Kodiak Gas Services (NYSE: KGS) buys DPS and raises $836M equity
Kodiak Gas Services, Inc. reported stronger Q2 2026 results while reshaping its balance sheet and expanding into distributed power generation. Total revenues rose to $391.1 million from $322.8 million, led by Compression Infrastructure growth and initial contributions from the new Power Infrastructure segment following the DPS acquisition.
Net income attributable to common shareholders increased to $52.0 million (diluted EPS $0.53) from $39.5 million (EPS $0.43). Assets grew to $5.50 billion, including $344.8 million of goodwill from the $726.4 million DPS transaction. Kodiak issued common stock for net proceeds of $836.1 million and issued $1.0 billion of 2031 senior notes, using proceeds to defease higher‑coupon 2029 notes and recording a $36.5 million loss on extinguishment of debt. Cash and cash equivalents increased to $137.6 million, stockholders’ equity to $2.16 billion, and long‑term debt and other borrowings were $2.73 billion.
The Compression Infrastructure fleet achieved 98.2% utilization, while the new 405 MW power fleet operated at 89.6% utilization. Remaining ASC 606 performance obligations totaled $2.64 billion, and purchase commitments for new compression and power units were $2.5 billion. Quarterly cash dividends of $0.49 per share continued.
Positive
- Revenue growth: Q2 2026 total revenues increased 21.1% year over year to $391.1 million, driven by Compression Infrastructure pricing/volume and new Power Infrastructure contributions.
- Stronger earnings: Q2 2026 net income attributable to common shareholders rose 31.6% to $52.0 million, with diluted EPS up to $0.53 from $0.43.
Negative
- Operating cash flow decline: Net cash provided by operating activities for the first half of 2026 fell to $170.6 million from $291.5 million in the prior‑year period.
- Debt extinguishment cost: Refinancing actions generated a $36.5 million loss on early extinguishment of debt related to the defeasance and redemption of 2029 Senior Notes.
Key Figures
Q2 2026 Revenue: $391,120,000
Q2 2026 Net Income to Common: $51,971,000
Q2 2026 Diluted EPS: $0.53
+5 more
8 metrics
Q2 2026 Revenue
$391,120,000
Total revenues for the three months ended June 30, 2026 versus $322,843,000 in 2025
Q2 2026 Net Income to Common
$51,971,000
Net income attributable to common shareholders for the three months ended June 30, 2026 versus $39,496,000 in 2025
Q2 2026 Diluted EPS
$0.53
Diluted earnings per share for the three months ended June 30, 2026 versus $0.43 in 2025
DPS Acquisition Consideration
$726,354,000
Fair value of total consideration transferred for the DPS acquisition on April 1, 2026
Equity Offering Net Proceeds
$836,132,000
Net proceeds from underwritten common stock offering completed May 15, 2026
Long-Term Debt and Borrowings
$2,725,272,000
Total long-term debt and other borrowings outstanding as of June 30, 2026
Operating Cash Flow H1 2026
$170,647,000
Net cash provided by operating activities for six months ended June 30, 2026 versus $291,500,000 in 2025
Remaining Performance Obligations
$2,643,245,000
ASC 606 remaining performance obligations in Compression Infrastructure as of June 30, 2026
Key Terms
distributed and behind-the-meter power generation, ASC 606, interest rate swap, variable interest entity, +2 more
6 terms
distributed and behind-the-meter power generation technical
"expanded its business beyond contract compression to include distributed and behind-the-meter power generation"
ASC 606 financial
"Revenue is recognized in accordance with either ASC 606, Revenue from Contracts with Customers"
A U.S. accounting standard that sets consistent rules for when and how companies record revenue from contracts with customers, focusing on the transfer of promised goods or services. It matters to investors because it affects the timing and amount of reported sales and profit—like deciding whether a contractor can count payment when a job starts, progresses, or finishes—so it improves comparability and helps assess a company's true economic performance.
interest rate swap financial
"The Company has entered into an interest rate swap, exchanging variable interest rates for fixed interest rates."
An interest rate swap is a financial agreement where two parties exchange interest payments on a set amount of money over time. Typically, one side pays a fixed interest rate, while the other pays a variable rate that can change with market conditions. This helps investors manage or reduce their exposure to interest rate fluctuations, much like locking in a mortgage rate to avoid future cost increases.
variable interest entity financial
"Kodiak is the primary beneficiary of Kodiak Services, which is a variable interest entity"
A variable interest entity (VIE) is a company structure where one party controls another company’s operations and economic outcomes through contracts or special arrangements instead of owning a majority of its voting shares. For investors, VIEs matter because the controlling party’s financial results, debts and risks can appear in the controller’s reports even though ownership looks separate, so understanding VIEs helps assess true exposure, governance limits and transparency—like spotting a puppet controlled by strings rather than direct ownership.
performance stock units financial
"Performance stock units cliff vest at the end of a three-year performance period"
Performance stock units are a type of company award that grants employees shares of stock only if certain performance goals are met. They motivate employees to work toward specific company achievements, aligning their interests with those of shareholders. For investors, they can influence a company's future stock supply and reflect management’s confidence in reaching key targets.
Defeasance financial
"which resulted in a legal defeasance under GAAP (the “Defeasance”)."
Defeasance is a legal process where a borrower replaces the collateral securing a loan with safe, interest-paying government securities that mimic the loan’s payment schedule, thereby releasing the original asset from the loan. For investors, defeasance matters because it shifts what actually backs the debt—reducing credit risk tied to the original asset but changing recovery rights and market liquidity, which can affect bond prices, yields and the ease of selling the asset.
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FAQ
How did Kodiak Gas Services (KGS) perform financially in Q2 2026?
Kodiak generated $391.1 million in Q2 2026 revenue, up from $322.8 million, and net income attributable to common shareholders of $52.0 million, versus $39.5 million a year earlier. Diluted EPS increased to $0.53 from $0.43.
What are the key terms of the DPS acquisition by Kodiak Gas Services (KGS)?
Kodiak acquired DPS for total consideration of $726.4 million, including $587.3 million in cash and 2.4 million KGS common shares valued at $139.0 million. The deal added distributed power generation capabilities and generated $37.0 million of revenue in the first half of 2026.
How did Kodiak Gas Services (KGS) finance its 2026 growth and acquisitions?
Kodiak issued 10.6 million common shares plus 1.6 million option shares at $71.00, raising net proceeds of $836.1 million, and issued $1.0 billion of 5.875% 2031 Senior Notes. A portion of the notes’ proceeds funded redemption of 7.25% 2029 Senior Notes.
What is Kodiak Gas Services’ (KGS) leverage and liquidity as of June 30, 2026?
As of June 30, 2026, Kodiak held $137.6 million in cash and cash equivalents and had total long‑term debt and other borrowings of $2.73 billion. Stockholders’ equity was $2.16 billion, supported by the 2026 equity offering and retained earnings.
How large are Kodiak Gas Services’ (KGS) future commitments and backlog?
Kodiak reported remaining ASC 606 performance obligations of $2.64 billion, largely in Compression Infrastructure, and purchase commitments for new compression and power units totaling $2.5 billion, with $587.9 million expected to be settled within 12 months.
What dividends did Kodiak Gas Services (KGS) pay in 2026 year to date?
Kodiak paid cash dividends of $0.49 per common share in both Q1 and Q2 2026, totaling $93.0 million for the first half of 2026. The board subsequently declared another $0.49 per share dividend payable on August 27, 2026.
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended June 30, 2026
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from _____________ to _____________
Commission File Number: 001-41732
(Exact Name of Registrant as Specified in its Charter)
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||
| (Address of principal executive offices) | (Zip Code) | |||||||
(936 ) 539-3300
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
NYSE Texas, Inc. | ||||||||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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.
| ☒ | Accelerated filer | ☐ | ||||||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||
| Emerging growth company | ||||||||||||||
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 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
As of August 3, 2026, the registrant had 101,104,031 shares of common stock, par value $0.01 per share, outstanding.
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| Page | ||||||||
Cautionary Note Regarding Forward-Looking Statements | ||||||||
PART I. | FINANCIAL INFORMATION | 1 | ||||||
Item 1. | Financial Statements (Unaudited) | 1 | ||||||
Condensed Consolidated Balance Sheets | 2 | |||||||
Condensed Consolidated Statements of Operations | 3 | |||||||
Condensed Consolidated Statements of Other Comprehensive Income | 4 | |||||||
Condensed Consolidated Statements of Stockholders’ Equity | 5 | |||||||
Condensed Consolidated Statements of Cash Flows | 6 | |||||||
Notes to Unaudited Condensed Consolidated Financial Statements | 7 | |||||||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 27 | ||||||
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 42 | ||||||
Item 4. | Controls and Procedures | 43 | ||||||
PART II. | OTHER INFORMATION | 44 | ||||||
Item 1. | Legal Proceedings | 44 | ||||||
Item 1A. | Risk Factors | 44 | ||||||
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 45 | ||||||
Item 3. | Defaults Upon Senior Securities | 45 | ||||||
Item 4. | Mine Safety Disclosures | 45 | ||||||
Item 5. | Other Information | 45 | ||||||
Item 6. | Exhibits | 46 | ||||||
Signatures | 47 | |||||||
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (this “Report”) contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Forward-looking statements can be identified by words such as: “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “project,” “estimate,” “expect,” “strategy,” “future,” “likely,” “may,” “should,” “will” and similar references to future periods. Examples of forward-looking statements include, among others, statements we make regarding:
•Expected operating results, such as revenue growth and earnings, including the integration of acquired businesses and assets into our operations, and our ability to service our indebtedness;
•Anticipated levels of capital expenditures and uses of capital;
•Current or future volatility in the credit markets and future market conditions;
•Potential or pending acquisition transactions or other strategic transactions, the timing thereof, the receipt of necessary approvals to close such acquisitions, our ability to finance such acquisitions, and our ability to achieve the intended operational, financial, and strategic benefits from any such transactions;
•Expectations of the effect on our financial condition of claims, litigation, environmental costs, contingent liabilities, and governmental and regulatory investigations and proceedings;
•Production and capacity forecasts for the natural gas and oil industry;
•Strategy for customer retention, growth, fleet maintenance, market position and financial results;
•Interest rate hedges; and
•Strategy for risk management.
Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not place undue reliance on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following:
•A reduction in the demand for natural gas and oil;
•The loss of, or the deterioration of the financial condition of, any of our key customers;
•Nonpayment and nonperformance by our customers, suppliers or vendors;
•Competitive pressures that may cause us to lose market share;
•Our ability to successfully integrate any acquired businesses, including Distributed Power Solutions, LLC (“DPS”), and realize the expected benefits thereof in the expected timeframe or at all;
•Our ability to source and fund purchases of additional compression and power generation equipment;
•Our ability to obtain, perform under and maintain strategic agreements and relationships;
•Changes in the distributed power industry, including any decreases in the demand for electricity and distributed power as a result of development of alternative power generation technologies, changes in the availability of grid power, or otherwise;
•Hazards customary to the operation of high voltage transmission and distribution systems;
•Risks associated with our diversification into new lines of business, including distributed power generation, and our limited operating experience in that business;
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•A deterioration in general economic, business, geopolitical or industry conditions, including as a result of the conflict between Russia and Ukraine, the conflict and potential regime change in Iran and the associated disruption to the Strait of Hormuz as well as other hostilities in the Middle East and developments between the United States and Venezuela, and slower economic growth in the United States;
•A downturn in the economic environment, as well as continued inflationary pressures;
•The outcome of any pending internal review or any future related government enforcement actions;
•Tax legislation and the impact of changes to applicable tax laws, and administrative initiatives or challenges to our tax positions;
•The loss of key management, operational personnel or qualified technical personnel;
•Our dependence on a limited number of suppliers;
•The cost of compliance with existing and new governmental regulations, as well as the associated uncertainty given the current U.S. federal government administration;
•Changes in trade policies and regulations, including increases or changes in duties, current and potentially new tariffs or quotas and other similar measures, as well as the potential direct and indirect impact of retaliatory tariffs and other actions;
•The cost of compliance with regulatory initiatives and stakeholders’ pressures, including sustainability and corporate responsibility;
•The inherent risks associated with our operations, such as equipment defects and malfunctions;
•Our reliance on third-party components for use in our information technology (“IT”) systems;
•Legal and reputational risks and expenses relating to the privacy, use and security of employee and client information;
•Threats of cyber attacks or terrorism;
•Agreements that govern our debt contain features that may limit our ability to operate our business and fund future growth and also increase our exposure to risk during adverse economic conditions;
•Volatile and/or elevated interest rates and associated central bank policy actions;
•Our ability to access the capital and credit markets or borrow on affordable terms (or at all) to obtain additional capital that we may require;
•Major natural disasters, severe weather events or other similar events that could disrupt operations;
•Unionization of our labor force, labor interruptions and new or amended labor regulations;
•Renewal of insurance;
•The effectiveness of our disclosure controls and procedures; and
•Such other factors set forth in Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, and the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of this Report.
Any forward-looking statement made by us in this Report is based only on information currently available to us and speaks only as of the date on which it is made. Except as may be required by applicable law, we undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise.
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PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
1
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KODIAK GAS SERVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
| (in thousands, except share and per share data) | June 30, 2026 | December 31, 2025 | ||||||||||||
| Assets | ||||||||||||||
| Current assets: | ||||||||||||||
| Cash and cash equivalents | $ | $ | ||||||||||||
Accounts receivable, net of allowance $ | ||||||||||||||
| Inventories, net | ||||||||||||||
| Contract assets | ||||||||||||||
| Prepaid expenses and other current assets | ||||||||||||||
| Total current assets | ||||||||||||||
| Property, plant and equipment, net | ||||||||||||||
| Operating lease right-of-use assets, net | ||||||||||||||
| Finance lease right-of-use assets, net | ||||||||||||||
| Goodwill | ||||||||||||||
| Identifiable intangible assets, net | ||||||||||||||
| Fair value of derivative instruments | ||||||||||||||
| Other assets | ||||||||||||||
| Total assets | $ | $ | ||||||||||||
| Liabilities and Stockholders’ Equity | ||||||||||||||
| Current liabilities: | ||||||||||||||
| Accounts payable | $ | $ | ||||||||||||
| Accrued liabilities | ||||||||||||||
| Contract liabilities | ||||||||||||||
| Total current liabilities | ||||||||||||||
| Long-term debt, net of unamortized debt issuance cost | ||||||||||||||
| Operating lease liabilities | ||||||||||||||
| Finance lease liabilities | ||||||||||||||
| Deferred tax liabilities | ||||||||||||||
| Other liabilities | ||||||||||||||
| Total liabilities | ||||||||||||||
Commitments and Contingencies (Note 13) | ||||||||||||||
| Stockholders’ equity: | ||||||||||||||
Preferred stock, ( | ||||||||||||||
Common stock, ( | ||||||||||||||
| Additional paid-in capital | ||||||||||||||
Treasury stock, at cost; | ( | ( | ||||||||||||
| Noncontrolling interest | ||||||||||||||
| Accumulated other comprehensive income (loss) | ( | |||||||||||||
| (Accumulated deficit) Retained earnings | ( | |||||||||||||
| Total stockholders’ equity | ||||||||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
2
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KODIAK GAS SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||
| June 30, | June 30, | |||||||||||||||||||||||||
(in thousands, except per share data) | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||
| Compression Infrastructure | $ | $ | $ | $ | ||||||||||||||||||||||
| Power Infrastructure | ||||||||||||||||||||||||||
| Other Services | ||||||||||||||||||||||||||
| Total revenues | ||||||||||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||||
| Cost of operations (exclusive of depreciation and amortization shown below): | ||||||||||||||||||||||||||
| Compression Infrastructure | ||||||||||||||||||||||||||
| Power Infrastructure | ||||||||||||||||||||||||||
| Other Services | ||||||||||||||||||||||||||
| Depreciation and amortization | ||||||||||||||||||||||||||
| Selling, general and administrative | ||||||||||||||||||||||||||
| Loss on sale of assets | ||||||||||||||||||||||||||
| Total operating expenses | ||||||||||||||||||||||||||
| Income from operations | ||||||||||||||||||||||||||
| Other expenses: | ||||||||||||||||||||||||||
| Interest expense | ( | ( | ( | ( | ||||||||||||||||||||||
| Loss on extinguishment of debt | ( | |||||||||||||||||||||||||
| Other expense, net | ( | ( | ( | ( | ||||||||||||||||||||||
| Total other expenses, net | ( | ( | ( | ( | ||||||||||||||||||||||
| Income before income taxes | ||||||||||||||||||||||||||
| Income tax expense | ||||||||||||||||||||||||||
| Net income | ||||||||||||||||||||||||||
| Less: Net income attributable to noncontrolling interests | ||||||||||||||||||||||||||
| Net income attributable to common shareholders | $ | $ | $ | $ | ||||||||||||||||||||||
| Earnings per share attributable to common shareholders: | ||||||||||||||||||||||||||
| Basic | $ | $ | $ | $ | ||||||||||||||||||||||
| Diluted | $ | $ | $ | $ | ||||||||||||||||||||||
| Weighted average shares outstanding: | ||||||||||||||||||||||||||
| Basic | ||||||||||||||||||||||||||
| Diluted | ||||||||||||||||||||||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
3
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KODIAK GAS SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME
(UNAUDITED)
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| June 30, | June 30, | ||||||||||||||||||||||
(in thousands) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Net income | $ | $ | $ | $ | |||||||||||||||||||
Cash flow hedges, net of tax effects of $ | ( | ( | |||||||||||||||||||||
| Comprehensive income | |||||||||||||||||||||||
| Less: Net income attributable to noncontrolling interests | |||||||||||||||||||||||
| Comprehensive income attributable to common shareholders | $ | $ | $ | $ | |||||||||||||||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
4
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KODIAK GAS SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(UNAUDITED)
| Common Shares | Preferred Shares | Additional Paid- In Capital | Treasury Shares | Noncontrolling Interest | Accumulated other comprehensive income (loss) | (Accumulated Deficit) Retained Earnings | Total Stockholders’ Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(in thousands, except per share data) | Shares | Amount | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, January 1, 2025 | $ | $ | $ | $ | ( | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred shares and noncontrolling interest converted to common shares | ( | ( | — | — | ( | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity compensation | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends and dividends equivalents paid to stockholders ($ | — | — | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted Stock Units vested, net of | — | — | ( | — | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Repurchase of common shares | — | — | — | — | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net effect on deferred taxes and taxes payable related to the vesting of restricted stock | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interest | — | — | — | — | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2025 | $ | $ | $ | $ | ( | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | — | $ | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred shares and noncontrolling interest converted to common shares | — | — | — | — | ( | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity compensation | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends and dividend equivalents paid to stockholders ($ | — | — | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted Stock Units vested, net | — | — | — | ( | — | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Repurchase of common shares | — | — | — | — | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net effect on deferred taxes and taxes payable related to the vesting of restricted stock | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interest | — | — | — | — | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2025 | $ | $ | $ | $ | ( | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, January 1, 2026 | $ | $ | $ | $ | ( | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred shares and noncontrolling interest converted to common shares | ( | ( | — | — | ( | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity compensation | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends and dividends equivalents paid to stockholders ($ | — | — | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted Stock Units vested, net of | — | — | ( | — | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net effect on deferred taxes and taxes payable related to the vesting of restricted stock | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interest | — | — | — | — | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2026 | $ | $ | $ | $ | ( | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common shares, net of offering costs | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common shares related to DPS Acquisition | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred shares and noncontrolling interest converted to common shares | — | — | — | — | — | — | ( | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity compensation | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends and dividends equivalents paid to stockholders ($ | — | — | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted Stock Units vested, net of | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net effect on deferred taxes and taxes payable related to the vesting of restricted stock | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interest | — | — | — | — | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2026 | $ | $ | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
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KODIAK GAS SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| Six Months Ended June 30, | |||||||||||
| (in thousands) | 2026 | 2025 | |||||||||
| Cash flows from operating activities: | |||||||||||
| Net income | $ | $ | |||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| Equity compensation expense | |||||||||||
| Amortization of debt issuance costs | |||||||||||
| Non-cash lease expense | |||||||||||
| Provision for credit losses | |||||||||||
| Inventory reserve | |||||||||||
| Loss on sale of assets | |||||||||||
| Amortization of interest rate swap | |||||||||||
| Deferred tax provision | |||||||||||
| Loss on extinguishment of debt | |||||||||||
| Changes in operating assets and liabilities, net of acquisition | |||||||||||
| Accounts receivable | ( | ||||||||||
| Inventories | ( | ||||||||||
| Contract assets | ( | ||||||||||
| Prepaid expenses and other current assets | |||||||||||
| Accounts payable | ( | ( | |||||||||
| Accrued and other liabilities | ( | ( | |||||||||
| Contract liabilities | ( | ||||||||||
| Other assets | ( | ||||||||||
| Net cash provided by operating activities | |||||||||||
| Cash flows from investing activities: | |||||||||||
| Acquisition of DPS, net of cash acquired | ( | ||||||||||
| Purchase of property, plant and equipment | ( | ( | |||||||||
| Proceeds from sale of assets | |||||||||||
| Net cash used for investing activities | ( | ( | |||||||||
| Cash flows from financing activities: | |||||||||||
| Borrowings on debt instruments | |||||||||||
| Payments on debt instruments | ( | ( | |||||||||
| Principal payments on other borrowings | ( | ( | |||||||||
| Payment of debt issuance cost | ( | ||||||||||
| Principal payments on finance leases | ( | ( | |||||||||
| Proceeds from issuance of common stock, net of issuance costs | |||||||||||
| Dividends paid to stockholders | ( | ( | |||||||||
| Repurchase of common shares | ( | ||||||||||
| Cash paid for shares withheld to cover taxes | ( | ( | |||||||||
| Net effect on deferred taxes and taxes payable related to the vesting of restricted stock | |||||||||||
| Distributions to noncontrolling interest | ( | ( | |||||||||
| Net cash provided by (used for) financing activities | ( | ||||||||||
| Net increase in cash and cash equivalents | |||||||||||
| Cash and cash equivalents - beginning of period | |||||||||||
| Cash and cash equivalents - end of period | $ | $ | |||||||||
| Supplemental cash disclosures: | |||||||||||
| Cash paid for interest | $ | $ | |||||||||
| Cash paid for taxes | $ | $ | |||||||||
| Supplemental disclosure of non-cash investing activities: | |||||||||||
| Increase in accrued capital expenditures | $ | ( | $ | ( | |||||||
| Non-cash finance lease additions | $ | $ | |||||||||
| Supplemental disclosure of non-cash financing activities: | |||||||||||
| Fair value changes in interest rate swap | $ | ( | $ | ||||||||
| Issuance of common shares related to DPS Acquisition | $ | $ | |||||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
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KODIAK GAS SERVICES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. Organization and Description of Business
Kodiak Gas Services, Inc. (the “Company” or “Kodiak”) is an operator of energy infrastructure and related services in the U.S. On April 1, 2026, the Company completed the acquisition of Distributed Power Solutions, LLC (“DPS”), which expanded its business beyond contract compression to include distributed and behind-the-meter power generation solutions, including the provision of power generation equipment and related services such as equipment installation, operation, maintenance and other support services.
Effective for the quarter ended June 30, 2026, the Company revised its reportable segments and now reports three
The Company operates compression units under primarily fixed-revenue contracts with upstream and midstream customers. The Company also provides power generation services under customer arrangements that generally include fixed monthly payments for power generation equipment and associated capacity, together with service-based fees for delivery, installation, operation, maintenance and other ancillary support services. These arrangements support customers across a variety of end markets including digital infrastructure, energy microgrid, manufacturing and other infrastructure and generally range from short-term to multi-year agreements.
Kodiak operates its business and the majority of the Company’s assets and liabilities under its subsidiary Kodiak Gas Services, LLC (“Kodiak Services”). Kodiak is the primary beneficiary of Kodiak Services, which is a variable interest entity, since the Company has the power to direct the activities that most significantly impact Kodiak Services’ economic performance and the Company has the right (and obligation) to receive benefits (and absorb losses) of Kodiak Services that could be potentially significant to the Company.
2. Basis of Presentation
Recently Issued Accounting Pronouncements
In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses (DISE) and in January 2025, the FASB issued ASU 2025-01,Clarifying the Effective Date. These updates require disaggregated disclosure of specific expense categories, including purchases of inventory, employee compensation, depreciation, and amortization, within relevant income statement captions and the total amount of selling expenses. This guidance is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. We are currently evaluating the impact of this standard on our disclosures.
3. Acquisitions
Distributed Power Solutions
On April 1, 2026, the Company completed the acquisition of DPS, a provider of turnkey distributed and behind‑the‑meter power generation solutions. DPS has been rebranded as Kodiak Power Solutions, a division of the Company. Kodiak Services acquired 100 % of the outstanding equity interests of DPS (the “DPS Acquisition”). The DPS Acquisition expands
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the Company’s platform beyond contract compression into distributed power generation and adds generation capacity, with customers across data center, microgrid, manufacturing and energy infrastructure end markets. DPS engaged in the rental and leasing of machinery for power generation to customers in the oil and gas, utility, data center, industrial, and commercial sectors. Strategically, the DPS Acquisition is expected to expand the Company’s distributed power generation capabilities and enhance revenue growth through increased scale and complementary service offerings.
The total consideration consisted of $587.3 million of cash, reflecting adjustments for certain additional power generation assets purchased prior to closing, indebtedness and working capital, and 2.4 million shares of the Company’s common stock, par value $0.01 per share with an estimated fair value of $139.0 million based on the Company’s closing stock price of $57.90 per share, on April 1, 2026.
The acquisition-date fair value of the consideration transferred and the preliminary allocation of the purchase price as of the acquisition date is as follows (in thousands):
| Fair value of consideration transferred | $ | |||||||
| Recognized amounts of identifiable assets acquired and liabilities assumed | ||||||||
| Cash and cash equivalents | $ | |||||||
| Accounts receivable | ||||||||
Intangible assets (1) | ||||||||
| Property, plant, and equipment | ||||||||
| Other current assets | ||||||||
| Non-current assets | ||||||||
| Total assets acquired | ||||||||
| Deferred revenue | ||||||||
| Other current liabilities | ||||||||
| Other non-current liabilities | ||||||||
| Total liabilities assumed | ||||||||
| Total identifiable assets acquired less liabilities assumed | $ | |||||||
| Goodwill acquired | $ | |||||||
(1) | Identifiable intangibles acquired include customer relationships with a fair value of $ | ||||
The allocation of purchase price to DPS's net assets and liabilities as of April 1, 2026 remains preliminary and subject to the potential identification of additional assets, contingencies, or revised fair value calculations. Accordingly, the Company continues to evaluate information necessary to determine the fair values of certain acquired assets and assumed liabilities. The preliminary purchase price allocation is subject to change during the measurement period as additional information becomes available, and actual allocation amounts will be disclosed in subsequent filings and completed no later than one year from the closing of the DPS Acquisition.
The purchase price was allocated to the assets acquired and liabilities assumed based on their respective fair values. The methodologies used, and key assumptions made, were based on a combination of the income approach, market approach, and cost approach. The fair value of the acquired property, plant and equipment was determined using the cost approach, which involved estimating the replacement cost and adjusting for age, condition and utility, and for trailers and vehicles, the market approach. The fair value of the acquired intangible assets was determined using the income approach, including the multi-period excess earnings method. Several significant assumptions were involved in the application of these valuation methods, including revenue growth rate, contributory asset charges, probability of renewal curves, discount rates and estimated useful lives.
The fair value of the assets acquired and liabilities assumed are categorized in the following levels:
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Level 1 - Cash and cash equivalents, based on observable inputs such as quoted prices in active markets at the measurement date for identical assets or liabilities.
Level 2 - Receivables and other current assets, non-current assets, deferred revenue and other current and non-current liabilities; based on inputs that are observable such as quoted prices in markets that are not active, or inputs which are observable, for substantially the full term of the asset or liability.
Level 3 - Intangible assets and property, plant, and equipment; based on unobservable inputs for which there is little or no market data and which assumptions are made about how market participants would price the assets or liabilities; The Company used a combination of the income, cost and market approaches based on various assumptions and inputs.
The preliminary allocation of purchase price includes approximately $344.8 million allocated to goodwill and is supported by the expected strategic benefits (discussed above) to be generated from the DPS Acquisition. The goodwill, which is deductible for tax purposes, has been allocated to our Power Infrastructure reportable segment. The acquired property, plant and equipment is stated at fair value, and depreciation on the acquired property, plant and equipment is computed using the straight-line method over the estimated remaining useful lives of each asset in line with the Company’s polices.
For the six month period ended June 30, 2026, our revenues include $37.0 million associated with the DPS Acquisition after the closing on April 1, 2026. It is impracticable to determine the earnings recorded in the condensed consolidated statements of operations for the six month period ended June 30, 2026 as we initiated the integration of a substantial portion of DPS into our ongoing operations during the current period. In addition, acquisition-related costs of approximately $3.3 million and $11.6 million, respectively, were incurred during the three and six month periods ended June 30, 2026 related to external legal fees, transaction consulting fees, and due diligence costs. These costs have been recognized in selling, general, and administrative expenses in the condensed consolidated statements of operations.
Unaudited Supplemental Pro Forma Financial Information
The following unaudited supplemental pro forma information has been prepared as though the DPS Acquisition had occurred on January 1, 2025. The pro forma information is presented for illustrative purposes only and is based on estimates and assumptions we deemed appropriate. The following pro forma information is not necessarily indicative of the historical results that would have been achieved if the acquisition had occurred in the past, and our operating results may have been different from those reflected in the pro forma information below. Therefore, the pro forma information should not be relied upon as an indication of the operating results that we would have achieved if the transaction had occurred on January 1, 2025 or the future results that we will achieve after the transactions. The pro forma results include certain adjustments, primarily due to increases in interest expense due to additional borrowings incurred to finance the acquisition and amortization of debt issuance costs and depreciation and amortization expense. Non-recurring acquisition related costs including transaction costs, such as legal, accounting, valuation and other professional services as well as integration costs such as severance are included within the pro forma revenue and net income below.
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||||||||||||
| Earnings | $ | $ | $ | $ | ||||||||||||||||||||||
4. Revenue Recognition
The Company generates revenue from compression and power infrastructure solutions and related services. Revenue is recognized in accordance with either Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers, or ASC Topic 842, Leases, depending on the nature of the arrangement.
ASC 606 – Revenue from Contracts with Customers
Revenues within the Compression Infrastructure and Other Services segments are recognized under ASC 606. The Company provides integrated equipment and services under customer contracts, which are generally accounted for as a single performance obligation comprised of a stand-ready series of services.
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ASC 842 – Leases
Revenue within the Power Infrastructure segment is primarily derived from arrangements that provide customers with the right to use power generation equipment and is accounted for under ASC 842. These arrangements are generally classified as operating leases, and lease revenue is recognized on a straight-line basis over the contractual term, which typically ranges from several months to multiple years.
Certain Power Infrastructure arrangements also include services such as delivery, installation, operation, maintenance and other support activities. To the extent such services are determined to be distinct from the lease component, they are accounted for separately under ASC 606 within the Other Services segment.
Judgment is required in evaluating customer arrangements, including determining whether an arrangement contains a lease, identifying lease and non-lease components and assessing whether non-lease services are distinct. For arrangements accounted for under ASC 606, the Company also evaluates whether the promised goods and services represent a single performance obligation, including a stand-ready series of services, or multiple performance obligations. For certain qualifying arrangements, the Company has elected the practical expedient to not separate lease and non-lease components and account for the combined component under the applicable guidance based on the predominant component.
The following table disaggregates the Company’s revenue by type and timing of provision of services or transfer of goods:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| June 30, | June 30, | ||||||||||||||||||||||
(in thousands) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| ASC 606 | |||||||||||||||||||||||
| Services provided over time: | |||||||||||||||||||||||
| Compression Infrastructure | $ | $ | $ | $ | |||||||||||||||||||
| Other Services | |||||||||||||||||||||||
| Total services provided over time | |||||||||||||||||||||||
| Services provided or goods transferred at a point in time: | |||||||||||||||||||||||
| Other Services | |||||||||||||||||||||||
| Total services provided or goods transferred at a point in time | |||||||||||||||||||||||
| ASC 842 | |||||||||||||||||||||||
| Equipment rental provided over time: | |||||||||||||||||||||||
| Power Infrastructure | |||||||||||||||||||||||
| Total revenue | $ | $ | $ | $ | |||||||||||||||||||
Contract Assets and Liabilities
Contract assets and contract liabilities presented below relate only to contracts accounted for under ASC 606 and do not include balances associated with lease arrangements accounted for under ASC 842, which are primarily included within the Power Infrastructure segment.
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Performance Obligations
The remaining performance obligations disclosure applies only to revenues accounted for under ASC 606 and does not include amounts related to lease arrangements accounted for under ASC 842, which are primarily associated with the Company’s Power Infrastructure segment.
As of June 30, 2026, we had $2.6 billion of remaining performance obligations related to our Compression Infrastructure segment.
The Company expects to recognize these remaining performance obligations as follows:
| (in thousands) | Remainder of 2026 | 2027 | 2028 | 2029 | 2030 | Thereafter | Total | ||||||||||||||||||||||||||||||||||
| Remaining performance obligations | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
As of June 30, 2026, the aggregate amount of transaction price allocated to unsatisfied performance obligations related to the Company’s revenue for the Other Services segment is $18.9 million, of which $17.0 million is expected to be recognized by December 31, 2026, and the remaining will be recognized in 2027.
The Company has a Power Infrastructure lease and service agreement with a customer for (i) the lease of power generation equipment and (ii) the operation and maintenance services for the equipment. The initial lease term ends on April 1, 2028 with options to renew for up to an additional 12 years with payments based on a fixed monthly fee, a portion of which is escalated annually based on the CPI index. Rental revenues under the initial term of this agreement are recognized on a straight-line basis and would be $13.7 million, $27.4 million, and $6.9 million for the remainder of the year ending December 31, 2026 and the years ending December 31, 2027 and 2028, respectively.
5. Accounts Receivable, net
The allowances for credit losses were $0.8 million and $13.0 million as of June 30, 2026, and December 31, 2025, respectively, which represents the Company’s best estimate of the amount of probable credit losses included within the Company’s accounts receivable balance.
The changes in the Company’s allowance for credit losses were as follows:
(in thousands) | Allowances for Credit Losses | ||||
Balance at January 1, 2025 | $ | ||||
| Current-period provision for expected credit losses | |||||
| Write-offs charged against allowance | ( | ||||
Balance at December 31, 2025 | $ | ||||
| Current-period provision for expected credit losses | |||||
| Write-offs charged against allowance | ( | ||||
Balance at June 30, 2026 | $ | ||||
6. Inventories, net
Inventories consisted of the following:
(in thousands) | June 30, 2026 | December 31, 2025 | |||||||||
| Non-serialized parts | $ | $ | |||||||||
| Serialized parts | |||||||||||
| Inventory reserve | ( | ( | |||||||||
| Inventories, net | $ | $ | |||||||||
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7. Property, Plant and Equipment, net
Property, plant and equipment, net consisted of the following:
(in thousands) | June 30, 2026 | December 31, 2025 | |||||||||
| Compression equipment | $ | $ | |||||||||
| Power equipment | |||||||||||
| Field equipment | |||||||||||
| Buildings and shipping containers | |||||||||||
| Technology hardware and software | |||||||||||
| Trailers and vehicles | |||||||||||
| Leasehold improvements | |||||||||||
| Furniture and fixtures | |||||||||||
| Land | |||||||||||
| Total property, plant and equipment, gross | |||||||||||
| Less: accumulated depreciation | ( | ( | |||||||||
| Property, plant and equipment, net | $ | $ | |||||||||
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8. Goodwill and Identifiable Intangible Assets, net
Goodwill
The Company allocates goodwill across its Compression Infrastructure and Power Infrastructure reporting units.
The carrying amount of goodwill, including changes therein, is shown below:
| Compression Infrastructure | Power Infrastructure | Total Goodwill | ||||||||||||||||||
| Balance as of December 31, 2025 | $ | $ | $ | |||||||||||||||||
Acquisition of DPS (1) | ||||||||||||||||||||
| Balance as of June 30, 2026 | $ | $ | $ | |||||||||||||||||
Intangible Assets
The Company’s identifiable intangible assets were as follows:
| June 30, 2026 | December 31, 2025 | ||||||||||||||||||||||||||||||||||
(in thousands) | Original Cost | Accumulated Amortization | Net Amount | Original Cost | Accumulated Amortization | Net Amount | |||||||||||||||||||||||||||||
| Trade name | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
| Customer relationships | ( | ( | |||||||||||||||||||||||||||||||||
| Internal use software | ( | ( | |||||||||||||||||||||||||||||||||
| Total identifiable intangible assets | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
Amortization expense was $5.1 million and $9.0 million for the three and six months ended June 30, 2026, respectively, and is recorded within depreciation and amortization in the condensed consolidated statements of operations. Amortization expense was $3.4 million and $6.7 million for the three and six months ended June 30, 2025, respectively.
As of June 30, 2026 and December 31, 2025, the remaining weighted average amortization period for identifiable intangible assets recognized is 10.4 years and 11.0 years, respectively.
Estimated future amortization expense related to intangible assets as of June 30, 2026 is as follows:
(in thousands) | Amount | ||||
| Years ending December 31, | |||||
| Remainder of 2026 | $ | ||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| 2030 | |||||
| Thereafter | |||||
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9. Debt and Credit Facilities
Long-term debt consisted of the following:
(in thousands) | June 30, 2026 | December 31, 2025 | |||||||||
| ABL Facility | $ | $ | |||||||||
| 2029 Senior Notes | |||||||||||
| 2031 Senior Notes | |||||||||||
| 2033 Senior Notes | |||||||||||
| 2035 Senior Notes | |||||||||||
| Total debt outstanding | |||||||||||
| Add: unamortized debt premiums | |||||||||||
| Less: unamortized debt issuance cost | ( | ( | |||||||||
| Long-term debt, net of unamortized debt issuance cost | |||||||||||
| Other borrowings | |||||||||||
| Total long-term debt and other borrowings | $ | $ | |||||||||
ABL Facility
On April 2, 2026, Kodiak and Kodiak Services entered into the Fifth Amendment to the Fourth Amended and Restated Credit Agreement (“Fifth Amendment”) with the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (as amended or restated from time to time, the “ABL Credit Agreement” or “ABL Facility”), which amends the Fourth Amended and Restated Credit Agreement dated as of March 22, 2023. The Fifth Amendment, among other things, modifies the calculation of the leverage ratio. Through June 30, 2026, the Fifth Amendment allows Kodiak Services to deduct from its total indebtedness the net proceeds from the issuance of the 2031 Senior Notes, in addition to the existing $50.0 million cash netting cap, so long as such proceeds remain as unrestricted cash or cash equivalents.
The ABL Facility is a revolving credit arrangement with a lockbox feature, where customer payments may be sent to a bank account managed by the agent and used to pay down borrowings if availability drops below $100.0 million for five consecutive business days. As of June 30, 2026, and December 31, 2025, availability exceeded this threshold, so the balance was classified as long-term in accordance with its maturity.
Interest on the outstanding borrowings under the ABL Facility is payable monthly and accrues based on variable rates of the Secured Overnight Financing Rate (“SOFR”) plus an applicable rate ranging from 1.75 % to 2.50 % or prime rate plus an applicable rate ranging from 0.75 % to 1.50 % depending on the leverage ratio as of the most recently ended quarter. As of June 30, 2026, and December 31, 2025, the weighted average interest rate on the ABL Facility was 6.03 % and 5.72 %, respectively, excluding the effect of the interest rate swap. The Company pays an annualized commitment fee of 0.25 % on the unused portion of its ABL Facility.
The ABL Facility provides for commitments totaling $2.0 billion and a maturity date of September 5, 2030. As of June 30, 2026, $14.6 million in letters of credit were outstanding. As of June 30, 2026, borrowings under our ABL Facility totaled $380.9 million.
As of June 30, 2026, we were in compliance with all covenants under the ABL Facility. All obligations under the ABL Facility are collateralized by essentially all the assets of the Company.
Redemption of 2029 Senior Notes
On March 11, 2026, we provided notice to the holders of our 2029 Senior Notes that, contingent on receipt of the proceeds from the 2031 Senior Notes, the 2029 Senior Notes would be redeemed at a premium on April 10, 2026. On March 30, 2026, utilizing a portion of the proceeds from the 2031 Senior Notes (as defined below), we made an irrevocable deposit of funds with the trustee to satisfy and discharge the 2029 Senior Notes in accordance with the terms of the applicable indenture, which resulted in a legal defeasance under GAAP (the “Defeasance”).
The Defeasance required a cash outlay of $785.5 million, which was irrevocably deposited with the trustee to fund interest payments on the 2029 Senior Notes through April 10, 2026, when the 2029 Senior Notes were redeemed at a premium, as well as fund the redemption of the 2029 Senior Notes in full. As a result of the Defeasance, the Company recognized a loss on early extinguishment of debt of $36.5 million for the six months ended June 30, 2026, which represents the early
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redemption premium of $27.2 million, the write-off of deferred financing costs of $7.8 million, and accrued interest of $1.5 million.
2031 Senior Notes
On March 20, 2026, Kodiak Services issued $1.0 billion in aggregate principal amount of 5.875 % senior unsecured notes due 2031 (the “2031 Senior Notes”). A portion of the net proceeds from the 2031 Senior Notes were used by the Company to redeem all of Kodiak Services’ outstanding 7.25 % Senior Notes due 2029 at a redemption price equal to 103.625 % of the $750.0 million.
The 2031 Senior Notes are redeemable at the Company’s option, in whole or in part, prior to April 1, 2028, at a redemption price equal to 100 % of their principal amount plus a “make-whole” premium and any accrued and unpaid interest up to the redemption date. This make-whole premium is determined as the excess, if any, of the present value at such time of the redemption plus any required interest payments through April 1, 2028, discounted semi-annually to the redemption date using the applicable treasury rate plus 0.50 % over the principal amount of the 2031 Senior Notes. Prior to April 1, 2028, the Company may also redeem up to 40 % of the aggregate principal amount of the 2031 Senior Notes using an amount not greater than the net cash proceeds from certain equity offerings at a redemption price of 105.875 % of the principal amount plus any accrued and unpaid interest up to the redemption date, provided that at least 50 % of the original aggregate principal amount remains outstanding following such redemption and the redemption occurs within 180 days following the equity offering’s closing.
On or after April 1, 2028, Kodiak Services may, on one or more occasions, redeem any or all of the 2031 Senior Notes at the redemption prices set forth below plus accrued and unpaid interest up to the redemption date, beginning on April 1 of the specified years indicated below.
Percentage of Principal Amount | ||||||||
2028 | ||||||||
2029 | ||||||||
2030 and thereafter | ||||||||
Fees and costs totaling $14.3 million were incurred related to the 2031 Senior Notes and are amortized over the life of the notes to interest expense.
2033 Senior Notes
On September 5, 2025, Kodiak Services issued $600.0 million in aggregate principal amount of 6.50 % senior unsecured notes due 2033 (the “2033 Senior Notes”). On September 22, 2025, Kodiak Services completed a private offering of an additional $170.0 million of 2033 Senior Notes for $173.4 million. The excess fair value above the face value was recognized as a bond premium, which is amortized as a reduction in interest expense over the remaining term of the 2033 Senior Notes. The net proceeds from the 2033 Senior Notes were used by the Company to repay a portion of the debt outstanding under the ABL Facility.
The 2033 Senior Notes can be redeemed by the Company on or after October 1, 2028, at specified redemption prices plus accrued and unpaid interest. Additionally, prior to October 1, 2028, the Company may redeem up to 40 % of the 2033 Senior Notes using proceeds from certain equity offerings at specified redemption prices and make-whole premiums plus any accrued and unpaid interest provided at least 50 % of the original principal remains and redemption occurs within 180 days of the offering.
2035 Senior Notes
On September 5, 2025, Kodiak Services issued $600.0 million in aggregate principal amount of 6.750 % senior unsecured notes due 2035 (the “2035 Senior Notes”). Subsequently, on September 22, 2025, Kodiak Services completed a private offering of an additional $30.0 million of 2035 Senior Notes for $30.9 million. The excess fair value above the face value was recognized as a bond premium, which is amortized as a reduction in interest expense over the remaining term of the 2035 Senior Notes. The net proceeds from the 2035 Senior Notes were utilized for the same purposes described above for the 2033 Senior Notes.
The 2035 Senior Notes can be redeemed by the Company on or after October 1, 2030, at specified redemption prices plus accrued and unpaid interest. Additionally, prior to October 1, 2030, the Company may redeem up to 40 % of the 2035 Senior Notes using proceeds from certain equity offerings at specified redemption prices and make-whole premiums plus
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any accrued and unpaid interest provided at least 50 % of the original principal remains and redemption occurs within 180 days of the offering.
The indentures governing the 2031 Senior Notes, 2033 Senior Notes and 2035 Senior Notes contain covenants that limit the ability of the Company and its restricted subsidiaries from actions such as distributing or redeeming equity, making certain investments, incurring additional debt, creating liens, selling assets, merging, engaging in affiliate transactions, and forming unrestricted subsidiaries, with some exceptions. Most restrictions terminate if the 2031 Senior Notes, 2033 Senior Notes and 2035 Senior Notes receive investment grade ratings from any two of Moody’s, S&P, and Fitch, and no default exists. The indentures also include standard events of default.
As of June 30, 2026, the scheduled maturities of the Company’s long-term debt were as follows:
(in thousands) | Amount | ||||
| Years ended December 31, | |||||
| Remainder of 2026 | $ | ||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| 2030 | |||||
| Thereafter | |||||
| Total | $ | ||||
10. Derivative Instruments
The Company has entered into an interest rate swap, exchanging variable interest rates for fixed interest rates. The interest rate swap was designated as a cash flow hedge derivative instrument, and management evaluated hedge effectiveness and determined it to be highly effective as of June 30, 2026. See Note 11. Fair Value Measurements for details on the valuation of the interest rate swap.
The table below summarizes the amortization schedule related to the interest rate swap, which matures on September 5, 2030:
| Notional Amount | Period End | |||||||
| $ | 9/5/2030 | |||||||
The following table summarizes the effects of the Company’s derivative instruments on the condensed consolidated statements of operations:
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||
(in thousands) | June 30, | June 30, | ||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
Gain on cash flow hedges: | ||||||||||||||||||||||||||
| Interest expense | $ | $ | $ | $ | ||||||||||||||||||||||
11. Fair Value Measurements
The Company’s financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable, derivative instruments and long-term debt. The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable are representative of their respective Level 1 fair values due to the short-term maturity of these instruments.
The Company’s ABL Facility applies floating interest rates to outstanding amounts; therefore, the carrying amount of the ABL Facility approximates its Level 3 fair value. The fair value of our senior notes is determined by using Level 2 inputs, relying on quoted prices in less active markets.
The Company records derivative instruments at fair value using Level 2 inputs of the fair value hierarchy. The interest rate swap is valued using a discounted cash flow analysis based on available market data on the expected cash flows of each
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derivative using observable inputs, including interest rate curves and credit spreads. See Note 10. Derivative Instruments for more details.
The following table summarizes the fair value of our interest rate swap, measured at fair value on a recurring basis, and our long‑term debt disclosed at fair value:
Carrying Value (1) | June 30, 2026 | ||||||||||||||||||||||||||||
(in thousands) | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||
| Interest rate swap- non-current asset | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| 2031 Senior Notes | |||||||||||||||||||||||||||||
| 2033 Senior Notes | |||||||||||||||||||||||||||||
| 2035 Senior Notes | |||||||||||||||||||||||||||||
| ABL Facility | |||||||||||||||||||||||||||||
Carrying Value (1) | December 31, 2025 | ||||||||||||||||||||||||||||
(in thousands) | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||
| Interest rate swap- non-current asset | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| 2029 Senior Notes | |||||||||||||||||||||||||||||
| 2033 Senior Notes | |||||||||||||||||||||||||||||
| 2035 Senior Notes | |||||||||||||||||||||||||||||
| ABL Facility | |||||||||||||||||||||||||||||
(1) | See Note 9. Debt and Credit Facilities for a reconciliation of the long-term debt’s presentation in the condensed consolidated balance sheets. | ||||
12. Stockholders’ Equity
Issuance of Common stock
On May 13, 2026, the Company completed an underwritten public offering of 10.6 million shares of its common stock at a public offering price of $71.00 per share. The underwriters exercised their option to purchase an additional 1.6 million shares, which was fully exercised on May 14, 2026. The offering, including the sale of the option shares, closed on May 15, 2026. The Company received aggregate net proceeds of approximately $836.1 million, after deducting underwriting discounts and offering expenses.
Share Repurchases
Kodiak’s board of directors (“Board”) has authorized a share repurchase program of up to $100.0 million of the Company’s outstanding common stock (the “Share Repurchase Program”) through December 31, 2026. As of June 30, 2026, $31.7 million remains available for repurchase under the Share Repurchase Program.
Preferred Stock
Holders of the Company’s preferred stock are entitled to one vote for each share, voting proportionally with holders of common stock. The preferred stock lacks economic benefits beyond its par value of $0.01 per share (with a maximum value of $50,000 ), as it does not participate in earnings or cash dividends of Kodiak. Rather, it solely represents a voting share. Each preferred stock holds an equal number of OpCo Units, representing economic interests in Kodiak’s subsidiary, Kodiak Services. Each OpCo Unit is redeemable at the option of the holder for (i) one share of common stock (along with cancellation of a corresponding share of preferred stock) or (ii) cash at Kodiak Services’ election, and subject to certain conditions. On or after April 1, 2029, Kodiak shall have the right to effect redemption of such OpCo Units (along with corresponding share of preferred stock). The OpCo Units represent and are accounted for as noncontrolling interests in Kodiak Services. For the six months ended June 30, 2026 and the year ended December 31, 2025, a total of 0.1 million and 0.5 million, respectively, shares of preferred stock and OpCo Units were converted into an equivalent number of common stock shares.
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2023 Omnibus Incentive Plan
On June 20, 2023, Kodiak’s Board authorized and adopted the Kodiak Gas Services, Inc. Omnibus Incentive Plan (the “Omnibus Plan”) for employees, consultants and directors. The Omnibus Plan enables Kodiak’s Board (or a committee authorized by Kodiak’s Board) to award incentive and non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, stock awards, dividend equivalents, other stock-based awards, cash awards and substitute awards intended to attract, retain and motivate key talent, including the Company’s named executive officers, while aligning compensation with long-term Company performance and shareholder returns. As of June 30, 2026, a total of 6.0 million shares of common stock has been reserved for issuance pursuant to awards under the Omnibus Plan.
Restricted Stock Units
Restricted stock units (“RSUs”) are time-based units that vest ratably over a three-year period, subject to continuous service through each vesting date. Stock-based compensation for RSUs is recognized on a straight-line basis over the requisite service period.
Performance Stock Units
Performance stock units (“PSUs”) cliff vest at the end of a three-year performance period, with the ultimate number of shares earned and issued ranging from 0 - 200 % of the number of shares subject to the PSU award based on the Company's achievement of certain predefined internal targets and the Company’s performance relative to its peers as described in the underlying PSU agreement, subject to continuous service through the end of the performance period. With respect to each PSU, each PSU holder is granted associated dividend equivalents rights. In the event that the Company declares and pays a regular cash dividend, on the record date for such dividend, the Company will accrue a dividend equivalent based on the number of PSUs expected to vest. The fair value of the market condition within the PSUs is determined using a Monte Carlo valuation model. Stock-based compensation for PSUs is recognized on a straight-line basis over the vesting period based on the probable performance outcome. The Company reassesses the probability of achieving the performance targets each reporting period and adjusts compensation expense accordingly.
The following table summarizes award activity under the Omnibus Plan for the six months ended June 30, 2026:
| RSUs | PSUs | ||||||||||||||||||||||
| Number of RSUs | Weighted- Average Price | Number of PSUs | Weighted- Average Price | ||||||||||||||||||||
Outstanding at December 31, 2025 | $ | $ | |||||||||||||||||||||
| Granted | |||||||||||||||||||||||
| Vested or exercised | ( | ( | |||||||||||||||||||||
| Forfeited or cancelled | ( | ( | |||||||||||||||||||||
Performance adjustment (1) | |||||||||||||||||||||||
Outstanding at June 30, 2026 | $ | $ | |||||||||||||||||||||
| Stock awards expected to vest | $ | $ | |||||||||||||||||||||
(1) | Represents additional shares expected to vest based on the probability of the performance conditions exceeding the target level. | ||||
As of June 30, 2026, the total future compensation cost related to non-vested equity awards was approximately $51.9 million to be recognized over the weighted-average period of 2.2 years, assuming the performance-based restricted stock units vest at 140 %, pursuant to the terms of the applicable award. During the three and six months ended June 30, 2026, approximately $8.6 million and $14.5 million, respectively, in equity compensation expense was recognized in selling, general and administrative expenses. During the three and six months ended June 30, 2025, approximately $6.3 million and
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$13.3 million, respectively, in equity compensation expense was recognized in selling, general and administrative expenses.
Dividends
The following table summarizes dividends declared and paid in each of the quarterly periods of 2026 and 2025:
| Dividends per Common Share | Dividends Paid | |||||||||||||
| (in thousands) | ||||||||||||||
| 2026 | ||||||||||||||
| Q1 | $ | $ | ||||||||||||
| Q2 | ||||||||||||||
| 2025 | ||||||||||||||
| Q1 | $ | $ | ||||||||||||
| Q2 | ||||||||||||||
| Q3 | ||||||||||||||
| Q4 | ||||||||||||||
Subsequent to quarter end, on August 5, 2026, the Company’s Board declared a cash dividend of $0.49 per share for the quarter ended June 30, 2026, which is payable on August 27, 2026, to shareholders of record as of the close of business on August 17, 2026 (the “Common Stock Dividend”). In conjunction with the Common Stock Dividend, Kodiak Services declared a distribution on its units of $0.49 per unit payable on August 27, 2026 to all unit holders of record of Kodiak Services as of the close of business on August 17, 2026.
13. Commitments and Contingencies
Accrued Capital Expenditures
As of June 30, 2026, and December 31, 2025, the Company had accrued capital expenditures of $48.0 million and $23.0 million, respectively. These amounts were included in accounts payable or accrued liabilities in the condensed consolidated balance sheets. Amounts exclude accrued capital expenditures related to the sales tax contingency accrual.
Purchase Commitments
Purchase commitments primarily consist of future commitments to purchase new compression and power generation units that have been ordered but not yet received. As of June 30, 2026, these commitments amounted to $2.5 billion, of which $587.9 million is expected to be settled within the next twelve months. Included within these future commitments is a multi-year strategic arrangement whereby Baker Hughes will provide power generation solutions to support Kodiak’s expanding energy infrastructure initiatives.
Sales Tax Contingency
Between October 2019 and May 2026, the Company received notices from the Texas Comptroller’s office in regards to audits for periods ranging from December 2015 through December 2025. The audits pertain to whether the Company may owe sales and use tax on certain of its compression equipment and parts that it purchased and used during that time period. As of June 30, 2026 and December 31, 2025, the Company’s associated liability was $65.8 million and $102.3 million, respectively, relating solely to the Texas portion of sales and use tax.
During the first quarter of 2026, the Company resolved outstanding Texas sales and use tax matters with the Texas Comptroller’s office related to certain prior periods. The settlement, which included applicable interest for the periods under review, was paid in full. The amount settled had previously been recognized in prior years, reflecting management’s earlier assessment of the liability.
Legal Matters
From time to time, the Company may become involved in various legal matters. Management believes that as of June 30, 2026, there are no legal matters whose resolution could have a material adverse effect on the unaudited condensed consolidated financial statements.
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In the first quarter of 2025, the Company received a report regarding certain payments to local government officials in Mexico that commenced prior to the Company’s acquisition of its Mexican business in connection with the acquisition of CSI Compressco LP (the “CSI Acquisition”) that presented potential compliance issues under U.S. law. In response, the Company retained outside counsel to conduct an internal investigation of the reported payments, including whether any payments made may have indirectly benefited individuals associated with certain criminal cartel organizations, some of which may be designated as foreign terrorist organizations (FTOs) and Specially Designated Global Terrorists (SDGTs) per Executive Order 14157 of January 20, 2025. The investigation determined that certain payments likely were made to persons associated with an organization designated as an FTO or SDGT. The payments appear to have been made in order to protect employees of the Mexican business from threats of harm or harassment, and to ensure access to work sites. The aggregate amount of these payments was not material. The Company sold its operations and legal entities in Mexico on September 30, 2025.
The Company voluntarily self-reported this matter to governmental authorities in the United States, including the Department of Justice (“DOJ”) and the Office of Foreign Assets Control (“OFAC”), and is cooperating with the investigative steps being taken by the DOJ and OFAC into the matter as a result of the voluntary self-disclosure. The Company also voluntarily self-reported to the SEC and intends to cooperate fully should there be any investigation by the Commission. This matter could result in U.S. governmental authorities seeking criminal and/or civil sanctions, including monetary fines and penalties, against the Company, as well as requiring additional changes to the Company’s business practices and compliance programs. To the extent any of the payments at issue are determined to be illegal in a foreign jurisdiction, it is possible that there could be civil or criminal penalties assessed in that jurisdiction.
Although the Company does not expect the findings from the investigation or actions taken by governmental authorities to have a significant adverse impact on its business, results of operations, financial condition and cash flows, there can be no assurance as to the ultimate outcome of these matters at this time.
Letters of Credit
As of June 30, 2026, there was $14.6 million of letters of credit outstanding under the ABL Facility mainly to support the Company's obligations to construct a gas compression station on behalf of a customer.
14. Accrued Liabilities
Accrued liabilities consist of the following:
(in thousands) | June 30, 2026 | December 31, 2025 | |||||||||
| Sales tax liability | $ | $ | |||||||||
| Accrued interest | |||||||||||
| Accrued compensation | |||||||||||
| Lease liabilities - current portion | |||||||||||
| Accrued taxes | |||||||||||
| Station project accrual | |||||||||||
| Equipment financing | |||||||||||
| Other | |||||||||||
| Total accrued liabilities | $ | $ | |||||||||
15. Income Taxes
For the three and six months ended June 30, 2026, the Company recorded income tax expense of $21.1 million and $23.9 million, respectively. For the three and six months ended June 30, 2025, the Company recorded income tax expense of $13.4 million and $24.0 million, respectively. The effective tax rate was approximately 28.8 % and 25.4 % for the three and six months ended June 30, 2026, compared to 25.2 % and 25.2 % for the three and six months ended June 30, 2025, respectively. The difference between the Company’s effective tax rate for the three and six months ended June 30, 2026, and the U.S. statutory tax rate of 21%, was primarily due to state income taxes, nondeductible executive compensation, and stock based compensation windfall. The Company’s effective tax rate for the three and six months ended June 30, 2025, differs from the U.S. statutory tax rate of 21% is primarily due to state income taxes.
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16. Leases
On June 1, 2026 we commenced an approximately 20 year finance lease for a building space which will be utilized for offices, training, storage and equipment maintenance. The lease provides for annual base payments of $3.0 million with annual fixed rental increases ranging from 2.0 % - 2.5 %. The lease expires on September 30, 2046 and contains four five-year optional renewal terms which were not deemed to be reasonably certain of exercise and have therefore been excluded from the measurement of the lease liability as of June 30, 2026. As a result, we established a $42.6 million finance lease right of use asset and $42.6 million finance lease liability during the period ended June 30, 2026.
The Company maintains operating leases for certain office space, warehouse facilities, operating locations, and equipment. These leases have remaining lease terms up to 20 years. These leases generally include options to renew or extend the lease term at the Company’s discretion which are reflected in the measurement of lease liabilities only when exercise of such rights is reasonably certain. Maintenance and insurance costs are generally the Company's responsibility under these arrangements, and none of the lease agreements contain material residual value guarantees or material restrictive covenants.
Lease costs are included in either cost of revenues or selling, general and administrative expense depending on the use of the underlying asset.
Leases are presented in our consolidated balance sheet as follows:
| (in thousands) | Classification | As of June 30, 2026 | As of December 31, 2025 | |||||||||||||||||
| Right-of-use Assets: | ||||||||||||||||||||
| Operating leases | Operating lease right-of-use assets, net | $ | $ | |||||||||||||||||
| Finance leases | Finance lease right-of-use assets, net | $ | $ | |||||||||||||||||
| Lease liabilities: | ||||||||||||||||||||
| Operating lease liabilities: | ||||||||||||||||||||
| Current | Accrued liabilities | $ | $ | |||||||||||||||||
| Noncurrent | Operating lease liabilities | |||||||||||||||||||
| Total operating lease liabilities | $ | $ | ||||||||||||||||||
| Finance lease liabilities: | ||||||||||||||||||||
| Current | Accrued liabilities | $ | $ | |||||||||||||||||
| Noncurrent | Finance lease liabilities | |||||||||||||||||||
| Total finance lease liabilities | $ | $ | ||||||||||||||||||
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The components of total lease cost were as follows:
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||
| June 30, | June 30, | |||||||||||||||||||||||||
| (in thousands) | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||
| Operating lease expense: | ||||||||||||||||||||||||||
| Operating lease expense | $ | $ | $ | $ | ||||||||||||||||||||||
| Short-term lease expense | ||||||||||||||||||||||||||
| Total operating lease expense | ||||||||||||||||||||||||||
| Finance lease expense: | ||||||||||||||||||||||||||
| Amortization of leased assets | ||||||||||||||||||||||||||
| Interest on lease liabilities | ||||||||||||||||||||||||||
| Total finance lease expense | ||||||||||||||||||||||||||
| Total lease expense | $ | $ | $ | $ | ||||||||||||||||||||||
The short-term lease cost disclosed above reasonably reflects the Company’s ongoing short-term lease commitments. These lease costs are primarily recorded within cost of operations.
Supplemental information related to the Company’s operating and finance leases were as follows:
| Six Months Ended June 30, | ||||||||||||||
| (in thousands, except years and percentages) | 2026 | 2025 | ||||||||||||
| Other supplemental information: | ||||||||||||||
| Cash paid for amounts included in the measurement of lease liabilities: | ||||||||||||||
| Operating cash flows - operating leases | $ | $ | ||||||||||||
| Operating cash flows - finance leases | ||||||||||||||
| Right-of-use assets obtained in exchange for lease obligations: | ||||||||||||||
| Operating leases | $ | $ | ||||||||||||
| Finance leases | ||||||||||||||
| Weighted-average remaining lease term: | ||||||||||||||
| Operating leases | ||||||||||||||
| Finance leases | ||||||||||||||
| Weighted-average discount rate: | ||||||||||||||
| Operating leases | % | % | ||||||||||||
| Finance leases | % | % | ||||||||||||
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Future minimum lease payments, under non-cancelable operating and finance leases with terms in excess of one year, as of June 30, 2026 are as follows:
| (in thousands) | Operating leases | Finance leases | ||||||||||||
| Year ended December 31, | ||||||||||||||
| Remainder of 2026 | $ | $ | ||||||||||||
| 2027 | ||||||||||||||
| 2028 | ||||||||||||||
| 2029 | ||||||||||||||
| 2030 | ||||||||||||||
| Thereafter | ||||||||||||||
| Total lease payments | ||||||||||||||
| Less: imputed interest | ( | ( | ||||||||||||
| Total lease liabilities | $ | $ | ||||||||||||
17. Segments
The Company previously managed its business through two
The Company established a new Power Infrastructure segment to represent its distributed power generation operations, while certain ancillary services associated with the power business that are similar in nature to existing service offerings are included within the Other Services segment. In addition, the Company renamed its Contract Services segment as Compression Infrastructure to better align with its expanded platform.
As a result, effective June 30, 2026, the Company now manages its business through three
Compression Infrastructure consists of operating Company-owned compression, customer-owned compression, and gas treating and cooling infrastructure under fixed-revenue contracts to enable the production, gathering and transportation of natural gas and oil.
Power Infrastructure includes the Company’s distributed and behind-the-meter power generation operations, which primarily consist of providing power generation equipment and associated capacity under structured customer arrangements with fixed monthly payments. These operations are designed to deliver rapid, reliable and scalable onsite power solutions for customers across a range of end markets, including data centers, utilities, industrial facilities and energy infrastructure, particularly in applications where demand for reliable power exceeds available grid capacity.
Other Services consists of a broad range of services to support ancillary needs of customers, including station construction, maintenance and overhaul, freight and crane charges, and other time and material-based offerings, as well as certain ancillary services associated with the compression and power generation businesses that are similar in nature to the Company’s historical service offerings.
Our Chief Executive Officer, also our chief operating decision maker (“CODM”), assesses the performance of each segment based on adjusted gross margin and certain asset measures, including capital expenditures. Total assets by segment are not regularly reviewed or used in the allocation of resources and are not practicably determinable on a consistent basis. Accordingly, total asset information is not presented for each reportable segment. Adjusted gross margin is calculated by subtracting specific costs of service, such as cost of operations, from revenues directly attributable to the segment. Adjusted gross margin is a key tool used by the CODM for annual budgeting, monthly forecasting, and determining how to allocate capital and resources across the segment.
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The following tables represent financial metrics by segment:
| (in thousands) | Compression Infrastructure | Power Infrastructure | Other Services | Total | |||||||||||||||||||
| Three Months Ended June 30, 2026 | |||||||||||||||||||||||
| Revenue | $ | $ | $ | $ | |||||||||||||||||||
| Cost of operations (exclusive of depreciation and amortization) | |||||||||||||||||||||||
| Adjusted gross margin | |||||||||||||||||||||||
| Capital expenditures | |||||||||||||||||||||||
| Three Months Ended June 30, 2025 | |||||||||||||||||||||||
| Revenue | $ | $ | $ | $ | |||||||||||||||||||
| Cost of operations (exclusive of depreciation and amortization) | |||||||||||||||||||||||
| Adjusted gross margin | |||||||||||||||||||||||
| Capital expenditures | |||||||||||||||||||||||
| Compression Infrastructure | Power Infrastructure | Other Services | Total | ||||||||||||||||||||
| Six Months Ended June 30, 2026 | |||||||||||||||||||||||
| Revenue | $ | $ | $ | $ | |||||||||||||||||||
| Cost of operations (exclusive of depreciation and amortization) | |||||||||||||||||||||||
| Adjusted gross margin | |||||||||||||||||||||||
Capital expenditures (1) | |||||||||||||||||||||||
| Six Months Ended June 30, 2025 | |||||||||||||||||||||||
| Revenue | $ | $ | $ | $ | |||||||||||||||||||
| Cost of operations (exclusive of depreciation and amortization) | |||||||||||||||||||||||
| Adjusted gross margin | |||||||||||||||||||||||
| Capital expenditures | |||||||||||||||||||||||
| (1) | Capital expenditures for the three months ended March 31, 2026 included an $ | ||||
The following table reconciles adjusted gross margin to income before income taxes:
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| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| June 30, | June 30, | ||||||||||||||||||||||
(in thousands) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Adjusted gross margin: | |||||||||||||||||||||||
| Compression Infrastructure | $ | $ | $ | $ | |||||||||||||||||||
| Power Infrastructure | |||||||||||||||||||||||
| Other Services | |||||||||||||||||||||||
Depreciation and amortization: | |||||||||||||||||||||||
| Compression Infrastructure | ( | ( | ( | ( | |||||||||||||||||||
| Power Infrastructure | ( | ( | |||||||||||||||||||||
| Selling, general and administrative expenses | ( | ( | ( | ( | |||||||||||||||||||
| Loss on sale of assets | ( | ( | ( | ( | |||||||||||||||||||
| Interest expense | ( | ( | ( | ( | |||||||||||||||||||
| Loss on extinguishment of debt | ( | ||||||||||||||||||||||
| Other expense, net | ( | ( | ( | ( | |||||||||||||||||||
| Income before income taxes | $ | $ | $ | $ | |||||||||||||||||||
18. Earnings Per Common Share
Basic earnings per share is computed using the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share of common stock is computed by using the weighted average shares of common stock outstanding, including the dilutive effect of restricted stock units and performance stock units based on an average share price during the period. For the three and six months ended June 30, 2026, 18,000 and 156,000 unvested RSUs and PSUs, respectively, were excluded from the calculation of potential dilutive common shares due to their anti-dilutive impact. For the three and six months ended June 30, 2025, 2,000 and 1,000 unvested RSUs and PSUs, respectively, were excluded from the calculation of potential dilutive common shares due to their anti-dilutive impact.
The computations of basic and diluted earnings per share were as follows:
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||
| June 30, | June 30, | |||||||||||||||||||||||||
| (in thousands, except per share data) | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||
| Net income attributable to common shareholders | $ | $ | $ | $ | ||||||||||||||||||||||
| Less: Dividends paid and earnings allocated to non-forfeitable RSUs | ( | ( | ( | ( | ||||||||||||||||||||||
| Net income used in basic and diluted earnings per share | $ | $ | $ | $ | ||||||||||||||||||||||
| Basic weighted average shares of common stock | ||||||||||||||||||||||||||
| Effect of dilutive securities: | ||||||||||||||||||||||||||
| RSUs and PSUs | ||||||||||||||||||||||||||
| Preferred shares | ||||||||||||||||||||||||||
| Diluted weighted average shares of common stock | ||||||||||||||||||||||||||
| Earnings per share attributable to common shareholders: | ||||||||||||||||||||||||||
| Basic | $ | $ | $ | $ | ||||||||||||||||||||||
| Diluted | $ | $ | $ | $ | ||||||||||||||||||||||
19. Subsequent Events
Purchase of Gas Compression Equipment
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results of operations is based on, and should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Report. The following discussion includes forward-looking statements that involve certain risks and uncertainties. For further information on items that could impact our future operating performance or financial condition, see the sections entitled “Risk Factors” section of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, and “Cautionary Note Regarding Forward-Looking Statements” in this Report. We assume no obligation to update any of these forward-looking statements, except as required by law. Unless otherwise indicated or the context otherwise requires, the historical financial information in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” reflects only the historical financial results of Kodiak Gas Services, Inc. and its consolidated subsidiaries and references to the “Company,” “we,” “our,” or “us” are to Kodiak Gas Services, Inc. and its consolidated subsidiaries.
Overview
We are a leading provider and operator of large horsepower contract compression infrastructure in the U.S., supporting the critical movement and processing of natural gas across key production regions. Following the acquisition of Distributed Power Solutions, LLC (“DPS”) on April 1, 2026, we expanded our platform beyond compression to include distributed and behind-the-meter power generation solutions, including the provision of power generation equipment and related services. In connection with the acquisition, effective as of June 30, 2026, we established a new Power Infrastructure segment to represent our distributed power generation operations, while certain ancillary services associated with the compression and power businesses that are similar in nature to our existing service offerings continue to be included within Other Services. In addition, we renamed our Contract Services segment as Compression Infrastructure to better align with our expanded energy infrastructure platform.
As a result, we now manage our business through three operating segments: Compression Infrastructure, Power Infrastructure and Other Services. We believe this expanded segmentation will provide our investors with additional information to better understand our performance. Concurrent with the change in reportable segments, we revised our prior period financial information to be consistent with the current period presentation. There was no impact on the Company’s previously reported consolidated financial position, results of operations or cash flows. See Note 16. Segments for further information.
Our Compression Infrastructure segment and related services are critical to our customers’ ability to reliably produce, gather and transport natural gas and oil. We are a market leader in the Permian Basin, which is the largest producing natural gas and oil basin in the U.S. We operate our large horsepower compression units primarily under fixed-revenue contracts with many upstream and midstream customers. Our compression assets have long useful lives consistent with the expected production lives of the key regions where we operate. We believe our customer-centric business model positions us as the preferred contract compression operator for our customers and creates long-standing relationships. We strategically invest in the training, development and retention of our highly skilled and dedicated employees and believe their expertise and commitment to excellence enhances and differentiates our business model. Furthermore, we maintain an intense focus on being one of the most sustainable and responsible operators of contract compression infrastructure.
Our Power Infrastructure segment provides distributed and behind-the-meter power generation solutions, including the provision of power generation equipment and associated capacity, together with related services such as delivery, installation, operation and maintenance. These solutions are designed to support both temporary and long-term power needs across a diverse range of end markets, including oil and gas, utilities, data centers, industrial and commercial customers. Power Infrastructure arrangements are typically structured to include fixed monthly payments and service-based components and may range from short-term deployments to multi-year agreements, depending on customer requirements.
Our Other Services segment consists of a broad range of services that support our customers’ operations, including station construction, maintenance, overhaul, freight and crane services, installation and other ancillary services, as well as certain services associated with our power generation operations that are similar in nature to our historical service offerings.
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Recent Developments
Issuance of Common Stock
On May 13, 2026, the Company completed an underwritten public offering of 10.6 million shares of its common stock at a public offering price of $71.00 per share. The underwriters exercised their option to purchase an additional 1.6 million shares, which was fully exercised on May 14, 2026. The offering, including the sale of the option shares, closed on May 15, 2026. The Company received aggregate net proceeds of approximately $836.1 million, after deducting underwriting discounts and offering expenses.
Acquisition of Distributed Power Solutions
On April 1, 2026, we completed the previously announced acquisition of DPS, a leading provider of turnkey distributed power generation solutions and behind‑the‑meter power generation solutions. The total consideration consisted of $587.3 million of cash, reflecting adjustments for certain additional power generation assets purchased prior to closing, indebtedness and working capital, and 2.4 million shares of the Company’s common stock, par value $0.01 per share with an estimated fair value of $139.0 million based on the Company’s closing stock price of $57.90 per share, on April 1, 2026. For more information about the acquisition of DPS, please see the Company’s Current Report on Form 8-K filed with the SEC on April 1, 2026.
Operational Highlights
The following table summarizes certain horsepower, unit count and horsepower utilization percentages for our compression fleet for the periods presented.
| Compression Infrastructure | Power Infrastructure | ||||||||||||||||||||||||||||||||||
| As of June 30, | Percentage Change | As of June 30, | Percentage Change | ||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||
Fleet capacity (hp / MW) (1) | 4,495,394 hp | 4,419,884 hp | 1.7 | % | 405 MW | — | n/m | ||||||||||||||||||||||||||||
Revenue-generating (hp / MW) (2) | 4,413,451 hp | 4,296,978 hp | 2.7 | % | 363 MW | — | n/m | ||||||||||||||||||||||||||||
| Fleet units | 4,623 | 4,881 | (5.3) | % | 149 | — | n/m | ||||||||||||||||||||||||||||
| Revenue-generating units | 4,452 | 4,514 | (1.4) | % | 129 | — | n/m | ||||||||||||||||||||||||||||
Output per revenue-generating unit (3) | 991 hp | 952 hp | 4.1 | % | 3 MW | — | n/m | ||||||||||||||||||||||||||||
Fleet utilization (4) | 98.2 | % | 97.2 | % | 1.0 | % | 89.6 | % | — | % | n/m | ||||||||||||||||||||||||
| (1) | Fleet capacity includes (x) revenue-generating and (y) idle horsepower or megawatts, respectively, which is comprised of units that do not have a signed contract or are not subject to a firm commitment from our customers and therefore are not currently generating revenue. | ||||
(2) | Revenue-generating power includes horsepower and megawatts units, respectively, that are operating under contract and generating revenue and units which are available to be deployed and for which we have a signed contract or are subject to a firm commitment from our customer. | ||||
(3) | Calculated as (i) revenue-generating horsepower or megawatts, respectively, divided by (ii) revenue-generating units at period end. | ||||
(4) | Fleet utilization is calculated as (i) revenue-generating horsepower or megawatts, respectively, divided by (ii) fleet horsepower or megawatts, respectively. | ||||
Horsepower
As of June 30, 2026, fleet horsepower increased 1.7% and revenue generating horsepower increased 2.7% compared to the prior year period. These increases were driven by a combination of organic growth and strategic asset acquisition, including the acquisition of large compression assets from a prominent oil and gas producer in the Permian Basin in March 2026. This strategic purchase enhanced our fleet’s capacity and operational efficiency. Additionally, the reduction of idle equipment during the period contributed to a more robust and productive fleet profile. These improvements were partially offset by the divestiture and retirement of certain non-core assets during the period, reflecting our ongoing commitment to fleet optimization. The 4.1% increase in revenue-generating horsepower per revenue-generating compression unit was primarily a result of deploying these new large horsepower units.
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Megawatts
On June 30, 2026, revenue-generating megawatts per revenue-generating power unit was 3.0 megawatts. Fleet utilization on June 30, 2026 was 89.6%. We had no revenue-generating megawatts per revenue-generated power unit prior to the DPS Acquisition on April 1, 2026.
Financial Results of Operations
Three Months Ended June 30, 2026, compared to the Three Months Ended June 30, 2025
The following table presents selected financial and operating information for the periods presented:
| Three Months Ended | |||||||||||||||||
| June 30, | % Change | ||||||||||||||||
(in thousands) | 2026 | 2025 | |||||||||||||||
| Revenues: | |||||||||||||||||
| Compression Infrastructure | $ | 315,125 | $ | 293,534 | 7.4 | % | |||||||||||
| Power Infrastructure | 32,891 | — | n/m | ||||||||||||||
| Other Services | 43,104 | 29,309 | 47.1 | % | |||||||||||||
| Total revenues | 391,120 | 322,843 | 21.1 | % | |||||||||||||
| Operating expenses: | |||||||||||||||||
| Cost of operations (exclusive of depreciation and amortization shown below): | |||||||||||||||||
| Compression Infrastructure | 94,435 | 93,137 | 1.4 | % | |||||||||||||
| Power Infrastructure | 11,686 | — | n/m | ||||||||||||||
| Other Services | 38,235 | 22,114 | 72.9 | % | |||||||||||||
| Depreciation and amortization | 78,650 | 66,135 | 18.9 | % | |||||||||||||
| Selling, general and administrative | 40,918 | 35,121 | 16.5 | % | |||||||||||||
| Loss on sale of assets | 2,959 | 6,606 | (55.2) | % | |||||||||||||
| Total operating expenses | 266,883 | 223,113 | 19.6 | % | |||||||||||||
| Income from operations | 124,237 | 99,730 | 24.6 | % | |||||||||||||
Other expenses: | |||||||||||||||||
| Interest expense | (50,061) | (45,755) | 9.4 | % | |||||||||||||
| Other expense, net | (939) | (546) | 72.0 | % | |||||||||||||
| Total other expenses, net | (51,000) | (46,301) | 10.1 | % | |||||||||||||
| Income before income taxes | 73,237 | 53,429 | 37.1 | % | |||||||||||||
| Income tax expense | 21,093 | 13,445 | 56.9 | % | |||||||||||||
| Net income | 52,144 | 39,984 | 30.4 | % | |||||||||||||
| Less: Net income attributable to noncontrolling interests | 173 | 488 | (64.5) | % | |||||||||||||
| Net income attributable to common shareholders | $ | 51,971 | $ | 39,496 | 31.6 | % | |||||||||||
Revenues and Sources of Income
Compression Infrastructure
Compression Infrastructure revenues increased $21.6 million, or 7.4%, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025. This was primarily due to a $23.4 million increase in revenue resulting from pricing increases and an increase in revenue-generating horsepower. This increase was partially offset by a decrease of $1.8 million related to gas treating and cooling services.
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Power Infrastructure
Power Infrastructure revenues were $32.9 million for the three months ended June 30, 2026. No comparable periods are shown due to the closing of the DPS Acquisition on April 1, 2026, prior to which we did not generate Power Infrastructure revenues.
Other Services
Other Services revenue increased $13.8 million, or 47.1%, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025. This increase was mainly driven by higher revenues from station construction services and incremental customer-requested services and materials, partially offset by a decline in field service revenue resulting from lower demand for third-party field service work and logistics.
Operating Costs and Other Expenses
Compression Infrastructure
Compression Infrastructure operating expenses increased $1.3 million, or 1.4%, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025. This was primarily due to a $3.6 million increase in direct labor expenses as a result of the higher revenue noted above, partially offset by a decrease in cost of parts utilized to support our operations.
Power Infrastructure
Power Infrastructure operating expenses were $11.7 million for the three months ended June 30, 2026. No comparable periods are shown due to the closing of the DPS Acquisition on April 1, 2026, prior to which we did not incur Power Infrastructure operating expenses.
Other Services
Other Services operating expenses increased $16.1 million, or 72.9%, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025. This increase was primarily driven by the higher Other Services revenue across our product lines as noted above.
Depreciation and Amortization
Depreciation and amortization increased $12.5 million, or 18.9%, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025. This increase was primarily due to the additional depreciation and amortization on the DPS assets acquired on April 1, 2026, partially offset by the impact of asset sales and disposals during the current period.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased $5.8 million, or 16.5%, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025, primarily driven by a $5.0 million increase in payroll expenses and $3.3 million in DPS Acquisition transaction costs, partially offset by a $1.9 million decrease in IT and other administrative costs.
Loss on Sale of Assets
Loss on sale of assets decreased $3.6 million, or 55.2% during the three months ended June 30, 2026 compared to the three months ended June 30, 2025. In the second quarter of 2025, we incurred a $6.6 million loss related to the sale and write-off of certain scrapped assets which contributed to higher loss in that period that was not repeated during the current period.
Interest Expense
Interest expense increased $4.3 million, or 9.4%, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025. The increase was primarily driven by higher interest expense on our senior notes, reflecting the issuance of the 2031 Senior Notes during the first quarter of 2026 and the issuance of the 2033 and 2035 Senior Notes
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during the third quarter of 2025. This increase was partially offset by lower interest expense on our ABL Facility, reflecting reduced borrowings in the current period.
Income Tax Expense
Income tax expense increased by $7.6 million, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025. This increase was primarily due to an increase in pre-tax income of $19.8 million for the three months ended June 30, 2026, compared to the three months ended June 30, 2025. The increase was also due to the state apportionment impact of the DPS Acquisition on existing deferred taxes.
Financial Results of Operations
Six Months Ended June 30, 2026, Compared to the Six Months Ended June 30, 2025
The following table presents selected financial and operating information for the periods presented:
| Six Months Ended | |||||||||||||||||
| June 30, | % Change | ||||||||||||||||
(in thousands) | 2026 | 2025 | |||||||||||||||
| Revenues: | |||||||||||||||||
| Compression Infrastructure | $ | 622,110 | $ | 582,490 | 6.8 | % | |||||||||||
| Power Infrastructure | 32,891 | — | n/m | ||||||||||||||
| Other Services | 81,878 | 69,995 | 17.0 | % | |||||||||||||
| Total revenues | 736,879 | 652,485 | 12.9 | % | |||||||||||||
| Operating expenses: | |||||||||||||||||
| Cost of operations (exclusive of depreciation and amortization shown below): | |||||||||||||||||
| Compression Infrastructure | 184,694 | 186,372 | (0.9) | % | |||||||||||||
| Power Infrastructure | 11,686 | — | n/m | ||||||||||||||
| Other Services | 70,854 | 57,340 | 23.6 | % | |||||||||||||
| Depreciation and amortization | 147,331 | 136,664 | 7.8 | % | |||||||||||||
| Selling, general and administrative | 87,045 | 67,376 | 29.2 | % | |||||||||||||
| Loss on sale of assets | 4,220 | 15,817 | (73.3) | % | |||||||||||||
| Total operating expenses | 505,830 | 463,569 | 9.1 | % | |||||||||||||
| Income from operations | 231,049 | 188,916 | 22.3 | % | |||||||||||||
| Other expenses: | |||||||||||||||||
| Interest expense | (98,802) | (92,979) | 6.3 | % | |||||||||||||
| Loss on extinguishment of debt | (36,512) | — | n/m | ||||||||||||||
| Other expense, net | (1,878) | (948) | 98.1 | % | |||||||||||||
| Total other expenses, net | (137,192) | (93,927) | 46.1 | % | |||||||||||||
| Income before income taxes | 93,857 | 94,989 | (1.2) | % | |||||||||||||
| Income tax expense | 23,853 | 23,969 | (0.5) | % | |||||||||||||
| Net income | 70,004 | 71,020 | (1.4) | % | |||||||||||||
| Net income attributable to noncontrolling interests | 228 | 1,113 | (79.5) | % | |||||||||||||
| Net income attributable to common shareholders | $ | 69,776 | $ | 69,907 | (0.2) | % | |||||||||||
Revenues and Sources of Income
Compression Infrastructure
Compression Infrastructure revenues increased $39.6 million, or 6.8%, for the six months ended June 30, 2026, compared to the six months ended June 30, 2025. This was primarily related to a $42.4 million increase in contract compression services as a result of price increases and an increase in average revenue-generating horsepower, including revenue-
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generating horsepower acquired in the CSI Acquisition. This increase was partially offset by $2.8 million decrease related to gas treating services.
Power Infrastructure
Power Infrastructure revenues were $32.9 million for the six months ended June 30, 2026. No comparable periods are shown due to the closing of the DPS Acquisition on April 1, 2026, prior to which we did not generate Power Infrastructure revenues.
Other Services
Other Services revenue increased $11.9 million, or 17.0% for the six months ended June 30, 2026 compared to the six months ended June 30, 2025, primarily due to increased revenues from station construction services and maintenance and overhaul services. This increase was partially offset by decreases in other field services, and freight and crane charges related to the mobilization of units.
Operating Costs and Other Expenses
Compression Infrastructure
Compression Infrastructure operating expenses decreased $1.7 million or 0.9% for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. This decrease was primarily due to a $7.4 million decrease in costs related to compression parts, fluids and ancillary equipment, partially offset by a $5.4 million increase in indirect expenses.
Power Infrastructure
Power Infrastructure operating expenses were $11.7 million for the six months ended June 30, 2026. No comparable periods are shown due to the closing of the DPS Acquisition on April 1, 2026, prior to which we did not incur Power Infrastructure operating expenses.
Other Services
Other Services operating expense increased $13.5 million or 23.6% for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. This increase was primarily due to increased expenses from station construction services and maintenance and overhaul services on increased revenues, partially offset by decreased freight and crane charges on lower mobilization activity, as noted above.
Depreciation and Amortization
Depreciation and amortization increased $10.7 million or 7.8% for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. This increase was primarily due to increased depreciation and amortization related to the DPS Acquisition. The remaining increase is related to increased depreciation on compression equipment purchases.
Selling, General and Administrative Expense
Selling, general and administrative expenses increased $19.7 million or 29.2% for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. This increase was due to a $10.5 million increase in professional fees, primarily related to transaction costs associated with the DPS Acquisition, a $4.9 million insurance expenses increase compared to the prior year period, attributable to both higher premiums and expanded coverage requirements in the current market environment, a $3.1 million increase in labor and benefits, and a $1.2 million increase in other selling, general, and administrative expenses.
Loss on Sale of Assets
Loss on sale of assets decreased $11.6 million for the six months ended June 30, 2026 compared to the six months ended June 30, 2025 primarily due to the write-off of certain scrapped assets last year which did not recur in the comparable 2026 period.
Interest Expense
Interest expense increased $5.8 million or 6.3% for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. This increase was primarily due to interest accrued on the 2033 and 2035 Senior Notes in the current year to date period, which were not outstanding during the comparable year to date period. This increase in interest expense was
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partially offset by a reduction in interest expense associated with lower outstanding borrowings under the ABL Facility and settlements received from interest rate swaps, which are recognized in the same financial statement line item as the underlying hedged debt, thereby reducing the net impact on reported interest expense.
Loss on Extinguishment of Debt
We recognized a $36.5 million loss on extinguishment of debt during the six months ended June 30, 2026, primarily due to the early redemption premium of $27.2 million, the write-off of deferred financing costs of $7.8 million, and accrued interest of $1.5 million associated with the defeasance and early redemption of our 2029 Senior Notes following the issuance of the 2031 Senior Notes. No such loss was recognized during the six months ended June 30, 2025.
Income Tax Expense
Income tax expense decreased by $0.1 million for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. This was primarily due to a decrease in pre-tax income of $1.1 million for the six months ended June 30, 2026, compared to the six months ended June 30, 2025.
Liquidity and Capital Resources
Overview
Our ability to fund operations, finance capital expenditures, service our debt and pay dividends depends on our operating cash flows and access to the capital and credit markets. Our primary sources of liquidity are cash flows generated from our operations and our borrowing availability under the ABL Facility. Our cash flow is affected by numerous factors, including prices and demand for our compression and power infrastructure assets and services, conditions in the financial markets and various other factors. We believe cash generated by operating activities will be sufficient to service our debt, fund working capital, fund our estimated capital expenditures in the short-term and long-term and, as our Board may determine from time to time in its discretion, pay dividends or repurchase shares pursuant to our Share Repurchase Program. As of June 30, 2026, we had approximately $1.7 billion of liquidity consisting of $137.6 million in cash and cash equivalents and $1.6 billion available under the ABL Facility.
Cash Requirements
Capital Expenditures
The compression and power infrastructure businesses are capital intensive, requiring significant investment to expand, maintain and upgrade existing operations. Our capital requirements have consisted primarily of, and we anticipate that our capital requirements will continue to consist primarily of, the following:
•Growth Capital Expenditures: capital expenditures made to (1) expand the operating capacity or operating income capacity of assets including, but not limited to, the acquisition of additional compression units and power generation units, balance of plant equipment, upgrades to existing equipment, expansion of supporting infrastructure, and implementation of new technologies, (2) maintain the operating capacity or operating income capacity of assets by acquisition of replacement compression units and power generation units, including their supporting infrastructure, and (3) expand the operating capacity or operating income capacity of existing assets.
•Other Capital Expenditures: capital expenditures made on assets required to support our operations—such as rolling stock, leasehold improvements, technology hardware and software and related implementation expenditures, safety enhancements to equipment, and other general items that are typically capitalized and that have a useful life beyond one year.
•Maintenance Capital Expenditures: periodic capital expenditures incurred at predetermined operating intervals to maintain consistent and reliable operating capacity of our assets over the near term. Such maintenance capital expenditures typically involve overhauls of significant components of our compression units, such as the engine and compressor, pistons, rings, heads, and bearings, and overhauls of significant components of our power generation units, such as blade repair/replacement, rotor refurbishment and bearing replacement. These maintenance capital expenditures are predictable and the majority of these expenditures are tied to a detailed, unit-by-unit schedule based on hours of operation or age. We utilize a disciplined and systematic asset management program whereby we perform major unit overhauls and engine replacements on a defined schedule based on hours of operation. As a result, our maintenance capital expenditures may vary considerably from year to year based on when such assets were added to the fleet. Maintenance capital expenditures along with regularly scheduled
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preventive maintenance expenses are typically sufficient to sustain the operating capacity of our assets over the full expected useful life of the compression units and power generation units. Maintenance capital expenditures do not include expenditures to replace compression units and power generation units when they reach the end of their useful lives.
The majority of our growth capital expenditures are related to the acquisition cost of new compression units and power generation units. Maintenance capital expenditures are related to overhauls of significant components of our compression and power generation equipment, such as the engine, compressors and turbines, which return the components to a like-new condition without modifying the application for which the compression and power generation equipment was designed.
For the six months ended June 30, 2026, growth capital expenditures were $286.7 million, other capital expenditures were $61.2 million, and maintenance capital expenditures were $37.7 million as compared to growth capital expenditures of $93.9 million, other capital expenditures of $38.7 million, and maintenance capital expenditures of $34.0 million for the six months ended June 30, 2025. The increase in growth capital expenditures was primarily driven by the April 1, 2026 acquisition of DPS. In addition, a $24.0 million purchase of used assets, reflecting an opportunistic purchase of compression equipment in place with a customer, to accelerate fleet growth and meet strong customer demand, as well as an $18.0 million investment in power generation infrastructure to support our recently acquired power business. The decrease in other capital expenditures was attributable to the completion of our engine conversion program, a multi-year fleet upgrade initiative that was substantially finished during fiscal year 2025. Maintenance capital expenditures remain disciplined, with only a modest increase despite the continued expansion of our fleet.
Dividends
Our Board may elect to declare cash dividends on our common stock, subject to our compliance with applicable law, and depending on, among other things, future business conditions, economic conditions, our financial condition, results of operations, projections, liquidity, earnings, legal requirements and restrictions in the agreements governing our indebtedness as discussed in this Report.
Subsequent to the quarter end, on August 5, 2026, the Company’s Board declared a cash dividend of $0.49 per share for the quarter ended June 30, 2026, which is payable on August 27, 2026, to shareholders of record as of the close of business on August 17, 2026. In conjunction with the Common Stock Dividend, Kodiak Services declared a distribution on its units of $0.49 per unit payable on August 27, 2026 to all unit holders of record of Kodiak Services as of the close of business on August 17, 2026. The declaration and payment of future dividends will be at the discretion of the Board and will depend on the factors discussed above.
Over the long-term, we expect to fund any dividends and our budgeted growth capital expenditures using our Discretionary Cash Flow. In the event our Discretionary Cash Flow is insufficient to fund any such dividends and our budgeted growth capital expenditures for such period, we may fund our dividend or budgeted growth expenditures (i) with additional borrowings under our ABL Facility (subject to the requirement that our availability, in the case of dividends, under the ABL Facility calculated on a pro forma basis after giving effect to the payment of a dividend, is not less than $100,000,000) or (ii) by reducing our growth capital expenditures. Any additional borrowings under our ABL Facility may result in an increase in our interest expense and any such reduction in our growth capital expenditures may result in lower growth in our revenue-generating horsepower in future periods. As of June 30, 2026, we had $1.6 billion available under our ABL Facility.
Contractual Obligations
Our material contractual obligations as of June 30, 2026, consisted of the following:
•Long-term debt of $2.8 billion, of which $380.9 million matures in 2030, $1.0 billion matures in 2031, $770.0 million matures in 2033, and $630.0 million matures in 2035.
•Purchase commitments of $2.5 billion, of which $587.9 million is expected to be settled within the next twelve months; primarily consisting of future commitments to purchase new compression and power generation units that have been ordered but not yet received. See Note 13. Commitments and Contingencies to the condensed consolidated financial statements included in this Report.
Other Commitments
As of June 30, 2026, other commitments include future operating and finance lease payments totaling $147.6 million.
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Sources of Cash
Cash Flows
The following table summarizes our cash flows:
| Six months ended June 30, | |||||||||||||||||
(in thousands) | 2026 | 2025 | |||||||||||||||
| Net cash provided by operating activities | $ | 170,647 | $ | 291,500 | |||||||||||||
| Net cash used for investing activities | (886,954) | (142,565) | |||||||||||||||
| Net cash provided by (used for) financing activities | 850,681 | (148,257) | |||||||||||||||
| Net increase in cash and cash equivalents | $ | 134,374 | $ | 678 | |||||||||||||
Operating Activities
The $120.9 million decrease in net cash provided by operating activities for the six months ended June 30, 2026, compared to the six months ended June 30, 2025, was primarily driven by unfavorable changes in working capital items, particularly an increase in accounts receivable related to strong revenue growth and timing of customer collections. Working capital items used cash of $154.6 million during the six months ended June 30, 2026 compared to the use of cash of $19.8 million during the six months ended June 30, 2025. This was partially offset by the $36.5 million non-cash add-back for the loss on extinguishment of debt associated with our strategic debt refinancing activities completed during the quarter.
Investing Activities
Net cash used in investing activities increased $744.4 million during the six months ended June 30, 2026, compared to the six months ended June 30, 2025. The increase was driven mainly by $576.0 million in cash paid for the DPS Acquisition, net of cash acquired, as well as a $158.4 million increase in cash used for capital expenditures, net of accrued capital expenditures.
Financing Activities
Net cash provided by financing activities of $850.7 million increased $998.9 million during the six months ended June 30, 2026, compared to cash used for financing activities of $148.3 million during the six months ended June 30, 2025. Cash provided by financing activities during six months ended June 30, 2026 was primarily the result of the issuance of common stock, which generated net proceeds of $836.1 million after offering costs as well as strategic debt refinancing activities, which resulted in net proceeds of approximately $122.8 million. These net proceeds more than offset the $92.6 million in dividend payments and $14.2 million tax-related outflows associated with equity compensation vesting.
Cash used for financing activities of $148.3 million during the six months ended June 30, 2025 was primarily the result of $76.6 million of dividends paid to stockholders, $20.0 million of share repurchases, $3.3 million of cash paid for shares withheld to cover taxes, $3.5 million of cash paid on principal payments of other borrowings, $1.5 million of cash paid on principal payments of finance leases, and $0.7 million of distributions to noncontrolling interest. This was offset by $43.2 million of net cash provided by borrowings.
Description of Indebtedness
ABL Facility
On April 2, 2026, Kodiak and Kodiak Services entered into the Fifth Amendment to the Fourth Amended and Restated Credit Agreement (“Fifth Amendment”) with the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (as amended or restated from time to time, the “ABL Credit Agreement” or “ABL Facility”), which amends the Fourth Amended and Restated Credit Agreement dated as of March 22, 2023. The Fifth Amendment, among other things, modifies the calculation of the leverage ratio. Through June 30, 2026, the Fifth Amendment allows Kodiak Services to deduct from its total indebtedness the net proceeds from the issuance of the 2031 Senior Notes, in addition to the existing $50.0 million cash netting cap, so long as such proceeds remain as unrestricted cash or cash equivalents.
The ABL Facility is a revolving credit arrangement with a lockbox feature, where customer payments may be sent to a bank account managed by the agent and used to pay down borrowings if availability drops below $100.0 million for five
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consecutive business days. As of June 30, 2026, and December 31, 2025, availability exceeded this threshold, so the balance was classified as long-term in accordance with its maturity.
Interest on the outstanding borrowings under the ABL Facility is payable monthly and accrues based on variable rates of the Secured Overnight Financing Rate (“SOFR”) plus an applicable rate ranging from 1.75% to 2.50% or prime rate plus an applicable rate ranging from 0.75% to 1.50% depending on the leverage ratio as of the most recently ended quarter. As of June 30, 2026, and December 31, 2025, the weighted average interest rate on the ABL Facility was 6.03% and 5.72%, respectively, excluding the effect of the interest rate swap. The Company pays an annualized commitment fee of 0.25% on the unused portion of its ABL Facility.
The ABL Facility provides for commitments totaling $2.0 billion and a maturity date of September 5, 2030. As of June 30, 2026, $14.6 million in letters of credit were outstanding. As of June 30, 2026, borrowings under our ABL Facility totaled $380.9 million.
As of June 30, 2026, we were in compliance with all covenants under the ABL Facility. All obligations under the ABL Facility are collateralized by essentially all the assets of the Company.
Redemption of 2029 Senior Notes
On March 11, 2026, we provided notice to the holders of our 2029 Senior Notes that, contingent on receipt of the proceeds from the 2031 Senior Notes, the 2029 Senior Notes would be redeemed at a premium on April 10, 2026. On March 30, 2026, utilizing a portion of the proceeds from the 2031 Senior Notes (as defined below), we made an irrevocable deposit of funds with the trustee to satisfy and discharge the 2029 Senior Notes in accordance with the terms of the applicable indenture, which resulted in a legal defeasance under GAAP (the “Defeasance”).
The Defeasance required a cash outlay of $785.5 million, which was irrevocably deposited with the trustee to fund interest payments on the 2029 Senior Notes through April 10, 2026, when the 2029 Senior Notes were redeemed at a premium, as well as fund the redemption of the 2029 Senior Notes in full. As a result of the Defeasance, the Company recognized a loss on early extinguishment of debt of $36.5 million for the six months ended June 30, 2026, which primarily represents the early redemption premium of $27.2 million, the write-off of deferred financing costs of $7.8 million, and accrued interest of $1.5 million.
2031 Senior Notes
On March 20, 2026, Kodiak Services issued $1.0 billion in aggregate principal amount of 5.875% senior unsecured notes due 2031 (the “2031 Senior Notes”). A portion of the net proceeds from the 2031 Senior Notes were used by the Company to redeem all of Kodiak Services’ outstanding 7.25% Senior Notes due 2029 at a redemption price equal to 103.625% of the $750.0 million aggregate principal amount, plus accrued and unpaid interest, if any.
2033 Senior Notes
On September 5, 2025, Kodiak Services issued $600.0 million in aggregate principal amount of 6.50% senior unsecured notes due 2033 (the “2033 Senior Notes”). Subsequently, on September 22, 2025, Kodiak Services completed a private offering of an additional $170.0 million of 2033 Senior Notes for $173.4 million. The net proceeds from these offerings were used by the Company to repay a portion of the debt outstanding under the ABL Facility.
2035 Senior Notes
On September 5, 2025, Kodiak Services issued $600.0 million in aggregate principal amount of 6.75% senior unsecured notes due 2035 (the “2035 Senior Notes”). Subsequently, on September 22, 2025, Kodiak Services completed a private offering of an additional $30.0 million of 2035 Senior Notes for $30.9 million. The excess fair value above the face value was recognized as a bond premium, which is amortized as a reduction in interest expense over the remaining term of the 2035 Senior Notes. The net proceeds from these offerings were used by the Company to repay a portion of the debt outstanding under the ABL Facility.
Derivatives and Hedging Activities
To mitigate a portion of the exposure to fluctuations in the variable interest rate of the ABL Facility, we have entered into derivative instruments.
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Our interest rate swap exchanges variable interest rates for fixed interest rates. The Company designates our interest rate swap as a cash flow hedge, evaluates hedge effectiveness and determined it to be highly effective as of June 30, 2026. See Note 10. Derivative Instruments to the condensed consolidated financial statements included in this Report.
Non-GAAP Financial Measures
Management uses a variety of financial and operating metrics to analyze our performance. These metrics are significant factors in assessing our operating results and profitability and include the non-GAAP financial measures of adjusted gross margin, adjusted gross margin percentage, adjusted EBITDA, adjusted EBITDA percentage, discretionary cash flow, free cash flow, adjusted net income and adjusted earnings per share.
Adjusted Gross Margin and Adjusted Gross Margin Percentage
Adjusted gross margin and adjusted gross margin percentage are considered non-GAAP financial measures. We define adjusted gross margin as revenue less cost of operations, exclusive of depreciation and amortization expense. We define adjusted gross margin percentage as adjusted gross margin divided by total revenues. We believe that adjusted gross margin is useful as a supplemental measure of our operating profitability. Adjusted gross margin is impacted primarily by the pricing trends for service operations and cost of operations, including labor rates for service technicians, volume and per unit costs for lubricant oils, coolants and other fluids, quantity and pricing of routine preventative maintenance on compression and power generation units and property tax rates on compression and power generation units. Adjusted gross margin should not be considered an alternative to, or more meaningful than, gross margin or any other measure of financial performance presented in accordance with GAAP. Moreover, adjusted gross margin as presented may not be comparable to similarly titled measures of other companies. Because we capitalize assets, depreciation and amortization of equipment is a necessary element of our costs. To compensate for the limitations of adjusted gross margin as a measure of our performance, we believe that it is important to consider gross margin determined under GAAP, as well as adjusted gross margin, to evaluate our operating profitability.
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Compression Infrastructure
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| June 30, | June 30, | ||||||||||||||||||||||
(in thousands) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Total revenues | $ | 315,125 | $ | 293,534 | $ | 622,110 | $ | 582,490 | |||||||||||||||
| Cost of operations (exclusive of depreciation and amortization) | (94,435) | (93,137) | (184,694) | (186,372) | |||||||||||||||||||
| Depreciation and amortization | (73,106) | (66,135) | (141,787) | (136,664) | |||||||||||||||||||
| Gross margin | $ | 147,584 | $ | 134,262 | $ | 295,629 | $ | 259,454 | |||||||||||||||
| Gross margin percentage | 46.8% | 45.7% | 47.5% | 44.5% | |||||||||||||||||||
| Depreciation and amortization | 73,106 | 66,135 | 141,787 | 136,664 | |||||||||||||||||||
| Adjusted gross margin | $ | 220,690 | $ | 200,397 | $ | 437,416 | $ | 396,118 | |||||||||||||||
| Adjusted gross margin percentage | 70.0% | 68.3% | 70.3% | 68.0% | |||||||||||||||||||
Power Infrastructure
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| June 30, | June 30, | ||||||||||||||||||||||
(in thousands) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Total revenues | $ | 32,891 | $ | — | $ | 32,891 | $ | — | |||||||||||||||
| Cost of operations (exclusive of depreciation and amortization) | (11,686) | — | (11,686) | — | |||||||||||||||||||
| Depreciation and amortization | (5,544) | — | (5,544) | — | |||||||||||||||||||
| Gross margin | $ | 15,661 | $ | — | $ | 15,661 | $ | — | |||||||||||||||
| Gross margin percentage | 47.6% | —% | 47.6% | —% | |||||||||||||||||||
| Depreciation and amortization | 5,544 | — | 5,544 | — | |||||||||||||||||||
| Adjusted gross margin | $ | 21,205 | $ | — | $ | 21,205 | $ | — | |||||||||||||||
| Adjusted gross margin percentage | 64.5% | —% | 64.5% | —% | |||||||||||||||||||
Other Services
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| June 30, | June 30, | ||||||||||||||||||||||
(in thousands) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Total revenues | $ | 43,104 | $ | 29,309 | $ | 81,878 | $ | 69,995 | |||||||||||||||
| Cost of operations (exclusive of depreciation and amortization) | (38,235) | (22,114) | (70,854) | (57,340) | |||||||||||||||||||
| Depreciation and amortization | — | — | — | — | |||||||||||||||||||
| Gross margin | $ | 4,869 | $ | 7,195 | $ | 11,024 | $ | 12,655 | |||||||||||||||
| Gross margin percentage | 11.3% | 24.5% | 13.5% | 18.1% | |||||||||||||||||||
| Depreciation and amortization | — | — | — | — | |||||||||||||||||||
| Adjusted gross margin | $ | 4,869 | $ | 7,195 | $ | 11,024 | $ | 12,655 | |||||||||||||||
| Adjusted gross margin percentage | 11.3% | 24.5% | 13.5% | 18.1% | |||||||||||||||||||
Adjusted EBITDA and Adjusted EBITDA Percentage
Adjusted EBITDA and adjusted EBITDA percentage are considered non-GAAP measures. We define adjusted EBITDA as net income before interest expense; income tax expense; and depreciation and amortization; plus certain items, as
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applicable, such as (i) impairment of long-lived assets; (ii) loss (gain) on derivatives; (iii) equity compensation expense; (iv) severance expenses; (v) transaction expenses; (vi) sales tax reserve; (vii) loss (gain) on disposal of business; (viii) loss (gain) on sale of assets; and (ix) loss on extinguishment of debt. We define adjusted EBITDA percentage as adjusted EBITDA divided by total revenues. Adjusted EBITDA and adjusted EBITDA percentage are used as supplemental financial measures by our management and external users of our financial statements, such as investors, commercial banks and other financial institutions, to assess:
•the financial performance of our assets without regard to the impact of financing methods, capital structure or historical cost basis of our assets;
•the viability of capital expenditure projects and the overall rates of return on alternative investment opportunities;
•the ability of our assets to generate cash sufficient to make debt payments and pay dividends; and
•our operating performance as compared to those of other companies in our industry without regard to the impact of financing methods and capital structure.
We believe that adjusted EBITDA and adjusted EBITDA percentage provide useful information because, when viewed with our GAAP results and the accompanying reconciliation, they provide a more complete understanding of our performance than GAAP results alone. We also believe that external users of our financial statements benefit from having access to the same financial measures that management uses in evaluating the results of our business.
Adjusted EBITDA and adjusted EBITDA percentage should not be considered as alternatives to, or more meaningful than, revenues, net income (loss), operating income, cash flows from operating activities or any other measure of financial performance presented in accordance with GAAP as measures of operating performance and liquidity. Moreover, our adjusted EBITDA and adjusted EBITDA percentage as presented may not be comparable to similarly titled measures of other companies.
Given we are a capital-intensive business, depreciation, impairment of compression and power generation equipment and the interest cost of acquiring this equipment are necessary elements of our costs. To compensate for these items, we believe that it is important to consider both net income (loss) and net cash provided by operating activities determined under GAAP, as well as adjusted EBITDA and adjusted EBITDA percentage, to evaluate our financial performance and our liquidity. Our adjusted EBITDA and adjusted EBITDA percentage exclude some, but not all, items that affect net income (loss) and net cash provided by operating activities, and these measures may vary among companies. Management compensates for the limitations of adjusted EBITDA and adjusted EBITDA percentage as an analytical tool by reviewing the comparable GAAP measures, understanding the differences between the measures and incorporating this knowledge into management’s decision-making processes.
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The following table reconciles adjusted EBITDA to net income (loss), the most directly comparable GAAP financial measure, for each of the periods presented:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| June 30, | June 30, | ||||||||||||||||||||||
(in thousands) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Net income | $ | 52,144 | $ | 39,984 | $ | 70,004 | $ | 71,020 | |||||||||||||||
| Interest expense | 50,061 | 45,755 | 98,802 | 92,979 | |||||||||||||||||||
| Income tax expense | 21,093 | 13,445 | 23,853 | 23,969 | |||||||||||||||||||
| Depreciation and amortization | 78,650 | 66,135 | 147,331 | 136,664 | |||||||||||||||||||
| Loss on extinguishment of debt | — | — | 36,512 | — | |||||||||||||||||||
| Equity compensation expense | 8,639 | 6,291 | 14,529 | 13,269 | |||||||||||||||||||
| Severance expense | — | — | 72 | 376 | |||||||||||||||||||
Transaction expenses (1) | 3,300 | — | 11,615 | 1,786 | |||||||||||||||||||
| Loss on sale of assets | 2,959 | 6,606 | 4,220 | 15,817 | |||||||||||||||||||
| Adjusted EBITDA | $ | 216,846 | $ | 178,216 | $ | 406,938 | $ | 355,880 | |||||||||||||||
| Net income percentage | 13.3 | % | 12.4 | % | 9.5 | % | 10.9 | % | |||||||||||||||
| Adjusted EBITDA percentage | 55.4 | % | 55.2 | % | 55.2 | % | 54.5 | % | |||||||||||||||
(1) | Represents certain costs associated with non-recurring professional services and other costs, primarily related to the acquisition of DPS for the three and six months ended June 30, 2026, and CSI Acquisition and secondary offerings for the six months ended June 30, 2025. | ||||
Discretionary Cash Flow
Discretionary cash flow is considered a non-GAAP measure. We define discretionary cash flow as net cash provided by operating activities less (i) maintenance capital expenditures; (ii) certain changes in operating assets and liabilities; and (iii) certain other expenses; plus certain items, as applicable, such as (w) severance expenses; (x) transaction expenses; and (y) sales tax reserve. We believe discretionary cash flow is a useful liquidity and performance measure and supplemental financial measure for us in assessing our ability to pay cash dividends to our stockholders, make growth capital expenditures and assess our operating performance. Our ability to pay dividends is subject to limitations due to restrictions contained in our ABL Credit Agreement as further described elsewhere herein. Discretionary cash flow is presented for supplemental informational purposes only and should not be considered a substitute for financial information presented in accordance with GAAP, such as revenues, net income, operating income (loss) or cash flows from operating activities. Discretionary cash flow as presented may not be comparable to similarly titled measures of other companies.
Free Cash Flow
Free cash flow is considered a non-GAAP measure. We define free cash flow as net cash provided by operating activities less (i) maintenance capital expenditures; (ii) certain changes in operating assets and liabilities; (iii) certain other expenses; (iv) growth capital expenditures; and (v) other capital expenditures; plus certain items, as applicable, such as (w) severance expenses; (x) transaction expenses; (y) sales tax reserve; and (z) proceeds from sale of assets. We believe free cash flow is a liquidity measure and useful supplemental financial measure for us in assessing our ability to pursue business opportunities and investments to grow our business and to service our debt. Free cash flow is presented for supplemental informational purposes only and should not be considered a substitute for financial information presented in accordance with GAAP, such as revenues, net income, operating income (loss) or cash flows from operating activities. Free cash flow as presented may not be comparable to similarly titled measures of other companies.
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The following table reconciles net cash provided by operating activities, to discretionary cash flow and free cash flow, for each of the periods presented:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| June 30, | June 30, | ||||||||||||||||||||||
(in thousands) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Net cash provided by operating activities | $ | 99,465 | $ | 177,172 | $ | 170,647 | $ | 291,500 | |||||||||||||||
| Maintenance capital expenditures | (19,947) | (17,565) | (37,705) | (33,972) | |||||||||||||||||||
| Severance expense | — | — | 72 | 376 | |||||||||||||||||||
Transaction expenses (1) | 3,300 | — | 11,615 | 1,786 | |||||||||||||||||||
| Change in operating assets and liabilities | 85,492 | (38,478) | 154,615 | (19,799) | |||||||||||||||||||
Other (2) | (5,059) | (4,705) | (9,488) | (7,383) | |||||||||||||||||||
| Discretionary cash flow | $ | 163,251 | $ | 116,424 | $ | 289,756 | $ | 232,508 | |||||||||||||||
Growth capital expenditures (3)(4) | |||||||||||||||||||||||
| Compression Infrastructure | (66,790) | (37,966) | (134,357) | (93,949) | |||||||||||||||||||
| Power Infrastructure | (134,371) | — | (152,356) | — | |||||||||||||||||||
Other capital expenditures (5) | (53,709) | (16,398) | (61,167) | (38,656) | |||||||||||||||||||
| Proceeds from sale of assets | 4,123 | 8,230 | 7,590 | 17,606 | |||||||||||||||||||
| Free cash flow | $ | (87,496) | $ | 70,290 | $ | (50,534) | $ | 117,509 | |||||||||||||||
(1) | Represents certain costs associated with non-recurring professional services and other costs, primarily related to the acquisition of DPS for the three and six months ended June 30, 2026 and the CSI Acquisition and secondary offerings for the six months ended June 30, 2025. | ||||
(2) | Includes non-cash lease expense, provision for credit losses and inventory reserve. | ||||
(3) | Growth and other capital expenditures includes a $32.0 million increase and a $25.6 million increase in accrued capital expenditures for the three and six months ended June 30, 2026, respectively. Growth and other capital expenditures includes a $10.7 million decrease and a $3.4 million increase in accrued capital expenditures for the three and six months ended June 30, 2025, respectively. | ||||
(4) | Growth capital expenditures for the three months ended March 31, 2026 included an $18.0 million investment in power generation infrastructure related to the DPS Acquisition. This investment was included within Compression Infrastructure in our first quarter 2026 presentation. As part of the establishment of the Power Infrastructure reportable segment in the second quarter of 2026, the prior-period capital expenditure amount has been reclassified from Compression Infrastructure to Power Infrastructure in the year-to-date presentation to conform to the current-period segment presentation. | ||||
(5) | Other capital expenditures include a $42.6 million non-cash finance lease addition related to one of our operational offices. While included in our other capital expenditure metric, this finance lease commencement is a non-cash activity and therefore is not reflected as a capital expenditure within the investing section of our statement of cash flows. | ||||
Adjusted Net Income and Adjusted Diluted Earnings Per Share
Adjusted net income and adjusted earnings per share are considered non-GAAP measures. Adjusted net income is defined as net income adjusted to exclude certain items, as applicable, such as (i) impairment of long-lived assets; (ii) severance expenses; (iii) transaction expenses; (iv) sales tax reserve; (v) loss on disposal of business; (vi) loss (gain) on derivatives; (vii) loss on extinguishment of debt; and (viii) the tax effects of the adjustments. Adjusted earnings per share is calculated by dividing adjusted net income by the weighted average diluted shares outstanding. We believe these non-GAAP financial measures are useful to investors because they are key measures used by our management team to evaluate our operating performance, generate future operating plans, and make strategic decisions. Adjusted net income and adjusted earnings per share are presented for supplemental informational purposes only and should not be considered a substitute for financial information presented in accordance with GAAP, such as revenues, net income, operating income, earnings per share, or cash flows from operating activities. Adjusted net income and adjusted earnings per share as presented may not be comparable to similarly titled measures of other companies.
The following tables reconcile net income to adjusted net income and diluted earnings per share to adjusted diluted earnings per share, for each of the periods presented:
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| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||
| June 30, | June 30, | |||||||||||||||||||||||||
(in thousands, except per share data) | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||
| Net income | $ | 52,144 | $ | 39,984 | $ | 70,004 | $ | 71,020 | ||||||||||||||||||
| Loss on extinguishment of debt | — | — | 36,512 | — | ||||||||||||||||||||||
| Severance expense | — | — | 72 | 376 | ||||||||||||||||||||||
Transaction expenses (1) | 3,300 | — | 11,615 | 1,786 | ||||||||||||||||||||||
Tax effect of adjustments (2) | (1,169) | — | (11,927) | (561) | ||||||||||||||||||||||
| Adjusted net income | $ | 54,275 | $ | 39,984 | $ | 106,276 | $ | 72,621 | ||||||||||||||||||
| Weighted-average common shares outstanding: | ||||||||||||||||||||||||||
| Diluted | 96,805 | 90,040 | 92,193 | 90,234 | ||||||||||||||||||||||
| Diluted earnings (loss) per common share | $ | 0.53 | $ | 0.43 | $ | 0.75 | $ | 0.76 | ||||||||||||||||||
| Loss on extinguishment of debt | — | — | 0.40 | — | ||||||||||||||||||||||
| Severance expense | — | — | — | 0.01 | ||||||||||||||||||||||
Transaction expenses (1) | 0.03 | — | 0.12 | 0.02 | ||||||||||||||||||||||
Tax effect of adjustments (2) | (0.01) | — | (0.13) | (0.01) | ||||||||||||||||||||||
| Adjusted diluted earnings per common share | $ | 0.55 | $ | 0.43 | $ | 1.14 | $ | 0.78 | ||||||||||||||||||
(1) | Represents certain costs associated with non-recurring professional services and other costs, primarily related to the acquisition of DPS for the three and six months ended June 30, 2026 and the CSI Acquisition and secondary offerings for the three and six months ended June 30, 2025. | ||||
(2) | Represents the estimated tax effect of adjustments calculated using the Company’s adjusted tax provision. | ||||
Critical Accounting Policies and Estimates
For a discussion of our critical accounting estimates, see “Part II – Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Estimates” of our Annual Report on Form 10-K for the year ended December 31, 2025. There have been no significant changes to our critical accounting estimates since our Annual Report on Form 10-K for the year ended December 31, 2025.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Interest Rate Risk
Our primary exposure to interest rate risk results from outstanding borrowings under the ABL Facility, which has a floating interest rate component. We use interest rate derivative instruments to manage our exposure to fluctuations in these variable interest rate components.
As of June 30, 2026 and December 31, 2025, we had $380.9 million and $464.6 million, respectively, outstanding under the ABL Facility with floating interest rate swap notional amounts of $325.0 million and $325.0 million, respectively, attributed to our borrowings under our ABL Facility. Excluding the effect of the interest rate swap, the average annualized interest rate incurred on the ABL Facility for borrowings during the six months ended June 30, 2026, was approximately 6.03%. We estimate that a 1.0% increase in the applicable average interest rate for the six months ended June 30, 2026, would have resulted in an estimated $3.1 million increase in ABL-related interest expense excluding the impact of our swaps.
Counterparty Risk
Our credit exposure generally relates to receivables for services provided, delays on services paid and a counterparty’s failure to meet its obligations under a derivatives contract with the Company. If any significant customer or derivative counterparty of ours should have credit or financial problems resulting in a delay or failure to pay the amount due, it could have a material adverse effect on our business, financial condition, results of operations and cash flows. Additionally, if any significant vendor of ours should have financial problems or operational delays, it could have a material adverse effect on our business, financial condition, results of operations and cash flows.
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The Company uses credit and other financial criteria to evaluate the credit standing of, and to select, customers, vendors and counterparties to its derivative instruments. Although the Company does not obtain collateral or otherwise secure the fair value of its derivative instruments, associated credit risk is mitigated by the Company’s risk management policies and procedures.
Concentration Risk
For the six months ended June 30, 2026, and year ended December 31, 2025, our four largest customers, which are all investment-grade counterparties, accounted for approximately 30% and 32%, respectively, of our total revenues, with no single customer accounting for more than 15% for either ending period. If any significant customer of ours should discontinue their relationship with us, it could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Commodity Price Risk
Market risk is the risk of loss arising from adverse changes in market rates and prices. We do not take title to any natural gas or oil in connection with our services and, accordingly, have no direct exposure to fluctuating commodity prices. However, the demand for our Compression Infrastructure depends upon the continued demand for, and production of, natural gas and oil. Sustained low natural gas or oil prices over the long term could result in a decline in the production of natural gas or oil, which could result in reduced demand for our Compression Infrastructure.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
As of June 30, 2026, an evaluation was performed under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2026.
Changes in Internal Control Over Financial Reporting
During the quarter June 30, 2026, we completed the acquisition of DPS. Management is in the process of integrating DPS's operations and internal control structure into our overall internal control over financial reporting framework. Other than changes associated with the integration of DPS, there were no changes in internal control over financial reporting that occurred during the quarter ended June 30, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time, we and our subsidiaries may be involved in various claims and litigation arising in the ordinary course of business. In management’s opinion, the resolution of such matters is not expected to have a material adverse effect on our financial position, results of operations or cash flows.
See the subsection titled “Sales Tax Contingency” and “Legal Matters” in Note 13. Commitments and Contingencies to our unaudited condensed consolidated financial statements in Part I, Item 1 “Financial Statements” of this Report for more information on certain litigation.
Item 1A. Risk Factors.
Notwithstanding the below risk factor updates, there have been no material changes to the risk factors previously disclosed in Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
Many of Kodiak’s power systems involve long sales cycles and are subject to extended lead times and limited availability of power generation equipment.
The sales cycle for Kodiak’s power systems, from initial contact with potential customers to the commencement of field delivery, may be lengthy. Customers generally consider a wide range of solutions before making a decision to rent or purchase power systems. Before a customer commits to rent or purchase power systems, they often require a significant technical review, assessment of competitive offerings and approval at a number of management levels within their organization. During the time the customers are evaluating Kodiak’s distributed power offerings, Kodiak may incur substantial sales and marketing, engineering, and other expenses, which we may ultimately be unable to offset with recognized profits.
In addition, power systems sales are subject to extended lead times and limited availability of power generation equipment. As a result, Kodiak may commit substantial capital in advance of any binding customer commitment, increasing its working capital requirements. If deployments are delayed or cancelled, Kodiak may experience stranded assets or impairment charges.
Distributed power solutions in some applications compete with access to the electrical grid.
Distributed power solutions are an alternative for customers to consider when grid access is unavailable, costly, or delayed. Kodiak’s distributed power service offering could be adversely affected in the event that large-scale utility projects are completed and the associated transmission and distribution networks are established or if grid power otherwise becomes readily available to customers on terms that are more attractive than those that Kodiak offers. Should this occur, customers may decide not to use Kodiak’s service offering or use it as bridge power only until interconnected to the grid or as backup power thereafter. If this occurs, Kodiak may not be able to achieve its expected returns and its results of operations and cash flow may be adversely impacted.
Kodiak may be unable to adapt its distributed power technologies to meet increasing customer needs and power loads, which could result in increased downtime of its power generation offering and disruptions to the power supply to its customers.
Demand for power has continued to significantly outpace available power generation supply from the grid, with the electrification of the oil and natural gas industry, as an example, straining aging and unreliable power grids. Further, the expanding use of artificial intelligence has led to the expansion of existing data centers and plans for new data centers.
The operation of Kodiak’s power generation facilities, information technology systems and other assets and conduct of other activities subjects Kodiak to a variety of risks, including the breakdown or failure of equipment, accidents, security breaches, viruses or outages affecting information technology systems, labor disputes, obsolescence, delivery/transportation problems and disruptions of fuel supply, failure to receive spare parts in a timely manner, failure to effectively manage related power loads, and performance below expected levels. As Kodiak expands distributed power offerings, the possibility exists that its planned offerings may not be able to effectively manage related power loads, resulting in potential downtimes and disruptions for its customers. Such experiences could have a material adverse effect on Kodiak’s business and operating results due to the damage to its reputation and the resulting dissatisfaction of customers. In addition, Kodiak is typically required to commit and install more generating capacity than is required under its power supply contracts in order to meet the reliability standards under those contracts, which increases the capital cost
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to Kodiak of the installed equipment. If Kodiak is unable to adapt its power generation technologies to meet future demand and customer needs as they evolve, or otherwise unable to meet their reliability requirements, its business and operating results may be adversely affected.
In addition, the sustainability of the favorable supply-demand dynamic in the power sector depends on multiple factors, including factors relating to technological advancements such as continued demand growth for generative AI computing applications, cloud computing, the level and pace at which the power industry can invest in power infrastructure and the pace of continued electrification driven demand growth.
Kodiak faces a variety of risks related to its diversification and entry into new lines of business in distributed power generation.
The diversification of Kodiak’s business as a provider of scaled distributed power and energy storage solutions to large-scale, high-demand customers, including data centers, industrial facilities, and utility-scale sites, carries a number of risks. Kodiak will become subject to laws and regulations previously inapplicable to its existing business and this could lead to additional litigation, compliance and regulatory risk. Kodiak’s expansion into the distributed power solutions business will also create the need for additional capital and other resources, the cost and availability of which may depend on market conditions, regulatory landscape, financial and operating results, interest rates, inflationary considerations, compliance with covenants under its credit facility, fuel costs (including the price of natural gas) and other considerations. Furthermore, while Kodiak’s management team has a track record of successfully executing on the growth of its existing business, the team has not directly engaged in the distributed power solutions business before and this lack of experience could have adverse impacts and complications such as on cost and timing to execute on the new business and the overall success of the program. If Kodiak is unable to successfully execute on this new line of business, its revenue and profitability may not grow as expected, its competitiveness may be materially and adversely affected, and its reputation and business may be harmed.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Except as previously disclosed in Current Reports on Form 8-K, no unregistered sales of the Company’s equity securities were made during the three months ended June 30, 2026.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not Applicable.
Item 5. Other Information.
Securities Trading Plans of Directors and Executive Officers
During the three months ended June 30, 2026, the following officer (as defined in Rule 16a-1(f) under the Exchange Act) adopted a written plan intended to satisfy the affirmative defense conditions of Rule 10b5-1(c).
Other than as disclosed below, no directors or executive officers adopted , modified or terminated
| Name | Title | Adoption Date | Expiration Date | Aggregate # of securities to be sold | ||||||||||||||||||||||
(1)The Rule 10b5-1 trading arrangement allows for the sale of shares subject to future vesting of equity awards, including performance stock unit awards, net of shares withheld for taxes. The exact number of shares sold depends on settlement outcomes and the tax withholdings, and therefore is not yet determinable.
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Item 6. Exhibits.
Exhibit Number | Description | |||||||
| 3.1 | Restated Certificate of Incorporation of Kodiak Gas Services, Inc. (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on May 7, 2026). | |||||||
| 3.2 | Third Amended and Restated Bylaws of Kodiak Gas Services, Inc. (incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on May 7, 2026). | |||||||
| 3.3 | Certificate of Designations of Series A Preferred Stock of Kodiak Gas Services, Inc. (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on April 1, 2024). | |||||||
| 4.1 | Registration Rights Agreement, dated as of July 3, 2023, by and among Kodiak Gas Services, Inc., Frontier TopCo Partnership, L.P. and each of the other signatories from time to time party thereto (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on July 5, 2023). | |||||||
| 4.2 | Stockholders’ Agreement, dated as of July 3, 2023, by and among Kodiak Gas Services, Inc. and Frontier TopCo Partnership, L.P. (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on July 5, 2023). | |||||||
| 4.3 | Registration Rights Agreement, dated as of April 1, 2024 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on April 1, 2024). | |||||||
| 31.1* | Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||||||
| 31.2* | Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||||||
| 32.1** | Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |||||||
| 32.2** | Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |||||||
| 101.INS* | Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. | |||||||
| 101.SCH* | Inline XBRL Taxonomy Extension Schema Document | |||||||
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |||||||
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document | |||||||
| 101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document | |||||||
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |||||||
| 104* | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |||||||
*Filed herewith.
**Furnished herewith.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Kodiak Gas Services, Inc. | ||||||||
Date: August 7, 2026 | By: | /s/ John B. Griggs | ||||||
| John B. Griggs | ||||||||
| Executive Vice President and Chief Financial Officer | ||||||||
| (Principal Financial Officer) | ||||||||
Date: August 7, 2026 | By: | /s/ Ewan W. Hamilton | ||||||
| Ewan W. Hamilton | ||||||||
| Executive Vice President and Chief Accounting Officer | ||||||||
| (Principal Accounting Officer) | ||||||||
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