WHD designs, manufactures, and sells wellhead and pressure control equipment for the oil industry. The company’s third-quarter fiscal 2025 earnings report showed an adjusted EBITDA of $87 million on $264 million in revenue (a margin of 32.9%, up from 31.7% the previous quarter), net income of $50 million, and a cash balance of $446 million. The company reports again on March 4. No wonder WHD shares are up 24% this year – and they could rise more. MoneyFlows data shows how Big Money investors are again be ...

Core Insights - Cactus, Inc. (WHD) has completed the acquisition of a 65% stake in the Surface Pressure Control (SPC) business of Baker Hughes Company (BKR), forming a new joint venture (JV) [1][4] - The enterprise value of BKR's SPC business is estimated at $530 million, with Cactus paying $344.5 million for the 65% stake [1][4] - After two years, Cactus has the option to purchase the remaining 35% stake, or Baker Hughes can require Cactus to do so [2][4] Company Developments - The acquisition allows Cactus to diversify its global oilfield equipment footprint and strengthens its business model with additional cash flow, enhancing investor appeal [2] - Cactus currently holds a Zacks Rank 1 (Strong Buy), indicating strong market confidence, while Baker Hughes has a Zacks Rank 3 (Hold) [3] Industry Context - Other players in the oil and gas equipment and service industry include Halliburton Company (HAL) and Core Laboratories Inc. (CLB), both of which also carry a Zacks Rank 3 [3] - The business models of WHD, BKR, HAL, and CLB are all vulnerable to fluctuations in crude oil prices [3]

Group 1 - Cactus, Inc. shares increased by 5.7% to close at $49.69, supported by strong trading volume, compared to a 2.2% gain over the past four weeks [1] - The stock's rally was driven by investor sentiment following Cactus' agreement to acquire a 65% stake in Baker Hughes' Surface Pressure Control business, which is expected to enhance its global presence and revenue visibility with a project backlog exceeding $600 million [2] - The company is projected to report quarterly earnings of $0.58 per share, reflecting an 18.3% decline year-over-year, with revenues anticipated at $250.63 million, down 7.9% from the previous year [3] Group 2 - The consensus EPS estimate for Cactus has been revised down by 0.8% over the last 30 days, indicating a negative trend in earnings estimate revisions, which typically does not lead to price appreciation [4] - Cactus holds a Zacks Rank of 1 (Strong Buy), indicating strong market confidence, while another company in the same industry, National Fuel Gas, has a Zacks Rank of 3 (Hold) [5] - National Fuel Gas' consensus EPS estimate has increased by 4.8% over the past month to $1.95, representing a 17.5% increase from the previous year [6]

Group 1 - Baker Hughes has finalized a joint venture with a subsidiary of Cactus, contributing its surface pressure control product line [1] - Cactus holds a 65% equity stake in the joint venture, while Baker Hughes retains a 35% stake [1]

Core Viewpoint - Cactus, Inc. has completed the acquisition of a majority interest in Baker Hughes Company's Surface Pressure Control business, marking a transformational step for the company [1] Group 1: Acquisition Details - The acquisition involves a majority interest in Baker Hughes Company's Surface Pressure Control business [1] - Formal financial guidance for the acquired business will be provided later in the first quarter of 2026 [1] Group 2: Leadership Commentary - Scott Bender, Chairman and CEO of Cactus, expressed excitement about welcoming the SPC team to the Cactus organization [1] - The transaction is described as transformational for the company [1]

Core Viewpoint - Cactus, Inc. (WHD) has been upgraded to a Zacks Rank 1 (Strong Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Performance - The Zacks rating system is based on changes in earnings estimates, which are closely correlated with stock price movements, particularly due to institutional investors adjusting their valuations based on these estimates [4][6]. - Cactus is expected to earn $2.50 per share for the fiscal year ending December 2025, with a 0% year-over-year change, but the Zacks Consensus Estimate has increased by 0.8% over the past three months [8]. Zacks Rating System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [7]. - Only the top 5% of Zacks-covered stocks receive a "Strong Buy" rating, indicating superior earnings estimate revisions, which positions Cactus favorably for potential market-beating returns [10].

Group 1 - Cactus, Inc. (WHD) has reached a significant support level and is considered a good investment pick from a technical perspective due to a "golden cross" formation [1] - The golden cross occurs when a stock's 50-day simple moving average breaks above its 200-day moving average, indicating a potential bullish breakout [1] - WHD has experienced a rally of 10.9% over the past four weeks, suggesting it could be poised for further gains [3] Group 2 - The stock's earnings expectations have improved, with two upward revisions in estimates over the past 60 days, indicating a bullish trend [3] - The Zacks Consensus Estimate for WHD has also moved up, reinforcing the positive outlook for the company [3] - A combination of earnings estimate revisions and technical indicators suggests that investors should monitor WHD for potential gains in the near future [4]

Acquisition and Business Development - Cactus Companies entered into an agreement to acquire a controlling interest in Baker Hughes Company's surface pressure control business on June 2, 2025[33]. Revenue and Financial Performance - For the three months ended September 30, 2025, total revenues were $263.954 million, a decrease from $293.181 million for the same period in 2024, representing a decline of approximately 10%[54]. - Product revenue for the three months ended September 30, 2025, was $206.822 million, accounting for 78% of total revenues, compared to $221.406 million and 76% in the prior year[54]. - For the nine months ended September 30, 2025, total consolidated revenues reached $817,848,000, with external customer revenues of $533,805,000 from Pressure Control and $284,043,000 from Spoolable Technologies[78]. - Total consolidated revenues for the three months ended September 30, 2024, were $293,181,000, with external customer revenues of $185,026,000 from Pressure Control and $108,155,000 from Spoolable Technologies[77]. Profitability and Earnings - Segment profit for Pressure Control was $44.523 million and for Spoolable Technologies was $25.806 million for the three months ended September 30, 2025, contributing to a total segment profit of $70.329 million[75]. - The total operating income for the three months ended September 30, 2025, was $61.234 million, reflecting the company's operational efficiency[75]. - The total operating income for the three months ended September 30, 2024, was $76,792,000, while for the nine months ended September 30, 2025, it was $190,651,000[77][78]. - Basic earnings per share for the three months ended September 30, 2025, was $0.61, compared to $0.75 for the same period in 2024[82]. - Diluted earnings per share for the nine months ended September 30, 2025, was $1.83, down from $2.09 in 2024[82]. - Segment profit for the three months ended September 30, 2024, was $85,444,000, and for the nine months ended September 30, 2025, it was $218,924,000[77][78]. Assets and Liabilities - As of September 30, 2025, total unbilled revenue included in accounts receivable was $30.7 million, up from $29.8 million as of December 31, 2024, representing a 3% increase[39]. - The allowance for credit losses increased from $3.905 million at the end of September 30, 2024, to $4.223 million at the end of September 30, 2025, reflecting a 8% rise[41]. - Total inventories as of September 30, 2025, amounted to $271.3 million, compared to $226.8 million as of December 31, 2024, indicating a 19.6% increase[42]. - Net property and equipment as of September 30, 2025, was $346.6 million, slightly up from $346.0 million as of December 31, 2024, showing a marginal increase of 0.2%[43]. - The total gross cost of intangible assets as of September 30, 2025, was $200.3 million, with a net cost of $152.0 million after accumulated amortization[44]. - The total liability from the Tax Receivable Agreement (TRA) was $281.7 million as of September 30, 2025, with $20.3 million classified as current liabilities[57]. Financing and Debt - Cactus Companies had no bank debt outstanding as of September 30, 2025, and maintained compliance with all covenants under the Amended ABL Credit Facility[46]. - The Amended ABL Credit Facility provides a term loan of $125.0 million and up to $225.0 million in revolving commitments, with a maximum borrowing capacity of $275.0 million[47]. Cash Dividends and Share Repurchase - Cactus Inc. declared cash dividends of $0.40 per share for the nine months ended September 30, 2025, totaling $28.0 million, compared to $24.9 million for the same period in 2024[64]. - During the nine months ended September 30, 2025, Cactus Companies distributed $62.3 million to Cactus Inc. for dividend and tax payments, an increase from $51.9 million in the prior year[66]. - The company did not repurchase any shares of Class A common stock under the share repurchase program during the nine months ended September 30, 2025, leaving $146.3 million authorized for future repurchases[65]. Operational Segments - The company operates in two segments: Pressure Control and Spoolable Technologies, focusing on equipment and technologies for oil and gas operations[76]. - Selling, general, and administrative expenses for the nine months ended September 30, 2025, totaled $49,504,000 for Pressure Control and $36,852,000 for Spoolable Technologies[78]. - The company recognized revenue when performance obligations are satisfied, primarily through short-term contracts for fixed consideration[52]. Interest Income - The company reported interest income of $2,062,000 for the three months ended September 30, 2024, and $7,820,000 for the nine months ended September 30, 2025[77][78].

Financial Data and Key Metrics Changes - Total Q3 revenues were $264 million, a sequential decline of 3.5% [5] - Adjusted EBITDA was $87 million, approximately flat from the second quarter, with an adjusted EBITDA margin of 32.9% compared to 31.7% in the second quarter [6][8] - GAAP net income for Q3 was $50 million, up from $49 million in Q2, with adjusted net income of $54 million and earnings per share of $0.67, compared to $53 million and $0.66 per share in Q2 [7][8] Business Line Data and Key Metrics Changes - Pressure Control segment revenues were $169 million, down 6.2% sequentially, but operating income increased by $2.2 million or 5.2% sequentially, with operating margins increasing by 290 basis points [5][6] - Spoolable Technologies segment revenues were $95 million, down 1% sequentially, with operating income decreasing by $2.2 million or 8% sequentially [5][6] Market Data and Key Metrics Changes - The company continues to face a challenging tariff environment, with a 70% tariff on goods imported from China and a 50% tariff on goods from Vietnam [11] - The U.S. land rig count is expected to drift modestly lower through the year-end, indicating subdued domestic activity levels [12] Company Strategy and Development Direction - The company is focusing on mitigating tariff impacts and enhancing profitability through cost reduction initiatives and supply chain flexibility [11][12] - The planned acquisition of a majority interest in the Surface Pressure Control business of Baker Hughes is expected to close in early 2026, which will enhance the company's market position [16] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about the downside risk of oil prices, suggesting they may stabilize between $55 and $60, which could impact upstream spending in 2026 [25] - The company anticipates that most industry activity declines for 2025 are behind them, with expectations for flat revenue in the Pressure Control segment for Q4 [12][13] Other Important Information - The company paid a quarterly dividend of $0.14 per share, resulting in a cash outflow of approximately $11 million [8][10] - The cash balance increased to $446 million, a sequential increase of approximately $40 million [8] Q&A Session Summary Question: Insights on U.S. customer sentiment and oil prices - Management indicated that customers are cautious, with concerns about potential declines in oil prices, and are not basing budgets on higher oil prices [25][26] Question: International opportunities for spoolable technologies - Management noted strong international demand, particularly in the Middle East and Africa, with new orders and increased personnel in these regions [27][28] Question: Pressure Control margin performance - Management attributed margin improvements to effective supply chain management and customer support, emphasizing the flexibility of their variable cost structure [30][31] Question: Update on the new wellhead system introduction - Management confirmed plans to introduce the new wellhead system in Q1 2026 [34] Question: Cactus SPC transaction and earnings power - Management provided insights on the integration planning for the Baker Hughes acquisition, expressing cautious optimism about future earnings potential [42][43]

Core Insights - Cactus, Inc. reported a revenue of $263.95 million for the quarter ended September 2025, reflecting a 10% decrease year-over-year, while EPS was $0.67 compared to $0.79 in the same quarter last year [1] - The revenue exceeded the Zacks Consensus Estimate by 3.86%, and the EPS surpassed the consensus estimate by 15.52% [1] Financial Performance Metrics - Revenue from Spoolable Technologies was $95.24 million, exceeding the average estimate of $87.43 million, but showing a year-over-year decline of 11.9% [4] - Revenue from Pressure Control was $168.71 million, slightly above the average estimate of $167.51 million, with a year-over-year decrease of 8.9% [4] - Operating income for Pressure Control was reported at $44.52 million, surpassing the average estimate of $38.96 million [4] - Corporate and other expenses resulted in an operating loss of $9.1 million, worse than the average estimate of a loss of $7.36 million [4] - Operating income for Spoolable Technologies was $25.81 million, exceeding the average estimate of $21.72 million [4] Stock Performance - Cactus shares have returned -0.2% over the past month, contrasting with the Zacks S&P 500 composite's increase of 3.8% [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]