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 energy infrastructure and related services in the U.S. On April 1, 2026, the Company completed the acquisition of Distributed Power Solutions, LLC (“DPS”), which expanded its business beyond contract compression to include distributed and behind-the-meter power generation solutions, including the provision of power generation equipment and related services such as equipment installation, operation, maintenance and other support services.

Effective for the quarter ended June 30, 2026, the Company revised its reportable segments and now reports three operating and reportable segments: Compression Infrastructure, Power Infrastructure and Other Services. Compression Infrastructure represents the Company’s legacy contract compression operations, Power Infrastructure reflects the Company’s distributed power generation operations, and Other Services includes a broad range of service offerings, including certain ancillary services associated with the compression and power generation businesses. The Company believes this expanded segmentation will provide its investors with additional information to better understand its performance. Prior-period segment information has been recast to conform to the current period presentation. See Note 17. Segments for further information.

The Company operates compression units under primarily fixed-revenue contracts with upstream and midstream customers. The Company also provides power generation services under customer arrangements that generally include fixed monthly payments for power generation equipment and associated capacity, together with service-based fees for delivery, installation, operation, maintenance and other ancillary support services. These arrangements support customers across a variety of end markets including digital infrastructure, energy microgrid, manufacturing and other infrastructure and generally range from short-term to multi-year agreements.

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, 2025. 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 November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses (DISE)and in January 2025, the FASB issued ASU 2025-01, Clarifying the Effective Date. These updates require 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

Distributed Power Solutions

On April 1, 2026, the Company completed the acquisition of DPS, a provider of turnkey distributed and behind‑the‑meter power generation solutions. DPS has been rebranded as Kodiak Power Solutions, a division of the Company. Kodiak Services acquired 100% of the outstanding equity interests of DPS (the “DPS Acquisition”). The DPS Acquisition expands the Company’s platform beyond contract compression into distributed power generation and adds generation capacity, with customers across data center, microgrid, manufacturing and energy infrastructure end markets. DPS engaged in the rental and leasing of machinery for power generation to customers in the oil and gas, utility, data center, industrial, and commercial sectors. Strategically, the DPS Acquisition is expected to expand the Company’s distributed power generation capabilities and enhance revenue growth through increased scale and complementary service offerings.

The total consideration consisted of $587.3 million of cash, reflecting adjustments for certain additional power generation assets purchased prior to closing, indebtedness and working capital, and 2.4 million shares of the Company’s common stock, par value $0.01 per share with an estimated fair value of $139.0 million based on the Company’s closing stock price of $57.90 per share, on April 1, 2026.

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

The allocation of purchase price to DPS's net assets and liabilities as of April 1, 2026 remains preliminary and subject to the potential identification of additional assets, contingencies, or revised fair value calculations. Accordingly, the Company continues to evaluate information necessary to determine the fair values of certain acquired assets and assumed liabilities. The preliminary purchase price allocation is subject to change during the measurement period as additional information becomes available, and actual allocation amounts will be disclosed in subsequent filings and completed no later than one year from the closing of the DPS Acquisition.

The purchase price was allocated to the assets acquired and liabilities assumed based on their respective fair values. The methodologies used, and key assumptions made, were based on a combination of the income approach, market approach, and cost approach. The fair value of the acquired property, plant and equipment was determined using the cost approach, which involved estimating the replacement cost and adjusting for age, condition and utility, and for trailers and vehicles, the market approach. The fair value of the acquired intangible assets was determined using the income approach, including the multi-period excess earnings method. Several significant assumptions were involved in the application of these valuation methods, including revenue growth rate, contributory asset charges, probability of renewal curves, discount rates and estimated useful lives.

The fair value of the assets acquired and liabilities assumed are categorized in the following levels:

Level 1 - Cash and cash equivalents, based on observable inputs such as quoted prices in active markets at the measurement date for identical assets or liabilities.

Level 2 - Receivables and other current assets, non-current assets, deferred revenue and other current and non-current liabilities; based on inputs that are observable such as quoted prices in markets that are not active, or inputs which are observable, for substantially the full term of the asset or liability.

Level 3 - Intangible assets and property, plant, and equipment; based on unobservable inputs for which there is little or no market data and which assumptions are made about how market participants would price the assets or liabilities; The Company used a combination of the income, cost and market approaches based on various assumptions and inputs.

The preliminary allocation of purchase price includes approximately $344.8 million allocated to goodwill and is supported by the expected strategic benefits (discussed above) to be generated from the DPS Acquisition. The goodwill, which is deductible for tax purposes, has been allocated to our Power Infrastructure reportable segment. The acquired property, plant and equipment is stated at fair value, and depreciation on the acquired property, plant and equipment is computed using the straight-line method over the estimated remaining useful lives of each asset in line with the Company’s polices.

For the six month period ended June 30, 2026, our revenues include $37.0 million associated with the DPS Acquisition after the closing on April 1, 2026. It is impracticable to determine the earnings recorded in the condensed consolidated statements of operations for the six month period ended June 30, 2026 as we initiated the integration of a substantial portion of DPS into our ongoing operations during the current period. In addition, acquisition-related costs of approximately $3.3 million and $11.6 million, respectively, were incurred during the three and six month periods ended June 30, 2026 related to external legal fees, transaction consulting fees, and due diligence costs. These costs have been recognized in selling, general, and administrative expenses in the condensed consolidated statements of operations.

Unaudited Supplemental Pro Forma Financial Information

The following unaudited supplemental pro forma information has been prepared as though the DPS Acquisition had occurred on January 1, 2025. 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, 2025 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.

4. Revenue Recognition

The Company generates revenue from compression and power infrastructure solutions and related services. Revenue is recognized in accordance with either Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers, or ASC Topic 842, Leases, depending on the nature of the arrangement.

ASC 606 – Revenue from Contracts with Customers

Revenues within the Compression Infrastructure and Other Services segments are recognized under ASC 606. The Company provides integrated equipment and services under customer contracts, which are generally accounted for as a single performance obligation comprised of a stand-ready series of services.

ASC 842 – Leases

Revenue within the Power Infrastructure segment is primarily derived from arrangements that provide customers with the right to use power generation equipment and is accounted for under ASC 842. These arrangements are generally classified as operating leases, and lease revenue is recognized on a straight-line basis over the contractual term, which typically ranges from several months to multiple years.

Certain Power Infrastructure arrangements also include services such as delivery, installation, operation, maintenance and other support activities. To the extent such services are determined to be distinct from the lease component, they are accounted for separately under ASC 606 within the Other Services segment.

Judgment is required in evaluating customer arrangements, including determining whether an arrangement contains a lease, identifying lease and non-lease components and assessing whether non-lease services are distinct. For arrangements accounted for under ASC 606, the Company also evaluates whether the promised goods and services represent a single performance obligation, including a stand-ready series of services, or multiple performance obligations. For certain qualifying arrangements, the Company has elected the practical expedient to not separate lease and non-lease components and account for the combined component under the applicable guidance based on the predominant component.

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

Contract Assets and Liabilities

Contract assets and contract liabilities presented below relate only to contracts accounted for under ASC 606 and do not include balances associated with lease arrangements accounted for under ASC 842, which are primarily included within the Power Infrastructure segment.

The Company recognizes a contract asset when it has transferred goods or services to a customer but its right to consideration is conditional on something other than the passage of time. Contract assets are reclassified to trade receivables when the right to consideration becomes unconditional. The Company had contract assets of $11.3 million and $5.2 million as of June 30, 2026, and December 31, 2025, respectively. As of January 1, 2026 and 2025, the beginning balances for contract assets were $5.2 million and $7.6 million, respectively.

The Company records contract liabilities when consideration is received or is contractually due in advance of transferring goods or services to the customer. The Company’s contract liabilities were $89.6 million and $94.5 million as of June 30, 2026, and December 31, 2025, respectively. As of January 1, 2026, and 2025, the beginning balances for contract liabilities were $94.5 million and $73.1 million, all of which was recognized as revenue in the six months ended June 30, 2026, and 2025, respectively.

Performance Obligations

The remaining performance obligations disclosure applies only to revenues accounted for under ASC 606 and does not include amounts related to lease arrangements accounted for under ASC 842, which are primarily associated with the Company’s Power Infrastructure segment.

As of June 30, 2026, we had $2.6 billion of remaining performance obligations related to our Compression Infrastructure segment.

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

As of June 30, 2026, the aggregate amount of transaction price allocated to unsatisfied performance obligations related to the Company’s revenue for the Other Services segment is $18.9 million, of which $17.0 million is expected to be recognized by December 31, 2026, and the remaining will be recognized in 2027.

The Company has a Power Infrastructure lease and service agreement with a customer for (i) the lease of power generation equipment and (ii) the operation and maintenance services for the equipment. The initial lease term ends on April 1, 2028 with options to renew for up to an additional 12 years with payments based on a fixed monthly fee, a portion of which is escalated annually based on the CPI index. Rental revenues under the initial term of this agreement are recognized on a straight-line basis and would be $13.7 million, $27.4 million, and $6.9 million for the remainder of the year ending December 31, 2026 and the years ending December 31, 2027 and 2028, respectively.

5. Accounts Receivable, net

The allowances for credit losses were $0.8 million and $13.0 million as of June 30, 2026, and December 31, 2025, respectively, which represents the Company’s best estimate of the amount of probable credit losses included within the Company’s 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 $72.9 million and $137.2 million for the three and six months ended June 30, 2026, respectively, and is recorded within depreciation and amortization in the accompanying condensed consolidated statements of operations. Depreciation expense was $62.1 million and $128.5 million for the three and six months ended June 30, 2025, respectively. The Company rents equipment to customers under ASC 842 operating lease arrangements. As of June 30, 2026, gross rental equipment of $491.5 million was included in property and equipment, of which $153.2 million is classified as construction in progress and not yet available for lease.

8. Goodwill and Identifiable Intangible Assets, net

Goodwill

The Company allocates goodwill across its Compression Infrastructure and Power Infrastructure reporting units.

The carrying amount of goodwill, including changes therein, is shown below:

(1) The goodwill increase between December 31, 2025 and June 30, 2026 stems from the DPS Acquisition, with the full amount allocated to the Power Infrastructure reporting unit. See Note 3. Acquisitions for more details.

Intangible Assets

The Company’s identifiable intangible assets were as follows:

Amortization expense was $5.1 million and $9.0 million for the three and six months ended June 30, 2026, respectively, and is recorded within depreciation and amortization in the condensed consolidated statements of operations. Amortization expense was $3.4 million and $6.7 million for the three and six months ended June 30, 2025, respectively.

As of June 30, 2026 and December 31, 2025, the remaining weighted average amortization period for identifiable intangible assets recognized is 10.4 years and 11.0 years, respectively.

Estimated future amortization expense related to intangible assets as of June 30, 2026 is as follows:

9. Debt and Credit Facilities

Long-term debt consisted of the following:

ABL Facility

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 $50.0 million cash netting cap, so long as such proceeds remain as unrestricted cash or cash equivalents.

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 $100.0 million forfive consecutive business days. As of June 30, 2026, and December 31, 2025, availability exceeded this threshold, so the balance was classified as long-term in accordance with its maturity.

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 June 30, 2026, and December 31, 2025, the weighted average interest rate on the ABL Facility was 6.03% 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.

The ABL Facility provides for commitments totaling $2.0 billion and a maturity date of September 5, 2030. As of June 30, 2026, $14.6 million in letters of credit were outstanding. As of June 30, 2026, borrowings under our ABL Facility totaled $380.9 million.

As of June 30, 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.

Redemption of 2029 Senior Notes

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”).

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 thesix months ended June 30, 2026, which 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.

2031 Senior Notes

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”). A portion of 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.

The 2031 Senior Notes are redeemable at the Company’s option, in whole or in part, prior to April 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 premium is determined as the excess, if any, of the present value at such time of the redemption plus any required interest payments through April 1, 2028, discounted semi-annually to the redemption date using the applicable treasury rate plus 0.50% over the principal amount of the 2031 Senior Notes. Prior to April 1, 2028, the Company may also redeem up to 40% of the aggregate principal amount of the 2031 Senior Notes using an amount not greater than the net cash proceeds from certain equity offerings at a redemption price of 105.875% 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 April 1, 2028, Kodiak Services may, on one or more occasions, redeem any or all of the 2031 Senior Notes at the redemption prices set forth below plus accrued and unpaid interest up to the redemption date, beginning on April 1 of the specified years indicated below.

Fees and costs totaling $14.3 million were incurred related to the 2031 Senior Notes and are amortized over the life of the notes to interest expense.

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 can be redeemed by the Company on or after October 1, 2028, at specified redemption prices plus accrued and unpaid interest. Additionally, prior to October 1, 2028, the Company may redeem up to 40% of the 2033 Senior Notes using proceeds from certain equity offerings at specified redemption prices and make-whole premiums plus any accrued and unpaid interest provided at least 50% of the original principal remains and redemption occurs within 180 days of the offering.

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”). 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 the 2035 Senior Notes were utilized for the same purposes described above for the 2033 Senior Notes.

The 2035 Senior Notes can be redeemed by the Company on or after October 1, 2030, at specified redemption prices plus accrued and unpaid interest. Additionally, prior to October 1, 2030, the Company may redeem up to 40% of the 2035 Senior Notes using proceeds from certain equity offerings at specified redemption prices and make-whole premiums plus any accrued and unpaid interest provided at least 50% of the original principal remains and redemption occurs within 180 days of the offering.

The indentures governing the 2031 Senior Notes, 2033 Senior Notes and 2035 Senior Notes contain covenants that limit the ability of the Company and its restricted subsidiaries from actions such as distributing or redeeming equity, making certain investments, incurring additional debt, creating liens, selling assets, merging, engaging in affiliate transactions, and forming unrestricted subsidiaries, with some exceptions. Most restrictions terminate if the 2031 Senior Notes, 2033 Senior Notes and 2035 Senior Notes receive investment grade ratings from any two of Moody’s, S&P, and Fitch, and no default exists. The indentures also include standard events of default.

As of June 30, 2026, the scheduled maturities of the Company’s long-term debt were as follows:

10. Derivative Instruments

The Company has entered into an interest rate swap, exchanging variable interest rates for fixed interest rates. The interest rate swap was designated as a cash flow hedge derivative instrument, and management evaluated hedge effectiveness and determined it to be highly effective as of June 30, 2026. See Note 11. Fair Value Measurements for details on the valuation of the interest rate swap.

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 on 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 our senior notes is determined by 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 following table summarizes the fair value of our interest rate swap, measured at fair value on a recurring basis, and our long‑term debt disclosed at fair value:

12. Stockholders’ Equity

Issuance of Common stock

On May 13, 2026, the Company completed an underwritten public offering of 10.6 million shares of its common stock at a public offering price of $71.00 per share. The underwriters exercised their option to purchase an additional 1.6 million shares, which was fully exercised on May 14, 2026. The offering, including the sale of the option shares, closed on May 15, 2026. The Company received aggregate net proceeds of approximately $836.1 million, after deducting underwriting discounts and offering expenses.

Share Repurchases

Kodiak’s board of directors (“Board”) has authorized a share repurchase program of up to $100.0 million of the Company’s outstanding common stock (the “Share Repurchase Program”) through December 31, 2026. As of June 30, 2026, $31.7 million remains available for repurchase under the Share Repurchase Program.

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 six months ended June 30, 2026 and the year ended December 31, 2025, a total of 0.1 million and 0.5 million, respectively, shares 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 attract, retain and motivate key talent, including the Company’s named executive officers, while aligning compensation with long-term Company performance and shareholder returns. As of June 30, 2026, a total of 6.0 million shares of common stock has 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 -200% 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.

The following table summarizes award activity under the Omnibus Plan for the six months ended June 30, 2026:

As of June 30, 2026, the total future compensation cost related to non-vested equity awards was approximately $51.9 million to be recognized over the weighted-average period of 2.2 years, assuming the performance-based restricted stock units vest at 140%, pursuant to the terms of the applicable award. During the three and six months ended June 30, 2026, approximately $8.6 million and $14.5 million, respectively, in equity compensation expense was recognized in selling, general and administrative expenses. During the three and six months ended June 30, 2025, approximately $6.3 million and

$13.3 million, respectively, in equity compensation expense was recognized in selling, general and administrative expenses.

Dividends

The following table summarizes dividends declared and paid in each of the quarterly periods of 2026 and 2025:

Subsequent to quarter end, on August 5, 2026, the Company’s Board declared a cash dividend of $0.49 per share for the quarter ended June 30, 2026, which is payable on August 27, 2026, to shareholders of record as of the close of business on August 17, 2026 (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 August 27, 2026 to all unit holders of record of Kodiak Services as of the close of business on August 17, 2026.

13. Commitments and Contingencies

Accrued Capital Expenditures

As of June 30, 2026, and December 31, 2025, the Company had accrued capital expenditures of $48.0 million and $23.0 million, respectively. These amounts were included in accounts payable or accrued liabilities in 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 and power generation units that have been ordered but not yet received. As of June 30, 2026, these commitments amounted to $2.5 billion, of which $587.9 million is expected to be settled within the next twelve months. Included within these future commitments is a multi-year strategic arrangement whereby Baker Hughes will provide power generation solutions to support Kodiak’s expanding energy infrastructure initiatives.

Sales Tax Contingency

Between October 2019 and May 2026, the Company received notices from the Texas Comptroller’s office in regards to audits for periods ranging from December 2015 through December 2025. 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 June 30, 2026 and December 31, 2025, the Company’s associated liability was $65.8 million and $102.3 million, respectively, relating solely to the Texas portion of sales and use tax.

During the first quarter of 2026, the Company resolved outstanding Texas sales and use tax matters with the Texas Comptroller’s office related to certain prior periods. The settlement, which included applicable interest for the periods under review, was paid in full. The amount settled had previously been recognized in prior years, reflecting management’s earlier assessment of the liability.

Legal Matters

From time to time, the Company may become involved in various legal matters. Management believes that as of June 30, 2026, 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 acquisition of CSI Compressco LP (the “CSI Acquisition”) that presented 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 have indirectly benefited 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 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. The aggregate amount of these payments was not material. The Company sold its operations and legal entities in Mexico on September 30, 2025.

The Company voluntarily self-reported this matter to governmental authorities in the United States, including the Department of Justice (“DOJ”) and the Office of Foreign Assets Control (“OFAC”), and is cooperating with the investigative steps being taken by the DOJ and OFAC into the matter as a result of the voluntary self-disclosure. The Company also voluntarily self-reported to the SEC and intends to cooperate fully should there be any investigation by the Commission. 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.

Letters of Credit

As of June 30, 2026, there was $14.6 million of letters of credit outstanding under the ABL Facility mainly to support the Company's obligations to construct a gas compression station on behalf of a customer.

14. Accrued Liabilities

Accrued liabilities consist of the following:

15. Income Taxes

For the three and six months ended June 30, 2026, the Company recorded income tax expense of $21.1 million and $23.9 million, respectively. For the three and six months ended June 30, 2025, the Company recorded income tax expense of $13.4 million and $24.0 million, respectively. The effective tax rate was approximately 28.8% and 25.4% for the three and six months ended June 30, 2026, compared to 25.2% and 25.2% for the three and six months ended June 30, 2025, respectively. The difference between the Company’s effective tax rate for the three and six months ended June 30, 2026, and the U.S. statutory tax rate of 21%, was primarily due to state income taxes, nondeductible executive compensation, and stock based compensation windfall. The Company’s effective tax rate for the three and six months ended June 30, 2025, differs from the U.S. statutory tax rate of 21% is primarily due to state income taxes.

The Company didnot have any uncertain tax benefits as of June 30, 2026, and December 31, 2025. For the three and six months ended June 30, 2026 and 2025, the Company hadno accrued interest or penalties related to uncertain tax positions, andno amounts were recognized in the condensed consolidated statements of operations.

16. Leases

On June 1, 2026 we commenced an approximately 20 year finance lease for a building space which will be utilized for offices, training, storage and equipment maintenance. The lease provides for annual base payments of $3.0 million with annual fixed rental increases ranging from 2.0% -2.5%. The lease expires on September 30, 2046 and contains four five-year optional renewal terms which were not deemed to be reasonably certain of exercise and have therefore been excluded from the measurement of the lease liability as of June 30, 2026. As a result, we established a $42.6 million finance lease right of use asset and $42.6 million finance lease liability during the period ended June 30, 2026.

The Company maintains operating leases for certain office space, warehouse facilities, operating locations, and equipment. These leases have remaining lease terms up to 20 years. These leases generally include options to renew or extend the lease term at the Company’s discretion which are reflected in the measurement of lease liabilities only when exercise of such rights is reasonably certain. Maintenance and insurance costs are generally the Company's responsibility under these arrangements, and none of the lease agreements contain material residual value guarantees or material restrictive covenants.

Lease costs are included in either cost of revenues or selling, general and administrative expense depending on the use of the underlying asset.

Leases are presented in our consolidated balance sheet as follows:

The components of total lease cost were as follows:

The short-term lease cost disclosed above reasonably reflects the Company’s ongoing short-term lease commitments. These lease costs are primarily recorded within cost of operations.

Supplemental information related to the Company’s operating and finance leases were as follows:

Future minimum lease payments, under non-cancelable operating and finance leases with terms in excess of one year, as of June 30, 2026 are as follows:

17. Segments

The Company previously managed its business throughtwo operating segments: Contract Services and Other Services. Following the acquisition of DPS, the Company expanded beyond its legacy compression business to include distributed and behind-the-meter power generation and reorganized its reportable segments to reflect this broader energy infrastructure platform.

The Company established a new Power Infrastructure segment to represent its distributed power generation operations, while certain ancillary services associated with the power business that are similar in nature to existing service offerings are included within the Other Services segment. In addition, the Company renamed its Contract Services segment as Compression Infrastructure to better align with its expanded platform.

As a result, effective June 30, 2026, the Company now manages its business through three operating segments: Compression Infrastructure, Power Infrastructure and Other Services. Prior-period segment information has been recast to conform to the current period presentation reflecting the Company’s revised reportable segment structure. The recast includes the renaming of the former Contract Services segment to Compression Infrastructure and the presentation of Power Infrastructure as a separate reportable segment, with certain ancillary services associated with the compression and power businesses continuing to be reported within Other Services. The recast of prior-period segment information had no effect on the Company’s previously reported consolidated financial position, results of operations or cash flows.

Compression Infrastructure consists of operating Company-owned compression, customer-owned compression, and gas treating and cooling infrastructure under fixed-revenue contracts to enable the production, gathering and transportation of natural gas and oil.

Power Infrastructure includes the Company’s distributed and behind-the-meter power generation operations, which primarily consist of providing power generation equipment and associated capacity under structured customer arrangements with fixed monthly payments. These operations are designed to deliver rapid, reliable and scalable onsite power solutions for customers across a range of end markets, including data centers, utilities, industrial facilities and energy infrastructure, particularly in applications where demand for reliable power exceeds available grid capacity.

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, as well as certain ancillary services associated with the compression and power generation businesses that are similar in nature to the Company’s historical service offerings.

Our Chief Executive Officer, also our chief operating decision maker (“CODM”), assesses the performance of each segment based on adjusted gross margin and certain asset measures, including capital expenditures. Total assets by segment are not regularly reviewed or used in the allocation of resources and are not practicably determinable on a consistent basis. Accordingly, total asset information is not presented for each reportable segment. Adjusted gross margin is calculated by subtracting specific costs of service, such as cost of operations, from revenues directly attributable to the segment. Adjusted gross margin is a key tool used by the CODM for annual budgeting, monthly forecasting, and determining how to allocate capital and resources across the segment.

The following tables represent financial metrics by segment:

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

18. 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 six months ended June 30, 2026,18,000 and 156,000 unvested RSUs and PSUs, respectively, were excluded from the calculation of potential dilutive common shares due to their anti-dilutive impact. For the three and six months ended June 30, 2025,2,000 and 1,000 unvested RSUs and PSUs, respectively, were excluded from the calculation of potential dilutive common shares due to their anti-dilutive impact.

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

19. Subsequent Events

Purchase of Gas Compression Equipment

Subsequent to June 30, 2026, the Company exercised buyout options related to certain operating lease agreements for gas compression equipment. The Company purchased the leased equipment for approximately $32.8 million. As a result of the transaction, the Company will recognize the equipment in property, plant and equipment and will no longer incur the related lease payments under these agreements.