Kodiak Gas Services Inc

Previous wording

On April 1, 2024, we completed the CSI Acquisition, pursuant to the terms of the Merger Agreement. CSI Compressco unitholders received 0.086 shares of Kodiak common stock for each CSI Compressco common unit owned. The Electing Unitholders received 0.086 limited liability company units representing economic interests in Kodiak Services (along with an equal number of shares of non-economic voting preferred stock of Kodiak) for each CSI Compressco common unit they held. At the option of the holder, each such unit will be redeemable for one share of Kodiak common stock (along with cancellation of a corresponding share of preferred stock), following a six-month post-closing lock-up and subject to certain conditions.

Current wording

On April 1, 2024, we completed the CSI Acquisition, pursuant to the terms of the Merger Agreement. CSI Compressco unitholders received 0.086 shares of common stock for each CSI Compressco common unit owned. The Electing Unitholders received 0.086 limited liability company units representing economic interests in Kodiak Services (along with an equal number of shares of non-economic voting preferred stock of Kodiak) for each CSI Compressco common unit they held. At the option of the holder, each such unit will be redeemable for one share of common stock (along with cancellation of a corresponding share of preferred stock), following a 180 day post-closing lock-up period and subject to certain conditions.

Previous wording

(1)Fleet horsepower includes owned horsepower excluding 27,663 and 32,340 of non-marketable or obsolete horsepower as of June 30, 2024, and 2023, respectively.

Current wording

(1)Fleet horsepower includes owned horsepower excluding 46,313 and 31,520 of non-marketable or obsolete horsepower as of September 30, 2024, and 2023, respectively.

Previous wording

(2)Revenue-generating horsepower includes fleet horsepower that is under contract, operating and generating revenue.

Current wording

(2)Revenue-generating horsepower includes fleet horsepower that is (x) under contract, operating and generating revenue or (y) under contract or subject to a firm commitment with a customer and available to be deployed.

Previous wording

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

Current wording

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

Previous wording

The 40.9% increase in fleet horsepower and revenue-generating horsepower, respectively, were primarily attributable to the (i) additional 1.2 million horsepower acquired as part of the CSI Acquisition and (ii) purchase and deployment of new compression units through organic growth. The 30.1% decrease in revenue-generating horsepower per revenue-generating compression unit was due to the lower average horsepower per unit of the fleet as part of the CSI Acquisition.

Current wording

The 37.5% and 32.7% increase in fleet horsepower and revenue-generating horsepower, respectively, were primarily attributable to the (i) additional 1.2 million horsepower acquired as part of the CSI Acquisition and (ii) purchase and deployment of new compression units through organic growth, offset by the sale of certain assets in the United States and our entity in Canada during the third quarter of 2024. The 15.4% decrease in revenue-generating horsepower per revenue-generating compression unit was due to the lower average horsepower per unit of the fleet acquired as part of the CSI Acquisition and offset by the sale of certain assets in the United States and all assets in Canada during the third quarter of 2024.

Previous wording

Contract Services revenue increased $110.3 million (30.7%) for the six months ended June 30, 2024, compared to the six months ended June 30, 2023. This was primarily related to a $108.4 million increase in contract compression services as a result of an increase in average revenue-generating horsepower, of which $76.4 million was related to the CSI Acquisition. Furthermore, there was also an increase of $1.9 million related to gas treating and cooling services as part of the CSI Acquisition.

Current wording

Contract Services revenue increased $97.6 million (52.3%) for the three months ended September 30, 2024, compared to the three months ended September 30, 2023. This was primarily related to a $90.7 million increase in contract compression services as a result of an increase in average revenue-generating horsepower, of which $74.2 million was related to the CSI

Previous wording

Other Services revenue increased $11.7 million (54.0%) for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. This increase was primarily due to a $10.1 million increase in parts sales, a $5.5 million increase in freight and crane charges related to mobilization of units, a $4.2 million increase in maintenance and overhaul services, and a $2.1 million increase in other field services, of which $19.5 million was related to the CSI Acquisition. This was partially offset by a $10.2 million decrease in revenues from station construction services, mostly due to a reduction in the average size of station construction projects.

Current wording

Other Services revenue decreased $4.0 million (9.0%) for the three months ended September 30, 2024, compared to the three months ended September 30, 2023. This decrease was primarily due a $21.9 million decrease in revenues from station construction services, mostly due to a reduction in the average size of station construction projects. This was offset by a $9.5 million increase in parts sales, a $4.0 million increase in freight and crane charges related to mobilization of units, a $2.1 million increase in maintenance and overhaul services, and a $1.9 million increase in other field services, of which $14.9 million was related to the CSI Acquisition.

Previous wording

Contract Services expenses increased $34.3 million (52.8%) for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. This was primarily due to a $16.0 million increase in direct labor expenses, a $6.1 million increase in parts used in support of our operations, a $4.0 million increase in lubricant oil and coolant, a $4.4 million increase in indirect expenses, mainly relating to vehicle and facility expenses, and a $0.6 million increase in gas treating expenses, much of which was attributable to the CSI Acquisition. In addition, there was a $3.3 million increase in sales and use tax accrual related to parts purchases as part of ongoing sales and use tax audits with the state of Texas.

Current wording

Contract Services expenses increased $31.1 million (47.6%) for the three months ended September 30, 2024, compared to the three months ended September 30, 2023. This was primarily due to a $14.8 million increase in direct labor expenses, a $7.2 million increase in parts used in support of our operations, a $4.2 million increase in lubricant oil and coolant, a $4.6 million increase in indirect expenses, mainly relating to vehicle and facility expenses, and a $0.5 million increase in gas treating expenses, much of which was attributable to the CSI Acquisition. In addition, there was a $0.5 million increase in sales and use tax accrual related to parts purchases as part of ongoing sales and use tax audits with the state of Texas.

Previous wording

Other Services expenses increased $9.8 million (54.4%) for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. This increase was primarily due to a $8.5 million increase in parts sales, a $4.8 million increase in freight and crane charges related to mobilization of units, a $3.8 million increase in maintenance and overhaul services, and a $2.3 million increase in other field services. This was partially offset by a $9.6 million decrease in expenses from station construction services, mostly due to slower demand on station projects.

Current wording

Other Services expenses decreased $6.1 million (15.8%) for the three months ended September 30, 2024, compared to the three months ended September 30, 2023. This decrease was primarily due to a $21.7 million decrease in expenses from station construction services, mostly due to slower demand on station projects. This was offset by a $8.4 million increase in parts sales, a $3.7 million increase in freight and crane charges related to mobilization of units, a $2.0 million increase in maintenance and overhaul services, and a $1.3 million increase in other field services.

Previous wording

Depreciation and Amortization increased $24.0 million (52.9%) for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. This increase was primarily due to a $21.2 million increase in depreciation and amortization related to the CSI Acquisition. The remaining increase is related to increased depreciation on compression equipment purchases.

Current wording

Depreciation and amortization increased $27.4 million (59.4%) for the three months ended September 30, 2024, compared to the three months ended September 30, 2023. This increase was primarily due to a $26.0 million increase in depreciation and amortization related to the CSI Acquisition. The remaining increase is related to increased depreciation on compression equipment purchases.

Previous wording

Selling, General and Administrative Expenses increased $46.5 million (346.0%) for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. This increase was due to a $14.6 million increase in professional fees, primarily related to transactions costs associated with the CSI Acquisition, a $14.4 million increase in labor and benefits, of which $9.0 million was related to severance, a $5.3 million increase in equity compensation expense related to equity compensation plans, a $4.5 million increase in bad debt expense related to expected credit losses, a $4.4 million increase in software expense, mainly related to the termination of an agreement as part of the CSI Acquisition, and a $3.3 million increase in other overhead expenses, mostly consisting of insurance and facility expenses.

Current wording

Selling, general and administrative expenses increased $15.9 million (80.8%) for the three months ended September 30, 2024, compared to the three months ended September 30, 2023. This increase was due to a $5.6 million increase in labor and benefits, of which $2.2 million was related to severance, a $4.6 million increase in professional fees, primarily related to transactions costs associated with the CSI Acquisition, a $1.4 million increase in equity compensation expense related to equity compensation plans, a $1.8 million increase in software expense, mainly related to the termination of an agreement as part of the CSI Acquisition, and a $4.5 million increase in other overhead expenses, mostly consisting of insurance and facility expenses. These increases were offset by a $2.0 million decrease in bad debt expense related to expected credit losses.

Previous wording

Interest Expense, Net decreased $21.5 million (29.2%) for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. This decrease was primarily due to a $21.8 million decrease in interest expense associated with lower outstanding borrowings on the ABL Facility and 2029 Senior Notes in the current quarter as compared to outstanding borrowings on the ABL Facility and Term Loan in the comparable quarter.

Current wording

Interest expense, net increased $14.3 million (36.0%) for the three months ended September 30, 2024, compared to the three months ended September 30, 2023. This increase was primarily due to increased interest expense associated with higher outstanding borrowings on the ABL Facility and 2029 Senior Notes in the current quarter as compared to outstanding borrowings on the ABL Facility and Term Loan in the comparable quarter.

Previous wording

Gain on Derivatives decreased $28.1 million (80.5%) for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. This decrease was primarily related to $6.8 million in cash received on derivatives for the three months ended June 30, 2024, due to an increase in the long-term Secured Overnight Financing Rate (“SOFR”) yield curve, as compared to a $3.6 million decrease in the fair value of derivatives and cash received on derivatives of $38.5 million for the three months ended June 30, 2023.

Current wording

Gain (loss) on derivatives decreased $35.5 million (234.3%) for the three months ended September 30, 2024, compared to the three months ended September 30, 2023. This decrease was primarily related to a decrease in the fair value of derivatives of $27.5 million offset by $5.0 million in cash received on derivatives for the three months ended September 30, 2024, due to a decrease in the long-term Secured Overnight Financing Rate (“SOFR”) yield curve, as compared to an $8.0 million increase in the fair value of derivatives due to an increase in the long-term SOFR yield curve and cash received on derivatives of $7.2 million for the three months ended September 30, 2023.

Previous wording

Income Tax Expense decreased by $3.5 million (60.1%) for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. This decrease was primarily due to a decrease in pre-tax income of $14.3 million for the three months ended June 30, 2024, compared to the three months ended June 30, 2023.

Current wording

Income tax (benefit) expense decreased by $10.1 million (127.6%) for the three months ended September 30, 2024, compared to the three months ended September 30, 2023. This decrease was primarily due to a decrease in pre-tax income of $38.1 million for the three months ended September 30, 2024, compared to the three months ended September 30, 2023.

Previous wording

Contract Services revenue increased $94.6 million (52.1%) for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. This was primarily related to a $92.7 million increase in contract compression services as a result of an increase in average revenue-generating horsepower, of which $76.4 million was related to the CSI Acquisition. Furthermore, there was also an increase of $1.9 million related to gas treating and cooling services as part of the CSI Acquisition.

Current wording

Contract Services revenue increased $208.0 million (38.1%) for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023. This was primarily related to a $194.4 million increase in contract compression services as a result of an increase in average revenue-generating horsepower, of which $164.3 million was related to the CSI Acquisition. Furthermore, there was also an increase of $13.6 million related to gas treating and cooling services as part of the CSI Acquisition.

Previous wording

Other Services revenue increased $21.4 million (62.7%) for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. This increase was primarily due to a $10.1 million increase in parts sales, a $5.5 million increase in freight and crane charges related to mobilization of units, a $4.2 million increase in maintenance and overhaul services, and a $2.3 million increase in other field services, of which $19.5 million was related to the CSI Acquisition. This was partially offset by a $0.7 million decrease in revenues from station construction services.

Current wording

Other Services revenue increased $17.4 million (22.2%) for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. This increase was primarily due to a $19.6 million increase in parts sales, a $9.5 million increase in freight and crane charges related to mobilization of units, a $6.3 million increase in maintenance and overhaul services, and a $4.2 million increase in other field services, of which $34.4 million was related to the CSI Acquisition. This was partially offset by a $22.6 million decrease in revenues from station construction services.

Previous wording

Contract Services expenses increased $37.4 million (29.3%) for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. This was primarily due to a $18.6 million increase in direct labor expenses, a $7.3 million increase in parts used in support of our operations, a $4.2 million increase in lubricant oil and coolant expenses, a $3.3 million increase in indirect expenses, mainly relating to vehicle and facility expenses and a $0.7 million increase in gas treating expenses, much of which was attributable to the CSI Acquisition. In addition, there was an increase of $3.3 million related to additional sales and use tax accrual amounts related to parts purchases as part of ongoing sales and use tax audits with the state of Texas.

Current wording

Contract Services expenses increased $68.6 million (35.5%) for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. This was primarily due to a $33.4 million increase in direct labor expenses, a $15.1 million increase in parts used in support of our operations, a $8.4 million increase in lubricant oil and coolant expenses, a $7.7 million increase in indirect expenses, mainly relating to vehicle and facility expenses and a $1.1 million increase in gas treating expenses, much of which was attributable to the CSI Acquisition. In addition, there was an increase of $3.6 million related to additional sales and use tax accrual amounts related to parts purchases as part of ongoing sales and use tax audits with the state of Texas.

Previous wording

Other Services expense increased $18.5 million (68.4%) for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. This increase was primarily due to a $8.5 million increase in parts sales, a $4.8 million increase in freight and crane charges related to mobilization of units, a $3.8 million increase in maintenance and overhaul service related expenses, and a $2.3 million increase in other field service expenses. This was partially offset by a $0.9 million decrease in expenses from station construction services.

Current wording

Other Services expense increased $12.4 million (18.8%) for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. This increase was primarily due to a $16.9 million increase in parts sales, a $7.1 million increase in freight and crane charges related to mobilization of units, a $6.0 million increase in maintenance and overhaul service-related expenses, and a $3.6 million increase in other field service expenses. This was partially offset by a $22.2 million decrease in expenses from station construction services.

Previous wording

Depreciation and Amortization increased $26.1 million (28.9%) for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. This increase was primarily due to a $21.2 million increase in depreciation and amortization related to the CSI Acquisition. The remaining increase is related to increased depreciation on compression equipment purchases.

Current wording

Depreciation and amortization increased $53.4 million (39.2%) for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. This increase was primarily due to a $46.4 million increase in depreciation and amortization related to the CSI Acquisition. The remaining increase is related to increased depreciation on compression equipment purchases.

Previous wording

Selling, General and Administrative expenses increased $58.2 million (219.5%) for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. This increase was due to a $23.1 million increase in professional fees, primarily related to transactions costs associated with the CSI Acquisition, a $14.7 million increase in labor and benefits, of which $9.0 million was related to severance, a $7.3 million increase in equity compensation expense related to equity compensation plans, a $4.6 million increase in bad debt expense, mainly related to expected credit losses. a $4.6 million increase in software expense, mainly related to the termination of an agreement as part of the CSI Acquisition, and a $3.9 million increase in other overhead expenses, mostly consisting of insurance and facility expenses.

Current wording

Selling, general and administrative expenses increased $74.1 million (160.5%) for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. This increase was due to a $27.7 million increase in professional fees, primarily related to transactions costs associated with the CSI Acquisition, a $20.3 million increase in labor and benefits, of which $11.2 million was related to severance, a $8.7 million increase in equity compensation expense related to equity compensation plans, a $2.6 million increase in bad debt expense, mainly related to expected credit losses, a $6.4 million increase in software expense, mainly related to the termination of an agreement as part of the CSI Acquisition, and a $8.5 million increase in other overhead expenses, mostly consisting of insurance and facility expenses.

Previous wording

Interest Expense, Net decreased $50.4 million (35.4%) for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. This decrease was primarily due a $50.7 million decrease as a result of lower borrowings on the ABL Facility and 2029 Senior Notes in the current year to date period as compared to the ABL Facility and Term Loan in the comparable year to date period.

Current wording

Interest expense, net decreased $36.2 million (19.9%) for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. This decrease was primarily due to lower borrowings on the ABL Facility and 2029 Senior Notes in the current year to date period as compared to the ABL Facility and Term Loan in the comparable year to date period.

Previous wording

Gain on Derivatives decreased $0.4 million (1.4%) for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. This decrease was primarily related to a $14.3 million increase in the fair value of derivatives and an increase in cash received on derivatives of $12.3 million for the six months ended June 30, 2024, due to an increase in the long-term SOFR yield curve, as compared to a $21.5 million decrease in the fair value of derivatives and cash received on derivatives of $48.5 million for the six months ended June 30, 2023, due to settlement on the termination of derivatives attributable to the Term Loan and a decrease in the long-term SOFR yield curve.

Current wording

Gain on derivatives decreased $35.9 million (85.2%) for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. This decrease was primarily related to a $13.2 million decrease in the fair value of derivatives offset by an increase in cash received on derivatives of $19.4 million for the nine months ended September 30, 2024, due to an decrease in the long-term SOFR yield curve, as compared to a $25.8 million settlement on the termination of derivatives attributable to the Term Loan and $29.8 million cash received on derivative settlements on our interest rate swaps and collars, offset by a decrease in the change in fair value of the derivatives of $13.5 million for the nine months ended September 30, 2023, due to settlement on the termination of derivatives attributable to the Term Loan and a decrease in the long-term SOFR yield curve.

Previous wording

Income Tax Expense increased by $10.4 million (556.2%) for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. This was primarily due to an increase in pre-tax income of $42.1 million for the six months ended June 30, 2024, compared to pre-tax income for the six months ended June 30, 2023.

Current wording

Income tax expense increased by $0.3 million (2.7%) for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. This was primarily due to an increase in pre-tax income of $4.1 million for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023.

Previous wording

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 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. At June 30, 2024, we had approximately $415.4 million of liquidity consisting of $4.0 million in cash and cash equivalents and $411.4 million available under the ABL Facility.

Current wording

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 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. At September 30, 2024, we had approximately $313.3 million of liquidity consisting of $7.4 million in cash and cash equivalents and $305.9 million available under the ABL Facility.

Previous wording

•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. 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 preventive maintenance expenses, are typically sufficient to sustain the operating capacity of our assets over the full expected useful life of the compression units. Maintenance capital expenditures do not include expenditures to replace compression units when they reach the end of their useful lives.

Current wording

•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. 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 preventive maintenance expenses, are typically sufficient to sustain the operating capacity of our assets over the full expected useful life of the compression units.

Previous wording

For the six months ended June 30, 2024, growth capital expenditures were $149.8 million and maintenance capital expenditures were $29.8 million. For the six months ended June 30, 2023, growth capital expenditures were $68.3 million and maintenance capital expenditures were $15.7 million. The increase in growth capital expenditures includes a $20.2 million non-cash increase related to our sales tax accrual on compression equipment purchases related to audits we are undergoing with the state of Texas. The remaining amounts were primarily related to the timing of compression unit purchases necessary to support operating capacity demand. The increase in maintenance capital expenditures was primarily due to an increase in unit overhauls scheduled based on the age and operating hours of such units.

Current wording

For the nine months ended September 30, 2024, growth capital expenditures were $214.9 million and maintenance capital expenditures were $51.3 million. For the nine months ended September 30, 2023, growth capital expenditures were $124.0 million and maintenance capital expenditures were $28.1 million. The increase in growth capital expenditures includes a $21.8 million non-cash increase related to our sales tax accrual on compression equipment purchases related to audits we are undergoing with the state of Texas. The remaining amounts were primarily related to the timing of compression unit purchases necessary to support operating capacity demand. The increase in maintenance capital expenditures was primarily due to maintenance capital expenditures on the assets acquired in the CSI Acquisition since closing on April 1, 2024 and an increase in unit overhauls scheduled based on the age and operating hours of such units.

Previous wording

Our Board of Directors may elect to declare cash dividends on our common stock, subject to our compliance with applicable law, and depending on, among other things, economic conditions, our financial condition, results of operations, projections, liquidity, earnings, legal requirements and restrictions in the agreements governing our indebtedness (as further discussed herein). The timing, amount and financing of dividends, if any, are subject to the discretion of our Board from time to time.

Current wording

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, economic conditions, our financial condition, results of operations, projections, liquidity, earnings, legal requirements and restrictions in the agreements governing our indebtedness (as further discussed herein). The timing, amount and financing of dividends, if any, are subject to the discretion of our Board from time to time.

Previous wording

On August 1, 2024, the Company’s Board declared the Common Stock Dividend and, in conjunction with the Common Stock Dividend, Kodiak Services declared a distribution on its units of $0.41 per unit payable on August 16, 2024 to all unitholders of record of Kodiak Services as of the close of business on August 12, 2024.

Current wording

On October 21, 2024, our Board declared the Common Stock Dividend and, in conjunction with the Common Stock Dividend, Kodiak Services declared a distribution on its units of $0.41 per unit payable on November 8, 2024 to all unitholders of record of Kodiak Services as of the close of business on November 1, 2024.

Previous wording

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 for the purpose of funding any such dividends and our budgeted growth capital expenditures for such period, we may fund such shortfall (i) with additional borrowings under our ABL Facility, which, as of June 30, 2024, had $411.4 million available (subject to the requirement that our availability, in the case of dividends, under the ABL Facility exceeds the greater of (x) 10% of the total commitments under the facility of $2.2 billion or (y) $200 million) or (ii) reduce our growth capital expenditures for such period. Any such additional borrowings under our ABL Facility will result in an increase in our interest expense for such period. Any such reduction in our growth capital expenditures may result in lower growth in our revenue-generating horsepower in future periods.

Current wording

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 for the purpose of funding any such dividends and our budgeted growth capital expenditures for such period, we may fund such shortfall (i) with additional borrowings under our ABL Facility, which, as of September 30, 2024, had $305.9 million available (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 such Specified Transaction) is not less than $125,000,000) or (ii) reduce our growth capital expenditures for such period. Any such additional borrowings under our ABL Facility will result in an increase in our interest expense for such period. Any such reduction in our growth capital expenditures may result in lower growth in our revenue-generating horsepower in future periods.

Previous wording

•Long-term debt of $2.5 billion, of which $1.8 billion is due in 2028 and $750 million is due in 2029.

Current wording

•Long-term debt of $2.6 billion, of which $1.9 billion is due in 2028 and $750.0 million is due in 2029.

Previous wording

•Purchase commitments of $220.7 million, of which $169.3 million is expected to be settled within the next twelve months; primarily consisting of future commitments to purchase new compression units that have been ordered but not yet received. See Note 14 (“Commitments and Contingencies”) to the condensed consolidated financial statements included elsewhere in this Report.

Current wording

•Purchase commitments of $158.9 million, of which $147.6 million is expected to be settled within the next twelve months; primarily consisting of future commitments to purchase new compression units that have been ordered but not yet received. See Note 14 (“Commitments and Contingencies”) to the condensed consolidated financial statements included elsewhere in this Report.

Previous wording

As of June 30, 2024, other commitments include operating lease payments totaling $58.9 million.

Current wording

As of September 30, 2024, other commitments include operating lease payments totaling $60.5 million.

Previous wording

The following table summarizes our cash flows for the six months ended June 30, 2024, and 2023 (in thousands):

Current wording

The following table summarizes our cash flows for the nine months ended September 30, 2024, and 2023 (in thousands):

Previous wording

The $54.7 million increase in net cash provided by operating activities for the six months ended June 30, 2024, compared to the six months ended June 30, 2023, was primarily due to a $44.3 million decrease in interest expense, net of debt issuance cost amortization, a $33.7 million increase in non-cash operating items, namely depreciation and amortization, taxes and equity compensation, and a $20.9 million increase from working capital changes, namely changes in accounts receivable, net, accrued and other liabilities, and contract liabilities. This increase was partially offset by a $36.2 million decrease in cash received on derivatives and a $8.0 million decrease in income from operations.

Current wording

The $5.8 million increase in net cash provided by operating activities for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, was primarily due to a $55.6 million decrease in interest expense, net of debt issuance cost amortization, a $82.8 million increase in non-cash operating items, namely depreciation and amortization, taxes and equity compensation. This increase was partially offset by a $58.8 million decrease in cash received on derivatives, a $73.2 million increase from working capital changes, namely changes in accounts receivable, net, accrued and other liabilities, and contract liabilities, and a $3.0 million decrease in income from operations.

Previous wording

The $74.4 million increase in net cash used in investing activities for the six months ended June 30, 2024, compared to the six months ended June 30, 2023, was primarily due to a $14.0 million increase in maintenance capital expenditures, a $69.1 million increase in growth capital expenditures, net of accrued capital expenditures and a $0.7 million decrease in proceeds on sale of property, plant and equipment. This was partially offset by $9.5 million in cash acquired related to the CSI Acquisition.

Current wording

The $94.8 million increase in net cash used in investing activities for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, was primarily due to a $118.1 million increase in capital expenditures, net of accrued capital expenditures. This was partially offset by $9.5 million in cash acquired related to the CSI Acquisition, and a $13.9 million increase in proceeds on sale of property, plant and equipment.

Previous wording

The $2.9 million increase in net cash used in financing activities for the six months ended June 30, 2024, compared to the six months ended June 30, 2023, was primarily due to an increase in dividends paid to stockholders of $62.4 million, distributions to noncontrolling interests of $2.5 million, $1.2 million increase in cash payments related to offering costs, and cash paid for shares withheld to cover taxes of $0.3 million. This was offset by a $42.3 million distribution made in the prior, a decrease in payments of debt issuance costs of $15.9 million an increase in net borrowings over payments on debt instruments of $2.9 million.

Current wording

The $105.1 million increase in net cash provided by financing activities for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, was primarily due to decreased proceeds from initial public offering of $277.8 million, an increase in dividends paid to stockholders of $97.5 million, share repurchases of $25.0 million, distributions to noncontrolling interests of $4.9 million, cash paid for shares withheld to cover taxes of $2.7 million, and principal payments on finance leases of $0.9 million. This was offset by an increase in net borrowings over payments on debt instruments of $444.8 million, a $42.3 million distribution, a decrease in payments of debt issuance costs of $16.4 million, a decrease of $8.1 million in cash payments related to offering costs, a decrease of $1.8 million related to loss on extinguishment of debt, and $0.4 million of taxes payable related to the vesting of restricted stock.

Previous wording

On March 22, 2023, wholly owned subsidiaries of Kodiak entered into the Fourth Amended and Restated Credit Agreement 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 mainly served to extend the maturity date from June 2024 to March 2028. The total commitments under the facility are $2.2 billion. As of June 30, 2024, there were $2.4 million in letters of credit outstanding under the ABL Facility See Note 10 (“Debt and Credit Facilities”) to the condensed consolidated financial statements included elsewhere in this Report. The ABL Credit Agreement requires that we meet certain financial ratios.

Current wording

On March 22, 2023, wholly owned subsidiaries of Kodiak entered into the Fourth Amended and Restated Credit Agreement 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 mainly served to extend the maturity date from June 2024 to March 2028. The total commitments under the facility are $2.2 billion. As of September 30, 2024, there were $2.4 million in letters of credit outstanding under the ABL Facility. See Note 10 (“Debt and Credit Facilities”) to the condensed consolidated financial statements included elsewhere in this Report for further description. The ABL Credit Agreement requires that we meet certain financial ratios.

Previous wording

Pursuant to the ABL Credit Agreement, the Company must comply with certain restrictive covenants, including a minimum interest coverage ratio of 2.5x and a maximum Leverage Ratio (calculated based on the ratio of Consolidated Total Debt to Consolidated EBITDA, each as defined in the ABL Credit Agreement). The maximum Leverage Ratio is (i) 5.75 to 1.00 for the fiscal quarters ending June 30, 2024, September 30, 2024, December 31, 2024 and March 31, 2025 and (ii) 5.25 to 1.00 for each fiscal quarter thereafter. All loan amounts are collateralized by essentially all the assets of the Company.

Current wording

Pursuant to the ABL Credit Agreement, the Company must comply with certain restrictive covenants, including a minimum interest coverage ratio of 2.5x and a maximum Leverage Ratio (calculated based on the ratio of Consolidated Total Debt to Consolidated EBITDA, each as defined in the ABL Credit Agreement). The maximum Leverage Ratio is (i) 5.75 to 1.00 for the fiscal quarters ending June 30, 2024, September 30, 2024, December 31, 2024 and March 31, 2025 and

Previous wording

On January 22, 2024, Kodiak entered into the Third Amendment to the ABL Credit Agreement (the “Third Amendment”). The Third Amendment, among other things, amended certain provisions of the ABL Facility (i) to accommodate the consummation of the transactions contemplated by the Merger Agreement and (ii) to account for the Company’s organizational structure after giving effect to the transactions contemplated by the Merger Agreement. Fees and costs totaling $2.9 million were incurred related to the Third Amendment and will be amortized over the life of the loan to interest expense. During the three and six months ended June 30, 2024, $0.9 million and $2.9 million was paid, respectively.

Current wording

On January 22, 2024, Kodiak entered into the Third Amendment to the ABL Credit Agreement (the “Third Amendment”). The Third Amendment, among other things, amended certain provisions of the ABL Facility (i) to accommodate the consummation of the transactions contemplated by the Merger Agreement and (ii) to account for the Company’s organizational structure after giving effect to the transactions contemplated by the Merger Agreement. Fees and costs totaling $2.9 million were incurred related to the Third Amendment and will be amortized over the life of the loan to interest expense.

Previous wording

On February 2, 2024, Kodiak Services issued $750,000,000 aggregate principal amount of Kodiak Services’ 7.250% senior notes due 2029 (the “2029 Senior Notes”), pursuant to an indenture, dated February 2, 2024, by and among the Company, and certain other subsidiary guarantors party thereto, and U.S. Bank Trust Company, National Association, as trustee.

Current wording

On February 2, 2024, Kodiak Services issued $750,000,000 aggregate principal amount of Kodiak Services’ 7.25% senior notes due 2029 (the “2029 Senior Notes”), pursuant to an indenture, dated February 2, 2024, by and among the Company, and certain other subsidiary guarantors party thereto, and U.S. Bank Trust Company, National Association, as trustee.