Cactus Inc.

05/08/2026 | Press release | Distributed by Public on 05/08/2026 09:24

Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations.
Except as otherwise indicated or required by the context, all references in this Quarterly Report to the "Company," "Cactus," "we," "us" and "our" refer to Cactus, Inc. ("Cactus Inc.") and its consolidated subsidiaries. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and related notes. The following discussion contains "forward-looking statements" that reflect our plans, estimates, beliefs and expected performance. Our actual results may differ materially from those anticipated as discussed in these forward-looking statements as a result of a variety of risks and uncertainties, which are difficult to predict, including those described above in "Cautionary Note Regarding Forward-Looking Statements," and in the risk factors included in "Part I, Item 1A. Risk Factors" in this Quarterly Report. In light of these risks, uncertainties and assumptions, the forward-looking events discussed may not occur. We assume no obligation to update any of these forward-looking statements except as otherwise required by law.
Executive Summary
Cactus is an equipment solutions provider primarily for onshore oil and gas markets. Cactus was founded in 2011 by a management group that previously operated two of the largest wellhead providers at the time. Since its formation, Cactus has rapidly grown to be a leading provider of wellhead solutions to the U.S. onshore market. With the acquisition of Cactus International, Cactus is now a global wellhead supplier.
On February 28, 2023, Cactus acquired FlexSteel, which grew from its founding in 2003 to its current status as a leading provider of spoolable pipe technologies, primarily to the U.S. onshore market. We believe this acquisition enhanced our position as a premier manufacturer and provider of highly engineered equipment to the exploration and production ("E&P") industry and has provided opportunities for meaningful growth. FlexSteel's spoolable technology products complement Cactus' pressure control equipment, and the combined business allows for exposure to customers operations from production trees to transportation of oil, gas and other liquids, as well as to additional customers operating in the midstream area.
Demand for our products and services depends primarily upon oil and gas industry activity levels, including the number of active drilling rigs, the number of wells being drilled, the number of wells being completed, and the volume of newly producing wells, among other factors.
Revenues
Our revenues are derived from three sources: products, rentals, and field service and other. Product revenues are derived from the sale of wellhead systems, production trees and spoolable pipe and fittings. Rental revenues are derived from the rental of equipment used during the completion process, the repair of such equipment, and the rental of equipment or tools used to install wellhead equipment or spoolable pipe. Field service and other revenues are earned when we provide installation and other field services for both product sales and equipment rental.
During the three months ended March 31, 2026, we derived 77% of total revenues from the sale of our products, 4% of total revenues from rental and 19% of total revenues from field service and other. During the three months ended March 31, 2025, we derived 74% of total revenues from the sale of our products, 10% of total revenues from rental and 16% of total revenues from field service and other. We have worldwide operations, including the U.S., Saudi Arabia, UAE, and China, with more limited operations in Australia and Canada, as well as sales in other international markets.
We operate in two business segments consisting of the Pressure Control segment and the Spoolable Technologies segment.
Pressure Control
The Pressure Control segment designs, manufactures, sells and rents a range of wellhead and pressure control equipment under the Cactus Wellhead brand. Products are sold and rented principally for onshore conventional and unconventional oil and gas wells, and are utilized during the drilling, completion and production phases of our customers' wells. In addition, we provide field services for all of our products and rental items to assist with the installation, maintenance and handling of the equipment.
We operate through service centers in the United States, which are strategically located in the key oil and gas producing regions. These service centers support our field services and provide equipment assembly and repair services. We also provide rental and service operations in the Kingdom of Saudi Arabia and Australia. Pressure Control manufacturing and production facilities are located in Bossier City, Louisiana, Suzhou, China, Saudi Arabia, Abu Dhabi, and Hai Duong,Vietnam.
Demand for our product sales in the Pressure Control segment is driven primarily by the number of new wells drilled, as each new well requires a wellhead and, after the completion phase, a production tree. Demand for our rental items is driven primarily by well completions as we rent frac trees to oil and gas operators to assist in hydraulic fracturing. Rental demand is also driven to a lesser extent by drilling activity as we rent tools used in the installation of wellheads. Field service and other revenues are closely correlated with revenues from product sales and rentals, as items sold or rented almost always have an associated service component.
Spoolable Technologies
The Spoolable Technologies segment designs, manufactures, and sells spoolable pipe and associated end fittings under the FlexSteel brand. Our customers use these products primarily as production, gathering, and takeaway pipelines to transport oil, gas or other liquids. In addition, we also provide field services and rental items to assist our customers with the installation of these products. We support our field service operations through service centers and pipe yards located in oil and gas regions throughout the United States and Western Canada. Our manufacturing facility is located in Baytown, Texas.
Demand for our product sales in the Spoolable Technologies segment is driven primarily by the number of wells being placed into production after the completions phase, as customers use our spoolable pipe and associated fittings to bring wells more rapidly onto production. Rental and field service and other revenues are closely correlated with revenues from product sales, as items sold usually have an associated rental and service component.
Recent Developments and Trends
Oil and Natural Gas Prices
The following table summarizes average oil and natural gas prices over the indicated periods, as well as industry activity levels as reflected by the average number of active onshore drilling rigs during the same periods.
Three Months Ended
March 31, 2026 December 31, 2025 March 31, 2025
Brent Oil Price ($/bbl) (1)
$ 80.72 $ 63.65 $ 75.87
WTI Oil Price ($/bbl) (2)
$ 72.74 $ 59.62 $ 71.78
Natural Gas Price ($/MMBtu) (3)
$ 4.71 $ 3.73 $ 4.14
U.S. Land Drilling Rigs (4)
530 527 572
International Land Drilling Rigs (4)
841 833 847
(1) EIA Europe Brent spot price.
(2) EIA Cushing, OK West Texas Intermediate ("WTI") spot price.
(3) EIA Henry Hub Natural Gas spot price per million British Thermal Unit ("MMBtu").
(4) Based on data made publicly available by Baker Hughes Company.
The Company's operating results continue to be impacted by conditions in the oil and gas industry, which are driven by global commodity prices, drilling and completion activity levels, and supply and demand dynamics.
Average WTI oil prices increased approximately 22% in the first quarter of 2026, as the outbreak of the conflict in Iran and associated supply disruption drove rapid price increases in March. WTI began the year on January 2 at $57.21 and closed March 31 at $102.86, an increase of approximately 80%. Brent oil prices similarly increased approximately 27% on average in the first quarter from the fourth quarter. Oil price levels remain elevated as geopolitical tensions continue in the Middle East, and the continued export of oil through the Strait of Hormuz remains uncertain. Average natural gas prices increased approximately 26% in the first quarter, largely due to a winter storm in the U.S. leading to elevated prices and low storage levels in January. Storage levels have since recovered to near five-year average levels and prices have moderated.
In the first quarter of 2026, average U.S. land drilling activity levels were relatively flat compared to the fourth quarter of 2025, as customers generally continued stable drilling programs despite elevated commodity prices reflecting E&P capital discipline. International land drilling levels increased approximately 1% from the fourth quarter of 2025, led by increased activity in the Middle East and Latin America, offset by declines in Asia.
U.S. Trade Policies
Over the course of 2025 and 2026, the Trump administration implemented and announced a number of new tariffs, including new Section 232 tariffs of 50% on imports of steel and certain products made from steel from most countries outside of the U.S. Threats and actual implementation of tariffs continue to cause market and geopolitical uncertainty. Tariff announcements and implementation have caused global equity, bond, and currency markets to experience heightened levels of volatility as market participants incorporate potential effects of supply chain disruption, inflation, and consumer demand into pricing models. In February 2026, the United States Supreme Court ruled that certain tariffs were unlawful, resulting in the implementation of alternative tariffs under Section 122 and further market uncertainty. As a result of the Supreme Court ruling, we have filed a claim for certain tariff refunds and are monitoring the situation closely, but there is no guarantee that any claim will be honored. The refunds being pursued represent a limited component of the overall tariff impact incurred by the Company as the most material tariff incurred by the Company under Section 232 remains unchanged.
We are incurring, and expect to continue to incur, elevated tariff expenses on our goods imported from Vietnam and China, and experience generally higher steel input costs at our Bossier City manufacturing facility as a result of the broad Section 232 tariffs. Both tariffs and higher steel input costs have impacted profitability, although the impact has been partially mitigated by cost reduction and recovery efforts.
Conflict in Iran
The outbreak of the conflict between the United States, Israel, and Iran in February has significantly disrupted global oil supply. Our operations in the region have been adversely impacted, and we continue to prioritize the safety of personnel in the region. We have experienced and expect to continue to experience significant disruptions to our operations, our customers' drilling activities, and our supply chain along with increased freight costs due to the conflict, and particularly the impediment of traffic through the Strait of Hormuz. Continued conflict in the region may lead to reduced revenues and profits and increased costs from our business in the region.
Pillar Two Framework
The Organization for Economic Cooperation and Development ("OECD") has introduced a framework ("Pillar Two") that provides for a new, global minimum tax of at least 15% on the income of large multinational corporations arising in each jurisdiction in which they operate. Pillar Two is being implemented on a country-by-country basis, and many countries have adopted rules in this regard. The United States has raised concerns regarding Pillar Two and has set out a proposed "side-by-side" solution under which U.S. parented groups (such as the Company) would be exempted from certain minimum taxes under Pillar Two in recognition of the existing U.S. minimum tax rules to which they are subject. On June 28, 2025, the Group of Seven issued a statement indicating that they agree that a side-by-side solution could preserve gains made by jurisdictions in tackling base erosion and profit shifting and provide clarity and stability in the international tax landscape. However, none of the OECD member states that have adopted Pillar Two have enacted rules necessary to implement the side-by-side solution. The Company continues to evaluate the impact of both Pillar Two and the proposed side-by-side solution and estimates the impacts to income tax expense to be immaterial.
Critical Accounting Policies and Estimates
A discussion of our critical accounting policies and estimates is contained in our 2025 Annual Report on Form 10-K. There have not been any changes in our critical accounting policies since December 31, 2025.
Consolidated Results of Operations
The following discussions relating to significant line items from our condensed consolidated statements of income are based on available information and represent our analysis of significant changes or events that impact the comparability of reported amounts. Where appropriate, we have identified specific events and changes that affect comparability or trends and, where reasonably practicable, have quantified the impact of such items.
We have two operating segments consisting of the Pressure Control segment and the Spoolable Technologies segment. Our results of operations are evaluated by the Chief Executive Officer on a consolidated basis as well as at the segment level. The performance of our operating segments is primarily evaluated based on segment operating income (in addition to other measures), which is defined as income before taxes and before interest income (expense), net, other income (expense), net and corporate and other expenses not allocated to the operating segments.
Three Months Ended March 31, 2026 Compared to Three Months Ended December 31, 2025
The following table presents a summary of the segment consolidated operating results for the periods indicated:
Three Months Ended
March 31, 2026 December 31, 2025 $ Change % Change
(in thousands)
Revenues
Pressure Control $ 300,172 $ 178,428 $ 121,744 68.2 %
Spoolable Technologies 89,900 84,202 5,698 6.8
Corporate and other (1,723) (1,427) (296) (20.7)
Total revenues 388,349 261,203 127,146 48.7
Operating income
Pressure Control 38,605 48,672 (10,067) (20.7)
Spoolable Technologies 23,567 20,925 2,642 12.6
Total segment operating income 62,172 69,597 (7,425) (10.7)
Corporate and other expenses (12,668) (9,747) (2,921) (30.0)
Total operating income 49,504 59,850 (10,346) (17.3)
Interest income, net 220 3,142 (2,922) (93.0)
Other expense, net
- (1,015) 1,015 (100.0)
Income before income taxes 49,724 61,977 (12,253) (19.8)
Income tax expense 9,503 13,675 (4,172) (30.5)
Net income 40,221 48,302 (8,081) (16.7)
Less: net income attributable to non-controlling interest 7,315 8,464 (1,149) (13.6)
Net income attributable to Cactus Inc. $ 32,906 $ 39,838 $ (6,932) (17.4) %
Pressure Control. Pressure Control revenue for the first quarter of 2026 was $300.2 million, an increase of $121.7 million, or 68.2%, from the fourth quarter of 2025 primarily driven by international contributions from the newly acquired Cactus International joint venture, partially offset by a decline in domestic rental revenue. Pressure Control operating income of $38.6 million for the first quarter of 2026 decreased $10.1 million, or 20.7% from the fourth quarter of 2025, as increased operating income from Cactus International was more than offset by the impacts of purchase accounting.
Spoolable Technologies. Spoolable Technologies revenue for the first quarter of 2026 was $89.9 million, an increase of $5.7 million, or 6.8% from the fourth quarter of 2025 primarily due to higher domestic and international customer activity levels. Total operating income for Spoolable Technologies for the first quarter of 2026 was $23.6 million, compared to operating income of $20.9 million for the fourth quarter of 2025, an increase of $2.6 million, or 12.6%, from the fourth quarter of 2025. The increase in operating income was primarily due to higher volume and lower selling, general and administrative expenses.
Corporate and other. Corporate and other revenue represents the elimination of inter-segment sales from our Pressure Control segment to our Spoolable Technologies segment. Corporate and other expenses include costs associated with executive management and other administrative functions not directly attributable to our reporting segment. Corporate and other expenses for the first quarter of 2026 was $12.7 million, an increase of $2.9 million, or 30.0% from the fourth quarter of 2025 primarily due to higher transaction and integration expenses. The expenses in both quarters include similar levels of expenses for professional fees associated with the Baker Hughes Transaction.
Interest income, net. Interest income, net was $0.2 million for the first quarter of 2026 and $3.1 million for the fourth quarter of 2025 resulting from lower levels of cash invested during the first quarter resulting from the completion of the Acquisition. The interest income, net is primarily comprised of interest income earned on the invested cash balance.
Other expense, net. Other expense, net had a decrease of $1.0 million compared to the fourth quarter of 2025 primarily related to the revaluation of the liability related to the tax receivable agreement as a result of changes to the forecasted state tax rate.
Income tax expense. Income tax expense for the first quarter of 2026 was $9.5 million compared to $13.7 million for the fourth quarter of 2025. Cactus Inc. is only subject to federal and state income tax on its share of income from Cactus Companies. Income allocated to the non-controlling interest is only taxable to the non-controlling interest.
Three Months Ended March 31, 2026 Compared to Three Months Ended March 31, 2025
The following table presents a summary of the segment consolidated operating results for the periods indicated:
Three Months Ended March 31,
2026 2025 $ Change % Change
(in thousands)
Revenues
Pressure Control $ 300,172 $ 190,277 $ 109,895 57.8 %
Spoolable Technologies 89,900 92,578 (2,678) (2.9)
Corporate and other (1,723) (2,536) 813 32.1
Total revenues 388,349 280,319 108,030 38.5
Operating income
Pressure Control 38,605 54,333 (15,728) (28.9)
Spoolable Technologies 23,567 23,876 (309) (1.3)
Total segment operating income 62,172 78,209 (16,037) (20.5)
Corporate and other expenses (12,668) (9,597) (3,071) (32.0)
Total operating income 49,504 68,612 (19,108) (27.8)
Interest income, net
220 2,325 (2,105) (90.5)
Income before income taxes 49,724 70,937 (21,213) (29.9)
Income tax expense 9,503 16,832 (7,329) (43.5)
Net income 40,221 54,105 (13,884) (25.7)
Less: net income attributable to non-controlling interest 7,315 9,882 (2,567) (26.0)
Net income attributable to Cactus Inc. $ 32,906 $ 44,223 $ (11,317) (25.6) %
nm = not meaningful
Pressure Control. Pressure Control revenue was $300.2 million for the first three months of 2026, an increase of $109.9 million, or 57.8%, from the first three months of 2025, primarily driven by international contributions from the newly acquired Cactus International joint venture. Operating income of $38.6 million in the first three months of 2026 decreased $15.7 million, or 28.9%, from the first three months of 2025. The decrease was primarily driven by higher operating income from Cactus
International, which was more than offset by the impacts of purchase accounting and increased tariff-related costs affecting product margins compared to prior year.
Spoolable Technologies. Spoolable Technologies revenue for the first three months of 2026 was $89.9 million, a decrease of $2.7 million, or 2.9%, from the first three months of 2025, primarily due to reduced customer activity levels in the U.S. Total operating income was $23.6 million in the first three months of 2026, a decrease of $0.3 million, or 1.3%, compared to operating income of $23.9 million in the first three months of 2025. Operating income for the first three months of 2026 reflected the impact of the lower volume.
Corporate and other. Corporate and other revenue represents the elimination of inter-segment sales from our Pressure Control segment to our Spoolable Technologies segment. Corporate and other expenses include costs associated with executive management and other administrative functions not directly attributable to our reporting segment. Corporate and other expenses for the first three months of 2026 was $12.7 million, an increase of $3.1 million, or 32.0% from the first three months of 2025. The increase was largely attributable to professional fees and integration expenses associated with the Baker Hughes Transaction.
Interest income, net. Interest income, net for the first three months of 2026 was $0.2 million, compared to $2.3 million for the first three months of 2025. The decrease was due to lower interest income earned on lower amounts of cash invested during the current period.
Income tax expense. Income tax expense for the first three months of 2026 was $9.5 million compared to $16.8 million for the first three months of 2025. The decrease in income tax expense from the first three months of 2025 was primarily due to a decrease in operating income during the first three months of 2026, and an income tax benefit from the Cactus International acquisition.
Liquidity and Capital Resources
At March 31, 2026, we had $291.6 million of cash and cash equivalents, including $97.8 million of cash held for certain restructuring activities related to the Cactus International acquisition. Our primary sources of liquidity and capital resources are cash on hand, cash flows generated by operating activities, and borrowings under our Amended ABL Credit Facility (as defined in Note 7 in the notes to the unaudited condensed consolidated financial statements). Depending upon market conditions and other factors, we may also have the ability to issue additional equity and debt if needed. As of March 31, 2026, we had $223.7 million of available borrowing capacity under our Amended ABL Credit Facility with no outstanding borrowings, in addition to $100.0 million available under our Term Loan Facility (as defined in Note 7 in the notes to the unaudited condensed consolidated financial statements) and $1.3 million in letters of credit outstanding. We were in compliance with the covenants of the Amended ABL Credit Facility as of March 31, 2026. Additionally, we have indemnified Baker Hughes for $27.4 million of contingent liabilities associated with letters of credit in support of Cactus International operations, which do not reduce the borrowing capacity under our Amended ABL Credit Facility.
In June 2023, our board of directors authorized the Company to repurchase shares of its Class A common stock for an aggregate purchase price of up to $150 million. Under our share repurchase program, shares may be repurchased from time to time in open market transactions or block trades, in privately negotiated transactions, or any other method permitted under U.S. securities laws, rules and regulations. The repurchase program does not obligate the Company to purchase any particular amount of shares, and the repurchase program may be suspended or discontinued at any time at the Company's discretion. As of March 31, 2026, $146.3 million remained authorized for future repurchases of Class A common stock under the program.
We expect that our existing cash on hand, cash generated from operations and available borrowings under our Amended ABL Credit Facility and Term Loan Facility will be sufficient for the next 12 months to meet our material cash requirements, including working capital requirements, debt service obligations, anticipated capital expenditures, lease obligations, repurchases of shares of our Class A common stock, expected TRA liability payments, anticipated tax liabilities and dividends to holders of our Class A common stock as well as pro rata cash distributions to holders of CC Units other than Cactus Inc.
We currently estimate our net capital expenditures for the year ending December 31, 2026 will range from $40 to $50 million. In the Pressure Control segment, capital expenditures are primarily related to U.S. service center enhancements, rental fleet investments, and international expansion, and less material investments in low-cost supply chain. In the Spoolable Technologies segment, capital expenditures are primarily related to manufacturing plant enhancements and additional deployment equipment used for product installation.
Our ability to satisfy our long-term liquidity requirements, including cash requirements to fund income tax liabilities and the TRA liability at Cactus Inc., along with associated distributions to holders of CC Units relating to their ownership of Cactus Companies, depends on our future operating performance, which is affected by, and subject to, prevailing economic conditions, market conditions in the E&P industry, availability and cost of raw materials, and financial, business and other factors, many of which are beyond our control. We will not be able to predict or control many of these factors, such as economic conditions in the markets where we operate, and competitive pressures. If necessary, we would likely choose to further reduce our spending on capital expenditures and operating expenses to ensure we operate within the cash flow generated from our operations.
Cash Flows
Three Months Ended March 31, 2026 Compared to Three Months Ended March 31, 2025
The following table summarizes our cash flows for the periods indicated:
Three Months Ended
March 31,
2026 2025
(in thousands)
Net cash provided by operating activities $ 128,271 $ 41,545
Net cash used in investing activities (309,989) (15,451)
Net cash used in financing activities
(21,529) (21,791)
Net cash provided by operating activities was $128.3 million and $41.5 million for the three months ended March 31, 2026 and 2025, respectively. Operating cash flows for the three months ended March 31, 2026 increased primarily due to an increase in working capital, largely driven by our recent acquisition of Cactus International.
Net cash used in investing activities was $310.0 million and $15.5 million for the three months ended March 31, 2026 and 2025, respectively. The increase for the three months ended March 31, 2026 was primarily due to cash paid to acquire Cactus International for $371.0 million less $70.0 million in cash acquired from the acquisition.
Net cash used in financing activities was $21.5 million for the three months ended March 31, 2026 compared to $21.8 million for the three months ended March 31, 2025. The decrease in net cash used in financing activities for the three months ended March 31, 2026 was primarily related to a decrease in distributions to members of Cactus Companies of approximately $3.6 million. This decrease was partially offset by an increase in share repurchases of $2.4 million as well as an increase in the payment of Class A share dividends of $1.0 million.
Cactus Inc. published this content on May 08, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on May 08, 2026 at 15:24 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]