A gain in revenue in the second quarter was reported by Cactus, Inc. while its operating income was down. At the same time, company leadership is cautious about what the third quarter might bring.
The Texas-based drilling company had revenue of $305.8 million and operating income of $48.5 million, compared to first quarter revenue of $228.4 million and operating income of $49.7 million.
Second quarter net income was $32.5 million or 38 cents a share while the adjusted net income was $67.3 million and 84 cents a share. It compared to first quarter net income of $52.3 million and 63 cents a share while the adjusted net income was $50.7 million and 64 cents a share.
“The second quarter once again showcased our ability to outperform a declining U.S. rig count due to our differentiated products and focus on execution,” said Scott Bender, CEO and Chairman of the Board of Cactus. He explained the company’s substantial free cash flow generation enabled the firm to repay all of the $155 million of debt raised for the FlexSteel acquisition within five months of closing.
The third quarter might be a different story, according to Bender. He anticipates revenue to be down sequentially because of lower U.S. land activity levels.
“We believe the majority of the rig count declines are behind us and are optimistic that drilling activity levels in the fourth quarter will be flat to up.”
Second Quarter Highlights
- Revenue of $305.8 million and operating income of $48.5 million;
- Net income of $32.5 million and diluted earnings per Class A share of $0.38;
- Adjusted net income(1) of $67.3 million and diluted earnings per share, as adjusted(1) of $0.84;
- Net income margin of 10.6% and adjusted net income margin(1) of 22.0%;
- Adjusted EBITDA(2) and Adjusted EBITDA margin(2) of $115.4 million and 37.7%, respectively;
- Cash flow from operations of $108.1 million;
- On June 7, 2023, announced approval of a $150 million share repurchase authorization;
- On August 1, 2023, the Board of Directors approved a 9% increase to the dividend to $0.12 per quarter;
- Cash and cash equivalents balance of $63.9 million and gross bank debt outstanding of $55 million as of June 30, 2023; and
- As of July 31, 2023, the full balance of the $155 million of bank debt raised to finance the FlexSteel acquisition had been paid off.
