Cactus, Inc.

Previous wording

Cactus is an equipment solutions provider primarily for onshore oil and gas markets. Cactus was founded in 2011 by a management group that previously operated two of the largest wellhead providers at the time. Since its formation, Cactus has rapidly grown to be a leading provider of wellhead solutions to the U.S. onshore market. With the acquisition of Cactus International, Cactus is now a global wellhead supplier.

Current wording

Cactus is an equipment solutions provider primarily for onshore oil and gas markets. Cactus was founded in 2011 by a management group that previously operated two of the largest wellhead providers at the time. Since its formation, Cactus has rapidly grown to be a leading provider of wellhead solutions to the U.S. onshore market. With the acquisition of Cactus International, Cactus became a global wellhead supplier.

Previous wording

On February 28, 2023, Cactus acquired FlexSteel, which grew from its founding in 2003 to its current status as a leading provider of spoolable pipe technologies, primarily to the U.S. onshore market. We believe this acquisition enhanced our position as a premier manufacturer and provider of highly engineered equipment primarily to the exploration and production ("E&P") industry and has provided opportunities for meaningful growth. FlexSteel’s spoolable technology products complement Cactus’s pressure control equipment, and the combined business allows for exposure to customers operations from production trees to transportation of oil, gas and other liquids, as well as to additional customers operating in the midstream area.

Current wording

On February 28, 2023, Cactus acquired FlexSteel, which grew from its founding in 2003 to its current status as a leading provider of spoolable pipe technologies, primarily to the U.S. onshore market. We believe this acquisition enhances our position as a premier manufacturer and provider of highly engineered equipment primarily to the exploration and production ("E&P") industry and provides opportunities for meaningful growth. FlexSteel’s spoolable technology products complement Cactus’s pressure control equipment, and the combined business allows for exposure to customers' operations from production trees to transportation of oil, gas and other liquids, as well as to additional customers operating in the midstream area.

Previous wording

During the six months ended June 30, 2026, we derived 77% of total revenues from the sale of our products, 4% of total revenues from rental and 19% of total revenues from field service and other. During the six months ended June 30, 2025, we derived 75% of total revenues from the sale of our products, 9% of total revenues from rental and 16% of total revenues from field service and other. We have worldwide operations, including the U.S., Saudi Arabia, UAE, and China, with more limited operations in Australia and Canada, as well as sales in other international markets.

Current wording

During the nine months ended September 30, 2026, we derived 76% of total revenues from the sale of our products, 5% of total revenues from rental and 19% of total revenues from field service and other. During the nine months ended September 30, 2025, we derived 76% of total revenues from the sale of our products, 8% of total revenues from rental and 16% of total revenues from field service and other. We have worldwide operations, including the U.S., Saudi Arabia, UAE, and China, with more limited operations in Australia and Canada, as well as sales in other international markets.

Previous wording

Average WTI and Brent oil prices increased approximately 31% and 27%, respectively, in the second quarter of 2026 compared to the first quarter of 2026, as the war in Iran and associated supply disruption led to elevated commodity prices. Oil price levels have been highly volatile as geopolitical tensions remain high in the Middle East, and the ability to export of oil through the Strait of Hormuz and the Red Sea remain uncertain. Average natural gas prices decreased approximately 37% in the second quarter of 2026 compared to the first quarter of 2026. Prices were elevated in the first quarter due to winter storms and seasonality and have since moderated, as storage levels remained above five-year historical average through the second quarter.

Current wording

Average WTI and Brent oil prices decreased approximately 9% and 6%, respectively, in the third quarter of 2026 compared to the second quarter of 2026, as the signing of a Memorandum of Understanding between the U.S. and Iran in mid-June led to a period of reduced commodity prices. The expiration of this Memorandum in August has led to a recent increase in commodity prices. Oil price levels have been highly volatile as geopolitical tensions remain escalated in the Middle East, and the ability to export oil through the Strait of Hormuz and the Red Sea remains uncertain. Oil prices for the nine months ended September 30, 2026, are well above prices for the same period of 2025 due to the conflict in the Middle East. Average Henry Hub natural gas prices remained stable in the third quarter of 2026.

Previous wording

Over the course of 2025 and 2026, the Trump administration implemented and announced a number of new tariffs, including new Section 232 tariffs of 50% on imports of steel and certain products made from steel from most countries outside of the U.S. Threats and actual implementation of tariffs continue to cause market and geopolitical uncertainty. Tariff announcements and implementation have caused global equity, bond, and currency markets to experience heightened levels of volatility as market participants incorporate potential effects of supply chain disruption, inflation, and consumer demand into pricing models. In February 2026, the United States Supreme Court ruled that certain tariffs were unlawful, resulting in the implementation of alternative tariffs under Section 122 and further market uncertainty. The Section 122 tariffs are anticipated to expire in July 2026 and be replaced by subsequent tariffs with similar cost impacts. As a result of the Supreme Court ruling, we filed claims for and have received certain tariff refunds and continue to monitor the situation closely, but there is no guarantee that any future refund claim will be honored. The refunds received and being pursued represent a limited component of the overall tariff impact incurred by the Company as the most material tariffs incurred by the Company under Section 232 and 301 remain unchanged.

Current wording

Over the course of 2025 and 2026, the Trump administration implemented and announced a number of new tariffs, including new Section 232 tariffs of 50% on imports of steel and certain products made from steel from most countries outside of the U.S. Threats and actual implementation of tariffs continue to cause market and geopolitical uncertainty. Tariff announcements and implementation have caused global equity, bond, and currency markets to experience heightened levels of volatility as market participants incorporate potential effects of supply chain disruption, inflation, and consumer demand into pricing models. In February 2026, the United States Supreme Court ruled that certain tariffs were unlawful, resulting in the implementation of alternative tariffs under Section 122 and further market uncertainty. The Section 122 tariffs expired in July 2026 and were replaced by subsequent Section 301 tariffs with similar cost impacts. As a result of the Supreme Court ruling, we filed claims for and have received certain tariff refunds and believe that we have received the majority of amounts due to us. We will continue to monitor the situation closely, but there is no guarantee that any future refund claim will be honored. The refunds received and being pursued represent a limited component of the overall tariff impact incurred by the Company as the most material tariffs incurred by the Company under Section 232 and 301 remain unchanged.

Previous wording

The ongoing war involving the United State, Isreal, and Iran continues to disrupt global oil supplies, maintaining upward pressure on energy prices and contributing to volatility in international markets Our operations in the region have been adversely impacted, and we continue to prioritize the safety of personnel in the region. We have experienced and expect to continue to experience disruptions to our operations, our customers’ drilling activities, and our supply chain along with increased freight and logistics costs due to the conflict, and particularly the impediment of traffic through the Strait of Hormuz. Continued war in the region may lead to reduced revenues and profits and increased costs for our business in the region.

Current wording

Geopolitical conditions in the Middle East continue to disrupt global oil supplies, maintaining upward pressure on energy prices and contributing to volatility in international markets. Our operations in the region have been adversely impacted, and we continue to prioritize the safety of personnel in the region. We have experienced and expect to continue to experience disruptions to our operations, our customers’ drilling activities, employee movement, and our supply chain, along with increased freight and logistics costs due to the conflict. In addition to disruptions to traffic through the Strait of Hormuz, escalating Houthi attacks in Saudi Arabia and continued security concerns in the region have created additional challenges for commercial shipping in the Red Sea. We will continue to monitor these developments and adjust our operations and supply chain activities to mitigate their impact. The duration, severity and ultimate impact of these conditions on our operations and financial results remain uncertain.

Previous wording

The Organization for Economic Cooperation and Development (“OECD”) has introduced a framework (“Pillar Two”) that provides for a new, global minimum tax of at least 15% on the income of large multinational corporations arising in each jurisdiction in which they operate. Pillar Two is being implemented on a country-by-country basis, and many countries have adopted rules in this regard. The United States had raised concerns regarding Pillar Two and had proposed a “side-by-side” solution under which U.S. parented groups (such as the Company) would be exempted from certain minimum taxes under Pillar Two in recognition of the existing U.S. minimum tax rules to which they are subject. On January 5, 2026, the OECD/G20 Inclusive Framework formally released a side-by-side package implementing this understanding, together with related simplifications and safe harbors. The side-by-side solution only takes legal effect in a given jurisdiction once that jurisdiction enacts implementing legislation or guidance. The Company continues to evaluate the impact of Pillar Two, and the associated adoption of that legislation by local jurisdictions, across the jurisdictions in which it operates, and estimates the impacts to income tax expense to be immaterial

Current wording

The Organization for Economic Cooperation and Development (“OECD”) has introduced a framework (“Pillar Two”) that provides for a new, global minimum tax of at least 15% on the income of large multinational corporations arising in each jurisdiction in which they operate. Pillar Two is being implemented on a country-by-country basis, and many countries have adopted rules in this regard. On January 5, 2026, the OECD/G20 Inclusive Framework formally released a side-by-side package implementing this understanding, together with related simplifications and safe harbors. The side-by-side solution only takes legal effect in a given jurisdiction once that jurisdiction enacts implementing legislation or guidance. The Company continues to evaluate the impact of Pillar Two, and the associated adoption of that legislation by local jurisdictions, across the jurisdictions in which it operates, and estimates the impacts to income tax expense to be immaterial.

Previous wording

Spoolable Technologies. Spoolable Technologies revenue for the second quarter of 2026 was $105.5 million, an increase of $15.6 million, or 17.4% from the first quarter of 2026 primarily due to higher domestic customer activity levels. Total operating income for Spoolable Technologies for the second quarter of 2026 was $32.2 million, compared to operating income of $23.6 million for the first quarter of 2026, an increase of $8.6 million, or 36.5%, from the first quarter of 2026. The increase in operating income was primarily due to improved operating leverage and better sales mix.

Current wording

Spoolable Technologies. Spoolable Technologies revenue for the third quarter of 2026 was $126.9 million, an increase of $21.3 million, or 20.2% from the second quarter of 2026 primarily due to growth in both domestic and international shipments. Total operating income for Spoolable Technologies for the third quarter of 2026 was $41.6 million, compared to operating income of $32.2 million for the second quarter of 2026, an increase of $9.4 million, or 29.3%, sequentially. The increase in operating income was primarily due to improved operating leverage.

Previous wording

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 the second quarter of 2026 was $7.7 million, a decrease of $4.9 million, or 38.9% from the first quarter of 2026 primarily due to lower transaction and integration expenses associated with the Baker Hughes Transaction.

Current wording

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 the third quarter of 2026 was $9.1 million, an increase of $1.3 million, or 17.3% from the second quarter of 2026 primarily due to higher transaction and personnel costs.

Previous wording

Interest income, net. Interest income, net was $0.9 million for the second quarter of 2026 compared to $0.2 million for the first quarter of 2026, with the improvement resulting from higher levels of cash invested during the second quarter following the completion of the Acquisition. The interest income, net is primarily comprised of interest income earned on the invested cash balance.

Current wording

Interest income, net. Interest income, net was $0.8 million for the third quarter of 2026 compared to $0.9 million for the second quarter of 2026, with the decrease due to lower interest income earned on lower amounts of cash invested during the third quarter. The interest income, net is primarily comprised of interest income earned on the invested cash balance.

Previous wording

Income tax expense. Income tax expense for the second quarter of 2026 was $23.2 million compared to $9.5 million for the first quarter of 2026. 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.

Current wording

Income tax expense. Income tax expense for the third quarter of 2026 was $20.7 million compared to $23.2 million for the second quarter of 2026. 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.

Previous wording

Pressure Control. Pressure Control revenue was $644.2 million for the first six months of 2026, an increase of $274.1 million, or 74.1%, from the first six months of 2025, primarily driven by international contributions from the newly acquired Cactus International joint venture. Operating income of $97.8 million in the first six months of 2026 increased $1.1 million, or 1.1%, from the first six months of 2025. The increase was primarily driven by higher operating income from Cactus International and tariff cost recovery, including the receipt of refunds of $10.3 million, which was more than offset by the impacts of purchase accounting and ongoing Section 232 and Section 301 tariff-related costs affecting product margins compared to prior year.

Current wording

Pressure Control. Pressure Control revenue was $949.0 million for the first nine months of 2026, an increase of $410.2 million, or 76.1%, from the first nine months of 2025, primarily driven by international contributions from the newly acquired Cactus International joint venture. Operating income of $159.3 million in the first nine months of 2026 increased $18.1 million, or 12.8%, from the first nine months of 2025. The increase was primarily driven by higher operating income from Cactus International and tariff cost recovery, including the receipt of refunds of $15.9 million, which was more than offset by the impacts of purchase accounting and ongoing Section 232 and Section 301 tariff-related costs negatively affecting product margins compared to prior year.

Previous wording

Spoolable Technologies. Spoolable Technologies revenue for the first six months of 2026 was $195.4 million, an increase of $6.6 million, or 3.5%, from the first six months of 2025, primarily due to higher customer activity levels in the international markets. Total operating income was $55.7 million in the first six months of 2026, an increase of $3.8 million, or 7.3%, compared to operating income of $51.9 million in the first six months of 2025. The increase was driven in part by improved operating leverage and lower selling, general and administrative expenses.

Current wording

Spoolable Technologies. Spoolable Technologies revenue for the first nine months of 2026 was $322.3 million, an increase of $38.3 million, or 13.5%, from the first nine months of 2025, primarily due to higher customer activity levels in international markets. Total operating income was $97.3 million in the first nine months of 2026, an increase of $19.6 million, or 25.2%, compared to operating income of $77.7 million in the first nine months of 2025. The increase was driven in part by improved operating leverage.

Previous wording

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 the first six months of 2026 was $20.4 million, an increase of $1.2 million, or 6.4% from the first six months of 2025. The increase was largely attributable to professional fees and integration expenses associated with the Baker Hughes Transaction.

Current wording

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 the first nine months of 2026 was $29.5 million, an increase of $1.2 million, or 4.3% from the first nine months of 2025. The increase was largely attributable to professional fees and integration expenses associated with the Baker Hughes Transaction.

Previous wording

Interest income, net. Interest income, net for the first six months of 2026 was $1.2 million, compared to $4.8 million for the first six months of 2025. The decrease was due to lower interest income earned on lower amounts of cash invested during the first six months of 2026 as a result of the utilization of cash to fund the Baker Hughes Transaction.

Current wording

Interest income, net. Interest income, net for the first nine months of 2026 was $1.9 million, compared to $7.8 million for the first nine months of 2025. The decrease was due to lower interest income earned on lower amounts of cash invested during the first nine months of 2026 as a result of the utilization of cash to fund the Baker Hughes Transaction.

Previous wording

Income tax expense. Income tax expense for the first six months of 2026 was $32.7 million compared to $31.1 million for the first six months of 2025. The increase in income tax expense from the first six months of 2025 was primarily due increase taxes associated with foreign operations.

Current wording

Income tax expense. Income tax expense for the first nine months of 2026 was $53.4 million compared to $45.4 million for the first nine months of 2025. The increase in income tax expense from the first nine months of 2025 was primarily due to increase in taxes associated with foreign operations.

Previous wording

At June 30, 2026, we had $365.8 million of cash and cash equivalents, including $92.5 million of cash held for certain restructuring activities related to the Cactus International acquisition. Our primary sources of liquidity and capital resources are cash on hand, cash flows generated by operating activities, and borrowings under our Amended ABL Credit Facility (as defined in Note 7 in the notes to the unaudited condensed consolidated financial statements). Depending upon market conditions and other factors, we may also have the ability to issue additional equity and debt if needed. As of June 30, 2026, we had $223.7 million of available borrowing capacity under our Amended ABL Credit Facility with no outstanding borrowings, in addition to $100.0 million available under our Term Loan Facility (as defined in Note 7 in the notes to the unaudited condensed consolidated financial statements) and $14.4 million in letters of credit outstanding. We were in compliance with the covenants of the Amended ABL Credit Facility as of June 30, 2026. Additionally, we have indemnified Baker Hughes for $14.1 million of contingent liabilities associated with letters of credit in support of Cactus International operations, which do not reduce the borrowing capacity under our Amended ABL Credit Facility.

Current wording

At September 30, 2026, we had $354.2 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 borrowings under our Amended ABL Credit Facility (as defined in Note 7 in the notes to the unaudited condensed consolidated financial statements). Depending upon market conditions and other factors, we may also have the ability to issue additional equity and debt if needed. As of September 30, 2026, we had $263.5 million of available borrowing capacity under our U.S. and UAE revolving credit facilities with no outstanding borrowings, in addition to $100.0 million available under our Term Loan Facility (as defined in Note 7 in the notes to the unaudited condensed consolidated financial statements) and $14.7 million in letters of credit outstanding. We were in compliance with the covenants of the Amended ABL Credit Facility as of September 30, 2026. Additionally, we have indemnified Baker Hughes for $13.9 million of contingent liabilities associated with letters of credit in support of Cactus International operations, which do not reduce the borrowing capacity under our Amended ABL Credit Facility.

Previous wording

For the full year 2026, the Company is increasing its net capital expenditure guidance from $40 to $50 million to $55 to $65 million. The higher range is due primarily to initial capacity investments in the Baytown Spoolable Technologies manufacturing facility to meet increased global demand. The Company is additionally evaluating capex related to the Spoolable Technologies business in the Eastern hemisphere. In the Pressure Control segment, capital expenditures are primarily related to U.S. service center enhancements, rental fleet investments, and international expansion, and less material investments in low-cost supply chain.

Current wording

For the full year 2026, the Company expects its net capital expenditures to be approximately $65 million. The estimate includes the placement of orders for long-lead equipment related to the Middle East Spoolable Technologies manufacturing facility and the ongoing Baytown facility expansion. The Board of Directors has also approved the investment of capex related to the Spoolable Technologies business in the Eastern hemisphere, with initial capital outlays included in the Company’s guidance. In the Pressure Control segment, capital expenditures are primarily related to U.S. service center enhancements, rental fleet investments, and international expansion, and less material investments in low-cost supply chain.

Previous wording

Net cash provided by operating activities was $232.8 million and $124.4 million for the six months ended June 30, 2026 and 2025, respectively. Operating cash flows for the six months ended June 30, 2026 increased primarily due to changes in working capital, largely driven by our recent acquisition of Cactus International.

Current wording

Net cash provided by operating activities was $251.3 million and $186.1 million for the nine months ended September 30, 2026 and 2025, respectively. Operating cash flows for the nine months ended September 30, 2026 increased primarily due to changes in working capital, largely driven by our recent acquisition of Cactus International.

Previous wording

Net cash used in investing activities was $325.6 million and $26.5 million for the six months ended June 30, 2026 and 2025, respectively. The increase for the six months ended June 30, 2026 was primarily due to cash paid to acquire Cactus International for $371.0 million, less $70.0 million in cash acquired from the acquisition.

Current wording

Net cash used in investing activities was $341.7 million and $34.7 million for the nine months ended September 30, 2026 and 2025, respectively. The increase for the nine months ended September 30, 2026 was primarily due to cash paid to acquire Cactus International for $371.0 million, less $70.0 million in cash acquired from the acquisition.

Previous wording

Net cash used in financing activities was $36.3 million for the six months ended June 30, 2026 compared to $36.5 million for the six months ended June 30, 2025. The decrease in net cash used in financing activities for the six months ended June 30, 2026 was primarily related to a decrease in distributions to members of Cactus Companies of approximately $4.5 million. This decrease was partially offset by an increase in share repurchases of $2.3 million as well as an increase in the payment of Class A share dividends of $1.8 million.

Current wording

Net cash used in financing activities was $51.5 million for the nine months ended September 30, 2026 compared to $49.8 million for the nine months ended September 30, 2025. The increase in net cash used in financing activities for the nine months ended September 30, 2026 was primarily related to an increase in the payment of Class A share dividends of $2.7 million and an increase in share repurchases of $2.2 million. These increases were partially offset by a decrease in distributions to members of Cactus Companies of approximately $3.4 million.