MONTGOMERY, Texas, Aug. 9, 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 June 30, 2023 and provided full-year 2023
guidance.
Second-Quarter 2023 Highlights
- Total revenues were $203.3
million, an increase of 14.8% compared to $177.2 million in the second quarter of 2022
- Net income was $17.5 million,
compared to net income of $8.9
million in the second quarter of 2022
- Adjusted EBITDA(1) was $107.9
million, an increase of 11.3% compared to $96.9 million in the second quarter of 2022;
Adjusted EBITDA for the six months ended June 30, 2023 was $214.2
million
- Horsepower utilization ended the second quarter of 2023 at
99.9%
- Establishes full-year 2023 Adjusted EBITDA guidance of
$425 to $440
million
- Guidance includes an estimated quarterly dividend of
$0.35 to $0.40 per share, payable subject to the board of
directors' approval beginning in the fourth quarter
- Completed initial public offering (IPO) of 16 million shares
for net proceeds of $231.4 million
(received July 3, 2023)
- Underwriters fully exercised their overallotment option in
July 2023, resulting in the issuance
and sale of an additional 2.4 million shares for net proceeds of
$36.2 million
Mickey McKee, Kodiak's founder
and Chief Executive Officer, stated, "We are proud to report strong
second quarter financial results, including record quarterly
revenues and adjusted EBITDA, driven by continued high demand for
our contract compression and other services. Growing global demand
for the reliable and secure flow of natural gas and oil directly
benefits our compression fleet that is strategically deployed in
the lowest-cost-to-produce basins in the U.S. with access to the
growing LNG export infrastructure along the Gulf Coast. The Permian
Basin and Eagle Ford Shale, where 84% of our fleet is located,
require significant amounts of large horsepower compression
infrastructure, and we are well positioned in these markets for
future growth.
"We exited the second quarter with 99.9% utilization and our
planned 2023 horsepower additions are fully contracted at rates
that we expect to provide us with attractive returns on capital.
With lead times on new equipment orders extending to a year or
more, we continue to sign contracts with customers on 2024
deliveries.
"Additionally, Kodiak achieved an important milestone in our
history with the completion of our IPO and listing on the New York
Stock Exchange. We have a dedicated and loyal workforce who
continues to deliver industry-leading mechanical availability, and
each member of that workforce is now a stockholder of Kodiak."
McKee added, "The demand for large horsepower compression
continues to grow, and tightening supplies of equipment and capital
discipline within our industry have created an attractive pricing
environment and compelling returns on new equipment. We view the
broader energy market as highly supportive right now, with a
multi-decade runway for conventional energy, which we believe will
drive demand for more compression. Our strategy is to continue to
provide compression services safely and sustainably in the best
basins with the best customers while generating steady growth in
cash flows and attractive returns for our investors. We are bullish
about continued growth for our industry and our Company."
(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 $181.6 million in the second quarter of 2023, an
11.6% increase compared to $162.8
million in the second quarter of 2022. Compression
Operations segment gross margin was $71.2
million in the second quarter of 2023, a 16.5% increase
compared to $61.1 million in the
second quarter of 2022. Compression Operations segment Adjusted
Gross Margin was $116.6 million in
the second quarter of 2023, an 11.6% increase compared to
$104.5 million in the second quarter
of 2022.
Other Services segment revenues were $21.7 million in the second quarter of 2023, a
51.2% increase compared to $14.3
million in the second quarter of 2022. Other Services
segment gross margin and Adjusted Gross Margin were each
$3.6 million in the second quarter of
2023, a 39.7% increase compared to $2.6
million in the second quarter of 2022.
Long-Term Debt and Liquidity
Long-term debt was $2.8 billion as
of June 30, 2023, prior to the
July 3, 2023 repayment of
$300 million and novation of the
remaining $700 million of the term
loan. After giving effect to these and other transactions in
connection with the IPO, the Company had approximately $1.85 billion drawn on its ABL Facility, and
approximately $350 million in ABL
Facility availability. The underwriters fully exercised their
overallotment option in July 2023,
resulting in net proceeds to the Company of $36.2 million that was immediately used to repay
borrowings on the ABL Facility.
Summary Financial
and Operating Data
(in thousands,
except percentages)
|
|
|
|
Three Months
Ended
|
|
|
June 30,
2023
|
|
March 31,
2023
|
|
June 30,
2022
|
Total
revenues
|
|
$
203,306
|
|
$
190,112
|
|
$
177,151
|
Net income
(loss)
|
|
$ 17,517
|
|
$
(12,343)
|
|
$
8,901
|
Adjusted
EBITDA(1)
|
|
$
107,885
|
|
$
106,318
|
|
$ 96,894
|
Adjusted EBITDA
Percentage (1)
|
|
53.1 %
|
|
55.9 %
|
|
54.7 %
|
|
|
|
|
|
|
|
Compression Operations
revenue
|
|
$
181,619
|
|
$
177,697
|
|
$
162,808
|
Compression Operations
gross margin
|
|
$ 71,172
|
|
$ 70,030
|
|
$ 61,075
|
Compression Operations
gross margin percentage
|
|
39.2 %
|
|
39.4 %
|
|
37.5 %
|
Compression Operations
Adjusted Gross Margin (1)
|
|
$
116,602
|
|
$
114,927
|
|
$
104,472
|
Compression Operations
Adjusted Gross Margin Percentage (1)
|
|
64.2 %
|
|
64.7 %
|
|
64.2 %
|
|
|
|
|
|
|
|
Other Services
revenue
|
|
$ 21,687
|
|
$ 12,415
|
|
$ 14,343
|
Other Services gross
margin
|
|
$
3,588
|
|
$
3,427
|
|
$
2,569
|
Other Services gross
margin percentage
|
|
16.5 %
|
|
27.6 %
|
|
17.9 %
|
Other Services Adjusted
Gross Margin (1)
|
|
$
3,588
|
|
$
3,427
|
|
$
2,569
|
Other Services Adjusted
Gross Margin Percentage (1)
|
|
16.5 %
|
|
27.6 %
|
|
17.9 %
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
|
$ 13,438
|
|
$ 13,085
|
|
$ 11,740
|
|
|
|
|
|
|
|
Maintenance capital
expenditures
|
|
$ 10,940
|
|
$
4,803
|
|
$
9,320
|
Growth capital
expenditures
|
|
$ 32,529
|
|
$ 35,815
|
|
$ 54,689
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
|
$ 94,678
|
|
$ 23,290
|
|
$ 72,851
|
Discretionary Cash Flow
(1)
|
|
$ 64,873
|
|
$ 49,706
|
|
$ 52,497
|
Free Cash Flow
(1)
|
|
$ 33,367
|
|
$ 13,923
|
|
$
(2,191)
|
|
|
(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)
|
|
|
|
June
30,
2023
|
|
March 31,
2023
|
|
June
30,
2022
|
Fleet horsepower
(1)
|
|
3,180,906
|
|
3,175,006
|
|
3,084,406
|
Revenue-generating
horsepower (2)
|
|
3,177,286
|
|
3,169,301
|
|
3,074,613
|
Fleet compression units
(1)
|
|
3,038
|
|
3,041
|
|
2,994
|
Revenue-generating
compression units (2)
|
|
3,023
|
|
3,033
|
|
2,987
|
Revenue-generating
horsepower per revenue-generating compression unit (3)
|
|
1,051
|
|
1,045
|
|
1,029
|
Horsepower utilization
(4)
|
|
99.9 %
|
|
99.8 %
|
|
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 32,240, 58,645, and 60,025 of non-marketable or obsolete
horsepower as of June 30, 2023, March 31, 2023, and June 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 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)
|
|
$ 425,000
|
|
$ 440,000
|
Discretionary Cash Flow
(1)(2)
|
|
$ 240,000
|
|
$ 260,000
|
Dividends per share
(3)
|
|
$
0.35
|
|
$
0.40
|
|
|
|
|
|
Segment
Information
|
|
|
|
|
Compression Operations
revenues
|
|
$ 730,000
|
|
$ 740,000
|
Compression Operations
Adjusted Gross Margin Percentage
|
|
64.0 %
|
|
65.0 %
|
Other Services
revenues
|
|
$
70,000
|
|
$
90,000
|
Other Services Adjusted
Gross Margin Percentage
|
|
16.0 %
|
|
18.0 %
|
|
|
|
|
|
Selling, General &
Administrative, Adjusted (4)
|
|
$
52,000
|
|
$
56,000
|
|
|
|
|
|
Capital
Expenditures
|
|
|
|
|
Growth capital
expenditures (5)
|
|
$ 165,000
|
|
$ 175,000
|
Maintenance capital
expenditures
|
|
32,000
|
|
36,000
|
|
|
(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)
|
Assumes one dividend is
paid in 2023.
|
(4)
|
Selling, General and
Administrative, Adjusted excludes transaction expenses and equity
compensation expense of $1.3 million and $0.9 million,
respectively, for the six months ended June 30, 2023.
|
(5)
|
Growth capital
expenditures include approximately $15 million in non-unit growth
capital expenditures.
|
Conference Call
Kodiak will conduct a conference call on Thursday, August 10, 2023 at 11:00 a.m. Eastern Time (10:00 a.m. Central Time) to discuss financial and
operating results for the quarter ended June
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 the third largest contract
compression services provider in the continental United States with a revenue generating fleet
of over 3.17 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 before interest
expense, net plus, (i) tax expense (benefit); (ii) depreciation and
amortization; (iii) unrealized loss (gain) on derivatives; (iv)
equity compensation expense; (v) transaction expenses; (vi) loss
(gain) on sale of assets; and (vii) impairment of compression
equipment. Adjusted EBITDA Percentage is defined as Adjusted EBITDA
divided by 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 maintenance capital expenditures,
transaction expenses, certain changes in operating assets and
liabilities and certain other 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 maintenance and growth capital expenditures,
transaction expenses, certain changes in operating assets and
liabilities and certain other expenses. 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
downturn in the economic environment, as well as inflationary
pressures; (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" section of such prospectus and
Part II, Item 1A. Risk Factors of our Quarterly Report on Form 10-Q
for the quarterly period ended June 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.
KODIAK GAS SERVICES,
INC.
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands,
except share and per share data)
|
|
|
|
Three Months
Ended
|
|
|
June 30,
2023
|
|
March 31,
2023
|
|
June 30,
2022
|
Revenues:
|
|
|
|
|
|
|
Compression
Operations
|
|
$
181,619
|
|
$
177,697
|
|
$
162,808
|
Other
Services
|
|
21,687
|
|
12,415
|
|
14,343
|
Total
revenues
|
|
203,306
|
|
190,112
|
|
177,151
|
Operating
expenses:
|
|
|
|
|
|
|
Cost of operations
(exclusive of depreciation and amortization shown
below):
|
|
|
|
|
|
|
Compression
Operations
|
|
65,017
|
|
62,770
|
|
58,336
|
Other
Services
|
|
18,099
|
|
8,988
|
|
11,774
|
Depreciation and
amortization
|
|
45,430
|
|
44,897
|
|
43,397
|
Selling, general and
administrative expenses
|
|
13,438
|
|
13,085
|
|
11,740
|
Gain on sale of fixed
assets
|
|
(738)
|
|
17
|
|
—
|
Total operating
expenses
|
|
141,246
|
|
129,757
|
|
125,247
|
Income from
operations
|
|
62,060
|
|
60,355
|
|
51,904
|
Other income
(expenses):
|
|
|
|
|
|
|
Interest expense,
net
|
|
(60,964)
|
|
(58,723)
|
|
(36,829)
|
Realized gain on
derivatives
|
|
25,835
|
|
—
|
|
—
|
Unrealized loss on
derivatives
|
|
(3,595)
|
|
(17,934)
|
|
(3,386)
|
Other income
(expense)
|
|
32
|
|
(31)
|
|
(7)
|
Total other
expenses
|
|
(38,692)
|
|
(76,688)
|
|
(40,222)
|
Income before income
taxes
|
|
23,368
|
|
(16,333)
|
|
11,682
|
Income tax expense
(benefit)
|
|
5,851
|
|
(3,990)
|
|
2,781
|
Net income
(loss)
|
|
$
17,517
|
|
$
(12,343)
|
|
$
8,901
|
Earnings (loss) per
share:
|
|
|
|
|
|
|
Basic and diluted
earnings (loss) per share
|
|
$
0.30
|
|
$
(0.21)
|
|
$
0.15
|
Weighted-average
shares outstanding - basic and diluted
|
|
59,000,000
|
|
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
June 30,
2023
|
|
As of December
31,
2022
|
Assets
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
41,371
|
|
$
20,431
|
Accounts receivable,
net
|
|
119,254
|
|
97,551
|
Inventories,
net
|
|
76,813
|
|
72,155
|
Fair value of
derivative instruments
|
|
—
|
|
823
|
Contract
assets
|
|
4,513
|
|
3,555
|
Prepaid expenses and
other current assets
|
|
20,201
|
|
9,520
|
Total current
assets
|
|
262,152
|
|
204,035
|
Property, plant and
equipment, net
|
|
2,486,846
|
|
2,488,682
|
Operating lease
right-of-use assets, net
|
|
34,799
|
|
9,827
|
Goodwill
|
|
305,553
|
|
305,553
|
Identifiable intangible
assets, net
|
|
127,625
|
|
132,362
|
Fair value of
derivative instruments
|
|
43,811
|
|
64,517
|
Other assets
|
|
577
|
|
564
|
Total assets
|
|
$
3,261,363
|
|
$
3,205,540
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
|
$
35,100
|
|
$
37,992
|
Accrued
liabilities
|
|
88,440
|
|
93,873
|
Contract
liabilities
|
|
86,258
|
|
57,109
|
Total current
liabilities
|
|
209,798
|
|
188,974
|
Long-term debt, net of
unamortized debt issuance cost
|
|
2,769,355
|
|
2,720,019
|
Operating lease
liabilities
|
|
29,970
|
|
6,754
|
Deferred tax
liabilities
|
|
57,916
|
|
57,155
|
Other
liabilities
|
|
1,449
|
|
3,545
|
Total
liabilities
|
|
3,068,488
|
|
2,976,447
|
|
|
|
|
|
Stockholders'
Equity:
|
|
|
|
|
Common stock, par value
$0.01 per share; 750,000,000 shares of common stock
authorized, 59,000,000
shares of common stock issued and outstanding as of June
30,
2023 and December 31,
2022
|
|
590
|
|
590
|
Additional paid-in
capital
|
|
—
|
|
33,189
|
Retained
earnings
|
|
192,285
|
|
195,314
|
Total stockholders'
equity
|
|
192,875
|
|
229,093
|
Total liabilities and
stockholders' equity
|
|
$
3,261,363
|
|
$
3,205,540
|
KODIAK GAS SERVICES,
INC.
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in
thousands)
|
|
|
|
For the Six
Months
Ended
June 30,
|
|
|
2023
|
|
2022
|
Cash flows from
operating activities:
|
|
|
|
|
Net income
|
|
$
5,174
|
|
$
58,456
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
Depreciation and
amortization expense
|
|
90,327
|
|
85,802
|
Stock-based
compensation expense
|
|
908
|
|
619
|
Amortization of debt
issuance costs
|
|
11,071
|
|
5,212
|
Non-cash lease
expense
|
|
1,786
|
|
1,365
|
Provision for credit
losses
|
|
2
|
|
85
|
Inventory
reserve
|
|
250
|
|
250
|
Gain on sale of fixed
assets
|
|
(721)
|
|
(7)
|
Unrealized loss (gain)
on derivatives
|
|
21,529
|
|
(32,822)
|
Deferred tax
provision
|
|
761
|
|
14,974
|
Changes in operating
assets and liabilities:
|
|
|
|
|
Accounts receivable,
net
|
|
(21,705)
|
|
(11,367)
|
Inventories
|
|
(4,907)
|
|
(5,302)
|
Contract
assets
|
|
(958)
|
|
(3,051)
|
Prepaid expenses and
other current assets
|
|
(10,681)
|
|
(314)
|
Accounts
payable
|
|
10,954
|
|
6,436
|
Accrued and other
liabilities
|
|
(14,971)
|
|
854
|
Contract
liabilities
|
|
29,149
|
|
6,457
|
Net cash provided by
operating activities
|
|
117,968
|
|
127,647
|
Cash flows from
investing activities:
|
|
|
|
|
Purchase of capital
assets
|
|
(94,034)
|
|
(145,952)
|
Proceeds from sale of
capital assets
|
|
1,055
|
|
13
|
Investment in
fund
|
|
(24)
|
|
(24)
|
Other
|
|
10
|
|
13
|
Net cash used in
investing activities
|
|
(92,993)
|
|
(145,950)
|
Cash flows from
financing activities:
|
|
|
|
|
Borrowings on debt
instruments
|
|
499,279
|
|
1,221,161
|
Payments on debt
instruments
|
|
(428,812)
|
|
(345,465)
|
Payment of debt
issuance cost
|
|
(32,202)
|
|
(27,561)
|
Distributions to
parent
|
|
(42,300)
|
|
(838,000)
|
Net cash (used
in) provided by financing activities
|
|
(4,035)
|
|
10,135
|
Net increase (decrease)
in cash and cash equivalents
|
|
20,940
|
|
(8,168)
|
Cash and cash
equivalents - beginning of period
|
|
20,431
|
|
28,795
|
Cash and cash
equivalents - end of period
|
|
$
41,371
|
|
$
20,627
|
Supplemental cash
disclosures:
|
|
|
|
|
Cash paid for
interest
|
|
$
116,370
|
|
$
52,204
|
Cash paid for
taxes
|
|
$
5,726
|
|
$
1,836
|
Supplemental
disclosure of non-cash investing activities:
|
|
|
|
|
Change in accrued
capital expenditures
|
|
$
9,946
|
|
$
1,931
|
KODIAK GAS SERVICES,
INC.
RECONCILIATION OF
NET INCOME TO ADJUSTED EBITDA
(in thousands,
excluding percentages; unaudited)
|
|
|
|
Three Months
Ended
|
|
|
June 30,
2023
|
|
March 31,
2023
|
|
June 30,
2022
|
Net income
(loss)
|
|
$
17,517
|
|
$
(12,343)
|
|
$
8,901
|
Interest expense,
net
|
|
60,964
|
|
58,723
|
|
36,829
|
Tax expense
(benefit)
|
|
5,851
|
|
(3,990)
|
|
2,781
|
Depreciation and
amortization
|
|
45,430
|
|
44,897
|
|
43,397
|
Realized (gain) on
derivatives
|
|
(25,835)
|
|
—
|
|
—
|
Unrealized loss on
derivatives
|
|
3,595
|
|
17,934
|
|
3,386
|
Equity compensation
expense (1)
|
|
29
|
|
879
|
|
—
|
Transaction expenses
(2)
|
|
1,072
|
|
201
|
|
1,600
|
(Gain) loss on sale of
assets
|
|
(738)
|
|
17
|
|
—
|
Adjusted
EBITDA
|
|
$
107,885
|
|
$
106,318
|
|
$
96,894
|
Adjusted EBITDA
Percentage
|
|
53.1 %
|
|
55.9 %
|
|
54.7 %
|
|
|
(1)
|
For the three months
ended June 30, 2023 and March 31, 2023 there were $29.0 thousand
and $0.9 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;
unaudited)
|
|
|
|
Three Months
Ended
|
|
|
June 30,
2023
|
|
March 31,
2023
|
|
June 30,
2022
|
Net cash provided by
operating activities
|
|
$
94,678
|
|
$
23,290
|
|
$
72,851
|
Interest expense,
net
|
|
60,964
|
|
58,723
|
|
36,829
|
Tax expense
(benefit)
|
|
5,851
|
|
(3,990)
|
|
2,781
|
Deferred tax (benefit)
provision
|
|
(3,282)
|
|
2,521
|
|
(1,116)
|
Realized gain on
derivatives
|
|
(25,835)
|
|
—
|
|
—
|
Transaction expenses
(1)
|
|
1,072
|
|
201
|
|
1,600
|
Other (2)
|
|
(6,763)
|
|
(6,346)
|
|
(4,315)
|
Change in operating
assets and liabilities
|
|
(18,800)
|
|
31,919
|
|
(11,736)
|
Adjusted
EBITDA
|
|
$
107,885
|
|
$
106,318
|
|
$
96,894
|
|
|
(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;
unaudited)
|
|
|
|
Three Months
Ended
|
|
|
June 30,
2023
|
|
March 31,
2023
|
|
June 30,
2022
|
Total
revenues
|
|
$
181,619
|
|
$
177,697
|
|
$
162,808
|
Cost of operations
(excluding depreciation and amortization)
|
|
(65,017)
|
|
(62,770)
|
|
(58,336)
|
Depreciation and
amortization
|
|
(45,430)
|
|
(44,897)
|
|
(43,397)
|
Gross margin
|
|
$ 71,172
|
|
$ 70,030
|
|
$ 61,075
|
Gross margin
percentage
|
|
39.2 %
|
|
39.4 %
|
|
37.5 %
|
Depreciation and
amortization
|
|
45,430
|
|
44,897
|
|
43,397
|
Adjusted Gross
Margin
|
|
$
116,602
|
|
$
114,927
|
|
$
104,472
|
Adjusted Gross Margin
Percentage (1)
|
|
64.2 %
|
|
64.7 %
|
|
64.2 %
|
|
|
(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;
unaudited)
|
|
|
|
Three Months
Ended
|
|
|
June 30,
2023
|
|
March 31,
2023
|
|
June 30,
2022
|
Total
revenues
|
|
$ 21,687
|
|
$ 12,415
|
|
$ 14,343
|
Cost of operations
(excluding depreciation and amortization)
|
|
(18,099)
|
|
(8,988)
|
|
(11,774)
|
Depreciation and
amortization
|
|
—
|
|
—
|
|
—
|
Gross margin
|
|
$
3,588
|
|
$
3,427
|
|
$
2,569
|
Gross margin
percentage
|
|
16.5 %
|
|
27.6 %
|
|
17.9 %
|
Depreciation and
amortization
|
|
—
|
|
—
|
|
—
|
Adjusted Gross
Margin
|
|
$
3,588
|
|
$
3,427
|
|
$
2,569
|
Adjusted Gross Margin
Percentage (1)
|
|
16.5 %
|
|
27.6 %
|
|
17.9 %
|
|
|
(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
|
|
|
June 30,
2023
|
|
March 31,
2023
|
|
June 30,
2022
|
Net income
(loss)
|
|
$
17,517
|
|
$
(12,343)
|
|
$
8,901
|
Depreciation and
amortization
|
|
45,430
|
|
44,897
|
|
43,397
|
Unrealized loss on
derivatives
|
|
3,595
|
|
17,934
|
|
3,386
|
Deferred tax provision
(benefit)
|
|
3,282
|
|
(2,521)
|
|
1,116
|
Amortization of debt
issuance costs
|
|
5,626
|
|
5,445
|
|
3,417
|
Equity compensation
expense (1)
|
|
29
|
|
879
|
|
—
|
Transaction expenses
(2)
|
|
1,072
|
|
201
|
|
1,600
|
(Gain) loss on sale of
assets
|
|
(738)
|
|
17
|
|
—
|
Maintenance capital
expenditures
|
|
(10,940)
|
|
(4,803)
|
|
(9,320)
|
Discretionary Cash
Flow
|
|
$
64,873
|
|
$
49,706
|
|
$
52,497
|
Growth capital
expenditures (3)(4)
|
|
(32,529)
|
|
(35,815)
|
|
(54,689)
|
Proceeds from sale of
assets
|
|
1,023
|
|
32
|
|
1
|
Free Cash
Flow
|
|
$
33,367
|
|
$
13,923
|
|
$
(2,191)
|
|
|
(1)
|
For the three months
ended June 30, 2023 and March 31, 2023 there were $29.0 thousand
and $0.9 million, respectively, of non-cash adjustments for equity
compensation expense related to the time-vesting units.
|
(2)
|
Represents certain
costs associated with non-recurring professional services, our
equity owners' expenses and other costs.
|
(3)
|
For the three months
ended June 30, 2023, March 31, 2023 and June 30, 2022, growth
capital expenditures include a $2.0 million, $8.0 million and $10.1
million decrease in accrued capital expenditures,
respectively.
|
(4)
|
For the three months
ended June 30, 2023, March 31, 2023 and June 30, 2022, there were
$4.8 million, $2.4 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
|
|
|
June 30,
2023
|
|
March 31,
2023
|
|
June 30,
2022
|
Net cash provided by
operating activities
|
|
$
94,678
|
|
$
23,290
|
|
$
72,851
|
Maintenance capital
expenditures
|
|
(10,940)
|
|
(4,803)
|
|
(9,320)
|
Transaction expenses
(1)
|
|
1,072
|
|
201
|
|
1,600
|
(Gain) loss on sale of
assets
|
|
(738)
|
|
17
|
|
—
|
Change in operating
assets and liabilities
|
|
(18,800)
|
|
31,919
|
|
(11,736)
|
Other (2)
|
|
(399)
|
|
(918)
|
|
(898)
|
Discretionary Cash
Flow
|
|
$
64,873
|
|
$
49,706
|
|
$
52,497
|
Growth capital
expenditures (3)(4)
|
|
(32,529)
|
|
(35,815)
|
|
(54,689)
|
Proceeds from sale of
assets
|
|
1,023
|
|
32
|
|
1
|
Free Cash
Flow
|
|
$
33,367
|
|
$
13,923
|
|
$
(2,191)
|
|
|
(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 June 30, 2023, March 31, 2023 and June 30, 2022, growth
capital expenditures include a $2.0 million, $8.0 million and $10.1
million decrease in accrued capital expenditures,
respectively.
|
(4)
|
For the three months
ended June 30, 2023, March 31, 2023 and June 30, 2022, there were
$4.8 million, $2.4 million and $1.7 million of non-unit growth
capital expenditures, 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-announces-second-quarter-2023-results-including-record-quarterly-revenues-and-provides-full-year-2023-guidance-301897239.html
SOURCE Kodiak Gas Services, Inc.