

 

Adjusted EBITDA(3)

$

22,483

 

 

$

54,145

 

 

$

62,718

 

Adjusted EBITDA margin(4)

33.8

%

 

35.1

%

 

37.2

%

(1)

Net income during the second quarter of 2020 is inclusive of $0.9 million in non-routine charges related to severance and $1.3 million in additional income related to the revaluation of the tax receivable agreement liability. Net income during the first quarter of 2020 is inclusive of $1.0 million in non-routine charges related to severance. Net income during the second quarter of 2019 is inclusive of $4.0 million of additional tax expense related to a valuation allowance accrual.

(2)

Net income, as adjusted and diluted earnings per share, as adjusted are non-GAAP financial measures. These figures assume Cactus, Inc. held all units in Cactus Wellhead, LLC (“Cactus LLC”), its operating subsidiary, at the beginning of the period. Additional information regarding net income, as adjusted and diluted earnings per share, as adjusted and the reconciliation of GAAP to non-GAAP financial measures are in the Supplemental Information tables.

(3)

Adjusted EBITDA is a non-GAAP financial measure. See definition of Adjusted EBITDA and the reconciliation of GAAP to non-GAAP financial measures in the Supplemental Information tables.

(4)

The percentage of Adjusted EBITDA to Revenues.

Scott Bender, President and CEO of Cactus, commented, “Given the unprecedented decline in oilfield activity, I am pleased with our results for the second quarter. The quarter highlighted the variable cost nature of the Company, which has now effected total payroll-related savings of an estimated $85 million on an annualized basis. Importantly, the second quarter highlighted the Company’s ability to generate significant free cash flow, with cash growing by over $40 million during the period, net of nearly $7 million in dividends and associated distributions. Although market share(1) was volatile during the period, we recorded approximately 33% share as of June with a further expansion achieved by mid-July.

While the overall U.S. rig count may trend lower in the near term, we believe that Cactus’ rigs followed bottomed around mid-year assuming commodity prices hold near current levels. I am encouraged by the swift rebound in oil prices from April lows, which provides optimism for a potential improvement in completion activity versus late second quarter levels. Nonetheless, as total Company revenues for the third quarter are likely to be down sequentially, we will continue to manage our costs as appropriate.”

Mr. Bender concluded, “Our cost structure is highly variable, our capital requirements are modest, and our management team is well aligned with our shareholders. Accordingly, returns and free cash flow remain our top priorities. This downturn provides us with the opportunity to further streamline our cost structure and emerge as a stronger company in a more favorable competitive environment.”

(1)

Additional information regarding market share and rigs followed is located in the Supplemental Information tables.

Revenue Categories

Product

 

Three Months Ended

 

June 30,

 

March 31,

 

June 30,

 

2020

 

2020

 

2019

 

(in thousands)

Product revenue

$

40,893

 

 

$

87,031

 

 

$

94,494

 

Gross profit

$

14,931

 

 

$

30,896

 

 

$

36,977

 

Gross margin

36.5

%

 

35.5

%

 

39.1

%

Second quarter 2020 product revenue decreased $46.1 million, or 53.0%, sequentially, as sales of wellhead and production related equipment decreased primarily due to lower drilling and completion activity from customers. Gross profit decreased $16.0 million, or 51.7%, sequentially, with margins increasing 100 basis points. The second quarter of 2020 included approximately $3.1 million in credits related to tariff refunds.

Rental

 

Three Months Ended

 

June 30,

 

March 31,

 

June 30,

 

2020

 

2020

 

2019

 

(in thousands)

Rental revenue

$

11,535

 

 

$

36,163

 

 

$

39,576

 

Gross profit

$

860

 

 

$

16,824

 

 

$

20,126

 

Gross margin

7.5

%

 

46.5

%

 

50.9

%

Second quarter 2020 rental revenue decreased $24.6 million, or 68.1%, sequentially, as our customers significantly reduced completion activity during the quarter. Gross profit decreased $16.0 million, or 94.9%, sequentially and margins decreased 3,900 basis points due to depreciation expense representing a higher percentage of revenue during the period.

Field Service and Other

 

Three Months Ended

 

June 30,

 

March 31,

 

June 30,

 

2020

 

2020

 

2019

 

(in thousands)

Field service and other revenue

$

14,120

 

 

$

30,945

 

 

$

34,423

 

Gross profit

$

2,634

 

 

$

7,134

 

 

$

7,599

 

Gross margin

18.7

%

 

23.1

%

 

22.1

%

Second quarter 2020 field service and other revenue decreased $16.8 million, or 54.4%, sequentially, as lower customer activity drove a significant decrease in associated billable hours and ancillary services. Gross profit decreased $4.5 million, or 63.1%, sequentially, with margins declining by 440 basis points sequentially as higher depreciation expense as a percent of revenue was partially offset by lower payroll-related expenses, improved labor utilization and rationalization of the field service vehicle fleet.

Selling, General and Administrative Expenses (“SG&A”)

SG&A for the second quarter of 2020 was $8.7 million (13.1% of revenues), compared to $13.7 million (8.9% of revenues) for the first quarter of 2020 and $13.3 million (7.9% of revenues) for the second quarter of 2019. The sequential decrease was primarily due to lower payroll expenses, which was partially offset by higher non-cash stock-based compensation. Separately, we recorded severance expenses of $0.9 million during the quarter associated with headcount reductions.

Liquidity, Capital Expenditures and Other

As of June 30, 2020, the Company had $270.7 million of cash and no bank debt outstanding. Operating cash flow was $57.4 million for the second quarter of 2020. During the second quarter, the Company made dividend payments and associated distributions of $6.8 million.

Net capital expenditures for the second quarter of 2020 were $8.2 million, driven largely by additions to the Company’s fleet of rental equipment ordered early in the year. The Company has lowered its full year 2020 net capital expenditures guidance to be in the range of $20 to $25 million.

During the second quarter, Cactus recognized $7.5 million in refunds pursuant to tariff exclusions granted by the U.S. Trade Representative. The refunds reduced inventory values by $4.0 million and cost of revenue by $3.5 million during the second quarter. Cactus has filed for additional tariff refunds related to these exclusions.

Quarterly Dividend

The Board of Directors (the “Board”) has approved the payment of a cash dividend of $0.09 per share of Class A common stock to be paid on September 17, 2020 to holders of record of Class A common stock at the close of business on August 31, 2020. A corresponding distribution of up to $0.09 per CW Unit has also been approved for holders of CW Units of Cactus Wellhead, LLC, which will have the same record and payment dates as applicable to the dividend declared with respect to the Company’s Class A common stock.

Conference Call Details

The Company will host a conference call to discuss financial and operational results tomorrow, Thursday, July 30, 2020 at 9:00 a.m. Central Time (10:00 a.m. Eastern Time).

The call will be webcast on Cactus’ website at www.CactusWHD.com. Institutional investors and analysts may participate by dialing (866) 670-2203. International parties may dial (630) 489-9861. The access code is 5634259. Please access the webcast or dial in for the call at least 10 minutes ahead of start time to ensure a proper connection.

An archived webcast of the conference call will be available on the Company’s website shortly after the end of the call.

About Cactus, Inc.

Cactus designs, manufactures, sells and rents a range of highly engineered wellhead and pressure control equipment. Its products are sold and rented principally for onshore unconventional oil and gas wells and are utilized during the drilling, completion and production phases of its customers’ wells. In addition, it provides field services for all its products and rental items to assist with the installation, maintenance and handling of the wellhead and pressure control equipment. Cactus operates service centers in the United States, which are strategically located in the key oil and gas producing regions, including the Permian, SCOOP/STACK, Marcellus, Utica, Eagle Ford and Bakken, among other areas, and in Eastern Australia.

Cautionary Statement Concerning Forward-Looking Statements

Certain statements contained in this press 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 Cactus’ 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,” “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. You are cautioned not to place undue reliance on any forward-looking statements, which can be affected by assumptions used or by known risks or uncertainties. Consequently, no forward-looking statements can be guaranteed. When considering these forward-looking statements, you should keep in mind the risk factors 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.

Cactus, Inc.

Condensed Consolidated Statements of Income

(unaudited)

 

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

2020

 

2019

 

2020

 

2019

 

(in thousands, except per share data)

Revenues

 

 

 

 

 

 

 

Product revenue

$

40,893

 

 

$

94,494

 

 

$

127,924

 

 

$

181,134

 

Rental revenue

11,535

 

 

39,576

 

 

47,698

 

 

78,073

 

Field service and other revenue

14,120

 

 

34,423

 

 

45,065

 

 

68,161

 

Total revenues

66,548

 

 

168,493

 

 

220,687

 

 

327,368

 

 

 

 

 

 

 

 

 

Costs and expenses

 

 

 

 

 

 

 

Cost of product revenue

25,962

 

 

57,517

 

 

82,097

 

 

110,535

 

Cost of rental revenue

10,675

 

 

19,450

 

 

30,014

 

 

37,241

 

Cost of field service and other revenue

11,486

 

 

26,824

 

 

35,297

 

 

53,730

 

Selling, general and administrative expenses

8,693

 

 

13,252

 

 

22,355

 

 

25,920

 

Severance expenses

857

 

 

 

 

1,864

 

 

 

Total costs and expenses

57,673

 

 

117,043

 

 

171,627

 

 

227,426

 

Income from operations

8,875

 

 

51,450

 

 

49,060

 

 

99,942

 

 

 

 

 

 

 

 

 

Interest income, net

223

 

 

93

 

 

633

 

 

116

 

Other income (expense), net

1,310

 

 

 

 

1,310

 

 

(1,042

)

Income before income taxes

10,408

 

 

51,543

 

 

51,003

 

 

99,016

 

Income tax expense

1,313

 

 

10,793

 

 

8,810

 

 

9,820

 

Net income

$

9,095

 

 

$

40,750

 

 

$

42,193

 

 

$

89,196

 

Less: net income attributable to non-controlling interest

3,067

 

 

19,342

 

 

17,182

 

 

40,981

 

Net income attributable to Cactus, Inc.

$

6,028

 

 

$

21,408

 

 

$

25,011

 

 

$

48,215

 

 

 

 

 

 

 

 

 

Earnings per Class A share – basic

$

0.13

 

 

$

0.46

 

 

$

0.53

 

 

$

1.13

 

Earnings per Class A share – diluted (a)

$

0.11

 

 

$

0.45

 

 

$

0.51

 

 

$

1.07

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding – basic

47,436

 

 

46,881

 

 

47,353

 

 

42,819

 

Weighted average shares outstanding – diluted (a)

75,367

 

 

47,145

 

 

75,347

 

 

75,326

 

(a)

Dilution for the three and six months ended June 30, 2020 includes $3.4 million and $18.5 million, respectively, of additional pre-tax income attributable to non-controlling interest adjusted for a corporate effective tax rate of 26%, and 27.9 million weighted average shares of Class B common stock plus the dilutive effect of restricted stock unit awards. Dilution for the three months ended June 30, 2019 excludes 28.2 million shares of Class B common stock as the effect would be anti-dilutive. Dilution for the six months ended June 30, 2019 includes an additional $42.4 million of pre-tax income attributable to non-controlling interest adjusted for a corporate effective tax rate of 24%, and 32.2 million weighted average shares of Class B common stock plus the dilutive effect of restricted stock unit awards.

Cactus, Inc.

Condensed Consolidated Balance Sheets

(unaudited)

 

 

June 30,

 

December 31,

 

2020

 

2019

 

(in thousands)

Assets

 

 

 

Current assets

 

 

 

Cash and cash equivalents

$

270,673

 

 

$

202,603

 

Accounts receivable, net

46,824

 

 

87,865

 

Inventories

90,719

 

 

113,371

 

Prepaid expenses and other current assets

8,450

 

 

11,044

 

Total current assets

416,666

 

 

414,883

 

 

 

 

 

Property and equipment, net

157,145

 

 

161,748

 

Operating lease right-of-use assets, net

22,500

 

 

26,561

 

Goodwill

7,824

 

 

7,824

 

Deferred tax asset, net

216,732

 

 

222,545

 

Other noncurrent assets

1,285

 

 

1,403

 

Total assets

$

822,152

 

 

$

834,964

 

 

 

 

 

Liabilities and Equity

 

 

 

Current liabilities

 

 

 

Accounts payable

$

13,288

 

 

$

40,957

 

Accrued expenses and other current liabilities

13,925

 

 

22,067

 

Current portion of liability related to tax receivable agreement

21,402

 

 

14,630

 

Finance lease obligations, current portion

5,398

 

 

6,735

 

Operating lease liabilities, current portion

4,765

 

 

6,737

 

Total current liabilities

58,778

 

 

91,126

 

 

 

 

 

Deferred tax liability, net

718

 

 

1,348

 

Liability related to tax receivable agreement, net of current portion

194,101

 

 

201,902

 

Finance lease obligations, net of current portion

2,977

 

 

3,910

 

Operating lease liabilities, net of current portion

17,671

 

 

20,283

 

Total liabilities

274,245

 

 

318,569

 

 

 

 

 

Equity

547,907

 

 

516,395

 

Total liabilities and equity

$

822,152

 

 

$

834,964

 

Cactus, Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited)

 

 

Six Months Ended June 30,

 

2020

 

2019

 

(in thousands)

Cash flows from operating activities

 

 

 

Net income

$

42,193

 

 

$

89,196

 

Reconciliation of net income to net cash provided by operating activities

 

 

 

Depreciation and amortization

21,500

 

 

18,257

 

Deferred financing cost amortization

84

 

 

84

 

Stock-based compensation

4,204

 

 

3,568

 

Provision for expected credit losses

574

 

 

 

Inventory obsolescence

2,322

 

 

1,188

 

(Gain) loss on disposal of assets

(438

)

 

1,403

 

Deferred income taxes

5,565

 

 

7,060

 

Gain from revaluation of liability related to tax receivable agreement

(1,310

)

 

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

42,039

 

 

(20,696

)

Inventories

17,076

 

 

(12,010

)

Prepaid expenses and other assets

2,619

 

 

1,261

 

Accounts payable

(25,686

)

 

1,691

 

Accrued expenses and other liabilities

(8,193

)

 

7,316

 

Net cash provided by operating activities

102,549

 

 

98,318

 

 

 

 

 

Cash flows from investing activities

 

 

 

Capital expenditures and other

(18,902

)

 

(29,924

)

Proceeds from sale of assets

2,352

 

 

1,175

 

Net cash used in investing activities

(16,550

)

 

(28,749

)

 

 

 

 

Cash flows from financing activities

 

 

 

Payments on finance leases

(3,265

)

 

(3,723

)

Dividends paid to Class A common stock shareholders

(8,568

)

 

 

Distributions to members

(4,712

)

 

(3,848

)

Repurchase of shares

(1,385

)

 

(1,516

)

Net cash used in financing activities

(17,930

)

 

(9,087

)

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

1

 

 

(174

)

 

 

 

 

Net increase in cash and cash equivalents

68,070

 

 

60,308

 

 

 

 

 

Cash and cash equivalents

 

 

 

Beginning of period

202,603

 

 

70,841

 

End of period

$

270,673

 

 

$

131,149

 

Cactus, Inc. – Supplemental Information
Reconciliation of GAAP to non-GAAP Financial Measures
Net income, as adjusted and diluted earnings per share, as adjusted
(unaudited)

 

Net income, as adjusted and diluted earnings per share, as adjusted are not measures of net income as determined by GAAP. Net income, as adjusted and diluted earnings per share, as adjusted are supplemental non-GAAP financial measures that are used by management and external users of the Company’s consolidated financial statements. Cactus defines net income, as adjusted as net income assuming Cactus, Inc. held all units in Cactus LLC, its operating subsidiary, at the beginning of the period, with the resulting additional income tax expense related to the incremental income attributable to Cactus, Inc. Net income, as adjusted, also includes certain other adjustments described below. Cactus defines diluted earnings per share, as adjusted as net income, as adjusted divided by weighted average shares outstanding, as adjusted. The Company believes this supplemental information is useful for evaluating performance period over period.

 

 

Three Months Ended

 

June 30,

 

March 31,

 

June 30,

 

2020

 

2020

 

2019

 

(in thousands, except per share data)

Net income

$

9,095

 

 

$

33,098

 

 

$

40,750

 

Adjustments:

 

 

 

 

 

Severance expenses, pre-tax (1)

857

 

 

1,007

 

 

 

Other non-operating income, pre-tax (2)

(1,310

)

 

 

 

 

Income tax expense differential (3)

(1,275

)

 

(3,320

)

 

(1,577

)

Net income, as adjusted

$

7,367

 

 

$

30,785

 

 

$

39,173

 

 

 

 

 

 

 

Diluted earnings per share, as adjusted

$

0.10

 

 

$

0.41

 

 

$

0.52

 

 

 

 

 

 

 

Weighted average shares outstanding, as adjusted (4)

75,367

 

 

75,395

 

 

75,375

 

(1)

Represents non-routine charges related to severance benefits.

(2)

Represents non-cash adjustments for the revaluation of the liability related to the tax receivable agreement.

(3)

Represents the increase in tax expense as though Cactus, Inc. owned 100% of Cactus LLC at the beginning of the period, calculated as the difference in tax expense recorded during each period and what would have been recorded, adjusted for pre-tax items listed above, based on a corporate effective tax rate of 26.0% on income before income taxes for the three months ended June 30, 2020 and March 31, 2020, and 24.0% for the three months ended June 30, 2019.

(4)

Reflects 47.4, 47.3, and 46.9 million weighted average shares of basic Class A common stock and 27.9, 28.0 and 28.2 million of additional shares for the three months ended June 30, 2020, March 31, 2020 and June 30, 2019, respectively, as if the weighted average shares of Class B common stock were exchanged and canceled for Class A common stock at the beginning of the period, plus the effect of dilutive securities.

Cactus, Inc. – Supplemental Information
Reconciliation of GAAP to non-GAAP Financial Measures
EBITDA and Adjusted EBITDA
(unaudited)

 

EBITDA and Adjusted EBITDA are not measures of net income as determined by GAAP. EBITDA and Adjusted EBITDA are supplemental non-GAAP financial measures that are used by management and external users of the Company’s consolidated financial statements, such as industry analysts, investors, lenders and rating agencies. Cactus defines EBITDA as net income excluding net interest, income tax and depreciation and amortization. Cactus defines Adjusted EBITDA as EBITDA excluding the other items outlined below.

 

Cactus management believes EBITDA and Adjusted EBITDA are useful because they allow management to more effectively evaluate the Company’s operating performance and compare the results of its operations from period to period without regard to financing methods or capital structure, or other items that impact comparability of financial results from period to period. EBITDA and Adjusted EBITDA should not be considered as alternatives to, or more meaningful than, net income or any other measure as determined in accordance with GAAP. The Company’s computations of EBITDA and Adjusted EBITDA may not be comparable to other similarly titled measures of other companies. Cactus presents EBITDA and Adjusted EBITDA because it believes they provide useful information regarding the factors and trends affecting the Company’s business.

 

 

Three Months Ended

 

Six Months Ended

 

June 30,

 

March 31,

 

June 30,

 

June 30,

 

2020

 

2020

 

2019

 

2020

 

2019

 

(in thousands)

 

(in thousands)

Net income

$

9,095

 

 

$

33,098

 

 

$

40,750

 

 

$

42,193

 

 

$

89,196

 

Interest income, net

(223

)

 

(410

)

 

(93

)

 

(633

)

 

(116

)

Income tax expense

1,313

 

 

7,497

 

 

10,793

 

 

8,810

 

 

9,820

 

Depreciation and amortization

10,520

 

 

10,980

 

 

9,376

 

 

21,500

 

 

18,257

 

EBITDA

20,705

 

 

51,165

 

 

60,826

 

 

71,870

 

 

117,157

 

Severance expenses (1)

857

 

 

1,007

 

 

 

 

1,864

 

 

 

Other non-operating income (2)

(1,310

)

 

 

 

 

 

(1,310

)

 

 

Secondary offering related expenses

 

 

 

 

 

 

 

 

1,042

 

Stock-based compensation

2,231

 

 

1,973

 

 

1,892

 

 

4,204

 

 

3,568

 

Adjusted EBITDA

$

22,483

 

 

$

54,145

 

 

$

62,718

 

 

$

76,628

 

 

$

121,767

 

(1)

Represents non-routine charges related to severance benefits.

(2)

Represents non-cash adjustments for the revaluation of the liability related to the tax receivable agreement.

Cactus, Inc. – Supplemental Information

Depreciation and Amortization by Category

(unaudited)

 

 

Three Months Ended

 

Six Months Ended

 

June 30,

 

March 31,

 

June 30,

 

June 30,

 

2020

 

2020

 

2019

 

2020

 

2019

 

(in thousands)

 

(in thousands)

Cost of product revenue

$

863

 

 

$

1,028

 

 

$

762

 

 

$

1,891

 

 

$

1,527

 

Cost of rental revenue

7,121

 

 

7,342

 

 

5,966

 

 

14,463

 

 

11,483

 

Cost of field service and other revenue

2,286

 

 

2,385

 

 

2,478

 

 

4,671

 

 

4,928

 

Selling, general and administrative expenses

250

 

 

225

 

 

170

 

 

475

 

 

319

 

Total depreciation and amortization

$

10,520

 

 

$

10,980

 

 

$

9,376

 

 

$

21,500

 

 

$

18,257

 

Cactus, Inc. – Supplemental Information

Estimated Market Share

(unaudited)

 

Market share represents the average number of active U.S. onshore rigs Cactus followed (which Cactus defines as the number of active U.S. onshore drilling rigs to which it was the primary provider of wellhead products and corresponding services during drilling) as of mid-month for each of the three months in the applicable quarter divided by the Baker Hughes U.S. onshore rig count quarterly average. Cactus believes that comparing the total number of active U.S. onshore rigs to which it was providing its products and services at a given time to the number of active U.S. onshore rigs during the same period provides Cactus with a reasonable approximation of its market share with respect to wellhead products sold and the corresponding services it provides.

 

 

Three Months Ended

 

June 30,

 

March 31,

 

June 30,

 

2020

 

2020

 

2019

Cactus U.S. onshore rigs followed

112

 

 

251

 

 

283

 

Baker Hughes U.S. onshore rig count quarterly average

378

 

 

763

 

 

963

 

Market share

29.6

%

 

32.9

%

 

29.4

%

 

CACTUS ANNOUNCES TIMING OF SECOND QUARTER 2020 EARNINGS RELEASE AND CONFERENCE CALL

HOUSTON – July 16, 2020 – Cactus, Inc. (NYSE: WHD) (“Cactus” or the “Company”) today announced that it will issue its second quarter 2020 earnings release after market close on Wednesday, July 29, 2020. The Company will host a conference call to discuss financial and operational results on Thursday, July 30, 2020 at 9:00 a.m. Central Time (10:00 a.m. Eastern Time).

The call will be webcast on Cactus’ website at www.CactusWHD.com. Institutional investors and analysts may participate by dialing (866) 670-2203. International parties may dial (630) 489-9861. The access code is 5634259. Please access the webcast or dial in for the call at least 10 minutes ahead of start time to ensure a proper connection. An archived webcast of the conference call will be available on the Company’s website shortly after the end of the call.

About Cactus, Inc. Cactus designs, manufactures, sells and rents a range of highly engineered wellhead and pressure control equipment. Its products are sold and rented principally for onshore unconventional oil and gas wells and are utilized during the drilling, completion and production phases of its customers’ wells. In addition, it provides field services for all its products and rental items to assist with the installation, maintenance and handling of the wellhead and pressure control equipment. Cactus operates service centers in the United States, which are strategically located in the key oil and gas producing regions, including the Permian, SCOOP/STACK, Marcellus, Utica, Eagle Ford and Bakken, among other areas, and in Eastern Australia.

Cactus, Inc.

John Fitzgerald, 713-904-4655

Director of Corporate Development and Investor Relations

IR@CactusWHD.com

Source: Cactus, Inc.

HOUSTON–(BUSINESS WIRE)–Cactus, Inc. (NYSE: WHD) (“Cactus” or the “Company”) today announced financial and operating results for the first quarter of 2020.

Highlights

  • Increased revenues 9.9% from fourth quarter 2019 to $154.1 million, with growth across all business lines;
  • Grew income from operations 11.4% sequentially to $40.2 million;
  • Reported net income of $33.1 million(1) and diluted earnings per Class A share of $0.40(1);
  • Generated net income, as adjusted(2) of $30.8 million and diluted earnings per share, as adjusted(2) of $0.41;
  • Reported Adjusted EBITDA(3) and related margin(4) of $54.1 million and 35.1%, respectively;
  • Generated cash flow from operations during the first quarter of 2020 of $45.2 million;
  • Reported cash balance of $230 million and no debt outstanding as of March 31, 2020;
  • Reported record U.S. land market share of 32.9%, up from 30.9% during the fourth quarter of 2019;
  • Announced measures expected to increase total annualized operating cost savings to approximately $60 million from the $35 million previously announced; and
  • The Board of Directors declared a quarterly cash dividend of $0.09 per share.

Financial Summary

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

 

March 31,

 

 

 

December 31,

 

 

 

March 31,

 

 

 

 

2020

 

 

 

2019

 

 

 

2019

 

 

 

(in thousands)

 

Revenues

 

$

154,139

 

$

140,238

 

$

158,875

 

Income from operations

 

$

40,185

 

$

36,085

 

$

48,492

 

Operating income margin

 

 

26.1

%

 

25.7

%

 

30.5

%

Net income (1)

 

$

33,098

 

$

31,274

 

$

48,446

 

Net income, as adjusted (2)

 

$

30,785

 

$

27,721

 

$

36,871

 

Adjusted EBITDA (3)

 

$

54,145

 

$

48,413

 

$

59,049

 

Adjusted EBITDA margin (4)

 

 

35.1

%

 

34.5

%

 

37.2

%

(1)

Net income during the first quarter of 2020 is inclusive of $1.0 million in non-routine charges related to severance incurred in connection with workforce reduction initiatives undertaken during the first quarter. Net income during the fourth quarter of 2019 is inclusive of $4.8 million in additional income related to the revaluation of the tax receivable agreement liability and $2.7 million of net additional tax expenses associated with various non-routine items. Net income during the first quarter of 2019 is inclusive of a deferred tax benefit of $8.2 million which resulted in a total income tax benefit of $1.0 million during the quarter and $1.0 million in secondary offering related expenses.

(2)

Net income, as adjusted and diluted earnings per share, as adjusted are non-GAAP financial measures. These figures assume Cactus, Inc. held all units in Cactus Wellhead, LLC (“Cactus LLC”), its operating subsidiary, at the beginning of the period. Additional information regarding net income, as adjusted and diluted earnings per share, as adjusted and the reconciliation of GAAP to non-GAAP financial measures are in the Supplemental Information tables.

(3)

Adjusted EBITDA is a non-GAAP financial measure. See definition of Adjusted EBITDA and the reconciliation of GAAP to non-GAAP financial measures in the Supplemental Information tables.

(4)

The percentage of Adjusted EBITDA to Revenues.

Scott Bender, President and CEO of Cactus, commented, “Our outperformance versus broader oilfield activity levels during the first quarter was encouraging, and Cactus posted revenue growth across all business lines, even as U.S. rig activity declined on a sequential basis. Despite the noticeable drop in activity toward the end of the quarter, our results were generally consistent with our expectations. In late March, Cactus demonstrated its strategy of quickly responding to the macroeconomic environment, by reducing its cost structure and capital expenditures. The quarter also highlighted the Company’s ability to generate significant free cash flow, with cash growing by approximately $28 million during the period, net of over $6 million in dividends and associated distributions.

Given the magnitude of the activity change, we are expecting lower revenues and margins across all of our business lines in the second quarter. With crude storage nearing full capacity and predictions for the U.S. rig count to continue falling at a historic rate, Cactus has instituted a second round of cost savings, which will reduce U.S. headcount by an additional 28 percent and increase total annualized payroll related costs savings to approximately $60 million, $25 million above the amount announced in early April. With customer drilling and completion activity currently in sharp decline, we expect subsequent quarters to highlight Cactus’ variable cost structure and ability to offset a meaningful portion of the expected reduction in revenue.”

Mr. Bender concluded, “Cactus demonstrated its ability to deliver positive margins and free cash flow during the last industry downturn. Going forward, we believe the capital-light nature of the business and strong balance sheet will enable the company to successfully navigate through this cycle. We believe the anticipated industry changes will provide the opportunity to gain market share and emerge as a stronger company in a more favorable competitive environment. As always, our first priority will be the health and safety of our Associates, and we will continue to operate the business with a focus on improving our operational processes while maximizing returns and free cash flow.”

Revenue Categories

Product

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

 

March 31,

 

 

 

December 31,

 

 

 

March 31,

 

 

 

 

2020

 

 

 

2019

 

 

 

2019

 

 

 

(in thousands)

 

Product revenue

 

$

87,031

 

$

83,371

 

$

86,640

 

Gross profit

 

$

30,896

 

$

31,059

 

$

33,622

 

Gross margin

 

 

35.5

%

 

37.3

%

 

38.8

%

First quarter 2020 product revenue increased $3.7 million, or 4.4%, sequentially, as sales of wellhead equipment and production related equipment increased largely due to higher market share. Gross profit decreased $0.2 million, or 0.5%, sequentially, with margins declining 180 basis points. The first quarter of 2020 included approximately $1.4 million in non-cash charges related to inventory obsolescence reserves. Cactus’ estimated market share(1) increased to 32.9% in the first quarter of 2020 versus 30.9% during the fourth quarter of 2019 and 29.1% during the first quarter of 2019.

(1) Additional information regarding market share and rigs followed is located in the Supplemental Information tables.

Rental

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

 

March 31,

 

 

 

December 31,

 

 

 

March 31,

 

 

 

 

2020

 

 

 

2019

 

 

 

2019

 

 

 

(in thousands)

 

Rental revenue

 

$

36,163

 

$

28,215

 

$

38,497

 

Gross profit

 

$

16,824

 

$

12,821

 

$

20,706

 

Gross margin

 

 

46.5

%

 

45.4

%

 

53.8

%

First quarter 2020 rental revenue increased $7.9 million, or 28.2%, sequentially, as customers increased completion activity and the Company witnessed greater adoption of its recent innovations. Gross profit increased $4.0 million, or 31.2%, sequentially and margins increased 110 basis points largely due to depreciation expense representing a lower percentage of revenue during the period.

Field Service and Other

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

 

March 31,

 

 

 

December 31,

 

 

March 31,

 

 

 

 

2020

 

 

 

2019

 

 

2019

 

 

 

(in thousands)

 

Field service and other revenue

 

$

30,945

 

$

28,652

$

33,738

 

Gross profit

 

$

7,134

 

$

4,594

$

6,832

 

Gross margin

 

 

23.1

%

 

16.0

%

 

20.3

%

First quarter 2020 field service and other revenue increased $2.3 million, or 8.0%, sequentially, as higher customer activity drove an increase in associated billable hours and ancillary services. Gross profit increased $2.5 million, or 55.3%, sequentially, with margins improving by 710 basis points sequentially due to higher labor utilization during the quarter, largely due to the impacts of fewer holidays and greater customer activity.

Selling, General and Administrative Expenses (“SG&A”) and Other

SG&A for the first quarter of 2020 was $13.7 million (8.9% of revenues), compared to $12.4 million (8.8% of revenues) for the fourth quarter of 2019 and $12.7 million (8.0% of revenues) for the first quarter of 2019. The first quarter of 2020 includes a $0.6 million non-cash charge associated with a provision for expected credit losses on accounts receivable. Apart from this charge, the sequential increase was due to higher foreign exchange losses and stock-based compensation, which offset lower incentive compensation expense accruals. Separately, we recorded severance expenses of $1.0 million during the first quarter of 2020 associated with headcount reductions.

Liquidity and Capital Expenditures

As of March 31, 2020, the Company had $230.2 million of cash, no bank debt outstanding and the full $75.0 million of capacity available under its revolving credit facility. Operating cash flow was $45.2 million for the first quarter of 2020, attributable to strong operating results, which offset an increase in working capital. During the first quarter, the Company made dividend payments and associated distributions of $6.5 million.

Net capital expenditures for the first quarter of 2020 were $8.3 million, driven largely by additions to the Company’s fleet of rental equipment, including recent innovations. As previously disclosed, the Company expects full year 2020 net capital expenditures to be in the range of $20 to $30 million, with the majority weighted toward the first six months of the year.

Quarterly Dividend

The Board of Directors (the “Board”) has approved the payment of a cash dividend of $0.09 per share of Class A common stock to be paid on June 18, 2020 to holders of record of Class A common stock at the close of business on June 1, 2020. A corresponding distribution of $0.09 per CW Unit has also been approved for holders of CW Units of Cactus Wellhead, LLC, which will have the same record and payment dates as applicable to the dividend declared with respect to the Company’s Class A common stock.

Conference Call Details

The Company will host a conference call to discuss financial and operational results tomorrow, Thursday, April 30, 2020 at 9:00 a.m. Central Time (10:00 a.m. Eastern Time).

The call will be webcast on Cactus’ website at www.CactusWHD.com. Institutional investors and analysts may participate by dialing (866) 670-2203. International parties may dial (630) 489-9861. The access code is 1375824. Please access the webcast or dial in for the call at least 10 minutes ahead of start time to ensure a proper connection.

An archived webcast of the conference call will be available on the Company’s website shortly after the end of the call.

About Cactus, Inc.

Cactus designs, manufactures, sells and rents a range of highly engineered wellhead and pressure control equipment. Its products are sold and rented principally for onshore unconventional oil and gas wells and are utilized during the drilling, completion and production phases of its customers’ wells. In addition, it provides field services for all its products and rental items to assist with the installation, maintenance and handling of the wellhead and pressure control equipment. Cactus operates service centers in the United States, which are strategically located in the key oil and gas producing regions, including the Permian, SCOOP/STACK, Marcellus, Utica, Eagle Ford and Bakken, among other areas, and in Eastern Australia.

Cautionary Statement Concerning Forward-Looking Statements

Certain statements contained in this press 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 Cactus’ 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,” “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. You are cautioned not to place undue reliance on any forward-looking statements, which can be affected by assumptions used or by known risks or uncertainties. Consequently, no forward-looking statements can be guaranteed. When considering these forward-looking statements, you should keep in mind the risk factors 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.

Cactus, Inc.

Condensed Consolidated Statements of Income

(unaudited)

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

 

 

 

2020

 

 

2019

 

 

 

 

(in thousands, except per share data)

 

Revenues

 

 

 

 

 

 

 

Product revenue

 

$

87,031

 

$

86,640

 

Rental revenue

 

 

36,163

 

 

38,497

 

Field service and other revenue

 

 

30,945

 

 

33,738

 

Total revenues

 

 

154,139

 

 

158,875

 

 

 

 

 

 

 

 

 

Costs and expenses

 

 

 

 

 

 

 

Cost of product revenue

 

 

56,135

 

 

53,018

 

Cost of rental revenue

 

 

19,339

 

 

17,791

 

Cost of field service and other revenue

 

 

23,811

 

 

26,906

 

Selling, general and administrative expenses

 

 

13,662

 

 

12,668

 

Severance expenses

 

 

1,007

 

 

 

Total costs and expenses

 

 

113,954

 

 

110,383

 

Income from operations

 

 

40,185

 

 

48,492

 

 

 

 

 

 

 

 

 

Interest income, net

 

 

410

 

 

23

 

Other expense, net

 

 

 

 

(1,042)

 

Income before income taxes

 

 

40,595

 

 

47,473

 

Income tax expense (benefit)

 

 

7,497

 

 

(973)

 

Net income

 

$

33,098

 

$

48,446

 

Less: net income attributable to non-controlling interest

 

 

14,115

 

 

21,639

 

Net income attributable to Cactus Inc.

 

$

18,983

 

$

26,807

 

 

 

 

 

 

 

 

 

Earnings per Class A share – basic

 

$

0.40

 

$

0.69

 

Earnings per Class A share – diluted (a)

 

$

0.40

 

$

0.59

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding – basic

 

 

47,270

 

 

38,719

 

Weighted average shares outstanding – diluted (a)

 

 

75,395

 

 

75,246

 

(a)

Dilution for the three months ended March 31, 2020 and March 31, 2019 includes $15.1 million and $23.0 million of additional pre-tax income attributable to non-controlling interest adjusted for a corporate effective tax rate of 26% and 24%, respectively, and 28.0 million and 36.3 million weighted average shares of Class B common stock plus the effect of dilutive securities.

Cactus, Inc.

Condensed Consolidated Balance Sheets

(unaudited)

 

 

 

 

 

 

 

 

 

 

March 31,

 

 

December 31,

 

 

 

2020

 

 

2019

 

 

(in thousands)

Assets

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

230,202

 

$

202,603

Accounts receivable, net

 

 

95,236

 

 

87,865

Inventories

 

 

100,301

 

 

113,371

Prepaid expenses and other current assets

 

 

9,535

 

 

11,044

Total current assets

 

 

435,274

 

 

414,883

 

 

 

 

 

 

 

Property and equipment, net

 

 

162,871

 

 

161,748

Operating lease right-of-use assets, net

 

 

24,872

 

 

26,561

Goodwill

 

 

7,824

 

 

7,824

Deferred tax asset, net

 

 

217,916

 

 

222,545

Other noncurrent assets

 

 

1,338

 

 

1,403

Total assets

 

$

850,095

 

$

834,964

 

 

 

 

 

 

 

Liabilities and Equity

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable

 

$

34,476

 

$

40,957

Accrued expenses and other current liabilities

 

 

19,275

 

 

22,067

Current portion of liability related to tax receivable agreement

 

 

14,630

 

 

14,630

Finance lease obligations, current portion

 

 

6,498

 

 

6,735

Operating lease liabilities, current portion

 

 

6,535

 

 

6,737

Total current liabilities

 

 

81,414

 

 

91,126

 

 

 

 

 

 

 

Deferred tax liability, net

 

 

1,511

 

 

1,348

Liability related to tax receivable agreement, net of current portion

 

 

201,902

 

 

201,902

Finance lease obligations, net of current portion

 

 

4,033

 

 

3,910

Operating lease liabilities, net of current portion

 

 

18,809

 

 

20,283

Total liabilities

 

 

307,669

 

 

318,569

 

 

 

 

 

 

 

Equity

 

 

542,426

 

 

516,395

Total liabilities and equity

 

$

850,095

 

$

834,964

Cactus, Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited)

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

 

 

2020

 

 

2019

 

 

(in thousands)

Cash flows from operating activities

 

 

 

 

 

 

Net income

 

$

33,098

 

$

48,446

Reconciliation of net income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

10,980

 

 

8,881

Deferred financing cost amortization

 

 

42

 

 

42

Stock-based compensation

 

 

1,973

 

 

1,676

Provision for expected credit losses

 

 

625

 

 

Inventory obsolescence

 

 

1,353

 

 

224

Loss on disposal of assets

 

 

961

 

 

863

Deferred income taxes

 

 

4,848

 

 

(2,796)

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

(8,244)

 

 

(15,597)

Inventories

 

 

8,306

 

 

(8,875)

Prepaid expenses and other assets

 

 

1,497

 

 

2,156

Accounts payable

 

 

(8,142)

 

 

192

Accrued expenses and other liabilities

 

 

(2,136)

 

 

(973)

Net cash provided by operating activities

 

 

45,161

 

 

34,239

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

Capital expenditures and other

 

 

(9,441)

 

 

(14,655)

Proceeds from sale of assets

 

 

1,103

 

 

808

Net cash used in investing activities

 

 

(8,338)

 

 

(13,847)

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

Payments on finance leases

 

 

(1,764)

 

 

(1,846)

Dividends paid to Class A common stock shareholders

 

 

(4,281)

 

 

Distributions to members

 

 

(2,203)

 

 

(235)

Repurchase of shares

 

 

(1,356)

 

 

(1,474)

Net cash used in financing activities

 

 

(9,604)

 

 

(3,555)

 

 

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

 

 

380

 

 

438

 

 

 

 

 

 

 

Net increase in cash and cash equivalents

 

 

27,599

 

 

17,275

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

 

 

 

 

Beginning of period

 

 

202,603

 

 

70,841

End of period

 

$

230,202

 

$

88,116

Cactus, Inc. – Supplemental Information
Reconciliation of GAAP to non-GAAP Financial Measures
Net income, as adjusted and diluted earnings per share, as adjusted
(unaudited)

Net income, as adjusted and diluted earnings per share, as adjusted are not measures of net income as determined by GAAP. Net income, as adjusted and diluted earnings per share, as adjusted are supplemental non-GAAP financial measures that are used by management and external users of the Company’s consolidated financial statements. Cactus defines net income, as adjusted as net income assuming Cactus, Inc. held all units in Cactus LLC, its operating subsidiary, at the beginning of the period, with the resulting additional income tax expense related to the incremental income attributable to Cactus, Inc. Net income, as adjusted, also includes certain other adjustments described below. Cactus defines diluted earnings per share, as adjusted as net income, as adjusted divided by weighted average shares outstanding, as adjusted. The Company believes this supplemental information is useful for evaluating performance period over period.

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

December 31,

 

 

March 31,

 

 

 

2020

 

 

2019

 

 

2019

 

 

(in thousands, except per share data)

Net income

 

$

33,098

 

 

$

31,274

 

 

$

48,446

 

Adjustments:

 

 

 

 

 

 

 

 

 

Severance expenses, pre-tax (1)

 

 

1,007

 

 

 

 

 

 

 

Other non-operating income, pre-tax (2)

 

 

 

 

 

(4,778

)

 

 

 

Secondary offering related expenses, pre-tax (3)

 

 

 

 

 

 

 

 

1,042

 

Income tax expense differential (4)

 

 

(3,320

)

 

 

1,225

 

 

 

(12,617

)

Net income, as adjusted

 

$

30,785

 

 

$

27,721

 

 

$

36,871

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share, as adjusted

 

$

0.41

 

 

$

0.37

 

 

$

0.49

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding, as adjusted (5)

 

 

75,395

 

 

 

75,405

 

 

 

75,246

 

(1)

 

Represents non-routine charges related to severance benefits.

(2)

 

Represents non-cash adjustments for the revaluation of the liability related to the tax receivable agreement.

(3)

 

Reflects fees and expenses recorded in first quarter 2019 in connection with the offering of Class A common stock by certain selling stockholders, excluding underwriting discounts and selling commissions incurred by the selling stockholders.

(4)

 

Represents the increase or decrease in tax expense as though Cactus, Inc. owned 100% of Cactus LLC at the beginning of the period, calculated as the difference in tax expense recorded during each period and what would have been recorded, adjusted for pre-tax items listed above, based on a corporate effective tax rate of 26.0% on income before income taxes for the three months ended March 31, 2020, and 24.0% for the three months ended December 31, 2019 and March 31, 2019.

(5)

 

Reflects 47.3, 47.1, and 38.7 million weighted average shares of basic Class A common stock and 28.0, 28.0 and 36.3 million of additional shares for the three months ended March 31, 2020, December 31, 2019, and March 31, 2019, respectively, as if the weighted average shares of Class B common stock were exchanged and canceled for Class A common stock at the beginning of the period, plus the effect of dilutive securities.

Cactus, Inc. – Supplemental Information
Reconciliation of GAAP to non-GAAP Financial Measures
EBITDA and Adjusted EBITDA
(unaudited)

EBITDA and Adjusted EBITDA are not measures of net income as determined by GAAP. EBITDA and Adjusted EBITDA are supplemental non‑GAAP financial measures that are used by management and external users of the Company’s consolidated financial statements, such as industry analysts, investors, lenders and rating agencies. Cactus defines EBITDA as net income excluding net interest, income tax and depreciation and amortization. Cactus defines Adjusted EBITDA as EBITDA excluding the other items outlined below.

Cactus management believes EBITDA and Adjusted EBITDA are useful because they allow management to more effectively evaluate the Company’s operating performance and compare the results of its operations from period to period without regard to financing methods or capital structure, or other items that impact comparability of financial results from period to period. EBITDA and Adjusted EBITDA should not be considered as alternatives to, or more meaningful than, net income or any other measure as determined in accordance with GAAP. The Company’s computations of EBITDA and Adjusted EBITDA may not be comparable to other similarly titled measures of other companies. Cactus presents EBITDA and Adjusted EBITDA because it believes they provide useful information regarding the factors and trends affecting the Company’s business.

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

December 31,

 

 

March 31,

 

 

 

2020

 

 

2019

 

 

2019

 

 

(in thousands)

Net income

 

$

33,098

 

 

$

31,274

 

 

$

48,446

 

Interest income, net

 

 

(410

)

 

 

(390

)

 

 

(23

)

Income tax expense (benefit)

 

 

7,497

 

 

 

9,979

 

 

 

(973

)

Depreciation and amortization

 

 

10,980

 

 

 

10,590

 

 

 

8,881

 

EBITDA

 

 

51,165

 

 

 

51,453

 

 

 

56,331

 

Severance expenses (1)

 

 

1,007

 

 

 

 

 

 

 

Other non-operating income (2)

 

 

 

 

 

(4,778

)

 

 

 

Secondary offering related expenses (3)

 

 

 

 

 

 

 

 

1,042

 

Stock-based compensation

 

 

1,973

 

 

 

1,738

 

 

 

1,676

 

Adjusted EBITDA

 

$

54,145

 

 

$

48,413

 

 

$

59,049

 

(1)

Represents non-routine charges related to severance benefits.

(2)

Represents non-cash adjustments for the revaluation of the liability related to the tax receivable agreement.

(3)

Reflects fees and expenses recorded in first quarter 2019 in connection with the offering of Class A common stock by certain selling stockholders, excluding underwriting discounts and selling commissions incurred by the selling stockholders.

Cactus, Inc. – Supplemental Information
Depreciation and Amortization by Category
(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

December 31,

 

 

March 31,

 

 

 

2020

 

 

2019

 

 

2019

 

 

(in thousands)

Cost of product revenue

 

$

1,028

 

$

893

 

$

765

Cost of rental revenue

 

 

7,342

 

 

7,014

 

 

5,517

Cost of field service and other revenue

 

 

2,385

 

 

2,500

 

 

2,450

Selling, general and administrative expenses

 

 

225

 

 

183

 

 

149

Total depreciation and amortization

 

$

10,980

 

$

10,590

 

$

8,881

Cactus, Inc. – Supplemental Information
Estimated Market Share
(unaudited)

Market share represents the average number of active U.S. onshore rigs Cactus followed (which Cactus defines as the number of active U.S. onshore drilling rigs to which it was the primary provider of wellhead products and corresponding services during drilling) as of mid-month for each of the three months in the applicable quarter divided by the Baker Hughes U.S. onshore rig count quarterly average. Cactus believes that comparing the total number of active U.S. onshore rigs to which it was providing its products and services at a given time to the number of active U.S. onshore rigs during the same period provides Cactus with a reasonable approximation of its market share with respect to wellhead products sold and the corresponding services it provides.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

 

March 31,

 

 

 

December 31,

 

 

 

March 31,

 

 

 

 

2020

 

 

 

2019

 

 

 

2019

 

Cactus U.S. onshore rigs followed

 

 

251

 

 

246

 

 

297

 

Baker Hughes U.S. onshore rig count quarterly average

 

 

763

 

 

796

 

 

1,021

 

Market share

 

 

32.9

%

 

30.9

%

 

29.1

%

 

HOUSTON–(BUSINESS WIRE)–Cactus, Inc. (NYSE: WHD) (“Cactus” or the “Company”) today announced that it will issue its first quarter 2020 earnings release after market close on Wednesday, April 29, 2020. The Company will host a conference call to discuss financial and operational results on Thursday, April 30, 2020 at 9:00 a.m. Central Time (10:00 a.m. Eastern Time).

The call will be webcast on Cactus’ website at www.CactusWHD.com. Institutional investors and analysts may participate by dialing (866) 670-2203. International parties may dial (630) 489-9861. The access code is 1375824. Please access the webcast or dial in for the call at least 10 minutes ahead of start time to ensure a proper connection.

An archived webcast of the conference call will be available on the Company’s website shortly after the end of the call.

About Cactus, Inc.

Cactus designs, manufactures, sells and rents a range of highly engineered wellhead and pressure control equipment. Its products are sold and rented principally for onshore unconventional oil and gas wells and are utilized during the drilling, completion and production phases of its customers’ wells. In addition, it provides field services for all its products and rental items to assist with the installation, maintenance and handling of the wellhead and pressure control equipment. Cactus operates service centers in the United States, which are strategically located in the key oil and gas producing regions, including the Permian, SCOOP/STACK, Marcellus, Utica, Eagle Ford and Bakken, among other areas, and in Eastern Australia.

Cactus Announces Business Update

HOUSTON – April 3, 2020 – Cactus, Inc. (NYSE: WHD) (“Cactus” or the “Company”) today announced that as part of the Company’s comprehensive response to the weakened macroeconomic environment, Cactus reduced its total U.S. associate headcount by approximately 30% effective April 1st in anticipation of the activity declines expected by early in the second quarter. Cactus also implemented large-scale salary reductions for its workforce beginning in March, inclusive of a 50% reduction to the CEO’s base salary, and salary reductions ranging from 25% to 50% for its other named executive officers. Board Member remuneration has also been reduced by 25%.

As a result of the above mentioned cost rationalization efforts, Cactus will record approximately $1 million in non-routine charges primarily related to severance benefits as of March 31st. These salary and headcount reductions are estimated to result in approximately $35 million of annualized cost savings, $5 million of which are associated with selling, general and administrative expenses. These cost savings estimates include items such as overtime reductions, benefits and payroll taxes. These estimates are, however, exclusive of additional or alternative potential cost saving measures that will be taken by the Company, such as a reduction in discretionary payments to associates related to annual incentive bonuses associated with the Company’s financial performance, which totaled approximately $8 million in 2019, $4 million of which was categorized as selling, general and administrative expenses.

In light of the recent macroeconomic events, Cactus has also withdrawn its full year net capital expenditure guidance for 2020. Net capital expenditures are now expected to be in the range of $20 million to $30 million in 2020, representing a reduction of more than 50% from 2019’s level. A majority of this spend will be allocated to the first half of the year. The Company’s cash balance rose to approximately $230 million as of March 31st, and its $75 million revolver remains fully available. Going forward, Cactus will continue to respond quickly to deteriorating conditions while protecting its reputation for operational excellence.

About Cactus, Inc.

Cactus designs, manufactures, sells and rents a range of highly engineered wellhead and pressure control equipment. Its products are sold and rented principally for onshore unconventional oil and gas wells and are utilized during the drilling, completion and production phases of its customers’ wells. In addition, it provides field services for all its products and rental items to assist with the installation, maintenance and handling of the wellhead and pressure control equipment. Cactus operates service centers in the United States, which are strategically located 2

in the key oil and gas producing regions, including the Permian, SCOOP/STACK, Marcellus, Utica, Eagle Ford and Bakken, among other areas, and in Eastern Australia.

Cautionary Statement Concerning Forward-Looking Statements

Certain statements contained in this press 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 Cactus’ 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,” “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. You are cautioned not to place undue reliance on any forward-looking statements, which can be affected by assumptions used or by known risks or uncertainties. Consequently, no forward-looking statements can be guaranteed. When considering these forward-looking statements, you should keep in mind the risk factors 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.

Cactus, Inc. John Fitzgerald, 713-904-4655 Director of Corporate Development and Investor Relations IR@CactusWHD.com

Source: Cactus, Inc.

Cactus Announces Fourth Quarter and Full Year 2019 Results

HOUSTON–(BUSINESS WIRE)–Cactus, Inc. (NYSE: WHD) (“Cactus” or the “Company”) today announced that it will issue its fourth quarter and full year 2019 earnings release after market close on Wednesday, February 26, 2020. The Company will host a conference call to discuss financial and operational results on Thursday, February 27, 2020 at 9:00 a.m. Central Time (10:00 a.m. Eastern Time).

The call will be webcast on Cactus’ website at www.CactusWHD.com. Institutional investors and analysts may participate by dialing (866) 670-2203. International parties may dial (630) 489-9861. The access code is 2489677. Please access the webcast or dial in for the call at least 10 minutes ahead of start time to ensure a proper connection.

An archived webcast of the conference call will be available on the Company’s website shortly after the end of the call.

About Cactus, Inc.

Cactus designs, manufactures, sells and rents a range of highly engineered wellhead and pressure control equipment. Its products are sold and rented principally for onshore unconventional oil and gas wells and are utilized during the drilling, completion and production phases of its customers’ wells. In addition, it provides field services for all its products and rental items to assist with the installation, maintenance and handling of the wellhead and pressure control equipment. Cactus operates service centers in the United States, which are strategically located in the key oil and gas producing regions, including the Permian, SCOOP/STACK, Marcellus, Utica, Eagle Ford and Bakken, among other areas, and in Eastern Australia.

CACTUS ANNOUNCES QUARTERLY CASH

DIVIDEND

HOUSTON–(BUSINESS WIRE)– Cactus, Inc. (NYSE: WHD) (“Cactus”) today announced that its Board of Directors has declared a quarterly cash dividend of $0.09 per share of Class A common stock payable on March 19, 2020 to holders of record of Class A common stock at the close of business on March 2, 2020. A corresponding distribution of $0.09 per CW Unit has been approved for holders of CW Units of Cactus Wellhead, LLC.

Declarations of any dividends in the future, and the amount of any such dividends, are subject to approval by Cactus’ Board of Directors.

About Cactus, Inc.

Cactus designs, manufactures, sells and rents a range of highly engineered wellhead and pressure control equipment. Its products are sold and rented principally for onshore unconventional oil and gas wells and are utilized during the drilling, completion and production phases of its customers’ wells. In addition, it provides field services for all its products and rental items to assist with the installation, maintenance and handling of the wellhead and pressure control equipment. Cactus operates service centers in the United States, which are strategically located in the key oil and gas producing regions, including the Permian, SCOOP/STACK, Marcellus, Utica, Eagle Ford and Bakken, among other areas, and in Eastern Australia.

View source version on businesswire.com: https://www.businesswire.com/news/home/20200130005871/en/

Cactus, Inc.

John Fitzgerald, 713-904-4655

Director of Corporate Development and Investor Relations

IR@CactusWHD.com Source: Cactus, Inc.

Jan 30, 2020

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