whd-20250331

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 March 31, 2025


☐			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 April 30, 2025, the registrant had 68,461,010 shares of Class A common stock, $0.01 par value per share, and 11,364,432 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	16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	22
Item 4.	Controls and Procedures	22

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	23
Item 1A.	Risk Factors	23
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24
Item 5.	Other Information	24
Item 6.	Exhibits	25
	Signatures	26

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, 2024 (our “2024 Annual Report”), “Part II, Item 1A. Risk Factors” is in 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 2024 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)	March 31, 2025		December 31, 2024
Assets
Current assets
Cash and cash equivalents	$	347,661	$	342,843
Accounts receivable, net of allowance of $3,787 and $3,779, respectively	219,694		191,627
Inventories	230,264		226,796
Prepaid expenses and other current assets	11,387		13,422
Total current assets	809,006		774,688
Property and equipment, net	347,634		346,008
Operating lease right-of-use assets, net	23,248		24,094
Intangible assets, net	159,994		163,991
Goodwill	203,028		203,028
Deferred tax asset, net	211,938		219,003
Investment in unconsolidated affiliates	6,000		—
Other noncurrent assets	8,219		8,516
Total assets	$	1,769,067	$	1,739,328
Liabilities and Equity
Current liabilities
Accounts payable	$	64,419	$	72,001
Accrued expenses and other current liabilities	69,933		75,416

Current portion of liability related to tax receivable agreement	20,297		20,297
Finance lease obligations, current portion	7,273		7,024
Operating lease liabilities, current portion	5,052		4,086
Total current liabilities	166,974		178,824
Deferred tax liability, net	3,038		2,868
Liability related to tax receivable agreement, net of current portion	258,376		258,376
Finance lease obligations, net of current portion	11,809		10,528
Operating lease liabilities, net of current portion	19,025		20,078
Other noncurrent liabilities	4,475		4,475
Total liabilities	463,697		475,149
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, 68,390 and 68,152 shares issued and outstanding	683		681
Class B common stock, $0.01 par value, 215,000 shares authorized, 11,433 and 11,433 shares issued and outstanding	—		—
Additional paid-in capital	522,386		520,794
Retained earnings	587,321		552,133
Accumulated other comprehensive loss	(2,355)		(2,491)
Total stockholders’ equity attributable to Cactus Inc.	1,108,035		1,071,117
Non-controlling interest	197,335		193,062
Total stockholders’ equity	1,305,370		1,264,179
Total liabilities and equity	$	1,769,067	$	1,739,328

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 March 31,
(in thousands, except per share data)		2025		2024
Revenues
Product revenue		$	208,961	$	207,511
Rental revenue		27,122		23,943
Field service and other revenue		44,236		42,669
Total revenues		280,319		274,123
Costs and expenses
Cost of product revenue		121,456		120,666
Cost of rental revenue		13,735		12,946
Cost of field service and other revenue		37,390		35,235
Selling, general and administrative expenses		39,126		29,422
Change in fair value of earn-out liability		—		13,304
Total costs and expenses		211,707		211,573
Operating income		68,612		62,550

Interest income, net		2,325		689

Income before income taxes		70,937		63,239
Income tax expense		16,832		13,424
Net income		$	54,105	$	49,815
Less: net income attributable to non-controlling interest		9,882		10,850
Net income attributable to Cactus Inc.		$	44,223	$	38,965

Earnings per Class A share - basic		$	0.65	$	0.60
Earnings per Class A share - diluted		$	0.64	$	0.59

Weighted average Class A shares outstanding - basic		68,194		65,378
Weighted average Class A shares outstanding - diluted		68,664		79,556

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

Table of Contents

CACTUS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)


	Three Months Ended March 31,
(in thousands)		2025		2024
Net income		$	54,105	$	49,815
Foreign currency translation adjustments		165		(803)
Comprehensive income		$	54,270	$	49,012
Less: comprehensive income attributable to non-controlling interest		9,911		10,677
Comprehensive income attributable to Cactus Inc.		$	44,359	$	38,335

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, 2024	68,151	$	681	11,433	$	—	$	520,794	$	552,133	$	(2,491)	$	193,062	$	1,264,179

Member distributions	—	—		—	—		—		—		—		(5,089)		(5,089)

Tax impact of equity transactions	—	—		—	—		401		—		—		—		401
Equity award vestings	239	2		—	—		(4,070)		—		—		(1,430)		(5,498)
Other comprehensive income	—	—		—	—		—		—		136		29		165
Share repurchases	—	—		—	—		—		—		—		—		—
Stock-based compensation	—	—		—	—		5,261		—		—		881		6,142
Cash dividends declared ($0.13 per share)	—	—		—	—		—		(9,035)		—		—		(9,035)
Net income	—	—		—	—		—		44,223		—		9,882		54,105
Balance at March 31, 2025	68,390	$	683	11,433	$	—	$	522,386	$	587,321	$	(2,355)	$	197,335	$	1,305,370

Balance at December 31, 2023	65,409	$	654	14,034	$	—	$	465,012	$	400,682	$	(826)	$	199,248	$	1,064,770

Member distributions	—	—		—	—		—		—		—		(1,684)		(1,684)

Tax impact of equity transactions	—	—		—	—		234		—		—		—		234
Equity award vestings	196	2		—	—		(3,466)		—		—		(1,432)		(4,896)
Other comprehensive loss	—	—		—	—		—		—		(630)		(173)		(803)
Share repurchases	(87)	(1)		—	—		(2,996)		—		—		(375)		(3,372)
Stock-based compensation	—	—		—	—		3,680		—		—		789		4,469
Cash dividends declared ($0.12 per share)	—	—		—	—		—		(7,944)		—		—		(7,944)
Net income	—	—		—	—		—		38,965		—		10,850		49,815
Balance at March 31, 2024	65,518	$	655	14,034	$	—	$	462,464	$	431,703	$	(1,456)	$	207,223	$	1,100,589

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

CACTUS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)


	Three Months Ended March 31,
(in thousands)	2025		2024
Cash flows from operating activities
Net income	$	54,105	$	49,815
Reconciliation of net income to net cash provided by operating activities:
Depreciation and amortization	15,678		15,046
Deferred financing cost amortization	280		280
Stock-based compensation	6,064		4,432
Provision for expected credit losses	133		162
Inventory obsolescence	(296)		1,062
Gain on disposal of assets	(79)		(208)
Deferred income taxes	7,623		4,403
Change in fair value of earn-out liability	—		13,304

Changes in operating assets and liabilities:
Accounts receivable	(28,087)		(3,011)
Inventories	(3,112)		234
Prepaid expenses and other assets	2,080		128
Accounts payable	(7,923)		(8,132)
Accrued expenses and other liabilities	(4,921)		8,748


Net cash provided by operating activities	41,545		86,263
Cash flows from investing activities
Investment in unconsolidated affiliate	(6,000)		—
Capital expenditures and other	(10,230)		(7,902)
Proceeds from sales of assets	779		1,094
Net cash used in investing activities	(15,451)		(6,808)
Cash flows from financing activities





Payments on finance leases	(1,988)		(2,031)
Dividends paid to Class A common stock shareholders	(9,216)		(8,144)
Distributions to members	(5,089)		(1,684)
Repurchases of shares	(5,498)		(8,268)
Net cash used in financing activities	(21,791)		(20,127)
Effect of exchange rate changes on cash and cash equivalents	515		1,137
Net increase in cash and cash equivalents	4,818		60,465
Cash and cash equivalents, beginning of period	342,843		133,792
Cash and cash equivalents, end of period	$	347,661	$	194,257

Supplemental disclosure of cash flow information
Net cash paid for income taxes	$	23,204	$	1,611
Cash paid for interest	$	627	$	535
Non-cash investing and financing activities:
Right-of-use assets obtained in exchange for new lease obligations	$	4,128	$	4,515
Property and equipment in accounts payable	$	914	$	2,637

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

CACTUS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(in thousands, except per share data, or as otherwise indicated)

1.Preparation of Interim Financial Statements and Other Items

Basis of Presentation

The financial statements presented in this report represent the consolidation of Cactus, Inc. (“Cactus Inc.”) and its subsidiaries (the “Company”), including Cactus Companies, LLC (“Cactus Companies”). Cactus Inc. is a holding company whose only material asset is an equity interest consisting of units representing limited liability company interests in Cactus Companies (“CC Units”). Cactus Inc. is the sole managing member of Cactus Companies and operates and controls all of the business and affairs of Cactus Companies and conducts its business through Cactus Companies and its subsidiaries. As a result, Cactus Inc. consolidates the financial results of Cactus Companies and its subsidiaries and reports a non-controlling interest related to the portion of CC Units not owned by Cactus Inc., which reduces net income attributable to holders of Cactus Inc.’s Class A common stock, par value $0.01 per share (“Class A common stock”). Except as otherwise indicated or required by the context, all references to “Cactus,” “we,” “us” and “our” refer to Cactus Inc. and its consolidated subsidiaries.

On February 28, 2023, Cactus Inc. through one of its subsidiaries, completed the acquisition of the FlexSteel business through a merger (the “Merger”) with HighRidge Resources, Inc. and its subsidiaries (“HighRidge”). On February 27, 2023, in order to facilitate the Merger with HighRidge, an internal reorganization was completed in which Cactus Companies acquired all of the outstanding units representing ownership interests in Cactus Wellhead, LLC (“Cactus LLC”), the operating subsidiary of Cactus Inc. (the “CC Reorganization”). The purpose of the Merger was to effect the acquisition of the operations of FlexSteel Holdings, Inc. and its subsidiaries. FlexSteel Holdings, Inc. was a wholly-owned subsidiary of HighRidge prior to the Merger and was converted into a limited liability company, contributed from HighRidge to Cactus Companies as part of the CC Reorganization and is now named FlexSteel Holdings, LLC (“FlexSteel”). The results of operations of FlexSteel have been reflected in our accompanying condensed consolidated financial statements from the closing date of the acquisition.

The Company currently operates in two business segments: Pressure Control and Spoolable Technologies.

The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. Accordingly, these consolidated financial statements do not include all information or notes required by generally accepted accounting principles for annual financial statements and should be read together with our Annual Report on Form 10-K for the year ended December 31, 2024.

The consolidated financial statements include all adjustments, which are of a normal recurring nature, unless otherwise disclosed, necessary for a fair statement of the consolidated financial statements for the interim periods. The results of operations for any interim period are not necessarily indicative of the results to be expected for the full year.

Investments in Unconsolidated Affiliates

In November 2023, the Company entered into an agreement to invest in a Vietnam forging manufacturing facility for an ownership percentage of 40%. In January 2025, the Company provided an initial capital contribution of $6.0 million. The investment in a company in which Cactus does not have a controlling financial interest, but over which it has significant influence, is accounted for using the equity method.

Use of Estimates

In preparing our consolidated financial statements in conformity with GAAP, we make numerous estimates and assumptions that affect the accounting for and recognition and disclosure of assets, liabilities, equity, revenues and expenses. We must make these estimates and assumptions because certain information that we use is dependent on future events, cannot be calculated with a high degree of precision from available data, or is not otherwise capable of being readily calculated based on accepted methodologies. In some cases, these estimates are particularly difficult to determine, and we must exercise significant judgment. Actual results could differ materially from the estimates and assumptions that we use in the preparation of our consolidated financial statements.

Recent Accounting Pronouncements

Standards Not Yet Adopted

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-09, “Income Taxes (Topic 740).” The amendments in this ASU require entities to disclose on an annual basis specific categories in the income tax rate reconciliation and provide additional disclosures for reconciling items that meet a specified quantitative threshold. Entities will also be required to disclose annually income taxes paid disaggregated by federal, state and foreign taxes and the amount of income taxes paid by individual jurisdictions that meet a five percent or greater threshold of total income taxes paid net of refunds received. The ASU also adds certain disclosures in order to be consistent with U.S. Securities and Exchange Commission rules and removes certain disclosures that no longer are considered cost beneficial or relevant. The amendments in this ASU should be applied on a prospective basis, with a retrospective option. The standard will be effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact the adoption of this new standard will have on our disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement- Reporting Comprehensive Income- Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The new standard would require public entities to disclose additional information about specific expense categories in the notes to the financial statements on an interim and annual basis. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2024-03.

2.Accounts Receivable and Allowance for Credit Losses

We extend credit to customers in the normal course of business. Our customers are predominantly oil and gas exploration and production companies located in the U.S. Our receivables are short-term in nature and typically due in 30 to 60 days. We do not accrue interest on delinquent receivables. Accounts receivable includes both amounts billed and currently due from customers, as well as unbilled amounts resulting from accrued revenue associated with products delivered and services performed for which billings have not yet been submitted to the customers. Total unbilled revenue included in accounts receivable as of March 31, 2025 and December 31, 2024 was $41.0 million and $29.8 million, respectively.

We maintain an allowance for credit losses to provide for the amount of billed receivables we believe to be at risk of loss. In our determination of the allowance for credit losses, we pool receivables with similar risk characteristics based on customer size, credit ratings, payment history, bankruptcy status and other factors known to us, and then apply an expected credit loss percentage. The expected credit loss percentage is determined using historical loss data adjusted for current conditions and forecasts of future economic conditions. Accounts deemed uncollectible are applied against the allowance for credit losses. The following is a roll-forward of our allowance for credit losses.


	Balance at Beginning of Period		Expense		Write off		Other		Balance at End of Period
Three Months Ended March 31, 2025	$	3,779	$	133	$	(114)	$	(11)	$	3,787
Three Months Ended March 31, 2024	3,642		162		(1)		—		3,803

3.Inventories

Inventories are stated at the lower of cost or net realizable value. Cost is determined using standard cost, which approximates average cost. Costs include an application of related material, direct labor, duties, tariffs, freight and overhead costs. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Reserves are made for excess and obsolete items based on a range of factors, including age, usage and technological or market changes that may impact demand for those products. Inventories consist of the following:


	March 31, 2025		December 31, 2024
Raw materials	$	31,581	$	31,031
Work-in-progress	14,532		10,979
Finished goods	184,151		184,786
	$	230,264	$	226,796

4.Property and Equipment, net

Property and equipment are stated at cost. We manufacture or construct most of our Pressure Control rental equipment assets. During the manufacture of these assets, they are reflected as construction in progress until complete. Property and equipment consists of the following:


	March 31, 2025		December 31, 2024
Land	$	16,442	$	16,442
Buildings and improvements	134,228		133,187
Machinery and equipment	146,199		139,605
Reels and skids	19,538		18,737
Vehicles	43,240		41,175
Rental equipment	225,485		222,975
Furniture and fixtures	2,007		1,905
Computers and software	11,645		4,919
Gross property and equipment	598,784		578,945
Less: Accumulated depreciation	(270,991)		(262,198)
Net property and equipment	327,793		316,747
Construction in progress	19,841		29,261
Total property and equipment, net	$	347,634	$	346,008

5.Other Intangible Assets

The following table presents the detail of acquired intangible assets:


	March 31, 2025						December 31, 2024
	Gross Cost		Accumulated Amortization		Net Cost		Gross Cost		Accumulated Amortization		Net Cost
Customer relationships	$	100,300	$	(13,931)	$	86,369	$	100,300	$	(12,259)	$	88,041
Developed technology	77,000		(16,042)		60,958		77,000		(14,117)		62,883
Tradename	16,000		(3,333)		12,667		16,000		(2,933)		13,067
Backlog	7,000		(7,000)		—		7,000		(7,000)		—
Total	$	200,300	$	(40,306)	$	159,994	$	200,300	$	(36,309)	$	163,991

All intangible assets are amortized over their estimated useful lives. The weighted average amortization period for identifiable intangible assets acquired as of March 31, 2025 is 10.5 years. Amortization expense recognized during the three months ended March 31, 2025 was $4.0 million and was recorded in selling, general and administrative expenses in the consolidated statements of income. Estimated future amortization expense is as follows:


Remainder of 2025	$	11,990
2026	15,987
2027	15,987
2028	15,987
2029	15,987
2030	15,987
Thereafter	68,069
Total	$	159,994

6.Debt

We had no bank debt outstanding as of March 31, 2025 and December 31, 2024. We had $2.4 million in letters of credit outstanding, and we were in compliance with all covenants under the Amended ABL Credit Facility (as defined below) as of March 31, 2025.

In August 2018, Cactus LLC entered into a five-year senior secured asset-based revolving credit facility with a syndicate of lenders and JPMorgan Chase Bank, N.A., as administrative agent for such lenders and as an issuing bank and swingline lender (the “ABL Credit Facility”). The ABL Credit Facility was amended in September 2020 and July 2022. On February 28, 2023, in connection with the Merger, Cactus Companies assumed the rights and obligations of Cactus LLC as Borrower under the ABL Credit Facility, and the ABL Credit Facility was amended and restated in its entirety (the “Amended ABL Credit Facility”). The Amended ABL Credit Facility provided a term loan of $125.0 million and up to $225.0 million in revolving commitments, of which $20.0 million is available for the issuance of letters of credit. Subject to certain terms and conditions set forth in the Amended ABL Credit Facility, Cactus Companies may request additional revolving commitments in an amount not to exceed $50.0 million, for a total of up to $275.0 million in revolving commitments. The term loan under the Amended ABL Credit Facility was set to mature on February 27, 2026 and any revolving loans under the Amended ABL Credit Facility mature on July 26, 2027. The maximum amount that Cactus Companies may borrow under the Amended ABL Credit Facility is subject to a borrowing base, which is based on a percentage of eligible accounts receivable and eligible inventory, subject to reserves and other adjustments.

Borrowings under the Amended ABL Credit Facility bear interest at Cactus Companies’ option at either (i) the Alternate Base Rate (as defined therein) (“ABR”), or (ii) the Adjusted Term SOFR Rate (as defined therein) (“Term Benchmark”), plus, in each case, an applicable margin. Letters of credit issued under the Amended ABL Credit Facility accrue fees at a rate equal to the applicable margin for Term Benchmark borrowings. The applicable margin is 2.50% per annum for term loan ABR borrowings and 3.50% per annum for term loan Term Benchmark borrowings. The applicable margin for revolving loan borrowings ranges from 0.0% to 0.5% per annum for revolving loan ABR borrowings and 1.25% to 1.75% per annum for revolving loan Term Benchmark borrowings and, in each case, is based on the average quarterly availability of the revolving loan commitment under the Amended ABL Credit Facility for the immediately preceding fiscal quarter. The unused portion of revolving commitment under the Amended ABL Credit Facility is subject to a commitment fee of 0.25% per annum.

The Amended ABL Credit Facility contains various covenants and restrictive provisions that limit Cactus Companies’ and each of its subsidiaries’ ability to, among other things, incur additional indebtedness and create liens, make investments or loans, merge or consolidate with other companies, sell assets, make certain restricted payments and distributions, and engage in transactions with affiliates. The obligations under the Amended ABL Credit Facility are guaranteed by certain subsidiaries of Cactus Companies and secured by a security interest in accounts receivable, inventory, equipment and certain other real and personal property assets of Cactus Companies and the guarantors. The Amended ABL Credit Facility requires Cactus Companies to maintain a minimum fixed charge coverage ratio of 1.00 based on the ratio of EBITDA (as defined therein) minus Unfinanced Capital Expenditures (as defined therein) to Fixed Charges (as defined therein) during certain periods, including when availability under the Amended ABL Credit Facility is under certain levels. If Cactus Companies fails to perform its obligations under the Amended ABL Credit Facility, (i) the revolving commitments under the Amended ABL Credit Facility could be terminated, (ii) any outstanding borrowings under the Amended ABL Credit Facility may be declared immediately due and payable, and (iii) the lenders may commence foreclosure or other actions against the collateral.

The Amended ABL Credit Facility was amended in December 2023 to incorporate certain changes related to revised and new definitions associated with the satisfaction of payment conditions for restricted payments, investments, permitted acquisitions, periodic reporting and asset dispositions. The amendment did not change the ABR, applicable margin rates, commitment fees, the maturity date, borrowing availability or covenants under the Amended ABL Credit Facility other than timing of certain reporting requirements.

7.Revenue

The majority of our revenues are derived from short-term contracts for fixed consideration, or in the case of rentals, for a fixed charge per day while the equipment is in use by the customer, plus repair costs. Product sales generally do not include right of return or other significant post-delivery obligations. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Revenues are recognized when we satisfy a performance obligation by transferring control of the promised goods or providing services to our customers at a point in time, in an amount specified in the contract with our customer which reflects the consideration to which we expect to be entitled in exchange for those goods or services. The majority of our contracts with customers contain a single performance obligation to

provide agreed upon products or services. For contracts with multiple performance obligations, we allocate revenue to each performance obligation based on its relative standalone selling price. We do not assess whether promised goods or services are performance obligations if they are immaterial in the context of the contract with the customer. We typically do not incur any material costs of obtaining contracts.

We do not adjust the amount of consideration per the contract for the effects of a significant financing component when we expect, at contract inception, that the period between the transfer of a promised good or service to a customer and when the customer pays for that good or service will be one year or less, which is in substantially all cases. Payment terms and conditions vary, although terms generally include a requirement of payment within 30 to 60 days of invoicing. Revenues are recognized net of any taxes collected from customers, which are subsequently remitted to governmental authorities. We treat shipping and handling associated with outbound freight as a fulfillment cost instead of as a separate performance obligation. We recognize the cost for the associated shipping and handling when incurred as an expense in cost of sales.

We disaggregate revenue into three categories: product revenues, rental revenues and field service and other revenues. We have predominately domestic operations, with a small amount of sales in Australia, Canada, the Middle East and other international markets. The following table presents our revenues disaggregated by category:


	Three Months Ended March 31,
		2025	2024
Product revenue			$	208,961	74	%	$	207,511	76	%
Rental revenue			27,122		10	%	23,943		8	%
Field service and other revenue			44,236		16	%	42,669		16	%
Total revenues			$	280,319	100	%	$	274,123	100	%

At March 31, 2025, we had a deferred revenue balance of $7.9 million compared to the December 31, 2024 balance of $8.1 million. Deferred revenue represents our obligation to transfer products to or perform services for a customer for which we have received cash or billed our customers in advance of delivering products or services. The revenue that has been deferred will be recognized upon product delivery, or as services are performed. As of March 31, 2025, we did not have any contracts with an original length of greater than a year from which revenue is expected to be recognized in the future related to performance obligations that are unsatisfied.

8.Tax Receivable Agreement (“TRA”)

In connection with our initial public offering (“IPO”) in February 2018, we entered into the TRA which generally provides for payment by Cactus Inc. to certain direct and indirect owners of Cactus LLC (after the CC Reorganization, Cactus Companies) of 85% of the net cash savings, if any, in U.S. federal, state and local income tax and franchise tax that Cactus Inc. actually realizes, or is deemed to realize in certain circumstances. Cactus Inc. retains the benefit of the remaining 15% of these net cash savings.

The TRA liability is calculated by determining the tax basis subject to the TRA (“tax basis”) and applying a blended tax rate to the basis differences and calculating the resulting iterative impact. The blended tax rate consists of the U.S. federal income tax rate and an assumed combined state and local income tax rate driven by the apportionment factors applicable to each state. Subsequent changes to the measurement of the TRA liability are recognized in the statements of income as a component of other expense, net. As of March 31, 2025, the total liability from the TRA was $278.7 million with $20.3 million reflected in current liabilities based on the expected timing of our next payments. The payments under the TRA will not be conditional on a holder of rights under the TRA having a continued ownership interest in either Cactus Companies or Cactus Inc.

The term of the TRA commenced upon completion of our IPO and will continue until all tax benefits that are subject to the TRA have been utilized or expired, unless we exercise our right to terminate the TRA. If we elect to terminate the TRA early (or it is terminated early due to certain mergers, asset sales, other forms of business combinations or other changes of control), our obligations under the TRA would accelerate and we would be required to make an immediate payment equal to the present value of the anticipated future payments to be made by us under the TRA, and such payment is expected to be substantial. The calculation of anticipated future payments is based upon certain assumptions and deemed events set forth in the TRA, including the assumptions that (i) we have sufficient taxable income to fully utilize the tax benefits covered by the TRA and (ii) any CC Units (other than those held by Cactus Inc.) outstanding on the termination date are deemed to be redeemed on the termination date. Any early termination payment may be made significantly in advance of the actual realization, if any, of the future tax benefits to which the termination payment relates.

We may elect to defer payments due under the TRA if we do not have available cash to satisfy our payment obligations under the TRA. Any such deferred payments under the TRA generally will accrue interest from the due date for such payment until the payment date.

In March of 2024, the TRA was amended to replace all references to one year LIBOR with references to the 12-month term SOFR published by CME Group Benchmark Administration Limited, plus 71.513 basis points. Additionally, all references to Cactus LLC were replaced with references to Cactus Companies in relation to the CC Reorganization.

9.Equity

As of March 31, 2025, Cactus Inc. owned 85.7% of Cactus Companies as compared to 85.6% of Cactus Companies as of December 31, 2024. As of March 31, 2025, Cactus Inc. had outstanding 68.4 million shares of Class A common stock (representing 85.7% of the total voting power) and 11.4 million shares of Class B common stock (representing 14.3% of the total voting power).

Redemptions of CC Units

As part of the CC Reorganization in connection with the acquisition of FlexSteel, Cactus Companies acquired all of the outstanding units representing limited liability company interests of Cactus LLC (“CW Units”) in exchange for an equal number of CC Units issued to each of the previous owners of CW Units other than Cactus Inc. In connection with the CC Reorganization, Cactus Inc. and the owners of CC Units entered into the Amended and Restated Limited Liability Company Operating Agreement of Cactus Companies (the “Cactus Companies LLC Agreement”). Pursuant to the Cactus Companies LLC Agreement, holders of CC Units are entitled to redeem their CC Units, which results in additional Class A common stock outstanding. Since our IPO in February 2018, an aggregate of 49.1 million CC Units (including CW Units prior to the CC Reorganization) and a corresponding number of shares of Class B common stock have been redeemed in exchange for shares of Class A common stock.

There were no redemptions of CC Units during the three months ended March 31, 2025 and 2024.

Dividends

Aggregate cash dividends of $0.13 and $0.12 per share of Class A common stock were declared during the three months ended March 31, 2025 and 2024 totaling $9.0 million and $8.0 million, respectively. Cash dividends paid during the three months ended March 31, 2025 and 2024 totaled $9.2 million and $8.1 million, respectively. Dividends accrue on unvested equity-based awards on the date of record and are paid upon vesting. Dividends are not paid to our Class B common stockholders; however, a corresponding distribution up to the same amount per share as our Class A common stockholders is paid to the owners of CC Units other than Cactus Inc. for any dividends declared on our Class A common stock. See further discussion of the distributions below under “Member Distributions.”

Share Repurchase Program

On June 6, 2023, our board of directors authorized the Company to repurchase shares of its Class A common stock for an aggregate purchase price of up to $150 million. Under our share repurchase program, shares may be repurchased from time to time in open market transactions or block trades, in privately negotiated transactions or any other method permitted under U.S. securities laws, rules and regulations. The repurchase program does not obligate the Company to purchase any particular amount of shares, and the repurchase program may be suspended or discontinued at any time at the Company’s discretion. During the three months ended March 31, 2025, the Company did not repurchase shares of Class A common stock under the share repurchase program. As of March 31, 2025, $146.3 million remained authorized for future repurchases of Class A common stock under the program.

Member Distributions

Distributions made by Cactus Companies are generally required to be made pro rata among all its members. For the three months ended March 31, 2025, Cactus Companies distributed $30.4 million to Cactus Inc. to fund its dividend and estimated tax payments and made pro rata distributions to the other members totaling $5.1 million over the same period. During the three months ended March 31, 2024, Cactus Companies distributed $7.8 million to Cactus Inc. to fund its dividend and estimated tax payments and made pro rata distributions to the other members totaling $1.7 million.

Limitation of Members’ Liability

Under the terms of the Cactus Companies LLC Agreement, the members of Cactus Companies are not obligated for debt, liabilities, contracts or other obligations of Cactus Companies. Profits and losses are allocated to members as defined in the Cactus Companies LLC Agreement.

10.Commitments and Contingencies

Due to the nature of our business, we are, from time to time, involved in routine litigation or subject to disputes or claims related to our business activities, including workers’ compensation claims and employment related disputes. A range of total possible losses for all litigation matters cannot be reasonably estimated. Based on our consideration of all relevant facts and circumstances, we do not expect the ultimate outcome of currently pending lawsuits or claims against us, other than as discussed below, will have a material adverse effect on our financial position, results of operations or cash flows, however, there can be no assurance as to the ultimate outcome of these matters. With respect to the litigation described below, if there was an adverse outcome, there could be a material impact on our business, financial condition and results of operations expected for the year. Litigation is subject to inherent uncertainties and management's view may change in the future. Therefore, there can be no assurance as to the ultimate outcome of any dispute or claim.

On August 20, 2021, Cactus filed a complaint against Cameron International Corporation (“Cameron”) in the U.S. District Court for the Southern District of Texas, Civil Action No.: 4:21-cv-02720-ASH, seeking a declaratory judgment that Cactus frac operations do not infringe certain Cameron patents and that such patents are invalid. In response to that action, Cameron has asserted infringement of certain of those patents by Cactus’ SafeLink® frac flow system and is seeking past royalties and other damages related to the alleged infringement. The parties have been unable to reach an amicable settlement, and the matter is currently set for a jury trial on June 9, 2025. At this time, we are not able to predict the outcome of these claims.

11.Fair Value Measurements

Authoritative guidance on fair value measurements provides a framework for measuring fair value and establishes a fair value hierarchy that prioritizes the inputs used to measure fair value, giving the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 inputs), observable inputs other than quoted prices in active markets (Level 2 inputs) and the lowest priority to unobservable inputs (Level 3 inputs).

The carrying value of cash and cash equivalents, receivables, accounts payable and accrued expenses approximates fair value based on the short-term nature of these accounts.

12.Segment Reporting

We operate in two business segments that offer different products and services and correspond to the manner in which the Company's Chief Executive Officer (the chief operating decision maker or "CODM") reviews and evaluates operating performance to make decisions about resources to be allocated to each segment.

Our reporting segments are:

•Pressure Control – engaged in the design, manufacture, sale, installation, service and associated rental of wellhead and pressure control equipment utilized during the drilling, completion and production phases of oil and gas wells.

•Spoolable Technologies – engaged in the design, manufacture, sale, installation, service and associated rental of onshore spoolable pipe technologies utilized for production, gathering and takeaway transportation of oil, gas or other liquids.

Financial information by business segment for the three months ended March 31, 2025 and 2024 is summarized below.


	Three Months Ended March 31,
	2025
	Pressure Control		Spoolable Technologies		Total

Revenues from external customers	$	187,741	$	92,578	$	280,319
Intersegment revenue	2,536		—		2,536
Total revenues	190,277		92,578		282,855
Reconciliation of revenue
Elimination of intersegment revenue					(2,536)
Total consolidated revenues					280,319

Less:(1)
Cost of revenue from external customers	$	116,246	$	56,335	172,581
Intersegment cost of revenue	2,226		—		2,226
Total cost of revenues	118,472		56,335		174,807
Reconciliation of cost of revenue
Elimination of intersegment cost of revenue					(2,226)
Total consolidated cost of revenue					172,581

Selling, general, administrative expenses and other (2)	17,472		12,367
Segment profit	$	54,333	$	23,876	$	78,209

Reconciliation of segment profit
Elimination of intersegment profit					(310)
Total consolidated segment profit					$	77,899
Corporate expenses (3)					(9,287)
Total operating income					$	68,612
Interest income, net					2,325

Income before income taxes					$	70,937

(1) The significant expense categories and amounts align with the segment-level information that is regularly provided to the chief operating decision maker.

(2) For each reportable segment, the 'Selling, general, administrative expenses and other' line items category includes: salaries and wages, stock based compensation amortization expense, depreciation expense, professional fees, rent expense, and other miscellaneous items.

(3) Comprised primarily of expenses not allocated to our operating segments.


	Three Months Ended March 31,
	2024
	Pressure Control		Spoolable Technologies		Total

Revenues from external customers	$	175,028	$	99,095	$	274,123
Intersegment revenue	—		—		—
Total revenues	175,028		99,095		274,123
Reconciliation of revenue
Elimination of intersegment revenue					—
Total consolidated revenues					274,123

Less:(1)
Cost of revenue from external customers	$	111,807	$	57,040	$	168,847
Intersegment cost of revenue	—		—		—
Total cost of revenues	111,807		57,040		168,847
Reconciliation of cost of revenue
Elimination of intersegment cost of revenue					—
Total consolidated cost of revenue					168,847

Selling, general, administrative expenses and other (2)	11,546		25,662
Segment profit	$	51,675	$	16,393	$	68,068

Reconciliation of segment profit
Elimination of intersegment profit					—
Total consolidated segment profit					$	68,068
Corporate expenses (3)					(5,518)
Total operating income					$	62,550
Interest income, net					689

Income before income taxes					$	63,239

(1) The significant expense categories and amounts align with the segment-level information that is regularly provided to the chief operating decision maker.

(3) Comprised primarily of expenses not allocated to our operating segments.

Assets are not reported to the CODM on a segment basis as it is not a meaningful measure used to run the business.

13.Earnings per Share

Basic earnings per share of Class A common stock is calculated by dividing the net income attributable to Cactus Inc. during the period by the weighted average number of shares of Class A common stock outstanding during the same period. Diluted earnings per share of Class A common stock is calculated by dividing the net income attributable to Cactus Inc. during that period by the weighted average number of common shares outstanding, assuming all potentially dilutive shares were issued.

We use the if-converted method to determine the potential dilutive effect of outstanding CC Units and corresponding shares of outstanding Class B common stock. We use the treasury stock method to determine the potential dilutive effect of unvested stock-based compensation awards assuming that the proceeds will be used to purchase shares of Class A common stock. For our unvested performance stock units, we first apply the criteria for contingently issuable shares before determining the potential dilutive effect using the treasury stock method.

The following table summarizes the basic and diluted earnings per share calculations:


	Three Months Ended March 31,
		2025		2024
Numerator:
Net income attributable to Cactus Inc.—basic		$	44,223	$	38,965
Net income attributable to non-controlling interest (1)		—		8,241
Net income attributable to Cactus Inc.—diluted (1)		$	44,223	$	47,206
Denominator:
Weighted average Class A shares outstanding—basic		68,194		65,378
Effect of dilutive shares (2)		470		14,178
Weighted average Class A shares outstanding—diluted (2)		68,664		79,556

Earnings per Class A share—basic		$	0.65	$	0.60
Earnings per Class A share—diluted (1)(2)		$	0.64	$	0.59

(1)The numerator is adjusted in the calculation of diluted earnings per share under the if-converted method to include net income attributable to the non-controlling interest calculated as its pre-tax income adjusted for a corporate effective tax rate of 25% for the three months ended March 31, 2025 and 26% for the three months ended March 31, 2024.

(2)Diluted earnings per share for the three months ended March 31, 2025 excludes 11.4 million weighted average shares of Class B common stock as the effect would be anti-dilutive.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Except as otherwise indicated or required by the context, all references in this Quarterly Report to the “Company,” “Cactus,” “we,” “us” and “our” refer to Cactus, Inc. (“Cactus Inc.”) and its consolidated subsidiaries, unless we state otherwise or the context otherwise requires. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and related notes. The following discussion contains “forward-looking statements” that reflect our plans, estimates, beliefs and expected performance. Our actual results may differ materially from those anticipated as discussed in these forward-looking statements as a result of a variety of risks and uncertainties, which are difficult to predict, including those described above in “Cautionary Note Regarding Forward-Looking Statements,” and in the risk factors included in “Part I, Item 1A. Risk Factors” in our 2024 Annual Report and "Part II, Item 1A. Risk Factors" in this Quarterly Report. In light of these risks, uncertainties and assumptions, the forward-looking events discussed may not occur. We assume no obligation to update any of these forward-looking statements except as otherwise required by law.

Executive Summary

Cactus is an equipment solutions provider primarily for onshore oil and gas markets. Founded in 2011 by a management group that previously operated two of the largest wellhead providers at the time, Cactus has rapidly grown to be a leading provider of wellhead solutions to the U.S. onshore market. On February 28, 2023, Cactus acquired FlexSteel, which similarly grew from its founding in 2003 to its current status as a leading provider of spoolable pipe technologies, primarily to the U.S. onshore market. We believe this acquisition enhances our position as a premier manufacturer and provider of highly engineered equipment to the exploration and production ("E&P") industry and should provide meaningful growth. We further believe FlexSteel’s products are highly complementary to Cactus’ equipment as it expands our exposure to our customers’ operations from production trees to transportation of oil, gas and other liquids, as well as to additional customers operating in the midstream area.

Demand for our products and services depends primarily upon oil and gas industry activity levels, including the number of active drilling rigs, the number of wells being drilled, the number of wells being completed, and the volume of newly producing wells, among other factors.

Revenues

Our revenues are derived from three sources: products, rentals, and field service and other. Product revenues are derived from the sale of wellhead systems, production trees and spoolable pipe and fittings. Rental revenues are derived from the rental of equipment used during the completion process, the repair of such equipment, and the rental of equipment or tools used to install wellhead equipment or spoolable pipe. Field service and other revenues are earned when we provide installation and other field services for both product sales and equipment rental.

During the three months ended March 31, 2025, we derived 74% of total revenues from the sale of our products, 10% of total revenues from rental and 16% of total revenues from field service and other. During the three months ended March 31, 2024, we derived 76% of total revenues from the sale of our products, 8% of total revenues from rental and 16% of total revenues from field service and other. We have predominantly domestic operations, with more limited operations in Australia, Canada, and the Middle East, as well as sales in other international markets.

We operate in two business segments consisting of the Pressure Control segment and the Spoolable Technologies segment.

Pressure Control

The Pressure Control segment designs, manufactures, sells and rents a range of wellhead and pressure control equipment under the Cactus Wellhead brand. Products are sold and rented principally for onshore unconventional oil and gas wells and are utilized during the drilling, completion and production phases of our customers’ wells. In addition, we provide field services for all of our products and rental items to assist with the installation, maintenance and handling of the equipment.

We operate through service centers in the United States, which are strategically located in the key oil and gas producing regions, and in Australia. These service centers support our field services and provide equipment assembly and repair services. We also provide rental and service operations in the Kingdom of Saudi Arabia. Pressure Control manufacturing and production facilities are located in Bossier City, Louisiana, Suzhou, China, and Vietnam.

Demand for our product sales in the Pressure Control segment is driven primarily by the number of new wells drilled, as each new well requires a wellhead and, after the completion phase, a production tree. Demand for our rental items is driven primarily by the number of well completions as we rent frac trees to oil and gas operators to assist in hydraulic fracturing. Rental demand is also driven to a lesser extent by drilling activity as we rent tools used in the installation of wellheads. Field service and other revenues are closely correlated with revenues from product sales and rentals, as items sold or rented almost always have an associated service component.

Spoolable Technologies

The Spoolable Technologies segment designs, manufactures, and sells spoolable pipe and associated end fittings under the FlexSteel brand. Our customers use these products primarily as production, gathering, and takeaway pipelines to transport oil, gas or other liquids. In addition, we also provide field services and rental items to assist our customers with the installation of these products. We support our field service operations through service centers and pipe yards located in oil and gas regions throughout the United States and Western Canada. Our manufacturing facility is located in Baytown, Texas.

Demand for our product sales in the Spoolable Technologies segment is driven primarily by the number of wells being placed into production after the completions phase, as customers use our spoolable pipe and associated fittings to bring wells more rapidly onto production. Rental and field service and other revenues are closely correlated with revenues from product sales, as items sold usually have an associated rental and service component.

Recent Developments and Trends

Oil and Natural Gas Prices

The following table summarizes average oil and natural gas prices in North America over the indicated periods, as well as industry activity levels as reflected by the average number of active onshore drilling rigs during the same periods.


	Three Months Ended
	March 31, 2025		December 31, 2024		March 31, 2024
WTI Oil Price ($/bbl) (1)	$	71.78	$	70.73	$	77.50
Natural Gas Price ($/MMBtu) (2)	$	4.14	$	2.44	$	2.15
U.S. Land Drilling Rigs (3)	572		569		602

(1) EIA Cushing, OK West Texas Intermediate ("WTI") spot price.

(2) EIA Henry Hub Natural Gas spot price per million British Thermal Unit (“MMBtu”).

(3) Baker Hughes.

In the first quarter of 2025, average U.S. land drilling and completion activity levels and oil prices were relatively flat compared to the fourth quarter of 2024. Average natural gas prices were up approximately 70% from the fourth quarter of 2024, as a cold January led to high inventory draws resulting in storage levels approaching the lowest levels observed in the previous five years. U.S. gas demand forecasts remained strong through the first quarter considering increasing liquid natural gas export capacity in 2025 and positive power demand trends. In early April 2025, several members of OPEC+ announced an increase to output plans beginning in April 2025, which has had a negative impact on recent commodity prices.

U.S. Trade Policies

Over the past several months, the Trump administration has implemented and announced a number of new tariffs, including new Section 232 tariffs of 25% on imports of steel and certain products made from steel from all locations, Synthetic Opioid tariffs of 20% on all imports from China, and broad “Reciprocal” tariffs with varying rates applied to U.S. trading partners across the globe. As of mid-April, most Reciprocal tariffs have been temporarily paused, except for those applied to certain countries, including China. After these tariff announcements, global equity, bond and currency markets reacted negatively and have continued to experience high levels of volatility due to the potential disruption to global trade, the increasingly uncertain global economic outlook, and the negative implications of reduced consumer demand for imported products and energy.

We anticipate incurring ele

SEC Form 10-Q filed by Cactus Inc.