Cactus(WHD) - 2019 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION Financial Statements Cactus, Inc. reported $158.9 million in Q1 2019 revenues and $48.4 million net income, with total assets reaching $742.6 million and new lease accounting standard adoption Condensed Consolidated Statements of Income (Q1 2019 vs Q1 2018) | Metric | Three Months Ended March 31, 2019 (in thousands) | Three Months Ended March 31, 2018 (in thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenues | $158,875 | $115,110 | +38.0% | | Product Revenue | $86,640 | $58,926 | +47.0% | | Rental Revenue | $38,497 | $29,145 | +32.1% | | Field Service & Other Revenue | $33,738 | $27,039 | +24.8% | | Income from Operations | $48,492 | $35,217 | +37.7% | | Net Income | $48,446 | $26,408 | +83.5% | | Net Income Attributable to Cactus Inc. | $26,807 | $3,753 | +614.3% | | Earnings per Class A share - diluted | $0.59 | $0.14 | +321.4% | Condensed Consolidated Balance Sheets Highlights | Metric | March 31, 2019 (in thousands) | December 31, 2018 (in thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | $88,116 | $70,841 | | Total current assets | $315,199 | $274,505 | | Total assets | $742,633 | $584,744 | | Liability related to tax receivable agreement | $224,542 | $147,589 | | Total liabilities | $326,272 | $222,416 | | Total stockholders' equity | $416,361 | $362,328 | - The company adopted the new lease accounting standard ASC Topic 842 on January 1, 2019, resulting in the recognition of operating lease right-of-use assets of $25.3 million and corresponding lease liabilities[66][68] Management's Discussion and Analysis of Financial Condition and Results of Operations Q1 2019 revenue growth was driven by increased market share and drilling activity, supported by strong liquidity and projected capital expenditures for fleet investments - Product revenue increased 47% YoY, primarily due to increased market share and customer activity, with active U.S. onshore drilling rigs followed increasing by 19%[144] - Rental revenue increased 32% YoY, driven by investments in the rental fleet to meet higher completion activity[145] - The company estimates net capital expenditures for 2019 to range from $60 million to $65 million, primarily for rental fleet investments[158] Cash Flow Summary (Q1 2019 vs Q1 2018) | Cash Flow Activity | Three Months Ended March 31, 2019 (in thousands) | Three Months Ended March 31, 2018 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $34,239 | $38,565 | | Net cash used in investing activities | ($13,847) | ($15,687) | | Net cash used in financing activities | ($3,555) | ($22,640) | Quantitative and Qualitative Disclosures About Market Risk The company reports no material changes in its market risk exposure since December 31, 2018, consistent with its prior annual report disclosures - There have been no material changes in the company's exposure to market risk since December 31, 2018[171] Controls and Procedures Management concluded that disclosure controls and procedures were ineffective as of March 31, 2019, due to a previously identified material weakness, with no new material changes in Q1 2019 - The principal executive officer and principal financial officer concluded that disclosure controls and procedures were not effective as of March 31, 2019[172] - The ineffectiveness is due to a previously disclosed material weakness in internal control over financial reporting, identified in the 2018 Annual Report[172] - There were no changes in internal control over financial reporting during Q1 2019 that materially affected or are likely to materially affect internal controls[173] PART II - OTHER INFORMATION Legal Proceedings The company is involved in routine legal disputes, which management does not expect to materially impact its financial condition or operations - The company is party to lawsuits arising in the ordinary course of business, but management does not expect them to have a material adverse impact[175][176] Risk Factors No material changes to the company's previously disclosed risk factors have occurred since the 2018 Annual Report - There have been no material changes in risk factors from those described in the 2018 Annual Report[177] Unregistered Sales of Equity Securities and Use of Proceeds In Q1 2019, the company repurchased 44,906 Class A shares at $32.79 per share to cover employee tax withholding obligations from vested restricted stock units Share Repurchases in Q1 2019 | Period | Total number of shares purchased | Average price paid per share | | :--- | :--- | :--- | | January 1-31, 2019 | - | $ - | | February 1-28, 2019 | 44,906 | $32.79 | | March 1-31, 2019 | - | $ - | | Total | 44,906 | $32.79 | - The repurchased shares were from employees to satisfy tax withholding obligations related to vested restricted stock units[179] Exhibits This section lists required exhibits, including CEO and CFO certifications and XBRL data files, filed as part of the quarterly report - The report includes required exhibits such as CEO and CFO certifications under Sections 302 and 906 of the Sarbanes-Oxley Act, and XBRL data files[182]