Cactus, Inc. Class A Common Stock · NYSE:WHD
Cactus, Inc. Class A Common Stock — Investor Presentation (February 2019)
28 slides from Cactus, Inc. Class A Common Stock's investor presentation, Feb 11, 2019
Slide 1: Investor Presentation Cactus, Inc. February 2019
Investor Presentation Cactus, Inc. (NYSE: WHD) February 2019
Slide 2: Non-GAAP Measures and Forward-Looking Statements
2 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 EBITDA, Adjusted EBITDA
Slide 3: Executive Team
3 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. ◼ Mr. Bender successfully built and monetized Ingram Cactus Company (sold to Cameron in
Slide 4: Investment Highlights
4 Investment Highlights Highly Experienced Management and Operating Team with Strong Industry Relationships Innovative and Differentiated Products with Presence Across Major Basins Leading Pure Play Wellhead and Pressure Control Equipment Solutions Provider for U.S. Onshore Returns Focused with Subs
Slide 5: Differentiated Business with Exposure to Favorable Industry Dynamics
5More favorable Less favorable Cactus Oilfield Equipment Pressure Pumping Proppant & Logistics Land Drilling Offshore Services Differentiated Offerings Margin Sustainability Through Cycle Minimal Capex Requirements Leverage to Onshore Well Count & Completion Intensity Low Personnel Requirements Stro
Slide 6: Company Overview
6 $259.5 $221.4 $155.0 $341.2 $509.1 2014 2015 2016 2017 LTM Q3 2018 $90.1 $63.1 $32.2 $112.1 $194.1 2014 2015 2016 2017 LTM Q3 2018 NA 17.9% 9.6% 23.9% 25.6% 2014 2015 2016 2017 LTM Q3 2018 LTM Q3 2018 Revenue by Type Revenue ($ in millions) ◼ Bakken ◼ Eagle Ford ◼ Permian ◼ DJ / Powder River ◼ Mar
Slide 7: Proprietary Equipment Across Drilling, Completion, and Production Phases of a Well
7 Proprietary Equipment Across Drilling, Completion, and Production Phases of a Well ◼ Designed for pad drilling and intense completion environments ◼ Principal products: SafeDrill® wellheads, frac stacks, zipper manifolds, and production trees ◼ Time savings can exceed 30 hours of rig time per well
Slide 8: Market Leader with Strong Growth
8 1,931 1,899 1,729 1,694 1,703 1,780 1,820 825 684 388 601 902 909 1,035 1,045 15 47 75 100 119 158 179 119 99 68 129 220 245 275 295 0.8% 2.5% 4.3% 5.9% 7.0% 8.9% 9.8% 14.4% 14.5% 17.5% 21.5% 24.4% 27.0% 26.6% 28.2% Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-1
Slide 9: Historical Margin Sustainability Through the Cycle
9 (20%) (10%) 0% 10% 20% 30% 40% 2014 2015 2016 2017 9M 2018 WHD Peer A Peer B Peer C Peer D Peer E Peer F Peer G Peer H 33% 26% 23% 23% 22% 16% 15% 12% 11% 0% 5% 10% 15% 20% 25% 30% 35% WHD Peer A Peer B Peer C Peer D Peer E Peer F Peer G Peer H Historical Margin Sustainability Through the Cycle Hi
Slide 10: Technically Advanced Pad Drilling Wellhead Systems
10 Technically Advanced Pad Drilling Wellhead Systems SafeDrill® Advantages Eliminates BOP manipulation No waiting on cement after running casing Quick connect BOP adaptors for initial installs Mandrel hangers Pack offs run and set through BOPs Reduced leak paths due to elimination of body pen
Slide 11: Well Counts and Pad Drilling Drive Our Product Business
11 22% 35% 39% 55% 64% 0% 25% 50% 75% 100% 2014 2015 2016 2017 2018 Pct 2.2 2.3 2.4 2.4 2.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 2014 2015 2016 2017 2018 Avg. Pad Size DJ / Niobrara Powder River Basin Bakken SCOOP / STACK Haynesville Eagle Ford Utica Gulf Coast Bossier City, Louisiana Manufacturing Facility
Slide 12: Focus on Completion Efficiency Drives Our Rental Business
12 Focus on Completion Efficiency Drives Our Rental Business ◼ Growth opportunity for Cactus ◼ Priced on per diem basis ◼ More wells per pad and/or stages per well generally translates into more rental equipment on location for greater period of time ◼ Market share increasing ◼ Expanded capacity in
Slide 13: Cactus Completions Equipment Advantage
13 Cactus Completions Equipment Advantage Designs, manufactures, and rents a range of highly engineered and internally-developed products Reliable equipment providers rewarded for reducing non-productive frac time Larger pad sizes, longer laterals and more intensive fracs increase duration of rental
Slide 14: A Dynamic Manufacturing Advantage
14 A Dynamic Manufacturing Advantage; Responsive, Highly Scalable and Lower Cost Bossier City Facility Suzhou Facility Industry Leading Product Quality (API 6A / ISO 9001) Highly Engineered Products Cactus Employees HSE Focus Rapid 48 Hour Order Turnaround 5-Axis CNC Machining Customer Respon
Slide 15: Management Track Record
15 1986 Current Scott and Joel Bender found Cactus Wellhead LLC Scott and Joel Bender appointed President and SVP, respectively, of Wood Group Pressure Control Scott and Joel Bender become President and VP Operations, respectively, of Ingram Cactus Company ◼ QA Director ◼ Chief Wellhead Engineer ◼ C
Slide 16: Well Established Relationships with High-Quality Customer Base
16 Majors 7% Large E&P 59% SMID E&P 18% Private 15% Other 1% Majors 15% Large E&P 60% SMID E&P 14% Private 10% Other 1% Majors 3% Large E&P 58% SMID E&P 21% Private 17% Other 1% Well Established Relationships with High-Quality Customer Base 2018 Total Revenue by Customer Type 2018 Rental Revenue by
Slide 17: Efficiently Run Business
17 7% 13% 15% 17% 17% 20% 21% 27% 29% 0% 5% 10% 15% 20% 25% 30% 35% WHD Peer A Peer B Peer C Peer D Peer E Peer F Peer G Peer H Efficiently Run Business Reported SG&A as a Percentage of Revenue (9M 2018) (1) Source: Factset, Company filings. 1. Peers include: Apergy, Dril-Quip, Forum Energy Technolo
Slide 18: Returns & Margins Have Outperformed Peers
18 Cactus FTI DRQ WEIR NCSM SBO OIS HTG FETNOV 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% (10.0%) 0.0% 10.0% 20.0% 30.0% 40.0% Returns & Margins Have Outperformed Peers Source: Company filings and Factset. Note: EBITDA Margins and ROCE for WHD, APY, DRQ, FET, GDI, NOV, OIS and SBO as of Q3 2018. EBITDA Marg
Slide 19: Strong balance sheet with track record of cash flow generation
19 $23.4 $17.4 $30.7 $63.7 2015 2016 2017 LTM Q3 2018 $39.7 $14.8 $81.4 $130.4 2015 2016 2017 LTM Q3 2018 ◼ Q4 2018 cash balance of approximately $71 million; no borrowings on revolving credit facility ◼ Liquidity and strong cash flows support future growth ◼ Closed a five-year, $75.0 million asset-
Slide 20: Record 2018 Results; Well Positioned for 2019
20 Record 2018 Results; Well Positioned for 2019 ◼ Q4 2018 profitability broadly in-line with current analyst consensus(1) ◼ Resilience of margins in Product and Rental segments offset weaker than expected revenues ◼ Rental and related Field Service businesses slowed by deferral of completion activi
Slide 21: Appendix
Appendix
Slide 22: Ownership Profile
22 Ownership Profile (5) Company Organizational Structure Source: Company filings. 1. As of November 1, 2018. Excludes effect of dilutive securities. 2. As of February 7, 2019 utilizing total shares outstanding as of November 1, 2018. 3. As of September, 30, 2018. 4. As of December 31, 2018. 5. As o
Slide 23: Building a Leading Equipment Company
23 1959 19801975 1985 1990 1995 2000 2005 2010 ICC sold to Cooper Cameron Corporation (1996) 2018 Scott Bender appointed President of Cactus Wellhead Equipment (“CWE”), a subsidiary of Cactus Pipe (1977) Cactus Pipe founded (1959) CWE Merges with Ingram Petroleum Services, forming Ingram Cactus Comp
Slide 24: Quarterly Financial Performance
24 $34.1 $61.3 Q3 2017 Q3 2018 $55.1 $61.3 Q2 2018 Q3 2018 $96.0 $150.7 Q3 2017 Q3 2018 $138.5 $150.7 Q2 2018 Q3 2018 Quarterly Financial Performance Total Revenue ($ in millions) Adj. EBITDA(1) ($ in millions) & Adj. EBITDA(1) as % of Revenue +57% +79% 35.5% of Total Revenue Source: Company filings
Slide 25: Annual Financial Performance
25 34.7% 28.5% 20.8% 32.9% 38.1% 2014 2015 2016 2017 LTM Q3 2018 NA $39.7 $14.8 $81.4 $130.4 2014 2015 2016 2017 LTM Q3 2018 $90.1 $63.1 $32.2 $112.1 $194.1 2014 2015 2016 2017 LTM Q3 2018 $259.5 $221.4 $155.0 $341.2 $509.1 2014 2015 2016 2017 LTM Q3 2018 Annual Financial Performance Total Revenue (
Slide 26: Cactus Equipment Positioned on a 4-Well Pad
26 Cactus Equipment Positioned on a 4-Well Pad 2 4 3 4 1 1 4 ▪ Wellheads are required by each well over production life ▪ One of the first pieces of equipment to be installed ▪ Cactus wellheads installed below surface Product Sold1 ▪ Frac stacks are connected to the wellhead for the fracturing phase
Slide 27: Non-GAAP Reconciliation
27 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 finan
Slide 28: Investor Relations Contact
28 Investor Relations Contact John Fitzgerald Director of Corporate Development & Investor Relations 713-904-4655 IR@CactusWHD.com