What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2022-02-28 compared with 2021-03-01 · 137 added, 89 removed, 135 unchanged (63% of the section changed)

4 unchanged sentences

We operate through 15 U.S.

service centers located in Texas, New Mexico, Pennsylvania, North Dakota, Louisiana, Oklahoma, Colorado and Wyoming as well as three service centers in Eastern Australia.

service centers located in Texas, New Mexico, Pennsylvania, North Dakota, Louisiana, Oklahoma, Colorado, Utah and Wyoming as well as three service centers in Eastern Australia.

We also provide rental and field service operations in the Kingdom of Saudi Arabia.

Our corporate headquarters are located in Houston, Texas.

5 unchanged sentences

Pursuant to the First Amended and Restated Limited Liability Company Operating Agreement of Cactus LLC (the “Cactus Wellhead LLC Agreement”), owners of CW Units are entitled to redeem their CW Units for shares of Cactus Inc.’s Class A common stock, par value $0.01 per share (“Class A common stock”) on a one-for-one basis, which results in a corresponding increase in Cactus Inc.’s membership interest in Cactus LLC and an increase in the number of shares of Class A common stock outstanding.

We refer to the owners of CW Units, other than Cactus Inc., (along with their permitted transferees) as “CW Unit Holders.” CW Unit Holders own one share of our Class B common stock, par value $0.01 per share (“Class B common stock”) for each CW Unit such CW Unit Holder owns.

Cadent Energy Partners II, L.P.

(“Cadent”), an affiliate of Cadent Energy Partners LLC, and Cactus WH Enterprises, LLC (“Cactus WH Enterprises”) are the largest CW Unit Holders.

Cactus WH Enterprises is a Delaware limited liability company owned by Scott Bender, Joel Bender, Steven Bender and certain of our other employees.

We refer to the owners of CW Units, other than Cactus Inc.

(along with their permitted transferees), as “CW Unit Holders.” CW Unit Holders own one share of our Class B common stock, par value $0.01 per share (“Class B common stock”) for each CW Unit such CW Unit Holder owns.

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.

Cactus WH Enterprises, LLC (“Cactus WH Enterprises”) is the largest CW Unit Holder.

Cactus WH Enterprises is a Delaware limited liability company owned by Scott Bender, Joel Bender, Steven Bender and certain other employees.

Cadent Energy Partners II, L.P.

(“Cadent”), an affiliate of Cadent Energy Partners LLC, owned more than 10% of issued and outstanding CW Units until March 2021, when it redeemed 4,111,250 of the CW Units (together with an equal number of shares of Class B common stock) owned by it in connection with our 2021 Secondary Offering, as defined below.

Subsequently, in a series of additional transactions throughout 2021, Cadent and its affiliates transferred or redeemed the remainder of its CW Units.

The redeemed CW Units were redeemed for Class A common stock, with such shares being distributed to their owners pro rata.

As of December 31, 2021, Cactus Inc.

owned 78.0% and CW Unit Holders owned 22.0% of Cactus LLC, which was based on 59.0 million shares of Class A common stock issued and outstanding and 16.7 million shares of Class B common stock issued and outstanding.

Cadent and Cactus WH Enterprises held approximately 11% and 23% of our voting power, respectively, as of December 31, 2020.

The following is a rollforward of ownership of legacy CW Units by legacy CW Unit Holders:

Cactus WH Enterprises held approximately 20% of our voting power as of December 31, 2021.

Since our IPO in February 2018, 43.9 million CW Units and a corresponding number of shares of Class B common stock have been redeemed in exchange for shares of Class A common stock.

The following is a rollforward of ownership of legacy CW Units by CW Unit Holders for the three years ended December 31, 2021:

(in thousands)

CW Units held by legacy CW Unit Holders as of February 7, 2018 60,558

IPO on February 12, 2018 (12,118)

July 2018 follow-on equity offering (11,197)

Other CW Unit redemptions (7)

CW Units held by legacy CW Unit Holders as of December 31, 2018 37,236

4 unchanged sentences

CW Units held by legacy CW Unit Holders as of December 31, 2020 27,655

For more information on our 2018 IPO, see our Annual Report of Form 10-K for the year ended December 31, 2018 .

For further information on the follow-on equity offerings in July 2018 and March 2019, see Note 10 in the Notes to the Consolidated Financial Statements.

March 2021 follow-on equity offering (6,273)

Cadent redemption in June 2021 (3,292)

Cadent redemption in September 2021 (715)

Other CW Unit redemptions (701)

CW Units held by legacy CW Unit Holders as of December 31, 2021 16,674

On March 9, 2021, Cactus Inc.

entered into an underwriting agreement with Cactus LLC, certain selling stockholders of Cactus (the “Selling Stockholders”) and the underwriters named therein, providing for the offer and sale by the Selling Stockholders (the “2021 Secondary Offering”) of up to 6,325,000 shares of Class A common stock at a price to the underwriters of $30.555 per share.

On March 12, 2021, in connection with the 2021 Secondary Offering, certain of the Selling Stockholders exercised their right to redeem 6,272,500 CW Units, together with a corresponding number of shares of Class B common stock, as provided in the Cactus Wellhead LLC Agreement.

Upon the closing of the 2021 Secondary Offering, Cactus Inc.

acquired the redeemed CW Units and a corresponding number of shares of Class B common stock (which shares of Class B common stock were then canceled) and issued 6,272,500 new shares of Class A common stock to the underwriters at the direction of the redeeming Selling Stockholders, as provided in the Cactus Wellhead LLC Agreement.

In addition, certain other Selling Stockholders sold 52,500 shares of Class A common stock in the 2021 Secondary Offering, which shares were owned by them directly as of the time of the 2021 Secondary Offering.

Cactus did not receive any of the proceeds from the sale of common stock in the 2021 Secondary Offering, and there was no change in the combined number of Cactus Inc.

voting shares outstanding.

On June 17, 2021, Cadent transferred ownership of 944,093 CW Units, together with a corresponding number of shares of Class B common stock, to its general partner, Cadent Energy Partners II - GP, L.P., (“Cadent GP”), and its manager, Cadent Management Services, LLC (“Cadent Management”).

Cadent then redeemed its remaining 3.3 million CW Units, together with a corresponding number of shares of Class B common stock, as provided in the Cactus Wellhead LLC Agreement.

The redeemed CW Units (and the corresponding shares of Class B common stock) were canceled and Cactus Inc.

issued 3.3 million new shares of Class A common stock to Cadent, which then distributed such shares to its limited partners.

Cactus received no proceeds from these events, and there was no change in the combined number of Cactus Inc.

voting shares outstanding.

On September 13, 2021, Cadent GP and Cadent Management transferred their aggregate ownership of 228,878 CW Units, together with a corresponding number of shares of Class B common stock, to their respective owners, which included certain Cactus Inc.

board members and executive management.

The transfers were made at the discretion of Cadent GP and Cadent Management without the consent of the transferees.

Additionally, Cadent GP and Cadent Management redeemed their remaining 715,215 CW Units held, together with a corresponding number of shares of Class B common stock, thus liquidating its ownership in Cactus Wellhead, LLC.

These transactions were in accordance with the Cactus Wellhead LLC Agreement.

The redeemed CW Units (and the corresponding shares of Class B common stock) were canceled and Cactus Inc.

issued 715,215 new shares of Class A common stock.

Cactus received no proceeds from these events, and there was no change in the combined number of Cactus Inc.

voting shares outstanding.

In addition to these significant redemptions during 2021, 700,957 CW Units were redeemed in exchange for shares of Class A common stock during the year ended December 31, 2021 pursuant to our regular quarterly redemption program.

The above discussion focuses on the 2021 activity and redemptions.

For further information on the follow-on equity offering that occurred in March 2019, see Note 10 in the Notes to the Consolidated Financial Statements.

The following diagram indicates our simplified ownership structure as of December 31, 2021:

Our principal products include our Cactus SafeDrill ® wellhead systems as well as frac stacks, our Cactus SafeLink ® monobore, SafeClamp ® and SafeInject ® systems, zipper manifolds and production trees that we design and manufacture.

Every oil and gas well requires a wellhead, which is installed at the onset of the drilling process and remains with the well through its entire productive life.

Every oil and gas well requires a wellhead system, which is installed throughout the drilling process and remains with the well through its entire productive life.

The Cactus SafeDrill ® wellhead systems employ technology which allows technicians to land and secure casing strings more safely from the rig floor, reducing the need to descend into the cellar.

2 unchanged sentences

These severe service applications require robust and reliable equipment.

Cactus, through its proprietary equipment, digital offerings and services, reduces the need for human intervention in the exclusion zone, eliminating non-productive time while leading to inherently safer and more environmentally responsible operations.

For the subsequent production phase of a well, we sell production trees and the equipment to interface with various forms of artificial lift that regulate hydrocarbon production, which are installed on the wellhead after the frac stack has been removed.

Cactus, through its proprietary equipment, digital offerings and services, reduces the need for human intervention in the exclusion zone, minimizing non-productive time and leading to inherently safer and more environmentally responsible operations.

For the subsequent production phase of a well, we sell production trees and equipment, when required, to interface with various forms of artificial lift that regulate hydrocarbon production, which are installed on the wellhead after the frac stack has been removed.

In addition, we provide mission-critical field services for all of our products and rental items, including 24-hour service crews to assist with the installation, maintenance, repair and safe handling of the wellhead and pressure control equipment.

Our innovative wellhead products and pressure control equipment are developed internally.

We believe our close

relationship with our customers provides us with insight into the specific issues encountered in the drilling and completion processes, allowing us to provide them the highest quality products and service solutions.

We have achieved significant market share, as measured by the percentage of total active U.S.

We believe our close relationship with our customers provides us with insight into the specific issues encountered in the drilling and completion processes, allowing us to provide them the highest quality products and service solutions.

We have achieved substantial market share, as measured by the percentage of total active U.S.

onshore rigs that we follow (which we define as the number of active U.S.

onshore drilling rigs to which we are the primary provider of wellhead products and corresponding services during drilling), and brand name recognition with respect to our engineered products, which we believe is due to our focus on safety, reliability, cost effectiveness and time saving features.

We optimize our products for pad drilling (i.e., the process of drilling multiple wellbores from a single surface location) to reduce rig time and provide operators with significant efficiencies that translate into increased safety, reduced environmental impact and cost savings at the wellsite.

We operate through service centers in the United States, which are strategically located in the key oil and gas producing regions, including the Permian, Marcellus, Utica, Haynesville, Eagle Ford, Bakken and SCOOP/STACK, among other active oil and gas regions in the United States, and in Eastern Australia.

We optimize our products for pad drilling (i.e., the process of drilling multiple wellbores from a single surface location) to reduce rig time and

provide operators with significant efficiencies that translate into increased safety, reduced environmental impact and cost savings at the wellsite.

We primarily operate through service centers in the United States, which are strategically located in the key oil and gas producing regions, including the Permian, Marcellus, Utica, Haynesville, Eagle Ford, Bakken and SCOOP/STACK, among other active oil and gas regions in the United States, and in Eastern Australia.

These service centers support our field services and provide equipment assembly and repair services.

We also conduct rental and field service operations in the Kingdom of Saudi Arabia.

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

We operate in one business segment.

2 unchanged sentences

Product revenues are primarily derived from the sale of wellhead systems and production trees.

Rental revenues are primarily derived from the rental and associated repair of equipment used for well control during the completion process as well as the rental of drilling tools.

Rental revenues are primarily derived from the rental of equipment used during the completion process, the repair of such equipment and the rental of drilling tools.

Field service and other revenues are primarily earned when we provide installation and other field services for both product sales and equipment rental.

Additionally, other revenues are derived from providing repair and reconditioning services to customers that have previously installed wellheads or production trees on their wellsite.

Additionally, other revenues are derived from providing repair and reconditioning services to customers that have previously installed wellheads or production trees.

Items sold or rented generally have an associated service component.

As a result, there is some level of correlation between field service and other revenues and revenues from product sales and rentals.

As a result, there is a close correlation between field service and other revenues and revenues from product sales and rentals.

For the year ended December 31, 2021, we derived 64% of our total revenues from the sale of our products, 14% from rental and 22% from field service and other.

1 unchanged sentence

In 2019, we derived 57% of our total revenues from the sale of our products, 22% from rental and 21% from field service and other.

We have predominantly domestic operations, with a small amount of sales in Australia.

We have predominantly domestic operations, with a small amount of activity in Australia and the Kingdom of Saudi Arabia.

Most of our sales are made on a call out basis pursuant to agreements, wherein our clients provide delivery instructions for goods and/or services as their operations require.

Such goods and/or services are most often priced in accordance with a preapproved price list.

The actual pricing of our products and services is impacted by a number of factors including competitive pricing pressure, the level of utilized capacity in the oil service sector, maintenance of market share, cost of producing the product and general market conditions.

Such goods and services are most often priced in accordance with a preapproved price list.

The actual pricing of our products and services is impacted by a number of factors including competitive pricing pressure, the value perceived by our customers, the level of utilized capacity in the oil service sector, cost of manufacturing the product, cost of providing the service and general market conditions.

Costs of Conducting Our Business

The principal elements of cost of sales for our products are the direct and indirect costs to manufacture and supply the product, including labor, materials, machine time, tariffs and duties, freight and lease expense related to our facilities.

The principal elements of cost of sales for rentals are the direct and indirect costs of supplying rental equipment, including depreciation, repairs specifically performed on such rental equipment and freight.

The principal elements of cost of sales for field service and other are labor, equipment depreciation and repair, equipment lease expense, fuel and supplies.

Selling, general and administrative expense is comprised of costs such as sales and marketing, engineering, general corporate overhead, business development, compensation, employment benefits, information technology, safety and environmental, legal and professional.

The principal elements of cost of sales for field service and other are labor, equipment depreciation and repair, equipment and vehicle lease expenses, fuel and supplies.

Selling, general and administrative expense is comprised of costs such as sales and marketing, engineering, general corporate overhead, business development, compensation, employment benefits, insurance, information technology, safety and environmental, legal and professional.

Suppliers and Raw Materials

Forgings, castings and bar stock represent the principal raw materials used in the manufacture of our products and rental equipment.

Forgings and plate, castings, tube and bar stock represent the principal raw materials used in the manufacture of our products and rental equipment.

In addition, we require accessory items (such as elastomers, ring gaskets, studs and nuts) and machined components.

We purchase these items from vendors in the United States, China, India and Australia.

For the years ended December 31, 2020, 2019 and 2018, approximately $6.7 million, $36.5 million and $46.7 million, respectively, of machined component purchases were made from a vendor located in China, representing approximately 7%, 16% and 21%, respectively, of our total third-party vendor purchases of raw materials, finished products, equipment, machining and other services.

We purchase a majority of these items from vendors in the United States, China, India and Australia.

For the year ended December 31, 2021, two vendors each represented approximately 9% of our total third-party vendor purchases of raw materials, finished products, components, equipment, machining and other services.

During the years ended December 31, 2020 and 2019, we had one vendor who represented approximately 9% and 16%, respectively, of such purchases.

We do not believe that we are overly dependent on any individual vendor to supply our required materials or services.

The materials

and services essential to our business are normally readily available and, where we use one or a few vendors as a source of any particular materials or services, we believe that we can, within a reasonable period of time, make satisfactory alternative arrangements in the event of an interruption of supply from any vendor.

We believe that our materials and services vendors have the capacity to meet additional demand should we require it, although initially at higher costs and delayed deliveries.

Notwithstanding the supply disruptions experienced starting in 2021, the materials and services essential to our business are normally readily available and, where we use one or a few vendors as a source of any particular materials or services, we believe that we can, within a reasonable period of time, make satisfactory alternative arrangements in the event of an interruption of supply from any vendor.

We believe our materials and services vendors have the capacity to meet additional demand should we require it, although at higher costs and with extended deliveries.

Manufacturing

1 unchanged sentence

Although both facilities can produce our full range of products, our Bossier City facility has advanced capabilities and is designed to support time-sensitive and rapid turnaround of made-to-order equipment, while our facility in China is optimized for longer lead time orders and outsources its machining requirements.

Both facilities are licensed to the latest American Petroleum Institute (“API”) 6A specification for both wellheads and valves and API Q1 and ISO 9001:2015 quality management systems.

Where traditional manufacturing facilities are designed to run in batches with different machining processes occurring in stages, our Bossier City facility uses advanced computer numeric control machines to perform multiple machining operations in a single step.

We believe eliminating the setup and queue times between machining processes allows us to offer significantly shorter order-to-delivery time for equipment than our competitors, albeit at higher costs than China.

The facilities are licensed to the latest American Petroleum Institute (“API”) 6A specification for wellheads and valves and API Q1 and ISO 9001:2015 quality management systems.

Where traditional manufacturing facilities are designed to run in batches with different machining processes occurring in stages, our Bossier City facility uses advanced computer numeric 5 Axis control machines to perform multiple machining operations with fewer steps.

We believe eliminating the queue times between machining operations allows us to offer significantly shorter order-to-delivery times compared to our competitors, albeit at higher costs than our facility in China.

Responsiveness to urgent needs strengthens our relationship with key customers.

Our Bossier City manufacturing facility also functions as a repair and testing facility with its API 6A certification and full Quality Assurance and Quality Control department.

The facility also has the ability to perform phosphate and oiling, copper coating and frac rental equipment remanufacturing.

The Bossier City facility has the ability to perform phosphate and oil coating, copper coating and frac rental equipment remanufacturing.

Our production facility in China is configured to efficiently produce our range of pressure control products and components for less time-sensitive, higher-volume orders.

All employees in our Suzhou facility are Cactus employees, which we believe is a key factor in ensuring high quality.

Our Suzhou facility currently assembles and tests machined components before shipment to Cactus facilities in the United States and Australia.

The Suzhou facility assembles and tests finished and semi-finished machined components before shipment to Cactus facilities in the United States and Australia.

Our Suzhou subsidiary is wholly-owned, and its facility is staffed by Cactus employees, which we believe is a key factor in ensuring high quality and dependable deliveries.

Trademarks and Patents

4 unchanged sentences

Once registered, our trademarks can be renewed every 10 years as long as we are using them in commerce.

We also seek to protect our technology through use of patents, which afford us 20 years of protection of our proprietary inventions and technology, although we do not deem patents to be critical to our success.

We also seek to protect our technology through use of patents, which affords us 20 years of protection of our proprietary inventions and technology, although we do not deem patents to be critical to our success.

We have been awarded several U.S.

7 unchanged sentences

These factors could have an adverse effect on our revenue and profitability.

Due to the ongoing COVID-19 pandemic, 2020 witnessed a severe decline in demand for fossil fuels resulting from government mandated lockdowns and travel restrictions.

The oil and gas industry was first impacted by this decline in March 2020 amid the initial worldwide spread of the virus, with West Texas Intermediate (WTI) prices trading at negative levels for a brief period in April.

Although oil prices recovered in the last quarter of 2020 from such lows, demand for oil and our customer activity levels remain significantly below levels before the pandemic.

Our business is not significantly impacted by seasonality, although our fourth quarter has historically been impacted by holidays and our clients’ budget cycles.

Our business is not significantly impacted by seasonality, although our fourth quarter has historically been impacted by holidays and our customers’ budget cycles.

We serve over 200 customers representing majors, independents and other oil and gas companies with operations in the key U.S.

oil and gas producing basins as well as in Australia.

No customer represented 10% or more of total revenues during the year ended December 31, 2020, whereas one customer represented approximately 10% of total revenues during the year ended December 31, 2019 and 11% during the year ended December 31, 2018.

oil and gas producing basins as well as in Australia and the Kingdom of Saudi Arabia.

One customer represented approximately 12% of our total revenues during the year ended December 31, 2021, whereas no customer represented 10% or more of total revenues during the year ended December 31, 2020 and one customer represented approximately 10% of total revenues during the year ended December 31, 2019.

The markets in which we operate are highly competitive.

We believe that we are one of the largest suppliers of wellheads in the United States.

We compete with divisions of Schlumberger and TechnipFMC, as well as with a number of other companies.

Similar to Cactus, Schlumberger and TechnipFMC manufacture their own engineered products.

We believe that the rental market for frac stacks and related flow control equipment is more fragmented than the wellhead product market.

Cactus does not believe that any individual company represents more than 20% of the U.S.

We believe we are one of the largest suppliers of wellheads in the United States.

We compete with divisions of Schlumberger and TechnipFMC, as well as a large number of other

We believe the rental market for frac stacks and related flow control equipment is more fragmented than the wellhead product market.

Cactus does not believe any individual company represents more than 20% of the U.S.

rental market.

As is the case in the wellhead market, Cactus, Schlumberger and TechnipFMC rent internally engineered and manufactured products.

The majority of our other competitors generally rent foreign manufactured generic products.

We believe that the principal competitive factors in the markets we serve are technical features, equipment availability, work force competency, efficiency, safety record, reputation, experience and price.

We believe the competitive factors in the markets we serve include technical features, equipment availability, work force competency, efficiency, safety record, reputation, continuity of management and price.

Additionally, projects are often awarded on a bid basis, which tends to create a highly competitive environment.

While we seek to be competitive in our pricing, we believe many of our customers elect to work with us based on product features, safety, performance and quality of our crews, equipment and services.

While we seek to be competitive in our pricing, we believe many of our customers elect to work with us based on product features, safety, performance and quality of our people, equipment and services.

We seek to differentiate ourselves from our competitors by delivering the highest‑quality services and equipment possible, coupled with superior execution and operating efficiency in a safe working environment.

8 unchanged sentences

• the Occupational Safety and Health Act;

• national and local environmental protection laws in Australia and the People’s Republic of China.

• national and local environmental protection laws in Australia, the People’s Republic of China and the Kingdom of Saudi Arabia.

New, modified or stricter enforcement of environmental laws and regulations could be adopted or implemented that significantly increase our compliance costs, pollution mitigation costs, or the cost of any remediation of environmental contamination that may become necessary, and these costs could be material.

Our clients are also subject to most, if not all, of the same laws and regulations relating to environmental protection and occupational safety and health in the United States and in foreign countries where we operate.

Consequently, to the extent these environmental compliance costs, pollution mitigation costs or remediation costs are incurred by our clients, those clients could elect to delay, restrict or cancel drilling, exploration or production programs, which could reduce demand for our products and services and, as a result, have a material adverse effect on our business, financial condition, results of operations, or cash flows.

Consistent with our quality assurance and control principles, we have established proactive environmental and worker safety policies in the United States and foreign countries for the management, handling, recycling or disposal of chemicals and gases and other materials and wastes resulting from our operations.

Our customers are also subject to most, if not all, of the same laws and regulations relating to environmental protection and occupational safety and health in the United States and in foreign countries where we operate.

Consequently, to the extent these environmental compliance costs, pollution mitigation costs or remediation costs are incurred by our customers, those customers could elect to delay, reduce or cancel drilling, exploration or production programs, which could reduce demand for our products and services and, as a result, have a material adverse effect on our business, financial condition, results of operations, or cash flows.

Consistent with our quality assurance and Health, Safety & Environment (“HSE”) principles, we have established proactive environmental and worker safety policies in the United States and foreign countries for the management, handling, recycling or disposal of chemicals and gases and other materials and wastes resulting from our operations.

Substantial fines and penalties can be imposed and orders or injunctions limiting or prohibiting certain operations may be issued in connection with any failure to comply with laws and regulations relating to worker health and safety.

2 unchanged sentences

These licenses and certifications expire every three years and are renewed upon successful completion of annual audits.

Our current API licenses and certifications are published on our website under the “Quality

Assurance & Control” section of our website at www.CactusWHD.com.

Cactus has also developed an API Q2 program specific to our service business.

At this time, we have not yet applied for API Q2 certification, but we are implementing the API Q2 Quality Management System at select service locations to reduce well site non-productive time, improve service tool reliability and enhance customer satisfaction and retention.

Our current API licenses and certifications are published on our website under the “Quality Assurance & Control” section of our website at www.CactusWHD.com.

API’s standards are subject to revision, however, and there is no guarantee that future amendments or substantive changes to the standards would not require us to modify our operations or manufacturing processes to meet the new standards.

3 unchanged sentences

Hydraulic Fracturing.

Many of our customers utilize hydraulic fracturing in their operations.

Environmental concerns have been raised regarding the potential impact of hydraulic fracturing on underground water supplies and seismic activity.

These concerns have led to several regulatory and governmental initiatives in the United States to restrict the hydraulic fracturing process, which could have an adverse impact on our customers’ completions or production activities.

Most of our customers utilize hydraulic fracturing in their operations.

Environmental concerns have been raised regarding the potential impact of hydraulic fracturing and the resulting wastewater disposal on underground water supplies and seismic activity.

These concerns have led to several regulatory and governmental initiatives in the United

States to restrict the hydraulic fracturing process, which could have an adverse impact on our customers’ completions or production activities.

Although we do not conduct hydraulic fracturing, increased regulation and attention given to the hydraulic fracturing process could lead to greater opposition to oil and gas production activities using hydraulic fracturing techniques.

In addition, 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.

In December 2021, the Texas Railroad Commission, which regulates the state’s oil and gas industry, suspended the use of deep wastewater disposal wells in four oil-producing counties in West Texas.

The suspension is intended to mitigate earthquakes thought to be caused by the injection of waste fluids, including saltwater, that are a byproduct of hydraulic fracturing into disposal wells.

The ban will require oil and gas production companies to find other options to handle the wastewater, which may include piping or trucking it longer distances to other locations not under the ban.

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 for which they contract, which could negatively impact demand for our products.

Climate Change.

3 unchanged sentences

In January 2021, the Acting Secretary of the Department of the Interior issued an order suspending new leasing and drilling permits for fossil fuel production on federal lands and waters for 60 days.

Then on January 27, 2021, President Biden issued an executive order indefinitely suspending new oil and natural gas leases on public lands or in offshore waters pending completion of a comprehensive review and reconsideration of federal oil and gas permitting and leasing practices.

To the extent that the review results in the development of additional restrictions on drilling, limitations on the availability of leases, or restrictions on the ability to obtain required permits, it could impact our customers’ opportunities and reduce demand for our products and services in the aforementioned areas.

Because our business depends on the level of activity in the oil and natural gas industry, existing or future laws, regulations, treaties or international agreements related to greenhouse gases and climate change, including incentives to conserve energy or use alternative energy sources, may reduce demand for oil and natural gas and could have a negative impact on our business.

Likewise, such restrictions may result in additional compliance obligations that could have a material adverse effect on our business, consolidated results of operations and consolidated financial condition.

President Biden then issued an executive order indefinitely suspending new oil and natural gas leases on public lands or in offshore waters pending completion of a comprehensive review and reconsideration of federal oil and gas permitting and leasing practices.

Several states filed lawsuits challenging the suspension and in June 2021, a judge in the U.S.

District Court for the Western District of Louisiana issued a nationwide temporary injunction blocking the suspension.

The Department of the Interior appealed the U.S.

District Court’s ruling and the appeal is pending.

To the extent that the Department of the Interior’s report or other initiatives to reform federal leasing practices result in the development of additional restrictions on drilling, limitations on the availability of leases, or restrictions on the ability to obtain required permits, it could impact our customers’ opportunities and reduce demand for our products and services in the aforementioned areas.

Because our business depends on the level of activity in the oil and natural gas industry, existing or future laws, regulations, treaties or international agreements related to greenhouse gases and climate change, may reduce demand for oil and natural gas and could have a negative impact on our business.

In addition, our business could be impacted by initiatives to address greenhouse gases and climate change and incentives to conserve energy or use alternative energy sources.

For example, the Build Back Better Act, passed by the U.S.

House of Representatives and supported by President Biden, includes incentives to increase wind and solar electric generation and encourage consumers to use these alternative energy sources.

At this time, it is uncertain whether, and in what form, the Build Back Better Act may become law.

However, the Build Back Better Act or similar state or federal initiatives to incentivize a shift away from fossil fuels could reduce demand for hydrocarbons, thereby reducing demand for our products and services and negatively impacting our business.

Insurance and Risk Management

9 unchanged sentences

Human Capital Management

As of December 31, 2020, we employed over 660 people worldwide, of which more than 550 were employed in the United States.

As of December 31, 2021, we employed over 1,000 people worldwide, of which a little more than 900 were employed in the United States.

We are not a party to any collective bargaining agreements and have not experienced any strikes or work stoppages.

We consider our relations with our workforce to be good.

Our business’s success depends mainly on our ability to attract, retain and motivate a diverse population of talented employees at all levels of our organization, including the individuals

who comprise our global workforce and executive officers and other key personnel.

Our business’s success depends mainly on our ability to attract, retain and motivate a diverse population of talented employees at all levels of our organization, including the individuals who comprise our global workforce and executive officers and other key personnel.

To succeed in a competitive industry, we have developed key recruitment and retention strategies, objectives and measures which we focus on as part of the overall management of our business.

2 unchanged sentences

Fiscal year 2020 was a challenging year in which we made difficult staffing decisions, resulting in significant reductions to our workforce.

We strive to maintain good relationships with our employees and prioritize rehiring our most experienced branch and field positions as the industry recovers.

We reinstated 145 employees before the end of 2020 who were part of our workforce reductions earlier in the year.

When hiring, we utilize employee referrals, diverse social media platforms, regional job fairs and partner with educational organizations across the United States to find diverse, qualified, motivated and responsible employees.

As the economy showed signs of improvement in late 2020 and throughout 2021, we rebuilt our workforce, increasing our workforce by approximately 57% during 2021.

We are approaching the workforce levels we were at right before the start of the pandemic in March 2020.

We strive to maintain good relationships with our employees and have prioritized rehiring our most experienced branch and field positions as the industry has recovered.

When hiring, we utilize employee referrals, a variety of social media platforms, regional job fairs and partner with educational organizations across the United States to find diverse, qualified, motivated and responsible candidates.

We are dedicated to the continual training and development of our employees, especially those in field and branch operations.

Our internal training focuses on safety, corporate and personal responsibility, product knowledge, behavioral development and ethical conduct.

In 2021, Cactus built an internal database to track training progress and completion for all of our associates, with particular interest in tracking the training and skill sets of our field service technicians and managers.

This tracking tool enables us to take a holistic view of our strength by branch and job title, which helps us to manage our operations and assign associates with the proper skills, training and experience to safely and efficiently meet or exceed customer demand.

Other training courses offered outside of the company are attended by employees with specialized skills, knowledge or certifications as needed for their ongoing success and professional development.

1 unchanged sentence

We provide compensation and benefits programs to help meet the needs of our employees.

In addition to salaries and wages, these programs (which vary by country) include annual bonuses, retirement plans such as a 401(k) plan, healthcare and insurance benefits, health savings accounts partially funded by the Company, standard flexible spending accounts, legal insurance, company-sponsored long and short term disability, accident and critical illness, paid time off, family leave, partially paid maternity and paternity leave, family care resources and employee assistance programs, among others.

In addition to salaries and wages, these programs (which vary by country) include annual bonuses, retirement plans such as a 401(k) plan, healthcare and insurance benefits, health savings accounts partially funded by the Company, standard flexible spending accounts, personal legal services insurance, company-sponsored long and short term disability, accident and critical illness, paid time off, family leave, partially paid maternity and paternity leave, family care resources and employee assistance programs, among others.

We also offer tuition reimbursement in certain circumstances to support the continued growth and development of our employees.

1 unchanged sentence

Health and Safety.

Our health and safety programs are designed around global standards with appropriate variations addressing the multiple jurisdictions and regulations, specific hazards and unique working environments of our manufacturing and production facilities, service centers and headquarter operations.

We require each location to conduct regular safety evaluations to verify that expectations for safety program procedures and training are being met.

We also engage in third party conformity assessments of our Health, Safety & Environment (“HSE”) processes to determine adherence to our HSE management system and to global health and safety standards.

We also engage in third party conformity assessments of our HSE processes to determine adherence to our HSE management system and to global health and safety standards.

We monitor our Occupational Safety and Health Administration Total Recordable Incident Rate (“TRIR”) to assess our operation’s health and safety performance.

TRIR is defined as the number of incidents per 100 full-time employees that have resulted in a recordable injury or illness in the pertinent period.

During fiscal year 2020, we had a TRIR of 0.55 and no work-related fatalities.

During fiscal year 2021, we had a TRIR of 1.29, which compares to 0.55 in 2020.

We had no work-related fatalities in either year.

Based on the most recent statistics available from the International Association of Drilling Contractors, our TRIR statistics are in line with the industry average.

We are committed to the health, safety and wellness of our employees.

2 unchanged sentences

These tools also support their physical and mental health by providing resources to improve or maintain their health status.

In response to the COVID-19 pandemic, we have implemented additional safety measures for employees performing critical on-site work.

In response to the COVID-19 pandemic, we implemented additional safety measures for employees performing critical on-site work.

Our facilities implemented mandatory personal protective wear, extensive deep cleaning and sanitation processes.

Any associate who has exhibited symptoms or believes they may have been exposed to the virus is tested and quarantined based on guidelines provided by the Centers for Disease Control and Prevention.

We provide paid time off for our associates who miss work due to COVID at their regular pay.

Additionally, we have allowed administrative employees to work from home if desired.

We also work with third-party vendors to offer vaccination clinics and schedule vaccines for any associate who requests help in doing so.

Any associate who has exhibited signs or symptoms or believes they may have been exposed to the virus is tested and quarantined based on guidelines provided by the Centers for Disease Control and Prevention.

We provide paid time off for our associates to get vaccinated and boosted.

We also provide additional time off for any fully vaccinated associates who miss work due to a breakthrough case of COVID-19.

Additionally, during certain time periods, we have allowed administrative employees

to work from home if desired.

Lastly, we encourage our employees to be fully vaccinated against COVID-19 and offer financial incentives within our medical benefits plan to those associates who are fully vaccinated.

Available Information

1 unchanged sentence

Our website address is www.CactusWHD.com.

Our periodic reports and other information filed with or furnished to the Securities and Exchange Commission (“SEC”) are available, free of charge, through our website, as soon as reasonably practicable after those reports and other information are electronically filed with or furnished to the SEC.

Our periodic reports and other information filed with or furnished to the Securities and Exchange Commission (“SEC”), including our Form 10-Ks, Form 10-Qs and Form 8-Ks, as well as amendments to such filings, are available free of charge through our website, as soon as reasonably practicable after those reports and other information are electronically filed with or furnished to the SEC.

Information on our website or any other website is not incorporated by reference into this Annual Report and does not constitute a part of this Annual Report.

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 1. Business