Kodiak Gas Services (KGS) Q2 2024 earnings summary

Executive summary

• Achieved record Q2 2024 revenues of $310 million, up 52% year-over-year, and Adjusted EBITDA of $154.3 million, driven by the CSI acquisition and organic fleet growth.

• Completed CSI Compressco acquisition, expanding fleet horsepower by 40.9% and revenue-generating units by 90.3% year-over-year, creating the industry's largest contract compression fleet.

• Integration of CSI is ahead of schedule, with expected cost synergies raised to over $30 million from the initial $20 million estimate.

• Utilization remains high: 94% overall, with large horsepower assets above 98%.

• Increased quarterly dividend by 8% to $0.41 per share, reflecting strong performance and shareholder returns.

Financial highlights

• Q2 2024 revenues: $310 million; Adjusted EBITDA: $154.3 million (49.8% margin); net income: $6.2 million, down due to higher SG&A and integration costs.

• Excluding one-time items, Adjusted EBITDA would have been nearly $162 million.

• Contract services revenue: $276.3 million with 64% adjusted gross margin; other services revenue: $33.4 million with 16.4% margin.

• Maintenance CapEx: $19 million; net growth CapEx: $90 million; total debt at quarter-end: $2.5 billion; $411 million revolver availability.

• Q2 2024 EPS: $0.07 (basic), $0.06 (diluted); Discretionary Cash Flow: $90.6 million; Free Cash Flow: $0.6 million.

Outlook and guidance

• Full-year 2024 revenue guidance: $1.12–$1.18 billion; Adjusted EBITDA: $590–$610 million; Discretionary Cash Flow: $365–$385 million.

• Contract services segment: $1.0–$1.04 billion revenue, 64–66% margin; other services: $100–$140 million revenue, 14–17% margin.

• Maintenance CapEx for 2024: $60–$70 million; growth CapEx: $210–$230 million (excluding $50 million in non-recurring items).

• Expect to add ~70,000 horsepower by year-end 2024; new unit deliveries are effectively fully contracted through 2025.

• $1.3 billion in unsatisfied performance obligations for Contract Services, with $440.1 million expected to be recognized in 2024.