Cactus, Inc. Posts Mixed Q3 Results: Earnings Fall Short While Revenues Exceed Forecasts

Cactus, Inc. WHD, a key player in the wellhead and pressure control equipment industry, revealed its financial outcomes for the third quarter of 2023 with adjusted earnings of 80 cents per share. Despite showing improvement from the previous year's 52 cents, the figures narrowly missed the Zacks Consensus Estimate by one cent. Interestingly, the company's overall quarterly revenue of $287.9 million surpassed the anticipated $287 million and also showed an increase from the previous year's $184.5 million.

The decline in revenues from Cactus' two primary segments, which was attributed to decreased customer drilling activities, was the primary cause of the earnings miss. The firm has reorganized its operations into Pressure Control and Spoolable Technologies following the acquisition of FlexSteel.

The Pressure Control segment contributed $182.5 million to the total revenue, a slight dip from $184.5 million in the year-ago period, yet exceeding expectations of $179.2 million. Despite the increase in revenues, the segment faced a decrease in Adjusted Segment EBITDA, which was $59.4 million, compared to last year's $62.7 million and short of the estimate by $0.1 million. The downturn reflects the reduced momentum in customer drilling ventures.

For the Spoolable Technologies unit, revenue stood at $105.4 million, just shy of the projected $106.7 million. Nonetheless, its Adjusted Segment EBITDA of $43.7 million outperformed the estimate, suggesting some resilience in a challenging market.

Cactus reported capital expenditures of $33.4 million and an impressive operating cash flow of $248.6 million for the third quarter. Its strong balance sheet was evident with $63.7 million in cash and no outstanding gross bank debt as of September 30.

Looking ahead, Cactus anticipates a stabilization in U.S. land activity levels in the upcoming quarter, with a recovery expected in the first quarter of 2024. Even though Pressure Control margins might take a hit from reduced activities, the company is optimistic about the positive impact of supply-chain strategies on inventory values starting early next year.

While Cactus currently holds a Zacks Rank #3 (Hold), investors seeking opportunity in the energy sector may consider other stocks with stronger Zacks Ranks. Oceaneering International, Inc. OII achieved third-quarter adjusted earnings of 38 cents per share, surpassing estimates, attributed to strong segment performance despite expecting a decline in EBITDA for the following quarter. Likewise, Matador Resources Company MTDR exceeded earnings with a record production average, and has revised its production forecast upwards for the subsequent quarter. Liberty Energy Inc. LBRT, also excelled in earnings, owing to robust execution and increased service pricing, and declared a noteworthy 40% increase in its dividend payout.

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