Cactus Announces Full Year and Fourth Quarter 2017 Results

– Full Year Revenues More than Doubled; Fourth Quarter Increased
9.1% Sequentially –

HOUSTON–(BUSINESS WIRE)–Cactus, Inc. (NYSE: WHD) (“Cactus” or the “Company”) today announced
financial and operating results for the full year and fourth quarter of
2017. On February 12, 2018, Cactus closed its initial public offering
(“IPO”) of Class A common stock. The financial results for 2017 and 2016
represent periods during which Cactus’ operating subsidiary was
privately-owned.

Key 2017 Operational Highlights

• Grew estimated U.S. onshore market share(1) in wellhead
  product line from 21.2% for fourth quarter 2016 to 26.0% for fourth
  quarter 2017;
• Developed and commercialized further innovations in frac rental
  offerings to reduce repair time and enhance reliability;
• Initiated expansion of its rental fleet to capitalize on higher
  intensity fracs and larger pad sizes; and
• Expanded Suzhou, China facility to improve product and rental margins.

Full Year 2017 Financial Highlights

• Increased revenues 120.1% to $341.2 million from $155.0 million in
  2016;
• Grew income from operations to $88.9 million from $10.6 million in
  2016;
• Grew net income to $66.5 million from a net loss of $8.2 million in
  2016; and
• Increased Adjusted EBITDA(2) and related margin(3)
  to $112.1 million and 32.9%, respectively, from $32.2 million and
  20.8%, respectively, in 2016.

Fourth Quarter 2017 Financial Highlights and Recent Events

• Reported financial results that were in-line with preliminary
  estimates from the Company’s prospectus filed with the SEC;
• Increased revenues 9.1% to $104.8 million from $96.0 million in the
  preceding quarter;
• Generated income from operations and net income of $28.7 million and
  $22.8 million, respectively;
• Increased Adjusted EBITDA(2) to $35.0 million from $34.1
  million in the preceding quarter; and
• Completed an upsized IPO(4) in February that allowed the
  Company to repay its term loan in full.

Financial Summary

Scott Bender, President and CEO of Cactus, commented, “Supported by our
talented team, Cactus entered 2017 well positioned to take advantage of
the expected improvements in the U.S. onshore unconventional oil and gas
market. As evidenced by our outstanding year-over-year financial
results, the benefits of our product and service offerings continued to
attract a growing customer base. This resulted in further market share
increases, including during the second half of 2017.

“Benefiting from the increasing onshore rig count and the number and
complexity of wells that are forecast in 2018, we expect another strong
year for the Company in 2018 and remain focused on generating superior
results and industry leading returns,” added Mr. Bender. “Working
closely with our customers, we look forward to providing additional
safety and efficiency enhancements to our products and services. In
addition, through our recent very successful IPO, we are now well
positioned to further grow the business through execution of strategic
initiatives that are well aligned with our core competencies while
maintaining our focus on return on capital,” concluded Mr. Bender.

Revenue Categories

Product

Fourth quarter 2017 product revenue was up $3.4 million, or 6.4%,
sequentially and $31.2 million, or 120.3%, year-over-year. The
sequential increase was driven primarily by greater sales volume of
production valves and wellhead equipment during the fourth quarter. As
expected, gross profit decreased $0.1 million sequentially with margins
declining 250 basis points due to a combination of seasonal impacts,
higher volume of lower margin commoditized production valves, and
greater reliance on the Company’s relatively higher cost U.S. facility
related to specific customer orders in excess of expectations. Cactus’
estimated market share was 26.0% for the fourth quarter 2017 compared to
25.6% for the third quarter 2017, while the U.S. onshore quarterly rig
count averaged 900 rigs in the fourth quarter 2017 down from 924 rigs in
the third quarter 2017.

Rental

Fourth quarter 2017 rental revenue was up $3.3 million, or 15.5%,
sequentially and $11.3 million, or 85.9%, year-over-year. The sequential
increase was due to higher demand for frac valves, reflecting greater
completions activity across the major U.S. basins in which the Company
participates, as well as an increase in Cactus’ rental asset fleet from
the capital investments made throughout 2017. Gross profit increased
$1.6 million sequentially with margins flat due to higher repair costs
in the fourth quarter related to the redeployment of previously
underutilized rental assets into basins where activity continues to
increase.

Field Service and Other

Fourth quarter 2017 field service and other revenue was up $2.0 million,
or 9.5%, sequentially and $12.7 million, or 121.7%, year-over-year. The
sequential increase was due to increased billable hours related to
installations. Gross profit declined $1.3 million sequentially with
margins decreasing 750 basis points due to seasonal impacts during the
fourth quarter. In addition, the Company experienced higher nonbillable
and training time related to the strategic ramp up in field service
headcount in preparation for an expected increase in U.S. onshore market
activity during 2018.

Selling, General and Administrative Expenses (“SG&A”)

SG&A for the fourth quarter 2017 was $6.6 million (6.3% of revenue),
compared to $7.1 million (7.4% of revenue) for the third quarter 2017
and $5.6 million (11.3% of revenue) for the fourth quarter 2016. The
sequential decline is primarily due to $0.3 million lower legal and
professional fees, $0.3 million lower costs incurred during the fourth
quarter 2017 associated with preparing to be a public company, and a
$0.1 million recovery of bad debt, offset by a $0.2 million increase in
costs associated with higher headcount. The fourth quarter
year-over-year increase relates to higher headcount associated with
significant growth in the business during 2017 and expectations for 2018.

Liquidity and Capital Expenditures

As of December 31, 2017, the Company had $248.5 million outstanding
under its term loan and cash on hand of $7.6 million. The Company’s
revolving credit facility was undrawn and total availability as of
December 31, 2017 was $50.0 million. In conjunction with the Company’s
IPO, the outstanding term loan was repaid in full.

Net capital expenditures for the fourth quarter 2017 were $9.3 million
and $30.7 million for the full year 2017. The majority of the spend
related to the addition of rental equipment, particularly frac valves
and drilling tools.

Recent Events

On February 12, 2018, Cactus closed its IPO of Class A common shares.
Including the exercise in full of the underwriters’ option to purchase
an additional 15% of common shares, the Company issued a total of
26,450,000 shares of Class A common stock in the IPO at $19.00 per
share, resulting in net proceeds of $467.4 million after deducting
underwriting discounts and commissions and offering expenses. Cactus
contributed all of the net proceeds of the IPO to its limited liability
company operating subsidiary in exchange for units.

The Company caused its operating subsidiary to use the net proceeds to
(i) fully repay the outstanding term loan facility, plus accrued
interest, of the operating subsidiary of $251.0 million and (ii)
distribute $216.4 million pari passu to the legacy owners of the
operating subsidiary as part of the corporate reorganization undertaken
in connection with the IPO. In conjunction with the IPO, there are
48,439,772 Class B common shares issued and outstanding, representing
the remaining units held by the legacy owners of the operating
subsidiary.

Further information on the IPO can be found in the prospectus filed with
the Securities and Exchange Commission (“SEC”).

In January 2018, Cactus made a $26.0 million tax distribution payment to
legacy owners related to the tax liabilities incurred prior to the IPO.
The payment was funded through the borrowing of $26.0 million under the
Company’s revolving credit facility.

As of March 7, 2018, Cactus had $8.0 million drawn under the revolving
credit facility and $14.0 million cash on hand.

Conference Call Details

Cactus will host a conference call to discuss financial and operational
results on Friday, March 9, 2018 at 9:00 AM Central Time (10:00 AM
Eastern Time).

The call will be webcast on Cactus’ website at www.CactusWHD.com.
Institutional investors and analysts may participate by dialing (800)
263-0877. International parties may dial (323) 794-2094. The access code
is 8902876. Please access the webcast or dial in for the call at least
10 minutes ahead of start time to ensure a proper connection.

An archived webcast of the conference call will be available on the
Company’s website shortly after the end of the call.

About Cactus

Cactus designs, manufactures, sells and rents a range of highly
engineered wellheads and pressure control equipment. Its products are
sold and rented principally for onshore unconventional oil and gas wells
and are utilized during the drilling, completion (including fracturing)
and production phases of its customers' wells. In addition, it provides
field services for all its products and rental items to assist with the
installation, maintenance and handling of the wellhead and pressure
control equipment. Cactus operates 14 service centers in the United
States, which are strategically located in the key oil and gas producing
regions, including the Permian, SCOOP/STACK, Marcellus, Utica, Eagle
Ford and Bakken, among other areas, and one service center in Eastern
Australia.

Cautionary Statement Concerning Forward-Looking Statements

Certain statements contained in this press release constitute
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. These forward-looking
statements are subject to risks, uncertainties and other factors, many
of which are outside of Cactus’ control, that could cause actual results
to differ materially from the results discussed in the forward-looking
statements.

Forward-looking statements can be identified by the use of
forward-looking terminology including “may,” “believe,” “expect,”
“intend,” “anticipate,” “estimate,” “continue,” or other similar words,
and include the Company’s expectation of future performance contained
herein. These statements discuss future expectations, contain
projections of results of operations or of financial condition, or state
other “forward-looking” information. You are cautioned not to
place undue reliance on any forward-looking statements, which can be
affected by assumptions used or by known risks or uncertainties.
Consequently, no forward-looking statements can be guaranteed. When
considering these forward-looking statements, you should keep in mind
the risk factors noted below and other cautionary statements in this
news release. The risk factors and other factors noted throughout in
this news release could cause actual results to differ materially from
those contained in any forward-looking statement. Known material factors
that could cause the Company’s actual results to differ materially from
the results contemplated by such forward-looking statements are
described in the Company’s filings with the Securities and Exchange
Commission, and include:

• changes in general economic conditions and changes in economic
  conditions of the crude oil and natural gas industry specifically;
• competitive conditions in the industry;
• changes in the long-term supply of and demand for crude oil and
  natural gas;
• the ability to realize the anticipated benefits of the Company’s
  business growth plans;
• actions taken by the Company’s customers, competitors, vendors and
  suppliers;
• the financial condition of the Company’s customers;
• changes in the availability and cost of capital;
• operating hazards, natural disasters, weather-related delays,
  casualty losses and other matters beyond the Company’s control;
• the effects of existing and future laws and governmental
  regulations;
• the effects of future litigation; and
• other factors discussed in the Company’s filings with the
  Securities and Exchange Commission.

Any forward-looking statement speaks only as of the date on which it
is made, and, except as required by law, Cactus does not undertake any
obligation to update or revise any forward-looking statement, whether as
a result of new information, future events or otherwise. New factors
emerge from time to time, and it is not possible for Cactus to predict
all such factors. When considering these forward-looking statements, you
should keep in mind the risk factors and other cautionary statements in
the prospectus filed with the SEC in connection with Cactus’ IPO. The
risk factors and other factors noted in Cactus’ prospectus could cause
its actual results to differ materially from those contained in any
forward-looking statement.

(a) Cactus has historically not been subject to U.S. federal income tax
at an entity level.

Contacts

Cactus, Inc.
Stephen Tadlock, 713-396-5748
VP and Chief
Administrative Officer
[email protected]