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Cactus (WHD) Stocks Dips 3.9% Since Q3 Earnings Meet Estimates
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Cactus, Inc.’s (WHD - Free Report) shares have declined 3.9% since the third-quarter 2021 earnings announcement on Nov 3. Increasing costs and expenses are holding the company back from reaching its potential profitability gains, which concerns investors.
Cactus reported third-quarter adjusted earnings of 19 cents per share, meeting the Zacks Consensus Estimate. The bottom line increased from the year-ago quarter’s 13 cents.
Total quarterly revenues of $115.4 million missed the Zacks Consensus Estimate of $117 million. However, the top line improved from the year-ago quarter’s $59.8 million.
The third-quarter results were driven by higher sales of wellhead and production-related equipment, backed by improved U.S. drilling activities. The positives were partially offset by higher costs and expenses.
Cactus’ board declared a quarterly cash dividend of 10 cents per share. The dividend will be paid out on Dec 16, 2021, to shareholders of record as of Nov 29, 2021. In the third quarter alone, it paid out $7.6 million through dividends.
Business Segments
From the Product business, Cactus generated revenues of $74.8 million, increasing from $35.9 million in the September-end quarter of 2020. Gross profit from the business unit was recorded at $25.1 million, up from the year-ago quarter’s $16 million. The segment was supported by higher U.S. drilling activity, which triggered sales of wellhead and production-related equipment. Also, production tree sales witnessed a jump in the quarter.
Cactus’s Rental revenues were recorded at $15.3 million, up from $9.9 million in the year-ago quarter. Gross income from the Rental unit increased to $2 million from the year-ago profit of $0.2 million. The segment was supported by higher customer completion activity and revenue generated in the Middle East.
From the Field Service and Other business segment, Cactus generated revenues of $25.3 million, up from $14.1 million in the year-ago quarter. Gross profit from the business unit was $5.8 million, up from the year-ago quarter’s $4.7 million. Higher client activities resulted in increased billable hours, thereby, boosting the segment.
Expenses
The cost of product revenues was recorded at $49.7 million, which jumped from $19.9 million in the year-ago quarter. Also, the cost of rental revenues was reported at $13.3 million, up from $9.6 million in the September-end quarter of 2020. The cost of field service and other revenues increased to $19.5 million from $9.3 million a year ago. As such, total expenses jumped to $94.6 million from the year-ago level of $47.2 million.
Capex and Cash Flow
Cactus’s third-quarter 2021 cash investment amount was recorded at $4.1 million. For the reported quarter, operating cash flow was $8.9 million.
Balance Sheet
At the third quarter-end, Cactus had cash and cash equivalents of $302 million, down sequentially from $309.1 million. It has no bank debt outstanding as of Sep 30, 2021.
Guidance
For 2021, Cactus reiterated capital spending of $10-$15 million. The company expects significant rig additions in the United States in fourth-quarter 2021 and early 2022. Additionally, the Zacks Rank #3 (Hold) company expects its Middle East operations to benefit from higher utilization of its rental equipment in the fourth quarter of 2021.
The coronavirus pandemic has been affecting Cactus’ overall business since the volatility of oil prices reduced drilling activities, which, in turn, dented the demand for the company’s pressure control equipment.
However, with the rising commodity pricing scenario and the rollout of coronavirus vaccines, the company’s business activities are expected to pick up.
Increased commodity prices created a favorable market scenario for upstream companies, which can lead to higher demand for Cactus’s equipment and services. In particular, upstream companies like Viper Energy Partners LP (VNOM - Free Report) , EOG Resources (EOG - Free Report) and EQT Corporation (EQT - Free Report) recently reported solid third-quarter earnings numbers due to high commodity prices. The growing energy demand will likely ensure increasing activities from these companies in the coming quarters. This will, in turn, boost the demand for Cactus’s services.
Viper Energy reported adjusted earnings per unit of 21 cents for the third quarter, beating the Zacks Consensus Estimate for earnings of 9 cents. The outperformance was backed by an increase in oil-equivalent production volumes and higher commodity price realizations. If the favorable scenario persists, the company’s drilling activities will likely witness an uprise.
Viper Energy declared a cash distribution of 38 cents per common unit, payable Nov 18, 2021, to shareholders of record as of Nov 11, 2021. The metric increased 15% from the prior-quarter figure of 33 cents per common unit. VNOM’s net cash from operating activities was recorded at $70 million, which rose from the year-ago figure of $27.3 million.
EOG Resources reported third-quarter 2021 adjusted earnings per share of $2.16, beating the Zacks Consensus Estimate of $2.01. The strong earnings were driven by increased production volumes and higher realization of commodity prices.
The company announced a quarterly dividend of 75 cents per share, indicating an 82% increase from the previous level. The dividend will be paid out on Jan 28, 2022, to shareholders of record as of Jan 14, 2022. EOG also declared a special dividend of $2 per share. Moreover, its board of directors updated its share repurchase authorization to $5 billion.
EQT Corp reported adjusted earnings from continuing operations of 12 cents per share, beating the Zacks Consensus Estimate of a loss of 5 cents. Increased production volumes and prices aided the company’s bottom line.
EQT Corp’s adjusted operating cash flow was $396.1 million for the quarter, up from $294.7 million a year ago. Free cash flow for the third quarter was $99.1 million against the year-ago free cash outflow of $46.7 million.
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Cactus (WHD) Stocks Dips 3.9% Since Q3 Earnings Meet Estimates
Cactus, Inc.’s (WHD - Free Report) shares have declined 3.9% since the third-quarter 2021 earnings announcement on Nov 3. Increasing costs and expenses are holding the company back from reaching its potential profitability gains, which concerns investors.
Cactus reported third-quarter adjusted earnings of 19 cents per share, meeting the Zacks Consensus Estimate. The bottom line increased from the year-ago quarter’s 13 cents.
Total quarterly revenues of $115.4 million missed the Zacks Consensus Estimate of $117 million. However, the top line improved from the year-ago quarter’s $59.8 million.
The third-quarter results were driven by higher sales of wellhead and production-related equipment, backed by improved U.S. drilling activities. The positives were partially offset by higher costs and expenses.
Cactus, Inc. Price, Consensus and EPS Surprise
Cactus, Inc. price-consensus-eps-surprise-chart | Cactus, Inc. Quote
Dividend
Cactus’ board declared a quarterly cash dividend of 10 cents per share. The dividend will be paid out on Dec 16, 2021, to shareholders of record as of Nov 29, 2021. In the third quarter alone, it paid out $7.6 million through dividends.
Business Segments
From the Product business, Cactus generated revenues of $74.8 million, increasing from $35.9 million in the September-end quarter of 2020. Gross profit from the business unit was recorded at $25.1 million, up from the year-ago quarter’s $16 million. The segment was supported by higher U.S. drilling activity, which triggered sales of wellhead and production-related equipment. Also, production tree sales witnessed a jump in the quarter.
Cactus’s Rental revenues were recorded at $15.3 million, up from $9.9 million in the year-ago quarter. Gross income from the Rental unit increased to $2 million from the year-ago profit of $0.2 million. The segment was supported by higher customer completion activity and revenue generated in the Middle East.
From the Field Service and Other business segment, Cactus generated revenues of $25.3 million, up from $14.1 million in the year-ago quarter. Gross profit from the business unit was $5.8 million, up from the year-ago quarter’s $4.7 million. Higher client activities resulted in increased billable hours, thereby, boosting the segment.
Expenses
The cost of product revenues was recorded at $49.7 million, which jumped from $19.9 million in the year-ago quarter. Also, the cost of rental revenues was reported at $13.3 million, up from $9.6 million in the September-end quarter of 2020. The cost of field service and other revenues increased to $19.5 million from $9.3 million a year ago. As such, total expenses jumped to $94.6 million from the year-ago level of $47.2 million.
Capex and Cash Flow
Cactus’s third-quarter 2021 cash investment amount was recorded at $4.1 million. For the reported quarter, operating cash flow was $8.9 million.
Balance Sheet
At the third quarter-end, Cactus had cash and cash equivalents of $302 million, down sequentially from $309.1 million. It has no bank debt outstanding as of Sep 30, 2021.
Guidance
For 2021, Cactus reiterated capital spending of $10-$15 million. The company expects significant rig additions in the United States in fourth-quarter 2021 and early 2022. Additionally, the Zacks Rank #3 (Hold) company expects its Middle East operations to benefit from higher utilization of its rental equipment in the fourth quarter of 2021.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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The coronavirus pandemic has been affecting Cactus’ overall business since the volatility of oil prices reduced drilling activities, which, in turn, dented the demand for the company’s pressure control equipment.
However, with the rising commodity pricing scenario and the rollout of coronavirus vaccines, the company’s business activities are expected to pick up.
Increased commodity prices created a favorable market scenario for upstream companies, which can lead to higher demand for Cactus’s equipment and services. In particular, upstream companies like Viper Energy Partners LP (VNOM - Free Report) , EOG Resources (EOG - Free Report) and EQT Corporation (EQT - Free Report) recently reported solid third-quarter earnings numbers due to high commodity prices. The growing energy demand will likely ensure increasing activities from these companies in the coming quarters. This will, in turn, boost the demand for Cactus’s services.
Viper Energy reported adjusted earnings per unit of 21 cents for the third quarter, beating the Zacks Consensus Estimate for earnings of 9 cents. The outperformance was backed by an increase in oil-equivalent production volumes and higher commodity price realizations. If the favorable scenario persists, the company’s drilling activities will likely witness an uprise.
Viper Energy declared a cash distribution of 38 cents per common unit, payable Nov 18, 2021, to shareholders of record as of Nov 11, 2021. The metric increased 15% from the prior-quarter figure of 33 cents per common unit. VNOM’s net cash from operating activities was recorded at $70 million, which rose from the year-ago figure of $27.3 million.
EOG Resources reported third-quarter 2021 adjusted earnings per share of $2.16, beating the Zacks Consensus Estimate of $2.01. The strong earnings were driven by increased production volumes and higher realization of commodity prices.
The company announced a quarterly dividend of 75 cents per share, indicating an 82% increase from the previous level. The dividend will be paid out on Jan 28, 2022, to shareholders of record as of Jan 14, 2022. EOG also declared a special dividend of $2 per share. Moreover, its board of directors updated its share repurchase authorization to $5 billion.
EQT Corp reported adjusted earnings from continuing operations of 12 cents per share, beating the Zacks Consensus Estimate of a loss of 5 cents. Increased production volumes and prices aided the company’s bottom line.
EQT Corp’s adjusted operating cash flow was $396.1 million for the quarter, up from $294.7 million a year ago. Free cash flow for the third quarter was $99.1 million against the year-ago free cash outflow of $46.7 million.