MONTGOMERY, Texas, Nov. 8, 2023
/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 quarter ended September 30, 2023 and also updated full-year
2023 guidance.
Third Quarter 2023 Highlights
- Total revenues were $231.0
million compared to $182.6
million in the third quarter of 2022
- Core Compression Operations segment revenues grew 14% over last
year's third quarter and 3% sequentially
- Net income was $21.8 million
compared to net income of $45.9
million in the third quarter of 2022
- Adjusted EBITDA(1) was $110.1
million compared to $101.5
million in the third quarter of 2022
- Horsepower utilization ended the third quarter of 2023 at
99.9%
- Updated full-year 2023 Adjusted EBITDA guidance to $430 to $440
million
- Initiated quarterly dividend of $0.38 per share, to be paid on November 10, 2023
Mickey McKee, Kodiak's founder
and Chief Executive Officer, stated, "Our third quarter financial
results were highlighted by record quarterly revenues and adjusted
EBITDA, margin expansion in our Compression Operations segment and
strong revenue growth in each of our segments. We initiated a
quarterly dividend of $0.38 per
share, above the midpoint of our prior guidance, with the first
payment to be made on November 10th.
Returning capital to our shareholders is an important component of
our capital allocation strategy and we believe Kodiak's stock
offers investors a very compelling yield.
"We exited the third quarter with 99.9% utilization and our
planned 2023 horsepower additions are fully contracted, giving us
great confidence in our revised full-year outlook. With lead times
on new equipment orders remaining at a year or more, we are nearly
fully contracted on our 2024 deliveries and already in discussions
with our customers on their 2025 needs. The rates on new unit
deployments continue to provide an attractive return on
capital."
McKee added, "Large horsepower compression remains in high
demand from our customers, and we see significant tailwinds for
natural gas infrastructure growth, particularly in the Permian
Basin, where over 70% of our horsepower is deployed. We're focused
on growing our fleet in the best basins with the best customers
while delivering the highest level of service in the industry."
(1) Adjusted EBITDA is
a Non-GAAP Financial Measure. A definition and reconciliation to
the most comparable GAAP financial measure is included
herein.
|
Segment Information
Compression Operations segment revenues were $186.7 million in the third quarter of 2023, a
14.1% increase compared to $163.7
million in the third quarter of 2022. Compression Operations
segment gross margin was $75.1 million in the third quarter of 2023,
an 18% increase compared to $63.7 million in the third quarter of 2022.
Compression Operations segment Adjusted Gross Margin was
$121.2 million in the third quarter
of 2023, a 12.4% increase compared to $107.8
million in the third quarter of 2022.
Other Services segment revenues were $44.3 million in the third quarter of 2023
compared to $19.0 million in the
third quarter of 2022. This segment's revenues were higher than
expected due to an accelerated construction schedule on our largest
project. Other Services segment gross margin and Adjusted Gross
Margin were each $5.5 million in the
third quarter of 2023, up from $4.9
million in the third quarter of 2022.
Long-Term Debt and Liquidity
Total debt outstanding was $1.8 billion as of September 30, 2023,
comprised entirely of borrowings on the ABL Facility and resulting
in a leverage ratio of 4.07x. The leverage ratio decreased from
June 30, 2023 as a result of the
reduction in debt in connection with the consummation of our IPO,
combined with growth in Adjusted EBITDA in the quarter ended
September 30, 2023. At
September 30, 2023, the Company had $396.2 million available on its ABL
Facility.
Summary Financial
Data (in thousands, except percentages)
|
|
|
|
Three Months
Ended
|
|
|
September 30,
2023
|
|
June 30,
2023
|
|
September 30,
2022
|
Total
revenues
|
|
$
230,983
|
|
$
203,306
|
|
$
182,645
|
Net income
|
|
$
21,766
|
|
$
17,517
|
|
$
45,900
|
Adjusted EBITDA
(1)
|
|
$
110,067
|
|
$
107,885
|
|
$
101,527
|
Adjusted EBITDA
percentage (1)
|
|
47.7 %
|
|
53.1 %
|
|
55.6 %
|
|
|
|
|
|
|
|
Compression Operations
revenue
|
|
$
186,673
|
|
$
181,619
|
|
$
163,662
|
Compression Operations
Adjusted Gross Margin (1)
|
|
$
121,203
|
|
$
116,602
|
|
$
107,790
|
Compression Operations
Adjusted Gross Margin Percentage (1)
|
|
64.9 %
|
|
64.2 %
|
|
65.9 %
|
|
|
|
|
|
|
|
Other Services
revenue
|
|
$
44,310
|
|
$
21,687
|
|
$
18,983
|
Other Services Adjusted
Gross Margin (1)
|
|
$
5,490
|
|
$
3,588
|
|
$
4,946
|
Other Services Adjusted
Gross Margin Percentage (1)
|
|
12.4 %
|
|
16.5 %
|
|
26.1 %
|
|
|
|
|
|
|
|
Maintenance capital
expenditures
|
|
$
12,312
|
|
$
10,940
|
|
$
10,340
|
Growth capital
expenditures
|
|
$
55,671
|
|
$
32,529
|
|
$
36,572
|
|
|
|
|
|
|
|
Discretionary Cash Flow
(1)
|
|
$
63,044
|
|
$
64,873
|
|
$
41,073
|
Free Cash Flow
(1)
|
|
$
7,373
|
|
$
33,367
|
|
$
12,511
|
|
|
(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.
|
Summary Operating
Data
(as of the dates
indicated)
|
|
|
|
September 30,
2023
|
|
June 30,
2023
|
|
September 30,
2022
|
Fleet horsepower
(1)
|
|
3,213,096
|
|
3,180,906
|
|
3,106,316
|
Revenue-generating
horsepower (2)
|
|
3,210,076
|
|
3,177,286
|
|
3,098,545
|
Fleet compression units
(1)
|
|
3,051
|
|
3,038
|
|
3,011
|
Revenue-generating
compression units (2)
|
|
3,034
|
|
3,023
|
|
3,004
|
Revenue-generating
horsepower per revenue-generating
compression unit (3)
|
|
1,058
|
|
1,051
|
|
1,031
|
Horsepower utilization
(4)
|
|
99.9 %
|
|
99.9 %
|
|
99.7 %
|
|
|
(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 31,520, 32,340 and 60,025 of non-marketable or obsolete
horsepower as of September 30, 2023, June 30, 2023, and September
30, 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)
|
Horsepower utilization
is calculated as (i) revenue-generating horsepower divided by (ii)
fleet horsepower.
|
Full-Year 2023 Guidance
Kodiak is providing revised guidance for the full year 2023. All
amounts below are in thousands except per share amounts and
percentages.
|
|
Full-Year 2023
Guidance
|
|
|
Low
|
|
High
|
Adjusted EBITDA
(1)
|
|
$
430,000
|
|
$
440,000
|
Discretionary Cash Flow
(1)(2)
|
|
$
235,000
|
|
$
245,000
|
Dividends per share
(3)
|
|
$
0.38
|
|
$
0.38
|
|
|
|
|
|
Segment
Information
|
|
|
|
|
Compression Operations
revenues
|
|
$
730,000
|
|
$
740,000
|
Compression Operations
Adjusted Gross Margin Percentage
|
|
64.0 %
|
|
65.0 %
|
Other Services
revenues
|
|
$
95,000
|
|
$
115,000
|
Other Services Adjusted
Gross Margin Percentage
|
|
15.0 %
|
|
17.0 %
|
|
|
|
|
|
Selling, General &
Administrative, Adjusted (4)
|
|
$
52,000
|
|
$
56,000
|
|
|
|
|
|
Capital
Expenditures
|
|
|
|
|
Growth capital
expenditures (5)
|
|
$
165,000
|
|
$
175,000
|
Maintenance capital
expenditures
|
|
$
34,000
|
|
$
38,000
|
|
|
(1)
|
The Company is unable
to reconcile projected Adjusted EBITDA to projected net income
(loss) and Discretionary Cash Flow to projected net cash provided
by operating activities, 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
includes a non-recurring $25.8 million realized gain on derivatives
and assumes no change to Secured Overnight Financing Rate
futures.
|
(3)
|
$1.52 per share
annualized. The Company expects to pay one dividend in
2023.
|
(4)
|
Selling, General and
Administrative, Adjusted excludes transaction expenses, equity
compensation expense and $2.0 million of bad debt expense related
to the collectability of outstanding receivables.
|
(5)
|
Growth capital
expenditures include approximately $15 million in non-unit growth
capital expenditures and exclude approximately $10 million in
capital expenditures related to the purchase and expansion of
previously-leased operations facilities during the fourth quarter
of 2023.
|
Conference Call
Kodiak will conduct a conference call on Thursday,
November 9, 2023 at 11:00 a.m. Eastern
Time (10:00 a.m. Central Time)
to discuss financial and operating results for the quarter ended
September 30, 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 over 3.2 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 to investors 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 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 on sale of capital assets; (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 and
our investors 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 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 on
sale of capital assets; (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 capital
assets. We believe Free Cash Flow is a liquidity measure and useful
supplemental financial measure for us and investors 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 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; (ii) anticipated levels of capital
expenditures and uses of capital; (iii) current or future
volatility in the credit markets and future market conditions; (iv)
expectations of the effect on our financial condition of claims,
litigation, environmental costs, contingent liabilities and
governmental and regulatory investigations and proceedings; (v)
production and capacity forecasts for the natural gas and oil
industry; (vi) strategy for customer retention, growth, fleet
maintenance, market position, financial results; (vii) the amount
and timing of future dividend payments; (viii) our interest rate
hedges; and (ix) 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 rely 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 make
acquisitions on economically acceptable terms; (vii) our ability to
fund purchases of additional compression equipment; (viii) a
deterioration in general economic, business, geopolitical or
industry conditions, including as a result of the conflict between
Russia and Ukraine, inflation, and slow economic growth
in the United States; (ix) tax
legislation and administrative initiatives or challenges to our tax
positions; (x) the loss of key management, operational personnel or
qualified technical personnel; (xi) our dependence on a limited
number of suppliers; (xii) the cost of compliance with existing
governmental regulations and proposed governmental regulations,
including climate change legislation and regulatory initiatives and
stakeholder pressures, including ESG scrutiny; (xiii) the inherent
risks associated with our operations, such as equipment defects and
malfunctions; (xiv) our reliance on third-party components for use
in our IT systems; (xv) legal and reputational risks and expenses
relating to the privacy, use and security of employee and client
information; (xvi) threats of cyber-attacks or terrorism; (xvii)
our credit agreement contains features that may limit our ability
to operate our business and fund future growth and also increases
our exposure to risk during adverse economic conditions; (xviii)
volatility in interest rates; (xix) our ability to access the
capital and credit markets or borrow on affordable terms to obtain
additional capital that we may require; (xx) the effectiveness of
our disclosure controls and procedures; and (xxi) 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 final prospectus filed with
the U.S. Securities and Exchange Commission (the "SEC") on
June 30, 2023 pursuant to Rule
424(b)(4) and throughout Part I, Item 2. "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and
Part II, Item 1A. "Risk Factors" sections of our Quarterly Report
on Form 10-Q for the quarterly period ended September 30,
2023.
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.
Contacts:
Kodiak Gas Services, Inc.
Graham Sones, VP – Investor
Relations
ir@kodiakgas.com
Dennard Lascar Investor
Relations
Ken Dennard / Rick Black
KGS@DennardLascar.com
KODIAK GAS
SERVICES, INC.
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands,
except share and per share data)
|
|
|
|
Three Months
Ended
|
|
|
September 30,
2023
|
|
June 30,
2023
|
|
September 30,
2022
|
Revenues:
|
|
|
|
|
|
|
Compression
operations
|
|
$
186,673
|
|
$
181,619
|
|
$
163,662
|
Other
services
|
|
44,310
|
|
21,687
|
|
18,983
|
Total
revenues
|
|
230,983
|
|
203,306
|
|
182,645
|
Operating
expenses:
|
|
|
|
|
|
|
Cost of operations
(exclusive of depreciation and amortization
shown below)
|
|
|
|
|
|
|
Compression
operations
|
|
65,470
|
|
65,017
|
|
55,872
|
Other
services
|
|
38,820
|
|
18,099
|
|
14,037
|
Depreciation and
amortization
|
|
46,087
|
|
45,430
|
|
44,111
|
Selling, general and
administrative expenses
|
|
19,648
|
|
13,438
|
|
11,190
|
Long-lived asset
impairment
|
|
—
|
|
—
|
|
—
|
Gain on sale of capital
assets
|
|
—
|
|
(738)
|
|
(818)
|
Total operating
expenses
|
|
170,025
|
|
141,246
|
|
124,392
|
Income from
operations
|
|
60,958
|
|
62,060
|
|
58,253
|
Other income
(expenses):
|
|
|
|
|
|
|
Interest expense,
net
|
|
(39,710)
|
|
(60,964)
|
|
(49,859)
|
Loss on extinguishment
of debt
|
|
(6,757)
|
|
—
|
|
—
|
Gain on
derivatives
|
|
15,141
|
|
22,240
|
|
51,862
|
Other income
(expense)
|
|
38
|
|
32
|
|
(19)
|
Total other income
(expenses)
|
|
(31,288)
|
|
(38,692)
|
|
1,984
|
Income before income
taxes
|
|
29,670
|
|
23,368
|
|
60,237
|
Income tax
expense
|
|
7,904
|
|
5,851
|
|
14,337
|
Net income
|
|
$
21,766
|
|
$
17,517
|
|
$
45,900
|
Basic and diluted
earnings per share
|
|
|
|
|
|
|
Basic net earnings per
share
|
|
$
0.28
|
|
$
0.30
|
|
$
0.78
|
Diluted net earnings
per share
|
|
$
0.28
|
|
$
0.30
|
|
$
0.78
|
Basic weighted average
shares of common stock outstanding
|
|
76,731,868
|
|
59,000,000
|
|
59,000,000
|
Diluted weighted
average shares of common stock outstanding
|
|
76,899,483
|
|
59,000,000
|
|
59,000,000
|
KODIAK GAS
SERVICES, INC.
CONDENSED
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands,
except share and per share data)
|
|
|
|
As of
September 30,
2023
|
|
As of
December 31,
2022
|
Assets
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
6,128
|
|
$
20,431
|
Accounts receivable,
net
|
|
116,875
|
|
97,551
|
Inventories,
net
|
|
70,606
|
|
72,155
|
Fair value of
derivative instruments
|
|
—
|
|
823
|
Contract
assets
|
|
9,608
|
|
3,555
|
Prepaid expenses and
other current assets
|
|
13,253
|
|
9,520
|
Total current
assets
|
|
216,470
|
|
204,035
|
Property, plant and
equipment, net
|
|
2,511,110
|
|
2,488,682
|
Operating lease
right-of-use assets, net
|
|
33,453
|
|
9,827
|
Goodwill
|
|
305,553
|
|
305,553
|
Identifiable intangible
assets, net
|
|
125,257
|
|
132,362
|
Fair value of
derivative instruments
|
|
51,790
|
|
64,517
|
Other assets
|
|
607
|
|
564
|
Total assets
|
|
$
3,244,240
|
|
$
3,205,540
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
|
$
48,835
|
|
$
37,992
|
Accrued
liabilities
|
|
102,448
|
|
93,873
|
Contract
liabilities
|
|
71,917
|
|
57,109
|
Fair value of
derivative instruments
|
|
—
|
|
—
|
Short-term debt, net of
unamortized debt issuance cost
|
|
—
|
|
—
|
Total current
liabilities
|
|
223,200
|
|
188,974
|
Long-term debt, net of
unamortized debt issuance cost
|
|
1,747,912
|
|
2,720,019
|
Operating lease
liabilities
|
|
34,026
|
|
6,754
|
Fair value of
derivative instruments
|
|
—
|
|
—
|
Deferred tax
liabilities
|
|
65,258
|
|
57,155
|
Other
liabilities
|
|
2,052
|
|
3,545
|
Total
liabilities
|
|
$
2,072,448
|
|
$
2,976,447
|
Commitments and
contingencies (Note 13)
|
|
|
|
|
Stockholders'
Equity:
|
|
|
|
|
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 September 30, 2023 and December 31, 2022
respectively
|
|
774
|
|
590
|
Additional paid-in
capital
|
|
956,465
|
|
33,189
|
Retained
earnings
|
|
214,553
|
|
195,314
|
Total stockholders'
equity
|
|
1,171,792
|
|
229,093
|
Total liabilities and
stockholders' equity
|
|
$
3,244,240
|
|
$
3,205,540
|
KODIAK GAS
SERVICES, INC.
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in
thousands)
|
|
|
For the Nine Months
Ended
September 30,
|
|
2023
|
|
2022
|
Cash flows from
operating activities:
|
|
|
|
Net income
|
$
26,940
|
|
$
104,356
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization expense
|
136,414
|
|
129,913
|
Stock-based
compensation expense
|
3,452
|
|
619
|
Amortization of debt
issuance costs
|
11,260
|
|
9,453
|
Non-cash lease
expense
|
3,132
|
|
2,066
|
Provision for credit
losses
|
2,047
|
|
85
|
Inventory
reserve
|
375
|
|
375
|
Gain on sale of
capital assets
|
(721)
|
|
(825)
|
Change in fair value
of derivatives
|
13,551
|
|
(86,676)
|
Deferred tax
provision
|
6,312
|
|
26,807
|
Loss on extinguishment
of debt
|
4,359
|
|
—
|
Changes in operating
assets and liabilities:
|
|
|
|
Accounts
receivable
|
(21,371)
|
|
5,048
|
Inventories
|
1,174
|
|
(9,904)
|
Contract
assets
|
(6,053)
|
|
(8,111)
|
Prepaid expenses and
other current assets
|
(3,733)
|
|
598
|
Accounts
payable
|
3,257
|
|
403
|
Accrued and other
liabilities
|
8,497
|
|
8,673
|
Contract
liabilities
|
14,807
|
|
3,974
|
Net cash provided by
operating activities
|
$
203,699
|
|
$
186,854
|
Cash flows from
investing activities:
|
|
|
|
Purchase of capital
assets
|
(145,573)
|
|
(199,707)
|
Proceeds from sale of
capital assets
|
1,055
|
|
8,023
|
Investment in
fund
|
—
|
|
—
|
Other
|
(45)
|
|
(86)
|
Net cash used in
investing activities
|
$
(144,563)
|
|
$
(191,770)
|
Cash flows from
financing activities:
|
|
|
|
Borrowings on debt
instruments
|
756,418
|
|
1,409,006
|
Payments on debt
instruments
|
(1,021,556)
|
|
(545,730)
|
Payment of debt
issuance cost
|
(32,759)
|
|
(27,819)
|
Proceeds from initial
public offering, net of underwriter discounts
|
277,840
|
|
—
|
Offering
costs
|
(9,247)
|
|
—
|
Loss on extinguishment
of debt
|
(1,835)
|
|
—
|
Contribution from
stockholders
|
—
|
|
—
|
Distribution to
parent
|
(42,300)
|
|
(838,000)
|
Net cash used in
financing activities
|
$
(73,439)
|
|
$
(2,543)
|
Net decrease in cash
and cash equivalents
|
(14,303)
|
|
(7,459)
|
Cash and cash
equivalents - beginning of period
|
20,431
|
|
28,795
|
Cash and cash
equivalents - end of period
|
$
6,128
|
|
$
21,336
|
Supplemental cash
disclosures:
|
|
|
|
Cash paid for
interest
|
$
173,006
|
|
$
88,569
|
Cash paid for
taxes
|
$
5,946
|
|
$
1,836
|
Supplemental
disclosure of non-cash investing activities:
|
|
|
|
Change in accrued
capital expenditures
|
$
(6,498)
|
|
$
8,773
|
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
|
$
(792)
|
|
$
—
|
KODIAK GAS
SERVICES, INC.
RECONCILIATION OF
NET INCOME TO ADJUSTED EBITDA
(in thousands,
excluding percentages; unaudited)
|
|
|
Three Months
Ended
|
|
September 30,
2023
|
|
June 30,
2023
|
|
September 30,
2022
|
Net income
|
$
21,766
|
|
$
17,517
|
|
$
45,900
|
Interest expense,
net
|
39,710
|
|
60,964
|
|
49,859
|
Income tax
expense
|
7,904
|
|
5,851
|
|
14,337
|
Depreciation and
amortization
|
46,087
|
|
45,430
|
|
44,111
|
Loss on extinguishment
of debt
|
6,757
|
|
—
|
|
—
|
Gain on
derivatives
|
(15,141)
|
|
(22,240)
|
|
(51,862)
|
Equity compensation
expense (1)
|
2,544
|
|
29
|
|
—
|
Transaction expenses
(2)
|
440
|
|
1,072
|
|
—
|
Gain on sale of
capital assets
|
—
|
|
(738)
|
|
(818)
|
Adjusted
EBITDA
|
$
110,067
|
|
$
107,885
|
|
$
101,527
|
Adjusted EBITDA
Percentage
|
47.7 %
|
|
53.1 %
|
|
55.6 %
|
|
|
(1)
|
For the three months
ended September 30, 2023 and June 30, 2023 there were $2.5 million
and $29.0 thousand, respectively, of non-cash adjustments for
equity compensation expense. There were no such adjustments for the
three months ended September 30, 2022.
|
(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;
unaudited)
|
|
|
|
Three Months
Ended
|
|
|
September 30,
2023
|
|
June 30,
2023
|
|
September 30,
2022
|
Net cash provided by
operating Activities
|
|
$
85,731
|
|
$
94,678
|
|
$
59,207
|
Interest expense,
net
|
|
39,710
|
|
60,964
|
|
49,859
|
Income tax
expense
|
|
7,904
|
|
5,851
|
|
14,337
|
Deferred tax
provision
|
|
(5,551)
|
|
(3,282)
|
|
(11,833)
|
Cash (received) paid
on derivatives
|
|
(7,163)
|
|
(25,835)
|
|
1,992
|
Loss on extinguishment
of debt
|
|
2,398
|
|
—
|
|
—
|
Transaction expenses
(1)
|
|
440
|
|
1,072
|
|
—
|
Other (2)
|
|
(3,705)
|
|
(6,763)
|
|
(5,066)
|
Change in operating
assets and liabilities
|
|
(9,697)
|
|
(18,800)
|
|
(6,969)
|
Adjusted
EBITDA
|
|
$
110,067
|
|
$
107,885
|
|
$
101,527
|
|
|
(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; unaudited)
|
|
|
|
Three Months
Ended
|
|
|
September 30,
2023
|
|
June 30,
2023
|
|
September 30,
2022
|
Total
revenues
|
|
$
186,673
|
|
$
181,619
|
|
$
163,662
|
Cost of sales
(excluding depreciation and amortization)
|
|
(65,470)
|
|
(65,017)
|
|
(55,872)
|
Depreciation and
amortization
|
|
(46,087)
|
|
(45,430)
|
|
(44,111)
|
Gross margin
|
|
$
75,116
|
|
$
71,172
|
|
$
63,679
|
Gross margin
percentage
|
|
40.2 %
|
|
39.2 %
|
|
38.9 %
|
Depreciation and
amortization
|
|
46,087
|
|
45,430
|
|
44,111
|
Adjusted Gross
Margin
|
|
$
121,203
|
|
$
116,602
|
|
$
107,790
|
Adjusted Gross Margin
Percentage (1)
|
|
64.9 %
|
|
64.2 %
|
|
65.9 %
|
|
|
(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; unaudited)
|
|
|
|
Three Months
Ended
|
|
|
September 30,
2023
|
|
June 30,
2023
|
|
September 30,
2022
|
Total
revenues
|
|
$
44,310
|
|
$
21,687
|
|
$
18,983
|
Cost of sales
(excluding depreciation and amortization)
|
|
(38,820)
|
|
(18,099)
|
|
(14,037)
|
Depreciation and
amortization
|
|
—
|
|
—
|
|
—
|
Gross margin
|
|
$
5,490
|
|
$
3,588
|
|
$
4,946
|
Gross margin
percentage
|
|
12.4 %
|
|
16.5 %
|
|
26.1 %
|
Depreciation and
amortization
|
|
—
|
|
—
|
|
—
|
Adjusted Gross
Margin
|
|
$
5,490
|
|
$
3,588
|
|
$
4,946
|
Adjusted Gross Margin
Percentage (1)
|
|
12.4 %
|
|
16.5 %
|
|
26.1 %
|
|
|
(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;
unaudited)
|
|
|
|
Three Months
Ended
|
|
|
September 30,
2023
|
|
June 30,
2023
|
|
September 30,
2022
|
Net income
|
|
$
21,766
|
|
$
17,517
|
|
$
45,900
|
Depreciation and
amortization
|
|
46,087
|
|
45,430
|
|
44,111
|
Change in fair value
of derivatives
|
|
(7,978)
|
|
3,595
|
|
(53,854)
|
Loss on extinguishment
of debt
|
|
6,757
|
|
—
|
|
|
Deferred tax
provision
|
|
5,551
|
|
3,282
|
|
11,833
|
Amortization of debt
issuance costs
|
|
189
|
|
5,626
|
|
4,241
|
Equity compensation
expense (1)
|
|
2,544
|
|
29
|
|
—
|
Transaction expenses
(2)
|
|
440
|
|
1,072
|
|
—
|
Gain on sale of
capital assets
|
|
—
|
|
(738)
|
|
(818)
|
Maintenance capital
expenditures
|
|
(12,312)
|
|
(10,940)
|
|
(10,340)
|
Discretionary Cash
Flow
|
|
$
63,044
|
|
$
64,873
|
|
$
41,073
|
Growth capital
expenditures (3)(4)
|
|
(55,671)
|
|
(32,529)
|
|
(36,572)
|
Proceeds from sale of
capital assets
|
|
—
|
|
1,023
|
|
8,010
|
Free Cash
Flow
|
|
$
7,373
|
|
$
33,367
|
|
$
12,511
|
|
|
(1)
|
For the three months
ended September 30, 2023 and June 30, 2023 there were $2.5 million
and $29.0 thousand, respectively, of non-cash adjustments for
equity compensation expense. There were no such adjustments for the
three months ended September 30, 2022.
|
(2)
|
Represents certain
costs associated with non-recurring professional services, our
equity owners' expenses and other costs.
|
(3)
|
For the three months
ended September 30, 2023, June 30, 2023 and September 30, 2022,
growth capital expenditures include a $16.4 million increase, a
$2.0 million decrease and a $6.8 million decrease in accrued
capital expenditures, respectively.
|
(4)
|
For the three months
ended September 30, 2023, June 30, 2023 and September 30, 2022,
there were $3.5 million, $4.8 million and $1.7 million of non-unit
growth capital expenditures, respectively.
|
KODIAK GAS
SERVICES, INC.
RECONCILIATION OF
NET CASH PROVIDED BY OPERATING ACTIVITIES TO DISCRETIONARY CASH
FLOW
AND FREE CASH FLOW
(in thousands;
unaudited)
|
|
|
|
Three Months
Ended
|
|
|
September 30,
2023
|
|
June 30,
2023
|
|
September 30,
2022
|
Net cash provided by
operating activities
|
|
$
85,731
|
|
$
94,678
|
|
$
59,207
|
Maintenance capital
expenditures
|
|
(12,312)
|
|
(10,940)
|
|
(10,340)
|
Loss on extinguishment
of debt
|
|
2,398
|
|
—
|
|
—
|
Transaction expenses
(1)
|
|
440
|
|
1,072
|
|
—
|
Gain on sale of
capital assets
|
|
—
|
|
(738)
|
|
(818)
|
Change in operating
assets and liabilities
|
|
(9,697)
|
|
(18,800)
|
|
(6,969)
|
Other (2)
|
|
(3,516)
|
|
(399)
|
|
(7)
|
Discretionary Cash
Flow
|
|
$
63,044
|
|
$
64,873
|
|
$
41,073
|
Growth capital
expenditures (3)(4)
|
|
(55,671)
|
|
(32,529)
|
|
(36,572)
|
Proceeds from sale of
capital assets
|
|
—
|
|
1,023
|
|
8,010
|
Free Cash
Flow
|
|
$
7,373
|
|
$
33,367
|
|
$
12,511
|
|
|
(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 September 30, 2023, June 30, 2023 and September 30, 2022,
growth capital expenditures include a $16.4 million increase, a
$2.0 million decrease and a $6.8 million decrease in accrued
capital expenditures, respectively.
|
(4)
|
For the three months
ended September 30, 2023, June 30, 2023 and September 30, 2022,
there were $3.5 million, $4.8 million and $1.7 million of non-unit
growth capital expenditures, respectively.
|
View original
content:https://www.prnewswire.com/news-releases/kodiak-gas-services-announces-third-quarter-2023-results-including-record-quarterly-revenues-and-adjusted-ebitda-updates-full-year-2023-guidance-301982294.html
SOURCE Kodiak Gas Services, Inc.