S-1/A

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 11, 2018

Registration No. 333-226095

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Amendment No. 1 to

Form S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

Cactus, Inc.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization) 3533
(Primary Standard Industrial
Classification Code Number) 35-2586106
(IRS Employer
Identification No.)

920 Memorial City Way, Suite 300
Houston, TX 77024
(713) 626-8800
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)

Scott Bender
President and Chief Executive Officer
920 Memorial City Way, Suite 300
Houston, TX 77024
(713) 626-8800
(Address, including zip code, and telephone number, including
area code, of agent for service)

Copies to:
Adorys Velazquez John P. Johnston Baker Botts L.L.P. 30 Rockefeller Plaza New York, NY 10112 (212) 408-2500	Shelley Barber Vinson & Elkins L.L.P. 666 Fifth Avenue, 26th Floor New York, NY 10103 (212) 237-0000

Approximate date of commencement of proposed sale of the securities to the public:
As soon as practicable after the effective date of this Registration Statement.

          If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box:    o

          If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

          If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

          If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

          Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company' in Rule 12b-2 of the Exchange Act.

Large accelerated filer o Accelerated filer o Non-accelerated filer ý
(Do not check if a
smaller reporting company) Smaller reporting company o Emerging growth company ý

          If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ý

The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment that specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until this Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

EXPLANATORY NOTE

        Cactus, Inc. is filing this Amendment No. 1 (the "Amendment") to its Registration Statement on Form S-1, File No. 333-226095 (the "Registration Statement"), as an exhibits only filing to file as exhibits the XBRL documents that inadvertently were omitted from the Registration Statement that was filed on July 9, 2018. Accordingly, this Amendment consists only of the facing page of the Registration Statement, this explanatory note, Part II of the Registration Statement, the signature pages to the Registration Statement and the filed exhibits. The preliminary prospectus has not changed and has been omitted from this Amendment.

Part II
INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13.    Other Expenses of Issuance and Distribution

        The following table sets forth an itemized statement of the amounts of all expenses (excluding underwriting discounts and commissions) payable by us in connection with the registration of the Class A common stock offered hereby. With the exception of the SEC registration fee and the FINRA filing fee, the amounts set forth below are estimates.

SEC registration fee	$	47,334
FINRA filing fee		57,529
Accounting fees and expenses		250,000
Legal fees and expenses		425,000
Printing and engraving expenses		50,000
Transfer agent and registrar fees		3,500
Miscellaneous		166,637
Total	$	1,000,000

Item 14.    Indemnification of Directors and Officers

        Section 145 of the DGCL provides that a corporation may indemnify any person who was or is a party, or is threatened to be made a party, to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise), against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. A similar standard is applicable in the case of derivative actions (i.e., actions by or in the right of the corporation), except that indemnification extends only to expenses, including attorneys' fees, incurred in connection with the defense or settlement of such action and the statute requires court approval before there can be any indemnification where the person seeking indemnification has been found liable to the corporation.

        Our amended and restated certificate of incorporation and amended and restated bylaws contain provisions that limit the liability of our directors and officers for monetary damages to the fullest extent permitted by the DGCL. Consequently, our directors will not be personally liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director, except liability:

•

for any breach of the director's duty of loyalty to our company or our stockholders;

•

for any act or omission not in good faith or that involve intentional misconduct or knowing violation of law;

•

under Section 174 of the DGCL regarding unlawful dividends and stock purchases; or

•

for any transaction from which the director derived an improper personal benefit.

        Any amendment to, or repeal of, these provisions will not eliminate or reduce the effect of these provisions in respect of any act, omission or claim that occurred or arose prior to that amendment or repeal. If the DGCL is amended to provide for further limitations on the personal liability of directors

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or officers of corporations, then the personal liability of our directors and officers will be further limited to the fullest extent permitted by the DGCL.

        In addition, we have entered into indemnification agreements with our current directors and officers containing provisions that are in some respects broader than the specific indemnification provisions contained in the DGCL. The indemnification agreements require us, among other things, to indemnify our directors against certain liabilities that may arise by reason of their status or service as directors and to advance their expenses incurred as a result of any proceeding against them as to which they could be indemnified. We also intend to enter into indemnification agreements with our future directors and officers.

        We intend to maintain liability insurance policies that indemnify our directors and officers against various liabilities, including certain liabilities under arising under the Securities Act and the Exchange Act, which may be incurred by them in their capacity as such.

        The proposed form of Underwriting Agreement filed as Exhibit 1.1 to this registration statement provides for indemnification of our directors and officers by the underwriters against certain liabilities arising under the Securities Act or otherwise in connection with this offering.

        Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

Item 15.    Recent Sales of Unregistered Securities

        None

Item 16.    Exhibits and Financial Statement Schedules

        (a)   Exhibits.

Exhibit No.			Description
	1.1	*	Form of Underwriting Agreement
	3.1		Amended and Restated Certificate of Incorporation of Cactus, Inc., effective February 12, 2018 (incorporated by reference to Exhibit 3.1 to the Registrant's Form 8-K filed with the Commission on February 12, 2018)
	3.2		Amended and Restated Bylaws of Cactus, Inc., effective February 12, 2018 (incorporated by reference to Exhibit 3.2 to the Registrant's Form 8-K filed with the Commission on February 12, 2018)
	5.1	*	Opinion of Baker Botts L.L.P. as to the legality of the securities being registered
	10.1		First Amended and Restated Limited Liability Company Operating Agreement of Cactus Wellhead, LLC, (incorporated by reference to Exhibit 10.2 to the Registrant's Form 8-K filed with the Commission on February 12, 2018)
	10.2	†	Amended and Restated Employment Agreement with Scott Bender, dated as of February 12, 2018 (incorporated by reference to Exhibit 10.3 to the Registrant's Form 8-K filed with the Commission on February 12, 2018)
	10.3	†	Amended and Restated Employment Agreement with Joel Bender, dated as of February 12, 2018 (incorporated by reference to Exhibit 10.4 to the Registrant's Form 8-K filed with the Commission on February 12, 2018)

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Exhibit No.			Description
	10.4	†	Amended and Restated Noncompetition Agreement with Scott Bender, dated as of February 12, 2018 (incorporated by reference to Exhibit 10.5 to the Registrant's Form 8-K filed with the Commission on February 12, 2018)
	10.5	†	Amended and Restated Noncompetition Agreement with Joel Bender, dated as of February 12, 2018 (incorporated by reference to Exhibit 10.6 to the Registrant's Form 8-K filed with the Commission on February 12, 2018)
	10.6	†	Indemnification Agreement (Scott Bender) (incorporated by reference to Exhibit 10.7 to the Registrant's Form 8-K filed with the Commission on February 12, 2018)
	10.7	†	Indemnification Agreement (Joel Bender) (incorporated by reference to Exhibit 10.8 to the Registrant's Form 8-K filed with the Commission on February 12, 2018)
	10.8	†	Indemnification Agreement (Bruce Rothstein) (incorporated by reference to Exhibit 10.9 to the Registrant's Form 8-K filed with the Commission on February 12, 2018)
	10.9	†	Indemnification Agreement (Brian Small) (incorporated by reference to Exhibit 10.10 to the Registrant's Form 8-K filed with the Commission on February 12, 2018)
	10.10	†	Indemnification Agreement (Steven Bender) (incorporated by reference to Exhibit 10.11 to the Registrant's Form 8-K filed with the Commission on February 12, 2018)
	10.11	†	Indemnification Agreement (Stephen Tadlock) (incorporated by reference to Exhibit 10.12 to the Registrant's Form 8-K filed with the Commission on February 12, 2018)
	10.12	†	Indemnification Agreement (John (Andy) O'Donnell) (incorporated by reference to Exhibit 10.13 to the Registrant's Form 8-K filed with the Commission on February 12, 2018)
	10.13	†	Indemnification Agreement (Michael McGovern) (incorporated by reference to Exhibit 10.14 to the Registrant's Form 8-K filed with the Commission on February 12, 2018)
	10.14	†	Indemnification Agreement (Alan Semple) (incorporated by reference to Exhibit 10.15 to the Registrant's Form 8-K filed with the Commission on February 12, 2018)
	10.15	†	Indemnification Agreement (Gary Rosenthal) (incorporated by reference to Exhibit 10.16 to the Registrant's Form 8-K filed with the Commission on February 12, 2018)
	10.16	†	Indemnification Agreement (Ike Smith) (incorporated by reference to Exhibit 10.17 to the Registrant's Form 8-K filed with the Commission on February 12, 2018)
	10.17		Tax Receivable Agreement (incorporated by reference to Exhibit 10.1 to the Registrant's Form 8-K filed with the Commission on February 12, 2018)
	10.18		Registration Rights Agreement (incorporated by reference to Exhibit 4.1 to the Registrant's Form 8-K filed with the Commission on February 12, 2018)
	10.19		Stockholders' Agreement, effective as of February 12, 2018, by and among Cactus, Inc., Cadent Energy Partners II,  L.P. and Cactus WH Enterprises, LLC (incorporated by reference to Exhibit 4.2 to the Registrant's Form 8-K filed with the Commission on February 12, 2018)

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Exhibit No.			Description
	10.20		Credit Agreement, dated July 31, 2014, among Cactus Wellhead, LLC, Credit Suisse AG, as administrative agent, collateral agent and issuing bank, and the lenders named therein as parties thereto (incorporated by reference to Exhibit 10.1 to the Registrant's Registration Statement on Form S-1 (File No. 333-222540) filed with the Commission on January 12, 2018)
	10.21	†	Cactus, Inc. Long Term Incentive Plan (incorporated by reference to Exhibit 10.18 to the Registrant's Form 8-K filed with the Commission on February 12, 2018)
	10.22	†	Form of Restricted Stock Agreement under the Cactus Inc. Long Term Incentive Plan (incorporated by reference to Exhibit 10.10 to the Registrant's Form S-1 Registration Statement (File No. 333-222540) filed with the Commission on January 12, 2018)
	10.23	†	Form of Restricted Stock Unit Agreement under the Cactus Inc. Long Term Incentive Plan (incorporated by reference to Exhibit 10.11 to the Registrant's Form S-1 Registration Statement (File No. 333-222540) filed with the Commission on January 12, 2018)
	10.24	†	Form of Restricted Stock Unit Agreement under the Cactus Inc. Long Term Incentive Plan (for Directors, One-Year Vesting) (incorporated by reference to Exhibit 4.7 to the Registrant's Registration Statement on Form S-8 (File No. 333-225269) filed with the Commission on May 29, 2018)
	10.25	†	Form of Restricted Stock Unit Agreement under the Cactus Inc. Long Term Incentive Plan (for Directors, Three-Year Vesting) (incorporated by reference to Exhibit 4.8 to the Registrant's Registration Statement on Form S-8 (File No. 333-225269) filed with the Commission on May 29, 2018)
	21.1	*	List of Subsidiaries of Cactus, Inc.
	23.1	*	Consent of PricewaterhouseCoopers LLP
	23.2	*	Consent of PricewaterhouseCoopers LLP
	23.3	*	Consent of Baker Botts L.L.P (included as part of Exhibit 5.1 hereto)
	24.1	*	Power of Attorney (included on the signature page of this Registration Statement)
	101	**	Interactive Data Files

*

Previously filed.

**

Filed herewith.

†

Management contract or compensatory plan or arrangement.

        (b)   Financial Statement Schedules.

        Financial statement schedules are omitted because the required information is not applicable, not required or included in the financial statements or the notes thereto included in the prospectus that forms a part of this registration statement.

Item 17.    Undertakings

        The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

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        Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

        The undersigned registrant hereby undertakes that:

        (1)   For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

        (2)   For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

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SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Houston, State of Texas, on July 11, 2018.

Cactus, Inc.
By:	/s/ SCOTT BENDER Scott Bender President, Chief Executive Officer and Director

        Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on July 11, 2018.

Signature	Title
/s/ SCOTT BENDER Scott Bender	President, Chief Executive Officer and Director (Principal Executive Officer)
* Brian Small	Chief Financial Officer (Principal Financial Officer)
* Ike Smith	Chief Accounting Officer (Principal Accounting Officer)
* Bruce Rothstein	Chairman of the Board of Directors
* Joel Bender	Director
* Michael McGovern	Director
* John (Andy) O'Donnell	Director
* Alan Semple	Director

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Signature	Title
* Gary Rosenthal	Director

*By: /s/ SCOTT BENDER
As Attoney-in-fact

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EXPLANATORY NOTE
Part II INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution
Item 14. Indemnification of Directors and Officers
Item 15. Recent Sales of Unregistered Securities
Item 16. Exhibits and Financial Statement Schedules
Item 17. Undertakings

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Document and Entity Information - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 13, 2018	Jun. 30, 2017
Entity Registrant Name	Cactus, Inc.
Entity Central Index Key	0001699136
Document Type	S-1
Document Period End Date	Mar. 31, 2018
Amendment Flag	false
Entity Filer Category	Non-accelerated Filer
Entity Public Float			$ 0
Class A Common Stock
Entity Common Stock, Shares Outstanding		26,450,000
Class B Common Stock
Entity Common Stock, Shares Outstanding		48,439,772

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CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Current assets
Cash and cash equivalents	$ 7,860	$ 7,574
Accounts receivable, net	84,800	84,173
Inventories	69,533	64,450
Prepaid expenses and other current assets	5,563	7,732
Total current assets	167,756	163,929
Property and equipment, net	109,492	94,654
Goodwill	7,824	7,824
Deferred tax asset, net	73,215
Other noncurrent assets	48	49
Total assets	358,335	266,456
Current liabilities
Accounts payable	38,575	35,080
Accrued expenses and other current liabilities	14,584	10,559
Capital lease obligations, current portion	5,578	4,667
Current maturities of long-term debt		2,568
Total current liabilities	58,737	52,874
Capital lease obligations, net of current portion	8,809	7,946
Deferred tax liability, net	489	416
Liability related to tax receivable agreement	62,989
Long-term debt, net		241,437
Total liabilities	131,024	302,673
Commitments and contingencies
Stockholders' / Members' equity (deficit)
Members' equity (deficit)		(36,299)
Preferred stock, $0.01 par value, 10,000 shares authorized, none issued and outstanding, respectively
Additional paid-in capital	83,145
Retained earnings	3,753
Accumulated other comprehensive income	321	82
Total stockholders' equity attributable to Cactus Inc. and members' equity (deficit)	87,484	(36,217)
Non-controlling interest	139,827
Total stockholders' and members' equity (deficit)	227,311	(36,217)
Total liabilities and equity	358,335	$ 266,456
Class A Common Stock
Stockholders' / Members' equity (deficit)
Common stock	$ 265

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical)	Mar. 31, 2018 $ / shares shares
Preferred stock, par value | $ / shares	$ 0.01
Preferred stock, shares authorized	10,000,000
Preferred stock, shares issued	0
Preferred stock, shares outstanding	0
Class A Common Stock
Common stock, par value | $ / shares	$ 0.01
Common stock, shares authorized	300,000,000
Common stock, shares issued	26,450,000
Common stock, shares outstanding	26,450,000
Class B Common Stock
Common stock, par value | $ / shares	$ 0.01
Common stock, shares authorized	215,000,000
Common stock, shares issued	48,440,000
Common stock, shares outstanding	48,440,000

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CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Revenues
Total revenues	$ 115,110	$ 58,503
Costs and expenses
Selling, general and administrative expenses	9,114	6,103
Total costs and expenses	79,893	48,509
Income from operations	35,217	9,994
Interest expense, net	(2,852)	(4,986)
Other income (expense), net	(4,305)
Income before income taxes	28,060	5,008
Income tax expense	1,652	154
Net income	26,408	4,854
Less: Pre-IPO net income attributable to Cactus LLC	13,648	4,854
Less: net income attributable to non-controlling interest	9,007
Net income attributable to Cactus Inc.	$ 3,753
Earnings per Class A Share - basic	$ 0.14
Earnings per Class A Share - diluted	$ 0.14
Weighted average Class A Shares outstanding - diluted	26,648
Products
Revenues
Total revenues	$ 58,926	33,038
Costs and expenses
Cost of revenue	37,066	23,195
Rental revenue
Revenues
Total revenues	29,145	12,975
Costs and expenses
Cost of revenue	12,176	8,273
Field service and other revenue
Revenues
Total revenues	27,039	12,490
Costs and expenses
Cost of revenue	$ 21,537	$ 10,938
Class A Common Stock
Costs and expenses
Earnings per Class A Share - basic	$ 0.14
Earnings per Class A Share - diluted	$ 0.14
Weighted average Class A Shares outstanding - basic	26,450,000
Weighted average Class A Shares outstanding - diluted	26,648,000

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net income	$ 26,408	$ 4,854
Foreign currency translation	239	177
Comprehensive income	26,647	5,031
Less: Pre-IPO comprehensive income attributable to Cactus LLC	13,928	$ 5,031
Less: comprehensive income attributable to non-controlling interest	8,981
Comprehensive income attributable to Cactus Inc.	$ 3,738

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CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands	Class A Common Stock Common stock	Class B Common Stock Common stock	Total	Members' Equity (Deficit)	Additional Paid-In Capital	Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Non-controlling Interest
Balance at the beginning of the period at Dec. 31, 2014			$ (102,303)	$ (102,327)			$ 24
Statement of Stockholders'/Members' Equity
Member distributions prior to IPO			(12,232)	(12,232)
Net income prior to IPO and reorganization			21,224	21,224
Other comprehensive income (loss)			(215)				(215)
Stock-based compensation			359	359
Balance at the end of the period at Dec. 31, 2015			(93,167)	(92,976)			(191)
Statement of Stockholders'/Members' Equity
Member distributions prior to IPO			(2,055)	(2,055)
Net income prior to IPO and reorganization			(8,176)	(8,176)
Other comprehensive income (loss)			(284)				(284)
Stock-based compensation			361	361
Balance at the end of the period at Dec. 31, 2016			(103,321)	(102,846)			(475)
Statement of Stockholders'/Members' Equity
Net income prior to IPO and reorganization			66,547	66,547
Other comprehensive income (loss)			557				557
Balance at the end of the period at Dec. 31, 2017			(36,217)	(36,299)			82
Statement of Stockholders'/Members' Equity
Member distributions prior to IPO			(26,000)	(26,000)
Net income prior to IPO and reorganization			13,648	13,648
Effect of IPO and reorganization	$ 265		250,972	$ 48,651	$ 71,195			$ 130,861
Effect of IPO and reorganization (shares)	26,450	48,440
Member distributions after IPO			(41)					(41)
Additional paid-in capital related to tax receivable agreement			11,116		11,116
Other comprehensive income (loss)			239				239
Stock-based compensation			834		834
Net income after IPO and reorganization			12,760			$ 3,753		9,007
Balance at the end of the period at Mar. 31, 2018	$ 265		$ 227,311		$ 83,145	$ 3,753	$ 321	$ 139,827
Balance at the end of the period (shares) at Mar. 31, 2018	26,450	48,440

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Cash flows from operating activities
Net income	$ 26,408	$ 4,854
Reconciliation of net income to net cash provided by operating activities
Depreciation and amortization	6,621	5,313
Debt discount and deferred loan cost amortization	219	438
Stock-based compensation	834
Inventory obsolescence	451
Loss on disposal of assets	29	235
Deferred income taxes	963	29
Loss on debt extinguishment	4,305
Changes in operating assets and liabilities
Accounts receivable	(419)	(8,998)
Inventories	(5,594)	(7,648)
Prepaid expenses and other assets	(56)	(1,140)
Accounts payable	792	12,508
Accrued expenses and other liabilities	4,012	341
Net cash provided by operating activities	38,565	5,932
Cash flows from investing activities
Capital expenditures	(16,127)	(8,584)
Proceeds from sale of assets	440	83
Net cash used in investing activities	(15,687)	(8,501)
Cash flows from financing activities
Principal payments on long-term debt	(248,529)	(642)
Payments on capital leases	(1,266)	(319)
Net proceeds from IPO	469,621
Distributions to members	(26,041)
Redemptions of CW Units	(216,425)
Net cash used in financing activities	(22,640)	(961)
Effect of exchange rate changes on cash and cash equivalents	48	12
Net increase (decrease) in cash and cash equivalents	286	(3,518)
Cash and cash equivalents
Beginning of period	7,574	8,688
End of period	$ 7,860	$ 5,170

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Organization and Nature of Operations

3 Months Ended

Mar. 31, 2018

Organization and Nature of Operations

Organization and Nature of Operations

1.   Organization and Nature of Operations

Description of Business

Cactus, Inc. (“Cactus Inc”) and its consolidated subsidiaries, 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 offering repair and refurbishment services and the provision of service crews to assist in the installation and operations of pressure control systems. We operate through 14 U.S. service centers located in Texas, Oklahoma, New Mexico, Louisiana, Pennsylvania, North Dakota, Wyoming and Colorado, and one service center in Australia, with our corporate headquarters located in Houston, Texas.

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. 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 (ii) Cactus LLC and its consolidated subsidiaries prior to the completion of our IPO.

Initial Public Offering

On February 12, 2018, we completed the initial public offering of 23,000,000 shares of Class A common stock (our “IPO”), par value $0.01 per share, at a price to the public of $19.00 per share. We received net proceeds of $408.0 million after deducting underwriting discounts and commissions and $2.8 million in current offering expenses of our IPO. We also paid $2.2 million in offering expenses during 2017 that were recorded to prepaid expenses in the consolidated balance sheet as of December 31, 2017. On February 14, 2018 we completed the sale of an additional 3,450,000 shares of Class A common stock pursuant to the exercise in full by the underwriters of their option to purchase additional shares of Class A common stock (the “Option”), from which we received an additional $61.6 million of net proceeds after deducting underwriting discounts and commissions. We contributed all of the net proceeds of our IPO (including from the Option) to Cactus LLC in exchange for units in Cactus LLC (“CW Units”). Cactus Inc. is a holding company who is the sole managing member of Cactus LLC.

Cactus LLC used the total $469.6 million of net proceeds (including net proceeds from the Option) to (i) repay all of the borrowings outstanding under its term loan facility, including accrued interest, of $251.0 million and (ii) redeem $216.4 million of CW Units from certain direct and indirect owners of Cactus LLC. The remaining $2.2 million was held by Cactus LLC to cover previously paid offering expenses in 2017.

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 Cactus Inc.’s Class A stockholders. As of March 31, 2018, Cactus Inc. owned 35.3% of Cactus LLC.

Tax Receivable Agreement

In connection with our IPO, we entered into a tax receivable agreement (the “TRA”) with certain direct and indirect owners of CW Units (the “TRA Holders”). 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 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. See Note 2 for further details of the TRA.

Reorganization

In connection with our IPO, we completed a series of reorganization transactions (the “Reorganization”), including the following:

(a) all of the membership interests in Cactus LLC were converted into a single class of CW Units;

(b) Cactus Inc. contributed the net proceeds of our IPO to Cactus LLC in exchange for 23,000,000 CW Units;

(c) Cactus LLC used the net proceeds of our IPO that it received from Cactus Inc. to repay the borrowings outstanding, plus accrued interest, under its term loan facility and to redeem 8,667,841 CW Units from the owners thereof;

(d) Cactus Inc. issued and contributed a total of 51,889,772 shares of its Class B common stock, par value $0.01 per share, equal to the number of outstanding CW Units held by the owners thereof following the redemption described in (c) above to Cactus LLC (the Class B common stock has no economic interest and does not share in cash dividends or liquidation rights, but entitles its holders to one vote on all matters to be voted on by Cactus’ shareholders generally);

(e) Cactus LLC distributed to each of the owners that continued to own CW Units following our IPO one share of Class B common stock for each CW Unit such owner held following the redemption described in (c) above;

(f) Cactus Inc. contributed the net proceeds from the exercise of the Option to Cactus LLC in return for 3,450,000 additional CW Units, and

(g) Cactus LLC used the net proceeds from the Option to redeem 3,450,000 CW Units from the owners thereof, and Cactus Inc. canceled a corresponding number of shares of Class B common stock.

As of March 31, 2018, there were 26,450,000 shares of Class A common stock and 48,439,772 shares of Class B common stock issued and outstanding.

Other IPO related items

In conjunction with our IPO, we also:

(a)wrote off $2.2 million of prepaid IPO costs incurred in 2017 as a reduction of additional paid-in capital;

(b)wrote off $4.3 million in unamortized debt discount and deferred loan costs related to the repayment of the term loan;

(c)issued 737,493 shares of restricted stock units and began recording stock-based compensation;

(d)recorded a deferred tax asset of $74.1 million related to the step-up in basis, a liability from the TRA of $63.0 million representing 85% of the expected net cash tax savings from the step-up in basis that will be paid to TRA Holders, and recorded $11.1 million as additional paid-in capital;

(e)reset the previous accumulated deficit in Cactus LLC to zero;  and

(f)recorded $130.9 million of non-controlling interest representing the portion of CW Units not owned by Cactus Inc.

Prior to our IPO, on January 25, 2018, Cactus LLC paid a cash distribution of $26.0 million to pre-IPO owners. This distribution was funded by borrowing under the 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 the revolving credit facility were repaid as of March 31, 2018.

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Basis of Presentation

The unaudited and condensed consolidated financial statements (“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 for interim financial information. Accordingly, these consolidated financial statements do not include all information or notes required by generally accepted accounting principles for annual financial statements and should be read together with our Annual Report for Form 10‑K for the year ended December 31, 2017. All significant intercompany transactions and balances have been eliminated upon consolidation.

In our opinion, the consolidated financial statements include all adjustments, which are of a normal recurring nature, unless otherwise disclosed, necessary for a fair statement of the consolidated financial statements for the interim periods. The results of operations for the three months ended March 31, 2018 are not necessarily indicative of the results to be expected for the full year.

As discussed in Note 1, as a result of our IPO and Reorganization, Cactus Inc. is the sole managing member of Cactus LLC and consolidates entities in which it has a controlling financial interest. The Reorganization was considered a transaction between entities under common control. As a result, the financial statements for periods prior to our IPO and the Reorganization have been adjusted to combine the previously separate entities for presentation purposes. However, Cactus Inc. had no operations or assets and liabilities prior to our IPO. As such, for periods prior to the completion of our IPO, the consolidated financial statements represent the historical financial position and results of operations of Cactus LLC and its subsidiaries. For periods after the completion of our IPO, the financial position and results of operations include those of Cactus and report the non-controlling interest related to the portion of CW Units not owned by Cactus Inc.

Limitation of Members’ Liability

Under the terms of the First Amended and Restated Limited Liability Company Operating Agreement, dated as of January 29, 2018 of Cactus LLC (the “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 LLC Agreement.

Policy for Interim Period Tax Allocation

For interim income tax reporting we estimate our annual effective tax rate and apply it to our year-to-date ordinary income. The tax effects of unusual or infrequently occurring items, including changes in judgment about valuation allowances and effects of changes in tax laws or rates, are reported in the interim period in which they occur. Our IPO closed on February 12, 2018, and the annual effective tax rate was determined considering the periods before and after our IPO. Accordingly, net income attributable to non-controlling interest includes its share of respective income tax expense, which is not subject to U.S. federal and state income tax expense, and net income attributable to Cactus Inc. includes its share of respective income tax expense, which does include U.S. federal and state income tax expense. As of March 31, 2018, Cactus Inc. owned 35.3% of Cactus LLC and non-controlling interest owned 64.7% of Cactus LLC. 

Income Taxes

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. Additionally, our operations in both Australia and China are subject to local country income taxes.

The provision for income tax for the three months ended March 31, 2018 consisted of:

	Three Months Ended March 31,
	2018
Current:
Federal	$	211
State		240
Foreign		238
Total current income taxes		689
Deferred:
Federal		762
State		128
Foreign		73
Total deferred income taxes		963
Total provision for income taxes	$	1,652

The effective income tax rate was different from the statutory U.S. federal income tax rate due to the following:

	Three Months Ended March 31,
	2018
Income taxes at 21% statutory tax rate	$	5,893
Net difference resulting from:
Profit of Cactus LLC Pre-IPO not subject to U.S. federal tax		(2,808)
Profit of non-controlling interest not subject to U.S. federal tax		(1,926)
Foreign earnings subject to different tax rates		50
State income taxes		318
Foreign withholding taxes		73
Change in valuation allowance		(20)
Other		72
Total provision for income taxes	$	1,652

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. All grant date fair value is expensed immediately for awards that are fully vested as of the grant date.

In conjunction with our IPO, we granted 737,493 restricted stock unit awards with a grant date fair value of $19.00. The majority of these awards vest over a three year period.  During the three months ended March 31, 2018, we recorded $0.8 million of stock-based compensation expense mostly included in selling, general and administrative expenses.  As of March 31, 2018, there was $13.2 million of unrecognized compensation cost related to these unvested restricted stock unit awards, which is expected to be recognized over a weighted average period of 2.8 years. 

Significant Customers

For the three months ended March 31, 2018, Cactus had one customer that represented 11% of consolidated revenues. No other customer represented 10% or more of consolidated revenues during this period. For the three months ended March 31, 2017, Cactus had two customers each representing 10% or more of consolidated revenues, whose combined revenues represented approximately 21% of consolidated revenues. There were no other customers representing 10% or more of consolidated revenues during this period.

Significant Vendors

We purchase a significant portion of supplies, equipment and machined components from a single vendor. For the three months ended March 31, 2018 and 2017, purchases from this vendor totaled $10.4 million and $6.4 million, respectively. These figures represent approximately 21% and 20% 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 March 31, 2018 and December 31, 2017 totaled $7.2 million and $7.4 million, respectively.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Such estimates include but are not limited to estimated losses on accounts receivables, estimated realizable value on excess and obsolete inventory, estimates related to fair value of reporting units for purposes of assessing goodwill and other indefinite-lived intangible assets for impairment and estimates of deferred tax assets related to the step-up in basis under the TRA and the associated liability under the TRA. Actual results could differ from those estimates.

Tax Receivable Agreement

Pursuant to the LLC Agreement, each TRA Holder will, subject to certain limitations, have 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 TRA 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 will be canceled.

Cactus LLC has made for itself (and for each of its direct or indirect subsidiaries that is treated as a partnership for U.S. federal income tax purposes and that it controls) an election under Section 754 of the Internal Revenue Code (the “Code”) that will be effective for 2018 and each taxable year in which a redemption of CW Units pursuant to the Redemption Right or the Call Right occurs. Pursuant to the Section 754 election, redemptions of CW Units pursuant to the Redemption Right or the Call Right are expected to result in adjustments to the tax basis of the tangible and intangible assets of Cactus LLC. These adjustments will be allocated to Cactus Inc. Such adjustments to the tax basis of the tangible and intangible assets of Cactus LLC would not have been available to Cactus Inc. absent its acquisition or deemed acquisition of CW Units pursuant to the exercise of the Redemption Right or the Call Right. In addition, the repayment of borrowings outstanding under the Cactus LLC term loan facility resulted in adjustments to the tax basis of the tangible and intangible assets of Cactus LLC, a portion of which was allocated to Cactus Inc.

These basis adjustments are expected to increase (for tax purposes) Cactus Inc.’s depreciation, depletion and amortization deductions and may also decrease Cactus Inc.’s gains (or increase its losses) on future dispositions of certain assets to the extent tax basis is allocated to those assets. Such increased deductions and losses and reduced gains may reduce the amount of tax that Cactus Inc. would otherwise be required to pay in the future.

The TRA will generally provide for the payment by Cactus Inc. to each TRA Holder 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 pursuant to the 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 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 benefit of the remaining 15% of the cash savings.

The payment obligations under the TRA are Cactus Inc.’s obligations and not obligations of Cactus LLC, and we expect that the payments we will be required to make under the TRA will be substantial. We have determined that it is more likely than not that actual cash tax savings will be realized by Cactus Inc. from the tax benefits resulting from the Reorganization and our IPO. Accordingly, the TRA is expected to result in future payments, and we have recorded a liability from the TRA of $63.0 million included in the consolidated balance sheet as of March 31, 2018.  Estimating the amount and timing of payments that may become due under the TRA is by its nature imprecise. For purposes of the TRA, net cash savings in tax generally will be calculated by comparing Cactus Inc.’s actual tax liability (determined by using the actual applicable U.S. federal income tax rate and an assumed combined state and local income tax rate) to the amount it would have been required to pay had it not been able to utilize any of the tax benefits subject to the TRA. The amounts payable, as well as the timing of any payments under the TRA, are dependent upon significant future events and assumptions, including the timing of the redemption of CW Units, the price of our Class A common stock at the time of each redemption, the extent to which such redemptions are taxable transactions, the amount of the redeeming unit holder’s tax basis in its CW Units at the time of the relevant redemption, the depreciation and amortization periods that apply to the increase in tax basis, the amount and timing of taxable income we generate in the future and the U.S. federal income tax rate then applicable, and the portion of Cactus Inc.’s payments under the TRA that constitute imputed interest or give rise to depreciable or amortizable tax basis.

The accounting under the TRA for any exchanges of CW Units subsequent to the Reorganization will follow the same procedures as described above.

A delay in the timing of redemptions of CW Units, holding other assumptions constant, would be expected to decrease the discounted value of the amounts payable under the TRA as the benefit of the depreciation and amortization deductions would be delayed and the estimated increase in tax basis could be reduced as a result of allocations of Cactus LLC taxable income to the redeeming unit holder prior to the redemption. Stock price increases or decreases at the time of each redemption of CW Units would be expected to result in a corresponding increase or decrease in the undiscounted amounts payable under the TRA in an amount equal to 85% of the tax-effected change in price. The amounts payable under the TRA are dependent upon Cactus Inc. having sufficient future taxable income to utilize the tax benefits on which it is required to make payments under the TRA. If Cactus Inc.’s projected taxable income is significantly reduced, the expected payments would be reduced to the extent such tax benefits do not result in a reduction of Cactus Inc.’s future income tax liabilities.

It is possible that future transactions or events could increase or decrease the actual tax benefits realized and the corresponding liability from the TRA. Moreover, there may be a negative impact on our liquidity if, as a result of timing discrepancies or otherwise, (i) the payments under the TRA exceed the actual benefits we realize in respect of the tax attributes subject to the TRA or (ii) distributions to Cactus Inc. by Cactus LLC are not sufficient to permit Cactus Inc. to make payments under the TRA after it has paid its taxes and other obligations. 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.

In addition, although we are not aware of any issue that would cause the Internal Revenue Service (“IRS”) or other relevant tax authorities to challenge potential tax basis increases or other tax benefits covered under the TRA, the TRA Holders will not reimburse us for any payments previously made under the TRA if such basis increases or other benefits are subsequently disallowed, except that excess payments made to any such holder will be netted against payments otherwise to be made, if any, to such holder after our determination of such excess. As a result, in such circumstances, Cactus Inc. could make payments that are greater than its actual cash tax savings, if any, and may not be able to recoup those payments.

We account for any amounts payable under the TRA in accordance with Accounting Standard Codification (“ASC”) Topic 450, Contingencies (“ASC 450”). We will recognize subsequent changes to the measurement of the liability from the TRA in the income statement as a component of income before taxes. In the case of any changes to any valuation allowance associated with the underlying tax asset, given the link between the tax savings generated and the recognition of the liability from the TRA (i.e., one is recorded based on 85% of the other), and the explicit guidance in ASC 740-20-45-11(g) which requires that subsequent changes in a valuation allowance established against deferred tax assets that arose due to change in tax basis as a result of a transaction among or with shareholders to be recorded in the income statement as opposed to equity, we believe recording of the corollary adjustment to the liability from the TRA in the income statement is appropriate.

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. In the event that the TRA is not terminated, the payments under the TRA are anticipated to commence in 2019 and to continue for 16 years after the date of the last redemption of CW Units. Accordingly, it is expected that payments will continue to be made under the TRA for more than 25 years. 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 (determined by applying a discount rate of one-year LIBOR plus 150 basis points) 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. Assuming no material changes in the relevant tax law, we expect that if the TRA were terminated as of March 31, 2018, the estimated termination payments, based on the assumptions discussed above, would be approximately $304.6 million (calculated using a discount rate equal to one-year LIBOR plus 150 basis points, applied against an undiscounted liability of $430.1 million).

The TRA provides that in the event that we breach any of our material obligations under the TRA, whether as a result of (i) our failure to make any payment when due (including in cases where we elect to terminate the TRA early, the TRA is terminated early due to certain mergers, asset sales, or other forms of business combinations or changes of control or we have available cash but fail to make payments when due under circumstances where we do not have the right to elect to defer the payment, as described below), (ii) our failure to honor any other material obligation under it or (iii) by operation of law as a result of the rejection of the TRA in a case commenced under the U.S. Bankruptcy Code or otherwise, then the TRA Holders may elect to treat such breach as an early termination, which would cause all our payment and other obligations under the TRA to be accelerated and become due and payable applying the same assumptions described above.

As a result of either an early termination or a change of control, we could be required to make payments under the TRA that exceed our actual cash tax savings under the TRA. In these situations, our obligations under the TRA could have a substantial negative impact on our liquidity and could have the effect of delaying, deferring or preventing certain mergers, asset sales, or other forms of business combinations or changes of control. 

Decisions we make in the course of running our business, such as with respect to mergers, asset sales, other forms of business combinations or other changes in control, may influence the timing and amount of payments that are received by the TRA Holders under the TRA. For example, the earlier disposition of assets following a redemption of CW Units may accelerate payments under the TRA and increase the present value of such payments, and the disposition of assets before a redemption of CW Units may increase the TRA Holders’ tax liability without giving rise to any rights of the TRA Holders to receive payments under the TRA. Such effects may result in differences or conflicts of interest between the interests of the TRA Holders and other shareholders.

Payments generally are due under the TRA within five business days following the finalization of the schedule with respect to which the payment obligation is calculated. However, interest on such payments will begin to accrue from the due date (without extensions) of our U.S. federal income tax return for the period to which such payments relate until such payment due date at a rate equal to one-year LIBOR plus 150 basis points. Except in cases where we elect to terminate the TRA early or it is otherwise terminated as described above, generally 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 at a rate of one-year LIBOR plus 550 basis points. However, interest will accrue from the due date for such payment until the payment date at a rate of one-year LIBOR plus 150 basis points if we are unable to make such payment as a result of limitations imposed by our credit agreement. We have no present intention to defer payments under the TRA.

Because we are a holding company with no operations of our own, our ability to make payments under the TRA is dependent on the ability of Cactus LLC to make distributions to us in an amount sufficient to cover our obligations under the TRA. This ability, in turn, may depend on the ability of Cactus LLC’s subsidiaries to make distributions to it. The ability of Cactus LLC, its subsidiaries and other entities in which it directly or indirectly holds an equity interest to make such distributions will be subject to, among other things, the applicable provisions of Delaware law (or other applicable jurisdiction) that may limit the amount of funds available for distribution and restrictions in relevant debt instruments issued by Cactus LLC or its subsidiaries and other entities in which it directly or indirectly holds an equity interest. Additionally, distributions made by Cactus LLC generally require pro-rata distribution among all its members, which could be significant. To the extent that we are unable to make payments under the TRA for any reason, such payments will be deferred and will accrue interest until paid.

Emerging Growth Company status

Cactus is an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). We will remain an emerging growth company until the earlier of (1) the last day of our fiscal year (a) following the fifth anniversary of the completion of our IPO, (b) in which our total annual gross revenue is at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our Class A common stock that is held by non-affiliates exceeds $700.0 million as of the last business day of our most recently completed second fiscal quarter (following twelve months from our IPO), and (2) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period. An emerging growth company may take advantage of specified reduced reporting and other burdens that are otherwise generally applicable to public companies. We have irrevocably opted out of the extended transition period and, as a result, we will adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies.

Recent Accounting Pronouncements

Standards Adopted

In August 2016, the FASB issued ASU No. 2016-15, Cash Flow Statement (Topic 250). This new guidance addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice, including: debt prepayment or debt extinguishment costs, settlement of zero coupon debt instruments or other debt instruments, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies, distributions received from equity method investees, beneficial interests in securitization transactions, and separately identifiable cash flows and application of the predominance principle. ASU 2016-15 is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. We adopted this ASU on January 1, 2018. The adoption of this pronouncement did not have a material impact on our consolidated financial statements.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which supersedes the current revenue recognition guidance. The ASU is based on the principle that revenue is recognized to depict the transfer of goods and services to customers in the amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The new standard will be effective for public companies for the fiscal years beginning after December 31, 2017 using one of two retrospective application methods. We adopted this ASU on January 1, 2018 using the modified retrospective method. The adoption of this pronouncement did not have a material impact on our consolidated financial statements. See Note 5.

In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, in an effort to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendments in this standard provide a screen to determine when an integrated set of assets and activities is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the integrated set of assets and activities is not a business. The new guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is allowed for transactions for which the acquisition date occurs before the issuance date or effective date of the amendments, only when the transaction has not been reported in financial statements that have been issued or made available for issuance and for transactions in which a subsidiary is deconsolidated or a group of assets is derecognized before the issuance date or effective date of the amendments, only when the transaction has not been reported in financial statements that have been issued or made available for issuance. Entities will be required to apply the guidance prospectively when adopted. We adopted this ASU on January 1, 2018. The adoption of this pronouncement did not have a material impact on our consolidated financial statements.

Standards Not Yet Adopted

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Upon adoption of the new guidance, lessees are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The new guidance will be effective for fiscal years beginning after December 15, 2018. We are currently evaluating the impact this pronouncement will have on our consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other, 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 annual, or interim, 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. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We do not expect the adoption of this pronouncement to have a material impact on our consolidated financial statements.

In February 2018, the FASB issued ASU 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220) Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The amendments in this update allow a reclassification from accumulated other comprehensive income (loss) to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. However, because the amendments only relate to the reclassification of the income tax effects of the Tax Cuts and Jobs Act, the underlying guidance that requires that the effect of a change in tax laws or rates be included in income from continuing operations is not affected. The amendments in this update also require certain disclosures about stranded tax effects. The amendments in this update are effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the impact this pronouncement will have on our consolidated financial statements.

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Inventories

3.   Inventories

Inventories consists of the following:

	March 31,		December 31,
	2018		2017
Raw materials	$	1,378	$	1,532
Work-in-progress		4,012		3,590
Finished goods		64,143		59,328
	$	69,533	$	64,450

3. Inventories

Inventories consist of the following:

	December 31,
	2017		2016
Raw materials	$	1,532	$	1,543
Work-in-progress		3,590		4,585
Finished goods		59,328		31,772
	$	64,450	$	37,900

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Long-term Debt

3 Months Ended

12 Months Ended

Mar. 31, 2018

Dec. 31, 2017

Long-term Debt.

Long-term Debt

4.   Long-term Debt

Long-term debt consists of the following:

	March 31,		December 31,
	2018		2017
Term Loan	$	—	$	248,529
Less:
Current portion		—		(2,568)
Unamortized debt discount and deferred loan costs		—		(4,524)
Long-term debt, net	$	—	$	241,437

On July 31, 2014, Cactus LLC entered into a credit agreement collateralized by substantially all of its assets (the “Credit Agreement”), consisting of a $275.0 million Tranche B term loan (the “Term Loan”) and $50.0 million revolving credit facility with a $10.0 million sublimit for letters of credit (the “Revolving Loans”). In conjunction with the completion of our IPO in February 2018, we repaid the Term Loan in full. There was $248.5 million outstanding on the Term Loan as of December 31, 2017. As of March 31, 2018 and December 31, 2017, no amounts were outstanding on the Revolving Loans and no letters of credit were outstanding. We may borrow and repay the Revolving Loans in accordance with the terms of the Credit Agreement. A commitment fee is payable quarterly on the unused portion of the revolving credit facility. Interest on the Revolving Loans is payable in arrears for each draw fixed at an adjusted base rate plus an applicable margin, as defined in the Credit Agreement. At March 31, 2018 there was no accrued interest and December 31, 2017 included $0.2 million of accrued interest within accrued expenses, on the consolidated balance sheets. The Revolving Loans portion of the Credit Agreement matures on July 31, 2019. Amounts outstanding under the Credit Agreement may be voluntarily prepaid, in whole or in part, without premium or penalty, in accordance with the terms of the Credit Agreement and subject to breakage and similar costs.

The Credit Agreement contains various restrictive covenants that may limit our ability to incur additional indebtedness and liens, make or declare dividends, or enter into certain transactions, and contains a total leverage financial covenant related only to the Revolving Loans once a total of $15.0 million or more has been drawn on the Revolving Loans. Based on this total leverage financial covenant, availability under the revolving credit facility can be limited to $15.0 million. At March 31, 2018, we had access to the full $50.0 million revolving credit facility capacity. At March 31, 2018 and December 31, 2017, we were in compliance with the covenants in the Credit Agreement.

At March 31, 2018, the applicable margin on our Revolving Loans was 2.75% with an adjusted base rate of one or three month LIBOR. At December 31, 2017, the weighted average interest rate for the borrowings under the Credit Agreement was 7.3%.

Loss on debt extinguishment

For the three months ended March 31, 2018, we recorded a $4.3 million loss on early extinguishment of debt in conjunction with the repayment of the Term Loan with a portion of the net proceeds from our IPO. The loss consists 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 statements of income.

4. Long‑Term Debt

Long‑term debt consists of the following:

	December 31,
	2017		2016
Term Loan	$	248,529	$	251,098
Less:
Current portion		(2,568)		(2,568)
Unamortized debt discount and deferred loan costs		(4,524)		(6,276)
Long-term debt, net	$	241,437	$	242,254

On July 31, 2014, we entered into a credit agreement collateralized by substantially all of our assets (the “Credit Agreement”), consisting of a $275.0 million Tranche B term loan (the “Term Loan”) and a $50.0 million revolving credit facility with a $10.0 million sublimit for letters of credit (the “Revolving Loans”). We make quarterly principal payments on the Term Loan and may make loan prepayments as outlined in the Credit Agreement. We may borrow and repay the Revolving Loans in accordance with the terms of the Credit Agreement. A commitment fee is payable quarterly on the unused portion of the revolving credit facility. There was $248.5 million and $251.1 million outstanding on the Term Loan as of December 31, 2017 and 2016, respectively. As of December 31, 2017 and 2016, no amounts were outstanding on the Revolving Loans and no letters of credit were outstanding. Interest on outstanding amounts under the Credit Agreement are payable in arrears for each draw fixed at an adjusted based rate plus an applicable margin, as defined in the Credit Agreement. At December 31, 2017 and 2016, there was $0.2 million and $0.1 million accrued interest included within accrued expenses, respectively, in the consolidated balance sheets. The Term Loan portion of the Credit Agreement matures on July 31, 2020. The Revolving Loans portion of the Credit Agreement matures on July 31, 2019. Amounts outstanding under the Credit Agreement may be voluntarily prepaid, in whole or in part, without premium or penalty, in accordance with the terms of the Credit Agreement and subject to breakage and similar costs.

In conjunction with the IPO, we repaid the Term Loan in full. As of December 31, 2017, prior to the repayment resulting from the IPO, the future maturities of long‑term debt were as follows:

Years Ending December 31,
2018	$	2,568
2019		2,568
2020		243,393
	$	248,529

The Credit Agreement contains various restrictive covenants that may limit our ability to incur additional indebtedness and liens, make or declare dividends, or enter into certain transactions, and contains a total leverage financial covenant related only to the Revolving Loans once a total of $15.0 million or more has been drawn on the Revolving Loans. Based on this total leverage financial covenant, availability under the revolving credit facility can be limited to $15.0 million. At December 31, 2017, we had access to the full $50.0 million revolving credit facility capacity. At December 31, 2017 and 2016, we were in compliance with the covenants in the Credit Agreement.

At December 31, 2017 and 2016, the weighted average interest rate for borrowings under the Credit Agreement was 7.3% and 7.0%, respectively.

Gain on debt extinguishment

In accordance with the provisions of the Credit Agreement, we redeemed $7.5 million and $10.0 million of the Term Loan at a price of 65% and 79% of the principal amount in 2016 and 2015, respectively. We paid $4.9 million and $7.9 million for such redemptions, including fees, in 2016 and 2015, respectively. We recorded a gain on debt extinguishment of $2.3 million and $1.6 million in 2016 and 2015, respectively, on the redemptions. The gain consists of the tender discount on the Term Loan amount redeemed, partially offset by transaction fees and the write‑off of $0.3 million and $0.2 million of the unamortized debt discount and deferred loan costs in 2016 and 2015, respectively. The gain on debt extinguishment is included under other income, net, in the consolidated statements of income.

Interest Expense, net

Interest expense, net, including debt discount and deferred loan costs amortization, is comprised of the following:

	Year Ended December 31,
	2017		2016		2015
Interest under Credit Agreement	$	18,627	$	18,414	$	19,682
Debt discount and deferred loan costs amortization		1,752		1,777		1,913
Capital lease interest		311		24		—
Other		82		20		253
Interest (income)		(5)		(2)		(11)
Interest expense, net	$	20,767	$	20,233	$	21,837

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Revenue

3 Months Ended

Mar. 31, 2018

Revenue Recognition

Revenue Recognition

5.   Revenue

Accounting Policy

We account for revenue in accordance with Topic 606, which we adopted on January 1, 2018, using the modified retrospective method. The adoption of Topic 606 did not have a material impact on the timing or amounts of revenue recognized in our unaudited condensed consolidated financial statements and therefore did not have a material impact on our financial position, results of operations, equity or cash flows as of the adoption date or for the three months ended March 31, 2018. Furthermore, we expect the impact of the adoption of the new standard to be immaterial to our revenue and gross profit on an ongoing basis.  We did not recognize any cumulative-effect adjustment to retained earnings upon adoption as the impact was immaterial. Also, the comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods.

Revenue Recognition

The majority of our revenues are derived from short term contracts.  Product sales generally do not include right of return or other significant post-delivery obligations.  Revenues are recognized when we satisfy a performance obligation by transferring control of the promised goods or 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.  We also assess our customer’s ability and intention to pay, which is based on a variety of factors including our customer’s historical payment experience and financial condition. Payment terms and conditions vary, although terms generally include a requirement of payment within 30 days.  Revenues are recognized net of any taxes collected from customers, which are subsequently remitted to governmental authorities. We elected to treat shipping and handling associated with outbound freight as a fulfillment cost instead of as a separate performance obligation. We recognize the cost for shipping and handling when incurred as an expense in cost of sales.

Performance Obligations

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer under Topic 606. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. 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. In accordance with Topic 606, 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.

All of our contracts are less than one year in duration.  We do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed.

Disaggregation of 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.  Approximately 99% of our revenues are from the United States.  For the three months ended March 31, 2018, we derived 51% of our total revenues from the sale of our products, 25% of our total revenues from rental and 24% of our total revenues from field service and other.

Contract Balances

We perform our obligations under contracts with our customers by transferring services and products in exchange for consideration. The timing of our performance often differs from the timing of invoicing and our customer’s payment, which results in the recording of unbilled revenue and deferred revenue. Amounts in the consolidated balance sheet as of March 31, 2018 representing unbilled revenue within accounts receivable, net, were $24.3 million and amounts representing deferred revenue within accrued expenses and other current liabilities were $1.1 million. This compares to an unbilled revenue balance of $24.7 million and a deferred revenue balance of $0.8 million as of December 31, 2017.

Contract Costs

We do not incur any material costs of obtaining contracts.

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Related Party Transactions

3 Months Ended

12 Months Ended

Mar. 31, 2018

Dec. 31, 2017

Related Party Transactions

Related Party Transactions

6.   Related Party Transactions

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 less than $0.1 million for each of the three months ended March 31, 2018 and 2017. There were no outstanding balances due as of March 31, 2018 or December 31, 2017 under the management services agreement.

From time to time, 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. During the three months ended March 31, 2018 and 2017, expense recognized in connection with these rentals totaled less than $0.1 million, respectively. As of March 31, 2018, and December 31, 2017, we owed less than $0.1 million, respectively, to the related party which are included in accounts payable in the consolidated balance sheets.

We are also party to a TRA 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.

7. Related Party Transactions

We entered into a management services agreement with two of our members, whereby we must pay 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. The agreement shall terminate upon the consummation of a change of control sale, as defined in our operating agreement. Management fee expense totaled $0.3 million for each of 2017, 2016 and 2015. There were no outstanding balances due as of December 31, 2017 and 2016 under the management services agreement. In conjunction with our IPO, the management services agreements terminated.

During 2016 and 2015, we rented certain equipment from a company owned by a member of Cactus LLC. These transactions were under short‑term rental arrangements. During 2017, 2016 and 2015, expense recognized in connection with these rentals totaled $0.3 million, $0.2 million and $0.3 million, respectively. As of December 31, 2017 and 2016, we owed less than $0.1 million, respectively, to this related party which are included in accounts payable in the consolidated balance sheets.

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Commitments and Contingencies

3 Months Ended

12 Months Ended

Mar. 31, 2018

Dec. 31, 2017

Commitments and Contingencies

Commitments and Contingencies

7.   Commitments and Contingencies

Operating Leases and Capital Leases

We lease certain facilities, vehicles, equipment, office and manufacturing space under noncancelable operating leases which expire at various dates through 2029. We are also party to a significant number of month-to-month leases that can be canceled at any time. Total rent expense related to operating leases for the three months ended March 31, 2018 and 2017 was approximately $1.8 million and $1.7 million, respectively.

We also lease vehicles under capital leases. These leases are typically three years in duration and have no guaranteed residual values. Amounts included within property and equipment under capital leases as of March 31, 2018 and December 31, 2017 are as follows:

	March 31,		December 31,
	2018		2017
Cost	$	18,591	$	15,557
Accumulated depreciation		(3,838)		(2,672)
Net	$	14,753	$	12,885

The following table presents our contractual obligations for the periods subsequent to March 31, 2018, including future minimum annual lease payments, including executory costs and interest, and the payments of the liability related to the TRA:

	Operating  Leases		Capital  Leases		Liability related to TRA		Total
Remainder of 2018	$	4,376	$	4,732	$	—	$	9,108
2019		4,206		6,420		5,840		16,466
2020		3,782		4,461		3,168		11,411
2021		3,095		494		3,255		6,844
2022		2,043		—		3,331		5,374
Thereafter		4,960		—		47,395		52,355
	$	22,462	$	16,107	$	62,989	$	101,558

Legal 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.

8. Commitments and Contingencies

Operating Leases and Capital Leases

We lease certain facilities, vehicles, equipment, office and manufacturing space under noncancelable operating leases which expire at various dates through 2029. We are also party to a significant number of month‑to‑month leases that can be canceled at any time. Total rent expense related to operating leases for 2017, 2016 and 2015 amounted to $7.1 million, $7.3 million and $7.9 million, respectively.

We also lease vehicles under capital leases. These leases are typically three years in duration and have no guaranteed residual values. Amounts included within property and equipment under capital leases are as follows:

	December 31,
	2017		2016
Cost	$	15,557	$	2,616
Accumulated depreciation		(2,672)		(171)
Net	$	12,885	$	2,445

Future minimum annual lease payments, including executory costs and interest, for years subsequent to December 31, 2017 are approximately as follows:

	Operating Leases		Capital Leases		Total
2018	$	5,506	$	5,296	$	10,802
2019		4,083		5,394		9,477
2020		3,752		3,475		7,227
2021		3,077		—		3,077
2022		2,031		—		2,031
Thereafter		4,713		—		4,713
	$	23,162	$	14,165	$	37,327

Legal 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.

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Employee Benefit Plans

3 Months Ended

12 Months Ended

Mar. 31, 2018

Dec. 31, 2017

Employee Benefit Plans

Employee Benefit Plans

8.   Employee Benefit Plans

401K Plan

Our employees within the United States are eligible to participate in a 401(k) plan (the “Plan”) sponsored by us. These employees are eligible to participate upon employment hire date and obtaining the age of eighteen. All eligible employees may contribute a percentage of their compensation subject to a maximum imposed by the Internal Revenue Code. We match 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. For the three months ended March 31, 2018 and 2017, employer matching contributions totaled $0.8 million and $0.4 million, respectively. Historically, we have not made non-elective employer contributions under the Plan.

9. Employee Benefit Plans

401K 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 upon employment hire date and obtaining the age of eighteen. All eligible employees may contribute a percentage of their compensation subject to a maximum imposed by the Internal Revenue Code. During 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 its discretion under the plan. Similar benefit plans exist for employees of our foreign subsidiaries. During 2017, 2016 and 2015, employer matching contributions totaled $2.2 million, $1.2 million and $1.5 million, respectively. We have not made non‑elective employer contributions under the plan.

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Supplemental Cash Flow Information

3 Months Ended

12 Months Ended

Mar. 31, 2018

Dec. 31, 2017

Supplemental Cash Flow Information

Supplemental Cash Flow Information

9.   Supplemental Cash Flow Information

Non-cash investing and financing activities were as follows:

	Three Months Ended March 31,
	2018		2017
Property and equipment acquired under capital lease	$	3,092	$	2,046
Property and equipment in payables		4,512		579

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.

11. Supplemental Information

Non-cash investing and financing activities were as follows:

	Year Ended December 31,
	2017		2016		2015
Property and equipment acquired under capital lease	$	12,941	$	2,616	$	—
Property and equipment in payables		1,553		243		276

Cash paid for interest and income taxes was as follows:

	Year Ended December 31,
	2017		2016		2015
Cash paid for interest	$	18,826	$	19,946	$	21,391
Cash paid for income taxes, net		1,535		583		370

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Earnings Per Share

3 Months Ended

12 Months Ended

Mar. 31, 2018

Dec. 31, 2017

Earnings Per Share

Earnings Per Share

10.   Earnings Per Share

Basic earnings per share of Class A common stock is calculated by dividing the net income attributable to Cactus Inc. for the period from February 12, 2018 through March 31, 2018, the period following the Reorganization and IPO, 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.

Dilution for the period includes the effect of unvested restricted stock units under the treasury method assuming that the proceeds will be used to purchase shares of Class A common stock.

There were no shares of Class A common stock or Class B common stock outstanding prior to February 12, 2018, therefore no earnings per share information has been presented for any period prior to that date.

The following table summarizes the basic and diluted earnings per share calculations:

	Three Months Ended March 31,
	2018		2017
Numerator:
Net income attributable to Cactus Inc.	$	3,753	$	—
Denominator:
Weighted average Class A shares outstanding—basic		26,450		—
Effect of dilutive shares (1)		198
Weighted average Class A shares outstanding—diluted (1)		26,648		—
Earnings per Class A Share—basic	$	0.14	$	—
Earnings per Class A Share—diluted (1)	$	0.14	$	—

(1) Diluted earnings per share for the periods presented excludes 48,439,772 shares of Class B common stock as the effect would be anti-dilutive.

.

10. Earnings (loss) Per Unit

Class A‑1 Units and Class B Units are entitled to allocations of distributions and income based upon the Class A Unit holder’s return on investment thresholds. The Class A‑1 Units and the Class B Units are considered participating securities and are required to be included in the calculation of basic earnings (loss) per Unit using the two‑class method. The two‑class method of computing earnings per Unit is an earnings allocation formula that determines earnings per Unit for each class of Unit according to dividends declared and participation rights in undistributed earnings. Basic earnings (loss) per Unit is calculated based on the weighted‑average number of the Class A Units outstanding during the periods presented. The following is a summary of earnings per Unit:

	Year Ended December 31,
	2017		2016		2015
Numerator:
Net income (loss)	$	66,547	$	(8,176)	$	21,224
Participating securities:
Dividends		—		—		(3,303)
Income allocation		(20,617)		—		(6,720)
Net income (loss) available to Class A Units	$	45,930	$	(8,176)	$	11,201
Denominator:
Weighted average Class A Units—basic and diluted		36,500		36,500		36,500
Earnings (loss) per Class A Unit—basic and diluted	$	1,258.36	$	(224.00)	$	306.88

Losses were not allocated to the participating Units in 2016 as the participating securities are not contractually obligated to fund losses.

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Preparation of Interim Financial Statements and Other Items (Policies)

3 Months Ended

12 Months Ended

Mar. 31, 2018

Dec. 31, 2017

Preparation Of Interim Financial Statements And Other Items

Basis of Presentation

Basis of Presentation

The unaudited and condensed consolidated financial statements (“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 for interim financial information. Accordingly, these consolidated financial statements do not include all information or notes required by generally accepted accounting principles for annual financial statements and should be read together with our Annual Report for Form 10‑K for the year ended December 31, 2017. All significant intercompany transactions and balances have been eliminated upon consolidation.

In our opinion, the consolidated financial statements include all adjustments, which are of a normal recurring nature, unless otherwise disclosed, necessary for a fair statement of the consolidated financial statements for the interim periods. The results of operations for the three months ended March 31, 2018 are not necessarily indicative of the results to be expected for the full year.

As discussed in Note 1, as a result of our IPO and Reorganization, Cactus Inc. is the sole managing member of Cactus LLC and consolidates entities in which it has a controlling financial interest. The Reorganization was considered a transaction between entities under common control. As a result, the financial statements for periods prior to our IPO and the Reorganization have been adjusted to combine the previously separate entities for presentation purposes. However, Cactus Inc. had no operations or assets and liabilities prior to our IPO. As such, for periods prior to the completion of our IPO, the consolidated financial statements represent the historical financial position and results of operations of Cactus LLC and its subsidiaries. For periods after the completion of our IPO, the financial position and results of operations include those of Cactus and report the non-controlling interest related to the portion of CW Units not owned by Cactus Inc.

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 LLC and its wholly owned subsidiaries, Suzhou and CWA. All significant intercompany transactions and balances have been eliminated upon consolidation.

Limitation of Members' Liability

Limitation of Members’ Liability

Under the terms of the First Amended and Restated Limited Liability Company Operating Agreement, dated as of January 29, 2018 of Cactus LLC (the “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 LLC Agreement.

Limitation of Members’ Liability

Under the terms of the Amended and Restated Limited Liability Company Operating Agreement, dated as of May 31, 2016, of Cactus LLC (the “Agreement”), the members are not obligated for debt, liabilities, contracts or other obligations of Cactus LLC. Profits and losses are allocated to members as defined in the Agreement.

Policy for Interim Period Tax Allocation

Policy for Interim Period Tax Allocation

For interim income tax reporting we estimate our annual effective tax rate and apply it to our year-to-date ordinary income. The tax effects of unusual or infrequently occurring items, including changes in judgment about valuation allowances and effects of changes in tax laws or rates, are reported in the interim period in which they occur. Our IPO closed on February 12, 2018, and the annual effective tax rate was determined considering the periods before and after our IPO. Accordingly, net income attributable to non-controlling interest includes its share of respective income tax expense, which is not subject to U.S. federal and state income tax expense, and net income attributable to Cactus Inc. includes its share of respective income tax expense, which does include U.S. federal and state income tax expense. As of March 31, 2018, Cactus Inc. owned 35.3% of Cactus LLC and non-controlling interest owned 64.7% of Cactus LLC. 

Income Taxes

Income Taxes

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. Additionally, our operations in both Australia and China are subject to local country income taxes.

The provision for income tax for the three months ended March 31, 2018 consisted of:

	Three Months Ended March 31,
	2018
Current:
Federal	$	211
State		240
Foreign		238
Total current income taxes		689
Deferred:
Federal		762
State		128
Foreign		73
Total deferred income taxes		963
Total provision for income taxes	$	1,652

The effective income tax rate was different from the statutory U.S. federal income tax rate due to the following:

	Three Months Ended March 31,
	2018
Income taxes at 21% statutory tax rate	$	5,893
Net difference resulting from:
Profit of Cactus LLC Pre-IPO not subject to U.S. federal tax		(2,808)
Profit of non-controlling interest not subject to U.S. federal tax		(1,926)
Foreign earnings subject to different tax rates		50
State income taxes		318
Foreign withholding taxes		73
Change in valuation allowance		(20)
Other		72
Total provision for income taxes	$	1,652

Income Taxes

Cactus LLC is a limited liability company and files a U.S. Return of Partnership Income, which includes both our U.S. and foreign operations. As a limited liability company, Cactus LLC is treated as a partnership, and the members of Cactus LLC are taxed individually on their share of our earnings for U.S. federal income tax purposes. Accordingly, no provision for U.S. federal income taxes has been made in the consolidated financial statements.

Cactus LLC is subject to state taxes within the United States. However, the income generated by Cactus LLC flows through to the members’ individual state tax returns. Additionally, our operations in both Australia and China are subject to local country income taxes.

Deferred taxes are recorded using the 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. The realizability of deferred tax assets are evaluated annually and a valuation allowance is provided if it is more likely than not that the deferred tax assets will not give rise to future benefits in our tax returns.

We account for uncertainty in income taxes by prescribing the minimum recognition threshold an income tax position is required to meet before being recognized in the consolidated financial statements. Each income tax position is assessed using a two‑step process. A determination is first made as to whether it is more likely than not that the income tax position will be sustained, based upon technical merits, upon examination by the taxing authorities. If the income tax position is expected to meet the more likely than not criteria, the benefit recorded in the consolidated financial statements equals the largest amount that is greater than 50% likely to be realized upon its ultimate settlement.

We record income tax related interest and penalties, if any, as a component in the provision for income tax expense.

U.S. Federal Income Tax Reform

On December 22, 2017, the President of the United States signed into law legislation informally known as the Tax Cuts and Jobs Act (the “Act”). The Act represents major tax reform legislation that, among other provisions, reduces the U.S. corporate tax rate. As of December 31, 2017, since Cactus LLC is a pass-through entity, management considers that the abovementioned Act will have an immaterial impact. However, going forward, the Company will analyze the impact based on revised circumstances.

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. All grant date fair value is expensed immediately for awards that are fully vested as of the grant date.

In conjunction with our IPO, we granted 737,493 restricted stock unit awards with a grant date fair value of $19.00. The majority of these awards vest over a three year period.  During the three months ended March 31, 2018, we recorded $0.8 million of stock-based compensation expense mostly included in selling, general and administrative expenses.  As of March 31, 2018, there was $13.2 million of unrecognized compensation cost related to these unvested restricted stock unit awards, which is expected to be recognized over a weighted average period of 2.8 years. 

Significant Customers

Significant Customers

For the three months ended March 31, 2018, Cactus had one customer that represented 11% of consolidated revenues. No other customer represented 10% or more of consolidated revenues during this period. For the three months ended March 31, 2017, Cactus had two customers each representing 10% or more of consolidated revenues, whose combined revenues represented approximately 21% of consolidated revenues. There were no other customers representing 10% or more of consolidated revenues during this period.

Significant Vendors

Significant Vendors

We purchase a significant portion of supplies, equipment and machined components from a single vendor. For the three months ended March 31, 2018 and 2017, purchases from this vendor totaled $10.4 million and $6.4 million, respectively. These figures represent approximately 21% and 20% 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 March 31, 2018 and December 31, 2017 totaled $7.2 million and $7.4 million, respectively.

Significant Vendors

We purchase a significant portion of supplies, equipment and machined components from a single vendor. During 2017, 2016 and 2015, purchases from this vendor totaled $33.4 million, $10.8 million and $18.1 million, respectively. These figures represent approximately 22%,  20% and 27% 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, 2017 and 2016 totaled $7.4 million and $1.3 million, respectively.

Use of Estimates

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Such estimates include but are not limited to estimated losses on accounts receivables, estimated realizable value on excess and obsolete inventory, estimates related to fair value of reporting units for purposes of assessing goodwill and other indefinite-lived intangible assets for impairment and estimates of deferred tax assets related to the step-up in basis under the TRA and the associated liability under the TRA. Actual results could differ from those estimates.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Such estimates include but are not limited to estimated losses on accounts receivables, estimated realizable value on excess and obsolete inventory, useful lives of equipment and estimates related to fair value of reporting units for purposes of assessing goodwill for impairment. Actual results could differ from those estimates.

Tax Receivable Agreement

Tax Receivable Agreement

Pursuant to the LLC Agreement, each TRA Holder will, subject to certain limitations, have 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 TRA 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 will be canceled.

Cactus LLC has made for itself (and for each of its direct or indirect subsidiaries that is treated as a partnership for U.S. federal income tax purposes and that it controls) an election under Section 754 of the Internal Revenue Code (the “Code”) that will be effective for 2018 and each taxable year in which a redemption of CW Units pursuant to the Redemption Right or the Call Right occurs. Pursuant to the Section 754 election, redemptions of CW Units pursuant to the Redemption Right or the Call Right are expected to result in adjustments to the tax basis of the tangible and intangible assets of Cactus LLC. These adjustments will be allocated to Cactus Inc. Such adjustments to the tax basis of the tangible and intangible assets of Cactus LLC would not have been available to Cactus Inc. absent its acquisition or deemed acquisition of CW Units pursuant to the exercise of the Redemption Right or the Call Right. In addition, the repayment of borrowings outstanding under the Cactus LLC term loan facility resulted in adjustments to the tax basis of the tangible and intangible assets of Cactus LLC, a portion of which was allocated to Cactus Inc.

These basis adjustments are expected to increase (for tax purposes) Cactus Inc.’s depreciation, depletion and amortization deductions and may also decrease Cactus Inc.’s gains (or increase its losses) on future dispositions of certain assets to the extent tax basis is allocated to those assets. Such increased deductions and losses and reduced gains may reduce the amount of tax that Cactus Inc. would otherwise be required to pay in the future.

The TRA will generally provide for the payment by Cactus Inc. to each TRA Holder 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 pursuant to the 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 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 benefit of the remaining 15% of the cash savings.

The payment obligations under the TRA are Cactus Inc.’s obligations and not obligations of Cactus LLC, and we expect that the payments we will be required to make under the TRA will be substantial. We have determined that it is more likely than not that actual cash tax savings will be realized by Cactus Inc. from the tax benefits resulting from the Reorganization and our IPO. Accordingly, the TRA is expected to result in future payments, and we have recorded a liability from the TRA of $63.0 million included in the consolidated balance sheet as of March 31, 2018.  Estimating the amount and timing of payments that may become due under the TRA is by its nature imprecise. For purposes of the TRA, net cash savings in tax generally will be calculated by comparing Cactus Inc.’s actual tax liability (determined by using the actual applicable U.S. federal income tax rate and an assumed combined state and local income tax rate) to the amount it would have been required to pay had it not been able to utilize any of the tax benefits subject to the TRA. The amounts payable, as well as the timing of any payments under the TRA, are dependent upon significant future events and assumptions, including the timing of the redemption of CW Units, the price of our Class A common stock at the time of each redemption, the extent to which such redemptions are taxable transactions, the amount of the redeeming unit holder’s tax basis in its CW Units at the time of the relevant redemption, the depreciation and amortization periods that apply to the increase in tax basis, the amount and timing of taxable income we generate in the future and the U.S. federal income tax rate then applicable, and the portion of Cactus Inc.’s payments under the TRA that constitute imputed interest or give rise to depreciable or amortizable tax basis.

The accounting under the TRA for any exchanges of CW Units subsequent to the Reorganization will follow the same procedures as described above.

A delay in the timing of redemptions of CW Units, holding other assumptions constant, would be expected to decrease the discounted value of the amounts payable under the TRA as the benefit of the depreciation and amortization deductions would be delayed and the estimated increase in tax basis could be reduced as a result of allocations of Cactus LLC taxable income to the redeeming unit holder prior to the redemption. Stock price increases or decreases at the time of each redemption of CW Units would be expected to result in a corresponding increase or decrease in the undiscounted amounts payable under the TRA in an amount equal to 85% of the tax-effected change in price. The amounts payable under the TRA are dependent upon Cactus Inc. having sufficient future taxable income to utilize the tax benefits on which it is required to make payments under the TRA. If Cactus Inc.’s projected taxable income is significantly reduced, the expected payments would be reduced to the extent such tax benefits do not result in a reduction of Cactus Inc.’s future income tax liabilities.

It is possible that future transactions or events could increase or decrease the actual tax benefits realized and the corresponding liability from the TRA. Moreover, there may be a negative impact on our liquidity if, as a result of timing discrepancies or otherwise, (i) the payments under the TRA exceed the actual benefits we realize in respect of the tax attributes subject to the TRA or (ii) distributions to Cactus Inc. by Cactus LLC are not sufficient to permit Cactus Inc. to make payments under the TRA after it has paid its taxes and other obligations. 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.

In addition, although we are not aware of any issue that would cause the Internal Revenue Service (“IRS”) or other relevant tax authorities to challenge potential tax basis increases or other tax benefits covered under the TRA, the TRA Holders will not reimburse us for any payments previously made under the TRA if such basis increases or other benefits are subsequently disallowed, except that excess payments made to any such holder will be netted against payments otherwise to be made, if any, to such holder after our determination of such excess. As a result, in such circumstances, Cactus Inc. could make payments that are greater than its actual cash tax savings, if any, and may not be able to recoup those payments.

We account for any amounts payable under the TRA in accordance with Accounting Standard Codification (“ASC”) Topic 450, Contingencies (“ASC 450”). We will recognize subsequent changes to the measurement of the liability from the TRA in the income statement as a component of income before taxes. In the case of any changes to any valuation allowance associated with the underlying tax asset, given the link between the tax savings generated and the recognition of the liability from the TRA (i.e., one is recorded based on 85% of the other), and the explicit guidance in ASC 740-20-45-11(g) which requires that subsequent changes in a valuation allowance established against deferred tax assets that arose due to change in tax basis as a result of a transaction among or with shareholders to be recorded in the income statement as opposed to equity, we believe recording of the corollary adjustment to the liability from the TRA in the income statement is appropriate.

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. In the event that the TRA is not terminated, the payments under the TRA are anticipated to commence in 2019 and to continue for 16 years after the date of the last redemption of CW Units. Accordingly, it is expected that payments will continue to be made under the TRA for more than 25 years. 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 (determined by applying a discount rate of one-year LIBOR plus 150 basis points) 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. Assuming no material changes in the relevant tax law, we expect that if the TRA were terminated as of March 31, 2018, the estimated termination payments, based on the assumptions discussed above, would be approximately $304.6 million (calculated using a discount rate equal to one-year LIBOR plus 150 basis points, applied against an undiscounted liability of $430.1 million).

The TRA provides that in the event that we breach any of our material obligations under the TRA, whether as a result of (i) our failure to make any payment when due (including in cases where we elect to terminate the TRA early, the TRA is terminated early due to certain mergers, asset sales, or other forms of business combinations or changes of control or we have available cash but fail to make payments when due under circumstances where we do not have the right to elect to defer the payment, as described below), (ii) our failure to honor any other material obligation under it or (iii) by operation of law as a result of the rejection of the TRA in a case commenced under the U.S. Bankruptcy Code or otherwise, then the TRA Holders may elect to treat such breach as an early termination, which would cause all our payment and other obligations under the TRA to be accelerated and become due and payable applying the same assumptions described above.

As a result of either an early termination or a change of control, we could be required to make payments under the TRA that exceed our actual cash tax savings under the TRA. In these situations, our obligations under the TRA could have a substantial negative impact on our liquidity and could have the effect of delaying, deferring or preventing certain mergers, asset sales, or other forms of business combinations or changes of control. 

Decisions we make in the course of running our business, such as with respect to mergers, asset sales, other forms of business combinations or other changes in control, may influence the timing and amount of payments that are received by the TRA Holders under the TRA. For example, the earlier disposition of assets following a redemption of CW Units may accelerate payments under the TRA and increase the present value of such payments, and the disposition of assets before a redemption of CW Units may increase the TRA Holders’ tax liability without giving rise to any rights of the TRA Holders to receive payments under the TRA. Such effects may result in differences or conflicts of interest between the interests of the TRA Holders and other shareholders.

Payments generally are due under the TRA within five business days following the finalization of the schedule with respect to which the payment obligation is calculated. However, interest on such payments will begin to accrue from the due date (without extensions) of our U.S. federal income tax return for the period to which such payments relate until such payment due date at a rate equal to one-year LIBOR plus 150 basis points. Except in cases where we elect to terminate the TRA early or it is otherwise terminated as described above, generally 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 at a rate of one-year LIBOR plus 550 basis points. However, interest will accrue from the due date for such payment until the payment date at a rate of one-year LIBOR plus 150 basis points if we are unable to make such payment as a result of limitations imposed by our credit agreement. We have no present intention to defer payments under the TRA.

Because we are a holding company with no operations of our own, our ability to make payments under the TRA is dependent on the ability of Cactus LLC to make distributions to us in an amount sufficient to cover our obligations under the TRA. This ability, in turn, may depend on the ability of Cactus LLC’s subsidiaries to make distributions to it. The ability of Cactus LLC, its subsidiaries and other entities in which it directly or indirectly holds an equity interest to make such distributions will be subject to, among other things, the applicable provisions of Delaware law (or other applicable jurisdiction) that may limit the amount of funds available for distribution and restrictions in relevant debt instruments issued by Cactus LLC or its subsidiaries and other entities in which it directly or indirectly holds an equity interest. Additionally, distributions made by Cactus LLC generally require pro-rata distribution among all its members, which could be significant. To the extent that we are unable to make payments under the TRA for any reason, such payments will be deferred and will accrue interest until paid.

Emerging Growth Company status

Emerging Growth Company status

Cactus is an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). We will remain an emerging growth company until the earlier of (1) the last day of our fiscal year (a) following the fifth anniversary of the completion of our IPO, (b) in which our total annual gross revenue is at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our Class A common stock that is held by non-affiliates exceeds $700.0 million as of the last business day of our most recently completed second fiscal quarter (following twelve months from our IPO), and (2) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period. An emerging growth company may take advantage of specified reduced reporting and other burdens that are otherwise generally applicable to public companies. We have irrevocably opted out of the extended transition period and, as a result, we will adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Standards Adopted

In August 2016, the FASB issued ASU No. 2016-15, Cash Flow Statement (Topic 250). This new guidance addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice, including: debt prepayment or debt extinguishment costs, settlement of zero coupon debt instruments or other debt instruments, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies, distributions received from equity method investees, beneficial interests in securitization transactions, and separately identifiable cash flows and application of the predominance principle. ASU 2016-15 is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. We adopted this ASU on January 1, 2018. The adoption of this pronouncement did not have a material impact on our consolidated financial statements.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which supersedes the current revenue recognition guidance. The ASU is based on the principle that revenue is recognized to depict the transfer of goods and services to customers in the amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The new standard will be effective for public companies for the fiscal years beginning after December 31, 2017 using one of two retrospective application methods. We adopted this ASU on January 1, 2018 using the modified retrospective method. The adoption of this pronouncement did not have a material impact on our consolidated financial statements. See Note 5.

In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, in an effort to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendments in this standard provide a screen to determine when an integrated set of assets and activities is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the integrated set of assets and activities is not a business. The new guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is allowed for transactions for which the acquisition date occurs before the issuance date or effective date of the amendments, only when the transaction has not been reported in financial statements that have been issued or made available for issuance and for transactions in which a subsidiary is deconsolidated or a group of assets is derecognized before the issuance date or effective date of the amendments, only when the transaction has not been reported in financial statements that have been issued or made available for issuance. Entities will be required to apply the guidance prospectively when adopted. We adopted this ASU on January 1, 2018. The adoption of this pronouncement did not have a material impact on our consolidated financial statements.

Standards Not Yet Adopted

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Upon adoption of the new guidance, lessees are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The new guidance will be effective for fiscal years beginning after December 15, 2018. We are currently evaluating the impact this pronouncement will have on our consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other, 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 annual, or interim, 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. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We do not expect the adoption of this pronouncement to have a material impact on our consolidated financial statements.

In February 2018, the FASB issued ASU 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220) Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The amendments in this update allow a reclassification from accumulated other comprehensive income (loss) to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. However, because the amendments only relate to the reclassification of the income tax effects of the Tax Cuts and Jobs Act, the underlying guidance that requires that the effect of a change in tax laws or rates be included in income from continuing operations is not affected. The amendments in this update also require certain disclosures about stranded tax effects. The amendments in this update are effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the impact this pronouncement will have on our consolidated financial statements.

Recent Accounting Pronouncements

Standards Adopted

In July 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015‑11, Simplifying the Measurement of Inventory, which requires companies to measure inventory at the lower of cost or net realizable value rather than at the lower of cost or market. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. We adopted this ASU on January 1, 2017. The adoption of this pronouncement did not have any material impact on the consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016‑09, Improvements to Employee Share‑Based Payment Accounting. This new guidance includes provisions intended to simplify how share based payments are accounted for and presented in the financial statements, including: a) all excess tax benefits and tax deficiencies should be recognized as income tax expense or benefit in the income statement; b) excess tax benefits should be classified along with other income tax cash flows as an operating activity; c) an entity can make an entity wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur; d) the threshold to qualify for equity classification permits withholding up to the maximum statutory tax rates in the applicable jurisdictions; e) cash paid by an employer should be classified as a financing activity when shares are directly withheld for tax withholding purposes. We adopted this ASU on January 1, 2017. The adoption of this pronouncement did not have any material impact on the consolidated financial statements.

Standards Not Yet Adopted

In May 2014, the FASB issued ASU No. 2014‑09, Revenue from Contracts with Customers, which supersedes the current revenue recognition guidance. The ASU is based on the principle that revenue is recognized to depict the transfer of goods and services to customers in the amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The new standard will be effective for public companies for the fiscal years beginning after December 31, 2017 using one of two retrospective application methods. We adopted this pronouncement on January 1, 2018 using the modified retrospective method. Based on the assessment performed, the adoption of this pronouncement will not have a material impact on the consolidated financial statements. We are continuing our assessment of potential changes to our disclosures under the new standard. We will provide additional disclosures, if any, regarding material differences in reported financial statement line items in 2018 when compared to the amounts that would have been reported under legacy accounting guidance.

In February 2016, the FASB issued ASU No. 2016‑02, Leases (Topic 842), to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Upon adoption of the new guidance, lessees are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The new guidance will be effective for fiscal years beginning after December 15, 2018. We are currently evaluating the impact this pronouncement will have on the consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017‑01, Business Combinations (Topic 805): Clarifying the Definition of a Business, in an effort to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendments in this standard provide a screen to determine when an integrated set of assets and activities is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the integrated set of assets and activities is not a business. The new guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is allowed for transactions for which the acquisition date occurs before the issuance date or effective date of the amendments, only when the transaction has not been reported in financial statements that have been issued or made available for issuance and for transactions in which a subsidiary is deconsolidated or a group of assets is derecognized before the issuance date or effective date of the amendments, only when the transaction has not been reported in financial statements that have been issued or made available for issuance. Entities will be required to apply the guidance prospectively when adopted. We do not expect the adoption of this pronouncement to have a material impact on the consolidated financial statements.

In January 2017, the FASB issued ASU 2017‑04, Intangibles‑Goodwill and Other, 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 annual, or interim, 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. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We do not expect the adoption of this pronouncement to have a material impact on the consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016‑15, Cash Flow Statement (Topic 250). This new guidance addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice, including: debt prepayment or debt extinguishment costs, settlement of zero coupon debt instruments or other debt instruments, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate owned life insurance policies, distributions received from equity method investees, beneficial interests in securitization transactions, and separately identifiable cash flows and application of the predominance principle. ASU 2016‑15 is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. We do not expect that the adoption of this pronouncement will have a material impact on the consolidated financial statements.

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Preparation of Interim Financial Statements and Other Items (Tables)

3 Months Ended

12 Months Ended

Mar. 31, 2018

Dec. 31, 2017

Preparation Of Interim Financial Statements And Other Items

Schedule of provision for income tax

	Three Months Ended March 31,
	2018
Current:
Federal	$	211
State		240
Foreign		238
Total current income taxes		689
Deferred:
Federal		762
State		128
Foreign		73
Total deferred income taxes		963
Total provision for income taxes	$	1,652

	Year Ended December 31,
	2017		2016		2015
Current:
Federal	$	—	$	—	$	—
State		594		229		474
Foreign		735		448		246
Total current income taxes		1,329		677		720
Deferred—foreign		220		132		64
Total provision for income taxes	$	1,549	$	809	$	784

Schedule of effective income tax rate

	Three Months Ended March 31,
	2018
Income taxes at 21% statutory tax rate	$	5,893
Net difference resulting from:
Profit of Cactus LLC Pre-IPO not subject to U.S. federal tax		(2,808)
Profit of non-controlling interest not subject to U.S. federal tax		(1,926)
Foreign earnings subject to different tax rates		50
State income taxes		318
Foreign withholding taxes		73
Change in valuation allowance		(20)
Other		72
Total provision for income taxes	$	1,652

	Year Ended December 31,
	2017		2016		2015
Income taxes at 35% statutory tax rate	$	23,834	$	(2,578)	$	7,703
Net difference resulting from:
Profit and loss of Cactus LLC not subject to U.S. federal tax		(22,758)		2,990		(7,627)
Foreign earnings subject to different tax rates		(302)		(122)		(50)
State income taxes		594		229		474
Foreign withholding taxes		220		132		64
Change in valuation allowance		(39)		158		220
Total provision for income taxes	$	1,549	$	809	$	784

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Inventories (Tables)

3 Months Ended

12 Months Ended

Mar. 31, 2018

Dec. 31, 2017

Inventories

Summary of inventories

	March 31,		December 31,
	2018		2017
Raw materials	$	1,378	$	1,532
Work-in-progress		4,012		3,590
Finished goods		64,143		59,328
	$	69,533	$	64,450

	December 31,
	2017		2016
Raw materials	$	1,532	$	1,543
Work-in-progress		3,590		4,585
Finished goods		59,328		31,772
	$	64,450	$	37,900

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Long-term Debt (Tables)

3 Months Ended

12 Months Ended

Mar. 31, 2018

Dec. 31, 2017

Long-term Debt.

Schedule of long-term debt

	March 31,		December 31,
	2018		2017
Term Loan	$	—	$	248,529
Less:
Current portion		—		(2,568)
Unamortized debt discount and deferred loan costs		—		(4,524)
Long-term debt, net	$	—	$	241,437

	December 31,
	2017		2016
Term Loan	$	248,529	$	251,098
Less:
Current portion		(2,568)		(2,568)
Unamortized debt discount and deferred loan costs		(4,524)		(6,276)
Long-term debt, net	$	241,437	$	242,254

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Commitments and Contingencies (Tables)

3 Months Ended

12 Months Ended

Mar. 31, 2018

Dec. 31, 2017

Commitments and Contingencies

Schedule of Property plant and equipment Net

	March 31,		December 31,
	2018		2017
Cost	$	18,591	$	15,557
Accumulated depreciation		(3,838)		(2,672)
Net	$	14,753	$	12,885

	December 31,
	2017		2016
Land	$	2,241	$	2,241
Buildings and improvements		11,657		11,169
Machinery and equipment		43,528		38,429
Vehicles under capital lease		15,557		2,616
Rental equipment		85,292		75,437
Furniture and fixtures		1,110		984
Computers and software		2,636		2,429
		162,021		133,305
Less: Accumulated depreciation and amortization		72,917		62,381
		89,104		70,924
Construction in progress		5,550		3,946
Total property and equipment, net		94,654		74,870

Schedule of future minimum lease payments

	Operating  Leases		Capital  Leases		Liability related to TRA		Total
Remainder of 2018	$	4,376	$	4,732	$	—	$	9,108
2019		4,206		6,420		5,840		16,466
2020		3,782		4,461		3,168		11,411
2021		3,095		494		3,255		6,844
2022		2,043		—		3,331		5,374
Thereafter		4,960		—		47,395		52,355
	$	22,462	$	16,107	$	62,989	$	101,558

	Operating Leases		Capital Leases		Total
2018	$	5,506	$	5,296	$	10,802
2019		4,083		5,394		9,477
2020		3,752		3,475		7,227
2021		3,077		—		3,077
2022		2,031		—		2,031
Thereafter		4,713		—		4,713
	$	23,162	$	14,165	$	37,327

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Supplemental Cash Flow Information (Table)

3 Months Ended

12 Months Ended

Mar. 31, 2018

Dec. 31, 2017

Supplemental Cash Flow Information

Schedule of non cash investing and financing activities

	Three Months Ended March 31,
	2018		2017
Property and equipment acquired under capital lease	$	3,092	$	2,046
Property and equipment in payables		4,512		579

Non-cash investing and financing activities were as follows:

	Year Ended December 31,
	2017		2016		2015
Property and equipment acquired under capital lease	$	12,941	$	2,616	$	—
Property and equipment in payables		1,553		243		276

Cash paid for interest and income taxes was as follows:

	Year Ended December 31,
	2017		2016		2015
Cash paid for interest	$	18,826	$	19,946	$	21,391
Cash paid for income taxes, net		1,535		583		370

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Earnings Per Share (Tables)

3 Months Ended

12 Months Ended

Mar. 31, 2018

Dec. 31, 2017

Earnings Per Share

Summary of earnings per Unit

	Three Months Ended March 31,
	2018		2017
Numerator:
Net income attributable to Cactus Inc.	$	3,753	$	—
Denominator:
Weighted average Class A shares outstanding—basic		26,450		—
Effect of dilutive shares (1)		198
Weighted average Class A shares outstanding—diluted (1)		26,648		—
Earnings per Class A Share—basic	$	0.14	$	—
Earnings per Class A Share—diluted (1)	$	0.14	$	—

(1) Diluted earnings per share for the periods presented excludes 48,439,772 shares of Class B common stock as the effect would be anti-dilutive.

.

	Year Ended December 31,
	2017		2016		2015
Numerator:
Net income (loss)	$	66,547	$	(8,176)	$	21,224
Participating securities:
Dividends		—		—		(3,303)
Income allocation		(20,617)		—		(6,720)
Net income (loss) available to Class A Units	$	45,930	$	(8,176)	$	11,201
Denominator:
Weighted average Class A Units—basic and diluted		36,500		36,500		36,500
Earnings (loss) per Class A Unit—basic and diluted	$	1,258.36	$	(224.00)	$	306.88

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Organization and Nature of Operations (Details) $ / shares in Units, $ in Thousands					3 Months Ended	12 Months Ended
	Feb. 14, 2018 USD ($) shares	Feb. 12, 2018 USD ($) item Vote $ / shares shares	Jan. 25, 2018 USD ($)	Jan. 21, 2018 USD ($)	Mar. 31, 2018 USD ($) Center $ / shares shares	Dec. 31, 2017 USD ($) item shares	Dec. 31, 2016 USD ($) shares	Dec. 31, 2015 USD ($) shares	Feb. 11, 2018 shares
Organization and Nature of Operations [Line Items]
Number of U.S. service centers					14	14
Number of service centers in Australia					1	1
Net proceeds from IPO					$ 469,621
Offering costs		$ 2,800				$ 2,200
Tax savings payable to TRA Holders (as a percent)		85.00%
Tax savings benefit retained (as a percent)		15.00%
Number of shares canceled | shares	3,450,000
Write off of stock issuance costs against equity		$ 2,200
Write-off of unamortized debt discount and deferred loan costs		$ 4,300			4,305		$ (2,251)	$ (1,640)
Restricted stock unit awards issued (in shares) | shares		737,493
Deferred tax asset, net		$ 74,100			73,215
Liability related to tax receivable agreement		63,000			62,989
Additional paid-in capital related to tax receivable agreement		11,100			11,116
Retained earnings					3,753
Non-controlling interest		130,900
Member distributions prior to IPO			$ 26,000		$ 26,000		2,055	12,232
Cactus LLC
Organization and Nature of Operations [Line Items]
Net proceeds from IPO		469,600
Ownership interest					35.30%
Retained earnings		0
Member distributions prior to IPO				$ 26,000
Cactus LLC | Term loan facility
Organization and Nature of Operations [Line Items]
Repayments of debt		251,000
Members' Equity (Deficit)
Organization and Nature of Operations [Line Items]
Member distributions prior to IPO					$ 26,000		$ 2,055	$ 12,232
Members' Equity (Deficit) | Cactus LLC
Organization and Nature of Operations [Line Items]
Redeem CW Units from certain direct and indirect owners		$ 216,400
Redeem CW Units from certain direct and indirect owners (in units) | shares		8,667,841
Class A Common Stock
Organization and Nature of Operations [Line Items]
Common stock, par value | $ / shares					$ 0.01
Common stock, shares issued | shares					26,450,000
Common stock, shares outstanding | shares					26,450,000	36,500	36,500	36,500	0
Class B Common Stock
Organization and Nature of Operations [Line Items]
Number of shares issued | shares		51,889,772
Common stock, par value | $ / shares		$ 0.01			$ 0.01
Number of votes per holder | Vote		1
Common stock, shares issued | shares					48,440,000
Common stock, shares outstanding | shares					48,440,000				0
Class B Common Stock | Cactus LLC
Organization and Nature of Operations [Line Items]
Redeem CW Units from certain direct and indirect owners (in units) | shares	3,450,000
Class B Common Stock | Members' Equity (Deficit) | Cactus LLC
Organization and Nature of Operations [Line Items]
Number of common stock for each unit | item		1
Initial Public Offering | Members' Equity (Deficit)
Organization and Nature of Operations [Line Items]
Number of CW Units acquired with the proceeds from the sale of common stock | shares		23,000,000
Initial Public Offering | Class A Common Stock
Organization and Nature of Operations [Line Items]
Number of shares issued | shares		23,000,000
Common stock, par value | $ / shares		$ 0.01
Price per share | $ / shares		$ 19.00
Net proceeds from IPO		$ 408,000
Over allotment | Members' Equity (Deficit)
Organization and Nature of Operations [Line Items]
Number of CW Units acquired with the proceeds from the sale of common stock | shares	3,450,000
Over allotment | Class A Common Stock
Organization and Nature of Operations [Line Items]
Number of shares issued | shares	3,450,000
Net proceeds from IPO	$ 61,600

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Preparation of Interim Financial Statements and Other Items - Provision for Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Other Ownership Interests [Line Items]
Non-controlling interest owned (as a percentage)	64.70%
Current:
Federal	$ 211
State	240		$ 594	$ 229	$ 474
Foreign	238		735	448	246
Total current income taxes	689		1,329	677	720
Deferred:
Federal	762
State	128
Foreign	73		220	132	64
Total deferred income taxes	963	$ 29
Total provision for income taxes	$ 1,652	$ 154	1,549	$ 809	$ 784
Cactus LLC
Other Ownership Interests [Line Items]
Ownership interest (as a percent)	35.30%
Deferred:
Total provision for income taxes			$ 0

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Preparation of Interim Financial Statements and Other Items - Effective Income Tax (Details)1 - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Effective income tax rate:
Income taxes at 21% statutory tax rate	$ 5,893		$ 23,834	$ (2,578)	$ 7,703
Statutory tax rate	21.00%		35.00%	35.00%	35.00%
Profit of Cactus LL Pre-IPO not subject to U.S. federal tax	$ (2,808)
Profit of non-controlling interest not subject to U.S. federal tax	(1,926)		$ (22,758)	$ 2,990	$ (7,627)
Foreign earnings subject to different tax rates	50
State income taxes	318		594	229	474
Foreign withholding taxes	73
Change in valuation allowance	(20)		(39)	158	220
Other	72
Total provision for income taxes	$ 1,652	$ 154	$ 1,549	$ 809	$ 784

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Preparation of Interim Financial Statements and Other Items - Share-based Compensation (Details - USD ($) $ / shares in Units, $ in Millions		3 Months Ended	12 Months Ended
	Feb. 12, 2018	Mar. 31, 2018	Dec. 31, 2016	Dec. 31, 2015
Stock-based Compensation
Vesting period			2 months	2 months
Stock-based compensation expenses			$ 0.4	$ 0.4
Restricted Stock Units
Stock-based Compensation
Granted (in shares)	737,493
Grant date fair value (in dollars per share)	$ 19.00
Vesting period	3 years
Stock-based compensation expenses		$ 0.8
Unrecognized compensation cost		$ 13.2
Expected to be recognized over weighted average period		2 years 9 months 18 days

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Preparation of Interim Financial Statements and Other Items (Details) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2018 USD ($) item	Mar. 31, 2017 USD ($) item	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)
Products
Concentration Risk [Line Items]
Purchases from the vendor	$ 37,066	$ 23,195	$ 124,030	$ 62,766	$ 84,604
Customer concentration | Revenue
Concentration Risk [Line Items]
Number of customers accounted for 10% or more of consolidated revenues | item	1	2
Concentration of risk (as a percent)	11.00%	21.00%	11.00%	12.00%	12.00%
Supplier concentration | Purchases
Concentration Risk [Line Items]
Concentration of risk (as a percent)	21.00%	20.00%	22.00%	20.00%	27.00%
Purchases from the vendor	$ 10,400	$ 6,400	$ 33,400	$ 10,800	$ 18,100
Amounts due to the vendor	$ 7,200		$ 7,400	$ 1,300

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Preparation of Interim Financial Statements and Other Items - Tax Receivable Agreement (Details - USD ($) $ in Thousands		3 Months Ended
	Feb. 12, 2018	Mar. 31, 2018
Preparation Of Interim Financial Statements And Other Items
Redemption ratio, shares of common stock per unit redeemed		1
Tax savings payable to TRA Holders (as a percent)	85.00%
Tax savings benefit retained (as a percent)	15.00%
Liability related to tax receivable agreement	$ 63,000	$ 62,989
Payment period, after redemption	16 years
Aggregate payment period	25 years
Variable interest rate, basis points spread over variable reference rate (as a percent)	1.50%
Present value of termination payments under Tax Receivable Arrangement		304,600
Undiscounted TRA liability		$ 430,100
TRA payment period		5 days
Variable interest rate, deferral period		5.50%

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Inventories (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Summary of inventories
Raw materials	$ 1,378	$ 1,532	$ 1,543
Work-in-progress	4,012	3,590	4,585
Finished goods	64,143	59,328	31,772
Total inventory	$ 69,533	$ 64,450	$ 37,900

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Long-term Debt (Details) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Long-term Debt.
Term Loan	$ 248,529	$ 251,098
Less: Current portion	(2,568)	(2,568)
Unamortized Premium and Deferred Finance Costs Balance, net	(4,524)	(6,276)
Long-term debt, net	$ 241,437	$ 242,254

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Long-term Debt - agreement information (Details) - USD ($) $ in Thousands			3 Months Ended	12 Months Ended
	Feb. 12, 2018	Jul. 31, 2014	Mar. 31, 2018	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2017
Debt Instrument [Line Items]
Amount outstanding						$ 241,437
Accrued interest				$ 50		$ 161
Interest rate at end of period			2.75%			7.30%
Gain (Loss) on Extinguishment of Debt [Abstract]
Loss on early extinguishment of debt	$ (4,300)		$ (4,305)	2,251	$ 1,640
Write-off of unamortized debt discount			2,100
Write-off of deferred loan costs			2,200
Term Loan
Debt Instrument [Line Items]
Face amount		$ 275,000
Amount outstanding				251,100		$ 248,500
Gain (Loss) on Extinguishment of Debt [Abstract]
Write-off of unamortized debt discount				300
Write-off of deferred loan costs					$ 200
Revolving Loans
Debt Instrument [Line Items]
Maximum borrowing capacity		50,000	50,000			50,000
Amount outstanding			0	0		0
Accrued interest			0			200
Total leverage financial covenant draw limit		15,000
Potential cap on availability		15,000
Letters of credit
Debt Instrument [Line Items]
Maximum borrowing capacity		$ 10,000
Amount outstanding			$ 0	$ 0		$ 0

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Revenue (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Contract Balances
Unbilled revenue	$ 24,300	$ 24,900	$ 8,800
Deferred revenue	$ 1,100	$ 765	$ 565
Products
Disaggregation of Revenue [Line Items]
Percentage of revenues	51.00%
Rental revenue
Disaggregation of Revenue [Line Items]
Percentage of revenues	25.00%
Field service and other revenue
Disaggregation of Revenue [Line Items]
Percentage of revenues	24.00%
United States
Disaggregation of Revenue [Line Items]
Percentage of revenues	99.00%

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Related Party Transactions (Details) $ in Millions		3 Months Ended		12 Months Ended
	Feb. 12, 2018	Mar. 31, 2018 USD ($)	Mar. 31, 2017 USD ($)	Dec. 31, 2017 USD ($) item	Dec. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)	Feb. 11, 2018 USD ($) item
Related Party Transaction [Line Items]
Tax savings payable to TRA Holders (as a percent)	85.00%
Management service agreement | Cactus LLC
Related Party Transaction [Line Items]
Number of LLC members | item				2			2
Annual management fee				$ 0.3	$ 0.3	$ 0.3	$ 0.3
Number of installments | item				4			4
Accounts payable to related party		$ 0.0		$ 0.0	0.0
Management service agreement | Maximum | Cactus LLC
Related Party Transaction [Line Items]
Expenses under related party agreements		0.1	$ 0.1
Short-term rental agreement | Cactus LLC
Related Party Transaction [Line Items]
Expenses under related party agreements				0.3	$ 0.2	$ 0.3
Short-term rental agreement | Maximum | Cactus LLC
Related Party Transaction [Line Items]
Expenses under related party agreements		0.1	$ 0.1
Accounts payable to related party		$ 0.1		$ 0.1

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Commitments and Contingencies - Operating leases (Details) - USD ($) $ in Millions	3 Months Ended		12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Commitments and Contingencies
Rental expense	$ 1.8	$ 1.7	$ 7.1	$ 7.3	$ 7.9

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Commitments and Contingencies - Capital leases (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Capital leases
Capital lease term	3 years	3 years
Capital lease assets in property, plant and equipment
Cost	$ 18,591	$ 15,557	$ 2,616
Accumulated depreciation	(3,838)	(2,672)	(171)
Net	$ 14,753	$ 12,885	$ 2,445

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Commitments and Contingencies - Future minimum annual lease payments (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Operating Leases
Remainder of 2018	$ 4,376
2019	4,206	$ 4,083
2020	3,782	3,752
2021	3,095	3,077
2022	2,043	2,031
Thereafter	4,960	4,713
Total	22,462	23,162
Capital Leases
Remainder of 2018	4,732
2019	6,420	5,394
2020	4,461	3,475
2021	494
Total	16,107	14,165
Liability related to TRA
2019	5,840
2020	3,168
2021	3,255
2022	3,331
Thereafter	47,395
Total	62,989
Total
Remainder of 2018	9,108
2019	16,466	9,477
2020	11,411	7,227
2021	6,844	3,077
2022	5,374	2,031
Thereafter	52,355	4,713
Total	$ 101,558	$ 37,327

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Employee Benefit Plans (Details) $ in Millions	3 Months Ended		12 Months Ended
	Mar. 31, 2018 USD ($)	Mar. 31, 2017 USD ($)	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)
Employee Benefit Plans
Employer match of first tier of employee contribution (as a percent)	100		100
First tier percentage of compensation eligible for match	3		3
Employer match of second tier of employee contribution (as a percent)	50		50
Second tier percentage of compensation eligible for match	4		4
Employer matching contributions	$ 0.8	$ 0.4	$ 2.2	$ 1.2	$ 1.5

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Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Supplemental Cash Flow Information
Property and equipment acquired under capital lease	$ 3,092	$ 2,046	$ 12,941	$ 2,616
Property and equipment in payables	$ 4,512	$ 579	$ 1,553	$ 243	$ 276

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Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Feb. 11, 2018
Numerator:
Net income (loss)	$ 3,753	$ 66,547	$ (8,176)	$ 21,224
Denominator:
Weighted average Class A Shares Outstanding - basic	26,450
Effect of dilutive shares	198
Weighted average Class A Shares Outstanding - diluted	26,648
Earnings per Class A Share - basic	$ 0.14
Earnings per Class A Share - diluted	$ 0.14
Class A Common Stock
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Common Stock, Shares, Outstanding	26,450,000	36,500	36,500	36,500	0
Denominator:
Weighted average Class A Shares Outstanding - diluted	26,648,000
Earnings per Class A Share - basic	$ 0.14
Earnings per Class A Share - diluted	$ 0.14
Class B Common Stock
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Common Stock, Shares, Outstanding	48,440,000				0
Denominator:
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	48,439,772

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CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Current assets
Cash and cash equivalents	$ 7,574	$ 8,688
Accounts receivable, net	84,173	32,289
Inventories	64,450	37,900
Prepaid expenses and other current assets	7,732	3,713
Total current assets	163,929	82,590
Property and equipment, net	94,654	74,870
Goodwill	7,824	7,824
Other noncurrent assets	49	44
Total assets	266,456	165,328
Current liabilities
Accounts payable	35,080	14,002
Accrued expenses and other current liabilities	10,559	6,430
Capital lease obligations, current portion	4,667	1,134
Current maturities of long-term debt	2,568	2,568
Total current liabilities	52,874	24,134
Capital lease obligations, net of current portion	7,946	2,065
Deferred tax liability, net	416	196
Long-term Debt, Excluding Current Maturities	241,437	242,254
Total liabilities	302,673	268,649
Stockholders' / Members' equity (deficit)
Members' equity (deficit)	(36,299)
Accumulated other comprehensive income	82	(475)
Total stockholders' and members' equity (deficit)	(36,217)	(103,321)
Total liabilities and equity	266,456	165,328
Class A
Stockholders' / Members' equity (deficit)
Members' equity (deficit)	(35,055)	(80,985)
Class A-1
Stockholders' / Members' equity (deficit)
Members' equity (deficit)	802	148
Class B
Stockholders' / Members' equity (deficit)
Members' equity (deficit)	$ (2,046)	$ (22,009)

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Dec. 31, 2017	Feb. 27, 2017	Dec. 31, 2016
Class A Common Stock
Common stock, shares outstanding	36,500		36,500
Class A
Units issued	36,500		36,500
Units outstanding	36,500		36,500
Class A-1
Units issued	520		520
Units outstanding	520		520
Class B
Units issued	8,608		8,608
Units outstanding	8,608		8,608
CACTUS INC
Common stock, par value	$ 0.01
Common stock, shares authorized	1,000,000	1,000,000
Common stock, shares issued	1,000,000

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CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Revenues
Total revenues	$ 115,110	$ 58,503	$ 341,191	$ 155,048	$ 221,395
Costs and expenses
Selling, general and administrative expenses	9,114	6,103	27,177	19,207	22,135
Total costs and expenses	79,893	48,509	252,328	144,433	179,190
Income from operations	35,217	9,994	88,863	10,615	42,205
Interest expense, net	(2,852)	(4,986)	(20,767)	(20,233)	(21,837)
Other income (expense), net	(4,305)			2,251	1,640
Income before income taxes	28,060	5,008	68,096	(7,367)	22,008
Income tax expense	1,652	154	1,549	809	784
Net income	26,408	$ 4,854	66,547	(8,176)	21,224
Net income attributable to Cactus Inc.	3,753		$ 66,547	$ (8,176)	21,224
Earnings Per Share, Basic and Diluted		$ 92.47	$ 1,258.36	$ (224.00)
Product revenue
Revenues
Total revenues	58,926	$ 33,038	$ 189,091	$ 77,739	110,917
Costs and expenses
Cost of revenue	37,066	23,195	124,030	62,766	84,604
Rental revenue
Revenues
Total revenues	29,145	12,975	77,469	44,372	65,431
Costs and expenses
Cost of revenue	12,176	8,273	40,519	33,990	39,251
Field service and other revenue
Revenues
Total revenues	27,039	12,490	74,631	32,937	45,047
Costs and expenses
Cost of revenue	$ 21,537	$ 10,938	$ 60,602	$ 28,470	$ 33,200
Class A Common Stock
Costs and expenses
Earnings Per Share, Basic and Diluted			$ 1,258.36	$ (224.00)	$ 306.88
Class A
Costs and expenses
Earnings Per Share, Basic and Diluted			$ 1,258.36	$ (224.00)	$ 306.88
Weighted Average Number of Shares Outstanding, Basic and Diluted			36,500	36,500	36,500

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended									12 Months Ended
	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net income (loss)	$ 26,408	$ 22,814	$ 22,301	$ 16,578	$ 4,854	$ 1,346	$ (3,167)	$ (1,833)	$ (4,522)	$ 66,547	$ (8,176)	$ 21,224
Foreign currency translation	239				177					557	(284)	(215)
Comprehensive income	$ 26,647				$ 5,031					$ 67,104	$ (8,460)	$ 21,009

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CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Members' Equity (Deficit)	Accumulated Other Comprehensive Income (Loss)
Balance at the beginning of the period at Dec. 31, 2014	$ (102,303)	$ (102,327)	$ 24
Statement of Stockholders'/Members' Equity
Member distributions prior to IPO	(12,232)	(12,232)
Net income prior to IPO and reorganization	21,224	21,224
Other comprehensive income (loss)	(215)		(215)
Stock-based compensation	359	359
Balance at the end of the period at Dec. 31, 2015	(93,167)	(92,976)	(191)
Statement of Stockholders'/Members' Equity
Member distributions prior to IPO	(2,055)	(2,055)
Net income prior to IPO and reorganization	(8,176)	(8,176)
Other comprehensive income (loss)	(284)		(284)
Stock-based compensation	361	361
Balance at the end of the period at Dec. 31, 2016	(103,321)	(102,846)	(475)
Statement of Stockholders'/Members' Equity
Net income prior to IPO and reorganization	66,547	66,547
Other comprehensive income (loss)	557		557
Balance at the end of the period at Dec. 31, 2017	(36,217)	(36,299)	82
Statement of Stockholders'/Members' Equity
Member distributions prior to IPO	(26,000)	(26,000)
Net income prior to IPO and reorganization	13,648	$ 13,648
Other comprehensive income (loss)	239		239
Stock-based compensation	834
Balance at the end of the period at Mar. 31, 2018	$ 227,311		$ 321

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Cash flows from operating activities
Net income (loss)	$ 26,408	$ 4,854	$ 66,547	$ (8,176)	$ 21,224
Reconciliation of net income to net cash provided by operating activities
Depreciation and amortization	6,621	5,313	23,271	21,241	20,580
Debt discount and deferred loan cost amortization	219	438	1,752	1,777	1,913
Stock-based compensation	834			361	359
Inventory obsolescence	451		1,259	1,851	2,343
Loss on disposal of assets	29	235	534	950	402
Deferred income taxes			220	132	64
Loss on debt extinguishment	4,305			(2,251)	(1,640)
Provision for (recovery of) bad debts			(100)	(357)	250
Changes in operating assets and liabilities
Accounts receivable	(419)	(8,998)	(50,094)	509	12,829
Inventories	(5,594)	(7,648)	(28,279)	4,126	10,563
Prepaid expenses and other assets	(56)	(1,140)	(4,012)	1,080	127
Accounts payable	792	12,508	19,505	5,014	(18,703)
Accrued expenses and other liabilities	4,012	341	4,104	(2,282)	(4,384)
Net cash provided by operating activities	38,565	5,932	34,707	23,975	45,927
Cash flows from investing activities
Capital expenditures	(16,127)	(8,584)	(32,074)	(21,677)	(25,281)
Patent expenditures			(8)	(44)
Proceeds from sale of assets	440	83	1,404	4,363	1,859
Net cash used in investing activities	(15,687)	(8,501)	(30,678)	(17,358)	(23,422)
Cash flows from financing activities
Principal payments on long-term debt	(248,529)	(642)	(2,569)	(7,908)	(10,525)
Payments on capital leases	(1,266)	(319)	(2,744)	(208)
Net proceeds from IPO	469,621
Distributions to members	(26,041)		0	(2,055)	(12,232)
Payments for deferred loan costs					(19)
Net cash used in financing activities	(22,640)	(961)	(5,313)	(10,171)	(22,776)
Effect of exchange rate changes on cash and cash equivalents			170	(284)	(128)
Net increase (decrease) in cash and cash equivalents			(1,114)	(3,838)	(399)
Cash and cash equivalents
Beginning of period	$ 7,574	$ 8,688	8,688	12,526	12,925
End of period			$ 7,574	$ 8,688	$ 12,526

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Organization and Nature of Operations

3 Months Ended

12 Months Ended

Mar. 31, 2018

Dec. 31, 2017

Organization and Nature of Operations

1. Organization and Nature of Operations

Cactus Wellhead, LLC (“Cactus LLC”) is a Delaware limited liability company and was formed on July 11, 2011. Cactus LLC has a U.S. manufacturing facility in Bossier City, Louisiana, that it acquired in September 2011. Effective August 14, 2013, Cactus LLC formed Cactus Wellhead (Suzhou) Pressure Control Co., Ltd. (“Suzhou”), a Chinese limited company, as a production facility that provides products to Cactus LLC and affiliates in the United States and Australia. Effective July 1, 2014, Cactus LLC formed Cactus Wellhead Australia Pty, Ltd (“CWA”), an Australian limited company, to service the Australian market.

Cactus LLC, Suzhou and CWA (collectively, “Cactus”, “we”, “us” and “our”) are primarily engaged in the design, manufacture and sale of wellheads and pressure control equipment. In addition, we maintain a fleet of frac trees and ancillary equipment for short‑term rental, we offer repair and refurbishment services and we provide service crews to assist in the installation and operations of pressure control systems at the wellhead. We operate through 14 U.S. service centers principally located in Texas, Oklahoma, New Mexico, Louisiana, Pennsylvania, North Dakota, Wyoming, Colorado, and one service center in Australia, with our corporate headquarters located in Houston, Texas.

On February 12, 2018, Cactus, Inc. (“Cactus Inc.”) completed the initial public offering of Class A common stock (the “IPO”). Pursuant to a reorganization and the IPO, Cactus Inc. became a holding corporation for Cactus LLC. See note 13.

Organization and Operations

1.   Organization and Nature of Operations

Description of Business

Cactus, Inc. (“Cactus Inc”) and its consolidated subsidiaries, 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 offering repair and refurbishment services and the provision of service crews to assist in the installation and operations of pressure control systems. We operate through 14 U.S. service centers located in Texas, Oklahoma, New Mexico, Louisiana, Pennsylvania, North Dakota, Wyoming and Colorado, and one service center in Australia, with our corporate headquarters located in Houston, Texas.

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. 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 (ii) Cactus LLC and its consolidated subsidiaries prior to the completion of our IPO.

Initial Public Offering

On February 12, 2018, we completed the initial public offering of 23,000,000 shares of Class A common stock (our “IPO”), par value $0.01 per share, at a price to the public of $19.00 per share. We received net proceeds of $408.0 million after deducting underwriting discounts and commissions and $2.8 million in current offering expenses of our IPO. We also paid $2.2 million in offering expenses during 2017 that were recorded to prepaid expenses in the consolidated balance sheet as of December 31, 2017. On February 14, 2018 we completed the sale of an additional 3,450,000 shares of Class A common stock pursuant to the exercise in full by the underwriters of their option to purchase additional shares of Class A common stock (the “Option”), from which we received an additional $61.6 million of net proceeds after deducting underwriting discounts and commissions. We contributed all of the net proceeds of our IPO (including from the Option) to Cactus LLC in exchange for units in Cactus LLC (“CW Units”). Cactus Inc. is a holding company who is the sole managing member of Cactus LLC.

Cactus LLC used the total $469.6 million of net proceeds (including net proceeds from the Option) to (i) repay all of the borrowings outstanding under its term loan facility, including accrued interest, of $251.0 million and (ii) redeem $216.4 million of CW Units from certain direct and indirect owners of Cactus LLC. The remaining $2.2 million was held by Cactus LLC to cover previously paid offering expenses in 2017.

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 Cactus Inc.’s Class A stockholders. As of March 31, 2018, Cactus Inc. owned 35.3% of Cactus LLC.

Tax Receivable Agreement

In connection with our IPO, we entered into a tax receivable agreement (the “TRA”) with certain direct and indirect owners of CW Units (the “TRA Holders”). 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 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. See Note 2 for further details of the TRA.

Reorganization

In connection with our IPO, we completed a series of reorganization transactions (the “Reorganization”), including the following:

(a) all of the membership interests in Cactus LLC were converted into a single class of CW Units;

(b) Cactus Inc. contributed the net proceeds of our IPO to Cactus LLC in exchange for 23,000,000 CW Units;

(c) Cactus LLC used the net proceeds of our IPO that it received from Cactus Inc. to repay the borrowings outstanding, plus accrued interest, under its term loan facility and to redeem 8,667,841 CW Units from the owners thereof;

(d) Cactus Inc. issued and contributed a total of 51,889,772 shares of its Class B common stock, par value $0.01 per share, equal to the number of outstanding CW Units held by the owners thereof following the redemption described in (c) above to Cactus LLC (the Class B common stock has no economic interest and does not share in cash dividends or liquidation rights, but entitles its holders to one vote on all matters to be voted on by Cactus’ shareholders generally);

(e) Cactus LLC distributed to each of the owners that continued to own CW Units following our IPO one share of Class B common stock for each CW Unit such owner held following the redemption described in (c) above;

(f) Cactus Inc. contributed the net proceeds from the exercise of the Option to Cactus LLC in return for 3,450,000 additional CW Units, and

(g) Cactus LLC used the net proceeds from the Option to redeem 3,450,000 CW Units from the owners thereof, and Cactus Inc. canceled a corresponding number of shares of Class B common stock.

As of March 31, 2018, there were 26,450,000 shares of Class A common stock and 48,439,772 shares of Class B common stock issued and outstanding.

Other IPO related items

In conjunction with our IPO, we also:

(a)wrote off $2.2 million of prepaid IPO costs incurred in 2017 as a reduction of additional paid-in capital;

(b)wrote off $4.3 million in unamortized debt discount and deferred loan costs related to the repayment of the term loan;

(c)issued 737,493 shares of restricted stock units and began recording stock-based compensation;

(d)recorded a deferred tax asset of $74.1 million related to the step-up in basis, a liability from the TRA of $63.0 million representing 85% of the expected net cash tax savings from the step-up in basis that will be paid to TRA Holders, and recorded $11.1 million as additional paid-in capital;

(e)reset the previous accumulated deficit in Cactus LLC to zero;  and

(f)recorded $130.9 million of non-controlling interest representing the portion of CW Units not owned by Cactus Inc.

Prior to our IPO, on January 25, 2018, Cactus LLC paid a cash distribution of $26.0 million to pre-IPO owners. This distribution was funded by borrowing under the 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 the revolving credit facility were repaid as of March 31, 2018.

CACTUS INC

Organization and Operations

1.           Organization and Operations

Cactus, Inc. (the “Company”) is a Delaware corporation, incorporated on February 17, 2017. Pursuant to a reorganization and completion of the Company’s initial public offering on February 12, 2018 (the “IPO”), the Company became a holding corporation for Cactus Wellhead, LLC (“Cactus LLC”) and its subsidiaries. Following completion of the IPO, the Company’s sole material assets are units in Cactus LLC (“CW Units”). See note 4.

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Summary of Significant Accounting Policies and Other Items

12 Months Ended

Dec. 31, 2017

Preparation of Interim Financial Statements 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 LLC and its wholly owned subsidiaries, Suzhou and CWA. All significant intercompany transactions and balances have been eliminated upon consolidation.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current period presentation.

Limitation of Members’ Liability

Under the terms of the Amended and Restated Limited Liability Company Operating Agreement, dated as of May 31, 2016, of Cactus LLC (the “Agreement”), the members are not obligated for debt, liabilities, contracts or other obligations of Cactus LLC. Profits and losses are allocated to members as defined in the Agreement.

Segment and Related Information

We operate as 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.

Significant Customers and Concentration of Credit Risk

We had one customer representing 11% of total revenues in 2017 and one customer representing 12% of total revenues in both 2016 and 2015. There were no other customers representing 10% or more of total revenues in 2017, 2016 or 2015. Our assets that are potentially subject to concentrations of credit risk are cash and accounts receivable. Our receivables are spread over a number of customers, a majority of which are operators and suppliers to the oil and natural gas industry. We manage the credit risk on 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 maximum exposure to credit loss in the event of non‑performance by the counterparty is limited to the receivable balance. We perform ongoing credit evaluations as to the financial condition of our customers with respect to trade receivables. Generally, no collateral is required as a condition of sale.

Significant Vendors

We purchase a significant portion of supplies, equipment and machined components from a single vendor. During 2017, 2016 and 2015, purchases from this vendor totaled $33.4 million, $10.8 million and $18.1 million, respectively. These figures represent approximately 22%,  20% and 27% 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, 2017 and 2016 totaled $7.4 million and $1.3 million, respectively.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Such estimates include but are not limited to estimated losses on accounts receivables, estimated realizable value on excess and obsolete inventory, useful lives of equipment and estimates related to fair value of reporting units for purposes of assessing goodwill for impairment. Actual results could differ from those estimates.

Revenue Recognition

Revenue is recognized when all of the following criteria have been met: (i) evidence of an arrangement exists; (ii) delivery and acceptance by the customer has occurred; (iii) the price to the customer is fixed or determinable; and (iv) collectability is reasonably assured, as follows:

Product revenue. Revenue is recognized from the sale of wellhead systems and production trees and is recognized when the products have shipped and significant risk of ownership has passed under our contract terms. The arrangements typically do not include the right of return.

Rental revenue. We design and manufacture a suite of highly technical equipment, tools and products used for well control during the drilling and completion phases that are rented to customers on a short-term basis. Our rental agreements are directly with customers and provide for a rate based on the period of time the equipment is used or made available to the customer. Revenue is recognized as earned over the rental period.

Field service and other revenue. We provide field services to our customers based on contractually agreed rates. Other revenue is derived from providing repair and reconditioning services to customers, generally to customers who have installed our products on their wellsite. Revenues are recognized as the services are performed or rendered.

From time to time certain of our contracts include multiple deliverables. The pricing of each of our products and services is individually negotiated and agreed with our customers. The hierarchy for determining the selling price of a deliverable includes (a) vendor‑specific objective evidence, if available, (b) third‑party evidence, if vendor‑specific evidence is not available, and (c) our best estimate of selling price, if neither vendor‑specific nor third‑party evidence is available. Our revenues for multi‑element arrangements are based on vendor‑specific evidence as most of our products, rentals and field services are sold on an individual basis.

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 (loss) in the consolidated statements of income and comprehensive income, and members’ 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 the consolidated results of operations 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. All grant date fair value is expensed immediately for awards that are fully vested as of the grant date.

Income Taxes

Cactus LLC is a limited liability company and files a U.S. Return of Partnership Income, which includes both our U.S. and foreign operations. As a limited liability company, Cactus LLC is treated as a partnership, and the members of Cactus LLC are taxed individually on their share of our earnings for U.S. federal income tax purposes. Accordingly, no provision for U.S. federal income taxes has been made in the consolidated financial statements.

Cactus LLC is subject to state taxes within the United States. However, the income generated by Cactus LLC flows through to the members’ individual state tax returns. Additionally, our operations in both Australia and China are subject to local country income taxes.

Deferred taxes are recorded using the 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. The realizability of deferred tax assets are evaluated annually and a valuation allowance is provided if it is more likely than not that the deferred tax assets will not give rise to future benefits in our tax returns.

We account for uncertainty in income taxes by prescribing the minimum recognition threshold an income tax position is required to meet before being recognized in the consolidated financial statements. Each income tax position is assessed using a two‑step process. A determination is first made as to whether it is more likely than not that the income tax position will be sustained, based upon technical merits, upon examination by the taxing authorities. If the income tax position is expected to meet the more likely than not criteria, the benefit recorded in the consolidated financial statements equals the largest amount that is greater than 50% likely to be realized upon its ultimate settlement.

We record income tax related interest and penalties, if any, as a component in the provision for income tax expense.

U.S. Federal Income Tax Reform

On December 22, 2017, the President of the United States signed into law legislation informally known as the Tax Cuts and Jobs Act (the “Act”). The Act represents major tax reform legislation that, among other provisions, reduces the U.S. corporate tax rate. As of December 31, 2017, since Cactus LLC is a pass-through entity, management considers that the abovementioned Act will have an immaterial impact. However, going forward, the Company will analyze the impact based on revised circumstances.

Cash and Cash Equivalents

We consider all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents. 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 as of December 31, 2017 and 2016 includes unbilled revenue of $24.9 million and $8.8 million, respectively, for products delivered and for services performed for which billings had not yet been submitted to the customers. Earnings are charged with a provision for doubtful accounts based on a current 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 $0.7 million and $0.9 million as of December 31, 2017 and 2016, 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, 2017	$	851	$	(100)	$	(3)	$	(8)	$	740
Year Ended December 31, 2016		1,208		(357)		—		—		851
Year Ended December 31, 2015		1,024		250		(66)		—		1,208

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 obsolete and slow‑moving 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 $5.9 million and $4.8 million as of December 31, 2017 and 2016, respectively.

The following is a rollforward of our inventory obsolescence reserve:

	Balance at								Balance at
	Beginning of		Expense						End of
	Period		(recovery)		Write off		Other		Period
Year Ended December 31, 2017	$	4,770	$	1,259	$	(103)	$	(41)	$	5,885
Year Ended December 31, 2016		3,184		1,851		(265)		—		4,770
Year Ended December 31, 2015		841		2,343		—		—		3,184

Property and Equipment

Property and equipment are stated at cost. We manufacture some 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 and improvement	5-39	years
Machinery and equipment	7	years
Vehicles under capital lease	3	years
Rental equipment	2-5	years
Furniture and fixtures	5	years
Computers and software	3-5	years

Property and equipment as of December 31, 2017 and 2016 consists of the following:

	December 31,
	2017		2016
Land	$	2,241	$	2,241
Buildings and improvements		11,657		11,169
Machinery and equipment		43,528		38,429
Vehicles under capital lease		15,557		2,616
Rental equipment		85,292		75,437
Furniture and fixtures		1,110		984
Computers and software		2,636		2,429
		162,021		133,305
Less: Accumulated depreciation and amortization		72,917		62,381
		89,104		70,924
Construction in progress		5,550		3,946
Total property and equipment, net		94,654		74,870

Depreciation of property and equipment was $23.3 million, $21.2 million and $20.6 million for 2017, 2016 and 2015, respectively. Depreciation expense is included in “total costs and expenses” in the consolidated statements of income.

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 2017, 2016 and 2015.

Goodwill

Goodwill represents the excess of acquisition consideration paid over the fair value of identifiable net tangible and identifiable intangible assets acquired. All of the goodwill 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 attributable to the reduced reliance on vendors and synergies associated with the ability of the Bossier City plant to manufacture our full range of products as well as to deliver time sensitive and rapid turnaround orders. 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 2017, 2016 or 2015, based on our annual impairment analysis.

Debt Discount and Deferred Loan Costs

Long‑term debt is presented in the consolidated balance sheets net of an original issue discount as well as deferred loan costs, which are both amortized to interest expense over the life of the debt. The original issue discount was $5.5 million. The amortization of the discount totaled $0.8 million, $0.8 million and $0.9 million for 2017, 2016 and 2015, respectively, and is included in interest expense in the consolidated statements of income.

Deferred loan costs are amortized to interest expense over the term of the related debt agreement using methods which approximate the effective interest method. We capitalized $6.0 million in connection with our long-term debt. The amortization of the deferred loan costs for 2017, 2016 and 2015 totaled $0.9 million, $0.9 million and $1.0 million, respectively.

When the related debt instrument is retired, any remaining unamortized costs of the original issue discount and deferred loan costs are included in the determination of the gain or loss on the extinguishment of the debt.

As of December 31, 2017 and 2016, the unamortized balance of debt discount and deferred loan costs was $4.5 million and $6.3 million, respectively. In conjunction with the IPO and repayment in full of our term loan, the unamortized balance of debt discount and deferred loan costs will be written off to loss on debt extinguishment.

Accrued Expenses and Other

Accrued expenses and other as of December 31, 2017 and 2016 are as follows:

	December 31,
	2017		2016
Payroll, payroll taxes and benefits	$	4,033	$	2,722
Income based tax payable		526		641
Taxes other than income		1,375		1,271
Deferred revenue		765		565
Product warranties		343		95
Accrued insurance		1,059		—
Accrued interest		161		50
Other		2,297		1,086
Total	$	10,559	$	6,430

Deferred Revenue

Deferred revenue represents cash received from customers for rental equipment services not yet rendered and products not yet delivered.

Product Warranties

We generally warrant our manufactured products 12 months from the date placed in service.

Fair Value Measures

Fair value measurements—We record financial assets and financial liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The fair value framework requires the categorization of assets and liabilities into three levels based upon the assumptions (inputs) used to price the assets or liabilities, with the exception of certain assets and liabilities measured using the net asset value practical expedient, which are not required to be leveled. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment. The three levels are defined as follows:

· Level 1:  Unadjusted quoted prices in active markets for identical assets and liabilities.

· Level 2:  Observable inputs other than quoted prices included in Level 1. For example, quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets.

· Level 3:  Unobservable inputs reflecting management’s own assumptions about the assumptions market participants would use in pricing the asset or liability.

Fair value of long‑lived, non‑financial assets—Long‑lived, non‑financial assets are measured at fair value on a non‑recurring basis for the purposes of calculating impairment. The fair value measurements of our long‑lived, non‑financial assets measured on a non‑recurring basis are determined by estimating the amount and timing of net future cash flows, which are Level 3 unobservable inputs, and discounting them using a risk‑adjusted rate of interest. Significant increases or decreases in actual cash flows may result in valuation changes.

Fair value of debt—The fair value, based on Level 2, of our term loan facility due 2020 approximated the face value of the debt of $248.5 million as of December 31, 2017. The fair value was approximately $231 million as of December 31, 2016 compared to the $251.1 million face value of the debt as of December 31, 2016.

Other fair value disclosures—The carrying amounts of cash and cash equivalents, receivables, accounts payable, as well as amounts included in other current assets and other current liabilities that meet the definition of financial instruments, approximate fair value.

Recent Accounting Pronouncements

Standards Adopted

In July 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015‑11, Simplifying the Measurement of Inventory, which requires companies to measure inventory at the lower of cost or net realizable value rather than at the lower of cost or market. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. We adopted this ASU on January 1, 2017. The adoption of this pronouncement did not have any material impact on the consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016‑09, Improvements to Employee Share‑Based Payment Accounting. This new guidance includes provisions intended to simplify how share based payments are accounted for and presented in the financial statements, including: a) all excess tax benefits and tax deficiencies should be recognized as income tax expense or benefit in the income statement; b) excess tax benefits should be classified along with other income tax cash flows as an operating activity; c) an entity can make an entity wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur; d) the threshold to qualify for equity classification permits withholding up to the maximum statutory tax rates in the applicable jurisdictions; e) cash paid by an employer should be classified as a financing activity when shares are directly withheld for tax withholding purposes. We adopted this ASU on January 1, 2017. The adoption of this pronouncement did not have any material impact on the consolidated financial statements.

Standards Not Yet Adopted

In May 2014, the FASB issued ASU No. 2014‑09, Revenue from Contracts with Customers, which supersedes the current revenue recognition guidance. The ASU is based on the principle that revenue is recognized to depict the transfer of goods and services to customers in the amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The new standard will be effective for public companies for the fiscal years beginning after December 31, 2017 using one of two retrospective application methods. We adopted this pronouncement on January 1, 2018 using the modified retrospective method. Based on the assessment performed, the adoption of this pronouncement will not have a material impact on the consolidated financial statements. We are continuing our assessment of potential changes to our disclosures under the new standard. We will provide additional disclosures, if any, regarding material differences in reported financial statement line items in 2018 when compared to the amounts that would have been reported under legacy accounting guidance.

In February 2016, the FASB issued ASU No. 2016‑02, Leases (Topic 842), to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Upon adoption of the new guidance, lessees are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The new guidance will be effective for fiscal years beginning after December 15, 2018. We are currently evaluating the impact this pronouncement will have on the consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017‑01, Business Combinations (Topic 805): Clarifying the Definition of a Business, in an effort to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendments in this standard provide a screen to determine when an integrated set of assets and activities is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the integrated set of assets and activities is not a business. The new guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is allowed for transactions for which the acquisition date occurs before the issuance date or effective date of the amendments, only when the transaction has not been reported in financial statements that have been issued or made available for issuance and for transactions in which a subsidiary is deconsolidated or a group of assets is derecognized before the issuance date or effective date of the amendments, only when the transaction has not been reported in financial statements that have been issued or made available for issuance. Entities will be required to apply the guidance prospectively when adopted. We do not expect the adoption of this pronouncement to have a material impact on the consolidated financial statements.

In January 2017, the FASB issued ASU 2017‑04, Intangibles‑Goodwill and Other, 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 annual, or interim, 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. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We do not expect the adoption of this pronouncement to have a material impact on the consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016‑15, Cash Flow Statement (Topic 250). This new guidance addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice, including: debt prepayment or debt extinguishment costs, settlement of zero coupon debt instruments or other debt instruments, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate owned life insurance policies, distributions received from equity method investees, beneficial interests in securitization transactions, and separately identifiable cash flows and application of the predominance principle. ASU 2016‑15 is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. We do not expect that the adoption of this pronouncement will have a material impact on the consolidated financial statements.

CACTUS INC

Preparation of Interim Financial Statements and Other Items

2.           Summary of Significant Accounting Policies

Basis of Presentation

The Company’s balance sheet has been prepared in accordance with U.S. generally accepted accounting principles. Separate statements of income and comprehensive income, cash flows and changes in stockholder’s equity have not been presented because the Company has had no operations to date.

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Inventories

3 Months Ended

12 Months Ended

Mar. 31, 2018

Dec. 31, 2017

Inventories

Inventories

3.   Inventories

Inventories consists of the following:

	March 31,		December 31,
	2018		2017
Raw materials	$	1,378	$	1,532
Work-in-progress		4,012		3,590
Finished goods		64,143		59,328
	$	69,533	$	64,450

3. Inventories

Inventories consist of the following:

	December 31,
	2017		2016
Raw materials	$	1,532	$	1,543
Work-in-progress		3,590		4,585
Finished goods		59,328		31,772
	$	64,450	$	37,900

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Long-term Debt

3 Months Ended

12 Months Ended

Mar. 31, 2018

Dec. 31, 2017

Long-term Debt.

Long-term Debt

4.   Long-term Debt

Long-term debt consists of the following:

	March 31,		December 31,
	2018		2017
Term Loan	$	—	$	248,529
Less:
Current portion		—		(2,568)
Unamortized debt discount and deferred loan costs		—		(4,524)
Long-term debt, net	$	—	$	241,437

On July 31, 2014, Cactus LLC entered into a credit agreement collateralized by substantially all of its assets (the “Credit Agreement”), consisting of a $275.0 million Tranche B term loan (the “Term Loan”) and $50.0 million revolving credit facility with a $10.0 million sublimit for letters of credit (the “Revolving Loans”). In conjunction with the completion of our IPO in February 2018, we repaid the Term Loan in full. There was $248.5 million outstanding on the Term Loan as of December 31, 2017. As of March 31, 2018 and December 31, 2017, no amounts were outstanding on the Revolving Loans and no letters of credit were outstanding. We may borrow and repay the Revolving Loans in accordance with the terms of the Credit Agreement. A commitment fee is payable quarterly on the unused portion of the revolving credit facility. Interest on the Revolving Loans is payable in arrears for each draw fixed at an adjusted base rate plus an applicable margin, as defined in the Credit Agreement. At March 31, 2018 there was no accrued interest and December 31, 2017 included $0.2 million of accrued interest within accrued expenses, on the consolidated balance sheets. The Revolving Loans portion of the Credit Agreement matures on July 31, 2019. Amounts outstanding under the Credit Agreement may be voluntarily prepaid, in whole or in part, without premium or penalty, in accordance with the terms of the Credit Agreement and subject to breakage and similar costs.

The Credit Agreement contains various restrictive covenants that may limit our ability to incur additional indebtedness and liens, make or declare dividends, or enter into certain transactions, and contains a total leverage financial covenant related only to the Revolving Loans once a total of $15.0 million or more has been drawn on the Revolving Loans. Based on this total leverage financial covenant, availability under the revolving credit facility can be limited to $15.0 million. At March 31, 2018, we had access to the full $50.0 million revolving credit facility capacity. At March 31, 2018 and December 31, 2017, we were in compliance with the covenants in the Credit Agreement.

At March 31, 2018, the applicable margin on our Revolving Loans was 2.75% with an adjusted base rate of one or three month LIBOR. At December 31, 2017, the weighted average interest rate for the borrowings under the Credit Agreement was 7.3%.

Loss on debt extinguishment

For the three months ended March 31, 2018, we recorded a $4.3 million loss on early extinguishment of debt in conjunction with the repayment of the Term Loan with a portion of the net proceeds from our IPO. The loss consists 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 statements of income.

4. Long‑Term Debt

Long‑term debt consists of the following:

	December 31,
	2017		2016
Term Loan	$	248,529	$	251,098
Less:
Current portion		(2,568)		(2,568)
Unamortized debt discount and deferred loan costs		(4,524)		(6,276)
Long-term debt, net	$	241,437	$	242,254

On July 31, 2014, we entered into a credit agreement collateralized by substantially all of our assets (the “Credit Agreement”), consisting of a $275.0 million Tranche B term loan (the “Term Loan”) and a $50.0 million revolving credit facility with a $10.0 million sublimit for letters of credit (the “Revolving Loans”). We make quarterly principal payments on the Term Loan and may make loan prepayments as outlined in the Credit Agreement. We may borrow and repay the Revolving Loans in accordance with the terms of the Credit Agreement. A commitment fee is payable quarterly on the unused portion of the revolving credit facility. There was $248.5 million and $251.1 million outstanding on the Term Loan as of December 31, 2017 and 2016, respectively. As of December 31, 2017 and 2016, no amounts were outstanding on the Revolving Loans and no letters of credit were outstanding. Interest on outstanding amounts under the Credit Agreement are payable in arrears for each draw fixed at an adjusted based rate plus an applicable margin, as defined in the Credit Agreement. At December 31, 2017 and 2016, there was $0.2 million and $0.1 million accrued interest included within accrued expenses, respectively, in the consolidated balance sheets. The Term Loan portion of the Credit Agreement matures on July 31, 2020. The Revolving Loans portion of the Credit Agreement matures on July 31, 2019. Amounts outstanding under the Credit Agreement may be voluntarily prepaid, in whole or in part, without premium or penalty, in accordance with the terms of the Credit Agreement and subject to breakage and similar costs.

In conjunction with the IPO, we repaid the Term Loan in full. As of December 31, 2017, prior to the repayment resulting from the IPO, the future maturities of long‑term debt were as follows:

Years Ending December 31,
2018	$	2,568
2019		2,568
2020		243,393
	$	248,529

The Credit Agreement contains various restrictive covenants that may limit our ability to incur additional indebtedness and liens, make or declare dividends, or enter into certain transactions, and contains a total leverage financial covenant related only to the Revolving Loans once a total of $15.0 million or more has been drawn on the Revolving Loans. Based on this total leverage financial covenant, availability under the revolving credit facility can be limited to $15.0 million. At December 31, 2017, we had access to the full $50.0 million revolving credit facility capacity. At December 31, 2017 and 2016, we were in compliance with the covenants in the Credit Agreement.

At December 31, 2017 and 2016, the weighted average interest rate for borrowings under the Credit Agreement was 7.3% and 7.0%, respectively.

Gain on debt extinguishment

In accordance with the provisions of the Credit Agreement, we redeemed $7.5 million and $10.0 million of the Term Loan at a price of 65% and 79% of the principal amount in 2016 and 2015, respectively. We paid $4.9 million and $7.9 million for such redemptions, including fees, in 2016 and 2015, respectively. We recorded a gain on debt extinguishment of $2.3 million and $1.6 million in 2016 and 2015, respectively, on the redemptions. The gain consists of the tender discount on the Term Loan amount redeemed, partially offset by transaction fees and the write‑off of $0.3 million and $0.2 million of the unamortized debt discount and deferred loan costs in 2016 and 2015, respectively. The gain on debt extinguishment is included under other income, net, in the consolidated statements of income.

Interest Expense, net

Interest expense, net, including debt discount and deferred loan costs amortization, is comprised of the following:

	Year Ended December 31,
	2017		2016		2015
Interest under Credit Agreement	$	18,627	$	18,414	$	19,682
Debt discount and deferred loan costs amortization		1,752		1,777		1,913
Capital lease interest		311		24		—
Other		82		20		253
Interest (income)		(5)		(2)		(11)
Interest expense, net	$	20,767	$	20,233	$	21,837

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Income Taxes

12 Months Ended

Dec. 31, 2017

Income Taxes

Income Taxes

5. Income Taxes

Components of income (loss) before income taxes—Domestic and foreign components of income (loss) before income taxes were as follows:

	Year Ended December 31,
	2017		2016		2015
Domestic	$	65,023	$	(8,558)	$	21,791
Foreign		3,073		1,191		217
Income (loss) before income taxes	$	68,096	$	(7,367)	$	22,008

Provision for income tax—The provision for income taxes consisted of:

	Year Ended December 31,
	2017		2016		2015
Current:
Federal	$	—	$	—	$	—
State		594		229		474
Foreign		735		448		246
Total current income taxes		1,329		677		720
Deferred—foreign		220		132		64
Total provision for income taxes	$	1,549	$	809	$	784

Effective income tax rate reconciliation—The effective income tax rate was different from the statutory U.S. federal income tax rate due to the following:

	Year Ended December 31,
	2017		2016		2015
Income taxes at 35% statutory tax rate	$	23,834	$	(2,578)	$	7,703
Net difference resulting from:
Profit and loss of Cactus LLC not subject to U.S. federal tax		(22,758)		2,990		(7,627)
Foreign earnings subject to different tax rates		(302)		(122)		(50)
State income taxes		594		229		474
Foreign withholding taxes		220		132		64
Change in valuation allowance		(39)		158		220
Total provision for income taxes	$	1,549	$	809	$	784

Deferred tax components—The components of deferred tax assets and liabilities are as follows:

	December 31,
	2017		2016
Foreign withholding taxes	$	416	$	196
Foreign loss carryforwards		(489)		(528)
Valuation allowance		489		528
Total deferred tax liability, net	$	416	$	196

We have foreign net operating losses of $1.8 million, $1.9 million and $1.3 million for 2017, 2016 and 2015, respectively. The foreign net operating losses have an indefinite carryforward period. We have recorded a full valuation allowance against the deferred tax assets associated with the foreign net operating loss carryforwards due to the uncertainty of realization.

Taxing Authority Examinations—The Texas Franchise state tax returns for the years ended December 31, 2014 and 2015 are currently under examination by the taxing authorities. Management believes that the result of the examination will not have a material impact on the financial statements. None of our other state income tax returns are currently under examination by state taxing authorities.

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Members' Equity

12 Months Ended

Dec. 31, 2017

Members' Equity

6. Members’ Equity

Member units outstanding were as follows:

	December 31,
	2017	2016
Units
Class A	36,500	36,500
Class A-1	520	520
Class B	8,608	8,608

There were no distributions for 2017. Distributions by Unit class are as follows for 2016 and 2015:

	Year Ended December 31,
	2016				2015
	Amount		Per Unit		Amount		Per Unit
Distributions
Class A	$	2,055	$	56	$	8,928	$	245
Class A-1		—		—		3		7
Class B		—		—		3,301		528
Total distributions	$	2,055			$	12,232

Distributions and income are defined in accordance with a waterfall calculation which allocates distributions and income to the Class A‑1 and Class B Unit holders based upon the Class A Unit holders’ return on investment thresholds. Under the terms of its operating agreement, Cactus LLC is obligated to make distributions to its members to enable them to settle tax liabilities that arise from their investment in Cactus LLC. These distributions are recorded in the period during which payment is made. Cactus LLC was not required to make any distributions related to member tax liabilities that arose in 2017 from their investment in Cactus LLC until 2018. In January 2018, Cactus LLC made a distribution of $26.0 million to its members related to tax liabilities incurred prior to the IPO. Voting rights are limited to Class A Unit holders.

There were no Class A or Class B Units issued during 2017, 2016 or 2015. From time to time, Cactus LLC issues Class A‑1 Units to Directors and key employees. There were no new Class A‑1 Units issued during 2017. During 2016 and 2015, Cactus LLC issued 120 and 125 Class A‑1 Units, respectively, and recorded compensation expense of $0.4 million and $0.4 million, respectively. The Class A‑1 Units were fully vested as of grant date and as such all equity compensation was expensed immediately. The equity compensation is included in selling, general and administrative expenses in the consolidated statements of income. Class A‑1 Unit holders are allocated pari passu with all Class A and Class A‑1 Unit holders provided Cactus LLC’s Enterprise Value exceeds the amount detailed in their individual Subscription and Investment Agreement.

The following is a rollforward of Class A‑1 Units:

Units at December 31, 2014	275
Units issued in 2015	125
Units at December 31, 2015	400
Units issued in 2016	120
Units at December 31, 2016	520
Units issued in 2017	—
Units at December 31, 2017	520

The Class A‑1 Units were valued using the Black Scholes valuation model. Volatility was estimated based on the average of the volatility of peer group companies in Cactus LLC’s industry. No forfeitures or expected future distributions were assumed. No Class A‑1 Units were issued in 2017. The key assumptions for 2016 and 2015 are as follows:

	December 31,
	2016		2015
Expected term in years	3.5	years	3.5	years
Expected volatility	33	%	33	%
Risk‑free interest rate	0.98	%	0.98	%

The key assumptions were unchanged between 2016 and 2015 as the Class A‑1 Units were issued within a two month period of time (January 1, 2016 and November 1, 2015) and management believes that there were no factors during the two months to change the assumptions.

CACTUS INC

Stockholder's Equity

3.           Stockholder’s Equity

As of December 31, 2017, the Company was authorized to issue 1 million shares of common stock with a par value of $0.01 per share. The Board of Directors has the authority to issue one or more series of preferred stock without stockholder approval. In conjunction with the IPO, the Company amended its articles of incorporation to increase the number of authorized shares.

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Related Party Transactions

3 Months Ended

12 Months Ended

Mar. 31, 2018

Dec. 31, 2017

Related Party Transactions

Related Party Transactions

6.   Related Party Transactions

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 less than $0.1 million for each of the three months ended March 31, 2018 and 2017. There were no outstanding balances due as of March 31, 2018 or December 31, 2017 under the management services agreement.

From time to time, 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. During the three months ended March 31, 2018 and 2017, expense recognized in connection with these rentals totaled less than $0.1 million, respectively. As of March 31, 2018, and December 31, 2017, we owed less than $0.1 million, respectively, to the related party which are included in accounts payable in the consolidated balance sheets.

We are also party to a TRA 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.

7. Related Party Transactions

We entered into a management services agreement with two of our members, whereby we must pay 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. The agreement shall terminate upon the consummation of a change of control sale, as defined in our operating agreement. Management fee expense totaled $0.3 million for each of 2017, 2016 and 2015. There were no outstanding balances due as of December 31, 2017 and 2016 under the management services agreement. In conjunction with our IPO, the management services agreements terminated.

During 2016 and 2015, we rented certain equipment from a company owned by a member of Cactus LLC. These transactions were under short‑term rental arrangements. During 2017, 2016 and 2015, expense recognized in connection with these rentals totaled $0.3 million, $0.2 million and $0.3 million, respectively. As of December 31, 2017 and 2016, we owed less than $0.1 million, respectively, to this related party which are included in accounts payable in the consolidated balance sheets.

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Commitments and Contingencies

3 Months Ended

12 Months Ended

Mar. 31, 2018

Dec. 31, 2017

Commitments and Contingencies

Commitments and Contingencies

7.   Commitments and Contingencies

Operating Leases and Capital Leases

We lease certain facilities, vehicles, equipment, office and manufacturing space under noncancelable operating leases which expire at various dates through 2029. We are also party to a significant number of month-to-month leases that can be canceled at any time. Total rent expense related to operating leases for the three months ended March 31, 2018 and 2017 was approximately $1.8 million and $1.7 million, respectively.

We also lease vehicles under capital leases. These leases are typically three years in duration and have no guaranteed residual values. Amounts included within property and equipment under capital leases as of March 31, 2018 and December 31, 2017 are as follows:

	March 31,		December 31,
	2018		2017
Cost	$	18,591	$	15,557
Accumulated depreciation		(3,838)		(2,672)
Net	$	14,753	$	12,885

The following table presents our contractual obligations for the periods subsequent to March 31, 2018, including future minimum annual lease payments, including executory costs and interest, and the payments of the liability related to the TRA:

	Operating  Leases		Capital  Leases		Liability related to TRA		Total
Remainder of 2018	$	4,376	$	4,732	$	—	$	9,108
2019		4,206		6,420		5,840		16,466
2020		3,782		4,461		3,168		11,411
2021		3,095		494		3,255		6,844
2022		2,043		—		3,331		5,374
Thereafter		4,960		—		47,395		52,355
	$	22,462	$	16,107	$	62,989	$	101,558

Legal 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.

8. Commitments and Contingencies

Operating Leases and Capital Leases

We lease certain facilities, vehicles, equipment, office and manufacturing space under noncancelable operating leases which expire at various dates through 2029. We are also party to a significant number of month‑to‑month leases that can be canceled at any time. Total rent expense related to operating leases for 2017, 2016 and 2015 amounted to $7.1 million, $7.3 million and $7.9 million, respectively.

We also lease vehicles under capital leases. These leases are typically three years in duration and have no guaranteed residual values. Amounts included within property and equipment under capital leases are as follows:

	December 31,
	2017		2016
Cost	$	15,557	$	2,616
Accumulated depreciation		(2,672)		(171)
Net	$	12,885	$	2,445

Future minimum annual lease payments, including executory costs and interest, for years subsequent to December 31, 2017 are approximately as follows:

	Operating Leases		Capital Leases		Total
2018	$	5,506	$	5,296	$	10,802
2019		4,083		5,394		9,477
2020		3,752		3,475		7,227
2021		3,077		—		3,077
2022		2,031		—		2,031
Thereafter		4,713		—		4,713
	$	23,162	$	14,165	$	37,327

Legal 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.

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Employee Benefit Plans

3 Months Ended

12 Months Ended

Mar. 31, 2018

Dec. 31, 2017

Employee Benefit Plans

Employee Benefit Plans

8.   Employee Benefit Plans

401K Plan

Our employees within the United States are eligible to participate in a 401(k) plan (the “Plan”) sponsored by us. These employees are eligible to participate upon employment hire date and obtaining the age of eighteen. All eligible employees may contribute a percentage of their compensation subject to a maximum imposed by the Internal Revenue Code. We match 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. For the three months ended March 31, 2018 and 2017, employer matching contributions totaled $0.8 million and $0.4 million, respectively. Historically, we have not made non-elective employer contributions under the Plan.

9. Employee Benefit Plans

401K 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 upon employment hire date and obtaining the age of eighteen. All eligible employees may contribute a percentage of their compensation subject to a maximum imposed by the Internal Revenue Code. During 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 its discretion under the plan. Similar benefit plans exist for employees of our foreign subsidiaries. During 2017, 2016 and 2015, employer matching contributions totaled $2.2 million, $1.2 million and $1.5 million, respectively. We have not made non‑elective employer contributions under the plan.

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Earnings Per Share

3 Months Ended

12 Months Ended

Mar. 31, 2018

Dec. 31, 2017

Earnings Per Share

Earnings Per Share

10.   Earnings Per Share

Basic earnings per share of Class A common stock is calculated by dividing the net income attributable to Cactus Inc. for the period from February 12, 2018 through March 31, 2018, the period following the Reorganization and IPO, 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.

Dilution for the period includes the effect of unvested restricted stock units under the treasury method assuming that the proceeds will be used to purchase shares of Class A common stock.

There were no shares of Class A common stock or Class B common stock outstanding prior to February 12, 2018, therefore no earnings per share information has been presented for any period prior to that date.

The following table summarizes the basic and diluted earnings per share calculations:

	Three Months Ended March 31,
	2018		2017
Numerator:
Net income attributable to Cactus Inc.	$	3,753	$	—
Denominator:
Weighted average Class A shares outstanding—basic		26,450		—
Effect of dilutive shares (1)		198
Weighted average Class A shares outstanding—diluted (1)		26,648		—
Earnings per Class A Share—basic	$	0.14	$	—
Earnings per Class A Share—diluted (1)	$	0.14	$	—

(1) Diluted earnings per share for the periods presented excludes 48,439,772 shares of Class B common stock as the effect would be anti-dilutive.

.

10. Earnings (loss) Per Unit

Class A‑1 Units and Class B Units are entitled to allocations of distributions and income based upon the Class A Unit holder’s return on investment thresholds. The Class A‑1 Units and the Class B Units are considered participating securities and are required to be included in the calculation of basic earnings (loss) per Unit using the two‑class method. The two‑class method of computing earnings per Unit is an earnings allocation formula that determines earnings per Unit for each class of Unit according to dividends declared and participation rights in undistributed earnings. Basic earnings (loss) per Unit is calculated based on the weighted‑average number of the Class A Units outstanding during the periods presented. The following is a summary of earnings per Unit:

	Year Ended December 31,
	2017		2016		2015
Numerator:
Net income (loss)	$	66,547	$	(8,176)	$	21,224
Participating securities:
Dividends		—		—		(3,303)
Income allocation		(20,617)		—		(6,720)
Net income (loss) available to Class A Units	$	45,930	$	(8,176)	$	11,201
Denominator:
Weighted average Class A Units—basic and diluted		36,500		36,500		36,500
Earnings (loss) per Class A Unit—basic and diluted	$	1,258.36	$	(224.00)	$	306.88

Losses were not allocated to the participating Units in 2016 as the participating securities are not contractually obligated to fund losses.

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Supplemental Information

3 Months Ended

12 Months Ended

Mar. 31, 2018

Dec. 31, 2017

Supplemental Cash Flow Information

Supplemental Cash Flow Information

9.   Supplemental Cash Flow Information

Non-cash investing and financing activities were as follows:

	Three Months Ended March 31,
	2018		2017
Property and equipment acquired under capital lease	$	3,092	$	2,046
Property and equipment in payables		4,512		579

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.

11. Supplemental Information

Non-cash investing and financing activities were as follows:

	Year Ended December 31,
	2017		2016		2015
Property and equipment acquired under capital lease	$	12,941	$	2,616	$	—
Property and equipment in payables		1,553		243		276

Cash paid for interest and income taxes was as follows:

	Year Ended December 31,
	2017		2016		2015
Cash paid for interest	$	18,826	$	19,946	$	21,391
Cash paid for income taxes, net		1,535		583		370

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Quarterly Financial Information (Unaudited)

12 Months Ended

Dec. 31, 2017

Quarterly Financial Information Disclosure [Abstract]

Quarterly Financial Information [Text Block]

12. Quarterly Financial Information (Unaudited)

Summarized quarterly financial data for the years ended December 31, 2017 and 2016 are presented in the following tables. In the following tables, the sum of basic and diluted earnings per unit 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 earnings per share amount.

	2017 Quarters
	Total		Fourth		Third		Second		First
Total revenues	$	341,191	$	104,784	$	96,027	$	81,877	$	58,503
Income from operations		88,863		28,737		28,059		22,073		9,994
Net income		66,547		22,814		22,301		16,578		4,854
Earnings per Class A Unit—basic and diluted		1,258.36		431.40		421.70		312.79		92.47

		2016 Quarters
	Total		Fourth		Third		Second		First
Total revenues	$	155,048	$	49,547	$	36,755	$	32,863	$	35,883
Income from operations		10,615		6,162		2,112		1,218		1,123
Net income (loss)		(8,176)		1,346		(3,167)		(1,833)		(4,522)
Earnings (loss) per Class A Unit—basic and diluted		(224.00)		36.88		(86.77)		(50.22)		(123.89)

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Subsequent Events

12 Months Ended

Dec. 31, 2017

Subsequent Events [Text Block]

13. Subsequent Events

On February 12, 2018, Cactus Inc. completed its IPO. Pursuant to the IPO, Cactus Inc. issued 23,000,000 shares of Class A common stock, par value $0.01 per share (“Class A Common Stock”), at a price to the public of $19.00 per share. Cactus Inc. received net proceeds of $405.8 million after deducting underwriting discounts and commissions and estimated offering expenses of the IPO. On February 14, 2018 Cactus Inc. completed the sale of an additional 3,450,000 shares of Class A Common Stock pursuant to the exercise in full by the underwriters of their option (the “Option”) to purchase additional shares of Class A Common Stock, resulting in $61.6 million of additional net proceeds. Cactus Inc. contributed all of the net proceeds of the IPO to Cactus LLC in exchange for CW Units. Cactus LLC used (i) $251.0 million of the net proceeds to repay all of the borrowings outstanding under its term loan facility, including accrued interest and (ii) $216.4 million to redeem CW Units from certain direct and indirect owners of Cactus LLC. After the IPO, the amount of debt outstanding for Cactus LLC significantly decreased. With the closing of the IPO, we will write off $2.2 million of deferred IPO costs as a charge to additional paid in capital that are included in prepaid expenses in the consolidated balance sheet as of December 31, 2017.

In connection with the completion of the IPO, Cactus Inc. became the sole managing member of Cactus LLC and is responsible for all operational, management and administrative decisions relating to Cactus LLC’s business and will consolidate the financial results of Cactus LLC and its subsidiaries. The Limited Liability Company Operating Agreement of Cactus LLC was amended and restated as the First Amended and Restated Limited Liability Company Operating Agreement of Cactus LLC (the “Cactus Wellhead LLC Agreement”) to, among other things, admit Cactus Inc. as the sole managing member of Cactus LLC.

In connection with the IPO, Cactus completed a series of reorganization transactions, including the following:

(a) all of the membership interests in Cactus LLC were converted into a single class of CW Units;

(b) Cactus Inc. contributed the net proceeds of the IPO to Cactus LLC in exchange for 23,000,000 CW Units;

(c) Cactus LLC used the net proceeds of the IPO that it received from Cactus Inc. to repay the borrowings outstanding, plus accrued interest, under its term loan facility and to redeem 8,667,841 CW Units from the owners thereof;

(d) Cactus Inc. issued and contributed 51,747,768 shares of its Class B common stock, par value $0.01 per share (“Class B Common Stock”) equal to the number of outstanding CW Units held by the Pre-IPO Owners following the redemption described in (c) above to Cactus LLC;

(e) Cactus LLC distributed to each of the Pre-IPO Owners that continued to own CW Units following the IPO one share of Class B Common Stock for each CW Unit such Pre-IPO Owner held following the redemption described in (c) above;

(f) Cactus Inc. contributed the net proceeds from the exercise of the Option to Cactus LLC in return for 3,450,000 additional CW Units; and

(g) Cactus LLC used the net proceeds from the Option to redeem 3,450,000 CW Units from the owners thereof, and Cactus Inc. canceled a corresponding number of shares of Class B Common Stock.

Additionally, in connection with the IPO, Cactus Inc. granted 0.7 million restricted stock unit awards, which will vest over one to three years, to certain directors, officers and employees of Cactus. Stock-based compensation expense associated with these awards will be recognized over the vesting term.

The owners of CW Units (along with their permitted transferees) are referred to as “CW Unit Holders.”  CW Unit Holders also own one share of our Class B Common Stock for each CW Unit such CW Unit Holders own. After giving effect to the IPO and the related transactions, Cactus Inc. owns an approximate 35.3% interest in Cactus LLC, and the CW Unit Holders own an approximate 64.7% interest in Cactus LLC. These ownership percentages are based on 26,450,000 shares of Class A Common Stock and 48,439,772 shares of Class B Common Stock issued and outstanding as of March 13, 2018.

The shares of Class B common stock are not considered participating securities because they do not participate in the earnings of Cactus Inc. The noncontrolling interest owners own shares of Class B common stock. The noncontrolling interest owners have redemption rights which enable the noncontrolling interest owners to redeem CW Units (and corresponding shares of Class B common stock) for shares of Class A common stock on a one for one basis or, at Cactus Inc.’s or Cactus LLC’s election, an equivalent amount of cash.

Cactus Inc.’s sole material assets are CW Units in Cactus LLC. On February 12, 2018, in connection with the IPO, Cactus Inc. became the managing member of Cactus LLC and is responsible for all operational, management and administrative decisions relating to Cactus LLC’s business.

Cactus Inc. will be subject to federal income taxes related to its share of income in Cactus LLC. In connection with the IPO, Cactus Inc. entered into the Tax Receivable Agreement (“TRA”) with certain direct and indirect owners of Cactus LLC (each such person, a “TRA Holder”) pursuant to which Cactus Inc. will pay to the TRA Holders 85% of the amount of 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) in periods after the IPO 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 Holders’ CW Units in connection with the IPO or pursuant to the exercise of the redemption right or the call right set forth in the TRA, (ii) certain increases in tax basis resulting from the repayment, in connection with the IPO, of borrowings outstanding under Cactus LLC’s term loan facility, 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. Cactus Inc. will retain the benefit of the remaining 15% of these net cash savings.

On January 21, 2018, the board of directors of Cactus LLC declared a cash distribution of $26.0 million, which was paid to the Pre-IPO Owners on January 25, 2018. Such distribution was funded by borrowing under the revolving credit facility. The purpose of the distribution was to provide funds to the Pre-IPO Owners to pay their federal and state tax liabilities associated with taxable income recognized by them as a result of their ownership interests in Cactus LLC prior to the completion of our IPO.

CACTUS INC

Subsequent Events [Text Block]

4.           Subsequent Events

On February 12, 2018, in connection with the completion of the Company’s IPO, Cactus Inc. became the managing member of Cactus LLC and is responsible for all operational, management and administrative decisions relating to Cactus LLC’s business.

Pursuant to the IPO, the Company issued 23,000,000 shares of Class A common stock, par value $0.01 per share (“Class A Common Stock”), at a price to the public of $19.00 per share. The Company received net proceeds of $405.8 million after deducting underwriting discounts and commissions and estimated offering expenses of the IPO. On February 14, 2018 the Company sold an additional 3,450,000 shares of Class A Common Stock pursuant to the exercise by the underwriters in full of their option to purchase additional shares of Class A Common Stock (the “Option”), resulting in $61.6 million of additional net proceeds after deducting underwriting discounts and commissions. The Company contributed all of the net proceeds of the IPO to Cactus LLC in exchange for CW Units. Cactus LLC used (i) $251.0 million of the net proceeds to repay all of the borrowings outstanding under its term loan facility, including accrued interest and (ii) $216.4 million to redeem CW Units from certain direct and indirect owners of Cactus LLC.

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Preparation of Interim Financial Statements and Other Items (Policies)

3 Months Ended

12 Months Ended

Mar. 31, 2018

Dec. 31, 2017

Basis of Presentation

Basis of Presentation

The unaudited and condensed consolidated financial statements (“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 for interim financial information. Accordingly, these consolidated financial statements do not include all information or notes required by generally accepted accounting principles for annual financial statements and should be read together with our Annual Report for Form 10‑K for the year ended December 31, 2017. All significant intercompany transactions and balances have been eliminated upon consolidation.

In our opinion, the consolidated financial statements include all adjustments, which are of a normal recurring nature, unless otherwise disclosed, necessary for a fair statement of the consolidated financial statements for the interim periods. The results of operations for the three months ended March 31, 2018 are not necessarily indicative of the results to be expected for the full year.

As discussed in Note 1, as a result of our IPO and Reorganization, Cactus Inc. is the sole managing member of Cactus LLC and consolidates entities in which it has a controlling financial interest. The Reorganization was considered a transaction between entities under common control. As a result, the financial statements for periods prior to our IPO and the Reorganization have been adjusted to combine the previously separate entities for presentation purposes. However, Cactus Inc. had no operations or assets and liabilities prior to our IPO. As such, for periods prior to the completion of our IPO, the consolidated financial statements represent the historical financial position and results of operations of Cactus LLC and its subsidiaries. For periods after the completion of our IPO, the financial position and results of operations include those of Cactus and report the non-controlling interest related to the portion of CW Units not owned by Cactus Inc.

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 LLC and its wholly owned subsidiaries, Suzhou and CWA. All significant intercompany transactions and balances have been eliminated upon consolidation.

Limitation of Members' Liability

Limitation of Members’ Liability

Under the terms of the First Amended and Restated Limited Liability Company Operating Agreement, dated as of January 29, 2018 of Cactus LLC (the “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 LLC Agreement.

Limitation of Members’ Liability

Under the terms of the Amended and Restated Limited Liability Company Operating Agreement, dated as of May 31, 2016, of Cactus LLC (the “Agreement”), the members are not obligated for debt, liabilities, contracts or other obligations of Cactus LLC. Profits and losses are allocated to members as defined in the Agreement.

Segment and Related Information

Segment and Related Information

We operate as 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.

Significant Customers and Concentration of Credit Risk

Significant Customers and Concentration of Credit Risk

We had one customer representing 11% of total revenues in 2017 and one customer representing 12% of total revenues in both 2016 and 2015. There were no other customers representing 10% or more of total revenues in 2017, 2016 or 2015. Our assets that are potentially subject to concentrations of credit risk are cash and accounts receivable. Our receivables are spread over a number of customers, a majority of which are operators and suppliers to the oil and natural gas industry. We manage the credit risk on 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 maximum exposure to credit loss in the event of non‑performance by the counterparty is limited to the receivable balance. We perform ongoing credit evaluations as to the financial condition of our customers with respect to trade receivables. Generally, no collateral is required as a condition of sale.

Significant Vendors

Significant Vendors

We purchase a significant portion of supplies, equipment and machined components from a single vendor. For the three months ended March 31, 2018 and 2017, purchases from this vendor totaled $10.4 million and $6.4 million, respectively. These figures represent approximately 21% and 20% 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 March 31, 2018 and December 31, 2017 totaled $7.2 million and $7.4 million, respectively.

Significant Vendors

We purchase a significant portion of supplies, equipment and machined components from a single vendor. During 2017, 2016 and 2015, purchases from this vendor totaled $33.4 million, $10.8 million and $18.1 million, respectively. These figures represent approximately 22%,  20% and 27% 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, 2017 and 2016 totaled $7.4 million and $1.3 million, respectively.

Use of Estimates

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Such estimates include but are not limited to estimated losses on accounts receivables, estimated realizable value on excess and obsolete inventory, estimates related to fair value of reporting units for purposes of assessing goodwill and other indefinite-lived intangible assets for impairment and estimates of deferred tax assets related to the step-up in basis under the TRA and the associated liability under the TRA. Actual results could differ from those estimates.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Such estimates include but are not limited to estimated losses on accounts receivables, estimated realizable value on excess and obsolete inventory, useful lives of equipment and estimates related to fair value of reporting units for purposes of assessing goodwill for impairment. Actual results could differ from those estimates.

Revenue Recognition

Revenue Recognition

Revenue is recognized when all of the following criteria have been met: (i) evidence of an arrangement exists; (ii) delivery and acceptance by the customer has occurred; (iii) the price to the customer is fixed or determinable; and (iv) collectability is reasonably assured, as follows:

Product revenue. Revenue is recognized from the sale of wellhead systems and production trees and is recognized when the products have shipped and significant risk of ownership has passed under our contract terms. The arrangements typically do not include the right of return.

Rental revenue. We design and manufacture a suite of highly technical equipment, tools and products used for well control during the drilling and completion phases that are rented to customers on a short-term basis. Our rental agreements are directly with customers and provide for a rate based on the period of time the equipment is used or made available to the customer. Revenue is recognized as earned over the rental period.

Field service and other revenue. We provide field services to our customers based on contractually agreed rates. Other revenue is derived from providing repair and reconditioning services to customers, generally to customers who have installed our products on their wellsite. Revenues are recognized as the services are performed or rendered.

From time to time certain of our contracts include multiple deliverables. The pricing of each of our products and services is individually negotiated and agreed with our customers. The hierarchy for determining the selling price of a deliverable includes (a) vendor‑specific objective evidence, if available, (b) third‑party evidence, if vendor‑specific evidence is not available, and (c) our best estimate of selling price, if neither vendor‑specific nor third‑party evidence is available. Our revenues for multi‑element arrangements are based on vendor‑specific evidence as most of our products, rentals and field services are sold on an individual basis.

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 (loss) in the consolidated statements of income and comprehensive income, and members’ 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 the consolidated results of operations 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. All grant date fair value is expensed immediately for awards that are fully vested as of the grant date.

Income Taxes

Income Taxes

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. Additionally, our operations in both Australia and China are subject to local country income taxes.

The provision for income tax for the three months ended March 31, 2018 consisted of:

	Three Months Ended March 31,
	2018
Current:
Federal	$	211
State		240
Foreign		238
Total current income taxes		689
Deferred:
Federal		762
State		128
Foreign		73
Total deferred income taxes		963
Total provision for income taxes	$	1,652

The effective income tax rate was different from the statutory U.S. federal income tax rate due to the following:

	Three Months Ended March 31,
	2018
Income taxes at 21% statutory tax rate	$	5,893
Net difference resulting from:
Profit of Cactus LLC Pre-IPO not subject to U.S. federal tax		(2,808)
Profit of non-controlling interest not subject to U.S. federal tax		(1,926)
Foreign earnings subject to different tax rates		50
State income taxes		318
Foreign withholding taxes		73
Change in valuation allowance		(20)
Other		72
Total provision for income taxes	$	1,652

Income Taxes

Cactus LLC is a limited liability company and files a U.S. Return of Partnership Income, which includes both our U.S. and foreign operations. As a limited liability company, Cactus LLC is treated as a partnership, and the members of Cactus LLC are taxed individually on their share of our earnings for U.S. federal income tax purposes. Accordingly, no provision for U.S. federal income taxes has been made in the consolidated financial statements.

Cactus LLC is subject to state taxes within the United States. However, the income generated by Cactus LLC flows through to the members’ individual state tax returns. Additionally, our operations in both Australia and China are subject to local country income taxes.

Deferred taxes are recorded using the 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. The realizability of deferred tax assets are evaluated annually and a valuation allowance is provided if it is more likely than not that the deferred tax assets will not give rise to future benefits in our tax returns.

We account for uncertainty in income taxes by prescribing the minimum recognition threshold an income tax position is required to meet before being recognized in the consolidated financial statements. Each income tax position is assessed using a two‑step process. A determination is first made as to whether it is more likely than not that the income tax position will be sustained, based upon technical merits, upon examination by the taxing authorities. If the income tax position is expected to meet the more likely than not criteria, the benefit recorded in the consolidated financial statements equals the largest amount that is greater than 50% likely to be realized upon its ultimate settlement.

We record income tax related interest and penalties, if any, as a component in the provision for income tax expense.

U.S. Federal Income Tax Reform

On December 22, 2017, the President of the United States signed into law legislation informally known as the Tax Cuts and Jobs Act (the “Act”). The Act represents major tax reform legislation that, among other provisions, reduces the U.S. corporate tax rate. As of December 31, 2017, since Cactus LLC is a pass-through entity, management considers that the abovementioned Act will have an immaterial impact. However, going forward, the Company will analyze the impact based on revised circumstances.

Cash and Cash Equivalents

Cash and Cash Equivalents

We consider all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents. 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 as of December 31, 2017 and 2016 includes unbilled revenue of $24.9 million and $8.8 million, respectively, for products delivered and for services performed for which billings had not yet been submitted to the customers. Earnings are charged with a provision for doubtful accounts based on a current 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 $0.7 million and $0.9 million as of December 31, 2017 and 2016, 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, 2017	$	851	$	(100)	$	(3)	$	(8)	$	740
Year Ended December 31, 2016		1,208		(357)		—		—		851
Year Ended December 31, 2015		1,024		250		(66)		—		1,208

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 obsolete and slow‑moving 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 $5.9 million and $4.8 million as of December 31, 2017 and 2016, respectively.

The following is a rollforward of our inventory obsolescence reserve:

	Balance at								Balance at
	Beginning of		Expense						End of
	Period		(recovery)		Write off		Other		Period
Year Ended December 31, 2017	$	4,770	$	1,259	$	(103)	$	(41)	$	5,885
Year Ended December 31, 2016		3,184		1,851		(265)		—		4,770
Year Ended December 31, 2015		841		2,343		—		—		3,184

Property and Equipment

Property and Equipment

Property and equipment are stated at cost. We manufacture some 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 and improvement	5-39	years
Machinery and equipment	7	years
Vehicles under capital lease	3	years
Rental equipment	2-5	years
Furniture and fixtures	5	years
Computers and software	3-5	years

Property and equipment as of December 31, 2017 and 2016 consists of the following:

	December 31,
	2017		2016
Land	$	2,241	$	2,241
Buildings and improvements		11,657		11,169
Machinery and equipment		43,528		38,429
Vehicles under capital lease		15,557		2,616
Rental equipment		85,292		75,437
Furniture and fixtures		1,110		984
Computers and software		2,636		2,429
		162,021		133,305
Less: Accumulated depreciation and amortization		72,917		62,381
		89,104		70,924
Construction in progress		5,550		3,946
Total property and equipment, net		94,654		74,870

Depreciation of property and equipment was $23.3 million, $21.2 million and $20.6 million for 2017, 2016 and 2015, respectively. Depreciation expense is included in “total costs and expenses” in the consolidated statements of income.

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 2017, 2016 and 2015.

Goodwill

Goodwill

Goodwill represents the excess of acquisition consideration paid over the fair value of identifiable net tangible and identifiable intangible assets acquired. All of the goodwill 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 attributable to the reduced reliance on vendors and synergies associated with the ability of the Bossier City plant to manufacture our full range of products as well as to deliver time sensitive and rapid turnaround orders. 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 2017, 2016 or 2015, based on our annual impairment analysis.

Debt Discount and Deferred Loan Costs

Debt Discount and Deferred Loan Costs

Long‑term debt is presented in the consolidated balance sheets net of an original issue discount as well as deferred loan costs, which are both amortized to interest expense over the life of the debt. The original issue discount was $5.5 million. The amortization of the discount totaled $0.8 million, $0.8 million and $0.9 million for 2017, 2016 and 2015, respectively, and is included in interest expense in the consolidated statements of income.

Deferred loan costs are amortized to interest expense over the term of the related debt agreement using methods which approximate the effective interest method. We capitalized $6.0 million in connection with our long-term debt. The amortization of the deferred loan costs for 2017, 2016 and 2015 totaled $0.9 million, $0.9 million and $1.0 million, respectively.

When the related debt instrument is retired, any remaining unamortized costs of the original issue discount and deferred loan costs are included in the determination of the gain or loss on the extinguishment of the debt.

As of December 31, 2017 and 2016, the unamortized balance of debt discount and deferred loan costs was $4.5 million and $6.3 million, respectively. In conjunction with the IPO and repayment in full of our term loan, the unamortized balance of debt discount and deferred loan costs will be written off to loss on debt extinguishment.

Accrued Expenses and Other

Accrued Expenses and Other

Accrued expenses and other as of December 31, 2017 and 2016 are as follows:

	December 31,
	2017		2016
Payroll, payroll taxes and benefits	$	4,033	$	2,722
Income based tax payable		526		641
Taxes other than income		1,375		1,271
Deferred revenue		765		565
Product warranties		343		95
Accrued insurance		1,059		—
Accrued interest		161		50
Other		2,297		1,086
Total	$	10,559	$	6,430

Deferred Revenue

Deferred revenue represents cash received from customers for rental equipment services not yet rendered and products not yet delivered.

Product Warranties

We generally warrant our manufactured products 12 months from the date placed in service.

Fair Value Measures

Fair Value Measures

Fair value measurements—We record financial assets and financial liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The fair value framework requires the categorization of assets and liabilities into three levels based upon the assumptions (inputs) used to price the assets or liabilities, with the exception of certain assets and liabilities measured using the net asset value practical expedient, which are not required to be leveled. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment. The three levels are defined as follows:

· Level 1:  Unadjusted quoted prices in active markets for identical assets and liabilities.

· Level 2:  Observable inputs other than quoted prices included in Level 1. For example, quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets.

· Level 3:  Unobservable inputs reflecting management’s own assumptions about the assumptions market participants would use in pricing the asset or liability.

Fair value of long‑lived, non‑financial assets—Long‑lived, non‑financial assets are measured at fair value on a non‑recurring basis for the purposes of calculating impairment. The fair value measurements of our long‑lived, non‑financial assets measured on a non‑recurring basis are determined by estimating the amount and timing of net future cash flows, which are Level 3 unobservable inputs, and discounting them using a risk‑adjusted rate of interest. Significant increases or decreases in actual cash flows may result in valuation changes.

Fair value of debt—The fair value, based on Level 2, of our term loan facility due 2020 approximated the face value of the debt of $248.5 million as of December 31, 2017. The fair value was approximately $231 million as of December 31, 2016 compared to the $251.1 million face value of the debt as of December 31, 2016.

Other fair value disclosures—The carrying amounts of cash and cash equivalents, receivables, accounts payable, as well as amounts included in other current assets and other current liabilities that meet the definition of financial instruments, approximate fair value.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Standards Adopted

In August 2016, the FASB issued ASU No. 2016-15, Cash Flow Statement (Topic 250). This new guidance addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice, including: debt prepayment or debt extinguishment costs, settlement of zero coupon debt instruments or other debt instruments, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies, distributions received from equity method investees, beneficial interests in securitization transactions, and separately identifiable cash flows and application of the predominance principle. ASU 2016-15 is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. We adopted this ASU on January 1, 2018. The adoption of this pronouncement did not have a material impact on our consolidated financial statements.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which supersedes the current revenue recognition guidance. The ASU is based on the principle that revenue is recognized to depict the transfer of goods and services to customers in the amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The new standard will be effective for public companies for the fiscal years beginning after December 31, 2017 using one of two retrospective application methods. We adopted this ASU on January 1, 2018 using the modified retrospective method. The adoption of this pronouncement did not have a material impact on our consolidated financial statements. See Note 5.

In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, in an effort to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendments in this standard provide a screen to determine when an integrated set of assets and activities is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the integrated set of assets and activities is not a business. The new guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is allowed for transactions for which the acquisition date occurs before the issuance date or effective date of the amendments, only when the transaction has not been reported in financial statements that have been issued or made available for issuance and for transactions in which a subsidiary is deconsolidated or a group of assets is derecognized before the issuance date or effective date of the amendments, only when the transaction has not been reported in financial statements that have been issued or made available for issuance. Entities will be required to apply the guidance prospectively when adopted. We adopted this ASU on January 1, 2018. The adoption of this pronouncement did not have a material impact on our consolidated financial statements.

Standards Not Yet Adopted

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Upon adoption of the new guidance, lessees are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The new guidance will be effective for fiscal years beginning after December 15, 2018. We are currently evaluating the impact this pronouncement will have on our consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other, 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 annual, or interim, 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. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We do not expect the adoption of this pronouncement to have a material impact on our consolidated financial statements.

In February 2018, the FASB issued ASU 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220) Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The amendments in this update allow a reclassification from accumulated other comprehensive income (loss) to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. However, because the amendments only relate to the reclassification of the income tax effects of the Tax Cuts and Jobs Act, the underlying guidance that requires that the effect of a change in tax laws or rates be included in income from continuing operations is not affected. The amendments in this update also require certain disclosures about stranded tax effects. The amendments in this update are effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the impact this pronouncement will have on our consolidated financial statements.

Recent Accounting Pronouncements

Standards Adopted

In July 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015‑11, Simplifying the Measurement of Inventory, which requires companies to measure inventory at the lower of cost or net realizable value rather than at the lower of cost or market. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. We adopted this ASU on January 1, 2017. The adoption of this pronouncement did not have any material impact on the consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016‑09, Improvements to Employee Share‑Based Payment Accounting. This new guidance includes provisions intended to simplify how share based payments are accounted for and presented in the financial statements, including: a) all excess tax benefits and tax deficiencies should be recognized as income tax expense or benefit in the income statement; b) excess tax benefits should be classified along with other income tax cash flows as an operating activity; c) an entity can make an entity wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur; d) the threshold to qualify for equity classification permits withholding up to the maximum statutory tax rates in the applicable jurisdictions; e) cash paid by an employer should be classified as a financing activity when shares are directly withheld for tax withholding purposes. We adopted this ASU on January 1, 2017. The adoption of this pronouncement did not have any material impact on the consolidated financial statements.

Standards Not Yet Adopted

In May 2014, the FASB issued ASU No. 2014‑09, Revenue from Contracts with Customers, which supersedes the current revenue recognition guidance. The ASU is based on the principle that revenue is recognized to depict the transfer of goods and services to customers in the amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The new standard will be effective for public companies for the fiscal years beginning after December 31, 2017 using one of two retrospective application methods. We adopted this pronouncement on January 1, 2018 using the modified retrospective method. Based on the assessment performed, the adoption of this pronouncement will not have a material impact on the consolidated financial statements. We are continuing our assessment of potential changes to our disclosures under the new standard. We will provide additional disclosures, if any, regarding material differences in reported financial statement line items in 2018 when compared to the amounts that would have been reported under legacy accounting guidance.

In February 2016, the FASB issued ASU No. 2016‑02, Leases (Topic 842), to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Upon adoption of the new guidance, lessees are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The new guidance will be effective for fiscal years beginning after December 15, 2018. We are currently evaluating the impact this pronouncement will have on the consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017‑01, Business Combinations (Topic 805): Clarifying the Definition of a Business, in an effort to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendments in this standard provide a screen to determine when an integrated set of assets and activities is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the integrated set of assets and activities is not a business. The new guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is allowed for transactions for which the acquisition date occurs before the issuance date or effective date of the amendments, only when the transaction has not been reported in financial statements that have been issued or made available for issuance and for transactions in which a subsidiary is deconsolidated or a group of assets is derecognized before the issuance date or effective date of the amendments, only when the transaction has not been reported in financial statements that have been issued or made available for issuance. Entities will be required to apply the guidance prospectively when adopted. We do not expect the adoption of this pronouncement to have a material impact on the consolidated financial statements.

In January 2017, the FASB issued ASU 2017‑04, Intangibles‑Goodwill and Other, 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 annual, or interim, 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. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We do not expect the adoption of this pronouncement to have a material impact on the consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016‑15, Cash Flow Statement (Topic 250). This new guidance addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice, including: debt prepayment or debt extinguishment costs, settlement of zero coupon debt instruments or other debt instruments, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate owned life insurance policies, distributions received from equity method investees, beneficial interests in securitization transactions, and separately identifiable cash flows and application of the predominance principle. ASU 2016‑15 is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. We do not expect that the adoption of this pronouncement will have a material impact on the consolidated financial statements.

CACTUS INC

Basis of Presentation

Basis of Presentation

The Company’s balance sheet has been prepared in accordance with U.S. generally accepted accounting principles. Separate statements of income and comprehensive income, cash flows and changes in stockholder’s equity have not been presented because the Company has had no operations to date.

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Preparation of Interim Financial Statements and Other Items (Tables)

3 Months Ended

12 Months Ended

Mar. 31, 2018

Dec. 31, 2017

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, 2017	$	851	$	(100)	$	(3)	$	(8)	$	740
Year Ended December 31, 2016		1,208		(357)		—		—		851
Year Ended December 31, 2015		1,024		250		(66)		—		1,208

Rollforward of inventory obsolescence reserve

	Balance at								Balance at
	Beginning of		Expense						End of
	Period		(recovery)		Write off		Other		Period
Year Ended December 31, 2017	$	4,770	$	1,259	$	(103)	$	(41)	$	5,885
Year Ended December 31, 2016		3,184		1,851		(265)		—		4,770
Year Ended December 31, 2015		841		2,343		—		—		3,184

Schedule of PP&E useful lives

Land	N/A
Buildings and improvement	5-39	years
Machinery and equipment	7	years
Vehicles under capital lease	3	years
Rental equipment	2-5	years
Furniture and fixtures	5	years
Computers and software	3-5	years

Schedule of Property plant and equipment Net

	March 31,		December 31,
	2018		2017
Cost	$	18,591	$	15,557
Accumulated depreciation		(3,838)		(2,672)
Net	$	14,753	$	12,885

	December 31,
	2017		2016
Land	$	2,241	$	2,241
Buildings and improvements		11,657		11,169
Machinery and equipment		43,528		38,429
Vehicles under capital lease		15,557		2,616
Rental equipment		85,292		75,437
Furniture and fixtures		1,110		984
Computers and software		2,636		2,429
		162,021		133,305
Less: Accumulated depreciation and amortization		72,917		62,381
		89,104		70,924
Construction in progress		5,550		3,946
Total property and equipment, net		94,654		74,870

Schedule of Accrued Liabilities [Table Text Block]

	December 31,
	2017		2016
Payroll, payroll taxes and benefits	$	4,033	$	2,722
Income based tax payable		526		641
Taxes other than income		1,375		1,271
Deferred revenue		765		565
Product warranties		343		95
Accrued insurance		1,059		—
Accrued interest		161		50
Other		2,297		1,086
Total	$	10,559	$	6,430

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Inventories (Tables)

3 Months Ended

12 Months Ended

Mar. 31, 2018

Dec. 31, 2017

Inventories

Summary of inventories

	March 31,		December 31,
	2018		2017
Raw materials	$	1,378	$	1,532
Work-in-progress		4,012		3,590
Finished goods		64,143		59,328
	$	69,533	$	64,450

	December 31,
	2017		2016
Raw materials	$	1,532	$	1,543
Work-in-progress		3,590		4,585
Finished goods		59,328		31,772
	$	64,450	$	37,900

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Long-term Debt (Tables)

3 Months Ended

12 Months Ended

Mar. 31, 2018

Dec. 31, 2017

Long-term Debt.

Schedule of long-term debt

	March 31,		December 31,
	2018		2017
Term Loan	$	—	$	248,529
Less:
Current portion		—		(2,568)
Unamortized debt discount and deferred loan costs		—		(4,524)
Long-term debt, net	$	—	$	241,437

	December 31,
	2017		2016
Term Loan	$	248,529	$	251,098
Less:
Current portion		(2,568)		(2,568)
Unamortized debt discount and deferred loan costs		(4,524)		(6,276)
Long-term debt, net	$	241,437	$	242,254

Schedule of maturity of debt, net

Years Ending December 31,
2018	$	2,568
2019		2,568
2020		243,393
	$	248,529

Interest Income and Interest Expense Disclosure [Table Text Block]

	Year Ended December 31,
	2017		2016		2015
Interest under Credit Agreement	$	18,627	$	18,414	$	19,682
Debt discount and deferred loan costs amortization		1,752		1,777		1,913
Capital lease interest		311		24		—
Other		82		20		253
Interest (income)		(5)		(2)		(11)
Interest expense, net	$	20,767	$	20,233	$	21,837

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Income Taxes (Tables)

3 Months Ended

12 Months Ended

Mar. 31, 2018

Dec. 31, 2017

Income Taxes

Schedule of components of income (loss) before income taxes

	Year Ended December 31,
	2017		2016		2015
Domestic	$	65,023	$	(8,558)	$	21,791
Foreign		3,073		1,191		217
Income (loss) before income taxes	$	68,096	$	(7,367)	$	22,008

Schedule of provision for income taxes

	Three Months Ended March 31,
	2018
Current:
Federal	$	211
State		240
Foreign		238
Total current income taxes		689
Deferred:
Federal		762
State		128
Foreign		73
Total deferred income taxes		963
Total provision for income taxes	$	1,652

	Year Ended December 31,
	2017		2016		2015
Current:
Federal	$	—	$	—	$	—
State		594		229		474
Foreign		735		448		246
Total current income taxes		1,329		677		720
Deferred—foreign		220		132		64
Total provision for income taxes	$	1,549	$	809	$	784

Schedule of effective income tax rate reconciliation

	Three Months Ended March 31,
	2018
Income taxes at 21% statutory tax rate	$	5,893
Net difference resulting from:
Profit of Cactus LLC Pre-IPO not subject to U.S. federal tax		(2,808)
Profit of non-controlling interest not subject to U.S. federal tax		(1,926)
Foreign earnings subject to different tax rates		50
State income taxes		318
Foreign withholding taxes		73
Change in valuation allowance		(20)
Other		72
Total provision for income taxes	$	1,652

	Year Ended December 31,
	2017		2016		2015
Income taxes at 35% statutory tax rate	$	23,834	$	(2,578)	$	7,703
Net difference resulting from:
Profit and loss of Cactus LLC not subject to U.S. federal tax		(22,758)		2,990		(7,627)
Foreign earnings subject to different tax rates		(302)		(122)		(50)
State income taxes		594		229		474
Foreign withholding taxes		220		132		64
Change in valuation allowance		(39)		158		220
Total provision for income taxes	$	1,549	$	809	$	784

Schedule of components of deferred tax assets and liabilities

	December 31,
	2017		2016
Foreign withholding taxes	$	416	$	196
Foreign loss carryforwards		(489)		(528)
Valuation allowance		489		528
Total deferred tax liability, net	$	416	$	196

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Members' Equity (Tables)

12 Months Ended

Dec. 31, 2017

Members' Equity.

Schedule of member unit outstanding

	December 31,
	2017	2016
Units
Class A	36,500	36,500
Class A-1	520	520
Class B	8,608	8,608

Schedule of distribution by unit class

	Year Ended December 31,
	2016				2015
	Amount		Per Unit		Amount		Per Unit
Distributions
Class A	$	2,055	$	56	$	8,928	$	245
Class A-1		—		—		3		7
Class B		—		—		3,301		528
Total distributions	$	2,055			$	12,232

Schedule of Common Stock Outstanding Roll Forward [Table Text Block]

The following is a rollforward of Class A‑1 Units:

Units at December 31, 2014	275
Units issued in 2015	125
Units at December 31, 2015	400
Units issued in 2016	120
Units at December 31, 2016	520
Units issued in 2017	—
Units at December 31, 2017	520

Schedule of assumptions used to determine unit value

	December 31,
	2016		2015
Expected term in years	3.5	years	3.5	years
Expected volatility	33	%	33	%
Risk‑free interest rate	0.98	%	0.98	%

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Commitments and Contingencies (Tables)

3 Months Ended

12 Months Ended

Mar. 31, 2018

Dec. 31, 2017

Commitments and Contingencies

Schedule of amounts included within property and equipment under capital leases

	December 31,
	2017		2016
Cost	$	15,557	$	2,616
Accumulated depreciation		(2,672)		(171)
Net	$	12,885	$	2,445

Schedule of future minimum lease payments

	Operating  Leases		Capital  Leases		Liability related to TRA		Total
Remainder of 2018	$	4,376	$	4,732	$	—	$	9,108
2019		4,206		6,420		5,840		16,466
2020		3,782		4,461		3,168		11,411
2021		3,095		494		3,255		6,844
2022		2,043		—		3,331		5,374
Thereafter		4,960		—		47,395		52,355
	$	22,462	$	16,107	$	62,989	$	101,558

	Operating Leases		Capital Leases		Total
2018	$	5,506	$	5,296	$	10,802
2019		4,083		5,394		9,477
2020		3,752		3,475		7,227
2021		3,077		—		3,077
2022		2,031		—		2,031
Thereafter		4,713		—		4,713
	$	23,162	$	14,165	$	37,327

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Earnings Per Share (Tables)

3 Months Ended

12 Months Ended

Mar. 31, 2018

Dec. 31, 2017

Earnings Per Share

Summary of earnings per Unit

	Three Months Ended March 31,
	2018		2017
Numerator:
Net income attributable to Cactus Inc.	$	3,753	$	—
Denominator:
Weighted average Class A shares outstanding—basic		26,450		—
Effect of dilutive shares (1)		198
Weighted average Class A shares outstanding—diluted (1)		26,648		—
Earnings per Class A Share—basic	$	0.14	$	—
Earnings per Class A Share—diluted (1)	$	0.14	$	—

(1) Diluted earnings per share for the periods presented excludes 48,439,772 shares of Class B common stock as the effect would be anti-dilutive.

.

	Year Ended December 31,
	2017		2016		2015
Numerator:
Net income (loss)	$	66,547	$	(8,176)	$	21,224
Participating securities:
Dividends		—		—		(3,303)
Income allocation		(20,617)		—		(6,720)
Net income (loss) available to Class A Units	$	45,930	$	(8,176)	$	11,201
Denominator:
Weighted average Class A Units—basic and diluted		36,500		36,500		36,500
Earnings (loss) per Class A Unit—basic and diluted	$	1,258.36	$	(224.00)	$	306.88

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Supplemental Cash Flow Information (Tables)

3 Months Ended

12 Months Ended

Mar. 31, 2018

Dec. 31, 2017

Supplemental Cash Flow Information

Schedule of non cash investing and financing activities

	Three Months Ended March 31,
	2018		2017
Property and equipment acquired under capital lease	$	3,092	$	2,046
Property and equipment in payables		4,512		579

Non-cash investing and financing activities were as follows:

	Year Ended December 31,
	2017		2016		2015
Property and equipment acquired under capital lease	$	12,941	$	2,616	$	—
Property and equipment in payables		1,553		243		276

Cash paid for interest and income taxes was as follows:

	Year Ended December 31,
	2017		2016		2015
Cash paid for interest	$	18,826	$	19,946	$	21,391
Cash paid for income taxes, net		1,535		583		370

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Quarterly Financial Information (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2017

Quarterly Financial Information Disclosure [Abstract]

Quarterly Financial Information [Table Text Block]

	2017 Quarters
	Total		Fourth		Third		Second		First
Total revenues	$	341,191	$	104,784	$	96,027	$	81,877	$	58,503
Income from operations		88,863		28,737		28,059		22,073		9,994
Net income		66,547		22,814		22,301		16,578		4,854
Earnings per Class A Unit—basic and diluted		1,258.36		431.40		421.70		312.79		92.47

		2016 Quarters
	Total		Fourth		Third		Second		First
Total revenues	$	155,048	$	49,547	$	36,755	$	32,863	$	35,883
Income from operations		10,615		6,162		2,112		1,218		1,123
Net income (loss)		(8,176)		1,346		(3,167)		(1,833)		(4,522)
Earnings (loss) per Class A Unit—basic and diluted		(224.00)		36.88		(86.77)		(50.22)		(123.89)

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Organization and Nature of Operations (Details) $ in Thousands		3 Months Ended	12 Months Ended
	Feb. 12, 2018 USD ($) shares	Mar. 31, 2018 USD ($) Center shares	Dec. 31, 2017 item	Feb. 11, 2018 shares
Organization and Nature of Operations
Number of U.S. service centers		14	14
Number of service centers in Australia		1	1
Net proceeds from IPO | $		$ 469,621
Write off of stock issuance costs against equity | $	$ 2,200
Restricted stock unit awards issued (in shares) | shares	737,493
Cactus LLC
Organization and Nature of Operations
Net proceeds from IPO | $	$ 469,600
Ownership interest		35.30%
Cactus LLC | Term loan facility
Organization and Nature of Operations
Repayments of debt | $	$ 251,000
Class B Common Stock
Organization and Nature of Operations
Number of shares issued | shares	51,889,772
Common stock, shares issued | shares		48,440,000
Common stock, shares outstanding | shares		48,440,000		0

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Summary of Significant Accounting Policies and Other Items - Significant Customers and Concentration of Credit Risk (Details) $ in Millions	3 Months Ended		12 Months Ended
	Mar. 31, 2018 USD ($)	Mar. 31, 2017 USD ($)	Dec. 31, 2017 USD ($) customer	Dec. 31, 2016 USD ($) customer	Dec. 31, 2015 USD ($) customer
Total revenues | Customer
Significant Customers and Concentration of Credit Risk
Number of Customers | customer			1	1	1
Concentration of risk (as a percent)	11.00%	21.00%	11.00%	12.00%	12.00%
Purchases | Supplier concentration
Significant Customers and Concentration of Credit Risk
Concentration of risk (as a percent)	21.00%	20.00%	22.00%	20.00%	27.00%
Purchases from the vendor	$ 10.4	$ 6.4	$ 33.4	$ 10.8	$ 18.1
Amounts due to the vendor	$ 7.2		$ 7.4	$ 1.3

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Summary of Significant Accounting Policies and Other Items - Income Taxes, Accounts Receivable (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Provisions for income taxes	$ 1,652	$ 154	$ 1,549	$ 809	$ 784
Accounts Receivable
Unbilled revenue	24,300		24,900	8,800
Allowance for doubtful accounts
Balance at Beginning of Period	$ 740	$ 851	851	1,208	1,024
Expense (recovery)			(100)	(357)
Expense (recovery)			(100)	(357)	250
Write off			(3)		(66)
Other			(8)
Balance at End of Period			740	$ 851	$ 1,208
Cactus LLC
Provisions for income taxes			$ 0

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Summary of Significant Accounting Policies and Other Items - Inventories (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Summary of Significant Accounting Policies and Other Items
Balance at Beginning of Period	$ 4,770	$ 3,184	$ 841
Expense (recovery)	1,259	1,851	2,343
Write off	(103)	(265)
Other	(41)
Balance at End of Period	$ 5,885	$ 4,770	$ 3,184

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Summary of Significant Accounting Policies and Other Items - Property and Equipment - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Property and equipment
Net	$ 109,492		$ 94,654	$ 74,870
Depreciation	$ 6,621	$ 5,313	23,271	21,241	$ 20,580
Property, Plant and Equipment
Property and equipment
Property and equipment, gross			162,021	133,305
Less: Accumulated depreciation and amortization			72,917	62,381
Net			89,104	70,924
Land
Property and equipment
Property and equipment, gross			2,241	2,241
Buildings and improvements
Property and equipment
Property and equipment, gross			$ 11,657	11,169
Buildings and improvements | Minimum
Property and Equipment
Estimated useful life (in years)			5 years
Buildings and improvements | Maximum
Property and Equipment
Estimated useful life (in years)			39 years
Machinery and equipment
Property and Equipment
Estimated useful life (in years)			7 years
Property and equipment
Property and equipment, gross			$ 43,528	38,429
Vehicles under capital lease
Property and Equipment
Estimated useful life (in years)			3 years
Property and equipment
Property and equipment, gross			$ 15,557	2,616
Rental equipment
Property and equipment
Property and equipment, gross			$ 85,292	75,437
Rental equipment | Minimum
Property and Equipment
Estimated useful life (in years)			2 years
Rental equipment | Maximum
Property and Equipment
Estimated useful life (in years)			5 years
Furniture and fixtures
Property and Equipment
Estimated useful life (in years)			5 years
Property and equipment
Property and equipment, gross			$ 1,110	984
Computers and software
Property and equipment
Property and equipment, gross			$ 2,636	2,429
Computers and software | Minimum
Property and Equipment
Estimated useful life (in years)			3 years
Computers and software | Maximum
Property and Equipment
Estimated useful life (in years)			5 years
Construction in progress
Property and equipment
Net			$ 5,550	$ 3,946

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Summary of Significant Accounting Policies and Other Items - Impairment of Long-Lived Assets and Goodwill - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Asset impairment charges
Impairment charges of long-lived assets	$ 0	$ 0	$ 0
Impairment of goodwill	$ 0	$ 0	$ 0

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Summary of Significant Accounting Policies and Other Items - Debt Discount and Deferred Loan Costs - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Summary of Significant Accounting Policies and Other Items
original issue discount	$ 5,500
Amortization of the discount	800	$ 800	$ 900
Capitalized amount in connection with long term debt	6,000
Amortization of deferred loan costs	900	900	$ 1,000
Unamortized debt discount and deferred loan costs	$ 4,524	$ 6,276

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Summary of Significant Accounting Policies and Other Items - Accrued expenses and Other - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Mar. 31, 2018	Dec. 31, 2016
Accrued expenses and other
Payroll, payroll taxes and benefits	$ 4,033		$ 2,722
Income based tax payable	526		641
Taxes other than income	1,375		1,271
Deferred revenue	765	$ 1,100	565
Product warranties	343		95
Accrued insurance	1,059
Accrued interest	161		50
Other	2,297		1,086
Total	$ 10,559	$ 14,584	$ 6,430
Product Warranties
Term of warrants	12 months

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Summary of Significant Accounting Policies and Other Items - Fair Value Measures - Term Loan Due 2020 - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
Fair value of debt
Fair value of debt	$ 248.5	$ 231.0
Face value of debt		$ 251.1

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Inventories (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Summary of inventories
Raw materials	$ 1,378	$ 1,532	$ 1,543
Work-in-progress	4,012	3,590	4,585
Finished goods	64,143	59,328	31,772
Total inventory	$ 69,533	$ 64,450	$ 37,900

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Long-term Debt (Details) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Long-term Debt.
Term Loan	$ 248,529	$ 251,098
Less: Current portion	(2,568)	(2,568)
Unamortized Premium and Deferred Finance Costs Balance, net	(4,524)	(6,276)
Long-term debt, net	$ 241,437	$ 242,254

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Long-term Debt - agreement information (Details) - USD ($) $ in Thousands	Jul. 31, 2014	Mar. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Long-term Debt
Amount outstanding			$ 241,437
Accrued interest			161	$ 50
Maturities of long term debt
2018			2,568
2019			2,568
2020			243,393
Term Loan			248,529	251,098
Accounts payable and accrued expenses
Long-term Debt
Accrued interest			$ 200	$ 100
Credit Agreement
Maturities of long term debt
Weighted average interest rate			7.30%	7.00%
Term Loan
Long-term Debt
Face amount	$ 275,000
Amount outstanding			$ 248,500	$ 251,100
Revolving Loans
Long-term Debt
Maximum borrowing capacity	50,000	$ 50,000	50,000
Amount outstanding		0	0	0
Accrued interest		0	200
Maturities of long term debt
Total leverage financial covenant draw limit	15,000
Potential cap on availability	15,000
Letters of credit
Long-term Debt
Maximum borrowing capacity	$ 10,000
Amount outstanding		$ 0	$ 0	$ 0

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Long-term Debt - Interest expenses, net (Details) - USD ($) $ in Thousands		3 Months Ended		12 Months Ended
	Feb. 12, 2018	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Interest Expense, net
Interest under Credit Agreement				$ 18,627	$ 18,414	$ 19,682
Debt discount and deferred loan costs amortization				1,752	1,777	1,913
Capital lease interest				311	24
Other				82	20	253
Interest (income)				(5)	(2)	(11)
Interest expense, net		$ 2,852	$ 4,986	$ 20,767	20,233	21,837
Gain (Loss) on Extinguishment of Debt [Abstract]
Gain on debt extinguishment	$ (4,300)	(4,305)			2,251	1,640
Write-off of unamortized debt discount		2,100
Write-off of deferred loan costs		$ 2,200
Term Loan
Gain (Loss) on Extinguishment of Debt [Abstract]
Amount of term loan redeemed					$ 7,500	$ 10,000
Percentage of principal amount redeemed					65.00%	79.00%
Amount paid for redemption including fees					$ 4,900	$ 7,900
Write-off of unamortized debt discount					$ 300
Write-off of deferred loan costs						$ 200

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Income Taxes - Components of income (loss) before income tax (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Components of income (loss) before income taxes
Domestic			$ 65,023	$ (8,558)	$ 21,791
Foreign			3,073	1,191	217
Income before income taxes	$ 28,060	$ 5,008	$ 68,096	$ (7,367)	$ 22,008

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Income Taxes - Provision for income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Current:
State	$ 240		$ 594	$ 229	$ 474
Foreign	238		735	448	246
Total current income taxes	689		1,329	677	720
Deferred-foreign	73		220	132	64
Total provision for income taxes	$ 1,652	$ 154	$ 1,549	$ 809	$ 784

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Income Taxes - Effective income tax reconciliation (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Effective income tax rate reconciliation
Income taxes at 35% statutory tax rate	$ 5,893		$ 23,834	$ (2,578)	$ 7,703
Statutory tax rate (as a percent)	21.00%		35.00%	35.00%	35.00%
Profit of non-controlling interest not subject to U.S. federal tax	$ (1,926)		$ (22,758)	$ 2,990	$ (7,627)
Foreign earnings subject to different tax rates			(302)	(122)	(50)
State income taxes	318		594	229	474
Foreign withholding taxes			220	132	64
Change in valuation allowance	(20)		(39)	158	220
Total provision for income taxes	$ 1,652	$ 154	$ 1,549	$ 809	$ 784

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Income Taxes - Deferred tax components (Details) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Components of deferred tax assets and liabilties
Foreign withholding taxes	$ 416	$ 196
Foreign loss carryforwards	(489)	(528)
Valuation allowance	489	528
Total deferred tax liability, net	$ 416	$ 196

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Income Taxes - Operating Losses (Details) - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Foreign
Operating Loss
Net operating losses	$ 1.8	$ 1.9	$ 1.3

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Members' Equity (Details) - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Members' Equity
Total distributions, Amount	$ 26,041,000	$ 0	$ 2,055,000	$ 12,232,000
Class A
Members' Equity
Units outstanding		36,500	36,500
Total distributions, Amount			$ 2,055	$ 8,928
Total distribution, Per Unit			$ 56.00	$ 245.00
Class A-1
Members' Equity
Units outstanding		520	520	400	275
Total distributions, Amount				$ 3
Total distribution, Per Unit				$ 7.00
Class B
Members' Equity
Units outstanding		8,608	8,608
Total distributions, Amount				$ 3,301
Total distribution, Per Unit				$ 528.00

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Members' Equity - Narratives (Details) - USD ($)	1 Months Ended	3 Months Ended	12 Months Ended
	Jan. 31, 2018	Mar. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Feb. 17, 2017
Members' Equity
Distributions to members		$ 26,041,000	$ 0	$ 2,055,000	$ 12,232,000
Compensation expenses				$ 400,000	$ 400,000
Vesting period				2 months	2 months
Forecast Member
Members' Equity
Distributions to members	$ 26,000,000
Class A
Members' Equity
Distributions to members				$ 2,055	$ 8,928
Units issued			0	0	0
Class B
Members' Equity
Distributions to members					$ 3,301
Units issued			0	0	0
Class A-1
Members' Equity
Distributions to members					$ 3
Units issued			0	120	125
Forfeited Units			0
Expected future distributions			0
CACTUS INC
Members' Equity
Common stock, par value			$ 0.01			$ 0.01
Common stock, shares issued			1,000,000

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Members' Equity - Rollforward (Details) - Class A-1 - shares	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Members' Equity
Units outstanding at beginning of the period	520	400	275
Units issued	0	120	125
Units outstanding at end of the period	520	520	400

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Members' Equity - Key assumptions (Details) - Class A-1	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Members' Equity
Expected term in years	3 years 6 months	3 years 6 months
Expected volatility	33.00%	33.00%
Riskfree interest rate	0.98%	0.98%

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Related Party Transactions (Details) $ in Millions		3 Months Ended		12 Months Ended
	Feb. 12, 2018	Mar. 31, 2018 USD ($)	Mar. 31, 2017 USD ($)	Dec. 31, 2017 USD ($) item	Dec. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)	Feb. 11, 2018 USD ($) item
Related Party Transaction [Line Items]
Tax savings payable to TRA Holders (as a percent)	85.00%
Management service agreement | Cactus LLC
Related Party Transaction [Line Items]
Number of LLC members | item				2			2
Annual management fee				$ 0.3	$ 0.3	$ 0.3	$ 0.3
Number of installments | item				4			4
Accounts payable to related party		$ 0.0		$ 0.0	0.0
Management service agreement | Maximum | Cactus LLC
Related Party Transaction [Line Items]
Expenses under related party agreements		0.1	$ 0.1
Short-term rental agreement | Cactus LLC
Related Party Transaction [Line Items]
Expenses under related party agreements				0.3	$ 0.2	$ 0.3
Short-term rental agreement | Maximum | Cactus LLC
Related Party Transaction [Line Items]
Expenses under related party agreements		0.1	$ 0.1
Accounts payable to related party		$ 0.1		$ 0.1

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Commitments and Contingencies - Operating leases (Details) - USD ($) $ in Millions	3 Months Ended		12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Commitments and Contingencies
Rental expense	$ 1.8	$ 1.7	$ 7.1	$ 7.3	$ 7.9

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Commitments and Contingencies - Capital leases (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Capital leases
Capital lease term	3 years	3 years
Capital lease assets in property, plant and equipment
Cost	$ 18,591	$ 15,557	$ 2,616
Accumulated depreciation	(3,838)	(2,672)	(171)
Net	$ 14,753	$ 12,885	$ 2,445

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Commitments and Contingencies - Future minimum annual lease payments (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Operating Leases
2018		$ 5,506
2019	$ 4,206	4,083
2020	3,782	3,752
2021	3,095	3,077
2022	2,043	2,031
Thereafter	4,960	4,713
Total	22,462	23,162
Capital Leases
2018		5,296
2019	6,420	5,394
2020	4,461	3,475
Total	16,107	14,165
Total
2018		10,802
2019	16,466	9,477
2020	11,411	7,227
2021	6,844	3,077
2022	5,374	2,031
Thereafter	52,355	4,713
Total	$ 101,558	$ 37,327

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Employee Benefit Plans (Details) $ in Millions	3 Months Ended		12 Months Ended
	Mar. 31, 2018 USD ($)	Mar. 31, 2017 USD ($)	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)
Employee Benefit Plans
Employer match of first tier of employee contribution (as a percent)	100		100
First tier percentage of compensation eligible for match	3		3
Employer match of second tier of employee contribution (as a percent)	50		50
Second tier percentage of compensation eligible for match	4		4
Employer matching contributions	$ 0.8	$ 0.4	$ 2.2	$ 1.2	$ 1.5

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Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended									12 Months Ended
	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Feb. 11, 2018
Numerator:
Net income (loss)	$ 3,753									$ 66,547	$ (8,176)	$ 21,224
Participating securities:
Dividends												(3,303)
Income allocation										(20,617)		(6,720)
Net income (loss) available to Class A Units										$ 45,930	$ (8,176)	$ 11,201
Denominator:
Earnings (loss) per Class A Unit-basic and diluted		$ 431.40	$ 421.70	$ 312.79	$ 92.47	$ 36.88	$ (86.77)	$ (50.22)	$ (123.89)	$ 1,258.36	$ (224.00)
Class A Common Stock
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Common Stock, Shares, Outstanding	26,450,000	36,500				36,500				36,500	36,500	36,500	0
Denominator:
Earnings (loss) per Class A Unit-basic and diluted										$ 1,258.36	$ (224.00)	$ 306.88
Class B Common Stock
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Common Stock, Shares, Outstanding	48,440,000												0

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Supplemental Information (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Supplemental Cash Flow Information
Property and equipment acquired under capital lease	$ 3,092	$ 2,046	$ 12,941	$ 2,616
Property and equipment in payables	$ 4,512	$ 579	1,553	243	$ 276
Cash paid for interest			18,826	19,946	21,391
Cash paid for income taxes, net			$ 1,535	$ 583	$ 370

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Quarterly Financial Information (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended									12 Months Ended
	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Quarterly Financial Information Disclosure [Abstract]
Total revenues	$ 115,110	$ 104,784	$ 96,027	$ 81,877	$ 58,503	$ 49,547	$ 36,755	$ 32,863	$ 35,883	$ 341,191	$ 155,048	$ 221,395
Income from operations	35,217	28,737	28,059	22,073	9,994	6,162	2,112	1,218	1,123	88,863	10,615	42,205
Net income (loss)	26,408	$ 22,814	$ 22,301	$ 16,578	$ 4,854	$ 1,346	$ (3,167)	$ (1,833)	$ (4,522)	66,547	(8,176)	21,224
Net Income (Loss) Attributable to Parent	$ 3,753									$ 66,547	$ (8,176)	$ 21,224
Earnings (loss) per Class A Unit-basic and diluted		$ 431.40	$ 421.70	$ 312.79	$ 92.47	$ 36.88	$ (86.77)	$ (50.22)	$ (123.89)	$ 1,258.36	$ (224.00)

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Subsequent Events (Details)					3 Months Ended	12 Months Ended
	Feb. 14, 2018 USD ($) shares	Feb. 12, 2018 USD ($) item $ / shares shares	Jan. 25, 2018 USD ($)	Jan. 21, 2018 USD ($)	Mar. 31, 2018 USD ($) $ / shares shares	Dec. 31, 2016 USD ($) shares	Dec. 31, 2015 USD ($) shares	Mar. 13, 2018 shares	Feb. 11, 2018 shares	Dec. 31, 2017 $ / shares shares	Feb. 17, 2017 $ / shares
Subsidiary, Sale of Stock [Line Items]
Net proceeds from IPO | $					$ 469,621,000
Write off of stock issuance costs against equity | $		$ 2,200,000
Restricted stock unit awards issued (in shares)		737,493
Vesting period						2 months	2 months
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners					64.70%
Tax savings payable to TRA Holders (as a percent)		85.00%
Tax savings benefit retained (as a percent)		15.00%
Member distributions prior to IPO | $			$ 26,000,000		$ 26,000,000	$ 2,055,000	$ 12,232,000
Class A Common Stock
Subsidiary, Sale of Stock [Line Items]
Common stock, par value | $ / shares					$ 0.01
Common stock, shares issued					26,450,000
Common stock, shares outstanding					26,450,000	36,500	36,500		0	36,500
Class A Common Stock | IPO
Subsidiary, Sale of Stock [Line Items]
Issuance of common stock (shares)		23,000,000
Common stock, par value | $ / shares		$ 0.01
Share price (in dollars per share) | $ / shares		$ 19.00
Net proceeds from IPO | $		$ 408,000,000
Class A Common Stock | Option
Subsidiary, Sale of Stock [Line Items]
Issuance of common stock (shares)	3,450,000
Net proceeds from IPO | $	$ 61,600,000
Class B Common Stock
Subsidiary, Sale of Stock [Line Items]
Issuance of common stock (shares)		51,889,772
Common stock, par value | $ / shares		$ 0.01			$ 0.01
Common stock, shares issued					48,440,000
Common stock, shares outstanding					48,440,000				0
Class B Common Stock | Subsequent event
Subsidiary, Sale of Stock [Line Items]
Number of common stock for each unit | item		1
Cactus LLC
Subsidiary, Sale of Stock [Line Items]
Net proceeds from IPO | $		$ 469,600,000
Ownership interest					35.30%
Member distributions prior to IPO | $				$ 26,000,000
Cactus LLC | Subsequent event
Subsidiary, Sale of Stock [Line Items]
Redeem CW Units from certain direct and indirect owners | $		216,400,000
Ownership interest								35.30%
Cactus LLC | IPO | Subsequent event
Subsidiary, Sale of Stock [Line Items]
Redeem CW Units from certain direct and indirect owners | $		8,667,841
Cactus LLC | Class B Common Stock
Subsidiary, Sale of Stock [Line Items]
Redeem CW Units from certain direct and indirect owners (in units)	3,450,000
Cactus LLC | Class B Common Stock | Option | Subsequent event
Subsidiary, Sale of Stock [Line Items]
Redeem CW Units from certain direct and indirect owners (in units)	3,450,000
Cactus LLC | Term loan facility
Subsidiary, Sale of Stock [Line Items]
Repayments of debt | $		251,000,000
Cactus LLC | Term loan facility | Subsequent event
Subsidiary, Sale of Stock [Line Items]
Repayments of debt | $		251,000,000
Redeem CW Units from certain direct and indirect owners (in units)	251,000,000
CACTUS INC
Subsidiary, Sale of Stock [Line Items]
Common stock, par value | $ / shares										$ 0.01	$ 0.01
Common stock, shares issued										1,000,000
CACTUS INC | Subsequent event
Subsidiary, Sale of Stock [Line Items]
Write off of stock issuance costs against equity | $		$ 2,200,000
Number of CW Units acquired with the proceeds from the sale of common stock		23,000,000
Restricted stock unit awards issued (in shares)		700,000
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners								64.70%
Tax savings payable to TRA Holders (as a percent)		85.00%
Tax savings benefit retained (as a percent)		15.00%
CACTUS INC | Subsequent event | Minimum
Subsidiary, Sale of Stock [Line Items]
Vesting period		1 year
CACTUS INC | Subsequent event | Maximum
Subsidiary, Sale of Stock [Line Items]
Vesting period		3 years
CACTUS INC | Option | Subsequent event
Subsidiary, Sale of Stock [Line Items]
Number of CW Units acquired with the proceeds from the sale of common stock	3,450,000
CACTUS INC | Class A Common Stock | Subsequent event
Subsidiary, Sale of Stock [Line Items]
Common stock, shares issued								26,450,000
Common stock, shares outstanding								26,450,000
CACTUS INC | Class A Common Stock | IPO | Subsequent event
Subsidiary, Sale of Stock [Line Items]
Issuance of common stock (shares)		23,000,000
Common stock, par value | $ / shares		$ 0.01
Share price (in dollars per share) | $ / shares		$ 19.00
Net proceeds from IPO | $		$ 405,800,000
CACTUS INC | Class A Common Stock | Option | Subsequent event
Subsidiary, Sale of Stock [Line Items]
Issuance of common stock (shares)	3,450,000
Net proceeds from IPO | $	$ 61,600,000
CACTUS INC | Class B Common Stock | Subsequent event
Subsidiary, Sale of Stock [Line Items]
Issuance of common stock (shares)		51,747,768
Common stock, par value | $ / shares		$ 0.01
Number of common stock for each unit | item		1
Common stock, shares issued								48,439,772
Common stock, shares outstanding								48,439,772