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, February 2019
Slide 1: Investor Presentation
Investor Presentation Cactus, Inc. (NYSE: WHD) February 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 Leading Pure Play Wellhead and Pressure Control 1 Equipment Solutions Provider for U.S. Onshore Innovative and Differentiated Products with 2 Presence Across Major Basins Delivered Significant Growth Across 3 Dynamic Manufacturing Capabilities All Businesses In 2018 And Well Po
Slide 5: Differentiated Business with Exposure to Favorable Industry Dynamics
Differentiated Business with Exposure to Favorable Industry Dynamics Attractive Underlying Fundamentals Complement Strong Industry Position Oilfield Pressure Proppant & Land Offshore Cactus Equipment Pumping Logistics Drilling Services Differentiated Offerings Margin Sustainability Through Cycle Min
Slide 6: Company Overview
Company Overview Cactus designs, manufactures, sells and rents highly engineered products which yield greater pad drilling and completion efficiencies while enhancing safety LTM Q3 2018 Revenue by Type Revenue ($ in millions) $509.1 Field $341.2 Service $259.5 $221.4 and $155.0 Other 22% Product 53%
Slide 7: Proprietary Equipment Across Drilling, Completion, and Production Phases of a Well
Proprietary Equipment Across Drilling, Completion, and Production Phases of a Well Technically advanced wellhead and frac solutions deliver greater reliability and time savings ◼ Designed for pad drilling and intense completion environments ◼ Principal products: SafeDrill® wellheads, frac stacks, zi
Slide 8: Market Leader with Strong Growth
Market Leader with Strong Growth Historical U.S. Onshore Market Share(1) Initiatives to Drive Growth Cactus Rigs ◼ Continuing new product development, Followed 28.2% 27.0% Market Share (1) 26.6% innovation and investment including: 295 24.4% 275 ◼ SafeDrill® 4T wellhead system 21.5% 245 ◼ Cactus Com
Slide 9: Historical Margin Sustainability Through the Cycle
Historical Margin Sustainability Through the Cycle Historical Adjusted EBITDA Margins (2014 – Q3 2018) (1)(2) Adjusted EBITDA Margin (2014 – Q3 2018) (1)(2) 35% 40% 33% 30% 30% 26% 25% 23% 20% 23% 22% 20% 10% 16% 15% 15% 0% 12% 11% 10% (10%) 5% (20%) 2014 2015 2016 2017 9M 2018 0% WHD Peer A Peer B
Slide 10: Technically Advanced Pad Drilling Wellhead Systems
Technically Advanced Pad Drilling Wellhead Systems Conventional Wellhead SafeDrill® Advantages Safety Time Savings Reduced leak paths Eliminates BOP due to elimination of manipulation body penetrations No waiting on cement No “hot work” required after running casing to cut casing with torch
Slide 11: Well Counts and Pad Drilling Drive Our Product Business
Well Counts and Pad Drilling Drive Our Product Business % of Wells Drilled on a Pad (Delaware Basin) Bakken Powder River Pct Basin 100% 2018 Marcellus: 95% Marcellus Utica 75% 2018 U.S. Land Avg: 75% 64% DJ / Niobrara 55% SCOOP / STACK 50% 39% 35% Delaware Barnett 22% 25% Legend Midland Haynesville
Slide 12: Focus on Completion Efficiency Drives Our Rental Business
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 201
Slide 13: Cactus Completions Equipment Advantage
Cactus Completions Equipment Advantage SB Series Frac Valves Designs, manufactures, and rents a range of ▪ Built-for-purpose frac valve highly engineered and internally-developed products ▪ Designed for high-intensity frac applications Reliable equipment ▪ Redundant sealing at providers rewarded for
Slide 14: 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 48 Hour Order Industry Leading Highly Turnaround Product Quality (API Scalable 5-Axis
Slide 15: 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 greater than 30% of the business Scott Bender, CEO ▪ Track record of building and successfully monetizing similar businesses ▪ Strength of leadership is attested by mana
Slide 16: Well Established Relationships with High-Quality Customer Base
Well Established Relationships with High-Quality Customer Base 2018 Total Revenue by Customer Type 2018 Product Revenue by Customer Type 2018 Rental Revenue by Customer Type Other Majors Other Majors Private Other Private 1% 7% 1% 3% 1% Majors Private 10% 15% 15% 17% SMID E&P 14% SMID E&P 18% SMID E
Slide 17: Efficiently Run Business
Efficiently Run Business Reported SG&A as a Percentage of Revenue (9M 2018) (1) 35% 30% 29% 27% 25% 21% 20% 20% 17% 17% 15% 15% 13% 10% 7% 5% 0% WHD Peer A Peer B Peer C Peer D Peer E Peer F Peer G Peer H Lean organizational structure promotes quick decision making, lower costs, and fast response ti
Slide 18: Returns & Margins Have Outperformed Peers
Returns & Margins Have Outperformed Peers Adjusted EBITDA Margin (%) 50.0% (1) Cactus 40.0% NCSM 30.0% SBO 20.0% FTI OIS WEIR NOV FET HTG 10.0% ROCE(2) 0.0% DRQ (2015 – Q3 2018) (%) (10.0%) 0.0% 10.0% 20.0% 30.0% 40.0% Source: Company filings and Factset. Note: EBITDA Margins and ROCE for WHD, APY,
Slide 19: Clean Balance Sheet & Low Capital Intensity
Clean Balance Sheet & Low Capital Intensity Strong balance sheet with track record of cash flow generation Balance Sheet & Capital Summary Adjusted EBITDA(1) – Net Capital Expenditures(2) ($ in millions) ◼ Q4 2018 cash balance of approximately $71 $130.4 million; no borrowings on revolving credit fa
Slide 20: Record 2018 Results; Well Positioned for 2019
Record 2018 Results; Well Positioned for 2019 Fourth Quarter Performance ◼ Q4 2018 profitability broadly in-line with current analyst consensus(1) ◼ Resilience of margins in Product and Rental segments offset weaker than expected revenues ◼ Rental and related Field Service businesses slowed by defer
Slide 21: Appendix
Appendix
Slide 22: Company Organizational Structure
Company Organizational Structure Company Profile Organizational Structure (1) Ticker WHD (NYSE) Class A Shares Outstanding (1) 37.7mm CW Unit Public Holders Investors Class B Shares Outstanding (1) 37.2mm Total Shares Outstanding (1) 74.9mm Class B Common Stock Class A Common Stock Market Capitaliza
Slide 23: Building a Leading Equipment Company
Building a Leading Equipment Company Management team has built the foundation of this company over four decades with a proven track record of success. Scott Bender CWE Merges with Ingram WGPC Sold to appointed Petroleum Services, forming GE Oil and Gas President of Ingram Cactus (2011) Cactus Cactus
Slide 24: Quarterly Financial Performance
Quarterly Financial Performance Adj. EBITDA(1) ($ in millions) & Adj. EBITDA(1) as % of Total Revenue ($ in millions) Revenue Sequential Quarters +9% +11% $61.3 $150.7 $55.1 $138.5 39.8% of 40.7% of Total Total Revenue Revenue Q2 2018 Q3 2018 Q2 2018 Q3 2018 Quarter-over-Quarter +57% $150.7 +79% $61
Slide 25: Annual Financial Performance
Annual Financial Performance Total Revenue ($ in millions) Adjusted EBITDA(1) ($ in millions) $509.1 $194.1 $341.2 $259.5 $112.1 $221.4 $90.1 $155.0 $63.1 $32.2 2014 2015 2016 2017 LTM Q3 2018 2014 2015 2016 2017 LTM Q3 2018 Adj. EBITDA(1) – Net Capital Expenditures(2) ($ in millions) Adjusted EBITD
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, September 30, June 30, September 30, 2018 2017 2016 2015 2018 2018 2017 Net income (loss) $134,412 $66,547 ($8,176) $21,224 $43,648 $41,542 $22,301 Interest expense, net 8,
Slide 28: Investor Relations Contact
Investor Relations Contact John Fitzgerald Director of Corporate Development & Investor Relations 713-904-4655 IR@CactusWHD.com 28