Cactus, Inc. Q2 FY2025 earnings call

• Generated substantial free cash flow in Q2 despite tariffs and commodity market weakness. • Announced transformative acquisition of controlling interest in Baker Hughes’ Surface Pressure Control business. • Spoolable Technologies outperformed profit expectations; Pressure Control product sales remained strong. • Second quarter total company financial highlights: revenue $274 million, adjusted EBITDA $87 million, adjusted EBITDA margins 31.7%, cash balance $405 million, 8% dividend increase to $0.14 per share. • Tariff impact: Unexpected doubling of Section 232 tariffs, supply chain adjustments to higher-cost jurisdictions, and paused cost recovery due to oil price decline. • Expectations for third quarter: Pressure Control revenue down mid-to-high single-digits, margins 28%-30%; Spoolable Technologies revenue down high-single-digits, margins 35%-37%; acquisition of Baker Hughes’ Surface Pressure Control business progressing, expected closing late 2025/early 2026.

Pressure Control: Revenues of $180 million, down 5.5% sequentially, contributing ~65.7% to total revenue. Operating income declined $12 million, adjusted segment EBITDA $11.7 million, down 18% sequentially. Spoolable Technologies: Revenues of $96 million, up 3.9% sequentially, contributing ~35.0% to total revenue. Operating income increased $4.2 million, adjusted segment EBITDA increased $4.4 million, up 13.2% sequentially.

• Reduced full-year 2025 CapEx outlook to $40 million to $45 million. • Third quarter expected effective tax rate 22%, adjusted EPS tax rate ~25%, depreciation/amortization ~$16 million. • Anticipated $24 million annual TRA payment and distributions related to 2024 taxes in third quarter. • Pressure Control margins expected to trough in 2025, with improvement expected in 2026. • Vietnam expected to fully take on former Chinese mode by coming summer.

• Tariff uncertainties, including unexpected doubling of Section 232 tariffs impacting costs. • Legal expenses and reserves related to litigation claims, with ongoing legal matters and potential future costs. • Commodity market weakness and impact on activity levels.

Q: Stephen Gengaro asks about tariff impact on June margins and customer confidence for activity ramp.

A: Scott Bender discusses unexpected tariff increase, supply chain adjustments, and customer price relief requests.

Q: J. David Anderson asks about Middle East acquisition and turning around the business.

A: Scott Bender talks about flatter organization, supply chain philosophy, and focus on international market.

Q: Arun Jayaram asks about legal costs and IP dispute.

A: Will Marsh discusses delayed trial and future expenses.

Q: Scott Gruber asks about margin troughing and Vietnam ramp.

A: Scott Bender talks about cost recovery, Vietnam migration, and rightsizing benefits.