Cactus

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2024
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from           to
Commission File Number: 001-38390
Cactus, Inc.
(Exact name of registrant as specified in its charter)
Delaware
35-2586106
(State or other jurisdiction
of incorporation or organization)
(I.R.S. Employer
Identification No.)
920 Memorial City Way, Suite 300
Houston, Texas
77024
(Address of principal executive offices)
(Zip code)
(713) 626-8800
(Registrant’s telephone number, including area code) 
Securities registered pursuant to Section 12(b) of the Act
Title of each class
 
Trading Symbol(s)
 
Name of each exchange on which registered
Class A Common Stock, par value $0.01
 
WHD
 
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None 
Indicate by check mark if the registrant is a well‑known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☑ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐    No ☑
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑   No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months
(or for such shorter period that the registrant was required to submit such files). Yes ☑   No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of
“large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b‑2 of the Exchange Act.
Large accelerated filer
☑
Accelerated filer ☐
Non-accelerated filer
☐
Smaller reporting company ☐
 
Emerging growth company ☐
If an emerging growth company indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards
provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section
404(b) of the Sarbanes-Oxley Act (15 U.S.C.7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☑
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to
previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers
during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act). Yes ☐   No ☑
As of June 28, 2024, the aggregate market value of the common stock of the registrant held by non-affiliates of the registrant was $3.5 billion.
As of February 25, 2025, the registrant had 68,151,542 shares of Class A common stock, $0.01 par value per share, and 11,432,545 shares of Class B common stock, $0.01 par value per share,
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of Registrant’s Definitive Proxy Statement for the 2025 Annual Meeting of Stockholders are incorporated by reference into Part III of this Annual Report on Form 10-K. Such Definitive
Proxy Statement will be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year to which this Report relates.

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TABLE OF CONTENTS
Cautionary Statement Regarding Forward-Looking Statements
ii
 
 
 
 
 
 
PART I
1
 
 
 
Item 1. 
Business
1
Item 1A. 
Risk Factors
10
Item 1B. 
Unresolved Staff Comments
20
Item 1C.
Cybersecurity
21
Item 2. 
Properties
22
Item 3. 
Legal Proceedings
22
Item 4. 
Mine Safety Disclosures
22
 
 
 
 
PART II
23
 
 
 
Item 5. 
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
23
 
Item 6. 
(Reserved)
24
Item 7. 
Management’s Discussion and Analysis of Financial Condition and Results of Operations
25
Item 7A. 
Quantitative and Qualitative Disclosures about Market Risk
34
Item 8. 
Financial Statements and Supplementary Data
35
Item 9. 
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
70
Item 9A. 
Controls and Procedures
70
Item 9B. 
Other Information
70
Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
70
 
 
 
 
PART III
70
 
 
 
Item 10. 
Directors, Executive Officers and Corporate Governance
70
Item 11. 
Executive Compensation
70
Item 12. 
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
70
Item 13. 
Certain Relationships and Related Transactions, and Director Independence
70
Item 14. 
Principal Accountant Fees and Services
71
 
 
 
 
PART IV
71
 
 
 
Item 15. 
Exhibits and Financial Statement Schedules
71
Item 16. 
Form 10‑K Summary
73
 
Signatures
74
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10‑K (this “Annual Report”) contains “forward-looking statements” within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”). When used in this Annual Report, the words “attempt,” “could,” “believe,” “anticipate,” “intend,”
“estimate,” “expect,” “project” and similar expressions are intended to identify forward‑looking statements, although not all forward‑looking statements
contain such identifying words. These forward‑looking statements are based on our current expectations and assumptions about future events and are based on
currently available information as to the outcome and timing of future events. When considering forward‑looking statements, you should keep in mind the risk
factors and other cautionary statements described under the heading “Item 1A. Risk Factors” included in this Annual Report and other cautionary statements
contained herein.
Important factors that could cause actual results to differ materially from those contained in the forward‑looking statements include, but are not
limited to:
•
demand for our products and services, which is affected by, among other things, the price of crude oil and natural gas;
•
the number of active drilling and workover rigs, pad sizes, drilling and completion efficiencies, lateral lengths, well productivity, well counts and
availability of takeaway and storage capacity;
•
changes in the number of drilled but uncompleted wells (“DUCs”);
•
competition and capacity within the oilfield services industry;
•
disparities in activity levels between private operators and large publicly-traded exploration and production (“E&P”) companies;
•
the financial health of our customers and our credit risk of customer non-payment;
•
availability and cost of raw materials, components and imported items;
•
changes in inland and ocean shipping costs as well as transit times, particularly due to Red Sea-related and U.S. union port labor related
disruptions, and increased transit times through and availability of the Panama Canal due to weather patterns and political tensions;
•
the impact of inflation, continued higher interest rates and the possibility of a recession;
•
availability and cost of skilled and qualified workers and our ability to recruit and retain employees and managers;
•
potential liabilities such as warranty and product liability claims arising out of the installation, use or misuse of our products;
•
our financial strategy, operating cash flows, liquidity and capital required for our business, including our ability to obtain and repay debt-
financing and to pay dividends;
•
our ability to retain, expand and create new relationships with major customers or suppliers;
•
consolidation among our customers;
•
increased competition resulting from consolidation of our competitors and the entry of new competitors;
•
laws and regulations, including environmental regulations, that may increase our costs or our customers’ costs, limit the demand for our products
and services or restrict our operations;
•
disruptions in political, regulatory, economic and social conditions domestically or internationally, including tensions and military activity
throughout the Middle East and elsewhere;
•
the severity and duration of global pandemics or other health crises, such as the outbreak of COVID-19, and the extent of their impact on our
business, including employee absenteeism and productivity;
•
the impact of actions taken by the Organization of Petroleum Exporting Countries and other oil and gas producing countries (“OPEC+”) affecting
the supply of oil and gas;
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•
the impact of LNG regasification and storage capacity on associated natural gas demand;
•
the impact of new, expanded or increased tariffs that could be imposed and related uncertainties;
•
the significance of future liabilities under the Tax Receivable Agreement (the “TRA”) we entered into in connection with our initial public
offering;
•
a failure of our information technology infrastructure or any significant breach of security;
•
potential uninsured claims and litigation against us;
•
currency exchange rate fluctuations associated with our international operations; and
•
our ability to expand internationally.
We caution you that these forward‑looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many
of which are beyond our control, incident to the operation of our business. These risks include but are not limited to the risks described in this Annual Report
under “Item 1A. Risk Factors.” Should one or more of the risks or uncertainties described in this Annual Report occur, or should underlying assumptions prove
incorrect, our actual results could differ materially from those expressed in any forward‑looking statements.
All forward‑looking statements, expressed or implied, included in this Annual Report are expressly qualified in their entirety by this cautionary
statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward‑looking statements that we or
persons acting on our behalf may issue. Except as otherwise required by applicable law, we disclaim any duty to update any forward‑looking statements, all of
which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this Annual Report.
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PART I
Item 1.     Business
General
Cactus, Inc. (“Cactus Inc.”) was incorporated on February 17, 2017 as a Delaware corporation for the purpose of completing an initial public offering
of equity, which was completed on February 12, 2018 (our “IPO”). We began operating in August 2011 following the formation of Cactus Wellhead, LLC
(“Cactus LLC”) in part by Scott Bender and Joel Bender, who have owned or operated wellhead manufacturing businesses since the late 1970s.
Cactus Inc. and its consolidated subsidiaries (the “Company,” “we,” “us,” “our” and “Cactus”) are primarily engaged in the design, manufacture, sale
and rental of highly engineered pressure control and spoolable pipe technologies. Our products are sold and rented principally for onshore unconventional oil
and gas wells and are utilized during the drilling, completion and production phases of our customers’ wells. We also provide field services for all of our
products and rental items to assist with the installation, maintenance and handling of the equipment. Additionally, we offer repair and refurbishment services as
appropriate. We operate through service centers and pipe yards located in the United States, Canada and Australia. We also provide rental and service
operations in the Middle East and other select international markets. Our primary manufacturing and production facilities are in Bossier City, Louisiana,
Baytown, Texas and Suzhou, China. Our corporate headquarters are located in Houston, Texas.
FlexSteel Acquisition
On February 28, 2023, we completed the acquisition of the FlexSteel business (the “Merger”) through a merger with HighRidge Resources, Inc. and
its subsidiaries (“HighRidge”). The purpose of the Merger was to effect the acquisition of the operations of FlexSteel Holdings, Inc. and its subsidiaries. We
completed the acquisition on a cash-free, debt-free basis and paid total cash consideration of $658.6 million which included the initial purchase consideration,
final adjustments for closing working capital, cash on hand and indebtedness adjustments, and earn-out payments made in 2024 as set forth in the related
merger agreement (the “Merger Agreement”).
CC Reorganization and Current Ownership Structure
On February 27, 2023, in order to facilitate the Merger with HighRidge, an internal reorganization (the “CC Reorganization”) was completed in which
Cactus Companies, LLC (“Cactus Companies”), a wholly-owned subsidiary of Cactus Inc., acquired all of the outstanding units representing limited liability
ownership interests in Cactus LLC (“CW Units”), the operating subsidiary of Cactus Inc., in exchange for an equal number of units representing limited
liability company interests in Cactus Companies (“CC Units”). Subsequent to the Merger, FlexSteel Holdings, Inc. was converted into a limited liability
company and is now named FlexSteel Holdings, LLC (“FlexSteel”). Cactus Inc. contributed HighRidge to Cactus Acquisitions LLC (“Cactus Acquisitions”), a
newly created entity, whereby HighRidge was converted into a limited liability company. Lastly, Cactus Acquisitions contributed FlexSteel to Cactus
Companies.
Cactus Inc. is a holding company whose only material asset is a direct and indirect equity interest consisting of CC Units following the completion of
the CC Reorganization (which were CW Units from the IPO until the CC Reorganization). Cactus Inc. was the sole managing member of Cactus LLC upon
completion of our IPO until the CC Reorganization and became the sole managing member of Cactus Companies upon completion of the CC Reorganization.
In connection with the CC Reorganization, Cactus Inc., Cactus Acquisitions and the remaining owners of CC Units entered into the Amended and Restated
Limited Liability Company Operating Agreement of Cactus Companies (the “Cactus Companies LLC Agreement”), which contains substantially the same
terms and conditions as the Second Amended and Restated Limited Liability Company Operating Agreement of Cactus LLC (the “Cactus Wellhead LLC
Agreement”), which was the limited liability company operating agreement of Cactus LLC prior to the CC Reorganization. Cactus Inc. was responsible for all
operational, management and administrative decisions relating to Cactus LLC’s business for the period from completion of our IPO until the CC
Reorganization and for the Cactus Companies’ business for periods after the CC Reorganization.
From the completion of our IPO until the CC Reorganization, pursuant to the Cactus Wellhead LLC Agreement, owners of CW Units were entitled to
redeem their CW Units for shares of Cactus Inc.’s Class A common stock, par value $0.01 per share (“Class A common stock”) on a one-for-one basis, which
would have resulted in a corresponding increase in Cactus Inc.’s membership interest in Cactus LLC and an increase in the number of shares of Class A
common stock outstanding. After the CC Reorganization, we refer to the owners of CC Units, other than Cactus Inc. (along with their permitted transferees), as
“CC Unit Holders.” From the completion of our IPO until the CC Reorganization, CW Unit Holders owned one share of our
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Class B common stock, par value $0.01 per share (“Class B common stock”) for each CW Unit such CW Unit Holder owned and, upon the completion of the
CC Reorganization, such CW Unit Holders ceased to be holders of CW Units and, instead, became holders of a number of CC Units equal to the number of
CW Units such CW Unit Holders held immediately prior to the completion of the CC Reorganization. Following the completion of the CC Reorganization, CC
Unit Holders own one share of our Class B common stock for each CC Unit such CC Unit Holder owns and Cactus Companies is the sole member of Cactus
LLC. Pursuant to the Cactus Companies LLC Agreement, owners of CC Units are entitled to redeem their CC Units for shares of Cactus Inc.’s Class A
common stock on a one-for-one basis, which would result in a corresponding increase in Cactus Inc.’s membership interest in Cactus Companies and an
increase in the number of shares of Class A common stock outstanding.
Since our IPO, 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. Holders of Class A common stock and Class B common stock vote together as a
single class on all matters presented to our stockholders for their vote or approval, except as otherwise required by applicable law or our amended and restated
certificate of incorporation. Cactus WH Enterprises, LLC (“Cactus WH Enterprises”) is the largest CC Unit Holder. Cactus WH Enterprises is a Delaware
limited liability company owned by Scott Bender, Joel Bender, Steven Bender and certain other employees. As of December 31, 2024, Cactus Inc. owned
85.6% and CC Unit Holders owned 14.4% of Cactus Companies, which was based on 68.2 million shares of Class A common stock issued and outstanding and
11.4 million shares of Class B common stock issued and outstanding. Cactus WH Enterprises held approximately 12.8% of our voting power as of December
31, 2024.
The following diagram indicates our simplified ownership structure as of December 31, 2024:
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Our Products and Services
We have two operating segments consisting of Pressure Control and Spoolable Technologies. See discussion below of each operating segment.
Pressure Control
The Pressure Control segment designs, manufactures, sells and rents a range of wellhead and pressure control equipment under the Cactus Wellhead
brand. Products are sold and rented principally for onshore unconventional oil and gas wells and are utilized during the drilling, completion and production
phases of our customers’ wells. In addition, we provide field services for all of our products and rental items to assist with the installation, maintenance and
handling of the equipment.
We operate through service centers in the United States, which are strategically located in the key oil and gas producing regions, and in Eastern
Australia. These service centers support our field services and provide equipment assembly and repair services. We also provide rental and service operations in
the Middle East. Pressure Control manufacturing and production facilities are located in Bossier City, Louisiana and Suzhou, China.
Demand for our product sales in the Pressure Control segment is driven primarily by the number of new wells drilled, as each new well requires a
wellhead and, after the completion phase, a production tree. Demand for our rental items is driven primarily by the number of well completions as we rent frac
trees to oil and gas operators to assist in hydraulic fracturing. To a lesser extent, rental demand is also driven by drilling activity as we rent tools used in the
installation of wellheads. Field service and other revenues are closely correlated with revenues from product sales and rentals, as items sold or rented almost
always have an associated service component.
Spoolable Technologies
The Spoolable Technologies segment designs, manufactures, and sells spoolable pipe and associated end fittings under the FlexSteel brand. Our
customers use these products primarily as production, gathering and takeaway pipelines to transport oil, gas or other liquids. In addition, we provide field
services and rental items to assist our customers with the installation of these products. We support our field service operations through service centers and pipe
yards located in oil and gas regions throughout the United States and Western Canada. We also provide equipment and services in select international markets.
The Spoolable Technologies manufacturing facility is located in Baytown, Texas.
Demand for our product sales in the Spoolable Technologies segment is driven primarily by the number of wells being placed into production after the
completions phase as customers use our spoolable pipe and associated fittings to bring wells more rapidly onto production. Rental and field service and other
revenues are closely correlated with revenues from product sales, as items sold usually have an associated rental and service component.
Our Revenues
Our revenues are derived from three sources: products, rentals, and field service and other. Product revenues are derived from the sale of wellhead
systems, production trees and spoolable pipe and fittings. Rental revenues are primarily derived from the rental of equipment used during the completion
process, the repair of such equipment and the rental of equipment or tools used to install wellhead equipment or spoolable pipe. Field service and other
revenues are primarily earned when we provide installation and other field services for both product sales and equipment rental.
For the year ended December 31, 2024, we derived 75% of our total revenues from the sale of our products, 9% from rentals and 16% from field
service and other. In 2023, we derived 74% of our total revenues from the sale of our products, 10% from rentals and 16% from field service and other. In
2022, we derived 66% of our total revenues from the sale of our products, 14% from rentals and 20% from field service and other. We have predominantly
domestic operations and sales, but also generate revenues in Australia, Canada and other select international markets.
Most of our sales are made on a call out basis pursuant to customer agreements, wherein our clients provide delivery instructions for goods and/or
services as their operations require. Such goods and services are most often priced in accordance with a preapproved price list. The actual pricing of our
products and services is impacted by a number of factors including competitive pricing pressure, the value perceived by our customers, the level of utilized
capacity in the oil service sector, cost of manufacturing the product, cost of providing the service, and general market conditions. See “Item 7. Management’s
Discussion and Analysis of Financial Condition and Results of Operations - Recent Developments and Trends” for a discussion of trends in market demand.
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Costs of Conducting Our Business
The principal elements of cost of sales for our products are the direct and indirect costs to manufacture and supply our products, including labor,
materials, machine time, tariffs and duties, freight and lease expenses related to our facilities. The principal elements of cost of sales for rentals are the direct
and indirect costs of manufacturing and supplying rental equipment, including depreciation, repairs specifically performed on such rental equipment and
freight. The principal elements of cost of sales for field service and other are labor, equipment depreciation and repair, equipment and vehicle lease expenses,
fuel and supplies. Selling, general and administrative expenses (“SG&A”) are comprised of costs such as sales and marketing, engineering and product
development, general corporate overhead, business development, compensation, employment benefits, insurance, information technology, safety and
environmental, legal and professional.
Suppliers and Raw Materials
Forgings, tube and bar stock represent the principal raw materials used in the manufacture of our Pressure Control products and rental equipment. In
addition, we require accessory items (such as elastomers, ring gaskets, studs and nuts) and machined components. The principal raw materials used by our
Spoolable Technologies segment include tube, bar stock, steel strip and high-density polyethylene. We purchase a majority of our raw materials from
vendors primarily located in the United States, China, India, Australia and Vietnam. We do not believe that we are overly dependent on any individual vendor
to supply our required materials or services. The materials and services essential to our business are normally readily available and, where we use one or a few
vendors as a source of any particular materials or services, we believe that we can, within a reasonable period of time, make satisfactory alternative
arrangements in the event of an interruption of supply from any vendor. We believe our materials and services vendors have the capacity to meet additional
demand should we require it, although at potentially higher costs and with extended deliveries.
Manufacturing
Our manufacturing and production facilities within our Pressure Control operating segment are located in Bossier City, Louisiana and Suzhou, China.
Although both facilities can produce our full range of products, our Bossier City facility has advanced production capabilities and is designed to support time-
sensitive and rapid turnaround of made-to-order equipment, while our facility in China is optimized for longer lead time orders and outsources its machining
requirements. The facilities are licensed to the latest American Petroleum Institute (“API”) 6A specification for wellheads and valves and API Q1 and
ISO 9001:2015 quality management systems. The Bossier City facility also has the ability to perform frac rental equipment remanufacturing. Our production
facility in China is configured to efficiently produce our range of pressure control products and components for less time-sensitive, higher-volume orders. The
Suzhou facility assembles and tests finished and semi-finished machined components before shipment to the United States, Australia and other international
locations. Our Suzhou subsidiary is wholly-owned, and its facility is staffed by Cactus employees, which we believe is a key factor in sustaining high quality
and dependable deliveries.
Our manufacturing facility within our Spoolable Technologies operating segment is located in Baytown, Texas. Using proprietary-designed
manufacturing equipment, we produce pipe products in accordance with industry standards. Additionally, our Baytown facility utilizes advanced Computer
Numeric Control machines dedicated to the precision manufacturing of the FlexSteel connectors. Our Baytown facility is licensed to the latest API 15S
specification for spoolable reinforced plastic line pipe, API 17J specification for unbonded flexible pipe and adheres to certified API Q1 and ISO 9001:2015
quality management systems.
Trademarks and Patents
Trademarks are important to the marketing of our products. The Company has numerous trademarks registered with the U.S. Patent and Trademark
Office as well as foreign trademark offices and has also applied for registration of several other trademarks, which are still pending. Once registered, our
trademarks can be renewed every 10 years as long as we are using them in commerce. We also seek to protect our technology through the use of patents, which
affords us 20 years of protection of our proprietary inventions and technology. We have been awarded U.S. patents and patents in foreign jurisdictions while
still having additional patent applications pending. We also rely on trade secret protection for our confidential and proprietary information. To protect our
information, we customarily enter into confidentiality agreements with our employees and suppliers. There can be no assurance, however, that others will not
independently obtain similar information or otherwise gain access to our trade secrets.
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Cyclicality
We are substantially dependent on conditions in the oil and gas industry, including the level of exploration, development and production activity of,
and the corresponding capital spending by oil and natural gas exploration and production companies. The level of exploration, development and production
activity is directly affected by trends in oil and natural gas prices, which have historically been volatile, and by the availability of capital and the associated
capital spending discipline exercised by customers. Declines, as well as anticipated declines, in oil and gas prices could negatively affect the level of these
activities and capital spending, which could adversely affect demand for our products and services and, in certain instances, result in the cancellation,
modification or rescheduling of existing and expected orders and the ability of our customers to pay us for our products and services. These factors could have
an adverse effect on our revenue and profitability.
Seasonality
Our business is not significantly impacted by seasonality, although our fourth quarter has historically been impacted by holidays and our customers’
budget cycles. These factors can lead to lower activity in our three revenue categories as well as lower margins, particularly in field services due to reduced
labor utilization.
Customers
We serve over 300 customers representing private operators, publicly-traded independents, majors and other companies with operations in the key
U.S. oil and gas producing basins as well as in Australia, Canada, the Middle East and other international locations. For the years ended December 31, 2024
and 2023, one customer represented 15% and 10%, respectively, of total Company revenues, with both operating segments reporting revenues with this
customer. No customer represented more than 10% of total Company revenues for the year ended December 31, 2022.
Competition
The markets in which we operate are highly competitive. In the Pressure Control segment, we believe we are one of the largest suppliers of wellheads
used in the United States. We compete with Vault, divisions of SLB and TechnipFMC, and a large number of other companies. We believe the rental market for
frac stacks and related flow control equipment is more fragmented than the wellhead product market, and we do not believe any individual company represents
more than 20% of the U.S. market. In the Spoolable Technologies segment, we compete with companies who offer spoolable products, including Baker
Hughes, Mattr, NOV and select other companies, and companies who offer traditional steel line pipe, including Tenaris, Vallourec, and a large number of other
line pipe manufacturers and distributors.
We believe the competitive factors in the markets we serve include technical features, equipment availability, work force competency, efficiency,
safety record, reputation, continuity of management, and price. Additionally, projects are often awarded on a bid basis, which tends to create a highly
competitive environment. While we seek to be competitive in our pricing, we believe many of our customers elect to work with us based on product
performance, features, safety and availability, as well as the quality of our people, equipment and services. We seek to differentiate ourselves from our
competitors by delivering the highest‑quality services and equipment possible, coupled with superior execution and operating efficiency in a safe working
environment.
Environmental, Health and Safety Regulation
We are subject to stringent governmental laws and regulations, both in the United States and other countries, pertaining to protection of the
environment and occupational safety and health. Compliance with environmental legal requirements in the United States at the federal, state or local levels may
require acquiring permits to conduct regulated activities, incurring capital expenditures to limit or prevent emissions, discharges and any unauthorized releases,
and complying with stringent practices to handle, recycle and dispose of certain wastes. These laws and regulations include, among others:
•
the Federal Water Pollution Control Act (the “Clean Water Act”);
•
the Clean Air Act;
•
the Comprehensive Environmental Response, Compensation and Liability Act;
•
the Resource Conservation and Recovery Act;
•
the Occupational Safety and Health Act; and
•
national and local environmental protection laws in Australia, China, Canada and the Middle East.
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New, modified or stricter enforcement of environmental laws and regulations could be adopted or implemented that may significantly increase our
compliance costs, pollution mitigation costs, or the cost of any remediation of environmental contamination that may become necessary, and these costs could
be material. Our customers are also subject to most, if not all, of the same laws and regulations relating to environmental protection and occupational safety and
health in the United States and in foreign countries where we operate. Consequently, to the extent these environmental compliance costs, pollution mitigation
costs or remediation costs are incurred by our customers, those customers could elect to delay, reduce or cancel drilling, exploration or production programs,
which could reduce demand for our products and services and, as a result, have a material adverse effect on our business, financial condition, results of
operations, or cash flows. Consistent with our quality assurance and Health, Safety & Environment (“HSE”) principles, we have established proactive
environmental and worker safety policies in the United States and foreign countries for the management, handling, recycling or disposal of chemicals and gases
and other materials and wastes resulting from our operations. Substantial fines and penalties can be imposed and orders or injunctions limiting or prohibiting
certain operations may be issued in connection with any failure to comply with laws and regulations relating to worker health and safety.
Licenses and Certifications. Our manufacturing facility in Bossier City, Louisiana, our production facility in Suzhou, China and our service center in
Brendale, Australia are currently licensed by the API to monogram manufactured products in accordance with API 6A, 21st Edition product specification for
both wellheads and valves while the quality management system is certified to API Q1, 10th Edition and ISO 9001:2015. Cactus has also developed an API Q2
program specific to our Pressure Control service business. We have and are implementing the API Q2 Quality Management System at select service locations
to reduce well site non-productive time, improve service tool reliability and enhance customer satisfaction and retention.
Our manufacturing facility in Baytown, Texas also holds API licenses, allowing us to monogram our FlexSteel products in strict accordance with
industry-leading standards. Specifically, we adhere to the API 15S 3rd Edition product specification for spoolable reinforced plastic line pipe and the API 17J
5th Edition product specification for unbonded flexible pipe. The FlexSteel quality management system is certified to API Q1, 9th Edition, and ISO 9001:2015.
We also hold product conformity certifications for our Spoolable Technologies segment from ICONTEC, covering Latin and South American standards for API
15S and 17J, and ABNT, endorsing Brazilian production conformity to API 15S and 17J.
The API licenses and certifications expire every three years and are renewed upon successful completion of annual audits. Our current API licenses
and certifications for our Pressure Control segment are published on our website under the “Quality Assurance & Control” section at www.CactusWHD.com.
The current licenses and certifications for our Spoolable Technologies segment can be found under the “HSEQ” section of our FlexSteel website at
www.flexsteelpipe.com. API’s standards are subject to revision, however, and there is no guarantee that future amendments or substantive changes to the
standards would not require us to modify our operations or manufacturing processes to meet the new standards. Doing so may materially affect our operational
costs. We also cannot guarantee that changes to the standards would not lead to the rescission of our licenses should we be unable to make the changes
necessary to meet the new standards. Loss of our API licenses could materially affect demand for these products.
Hydraulic Fracturing. Most of our customers utilize hydraulic fracturing in their operations. Environmental concerns have been raised regarding the
potential impact of hydraulic fracturing and the resulting wastewater disposal on underground water supplies and seismic activity. These concerns have led to
several regulatory and governmental initiatives in the United States to restrict the hydraulic fracturing process, which could have an adverse impact on our
customers’ completions or production activities. Although we do not conduct hydraulic fracturing, certain of our products are used in hydraulic fracturing.
Increased regulation and attention given to the hydraulic fracturing process could lead to greater opposition to oil and gas production activities using hydraulic
fracturing techniques. Since 2021, the Texas Railroad Commission, which regulates the state’s oil and gas industry, has suspended the use of deep wastewater
disposal wells in certain areas of oil-producing counties in West Texas. The suspensions are intended to mitigate earthquakes thought to be caused by the
injection of waste fluids, including saltwater, that are a byproduct of hydraulic fracturing into disposal wells. The bans require oil and gas production
companies to find other options to handle the wastewater, which may include piping or trucking it longer distances to other locations not under the bans. In
addition, the Texas Railroad Commission has overseen the development of well-operator-led response plans to reduce injection volumes in other portions of
West Texas in order to reduce seismicity in these areas. The adoption of new laws or regulations at the federal, state, local or foreign level imposing reporting
obligations on, or otherwise limiting, delaying or banning, the hydraulic fracturing process or other processes on which hydraulic fracturing and subsequent
hydrocarbon production relies, such as water disposal, could make it more difficult to complete oil and natural gas wells. Further, it could increase our
customers’ costs of compliance and doing business, and otherwise adversely affect the hydraulic fracturing services for which they contract, which could
negatively impact demand for our products.
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Climate Change. Local, state, national and foreign governments and agencies continue to evaluate, and in some instances adopt, climate-related
legislation and other regulatory initiatives that would restrict emissions of greenhouse gases. Changes in environmental requirements related to greenhouse
gases, climate change and alternative energy sources may negatively impact demand for our services. Oil and natural gas exploration and production may
decline as a result of environmental requirements, including land use policies responsive to environmental concerns. For example, in January 2025, President
Biden issued a Memorandum of Withdrawal that could have had the effect of preventing future leasing by the federal government (and therefore oil and gas
exploration) of the lands underlying federal waters offshore the U.S. East Coast, the eastern Gulf of Mexico, the Pacific Ocean off the coasts of Washington,
Oregon, and California, and additional portions of the Northern Bering Sea in Alaska. The Trump Administration, however, overturned President Biden’s
Memorandum of Withdrawal and issued a series of executive orders that signal a shift in the United States’ energy and climate change policies. Future
administrations may, however, pursue executive orders similar to, or more restrictive than, those put in place by President Biden. The topic of oil and gas
leasing on public land remains politically fraught.
Because our business depends on the level of activity in the oil and natural gas industry, existing or future laws, regulations, treaties or international
agreements related to greenhouse gases and climate change, may reduce demand for oil and natural gas and could have a negative impact on our business.
Likewise, such restrictions may result in additional compliance obligations that could have a material adverse effect on our business, consolidated results of
operations and consolidated financial position. In addition, our business could be negatively impacted by initiatives to address greenhouse gases and climate
change and incentives to conserve energy or use alternative energy sources. For example, the Inflation Reduction Act of 2022 (the “Inflation Reduction Act”)
appropriates significant federal funding for the development of renewable energy, clean hydrogen, clean fuels, electric vehicles and supporting infrastructure
and carbon capture and sequestration, amongst other provisions. In addition, the Inflation Reduction Act imposes the first ever federal fee on the emission of
greenhouse gases (“GHG”) through a methane emissions charge. The Inflation Reduction Act amends the federal Clean Air Act to impose a fee on the emission
of methane from sources required to report their GHG emissions to the EPA, including those sources in the onshore petroleum and natural gas production
categories. The final rule implementing the waste emissions charge was published in November 2024. These developments could further accelerate the
transition of the U.S. economy away from the use of fossil fuels towards lower- or zero-carbon emissions alternatives, which could reduce demand for our
products and services and negatively impact our business. In January 2025, however, the United States submitted formal notification to the United Nations that
it intends to withdraw from the Paris Agreement and the President Trump signed executive orders that, among other things, direct federal executive
departments and agencies to initiate a regulatory freeze for certain rules that have not taken effect, pending review by the newly appointed agency head, call
upon the EPA to submit a report on the continuing applicability of its endangerment finding for GHGs under the Clean Air Act and issue guidance on the
“social cost of carbon” to consider whether such metric should be eliminated, and pause the disbursement of funds appropriated through the Inflation
Reduction Act and the Infrastructure Investments and Jobs Act.
Insurance and Risk Management
We rely on customer indemnifications and third‑party insurance as part of our risk mitigation strategy. However, our customers may be unable to
satisfy indemnification claims against them. In addition, we indemnify our customers against certain claims and liabilities resulting or arising from our
provision of goods or services to them. Our insurance may not be sufficient to cover any particular loss or may not cover all losses. We carry a variety of
insurance coverages for our operations, and we are partially self‑insured for certain claims, in amounts that we believe to be customary and reasonable.
Historically, insurance rates have been subject to various market fluctuations that may result in less coverage, increased premium costs, or higher deductibles or
self‑insured retentions.
Our insurance includes coverage for commercial general liability, damage to our real and personal property, damage to our mobile equipment,
pollution liability, workers’ compensation and employer’s liability, auto liability, foreign package policy, commercial crime, fiduciary liability employment
practices, cargo, excess liability, directors and officers’ and cyber insurance. We also maintain a partially self-insured medical plan that utilizes specific and
aggregate stop loss limits. Our insurance includes various coverage limitations, policy limits and deductibles or self‑insured retentions, which must be met prior
to, or in conjunction with, any recovery.
Human Capital Management
As of December 31, 2024, we employed approximately 1,600 people worldwide, of which over 100 were employed outside of the United States,
mainly in Australia and China. We are not a party to any collective bargaining agreements and have not experienced any strikes or work stoppages. We consider
our relations with our workforce to be strong.
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Our success is intrinsically tied to our ability to attract, retain, and inspire a diverse and talented team across all levels of our organization. This
includes our global workforce, executive leadership, and other key personnel. Operating in a highly competitive industry, we have developed and implemented
targeted strategies, objectives, and metrics for recruitment and retention. These initiatives are integral to our overall business management approach,
contributing to our ability to maintain high retention rates among key managers and associates while fostering a dynamic and motivated workforce.
Recruiting. Our talent strategy focuses on attracting, recognizing, developing, and retaining top-performing individuals. To identify and secure
exceptional talent, we actively encourage and reward employee referrals, leverage multiple social media platforms, and participate in regional job fairs.
Additionally, we build strategic partnerships with educational institutions across the United States and collaborate with local workforce commissions. These
efforts ensure we maintain a diverse and highly skilled candidate pool in every region where we operate.
Training and Development. We are deeply committed to the training and development of our employees, with a special emphasis on those in field,
plant, and branch operations. Our comprehensive internal training programs are designed to enhance and monitor technical and safety skills while fostering
growth in key areas such as safety practices, corporate and personal responsibility, product knowledge, behavioral development, and ethical conduct.
To support career advancement, our development plans equip individuals with the technical expertise needed to perform their roles with the highest levels
of safety and precision. For employees requiring specialized skills, knowledge, or certifications, we provide access to external training opportunities tailored to
their professional growth.
We believe that our unwavering focus on training and development not only fosters a safer work environment but also creates pathways for internal
promotions, boosts employee morale, and strengthens retention across the organization.
Workplace Culture. We believe our workplace culture is fundamental to our success, driving innovation, creativity, and sustainable growth. Our
commitment is to nurture a workplace culture that values every individual, and empowers everyone to contribute their unique perspectives.
We are dedicated to fostering an environment where discrimination has no place. This commitment is reflected in every aspect of our business—from
recruitment and promotion practices to employee development initiatives and supplier partnerships. Our workforce comprises a diverse associate group, with
approximately 10% women and approximately 46% of our workforce representing a minority population. By cultivating a diverse environment, we strengthen
our organization, enrich our workplace culture, and ensure long-term success.
Compensation and Benefits. We provide comprehensive compensation and benefits programs thoughtfully designed to address the diverse needs of
our employees and their families. Our approach goes beyond offering competitive salaries and wages, incorporating a wide range of benefits to promote
financial security, health, wellness, and professional growth.
Our financial benefits include annual bonuses and retirement plans, such as a 401(k), to help employees build long-term financial stability. We also utilize
targeted equity-based grants with vesting conditions to support the retention of key personnel, aligning their success with the Company's growth.
To promote health and wellness, we offer competitive healthcare and insurance options, including health savings accounts partially funded by the
Company and standard flexible spending accounts. Employees also have access to company-sponsored long- and short-term disability coverage, accident and
critical illness insurance, and resources to support overall well-being.
Recognizing the importance of work-life balance, we provide paid time off, family leave, and paid maternity and paternity leave. Our commitment to
supporting families extends further with access to family care resources and personal legal services insurance. Additionally, employee assistance programs are
available to help navigate personal and professional challenges.
We also invest in our employees’ professional development by offering tuition reimbursement in certain circumstances, enabling continued growth and
skill development.
Through this holistic approach to compensation and benefits, we aim to create a supportive and empowering environment that fosters employee
satisfaction, enhances retention, and ensures the long-term success of both our employees and the organization.
Health and Safety. Our health and safety programs are designed around global standards with appropriate variations addressing the multiple
jurisdictions and regulations, specific hazards and unique working environments of our manufacturing
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and production facilities, service centers and headquarters. We require each location to conduct regular safety evaluations to verify that expectations for safety
program procedures and training are being met. We also engage in third-party conformity assessments of our HSE processes to determine adherence to our
HSE management system and to global health and safety standards. We monitor our Occupational Safety and Health Administration Total Recordable Incident
Rate (“TRIR”) to assess our operation’s health and safety performance. TRIR is defined as the number of incidents per 100 full-time employees that have
resulted in a recordable injury or illness in the pertinent period. During fiscal year 2024, our Pressure Control segment reported a TRIR of 0.81, which
compares to 1.19 in 2023, with no work-related fatalities in either year. Our Spoolable Technologies segment reported a TRIR of 1.26 for fiscal year 2024,
compared to 0.98 in 2023, with no work-related fatalities. Based on the most recent statistics available from the International Association of Drilling
Contractors, our TRIR statistics are in line with the industry average.
We are committed to the health, safety and wellness of our employees. We provide our employees and their families access to various flexible and
convenient health and wellness programs. These programs include benefits that offer protection and security to have peace of mind concerning events that may
require time away from work or impact their financial well-being. These tools also support their physical and mental health by providing resources to improve
or maintain their health status.
Executive Officers and Directors
The following tables set forth certain information regarding our Executive Officers and Directors as of February 25, 2025:
Information About Our Executive Officers
Name
Position
Scott Bender
Chief Executive Officer, Chairman of the Board and Director
Joel Bender
President and Director
Steven Bender
Chief Operating Officer
Stephen Tadlock
Executive Vice President, Chief Executive Officer of the Spoolable Technologies segment
Jay A. Nutt
Executive Vice President, Chief Financial Officer, and Treasurer
William Marsh
Executive Vice President, General Counsel and Corporate Secretary
Information About Our Board of Directors
Name
Position
Scott Bender
Chief Executive Officer, Chairman of the Board and Director of Cactus, Inc.
Joel Bender
President and Director of Cactus, Inc.
Melissa Law
President of Global Operations for Tate & Lyle
Michael McGovern
Former Executive Chairman of the board of directors of Superior Energy Services, Inc.
John (Andy) O’Donnell
Former Vice President and executive officer of Baker Hughes Incorporated
Gary Rosenthal
Partner, The Sterling Group, L.P.
Bruce Rothstein
Former Member and co-founder of Cadent Energy Partners LLC
Alan Semple
Director of Teekay Tankers Ltd
Tym Tombar
Managing Director and Co-Founder of Arcadius Capital Partners
Available Information
Our principal executive offices are located at 920 Memorial City Way, Suite 300, Houston, TX 77024, and our telephone number at that address is
(713) 626‑8800. Our website address is www.CactusWHD.com. Our periodic reports and other information filed with or furnished to the SEC, including our
Form 10-Ks, Form 10-Qs and Form 8-Ks, as well as amendments to such filings, are available free of charge through our website, as soon as reasonably
practicable after those reports and other information are electronically filed with or furnished to the SEC. Information on our website or any other website is
not incorporated by reference into this Annual Report and does not constitute a part of this Annual Report.
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Item 1A.   Risk Factors
Investing in our Class A common stock involves risks. You should carefully consider the information in this Annual Report, including the matters addressed
under “Cautionary Statement Regarding Forward‑Looking Statements,” and the following risks before making an investment decision. Our business, results of
operations and financial condition could be materially and adversely affected by any of these risks. Additional risks or uncertainties not currently known to us,
or that we deem immaterial, may also have an effect on our business, results of operations and financial condition. The trading price of our Class A common
stock could decline due to any of these risks, and you may lose all or part of your investment.
Risks Related to the Oilfield Services Industry and Our Business
Demand for our products and services depends on oil and gas industry activity and customer expenditure levels, which are directly affected by trends
in the demand for and price of crude oil and natural gas and availability of capital.
Demand for our products and services depends primarily upon the general level of activity in the oil and gas industry, including the number of drilling
rigs in operation, the number of oil and gas wells being drilled, the depth, lateral length and drilling conditions of these wells, the volume of production, the
number of well completions and the level of well remediation activity, the number of wells put into production and the corresponding capital spending by oil
and gas exploration and production companies. Oil and gas activity is in turn heavily influenced by, among other factors, current and anticipated oil and natural
gas prices locally and worldwide, which have historically been volatile. Declines, as well as anticipated declines, in oil and gas prices could negatively affect
the level of these activities and capital spending, which could adversely affect demand for our products and services and, in certain instances, result in the
cancellation, modification or rescheduling of existing and expected orders and the ability of our customers to pay us for our products and services. These
factors could have an adverse effect on our results of operations, financial condition and cash flows.
The oil and gas industry is cyclical and has historically experienced periodic downturns, which have been characterized by diminished demand for our
products and services and downward pressure on the prices we charge. These downturns cause many E&P companies to reduce their capital budgets and
drilling activity. Any future downturn or expected downturn could result in a significant decline in demand for oilfield services and adversely affect our
business, results of operations and cash flows.
U.S. drilling and completion activity could be adversely affected by any significant constraints in equipment, labor or takeaway capacity in the regions
in which we operate.
U.S. drilling and completion activity may be impacted by, among other things, the availability and cost of ancillary equipment and services, pipeline
capacity, and material and labor shortages. Should significant changes in activity occur, there could be concerns over availability of the equipment, materials
and labor required to drill and complete a well, together with the ability to move the produced oil and natural gas to market. Should significant constraints
develop that materially impact the efficiency and economics of oil and gas producers, U.S. drilling and completion activity could be adversely affected. This
would have an adverse impact on the demand for the products we sell and rent, which could have a material adverse effect on our business, results of
operations and cash flows.
We may be unable to employ a sufficient number of skilled and qualified workers to sustain or expand our current operations.
The delivery of our products and services requires personnel with specialized skills and experience. Our ability to be productive and profitable will
depend upon our ability to attract and retain skilled workers. In addition, our ability to expand our operations depends in part on our ability to increase the size
of our skilled labor force. The demand for skilled workers is high and the cost to attract and retain qualified personnel has remained elevated. During industry
downturns, skilled workers may leave the industry, reducing the availability of qualified workers when conditions improve. In addition, a significant increase in
the wages paid by competing employers both within and outside of our industry could result in increases in the wage rates that we must pay. If we are not able
to employ and retain skilled workers, our ability to respond quickly to customer demands or strong market conditions may inhibit our growth, which could
have a material adverse effect on our business, results of operations and cash flows.
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Our business is dependent on the continuing services of certain of our key managers and employees.
We depend on key personnel. The loss of key personnel could adversely impact our business. The loss of qualified employees or an inability to retain
and motivate additional highly‑skilled employees required for the operation and expansion of our business could hinder our ability to successfully maintain and
expand our market share.
Political, regulatory, economic and social disruptions in the countries in which we conduct business and globally could adversely affect our business
or results of operations.
In addition to our facilities in the United States, we operate a production facility in China and have facilities in Australia and Canada that sell and rent
equipment as well as provide parts, repair services and field services associated with installation. Additionally, we provide rental and field service operations in
the Middle East. Instability and unforeseen changes in any of the markets in which we conduct business could have an adverse effect on the demand for, or
supply of, our business, results of operations and cash flows.
We are dependent on a relatively small number of customers in a single industry. The loss of an important customer could adversely affect our results
of operations and financial condition.
Our customers are engaged in the oil and natural gas E&P business primarily in the United States, but also in Australia, Canada, the Middle East and
other select international markets. Historically, we have been dependent on a relatively small number of customers for our revenues. Our business, results of
operations and financial position could be materially adversely affected if an important customer ceases to engage us for our services on favorable terms, or at
all, or fails to pay or delays paying us significant amounts of our outstanding receivables. Additionally, the E&P industry has seen consolidation activity, which
may continue. Changes in ownership of our customers may result in the loss of, or reduction in, business from those customers which could materially and
adversely affect our business, results of operations and cash flows.
Delays in obtaining, or inability to obtain or renew, permits or authorizations by our customers for their operations could impair our business.
Our customers are required to obtain permits or authorizations from one or more governmental agencies or other third parties to perform drilling and
completion activities, including hydraulic fracturing. Such permits or approvals are typically required by state agencies but can also be required by federal and
local governmental agencies or other third parties. As with most permitting and authorization processes, there is a degree of uncertainty as to whether a permit
will be granted, the time it will take for a permit or approval to be issued and the conditions which may be imposed in connection with the granting of the
permit. In some jurisdictions, certain regulatory authorities have delayed or suspended the issuance of permits or authorizations while the potential
environmental impacts associated with issuing such permits can be studied and appropriate mitigation measures evaluated. In Texas, rural water districts have
begun to impose restrictions on water use and may require permits for water used in drilling and completion activities. Oil and gas leasing on public land
remains politically fraught and federal land available for oil and gas leasing could be significantly reduced due to environmental and climate concerns. The
effects of these developments or other initiatives to reform the federal leasing process could result in additional restrictions or limitations on the issuance of
federal leases and permits for drilling on public lands. Permitting, authorization or renewal delays, the inability to obtain new permits or the revocation of
current permits could impact our customers’ operations and cause a loss of revenue and potentially have a material adverse effect on our business, results of
operations and cash flows. In January 2025, however, President Trump signed an executive order directing federal executive departments and agencies to
initiate a regulatory freeze for certain rules that have not taken effect, pending review by the newly appointed agency head, identify and exercise emergency
authorities to facilitate conventional energy production, transportation, and refining, and mandate a review of existing regulations that may burden domestic
energy development.
Competition within the oilfield services industry may adversely affect our ability to market our services.
The oilfield services industry is highly competitive and fragmented and includes numerous companies capable of competing effectively in our
markets, including several large companies that possess substantially greater financial and other resources than we do. Consolidation of our competitors and the
entry of new competitors could result in a further increase in competition. The amount of equipment available may exceed demand, which could result in active
price competition. Many contracts are awarded on a bid basis, which may further increase competition based primarily on price. In addition, adverse market
conditions reduce demand for well servicing equipment, which results in excess equipment and lower utilization rates. If market conditions deteriorate or if
adverse market conditions persist, the prices we are able to charge and utilization rates may decline. Any significant future increase in overall market capacity
for the products, rental equipment or services that we offer could adversely affect our business, results of operations and cash flows.
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New technology may cause us to become less competitive.
The oilfield services industry is subject to the introduction of new drilling and completions techniques and services using new technologies, some of
which may be subject to patent or other intellectual property protections. Although we believe our equipment and processes currently give us a competitive
advantage, as competitors and others use or develop new or comparable technologies in the future, we may lose market share or be placed at a competitive
disadvantage. Further, we may face competitive pressure to develop, implement, license or acquire certain new technologies at a substantial cost. Some of our
competitors have greater financial, technical and personnel resources that may allow them to enjoy various competitive advantages in the development and
implementation of new technologies. We cannot be certain that we will be able to continue to develop and implement new technologies or products. Limits on
our ability to develop, bring to market, effectively use and implement new and emerging technologies may have a material adverse effect on our business,
results of operations and cash flows, including a reduction in the value of assets replaced by new technologies.
Increased costs, increased transit times, increased tariffs, or lack of availability, of raw materials and other components may result in increased
operating expenses and adversely affect our results of operations and cash flows.
Our ability to source and transport low-cost raw materials and components, such as steel, tube and bar stock, forgings and machined components is
critical to our ability to successfully compete. Among other things, the conflicts in Ukraine and the Middle East may result in longer transit times, higher costs
and reduced availability of raw materials and components used in our wide variety of products and systems. Further union port labor related disruptions could
also result in increased transit times and costs. Transit times through and availability of the Panama Canal may be impacted by weather patterns and political
tensions among the US, Panama and China. In the United States, the Trump administration has indicated that it may increase existing tariffs or implement new
tariffs that may result in increased costs and inflation impacting the cost of other raw materials. There is no assurance that we will be able to continue to
purchase and move these materials on a timely basis or at commercially viable prices, nor can we be certain of the impact of changes to tariffs and future
legislation that may impact trade with China or other countries. Further, unexpected changes in the size of regional and/or product markets, particularly for
short lead‑time products, could affect our results of operations and cash flows. Should our current suppliers be unable to provide the necessary raw materials or
components or otherwise fail to deliver such materials and components timely and, in the quantities required, resulting delays in the provision of products or
services to our customers could have a material adverse effect on our business, results of operations and cash flows. In addition, our results of operations may
be adversely affected by further rising costs to the extent we are unable to recoup them from our customers.
We design, manufacture, sell, rent and install equipment that is used in oil and gas E&P activities, which may subject us to liability, including claims
for personal injury, property damage and environmental contamination should such equipment fail to perform to specifications.
We provide products and systems to customers involved in oil and gas exploration, development and production. Some of our equipment is designed
to operate in high‑temperature and/or high‑pressure environments, and some equipment is designed for use in hydraulic fracturing operations. We also provide
parts, repair services and field services associated with installation at all our facilities and service centers in the United States and Australia, as well as at
customer sites, including sites in the Middle East. Because of applications to which our products and services are exposed, particularly those involving high
pressure environments, a failure of such equipment, or a failure of our customers to maintain or operate the equipment properly, could cause damage to the
equipment, damage to the property of customers and others, personal injury and environmental contamination and could lead to a variety of claims against us
that could have an adverse effect on our business, results of operations and cash flows.
We indemnify our customers against certain claims and liabilities resulting or arising from our provision of goods or services to them. In addition, we
rely on customer indemnifications, generally, and third‑party insurance as part of our risk mitigation strategy. However, courts may limit indemnity claims and
our insurance may not be adequate to cover our liabilities. In addition, our customers may be unable to satisfy indemnification claims against them. Further,
insurance companies may refuse to honor their policies, or insurance may not generally be available in the future, or if available, premiums may not be
commercially justifiable. We could incur substantial liabilities and damages that are either not covered by customer indemnities or insurance or that are in
excess of policy limits, or incur liability at a time when we are not able to obtain liability insurance. Such potential liabilities could have a material adverse
effect on our business, results of operations and cash flows.
Our operations are subject to hazards inherent in the oil and natural gas industry, which could expose us to substantial liability and cause us to lose
customers and substantial revenue.
Risks inherent in our industry include the risks of equipment defects, installation errors, the presence of multiple contractors at the wellsite over which
we have no control, vehicle accidents, fires, explosions, blowouts, surface cratering,
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uncontrollable flows of gas or well fluids, pipe or pipeline failures, abnormally pressured formations and various environmental hazards such as oil spills and
releases of, and exposure to, hazardous substances. For example, our operations are subject to risks associated with hydraulic fracturing, including any
mishandling, surface spillage or potential underground migration of fracturing fluids, including chemical additives. The occurrence of any of these events could
result in substantial losses to us due to injury or loss of life, severe damage to or destruction of property, natural resources and equipment, pollution or other
environmental damage, clean‑up responsibilities, regulatory investigations and penalties, suspension of operations and repairs required to resume operations.
The cost of managing such risks may be significant. The frequency and severity of such incidents will affect operating costs, insurability and relationships with
customers, employees and regulators. In particular, our customers may elect not to purchase our products or services if they view our environmental or safety
record as unacceptable, which could cause us to lose customers and substantial revenues.
Oilfield anti-indemnity provisions enacted by many states may restrict or prohibit a party’s indemnification of us.
We typically enter into agreements with our customers governing the provision of our services, which usually include certain indemnification
provisions for losses resulting from operations. Such agreements may require each party to indemnify the other against certain claims regardless of the
negligence or other fault of the indemnified party; however, many states place limitations on contractual indemnity agreements, particularly agreements that
indemnify a party against the consequences of its own negligence. Furthermore, certain states, including Louisiana, New Mexico, Texas, and Wyoming, have
enacted statutes generally referred to as “oilfield anti-indemnity acts” expressly prohibiting certain indemnity agreements contained in or related to oilfield
services agreements. Such oilfield anti-indemnity acts may restrict or void a party’s indemnification of us, which could have a material adverse effect on our
business, results of operations and cash flows.
Our operations require us to comply with various domestic and international regulations, violations of which could have a material adverse effect on
our results of operations, financial condition and cash flows.
We are exposed to a variety of federal, state, local and international laws and regulations relating to matters such as environmental, workplace, health
and safety, labor and employment, customs and tariffs, export and re-export controls, economic sanctions, currency exchange, bribery and corruption and
taxation. These laws and regulations are complex, frequently change and have tended to become more stringent over time. They may be adopted, enacted,
amended, enforced or interpreted in such a manner that the incremental cost of compliance could adversely impact our business, results of operations and cash
flows.
In addition to our U.S. operations, we have operations in, among other countries, China, Australia, Canada, Vietnam and the Middle East. Our
operations outside of the United States require us to comply with numerous anti‑bribery and anti‑corruption regulations. The U.S. Foreign Corrupt Practices
Act, among others, applies to us and our operations. Our policies, procedures and programs may not always protect us from reckless or criminal acts committed
by our employees or agents, and severe criminal or civil sanctions may be imposed as a result of violations of these laws. We are also subject to the risks that
our employees and agents outside of the United States may fail to comply with applicable laws.
In addition, we import raw materials, semi‑finished goods, and finished products into, among other countries, the United States, China, Australia,
Canada, Vietnam, India and the Middle East for use in such countries or for manufacturing and/or finishing for re‑export and import into another country for
use or further integration into equipment or systems. Most movement of raw materials, semi‑finished or finished products involves imports and exports. As a
result, compliance with multiple trade sanctions, embargoes and import/export laws and regulations pose an ongoing challenge and risk to us since a portion of
our business is conducted outside of the United States through our subsidiaries. Our failure to comply with these laws and regulations could materially affect
our business, results of operations and cash flows.
Compliance with environmental laws and regulations may adversely affect our business and results of operations.
Environmental laws and regulations in the United States and foreign countries affect the equipment, systems and services we design, market and sell,
as well as the facilities where we manufacture and produce our equipment and systems. For example, we may be affected by such laws as the Resource
Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation, and Liability Act, the Clean Water Act, the Clean Air Act and
the Occupational Safety and Health Act of 1970. Further, our customers may be subject to a range of laws and regulations governing hydraulic fracturing,
drilling and greenhouse gas emissions.
We are required to invest financial and managerial resources to comply with environmental laws and regulations. Failure to comply with these laws
and regulations may result in the assessment of administrative, civil and criminal penalties, the imposition of remedial obligations, or the issuance of orders
enjoining operations. These laws and regulations, as well as the
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adoption of other new laws and regulations affecting our operations or the exploration, production and transportation of crude oil and natural gas by our
customers, could adversely affect our business and operating results by increasing our costs of compliance, increasing the costs of compliance and costs of
doing business for our customers, limiting the demand for our products and services or restricting our operations. Increased regulation or a move away from the
use of fossil fuels caused by additional regulation could also reduce demand for our products and services.
Existing or future laws and regulations related to greenhouse gases and climate change and related public and governmental initiatives and additional
compliance obligations could have a material adverse effect on our business, results of operations, prospects, and financial condition.
Changes in environmental requirements related to greenhouse gas emissions may negatively impact demand for our products and services. Oil and
natural gas E&P may decline as a result of environmental requirements, including land use policies and other actions to restrict oil and gas leasing and
permitting in response to environmental and climate change concerns. Federal, state, and local agencies continue to evaluate climate-related legislation and
other regulatory initiatives that would restrict emissions of greenhouse gases in areas in which we conduct business. Because our business depends on the level
of activity in the oil and natural gas industry, existing or future laws and regulations related to greenhouse gases could have a negative impact on our business if
such laws or regulations reduce demand for oil and natural gas. Likewise, such laws or regulations may result in additional compliance obligations with respect
to the release, capture, sequestration, and use of greenhouse gases. These additional obligations could increase our costs and have a material adverse effect on
our business, results of operations, prospects, and financial condition. Additional compliance obligations could also increase costs of compliance and costs of
doing business for our customers, thereby reducing demand for our products and services. Finally, increasing concentrations of greenhouse gases in the Earth’s
atmosphere may produce climate changes that could have significant physical effects, such as increased frequency and severity of storms, droughts, floods,
wildfires and other climatic events; if such effects were to occur, they could have an adverse impact on our operations. Although the Trump Administration has
signaled a shift in federal climate policy, state and local climate and energy initiatives may continue, and future presidential administrations may pursue
executive orders similar to, or more restrictive than, those put in place by President Biden.
Many of our customers utilize hydraulic fracturing in their operations. Environmental concerns have been raised regarding the potential impact of
hydraulic fracturing on underground water supplies and seismic activity. These concerns have led to several regulatory and governmental initiatives in the
United States to restrict the hydraulic fracturing process, which could have an adverse impact on our customers’ completions or production activities. Although
we do not conduct hydraulic fracturing, our products are used in hydraulic fracturing. Increased regulation and attention given to the hydraulic fracturing
process could lead to greater opposition to oil and gas production activities using hydraulic fracturing techniques. Since 2021, the Texas Railroad Commission,
which regulates the state’s oil and gas industry, has suspended the use of deep wastewater disposal wells in certain areas of four oil-producing counties in West
Texas. The suspensions are intended to mitigate earthquakes thought to be caused by the injection of waste fluids, including saltwater, that are a byproduct of
hydraulic fracturing into disposal wells. The bans require oil and gas production companies to find other options to handle the wastewater, which may include
piping or trucking it longer distances to other locations not under the ban. In addition, the Texas Railroad Commission has overseen the development of well-
operator-led response plans to reduce injection volumes in other portions of West Texas to reduce seismicity in these areas. The adoption of new laws or
regulations at the federal, state, local or foreign level imposing reporting obligations on, or otherwise limiting, delaying or banning, the hydraulic fracturing
process or other processes on which hydraulic fracturing and subsequent hydrocarbon production relies, such as water disposal, could make it more difficult to
complete oil and natural gas wells. Further, it could increase our customers’ costs of compliance and doing business, and otherwise adversely affect the
hydraulic fracturing services they perform, which could negatively impact demand for our products.
Increasing attention by the public and government agencies to climate change and environmental, social and governance (“ESG”) matters could also
negatively impact demand for our products and services. Increasing attention is being given to corporate activities related to ESG in public discourse and the
investment community. A number of advocacy groups, both domestically and internationally, have campaigned for governmental and private action to promote
change at public companies related to ESG matters, including through the investment and voting practices of investment advisers, public pension funds,
universities and other members of the investing community. These activities include increasing attention and demands for action related to climate change and
energy rebalancing matters, such as promoting the use of substitutes to fossil fuel products and encouraging the divestment of fossil fuel equities, as well as
pressuring lenders and other financial services companies to limit or curtail activities with fossil fuel companies. If this were to continue, it could have a
material adverse effect on the valuation of our Class A common stock and our ability to access equity capital markets.
In addition, our business could be impacted by initiatives to address greenhouse gases and climate change and public pressure to conserve energy or
use alternative energy sources. State or federal initiatives to incentivize a shift away from fossil fuels could also reduce demand for hydrocarbons. For example,
the Inflation Reduction Act appropriates significant federal
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funding for the development of renewable energy, clean hydrogen, clean fuels, electric vehicles and supporting infrastructure and carbon capture and
sequestration, amongst other provisions. In addition, the Inflation Reduction Act imposes the first ever federal fee on the emission of GHG through a methane
emissions charge. The Inflation Reduction Act amends the federal Clean Air Act to impose a fee on the emission of methane from sources required to report
their GHG emissions to the EPA, including those sources in the onshore petroleum and natural gas production categories, the rule for which was finalized in
November 2024. These developments could further accelerate the transition of the U.S. economy away from the use of fossil fuels towards lower- or zero-
carbon emissions alternatives, which would reduce demand for our products and services and negatively impact our business. In January 2025, however,
President Trump signed executive orders that, among other things, direct federal executive departments and agencies to initiate a regulatory freeze for certain
rules that have not taken effect, pending review by the newly appointed agency head, call upon the EPA to submit a report on the continuing applicability of its
endangerment finding for GHGs under the Clean Air Act and issue guidance on the “social cost of carbon” to consider whether such metric should be
eliminated, and pause the disbursement of funds appropriated through the IRA and the Infrastructure Investments and Jobs Act. However, future presidential
administrations may pursue executive orders that increase the amount of regulation.
The global outbreak of COVID-19 had, and similar pandemics in the future may have, an adverse impact on our business and operations.
The COVID-19 pandemic negatively affected our revenues and operations. We experienced, and if another pandemic was to occur, we may experience
in the future, slowdowns or temporary idling of certain of our manufacturing and service facilities due to a number of factors, including implementing
additional safety measures, testing of our team members, team member absenteeism and governmental orders. A prolonged closure could have a material
adverse impact on our ability to operate our business and on our results of operations. We have also experienced, and if another pandemic was to occur, we
could experience, disruption and volatility in our supply chain, which has resulted, and may continue to result, in increased costs for certain goods. Outbreaks
of other pandemics or contagious diseases may in the future disrupt our operations, suppliers or facilities, result in increased costs for certain goods or
otherwise impact us in a manner similar to the COVID-19 pandemic.
The ongoing conflicts in various parts of the world may adversely affect our business and results of operations.
The ongoing conflicts in Ukraine and the Middle East could have adverse effects on global macroeconomic conditions which could negatively impact
our business and results of operations. The conflicts are highly unpredictable and have resulted in volatility with oil and natural gas prices worldwide. Elevated
energy prices could result in higher inflation worldwide, causing economic uncertainty in the oil and natural gas markets as well as the stock market, resulting
in stock price volatility, foreign currency fluctuations and supply chain disruptions. These conditions could ultimately dampen demand for our goods and
services by increasing the possibility of a recession. In addition, the conflicts could lead to increased cyberattacks or could aggravate other risk factors that we
identify in our public filings. Additional conflicts in other parts of the world could have similar negative impacts on our business.
Risks Related to Our Class A Common Stock
We are a holding company whose only material asset is our equity interest in Cactus Companies, and accordingly, we are dependent upon distributions
from Cactus Companies to pay taxes, make payments under the TRA and cover our corporate and other overhead expenses and pay dividends to
holders of our Class A Common Stock.
We are a holding company and have no material assets other than our equity interest in Cactus Companies. We have no independent means of
generating revenue. To the extent Cactus Companies has available cash and subject to the terms of any current or future credit agreements or debt instruments,
we intend to cause Cactus Companies to make (i) pro rata distributions to its unit holders, including us, in an amount at least sufficient to allow us to pay our
taxes and to make payments under the TRA and (ii) non‑pro rata payments to us to reimburse us for our corporate and other overhead expenses. To the extent
that we need funds and Cactus Companies or its subsidiaries are restricted from making such distributions or payments under applicable law or regulation or
under the terms of any future financing arrangements, or are otherwise unable to provide such funds, our financial condition and liquidity could be materially
adversely affected. In addition, our ability to pay dividends to holders of our Class A common stock depends on receipt of distributions from Cactus
Companies.
Moreover, because we have no independent means of generating revenue, our ability to make payments under the TRA is dependent on the ability of
Cactus Companies to make distributions to us in an amount sufficient to cover our obligations under the TRA. This ability, in turn, may depend on the ability of
Cactus Companies’ subsidiaries to make distributions to it. The ability of Cactus Companies and its subsidiaries to make such distributions will be subject to,
among other things, (i) the applicable provisions of Delaware law (or other applicable U.S. and foreign jurisdictions) that may limit the amount of funds
available for distribution and (ii) restrictions in relevant debt instruments issued by Cactus Companies or its subsidiaries. To the
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extent that we are unable to make payments under the TRA for any reason, such payments will be deferred and will accrue interest until paid.
Cactus WH Enterprises LLC has the ability to direct the voting of a significant percentage of the voting power of our common stock, and its interests
may conflict with those of our other shareholders.
Holders of Class A common stock and Class B common stock vote together as a single class on all matters presented to our stockholders for their vote
or approval, except as otherwise required by applicable law or our amended and restated certificate of incorporation. Cactus WH Enterprises owned
approximately 13% of our voting power as of December 31, 2024. This concentration of ownership may limit stockholders’ ability to affect the way we are
managed or the direction of our business. The interests of Cactus WH Enterprises with respect to matters potentially or actually involving or affecting us, such
as future acquisitions, financings and other corporate opportunities and attempts to acquire us, may conflict with the interests of our other stockholders. The
existence of significant stockholders may have the effect of deterring hostile takeovers, delaying or preventing changes in control or changes in management or
limiting the ability of our other stockholders to approve transactions that they may deem to be in our best interests. Cactus WH Enterprises’ concentration of
stock ownership may also adversely affect the trading price of our Class A common stock to the extent investors perceive a disadvantage in owning stock of a
company with significant stockholders.
Our amended and restated certificate of incorporation and amended and restated bylaws, as well as Delaware law, contain provisions that could
discourage acquisition bids or merger proposals, which may adversely affect the market price of our Class A common stock.
Our amended and restated certificate of incorporation authorizes our board of directors to issue preferred stock without shareholder approval. If our
board of directors elects to issue preferred stock, it could be more difficult for a third party to acquire us. In addition, some provisions of our amended and
restated certificate of incorporation and amended and restated bylaws could make it more difficult for a third party to acquire control of us, even if the change
of control would be beneficial to our shareholders, including:
•
limitations on the removal of directors, including a classified board whereby only one-third of the directors are elected each year, which will be
phased out between 2025 and 2027;
•
limitations on the ability of our shareholders to call special meetings;
•
providing that the board of directors is expressly authorized to adopt, or to alter or repeal our bylaws; and
•
establishing advance notice and certain information requirements for nominations for election to our board of directors or for proposing matters
that can be acted upon by shareholders at shareholder meetings.
In addition, certain change of control events have the effect of accelerating the payment due under the TRA, which could be substantial and
accordingly serve as a disincentive to a potential acquirer of our company.
Future sales of our Class A common stock in the public market, or the perception that such sales may occur, could reduce our stock price, and any
additional capital raised by us through the sale of equity or convertible securities may dilute your ownership in us.
Subject to certain limitations and exceptions, the CC Unit Holders may cause Cactus Companies to redeem their CC Units for shares of Class A
common stock (on a one‑for‑one basis, subject to conversion rate adjustments for stock splits, stock dividends and reclassification and other similar
transactions) and then sell those shares of Class A common stock. Additionally, we may issue additional shares of Class A common stock or convertible
securities in subsequent public offerings. We had 68,151,542 outstanding shares of Class A common stock and 11,432,545 outstanding shares of Class B
common stock as of February 25, 2025. The CC Unit Holders own all outstanding shares of our Class B common stock, representing approximately 14.4% of
our total outstanding common stock.
As required pursuant to the terms of the registration rights agreement that we entered into at the time of our IPO, we have filed a registration statement
on Form S-3 under the Securities Act of 1933, as amended, to permit the public resale of shares of Class A common stock owned by Cactus WH Enterprises,
Lee Boquet and certain members of our board of directors.
We cannot predict the size of future issuances of our Class A common stock or securities convertible into Class A common stock or the effect, if any,
that future issuances and sales of shares of our Class A common stock will have on the market price of our Class A common stock.
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Sales of substantial amounts of our Class A common stock (including shares issued in connection with an acquisition) or secondary offerings, or the
perception that such sales could occur, may adversely affect prevailing market prices of our Class A common stock.
Cactus Inc. will be required to make payments under the TRA for certain tax benefits that we may claim, and the amounts of such payments could be
significant.
In connection with our IPO, we entered into the TRA with certain direct and indirect owners of Cactus LLC (the “TRA Holders”). Following
completion of the CC Reorganization, the TRA Holders are certain direct and indirect owners of Cactus Companies and prior direct and indirect owners of
Cactus LLC. This agreement generally provides for the payment by Cactus Inc. to each TRA Holder 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 as a result of certain increases in tax
basis and certain benefits attributable to imputed interest. Cactus Inc. will retain the benefit of the remaining 15% of these net cash savings.
The term of the TRA 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 (or the TRA is terminated due to other circumstances, including our breach of a material obligation thereunder or certain mergers or other
changes of control relating to Cactus Companies), and we make the termination payment specified in the TRA. In addition, payments we make under the TRA
will be increased by any interest accrued from the due date (without extensions) of the corresponding tax return. Payments under the TRA commenced in 2019,
and in the event that the TRA is not terminated, the payments under the TRA are anticipated to continue for approximately 20 years after the date of the last
redemption of CC Units.
The payment obligations under the TRA are our obligations and not obligations of Cactus Companies, and we expect that the payments we will be
required to make under the TRA will be substantial. Estimating the amount and timing of payments that may become due under the TRA Agreement is by its
nature imprecise. For purposes of the TRA, cash savings in tax generally are calculated by comparing our actual tax liability (determined by using the actual
applicable U.S. federal income tax rate and an assumed combined state and local income tax rate) to the amount we would have been required to pay had we
not been able to utilize any of the tax benefits subject to the TRA. The amounts payable, as well as the timing of any payments under the TRA, are dependent
upon significant future events and assumptions, including the timing of the redemption of CC Units, the price of our Class A common stock at the time of each
redemption, the extent to which such redemptions are taxable transactions, the amount of the redeeming unit holder’s tax basis in its CC Units at the time of the
relevant redemption, the depreciation and amortization periods that apply to the increase in tax basis, the amount and timing of taxable income we generate in
the future and the U.S. federal income tax rates then applicable, and the portion of our payments under the TRA that constitute imputed interest or give rise to
depreciable or amortizable tax basis. The payments under the TRA are not conditioned upon a holder of rights under the TRA having a continued ownership
interest in us.
In certain cases, payments under the TRA may be accelerated and/or significantly exceed the actual benefits, if any, we realize in respect of the tax
attributes subject to the TRA.
If we elect to terminate the TRA early or it is terminated early due to Cactus Inc.’s failure to honor a material obligation thereunder or due to certain
mergers or other changes of control, our obligations under the TRA would accelerate and we would be required to make an immediate payment equal to the
present value of the anticipated future payments to be made by us under the TRA (determined by applying a discount rate equivalent to the 30-day SOFR plus
0.715%) and such payment is expected to be substantial. The calculation of anticipated future payments will be based upon certain assumptions and deemed
events set forth in the TRA, including (i) the assumption that we have sufficient taxable income to fully utilize the tax benefits covered by the TRA and (ii) the
assumption that any CC Units (other than those held by Cactus Inc.) outstanding on the termination date are deemed to be redeemed on the termination date.
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.
As a result of either an early termination or a change of control, we could be required to make payments under the TRA that exceed our actual cash tax
savings under the TRA. In these situations, our obligations under the TRA could have a substantial negative impact on our liquidity and could have the effect of
delaying, deferring or preventing certain mergers, asset sales, or other forms of business combinations or changes of control. If the TRA were terminated as of
December 31, 2024, the estimated termination payments, based on the assumptions discussed above, would have been approximately $273.7 million
(calculated using a discount rate equal to the 12-month term SOFR published by CME Group Benchmark Administration Limited, plus 71.513 basis points,
applied against an undiscounted liability of approximately $406.5 million). The foregoing number is merely an estimate and the actual payment could differ
materially. There can be no assurance that we will be able to finance our obligations under the TRA.
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Payments under the TRA are based on the tax reporting positions that we will determine. The TRA Holders will not reimburse us for any payments
previously made under the TRA if any tax benefits that have given rise to payments under the TRA are subsequently disallowed, except that excess payments
made to any TRA Holder will be netted against payments that would otherwise be made to such TRA Holder, if any, after our determination of such excess. As
a result, in some circumstances, we could make payments that are greater than our actual cash tax savings, if any, and may not be able to recoup those
payments, which could adversely affect our liquidity.
If Cactus Companies were to become a publicly traded partnership taxable as a corporation for U.S. federal income tax purposes, we and
Cactus Companies might be subject to potentially significant tax inefficiencies, and we would not be able to recover payments previously made by us
under the TRA even if the corresponding tax benefits were subsequently determined to have been unavailable due to such status.
We intend to operate such that Cactus Companies does not become a publicly traded partnership taxable as a corporation for U.S. federal income tax
purposes. A “publicly traded partnership” is a partnership the interests of which are traded on an established securities market or are readily tradable on a
secondary market or the substantial equivalent thereof. Under certain circumstances, redemptions of CC Units pursuant to the Redemption Right or our Call
Right (each as defined in Note 12 in the notes to the Consolidated Financial Statements) or other transfers of CC Units could cause Cactus Companies to be
treated as a publicly traded partnership. Applicable U.S. Treasury regulations provide for certain safe harbors from treatment as a publicly traded partnership,
and we intend to operate such that one or more such safe harbors shall apply. For example, we intend to limit the number of unit holders of Cactus Companies,
and the Cactus Companies LLC Agreement, which was entered into with Cactus LLC in connection with the closing of our IPO and amended as part of the CC
Reorganization, provides for limitations on the ability of CC Unit Holders to transfer their CC Units and provides us, as managing member of
Cactus Companies, with the right to impose restrictions (in addition to those already in place) on the ability of unit holders of Cactus Companies to redeem
their CC Units pursuant to the Redemption Right to the extent we believe it is necessary to ensure that Cactus Companies will continue to be treated as a
partnership for U.S. federal income tax purposes.
If Cactus Companies were to become a publicly traded partnership, significant tax inefficiencies might result for us and for Cactus Companies,
including inefficiencies as a result of our inability to file a consolidated U.S. federal income tax return with Cactus Companies. In addition, we would no longer
have the benefit of certain increases in tax basis covered under the TRA, and we would not be able to recover any payments previously made by us under the
TRA, even if the corresponding tax benefits (including any claimed increase in the tax basis of Cactus Companies’ assets) were subsequently determined to
have been unavailable.
Risks Related to the FlexSteel Business
We may not realize the anticipated benefits from the FlexSteel acquisition, and failure to realize the anticipated benefits could adversely impact our
business and our operating results.
We may not be able to achieve the full potential strategic and financial benefits that were expected to be achieved at the time of the acquisition of the
FlexSteel business, or such benefits may be delayed or not occur at all. If we fail to achieve some or all of the benefits expected to result from the acquisition,
or if such benefits are delayed, our business could be impacted. FlexSteel’s operations are subject to many of the same risks as the Pressure Control operations.
The failure of FlexSteel to achieve financial results after the closing date of the acquisition similar to those obtained in the past could adversely impact our
business and our consolidated operating results.
We may experience difficulties in integrating the operations of FlexSteel into our business and in realizing the expected benefits of the Merger.
The ongoing success of the Merger will depend in part on our ability to realize all of the anticipated business opportunities from combining the
operations of FlexSteel with our Pressure Control business in an efficient and effective manner. The integration process could take longer than anticipated and
could result in the distraction of management, the loss of key employees from either company, the disruption of each company’s ongoing businesses, tax costs
or inefficiencies, or inconsistencies in standards, controls, information technology systems, procedures and policies, any of which could adversely affect our
ability to maintain relationships with customers, employees or other third parties, or our ability to achieve the anticipated benefits of the FlexSteel acquisition,
and could harm our financial performance.
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FlexSteel may have liabilities that are not known to us and the indemnities negotiated in the Merger Agreement may not offer adequate protection.
As part of the Merger, we assumed certain liabilities of FlexSteel. There may be liabilities that we failed to identify or we were unable to discover in
the course of performing due diligence investigations into FlexSteel. We may also have not correctly assessed the significance of certain FlexSteel liabilities
identified in the course of our due diligence. Any such liabilities, individually or in the aggregate, could have a material adverse effect on our business,
financial condition and results of operations. As we continue to integrate FlexSteel into our operations, we may learn additional information about FlexSteel,
such as unknown or contingent liabilities and issues relating to compliance with applicable laws, that could potentially have an adverse effect on our business,
financial condition and results of operations.
We will not be able to enforce claims with respect to the representations and warranties that the sellers of FlexSteel provided under the Merger
Agreement.
In connection with the Merger, the sellers of FlexSteel gave customary representations and warranties related to FlexSteel under the Merger
Agreement. We will not be able to enforce any claims against the sellers, including any claims relating to breaches of such representations and warranties. The
sellers’ liability with respect to breaches of their representations and warranties under the Merger Agreement is limited. To provide for coverage against certain
breaches by the sellers of their representations and warranties and certain pre-closing taxes of FlexSteel, we obtained a representation and warranty insurance
policy. The policy is subject to a retention amount, exclusions, policy limits and certain other customary terms and conditions.
General Risks
A failure of our information technology infrastructure and cyberattacks could adversely impact us.
We depend on our information technology (“IT”) systems for the efficient operation of our business. Accordingly, we rely upon the capacity, reliability
and security of our IT hardware and software infrastructure and our ability to expand and update this infrastructure in response to our changing needs. Despite
our implementation of security measures, our systems are vulnerable to damage from computer viruses, natural disasters, incursions by intruders or hackers,
failures in hardware or software, power fluctuations, cyber terrorists and other similar disruptions. Additionally, we rely on third parties to support the operation
of our IT hardware and software infrastructure, and in certain instances, utilize web‑based applications. The failure of our IT systems or those of our vendors to
perform as anticipated for any reason or any significant breach of security could disrupt our business and result in numerous adverse consequences, including
reduced effectiveness and efficiency of operations, inappropriate disclosure of confidential and proprietary information, reputational harm, increased overhead
costs and loss of important information, which could have a material adverse effect on our business and results of operations. In addition, we may be required
to incur significant costs to protect against damage caused by these disruptions or security breaches in the future.
We rely on our information systems to conduct our business, and failure to protect these systems against security breaches could disrupt our business
and adversely affect our results of operations.
We rely on information technology systems and networks in our operations, and those of our third-party vendors, suppliers and other business
partners. Despite our implementation of security measures, our systems are vulnerable to damage from computer viruses, natural disasters, incursions by
intruders or hackers, failures in hardware or software, power fluctuations, cyber terrorists and other similar disruptions. A successful cyber-attack could
materially disrupt our operations or lead to unauthorized access, release or alteration of information on our systems or the systems of our service providers,
vendors or customers.
Any such attack or other breach of our information technology systems—or those of our third-party service providers, suppliers or other business
partners—could have a material adverse effect on our business, operating results, financial condition, our reputation or cash flows. In addition, the
unavailability of the information systems or the failure of these systems to perform as anticipated, including any failure in disaster recovery plans or data
backups, for us or our third-party technical managers for any reason could disrupt our business. We may be required to incur significant additional costs to
remediate, modify or enhance our information technology systems or to try to prevent any such attacks.
Finally, certain cyber incidents, such as surveillance or reconnaissance, may remain undetected for an extended period. Our systems for protecting
against cybersecurity risks may not be sufficient. As cyberattacks continue to evolve, including those leveraging artificial intelligence, we may be required to
expend significant additional resources to continue to modify or enhance our protective measures or to investigate and remediate any vulnerabilities to
cyberattacks. In addition, new laws and
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regulations governing data privacy, cybersecurity, and the unauthorized disclosure of confidential information pose increasingly complex compliance
challenges and potentially elevate costs, and any failure to comply with these laws and regulations could result in significant penalties and legal liability.
Our business is subject to complex and evolving laws and regulations regarding privacy and data protection (“data protection laws”).
The regulatory environment relating to data privacy and protection is constantly evolving and can be subject to significant change. Laws and
regulations governing data privacy and the unauthorized collection, processing or disclosure of personal information, including a growing number of U.S. state
laws and regulations, such as the California Consumer Privacy Act, pose increasingly complex compliance challenges and potentially elevate our costs. Any
failure, or perceived failure, by us to comply with applicable data protection laws could result in proceedings or actions against us by governmental entities or
others, subject us to significant fines, penalties, judgments and negative publicity, require us to change our business practices, increase the costs and complexity
of compliance, and adversely affect our business. As noted above, we are also subject to the possibility of cyber-attacks, which themselves may result in a
violation of these laws. Finally, if we acquire a company that has violated or is not in compliance with applicable data protection laws, we may incur significant
liabilities and penalties as a result.
Holders of our Class A common stock may not receive dividends on their Class A common stock.
Holders of our Class A common stock are entitled to receive only such dividends as our board of directors may declare out of funds legally available
for such payments. We are incorporated in Delaware and are governed by the Delaware General Corporation Law (“DGCL”). The DGCL allows a corporation
to pay dividends only out of a surplus, as determined under Delaware law or, if there is no surplus, out of net profits for the fiscal year in which the dividend
was declared and for the preceding fiscal year. Under the DGCL, however, we cannot pay dividends out of net profits if, after we pay the dividend, our capital
would be less than the capital represented by the outstanding stock of all classes having a preference upon the distribution of assets. We are not required to pay
a dividend, and any determination to pay dividends and other distributions in cash, stock or property by us in the future (including determinations as to the
amount of any such dividend or distribution) will be at the discretion of our board of directors and will be dependent on then-existing conditions, including
business conditions, our financial condition, results of operations, liquidity, capital requirements, contractual restrictions, including restrictive covenants
contained in debt agreements, and other factors.
If we are unable to fully protect our intellectual property rights or trade secrets or a third party attempts to enforce their intellectual property rights
against us, we may suffer a loss in revenue or any competitive advantage or market share we hold, or we may incur costs in litigation defending
intellectual property rights.
While we have several patents and others are pending, we do not have patents relating to all of our key processes and technology. If we are not able to
maintain the confidentiality of our trade secrets, or if our competitors are able to replicate our technology or services, our competitive advantage could be
diminished. We also cannot provide any assurance that any patents we may obtain in the future would provide us with any significant commercial benefit or
would allow us to prevent our competitors from employing comparable technologies or processes. We may initiate litigation from time to time to protect and
enforce our intellectual property rights. In any such litigation, a defendant may assert that our intellectual property rights are invalid or unenforceable. Third
parties from time to time may also initiate litigation against us by asserting that our businesses infringe, impair, misappropriate, dilute or otherwise violate
another party’s intellectual property rights. We may not prevail in any such litigation, and our intellectual property rights may be found invalid or unenforceable
or our products and services may be found to infringe, impair, misappropriate, dilute or otherwise violate the intellectual property rights of others. The results
or costs of any such litigation may have an adverse effect on our business, results of operations and financial condition. Any litigation concerning intellectual
property could be protracted and costly, is inherently unpredictable and could have an adverse effect on our business, regardless of its outcome.
Item 1B.   Unresolved Staff Comments
None.
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Item 1C.   Cybersecurity
Risk Management and Strategy.
We depend on information systems and related technologies for internal purposes, including secure data storage, processing, and transmission, as well
as in our interactions with our business associates, such as customers and suppliers. We also rely on third-party business associates, with whom we may share
data and services, to defend their digital technologies and services against attack.
Managing Material Risks & Integrated Overall Risk Management
We have integrated cybersecurity risk management into our broader risk management framework to promote a company-wide culture of cyber risk
awareness. We depend on various controls, policies, procedures and programs (“Risk Controls”) to manage our risks, including risks associated with our
information systems. Risks Assessment and Risk Controls are included as part of our annual enterprise risk management (“ERM”) program. Our risk controls
include our administrative, physical, and technical controls (“Cyber Risk Controls”). We are dependent on our Cyber Risk Controls to protect our information
systems and the data that resides on or is transmitted through them. The Cyber Risk Controls are in many cases integrated with our other Risk Controls in an
attempt to maximize their effectiveness.
Engaging Third Parties on Risk Management
We collaborate with our clients, vendors and other third parties to develop information systems and protect against cybersecurity threats. We engage
third-party security experts for risk assessments and program enhancements.
Managing Third Party Risk
There are risks associated with the use of vendors, service providers and other third parties that provide information system services to us, process
information on our behalf, or have access to our information. We evaluate third-party service providers’ cybersecurity posture and seek to mitigate risk through
contractual safeguards, monitoring, and incident response plans.
Risks from Cybersecurity Incidents
While we have experienced and will likely continue to experience varying degrees of cyber incidents in the normal conduct of our business, including
attacks resulting from phishing emails and ransomware infections, those incidents have not materially affected the Company’s business strategy, results of
operations, or financial condition. There can be no assurance that the systems we have designed to prevent or limit the effects of cyber incidents or attacks will
be sufficient to prevent or detect future material consequences arising from incidents or attacks, or to avoid a material adverse impact on our systems after such
incidents or attacks do occur. However, the Company does not currently anticipate that risks from cybersecurity threats are reasonably likely to materially
affect the Company, including its business strategy, results of operations, or financial condition.
Governance.
Risk Management Personnel
Our Director of Cybersecurity and Networking has direct responsibility for assessing, monitoring and managing risks related to cybersecurity threats
in conjunction with the Vice President of Information Technology. Third party experts and/or consultants are retained to help identify, assess and monitor
cybersecurity incidents and related risks. Our Director of Cybersecurity and Networking has been in that position with the Company since 2019 and, including
prior experience, has over 13 years’ experience in managing IT infrastructure, architecture and security. Our Vice President of Information Technology has been
with the Company in his current position and similar roles since its inception in 2011. Prior to joining the Company, he had over 20 years’ experience in
oversight of Information Technology systems including ERP systems, infrastructure, and networking.
Monitoring Cybersecurity Risks and Incidents
Our Director of IT Cybersecurity and Networking meets regularly with members of our executive team to discuss and review risks related to
cybersecurity. The reviews may include evaluations of risks and incidents identified by third-party providers retained to review our cyber risk as well as
cybersecurity threat scenario planning. Identified risks related to cybersecurity threats may also be analyzed as part of our ERM process.
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Board of Director Oversight
Our Audit Committee is responsible for oversight of our programs and procedures related to cybersecurity risk. Management provides periodic reports
to the Audit Committee on cybersecurity risk. The Audit Committee reports significant findings from these reports to the full Board of Directors.
Item 2.    Properties
The following table sets forth information with respect to our current principal facilities. We believe that our facilities are suitable and adequate for our
current operations.
Location
 
Type
Operating Segment
 
Own/
Lease
United States
   
   
Baytown, TX
Manufacturing Facility, Service Center and Land
Spoolable Technologies
Own
Bossier City, LA
  Manufacturing Facility and Service Center
Pressure Control
  Lease
Bossier City, LA
  Manufacturing and Assembly Facilities, Warehouse and Land
Pressure Control
  Own
Donora, PA
  Service Center
Pressure Control
  Lease
DuBois, PA
  Service Center
Pressure Control
  Lease
Hobbs, NM
  Service Center / Land
Pressure Control
  Own
Hobbs, NM
Service Center
Spoolable Technologies
Lease
Houston, TX
  Administrative Headquarters
N/A
  Lease
New Waverly, TX
  Service Center / Land
Pressure Control
  Own
Odessa, TX
  Service Center / Land
Pressure Control
  Own
Oklahoma City, OK
  Service Center
Pressure Control
  Lease
Pleasanton, TX
Service Center
Spoolable Technologies
Own
Pleasanton, TX
  Service Center
Pressure Control
  Lease
Williston, ND
  Service Center
Pressure Control
  Lease
International
   
   
Queensland, Australia
  Service Centers and Offices / Land
Pressure Control
  Lease
Suzhou, China
  Production Facility and Offices
Pressure Control
  Lease
Hai Duong, Vietnam
Production Facility and Offices
Pressure Control
Lease
Consists of various facilities adjacent to each other constituting our manufacturing facility, test and assembly facility, warehouse and service center.
    We also own land adjacent to these facilities.
    Corporate headquarters.
Item 3.    Legal Proceedings
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. In the opinion of our management, there is no pending litigation, dispute
or claim against us that, if decided adversely, will have a material adverse effect on our results of operations, financial condition or cash flows.
Item 4.    Mine Safety Disclosures
Not applicable.
(1)
(1)
(2)
(3)
(2)
(2)
(1)    
(2)
(3)
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PART II
Item 5.    Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Common Stock
We have issued and outstanding two classes of common stock, Class A common stock and Class B common stock. Holders of Class B common stock
own a corresponding number of CC Units which may be redeemed for shares of Class A common stock. The principal market for our Class A common stock is
the New York Stock Exchange (“NYSE”), where it is traded under the symbol “WHD.” No public trading market currently exists for our Class B common
stock. As of December 31, 2024, there was one holder of record of our Class A common stock. The foregoing does not include the number of shareholders
whose shares are nominally held by banks, brokerage houses or other institutions, but includes all such institutions as one record holder. As of December 31,
2024, there were five holders of record of our Class B common stock.
Dividends
We have paid a regular quarterly cash dividend on our Class A common stock as approved by our board of directors since December 2019. 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 our CC Unit Holders for any dividends declared on our Class A common stock. We have paid quarterly dividends uninterrupted since initiation of the
cash dividend program and the approved dividend per share amount has increased from the initial amount of $0.09 per share to the current amount of $0.13 per
share of Class A common stock. In fiscal year 2024, the annual dividend rate for our Class A common stock was $0.50 per share compared to $0.46 per share in
fiscal year 2023 and $0.44 per share in fiscal year 2022.
We currently intend to continue paying the quarterly dividend at the current levels while retaining the balance of future earnings, if any, to finance the
growth of our business or repurchase shares of our Class A common stock. We would seek to increase the dividend in the future if our financial condition and
results of operations permit. Our future dividend policy is within the discretion of our board of directors and will depend upon then-existing conditions,
including our results of operations, financial condition, capital requirements, investment opportunities, statutory and contractual restrictions on our ability to
pay dividends and other factors our Board of Directors may deem relevant.
Share Repurchase Program
In June 2023, our Board of Directors authorized the Company to repurchase shares of its Class A common stock for an aggregate purchase price of up
to $150 million. Under our share repurchase program, shares may be repurchased from time to time in open market transactions or block trades, in privately
negotiated transactions or any other method permitted under U.S. 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.
The Inflation Reduction Act of 2022 provides for, among other things, the imposition of a 1% U.S. Federal excise tax on certain repurchases of stock
by publicly traded U.S. corporations after December 31, 2022. Accordingly, this new excise tax applies to our share repurchase program. For the years ended
December 31, 2024 and 2023, issuances of shares exceeded share repurchases and, as such, there was no excise tax. In future years, the Company could be
subject to the excise tax depending on the total shares repurchased in comparison to shares issued.
Performance Graph
The graph below compares the cumulative total shareholder return on our common stock to the S&P 500 Index, the S&P Oil & Gas Equipment &
Services Index and the PHLX Oil Service Index. The total shareholder return assumes $100 was invested on December 31, 2019 in Cactus Inc., the S&P 500
Index, the S&P Oil and Gas Equipment Select Industry Index and the PHLX Oil Service Index. It also assumes reinvestment of all dividends. The following
graph and related information shall not be deemed “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference
into any future filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that Cactus Inc. specifically incorporates it
by reference into such filing.  
23

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Issuer Purchases of Equity Securities
The following sets forth information with respect to our repurchase of Class A common stock during the three months ended December 31, 2024 (in
whole shares).
Period
Total number of shares
purchased
Weighted-average price paid
per share 
Total number of shares
purchased as part of
publicly announced plans or
programs 
Maximum dollar value of
shares that may yet be
purchased under the plans
or programs 
October 1-31, 2024
172 
$
60.07 
— 
$
146,302,153 
November 1-30, 2024
— 
$
— 
— 
$
146,302,153 
December 1-31, 2024
— 
$
— 
— 
$
146,302,153 
Total
172 
$
60.07 
— 
$
— 
Consists of shares of Class A common stock repurchased from employees to satisfy tax withholding obligations related to restricted stock units that vested
during the period.
Average price paid for Class A common stock purchased from employees to satisfy tax withholding obligations related to restricted stock units that vested
during the period.
In June 2023, our board of directors authorized the Company to repurchase shares of its Class A common stock for an aggregate purchase price of up to
$150 million.
Item 6.    (Reserved)
(1)
(2)
(3)
(3)
(1)
(2)
(3)
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Table of Contents
Item 7.    Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying
consolidated financial statements and related notes. The following discussion contains “forward-looking statements” that reflect our plans, estimates, beliefs
and expected performance. Our actual results may differ materially from those anticipated as discussed in these forward-looking statements as a result of a
variety of risks and uncertainties, including those described in “Cautionary Statement Regarding Forward-Looking Statements” and “Item 1A. Risk Factors”
included elsewhere in this Annual Report, all of which are difficult to predict. In light of these risks, uncertainties and assumptions, the forward-looking events
discussed may not occur. We assume no obligation to update any of these forward-looking statements except as otherwise required by law.
Market Factors
See “Item 1. Business” for information on our products and business. Demand for our products and services depends primarily upon oil and gas
industry activity levels, including the number of active drilling rigs, the number of wells being drilled, the number of wells being completed and the volume of
newly producing wells, among other factors. Oil and gas exploration and production activity is in turn heavily influenced by, among other factors, investor
sentiment, availability of capital and oil and gas prices locally and worldwide, which have historically been volatile.
Revenues generated by our Pressure Control and Spoolable Technologies operating segments are derived from three sources: products, rentals, and
field service and other. Product revenues are derived from the sale of wellhead systems, production trees and spoolable pipe and fittings. Rental revenues are
primarily derived from the rental of equipment used during the completion process, the repair of such equipment and the rental of equipment or tools used to
install wellhead equipment or spoolable pipe. Field service and other revenues are primarily earned when we provide installation and other field services for
both product sales and equipment rental.
Pressure Control
The Pressure Control segment designs, manufactures, sells and rents a range of wellhead and pressure control equipment under the Cactus Wellhead
brand. Products are sold and rented principally for onshore unconventional oil and gas wells and are utilized during the drilling, completion and production
phases of our customers’ wells. In addition, we provide field services for all of our products and rental items to assist with the installation, maintenance and
handling of the equipment.
We operate through service centers in the United States, which are strategically located in the key oil and gas producing regions, and in Eastern
Australia. These service centers support our field services and provide equipment assembly and repair services. We also provide rental and service operations in
the Middle East. Pressure Control manufacturing and production facilities are located in Bossier City, Louisiana and Suzhou, China.
Demand for our product sales in the Pressure Control segment are driven primarily by the number of new wells drilled, as each new well requires a
wellhead and, after the completion phase, a production tree. Demand for our rental items is driven primarily by the number of well completions as we rent frac
trees to oil and gas operators to assist in hydraulic fracturing. Rental demand is also driven to a lesser extent by drilling activity as we rent tools used in the
installation of wellheads. Field service and other revenues are closely correlated with revenues from product sales and rentals, as items sold or rented almost
always have an associated service component.
Spoolable Technologies
The Spoolable Technologies segment designs, manufactures and sells spoolable pipe and associated end fittings under the FlexSteel brand. Our
customers use these products primarily as production, gathering and takeaway pipelines to transport oil, gas or other liquids. In addition, we also provide field
services and rental items to assist our customers with the installation of these products. We support our field service operations through service centers and pipe
yards located in oil and gas producing regions throughout the United States and Western Canada. Our manufacturing facility is located in Baytown, Texas.
Demand for our product sales in the Spoolable Technologies segment are driven primarily by the number of wells being placed into production after
the completions phase as customers use our spoolable pipe and associated fittings to bring wells more rapidly onto production. Rental and field service and
other revenues are closely correlated with revenues from product sales, as items sold usually have an associated rental and service component.
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Table of Contents
Seasonality
Our business experiences some seasonality during the fourth quarter due to holidays and customers managing their budgets as the year closes out. This
can lead to lower activity in our three revenue categories as well as lower margins, particularly in field services due to lower labor utilization.
Recent Developments and Trends
Oil and Natural Gas Prices
The following table summarizes average oil and natural gas prices in North America over the indicated periods as well as industry activity levels as
reflected by the average number of active onshore drilling rigs during the same periods.
Year Ended
December 31,
2024
2023
2022
WTI Oil Price ($/bbl) 
$
76.63 
$
77.58 
$
94.90 
Natural Gas Price ($/MMBtu) 
$
2.19 
$
2.53 
$
6.45 
U.S. Land Drilling Rigs 
580
667
705
U.S. Energy Information Administration (“EIA”) Cushing, OK WTI (“West Texas Intermediate”) spot price per barrel of crude oil.
 EIA Henry Hub Natural Gas spot price per million British Thermal Unit (“MMBtu”).
 Baker Hughes.
Onshore drilling and completion activity levels declined through the first half of 2024, resulting in the average number of U.S. land drilling rigs for
2024 to be 13% below 2023 levels. Average oil prices were relatively stable in 2024 and were down 1% from 2023 average levels. Natural gas prices declined
approximately 13% in 2024 from 2023 with prices averaging $2.19 per MMBtu in 2024 compared to $2.53 per MMBtu in 2023. Natural gas prices were lower
as inventory levels remained above five-year maximum levels through most of the first half of 2024. Spot prices averaged $3.01 per MMBtu in December 2024
and closed 2024 at $3.40 per MMBtu, as colder than forecasted weather impacted prices. The increased year-end 2024 natural gas prices could favorably
impact oil and gas industry activity levels, although most of our customers are primarily oil-focused, thus moderating the potential impact to demand for our
products and services.
The ongoing conflict in Ukraine and prolonged conflict in the Middle East have had repercussions globally by continuing to cause uncertainty, not
only in the oil and natural gas markets, but also in the financial markets and global supply chain. Additionally, the U.S. presidential election outcome has
introduced further uncertainty to global supply chains, as the new administration has signaled the potential to impose and increase tariffs, including on China,
where we have a manufacturing facility. Such uncertainty could continue to result in stock price volatility and supply chain disruptions as well as higher oil and
natural gas prices which could cause higher inflation worldwide, impact consumer spending and negatively impact demand for our goods and services.
Consolidated Results of Operations
The following discussions relating to significant line items from our condensed consolidated statements of income are based on available information
and represent our analysis of significant changes or events that impact the comparability of reported amounts. Where appropriate, we have identified specific
events and changes that affect comparability or trends and, where reasonably practicable, have quantified the impact of such items.
We have two operating segments consisting of the Pressure Control segment and the Spoolable Technologies segment. Our results of operations are
evaluated by the Chief Executive Officer on a consolidated basis as well as at the segment level. The performance of our operating segments is primarily
evaluated based on segment operating income (in addition to other measures), which is defined as income before taxes and before interest income (expense),
net, other income (expense), net and corporate and other expenses not allocated to the operating segments.
(1)
(2)
(3)
(1) 
(2)
(3)
26

Table of Contents
Year Ended December 31, 2024 Compared to Year Ended December 31, 2023
The following table presents summary consolidated operating results for the periods indicated: 
 
Year Ended
 
 
 
December 31,
 
 
 
2024
2023
$ Change
% Change
 
(in thousands)
 
Revenues
  
  
  
  
Pressure Control
$
724,038 
$
756,727 
$
(32,689)
(4.3)%
Spoolable Technologies
407,038 
340,233 
66,805 
19.6
Corporate and other
(1,262)
— 
(1,262)
—
Total revenues
1,129,814 
1,096,960 
32,854 
3.0
Operating income
Pressure Control
210,710 
236,934 
(26,224)
(11.1)
Spoolable Technologies
104,864 
62,172 
42,692 
68.7
Total segment operating income
315,574 
299,106 
16,468 
5.5
Corporate and other expenses
(25,961)
(34,740)
8,779 
(25.3)
Total operating income
289,613 
264,366 
25,247 
9.6
Interest income (expense), net
6,459 
(6,480)
12,939 
nm
Other income, net
3,204 
4,490 
(1,286)
(28.6)
Income before income taxes
299,276 
262,376 
36,900 
14.1
Income tax expense
66,518 
47,536 
18,982 
39.9
Net income
$
232,758 
$
214,840 
$
17,918 
8.3
Less: net income attributable to non-controlling interest
47,351 
45,669 
1,682 
3.7
Net income attributable to Cactus Inc.
$
185,407 
$
169,171 
$
16,236 
9.6%
nm = not meaningful 
Pressure Control. Pressure Control revenue was $724.0 million for 2024, a decrease of $32.7 million, or 4.3%, from $756.7 million for 2023. The
decrease in revenues was primarily due to decreased sales of wellhead and production related equipment resulting from lower drilling and completion activity
by our customers. In addition, rental of drilling and completion equipment decreased as a result of the decline in customer activity. Operating income of $210.7
million in 2024 resulted in a decrease of $26.2 million, or 11.1%, from $236.9 million in 2023. The decrease was primarily attributable to lower gross margins
during the period due to decreased customer activity levels and higher selling, general and administrative ("SG&A") expenses. The increase in SG&A expenses
primarily related to higher personnel costs, stock-based compensation expense and other reserves, partially offset by a decrease in bad debt expense.
Spoolable Technologies. Spoolable Technologies revenue of $407.0 million for 2024, represented an increase of $66.8 million, or 19.6%, from $340.2
million for 2023 as results for 2023 only included ten months of revenues from the FlexSteel acquisition, which closed on February 28, 2023. Total operating
income of $104.9 million for 2024, resulted in an increase of $42.7 million, or 68.7%, from $62.2 million for 2023 as results for 2023 only included ten months
of revenues. Operating income for the 2024 included $16.3 million of expense related to the change in fair value of the earn-out liability for the FlexSteel
acquisition and $16.0 million of intangible amortization. Operating income for 2023 included approximately $14.9 million of expense related to the change in
fair value of the estimated earn-out liability, $23.5 million of inventory step-up expense and $20.3 million of intangible amortization expense, as well as
depreciation expense of $13.8 million primarily associated with the step-up of fixed assets in connection with accounting for the purchased assets at fair value.
Corporate and other. Corporate and other revenue represents the elimination of inter-segment sales from our Pressure Control segment to our
Spoolable Technologies segment. Corporate and other expenses include costs associated with executive management and other administrative functions not
directly attributable to our reporting segments. Corporate and other expenses for 2024 were $26.0 million, a decrease of $8.8 million from $34.7 million for
2023. The decrease was largely
27

Table of Contents
attributable to lower professional fees related to transaction costs associated with growth initiatives, including the closing of and accounting for the FlexSteel
acquisition in 2023.
Interest income (expense), net. Interest income, net was $6.5 million in 2024 compared to interest expense, net of $6.5 million in 2023. The increase in
interest income, net of $12.9 million was primarily due to an increase in interest income earned on cash invested during the 2024 period. Interest expense in
2023 was primarily related to borrowings outstanding through July 2023 under the Amended ABL Credit Facility (as defined in Note 6 in the notes to the
Consolidated Financial Statements) which were required to finance the FlexSteel acquisition.
Other income, net. Other income, net represents non-cash adjustments for the revaluation of the liability related to the tax receivable agreement as a
result of changes to the forecasted state tax rate.
Income tax expense. Income tax expense for 2024 was $66.5 million (22.2% effective tax rate) compared to $47.5 million (18.1% effective tax rate)
for 2023. Income tax expense for 2024 includes approximately $66.5 million of expense associated with current income. Additionally, in 2024 we recognized
$2.1 million of expense associated with the revaluation of our deferred tax asset as a result of a change in our forecasted state tax rate, a $2.1 million benefit
related to the finalization of our 2023 tax returns, a $0.7 million benefit associated with permanent differences related to equity compensation and $0.7 million
of expense associated with other adjustments. Income tax expense for 2023 includes approximately $56.6 million of expense associated with current income
offset by a $12.1 million benefit associated with the release of our valuation allowance previously provided for our investment in Cactus Companies based on
the determination that the deferred tax asset was realizable due to our ability to generate sufficient taxable income of the appropriate type. Additionally in 2023,
we recognized $4.9 million of expense associated with the revaluation of our deferred tax asset as a result of a change in our forecasted state tax rate, $0.5
million of expense related to the finalization of our 2022 tax returns, a $1.2 million benefit associated with permanent differences related to equity
compensation and a $1.2 million benefit associated with other adjustments. Partial valuation releases occur in conjunction with redemptions of CC Units as a
portion of Cactus Inc.’s deferred tax assets from its investment in Cactus Companies becomes realizable. Cactus Inc. is only subject to federal and state income
tax on its share of income from Cactus Companies. Income allocated to the non-controlling interest is only taxable to the non-controlling interest.
Year Ended December 31, 2023 Compared to Year Ended December 31, 2022
The following table presents summary consolidated operating results for the periods indicated: 
 
Year Ended
 
 
 
December 31,
 
 
 
2023
2022
$ Change
% Change
 
(in thousands)
 
Revenues
  
  
  
  
Pressure Control
$
756,727 
$
688,369 
$
68,358 
9.9%
Spoolable Technologies
340,233 
— 
340,233 
—
Total revenues
1,096,960 
688,369 
408,591 
59.4
Operating income
Pressure Control
236,934 
202,650 
34,284 
16.9
Spoolable Technologies
62,172 
— 
62,172 
—
Total segment operating income
299,106 
202,650 
96,456 
47.6
Corporate and other expenses
(34,740)
(27,902)
(6,838)
24.5
Total operating income
264,366 
174,748 
89,618 
51.3
Interest income (expense), net
(6,480)
3,714 
(10,194)
nm
Other income (expense), net
4,490 
(1,910)
6,400 
nm
Income before income taxes
262,376 
176,552 
85,824 
48.6
Income tax expense
47,536 
31,430 
16,106 
51.2
Net income
$
214,840 
$
145,122 
$
69,718 
48.0
Less: net income attributable to non-controlling interest
45,669 
34,948 
10,721 
30.7
Net income attributable to Cactus Inc.
$
169,171 
$
110,174 
$
58,997 
53.5%
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Table of Contents
nm = not meaningful 
Pressure Control. Pressure Control revenue was $756.7 million for 2023, an increase of $68.4 million, or 10%, from $688.4 million for 2022. The
increase in revenues was primarily due to higher sales of wellhead and production related equipment resulting from higher drilling and completion activity by
our customers. In addition, increased rental of drilling and completion equipment and field service associated with product and rental revenues also increased
as a result of higher customer activity. Operating income of $236.9 million in 2023 increased $34.3 million, or 17%, from $202.7 million in 2022. The increase
was primarily attributable to higher gross margins during the period and increased volume partially offset by higher segment selling, general and administrative
(“SG&A”) expenses. The increase in SG&A expenses primarily related to higher bad debt expense, travel and entertainment expenses, professional fees and
hardware and software expenses.
Spoolable Technologies. Spoolable Technologies revenue of $340.2 million and operating income of $62.2 million represents FlexSteel results
generated from February 28, 2023, the date of acquisition, through December 31, 2023. The results for Spoolable Technologies include the following items
resulting from purchase accounting: approximately $14.9 million of expense related to the change in fair value of the estimated earn-out payment for the
FlexSteel acquisition, $23.5 million of inventory step-up expense, $20.3 million of intangible amortization expense and depreciation expense of $13.8 million
primarily associated with the step-up of fixed assets.
Corporate and other expenses. Corporate and other expenses for 2023 were $34.7 million, an increase of $6.8 million from $27.9 million for 2022.
The increase was largely attributable to higher professional fees of $3.8 million related to transaction costs associated with the closing of and accounting for the
FlexSteel acquisition. Additional increases were attributable to higher personnel costs of which the largest increase was related to stock-based compensation.
Interest income (expense), net. Interest expense, net was $6.5 million in 2023 compared to interest income, net of $3.7 million in 2022. The increase in
interest expense, net of $10.2 million was primarily related to borrowings under the Amended ABL Credit Facility related to financing the FlexSteel
acquisition.
Other income (expense), net. Other income (expense), net represents non-cash adjustments for the revaluation of the liability related to the tax
receivable agreement as a result of changes to the forecasted state tax rate.
Income tax expense. Income tax expense for 2023 was $47.5 million (18.1% effective tax rate) compared to $31.4 million (17.8% effective tax rate)
for 2022. Income tax expense for 2023 includes approximately $56.6 million of expense associated with current income offset by a $12.1 million benefit
associated with the release of our valuation allowance previously provided for our investment in Cactus Companies based on the determination that the
deferred tax asset was realizable due to our ability to generate sufficient taxable income of the appropriate type. Additionally, we recognized $4.9 million of
expense associated with the revaluation of our deferred tax asset as a result of a change in our forecasted state tax rate, $0.5 million of expense related to the
finalization of our 2022 tax returns, a $1.2 million benefit associated with permanent differences related to equity compensation and a $1.2 million benefit
associated with other adjustments. Income tax expense for 2022 primarily included approximately $36.4 million of expense associated with current income
offset by a $1.7 million benefit associated with permanent differences related to equity compensation, a $1.7 million benefit resulting from a change in our
forecasted state rate and a $1.4 million tax benefit associated with the partial valuation allowance release in conjunction with CW Unit redemptions during
2022. Partial valuation releases occur in conjunction with redemptions of CW Units (or CC Units, in the case of redemptions after the CC Reorganization) as a
portion of Cactus Inc.’s deferred tax assets from its investment in Cactus LLC (or, after the CC Reorganization, its investment in Cactus Companies) becomes
realizable. Cactus Inc. is only subject to federal and state income tax on its share of income from Cactus Companies. Income allocated to the non-controlling
interest is only taxable to the non-controlling interest.
Liquidity and Capital Resources
At December 31, 2024, we had $342.8 million of cash and cash equivalents. Our primary sources of liquidity and capital resources are cash on hand,
cash flows generated by operating activities and, if necessary, borrowings under our Amended ABL Credit Facility. Depending upon market conditions and
other factors, we may also have the ability to issue additional equity and debt if needed. As of December 31, 2024, we had no borrowings outstanding under
our Amended ABL Credit Facility and $222.6 million of available borrowing capacity. We had $2.4 million in letters of credit outstanding at December 31,
2024 which reduced our available borrowing capacity. We were in compliance with the covenants of the Amended ABL Credit Facility as of December 31,
2024.
In June 2023, our board of directors authorized the Company to repurchase shares of its Class A common stock for an aggregate purchase price of up
to $150 million. Under our share repurchase program, shares may be repurchased from time to
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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. At December 31, 2024, $146.3 million of Class A common stock could be repurchased
under our share repurchase program.
We expect that our existing cash on hand, cash generated from operations and available borrowings under our Amended ABL Credit Facility will be
sufficient for the next 12 months to meet our material cash requirements, including working capital requirements, debt service obligations, anticipated capital
expenditures, lease obligations, repurchases of shares of our Class A common stock, expected TRA liability payments, anticipated tax liabilities and dividends
to holders of our Class A common stock as well as pro rata cash distributions to holders of CC Units other than Cactus Inc.
We currently estimate our net capital expenditures for the year ending December 31, 2025 will range from $45 million to $55 million, mostly related
to rental fleet investments including drilling tools, international expansion, diversification of our low cost supply chain, enhancements for our Baytown, TX
manufacturing plant and additional deployment of equipment to facilitate installation of recent product introductions. We continuously evaluate our capital
expenditures, and the amount we ultimately spend will depend on a number of factors, including, among other things, demand for rental assets, available
capacity in existing locations, prevailing economic conditions, market conditions in the E&P industry, customers’ forecasts, crude oil and natural gas price
volatility and company initiatives.
For information concerning our future lease payments as of December 31, 2024, see Note 10 to our consolidated financial statements.
Our ability to satisfy our long-term liquidity requirements, including cash distributions to CC Unit Holders to fund their respective income tax
liabilities relating to their share of the income of Cactus Companies and to fund liabilities related to the TRA, depends on our future operating performance,
which is affected by, and subject to, prevailing economic conditions, market conditions in the E&P industry, availability and cost of raw materials, and
financial, business and other factors, many of which are beyond our control. We will not be able to predict or control many of these factors, such as economic
conditions in the markets where we operate and competitive pressures. If necessary, we could choose to further reduce our spending on capital projects and
operating expenses to ensure we operate within the cash flow generated from our operations.
Tax Receivable Agreement (TRA)
The TRA generally provides for the payment by Cactus Inc. to the TRA Holders 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. To the extent Cactus Companies has available cash, we intend to cause Cactus Companies to make pro rata distributions to its
unit holders, including Cactus Inc., in an amount at least sufficient to allow us to pay our taxes and to make payments under the TRA.
Except in cases where we elect to terminate the TRA early, the TRA is terminated early due to certain mergers, asset sales, or other forms of business
combinations or changes of control relating to Cactus Companies or if we have available cash but fail to make payments when due under circumstances where
we do not have the right to elect to defer the payment. We may generally 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. In certain cases, payments under the TRA
may be accelerated and/or significantly exceed the actual benefits, if any, we realize in respect of the tax attributes subject to the TRA. In these situations, our
obligations under the TRA could have a substantial negative impact on our liquidity.
Assuming no material changes in the relevant tax law, we expect that if the TRA were terminated as of December 31, 2024, the estimated termination
payments, based on the assumptions discussed in Note 11 of the notes to the Consolidated Financial Statements, would be approximately $273.7 million,
calculated using a discount rate equal to the 12-month term SOFR published by CME Group Benchmark Administration Limited, plus 71.513 basis points,
applied against an undiscounted liability of $406.5 million. A 10% increase in the price of our Class A common stock at December 31, 2024 would have
increased the discounted liability by $9.6 million to $283.3 million (an undiscounted increase of $15.8 million to $422.3 million), and likewise, a 10% decrease
in the price of our Class A common stock at December 31, 2024 would have decreased the discounted liability by $9.6 million to $264.1 million
(an undiscounted decrease of $15.8 million to $390.8 million).
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Cash Flows
Year Ended December 31, 2024 Compared to Year Ended December 31, 2023
The following table summarizes our cash flows for the periods indicated: 
 
Year Ended December 31,
 
2024
2023
 
(in thousands)
Net cash provided by operating activities
$
316,113 
$
340,280 
Net cash used in investing activities
(35,388)
(654,793)
Net cash provided by (used in) financing activities
(70,144)
103,275 
 
Net cash provided by operating activities was $316.1 million in 2024 compared to $340.3 million in 2023. Operating cash flows decreased primarily
due to an increase in cash outflows associated with working capital, largely related to increased purchases of inventory of $67.6 million as well as payout of the
earn-out liability of $31.2 million. These decreases in operating cash flows were offset by an increase in customer collections of $24.9 million as well as an
increase in operating income of $17.9 million in 2024 compared to 2023.
Net cash used in investing activities was $35.4 million and $654.8 million for 2024 and 2023, respectively. The decrease was primarily due to the non-
recurrence of cash paid to acquire FlexSteel for $621.5 million, less $5.3 million in cash acquired during the first quarter of 2023. Additionally, our capital
expenditures decreased approximately $4.8 million primarily due to the $7.0 million purchase of a previously leased facility during the first half of 2023.
Net cash used in financing activities was $70.1 million for 2024 compared to net cash provided by in financing activities of $103.3 million for 2023.
The decrease in net cash provided by financing activities was primarily related to certain financing activities in 2023 associated with the FlexSteel acquisition.
We received approximately $169.9 million of proceeds, net of issuance costs, from issuing shares of our Class A common stock during 2023. The year ended
December 31, 2023 also included payments of approximately $6.9 million of debt issuance costs. The year ended December 31, 2024 includes a $4.1 million
increase in share repurchases, primarily associated with the Company's share repurchase program, higher dividend payments of approximately $3.6 million and
a $6.0 million payment related to the contingent consideration established as of the FlexSteel acquisition date. These increases are partially offset by a $3.4
million decrease in member distributions.
Year Ended December 31, 2023 Compared to Year Ended December 31, 2022
The following table summarizes our cash flows for the periods indicated: 
 
Year Ended December 31,
 
2023
2022
 
(in thousands)
Net cash provided by operating activities
$
340,280 
$
117,884 
Net cash used in investing activities
(654,793)
(25,536)
Net cash provided by (used in) financing activities
103,275 
(47,382)
Net cash provided by operating activities was $340.3 million in 2023 compared to $117.9 million in 2022. Operating cash flows increased primarily
due to higher income and a decrease in cash outflows associated with working capital, largely related to decreased purchases of inventory as well as higher
collections on receivable balances. These increases in operating cash flows were slightly offset by $20.5 million of additional income tax payments, higher
TRA payments of $15.2 million and $4.6 million of additional interest paid in 2023 compared to 2022.
Net cash used in investing activities was $654.8 million and $25.5 million for 2023 and 2022, respectively. The increase was primarily due to cash
paid to acquire FlexSteel for $621.5 million, less $5.3 million in cash acquired. Additionally, our capital expenditures increased approximately $15.7 million
primarily due to the $7.0 million purchase of a previously leased facility, Pressure Control rental fleet additions and enhancements and $3.0 million of capital
expenditures for the Spoolable Technologies segment. Other movements in our investing activities were related to the increase in proceeds from sales of assets
of approximately $2.6 million from 2022.
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Net cash provided by financing activities was $103.3 million for 2023 compared to net cash used in financing activities of $47.4 million for 2022. The
increase in net cash provided by financing activities was primarily related to certain financing activities in 2023 associated with the FlexSteel acquisition. We
received approximately $169.9 million of proceeds, net of issuance costs, from issuing shares of our Class A common stock during 2023. Additionally, we
received $155.0 million from total borrowings under our Amended ABL Credit Facility of which all $155.0 million has been repaid. Increased payments of
$6.6 million in deferred financing costs, increased distributions to members of $7.0 million, higher dividend payments of $3.4 million, $1.6 million of
additional payments on finance leases and a $0.7 million increase in share repurchases partially offset the aforementioned cash inflows associated with the
equity financing activities during 2023.
Critical Accounting Policies and Estimates
In preparing our financial statements in accordance with accounting principles generally accepted in the United States of America (“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 generally 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 financial statements. We identify certain accounting policies as critical based on, among other things, their impact on the
portrayal of our financial condition and results of operations and the degree of difficulty, subjectivity and complexity in their deployment. Note 2 of the notes to
the Consolidated Financial Statements includes a summary of the significant accounting policies used in the preparation of the accompanying consolidated
financial statements. The following is a brief discussion of our most critical accounting policies and related estimates and assumptions.
Determination of Fair Value in Business Combinations
Accounting for the acquisition of a business requires the allocation of the purchase price to the various assets acquired and liabilities assumed at their
respective fair values. The determination of fair value requires the use of significant estimates and assumptions, and in making these determinations,
management uses all available information. For tangible and identifiable intangible assets acquired in a business combination, the determination of fair value
utilizes several valuation methodologies including discounted cash flows which has assumptions with respect to the timing and amount of future revenue and
expenses associated with an asset. The assumptions made in performing these valuations include, but are not limited to, discount rates, future revenues and
operating costs, projections of capital costs, and other assumptions believed to be consistent with those used by principal market participants. Due to the
specialized nature of these calculations, we engage third-party specialists to assist management in evaluating our assumptions as well as appropriately
measuring the fair value of assets acquired and liabilities assumed.
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 direct labor and overhead cost. Net realizable value is the estimated selling price in the ordinary course of business, less
reasonably predictable costs of completion, disposal and transportation. We evaluate the components of inventory on a regular basis for excess and
obsolescence. Reserves are made based on a range of factors, including age, usage and technological or market changes that may impact demand for those
products. The amount of reserve recorded is subjective and is susceptible to change from period to period.
Long‑Lived Assets
Key estimates related to long‑lived assets include useful lives and recoverability of carrying values. Such estimates could be modified, as impairment
could arise as a result of changes in supply and demand fundamentals, technological developments, new competitors with disruptive technologies or cost
advantages and the cyclical nature of the oil and gas industry. We evaluate long‑lived assets for potential impairment indicators whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be recoverable. Long‑lived assets assessed for impairment are grouped at the lowest level
for which identifiable cash flows are available, and a provision would be made where the cash flow is less than the carrying value of the asset. The estimation
of future cash flows and fair value is highly subjective and inherently imprecise. Estimates can change materially from period to period based on many factors.
Accordingly, if conditions change in the future, we may record impairment losses, which could be material to any particular reporting period.
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Goodwill
Goodwill represents the excess of purchase price paid over the fair value of the net assets of acquired businesses. Goodwill is not amortized, but we
evaluate at least annually whether it is impaired. Goodwill is considered impaired if the carrying amount of the reporting unit exceeds its estimated fair value.
We conduct our annual assessment of the recoverability of goodwill as of December 31 of each year. 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. The goodwill impairment test is also
performed whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If it is necessary to perform the quantitative
assessment to determine if our goodwill is impaired, we will utilize a discounted cash flow analysis using management’s projections that are subject to various
risks and uncertainties of revenues, expenses and cash flows as well as assumptions regarding discount rates, terminal value and control premiums. Estimates
of future cash flows and fair value are highly subjective and inherently imprecise.
Income Taxes
Deferred taxes are recorded using the asset and liability method, whereby tax assets and liabilities are determined based on the differences between the
financial statement and tax basis of assets and liabilities using enacted tax laws and rates expected to apply to taxable income in the year in which the
differences are expected to reverse. We assess the likelihood that our deferred tax assets will be recovered through adjustments to future taxable income. To the
extent we believe recovery is not likely, we establish a valuation allowance to reduce the asset to a value we believe will be recoverable based on our
expectation of future taxable income. In evaluating our ability to recover our deferred tax assets, we consider all available positive and negative evidence,
including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and results of recent operations. The
assumptions about future taxable income require significant judgment and are consistent with the plans and estimates management is using to manage the
underlying business. If the projected future taxable income changes materially, we may be required to reassess the amount of valuation allowance recorded
against our deferred tax assets.
Tax Receivable Agreement
The TRA generally provides for the payment by Cactus Inc. to the TRA Holders 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 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 in
connection with our IPO or any subsequent offering (or, following the completion of the CC Reorganization, such TRA Holder’s CC Units), or pursuant to any
other exercise of the Redemption Right or the Call Right, (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. makes under the TRA. We retain the remaining 15% of the 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 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.
Redemptions of CC Units (CW Units prior to the CC Reorganization) result in adjustments to the tax basis of the tangible and intangible assets of
Cactus Companies (Cactus LLC prior to the CC Reorganization). These adjustments are allocated to Cactus Inc. Such adjustments to the tax basis of the
tangible and intangible assets of Cactus Companies would not be available to Cactus Inc. absent its acquisition or deemed acquisition of CC Units or CW Units
prior to the CC Reorganization. In addition, the repayment of borrowings outstanding under the Cactus LLC term loan facility resulted in adjustments to the tax
basis of the tangible and intangible assets of Cactus LLC, a portion of which was allocated to Cactus Inc. These basis adjustments are expected to increase (for
tax purposes) Cactus Inc.’s depreciation and amortization deductions and may also decrease Cactus Inc.’s gains (or increase its losses) on future dispositions of
certain assets to the extent tax basis is allocated to those assets. Such increased deductions and losses and reduced gains may reduce the amount of tax that
Cactus Inc. would otherwise be required to pay in the future. 
Estimating the amount and timing of the tax benefit is by its nature imprecise and the assumptions used in the estimates can change. The tax benefit is
dependent upon future events and assumptions, the amount of the redeeming unit holders’ tax basis in its CC Units (formerly CW Units) at the time of the
relevant redemption, the depreciation and amortization
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periods that apply to the increase in tax basis, the amount and timing of taxable income we generate in the future and the U.S. federal, state and local income
tax rate then applicable, and the portion of Cactus Inc.’s payments under the TRA that constitute imputed interest or give rise to depreciable or amortizable tax
basis. The most critical estimate included in calculating the TRA liability to record is the combined U.S. federal income tax rate and an assumed combined state
and local income tax rate, to determine the future benefit we will realize. A 100 basis point decrease/increase in the blended tax rate used would
decrease/increase the TRA liability recorded at December 31, 2024 by approximately $15.3 million. 
Recent Accounting Pronouncements
See Note 2 of the notes to the Consolidated Financial Statements for discussion of recent accounting pronouncements.
Inflation
While inflationary cost increases can affect our income from operations’ margin, we believe that inflation generally has not had a material adverse
effect on our results of operations. Other than the potential for increased inflation as a result of new tariffs and retaliatory actions by other countries,
inflationary cost increases are not expected to have a material adverse effect on our results of operations. In 2022, the United States experienced the highest
inflation in decades primarily due to supply-chain issues, a shortage of labor and a build-up of demand for goods and services. The most noticeable adverse
impact to our business was increased costs associated with freight, materials, vehicle-related costs and personnel expenses. Most of our costs associated with
providing our products and services moderated in 2023 and 2024, except for salaries and wages. It is highly unlikely that salaries and wages will decrease to
the levels experienced in prior years.
Item 7A.   Quantitative and Qualitative Disclosures about Market Risk
In the normal course of business, we are exposed to market risk from changes in foreign currency exchange rates and changes in interest rates. 
Foreign Currency Exchange Rate Risk 
We have subsidiaries with operations in China, Australia and Canada who conduct business in their local currencies (functional currencies) and are
therefore subject to foreign currency exchange rate risk on cash flows related to sales, expenses, financing and investing transactions in currencies other than
the U.S. dollar. Currently, we do not have any open foreign currency forward contracts to hedge this risk.
Additionally, certain intercompany balances between our U.S. and foreign subsidiaries as well as other financial assets and liabilities are denominated
in U.S. dollars. Since this is not the functional currency of our foreign subsidiaries, the changes in these balances are translated in our Consolidated Statements
of Income, resulting in the recognition of a remeasurement gain or loss. In order to provide a hedge against currency fluctuations on the U.S. dollar
denominated assets and liabilities held by certain of our foreign subsidiaries, we enter into monthly foreign currency forward contracts (balance sheet hedges)
to offset a portion of the remeasurement gain or loss recorded. As of December 31, 2024, if the U.S. dollar strengthened or weakened 5%, the impact to the
unrealized value of our forward contracts would be approximately $0.9 million. The gain or loss on the forward contracts would be largely offset by the gain or
loss on the underlying transactions, and therefore, would have minimal impact on future earnings.
Interest Rate Risk
Our Amended ABL Credit Facility is variable rate debt. At December 31, 2024, there were no borrowings outstanding. Borrowings under our
Amended ABL Credit Facility bear interest at Cactus Company’s option at either the Alternate Base Rate (as defined therein) or the Adjusted Term SOFR Rate
(as defined therein), plus, in each case, an applicable margin.
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Item 8.    Financial Statements and Supplementary Data
The following Consolidated Financial Statements are filed as part of this Annual Report:
Cactus, Inc. and Subsidiaries
Management’s Report on Internal Control Over Financial Reporting 
36
 
 
Report of Independent Registered Public Accounting Firm  (PCAOB ID 238)
37
 
 
Consolidated Balance Sheets as of December 31, 2024 and 2023
39
 
 
Consolidated Statements of Income for the Years Ended December 31, 2024, 2023 and 2022
40
 
 
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2024, 2023 and 2022
41
 
 
Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2024, 2023 and 2022
42
 
 
Consolidated Statements of Cash Flows for the Years Ended December 31, 2024, 2023 and 2022
43
 
 
Notes to the Consolidated Financial Statements 
44
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Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules
13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended. Our internal control over financial reporting was designed to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In making its assessment, management has utilized the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission
(or “COSO”) in Internal Control-Integrated Framework (2013 framework). Based on this assessment, management has concluded that, as of December 31,
2024, our internal control over financial reporting was effective.
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/ Jay A. Nutt
Chief Executive Officer, Chairman of the Board and Director
 
Executive Vice President, Chief Financial Officer and Treasurer
Houston, Texas
February 27, 2025
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Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of Cactus, Inc.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Cactus, Inc. and its subsidiaries (the "Company") as of December 31, 2024 and 2023, and
the related consolidated statements of income, of comprehensive income, of stockholders' equity and of cash flows for each of the three years in the period
ended December 31, 2024, including the related notes (collectively referred to as the "consolidated financial statements"). We also have audited the Company's
internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by
the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of
December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024 in
conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material
respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework
(2013) issued by the COSO.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and
for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control
Over Financial Reporting. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control
over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States)
(PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable
assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal
control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and
significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control
over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other
procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. 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; 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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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
Critical Audit Matters
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 (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. 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.
The principal considerations for our determination that performing procedures relating to the liability related to the TRA is a critical audit matter are (i) a high
degree of auditor subjectivity and effort in performing procedures and evaluating audit evidence related to management’s calculation of the tax basis and
development of applicable state apportionment factors utilized in determining the blended tax rate and (ii) 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 relating to the calculation and recognition of the TRA liability,
including controls over the completeness and accuracy of the underlying data used in the tax basis and blended tax rate calculations. These procedures also
included, among others, testing the completeness and accuracy of the underlying information used in the calculation of the TRA liability, and the involvement
of professionals with specialized skill and knowledge to assist in (i) developing an independent calculation of the tax basis, (ii) comparing the independent
calculation to management’s calculations to evaluate the reasonableness of the tax basis, (iii) evaluating the apportionment factors and the resulting blended tax
rate, and (iv) assessing management’s application of the tax laws. 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.
/s/ PricewaterhouseCoopers LLP
Houston, Texas
February 27, 2025
We have served as the Company’s auditor since 2015, which includes periods before the Company became subject to SEC reporting requirements.
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CACTUS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
 
December 31,
 
2024
2023
(in thousands, except per share data)
Assets
 
 
Current assets
  
  
Cash and cash equivalents
$
342,843 
$
133,792 
Accounts receivable, net of allowance of $3,779 and $3,642, respectively
191,627 
205,381 
Inventories
226,796 
205,625 
Prepaid expenses and other current assets
13,422 
11,380 
Total current assets
774,688 
556,178 
Property and equipment, net
346,008 
345,502 
Operating lease right-of-use assets, net
24,094 
23,496 
Intangible assets, net
163,991 
179,978 
Goodwill
203,028 
203,028 
Deferred tax asset, net
219,003 
204,852 
Other noncurrent assets
8,516 
9,527 
Total assets
$
1,739,328 
$
1,522,561 
Liabilities and Equity
 
 
Current liabilities
 
 
Accounts payable
$
72,001 
$
71,841 
Accrued expenses and other current liabilities
75,416 
50,654 
Earn-out liability
— 
20,810 
Current portion of liability related to tax receivable agreement
20,297 
20,855 
Finance lease obligations, current portion
7,024 
7,280 
Operating lease liabilities, current portion
4,086 
4,220 
Total current liabilities
178,824 
175,660 
Deferred tax liability, net
2,868 
3,589 
Liability related to tax receivable agreement, net of current portion
258,376 
250,069 
Finance lease obligations, net of current portion
10,528 
9,352 
Operating lease liabilities, net of current portion
20,078 
19,121 
Other noncurrent liabilities
4,475 
— 
Total liabilities
475,149 
457,791 
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, 68,152 and 65,409 shares issued and outstanding
681 
654 
Class B common stock, $0.01 par value, 215,000 shares authorized, 11,433 and 14,034 shares issued and outstanding
— 
— 
Additional paid-in capital
520,794 
465,012 
Retained earnings
552,133 
400,682 
Accumulated other comprehensive loss
(2,491)
(826)
Total stockholders’ equity attributable to Cactus Inc.
1,071,117 
865,522 
Non-controlling interest
193,062 
199,248 
Total stockholders’ equity
1,264,179 
1,064,770 
Total liabilities and equity
$
1,739,328 
$
1,522,561 
The accompanying notes are an integral part of these consolidated financial statements.
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CACTUS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
 
Year Ended December 31,
 
2024
2023
2022
(in thousands, except per share data)
Revenues
 
 
 
Product revenue
$
852,265 
$
810,379 
$
452,615 
Rental revenue
101,785 
113,631 
100,453 
Field service and other revenue
175,764 
172,950 
135,301 
Total revenues
1,129,814 
1,096,960 
688,369 
Costs and expenses
 
 
 
Cost of product revenue
496,888 
490,149 
277,871 
Cost of rental revenue
54,448 
61,983 
62,037 
Cost of field service and other revenue
142,085 
138,536 
106,013 
Selling, general and administrative expenses
130,462 
127,076 
67,700 
Change in fair value of earn-out liability
16,318 
14,850 
— 
Total costs and expenses
840,201 
832,594 
513,621 
Operating income
289,613 
264,366 
174,748 
Interest income (expense), net
6,459 
(6,480)
3,714 
Other income (expense), net
3,204 
4,490 
(1,910)
Income before income taxes
299,276 
262,376 
176,552 
Income tax expense
66,518 
47,536 
31,430 
Net income
$
232,758 
$
214,840 
$
145,122 
Less: net income attributable to non-controlling interest
47,351 
45,669 
34,948 
Net income attributable to Cactus Inc.
$
185,407 
$
169,171 
$
110,174 
Earnings per Class A share - basic
$
2.79 
$
2.62 
$
1.83 
Earnings per Class A share - diluted
$
2.77 
$
2.57 
$
1.80 
Weighted average Class A shares outstanding - basic
66,393 
64,641 
60,323 
Weighted average Class A shares outstanding - diluted
79,915 
79,460 
76,337 
The accompanying notes are an integral part of these consolidated financial statements.
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CACTUS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 
Year Ended December 31, 
 
2024
2023
2022
(in thousands)
Net income
$
232,758 
$
214,840 
$
145,122 
Foreign currency translation adjustments
(1,974)
239 
(1,308)
Comprehensive income
230,784 
215,079 
143,814 
Less: comprehensive income attributable to non-controlling interest
47,042 
45,750 
34,632 
Comprehensive income attributable to Cactus Inc.
$
183,742 
$
169,329 
$
109,182 
The accompanying notes are an integral part of these consolidated financial statements.
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CACTUS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
Class A
Common Stock
Class B
Common Stock
Additional
Paid-In Capital
Retained
Earnings
Accumulated Other
Comprehensive
Income (Loss)
Non-
controlling
Interest
Total Equity
(in thousands)
Shares
Amount
Shares
Amount
Balance at December 31, 2021
59,035 
$
590 
16,674 
$
— 
$
289,600 
$
178,446 
$
8 
$
126,389 
$
595,033 
Member distributions
— 
— 
— 
— 
— 
— 
— 
(9,692)
(9,692)
Effect of CW Unit redemptions
1,696 
17 
(1,696)
— 
13,690 
— 
— 
(13,707)
— 
Tax impact of equity transactions
— 
— 
— 
— 
2,076 
— 
— 
— 
2,076 
Equity award vestings
172 
2 
— 
— 
(3,306)
— 
— 
(1,257)
(4,561)
Other comprehensive loss
— 
— 
— 
— 
— 
— 
(992)
(316)
(1,308)
Stock-based compensation
— 
— 
— 
— 
8,468 
— 
— 
2,163 
10,631 
Cash dividends declared ($0.44 per share)
— 
— 
— 
(26,856)
— 
— 
(26,856)
Net income
— 
— 
— 
— 
— 
110,174 
— 
34,948 
145,122 
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)
Effect of CW Unit redemptions
944 
9 
(944)
— 
12,787 
— 
— 
(12,796)
— 
Tax impact of equity transactions
— 
— 
— 
— 
(13,099)
— 
— 
16,508 
3,409 
Equity award vestings
218 
2 
— 
— 
(3,422)
— 
— 
(1,501)
(4,921)
Other comprehensive income
— 
— 
— 
— 
— 
— 
158 
81 
239 
Share repurchases
(8)
— 
— 
— 
(286)
— 
— 
(41)
(327)
Stock-based compensation
— 
— 
— 
— 
14,782 
— 
— 
3,322 
18,104 
Cash dividends declared ($0.46 per share)
— 
— 
— 
(30,253)
— 
— 
(30,253)
Net income
— 
— 
— 
— 
— 
169,171 
— 
45,669 
214,840 
Balance at December 31, 2023
65,409 
$
654 
14,034 
$
— 
$
465,012 
$
400,682 
$
(826)
$
199,248 
$
1,064,770 
Member distributions
— 
— 
— 
— 
— 
— 
— 
(13,290)
(13,290)
Effect of CC Unit redemptions
2,601 
26 
(2,601)
— 
41,636 
— 
— 
(41,662)
— 
Tax impact of equity transactions
— 
— 
— 
— 
2,014 
— 
— 
— 
2,014 
Equity award vestings
228 
2 
— 
— 
(4,292)
— 
— 
(1,669)
(5,959)
Other comprehensive loss
— 
— 
— 
— 
— 
— 
(1,665)
(309)
(1,974)
Share repurchases
(87)
(1)
— 
— 
(2,996)
— 
— 
(375)
(3,372)
Stock-based compensation
— 
— 
— 
— 
19,420 
— 
— 
3,768 
23,188 
Cash dividends declared ($0.50 per share)
— 
— 
(33,956)
— 
— 
(33,956)
Net income
— 
— 
— 
— 
— 
185,407 
— 
47,351 
232,758 
Balance at December 31, 2024
68,151 
$
681 
11,433 
$
— 
$
520,794 
$
552,133 
$
(2,491)
$
193,062 
$
1,264,179 
The accompanying notes are an integral part of these consolidated financial statements.
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CACTUS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
Year Ended December 31,
 
2024
2023
2022
(in thousands)
Cash flows from operating activities
 
 
 
Net income
$
232,758 
$
214,840 
$
145,122 
Reconciliation of net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
60,438 
65,045 
34,124 
Deferred financing cost amortization
1,120 
4,514 
165 
Stock-based compensation
22,888 
18,105 
10,631 
Provision for expected credit losses
370 
2,622 
406 
Inventory obsolescence
3,841 
5,337 
2,739 
Gain on disposal of assets
(1,013)
(3,156)
(1,391)
Deferred income taxes
19,773 
17,343 
25,299 
Change in fair value of earn-out liability
16,318 
14,850 
— 
(Gain) loss from revaluation of liability related to tax receivable agreement
(3,204)
(4,490)
1,910 
Changes in operating assets and liabilities:
Accounts receivable
13,048 
(11,858)
(49,349)
Inventories
(25,628)
41,922 
(44,891)
Prepaid expenses and other assets
(2,267)
753 
(3,108)
Accounts payable
675 
8,710 
5,803 
Accrued expenses and other liabilities
28,964 
(7,367)
2,090 
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 
Cash flows from investing activities
 
 
 
Acquisition of a business, net of cash and cash equivalents acquired
— 
(616,189)
— 
Capital expenditures and other
(39,176)
(43,977)
(28,291)
Proceeds from sale of assets
3,788 
5,373 
2,755 
Net cash used in investing activities
(35,388)
(654,793)
(25,536)
Cash flows from financing activities
 
 
 
Proceeds from the issuance of long-term debt
— 
155,000 
— 
Repayments of borrowings of long-term debt
— 
(155,000)
— 
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)
Payments on finance leases
(7,882)
(7,652)
(6,055)
Dividends paid to Class A common stock shareholders
(33,681)
(30,124)
(26,719)
Distributions to members
(13,290)
(16,644)
(9,692)
Repurchases of shares
(9,331)
(5,249)
(4,563)
Net cash provided by (used in) financing activities
(70,144)
103,275 
(47,382)
Effect of exchange rate changes on cash and cash equivalents
(1,530)
503 
(2,108)
Net increase (decrease) in cash and cash equivalents
209,051 
(210,735)
42,858 
Cash and cash equivalents
 
 
 
Beginning of period
133,792 
344,527 
301,669 
End of period
$
342,843 
$
133,792 
$
344,527 
The accompanying notes are an integral part of these consolidated financial statements.
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CACTUS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data, or as otherwise indicated)
1.
Organization and Nature of Operations
Cactus, Inc. (“Cactus Inc.”) and its consolidated subsidiaries (the “Company”), including Cactus Companies, LLC (“Cactus Companies”) are
primarily engaged in the design, manufacture, sale and rental of highly engineered pressure control and spoolable pipe technologies. Our products are sold and
rented principally for onshore unconventional oil and gas wells and are utilized during the drilling, completion and production phases of our customers’ wells.
We also provide field services for all of our products and rental items to assist with the installation, maintenance and handling of the equipment. Additionally,
we offer repair and refurbishment services for pressure control equipment. We operate through service centers and pipe yards located in the United States,
Canada and Australia. We also provide rental and service operations in the Middle East and other select international markets. We have manufacturing and
production facilities in Bossier City, Louisiana, Baytown, Texas and Suzhou, China. Our corporate headquarters are located in Houston, Texas.
Cactus Inc. was incorporated on February 17, 2017 as a Delaware corporation for the purpose of completing an initial public offering of equity and
related transactions, which was completed on February 12, 2018 (our “IPO”). 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 is responsible for all operational, management and administrative decisions relating to Cactus Companies’ business. Pursuant to the Amended
and Restated Limited Liability Company Operating Agreement of Cactus Companies (the “Cactus Companies LLC Agreement”), owners of CC Units are
entitled to redeem their CC Units for shares of Cactus Inc.’s Class A common stock, par value $0.01 per share (“Class A common stock”) on a one-for-one
basis, which results in a corresponding increase in Cactus Inc.’s membership interest in Cactus Companies and an increase in the number of shares of Class A
common stock outstanding. We refer to the owners of CC Units, other than Cactus Inc. (along with their permitted transferees), as “CC Unit Holders.” CC Unit
Holders own one share of our Class B common stock, par value $0.01 per share (“Class B common stock”) for each CC Unit such CC Unit Holder owns.
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
(including Cactus Companies).
On February 28, 2023, Cactus Inc. through one of its subsidiaries, completed the acquisition of the FlexSteel business (the “Merger”) through a
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. See further discussion of the acquisition in Note 3.
2.
Summary of Significant Accounting Policies and Other Items
Basis of Presentation
The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America
(“GAAP”). These consolidated financial statements include the accounts of Cactus Inc. and its wholly-owned subsidiaries. All intercompany transactions and
balances have been eliminated upon consolidation.
As the sole managing member of Cactus Companies, Cactus Inc. 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.
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.
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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. 
Concentrations of Credit Risk
Our assets that are potentially subject to concentrations of credit risk are cash and cash equivalents and accounts receivable. We manage the credit risk
associated with these financial instruments by transacting only with what management believes are financially secure counterparties, requiring credit approvals
and credit limits and monitoring counterparties’ financial condition. Our receivables are spread over a number of customers, a majority of which are oil and
natural gas exploration and production (“E&P”) companies representing private operators, publicly-traded independents, majors and other companies with
operations in the key U.S. oil and gas producing basins, as well as Australia, Canada and the Middle East. Our maximum exposure to credit loss in the event of
non‑performance by the customer is limited to the receivable balance. We perform ongoing credit evaluations and monitoring as to the financial condition of
our customers with respect to trade receivables. Generally, no collateral is required as a condition of sale. We also control our exposure associated with trade
receivables by discontinuing sales and service to non-paying customers. 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, 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 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)
We account for amounts payable under the TRA in accordance with Accounting Standards Codification (“ASC”) Topic 450, Contingencies. 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, 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.
Revenue Recognition
The majority of our revenues are derived from short-term contracts for fixed consideration, or in the case of equipment rentals, for a fixed charge per
day while the equipment is in use by the customer. 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 and that 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 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 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.
Revenues are recognized net of any taxes collected from customers, which are subsequently remitted to governmental authorities. We treat shipping and
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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. Our revenues are derived from three sources: products, rentals, and field service and other:
Product revenue. Product revenues are primarily derived from the sale of wellhead systems, production trees, spoolable pipe and connections.
Revenue is recognized when the customer obtains control of the products.  
Rental revenue. Rental revenues are primarily derived from the rental of equipment, tools and products to customers used for well control as well as
rental of equipment used for pipe installation. Our rental agreements are directly with our customers and provide for a rate based primarily on the
period of time the equipment is used or made available to the customer. In addition, customers are charged for repair costs for our frac equipment,
typically through an agreed upon rate for each rental job. Revenue is recognized ratably over the rental period, which tends to be short-term in nature
with most equipment on site for less than 90 days. 
Field service and other revenue. We provide field services to our customers based on contractually agreed rates. Other revenues are derived from
providing repair and reconditioning services to customers who have installed wellheads and production trees on their wellsite. Revenues are
recognized as the services are performed or rendered. 
Foreign Currency Translation
The financial position and results of operations of our foreign subsidiaries are measured using the local currency as the functional currency. Revenues
and expenses of the subsidiaries have been translated into U.S. dollars at average exchange rates prevailing during the period. Assets and liabilities have been
translated at the rates of exchange on the balance sheet dates. The resulting translation gain and loss adjustments have been recorded directly as a separate
component of other comprehensive income in the consolidated statements of comprehensive income and stockholders’ equity. Transaction gains and losses that
arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in our consolidated statements
of income as incurred.
Derivative Financial Instruments
We utilize a hedging program to reduce the risks associated with changes in the value of monetary assets and liabilities denominated in currencies
other than the functional currency of our subsidiaries. Under this program, we utilize foreign currency forward contracts to offset gains or losses recorded upon
remeasurement of assets and liabilities stated in the non-functional currencies of our subsidiaries. These forward contracts are not designated as hedges for
accounting purposes. As such, we record changes in fair value of the forward contracts in our consolidated statements of income along with the gain or loss
resulting from remeasurement of the U.S. dollar denominated financial assets and liabilities held by our foreign subsidiaries. The forward contracts are
typically only 30 days in duration and are settled and renewed each month. As of December 31, 2024 and 2023, the fair value of our forward contracts was
immaterial.
Stock-based Compensation
We measure the cost of equity‑based awards based on the grant date fair value and allocate the compensation expense over the requisite service
period, which is usually the vesting period. The grant date fair value is determined by the closing price of our Class A common stock on the grant date.
Income Taxes
Deferred taxes are recorded using the asset and liability method, whereby tax assets and liabilities are determined based on the differences between the
financial statement and tax basis of assets and liabilities using enacted tax laws and rates expected to apply to taxable income in the year in which the
differences are expected to reverse. We regularly evaluate the valuation allowances established for deferred tax assets for which future realization is uncertain.
In assessing the realizability of deferred tax assets, we consider both positive and negative evidence, including scheduled reversals of deferred tax assets and
liabilities, projected future taxable income, tax planning strategies and results of recent operations. If, based on the weight of available evidence, it is more
likely than not that the deferred tax assets will not be realized, a valuation allowance is recorded.
Cactus Inc. is a corporation and is subject to U.S. federal as well as state income tax related to its ownership percentage in Cactus Companies. Cactus
Companies is a Delaware limited liability company treated as a partnership for U.S. federal income tax purposes and files a U.S. Return of Partnership Income,
which includes both our U.S. and foreign operations. Consequently, the members of Cactus Companies are taxed individually on their share of earnings for
U.S. federal
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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.
Cash and Cash Equivalents
Cash in excess of current operating requirements is invested in short-term interest-bearing investments with maturities of three months or less at the
date of purchase and is stated at cost, which approximates fair value. Throughout the year we maintained cash balances that were not covered by federal deposit
insurance. We have not experienced any losses in such accounts.
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 E&P companies in the United States.
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
amounts billed and currently due from customers and unbilled amounts for 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 December 31, 2024 and 2023 was $29.8 million and $26.8 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 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
Year Ended December 31, 2024
$
3,642 
$
370 
$
(254)
$
21 
$
3,779 
Year Ended December 31, 2023
1,060 
2,622 
(36)
(4)
3,642 
Year Ended December 31, 2022
741 
406 
(86)
(1)
1,060 
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. The inventory obsolescence
reserve was $28.0 million and $25.6 million as of December 31, 2024 and 2023, respectively. 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
Year Ended December 31, 2024
$
25,638 
$
3,841 
$
(1,285)
$
(146)
$
28,048 
Year Ended December 31, 2023
20,488 
5,337 
(193)
6 
25,638 
Year Ended December 31, 2022
18,012 
2,739 
(202)
(61)
20,488 
Property and Equipment
Property and equipment are stated at cost. We manufacture or construct most of our pressure control rental assets and during the production of these
assets, they are reflected as construction in progress until complete. 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. 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
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charged to income as incurred while significant renewals and improvements are capitalized. Estimated useful lives are as follows:
Land
N/A
Buildings and improvements
5
-
30 years
Machinery and equipment
3
-
20 years
Reels and skids
10
-
20 years
Vehicles
3
-
5
years
Rental equipment
2
-
11 years
Furniture and fixtures
5
years
Computers and software
3
-
5
years
Property and equipment as of December 31, 2024 and 2023 consists of the following:
 
December 31,
 
2024
2023
Land
$
16,442 
$
16,442 
Buildings and improvements
133,187 
131,974 
Machinery and equipment
139,605 
128,962 
Reels and skids
18,737 
16,181 
Vehicles
41,175 
36,552 
Rental equipment
222,975 
218,340 
Furniture and fixtures
1,905 
1,913 
Computers and software
4,919 
3,951 
Gross property and equipment
578,945 
554,315 
Less: Accumulated depreciation
(262,198)
(231,594)
Net property and equipment
316,747 
322,721 
Construction in progress
29,261 
22,781 
Total property and equipment, net
$
346,008 
$
345,502 
Depreciation and amortization was $60.4 million, $65.0 million and $34.1 million for 2024, 2023 and 2022, respectively. Depreciation and
amortization expense is included in the consolidated statements of income as follows:
 
Year Ended December 31,
 
2024
2023
2022
Cost of product revenue
$
16,287 
$
13,762 
$
3,022 
Cost of rental revenue
16,634 
20,191 
23,663 
Cost of field service and other revenue
10,604 
9,786 
6,986 
Selling, general and administrative expenses
16,913 
21,306 
453 
Total depreciation and amortization
$
60,438 
$
65,045 
$
34,124 
Impairment of Long‑Lived Assets
We review the recoverability of long‑lived assets, including finite-lived acquired intangible assets and property and equipment, when events or
changes in circumstances occur that indicate the carrying value of the asset or asset group may not be recoverable. The assessment of possible impairment is
based on our ability to recover the carrying value of the asset or asset group from the expected future pre‑tax cash flows (undiscounted) of the related
operations. If these cash flows are less than the carrying value of such asset, an impairment loss is recognized for the difference between estimated fair value
and carrying value. We concluded there were no indicators evident or other circumstances present that these assets were not recoverable and accordingly, no
impairment charges of long‑lived assets were recognized for 2024, 2023 and 2022.
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Goodwill
Goodwill represents the excess of purchase price paid over the fair value of the net assets of acquired businesses. Goodwill is not amortized, but we
evaluate at least annually whether it is impaired. Goodwill is considered impaired if the carrying amount of the reporting unit exceeds its estimated fair value.
We conduct our annual assessment of the recoverability of goodwill as of December 31 of each year. 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 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. If it is necessary to perform the quantitative
assessment to determine if our goodwill is impaired, we will utilize a discounted cash flow analysis using management’s projections that are subject to various
risks and uncertainties of revenues, expenses and cash flows as well as assumptions regarding discount rates, terminal value and control premiums. Estimates
of future cash flows and fair value are highly subjective and inherently imprecise. These estimates can change materially from period to period based on many
factors. Accordingly, if conditions change in the future, we may record impairment losses, which could be material to any particular reporting period. Based on
our annual impairment analysis using qualitative assessments, we concluded that there was no impairment of goodwill in each of the three years ended
December 31, 2024.
Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities as of December 31, 2024 and 2023 are as follows:
 
December 31,
 
2024
2023
Income based tax payable
$
24,112 
$
6,437 
Payroll, incentive compensation, payroll taxes and benefits
13,925 
13,964 
Accrued professional fees and other
11,385 
5,114 
Deferred revenue
8,069 
8,105 
Customer deposits
6,512 
5,927 
Accrued international freight and tariffs
4,988 
5,198 
Taxes other than income
4,045 
4,566 
Product warranties
1,493 
731 
Accrued dividends
887 
612 
Total accrued expenses and other current liabilities
$
75,416 
$
50,654 
Self-Insurance Accrued Expenses
We maintain a partially self-insured health benefit plan which provides medical and prescription drug benefits to certain of our employees electing
coverage under the plan. Our exposure is limited by individual and aggregate stop loss limits through third-party insurance carriers. Our self-insurance expense
is accrued based upon the aggregate of the expected liability for reported claims and the estimated liability for claims incurred but not reported, based on
historical claims experience provided by our third-party insurance advisors, adjusted as necessary based upon management’s reasoned judgment. 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 as of both December 31, 2024 and 2023.
Product Warranties
We generally warrant our wellhead manufactured products for 12 months and our manufactured spoolable pipe and connections for up to 24 months
from the date placed in service. The estimated liability for product warranties is based on historical and current claims experience.
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Employee Benefit Plans
Our employees within the United States are eligible to participate in a 401(k) plan sponsored by us. These employees are eligible to participate on the
first day of the month following 30 days of employment and if they are at least eighteen years of age. Eligible employees may contribute a percentage of their
compensation subject to a maximum imposed by the Internal Revenue Code. Broadly similar benefit plans exist for employees of our foreign subsidiaries. We
match 100% of the first 3% of gross pay contributed by each employee and 50% of the next 4% of gross pay contributed by each employee, and we may also
make additional non‑elective employer contributions at our discretion under the plan. During 2024, 2023 and 2022, employer matching contributions totaled
$5.6 million, $3.7 million and $4.2 million, respectively.
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.
Recently adopted accounting pronouncements
In November 2023, the FASB issued ASU No. 2023-07, “Improvements to Reportable Segment Disclosures (Topic 280)” in order to require
disclosure of incremental segment information on an annual and interim basis for all public entities. 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 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.
3.
FlexSteel Acquisition
On February 28, 2023 (the “acquisition date”), we completed the acquisition of FlexSteel in accordance with the terms and conditions of the merger
agreement dated December 30, 2022. 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.
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Purchase Price Consideration
The final purchase price consideration for the acquisition is $627.5 million and is summarized as follows:
Purchase Price
Consideration
Cash consideration
$
621,505 
Add: Contingent consideration 
5,960 
Fair value of consideration transferred
$
627,465 
Represents the estimated fair value as of the acquisition date of the earn-out payment of up to $75 million of additional cash consideration if certain
revenue growth targets are met by FlexSteel. 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 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 final allocation of the purchase price as of the acquisition date.
Cash and cash equivalents
$
5,316 
Receivables
58,002 
Inventories
91,746 
Prepaid expenses and other current assets
1,283 
Property and equipment
206,928 
Operating lease right-of-use assets
1,021 
Identifiable intangible assets
200,300 
Other noncurrent assets
5,666 
Total assets acquired
570,262 
Accounts payable
(14,975)
Accrued expenses and other current liabilities
(26,827)
Finance lease obligations
(974)
Operating lease liabilities
(906)
Deferred tax liabilities
(94,319)
Total liabilities assumed
(138,001)
Net assets acquired
432,261 
Goodwill
$
195,204 
Assets acquired and liabilities assumed in connection with the acquisition were recorded at their fair values as of the acquisition date. The fair values were
determined by management, based in part on an independent valuation performed by third-party valuation specialists. The valuation methods used to determine
the fair value of intangible assets included the multi-year excess earnings approach for customer relationships and backlog and the relief from royalty method
for tradename and developed technology. These fair values were based on inputs that are not observable in the market and thus represent Level 3 inputs.
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. Identifiable intangible assets with finite lives
are subject to amortization over their estimated useful lives.
(1)
(1) 
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The fair values determined for accounts receivable, accounts payable and most other current assets and liabilities, other than inventory, were equivalent to
the carrying value due to their short-term nature. Acquired inventories are comprised of raw materials, work-in-progress and finished goods. The fair value of
finished goods was calculated as the estimated selling price, less costs of the selling effort and a reasonable profit allowance relating to the selling effort. The
fair value of work-in-progress was calculated as the estimated selling price, less costs to complete, less costs of the selling effort and a reasonable profit
allowance on completion and selling costs. The fair value of raw materials was determined based on replacement cost which approximates historical carrying
value. The fair value of identifiable fixed assets was calculated using a combination of valuation approaches, but primarily consisted of the cost approach
which adjusts estimates of replacement cost for the age, condition and utility of the associated assets.
Goodwill is calculated as the excess of the purchase price over the estimated fair value of net assets acquired and represents the future economic benefits
arising from other assets acquired that could not be individually identified and separately recognized. Among the factors that contributed to a purchase price in
excess of the estimated fair value of the net tangible and intangible assets acquired were the acquisition of an assembled workforce, expansion opportunities
and other benefits that we believe will result from combining the operations of FlexSteel with ours. Goodwill was further increased by the deferred tax liability
associated with the fair market value in excess of the tax basis acquired. The goodwill associated with this transaction has been allocated to our Spoolable
Technologies segment and is not deductible for tax purposes.
Pro forma financial information
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 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. The unaudited pro forma financial information is presented for informational purposes only and is neither indicative of the results of
operations that would have occurred if the acquisition had taken place at the beginning of the period presented nor indicative of future operating results.
Year Ended
December 31,
2023
2022
Revenues
$
1,150,339 
$
1,039,612 
Net Income attributable to Cactus, Inc.
181,020 
116,180 
4.
Inventories
Inventories consist of the following: 
 
December 31,
 
2024
2023
Raw materials
$
31,031 
$
22,373 
Work-in-progress
10,979 
11,471 
Finished goods
184,786 
171,781 
Total inventories
$
226,796 
$
205,625 
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5.
Other Intangible Assets
The following table presents the detail of acquired intangible assets other than goodwill as of December 31, 2024:
Amortization Period
Gross Cost
Accumulated
Amortization
Net Book Value
Customer relationships
15 years
$
100,300 
$
(12,259)
$
88,041 
Developed technology
10 years
77,000 
(14,117)
62,883 
Tradename
10 years
16,000 
(2,933)
13,067 
Backlog
3 months
7,000 
(7,000)
— 
Total
$
200,300 
$
(36,309)
$
163,991 
All intangible assets are amortized over their estimated useful lives. The weighted average remaining amortization period for identifiable intangible assets
acquired is 10.8 years. Amortization expense recognized during the twelve months ended December 31, 2024 was $16.0 million and was recorded in SG&A
expenses in the consolidated statements of income. Estimated future amortization expense is as follows:
2025
15,987 
2026
15,987 
2027
15,987 
2028
15,987 
2029
15,987 
Thereafter
84,056 
Total
$
163,991 
6.
Debt
We had no debt outstanding as of December 31, 2024 and 2023. We had $2.4 million in letters of credit outstanding and were in compliance with all
covenants under the Amended ABL Credit Facility (as defined below) as of December 31, 2024.
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 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.
We borrowed the full $125.0 million term loan amount and $30.0 million as a revolving loan at closing of the Amended ABL Credit Facility to fund a
portion of the acquisition. The term loan was required to be repaid in regular set amounts starting July 1, 2023 as set forth in the amortization schedule in the
Amended ABL Credit Facility and could be prepaid without the payment of any prepayment premium (other than customary breakage costs for Term
Benchmark (as defined below) borrowings). The term loan and revolving loan were repaid in full in July 2023.
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 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
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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.
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 the accounts receivable, inventory and certain other real and
personal property assets of Cactus Companies and the guarantors. Until the term loan was repaid in full, the Amended ABL Credit Facility required Cactus
Companies to maintain a leverage ratio no greater than 2.50 to 1.00 based on the ratio of Total Indebtedness (as defined therein) to EBITDA (as defined
therein). The Amended ABL Credit Facility requires Cactus Companies to maintain a minimum fixed charge coverage ratio of 1.00 to 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 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.
At December 31, 2024 and 2023, although there were no borrowings outstanding, the applicable margin on our Term Benchmark borrowings was
1.25%, plus the base rate of one, three or six month SOFR plus 0.10%, subject to a floor rate.
Interest (Income) Expense, net
Interest (income) expense, net, including deferred financing cost amortization, was comprised of the following:
 
Year Ended December 31,
 
2024
2023
2022
Interest under bank facilities
$
639 
$
3,818 
$
268 
Deferred financing cost amortization
1,120 
4,514 
165 
Finance lease interest
1,635 
1,110 
628 
Other
430 
794 
167 
Interest income
(10,283)
(3,756)
(4,942)
Interest (income) expense, net
$
(6,459)
$
6,480 
$
(3,714)
7.
Income Taxes
Domestic and foreign components of income before income taxes were as follows: 
 
Year Ended December 31,
 
2024
2023
2022
Domestic
$
272,689 
$
241,084 
$
155,380 
Foreign
26,587 
21,292 
21,172 
Income before income taxes
$
299,276 
$
262,376 
$
176,552 
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The provision for income taxes consisted of: 
 
Year Ended December 31,
 
2024
2023
2022
Current:
  
  
  
Federal
$
32,910 
$
18,354 
$
— 
State
5,183 
4,040 
1,231 
Foreign
8,652 
7,799 
4,900 
Total current income taxes
46,745 
30,193 
6,131 
Deferred:
Federal
17,516 
12,925 
23,945 
State
2,636 
4,249 
514 
Foreign
(379)
169 
840 
Total deferred income taxes
19,773 
17,343 
25,299 
Total provision for income taxes
$
66,518 
$
47,536 
$
31,430 
    The effective income tax rate was different from the statutory U.S. federal income tax rate due to the following: 
 
Year Ended December 31,
 
2024
2023
2022
Income taxes at 21% statutory tax rate
$
62,849 
$
55,094 
$
37,076 
Net difference resulting from:
Profit of non-controlling interest not subject to U.S. federal tax
(10,293)
(9,951)
(7,339)
Foreign income taxes (net of foreign tax credit)
2,646 
1,918 
2,104 
State income taxes (excluding rate change)
6,113 
3,999 
2,910 
Impact of change in forecasted state income tax rate
2,059 
4,906 
(1,739)
Foreign withholding taxes
1,535 
1,419 
1,225 
Change in valuation allowance
— 
(12,067)
(1,381)
Adjustments of prior year taxes
(1,757)
480 
(120)
Stock compensation
(661)
(1,193)
(1,743)
Nondeductible expenses associated with acquisition
2,036 
3,951 
— 
Other
1,991 
(1,020)
437 
Total provision for income taxes
$
66,518 
$
47,536 
$
31,430 
Our effective tax rate was 22.2%, 18.1% and 17.8% for the years ended December 31, 2024, 2023 and 2022, respectively. 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).
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The components of deferred tax assets and liabilities are as follows:
 
December 31,
 
2024
2023
Investment in Cactus Companies (Cactus LLC prior to the CC Reorganization)
$
194,015 
$
179,196 
Imputed interest
14,080 
12,740 
Tax credits
10,563 
7,439 
Net operating loss and other carryforwards
9,062 
11,343 
Other
356 
359 
Deferred tax assets
228,076 
211,077 
Valuation allowance
(9,073)
(6,225)
Deferred tax asset, net
219,003 
204,852 
Foreign withholding taxes
1,529 
1,350 
Other
1,339 
2,239 
Deferred tax liability, net
$
2,868 
$
3,589 
As of December 31, 2024, our liability related to the TRA was $278.7 million, representing 85% of the calculated net cash savings in the United States
federal, state and local and franchise tax that we anticipate realizing in future years from certain increases in tax basis and certain tax benefits attributed to
imputed interest as a result of our acquisition of CC Units (CW Units prior to the CC Reorganization). We have determined it is more-likely-than-not that we
will be able to utilize all of our tax basis subject to the TRA; therefore, we have recorded a liability related to the TRA for the tax savings we may realize from
certain increases in tax basis and certain tax benefits attributable to imputed interest as a result of our acquisition (or deemed acquisition for United States
federal income tax purposes) of CC Units (CW Units prior to the CC Reorganization). If we determine the utilization of this tax basis is not more-likely-than-
not in the future, our estimate of amounts to be paid under the TRA would be reduced. In this scenario, the reduction of the liability under the TRA would result
in a benefit to our pre-tax consolidated results of operations in conjunction with an increase to the valuation allowance and an offsetting adjustment to tax
expense.
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 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 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. As of December 31, 2024, we have a
valuation allowance of $9.1 million against these deferred tax assets, primarily associated with our portion of Cactus Companies’ accrued foreign taxes and
state tax credits, due to uncertainty of realization.
As of December 31, 2024, we have deferred tax assets on U.S. federal and state net operating loss (“NOL”) carryforwards of approximately $8.5
million and $0.5 million, respectively, which can be used to offset U.S. federal and state taxes payable in future years. 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 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.
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The aggregate changes in the balance of the Company's unrecognized tax benefits were as follows for the periods presented (in thousands):
December 31,
2024
2023
2022
Balance, beginning of year
$
5,666  $
—  $
— 
Gross increases based on tax positions related to current year
— 
5,666 
— 
Gross decreases based on tax positions related to prior years
(192)
— 
— 
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. 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. Our federal and state income tax returns for the years ended
December 31, 2021 through December 31, 2023 remain open for all purposes of examination by the IRS and applicable state taxing jurisdictions. 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.
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.
8.
Stock-Based Compensation
We have a long-term incentive plan (“LTIP”) that provides for the grant of various stock-based compensation awards at the discretion of our
Compensation Committee of our Board of Directors. Employees and non-employee directors are eligible to receive awards under the LTIP. Stock-based awards
granted pursuant to the LTIP are expected to be settled in shares of our Class A common stock if they vest. Our stock-based awards do not have voting rights
prior to vesting. Dividends declared are accumulated and paid upon vesting. We account for forfeitures when they occur and recognize the impact to stock-
based compensation expense at that time. 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 $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 (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. We recognize compensation
expense over the requisite service period using straight-line amortization.
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The following table summarizes our RSU activity during the year ended December 31, 2024 (RSUs in thousands):
 
No. of RSUs
Weighted Average Grant
Date Fair Value ($)
Nonvested as of December 31, 2023
564 
$
43.75 
Granted
531 
46.73 
Vested
(185)
43.02 
Forfeited
(48)
45.90 
Nonvested as of December 31, 2024
862 
$
45.63 
The weighted average grant date fair value of RSUs granted was $46.73 during 2024, $43.19 during 2023 and $55.06 during 2022. The total fair value
of RSUs vested was $8.7 million during 2024, $10.1 million during 2023 and $14.1 million during 2022. There was approximately $23.8 million of
unrecognized compensation expense relating to the unvested RSUs as of December 31, 2024. The unrecognized compensation expense will be recognized over
the weighted average remaining vesting period of 2.3 years.
Performance Stock Units
Performance stock units (“PSUs”) are granted to our executive officers, and in rare instances, other key employees. Under these awards, the number of
shares vested and earned is typically determined at the end of a three-year performance period based on our Return on Capital Employed (“ROCE”). The
number of shares earned may range from 0% to 200% of the target units set forth in the applicable award agreement and is determined at the end of the
performance period conditioned upon continued service and on our achievement of certain predefined targets as defined in the underlying performance stock
unit agreements. PSUs cliff vest upon conclusion of the three-year performance period. As the ROCE target represents a performance condition, we recognize
compensation expense for the performance share units on a straight-line basis over three years based on the probable outcome of the ROCE performance.
The following table summarizes our PSU activity during the year ended December 31, 2024 (PSUs in thousands at their target number of shares,
which assumes achievement of 100% of target, unless otherwise noted):
No. of PSUs
Weighted Average Grant
Date Fair Value ($)
Nonvested as of December 31, 2023
176 
$
47.71 
Granted
98 
46.74 
Vested 
(160)
53.14 
Performance adjustment 
67 
54.36 
Nonvested as of December 31, 2024
181 
$
44.85 
Represents shares vested based on actual performance metrics upon conclusion of the performance period.
    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 $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.
(1)
(2)
(1)    
(2)
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9.
Revenue
We disaggregate revenue from contracts with customers into three revenue categories: (i) product revenues, (ii) rental revenues and (iii) 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. For the year ended December 31, 2024, we derived 75% of our total revenues from the sale of our products, 9% of our total revenues from rental and
16% of our total revenues from field service and other. This compares to 74% of our total revenues from the sale of our products, 10% of our total revenues
from rental and 16% of our total revenues from field service and other for the year ended December 31, 2023.  In 2022, we derived 66% of our total revenues
from the sale of our products, 14% from rental and 20% from field service and other. The following table presents our revenues disaggregated by category:
 
Year Ended December 31,
 
2024
2023
2022
Product revenue
$
852,265 
$
810,379 
$
452,615 
Rental revenue
101,785 
113,631 
100,453 
Field service and other revenue
175,764 
172,950 
135,301 
Total revenue
$
1,129,814 
$
1,096,960 
$
688,369 
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. The revenue that has been deferred will be recognized upon product delivery or as services are performed. As of December 31, 2024,
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.
10. Leases
We lease real estate, apartments, forklifts, vehicles and other equipment under non-cancellable agreements. Certain of our leases include one or more
options to renew, with renewal terms that can extend the lease term from one to 10 years or greater. The exercise of lease renewal options is typically at our
discretion. The measurement of the lease term includes options to extend or renew the lease when it is reasonably certain that we will exercise those options.
Lease assets and liabilities are recognized at the commencement date based on the present value of minimum lease payments over the lease term. To determine
the present value of future minimum lease payments, we use the implicit rate when readily determinable; however, many of our leases do not provide an
implicit rate. Therefore, to determine the present value of minimum lease payments, we use our incremental borrowing rate based on the information available
at the commencement date of the lease. Our finance lease agreements typically include an interest rate that is used to determine the present value of future lease
payments. Short-term operating leases with an initial term of twelve months or less are not recorded on our balance sheet. Minimum lease payments are
expensed on a straight-line basis over the lease term, including reasonably certain renewal options.
The following are the components of operating and finance lease costs:
Year Ended December 31,
 
2024
2023
Finance lease cost:
 
Amortization of right-of-use assets
$
7,922  $
7,307 
Interest expense
1,635 
1,110 
Operating lease cost
6,343 
6,123 
Short-term lease cost
5,304 
4,175 
Sublease income
(354)
(396)
Total lease cost
$
20,850  $
18,319 
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The following is supplemental cash flow information for our operating and finance leases:
Year Ended December 31,
 
2024
2023
Cash paid for amounts included in the measurement of lease liabilities:
 
Operating cash flows from finance leases
$
1,635  $
1,110 
Operating cash flows from operating leases
6,280 
6,143 
Financing cash flows from finance leases
7,882 
7,652 
Total
$
15,797  $
14,905 
 
 
Right-of-use assets obtained in exchange for new lease obligations:
 
Operating leases
$
8,346  $
6,361 
Finance leases
9,021 
11,159 
Total
$
17,367  $
17,520 
The following is the aggregate future lease payments for operating and finance leases as of December 31, 2024:
 
Operating
Finance
2025
$
5,181 
$
8,528 
2026
5,270 
7,655 
2027
4,866 
4,117 
2028
4,213 
— 
2029
3,066 
— 
Thereafter
5,500 
— 
Total undiscounted lease payments
28,096 
20,300 
Less: effects of discounting
(3,932)
(2,748)
Present value of lease payments
$
24,164 
$
17,552 
The following represents the average lease terms and discount rates for our operating and finance leases:
Year Ended December 31,
 
2024
2023
Weighted average remaining lease term:
   
Finance leases
1.8 years
1.9 years
Operating leases
6.0 years
6.1 years
Weighted average discount rate
   
Finance leases
18.87  %
16.28  %
Operating leases
4.79  %
3.59  %
As a lessor, we rent a fleet of frac valves and ancillary equipment and equipment used for pipe installation for short-term rental periods, typically one
to three months. Our lessor portfolio consists mainly of operating leases for equipment utilized during the drilling, completion and production phases of our
customers’ wells. At this time, most lessor agreements contain less than three-month terms with no renewal options that are reasonably certain to exercise, or
early termination options based on established terms specific to the individual agreement. See Note 9 for disaggregation of revenue.
11. Tax Receivable Agreement
In connection with our IPO, we 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 payment by Cactus Inc. to the TRA Holders 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 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
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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. makes under the TRA. We retain the remaining
15% of the 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. As of December 31, 2024, 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 payment. 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 relating to Cactus Companies), 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 will be 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.
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.
12. Equity
As of December 31, 2024, Cactus Inc. owned 85.6% of Cactus Companies, as compared to 82.3% of Cactus LLC (prior to the CC Reorganization) as
of December 31, 2023. As of December 31, 2024, Cactus Inc. 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
In January 2023, Cactus Inc. completed an underwritten offering of 3,224,300 shares of Class A common stock at a price to the underwriters of $51.36
per share for net proceeds of $165.6 million (net of $6.9 million of underwriting discounts and commissions). In addition to the underwriting discounts and
commissions, approximately $2.2 million of costs directly associated with the stock issuance were recorded as a reduction to additional paid-in capital.
FlexSteel Acquisition
In conjunction with the FlexSteel acquisition, a restricted stock award of 128,150 shares of Class A common stock was issued under the Company’s
long-term incentive plan to a key employee in exchange for cash consideration of $6.5 million. The shares were restricted from sale or trading and were subject
to vesting requirements for one year from grant date.
CC Reorganization
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. (the “CW Unit Holders”). Upon the completion of the CC Reorganization, CW Unit Holders ceased to be holders of CW Units
and, instead, became holders of a number of CC Units equal to the number of CW Units such CW Unit Holders held immediately prior to the completion of the
CC Reorganization. After the CC Reorganization, we refer to the owners of CC Units, other than Cactus Inc. (along with their permitted transferees), as “CC
Unit Holders.” Following the completion of the CC Reorganization, CC Unit Holders own one share of our Class B Common Stock for each CC Unit such CC
Unit Holder owns.
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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”), which contains substantially the same terms and conditions
as the Second Amended and Restated Limited Liability Company Operating Agreement of Cactus LLC (the “Cactus Wellhead LLC Agreement”), which was
the limited liability company operating agreement of Cactus LLC prior to the CC Reorganization. Cactus Inc. was responsible for all operational, management
and administrative decisions relating to Cactus LLC’s business for the period from completion of our IPO until the CC Reorganization and relating to Cactus
Companies’ business for periods after the CC Reorganization.
Redemptions of CC Units
Pursuant to the Cactus Companies LLC Agreement, each holder of CC Units has, subject to certain limitations, the right (the “Redemption Right”) to
cause Cactus Companies to acquire all or at least a minimum portion of its CC Units for, at Cactus Companies’ election, (x) shares of our Class A common
stock at a redemption ratio of one share of Class A common stock for each CC Unit redeemed, subject to conversion rate adjustments for stock splits, stock
dividends and reclassification and other similar transactions, or (y) an equivalent amount of cash. Alternatively, upon the exercise of such redemption right,
Cactus Inc. (instead of Cactus Companies) has the right (the “Call Right”) to acquire each tendered CC Unit directly from the exchanging CC Unit Holder for,
at its election, (x) one share of Class A common stock, subject to conversion rate adjustments for stock splits, stock dividends and reclassifications and other
similar transactions, or (y) an equivalent amount of cash. In connection with any redemption of CC Units pursuant to such Redemption Right or our Call Right,
the corresponding number of shares of Class B common stock will be canceled.
Any exercise by Cactus Companies or Cactus Inc. of the right to acquire redeemed CC Units for cash must be approved by the board of directors of
Cactus Inc. To date, neither Cactus Inc. nor Cactus Companies (Cactus LLC prior to the CC Reorganization) have elected to acquire CC Units (including CW
Units prior to the CC Reorganization) for cash in connection with exchanges by CC Unit Holders (CW Unit Holders prior to the CC Reorganization). It is the
policy of Cactus Inc. that any exercise by Cactus Inc. or Cactus Companies of the right to acquire redeemed CC Units for cash must be approved by a majority
of those members of the board of directors of Cactus Inc. who have no interest in such transaction.
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 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):
Units
CW Units outstanding as of December 31, 2021
16,674 
CW Unit redemptions
(1,696)
CW Units outstanding as of December 31, 2022
14,978 
CC Unit redemptions
(944)
CC Units outstanding as of December 31, 2023
14,034 
CC Unit redemptions
(2,601)
CC Units outstanding as of December 31, 2024
11,433 
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. Cactus Inc. 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. As a result of all of the CC Unit (CW Units prior to the CC Reorganization) redemptions during the years ended December 31, 2024, 2023 and
2022, Cactus Inc. 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.
Dividends 
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, 2024, 2023 and 2022
totaled $33.7 million, $30.1 million and $26.7 million,
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respectively. Dividends accrue on unvested stock-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 our CC Unit Holders (CW
Unit Holders prior to the CC Reorganization) for any dividends declared on our Class A common stock. See Note 16 for further discussion of distributions
made by Cactus Companies.
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 twelve months ended December 31, 2024, the Company purchased and retired 86,599 shares of Class A common stock for $3.4 million or $38.92
average price per share excluding commissions, under the share repurchase program. As of December 31, 2024, $146.3 million remained authorized for future
repurchases of Class A common stock under the program.
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.
13. Commitments and Contingencies
We are involved in various disputes arising in the ordinary course of business. Management does not believe the outcome of these disputes will have a
material adverse effect on our consolidated financial position or consolidated results of operations.
14. 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) 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.
The fair value of our foreign currency forwards was less than $0.1 million as of December 31, 2024 and 2023, determined using market observable inputs
including forward and spot prices (Level 2 inputs).
We had no long-term debt outstanding as of December 31, 2024 or 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
Risk-free interest rate
5.40%
to
5.63%
Expected revenue volatility
21.70%
Revenue discount rate
10.02%
to
10.23%
Credit discount rate
9.85%
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The following table presents a summary of the changes in fair value of our earn-out liability measured using Level 3 inputs:
Opening balance at February 28, 2023
$
5,960 
Changes in fair value
14,850 
Balance at December 31, 2023
$
20,810 
Changes in fair value
$
16,318 
Balance at August 31, 2024
$
37,128 
The FlexSteel acquisition contingent consideration earn-out period ended June 30, 2024. The earn-out payment was made in September 2024.
15. Segment Reporting
Prior to the acquisition of FlexSteel, we operated in a single operating segment which reflected how our business was managed and the nature of our
products and services. Upon completion of the acquisition, we re-evaluated our reportable segments and now report two operating segments. The operating
segments have been identified based on the Company’s management structure, the different products and services offered by each and the financial data
utilized by the Company’s Chief Executive Officer (the chief operating decision maker or “CODM”) to assess segment performance and allocate resources
among segments.
Our reporting segments are:
•
Pressure Control – engaged in the design, manufacture, sale, installation and service 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.
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.
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Financial information by segment for the years ended December 31, 2024, 2023, and 2022 is summarized below.
Year Ended December 31,
2024
Pressure
Control
Spoolable
Technologies
Total
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
(1,262)
Total consolidated revenues
1,129,814 
Less:
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
(1,127)
Total consolidated cost of revenue
693,421 
Selling, general, administrative expenses and other 
56,348 
64,606 
Segment profit
$
210,710  $
104,864 
$
315,574 
Reconciliation of segment profit
Elimination of intersegment profit
(135)
Total consolidated segment profit
$
315,439 
Corporate expenses 
(25,826)
Total operating income
$
289,613 
Interest income, net
6,459 
Other income, net
3,204 
Income before income taxes
$
299,276 
 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.
 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.
    
Comprised primarily of expenses not allocated to our operating segments.
(1)
(2)
(3)
(1)
(2)
(3) 
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Year Ended December 31,
2023
Pressure
Control
Spoolable
Technologies
Total
Revenues from external customers
$
756,727  $
340,233  $
1,096,960 
Intersegment revenue
— 
— 
— 
Total revenues
756,727 
340,233 
1,096,960 
Reconciliation of revenue
Elimination of intersegment revenue
— 
Total consolidated revenues
1,096,960 
Less:
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
690,668 
Selling, general, administrative expenses and other 
43,975 
63,211 
Segment profit
$
236,934  $
62,172  $
299,106 
Reconciliation of segment profit
Elimination of intersegment profit
— 
Total consolidated segment profit
$
299,106 
Corporate expenses 
(34,740)
Total operating income
$
264,366 
Interest expense, net
(6,480)
Other income, net
4,490 
Income before income taxes
$
262,376 
 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.
 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.
    
Comprised primarily of expenses not allocated to our operating segments.
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Table of Contents
Year Ended December 31,
2022
Pressure
Control
Spoolable
Technologies
Total
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
688,369 
Less:
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
445,921 
Selling, general, administrative expenses and other 
39,798 
— 
Segment profit
$
202,650  $
— 
$
202,650 
Reconciliation of segment profit
Elimination of intersegment profit
— 
Total consolidated segment profit
$
202,650 
Corporate expenses 
(27,902)
Total operating income
$
174,748 
Interest income, net
3,714 
Other expense, net
(1,910)
Income before income taxes
$
176,552 
 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.
 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.
Comprised primarily of expenses not allocated to our operating segments.
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(2)
(3)
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Table of Contents
Additional financial information by operating segment for the years ended December 31, 2024, 2023, and 2022 is summarized below.
Year Ended December 31,
2024
2023
2022
Depreciation and amortization:
Pressure Control
$
26,782 
$
30,898 
$
34,124 
Spoolable Technologies
33,656 
34,147 
— 
Total depreciation and amortization
$
60,438 
$
65,045 
$
34,124 
Capital expenditures:
Pressure Control
$
24,240 
$
40,940 
$
28,291 
Spoolable Technologies
14,936 
3,037 
— 
Total capital expenditures
$
39,176 
$
43,977 
$
28,291 
Segment Assets:
Pressure Control
$
438,929 
$
437,887 
$
447,937 
Spoolable Technologies
705,943 
713,007 
— 
Total segment assets
1,144,872 
1,150,894 
447,937 
Corporate and other
594,456 
371,667 
670,959 
Total assets
$
1,739,328 
$
1,522,561 
$
1,118,896 
Segment assets consist of accounts receivables, inventories, prepaid expenses and other current assets, property and equipment, net, goodwill and other
intangible assets, net.
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, 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.
16. Related Party Transactions
When needed, we rent a plane under dry lease from a company owned by a member of Cactus Companies. 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 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. Our Chief Executive
Officer and President reimburse the Company up to $2,350 per day for their personal use of the pilots employed by the Company, depending on how many
company pilots are utilized for the day.
The TRA agreement is with certain direct and indirect holders of CC Units (CW Unit Holders prior to the CC Reorganization), including certain of our
officers, directors and employees. These TRA Holders have the right in the future to receive 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. The total liability from the TRA as of
December 31, 2024 was $278.7 million. 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, 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.
Distributions made by Cactus Companies (Cactus LLC prior to the CC Reorganization) are generally required to be made pro rata among all its
members. 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
(1)
(2)
(1)    
(2)    
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Table of Contents
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.
17. 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 (CW Units prior to
the CC Reorganization) and corresponding shares of outstanding Class B common stock. We use the treasury stock method to determine the potential dilutive
effect of our 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:
 
Year Ended December 31,
 
2024
2023
2022
Numerator:
  
  
Net income attributable to Cactus Inc.—basic
$
185,407 
$
169,171  $
110,174 
Net income attributable to non-controlling interest
36,266 
35,075 
27,235 
Net income attributable to Cactus Inc.—diluted
$
221,673 
$
204,246  $
137,409 
Denominator:
Weighted average Class A shares outstanding—basic
66,393 
64,641 
60,323 
Effect of dilutive shares
13,522 
14,819 
16,014 
Weighted average Class A shares outstanding—diluted
79,915 
79,460 
76,337 
Earnings per Class A share—basic
$
2.79 
$
2.62  $
1.83 
Earnings per Class A share—diluted
$
2.77 
$
2.57  $
1.80 
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.
18. Supplemental Cash Flow Information
Non-cash investing and financing activities were as follows:
 
Year Ended December 31,
 
2024
2023
2022
Right-of-use assets obtained in exchange for new lease obligations
$
17,367 
$
17,520 
$
14,506 
Property and equipment in accounts payable
1,150 
1,997 
1,369 
Cash paid for interest and income taxes was as follows:
 
Year Ended December 31,
 
2024
2023
2022
Cash paid for interest
$
2,704 
$
5,629 
$
1,063 
Cash paid for income taxes, net
24,800 
25,998 
5,502 
During the years ended December 31, 2024, 2023 and 2022, we issued 2.6 million, 0.9 million and 1.7 million shares of Class A common stock,
respectively, pursuant to redemptions of CC Units (CW Units prior to the CC Reorganization) by holders thereof.
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(1)
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Table of Contents
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A.    Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We have evaluated, under the supervision and with the participation of our principal executive officer and principal financial officer, the effectiveness
of the design and operation of our disclosure controls and procedures (as defined in Rules 13a‑15(e) and 15d‑15(e) under the Exchange Act as amended) as of
December 31, 2024. Based upon that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and
procedures were effective at the reasonable assurance level as of such date. Our disclosure controls and procedures are designed to provide reasonable
assurance that the information required to be disclosed by us in reports that we file or submit under the Exchange Act is accumulated and communicated to our
management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure and
is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC.
Management’s Report on Internal Control Over Financial Reporting
Management’s annual report on internal control over financial reporting is incorporated by reference to page 36 of this Annual Report on Form 10-K.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting during the quarter ended December 31, 2024 that have materially affected,
or are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B.    Other Information
During the three months ended December 31, 2024, no director or officer (as defined in Rule 16a-1(f) of the Exchange Act) of Cactus, Inc. adopted or
terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.
Item 9C.    Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
PART III
Item 10.    Directors, Executive Officers and Corporate Governance
The information required by this item (and only such information) is incorporated by reference to our Definitive Proxy Statement for our 2025 Annual
Meeting of Shareholders to be filed with the SEC within 120 days of December 31, 2024 (“Proxy Statement”).
Item 11.    Executive Compensation 
The information required by this item (and only such information) is incorporated by reference to our Proxy Statement.
Item 12.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by this item (and only such information) is incorporated by reference to our Proxy Statement.
Item 13.    Certain Relationships and Related Transactions, and Director Independence
The information required by this item (and only such information) is incorporated by reference to our Proxy Statement.
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Table of Contents
Item 14.    Principal Accountant Fees and Services
The information required by this item (and only such information) is incorporated by reference to our Proxy Statement.
PART IV
Item 15.    Exhibits and Financial Statement Schedules
(1) Financial Statements
The consolidated financial statements of Cactus, Inc. and Subsidiaries and the Report of Independent Registered Public Accounting Firm are included
in Part II, Item 8. of this Annual Report. Reference is made to the accompanying Index to Consolidated Financial Statements.
(2) Financial Statement Schedules
All financial statement schedules have been omitted because they are not applicable or the required information is presented in the financial
statements or the notes thereto.
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Table of Contents
(3) Index to Exhibits
The exhibits required to be filed or furnished pursuant to Item 601 of Regulation S-K are set forth below.
Exhibit No.
    
Description
2.1
Agreement and Plan of Merger among Cactus, Inc., Atlas Merger Sub, LLC, HighRidge Resources, Inc. and FlexSteel LTIP LP, dated as of
December 30, 2022 (incorporated by reference to Exhibit 2.1 to the Registrant’s Form 8-K filed with the Commission on January 3, 2023)
3.1
  Restated Certificate of Incorporation of Cactus, Inc. (incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-
K filed with the Commission on May 20, 2024)
3.2
Amended and Restated Bylaws of Cactus, Inc. (incorporated by reference to Exhibit 3.6 to the Registrant's Form 10-Q filed with the
Commission on August 1, 2024)
4.1*
  Description of the Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934
10.1
  Amended and Restated Limited Liability Company Operating Agreement of Cactus Companies, LLC, dated February 27, 2023
(incorporated by reference to Exhibit 10.2 to the Registrant’s Form 8‑K filed with the Commission on March 1, 2023)
10.2†
Second Amended and Restated Employment Agreement with Scott Bender, dated as of April 25, 2021 (incorporated by reference to Exhibit
10.1 to the Registrant’s Form 8-K filed with the Commission on April 28, 2021)
10.3†
Second Amended and Restated Employment Agreement with Joel Bender, dated as of April 25, 2021 (incorporated by reference to Exhibit
10.2 to the Registrant’s Form 8-K filed with the Commission on April 28, 2021)
10.4†
Amended and Restated Noncompetition Agreement with Scott Bender, dated as of February 12, 2018 (incorporated by reference to
Exhibit 10.5 to the Registrant’s Form 8‑K filed with the Commission on February 12, 2018)
10.5†
Amended and Restated Noncompetition Agreement with Joel Bender, dated as of February 12, 2018 (incorporated by reference to
Exhibit 10.6 to the Registrant’s Form 8‑K filed with the Commission on February 12, 2018)
10.6†
Form of Director and Officer Indemnification Agreement (incorporated by reference to Exhibit 10.5 to the Registrant’s Registration
Statement on Form S-1 filed with the Commission on January 12, 2018)
10.7†*
Schedule of Director and Officer Indemnification Agreements Identical in All Material Respects to the Form of Director and Officer
Indemnification Agreement Filed as Exhibit 10.7 to this Annual Report pursuant to Instruction 2 to Item 601 of Regulation S-K
10.8
Tax Receivable Agreement (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8‑K filed with the Commission on
February 12, 2018)
10.9
Registration Rights Agreement (incorporated by reference to Exhibit 4.1 to the Registrant’s Form 8‑K filed with the Commission on
February 12, 2018)
10.10†
Cactus, Inc. Long-Term Incentive Plan (amended and restated effective May 16, 2023) (incorporated by reference to Appendix A to the
Registrant’s Definitive Proxy Statement on Schedule 14A filed with the Commission on March 30, 2023)
10.11†
Form of Restricted Stock Agreement under the Cactus Inc. Long Term Incentive Plan (incorporated by reference to Exhibit 10.10 to the
Registrant’s Form S‑1 Registration Statement filed with the Commission on January 12, 2018)
10.12†
Form of Restricted Stock Unit Agreement under the Cactus Inc. Long Term Incentive Plan (incorporated by reference to Exhibit 10.11 to the
Registrant’s Form S‑1 Registration Statement filed with the Commission on January 12, 2018)
10.13
Amended and Restated Credit Agreement, dated as of February 28, 2023, among Cactus Companies, LLC, as borrower, certain subsidiaries
of Cactus Companies, LLC, as guarantors, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent, an issuing
bank and swingline lender (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8‑K filed with the Commission on March 1,
2023)
10.14
First Amendment to Amended and Restated Credit Agreement, dated as of February 28, 2023, among Cactus Companies, LLC, as borrower,
certain subsidiaries of Cactus Companies, LLC, as guarantors, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative
agent, an issuing bank and swingline lender (incorporated by reference to Exhibit 10.14 to the Registrant’s Form 10-K filed with the
Commission on February 29, 2024)
10.15†
Form of Restricted Stock Unit Agreement (Directors, one-year vesting) (incorporated by reference to Exhibit 4.7 to the Registrants Form S-
8 Registration Statement filed with the Commission on May 29, 2018)
10.16†
Form of Restricted Stock Unit Agreement (Directors, three-year vesting) (incorporated by reference to Exhibit 4.8 to the Registrants Form
S-8 Registration Statement filed with the Commission on May 29, 2018)
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Table of Contents
Exhibit No.
    
Description
10.17†
Form of Performance Stock Unit Agreement (three-year vesting) under the Cactus, Inc. Long Term Incentive Plan (incorporated by
reference to Exhibit 10.1 to the Registrant’s Form 8-K filed with the Commission on March 17, 2020)
10.18†
Form of Performance Stock Unit Agreement (two and three-year vesting) under the Cactus, Inc. Long Term Incentive Plan (incorporated by
reference to Exhibit 10.2 to the Registrant’s Form 8-K filed with the Commission on March 17, 2020)
10.19†
Form of Performance Stock Unit Agreement under the Cactus, Inc. Long Term Incentive Plan (incorporated by reference to Exhibit 10.26 to
the Registrant’s Form 10-K filed with the Commission on February 28, 2022)
10.20†
Form of Restricted Stock Agreement (four-year cliff vesting) under the Cactus, Inc. Long Term Incentive Plan (incorporated by reference to
Exhibit 10.1 to the Registrant’s Form 10-Q filed with the Commission on May 10, 2023)
10.21†
Offer Letter to Stephen Tadlock dated May 30, 2017 (incorporated by reference to Item 10.17 of the Registrant’s Annual Report on Form
10-K for the year ended December 31, 2018, filed with the Commission on March 15, 2019)
10.22†
Offer Letter to William Marsh dated April 25, 2022 (incorporated by reference to Exhibit 10.27 to the Registrant’s Form 10-K filed with the
Commission on March 1, 2023)
10.23†
Offer Letter to Alan Keifer dated November 13, 2023 (incorporated by reference to Exhibit 10.23 to the Registrant’s Form 10-K filed with
the Commission on February 29, 2024)
10.24†
Offer Letter to Jay A. Nutt dated May 20, 2024 (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 10-Q filed with the
Commission on August 1, 2024)
10.25
First Amendment to the Tax Receivable Agreement, dated as of February 29, 2024, by and among Cactus, Inc., Cadent Management
Services, LLC and the TRA Holders identified therein (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 10-Q filed with
the Commission on May 2, 2024)
19*
Cactus, Inc. Trading Policy
21.1*
List of Subsidiaries of Cactus, Inc.
23.1*
Consent of PricewaterhouseCoopers LLP
31.1*
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1**
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2**
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
97
Policy for Recovery of Performance-Based Incentive Compensation from Executive Officers (incorporated by reference to Exhibit 97 to the
Registrant’s Form 10-K filed with the Commission on February 29, 2024)
101.INS*
XBRL Instance Document - the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the
Inline XBRL document
101.SCH*
XBRL Inline Taxonomy Extension Schema Document
101.CAL*
XBRL Inline Taxonomy Calculation Linkbase Document
101.LAB*
XBRL Inline Taxonomy Label Linkbase Document
101.PRE*
XBRL Inline Taxonomy Presentation Linkbase Document
101.DEF*
XBRL Inline Taxonomy Definition Document
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
*     Filed herewith.
**   Furnished herewith.
†     Management contract or compensatory plan or arrangement.
Item 16.    Form 10‑K Summary
None.
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Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
 
Cactus, Inc.
 
 
Date: February 27, 2025
By:
/s/ Scott Bender
 
 
Scott Bender
 
 
Chief Executive Officer, Chairman of the Board and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature
    
Title
Date
 
 
 
 
 
/s/ Scott Bender
 
Chief Executive Officer, Chairman of the Board and Director (Principal
Executive Officer)
 
February 27, 2025
Scott Bender
 
 
 
 
 
 
 
 
 
/s/ Jay A. Nutt
 
Executive Vice President, Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)
 
February 27, 2025
Jay A. Nutt
 
 
 
 
 
 
 
 
 
/s/ Joel Bender
 
President and Director
 
February 27, 2025
Joel Bender
 
 
 
 
 
 
 
 
 
/s/ Melissa Law
 
Director
 
February 27, 2025
Melissa Law
 
 
 
 
 
 
 
 
/s/ Michael McGovern
 
Director
 
February 27, 2025
Michael McGovern
 
 
 
 
 
 
 
 
 
/s/ John (Andy) O’Donnell
 
Director
 
February 27, 2025
John (Andy) O’Donnell
 
 
 
 
 
 
 
 
 
/s/ Gary Rosenthal
 
Director
 
February 27, 2025
Gary Rosenthal
 
 
 
 
/s/ Bruce Rothstein
Director
February 27, 2025
Bruce Rothstein
 
 
 
 
 
/s/ Alan Semple
 
Director
 
February 27, 2025
Alan Semple
 
 
 
 
/s/ Tym Tombar
Director
February 27, 2025
Tym Tombar
74

Exhibit 4.1
Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934
Capitalized terms used but not defined herein have the meanings set forth in the Annual Report on Form 10-K to which this Exhibit is attached.
References to “we,” “our” and “us” refer to Cactus, Inc., unless the context otherwise requires. References to “stockholders” refer to holders of
our Class A common stock and Class B common stock, unless the context otherwise requires.
As of December 31, 2024, we had one class of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”): Class A common stock, $0.01 par value per share. Although described below, our Class B common stock, $0.01 par value per
share, is not registered under Section 12 of the Exchange Act.
The following contains a description of our Class A common stock and Class B common stock, as well as certain related additional information.
The following summary does not purport to be complete and is qualified in its entirety by reference to the provisions of applicable law and to our
Amended and Restated Bylaws and Restated Certificate of Incorporation, which we refer to as our “amended and restated bylaws” and our
“restated certificate of incorporation,” respectively. Our amended and restated bylaws and restated certificate of incorporation as they exist on
the date of this Annual Report on Form 10-K are incorporated by reference or filed as an exhibit to the Annual Report on Form 10-K of which
this Exhibit is a part, and amendments or restatements of each will be filed with the Securities and Exchange Commission (the “SEC”) in future
periodic or current reports in accordance with the rules of the SEC. You are encouraged to read these documents.
General
As of December 31, 2024, our authorized capital stock consisted of: 300,000,000 shares of Class A common stock, $0.01 par value per share;
215,000,000 shares of Class B common stock, $0.01 par value per share; and 10,000,000 shares of preferred stock, $0.01 par value per share.
Class A Common Stock
Voting Rights.  Holders of shares of Class A common stock are entitled to one vote per share held of record on all matters to be voted upon by the
stockholders. The holders of Class A common stock do not have cumulative voting rights in the election of directors.
Dividend Rights.  Holders of shares of our Class A common stock are entitled to ratably receive dividends when and if declared by our board of
directors out of funds legally available for that purpose, subject to any statutory or contractual restrictions on the payment of dividends and to
any prior rights and preferences that may be applicable to any outstanding preferred stock.
Liquidation Rights.  Upon our liquidation, dissolution, distribution of assets or other winding up, the holders of Class A common stock are
entitled to ratably receive the assets available for distribution to the stockholders after payment of liabilities and the liquidation preference of any
of our outstanding shares of preferred stock.
Other Matters.  The shares of Class A common stock have no preemptive or conversion rights and are not subject to further calls or assessment
by us.  There are no redemption or sinking fund provisions

applicable to the Class A common stock.  All outstanding shares of our Class A common stock are fully paid and non-assessable.
Class B Common Stock
Generally.  From the completion of our initial public offering in 2018 until the CC Reorganization (as defined below) in 2013, each owner of
units representing limited liability ownership interests in Cactus LLC (“CW Units”) (a “CW Unit Holder”) owned one share of our Class B
common stock for each CW Unit such CW Unit Holder owned and, upon the completion of the CC Reorganization, such CW Unit Holders
ceased to be holders of CW Units and, instead, became holders of a number of units representing limited liability company interests in Cactus
Companies, LLC (“Cactus Companies”), a wholly-owned subsidiary of Cactus, (“CC Units”) equal to the number of CW Units such CW Unit
Holders held immediately prior to the completion of the CC Reorganization. Following the completion of the CC Reorganization, each owner of
CC Units (a “CC Unit Holder”) owns one share of our Class B common stock for each CC Unit such CC Unit Holder owns.
Voting Rights.  Holders of shares of our Class B common stock are entitled to one vote per share held of record on all matters to be voted upon
by the stockholders.  The holders of our Class B common stock do not have cumulative voting rights in the election of directors. Holders of
shares of our Class A common stock and Class B common stock vote together as a single class on all matters presented to our stockholders for
their vote or approval, except with respect to the amendment of certain provisions of our restated certificate of incorporation that would alter or
change the powers, preferences or special rights of the Class B common stock so as to affect them adversely, which amendments must be by a
majority of the votes entitled to be cast by the holders of the shares affected by the amendment, voting as a separate class, or as otherwise
required by applicable law.
Dividend and Liquidation Rights.  Holders of our Class B common stock do not have any right to receive dividends, unless the dividend consists
of shares of our Class B common stock or of rights, options, warrants or other securities convertible or exercisable into or exchangeable for
shares of Class B common stock paid proportionally with respect to each outstanding share of our Class B common stock and a dividend
consisting of shares of Class A common stock or of rights, options, warrants or other securities convertible or exercisable into or exchangeable
for shares of Class A common stock on the same terms is simultaneously paid to the holders of Class A common stock.  Holders of our Class B
common stock do not have any right to receive a distribution upon a liquidation or winding up of Cactus, Inc.
Other Matters. The shares of Class B common stock have no preemptive rights and are not subject to further calls or assessment by us. There are
no redemption or sinking fund provisions applicable to the Class B common stock. All outstanding shares of our Class B common stock are fully
paid and non-assessable.
Anti-Takeover Effects of Provisions of Our Restated Certificate of Incorporation, our Amended and Restated Bylaws and Delaware Law
Some provisions of Delaware law, and our restated certificate of incorporation and our amended and restated bylaws described below, contain
provisions that could make the following transactions more difficult: acquisitions of us by means of a tender offer, a proxy contest or otherwise;
or removal of our incumbent officers and directors.  These provisions may also have the effect of preventing changes in our management.  It is
possible that these provisions could make it more difficult to accomplish or could deter
    

transactions that stockholders may otherwise consider to be in their best interest or in our best interest, including transactions that might result in
a premium over the market price for our shares.
These provisions, summarized below, are expected to discourage coercive takeover practices and inadequate takeover bids.  These provisions are
also designed to encourage persons seeking to acquire control of us to first negotiate with us.  We believe that the benefits of increased protection
and our potential ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure us outweigh the
disadvantages of discouraging these proposals because, among other things, negotiation of these proposals could result in an improvement of
their terms.
Delaware Law
We are not subject to the provisions of Section 203 of the Delaware General Corporation Law (“DGCL”), regulating corporate takeovers.  In
general, those provisions prohibit a Delaware corporation, including those whose securities are listed for trading on the New York Stock
Exchange, from engaging in any business combination with any interested stockholder for a period of three years following the date that the
stockholder became an interested stockholder, unless:
•
the transaction is approved by the board of directors before the date the interested stockholder attained that status;
•
upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder
owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced; or
•
on or after such time the business combination is approved by the board of directors and authorized at a meeting of stockholders by at
least two-thirds of the outstanding voting stock that is not owned by the interested stockholder.
Restated Certificate of Incorporation and Our Amended and Restated Bylaws
Provisions of our restated certificate of incorporation and our amended and restated bylaws may delay or discourage transactions involving an
actual or potential change in control or change in our management, including transactions in which stockholders might otherwise receive a
premium for their shares, or transactions that our stockholders might otherwise deem to be in their best interest.  Therefore, these provisions
could adversely affect the price of our Class A common stock.
Among other things, our restated certificate of incorporation and amended and restated bylaws:
•
establish advance notice procedures with regard to stockholder proposals relating to the nomination of candidates for election as
directors or new business to be brought before meetings of our stockholders.   These procedures provide that notice of stockholder
proposals must be timely given in writing to our corporate secretary prior to the meeting at which the action is to be taken.  Generally, to
be timely, notice must be received at our principal executive offices not less than 90 days nor more than 120 days prior to the first
anniversary date of the annual meeting for the preceding year.  Our amended and restated bylaws specify the requirements as to form and
content of all stockholders’ notices.  These requirements may preclude stockholders from bringing matters before the stockholders at an
annual or special meeting;
•
provide our board of directors the ability to authorize undesignated preferred stock.  This ability makes it possible for our board of
directors to issue, without stockholder approval, preferred stock with voting or other rights or preferences that could impede the success
of any attempt to change
    

control of us.    These and other provisions may have the effect of deferring hostile takeovers or delaying changes in control or
management of our company;
•
provide that the authorized number of directors may be changed only by resolution of the board of directors;
•
provide that all vacancies, including newly created directorships, shall, except as otherwise required by law and the rights of holders of
any series of preferred stock, be filled solely by the affirmative vote of a majority of directors then in office, even if less than a quorum;
•
provide that any action required or permitted to be taken by the stockholders must be effected at a duly called annual or special meeting
of stockholders and may not be effected by any consent in writing in lieu of a meeting of such stockholders, subject to the rights of the
holders of any series of preferred stock with respect to such series;
•
provide that our restated certificate of incorporation may be amended by the affirmative vote of the holders of, (i) prior to the
commencement of the 2026 annual meeting of stockholders, at least two-thirds, and (ii) from the commencement of the 2026 annual
meeting of stockholders and thereafter, not less than a majority, in voting power of our outstanding shares of stock entitled to vote
thereon, voting together as a single class;
•
provide that special meetings of our stockholders may only be called by the board of directors, the chief executive officer or the
chairman of the board;
•
provide for our board of directors to be divided into three classes until the 2027 annual meeting of stockholders, with the Class II
directors elected at the 2025 annual meeting of shareholders serving for a term of one year, the Class II and III directors elected at the
2026 annual meeting of stockholders to serve for a term of one year, and the Class I, II and III directors elected at the 2027 annual
meeting of stockholders to serve for a term of one year, at which time all directors will be elected to serve for one year terms at all
subsequent annual meetings of stockholders; and
•
provide that our amended and restated bylaws can be amended by the board of directors or (i) prior to the commencement of the 2026
annual meeting of stockholders, upon the affirmative vote of at least two-thirds of our shares entitled to vote in the election of directors,
and (ii) from the commencement of the 2026 annual meeting of stockholders and thereafter, upon the affirmative vote of not less than a
majority in voting power of the then-outstanding shares of stock of the Corporation entitled to vote thereon, voting together as a single
class.
Forum Selection
Our restated certificate of incorporation provides that unless we select or consent in writing to the selection of an alternative forum:
(i) the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have, or declines to accept, jurisdiction, another state
court or a federal court located within the State of Delaware) will, to the fullest extent permitted by applicable law, be the sole and exclusive
forum for any stockholder to bring:
•
any derivative action or proceeding brought on our behalf;
    

•
any action asserting a claim of breach of a duty (including any fiduciary duty) owed by any of our current or former directors, officers,
employees or agents to us or our stockholders;
•
any action asserting a claim against us or any current or former director or officer or other employee of ours arising pursuant to any
provision of the DGCL, our certificate of incorporation or our bylaws; or
•
any action asserting a claim against us or any director or officer or other employee of ours that is governed by the internal affairs
doctrine, in each such case subject to such Court of Chancery having personal jurisdiction over the indispensable parties named as
defendants therein; and
(ii) the federal district courts of the United States of America will, to the fullest extent permitted by applicable law, be the sole and exclusive
forum for the resolution of any complaint asserting a cause of action arising under the federal securities laws of the United States of America,
Our restated certificate of incorporation also provides that any person or entity purchasing or otherwise acquiring any interest in shares of our
capital stock will be deemed to have notice of, and to have consented to, this forum selection provision.  Although we believe these provisions
benefit us by providing increased consistency in the application of Delaware and federal law for the specified types of actions and proceedings,
the provisions may have the effect of discouraging lawsuits against our directors, officers, employees and agents.  The enforceability of similar
exclusive forum provisions in other companies’ certificates of incorporation has been challenged in legal proceedings, and it is possible that, in
connection with one or more actions or proceedings described above, a court could rule that this provision in our restated certificate of
incorporation is inapplicable or unenforceable.
Limitation of Liability and Indemnification Matters
Our restated certificate of incorporation limits the liability of our directors and officers for monetary damages for breach of their fiduciary duty
as directors and officers, except for liability that cannot be eliminated under the DGCL.  Delaware law provides that directors and officers of a
company will not be personally liable for monetary damages for breach of their fiduciary duty as directors and officers, except for liabilities:
•
for any breach of their duty of loyalty to us or our stockholders;
•
for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;
•
for, with respect to directors, unlawful payment of dividend or unlawful stock repurchase or redemption, as provided under Section 174
of the DGCL;
•
for any transaction from which the director or officer derived an improper personal benefit; or
•
for, with respect to officers, any action by or in the right of the corporation.
Any amendment, repeal or modification of these provisions will be prospective only and would not affect any limitation on liability of a director
or officer for acts or omissions that occurred prior to any such amendment, repeal or modification.
    

Our amended and restated bylaws also provide that we will indemnify our directors and officers to the fullest extent permitted by Delaware
law.    Our amended and restated bylaws also require us, to the fullest extent not prohibited by applicable law, pay the expenses (including
attorneys’ fees) incurred by a covered person in defending any proceeding in advance of its final disposition.    We have entered into
indemnification agreements with each of our current directors and officers and intend to enter into indemnification agreements with any future
directors and officers.  These agreements require us to indemnify these individuals to the fullest extent permitted under Delaware law against
liability that may arise by reason of their service to us, and to advance expenses incurred as a result of any proceeding against them as to which
they could be indemnified.    We believe that the limitation of liability provision that is in our restated certificate of incorporation and the
indemnification agreements will facilitate our ability to continue to attract and retain qualified individuals to serve as directors and officers.
Transfer Agent and Registrar
The transfer agent and registrar for our Class A common stock is Equiniti Trust Company, LLC.
Listing
Our Class A common stock is listed on the NYSE under the symbol “WHD.”
    

Exhibit 10.7
SCHEDULE OF DIRECTOR AND OFFICER INDEMNIFICATION AGREEMENTS SUBSTANTIALLY IDENTICAL TO FORM OF DIRECTOR
AND OFFICER INDEMNIFICATION AGREEMENT FILED AS EXHIBIT TO ANNUAL REPORT
In accordance with Instruction 2 to Item 601 of Regulation S-K, the Registrant has omitted filing the following Director and Officer Indemnification
Agreements by and between Cactus, Inc. and the parties named below because they are substantially identical in all material respects to the form of Director
and Officer Indemnification Agreement filed as Exhibit 10.6 to Cactus, Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024:
1.
Indemnification Agreement with Scott Bender, dated as of February 12, 2018
2.
Indemnification Agreement with Joel Bender, dated as of February 12, 2018
3.
Indemnification Agreement with Bruce Rothstein, dated as of February 12, 2018
4.
Indemnification Agreement with Steven Bender dated as of February 12, 2018
5.
Indemnification Agreement with Stephen Tadlock, dated as of February 12, 2018
6.
Indemnification Agreement with John (Andy) O’Donnell, dated as of February 12, 2018
7.
Indemnification Agreement with Michael McGovern, dated as of February 12, 2018
8.
Indemnification Agreement with Alan Semple, dated as of February 12, 2018
9.
Indemnification Agreement with Gary Rosenthal, dated as of February 12, 2018
10. Indemnification Agreement with Melissa Law, dated as of January 30, 2020
11. Indemnification Agreement with Tym Tombar, dated as of July 1, 2021
12. Indemnification Agreement with William Marsh, dated as of May 17, 2022
13. Indemnification Agreement with Jay A. Nutt, dated as of June 3, 2024

Adopted May 16, 2023
Exhibit 19
CACTUS, INC.
TRADING POLICY
(Adopted as of May 2023)
This Trading Policy (this “Policy”) provides guidelines to directors, officers, employees, contractors and consultants of
Cactus, Inc. (the “Company”) and its subsidiaries with respect to transactions in the securities of the Company and its business
partners. The Company has adopted this Policy to promote compliance with applicable securities laws that prohibit certain persons
who are aware of Material Non-Public information (as defined below) about a company from: (i) engaging in transactions in the
securities of that company; or (ii) providing Material Non-Public information to other persons who may trade on the basis of that
information.
This Policy applies to directors, officers, employees, contractors and consultants of the Company and its subsidiaries. This
Policy also applies to any person who receives Material, Non-Public Information from such persons. The foregoing people to
whom this Policy applies are referred to in this Policy as “Restricted Parties.” All Restricted Parties must comply strictly with this
Policy. Further, in certain circumstances, this Policy also applies to Related Persons (as defined below) who are family members
of, or entities controlled or influenced by, Restricted Parties.
This Policy applies to transactions in the securities of (1) the Company and (2) the Company’s customers, joint-venture or
strategic partners, vendors and suppliers (“business partners”). Transactions subject to this Policy include purchases, sales and
bona fide gifts. Securities subject to this Policy include a broad range of financial instruments, including common stock, options to
buy or sell common stock, warrants and convertible securities as well as derivative instruments that are not issued by the Company
or its business partners, such as exchange-traded put or call options or swaps.
The Company reserves the right to amend or rescind this Policy or any portion of it at any time and to adopt different
policies and procedures at any time. In the event of any conflict or inconsistency between this Policy and any other materials
distributed by the Company, this Policy shall govern. If a law conflicts with this Policy, you must comply with the law.
You should read this Policy carefully and ask questions of the Company’s General Counsel.
I.
Definitions and Explanations
A.
Material, Non-Public Information
1.
What Information is “Material”?
It is not possible to define all categories of material information. However, information should be regarded
as material if there is a substantial likelihood that it would be considered important to an investor in making
an investment decision regarding the Company’s securities. Information that is likely to affect the price of a
company’s securities (whether positive or negative) is almost always material. It is also important to
remember that either positive or negative information may be material.

While it may be difficult under this standard to determine whether particular information is material, there
are various categories of information that are particularly sensitive and, as a general rule, should always be
considered material information. Common examples of material information include:
•
Financial results;
•
Projections of future earnings or losses;
•
News of a significant transaction, including, among other things, a proposed merger;
•
News of a significant acquisition or a sale of significant assets;
•
Equity or debt offerings;
•
Impending announcements of bankruptcy, reorganization, insolvency or other financial liquidity
problems;
•
Gain or loss of a substantial customer or supplier;
•
Changes in the Company’s distribution or dividend policy;
•
Stock splits;
•
Changes in the Company’s or its subsidiaries’ credit ratings;
•
Significant developments in litigation or regulatory proceedings; and
•
Changes in management.
The above list is for illustration purposes only. If securities transactions become the subject of scrutiny, they
will be viewed after-the-fact and with the benefit of hindsight. Therefore, before engaging in any securities
transaction, you should consider carefully how the Securities and Exchange Commission (“SEC”) and
others might view your transaction in hindsight and with all of the facts disclosed.
2.
What Information is “Non-Public”?
Information is “non-public” if it has not been previously disclosed to the general public and is otherwise not
generally available to the investing public. In order for information to be considered “public,” it must be
widely disseminated in a manner making it generally available to the investing public and the investing
public must have had time to absorb the information fully. Generally, one should allow two full Trading
Days (as defined below) following publication as a reasonable waiting period before considering
information to be “public.”
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B.
Related Person
“Related Person” means, with respect to the Company’s Restricted Parties:
•
Any family member living in the Restricted Party’s household (including a spouse, minor child, minor
stepchild, parent, stepparent, grandparent, sibling, in-law) and anyone else living in the Restricted Party’s
household;
•
Family members who do not live in the Restricted Party’s household but whose transactions in Company
securities are directed by the Restricted Party or subject to the Restricted Party’s influence or control;
•
Partnerships in which the Restricted Party is a general partner;
•
Trusts of which the Restricted Party is a trustee;
•
Estates of which the Restricted Party is an executor; and
•
Other equivalent legal entities which such Restricted Party controls.
C.
Trading Day
“Trading Day” means a day on which the New York Stock Exchange is open for trading, and a “Trading Day”
begins at the time trading begins.
II.
General Policy
Persons subject to this Policy have ethical and legal obligations to maintain the confidentiality of information about the
Company and to not engage in transactions in Company securities while in possession of Material Non-Public Information.
This Policy prohibits Restricted Parties from transacting or “tipping” others who may transact in the Company’s securities
while aware of Material, Non-Public Information about the Company. This Policy also includes the further guidelines with
respect to the Company’s securities that are outlined below.
Additionally, Restricted Parties must treat Material, Non-Public Information about the Company’s business partners with
the same care required with respect to Material, Non-Public Information related directly to the Company. Accordingly,
Restricted Parties are prohibited from transacting or tipping others who may transact in the securities of Company’s
business partners while in possession of Material, Non-Public Information about the Company’s business partners obtained
from their employment by or relationship with the Company. In connection with that, Restricted Parties should generally
follow the same guidelines outlined below related to the Company’s securities with respect to the securities of the
Company’s business partners. Questions regarding the Policy and its application to the securities of the Company’s
business partners should be directed to the Company’s General Counsel.
A.
Transacting on Material, Non-Public Information
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Except as otherwise specified in this Policy, no Restricted Party or Related Person shall engage in any transaction
in the Company’s securities, including any purchase or sale or offer to purchase or offer to sell, during any period
commencing with the date that he or she is aware of Material, Non-Public Information concerning the Company,
and ending at the beginning of the third Trading Day following the date of public disclosure of the Material, Non-
Public Information, or at the time that the information is no longer material.
B.
Tipping Others of Material, Non-Public Information
No Restricted Party shall disclose or tip Material, Non-Public Information about the Company to any person whose
job does not require them to have that information or outside of the Company to other persons (including Related
Persons), nor shall any Restricted Party or Related Person make recommendations or express opinions on the basis
of Material, Non-Public Information as to transacting in the Company’s securities. Restricted Parties are not
authorized to recommend the purchase or sale of the Company’s securities to any other person regardless of
whether the Restricted Party is aware of Material, Non-Public Information.
C.
Confidentiality of Material, Non-Public Information
Material, Non-Public Information relating to the Company is the Company’s property and the unauthorized
disclosure of Material, Non-Public Information is prohibited. If a Restricted Party receives any inquiry from outside
the Company (such as a securities analyst) for information (particularly financial results and/or projections) that
may be Material, Non-Public Information, the inquiry should be referred to the Company’s Chief Financial Officer,
who is responsible for coordinating and overseeing the release of that information to the investing public, securities
analysts and others in compliance with applicable laws and regulations.
D.
Special and Prohibited Transactions
The Company has determined that there is a heightened legal risk and/or the appearance of improper or
inappropriate conduct if Restricted Parties and Related Persons engage in certain types of transactions, including,
among other things, short-term or speculative transactions. It therefore is the Company’s policy that Restricted
Parties and Related Persons may not engage in any of the following transactions, or should otherwise consider the
Company’s preferences as described below:
1.
Transactions in Company Debt Securities. The Company believes that it is inappropriate for Restricted
Parties and Related Persons to be creditors of the Company due to actual or perceived conflicts of interest
that may arise in connection therewith. Therefore, transactions in Company debt securities, whether or not
those securities are convertible into Company common stock, are prohibited, regardless of whether you are
in possession of Material, Non-Public Information.
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2.
Hedging Transactions and Other Transactions Involving Company Derivative Securities. Hedging or
monetization transactions can permit an individual to hedge against a decline in stock price, while at the
same time eliminating much of the individual’s economic interest in any rise in value of the hedged
securities. Because hedging transactions can present the appearance of a bet against the Company, hedging
or monetization transactions, whether direct or indirect, involving the Company’s securities are completely
prohibited, regardless of whether you are in possession of Material, Non-Public Information. Examples of
hedging transactions include “short sales,” prepaid variable forwards, equity swaps and collars.
Transactions involving derivative securities, whether or not entered into for hedging or monetization
purposes, may also create the appearance of impropriety in the event of any unusual activity in the
underlying equity security. Transactions involving Company-based derivative securities are completely
prohibited, whether or not you are in possession of Material, Non-Public Information. “Derivative
securities” are options, warrants, stock appreciation rights, convertible notes or similar rights whose value is
derived from the value of an equity security, such as Company common stock. Transactions in derivative
securities include, but are not limited to, trading in Company-based option contracts, transactions in
straddles or collars, and writing puts or calls. Transactions in debt that may be convertible into Company
common stock would also constitute a transaction in derivative securities prohibited by this Policy. This
Policy does not, however, restrict acquiring, holding, exercising, or settling awards such as options,
restricted stock, restricted stock units, or other derivative securities granted under a Company equity
incentive plan as described in more detail below under “Exempted Transactions.”
3.
Purchases of Company Stock on Margin. Any of the Company’s common stock purchased in the open
market should be paid for in full at the time of purchase. Purchasing the Company’s common stock on
margin (e.g., borrowing money from a brokerage firm or other third party to fund the stock purchase) is
strictly prohibited by this Policy.
4.
Pledges of Company Securities. Company stock pledged as collateral, including shares held in a margin
account, may be sold without your consent by the lender in foreclosure if you default on your loan. A
foreclosure sale that occurs when you are aware of Material, Non-Public Information may, under some
circumstances, result in unlawful trading. Because of this danger, pledging Company securities as collateral
is prohibited by this Policy, subject to receipt of a waiver of this prohibition from the Audit Committee of
the Company’s Board of Directors (the “Board”).
5.
Short-Term Trading. Short-term trading of Company securities (purchases and sales, or vice versa, within
six months) may be distracting and may unduly focus the person on the Company’s short-term stock market
performance instead of the Company’s long-term business objectives. For
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these reasons, short-term trading of Company securities in the open market is prohibited.
6.
Standing and Limit Orders. Standing and limit orders (except standing and limit orders under approved Rule
10b5-1 Plans, see Section V below) should be used only for a very brief period of time. The problem with
purchases or sales of Company securities resulting from standing instructions to a broker is that there is no
control over the timing of the transaction. The broker could execute a transaction when the Restricted Party
is in possession of Material, Non- Public Information.
E.
Exempted Transactions
This Policy does not apply in the case of the following transactions, except as specifically noted:
1.
Stock Option Exercises. This Policy does not apply to the exercise of an employee stock option acquired
pursuant to the Company’s plans, or to the exercise of a tax withholding right pursuant to which a person
has elected to have the Company withhold shares subject to an option to satisfy tax withholding
requirements. This Policy does apply, however, to any sale of stock as part of a broker-assisted cashless
exercise of an option, or any other market sale for the purpose of generating the cash needed to pay the
exercise price of an option.
2.
Restricted Stock and Restricted Stock Unit Awards. This Policy does not apply to the vesting of restricted
stock and restricted stock units, or the exercise of a tax withholding right pursuant to which the Restricted
Party elects to have the Company withhold shares of stock to satisfy tax withholding requirements upon the
vesting of any restricted stock or restricted stock units. The Policy does apply, however, to any market sale
of restricted stock.
3.
401(k) Plan. This Policy does not apply to purchases of Company securities in the Company’s 401(k) plan,
if any, resulting from a Restricted Party’s periodic contribution of money to the plan pursuant to the
Restricted Party’s payroll deduction election. This Policy does apply, however, to certain elections the
Restricted Party may make under the 401(k) plan, including:
(a)
an election to increase or decrease the percentage of the Restricted Party’s periodic contributions
that will be allocated to the Company stock fund;
(b)
an election to make an intra-plan transfer of an existing account balance into or out of the Company
stock fund;
(c)
an election to borrow money against the Restricted Party’s 401(k) plan account if the loan will result
in a liquidation of some or all of the Restricted Party’s Company stock fund balance; and
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(d)
an election to pre-pay a plan loan if the pre-payment will result in allocation of loan proceeds to the
Company stock fund.
4.
Employee Stock Purchase Plan. This Policy does not apply to purchases of Company securities in any
employee stock purchase plan the Company may maintain from time to time resulting from the Restricted
Party’s periodic contribution of money to the plan pursuant to the election the Restricted Party made at the
time of the Restricted Party’s enrollment in the plan. This Policy also does not apply to purchases of
Company securities resulting from lump sum contributions to any such plan, provided that the Restricted
Party elected to participate by lump sum payment at the beginning of the applicable enrollment period. This
Policy does apply, however, to the Restricted Party’s election to participate in any such plan for any
enrollment period, and to the Restricted Party’s sales of Company securities purchased pursuant to the plan.
5.
Dividend Reinvestment Plan. This Policy does not apply to purchases of Company securities under any
dividend reinvestment plan the Company may maintain from time to time resulting from the Restricted
Party’s reinvestment of dividends paid on Company securities. This Policy does apply, however, to
voluntary purchases of Company securities resulting from additional contributions the Restricted Party
chooses to make to any such dividend reinvestment plan, and to the Restricted Party’s election to participate
in any such plan or increase the Restricted Party’s level of participation in any such plan. This Policy also
applies to the Restricted Party’s sale of any Company securities purchased pursuant to any such plan.
6.
Other Similar Transactions. Any other purchase of Company securities from the Company or sales of
Company securities to the Company are not subject to this Policy.
F.
Indirect Transactions in Company Securities
Transactions in mutual funds or exchange traded funds that are invested in Company securities are not transactions
subject to this Policy.
G.
Post-Termination Transactions
The guidelines set forth in this Section II continue to apply to transactions in the Company’s securities even after
the Restricted Party has terminated employment or other service relationship with the Company as follows: if the
Restricted Party is aware of Material, Non-Public Information when his or her employment or service relationship
terminates, the Restricted Party may not transact in the Company’s securities until that information has become
public or is no longer Material.
H.
Hardship Waivers
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Transactions that may be necessary or justifiable for independent reasons (such as the need to raise money for an
emergency expenditure), or small transactions, are not excepted from this Policy. The securities laws do not
recognize any mitigating circumstances, and, in any event, even the appearance of an improper transaction must be
avoided to preserve the Company’s reputation for adhering to the highest standards of conduct.
III.
Additional Trading Guidelines and Requirements for Certain Restricted Parties
A.
Blackout Period and Trading Window
The period beginning at the close of market on the 20th calendar day prior to the end of each fiscal quarter or year
and ending after two full Trading Days following the date of public disclosure of the financial results for that fiscal
quarter (“Blackout Period”) is a particularly sensitive period of time for transactions in the Company’s securities
from the perspective of compliance with applicable securities laws. This sensitivity is due to the fact that certain
Restricted Parties identified by the Company will, during the Blackout Period, often be aware of Material, Non-
Public Information about the expected financial results for the quarter. Certain Restricted Parties identified by the
Company and who have been notified that they have been so identified (the “Window Group”), which generally
consists of the Company’s Directors, Executive Officers and certain key employees, are prohibited from transacting
in the Company’s securities during the Blackout Period. Restricted Parties who have not been identified as being in
the Window Group should also adhere to the general prohibitions set forth in this section of the Policy.
To ensure compliance with this Policy and applicable federal and state securities laws, the Company requires that
the Window Group refrain from executing transactions involving the Company’s securities other than during the
period commencing at the open of market after the expiration of two full Trading Days following the date of public
disclosure of the financial results for a particular fiscal quarter or year and continuing until the close of market on
the 20th calendar day prior to the end of each fiscal quarter or year (“Trading Window”).
From time to time, the Company may also prohibit the Window Group from transacting in the Company’s
securities because of developments known to the Company and not yet disclosed to the public. In this event, the
Window Group may not engage in any transaction involving the Company’s securities until the information has
been known publicly for at least two full Trading Days and also may not disclose to others the fact of the trading
suspension.
It should be noted that even during the Trading Window, any person aware of Material, Non-Public Information
concerning the Company should not engage in any transactions in the Company’s securities until the information
has been known publicly for at least two full Trading Days, whether or not the Company has recommended a
suspension of trading to that person. Transacting in the Company’s securities during the Trading Window should
not be considered a “safe harbor,” and all Restricted Parties must use good judgment at all times.
Active 37128766.1                        8

B.
Pre-Clearance of Trades
The Company has determined that the Window Group must not transact in the Company’s securities, even during a
Trading Window, without first complying with the Company’s “pre-clearance” process. Each member of the
Window Group should contact the Company’s General Counsel prior to commencing any transaction in the
Company’s securities. The General Counsel will consult, as necessary, with senior management before clearing any
proposed transaction. Any proposed transaction cleared by the Company’s General Counsel shall be reported
immediately to the Company’s Chief Executive Officer.
Please note that clearance of a proposed transaction by the Company’s General Counsel does not constitute
legal advice regarding or otherwise acknowledge that a member of the Window Group does not possess
Material, Non-Public Information. Employees must ultimately make their own judgments regarding, and are
personally responsible for determining, whether they are in possession of Material, Non-Public Information.
C.
Hardship Waivers
The guidelines specified in this Section III may be waived, at the discretion of the Company’s Chief Executive
Officer, if compliance would create severe hardship or prevent a Restricted Party within the Window Group from
complying with a court order, as in the case of a divorce settlement. Any exception approved by the Company’s
Chief Executive Officer shall be reported immediately to the Audit Committee of the Company’s Board.
IV.
Additional Information for Directors and Officers
The Company’s directors and Section 16 officers (as determined from time to time by the Board) are required to file
Section 16 reports with the SEC when they engage in transactions in the Company’s securities. Although the Company
may generally assist its directors and Section 16 officers in preparing and filing the required reports, directors and Section
16 officers retain responsibility for the reports.
Directors and Section 16 officers shall also comply with the policies and procedures set forth in the Company’s Short-
Swing Trading and Reporting Policy.
V.
Planned Trading Programs
Rule 10b5-1 under the Exchange Act provides an affirmative defense to an allegation that a transaction has been made on
the basis of Material, Non-Public Information. Restricted Parties may transact in the Company’s securities even when
aware of Material, Non-Public Information under a properly established Rule 10b5-1 Plan.
The Company’s directors and Section 16 officers, prior to establishing, modifying or terminating a Rule 10b5-1 Plan or
any non-10b5-1 trading arrangement, are required to provide the Company’s General Counsel with a copy of such plan or
arrangement along with an explanation of the person’s plans for establishing, modifying or terminating such
Active 37128766.1                        9

plan or arrangement. The General Counsel will consult, as necessary, with senior management before clearing any action
with respect to such plan or arrangement. Any proposed action with respect to any such plan or arrangement cleared by the
Company’s General Counsel shall be reported immediately to the Company’s Chief Executive Officer.
Please note that clearance of a proposed Rule 10b5-1 Plan or any non-10b5-1 trading arrangement by the
Company’s General Counsel does not constitute legal advice regarding such plan or arrangement. Individuals must
ultimately make their own judgments regarding, and are personally responsible for, their transactions in the
Company’s securities.
The Company’s directors and Section 16 officers should be aware that under rules adopted by the SEC, the Company is
required to disclose on a quarterly basis any director or Section 16 officer 10b5-1 Plan and written non-10b5-1 trading
arrangement adopted, modified or terminated during each quarter and the material terms of any such plan or arrangement.
VI.
Potential Criminal and Civil Liability and/or Disciplinary Action
A.
SEC Enforcement Action
The adverse consequences of an SEC Enforcement Action against a Restricted Party for trading violations can be
severe.
B.
Disciplinary Action by the Company
Persons who violate this Policy shall be subject to disciplinary action by the Company, which may include
termination or other appropriate action.
VII.
Administration of the Policy
The Company’s General Counsel and in his/her absence, an employee designated by the General Counsel shall be
responsible for administration of this Policy. All determinations and interpretations by the General Counsel shall be final
and not subject to further review.
* * * *
Each individual is responsible for making sure that he, she or they complies with this Policy, and that any Related Person whose
transactions are subject to this Policy, as discussed above, also complies with this Policy. In all cases, the responsibility for
determining whether an individual is in possession of Material Non-Public Information rests with that individual, and any action
on the part of the Company, the Company’s General Counsel or any other employee or director pursuant to this Policy (or
otherwise) does not in any way constitute legal advice or insulate an individual from liability under applicable securities laws.
Active 37128766.1                        10

ANNEX A
TRADING POLICY
CERTIFICATION
I have read and understand the Trading Policy (the “Policy”) of Cactus, Inc. (the “Company”). I agree that I will comply with the
policies and procedures set forth in the Policy. I understand and agree that, if I am an employee of the Company or one of its
subsidiaries or other affiliates, my failure to comply in all respects with the Company’s policies, including the Policy, is a basis for
termination for cause of my employment with the Company and any subsidiary or other affiliate to which my employment now
relates or may in the future relate.
I am aware that this signed Certification will be filed with my personnel records in the Company’s Human Resources Department.
Signature
Type or Print Name
Date
Active 37128766.1                    A-1

Exhibit 21.1
Cactus, Inc.
Significant Subsidiaries
 
 
 
State or Country
Subsidiary
of Incorporation
Cactus Acquisitions LLC
Delaware
Cactus Companies, LLC
Delaware
Cactus Wellhead, LLC
 
Delaware
Cactus Wellhead (Suzhou) Pressure Control Co., Ltd.
 
China
Cactus Wellhead Australia Pty, Ltd
 
Australia
Cactus Wellhead International I, LLC
Delaware
Cactus Wellhead Vietnam Limited Company
Vietnam
FlexSteel Holdings, LLC
Delaware
FlexSteel USA, LLC
Nevada
Rubiales Consulting, LLC
Delaware
Talon Bridge Holdings, LLC
Delaware
FlexSteel Pipeline Technologies, Ltd.
Canada

Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (No. 333-263106) and S-8 (No. 333-225269) of Cactus, Inc. of
our report dated February 27, 2025 relating to the financial statements and the effectiveness of internal control over financial reporting, which appears in this
Form 10-K.
/s/ PricewaterhouseCoopers LLP
Houston, Texas
February 27, 2025

Exhibit 31.1
CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER PURSUANT TO RULE 13a-14(a)
I, Scott Bender, certify that:
I have reviewed this Annual Report on Form 10-K of Cactus, Inc. (the “registrant”);
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and
have:
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;
c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal
quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s
auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to
adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over
financial reporting.
Date: February 27, 2025
/s/ Scott Bender
Scott Bender
Chief Executive Officer, Chairman of the Board and Director
(Principal Executive Officer)

Exhibit 31.2
CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER PURSUANT TO RULE 13a-14(a)
I, Jay A. Nutt, certify that:
I have reviewed this Annual Report on Form 10-K of Cactus, Inc. (the “registrant”);
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and
have:
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;
c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal
quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s
auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to
adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over
financial reporting.
Date: February 27, 2025
/s/ Jay A. Nutt
Jay A. Nutt
Executive Vice President, Chief Financial Officer and Treasurer
(Principal Financial Officer)


Exhibit 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report on Form 10-K of Cactus, Inc. (the “Company”) for the year ended December 31, 2024 as filed with the Securities and
Exchange Commission on the date hereof (the “Report”), I, Scott Bender, Chief Executive Officer, Chairman of the Board and Director of the Company,
certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:
1)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: February 27, 2025
/s/ Scott Bender
Scott Bender
Chief Executive Officer, Chairman of the Board and Director
(Principal Executive Officer)

Exhibit 32.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report on Form 10-K of Cactus, Inc. (the “Company”) for the year ended December 31, 2024 as filed with the Securities and
Exchange Commission on the date hereof (the “Report”), I, Jay A. Nutt, Executive Vice President, Chief Financial Officer and Treasurer of the Company,
certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:
1)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: February 27, 2025
/s/ Jay A. Nutt
Jay A. Nutt
Executive Vice President, Chief Financial Officer and Treasurer
(Principal Financial Officer)