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    WHD
    Earnings call· Mar 2026(Q1 FY26)

    Cactus Q1 FY26 earnings call WHD

    May 7, 2026 Source

    Executive summary

    Cactus Q1 FY26 — Strong Q1 Performance Driven by Cactus International Acquisition and Spoolable Technologies Outperformance

    Cactus delivered strong Q1 FY26 results, driven by the acquisition of Cactus International and robust performance in Spoolable Technologies, which saw record international sales. While the Middle East conflict presents headwinds and logistics challenges, the company is actively pursuing operational efficiencies and supply chain optimization, including increasing synergy targets for the acquisition. Management expresses guarded optimism for the oil and gas market, anticipating increased customer activity despite ongoing geopolitical complexities.

    Highlights

    5

    • Total company revenue reached $388 million, a sequential increase driven by the Cactus International acquisition.

    • Adjusted EBITDA was $100 million, up $14.6 million sequentially from Q4 FY25.

    • Spoolable Technologies revenue grew 6.8% sequentially to $90 million, achieving record non-U.S. revenues.

    • Annualized synergy target for the Cactus International acquisition was increased by 50% from $10 million to $15 million.

    • The Vietnam facility received tentative API approval, enabling shipments with a lower 50% import tariff.

    Concerns

    5

    • The Middle East conflict modestly impacted Pressure Control revenues and operating income, with full Q2 impact expected.

    • Backlog decreased from year-end due influenced by multiyear contract negotiations and the Middle East conflict, with potential for further Q2 decrease.

    • Pressure Control adjusted EBITDA margin is expected to decrease to 22%-24% in Q2 from 25.8% in Q1 due to elevated logistics and lower manufacturing absorption.

    • The company continues to pay a 75% total tariff on most China-sourced goods.

    • Elevated unbilled accounts receivable in Cactus International impacted Q1 cash from operations, with resolution expected to take a couple of quarters.

    Guidance & targets

    11
    CategoryTargetConfidence
    Total Depreciation and Amortization Expense
    approximately $37 million
    medium materiality
    High
    Full Year Capital Expenditure Outlook
    $40 million to $50 million
    high materiality
    High
    Pressure Control Revenue
    approximately flat
    high materiality
    High
    Pressure Control Adjusted EBITDA Margin
    22% to 24%
    high materiality
    High
    Cactus International Inventory Amortization Expense
    last quarter for this expense
    medium materiality
    High
    Cactus International Annualized Synergies
    $15 million
    high materiality
    High
    Cactus International Supply Chain Savings
    not meaningful
    medium materiality
    High
    Spoolable Technologies Revenue Growth
    mid-single digits percentage-wise increase
    high materiality
    High
    Spoolable Technologies Adjusted EBITDA Margin
    approximately 36% to 38%
    high materiality
    High
    Adjusted Corporate EBITDA
    charge of approximately $5 million
    medium materiality
    High
    US Onshore Rig Count
    525
    high materiality
    High

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Pressure Control
    Revenues up due to Cactus International acquisition. Operating income and margin decreased sequentially due to $19 million purchase price accounting adjustments and inclusion of Cactus International operating results. Modestly impacted by Middle East conflict, offset by U.S. market strength.
    Operating income: decreased $10 millionOperating income sequential change: -20.7%Operating margin sequential change: -14%Adjusted segment EBITDA: $12.7 million higher sequentiallyAdjusted segment EBITDA margin sequential change: -930 basis points
    		$300 million—nearly 70%—
    Spoolable Technologies
    Reflecting higher customer activity and increased sales across domestic and international markets. Improved operating leverage and lower stock-based compensation expense contributed to operating income growth. Margin decrease offset by increased input costs.
    Operating income: increased $2.6 millionOperating income sequential change: 12.6%Operating margin sequential change: 130 basis pointsAdjusted segment EBITDA: increased $1.8 millionAdjusted segment EBITDA sequential change: 5.9%Adjusted segment EBITDA margin sequential change: -30 basis points
    		$90 million—6.8%—

    Operational metrics

    23
    Adjusted EBITDA
    $100 millionup $14.6 million from Q4
    Q1 FY26

    Total company adjusted EBITDA.

    Adjusted EBITDA Margin
    25.8%compared to 32.7% in Q4
    Q1 FY26

    Total company adjusted EBITDA margin.

    Stock-based Compensation Expense
    $7 million
    Q1 FY26

    Included in adjustments to total company EBITDA.

    Inventory step-up amortization
    $10.4 million
    Q1 FY26

    Due to purchase price accounting for Cactus International and FlexSteel acquisitions. Expected to be the last quarter for this expense in Q2.

    Transaction-related professional fees
    $5.8 million
    Q1 FY26

    Included in adjustments to total company EBITDA.

    Severance
    $900,000
    Q1 FY26

    Primarily incurred in initial actions to rightsize the Cactus International organization.

    GAAP Net Income
    $40 millionversus $48 million during Q4
    Q1 FY26

    Decrease largely driven by purchase price accounting.

    Book Tax Expense
    $10 million
    Q1 FY26

    Resulting in an effective tax rate of 19%.

    Effective Tax Rate
    19%
    Q1 FY26

    Book tax expense rate.

    Adjusted Net Income
    $56 millioncompared to $52 million in Q4
    Q1 FY26

    Net of a 22% tax rate applied to adjusted pretax income and includes deductions for noncontrolling interest.

    Adjusted EPS
    $0.70compared to $0.65 per share in Q4
    Q1 FY26

    Diluted basis.

    Adjusted EPS Tax Rate
    22%
    Q1 FY26

    Estimated tax rate for adjusted EPS.

    Quarterly Dividend
    $0.14
    Q1 FY26

    Paid during the quarter, including related distributions to members. Board approved same dividend for Q2.

    Cash Balance
    $292 milliondecreased from year-end
    Q1 FY26

    Includes $98 million of cash held to finalize Cactus International legal entity restructuring transactions.

    Cash held for legal entity restructuring
    $98 million
    Q1 FY26

    This cash is designated to complete legal entity restructurings with Baker Hughes in certain jurisdictions, which are their responsibility to finalize.

    Public or Class A Ownership
    87%averaged 86%
    Q1 FY26

    Average ownership during the quarter was 86%, ending the period at 87%.

    Depreciation and Amortization Expense
    $36.8 million
    Q1 FY26

    Includes amortization related to intangible assets and inventory step-up values from acquisitions.

    Pressure Control D&A Expense
    $28 million
    Q2 FY26 (expected)

    Expected D&A for the Pressure Control segment in Q2, including inventory and intangible amortization due to purchase price accounting.

    Spoolable Technologies D&A Expense
    $9 million
    Q2 FY26 (expected)

    Expected D&A for the Spoolable Technologies segment in Q2.

    Tariff on China Imports
    75%
    Q1 FY26

    Total tariff on most goods imported from China, with no meaningful changes from recent rulings.

    Tariff on Vietnam Imports
    50%
    Q1 FY26

    Lower tariff rate for goods imported from the tentatively API-approved Vietnam facility.

    US onshore rig count
    525up from 490 (prior forecast)
    Near term

    Revised expectation for the US onshore rig count, reflecting increased customer optimism.

    Polyethylene Price Increase
    material increase
    Recent

    Recent material increase in the price of polyethylene, a primary input cost for Spoolable Technologies.

    Industry KPIs

    5
    MetricValueDetails
    Rpo backlog$537 millionUSD
    FCF CAPEX leverage$9 millionUSD
    M a integration progress$15 millionUSD
    Orders bookings by segment$30 millionUSD
    Segment adjusted EBITDA margin22% to 24%%

    Orderbook & backlog

    1
    Total company remaining performance obligations$537 millionQ1 FY26

    decreased from year-end

    Significant majority associated with international Pressure Control business. Not indicative of future revenues beyond near term for short-cycle businesses. Backlog in Cactus International decreased due to multiyear contract negotiations and Middle East conflict.

    Deals & partnerships

    1
    Baker HughesAcquisition of 65% stake in Cactus International joint venture$355 million (for 65% stake)

    First quarter of ownership for Cactus International. Legal entity restructuring transactions with Baker Hughes are ongoing in certain jurisdictions, with $98 million cash held for this purpose. Supply chain-related savings not expected before H2 2027.

    Risks & headwinds

    6
    Middle East Conflict Impact on Pressure Control BusinessQ1 FY26 and Q2 FY26

    Modestly impacted revenues and operating income in Q1; full Q2 impact expected.

    Mitigation: Utilizing alternative shipping methods; prioritizing personnel safety; hopeful for expeditious resolution. Expecting significant increase in demand in Q2/Q3 2027 post-conflict.

    Backlog DecreaseQ1 FY26, potentially Q2 FY26

    Backlog ended Q1 at $537 million, decreased from year-end.

    Mitigation: Ongoing multiyear contract negotiations with large Middle East customer. Impact from Middle East conflict.

    Tariffs on China-Sourced ProductsOngoing

    75% total tariff (25% Section 301 and 50% Section 232) remains in place.

    Mitigation: Increasing shipments from tentatively API-approved Vietnam facility, which attracts a lower 50% import tariff (Section 232 only).

    Increased Input CostsRecent, ongoing

    Recent material increase in the price of polyethylene.

    Mitigation: Proactive cost mitigation and recovery efforts by the Spoolable Technologies team.

    Elevated Unbilled Accounts ReceivableQ1 FY26, expected to take a couple of quarters to resolve.

    Elevated level of unbilled AR in Cactus International.

    Mitigation: Working on processes to improve and accelerate billing timing with customers to increase cash flow velocity.

    Logistics Challenges in Middle EastOngoing, potentially months for resolution

    Very circuitous shipping routes around Arabian Peninsula, adding ~30 days to transit. 1,600 vessels backlog at Strait of Hormuz.

    Mitigation: Utilizing alternative shipping methods; prioritizing personnel safety. Expecting months for shipping to return to normal.

    What to watch in Q2 FY26

    5

    Cactus International Backlog Trend

    next quarter
    Current$537 million
    TargetStabilization or increase

    Why it matters

    Backlog is a key indicator of future revenue for the international Pressure Control business and reflects the impact of contract negotiations and geopolitical events.

    Backlog could continue to decrease in the second quarter, considering the conflict in the Middle East and the impact of contract renegotiation timing.

    Q&A highlights

    6

    What self-help opportunities and synergy potential do you see in the Cactus International business, particularly regarding supply chain optimization, looking towards 2027 and beyond?

    Scott Bender stated that the increased $15 million synergy target primarily comes from making the organization more efficient, reducing headcount to be more like Cactus. He identified supply chain optimization as a potentially larger prize, with early indications of significant room for improvement due to Cactus's lower-cost supply chain. He noted it would take until the end of Q2 or early Q3 2026 to cycle through existing inventory before lower-cost product replenishment begins.

    “Well, as we discussed, that the $15 million in synergies relates primarily to making the organization far more efficient. So I think there was some bloat in the way it was organized, and we're trying to reduce that to be more like Cactus. Potentially, the larger prize here is going to be supply chain.”

    asked by Arun Jayaram · answered by Scott Bender

    2 min read6 chapters

    Detailed Narrative

    01

    Cactus International Integration & Synergies

    The acquisition of Cactus International significantly boosted Q1 revenues, and the company has increased its annualized synergy target for the acquisition by 50% to $15 million. These synergies primarily stem from organizational rightsizing, with actions already completed to lock in savings. While supply chain optimization is expected to yield substantial benefits, meaningful savings from this area are not anticipated before the second half of 2027 due to the need to cycle through existing inventory.

    02

    Middle East Conflict Impact and Mitigation

    The ongoing conflict in the Middle East has modestly impacted Pressure Control revenues and operating income, leading to delayed shipments and significant logistics challenges. Management expects these impacts to continue through Q2, necessitating alternative shipping methods and affecting manufacturing absorption. The company is prioritizing personnel safety in the region and is hopeful for an expeditious resolution, noting that the clearing of the Strait of Hormuz could take months due to a large backlog of vessels.

    03

    Spoolable Technologies Outperformance and Growth

    The Spoolable Technologies segment delivered a strong quarter with 6.8% sequential revenue growth to $90 million, driven by record non-U.S. revenues in the Middle East and Latin America. International order momentum is increasing, with recent incremental orders totaling approximately $30 million from Latin America for 2026 delivery. The segment also shipped its first sour service equipment order to the Middle East in April, indicating expanding product reach.

    04

    Tariff and Supply Chain Dynamics

    Cactus continues to face a 75% total tariff on most China-sourced goods (25% Section 301 and 50% Section 232). However, the Vietnam facility is tentatively API approved, which will allow for increased shipments at a lower 50% import tariff under Section 232 only. The company is also proactively addressing recent material increases in polyethylene prices, a primary input cost, through cost mitigation and recovery efforts.

    05

    U.S. Market Optimism and Activity Outlook

    Despite no immediate significant increase in U.S. land activity, customer optimism has improved, with management now expecting the U.S. onshore rig count to be around 525, up from a prior forecast of 490. The company is seeing increased inquiries for its SafeDrill and FlexSteel products, which are engineered to accelerate production, as customers respond to highly supportive commodity prices and a shift in market outlook from supply abundance to supply concerns.

    06

    Cash and Working Capital Management

    The company ended the quarter with a cash balance of $292 million, which includes $98 million held for legal entity restructuring transactions with Baker Hughes. Elevated unbilled accounts receivable in the Cactus International business impacted Q1 cash from operations. Management is actively working to improve billing processes and accelerate cash flow velocity, a process expected to take a couple of quarters to fully materialize.

    AI-generated summary of the company’s earnings call. Not investment advice.