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Item 1A. Risk Factors

2026-02-26 compared with 2025-02-27 · 106 added, 76 removed, 244 unchanged (43% of the section changed)

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Risks Related to the Oilfield Services Industry and Our Business

Demand for our products and services depends on oil and gas industry activity and customer expenditure levels, which are directly affected by trends in the demand for and price of crude oil and natural gas and availability of capital.

Demand for our products and services depends primarily upon the general level of activity in the oil and gas industry, including the number of drilling rigs in operation, the number of oil and gas wells being drilled, the depth, lateral length and drilling conditions of these wells, the volume of production, the number of well completions and the level of well remediation activity, the number of wells put into production and the corresponding capital spending by oil and gas exploration and production companies.

Demand for our products and services depends on oil and gas industry activity and customer expenditure levels, which are directly affected by trends in the supply of and demand for and price of crude oil and natural gas and availability of capital.

Demand for our products and services depends primarily upon the general level of activity in the oil and gas industry, including the number of drilling rigs in operation, the number of oil and gas wells being drilled, the depth, lateral length and drilling conditions of these wells, the volume of production, the number of well completions and the level of well remediation activity, the number of wells put into production, the number of wells drilled but uncompleted, the impact of actions taken by the Organization of Petroleum Exporting Countries and other oil and gas producing countries ("OPEC+") affecting the global supply of oil and gas and the capital spending by oil and gas exploration and production companies.

Oil and gas activity is in turn heavily influenced by, among other factors, current and anticipated oil and natural gas prices locally and worldwide, which have historically been volatile.

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The oil and gas industry is cyclical and has historically experienced periodic downturns, which have been characterized by diminished demand for our products and services and downward pressure on the prices we charge.

These downturns cause many E&P companies to reduce their capital budgets and drilling activity.

These downturns cause exploration and production ("E&P") companies to reduce their capital budgets and drilling activity.

Any future downturn or expected downturn could result in a significant decline in demand for oilfield services and adversely affect our business, results of operations and cash flows.

drilling and completion activity could be adversely affected by any significant constraints in equipment, labor or takeaway capacity in the regions in which we operate.

drilling and completion activity may be impacted by, among other things, the availability and cost of ancillary equipment and services, pipeline capacity, and material and labor shortages.

drilling and completion activity may be impacted by, among other things, the availability and cost of ancillary equipment and services, pipeline capacity, and material and labor availability and costs.

Should significant changes in activity occur, there could be concerns over availability of the equipment, materials and labor required to drill and complete a well, together with the ability to move the produced oil and natural gas to market.

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Our business is dependent on the continuing services of certain of our key managers and employees.

We depend on key personnel.

The loss of key personnel could adversely impact our business.

The loss of qualified employees or an inability to retain and motivate additional highly‑skilled employees required for the operation and expansion of our business could hinder our ability to successfully maintain and expand our market share.

We depend on key executives and management personnel.

Our future plans depend in part on our ability to identify, retain, develop and/or recruit suitable successors to senior management.

The loss of any key executives and/or managers could adversely impact our business.

The loss of qualified associates or an inability to retain and motivate additional highly‑skilled associates required for the operation and expansion of our business could hinder our ability to successfully maintain and expand our market share.

Political, regulatory, economic and social disruptions in the countries in which we conduct business and globally could adversely affect our business or results of operations.

In addition to our facilities in the United States, we operate a production facility in China and have facilities in Australia and Canada that sell and rent equipment as well as provide parts, repair services and field services associated with installation.

In addition to our facilities in the United States, we operate a production facilities in China and, Vietnam, and we have facilities in Australia and Canada that sell and rent equipment as well as provide parts, repair services and field services associated with installation.

Additionally, we provide rental and field service operations in the Middle East.

Instability and unforeseen changes in any of the markets in which we conduct business could have an adverse effect on the demand for, or supply of, our business, results of operations and cash flows.

We have also expanded our operations and footprint in the Middle East as a result of the Baker Hughes Transaction.

We are dependent on a relatively small number of customers in a single industry.

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Historically, we have been dependent on a relatively small number of customers for our revenues.

Our business, results of operations and financial position could be materially adversely affected if an important customer ceases to engage us for our services on favorable terms, or at all, or fails to pay or delays paying us significant amounts of our outstanding receivables.

Additionally, the E&P industry has seen consolidation activity, which may continue.

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Permitting, authorization or renewal delays, the inability to obtain new permits or the revocation of current permits could impact our customers’ operations and cause a loss of revenue and potentially have a material adverse effect on our business, results of operations and cash flows.

In January 2025, however, President Trump signed an executive order directing federal executive departments and agencies to initiate a regulatory freeze for certain rules that have not taken effect, pending review by the newly appointed agency head, identify and exercise emergency authorities to facilitate conventional energy production, transportation, and refining, and mandate a review of existing regulations that may burden domestic energy development.

Competition within the oilfield services industry may adversely affect our ability to market our services.

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The oilfield services industry is subject to the introduction of new drilling and completions techniques and services using new technologies, some of which may be subject to patent or other intellectual property protections.

Although we believe our equipment and processes currently give us a competitive advantage, as competitors and others use or develop new or comparable technologies in the future, we may lose market share or be placed at a competitive disadvantage.

Although we believe our equipment and processes currently give us a competitive advantage in the U.S., as competitors and others use or develop new or comparable technologies in the future, we may lose market share or be placed at a competitive disadvantage.

Further, we may face competitive pressure to develop, implement, license or acquire certain new technologies at a substantial cost.

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Limits on our ability to develop, bring to market, effectively use and implement new and emerging technologies may have a material adverse effect on our business, results of operations and cash flows, including a reduction in the value of assets replaced by new technologies.

Increased costs, increased transit times, increased tariffs, or lack of availability, of raw materials and other components may result in increased operating expenses and adversely affect our results of operations and cash flows.

Our ability to source and transport low-cost raw materials and components, such as steel, tube and bar stock, forgings and machined components is critical to our ability to successfully compete.

Increased costs, inflation, increased transit times, changes in global trade policies, increased tariffs, or lack of availability, of raw materials and other components may result in increased operating expenses and adversely affect our results of operations and cash flows.

Our ability to source and transport raw materials and components, such as steel, tube and bar stock, forgings and machined components is critical to our ability to successfully compete.

Among other things, the conflicts in Ukraine and the Middle East may result in longer transit times, higher costs and reduced availability of raw materials and components used in our wide variety of products and systems.

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Transit times through and availability of the Panama Canal may be impacted by weather patterns and political tensions among the US, Panama and China.

In the United States, the Trump administration has indicated that it may increase existing tariffs or implement new tariffs that may result in increased costs and inflation impacting the cost of other raw materials.

There is no assurance that we will be able to continue to purchase and move these materials on a timely basis or at commercially viable prices, nor can we be certain of the impact of changes to tariffs and future legislation that may impact trade with China or other countries.

Tariffs, and related policy changes implemented by the U.S.

government, have created volatility in the oil and gas markets and will likely result in higher operating expenses and potentially lower demand for our products, which could adversely affect our results of operations and cash flows.

tariff increases on imports of steel, aluminum, and derivative products worldwide may impact our costs and profitability.

Additionally, the imposition of high tariffs on products from China, as well as varying levels of tariffs on products from India and Vietnam could have an unfavorable impact on our supply chain diversification plans.

Further, should our current suppliers be unable to provide the necessary raw materials or components or otherwise fail to deliver materials and components timely and, in the quantities required, as a result of global trade policies or other reasons, resulting delays in the provision of products or services to our customers could have a material adverse effect on our business, results of operations and cash flows.

In addition, our results of operations may be adversely affected by further rising costs to the extent we are unable to partially recoup them from our customers.

There is no assurance that we will be able to continue to purchase and move these materials on a timely basis or at commercially viable prices, nor can we be certain of the impact of changes to tariffs, litigation related to tariffs and future legislation that may impact trade with China or other countries.

Further, unexpected changes in the size of regional and/or product markets, particularly for short lead‑time products, could affect our results of operations and cash flows.

Should our current suppliers be unable to provide the necessary raw materials or components or otherwise fail to deliver such materials and components timely and, in the quantities required, resulting delays in the provision of products or services to our customers could have a material adverse effect on our business, results of operations and cash flows.

In addition, our results of operations may be adversely affected by further rising costs to the extent we are unable to recoup them from our customers.

We design, manufacture, sell, rent and install equipment that is used in oil and gas E&P activities, which may subject us to liability, including claims for personal injury, property damage and environmental contamination should such equipment fail to perform to specifications.

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Further, insurance companies may refuse to honor their policies, or insurance may not generally be available in the future, or if available, premiums may not be commercially justifiable.

We could incur substantial liabilities and damages that are either not covered by customer indemnities or insurance or that are in excess of policy limits, or incur liability at a time when we are not able to obtain liability insurance.

We could incur substantial liabilities and damages that are either not covered by customer indemnities

or insurance or that are in excess of policy limits, or incur liability at a time when we are not able to obtain liability insurance.

Such potential liabilities could have a material adverse effect on our business, results of operations and cash flows.

Our customers require us to be licensed or approved by industry groups such as the American Petroleum Institute ("API") and the International Organization for Standardization ("ISO").

The failure to obtain and maintain such licenses and/or approvals could have a material adverse effect on our results of operations, financial condition and cash flows.

We currently hold licenses from API and ISO that are required by our customers.

Maintaining those licenses are subject to continually meeting the standards required for those licenses, including periodic audit by the applicable organization.

If we are not able to continue to hold such licenses and/or approvals, we could potentially no longer be able to provide goods and services to many of our customers.

Our operations are subject to hazards inherent in the oil and natural gas industry, which could expose us to substantial liability and cause us to lose customers and substantial revenue.

uncontrollable flows of gas or well fluids, pipe or pipeline failures, abnormally pressured formations and various environmental hazards such as oil spills and releases of, and exposure to, hazardous substances.

Risks inherent in our industry include the risks of equipment defects, installation errors, the presence of multiple contractors at the wellsite over which we have no control, vehicle accidents, fires, explosions, blowouts, surface cratering, uncontrollable flows of gas or well fluids, pipe or pipeline failures, abnormally pressured formations and various environmental hazards such as oil spills and releases of, and exposure to, hazardous substances.

For example, our operations are subject to risks associated with hydraulic fracturing, including any mishandling, surface spillage or potential underground migration of fracturing fluids, including chemical additives.

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The frequency and severity of such incidents will affect operating costs, insurability and relationships with customers, employees and regulators.

In particular, our customers may elect not to purchase our products or services if they view our environmental or safety record as unacceptable, which could cause us to lose customers and substantial revenues, leading to a material adverse effect on our business, results of operations and cash flows.

Oilfield anti-indemnity provisions enacted by many states may restrict or prohibit a party’s indemnification of us.

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Foreign Corrupt Practices Act, among others, applies to us and our operations.

Our policies, procedures and programs may not always protect us from reckless or criminal acts committed by our employees or agents, and severe criminal or civil sanctions may be imposed as a result of violations of these laws.

We are also subject to the risks that our employees and agents outside of the United States may fail to comply with applicable laws.

Our policies, procedures and programs may not always protect us from reckless or criminal acts committed by our associates or agents, and severe criminal or civil sanctions may be imposed as a result of violations of these laws.

We are also subject to the risks that our associates and agents outside of the United States may fail to comply with applicable laws.

In addition, we import raw materials, semi‑finished goods, and finished products into, among other countries, the United States, China, Australia, Canada, Vietnam, India and the Middle East for use in such countries or for manufacturing and/or finishing for re‑export and import into another country for use or further integration into equipment or systems.

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Failure to comply with these laws and regulations may result in the assessment of administrative, civil and criminal penalties, the imposition of remedial obligations, or the issuance of orders enjoining operations.

These laws and regulations, as well as the

adoption of other new laws and regulations affecting our operations or the exploration, production and transportation of crude oil and natural gas by our customers, could adversely affect our business and operating results by increasing our costs of compliance, increasing the costs of compliance and costs of doing business for our customers, limiting the demand for our products and services or restricting our operations.

Increased regulation or a move away from the use of fossil fuels caused by additional regulation could also reduce demand for our products and services.

These laws and regulations, as well as the adoption of other new laws and regulations affecting our operations or the exploration, production and transportation of crude oil and natural gas by our customers, could adversely affect our business and operating results by increasing our costs of compliance, increasing the costs of compliance and costs of doing business for our customers, limiting the demand for our products and services or restricting our operations.

Increased regulation or a move away from the use of fossil fuels caused by additional regulation could also reduce demand for our products and services, leading to a material adverse effect on our business, results of operations and cash flows.

Existing or future laws and regulations related to greenhouse gases and climate change and related public and governmental initiatives and additional compliance obligations could have a material adverse effect on our business, results of operations, prospects, and financial condition.

Changes in environmental requirements related to greenhouse gas emissions may negatively impact demand for our products and services.

Oil and natural gas E&P may decline as a result of environmental requirements, including land use policies and other actions to restrict oil and gas leasing and permitting in response to environmental and climate change concerns.

Oil and natural gas E&P activity may decline as a result of environmental requirements, including land use policies and other actions to restrict oil and gas leasing and permitting in response to environmental and climate change concerns.

Federal, state, and local agencies continue to evaluate climate-related legislation and other regulatory initiatives that would restrict emissions of greenhouse gases in areas in which we conduct business.

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Additional compliance obligations could also increase costs of compliance and costs of doing business for our customers, thereby reducing demand for our products and services.

Finally, increasing concentrations of greenhouse gases in the Earth’s atmosphere may produce climate changes that could have significant physical effects, such as increased frequency and severity of storms, droughts, floods, wildfires and other climatic events;

if such effects were to occur, they could have an adverse impact on our operations.

Although the Trump Administration has signaled a shift in federal climate policy, state and local climate and energy initiatives may continue, and future presidential administrations may pursue executive orders similar to, or more restrictive than, those put in place by President Biden.

Finally, increased frequency and severity of storms, droughts, floods, wildfires and other climatic events could have an adverse impact on our operations.

Many of our customers utilize hydraulic fracturing in their operations.

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In addition, the Texas Railroad Commission has overseen the development of well-operator-led response plans to reduce injection volumes in other portions of West Texas to reduce seismicity in these areas.

The adoption of new laws or regulations at the federal, state, local or foreign level imposing reporting obligations on, or otherwise limiting, delaying or banning, the hydraulic fracturing process or other processes on which hydraulic fracturing and subsequent hydrocarbon production relies, such as water disposal, could make it more difficult to complete oil and natural gas wells.

Further, it could increase our customers’ costs of compliance and doing business, and otherwise adversely affect the hydraulic fracturing services they perform, which could negatively impact demand for our products.

other processes on which hydraulic fracturing and subsequent hydrocarbon production relies, such as water disposal, could make it more difficult to complete oil and natural gas wells.

Increasing attention by the public and government agencies to climate change and environmental, social and governance (“ESG”) matters could also negatively impact demand for our products and services.

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State or federal initiatives to incentivize a shift away from fossil fuels could also reduce demand for hydrocarbons.

For example, the Inflation Reduction Act appropriates significant federal

funding for the development of renewable energy, clean hydrogen, clean fuels, electric vehicles and supporting infrastructure and carbon capture and sequestration, amongst other provisions.

In addition, the Inflation Reduction Act imposes the first ever federal fee on the emission of GHG through a methane emissions charge.

The Inflation Reduction Act amends the federal Clean Air Act to impose a fee on the emission of methane from sources required to report their GHG emissions to the EPA, including those sources in the onshore petroleum and natural gas production categories, the rule for which was finalized in November 2024.

These developments could further accelerate the transition of the U.S.

economy away from the use of fossil fuels towards lower- or zero-carbon emissions alternatives, which would reduce demand for our products and services and negatively impact our business.

In January 2025, however, President Trump signed executive orders that, among other things, direct federal executive departments and agencies to initiate a regulatory freeze for certain rules that have not taken effect, pending review by the newly appointed agency head, call upon the EPA to submit a report on the continuing applicability of its endangerment finding for GHGs under the Clean Air Act and issue guidance on the “social cost of carbon” to consider whether such metric should be eliminated, and pause the disbursement of funds appropriated through the IRA and the Infrastructure Investments and Jobs Act.

However, future presidential administrations may pursue executive orders that increase the amount of regulation.

Early in 2025, President Trump signed executive orders that, among other things, directed federal executive departments and agencies to initiate a regulatory freeze for certain rules, called upon the Environmental Protection Agency (the “EPA”) to submit a report on the continuing applicability of its endangerment finding for GHGs under the Clean Air Act and issue guidance on the “social cost of carbon” to consider whether such metric should be eliminated, and paused the disbursement of funds appropriated through the Inflation Reduction Act of 2022 and the Infrastructure Investments and Jobs Act.

Additionally, on February 12, 2026, the EPA finalized its rescission of the 2009 Greenhouse Gas Endangerment Finding regarding greenhouse gas and all federal greenhouse gas emissions standards for vehicles and engines.

However, future presidential administrations may pursue executive orders or rulemaking that would increase the amount of regulation.

The global outbreak of COVID-19 had, and similar pandemics in the future may have, an adverse impact on our business and operations.

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Outbreaks of other pandemics or contagious diseases may in the future disrupt our operations, suppliers or facilities, result in increased costs for certain goods or otherwise impact us in a manner similar to the COVID-19 pandemic.

The ongoing conflicts in various parts of the world may adversely affect our business and results of operations.

The ongoing conflicts in Ukraine and the Middle East could have adverse effects on global macroeconomic conditions which could negatively impact our business and results of operations.

The ongoing conflicts in various parts of the world may affect our business and results of operations.

The ongoing conflicts in Venezuela, Iran, Ukraine and other countries in the Middle East could have effects on global macroeconomic conditions which could impact our business and results of operations.

The conflicts are highly unpredictable and have resulted in volatility with oil and natural gas prices worldwide.

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Risks Related to Our Class A Common Stock

We are a holding company whose only material asset is our equity interest in Cactus Companies, and accordingly, we are dependent upon distributions from Cactus Companies to pay taxes, make payments under the TRA and cover our corporate and other overhead expenses and pay dividends to holders of our Class A Common Stock.

We are a holding company whose only material asset is our equity interest in Cactus Companies, and accordingly, we are dependent upon distributions from Cactus Companies to pay taxes, make payments under the Tax Receivable Agreement ("TRA") and cover our corporate and other overhead expenses and pay dividends to holders of our Class A Common Stock.

We are a holding company and have no material assets other than our equity interest in Cactus Companies.

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and foreign jurisdictions) that may limit the amount of funds available for distribution and (ii) restrictions in relevant debt instruments issued by Cactus Companies or its subsidiaries.

extent that we are unable to make payments under the TRA for any reason, such payments will be deferred and will accrue interest until paid.

Cactus WH Enterprises LLC has the ability to direct the voting of a significant percentage of the voting power of our common stock, and its interests may conflict with those of our other shareholders.

To the extent that we are unable to make payments under the TRA for any reason, such payments will be deferred and will accrue interest until paid.

Cactus WH Enterprises has the ability to direct the voting of a significant percentage of the voting power of our common stock, and its interests may conflict with those of our other shareholders.

Holders of Class A common stock and Class B common stock vote together as a single class on all matters presented to our stockholders for their vote or approval, except as otherwise required by applicable law or our amended and restated certificate of incorporation.

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In addition, some provisions of our amended and restated certificate of incorporation and amended and restated bylaws could make it more difficult for a third party to acquire control of us, even if the change of control would be beneficial to our shareholders, including:

• limitations on the removal of directors, including a classified board whereby only one-third of the directors are elected each year, which will be phased out between 2025 and 2027;

• limitations on the removal of directors, including a classified board whereby only one-third of the directors are elected each year, which will be phased out by 2027;

• limitations on the ability of our shareholders to call special meetings;

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The payment obligations under the TRA are our obligations and not obligations of Cactus Companies, and we expect that the payments we will be required to make under the TRA will be substantial.

Estimating the amount and timing of payments that may become due under the TRA Agreement is by its nature imprecise.

Estimating the amount and timing of payments that may become due under the TRA is by its nature imprecise.

For purposes of the TRA, cash savings in tax generally are calculated by comparing our actual tax liability (determined by using the actual applicable U.S.

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In certain cases, payments under the TRA may be accelerated and/or significantly exceed the actual benefits, if any, we realize in respect of the tax attributes subject to the TRA.

If we elect to terminate the TRA early or it is terminated early due to Cactus Inc.’s failure to honor a material obligation thereunder or due to certain mergers or other changes of control, our obligations under the TRA would accelerate and we would be required to make an immediate payment equal to the present value of the anticipated future payments to be made by us under the TRA (determined by applying a discount rate equivalent to the 30-day SOFR plus 0.715%) and such payment is expected to be substantial.

If we elect to terminate the TRA early or it is terminated early due to Cactus Inc.’s failure to honor a material obligation thereunder or due to certain mergers or other changes of control, our obligations under the TRA would accelerate and we would be required to make an immediate payment equal to the present value of the anticipated future payments to be made by us under the TRA (determined by applying a discount rate equivalent to the 30-day SOFR plus 221.5 basis points) and such payment is expected to be substantial.

The calculation of anticipated future payments will be based upon certain assumptions and deemed events set forth in the TRA, including (i) the assumption that we have sufficient taxable income to fully utilize the tax benefits covered by the TRA and (ii) the assumption that any CC Units (other than those held by Cactus Inc.) outstanding on the termination date are deemed to be redeemed on the termination date.

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In addition, we would no longer have the benefit of certain increases in tax basis covered under the TRA, and we would not be able to recover any payments previously made by us under the TRA, even if the corresponding tax benefits (including any claimed increase in the tax basis of Cactus Companies’ assets) were subsequently determined to have been unavailable.

Risks Related to the FlexSteel Business

We may not realize the anticipated benefits from the FlexSteel acquisition, and failure to realize the anticipated benefits could adversely impact our business and our operating results.

We may not be able to achieve the full potential strategic and financial benefits that were expected to be achieved at the time of the acquisition of the FlexSteel business, or such benefits may be delayed or not occur at all.

If we fail to achieve some or all of the benefits expected to result from the acquisition, or if such benefits are delayed, our business could be impacted.

FlexSteel’s operations are subject to many of the same risks as the Pressure Control operations.

The failure of FlexSteel to achieve financial results after the closing date of the acquisition similar to those obtained in the past could adversely impact our business and our consolidated operating results.

We may experience difficulties in integrating the operations of FlexSteel into our business and in realizing the expected benefits of the Merger.

The ongoing success of the Merger will depend in part on our ability to realize all of the anticipated business opportunities from combining the operations of FlexSteel with our Pressure Control business in an efficient and effective manner.

The integration process could take longer than anticipated and could result in the distraction of management, the loss of key employees from either company, the disruption of each company’s ongoing businesses, tax costs or inefficiencies, or inconsistencies in standards, controls, information technology systems, procedures and policies, any of which could adversely affect our ability to maintain relationships with customers, employees or other third parties, or our ability to achieve the anticipated benefits of the FlexSteel acquisition, and could harm our financial performance.

FlexSteel may have liabilities that are not known to us and the indemnities negotiated in the Merger Agreement may not offer adequate protection.

As part of the Merger, we assumed certain liabilities of FlexSteel.

There may be liabilities that we failed to identify or we were unable to discover in the course of performing due diligence investigations into FlexSteel.

We may also have not correctly assessed the significance of certain FlexSteel liabilities identified in the course of our due diligence.

Any such liabilities, individually or in the aggregate, could have a material adverse effect on our business, financial condition and results of operations.

As we continue to integrate FlexSteel into our operations, we may learn additional information about FlexSteel, such as unknown or contingent liabilities and issues relating to compliance with applicable laws, that could potentially have an adverse effect on our business, financial condition and results of operations.

We will not be able to enforce claims with respect to the representations and warranties that the sellers of FlexSteel provided under the Merger Agreement.

In connection with the Merger, the sellers of FlexSteel gave customary representations and warranties related to FlexSteel under the Merger Agreement.

We will not be able to enforce any claims against the sellers, including any claims relating to breaches of such representations and warranties.

The sellers’ liability with respect to breaches of their representations and warranties under the Merger Agreement is limited.

To provide for coverage against certain breaches by the sellers of their representations and warranties and certain pre-closing taxes of FlexSteel, we obtained a representation and warranty insurance policy.

The policy is subject to a retention amount, exclusions, policy limits and certain other customary terms and conditions.

General Risks

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Accordingly, we rely upon the capacity, reliability and security of our IT hardware and software infrastructure and our ability to expand and update this infrastructure in response to our changing needs.

Despite our implementation of security measures, our systems are vulnerable to damage from computer viruses, natural disasters, incursions by intruders or hackers, failures in hardware or software, power fluctuations, cyber terrorists and other similar disruptions.

Despite our implementation of security measures, our systems may be vulnerable to damage from computer viruses, natural disasters, incursions by intruders or hackers, failures in hardware or software, power fluctuations, cyber terrorists and other similar disruptions.

Additionally, we rely on third parties to support the operation of our IT hardware and software infrastructure, and in certain instances, utilize web‑based applications.

The failure of our IT systems or those of our vendors to perform as anticipated for any reason or any significant breach of security could disrupt our business and result in numerous adverse consequences, including reduced effectiveness and efficiency of operations, inappropriate disclosure of confidential and proprietary information, reputational harm, increased overhead costs and loss of important information, which could have a material adverse effect on our business and results of operations.

In addition, we may be required to incur significant costs to protect against damage caused by these disruptions or security breaches in the future.

We rely on our information systems to conduct our business, and failure to protect these systems against security breaches could disrupt our business and adversely affect our results of operations.

We rely on information technology systems and networks in our operations, and those of our third-party vendors, suppliers and other business partners.

We rely on IT systems and networks in our operations, and those of our third-party vendors, suppliers and other business partners.

A successful cyber-attack could materially disrupt our operations or lead to unauthorized access, release or alteration of information on our systems or the systems of our service providers, vendors or customers.

Any such attack or other breach of our information technology systems—or those of our third-party service providers, suppliers or other business partners—could have a material adverse effect on our business, operating results, financial condition, our reputation or cash flows.

Any such attack or other breach of our IT systems—or those of our third-party service providers, suppliers or other business partners—could have a material adverse effect on our business, operating results, financial condition, our reputation or cash flows.

In addition, the unavailability of the information systems or the failure of these systems to perform as anticipated, including any failure in disaster recovery plans or data backups, for us or our third-party technical managers for any reason could disrupt our business.

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As cyberattacks continue to evolve, including those leveraging artificial intelligence, we may be required to expend significant additional resources to continue to modify or enhance our protective measures or to investigate and remediate any vulnerabilities to cyberattacks.

In addition, new laws and

regulations governing data privacy, cybersecurity, and the unauthorized disclosure of confidential information pose increasingly complex compliance challenges and potentially elevate costs, and any failure to comply with these laws and regulations could result in significant penalties and legal liability.

In addition, new laws and regulations governing data privacy, cybersecurity, and the unauthorized disclosure of confidential information pose increasingly complex compliance challenges and potentially elevate costs, and any failure to comply with these laws and regulations could result in significant penalties and legal liability.

Our business is subject to complex and evolving laws and regulations regarding privacy and data protection (“data protection laws”).

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Any litigation concerning intellectual property could be protracted and costly, is inherently unpredictable and could have an adverse effect on our business, regardless of its outcome.

Risks Related to the Joint Venture and the Baker Hughes Transaction

We may not realize the anticipated benefits from the Baker Hughes Transaction, and the Baker Hughes Transaction could adversely impact our business and our operating results.

We may not be able to achieve the full potential strategic and financial benefits that we expect to achieve from the Baker Hughes Transaction, or such benefits may be delayed or not occur at all.

We may not achieve the anticipated benefits from the Baker Hughes Transaction for a variety of reasons, including, among others, unanticipated costs, charges and expenses.

For example, the capital needs of the Joint Venture may exceed our current expectations.

In addition, we may not achieve the anticipated unrealized benefits of operational initiatives being, and expected to be, taken with respect to the Joint Venture.

If we fail to achieve some or all of the benefits expected to result from the Baker Hughes Transaction, or if such benefits are delayed, our business could be harmed.

We may experience difficulties in integrating the operations of the Joint Venture into our business.

The success of the Baker Hughes Transaction depends in part on our ability to successfully integrate the operations of the Joint Venture into our business.

The integration process could take longer than anticipated and could result in the loss of key employees from the Company and/or the Joint Venture, the disruption of the Company’s and/or the Joint Venture’s ongoing businesses, tax costs or inefficiencies, or inconsistencies in standards, controls, information technology systems, procedures or policies, any of which could adversely affect our ability to maintain relationships with customers, employees or other third parties, or our ability to achieve the anticipated benefits of the Baker Hughes Transaction, and could harm our financial performance.

Prior to the Baker Hughes Transaction, we did not have any significant infrastructure in most of the countries where the Joint Venture is doing business.

As a result, Baker Hughes Company is providing the Joint Venture with limited transition services.

If Baker Hughes Company fails to continue providing these transition services, or if we are unable to successfully or timely integrate and support the operations of the Joint Venture, we may incur unanticipated liabilities and be

unable to realize the revenue growth, synergies and other anticipated benefits resulting from the Baker Hughes Transaction, and our business, results of operations and financial condition could be materially and adversely affected.

We may be required to acquire Baker Hughes Company’s interests in the Joint Venture.

Generally beginning on January 1, 2028, the Baker Member has the right to sell to either the Joint Venture or the Cactus Member, and the Joint Venture or the Cactus Member, as applicable, shall be obligated to purchase all of the Membership Interests held by Baker Hughes Company (the “Put Right”).

The purchase price (the “Exit Price”) will be based on an enterprise value of the Joint Venture using a multiple of six times its TTM Adjusted EBITDA (as defined and calculated in the Joint Venture LLC Agreement), subject to a maximum valuation of $660.0 million.

If the Baker Member exercises the Put Right, we may not have sufficient liquidity to fund the Exit Price.

We may be required to access external financing, and we may be unable to do so on favorable terms, or at all.

Accordingly, our obligation to fund the Exit Price may adversely affect our liquidity and cause us to enter into financing arrangements with terms that are unfavorable to us.

The Joint Venture LLC Agreement restricts certain of our or the Joint Venture’s actions.

For so long as Baker Hughes Company owns interests in the Joint Venture, we must, subject to certain exceptions, cause the Joint Venture to operate its business in the ordinary course consistent with past practice and not take certain actions that could reasonably be expected to reduce the Exit Price.

Certain significant actions of the Joint Venture require the approval of Baker Hughes Company.

Such restrictions may limit the ability of the Joint Venture to take actions that we believe to be beneficial to our business, results of operations and financial condition, or those of the Joint Venture.

It is possible that disputes arise between us and Baker Hughes Company concerning our operation of the Joint Venture and such disputes could adversely affect our business and financial performance.

Our agreement with Baker Hughes Company significantly restricts our ability to transfer our interests in the Joint Venture.

These transfer restrictions may limit our ability to dispose of our Membership Interests in the Joint Venture in ways which may be beneficial to our business, results of operations and financial condition.

For so long as Baker Hughes Company owns interests in the Joint Venture, we are required to conduct the surface pressure control business in the countries where the Acquired Business operated prior to our acquisition only through the Joint Venture, subject to certain exceptions.

These restrictions mean that certain new opportunities will be directed to the Joint Venture and not us, which may reduce the direct benefit that we receive from such new opportunities.

The Joint Venture may have liabilities that are not known to us and the indemnities negotiated in the Framework Agreement may not offer adequate protection.

As part of the Baker Hughes Transaction, the Joint Venture assumed certain liabilities of the Acquired Business.

There may be liabilities that we failed or were unable to discover in the course of performing due diligence investigations into the Acquired Business.

We may also have not correctly assessed the significance of certain liabilities of the Acquired Business identified in the course of our due diligence.

Any such liabilities, individually or in the aggregate, could have a material adverse effect on our business, financial condition and results of operations.

As we integrate the Joint Venture into our operations, we may learn additional information about the Joint Venture, such as unknown or contingent liabilities and issues relating to compliance with applicable laws, that could potentially have an adverse effect on our business, financial condition and results of operations.

We may not be able to enforce claims with respect to certain of the representations and warranties that Baker Hughes Holdings made in the Framework Agreement.

Under the Framework Agreement entered into by Cactus Companies, Baker Hughes Holdings and the Joint Venture on June 2, 2025 (the "Framework Agreement"), Baker Hughes Holdings gave customary representations and warranties related to the Acquired Business.

We may not be able to enforce any claims against Baker Hughes Holdings or its affiliates relating to breaches of certain representations and warranties in the Framework Agreement, except in the case of fraud as provided in the Framework Agreement.

Accordingly, the liability of these entities with respect to breaches of Baker Hughes Holdings’ representations and warranties under the Framework Agreement is limited.

To provide for coverage against certain breaches by Baker Hughes Holdings of its representations and warranties in the Framework Agreement and certain pre-closing taxes of the Joint Venture, we have obtained a representation and warranty insurance policy.

The policy is subject to a retention amount, exclusions, policy limits and certain other customary terms and conditions.

The Baker Hughes Transaction represents an expansion outside of our current geographic regions, and we may encounter new obstacles operating in different geographic regions.

Prior to the Baker Hughes Transaction, our operations historically focused on the United States.

The Baker Hughes Transaction represents an expansion of our operations in the Middle East and other jurisdictions.

Certain aspects related to operating in these new jurisdictions may not be as familiar to us as the jurisdictions in which we operated prior to the Baker Hughes Transaction.

As a result, we may encounter obstacles that may cause us not to achieve the expected results of the Baker Hughes Transaction.

These obstacles may include a less familiar and more volatile geopolitical landscape, new customers with whom we have no established relationship and just a small number of which account for the preponderance of the Joint Venture’s revenue, pressure from local governments to hire local associates, use local suppliers or to direct business to nationalized companies, unfamiliar operating conditions, and a distinct regulatory environment.

Our future success will depend, in part, upon our ability to manage this expanded business, which may pose substantial challenges for management, including challenges related to the management and monitoring of new operations and jurisdictions and associated increased costs and complexity.

We may also face increased scrutiny from governmental authorities as a result of the increase in the size of our business.

Any adverse conditions, regulations or developments related to our expansion into or within these new jurisdictions may have a negative impact on our business, financial condition and results of operations.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors