Cactus, Inc. Class A Common Stock · NYSE:WHD
Cactus, Inc. Class A Common Stock — Investor Presentation (August 2019)
27 slides from Cactus, Inc. Class A Common Stock's investor presentation, August 2019
Slide 1: Investor Presentation
Investor Presentation Cactus, Inc. (NYSE: WHD) August 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 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
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 Q2 2019 Revenue by Type Revenue ($ in millions) $617.9 $544.1 Q2 2019 Field $168.5 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 stacks
Slide 7: Market Leader with Strong Growth
Market Leader with Strong Growth Historical U.S. Onshore Market Share(1) 29.3% Cactus Rigs Followed 28.2% 27.0% (1) 26.6% Market Share 295 24.4% 275 276 21.5% 245 220 17.5% 179 14.4% 14.5% 158 129 119 119 100 99 9.8% 75 8.9% 68 7.0% 47 5.9% 4.3% 15 2.5% 0.8% Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14
Slide 8: Historical Margin Sustainability Through the Cycle
Historical Margin Sustainability Through the Cycle Historical Adjusted EBITDA Margins (2014 – 2018) (1)(2) Adjusted EBITDA Margin (2014 – 2018) (1)(2) 35% 34% 40% 30% 30% 25% 25% 23% 23% 20% 22% 20% 10% 16% 15% 15% 0% 12% 11% 10% (10%) 5% (20%) 2014 2015 2016 2017 2018 0% WHD Peer A Peer B Peer C Pe
Slide 9: Technologically Advanced Pad Drilling Wellhead Systems
Technologically Advanced Pad Drilling Wellhead Systems Conventional Wellhead SafeDrill® Advantages Safety Time Savings Fewer trips into Eliminates time confined space (cellar) consuming BOP manipulation No BOP manipulation after intermediate No waiting on cement casing has been after running
Slide 10: 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% DJ / Niobrara 64% 55% SCOOP / STACK 50% 39% 35% Delaware Barnett 22% 25% Legend Midland Haynesville
Slide 11: Small Expenditures Can Make Big Impact on Operators
Small Expenditures Can Make 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 amo
Slide 12: 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 ◼ Increasing market share ◼ Proprietary rental equ
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: New Innovations Strengthen Moat in Rental Business
New Innovations Strengthen Moat in Rental Business Complement & enhance existing rental offerings while operated by existing Cactus personnel ◼ Designed to significantly reduce non-productive time by increasing SafeClamp® reliability and automation SafeInjectTM ◼ Increases safety by removing personn
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 ◼ Facility has 16 5-axis computer numerically ◼ Cactus sources most of its less time-sensitive, hig
Slide 16: 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 25% of the business Scott Bender, CEO ▪ Track record of building and successfully monetizing similar businesses ▪ Strength of leadership is attested by mana
Slide 17: Well Established Relationships with High-Quality Customer Base
Well Established Relationships with High-Quality Customer Base 1H 2019 Total Revenue by Customer 1H 2019 Product Revenue by Customer 1H 2019 Rental Revenue by Customer Type Type Type Other Majors Other Majors Private Private 1% 10% 1% 2% 13% Private 17% Majors 20% 26% SMID E&P 11% SMID E&P 16% SMID
Slide 18: 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 – 2018) (%) (10.0%) 0.0% 10.0% 20.0% 30.0% 40.0% Source: Company filings and Factset. Note: Adj. EBITDA Margins as of 2Q 2019 for WHD, APY, DRQ, F
Slide 19: 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) ◼ June 30, 2019 cash balance of $131.1 million; no $171.0 borrowings on revolving credit facilit
Slide 20: Well Positioned in 2019 Following Strong First Half Results
Well Positioned in 2019 Following Strong First Half Results Second Quarter Performance ◼ Reported record revenue across all business lines ◼ Product market share reached all time high ◼ Customers’ completions activity showed continued strength from year-end 2018 lows ◼ Maintained attractive margins
Slide 21: Appendix
Appendix
Slide 22: Company Organizational Structure
Company Organizational Structure Company Profile Organizational Structure (1) Ticker WHD (NYSE) Class A Shares Outstanding (1) 47.1mm CW Unit Public Holders Investors Class B Shares Outstanding (1) 28.0mm Total Shares Outstanding (1) 75.1mm Class B Common Stock Class A Common Stock Market Capitaliza
Slide 23: Building a Leading Equipment Company
Building a Leading Equipment Company Management team has built the foundation of this company over four decades with a proven track record of success. Scott Bender CWE Merges with Ingram WGPC Sold to appointed Petroleum Services, forming GE Oil and Gas President of Ingram Cactus (2011) Cactus Cactus
Slide 24: Quarterly Financial Performance
Quarterly Financial Performance Adj. EBITDA(1) ($ in millions) & Adj. EBITDA(1) as % of Total Revenue ($ in millions) Revenue Sequential Quarters $168.5 $158.9 +6% +6% $62.7 $59.0 37.2% of 37.2% of Total Total Revenue Revenue Q1 2019 Q2 2019 Q1 2019 Q2 2019 Quarter-over-Quarter $168.5 +22% +14% $138
Slide 25: Cactus Equipment Positioned on a 4-Well Pad
Cactus Equipment Positioned on a 4-Well Pad 1 2 4 4 3 4 1 1 Product Sold 2 Equipment Rented 3 Equipment Rented 4 Services Provided Product Sold ▪ Wellheads are required ▪ Frac stacks are ▪ Zipper manifolds used ▪ Variety of equipment to ▪ Production trees (not by each well over connected to the duri
Slide 26: Non-GAAP Reconciliation
Non-GAAP Reconciliation LTM Year Ended Three Months Ended ($ in thousands) June 30, December 31, December 31, December 31, December 31, June 30, March 31, June 30, 2019 2018 2017 2016 2015 2019 2019 2018 Net income (loss) $171,527 $150,281 $66,547 ($8,176) $21,224 $40,750 $48,446 $41,542 Interest (i
Slide 27: Investor Relations Contact
Investor Relations Contact John Fitzgerald Director of Corporate Development & Investor Relations 713-904-4655 [email protected] 27