Cactus Announces First Quarter 2021 Results

Cactus, Inc. (NYSE: WHD) ("Cactus” or the "Company”) today announced financial and operating results for the first quarter of 2021.

First Quarter Highlights

• Revenue of $84.4 million;
• Income from operations of $11.6 million;
• Net income of $15.1 million⁽¹⁾ and diluted earnings per Class A share of $0.19⁽¹⁾;
• Net income, as adjusted⁽²⁾ of $8.6 million and diluted earnings per share, as adjusted⁽²⁾ of $0.11;
• Adjusted EBITDA⁽³⁾ and related margin⁽⁴⁾ of $22.8 million and 27.0%, respectively;
• Cash flow from operations of $15.7 million;
• Cash balance of $292.0 million and no bank debt outstanding as of March 31, 2021; and
• The Board of Directors ("the Board") declared a quarterly cash dividend of $0.09 per share.

   

Financial Summary

Scott Bender, President and CEO of Cactus, commented, "While the storms that impacted the Southern U.S. presented challenges in February, we were pleased to achieve significant growth across all of our revenue categories during the first quarter. Cactus maintained Product market share⁽¹⁾ above 40% during the period, as the number of rigs we followed increased by approximately 27% sequentially. In Rental, we were pleased to see significant revenue gains as customers showed an increased appreciation for reliability and efficiency. Additionally, we delivered free cash flow above our dividend and related distributions despite outflows associated with increased working capital needs.

"Looking to the second quarter, we expect further gains in rigs followed. In addition, we believe the impact from increased customer demand is beginning to benefit our business in metrics above and beyond activity improvements. On the new technology front, we successfully deployed our first electric-powered rental equipment. In total, we expect Company revenue to be up in excess of 20% sequentially for the second quarter, primarily driven by our Product business.”

Mr. Bender concluded, "The U.S. market recovery is now in full swing. Safety, returns and free cash flow will remain our top priorities as we evaluate growth opportunities. As a provider of differentiated products and services, our team is confident that the expected increases in activity levels and benefits of greater operating leverage will enable the business to generate attractive returns.”

Revenue Categories

Product

First quarter 2021 product revenue increased $8.9 million, or 20.8%, sequentially, as sales of wellhead and production related equipment increased primarily due to higher drilling activity in the U.S. Gross profit increased $2.2 million, or 16.3%, sequentially, with margins decreasing 110 basis points largely due to cost inflation.

Rental

First quarter 2021 rental revenue increased $3.9 million, or 45.4%, sequentially, due to a combination of increased customer completion activity and an increase in the use of our innovative technologies. Gross profit increased $1.1 million sequentially and margins increased 1,210 basis points as depreciation expense represented a lower percentage of revenue during the period, which was partially offset by increased equipment reactivation costs.

Field Service and Other

First quarter 2021 field service and other revenue increased $3.5 million, or 21.2%, sequentially, as higher customer activity drove an increase in associated billable hours and ancillary services. Gross profit increased $0.6 million, or 11.1%, sequentially, with margins decreasing by 250 basis points sequentially due to higher labor costs associated with partial wage reinstatements instituted during the quarter as well as reduced labor and equipment utilization associated with the adverse winter weather that impacted operations in February.

Selling, General and Administrative Expenses ("SG&A”)

SG&A expense for the first quarter of 2021 was $9.6 million (11.4% of revenues), compared to $9.0 million (13.2% of revenues) for the fourth quarter of 2020 and $13.7 million (8.9% of revenues) for the first quarter of 2020. The sequential increase was primarily due to higher payroll expenses and a larger bonus accrual.

Liquidity, Capital Expenditures and Other

As of March 31, 2021, the Company had $292.0 million of cash and no bank debt outstanding. Operating cash flow was $15.7 million for the first quarter of 2021. During the first quarter, the Company made dividend payments and associated distributions of $6.2 million.

Net cash used in investing activities was $2.0 million during the first quarter of 2021, driven largely by additions to the Company’s fleet of rental equipment. For the full year 2021, the Company expects capital expenditures to be in the range of $10 to $15 million.

On March 12, 2021, Cactus closed an underwritten secondary offering of approximately 6.3 million shares of its Class A common stock by certain selling stockholders. Cactus did not receive any proceeds from the sale of the common stock in the offering. Cactus incurred $0.4 million in costs associated with the offering, which were recorded as Other Expense.

As of March 31, 2021, Cactus had 54,317,589 shares of Class A common stock outstanding (representing 71.8% of the total voting power) and 21,382,577 shares of Class B common stock outstanding (representing 28.2% of the total voting power).

Quarterly Dividend

The Board has approved the payment of a cash dividend of $0.09 per share of Class A common stock to be paid on June 17, 2021 to holders of record of Class A common stock at the close of business on May 31, 2021. A corresponding distribution of up to $0.09 per CW Unit has also been approved for holders of CW Units of Cactus Wellhead, LLC.

Conference Call Details

The Company will host a conference call to discuss financial and operational results tomorrow, Thursday, May 6, 2021 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. Institutional investors and analysts may participate by dialing (833) 665-0603. International parties may dial (929) 517-0394. The access code is 4696372. Please access the webcast or dial in for the call at least 10 minutes ahead of start time to ensure a proper connection.

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 and rents a range of highly engineered wellhead and pressure control equipment. 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 all its products and rental items to assist with the installation, maintenance and handling of the wellhead and pressure control equipment. Cactus operates service centers in the United States, which are strategically located in the key oil and gas producing regions, including the Permian, SCOOP/STACK, Marcellus, Utica, Haynesville, Eagle Ford and Bakken, among other areas, and in Eastern Australia.

Cautionary Statement Concerning Forward-Looking Statements

Certain statements contained in this press 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,” "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 known 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.

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