Cactus Surpasses Q2 Earnings and Revenue Estimates

Cactus, Inc. WHD reported second-quarter 2024 adjusted earnings of 81 cents per share, which beat the Zacks Consensus Estimate of 70 cents. However, the bottom line declined from the year-ago quarter's 84 cents.

Total quarterly revenues of $290 million beat the Zacks Consensus Estimate of $275 million. The top line also declined from the year-ago quarter's figure of $306 million.

The better-than-expected quarterly results can be attributed to increased customer drilling efficiency. This was partially offset by lower contributions from both segments. 

Business Segments

Following the closure of the FlexSteel acquisition, Cactus reported under two business segments — Pressure Control and Spoolable Technologies.

WHD generated revenues of $187.2 million from the Pressure Control segment, down from $199.1 million reported in the year-ago quarter. The segment was aided by increased customer drilling efficiency and production equipment shipments to a large customer. This was partially offset by lower industry activity and softer U.S. land rig count through the quarter. The top line was above our estimate of $175 million.

Adjusted Segment EBITDA for Pressure Control totaled $65.3 million, down from almost $74.1 million in the prior-year quarter. The reported figure was above our estimate of $58.7 million.

Revenues from the Spoolable Technologies segment came in at $103.7 million, down from $106.7 million in the prior-year quarter. The figure was above our estimate of $100.4 million.

Adjusted Segment EBITDA for the unit totaled $42.5 million, down from $45.5 million in the prior-year quarter. The figure was above our estimate of $35.9 million.

Capex and Cash Flow

Cactus' capital expenditure and other amount for the quarter totaled $7.2 million. Operating cash flow amounted to $78 million.

Balance Sheet

Cactus had cash and cash equivalents of $246.5 million at the end of the second quarter of 2024. The company had no bank debt outstanding as of Jun 30, 2024.

Outlook

Cactus expects relatively stable U.S. land activity levels in the third quarter of 2024. However, in the Pressure Control sector, WHD anticipates revenues to be moderate following the lower average drilling activity levels this year and less visibility into production equipment awards. Additionally, from Spoolable Technologies, Cactus expects revenues to be flat to slightly down from the second quarter, reflecting the timing of international shipments.

It expects net capital expenditures to be in the band of $35-$45 million for full-year 2024, down from the previously guided range of $45-$55 million.

Zacks Rank and Key Picks

Currently, WHD carries a Zacks Rank #3 (Hold).

Investors interested in the energy sector may look at some better-ranked stocks like Sunoco LP, SM Energy Company and Baker Hughes Company. While Sunoco and SM Energy currently sport a Zacks Rank #1 (Strong Buy) each, Baker Hughes carries a Zacks Rank #2 (Buy).

Sunoco is a leading wholesale motor fuel distributor in the United States, boasting a vast distribution network spanning 40 states. With long-term contracts servicing more than 10,000 convenience stores, it distributes over 10 fuel brands, ensuring a stable revenue stream. SUN currently has a Value Score of A.

The Zacks Consensus Estimate for 2024 and 2025 earnings per unit is pegged at $7.29 and $7.26, respectively. The partnership has witnessed upward earnings estimate revisions for 2025 in the past 30 days.

SM Energy is set to expand its oil-centered operations in the coming years, with an increasing focus on crude oil, especially in the Permian Basin and Eagle Ford regions. The company's attractive oil and gas investments should create long-term value for shareholders.

The Zacks Consensus Estimate for SM's 2024 EPS is pegged at $7.09. The company has a Zacks Style Score of A for Value. It has witnessed upward earnings estimate revisions for 2024 in the past 30 days.

Baker Hughes, a leading player in the oilfield service sector, is known for its advanced technologies and equipment catering to the needs of upstream companies. The company expects substantial growth from LNG contracts globally due to the strong demand outlook.

The Zacks Consensus Estimate for BKR's 2024 EPS is pegged at $2.20. The company has a Zacks Style Score of A for Value. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past seven days.

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