Release Date: May 02, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Cactus Inc (WHD, Financial) reported strong sales in Spoolable Technologies, showing growth from the previous quarter due to robust sales to large integrated customers.
- The company's total revenue for Q1 was $274 million with an adjusted EBITDA of $95 million and an adjusted EBITDA margin of 34.8%, demonstrating solid financial performance.
- Cactus Inc (WHD) increased its cash balance to $194 million, indicating strong liquidity and financial health.
- The company paid a quarterly dividend of $0.12 per share, reflecting its ongoing commitment to returning value to shareholders.
- Cactus Inc (WHD) is pursuing expansion plans in the Mideast, targeting a market for surface pressure control equipment that exceeds $0.5 billion annually, which could significantly enhance future revenues.
Negative Points
- The Pressure Control segment saw a revenue decrease of 3% sequentially, primarily due to decreased customer activity, highlighting potential volatility in market demand.
- Operating income and adjusted segment EBITDA in the Pressure Control segment both decreased due to lower operating leverage and margin declines.
- The Spoolable Technologies segment faced increased input costs, which negatively impacted the adjusted EBITDA margin by 240 basis points.
- Cactus Inc (WHD) reported a sequential decrease in GAAP net income from $62 million in the fourth quarter to $50 million in the first quarter, largely due to an increase in the remeasurement of the earn-out liability.
- Despite the increase in cash balance, the company faces challenges with the macroeconomic backdrop providing little optimism for 2024 U.S. activity levels in the oil and gas sector.
Q & A Highlights
Q: When can we expect international operations to significantly impact Cactus Inc's income statement?
A: Scott Bender, CEO, mentioned that international operations are expected to have a meaningful impact next year.
Q: How does Cactus Inc view the US land market activity for the remainder of the year?
A: Scott Bender, CEO, expressed a lack of optimism for significant improvement in 2024. He anticipates a potential plateau as the year progresses, particularly after a trough in onshore rig counts during the summer.
Q: What are the expectations for the Pressure Control segment's revenue and EBITDA margins in Q2 2024?
A: Scott Bender, CEO, expects the Pressure Control segment's revenue to be relatively flat compared to Q1, with adjusted EBITDA margins projected to be between 33% and 35%.
Q: What are the projections for the Spoolable Technologies segment in Q2 2024?
A: Scott Bender, CEO, anticipates a slight increase in revenue from Q1, with adjusted EBITDA margins expected to be around 36% to 38%.
Q: Can you provide details on the financial performance in Q1 2024?
A: Al Keifer, Interim CFO, reported Q1 revenues of $274 million with an adjusted EBITDA of $95 million and a 34.8% EBITDA margin. He noted a decrease in net income primarily due to a remeasurement of the FlexSteel earn-out liability.
Q: What is the outlook for dividends and capital expenditures in 2024?
A: Al Keifer, Interim CFO, mentioned that the quarterly dividend will remain at $0.12 per share, with net CapEx for the year expected to be between $45 million and $55 million.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
