Cactus(US:WHD)2024-10-31 20:50Financial Data and Key Metrics Changes - Total company revenue for Q3 2024 was $293 million, up 1% sequentially [11] - Adjusted EBITDA for Q3 2024 was $100 million, down 3% sequentially, with an adjusted EBITDA margin of 34.2% compared to 35.7% in Q2 2024 [9][16] - GAAP net income was $62 million in Q3 2024, slightly down from $63 million in Q2 2024 [18] - Cash balance increased to $303 million, up $57 million during the quarter [21] Business Segment Data and Key Metrics Changes - Pressure Control segment revenues were $185 million, down 1.1% sequentially, with operating income decreasing by $3.1 million or 5.6% [11][12] - Adjusted segment EBITDA for Pressure Control decreased by $3.3 million or 5.1% sequentially [13] - Spoolable Technology segment revenues increased by 4.3% sequentially, with adjusted segment EBITDA remaining flat at $42.5 million [13][15] Market Data and Key Metrics Changes - The U.S. land rig activity continued to decline, impacting the Pressure Control segment [7] - International revenue in spoolable Technologies for 2024 has already doubled compared to the full year performance of 2023 [30] Company Strategy and Development Direction - The company remains focused on international expansion, particularly in the Mideast, while also evaluating strategic opportunities [30] - The primary objective for the next year includes contributions from a new manufacturing facility to enhance the supply chain [33] - The company is optimistic about its market positioning and the introduction of new products and services [31] Management's Comments on Operating Environment and Future Outlook - Management noted that while the U.S. market is challenging, they are pleased with the positioning of the company and its high-margin products [31] - There is an expectation of a mid-single digit dip in Pressure Control revenue for Q4 due to lower drilling activity and seasonal factors [24] - Management anticipates adjusted EBITDA margins in the Pressure Control segment to be between 33% to 35% for Q4 [26] Other Important Information - The company paid a dividend of $0.13 per share, resulting in a cash outflow of approximately $11 million [20] - Capital expenditures for the full year 2024 have been reduced to a range of $32 million to $37 million [22] Q&A Session Summary Question: Thoughts on overall portfolio and strategic growth opportunities - Management indicated that the primary objective is international expansion, but they remain open to acquisition opportunities similar to Flexsteel [35] Question: General thoughts on tariffs and risk mitigation - Management believes they are in a strong position compared to competitors due to their manufacturing base and ongoing expansion efforts [37][38] Question: Cash balance and potential return to shareholders - Management acknowledged having excess cash and indicated that if no acquisitions occur, they would consider returning cash to shareholders by the end of the coming year [41] Question: Update on wellhead system qualification in the Middle East - Management confirmed ongoing testing and a cautious approach to decision-making regarding the facility [43] Question: Changes in customer dynamics and pricing - Management noted a shift towards technical buying among major operators, which could benefit the company [47] Question: Revenue per rig dynamics and customer caution - Management explained that revenue per rig is primarily impacted by production tree call-offs, which are difficult to predict [53] Question: International revenue contribution and future growth - Management stated that international revenue in spoolable Technologies is currently in the high single digits as a percentage and is expected to grow significantly [61][62]