Kodiak Gas Services, Inc.
For the period ended Mar 31, 2026. Filed May 11, 2026.
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.
Mar 31, 2026 · Filed May 11, 2026
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 2025-09-30; filed 2025-11-05.
0001767042-25-000080
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-05-11.
0001767042-26-000043
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 146 previous paragraphs and 112 current paragraphs.
62 unchanged; 28 reworded; 22 added; 54 removed; 2 previous and 0 current paragraphs rearranged.
Tables are not compared: 13 previous and 12 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 (22)
Current report
The acquisition of DPS (as defined below) was completed subsequent to the three months ended March 31, 2026. We expect that the recently acquired distributed power business will primarily be incorporated into a new reportable segment, Power Infrastructure beginning in the second quarter of fiscal year 2026. Certain ancillary services associated with the distributed power business, which are similar to those previously included in our operations, will be classified under our Other Services reportable segment. On a prospective basis, we expect to rename our Contract Services reportable segment to Compression Infrastructure. It is important to note that these changes to our reportable segments will be implemented in future periods and have not been implemented for the current period. For the current Quarterly Report on Form 10-Q for the period ended March 31, 2026, all financial information, disclosures, and discussion continue to be presented based on our existing reportable segments as of the reporting date.
Current report
Acquisition of Distributed Power Solutions
Current report
On April 1, 2026, we completed the previously announced acquisition of Distributed Power Solutions, LLC (“DPS”), a leading provider of turnkey distributed power generation solutions and behind‑the‑meter power generation solutions. Closing consideration consisted of $587.3 million of cash (including adjustments for certain additional power generation assets purchased since the transaction announcement, indebtedness and working capital) and the issuance of 2,401,278 shares of the Company’s common stock, par value $0.01 per share. For more information about the acquisition of DPS, please see the Company’s Current Report on Form 8-K filed with the SEC on April 1, 2026. Subsequent to March 31, 2026, and in connection with the acquisition of DPS, we entered into purchase commitments totaling approximately $244.8 million for the acquisition of power generation assets. These commitments are expected to be fulfilled over a period of approximately four years and are intended to support our planned investment in expanding our power generation fleet. As these commitments were entered into after March 31, 2026, they are not reflected in the accompanying financial statements.
Current report
2031 Senior Notes Offering
Current report
On March 20, 2026, we completed the private offering of $1.0 billion in 5.875% senior unsecured notes due 2031, issued at par and guaranteed on a senior unsecured basis by the Company and certain subsidiaries. The proceeds from the offering were used to redeem the outstanding 7.25% Senior Notes due 2029 at a redemption price equal to 103.625% of the $750.0 million aggregate principal amount, plus accrued and unpaid interest.
Current report
On March 11, 2026, we provided notice to the holders of our 2029 Senior Notes that, contingent on receipt of the proceeds from the 2031 Senior Notes, the 2029 Senior Notes would be redeemed at a premium on April 10, 2026. On March 30, 2026, utilizing a portion of the proceeds from the 2031 Senior Notes, we made an irrevocable deposit of funds with the trustee to satisfy and discharge the 2029 Senior Notes in accordance with the terms of the applicable indenture, which resulted in a legal defeasance under GAAP (the “Defeasance”). As a result of the Defeasance, the Company recognized a loss on early extinguishment of debt of$36.5 million for thethree months ended March 31, 2026, which primarily represents the early redemption premium of$27.2 million, write-off of deferred financing costs of $7.8 million, and accrued interest of $1.5 million.
Current report
For the three months ended March 31, 2026, fleet horsepower increased 1.2% and revenue generating horsepower increased 2.5% compared to three months ended March 31, 2025. These increases were primarily attributable to the acquisition of over 20,000 horsepower of large compression assets from a prominent oil and gas producer in the Permian Basin in March 2026. This strategic purchase enhanced our fleet’s capacity and operational efficiency. Additionally, the reduction of idle equipment during the period contributed to a more robust and productive fleet profile. These improvements were partially offset by the divestiture and retirement of certain non-core assets during the period, reflecting our ongoing commitment to fleet optimization. The 3.6% increase in revenue-generating horsepower per revenue-generating compression unit was primarily a result of deploying these new large horsepower units.
Current report
Selling, general and administrative expenses increased $13.9 million, or 43.0%, for the three months ended March 31, 2026, compared to the three months ended March 31, 2025. The majority of this increase resulted from a $10.8 million increase in professional fees, reflecting higher legal and transaction-related costs related to the DPS acquisition. Additionally, general liability insurance expenses increased $2.0 million compared to the prior year period, attributable to both higher premiums and expanded coverage requirements in the current market environment.
Current report
Loss on sale of assets decreased $8.0 million during the three months ended March 31, 2026 compared to the three months ended March 31, 2025. In the first quarter of 2025, we recognized a net loss of $2.6 million on a sale-leaseback transaction and incurred a $6.6 million loss related to the sale and write-off of certain scrapped assets, neither of which reoccurred in the first quarter of 2026 and both of which contributed to higher loss in that period.
Current report
Interest expense increased $1.5 million, or 3.2%, for the three months ended March 31, 2026, compared to the three months ended March 31, 2025. The increase was primarily driven by higher interest expense on our senior notes, reflecting the impact of our debt refinancing activities, including the issuance of the 2031 Senior Notes and redemption of the 2029 Senior Notes during the first quarter of 2026. This increase was partially offset by lower interest expense on our ABL Facility, reflecting reduced borrowings in the current period.
Current report
Loss on Extinguishment of Debt
Current report
We recognized a $36.5 million loss on extinguishment of debt during the three months ended March 31, 2026, primarily due to the early redemption premium of$27.2 million, thewrite-off of deferred financing costs of $7.8 million, and accrued interest of $1.5 million associated with the defeasance and early redemption of our 2029 Senior Notes following the issuance of the 2031 Senior Notes. No such loss was recognized during the three months ended March 31, 2025.
Current report
For the three months ended March 31, 2026, growth capital expenditures were $85.6 million, other capital expenditures were $7.5 million, and maintenance capital expenditures were $17.8 million as compared to growth capital expenditures of $56.0 million, other capital expenditures of $22.3 million, and maintenance capital expenditures of $16.4 million for the three months ended March 31, 2025. The increase in growth capital expenditures was primarily driven by a $24.0 million purchase of used assets, reflecting an opportunistic purchase of compression equipment to accelerate fleet growth and meet strong customer demand, as well as an $18.0 million investment in power generation infrastructure to support our recently acquired power distribution business. The decrease in other capital expenditures was attributable to the completion of our engine conversion program, a multi-year fleet upgrade initiative that was substantially finished during fiscal year 2025.
Current report
Maintenance capital expenditures remain disciplined, with only a modest increase despite the continued expansion of our fleet.
Current report
Subsequent to March 31, 2026, and in connection with the acquisition of DPS, we entered into purchase commitments totaling approximately $244.8 million for the acquisition of power generation assets. These commitments are expected to be fulfilled over a period of approximately four years and are intended to support our planned investment in expanding our power generation fleet. See Note 17. Subsequent Events to the condensed consolidated financial statements included in this Report.
Current report
The $43.1 million decrease in net cash provided by operating activities for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, was primarily driven by unfavorable changes in working capital items, particularly an increase in accounts receivable related to strong revenue growth and timing of customer collections. Working capital items used cash of $69.1 million during the three months ended March 31, 2026 compared to the use of cash of $18.7 million during the three months ended March 31, 2025. This was partially offset by the $36.5 million non-cash add-back for the loss on extinguishment of debt associated with our strategic debt refinancing activities completed during the quarter.
Current report
Net cash provided by financing activities of $134.9 million increased $183.9 million during the three months ended March 31, 2026, compared to cash used for financing activities of $49.0 million during the three months ended March 31, 2025. Cash provided by financing activities during three months ended March 31, 2026 was primarily the result of our strategic debt refinancing activities completed during the quarter, which resulted in net proceeds of approximately $193.2 million. These net proceeds, combined with lower share repurchase activity, more than offset the $42.6 million in dividend payments and $15.0 million tax-related outflows associated with equity compensation vesting.
Current report
The ABL Facility is a revolving credit arrangement with a lockbox feature, where customer payments may be sent to a bank account managed by the agent and used to pay down borrowings if availability drops below $100 million for five consecutive business days. As of March 31, 2026, and December 31, 2025, availability exceeded this threshold, so the balance was classified as long-term in accordance with its maturity.
Current report
The ABL Facility provides for commitments totaling $2.0 billion and a maturity date of September 5, 2030. As of March 31, 2026, $1.4 million in letters of credit were outstanding. As of March 31, 2026, borrowings under our ABL Facility totaled $449.9 million.
Current report
On March 11, 2026, we provided notice to the holders of our 2029 Senior Notes that, contingent on receipt of the proceeds from the 2031 Senior Notes, the 2029 Senior Notes would be redeemed at a premium on April 10, 2026. On March 30, 2026, utilizing a portion of the proceeds from the 2031 Senior Notes (as defined below), we made an irrevocable deposit of funds with the trustee to satisfy and discharge the 2029 Senior Notes in accordance with the terms of the applicable indenture, which resulted in a legal defeasance under GAAP (the “Defeasance”).
Current report
The Defeasance required a cash outlay of $785.5 million, which was irrevocably deposited with the trustee to fund interest payments on the 2029 Senior Notes through April 10, 2026, when the 2029 Senior Notes were redeemed at a premium, as well as fund the redemption of the 2029 Senior Notes in full. As a result of the Defeasance, the Company recognized a loss on early extinguishment of debt of$36.5 million for thethree months ended March 31, 2026, which primarily represents the early redemption premium of$27.2 million, thewrite-off of deferred financing costs of $7.8 million, and accrued interest of $1.5 million.
Current report
On March 20, 2026, Kodiak Services issued $1.0 billion in aggregate principal amount of 5.875% senior unsecured notes due 2031 (the “2031 Senior Notes”). The net proceeds from the 2031 Senior Notes were used by the Company to redeem all of Kodiak Services’ outstanding 7.25% Senior Notes due 2029 at a redemption price equal to 103.625% of the $750.0 million aggregate principal amount, plus accrued and unpaid interest, if any.
Removed paragraphs (54)
Previous report
One Big Beautiful Bill Act of 2025 (“OBBBA”)
Previous report
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 report
U.S. Trade Policy and Recent Executive Orders
Previous report
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 report
We are also monitoring and evaluating the potential impact of various executive orders issued by the U.S. government, including the executive orders entitled “Reducing Anti-Competitive Regulatory Barriers” and “Zero-Based Regulatory
Previous report
Budgeting to Unleash American Energy,” on our business, including potential impacts to our financial condition, results of operations and cash flows.
Previous report
Senior Notes Offerings
Previous 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.
Previous report
Secondary Offering
Previous 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.
Previous report
Disposal of Mexico Operations
Previous 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.
Previous report
Settlement of Sales Tax Audit
Previous 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.
Previous report
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 report
Long-lived Asset Impairment
Previous 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.
Previous report
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 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.
Previous 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.
Previous report
Loss on Derivatives
Previous report
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 report
Other Expense, net
Previous 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.
Previous report
Income Tax Benefit
Previous report
Financial Results of Operations
Previous report
Nine Months Ended September 30, 2025, Compared to the Nine Months Ended September 30, 2024
Previous report
Revenues and Sources of Income
Previous report
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 report
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 report
Operating Costs and Other Expenses
Previous report
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 report
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 report
Depreciation and Amortization
Previous report
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 report
Long-lived Asset Impairment
Previous 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.
Previous report
Selling, General and Administrative Expense
Previous report
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 report
Loss on Sale of Assets
Showing the first 40 of 54 passages. Open the source sections for the rest.
Reworded paragraphs (28)
Previous wording
We are a leading provider and operator of large horsepower contract compression infrastructure in the U.S. Our Contract Services and related services are critical to our customers’ ability to reliably produce, gather and transport natural gas and oil. We are a market leader in the Permian Basin, which is the largest producing natural gas and oil basin in the U.S. We operate our large horsepower compression units primarily under fixed-revenue contracts with many upstream and midstream customers. Our compression assets have long useful lives consistent with the expected production lives of the key regions where we operate. We believe our customer-centric business model positions us as the preferred contract compression operator for our customers and creates long-standing relationships. We strategically invest in the training, development and retention of our highly skilled and dedicated employees and believe their expertise and commitment to excellence enhances and differentiates our business model. Furthermore, we maintain an intense focus on being one of the most sustainable and responsible operators of contract compression infrastructure.
Current wording
We are a leading provider and operator of large horsepower contract compression infrastructure in the U.S., supporting the critical movement and processing of natural gas across key production regions. Our Contract Services and related services are critical to our customers’ ability to reliably produce, gather and transport natural gas and oil. We are a market leader in the Permian Basin, which is the largest producing natural gas and oil basin in the U.S. We operate our large horsepower compression units primarily under fixed-revenue contracts with many upstream and midstream customers. Our compression assets have long useful lives consistent with the expected production lives of the key regions where we operate. We believe our customer-centric business model positions us as the preferred contract compression operator for our customers and creates long-standing relationships. We strategically invest in the training, development and retention of our highly skilled and dedicated employees and believe their expertise and commitment to excellence enhances and differentiates our business model. Furthermore, we maintain an intense focus on being one of the most sustainable and responsible operators of contract compression infrastructure.
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 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
As of March 31, 2026, we managed 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, the provision of freight and crane services and other time and material-based offerings. Our Other Services offerings are often cross-sold with Contract Services.
Previous 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.
Current wording
Contract Services revenue increased $18.0 million, or 6.2%, for the three months ended March 31, 2026, compared to the three months ended March 31, 2025. This was primarily due to a $17.3 million increase in Contract Services revenue resulting from pricing increase and revenue-generating horsepower. This increase was partially offset by a decrease of $1.0 million related to gas treating and cooling services.
Previous wording
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 wording
Other Services revenue decreased $1.9 million, or 4.7%, for the three months ended March 31, 2026, compared to the three months ended March 31, 2025. This reduction was mainly driven by lower revenues from station construction services along with a decline in field service revenue resulting from lower demand for third-party field service work and logistics. These declines were partially offset by strong growth in shop service revenue and incremental customer-requested services and materials.
Previous 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.
Current wording
Contract Services expenses decreased $3.0 million, or 3.2%, for the three months ended March 31, 2026, compared to the three months ended March 31, 2025. This was primarily due to a $1.7 million decrease in cost of parts utilized to support our operations and a $1.4 million decrease in lubricant oil and coolant costs. These decreases were partially offset by a $1.6 million increase in direct labor expenses as a result of the incremental revenue noted above.
Previous wording
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 wording
Other Services expenses decreased $2.6 million, or 7.4%, for the three months ended March 31, 2026, compared to the three months ended March 31, 2025. This decrease was primarily driven by the lower Other Services revenue across our product lines as noted above.
Previous 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.
Current wording
Depreciation and amortization decreased $1.8 million, or 2.6%, for the three months ended March 31, 2026, compared to the three months ended March 31, 2025. This decrease was primarily due to full depreciation of certain assets since the three months ended March 31, 2025, as well as the impact of asset sales and disposals during the current period.
Previous 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.
Current wording
Income tax expense decreased by $7.8 million, for the three months ended March 31, 2026, compared to the three months ended March 31, 2025. This decrease was primarily due to a decrease in pre-tax income of $20.9 million, as well as tax benefit related to the vesting of restricted stock for the three months ended March 31, 2026, compared to the three months ended March 31, 2025.
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 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.
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 or repurchase shares pursuant to our Share Repurchase Program. As of March 31, 2026, we had approximately $1.6 billion of liquidity consisting of $94.4 million in cash and cash equivalents and $1.5 billion available under the ABL Facility.
Previous 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.
Current wording
•Long-term debt of $2.8 billion, of which $449.9 million matures in 2030, $1.0 billion matures in 2031, $770.0 million matures in 2033, and $630.0 million matures in 2035.
Previous 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.
Current wording
•Purchase commitments of $276.4 million, of which $241.9 million is expected to be settled within the next twelve months; primarily consisting of future commitments to purchase new compression and power generation units that have been ordered but not yet received. See Note 12. Commitments and Contingencies to the condensed consolidated financial statements included in this Report.
Previous wording
As of September 30, 2025, other commitments include future operating and finance lease payments totaling $76.3 million.
Current wording
As of March 31, 2026, other commitments include future operating and finance lease payments totaling $77.5 million.
Previous 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.
Current wording
The $46.7 million increase in net cash used in investing activities for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, was primarily due to a $40.8 million increase in cash used for capital expenditures, net of accrued capital expenditures. This was partially offset by a $5.9 million decrease in cash provided by proceeds on sale of assets.
Previous 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.
Current wording
Cash used for financing activities of $49.0 million during the three months ended March 31, 2025 was primarily the result of $36.4 million of dividends paid to stockholders, $10.0 million of share repurchases, $2.8 million of cash paid for shares withheld to cover taxes, $2.0 million of cash paid on principal payments of other borrowings, $0.7 million of cash paid on principal payments of finance leases, and $0.4 million of distributions to noncontrolling interest. This was offset by $3.3 million of net cash provided by borrowings.
Previous 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.
Current wording
On April 2, 2026, Kodiak and Kodiak Services entered into the Fifth Amendment to the Fourth Amended and Restated Credit Agreement (“Fifth Amendment”) with the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (as amended or restated from time to time, the “ABL Credit Agreement” or “ABL Facility”), which amends the Fourth Amended and Restated Credit Agreement dated as of March 22, 2023. The Fifth Amendment, among other things, modifies the calculation of the leverage ratio. Through June 30, 2026, the Fifth Amendment allows Kodiak Services to deduct from its total indebtedness the net proceeds from the issuance of the 2031 Senior Notes, in addition to the existing $50,000,000 cash netting cap, so long as such proceeds remain as unrestricted cash or cash equivalents.
Previous 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.
Current wording
Interest on the outstanding borrowings under the ABL Facility is payable monthly and accrues based on variable rates of the Secured Overnight Financing Rate (“SOFR”) plus an applicable rate ranging from 1.75% to 2.50% or prime rate plus an applicable rate ranging from 0.75% to 1.50% depending on the leverage ratio as of the most recently ended quarter. As of March 31, 2026, and December 31, 2025, the weighted average interest rate on the ABL Facility was 5.67% and 5.72%, respectively, excluding the effect of the interest rate swap. The Company pays an annualized commitment fee of 0.25% on the unused portion of its ABL Facility.
Previous wording
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.
Current wording
As of March 31, 2026, we were in compliance with all covenants under the ABL Facility. All obligations under the ABL Facility are collateralized by essentially all the assets of the Company.
Previous wording
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 wording
On September 5, 2025, Kodiak Services issued $600.0 million in aggregate principal amount of 6.50% senior unsecured notes due 2033 (the “2033 Senior Notes”). Subsequently, on September 22, 2025, Kodiak Services completed a private offering of an additional $170.0 million of 2033 Senior Notes for $173.4 million. The net proceeds from these offerings were used by the Company to repay a portion of the debt outstanding under the ABL Facility.
Previous wording
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 wording
On September 5, 2025, Kodiak Services issued $600.0 million in aggregate principal amount of 6.75% senior unsecured notes due 2035 (the “2035 Senior Notes”). Subsequently, on September 22, 2025, Kodiak Services completed a private offering of an additional $30.0 million of 2035 Senior Notes for $30.9 million. The excess fair value above the face value was recognized as a bond premium, which is amortized as a reduction in interest expense over the remaining term of the 2035 Senior Notes. The net proceeds from these offerings were used by the Company to repay a portion of the debt outstanding under the ABL Facility.
Previous wording
To mitigate a portion of the exposure to fluctuations in the variable interest rate of the ABL Facility, we have entered into the interest rate swap discussed above.
Current wording
To mitigate a portion of the exposure to fluctuations in the variable interest rate of the ABL Facility, we have entered into derivative instruments.
Previous 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.
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 as of March 31, 2026. See Note 9. Derivative Instruments to the condensed consolidated financial statements included in this Report.
Previous wording
Management uses a variety of financial and operating metrics to analyze our performance. These metrics are significant factors in assessing our operating results and profitability and include the non-GAAP financial measures of adjusted gross margin, adjusted gross margin percentage, adjusted EBITDA, adjusted EBITDA percentage, discretionary cash flow and free cash flow.
Current wording
Management uses a variety of financial and operating metrics to analyze our performance. These metrics are significant factors in assessing our operating results and profitability and include the non-GAAP financial measures of adjusted gross margin, adjusted gross margin percentage, adjusted EBITDA, adjusted EBITDA percentage, discretionary cash flow, free cash flow, adjusted net income and adjusted earnings per share.
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; (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:
Current wording
Adjusted EBITDA and adjusted EBITDA percentage are considered non-GAAP measures. We define adjusted EBITDA as net income before interest expense; income tax expense; and depreciation and amortization; plus certain items, as applicable, such as (i) impairment of long-lived assets; (ii) loss (gain) on derivatives; (iii) equity compensation expense; (iv) severance expenses; (v) transaction expenses; (vi) sales tax reserve; (vii) loss (gain) on disposal of business; (viii) loss (gain) on sale of assets; and (ix) loss on extinguishment of debt. We define adjusted EBITDA percentage as adjusted EBITDA divided by total revenues. Adjusted EBITDA and adjusted EBITDA percentage are used as supplemental financial measures by our management and external users of our financial statements, such as investors, commercial banks and other financial institutions, to assess:
Previous wording
Discretionary cash flow is considered a non-GAAP measure. We define discretionary cash flow as net cash provided by operating activities less (i) maintenance capital expenditures; (ii) certain changes in operating assets and liabilities; and (iii) certain other expenses; plus (w) cash loss on extinguishment of debt; (x) severance expenses; and (y) transaction expenses. We believe discretionary cash flow is a useful liquidity and performance measure and supplemental financial measure for us in assessing our ability to pay cash dividends to our stockholders, make growth capital expenditures and assess our operating performance. Our ability to pay dividends is subject to limitations due to restrictions contained in our ABL Credit Agreement, as further described in this Report. Discretionary cash flow is presented for supplemental informational purposes only and should not be considered a substitute for financial information presented in accordance with GAAP, such as revenues, net income (loss), operating income (loss) or cash flows from operating activities. Discretionary cash flow as presented may not be comparable to similarly titled measures of other companies.
Current wording
Discretionary cash flow is considered a non-GAAP measure. We define discretionary cash flow as net cash provided by operating activities less (i) maintenance capital expenditures; (ii) certain changes in operating assets and liabilities; and (iii) certain other expenses; plus certain items, as applicable, such as (w) severance expenses; (x) transaction expenses; and (y) sales tax reserve. We believe discretionary cash flow is a useful liquidity and performance measure and supplemental financial measure for us in assessing our ability to pay cash dividends to our stockholders, make growth capital expenditures and assess our operating performance. Our ability to pay dividends is subject to limitations due to restrictions contained in our ABL Credit Agreement as further described elsewhere herein. Discretionary cash flow is presented for supplemental informational purposes only and should not be considered a substitute for financial information presented in accordance with GAAP, such as revenues, net income, operating income (loss) or cash flows from operating activities. Discretionary cash flow as presented may not be comparable to similarly titled measures of other companies.
Previous wording
We define free cash flow as net cash provided by operating activities less (i) maintenance capital expenditures; (ii) certain changes in operating assets and liabilities; (iii) certain other expenses; and (iv) growth and other capital expenditures; plus (w) cash loss on extinguishment of debt; (x) severance expenses; (y) transaction expenses; and (z) proceeds from sale of assets. We believe free cash flow is a liquidity measure and useful supplemental financial measure for us in assessing our ability to pursue business opportunities and investments to grow our business and to service our debt. Free cash flow is presented for supplemental informational purposes only and should not be considered a substitute for financial information presented in accordance with GAAP, such as revenues, net income (loss), operating income (loss) or cash flows from operating activities. Free cash flow as presented may not be comparable to similarly titled measures of other companies.
Current wording
Free cash flow is considered a non-GAAP measure. We define free cash flow as net cash provided by operating activities less (i) maintenance capital expenditures; (ii) certain changes in operating assets and liabilities; (iii) certain other expenses; (iv) growth capital expenditures; and (v) other capital expenditures; plus certain items, as applicable, such as (w) severance expenses; (x) transaction expenses; (y) sales tax reserve; and (z) proceeds from sale of assets. We believe free cash flow is a liquidity measure and useful supplemental financial measure for us in assessing our ability to pursue business opportunities and investments to grow our business and to service our debt. Free cash flow is presented for supplemental informational purposes only and should not be considered a substitute for financial information presented in accordance with GAAP, such as revenues, net income, operating income (loss) or cash flows from operating activities. Free cash flow as presented may not be comparable to similarly titled measures of other companies.
Previous wording
Adjusted Net Income (Loss) and Adjusted Diluted Earnings Per Share
Current wording
Adjusted Net Income and Adjusted Diluted Earnings Per Share
Previous wording
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 wording
Adjusted net income and adjusted earnings per share are considered non-GAAP measures. Adjusted net income is defined as net income adjusted to exclude certain items, as applicable, such as (i) impairment of long-lived assets; (ii) severance expenses; (iii) transaction expenses; (iv) sales tax reserve; (v) loss on disposal of business; (vi) loss (gain) on derivatives; (vii) loss on extinguishment of debt; and (viii) the tax effects of the adjustments. Adjusted earnings per share is calculated by dividing adjusted net income by the weighted average diluted shares outstanding. We believe these non-GAAP financial measures are useful to investors because they are key measures used by our management team to evaluate our operating performance, generate future operating plans, and make strategic decisions. Adjusted net income and adjusted earnings per share are presented for supplemental informational purposes only and should not be considered a substitute for financial information presented in accordance with GAAP, such as revenues, net income, operating income, earnings per share, or cash flows from operating activities. Adjusted net income and adjusted earnings per share as presented may not be comparable to similarly titled measures of other companies.
Previous wording
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:
Current wording
The following tables reconcile net income to adjusted net income and diluted earnings per share to adjusted diluted earnings per share, for each of the periods presented:
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
The following table presents selected financial and operating information for the periods presented:
Previous report — wording carried elsewhere
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.