Core Points - Cactus, Inc. will release its third quarter 2025 earnings after market close on October 29, 2025 [1] - A conference call to discuss financial and operational results is scheduled for October 30, 2025, at 9:00 a.m. Central Time [1] - The conference call will be available via webcast on Cactus' official website [1]

Group 1 - Cactus, Inc. (NYSE: WHD) is experiencing increased costs due to steel tariffs, particularly affecting imports from China and Vietnam [1] - The company's profit margins are under pressure as a result of these rising costs [1] - Although the company is shifting its sourcing strategies to mitigate some of the impact, it is not fully alleviating the financial strain [1]

Company Overview - Cactus designs, manufactures, sells, and rents highly engineered products for improved drilling and completions efficiencies and enhanced safety, with product revenue accounting for 64%, rental 14%, and field service & other 22% of total revenue[9] - The company's adjusted EBITDA margin has shown resilience, with YTD 2022 annualized margin at 31%[12] - Cactus has achieved significant U S onshore market share gains, reaching 41 8% in 2021[19] Financial Performance - The company's revenue increased from $341 2 million in 2017 to $632 2 million YTD 2022 annualized[9, 16] - Adjusted EBITDA increased from $112 1 million in 2017 to $195 7 million YTD 2022 annualized[12] - Adjusted EBITDA less net capital expenditures as a percentage of revenue was 26 9% YTD 2022 annualized[14] Strategy and Outlook - Cactus' SafeDrill wellhead systems offer safety and time savings advantages over conventional wellheads[33, 34] - The company is experiencing favorable macro trends, including an expected ~10% growth in the U S land rig count in 2023[44] - Cactus is expanding geographically, with potential for growth in regions outside the U S and Australia, which currently account for 76% of the global land rig count[49, 50] - The company is committed to ESG goals, offering solutions that enable customers to drill and complete wells faster, safer, and cleaner[51, 54]

Group 1 - Cactus, Inc. (NYSE:WHD) experienced a share price decline of 6.61% from September 5 to September 12, 2025, ranking among the energy stocks that lost the most during that week [1] - The company's Executive Vice President and Secretary, William D. Marsh, sold 10,172 shares for a total of $420,307, contributing to the downward pressure on the stock [2] - Since the beginning of 2025, Cactus, Inc.'s share price has dropped over 30%, following a challenging second quarter where the company missed earnings and revenue expectations [3] Group 2 - Despite the recent setbacks, Cactus, Inc. raised its quarterly dividend by 8% to $0.14 per share in July [3]

Group 1: TimesSquare Capital Management Overview - TimesSquare Capital Management released its "U.S. Small Cap Growth Strategy" second-quarter 2025 investor letter, reporting a fund return of 11.28% (gross) and 11.02% (net) compared to the Russell 2000 Growth Index return of 11.97% [1] - The second quarter saw equities posting double-digit returns as global economic activity measures improved [1] Group 2: Cactus, Inc. (NYSE:WHD) Performance - Cactus, Inc. (NYSE:WHD) had a one-month return of 2.99% but experienced a significant decline of 25.29% over the last 52 weeks, closing at $41.42 per share with a market capitalization of $2.853 billion on September 10, 2025 [2] - Cactus, Inc. reported revenue of $274 million in Q2 2025, reflecting a sequential decline of 2.4% [4] Group 3: Cactus, Inc. Business Insights - The Energy sector's performance is often linked to commodity prices, with Cactus, Inc. focusing on low-cost exploration & production companies and specialized service providers [3] - Cactus, Inc. experienced a 5% decline, despite first-quarter results exceeding consensus due to higher sales in pressure control equipment [3] - The company acquired a majority stake in Surface Pressure Control in June, aiming to accelerate international expansion, while management anticipates further declines in U.S. land activity for the remainder of the year [3] Group 4: Hedge Fund Interest - Cactus, Inc. was held by 29 hedge fund portfolios at the end of Q2 2025, an increase from 23 in the previous quarter, but it is not among the 30 most popular stocks among hedge funds [4]

Core Viewpoint - Cactus reported weaker-than-expected second quarter results, missing analyst projections for both non-GAAP earnings and GAAP revenue, primarily due to declining North American oilfield activity and increased tariff pressures [1][6][10] Financial Performance - Non-GAAP EPS was $0.66, below the expected $0.72, and down 18.5% from $0.81 in Q2 2024 [2] - GAAP revenue was $273.6 million, missing the consensus of $278.8 million and down 5.8% from $290.4 million in Q2 2024 [2][5] - Adjusted EBITDA was $86.7 million, a decline of 16.4% from $103.6 million year-over-year [2] - Net income was $49.0 million, down 22.3% from $63.1 million in the previous year [2] Segment Performance - The Pressure Control segment faced significant revenue declines, dropping 5.5% sequentially and 4.0% year-over-year, attributed to lower frac equipment rental and increased tariffs [6][10] - Operating margin for the Pressure Control segment decreased to 23.5%, down from 28.6% last quarter and 29.7% in the same period last year [7] - In contrast, the Spoolable Technologies segment saw a sequential revenue growth of 3.9%, driven by international demand, particularly in the Middle East [8][9] Strategic Initiatives - The company is focusing on integrating FlexSteel, enhancing supply chains, and increasing international exposure to mitigate reliance on the U.S. market [4][14] - Cactus is transitioning manufacturing from China to Vietnam to address tariff impacts, with expectations for partial relief once API certification is achieved [8][13] - The acquisition of 65% of Baker Hughes's Surface Pressure Control business is in progress, aimed at expanding international reach and product offerings [16] Cash Flow and Capital Expenditures - Cash flow remained strong, with cash and equivalents rising to $405.2 million and no outstanding bank debt [11] - Full-year 2025 net capital expenditures guidance was reduced to $40–$45 million, reflecting a conservative outlook [11] - The quarterly dividend was raised by 8% to $0.14 per share, demonstrating a commitment to shareholder returns despite profitability pressures [12] Outlook - Management anticipates modest revenue declines in both main segments due to ongoing weakness in North American oilfield activity [17] - No specific revenue or earnings guidance was provided for the next quarter or full year, with a focus on right-sizing the organization for the second half of the year [17]

PART I - FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents Cactus, Inc.'s unaudited condensed consolidated financial statements as of June 30, 2025, including balance sheets, income statements, cash flows, and notes on accounting policies and segment performance [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to **$1.82 billion** by June 30, 2025, driven by cash growth, while total liabilities remained stable and equity rose to **$1.35 billion** Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $405,177 | $342,843 | | Total current assets | $873,351 | $774,688 | | Total assets | $1,824,529 | $1,739,328 | | **Liabilities & Equity** | | | | Total current liabilities | $179,963 | $178,824 | | Total liabilities | $475,992 | $475,149 | | Total stockholders' equity | $1,348,537 | $1,264,179 | [Condensed Consolidated Statements of Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Total revenues and net income decreased for Q2 and H1 2025 compared to 2024, primarily due to lower product and rental revenues and increased expenses Statement of Income Summary (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $273,575 | $290,389 | $553,894 | $564,512 | | Operating Income | $60,805 | $79,819 | $129,417 | $142,369 | | Net Income | $49,047 | $63,059 | $103,152 | $112,874 | | Diluted EPS | $0.59 | $0.75 | $1.23 | $1.35 | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations decreased to **$124.4 million** in H1 2025 due to lower earnings, while investing cash outflows increased due to an affiliate investment Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $124,380 | $164,218 | | Net cash used in investing activities | ($26,507) | ($14,054) | | Net cash used in financing activities | ($36,546) | ($37,195) | | **Net increase in cash** | **$62,334** | **$112,711** | [Notes to Financial Statements](index=11&type=section&id=Notes%20to%20Financial%20Statements) Notes detail business segments, recent transactions, accounting policies, and financial line items, including two operating segments and a pending Baker Hughes acquisition - The company operates in two business segments: Pressure Control and Spoolable Technologies[27](index=27&type=chunk) - In June 2025, the company entered into an agreement to acquire a controlling interest in Baker Hughes Company's surface pressure control business[31](index=31&type=chunk) Revenue by Category for Six Months Ended June 30 (in thousands) | Revenue Category | 2025 | % of Total | 2024 | % of Total | | :--- | :--- | :--- | :--- | :--- | | Product revenue | $417,223 | 75% | $428,412 | 76% | | Rental revenue | $48,908 | 9% | $49,150 | 9% | | Field service and other | $87,763 | 16% | $86,950 | 15% | | **Total revenues** | **$553,894** | **100%** | **$564,512** | **100%** | - The company is involved in patent litigation with Cameron International Corporation regarding its SafeLink® frac flow system. The outcome is currently unpredictable[65](index=65&type=chunk)[66](index=66&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses H1 2025 financial performance, noting decreased revenues, segment trends, market factors, the Baker Hughes acquisition, and strong liquidity [Recent Developments and Trends](index=25&type=section&id=Recent%20Developments%20and%20Trends) Key market factors include declining oil prices and drilling activity, new tariffs, and the **$344.5 million** acquisition of Baker Hughes' surface pressure control business Key Market Indicators | Indicator | Q2 2025 | Q1 2025 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | WTI Oil Price ($/bbl) | $64.57 | $71.78 | $68.12 | $79.69 | | U.S. Land Drilling Rigs | 556 | 572 | 564 | 593 | - The company is facing elevated tariff expenses on goods from Vietnam and China and higher steel costs due to Section 232 tariffs, which could impact profitability[94](index=94&type=chunk) - Cactus will acquire a **65%** interest in Baker Hughes' surface pressure control business for a cash price of **$344.5 million**, creating a joint venture, expected to close in late 2025 or early 2026[97](index=97&type=chunk)[99](index=99&type=chunk) [Results of Operations](index=27&type=section&id=Results%20of%20Operations) Total revenues decreased sequentially in Q2 2025 and year-over-year for H1 2025, with varied segment performance and increased corporate expenses Q2 2025 vs Q1 2025 Segment Performance (in thousands) | Segment | Q2 2025 Revenue | Q1 2025 Revenue | % Change | Q2 2025 Op. Income | Q1 2025 Op. Income | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Pressure Control | $179,772 | $190,277 | (5.5)% | $42,333 | $54,333 | (22.1)% | | Spoolable Technologies | $96,225 | $92,578 | 3.9% | $28,053 | $23,876 | 17.5% | H1 2025 vs H1 2024 Segment Performance (in thousands) | Segment | H1 2025 Revenue | H1 2024 Revenue | % Change | H1 2025 Op. Income | H1 2024 Op. Income | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Pressure Control | $370,049 | $362,220 | 2.2% | $96,666 | $107,344 | (9.9)% | | Spoolable Technologies | $188,803 | $202,811 | (6.9)% | $51,929 | $46,434 | 11.8% | [Liquidity and Capital Resources](index=29&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with **$405.2 million** cash and **$222.6 million** credit availability, sufficient to fund operations and the Baker Hughes acquisition - As of June 30, 2025, the company had **$405.2 million** in cash and cash equivalents and **$222.6 million** of available borrowing capacity[115](index=115&type=chunk) - The company expects to fund the Baker Hughes Transaction using cash on hand and its undrawn credit facility[117](index=117&type=chunk) - Estimated net capital expenditures for 2025 are projected to be between **$40 million** and **$45 million**[118](index=118&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=30&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's exposure to market risk has not materially changed since December 31, 2024 - There have been no material changes in the company's exposure to market risk since December 31, 2024[123](index=123&type=chunk) [Item 4. Controls and Procedures](index=30&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control during Q2 2025 - The principal executive officer and principal financial officer concluded that disclosure controls and procedures were effective as of June 30, 2025[124](index=124&type=chunk) - No changes occurred in internal control over financial reporting during Q2 2025 that have materially affected, or are reasonably likely to materially affect, internal controls[125](index=125&type=chunk) PART II - OTHER INFORMATION [Item 1. Legal Proceedings](index=31&type=section&id=Item%201.%20Legal%20Proceedings) The company is engaged in a patent infringement lawsuit with Cameron International Corporation regarding its SafeLink® frac flow system, with an unpredictable outcome - Cactus is in a legal dispute with Cameron International Corporation over alleged patent infringement by its SafeLink® frac flow system[129](index=129&type=chunk) - The jury trial, originally scheduled for June 9, 2025, has been delayed with no new date set. The company cannot predict the outcome of these claims[129](index=129&type=chunk) [Item 1A. Risk Factors](index=31&type=section&id=Item%201A.%20Risk%20Factors) New risk factors primarily relate to the pending Baker Hughes Transaction, including integration challenges, unknown liabilities, and international expansion hurdles - New risks have been identified related to the Baker Hughes Transaction, including[131](index=131&type=chunk)[133](index=133&type=chunk)[134](index=134&type=chunk)[136](index=136&type=chunk) - Failure to realize anticipated strategic and financial benefits - Difficulties in integrating the Joint Venture's operations, which could disrupt business and lead to loss of key employees - Potential for unknown or underestimated liabilities from the acquired business - Obstacles related to expanding into new geographic regions like the Middle East, including geopolitical risks and unfamiliar regulatory environments [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=33&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased Class A common stock from employees for tax obligations in Q2 2025, with **$146.3 million** remaining authorized under its repurchase program Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased | Avg. Price Paid | Remaining Authorization | | :--- | :--- | :--- | :--- | | April 2025 | 1,197 | $37.81 | - | | May 2025 | 3,273 | $41.32 | - | | June 2025 | 717 | $44.10 | - | | **Total** | **5,187** | **$40.90** | **$146,302,153** | - The shares purchased were from employees to satisfy tax withholding obligations and were not part of the publicly announced repurchase program[138](index=138&type=chunk) [Item 5. Other Information](index=33&type=section&id=Item%205.%20Other%20Information) No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during Q2 2025 - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[139](index=139&type=chunk) [Item 6. Exhibits](index=34&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including agreements, corporate governance documents, and CEO/CFO certifications

Financial Data and Key Metrics Changes - Total Q2 revenue was $274 million, representing a sequential decline of 2.4% [8] - Adjusted EBITDA for Q2 was $87 million, down 7.6% sequentially, with adjusted EBITDA margins at 31.7% compared to 33.5% in Q1 [11][12] - GAAP income decreased to $49 million in Q2 from $54 million in Q1, primarily due to lower operating income [12] - Adjusted net income for Q2 was $53 million, or $0.66 per share, down from $59 million and $0.73 per share in Q1 [12] Business Line Data and Key Metrics Changes - Pressure Control segment revenues were $180 million, down 5.5% sequentially, mainly due to lower rental business revenue [8][9] - Spoolable Technologies segment revenues increased to $96 million, up 3.9% sequentially, driven by higher domestic customer activity [10] - Operating income for the Pressure Control segment declined by $12 million or 22.1% sequentially, while operating income for Spoolable Technologies increased by $4.2 million or 17.5% [9][10] Market Data and Key Metrics Changes - The U.S. Land rig count was reported at 526, which is 5% below the second quarter average [20] - The average rig count is expected to decline further, impacting pressure control revenue in Q3 [20] Company Strategy and Development Direction - The company announced a transformative acquisition of a controlling interest in Baker Hughes' surface pressure control business, aiming to diversify its footprint [6][23] - The focus remains on enhancing operational efficiencies and supply chain management, particularly in light of tariff impacts [17][46] Management's Comments on Operating Environment and Future Outlook - Management noted that the second quarter faced challenges due to tariff increases and commodity market weakness, but free cash flow remained strong [6][24] - The company anticipates that the sharpest domestic activity declines for 2025 are behind them, with expectations for a broader geographic footprint post-acquisition [24] Other Important Information - The Board approved an 8% increase in the quarterly dividend to $0.14 per share, reflecting confidence in cash flow durability [7][15] - Legal expenses related to ongoing litigation increased by approximately $2 million from the first quarter [9] Q&A Session Summary Question: Impact of tariffs on pressure control margins - Management acknowledged that the unexpected doubling of tariffs impacted margins, but cost recovery initiatives were paused due to falling oil prices [27][28] Question: Customer confidence in ramping activity - Management indicated that customers are focused on capital discipline and returning cash to shareholders, which has led to a cautious approach towards CapEx expansion despite favorable oil prices [31][32] Question: Trends in drilling, completions, and production - Management noted that completions activity is expected to decline more significantly than drilling, with production activity not suffering to the same degree [39][40] Question: Acquisition strategy in the Middle East - Management expressed optimism about turning around the acquired business, focusing on supply chain improvements and cultural changes [42][46] Question: Legal charges and ongoing litigation - Management confirmed that trial delays would lead to further legal expenses, but the nature of the dispute involves IP issues related to the SafeLink product [52][53]

Financial Data and Key Metrics Changes - Total Q2 revenues were $274 million, a sequential decline of 2.4% [8] - Adjusted EBITDA for Q2 was $87 million, down 7.6% sequentially, with adjusted EBITDA margins at 31.7% compared to 33.5% in Q1 [12] - GAAP income decreased to $49 million in Q2 from $54 million in Q1, primarily due to lower operating income [13] - Adjusted net income for Q2 was $53 million, or $0.66 per share, down from $59 million and $0.73 per share in Q1 [13][14] - Cash balance increased to $405 million, a sequential increase of approximately $58 million [14] Business Line Data and Key Metrics Changes - Pressure Control segment revenues were $180 million, down 5.5% sequentially, primarily due to lower rental business revenue [8] - Spoolable Technologies segment revenues increased by 3.9% sequentially to $96 million, driven by higher domestic customer activity [11] - Operating income for Pressure Control declined by $12 million or 22.1% sequentially, while operating income for Spoolable Technologies increased by $4.2 million or 17.5% [10][11] Market Data and Key Metrics Changes - The U.S. Land rig count was reported at 526, 5% below the second quarter average [21] - The company anticipates a mid to high single-digit decline in Pressure Control revenue for Q3 compared to Q2 [21] Company Strategy and Development Direction - The company announced a transformative acquisition of a controlling interest in Baker Hughes' surface pressure control business, expected to close in late 2025 or early 2026 [24] - The strategic rationale for the acquisition is to diversify the company's footprint and enhance its market position in the Middle East [24] - The company is focused on maintaining capital discipline and evaluating capital spending in light of domestic activity trends [15] Management's Comments on Operating Environment and Future Outlook - Management noted that the tariff impact and commodity market weakness affected performance, particularly in June [17] - The company expects adjusted EBITDA margins in the Pressure Control segment to remain stable at 28% to 30% for Q3, despite lower operating leverage [21] - Management expressed optimism that the sharpest domestic activity declines are behind them and anticipates a broader geographic footprint post-acquisition [26] Other Important Information - The Board approved an 8% increase in the quarterly dividend to $0.14 per share, reflecting confidence in cash flow durability [15][26] - Legal expenses related to litigation claims increased by approximately $2 million from Q1, totaling $5.1 million in Q2 [10] Q&A Session Summary Question: Impact of tariffs on pressure control margins - Management acknowledged that the unexpected doubling of tariffs impacted margins, but they had also begun sourcing from higher-cost U.S. suppliers [29][30] Question: Customer confidence in ramping activity - Management noted that customers are focused on capital discipline and returning cash to shareholders, which has led to a cautious approach towards CapEx expansion despite favorable oil prices [34][35] Question: Trends in product lines across drilling, completions, and production - Management indicated that completions were the weakest, with a significant decline expected in frac activity, while production activity is expected to hold up better [41][42] Question: Plans for the Middle East acquisition - Management expressed excitement about turning around the acquired business, focusing on supply chain improvements and cultural changes [48][49] Question: Legal charges and ongoing litigation - Management confirmed that legal expenses were related to an IP dispute and that further expenses are expected in the back half of the year due to trial preparations [55][56]

Core Insights - Cactus, Inc. reported a revenue of $273.58 million for the quarter ended June 2025, reflecting a 5.8% decline year-over-year and falling short of the Zacks Consensus Estimate of $275.61 million by 0.74% [1] - The company's EPS was $0.66, down from $0.81 in the same quarter last year, and also slightly below the consensus estimate of $0.67, resulting in an EPS surprise of -1.49% [1] Revenue Breakdown - Spoolable Technologies generated revenues of $96.23 million, exceeding the average estimate of $94.13 million, but showing a year-over-year decline of 7.2% [4] - Pressure Control revenues were reported at $179.77 million, which was below the average estimate of $182.33 million, marking a 4% decrease year-over-year [4] Operating Income Analysis - Operating income for Pressure Control was $42.33 million, falling short of the average estimate of $50.05 million [4] - Corporate and other expenses resulted in an operating loss of $9.58 million, worse than the estimated loss of $7.5 million [4] - Spoolable Technologies reported an operating income of $28.05 million, surpassing the average estimate of $24.83 million [4] Stock Performance - Cactus shares have returned +4.7% over the past month, outperforming the Zacks S&P 500 composite's +3.4% change [3] - The stock currently holds a Zacks Rank 5 (Strong Sell), indicating potential underperformance relative to the broader market in the near term [3]