Cactus, Inc. 10-Q

Item 1. Financial Statements. CACTUS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (in thousands, except per share data) March 31, 2025 December 31, 2024 Assets Current assets Cash and cash equivalents $ 347,661 $ 342,843 Accounts receivable, net of allowance of $ 3,787 and $ 3,779 , respectively 219,694 191,627 Inventories 230,264 226,796 Prepaid expenses and other current assets 11,387 13,422 Total current assets 809,006 774,688 Property and equipment, net 347,634 346,008 Operating lease right-of-use assets, net 23,248 24,094 Intangible assets, net 159,994 163,991 Goodwill 203,028 203,028 Deferred tax asset, net 211,938 219,003 Investment in unconsolidated affiliates 6,000 — Other noncurrent assets 8,219 8,516 Total assets $ 1,769,067 $ 1,739,328 Liabilities and Equity Current liabilities Accounts payable $ 64,419 $ 72,001 Accrued expenses and other current liabilities 69,933 75,416 Current portion of liability related to tax receivable agreement 20,297 20,297 Finance lease obligations, current portion 7,273 7,024 Operating lease liabilities, current portion 5,052 4,086 Total current liabilities 166,974 178,824 Deferred tax liability, net 3,038 2,868 Liability related to tax receivable agreement, net of current portion 258,376 258,376 Finance lease obligations, net of current portion 11,809 10,528 Operating lease liabilities, net of current portion 19,025 20,078 Other noncurrent liabilities 4,475 4,475 Total liabilities 463,697 475,149 Commitments and contingencies Stockholders’ equity Preferred stock, $ 0.01 par value, 10,000 shares authorized, none issued and outstanding — — Class A common stock, $ 0.01 par value, 300,000 shares authorized, 68,390 and 68,152 shares issued and outstanding 683 681 Class B common stock, $ 0.01 par value, 215,000 shares authorized, 11,433 and 11,433 shares issued and outstanding — — Additional paid-in capital 522,386 520,794 Retained earnings 587,321 552,133 Accumulated other comprehensive loss ( 2,355 ) ( 2,491 ) Total stockholders’ equity attributable to Cactus Inc. 1,108,035 1,071,117 Non-controlling interest 197,335 193,062 Total stockholders’ equity 1,305,370 1,264,179 Total liabilities and equity $ 1,769,067 $ 1,739,328 The accompanying notes are an integral part of these condensed consolidated financial statements. 1 Table of Contents CACTUS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited) Three Months Ended March 31, (in thousands, except per share data) 2025 2024 Revenues Product revenue $ 208,961 $ 207,511 Rental revenue 27,122 23,943 Field service and other revenue 44,236 42,669 Total revenues 280,319 274,123 Costs and expenses Cost of product revenue 121,456 120,666 Cost of rental revenue 13,735 12,946 Cost of field service and other revenue 37,390 35,235 Selling, general and administrative expenses 39,126 29,422 Change in fair value of earn-out liability — 13,304 Total costs and expenses 211,707 211,573 Operating income 68,612 62,550 Interest income, net 2,325 689 Income before income taxes 70,937 63,239 Income tax expense 16,832 13,424 Net income $ 54,105 $ 49,815 Less: net income attributable to non-controlling interest 9,882 10,850 Net income attributable to Cactus Inc. $ 44,223 $ 38,965 Earnings per Class A share - basic $ 0.65 $ 0.60 Earnings per Class A share - diluted $ 0.64 $ 0.59 Weighted average Class A shares outstanding - basic 68,194 65,378 Weighted average Class A shares outstanding - diluted 68,664 79,556 The accompanying notes are an integral part of these condensed consolidated financial statements. 2 Table of Contents CACTUS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited) Three Months Ended March 31, (in thousands) 2025 2024 Net income $ 54,105 $ 49,815 Foreign currency translation adjustments 165 ( 803 ) Comprehensive income $ 54,270 $ 49,012 Less: comprehensive income attributable to non-controlling interest 9,911 10,677 Comprehensive income attributable to Cactus Inc. $ 44,359 $ 38,335 The accompanying notes are an integral part of these condensed consolidated financial statements. 3 CACTUS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (unaudited) Class A Class B Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Non-controlling Interest Total Equity Common Stock Common Stock (in thousands) Shares Amount Shares Amount Balance at December 31, 2024 68,151 $ 681 11,433 $ — $ 520,794 $ 552,133 $ ( 2,491 ) $ 193,062 $ 1,264,179 Member distributions — — — — — — — ( 5,089 ) ( 5,089 ) Tax impact of equity transactions — — — — 401 — — — 401 Equity award vestings 239 2 — — ( 4,070 ) — — ( 1,430 ) ( 5,498 ) Other comprehensive income — — — — — — 136 29 165 Share repurchases — — — — — — — — — Stock-based compensation — — — — 5,261 — — 881 6,142 Cash dividends declared ($ 0.13 per share) — — — — — ( 9,035 ) — — ( 9,035 ) Net income — — — — — 44,223 — 9,882 54,105 Balance at March 31, 2025 68,390 $ 683 11,433 $ — $ 522,386 $ 587,321 $ ( 2,355 ) $ 197,335 $ 1,305,370 Balance at December 31, 2023 65,409 $ 654 14,034 $ — $ 465,012 $ 400,682 $ ( 826 ) $ 199,248 $ 1,064,770 Member distributions — — — — — — — ( 1,684 ) ( 1,684 ) Tax impact of equity transactions — — — — 234 — — — 234 Equity award vestings 196 2 — — ( 3,466 ) — — ( 1,432 ) ( 4,896 ) Other comprehensive loss — — — — — — ( 630 ) ( 173 ) ( 803 ) Share repurchases ( 87 ) ( 1 ) — — ( 2,996 ) — — ( 375 ) ( 3,372 ) Stock-based compensation — — — — 3,680 — — 789 4,469 Cash dividends declared ($ 0.12 per share) — — — — — ( 7,944 ) — — ( 7,944 ) Net income — — — — — 38,965 — 10,850 49,815 Balance at March 31, 2024 65,518 $ 655 14,034 $ — $ 462,464 $ 431,703 $ ( 1,456 ) $ 207,223 $ 1,100,589 The accompanying notes are an integral part of these condensed consolidated financial statements. 4 CACTUS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) Three Months Ended March 31, (in thousands) 2025 2024 Cash flows from operating activities Net income $ 54,105 $ 49,815 Reconciliation of net income to net cash provided by operating activities: Depreciation and amortization 15,678 15,046 Deferred financing cost amortization 280 280 Stock-based compensation 6,064 4,432 Provision for expected credit losses 133 162 Inventory obsolescence ( 296 ) 1,062 Gain on disposal of assets ( 79 ) ( 208 ) Deferred income taxes 7,623 4,403 Change in fair value of earn-out liability — 13,304 Changes in operating assets and liabilities: Accounts receivable ( 28,087 ) ( 3,011 ) Inventories ( 3,112 ) 234 Prepaid expenses and other assets 2,080 128 Accounts payable ( 7,923 ) ( 8,132 ) Accrued expenses and other liabilities ( 4,921 ) 8,748 Net cash provided by operating activities 41,545 86,263 Cash flows from investing activities Investment in unconsolidated affiliate ( 6,000 ) — Capital expenditures and other ( 10,230 ) ( 7,902 ) Proceeds from sales of assets 779 1,094 Net cash used in investing activities ( 15,451 ) ( 6,808 ) Cash flows from financing activities Payments on finance leases ( 1,988 ) ( 2,031 ) Dividends paid to Class A common stock shareholders ( 9,216 ) ( 8,144 ) Distributions to members ( 5,089 ) ( 1,684 ) Repurchases of shares ( 5,498 ) ( 8,268 ) Net cash used in financing activities ( 21,791 ) ( 20,127 ) Effect of exchange rate changes on cash and cash equivalents 515 1,137 Net increase in cash and cash equivalents 4,818 60,465 Cash and cash equivalents, beginning of period 342,843 133,792 Cash and cash equivalents, end of period $ 347,661 $ 194,257 Supplemental disclosure of cash flow information Net cash paid for income taxes $ 23,204 $ 1,611 Cash paid for interest $ 627 $ 535 Non-cash investing and financing activities: Right-of-use assets obtained in exchange for new lease obligations $ 4,128 $ 4,515 Property and equipment in accounts payable $ 914 $ 2,637 The accompanying notes are an integral part of these condensed consolidated financial statements. 5 CACTUS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (in thousands, except per share data, or as otherwise indicated) 1. Preparation of Interim Financial Statements and Other Items Basis of Presentation The financial statements presented in this report represent the consolidation of Cactus, Inc. (“Cactus Inc.”) and its subsidiaries (the “Company”), including Cactus Companies, LLC (“Cactus Companies”). Cactus Inc. is a holding company whose only material asset is an equity interest consisting of units representing limited liability company interests in Cactus Companies (“CC Units”). Cactus Inc. is the sole managing member of Cactus Companies and operates and controls all of the business and affairs of Cactus Companies and conducts its business through Cactus Companies and its subsidiaries. As a result, Cactus Inc. consolidates the financial results of Cactus Companies and its subsidiaries and reports a non-controlling interest related to the portion of CC Units not owned by Cactus Inc., which reduces net income attributable to holders of Cactus Inc.’s Class A common stock, par value $ 0.01 per share (“Class A common stock”). Except as otherwise indicated or required by the context, all references to “Cactus,” “we,” “us” and “our” refer to Cactus Inc. and its consolidated subsidiaries. On February 28, 2023, Cactus Inc. through one of its subsidiaries, completed the acquisition of the FlexSteel business through a merger (the “Merger”) with HighRidge Resources, Inc. and its subsidiaries (“HighRidge”). On February 27, 2023, in order to facilitate the Merger with HighRidge, an internal reorganization was completed in which Cactus Companies acquired all of the outstanding units representing ownership interests in Cactus Wellhead, LLC (“Cactus LLC”), the operating subsidiary of Cactus Inc. (the “CC Reorganization”). The purpose of the Merger was to effect the acquisition of the operations of FlexSteel Holdings, Inc. and its subsidiaries. FlexSteel Holdings, Inc. was a wholly-owned subsidiary of HighRidge prior to the Merger and was converted into a limited liability company, contributed from HighRidge to Cactus Companies as part of the CC Reorganization and is now named FlexSteel Holdings, LLC (“FlexSteel”). The results of operations of FlexSteel have been reflected in our accompanying condensed consolidated financial statements from the closing date of the acquisition. The Company currently operates in two business segments: Pressure Control and Spoolable Technologies. The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. Accordingly, these consolidated financial statements do not include all information or notes required by generally accepted accounting principles for annual financial statements and should be read together with our Annual Report on Form 10-K for the year ended December 31, 2024. The consolidated financial statements include all adjustments, which are of a normal recurring nature, unless otherwise disclosed, necessary for a fair statement of the consolidated financial statements for the interim periods. The results of operations for any interim period are not necessarily indicative of the results to be expected for the full year. Investments in Unconsolidated Affiliates In November 2023, the Company entered into an agreement to invest in a Vietnam forging manufacturing facility for an ownership percentage of 40 %. In January 2025, the Company provided an initial capital contribution of $ 6.0 million. The investment in a company in which Cactus does not have a controlling financial interest, but over which it has significant influence, is accounted for using the equity method. Use of Estimates In preparing our consolidated financial statements in conformity with GAAP, we make numerous estimates and assumptions that affect the accounting for and recognition and disclosure of assets, liabilities, equity, revenues and expenses. We must make these estimates and assumptions because certain information that we use is dependent on future events, cannot be calculated with a high degree of precision from available data, or is not otherwise capable of being readily calculated based on accepted methodologies. In some cases, these estimates are particularly difficult to determine, and we must exercise significant judgment. Actual results could differ materially from the estimates and assumptions that we use in the preparation of our consolidated financial statements. 6 Recent Accounting Pronouncements Standards Not Yet Adopted In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-09, “Income Taxes (Topic 740) .” The amendments in this ASU require entities to disclose on an annual basis specific categories in the income tax rate reconciliation and provide additional disclosures for reconciling items that meet a specified quantitative threshold. Entities will also be required to disclose annually income taxes paid disaggregated by federal, state and foreign taxes and the amount of income taxes paid by individual jurisdictions that meet a five percent or greater threshold of total income taxes paid net of refunds received. The ASU also adds certain disclosures in order to be consistent with U.S. Securities and Exchange Commission rules and removes certain disclosures that no longer are considered cost beneficial or relevant. 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. 2. Accounts Receivable and Allowance for Credit Losses We extend credit to customers in the normal course of business. Our customers are predominantly oil and gas exploration and production companies located in the U.S. Our receivables are short-term in nature and typically due in 30 to 60 days. We do not accrue interest on delinquent receivables. Accounts receivable includes both amounts billed and currently due from customers, as well as unbilled amounts resulting from accrued revenue associated with products delivered and services performed for which billings have not yet been submitted to the customers. Total unbilled revenue included in accounts receivable as of March 31, 2025 and December 31, 2024 was $ 41.0 million and $ 29.8 million, respectively. We maintain an allowance for credit losses to provide for the amount of billed receivables we believe to be at risk of loss. In our determination of the allowance for credit losses, we pool receivables with similar risk characteristics based on customer size, credit ratings, payment history, bankruptcy status and other factors known to us, and then apply an expected credit loss percentage. The expected credit loss percentage is determined using historical loss data adjusted for current conditions and forecasts of future economic conditions. Accounts deemed uncollectible are applied against the allowance for credit losses. 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 Three Months Ended March 31, 2025 $ 3,779 $ 133 $ ( 114 ) $ ( 11 ) $ 3,787 Three Months Ended March 31, 2024 3,642 162 ( 1 ) — 3,803 3. Inventories Inventories are stated at the lower of cost or net realizable value. Cost is determined using standard cost, which approximates average cost. Costs include an application of related material, direct labor, duties, tariffs, freight and overhead costs. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Reserves are made for excess and obsolete items based on a range of factors, including age, usage and technological or market changes that may impact demand for those products. Inventories consist of the following: March 31, 2025 December 31, 2024 Raw materials $ 31,581 $ 31,031 Work-in-progress 14,532 10,979 Finished goods 184,151 184,786 $ 230,264 $ 226,796 7 4. Property and Equipment, net Property and equipment are stated at cost. We manufacture or construct most of our Pressure Control rental equipment assets. During the manufacture of these assets, they are reflected as construction in progress until complete. Property and equipment consists of the following: March 31, 2025 December 31, 2024 Land $ 16,442 $ 16,442 Buildings and improvements 134,228 133,187 Machinery and equipment 146,199 139,605 Reels and skids 19,538 18,737 Vehicles 43,240 41,175 Rental equipment 225,485 222,975 Furniture and fixtures 2,007 1,905 Computers and software 11,645 4,919 Gross property and equipment 598,784 578,945 Less: Accumulated depreciation ( 270,991 ) ( 262,198 ) Net property and equipment 327,793 316,747 Construction in progress 19,841 29,261 Total property and equipment, net $ 347,634 $ 346,008 5. Other Intangible Assets The following table presents the detail of acquired intangible assets: March 31, 2025 December 31, 2024 Gross Cost Accumulated Amortization Net Cost Gross Cost Accumulated Amortization Net Cost Customer relationships $ 100,300 $ ( 13,931 ) $ 86,369 $ 100,300 $ ( 12,259 ) $ 88,041 Developed technology 77,000 ( 16,042 ) 60,958 77,000 ( 14,117 ) 62,883 Tradename 16,000 ( 3,333 ) 12,667 16,000 ( 2,933 ) 13,067 Backlog 7,000 ( 7,000 ) — 7,000 ( 7,000 ) — Total $ 200,300 $ ( 40,306 ) $ 159,994 $ 200,300 $ ( 36,309 ) $ 163,991 All intangible assets are amortized over their estimated useful lives. The weighted average amortization period for identifiable intangible assets acquired as of March 31, 2025 is 10.5 years. Amortization expense recognized during the three months ended March 31, 2025 was $ 4.0 million and was recorded in selling, general and administrative expenses in the consolidated statements of income. Estimated future amortization expense is as follows: Remainder of 2025 $ 11,990 2026 15,987 2027 15,987 2028 15,987 2029 15,987 2030 15,987 Thereafter 68,069 Total $ 159,994 8 6. Debt We had no bank debt outstanding as of March 31, 2025 and December 31, 2024. We had $ 2.4 million in letters of credit outstanding, and we were in compliance with all covenants under the Amended ABL Credit Facility (as defined below) as of March 31, 2025. 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 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 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. Borrowings under the Amended ABL Credit Facility bear interest at Cactus Companies’ option at either (i) the Alternate Base Rate (as defined therein) (“ABR”), or (ii) the Adjusted Term SOFR Rate (as defined therein) (“Term Benchmark”), plus, in each case, an applicable margin. 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 is 2.50 % per annum for term loan ABR borrowings and 3.50 % per annum for term loan 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 unused portion of revolving commitment under the Amended ABL Credit Facility is subject to a commitment fee of 0.25 % per annum. The Amended ABL Credit Facility contains various covenants and restrictive provisions that limit Cactus Companies’ and each of its subsidiaries’ ability to, among other things, incur additional indebtedness and create liens, make investments or loans, merge or consolidate with other companies, sell assets, make certain restricted payments and distributions, and engage in transactions with affiliates. The obligations under the Amended ABL Credit Facility are guaranteed by certain subsidiaries of Cactus Companies and secured by a security interest in accounts receivable, inventory, equipment and certain other real and personal property assets of Cactus Companies and the guarantors. The Amended ABL Credit Facility requires Cactus Companies to maintain a minimum fixed charge coverage ratio of 1.00 based on the ratio of EBITDA (as defined therein) minus Unfinanced Capital Expenditures (as defined therein) to Fixed Charges (as defined therein) during certain periods, including when availability under the Amended ABL Credit Facility is under certain levels. If Cactus Companies fails to perform its obligations under the Amended ABL Credit Facility, (i) the revolving commitments under the Amended ABL Credit Facility could be terminated, (ii) any outstanding borrowings under the Amended ABL Credit Facility may be declared immediately due and payable, and (iii) the lenders may commence foreclosure or other actions against the collateral. The Amended ABL Credit Facility was amended in December 2023 to incorporate certain changes related to revised and new definitions associated with the satisfaction of payment conditions for restricted payments, investments, permitted acquisitions, periodic reporting and asset dispositions. The amendment did not change the ABR, applicable margin rates, commitment fees, the maturity date, borrowing availability or covenants under the Amended ABL Credit Facility other than timing of certain reporting requirements. 7. Revenue The majority of our revenues are derived from short-term contracts for fixed consideration, or in the case of rentals, for a fixed charge per day while the equipment is in use by the customer, plus repair costs. Product sales generally do not include right of return or other significant post-delivery obligations. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Revenues are recognized when we satisfy a performance obligation by transferring control of the promised goods or providing services to our customers at a point in time, in an amount specified in the contract with our customer which reflects the consideration to which we expect to be entitled in exchange for those goods or services. The majority of our contracts with customers contain a single performance obligation to 9 provide agreed upon products or services. For contracts with multiple performance obligations, we allocate revenue to each performance obligation based on its relative standalone selling price. We do not assess whether promised goods or services are performance obligations if they are immaterial in the context of the contract with the customer. We typically do not incur any material costs of obtaining contracts. We do not adjust the amount of consideration per the contract for the effects of a significant financing component when we expect, at contract inception, that the period between the transfer of a promised good or service to a customer and when the customer pays for that good or service will be one year or less, which is in substantially all cases. Payment terms and conditions vary, although terms generally include a requirement of payment within 30 to 60 days of invoicing. 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. We disaggregate revenue into three categories: product revenues, rental revenues and field service and other revenues. We have predominately domestic operations, with a small amount of sales in Australia, Canada, the Middle East and other international markets. The following table presents our revenues disaggregated by category: Three Months Ended March 31, 2025 2024 Product revenue $ 208,961 74 % $ 207,511 76 % Rental revenue 27,122 10 % 23,943 8 % Field service and other revenue 44,236 16 % 42,669 16 % Total revenues $ 280,319 100 % $ 274,123 100 % At March 31, 2025, we had a deferred revenue balance of $ 7.9 million compared to the December 31, 2024 balance of $ 8.1 million. Deferred revenue represents our obligation to transfer products to or perform services for a customer for which we have received cash or billed our customers in advance of delivering products or services. The revenue that has been deferred will be recognized upon product delivery, or as services are performed. As of March 31, 2025, we did not have any contracts with an original length of greater than a year from which revenue is expected to be recognized in the future related to performance obligations that are unsatisfied. 8. Tax Receivable Agreement ( “ TRA ” ) In connection with our initial public offering (“IPO”) in February 2018, we entered into the TRA which generally provides for payment by Cactus Inc. to certain direct and indirect owners of Cactus LLC (after the CC Reorganization, Cactus Companies) of 85 % of the net cash savings, if any, in U.S. federal, state and local income tax and franchise tax that Cactus Inc. actually realizes, or is deemed to realize in certain circumstances. Cactus Inc. retains the benefit of the remaining 15 % of these net cash savings. The TRA liability is calculated by determining the tax basis subject to the TRA (“tax basis”) and applying a blended tax rate to the basis differences and calculating the resulting iterative impact. The blended tax rate consists of the U.S. federal income tax rate and an assumed combined state and local income tax rate driven by the apportionment factors applicable to each state. Subsequent changes to the measurement of the TRA liability are recognized in the statements of income as a component of other expense, net. As of March 31, 2025, the total liability from the TRA was $ 278.7 million with $ 20.3 million reflected in current liabilities based on the expected timing of our next payments. The payments under the TRA will not be conditional on a holder of rights under the TRA having a continued ownership interest in either Cactus Companies or Cactus Inc. The term of the TRA commenced upon completion of our IPO and will continue until all tax benefits that are subject to the TRA have been utilized or expired, unless we exercise our right to terminate the TRA. If we elect to terminate the TRA early (or it is terminated early due to certain mergers, asset sales, other forms of business combinations or other changes of control), our obligations under the TRA would accelerate and we would be required to make an immediate payment equal to the present value of the anticipated future payments to be made by us under the TRA, and such payment is expected to be substantial. The calculation of anticipated future payments is based upon certain assumptions and deemed events set forth in the TRA, including the assumptions that (i) we have sufficient taxable income to fully utilize the tax benefits covered by the TRA and (ii) any CC Units (other than those held by Cactus Inc.) outstanding on the termination date are deemed to be redeemed on the termination date. Any early termination payment may be made significantly in advance of the actual realization, if any, of the future tax benefits to which the termination payment relates. 10 We may elect to defer payments due under the TRA if we do not have available cash to satisfy our payment obligations under the TRA. Any such deferred payments under the TRA generally will accrue interest from the due date for such payment until the payment date. In March of 2024, the TRA was amended to replace all references to one year LIBOR with references to the 12-month term SOFR published by CME Group Benchmark Administration Limited, plus 71.513 basis points. Additionally, all references to Cactus LLC were replaced with references to Cactus Companies in relation to the CC Reorganization. 9. Equity As of March 31, 2025, Cactus Inc. owned 85.7 % of Cactus Companies as compared to 85.6 % of Cactus Companies as of December 31, 2024. As of March 31, 2025, Cactus Inc. had outstanding 68.4 million shares of Class A common stock (representing 85.7 % of the total voting power) and 11.4 million shares of Class B common stock (representing 14.3 % of the total voting power). Redemptions of CC Units As part of the CC Reorganization in connection with the acquisition of FlexSteel, Cactus Companies acquired all of the outstanding units representing limited liability company interests of Cactus LLC (“CW Units”) in exchange for an equal number of CC Units issued to each of the previous owners of CW Units other than Cactus Inc. In connection with the CC Reorganization, Cactus Inc. and the owners of CC Units entered into the Amended and Restated Limited Liability Company Operating Agreement of Cactus Companies (the “Cactus Companies LLC Agreement”). Pursuant to the Cactus Companies LLC Agreement, holders of CC Units are entitled to redeem their CC Units, which results in additional Class A common stock outstanding. 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. There were no redemptions of CC Units during the three months ended March 31, 2025 and 2024. Dividends Aggregate cash dividends of $ 0.13 and $ 0.12 per share of Class A common stock were declared during the three months ended March 31, 2025 and 2024 totaling $ 9.0 million and $ 8.0 million, respectively. Cash dividends paid during the three months ended March 31, 2025 and 2024 totaled $ 9.2 million and $ 8.1 million, respectively. Dividends accrue on unvested equity-based awards on the date of record and are paid upon vesting. Dividends are not paid to our Class B common stockholders; however, a corresponding distribution up to the same amount per share as our Class A common stockholders is paid to the owners of CC Units other than Cactus Inc. for any dividends declared on our Class A common stock. See further discussion of the distributions below under “Member Distributions.” Share Repurchase Program On June 6, 2023, our board of directors authorized the Company to repurchase shares of its Class A common stock for an aggregate purchase price of up to $ 150 million. Under our share repurchase program, shares may be repurchased from time to time in open market transactions or block trades, in privately negotiated transactions or any other method permitted under U.S. securities laws, rules and regulations. The repurchase program does not obligate the Company to purchase any particular amount of shares, and the repurchase program may be suspended or discontinued at any time at the Company’s discretion. During the three months ended March 31, 2025, the Company did not repurchase shares of Class A common stock under the share repurchase program. As of March 31, 2025, $ 146.3 million remained authorized for future repurchases of Class A common stock under the program. Member Distributions Distributions made by Cactus Companies are generally required to be made pro rata among all its members. For the three months ended March 31, 2025, Cactus Companies distributed $ 30.4 million to Cactus Inc. to fund its dividend and estimated tax payments and made pro rata distributions to the other members totaling $ 5.1 million over the same period. During the three months ended March 31, 2024, Cactus Companies distributed $ 7.8 million to Cactus Inc. to fund its dividend and estimated tax payments and made pro rata distributions to the other members totaling $ 1.7 million. 11 Limitation of Members’ Liability Under the terms of the Cactus Companies LLC Agreement, the members of Cactus Companies are not obligated for debt, liabilities, contracts or other obligations of Cactus Companies. Profits and losses are allocated to members as defined in the Cactus Companies LLC Agreement. 10. Commitments and Contingencies Due to the nature of our business, we are, from time to time, involved in routine litigation or subject to disputes or claims related to our business activities, including workers’ compensation claims and employment related disputes. A range of total possible losses for all litigation matters cannot be reasonably estimated. Based on our consideration of all relevant facts and circumstances, we do not expect the ultimate outcome of currently pending lawsuits or claims against us, other than as discussed below, will have a material adverse effect on our financial position, results of operations or cash flows, however, there can be no assurance as to the ultimate outcome of these matters. With respect to the litigation described below, if there was an adverse outcome, there could be a material impact on our business, financial condition and results of operations expected for the year. Litigation is subject to inherent uncertainties and management's view may change in the future. Therefore, there can be no assurance as to the ultimate outcome of any dispute or claim. On August 20, 2021, Cactus filed a complaint against Cameron International Corporation (“Cameron”) in the U.S. District Court for the Southern District of Texas, Civil Action No.: 4:21-cv-02720-ASH, seeking a declaratory judgment that Cactus frac operations do not infringe certain Cameron patents and that such patents are invalid. In response to that action, Cameron has asserted infringement of certain of those patents by Cactus’ SafeLink® frac flow system and is seeking past royalties and other damages related to the alleged infringement. The parties have been unable to reach an amicable settlement, and the matter is currently set for a jury trial on June 9, 2025. At this time, we are not able to predict the outcome of these claims. 11. Fair Value Measurements Authoritative guidance on fair value measurements provides a framework for measuring fair value and establishes a fair value hierarchy that prioritizes the inputs used to measure fair value, giving the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 inputs), observable inputs other than quoted prices in active markets (Level 2 inputs) and the lowest priority to unobservable inputs (Level 3 inputs). The carrying value of cash and cash equivalents, receivables, accounts payable and accrued expenses approximates fair value based on the short-term nature of these accounts. 12 12. Segment Reporting We operate in two business segments that offer different products and services and correspond to the manner in which the Company's Chief Executive Officer (the chief operating decision maker or "CODM") reviews and evaluates operating performance to make decisions about resources to be allocated to each segment. Our reporting segments are: • Pressure Control – engaged in the design, manufacture, sale, installation, service and associated rental of wellhead and pressure control equipment utilized during the drilling, completion and production phases of oil and gas wells. • 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. Financial information by business segment for the three months ended March 31, 2025 and 2024 is summarized below. Three Months Ended March 31, 2025 Pressure Control Spoolable Technologies Total Revenues from external customers $ 187,741 $ 92,578 $ 280,319 Intersegment revenue 2,536 — 2,536 Total revenues 190,277 92,578 282,855 Reconciliation of revenue Elimination of intersegment revenue ( 2,536 ) Total consolidated revenues 280,319 Less: (1) Cost of revenue from external customers $ 116,246 $ 56,335 172,581 Intersegment cost of revenue 2,226 — 2,226 Total cost of revenues 118,472 56,335 174,807 Reconciliation of cost of revenue Elimination of intersegment cost of revenue ( 2,226 ) Total consolidated cost of revenue 172,581 Selling, general, administrative expenses and other (2) 17,472 12,367 Segment profit $ 54,333 $ 23,876 $ 78,209 Reconciliation of segment profit Elimination of intersegment profit ( 310 ) Total consolidated segment profit $ 77,899 Corporate expenses (3) ( 9,287 ) Total operating income $ 68,612 Interest income, net 2,325 Income before income taxes $ 70,937 (1) The significant expense categories and amounts align 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. 13 Three Months Ended March 31, 2024 Pressure Control Spoolable Technologies Total Revenues from external customers $ 175,028 $ 99,095 $ 274,123 Intersegment revenue — — — Total revenues 175,028 99,095 274,123 Reconciliation of revenue Elimination of intersegment revenue — Total consolidated revenues 274,123 Less: (1) Cost of revenue from external customers $ 111,807 $ 57,040 $ 168,847 Intersegment cost of revenue — — — Total cost of revenues 111,807 57,040 168,847 Reconciliation of cost of revenue Elimination of intersegment cost of revenue — Total consolidated cost of revenue 168,847 Selling, general, administrative expenses and other (2) 11,546 25,662 Segment profit $ 51,675 $ 16,393 $ 68,068 Reconciliation of segment profit Elimination of intersegment profit — Total consolidated segment profit $ 68,068 Corporate expenses (3) ( 5,518 ) Total operating income $ 62,550 Interest income, net 689 Income before income taxes $ 63,239 (1) The significant expense categories and amounts align 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. The expenses for Spoolable Technologies also include the change in fair value of the earn-out liability. (3) Comprised primarily of expenses not allocated to our operating segments. Assets are not reported to the CODM on a segment basis as it is not a meaningful measure used to run the business. 14 13. Earnings per Share Basic earnings per share of Class A common stock is calculated by dividing the net income attributable to Cactus Inc. during the period by the weighted average number of shares of Class A common stock outstanding during the same period. Diluted earnings per share of Class A common stock is calculated by dividing the net income attributable to Cactus Inc. during that period by the weighted average number of common shares outstanding, assuming all potentially dilutive shares were issued. We use the if-converted method to determine the potential dilutive effect of outstanding CC Units and corresponding shares of outstanding Class B common stock. We use the treasury stock method to determine the potential dilutive effect of unvested stock-based compensation awards assuming that the proceeds will be used to purchase shares of Class A common stock. For our unvested performance stock units, we first apply the criteria for contingently issuable shares before determining the potential dilutive effect using the treasury stock method. The following table summarizes the basic and diluted earnings per share calculations: Three Months Ended March 31, 2025 2024 Numerator: Net income attributable to Cactus Inc.—basic $ 44,223 $ 38,965 Net income attributable to non-controlling interest (1) — 8,241 Net income attributable to Cactus Inc.—diluted (1) $ 44,223 $ 47,206 Denominator: Weighted average Class A shares outstanding—basic 68,194 65,378 Effect of dilutive shares (2) 470 14,178 Weighted average Class A shares outstanding—diluted (2) 68,664 79,556 Earnings per Class A share—basic $ 0.65 $ 0.60 Earnings per Class A share—diluted (1)(2) $ 0.64 $ 0.59 (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 25 % for the three months ended March 31, 2025 and 26 % for the three months ended March 31, 2024. (2) Diluted earnings per share for the three months ended March 31, 2025 excludes 11.4 million weighted average shares of Class B common stock as the effect would be anti-dilutive. 15