Kodiak Gas Services, Inc.
For the period ended Sep 30, 2025. Filed Nov 5, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2025 · Filed Nov 5, 2025
KGS$41.67+7.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-06-30; filed 2025-08-07.
0001767042-25-000045
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-09-30; filed 2025-11-05.
0001767042-25-000080
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 124 previous paragraphs and 146 current paragraphs.
76 unchanged; 38 reworded; 32 added; 9 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 11 previous and 13 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (32)
Current report
Senior Notes Offerings
Current report
On September 5, 2025, we completed private offering of $600.0 million in 6.500% senior unsecured notes due 2033 and $600.0 million in 6.750% senior unsecured notes due 2035, both issued at par and guaranteed on a senior unsecured basis by the Company and certain subsidiaries. Subsequently, Kodiak completed private offerings of an additional $170.0 million in 6.500% senior unsecured notes due 2033 and an additional $30.0 million in 6.750% senior unsecured notes due 2035, both of which were issued at a premium to par. The proceeds from both offerings were used to repay a portion of the outstanding indebtedness under the Company’s revolving asset-based loan credit facility (“ABL Facility”), which was amended during the three months ended September 30, 2025 to reduce total commitments to $2.0 billion and extend the maturity date to 2030. See further details in Description of Indebtedness within the Liquidity and Capital Resources section that follows herein.
Current report
Secondary Offering
Current report
On September 8, 2025, Frontier TopCo Partnership, L.P. sold 10,000,000 shares of Kodiak common stock to the public pursuant to an underwritten offering (the “Secondary Offering”). We did not sell any shares of common stock nor did we receive any proceeds from the Secondary Offering. The Secondary Offering closed on September 9, 2025.
Current report
Disposal of Mexico Operations
Current report
On September 30, 2025, the Company sold its operation and legal entities in Mexico to a third-party buyer. The majority of the operations were included in the Contract Services segment through the date of sale. At the disposal date, total net assets sold were $34.3 million, consisting of compression equipment, inventory, and other assets. Upon disposition, we incurred a loss of $33.3 million included in loss on sale of assets in our unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2025.
Current report
Settlement of Sales Tax Audit
Current report
During the three months ended September 30, 2025, the Company received a settlement offer with the Texas Comptroller’s office to resolve the outstanding Texas sales and use tax matters. Under this settlement arrangement, the Company would be subject to interest and penalties for all open periods totaling $28.0 million. As such, this amount has been recorded within other income (expense) in the unaudited condensed statement of operations for the three and nine months ended September 30, 2025.
Current report
Other Services revenue decreased $14.6 million, or 36.1%, for the three months ended September 30, 2025, compared to the three months ended September 30, 2024. This reduction was mainly driven by lower revenues from station construction services and maintenance and overhaul services. These declines were partially mitigated by an increase in revenues from field services.
Current report
Other Services expenses decreased $10.7 million, or 32.7%, for the three months ended September 30, 2025, compared to the three months ended September 30, 2024. This decrease was primarily driven by the lower overall revenue across our products lines as noted above.
Current report
Long-lived Asset Impairment
Current report
Long-lived asset impairment decreased for the three months ended September 30, 2025 compared to the three months ended September 30, 2024 due to certain events occurring to a group of non-operating compression units associated with a certain customer in bankruptcy that indicated the carrying value of the assets may not be recoverable. As a result, we recorded an impairment of compression equipment of $9.9 million for the three months ended September 30, 2024. No impairment was recorded for the three months ended September 30, 2025.
Current report
Loss on sale of assets increased $27.9 million during the three months ended September 30, 2025 compared to the three months ended September 30, 2024 primarily due to the $33.3 million loss recognized on the sale of our Mexico business.
Current report
Interest Expense
Current report
Interest expense increased $2.4 million, or 4.5%, for the three months ended September 30, 2025, compared to the three months ended September 30, 2024. 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 period of the prior year. This increase in interest expense was partially offset by a reduction in interest expense resulting from lower outstanding borrowings under the ABL Facility. Additionally, settlements received from interest rate swaps further reduced interest expense, as these settlements are recognized in the same financial statement line item as the underlying hedged debt.
Current report
Loss on Derivatives
Current report
Other Expense, net
Current report
Other expense, net increased $28.1 million for the three months ended September 30, 2025, compared to the three months ended September 30, 2024. This increase was primarily due to the Company accruing interest and penalties of $28.0 million as part of a settlement offer received from the Texas Comptroller’s office resolving the outstanding sales and use tax matters.
Current report
Income Tax Benefit
Current report
Nine Months Ended September 30, 2025, Compared to the Nine Months Ended September 30, 2024
Current report
Long-lived Asset Impairment
Current report
Long-lived asset impairment decreased for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 due to certain events occurring to a group of non-operating compression units associated with a certain customer in bankruptcy that indicated the carrying value of the assets may not be recoverable. As a result, we recorded an impairment of compression equipment of $9.9 million for the nine months ended September 30, 2024. No impairment was recorded for the nine months ended September 30, 2025.
Current report
Interest Expense
Current report
Other Expense, net
Current report
Other expense, net increased $29.2 million for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024. This increase was due to the Company reaching a settlement agreement with the Texas Comptroller’s office resolving the outstanding sales and use tax matters. As part of this settlement, the Company accrued interest and penalties totaling $28.0 million.
Current report
2033 Senior Notes
Current report
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. The net proceeds from these offerings were used by the Company to repay a portion of the debt outstanding under the ABL Facility.
Current report
2035 Senior Notes
Current report
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. The net proceeds from these offerings were used by the Company to repay a portion of the debt outstanding under the ABL Facility.
Current report
Adjusted Net Income (Loss) and Adjusted Diluted Earnings Per Share
Current report
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) severance expenses; (ii) transaction expenses; (iii) sales tax reserve; (iv) loss on disposal of business; (v) loss (gain) on derivatives; (vi) impairment of compression equipment; 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. 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 (loss) and adjusted earnings (loss) 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 (loss), operating income (loss) or cash flows from operating activities. Adjusted net income (loss) and adjusted earnings per share as presented may not be comparable to similarly titled measures of other companies.
Current report
The following tables reconcile net income (loss) to adjusted net income (loss) and diluted earnings per share to adjusted diluted earnings per share, for each of the periods presented:
Removed paragraphs (9)
Previous report
Other Services revenue decreased $4.1 million, or 12.3%, for the three months ended June 30, 2025, compared to the three months ended June 30, 2024. This decrease was primarily due to decreased revenues from station construction services, decreased parts sales, and decreased maintenance and overhaul services. These decreases were offset by increased field services.
Previous report
Other Services expenses decreased $5.8 million, or 20.8%, for the three months ended June 30, 2025, compared to the three months ended June 30, 2024. This decrease was primarily due to costs associated with decreased station construction service expenses, decreased parts sales, decreased maintenance and overhaul services, and decreased freight and crane charges related to mobilization of units. These decreases were offset by increased field services.
Previous report
Interest Expense, Net
Previous report
Interest expense, net decreased $6.4 million, or 12.2%, for the three months ended June 30, 2025, compared to the three months ended June 30, 2024. This decrease was primarily due to decreased interest expense associated with a decrease in borrowings outstanding under the ABL Facility and derivative interest associated with our interest rate swaps.
Previous report
Six Months Ended June 30, 2025, Compared to the Six Months Ended June 30, 2024
Previous report
Interest Expense, Net
Previous report
Gain on Derivatives
Previous report
Income Tax Expense
Previous report
The applicable interest rate under the ABL Facility is (i) in the case of SOFR-based borrowings, the Term SOFR or Daily Simple SOFR rate then in effect (subject to a floor of 0%) plus 0.10% plus a spread that depends on our Leverage Ratio as of the most recent determination date, ranging from 2.00% if our Leverage Ratio is less than or equal to 3.00:1.00 to 3.00% if our Leverage Ratio is greater than 5.50:1.00 and (ii) in the case of prime rate-based borrowings, the prime rate (subject to a floor of 2.5%) plus a spread that depends on our Leverage Ratio as of the most recent determination date, ranging from 1.00% if our Leverage Ratio is less than or equal to 3.00:1.00 to 2.00% if our Leverage Ratio is greater than 5.50:1.00.
Reworded paragraphs (38)
Previous wording
We manage our business through two operating segments: Contract Services and Other Services. Contract Services consists of operating Company-owned and customer-owned compression, and gas treating and cooling infrastructure, pursuant to fixed-revenue contracts to enable the production and gathering of natural gas and oil. Other Services consists of a broad range of contract services to support ancillary needs of our customers, including station construction, customer-owned compressor maintenance and overhaul, freight and crane charges and other time and material-based offerings. Our Other Services offerings are often cross-sold with Contract Services.
Current wording
We manage our business through two operating segments: Contract Services and Other Services. Contract Services consists of operating Company-owned and customer-owned compression, and gas treating and cooling infrastructure, pursuant to fixed-revenue contracts to enable the production and gathering of natural gas and oil. Other Services consists of a broad range of services to support ancillary needs of our customers, including station construction, customer-owned compressor maintenance and overhaul, freight and crane charges and other time and material-based offerings. Our Other Services offerings are often cross-sold with Contract Services.
Previous wording
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”), was enacted into law in the United States. The OBBBA introduces significant changes to U.S. tax law, including full expensing of qualified capital expenditures, full expensing of domestic research and development expenditures, changes to the business interest limitation, and modifications to the international tax framework. The Company is still evaluating the impact of the OBBBA; however, we do anticipate a material reduction in current income tax expense for the year, primarily driven by the permanent reinstatement of full expensing of qualified capital expenditures and changes to the business interest limitation, with no material impact to the effective tax rate.
Current wording
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”), was enacted into law in the United States. The OBBBA introduces significant changes to U.S. tax law, including full expensing of qualified capital expenditures, full expensing of domestic research and development expenditures, changes to the business interest limitation, and modifications to the international tax framework. For the three months ended September 30, 2025, the Company included the impact of the OBBBA, which materially reduced current income tax expense for the year, primarily driven by the permanent reinstatement of full expensing of qualified capital expenditures and changes to the business interest limitation, with no material impact to the effective tax rate.
Previous wording
Proposed changes and the announcement related to the U.S. global trade policy, along with potential international retaliatory measures, have resulted in volatility in global markets and uncertainty around short- and long-term economic impacts in the United States, including concerns over potential tariff impacts for the cost of goods, inflation, recession and slowing economic growth. Although these developments did not materially impact our first or second quarter results, we are continuing to actively monitor and evaluate the potential impacts of these measures, including the imposition of tariffs, on our business and operations, as well as opportunities to mitigate their related impacts. We remain cautious, as there are risks that increased tariffs could, among other things, create new trade barriers that disrupt supply chains, raise costs, and weaken consumer confidence; however, it is not currently possible to predict the impact, if any, of any changes or proposed changes to the U.S. global trade policy, or any international retaliatory measures, on our financial condition, results of operations and cash flows.
Current wording
Proposed changes and the announcement related to the U.S. global trade policy, along with potential international retaliatory measures, have resulted in volatility in global markets and uncertainty around short- and long-term economic impacts in the United States, including concerns over potential tariff impacts for the cost of goods, inflation, recession and slowing economic growth. Although these developments did not materially impact our results, we are continuing to actively monitor and evaluate the potential impacts of these measures, including the imposition of tariffs, on our business and operations, as well as opportunities to mitigate their related impacts. There are risks that increased tariffs could, among other things, create new trade barriers that disrupt supply chains, raise costs, and weaken consumer confidence; however, it is not currently possible to predict the impact, if any, of any changes or proposed changes to the U.S. global trade policy, or any international retaliatory measures, on our financial condition, results of operations and cash flows.
Previous wording
The 1.4% decrease in fleet horsepower and 1.7% increase in revenue-generating horsepower were mainly driven by the sale and scrapping of certain non-core assets, which reduced overall fleet horsepower, as well as the deployment of new large horsepower compression units. The 29.7% increase in revenue-generating horsepower per revenue-generating compression unit was a result of deploying these existing, large horsepower units.
Current wording
The 0.9% increase in fleet horsepower and 2.1% increase in revenue-generating horsepower were mainly driven by the strategic acquisition and deployment of new large horsepower compression units throughout the period. This was partially offset by the divestiture of assets from our Mexico operations on September 30, 2025, as well as the sale and scrapping of certain other non-core assets, as part of our ongoing efforts to optimize the fleet and focus on core business segments. The 7.8% increase in revenue-generating horsepower per revenue-generating compression unit was a result of deploying these new large horsepower units.
Previous wording
Contract Services revenue increased $17.3 million, or 6.3%, for the three months ended June 30, 2025, compared to the three months ended June 30, 2024. This was primarily due to a $16.3 million increase in Contract Services resulting from increases in price and revenue-generating horsepower as well as an increase of $1.0 million related to gas treating and cooling services.
Current wording
Contract Services revenue increased $12.7 million, or 4.5%, for the three months ended September 30, 2025, compared to the three months ended September 30, 2024. This was primarily due to a $13.3 million increase in Contract Services revenue resulting from increases in price and revenue-generating horsepower. This increase was offset by a decrease of $0.6 million related to gas treating and cooling services.
Previous wording
Contract Services expenses decreased $6.2 million, or 6.2%, for the three months ended June 30, 2025, compared to the three months ended June 30, 2024. This was primarily due to a $3.5 million decrease related to sales and use tax expense amounts related to parts purchases as part of ongoing sales and use tax audits with the State of Texas, a $3.4 million decrease in indirect expenses, a $1.3 million decrease in parts used in support of our operations, and a $0.6 million decrease in lubricant oil and coolant. These increases were partially offset by a $2.8 million increase in direct labor expenses.
Current wording
Contract Services expenses decreased $2.4 million, or 2.5%, for the three months ended September 30, 2025, compared to the three months ended September 30, 2024. This was primarily due to a $4.5 million decrease in cost of parts utilized to support of our operations, a $1.6 million decrease in indirect expenses, and a $0.9 million decrease in lubricant oil and coolant costs. These decreases were partially offset by a $4.6 million increase in direct labor expenses and an additional $0.1 million increase related to sales and use tax imposed on the consumption of taxable materials in operations.
Previous wording
Depreciation and amortization decreased $3.3 million, or 4.8%, for the three months ended June 30, 2025, compared to the three months ended June 30, 2024. This decrease was primarily due to full depreciation of certain assets in prior periods, as well as the impact of asset sales and disposals during the current period.
Current wording
Depreciation and amortization decreased $7.1 million, or 9.7%, for the three months ended September 30, 2025, compared to the three months ended September 30, 2024. This decrease was primarily due to full depreciation of certain assets in prior periods, as well as the impact of asset sales and disposals during the current period.
Previous wording
Selling, general and administrative expenses decreased $24.8 million, or 41.4%, for the three months ended June 30, 2025, compared to the three months ended June 30, 2024. This decrease was due to a $10.8 million decrease in professional fees, primarily related to transaction costs associated with the CSI Acquisition in the prior year period, an $8.8 million decrease in labor and benefits, a $3.5 million decrease in the provision for credit losses, and a $3.1 million decrease in software expense, mainly related to the termination of an agreement as part of the CSI Acquisition. These decreases were partially offset by a $1.0 million increase in equity compensation expense related to equity compensation plans, and a $0.5 million increase in other selling, general, and administrative expenses.
Current wording
Selling, general and administrative expenses increased $2.2 million, or 6.3%, for the three months ended September 30, 2025, compared to the three months ended September 30, 2024. The increase was attributable to a $3.1 million increase in professional fees, a $2.1 million increase in other selling, general, and administrative expenses, and a $0.8 million increase in compensation expense related to equity compensation plans. These increases were partially offset by a $3.1 million decrease in labor and benefits and a $0.7 million decrease in software expense.
Previous wording
Gain on derivatives decreased $6.8 million for the three months ended June 30, 2025, compared to the three months ended June 30, 2024. This decrease was attributed to the designation of the interest rate swap as a cash flow hedge as of January 1, 2025. As a result, all changes in the fair value of the interest rate swap are now recognized in accumulated other comprehensive income (loss) and reclassified into earnings in the same period the hedged transaction affects earnings within interest expense. The net gain on derivatives recognized during the three months ended June 30, 2024 related to $6.8 million in cash received on derivatives due to an increase in the long-term SOFR yield curve.
Current wording
Loss on derivatives decreased $20.3 million for the three months ended September 30, 2025, compared to the three months ended September 30, 2024. This decrease was attributed to the designation of the interest rate swap as a cash flow hedge as of January 1, 2025. As a result, all changes in the fair value of the interest rate swap are now recognized in accumulated other comprehensive income (loss) and reclassified into earnings in the same period the hedged transaction affects earnings within interest expense. The net loss on derivatives recognized during the three months ended September 30, 2024 related to a decrease in the fair value of derivatives of $27.5 million partially offset by $5.0 million in cash received on derivatives due to a decrease in the long-term Secured Overnight Financing Rate (“SOFR”) yield curve.
Previous wording
Income tax expense increased by $11.1 million, for the three months ended June 30, 2025, compared to the three months ended June 30, 2024. This increase was primarily due to an increase in pre-tax income of $44.4 million for the three months ended June 30, 2025, compared to the three months ended June 30, 2024.
Current wording
Income tax benefit increased by $4.1 million, for the three months ended September 30, 2025, compared to the three months ended September 30, 2024. This increase was primarily due to an decrease in pre-tax income of $12.1 million for the three months ended September 30, 2025, compared to the three months ended September 30, 2024.
Previous wording
Contract Services revenue increased $112.8 million (24.0%) for the six months ended June 30, 2025, compared to the six months ended June 30, 2024. This was primarily related to a $109.5 million increase in contract compression services as a result of price increases and an increase in average revenue-generating horsepower, including revenue-generating horsepower acquired in the CSI Acquisition. Furthermore, there was also an increase of $3.4 million related to gas treating and cooling services.
Current wording
Contract Services revenue increased $125.5 million, or 16.6%, for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024. This was primarily related to a $122.8 million increase in contract compression services as a result of price increases and an increase in average revenue-generating horsepower, including revenue- generating horsepower acquired in the CSI Acquisition. Furthermore, there was also an increase of $2.7 million related to gas treating and cooling services.
Previous wording
Other Services revenue increased $14.5 million (26.1%) for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. This increase was primarily due to increased other field services, parts sales, and freight and crane charges related to the mobilization of units. This was partially offset by decreased revenues from station construction services and maintenance and overhaul services.
Current wording
Other Services revenue decreased $0.1 million (0.1%) for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. This decrease was primarily due to decreased revenues from station construction services and maintenance and overhaul services. This decrease was partially offset by increases in other field services, parts sales, and freight and crane charges related to the mobilization of units.
Previous wording
Contract Services expenses increased $21.2 million (12.8%) for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. This was primarily due to a $23.6 million increase in direct labor expenses, a $3.7 million increase in parts used in support of our operations, a $2.5 million increase in lubricant oil and coolant expenses, and a $0.3 million increase in gas treating expenses. These increases were offset by a $5.5 million decrease in indirect expenses, and a $3.4 million decrease related to 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 $18.8 million (7.2%) for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. This was primarily due to a $26.5 million increase in direct labor expenses, a $1.6 million increase in lubricant oil and coolant expenses, a $0.8 million increase in parts used in support of our operations, and a $0.3 million increase in gas treating expenses. These increases were offset by a $7.1 million decrease in indirect expenses, and a $3.3 million decrease related to sales and use tax imposed on the consumption of taxable materials in operations.
Previous wording
Other Services expense increased $11.7 million (25.7%) for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. This increase was primarily due to increased other field service expenses, increased parts sales, increased freight and crane charges related to mobilization of units. This was partially offset by decreased expenses from station construction services.
Current wording
Other Services expense increased $1.0 million (1.3%) for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. This increase was primarily due to increased other field service expenses, increased parts sales, increased freight and crane charges related to mobilization of units. This was partially offset by decreased expenses from station construction services.
Previous wording
Depreciation and amortization increased $20.3 million (17.4%) for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. This increase was primarily due toincreased 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 $13.1 million (6.9%) for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. This increase was primarily due toincreased 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 decreased $17.4 million (20.5%) for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. This decrease was due to a $15.3 million decrease in professional fees, primarily related to transaction costs associated with the CSI Acquisition in the prior year, a $3.6 million decrease in the provision for credit losses, a $2.9 million decrease in labor and benefits, and a $2.2 million decrease in software expense, mainly related to the termination of an agreement as part of the CSI Acquisition. These increases were partially offset by a $5.1 million increase in equity compensation expense related to equity compensation plans, and a $1.5 million increase in other selling, general, and administrative expenses.
Current wording
Selling, general and administrative expenses decreased $15.1 million (12.6%) for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. This decrease was due to a $12.2 million decrease in professional fees, primarily related to transaction costs associated with the CSI Acquisition in the prior year, a $5.9 million decrease in labor and benefits, a $3.6 million decrease in the provision for credit losses, and a $2.6 million decrease in software expense, mainly related to the termination of an agreement as part of the CSI Acquisition. These decreases were partially offset by a $5.9 million increase in equity compensation expense related to equity compensation plans, and a $3.2 million increase in other selling, general, and administrative expenses.
Previous wording
Loss on sale of assets increased for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 due to the write-off of certain scrapped assets, partially offset by a gain on sale of assets.
Current wording
Loss on sale of assets increased $44.8 million for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 primarily due to the sale of our Mexico operations to a third-party buyer and the write-off of certain scrapped assets.
Previous wording
Interest expense, net increased $1.1 million (1.2%) for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. This increase was primarily due to higher interest rates on the ABL Facility in the current year to date period as compared to the comparable year to date period. This increase in interest expense was partially offset by 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.
Current wording
Interest expense increased $3.5 million (2.4%) for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. 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 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.
Previous wording
Gain on derivatives decreased $26.6 million for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. This decrease was attributed to the designation of the interest rate swap as a cash flow hedge as of January 1, 2025. As a result, all changes in the fair value of the interest rate swap are now recognized in accumulated other comprehensive income (loss) and reclassified into earnings in the same period the hedged transaction affects earnings within interest expense. The net gain on derivatives recognized during the six months ended June 30, 2024 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 due to the increase in the long-term SOFR yield curve.
Current wording
Gain on derivatives decreased $6.2 million for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. This decrease was attributed to the designation of the interest rate swap as a cash flow hedge as of January 1, 2025. As a result, all changes in the fair value of the interest rate swap are now recognized in accumulated other comprehensive income (loss) and reclassified into earnings in the same period the hedged transaction affects earnings within interest expense. The net gain on derivatives recognized during the nine months ended September 30, 2024 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 due to an decrease in the long-term SOFR yield curve.
Previous wording
Income tax expense increased by $11.8 million for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. This was primarily due to an increase in pre-tax income of $45.8 million for the six months ended June 30, 2025, compared to the six months ended June 30, 2024.
Current wording
Income tax expense increased by $7.6 million for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. This was primarily due to an increase in pre-tax income of $33.7 million for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024.
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 as discussed below. As of June 30, 2025, we had approximately $371.8 million of liquidity consisting of $5.4 million in cash and cash equivalents and $366.4 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 as discussed below. As of September 30, 2025, we had approximately $1.5 billion of liquidity consisting of $0.7 million in cash and cash equivalents and $1.5 billion available under the ABL Facility.
Previous wording
For the six months ended June 30, 2025, growth capital expenditures were $93.9 million, other capital expenditures were $38.7 million, and maintenance capital expenditures were $34.0 million as compared to growth capital expenditures of $129.5 million, other capital expenditures of $20.3 million, and maintenance capital expenditures of $29.8 million for the six months ended June 30, 2024. The decrease in growth capital expenditures was primarily related to the timing of compression unit purchases necessary to support operating capacity demand. The increase in other capital expenditures was primarily related to safety upgrades related to compression equipment purchased in the CSI Acquisition and the ongoing implementation of a new business system. The increase in maintenance capital expenditures was primarily due to maintenance capital expenditures on the assets acquired in the CSI Acquisition and 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, 2025, growth capital expenditures were $174.3 million, other capital expenditures were $50.9 million, and maintenance capital expenditures were $53.7 million as compared to growth capital expenditures of $182.5 million, other capital expenditures of $32.4 million, and maintenance capital expenditures of $51.3 million for the nine months ended September 30, 2024. The decrease in growth capital expenditures was primarily related to the timing of compression unit purchases necessary to support operating capacity demand. The increase in other capital expenditures was primarily related to safety upgrades related to compression equipment purchased in the CSI Acquisition and the ongoing implementation of a new business system. The increase in maintenance capital expenditures was primarily due to maintenance capital expenditures on the assets acquired in the CSI Acquisition and an increase in unit overhauls scheduled based on the age and operating hours of such units.
Previous wording
Subsequent to the quarter end, on July 24, 2025, the Company’s Board declared a cash dividend of $0.45 per share for the quarter ended June 30, 2025, which is payable on August 14, 2025, to shareholders of record as of the close of business on August 4, 2025. In conjunction with the Common Stock Dividend, Kodiak Services declared a distribution on its units of $0.45 per unit payable on August 14, 2025 to all unitholders of record of Kodiak Services as of the close of business on August 4, 2025. The declaration and payment of future dividends will be at the discretion of the Board and will depend on the factors discussed above.
Current wording
Subsequent to the quarter end, on October 23, 2025, the Company’s Board declared a cash dividend of $0.49 per share for the quarter ended September 30, 2025, which is payable on November 13, 2025, to shareholders of record as of the close of business on November 3, 2025. In conjunction with the Common Stock Dividend, Kodiak Services declared a distribution on its units of $0.49 per unit payable on November 13, 2025 to all unitholders of record of Kodiak Services as of the close of business on November 3, 2025. The declaration and payment of future dividends will be at the discretion of the Board and will depend on the factors discussed above.
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 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 $125,000,000) 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, 2025, we had $366.4 million available under our ABL Facility.
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 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 September 30, 2025, we had $1.5 billion available under our ABL Facility.
Previous wording
•Long-term debt of $2.6 billion, of which $1.8 billion matures in 2028 and $750.0 million matures in 2029.
Current wording
•Long-term debt of $2.7 billion, of which $521.5 million matures in 2030, $750.0 million matures in 2029, $770.0 million matures in 2033, and $630.0 million matures in 2035.
Previous wording
•Purchase commitments of $131.1 million, of which all 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 13. Commitments and Contingencies to the condensed consolidated financial statements included in this Report.
Current wording
•Purchase commitments of $142.5 million, of which all 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 13. Commitments and Contingencies to the condensed consolidated financial statements included in this Report.
Previous wording
As of June 30, 2025, other commitments include future operating and finance lease payments totaling $80.5 million.
Current wording
As of September 30, 2025, other commitments include future operating and finance lease payments totaling $76.3 million.
Previous wording
The $118.9 million increase in net cash provided by operating activities for the six months ended June 30, 2025, compared to the six months ended June 30, 2024, was primarily due to a $74.6 million increase in income from operations and a $40.2 million increase in non-cash operating expenses, namely depreciation and amortization, taxes and equity compensation. Additionally, cash provided by operating activities was impacted by a $0.2 million decrease in interest expense, net of debt issuance cost amortization. Changes in working capital items used cash of $19.8 million during the six months ended June 30, 2025 compared to $7.8 million during the six months ended June 30, 2024. The change in working capital items primarily related to enhancements in customer collection processes and timing of supplier payments.
Current wording
The $195.4 million increase in net cash provided by operating activities for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024, was primarily due to a $72.7 million increase in income from operations and a $26.3 million increase in operating expenses, namely depreciation and amortization, taxes and equity compensation. Additionally, cash provided by operating activities was impacted by a $1.9 million increase in interest expense, net of debt issuance cost amortization. Changes in working capital items provided cash of $26.4 million during the nine months ended September 30, 2025 compared to the use of cash of $76.7 million during the nine months ended September 30, 2024. The change in working capital items primarily related to enhancements in customer collection processes and timing of supplier payments.
Previous wording
The $24.8 million decrease in net cash used in investing activities for the six months ended June 30, 2025, compared to the six months ended June 30, 2024, was primarily due to a $17.0 million decrease in cash used for capital expenditures, net of accrued capital expenditures and a $17.2 million increase in cash provided by proceeds on sale of assets. This was partially offset by $9.5 million in cash acquired in connection with the CSI Acquisition.
Current wording
The $3.6 million decrease in net cash used in investing activities for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024, was primarily due to a $9.5 million decrease in cash acquired in connection with the CSI Acquisition in the prior year and a $1.1 million decrease in cash used for capital expenditures, net of accrued capital expenditures. This was partially offset by a $12.0 million increase in cash provided by proceeds on sale of assets.
Previous wording
Net cash used for financing activities increased $141.3 million during the six months ended June 30, 2025, compared to the six months ended June 30, 2024. Cash used for financing activities of $148.3 million in six months ended June 30, 2025 was primarily the result of $76.6 million of dividends paid to stockholders, net borrowings of $43.2 million, $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.
Current wording
Net cash used for financing activities increased $204.9 million during the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024. Cash used for financing activities of $173.2 million in nine months ended September 30, 2025 was primarily the result of $116.6 million of dividends paid to stockholders, $70.3 million of share repurchases, $6.0 million of cash paid for shares withheld to cover taxes, $4.6 million of cash paid on principal payments of other borrowings, $2.4 million of cash paid on principal payments of finance leases, and $1.0 million of distributions to noncontrolling interest. This was offset by $50.3 million of net borrowings and $3.9 million of cash related to vesting of restricted stock.
Previous wording
Cash used for financing activities of $7.0 million during the six months ended June 30, 2024 was primarily the result of $62.4 million of dividends paid to stockholders, $16.3 million of payments of debt issuance costs, $2.5 million of distributions to noncontrolling interest, $1.8 million of cash paid on principal payments of other borrowings, $1.2 million of offering costs, $0.4 million of cash paid on principal payments of finance leases, and $0.3 million of cash paid for shares withheld to cover taxes. This was offset by $77.9 million of net cash provided by borrowings.
Current wording
Cash provided by financing activities of $31.7 million during the nine months ended September 30, 2024 was primarily the result of $183.4 million of net cash provided by borrowings. This was offset by $97.5 million of dividends paid to stockholders, $25.0 million of share repurchases, $16.3 million of payments of debt issuance costs, $3.7 million of cash paid on principal payments of other borrowings, $2.7 million of cash paid for shares withheld to cover taxes, $1.2 million of offering costs, and $0.9 million of cash paid on principal payments of finance leases.
Previous wording
On March 22, 2023, Kodiak and Kodiak Services 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. 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 (see Note 3. Acquisitions and Divestitures) and (ii) to account for the Company’s organizational structure after giving effect to the transactions contemplated by the Merger Agreement. The total commitments under the facility are $2.2 billion. As of June 30, 2025, there were $1.6 million in letters of credit outstanding under the ABL Facility. 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. See Note 9. Debt and Credit Facilities to the condensed consolidated financial statements included in this Report for further description.
Current wording
On September 5, 2025, Kodiak and Kodiak Services entered into the Fourth 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 Fourth Amendment, among other things, reduces the interest rate margins applicable to loans under the ABL facility, reduces overall commitments under the ABL facility to $2.0 billion, provides for a flat unused commitment fee of 0.25%, modifies the calculation of various leverage rations, modifies certain borrowing base provisions, and extends the maturity date from March 2028 to September 2030. As of September 30, 2025, there were $2.4 million in letters of credit outstanding under the ABL Facility. Lender fees and costs totaling $12.0 million were incurred related to the Fourth Amendment and will be amortized over the life of the loan to interest expense.
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 5.25 to 1.00. 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 (a) an amount equal to (i) Total Indebtedness minus (ii) the lesser of (A) unrestricted cash and certain cash equivalents and (B) $50.0 million to (b) EBITDA, each as defined in the ABL Credit Agreement), and a Secured Leverage Ratio (calculated based on the ratio of (a) an amount equal to (i) Senior Secured Debt minus (ii) the lesser of (A) unrestricted cash and certain cash equivalents and (B) $50.0 million to (b) EBITDA). The maximum Leverage Ratio is 5.25 to 1.00. The maximum Secured Leverage Ratio is 3.25 to 1.00 for each fiscal quarter.
Previous wording
The ABL Facility is a “revolving credit facility” that includes a lockbox arrangement whereby, under certain events, remittances from customers are forwarded to a bank account controlled by the administrative agent and are applied to reduce borrowings under the facility. One such event occurs if availability under the ABL Credit Agreement falls below a specified threshold (i.e., the greater of $200 million or 10% of the aggregate commitments at the time of measurement). As of June 30, 2025, and December 31, 2024, availability under the ABL Facility was in excess of the specified threshold, and, as such, the entire balance was classified as long term debt in accordance with its maturity.
Current wording
The ABL Facility is a “revolving credit facility” that includes a lockbox arrangement whereby, under certain events, remittances from customers are forwarded to a bank account controlled by the administrative agent and are applied to reduce borrowings under the facility. One such event occurs if availability under the ABL Credit Agreement falls below a specified threshold (i.e., $100 million for five (5) consecutive days until such time availability is greater than $100 million for twenty (20) consecutive days). As of September 30, 2025, and December 31, 2024, availability under the ABL Facility was in excess of the specified threshold, and, as such, the entire balance was classified as long-term in accordance with its maturity.
Previous wording
As of June 30, 2025, we had $366.4 million available under our ABL Facility. The weighted average interest rate as of June 30, 2025, and December 31, 2024, was 6.51% and 6.80%, respectively, excluding the effect of our interest rate swap. The Company pays an annualized commitment fee of 0.25% on the unused portion of its ABL Facility if borrowings are greater than 50% of total commitments and 0.50% on the unused portion of the ABL Facility if borrowings are less than 50% of total commitments.
Current wording
Interest on the outstanding borrowings under the ABL Facility is payable monthly. Depending on the loan type elected by the Company, interest 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. The weighted average interest rate on the ABL Facility as of September 30, 2025, and December 31, 2024, was 5.94% and 6.80%, respectively, excluding the effect of interest rate swaps. The Company pays an annualized commitment fee of 0.25% on the unused portion of its ABL Facility.
Previous wording
On February 2, 2024, Kodiak Services issued $750.0 million aggregate principal amount of 2029 Senior Notes. The proceeds from the 2029 Senior Notes were used to repay a portion of then outstanding borrowings under the ABL Facility and to pay related fees and expenses in connection with the issuance. In connection with the closing of the CSI Acquisition on April 1, 2024, the Company used proceeds from additional draws on the ABL Facility to repay $651.8 million of existing outstanding indebtedness, except for certain equipment financing obligations, and pay fees and expenses related to the notes offering and the CSI Acquisition.
Current wording
On February 2, 2024, Kodiak Services issued $750.0 million aggregate principal amount of 2029 Senior Notes. The proceeds from the 2029 Senior Notes were used to repay a portion of then outstanding borrowings under the ABL Facility and to pay related fees and expenses in connection with the issuance.
Previous wording
Our interest rate swap exchanges variable interest rates for fixed interest rates. During the first quarter of 2025, the Company designated the interest rate swap as a cash flow hedge, evaluated hedge effectiveness and determined it to be highly effective. See Note 10. Derivative Instruments to the condensed consolidated financial statements included in this Report.
Current wording
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. See Note 10. Derivative Instruments to the condensed consolidated financial statements included in this Report.
Previous wording
Adjusted EBITDA and adjusted EBITDA percentage are considered non-GAAP measures. We define adjusted EBITDA as net income (loss) before interest expense; income tax expense; and depreciation and amortization; plus (i) loss on extinguishment of debt; (ii) loss (gain) on derivatives; (iii) equity compensation expense; (iv) severance expenses; (v) transaction expenses; (vi) loss (gain) on sale of assets; and (vii) impairment of compression equipment. 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:
Current wording
Adjusted EBITDA and adjusted EBITDA percentage are considered non-GAAP measures. We define adjusted EBITDA as net income (loss) before interest expense; income tax expense; and depreciation and amortization; plus (i) loss on extinguishment of debt; (ii) loss (gain) on derivatives; (iii) equity compensation expense; (iv) severance expenses; (v) transaction expenses; (vi) loss (gain) on sale of assets; (vii) loss (gain) on disposal of business; (viii) sales tax reserve; and (ix) impairment of compression equipment. 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:
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Loss on sale of assets increased during the three months ended June 30, 2025 compared to the three months ended June 30, 2024 due to the write-off of certain scrapped assets, partially offset by a gain on sale of assets.