What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-02-26 compared with 2025-02-27 · 118 added, 95 removed, 232 unchanged (48% of the section changed)

9 unchanged sentences

Demand for our products and services depends primarily upon oil and gas industry activity levels, including the number of active drilling rigs, the number of wells being drilled, the number of wells being completed and the volume of newly producing wells, among other factors.

Oil and gas exploration and production activity is in turn heavily influenced by, among other factors, investor sentiment, availability of capital and oil and gas prices locally and worldwide, which have historically been volatile.

Oil and gas E&P activity is in turn heavily influenced by, among other factors, investor sentiment, availability of capital and oil and gas prices locally and worldwide, which have historically been volatile.

Revenues generated by our Pressure Control and Spoolable Technologies operating segments are derived from three sources:

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We also provide rental and service operations in the Middle East.

Pressure Control manufacturing and production facilities are located in Bossier City, Louisiana and Suzhou, China.

Pressure Control manufacturing and production facilities are located in Bossier City, Louisiana, Suzhou, China and Hai Duong, Vietnam.

Demand for our product sales in the Pressure Control segment are driven primarily by the number of new wells drilled, as each new well requires a wellhead and, after the completion phase, a production tree.

Demand for our rental items is driven primarily by the number of well completions as we rent frac trees to oil and gas operators to assist in hydraulic fracturing.

Rental demand is also driven to a lesser extent by drilling activity as we rent tools used in the installation of wellheads.

Rental demand is also driven by drilling activity as we rent tools used in the installation of wellheads.

Field service and other revenues are closely correlated with revenues from product sales and rentals, as items sold or rented almost always have an associated service component.

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Rental and field service and other revenues are closely correlated with revenues from product sales, as items sold usually have an associated rental and service component.

Our business experiences some seasonality during the fourth quarter due to holidays and customers managing their budgets as the year closes out.

This can lead to lower activity in our three revenue categories as well as lower margins, particularly in field services due to lower labor utilization.

Our business experiences some seasonality during the fourth quarter due to holidays and customers managing their cash balances as the year closes out.

These activities can lead to lower demand in our three revenue categories as well as lower margins, particularly in field services due to lower labor utilization.

Recent Developments and Trends

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(2) EIA Henry Hub Natural Gas spot price per million British Thermal Unit (“MMBtu”).

(3) Baker Hughes.

Onshore drilling and completion activity levels declined through the first half of 2024, resulting in the average number of U.S.

(3) Based on Baker Hughes rig count information.

Broad economic uncertainty, geopolitical uncertainty, and robust supply of crude oil relative to demand resulted in lower oil prices and U.S.

drilling activity levels in 2025.

drilling activity levels declined through the first half of 2025, resulting in the average number of U.S.

land drilling rigs for 2025 to be 6% below 2024 levels.

Average oil prices were relatively stable in 2024 and were down 1% from 2023 average levels.

Natural gas prices declined approximately 13% in 2024 from 2023 with prices averaging $2.19 per MMBtu in 2024 compared to $2.53 per MMBtu in 2023.

Natural gas prices were lower as inventory levels remained above five-year maximum levels through most of the first half of 2024.

Spot prices averaged $3.01 per MMBtu in December 2024 and closed 2024 at $3.40 per MMBtu, as colder than forecasted weather impacted prices.

The increased year-end 2024 natural gas prices could favorably impact oil and gas industry activity levels, although most of our customers are primarily oil-focused, thus moderating the potential impact to demand for our products and services.

The ongoing conflict in Ukraine and prolonged conflict in the Middle East have had repercussions globally by continuing to cause uncertainty, not only in the oil and natural gas markets, but also in the financial markets and global supply chain.

Additionally, the U.S.

presidential election outcome has introduced further uncertainty to global supply chains, as the new administration has signaled the potential to impose and increase tariffs, including on China, where we have a manufacturing facility.

Such uncertainty could continue to result in stock price volatility and supply chain disruptions as well as higher oil and natural gas prices which could cause higher inflation worldwide, impact consumer spending and negatively impact demand for our goods and services.

Average oil prices were down 15% from 2024 average levels.

Conversely, optimism regarding the medium-to-long term outlook for natural gas demand strengthened as energy demands from artificial intelligence-associated infrastructure build out increased.

Henry Hub natural gas prices increased approximately 61% in 2025 from 2024 with prices averaging $3.52 per MMBtu in 2025 compared to $2.19 per MMBtu in 2024.

Natural gas-directed drilling activity favorably impacted industry activity levels, but not enough to offset weakness in oil-directed drilling activity.

Ongoing conflicts in Ukraine and the Middle East have had global repercussions on commodity prices and have resulted in increased market uncertainty and volatile equity and commodity pricing.

Trade Policies

Over the course of 2025, the Trump administration has implemented and announced a number of new tariffs, including new Section 232 tariffs of 50% on imports of steel and certain products made from steel from most countries outside of the U.S., and Synthetic Opioid tariffs on all imports from China.

Threats and actual implementation of tariffs continue to cause much market and geopolitical uncertainty, as evidenced by the recently announced and then rescinded imposition of tariffs by the U.S.

on imports from NATO allies opposed to U.S.

intervention in Greenland.

Tariff announcements have resulted in global equity, bond, and currency markets to experience heightened levels of volatility as market participants incorporate potential effects of supply chain disruption, inflation, and consumer demand into pricing models.

We are incurring, and expect to continue to incur, elevated tariff expenses on our goods imported from Vietnam and China, and experience generally higher steel input costs at our Bossier City manufacturing facility as a result of the broad Section 232 tariffs.

Both tariffs and higher steel input costs have impacted profitability, although the impact has been partially mitigated by cost reduction efforts and increased pricing.

The weaker oil demand and increased supply outlook and associated decline in commodity pricing has led and is likely to continue to lead to lower U.S.

land drilling and completion activity levels in 2026 and correspondingly may reduce domestic demand for our products and services.

Pillar Two Framework

The Organization for Economic Cooperation and Development (“OECD”) has introduced a framework (“Pillar Two”) that provides for a new, global minimum tax of at least 15% on the income of large multinational corporations arising in each jurisdiction in which they operate.

Pillar Two is being implemented on a country-by-country basis, and many countries have adopted rules in this regard.

The United States has raised concerns regarding Pillar Two and has set out a proposed “side-by-side” solution under which U.S.

parented groups (such as the Company) would be exempted from certain minimum taxes under Pillar Two in recognition of the existing U.S.

minimum tax rules to which they are subject.

On June 28, 2025, the Group of Seven issued a statement indicating that they agree that a side-by-side solution could preserve gains made by jurisdictions in tackling base erosion and profit shifting and provide clarity and stability in the international tax landscape.

However, none of the OECD member states that have adopted Pillar Two have enacted rules necessary to implement the side-by-side solution.

The Company continues to evaluate the impact of both Pillar Two and the proposed side-by-side solution and estimates the impacts to income tax expense to be immaterial.

2025 Tax Legislation

On July 4, 2025, tax legislation colloquially known as the One Big Beautiful Bill Act (“OBBBA”) was enacted.

The OBBBA includes tax provisions such as the reinstatement of immediate deductibility of certain capital expenditures for tangible, depreciable personal property of domestic research and development expenditures.

These provisions have the effect of accelerating tax deductions which, in turn, will reduce current tax expense with an offset to deferred tax expense.

The Company continues to evaluate the impacts of this legislation but anticipates the impact to total income tax expense will be immaterial.

Consolidated Results of Operations

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Corporate and other

(1,262) — (1,262) —

(6,385) (1,262) (5,123) nm

Total revenues 1,079,051 1,129,814 (50,763) (4.5)

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Total operating income 250,501 289,613 (39,112) (13.5)

Interest income (expense), net 6,459 (6,480) 12,939 nm

Other income, net

Interest income, net

10,962 6,459 4,503 69.7

Other (expense) income, net

(794) 3,204 (3,998) nm

Income before income taxes 260,669 299,276 (38,607) (12.9)

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Pressure Control revenue was $717.2 million for 2025, a decrease of $6.8 million, or 0.9%, from $724.0 million for 2024.

The decrease in revenues was primarily due to decreased sales of wellhead and production related equipment resulting from lower drilling and completion activity by our customers.

In addition, rental of drilling and completion equipment decreased as a result of the decline in customer activity.

The decrease in revenues was primarily due to reduced sales of wellhead and production related equipment resulting from lower drilling and completion activity by our customers following a decline in rig counts, offset by an increase in intersegment sales.

Operating income of $189.9 million in 2025 resulted in a decrease of $20.8 million, or 9.9%, from $210.7 million in 2024.

The decrease was primarily attributable to lower gross margins during the period due to decreased customer activity levels and higher selling, general and administrative ("SG&A") expenses.

The increase in SG&A expenses primarily related to higher personnel costs, stock-based compensation expense and other reserves, partially offset by a decrease in bad debt expense.

The decrease in operating income was primarily attributable to escalated tariff cost impacts on product margins, as well as increased legal expenses and reserves in connection with litigation claims.

Spoolable Technologies.

Spoolable Technologies revenue of $407.0 million for 2024, represented an increase of $66.8 million, or 19.6%, from $340.2 million for 2023 as results for 2023 only included ten months of revenues from the FlexSteel acquisition, which closed on February 28, 2023.

Total operating income of $104.9 million for 2024, resulted in an increase of $42.7 million, or 68.7%, from $62.2 million for 2023 as results for 2023 only included ten months of revenues.

Operating income for the 2024 included $16.3 million of expense related to the change in fair value of the earn-out liability for the FlexSteel acquisition and $16.0 million of intangible amortization.

Operating income for 2023 included approximately $14.9 million of expense related to the change in fair value of the estimated earn-out liability, $23.5 million of inventory step-up expense and $20.3 million of intangible amortization expense, as well as depreciation expense of $13.8 million primarily associated with the step-up of fixed assets in connection with accounting for the purchased assets at fair value.

Spoolable Technologies revenue of $368.2 million for 2025, represented a decrease of $38.8 million, or 9.5%, from $407.0 million for 2024, primarily due to reduced sales of spoolable pipe and associated end fittings resulting from lower domestic activity by our customers.

Total operating income of $98.7 million for 2025, resulted in a decrease of $6.2 million, or 5.9%, from $104.9 million for 2024.

Operating income for 2025 was reduced primarily due to lower sales volume.

Operating income for 2024 included a non-recurring $16.3 million of expense related to the change in fair value of the earn‑out liability associated with the FlexSteel acquisition.

Corporate and other.

Corporate and other revenue represents the elimination of inter-segment sales from our Pressure Control segment to our Spoolable Technologies segment.

Corporate and other revenue includes the elimination of inter-segment sales from our Pressure Control segment to our Spoolable Technologies segment.

Corporate and other expenses include costs associated with executive management and other administrative functions not directly attributable to our reporting segments.

Corporate and other expenses for 2024 were $26.0 million, a decrease of $8.8 million from $34.7 million for 2023.

The decrease was largely

attributable to lower professional fees related to transaction costs associated with growth initiatives, including the closing of and accounting for the FlexSteel acquisition in 2023.

Interest income (expense), net.

Interest income, net was $6.5 million in 2024 compared to interest expense, net of $6.5 million in 2023.

The increase in interest income, net of $12.9 million was primarily due to an increase in interest income earned on cash invested during the 2024 period.

Interest expense in 2023 was primarily related to borrowings outstanding through July 2023 under the Amended ABL Credit Facility (as defined in Note 6 in the notes to the Consolidated Financial Statements) which were required to finance the FlexSteel acquisition.

Other income, net.

Other income, net represents non-cash adjustments for the revaluation of the liability related to the tax receivable agreement as a result of changes to the forecasted state tax rate.

Corporate and other expenses for 2025 were $38.0 million, an increase of $12.1 million from $26.0 million for 2024.

The increase was largely attributable to professional fees associated with the Baker Hughes transaction.

Interest income, net.

Interest income, net was $11.0 million in 2025 compared to $6.5 million in 2024.

The increase in interest income, net of $4.5 million was primarily due to an increase in interest income earned on higher levels of cash invested during the period.

Other (expense) income, net.

Other expense, net of $0.8 million in 2025, represented a decrease of $4.0 million, compared to other income, net of $3.2 million.

The decrease primarily related to the revaluation of the liability related to the tax receivable agreement as a result of changes to the forecasted state tax rate.

Income tax expense.

Income tax expense for 2025 was $59.0 million (22.6% effective tax rate) compared to $66.5 million (22.2% effective tax rate) for 2024.

Income tax expense for 2025 includes $57.3 million of expense associated with current income, approximately $0.3 million of expense associated with permanent differences related to equity compensation, and approximately $1.4 million of expense associated with other adjustments.

Income tax expense for 2024 includes approximately $66.5 million of expense associated with current income.

Additionally, in 2024 we recognized $2.1 million of expense associated with the revaluation of our deferred tax asset as a result of a change in our forecasted state tax rate, a $2.1 million benefit related to the finalization of our 2023 tax returns, a $0.7 million benefit associated with permanent differences related to equity compensation and $0.7 million of expense associated with other adjustments.

Income tax expense for 2023 includes approximately $56.6 million of expense associated with current income offset by a $12.1 million benefit associated with the release of our valuation allowance previously provided for our investment in Cactus Companies based on the determination that the deferred tax asset was realizable due to our ability to generate sufficient taxable income of the appropriate type.

Additionally in 2023, we recognized $4.9 million of expense associated with the revaluation of our deferred tax asset as a result of a change in our forecasted state tax rate, $0.5 million of expense related to the finalization of our 2022 tax returns, a $1.2 million benefit associated with permanent differences related to equity compensation and a $1.2 million benefit associated with other adjustments.

Partial valuation releases occur in conjunction with redemptions of CC Units as a portion of Cactus Inc.’s deferred tax assets from its investment in Cactus Companies becomes realizable.

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Spoolable Technologies 407,038 340,233 66,805 19.6

Corporate and other

(1,262) — (1,262) —

Total revenues 1,129,814 1,096,960 32,854 3.0

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Interest income (expense), net 6,459 (6,480) 12,939 nm

Other income (expense), net 4,490 (1,910) 6,400 nm

Other income, net

3,204 4,490 (1,286) (28.6)

Income before income taxes 299,276 262,376 36,900 14.1

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Pressure Control.

Pressure Control revenue was $756.7 million for 2023, an increase of $68.4 million, or 10%, from $688.4 million for 2022.

The increase in revenues was primarily due to higher sales of wellhead and production related equipment resulting from higher drilling and completion activity by our customers.

In addition, increased rental of drilling and completion equipment and field service associated with product and rental revenues also increased as a result of higher customer activity.

Operating income of $236.9 million in 2023 increased $34.3 million, or 17%, from $202.7 million in 2022.

The increase was primarily attributable to higher gross margins during the period and increased volume partially offset by higher segment selling, general and administrative (“SG&A”) expenses.

The increase in SG&A expenses primarily related to higher bad debt expense, travel and entertainment expenses, professional fees and hardware and software expenses.

Pressure Control revenue was $724.0 million for 2024, a decrease of $32.7 million, or 4.3%, from $756.7 million for 2023.

The decrease in revenues was primarily due to decreased sales of wellhead and production related equipment resulting from lower drilling and completion activity by our customers.

In addition, rental of drilling and completion equipment decreased as a result of the decline in customer activity.

Operating income of $210.7 million in 2024 resulted in a decrease of $26.2 million, or 11.1%, from $236.9 million in 2023.

The decrease was primarily attributable to lower gross

margins during the period due to decreased customer activity levels and higher selling, general and administrative ("SG&A") expenses.

The increase in SG&A expenses primarily related to higher personnel costs, stock-based compensation expense and other reserves, partially offset by a decrease in bad debt expense.

Spoolable Technologies.

Spoolable Technologies revenue of $340.2 million and operating income of $62.2 million represents FlexSteel results generated from February 28, 2023, the date of acquisition, through December 31, 2023.

The results for Spoolable Technologies include the following items resulting from purchase accounting:

approximately $14.9 million of expense related to the change in fair value of the estimated earn-out payment for the FlexSteel acquisition, $23.5 million of inventory step-up expense, $20.3 million of intangible amortization expense and depreciation expense of $13.8 million primarily associated with the step-up of fixed assets.

Corporate and other expenses.

Corporate and other expenses for 2023 were $34.7 million, an increase of $6.8 million from $27.9 million for 2022.

The increase was largely attributable to higher professional fees of $3.8 million related to transaction costs associated with the closing of and accounting for the FlexSteel acquisition.

Additional increases were attributable to higher personnel costs of which the largest increase was related to stock-based compensation.

Total operating income of $104.9 million for 2024, resulted in an increase of $42.7 million, or 68.7%, from $62.2 million for 2023 as results for 2023 only included ten months of revenues.

Corporate and other.

Corporate and other revenue represents the elimination of inter-segment sales from our Pressure Control segment to our Spoolable Technologies segment.

Corporate and other expenses include costs associated with executive management and other administrative functions not directly attributable to our reporting segments.

Corporate and other expenses for 2024 were $26.0 million, a decrease of $8.8 million from $34.7 million for 2023.

The decrease was largely attributable to lower professional fees related to transaction costs associated with growth initiatives, including the closing of and accounting for the FlexSteel acquisition in 2023.

Interest income (expense), net.

Interest expense, net was $6.5 million in 2023 compared to interest income, net of $3.7 million in 2022.

The increase in interest expense, net of $10.2 million was primarily related to borrowings under the Amended ABL Credit Facility related to financing the FlexSteel acquisition.

Other income (expense), net.

Other income (expense), net represents non-cash adjustments for the revaluation of the liability related to the tax receivable agreement as a result of changes to the forecasted state tax rate.

Interest income, net was $6.5 million in 2024 compared to interest expense, net of $6.5 million in 2023.

The increase in interest income, net of $12.9 million was primarily due to an increase in interest income earned on cash invested during the 2024 period.

Interest expense in 2023 was primarily related to borrowings outstanding through July 2023 under the Amended ABL Credit Facility (the "Second Amended ABL Credit Facility") which were required to finance the FlexSteel acquisition.

Other income, net.

Other income, net represents non-cash adjustments for the revaluation of the liability related to the tax receivable agreement as a result of changes to the forecasted state tax rate.

Income tax expense.

Income tax expense for 2024 was $66.5 million (22.2% effective tax rate) compared to $47.5 million (18.1% effective tax rate) for 2023.

Income tax expense for 2024 includes approximately $66.5 million of expense associated with current income.

Additionally, we recognized $4.9 million of expense associated with the revaluation of our deferred tax asset as a result of a change in our forecasted state tax rate, $0.5 million of expense related to the finalization of our 2022 tax returns, a $1.2 million benefit associated with permanent differences related to equity compensation and a $1.2 million benefit associated with other adjustments.

Income tax expense for 2022 primarily included approximately $36.4 million of expense associated with current income offset by a $1.7 million benefit associated with permanent differences related to equity compensation, a $1.7 million benefit resulting from a change in our forecasted state rate and a $1.4 million tax benefit associated with the partial valuation allowance release in conjunction with CW Unit redemptions during 2022.

Partial valuation releases occur in conjunction with redemptions of CW Units (or CC Units, in the case of redemptions after the CC Reorganization) as a portion of Cactus Inc.’s deferred tax assets from its investment in Cactus LLC (or, after the CC Reorganization, its investment in Cactus Companies) becomes realizable.

Partial valuation releases occur in conjunction with redemptions of CC Units as a portion of Cactus Inc.’s deferred tax assets from its investment in Cactus Companies becomes realizable.

is only subject to federal and state income tax on its share of income from Cactus Companies.

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Liquidity and Capital Resources

At December 31, 2024, we had $342.8 million of cash and cash equivalents.

Our primary sources of liquidity and capital resources are cash on hand, cash flows generated by operating activities and, if necessary, borrowings under our Amended ABL Credit Facility.

At December 31, 2025, we had $494.6 million of cash, cash equivalents and restricted cash, of which $123.6 million was available cash on hand.

Restricted cash consisted of $371.0 million of cash held in an escrow account in connection with the Baker Hughes Transaction.

In connection with the Baker Hughes Transaction, these funds were required to be placed in escrow and were restricted from use for any purpose other than funding the Baker Hughes Transaction consideration at closing.

The escrowed funds were released on January 1, 2026, the acquisition closing date, at which point the restriction lapsed and the cash was released to Baker Hughes Company.

Our primary sources of liquidity and capital resources are cash on hand, cash flows generated by operating activities and, if necessary, borrowings under our Amended ABL Credit Facility (as defined in Note 6 in the notes to the Consolidated Financial Statements).

Depending upon market conditions and other factors, we may also have the ability to issue additional equity and debt if needed.

As of December 31, 2024, we had no borrowings outstanding under our Amended ABL Credit Facility and $222.6 million of available borrowing capacity.

As of December 31, 2025, we had no borrowings outstanding under our Amended ABL Credit

Facility and $222.9 million of available borrowing capacity in addition to $100.0 million available under our Term Loan Facility (as defined in Note 6 to the notes to the Consolidated Financial Statements).

We had $1.8 million in letters of credit outstanding at December 31, 2025 which reduced our available borrowing capacity.

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In June 2023, our board of directors authorized the Company to repurchase shares of its Class A common stock for an aggregate purchase price of up to $150 million.

Under our share repurchase program, shares may be repurchased from time to

time in open market transactions or block trades, in privately negotiated transactions or any other method permitted under U.S.

Under our share repurchase program, shares may be repurchased from time to time in open market transactions or block trades, in privately negotiated transactions or any other method permitted under U.S.

securities laws, rules and regulations.

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At December 31, 2025, $146.3 million of Class A common stock could be repurchased under our share repurchase program.

We expect that our existing cash on hand, cash generated from operations and available borrowings under our Amended ABL Credit Facility will be sufficient for the next 12 months to meet our material cash requirements, including working capital requirements, debt service obligations, anticipated capital expenditures, lease obligations, repurchases of shares of our Class A common stock, expected TRA liability payments, anticipated tax liabilities and dividends to holders of our Class A common stock as well as pro rata cash distributions to holders of CC Units other than Cactus Inc.

We currently estimate our net capital expenditures for the year ending December 31, 2025 will range from $45 million to $55 million, mostly related to rental fleet investments including drilling tools, international expansion, diversification of our low cost supply chain, enhancements for our Baytown, TX manufacturing plant and additional deployment of equipment to facilitate installation of recent product introductions.

We expect that our existing cash on hand, cash generated from operations and available borrowings under our Amended ABL Credit Facility and Term Loan Facility will be sufficient for the next 12 months to meet our material cash requirements, including working capital requirements, debt service obligations, anticipated capital expenditures, lease obligations, repurchases of shares of our Class A common stock, expected TRA liability payments, anticipated tax liabilities and dividends to holders of our Class A common stock as well as pro rata cash distributions to holders of CC Units other than Cactus Inc.

We currently estimate our net capital expenditures for the year ending December 31, 2026 will range from $40 million to $50 million, including investments in international expansion such as investments in the Joint Venture, further diversification of our low cost supply chain, enhancements for our Baytown, TX manufacturing plant and Hobbs, NM service center and additional deployment of equipment to facilitate installation of recent product introductions.

We continuously evaluate our capital expenditures, and the amount we ultimately spend will depend on a number of factors, including, among other things, demand for rental assets, available capacity in existing locations, prevailing economic conditions, market conditions in the E&P industry, customers’ forecasts, crude oil and natural gas price volatility and company initiatives.

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Assuming no material changes in the relevant tax law, we expect that if the TRA were terminated as of December 31, 2025, the estimated termination payments, based on the assumptions discussed in Note 11 of the notes to the Consolidated Financial Statements, would be approximately $251.2 million, calculated using a discount rate equal to the 12-month term SOFR published by CME Group Benchmark Administration Limited, plus 221.5 basis points, applied against an undiscounted liability of $348.4 million.

A 10% increase in the price of our Class A common stock at December 31, 2024 would have increased the discounted liability by $9.6 million to $283.3 million (an undiscounted increase of $15.8 million to $422.3 million), and likewise, a 10% decrease in the price of our Class A common stock at December 31, 2024 would have decreased the discounted liability by $9.6 million to $264.1 million (an undiscounted decrease of $15.8 million to $390.8 million).

A 10% increase in the price of our Class A common stock at December 31, 2025 would have

increased the discounted liability by $7.6 million to $258.8 million (an undiscounted increase of $11.9 million to $360.3 million), and likewise, a 10% decrease in the price of our Class A common stock at December 31, 2025 would have decreased the discounted liability by $7.6 million to $243.6 million (an undiscounted decrease of $11.9 million to $336.6 million).

Year Ended December 31, 2025 Compared to Year Ended December 31, 2024

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Net cash used in investing activities (39,063) (35,388)

Net cash provided by (used in) financing activities (70,144) 103,275

Net cash used in financing activities

(69,064) (70,144)

Net cash provided by operating activities was $258.4 million in 2025 compared to $316.1 million in 2024.

Operating cash flows decreased primarily due to an increase in cash outflows associated with working capital, largely related to increased purchases of inventory of $67.6 million as well as payout of the earn-out liability of $31.2 million.

These decreases in operating cash flows were offset by an increase in customer collections of $24.9 million as well as an increase in operating income of $17.9 million in 2024 compared to 2023.

Operating cash flows decreased primarily due to lower earnings as well as an increase in cash outflows associated with working capital, largely related to purchases of inventory of $26.8 million, reflecting escalated values due to tariffs.

These decreases in operating cash flows were partially offset by an increase in customer collections of $13.4 million.

Net cash used in investing activities was $39.1 million and $35.4 million for 2025 and 2024, respectively.

The decrease was primarily due to the non-recurrence of cash paid to acquire FlexSteel for $621.5 million, less $5.3 million in cash acquired during the first quarter of 2023.

Additionally, our capital expenditures decreased approximately $4.8 million primarily due to the $7.0 million purchase of a previously leased facility during the first half of 2023.

Net cash used in financing activities was $70.1 million for 2024 compared to net cash provided by in financing activities of $103.3 million for 2023.

The decrease in net cash provided by financing activities was primarily related to certain financing activities in 2023 associated with the FlexSteel acquisition.

We received approximately $169.9 million of proceeds, net of issuance costs, from issuing shares of our Class A common stock during 2023.

The year ended December 31, 2023 also included payments of approximately $6.9 million of debt issuance costs.

The year ended December 31, 2024 includes a $4.1 million increase in share repurchases, primarily associated with the Company's share repurchase program, higher dividend payments of approximately $3.6 million and a $6.0 million payment related to the contingent consideration established as of the FlexSteel acquisition date.

These increases are partially offset by a $3.4 million decrease in member distributions.

The 2025 increase was primarily due to the initial investment of $6.0 million related to our joint venture in Vietnam intended to further diversify our manufacturing capabilities, partly offset by an increase in proceeds from sale of assets.

Net cash used in financing activities was $69.1 million for 2025 compared to net cash used by in financing activities of $70.1 million for 2024.

The year ended December 31, 2025 value includes a $3.4 million decrease in share repurchases, primarily associated with the Company's share repurchase program, more than offset by higher dividend payments of approximately $3.8 million, a $2.4 million payment of deferred financing costs and a $2.3 million increase in member distributions.

The year ended December 31, 2024 included a $6.0 million payment of contingent consideration.

Year Ended December 31, 2024 Compared to Year Ended December 31, 2023

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Net cash provided by operating activities was $316.1 million in 2024 compared to $340.3 million in 2023.

Operating cash flows increased primarily due to higher income and a decrease in cash outflows associated with working capital, largely related to decreased purchases of inventory as well as higher collections on receivable balances.

These increases in operating cash flows were slightly offset by $20.5 million of additional income tax payments, higher TRA payments of $15.2 million and $4.6 million of additional interest paid in 2023 compared to 2022.

These decreases in operating cash flows were offset by an increase in customer collections of $24.9 million as well as an increase in operating income of $17.9 million in 2024 compared to 2023.

Net cash used in investing activities was $35.4 million and $654.8 million for 2024 and 2023, respectively.

The increase was primarily due to cash paid to acquire FlexSteel for $621.5 million, less $5.3 million in cash acquired.

Additionally, our capital expenditures increased approximately $15.7 million primarily due to the $7.0 million purchase of a previously leased facility, Pressure Control rental fleet additions and enhancements and $3.0 million of capital expenditures for the Spoolable Technologies segment.

Other movements in our investing activities were related to the increase in proceeds from sales of assets of approximately $2.6 million from 2022.

Net cash provided by financing activities was $103.3 million for 2023 compared to net cash used in financing activities of $47.4 million for 2022.

The increase in net cash provided by financing activities was primarily related to certain financing activities in 2023 associated with the FlexSteel acquisition.

We received approximately $169.9 million of proceeds, net of issuance costs, from issuing shares of our Class A common stock during 2023.

Additionally, we received $155.0 million from total borrowings under our Amended ABL Credit Facility of which all $155.0 million has been repaid.

Increased payments of $6.6 million in deferred financing costs, increased distributions to members of $7.0 million, higher dividend payments of $3.4 million, $1.6 million of additional payments on finance leases and a $0.7 million increase in share repurchases partially offset the aforementioned cash inflows associated with the equity financing activities during 2023.

The decrease was primarily due to the non-recurrence of cash paid to acquire FlexSteel for $621.5 million, less $5.3 million in cash acquired during the first quarter of 2023.

Additionally, our capital expenditures decreased approximately $4.8 million primarily due to the $7.0 million purchase of a previously leased facility during the first half of 2023.

Net cash used in financing activities was $70.1 million for 2024 compared to net cash provided by in financing activities of $103.3 million for 2023.

The decrease in net cash provided by financing activities was primarily related to certain financing activities in 2023 associated with the FlexSteel acquisition.

We received approximately $169.9 million of proceeds,

net of issuance costs, from issuing shares of our Class A common stock during 2023.

The year ended December 31, 2023 also included payments of approximately $6.9 million of debt issuance costs.

These increases are partially offset by a $3.4 million decrease in member distributions.

Critical Accounting Policies and Estimates

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See Note 2 of the notes to the Consolidated Financial Statements for discussion of recent accounting pronouncements.

While inflationary cost increases can affect our income from operations’ margin, we believe that inflation generally has not had a material adverse effect on our results of operations.

Other than the potential for increased inflation as a result of new tariffs and retaliatory actions by other countries, inflationary cost increases are not expected to have a material adverse effect on our results of operations.

In 2022, the United States experienced the highest inflation in decades primarily due to supply-chain issues, a shortage of labor and a build-up of demand for goods and services.

The most noticeable adverse impact to our business was increased costs associated with freight, materials, vehicle-related costs and personnel expenses.

Most of our costs associated with providing our products and services moderated in 2023 and 2024, except for salaries and wages.

It is highly unlikely that salaries and wages will decrease to the levels experienced in prior years.

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 7. Management’s Discussion and Analysis