Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Feb. 24, 2020 | Jun. 30, 2019 | |
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2019 | ||
Entity Registrant Name | Cactus, Inc. | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 1.6 | ||
Entity Central Index Key | 0001699136 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Class A Common Stock | |||
Entity Common Stock, Shares Outstanding | 47,339,551 | ||
Class B Common Stock | |||
Entity Common Stock, Shares Outstanding | 27,957,699 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Current assets | ||
Cash and cash equivalents | $ 202,603 | $ 70,841 |
Accounts receivable, net of allowance of $837 and $576, respectively | 87,865 | 92,269 |
Inventories | 113,371 | 99,837 |
Prepaid expenses and other current assets | 11,044 | 11,558 |
Total current assets | 414,883 | 274,505 |
Property and equipment, net | 161,748 | 142,054 |
Operating lease right-of-use assets, net | 26,561 | |
Goodwill | 7,824 | 7,824 |
Deferred tax asset, net | 222,545 | 159,053 |
Other noncurrent assets | 1,403 | 1,308 |
Total assets | 834,964 | 584,744 |
Current liabilities | ||
Accounts payable | 40,957 | 42,047 |
Accrued expenses and other current liabilities | 22,067 | 15,650 |
Current portion of liability related to tax receivable agreement | 14,630 | 9,574 |
Finance lease obligations, current portion | 6,735 | 7,353 |
Operating lease liabilities, current portion | 6,737 | |
Total current liabilities | 91,126 | 74,624 |
Deferred tax liability, net | 1,348 | 1,036 |
Liability related to tax receivable agreement, net of current portion | 201,902 | 138,015 |
Finance lease obligations, net of current portion | 3,910 | 8,741 |
Operating lease liabilities, net of current portion | 20,283 | |
Total liabilities | 318,569 | 222,416 |
Commitments and contingencies | ||
Stockholders' equity | ||
Preferred stock, $0.01 par value, 10,000 shares authorized, none issued and outstanding | ||
Additional paid-in capital | 194,456 | 126,418 |
Retained earnings | 132,990 | 51,683 |
Accumulated other comprehensive loss | (452) | (820) |
Total stockholders' equity attributable to Cactus Inc. | 327,466 | 177,658 |
Non-controlling interest | 188,929 | 184,670 |
Total stockholders' equity | 516,395 | 362,328 |
Total liabilities and equity | 834,964 | 584,744 |
Class A Common Stock | ||
Stockholders' equity | ||
Common stock, $0.01 par value | 472 | 377 |
Class B Common Stock | ||
Stockholders' equity | ||
Common stock, $0.01 par value |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Allowance for doubtful accounts receivable | $ 837 | $ 576 |
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 10,000 | 10,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Class A Common Stock | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 300,000 | 300,000 |
Common stock, shares issued | 47,159 | 37,654 |
Common stock, shares outstanding | 47,159 | 37,654 |
Class B Common Stock | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 215,000 | 215,000 |
Common stock, shares issued | 27,958 | 37,236 |
Common stock, shares outstanding | 27,958 | 37,236 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Revenues | |||
Total revenues | $ 628,414 | $ 544,135 | $ 341,191 |
Costs and expenses | |||
Selling, general and administrative expenses | 51,657 | 40,529 | 27,177 |
Total costs and expenses | 445,264 | 366,434 | 252,328 |
Income from operations | 183,150 | 177,701 | 88,863 |
Interest income (expense), net | 879 | (3,595) | (20,767) |
Other income (expense), net | 4,294 | (4,305) | |
Income before income taxes | 188,323 | 169,801 | 68,096 |
Income tax expense | 32,020 | 19,520 | 1,549 |
Net income | 156,303 | 150,281 | 66,547 |
Less: pre-IPO net income attributable to Cactus LLC | 13,648 | 66,547 | |
Less: net income attributable to non-controlling interest | 70,691 | 84,950 | |
Net income attributable to Cactus Inc. | $ 85,612 | $ 51,683 | |
Earnings per Class A share - basic | $ 1.60 | ||
Earnings per Class A share - diluted | $ 1.88 | $ 1.58 | |
Product revenue | |||
Revenues | |||
Total revenues | $ 357,087 | $ 290,496 | 189,091 |
Costs and expenses | |||
Cost of revenue | 220,615 | 174,675 | 124,030 |
Rental revenue | |||
Revenues | |||
Total revenues | 141,816 | 133,418 | 77,469 |
Costs and expenses | |||
Cost of revenue | 69,829 | 55,015 | 40,519 |
Field service and other revenue | |||
Revenues | |||
Total revenues | 129,511 | 120,221 | 74,631 |
Costs and expenses | |||
Cost of revenue | $ 103,163 | $ 96,215 | $ 60,602 |
Class A Common Stock | |||
Costs and expenses | |||
Earnings per Class A share - basic | $ 1.90 | $ 1.60 | |
Earnings per Class A share - diluted | $ 1.88 | $ 1.58 | |
Weighted average Class A shares outstanding - basic | 44,983 | 32,329 | |
Weighted average Class A shares outstanding - diluted | 75,353 | 32,695 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||
Net income | $ 156,303 | $ 150,281 | $ 66,547 |
Foreign currency translation adjustments | 368 | (902) | 557 |
Comprehensive income | 156,671 | ||
Comprehensive income | 149,379 | 67,104 | |
Less: pre-IPO comprehensive income attributable to Cactus LLC | 13,928 | $ 67,104 | |
Less: comprehensive income attributable to non-controlling interest | 70,581 | 84,212 | |
Comprehensive income attributable to Cactus Inc. | $ 86,090 | ||
Comprehensive income attributable to Cactus Inc. | $ 51,239 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY - USD ($) shares in Thousands, $ in Thousands | Class A Common StockCommon stock | Class B Common StockCommon stock | Members' Equity (Deficit) | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Non-controlling Interest | Total |
Balance at the beginning of the period at Dec. 31, 2016 | $ (102,846) | $ (475) | $ (103,321) | |||||
Statement of Stockholders'/Members' Equity | ||||||||
Other comprehensive income (loss) | 557 | 557 | ||||||
Net income | 66,547 | 66,547 | ||||||
Balance at the end of the period at Dec. 31, 2017 | (36,299) | 82 | (36,217) | |||||
Statement of Stockholders'/Members' Equity | ||||||||
Member distributions prior to IPO | (26,000) | (26,000) | ||||||
Net income prior to IPO | 13,648 | 13,648 | ||||||
Effect of IPO | $ 265 | $ 48,651 | $ 71,196 | $ 130,861 | 250,973 | |||
Effect of IPO (shares) | 26,450 | 48,440 | ||||||
Member distribution after IPO | (5,848) | (5,848) | ||||||
Effect of Follow-on Offering and CW Unit redemptions | $ 112 | 24,472 | (25,293) | (709) | ||||
Effect of Follow-on Offering and CW Unit redemptions (in shares) | 11,204 | (11,204) | ||||||
Additional paid-in capital related to tax receivable agreement | 26,046 | 26,046 | ||||||
Other comprehensive income (loss) | (902) | (902) | ||||||
Stock-based compensation | 4,704 | 4,704 | ||||||
Net income | $ 51,683 | 84,950 | 136,633 | |||||
Balance at the end of the period at Dec. 31, 2018 | $ 377 | 126,418 | 51,683 | (820) | 184,670 | 362,328 | ||
Balance at the end of the period (shares) at Dec. 31, 2018 | 37,654 | 37,236 | ||||||
Statement of Stockholders'/Members' Equity | ||||||||
Adjustments to prior periods | 10,424 | 409 | (11,339) | (506) | ||||
Member distribution after IPO | (8,392) | (8,392) | ||||||
Effect of CW Unit redemptions | $ 93 | 48,635 | (59) | (48,669) | ||||
Effect of CW Unit redemptions (in shares) | 9,278 | (9,278) | ||||||
Adjustment to deferred tax asset from CW Unit redemptions | (9,751) | (9,751) | ||||||
Additional paid-in capital related to tax receivable agreement | 15,250 | 15,250 | ||||||
Equity award vestings | $ 2 | (791) | (760) | (1,549) | ||||
Equity award vestings (in shares) | 227 | |||||||
Other comprehensive income (loss) | 18 | 4 | 22 | |||||
Stock-based compensation | 4,271 | 2,724 | 6,995 | |||||
Cash dividends declared | (4,305) | (4,305) | ||||||
Net income | 85,612 | 70,691 | 156,303 | |||||
Balance at the end of the period at Dec. 31, 2019 | $ 472 | $ 194,456 | $ 132,990 | $ (452) | $ 188,929 | $ 516,395 | ||
Balance at the end of the period (shares) at Dec. 31, 2019 | 47,159 | 27,958 |
CONSOLIDATED STATEMENTS OF ST_2
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Parenthetical) | 12 Months Ended |
Dec. 31, 2019$ / shares | |
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY | |
Cash dividend declared | $ 0.09 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Cash flows from operating activities | |||
Net income | $ 156,303 | $ 150,281 | $ 66,547 |
Reconciliation of net income to net cash provided by operating activities: | |||
Depreciation and amortization | 38,854 | 30,153 | 23,271 |
Debt discount and deferred financing cost amortization | 168 | 275 | 1,752 |
Stock-based compensation | 6,995 | 4,704 | |
Provision for bad debts | 355 | (100) | |
Inventory obsolescence | 2,552 | 1,451 | 1,259 |
Loss on disposal of assets | 236 | 886 | 534 |
Deferred income taxes | 25,403 | 15,201 | 220 |
Loss on debt extinguishment | 4,305 | ||
Gain from revaluation of liability related to tax receivable agreement | (5,336) | ||
Changes in operating assets and liabilities: | |||
Accounts receivable | 4,204 | (8,105) | (50,094) |
Inventories | (17,592) | (38,227) | (28,279) |
Prepaid expenses and other assets | 438 | (6,509) | (4,012) |
Accounts payable | (607) | 7,651 | 19,505 |
Accrued expenses and other liabilities | 6,994 | 5,114 | 4,104 |
Payments pursuant to tax receivable agreement | (9,335) | ||
Net cash provided by operating activities | 209,632 | 167,180 | 34,707 |
Cash flows from investing activities | |||
Capital expenditures and other | (59,703) | (70,053) | (32,082) |
Proceeds from sale of assets | 3,755 | 1,899 | 1,404 |
Net cash used in investing activities | (55,948) | (68,154) | (30,678) |
Cash flows from financing activities | |||
Principal payments on long-term debt | (248,529) | (2,569) | |
Payment of deferred financing costs | (840) | ||
Payments on finance leases | (7,484) | ||
Payments on finance leases, before adoption of ASU 2016-02 | (6,274) | (2,744) | |
Net proceeds from equity offerings | 828,168 | ||
Distributions to members | (8,392) | (31,848) | |
Redemption of CW Units | (575,681) | ||
Repurchase of shares | (1,549) | ||
Net cash used in financing activities | (21,669) | (35,004) | (5,313) |
Effect of exchange rate changes on cash and cash equivalents | (253) | (755) | 170 |
Net increase in cash and cash equivalents | 131,762 | 63,267 | (1,114) |
Cash and cash equivalents | |||
Beginning of period | 70,841 | 7,574 | 8,688 |
End of period | 202,603 | $ 70,841 | $ 7,574 |
Class A Common Stock | |||
Cash flows from financing activities | |||
Dividends paid to Class A Common Stock shareholders | $ (4,244) |
Organization and Nature of Oper
Organization and Nature of Operations | 12 Months Ended |
Dec. 31, 2019 | |
Organization and Nature of Operations | |
Organization and Nature of Operations | 1. Organization and Nature of Operations Cactus, Inc. (“Cactus Inc.”) and its consolidated subsidiaries (“the Company”), including Cactus Wellhead, LLC (“Cactus LLC”), are primarily engaged in the design, manufacture and sale of wellhead and pressure control equipment. In addition, we maintain a fleet of frac valves and ancillary equipment for short-term rental, as well as offer repair and refurbishment services and the provision of service crews to assist in the installation and operations of pressure control systems. We operate through U.S. service centers located in Texas, Pennsylvania, Oklahoma, North Dakota, New Mexico, Louisiana, Colorado and Wyoming, and in Eastern Australia, with our corporate headquarters located in Houston, Texas. We also have manufacturing and production facilities in Bossier City, Louisiana and Suzhou, China. Cactus Inc. was incorporated on February 17, 2017 as a Delaware corporation for the purpose of completing an initial public offering of equity and related transactions, which was completed on February 12, 2018 (our “IPO”). Cactus Inc. is a holding company whose only material asset is an equity interest consisting of units representing limited liability company interests in Cactus LLC (“CW Units”). Cactus Inc. became the sole managing member of Cactus LLC upon completion of our IPO. Cactus LLC is a Delaware limited liability company and was formed on July 11, 2011. Except as otherwise indicated or required by the context, all references to “Cactus,” “we,” “us” and “our” refer to Cactus Inc. and its consolidated subsidiaries (including Cactus LLC) following the completion of our IPO and Cactus LLC and its consolidated subsidiaries prior to the completion of our IPO. As the sole managing member of Cactus LLC, Cactus Inc. operates and controls all of the business and affairs of Cactus LLC and conducts its business through Cactus LLC and its subsidiaries. As a result, Cactus Inc. consolidates the financial results of Cactus LLC and its subsidiaries and reports non-controlling interest related to the portion of CW Units not owned by Cactus Inc., which reduces net income attributable to holders of Cactus Inc.’s Class A common stock, par value $0.01 per share (“Class A common stock”). For information regarding our IPO, see our Annual Report on Form 10-K for the year ended December 31, 2018. As of December 31, 2019, Cactus Inc. owned 62.8% of Cactus LLC as compared to 50.3% as of December 31, 2018. As of December 31, 2019, Cactus Inc. had outstanding 47.2 million shares of Class A common stock (representing 62.8% of the total voting power) and 28.0 million shares of Class B common stock (representing 37.2% of the total voting power). |
Summary of Significant Accounti
Summary of Significant Accounting Policies and Other Items | 12 Months Ended |
Dec. 31, 2019 | |
Summary of Significant Accounting Policies and Other Items | |
Summary of Significant Accounting Policies and Other Items | 2. Summary of Significant Accounting Policies and Other Items Basis of Presentation The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). These consolidated financial statements include the accounts of Cactus Inc. and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated upon consolidation. Cactus Inc. is the sole managing member of Cactus LLC and consolidates the financial results of Cactus LLC and its subsidiaries and reports a non-controlling interest related to the portion of CW Units not owned by Cactus Inc., which reduces net income attributable to holders of Cactus Inc.’s Class A common stock. Use of Estimates In preparing our consolidated financial statements in conformity with 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 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 consolidated financial statements. Segment Information We operate in a single operating segment, which reflects how we manage our business and the fact that all of our products and services are dependent upon the oil and natural gas industry. Substantially all of our products and services are sold in the U.S., which consists largely of oil and natural gas exploration and production companies. We operate in the United States, Australia and China. Our operations in Australia and China represented less than 10% of our consolidated operations for all periods presented in these consolidated financial statements. Concentrations of Credit Risk Our assets that are potentially subject to concentrations of credit risk are cash and cash equivalents and accounts receivable. We manage the credit risk associated with these financial instruments by transacting only with what management believes are financially secure counterparties, requiring credit approvals and credit limits and monitoring counterparties’ financial condition. Our receivables are spread over a number of customers, a majority of which are operators and suppliers to the oil and natural gas industry. Our maximum exposure to credit loss in the event of non‑performance by the customer is limited to the receivable balance. We perform ongoing credit evaluations and monitoring as to the financial condition of our customers with respect to trade receivables. Generally, no collateral is required as a condition of sale. We also control our exposure associated with trade receivables by discontinuing sales and service to non-paying customers. We had one customer representing 10% of total revenues for the year ended December 31, 2019 and one customer representing 11% of total revenues in each of the years ended December 31, 2018 and 2017. Significant Vendors We purchase a significant portion of supplies, equipment and machined components from a single vendor. During 2019, 2018 and 2017, purchases from this vendor totaled $36.5 million, $46.7 million and $33.4 million, respectively. These figures represent approximately 16%, 21% and 22% for the respective periods, of total third party vendor purchases of raw materials, finished products, equipment, machining and other services. Amounts due to the vendor included in accounts payable, in the consolidated balance sheets, as of December 31, 2019 and 2018 totaled $4.3 million and $5.0 million, respectively. Tax Receivable Agreement (TRA) In connection with our IPO, we entered into the TRA with certain direct and indirect owners of Cactus LLC (the “TRA Holders”). The TRA generally provides for 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 or franchise tax that Cactus Inc. actually realizes or is deemed to realize in certain circumstances. Cactus Inc. will retain the benefit of the remaining 15% of these net cash savings. We account for amounts payable under the TRA in accordance with Accounting Standards Codification (“ASC”) Topic 450, Contingencies. As such, subsequent changes to the measurement of the TRA liability are recognized in the statements of income as a component of other income (expense), net. For the year ended December 31, 2019, we recognized a $5.3 million gain on the change in the TRA liability. See Note 9 for further details on the TRA liability. Revenue Recognition The majority of our revenues are derived from short-term contracts for fixed consideration. Product sales generally do not include right of return or other significant post-delivery obligations. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Revenues are recognized when we satisfy a performance obligation by transferring control of the promised goods or providing services to our customers at a point in time, in an amount specified in the contract with our customer and that reflects the consideration we expect to be entitled to in exchange for those goods or services. The majority of our contracts with customers contain a single performance obligation to provide agreed upon products or services. For contracts with multiple performance obligations, we allocate revenue to each performance obligation based on its relative standalone selling price. We do not assess whether promised goods or services are performance obligations if they are immaterial in the context of the contract with the customer. We do not incur any material costs of obtaining contracts. We do not adjust the amount of consideration per the contract for the effects of a significant financing component when we expect, at contract inception, that the period between the transfer of a promised good or service to a customer and when the customer pays for that good or service will be one year or less, which is in substantially all cases. Payment terms and conditions vary, although terms generally include a requirement of payment within 30 to 45 days. Revenues are recognized net of any taxes collected from customers, which are subsequently remitted to governmental authorities. We treat shipping and handling associated with outbound freight as a fulfillment cost instead of as a separate performance obligation. We recognize the cost for the associated shipping and handling when incurred as an expense in cost of sales. Our revenues are derived from three sources: products, rentals, and field service and other: Product revenue. Product revenues are primarily derived from the sale of wellhead systems and production trees. Revenue is recognized when the products have shipped and the customer obtains control of the products. Rental revenue. Rental revenues are primarily derived from the rental of equipment, tools and products used for well control during the drilling and completion phases to customers. Our rental agreements are directly with our customers and provide for a rate based on the period of time the equipment is used or made available to the customer. In addition, customers are charged for repair costs either through an agreed upon rate or as incurred. Revenue is recognized ratably over the rental period, which tends to be short-term in nature with most equipment on site for less than 90 days. Field service and other revenue. We provide field services to our customers based on contractually agreed rates. Other revenues are derived from providing repair and reconditioning services to customers who have installed wellheads and production trees on their wellsite. Revenues are recognized as the services are performed or rendered. Foreign Currency Translation The financial position and results of operations of our foreign subsidiaries are measured using the local currency as the functional currency. Revenues and expenses of the subsidiaries have been translated into U.S. dollars at average exchange rates prevailing during the period. Assets and liabilities have been translated at the rates of exchange on the balance sheet dates. The resulting translation gain and loss adjustments have been recorded directly as a separate component of other comprehensive income in the consolidated statements of comprehensive income and stockholders’ equity. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in our consolidated statements of income as incurred. Stock‑based Compensation We measure the cost of equity‑based awards based on the grant date fair value and we allocate the compensation expense over the corresponding service period, which is usually the vesting period, using the straight‑line method. The grant date fair value is determined by the average price of the trading high and trading low of our Class A common stock on the effective date of the grant. 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 rates in effect for the year in which the differences are expected to reverse. We regularly evaluate the valuation allowances established for deferred tax assets for which future realization is uncertain. In assessing the realizability of deferred tax assets, we consider both positive and negative evidence, including scheduled reversals of deferred tax assets and liabilities, projected future taxable income, tax planning strategies and results of recent operations. If, based on the weight of available evidence, it is more likely than not that the deferred tax assets will not be realized, a valuation allowance is recorded. Cactus Inc. is a corporation and is subject to U.S. federal as well as state income tax related to its ownership percentage in Cactus LLC. Cactus LLC is a limited liability company treated as a partnership for U.S. federal income tax purposes and files a U.S. Return of Partnership Income, which includes both our U.S. and foreign operations. Consequently, the members of Cactus LLC are taxed individually on their share of earnings for U.S. federal and state income tax purposes. However, Cactus LLC is subject to the Texas Margins Tax. Additionally, our operations in both Australia and China are subject to local country income taxes. See Note 5 “Income Taxes” for additional information regarding income taxes. Cash and Cash Equivalents Cash in excess of current operating requirements is invested in short-term interest-bearing investments with maturities of three months or less at the date of purchase and is stated at cost, which approximates fair value. Throughout the year we maintained cash balances that were not covered by federal deposit insurance. We have not experienced any losses in such accounts. Accounts Receivable We extend credit to customers in the normal course of business. We do not accrue interest on delinquent accounts receivable. Accounts receivable includes amounts billed and currently due from customers and unbilled amounts for products delivered and services performed for which billings had not yet been submitted to the customers. Total unbilled revenue included in accounts receivable as of December 31, 2019 and 2018 was $23.8 million and $26.8 million, respectively. We maintain an allowance for doubtful accounts to provide for the estimated amount of receivables that will not be collected. In our determination of the allowance for doubtful accounts, we assess those amounts where there are concerns over collection and record an allowance for that amount. Estimating this amount requires us to analyze the financial condition of our customers, our historical experience and any specific concerns. Earnings are charged with a provision for doubtful accounts based on this review of the collectability of accounts. Accounts deemed uncollectible are applied against the allowance for doubtful accounts. Accounts receivable is net of allowance for doubtful accounts of $0.8 million and $0.6 million as of December 31, 2019 and 2018, respectively. The following is a rollforward of our allowance for doubtful accounts: Balance at Balance at Beginning of Expense End of Period (recovery) Write off Other Period Year Ended December 31, 2019 $ 576 $ 355 $ (94) $ — $ 837 Year Ended December 31, 2018 740 — (164) — 576 Year Ended December 31, 2017 851 (100) (3) (8) 740 Inventories Inventories are stated at the lower of cost or net realizable value. Cost is determined using standard cost (which approximates average cost) and weighted average methods. 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. Reserves are made for excess and obsolete items based on a range of factors, including age, usage and technological or market changes that may impact demand for those products. The inventory obsolescence reserve was $9.8 million and $7.3 million as of December 31, 2019 and 2018, respectively. The following is a rollforward of our inventory obsolescence reserve: Balance at Balance at Beginning of End of Period Expense Write off Other Period Year Ended December 31, 2019 $ 7,310 $ 2,552 $ (90) $ — $ 9,772 Year Ended December 31, 2018 5,885 1,451 — (26) 7,310 Year Ended December 31, 2017 4,770 1,259 (103) (41) 5,885 Property and Equipment Property and equipment are stated at cost. We manufacture or construct most of our own rental assets and during the manufacture of these assets, they are reflected as construction in progress until complete. We depreciate the cost of property and equipment using the straight‑line method over the estimated useful lives and depreciate our rental assets to their salvage value. Leasehold improvements are amortized over the shorter of the remaining lease term or economic life of the related assets. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss are reflected in income for the period. The cost of maintenance and repairs is charged to income as incurred; significant renewals and improvements are capitalized. Estimated useful lives are as follows: Land N/A Buildings 10 - 30 years Machinery and equipment 2 - 12 years Vehicles under finance lease 3 years Rental equipment 2 - 8 years Furniture and fixtures 5 years Computers and software 4 years Property and equipment as of December 31, 2019 and 2018 consists of the following: December 31, 2019 2018 Land $ 3,203 $ 3,614 Buildings and improvements 21,655 20,803 Machinery and equipment 55,494 47,606 Vehicles under finance lease 24,275 25,165 Rental equipment 161,156 124,002 Furniture and fixtures 1,684 1,623 Computers and software 3,317 3,094 Gross property and equipment 270,784 225,907 Less: Accumulated depreciation (123,397) (96,412) Net property and equipment 147,387 129,495 Construction in progress 14,361 12,559 Total property and equipment, net $ 161,748 $ 142,054 Depreciation and amortization was $38.9 million, $30.2 million and $23.3 million for 2019, 2018 and 2017, respectively. Depreciation and amortization expense is included in the consolidated statements of income as follows: Year Ended December 31, 2019 2018 2017 Cost of product revenue $ 3,304 $ 3,262 $ 3,169 Cost of rental revenue 24,881 17,997 14,912 Cost of field service and other revenue 9,986 8,456 4,786 Selling, general and administrative expenses 683 438 404 Total depreciation and amortization $ 38,854 $ 30,153 $ 23,271 Impairment of Long‑Lived Assets We review the recoverability of long‑lived assets, such as property and equipment, when events or changes in circumstances occur that indicate the carrying value of the asset or asset group may not be recoverable. The assessment of possible impairment is based on our ability to recover the carrying value of the asset or asset group from the expected future pre‑tax cash flows (undiscounted) of the related operations. If these cash flows are less than the carrying value of such asset, an impairment loss is recognized for the difference between estimated fair value and carrying value. We concluded there were no indicators evident or other circumstances present that these assets were not recoverable and accordingly, no impairment charges of long‑lived assets were recognized for 2019, 2018 and 2017. Goodwill Goodwill represents the excess of acquisition consideration paid over the fair value of net assets acquired. All of the goodwill recorded on our consolidated balance sheets resulted from the acquisition of a manufacturing facility in Bossier City, Louisiana in 2011. The facility supports our full range of products, rentals and services. Goodwill is not amortized, but is reviewed for impairment on an annual basis (or more frequently if impairment indicators exist). We have established December 31 as the date of our annual test for impairment of goodwill. We perform a qualitative assessment of the fair value of our reporting unit before calculating the fair value of the reporting unit in step one of the two‑step goodwill impairment model. If, through the qualitative assessment, we determine that it is more likely than not that the reporting unit’s fair value is greater than its carrying value, the remaining impairment steps would be unnecessary. If there are indicators that goodwill has been impaired and thus the two‑step goodwill impairment model is necessary, step one is to determine the fair value of the reporting unit and compare it to the reporting unit’s carrying value. Fair value is determined based on the present value of estimated cash flows using available information regarding expected cash flows of each reporting unit, discount rates and the expected long‑term cash flow growth rates. If the fair value of the reporting unit exceeds the carrying value, goodwill is not impaired and no further testing is performed. The second step is performed if the carrying value exceeds the fair value. The implied fair value of the reporting unit’s goodwill must be determined and compared to the carrying value of the goodwill. If the carrying value of a reporting unit’s goodwill exceeds its implied fair value, an impairment loss equal to the difference will be recorded. We concluded that there was no impairment of goodwill in 2019, 2018 or 2017 based on our annual impairment analysis. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities as of December 31, 2019 and 2018 are as follows: December 31, 2019 2018 Payroll, incentive compensation, payroll taxes and benefits $ 10,708 $ 7,842 Accrued international freight and tariffs 3,794 1,418 Income based tax payable 2,481 2,061 Accrued professional fees and other 1,790 1,512 Deferred revenue 1,371 1,110 Taxes other than income 767 1,414 Accrued workers' compensation insurance 600 — Product warranties 556 293 Total $ 22,067 $ 15,650 Self-Insurance Accrued Expenses We maintain a partially self-insured health benefit plan which provides medical and prescription drug benefits to certain of our employees electing coverage under the plan. Our exposure is limited by individual and aggregate stop loss limits via third-party insurance carriers. Our self-insurance expense is accrued based upon the aggregate of the expected liability for reported claims and the estimated liability for claims incurred but not reported, based on historical claims experience provided by our third-party insurance advisors, adjusted as necessary based upon management’s reasoned judgment. Actual employee medical claims expense may differ from estimated loss provisions based on historical experience. The liabilities for these claims are included as a component of payroll, incentive compensation, payroll taxes and benefits in the table above and were $1.6 million and $0.5 million as of December 31, 2019 and 2018, respectively. Product Warranties We generally warrant our manufactured products 12 months from the date placed in service. The estimated liability for product warranties is based on historical and current claims experience. Fair Value Measurements The carrying value of cash and cash equivalents, receivables, accounts payable and accrued expenses approximates fair value based on the short-term nature of these accounts. We had no long-term debt outstanding as of December 31, 2019 or 2018. Employee Benefit Plan Our employees within the United States are eligible to participate in a 401(k) plan sponsored by us. These employees are eligible to participate on the first day of the month following 30 days of employment and if they are at least eighteen years of age. All eligible employees may contribute a percentage of their compensation subject to a maximum imposed by the Internal Revenue Code. During 2019, 2018 and 2017, we matched 100% of the first 3% of gross pay contributed by each employee and 50% of the next 4% of gross pay contributed by each employee. We may also make additional non‑elective employer contributions at our discretion under the plan. Similar benefit plans exist for employees of our foreign subsidiaries. During 2019, 2018 and 2017, employer matching contributions totaled $3.1 million, $3.7 million and $2.2 million, respectively. For the year ended December 31, 2019, we made a non-elective contribution of $0.1 million under the Plan. No such contributions were made in 2018 or 2017. Recent Accounting Pronouncements Standards Adopted Effective January 1, 2019, we adopted Financial Accounting Standards Board (“FASB”) ASU No. 2016-02, Leases (Topic 842) by utilizing the modified retrospective approach. There was no cumulative effect adjustment required to the opening balance of retained earnings as we utilized the package of practical expedients permitted under the transition guidance within the standard. The expedient package allowed us to not reassess whether existing contracts contained a lease, to not reassess the lease classification of existing leases, and to not consider the initial direct cost for existing leases. In addition to the package of practical expedients, we also utilized expedients and elections allowing for the exclusion of leases with terms of less than twelve months across all asset classes, use of the portfolio approach and the election to not separate non-lease components from lease components. Adoption of this standard resulted in the recognition of operating lease right-of-use (“ROU”) assets of $25.3 million, reversal of previously recorded deferred rent of $0.5 million and corresponding operating short-term and long-term lease liabilities of $6.2 million and $19.6 million, respectively, on the consolidated balance sheet. Our accounting for finance leases remained substantially unchanged under the new guidance. Additionally, as a lessor, recognition of lease revenue associated with short-term equipment rentals remained consistent with previous guidance. Adoption of the standard did not have a material impact on our consolidated statements of income and consolidated statements of comprehensive income or consolidated statements of cash flows. See Note 8 for further details regarding leases. Standards Not Yet Adopted In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350), which simplifies the accounting for goodwill impairment by eliminating Step 2 of the current goodwill impairment test. In computing the implied fair value of goodwill under Step 2, an entity had to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities (including unrecognized assets and liabilities) following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Instead, under the new standard, an entity should perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The new guidance should be adopted for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. We do not expect the adoption of this pronouncement will have a material impact on our consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 changes the measurement of credit losses on financial assets measured at amortized cost, including but not limited to trade receivables. The new guidance replaces the current methodology for recognizing credit losses when it is probable that a loss has been incurred with an expected loss model that requires consideration of a broader range of information to estimate expected credit losses over the lifetime of an asset. Application of this new guidance may result in an earlier recognition of credit losses as the allowance for credit losses is measured and recorded upon the initial recognition of the financial asset. The allowance for credit losses under the new guidance represents the portion of the asset’s amortized cost basis that we do not expect to collect over the asset’s contractual life, considering past events, current conditions and reasonable and supportable forecasts of future economic conditions. We finalized our methodology for estimating expected credit losses, including the assumptions used in order to pool receivables with similar risk characteristics and adopted the new standard effective January 1, 2020. Adoption of the standard did not impact our consolidated financial statements. |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2019 | |
Inventories | |
Inventories | 3. Inventories Inventories consist of the following: December 31, 2019 2018 Raw materials $ 1,538 $ 1,925 Work-in-progress 4,619 3,582 Finished goods 107,214 94,330 $ 113,371 $ 99,837 |
Debt
Debt | 12 Months Ended |
Dec. 31, 2019 | |
Debt | |
Debt | 4. Debt We had no debt outstanding as of December 31, 2019 and 2018. On August 21, 2018, Cactus LLC entered into a five-year senior secured asset-based revolving credit facility with a syndicate of lenders and JPMorgan Chase Bank, N.A., as administrative agent for such lenders and as an issuing bank and swingline lender (the “ABL Credit Facility”). The ABL Credit Facility provides for $75.0 million in revolving commitments, up to $15.0 million of which is available for the issuance of letters of credit. The ABL Credit Facility matures on August 21, 2023. The maximum amount that Cactus LLC may borrow under the ABL Credit Facility is subject to a borrowing base, which is based on a percentage of eligible accounts receivable and eligible inventory, subject to reserves and other adjustments. Borrowings under the ABL Credit Facility bear interest at Cactus LLC’s option at either (i) the Alternate Base Rate (as defined therein) (“ABR”), or (ii) the Adjusted LIBO Rate (as defined therein) (“Eurodollar”), plus, in each case, an applicable margin. Letters of credit issued under the ABL Credit Facility accrue fees at a rate equal to the applicable margin for Eurodollar borrowings. The applicable margin ranges from 0.50% to 1.00% per annum for ABR borrowings and 1.50% to 2.00% per annum for Eurodollar borrowings and, in each case, is based on the average quarterly availability under the ABL Credit Facility for the immediately preceding fiscal quarter. The unused portion of the ABL Credit Facility is subject to a commitment fee that varies from 0.250% to 0.375% per annum, according to the average quarterly availability under the ABL Credit Facility for the immediately preceding fiscal quarter. The ABL Credit Facility contains various covenants and restrictive provisions that limit Cactus LLC’s and each of its subsidiaries’ ability to, among other things, incur additional indebtedness and create liens, make investments or loans, enter into asset sales, make certain restricted payments and distributions, and engage in transactions with affiliates. The ABL Credit Facility also requires Cactus LLC to maintain a fixed charge coverage ratio of 1.0 to 1.0 based on the ratio of EBITDA (as defined therein) minus Unfinanced Capital Expenditures (as defined therein) to Fixed Charges (as defined therein) during certain periods, including when availability under the ABL Credit Facility is under certain levels. If Cactus LLC fails to perform its obligations under the ABL Credit Facility, (i) the commitments under the ABL Credit Facility could be terminated, (ii) any outstanding borrowings under the ABL Credit Facility may be declared immediately due and payable and (iii) the lenders may commence foreclosure or other actions against the collateral. At December 31, 2019 and 2018, although there were no borrowings outstanding, the applicable margin on our Eurodollar borrowings was 1.5% plus an adjusted base rate of one or three month LIBOR. We were in compliance with all covenants under the ABL Credit Facility as of December 31, 2019. The ABL Credit Facility replaced Cactus LLC’s prior credit agreement, dated as of July 31, 2014, with Credit Suisse AG, as administrative agent, collateral agent and issuing bank, and the other lenders party thereto (the “Prior Credit Agreement”). The Prior Credit Agreement provided for a term loan tranche in an aggregate principal amount of $275.0 million, the outstanding balance of which was repaid in full in February 2018 from the net proceeds of our IPO, and a revolving credit facility (the “Prior Revolving Credit Facility”) of up to $50.0 million with a $10.0 million sublimit for letters of credit. The Prior Credit Agreement was terminated concurrently with the effectiveness of, and as a condition of entering into, the ABL Credit Facility. No loans or letters of credit under the Prior Credit Agreement were outstanding at the time of, or were repaid in connection with, such termination. Loss on Debt Extinguishment We recorded a $4.3 million loss on early extinguishment of debt in conjunction with the repayment of the term loan portion of the Prior Credit Agreement with a portion of the net proceeds from our IPO. The loss consisted of the write-off of the unamortized balance of debt discount and deferred loan costs of $2.1 million and $2.2 million, respectively. The loss on debt extinguishment is included under other income (expense), net, in the consolidated statement of income for the year ended December 31, 2018. Interest (Income) Expense, net Interest (income) expense, net, including debt discount and deferred financing costs amortization, was comprised of the following: Year Ended December 31, 2019 2018 2017 Interest under bank facilities $ 315 $ 2,669 $ 18,627 Debt discount and deferred financing costs amortization 168 275 1,752 Finance lease interest 877 734 311 Other 164 45 82 Interest income (2,403) (128) (5) Interest (income) expense, net $ (879) $ 3,595 $ 20,767 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2019 | |
Income Taxes | |
Income Taxes | 5. Income Taxes Domestic and foreign components of income before income taxes were as follows: Year Ended December 31, 2019 2018 2017 Pre-IPO Domestic $ — $ 13,370 $ 65,023 Post-IPO Domestic 173,039 146,620 — Pre-IPO Foreign — 512 3,073 Post-IPO Foreign 15,284 9,299 — Income before income taxes $ 188,323 $ 169,801 $ 68,096 The provision for income taxes consisted of: Year Ended December 31, 2019 2018 2017 Current: Federal $ 1,088 $ — $ — State 1,408 1,172 594 Foreign 4,121 3,147 735 Total current income taxes 6,617 4,319 1,329 Deferred: Federal 14,853 12,589 — State 10,681 1,992 — Foreign (131) 620 220 Total deferred income taxes 25,403 15,201 220 Total provision for income taxes $ 32,020 $ 19,520 $ 1,549 The effective income tax rate was different from the statutory U.S. federal income tax rate due to the following: Year Ended December 31, 2019 2018 2017 Income taxes at 21% (35% for 2017) statutory tax rate $ 39,548 $ 35,658 $ 23,834 Net difference resulting from: Profit of Cactus LLC pre-IPO not subject to U.S. federal tax — (2,808) (22,758) Profit of non-controlling interest not subject to U.S. federal tax (15,477) (18,570) — Foreign income taxes (net of foreign tax credit) 364 828 (302) State income taxes (excluding rate change) 4,887 2,746 594 Impact of change in forecasted state income tax rate 5,774 — — Foreign withholding taxes 988 1,056 220 Change in valuation allowance (3,888) 733 (39) Other (176) (123) — Total provision for income taxes $ 32,020 $ 19,520 $ 1,549 Our effective tax rate was 17.0%, 11.5% and 2.3% for the years ended December 31, 2019, 2018 and 2017, respectively. For the year ended December 31, 2019, the primary reason for the change to our effective tax rate relates to an increase in Cactus Inc.’s ownership of Cactus LLC and a write down of our deferred tax asset due to a change in our forecasted state tax rate. Prior to our IPO, our accounting predecessor was a limited liability company treated as a partnership for U.S. federal income tax purposes, and therefore not subject to U.S. federal income taxes. Our operations are subject to state taxes within the United States and our operations in China and Australia are subject to local country income taxes. The components of deferred tax assets and liabilities are as follows: December 31, 2019 2018 Investment in Cactus LLC $ 234,629 $ 181,390 Net operating loss carryforwards — 619 Imputed interest 10,323 7,445 Tax credits 1,479 1,988 Other 155 144 Deferred tax assets 246,586 191,586 Valuation allowance (24,041) (32,533) Deferred tax asset, net $ 222,545 $ 159,053 Foreign withholding taxes $ 1,054 $ 1,036 Other 294 — Deferred tax liability, net $ 1,348 $ 1,036 We recorded a deferred tax asset for the differences between our tax and book basis in the investment in Cactus LLC and imputed interest on the TRA. We also recorded deferred tax assets for foreign tax credits associated with our portion of Cactus LLC’s accrued foreign taxes. We did not have any foreign net operating losses for 2019. Foreign net operating losses were $1.4 million and $1.6 million for 2018 and 2017, respectively. Based upon our cumulative earnings history and forecasted future sources of taxable income, we believe that we will be able to realize the majority of our U.S. deferred tax assets in the future. We do not expect to realize the portion of our deferred tax asset for our investment in Cactus LLC that may only be realizable through the sale or liquidation of the investment and our ability to generate sufficient capital gains. As of December 31, 2019, we have a valuation allowance of $22.7 million against this deferred tax asset. For the year ended December 31, 2019, as a result of the March 2019 Secondary Offering and redemptions of CW Units, we released $5.4 million of our valuation allowance and recorded a tax benefit of $5.4 million related to the realizable portion of the deferred tax asset. As of December 31, 2019, our liability related to the TRA was $216.5 million, representing 85% of the calculated net cash savings in the United States federal, state and local or franchise tax that we anticipate realizing in future years from certain increases in tax basis and certain tax benefits attributed to imputed interest as a result of our acquisition of CW Units. We have determined it is more-likely-than-not that we will be able to utilize all of our tax basis subject to the TRA; therefore, we have recorded a liability related to the TRA for the tax savings we may realize from certain increases in tax basis and certain tax benefits attributable to imputed interest as a result of our acquisition (or deemed acquisition for United States federal income tax purposes) of CW Units. If we determine the utilization of this tax basis is not more-likely-than-not in the future, our estimate of amounts to be paid under the TRA would be reduced. In this scenario, the reduction of the liability under the TRA would result in a benefit to our pre-tax consolidated results of operations. As of December 31, 2019 and 2018, we had no uncertain tax positions. None of our federal or state income tax returns are currently under examination by state taxing authorities. |
Stock-based Compensation
Stock-based Compensation | 12 Months Ended |
Dec. 31, 2019 | |
Stock-based Compensation | |
Stock-based Compensation | 6. Stock-Based Compensation We have a long-term incentive plan (“LTIP”) to incentivize individuals providing services to us or our affiliates. The LTIP provides for the grant, from time to time, at the discretion of our compensation committee of our board of directors, of stock options, stock appreciation rights, restricted stock, restricted stock units, stock awards, dividend equivalents, other stock-based awards, cash awards, substitute awards and performance awards. Any individual who is an officer or employee or an officer or employee of any of our affiliates, and any other person who provides services to us or our affiliates, including members of our board of directors, will be eligible to receive awards under the LTIP at the discretion of our board of directors. As of December 31, 2019, 2.0 million stock awards were available for grant. Restricted Stock Units Restricted stock units (“RSUs”) granted pursuant to the LTIP are expected to be settled in shares of our Class A common stock if they vest. RSU’s generally vest over a three-year period; however, RSUs granted to our non-employee directors generally vest on the first anniversary of the grant. A summary of restricted stock unit awards for the year ended December 31, 2019 is as follows (units in thousands): No. of RSUs Weighted Average Grant Date Fair Value Nonvested as of December 31, 2018 782 $ 19.84 Granted 221 $ 37.04 Vested (274) $ 19.50 Forfeited (39) $ 22.48 Nonvested as of December 31, 2019 690 $ 25.34 During the year ended December 31, 2019 and 2018, we recorded $7.0 million and $4.7 million, respectively, of stock-based compensation expense. We did not recognize any stock-based compensation expense during 2017. Stock-based compensation expense is primarily recorded in selling, general and administrative expenses. There was approximately $11.1 million of unrecognized compensation expense relating to the unvested RSUs as of December 31, 2019. The unrecognized compensation expense will be recognized over the weighted average remaining vesting period of 2.0 years. |
Revenue
Revenue | 12 Months Ended |
Dec. 31, 2019 | |
Revenue | |
Revenue | 7. Revenue We disaggregate revenue from contracts with customers into three revenue categories: (i) product revenues, (ii) rental revenues and (iii) field service and other revenues. We have predominately domestic operations, with a small amount of sales being generated in Australia. For the year ended December 31, 2019, we derived 57% of our total revenues from the sale of our products, 22% of our total revenues from rental and 21% of our total revenues from field service and other. This compares to 53% of our total revenues from the sale of our products, 25% of our total revenues from rental and 22% of our total revenues from field service and other for the year ended December 31, 2018. In 2017, we derived 55% of our total revenues from the sale of our products, 23% from rental and 22% from field service and other. The following table presents our revenues disaggregated by category: Year Ended December 31, 2019 2018 2017 Product revenue $ 357,087 $ 290,496 $ 189,091 Rental revenue 141,816 133,418 77,469 Field service and other revenue 129,511 120,221 74,631 Total revenue $ 628,414 $ 544,135 $ 341,191 At December 31, 2019, we had a deferred revenue balance of $1.4 million compared to the December 31, 2018 balance of $1.1 million included in accrued expenses and other current liabilities in the consolidated balance sheets. Deferred revenue represents our obligation to transfer products or perform services to a customer for which we have received cash or billed in advance. The revenue that has been deferred will be recognized upon product delivery or as services are performed. As of December 31, 2019, we did not have any contracts with an original length of greater than a year from which revenue is expected to be recognized in the future related to performance obligations that are unsatisfied. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2019 | |
Leases | |
Leases | 8 . Leases As a lessee, we lease real estate, apartments, forklifts, vehicles and trucks, and other equipment under non-cancellable agreements. We determine if these contracts are or contain a lease at inception and review the facts and circumstances of the arrangement to classify the leased asset as operating or finance. To assess whether a contract is or contains a lease, we consider whether (i) explicitly or implicitly identified assets have been deployed in the contract and (ii) whether we obtain substantially all the economic benefits from the use of that underlying asset and direct how and for what purpose the asset is used during the term of the contract. The portion of active leases within our portfolio classified as operating leases are included in operating lease right-of-use assets and current and long-term operating lease liabilities on our consolidated balance sheet. The finance lease right-of-use assets portion of the active lease agreements are included in property and equipment and current and long-term finance lease obligations on our consolidated balance sheets. The ROU assets represent our right to use the underlying asset for the lease term and lease liabilities represent our obligation to make minimum lease payments arising from the lease for the duration of the lease term. Certain of our leases include one or more options to renew, with renewal terms that can extend the lease term from one to 10 years or greater. The exercise of lease renewal options is typically at our discretion. The measurement of the lease term includes options to extend or renew the lease when it is reasonably certain that we will exercise that option. We do not have leases that include options to purchase leased property or that provide for the automatic transfer of ownership of leased property to us, residual value guarantees, or the incurrence by us of other restrictions or covenants. To determine the present value of future minimum lease payments, we use the implicit rate when readily determinable; however, many of our leases do not provide an implicit rate, therefore to determine the present value of minimum lease payments we use our incremental borrowing rate based on the information available at commencement date of the lease. Our finance lease agreements typically include an interest rate that is used to determine the present value of future lease payments. Minimum lease payments are expensed on a straight-line basis over the term of the lease, including reasonably certain renewal options. In addition, some leases may require additional contingent or variable lease payments based on factors specific to the individual agreement. Variable lease payments for which we are typically responsible include payment of real estate taxes and maintenance expenses. These payments are expensed as incurred and recorded as variable lease costs. The following are the components of operating and finance lease costs: Year Ended December 31, 2019 Finance lease cost: Amortization of right-of-use assets $ 7,601 Interest expense 877 Operating lease cost 8,329 Short-term lease cost 847 Variable lease cost 528 Sublease income (455) Total lease cost $ 17,727 The following is supplemental cash flow information for our operating and finance leases: Year Ended December 31, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from finance leases $ 877 Operating cash flows from operating leases 6,828 Financing cash flows from finance leases 7,484 Total $ 15,189 Right-of-use assets obtained in exchange for new lease obligations: Operating leases $ 8,054 Finance leases 3,008 Total $ 11,062 The following is the aggregate future lease payments for operating and finance leases as of December 31, 2019: Operating Finance 2020 $ 7,691 $ 7,434 2021 6,291 3,438 2022 3,967 768 2023 3,072 4 2024 2,453 — Thereafter 7,163 — Total undiscounted lease payments 30,637 11,644 Less: effects of discounting (3,617) (999) Present value of lease payments $ 27,020 $ 10,645 The following represents the average lease terms and discount rates for our operating and finance lease portfolio as of December 31, 2019: December 31, 2019 Weighted average remaining lease term: Finance leases 1.51 years Operating leases 5.82 years Weighted average discount rate Finance leases 12.18 % Operating leases 3.76 % As a lessor, we rent a fleet of frac valves and ancillary equipment for short-term rental periods, typically one to two months. Our lessor portfolio consists mainly of operating leases for equipment utilized during the drilling, completion and production phases of our customers’ wells. At this time, most lessor agreements contain less than three-month terms with no renewal options that are reasonably certain to exercise, or early termination options based on established terms specific to the individual agreement. See Note 7 for disaggregation of revenue. Disclosures related to periods prior to adoption of new lease standard Operating and Capital Leases : We lease certain facilities, vehicles, equipment, office and manufacturing space under noncancelable operating leases which expire at various dates. We are also party to a significant number of month‑to‑month leases that can be canceled at any time. Total rent expense under operating leases was $7.7 million in 2018 and $7.1 million in 2017. Accumulated depreciation for capital leases totaled $8.6 million at December 31, 2018. Minimum lease payments, including executory costs and interest, under capital and operating leases with non-cancelable terms as of December 31, 2018 were as follows: Operating Capital 2019 $ 6,638 $ 8,740 2020 4,618 6,790 2021 3,487 2,533 2022 2,195 41 2023 1,426 — Thereafter 3,339 — $ 21,703 $ 18,104 |
Tax Receivable Agreement
Tax Receivable Agreement | 12 Months Ended |
Dec. 31, 2019 | |
Tax Receivable Agreement | |
Tax Receivable Agreement | 9 . 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 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 will retain the remaining 15% of the cash savings. The TRA liability is calculated by determining the tax basis subject to 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. As of December 31, 2019, the total liability from the TRA was $216.5 million with $14.6 million reflected in current liabilities based on the expected timing of our next payment. The payments under the TRA will not be conditional on a holder of rights under the TRA having a continued ownership interest in either Cactus LLC or Cactus Inc. The term of the TRA commenced upon completion of our IPO and will continue until all tax benefits that are subject to the TRA have been utilized or expired, unless we exercise our right to terminate the TRA. If we elect to terminate the TRA early (or it is terminated early due to certain mergers, asset sales, other forms of business combinations or other changes of control), our obligations under the TRA would accelerate and we would be required to make an immediate payment equal to the present value of the anticipated future payments to be made by us under the TRA and such payment is expected to be substantial. The calculation of anticipated future payments will be based upon certain assumptions and deemed events set forth in the TRA, including the assumptions that (i) we have sufficient taxable income to fully utilize the tax benefits covered by the TRA and (ii) any CW Units (other than those held by Cactus Inc.) outstanding on the termination date are deemed to be redeemed on the termination date. Any early termination payment may be made significantly in advance of the actual realization, if any, of the future tax benefits to which the termination payment relates. We may 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 from the due date for such payment until the payment date. |
Equity
Equity | 12 Months Ended |
Dec. 31, 2019 | |
Equity | |
Equity | 10. Equity Redemptions of CW Units Pursuant to the First Amended and Restated Limited Liability Company Operating Agreement of Cactus LLC (the “Cactus LLC Agreement”), each holder of CW Units (“CW Unit Holder”) has, subject to certain limitations, the right (the “Redemption Right”) to cause Cactus LLC to acquire all or at least a minimum portion of its CW Units for, at Cactus LLC’s election, (x) shares of our Class A common stock at a redemption ratio of one share of Class A common stock for each CW Unit redeemed, subject to conversion rate adjustments for stock splits, stock dividends and reclassification and other similar transactions, or (y) an equivalent amount of cash. Alternatively, upon the exercise of the Redemption Right, Cactus Inc. (instead of Cactus LLC) will have the right (the “Call Right”) to acquire each tendered CW Unit directly from the exchanging CW Unit Holder for, at its election, (x) one share of Class A common stock, subject to conversion rate adjustments for stock splits, stock dividends and reclassifications and other similar transactions, or (y) an equivalent amount of cash. In connection with any redemption of CW Units pursuant to the Redemption Right or our Call Right, the corresponding number of shares of Class B common stock, par value $0.01 per share (“Class B common stock”), will be canceled. The following is a rollforward of ownership of legacy CW Units by legacy CW Unit Holders. CW Units (in thousands) CW Units held by legacy CW Unit Holders as of February 7, 2018 60,558 IPO (12,118) July 2018 Follow-on Offering (11,197) Other CW Unit redemptions (7) CW Units held by legacy CW Unit Holders as of December 31, 2018 37,236 March 2019 Secondary Offering (8,474) Other CW Unit redemptions (804) CW Units held by legacy CW Unit Holders as of December 31, 2019 27,958 On March 19, 2019, Cactus Inc. entered into an underwriting agreement by and among Cactus Inc., Cactus LLC, certain selling stockholders of Cactus (the “Selling Stockholders”) and the underwriters named therein, providing for the offer and sale of Class A common stock by the Selling Stockholders (the “March 2019 Secondary Offering”). As described in the prospectus supplement dated March 19, 2019 and filed with the Securities and Exchange Commission on March 20, 2019, in connection with the March 2019 Secondary Offering, certain Selling Stockholders owning CW Units exercised their Redemption Right with respect to 8.5 million CW Units, together with a corresponding number of shares of Class B common stock, as provided in the Cactus LLC Agreement. The March 2019 Secondary Offering closed on March 21, 2019, at which time, in exercise of its Call Right, Cactus Inc. acquired the redeemed CW Units and a corresponding number of shares of Class B common stock (which shares of Class B common stock were then canceled) and issued 8.5 million shares of Class A common stock to the underwriters at the direction of the redeeming Selling Stockholders, as provided in the Cactus LLC Agreement. In addition, certain other Selling Stockholders sold 26 thousand shares of Class A common stock in the March 2019 Secondary Offering, which shares were owned by them directly prior to the closing of this offering. Cactus did not receive any of the proceeds from the sale of common stock in the March 2019 Secondary Offering. Cactus incurred $1.0 million in offering expenses which were recorded in other income (expense), net, in the consolidated statement of income during the first quarter of 2019. In addition to the redemptions associated with the March 2019 Secondary Offering, certain legacy CW Unit Holders redeemed 0.8 million CW Units (together with a corresponding number of shares of Class B common stock) pursuant to the Redemption Right, for the year ended December 31, 2019. Cactus acquired the redeemed CW Units and a corresponding number of shares of Class B common stock (which shares of Class B common stock were then canceled) and issued 0.8 million shares of Class A common stock to the redeeming CW Unit Holders. Any exercise by Cactus LLC or Cactus Inc. of the right to acquire redeemed CW Units for cash must be approved by the board of directors of Cactus Inc. To date, neither Cactus Inc. nor Cactus LLC have elected to acquire CW Units for cash in connection with exchanges by CW Unit Holders. It is the policy of Cactus Inc. that any exercise by Cactus Inc. or Cactus LLC of the right to acquire redeemed CW Units for cash must be approved by a majority of those members of the board of directors of Cactus Inc. who have no interest in such transaction. Pursuant to the tax receivable agreement (the “TRA”) described in Note 9, the CW Units redeemed in the March 2019 Secondary Offering and other CW Unit redemptions for the year ended December 31, 2019, created additional TRA liability. Also, as a result, Cactus Inc. increased its ownership in Cactus LLC and accordingly, increased its equity by $48.7 million from the non-controlling interest. During 2019, we corrected for misstatements of equity between Cactus Inc. and non-controlling interest related to our July 2018 Follow-on Offering by reducing non-controlling interest and increasing additional paid-in capital and accumulated other comprehensive income. This related to immaterial errors associated with the ownership percentage change used in the underlying calculation giving effect to the offering. Additionally, we finalized the majority of the Company’s tax returns and identified immaterial adjustments. Dividends On October 29, 2019, our board of directors authorized the introduction of a regular quarterly cash dividend of $0.09 per share of Class A common stock of which $4.2 million was paid on December 19, 2019. We currently intend to continue paying the quarterly dividend while retaining the balance of future earnings, if any, to finance the growth of our business. However, our future dividend policy is within the discretion of our board of directors and will depend upon then-existing conditions, including our results of operations, financial condition, capital requirements, investment opportunities, statutory and contractual restrictions on our ability to pay dividends and other factors our board of directors may deem relevant. Limitation of Members’ Liability Under the terms of the Cactus Wellhead LLC Agreement, the members of Cactus LLC are not obligated for debt, liabilities, contracts or other obligations of Cactus LLC. Profits and losses are allocated to members as defined in the Cactus Wellhead LLC Agreement. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2019 | |
Related Party Transactions | |
Related Party Transactions | 11. Related Party Transactions When needed, we rent a plane under dry-lease from a company owned by a member of Cactus LLC. These transactions are under short-term rental arrangements and the agreement governing these transactions does not qualify as a lease under ASC 842. We pay a base hourly rent of $1,750 per flight hour of use of the aircraft, payable monthly, for the hours of aircraft operation during the prior calendar month. We are also responsible for employing pilots and certain fuel true up fees. During 2019, 2018 and 2017, expense recognized in connection with these rentals totaled $0.3 million, $0.4 million and $0.3 million, respectively. As of December 31, 2019 and 2018, we owed less than $0.1 million to the related party which are included in accounts payable in the consolidated balance sheets. The TRA agreement is with certain direct and indirect holders of CW Units, including certain of our officers, directors and employees. These TRA Holders have the right in the future to receive 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. The total liability from the TRA as of December 31, 2019 was $216.5 million. We pay professional fees to assist with maintenance of the TRA which are reimbursable from the TRA Holders. As of December 31, 2019, we had a $0.3 million balance due from the TRA Holders for fees paid in 2019. The balance is included in accounts receivable, net in the consolidated balance sheet. No such balance existed as of December 31, 2018. Distributions made by Cactus LLC are generally required to be made pro rata among all its members. For the year ended December 31, 2019, Cactus LLC distributed $14.2 million to Cactus Inc. to fund the 2019 TRA liability payments and estimated tax payments and made pro rata distributions to its other members totaling $8.4 million over the same period. For the year ended December 31, 2018, Cactus LLC made $3.8 million in distributions to Cactus Inc. to cover its estimated tax payments and also made an aggregate $5.8 million in pro-rata distributions to its other members over the same period. Prior to our IPO, we were party to a management services agreement with two Cactus LLC members, whereby Cactus paid an annual management fee totaling approximately $0.3 million, payable in four installments, each to be paid quarterly in advance, prorated for any partial year. In conjunction with our IPO, the management services agreement terminated pursuant to its terms. Management fee expense totaled $0.1 million and $0.3 million for 2018 and 2017, respectively. There were no outstanding balances due as of December 31, 2019 and 2018 under the management services agreement. Prior to our IPO, on January 25, 2018, Cactus LLC paid a cash distribution of $26.0 million to holders of CW Units at that time. This distribution was funded by borrowing under a revolving credit facility. The purpose of the distribution was to provide funds to these owners to pay their federal and state tax liabilities associated with taxable income recognized by them for periods prior to the completion of our IPO as a result of their ownership interests in Cactus LLC. The borrowings under this revolving credit facility were repaid during the first quarter of 2018. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies | |
Commitments and Contingencies | 12. Commitments and Contingencies We are involved in various disputes arising in the ordinary course of business. Management does not believe the outcome of these disputes will have a material adverse effect on our consolidated financial position or consolidated results of operations. |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Dec. 31, 2019 | |
Earnings Per Share | |
Earnings Per Share | 13. Earnings Per Share Basic earnings per share of Class A common stock is calculated by dividing the net income attributable to Cactus Inc. during the period by the weighted average number of shares of Class A common stock outstanding during the same period. Diluted earnings per share of Class A common stock is calculated by dividing the net income attributable to Cactus Inc. during that period by the weighted average number of common shares outstanding assuming all potentially dilutive shares were issued. We use the “if-converted” method to determine the potential dilutive effect of outstanding CW Units (and corresponding shares of outstanding Class B common stock), and the treasury stock method to determine the potential dilutive effect of unvested restricted stock units assuming that the proceeds will be used to purchase shares of Class A common stock. The following table summarizes the basic and diluted earnings per share calculations: Year Ended December 31, 2019 2018 Numerator: Net income attributable to Cactus Inc.—basic $ 85,612 $ 51,683 Net income attributable to non-controlling interest (1) 56,012 — Net income attributable to Cactus Inc.—diluted (1) $ 141,624 $ 51,683 Denominator: Weighted average Class A shares outstanding—basic 44,983 32,329 Effect of dilutive shares (2) 30,370 366 Weighted average Class A shares outstanding—diluted (2) 75,353 32,695 Earnings per Class A share—basic $ 1.90 $ 1.60 Earnings per Class A share—diluted (1) (2) $ 1.88 $ 1.58 (1) Under the if-converted method for the twelve months ended December 31, 2019, the numerator is adjusted in the calculation of diluted earnings per share to include $73.7 million of additional pre-tax income attributable to non-controlling interest adjusted for a corporate effective tax rate of 24%. (2) Diluted earnings per share for the year ended December 31, 2018 excludes 37.2 million shares of Class B common stock as the effect would be anti-dilutive. |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information | 12 Months Ended |
Dec. 31, 2019 | |
Supplemental Cash Flow Information | |
Supplemental Cash Flow Information | 14. Supplemental Cash Flow Information Non-cash investing and financing activities were as follows: Year Ended December 31, 2019 2018 2017 Property and equipment acquired under finance leases $ 3,008 $ 9,966 $ 12,941 Property and equipment in payables 1,052 1,312 1,553 Cash paid for interest and income taxes was as follows: Year Ended December 31, 2019 2018 2017 Cash paid for interest $ 1,187 $ 3,583 $ 18,826 Cash paid for income taxes, net 5,301 7,613 1,535 In conjunction with our IPO, we issued and contributed shares of Class B common stock to owners of CW Units equal to the number of outstanding CW Units held by the owners thereof. The Class B common stock has no economic interest and does not share in cash dividends or liquidation rights. During the year ended December 31, 2019, we issued 9.3 million shares of Class A common stock pursuant to redemptions of CW Units by holders thereof. |
Quarterly Financial Information
Quarterly Financial Information (Unaudited) | 12 Months Ended |
Dec. 31, 2019 | |
Quarterly Financial Information Disclosure [Abstract] | |
Quarterly Financial Information [Text Block] | 15. Quarterly Financial Information (Unaudited) Summarized quarterly financial data for the years ended December 31, 2019 and 2018 are presented in the following tables. In the following tables, the sum of basic and diluted earnings per share for the four quarters may differ from the annual amounts due to the required method of computing weighted average number of shares in the respective periods. Additionally, due to the effect of rounding, the sum of the individual quarterly earnings per share amounts may not equal the calculated year-to-date earnings per share amount. 2019 Quarters First Second Third Fourth Total Total revenues $ 158,875 $ 168,493 $ 160,808 $ 140,238 $ 628,414 Income from operations 48,492 51,450 47,123 36,085 183,150 Net income 48,446 40,750 35,833 31,274 156,303 Less: net income attributable to non-controlling interest 21,639 19,342 16,494 13,216 70,691 Net income attributable to Cactus Inc. 26,807 21,408 19,339 18,058 85,612 Earnings per Class A share—basic $ 0.69 $ 0.46 $ 0.41 $ 0.38 $ 1.90 Earnings per Class A share—diluted $ 0.59 $ 0.45 $ 0.41 $ 0.38 $ 1.88 Dividends declared per common share $ — $ — $ — $ 0.09 $ 0.09 2018 Quarters First Second Third Fourth Total Total revenues $ 115,110 $ 138,543 $ 150,658 $ 139,824 $ 544,135 Income from operations 35,217 46,487 52,133 43,864 177,701 Net income 26,408 41,542 43,648 38,683 150,281 Less: pre-IPO net income attributable to Cactus LLC 13,648 — — — 13,648 Less: net income attributable to non-controlling interest 9,007 29,208 24,976 21,759 84,950 Net income attributable to Cactus Inc. 3,753 12,334 18,672 16,924 51,683 Earnings per Class A share—basic $ 0.14 $ 0.47 $ 0.52 $ 0.45 $ 1.60 Earnings per Class A share—diluted $ 0.14 $ 0.46 $ 0.52 $ 0.44 $ 1.58 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies and Other Items (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Preparation Of Interim Financial Statements And Other Items | |
Basis of Presentation | Basis of Presentation The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). These consolidated financial statements include the accounts of Cactus Inc. and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated upon consolidation. Cactus Inc. is the sole managing member of Cactus LLC and consolidates the financial results of Cactus LLC and its subsidiaries and reports a non-controlling interest related to the portion of CW Units not owned by Cactus Inc., which reduces net income attributable to holders of Cactus Inc.’s Class A common stock. |
Use of Estimates | Use of Estimates In preparing our consolidated financial statements in conformity with 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 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 consolidated financial statements. |
Segment Information | Segment Information We operate in a single operating segment, which reflects how we manage our business and the fact that all of our products and services are dependent upon the oil and natural gas industry. Substantially all of our products and services are sold in the U.S., which consists largely of oil and natural gas exploration and production companies. We operate in the United States, Australia and China. Our operations in Australia and China represented less than 10% of our consolidated operations for all periods presented in these consolidated financial statements. |
Concentration of Credit Risk | Concentrations of Credit Risk Our assets that are potentially subject to concentrations of credit risk are cash and cash equivalents and accounts receivable. We manage the credit risk associated with these financial instruments by transacting only with what management believes are financially secure counterparties, requiring credit approvals and credit limits and monitoring counterparties’ financial condition. Our receivables are spread over a number of customers, a majority of which are operators and suppliers to the oil and natural gas industry. Our maximum exposure to credit loss in the event of non‑performance by the customer is limited to the receivable balance. We perform ongoing credit evaluations and monitoring as to the financial condition of our customers with respect to trade receivables. Generally, no collateral is required as a condition of sale. We also control our exposure associated with trade receivables by discontinuing sales and service to non-paying customers. We had one customer representing 10% of total revenues for the year ended December 31, 2019 and one customer representing 11% of total revenues in each of the years ended December 31, 2018 and 2017. |
Significant Vendors | Significant Vendors We purchase a significant portion of supplies, equipment and machined components from a single vendor. During 2019, 2018 and 2017, purchases from this vendor totaled $36.5 million, $46.7 million and $33.4 million, respectively. These figures represent approximately 16%, 21% and 22% for the respective periods, of total third party vendor purchases of raw materials, finished products, equipment, machining and other services. Amounts due to the vendor included in accounts payable, in the consolidated balance sheets, as of December 31, 2019 and 2018 totaled $4.3 million and $5.0 million, respectively. |
Tax Receivable Agreement | Tax Receivable Agreement (TRA) In connection with our IPO, we entered into the TRA with certain direct and indirect owners of Cactus LLC (the “TRA Holders”). The TRA generally provides for 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 or franchise tax that Cactus Inc. actually realizes or is deemed to realize in certain circumstances. Cactus Inc. will retain the benefit of the remaining 15% of these net cash savings. We account for amounts payable under the TRA in accordance with Accounting Standards Codification (“ASC”) Topic 450, Contingencies. As such, subsequent changes to the measurement of the TRA liability are recognized in the statements of income as a component of other income (expense), net. For the year ended December 31, 2019, we recognized a $5.3 million gain on the change in the TRA liability. See Note 9 for further details on the TRA liability. |
Revenue Recognition | Revenue Recognition The majority of our revenues are derived from short-term contracts for fixed consideration. Product sales generally do not include right of return or other significant post-delivery obligations. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Revenues are recognized when we satisfy a performance obligation by transferring control of the promised goods or providing services to our customers at a point in time, in an amount specified in the contract with our customer and that reflects the consideration we expect to be entitled to in exchange for those goods or services. The majority of our contracts with customers contain a single performance obligation to provide agreed upon products or services. For contracts with multiple performance obligations, we allocate revenue to each performance obligation based on its relative standalone selling price. We do not assess whether promised goods or services are performance obligations if they are immaterial in the context of the contract with the customer. We do not incur any material costs of obtaining contracts. We do not adjust the amount of consideration per the contract for the effects of a significant financing component when we expect, at contract inception, that the period between the transfer of a promised good or service to a customer and when the customer pays for that good or service will be one year or less, which is in substantially all cases. Payment terms and conditions vary, although terms generally include a requirement of payment within 30 to 45 days. Revenues are recognized net of any taxes collected from customers, which are subsequently remitted to governmental authorities. We treat shipping and handling associated with outbound freight as a fulfillment cost instead of as a separate performance obligation. We recognize the cost for the associated shipping and handling when incurred as an expense in cost of sales. Our revenues are derived from three sources: products, rentals, and field service and other: Product revenue. Product revenues are primarily derived from the sale of wellhead systems and production trees. Revenue is recognized when the products have shipped and the customer obtains control of the products. Rental revenue. Rental revenues are primarily derived from the rental of equipment, tools and products used for well control during the drilling and completion phases to customers. Our rental agreements are directly with our customers and provide for a rate based on the period of time the equipment is used or made available to the customer. In addition, customers are charged for repair costs either through an agreed upon rate or as incurred. Revenue is recognized ratably over the rental period, which tends to be short-term in nature with most equipment on site for less than 90 days. Field service and other revenue. We provide field services to our customers based on contractually agreed rates. Other revenues are derived from providing repair and reconditioning services to customers who have installed wellheads and production trees on their wellsite. Revenues are recognized as the services are performed or rendered. |
Foreign Currency Translation | Foreign Currency Translation The financial position and results of operations of our foreign subsidiaries are measured using the local currency as the functional currency. Revenues and expenses of the subsidiaries have been translated into U.S. dollars at average exchange rates prevailing during the period. Assets and liabilities have been translated at the rates of exchange on the balance sheet dates. The resulting translation gain and loss adjustments have been recorded directly as a separate component of other comprehensive income in the consolidated statements of comprehensive income and stockholders’ equity. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in our consolidated statements of income as incurred. |
Stock-based Compensation | Stock‑based Compensation We measure the cost of equity‑based awards based on the grant date fair value and we allocate the compensation expense over the corresponding service period, which is usually the vesting period, using the straight‑line method. The grant date fair value is determined by the average price of the trading high and trading low of our Class A common stock on the effective date of the grant. |
Income Taxes | 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 rates in effect for the year in which the differences are expected to reverse. We regularly evaluate the valuation allowances established for deferred tax assets for which future realization is uncertain. In assessing the realizability of deferred tax assets, we consider both positive and negative evidence, including scheduled reversals of deferred tax assets and liabilities, projected future taxable income, tax planning strategies and results of recent operations. If, based on the weight of available evidence, it is more likely than not that the deferred tax assets will not be realized, a valuation allowance is recorded. Cactus Inc. is a corporation and is subject to U.S. federal as well as state income tax related to its ownership percentage in Cactus LLC. Cactus LLC is a limited liability company treated as a partnership for U.S. federal income tax purposes and files a U.S. Return of Partnership Income, which includes both our U.S. and foreign operations. Consequently, the members of Cactus LLC are taxed individually on their share of earnings for U.S. federal and state income tax purposes. However, Cactus LLC is subject to the Texas Margins Tax. Additionally, our operations in both Australia and China are subject to local country income taxes. See Note 5 “Income Taxes” for additional information regarding income taxes. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash in excess of current operating requirements is invested in short-term interest-bearing investments with maturities of three months or less at the date of purchase and is stated at cost, which approximates fair value. Throughout the year we maintained cash balances that were not covered by federal deposit insurance. We have not experienced any losses in such accounts. |
Accounts Receivable | Accounts Receivable We extend credit to customers in the normal course of business. We do not accrue interest on delinquent accounts receivable. Accounts receivable includes amounts billed and currently due from customers and unbilled amounts for products delivered and services performed for which billings had not yet been submitted to the customers. Total unbilled revenue included in accounts receivable as of December 31, 2019 and 2018 was $23.8 million and $26.8 million, respectively. We maintain an allowance for doubtful accounts to provide for the estimated amount of receivables that will not be collected. In our determination of the allowance for doubtful accounts, we assess those amounts where there are concerns over collection and record an allowance for that amount. Estimating this amount requires us to analyze the financial condition of our customers, our historical experience and any specific concerns. Earnings are charged with a provision for doubtful accounts based on this review of the collectability of accounts. Accounts deemed uncollectible are applied against the allowance for doubtful accounts. Accounts receivable is net of allowance for doubtful accounts of $0.8 million and $0.6 million as of December 31, 2019 and 2018, respectively. The following is a rollforward of our allowance for doubtful accounts: Balance at Balance at Beginning of Expense End of Period (recovery) Write off Other Period Year Ended December 31, 2019 $ 576 $ 355 $ (94) $ — $ 837 Year Ended December 31, 2018 740 — (164) — 576 Year Ended December 31, 2017 851 (100) (3) (8) 740 |
Inventories | Inventories Inventories are stated at the lower of cost or net realizable value. Cost is determined using standard cost (which approximates average cost) and weighted average methods. 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. Reserves are made for excess and obsolete items based on a range of factors, including age, usage and technological or market changes that may impact demand for those products. The inventory obsolescence reserve was $9.8 million and $7.3 million as of December 31, 2019 and 2018, respectively. The following is a rollforward of our inventory obsolescence reserve: Balance at Balance at Beginning of End of Period Expense Write off Other Period Year Ended December 31, 2019 $ 7,310 $ 2,552 $ (90) $ — $ 9,772 Year Ended December 31, 2018 5,885 1,451 — (26) 7,310 Year Ended December 31, 2017 4,770 1,259 (103) (41) 5,885 |
Property and Equipment | Property and Equipment Property and equipment are stated at cost. We manufacture or construct most of our own rental assets and during the manufacture of these assets, they are reflected as construction in progress until complete. We depreciate the cost of property and equipment using the straight‑line method over the estimated useful lives and depreciate our rental assets to their salvage value. Leasehold improvements are amortized over the shorter of the remaining lease term or economic life of the related assets. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss are reflected in income for the period. The cost of maintenance and repairs is charged to income as incurred; significant renewals and improvements are capitalized. Estimated useful lives are as follows: Land N/A Buildings 10 - 30 years Machinery and equipment 2 - 12 years Vehicles under finance lease 3 years Rental equipment 2 - 8 years Furniture and fixtures 5 years Computers and software 4 years Property and equipment as of December 31, 2019 and 2018 consists of the following: December 31, 2019 2018 Land $ 3,203 $ 3,614 Buildings and improvements 21,655 20,803 Machinery and equipment 55,494 47,606 Vehicles under finance lease 24,275 25,165 Rental equipment 161,156 124,002 Furniture and fixtures 1,684 1,623 Computers and software 3,317 3,094 Gross property and equipment 270,784 225,907 Less: Accumulated depreciation (123,397) (96,412) Net property and equipment 147,387 129,495 Construction in progress 14,361 12,559 Total property and equipment, net $ 161,748 $ 142,054 Depreciation and amortization was $38.9 million, $30.2 million and $23.3 million for 2019, 2018 and 2017, respectively. Depreciation and amortization expense is included in the consolidated statements of income as follows: Year Ended December 31, 2019 2018 2017 Cost of product revenue $ 3,304 $ 3,262 $ 3,169 Cost of rental revenue 24,881 17,997 14,912 Cost of field service and other revenue 9,986 8,456 4,786 Selling, general and administrative expenses 683 438 404 Total depreciation and amortization $ 38,854 $ 30,153 $ 23,271 |
Impairment of Long-Lived Assets | Impairment of Long‑Lived Assets We review the recoverability of long‑lived assets, such as property and equipment, when events or changes in circumstances occur that indicate the carrying value of the asset or asset group may not be recoverable. The assessment of possible impairment is based on our ability to recover the carrying value of the asset or asset group from the expected future pre‑tax cash flows (undiscounted) of the related operations. If these cash flows are less than the carrying value of such asset, an impairment loss is recognized for the difference between estimated fair value and carrying value. We concluded there were no indicators evident or other circumstances present that these assets were not recoverable and accordingly, no impairment charges of long‑lived assets were recognized for 2019, 2018 and 2017. |
Goodwill | Goodwill Goodwill represents the excess of acquisition consideration paid over the fair value of net assets acquired. All of the goodwill recorded on our consolidated balance sheets resulted from the acquisition of a manufacturing facility in Bossier City, Louisiana in 2011. The facility supports our full range of products, rentals and services. Goodwill is not amortized, but is reviewed for impairment on an annual basis (or more frequently if impairment indicators exist). We have established December 31 as the date of our annual test for impairment of goodwill. We perform a qualitative assessment of the fair value of our reporting unit before calculating the fair value of the reporting unit in step one of the two‑step goodwill impairment model. If, through the qualitative assessment, we determine that it is more likely than not that the reporting unit’s fair value is greater than its carrying value, the remaining impairment steps would be unnecessary. If there are indicators that goodwill has been impaired and thus the two‑step goodwill impairment model is necessary, step one is to determine the fair value of the reporting unit and compare it to the reporting unit’s carrying value. Fair value is determined based on the present value of estimated cash flows using available information regarding expected cash flows of each reporting unit, discount rates and the expected long‑term cash flow growth rates. If the fair value of the reporting unit exceeds the carrying value, goodwill is not impaired and no further testing is performed. The second step is performed if the carrying value exceeds the fair value. The implied fair value of the reporting unit’s goodwill must be determined and compared to the carrying value of the goodwill. If the carrying value of a reporting unit’s goodwill exceeds its implied fair value, an impairment loss equal to the difference will be recorded. We concluded that there was no impairment of goodwill in 2019, 2018 or 2017 based on our annual impairment analysis. |
Accrued Expenses and Other Current Liabilities | Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities as of December 31, 2019 and 2018 are as follows: December 31, 2019 2018 Payroll, incentive compensation, payroll taxes and benefits $ 10,708 $ 7,842 Accrued international freight and tariffs 3,794 1,418 Income based tax payable 2,481 2,061 Accrued professional fees and other 1,790 1,512 Deferred revenue 1,371 1,110 Taxes other than income 767 1,414 Accrued workers' compensation insurance 600 — Product warranties 556 293 Total $ 22,067 $ 15,650 Self-Insurance Accrued Expenses We maintain a partially self-insured health benefit plan which provides medical and prescription drug benefits to certain of our employees electing coverage under the plan. Our exposure is limited by individual and aggregate stop loss limits via third-party insurance carriers. Our self-insurance expense is accrued based upon the aggregate of the expected liability for reported claims and the estimated liability for claims incurred but not reported, based on historical claims experience provided by our third-party insurance advisors, adjusted as necessary based upon management’s reasoned judgment. Actual employee medical claims expense may differ from estimated loss provisions based on historical experience. The liabilities for these claims are included as a component of payroll, incentive compensation, payroll taxes and benefits in the table above and were $1.6 million and $0.5 million as of December 31, 2019 and 2018, respectively. Product Warranties We generally warrant our manufactured products 12 months from the date placed in service. The estimated liability for product warranties is based on historical and current claims experience. |
Fair Value Measures | Fair Value Measurements The carrying value of cash and cash equivalents, receivables, accounts payable and accrued expenses approximates fair value based on the short-term nature of these accounts. We had no long-term debt outstanding as of December 31, 2019 or 2018. |
Employee Benefit Plan | Employee Benefit Plan Our employees within the United States are eligible to participate in a 401(k) plan sponsored by us. These employees are eligible to participate on the first day of the month following 30 days of employment and if they are at least eighteen years of age. All eligible employees may contribute a percentage of their compensation subject to a maximum imposed by the Internal Revenue Code. During 2019, 2018 and 2017, we matched 100% of the first 3% of gross pay contributed by each employee and 50% of the next 4% of gross pay contributed by each employee. We may also make additional non‑elective employer contributions at our discretion under the plan. Similar benefit plans exist for employees of our foreign subsidiaries. During 2019, 2018 and 2017, employer matching contributions totaled $3.1 million, $3.7 million and $2.2 million, respectively. For the year ended December 31, 2019, we made a non-elective contribution of $0.1 million under the Plan. No such contributions were made in 2018 or 2017. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Standards Adopted Effective January 1, 2019, we adopted Financial Accounting Standards Board (“FASB”) ASU No. 2016-02, Leases (Topic 842) by utilizing the modified retrospective approach. There was no cumulative effect adjustment required to the opening balance of retained earnings as we utilized the package of practical expedients permitted under the transition guidance within the standard. The expedient package allowed us to not reassess whether existing contracts contained a lease, to not reassess the lease classification of existing leases, and to not consider the initial direct cost for existing leases. In addition to the package of practical expedients, we also utilized expedients and elections allowing for the exclusion of leases with terms of less than twelve months across all asset classes, use of the portfolio approach and the election to not separate non-lease components from lease components. Adoption of this standard resulted in the recognition of operating lease right-of-use (“ROU”) assets of $25.3 million, reversal of previously recorded deferred rent of $0.5 million and corresponding operating short-term and long-term lease liabilities of $6.2 million and $19.6 million, respectively, on the consolidated balance sheet. Our accounting for finance leases remained substantially unchanged under the new guidance. Additionally, as a lessor, recognition of lease revenue associated with short-term equipment rentals remained consistent with previous guidance. Adoption of the standard did not have a material impact on our consolidated statements of income and consolidated statements of comprehensive income or consolidated statements of cash flows. See Note 8 for further details regarding leases. Standards Not Yet Adopted In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350), which simplifies the accounting for goodwill impairment by eliminating Step 2 of the current goodwill impairment test. In computing the implied fair value of goodwill under Step 2, an entity had to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities (including unrecognized assets and liabilities) following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Instead, under the new standard, an entity should perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The new guidance should be adopted for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. We do not expect the adoption of this pronouncement will have a material impact on our consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 changes the measurement of credit losses on financial assets measured at amortized cost, including but not limited to trade receivables. The new guidance replaces the current methodology for recognizing credit losses when it is probable that a loss has been incurred with an expected loss model that requires consideration of a broader range of information to estimate expected credit losses over the lifetime of an asset. Application of this new guidance may result in an earlier recognition of credit losses as the allowance for credit losses is measured and recorded upon the initial recognition of the financial asset. The allowance for credit losses under the new guidance represents the portion of the asset’s amortized cost basis that we do not expect to collect over the asset’s contractual life, considering past events, current conditions and reasonable and supportable forecasts of future economic conditions. We finalized our methodology for estimating expected credit losses, including the assumptions used in order to pool receivables with similar risk characteristics and adopted the new standard effective January 1, 2020. Adoption of the standard did not impact our consolidated financial statements. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies and Other Items (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Preparation Of Interim Financial Statements And Other Items | |
Rollforward of the allowance for doubtful accounts | Balance at Balance at Beginning of Expense End of Period (recovery) Write off Other Period Year Ended December 31, 2019 $ 576 $ 355 $ (94) $ — $ 837 Year Ended December 31, 2018 740 — (164) — 576 Year Ended December 31, 2017 851 (100) (3) (8) 740 |
Rollforward of inventory obsolescence reserve | Balance at Balance at Beginning of End of Period Expense Write off Other Period Year Ended December 31, 2019 $ 7,310 $ 2,552 $ (90) $ — $ 9,772 Year Ended December 31, 2018 5,885 1,451 — (26) 7,310 Year Ended December 31, 2017 4,770 1,259 (103) (41) 5,885 |
Schedule of PP&E useful lives | Land N/A Buildings 10 - 30 years Machinery and equipment 2 - 12 years Vehicles under finance lease 3 years Rental equipment 2 - 8 years Furniture and fixtures 5 years Computers and software 4 years |
Schedule of property and equipment net | December 31, 2019 2018 Land $ 3,203 $ 3,614 Buildings and improvements 21,655 20,803 Machinery and equipment 55,494 47,606 Vehicles under finance lease 24,275 25,165 Rental equipment 161,156 124,002 Furniture and fixtures 1,684 1,623 Computers and software 3,317 3,094 Gross property and equipment 270,784 225,907 Less: Accumulated depreciation (123,397) (96,412) Net property and equipment 147,387 129,495 Construction in progress 14,361 12,559 Total property and equipment, net $ 161,748 $ 142,054 |
Schedule of depreciation expense by income statement caption | Year Ended December 31, 2019 2018 2017 Cost of product revenue $ 3,304 $ 3,262 $ 3,169 Cost of rental revenue 24,881 17,997 14,912 Cost of field service and other revenue 9,986 8,456 4,786 Selling, general and administrative expenses 683 438 404 Total depreciation and amortization $ 38,854 $ 30,153 $ 23,271 |
Schedule of accrued expenses and other current liabilities | December 31, 2019 2018 Payroll, incentive compensation, payroll taxes and benefits $ 10,708 $ 7,842 Accrued international freight and tariffs 3,794 1,418 Income based tax payable 2,481 2,061 Accrued professional fees and other 1,790 1,512 Deferred revenue 1,371 1,110 Taxes other than income 767 1,414 Accrued workers' compensation insurance 600 — Product warranties 556 293 Total $ 22,067 $ 15,650 |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Inventories | |
Summary of inventories | December 31, 2019 2018 Raw materials $ 1,538 $ 1,925 Work-in-progress 4,619 3,582 Finished goods 107,214 94,330 $ 113,371 $ 99,837 |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Debt | |
Schedule of interest (income) expense | Year Ended December 31, 2019 2018 2017 Interest under bank facilities $ 315 $ 2,669 $ 18,627 Debt discount and deferred financing costs amortization 168 275 1,752 Finance lease interest 877 734 311 Other 164 45 82 Interest income (2,403) (128) (5) Interest (income) expense, net $ (879) $ 3,595 $ 20,767 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Taxes | |
Schedule of components of income (loss) before income taxes | Year Ended December 31, 2019 2018 2017 Pre-IPO Domestic $ — $ 13,370 $ 65,023 Post-IPO Domestic 173,039 146,620 — Pre-IPO Foreign — 512 3,073 Post-IPO Foreign 15,284 9,299 — Income before income taxes $ 188,323 $ 169,801 $ 68,096 |
Schedule of provision for income taxes | Year Ended December 31, 2019 2018 2017 Current: Federal $ 1,088 $ — $ — State 1,408 1,172 594 Foreign 4,121 3,147 735 Total current income taxes 6,617 4,319 1,329 Deferred: Federal 14,853 12,589 — State 10,681 1,992 — Foreign (131) 620 220 Total deferred income taxes 25,403 15,201 220 Total provision for income taxes $ 32,020 $ 19,520 $ 1,549 |
Schedule of effective income tax rate reconciliation | Year Ended December 31, 2019 2018 2017 Income taxes at 21% (35% for 2017) statutory tax rate $ 39,548 $ 35,658 $ 23,834 Net difference resulting from: Profit of Cactus LLC pre-IPO not subject to U.S. federal tax — (2,808) (22,758) Profit of non-controlling interest not subject to U.S. federal tax (15,477) (18,570) — Foreign income taxes (net of foreign tax credit) 364 828 (302) State income taxes (excluding rate change) 4,887 2,746 594 Impact of change in forecasted state income tax rate 5,774 — — Foreign withholding taxes 988 1,056 220 Change in valuation allowance (3,888) 733 (39) Other (176) (123) — Total provision for income taxes $ 32,020 $ 19,520 $ 1,549 |
Schedule of components of deferred tax assets and liabilities | December 31, 2019 2018 Investment in Cactus LLC $ 234,629 $ 181,390 Net operating loss carryforwards — 619 Imputed interest 10,323 7,445 Tax credits 1,479 1,988 Other 155 144 Deferred tax assets 246,586 191,586 Valuation allowance (24,041) (32,533) Deferred tax asset, net $ 222,545 $ 159,053 Foreign withholding taxes $ 1,054 $ 1,036 Other 294 — Deferred tax liability, net $ 1,348 $ 1,036 |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Stock-based Compensation | |
Summary of restricted stock unit awards | A summary of restricted stock unit awards for the year ended December 31, 2019 is as follows (units in thousands): No. of RSUs Weighted Average Grant Date Fair Value Nonvested as of December 31, 2018 782 $ 19.84 Granted 221 $ 37.04 Vested (274) $ 19.50 Forfeited (39) $ 22.48 Nonvested as of December 31, 2019 690 $ 25.34 |
Revenue (Tables)
Revenue (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Revenue | |
Revenues disaggregated by category | Year Ended December 31, 2019 2018 2017 Product revenue $ 357,087 $ 290,496 $ 189,091 Rental revenue 141,816 133,418 77,469 Field service and other revenue 129,511 120,221 74,631 Total revenue $ 628,414 $ 544,135 $ 341,191 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Leases | |
Components of operating and finance lease costs | Year Ended December 31, 2019 Finance lease cost: Amortization of right-of-use assets $ 7,601 Interest expense 877 Operating lease cost 8,329 Short-term lease cost 847 Variable lease cost 528 Sublease income (455) Total lease cost $ 17,727 |
Schedule of supplemental cash flow information related to operating and finance leases | Year Ended December 31, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from finance leases $ 877 Operating cash flows from operating leases 6,828 Financing cash flows from finance leases 7,484 Total $ 15,189 Right-of-use assets obtained in exchange for new lease obligations: Operating leases $ 8,054 Finance leases 3,008 Total $ 11,062 |
Schedule of operating lease future lease payments under ASC 842 | Operating Finance 2020 $ 7,691 $ 7,434 2021 6,291 3,438 2022 3,967 768 2023 3,072 4 2024 2,453 — Thereafter 7,163 — Total undiscounted lease payments 30,637 11,644 Less: effects of discounting (3,617) (999) Present value of lease payments $ 27,020 $ 10,645 |
Schedule of finance lease future lease payments under ASC 842 | The following is the aggregate future lease payments for operating and finance leases as of December 31, 2019: Operating Finance 2020 $ 7,691 $ 7,434 2021 6,291 3,438 2022 3,967 768 2023 3,072 4 2024 2,453 — Thereafter 7,163 — Total undiscounted lease payments 30,637 11,644 Less: effects of discounting (3,617) (999) Present value of lease payments $ 27,020 $ 10,645 |
Schedule of operating lease future payments under Topic 840 | Minimum lease payments, including executory costs and interest, under capital and operating leases with non-cancelable terms as of December 31, 2018 were as follows: Operating Capital 2019 $ 6,638 $ 8,740 2020 4,618 6,790 2021 3,487 2,533 2022 2,195 41 2023 1,426 — Thereafter 3,339 — $ 21,703 $ 18,104 |
Schedule of finance lease future payments before Topic 842 | Operating Capital 2019 $ 6,638 $ 8,740 2020 4,618 6,790 2021 3,487 2,533 2022 2,195 41 2023 1,426 — Thereafter 3,339 — $ 21,703 $ 18,104 |
Schedule of weighted-average lease terms and weighted-average discount rates | December 31, 2019 Weighted average remaining lease term: Finance leases 1.51 years Operating leases 5.82 years Weighted average discount rate Finance leases 12.18 % Operating leases 3.76 % |
Equity (Tables)
Equity (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Equity | |
Schedule of CW units held by legacy CW unit holders | CW Units (in thousands) CW Units held by legacy CW Unit Holders as of February 7, 2018 60,558 IPO (12,118) July 2018 Follow-on Offering (11,197) Other CW Unit redemptions (7) CW Units held by legacy CW Unit Holders as of December 31, 2018 37,236 March 2019 Secondary Offering (8,474) Other CW Unit redemptions (804) CW Units held by legacy CW Unit Holders as of December 31, 2019 27,958 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Earnings Per Share | |
Summary of basic and diluted earnings per share | Year Ended December 31, 2019 2018 Numerator: Net income attributable to Cactus Inc.—basic $ 85,612 $ 51,683 Net income attributable to non-controlling interest (1) 56,012 — Net income attributable to Cactus Inc.—diluted (1) $ 141,624 $ 51,683 Denominator: Weighted average Class A shares outstanding—basic 44,983 32,329 Effect of dilutive shares (2) 30,370 366 Weighted average Class A shares outstanding—diluted (2) 75,353 32,695 Earnings per Class A share—basic $ 1.90 $ 1.60 Earnings per Class A share—diluted (1) (2) $ 1.88 $ 1.58 (1) Under the if-converted method for the twelve months ended December 31, 2019, the numerator is adjusted in the calculation of diluted earnings per share to include $73.7 million of additional pre-tax income attributable to non-controlling interest adjusted for a corporate effective tax rate of 24%. (2) Diluted earnings per share for the year ended December 31, 2018 excludes 37.2 million shares of Class B common stock as the effect would be anti-dilutive. |
Supplemental Cash Flow Inform_2
Supplemental Cash Flow Information (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Supplemental Cash Flow Information | |
Schedule of non cash investing and financing activities | Year Ended December 31, 2019 2018 2017 Property and equipment acquired under finance leases $ 3,008 $ 9,966 $ 12,941 Property and equipment in payables 1,052 1,312 1,553 |
Schedule of cash paid for interest and income taxes, net | Year Ended December 31, 2019 2018 2017 Cash paid for interest $ 1,187 $ 3,583 $ 18,826 Cash paid for income taxes, net 5,301 7,613 1,535 |
Quarterly Financial Informati_2
Quarterly Financial Information (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Quarterly Financial Information Disclosure [Abstract] | |
Quarterly Financial Information [Table Text Block] | 2019 Quarters First Second Third Fourth Total Total revenues $ 158,875 $ 168,493 $ 160,808 $ 140,238 $ 628,414 Income from operations 48,492 51,450 47,123 36,085 183,150 Net income 48,446 40,750 35,833 31,274 156,303 Less: net income attributable to non-controlling interest 21,639 19,342 16,494 13,216 70,691 Net income attributable to Cactus Inc. 26,807 21,408 19,339 18,058 85,612 Earnings per Class A share—basic $ 0.69 $ 0.46 $ 0.41 $ 0.38 $ 1.90 Earnings per Class A share—diluted $ 0.59 $ 0.45 $ 0.41 $ 0.38 $ 1.88 Dividends declared per common share $ — $ — $ — $ 0.09 $ 0.09 2018 Quarters First Second Third Fourth Total Total revenues $ 115,110 $ 138,543 $ 150,658 $ 139,824 $ 544,135 Income from operations 35,217 46,487 52,133 43,864 177,701 Net income 26,408 41,542 43,648 38,683 150,281 Less: pre-IPO net income attributable to Cactus LLC 13,648 — — — 13,648 Less: net income attributable to non-controlling interest 9,007 29,208 24,976 21,759 84,950 Net income attributable to Cactus Inc. 3,753 12,334 18,672 16,924 51,683 Earnings per Class A share—basic $ 0.14 $ 0.47 $ 0.52 $ 0.45 $ 1.60 Earnings per Class A share—diluted $ 0.14 $ 0.46 $ 0.52 $ 0.44 $ 1.58 |
Organization and Nature of Op_2
Organization and Nature of Operations (Details) - $ / shares shares in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Cactus LLC | ||
Organization and Nature of Operations | ||
Ownership percentage | 62.80% | 50.30% |
Class A Common Stock | ||
Organization and Nature of Operations | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares outstanding | 47,159 | 37,654 |
Voting power of shares outstanding as a percent of the total shares outstanding | 62.80% | |
Class B Common Stock | ||
Organization and Nature of Operations | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares outstanding | 27,958 | 37,236 |
Voting power of shares outstanding as a percent of the total shares outstanding | 37.20% |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies and Other Items - Significant Customers and Concentration of Credit Risk (Details) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019USD ($)customer | Dec. 31, 2018USD ($)customer | Dec. 31, 2017USD ($)customer | |
Total revenues | Customer | |||
Significant Customers and Concentration of Credit Risk | |||
Number of Customers | customer | 1 | 1 | 1 |
Concentration of risk (as a percent) | 10.00% | 11.00% | 11.00% |
Purchases | Supplier concentration | |||
Significant Customers and Concentration of Credit Risk | |||
Concentration of risk (as a percent) | 16.00% | 21.00% | 22.00% |
Purchases from the vendor | $ 36.5 | $ 46.7 | $ 33.4 |
Amounts due to the vendor | $ 4.3 | $ 5 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies and Other Items - Tax Receivable Agreement (TRA) (Details) - USD ($) $ in Millions | Feb. 12, 2018 | Dec. 31, 2019 |
Summary of Significant Accounting Policies and Other Items | ||
Tax savings payable to TRA Holders (as a percent) | 85.00% | 85.00% |
Portion of net cash savings per tax agreement retained by entity | 15.00% | |
Gain on change in TRA liability | $ 5.3 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies and Other Items - Accounts Receivable (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Accounts Receivable | |||
Unbilled revenue | $ 23,800 | $ 26,800 | |
Allowance for doubtful accounts | |||
Balance at Beginning of Period | 576 | 740 | $ 851 |
Expense (recovery) | 355 | (100) | |
Write off | (94) | (164) | (3) |
Other | (8) | ||
Balance at End of Period | $ 837 | $ 576 | $ 740 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies and Other Items - Inventories (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Summary of Significant Accounting Policies and Other Items | |||
Balance at Beginning of Period | $ 7,310 | $ 5,885 | $ 4,770 |
Expense (recovery) | 2,552 | 1,451 | 1,259 |
Write off | (90) | (103) | |
Other | (26) | (41) | |
Balance at End of Period | $ 9,772 | $ 7,310 | $ 5,885 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies and Other Items - Property and Equipment (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Property and equipment | ||
Gross property and equipment | $ 270,784 | $ 225,907 |
Less: Accumulated depreciation | (123,397) | (96,412) |
Net property and equipment | 147,387 | 129,495 |
Total property and equipment, net | 161,748 | 142,054 |
Land | ||
Property and equipment | ||
Gross property and equipment | $ 3,203 | 3,614 |
Buildings | Minimum | ||
Property and Equipment | ||
Estimated useful life (in years) | 10 years | |
Buildings | Maximum | ||
Property and Equipment | ||
Estimated useful life (in years) | 30 years | |
Buildings and improvements | ||
Property and equipment | ||
Gross property and equipment | $ 21,655 | 20,803 |
Machinery and equipment | ||
Property and equipment | ||
Gross property and equipment | $ 55,494 | 47,606 |
Machinery and equipment | Minimum | ||
Property and Equipment | ||
Estimated useful life (in years) | 2 years | |
Machinery and equipment | Maximum | ||
Property and Equipment | ||
Estimated useful life (in years) | 12 years | |
Vehicles under finance lease | ||
Property and equipment | ||
Gross property and equipment | $ 24,275 | 25,165 |
Finance lease right-of-use asset | ||
Property and Equipment | ||
Estimated useful life (in years) | 3 years | |
Rental equipment | ||
Property and equipment | ||
Gross property and equipment | $ 161,156 | 124,002 |
Rental equipment | Minimum | ||
Property and Equipment | ||
Estimated useful life (in years) | 2 years | |
Rental equipment | Maximum | ||
Property and Equipment | ||
Estimated useful life (in years) | 8 years | |
Furniture and fixtures | ||
Property and Equipment | ||
Estimated useful life (in years) | 5 years | |
Property and equipment | ||
Gross property and equipment | $ 1,684 | 1,623 |
Computers and software | ||
Property and equipment | ||
Gross property and equipment | $ 3,317 | 3,094 |
Computers and software | Maximum | ||
Property and Equipment | ||
Estimated useful life (in years) | 4 years | |
Construction in progress | ||
Property and equipment | ||
Gross property and equipment | $ 14,361 | $ 12,559 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies and Other Items - Depreciation (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Depreciation expense | |||
Total depreciation and amortization | $ 38,854 | $ 30,153 | $ 23,271 |
Cost of Sales | Product revenue | |||
Depreciation expense | |||
Depreciation - Cost of sales | 3,304 | 3,262 | 3,169 |
Cost of Sales | Rental revenue | |||
Depreciation expense | |||
Depreciation - Cost of sales | 24,881 | 17,997 | 14,912 |
Cost of Sales | Field service and other revenue | |||
Depreciation expense | |||
Depreciation - Cost of sales | 9,986 | 8,456 | 4,786 |
Selling, General and Administrative Expenses | |||
Depreciation expense | |||
Depreciation - SG&A | $ 683 | $ 438 | $ 404 |
Summary of Significant Accou_10
Summary of Significant Accounting Policies and Other Items - Impairment of Long-Lived Assets and Goodwill (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Asset impairment charges | |||
Impairment charges of long-lived assets | $ 0 | $ 0 | $ 0 |
Impairment of goodwill | $ 0 | $ 0 | $ 0 |
Summary of Significant Accou_11
Summary of Significant Accounting Policies and Other Items - Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Accrued expenses and other | ||
Payroll, incentive compensation, payroll taxes and benefits | $ 10,708 | $ 7,842 |
Accrued international freight | 3,794 | 1,418 |
Income based tax payable | 2,481 | 2,061 |
Accrued professional fees and other | 1,790 | 1,512 |
Deferred revenue | 1,371 | 1,110 |
Taxes other than income | 767 | 1,414 |
Accrued workers' compensation insurance | 600 | |
Product warranties | 556 | 293 |
Total | 22,067 | 15,650 |
Self Insurance Accrued Expenses | $ 1,600 | 500 |
Product Warranties | ||
Warranty period | 12 months | |
Long Term Debt | ||
Long-term debt | $ 0 | $ 0 |
Summary of Significant Accou_12
Summary of Significant Accounting Policies and Other Items - Employee Benefit Plans (Details) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | |
Summary of Significant Accounting Policies and Other Items | |||
Employer match of first tier of employee contribution (as a percent) | 100 | 100 | 100 |
First tier percentage of compensation eligible for match | 3 | 3 | 3 |
Employer match of second tier of employee contribution (as a percent) | 50 | 50 | 50 |
Second tier percentage of compensation eligible for match | 4 | 4 | 4 |
Employer matching contributions | $ 3.1 | $ 3.7 | $ 2.2 |
Employer non-elective contribution | $ 0.1 | $ 0 | $ 0 |
Summary of Significant Accou_13
Summary of Significant Accounting Policies and Other Items - Recent Accounting Pronouncements (Details) - USD ($) $ in Thousands | Jan. 01, 2019 | Dec. 31, 2019 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Operating lease right-of-use assets, net | $ 26,561 | |
Short-term operating lease liabilities | 6,737 | |
Long-term operating lease liabilities | $ 20,283 | |
ASU 2016-02 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Accounting Standards Update adopted | true | |
ASU method of adoption | Modified Retrospective | |
Operating lease right-of-use assets, net | $ 25,300 | |
Deferred rent | 500 | |
Short-term operating lease liabilities | 6,200 | |
Long-term operating lease liabilities | $ 19,600 | |
Use of lease practical expedient package | true | |
Cumulative effect adjustment to retained earnings | $ 0 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Summary of inventories | ||
Raw materials | $ 1,538 | $ 1,925 |
Work-in-progress | 4,619 | 3,582 |
Finished goods | 107,214 | 94,330 |
Total inventory | $ 113,371 | $ 99,837 |
Debt - Credit agreement (Detail
Debt - Credit agreement (Details) - USD ($) $ in Millions | Aug. 21, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Feb. 28, 2018 | Jul. 31, 2014 |
Long-term Debt | |||||
Long-term debt outstanding | $ 0 | $ 0 | |||
One-month LIBOR | |||||
Long-term Debt | |||||
Applicable margin rate (as a percent) | 1.50% | 1.50% | |||
Variable reference rate | one-month LIBOR | one-month LIBOR | |||
Three-month LIBOR | |||||
Long-term Debt | |||||
Applicable margin rate (as a percent) | 1.50% | 1.50% | |||
Variable reference rate | three-month LIBOR | three-month LIBOR | |||
Prior Credit Agreement | |||||
Long-term Debt | |||||
Aggregate principal amount | $ 275 | ||||
Amount outstanding | $ 0 | ||||
Letters of credit outstanding | $ 0 | ||||
ABL Credit Facility | |||||
Long-term Debt | |||||
Long-term debt outstanding | $ 0 | $ 0 | |||
Prior Revolving Credit Facility | Maximum | |||||
Long-term Debt | |||||
Maximum borrowing capacity | 50 | ||||
Prior letters of credit | |||||
Long-term Debt | |||||
Maximum borrowing capacity | $ 10 | ||||
Cactus LLC | ABL Credit Facility | |||||
Long-term Debt | |||||
Debt term | 5 years | ||||
Maximum borrowing capacity | $ 75 | ||||
Fixed charge coverage ratio | 1 | ||||
Cactus LLC | ABL Credit Facility | Minimum | |||||
Long-term Debt | |||||
Commitment fee (as a percent) | 0.25% | ||||
Cactus LLC | ABL Credit Facility | Minimum | Alternate Base Rate | |||||
Long-term Debt | |||||
Applicable margin rate (as a percent) | 0.50% | ||||
Cactus LLC | ABL Credit Facility | Minimum | Eurodollar | |||||
Long-term Debt | |||||
Applicable margin rate (as a percent) | 1.50% | ||||
Cactus LLC | ABL Credit Facility | Maximum | |||||
Long-term Debt | |||||
Commitment fee (as a percent) | 0.375% | ||||
Cactus LLC | ABL Credit Facility | Maximum | Alternate Base Rate | |||||
Long-term Debt | |||||
Applicable margin rate (as a percent) | 1.00% | ||||
Cactus LLC | ABL Credit Facility | Maximum | Eurodollar | |||||
Long-term Debt | |||||
Applicable margin rate (as a percent) | 2.00% | ||||
Cactus LLC | Letters of credit | |||||
Long-term Debt | |||||
Maximum borrowing capacity | $ 15 |
Debt - Loss on debt extinguishm
Debt - Loss on debt extinguishment (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Gain (Loss) on Extinguishment of Debt [Abstract] | |
Loss on debt extinguishment | $ 4,305 |
Loss on early extinguishment related to the write-off of unamortized debt discount | 2,100 |
Loss on early debt extinguishment related to write off of deferred loan costs | $ 2,200 |
Debt - Interest expenses (Detai
Debt - Interest expenses (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Interest Expense, net | |||
Interest under bank facilities | $ 315 | $ 2,669 | $ 18,627 |
Debt discount and deferred financing costs amortization | 168 | 275 | 1,752 |
Finance lease interest | 877 | ||
Finance lease interest, before adoption of ASU 2016-02 | 734 | 311 | |
Other | 164 | 45 | 82 |
Interest income | 2,403 | 128 | 5 |
Interest (income) expense, net | $ (879) | $ 3,595 | $ 20,767 |
Income Taxes - Components of in
Income Taxes - Components of income (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Components of income before taxes | |||
Pre-IPO Domestic | $ 13,370 | $ 65,023 | |
Post-IPO Domestic | $ 173,039 | 146,620 | |
Pre-IPO Foreign | 512 | 3,073 | |
Post-IPO Foreign | 15,284 | 9,299 | |
Income before income taxes | $ 188,323 | $ 169,801 | $ 68,096 |
Income Taxes - Provision for in
Income Taxes - Provision for income tax (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Current: | |||
Federal | $ 1,088 | ||
State | 1,408 | 1,172 | 594 |
Foreign | 4,121 | 3,147 | 735 |
Total current income taxes | 6,617 | 4,319 | 1,329 |
Deferred: | |||
Federal | 14,853 | 12,589 | |
State | 10,681 | 1,992 | |
Foreign | (131) | 620 | 220 |
Total deferred income taxes | 25,403 | 15,201 | 220 |
Total provision for income taxes | $ 32,020 | $ 19,520 | $ 1,549 |
Income Taxes - Effective income
Income Taxes - Effective income tax reconciliation (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Effective income tax rate reconciliation | |||
Income taxes at 21% (35% for 2017) statutory tax rate | $ 39,548 | $ 35,658 | $ 23,834 |
Statutory federal tax rate (as a percent) | 21.00% | 21.00% | 35.00% |
Profit of Cactus LL pre-IPO not subject to U.S. federal tax | $ (2,808) | $ (22,758) | |
Profit of non-controlling interest not subject to U.S. federal tax | $ (15,477) | (18,570) | |
Foreign income taxes (net of foreign tax credit) | 364 | 828 | (302) |
State income taxes (excluding rate change) | 4,887 | 2,746 | 594 |
Impact of change in forecasted state income tax rate | 5,774 | ||
Foreign withholding taxes | 988 | 1,056 | 220 |
Change in valuation allowance | (3,888) | 733 | (39) |
Other | (176) | (123) | |
Total provision for income taxes | $ 32,020 | $ 19,520 | $ 1,549 |
Effective tax rate | 17.00% | 11.50% | 2.30% |
Income Taxes - Deferred tax (De
Income Taxes - Deferred tax (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Components of deferred tax assets and liabilities | ||
Investment in Cactus LLC | $ 234,629 | $ 181,390 |
Net operating loss carryforwards | 619 | |
Imputed interest | 10,323 | 7,445 |
Tax credits | 1,479 | 1,988 |
Other | 155 | 144 |
Deferred tax assets | 246,586 | 191,586 |
Valuation allowance | (24,041) | (32,533) |
Deferred tax asset, net | 222,545 | 159,053 |
Foreign withholding taxes | 1,054 | 1,036 |
Other | 294 | |
Deferred tax liability, net | $ 1,348 | $ 1,036 |
Income Taxes - Operating Losses
Income Taxes - Operating Losses (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Foreign | |||
Operating Loss | |||
Net operating losses | $ 0 | $ 1.4 | $ 1.6 |
Income Taxes - Valuation allowa
Income Taxes - Valuation allowance (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Line Items] | |||
Income Tax Expense (Benefit) | $ 32,020 | $ 19,520 | $ 1,549 |
Valuation allowance | 24,041 | $ 32,533 | |
Deferred Tax Asset Investment In Subsidiary [Member] | |||
Income Tax Disclosure [Line Items] | |||
Income Tax Expense (Benefit) | 5,400 | ||
Increase (decrease) in valuation allowance | 5,400 | ||
Valuation allowance | $ 22,700 |
Income Taxes - Liabilities rela
Income Taxes - Liabilities related to TRA and Uncertain Tax Benefits (Details) - USD ($) $ in Millions | Feb. 12, 2018 | Dec. 31, 2019 | Dec. 31, 2018 |
Liabilities Related To Tax Receivable Agreement [Abstract] | |||
Tax Receivable Agreement Liability | $ 216.5 | ||
Tax Savings Payable To TRA Holders As Percent | 85.00% | 85.00% | |
Unrecognized Tax Benefits, Income Tax Penalties and Interest Expense [Abstract] | |||
Unrecognized Tax Benefits | $ 0 | $ 0 |
Stock-based Compensation (Detai
Stock-based Compensation (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Stock-based Compensation | |||
Shares available for grant | 2,000 | ||
Restricted Stock Units | |||
No. of Stock Units | |||
Nonvested restricted stock units, beginning of period | 782 | ||
Granted (in units) | 221 | ||
Vested (in units) | (274) | ||
Forfeited (in units) | (39) | ||
Nonvested restricted stock units, end of period | 690 | 782 | |
Weighted Average Grant Date Fair Value | |||
Nonvested restricted stock units, beginning of period | $ 19.84 | ||
Granted (in dollars per share) | 37.04 | ||
Vested (in dollars per share) | 19.50 | ||
Forfeited (in dollars per share) | 22.48 | ||
Nonvested restricted stock units, end of period | $ 25.34 | $ 19.84 | |
Stock-based Compensation | |||
Vesting period | 3 years | ||
Unrecognized compensation cost | $ 11.1 | ||
Weighted average period over which unrecognized compensation cost is expected to be recognized | 2 years | ||
Selling, General and Administrative Expenses | |||
Stock-based Compensation | |||
Share-based compensation costs recognized | $ 7 | $ 4.7 | $ 0 |
Revenue (Details)
Revenue (Details) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Product revenue | |||
Disaggregation of revenues | |||
Total revenue | 57.00% | 53.00% | 55.00% |
Rental revenue | |||
Disaggregation of revenues | |||
Total revenue | 22.00% | 25.00% | 23.00% |
Field service and other revenue | |||
Disaggregation of revenues | |||
Total revenue | 21.00% | 22.00% | 22.00% |
Revenue - Disaggregated by cate
Revenue - Disaggregated by category (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Disaggregation of Revenue [Line Items] | |||||||||||
Total revenues | $ 140,238 | $ 160,808 | $ 168,493 | $ 158,875 | $ 139,824 | $ 150,658 | $ 138,543 | $ 115,110 | $ 628,414 | $ 544,135 | $ 341,191 |
Product revenue | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total revenues | 357,087 | 290,496 | 189,091 | ||||||||
Rental revenue | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total revenues | 141,816 | 133,418 | 77,469 | ||||||||
Field service and other revenue | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total revenues | $ 129,511 | $ 120,221 | $ 74,631 |
Revenue - Contracts with custom
Revenue - Contracts with customers (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Contract Balances | ||
Deferred revenue | $ 1,371 | $ 1,110 |
Leases (Details)
Leases (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Lessee, Lease, Description [Line Items] | |||
Total rent expense under operating leases | $ 7.7 | $ 7.1 | |
Accumulated depreciation for capital leases | $ 8.6 | ||
Minimum | |||
Lessee, Lease, Description [Line Items] | |||
Length of potential lease renewal for operating leases | 1 year | ||
Length of potential lease renewal for finance leases | 1 year | ||
Maximum | |||
Lessee, Lease, Description [Line Items] | |||
Length of potential lease renewal for operating leases | 10 years | ||
Length of potential lease renewal for finance leases | 10 years |
Leases - Components of lease co
Leases - Components of lease costs (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Operating and finance lease costs | |
Amortization of right-of-use assets | $ 7,601 |
Interest expense | 877 |
Operating lease cost | 8,329 |
Short-term lease cost | 847 |
Variable lease cost | 528 |
Sublease income | (455) |
Total lease cost | $ 17,727 |
Leases - Supplemental cash flow
Leases - Supplemental cash flow (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Cash paid for amounts included in the measurement of lease liabilities: | |
Operating cash flows from finance leases | $ 877 |
Operating cash flows from operating leases | 6,828 |
Financing cash flows from finance leases | 7,484 |
Total | 15,189 |
Right-of-use assets obtained for new lease obligations: | |
Operating leases | 8,054 |
Finance leases | 3,008 |
Total | $ 11,062 |
Leases - Future lease payments
Leases - Future lease payments (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Operating leases | ||
2020 | $ 7,691 | |
2021 | 6,291 | |
2022 | 3,967 | |
2023 | 3,072 | |
2024 | 2,453 | |
Thereafter | 7,163 | |
Total undiscounted lease payments | 30,637 | |
Less: effects of discounting | (3,617) | |
Present value of lease payments | 27,020 | |
Finance leases | ||
2020 | 7,434 | |
2021 | 3,438 | |
2022 | 768 | |
2023 | 4 | |
Total undiscounted lease payments | 11,644 | |
Less: effects of discounting | (999) | |
Present value of lease payments | $ 10,645 | |
Operating leases under ASC 840 | ||
2019 | $ 6,638 | |
2020 | 4,618 | |
2021 | 3,487 | |
2022 | 2,195 | |
2023 | 1,426 | |
Thereafter | 3,339 | |
Total | 21,703 | |
Capital Leases under ASC 840 | ||
2019 | 8,740 | |
2020 | 6,790 | |
2021 | 2,533 | |
2022 | 41 | |
Total | $ 18,104 |
Leases - Quantitative informati
Leases - Quantitative information (Details) | Dec. 31, 2019 |
Weighted average remaining lease term: | |
Finance lease, weighted average remaining lease term | 1 year 6 months 4 days |
Operating Lease, weighted average remaining lease term | 5 years 9 months 26 days |
Weighted average discount rate | |
Finance lease, weighted average discount rate, percent | 12.18% |
Operating lease, weighted average discount rate, percent | 3.76% |
Leases - Lessor (Details)
Leases - Lessor (Details) | 12 Months Ended |
Dec. 31, 2019 | |
Lessor, Lease, Description [Line Items] | |
Operating lease option to extend | false |
Operating lease option to terminate | false |
Minimum | |
Lessor, Lease, Description [Line Items] | |
Short-term rental periods for equipment | 1 month |
Maximum | |
Lessor, Lease, Description [Line Items] | |
Short-term rental periods for equipment | 2 months |
Lessor agreements terms | 3 months |
Tax Receivable Agreement (Detai
Tax Receivable Agreement (Details) - USD ($) $ in Thousands | Feb. 12, 2018 | Dec. 31, 2019 | Dec. 31, 2018 |
Tax Receivable Agreement | |||
Tax savings payable to TRA Holders (as a percent) | 85.00% | 85.00% | |
Tax savings benefit recorded as APIC (as a percent) | 15.00% | ||
Total TRA liability | $ 216,500 | ||
Tax Receivable Agreement Liability Current | $ 14,630 | $ 9,574 |
Equity - Redemption of CW Units
Equity - Redemption of CW Units (Details) - $ / shares | Mar. 20, 2019 | Feb. 12, 2018 | Mar. 31, 2019 | Jul. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Feb. 07, 2018 |
Redemptions of CW Units | |||||||
CW Units held by legacy CW Unit Holders | 27,958,000 | 37,236,000 | 60,558,000 | ||||
CW Unit redemptions | (804,000) | (7,000) | |||||
IPO | |||||||
Redemptions of CW Units | |||||||
CW Unit redemptions | (12,118,000) | ||||||
July 2018 follow-on offering | |||||||
Redemptions of CW Units | |||||||
CW Unit redemptions | (11,197,000) | ||||||
March 2019 Secondary Offering | |||||||
Redemptions of CW Units | |||||||
CW Unit redemptions | 8,500,000 | (8,474,000) | |||||
Class A Common Stock | |||||||
Redemptions of CW Units | |||||||
Redemption ratio, shares of common stock per unit redeemed | 1 | ||||||
Common stock, par value | $ 0.01 | $ 0.01 | |||||
Class B Common Stock | |||||||
Redemptions of CW Units | |||||||
Common stock, par value | $ 0.01 | $ 0.01 |
Equity - Redemptions and Divide
Equity - Redemptions and Dividends (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | Dec. 19, 2019 | Oct. 29, 2019 | Mar. 21, 2019 | Mar. 20, 2019 | Mar. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 |
Redemptions of CW Units | ||||||||
CW Unit redemptions | (804) | (7) | ||||||
Dividends declared per common share | $ 0.09 | |||||||
Cactus LLC | ||||||||
Redemptions of CW Units | ||||||||
Increase to equity in non-controlling interest | $ 48.7 | |||||||
March 2019 Secondary Offering | ||||||||
Redemptions of CW Units | ||||||||
CW Unit redemptions | 8,500 | (8,474) | ||||||
March 2019 Secondary Offering | Other income (expense) | ||||||||
Redemptions of CW Units | ||||||||
Offering expenses | $ 1 | |||||||
Class A Common Stock | ||||||||
Redemptions of CW Units | ||||||||
Dividends declared per common share | $ 0.09 | $ 0.09 | $ 0.09 | |||||
Dividend paid | $ 4.2 | |||||||
Class A Common Stock | March 2019 Secondary Offering | ||||||||
Redemptions of CW Units | ||||||||
Number of shares issued | 8,500 | 800 | ||||||
Number of shares sold by certain other selling stockholders | 26 | |||||||
Class B Common Stock | ||||||||
Redemptions of CW Units | ||||||||
Number of shares canceled | 800 |
Related Party Transactions (Det
Related Party Transactions (Details) $ in Thousands | Feb. 12, 2018 | Feb. 11, 2018USD ($)iteminstallment | Jan. 25, 2018USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) |
Related Party Transaction [Line Items] | ||||||
Tax savings payable to TRA Holders (as a percent) | 85.00% | 85.00% | ||||
Total TRA liability | $ 216,500 | |||||
Tax Receivable Agreement Liability | 216,500 | |||||
Tax Receivable Agreement, Liability Non Current | 201,902 | $ 138,015 | ||||
Cactus LLC | ||||||
Related Party Transaction [Line Items] | ||||||
Cash distribution to pre-IPO owners | $ 26,000 | |||||
Certain direct and indirect holders of CW Units | ||||||
Related Party Transaction [Line Items] | ||||||
Tax savings payable to TRA Holders (as a percent) | 85.00% | |||||
Tax Receivable Agreement, Liability Non Current | 216,500 | |||||
Due from Related Parties, Current | 300 | |||||
Management service agreement | ||||||
Related Party Transaction [Line Items] | ||||||
Expenses under related party agreements | 100 | $ 300 | ||||
Accounts payable to related party | 0 | 0 | ||||
Management service agreement | Cactus LLC | ||||||
Related Party Transaction [Line Items] | ||||||
Number of LLC members | item | 2 | |||||
Annual management services fee total | $ 300 | |||||
Number of installments | installment | 4 | |||||
Short-term rental agreement | Company owned by member of Cactus LLC | ||||||
Related Party Transaction [Line Items] | ||||||
Expenses under related party agreements | 300 | 400 | $ 300 | |||
Short-term rental agreement | Maximum | Company owned by member of Cactus LLC | ||||||
Related Party Transaction [Line Items] | ||||||
Accounts payable to related party | 100 | 100 | ||||
Cactus LLC | ||||||
Related Party Transaction [Line Items] | ||||||
Distribution received from subsidiary | 14,200 | 3,800 | ||||
Distributions to LLC members made by subsidiary | $ 8,400 | $ 5,800 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | |
Numerator: | ||||||||||
Net income attributable to Cactus Inc. | $ 18,058 | $ 19,339 | $ 21,408 | $ 26,807 | $ 16,924 | $ 18,672 | $ 12,334 | $ 3,753 | $ 85,612 | $ 51,683 |
Net income attributable to non-controlling interest (1) | 56,012 | |||||||||
Net income attributable to Cactus Inc. - diluted (1) | $ 141,624 | $ 51,683 | ||||||||
Denominator: | ||||||||||
Effect of dilutive shares (2) | 30,370 | 366 | ||||||||
Earnings per Class A share - basic | $ 0.45 | $ 0.52 | $ 0.47 | $ 0.14 | $ 1.60 | |||||
Earnings per Class A Share - diluted (1) (2) | $ 0.38 | $ 0.41 | $ 0.45 | $ 0.59 | $ 0.44 | $ 0.52 | $ 0.46 | $ 0.14 | $ 1.88 | $ 1.58 |
Pre-tax income attributable to non-controlling interest | $ 73,700 | |||||||||
Corporate effective interest rate, if-converted method | 24.00% | |||||||||
Class A Common Stock | ||||||||||
Denominator: | ||||||||||
Weighted average Class A Shares Outstanding - basic | 44,983 | 32,329 | ||||||||
Weighted average Class A Shares Outstanding - diluted (2) | 75,353 | 32,695 | ||||||||
Earnings per Class A share - basic | $ 0.38 | $ 0.41 | $ 0.46 | $ 0.69 | $ 1.90 | $ 1.60 | ||||
Earnings per Class A Share - diluted (1) (2) | $ 1.88 | $ 1.58 | ||||||||
Class B Common Stock | ||||||||||
Denominator: | ||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 37,200 |
Supplemental Cash Flow Inform_3
Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands, shares in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Property and equipment acquired under finance leases | $ 3,008 | $ 9,966 | $ 12,941 |
Property and equipment in payables | 1,052 | 1,312 | 1,553 |
Cash paid for interest | 1,187 | 3,583 | 18,826 |
Cash paid for income taxes, net | $ 5,301 | $ 7,613 | $ 1,535 |
Class A Common Stock | |||
Number of common stock shares issued upon redemption of CW units | 9.3 | ||
Class B Common Stock | |||
Economic interest of shares | $ 0 |
Quarterly Financial Informati_3
Quarterly Financial Information (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | Oct. 29, 2019 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Total revenues | $ 140,238 | $ 160,808 | $ 168,493 | $ 158,875 | $ 139,824 | $ 150,658 | $ 138,543 | $ 115,110 | $ 628,414 | $ 544,135 | $ 341,191 | |
Income from operations | 36,085 | 47,123 | 51,450 | 48,492 | 43,864 | 52,133 | 46,487 | 35,217 | 183,150 | 177,701 | 88,863 | |
Net income | 31,274 | 35,833 | 40,750 | 48,446 | 38,683 | 43,648 | 41,542 | 26,408 | 156,303 | 150,281 | 66,547 | |
Less: pre-IPO net income attributable to Cactus LLC | 13,648 | 13,648 | $ 66,547 | |||||||||
Less: net income attributable to non-controlling interest | 13,216 | 16,494 | 19,342 | 21,639 | 21,759 | 24,976 | 29,208 | 9,007 | 70,691 | 84,950 | ||
Net income attributable to Cactus, Inc. - basic | $ 18,058 | $ 19,339 | $ 21,408 | $ 26,807 | $ 16,924 | $ 18,672 | $ 12,334 | $ 3,753 | $ 85,612 | $ 51,683 | ||
Earnings per Class A share - basic | $ 0.45 | $ 0.52 | $ 0.47 | $ 0.14 | $ 1.60 | |||||||
Earnings per Class A Share - diluted (1) (2) | $ 0.38 | $ 0.41 | $ 0.45 | $ 0.59 | $ 0.44 | $ 0.52 | $ 0.46 | $ 0.14 | $ 1.88 | 1.58 | ||
Dividends declared per common share | 0.09 | |||||||||||
Class A Common Stock | ||||||||||||
Earnings per Class A share - basic | 0.38 | $ 0.41 | $ 0.46 | $ 0.69 | 1.90 | 1.60 | ||||||
Earnings per Class A Share - diluted (1) (2) | 1.88 | $ 1.58 | ||||||||||
Dividends declared per common share | $ 0.09 | $ 0.09 | $ 0.09 |