How will the increased midstream and international activity impact the margin profile of the Spoolable segment?

Management expressed optimism about the margin profile but declined to provide specific details due to competitive reasons. “Yes. In general, Stephen, I don't like to talk about margins because of our competitors. But let me just say we're optimistic about margin. Can I leave it at that?”

Expand on the international opportunities for Spoolable Technologies, the rationale for investment, and how this could transform the segment's earnings profile by 2027-2028.

The Baytown expansion will add 20% to capacity, primarily for the Western Hemisphere. A potential Eastern Hemisphere expansion could add substantially more, with Eastern Hemisphere revenue potentially becoming 40% of total Spoolable revenue. The growth is driven by activity in Latin America, US midstream, and re-establishing an international footprint where they were previously underrepresented. “Well, the expansions that are currently being undertaken will add -- and this is just -- it's a Baytown facility, can add as much as 20% to our capacity in Baytown. So if you look at our Baytown revenues, you can add 20%. The expansion in the Mid East could add substantially more than that.”

Discuss the strength in Pressure Control aftermarket services in the Middle East, its connection to legacy Vetco Gray assets, and its future implications.

Most of the aftermarket surge in Q2 was from Saudi Arabia and Norway. The company has not yet seen the full aftermarket potential from underserved legacy Vetco Gray markets like West Africa, North Africa, and the Far East, but believes it is coming. “Most of the aftermarket surge in the quarter was related to our large operation in Saudi Arabia and to some extent, in Norway. So we haven't really begun to see yet the aftermarket surge from what we consider to be underserved legacy Vetco Gray markets like West Africa, North Africa and the Far East. But we believe that's coming.”

WHD

Cactus (WHD) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Energy· Jul 30, 2026

Source: earnings call transcript

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

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

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

Category	Target	Timeline	Confidence
Pressure Control revenue	down approximately 10% medium materiality	Q3 · FY26	High
Pressure Control Adjusted EBITDA margins	22% to 24% range medium materiality	Q3 · FY26	High
Spoolable Technologies revenue	increase a further 15% to 20% high materiality	Q3 · FY26	High
Spoolable Technologies Adjusted EBITDA margins	approximately 39% to 41% medium materiality	Q3 · FY26	High
Adjusted corporate EBITDA	charge of approximately $5 million low materiality	Q3 · FY26	High
Full-year 2026 net CapEx	$55 million to $65 million high materiality	FY26	High
Effective tax rate	24% low materiality	Q3 · FY26	High
Estimated tax rate for adjusted EPS	approximately 27% low materiality	Q3 · FY26	High
Total depreciation and amortization expense	approximately $27 million low materiality	Q3 · FY26	High
Annualized synergies target	$20 million medium materiality	First year post-close	High
Baytown plant expansion capacity/revenue benefits	start to be realized toward the end of next year medium materiality	End of 2027 · FY27	High
International Spoolable expansion timeline	about 2 years from start to finish medium materiality	Long-term	Medium

Segment performance

Segment	Revenue	YoY	QoQ	Margin
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

WHD operating KPIs by quarter

WHD operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Mar 2026 Q1 FY26	This call Jun 2026 Q2 FY26	Change vs prior quarter
Backlog	$537M Total company remaining performance obligations or backlog ended the quarter at $537 million. Source: earnings call transcript	$455.8M Total company remaining performance obligations or backlog ended the quarter at $455.8 million. Source: earnings call transcript	-15.1%

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Orderbook & backlog

Total remaining performance obligations (backlog) $455.8 million Q2 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 orders over $80 million July 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

Baker Hughes Legal 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

Spoolable Technologies Baytown plant expansion underway $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 expansion evaluating

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

Middle East conflict disruption Q3 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 imports Ongoing

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 volatility Near-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 International H2 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

Cactus International Middle East orders

Q3 FY26

Current Backlog decreased in Q2

Target Material 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.

Find out whether WHD delivers this. Inve re-checks your case every morning.

Q&A highlights

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 read 5 chapters

Detailed narrative

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.

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.

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.

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.

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.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.