Cactus (WHD) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue reached $293.2 million, up 1% sequentially, with operating income of $76.8 million and net income of $62.4 million; adjusted EBITDA was $100.4 million with a 34.2% margin.

• Spoolable Technologies achieved record quarterly revenue, up 4.3% sequentially, while Pressure Control saw a 1.1% sequential decline.

• Cash and cash equivalents increased to $303.4 million, reflecting strong operating earnings and disciplined working capital management, with no bank debt outstanding.

• The FlexSteel acquisition, completed in February 2023, expanded product offerings and customer base; the final $37 million earn-out payment was made in Q3.

• Revenue mix for the nine months ended September 30, 2024: 76% products, 9% rentals, 15% field service and other.

Financial highlights

• Q3 adjusted EBITDA was $100.4 million, down 3% sequentially; adjusted EBITDA margin was 34.2% versus 35.7% in Q2.

• Net income attributable to Cactus Inc. was $49.9 million, while adjusted net income was $63.5 million ($0.79/share); diluted EPS was $0.74.

• Operating income for Q3 was $76.8 million, down 3.8% sequentially; operating income margin was 26.2%.

• Dividend of $0.13 per share paid, totaling $10.4 million in Q3; aggregate cash dividends of $0.37 per share declared for the nine months.

• Capital expenditures for Q3 were $10 million; full-year 2024 CapEx outlook reduced to $32–$37 million.

Outlook and guidance

• Q4 Pressure Control revenue expected to dip mid-single digits sequentially due to lower U.S. land drilling and seasonal factors; adjusted EBITDA margin guidance: 33%–35%.

• Spoolable Technologies revenue expected to decline mid to high single digits in Q4, with margins of 36%–38%.

• Full-year 2024 net capital expenditures guidance reduced to $32–$37 million, focused on rental fleet, international expansion, and manufacturing enhancements.

• Management expects existing cash, operating cash flow, and available credit to be sufficient for at least the next 12 months.

• International expansion, especially in the Middle East and for FlexSteel, remains a strategic focus.