Cactus Q3 Earnings Call Highlights

Key Points

• Third-quarter revenue fell 4% sequentially to $431 million, while adjusted EBITDA was essentially flat at $132 million; the margin improved to 30.6% due to cost controls, synergies and Spoolable Technologies growth.
• Pressure Control revenue declined 11% as Middle East shipments weakened, but margins improved and international bookings recovered. Spoolable Technologies revenue surged more than 20%, supported by stronger domestic activity and international demand.
• Cactus plans to invest approximately $100 million in a Middle East Spoolable Technologies facility, with most spending in 2027–2028 and operations targeted for 2029. The company maintained its $0.15-per-share quarterly dividend and ended the quarter with $354 million in cash.

Cactus NYSE: WHD reported third-quarter 2026 revenue of $431 million, down 4% sequentially, while adjusted EBITDA was essentially flat at $132 million. Adjusted EBITDA margin improved to 30.6% from 29.5% in the second quarter, supported by cost controls, synergy realization and growth in its Spoolable Technologies business.

Chairman and Chief Executive Officer Scott Bender said Pressure Control sales declined as expected, though bookings accelerated and margins exceeded expectations. Meanwhile, Spoolable Technologies posted substantial growth in sales and backlog as domestic and international demand continued to build.

“Although the global market remains highly dynamic and uncertain, I’m confident that our business, which focuses on differentiated, highly engineered products, will continue to outperform,” Bender said.

Pressure Control revenue declines as international bookings recover

Pressure Control segment revenue totaled $305 million, down 11% from the prior quarter. Chief Financial Officer Jay Nutt said lower product shipments in the Middle East more than offset higher U.S. sales, where domestic customers increased activity.

Despite the lower revenue, Pressure Control operating income rose $2.4 million, or 4%, sequentially, and operating margin increased by about 3 percentage points. Adjusted segment EBITDA declined 10% to an undisclosed amount, while margin increased 40 basis points. Nutt attributed the margin improvement to product mix, stronger spares and repair margins at Cactus International, cost controls and realized synergies.

The company received approximately $6 million in tariff refunds during the quarter and said it has received the vast majority of refunds it expects. Cactus continues to pay approximately 75% total tariffs on most goods imported from China, according to Bender.

Cactus International backlog increased during the quarter after customers that had reduced inventory during the first half resumed placing orders. Steve Tadlock, chief executive officer of Cactus International, said the recovery occurred across multiple Middle Eastern countries and followed a period in which customer orders were largely focused on repairs and spares.

Tadlock said the new orders generally carry delivery timelines of nine to 15 months. Bender said the company expects Cactus International sales to remain around third-quarter levels in the fourth quarter as it works through existing backlog.

For the fourth quarter, Cactus expects Pressure Control revenue to be flat to up sequentially and adjusted EBITDA margins of 23% to 25%, excluding approximately $4 million of stock-based compensation expense. The expected decline from third-quarter margins reflects the absence of tariff recoveries and an unfavorable customer mix at Cactus International.

Looking into 2027, Bender said Pressure Control revenue is expected to be broadly flat with 2026, with a stronger second half of the year. The company expects supply-chain transformation initiatives and associated cost savings to begin benefiting results in the second half of 2027 and more fully contribute in 2028.

Spoolable Technologies posts more than 20% revenue growth

Spoolable Technologies revenue rose more than 20% sequentially to $127 million. The increase reflected stronger seasonal domestic activity and continued expansion in international markets. Segment operating income increased $9.4 million, or 29%, while operating margin expanded 230 basis points.

Adjusted segment EBITDA rose $9.8 million, or 23%, from the second quarter, and margin improved by 110 basis points as operating leverage increased.

Bender said fourth-quarter Spoolable Technologies revenue is expected to rise by low single digits sequentially. While North American seasonal trends typically weaken late in the year, Cactus expects international strength and the timing of several large Latin American shipments to more than offset that effect.

The company expects non-U.S. sales to account for about 20% of Spoolable Technologies revenue in 2026, more than double the sub-10% share reported in 2025. The segment’s fourth-quarter adjusted EBITDA margin is expected to range from 39% to 41%, excluding $1 million in stock-based compensation. Cactus said higher input costs and holiday-related manufacturing inefficiencies are expected to offset improved operating leverage.

Bender also said Cactus expects to make its first substantial shipments to midstream customers in the fourth quarter following a newly approved PHMSA exemption process intended to accelerate approvals for larger-diameter spoolable pipe used in regulated pipelines.

Middle East manufacturing facility planned

Cactus announced plans to build a Spoolable Technologies manufacturing facility in the Middle East, citing a substantial regional opportunity where steel pipe remains dominant. The company said the Middle East has represented only about 2% of Spoolable Technologies revenue since Cactus acquired the business, despite recent customer awards.

The facility is expected to require approximately $100 million of investment, funded through internally generated cash. Most of the spending is planned for 2027 and 2028, with a modest amount expected in 2026. Operations are expected to begin in 2029.

Bender said a local manufacturing presence is needed to create a “step change” in Middle East sales. He added that several products have already been qualified by key regional customers, with remaining testing expected to be completed around the end of the first quarter or beginning of the second quarter.

The company’s Baytown expansion, which remains underway, is expected to add about 20% to Baytown capacity. Bender said Cactus’ ability to manufacture large-diameter, high-pressure spoolable pipe supports margins comparable with those in North America even as international sales increase.

Cash balance rises; dividend maintained

GAAP net income was $74 million in the third quarter, compared with $61 million in the second quarter. Adjusted net income was $78 million, or $0.96 per share, compared with $75 million, or $0.93 per share, in the preceding quarter.

Cactus ended the quarter with $354 million in cash. The balance included a $91 million cash disbursement through accounts payable to complete Cactus International legal-entity formation transactions with Baker Hughes. Excluding those transaction-related outflows, quarter-end cash increased $79 million sequentially.

The company paid a quarterly dividend of $0.15 per share during the quarter and said its board approved another $0.15-per-share dividend to be paid in December. Cactus expects full-year 2026 net capital expenditures of about $65 million, including long-lead equipment for the planned Middle East facility and the Baytown expansion.

About Cactus (NYSE:WHD)

Cactus, Inc NYSE: WHD designs, manufactures, sells and rents wellhead and pressure-control equipment used in onshore oil and gas drilling and production. Its products are designed to help operators manage pressure and control access to wells during drilling, completion and production activities.

The company's offerings include wellhead systems, frac stacks, zipper manifolds and other pressure-control equipment. Cactus also provides field services, including equipment installation, maintenance and support, as well as rental services for selected products.

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