Cactus, Inc. (NYSE: WHD) (“Cactus” or the “Company”) today
announced financial and operating results for the second quarter of
2023.
Second Quarter Highlights
- Revenue of $305.8 million and operating income of $48.5
million;
- Net income of $32.5 million and diluted earnings per Class A
share of $0.38;
- Adjusted net income(1) of $67.3 million and diluted earnings
per share, as adjusted(1) of $0.84;
- Net income margin of 10.6% and adjusted net income margin(1) of
22.0%;
- Adjusted EBITDA(2) and Adjusted EBITDA margin(2) of $115.4
million and 37.7%, respectively;
- Cash flow from operations of $108.1 million;
- On June 7, 2023, announced approval of a $150 million share
repurchase authorization;
- On August 1, 2023, the Board of Directors approved a 9%
increase to the dividend to $0.12 per quarter;
- Cash and cash equivalents balance of $63.9 million and gross
bank debt outstanding of $55 million as of June 30, 2023; and
- As of July 31, 2023, the full balance of the $155 million of
bank debt raised to finance the FlexSteel acquisition had been paid
off.
Financial Summary
Three Months Ended
June 30,
March 31,
June 30,
2023
2023(3)
2022
(in thousands)
Revenues
$
305,819
$
228,405
$
170,215
Operating income(4)
$
48,522
$
49,688
$
44,241
Operating income margin
15.9
%
21.8
%
26.0
%
Net income
$
32,459
$
52,288
$
35,780
Net income margin
10.6
%
22.9
%
21.0
%
Adjusted net income(1)
$
67,279
$
50,682
$
33,409
Adjusted net income margin(1)
22.0
%
22.2
%
19.6
%
Adjusted EBITDA(2)
$
115,419
$
79,411
$
55,506
Adjusted EBITDA margin(2)
37.7
%
34.8
%
32.6
%
(1)
Adjusted net income, Adjusted net income
margin and diluted earnings per share, as adjusted are non-GAAP
financial measures. These figures assume Cactus, Inc. held all
units in its operating subsidiary at the beginning of the period.
Additional information regarding non-GAAP measures and the
reconciliation of GAAP to non-GAAP financial measures are in the
Supplemental Information tables.
(2)
Adjusted EBITDA and Adjusted EBITDA margin
are non-GAAP financial measures. See definition of these measures
and the reconciliation of GAAP to non-GAAP financial measures in
the Supplemental Information tables.
(3)
First quarter 2023 results throughout
include only one month of FlexSteel results from the close of the
acquisition on February 28th, 2023.
(4)
Operating income for the second quarter of
2023 includes $18.1 million of expense related to the remeasurement
of the earn-out liability associated with the FlexSteel
acquisition, $19.3 million of inventory costs associated with the
step-up in value of inventory on hand at acquisition, and $8.7
million of intangible amortization expense related to purchase
price accounting. Operating income for the first quarter of 2023
includes $4.2 million of inventory costs associated with the
step-up in value of inventory on hand at acquisition and $3.7
million of intangible amortization expense related to purchase
price accounting.
Scott Bender, CEO and Chairman of the Board of Cactus,
commented, “The second quarter once again showcased our ability to
outperform a declining U.S. rig count due to our differentiated
products and focus on execution. Revenues increased sequentially in
both segments despite lower U.S. activity levels as the quarter
progressed. Additionally, our substantial free cash flow generation
enabled us to repay all of the $155 million of debt raised for the
FlexSteel acquisition within five months of closing, well ahead of
plan, leaving us once again free of bank debt.”
“Looking ahead to the third quarter, we anticipate revenue to be
down sequentially due to lower U.S. land activity levels, although
we expect impacts to the FlexSteel business will lag the activity
decline. We also expect margins to remain robust in both segments.
We believe the majority of the rig count declines are behind us and
are optimistic that drilling activity levels in the fourth quarter
will be flat to up.”
Mr. Bender concluded, “The integration of the FlexSteel business
has been proceeding smoothly, and we are very pleased to report the
first full quarter of results since the acquisition closed.
Revenue, margins and cash flow generation all exceeded our
expectations, and we continue to be excited about the growth
potential of the business under our ownership. Additionally, we are
pleased to have our new share repurchase authorization in place to
allow us to invest in Cactus stock during what we perceive to be
market price dislocations.”
Segment Performance
Upon completion of the FlexSteel acquisition, we re-evaluated
our reportable segments and now report two business segments,
Pressure Control (legacy Cactus) and Spoolable Technologies
(FlexSteel). All corporate and other costs not directly
attributable to either segment have been included in Pressure
Control results.
Pressure Control
Three Months Ended
June 30,
March 31,
June 30,
2023
2023
2022
(in thousands)
Pressure Control
Revenue
$
199,134
$
194,655
$
170,215
Operating income
$
54,540
$
49,439
$
44,241
Revaluation gain on TRA liability(1)
—
3,417
—
Depreciation and amortization expense
9,127
7,992
8,915
Segment EBITDA(2)
63,667
60,848
53,156
Stock-based compensation
4,086
3,091
2,350
Revaluation gain on TRA liability(1)
—
(3,417
)
—
Transaction related expenses(3)
2,191
8,581
—
Adjusted Segment EBITDA(2)
$
69,944
$
69,103
$
55,506
Operating income margin
27.4
%
25.4
%
26.0
%
Adjusted Segment EBITDA margin(2)
35.1
%
35.5
%
32.6
%
(1)
Represents non-cash adjustments for the
revaluation of the liability related to the TRA.
(2)
Segment EBITDA, Adjusted Segment EBITDA
and Adjusted Segment EBITDA margin are non-GAAP financial measures.
See definition of these measures and the reconciliation of GAAP to
non-GAAP financial measures in the Supplemental Information
tables.
(3)
Reflects fees and expenses recorded in
connection with the FlexSteel Acquisition and related
financing.
Second quarter 2023 Pressure Control revenue increased $4.5
million, or 2.3%, sequentially, as sales of wellhead and production
related equipment improved primarily due to higher customer
activity relative to the declining rig count. Operating income
increased $5.1 million, or 10.3%, sequentially, with margins
increasing 200 basis points primarily due to lower transaction
expenses offset partially by an increase in the allowance for
doubtful accounts. Adjusted Segment EBITDA increased $0.8 million,
or 1.2%, sequentially, with Adjusted Segment EBITDA margins
decreasing 40 basis points.
Spoolable Technologies
Three Months Ended
June 30,
March 31,
June 30,
2023
2023
2022
(in thousands)
Spoolable Technologies
Revenue
$
106,685
$
33,750
$
—
Operating income (loss)
$
(6,018
)
$
249
$
—
Other non-operating income
—
121
—
Depreciation and amortization expense
12,787
5,118
—
Segment EBITDA(1)
6,769
5,488
—
Stock-based compensation
1,237
750
—
Remeasurement (gain) loss on earn-out
liability(2)
18,144
(121
)
—
Inventory step-up expense(3)
19,325
4,191
—
Adjusted Segment EBITDA(1)
$
45,475
$
10,308
$
—
Operating income (loss) margin
(5.6
)%
0.7
%
n/a
Adjusted Segment EBITDA margin(1)
42.6
%
30.5
%
n/a
(1)
Segment EBITDA, Adjusted Segment EBITDA
and Adjusted Segment EBITDA margin are non-GAAP financial measures.
See definition of these measures and the reconciliation of GAAP to
non-GAAP financial measures in the Supplemental Information
tables.
(2)
Represents non-cash adjustments for the
remeasurement of the earn-out liability associated with the
FlexSteel Acquisition.
(3)
Represents amortization of the FlexSteel
inventory step-up adjustment due to purchase price accounting.
In the second quarter of 2023, Spoolable Technologies generated
revenue of $106.7 million and segment operating loss of $6.0
million. Operating loss was inclusive of $19.3 million of inventory
costs associated with the step-up in value of inventory on hand at
acquisition, $8.7 million of intangible amortization expense, and
$18.1 million of expense related to the remeasurement of the
earn-out liability associated with the FlexSteel acquisition.
Adjusted Segment EBITDA margins increased 1,210 basis points due to
the depletion of higher cost material in the prior quarter and
improved operating leverage.
Liquidity, Capital Expenditures and Other
As of June 30, 2023, the Company had $55.0 million gross bank
debt, $63.9 million of cash and cash equivalents, and $193.3
million availability on our revolving credit facility. Operating
cash flow was $108.1 million for the second quarter of 2023. During
the second quarter, the Company made dividend payments and
associated distributions of $8.7 million.
Net cash used in investing activities represented $6.4 million
during the second quarter of 2023. For the full year 2023, the
Company now expects net capital expenditures to be in the range of
$35 million to $45 million on lower expectations for near-term
growth spending given moderating activity levels.
As of June 30, 2023, Cactus had 64,609,498 shares of Class A
common stock outstanding (representing 81.3% of the total voting
power) and 14,820,100 shares of Class B common stock outstanding
(representing 18.7% of the total voting power).
Quarterly Dividend
In August 2023, the Board approved a quarterly cash dividend of
$0.12 per share of Class A common stock with payment to occur on
September 14, 2023 to holders of record of Class A common stock at
the close of business on August 28, 2023. A corresponding
distribution of up to $0.12 per CC Unit has also been approved for
holders of CC Units of Cactus Companies, LLC.
Conference Call Details
The Company will host a conference call to discuss financial and
operational results tomorrow, Tuesday August 8, 2023 at 9:00 a.m.
Central Time (10:00 a.m. Eastern Time).
The call will be webcast on Cactus’ website at
www.CactusWHD.com. Please access the webcast for the call at least
10 minutes ahead of the start time to ensure a proper connection.
Analysts and institutional investors may click here to pre-register
for the conference call and obtain a dial-in number and
passcode.
An archived webcast of the conference call will be available on
the Company’s website shortly after the end of the call.
About Cactus, Inc.
Cactus designs, manufactures, sells or rents a range of highly
engineered pressure control and spoolable pipe technologies. Its
products are sold and rented principally for onshore unconventional
oil and gas wells and are utilized during the drilling, completion
and production phases of its customers’ wells. In addition, it
provides field services for its products and rental items to assist
with the installation, maintenance and handling of the equipment.
Cactus operates service centers throughout North America and
Australia, while also providing equipment and services in select
international markets.
Cautionary Statement Concerning Forward-Looking
Statements
Certain statements contained in this press release and oral
statements made regarding the matters addressed in this release
constitute “forward-looking statements” within the meaning of the
Private Securities Litigation Reform Act of 1995. These
forward-looking statements are subject to risks, uncertainties and
other factors, many of which are outside of Cactus’ control, that
could cause actual results to differ materially from the results
discussed in the forward-looking statements.
Forward-looking statements can be identified by the use of
forward-looking terminology including “may,” “believe,” “expect,”
“intend,” “anticipate,” “plan,” “should,” “estimate,” “continue,”
“potential,” “will,” “hope” or other similar words and include the
Company’s expectation of future performance contained herein. These
statements discuss future expectations, contain projections of
results of operations or of financial condition, or state other
“forward-looking” information. You are cautioned not to place undue
reliance on any forward-looking statements, which can be affected
by assumptions used or by risks or uncertainties. Consequently, no
forward-looking statements can be guaranteed. When considering
these forward-looking statements, you should keep in mind the risk
factors and other factors noted in the Company’s Annual Report on
Form 10-K, any Quarterly Reports on Form 10-Q and the other
documents that the Company files with the Securities and Exchange
Commission. The risk factors and other factors noted therein could
cause actual results to differ materially from those contained in
any forward-looking statement. Cactus disclaims any duty to update
and does not intend to update any forward-looking statements, all
of which are expressly qualified by the statements in this section,
to reflect events or circumstances after the date of this press
release.
Cactus, Inc.
Condensed Consolidated
Statements of Income
(unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
2023
2022
2023
2022
(in thousands, except per
share data)
Revenues
Pressure Control
$
199,134
$
170,215
$
393,789
$
316,114
Spoolable Technologies
106,685
—
140,435
—
Total revenues
305,819
170,215
534,224
316,114
Operating income (loss)
Pressure Control
54,540
44,241
103,979
75,231
Spoolable Technologies
(6,018
)
—
(5,769
)
—
Total operating income
48,522
44,241
98,210
75,231
Interest income (expense), net
(5,928
)
304
(4,926
)
204
Other income (expense), net
—
—
3,538
(1,115
)
Income before income taxes
42,594
44,545
96,822
74,320
Income tax expense
10,135
8,765
12,075
11,457
Net income
$
32,459
$
35,780
$
84,747
$
62,863
Less: net income attributable to
non-controlling interest
7,709
8,636
17,103
15,103
Net income attributable to Cactus,
Inc.
$
24,750
$
27,144
$
67,644
$
47,760
Earnings per Class A share - basic
$
0.38
$
0.45
$
1.05
$
0.80
Earnings per Class A share -
diluted(1)
$
0.38
$
0.44
$
1.02
$
0.78
Weighted average shares outstanding -
basic
64,566
60,523
64,155
59,909
Weighted average shares outstanding -
diluted(1)
65,003
76,322
79,512
76,262
(1)
Dilution for the three months ended June
30, 2023 excludes 14.9 million shares of Class B common stock as
the effect would be anti-dilutive. Dilution for the six months
ended June 30, 2023 includes $17.7 million of additional pre-tax
income attributable to non-controlling interest adjusted for a
corporate effective tax rate of 26.0% and 14.9 million weighted
average shares of Class B common stock outstanding plus the effect
of dilutive securities. Dilution for the three and six months ended
June 30, 2022 includes $9.0 million and $15.7 million,
respectively, of additional pre-tax income attributable to
non-controlling interest adjusted for a corporate effective tax
rate of 25.0% and 15.4 million and 15.9 million weighted average
shares of Class B common stock outstanding, respectively, plus the
effect of dilutive securities.
Cactus, Inc.
Condensed Consolidated Balance
Sheets
(unaudited)
June 30,
December 31,
2023
2022
(in thousands)
Assets
Current assets
Cash and cash equivalents
$
63,910
$
344,527
Accounts receivable, net
214,590
138,268
Inventories
209,387
161,283
Prepaid expenses and other current
assets
11,182
10,564
Total current assets
499,069
654,642
Property and equipment, net
345,956
129,998
Operating lease right-of-use assets,
net
20,998
23,183
Intangible assets, net
187,971
—
Goodwill
202,806
7,824
Deferred tax asset, net
209,721
301,644
Other noncurrent assets
9,876
1,605
Total assets
$
1,476,397
$
1,118,896
Liabilities and Equity
Current liabilities
Accounts payable
$
63,585
$
47,776
Accrued expenses and other current
liabilities
53,216
30,619
Current portion of liability related to
tax receivable agreement
27,544
27,544
Finance lease obligations, current
portion
7,299
5,933
Operating lease liabilities, current
portion
4,446
4,777
Long-term debt, current portion
24,641
—
Total current liabilities
180,731
116,649
Deferred tax liability, net
1,049
1,966
Liability related to tax receivable
agreement, net of current portion
262,882
265,025
Finance lease obligations, net of current
portion
8,614
6,436
Operating lease liabilities, net of
current portion
16,364
18,375
Long-term debt, net of current portion
30,000
—
Other noncurrent liabilities
23,983
—
Total liabilities
523,623
408,451
Equity
952,774
710,445
Total liabilities and equity
$
1,476,397
$
1,118,896
Cactus, Inc.
Condensed Consolidated
Statements of Cash Flows
(unaudited)
Six Months Ended
June 30,
2023
2022
(in thousands)
Cash flows from operating
activities
Net income
$
84,747
$
62,863
Reconciliation of net income to net cash
provided by operating activities
Depreciation and amortization
35,024
17,592
Deferred financing cost amortization
3,545
84
Stock-based compensation
9,164
5,016
Provision for expected credit losses
1,515
240
Inventory obsolescence
1,980
959
Gain on disposal of assets
(1,632
)
(518
)
Deferred income taxes
1,079
8,504
Change in fair value of earn-out
liability
18,023
—
(Gain) loss from revaluation of liability
related to tax receivable agreement
(3,417
)
1,115
Changes in operating assets and
liabilities:
Accounts receivable
(20,107
)
(36,484
)
Inventories
41,185
(30,670
)
Prepaid expenses and other assets
965
(210
)
Accounts payable
1,236
14,238
Accrued expenses and other liabilities
(4,789
)
5,494
Net cash provided by operating
activities
168,518
48,223
Cash flows from investing
activities
Acquisition of a business, net of cash and
cash equivalents acquired
(618,857
)
—
Capital expenditures and other
(23,700
)
(13,752
)
Proceeds from sales of assets
3,038
876
Net cash used in investing activities
(639,519
)
(12,876
)
Cash flows from financing
activities
Proceeds from issuance of long-term
debt
155,000
—
Repayments of borrowings of long-term
debt
(100,000
)
—
Net proceeds from the issuance of Class A
common stock
169,878
—
Payments of deferred financing costs
(6,817
)
—
Payments on finance leases
(3,594
)
(2,987
)
Dividends paid to Class A common stock
shareholders
(14,469
)
(13,335
)
Distributions to members
(4,712
)
(3,348
)
Repurchase of shares
(4,599
)
(4,495
)
Net cash provided by (used in) financing
activities
190,687
(24,165
)
Effect of exchange rate changes on cash
and cash equivalents
(303
)
(1,167
)
Net increase (decrease) in cash and cash
equivalents
(280,617
)
10,015
Cash and cash equivalents
Beginning of period
344,527
301,669
End of period
$
63,910
$
311,684
Cactus, Inc. – Supplemental Information
Reconciliation of GAAP to non-GAAP Financial Measures
Adjusted net income, diluted earnings per share, as adjusted and
adjusted net income margin (unaudited)
Adjusted net income, diluted earnings per share, as adjusted and
adjusted net income margin are not measures of net income as
determined by GAAP but they are supplemental non-GAAP financial
measures that are used by management and external users of the
Company’s consolidated financial statements. Cactus defines
adjusted net income as net income assuming Cactus, Inc. held all
units in its operating subsidiary at the beginning of the period,
with the resulting additional income tax expense related to the
incremental income attributable to Cactus, Inc. Adjusted net income
also includes certain other adjustments described below. Cactus
defines diluted earnings per share, as adjusted as Adjusted net
income divided by weighted average shares outstanding, as adjusted.
Cactus defines Adjusted net income margin as Adjusted net income
divided by total revenue. The Company believes this supplemental
information is useful for evaluating performance period over
period.
Three Months Ended
June 30,
March 31,
June 30,
2023
2023
2022
(in thousands, except per
share data)
Net income
$
32,459
$
52,288
$
35,780
Adjustments:
Revaluation gain on TRA liability(1)
—
(3,417
)
—
Transaction related expenses,
pre-tax(2)
2,191
8,581
—
Intangible amortization expense(3)
8,663
3,666
—
Remeasurement (gain) loss on earn-out
liability(4)
18,144
(121
)
—
Inventory step-up expense(5)
19,325
4,191
—
Income tax expense differential(6)
(13,503
)
(14,506
)
(2,371
)
Adjusted net income
$
67,279
$
50,682
$
33,409
Diluted earnings per share, as
adjusted
$
0.84
$
0.64
$
0.44
Weighted average shares outstanding, as
adjusted(7)
79,866
79,155
76,322
Revenue
$
305,819
$
228,405
$
170,215
Net income margin
10.6
%
22.9
%
21.0
%
Adjusted net income margin
22.0
%
22.2
%
19.6
%
(1)
Represents non-cash adjustments for the
revaluation of the liability related to the TRA.
(2)
Reflects fees and expenses recorded in
connection with the FlexSteel Acquisition and related
financing.
(3)
Reflects amortization expense associated
with the step-up in intangible value due to purchase price
accounting.
(4)
Represents non-cash adjustments for the
remeasurement of the earn-out liability associated with the
FlexSteel Acquisition.
(5)
Represents amortization of the FlexSteel
inventory step-up adjustment due to purchase price accounting.
(6)
Represents the increase or decrease in tax
expense as though Cactus, Inc. owned 100% of its operating
subsidiary at the beginning of the period, calculated as the
difference in tax expense recorded during each period and what
would have been recorded, adjusted for pre-tax items listed above,
based on a corporate effective tax rate of 26.0% on income before
income taxes for the three months ended June 30, 2023, 24.5% for
the three months ended March 31, 2023, and 25.0% for the three
months ended June 30, 2022.
(7)
Reflects 64.6, 63.7, and 60.5 million
weighted average shares of basic Class A common stock outstanding
and 14.9, 15.0 and 15.4 million of additional shares for the three
months ended June 30, 2023, March 31, 2023 and June 30, 2022,
respectively, as if the weighted average shares of Class B common
stock were exchanged and cancelled for Class A common stock at the
beginning of the period, plus the effect of dilutive
securities.
Cactus, Inc. – Supplemental Information
Reconciliation of GAAP to non-GAAP Financial Measures
EBITDA, Adjusted EBITDA and Adjusted EBITDA margin
(unaudited)
EBITDA, Adjusted EBITDA and Adjusted EBITDA margin are not
measures of net income as determined by GAAP but are supplemental
non-GAAP financial measures that are used by management and
external users of the Company’s consolidated financial statements,
such as industry analysts, investors, lenders and rating agencies.
Cactus defines EBITDA as net income excluding net interest, income
tax and depreciation and amortization. Cactus defines Adjusted
EBITDA as EBITDA excluding the other items outlined below.
Cactus management believes EBITDA and Adjusted EBITDA are useful
because they allow management to more effectively evaluate the
Company’s operating performance and compare the results of its
operations from period to period without regard to financing
methods or capital structure, or other items that impact
comparability of financial results from period to period. EBITDA
and Adjusted EBITDA should not be considered as alternatives to, or
more meaningful than, net income or any other measure as determined
in accordance with GAAP. The Company’s computations of EBITDA and
Adjusted EBITDA may not be comparable to other similarly titled
measures of other companies. Cactus defines Adjusted EBITDA margin
as Adjusted EBITDA divided by total revenue. Cactus presents this
supplemental information because it believes it provides useful
information regarding the factors and trends affecting the
Company’s business.
Three Months Ended
Six Months Ended
June 30,
March 31,
June 30,
June 30,
2023
2023
2022
2023
2022
(in thousands)
(in thousands)
Net income
$
32,459
$
52,288
$
35,780
$
84,747
$
62,863
Interest (income) expense, net
5,928
(1,002
)
(304
)
4,926
(204
)
Income tax expense
10,135
1,940
8,765
12,075
11,457
Depreciation and amortization
21,914
13,110
8,915
35,024
17,592
EBITDA
70,436
66,336
53,156
136,772
91,708
Revaluation (gain) loss on TRA
liability(1)
—
(3,417
)
—
(3,417
)
1,115
Transaction related expenses(2)
2,191
8,581
—
10,772
—
Remeasurement (gain) loss on earn-out
liability(3)
18,144
(121
)
—
18,023
—
Inventory step-up expense(4)
19,325
4,191
—
23,516
—
Stock-based compensation
5,323
3,841
2,350
9,164
5,016
Adjusted EBITDA
$
115,419
$
79,411
$
55,506
$
194,830
$
97,839
Revenue
$
305,819
$
228,405
$
170,215
$
534,224
$
316,114
Net income margin
10.6
%
22.9
%
21.0
%
15.9
%
19.9
%
Adjusted EBITDA margin
37.7
%
34.8
%
32.6
%
36.5
%
31.0
%
(1)
Represents non-cash adjustments for the
revaluation of the liability related to the TRA.
(2)
Reflects fees and expenses recorded in
connection with the FlexSteel Acquisition and related
financing.
(3)
Represents non-cash adjustments for the
remeasurement of the earn-out liability associated with the
FlexSteel Acquisition.
(4)
Represents amortization of the FlexSteel
inventory step-up adjustment due to purchase price accounting.
Cactus, Inc. – Supplemental Information
Reconciliation of GAAP to non-GAAP Financial Measures
Segment EBITDA, Adjusted Segment EBITDA and Adjusted Segment
EBITDA margin (unaudited)
Segment EBITDA, Adjusted Segment EBITDA and Adjusted Segment
EBITDA margin are not measures of net income as determined by GAAP
but are supplemental non-GAAP financial measures that are used by
management and external users of the Company’s consolidated
financial statements, such as industry analysts, investors, lenders
and rating agencies. Cactus defines Segment EBITDA as segment
operating income including other non-operating income and excluding
depreciation and amortization, in each case, attributable to the
segment. Cactus defines Adjusted Segment EBITDA as Segment EBITDA
excluding the other items outlined below that are attributable to
the segment.
Cactus management believes Segment EBITDA and Adjusted Segment
EBITDA are useful because they allow management to more effectively
evaluate the Company’s segment operating performance and compare
the results of its segment operations from period to period without
regard to financing methods or capital structure, or other items
that impact comparability of financial results from period to
period. Segment EBITDA and Adjusted Segment EBITDA should not be
considered as alternatives to, or more meaningful than, net income
or any other measure as determined in accordance with GAAP. The
Company’s computations of Segment EBITDA and Adjusted Segment
EBITDA may not be comparable to other similarly titled measures of
other companies. Cactus defines Adjusted Segment EBITDA margin as
Adjusted Segment EBITDA divided by total segment revenue. Cactus
presents this supplemental information because it believes it
provides useful information regarding the factors and trends
affecting the Company’s business.
Three Months Ended
Six Months Ended
June 30,
March 31,
June 30,
June 30,
2023
2023
2022
2023
2022
(in thousands)
(in thousands)
Pressure Control
Revenue
$
199,134
$
194,655
$
170,215
$
393,789
$
316,114
Operating income
$
54,540
$
49,439
$
44,241
$
103,979
$
75,231
Revaluation gain (loss) on TRA
liability(1)
—
3,417
—
3,417
(1,115
)
Depreciation and amortization expense
9,127
7,992
8,915
17,119
17,592
Segment EBITDA
63,667
60,848
53,156
124,515
91,708
Stock-based compensation
4,086
3,091
2,350
7,177
5,016
Revaluation (gain) loss on TRA
liability(1)
—
(3,417
)
—
(3,417
)
1,115
Transaction related expenses(2)
2,191
8,581
—
10,772
—
Adjusted Segment EBITDA
$
69,944
$
69,103
$
55,506
$
139,047
$
97,839
Operating income margin
27.4
%
25.4
%
26.0
%
26.4
%
23.8
%
Adjusted Segment EBITDA margin
35.1
%
35.5
%
32.6
%
35.3
%
31.0
%
(1)
Represents non-cash adjustments for the
revaluation of the liability related to the TRA.
(2)
Reflects fees and expenses recorded in
connection with the FlexSteel Acquisition and related
financing.
Cactus, Inc. – Supplemental
Information
Reconciliation of GAAP to
non-GAAP Financial Measures
Segment EBITDA, Adjusted
Segment EBITDA and Adjusted Segment EBITDA margin
(continued)
(unaudited)
Three Months Ended
Six Months Ended
June 30,
March 31,
June 30,
June 30,
2023
2023
2022
2023
2022
(in thousands)
(in thousands)
Spoolable Technologies
Revenue
$
106,685
$
33,750
$
—
$
140,435
$
—
Operating income (loss)
$
(6,018
)
$
249
$
—
$
(5,769
)
$
—
Other non-operating income
—
121
—
121
—
Depreciation and amortization expense
12,787
5,118
—
17,905
—
Segment EBITDA
6,769
5,488
—
12,257
—
Stock-based compensation
1,237
750
—
1,987
—
Remeasurement (gain) loss on earn-out
liability(1)
18,144
(121
)
—
18,023
—
Inventory step-up expense(2)
19,325
4,191
—
23,516
—
Adjusted Segment EBITDA
$
45,475
$
10,308
$
—
$
55,783
$
—
Operating income (loss) margin
(5.6
)%
0.7
%
n/a
(4.1
)%
n/a
Adjusted Segment EBITDA margin
42.6
%
30.5
%
n/a
39.7
%
n/a
(1)
Represents non-cash adjustments for the
revaluation of the earn-out liability associated with the FlexSteel
Acquisition.
(2)
Represents amortization of the FlexSteel
inventory step-up adjustment due to purchase price accounting.
A reconciliation of segment operating income to net income is
shown below.
Three Months Ended
Six Months Ended
June 30,
March 31,
June 30,
June 30,
2023
2023
2022
2023
2022
(in thousands)
(in thousands)
Consolidated operating income
(loss)
Pressure Control
$
54,540
$
49,439
$
44,241
$
103,979
$
75,231
Spoolable Technologies
(6,018
)
249
—
(5,769
)
—
Total operating income
48,522
49,688
44,241
98,210
75,231
Interest income (expense), net
(5,928
)
1,002
304
(4,926
)
204
Other income (expense), net
—
3,538
—
3,538
(1,115
)
Income before income taxes
42,594
54,228
44,545
96,822
74,320
Income tax expense
10,135
1,940
8,765
12,075
11,457
Net income
$
32,459
$
52,288
$
35,780
$
84,747
$
62,863
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230807461240/en/
Cactus, Inc. Alan Boyd, 713-904-4669 Director of
Corporate Development and Investor Relations IR@CactusWHD.com
Cactus (NYSE:WHD)
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