THE
WOODLANDS, Texas, March 6,
2024 /PRNewswire/ -- Kodiak Gas Services, Inc. (NYSE:
KGS) ("Kodiak" or the "Company"), a leading provider of critical
energy infrastructure and contract compression services, today
reported financial and operating results for the fourth quarter and
full year ended December 31, 2023 and
also provided full-year 2024 guidance.
Fourth Quarter 2023 Highlights
- Total revenues for fourth quarter 2023 were $226.0 million compared to $179.8 million for fourth quarter 2022.
- Fourth quarter 2023 Compression Operations segment Adjusted
Gross Margin Percentage(1) increased 140 basis points
over third quarter 2023.
- Net loss for the quarter ended December
31, 2023 was $6.9 million,
including a $21.8 million loss on
derivatives.
- Adjusted EBITDA(1) for the quarter ended
December 31, 2023 was $113.9 million compared to $103.2 million for the quarter ended December 31, 2022.
- Paid inaugural cash dividend of $0.38 per share, or $1.52 per share annualized.
- Announced a definitive agreement to acquire CSI Compressco to
create the industry's largest contract compression fleet.
Fiscal Year 2023 Highlights
- Total revenues for the year ended December 31, 2023 were $850.4 million compared to $707.9 million for the year ended December 31, 2022.
- Compression Operations segment revenues grew 12.3% over the
year ended December 31, 2022.
- Compression Operations Adjusted Gross Margin increased 11.5%
compared to the year ended December 31,
2022.
- Net income for the year ended December
31, 2023 was $20.1
million.
- Adjusted EBITDA was $438.1
million compared to $399.0
million for the year ended December
31, 2022.
- Horsepower utilization ended 2023 at 99.9%.
2024 Outlook Highlights
- Initiated standalone 2024 Adjusted EBITDA guidance of
$460 million to $490 million.
- Expected Discretionary Cash Flow of $295
million to $310 million will
allow for continued investment in the fleet and return of capital
to shareholders.
(1) Adjusted Gross Margin and Adjusted EBITDA are Non-GAAP
Financial Measures. Definitions and reconciliations to the most
comparable GAAP financial measures are included herein.
"2023 was a historic year for Kodiak with several noteworthy
milestones, including our June IPO, the November initiation of a
quarterly dividend, and the announcement of the agreement to
acquire CSI Compressco," stated Mickey
McKee, Kodiak's founder and Chief Executive Officer.
"Financially, we set new annual revenue and Adjusted EBITDA records
while at the same time maintaining capital discipline and
generating a new Kodiak record level of Free Cash Flow. Our fourth
quarter results continued to reflect the strength of our
customer-focused strategy with record Adjusted EBITDA and margin
improvement in both our Compression Operations and Other Services
segments. Kodiak's record-setting year would not have been possible
without the tireless efforts of our approximately 800
highly-capable employees to provide our customers with unequaled
service quality.
"As we look forward, customer demand for large horsepower
compression infrastructure continues to be strong, particularly in
the Permian Basin, where over 70% of our horsepower is deployed.
Our fleet is effectively fully utilized, and we expect this trend
to last given the robust multi-year outlook for natural gas to
supply the coming wave of LNG export projects. Our pending
acquisition of CSI Compressco will give us the largest contract
compression fleet in the industry and enhance both our service
offerings and the scale of those offerings. Kodiak is fully
contracted on our 2024 new unit deliveries, and deep in discussions
with our customers on their 2025 needs. In closing, we remain
committed to having the safest and most sustainable contract
compression fleet in the industry and delivering the high quality
of service and industry-leading mechanical availability that our
customers have come to expect."
Segment Information
Compression Operations segment revenues were $735.6 million in the year ended
December 31, 2023, a 12.3% increase
compared to $655.0 million in
the year ended December 31, 2022.
Compression Operations segment gross margin was $295.6 million in the year ended
December 31, 2023, a 16.0% increase
compared to $254.8 million in
the year ended December 31, 2022.
Compression Operations segment Adjusted Gross Margin was
$478.5 million in the year ended
December 31, 2023, an 11.5% increase
compared to $429.2 million in
the year ended December 31, 2022.
Other Services segment revenues were $114.8 million in the year ended December 31, 2023 compared to $53.0 million in the year ended December 31, 2022. This segment's revenues
finished the year well in excess of what the Company originally
forecasted based on the award of and accelerated progress on two
large projects in the second half of 2023. Other Services
segment gross margin and Adjusted Gross Margin were each
$21.0 million in the year ended
December 31, 2023, up from
$11.3 million in the year ended
December 31, 2022.
Transaction Update
In December 2023, Kodiak announced
a definitive merger agreement to acquire CSI Compressco in an
all-equity transaction (the "Transaction") valued at approximately
$854 million as of the announcement
date, including the assumption of $619
million of net debt. The Transaction is expected to create
the industry's largest contract compression fleet and be accretive
to Discretionary Cash Flow and Free Cash Flow per share upon
closing.
CSI Compressco majority unitholders delivered consents
sufficient to approve the Transaction and closing is expected in
the second quarter of 2024, subject to customary closing conditions
and regulatory approval.
Long-Term Debt and Liquidity
Total debt outstanding was $1.8 billion as of December 31, 2023,
comprised entirely of borrowings on the ABL Facility, and the
leverage ratio was 3.96x. At December 31, 2023, the Company
had $354.9 million available on its
ABL Facility and was in compliance with all financial
covenants.
In February 2024, the Company
issued $750 million of 7.25% senior
unsecured notes due 2029. In connection with the issuance, Kodiak
was assigned corporate family/issuer credit ratings of 'Ba3', 'B+'
and 'BB' by Moody's Investors Service, S&P Global Ratings and
Fitch Ratings, respectively.
The proceeds from the notes offering were used to reduce
borrowings under the ABL Facility. The Company intends to use the
availability on its ABL Facility to repay CSI Compressco's
outstanding indebtedness in full, as well as fees and expenses, in
connection with the Transaction.
|
Summary Financial
Data
(in thousands,
except percentages)
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
December 31,
2023
|
|
September 30,
2023
|
|
December 31,
2022
|
|
December 31,
2023
|
|
December 31,
2022
|
|
Total
Revenues
|
$
225,980
|
|
$
230,983
|
|
$
179,776
|
|
$
850,381
|
|
$
707,913
|
|
Net Income
(loss)
|
$
(6,874)
|
|
$
21,766
|
|
$
1,909
|
|
$
20,066
|
|
$
106,265
|
|
Adjusted EBITDA (1)
(2)
|
$
113,878
|
|
$
110,067
|
|
$
103,235
|
|
$
438,148
|
|
$
399,038
|
|
Adjusted EBITDA
percentage (1) (2)
|
50.4 %
|
|
47.7 %
|
|
57.4 %
|
|
51.5 %
|
|
56.4 %
|
|
|
|
|
|
|
|
|
|
|
|
Compression Operations
Revenues
|
$
189,616
|
|
$
186,673
|
|
$
170,992
|
|
$
735,605
|
|
$
654,957
|
|
Compression Operations
Adjusted Gross Margin (1)
|
$
125,781
|
|
$
121,203
|
|
$
112,422
|
|
$
478,513
|
|
$
429,242
|
|
Compression Operations
Adjusted Gross Margin Percentage (1)
|
66.3 %
|
|
64.9 %
|
|
65.7 %
|
|
65.1 %
|
|
65.5 %
|
|
|
|
|
|
|
|
|
|
|
|
Other Services
Revenues
|
$
36,364
|
|
$
44,310
|
|
$
8,784
|
|
$
114,776
|
|
$
52,956
|
|
Other Services Adjusted
Gross Margin (1)
|
$
8,492
|
|
$
5,490
|
|
$
1,786
|
|
$
20,997
|
|
$
11,320
|
|
Other Services Adjusted
Gross Margin Percentage (1)
|
23.4 %
|
|
12.4 %
|
|
20.3 %
|
|
18.3 %
|
|
21.4 %
|
|
|
|
|
|
|
|
|
|
|
|
Maintenance Capital
Expenditures
|
$
8,934
|
|
$
12,312
|
|
$
20,542
|
|
$
36,990
|
|
$
48,313
|
|
Growth Capital
Expenditures
|
$
60,472
|
|
$
55,671
|
|
$
49,791
|
|
$
184,487
|
|
$
212,953
|
|
|
|
|
|
|
|
|
|
|
|
Discretionary Cash Flow
(1) (2)
|
$
70,527
|
|
$
63,044
|
|
$
31,071
|
|
$
248,149
|
|
$
188,547
|
|
Free Cash Flow (1)
(2)
|
$
10,449
|
|
$
7,373
|
|
$
(18,661)
|
|
$
65,111
|
|
$
(16,324)
|
|
|
|
(1)
|
Adjusted EBITDA,
Adjusted EBITDA Percentage, Adjusted Gross Margin, Adjusted Gross
Margin Percentage, Discretionary Cash Flow, and Free Cash Flow are
non-GAAP financial measures. For definitions and reconciliations to
the most directly comparable financial measures calculated and
presented in accordance with GAAP, see "Non-GAAP Financial
Measures" below.
|
|
(2)
|
For the three months
ended December 31, 2023, September 30, 2023 and December 31, 2022,
includes $5.1 million, $2.0 million, and $0, respectively, of
non-cash provisions for expected credit losses. For the years ended
December 31, 2023 and 2022, includes $7.1 million and $0.1 million,
respectively, of non-cash provisions for expected credit
losses.
|
|
Summary Operating
Data
(as of the dates
indicated)
|
|
|
December 31,
2023
|
|
September 30,
2023
|
|
December 31,
2022
|
|
Fleet horsepower
(1)
|
3,261,661
|
|
3,213,096
|
|
3,134,306
|
|
Revenue-generating
horsepower (2)
|
3,258,951
|
|
3,210,076
|
|
3,131,631
|
|
Fleet compression units
(1)
|
3,078
|
|
3,051
|
|
3,024
|
|
Revenue-generating
compression units (2)
|
3,062
|
|
3,034
|
|
3,021
|
|
Revenue-generating
horsepower per revenue-generating compression unit (3)
|
1,064
|
|
1,058
|
|
1,037
|
|
Horsepower utilization
(4)
|
99.9 %
|
|
99.9 %
|
|
99.9 %
|
|
|
|
(1)
|
Fleet horsepower and
fleet compression units include revenue-generating horsepower and
idle horsepower, which are compression units that do not have a
signed contract or are not subject to a firm commitment from our
customer and are not yet generating revenue. Fleet horsepower
excludes 33,020, 31,520 and 58,645 of non-marketable or obsolete
horsepower as of three months ended December 31, 2023, September
30, 2023 and December 31, 2022, respectively.
|
|
(2)
|
Revenue-generating
horsepower and revenue-generating compression units include
compression units that are operating under contract and generating
revenue and compression units which are available to be deployed
and for which we have a signed contract or are subject to a firm
commitment from our customer.
|
|
(3)
|
Calculated as (i)
revenue-generating horsepower divided by (ii) revenue-generating
compression units at period end.
|
|
(4)
|
Calculated as (i)
revenue-generating horsepower divided by (ii) fleet horsepower at
period end.
|
Full-Year 2024 Guidance
Kodiak is providing initial guidance for the full year 2024.
Note that the amounts below do not include any impact from the
pending acquisition of CSI Compressco. All amounts below are in
thousands except percentages.
|
|
Full-Year 2024
Guidance
|
|
|
Low
|
|
High
|
|
Adjusted EBITDA
(1)
|
|
$
460,000
|
|
$
490,000
|
|
Discretionary Cash Flow
(1)(2)
|
|
$
295,000
|
|
$
310,000
|
|
|
|
|
|
|
Segment
Information
|
|
|
|
|
|
Compression Operations
revenues
|
|
$
795,000
|
|
$
825,000
|
|
Compression Operations
Adjusted Gross Margin Percentage (1)
|
|
64.0 %
|
|
66.0 %
|
|
Other Services
revenues
|
|
$
60,000
|
|
$
80,000
|
|
Other Services Adjusted
Gross Margin Percentage (1)
|
|
15.0 %
|
|
20.0 %
|
|
|
|
|
|
|
Capital
Expenditures
|
|
|
|
|
|
Growth capital
expenditures, net (3)
|
|
$
165,000
|
|
$
185,000
|
|
Maintenance capital
expenditures
|
|
$
40,000
|
|
$
50,000
|
|
|
|
(1)
|
The Company is unable
to reconcile projected Adjusted EBITDA to projected net income
(loss), projected Discretionary Cash Flow to projected net cash
provided by operating activities and projected Adjusted Gross
Margin to projected gross margin, the most comparable financial
measures calculated in accordance with GAAP, respectively, without
unreasonable efforts because components of the calculations are
inherently unpredictable, such as changes to current assets and
liabilities, unknown future events, and estimating certain future
GAAP measures. The inability to project certain components of the
calculation would significantly affect the accuracy of the
reconciliations.
|
|
(2)
|
Discretionary Cash Flow
guidance assumes no change to Secured Overnight Financing Rate
futures and that our senior unsecured notes due 2029 remain
outstanding for the duration of 2024.
|
|
(3)
|
Growth capital
expenditures include new compression units, compression unit
upgrades, capitalized make-ready costs and capitalized installation
costs, as well as expenditures on assets other than compression
units required to operate the business. For 2024, growth
capital expenditures include approximately $12.5 million of
non-unit-related expenditures and are presented net of proceeds
from expected facility sales.
|
Conference Call
Kodiak will conduct a conference call on Thursday, March 7,
2024 at 11:00 a.m. Eastern Time
(10:00 a.m. Central Time) to discuss
financial and operating results for the quarter and year ended
December 31, 2023. To listen to the
call by phone, dial 201-389-0872 and ask for the Kodiak Gas
Services call at least 10 minutes prior to the start time. To
listen to the call via webcast, please visit the Investors tab of
Kodiak's website at www.kodiakgas.com.
About Kodiak Gas Services, Inc.
Kodiak Gas Services, Inc. is one of the largest contract
compression services providers in the continental United States with a revenue-generating fleet
of approximately 3.3 million horsepower. The company focuses
on providing contract compression services to oil and gas producers
and midstream customers in high–volume gas gathering systems,
processing facilities, multi–well gas lift applications and natural
gas transmission systems. More information is available at
www.kodiakgas.com.
Non-GAAP Financial Measures
Adjusted EBITDA is defined as net income (loss) before interest
expense, net: income tax expense (benefit); and depreciation and
amortization; plus (i) loss on extinguishment of debt; (ii) loss
(gain) on derivatives; (iii) equity compensation expense; (iv)
transaction expenses; (v) loss (gain) on sale of assets; and (vi)
impairment of compression equipment. Adjusted EBITDA Percentage is
defined 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: (i) the financial performance of
our assets without regard to the impact of financing methods,
capital structure or historical cost basis of our assets; (ii) the
viability of capital expenditure projects and the overall rates of
return on alternative investment opportunities; (iii) the ability
of our assets to generate cash sufficient to make debt payments and
pay dividends; and (iv) our operating performance as compared to
those of other companies in our industry without regard to the
impact of financing methods and capital structure. We believe
Adjusted EBITDA and Adjusted EBITDA Percentage provide useful
information because, when viewed with our GAAP results and the
accompanying reconciliation, they provide a more complete
understanding of our performance than GAAP results alone. We also
believe that external users of our financial statements benefit
from having access to the same financial measures that management
uses in evaluating the results of our business. Reconciliations of
Adjusted EBITDA to net income (loss), the most directly comparable
GAAP financial measure, and net cash provided by operating
activities are presented below.
Adjusted Gross Margin is defined as revenue less cost of
operations, exclusive of depreciation and amortization expense.
Adjusted Gross Margin Percentage is defined as Adjusted Gross
Margin divided by total revenues. We believe Adjusted Gross Margin
and Adjusted Gross Margin Percentage are useful as supplemental
measures to investors of our operating profitability.
Reconciliations of Adjusted Gross Margin to gross margin are
presented below.
Discretionary Cash Flow is defined as net cash provided by
operating activities less (i) maintenance capital expenditures;
(ii) gain (loss) on sale of property, plant and equipment; (iii)
certain changes in operating assets and liabilities; and (iv)
certain other expenses; plus (x) cash loss on extinguishment of
debt; 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. Reconciliations of Discretionary
Cash Flow to net income (loss) and net cash provided by operating
activities are presented below.
Free Cash Flow is defined as net cash provided by operating
activities less (i) maintenance capital expenditures; (ii) gain
(loss) on sale of property, plant and equipment; (iii) certain
changes in operating assets and liabilities; (iv) certain other
expenses; and (v) net growth capital expenditures; plus (x) cash
loss on extinguishment of debt; (y) transaction expenses; and (z)
proceeds from sale of property, plant and equipment. 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. Reconciliations of Free Cash Flow to net income
(loss) and net cash provided by operating activities are presented
below.
Cautionary Note Regarding Forward-Looking Statements
This news release contains, and our officers and representatives
may from time to time make, "forward-looking statements" within the
meaning of the safe harbor provisions of the U.S. Private
Securities Litigation Reform Act of 1995. Forward-looking
statements are neither historical facts nor assurances of future
performance. Instead, they are based only on our current beliefs,
expectations and assumptions regarding the future of our business,
future plans and strategies, projections, anticipated events and
trends, the economy and other future conditions. Forward-looking
statements can be identified by words such as: "anticipate,"
"intend," "plan," "goal," "seek," "believe," "project," "estimate,"
"expect," "strategy," "future," "likely," "may," "should," "will"
and similar references to future periods. Examples of
forward-looking statements include, among others, statements we
make regarding: (i) expected operating results, such as revenue
growth and earnings, including upon consummation of the
Transaction, and our ability to service our indebtedness; (ii)
anticipated levels of capital expenditures and uses of capital;
(iii) current or future volatility in the credit markets and future
market conditions; (iv) potential or pending acquisition
transactions, including the Transaction, or other strategic
transactions, the timing thereof, the receipt of necessary
approvals to close such acquisitions, our ability to finance such
acquisitions, and our ability to achieve the intended operational,
financial, and strategic benefits from any such transactions; (v)
expected synergies and efficiencies to be achieved as a result of
the Transaction; (vi) expectations regarding the leverage and
dividend profile upon consummation of the Transaction, including
the amount and timing of future dividend payments; (vii)
expectations of the effect on our financial condition of claims,
litigation, environmental costs, contingent liabilities and
governmental and regulatory investigations and proceedings; (viii)
production and capacity forecasts for the natural gas and oil
industry; (ix) strategy for customer retention, growth, fleet
maintenance, market position and financial results; (x) our
interest rate hedges; and (xi) strategy for risk management.
Because forward-looking statements relate to the future, they
are subject to inherent uncertainties, risks and changes in
circumstances that are difficult to predict and many of which are
outside of our control. Our actual results and financial condition
may differ materially from those indicated in the forward-looking
statements. Therefore, you should not place undue reliance on any
of these forward-looking statements. Important factors that could
cause our actual results and financial condition to differ
materially from those indicated in the forward-looking statements
include, among others, the following: (i) a reduction in the demand
for natural gas and oil; (ii) the loss of, or the deterioration of
the financial condition of, any of our key customers; (iii)
nonpayment and nonperformance by our customers, suppliers or
vendors; (iv) competitive pressures that may cause us to lose
market share; (v) the structure of our Compression Operations
contracts and the failure of our customers to continue to contract
for services after expiration of the primary term; (vi) our ability
to consummate the Transaction on a timely basis or at all; (vii)
our ability to successfully integrate any acquired businesses,
including CSI Compressco, and realize the expected benefits
thereof; (viii) difficulties and delays in meeting the conditions
required for the closing of the Transaction; (ix) our ability to
fund purchases of additional compression equipment; (x) a
deterioration in general economic, business, geopolitical or
industry conditions, including as a result of the conflict between
Russia and Ukraine and the Israel-Hamas war, inflation,
and slow economic growth in the United
States; (xi) a downturn in the economic environment, as well
as inflationary pressures; (xii) tax legislation and administrative
initiatives or challenges to our tax positions; (x) the loss of key
management, operational personnel or qualified technical personnel;
(xiii) our dependence on a limited number of suppliers; (xiv) the
cost of compliance with existing and new governmental regulations,
including climate change legislation; (xv) the cost of compliance
with regulatory initiatives and stakeholder pressures, including
ESG scrutiny; (xvi) the inherent risks associated with our
operations, such as equipment defects and malfunctions; (xvii) our
reliance on third-party components for use in our IT systems;
(xviii) legal and reputational risks and expenses relating to the
privacy, use and security of employee and client information; (xix)
threats of cyber-attacks or terrorism; (xx) agreements that govern
our debt contain features that may limit our ability to operate our
business and fund future growth and also increase our exposure to
risk during adverse economic conditions; (xi) volatility in
interest rates; (xxii) our ability to access the capital and credit
markets or borrow on affordable terms to obtain additional capital
that we may require; (xxiii) the effectiveness of our disclosure
controls and procedures; and (xxiv) such other factors as discussed
throughout the "Risk Factors" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" sections
of our Annual Report on Form 10-K for the year ended December 31, 2023, to be filed with the U.S.
Securities and Exchange Commission.
Any forward-looking statement made by us in this news release is
based only on information currently available to us and speaks only
as of the date on which it is made. Except as may be required by
applicable law, we undertake no obligation to publicly update any
forward-looking statement whether as a result of new information,
future developments or otherwise.
|
KODIAK GAS SERVICES,
INC.
CONSOLIDATED
STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands,
except share and per share data)
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
December
31, 2023
|
|
September
30, 2023
|
|
December
31, 2022
|
|
December
31, 2023
|
|
December
31, 2022
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
Compression
Operations
|
$
189,616
|
|
$
186,673
|
|
$
170,992
|
|
$
735,605
|
|
$
654,957
|
|
Other
Services
|
36,364
|
|
44,310
|
|
8,784
|
|
114,776
|
|
52,956
|
|
Total
revenues
|
$
225,980
|
|
$
230,983
|
|
$
179,776
|
|
$
850,381
|
|
$
707,913
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
Cost of operations
(exclusive of depreciation and amortization shown below)
|
|
|
|
|
|
|
|
|
|
|
Compression
Operations
|
63,835
|
|
65,470
|
|
58,570
|
|
257,092
|
|
225,715
|
|
Other
Services
|
27,872
|
|
38,820
|
|
6,998
|
|
93,779
|
|
41,636
|
|
Depreciation and
amortization
|
46,455
|
|
46,087
|
|
44,550
|
|
182,869
|
|
174,463
|
|
Selling, general and
administrative expenses
|
27,137
|
|
19,648
|
|
12,122
|
|
73,308
|
|
44,882
|
|
Gain on sale of
capital assets
|
(56)
|
|
—
|
|
(49)
|
|
(777)
|
|
(874)
|
|
Total operating
expenses
|
$
165,243
|
|
$
170,025
|
|
$
122,191
|
|
$
606,271
|
|
$
485,822
|
|
Income from
operations
|
60,737
|
|
60,958
|
|
57,585
|
|
244,110
|
|
222,091
|
|
Other income
(expenses):
|
|
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
(40,484)
|
|
(39,710)
|
|
(61,251)
|
|
(222,514)
|
|
(165,867)
|
|
Loss on extinguishment
of debt
|
—
|
|
(6,757)
|
|
—
|
|
(6,757)
|
|
—
|
|
Gain (loss) on
derivatives
|
(21,814)
|
|
15,141
|
|
6,144
|
|
20,266
|
|
83,116
|
|
Other income
(expense)
|
(8)
|
|
38
|
|
27
|
|
31
|
|
17
|
|
Total other income
(expenses)
|
$
(62,306)
|
|
$
(31,288)
|
|
$
(55,080)
|
|
$ (208,974)
|
|
$
(82,734)
|
|
Income before income
taxes
|
(1,569)
|
—
|
29,670
|
—
|
2,505
|
|
35,136
|
|
139,357
|
|
Income tax
expense
|
5,305
|
|
7,904
|
|
596
|
|
15,070
|
|
33,092
|
|
Net income
(loss)
|
$
(6,874)
|
|
$
21,766
|
|
$
1,909
|
|
$
20,066
|
|
$
106,265
|
|
Basic and diluted
earnings per share
|
|
|
|
|
|
|
|
|
|
|
Basic net earnings per
share
|
$
(0.09)
|
|
$
0.28
|
|
$
0.03
|
|
$
0.29
|
|
$
1.80
|
|
Diluted net earnings
per share
|
$
(0.09)
|
|
$
0.28
|
|
$
0.03
|
|
$
0.29
|
|
$
1.80
|
|
Basic weighted average
shares of common stock outstanding
|
77,400,000
|
|
76,731,868
|
|
59,000,000
|
|
68,058,630
|
|
59,000,000
|
|
Diluted weighted
average shares of common stock outstanding
|
77,675,607
|
|
76,899,483
|
|
59,000,000
|
|
68,327,018
|
|
59,000,000
|
|
KODIAK GAS SERVICES,
INC.
CONSOLIDATED BALANCE
SHEETS
(UNAUDITED)
(in thousands,
except share and per share data)
|
|
|
As of December
31,
|
|
2023
|
|
2022
|
|
Assets
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
5,562
|
|
$
20,431
|
|
Accounts receivable,
net
|
113,192
|
|
97,551
|
|
Inventories,
net
|
76,238
|
|
72,155
|
|
Fair value of
derivative instruments
|
8,194
|
|
823
|
|
Contract
assets
|
17,424
|
|
3,555
|
|
Prepaid expenses and
other current assets
|
10,353
|
|
9,520
|
|
Total current
assets
|
230,963
|
|
204,035
|
|
Property, plant and
equipment, net
|
2,536,091
|
|
2,488,682
|
|
Operating lease
right-of-use assets, net
|
33,716
|
|
9,827
|
|
Goodwill
|
305,553
|
|
305,553
|
|
Identifiable intangible
assets, net
|
122,888
|
|
132,362
|
|
Fair value of
derivative instruments
|
14,256
|
|
64,517
|
|
Other assets
|
639
|
|
564
|
|
Total assets
|
$
3,244,106
|
|
$
3,205,540
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
$
49,842
|
|
$
37,992
|
|
Accrued
liabilities
|
97,078
|
|
93,873
|
|
Contract
liabilities
|
63,709
|
|
57,109
|
|
Total current
liabilities
|
210,629
|
|
188,974
|
|
Long-term debt, net of
unamortized debt issuance cost
|
1,791,460
|
|
2,720,019
|
|
Operating lease
liabilities, net of current portion
|
34,468
|
|
6,754
|
|
Deferred tax
liabilities
|
62,748
|
|
57,155
|
|
Other
liabilities
|
2,148
|
|
3,545
|
|
Total
liabilities
|
2,101,453
|
|
2,976,447
|
|
Commitments and
contingencies (Note 13)
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
Preferred stock, par
value $0.01 par value; 50,000,000 shares of preferred
stock
authorized, zero issued
as of December 31, 2023 and 2022, respectively
|
—
|
|
—
|
|
Common stock, par value
$0.01 per share; 750,000,000 shares of common stock
authorized, 77,400,000
and 59,000,000 shares of common stock issued and
outstanding as of
December 31, 2023 and 2022, respectively
|
774
|
|
590
|
|
Additional paid-in
capital
|
963,760
|
|
33,189
|
|
Retained
earnings
|
178,119
|
|
195,314
|
|
Total stockholders'
equity
|
1,142,653
|
|
229,093
|
|
Total liabilities and
stockholders' equity
|
$
3,244,106
|
|
$
3,205,540
|
|
KODIAK GAS SERVICES,
INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in
thousands)
|
|
|
|
Year
Ended
|
|
|
December 31,
2023
|
|
December 31,
2022
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
Net income
|
|
$
20,066
|
|
$
106,265
|
|
Adjustments to
reconcile net income to net cash provided by operating
|
|
|
|
|
|
Depreciation and
amortization
|
|
182,869
|
|
174,463
|
|
Stock-based
compensation expense
|
|
5,914
|
|
971
|
|
Amortization of debt
issuance costs
|
|
13,556
|
|
13,727
|
|
Non-cash lease
expense
|
|
4,465
|
|
2,817
|
|
Provision for credit
losses
|
|
7,101
|
|
86
|
|
Inventory
reserve
|
|
500
|
|
500
|
|
(Gain) loss on sale of
property, plant and equipment
|
|
(777)
|
|
(874)
|
|
Change in fair value
of derivatives
|
|
42,890
|
|
(87,363)
|
|
Deferred tax
provision
|
|
7,863
|
|
27,301
|
|
Loss on extinguishment
of debt
|
|
4,359
|
|
—
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
Accounts
receivable
|
|
(22,742)
|
|
(16,887)
|
|
Inventories
|
|
(4,583)
|
|
(24,302)
|
|
Contract
assets
|
|
(13,869)
|
|
(3,555)
|
|
Prepaid expenses and
other current assets
|
|
(833)
|
|
(3,269)
|
|
Accounts
payable
|
|
10,166
|
|
(1,518)
|
|
Accrued and other
liabilities
|
|
2,781
|
|
25,579
|
|
Contract
liabilities
|
|
6,600
|
|
5,905
|
|
Net cash provided by
operating activities
|
|
266,326
|
|
$
219,846
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
Purchase of property,
plant and equipment
|
|
(219,795)
|
|
(259,349)
|
|
Proceeds from sale of
property, plant and equipment
|
|
1,449
|
|
8,082
|
|
Other
|
|
(75)
|
|
(115)
|
|
Net cash used in
investing activities
|
|
(218,421)
|
|
(251,382)
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
Borrowings on debt
instruments
|
|
1,020,102
|
|
1,613,886
|
|
Payments on debt
instruments
|
|
(1,243,981)
|
|
(724,895)
|
|
Payment of debt
issuance cost
|
|
(32,768)
|
|
(27,819)
|
|
Proceeds from initial
public offering, net of underwriter discounts
|
|
277,840
|
|
—
|
|
Offering
costs
|
|
(10,039)
|
|
—
|
|
Loss on extinguishment
of debt
|
|
(1,835)
|
|
—
|
|
Dividends paid to
stockholders
|
|
(29,793)
|
|
—
|
|
Distribution to
parent
|
|
(42,300)
|
|
(838,000)
|
|
Net cash (used in)
provided by financing activities
|
|
$
(62,774)
|
|
$
23,172
|
|
Net decrease in cash
and cash equivalents
|
|
(14,869)
|
|
(8,364)
|
|
Cash and cash
equivalents - beginning of year
|
|
20,431
|
|
28,795
|
|
Cash and cash
equivalents - end of year
|
|
$
5,562
|
|
$
20,431
|
|
Supplemental cash
disclosures:
|
|
|
|
|
|
Cash paid for
interest
|
|
$
216,648
|
|
$
143,441
|
|
Cash paid for
taxes
|
|
$
9,762
|
|
$
2,177
|
|
Supplemental
disclosure of non-cash investing activities:
|
|
|
|
|
|
Increase in accrued
capital expenditures
|
|
$
(1,682)
|
|
$
(1,918)
|
|
Purchase of property,
plant and equipment through exchange of lease ROU asset
|
|
$
3,227
|
|
$
—
|
|
Supplemental
disclosure of non-cash financing activities:
|
|
|
|
|
|
Non-cash debt
novation
|
|
$
(689,829)
|
|
$
—
|
|
Non-cash loss on
extinguishment of debt
|
|
$
(563)
|
|
$
—
|
|
Non-cash offering
costs
|
|
$
(25)
|
|
$
—
|
|
KODIAK GAS SERVICES,
INC.
RECONCILIATION OF
NET INCOME TO ADJUSTED EBITDA
(in thousands,
excluding percentages)
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
December 31,
2023
|
|
September 30,
2023
|
|
December 31,
2022
|
|
December 31,
2023
|
|
December 31,
2022
|
|
Net income
(loss)
|
$
(6,874)
|
|
$
21,766
|
|
$
1,909
|
|
$
20,066
|
|
$
106,265
|
|
Interest expense,
net
|
40,484
|
|
39,710
|
|
61,251
|
|
222,514
|
|
165,867
|
|
Income tax
expense
|
5,305
|
|
7,904
|
|
596
|
|
15,070
|
|
33,092
|
|
Depreciation and
amortization
|
46,455
|
|
46,087
|
|
44,550
|
|
182,869
|
|
174,463
|
|
Loss on extinguishment
of debt
|
—
|
|
6,757
|
|
—
|
|
6,757
|
|
—
|
|
(Gain) loss on
derivatives
|
21,814
|
|
(15,141)
|
|
(6,144)
|
|
(20,266)
|
|
(83,116)
|
|
Equity compensation
expense (1)
|
2,462
|
|
2,544
|
|
352
|
|
5,914
|
|
971
|
|
Transaction expenses
(2)
|
4,288
|
|
440
|
|
770
|
|
6,001
|
|
2,370
|
|
Gain on sale of
capital assets
|
(56)
|
|
—
|
|
(49)
|
|
(777)
|
|
(874)
|
|
Adjusted
EBITDA
|
$
113,878
|
|
$
110,067
|
|
$
103,235
|
|
$
438,148
|
|
$
399,038
|
|
Adjusted EBITDA
Percentage
|
50.4 %
|
|
47.7 %
|
|
57.4 %
|
|
51.5 %
|
|
56.4 %
|
|
|
|
(1)
|
For the three months
ended December 31, 2023, September 30, 2023, and December 31, 2022,
there were $2.5 million, $2.5 million, and $0.4 million,
respectively, of non-cash adjustments for equity compensation
expense. For the years ended December 31, 2023 and 2022, there were
$5.9 million and $1.0 million, respectively, of non-cash
adjustments for equity compensation expense.
|
|
(2)
|
Represents certain
costs associated with non-recurring professional services, our
equity owners' expenses and other costs.
|
|
KODIAK GAS SERVICES,
INC.
RECONCILIATION OF
NET CASH PROVIDED BY OPERATING ACTIVITIES TO ADJUSTED
EBITDA
(in
thousands)
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
December 31,
2023
|
|
September 30,
2023
|
|
December 31,
2022
|
|
December 31,
2023
|
|
December 31,
2022
|
|
Net cash provided by
operating activities
|
$
62,627
|
|
$
85,731
|
|
$
32,992
|
|
$
266,326
|
|
$
219,846
|
|
Interest expense,
net
|
40,484
|
|
39,710
|
|
61,251
|
|
222,514
|
|
165,867
|
|
Income tax
expense
|
5,305
|
|
7,904
|
|
596
|
|
15,070
|
|
33,092
|
|
Deferred tax
provision
|
(1,551)
|
|
(5,551)
|
|
(494)
|
|
(7,863)
|
|
(27,301)
|
|
Cash received on
derivatives
|
(7,525)
|
|
(7,163)
|
|
(5,457)
|
|
(63,156)
|
|
4,247
|
|
Loss on extinguishment
of debt
|
—
|
|
2,398
|
|
—
|
|
2,398
|
|
—
|
|
Transaction expenses
(1)
|
4,288
|
|
440
|
|
770
|
|
6,001
|
|
2,370
|
|
Other (2)
|
(8,808)
|
|
(3,705)
|
|
(5,152)
|
|
(25,622)
|
|
(17,130)
|
|
Change in operating
assets and liabilities
|
19,058
|
|
(9,697)
|
|
18,729
|
|
22,480
|
|
18,047
|
|
Adjusted
EBITDA
|
$
113,878
|
|
$ 110,067
|
|
$
103,235
|
|
$
438,148
|
|
$
399,038
|
|
|
|
(1)
|
Represents certain
costs associated with non-recurring professional services, our
equity owners' expenses and other costs.
|
|
(2)
|
Includes amortization
of debt issuance costs, non-cash lease expense, provision for
credit losses and inventory reserve.
|
|
KODIAK GAS SERVICES,
INC.
RECONCILIATION OF
ADJUSTED GROSS MARGIN TO GROSS MARGIN FOR COMPRESSION
OPERATIONS
(in thousands,
excluding percentages)
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
December 31,
2023
|
|
September 30,
2023
|
|
December 31,
2022
|
|
December 31,
2023
|
|
December 31,
2022
|
|
Total
revenues
|
$ 189,616
|
|
$ 186,673
|
|
$
170,992
|
|
$
735,605
|
|
$
654,957
|
|
Cost of sales
(excluding depreciation and amortization)
|
(63,835)
|
|
(65,470)
|
|
(58,570)
|
|
(257,092)
|
|
(225,715)
|
|
Depreciation and
amortization
|
(46,455)
|
|
(46,087)
|
|
(44,550)
|
|
(182,869)
|
|
(174,463)
|
|
Gross margin
|
$
79,326
|
|
$
75,116
|
|
$
67,872
|
|
$
295,644
|
|
$
254,779
|
|
Gross margin
percentage
|
41.8 %
|
|
40.2 %
|
|
39.7 %
|
|
40.2 %
|
|
38.9 %
|
|
Depreciation and
amortization
|
46,455
|
|
46,087
|
|
44,550
|
|
182,869
|
|
174,463
|
|
Adjusted Gross
Margin
|
$ 125,781
|
|
$ 121,203
|
|
$
112,422
|
|
$
478,513
|
|
$
429,242
|
|
Adjusted Gross Margin
Percentage (1)
|
66.3 %
|
|
64.9 %
|
|
65.7 %
|
|
65.1 %
|
|
65.5 %
|
|
|
|
(1)
|
Calculated using
Adjusted Gross Margin for Compression Operations as a percentage of
total Compression Operations revenues.
|
|
KODIAK GAS SERVICES,
INC.
RECONCILIATION OF
ADJUSTED GROSS MARGIN TO GROSS MARGIN FOR OTHER
SERVICES
(in thousands,
excluding percentages)
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
December 31,
2023
|
|
September 30,
2023
|
|
December 31,
2022
|
|
December 31,
2023
|
|
December 31,
2022
|
|
Total
revenues
|
$
36,364
|
|
$
44,310
|
|
$
8,784
|
|
$
114,776
|
|
$
52,956
|
|
Cost of sales
(excluding depreciation and amortization)
|
(27,872)
|
|
(38,820)
|
|
(6,998)
|
|
(93,779)
|
|
(41,636)
|
|
Depreciation and
amortization
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Gross margin
|
$
8,492
|
|
$
5,490
|
|
$
1,786
|
|
$
20,997
|
|
$
11,320
|
|
Gross margin
percentage
|
23.4 %
|
|
12.4 %
|
|
20.3 %
|
|
18.3 %
|
|
21.4 %
|
|
Depreciation and
amortization
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Adjusted Gross
Margin
|
$
8,492
|
|
$
5,490
|
|
$
1,786
|
|
$
20,997
|
|
$
11,320
|
|
Adjusted Gross Margin
Percentage (1)
|
23.4 %
|
|
12.4 %
|
|
20.3 %
|
|
18.3 %
|
|
21.4 %
|
|
|
|
(1)
|
Calculated using
Adjusted Gross Margin for Other Services as a percentage of total
Other Services revenues.
|
|
KODIAK GAS SERVICES,
INC.
RECONCILIATION OF
NET INCOME TO DISCRETIONARY CASH FLOW AND FREE CASH
FLOW
(in
thousands)
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
December 31,
2023
|
|
September 30,
2023
|
|
December 31,
2022
|
|
December 31,
2023
|
|
December 31,
2022
|
|
Net income
(loss)
|
$
(6,874)
|
|
$
21,766
|
|
$
1,909
|
|
$
20,066
|
|
$
106,265
|
|
Depreciation and
amortization
|
46,455
|
|
46,087
|
|
44,550
|
|
182,869
|
|
174,463
|
|
Change in fair value
of derivatives
|
29,339
|
|
(7,978)
|
|
(687)
|
|
42,890
|
|
(87,363)
|
|
Loss on extinguishment
of debt
|
—
|
|
6,757
|
|
—
|
|
6,757
|
|
—
|
|
Deferred tax
provision
|
1,551
|
|
5,551
|
|
494
|
|
7,863
|
|
27,301
|
|
Amortization of debt
issuance costs
|
2,296
|
|
189
|
|
4,274
|
|
13,556
|
|
13,727
|
|
Equity compensation
expense (1)
|
2,462
|
|
2,544
|
|
352
|
|
5,914
|
|
971
|
|
Transaction expenses
(2)
|
4,288
|
|
440
|
|
770
|
|
6,001
|
|
2,370
|
|
Gain on sale of
capital assets
|
(56)
|
|
—
|
|
(49)
|
|
(777)
|
|
(874)
|
|
Maintenance capital
expenditures
|
(8,934)
|
|
(12,312)
|
|
(20,542)
|
|
(36,990)
|
|
(48,313)
|
|
Discretionary Cash
Flow
|
$
70,527
|
|
$
63,044
|
|
$
31,071
|
|
$
248,149
|
|
$
188,547
|
|
Growth capital
expenditures (3)(4)
|
(60,472)
|
|
(55,671)
|
|
(49,791)
|
|
(184,487)
|
|
(212,953)
|
|
Proceeds from sale of
property, plant and equipment
|
394
|
|
—
|
|
59
|
|
1,449
|
|
8,082
|
|
Free Cash
Flow
|
$
10,449
|
|
$
7,373
|
|
$
(18,661)
|
|
$
65,111
|
|
$
(16,324)
|
|
|
|
(1)
|
For the three months
ended December 31, 2023, September 30, 2023, and December 31, 2022,
there were $2.5 million, $2.5 million, and $0.4 million,
respectively, of non-cash adjustments for equity compensation
expense. For the years ended December 31, 2023 and 2022, there were
$5.9 million and $1.0 million, respectively, of non-cash
adjustments for equity compensation expense.
|
|
(2)
|
Represents certain
costs associated with non-recurring professional services, our
equity owners' expenses and other costs.
|
|
(3)
|
For the three months
ended December 31, 2023, September 30, 2023, and December 31, 2022,
growth capital expenditures include a $4.8 million decrease, a
$16.4 million increase and a $10.7 million increase in accrued
capital expenditures, respectively. For the years ended December
31, 2023 and 2022, growth capital expenditures include a $1.7
million increase and $1.9 million increase in accrued capital
expenditures, respectively.
|
|
(4)
|
For the three months
ended December 31, 2023, September 30, 2023, and December 31, 2022,
there were $15.2 million, $3.5 million and $3.5 million of non-unit
growth capital expenditures, respectively. For the years ended
December 31, 2023 and 2022, non-unit growth capital expenditures
amounted to $26.6 million and $7.4 million,
respectively.
|
|
KODIAK GAS SERVICES,
INC.
RECONCILIATION OF
NET CASH PROVIDED BY OPERATING ACTIVITIES TO DISCRETIONARY CASH
FLOW AND FREE CASH FLOW
(in
thousands)
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
December 31,
2023
|
|
September 30,
2023
|
|
December 31,
2022
|
|
December 31,
2023
|
|
December 31,
2022
|
|
Net cash provided by
operating activities
|
$
62,627
|
|
$
85,731
|
|
$
32,992
|
|
$
266,326
|
|
$
219,846
|
|
Maintenance capital
expenditures
|
(8,934)
|
|
(12,312)
|
|
(20,542)
|
|
(36,990)
|
|
(48,313)
|
|
Loss on extinguishment
of debt
|
—
|
|
2,398
|
|
—
|
|
2,398
|
|
—
|
|
Transaction expenses
(1)
|
4,288
|
|
440
|
|
770
|
|
6,001
|
|
2,370
|
|
Gain on sale of
capital assets
|
(56)
|
|
—
|
|
(49)
|
|
(777)
|
|
(874)
|
|
Change in operating
assets and liabilities
|
19,058
|
|
(9,697)
|
|
18,729
|
|
22,480
|
|
18,047
|
|
Other (2)
|
(6,456)
|
|
(3,516)
|
|
(829)
|
|
(11,289)
|
|
(2,529)
|
|
Discretionary Cash
Flow
|
$
70,527
|
|
$
63,044
|
|
$
31,071
|
|
$
248,149
|
|
$
188,547
|
|
Growth capital
expenditures (3)(4)
|
(60,472)
|
|
(55,671)
|
|
(49,791)
|
|
(184,487)
|
|
(212,953)
|
|
Proceeds from sale of
property, plant and equipment
|
394
|
|
—
|
|
59
|
|
1,449
|
|
8,082
|
|
Free Cash
Flow
|
$
10,449
|
|
$
7,373
|
|
$
(18,661)
|
|
$
65,111
|
|
$
(16,324)
|
|
|
|
(1)
|
Represents certain
costs associated with non-recurring professional services, our
equity owners' expenses and other costs.
|
|
(2)
|
Includes non-cash lease
expense, provision for credit losses and inventory
reserve.
|
|
(3)
|
For the three months
ended December 31, 2023, September 30, 2023, and December 31, 2022,
growth capital expenditures include a $4.8 million decrease, a
$16.4 million increase and a $10.7 million increase in accrued
capital expenditures, respectively. For the years ended December
31, 2023 and 2022, growth capital expenditures include a $1.7
million increase and $1.9 million increase in accrued capital
expenditures, respectively.
|
|
(4)
|
For the three months
ended December 31, 2023, September 30, 2023, and December 31, 2022,
there were $15.2 million, $3.5 million and $3.5 million of non-unit
growth capital expenditures, respectively. For the years ended
December 31, 2023 and 2022, non-unit growth capital expenditures
amounted to $26.6 million and $7.4 million,
respectively.
|
Contacts:
Kodiak Gas Services, Inc.
Graham Sones, VP – Investor
Relations
ir@kodiakgas.com
Dennard Lascar Investor
Relations
Ken Dennard / Rick Black
KGS@DennardLascar.com
View original
content:https://www.prnewswire.com/news-releases/kodiak-gas-services-reports-fourth-quarter-and-full-year-2023-results-achieves-record-annual-revenues-and-adjusted-ebitda-provides-full-year-2024-guidance-302082080.html
SOURCE Kodiak Gas Services, Inc.