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    WHD
    Earnings call· Jun 2026(Q2 FY26)

    Cactus Q2 FY26 earnings call WHD

    Jul 30, 2026 Source

    Executive summary

    Cactus, Inc. Q2 FY26 — Strong Spoolable Growth and Increased Dividend

    Cactus delivered a strong second quarter, driven by robust performance in its Spoolable Technologies segment, which saw significant domestic and international order momentum leading to planned capacity expansions. While the Pressure Control segment navigated Middle East conflict-related disruptions, the company increased its dividend for the fourth consecutive year, reflecting confidence in its diversified and cash-generative business model. Management is focused on realizing further synergies and expanding international footprints for both segments.

    Highlights

    5

    • Total revenue of $450 million, up 15.8% sequentially.

    • Adjusted EBITDA of $133 million, up 32.5% sequentially, with a margin of 29.5%.

    • Spoolable Technologies revenue up 17.4% sequentially, with Q3 revenue expected to increase a further 15%-20%.

    • Board approved a 7% increase in quarterly dividend to $0.15 per share, marking the fourth consecutive year of increases.

    • Annualized synergies target increased by 33% from $15 million to $20 million due to organizational restructuring.

    Concerns

    5

    • Pressure Control revenue expected to be down approximately 10% in Q3 due to lower international shipments.

    • Backlog in Cactus International business decreased more than anticipated due to strong Q2 deliveries and ongoing contract negotiations.

    • Middle East conflict continues to cause disruption and logistics challenges, impacting Pressure Control business.

    • Input costs for Spoolable Technologies impacted by increases in steel and HDPE, with HDPE prices volatile due to Middle East conflict.

    • Tariff refunds in Q2 totaled only $10 million, representing less than 15% of total tariffs paid over the relevant period.

    Guidance & targets

    12
    CategoryTargetConfidence
    Pressure Control revenue
    down approximately 10%
    medium materiality
    High
    Pressure Control Adjusted EBITDA margins
    22% to 24% range
    medium materiality
    High
    Spoolable Technologies revenue
    increase a further 15% to 20%
    high materiality
    High
    Spoolable Technologies Adjusted EBITDA margins
    approximately 39% to 41%
    medium materiality
    High
    Adjusted corporate EBITDA
    charge of approximately $5 million
    low materiality
    High
    Full-year 2026 net CapEx
    $55 million to $65 million
    high materiality
    High
    Effective tax rate
    24%
    low materiality
    High
    Estimated tax rate for adjusted EPS
    approximately 27%
    low materiality
    High
    Total depreciation and amortization expense
    approximately $27 million
    low materiality
    High
    Annualized synergies target
    $20 million
    medium materiality
    High
    Baytown plant expansion capacity/revenue benefits
    start to be realized toward the end of next year
    medium materiality
    High
    International Spoolable expansion timeline
    about 2 years from start to finish
    medium materiality
    Medium

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Pressure Control
    Driven primarily by stronger backlog conversion in the Middle East and improved U.S. revenues due to customer activity strengthening in response to higher commodity prices. Operating income included approximately $20 million of purchase price accounting adjustments.
    Operating income increase: $20.5 millionOperating margin improvement: 430 basis pointsAdjusted segment EBITDA: $95.9 millionAdjusted segment EBITDA increase: 33.5%
    		$344 million—14.6%Operating income up 53.2% sequentially; Adjusted segment EBITDA margin up 400 bps
    Spoolable Technologies
    Reflecting expanding domestic activity in a seasonally strong quarter and continued resilience in international markets. Sales mix and operating leverage both improved.
    Operating income increase: $8.6 millionOperating margin improvement: 430 basis pointsAdjusted segment EBITDA: $42.1 millionAdjusted segment EBITDA increase: 21.8%
    		$106 million—17.4%Operating income up 36.5% sequentially; Adjusted segment EBITDA margin up 330 bps

    Operational metrics

    21
    Adjusted EBITDA
    $133 million32.5% sequentially
    Q2 FY26

    Total company adjusted EBITDA.

    Adjusted EBITDA margin
    29.5%up from 25.8% in Q1
    Q2 FY26

    Total company adjusted EBITDA margin.

    Cash balance
    $366 millionincreased by $74 million sequentially
    Q2 FY26 end

    Includes $92.5 million of cash held to finalize Cactus International legal entity restructuring transactions.

    Net CapEx
    $15.6 million
    Q2 FY26

    Net capital expenditures during the second quarter.

    GAAP Net Income
    $61 millionversus $40 million during Q1
    Q2 FY26

    Increase driven by higher operating earnings and lower transaction-related expenses, offsetting higher severance and integration expenses.

    Adjusted Net Income
    $75 millioncompared to $56 million in Q1
    Q2 FY26

    Net of a 27% tax rate applied to adjusted pretax income.

    Adjusted EPS
    $0.93compared to $0.70 per share in Q1
    Q2 FY26

    Diluted basis.

    Quarterly Dividend
    $0.14
    Q2 FY26

    Resulted in cash outflow of approximately $11 million.

    Quarterly Dividend
    $0.157% increase
    Q3 FY26

    Approved by the Board, marking the fourth straight year of dividend increases.

    Depreciation and amortization expense
    $36.6 million
    Q2 FY26

    Total D&A for the second quarter.

    Book tax expense
    $23 million
    Q2 FY26

    Resulting in an effective tax rate of 27%.

    Stock-based compensation
    $7.4 million
    Q2 FY26

    Non-cash charge included in adjustments to total company EBITDA.

    Inventory step-up amortization
    $9.5 million
    Q2 FY26

    Due to purchase price accounting, included in adjustments to total company EBITDA.

    Transaction-related professional fees
    $0.2 million
    Q2 FY26

    Included in adjustments to total company EBITDA.

    Severance and integration expenses
    $4.9 million
    Q2 FY26

    Predominantly incurred in continuing actions to rightsize Cactus International organization, included in adjustments to total company EBITDA.

    Public or Class A ownership
    87%
    Q2 FY26

    Averaged and ended the period at 87%.

    Tariff refunds
    $10 million
    Q2 FY26

    Received in the second quarter, representing less than 15% of total tariffs paid over the relevant period.

    Total tariff burden
    75%
    Current

    Applies to most goods imported from China.

    Additional Section 301 tariffs
    10% to 12.5%
    Recently introduced

    Introduced for 60 countries, designed as a replacement for 10% Section 122 tariffs. Not expected to materially change overall tariff burden as they don't apply to goods already under Section 232.

    Pressure Control imports from Vietnam
    15%
    Q3 FY26

    Expected to modestly increase thereafter, reducing tariff burden.

    Adjusted corporate EBITDA expense
    $5.3 million
    Q2 FY26

    Corporate and other expenses decreased by $4.9 million to $7.7 million in Q2, including $200,000 of transaction and integration costs.

    Industry KPIs

    5
    MetricValueDetails
    Rpo backlog$455.8 millionUSD
    FCF CAPEX leverage$15.6 millionUSD
    M a integration progress$20 millionUSD
    Orders bookings by segment$80 millionUSD
    Segment adjusted EBITDA margin22% to 24%%

    Orderbook & backlog

    2
    Total remaining performance obligations (backlog)$455.8 millionQ2 FY26 end

    decreased sequentially

    Majority associated with Cactus International Pressure Control business. Decrease in Cactus International backlog was partially offset by an increase in Spoolable Technologies backlog.

    Spoolable Technologies international ordersover $80 millionJuly 2026

    Planned shipments beginning in Q4 FY26 and extending through mid-2027. These orders fundamentally changed the international market contribution to the Spoolable business.

    Deals & partnerships

    1
    Baker HughesLegal entity restructuring transactions

    Cactus held $92.5 million of cash to finalize Cactus International legal entity restructuring transactions with Baker Hughes in one jurisdiction, which will be facilitated by Baker Hughes in Q3. One deferred closing was accomplished in Q2, the second is imminent.

    Capital programs

    2
    Spoolable Technologies Baytown plant expansionunderway$40 million

    Benefit: up to 20% additional capacity

    To meet increased demand, particularly from international and midstream customers. Additional capacity and revenue benefits could start to be realized toward the end of 2027.

    Spoolable Technologies Eastern Hemisphere expansionevaluating

    Benefit: could add substantially more capacity; Eastern Hemisphere revenue could be 40% of total Spoolable revenue

    Evaluating further investments to meet additional global demand. Could impact CapEx this year and beyond. Plans are being finalized.

    Risks & headwinds

    4
    Middle East conflict disruptionQ3 FY26 and ongoing

    Pressure Control revenue expected to be down approximately 10% in Q3; backlog decrease in Cactus International

    Mitigation: Teams worked diligently to continue planned deliveries; customer conversations indicate continued appetite for long-term regional production and spending once conflict abates; reshaping Cactus International into a leaner, more responsive organization.

    Tariff burden on importsOngoing

    75% total tariff on most China imports; additional 10%-12.5% Section 301 tariffs introduced; Q2 refunds of $10 million (less than 15% of total paid)

    Mitigation: Expanding shipments from Vietnamese facility (expected 15% of US PC imports in Q3); leveraging higher purchasing power with suppliers to lower costs from China.

    Input cost increases and volatilityNear-term

    Impacted by increases in steel and HDPE; HDPE prices recently reduced but blockade could reverse trend

    Mitigation: Closely monitoring input costs for Spoolable Technologies.

    Backlog conversion and new orders for Cactus InternationalH2 FY26 and H1 FY27

    Backlog decreased more than anticipated in Q2; need to work through backlog of material ordered pre-close to realize supply chain synergies

    Mitigation: Expect material orders from multiple large customers in the Middle East in Q3; supply chain enhancements expected to have more meaningful impact in H2 2027 with new orders.

    What to watch in Q3 FY26

    5

    Cactus International Middle East orders

    Q3 FY26
    CurrentBacklog decreased in Q2
    TargetMaterial orders received, backlog growth

    Why it matters

    New orders are crucial for the recovery and future growth of the Pressure Control segment, especially given the Middle East conflict.

    We expect material orders from multiple large customers in the Middle East in the third quarter.

    Q&A highlights

    7

    What are the drivers of growth in the US Spoolable market, specifically increased adoption, share gain, or expanding markets like midstream?

    The growth is attributed to both increased adoption and expanding markets. A new FEMSA regulation change has made it easier to use their product in midstream, providing a boost, and they are seeing greater adoption from E&P customers.

    “Yes, it's both. It's far better, I think, results in the midstream sector, which -- much of which was brought about, and I don't want to go into detail, but you can look it up by a new FEMSA regulation change, which made it easier to use our product in midstream than before.”

    asked by Stephen Gengaro · answered by Scott Bender

    2 min read5 chapters

    Detailed Narrative

    01

    Spoolable Technologies Drives Growth and Expansion

    The Spoolable Technologies segment demonstrated significant momentum, with Q2 revenues increasing 17.4% sequentially and Q3 expected to see a further 15%-20% increase. This growth is fueled by expanding domestic activity, particularly in midstream markets due to a new FEMSA regulation change, and continued resilience and order momentum in international markets, including over $80 million in new orders from Latin America and the Middle East in July. The company is investing in capacity expansion at its Baytown facility, expecting to add up to 20% to its capacity, with benefits realized by late 2027.

    02

    Pressure Control Navigates Middle East Challenges

    Pressure Control revenues increased 14.6% sequentially in Q2, largely due to stronger backlog conversion and aftermarket service in the Middle East, despite ongoing conflict disruptions. However, Q3 revenues are expected to decline by approximately 10% as international shipments normalize. The company is actively working to reshape the Cactus International joint venture into a leaner organization, with annualized synergies target increased to $20 million, though supply chain enhancements are expected to have a more meaningful impact in the back half of 2027.

    03

    Strategic Capacity Investments Underway

    Cactus is making strategic investments to support its growth trajectory, increasing its full-year 2026 net CapEx guidance to $55 million-$65 million. A significant portion of this is allocated to the $40 million Baytown plant expansion for Spoolable Technologies, with the majority of spending occurring in 2027. Furthermore, the company is evaluating additional investments for a potential Spoolable Technologies facility in the Eastern Hemisphere, which could add substantially more capacity and further diversify its global manufacturing footprint, with a potential two-year timeline for completion.

    04

    Tariff Landscape and Mitigation Efforts

    The tariff situation remains dynamic, with a 75% total tariff on most imports from China (25% Section 301, 50% Section 232) and new Section 301 tariffs of 10%-12.5% impacting certain imports. While Q2 saw $10 million in tariff refunds, this represents less than 15% of total tariffs paid. Cactus continues to mitigate its tariff burden by expanding shipments from its Vietnamese facility, which is expected to source approximately 15% of total Pressure Control imports into the U.S. in Q3, and by leveraging increased purchasing power to lower costs from China.

    05

    Shareholder Returns and Financial Strength

    The company's strong financial performance, including $133 million in adjusted EBITDA and a cash balance of $366 million, has provided confidence for consistent shareholder returns. The Board approved a 7% increase in the quarterly dividend to $0.15 per share, marking the fourth consecutive year of dividend growth. Adjusted net income for Q2 was $75 million, or $0.93 per share, reflecting higher operating earnings and a 27% effective tax rate.

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