Kodiak Gas Services Inc. press release

Kodiak Gas Services Reports Fourth Quarter and Full Year 2025 Financial Results; Provides Full Year 2026 Guidance

2026-02-25

NYSE - New York Stock Exchange · Natural Gas · Oil · United States · Corporate Finance

Kodiak Gas Services Reports Fourth Quarter and Full Year 2025 Financial Results; Provides Full Year 2026 Guidance

Kodiak Gas Services, Inc. (NYSE: KGS) (“Kodiak” or the “Company”), a leading provider of critical energy infrastructure and contract compression services, today reported financial and operating results for the fourth quarter and full year ended December 31, 2025. The Company also announced full-year 2026 guidance.

Fourth Quarter 2025 and Recent Highlights

Reported net income of $24.6 million, or $0.28 per diluted share and adjusted net income (1) of $35.3 million, or $0.40 per adjusted diluted share (1)

Realized Contract Services gross margin percentage of 45.0% and record adjusted gross margin percentage (1) of 69.2%

Record quarterly adjusted EBITDA (1) of $184.5 million, a 9.1% increase compared to fourth quarter 2024

Quarterly net cash provided by operating activities of $194.9 million and discretionary cash flow (1) of $112.5 million, a 4.5% increase compared to fourth quarter 2024

Fleet utilization increased to 97.7%, a 120 basis point increase compared to fourth quarter 2024

Announced agreement to acquire Distributed Power Solutions, LLC on February 5, 2026

Full Year 2025 Highlights

Generated net cash provided by operating activities of $599.7 million and discretionary cash flow (1) of $461.7 million, a 23.7% increase compared to 2024

Returned over $263 million to stockholders through dividends and share repurchases

Achieved total leverage target of 3.5x at year-end 2025

Sold Mexico operations, completing the divestment of all international operations

2026 Guidance Highlights

Provided full year 2026 capital spending outlook and financial guidance ranges, excluding any impact from the pending acquisition of Distributed Power Solutions, LLC

2026 Adjusted EBITDA expected to be in the range of $750 million to $780 million

Growth capital expenditures expected to be in the range of $235 million to $265 million and deliver approximately 150,000 new unit horsepower

CEO Commentary

“I'm extremely proud of Kodiak’s record performance in 2025, which reflects the strength of our business model, the dedication of our team, and the continued demand for large horsepower contract compression,” said Mickey McKee, Kodiak's President and Chief Executive Officer. “Our strong fourth‑quarter results included new high‑water marks in Contract Services adjusted gross margin percentage, adjusted EBITDA, and free cash flow, underscoring the effectiveness of our strategic focus on large‑horsepower compression and fleet optimization. Continued investments in technology and talent are enhancing our operational execution and enabling us to meet our customers’ evolving needs with greater reliability and efficiency.

“Kodiak continues to deliver on the commitments we’ve made to our stakeholders, including returning capital to shareholders and maintaining a disciplined balance sheet. In 2025, we returned over $263 million to shareholders through dividends and share repurchases and achieved our leverage target of 3.5x at year‑end.

“As we look ahead to 2026, we remain focused on operational excellence, disciplined capital allocation, and strategic growth—supported by the recently announced acquisition of Distributed Power Solutions. Our 2026 guidance reflects confidence in our ability to generate sustainable growth in our contract compression business, and we look forward to providing updates on our combined compression and distributed power offering in the months ahead. I want to thank our employees for their exceptional work and our customers and shareholders for their continued support as we build on this momentum in the year ahead.”

Segment Information

Contract Services segment revenue was $301.8 million in the fourth quarter of 2025, a 7.7% increase compared to $280.2 million in the fourth quarter of 2024. Contract Services segment gross margin was $135.7 million in the fourth quarter of 2025, a 16.4% increase compared to $116.6 million in the fourth quarter of 2024 and adjusted gross margin was $208.9 million in the fourth quarter of 2025, an 11.7% increase compared to $187.0 million in the fourth quarter of 2024.

Other Services segment revenue was $31.1 million in the fourth quarter of 2025, a 6.0% increase compared to $29.3 million in the fourth quarter of 2024. Other Services segment gross margin and adjusted gross margin were each $4.0 million in the fourth quarter of 2025, a 6.6% decrease compared to $4.2 million for each measure in the fourth quarter of 2024.

Long-Term Debt and Liquidity

Total debt outstanding was $2.6 billion as of December 31, 2025, and the Company had $1.5 billion available on its ABL Facility. Kodiak’s credit agreement leverage ratio was 3.5x as of December 31, 2025.

Acquisition of Distributed Power Solutions, LLC

On February 5. 2026, Kodiak announced that it entered into a definitive agreement to acquire Distributed Power Solutions, LLC, a leading provider of turnkey, scalable and highly-reliable distributed power solutions, in an equity and cash transaction valued at approximately $675 million (the “Acquisition”), subject to adjustment in accordance with the purchase agreement. The purchase price includes $575 million in cash, subject to adjustment in accordance with the purchase agreement, and the issuance of 2,401,278 shares, of Kodiak common stock, to the sellers.

The Acquisition is expected to close in early April of 2026, subject to regulatory approvals and customary closing conditions, including the expiration or termination of all waiting periods imposed under the Hart-Scott Rodino Antitrust Improvements Act of 1976, as amended. Kodiak expects to update full-year 2026 guidance after closing to reflect the contribution from the Acquisition.

Summary Financial Data

Three Months Ended

Year Ended

(in thousands, excluding percentages)

December 31, 2025

September 30, 2025

December 31, 2024

December 31, 2025

December 31, 2024

Total revenues

$

332,871

$

322,744

$

309,519

$

1,308,100

$

1,159,311

Net income (loss) attributable to common shareholders

$

24,625

$

(14,011

)

$

19,083

$

80,521

$

49,895

Adjusted net income (1)

$

35,261

$

31,539

$

20,645

$

139,421

$

92,078

Adjusted EBITDA (1)

$

184,451

$

174,702

$

169,072

$

715,033

$

609,550

Adjusted EBITDA percentage (1)

55.4

%

54.1

%

54.6

%

54.7

%

52.6

%

Contract Services revenue

$

301,810

$

296,970

$

280,211

$

1,181,270

$

1,034,173

Contract Services adjusted gross margin (1)

$

208,911

$

202,748

$

187,027

$

807,777

$

679,157

Contract Services adjusted gross margin percentage (1)

69.2

%

68.3

%

66.7

%

68.4

%

65.7

%

Other Services revenue

$

31,061

$

25,774

$

29,308

$

126,830

$

125,138

Other Services adjusted gross margin (1)

$

3,961

$

3,782

$

4,242

$

20,398

$

21,778

Other Services adjusted gross margin percentage (1)

12.8

%

14.7

%

14.5

%

16.1

%

17.4

%

Maintenance capital expenditures

$

22,265

$

19,765

$

14,858

$

76,002

$

66,200

Growth capital expenditures (2)

$

25,253

$

80,330

$

44,693

$

199,532

$

227,193

Other capital expenditures (3)

11,895

12,202

26,393

62,753

58,799

Total Growth and Other capital expenditures

$

37,148

$

92,532

$

71,086

$

262,285

$

285,992

Discretionary cash flow (1)

$

112,524

$

116,652

$

107,690

$

461,684

$

373,281

Free cash flow (1)

$

78,609

$

33,463

$

56,657

$

229,581

$

122,319

(1)

Adjusted net income, adjusted EBITDA, adjusted EBITDA percentage, adjusted gross margin, adjusted gross margin percentage, discretionary cash flow and free cash flow are non-GAAP financial measures. For definitions and reconciliations to the most directly comparable financial measures calculated and presented in accordance with GAAP, see “Non-GAAP Financial Measures” below.

(2)

Growth 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, 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 their supporting infrastructure, and (3) expand the operating capacity or operating income capacity of existing assets.

(3)

Other 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. Other capital expenditures were previously included in growth capital expenditures, but are now shown separately for both current and historical periods.

Summary Operating Data

(as of the dates indicated)

December 31, 2025

September 30, 2025

December 31, 2024

Fleet horsepower (1)

4,456,285

4,456,492

4,402,747

Revenue-generating horsepower (2)

4,354,724

4,350,576

4,250,499

Fleet compression units

4,736

4,767

5,069

Revenue-generating compression units

4,490

4,510

4,592

Revenue-generating horsepower per revenue-generating compression unit (3)

970

965

926

Fleet utilization (4)

97.7

%

97.6

%

96.5

%

(1)

Fleet horsepower includes (x) revenue-generating horsepower and (y) idle horsepower, which is comprised of compression units that do not have a signed contract or are not subject to a firm commitment from our customer and therefore are not currently generating revenue.

(2)

Revenue-generating horsepower includes compression units that are operating under contract and generating revenue and compression 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 divided by (ii) revenue-generating compression units at period end.

(4)

Fleet utilization is calculated as (i) revenue-generating horsepower divided by (ii) fleet horsepower.

Full-Year 2026 Guidance

Kodiak is providing initial guidance for the full year 2026. Note that the amounts below do not include any impact from the pending acquisition of Distributed Power Solutions, LLC.

Full-Year 2026 Guidance

(in thousands, excluding percentages)

Low

High

Adjusted EBITDA (1)

$

750,000

$

780,000

Discretionary cash flow (1)(2)

$

480,000

$

510,000

Segment Information

Contract Services revenues

$

1,240,000

$

1,280,000

Contract Services adjusted gross margin percentage (1)

67.5

%

69.5

%

Other Services revenues

$

125,000

$

150,000

Other Services adjusted gross margin percentage (1)

13.0

%

16.0

%

Capital Expenditures

Maintenance capital expenditures

$

75,000

$

85,000

Growth capital expenditures

$

235,000

$

265,000

Other capital expenditures

40,000

50,000

Total Growth and Other capital expenditures

$

275,000

$

315,000

(1)

The Company is unable to reconcile projected adjusted EBITDA to projected net income (loss) and discretionary cash flow to projected net cash provided by operating activities and projected adjusted gross margin percentage to projected gross margin percentage, the most comparable financial measures calculated in accordance with GAAP, respectively, without unreasonable efforts because components of the calculations are inherently unpredictable, such as changes to current assets and liabilities, unknown future events, and estimating certain future GAAP measures. The inability to project certain components of the calculation would significantly affect the accuracy of the reconciliations.

(2)

Discretionary cash flow guidance assumes no change to Secured Overnight Financing Rate futures.

Conference Call

Kodiak will conduct a conference call on Thursday, February 26, 2026, at 11:00 a.m. Eastern Time (10:00 a.m. Central Time) to discuss financial and operating results for the fourth quarter and full year ended December 31, 2025. To listen to the call by phone, dial 877-407-4012 and ask for the Kodiak Gas Services call at least 10 minutes prior to the start time. To listen to the call via webcast, please visit the Investors tab of Kodiak’s website at www.kodiakgas.com .

About Kodiak

Kodiak is a leading contract compression services provider in the United States, serving as a critical link in the infrastructure that enables the safe and reliable production and transportation of natural gas and oil. Headquartered in The Woodlands, Texas, Kodiak provides contract compression and related services to oil and gas producers and midstream customers in high–volume gas gathering systems, processing facilities, multi-well gas lift applications and natural gas transmission systems. More information is available at www.kodiakgas.com .

Non-GAAP Financial Measures

Adjusted net income and adjusted earnings per share are considered non-GAAP measures. Adjusted net income (loss) is defined as net income (loss) excluding (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; and (vii) the tax effects of the adjustments.

Adjusted earnings (loss) per share is calculated by dividing adjusted net income by the weighted average diluted shares outstanding.

Adjusted EBITDA is defined net income (loss) before interest expense; income tax expense; and depreciation and amortization; plus (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; and (viii) loss (gain) on sale of assets. Adjusted EBITDA percentage is defined as adjusted EBITDA divided by total revenues.

Adjusted net income, adjusted diluted EPS, 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: (i) the financial performance of our assets without regard to the impact of financing methods, capital structure or historical cost basis of our assets; (ii) the viability of capital expenditure projects and the overall rates of return on alternative investment opportunities; (iii) the ability of our assets to generate cash sufficient to make debt payments and pay dividends; and (iv) 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 adjusted net income, adjusted diluted EPS, 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. Reconciliations of adjusted net income and adjusted EBITDA to net income (loss) and adjusted diluted EPS to GAAP diluted earnings (loss) per share, the most directly comparable GAAP financial measures are presented below.

Adjusted gross margin is defined as revenue less cost of operations, exclusive of depreciation and amortization expense. Adjusted gross margin percentage is defined as adjusted gross margin divided by total revenues. We believe adjusted gross margin and adjusted gross margin percentage are useful as supplemental measures to investors of our operating profitability. Reconciliations of adjusted gross margin to gross margin are presented below.

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 (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. A reconciliation of discretionary cash flow to net cash provided by operating activities is presented below.

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 (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. A reconciliation of free cash flow to net cash provided by operating activities is presented below.

Cautionary Note Regarding Forward-Looking Statements

This news release contains, and our officers and representatives may from time to time make, “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: (i) expected operating results, such as revenue growth and earnings, including the integration of acquired businesses into our operations, and our ability to service our indebtedness; (ii) anticipated levels of capital expenditures and uses of capital; (iii) current or future volatility in the credit markets and future market conditions; (iv) potential or pending acquisition transactions or other strategic transactions, including the pending acquisition of Distributed Power Solutions, LLC (“DPS”), 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; (v) expectations of the effect on our financial condition of claims, litigation, environmental costs, contingent liabilities and governmental and regulatory investigations and proceedings; (vi) production and capacity forecasts for the natural gas and oil industry; (vii) strategy for customer retention, growth, fleet maintenance, market position and financial results; (viii) our interest rate hedges; and (ix) 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: (i) a reduction in the demand for natural gas and oil; (ii) the loss of, or the deterioration of the financial condition of, any of our key customers; (iii) nonpayment and nonperformance by our customers, suppliers or vendors; (iv) competitive pressures that may cause us to lose market share; (v) our ability to successfully integrate any acquired businesses, including DPS, if acquired, and realize the expected benefits thereof in the expected timeframe or at all; (vi) our ability to fund purchases of additional compression equipment; (vii) a deterioration in general economic, business, geopolitical or industry conditions, including as a result of the conflict between Russia and Ukraine, hostilities in the Middle East and developments between the United States and Venezuela, inflation, and slow economic growth in the United States; (viii) a downturn in the economic environment, as well as continued inflationary pressures; (ix) the outcome of any pending internal review or any future related government enforcement actions; (x) tax legislation and the impact of changes to applicable tax laws, including the passage of the One Big Beautiful Bill Act, ("OBBBA") and administrative initiatives or challenges to our tax positions; (xi) the loss of key management, operational personnel or qualified technical personnel; (xii) our dependence on a limited number of suppliers; (xiii) the cost of compliance with existing and new governmental regulations, including climate changed legislation, and the associated uncertainty given the current U.S. federal government administration; (xiv) 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; (xv) the cost of compliance with regulatory initiatives and stakeholders’ pressures, including sustainability and corporate responsibility; (xvi) the inherent risks associated with our operations, such as equipment defects and malfunctions; (xvii) our reliance on third-party components for use in our information technology ("IT") systems; (xviii) legal and reputational risks and expenses relating to the privacy, use and security of employee and client information; (xix) threats of cyber-attacks or terrorism; (xx) 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; (xxi) volatile and/or elevated interest rates and associated central bank policy actions; (xxii) 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; (xxiii) major natural disasters, severe weather events or other similar events that could disrupt operations; (xxiv) unionization of our labor force, labor interruptions and new or amended labor regulations; (xxv) renewal of insurance; (xxvi) the effectiveness of our disclosure controls and procedures; and (xxvii) such other factors as discussed throughout the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2025, to be filed with the U.S. Securities and Exchange Commission.(“SEC”).