Cactus Inc - Ordinary Shares (WHD) 1 Aug 24 2024 Q2 Earnings call transcript

In the recently concluded Q2 2024 earnings call, Cactus Inc. executives provided insights into the company's performance, highlighting a strong financial position and strategic initiatives to drive growth in a challenging market. Revenue and Margins Improve Despite Industry Downturn

Cactus reported a robust Q2 with revenues of $290 million and adjusted EBITDA of $104 million, representing an 8.7% increase from the first quarter. The company's focus on operational efficiency and customer execution has enabled it to outperform despite industry-wide declines in North American land activity. Strategic Hires and Financial Performance

One of the notable highlights was the appointment of Jay Nutt as the new Chief Financial Officer, who brings extensive global financial leadership experience to the company. This strategic hire is expected to contribute significantly to Cactus' continued growth and industry-leading returns. Additionally, the company announced an 8% increase in the quarterly dividend to $0.13 per share, reflecting confidence in its financial health. Segmental Performance

The Pressure Control segment saw a 6.9% sequential revenue growth, driven by shipments to new customers and efficiency improvements. The Spoolable Technologies segment also recorded a 4.7% sequential increase in revenues, attributed to the resilience of international shipments and higher domestic customer activity. International Expansion and Operational Outlook

Cactus is focusing on expanding its international presence, particularly in the Middle East, and is making significant investments in international expansion plans. The company is also implementing cost-saving measures, such as using its supply chain to source components for its Flexsteel product, to enhance its cost profile. Outlook and Challenges

Looking ahead, Cactus expects a mid-single-digit decline in Pressure Control revenue in the third quarter due to lower U.S. land drilling activity and less visibility into production equipment shipments. However, the company remains optimistic about the potential for increased drilling efficiency and cost savings through its next-generation wellhead system. Investor Questions and Strategic Initiatives

During the Q&A session, investors raised questions about international growth and the potential impact of increased tariffs on Chinese goods. Cactus executives emphasized their commitment to international expansion and their confidence in their ability to navigate tariff changes, thanks to their ability to manufacture products in multiple locations. Conclusion

Overall, Cactus Inc.'s Q2 2024 earnings call underscored the company's resilience in a challenging market and its strategic initiatives to drive growth and enhance operational efficiency. With a clear focus on customer execution, cost savings, and international expansion, Cactus is well-positioned to navigate the evolving landscape of the oil and gas industry.