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CI

Cactus, Inc. (WHD)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 revenue fell to $272.1M with Adjusted EBITDA of $92.7M (34.1% margin); softness stemmed from seasonality and lower activity in Spoolable Technologies, while Pressure Control margins improved slightly despite lower volumes .
  • Cash rose to $342.8M with no bank debt; the Board maintained the $0.13 quarterly dividend, supporting shareholder returns and balance sheet flexibility .
  • Q1 2025 outlook: Pressure Control revenue flat to up vs Q4; Spoolable revenue down mid- to high-single-digits; segment adj. EBITDA margins guided to 33–35% (PC) and 35–37% (Spoolable), reflecting extended seasonality and lower operating leverage in Spoolables .
  • Strategic catalysts: supply chain diversification (Vietnam facility ramping 2Q and into 2H post-API 6A accreditation), tariff mitigation actions ($6M investment in Jan), and launch of H2S-qualified FlexSteel product, expanding international TAM—especially Middle East .
  • S&P Global consensus estimates were unavailable; comparison to Street is not presented; focus turns to execution on margins, tariff pass-through, and international expansion near term (S&P Global data unavailable via API).

What Went Well and What Went Wrong

  • What Went Well

    • Margin resilience: Adjusted EBITDA margin held ~flat q/q at 34.1% despite revenue declines, aided by Pressure Control margin uptick and lower corporate expenses .
    • Balance sheet strength and capital returns: $342.8M cash, no bank debt, and continued $0.13 dividend, providing optionality for investment and returns .
    • Product and international pipeline: New H2S-qualified pipe shipping in Mar/Apr, with Middle East as a key market; management reiterated progress on international expansion and expects stronger 2Q–3Q Spoolable activity .
    • Quote: “2024 was a record revenue year for Cactus… both segments outperformed lower average industry activity levels year-over-year” .

  • What Went Wrong

    • Spoolable softness: Q4 Spoolables revenue declined 11.2% q/q on deeper seasonality; segment operating margin fell 380 bps on higher input costs and reduced operating leverage .
    • Revenue came in “a bit more than we anticipated” below prior Spoolables guidance cadence as strength in October didn’t sustain through year-end .
    • Tariff and supply chain uncertainty: Management flagged incremental tariff cost headwinds on imported steel and derivatives and elevated inventories due to port/tariff risks .

Financial Results

Headline trend (sequential)

MetricQ2 2024Q3 2024Q4 2024
Revenue ($M)$290.389 $293.181 $272.121
Net Income ($M)$63.059 $62.437 $57.447
Diluted EPS – Class A ($)$0.75 $0.74 $0.68
Diluted EPS, as adjusted ($)$0.81 $0.79 $0.71
Adjusted EBITDA ($M)$103.637 $100.370 $92.711
Adjusted EBITDA Margin (%)35.7% 34.2% 34.1%
Net Income Margin (%)21.7% 21.3% 21.1%
S&P Global Consensus RevenueN/A (unavailable)N/A (unavailable)N/A (unavailable)
S&P Global Consensus EPSN/A (unavailable)N/A (unavailable)N/A (unavailable)
Note: S&P Global consensus estimates were not retrievable at this time; comparisons to Street are not shown (S&P Global data unavailable via API).

Year-over-year (Q4)

MetricQ4 2023Q4 2024
Revenue ($M)$274.866 $272.121
Net Income ($M)$62.074 $57.447
Diluted EPS – Class A ($)$0.74 $0.68
Diluted EPS, as adjusted ($)$0.81 $0.71
Adjusted EBITDA ($M)$100.121 $92.711
Adjusted EBITDA Margin (%)36.4% 34.1%
Net Income Margin (%)22.6% 21.1%

Segment breakdown (selected metrics)

SegmentQ2 2024 Revenue ($M)Q3 2024 Revenue ($M)Q4 2024 Revenue ($M)Q2 2024 Adj Seg EBITDA MarginQ3 2024 Adj Seg EBITDA MarginQ4 2024 Adj Seg EBITDA Margin
Pressure Control$187.192 $185.099 $176.719 34.9% 33.5% 34.8%
Spoolable Technologies$103.716 $108.155 $96.072 40.9% 39.3% 36.7%

KPIs

KPIQ2 2024Q3 2024Q4 2024
Cash from Operations ($M)$78.0 $85.3 $66.6
Net Capital Expenditures ($M)$7.2 $10.0 $11.3
Cash & Cash Equivalents ($M)$246.5 $303.4 $342.8
Quarterly Dividend/Share ($)$0.13 $0.13 $0.13 (declared Jan-2025)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Pressure Control revenueQ1 2025—Flat to up vs Q4 ($177M baseline) New
Pressure Control adj. EBITDA marginQ1 2025—33%–35% (excl. ~$3M SBC) New
Spoolable Technologies revenueQ1 2025—Down mid- to high-single-digits vs Q4 New
Spoolable adj. EBITDA marginQ1 2025—~35%–37% (excl. ~$1M SBC) New
Adjusted Corporate EBITDAQ1 2025—~$(4.5)M charge (excl. ~$2M SBC) New
D&AQ1 2025—~$15.5M (PC ~$7.0M; Spoolable ~$8.5M) New
Effective tax rate (GAAP)Q1 2025—~22% (adj. EPS tax ~26%) New
Net CapExFY 2025FY24 guide $32–$37M (Oct-2024) $45–$55M (incl. supply chain and Baytown efficiency) Higher vs FY24 guide
Supply chain mitigation1Q 2025—$6M investment made in Jan (tariff mitigation) New
DividendOngoing$0.13/share $0.13/share declared for Mar 20, 2025 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q4 2024)Trend
Tariffs & supply chainPrior updates focused on macro softness and seasonality; no explicit tariff details in Q2/Q3 press releases Explicit warning of additional tariffs on steel/derivatives; elevated inventories; Vietnam facility to diversify and reduce tariff exposure vs China Emerging headwind; mitigation underway
International expansion“International momentum continued” (Q2); sustained international activity (Q3) “Made real progress” on international Pressure Control; Spoolables aiming for 40% international revenue over time Building; core pillar for growth
Product innovationNot highlighted previouslyLaunching H2S-qualified FlexSteel product; first shipment Mar/Apr; key Middle East opportunity Positive product-cycle catalyst
Macro/rig count & consolidationsStable rig count outlook; customer consolidations possible downside (Q2) U.S. land activity soft; company expects to outperform underlying activity; watching trade policy uncertainty Cautious macro; relative outperformance
Capital intensity/manufacturingFY24 capex trimmed to $32–$37M (Q3) FY25 capex stepped up to $45–$55M incl. Vietnam ramp and Baytown efficiency; $6M supply chain spend Strategic reinvestment increasing

Management Commentary

  • Strategic posture: “Our business continued to outperform, with revenue and earnings… outpacing the industry activity levels… Our focus on… highly engineered products and services… drives this out performance” .
  • Supply chain/tariffs: “We believe… cost profile will be impacted by additional tariffs… incremental to Section 301… [Vietnam] will be impacted… but at a significantly lower rate than our Chinese production facility” .
  • Vietnam facility ramp: “First orders… expect modest shipments to begin in the second quarter before ramping up in the back half… once we obtain API 6A accreditation” .
  • Spoolables product: “Introducing a product qualified for H2S service… increase our addressable market particularly in the most active international regions” .
  • Financial discipline and dividend: “Adjusted EBITDA margins remained strong… cash balance to $343 million… quarterly dividend of $0.13 per share” .

Q&A Highlights

  • Tariff pass-through and cost gap: Management expects customer support for tariff-related cost recovery; Bossier City manufacturing historically ~35% higher cost vs Far East, and U.S. steel prices likely move up with tariffs .
  • U.S. activity/outperformance: Company expects to outgrow underlying activity; previously envisioned rig count ~550–560 with some gas basin improvement, tempered by trade policy uncertainty .
  • Supply chain strategy: $6M investment enables vertical manufacturing; Vietnam intended to supply U.S. demand while China serves international; domestic capacity constrained (forging) .
  • H2S FlexSteel: First shipment in Mar/Apr to U.S. customer; Middle East H2S oil production is major TAM; additional qualifications underway in 2025 .
  • International PC growth: Management indicated “real progress” but withheld specifics; modeling remains U.S.-weighted near term .

Estimates Context

  • Consensus (S&P Global) for Q2–Q4 2024 revenue and EPS was unavailable at time of analysis; we could not compute beats/misses versus Street (S&P Global data unavailable via API).
  • Internal context: Adjusted EBITDA margin held ~flat q/q (34.1%) amid lower revenues, suggesting better-than-feared decrementals in Pressure Control offset by Spoolables seasonality, but Street comparison cannot be drawn without S&P estimates .

Key Takeaways for Investors

  • Margin durability despite lower activity: Pressure Control margins improved sequentially even as segment revenues declined; total company adj. EBITDA margin held ~flat at 34.1% .
  • Near-term setup: Q1 guide implies flat-to-up Pressure Control, but extended seasonality weighs on Spoolables; expect a stronger seasonal 2Q rebound in Spoolables .
  • Tariff risk but credible mitigation: Anticipated tariff headwinds on steel are being addressed via Vietnam facility ramp and supply chain investments; watch API 6A accreditation and 2H volume ramp .
  • Product catalyst: H2S-qualified FlexSteel opens larger Middle East opportunity in 2025, supporting the goal of 40% international revenue in Spoolables over time .
  • Strong liquidity and returns: $342.8M cash, no bank debt, ongoing dividend at $0.13; FY25 capex is stepping up to $45–$55M to fund diversification and efficiency—balance growth and returns .
  • Watchlist items: tariff pass-through to pricing, Spoolables margin trajectory as volumes recover, international order cadence (lumpiness), and any updates on Pressure Control international efforts .

Citations:

  • Q4 press release/8-K and financials .
  • Q4 earnings press release (duplicate content) .
  • Q4 earnings call transcript .
  • Q3 2024 press release (trend) .
  • Q2 2024 press release (trend) .
  • Dividend press release .
  • Earnings timing press release .