STACK operator reports increased 3Q earnings

One of the operators in Oklahoma’s STACK play, Cactus, Inc. reported increased third quarter revenues totaling $150.7 million, an increase of 8.7% from the second quarter.

The Houston-based company said its income from operations rose 12.1% to $52.1 million and net income came to $43.6 million

Cash flow for the quarter totaled $41.6 million. Company President and CEO Scott Bender’s expecting the growth to continue.

““Looking ahead to the fourth quarter of 2018, we expect our Product business to remain strong as we believe our market share will continue to grow. While our Rental business has performed well, customer budget constraints and completions delays are resulting in reduced demand for frac-related assets and associated Field Service.”

The company accelerated capital spending in the third quarter with completion of its roofline expansion at Bossier City and the acquisition of a large facility in New Mexico to serve the Delaware Basin.

Mr. Bender concluded, “We accelerated our capital spending during the third quarter with the completion of our roofline expansion at Bossier City and the acquisition of a large facility in New Mexico to serve the Delaware Basin. In addition, we are pulling spending forward in response to anticipated year-end tariff changes, and we are directing additional capital toward our new completions innovations before the end of this year. As a result, capital expenditures for 2018 are now expected to be in the range of $65 to $70 million, above our prior indication of $60 million.”

Third quarter 2018 product revenue increased $6.1 million, or 8.3%, sequentially, driven primarily by greater sales volume of higher value wellhead and production equipment. Gross profit increased $4.3 million sequentially with margins improving 240 basis points primarily due to leverage of the Company’s fixed cost base and more favorable supply chain execution. Cactus’ estimated market share(4) was 27.4% for third quarter 2018 compared to 26.0% for second quarter 2018.

Third quarter 2018 field service and other revenue increased $2.8 million, or 9.3%, sequentially, due to further increases in billable hours and ancillary services associated with greater volume of product sales and rental activity. Gross profit increased $0.7 million sequentially, or 10.5%.

As of September 30, 2018, the Company had $42.0 million of cash on hand, no bank debt outstanding and the full $75.0 million of capacity available under the Company’s revolving credit facility. Operating cash flow was $41.6 million for third quarter 2018 and $122.4 million for the first nine months of 2018, reflecting strong operating results.

Net capital expenditures for third quarter 2018 were $23.1 million, driven largely by $11.8 million directed toward the expansion of the Company’s fleet of frac rental assets and $3.0 million for other rental assets. $6.8 million was spent during the third quarter for the purchase of a new branch facility in Hobbs, NM and the expansion of the Company’s domestic manufacturing facility in Bossier City, LA.