Kodiak Gas Services, Inc.

What they do

Kodiak owns and operates a fleet of contract compression units, about 80% of its 4.5 million total fleet horsepower being large horsepower (over 1,000 hp per unit), under fixed-revenue term contracts with upstream and midstream customers. It is a market leader in the Permian Basin and also operates in the Eagle Ford Shale. Beyond compression, its Other Services segment provides station construction, customer-owned compression maintenance and overhaul, freight and crane charges, and parts sales. Following the April 1, 2026 acquisition of Distributed Power Solutions, the company renamed Contract Services as Compression Infrastructure and added a Power Infrastructure segment for distributed and behind-the-meter power generation.

Revenue drivers

• Compression Infrastructure — The legacy contract compression business, which generated record segment revenues of $315.1 million in Q2 2026, with a 46.8% gross margin percentage and 70.0% adjusted gross margin percentage. It operates about 4.5 million fleet horsepower, roughly 80% of which is large horsepower, under fixed-revenue term contracts in regions including the Permian Basin and Eagle Ford.
• Power Infrastructure — A new segment established after the April 1, 2026 DPS acquisition, covering distributed and behind-the-meter power generation. In Q2 2026, its first full quarter, Power Infrastructure fleet utilization was 89.6%. The company has announced a multi-year order for one gigawatt of gas turbines to be delivered by 2030.
• Other Services — Time-and-material offerings including station construction, customer-owned compression maintenance and overhaul, freight and crane charges, and parts sales. These services are often cross-sold with Contract Services and require no associated capital expenditures.

Recent performance

Second quarter 2026 revenue was $391.1 million, up from $345.8 million in the first quarter and $322.7 million in the third quarter of 2025. Compression Infrastructure segment revenues reached a record $315.1 million, with adjusted gross margin percentage of 70.0%. Net income attributable to common shareholders was $52.0 million, or $0.53 per diluted share, and adjusted EBITDA was a record $216.8 million, up 21.7% from Q2 2025. Quarterly net cash provided by operating activities was $99.5 million, with record discretionary cash flow of $163.3 million, up 40.2% from Q2 2025. Compression Infrastructure fleet utilization was 98.2%, a 100 basis point increase over Q2 2025.

Strategy

Kodiak focuses on large horsepower compression under long-term fixed-revenue contracts, which management believes produce more stable, recurring cash flow and higher margins. It continues to cross-sell Other Services to support cash flow without capital expenditure. Following the DPS acquisition, the company is expanding into Power Infrastructure, targeting more than two gigawatts of power generation capacity by the end of the decade and progressing detailed engineering and design on data center and energy microgrid projects. It has secured a turbine supply agreement for up to one gigawatt of generation capacity. The company also operates a Share Repurchase Program of up to $150.0 million expiring December 31, 2026, amended on August 4, 2025.

Risks

• Commodity price and production risk — Demand for Kodiak's compression infrastructure depends on continued natural gas and oil production, and sustained low prices could reduce customer activity and demand for its equipment and services.
• Customer concentration — Kodiak's four largest customers, all investment-grade, accounted for approximately 30% of total revenues for the six months ended June 30, 2026, and 32% for the year ended December 31, 2025, with no single customer above 15%.
• Interest rate and leverage risk — As of June 30, 2026, Kodiak had $2.72 billion of long-term debt and $380.9 million outstanding under its floating-rate ABL Facility; excluding swaps, a 1.0% rate increase would have added an estimated $3.1 million to ABL interest expense for the six months ended June 30, 2026.
• Integration and execution risk — The DPS acquisition closed April 1, 2026, and management is still integrating DPS operations and internal controls, while Power Infrastructure involves long sales cycles, extended lead times and limited availability of power systems.

Outlook

Management increased full year 2026 Adjusted EBITDA guidance to a range of $830 million to $860 million and discretionary cash flow guidance to a range of $570 million to $600 million. It reduced the midpoint for Power Infrastructure growth capital expenditures to reflect updated expectations for timing and amount of down payments for future deliveries. The CEO cited strong visibility into future U.S. natural gas production growth, a tight supply environment for compression equipment, and a pipeline of customer engagements supporting a path to more than two gigawatts of power generation capacity by the end of the decade.