Kodiak Gas Services, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Description of Business

Kodiak Gas Services, Inc. (the “Company” or “Kodiak”) is an operator of contract compression infrastructure and related services primarily in the U.S. The Company operates compression units under fixed-revenue contracts with upstream and midstream customers.

Kodiak operates its business and the majority of the Company’s assets and liabilities under its subsidiary Kodiak Gas Services, LLC (“Kodiak Services”). Kodiak is the primary beneficiary of Kodiak Services, which is a variable interest entity, since the Company has the power to direct the activities that most significantly impact Kodiak Services’ economic performance and the Company has the right (and obligation) to receive benefits (and absorb losses) of Kodiak Services that could be potentially significant to the Company.

2. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission pertaining to interim financial information. As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP have been condensed or omitted. Therefore, these financial statements should be read in conjunction with the audited consolidated financial statements, and notes thereto, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. These unaudited condensed consolidated financial statements include the accounts of Kodiak and its subsidiaries. All significant intercompany transactions and balances have been eliminated upon consolidation.

Recently Issued Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendment requires the annual financial statements to include consistent categories and greater disaggregation of information in the rate reconciliation, and income taxes paid disaggregated by jurisdiction. The guidance is effective for annual reporting periods beginning after December 15, 2024, with early adoption permitted, and should be applied on a prospective basis, with a retrospective option. We are currently evaluating the impact of this standard on our disclosures.

In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses (DISE), which requires the disaggregated disclosure of specific expense categories, including purchases of inventory, employee compensation, depreciation, and amortization, within relevant income statement captions and the total amount of selling expenses. This guidance is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. We are currently evaluating the impact of this standard on our disclosures.

3. Acquisitions and Divestitures

Merger with CSI Compressco

On April 1, 2024, the Company completed the acquisition of CSI Compressco (the “CSI Acquisition”). To complete the acquisition, we issued 6.8 million shares of common stock and 5.6 million of preferred shares for total consideration of $342.3 million.

The acquisition-date fair value of the consideration transferred and the final allocation of the purchase price as of the acquisition date is as follows (in thousands):

It is impracticable to determine the revenue and earnings recorded in the condensed consolidated statements of operations for the three and nine months ended September 30, 2024 as we had initiated the integration of a substantial portion of CSI Compressco into our ongoing operations following the close of the CSI Acquisition. Acquisition-related costs of approximately $0.6 million were incurred during the nine months ended September 30, 2025 primarily related to external legal fees, transaction consulting fees, due diligence costs, and employee retention incentives that were completed in March 2025. These costs have been recognized in selling, general and administrative expenses in the condensed consolidated statements of operations. Acquisition-related costs of approximately $2.6 million and $27.8 million were incurred during the three and nine months ending September 30, 2024, respectively.

Unaudited Supplemental Pro Forma Financial Information

The following unaudited supplemental pro forma information has been prepared as though the CSI Acquisition had occurred on January 1, 2023. The pro forma information is presented for illustrative purposes only and is based on estimates and assumptions we deemed appropriate. The following pro forma information is not necessarily indicative of the historical results that would have been achieved if the acquisition had occurred in the past, and our operating results may have been different from those reflected in the pro forma information below. Therefore, the pro forma information should not be relied upon as an indication of the operating results that we would have achieved if the transaction had occurred on January 1, 2023 or the future results that we will achieve after the transactions. The pro forma results include certain adjustments, primarily due to increases in interest expense due to additional borrowings incurred to finance the acquisition and amortization of debt issuance costs and depreciation and amortization expense. Non-recurring acquisition related costs including transaction costs, such as legal, accounting, valuation and other professional services as well as integration costs such as severance are included within the pro forma revenue and net income below.

Sale Leaseback

On March 26, 2025, we entered into a sale-leaseback agreement with an unrelated party involvingtwo buildings in Midland and Monahans, Texas. Under the arrangement, the properties with a net book value of $8.2 million were sold for $5.9 million and leased back under a 15 month lease agreement. We received cash of $5.5 million, net of closing costs and other fees related to the sale of the property. The lease provides for annual base payments of $0.7 million and expires in June 2026. The transaction qualifies as a sale leaseback, and as a result, we recorded a $2.6 million net loss on sale that is recorded within loss on sale of assets in the condensed consolidated statements of operations. Additionally, we established a $2.5 million right of use asset and operating lease liability.

Mexico Divestiture

On September 30, 2025, the Company sold its operations 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.

4. Revenue Recognition

The following table disaggregates the Company’s revenue by type and timing of provision of services or transfer of goods:

Contract Assets and Liabilities

The Company recognizes a contract asset when the Company has the right to consideration in exchange for goods or services transferred to a customer. Contract assets are transferred to trade receivables when the Company has the right to bill. The Company had contract assets of $4.9 million and $7.6 million as of September 30, 2025, and December 31, 2024, respectively. As of January 1, 2025 and January 1, 2024, the beginning balances for contract assets were $7.6 million and $17.4 million, respectively.

The Company records contract liabilities when cash payments are received or due in advance of performance. The Company’s contract liabilities were $69.5 million and $73.1 million as of September 30, 2025, and December 31, 2024, respectively. As of January 1, 2025, and January 1, 2024, the beginning balances for contract liabilities were $73.1 million and $63.7 million, all of which was recognized as revenue in the nine months ended September 30, 2025, and September 30, 2024, respectively.

Performance Obligations

As of September 30, 2025, we had $1.5 billion of remaining performance obligations related to our Contract Services segment.

The Company expects to recognize these remaining performance obligations as follows:

As of September 30, 2025, the aggregate amount of transaction price allocated to unsatisfied performance obligations related to the Company’s revenue for the Other Services segment is $15.2 million, of which $0.3 million is expected to be recognized by December 31, 2025 and the remaining portion in 2026.

5. Accounts Receivable, net

The allowances for credit losses were $13.0 million and $12.6 million as of September 30, 2025, and December 31, 2024, respectively, which represents the Company’s best estimate of the amount of probable credit losses included within the Company’s existing accounts receivable balance.

The changes in the Company’s allowance for credit losses were as follows:

6. Inventories, net

Inventories consisted of the following:

7. Property, Plant and Equipment, net

Property, plant and equipment, net consisted of the following:

Depreciation expense was $62.0 million and $190.5 million for the three and nine months ended September 30, 2025, respectively, and is recorded within depreciation and amortization on the accompanying condensed consolidated statements of operations. Depreciation expense was $69.0 million and $179.6 million for the three and nine months ended September 30, 2024, respectively.

8. Goodwill and Identifiable Intangible Assets, net

Goodwill

The carrying amount of goodwill, including changes therein, in the Contract services segment is below:

(1) See Note 3 (“Acquisitions and Divestitures”) for more details.

Intangible Assets

The Company’s identifiable intangible assets were as follows:

Amortization expense was $3.7 million and $10.5 million for the three and nine months ended September 30, 2025, respectively, and is recorded within depreciation and amortization in the condensed consolidated statements of operations. Amortization expense was $3.7 million and $9.1 million for the three and nine months ended September 30, 2024, respectively.

As of September 30, 2025 and December 31, 2024, the remaining weighted average amortization period for identifiable intangible assets recognized is 11.3 years and 12.4 years, respectively.

Estimated future amortization expense related to intangible assets as of September 30, 2025 is as follows:

9. Debt and Credit Facilities

Long-term debt consisted of the following:

ABL Facility

On September 5, 2025, Kodiak and Kodiak Services entered into the Fourth Amendment to the Fourth Amended and Restated Credit Agreement (“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 ratios, 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.

Pursuant to the ABL Credit Agreement, the Company must comply with certain restrictive covenants, including a minimum interest coverage ratio of 2.5 x 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.

The ABL Credit Agreement also restricts the Company’s ability to: incur additional indebtedness and guarantee indebtedness; pay certain dividends or make other distributions or repurchase or redeem equity interests; prepay, redeem or repurchase certain debt; issue certain preferred units or similar equity securities; make loans and investments; sell, transfer or otherwise dispose of assets; incur liens; enter into transactions with affiliates; enter into agreements restricting the Company’s restricted subsidiaries’ ability to pay dividends; enter into certain swap agreements; amend certain organizational documents; enter into sale and leaseback transactions; and consolidate, merge or sell all or substantially all of the Company’s assets.

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.

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.

All obligations under the ABL Facility are collateralized by essentially all the assets of the Company. We were in compliance with all covenants as of September 30, 2025, and December 31, 2024.

2029 Senior Notes

On February 2, 2024, Kodiak Services issued $750.0 million aggregate principal amount of 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.

The 2029 Senior Notes are redeemable at the Company’s option, in whole or in part, prior to February 15, 2026, at a redemption price equal to 100% of the principal amount plus a “make-whole” premium and any accrued and unpaid interest up to the redemption date. This make-whole redemption price is determined as the higher of 100% of the principal amount of the notes plus a make-whole premium calculated as the present value at such time of the redemption plus any required interest payments through the redemption date, discounted semi-annually to the redemption date using the applicable treasury rate plus 0.50%. Prior to February 15, 2026, the Company may also redeem up to 40% of the aggregate principal amount of the 2029 Senior Notes using an amount not greater than the net cash proceeds from certain equity offerings at a redemption price of 107.250% of the principal amount, plus accrued and unpaid interest up to the redemption date, provided that at least 50% of the original aggregate principal amount remains outstanding following such redemption and the redemption occurs within 180 days following the equity offering’s closing.

On or after February 15, 2026, Kodiak Services may, on one or more occasions, redeem any or all of the 2029 Senior Notes at the redemption prices set forth below plus accrued and unpaid interest up to the redemption date, beginning on February 15 of the years indicated below:

Fees and costs totaling $13.4 million were incurred related to the 2029 Senior Notes and will be amortized over the life of the notes to interest expense.

The net proceeds from the 2029 Senior Notes were used to repay a portion of the outstanding indebtedness under the ABL Facility and to pay related fees and expenses in connection with the 2029 Senior Notes offering.

2033 Senior Notes

On September 5, 2025, Kodiak Services issued $600.0 million in aggregate principal amount of 6.50% senior unsecured notes due 2033 (the “2033 Senior Notes”). On September 22, 2025, Kodiak Services completed a private offering of an additional $170.0 million of 2033 Senior Notes for $173.4 million. The excess fair value above the face value was recognized as a bond premium, which is amortized as a reduction in interest expense over the remaining term of the 2033

Senior Notes. The net proceeds from the 2033 Senior Notes were used by the Company to repay a portion of the debt outstanding under the ABL Facility.

The 2033 Senior Notes are redeemable at the Company’s option, in whole or in part, prior to October 1, 2028, at a redemption price equal to 100% of their principal amount plus a “make-whole” premium and any accrued and unpaid interest up to the redemption date. This make-whole redemption price is determined as the higher of 100% of the principal amount of the notes plus a make-whole premium calculated as the present value at such time of the redemption plus any required interest payments through the redemption date, discounted semi-annually to the redemption date using the applicable treasury rate plus 0.50%. Prior to October 1, 2028, the Company may also redeem up to 40% of the aggregate principal amount of the 2033 Notes using an amount not greater than the net cash proceeds from certain equity offerings at a redemption price of 106.500% of the principal amount plus any accrued and unpaid interest up to the redemption date, provided that at least 50% of the original aggregate principal amount remains outstanding following such redemption and the redemption occurs within 180 days following the equity offering’s closing.

On or after October 1, 2028, Kodiak Services may, on one or more occasions, redeem any or all of the 2033 Notes at the redemption prices set forth below plus accrued and unpaid interest up to the redemption date, beginning on April 15 of the specified years indicated below.

Fees and costs totaling $11.0 million were incurred related to the 2033 Senior Notes and will be amortized over the life of the notes to interest expense.

2035 Senior Notes

On September 5, 2025, Kodiak Services issued $600.0 million in aggregate principal amount of 6.750% senior unsecured notes due 2035 (the “2035 Senior Notes”). On September 22, 2025, Kodiak Services completed a private offering of an additional $30.0 million of 2035 Senior Notes for $30.9 million. The excess fair value above the face value was recognized as a bond premium, which is amortized as a reduction in interest expense over the remaining term of the 2035 Senior Notes. The net proceeds from the 2035 Senior Notes were utilized for the same purposes described above for the 2033 Senior Notes.

The 2035 Senior Notes are redeemable at the Company’s option, in whole or in part, prior to October 1, 2030, at a redemption price equal to 100% of the principal amount plus a “make-whole” premium and any accrued and unpaid interest up to the redemption date. This make-whole redemption price is determined as the higher of 100% of the principal amount of the notes plus a make-whole premium calculated as the present value at such time of the redemption plus any required interest payments through the redemption date, discounted semi-annually to the redemption date using the applicable treasury rate plus 0.50%. Prior to October 1, 2030, the Company may also redeem up to 40% of the aggregate principal amount of the 2035 Senior Notes using an amount not greater than the net proceeds of certain equity offerings at a redemption price of 106.750% of the principal amount plus any accrued and unpaid interest up to the redemption date, provided that at least 50% of the original aggregate principal amount remains outstanding following such redemption and the redemption occurs within 180 days following the equity offering’s closing.

On or after October 1, 2030, Kodiak Services may, on any one or more occasions, redeem all or part of the 2035 Notes at the redemption prices set forth below plus accrued and unpaid interest up to the redemption date, beginning on April 15 of the years indicated below:

Fees and costs totaling $9.9 million were incurred related to the 2035 Senior Notes and will be amortized over the life of the notes to interest expense.

The indentures governing the 2029 Senior Notes, 2033 Senior Notes and 2035 Senior Notes contain covenants that, subject to certain exceptions and qualifications, limit the ability of the Company and its restricted subsidiaries to: (i) make distributions on, purchase or redeem equity interests or repurchase or redeem subordinated indebtedness; (ii) make certain investments; (iii) incur or guarantee additional indebtedness, issue disqualified stock, or issue other preferred securities (except non-economic preferred securities); (iv) create certain liens to secure indebtedness; (v) sell or otherwise dispose of assets; (vi) consolidate with or merge into another entity; (vii) engage in transactions with affiliates; and (viii) create unrestricted subsidiaries. Many of these covenants terminate if the Notes achieve an investment grade rating from any two of Moody’s, S&P, and Fitch, and no default under the indentures exists. The indentures governing the 2029 Senior Notes, 2033 Senior Notes and 2035 Senior Notes also contain customary events of default.

As of September 30, 2025, the scheduled maturities of the Company’s long-term debt were as follows:

Debt Issuance Costs

The total remaining unamortized debt issuance costs of $66.6 million as of September 30, 2025 are being amortized over the respective terms of the ABL Facility, 2029 Senior Notes, 2033 Senior Notes, and 2035 Senior Notes. Amortization expense related to these costs of $3.5 million and $9.7 million for the three and nine months ended September 30, 2025, respectively, are included in interest expense in the accompanying condensed consolidated statements of operations. Amortization expense related to these costs of $3.1 million and $8.1 million for the three and nine months ended September 30, 2024, respectively, are included in interest expense in the accompanying condensed consolidated statements of operations.

Other Borrowings

As a result of the CSI Acquisition, the Company assumed finance agreements with a third party in the amount of $11.4 million to finance certain compression equipment. The obligations under the finance agreements are payable in monthly installments totaling $0.7 million for 36 months from inception. As of September 30, 2025, remaining amounts due under the finance agreements totaled $1.1 million. This amount is classified in accrued liabilities on the accompanying condensed consolidated balance sheet.

10. Derivative Instruments

The Company has entered into an interest rate swap, exchanging variable interest rates for fixed interest rates. In prior periods, the Company entered into interest rate collars that fixed interest rates within a range through the simultaneous purchase of an interest rate cap and sale of an interest rate floor. Effective January 1, 2025, the Company designated the interest rate swap as a cash flow hedge derivative instrument, evaluated hedge effectiveness and determined it to be highly effective. Changes in the fair value attributable to changes in interest rates for derivative contracts that have been designated as cash flow hedges are recognized in accumulated other comprehensive income (loss) (“AOCI”) and reclassified into earnings in the same period the hedged transaction impacts earnings and are presented within the same line item of the condensed consolidated statement of operations as the hedged item. The Company accounts for the interest rate swap agreement as a cash flow hedge, thus the effective portion of gains and losses resulting from changes in fair value are recognized in AOCI and are amortized to interest expense over the term of the respective debt. Cash flows from derivatives are classified in the statement of cash flows in the same category as the cash flows from the items subject to designated hedge or undesignated (economic) hedge relationships.

Following the Fourth Amendment to the ABL Facility, the Company entered into a new interest rate swap to reflect revised loan terms. Accordingly, the prior hedging relationship was discontinued, resulting in the reclassification of $7.7 million from accumulated other comprehensive income (loss) to interest expense. Effective September 5, 2025, the new interest rate swap was formally designated as a cash flow hedge to manage variability in cash flows related to forecasted interest payments. At inception of the hedge relationship, and upon ongoing assessment, the Company determined the hedging relationship to be highly effective in offsetting changes in expected cash flows due to interest rate risk.

The table below summarizes the amortization schedule related to the interest rate swap, which matures on September 5, 2030:

The following table summarizes the effects of the Company’s derivative instruments in the condensed consolidated statements of operations:

11. Fair Value Measurements

The Company’s financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable, derivative instruments and long-term debt. The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable are representative of their respective Level 1 fair values due to the short-term maturity of these instruments.

The Company’s ABL Facility applies floating interest rates to outstanding amounts; therefore, the carrying amount of the ABL Facility approximates its Level 3 fair value. The fair value of the 2029 Senior Notes, 2033 Senior Notes, and 2035 Senior Notes are determined using Level 2 inputs, relying on quoted prices in less active markets.

The Company records derivative instruments at fair value using Level 2 inputs of the fair value hierarchy. The interest rate swap is valued using a discounted cash flow analysis based on available market data on the expected cash flows of each derivative using observable inputs, including interest rate curves and credit spreads. See Note 10. Derivative Instruments for more details.

The contingent consideration liability from a prior year acquisition is measured at fair value each reporting period, using Level 3 unobservable inputs (such as probability assessments of future cash flows), and changes in estimates of fair value are recognized in earnings.

The carrying amount and the estimated fair value for the assets and liabilities measured on a recurring basis are as follows:

12. Stockholders’ Equity

Share Repurchases

In November 2024, Kodiak’s board of directors (“Board”) approved a share repurchase program authorizing the Company to buy an aggregate amount of up to $50.0 million of our outstanding common stock (the “Share Repurchase Program”). The Share Repurchase Program was previously set to expire on December 31, 2025. In August 2025, the Board approved a $100.0 million increase to the Share Repurchase Program and extended the expiration date to December 31, 2026.

Pursuant to the Share Repurchase Program, in August 2025, the Company repurchased 1.5 million shares of common stock from Frontier TopCo Partnership, L.P, an affiliate of EQT AB and holder of Kodiak’s common stock in a private transaction at a price of $33.14 per share for an aggregate purchase price of approximately $50.0 million.

The above shares of common stock are currently held in treasury stock. Treasury stock purchases are accounted for under the cost method whereby the cost of the acquired stock is recorded as treasury stock. Gains and losses on the subsequent reissuance of shares are credited or charged to additional paid-in capital using the average-cost method.

The Inflation Reduction Act of 2022, which was enacted into law on August 16, 2022, imposed a nondeductible 1% excise tax on the net value of certain stock repurchases made after December 31, 2022. For the three months ended September 30, 2025, we reflected the applicable excise tax in treasury stock as part of the cost basis of the stock repurchased and recorded a corresponding liability for the excise taxes payable in accrued expenses and other liabilities on our consolidated balance sheet. All amounts presented in this report related to our share repurchases and our share repurchase authorization exclude such excise taxes, to the extent applicable, unless otherwise indicated.

Preferred Stock

Holders of the Company’s preferred stock are entitled toone vote for each share, voting proportionally with holders of common stock. The preferred stock lacks economic benefits beyond its par value of $0.01 per share (with a maximum value of $50,000), as it does not participate in earnings or cash dividends of Kodiak. Rather, it solely represents a voting share. Each preferred stock holds an equal number of OpCo Units, representing economic interests in Kodiak’s subsidiary, Kodiak Services. Each OpCo Unit is redeemable at the option of the holder for (i)one share of common stock (along with cancellation of a corresponding share of preferred stock) or (ii) cash at Kodiak Services’ election, and subject to certain conditions. On or after April 1, 2029, Kodiak shall have the right to effect redemption of such OpCo Units (along with corresponding share of preferred stock). The OpCo Units represent and are accounted for as noncontrolling interests in Kodiak Services. For the nine months ended September 30, 2025, and year-ended December 31, 2024, a total of 0.5 million and 4.7 million, respectively, of preferred stock and OpCo Units were converted into an equivalent number of common stock shares.

2023 Omnibus Incentive Plan

On June 20, 2023, Kodiak’s Board authorized and adopted the Kodiak Gas Services, Inc. Omnibus Incentive Plan (the “Omnibus Plan”) for employees, consultants and directors. The Omnibus Plan enables Kodiak’s Board (or a committee authorized by Kodiak’s Board) to award incentive and non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, stock awards, dividend equivalents, other stock-based awards, cash awards and substitute awards intended to align the interests of service providers, including the Company’s named executive officers, with those of the Company’s stockholders. A total of 5.8 million shares of common stock have been reserved for issuance pursuant to awards under the Omnibus Plan.

Restricted Stock Units

Restricted stock units (“RSUs”) are time-based units that vest ratably over athree-year period, subject to continuous service through each vesting date. Stock-based compensation for RSUs is recognized on a straight-line basis over the requisite service period.

Performance Stock Units

Performance stock units (“PSUs”) cliff vest at the end of athree-year performance period, with the ultimate number of shares earned and issued ranging from 0 -190% of the number of shares subject to the PSU award based on the Company's achievement of certain predefined internal targets and the Company's performance relative to its peers as described in the underlying PSU agreement, subject to continuous service through the end of the performance period. With respect to each PSU, each PSU holder is granted associated dividend equivalents rights. In the event that the Company declares and pays a regular cash dividend, on the record date for such dividend, the Company will accrue a dividend equivalent based on the number of PSUs expected to vest. The fair value of the market condition within the PSUs is determined using a Monte Carlo valuation model. Stock-based compensation for PSUs is recognized on a straight-line basis over the vesting period based on the probable performance outcome. The Company reassesses the probability of achieving the performance targets each reporting period and adjusts compensation expense accordingly.

CSI Compressco Long Term Incentive Plan

In connection with the CSI Acquisition, we assumed the CSI Compressco LP Third Amended and Restated 2011 Long Term Incentive Plan (“2011 Plan”) and outstanding unvested RSU awards originally granted by CSI Compressco under the 2011 Plan that were held by former CSI Compressco employees continuing their employment with Kodiak post-acquisition. These assumed awards were converted into 145,302 RSU awards under the Omnibus Plan and will vest in accordance with their original terms, generally over 3 years. Awards cancelled or forfeited, and shares withheld to satisfy tax withholding obligations, become available for future issuance.

The following table summarizes award activity under the Omnibus Plan for the nine months ended September 30, 2025:

As of September 30, 2025, the total future compensation cost related to non-vested equity awards was approximately $35.8 million, assuming the performance-based restricted stock units vest at 100%, pursuant to the terms of the applicable award. During the three and nine months ended September 30, 2025, approximately $4.7 million and $18.0 million, respectively, in equity compensation expense was recognized in selling, general and administrative expenses. During the three and nine months ended September 30, 2024, approximately $3.9 million and $11.9 million, respectively, in equity compensation expense was recognized in selling, general and administrative expenses.

Dividends

The following table summarizes the Company’s dividends declared and paid in each of the quarterly periods of 2025 and 2024:

Subsequent to 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 (the “Common Stock Dividend”). In conjunction with the Common Stock Dividend, Kodiak Services declared a distribution on its units of $0.49 per unit payable on November 13, 2025 to all unitholders of record of Kodiak Services as of the close of business on November 3, 2025.

13. Commitments and Contingencies

Accrued Capital Expenditures

As of September 30, 2025, and December 31, 2024, the Company has accrued capital expenditures of $19.0 million and $12.5 million, respectively. These amounts were included in accounts payable or accrued liabilities on the condensed consolidated balance sheets. Amounts exclude accrued capital expenditures related to the sales tax contingency accrual.

Purchase Commitments

Purchase commitments primarily consist of future commitments to purchase new compression units that have been ordered but not yet received. As of September 30, 2025, these commitments amounted to $142.5 million, all of which is expected to be settled within the next twelve months.

Contingent Consideration

The Company agreed to pay, as contingent consideration, up to $3.6 million of certain past due accounts receivable acquired in connection with a prior acquisition in 2019, if collected, to the seller in that transaction. The Company records contingent consideration at the acquisition and end of reporting periods at fair value in accrued liabilities. As of September 30, 2025, and December 31, 2024, none of the outstanding receivables had been collected.

Sales Tax Contingency

Between October 2019 and April 2023, the Company received notices from the Texas Comptroller’s office in regards to audits for periods ranging from December 2015 through November 2023. The audits pertain to whether the Company may owe sales and use tax on certain of its compression equipment and parts that it purchased and used during that time period. As of December 31, 2024, the Company accrued a total amount of $70.9 million.

During the quarter, 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 during the three and nine months ended September 30, 2025. During the nine months ended September 30, 2025, the Company accrued $30.4 million, including associated penalties and interest discussed above, for sales and use tax on compression equipment and parts purchased during the period.

As of September 30, 2025, the Company had a total of $105.5 million included as accrued liabilities for all states on the condensed consolidated balance sheets for sales and use tax on all compression equipment and parts purchased and used as of the balance sheet date.

Legal Matters

From time to time, the Company may become involved in various legal matters. Management believes that as of September 30, 2025, there are no legal matters whose resolution could have a material adverse effect on the unaudited condensed consolidated financial statements.

In the first quarter of 2025, the Company received a report regarding certain payments to local government officials in Mexico that commenced prior to the Company’s acquisition of its Mexican business in connection with the CSI Acquisition that may present potential compliance issues under U.S. law. In response, the Company retained outside counsel to conduct an internal investigation of the reported payments, including whether any payments made may be indirectly benefiting individuals associated with certain criminal cartel organizations, some of which may be designated as foreign terrorist organizations (FTOs) and Specially Designated Global Terrorists (SDGTs) per Executive Order 14157 of January 20, 2025. The investigation is substantially complete, and has determined that certain payments likely were made to persons associated with an organization designated as an FTO or SDGT. The payments appear to have been made in order to protect employees of the Mexican business from threats of harm or harassment, and to ensure access to work sites. At this time, the Company believes that the aggregate amount of these payments was not material. As disclosed elsewhere in this filing, the Company sold its operations and legal entities in Mexico on September 30, 2025.

The Company has voluntarily self-reported this matter to governmental authorities in the United States, including the Department of Justice, the SEC, and the Office of Foreign Assets Control, and intends to cooperate fully with any investigations or inquiries that arise. This matter could result in U.S. governmental authorities seeking criminal and/or civil sanctions, including monetary fines and penalties, against the Company, as well as requiring additional changes to the Company’s business practices and compliance programs. To the extent any of the payments at issue are determined to be illegal in a foreign jurisdiction, it is possible that there could be civil or criminal penalties assessed in that jurisdiction.

Although the Company does not expect the findings from the investigation or actions taken by governmental authorities to have a significant adverse impact on its business, results of operations, financial condition and cash flows, there can be no assurance as to the ultimate outcome of these matters at this time.

14. Accrued Liabilities

Accrued liabilities consist of the following:

15. Income Taxes

For the three and nine months ended September 30, 2025, the Company recorded income tax benefit of $6.3 million and income tax expense of $17.7 million, respectively. For the three and nine months ended September 30, 2024, the Company recorded income tax benefit of $2.2 million and income tax expense of $10.0 million, respectively. The effective tax rate was approximately 30.7% and 23.7% for the three and nine months ended September 30, 2025 compared to 26.0% and 24.6% for the three and nine months ended September 30, 2024, respectively. The difference between the Company’s effective tax rates for the three and nine months ended September 30, 2025, and 2024 and the U.S. statutory tax rate of 21% was primarily due to state income taxes.

The Company didnot have any uncertain tax benefits as of September 30, 2025, and December 31, 2024. For the three and nine months ended September 30, 2025 and 2024, the Company hadno accrued interest or penalties related to uncertain tax positions, andno amounts were recognized in the condensed consolidated statements of operations.

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 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.

16. Segments

The Company manages its business throughtwo operating segments: Contract Services and Other Services. Contract Services consists of operating Company-owned compression, customer-owned compression, and gas treating and cooling infrastructure, pursuant to fixed-revenue contracts, to enable the production, gathering and transportation of natural gas and oil. Other Services consists of a broad range of services to support ancillary needs of customers, including station construction, maintenance and overhaul, freight and crane charges, and other time and material-based offerings.

The Company evaluates performance and allocates resources based on the adjusted gross margin of each segment, which consists of revenues directly attributable to the specific segment less all costs of service directly attributable to the specific segment, exclusive of depreciation and amortization and any impairment or gain (loss) on the depreciable assets. Depreciation and amortization for the Contract Services segment was $66.3 million and $203.0 million for the three and nine months ended September 30, 2025, respectively, and $73.5 million and $189.9 million for the three and nine months ended September 30, 2024, respectively. All depreciation and amortization expense is attributable to the Contract Services segment.

The following tables represents financial metrics by segment:

The following table reconciles adjusted gross margin to income before income taxes:

17. Earnings Per Common Share

Basic earnings per share is computed using the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share of common stock is computed by using the weighted average shares of common stock outstanding, including the dilutive effect of restricted stock units and performance stock units based on an average share price during the period. For the three and nine months ended September 30, 2025, zero and 14.0 thousand unvested RSUs and PSUs, respectively, were excluded from the calculation of potential dilutive common shares due to their anti-dilutive impact. For the three months ended September 30, 2024,5.6 million OpCo Units held by noncontrolling interest and 1.1 million unvested RSUs and PSUs were similarly excluded for the same reason. Furthermore, for the nine months ended September 30, 2024,42.0 thousand unvested RSUs and PSUs, were also excluded due to their anti-dilutive impact.

The computations of basic and diluted earnings per share were as follows:

18. Related Party Transactions

Master Services Agreement

The Company has executed a master services agreement with IFS North America, Inc., a related party controlled by EQT AB, for a system license subscription and cloud hosting service to support the implementation of the Company’s enterprise resource planning system. As of September 30, 2025, total purchases under this agreement since inception were approximately $12.9 million, inclusive of contract termination costs. Total cost incurred during the three and nine months ended September 30, 2025 were approximately $1.8 million and $3.5 million, respectively. Total costs incurred during three and nine months ended September 30, 2024 were approximately zero dollars and $2 million, respectively. A portion of these costs were capitalized as internal-use software within intangible assets in the condensed consolidated balance sheets, see Note 8. Goodwill and Identifiable Intangible Assets, net. The remaining costs incurred were recognized in selling, general and administrative expenses in the condensed consolidated statements of operations.

Stock Repurchase

On August 11, 2025, the Company entered into a stock repurchase agreement with Frontier TopCo Partnership, L.P. Frontier TopCo Partnership, L.P, an affiliate of EQT AB and stockholder of the Company. See Note 12. Stockholders’ Equity for further details of this transaction. The stock repurchase agreement contains customary representations and warranties and the Repurchase closed on August 12, 2025.