Cactus, Inc. Q1 FY2025 earnings call

• Strong start to 2025 with record pressure control product revenues per rig and first quarter bookings. - First quarter total company highlights: revenue $280 million, adjusted EBITDA $94 million, adjusted EBITDA margin 33.5%. - Mitigation of tariff impact on Pressure Control business through increasing alternative sourcing, new wellhead design, and ramping up Vietnam production. - Second quarter outlook: Pressure Control revenue expected down low to mid-single digits due to moderating product sold per rig and activity decline; Spoolable Technologies revenue expected up mid to high single digits due to seasonal expansion and record Q1 orders. - Reduced full-year 2025 net CapEx outlook to $40 million to $50 million.

Pressure Control segment: Revenues of $190 million, up 7.7% sequentially, contributing approximately 67.86% to total revenue. Operating income increased $3.5 million, 6.9% sequentially, but margins decreased due to litigation reserves. Spoolable Technologies segment: Revenues of $93 million, down 3.6% sequentially, contributing approximately 33.21% to total revenue. Operating income decreased $1.6 million, or 6.5% sequentially, due to lower operating leverage.

• Second quarter Pressure Control revenue expected down low to mid-single digits vs Q1's $190 million. - Spoolable Technologies segment revenue expected up mid to high single digits from Q1. - Pressure Control segment adjusted EBITDA margins expected 33% to 35% for Q2 (excluding ~$3M stock-based comp). - Spoolable Technologies segment adjusted EBITDA margins expected 35% to 37% for Q2 (excluding $1M stock-based comp). - Reduced full-year 2025 net CapEx to $40M-$50M. - Board approved $0.13 per share dividend paid in June.

• Tariff impacts on Pressure Control business, though expecting neutralization by mid-next year. - Uncertain industry outlook affecting customer budgets and activity levels. - Steel input cost increases affecting Spoolable Technologies despite domestic sourcing. - Dependence on limited US steel-making capacity impacting manufacturing.

Q: David Anderson from Barclays asked about Vietnam sourcing, mitigation of steel costs, and cost advantage vs China.

A: Scott Bender discussed Vietnam migration to replace China, Bossier City's role as a fast turnaround environment, and customer absorption of costs during interim tariff period.

Q: Stephen Gengaro from Stifel asked about M&A opportunities and Bossier City operations.

A: Scott Bender talked about private equity availability of oilfield service investments and Bossier City as a robust manufacturing environment protecting market share.

Q: Scott Gruber from Citigroup asked about 2Q Pressure Control revenue guide and Vietnam startup costs.

A: Alan Boyd repeated Pressure Control revenue expected down low to mid-single digits; Scott Bender stated Vietnam startup costs are de minimis.

Q: Arun Jayaram from J.P. Morgan asked about Vietnam manufacturing mix evolution and inventory impact of tariffs.

A: Scott Bender and Jay Nutt discussed Vietnam's goal to replace China's US market supply, and that 2Q will not fully reflect tariff impact due to pre-tariff inventory but margin compression expected in back half.

Q: Jeff LeBlanc from TPH asked about Section 232 investigation.

A: Scott Bender discussed limited US steel-making capacity and inflationary impact of 232 tariffs.

Q: Don Crist from Johnson Rice asked about sour flexible pipe market.

A: Scott Bender talked about sour service pipe opportunities in North America and Middle East, noting it's a growing but small percentage of sales with premium pricing for reliability.