Cactus, Inc. (NYSE: WHD) reported Q3 EPS of $0.52, $0.02 better than the analyst estimate of $0.50. Revenue for the quarter came in at $150.7 million versus the consensus estimate of $147.25 million.

• Increased revenues 8.7% from second quarter 2018 to $150.7 million, with growth in all business lines;
• Grew income from operations 12.1% sequentially to $52.1 million;
• Generated net income of $43.6 million and net income, as adjusted(1) of $39.2 million;
• Reported diluted earnings per Class A share of $0.52 and diluted earnings per share, as adjusted(1) of $0.52;
• Increased Adjusted EBITDA(2) and related margin(3) to $61.3 million and 40.7%, respectively, from $55.1 million and 39.8%, respectively, in the second quarter of 2018; and
• Generated cash flow from operations during the third quarter of 2018 of $41.6 million.

Scott Bender, President and CEO of Cactus, commented, “We continued to execute well in the third quarter, with sequential revenue growth across all of our business lines outpacing the U.S. onshore rig count growth and highlighting the differentiation of our products and the strength of our customer base. The continued expansion in margins reflects our ability to execute, our operating leverage, and our differentiated supply chain capabilities.

“Looking ahead to the fourth quarter of 2018, we expect our Product business to remain strong as we believe our market share will continue to grow. While our Rental business has performed well, customer budget constraints and completions delays are resulting in reduced demand for frac-related assets and associated Field Service. In addition, we expect to see typical fourth quarter seasonality. Overall, given the differing margin profiles of our business lines, the anticipated strength in our Product business is not expected to compensate for declining completions activity in the fourth quarter.

“We continue to make progress with the commercialization of our new completions innovations, which complement our existing rental offerings. Initial trials will commence in the fourth quarter, and we are excited about the opportunity for customer adoption to provide additional growth for our business in 2019.

“Regarding tariffs, the USTR finalized tariffs on $200 billion of Chinese imports during the quarter with an initial rate of 10% taking effect in late September. We believe that we have the appropriate strategies in place to neutralize this impact.”

Mr. Bender concluded, “We accelerated our capital spending during the third quarter with the completion of our roofline expansion at Bossier City and the acquisition of a large facility in New Mexico to serve the Delaware Basin. In addition, we are pulling spending forward in response to anticipated year-end tariff changes, and we are directing additional capital toward our new completions innovations before the end of this year. As a result, capital expenditures for 2018 are now expected to be in the range of $65 to $70 million, above our prior indication of $60 million.”

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