We mistakenly identified Cactus Drilling for the recent fourth quarter and 2018 financial reports from Cactus Inc., a public original equipment manufacturer for Cactus Drilling LLC.
Cactus Wellhead is a privately-owned drilling contractor based out of Oklahoma City and with headquarters in Houston, Texas and is often confused as being Cactus Drilling.
So it was Cactus Inc. that reported fourth quarter 2018 revenues of nearly $140 million. It also felt the impact of lower oil prices and declining activity.
The company stated the revenues totaled $139.8 million and the generated income from the operations came to $43.9 million.
Net income was $38.7 million while adjusted earnings were $33.8 million. It resulted in diluted earnings of 44 cents per Class A share and adjusted earnings of 45 cents.
Full year earnings for 2018 included $544.1 million in revenues which were 59.5% higher than 2017 revenues. Net income was $150.3 million.
Scott Bender, President and CEO of Cactus, commented, “2018 was a tremendous year for Cactus. Our profitability during the fourth quarter was generally consistent with our expectations despite the dramatic decline in oil prices throughout the fourth quarter, and we were pleased with the resiliency demonstrated by our business.”
He said drilling related activity showed only a slight increase and completions declined more than anticipated. Bender explained it was because customers deferred activity due to budget exhaustion.
“Although the market is anticipating a pullback in the U.S. rig count in 2019, we believe the strength of our customer base will moderate the impact of a potential decline in drilling related activity,” added Bender. ” For the first quarter of 2019, we currently anticipate that revenue across all our business lines will increase relative to the fourth quarter of 2018 based on the rebound in activity we have seen during the first two months of the year.”
Fourth quarter 2018 product revenue decreased $0.5 million, or 0.6%, sequentially, as lower sales of production related equipment more than offset an increase in sales of wellhead equipment. Gross profit increased $0.6 million sequentially with margins improving 100 basis points primarily due to product mix and more favorable supply chain execution. Cactus’ estimated market share(4) was 27.8% in the fourth quarter of 2018 compared to 27.4% during the third quarter of 2018.
Fourth quarter 2018 rental revenue decreased $6.9 million, or 18.2%, sequentially, as budget exhaustion and the steep decline in oil prices during the quarter led to reduced customer completion activity. Gross profit decreased $5.1 million sequentially with gross profit margins down 320 basis points, primarily due to depreciation expense representing a higher proportion of revenue than during the previous quarter.