Cactus(WHD)2025-02-27 22:28Customer Dependence and Revenue - The company serves over 300 customers, with one customer representing 15% of total revenues in 2024 and 10% in 2023[47]. - The company is dependent on a relatively small number of customers in the oil and natural gas E&P business, which could adversely affect its financial condition if an important customer is lost[87]. Manufacturing and Operations - The manufacturing facility in Bossier City, Louisiana, is designed for rapid turnaround of made-to-order equipment, while the Suzhou facility in China is optimized for higher-volume orders[42]. - The company has advanced manufacturing capabilities in Baytown, Texas, producing pipe products in accordance with industry standards and utilizing advanced CNC machines[43]. - The company operates through service centers and pipe yards located in the United States, Canada, Australia, and provides services in the Middle East and other international markets[260]. Industry Dependency and Market Conditions - The company is substantially dependent on the oil and gas industry, with exploration and production activity directly affected by oil and natural gas prices, which have historically been volatile[45]. - The company’s business is heavily influenced by trends in the demand for and price of crude oil and natural gas, which have historically been volatile[81]. - The oilfield services industry is highly competitive, and increased competition could lead to lower prices and utilization rates for the company's services[89]. - The introduction of new technologies in the oilfield services industry may cause the company to lose market share if it cannot keep up with competitors[90]. - Ongoing global conflicts, particularly in Ukraine and the Middle East, have resulted in volatility in oil and natural gas prices, potentially dampening demand for the company's products[109]. Environmental and Regulatory Compliance - The company has established proactive environmental and worker safety policies to manage compliance with stringent governmental laws and regulations[52]. - The company is subject to various environmental laws and regulations, and failure to comply could result in significant penalties and increased costs[100]. - Changes in regulations related to greenhouse gas emissions could negatively impact demand for the company's products and services[103]. - Increased regulation on hydraulic fracturing in Texas has led to suspensions of deep wastewater disposal wells in certain areas, potentially increasing costs for oil and gas production companies[104]. Financial Performance and Metrics - Total revenues for 2024 reached 1,096,960 in 2023 and a significant rise of 64% compared to 185,407, representing an increase of 10% from 110,174 in 2022[249]. - The total stockholders' equity attributable to Cactus Inc. rose to 865.5 million in 2023, reflecting an increase of about 23.8%[247]. - The company reported a foreign currency translation adjustment loss of 239 in 2023[252]. - The company completed the acquisition of the FlexSteel business on February 28, 2023, which has been reflected in the financial statements from the closing date of the acquisition[262]. Employee and Workforce Management - The company employed approximately 1,600 people worldwide as of December 31, 2024, with over 100 employees located outside the United States, primarily in Australia and China[61]. - The company has developed targeted strategies for recruitment and retention to maintain high retention rates among key managers and associates[62]. - The company is committed to fostering a diverse workforce, with approximately 10% women and 46% of the workforce representing a minority population[67]. Risk Management and Insurance - The company relies on customer indemnifications and third-party insurance for risk mitigation, but limitations on these could expose it to substantial liabilities[93]. - The company’s insurance includes coverage for various liabilities, including pollution liability and cyber insurance, but may not cover all losses[59]. - The company relies on information technology systems, and any failure or cyberattack could disrupt operations and adversely affect financial performance[132]. Tax and Financial Obligations - Payments under the Tax Receivable Agreement (TRA) could be substantial, as Cactus Inc. is obligated to pay 85% of net cash savings from tax benefits realized[120]. - The liability related to the Tax Receivable Agreement (TRA) was reported at 35,388,000 for 2024, a significant decrease from 39,176,000, a decrease from $43,977,000 in 2023[258]. - The company had no outstanding debt as of December 31, 2024, and maintained compliance with all covenants under the Amended ABL Credit Facility[308]. Audit and Internal Controls - The independent auditor, PricewaterhouseCoopers, LLP, confirmed the effectiveness of the internal control over financial reporting as of December 31, 2024[230]. - The company maintained effective internal control over financial reporting based on the COSO framework, as stated in the management's assessment[229]. - The audit report highlighted a critical audit matter related to the TRA liability, emphasizing the complexity and subjectivity involved in its calculation[241].