30 slides from Cactus, Inc. Class A Common Stock's investor presentation, September 2020
Slide 1: Investor Presentation
Investor Presentation Cactus, Inc. (NYSE: WHD) September 2020
Slide 2: Important Disclosures
Important Disclosures Non-GAAP Measures This presentation includes references to EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, and EBIT, which are not measures calculated in accordance with accounting principles generally accepted in the United States of America (“GAAP”). A reconciliation of EBIT
Slide 3: Executive Team
Executive Team ◼ Mr. Bender has served as President and CEO since co-founding Cactus Wellhead, LLC (“Cactus LLC”) in 2011. ◼ Mr. Bender previously was President of Wood Group Pressure Control from 2000 to 2011. Scott Bender ◼ Mr. Bender successfully built and monetized Ingram Cactus Company (sold to
Slide 4: Investment Highlights
Investment Highlights A Leading Pure Play Wellhead and Pressure Control 1 Equipment Solutions Provider for Onshore Markets Innovative and Differentiated Products & Services 2 That Drive Margin Stability Through the Cycle Dynamic & Variable-Cost Operating and Through-Cycle 3 Manufacturing Capabilitie
Slide 5: Company Overview
Company Overview Cactus designs, manufactures, sells and rents highly engineered products which yield greater pad drilling and completions efficiencies while enhancing safety Q2 2020 LTM Revenue by Type Revenue ($ in millions) $628.4 $544.1 $521.7 Field $341.2 Service and $155.0 Other 21% Rental Pro
Slide 6: Proprietary Equipment Across Drilling, Completion, and Production Phases of a Well
Proprietary Equipment Across Drilling, Completion, and Production Phases of a Well Technologically advanced wellhead and frac solutions deliver greater reliability and time savings ◼ Designed for pad drilling and intense completion environments ◼ Principal products: SafeDrill® wellheads, frac relate
Slide 7: Market Leader with Strong Market Share Growth
Market Leader with Strong Market Share Growth Historical U.S. Onshore Market Share(1) 400 35.0% 32.7% 30.9% 350 29.3% Cactus Rigs Followed 28.2% 30.0% 27.0% 26.6% (1) Market Share 295 300 24.4% 275 276 25.0% 21.5% 245 250 240 220 20.0% 17.5% 200 179 14.4% 14.5% 158 15.0% 150 129 119 119 100 99 10.0%
Slide 8: Cactus was Well Positioned for the Downturn…
Cactus was Well Positioned for the Downturn… Well Prepared for a Downturn 2014 – 2019 Trough Annual Adjusted EBITDA Margin(2)(3)(4) ▪ Management team has operated through several 22% 21% industry cycles 14% ▪ No bank debt and over $270 million in cash(1) 6% 6% ▪ Variable cost structure & low capex r
Slide 9: …and Cactus is Well Prepared for a Recovery
…and Cactus is Well Prepared for a Recovery Highlights 2017 Incremental EBITDA Margins(1)(2) ◼ Positive operating leverage generally benefits margins as revenue increases 80% ◼ Incremental EBITDA margins were strong during the last market recovery (2017) ◼ Slower activity environment 45% 43% provide
Slide 10: Technologically Advanced Pad Drilling Wellhead Systems
Technologically Advanced Pad Drilling Wellhead Systems Cactus SafeDrill® SafeDrill® Advantages Safety Time Savings Fewer trips into Eliminates time confined space (cellar) consuming BOP - manipulation No BOP manipulation No waiting on cement after intermediate after running casing casing has
Slide 11: Innovations Enhance Rental Business Value Proposition
Innovations Enhance Rental Business Value Proposition Complement & enhance legacy rental offerings while requiring no additional personnel ◼ Significantly reduce non-productive time (“NPT”) by increasing reliability and automation ◼ Increase safety and reduce costs by removing personnel from the exc
Slide 12: Improvements in Operator Efficiencies Beneficial to Cactus
Improvements in Operator Efficiencies Beneficial to Cactus U.S. Drilling Days Per 1,000 Lateral Ft. U.S. Well Completions Utilizing Zipper Fracs Days Pct 7 6.4 90% 5.9 6 5.2 5 79% 80% 4.4 76% 4 3.6 3.5 3.3 3.3 70% 69% 2.9 3 2 61% 60% 56% 1 0 50% 2011 2012 2013 2014 2015 2016 2017 2018 2019 2017 2018
Slide 13: Small Expenditures Can Have a Big Impact on Operators
Small Expenditures Can Have a Big Impact on Operators Cactus Value Proposition Components of Onshore Well Costs(1) ◼ Cactus offerings make up a Other relatively small portion of the 15% overall cost to drill & complete a well Completion 54% ◼ Efficiency and reliability can cause a disproportionate a
Slide 14: Flexible and Scalable Operating Footprint
Flexible and Scalable Operating Footprint U.S. Operations United States ◼ Service centers support field services and provide repair services Bakken Bossier City, Louisiana Powder Manufacturing Facility ◼ Well-diversified across all key producing basins River Marcellus Basin Utica ◼ Flexible cost str
Slide 15: A Dynamic Manufacturing Advantage; Responsive, Highly Scalable and Lower Cost
A Dynamic Manufacturing Advantage; Responsive, Highly Scalable and Lower Cost Responsive manufacturing in the U.S. supplemented by high volume production in China Bossier City Facility Suzhou Facility ◼ Rapid-response manufacturing of equipment ◼ Less time-sensitive, high-volume wellhead equipment ◼
Slide 16: Experienced and Well Aligned Management Team with Strong Industry Relationships
Experienced and Well Aligned Management Team with Strong Industry Relationships ◼ Management team is well incentivized as it owns more than 25% of the business ◼ 2020 executive management salaries reduced by 33 - 55% ◼ Performance-based stock compensation tied to Return on Capital Employed (“ROCE”)
Slide 17: Well Established Relationships with High-Quality Customer Base
Well Established Relationships with High-Quality Customer Base 1H20 Total Revenue by Customer Type 1H20 Product Revenue by Customer Type 1H20 Rental Revenue by Customer Type Other Majors Majors Other Majors Other 1% 9% 8% 1% 2% Private 0% Private 14% Majors 20% Private 22% 23% SMID E&P 9% SMID E&P S
Slide 18: Returns & Margins Have Outperformed Peers
Returns & Margins Have Outperformed Peers LTM Adjusted EBITDA Margin (%) 40.0% (1) 30.0% NCSM SBO 20.0% FTI OIS WEIR NOV FET HTG 10.0% ROCE(2) 0.0% DRQ (2015 – 2019) (%) (10.0%) 0.0% 10.0% 20.0% 30.0% 40.0% Source: Company filings and Factset. Note: LTM Adj. EBITDA Margins based on latest publicly a
Slide 19: History of Prudent Investment Strategy
History of Prudent Investment Strategy Goodwill, Intangible, Long-Lived & Other Asset Impairment Expenses ($mm) (2015 – YTD 2020) ($mm) $10,597 $1,000 $750 $664 $613 $487 $500 $250 $179 $132 $68 $30 $0 $- WHD Peer A Peer B Peer C Peer D Peer E Peer F Peer G Peer H Cactus Has Recorded Zero Impairment
Slide 20: Execution Has Driven Post-IPO Equity Performance
Execution Has Driven Post-IPO Equity Performance Indexed Share Price Performance of Cactus vs. Indexed Share Price Performance of OSX 5x 4.7x 4x 3x 2x 1x Feb-18 May-18 Aug -18 Nov-18 Feb-19 May-19 Aug -19 Nov-19 Feb-20 May-20 Aug -20 Cactus’ Share Price Has Outperformed the OSX by Nearly 5x Since IP
Slide 21: Clean Balance Sheet & Low Capital Intensity
Clean Balance Sheet & Low Capital Intensity Adjusted EBITDA(1) – Net Capital Expenditures(2) ($ in Balance Sheet & Capital Summary millions) ◼ June 30, 2020 cash balance of $270.7 million $173.1 ◼ Expect 2020 to be a year of meaningful cash $144.4 $140.1 generation ◼ Ability to quickly scale back gr
Slide 22: Recent Performance & Outlook
Recent Performance & Outlook Second Quarter 2020 Performance ◼ Generated Adjusted EBITDA margins of nearly 34% ◼ Innovations represented approximately 15% of Rental revenue ◼ Increased cash position by over $40mm during the quarter net of nearly $7mm in dividend & distribution payments ◼ Reduced ann
Slide 23: Positive Developments with Limited Capital Required
Positive Developments with Limited Capital Required ◼ Product ◼ Potential for share gains given strong customer profile and operator search for efficiency gains ◼ Downturns typically drive increased rig efficiency as operators drop least efficient rigs ◼ More wells drilled per rig ◼ Opportunity to g
Slide 24: Cactus Is Committed to ESG
Cactus Is Committed to ESG Environmental Social ◼ Cactus, Inc. is committed to reducing its impact on the ◼ Cactus, Inc. is dedicated to improving lives and protecting human environment. We will continue to strive to improve our rights. We seek to make the world a better place by encouraging environ
Slide 25: Appendix
\ i gafety Stro, r co ‘ “Year tong Appendix
Slide 26: Company Organizational Structure
Company Organizational Structure Company Profile Organizational Structure(1) Ticker WHD (NYSE) Class A Shares Outstanding(1) 47.5mm CW Unit Public Class B Shares Outstanding(1) 27.8mm Holders Investors Total Shares Outstanding(1) 75.4mm Market Capitalization(2) ~$1.7bn Class B Common Stock Class A C
Slide 27: Cactus Equipment Positioned on a 4-Well Pad
Cactus Equipment Positioned on a 4-Well Pad 1 2 4 4 3 4 1 1 Product Sold 2 Equipment Rented 3 Equipment Rented 4 Services Provided Product Sold ▪ Wellheads are required ▪ Frac stacks are ▪ Zipper manifolds used ▪ Variety of equipment to ▪ Production trees (not by each well over connected to the duri
Slide 28: Non-GAAP Reconciliation
Non-GAAP Reconciliation Important Disclosure Regarding Non-GAAP Measures EBITDA and Adjusted EBITDA are not measures calculated in accordance with GAAP. EBITDA and Adjusted EBITDA are supplemental non-GAAP financial measures that are used by management and external users of our consolidated financia
Slide 29: Non-GAAP Reconciliation
Non-GAAP Reconciliation Important Disclosure Regarding Non-GAAP Measures EBITDA and Adjusted EBITDA are not measures calculated in accordance with GAAP. EBITDA and Adjusted EBITDA are supplemental non-GAAP financial measures that are used by management and external users of our consolidated financia
Slide 30: Investor Relations Contact
Investor Relations Contact John Fitzgerald Director of Corporate Development & Investor Relations 713-904-4655 IR@CactusWHD.com 30