Cactus, Inc. (NYSE:WHD) Q1 2021 Earnings Conference Call May 6, 2021 10:00 AM ET Company Participants John Fitzgerald - Director, Corporate Development & IR Scott Bender - President, CEO & Director Stephen Tadlock - CFO, VP & Treasurer Steven Bender - VP, Operations Joel Bender - SVP, COO & Director Conference Call Participants Chase Mulvehill - Bank of America Merrill Lynch Scott Gruber - Citigroup Thomas Moll - Stephens Inc. George O'Leary - Tudor, Pickering, Holt & Co. Connor Lynagh - Morgan Stanley Ian ...

PART I - FINANCIAL INFORMATION This section presents the company's financial statements, management's discussion and analysis of financial condition, market risk disclosures, and internal controls for the period [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) The financial statements for Q1 2021 reflect a downturn in the oil and gas industry, showing decreased revenue and net income compared to Q1 2020, while total assets and liabilities increased, maintaining strong liquidity [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Balance Sheet Summary (as of March 31, 2021 vs. December 31, 2020) | Account | March 31, 2021 ($ thousands) | December 31, 2020 ($ thousands) | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | 291,970 | 288,659 | | Accounts receivable, net | 57,633 | 44,068 | | Total current assets | 439,407 | 425,142 | | Total assets | 877,865 | 815,594 | | **Liabilities & Equity** | | | | Total current liabilities | 55,056 | 48,915 | | Liability related to tax receivable agreement | 251,082 | 204,351 | | Total liabilities | 318,815 | 264,824 | | Total stockholders' equity | 559,050 | 550,770 | [Condensed Consolidated Statements of Income](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Income Statement Summary (Three Months Ended March 31) | Metric | 2021 ($ thousands) | 2020 ($ thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Total revenues | 84,417 | 154,139 | -45.2% | | Income from operations | 11,635 | 40,185 | -71.0% | | Net income | 15,136 | 33,098 | -54.3% | | Net income attributable to Cactus Inc. | 11,559 | 18,983 | -39.1% | | Diluted EPS | $0.19 | $0.40 | -52.5% | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Summary (Three Months Ended March 31) | Cash Flow Activity | 2021 ($ thousands) | 2020 ($ thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | 15,747 | 45,161 | | Net cash used in investing activities | (2,028) | (8,338) | | Net cash used in financing activities | (10,483) | (9,604) | | **Net increase in cash** | **3,311** | **27,599** | - The significant decrease in net cash from operating activities in Q1 2021 compared to Q1 2020 was primarily due to lower net income[104](index=104&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) - For the three months ended March 31, 2021, one customer represented **12% of consolidated revenue**, compared to **10%** for the same period in 2020[32](index=32&type=chunk) Revenue by Category (Three Months Ended March 31) | Revenue Category | 2021 ($ thousands) | % of Total | 2020 ($ thousands) | % of Total | | :--- | :--- | :--- | :--- | :--- | | Product revenue | 51,956 | 61% | 87,031 | 57% | | Rental revenue | 12,489 | 15% | 36,163 | 23% | | Field service and other | 19,972 | 24% | 30,945 | 20% | | **Total revenue** | **84,417** | **100%** | **154,139** | **100%** | - As of March 31, 2021, the total liability from the Tax Receivable Agreement (TRA) was **$251.1 million**[47](index=47&type=chunk) - In March 2021, a secondary offering of **6,325,000 shares** of Class A common stock was completed by selling stockholders. Cactus did not receive any proceeds from this sale[52](index=52&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=17&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes Q1 2021's year-over-year revenue and profitability decline to the industry downturn, noting sequential recovery driven by rising oil prices and a strong balance sheet with significant cash and no debt [Executive Summary & Market Factors](index=17&type=section&id=Executive%20Summary%20%26%20Market%20Factors) - Cactus designs, manufactures, sells, and rents highly engineered wellhead and pressure control equipment primarily for U.S. onshore unconventional oil and gas wells[61](index=61&type=chunk) - Revenue is derived from three sources: products (**61%** in Q1 2021), rentals (**15%**), and field services (**24%**)[63](index=63&type=chunk)[64](index=64&type=chunk) - Demand for products and services is heavily dependent on oil and gas industry activity, influenced by commodity prices, rig counts, and well completion levels[65](index=65&type=chunk) [Recent Developments and Trends](index=19&type=section&id=Recent%20Developments%20and%20Trends) - The weekly average U.S. onshore rig count increased from **295** in Q4 2020 to **377** in Q1 2021, indicating a recovery in drilling activity[70](index=70&type=chunk) - In response to recovering demand, the company added over **100 associates** in Q1 2021 and began reinstating wage reductions implemented in 2020[34](index=34&type=chunk)[72](index=72&type=chunk) - The company faces rising costs for raw materials, particularly steel, and increased freight costs due to supply chain disruptions, which may adversely affect margins[74](index=74&type=chunk) [Consolidated Results of Operations](index=20&type=section&id=Consolidated%20Results%20of%20Operations) Q1 2021 vs Q4 2020 Performance | Metric | Q1 2021 ($ thousands) | Q4 2020 ($ thousands) | QoQ Change | | :--- | :--- | :--- | :--- | | Total Revenues | 84,417 | 68,090 | +24.0% | | Income from Operations | 11,635 | 8,423 | +38.1% | | Net Income | 15,136 | 6,136 | +146.7% | - The **24% sequential increase** in revenue was driven by higher sales of wellhead equipment and greater customer completion activity in response to rising oil prices[78](index=78&type=chunk)[79](index=79&type=chunk) Q1 2021 vs Q1 2020 Performance | Metric | Q1 2021 ($ thousands) | Q1 2020 ($ thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Total Revenues | 84,417 | 154,139 | -45.2% | | Income from Operations | 11,635 | 40,185 | -71.0% | | Net Income | 15,136 | 33,098 | -54.3% | - The **45.2% year-over-year revenue decline** resulted from lower drilling and completion activity by customers due to the industry downturn that began in March 2020[90](index=90&type=chunk)[91](index=91&type=chunk) [Liquidity and Capital Resources](index=23&type=section&id=Liquidity%20and%20Capital%20Resources) - As of March 31, 2021, the company had **$292.0 million** in cash and cash equivalents and no outstanding borrowings under its ABL Credit Facility[100](index=100&type=chunk) - The company had **$63.7 million** of available borrowing capacity under its ABL Credit Facility as of March 31, 2021[100](index=100&type=chunk) - Net capital expenditures for Q1 2021 were **$2.0 million**. The full-year 2021 forecast for net capital expenditures is estimated to be between **$10 million and $15 million**[102](index=102&type=chunk) [Cash Flows](index=24&type=section&id=Cash%20Flows) Cash Flow Comparison (Three Months Ended March 31) | Cash Flow Activity | 2021 ($ thousands) | 2020 ($ thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | 15,747 | 45,161 | | Net cash used in investing activities | (2,028) | (8,338) | | Net cash used in financing activities | (10,483) | (9,604) | - Cash from operations decreased primarily due to lower net income. Cash used in investing decreased due to lower capital expenditures on the rental fleet in 2021[104](index=104&type=chunk)[105](index=105&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=24&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company states that its exposure to market risk has not changed materially since December 31, 2020, as detailed in its 2020 Annual Report on Form 10-K - There have been no material changes in the company's exposure to market risk since the end of the previous fiscal year[107](index=107&type=chunk) [Item 4. Controls and Procedures](index=24&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2021, with no material changes to internal control over financial reporting during Q1 2021 - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of March 31, 2021[108](index=108&type=chunk) - No changes occurred in internal control over financial reporting during Q1 2021 that have materially affected, or are reasonably likely to materially affect, these controls[109](index=109&type=chunk) PART II - OTHER INFORMATION This section covers legal proceedings, risk factors, equity security sales, and a list of exhibits filed with the report [Item 1. Legal Proceedings](index=25&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various routine lawsuits and disputes arising in the ordinary course of business, with management believing no pending matters will have a material adverse effect on financial condition - Management believes that pending or threatened legal matters are unlikely to have a material adverse impact on the company's financial condition[111](index=111&type=chunk)[112](index=112&type=chunk) [Item 1A. Risk Factors](index=25&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's 2020 Annual Report on Form 10-K or other SEC filings - No material changes in risk factors have occurred since those described in the 2020 Annual Report[113](index=113&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=25&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) In Q1 2021, the company repurchased **100,101 shares** of Class A common stock from employees to satisfy tax withholding obligations for vested restricted stock units Issuer Purchases of Equity Securities (Q1 2021) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | January 2021 | — | $ — | | February 2021 | 38,916 | $29.03 | | March 2021 | 61,185 | $32.82 | | **Total** | **100,101** | **$31.35** | - The repurchased shares were from employees to satisfy tax withholding obligations related to vested restricted stock units[115](index=115&type=chunk) [Item 6. Exhibits](index=26&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed as part of the Form 10-Q report, including corporate governance documents and certifications by the CEO and CFO as required by the Sarbanes-Oxley Act - The report includes required exhibits such as the Certificate of Incorporation, Bylaws, and CEO/CFO certifications pursuant to the Sarbanes-Oxley Act[117](index=117&type=chunk)

Cactus, Inc. (NYSE:WHD) Q4 2020 Earnings Conference Call February 25, 2021 10:00 AM ET Company Participants John Fitzgerald - Director of Corporate Development and IR Scott Bender - CEO Steve Tadlock - CFO Joel Bender - SVP and COO David Isaac - General Counsel and VP of Administration Conference Call Participants George O'Leary - TPH & Company Tommy Moll - Stephens Scott Gruber - Citigroup Blake Gendron - Wolfe Research Stephen Gengaro - Stifel Operator Ladies and gentlemen, thank you for standing by, and ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-38390 Cactus, Inc. | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | | --- | ...

Cactus, Inc. (NYSE:WHD) Q3 2020 Earnings Conference Call November 5, 2020 10:00 AM ET Company Participants John Fitzgerald - Director of Corporate Development and Investor Relations Scott Bender - President, Chief Executive Officer and Director Stephen Tadlock - Vice President, Chief Financial Officer and Treasurer Conference Call Participants Stephen Gengaro - Stifel George O'Leary - Tudor, Pickering, Holt Chase Mulvehill - Bank of America Tommy Moll - Stephens Inc Scott Gruber - Citigroup Jake Lundberg - ...

[PART I - FINANCIAL INFORMATION](index=6&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) This section presents unaudited condensed consolidated financial statements, reflecting a significant decline in revenue and net income due to industry downturns, offset by strong cash and cost management Condensed Consolidated Balance Sheet Highlights (unaudited) | (in thousands) | September 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | **Total current assets** | $411,894 | $414,883 | | Cash and cash equivalents | $273,941 | $202,603 | | Accounts receivable, net | $40,290 | $87,865 | | Inventories | $87,702 | $113,371 | | **Total assets** | $811,488 | $834,964 | | **Total current liabilities** | $47,997 | $91,126 | | **Total liabilities** | $264,928 | $318,569 | | **Total stockholders' equity** | $546,560 | $516,395 | Condensed Consolidated Statements of Income (unaudited) | (in thousands, except per share data) | Three Months Ended Sep 30, 2020 | Three Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | **Total revenues** | $59,789 | $160,808 | $280,476 | $488,176 | | **Income from operations** | $12,556 | $47,123 | $61,616 | $147,065 | | **Net income** | $10,886 | $35,833 | $53,079 | $125,029 | | **Net income attributable to Cactus Inc.** | $6,233 | $19,339 | $31,244 | $67,554 | | **Earnings per Class A share - diluted** | $0.13 | $0.41 | $0.64 | $1.50 | Condensed Consolidated Statements of Cash Flows (unaudited) | (in thousands) | Nine Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2019 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $121,485 | $148,191 | | **Net cash used in investing activities** | ($16,494) | ($37,715) | | **Net cash used in financing activities** | ($34,090) | ($13,042) | | **Net increase in cash and cash equivalents** | $71,338 | $96,704 | - In response to the weakened macroeconomic environment due to COVID-19, the company implemented significant cost reduction measures, including salary reductions for executives and workforce, headcount reductions of **almost 50%**, suspension of the 401(k) match, and reduced capital expenditures[42](index=42&type=chunk)[43](index=43&type=chunk) - The company recognized approximately **$14.0 million** in tariff refunds (including **$0.5 million** in interest) as of September 30, 2020, related to exclusions on certain Chinese imports[65](index=65&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the severe impact of COVID-19 and the oil and gas downturn on financial performance, detailing cost-cutting, tariff refunds, and strong liquidity [Executive Summary & Market Factors](index=23&type=section&id=Executive%20Summary%20%26%20Market%20Factors) Cactus designs, manufactures, sells, and rents wellhead and pressure control equipment for U.S. onshore wells, with demand driven by oil and gas activity - The company operates in a single business segment, deriving revenue from three sources: products (wellhead systems), rentals (well control equipment), and field services[71](index=71&type=chunk)[73](index=73&type=chunk) - Demand for products and services is primarily driven by the level of oil and gas activity, including the number of drilling rigs, well completions, and capital spending by customers[75](index=75&type=chunk) [Recent Developments and Trends](index=24&type=section&id=Recent%20Developments%20and%20Trends) The COVID-19 pandemic severely impacted drilling activity, leading to significant cost reductions and temporary tariff exemptions - The weekly average U.S. onshore rig count declined to **240** for Q3 2020, compared to **894** for the same period in 2019, reflecting a significant drop in customer activity[81](index=81&type=chunk) - The company is well-positioned to navigate the market downturn with a strong balance sheet, having reduced its workforce by **almost 50%**, holding approximately **$273.9 million** in cash, and having no long-term debt as of September 30, 2020[83](index=83&type=chunk) - A tariff exemption on certain Chinese imports, which was in effect from September 2018 to August 2020, resulted in the recognition of **$14.0 million** in refunds[84](index=84&type=chunk)[85](index=85&type=chunk) [Consolidated Results of Operations](index=25&type=section&id=Consolidated%20Results%20of%20Operations) The company experienced significant year-over-year declines in Q3 and nine-month 2020 financial performance, with revenues and income from operations falling sharply due to lower customer activity, partially offset by cost-cutting and tariff refunds Q3 2020 vs. Q3 2019 Performance (in thousands) | Metric | Q3 2020 | Q3 2019 | % Change | | :--- | :--- | :--- | :--- | | **Total Revenues** | $59,789 | $160,808 | (62.8)% | | Product Revenue | $35,857 | $92,582 | (61.3)% | | Rental Revenue | $9,881 | $35,528 | (72.2)% | | **Income from Operations** | $12,556 | $47,123 | (73.4)% | | **Net Income** | $10,886 | $35,833 | (69.6)% | Nine Months 2020 vs. Nine Months 2019 Performance (in thousands) | Metric | Nine Months 2020 | Nine Months 2019 | % Change | | :--- | :--- | :--- | :--- | | **Total Revenues** | $280,476 | $488,176 | (42.5)% | | Product Revenue | $163,781 | $273,716 | (40.2)% | | Rental Revenue | $57,579 | $113,601 | (49.3)% | | **Income from Operations** | $61,616 | $147,065 | (58.1)% | | **Net Income** | $53,079 | $125,029 | (57.5)% | - Cost of product revenue for Q3 2020 decreased by **66%** and included approximately **$5.4 million** in credits from tariff refunds[90](index=90&type=chunk) - For the nine months ended September 30, 2020, the company recorded **$1.9 million** in severance expenses due to headcount reductions[107](index=107&type=chunk) [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) As of September 30, 2020, Cactus maintained a strong liquidity position with substantial cash, no debt, and reduced capital expenditures, believing existing liquidity is sufficient for future obligations - As of September 30, 2020, the company had **$273.9 million** in cash and cash equivalents, no borrowings outstanding under its ABL Credit Facility, and **$39.3 million** of available borrowing capacity[110](index=110&type=chunk) - Net capital expenditures for the first nine months of 2020 totaled **$16.5 million**, a significant decrease from the prior year, primarily due to reduced investment in the rental fleet[113](index=113&type=chunk)[117](index=117&type=chunk) - Net cash used in financing activities increased to **$34.1 million** for the nine months ended September 30, 2020, mainly due to **$12.8 million** in dividend payments and a **$9.7 million** increase in member distributions[118](index=118&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=30&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's exposure to market risk has not materially changed since the 2019 fiscal year-end, referring stakeholders to prior disclosures - The company's exposure to market risk has not changed materially since December 31, 2019[120](index=120&type=chunk) [Controls and Procedures](index=30&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded the company's disclosure controls and procedures were effective as of September 30, 2020, with no material changes to internal control over financial reporting identified during Q3 2020 - Based on an evaluation by management, the company's disclosure controls and procedures were concluded to be effective as of September 30, 2020[122](index=122&type=chunk) - There were no changes in internal control over financial reporting during Q3 2020 that have materially affected, or are reasonably likely to materially affect, these controls[123](index=123&type=chunk) [PART II - OTHER INFORMATION](index=31&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Legal Proceedings](index=31&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in routine lawsuits, but management believes these legal matters will not materially adversely affect its financial condition, results of operations, or cash flows - The company is party to lawsuits arising in the ordinary course of business, but management believes it is unlikely that these will have a material adverse impact on its financial condition[125](index=125&type=chunk)[126](index=126&type=chunk) [Risk Factors](index=31&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the company's risk factors have occurred since the 2019 Annual Report, except as previously disclosed in the Q1 2020 Form 10-Q - There have been no material changes in the company's risk factors from those described in the 2019 Annual Report, other than what was disclosed in the Q1 2020 10-Q[127](index=127&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=31&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q3 2020, the company repurchased Class A common stock shares to satisfy employee tax withholding obligations related to vested restricted stock units Issuer Purchases of Equity Securities (Q3 2020) | Period | Total number of shares purchased | Average price paid per share (USD) | | :--- | :--- | :--- | | July 1-31, 2020 | — | $ — | | August 1-31, 2020 | — | $ — | | September 1-30, 2020 | 426 | $19.66 | | **Total** | **426** | **$19.66** | - The repurchased shares of Class A common stock were from employees to satisfy tax withholding obligations related to vested restricted stock units[129](index=129&type=chunk) [Exhibits](index=32&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including corporate governance documents, credit agreement amendments, and CEO/CFO certifications - A list of exhibits filed with the report is provided, including corporate charters, an amendment to the credit agreement, and CEO/CFO certifications under Sarbanes-Oxley Sections 302 and 906[131](index=131&type=chunk)

Cactus, Inc. (NYSE:WHD) Q2 2020 Earnings Conference Call July 30, 2020 10:00 AM ET Company Participants John Fitzgerald - Director of Corporate Development & Investor Relations Scott Bender - Chief Executive Officer Steve Tadlock - Chief Financial Officer Joel Bender - Senior Vice President and Chief Operating Officer Conference Call Participants Sean Meakim - JPMorgan Ian MacPherson - Simmons George O'Leary - TPH & Company Tommy Moll - Stephens Jacob Lundberg - Credit Suisse Connor Lynagh - Morgan Stanley ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ______________________________________________________________________________ ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2020 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 001-38390 ______________________________________________________________________________ C ...

Cactus, Inc. (NYSE:WHD) Q1 2020 Earnings Conference Call April 30, 2020 10:00 AM ET Company Participants John Fitzgerald - Director of Corporate Development & Investor Relations Scott Bender - Chief Executive Officer Steve Tadlock - Chief Financial Officer Conference Call Participants Tommy Moll - Stephens Inc. George O'Leary - Tudor, Pickering, Holt & Co. Scott Gruber - Citigroup Praveen Narra - Raymond James Connor Lynagh - Morgan Stanley Blake Gendron - Wolfe Research Jacob Lundberg - Credit Suisse Chase ...

PART I - FINANCIAL INFORMATION [Financial Statements](index=7&type=section&id=Item%201.%20Financial%20Statements) The unaudited condensed consolidated financial statements for Q1 2020 show total assets increased to $850.1 million, while revenues slightly decreased to $154.1 million and net income fell to $33.1 million due to higher costs - The financial statements are prepared on a consolidated basis, including Cactus Inc. and its subsidiary Cactus Wellhead, LLC, with Cactus Inc. consolidating results and reporting a non-controlling interest[26](index=26&type=chunk) Condensed Consolidated Balance Sheet Highlights (as of March 31, 2020) | Metric | March 31, 2020 (in thousands) | December 31, 2019 (in thousands) | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $230,202 | $202,603 | | Total current assets | $435,274 | $414,883 | | Total assets | $850,095 | $834,964 | | **Liabilities & Equity** | | | | Total current liabilities | $81,414 | $91,126 | | Total liabilities | $307,669 | $318,569 | | Total stockholders' equity | $542,426 | $516,395 | Condensed Consolidated Statement of Income (Three Months Ended March 31) | Metric | 2020 (in thousands) | 2019 (in thousands) | | :--- | :--- | :--- | | Total revenues | $154,139 | $158,875 | | Income from operations | $40,185 | $48,492 | | Net income | $33,098 | $48,446 | | Net income attributable to Cactus Inc. | $18,983 | $26,807 | | Earnings per Class A share - diluted | $0.40 | $0.59 | Condensed Consolidated Statement of Cash Flows (Three Months Ended March 31) | Metric | 2020 (in thousands) | 2019 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $45,161 | $34,239 | | Net cash used in investing activities | ($8,338) | ($13,847) | | Net cash used in financing activities | ($9,604) | ($3,555) | | Net increase in cash and cash equivalents | $27,599 | $17,275 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the severe impact of COVID-19 and oil price instability on demand, leading to a 3.0% revenue decline and cost-saving measures, while maintaining a strong liquidity position [Executive Summary & Business Overview](index=27&type=section&id=Executive%20Summary%20%26%20Business%20Overview) Cactus designs, manufactures, sells, and rents wellhead and pressure control equipment for onshore oil and gas wells, operating in a single segment with revenue from products, rentals, and field services - For the three months ended March 31, 2020, revenue was composed of **57% product sales**, **23% rentals**, and **20% field service and other**, a mix similar to the prior year period[77](index=77&type=chunk) [Recent Developments and Trends](index=29&type=section&id=Recent%20Developments%20and%20Trends) Q1 2020 experienced severe market disruptions due to the COVID-19 pandemic and oil price war, resulting in reduced customer capital expenditure and significant workforce reductions - The combination of the COVID-19 pandemic and geopolitical oil price instability has led to a severe decline in oil demand and significant reductions in customer capital expenditure budgets for 2020[37](index=37&type=chunk)[86](index=86&type=chunk) - The U.S. onshore rig count, a key indicator of demand, dropped from an average of **763 in Q1 2020 to 448 by April 24, 2020**, and is expected to continue declining[86](index=86&type=chunk) - In response to the downturn, the company reduced its U.S. workforce by **277 employees in March** and an additional **212 in April**, also implementing salary reductions for executives and other employees, and reduced board compensation[39](index=39&type=chunk)[71](index=71&type=chunk)[89](index=89&type=chunk) - The U.S. Trade Representative granted certain tariff exclusion requests on Chinese imports, applying retroactively from September 24, 2018, to August 7, 2020, temporarily relieving tariff costs on some imported products[90](index=90&type=chunk) [Consolidated Results of Operations](index=31&type=section&id=Consolidated%20Results%20of%20Operations) Q1 2020 total revenues decreased by 3.0% to $154.1 million, with income from operations falling 17.1% to $40.2 million, impacted by higher costs and severance expenses Consolidated Operating Results (Three Months Ended March 31) | | 2020 (in thousands) | 2019 (in thousands) | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | **Total revenues** | **$154,139** | **$158,875** | **($4,736)** | **(3.0)%** | | Product revenue | $87,031 | $86,640 | $391 | 0.5% | | Rental revenue | $36,163 | $38,497 | ($2,334) | (6.1)% | | Field service and other revenue | $30,945 | $33,738 | ($2,793) | (8.3)% | | **Income from operations** | **$40,185** | **$48,492** | **($8,307)** | **(17.1)%** | | **Net income** | **$33,098** | **$48,446** | **($15,348)** | **(31.7)%** | - Product revenue remained stable due to product mix, drilling efficiencies, and increased market share, offsetting the lower rig count[93](index=93&type=chunk) - Rental and Field Service revenues decreased due to lower completion activity and increased competition[94](index=94&type=chunk)[95](index=95&type=chunk) - Total costs increased by **3.2%**, driven by higher cost of product revenue (tariffs, inventory reserves), higher depreciation on the rental fleet, and **$1.0 million in severance expenses**[91](index=91&type=chunk)[96](index=96&type=chunk)[97](index=97&type=chunk)[100](index=100&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains a strong liquidity position with $230.2 million in cash and no debt, increased operating cash flow to $45.2 million, and reduced its 2020 capital expenditure forecast - As of March 31, 2020, the company had **$230.2 million in cash and cash equivalents**, no outstanding borrowings, and **$75.0 million of available capacity** under its ABL Credit Facility[105](index=105&type=chunk) - The 2020 net capital expenditure forecast has been reduced to a range of **$20 million to $30 million**, primarily for rental fleet investments[108](index=108&type=chunk) Cash Flow Summary (Three Months Ended March 31) | Metric | 2020 (in thousands) | 2019 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $45,161 | $34,239 | | Net cash used in investing activities | ($8,338) | ($13,847) | | Net cash used in financing activities | ($9,604) | ($3,555) | [Quantitative and Qualitative Disclosures About Market Risk](index=37&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's exposure to market risk has not materially changed since the end of the 2019 fiscal year - The company's exposure to market risk has not changed materially since December 31, 2019[115](index=115&type=chunk) [Controls and Procedures](index=37&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2020, with no material changes to internal control over financial reporting during Q1 2020 - Based on an evaluation, the principal executive officer and principal financial officer concluded that disclosure controls and procedures were effective as of March 31, 2020[116](index=116&type=chunk) - No changes occurred in internal control over financial reporting during the first quarter of 2020 that have materially affected, or are reasonably likely to materially affect, these controls[117](index=117&type=chunk) PART II - OTHER INFORMATION [Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in routine lawsuits and disputes, but management does not believe their outcomes will have a material adverse effect on financial condition or results of operations - The company is party to lawsuits arising in the ordinary course of business, but management believes it is unlikely that these will have a material adverse impact on its financial condition[119](index=119&type=chunk)[120](index=120&type=chunk) [Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) This section updates the key risk factor, emphasizing that the COVID-19 pandemic's severe impact on oil and gas demand, combined with oversupply, could materially affect the company's financial condition - The report updates a key risk factor to highlight that demand for the company's products is directly affected by oil and gas prices and customer spending[122](index=122&type=chunk)[123](index=123&type=chunk) - The effects of the COVID-19 pandemic have collapsed oil demand, which, coupled with oversupply and limited storage, could materially and adversely impact the company's financial condition and results, with the full duration and extent of the downturn remaining uncertain[127](index=127&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=41&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q1 2020, the company repurchased 55,996 shares of Class A common stock at an average price of $24.22 to satisfy employee tax withholding obligations Issuer Purchases of Equity Securities (Q1 2020) | Period | Total number of shares purchased | Average price paid per share | | :--- | :--- | :--- | | January 1-31, 2020 | — | $ — | | February 1-29, 2020 | 39,779 | $28.79 | | March 1-31, 2020 | 16,217 | $13.00 | | **Total** | **55,996** | **$24.22** | - The repurchased shares of Class A common stock were from employees to satisfy tax withholding obligations related to vested restricted stock units[129](index=129&type=chunk) [Exhibits](index=42&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including Amended and Restated Bylaws and CEO/CFO certifications required by the Sarbanes-Oxley Act - Key exhibits filed with this report include: - Amended and Restated Bylaws of Cactus, Inc. - CEO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - CFO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - CEO and CFO Certifications Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002[133](index=133&type=chunk)