Cactus Q2 Earnings Call Highlights

Key Points

• Cactus delivered strong second-quarter results: Revenue rose 15.8% sequentially to $450 million, while adjusted EBITDA increased 32.5% to $133 million and margins expanded to 29.5%. The company also raised its quarterly dividend 7% to $0.15 per share.
• Growth is expected to continue at Spoolable Technologies, with third-quarter revenue projected to increase 15%–20% and more than $80 million in incremental international orders received in July. Pressure Control revenue, however, is expected to decline about 10% as unusually strong Middle East shipments normalize.
• Cactus raised 2026 capital-expenditure guidance to $55 million–$65 million, primarily to expand capacity at its Baytown, Texas, facility, which could increase output by up to 20%. Management is also pursuing tariff mitigation through increased Vietnam sourcing for U.S. Pressure Control imports.

Cactus NYSE: WHD reported second-quarter revenue of $450 million, up 15.8% sequentially, as stronger Middle East Pressure Control deliveries and continued growth at Spoolable Technologies lifted results. Adjusted EBITDA rose 32.5% from the first quarter to $133 million, while adjusted EBITDA margin expanded to 29.5% from 25.8%.

Chairman and Chief Executive Officer Scott Bender called the quarter “excellent,” citing higher-than-expected Pressure Control shipments and aftermarket service in the Middle East despite conflict-related disruptions. He also said Spoolable Technologies accelerated in the domestic market while maintaining international shipment and order momentum.

GAAP net income was $61 million, compared with $40 million in the first quarter. Adjusted net income totaled $75 million, or $0.93 per share, versus $56 million, or $0.70 per share, in the prior quarter. The company ended the quarter with $366 million in cash and raised its quarterly dividend 7% to $0.15 per share, payable in September.

Pressure Control deliveries support second-quarter gains

Pressure Control revenue totaled $344 million, an increase of 14.6% sequentially. Chief Financial Officer Jay Nutt said the gain was driven primarily by stronger backlog conversion in the Middle East, where the company completed more deliveries than anticipated despite ongoing logistics challenges related to regional conflict. U.S. revenue also improved as customer activity increased alongside higher commodity prices.

The segment’s adjusted EBITDA rose 33.5% sequentially to $95.9 million, with margins increasing by 400 basis points. Nutt attributed the margin improvement to higher operating leverage, acquisition synergies and tariff-cost recovery efforts. The company received roughly $10 million in reciprocal and retaliatory tariff refunds during the quarter, representing less than 15% of the tariffs paid during the relevant period.

Pressure Control backlog, which consists largely of Cactus International obligations, ended the quarter at $455.8 million. Backlog declined more than anticipated as the company completed a high level of project deliveries and continued contract negotiations with a large Middle East customer. Management expects material third-quarter orders from multiple large Middle East customers.

For the third quarter, Cactus expects Pressure Control revenue to decline about 10% as Cactus International shipments return closer to first-quarter levels following an unusually strong second quarter. The anticipated decline in international shipments is expected to more than offset domestic growth. Pressure Control adjusted EBITDA margins are forecast at 22% to 24%, excluding approximately $4 million in stock-based compensation expense.

Bender said the company has increased its first-year post-close annualized synergy target for Cactus International by 33%, to a range of $15 million to $20 million, following substantially completed organizational restructuring. He said supply-chain initiatives could provide further benefits, though more meaningful effects are expected in the second half of 2027 as new orders are executed.

Spoolable Technologies outlook accelerates

Spoolable Technologies generated second-quarter revenue of $106 million, up 17.4% sequentially, reflecting expanding U.S. activity during a seasonally strong period and resilient international demand. Adjusted EBITDA increased 21.8% to $42.1 million, and segment margins expanded 330 basis points on improved sales mix and operating leverage.

The company expects the segment’s revenue to grow another 15% to 20% in the third quarter as it accelerates shipments of previously announced Latin American orders and sees further domestic activity growth. Cactus also received more than $80 million of incremental international orders in July, with deliveries scheduled to begin in the fourth quarter and continue through the middle of next year.

Bender said the orders represent a significant shift in the international contribution to the Spoolable business, particularly in Latin America and the Middle East. He also pointed to growing U.S. demand from exploration and production and midstream customers for larger-diameter, higher-pressure products. A change in Pipeline and Hazardous Materials Safety Administration regulations has made the company’s products easier to use in midstream applications, he said.

Spoolable Technologies adjusted EBITDA margin is expected to be about 39% to 41% in the third quarter, excluding $1 million of stock-based compensation. Management said it continues to monitor steel and HDPE input costs, noting that HDPE prices have recently declined from highs associated with the Middle East conflict.

Capacity investments and tariff actions

Cactus increased its 2026 net capital-expenditure guidance to $55 million to $65 million, largely to support capacity investments at its Baytown, Texas, Spoolable Technologies facility. The planned expansion is expected to cost approximately $40 million in total, with most spending occurring in 2027. Management said the added capacity could begin contributing to revenue toward the end of next year.

Bender said the Baytown project could add as much as 20% to facility capacity and is expected to be absorbed by Western Hemisphere demand. The company is also evaluating an Eastern Hemisphere manufacturing investment to serve additional global demand. He said an international facility could take roughly two years from start to finish, but the company has not yet included such an expansion in its capital-spending guidance.

On tariffs, Bender said Cactus continues to pay a 75% total tariff on most U.S. imports from China, consisting of a 25% Section 301 tariff and a 50% Section 232 tariff. The company expects roughly 15% of total U.S. Pressure Control imports to be sourced from Vietnam in the third quarter, with that share increasing modestly afterward. Management said Vietnam sourcing could eventually reach 40% of total Far East shipments for U.S. Pressure Control.

The company expects an effective tax rate of 24% in the third quarter and an adjusted EPS tax rate of approximately 27%. Third-quarter depreciation and amortization expense is expected to be about $27 million, down from the first-half run rate following the completion of inventory fair-value step-up amortization related to the Cactus International acquisition.

About Cactus (NYSE:WHD)

Cactus, Inc, together with its subsidiaries, designs, manufactures, sells, and leases pressure control and spoolable pipes in the United States, Australia, Canada, the Middle East, and internationally. It operates through two segments, Pressure Control and Spoolable Technologies. The Pressure Control segment designs, manufactures, sells, and rents a range of wellhead and pressure control equipment under the Cactus Wellhead brand name through service centers. Its products are sold and rented primarily for onshore unconventional oil and gas wells for drilling, completion, and production phases of the wells.

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