whd-20240930

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, 2024


☐			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 October 29, 2024, the registrant had 66,656,160 shares of Class A common stock, $0.01 par value per share, and 12,927,927 shares of Class B common stock, $0.01 par value per share, outstanding.

Table of Contents

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	26
Item 1A.	Risk Factors	26
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26
Item 5.	Other Information	27
Item 6.	Exhibits	27
	Signatures	28

Table of Contents

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, 2023 (our “2023 Annual 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 2023 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.

Table of Contents

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, 2024		December 31, 2023
Assets
Current assets
Cash and cash equivalents	$	303,376	$	133,792
Accounts receivable, net of allowance of $3,905 and $3,642, respectively	196,874		205,381
Inventories	219,799		205,625
Prepaid expenses and other current assets	10,152		11,380
Total current assets	730,201		556,178
Property and equipment, net	344,183		345,502
Operating lease right-of-use assets, net	23,589		23,496
Intangible assets, net	167,988		179,978
Goodwill	203,028		203,028
Deferred tax asset, net	203,778		204,852
Other noncurrent assets	8,956		9,527
Total assets	$	1,681,723	$	1,522,561
Liabilities and Equity
Current liabilities
Accounts payable	$	74,897	$	71,841
Accrued expenses and other current liabilities	79,347		50,654
Earn-out liability	—		20,810
Current portion of liability related to tax receivable agreement	25,485		20,855
Finance lease obligations, current portion	7,121		7,280
Operating lease liabilities, current portion	4,451		4,220
Total current liabilities	191,301		175,660
Deferred tax liability, net	3,160		3,589
Liability related to tax receivable agreement, net of current portion	241,542		250,069
Finance lease obligations, net of current portion	10,620		9,352
Operating lease liabilities, net of current portion	19,414		19,121
Other noncurrent liabilities	3,406		—
Total liabilities	469,443		457,791
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, 66,656 and 65,409 shares issued and outstanding	666		654
Class B common stock, $0.01 par value, 215,000 shares authorized, 12,928 and 14,034 shares issued and outstanding	—		—
Additional paid-in capital	488,611		465,012
Retained earnings	514,481		400,682
Accumulated other comprehensive loss	(739)		(826)
Total stockholders’ equity attributable to Cactus Inc.	1,003,019		865,522
Non-controlling interest	209,261		199,248
Total stockholders’ equity	1,212,280		1,064,770
Total liabilities and equity	$	1,681,723	$	1,522,561

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)	2024		2023		2024		2023
Revenues
Product revenue	$	221,406	$	214,295	$	649,818	$	605,698
Rental revenue	26,979		28,879		76,129		84,916
Field service and other revenue	44,796		44,696		131,746		131,480
Total revenues	293,181		287,870		857,693		822,094
Costs and expenses
Cost of product revenue	128,758		123,278		377,591		373,310
Cost of rental revenue	14,346		15,558		40,986		48,538
Cost of field service and other revenue	35,775		36,973		105,616		103,861
Selling, general and administrative expenses	37,372		29,549		98,021		97,519
Change in fair value of earn-out liability	138		(5,091)		16,318		13,053
Total costs and expenses	216,389		200,267		638,532		636,281
Operating income	76,792		87,603		219,161		185,813

Interest income (expense), net	2,062		(1,372)		4,156		(6,298)
Other income, net	—		266		—		3,804
Income before income taxes	78,854		86,497		223,317		183,319
Income tax expense	16,417		18,478		48,006		30,553
Net income	$	62,437	$	68,019	$	175,311	$	152,766
Less: net income attributable to non-controlling interest	12,510		15,439		36,591		32,542
Net income attributable to Cactus Inc.	$	49,927	$	52,580	$	138,720	$	120,224

Earnings per Class A share - basic	$	0.75	$	0.81	$	2.10	$	1.87
Earnings per Class A share - diluted	$	0.74	$	0.80	$	2.09	$	1.82

Weighted average Class A shares outstanding - basic	66,563		64,879		66,030		64,399
Weighted average Class A shares outstanding - diluted	80,190		65,486		79,777		79,632

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)	2024		2023		2024		2023
Net income	$	62,437	$	68,019	$	175,311	$	152,766
Foreign currency translation adjustments	769		(670)		140		(812)
Comprehensive income	$	63,206	$	67,349	$	175,451	$	151,954
Less: comprehensive income attributable to non-controlling interest	12,678		15,319		36,644		32,393
Comprehensive income attributable to Cactus Inc.	$	50,528	$	52,030	$	138,807	$	119,561

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

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, 2024	66,480	$	665	13,082	$	—	$	481,960	$	473,391	$	(1,340)	$	200,120	$	1,154,796

Member distributions	—	—		—	—		—		—		—		(1,827)		(1,827)
Effect of CC Unit redemptions	154	1		(154)	—		2,448		—		—		(2,449)		—
Tax impact of equity transactions	—	—		—	—		70		—		—		—		70
Equity award vestings	22	—		—	—		(640)		—		—		(192)		(832)
Other comprehensive income	—	—		—	—		—		—		601		168		769

Stock-based compensation	—	—		—	—		4,773		—		—		931		5,704
Cash dividends declared ($0.13 per share)	—	—		—	—		—		(8,837)		—		—		(8,837)
Net income	—	—		—	—		—		49,927		—		12,510		62,437
Balance at September 30, 2024	66,656	$	666	12,928	$	—	$	488,611	$	514,481	$	(739)	$	209,261	$	1,212,280

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

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

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, 2023	65,409	$	654	14,034	$	—	$	465,012	$	400,682	$	(826)	$	199,248	$	1,064,770

Member distributions	—	—		—	—		—		—		—		(10,444)		(10,444)
Effect of CC Unit redemptions	1,106	11		(1,106)	—		16,854		—		—		(16,865)		—
Tax impact of equity transactions	—	—		—	—		603		—		—		—		603
Equity award vestings	228	2		—	—		(4,284)		—		—		(1,667)		(5,949)
Other comprehensive income	—	—		—	—		—

SEC Form 10-Q filed by Cactus Inc.