Cactus, Inc. 2026 Q1 Filing Summary
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended March 31, 2026. Cactus, Inc. operates in two segments: Pressure Control (wellhead and pressure control equipment) and Spoolable Technologies (spoolable pipe technologies). The quarter was defined by the closing of the Cactus International acquisition on January 1, 2026, a joint venture with Baker Hughes acquiring 65% of Baker Hughes Pressure Control LLC for approximately $344.5 million. This transaction expanded Cactus into a global supplier with operations in the Middle East, China, and Australia.
Key Financial Metrics
| Metric | Q1 2026 | Q1 2025 |
|---|---|---|
| Total Revenues | $388.3 million | $280.3 million |
| Operating Income | $49.5 million | $68.6 million |
| Net Income (Consolidated) | $40.2 million | $54.1 million |
| Net Income Attributable to Cactus Inc. | $32.9 million | $44.2 million |
| Diluted EPS (Class A) | $(0.70) | $0.64 |
| Operating Cash Flow | $128.3 million | $41.5 million |
| Cash and Cash Equivalents | $291.6 million | $347.7 million |
| Total Debt | $0 (No bank debt outstanding) | $0 |
Note: The reported loss per share of $(0.70) is driven by an $81.5 million non-cash accretion charge related to the redeemable non-controlling interest (NCI) from the Cactus International acquisition, which reduced net income available to common shareholders.
Material Changes vs. Prior Period
- Revenue Growth: Total revenue increased 38.5% year-over-year, driven primarily by the Cactus International acquisition which contributed $126.9 million in revenue. The Pressure Control segment revenue grew 57.8% to $300.2 million, while Spoolable Technologies revenue declined slightly by 2.9% to $89.9 million due to reduced U.S. customer activity.
- Profitability Decline: Operating income decreased 27.8% year-over-year. Despite higher revenues, margins were compressed by purchase accounting adjustments (amortization of intangibles), increased tariff costs on steel imports, and integration expenses.
- Cash Flow: Operating cash flow surged to $128.3 million, up from $41.5 million, largely due to working capital changes associated with the acquisition. Investing cash outflows were $310.0 million, primarily for the acquisition payment.
- Balance Sheet: Total assets increased to $2.46 billion from $1.87 billion. Accounts receivable and inventory grew significantly due to the inclusion of Cactus International assets. A $240.6 million redeemable non-controlling interest was recorded in mezzanine equity.
Outlook, Risks, and Management Commentary
- Geopolitical Risks: The conflict between Iran, the U.S., and Israel has disrupted operations in the Middle East (UAE and Saudi Arabia), impeded supply chains through the Strait of Hormuz, and increased freight costs. Management expects continued operational delays and potential revenue reductions in the region.
- Tariff Impact: New Section 232 tariffs on steel imports and higher input costs have impacted profitability. While the company is pursuing refunds for certain unlawful tariffs, the most material tariff impacts remain.
- Liquidity: The company maintains strong liquidity with $291.6 million in cash and $223.7 million in available borrowing capacity under its Amended ABL Credit Facility. No bank debt is currently outstanding.
- Capital Allocation: The company declared a quarterly dividend of $0.14 per share. Capital expenditures for 2026 are estimated between $40 million and $50 million. A share repurchase program remains active with $146.3 million authorized, though no shares were repurchased under the program in Q1 (only tax withholding shares were purchased).
- Integration: Cactus International's controls are excluded from the internal control assessment for one year post-acquisition. Integration activities are ongoing.
Investor Verification Checklist
- Acquisition Accounting: Verify the preliminary purchase price allocation and the magnitude of the $81.5 million NCI accretion charge impacting EPS.
- Geopolitical Exposure: Assess the specific revenue and margin impact of the Iran conflict on the Middle East operations and supply chain disruptions.
- Tariff Mitigation: Review the status of tariff refund claims and the effectiveness of cost recovery efforts against Section 232 tariffs.
- Working Capital: Monitor the sustainability of the high accounts receivable balance ($459.9 million) and inventory levels ($404.2 million) post-acquisition.
- Debt Covenants: Confirm continued compliance with the Amended ABL Credit Facility leverage ratios, especially as the Term Loan Facility becomes available.