whd-20230930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________________________________________________________________

FORM 10-Q

______________________________________________________________________________

(MARK ONE)


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

Commission File Number: 001-38390

______________________________________________________________________________

Cactus, Inc.

(Exact name of registrant as specified in its charter)

______________________________________________________________________________


Delaware		35-2586106
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

920 Memorial City Way, Suite 300		77024
Houston,	Texas	(Zip Code)
(Address of principal executive offices)

(713) 626-8800

(Registrant’s telephone number, including area code)

______________________________________________________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Class A Common Stock, par value $0.01

WHD

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☑	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of November 6, 2023, the registrant had 65,323,129 shares of Class A common stock, $0.01 par value per share, and 14,106,469 shares of Class B common stock, $0.01 par value per share, outstanding.

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TABLE OF CONTENTS


Cautionary Note Regarding Forward-Looking Statements		i

PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements	1
Item 2.	Management ’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25
Item 4.	Controls and Procedures	25

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	25
Item 1A.	Risk Factors	25
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26
Item 5.	Other Information	26
Item 6.	Exhibits	26
	Signatures	27

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (the “Quarterly Report”) contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). When used in this Quarterly Report, the words “could,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on our current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events. We caution you that these forward-looking statements are subject to risks and uncertainties, most of which are difficult to predict and many of which are beyond our control. When considering forward‑looking statements, you should keep in mind the risk factors and other cautionary statements described under “Part I, Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022 (our “2022 Annual Report”), the Risk Factors described in “Part II, Item 1A. Risk Factors” of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, the Risk Factors described in “Part II, Item 1A. Risk Factors” of this Quarterly Report and other cautionary statements contained herein and in our Exchange Act filings. Forward‑looking statements are based on management’s current belief, based on currently available information, as to the outcome and timing of future events. Should one or more of the risks or uncertainties described in our 2022 Annual Report or other Exchange Act filings occur, or should underlying assumptions prove incorrect, our actual results could differ materially from those expressed in any forward-looking statements.

All forward-looking statements, expressed or implied, included in this Quarterly Report are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue. Except as otherwise required by applicable law, we disclaim any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this Quarterly Report.

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

CACTUS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)


(in thousands, except per share data)	September 30, 2023		December 31, 2022
Assets
Current assets
Cash and cash equivalents	$	63,738	$	344,527
Accounts receivable, net of allowance of $3,187 and $1,060, respectively	206,251		138,268
Inventories	203,517		161,283
Prepaid expenses and other current assets	19,442		10,564
Total current assets	492,948		654,642
Property and equipment, net	345,222		129,998
Operating lease right-of-use assets, net	19,969		23,183
Intangible assets, net	183,974		—
Goodwill	200,723		7,824
Deferred tax asset, net	211,535		301,644
Other noncurrent assets	9,779		1,605
Total assets	$	1,464,150	$	1,118,896
Liabilities and Equity
Current liabilities
Accounts payable	$	65,217	$	47,776
Accrued expenses and other current liabilities	60,713		30,619
Earn-out liability	18,892		—
Current portion of liability related to tax receivable agreement	20,855		27,544
Finance lease obligations, current portion	7,543		5,933
Operating lease liabilities, current portion	4,147		4,777
Total current liabilities	177,367		116,649
Deferred tax liability, net	1,469		1,966
Liability related to tax receivable agreement, net of current portion	250,256		265,025
Finance lease obligations, net of current portion	9,239		6,436
Operating lease liabilities, net of current portion	15,748		18,375
Total liabilities	454,079		408,451
Commitments and contingencies
Stockholders’ equity
Preferred stock, $0.01 par value, 10,000 shares authorized, none issued and outstanding	—		—
Class A common stock, $0.01 par value, 300,000 shares authorized, 65,323 and 60,903 shares issued and outstanding	654		609
Class B common stock, $0.01 par value, 215,000 shares authorized, 14,106 and 14,978 shares issued and outstanding	—		—
Additional paid-in capital	462,302		310,528
Retained earnings	359,699		261,764
Accumulated other comprehensive loss	(1,647)		(984)
Total stockholders’ equity attributable to Cactus Inc.	821,008		571,917
Non-controlling interest	189,063		138,528
Total stockholders’ equity	1,010,071		710,445
Total liabilities and equity	$	1,464,150	$	1,118,896

The accompanying notes are an integral part of these condensed consolidated financial statements.

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CACTUS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except per share data)	2023		2022		2023		2022
Revenues
Product revenue	$	214,295	$	121,782	$	605,698	$	328,054
Rental revenue	28,879		27,105		84,916		73,143
Field service and other revenue	44,696		35,594		131,480		99,398
Total revenues	287,870		184,481		822,094		500,595
Costs and expenses
Cost of product revenue	123,278		73,747		373,310		203,839
Cost of rental revenue	15,558		16,323		48,538		46,740
Cost of field service and other revenue	36,973		27,145		103,861		78,685
Selling, general and administrative expenses	29,549		15,970		97,519		44,804
Change in fair value of earn-out liability	(5,091)		—		13,053		—
Total costs and expenses	200,267		133,185		636,281		374,068
Operating income	87,603		51,296		185,813		126,527

Interest income (expense), net	(1,372)		1,140		(6,298)		1,344
Other income, net	266		1,125		3,804		10
Income before income taxes	86,497		53,561		183,319		127,881
Income tax expense	18,478		12,041		30,553		23,498
Net income	$	68,019	$	41,520	$	152,766	$	104,383
Less: net income attributable to non-controlling interest	15,439		10,095		32,542		25,198
Net income attributable to Cactus Inc.	$	52,580	$	31,425	$	120,224	$	79,185

Earnings per Class A share - basic	$	0.81	$	0.52	$	1.87	$	1.32
Earnings per Class A share - diluted	$	0.80	$	0.51	$	1.82	$	1.30

Weighted average Class A shares outstanding - basic	64,879		60,665		64,399		60,164
Weighted average Class A shares outstanding - diluted	65,486		61,106		79,632		76,296

The accompanying notes are an integral part of these condensed consolidated financial statements.

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CACTUS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
Net income	$	68,019	$	41,520	$	152,766	$	104,383
Foreign currency translation adjustments	(670)		(1,219)		(812)		(2,150)
Comprehensive income	$	67,349	$	40,301	$	151,954	$	102,233
Less: comprehensive income attributable to non-controlling interest	15,319		9,795		32,393		24,673
Comprehensive income attributable to Cactus Inc.	$	52,030	$	30,506	$	119,561	$	77,560

The accompanying notes are an integral part of these condensed consolidated financial statements.

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CACTUS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(unaudited)


	Class A			Class B			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Non-controlling Interest		Total Equity
	Common Stock			Common Stock
(in thousands)	Shares	Amount		Shares	Amount
Balance at June 30, 2023	64,609	$	647	14,820	$	—	$	446,206	$	315,049	$	(1,096)	$	191,968	$	952,774

Member distributions	—	—		—	—		—		—		—		(9,214)		(9,214)
Effect of CC Unit redemptions	714	7		(714)	—		9,753		—		—		(9,760)		—
Tax impact of equity transactions	—	—		—	—		2,574		—		—		(100)		2,474

Other comprehensive loss	—	—		—	—		—		—		(551)		(119)		(670)

Stock-based compensation	—	—		—	—		3,769		—		—		849		4,618
Cash dividends declared ($0.12 per share)	—	—		—	—		—		(7,930)		—		—		(7,930)
Net income	—	—		—	—		—		52,580		—		15,439		68,019
Balance at September 30, 2023	65,323	$	654	14,106	$	—	$	462,302	$	359,699	$	(1,647)	$	189,063	$	1,010,071

Balance at June 30, 2022	60,613	$	606	15,263	$	—	$	304,418	$	212,913	$	(698)	$	126,569	$	643,808
Member distributions	—	—		—	—		—		—		—		(4,659)		(4,659)
Effect of CW Unit redemptions	104	1		(104)	—		894		—		—		(895)		—
Tax impact of equity transactions	—	—		—	—		(33)		—		—		—		(33)
Equity award vestings	2	—		—	—		5		—		—		(3)		2
Other comprehensive loss	—	—		—	—		—		—		(919)		(300)		(1,219)
Stock-based compensation	—	—		—	—		2,414		—		—		604		3,018
Cash dividends declared ($0.11 per share)	—	—		—	—		—		(6,787)		—		—		(6,787)
Net income	—	—		—	—		—		31,425		—		10,095		41,520
Balance at September 30, 2022	60,719	$	607	15,159	$	—	$	307,698	$	237,551	$	(1,617)	$	131,411	$	675,650

The accompanying notes are an integral part of these condensed consolidated financial statements.

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CACTUS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(unaudited)


	Class A			Class B			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Non-controlling Interest		Total Equity
	Common Stock			Common Stock
(in thousands)	Shares	Amount		Shares	Amount
Balance at December 31, 2022	60,903	$	609	14,978	$	—	$	310,528	$	261,764	$	(984)	$	138,528	$	710,445
Issuances of common stock	3,352	34		—	—

SEC Form 10-Q filed by Cactus Inc.