whd-20240630

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 June 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 July 31, 2024, the registrant had 66,479,914 shares of Class A common stock, $0.01 par value per share, and 13,081,859 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	26
Item 6.	Exhibits	27
	Signatures	28

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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, 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.

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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)	June 30, 2024		December 31, 2023
Assets
Current assets
Cash and cash equivalents	$	246,503	$	133,792
Accounts receivable, net of allowance of $4,277 and $3,642, respectively	205,024		205,381
Inventories	206,730		205,625
Prepaid expenses and other current assets	10,764		11,380
Total current assets	669,021		556,178
Property and equipment, net	343,525		345,502
Operating lease right-of-use assets, net	23,239		23,496
Intangible assets, net	171,984		179,978
Goodwill	203,028		203,028
Deferred tax asset, net	206,409		204,852
Other noncurrent assets	9,187		9,527
Total assets	$	1,626,393	$	1,522,561
Liabilities and Equity
Current liabilities
Accounts payable	$	63,760	$	71,841
Accrued expenses and other current liabilities	61,022		50,654
Earn-out liability	36,990		20,810
Current portion of liability related to tax receivable agreement	5,578		20,855
Finance lease obligations, current portion	7,087		7,280
Operating lease liabilities, current portion	4,186		4,220
Total current liabilities	178,623		175,660
Deferred tax liability, net	2,887		3,589
Liability related to tax receivable agreement, net of current portion	259,550		250,069
Finance lease obligations, net of current portion	9,372		9,352
Operating lease liabilities, net of current portion	18,953		19,121
Other noncurrent liabilities	2,212		—
Total liabilities	471,597		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, 66,480 and 65,409 shares issued and outstanding	665		654
Class B common stock, $0.01 par value, 215,000 shares authorized, 13,082 and 14,034 shares issued and outstanding	—		—
Additional paid-in capital	481,960		465,012
Retained earnings	473,391		400,682
Accumulated other comprehensive loss	(1,340)		(826)
Total stockholders’ equity attributable to Cactus Inc.	954,676		865,522
Non-controlling interest	200,120		199,248
Total stockholders’ equity	1,154,796		1,064,770
Total liabilities and equity	$	1,626,393	$	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 June 30,				Six Months Ended June 30,
(in thousands, except per share data)	2024		2023		2024		2023
Revenues
Product revenue	$	220,901	$	231,893	$	428,412	$	391,403
Rental revenue	25,207		28,220		49,150		56,037
Field service and other revenue	44,281		45,706		86,950		86,784
Total revenues	290,389		305,819		564,512		534,224
Costs and expenses
Cost of product revenue	128,167		149,217		248,833		250,032
Cost of rental revenue	13,694		16,896		26,640		32,980
Cost of field service and other revenue	34,606		34,971		69,841		66,888
Selling, general and administrative expenses	31,227		38,069		60,649		67,970
Change in fair value of earn-out liability	2,876		18,144		16,180		18,144
Total costs and expenses	210,570		257,297		422,143		436,014
Operating income	79,819		48,522		142,369		98,210

Interest income (expense), net	1,405		(5,928)		2,094		(4,926)
Other income, net	—		—		—		3,538
Income before income taxes	81,224		42,594		144,463		96,822
Income tax expense	18,165		10,135		31,589		12,075
Net income	$	63,059	$	32,459	$	112,874	$	84,747
Less: net income attributable to non-controlling interest	13,231		7,709		24,081		17,103
Net income attributable to Cactus Inc.	$	49,828	$	24,750	$	88,793	$	67,644

Earnings per Class A share - basic	$	0.75	$	0.38	$	1.35	$	1.05
Earnings per Class A share - diluted	$	0.75	$	0.38	$	1.35	$	1.02

Weighted average Class A shares outstanding - basic	66,142		64,566		65,760		64,155
Weighted average Class A shares outstanding - diluted	66,579		65,003		79,686		79,512

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 June 30,				Six Months Ended June 30,
(in thousands)	2024		2023		2024		2023
Net income	$	63,059	$	32,459	$	112,874	$	84,747
Foreign currency translation adjustments	174		(445)		(629)		(142)
Comprehensive income	$	63,233	$	32,014	$	112,245	$	84,605
Less: comprehensive income attributable to non-controlling interest	13,289		7,596		23,966		17,073
Comprehensive income attributable to Cactus Inc.	$	49,944	$	24,418	$	88,279	$	67,532

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 March 31, 2024	65,518	$	655	14,034	$	—	$	462,464	$	431,703	$	(1,456)	$	207,223	$	1,100,589

Member distributions	—	—		—	—		—		—		—		(6,933)		(6,933)
Effect of CC Unit redemptions	952	10		(952)	—		14,406		—		—		(14,416)		—
Tax impact of equity transactions	—	—		—	—		299		—		—		—		299
Equity award vestings	10	—		—	—		(178)		—		—		(43)		(221)
Other comprehensive income	—	—		—	—		—		—		116		58		174

Stock-based compensation	—	—		—	—		4,969		—		—		1,000		5,969
Cash dividends declared ($0.12 per share)	—	—		—	—		—		(8,140)		—		—		(8,140)
Net income	—	—		—	—		—		49,828		—		13,231		63,059
Balance at June 30, 2024	66,480	$	665	13,082	$	—	$	481,960	$	473,391	$	(1,340)	$	200,120	$	1,154,796

Balance at March 31, 2023	64,448	$	645	14,978	$	—	$	439,844	$	297,528	$	(764)	$	188,583	$	925,836
Member distributions	—	—		—	—		—		—		—		(3,068)		(3,068)
Effect of CC Unit redemptions	158	2		(158)	—		2,020		—		—		(2,022)		—
Tax impact of equity transactions	—	—		—	—		428		—		—		—		428
Equity award vestings	7	—		—	—		(62)		—		—		(35)		(97)
Other comprehensive loss	—	—		—	—		—		—		(332)		(113)		(445)
Share repurchases	(4)						(137)						(22)		(159)
Stock-based compensation	—	—		—	—		4,113		—		—		936		5,049
Cash dividends declared ($0.11 per share)	—	—		—	—		—		(7,229)		—		—		(7,229)
Net income	—	—		—	—		—		24,750		—		7,709		32,459
Balance at June 30, 2023	64,609	$	647	14,820	$	—	$	446,206	$	315,049	$	(1,096)	$	191,968	$	952,774

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	—	—		—	—		—		—

SEC Form 10-Q filed by Cactus Inc.