Cactus(WHD) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For Q4 2024, total revenue was $272 million, down 7.2$93 million, also down 7.6% sequentially, resulting in adjusted EBITDA margins of 34.1% [8][11][15] - GAAP net income for the quarter was $57 million, compared to$62 million in Q3 2024, driven by lower revenues in both segments [16][17] - Adjusted net income and earnings per share were $57 million and$0.71 per share, respectively, down from $63 million and$0.79 per share in Q3 2024 [17][18] Business Line Data and Key Metrics Changes - Pressure control segment revenues were $177 million, down 4.5$1.7 million or 3.3% [12] - Spoolable technology segment revenues were $96 million, down 11.2$7.4 million or 22.4% [13] - Adjusted segment EBITDA for pressure control decreased by $0.5 million or 0.8$7.3 million or 17.1% [12][14] Market Data and Key Metrics Changes - The company ended the year with a cash balance of $343 million, an increase of approximately$39 million from the previous quarter [19] - The public or Class A ownership of the company averaged 85% and ended the quarter at 86% [16] Company Strategy and Development Direction - The company aims to ramp up production at its new facility in Vietnam and introduce new products to enhance value in both segments [28][36] - Focus on international expansion and diversification of revenue sources, targeting a long-term goal of 40% international revenue contribution [30][36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in outperforming underlying activity levels in the US market despite trade policy uncertainties [42][43] - The company anticipates a strong rebound in customer activity in the second and third quarters of 2025, with expectations for increased international orders [30][36] Other Important Information - The board approved a quarterly dividend of $0.13 per share, to be paid in March [23] - The company made a cash tax payment of approximately$25 million in January related to deferred 2024 federal taxes [21] Q&A Session Summary Question: Outlook for US activity in the next few quarters - Management is confident in their ability to outgrow underlying activity levels, anticipating a US rig count in the 550 to 560 range [42][43] Question: Margin headwind comparison between Bossier City and China - Historical costs were at least 35% higher for the Bossier facility compared to the Far East supply chain, with increasing tariffs expected to impact costs [45][46] Question: Game plan for mitigating tariff impacts - The company has flexibility between its facilities in Vietnam and Bossier City to mitigate tariff impacts, with a focus on vertical manufacturing capabilities [57][60] Question: Commercialization of H2S solutions - The H2S product is commercialized, with shipments expected to begin in March or April, targeting the Middle East market [68][70] Question: Spoolable technology growth in 2025 - The company is optimistic about growth in spoolable technology, despite a flat completion activity outlook, with international growth potential remaining strong [80][86] Question: International growth opportunities in pressure control - Management acknowledged progress in international growth but refrained from providing specific details on opportunities in regions like Argentina and the Middle East [95][96]