What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-02-27 compared with 2024-02-29 · 225 added, 197 removed, 920 unchanged (31% of the section changed)

17 unchanged sentences

Based on this assessment, management has concluded that, as of December 31, 2024, our internal control over financial reporting was effective.

As disclosed in Note 3 in the notes to the Consolidated Financial Statements, we acquired FlexSteel on February 28, 2023 and accounted for this acquisition as a business combination.

FlexSteel’s total revenues constituted approximately 31% of our total consolidated revenues for the year ended December 31, 2023.

FlexSteel’s total assets, excluding goodwill and acquired intangible assets, constituted approximately 24% of our total consolidated assets as of December 31, 2023.

We excluded FlexSteel from management's assessment of our internal controls over financial reporting as of December 31, 2023.

This exclusion is in accordance with the SEC staff’s general guidance that an assessment of a recently acquired business may be omitted from the scope of management’s assessment of internal controls over financial reporting for one year following the acquisition.

Our independent registered public accounting firm, PricewaterhouseCoopers, LLP, has issued an audit report on the effectiveness of our internal control over financial reporting as of December 31, 2024, which appears herein.

/s/ Scott Bender /s/ Alan Keifer

Chief Executive Officer, Chairman of the Board and Director Interim Chief Financial Officer

/s/ Scott Bender /s/ Jay A.

Chief Executive Officer, Chairman of the Board and Director Executive Vice President, Chief Financial Officer and Treasurer

Houston, Texas

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We believe that our audits provide a reasonable basis for our opinions.

As described in Management’s Report on Internal Control Over Financial Reporting, management has excluded FlexSteel from its assessment of internal control over financial reporting as of December 31, 2023 because it was acquired by the Company in a purchase business combination during 2023.

We have also excluded FlexSteel from our audit of internal control over financial reporting.

FlexSteel is a wholly-owned subsidiary whose total assets and total revenues excluded from management’s assessment and our audit of internal control over financial reporting represent approximately 24% and 31%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2023.

Definition and Limitations of Internal Control over Financial Reporting

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A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit

preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

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Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Liability related to the Tax Receivable Agreement

As described in Note 11 to the consolidated financial statements, the Company has a liability under the Tax Receivable Agreement ("TRA") of $278.7 million as of December 31, 2024.

In connection with its initial public offering, the Company entered into the TRA with certain direct and indirect owners of Cactus LLC (after the CC Reorganization, Cactus Companies).

These owners are referred to as the “TRA Holders”.

The TRA generally provides for the payment by the Company to the TRA Holders of 85% of the net cash tax savings, if any, in United States federal, state and local income tax and franchise tax that the Company actually realizes or is deemed to realize in certain circumstances as a result of (i) certain increases in tax basis that occur as a result of the Company’s acquisition (or deemed acquisition for U.S.

federal income tax purposes) of all or a portion of such TRA Holder’s ownership interest in Cactus Companies (formerly Cactus LLC), (ii) certain increases in tax basis resulting from the repayment of borrowings outstanding under Cactus LLC’s term loan facility, and (iii) imputed interest deemed to be paid by the Company as a result of, and additional tax basis arising from, any payments the Company makes under the TRA.

In connection with its initial public offering, the Company entered into the TRA with certain direct and indirect owners of Cactus LLC (the "TRA Holders").

The TRA generally provides for the payment by the Company to the TRA Holders of 85% of the net cash savings, if any, in United States federal, state and local income tax and franchise tax that the Company actually realizes or is deemed to realize in certain circumstances as a result of (i) certain increases in tax basis that occur as a result of the Company's acquisition (or deemed acquisition for U.S.

federal income tax purposes) of all or a portion of such TRA Holder’s ownership interest in Cactus, LLC (ii) certain increases in tax basis resulting from the repayment of borrowings outstanding under Cactus LLC’s term loan facility, and (iii) imputed interest deemed to be paid by the Company as a result of, and additional tax basis arising from, any payments the Company makes under the TRA.

Management calculates the TRA liability by determining the tax basis subject to the TRA (“tax basis”) and applying a blended tax rate to the basis differences and calculating the iterative impact.

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Evaluating management’s determination of the apportionment factors involved considering the current and expected activity levels of the Company and whether the apportionment factors were consistent with evidence obtained in other areas of the audit.

Acquisition of FlexSteel – Valuation of Customer Relationships and Developed Technology

As described in Notes 3 and 5 to the consolidated financial statements, on February 28, 2023, the Company completed the acquisition of FlexSteel for consideration of approximately $627.5 million.

Of the acquired intangible assets, $100.3 million of customer relationships and $77.0 million of developed technology was recorded.

The valuation methods used to determine the estimated fair value of intangible assets included the multi-period excess earnings approach for customer relationships and the

relief from royalty method for developed technology.

Several significant assumptions and estimates were involved in the application of these valuation methods, including forecasted revenues, long-term growth rate, royalty rates, margins, tax rates, capital spending, discount rates, attrition rates and working capital changes.

The principal considerations for our determination that performing procedures relating to the valuation of customer relationships and developed technology acquired in the acquisition of FlexSteel is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the customer relationships and developed technology acquired;

(ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to the forecasted revenues, long-term growth rate, royalty rate, margins, discount rate, and attrition rate for customer relationships and forecasted revenues, long-term growth rate, royalty rate, and discount rate for developed technology;

and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to the acquisition accounting, including controls over management’s valuation of the customer relationships and developed technology acquired.

These procedures also included, among others (i) reading the purchase agreement;

(ii) testing management’s process for developing the fair value estimate of the customer relationships and developed technology acquired;

(iii) evaluating the appropriateness of the multi-period excess earnings and relief from royalty methods used by management;

(iv) testing the completeness and accuracy of the underlying data used in the multi-period excess earnings and relief from royalty methods;

and (v) evaluating the reasonableness of the significant assumptions used by management related to forecasted revenues, long-term growth rate, royalty rate, margins, discount rate, and attrition rate for customer relationships and forecasted revenues, margins, long-term growth rate, royalty rate, and discount rate for developed technology.

Evaluating management’s assumptions related to the forecasted revenues, margins and long-term growth rates for customer relationships and developed technology involved considering (i) the current and past performance of the FlexSteel business;

(ii) the consistency with external market and industry data;

and (iii) whether the assumptions were consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the multi-period excess earnings and relief from royalty methods and (ii) the reasonableness of the discount rate, royalty rate, and attrition rate assumptions for customer relationships and the royalty rate and discount rate assumptions for developed technology.

/s/ PricewaterhouseCoopers LLP

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Operating lease liabilities, net of current portion 20,078 19,121

Other noncurrent liabilities

Total liabilities 475,149 457,791

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Retained earnings 552,133 400,682

Accumulated other comprehensive income (loss) ( 826 ) ( 984 )

Accumulated other comprehensive loss

( 2,491 ) ( 826 )

Total stockholders’ equity attributable to Cactus Inc.

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Balance at December 31, 2022 60,903 $ 609 14,978 $ — $ 310,528 $ 261,764 $ ( 984 ) $ 138,528 $ 710,445

Issuance of common stock

3,352 34 143,722 — — 26,122 169,878

Member distributions — — — — — — — ( 16,644 ) ( 16,644 )

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Equity award vestings 218 2 — — ( 3,422 ) — — ( 1,501 ) ( 4,921 )

Other comprehensive loss — — — — — — ( 992 ) ( 316 ) ( 1,308 )

Other comprehensive income

— — — — — — 158 81 239

Share repurchases

( 8 ) — — — ( 286 ) — — ( 41 ) ( 327 )

Stock-based compensation — — — — 14,782 — — 3,322 18,104

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Balance at December 31, 2023 65,409 $ 654 14,034 $ — $ 465,012 $ 400,682 $ ( 826 ) $ 199,248 $ 1,064,770

Issuances of common stock 3,352 34 — — 143,722 — — 26,122 169,878

Member distributions — — — — — — — ( 13,290 ) ( 13,290 )

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Equity award vestings 228 2 — — ( 4,292 ) — — ( 1,669 ) ( 5,959 )

Other comprehensive income — — — — — — 158 81 239

Other comprehensive loss

— — — — — — ( 1,665 ) ( 309 ) ( 1,974 )

Share repurchases ( 87 ) ( 1 ) — — ( 2,996 ) — — ( 375 ) ( 3,372 )

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Payments pursuant to tax receivable agreement ( 20,800 ) ( 26,890 ) ( 11,666 )

Payment of earn-out liability

( 31,168 ) — —

Net cash provided by operating activities 316,113 340,280 117,884

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Net proceeds from the issuance of Class A common stock — 169,878 —

Payment of contingent consideration

( 5,960 ) — —

Payments of deferred financing costs — ( 6,934 ) ( 353 )

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We also control our exposure associated with trade receivables by discontinuing sales and service to non-paying customers.

For the year ended December 31, 2023, one customer represented approximately 10 % of total revenues, with both operating segments reporting revenues with this customer.

For the year ended December 31, 2022, no customers represented 10% or more of total revenues.

One customer represented approximately 12 % of total revenues for the year ended December 31, 2021.

For the year ended December 31, 2024 and 2023, one customer represented approximately 15 % and 10 %, respectively, of total revenues, with both operating segments reporting revenues with this customer.

No customer represented more than 10% of total revenues for the year ended December 31, 2022.

Significant Vendors

The principal raw materials used in the manufacture of our pressure control products and rental equipment include forgings, castings, tube and bar stock.

The principal raw materials used in the manufacture of our pressure control products and rental equipment include forgings, tube and bar stock.

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

The principal raw materials used for our spoolable products include tube, bar stock, steel strip and high-density polyethylene.

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

For the year ended December 31, 2023, one vendor represented approximately 10 % of our total third-party vendor purchases of raw materials, finished products, equipment, machining and other services.

For the years ended December 31, 2022 and 2021, no vendor represented 10% or more 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 primarily located in the United States, China, India, Australia and Vietnam.

For the year ended December 31, 2024 and 2023, one vendor represented approximately 10 % of our total third-party vendor purchases of raw materials, finished products, equipment, machining and other services.

For the year ended December 31, 2022, no vendor represented 10% or more of our total third-party vendor purchases of raw materials, finished products, equipment, machining and other services.

Tax Receivable Agreement (TRA)

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As such, subsequent changes to the measurement of the TRA liability are recognized in the statements of income as a component of other income (expense), net.

During the years ended December 31, 2023, 2022 and 2021, we recognized a $ 4.5 million gain, a $ 1.9 million loss and a $ 0.9 million gain on the change in the TRA liability, respectively.

During the years ended December 31, 2024, 2023 and 2022, we recognized a $ 3.2 million gain, a $ 4.5 million gain and a $ 1.9 million loss on the change in the TRA liability, respectively.

See Note 11 for further details on the TRA liability.

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Payment terms and conditions vary, although terms generally include a requirement of payment within 30 to 60 days.

Revenues are recognized net

of any taxes collected from customers, which are subsequently remitted to governmental authorities.

We treat shipping and handling associated with outbound freight as a fulfillment cost instead of as a separate performance obligation.

Revenues are recognized net of any taxes collected from customers, which are subsequently remitted to governmental authorities.

We treat shipping and

handling associated with outbound freight as a fulfillment cost instead of as a separate performance obligation.

We recognize the cost for the associated shipping and handling when incurred as an expense in cost of sales.

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Product revenues are primarily derived from the sale of wellhead systems, production trees, spoolable pipe and connections.

Revenue is recognized when the products have shipped and the customer obtains control of the products.

Revenue is recognized when the customer obtains control of the products.

Rental revenue.

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Consequently, the members of Cactus Companies are taxed individually on their share of earnings for U.S.

federal and state income tax purposes.

Cactus Companies is subject to the Texas Margins Tax and our operations in China, Australia, Canada and the Middle East are subject to local country income taxes.

and state income tax purposes.

Cactus Companies is subject to the Texas Margins Tax and our operations in China, Australia, Canada, Vietnam and the Middle East are subject to local country income taxes.

See Note 7 for additional information regarding income taxes.

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Accounts deemed uncollectible are applied against the allowance for credit losses.

The following is a rollforward of our allowance for credit losses:

Balance at Beginning of Period Expense Write off Translation Adjustments Balance at End of Period

The following is a roll forward of our allowance for credit losses:

Balance at Beginning of Period Expense Write off Other

Balance at End of Period

Year Ended December 31, 2024 $ 3,642 $ 370 $ ( 254 ) $ 21 $ 3,779

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The inventory obsolescence reserve was $ 28.0 million and $ 25.6 million as of December 31, 2024 and 2023, respectively.

The following is a rollforward of our inventory obsolescence reserve:

The following is a roll forward of our inventory obsolescence reserve:

Balance at Beginning of Period Expense Write off Translation Adjustments Balance at End of Period

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We depreciate the cost of property and equipment using the straight‑line method over the estimated useful lives and depreciate our rental assets to their salvage value.

Leasehold improvements are amortized over the shorter of the remaining lease term or economic life of the

related assets.

Leasehold improvements are amortized over the shorter of the remaining lease term or economic life of the related assets.

When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss are reflected in income for the period.

The cost of maintenance and repairs is charged to income as incurred while significant renewals and improvements are capitalized.

The cost of maintenance and repairs is

charged to income as incurred while significant renewals and improvements are capitalized.

Estimated useful lives are as follows:

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We first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the goodwill impairment test.

If the qualitative assessment indicates that it is more likely than not that the fair value of the reporting unit is less than its carrying amount or we elect not to perform a qualitative assessment, the quantitative assessment of goodwill test is performed.

If the qualitative assessment indicates that it is more likely than not that the fair value of the reporting unit is less than its carrying amount, or if we elect not to perform a qualitative assessment, the quantitative assessment of goodwill test is performed.

The goodwill impairment test is also performed whenever events or changes in circumstances indicate that the carrying value may not be recoverable.

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Accrued expenses and other current liabilities as of December 31, 2024 and 2023 are as follows:

Income based tax payable $ 24,112 $ 6,437

Payroll, incentive compensation, payroll taxes and benefits 13,925 13,964

Deferred revenue 8,105 1,450

Accrued professional fees and other 11,385 5,114

Deferred revenue 8,069 8,105

Customer deposits 6,512 5,927

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Taxes other than income 4,045 4,566

Income based tax payable 4,274 2,537

Product warranties 1,493 731

Accrued dividends 887 612

Accrued workers’ compensation insurance 197 576

Total accrued expenses and other current liabilities $ 75,416 $ 50,654

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Actual employee medical claims expense may differ from estimated loss provisions based on historical experience.

The liabilities for these claims are included as a component of payroll, incentive compensation, payroll taxes and benefits in the table above and were $ 2.3 million and $ 1.4 million as of December 31, 2023 and 2022, respectively.

The liabilities for these claims are included as a component of payroll, incentive compensation, payroll taxes and benefits in the table above and were $ 2.3 million as of both December 31, 2024 and 2023.

Product Warranties

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Securities and Exchange Commission rules and removes certain disclosures that no longer are considered cost beneficial or relevant.

The amendments in this ASU are to be applied on a prospective basis and will be effective for our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, with early adoption permitted.

We are currently evaluating the impact the adoption of this new standard will have on our disclosures.

The amendments in this ASU should be applied on a prospective basis, with a retrospective option.

The standard will be effective for fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company is currently evaluating the impact the adoption of this new standard will have on our disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement- Reporting Comprehensive Income- Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses .

The new standard would require public entities to disclose additional information about specific expense categories in the notes to the financial statements on an interim and annual basis.

ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, with early adoption permitted.

The Company is currently evaluating the impact of adopting ASU 2024-03.

Recently adopted accounting pronouncements

In November 2023, the FASB issued ASU No.

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The ASU expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items and interim disclosures of a reportable segment’s profit or loss and assets.

The ASU is to be applied retrospectively to all prior periods presented in the financial statements and is effective for our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, with early adoption permitted.

We are currently evaluating the impact the adoption of this new standard will have on our segment disclosures.

The Company adopted ASU 2023-07 during the year ended December 31, 2024.

See Note 15 Segment Reporting in the accompanying notes to the consolidated financial statements for further detail.

FlexSteel Acquisition

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Including final adjustments for closing working capital, cash on hand and indebtedness adjustments as set forth in the merger agreement, we paid total cash consideration of $ 627.5 million.

There is also a potential future earn-out payment of up to $ 75.0 million to be paid no later than the third quarter of 2024, if certain revenue growth targets are met by FlexSteel.

We funded the upfront purchase price using a combination of $ 165.6 million of net proceeds received from the public offering of shares of our Class A common stock completed in January 2023, borrowings under the Amended ABL Credit Facility (as defined in Note 6) totaling $ 155.0 million and available cash on hand at the time of closing.

We believe this acquisition enhances Cactus’ position as a premier manufacturer and provider of highly engineered equipment to the oil and gas E&P industry and provides meaningful growth potential for Cactus.

We also believe FlexSteel’s products are highly complementary to Cactus’ equipment as it expands our exposure to our customers’ operations from production trees to transportation of oil, gas and other liquids as well as to additional customers operating in the midstream area.

The acquisition has been accounted for using the acquisition method of accounting, with Cactus being treated as the accounting acquirer.

Under the acquisition method of accounting, the assets and liabilities are recorded at their respective fair values as of the acquisition date.

The transaction was treated as a purchase of stock for United States federal income tax purposes.

In connection with the acquisition, we incurred approximately $ 7.5 million and $ 8.4 million of transaction costs for the year ended December 31, 2023 and 2022, respectively, required to effect the transaction.

We incurred an additional $ 4.7 million in costs during the year ended December 31, 2023 related to the reporting of and accounting for the transaction.

These fees primarily related to legal, accounting and consulting fees and are included in selling, general and administrative (“SG&A”) expenses in the consolidated statements of income.

Purchase Price Consideration

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The estimated fair value of the earn-out payment was determined using a Monte Carlo simulation valuation methodology based on probability-weighted performance projections and other inputs, including a discount rate.

Changes in the fair value of the earn-out liability subsequent to the acquisition date are recognized in the consolidated statements of income.

As of December 31, 2023, the estimated fair value of the earn-out payment increased to $ 20.8 million.

The increase is based on the revised forecast for the period January 1, 2023 through June 30, 2024, reflecting improvements in FlexSteel’s revenues as compared to projections made at the time of the acquisition.

See further discussion of the calculation of fair value of the earn-out liability in Note 14.

Changes in the fair value of the earn-out liability subsequent to the acquisition date have been recognized in the consolidated statements of income.

The contingent consideration earn-out period ended on June 30, 2024 and resulted in an earn-out liability of $ 37.0 million.

The earn-out payment was made in September 2024.

Purchase Price Allocation

The following table provides the allocation of the purchase price as of the acquisition date.

The goodwill reflected below increased $ 1.7 million from the original preliminary purchase price allocation as a result of measurement period adjustments, primarily related to changes in cash consideration upon finalization of the closing net working capital, updates to deferred tax liabilities and valuation adjustments to property and equipment and inventories.

The following table provides the final allocation of the purchase price as of the acquisition date.

Cash and cash equivalents $ 5,316

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Pro forma financial information

From acquisition date through December 31, 2023, FlexSteel produced revenue of $ 340.2 million and net income of $ 61.7 million.

The pro forma financial information below represents the combined results of operations for the years ended December 31, 2023 and 2022, as if the acquisition had occurred as of January 1, 2022.

The unaudited pro forma combined financial information includes, where applicable, adjustments for additional amortization expense related to the fair value step-up of intangible assets, additional inventory fair value step-up expense, additional depreciation expense associated with adjusting property and equipment to fair value, decreases in interest expense due to modification of borrowings in conjunction with the acquisition and associated tax-related impacts of adjustments.

These pro forma adjustments are based on available information as of the date hereof and upon assumptions that we believe are reasonable to reflect the impact of the FlexSteel acquisition on our historical financial information on a supplemental pro forma basis.

These pro forma adjustments are based upon assumptions that we believe are reasonable to reflect the impact of the FlexSteel acquisition on our historical financial information on a supplemental pro forma basis.

Adjustments do not include the elimination of transaction-related costs incurred or any costs related to integration activities, cost savings or synergies that have been or may be achieved by the combined business.

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Total inventories $ 226,796 $ 205,625

Goodwill and Other Intangible Assets

The change in carrying value of goodwill allocated to our reportable segments during the twelve months ended December 31, 2023 was as follows:

Pressure Control Spoolable Technologies Total

Balance at December 31, 2022 $ 7,824 $ — $ 7,824

FlexSteel acquisition — 195,204 195,204

Balance at December 31, 2023 $ 7,824 $ 195,204 $ 203,028

Other Intangible Assets

The following table presents the detail of acquired intangible assets other than goodwill as of December 31, 2024:

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In August 2018, Cactus LLC entered into a five-year senior secured asset-based revolving credit facility with a syndicate of lenders and JPMorgan Chase Bank, N.A., as administrative agent for such lenders and as an issuing bank and swingline lender (the “ABL Credit Facility”).

The ABL Credit Facility and its amendments provided for up to $ 80.0 million in revolving commitments, up to $ 15.0 million of which was available for the issuance of letters of credit.

On February 28, 2023, in connection with the FlexSteel acquisition, Cactus Companies assumed the rights and obligations of Cactus LLC as Borrower under the ABL Credit Facility, and the ABL Credit Facility was amended and restated in its entirety (the “Amended ABL Credit Facility”).

The Amended ABL Credit Facility provides for a term loan of $ 125.0 million and up to $ 225.0 million in revolving commitments, of which $ 20.0 million is available for the issuance of letters of credit.

The ABL Credit Facility was amended in September 2020 and July 2022.

On February 28, 2023, in connection with the Merger, Cactus Companies assumed the rights and obligations of Cactus LLC as Borrower under the ABL Credit Facility, and the ABL Credit Facility was amended and restated in its entirety (the “Amended ABL Credit Facility”).

The Amended ABL Credit Facility provided a term loan of $ 125.0 million and up to $ 225.0 million in revolving commitments, of which $ 20.0 million is available for the issuance of letters of credit.

Subject to certain terms and conditions set forth in the Amended ABL Credit Facility, Cactus Companies may request additional revolving commitments in an amount not to exceed $ 50.0 million, for a total of up to $ 275.0 million in revolving commitments.

The term loan under the Amended ABL Credit Facility was set to mature on February 27, 2026 and any revolving loans under the Amended ABL Credit Facility mature on July 26, 2027.

The revolving loans under the Amended ABL Credit Facility mature on July 26, 2027.

The maximum amount that Cactus Companies may borrow under the Amended ABL Credit Facility is subject to a borrowing base, which is based on a percentage of eligible accounts receivable and eligible inventory, subject to reserves and other adjustments.

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Letters of credit issued under the Amended ABL Credit Facility accrue fees at a rate equal to the applicable margin for Term Benchmark borrowings.

The applicable margin for revolving loan borrowings ranges from 0.0 % to 0.5 % per annum for revolving loan ABR borrowings and 1.25 % to 1.75 % per annum for revolving loan Term Benchmark borrowings and, in each case, is based on the average quarterly availability of the revolving loan commitment under the Amended ABL Credit Facility for the immediately preceding fiscal quarter.

The applicable margin for revolving loan borrowings ranges from 0.0 % to 0.5 % per annum for revolving loan ABR borrowings and 1.25 % to 1.75 % per annum for

revolving loan Term Benchmark borrowings and, in each case, is based on the average quarterly availability of the revolving loan commitment under the Amended ABL Credit Facility for the immediately preceding fiscal quarter.

The unused portion of the revolving commitment under the Amended ABL Credit Facility is subject to a commitment fee of 0.25 % per annum.

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Our effective tax rate was 22.2 %, 18.1 % and 17.8 % for the years ended December 31, 2024, 2023 and 2022, respectively.

Our effective tax rate is typically lower than the federal statutory rate of 21% due to the fact that Cactus Inc.

is only subject to federal and state income tax on its share of income from Cactus Companies (Cactus LLC prior to the CC Reorganization).

Income allocated to the non-controlling interest is not subject to U.S.

federal or state tax.

The components of deferred tax assets and liabilities are as follows:

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Net operating loss and other carryforwards 9,062 11,343

Other 356 359

Deferred tax assets 228,076 211,077

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We record a deferred tax asset for the differences between our tax and book basis in the investment in Cactus Companies (Cactus LLC prior to the CC Reorganization) and imputed interest on the TRA.

Based upon our cumulative earnings history and forecasted future sources of taxable income, we believe that we will be able to realize the majority of our U.S.

deferred tax assets in the future.

Subsequent to completion of the FlexSteel acquisition, we determined that we expect to generate sufficient taxable income of the appropriate type to allow for the realization of the deferred tax asset associated with our investment in Cactus Companies and recognized a $ 12.1 million tax benefit associated with the release of our valuation allowance previously provided.

Based upon our cumulative earnings history and forecasted future sources of taxable income, we believe that we will be able to realize our U.S.

deferred tax assets associated with our investment in Cactus Companies in the future.

Subsequent to completion of the FlexSteel acquisition during 2023, we determined that we expect to generate sufficient taxable income of the appropriate type to allow for the realization of the deferred tax asset associated with our investment in Cactus Companies and recognized a $ 12.1 million tax benefit associated with the release of our valuation allowance previously provided.

As such, as of December 31, 2023, we no longer have a valuation allowance against the deferred tax asset for the investment in Cactus Companies.

During the first quarter of 2023, we recognized $ 4.3 million of tax expense associated with the revaluation of our deferred tax asset as a result of a change in our forecasted state rate primarily due to state impacts of the FlexSteel acquisition.

During the year ended December 31, 2022, as a result of redemptions of CW Units, we released $ 1.4 million of our valuation allowance and recorded a tax benefit of $ 1.4 million related to the realizable portion of the deferred tax asset.

As of December 31, 2022, we had a valuation allowance of $ 12.2 million against the $ 299.3 million deferred tax asset.

During the fourth quarter of 2024, we recognized $ 2.1 million of tax expense associated with the revaluation of our deferred tax asset (the difference between our tax and book basis in the investment in Cactus Companies and imputed interest) as a result of a change in our forecasted state rate.

We also record deferred tax assets for imputed interest, certain tax credits and net operating loss and other carryforwards.

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federal and state taxes payable in future years.

Additionally, we have a deferred tax asset on deferred interest of $ 2.5 million.

federal NOL and deferred interest carryforwards have no expiration date whereas the U.S.

federal NOL carryforwards have no expiration date whereas the U.S.

state NOL carryforwards generally will expire in periods beginning in 2041.

As a result of the FlexSteel acquisition, we acquired certain carryforward tax attributes, of which, $ 5.7 million were accounted for as unrecognized tax benefits in the acquisition accounting.

As of December 31, 2024, the Company had $ 5.5 million of unrecognized tax benefits all of which would not impact the effective tax rate if recognized.

The Company expects our unrecognized tax benefits will not increase in the next twelve months.

The Company recognizes the interest related to uncertain tax benefits as a component of income tax expense.

No interest was recognized during the year ended December 31, 2024.

The aggregate changes in the balance of the Company's unrecognized tax benefits were as follows for the periods presented (in thousands):

2024 2023 2022

Balance, beginning of year

$ 5,666 $ — $ —

Gross increases based on tax positions related to current year

Gross decreases based on tax positions related to prior years

Balance, end of year

$ 5,474 $ 5,666 $ —

As a result of the FlexSteel acquisition, we acquired certain carryforward tax attributes, which were accounted for as unrecognized tax benefits in the acquisition accounting.

This remains the balance of our uncertain tax positions as of December 31, 2024.

We had no uncertain tax positions as of December 31, 2022.

The unrecognized tax benefits have been

offset by an indemnification receivable from the seller of $ 5.7 million.

One of our subsidiaries is in the process of finalizing an Internal Revenue Service (“IRS”) audit of its 2021 federal income tax return with the expectation that no changes will occur as a result of this examination.

The unrecognized tax benefits have been offset by an indemnification receivable from the seller of $ 5.5 million.

One of our subsidiaries is awaiting documents finalizing an Internal Revenue Service (“IRS”) no change audit of its 2021 federal income tax return.

None of our state income tax returns are currently under examination by state taxing authorities.

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However, certain earlier tax years remain open for adjustment to the extent of their net operating loss and deferred interest carryforwards available for future utilization.

The Organization for Economic Cooperation and Development (“OECD”) recently enacted rules (“Pillar Two”) for a new, global minimum tax of at least 15% on income arising in low-tax jurisdictions.

The Pillar Two rules are expected to be enacted beginning January 1, 2024.

In 2021, as part of the Organization for Economic Co-operation and Development's ("OECD") Inclusive Framework, 140 member countries agreed to the implementation of the Pillar Two Global Minimum Tax ("Pillar Two") of 15%.

The OECD continues to release additional guidance, including administrative guidance on how Pillar Two rules should be interpreted and applied by jurisdictions as they adopt Pillar Two.

A number of countries have utilized the administrative guidance as a starting point for legislation that is effective January 1, 2024 and other pending legislation that may be enacted in the future.

The Company has determined that there is an immaterial impact for the year ending December 31, 2024.

We are currently evaluating the impact this new legislation will have on our consolidated financial statements.

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We account for forfeitures when they occur and recognize the impact to stock-based compensation expense at that time.

We recorded $ 18.1 million, $ 10.6 million and $ 8.6 million of stock-based compensation expense for the years ended December 31, 2023, 2022 and 2021.

We recorded $ 22.9 million, $ 18.1 million and $ 10.6 million of stock-based compensation expense for the years ended December 31, 2024, 2023 and 2022, respectively.

Stock-based compensation expense is primarily recorded in selling, general and administrative expenses.

We recognized $ 1.2 million, $ 1.7 million and $ 1.1 million in tax benefits for tax deductions from the vesting of stock-based awards benefits during the years ended December 31, 2023, 2022 and 2021, respectively.

We recognized $ 0.7 million, $ 1.2 million and $ 1.7 million in tax benefits for tax deductions from the vesting of stock-based awards during the years ended December 31, 2024, 2023 and 2022, respectively.

As of December 31, 2024, 2.4 million stock awards were available for grant.

Restricted Stock Units

Restricted stock units (“RSUs”) granted to our key employees generally vest over a three-year period (vesting ratably in equal tranches over a three-year period);

Restricted stock units (“RSUs”) granted to our key employees generally vest over a three-year period (generally vesting ratably in equal tranches over the vesting period);

however, RSUs granted to our non-employee directors generally vest on the first anniversary of the grant date.

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Under these awards, the number of shares vested and earned is typically determined at the end of a three-year performance period based on our Return on Capital Employed (“ROCE”).

The number of shares earned may range from 0 % to 200 % of the target units set forth in the applicable award agreement and is determined at the end of the performance period conditioned upon continued service and on our achievement of certain predefined targets as defined in the underlying performance stock

unit agreements.

PSUs cliff vest upon conclusion of the three-year performance period.

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( 160 ) 53.14

Forfeited ( 35 ) 45.78

Performance adjustment (2)

Nonvested as of December 31, 2024

(1) Reflects shares vested at 200 % of target based on actual ROCE performance upon conclusion of the three-year performance period.

(2) Represents additional shares issued to participants upon vesting due to the ROCE performance metrics exceeding target upon conclusion of the three-year performance period.

(1) Represents shares vested based on actual performance metrics upon conclusion of the performance period.

(2) Represents additional shares issued to participants upon vesting due to the performance metrics exceeding target upon conclusion of the performance period.

The weighted average grant date fair value of PSUs granted was $ 46.74 during 2024, $ 44.20 during 2023 and $ 55.02 during 2022.

The total fair value of PSUs vested was $ 5.9 million during 2023 ( 200 % of target achieved) and $ 4.8 million during 2022 ( 80 % of target achieved).

No PSUs vested during 2021.

The total fair value of PSUs vested was $ 9.2 million during 2024, $ 5.9 million during 2023 and $ 4.8 million during 2022.

As of December 31, 2024, there was approximately $ 4.2 million of unrecognized compensation expense relating to the unvested PSUs (based on the grant date fair value of the awards at 100 % of target) which is expected to be recognized over a weighted average period of 1.7 years.

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Total revenue $ 1,129,814 $ 1,096,960 $ 688,369

At December 31, 2023, we had a deferred revenue balance of $ 8.1 million compared to the December 31, 2022 balance of $ 1.5 million included in accrued expenses and other current liabilities in the consolidated balance sheets.

Deferred revenue as of December 31, 2024 and 2023, had a balance of $ 8.1 million included in accrued expenses and other current liabilities in the consolidated balance sheets.

Deferred revenue represents our obligation to transfer products or perform services for a customer for which we have received cash or billed in advance.

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2027 4,866 4,117

2027 3,666 60

Thereafter 5,500 —

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actually realizes or is deemed to realize in certain circumstances as a result of (i) certain increases in tax basis that occur as a result of Cactus Inc.’s acquisition (or deemed acquisition for U.S.

federal income tax purposes) of all or a portion of such TRA Holder’s CW Units (or CC Units after the CC Reorganization) in connection with our IPO or any subsequent offering, or pursuant to any other exercise of the Redemption Right or the Call Right (each as defined below), (ii) certain increases in tax basis resulting from the repayment of borrowings outstanding under Cactus LLC’s term loan facility in connection with our IPO and (iii) imputed interest deemed to be paid by Cactus Inc.

federal income tax purposes) of all or a portion of such TRA Holder’s CW Units (or CC Units after the CC Reorganization) in connection with our

IPO or any subsequent offering, or pursuant to any other exercise of the Redemption Right or the Call Right (each as defined below), (ii) certain increases in tax basis resulting from the repayment of borrowings outstanding under Cactus LLC’s term loan facility in connection with our IPO and (iii) imputed interest deemed to be paid by Cactus Inc.

as a result of, and additional tax basis arising from, any payments Cactus Inc.

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As of December 31, 2024, Cactus Inc.

had outstanding 65.4 million

shares of Class A common stock (representing 82.3 % of the total voting power) and 14.0 million shares of Class B common stock (representing 17.7 % of the total voting power).

had outstanding 68.2 million shares of Class A common stock (representing 85.6 % of the total voting power) and 11.4 million shares of Class B common stock (representing 14.4 % of the total voting power).

Equity Offering

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The shares were restricted from sale or trading and were subject to vesting requirements for one year from grant date.

The agreement included a guaranteed payment provision whereby if the fair market value of the restricted shares was below the purchase price upon vesting, Cactus would compensate the key employee for the difference in price plus a gross-up for taxes.

The restricted stock award early vested in October 2023 when the employee separated from the Company.

The guaranteed payment provision was not triggered when the shares vested;

therefore, no cash payment was required or made in accordance with the terms of this agreement.

CC Reorganization

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Since our IPO in February 2018, an aggregate of 49.1 million CC Units (including CW Units prior to the CC Reorganization) 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 CC Units (including CW Units prior to the CC Reorganization) for the three years ended December 31, 2023 (in thousands):

CW Units outstanding as of December 31, 2020 27,655

2021 Secondary Offering ( 6,273 )

Cadent redemption in June 2021 ( 3,292 )

Cadent redemption in September 2021 ( 715 )

Other CW Unit redemptions ( 701 )

The following is a roll forward of ownership of CC Units (including CW Units prior to the CC Reorganization) for the three years ended December 31, 2024 (in thousands):

CW Units outstanding as of December 31, 2021 16,674

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CC Units outstanding as of December 31, 2023 14,034

In addition to the redemptions associated with the 2021 Secondary Offering (as defined below) and the 2021 redemptions by Cadent (as defined below) and its affiliates, certain CC Unit Holders (CW Unit Holders prior to the CC Reorganization) redeemed 0.9 million, 1.7 million and 0.7 million CC Units (CW Units prior to the CC Reorganization), together with a corresponding number of shares of Class B common stock, pursuant to the Redemption Right for the years ended December 31, 2023, 2022 and 2021, respectively.

CC Unit redemptions ( 2,601 )

CC Units outstanding as of December 31, 2024

Certain CC Unit Holders (CW Unit Holders prior to the CC Reorganization) redeemed 2.6 million, 0.9 million and 1.7 million CC Units (CW Units prior to the CC Reorganization), together with a corresponding number of shares of Class B common stock, pursuant to the Redemption Right for the years ended December 31, 2024, 2023 and 2022, respectively.

acquired the redeemed CC Units (CW Units prior to the CC Reorganization) and a corresponding number of shares of Class B common stock (which shares of Class B common stock were then canceled) and issued 2.6 million, 0.9 million and 1.7 million shares of Class A common stock to the redeeming CC Unit Holders (CW Unit Holders prior to the CC Reorganization) during the same respective time periods.

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increased its ownership in Cactus Companies (Cactus LLC prior to the CC Reorganization) and accordingly, increased its equity by approximately $ 41.7 million, $ 12.8 million and $ 13.7 million, respectively, resulting from a reduction in the non-controlling interest.

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 incurred $ 0.4 million in expenses which were recorded in other expense, net, in the consolidated statements of income.

There was no change in the combined number of Cactus Inc.

voting shares outstanding as a result of the 2021 Secondary Offering.

On June 17, 2021, Cadent Energy Partners II, L.P.

(“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.

Aggregate cash dividends of $ 0.50 , $ 0.46 and $ 0.44 per share of Class A common stock declared during the years ended December 31, 2024, 2023 and 2022 totaled $ 34.0 million, $ 30.3 million and $ 26.9 million, respectively.

Cash dividends paid during the years ended December 31, 2023, 2022 and 2021 totaled $ 30.1 million, $ 26.7 million and $ 21.2 million, respectively.

Cash dividends paid during the years ended December 31, 2024, 2023 and 2022 totaled $ 33.7 million, $ 30.1 million and $ 26.7 million,

respectively.

Dividends accrue on unvested stock-based awards on the date of record and are paid upon vesting.

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We had no long-term debt outstanding as of December 31, 2024 or 2023.

The following table sets forth our liabilities that are measured at fair value on a recurring basis by level within the fair value hierarchy:

Fair Value at December 31, 2023

Level 1 Level 2 Level 3 Total

Earn-out liability $ — $ — $ 20,810 $ 20,810

The earn-out liability related to the FlexSteel acquisition (see Note 3) is measured at fair value using Level 3 unobservable inputs at the end of each reporting period with changes in its estimated fair value recorded in earnings until the liability is settled.

The fair value is determined based on the evaluation of the probability and amount of earn-out that may be achieved based on expected future performance of FlexSteel using a Monte Carlo simulation model.

The Monte Carlo simulation model uses assumptions including revenue volatilities, risk free rates, credit discount rates and revenue discount rates.

The following table sets forth the range of inputs for the significant assumptions utilized to determine the fair value of the earn-out payment as of December 31, 2023:

At December 31, 2023, the earn-out liability was measured at a fair value of $ 20.8 million using Level 3 unobservable inputs.

The fair value at December 31, 2023 was determined based on the evaluation of the probability and amount of earn-out that may be achieved based on expected future performance of FlexSteel using a Monte Carlo simulation model.

The Monte Carlo simulation model used assumptions including revenue volatilities, risk free rates, credit discount rates and revenue discount rates.

The following table sets forth the range of inputs for the significant assumptions utilized to determine the fair value as of December 31, 2023:

December 31, 2023

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Balance at December 31, 2023 $ 20,810

Changes in fair value $ 16,318

Balance at August 31, 2024

The FlexSteel acquisition contingent consideration earn-out period ended June 30, 2024.

The earn-out payment was made in September 2024.

Segment Reporting

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• Spoolable Technologies – engaged in the design, manufacture, sale, installation, service and associated rental of onshore spoolable pipe technologies utilized for production, gathering and takeaway transportation of oil, gas or other liquids.

The Company’s CODM evaluates performance and allocates resources for the reportable segments based on each segment’s profit or loss (which includes certain corporate overhead allocations directly attributable to each of the segments).

Intersegment revenue and expenses have been eliminated in the computation of total revenue and operating income.

The CODM uses the segment profit or loss for each segment predominantly in the annual budget and forecasting process.

The CODM considers quarter-to-quarter variances on a sequential basis when making decisions about the allocation of operating and capital resources to each segment.

Financial information by segment for the years ended December 31, 2024, 2023, and 2022 is summarized below.

Year Ended December 31,

Pressure Control

Spoolable Technologies

Revenues from external customers

$ 722,776 $ 407,038 $ 1,129,814

Intersegment revenue

1,262 — 1,262

Total revenues 724,038 407,038 1,131,076

Reconciliation of revenue

Elimination of intersegment revenue

Total consolidated revenues

Cost of revenue from external customers

$ 455,853 $ 237,568 693,421

Intersegment cost of revenue

1,127 — 1,127

Total cost of revenues

456,980 237,568 694,548

Reconciliation of cost of revenue

Elimination of intersegment cost of revenue

Total consolidated cost of revenue

Selling, general, administrative expenses and other (2)

56,348 64,606

Segment profit

$ 210,710 $ 104,864 $ 315,574

Reconciliation of segment profit

Elimination of intersegment profit

Total consolidated segment profit

Corporate expenses (3)

Total operating income

Interest income, net

Other income, net

Income before income taxes $ 299,276

(1) The significant expense categories and amounts align with the segment with the segment-level information that is regularly provided to the chief operating decision maker.

(2) For each reportable segment, the 'Selling, general, administrative expenses and other' line items category includes:

salaries and wages, stock based compensation amortization expense, depreciation expense, professional fees, rent expense, and other miscellaneous items.

Spoolable technologies also includes the change in fair value of the earn-out liability.

(3) Comprised primarily of expenses not allocated to our operating segments.

Year Ended December 31,

Pressure Control

Spoolable Technologies

Revenues from external customers

$ 756,727 $ 340,233 $ 1,096,960

Intersegment revenue

Total revenues 756,727 340,233 1,096,960

Operating income:

Reconciliation of revenue

Elimination of intersegment revenue

Total consolidated revenues

Cost of revenue from external customers

$ 475,818 $ 214,850 $ 690,668

Intersegment cost of revenue

Total cost of revenues 475,818 214,850 690,668

Reconciliation of cost of revenue

Elimination of intersegment cost of revenue

Total consolidated cost of revenue

Selling, general, administrative expenses and other (2)

43,975 63,211

Segment profit

$ 236,934 $ 62,172 $ 299,106

Reconciliation of segment profit

Elimination of intersegment profit

Total consolidated segment profit

Corporate expenses (3)

Total operating income

Interest expense, net

Other income, net

Income before income taxes $ 262,376

(1) The significant expense categories and amounts align with the segment with the segment-level information that is regularly provided to the chief operating decision maker.

(2) For each reportable segment, the 'Selling, general, administrative expenses and other' line items category includes:

salaries and wages, stock based compensation amortization expense, depreciation expense, professional fees, rent expense, and other miscellaneous items.

Spoolable technologies also includes the change in fair value of the earn-out liability.

(3) Comprised primarily of expenses not allocated to our operating segments.

Year Ended December 31,

Pressure Control

Spoolable Technologies

Total segment operating income 299,106 202,650 91,579

Corporate and other expenses (2)

Revenues from external customers

$ 688,369 $ — $ 688,369

Intersegment revenue

Total revenues 688,369 — 688,369

Reconciliation of revenue

Elimination of intersegment revenue

Total consolidated revenues

Cost of revenue from external customers

$ 445,921 $ — $ 445,921

Intersegment cost of revenue

Total cost of revenues

445,921 — 445,921

Reconciliation of cost of revenue

Elimination of intersegment cost of revenue

Total consolidated cost of revenue

Selling, general, administrative expenses and other (2)

Segment profit

$ 202,650 $ — $ 202,650

Reconciliation of segment profit

Elimination of intersegment profit

Total consolidated segment profit

Corporate expenses (3)

Total operating income

Interest income (expense), net ( 6,480 ) 3,714 ( 774 )

Other income (expense), net 4,490 ( 1,910 ) 492

Interest income, net

Other expense, net

Income before income taxes $ 176,552

(1) Includes approximately $ 23.5 million of inventory step-up expense as a result of purchase accounting and $ 14.9 million of expense related to the change in fair value of the earn-out liability.

(1) The significant expense categories and amounts align with the segment with the segment-level information that is regularly provided to the chief operating decision maker.

(2) For each reportable segment, the 'Selling, general, administrative expenses and other' line items category includes:

salaries and wages, stock based compensation amortization expense, depreciation expense, professional fees, rent expense, and other miscellaneous items.

(3) Comprised primarily of expenses not allocated to our operating segments.

Corporate and other expenses were previously included in our Pressure Control segment.

The information for fiscal year 2022 and 2021 has been recast to align with the presentation for the year ended December 31, 2023.

Additional financial information by operating segment for the years ended December 31, 2024, 2023, and 2022 is summarized below.

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(2) Consists primarily of cash and cash equivalents and deferred tax assets.

Based on the location where the sale originated, revenues in the United States exceeded 95 % of total revenues during each of the three years ended December 31, 2023.

Based on the location where the sale originated, revenues in the United States exceeded 95 % of total revenues during each of the three years ended December 31, 2024, 2023, and 2022.

Additionally, tangible long-lived assets in the United States exceeded 90 % of total tangible long-lived assets as of December 31, 2024, 2023, and 2022.

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These transactions are under short-term rental arrangements and the agreement governing these transactions does not qualify as a lease.

Effective January 1, 2022, we pay a base hourly rent of $ 2,500 per flight hour of use (increased from $ 1,750 per flight hour) of the aircraft, payable monthly, for the hours of aircraft operation.

During the year ended December 31, 2023, expense recognized in connection with these rentals totaled $ 0.3 million as compared to $ 0.2 million during each of the years ended December 31, 2022 and 2021.

As of December 31, 2023 and 2022, we owed less than $ 0.1 million to the related party which are included in accounts payable in the consolidated balance sheets.

Effective January 1, 2022, we pay a base hourly rent of $ 2,500 per flight hour of use of the aircraft, payable monthly, for the hours of aircraft operation.

During the year ended December 31, 2024, expense recognized in connection with these rentals totaled $ 0.1 million as compared to $ 0.3 million and $ 0.2 million during each of the years ended December 31, 2023 and 2022, respectively.

As of December 31, 2024 we had no liability outstanding to the related party compared to less than $ 0.1 million as of December 31, 2023 which was included in accounts payable in the consolidated balance sheet.

We are also responsible for employing pilots and fuel expenses.

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We pay professional fees to assist with maintenance of the TRA and composite tax payments in advance of the state tax return filings which are reimbursable from the TRA Holders.

As of December 31, 2023 and 2022, amounts due from the TRA

Holders for fees and estimated state tax payments made on their behalf totaled $ 0.3 million and $ 0.1 million, respectively.

As of December 31, 2024 and 2023, amounts due from the TRA Holders for fees and estimated state tax payments made on their behalf totaled $ 0.4 million and $ 0.3 million, respectively.

The balances are included in accounts receivable, net in the consolidated balance sheets.

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During the years ended December 31, 2024, 2023 and 2022, Cactus Companies (Cactus LLC prior to the CC Reorganization) distributed $ 68.0 million, $ 75.8 million and $ 38.6 million, respectively, to Cactus Inc.

to fund its dividend, TRA liability and estimated tax payments.

During the year ended December 31, 2023, Cactus Companies made pro rata distributions to the other members totaling $ 16.6 million.

During the years ended December 31, 2022 and 2021, Cactus LLC made pro rata distributions to the other members totaling $ 9.7 million.

fund its dividend, TRA liability and estimated tax payments.

During the years ended December 31, 2024, 2023, and 2022 Cactus Companies made pro rata distributions to the other members totaling $ 13.3 million, $ 16.6 million, and $ 9.7 million, respectively.

Earnings Per Share

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$ 2.77 $ 2.57 $ 1.80

(1) The numerator is adjusted in the calculation of diluted earnings per share under the if-converted method to include net income attributable to the non-controlling interest calculated as its pre-tax income adjusted for a corporate effective tax rate of 26 %, 25 % and 27 % for the years ended December 31, 2023, 2022 and 2021, respectively.

(1) The numerator is adjusted in the calculation of diluted earnings per share under the if-converted method to include net income attributable to the non-controlling interest calculated as its pre-tax income adjusted for a corporate effective tax rate of 26 % for the years ended December 31, 2024, 2023, respectively, and 25 % for the year ended December 31, 2022.

Supplemental Cash Flow Information

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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 8. Financial Statements and Supplementary Data