The following discussion and analysis of our financial condition and results of operations is based on, and should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Report. The following discussion includes forward-looking statements that involve certain risks and uncertainties. For further information on items that could impact our future operating performance or financial condition, see the sections entitled “Risk Factors” section of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, and “Cautionary Note Regarding Forward-Looking Statements” in this Report. We assume no obligation to update any of these forward-looking statements, except as required by law. Unless otherwise indicated or the context otherwise requires, the historical financial information in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” reflects only the historical financial results of Kodiak Gas Services, Inc. and its consolidated subsidiaries and references to the “Company,” “we,” “our,” or “us” are to Kodiak Gas Services, Inc. and its consolidated subsidiaries.
Overview
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. Following the acquisition of Distributed Power Solutions, LLC (“DPS”) on April 1, 2026, we expanded our platform beyond compression to include distributed and behind-the-meter power generation solutions, including the provision of power generation equipment and related services. In connection with the acquisition, effective as of June 30, 2026, we established a new Power Infrastructure segment to represent our distributed power generation operations, while certain ancillary services associated with the compression and power businesses that are similar in nature to our existing service offerings continue to be included within Other Services. In addition, we renamed our Contract Services segment as Compression Infrastructure to better align with our expanded energy infrastructure platform.
As a result, we now manage our business through three operating segments: Compression Infrastructure, Power Infrastructure and Other Services. We believe this expanded segmentation will provide our investors with additional information to better understand our performance. Concurrent with the change in reportable segments, we revised our prior period financial information to be consistent with the current period presentation. There was no impact on the Company’s previously reported consolidated financial position, results of operations or cash flows. See Note 16. Segments for further information.
Our Compression Infrastructure segment 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.
Our Power Infrastructure segment provides distributed and behind-the-meter power generation solutions, including the provision of power generation equipment and associated capacity, together with related services such as delivery, installation, operation and maintenance. These solutions are designed to support both temporary and long-term power needs across a diverse range of end markets, including oil and gas, utilities, data centers, industrial and commercial customers. Power Infrastructure arrangements are typically structured to include fixed monthly payments and service-based components and may range from short-term deployments to multi-year agreements, depending on customer requirements.
Our Other Services segment consists of a broad range of services that support our customers’ operations, including station construction, maintenance, overhaul, freight and crane services, installation and other ancillary services, as well as certain services associated with our power generation operations that are similar in nature to our historical service offerings.
27
Table of Contents
Recent Developments
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.
Acquisition of Distributed Power Solutions
On April 1, 2026, we completed the previously announced acquisition of DPS, a leading provider of turnkey distributed power generation solutions and behind‑the‑meter power generation solutions. 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. 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.
Operational Highlights
The following table summarizes certain horsepower, unit count and horsepower utilization percentages for our compression fleet for the periods presented.
Compression Infrastructure Power Infrastructure
As of June 30, Percentage Change As of June 30, Percentage Change
2026 2025 2026 2025
Fleet capacity (hp / MW) (1) 4,495,394 hp 4,419,884 hp 1.7 % 405 MW — n/m
Revenue-generating (hp / MW) (2) 4,413,451 hp 4,296,978 hp 2.7 % 363 MW — n/m
Fleet units 4,623 4,881 (5.3) % 149 — n/m
Revenue-generating units 4,452 4,514 (1.4) % 129 — n/m
Output per revenue-generating unit (3) 991 hp 952 hp 4.1 % 3 MW — n/m
Fleet utilization (4) 98.2 % 97.2 % 1.0 % 89.6 % — % n/m
(1) Fleet capacity includes (x) revenue-generating and (y) idle horsepower or megawatts, respectively, which is comprised of units that do not have a signed contract or are not subject to a firm commitment from our customers and therefore are not currently generating revenue.
(2) Revenue-generating power includes horsepower and megawatts units, respectively, that are operating under contract and generating revenue and 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 or megawatts, respectively, divided by (ii) revenue-generating units at period end.
(4) Fleet utilization is calculated as (i) revenue-generating horsepower or megawatts, respectively, divided by (ii) fleet horsepower or megawatts, respectively.
Horsepower
As of June 30, 2026, fleet horsepower increased 1.7% and revenue generating horsepower increased 2.7% compared to the prior year period. These increases were driven by a combination of organic growth and strategic asset acquisition, including the acquisition 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 4.1% increase in revenue-generating horsepower per revenue-generating compression unit was primarily a result of deploying these new large horsepower units.
28
Table of Contents
Megawatts
On June 30, 2026, revenue-generating megawatts per revenue-generating power unit was 3.0 megawatts. Fleet utilization on June 30, 2026 was 89.6%. We had no revenue-generating megawatts per revenue-generated power unit prior to the DPS Acquisition on April 1, 2026.
Financial Results of Operations
Three Months Ended June 30, 2026, compared to the Three Months Ended June 30, 2025
The following table presents selected financial and operating information for the periods presented:
Three Months Ended
June 30, % Change
(in thousands) 2026 2025
Revenues:
Compression Infrastructure $ 315,125 $ 293,534 7.4 %
Power Infrastructure 32,891 — n/m
Other Services 43,104 29,309 47.1 %
Total revenues 391,120 322,843 21.1 %
Operating expenses:
Cost of operations (exclusive of depreciation and amortization shown below):
Compression Infrastructure 94,435 93,137 1.4 %
Power Infrastructure 11,686 — n/m
Other Services 38,235 22,114 72.9 %
Depreciation and amortization 78,650 66,135 18.9 %
Selling, general and administrative 40,918 35,121 16.5 %
Loss on sale of assets 2,959 6,606 (55.2) %
Total operating expenses 266,883 223,113 19.6 %
Income from operations 124,237 99,730 24.6 %
Other expenses:
Interest expense (50,061) (45,755) 9.4 %
Other expense, net (939) (546) 72.0 %
Total other expenses, net (51,000) (46,301) 10.1 %
Income before income taxes 73,237 53,429 37.1 %
Income tax expense 21,093 13,445 56.9 %
Net income 52,144 39,984 30.4 %
Less: Net income attributable to noncontrolling interests 173 488 (64.5) %
Net income attributable to common shareholders $ 51,971 $ 39,496 31.6 %
Revenues and Sources of Income
Compression Infrastructure
Compression Infrastructure revenues increased $21.6 million, or 7.4%, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025. This was primarily due to a $23.4 million increase in revenue resulting from pricing increases and an increase in revenue-generating horsepower. This increase was partially offset by a decrease of $1.8 million related to gas treating and cooling services.
29
Table of Contents
Power Infrastructure
Power Infrastructure revenues were $32.9 million for the three months ended June 30, 2026. No comparable periods are shown due to the closing of the DPS Acquisition on April 1, 2026, prior to which we did not generate Power Infrastructure revenues.
Other Services
Other Services revenue increased $13.8 million, or 47.1%, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025. This increase was mainly driven by higher revenues from station construction services and incremental customer-requested services and materials, partially offset by a decline in field service revenue resulting from lower demand for third-party field service work and logistics.
Operating Costs and Other Expenses
Compression Infrastructure
Compression Infrastructure operating expenses increased $1.3 million, or 1.4%, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025. This was primarily due to a $3.6 million increase in direct labor expenses as a result of the higher revenue noted above, partially offset by a decrease in cost of parts utilized to support our operations.
Power Infrastructure
Power Infrastructure operating expenses were $11.7 million for the three months ended June 30, 2026. No comparable periods are shown due to the closing of the DPS Acquisition on April 1, 2026, prior to which we did not incur Power Infrastructure operating expenses.
Other Services
Other Services operating expenses increased $16.1 million, or 72.9%, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025. This increase was primarily driven by the higher Other Services revenue across our product lines as noted above.
Depreciation and Amortization
Depreciation and amortization increased $12.5 million, or 18.9%, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025. This increase was primarily due to the additional depreciation and amortization on the DPS assets acquired on April 1, 2026, partially offset by the impact of asset sales and disposals during the current period.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased $5.8 million, or 16.5%, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025, primarily driven by a $5.0 million increase in payroll expenses and $3.3 million in DPS Acquisition transaction costs, partially offset by a $1.9 million decrease in IT and other administrative costs.
Loss on Sale of Assets
Loss on sale of assets decreased $3.6 million, or 55.2% during the three months ended June 30, 2026 compared to the three months ended June 30, 2025. In the second quarter of 2025, we incurred a $6.6 million loss related to the sale and write-off of certain scrapped assets which contributed to higher loss in that period that was not repeated during the current period.
Interest Expense
Interest expense increased $4.3 million, or 9.4%, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025. The increase was primarily driven by higher interest expense on our senior notes, reflecting the issuance of the 2031 Senior Notes during the first quarter of 2026 and the issuance of the 2033 and 2035 Senior Notes
30
Table of Contents
during the third quarter of 2025. This increase was partially offset by lower interest expense on our ABL Facility, reflecting reduced borrowings in the current period.
Income Tax Expense
Income tax expense increased by $7.6 million, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025. This increase was primarily due to an increase in pre-tax income of $19.8 million for the three months ended June 30, 2026, compared to the three months ended June 30, 2025. The increase was also due to the state apportionment impact of the DPS Acquisition on existing deferred taxes.
Financial Results of Operations
Six Months Ended June 30, 2026, Compared to the Six Months Ended June 30, 2025
The following table presents selected financial and operating information for the periods presented:
Six Months Ended
June 30, % Change
(in thousands) 2026 2025
Revenues:
Compression Infrastructure $ 622,110 $ 582,490 6.8 %
Power Infrastructure 32,891 — n/m
Other Services 81,878 69,995 17.0 %
Total revenues 736,879 652,485 12.9 %
Operating expenses:
Cost of operations (exclusive of depreciation and amortization shown below):
Compression Infrastructure 184,694 186,372 (0.9) %
Power Infrastructure 11,686 — n/m
Other Services 70,854 57,340 23.6 %
Depreciation and amortization 147,331 136,664 7.8 %
Selling, general and administrative 87,045 67,376 29.2 %
Loss on sale of assets 4,220 15,817 (73.3) %
Total operating expenses 505,830 463,569 9.1 %
Income from operations 231,049 188,916 22.3 %
Other expenses:
Interest expense (98,802) (92,979) 6.3 %
Loss on extinguishment of debt (36,512) — n/m
Other expense, net (1,878) (948) 98.1 %
Total other expenses, net (137,192) (93,927) 46.1 %
Income before income taxes 93,857 94,989 (1.2) %
Income tax expense 23,853 23,969 (0.5) %
Net income 70,004 71,020 (1.4) %
Net income attributable to noncontrolling interests 228 1,113 (79.5) %
Net income attributable to common shareholders $ 69,776 $ 69,907 (0.2) %
Revenues and Sources of Income
Compression Infrastructure
Compression Infrastructure revenues increased $39.6 million, or 6.8%, for the six months ended June 30, 2026, compared to the six months ended June 30, 2025. This was primarily related to a $42.4 million increase in contract compression services as a result of price increases and an increase in average revenue-generating horsepower, including revenue-
31
Table of Contents
generating horsepower acquired in the CSI Acquisition. This increase was partially offset by $2.8 million decrease related to gas treating services.
Power Infrastructure
Power Infrastructure revenues were $32.9 million for the six months ended June 30, 2026. No comparable periods are shown due to the closing of the DPS Acquisition on April 1, 2026, prior to which we did not generate Power Infrastructure revenues.
Other Services
Other Services revenue increased $11.9 million, or 17.0% for the six months ended June 30, 2026 compared to the six months ended June 30, 2025, primarily due to increased revenues from station construction services and maintenance and overhaul services. This increase was partially offset by decreases in other field services, and freight and crane charges related to the mobilization of units.
Operating Costs and Other Expenses
Compression Infrastructure
Compression Infrastructure operating expenses decreased $1.7 million or 0.9% for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. This decrease was primarily due to a $7.4 million decrease in costs related to compression parts, fluids and ancillary equipment, partially offset by a $5.4 million increase in indirect expenses.
Power Infrastructure
Power Infrastructure operating expenses were $11.7 million for the six months ended June 30, 2026. No comparable periods are shown due to the closing of the DPS Acquisition on April 1, 2026, prior to which we did not incur Power Infrastructure operating expenses.
Other Services
Other Services operating expense increased $13.5 million or 23.6% for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. This increase was primarily due to increased expenses from station construction services and maintenance and overhaul services on increased revenues, partially offset by decreased freight and crane charges on lower mobilization activity, as noted above.
Depreciation and Amortization
Depreciation and amortization increased $10.7 million or 7.8% for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. This increase was primarily due to increased depreciation and amortization related to the DPS Acquisition. The remaining increase is related to increased depreciation on compression equipment purchases.
Selling, General and Administrative Expense
Selling, general and administrative expenses increased $19.7 million or 29.2% for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. This increase was due to a $10.5 million increase in professional fees, primarily related to transaction costs associated with the DPS Acquisition, a $4.9 million insurance expenses increase compared to the prior year period, attributable to both higher premiums and expanded coverage requirements in the current market environment, a $3.1 million increase in labor and benefits, and a $1.2 million increase in other selling, general, and administrative expenses.
Loss on Sale of Assets
Loss on sale of assets decreased $11.6 million for the six months ended June 30, 2026 compared to the six months ended June 30, 2025 primarily due to the write-off of certain scrapped assets last year which did not recur in the comparable 2026 period.
Interest Expense
Interest expense increased $5.8 million or 6.3% for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. This increase was primarily due to interest accrued on the 2033 and 2035 Senior Notes in the current year to date period, which were not outstanding during the comparable year to date period. This increase in interest expense was
32
Table of Contents
partially offset by a reduction in interest expense associated with lower outstanding borrowings under the ABL Facility and settlements received from interest rate swaps, which are recognized in the same financial statement line item as the underlying hedged debt, thereby reducing the net impact on reported interest expense.
Loss on Extinguishment of Debt
We recognized a $36.5 million loss on extinguishment of debt during the six months ended June 30, 2026, primarily due to the early redemption premium of $27.2 million, the write-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 six months ended June 30, 2025.
Income Tax Expense
Income tax expense decreased by $0.1 million for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. This was primarily due to a decrease in pre-tax income of $1.1 million for the six months ended June 30, 2026, compared to the six months ended June 30, 2025.
Liquidity and Capital Resources
Overview
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 and power 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 June 30, 2026, we had approximately $1.7 billion of liquidity consisting of $137.6 million in cash and cash equivalents and $1.6 billion available under the ABL Facility.
Cash Requirements
Capital Expenditures
The compression and power infrastructure businesses are capital intensive, requiring significant investment to expand, maintain and upgrade existing operations. Our capital requirements have consisted primarily of, and we anticipate that our capital requirements will continue to consist primarily of, the following:
•Growth Capital Expenditures: capital expenditures made to (1) expand the operating capacity or operating income capacity of assets including, but not limited to, the acquisition of additional compression units and power generation units, balance of plant equipment, upgrades to existing equipment, expansion of supporting infrastructure, and implementation of new technologies, (2) maintain the operating capacity or operating income capacity of assets by acquisition of replacement compression units and power generation units, including their supporting infrastructure, and (3) expand the operating capacity or operating income capacity of existing assets.
•Other Capital Expenditures: capital expenditures made on assets required to support our operations—such as rolling stock, leasehold improvements, technology hardware and software and related implementation expenditures, safety enhancements to equipment, and other general items that are typically capitalized and that have a useful life beyond one year.
•Maintenance Capital Expenditures: periodic capital expenditures incurred at predetermined operating intervals to maintain consistent and reliable operating capacity of our assets over the near term. Such maintenance capital expenditures typically involve overhauls of significant components of our compression units, such as the engine and compressor, pistons, rings, heads, and bearings, and overhauls of significant components of our power generation units, such as blade repair/replacement, rotor refurbishment and bearing replacement. These maintenance capital expenditures are predictable and the majority of these expenditures are tied to a detailed, unit-by-unit schedule based on hours of operation or age. We utilize a disciplined and systematic asset management program whereby we perform major unit overhauls and engine replacements on a defined schedule based on hours of operation. As a result, our maintenance capital expenditures may vary considerably from year to year based on when such assets were added to the fleet. Maintenance capital expenditures along with regularly scheduled
33
Table of Contents
preventive maintenance expenses are typically sufficient to sustain the operating capacity of our assets over the full expected useful life of the compression units and power generation units. Maintenance capital expenditures do not include expenditures to replace compression units and power generation units when they reach the end of their useful lives.
The majority of our growth capital expenditures are related to the acquisition cost of new compression units and power generation units. Maintenance capital expenditures are related to overhauls of significant components of our compression and power generation equipment, such as the engine, compressors and turbines, which return the components to a like-new condition without modifying the application for which the compression and power generation equipment was designed.
For the six months ended June 30, 2026, growth capital expenditures were $286.7 million, other capital expenditures were $61.2 million, and maintenance capital expenditures were $37.7 million as compared to growth capital expenditures of $93.9 million, other capital expenditures of $38.7 million, and maintenance capital expenditures of $34.0 million for the six months ended June 30, 2025. The increase in growth capital expenditures was primarily driven by the April 1, 2026 acquisition of DPS. In addition, a $24.0 million purchase of used assets, reflecting an opportunistic purchase of compression equipment in place with a customer, 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 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. Maintenance capital expenditures remain disciplined, with only a modest increase despite the continued expansion of our fleet.
Dividends
Our Board may elect to declare cash dividends on our common stock, subject to our compliance with applicable law, and depending on, among other things, future business conditions, economic conditions, our financial condition, results of operations, projections, liquidity, earnings, legal requirements and restrictions in the agreements governing our indebtedness as discussed in this Report.
Subsequent to the 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. 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. The declaration and payment of future dividends will be at the discretion of the Board and will depend on the factors discussed above.
Over the long-term, we expect to fund any dividends and our budgeted growth capital expenditures using our Discretionary Cash Flow. In the event our Discretionary Cash Flow is insufficient to fund any such dividends and our budgeted growth capital expenditures for such period, we may fund our dividend or budgeted growth expenditures (i) with additional borrowings under our ABL Facility (subject to the requirement that our availability, in the case of dividends, under the ABL Facility calculated on a pro forma basis after giving effect to the payment of a dividend, is not less than $100,000,000) or (ii) by reducing our growth capital expenditures. Any additional borrowings under our ABL Facility may result in an increase in our interest expense and any such reduction in our growth capital expenditures may result in lower growth in our revenue-generating horsepower in future periods. As of June 30, 2026, we had $1.6 billion available under our ABL Facility.
Contractual Obligations
Our material contractual obligations as of June 30, 2026, consisted of the following:
•Long-term debt of $2.8 billion, of which $380.9 million matures in 2030, $1.0 billion matures in 2031, $770.0 million matures in 2033, and $630.0 million matures in 2035.
•Purchase commitments of $2.5 billion, of which $587.9 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 13. Commitments and Contingencies to the condensed consolidated financial statements included in this Report.
Other Commitments
As of June 30, 2026, other commitments include future operating and finance lease payments totaling $147.6 million.
34
Table of Contents
Sources of Cash
Cash Flows
The following table summarizes our cash flows:
Six months ended June 30,
(in thousands) 2026 2025
Net cash provided by operating activities $ 170,647 $ 291,500
Net cash used for investing activities (886,954) (142,565)
Net cash provided by (used for) financing activities 850,681 (148,257)
Net increase in cash and cash equivalents $ 134,374 $ 678
Operating Activities
The $120.9 million decrease in net cash provided by operating activities for the six months ended June 30, 2026, compared to the six months ended June 30, 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 $154.6 million during the six months ended June 30, 2026 compared to the use of cash of $19.8 million during the six months ended June 30, 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.
Investing Activities
Net cash used in investing activities increased $744.4 million during the six months ended June 30, 2026, compared to the six months ended June 30, 2025. The increase was driven mainly by $576.0 million in cash paid for the DPS Acquisition, net of cash acquired, as well as a $158.4 million increase in cash used for capital expenditures, net of accrued capital expenditures.
Financing Activities
Net cash provided by financing activities of $850.7 million increased $998.9 million during the six months ended June 30, 2026, compared to cash used for financing activities of $148.3 million during the six months ended June 30, 2025. Cash provided by financing activities during six months ended June 30, 2026 was primarily the result of the issuance of common stock, which generated net proceeds of $836.1 million after offering costs as well as strategic debt refinancing activities, which resulted in net proceeds of approximately $122.8 million. These net proceeds more than offset the $92.6 million in dividend payments and $14.2 million tax-related outflows associated with equity compensation vesting.
Cash used for financing activities of $148.3 million during the six months ended June 30, 2025 was primarily the result of $76.6 million of dividends paid to stockholders, $20.0 million of share repurchases, $3.3 million of cash paid for shares withheld to cover taxes, $3.5 million of cash paid on principal payments of other borrowings, $1.5 million of cash paid on principal payments of finance leases, and $0.7 million of distributions to noncontrolling interest. This was offset by $43.2 million of net cash provided by borrowings.
Description of Indebtedness
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 for five
35
Table of Contents
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 the six months ended June 30, 2026, which primarily represents the early redemption premium of $27.2 million, the write-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 aggregate principal amount, plus accrued and unpaid interest, if any.
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”). 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.
2035 Senior Notes
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.
Derivatives and Hedging Activities
To mitigate a portion of the exposure to fluctuations in the variable interest rate of the ABL Facility, we have entered into derivative instruments.
36
Table of Contents
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 June 30, 2026. See Note 10. Derivative Instruments to the condensed consolidated financial statements included in this Report.
Non-GAAP Financial Measures
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.
Adjusted Gross Margin and Adjusted Gross Margin Percentage
Adjusted gross margin and adjusted gross margin percentage are considered non-GAAP financial measures. We define adjusted gross margin as revenue less cost of operations, exclusive of depreciation and amortization expense. We define adjusted gross margin percentage as adjusted gross margin divided by total revenues. We believe that adjusted gross margin is useful as a supplemental measure of our operating profitability. Adjusted gross margin is impacted primarily by the pricing trends for service operations and cost of operations, including labor rates for service technicians, volume and per unit costs for lubricant oils, coolants and other fluids, quantity and pricing of routine preventative maintenance on compression and power generation units and property tax rates on compression and power generation units. Adjusted gross margin should not be considered an alternative to, or more meaningful than, gross margin or any other measure of financial performance presented in accordance with GAAP. Moreover, adjusted gross margin as presented may not be comparable to similarly titled measures of other companies. Because we capitalize assets, depreciation and amortization of equipment is a necessary element of our costs. To compensate for the limitations of adjusted gross margin as a measure of our performance, we believe that it is important to consider gross margin determined under GAAP, as well as adjusted gross margin, to evaluate our operating profitability.
37
Table of Contents
Compression Infrastructure
Three Months Ended Six Months Ended
June 30, June 30,
(in thousands) 2026 2025 2026 2025
Total revenues $ 315,125 $ 293,534 $ 622,110 $ 582,490
Cost of operations (exclusive of depreciation and amortization) (94,435) (93,137) (184,694) (186,372)
Depreciation and amortization (73,106) (66,135) (141,787) (136,664)
Gross margin $ 147,584 $ 134,262 $ 295,629 $ 259,454
Gross margin percentage 46.8% 45.7% 47.5% 44.5%
Depreciation and amortization 73,106 66,135 141,787 136,664
Adjusted gross margin $ 220,690 $ 200,397 $ 437,416 $ 396,118
Adjusted gross margin percentage 70.0% 68.3% 70.3% 68.0%
Power Infrastructure
Three Months Ended Six Months Ended
June 30, June 30,
(in thousands) 2026 2025 2026 2025
Total revenues $ 32,891 $ — $ 32,891 $ —
Cost of operations (exclusive of depreciation and amortization) (11,686) — (11,686) —
Depreciation and amortization (5,544) — (5,544) —
Gross margin $ 15,661 $ — $ 15,661 $ —
Gross margin percentage 47.6% —% 47.6% —%
Depreciation and amortization 5,544 — 5,544 —
Adjusted gross margin $ 21,205 $ — $ 21,205 $ —
Adjusted gross margin percentage 64.5% —% 64.5% —%
Other Services
Three Months Ended Six Months Ended
June 30, June 30,
(in thousands) 2026 2025 2026 2025
Total revenues $ 43,104 $ 29,309 $ 81,878 $ 69,995
Cost of operations (exclusive of depreciation and amortization) (38,235) (22,114) (70,854) (57,340)
Depreciation and amortization — — — —
Gross margin $ 4,869 $ 7,195 $ 11,024 $ 12,655
Gross margin percentage 11.3% 24.5% 13.5% 18.1%
Depreciation and amortization — — — —
Adjusted gross margin $ 4,869 $ 7,195 $ 11,024 $ 12,655
Adjusted gross margin percentage 11.3% 24.5% 13.5% 18.1%
Adjusted EBITDA and Adjusted EBITDA Percentage
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
38
Table of Contents
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:
•the financial performance of our assets without regard to the impact of financing methods, capital structure or historical cost basis of our assets;
•the viability of capital expenditure projects and the overall rates of return on alternative investment opportunities;
•the ability of our assets to generate cash sufficient to make debt payments and pay dividends; and
•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 that 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.
Adjusted EBITDA and adjusted EBITDA percentage should not be considered as alternatives to, or more meaningful than, revenues, net income (loss), operating income, cash flows from operating activities or any other measure of financial performance presented in accordance with GAAP as measures of operating performance and liquidity. Moreover, our adjusted EBITDA and adjusted EBITDA percentage as presented may not be comparable to similarly titled measures of other companies.
Given we are a capital-intensive business, depreciation, impairment of compression and power generation equipment and the interest cost of acquiring this equipment are necessary elements of our costs. To compensate for these items, we believe that it is important to consider both net income (loss) and net cash provided by operating activities determined under GAAP, as well as adjusted EBITDA and adjusted EBITDA percentage, to evaluate our financial performance and our liquidity. Our adjusted EBITDA and adjusted EBITDA percentage exclude some, but not all, items that affect net income (loss) and net cash provided by operating activities, and these measures may vary among companies. Management compensates for the limitations of adjusted EBITDA and adjusted EBITDA percentage as an analytical tool by reviewing the comparable GAAP measures, understanding the differences between the measures and incorporating this knowledge into management’s decision-making processes.
39
Table of Contents
The following table reconciles adjusted EBITDA to net income (loss), the most directly comparable GAAP financial measure, for each of the periods presented:
Three Months Ended Six Months Ended
June 30, June 30,
(in thousands) 2026 2025 2026 2025
Net income $ 52,144 $ 39,984 $ 70,004 $ 71,020
Interest expense 50,061 45,755 98,802 92,979
Income tax expense 21,093 13,445 23,853 23,969
Depreciation and amortization 78,650 66,135 147,331 136,664
Loss on extinguishment of debt — — 36,512 —
Equity compensation expense 8,639 6,291 14,529 13,269
Severance expense — — 72 376
Transaction expenses (1) 3,300 — 11,615 1,786
Loss on sale of assets 2,959 6,606 4,220 15,817
Adjusted EBITDA $ 216,846 $ 178,216 $ 406,938 $ 355,880
Net income percentage 13.3 % 12.4 % 9.5 % 10.9 %
Adjusted EBITDA percentage 55.4 % 55.2 % 55.2 % 54.5 %
(1) Represents certain costs associated with non-recurring professional services and other costs, primarily related to the acquisition of DPS for the three and six months ended June 30, 2026, and CSI Acquisition and secondary offerings for the six months ended June 30, 2025.
Discretionary Cash Flow
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.
Free Cash Flow
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.
40
Table of Contents
The following table reconciles net cash provided by operating activities, to discretionary cash flow and free cash flow, for each of the periods presented:
Three Months Ended Six Months Ended
June 30, June 30,
(in thousands) 2026 2025 2026 2025
Net cash provided by operating activities $ 99,465 $ 177,172 $ 170,647 $ 291,500
Maintenance capital expenditures (19,947) (17,565) (37,705) (33,972)
Severance expense — — 72 376
Transaction expenses (1) 3,300 — 11,615 1,786
Change in operating assets and liabilities 85,492 (38,478) 154,615 (19,799)
Other (2) (5,059) (4,705) (9,488) (7,383)
Discretionary cash flow $ 163,251 $ 116,424 $ 289,756 $ 232,508
Growth capital expenditures (3)(4)
Compression Infrastructure (66,790) (37,966) (134,357) (93,949)
Power Infrastructure (134,371) — (152,356) —
Other capital expenditures (5) (53,709) (16,398) (61,167) (38,656)
Proceeds from sale of assets 4,123 8,230 7,590 17,606
Free cash flow $ (87,496) $ 70,290 $ (50,534) $ 117,509
(1) Represents certain costs associated with non-recurring professional services and other costs, primarily related to the acquisition of DPS for the three and six months ended June 30, 2026 and the CSI Acquisition and secondary offerings for the six months ended June 30, 2025.
(2) Includes non-cash lease expense, provision for credit losses and inventory reserve.
(3) Growth and other capital expenditures includes a $32.0 million increase and a $25.6 million increase in accrued capital expenditures for the three and six months ended June 30, 2026, respectively. Growth and other capital expenditures includes a $10.7 million decrease and a $3.4 million increase in accrued capital expenditures for the three and six months ended June 30, 2025, respectively.
(4) Growth capital expenditures for the three months ended March 31, 2026 included an $18.0 million investment in power generation infrastructure related to the DPS Acquisition. This investment was included within Compression Infrastructure in our first quarter 2026 presentation. As part of the establishment of the Power Infrastructure reportable segment in the second quarter of 2026, the prior-period capital expenditure amount has been reclassified from Compression Infrastructure to Power Infrastructure in the year-to-date presentation to conform to the current-period segment presentation.
(5) Other capital expenditures include a $42.6 million non-cash finance lease addition related to one of our operational offices. While included in our other capital expenditure metric, this finance lease commencement is a non-cash activity and therefore is not reflected as a capital expenditure within the investing section of our statement of cash flows.
Adjusted Net Income and Adjusted Diluted Earnings Per Share
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.
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:
41
Table of Contents
Three Months Ended Six Months Ended
June 30, June 30,
(in thousands, except per share data) 2026 2025 2026 2025
Net income $ 52,144 $ 39,984 $ 70,004 $ 71,020
Loss on extinguishment of debt — — 36,512 —
Severance expense — — 72 376
Transaction expenses (1) 3,300 — 11,615 1,786
Tax effect of adjustments (2) (1,169) — (11,927) (561)
Adjusted net income $ 54,275 $ 39,984 $ 106,276 $ 72,621
Weighted-average common shares outstanding:
Diluted 96,805 90,040 92,193 90,234
Diluted earnings (loss) per common share $ 0.53 $ 0.43 $ 0.75 $ 0.76
Loss on extinguishment of debt — — 0.40 —
Severance expense — — — 0.01
Transaction expenses (1) 0.03 — 0.12 0.02
Tax effect of adjustments (2) (0.01) — (0.13) (0.01)
Adjusted diluted earnings per common share $ 0.55 $ 0.43 $ 1.14 $ 0.78
(1) Represents certain costs associated with non-recurring professional services and other costs, primarily related to the acquisition of DPS for the three and six months ended June 30, 2026 and the CSI Acquisition and secondary offerings for the three and six months ended June 30, 2025.
(2) Represents the estimated tax effect of adjustments calculated using the Company’s adjusted tax provision.
Critical Accounting Policies and Estimates
For a discussion of our critical accounting estimates, see “Part II – Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Estimates” of our Annual Report on Form 10-K for the year ended December 31, 2025. There have been no significant changes to our critical accounting estimates since our Annual Report on Form 10-K for the year ended December 31, 2025.