• Revenue: $290 million for Q2 2024.
• Adjusted EBITDA: $104 million with a margin of 35.7%.
• Cash Balance: Increased to $247 million.
• Dividend: 8% increase to $0.13 per share.
• Pressure Control Segment Revenue: $187 million, up 6.9% sequentially.
• Pressure Control Segment Operating Income: Increased by $4 million or 7.7% sequentially.
• Spoolable Technology Segment Revenue: Up 4.7% sequentially.
• Net Income: GAAP Net income of $63 million for the quarter.
• Adjusted Net Income: $65 million, $0.81 per share.
• Depreciation and Amortization Expense: $15 million for Q2.
• Effective Tax Rate: 22% for the second quarter.
• Net CapEx: Approximately $7 million during Q2.

• Warning! GuruFocus has detected 4 Warning Signs with WHD.

Release Date: October 31, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Cactus Inc (NYSE:WHD) reported a solid quarter with total Q2 revenues of $290 million and adjusted EBITDA of $104 million.
• The company increased its cash balance to $247 million, showcasing strong financial management.
• An 8% increase in the quarterly dividend to $0.13 per share was approved, reflecting confidence in future cash flows.
• The introduction of a new CFO, Jay Nutt, who brings extensive global financial leadership experience, is expected to add value.
• The company is seeing increased interest in its larger diameter Spoolable products, indicating potential for growth in new market segments.

Negative Points

• Cactus Inc (NYSE:WHD) anticipates a moderation in pressure control revenue due to lower average US land drilling activity.
• There is less visibility into production equipment shipments, which could impact future revenue streams.
• The international expansion of pressure control products is progressing slower than anticipated.
• Increased ocean freight costs are expected to offset some cost efficiencies, potentially impacting margins.
• The company faces potential challenges from further rig reductions as operators pursue consolidating transactions.

Q & A Highlights

Q: Can you expand on the international momentum in the Spoolable segment and the traction with larger diameter products? A: Stephen Tadlock, Executive Vice President, Treasurer, explained that Cactus is focusing on international growth by adding key personnel and installation equipment. The company is seeing increased quoting activity and interest in larger diameter products due to their rapid installation and corrosion resistance benefits. This growth is targeted in regions like the Middle East, Latin America, and Australia.

Q: What is your outlook for the US land rig count and market conditions for the rest of the year and into 2025? A: Scott Bender, Chairman and CEO, believes the worst of the rig count decline is behind, with stabilization expected around 550 rigs. He anticipates better natural gas support in 2025 but is cautious about the impact of industry consolidation. Bender emphasized that wellhead shipments per rig have increased, indicating improved efficiency.

Q: How is Cactus driving international business growth, and what is the target for international revenue as a percentage of total revenue? A: Scott Bender stated that Cactus is leveraging shared resources and channel partners to grow internationally, particularly in the Spoolable segment. The company aims for international revenue to constitute 40% of total revenue in the next few years, with significant growth potential in large international projects.

Q: Can you provide more details on the significant order from a large customer new to Cactus and its implications? A: Scott Bender mentioned that the order came from a customer who was previously a wellhead customer but not a production tree customer. This shift indicates a growing preference for Cactus's production equipment, which offers API monogram products and aftermarket service. The company is optimistic about growth in the production segment.

Q: How do you expect margins to behave in 2025 with new manufacturing facilities and product introductions, even in a lackluster North American market? A: Scott Bender expressed optimism about maintaining strong margins due to new low-cost manufacturing facilities and product introductions like the next-generation wellhead system and frac valve. He emphasized a responsible rollout of new products to avoid financial impacts from inventory obsolescence.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.