[Executive Summary & Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Highlights) Kodiak Gas Services presents a comprehensive overview of its Q2 2025 performance and revised full-year outlook, emphasizing strong financial results and strategic initiatives [Second Quarter 2025 Performance Highlights](index=1&type=section&id=Second%20Quarter%202025%20Performance%20Highlights) Kodiak Gas Services reported strong financial and operational results for Q2 2025, achieving record earnings per share, adjusted EBITDA, and free cash flow, alongside significant improvements in contract services adjusted gross margin and fleet utilization | Metric | Q2 2025 Value | Change vs. Q2 2024 | | :----------------------------------- | :------------ | :------------------- | | **Net income attributable to common shareholders** | **$39.5 million** | **+537%** (from $6.2M) | | **Earnings per share** (diluted) | **$0.43** | - | | **Adjusted EBITDA** | **$178.2 million** | **+15.5%** | | **Contract Services adjusted gross margin percentage** | **68.3%** | **+430 basis points** | | **Free cash flow** | **$70.3 million** | - | | **Capital Returned to Stockholders** (Dividends & Repurchases) | Over **$50 million** | - | | **New Large Horsepower Compression Units Deployed** | **31,800 horsepower** | - | | **Fleet utilization** | **97.2%** | **+290 basis points** | - Kodiak was added to the **S&P SmallCap 600 index** effective August 6, 2025, signifying **financial strength** and **commitment** to **profitable growth**[6](index=6&type=chunk)[11](index=11&type=chunk) [Revised Full-Year 2025 Outlook Highlights](index=1&type=section&id=Revised%20Full-Year%202025%20Outlook%20Highlights) The company increased its full-year 2025 guidance for adjusted EBITDA and discretionary cash flow, reflecting continued confidence in its operational performance and market position | Metric | Revised Full-Year 2025 Guidance Range | | :----------------------------------- | :------------------------------------ | | **Adjusted EBITDA** | **$700 million** to **$725 million** | | **Discretionary cash flow** | **$445 million** to **$465 million** | [CEO Commentary](index=1&type=section&id=CEO%20Commentary) CEO Mickey McKee highlighted the company's commitment to operational excellence, strategic focus on large horsepower compression, fleet optimization, and investments in technology and personnel as drivers for record adjusted EBITDA and improved margins. He expressed confidence in long-term growth prospects due to Permian Basin natural gas production growth and strong demand from data centers and LNG projects, reinforcing the decision to increase the share repurchase program - The company's **strategic focus** on large horsepower compression, **fleet optimization**, and **significant investments** in technology and personnel contributed to a fourth consecutive quarterly **increase** in **Contract Services adjusted gross margin percentage** and **record** quarterly **Adjusted EBITDA**[4](index=4&type=chunk) - **Confidence** in **long-term growth** is driven by highly visible **Permian Basin natural gas production growth** and **strong demand outlook from power demand for data centers and domestic LNG projects**[7](index=7&type=chunk) - The **increase** in the **share repurchase program** reflects **confidence** in the business and **commitment** to returning capital to shareholders, while maintaining focus on **superior service** and a **reliable** compression fleet[8](index=8&type=chunk) [Operational and Financial Updates](index=2&type=section&id=Operational%20and%20Financial%20Updates) This section details Kodiak's segment performance, debt management, S&P index inclusion, and share repurchase activities [Segment Performance](index=2&type=section&id=Segment%20Performance) Kodiak's Contract Services segment demonstrated robust growth in revenue and gross margin, while Other Services experienced a revenue decrease but a significant increase in gross margin [Contract Services](index=2&type=section&id=Contract%20Services) The Contract Services segment demonstrates robust revenue and gross margin growth, reflecting strong operational performance | Metric | Q2 2025 Value | Q2 2024 Value | YoY Change | | :-------------------------- | :------------ | :------------ | :--------- | | **Revenue** | **$293.5 million** | **$276.3 million** | **+6.3%** | | **Gross Margin** | **$134.3 million** | **$107.5 million** | **+24.9%** | | **Adjusted Gross Margin** | **$200.4 million** | **$176.9 million** | **+13.3%** | [Other Services](index=2&type=section&id=Other%20Services) The Other Services segment experienced a revenue decrease but a significant increase in gross margin, indicating improved profitability | Metric | Q2 2025 Value | Q2 2024 Value | YoY Change | | :-------------------------- | :------------ | :------------ | :--------- | | **Revenue** | **$29.3 million** | **$33.4 million** | **-12.3%** | | **Gross Margin & Adjusted Gross Margin** | **$7.2 million** | **$5.5 million** | **+31.6%** | [Long-Term Debt and Liquidity](index=2&type=section&id=Long-Term%20Debt%20and%20Liquidity) The company reduced its debt outstanding by approximately $48 million during Q2 2025, maintaining a healthy liquidity position with significant availability on its ABL Facility | Metric | As of June 30, 2025 | | :-------------------------------- | :------------------ | | **Debt Reduction** (Q2 2025) | ~**$48 million** | | **Total Debt Outstanding** | **$2.6 billion** | | **ABL Facility Availability** | **$366.4 million** | | **Credit Agreement Leverage Ratio** | **3.6x** | [S&P SmallCap 600 Index Inclusion](index=2&type=section&id=S%26P%20SmallCap%20600%20Index%20Inclusion) Kodiak Gas Services was announced to join the S&P SmallCap 600 index, effective August 6, 2025, marking a significant milestone that affirms its financial strength and commitment to profitable growth - Kodiak will join the **S&P SmallCap 600 index** effective August 6, 2025, which is a **significant milestone** affirming the company's **financial strength** and **commitment** to **profitable growth**[6](index=6&type=chunk)[11](index=11&type=chunk) [Share Repurchase Program](index=2&type=section&id=Share%20Repurchase%20Program) The Board of Directors approved a $100 million increase to the share repurchase program, extending its expiration to December 31, 2026, bringing the total available for repurchases to $115.0 million. To date, the company has repurchased approximately 2.0 million shares for $60.0 million | Metric | Details | | :-------------------------------- | :------------------------------------------------ | | **Program Increase** | **$100 million** | | New Expiration Date | December 31, 2026 | | **Total Available for Repurchases** | **$115.0 million** | | **Shares Repurchased to Date** | ~**2.0 million shares** | | **Aggregate Amount Repurchased to Date** | **$60.0 million** (at a weighted average price of **$30.24**) | [Summary Financial and Operating Data](index=3&type=section&id=Summary%20Financial%20and%20Operating%20Data) This section provides a detailed overview of Kodiak's financial and operating performance for Q2 2025 and comparative periods [Summary Financial Data](index=3&type=section&id=Summary%20Financial%20Data) The summary financial data for Q2 2025 shows significant improvements across key profitability and cash flow metrics compared to both the previous quarter and the prior year, driven by strong performance in Contract Services | Metric (in thousands) | June 30, 2025 | March 31, 2025 | June 30, 2024 | QoQ Change (vs. Mar 2025) | YoY Change (vs. Jun 2024) | | :----------------------------------- | :------------ | :------------- | :------------ | :------------------------ | :------------------------ | | **Total revenues** | **$322,843** | **$329,642** | **$309,653** | **-2.1%** | **+4.2%** | | **Net income attributable to common shareholders** | **$39,496** | **$30,411** | **$6,228** | **+29.9%** | **+534.2%** | | **Adjusted EBITDA** | **$178,216** | **$177,664** | **$154,342** | **+0.3%** | **+15.5%** | | **Adjusted EBITDA percentage** | **55.2%** | **53.9%** | **49.8%** | **+1.3 pp** | **+5.4 pp** | | **Contract Services revenue** | **$293,534** | **$288,956** | **$276,250** | **+1.6%** | **+6.3%** | | **Contract Services adjusted gross margin** | **$200,397** | **$195,721** | **$176,917** | **+2.4%** | **+13.3%** | | **Contract Services adjusted gross margin percentage** | **68.3%** | **67.7%** | **64.0%** | **+0.6 pp** | **+4.3 pp** | | **Other Services revenue** | **$29,309** | **$40,686** | **$33,403** | **-27.9%** | **-12.3%** | | **Other Services adjusted gross margin** | **$7,195** | **$5,460** | **$5,467** | **+31.8%** | **+31.6%** | | **Other Services adjusted gross margin percentage** | **24.5%** | **13.4%** | **16.4%** | **+11.1 pp** | **+8.1 pp** | | **Maintenance capital expenditures** | **$17,565** | **$16,407** | **$19,147** | **+7.1%** | **-8.2%** | | **Growth capital expenditures** | **$37,966** | **$55,983** | **$77,257** | **-32.2%** | **-50.9%** | | **Other capital expenditures** | **$16,398** | **$22,258** | **$13,133** | **-26.3%** | **+24.9%** | | **Discretionary cash flow** | **$116,424** | **$116,084** | **$90,617** | **+0.3%** | **+28.5%** | | **Free cash flow** | **$70,290** | **$47,219** | **$638** | **+48.8%** | **+10917.2%** | [Summary Operating Data](index=4&type=section&id=Summary%20Operating%20Data) Operating data as of June 30, 2025, indicates a slight decrease in total fleet horsepower but an increase in revenue-generating horsepower, leading to improved fleet utilization and higher horsepower per revenue-generating unit | Metric | June 30, 2025 | March 31, 2025 | June 30, 2024 | QoQ Change (vs. Mar 2025) | YoY Change (vs. Jun 2024) | | :------------------------------------------ | :------------ | :------------- | :------------ | :------------------------ | :------------------------ | | **Fleet horsepower** | **4,419,884** | **4,422,914** | **4,481,900** | **-0.1%** | **-1.4%** | | **Revenue-generating horsepower** | **4,296,978** | **4,284,103** | **4,224,839** | **+0.3%** | **+1.7%** | | **Fleet compression units** | **4,881** | **4,941** | **7,317** | **-1.2%** | **-33.3%** | | **Revenue-generating compression units** | **4,514** | **4,545** | **5,753** | **-0.7%** | **-21.5%** | | **Revenue-generating horsepower per revenue-generating compression unit** | **952** | **943** | **734** | **+1.0%** | **+29.7%** | | **Fleet utilization** | **97.2%** | **96.9%** | **94.3%** | **+0.3 pp** | **+2.9 pp** | [Full-Year 2025 Guidance](index=4&type=section&id=Full-Year%202025%20Guidance) Kodiak Gas Services provides its updated full-year 2025 financial and operational guidance, reflecting confidence in future performance [Full-Year 2025 Guidance](index=4&type=section&id=Full-Year%202025%20Guidance) Kodiak Gas Services has provided revised full-year 2025 guidance, increasing the low end of the Adjusted EBITDA range and raising the Discretionary Cash Flow guidance, while also providing specific revenue and margin targets for its Contract and Other Services segments, and capital expenditure forecasts | Metric (in thousands, excluding percentages) | Low | High | | :----------------------------------- | :---------- | :---------- | | **Adjusted EBITDA** | **$700,000** | **$725,000** | | **Discretionary cash flow** | **$445,000** | **$465,000** | | **Contract Services revenues** | **$1,160,000** | **$1,200,000** | | **Contract Services adjusted gross margin percentage** | **67.0%** | **69.0%** | | **Other Services revenues** | **$120,000** | **$140,000** | | **Other Services adjusted gross margin percentage** | **14.0%** | **17.0%** | | **Maintenance capital expenditures** | **$75,000** | **$85,000** | | **Growth capital expenditures** | **$180,000** | **$205,000** | | **Other capital expenditures** | **$60,000** | **$65,000** | | **Total Growth and Other capital expenditures** | **$240,000** | **$270,000** | [Company Information & Disclosures](index=5&type=section&id=Company%20Information%20%26%20Disclosures) This section provides essential company information, including conference call details, company overview, non-GAAP definitions, and forward-looking statements [Conference Call Details](index=5&type=section&id=Conference%20Call%20Details) Kodiak will host a conference call on Thursday, August 7, 2025, to discuss its Q2 2025 financial and operating results, with details provided for phone and webcast access - A conference call to discuss Q2 2025 results will be held on Thursday, August 7, 2025, at 10:00 a.m. Eastern Time (9:00 a.m. Central Time)[22](index=22&type=chunk) [About Kodiak Gas Services](index=5&type=section&id=About%20Kodiak%20Gas%20Services) Kodiak Gas Services is a leading contract compression services provider in the United States, offering critical energy infrastructure and services to oil and gas producers and midstream customers, headquartered in The Woodlands, Texas - Kodiak is a **leading contract compression services provider** in the U.S., providing **critical energy infrastructure** for natural gas and oil production and transportation[23](index=23&type=chunk) - The company serves oil and gas producers and midstream customers in high-volume gas gathering systems, processing facilities, multi-well gas lift applications, and natural gas transmission systems[23](index=23&type=chunk) [Non-GAAP Financial Measures Definitions](index=5&type=section&id=Non-GAAP%20Financial%20Measures%20Definitions) This section provides definitions and rationale for the non-GAAP financial measures used by Kodiak, including Adjusted EBITDA, Adjusted Gross Margin, Discretionary Cash Flow, and Free Cash Flow, explaining their utility for management and investors in assessing performance and liquidity - **Adjusted EBITDA** is defined as **net income (loss)** before interest, taxes, **depreciation and amortization**, plus specific non-recurring items, used to assess **financial performance** without financing methods or **capital structure impact**[24](index=24&type=chunk) - **Adjusted gross margin** is revenue less cost of operations (excluding **depreciation and amortization**), serving as a **supplemental measure** of **operating profitability**[25](index=25&type=chunk) - **Discretionary cash flow** is **net cash provided by operating activities** less **maintenance capital expenditures** and certain **changes in operating assets and liabilities**, plus specific non-recurring items, used to assess **ability to pay dividends** and make **growth capital expenditures**[26](index=26&type=chunk) - **Free cash flow** is **net cash provided by operating activities** less **maintenance**, **growth**, and **other capital expenditures**, plus specific non-recurring items and **proceeds from asset sales**, used to assess **ability to pursue business opportunities** and **service debt**[27](index=27&type=chunk) [Cautionary Note Regarding Forward-Looking Statements](index=5&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) The report includes a cautionary note regarding forward-looking statements, emphasizing that these are based on current beliefs and assumptions, subject to inherent uncertainties and risks that could cause actual results to differ materially. The company disclaims any obligation to publicly update these statements - Forward-looking statements are based on **current beliefs**, **expectations**, and **assumptions**, and are subject to **inherent uncertainties**, **risks**, and **changes in circumstances** that are difficult to predict and outside of the company's control[28](index=28&type=chunk)[31](index=31&type=chunk) - **Actual results** and **financial condition** may differ materially from those indicated in forward-looking statements due to various factors, including **demand for natural gas/oil**, **customer financial condition**, **competitive pressures**, **integration of acquisitions**, and **economic conditions**[31](index=31&type=chunk) - The company undertakes no obligation to **publicly update** any forward-looking statement, except as required by **applicable law**[32](index=32&type=chunk) [Condensed Consolidated Financial Statements (Unaudited)](index=8&type=section&id=Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) This section presents Kodiak's unaudited condensed consolidated financial statements, including statements of operations, balance sheets, and cash flows [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The unaudited condensed consolidated statements of operations provide a detailed breakdown of revenues, operating expenses, and net income for the three months ended June 30, 2025, March 31, 2025, and June 30, 2024 - The table presents **detailed revenues**, **operating expenses**, **income from operations**, other income/expenses, **income before income taxes**, **income tax expense**, **net income**, and **earnings per share** for the specified periods[34](index=34&type=chunk) [Condensed Consolidated Balance Sheets](index=9&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The unaudited condensed consolidated balance sheets present the company's assets, liabilities, and stockholders' equity as of June 30, 2025, and December 31, 2024, showing changes in financial position over the period - The table provides a snapshot of **current assets**, **non-current assets** (including **property, plant and equipment**, **goodwill**, and **intangibles**), **current liabilities**, **long-term debt**, and **stockholders' equity** at the end of the reporting periods[36](index=36&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The unaudited condensed consolidated statements of cash flows detail the cash generated from or used in operating, investing, and financing activities for the six months ended June 30, 2025, and June 30, 2024 - The table outlines **net cash provided by operating activities**, **net cash used for investing activities** (including **purchase of property, plant and equipment**), and **net cash used for financing activities** (including **debt payments**, **dividends**, and **share repurchases**)[38](index=38&type=chunk) [Non-GAAP Reconciliations (Unaudited)](index=11&type=section&id=Non-GAAP%20Reconciliations%20(Unaudited)) This section provides detailed reconciliations of non-GAAP financial measures to their most directly comparable GAAP measures [Reconciliation of Net Income (Loss) to Adjusted EBITDA](index=11&type=section&id=Reconciliation%20of%20Net%20Income%20(Loss)%20to%20Adjusted%20EBITDA) This section provides a reconciliation of net income (loss) to Adjusted EBITDA, a non-GAAP measure, for the three months ended June 30, 2025, March 31, 2025, and June 30, 2024, detailing adjustments for interest, taxes, depreciation, amortization, and other non-recurring items - The reconciliation shows the **adjustments made to GAAP net income** to arrive at **Adjusted EBITDA**, including adding back **interest expense**, **income tax expense**, **depreciation and amortization**, and other specific non-cash or non-recurring items[39](index=39&type=chunk) [Reconciliation of Adjusted Gross Margin to Gross Margin](index=12&type=section&id=Reconciliation%20of%20Adjusted%20Gross%20Margin%20to%20Gross%20Margin) This section reconciles Adjusted Gross Margin to Gross Margin for both Contract Services and Other Services segments for the three months ended June 30, 2025, March 31, 2025, and June 30, 2024, primarily by adding back depreciation and amortization - The reconciliation for Contract Services shows **Adjusted Gross Margin** is derived by adding back **depreciation and amortization** to **Gross Margin**[41](index=41&type=chunk) - For Other Services, **Gross Margin** and **Adjusted Gross Margin** are identical as there is no **depreciation and amortization** allocated to this segment in the calculation[42](index=42&type=chunk) [Reconciliation of Net Cash Provided by Operating Activities to Discretionary Cash Flow and Free Cash Flow](index=13&type=section&id=Reconciliation%20of%20Net%20Cash%20Provided%20by%20Operating%20Activities%20to%20Discretionary%20Cash%20Flow%20and%20Free%20Cash%20Flow) This section provides a reconciliation of net cash provided by operating activities to Discretionary Cash Flow and Free Cash Flow for the three months ended June 30, 2025, March 31, 2025, and June 30, 2024, detailing adjustments for capital expenditures, changes in operating assets and liabilities, and other items - **Discretionary cash flow** is calculated by adjusting **net cash provided by operating activities** for **maintenance capital expenditures**, **severance**, **transaction expenses**, **changes in operating assets and liabilities**, and other items[43](index=43&type=chunk) - **Free cash flow** is further derived from **discretionary cash flow** by subtracting **growth** and **other capital expenditures** and adding **proceeds from asset sales**[43](index=43&type=chunk)

Group 1 - Kodiak Gas Services Inc. will replace NV5 Global Inc. in the S&P SmallCap 600 effective August 6, 2025 [1] - Acuren Corp. is acquiring NV5 Global in a deal expected to be completed soon pending final conditions [1] - The addition of Kodiak Gas Services and deletion of NV5 Global will take place prior to the opening of trading on the effective date [1] Group 2 - Kodiak Gas Services is classified under the Energy sector, while NV5 Global is classified under the Industrials sector [1]

Group 1 - S&P Dow Jones Indices has added Kodiak Gas Services Inc. (KGS) to the S&P SmallCap 600 Index [1]

Group 1: Market Overview - The U.S. equity markets are experiencing a downtrend due to President Trump's proposed tariffs on imported goods from 14 countries, including Japan and South Korea, set to take effect in August [1] - The sudden shift in tariff policy has increased market uncertainty and financial turmoil, prompting policymakers to take action to protect their economies [1] Group 2: Investment Strategies - Investors are turning to momentum stocks as a strategy to achieve sustained profits amid market volatility [2] - Momentum investing is based on the principle of "buying high and selling higher," capitalizing on established trends in stock prices [3] Group 3: Momentum Strategy Implementation - A screening strategy has been developed to identify momentum anomaly stocks, focusing on the top 50 stocks with the best percentage price change over the last 52 weeks [5] - The strategy also includes selecting stocks that are among the 10 worst performers over the past week to identify those experiencing a short-term pullback [6] - Stocks with a Zacks Rank 1 (Strong Buy) and a Momentum Style Score of B or better are prioritized for selection, indicating a higher probability of success [7] Group 4: Selected Stocks - Urban Outfitters, Inc. has seen a 63.6% increase in stock price over the past year but a 4.2% decline in the past week, with a Momentum Score of B [8] - Royal Gold, Inc. has experienced a 22% increase in stock price over the past year but a 9.8% decline in the past week, holding a Momentum Score of A [9] - Kodiak Gas Services has seen a 25.3% increase in stock price over the past year but a 3.8% decline in the past week, also with a Momentum Score of A [10]

Group 1 - The sale of approximately 3.2 million shares of Kodiak Gas Services, Inc. resulted in gross proceeds of around USD 116 million [1] - The sale was executed on May 12, 2025, under Rule 144 of the Securities Act of 1933, with J.P. Morgan Securities LLC acting as the broker [1] - Concurrently, Kodiak Gas Services repurchased approximately 278,000 shares from EQT for gross proceeds of about USD 10 million [1] Group 2 - Following these transactions, EQT now holds approximately 31.3 million shares of Kodiak Gas Services' common stock [1]

PART I [Item 1. Financial Statements (Unaudited)](index=6&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Presents unaudited condensed consolidated financial statements for Q1 2025, detailing balance sheets, operations, equity, and cash flows, with key notes on accounting policies and the CSI Compressco acquisition [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets remained stable at **$4.436 billion** as of March 31, 2025, with a slight increase in liabilities and decrease in equity Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total current assets** | $387,078 | $383,661 | | **Property, plant and equipment, net** | $3,400,154 | $3,395,022 | | **Total assets** | **$4,436,122** | **$4,435,123** | | **Total current liabilities** | $329,869 | $319,369 | | **Long-term debt, net** | $2,588,329 | $2,581,909 | | **Total liabilities** | **$3,080,265** | **$3,061,516** | | **Total stockholders' equity** | **$1,355,857** | **$1,373,607** | [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Total revenues rose **53.0%** to **$329.6 million** in Q1 2025, but net income remained flat at **$31.0 million** due to increased expenses and absence of derivative gains Statement of Operations Highlights (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Total revenues** | $329,642 | $215,492 | | **Income from operations** | $89,186 | $60,158 | | **Interest expense** | $(47,224) | $(39,740) | | **Gain on derivatives** | $— | $19,757 | | **Net income** | $31,036 | $30,232 | | **Net income attributable to common shareholders** | $30,411 | $30,232 | | **Diluted EPS** | $0.33 | $0.39 | [Condensed Consolidated Statements of Stockholders' Equity](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Stockholders' equity decreased to **$1.356 billion** in Q1 2025, primarily due to **$37.0 million** in dividends and **$10.0 million** in share repurchases, partially offset by net income - Key activities affecting stockholders' equity in Q1 2025 included net income of **$31.0 million**, dividend payments of **$37.0 million**, and common share repurchases of **$10.0 million**[19](index=19&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations more than doubled to **$114.3 million** in Q1 2025, while investing and financing activities resulted in net cash outflows, leading to a **$2.8 million** decrease in cash Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $114,328 | $51,542 | | **Net cash used for investing activities** | $(68,177) | $(60,150) | | **Net cash provided by (used for) financing activities** | $(48,951) | $12,352 | | **Net (decrease) increase in cash** | $(2,800) | $3,744 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Key notes detail the **$342.3 million** CSI Compressco acquisition, **$1.5 billion** in remaining performance obligations, a **$72.5 million** sales tax contingency, and **$10.0 million** in share repurchases - On April 1, 2024, the Company completed the acquisition of CSI Compressco LP for total consideration of **$342.3 million**, resulting in **$109.9 million** of goodwill[29](index=29&type=chunk)[30](index=30&type=chunk) - As of March 31, 2025, the company had **$1.5 billion** of remaining performance obligations related to its Contract Services segment, with **$631.0 million** expected to be recognized in the remainder of 2025[39](index=39&type=chunk) - The company accrued an additional **$1.6 million** for a sales tax contingency during the quarter, bringing the total accrued liability to **$72.5 million** as of March 31, 2025[85](index=85&type=chunk) - In March 2025, the company repurchased **270,000** shares of common stock for approximately **$10.0 million** under its share repurchase program[72](index=72&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2025 performance, highlighting **53%** revenue growth and **34.4%** fleet horsepower increase, driven by the CSI acquisition, alongside liquidity and non-GAAP measures [Operational Highlights](index=30&type=section&id=Operational%20Highlights) Operational capacity expanded significantly, with fleet horsepower increasing **34.4%** to **4.4 million HP** and revenue-generating horsepower growing **30.4%** Operational Data Comparison (at period end) | Metric | March 31, 2025 | March 31, 2024 | % Change | | :--- | :--- | :--- | :--- | | **Fleet horsepower** | 4,422,914 | 3,290,971 | 34.4% | | **Revenue-generating horsepower** | 4,284,103 | 3,285,592 | 30.4% | | **Fleet utilization** | 96.9% | 99.8% | (3.0%) | - The increase in horsepower was primarily attributable to the **1.2 million** horsepower acquired from the CSI Acquisition and organic growth through new compression unit purchases[107](index=107&type=chunk) [Financial Results of Operations](index=31&type=section&id=Financial%20Results%20of%20Operations) Total revenues surged **53.0%** to **$329.6 million** in Q1 2025, but net income remained flat at **$31.0 million** due to higher interest expense and asset sale losses Financial Results Summary (in thousands) | Metric | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | **Total revenues** | $329,642 | $215,492 | 53.0% | | **Income from operations** | $89,186 | $60,158 | 48.3% | | **Interest expense** | $(47,224) | $(39,740) | 18.8% | | **Net income** | $31,036 | $30,232 | 2.7% | - The decrease in gain on derivatives was due to the designation of the interest rate swap as a cash flow hedge effective January 1, 2025, causing fair value changes to be recorded in other comprehensive income instead of earnings[117](index=117&type=chunk) [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) Total liquidity stood at **$321.2 million** as of March 31, 2025, with Q1 2025 capital expenditures totaling **$94.7 million** and a **$0.45** per share dividend declared - As of March 31, 2025, the company had approximately **$321.2 million** of liquidity, consisting of **$2.0 million** in cash and **$319.3 million** available under its ABL Facility[119](index=119&type=chunk) Capital Expenditures (in millions) | Category | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Growth Capital Expenditures | $56.0 | $52.2 | | Other Capital Expenditures | $22.3 | $7.2 | | Maintenance Capital Expenditures | $16.4 | $10.6 | - On April 23, 2025, the Board declared a cash dividend of **$0.45** per share for Q1 2025[125](index=125&type=chunk) [Non-GAAP Financial Measures](index=37&type=section&id=Non-GAAP%20Financial%20Measures) Non-GAAP measures show strong performance, with Adjusted EBITDA increasing to **$177.7 million** and Free Cash Flow rising to **$47.2 million** in Q1 2025 Adjusted EBITDA Reconciliation (in thousands) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Net income** | $31,036 | $30,232 | | Interest expense | 47,224 | 39,740 | | Income tax expense | 10,524 | 9,875 | | Depreciation and amortization | 70,529 | 46,944 | | Gain on derivatives | — | (19,757) | | Equity compensation expense | 6,978 | 2,848 | | Transaction expenses | 1,786 | 7,880 | | Loss on sale of assets | 9,211 | — | | **Adjusted EBITDA** | **$177,664** | **$117,762** | Discretionary and Free Cash Flow (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $114,328 | $51,542 | | **Discretionary cash flow** | $116,084 | $71,925 | | **Free cash flow** | $47,219 | $12,524 | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=40&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's market risks include interest rate, counterparty, concentration, and commodity price risks, with a **1.0%** interest rate increase potentially raising annual expense by **$4.8 million** - The company's primary interest rate risk is from its ABL Facility. A **1.0%** increase in the average interest rate would have resulted in an estimated **$4.8 million** increase in ABL-related interest expense for Q1 2025[162](index=162&type=chunk)[163](index=163&type=chunk) - For Q1 2025, the company's four largest customers accounted for approximately **31%** of its recurring revenues[167](index=167&type=chunk) - The company has no direct exposure to commodity prices as it does not take title to natural gas or oil, but demand for its services is dependent on continued production, which is influenced by commodity prices[168](index=168&type=chunk) [Item 4. Controls and Procedures](index=42&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including CEO and CFO, concluded disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal controls - Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of March 31, 2025[169](index=169&type=chunk) - No changes occurred during the quarter ended March 31, 2025, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[170](index=170&type=chunk) PART II [Item 1. Legal Proceedings](index=43&type=section&id=Item%201.%20Legal%20Proceedings) The company does not expect ordinary course legal matters to materially affect its financial position, referencing the sales tax contingency - Management does not expect the resolution of ordinary course legal matters to have a material adverse effect on the company's financial statements[173](index=173&type=chunk) [Item 1A. Risk Factors](index=43&type=section&id=Item%201A.%20Risk%20Factors) No material changes to previously disclosed risk factors from the Annual Report on Form 10-K for the fiscal year ended December 31, 2024 - There have been no material changes to the risk factors previously disclosed in the Annual Report on Form 10-K for the fiscal year ended December 31, 2024[174](index=174&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=43&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) In Q1 2025, the company repurchased **270,000** common shares for **$10.0 million**, with **$25.0 million** remaining under the repurchase program Share Repurchases in Q1 2025 | Period | Total Shares Purchased | Average Price Paid Per Share | Maximum Value Remaining (in thousands) | | :--- | :--- | :--- | :--- | | March 1-31, 2025 | 270,000 | $36.87 | $25,040 | [Item 3. Defaults Upon Senior Securities](index=43&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon its senior securities during the period - None[178](index=178&type=chunk) [Item 5. Other Information](index=43&type=section&id=Item%205.%20Other%20Information) No directors or executive officers adopted or terminated Rule 10b5-1 trading arrangements during Q1 2025 - During Q1 2025, no directors or officers adopted or terminated a Rule 10b5-1 trading arrangement[180](index=180&type=chunk) [Item 6. Exhibits](index=44&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including corporate governance documents, agreements, and CEO/CFO certifications - The report includes a list of exhibits filed, such as the Certificate of Incorporation, Bylaws, various agreements, and CEO/CFO certifications[181](index=181&type=chunk)

Financial Data and Key Metrics Changes - Total revenues for Q1 2025 were $330 million, up approximately 7% sequentially [22] - Adjusted EBITDA for the quarter was just under $178 million, up 5% from Q4 2024 [24] - The company achieved an all-time low leverage of 3.7 times [14][29] - A quarterly dividend of $0.45 per share was announced, representing a 10% increase over the prior quarter [14] Business Line Data and Key Metrics Changes - In the Contract Services segment, monthly dollar revenue generating horsepower increased from $21.97 to $22.48 [22] - Adjusted gross margin percentage for Contract Services increased to approximately 68%, up a full percentage point from the previous quarter [22] - The Other Services segment saw revenues of $40.7 million, a 39% sequential increase [24] Market Data and Key Metrics Changes - The Permian Basin's oil production grew by about 2% in 2024, while marketed natural gas production grew by 12% [7] - The EIA projects a meaningful increase in Permian natural gas production in 2025 [8] Company Strategy and Development Direction - The company is focused on expanding its large horsepower compression services, which are critical for maintaining production volumes [6][10] - Kodiak is committed to a strategy of recontracting existing contracts and increasing operational efficiency [20][30] - The company plans to continue investing in new unit growth and technology advancements, including industrial artificial intelligence [27][56] Management's Comments on Operating Environment and Future Outlook - Management remains bullish on the outlook for U.S. natural gas growth despite recent volatility in oil prices and economic concerns [6][20] - The company believes that the fundamentals for natural gas compression remain strong, with significant demand expected from LNG exports and power generation [10][12] - Management expressed confidence in achieving their 2025 guidance and maintaining stable cash flows [30][31] Other Important Information - The company has successfully redeployed previously idle assets and divested non-core small horsepower units [14] - Kodiak's fleet utilization remains high at 97%, with 99% utilization of large horsepower equipment [10] Q&A Session Summary Question: What are the remaining unknowns for 2025 that might influence results? - Management highlighted recontracting strategy and expense management as key factors influencing results [37][38] Question: Is there a difference in outsourcing demand between midstream and upstream customers? - Management noted that both upstream and midstream customers may prefer outsourcing to reduce capital expenditures [40] Question: What macro backdrop is assumed for the growth outlook? - Management expressed confidence in continued gas production growth in the Permian Basin, even in a flat oil price environment [46] Question: How is the company balancing share buybacks with leverage targets? - Management confirmed a focus on achieving a leverage target of 3.5 times while also considering share repurchases [48][50] Question: What cost management strategies have contributed to higher margins? - Management mentioned the implementation of AI for condition-based maintenance and repositioning the fleet as key strategies [52][54] Question: How does the company view the labor market challenges in the Permian? - Management emphasized the importance of training and development to address labor challenges [57] Question: How is the company positioned for potential M&A opportunities? - Management indicated openness to opportunistic bolt-on acquisitions, especially if asset valuations decline [71][72] Question: How has customer behavior evolved in today's environment? - Management noted that customers are more consolidated with better balance sheets, making them more resilient in downturns [78] Question: What factors could lead to a loss of pricing power in the industry? - Management stated that a significant reduction in utilization would be necessary for pricing softness to occur [80][82]

Financial Data and Key Metrics Changes - Kodiak set new records in total revenue, adjusted EBITDA, discretionary cash flow, and achieved an all-time low leverage of 3.7 times in Q1 2025 [15][20] - Total revenues for Q1 were $330 million, up approximately 7% sequentially, with adjusted EBITDA just under $178 million, up 5% from Q4 [22][24] - The adjusted gross margin percentage for contract services increased to approximately 68%, reflecting higher average prices and operational efficiencies [22][24] Business Line Data and Key Metrics Changes - In the Contract Services segment, monthly dollar revenue generating horsepower increased from $21.97 to $22.48, indicating strength in the large horsepower market [22] - The Other Services segment saw revenues increase to $40.7 million, a 39% sequential increase, supported by project completions [24] - Fleet utilization reached 97%, with large horsepower equipment utilization at 99%, reflecting strong demand [10][11] Market Data and Key Metrics Changes - The Permian Basin continues to play a significant role in U.S. gas supply growth, with natural gas production projected to increase despite flat oil production [8][9] - LNG exports are expected to double by the end of the decade, driving demand for natural gas and compression services [12][13] - The company noted that the U.S. oil and gas industry is largely domestic, which helps mitigate tariff impacts on operations [17][18] Company Strategy and Development Direction - Kodiak's strategy focuses on large horsepower contract compression services, which are resilient to commodity price fluctuations [6][21] - The company is committed to increasing its fleet and enhancing operational efficiencies while maintaining a strong balance sheet [20][29] - Kodiak is exploring potential bolt-on acquisitions as opportunities arise, particularly in light of changing asset valuations [70][71] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth outlook for U.S. natural gas, driven by LNG exports and power generation demand [11][14] - The company remains optimistic about its ability to navigate economic uncertainties and achieve its growth targets [20][32] - Management highlighted the importance of recontracting efforts and the stability provided by fixed revenue, multiyear contracts [10][16] Other Important Information - Kodiak announced a quarterly dividend of $0.45 per share, a 10% increase over the prior quarter, and repurchased approximately $10 million in stock [15][20] - The company is focused on training and developing its workforce to address labor market challenges in the Permian Basin [57] Q&A Session Summary Question: What are the remaining unknowns for 2025 that might influence results? - Management indicated that recontracting strategies and expense management are key factors influencing guidance for 2025 [36][37] Question: Is there a difference in outsourcing demand between midstream and upstream customers? - Management noted that both upstream and midstream customers may prefer to outsource compression to reduce capital expenditures [38][39] Question: What macro backdrop is assumed in the growth outlook? - Management expressed confidence in continued gas production growth in the Permian Basin, even in a flat oil price environment [44][45] Question: How is the company balancing share buybacks with leverage targets? - Management confirmed a focus on achieving a leverage target of 3.5 times while also considering share repurchases [46][48] Question: What actions are being taken to improve margins? - Management highlighted the implementation of AI and machine learning for maintenance efficiencies and repositioning the fleet to enhance profitability [51][54] Question: How is the company addressing labor market challenges? - Management emphasized the importance of training and development to alleviate labor issues in the Permian Basin [57] Question: How do current lead times for new equipment look? - Management reported that lead times for new equipment remain around a year, indicating a tight supply chain [86][87] Question: How much of the revenue increase was due to organic pricing versus mix shift? - Management indicated that a combination of churn and new horsepower growth contributed to the revenue increase, with pricing uplift from recontracting efforts [88][90]

Group 1 - Kodiak Gas Services reported quarterly earnings of $0.42 per share, exceeding the Zacks Consensus Estimate of $0.39 per share, and showing an increase from $0.39 per share a year ago, representing an earnings surprise of 7.69% [1] - The company achieved revenues of $329.64 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 1.06%, and up from $215.49 million year-over-year [2] - Kodiak Gas has surpassed consensus EPS estimates three times over the last four quarters and topped consensus revenue estimates two times in the same period [2] Group 2 - The stock has underperformed, losing about 16.2% since the beginning of the year, compared to the S&P 500's decline of 4.7% [3] - The current consensus EPS estimate for the upcoming quarter is $0.40 on revenues of $336.17 million, and for the current fiscal year, it is $2.09 on revenues of $1.35 billion [7] - The Zacks Industry Rank for Oil and Gas - Mechanical and Equipment is currently in the bottom 15% of over 250 Zacks industries, indicating potential challenges for stock performance [8] Group 3 - The estimate revisions trend for Kodiak Gas is currently favorable, leading to a Zacks Rank 2 (Buy) for the stock, suggesting it is expected to outperform the market in the near future [6] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5] - The outlook for the industry can significantly impact stock performance, with the top 50% of Zacks-ranked industries outperforming the bottom 50% by more than 2 to 1 [8]

NEWS RELEASE Investor Contact Graham Sones, VP – Investor Relations ir@kodiakgas.com (936) 755-3529 Kodiak Gas Services Announces First Quarter 2025 Financial Results, Provides Updated Full Year 2025 Guidance THE WOODLANDS, Texas — May 7, 2025 — Kodiak Gas Services, Inc. (NYSE: KGS) ("Kodiak" or the "Company"), a leading provider of critical energy infrastructure and contract compression services, today reported financial and operating results for the quarter ended March 31, 2025 and updated full-year 2025 ...