# Cactus, Inc. (WHD) Informational only - not investment advice. CIK: 0001699136 SIC: 3533 Oil & Gas Field Machinery & Equipment SIC breadcrumb: [Manufacturing](/division/D/) > [Industrial And Commercial Machinery And Computer Equipment](/major-group/35/) > [SIC 3533 Oil & Gas Field Machinery & Equipment](/industry/3533/) Latest 10-K filed: 2026-02-26 SEC page: https://www.sec.gov/edgar/browse/?CIK=1699136 Filing source: https://www.sec.gov/Archives/edgar/data/1699136/000162828026012377/whd-20251231.htm ## Selected Fundamentals | Metric | Value | Unit | FY | Filed | | --- | ---: | --- | ---: | --- | | Revenue | 1079051000 | USD | 2025 | 2026-02-26 | | Net income | 166014000 | USD | 2025 | 2026-02-26 | | Assets | 1871617000 | USD | 2025 | 2026-02-26 | ## Financials Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-02-26. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001699136.json. Derived margins are computed from the extracted annual SEC facts. | Metric | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | | --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | | Revenue | | 341,191,000 | 544,135,000 | 628,414,000 | 348,566,000 | 438,589,000 | 688,369,000 | 1,096,960,000 | 1,129,814,000 | 1,079,051,000 | | Net income | | | 51,683,000 | 85,612,000 | 34,446,000 | 49,593,000 | 110,174,000 | 169,171,000 | 185,407,000 | 166,014,000 | | Operating income | 10,615,000 | 88,863,000 | 177,701,000 | 183,150,000 | 70,039,000 | 75,427,000 | 174,748,000 | 264,366,000 | 289,613,000 | 250,501,000 | | Assets | | 266,456,000 | 584,744,000 | 834,964,000 | 815,594,000 | 982,078,000 | 1,118,896,000 | 1,522,561,000 | 1,739,328,000 | 1,871,617,000 | | Liabilities | | 302,673,000 | 222,416,000 | 318,569,000 | 264,824,000 | 387,045,000 | 408,451,000 | 457,791,000 | 475,149,000 | 438,569,000 | | Stockholders' equity | | -36,217,000 | 177,658,000 | 327,466,000 | 352,970,000 | 468,644,000 | 571,917,000 | 865,522,000 | 1,071,117,000 | 1,226,390,000 | | Cash and cash equivalents | | 7,574,000 | 70,841,000 | 202,603,000 | 288,659,000 | 301,669,000 | 344,527,000 | 133,792,000 | 342,843,000 | 123,571,000 | | Net margin | | | 9.50% | 13.62% | 9.88% | 11.31% | 16.01% | 15.42% | 16.41% | 15.39% | | Operating margin | | 26.04% | 32.66% | 29.14% | 20.09% | 17.20% | 25.39% | 24.10% | 25.63% | 23.21% | ## Quarterly Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-08. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001699136.json. Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived. | Quarter | End date | Revenue | Net income | Diluted EPS | Method | | --- | --- | ---: | ---: | ---: | --- | | 2018-Q1 | 2018-03-31 | | | 0.14 | reported discrete quarter | | 2018-Q2 | 2018-06-30 | | | 0.46 | reported discrete quarter | | 2018-Q3 | 2018-09-30 | | | 0.52 | reported discrete quarter | | 2019-Q1 | 2019-03-31 | | | 0.59 | reported discrete quarter | | 2020-Q2 | 2020-06-30 | | | 0.11 | reported discrete quarter | | 2020-Q3 | 2020-09-30 | | | 0.13 | reported discrete quarter | | 2021-Q1 | 2021-03-31 | | | 0.19 | reported discrete quarter | | 2023-Q2 | 2023-06-30 | 305,819,000 | 24,750,000 | | reported discrete quarter | | 2023-Q3 | 2023-09-30 | 287,870,000 | 52,580,000 | | reported discrete quarter | | 2023-Q4 | 2023-12-31 | 274,866,000 | 48,947,000 | | derived Q4 = FY annual - nine-month YTD | | 2024-Q1 | 2024-03-31 | 274,123,000 | 38,965,000 | | reported discrete quarter | | 2024-Q2 | 2024-06-30 | 290,389,000 | 49,828,000 | | reported discrete quarter | | 2024-Q3 | 2024-09-30 | 293,181,000 | 49,927,000 | | reported discrete quarter | | 2024-Q4 | 2024-12-31 | 272,121,000 | 46,687,000 | | derived Q4 = FY annual - nine-month YTD | | 2025-Q1 | 2025-03-31 | 280,319,000 | 44,223,000 | | reported discrete quarter | | 2025-Q2 | 2025-06-30 | 273,575,000 | 40,329,000 | | reported discrete quarter | | 2025-Q3 | 2025-09-30 | 263,954,000 | 41,624,000 | | reported discrete quarter | | 2025-Q4 | 2025-12-31 | 261,203,000 | 39,838,000 | | derived Q4 = FY annual - nine-month YTD | | 2026-Q1 | 2026-03-31 | 388,349,000 | 32,906,000 | | reported discrete quarter | ## Macro Cross-References - [CPIAUCSL](/indicator/CPIAUCSL/): Consumer Price Index for All Urban Consumers: All Items in U.S. City Average - [UNRATE](/indicator/UNRATE/): Unemployment Rate - [FEDFUNDS](/indicator/FEDFUNDS/): Federal Funds Effective Rate - [CES0500000003](/indicator/CES0500000003/): Average Hourly Earnings of All Employees, Total Private - [DFEDTARU](/indicator/DFEDTARU/): Federal Funds Target Range - Upper Limit - [DFEDTARL](/indicator/DFEDTARL/): Federal Funds Target Range - Lower Limit - [DGS3MO](/indicator/DGS3MO/): Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity - [DGS2](/indicator/DGS2/): Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity - [DGS10](/indicator/DGS10/): Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity - [DGS30](/indicator/DGS30/): Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity - [T10Y2Y](/indicator/T10Y2Y/): 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity - [CPILFESL](/indicator/CPILFESL/): Consumer Price Index for All Urban Consumers: All Items Less Food and Energy - [CPIUFDSL](/indicator/CPIUFDSL/): Consumer Price Index for All Urban Consumers: Food - [CPIENGSL](/indicator/CPIENGSL/): Consumer Price Index for All Urban Consumers: Energy - [CUSR0000SAH1](/indicator/CUSR0000SAH1/): Consumer Price Index for All Urban Consumers: Shelter - [PCEPI](/indicator/PCEPI/): Personal Consumption Expenditures: Chain-type Price Index - [PCEPILFE](/indicator/PCEPILFE/): Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index - [PPIACO](/indicator/PPIACO/): Producer Price Index by Commodity: All Commodities - [T10YIE](/indicator/T10YIE/): 10-Year Breakeven Inflation Rate - [U6RATE](/indicator/U6RATE/): Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons - [PAYEMS](/indicator/PAYEMS/): All Employees, Total Nonfarm - [CIVPART](/indicator/CIVPART/): Labor Force Participation Rate - [EMRATIO](/indicator/EMRATIO/): Employment-Population Ratio - [UNEMPLOY](/indicator/UNEMPLOY/): Unemployed - [CE16OV](/indicator/CE16OV/): Employment Level - [ICSA](/indicator/ICSA/): Initial Claims - [JTSJOL](/indicator/JTSJOL/): Job Openings: Total Nonfarm - [JTSQUR](/indicator/JTSQUR/): Quits: Total Nonfarm - [GDPC1](/indicator/GDPC1/): Real Gross Domestic Product - [A191RL1Q225SBEA](/indicator/A191RL1Q225SBEA/): Real Gross Domestic Product: Percent Change from Preceding Period - [INDPRO](/indicator/INDPRO/): Industrial Production: Total Index - [TCU](/indicator/TCU/): Capacity Utilization: Total Index - [HOUST](/indicator/HOUST/): New Privately-Owned Housing Units Started: Total Units - [PERMIT](/indicator/PERMIT/): New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units - [RSAFS](/indicator/RSAFS/): Advance Retail Sales: Retail Trade - [PCE](/indicator/PCE/): Personal Consumption Expenditures - [DSPIC96](/indicator/DSPIC96/): Real Disposable Personal Income - [PSAVERT](/indicator/PSAVERT/): Personal Saving Rate - [M2SL](/indicator/M2SL/): M2 - [BOPGSTB](/indicator/BOPGSTB/): U.S. International Trade in Goods and Services: Balance - [MSPUS](/indicator/MSPUS/): Median Sales Price of Houses Sold for the United States - [HSN1F](/indicator/HSN1F/): New One Family Houses Sold: United States - [RHORUSQ156N](/indicator/RHORUSQ156N/): Homeownership Rate in the United States - [TTLCONS](/indicator/TTLCONS/): Total Construction Spending: Total Construction in the United States - [RRVRUSQ156N](/indicator/RRVRUSQ156N/): Rental Vacancy Rate in the United States - [TOTALSL](/indicator/TOTALSL/): Total Consumer Credit Owned and Securitized - [REVOLSL](/indicator/REVOLSL/): Revolving Consumer Credit Owned and Securitized - [DRCCLACBS](/indicator/DRCCLACBS/): Delinquency Rate on Credit Card Loans, All Commercial Banks - [GDP](/indicator/GDP/): Gross Domestic Product - [GPDI](/indicator/GPDI/): Gross Private Domestic Investment - [GCE](/indicator/GCE/): Government Consumption Expenditures and Gross Investment - [PCEC](/indicator/PCEC/): Personal Consumption Expenditures - [NETEXP](/indicator/NETEXP/): Net Exports of Goods and Services - [GFDEBTN](/indicator/GFDEBTN/): Federal Debt: Total Public Debt - [GFDEGDQ188S](/indicator/GFDEGDQ188S/): Federal Debt: Total Public Debt as Percent of Gross Domestic Product - [FYFSD](/indicator/FYFSD/): Federal Surplus or Deficit - [FGRECPT](/indicator/FGRECPT/): Federal Government Current Receipts - [FGEXPND](/indicator/FGEXPND/): Federal Government: Current Expenditures - [MANEMP](/indicator/MANEMP/): All Employees, Manufacturing - [USCONS](/indicator/USCONS/): All Employees, Construction - [USTRADE](/indicator/USTRADE/): All Employees, Retail Trade - [USFIRE](/indicator/USFIRE/): All Employees, Financial Activities - [USGOVT](/indicator/USGOVT/): All Employees, Government - [AWHAETP](/indicator/AWHAETP/): Average Weekly Hours of All Employees, Total Private - [DGORDER](/indicator/DGORDER/): Manufacturers' New Orders: Durable Goods - [NEWORDER](/indicator/NEWORDER/): Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft - [BUSINV](/indicator/BUSINV/): Total Business Inventories - [EXPGS](/indicator/EXPGS/): Exports of Goods and Services - [IMPGS](/indicator/IMPGS/): Imports of Goods and Services - [IR](/indicator/IR/): Import Price Index (End Use): All Commodities - [PPIFIS](/indicator/PPIFIS/): Producer Price Index by Commodity: Final Demand ## Latest quarter (10-Q) Latest 10-Q source: https://www.sec.gov/Archives/edgar/data/1699136/000162828026032636/whd-20260331.htm Extracted between Part I Item 2 and the next Item 3/4 or Part II heading after HTML sanitization. Confidence: high Filing date: 2026-05-08 Report date: 2026-03-31 Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations. Except as otherwise indicated or required by the context, all references in this Quarterly Report to the “Company,” “Cactus,” “we,” “us” and “our” refer to Cactus, Inc. (“Cactus Inc.”) and its consolidated subsidiaries. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and related notes. The following discussion contains “forward-looking statements” that reflect our plans, estimates, beliefs and expected performance. Our actual results may differ materially from those anticipated as discussed in these forward-looking statements as a result of a variety of risks and uncertainties, which are difficult to predict, including those described above in “Cautionary Note Regarding Forward-Looking Statements,” and in the risk factors included in “Part I, Item 1A. Risk Factors” in this Quarterly Report. In light of these risks, uncertainties and assumptions, the forward-looking events discussed may not occur. We assume no obligation to update any of these forward-looking statements except as otherwise required by law. Executive Summary Cactus is an equipment solutions provider primarily for onshore oil and gas markets. Cactus was founded in 2011 by a management group that previously operated two of the largest wellhead providers at the time. Since its formation, Cactus has rapidly grown to be a leading provider of wellhead solutions to the U.S. onshore market. With the acquisition of Cactus International, Cactus is now a global wellhead supplier. On February 28, 2023, Cactus acquired FlexSteel, which grew from its founding in 2003 to its current status as a leading provider of spoolable pipe technologies, primarily to the U.S. onshore market. We believe this acquisition enhanced our position as a premier manufacturer and provider of highly engineered equipment to the exploration and production ("E&P") industry and has provided opportunities for meaningful growth. FlexSteel’s spoolable technology products complement Cactus’ pressure control equipment, and the combined business allows for exposure to customers operations from production trees to transportation of oil, gas and other liquids, as well as to additional customers operating in the midstream area. Demand for our products and services depends primarily upon oil and gas industry activity levels, including the number of active drilling rigs, the number of wells being drilled, the number of wells being completed, and the volume of newly producing wells, among other factors. Revenues Our revenues are derived from three sources: products, rentals, and field service and other. Product revenues are derived from the sale of wellhead systems, production trees and spoolable pipe and fittings. Rental revenues are derived from the rental of equipment used during the completion process, the repair of such equipment, and the rental of equipment or tools used to install wellhead equipment or spoolable pipe. Field service and other revenues are earned when we provide installation and other field services for both product sales and equipment rental. During the three months ended March 31, 2026, we derived 77% of total revenues from the sale of our products, 4% of total revenues from rental and 19% of total revenues from field service and other. During the three months ended March 31, 2025, we derived 74% of total revenues from the sale of our products, 10% of total revenues from rental and 16% of total revenues from field service and other. We have worldwide operations, including the U.S., Saudi Arabia, UAE, and China, with more limited operations in Australia and Canada, as well as sales in other international markets. We operate in two business segments consisting of the Pressure Control segment and the Spoolable Technologies segment. Pressure Control The Pressure Control segment designs, manufactures, sells and rents a range of wellhead and pressure control equipment under the Cactus Wellhead brand. Products are sold and rented principally for onshore conventional and unconventional oil and gas wells, and are utilized during the drilling, completion and production phases of our customers’ wells. In addition, we provide field services for all of our products and rental items to assist with the installation, maintenance and handling of the equipment. We operate through service centers in the United States, which are strategically located in the key oil and gas producing regions. These service centers support our field services and provide equipment assembly and repair services. We also provide rental and service operations in the Kingdom of Saudi Arabia and Australia. Pressure Control manufacturing and production facilities are located in Bossier City, Louisiana, Suzhou, China, Saudi Arabia, Abu Dhabi, and Hai Duong,Vietnam. 16 Demand for our product sales in the Pressure Control segment is driven primarily by the number of new wells drilled, as each new well requires a wellhead and, after the completion phase, a production tree. Demand for our rental items is driven primarily by well completions as we rent frac trees to oil and gas operators to assist in hydraulic fracturing. Rental demand is also driven to a lesser extent by drilling activity as we rent tools used in the installation of wellheads. Field service and other revenues are closely correlated with revenues from product sales and rentals, as items sold or rented almost always have an associated service component. Spoolable Technologies The Spoolable Technologies segment designs, manufactures, and sells spoolable pipe and associated end fittings under the FlexSteel brand. Our customers use these products primarily as production, gathering, and takeaway pipelines to transport oil, gas or other liquids. In addition, we also provide field services and rental items to assist our customers with the installation of these products. We support our field service operations through service centers and pipe yards located in oil and gas regions throughout the United States and Western Canada. Our manufacturing facility is located in Baytown, Texas. Demand for our product sales in the Spoolable Technologies segment is driven primarily by the number of wells being placed into production after the completions phase, as customers use our spoolable pipe and associated fittings to bring wells more rapidly onto production. Rental and field service and other revenues are closely correlated with revenues from product sales, as items sold usually have an associated rental and service component. Recent Developments and Trends Oil and Natural Gas Prices The following table summarizes average oil and natural gas prices over the indicated periods, as well as industry activity levels as reflected by the average number of active onshore drilling rigs during the same periods. Three Months Ended March 31, 2026 December 31, 2025 March 31, 2025 Brent Oil Price ($/bbl) (1) $ 80.72  $ 63.65  $ 75.87  WTI Oil Price ($/bbl) (2) $ 72.74  $ 59.62  $ 71.78  Natural Gas Price ($/MMBtu) (3) $ 4.71  $ 3.73  $ 4.14  U.S. Land Drilling Rigs (4) 530 527 572 International Land Drilling Rigs (4) 841 833 847 (1) EIA Europe Brent spot price. (2) EIA Cushing, OK West Texas Intermediate ("WTI") spot price. (3) EIA Henry Hub Natural Gas spot price per million British Thermal Unit (“MMBtu”). (4) Based on data made publicly available by Baker Hughes Company. The Company’s operating results continue to be impacted by conditions in the oil and gas industry, which are driven by global commodity prices, drilling and completion activity levels, and supply and demand dynamics. Average WTI oil prices increased approximately 22% in the first quarter of 2026, as the outbreak of the conflict in Iran and associated supply disruption drove rapid price increases in March. WTI began the year on January 2 at $57.21 and closed March 31 at $102.86, an increase of approximately 80%. Brent oil prices similarly increased approximately 27% on average in the first quarter from the fourth quarter. Oil price levels remain elevated as geopolitical tensions continue in the Middle East, and the continued export of oil through the Strait of Hormuz remains uncertain. Average natural gas prices increased approximately 26% in the first quarter, largely due to a winter storm in the U.S. leading to elevated prices and low storage levels in January. Storage levels have since recovered to near five-year average levels and prices have moderated. In the first quarter of 2026, average U.S. land drilling activity levels were relatively flat compared to the fourth quarter of 2025, as customers generally continued stable drilling programs despite elevated commodity prices reflecting E&P capital discipline. International land drilling levels increased approximately 1% from the fourth quarter of 2025, led by increased activity in the Middle East and Latin America, offset by declines in Asia. 17 U.S. Trade Policies Over the course of 2025 and 2026, the Trump administration implemented and announced a number of new tariffs, including new Section 232 tariffs of 50% on imports of steel and certain products made from steel from most countries outside of the U.S. Threats and actual implementation of tariffs continue to cause market and geopolitical uncertainty. Tariff announcements and implementation have caused global equity, bond, and currency markets to experience heightened levels of volatility as market participants incorporate potential effects of supply chain disruption, inflation, and consumer demand into pricing models. In February 2026, the United States Supreme Court ruled that certain tariffs were unlawful, resulting in the implementation of alternative tariffs under Section 122 and further market uncertainty. As a result of the Supreme Court ruling, we have filed a claim for certain tariff refunds and are monitoring the situation closely, but there is no guarantee that any claim will be honored. The refunds being pursued represent a limited component of the overall tariff impact incurred by the Company as the most material tariff incurred by the Company under Section 232 remains unchanged. We are incurring, and expect to continue to incur, elevated tariff expenses on our goods imported from Vietnam and China, and experience generally higher steel input costs at our Bossier City manufacturing facility as a result of the broad Section 232 tariffs. Both tariffs and higher steel input costs have impacted profitability, although the impact has been partially mitigated by cost reduction and recovery efforts. Conflict in Iran The outbreak of the conflict between the United States, Israel, and Iran in February has significantly disrupted global oil supply. Our operations in the region have been adversely impacted, and we continue to prioritize the safety of personnel in the region. We have experienced and expect to continue to experience significant disruptions to our operations, our customers’ drilling activities, and our supply chain along with increased freight costs due to the conflict, and particularly the impediment of traffic through the Strait of Hormuz. Continued conflict in the region may lead to reduced revenues and profits and increased costs from our business in the region. Pillar Two Framework The Organization for Economic Cooperation and Development (“OECD”) has introduced a framework (“Pillar Two”) that provides for a new, global minimum tax of at least 15% on the income of large multinational corporations arising in each jurisdiction in which they operate. Pillar Two is being implemented on a country-by-country basis, and many countries have adopted rules in this regard. The United States has raised concerns regarding Pillar Two and has set out a propos [Excerpt truncated for page length; source filing is linked above.] ## Latest 10-K MD&A Extracted between Item 7 and the next Item 7A/8 heading after HTML sanitization. Confidence: high Item 7.    Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying consolidated financial statements and related notes. The following discussion contains “forward-looking statements” that reflect our plans, estimates, beliefs and expected performance. Our actual results may differ materially from those anticipated as discussed in these forward-looking statements as a result of a variety of risks and uncertainties, including those described in “Cautionary Statement Regarding Forward-Looking Statements” and “Item 1A. Risk Factors” included elsewhere in this Annual Report, all of which are difficult to predict. In light of these risks, uncertainties and assumptions, the forward-looking events discussed may not occur. We assume no obligation to update any of these forward-looking statements except as otherwise required by law. Market Factors See “Item 1. Business” for information on our products and business. Demand for our products and services depends primarily upon oil and gas industry activity levels, including the number of active drilling rigs, the number of wells being drilled, the number of wells being completed and the volume of newly producing wells, among other factors. Oil and gas E&P activity is in turn heavily influenced by, among other factors, investor sentiment, availability of capital and oil and gas prices locally and worldwide, which have historically been volatile. Revenues generated by our Pressure Control and Spoolable Technologies operating segments are derived from three sources: products, rentals, and field service and other. Product revenues are derived from the sale of wellhead systems, production trees and spoolable pipe and fittings. Rental revenues are primarily derived from the rental of equipment used during the completion process, the repair of such equipment and the rental of equipment or tools used to install wellhead equipment or spoolable pipe. Field service and other revenues are primarily earned when we provide installation and other field services for both product sales and equipment rental. Pressure Control The Pressure Control segment designs, manufactures, sells and rents a range of wellhead and pressure control equipment under the Cactus Wellhead brand. Products are sold and rented principally for onshore unconventional oil and gas wells and are utilized during the drilling, completion and production phases of our customers’ wells. In addition, we provide field services for all of our products and rental items to assist with the installation, maintenance and handling of the equipment. We operate through service centers in the United States, which are strategically located in the key oil and gas producing regions, and in Eastern Australia. These service centers support our field services and provide equipment assembly and repair services. We also provide rental and service operations in the Middle East. Pressure Control manufacturing and production facilities are located in Bossier City, Louisiana, Suzhou, China and Hai Duong, Vietnam. Demand for our product sales in the Pressure Control segment are driven primarily by the number of new wells drilled, as each new well requires a wellhead and, after the completion phase, a production tree. Demand for our rental items is driven primarily by the number of well completions as we rent frac trees to oil and gas operators to assist in hydraulic fracturing. Rental demand is also driven by drilling activity as we rent tools used in the installation of wellheads. Field service and other revenues are closely correlated with revenues from product sales and rentals, as items sold or rented almost always have an associated service component. Spoolable Technologies The Spoolable Technologies segment designs, manufactures and sells spoolable pipe and associated end fittings under the FlexSteel brand. Our customers use these products primarily as production, gathering and takeaway pipelines to transport oil, gas or other liquids. In addition, we also provide field services and rental items to assist our customers with the installation of these products. We support our field service operations through service centers and pipe yards located in oil and gas producing regions throughout the United States and Western Canada. Our manufacturing facility is located in Baytown, Texas. Demand for our product sales in the Spoolable Technologies segment are driven primarily by the number of wells being placed into production after the completions phase as customers use our spoolable pipe and associated fittings to bring wells more rapidly onto production. Rental and field service and other revenues are closely correlated with revenues from product sales, as items sold usually have an associated rental and service component. 28 Table of Contents Seasonality Our business experiences some seasonality during the fourth quarter due to holidays and customers managing their cash balances as the year closes out. These activities can lead to lower demand in our three revenue categories as well as lower margins, particularly in field services due to lower labor utilization. Recent Developments and Trends Oil and Natural Gas Prices The following table summarizes average oil and natural gas prices in North America over the indicated periods as well as industry activity levels as reflected by the average number of active onshore drilling rigs during the same periods. Year Ended December 31, 2025 2024 2023 WTI Oil Price ($/bbl) (1) $ 65.39  $ 76.63  $ 77.58  Natural Gas Price ($/MMBtu) (2) $ 3.52  $ 2.19  $ 2.53  U.S. Land Drilling Rigs (3) 545 580 667 (1) U.S. Energy Information Administration (“EIA”) Cushing, OK WTI (“West Texas Intermediate”) spot price per barrel of crude oil. (2) EIA Henry Hub Natural Gas spot price per million British Thermal Unit (“MMBtu”). (3) Based on Baker Hughes rig count information. Broad economic uncertainty, geopolitical uncertainty, and robust supply of crude oil relative to demand resulted in lower oil prices and U.S. drilling activity levels in 2025. Onshore U.S. drilling activity levels declined through the first half of 2025, resulting in the average number of U.S. land drilling rigs for 2025 to be 6% below 2024 levels. Average oil prices were down 15% from 2024 average levels. Conversely, optimism regarding the medium-to-long term outlook for natural gas demand strengthened as energy demands from artificial intelligence-associated infrastructure build out increased. Henry Hub natural gas prices increased approximately 61% in 2025 from 2024 with prices averaging $3.52 per MMBtu in 2025 compared to $2.19 per MMBtu in 2024. Natural gas-directed drilling activity favorably impacted industry activity levels, but not enough to offset weakness in oil-directed drilling activity. Ongoing conflicts in Ukraine and the Middle East have had global repercussions on commodity prices and have resulted in increased market uncertainty and volatile equity and commodity pricing. U.S. Trade Policies Over the course of 2025, the Trump administration has implemented and announced a number of new tariffs, including new Section 232 tariffs of 50% on imports of steel and certain products made from steel from most countries outside of the U.S., and Synthetic Opioid tariffs on all imports from China. Threats and actual implementation of tariffs continue to cause much market and geopolitical uncertainty, as evidenced by the recently announced and then rescinded imposition of tariffs by the U.S. on imports from NATO allies opposed to U.S. intervention in Greenland. Tariff announcements have resulted in global equity, bond, and currency markets to experience heightened levels of volatility as market participants incorporate potential effects of supply chain disruption, inflation, and consumer demand into pricing models. We are incurring, and expect to continue to incur, elevated tariff expenses on our goods imported from Vietnam and China, and experience generally higher steel input costs at our Bossier City manufacturing facility as a result of the broad Section 232 tariffs. Both tariffs and higher steel input costs have impacted profitability, although the impact has been partially mitigated by cost reduction efforts and increased pricing. The weaker oil demand and increased supply outlook and associated decline in commodity pricing has led and is likely to continue to lead to lower U.S. land drilling and completion activity levels in 2026 and correspondingly may reduce domestic demand for our products and services. 29 Table of Contents Pillar Two Framework The Organization for Economic Cooperation and Development (“OECD”) has introduced a framework (“Pillar Two”) that provides for a new, global minimum tax of at least 15% on the income of large multinational corporations arising in each jurisdiction in which they operate. Pillar Two is being implemented on a country-by-country basis, and many countries have adopted rules in this regard. The United States has raised concerns regarding Pillar Two and has set out a proposed “side-by-side” solution under which U.S. parented groups (such as the Company) would be exempted from certain minimum taxes under Pillar Two in recognition of the existing U.S. minimum tax rules to which they are subject. On June 28, 2025, the Group of Seven issued a statement indicating that they agree that a side-by-side solution could preserve gains made by jurisdictions in tackling base erosion and profit shifting and provide clarity and stability in the international tax landscape. However, none of the OECD member states that have adopted Pillar Two have enacted rules necessary to implement the side-by-side solution. The Company continues to evaluate the impact of both Pillar Two and the proposed side-by-side solution and estimates the impacts to income tax expense to be immaterial. 2025 Tax Legislation On July 4, 2025, tax legislation colloquially known as the One Big Beautiful Bill Act (“OBBBA”) was enacted. The OBBBA includes tax provisions such as the reinstatement of immediate deductibility of certain capital expenditures for tangible, depreciable personal property of domestic research and development expenditures. These provisions have the effect of accelerating tax deductions which, in turn, will reduce current tax expense with an offset to deferred tax expense. The Company continues to evaluate the impacts of this legislation but anticipates the impact to total income tax expense will be immaterial. Consolidated Results of Operations The following discussions relating to significant line items from our condensed consolidated statements of income are based on available information and represent our analysis of significant changes or events that impact the comparability of reported amounts. Where appropriate, we have identified specific events and changes that affect comparability or trends and, where reasonably practicable, have quantified the impact of such items. We have two operating segments consisting of the Pressure Control segment and the Spoolable Technologies segment. Our results of operations are evaluated by the Chief Executive Officer on a consolidated basis as well as at the segment level. The performance of our operating segments is primarily evaluated based on segment operating income (in addition to other measures), which is defined as income before taxes and before interest income (expense), net, other income (expense), net and corporate and other expenses not allocated to the operating segments. 30 Table of Contents Year Ended December 31, 2025 Compared to Year Ended December 31, 2024 The following table presents summary consolidated operating results for the periods indicated:  Year Ended December 31, 2025 2024 $ Change % Change (in thousands) Revenues Pressure Control $ 717,191  $ 724,038  $ (6,847) (0.9)% Spoolable Technologies 368,245  407,038  (38,793) (9.5) Corporate and other (6,385) (1,262) (5,123) nm Total revenues 1,079,051  1,129,814  (50,763) (4.5) Operating income Pressure Control 189,861  210,710  (20,849) (9.9) Spoolable Technologies 98,660  104,864  (6,204) (5.9) Total segment operating income 288,521  315,574  (27,053) (8.6) Corporate and other expenses (38,020) (25,961) (12,059) 46.5 Total operating income 250,501  289,613  (39,112) (13.5) Interest income, net 10,962  6,459  4,503  69.7 Other (expense) income, net (794) 3,204  (3,998) nm Income before income taxes 260,669  299,276  (38,607) (12.9) Income tax expense 59,027  66,518  (7,491) (11.3) Net income $ 201,642  $ 232,758  $ (31,116) (13.4) Less: net income attributable to non-controlling interest 35,628  47,351  (11,723) (24.8) Net income attributable to Cactus Inc. $ 166,014  $ 185,407  $ (19,393) (10.5)% nm = not meaningful  Pressure Control. Pressure Control revenue was $717.2 million for 2025, a decrease of $6.8 million, or 0.9%, from $724.0 million for 2024. The decrease in revenues was primarily due to reduced sales of wellhead and production related equipment resulting from lower drilling and completion activity by our customers following a decline in rig counts, offset by an increase in intersegment sales. Operating income of $189.9 million in 2025 resulted in a decrease of $20.8 million, or 9.9%, from $210.7 million in 2024. The decrease in operating income was primarily attributable to escalated tariff cost impacts on product margins, as well as increased legal expenses and reserves in connection with litigation claims. Spoolable Technologies. Spoolable Technologies revenue of $368.2 million for 2025, represented a decrease of $38.8 million, or 9.5%, from $407.0 million for 2024, primarily due to reduced sales of spoolable pipe and associated end fittings resulting from lower domestic activity by our customers. Total operating income of $98.7 million for 2025, resulted in a decrease of $6.2 million, or 5.9%, from $104.9 million for 2024. Operating income for 2025 was reduced primarily due to lower sales volume. Operating income for 2024 included a non-recurring $16.3 million of expense related to the change in fair value of the earn‑out liability associated with the FlexSteel acquisition. Corporate and other. Corporate and other revenue includes the elimination of inter-segment sales from our Pressure Control segment to our Spoolable Technologies segment. Corporate and other expenses include costs associated with executive management and other administrative functions not directly attributable to our reporting segments. Corporate and other expenses for 2025 were $38.0 million, an increase of $12.1 million from $26.0 million for 2024. The increase was largely attributable to professional fees associated with the Baker Hughes transaction. 31 Table of Contents Interest income, net. Interest income, net was $11.0 million in 2025 compared to $6.5 million in 2024. The increase in interest income, net of $4.5 million was primarily due to an increase in interest income earned on higher levels of cash invested during the period. Other (expense) income, net. Other expense, net of $0.8 million in 2025, represented a decrease of $4.0 million, compared to other income, net of $3.2 million. The decrease primarily related to the revaluation of the liability related to the tax receivable agreement as a result of changes to the forecasted state tax rate. Income tax expense. Income tax expense for 2025 was $59.0 million (22.6% effective tax rate) compared to $66.5 million (22.2% effective tax rate) for 2024. Income tax expense for 2025 includes $57.3 million of expense associated with current income, approximately $0.3 million of expense associated with permanent differences related to equity compensation, and approximately $1.4 million of expense associated with other adjustments. Income tax expense for 2024 includes approximately $66.5 million of expense associated with current income. Additionally, in 2024 we recognized $2.1 million of expense associated with the revaluation of our deferred tax asset as a result of a change in our forecasted state tax rate, a $2.1 million benefit related to the finalization of our 2023 tax returns, a $0.7 million benefit associated with permanent differences related to equity compensation and $0.7 million of expense associated with other adjustments. Partial valuation releases occur in conjunction with redemptions of CC Units as a portion of Cactus Inc.’s deferred tax assets from its investment in Cactus Companies becomes realizable. Cactus Inc. is only subject to federal and state income tax on its share of income from Cactus Companies. Income allocated to the non-controlling interest is only taxable to the non-controlling interest. Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 The following table presents summary consolidated operating results for the periods indicated:  Year Ended December 31, 2024 2023 $ Change % Change (in thousands) Revenues Pressure Control $ 724,038  $ 756,727  $ (32,689) (4.3)% Spoolable Technologies 407,038  340,233  66,805  19.6 Corporate and other (1,262) —  (1,262) — Total revenues 1,129,814  1,096,960  32,854  3.0 Operating income Pressure Control 210,710  236,934  (26,224) (11.1) Spoolable Technologies 104,864  62,172  42,692  68.7 Total segment operating income 315,574  299,106  16,468  5.5 Corporate and other expenses (25,961) (34,740) 8,779  (25.3) Total operating income 289,613  264,366  25,247  9.6 Interest income (expense), net 6,459  (6,480) 12,939  nm Other income, net 3,204  4,490  (1,286) (28.6) Income before income taxes 299,276  262,376  36,900  14.1 Income tax expense 66,518  47,536  18,982  39.9 Net income $ 232,758  $ 214,840  $ 17,918  8.3 Less: net income attributable to non-controlling interest 47,351  45,669  1,682  3.7 Net income attributable to Cactus Inc. $ 185,407  $ 169,171  $ 16,236  9.6% nm = not meaningful  Pressure Control. Pressure Control revenue was $724.0 million for 2024, a decrease of $32.7 million, or 4.3%, from $756.7 million for 2023. The decrease in revenues was primarily due to decreased sales of wellhead and production related equipment resulting from lower drilling and completion activity by our customers. In addition, rental of drilling and completion equipment decreased as a result of the decline in customer activity. Operating income of $210.7 million in 2024 resulted in a decrease of $26.2 million, or 11.1%, from $236.9 million in 2023. The decrease was primarily attributable to lower gross 32 Table of Contents margins during the period due to decreased customer activity levels and higher selling, general and administrative ("SG&A") expenses. The increase in SG&A expenses primarily related to higher personnel costs, stock-based compensation expense and other reserves, partially offset by a decrease in bad debt expense. Spoolable Technologies. Spoolable Technologies revenue of $407.0 million for 2024, represented an increase of $66.8 million, or 19.6%, from $340.2 million for 2023 as results for 2023 only included ten months of revenues from the FlexSteel acquisition, which closed on February 28, 2023. Total operating income of $104.9 million for 2024, resulted in an increase of $42.7 million, or 68.7%, from $62.2 million for 2023 as results for 2023 only included ten months of revenues. Operating income for the 2024 included $16.3 million of expense related to the change in fair value of the earn-out liability for the FlexSteel acquisition and $16.0 million of intangible amortization. Operating income for 2023 included approximately $14.9 million of expense related to the change in fair value of the estimated earn-out liability, $23.5 million of inventory step-up expense and $20.3 million of intangible amortization expense, as well as depreciation expense of $13.8 million primarily associated with the step-up of fixed assets in connection with accounting for the purchased assets at fair value. Corporate and other. Corporate and other revenue represents the elimination of inter-segment sales from our Pressure Control segment to our Spoolable Technologies segment. Corporate and other expenses include costs associated with executive management and other administrative functions not directly attributable to our reporting segments. Corporate and other expenses for 2024 were $26.0 million, a decrease of $8.8 million from $34.7 million for 2023. The decrease was largely attributable to lower professional fees related to transaction costs associated with growth initiatives, including the closing of and accounting for the FlexSteel acquisition in 2023. Interest income (expense), net. Interest income, net was $6.5 million in 2024 compared to interest expense, net of $6.5 million in 2023. The increase in interest income, net of $12.9 million was primarily due to an increase in interest income earned on cash invested during the 2024 period. Interest expense in 2023 was primarily related to borrowings outstanding through July 2023 under the Amended ABL Credit Facility (the "Second Amended ABL Credit Facility") which were required to finance the FlexSteel acquisition. Other income, net. Other income, net represents non-cash adjustments for the revaluation of the liability related to the tax receivable agreement as a result of changes to the forecasted state tax rate. Income tax expense. Income tax expense for 2024 was $66.5 million (22.2% effective tax rate) compared to $47.5 million (18.1% effective tax rate) for 2023. Income tax expense for 2024 includes approximately $66.5 million of expense associated with current income. Additionally, in 2024 we recognized $2.1 million of expense associated with the revaluation of our deferred tax asset as a result of a change in our forecasted state tax rate, a $2.1 million benefit related to the finalization of our 2023 tax returns, a $0.7 million benefit associated with permanent differences related to equity compensation and $0.7 million of expense associated with other adjustments. Income tax expense for 2023 includes approximately $56.6 million of expense associated with current income offset by a $12.1 million benefit associated with the release of our valuation allowance previously provided for our investment in Cactus Companies based on the determination that the deferred tax asset was realizable due to our ability to generate sufficient taxable income of the appropriate type. Additionally in 2023, we recognized $4.9 million of expense associated with the revaluation of our deferred tax asset as a result of a change in our forecasted state tax rate, $0.5 million of expense related to the finalization of our 2022 tax returns, a $1.2 million benefit associated with permanent differences related to equity compensation and a $1.2 million benefit associated with other adjustments. Partial valuation releases occur in conjunction with redemptions of CC Units as a portion of Cactus Inc.’s deferred tax assets from its investment in Cactus Companies becomes realizable. Cactus Inc. is only subject to federal and state income tax on its share of income from Cactus Companies. Income allocated to the non-controlling interest is only taxable to the non-controlling interest. Liquidity and Capital Resources At December 31, 2025, we had $494.6 million of cash, cash equivalents and restricted cash, of which $123.6 million was available cash on hand. Restricted cash consisted of $371.0 million of cash held in an escrow account in connection with the Baker Hughes Transaction. In connection with the Baker Hughes Transaction, these funds were required to be placed in escrow and were restricted from use for any purpose other than funding the Baker Hughes Transaction consideration at closing. The escrowed funds were released on January 1, 2026, the acquisition closing date, at which point the restriction lapsed and the cash was released to Baker Hughes Company. Our primary sources of liquidity and capital resources are cash on hand, cash flows generated by operating activities and, if necessary, borrowings under our Amended ABL Credit Facility (as defined in Note 6 in the notes to the Consolidated Financial Statements). Depending upon market conditions and other factors, we may also have the ability to issue additional equity and debt if needed. As of December 31, 2025, we had no borrowings outstanding under our Amended ABL Credit 33 Table of Contents Facility and $222.9 million of available borrowing capacity in addition to $100.0 million available under our Term Loan Facility (as defined in Note 6 to the notes to the Consolidated Financial Statements). We had $1.8 million in letters of credit outstanding at December 31, 2025 which reduced our available borrowing capacity. We were in compliance with the covenants of the Amended ABL Credit Facility as of December 31, 2025. In June 2023, our board of directors authorized the Company to repurchase shares of its Class A common stock for an aggregate purchase price of up to $150 million. Under our share repurchase program, shares may be repurchased from time to time in open market transactions or block trades, in privately negotiated transactions or any other method permitted under U.S. securities laws, rules and regulations. The repurchase program does not obligate the Company to purchase any particular amount of shares, and the repurchase program may be suspended or discontinued at any time at the Company’s discretion. At December 31, 2025, $146.3 million of Class A common stock could be repurchased under our share repurchase program. We expect that our existing cash on hand, cash generated from operations and available borrowings under our Amended ABL Credit Facility and Term Loan Facility will be sufficient for the next 12 months to meet our material cash requirements, including working capital requirements, debt service obligations, anticipated capital expenditures, lease obligations, repurchases of shares of our Class A common stock, expected TRA liability payments, anticipated tax liabilities and dividends to holders of our Class A common stock as well as pro rata cash distributions to holders of CC Units other than Cactus Inc. We currently estimate our net capital expenditures for the year ending December 31, 2026 will range from $40 million to $50 million, including investments in international expansion such as investments in the Joint Venture, further diversification of our low cost supply chain, enhancements for our Baytown, TX manufacturing plant and Hobbs, NM service center and additional deployment of equipment to facilitate installation of recent product introductions. We continuously evaluate our capital expenditures, and the amount we ultimately spend will depend on a number of factors, including, among other things, demand for rental assets, available capacity in existing locations, prevailing economic conditions, market conditions in the E&P industry, customers’ forecasts, crude oil and natural gas price volatility and company initiatives. For information concerning our future lease payments as of December 31, 2025, see Note 10 to our consolidated financial statements. Our ability to satisfy our long-term liquidity requirements, including cash distributions to CC Unit Holders to fund their respective income tax liabilities relating to their share of the income of Cactus Companies and to fund liabilities related to the TRA, depends on our future operating performance, which is affected by, and subject to, prevailing economic conditions, market conditions in the E&P industry, availability and cost of raw materials, and financial, business and other factors, many of which are beyond our control. We will not be able to predict or control many of these factors, such as economic conditions in the markets where we operate and competitive pressures. If necessary, we could choose to further reduce our spending on capital projects and operating expenses to ensure we operate within the cash flow generated from our operations. Tax Receivable Agreement (TRA) The TRA generally provides for the payment by Cactus Inc. to the TRA Holders of 85% of the net cash savings, if any, in U.S. federal, state and local income tax and franchise tax that Cactus Inc. actually realizes or is deemed to realize in certain circumstances. Cactus Inc. retains the benefit of the remaining 15% of these net cash savings. To the extent Cactus Companies has available cash, we intend to cause Cactus Companies to make pro rata distributions to its unit holders, including Cactus Inc., in an amount at least sufficient to allow us to pay our taxes and to make payments under the TRA. Except in cases where we elect to terminate the TRA early, the TRA is terminated early due to certain mergers, asset sales, or other forms of business combinations or changes of control relating to Cactus Companies or if we have available cash but fail to make payments when due under circumstances where we do not have the right to elect to defer the payment. We may generally elect to defer payments due under the TRA if we do not have available cash to satisfy our payment obligations under the TRA. Any such deferred payments under the TRA generally will accrue interest. In certain cases, payments under the TRA may be accelerated and/or significantly exceed the actual benefits, if any, we realize in respect of the tax attributes subject to the TRA. In these situations, our obligations under the TRA could have a substantial negative impact on our liquidity. Assuming no material changes in the relevant tax law, we expect that if the TRA were terminated as of December 31, 2025, the estimated termination payments, based on the assumptions discussed in Note 11 of the notes to the Consolidated Financial Statements, would be approximately $251.2 million, calculated using a discount rate equal to the 12-month term SOFR published by CME Group Benchmark Administration Limited, plus 221.5 basis points, applied against an undiscounted liability of $348.4 million. A 10% increase in the price of our Class A common stock at December 31, 2025 would have 34 Table of Contents increased the discounted liability by $7.6 million to $258.8 million (an undiscounted increase of $11.9 million to $360.3 million), and likewise, a 10% decrease in the price of our Class A common stock at December 31, 2025 would have decreased the discounted liability by $7.6 million to $243.6 million (an undiscounted decrease of $11.9 million to $336.6 million). Cash Flows Year Ended December 31, 2025 Compared to Year Ended December 31, 2024 The following table summarizes our cash flows for the periods indicated:  Year Ended December 31, 2025 2024 (in thousands) Net cash provided by operating activities $ 258,417  $ 316,113  Net cash used in investing activities (39,063) (35,388) Net cash used in financing activities (69,064) (70,144) Net cash provided by operating activities was $258.4 million in 2025 compared to $316.1 million in 2024. Operating cash flows decreased primarily due to lower earnings as well as an increase in cash outflows associated with working capital, largely related to purchases of inventory of $26.8 million, reflecting escalated values due to tariffs. These decreases in operating cash flows were partially offset by an increase in customer collections of $13.4 million. Net cash used in investing activities was $39.1 million and $35.4 million for 2025 and 2024, respectively. The 2025 increase was primarily due to the initial investment of $6.0 million related to our joint venture in Vietnam intended to further diversify our manufacturing capabilities, partly offset by an increase in proceeds from sale of assets. Net cash used in financing activities was $69.1 million for 2025 compared to net cash used by in financing activities of $70.1 million for 2024. The year ended December 31, 2025 value includes a $3.4 million decrease in share repurchases, primarily associated with the Company's share repurchase program, more than offset by higher dividend payments of approximately $3.8 million, a $2.4 million payment of deferred financing costs and a $2.3 million increase in member distributions. The year ended December 31, 2024 included a $6.0 million payment of contingent consideration. Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 The following table summarizes our cash flows for the periods indicated:  Year Ended December 31, 2024 2023 (in thousands) Net cash provided by operating activities $ 316,113  $ 340,280  Net cash used in investing activities (35,388) (654,793) Net cash provided by (used in) financing activities (70,144) 103,275  Net cash provided by operating activities was $316.1 million in 2024 compared to $340.3 million in 2023. Operating cash flows decreased primarily due to an increase in cash outflows associated with working capital, largely related to increased purchases of inventory of $67.6 million as well as payout of the earn-out liability of $31.2 million. These decreases in operating cash flows were offset by an increase in customer collections of $24.9 million as well as an increase in operating income of $17.9 million in 2024 compared to 2023. Net cash used in investing activities was $35.4 million and $654.8 million for 2024 and 2023, respectively. The decrease was primarily due to the non-recurrence of cash paid to acquire FlexSteel for $621.5 million, less $5.3 million in cash acquired during the first quarter of 2023. Additionally, our capital expenditures decreased approximately $4.8 million primarily due to the $7.0 million purchase of a previously leased facility during the first half of 2023. Net cash used in financing activities was $70.1 million for 2024 compared to net cash provided by in financing activities of $103.3 million for 2023. The decrease in net cash provided by financing activities was primarily related to certain financing activities in 2023 associated with the FlexSteel acquisition. We received approximately $169.9 million of proceeds, 35 Table of Contents net of issuance costs, from issuing shares of our Class A common stock during 2023. The year ended December 31, 2023 also included payments of approximately $6.9 million of debt issuance costs. The year ended December 31, 2024 includes a $4.1 million increase in share repurchases, primarily associated with the Company's share repurchase program, higher dividend payments of approximately $3.6 million and a $6.0 million payment related to the contingent consideration established as of the FlexSteel acquisition date. These increases are partially offset by a $3.4 million decrease in member distributions. Critical Accounting Policies and Estimates In preparing our financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”), we make numerous estimates and assumptions that affect the accounting for and recognition and disclosure of assets, liabilities, equity, revenues and expenses. We must make these estimates and assumptions because certain information that we use is dependent on future events, cannot be calculated with a high degree of precision from available data or is not otherwise capable of being readily calculated based on generally accepted methodologies. In some cases, these estimates are particularly difficult to determine, and we must exercise significant judgment. Actual results could differ materially from the estimates and assumptions that we use in the preparation of our financial statements. We identify certain accounting policies as critical based on, among other things, their impact on the portrayal of our financial condition and results of operations and the degree of difficulty, subjectivity and complexity in their deployment. Note 2 of the notes to the Consolidated Financial Statements includes a summary of the significant accounting policies used in the preparation of the accompanying consolidated financial statements. The following is a brief discussion of our most critical accounting policies and related estimates and assumptions. Determination of Fair Value in Business Combinations Accounting for the acquisition of a business requires the allocation of the purchase price to the various assets acquired and liabilities assumed at their respective fair values. The determination of fair value requires the use of significant estimates and assumptions, and in making these determinations, management uses all available information. For tangible and identifiable intangible assets acquired in a business combination, the determination of fair value utilizes several valuation methodologies including discounted cash flows which has assumptions with respect to the timing and amount of future revenue and expenses associated with an asset. The assumptions made in performing these valuations include, but are not limited to, discount rates, future revenues and operating costs, projections of capital costs, and other assumptions believed to be consistent with those used by principal market participants. Due to the specialized nature of these calculations, we engage third-party specialists to assist management in evaluating our assumptions as well as appropriately measuring the fair value of assets acquired and liabilities assumed. Inventories Inventories are stated at the lower of cost or net realizable value. Cost is determined using standard cost (which approximates average cost). Costs include an application of related direct labor and overhead cost. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. We evaluate the components of inventory on a regular basis for excess and obsolescence. Reserves are made based on a range of factors, including age, usage and technological or market changes that may impact demand for those products. The amount of reserve recorded is subjective and is susceptible to change from period to period. Long‑Lived Assets Key estimates related to long‑lived assets include useful lives and recoverability of carrying values. Such estimates could be modified, as impairment could arise as a result of changes in supply and demand fundamentals, technological developments, new competitors with disruptive technologies or cost advantages and the cyclical nature of the oil and gas industry. We evaluate long‑lived assets for potential impairment indicators whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Long‑lived assets assessed for impairment are grouped at the lowest level for which identifiable cash flows are available, and a provision would be made where the cash flow is less than the carrying value of the asset. The estimation of future cash flows and fair value is highly subjective and inherently imprecise. Estimates can change materially from period to period based on many factors. Accordingly, if conditions change in the future, we may record impairment losses, which could be material to any particular reporting period. 36 Table of Contents Goodwill Goodwill represents the excess of purchase price paid over the fair value of the net assets of acquired businesses. Goodwill is not amortized, but we evaluate at least annually whether it is impaired. Goodwill is considered impaired if the carrying amount of the reporting unit exceeds its estimated fair value. We conduct our annual assessment of the recoverability of goodwill as of December 31 of each year. We first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the goodwill impairment test. If the qualitative assessment indicates that it is more likely than not that the fair value of the reporting unit is less than its carrying amount or we elect not to perform a qualitative assessment, the quantitative assessment of goodwill test is performed. The goodwill impairment test is also performed whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If it is necessary to perform the quantitative assessment to determine if our goodwill is impaired, we will utilize a discounted cash flow analysis using management’s projections that are subject to various risks and uncertainties of revenues, expenses and cash flows as well as assumptions regarding discount rates, terminal value and control premiums. Estimates of future cash flows and fair value are highly subjective and inherently imprecise. Income Taxes Deferred taxes are recorded using the asset and liability method, whereby tax assets and liabilities are determined based on the differences between the financial statement and tax basis of assets and liabilities using enacted tax laws and rates expected to apply to taxable income in the year in which the differences are expected to reverse. We assess the likelihood that our deferred tax assets will be recovered through adjustments to future taxable income. To the extent we believe recovery is not likely, we establish a valuation allowance to reduce the asset to a value we believe will be recoverable based on our expectation of future taxable income. In evaluating our ability to recover our deferred tax assets, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and results of recent operations. The assumptions about future taxable income require significant judgment and are consistent with the plans and estimates management is using to manage the underlying business. If the projected future taxable income changes materially, we may be required to reassess the amount of valuation allowance recorded against our deferred tax assets. Tax Receivable Agreement The TRA generally provides for the payment by Cactus Inc. to the TRA Holders of 85% of the net cash savings, if any, in U.S. federal, state and local income tax and franchise tax that Cactus Inc. actually realizes or is deemed to realize in certain circumstances as a result of (i) certain increases in tax basis that occur as a result of Cactus Inc.’s acquisition (or deemed acquisition for U.S. federal income tax purposes) of all or a portion of such TRA Holder’s CW Units in connection with our IPO or any subsequent offering (or, following the completion of the CC Reorganization, such TRA Holder’s CC Units), or pursuant to any other exercise of the Redemption Right or the Call Right, (ii) certain increases in tax basis resulting from the repayment of borrowings outstanding under Cactus LLC’s term loan facility in connection with our IPO and (iii) imputed interest deemed to be paid by Cactus Inc. as a result of, and additional tax basis arising from, any payments Cactus Inc. makes under the TRA. We retain the remaining 15% of the cash savings. The TRA liability is calculated by determining the tax basis subject to the TRA (“tax basis”) and applying a blended tax rate to the basis differences and calculating the iterative impact. The blended tax rate consists of the U.S. federal income tax rate and an assumed combined state and local income tax rate driven by the apportionment factors applicable to each state. Redemptions of CC Units (CW Units prior to the CC Reorganization) result in adjustments to the tax basis of the tangible and intangible assets of Cactus Companies (Cactus LLC prior to the CC Reorganization). These adjustments are allocated to Cactus Inc. Such adjustments to the tax basis of the tangible and intangible assets of Cactus Companies would not be available to Cactus Inc. absent its acquisition or deemed acquisition of CC Units or CW Units prior to the CC Reorganization. In addition, the repayment of borrowings outstanding under the Cactus LLC term loan facility resulted in adjustments to the tax basis of the tangible and intangible assets of Cactus LLC, a portion of which was allocated to Cactus Inc. These basis adjustments are expected to increase (for tax purposes) Cactus Inc.’s depreciation and amortization deductions and may also decrease Cactus Inc.’s gains (or increase its losses) on future dispositions of certain assets to the extent tax basis is allocated to those assets. Such increased deductions and losses and reduced gains may reduce the amount of tax that Cactus Inc. would otherwise be required to pay in the future.  Estimating the amount and timing of the tax benefit is by its nature imprecise and the assumptions used in the estimates can change. The tax benefit is dependent upon future events and assumptions, the amount of the redeeming unit holders’ tax basis in its CC Units (formerly CW Units) at the time of the relevant redemption, the depreciation and amortization 37 Table of Contents periods that apply to the increase in tax basis, the amount and timing of taxable income we generate in the future and the U.S. federal, state and local income tax rate then applicable, and the portion of Cactus Inc.’s payments under the TRA that constitute imputed interest or give rise to depreciable or amortizable tax basis. The most critical estimate included in calculating the TRA liability to record is the combined U.S. federal income tax rate and an assumed combined state and local income tax rate, to determine the future benefit we will realize. A 100 basis point decrease/increase in the blended tax rate used would decrease/increase the TRA liability recorded at December 31, 2025 by approximately $14.4 million.  Recent Accounting Pronouncements See Note 2 of the notes to the Consolidated Financial Statements for discussion of recent accounting pronouncements.