Cactus(US:WHD)2025-10-30 15:00Financial 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]