Cactus Q4 Earnings Call Highlights

Key Points

• Q4 results: Cactus reported $261 million in revenue and $85 million of adjusted EBITDA (32.7% margin), finished the quarter with $495 million in cash, paid a $0.14 quarterly dividend, and closed the acquisition of Baker Hughes’ surface pressure control business on Jan. 1.
• Business trends and Q1 guidance: Pressure Control revenue rose 5.8% sequentially to $178 million and management forecasts Q1 Pressure Control revenue of $295–305 million with 23–25% adjusted EBITDA margins, while Spoolable Technologies declined seasonally to $84 million and is expected to fall mid-single-digits in Q1 with 33–35% margins.
• Cactus International outlook: The acquired business finished 2025 with roughly $550 million of backlog, management expects 2026 orders to be subdued with supply‑chain and synergy benefits more visible in 2027, and sees major market‑share and growth opportunities in the Middle East (notably Saudi Arabia).

Cactus NYSE: WHD executives highlighted what they described as a strong finish to 2025, pointing to better-than-expected performance in Pressure Control and sustained profitability in Spoolable Technologies, while also outlining early priorities and expectations following the closing of its acquisition of a majority interest in Baker Hughes’ surface pressure control business, now referred to as Cactus International.

Fourth-quarter results and segment performance

Chairman and CEO Scott Bender said the company ended 2025 with “strong performance in both segments,” citing Pressure Control revenues and margins that exceeded expectations due to a favorable mix of product sales and a more resilient rig count than anticipated. Spoolable Technologies, he said, declined seasonally as expected but maintained strong profitability.

For the fourth quarter, Cactus reported total revenue of $261 million and adjusted EBITDA of $85 million, implying an adjusted EBITDA margin of 32.7%. The company paid a quarterly dividend of $0.14 per share and ended the quarter with $495 million in cash. Bender noted the company closed the acquisition of the Baker Hughes surface pressure control business on Jan. 1.

Chief Financial Officer Jay Nutt said total revenue declined 1% sequentially and adjusted EBITDA fell 1.7% from the third quarter. In the Pressure Control segment, revenue rose 5.8% sequentially to $178 million, driven primarily by higher product sales per rig followed and improved rental revenues on increased customer activity. Segment operating income increased $4.1 million, or 9.3%, with operating margins expanding 90 basis points. Nutt said the segment benefited from cost reduction initiatives, adding that the U.S. Pressure Control business was performing “at its highest level since the inception of the company.”

In Spoolable Technologies, revenue declined 11.6% sequentially to $84 million, which management attributed to lower U.S. customer activity during a seasonally slow quarter. Operating income fell $4.9 million, or 18.9%, and operating margins compressed 220 basis points, reflecting reduced operating leverage. Nutt reminded investors that the second and third quarters are usually the strongest periods for the segment.

Profit, cash flow, and notable items

Nutt said corporate and other expenses were $9.7 million in the fourth quarter, up $700,000 sequentially due to increased transaction and integration costs. Adjusted corporate EBITDA was an expense of $4.7 million.

Adjustments to total-company EBITDA included:

• $6 million in non-cash stock-based compensation
• $3.3 million in transaction-related professional fees and expenses
• $164,000 tied to additional restructuring actions
• A $1 million loss related to the revaluation of the tax receivable agreement (TRA) liability

Depreciation and amortization expense totaled $16 million, including $4 million tied to amortization of intangible assets from the FlexSteel acquisition. GAAP net income was $48 million versus $50 million in the third quarter, which Nutt said was largely driven by lower operating income and the TRA revaluation loss. Book income tax expense was $14 million, resulting in an effective tax rate of 22%.

On an adjusted basis, net income was $52 million, or $0.65 per share, compared with $54 million, or $0.67 per share, in the third quarter. Nutt said adjusted net income for the quarter and full year 2025 was net of a 25% tax rate applied to adjusted pre-tax income.

During the quarter, the company paid roughly $11 million in cash dividends including related distributions to members, and also made a $23 million cash TRA payment after completion of 2024 tax filings. Cactus ended the quarter with $495 million of cash, including $371 million held in escrow to facilitate the acquisition closing on Jan. 1. Net capital expenditures were approximately $4 million in the fourth quarter and $39 million for the full year, slightly under the range the company had guided to in October.

Guidance and outlook for the first quarter

For the first quarter, Bender said the company expects total Pressure Control revenue of approximately $295 million to $305 million. In North America, management expects stable drilling and completion activity, but “modestly softer sales” on lower product sales per rig after higher rates in the fourth quarter. International sales are expected to contribute about $130 million to $140 million of Pressure Control revenue in the first quarter.

Pressure Control adjusted EBITDA margins are expected to be 23% to 25% in the first quarter. Management said the margin guidance excludes about $4 million of stock-based compensation expense within the segment and also excludes expected amortization of the inventory write-up related to purchase price accounting for Cactus International. Bender said margins are expected to decline from fourth-quarter levels “due almost entirely to the inclusion of Cactus International.”

For Spoolable Technologies, Bender said first-quarter revenue is expected to be down mid-single digits from the fourth quarter, citing continued North American seasonality and customers being slow to increase activity through January and early February. Adjusted EBITDA margins are expected to be 33% to 35%, excluding $1 million of stock-based compensation. Management attributed the anticipated margin step-down to lower operating leverage and somewhat higher input costs. Bender also said the company is introducing new SKUs intended to enhance market share, with plans to pilot some of those SKUs with a “large Mideast customer” in 2026, potentially impacting 2027 revenue.

Adjusted corporate EBITDA is expected to be an expense of about $5 million in the first quarter, excluding roughly $2 million of stock-based compensation.

Cactus International: backlog, market share focus, and synergy timing

Bender provided commentary on trends at the Cactus International business and described the acquisition as “transformational.” He said the business closed 2024 with over $600 million in backlog and ended 2025 with backlog of approximately $550 million, while also noting an order slowdown. Based on that slowdown, management expects full-year 2026 to be more in line with previously announced 2024 results from a revenue and adjusted EBITDA perspective. Bender said the company anticipates increased order activity in the second half of 2026 and into 2027.

During Q&A, Bender told analysts that meaningful supply chain savings are expected as Cactus begins using its own supply chain, but he cautioned that because many 2026 orders have already been placed, the margin enhancement from supply chain changes is likely to be more visible in 2027. He also said he was optimistic the company could exceed its projected synergies in 2026, while acknowledging the integration was still early.

Responding to questions about regional prospects, Bender said the company sees greater growth opportunities in the Middle East than in the U.S. He described Saudi Arabia as being in a period of destocking and moderating forward purchases, but noted that Saudi is adding 70 rigs, which underpinned his optimism that 2027 could be “considerably better” than 2026. He characterized Abu Dhabi as stable and said Qatar and Kuwait have prospects for improvement, while also pointing to potential revenue from sub-Saharan Africa and the Far East as the company expands its international sales efforts.

On market share, Bender said the company sees a “huge opportunity” in Saudi Arabia, where he said market share is well below where it should be, at roughly one-third. He also noted that in Abu Dhabi, the company shares a contract 50/50 with TechnipFMC. Separately, Bender said the company is focused on expanding aftermarket services tied to a large installed base from legacy Vetco Gray, pointing to opportunities in West Africa and the Far East that he said had not been a focus previously.

Management also addressed tariffs and manufacturing strategy, stating that tariffs under Sections 301 and 232 still total 75% on most goods imported from China. Bender said the company’s Vietnam facility—where Section 232 tariffs remain at 50%—is ramping in the first quarter, with API certification now expected early in the second quarter. In Q&A, executives said they had begun moving product from Vietnam into the U.S. and applying value-added work in Bossier City to apply the monogram, while the API audit process was ongoing and expected to take additional time. Bender said Vietnam is “inherently lower cost than China,” and the tariff differential could boost effective margins as shipments shift.

Finally, Bender confirmed Stephen Tadlock has been appointed CEO of Cactus International, citing Tadlock’s experience leading and integrating the FlexSteel segment.

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.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.