WHD 10-K & 10-Q changes, risk factors and insider trading

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 supply of and 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 productionproduction, the number of wells drilled but uncompleted, the impact of actions taken by the Organization of Petroleum Exporting Countries and other oil and gas producing countries ("OPEC+") affecting the global supply of oil and gas 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 manyexploration and production ("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 may be impacted by, among other things, the availability and cost of ancillary equipment and services, pipeline capacity, and material and labor shortages.availability and costs. 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 depend on key executives and management personnel. Our future plans depend in part on our ability to identify, retain, develop and/or recruit suitable successors to senior management. The loss of any key personnelexecutives and/or managers could adversely impact our business. The loss of qualified employeesassociates or an inability to retain and motivate additional highly‑skilled employeesassociates required for the operation and expansion of our business could hinder our ability to successfully maintain and expand our market share.

In addition to our facilities in the United States, we operate a production facilityfacilities in China and, Vietnam, and we 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 have also expanded our operations and footprint in the Middle East as a result of the Baker Hughes Transaction.

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.receivables for product and services provided. 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.

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.

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,advantage in the U.S., 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, inflation, increased transit times, changes in global trade policies, 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.

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, 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.revenues, leading to a material adverse effect on 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 employeesassociates 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 employeesassociates and agents outside of the United States may fail to comply with applicable laws.

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 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.services, leading to a material adverse effect on our business, results of operations and cash flows.

Changes in environmental requirements related to greenhouse gas emissions may negatively impact demand for our products and services. Oil and natural gas E&P activity 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.products, leading to a material adverse effect on our business, results of operations and cash flows.

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 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 sourcesEarly 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, directdirected federal executive departments and agencies to initiate a regulatory freeze for certain rulesrules, that have not taken effect, pending review by the newly appointed agency head, callcalled upon the Environmental Protection Agency (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 pausepaused the disbursement of funds appropriated through the IRAInflation Reduction Act of 2022 and the Infrastructure Investments and Jobs Act. Additionally, on February 12, 2026, the EPA finalized its rescission of the 2009 Greenhouse Gas Endangerment Finding regarding greenhouse gas and all federal greenhouse gas emissions standards for vehicles and engines. However, future presidential administrations may pursue executive orders or rulemaking that would increase the amount of regulation.

The ongoing conflicts in various parts of the world may adversely affect our business and results of operations.

The ongoing conflicts in Venezuela, Iran, Ukraine and other countries in 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.

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 Tax Receivable Agreement ("TRA") and cover our corporate and other overhead expenses and pay dividends to holders of our Class A Common Stock.

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.

•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 andby 2027;

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.

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%221.5 basis points) 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.

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 aremay be 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.operations and cash flows. 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 information technologyIT 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 aremay be 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 technologyIT 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.

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 productionE&P 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.

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, LouisianaLouisiana, Suzhou, China and Suzhou,Hai China.Duong, Vietnam.

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.

Our business experiences some seasonality during the fourth quarter due to holidays and customers managing their budgetscash balances as the year closes out. ThisThese activities can lead to lower activitydemand in our three revenue categories as well as lower margins, particularly in field services due to lower labor utilization.

(3) Based on Baker Hughes.Hughes rig count information.

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"Second toAmended theABL ConsolidatedCredit Financial StatementsFacility") which were required to finance the FlexSteel acquisition.

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.Facility (as defined in Note 6 in the notes to the 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 December 31, 2024,2025, we had no borrowings outstanding under our Amended ABL Credit Facility and $222.6$222.9 million of available borrowing capacity.capacity in addition to $100.0 million available under our Term Loan Facility (as defined in Note 6 to the notes to the Consolidated Financial Statements). We had $2.4$1.8 million in letters of credit outstanding at December 31, 20242025 which reduced our available borrowing capacity. We were in compliance with the covenants of the Amended ABL Credit Facility as of December 31, 2024.2025.

We expect that our existing cash on hand, cash generated from operations and available borrowings under our Amended ABL Credit Facility and Term Loan 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, 20252026 will range from $45$40 million to $55$50 million, mostly related to rental fleetincluding investments including drilling tools,in international expansion,expansion such as investments in the Joint Venture, further diversification of our low cost supply chain, enhancements for our Baytown, TX manufacturing plant and Hobbs, NM service center 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.

In addition to the information set forth in this Quarterly Report, you should carefully consider the risk factors and other cautionary statements described under the heading “Item 1A. Risk Factors” included in our 2025 Annual Report, and under the heading "Part II Item 1A Risk Factors" in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2026 and in our other filings with the SEC, which could materially affect our business, results of operations, financial condition or cash flows. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, results of operations, financial condition or cash flows. There have been no material changes in our risk factors from those described in our 2025 Annual Report, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2026 and our other SEC filings, except as follows:

TheOngoing current warconflict between the United States, Iran and other countries in the UnitedMiddle StatesEast and Israel will likelycould continue to adversely impact our operations in the Middle East.

Cactus International, a 65% owned subsidiary of the Company, has plants in the UAE and Saudi ArabiaArabia. thatBoth Cactus Wellhead and Cactus International, as well as our Spoolable Technologies segment, maintain significant operations in the Middle East. As long as the conflict between or among the United States, Iran and other countries in the Middle East continues, (i) those plants and operations are subject to continuedinterruptions, interruptions(ii) customer operations may be disrupted resulting in operationsfewer dueorders, to the war between Iran, and United States and Israel. The war has also impeded(iii) traffic through the Strait of Hormuz impactingwill likely negatively impact our supply chain in the regionregion, and(iv) impactingthere themay operationsbe andincreased safety concerns for the safety of our employees and of(v) our customersintegration inplan the Middle East. We have experienced and expect to continue to experience significant delays and decreased order activities from our customers because of this disruption. The delays in orders potentially impacts not only our operations throughfor Cactus International butmay alsobe international sales by our Spoolable Technologies segment.delayed. There is no way to predict when this conflict will be resolved and when operations can be restored to the conditions that existed before the war.conflict began. Until such conditions are restored, we expect that our operations in the Middle East and our financial results will be adversely impacted.

Except as otherwise indicated or required by the context, all references in this Quarterly Report to the “Company,” “Cactus,” “we,” “us” and “our” refer to Cactus, Inc. (“Cactus Inc.”) and its consolidated subsidiaries. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying unaudited condensed 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, which are difficult to predict, including those described above in “Cautionary Note Regarding Forward-Looking Statements,” and in the risk factors included in “Part I,II, Item 1A. Risk Factors” in this Quarterly Report. 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.

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’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.

During the threesix months ended MarchJune 31,30, 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 threesix months ended MarchJune 31,30, 2025, we derived 74%75% of total revenues from the sale of our products, 10%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.

The Pressure Control segment designs, manufactures, sells and rents a range of wellhead and pressure control equipment under the Cactus Wellhead brand.brand and, following the acquisition of Cactus International on January 1, 2026, includes a broader portfolio of surface pressure control products and services serving customers in key international oil and gas markets. Products are sold and rented principally for onshore conventional and unconventional oil and gas wells,wells and are utilized during the drilling, completion and production phases of our customers’customers' wells. In addition, we provide field services for all of our products and rental itemsequipment to assist with the installation, maintenance and handling of the equipment.

We operate through service centers in the United States,States whichthat are strategically located in the key oil and gas producing regions. These service centers support our field services and provide equipment assembly and repair services. WeThrough our legacy operations and Cactus International, we also providemaintain service, rental and serviceoperational operationscapabilities inacross numerous international markets, including the Kingdom of Saudi Arabia and Australia. Pressure Control manufacturing and production facilities are located in Bossier City, Louisiana,Louisiana; Suzhou, China,China; Saudi Arabia,Arabia; Abu Dhabi,Dhabi; and Hai Duong,Vietnam.Duong, Vietnam, supporting both domestic and international customer demand.

Demand for our product sales in the Pressure Control segmentproduct sales is driven primarily by the number of new wells drilled, as each new well requires a wellhead and, afterfollowing the completion phase, a production tree. Demand for our rental itemsequipment is driven primarily by well completionscompletions, as we rent frac trees to oil and gas operators to assist insupport hydraulic fracturing.fracturing activities. Rental demand is also drivendriven, to a lesser extentextent, by drilling activity asthrough wethe rentrental of tools used in thewellhead installation of wellheads.installation. Field service and other revenues are closely correlated with revenues from product sales and rentals,rental activity, as itemsequipment sold or rented almostgenerally always haverequires an associated service component.

The Company’s operating results continue to be impacted by conditions in the oil and gas industry, which are primarily driven by global commodity prices, drilling and completion activity levels, and supply and demand dynamics.

Average WTI and Brent oil prices increased approximately 22%31% and 27%, respectively, in the second quarter of 2026 compared to the first quarter of 2026, as the outbreak of the conflictwar in Iran and associated supply disruption droveled rapidto priceelevated increasescommodity in March. WTI began the year on January 2 at $57.21 and closed March 31 at $102.86, an increase of approximately 80%. Brent oil prices similarly increased approximately 27% on average in the first quarter from the fourth quarter.prices. Oil price levels remainhave elevatedbeen highly volatile as geopolitical tensions continueremain high in the Middle East, and the continuedability to export of oil through the Strait of Hormuz remainsand the Red Sea remain uncertain. Average natural gas prices increaseddecreased approximately 26%37% in the second quarter of 2026 compared to the first quarter of 2026. Prices were elevated in the first quarter, largelyquarter due to a winter storm in the U.S. leading to elevated pricesstorms and lowseasonality and have since moderated, as storage levels inremained January. Storage levels have since recovered to nearabove five-year historical average levelsthrough andthe pricessecond have moderated.quarter.

In the firstsecond quarter of 2026, average U.S. land drilling activity levels were relativelyup flat2% compared to the fourthfirst quarter of 2025,2026, as our customers generally continued stable drilling programs despite elevatedstronger commodity pricesprices, reflecting E&P capital discipline. International land drilling levels increaseddecreased approximately 1%3% from the fourthfirst quarter of 2025,2026, led by increasedreduced activity in the Middle East and Latin America,East, offset by declinesincreases in Asia.Africa.

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 filed a claim forreceived certain tariff refunds and arecontinue monitoringto 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 tarifftariffs incurred by the Company under Section 232 remainsand 301 remain unchanged.

We are incurring, and expect to continue to incur, elevated tariff expenses on our goods imported from Vietnam and China, and experience generally higher steel input costs at our Bossier City and Baytown manufacturing facilityfacilities primarily as a result of the broad Section 232 tariffs. Both tariffs and higher steel input costs have impacted profitability, although the impact has been partially mitigated by cost reduction and tariff recovery efforts.

The outbreakongoing ofwar the conflict betweeninvolving the United States,State, Israel,Isreal, and Iran incontinues Februaryto has significantly disrupteddisrupt global oil supply.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 significant 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 conflictwar in the region may lead to reduced revenues and profits and increased costs fromfor our business in the region.

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 hashad raised concerns regarding Pillar Two and hashad set outproposed a proposed “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 JuneJanuary 28,5, 2025,2026, the GroupOECD/G20 ofInclusive SevenFramework issuedformally a statement indicating that they agree thatreleased a side-by-side package implementing this understanding, together with related simplifications and safe harbors. The side-by-side solution couldonly preservetakes gainslegal made by jurisdictionseffect in tacklinga basegiven erosionjurisdiction and profit shifting and provide clarity and stability in the international tax landscape. However, none of the OECD member statesonce that havejurisdiction adoptedenacts Pillarimplementing Twolegislation haveor enacted rules necessary to implement the side-by-side solution.guidance. The Company continues to evaluate the impact of both Pillar TwoTwo, and the proposedassociated side-by-sideadoption solutionof that legislation by local jurisdictions, across the jurisdictions in which it operates, and estimates the impacts to income tax expense to be immaterial.immaterial

Three Months Ended MarchJune 31,30, 2026 Compared to Three Months Ended DecemberMarch 31, 20252026

Pressure Control. Pressure Control revenue for the firstsecond quarter of 2026 was $300.2$344.0 million, an increase of $121.7$43.8 million, or 68.2%,14.6%, from the fourthfirst quarter of 20252026 primarily drivendue byto internationalincreased contributionsrevenues fromin the newlyMiddle acquired Cactus International joint venture, partially offset by a decline in domestic rental revenue.East. Pressure Control operating income of $38.6$59.2 million for the second quarter of 2026 increased $20.5 million, or 53.2% from the first quarter of 2026 decreased $10.1 million, or 20.7% from the fourth quarter of 2025,2026, as increasedsegment operating income fromimproved Cactusdue International was more than offset byto the impactshigher volume and operating leverage, combined with the positive impact of purchasetariff accounting.cost recovery, including the receipt of refunds of $10.3 million.

Spoolable Technologies. Spoolable Technologies revenue for the firstsecond quarter of 2026 was $89.9$105.5 million, an increase of $5.7$15.6 million, or 6.8%17.4% from the fourthfirst quarter of 20252026 primarily due to higher domestic and international customer activity levels. Total operating income for Spoolable Technologies for the firstsecond quarter of 2026 was $23.6$32.2 million, compared to operating income of $20.9$23.6 million for the fourthfirst quarter of 2025,2026, an increase of $2.6$8.6 million, or 12.6%,36.5%, from the fourthfirst quarter of 2025.2026. The increase in operating income was primarily due to higherimproved volumeoperating leverage and lowerbetter selling,sales general and administrative expenses.mix.

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 segment.segments. Corporate and other expenses for the firstsecond quarter of 2026 was $12.7$7.7 million, ana increasedecrease of $2.9$4.9 million, or 30.0%38.9% from the fourthfirst quarter of 20252026 primarily due to higherlower transaction and integration expenses. The expenses in both quarters include similar levels of expenses for professional fees associated with the Baker Hughes Transaction.

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 20262026, and $3.1 million forwith the fourth quarter of 2025improvement resulting from lowerhigher levels of cash invested during the firstsecond quarter resulting fromfollowing the completion of the Acquisition. The interest income, net is primarily comprised of interest income earned on the invested cash balance.

Income tax expense. Income tax expense for the firstsecond quarter of 2026 was $9.5$23.2 million compared to $13.7$9.5 million for the fourthfirst quarter of 2025.2026. 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.

ThreeSix Months Ended MarchJune 31,30, 2026 Compared to ThreeSix Months Ended MarchJune 31,30, 2025

Pressure Control. Pressure Control revenue was $300.2$644.2 million for the first threesix months of 2026, an increase of $109.9$274.1 million, or 57.8%,74.1%, from the first threesix months of 2025, primarily driven by international contributions from the newly acquired Cactus International joint venture. Operating income of $38.6$97.8 million in the first threesix months of 2026 decreasedincreased $15.7$1.1 million, or 28.9%,1.1%, from the first threesix months of 2025. The decreaseincrease was primarily driven by higher operating income from Cactus International,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 increasedongoing Section 232 and Section 301 tariff-related costs affecting product margins compared to prior year.

Spoolable Technologies. Spoolable Technologies revenue for the first threesix months of 2026 was $89.9$195.4 million, aan decreaseincrease of $2.7$6.6 million, or 2.9%,3.5%, from the first threesix months of 2025, primarily due to reducedhigher customer activity levels in the U.S.international markets. Total operating income was $23.6$55.7 million in the first threesix months of 2026, aan decreaseincrease of $0.3$3.8 million, or 1.3%,7.3%, compared to operating income of $23.9$51.9 million in the first threesix months of 2025. OperatingThe incomeincrease forwas thedriven firstin threepart monthsby ofimproved 2026operating reflectedleverage the impact of theand lower volume.selling, general and administrative expenses.

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 segment.segments. Corporate and other expenses for the first threesix months of 2026 was $12.7$20.4 million, an increase of $3.1$1.2 million, or 32.0%6.4% from the first threesix months of 2025. The increase was largely attributable to professional fees and integration expenses associated with the Baker Hughes Transaction.

Interest income, net. Interest income, net for the first threesix months of 2026 was $0.2$1.2 million, compared to $2.3$4.8 million for the first threesix months of 2025. The decrease was due to lower interest income earned on lower amounts of cash invested during the currentfirst period.six months of 2026 as a result of the utilization of cash to fund the Baker Hughes Transaction.

Income tax expense. Income tax expense for the first threesix months of 2026 was $9.5$32.7 million compared to $16.8$31.1 million for the first threesix months of 2025. The decreaseincrease in income tax expense from the first threesix months of 2025 was primarily due toincrease ataxes decreaseassociated inwith operatingforeign income during the first three months of 2026, and an income tax benefit from the Cactus International acquisition.operations.

At MarchJune 31,30, 2026, we had $291.6$365.8 million of cash and cash equivalents, including $97.8$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 MarchJune 31,30, 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 $1.3$14.4 million in letters of credit outstanding. We were in compliance with the covenants of the Amended ABL Credit Facility as of MarchJune 31,30, 2026. Additionally, we have indemnified Baker Hughes for $27.4$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.

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. As of MarchJune 31,30, 2026, $146.3 million remained authorized for future repurchases of Class A common stock under the program.

Our ability to satisfy our long-term liquidity requirements, including cash requirements to fund income tax liabilities and the TRA liability at Cactus Inc., along with associated distributions to holders of CC Units relating to their ownership of Cactus Companies, 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 would likely choose to furtherreduce reduceand delay or defer our spending on capital expenditures and operating expenses to ensure we operate within the cash flow generated from our operations.

ThreeSix Months Ended MarchJune 31,30, 2026 Compared to ThreeSix Months Ended MarchJune 31,30, 2025

Net cash provided by operating activities was $128.3$232.8 million and $41.5$124.4 million for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively. Operating cash flows for the threesix months ended MarchJune 31,30, 2026 increased primarily due to an increasechanges in working capital, largely driven by our recent acquisition of Cactus International.

Net cash used in investing activities was $310.0$325.6 million and $15.5$26.5 million for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively. The increase for the threesix months ended MarchJune 31,30, 2026 was primarily due to cash paid to acquire Cactus International for $371.0 millionmillion, less $70.0 million in cash acquired from the acquisition.

Net cash used in financing activities was $21.5$36.3 million for the threesix months ended MarchJune 31,30, 2026 compared to $21.8$36.5 million for the threesix months ended MarchJune 31,30, 2025. The decrease in net cash used in financing activities for the threesix months ended MarchJune 31,30, 2026 was primarily related to a decrease in distributions to members of Cactus Companies of approximately $3.6$4.5 million. This decrease was partially offset by an increase in share repurchases of $2.4$2.3 million as well as an increase in the payment of Class A share dividends of $1.0$1.8 million.