Earlier this morning, Cactus' (WHD) up-sized 23.0 million share IPO priced at $19, which is at the high-end of the $16-$19 expected range. The deal was originally expected to consist of 21.4 million shares. So, in total, the IPO raised $437 million in total gross proceeds, or, about 13.5% more than anticipated.
The lead underwriters on the deal were Citigroup and Credit Suisse. Shares are slated to open for trading later this morning on the NYSE.
Cactus (WHD) is a manufacturer, seller, and renter of wellheads and pressure control equipment that are used primarily for onshore unconventional oil and gas wells. More specifically, they are utilized during the drilling, completion (including fracturing), and production phases.
With 14 service centers across the U.S., WHD has exposure to all of the most active and prominent oil and gas producing regions. These include the Permian Basin, SCOOP/STACK, Marcellus, Utica, Eagle Ford, and Bakken regions. It also has one service center in Eastern Australia.
WHD's main products include its Cactus SafeDrill wellhead systems, frac stacks, zipper manifolds, and production trees. The Cactus SafeDrill wellhead systems employ technology traditionally associated with deepwater applications, which allows technicians to land and secure casing strings safely from the rig floor without the need to descend into the well cellar. The company believes it is a market leader in the onshore application of such technology.
Also, during the completion phase of a well, WHD rents frac stacks, zipper manifolds and other high-pressure equipment that are used for well control and for managing the transmission of frac fluids and proppants during the hydraulic fracturing process. And finally, for the completion production phase of a well, it sells production trees that regulate hydrocarbon production, which are installed on the wellhead after the frac tree has been removed. The company also provides repair services on all of the equipment it sells or rents.
In its IPO prospectus, WHD provided some initial guidance for 4Q17:
- Revenue will be $103.5-$106.5 million, up 112% year/year at the mid-point.
- Adj. EBITDA of $34-$35.3 million, increasing by 201% at the mid-point.
- Net income to range between $21.6-$23.5 million, up sharply from $1.6 million in the year ago quarter.
- It estimates a cash balance, as of December 31, 2017, of $7.6 million. WHD has a considerable amount of debt on the books at $248.5 million.