Cactus, Inc. (NYSE:WHD) Q2 2022 Results Conference Call August 4, 2022 10:00 AM ET Company Participants John Fitzgerald - IR Scott Bender - CEO Stephen Tadlock - CFO Conference Call Participants Cameron Lochridge - Stephens Connor Lynagh - Morgan Stanley David Smith - Pickering Energy Partners David Anderson - Barclays Scott Gruber - Citigroup Stephen Gengaro - Stephens Operator Good morning, and thank you for standing by. Welcome to the Cactus Second Quarter 2022 Earnings Call. [Operator Instructions] Ple ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ______________________________________________________________________________ FORM 10-Q ______________________________________________________________________________ (MARK ONE) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transi ...

Financial Data and Key Metrics Changes - Cactus reported Q1 2022 revenues of $146 million, a 12% increase sequentially [10] - Adjusted EBITDA for Q1 2022 was approximately $42 million, up 16% from $37 million in Q4 2021, with adjusted EBITDA margins at 29%, an increase of 80 basis points [8][14] - GAAP net income was $27 million in Q1 2022, compared to $20 million in Q4 2021, driven by higher operating income and lower income tax expense [18] - The company ended the quarter with $298 million in cash and no debt, with operating cash flow of approximately $17 million [8][20] Business Line Data and Key Metrics Changes - Product revenues were $94 million, up 12% sequentially, with product gross margins at 35%, an increase of 60 basis points [10] - Rental revenue was $22 million, up 16% versus Q4 2021, with gross margins increasing by 820 basis points [11] - Field service and other revenues were approximately $30 million, up 10% versus Q4 2021, representing 25% of combined product and rental-related revenues [11] Market Data and Key Metrics Changes - U.S. product market share remained strong at 41%, with rigs followed increasing by over 11% [24] - Despite lower rig efficiencies, product revenue per U.S. land rig followed increased due to cost recovery efforts [24] Company Strategy and Development Direction - Cactus aims to maintain a focus on margin expansion and market share gains, with expectations for product revenue to increase by 10% in Q2 2022 [26] - The company is exploring M&A opportunities to expand geographically and enhance competitive positioning, while also committing to sustaining dividends [33][75] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about ancillary supply issues, including availability of pipe, rigs, and other materials, which could limit growth [38] - The company anticipates continued cost recovery efforts to mitigate inflationary pressures from labor and fuel costs [12][27] - Management remains optimistic about increasing rig counts and market share, particularly with private operators becoming more sophisticated [48][30] Other Important Information - Cactus has elevated inventory levels to address supply chain uncertainties and ensure timely delivery to customers [21][29] - The company announced the retirement of David Isaac, Chief Administrative Officer and General Counsel, and the appointment of Will Marsh as his successor [34] Q&A Session Summary Question: What are the main risks over the next 12 months? - Management highlighted ancillary supply issues as a primary concern, including availability of rigs and materials [38] Question: How does the current cycle compare to previous cycles? - Management indicated potential for meaningful margin expansion, with volume expansion constrained [42] Question: Can you discuss market share dynamics with private operators? - Management noted increased traction with private operators, which could lead to higher market share [46] Question: What are the biggest supply chain bottlenecks? - Management identified vessel loadings and sailings from China as significant challenges, but expects improvements [56] Question: How are competitors handling cost recovery? - Management observed that larger competitors are being more responsible in cost recovery, while smaller players may struggle [60] Question: What is the outlook for rig counts? - Management expects the U.S. rig count to approach 800 by year-end, with potential challenges in efficiency for new rigs [66][70]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ______________________________________________________________________________ FORM 10-Q ______________________________________________________________________________ (MARK ONE) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the trans ...

Part I [Business](index=5&type=section&id=Item%201.%20Business) Cactus, Inc. designs, manufactures, and sells wellhead and pressure control equipment for onshore unconventional oil and gas wells globally - Cactus, Inc. is a holding company whose primary asset is a **78.0% ownership interest** in Cactus Wellhead, LLC as of December 31, 2021. The company designs, manufactures, and sells wellhead and pressure control equipment for oil and gas wells[18](index=18&type=chunk)[19](index=19&type=chunk)[20](index=20&type=chunk) Revenue Breakdown by Source (2019-2021) | Revenue Source | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Product Sales | 64% | 59% | 57% | | Rental | 14% | 19% | 22% | | Field Service & Other | 22% | 22% | 21% | - The company's principal products include Cactus SafeDrill® wellhead systems, frac stacks, zipper manifolds, and production trees. It also provides critical field services, including 24-hour crews for installation, maintenance, and repair[25](index=25&type=chunk) - Manufacturing facilities are located in Bossier City, LA (for rapid, made-to-order equipment) and Suzhou, China (for longer lead-time orders). Both facilities are licensed to API 6A specifications[33](index=33&type=chunk) - As of December 31, 2021, the company employed **over 1,000 people worldwide**. In 2021, the workforce increased by **approximately 57%** to rebuild from 2020 reductions and meet recovering industry demand[50](index=50&type=chunk)[51](index=51&type=chunk) - The company's Total Recordable Incident Rate (TRIR) was **1.29 in 2021**, compared to **0.55 in 2020**. Management states this is in line with the industry average[54](index=54&type=chunk) [Risk Factors](index=14&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from oil and gas industry cyclicality, volatile commodity prices, rising operational costs, and substantial Tax Receivable Agreement liabilities - Demand for products is highly dependent on oil and gas industry activity, which is affected by volatile crude oil and natural gas prices. The COVID-19 pandemic has negatively impacted revenues and operations through facility slowdowns and supply chain disruptions[59](index=59&type=chunk)[60](index=60&type=chunk) - The company faces increased costs and potential shortages of raw materials like steel, as well as significantly higher freight costs. The highest inflation in decades is adversely impacting freight, materials, and labor costs[73](index=73&type=chunk)[75](index=75&type=chunk) - As a holding company, Cactus Inc.'s only material asset is its equity in Cactus LLC. It depends on distributions from Cactus LLC to pay taxes, dividends, and make substantial payments under the Tax Receivable Agreement (TRA)[93](index=93&type=chunk)[94](index=94&type=chunk) - The company is required to make significant payments under the TRA, representing **85% of net cash tax savings realized**. Early termination of the TRA could result in an accelerated payment, estimated at approximately **$361.9 million** as of December 31, 2021[101](index=101&type=chunk)[106](index=106&type=chunk) - Cactus WH Enterprises, LLC holds significant voting power (**approximately 20%** as of year-end 2021) and has the right to designate nominees to the board, which may create conflicts of interest with other shareholders[96](index=96&type=chunk) [Unresolved Staff Comments](index=28&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports that it has no unresolved staff comments from the SEC - None[115](index=115&type=chunk) [Properties](index=28&type=section&id=Item%202.%20Properties) Cactus, Inc. operates from various owned and leased facilities, including manufacturing and service centers across the U.S., China, and Australia - The company's principal facilities include owned and leased manufacturing, assembly, and service centers in Bossier City, LA. It also owns facilities in Hobbs, NM, and New Waverly, TX, and leases its Houston headquarters and a production facility in Suzhou, China[116](index=116&type=chunk)[117](index=117&type=chunk) [Legal Proceedings](index=28&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in routine litigation, but management believes no pending matters will materially affect its financial condition - The company is subject to routine litigation in the ordinary course of business, but management does not expect any pending cases to have a material adverse effect[118](index=118&type=chunk) [Mine Safety Disclosures](index=28&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[119](index=119&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=29&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Cactus, Inc.'s Class A common stock trades on the NYSE, with quarterly dividends increasing and minor share repurchases for tax obligations - The company's Class A common stock is traded on the New York Stock Exchange (NYSE) under the **\"WHD\"**[121](index=121&type=chunk) - The quarterly cash dividend was increased to **$0.10 per share** in July 2021 and again to **$0.11 per share** in January 2022. The annual dividend rate was **$0.38 per share in 2021**, up from **$0.36 in 2020**[122](index=122&type=chunk)[123](index=123&type=chunk) - During Q4 2021, the company repurchased **2,171 shares** of Class A common stock from employees at an average price of **$41.87 per share** to satisfy tax withholding obligations on vested restricted stock units[126](index=126&type=chunk)[127](index=127&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2021, Cactus experienced a 25.8% increase in total revenues to $438.6 million, driven by higher drilling activity, while maintaining strong liquidity despite rising costs Consolidated Results of Operations (2021 vs. 2020) | Metric | 2021 (in thousands) | 2020 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | Total Revenues | $438,589 | $348,566 | 25.8% | | Product Revenue | $280,907 | $206,801 | 35.8% | | Rental Revenue | $61,629 | $66,169 | (6.9)% | | Field Service & Other Revenue | $96,053 | $75,596 | 27.1% | | Income from Operations | $75,427 | $70,039 | 7.7% | | Net Income | $67,470 | $59,215 | 13.9% | | Net Income Attributable to Cactus Inc. | $49,593 | $34,446 | 44.0% | - The increase in product revenue was due to higher sales of wellhead and production equipment from increased customer drilling and completion activity. The decrease in rental revenue was due to reduced completion activity and extraordinary market pressure[144](index=144&type=chunk)[145](index=145&type=chunk) - The company experienced substantial cost increases in 2021 for salaries, raw materials (steel), and ocean freight due to supply chain pressures and increased global demand[141](index=141&type=chunk) - As of December 31, 2021, the company had **$301.7 million** in cash and cash equivalents and no borrowings outstanding under its **$75.0 million** ABL Credit Facility[156](index=156&type=chunk) - Net capital expenditures for 2022 are estimated to be between **$20 million and $30 million**, primarily for rental fleet investments and manufacturing facility expansion[158](index=158&type=chunk) - The estimated termination payment for the Tax Receivable Agreement (TRA) as of December 31, 2021, would be approximately **$361.9 million**[162](index=162&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=38&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company is exposed to market risks from foreign currency exchange rates and interest rates, partially managed through hedging and no current debt - The company is subject to foreign currency exchange rate risk due to operations in China and Australia. It uses monthly foreign currency forward contracts to hedge against fluctuations on U.S. dollar-denominated assets and liabilities held by its foreign subsidiaries[177](index=177&type=chunk)[178](index=178&type=chunk) - Interest rate risk arises from the variable rate ABL Credit Facility. As of December 31, 2021, there were no borrowings outstanding under this facility[179](index=179&type=chunk) [Financial Statements and Supplementary Data](index=39&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the consolidated financial statements for 2021, showing increased assets and liabilities, with the TRA liability identified as a critical audit matter - Management concluded that as of December 31, 2021, the company's internal control over financial reporting was effective, based on the COSO framework[185](index=185&type=chunk) - The independent auditor, PricewaterhouseCoopers LLP, issued an unqualified opinion on the consolidated financial statements and the effectiveness of internal control over financial reporting. The liability related to the Tax Receivable Agreement (TRA) was identified as a Critical Audit Matter due to the complexity of calculating the tax basis and blended tax rate[190](index=190&type=chunk)[197](index=197&type=chunk)[198](index=198&type=chunk) Consolidated Balance Sheet Highlights (as of Dec 31) | Account | 2021 (in thousands) | 2020 (in thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | $301,669 | $288,659 | | Total Current Assets | $518,485 | $425,142 | | Total Assets | $982,078 | $815,594 | | Total Current Liabilities | $92,574 | $48,915 | | Liability related to TRA | $281,607 | $204,351 | | Total Liabilities | $387,045 | $264,824 | | Total Stockholders' Equity | $595,033 | $550,770 | Consolidated Income Statement Summary (Year Ended Dec 31) | Account | 2021 (in thousands) | 2020 (in thousands) | 2019 (in thousands) | | :--- | :--- | :--- | :--- | | Total Revenues | $438,589 | $348,566 | $628,414 | | Income from Operations | $75,427 | $70,039 | $183,150 | | Net Income | $67,470 | $59,215 | $156,303 | | Net Income Attributable to Cactus Inc. | $49,593 | $34,446 | $85,612 | | Diluted EPS | $0.83 | $0.72 | $1.88 | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=66&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting principles or financial disclosure - None[301](index=301&type=chunk) [Controls and Procedures](index=66&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2021, with no material changes to internal controls - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of December 31, 2021[302](index=302&type=chunk) - There were no changes in internal control over financial reporting during the quarter ended December 31, 2021, that materially affected, or are reasonably likely to materially affect, internal controls[303](index=303&type=chunk) [Other Information](index=67&type=section&id=Item%209B.%20Other%20Information) This item is not applicable - Not applicable[304](index=304&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=67&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable - Not applicable[305](index=305&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=67&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) The company's board comprises nine directors, with six independent members, and operates through independent committees, adhering to strong corporate governance policies - The board of directors consists of **nine members**, with Scott Bender serving as President & CEO and Bruce Rothstein as Chairman. The board is divided into three staggered classes[307](index=307&type=chunk)[322](index=322&type=chunk) - The board has determined that **six of its nine directors are independent** under NYSE listing standards: Messrs. McGovern, O'Donnell, Rosenthal, Rothstein, Semple, and Tombar, and Ms. Law[323](index=323&type=chunk) - The company has standing Audit, Compensation, and Nominating and Governance Committees, each composed entirely of independent directors[324](index=324&type=chunk) - The company has adopted a Code of Business Conduct and Ethics, and policies that prohibit directors and executive officers from hedging or pledging their ownership of company stock[330](index=330&type=chunk)[342](index=342&type=chunk) [Executive Compensation](index=75&type=section&id=Item%2011.%20Executive%20Compensation) Executive compensation is performance-based, with a significant portion at-risk, tied to key financial and operational metrics, and includes long-term incentives and stock ownership guidelines - The executive compensation program is designed to pay for performance, with **86% of the CEO's** and an average of **77% of other NEOs' 2021 target total direct compensation** being \"at-risk\" (variable cash and equity incentives)[344](index=344&type=chunk)[346](index=346&type=chunk) - The 2021 Management Incentive Plan (MIP) for NEOs was based on three metrics: Adjusted EBITDA (**80% weight**), Operating Capital Employed/Revenue (**10% weight**), and Total Recordable Incident Rate (TRIR) (**10% weight**)[364](index=364&type=chunk)[367](index=367&type=chunk) - For 2021, the company exceeded its Adjusted EBITDA target and its OCE/Revenue target, but missed its TRIR target. This resulted in a total bonus payout of **104.3% of the target bonus** for NEOs[369](index=369&type=chunk) - Long-term incentive awards in 2021 consisted of a mix of time-based Restricted Stock Units (RSUs) and Performance Stock Units (PSUs). The PSUs vest after a three-year period based on the company's Return on Capital Employed (ROCE) performance[371](index=371&type=chunk)[373](index=373&type=chunk) - The company has stock ownership guidelines requiring the CEO to hold **6x base salary** and other NEOs to hold **2x base salary** in company stock[374](index=374&type=chunk) - The CEO's 2021 total annual compensation was **$2,031,846**, which is approximately **22 times** the median employee's annual total compensation of **$92,211**[408](index=408&type=chunk)[409](index=409&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=92&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Key beneficial owners include Cactus WH Enterprises (19.8%), with directors and executive officers collectively owning 20.9% of combined voting power as of February 14, 2022 Security Ownership of 5% Stockholders (as of Feb 14, 2022) | Owner | Combined Voting Power % | | :--- | :--- | | Cactus WH Enterprises, LLC | 19.8% | | The Vanguard Group | 7.4% | | T. Rowe Price Associates | 7.2% | | AllianceBernstein L.P. | 6.4% | | BlackRock, Inc. | 5.1% | - Directors and executive officers as a group beneficially owned approximately **20.9% of the combined voting power** as of February 14, 2022[420](index=420&type=chunk) - Scott Bender and Joel Bender control Cactus WH Enterprises and are deemed beneficial owners of the **15,014,963 shares** it holds, giving them each approximately **20.0% of the combined voting power**[420](index=420&type=chunk)[422](index=422&type=chunk) - As of December 31, 2021, there were **1,295,150 securities** remaining available for future issuance under the company's equity compensation plans[425](index=425&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=95&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) The company has significant related party agreements, including the Cactus Wellhead LLC Agreement, Tax Receivable Agreement, and a Stockholders' Agreement, all reviewed by the Audit Committee - The company has a written policy requiring the Audit Committee to review and approve all Related Party Transactions exceeding **$120,000**[426](index=426&type=chunk)[427](index=427&type=chunk) - The Cactus Wellhead LLC Agreement provides CW Unit Holders with the right to redeem their units for Class A common stock or cash. In 2021, Cactus LLC distributed **$9.7 million** to non-controlling members[429](index=429&type=chunk)[431](index=431&type=chunk) - The Tax Receivable Agreement (TRA) obligates the company to pay **85% of realized tax savings** to TRA Holders. In 2021, a company controlled by Scott and Joel Bender received approximately **$2.8 million** under the TRA[439](index=439&type=chunk)[450](index=450&type=chunk) - The Amended and Restated Stockholders' Agreement provides Cactus WH Enterprises the right to designate a certain number of directors to the board as long as it maintains at least **5% ownership**[457](index=457&type=chunk) - The company leases an aircraft from SusieAir, LLC, an entity wholly owned by CEO Scott Bender. In 2021, the company recognized **$0.2 million** in expense related to this lease[461](index=461&type=chunk)[462](index=462&type=chunk) [Principal Accountant Fees and Services](index=101&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) For 2021, Cactus, Inc. incurred $1.723 million in fees from PricewaterhouseCoopers LLP, primarily for audit services, all pre-approved by the Audit Committee Accountant Fees (2021 vs. 2020) | Fee Type | 2021 (in thousands) | 2020 (in thousands) | | :--- | :--- | :--- | | Audit Fees | $1,722 | $1,422 | | Audit-Related Fees | $1 | $1 | | Tax Fees | $— | $— | | All Other Fees | $— | $— | | **Total** | **$1,723** | **$1,423** | - All audit and non-audit services provided by PricewaterhouseCoopers LLP in 2021 and 2020 were pre-approved by the Audit Committee[465](index=465&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=102&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section provides an index of all exhibits filed with the Form 10-K, including governing documents and material contracts, with financial schedules omitted - This section contains the index of exhibits filed with the Form 10-K, including governing documents, material contracts, and certifications[470](index=470&type=chunk)[471](index=471&type=chunk)[472](index=472&type=chunk) - All financial statement schedules have been omitted because they are not applicable or the required information is already presented in the financial statements or notes[469](index=469&type=chunk) [Form 10-K Summary](index=104&type=section&id=Item%2016.%20Form%2010-K%20Summary) No Form 10-K summary was provided - None[475](index=475&type=chunk)

Cactus, Inc. (NYSE:WHD) Q4 2021 Earnings Conference Call February 28, 2022 10:00 AM ET Company Participants John Fitzgerald - Director of Corporate Development and Investor Relations Scott Bender - Chief Executive Officer Steve Tadlock - Chief Financial Officer Steven Bender - Vice President of Operations Conference Call Participants David Anderson - Barclays Chase Mulvehill - Bank of America Scott Gruber - Citigroup Stephen Gengaro - Stifel Ian MacPherson - Piper Sandler Cameron Lochridge - Stephens Discla ...

Cactus, Inc. (NYSE:WHD) Q3 2021 Results Conference Call November 4, 2021 10:00 AM ET Company Participants John Fitzgerald - Director of Corporate Development and IR Scott Bender - Chief Executive Officer Steve Tadlock - Chief Financial Officer Joel Bender - Senior Vice President and Chief Operating Officer Steven Bender - Vice President of Operations David Isaac - General Counsel and Vice President of Administration Conference Call Participants Chase Mulvehill - BofA Scott Gruber - Citigroup Ian MacPherson ...

[PART I - FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) Presents Cactus, Inc.'s unaudited condensed consolidated financial statements for Q3 and nine months ended September 30, 2021 [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to **$963.9 million** by September 30, 2021, with liabilities rising due to the TRA Condensed Consolidated Balance Sheets (in thousands USD) | | September 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $301,974 | $288,659 | | Accounts receivable, net | $79,401 | $44,068 | | Inventories | $101,137 | $87,480 | | Total current assets | $491,801 | $425,142 | | Total assets | $963,930 | $815,594 | | **Liabilities and Equity** | | | | Accounts payable | $43,405 | $20,163 | | Total current liabilities | $87,951 | $48,915 | | Liability related to tax receivable agreement, net | $272,017 | $195,061 | | Total liabilities | $384,230 | $264,824 | | Total stockholders' equity | $579,700 | $550,770 | | Total liabilities and equity | $963,930 | $815,594 | [Condensed Consolidated Statements of Income](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Total revenues for Q3 2021 significantly increased to **$115.4 million**, with nine-month revenues growing **10.1%** Financial Performance (in thousands USD, except per share data) | Metric | Q3 2021 | Q3 2020 | Nine Months 2021 | Nine Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $115,363 | $59,789 | $308,673 | $280,476 | | Income from operations | $20,766 | $12,556 | $49,715 | $61,616 | | Net income | $17,177 | $10,886 | $47,087 | $53,079 | | Net income attributable to Cactus Inc. | $12,617 | $6,233 | $34,569 | $31,244 | | Earnings per Class A share - diluted | $0.21 | $0.13 | $0.58 | $0.64 | [Condensed Consolidated Statements of Comprehensive Income](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Comprehensive income attributable to Cactus Inc. increased to **$12.2 million** in Q3 2021, driven by foreign currency translation adjustments Comprehensive Income (in thousands USD) | Metric | Q3 2021 | Q3 2020 | Nine Months 2021 | Nine Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Net income | $17,177 | $10,886 | $47,087 | $53,079 | | Foreign currency translation adjustments | $(529) | $533 | $(804) | $329 | | Comprehensive income | $16,648 | $11,419 | $46,283 | $53,408 | | Comprehensive income attributable to Cactus Inc. | $12,235 | $6,536 | $34,074 | $31,430 | [Condensed Consolidated Statements of Stockholders' Equity](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) Stockholders' equity increased to **$579.7 million** by September 30, 2021, due to net income and CW Unit redemptions - For the nine months ended September 30, 2021, the company declared cash dividends of **$0.28 per share**, totaling **$15.3 million**[25](index=25&type=chunk)[56](index=56&type=chunk) - The effect of CW Unit redemptions resulted in a **$78.7 million** decrease in non-controlling interest and a corresponding increase in additional paid-in capital for the nine months ended September 30, 2021[25](index=25&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities decreased to **$52.1 million** for the nine months ended September 30, 2021, due to increased working capital Cash Flow Summary (in thousands USD) | Cash Flow Activity | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $52,084 | $121,485 | | Net cash used in investing activities | $(8,417) | $(16,494) | | Net cash used in financing activities | $(30,354) | $(34,090) | | Net increase in cash and cash equivalents | $13,315 | $71,338 | | Cash and cash equivalents, end of period | $301,974 | $273,941 | [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail accounting policies, customer concentration, **no outstanding debt**, **$283.0 million** TRA liability, and increased Cactus LLC ownership - For the nine months ended September 30, 2021, one customer accounted for **13%** of consolidated revenues[33](index=33&type=chunk) - The company had **no debt outstanding** as of September 30, 2021, but has access to a **$75.0 million** ABL Credit Facility[41](index=41&type=chunk)[42](index=42&type=chunk) - As of September 30, 2021, the total liability from the Tax Receivable Agreement (TRA) was **$283.0 million**[47](index=47&type=chunk) - Cactus Inc.'s ownership of Cactus LLC increased to **77.9%** as of September 30, 2021, up from **63.3%** as of December 31, 2020, due to redemptions of CW Units[50](index=50&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=19&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, market factors, revenue growth, cost pressures, and strong liquidity with **$302.0 million** cash and no debt [Executive Summary & Market Factors](index=19&type=section&id=Executive%20Summary%20%26%20Market%20Factors) Cactus designs and sells wellhead and pressure control equipment for U.S. onshore oil and gas wells, with demand driven by industry activity - The company operates in one business segment, deriving revenue from products, rentals, and field services[67](index=67&type=chunk) - Demand for products and services is primarily dependent on the level of oil and gas industry activity, including drilling rig counts and capital spending by customers[69](index=69&type=chunk) [Recent Developments and Trends](index=21&type=section&id=Recent%20Developments%20and%20Trends) Economic reopening and higher commodity prices boosted activity, leading to workforce expansion but also significant cost inflation in freight and raw materials - Higher commodity prices have resulted in increased drilling and completion activity, leading to improved demand for the company's products and services[75](index=75&type=chunk) - The company is experiencing substantial increases in ocean freight, salaries, wages, and raw material prices due to supply chain pressures and increased global demand[75](index=75&type=chunk) - International freight costs have surged from approximately **$2,800 per container** pre-pandemic to over **$17,000**, with prices expected to remain elevated until mid-to-late 2022[78](index=78&type=chunk) [Results of Operations](index=23&type=section&id=Results%20of%20Operations) Q3 2021 revenue grew **5.9%** sequentially, and nine-month revenue increased **10.1%** year-over-year, driven by product revenue despite higher costs Q3 2021 vs Q2 2021 Performance (in thousands USD) | Metric | Q3 2021 | Q2 2021 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $115,363 | $108,893 | $6,470 | 5.9% | | Income from operations | $20,766 | $17,314 | $3,452 | 19.9% | | Net income attributable to Cactus Inc. | $12,617 | $10,393 | $2,224 | 21.4% | Nine Months 2021 vs 2020 Performance (in thousands USD) | Metric | Nine Months 2021 | Nine Months 2020 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $308,673 | $280,476 | $28,197 | 10.1% | | Product revenue | $197,136 | $163,781 | $33,355 | 20.4% | | Rental revenue | $42,404 | $57,579 | $(15,175) | (26.4)% | | Income from operations | $49,715 | $61,616 | $(11,901) | (19.3)% | | Net income attributable to Cactus Inc. | $34,569 | $31,244 | $3,325 | 10.6% | [Liquidity and Capital Resources](index=26&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with **$302.0 million** cash and no debt, with **$52.1 million** in operating cash flow for the first nine months - As of September 30, 2021, the company had **$302.0 million** in cash and cash equivalents and **no borrowings outstanding** under its **$75.0 million** ABL Credit Facility[107](index=107&type=chunk) - Net capital expenditures for the full year 2021 are estimated to range from **$10 million to $15 million**[110](index=110&type=chunk) - Net cash provided by operating activities decreased to **$52.1 million** for the first nine months of 2021 from **$121.5 million** in the prior year, mainly due to an increase in working capital[112](index=112&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=27&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reports no material changes in its market risk exposure since December 31, 2020 - There have been **no material changes** in the company's exposure to market risk since December 31, 2020[115](index=115&type=chunk) [Controls and Procedures](index=27&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of September 30, 2021, with no material changes to internal controls - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were **effective** as of September 30, 2021[117](index=117&type=chunk) - No changes in internal control over financial reporting occurred during Q3 2021 that have materially affected, or are reasonably likely to materially affect, internal controls[118](index=118&type=chunk) [PART II - OTHER INFORMATION](index=28&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Legal Proceedings](index=28&type=section&id=Item%201.%20Legal%20Proceedings) Management believes ongoing legal proceedings are unlikely to have a material adverse effect on the company's financial condition - Management does not believe that pending or threatened legal matters will have a **material adverse impact** on the company's financial condition[120](index=120&type=chunk)[121](index=121&type=chunk) [Risk Factors](index=28&type=section&id=Item%201A.%20Risk%20Factors) The company reports no material changes in its risk factors from those described in its 2020 Annual Report - There have been **no material changes** in the company's risk factors from those described in the 2020 Annual Report[122](index=122&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=28&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q3 2021, the company repurchased **534 shares** of Class A common stock at **$33.37 per share** for tax withholding Issuer Purchases of Equity Securities (Q3 2021) | Period | Total number of shares purchased | Average price paid per share | | :--- | :--- | :--- | | July 1-31, 2021 | — | $ — | | August 1-31, 2021 | — | $ — | | September 1-30, 2021 | 534 | $33.37 | | **Total** | **534** | **$33.37** | [Exhibits](index=29&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Quarterly Report on Form 10-Q, including CEO/CFO certifications and XBRL - The report includes required exhibits, such as CEO/CFO certifications under Sarbanes-Oxley Sections 302 and 906, and XBRL data files[126](index=126&type=chunk)

Cactus, Inc. (NYSE:WHD) Q2 2021 Earnings Conference Call July 29, 2021 10:00 AM ET Company Participants John Fitzgerald - Director, Corporate Development and Investor Relations Scott Bender - Chief Executive Officer Steve Tadlock - Chief Financial Officer Joel Bender - Senior Vice President and Chief Operating Officer Steven Bender - Vice President, Operations David Isaac - General Counsel and Vice President, Administration Conference Call Participants George O’Leary - TPH & Company Tommy Moll - Stephens Ch ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ______________________________________________________________________________ FORM 10-Q ______________________________________________________________________________ (MARK ONE) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transi ...