28 slides from Cactus, Inc. Class A Common Stock's investor presentation, November 2019
Slide 1: Investor Presentation
Investor Presentation Cactus, Inc. (NYSE: WHD) November 2019
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 Activity Innovative and Differentiated Products with 2 Presence Across Various Geographies Consistent 3 Dynamic Manufacturing Capabilities Market Outperformance Returns Focused with Sub
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 LTM Q3 2019 Revenue by Type Revenue ($ in millions) $628.0 $544.1 Q3 2019 Field $160.8 Service $341.2 9 mos. and $221.4 ended
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 Growth
Market Leader with Strong Growth Historical U.S. Onshore Market Share(1) 400 35.0% 350 29.3% 29.7% Cactus Rigs Followed 28.2% 30.0% (1) 27.0% 26.6% Market Share 295 300 24.4% 275 276 25.0% 21.5% 245 247 250 220 20.0% 17.5% 200 179 14.4% 14.5% 158 15.0% 150 129 119 119 100 99 10.0% 100 9.8% 75 8.9% 6
Slide 8: Historical Margin Sustainability Through the Cycle
Historical Margin Sustainability Through the Cycle Historical Adjusted EBITDA Margins (2014 – YTD 2019) (1)(2) Adjusted EBITDA Margin (2014 – YTD 2019) (1)(2) 35% 34% 40% 30% 30% 25% 25% 23% 23% 20% 22% 20% 10% 15% 15% 14% 13% 0% 11% 10% (10%) 5% (20%) 2014 2015 2016 2017 2018 YTD 2019 0% WHD Peer A
Slide 9: 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 10: Well Counts and Pad Drilling Drive Our Product Business
Well Counts and Pad Drilling Drive Our Product Business Operations & Trends % of Wells Drilled on a Pad (Delaware Basin) ◼ Well-diversified across all key producing basins Pct 100% 2019 YTD Marcellus: 93% ◼ Service centers support field services and provide repair 2019 YTD U.S. Land Avg: 77% 73% ser
Slide 11: Operator Drilling Efficiencies Translate Into More Wells Drilled Per Rig
Operator Drilling Efficiencies Translate Into More Wells Drilled Per Rig U.S. Drilling Days Per 1,000 Lateral Foot Days 7.1 7.0 6.4 6.4 5.4 5.5 5.4 5.3 4.7 4.8 4.6 4.6 4.1 4.0 4.0 4.0 3.3 3.3 3.2 3.1 3.0 2.9 2.9 2.7 2.7 2.7 2.7 2.8 2.7 2.6 2.4 2.2 2.0 Source: Barclays Research. 11
Slide 12: Cactus Generating More Revenue Per Rig Followed
Cactus Generating More Revenue Per Rig Followed Drivers For Increased Revenue Per Rig Cactus Product Revenue Per U.S. Onshore Rig Followed(1) (Data Indexed to 100) ◼ Increased rig efficiencies 178 ◼ E&Ps drilling more wells per rig operated 165 ◼ Lateral lengths stabilizing ◼ Sale of higher-end well
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 overall 15% cost to drill & complete a well Completion ◼ Efficiency and reliability can cause a 54% disproportionate a
Slide 14: Focus on Completions Efficiency Drives Our Rental Business
Focus on Completions 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 periods of time ◼ Proprietary rental equipment offerings enhance w
Slide 15: Recent Innovations Strengthen Moat in Rental Business
Recent Innovations Strengthen Moat in Rental Business Complement & enhance legacy rental offerings while requiring no additional personnel ◼ Designed to significantly reduce non-productive time by increasing reliability and automation ◼ Increases safety by removing personnel from the exclusion zone
Slide 16: 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 ◼ Facility has 16 5-axis computer numerically ◼ Cactus sources most of its less time-sensitive, hig
Slide 17: Highly Experienced and Well Incentivized Team with Strong Industry Relationships
Highly Experienced and Well Incentivized Team with Strong Industry Relationships ◼ Management team is well incentivized as it owns more than 25% of the business ◼ Management team has built the foundation of this company over four decades ◼ Track record of building and successfully monetizing similar
Slide 18: Well Established Relationships with High-Quality Customer Base
Well Established Relationships with High-Quality Customer Base 3Q 2019 YTD Total Revenue by 3Q 2019 YTD Product Revenue by 3Q 2019 YTD Rental Revenue by Customer Type Customer Type Customer Type Other Majors Other Majors 1% 1% 2% Private Private 10% Private 13% 18% 20% Majors 27% SMID E&P 11% SMID S
Slide 19: Returns & Margins Have Outperformed Peers
Returns & Margins Have Outperformed Peers 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 – YTD 2019) (%) (10.0%) 0.0% 10.0% 20.0% 30.0% 40.0% Source: Company filings and Factset. Note: Adj. EBITDA Margins as of 3Q 2019 for WHD, APY, DR
Slide 20: Compelling Value Opportunity in Relation to Select Industrial Companies
Compelling Value Opportunity in Relation to Select Industrial Companies Better Margins… …Returns… …And Growth… Avg. EBITDA Margin ROCE Consensus Revenue Growth (2015 - YTD 2019) (2015 - YTD 2019) (1) (2018 - 2020E) (2) 37% 13% 34% 8% 7% 6% 5% 24% 3% 1% 19% 19% 20% 16% 17% 15% 14% 15% 14% 13% 11% 10%
Slide 21: Clean Balance Sheet & Low Capital Intensity
Clean Balance Sheet & Low Capital Intensity Strong balance sheet with track record of cash flow generation Adjusted EBITDA(1) – Net Capital Expenditures(2) ($ in Balance Sheet & Capital Summary millions) ◼ September 30, 2019 cash balance of $167.5 $182.6 million; no borrowings on revolving credit fa
Slide 22: Continued Outperformance in 2019
Continued Outperformance in 2019 Third Quarter Performance ◼ Product revenue continued to outperform the trajectory of the U.S. onshore rig count ◼ Improved margins in Rental business despite reduced completion activity from customers ◼ Increased cash position by over $36mm during the quarter Outloo
Slide 23: Additional Growth Avenues with Modest Capital Requirements
Additional Growth Avenues with Modest Capital Requirements ◼ Product ◼ Continued market share gains ◼ Continued gains in rig efficiency (wells drilled per rig) ◼ New features and technology for wellhead systems ◼ Shift to higher pressure wellhead systems ◼ Rental ◼ Continued deployment of recent ren
Slide 24: Appendix
\ i gafety Stro, r co ‘ “Year tong Appendix
Slide 25: Company Organizational Structure
Company Organizational Structure Company Profile Organizational Structure (1) Ticker WHD (NYSE) Class A Shares Outstanding (1) 47.1mm CW Unit Public Class B Shares Outstanding (1) 28.0mm Holders Investors Total Shares Outstanding (1) 75.1mm Market Capitalization (2) ~$2.3bn Class B Common Stock Clas
Slide 26: Cactus Equipment Positioned on a 4-Well Pad
Cactus Equipment Positioned on a 4-Well Pad 1 2 4 4 3 4 1 1 Product Sold 2 Equipment Rented 3 Equipment Rented 4 Services Provided Product Sold ▪ Wellheads are required ▪ Frac stacks are ▪ Zipper manifolds used ▪ Variety of equipment to ▪ Production trees (not by each well over connected to the duri
Slide 27: Non-GAAP Reconciliation
Non-GAAP Reconciliation LTM Year Ended Three Months Ended ($ in thousands) September 30, December 31, December 31, December 31, December 31, September 30, June 30, September 30, 2019 2018 2017 2016 2015 2019 2019 2018 Net income (loss) $163,712 $150,281 $66,547 ($8,176) $21,224 $35,833 $40,750 $43,6
Slide 28: Investor Relations Contact
Investor Relations Contact John Fitzgerald Director of Corporate Development & Investor Relations 713-904-4655 IR@CactusWHD.com 28