WHD — Cactus, Inc.

Summary of WHD Q4 2025 Earnings Call

1. Key Financial Results and Metrics:

• Total Revenue: $261 million, down 1% sequentially.
• Adjusted EBITDA: $85 million, a decrease of 1.7% from Q3.
• Adjusted EBITDA Margin: 32.7%, slightly down from 32.9% in Q3.
• Pressure Control Segment Revenue: $178 million, up 5.8% sequentially, with operating income increasing by 9.3%.
• Spoolable Technologies Segment Revenue: $84 million, down 11.6% sequentially.
• GAAP Net Income: $48 million, compared to $50 million in Q3.
• Adjusted Net Income: $52 million ($0.65 per share), down from $54 million ($0.67 per share) in Q3.
• Cash Balance: Increased to $495 million, including $371 million in escrow for the Baker Hughes acquisition.
• Quarterly Dividend: $0.14 per share.

2. Strategic Updates and Business Highlights:

• Cactus closed the acquisition of Baker Hughes Surface Pressure Control business, referred to as Cactus International, on January 1, 2026.
• The Pressure Control segment is performing at its highest level since the company's inception.
• The company aims to achieve $10 million in annualized synergies from the Cactus International acquisition within one year.
• Cactus International's integration is expected to enhance operational efficiencies and improve market share in the Middle East.

3. Forward Guidance and Outlook:

• Q1 2026 Pressure Control Revenue Guidance: Expected to be between $295 million and $305 million.
• Adjusted EBITDA Margins for Q1: Projected to be 23% to 25%, reflecting the inclusion of Cactus International.
• 2026 CapEx Expectations: Projected to be between $40 million and $50 million, similar to 2025 levels.
• Anticipated improvement in order activity for Cactus International in the second half of 2026 and into 2027.

4. Bad News, Challenges, or Points of Concern:

• Decline in Spoolable Technologies revenue due to seasonal factors and lower customer activity.
• Concerns regarding the stability of U.S. drilling activity, with analysts projecting a decrease in rig counts.
• The tariff environment remains uncertain, particularly with ongoing geopolitical factors affecting oil prices.
• Integration costs related to the acquisition of Cactus International have increased corporate expenses.

5. Notable Q&A Insights:

• Management expressed optimism about achieving significant supply chain savings from the Cactus International acquisition, but noted that most orders for 2026 have already been placed, delaying margin improvements until 2027.
• There are expectations for increased drilling efficiencies in the U.S., with a focus on wells drilled rather than rig counts.
• The company sees substantial growth opportunities in the Middle East, particularly in Saudi Arabia, where they currently hold a low market share.
• The aftermarket services segment of Cactus International is viewed as a high-margin opportunity, with a focus on leveraging the legacy Vetco Gray installed base.

Overall, WHD demonstrated solid performance in Q4 2025, with strategic initiatives aimed at enhancing growth and profitability through the recent acquisition, despite facing some challenges in revenue and market conditions.