Cactus, Inc. Q4 FY2025 earnings call

• Q4 total company highlights: revenue $261 million, adjusted EBITDA $85 million, adjusted EBITDA margins 32.7%. Paid quarterly dividend of 14 cents per share, increased cash balance to $495 million, and closed acquisition of majority interest of BakerU's surface pressure control business (Cactus International) on January 1. • CFO Jay Nutt reviewed financial results: total Q4 revenues $261 million, down 1% sequentially; total adjusted EBITDA $85 million, down 1.7% sequentially. • Scott provided thoughts on first quarter outlook, including pressure control and spoolable technology segments, and introduced Cactus International business trends. • Mentioned corporate and other expenses in Q4, dividend payment, cash balance, capex details, and future expectations including Cactus International's financial inclusion and capex plans.

For the pressure control segment, Q4 revenues were $178 million, up 5.8% sequentially, driven by higher levels of products sold per rig and improved rental revenues. Operating income increased $4.1 million, or 9.3% sequentially, with operating margins expanding 90 basis points. Adjusted segment EBITDA was $4 million, or 7.2% higher sequentially, with margins improving by 50 basis points. For the spoolable technology segment, Q4 revenues were $84 million, down 11.6% sequentially as anticipated due to lower U.S. customer activity. Operating income decreased $4.9 million or 18.9% sequentially, with operating margins compressing 220 basis points. Adjusted segment EBITDA decreased $4.9 million or 13.6% sequentially, while margins declined by 90 basis points.

• First quarter pressure control revenue expected to be approximately 295 to 305 million; North America sales expected to be modestly softer, international sales to contribute 130 to 140 million. Pressure control segment adjusted EBITDA margins expected to be 23% to 25% in Q1. • Cactus International: 2026 expected to be more in line with 2024 results from revenue and adjusted EBITDA perspective, increased order activity anticipated in second half of 2026 and into 2027. • Spoolable technologies: Q1 revenue expected to be down mid-single digits relative to Q4, adjusted EBITDA margins expected to be approximately 35% in Q1. • 2026 net capex expectations in range of $40 to $50 million, including investments at Cactus International. • Board approved quarterly dividend of 14 cents per share, to be paid in March.

• Forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond control, which can cause actual results to differ materially from current expectations. • Tariff environment as it applies to imports to the U.S. remains uncertain, with tariffs on majority goods imported from China still at 75%.

Q: On Cactus International synergies and margin progression, A: Very meaningful supply chain savings expected in 2027, but orders for 2026 already placed, so margin enhancement won't be seen until 2027; optimistic to exceed projected synergies even for 2026.

Q: On U.S. wellhead activity evolution, A: Personal opinion is U.S. onshore rig count will be in range of probably 490, concerned about prices supported by geopolitical factors.

Q: On international segment growth prospects, A: Greater growth prospects in Mideast, particularly Saudi with 70 rigs added, Abu Dhabi stable, Qatar and Kuwait prospects improving, and potential improvement from Far East and Sub-Sahara Africa.

Q: On Cactus International aftermarket services, A: Intensely focused on installed base, substantial opportunities in West Africa and Far East where Legacy Vetco Gray had dominant positions.

Q: On U.S. drilling efficiencies, A: Seeing greater efficiencies, best proxy is wells drilled, bullish on increased efficiencies over time.

Q: On Vietnam and API certification, A: Vietnam tariffs expected to be about 25% lower than China, API certification in process, expected to finish this week with reports back in 30-60 days, which should boost margins.

Q: On North Africa installed base, A: Yes, there is an installed base from the international acquisition that could grow meaningfully over the next couple of years.