Executive Summary

Q2 2025 printed softer than expected on tariffs and weaker frac rentals: revenue $273.6M, GAAP EPS $0.59, Adjusted EPS $0.66, Adjusted EBITDA $86.7M; margins compressed as Section 232 tariffs doubled mid-quarter and mix shifted away from rentals .
Versus S&P Global consensus, Cactus delivered a miss on revenue ($273.6M vs $278.9M*), EPS ($0.66 vs $0.72*), and EBITDA ($76.7M vs $91.3M* on EBITDA basis); Adjusted EBITDA was $86.7M .
Management lowered full-year capex to $40–$45M (from $40–$50M), raised the dividend 8% to $0.14, and guided Q3 segment revenues down with PC Adj. EBITDA margin ~28–30% and Spoolable 35–37% despite lower activity .
Strategic catalyst: announced agreement to acquire 65% of Baker Hughes’ Surface Pressure Control (SPC) JV, broadening international exposure (≈85% SPC revenues in Middle East) and diversifying beyond North America and U.S. tariff risk .

Values with asterisk (*) are from S&P Global.

What Went Well and What Went Wrong

What Went Well
- Spoolable Technologies outperformed: revenue +3.9% q/q, margins +340 bps on improved manufacturing efficiency; Adj. Segment EBITDA +13.2% q/q .
- Product sales in Pressure Control outperformed the decline in U.S. land rig count, evidencing market share strength despite lower activity .
- Balance sheet resilience: $405.2M cash, no bank debt; strong CFO of $82.8M in Q2; dividend raised 8% to $0.14 .
What Went Wrong
- Pressure Control downturn: revenue -5.5% q/q on weaker frac rentals; margins -510 bps q/q on higher tariff costs, lower operating leverage, and increased legal expenses/reserves (~~$5.1M, +~~$2M q/q) .
- Tariff shock: Section 232 doubled from 25% to 50% on steel, lifting effective incremental rates to ~70% for certain imports and forcing higher-cost sourcing; depressed exit-quarter margins .
- Litigation drag: higher legal costs tied to a Cameron IP dispute (SafeLink); trial delayed; management expects further expenses but uncertain magnitude .

Financial Results

Summary metrics (GAAP unless noted)

Metric	Q2 2024	Q1 2025	Q2 2025
Revenue ($M)	290.4	280.3	273.6
Operating Income ($M)	79.8	68.6	60.8
Net Income ($M)	63.1	54.1	49.0
Net Income Margin (%)	21.7%	19.3%	17.9%
Adjusted Net Income ($M)	65.2	58.8	53.2
Adjusted Net Income Margin (%)	22.4%	21.0%	19.5%
GAAP Diluted EPS ($)	0.75	0.64	0.59
Adjusted EPS ($)	0.81	0.73	0.66
Adjusted EBITDA ($M)	103.6	93.8	86.7
Adjusted EBITDA Margin (%)	35.7%	33.5%	31.7%

Segment breakdown

Segment	Metric	Q2 2024	Q1 2025	Q2 2025
Pressure Control	Revenue ($M)	187.2	190.3	179.8
	Adjusted Segment EBITDA ($M)	65.3	64.8	53.1
	Adjusted Segment EBITDA Margin (%)	34.9%	34.0%	29.5%
Spoolable Technologies	Revenue ($M)	103.7	92.6	96.2
	Adjusted Segment EBITDA ($M)	42.5	33.5	37.9
	Adjusted Segment EBITDA Margin (%)	40.9%	36.2%	39.4%

Key Q2 2025 KPIs

KPI	Q2 2025
Cash & Cash Equivalents ($M)	405.2
Cash from Operations ($M)	82.8
Net Capex ($M)	11.1
Dividend per Class A Share ($)	0.14
Class A Shares Outstanding (end of period)	68,574,875

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Total Net Capex	FY 2025	$40–$50M	$40–$45M	Lowered
Pressure Control Adj. EBITDA Margin	Q2 2025 (guide vs actual)	~33%–35% (June update)	29.5% actual	Missed
Pressure Control Revenue	Q3 2025	—	Down mid-to-high single-digits vs Q2 ($180M base)	New
Pressure Control Adj. EBITDA Margin (ex-SBC)	Q3 2025	—	~28%–30%	New
Spoolable Technologies Revenue	Q3 2025	—	Down high single-digits vs Q2	New
Spoolable Adj. EBITDA Margin (ex-SBC)	Q3 2025	—	~35%–37%	New
Corporate Adj. EBITDA	Q3 2025	—	≈ -$4M (ex ~$2M SBC)	New
Effective Tax Rate (GAAP)	Q3 2025	—	~22%	New
Tax Rate for Adjusted EPS	Q3 2025	—	~25%	New
D&A Expense	Q3 2025	—	~$16M total; ~$7M PC, ~$9M Spoolable	New
TRA/Distributions Payment	Late Q3 2025	—	≈$24M	New
Dividend per Share	Ongoing	$0.13 (Q1)	$0.14 (Q2)	Raised

Earnings Call Themes & Trends

Topic	Q4 2024 (Q-2)	Q1 2025 (Q-1)	Q2 2025 (Current)	Trend
Tariffs & supply chain	Preparing for softer activity; initiatives include supply chain diversification .	Tariffs a headwind; accelerating Vietnam production to mitigate .	Section 232 doubled mid-Q; effective incremental tariffs ~70% on some imports; shifting sourcing and pursuing cost recovery .	Worsened in Q2 on policy shock .
U.S. activity/rig count	Expect flat Q1 2025 activity vs Q4 .	Anticipated declines through Q2 and potentially beyond .	U.S. land rig count down; frac crews ~10–12% below Q2 average; majority of 2025 cuts likely done if prices stable .	Softening; possibly bottoming .
Segment mix: rentals vs products	PC margins resilient in Q4 .	PC revenue up on strong product sold per rig .	Rental revenue weakened; product sales outperformed rig count decline .	Mix shifted away from rentals .
International diversification	N/A	N/A	Announced 65% SPC JV; ~85% revenues in Middle East; backlog $600M+ (Dec-2024) .	Accelerating international pivot .
Legal/regulatory	N/A	N/A	Higher legal costs; Cameron SafeLink IP litigation; trial delayed; more costs likely .	Elevated expense uncertainty .
Capital allocation	Cash $342.8M; dividend $0.13 set in Jan .	Dividend $0.13; ongoing Vietnam investment .	Dividend raised to $0.14; reduced capex; strong CFO supports returns .	Dividend growth, tighter capex .

Management Commentary

“Pressure Control margins were unfavorably impacted by tariffs as we exited the second quarter, particularly given the unexpected doubling of the Section 232 tariff announced and implemented in the quarter.”
“We anticipate that the U.S. land rig count will continue to decline… We expect revenues to be down modestly in both segments…”
“We expect Pressure Control revenue to be down mid to high single digits… Adjusted EBITDA margins… 28%–30% for the third quarter… Spoolable… revenue… down high single digits… margins ~35%–37%.”
On SPC JV: “Transforms Cactus’ geographic footprint… ~85% of SPC revenues generated in the Middle East… providing for a more diverse and stable… revenue profile…” .

Q&A Highlights

Tariff impact and margin trough: June bore the brunt of tariff hikes; cost recovery paused amid oil price weakness; management expects PC margins to trough in Q2–Q3 and improve as Vietnam ramps and cost actions flow through .
Activity mix: Completions/frac weakening more than drilling; production holding better but likely to soften with frac declines; frac crew counts ~12% below Q2 average by late July .
SPC JV execution: Expect cultural and supply chain improvements vs legacy owner; focus on flatter organization and cost structure enhancements; close anticipated late 2025/early 2026 .
Legal costs: Cameron SafeLink IP case; trial delayed; further back-half costs likely, magnitude uncertain .

Estimates Context

Q2 2025 actuals vs S&P Global consensus

Metric	Actual	Consensus
Revenue ($M)	273.6	278.9*
EPS (Primary/Adjusted) ($)	0.66	0.72*
EBITDA ($M)	76.7 (EBITDA)	91.3*

Notes: Adjusted EBITDA in Q2 2025 was $86.7M . Values marked with * are from S&P Global.

Where estimates may adjust:

Lower PC profitability run-rate from tariff shock and mix shift likely reduces near-term EPS/EBITDA estimates; Q3 guide implies continued margin compression vs early-June expectations .
Capex reduction and strong FCF support higher dividend capacity; may partially offset estimate cuts via lower share count or improved capital returns math .
SPC JV closing/trajectory could lift 2026–2027 revenue/margins via international mix; timing remains late-2025/early-2026 .

Key Takeaways for Investors

Q2 was a tariff-driven margin reset; PC margins fell below early-June expectations, and management sees Q2–Q3 as the trough before recovery via Vietnam sourcing, cost actions, and cost recovery initiatives .
Spoolable execution remained strong with margin expansion despite macro softness, partially offsetting PC pressure .
Guide implies near-term revenue/margin drift lower, but cash generation remains robust; capex trimmed to $40–$45M and dividend lifted to $0.14 .
SPC JV is a structural positive: diversifies revenue internationally (Middle East-heavy), reduces U.S.-centric volatility/tariff exposure, and offers operational improvement levers post-close .
Legal spend is a watch item into 2H (Cameron IP case); management flagged ongoing but unpredictable costs .
Setup into 2026: if tariffs stabilize and Vietnam fully replaces China by next summer, PC margins should grind higher even on a soft rig count backdrop; management expects improvements on multiple fronts .
Trading lens: expect estimates to reset nearer management guide; stock likely keys off tariff developments, frac activity trajectory, and SPC JV milestones/closing .

Values marked with * in the Estimates Context section are retrieved from S&P Global.

Cactus, Inc. (WHD)·Q2 2025 Earnings Summary