• Revenue: $272 million for Q4, down 7.2% sequentially.
• Adjusted EBITDA: $93 million, down 7.6% sequentially, with margins at 34.1%.
• Pressure Control Revenue: $177 million, down 4.5% sequentially.
• Spoolable Technologies Revenue: $96 million, down 11.2% sequentially.
• Net Income: GAAP net income of $57 million for Q4.
• Adjusted Net Income: $57 million, with earnings per share at $0.71.
• Cash Balance: Ended the year with $343 million, a quarterly increase of $39 million.
• Dividend: Quarterly dividend of $0.13 per share.
• CapEx: Approximately $11 million for Q4, with full-year 2024 net CapEx at $35 million.
• Depreciation and Amortization: $15 million for Q4, including $4 million for intangible assets.

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

Release Date: February 27, 2025

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

Positive Points

• Cactus Inc (NYSE:WHD) reported solid margin performance in both segments despite a decline in fourth-quarter revenue due to seasonality.
• The company ended the year with a strong cash balance of $343 million, an increase of approximately $39 million from the previous quarter.
• Cactus Inc (NYSE:WHD) maintained a quarterly dividend of $0.13 per share, demonstrating a commitment to returning value to shareholders.
• The company is expanding its international presence with a new production facility in Vietnam, expected to diversify supply chain risks and reduce tariff impacts.
• Cactus Inc (NYSE:WHD) introduced a new product qualified for H2S service, which is expected to increase its addressable market, particularly in active international regions like the Middle East.

Negative Points

• Fourth-quarter revenues were down 7.2% sequentially, with a notable decline in the Spoolable Technologies segment due to lower customer activity.
• Operating income in the Spoolable Technologies segment decreased significantly by 22.4% sequentially, impacted by higher input costs and reduced operating leverage.
• The company faces potential cost increases due to new tariffs on goods imported from its Chinese production facility, affecting its cost profile.
• Cactus Inc (NYSE:WHD) anticipates lower operating leverage in the first quarter, which could impact EBITDA margins.
• The company is experiencing uncertainty in the US market due to changing trade policies, which could affect future activity levels and growth.

Q & A Highlights

Q: How is Cactus Inc. viewing the activity outlook in the US market over the next few quarters, and can the company outgrow underlying activity? A: Scott Bender, CEO, expressed confidence that Cactus Inc. can outgrow underlying activity by continuing to add new customers. He noted that while the US rig count was anticipated to be in the 550 to 560 range, recent trade policy uncertainties could impact this. However, he remains confident that Cactus will outperform whatever happens to US activity levels.

Q: What is the impact of the Bossier City facility versus China on margins, and how does Cactus plan to manage this? A: Scott Bender, CEO, explained that the Bossier City facility is at least 35% more expensive than the Far East supply chain. He noted that US steel prices are expected to increase alongside tariffs, impacting costs. Cactus plans to manage this by leveraging its Vietnam facility to supply US needs, while the Chinese facility will focus on international demand.

Q: How does Cactus plan to mitigate the impact of tariffs with its supply chain investments? A: Scott Bender, CEO, mentioned a $6 million supply chain investment aimed at vertical manufacturing capabilities, initially planned for 2024 but postponed to 2025. This investment will help Cactus manage tariff impacts by enhancing its production capabilities in Vietnam, which will supply the US market, while the Chinese facility will handle international demand.

Q: What are the growth opportunities for FlexSteel's new H2S product, and is it commercialized? A: Stephen Tadlock, Executive Vice President, confirmed that the H2S product is commercialized, with the first shipment expected in March or April to a US customer. The product is expected to significantly increase the addressable market, particularly in the Middle East, where oil production is sour, supporting FlexSteel's goal of achieving 40% international revenue contribution.

Q: How is the Spoolables segment's market share evolving in the US, and what are the growth prospects for 2025? A: Stephen Tadlock, Executive Vice President, noted that 2024 was a record revenue year for Spoolables, indicating market share growth despite a 13% reduction in rig count. The segment continues to expand, particularly in larger diameters and pressures. While Q1 is typically the weakest quarter, customer feedback suggests increased activity in 2025, with international orders expected to contribute significantly.

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