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.
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Summary Financial Data(in thousands, except percentages) |
||||||
|
Three Months Ended |
||||||
|
September 30, |
June 30, 2023 |
September 30, |
||||
|
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 |
|||
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(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, |
June 30, 2023 |
September 30, |
||||
|
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 |
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
[email protected]
Dennard Lascar Investor RelationsKen Dennard / Rick Black
[email protected]
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KODIAK GAS SERVICES, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (in thousands, except share and per share data) |
||||||
|
Three Months Ended |
||||||
|
September 30, |
June 30, 2023 |
September 30, |
||||
|
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 |
||||||
|
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 |
|||
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KODIAK GAS SERVICES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (in thousands, except share and per share data) |
||||
|
As of |
As of |
|||
|
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 |
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 |
|||
|
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, |
June 30, 2023 |
September 30, |
|||
|
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, |
June 30, 2023 |
September 30, |
||||
|
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, |
June 30, 2023 |
September 30, |
||||
|
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, |
June 30, 2023 |
September 30, |
||||
|
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, |
June 30, 2023 |
September 30, |
||||
|
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 (in thousands; unaudited) |
||||||
|
Three Months Ended |
||||||
|
September 30, |
June 30, 2023 |
September 30, |
||||
|
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. |
SOURCE Kodiak Gas Services, Inc.