What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2025-03-07 compared with 2024-03-07 · 585 added, 504 removed, 668 unchanged (62% of the section changed)

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However, in evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management was necessarily required to apply its judgment in evaluating the cost-benefit relationship of such possible controls and procedures.

Remediation of Previously Reported Material Weakness in Internal Control over Financial Reporting

As previously disclosed in the Company's Form 10-Q for the quarter ended June 30, 2023, a material weakness in our internal control over financial reporting existed as of June 30, 2023, relating to the proper inclusion of an out of period adjustment in the preparation of comparable interim unaudited condensed consolidated financial statements, which resulted in an adjustment to the amounts recorded for our derivative interest rate swaps for the period ended March 31, 2022.

During the year ended December 31, 2023, we implemented the following controls to improve our internal control over financial reporting to address this material weakness:

• Evaluated closing entries within each respective historical period and account balance by formally documenting and tracking out of period adjustments.

• Enhanced our assessment of out of period adjustments for inclusion in comparable interim unaudited condensed financial statements to ensure transactions are recorded in the appropriate reporting period.

• Engaged an outside firm to assist management with (i) reviewing our current processes, procedures, and systems and assessing the design of controls to identify opportunities to enhance the design of controls that would address relevant risks identified by management, and (ii) enhancing and implementing protocols to retain sufficient documentary evidence of operating effectiveness of such controls.

These enhanced controls and engagement of an outside firm to assist management resulted in an improved internal control environment that have been implemented for a sufficient length of time for management to conclude, through testing the design and operating effectiveness of these controls, that we have fully remediated the material weakness.

Management’s Annual Report on Internal Control over Financial Reporting

This Annual Report does not include a report of management’s assessment regarding internal control over financial reporting or an attestation report of the Company’s independent registered public accounting firm due to a transition period established by rules of the SEC for newly public companies.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f) and 15d-15(f).

Management conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting based on the criteria set forth in the Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on this evaluation, our management has concluded that our internal control over financial reporting was effective as of December 31, 2024.

As disclosed in Note 3.

Acquisitions and Divestitures to the consolidated financial statements included elsewhere in this Annual Report, Kodiak acquired CSI Compressco on April 1, 2024.

Following the close of the CSI Acquisition, we integrated a portion of CSI Compressco into our existing systems and internal control over financial reporting and related processes.

Consistent with interpretive guidance issued by the Staff of the SEC for newly acquired businesses, management has excluded a portion of CSI Compressco from our assessment of internal control over financial reporting as of December 31, 2024.

In accordance with such guidance, an assessment of recent business combinations may be omitted from management’s assessment of internal control over financial reporting for one year following the acquisition.

The excluded elements represent controls over approximately 22% of consolidated assets and approximately 22% of consolidated revenues as shown on our consolidated financial statements as of and for the year ended December 31, 2024.

Inherent Limitations on Effectiveness of Controls

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Changes in Internal Control over Financial Reporting

Table of Conten ts

Other than the controls implemented to remediate the previously identified material weakness described above, there have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the last fiscal quarter, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

On April 1, 2024, we completed the CSI Acquisition.

As part of the ongoing integration, we are in the process of incorporating the controls and related procedures of CSI Compressco.

Other than incorporating CSI Compressco’s controls there have been no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Other Information.

Securities Trading Plans of Directors and Executive Officers

During the year covered by this Annual Report, none of our directors or “officers” (as such term is defined in Rule16a-1(f) under the Exchange Act) adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement” (as each term is defined in Item 408(a) of Regulation S-K).

Second Amended and Restated Bylaws

On March 1, 2024, our board of directors approved and adopted the second amended and restated bylaws of the Company (as so amended and restated, the “Kodiak Bylaws”).

The bylaws were amended to clarify the scope of certain disclosure requirements relating to stockholder notices of director nominations and proposals of other business at a stockholder meeting.

The Kodiak Bylaws supersede and replace the Company’s amended and restated bylaws that were in effect immediately prior to the adoption of the Kodiak Bylaws.

The foregoing summary of the Kodiak Bylaws does not purport to be complete and is qualified in its entirety by reference to the full text of the Kodiak Bylaws, a copy of which is filed as Exhibit 3.2 to this Annual Report and is incorporated into this Item 9B by reference.

During the three months ended December 31, 2024, none of our directors or “officers” (as such term is defined in Rule16a-1(f) under the Exchange Act) adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement” (as each term is defined in Item 408(a) of Regulation S-K).

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

Table of Conten ts

Directors, Executive Officers and Corporate Governance

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Plan Category Number of securities to be issued upon exercise of outstanding options, warrants, and rights Weighted-average exercise price of outstanding options, warrants, and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))

(a)(1) (b)(2) (c)(3)

Equity compensation plans approved by security holders 1,945,134 $ — 5,703,962

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The PSUs included in this column represent the number of shares that may be issued upon vesting if the target performance goal is achieved during the three-year performance period.

See Note 12 (“Stockholders' Equity”) to our Financial Statements for further details of our Omnibus Plan.

Stockholders’ Equity to our consolidated financial statements for further details of our Omnibus Plan.

Because the number of shares of common stock to be issued upon settlement of outstanding PSUs is subject to performance conditions, the number of shares of common stock actually issued may be substantially more or less than the number reflected in this column.

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Certain Relationships and Related Transactions, and Director Independence

Table of Conten ts

The information required by Item 13 is incorporated herein by reference from our definitive proxy statement, which will be filed no later than 120 days after December 31, 2024.

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The information required by Item 14 is incorporated herein by reference from our definitive proxy statement, which will be filed no later than 120 days after December 31, 2024.

Table of Conten ts

Exhibits and Financial Statement Schedules

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(incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on July 5, 2023).

3.2 Certificate of Designations of Series A Preferred Stock of Kodiak Gas Services, Inc.

(incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on April 1, 2024).

Second Amended and Restated Bylaws of Kodiak Gas Services, Inc.

6 unchanged sentences

Bank Trust Company, National Association, as trustee (including Form of Note (incorporated by reference to the Registrant’s Current Report on Form 8-K filed with the SEC on February 2, 2024).

Description of Capital Stock of Kodiak Gas Services, Inc.

Kodiak Gas Services, Inc.

9 unchanged sentences

333-271050) filed with the SEC on June 20, 2023).

Table of Conten ts

10.7 First Amendment to Fourth Amended and Restated ABL Credit Agreement, dated as of May 31, 2023, among Frontier Intermediate Holding, LLC, Kodiak Gas Services, LLC, the other obligors party thereto, the lenders party thereto, and JP Morgan Chase Bank, N.A., as administrative agent (incorporated by reference to Exhibit 10.2 to the Registrant’s Registration Statement on Form S-1 (File No.

7 unchanged sentences

Executive Severance Plan of Kodiak Gas Services, Inc.

(incorporated by reference to Exhibit 10.11 to the Registrant’s Annual Report on Form 10-K filed with the SEC on March 7, 2024).

Form of Executive Severance Plan Participation Agreement of Kodiak Gas Services, Inc.

1 unchanged sentence

10.13 Assumption, Ratification and Confirmation Agreement, dated as of June 29, 2023, by and among Kodiak Gas Services, Inc., Frontier Intermediate Holding, LLC, and JPMorgan Chase Bank, N.A., as administrative agent (incorporated by reference to Exhibit 10.12 to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on November 9, 2023).

L ist of Subsidiaries

10.14 Registration Rights Agreement, dated as of April 1, 2024 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on April 1, 2024).

10.15 Sixth Amended and Restated Limited Liability Company Agreement of Kodiak Gas Services, LLC, dated as of April 1, 2024 (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on April 1, 2024).

14.1 Code of Business Conduct, as amended May 2024 (incorporated by reference to Exhibit 14.1 to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on May 9, 2024).

19.1* Kodiak Gas Services, Inc.

Insider Trading Policy

List of Subsidiaries

Consent of BDO USA, P.C.

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97.1 Clawback Policy of Kodiak Gas Services, Inc.

(incorporated by reference to Exhibit 99.7 to the Registrant’s Annual Report on Form 10-K filed with the SEC on March 7, 2024).

101.INS* Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.

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† Management compensatory plan or contract.

Table of Conten ts

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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/s/ Terry Bonno Director

Table of Conten ts

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

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Note 1 – Organization and Description of Business

Note 2 – Basis of Presentation and Accounting Policies

Note 2 – Summary of Significant Accounting Policies

Note 3 – Acquisitions and Divestitures

Note 4 – Revenue Recognition

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Note 9 – Leases

Note 10 – Long-Lived and Other Asset Impairment

Note 11 – Debt and Credit Facilities

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Note 1 5 – Commitments and Contingencies

Note 14 – Prepaid Expenses and Other Current Assets

Note 1 6 – Accrued Liabilities

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Note 2 0 – Segments

Note 20 – Earnings Per Common Share

Note 2 1 – Subsequent Events

Table of Conten ts

Note 2 1 – Earnings Per Share of Common S t ock

N ote 2 2 - Related Party Transactions

Report of Independent Registered Public Accounting Firm

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March 6, 2025

Table of Conten ts

KODIAK GAS SERVICES, INC.

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Cash and cash equivalents $ 4,750 $ 5,562

Accounts receivable, net 113,192 97,551

Accounts receivable, net of allowance of $ 12,629 and $ 8,050 , respectively

253,637 113,192

Inventories, net 103,341 76,238

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Operating lease right-of-use assets, net 53,754 33,716

Finance lease right-of-use assets, net 5,696 —

Goodwill 415,213 305,553

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Long-term debt, net of unamortized debt issuance cost 2,581,909 1,791,460

Operating lease liabilities, net of current portion 34,468 6,754

Operating lease liabilities 49,748 34,468

Finance lease liabilities 3,514 —

Deferred tax liabilities 103,826 62,748

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Stockholders’ equity:

Preferred stock, par value $ 0.01 par value;

50,000,000 shares of preferred stock authorized, zero issued as of December 31, 2023 and 2022, respectively

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 December 31, 2023 and 2022, respectively

Preferred stock, ( 50.0 million authorized, $ 0.01 par value)

0.8 million and zero shares issued and outstanding as of December 31, 2024 and 2023, respectively

Common stock, ( 750.0 million shares authorized, $ 0.01 par value)

89.2 million and 77.4 million issued and 87.8 million and 77.4 million outstanding as of December 31, 2024 and 2023, respectively

Additional paid-in capital 1,305,375 963,760

Treasury stock, at cost ( 1.4 million and zero shares held as of December 31, 2024 and 2023, respectively)

Noncontrolling interest 13,694 —

Retained earnings 93,637 178,119

2 unchanged sentences

See accompanying notes to the consolidated financial statements.

Table of Conten ts

KODIAK GAS SERVICES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share data)

(in thousands, except per share data)

Year Ended December 31,

2024 2023 2022

Compression Operations $ 735,605 $ 654,957 $ 583,070

Contract Services $ 1,034,173 $ 735,605 $ 654,957

Other Services 125,138 114,776 52,956

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Cost of operations (exclusive of depreciation and amortization shown below):

Compression Operations (related party amount of $ 138 for the year ended December 31, 2023)

257,092 225,715 192,813

Contract Services 355,016 257,092 225,715

Other Services 103,360 93,779 41,636

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Long-lived asset impairment 9,921 — —

(Gain) loss on sale of property, plant and equipment ( 777 ) ( 874 ) 426

Loss (gain) on sale of assets 29,612 ( 777 ) ( 874 )

Total operating expenses 909,861 606,271 485,822

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Gain on derivatives 24,017 20,266 83,116

Other income (expense) 31 17 ( 99 )

Other (expense) income, net ( 415 ) 31 17

Total other expenses ( 173,542 ) ( 208,974 ) ( 82,734 )

Income before income taxes 75,908 35,136 139,357

Income tax expense (benefit) 15,070 33,092 ( 58,573 )

Income tax expense 25,574 15,070 33,092

Net income 50,334 20,066 106,265

Net income attributable to noncontrolling interests 439 — —

Net income attributable to common shareholders $ 49,895 $ 20,066 $ 106,265

Earnings per share:

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See accompanying notes to the consolidated financial statements.

Table of Conten ts

KODIAK GAS SERVICES, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except share data)

Common Shares Additional Paid- In Capital Retained Earnings (Accumulated Deficit) Total Stockholders’ Equity

Shares Amount

(in thousands)

Common Shares Preferred Shares Additional Paid- In Capital Treasury Shares Noncontrolling Interest Retained Earnings Total Stockholders’ Equity

Shares Amount Shares Amount Shares Amount

Balance, January 1, 2022 59,000 $ 590 — $ — $ 871,403 — $ — $ — $ 88,078 $ 960,071

Contribution from parent — — 24,000 — 24,000

Equity compensation - profits interests — — — — ( 214 ) — — — 971 757

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Balance, December 31, 2022 59,000 $ 590 — $ — $ 33,189 — $ — $ — $ 195,314 $ 229,093

Equity compensation - profits interests — — ( 214 ) 971 757

Distribution to parent — — — — ( 33,189 ) — — — ( 9,111 ) ( 42,300 )

Net income — — — 106,265 106,265

Balance, December 31, 2022 59,000,000 590 33,189 195,314 229,093

Distribution to parent — — ( 33,189 ) ( 9,111 ) ( 42,300 )

Proceeds from initial public offering, net of underwriter discounts 18,400 184 — — 277,656 — — — — 277,840

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Debt novation — — — — 692,099 — — — — 692,099

Equity compensation - profits interests — — — 1,643 1,643

Equity compensation - Omnibus Plan — — 4,271 — 4,271

Equity compensation — — — — 4,271 — — — 1,643 5,914

Incentive award conversion — — — — 582 — — — — 582

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Balance, December 31, 2023 77,400 $ 774 — $ — $ 963,760 — $ — $ — $ 178,119 $ 1,142,653

Issuance of common shares for business acquisition 6,786 68 — — 188,099 — — — — 188,167

Issuance of preferred shares and noncontrolling interest for business acquisition — — 5,562 56 ( 124 ) — — 154,186 — 154,118

Preferred shares and noncontrolling interest converted to common shares 4,730 47 ( 4,730 ) ( 47 ) 136,088 — — ( 136,088 ) — —

Equity compensation — — — — 17,008 — — 650 — 17,658

Offering costs — — — — ( 1,162 ) — — — — ( 1,162 )

Dividends and dividends equivalents paid to stockholders — — — — — — — — ( 134,803 ) ( 134,803 )

Restricted stock units vested under the Omnibus Plan, net of 107 shares withheld for taxes

324 3 — — ( 2,769 ) — — — — ( 2,766 )

Taxes withheld on issuance of stock-based awards and conversion of preferred shares — — — — 4,540 — — — — 4,540

Repurchase of common shares — — — — — 1,435 ( 40,000 ) — — ( 40,000 )

Distributions to noncontrolling interest — — — — — — — ( 5,529 ) — ( 5,529 )

Net income — — — — — — — 439 49,895 50,334

Other — — — — ( 65 ) — — 36 426 397

Balance, December 31, 2024 89,240 $ 892 832 $ 9 $ 1,305,375 1,435 $ ( 40,000 ) $ 13,694 $ 93,637 $ 1,373,607

See accompanying notes to the consolidated financial statements.

Table of Conten ts

KODIAK GAS SERVICES, INC.

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Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 182,869 174,463 160,045

Stock-based compensation expense 5,914 971 1,224

Depreciation and amortization expense 260,272 182,869 174,463

Long-lived asset impairment 9,921 — —

Equity compensation expense 17,658 5,914 971

Amortization of debt issuance costs 11,969 13,556 13,727

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Inventory reserve 559 500 500

(Gain) loss on sale of property, plant and equipment ( 777 ) ( 874 ) 426

Loss (gain) on sale of assets 29,612 ( 777 ) ( 874 )

Change in fair value of derivatives 1,234 42,890 ( 87,363 )

Deferred tax provision (benefit) 7,863 27,301 ( 60,972 )

Deferred tax provision 15,429 7,863 27,301

Loss on extinguishment of debt — 4,359 —

Changes in operating assets and liabilities:

Changes in operating assets and liabilities, exclusive of effects of business acquisition:

Accounts receivable ( 102,887 ) ( 22,742 ) ( 16,887 )

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Contract liabilities 9,366 6,600 5,905

Other assets ( 691 ) — —

Net cash provided by operating activities 327,987 266,326 219,846

Cash flows from investing activities:

Net cash acquired in acquisition of CSI Compressco LP 9,458 — —

Purchase of property, plant and equipment ( 336,956 ) ( 219,795 ) ( 259,349 )

Proceeds from sale of property, plant and equipment 1,449 8,082 13

Proceeds from sale of assets 35,030 1,449 8,082

Other — ( 75 ) ( 115 )

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Payments on debt instruments ( 2,475,572 ) ( 1,243,981 ) ( 724,895 )

Principal payments on other borrowings ( 5,634 ) — —

Payment of debt issuance cost ( 16,271 ) ( 32,768 ) ( 27,819 )

Principal payments on finance leases ( 2,421 ) — —

Proceeds from initial public offering, net of underwriter discounts — 277,840 —

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Dividends paid to stockholders ( 133,886 ) ( 29,793 ) —

Contribution from parent — — 24,000

Repurchase of common shares ( 40,000 ) — —

Cash paid for shares withheld to cover taxes ( 2,766 ) — —

Taxes withheld on issuance of stock-based awards and conversion of preferred shares 4,540 — —

Distribution to parent — ( 42,300 ) ( 838,000 )

Distribution to noncontrolling interest ( 5,529 ) — —

Net cash (used in) provided by financing activities ( 36,331 ) ( 62,774 ) 23,172

Net (decrease) increase in cash and cash equivalents ( 14,869 ) ( 8,364 ) 4,690

Cash and cash equivalents - beginning of year 20,431 28,795 24,105

Cash and cash equivalents - end of year $ 5,562 $ 20,431 $ 28,795

Net decrease in cash and cash equivalents ( 812 ) ( 14,869 ) ( 8,364 )

Cash and cash equivalents - beginning of period 5,562 20,431 28,795

Cash and cash equivalents - end of period $ 4,750 $ 5,562 $ 20,431

Supplemental cash disclosures:

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Supplemental disclosure of non-cash financing activities:

Dividends equivalent $ ( 917 ) $ — $ —

Non-cash debt novation $ — $ ( 689,829 ) $ —

Non-cash loss on extinguishment of debt

$ ( 563 ) $ — $ —

Non-cash offering costs $ ( 25 ) $ — $ —

See accompanying notes to the consolidated financial statements.

Table of Conten ts

KODIAK GAS SERVICES, INC.

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Kodiak Gas Services, Inc.

(the “Company”, “Kodiak” or “KGS”) began operations in 2011 as Kodiak Gas Services, LLC.

Shortly after commencing operations, the Company acquired all the assets and liabilities of KGS Investments, Inc.

On February 8, 2019, Kodiak was acquired by EQT Partners through Frontier Acquisition I, Inc.

and Frontier Acquisition II, Inc.

(collectively, “Frontier”).

On October 24, 2019, Kodiak acquired Pegasus Optimization Managers, LLC (“Pegasus”), a provider of natural gas compression operations.

Kodiak’s key areas of operation are located in the Permian Basin and Eagle Ford Shale with other areas of operation in the Powder River Basin, Mid-Continent Region, DJ Basin, Appalachian Basin, Barnett Shale / East Texas Region and Black Warrior Basin.

Kodiak is an operator of contract compression infrastructure and related services in the U.S.

The Company operates the compression units under fixed-revenue contracts with upstream and midstream customers.

The Company manages business through two operating segments:

Compression Operations and Other Services.

Compression Operations consists of operating Company- owned and customer-owned compression infrastructure for our customers to enable the production and gathering and transportation of natural gas and oil.

Other Services consists of station construction, maintenance and overhaul, and other ancillary time and material-based offerings.

See Note 19 (“Segments”) to our Consolidated Financial Statements.

On June 20, 2023, Kodiak’s board of directors approved a 590,000 -for-1 split (the “Stock Split”) of the Company’s common stock.

Prior to the consummation of the initial public offering of the Company’s common stock (the “IPO”), the Company was 100 % owned by its parent, Frontier TopCo Partnership, L.P.

(“Kodiak Holdings”).

The Stock Split became effective upon filing of the Company’s Amended and Restated Certificate of Incorporation on June 28, 2023 in connection with the IPO.

The par value of the Company’s common stock was not adjusted as a result of the Stock Split, however, the number of shares that the Company is authorized to issue increased to 750,000,000 .

All share and per share data shown in the accompanying consolidated financial statements and related notes has been retroactively revised to give effect to the Stock Split for all periods presented.

On June 28, 2023, Kodiak’s Registration Statement on Form S-1 relating to the IPO was declared effective by the U.S.

Securities and Exchange Commission (“SEC”) and the shares of its common stock began trading on the New York Stock Exchange on June 29, 2023.

On July 3, 2023, the Company issued and sold 16,000,000 shares of common stock at a price to the public of $ 16.00 per share.

The Company received net proceeds of approximately $ 230.8 million, after deducting expenses and underwriting discounts and commissions payable by the Company.

On July 13, 2023, the Company issued and sold an additional 2,400,000 shares of common stock at a price to the public of $ 16.00 per share (referred to herein as the “over allotment”).

The Company received net proceeds of approximately $ 36.2 million, after deducting underwriting discounts.

The net proceeds were used for repayment of existing indebtedness, as described further in Note 9 (“Debt and Credit Facilities”), and general corporate purposes.

After giving effect to these transactions, had 77,400,000 shares of common stock issued and outstanding.

Pending Merger with CSI Compressco

On December 19, 2023, Kodiak and certain of its subsidiaries entered into an agreement and plan of merger with CSI Compressco LP, a Delaware limited partnership (“CSI Compressco”), and CSI Compressco GP LLC, the sole general partner of CSI Compressco (the “Merger”) pursuant to which Kodiak agreed to acquire 100 % of the issued and outstanding partnership interests of CSI Compressco in an all-equity transaction.

Under certain circumstances, a termination of the merger agreement may occur.

In the event of a termination, CSI Compressco may be required to pay the Company a breakup fee equal to $ 15 million or the Company may be required to pay CSI Compressco a reverse breakup fee equal to $ 20 million.

In connection with the closing of the Merger, Kodiak intends to (i) repay all amounts outstanding under CSI Compressco’s existing (a) Loan and Security Agreement, dated as of June 29, 2018, as amended, (b) Loan, Security and Guaranty Agreement, dated as of January 29, 2021, as amended, and to terminate such agreements and any security interests and guarantees in connection therewith and (ii) call for redemption, contingent upon consummation of the Merger, CSI Compressco’s existing (a) 7.50 % First Lien Notes due 2025 and (b) 10.00 %/ 10.75 % Second Lien Notes due 2026, and to terminate any security interests and guarantees in connection therewith.

Table of Conten ts

We expect to close the Merger in the second quarter of 2024, subject to the satisfaction of customary closing conditions, although we cannot assure you that we will complete the Merger on the terms contemplated or at all.

(the “Company” or “Kodiak”) is an operator of contract compression infrastructure and related services primarily in the U.S.

The Company operates compression units under fixed-revenue contracts with upstream and midstream customers.

Kodiak operates its business and the majority of the Company’s assets and liabilities under its subsidiary Kodiak Gas Services, LLC (“Kodiak Services”).

Kodiak is the primary beneficiary of Kodiak Services, which is a variable interest entity, since the Company has the power to direct the activities that most significantly impact Kodiak Services’ economic performance and the Company has the right (and obligation) to receive benefits (and absorb losses) of Kodiak Services that could be potentially significant to the Company.

Summary of Significant Accounting Policies

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All significant intercompany transactions and balances have been eliminated upon consolidation.

In addition, certain prior year amounts have been reclassified to conform to the current year presentation.

Segment Information

The Company operates in two business segments.

Operating segments are defined as components of an enterprise about which separate financial information is evaluated regularly by the chief operating decision maker, who is the Company’s chief executive officer (“CEO”), in deciding how to allocate resources and assessing performance.

The Company has identified the operating segments as Compression Operations and Other Services.

The CEO allocates resources and assesses performance of the two operating segments based upon discrete financial information at the operating segment level.

Compression Operations consists of operating Company-owned and customer-owned compression infrastructure for its customers, pursuant to fixed-revenue contracts to enable the production, gathering and transportation of natural gas and oil.

Other Services consists of a full range of contract services to support the needs of our customers including station construction, maintenance and overhaul, and other ancillary time and material-based offerings.

See Note 19 (“Segments”) to our Consolidated Financial Statements.

Use of Estimates

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Actual results could differ from those estimates and assumptions used in preparing the accompanying consolidated financial statements.

Significant estimates and assumptions that impact these consolidated financial statements relate to, among other things, capitalized installation costs and commissioning costs, fair value of derivative instruments, estimates of cost to complete on revenue contracts with customers, grant date fair value for the share-based equity awards, forecasting of our income tax (provision) benefit and the valuation of deferred taxes and useful lives of and salvage value of property, plant and equipment.

Significant estimates and assumptions that impact these consolidated financial statements relate to, among other things, fair value of derivative instruments, estimates of cost to complete on revenue contracts with customers, grant date fair value for the share-based equity awards, forecasting of our income tax (provision) benefit and the valuation of deferred taxes, useful lives of and salvage value of property, plant and equipment, fair value of assets acquired and liabilities assumed in business combinations, and sales tax liabilities.

Cash and Cash Equivalents

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Revenue Recognition

The Company recognizes revenue when obligations under the terms of a contract with customer are satisfied.

The Company recognizes revenue when obligations under the terms of a contract with the customer are satisfied.

Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products or providing services to our customers.

See Note 3 (“Revenue Recognition”) for more detailed information about revenue recognition for the years ended December 31, 2023, 2022 and 2021.

Revenue Recognition for more detailed information about revenue recognition.

Accounts Receivable and Allowance for Credit Losses

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Recoveries of accounts receivable previously written off are recorded when received.

There was $ 8.1 million and $ 0.9 million in allowance for credit losses at December 31, 2023 and 2022, respectively.

We utilize an aging schedule to determine our allowance for credit losses, and measure expected credit losses on a collective (pool) basis when similar risk characteristics exist.

The risk characteristics are assessed based on the financial strength of the customer and overall business climate in which customer operates.

If a customer does not share similar risk characteristics with other customers, we evaluate the customer’s outstanding trade receivables for expected credit losses on

Table of Conten ts

an individual basis.

If a customer does not share similar risk characteristics with other customers, we evaluate the customer’s outstanding trade receivables for expected credit losses on an individual basis.

Each reporting period, we reassess our customers’ risk profiles and determine the appropriate asset pool classification, or perform individual assessments of expected credit losses, based on the customers’ risk characteristics at the reporting date.

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Serialized inventories' cost is determined using the specific-identification cost method.

The Company recognizes decreases in inventory values for certain items through reductions of carrying values to lower of cost or net realizable value on an as needed basis.

The Company recognizes decreases in inventory values through reductions of carrying values to lower of cost or net realizable value on an as needed basis.

Periodically, obsolescence reviews are performed on slow-moving inventories and reserves are established based on estimated shrinkage between physical inventory counts, changes in customer demand, technological developments, or other economic factors.

For the years ended December 31, 2023 and 2022, the Company wrote off inventory reserves of $ 0.5 million and $ 0.5 million, respectively.

For the year ended December 31, 2021, there was no write off of inventory reserves.

Property, Plant and Equipment, net

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Long-lived assets, including property, plant, and equipment, and other finite-lived identifiable intangible assets, are reviewed for impairment whenever events or changes in circumstances, including the removal of compressors from the active fleet, indicate that the carrying amount of an asset may not be recoverable.

Such events and changes may include significant changes in performance relative to expected operating results, significant changes in asset use, significant negative industry or economic trends, and changes in the Company’s business strategy, among others.

Such events may include significant changes in performance relative to expected operating results, significant changes in asset use, significant negative industry or economic trends, and changes in the Company’s business strategy, among others.

Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the assets to estimated future undiscounted net cash flows expected to be generated by the asset.

Impairment losses are recognized in the period in which the impairment occurs and represent the excess of the asset carrying value over its fair value.

No impairment was recorded for the years ended December 31, 2023 and 2022.

In December 2021, certain compression equipment was identified as not being part of the Company’s ongoing operations.

As such, a recoverability assessment was performed, and fair value was assessed using a combination of a market and cost approach.

Based on the assessed fair value, an impairment expense of $ 9.1 million was recorded for the year ended December 31, 2021.

As a result of the Company’s adoption of Financial Accounting Standard Board (“FASB”) Accounting Standards Codification (“ASC”) 842 Leases on January 1, 2022, the Company recorded an operating lease right-of-use (“ROU”) asset and an operating lease liability on the consolidated balance sheet.

Under previous guidance, operating leases were not recorded to the balance sheet.

The Company determines if an arrangement is a lease at commencement date.

Operating leases are included in lease right-of-use assets, and operating lease liabilities in the Company’s consolidated balance sheets.

Impairment losses are recognized in the period in which the impairment occurs and represent the excess of the asset carrying value over its estimated future discounted cash flows.

The Company determines if an arrangement is a lease at commencement date and the leases are included in either operating or financing lease right-of-use assets ("ROU"), and operating or finance lease liabilities in the Company’s consolidated balance sheets.

ROU lease assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease.

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ROU lease assets also include any lease payments made and exclude lease incentives.

The Company’s lease terms may include options to extend or terminate the

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lease when it is reasonably certain that the Company will exercise that option.

The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.

Short-term leases (those with an initial term of twelve months or less upon commencement)are not recorded on our consolidated balance sheet.

Lease expense for lease payments is recognized on a straight-line basis over the lease term.

Variable costs such as the Company’s proportionate share of actual costs for utilities, common area maintenance, property taxes and insurance are not included in the lease liability and are recognized in the period in which they are incurred.

For short-term leases (leases that have terms of twelve months or less upon commencement), lease payments are recognized on a straight-line basis and no ROU assets are recorded.

For certain equipment leases, such as office equipment, we have elected to account for the lease and non-lease components as a single lease component.

The Company has elected to apply the bright line thresholds as established under ASC 840 in determining the classification of leases under ASC 842 as an accounting policy election.

As it relates to the Company’s compression operations service agreements, in which the Company is a lessor, the services' nonlease component is predominant over the compression package lease component and therefore recognition of these agreements follows the ASC 606 Revenue guidance.

For finance leases, we amortize our right-of-use assets on a straight-line basis over the shorter of the asset’s useful life or the lease term.

Additionally, interest expense is recognized each period related to the accretion of our lease liabilities over their respective lease terms.

Identifiable Intangible Assets, net

Identifiable intangible assets acquired in connection with business combinations are recorded at fair value as of the date of acquisition.

The cost of identifiable intangible assets with finite lives are amortized using the straight-line method over their estimated useful lives, which is the period over which the assets are expected to contribute directly or indirectly to future cash flows.

The cost of identifiable intangible assets with finite lives are amortized using the straight-line method over their estimated useful lives, generally ranging from 5 to 20 years, which is the period over which the assets are expected to contribute directly or indirectly to future cash flows.

The Company’s identifiable intangible assets consist of trade name and customer relationships.

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As of December 31, 2024 and 2023, the Company had two reporting units;

however, the entire goodwill balance was allocated to the Company’s Compression Operations reporting unit.

however, the entire goodwill balance was allocated to the Company’s Contract Services reporting unit.

The Company conducts an annual impairment test during the fourth quarter or more frequently if there are indicators that goodwill may be impaired.

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The Company records impairment when the carrying value exceeds the fair value and to the extent there is remaining goodwill in the reporting unit.

The Company performed a qualitative test during its fourth quarter and noted that there were no events or circumstances occurring that indicated that the fair value of the Compression Operations reporting unit may be below its carrying amount.

The Company performed a qualitative test during its fourth quarter and concluded that there were no events or circumstances that occurred indicating it was more likely than not that the fair value of the Contract Services reporting unit was below its carrying amount.

No goodwill impairment was recorded for the years ended December 31, 2024, 2023, or 2022.

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A number of significant assumptions and estimates are involved in the application of the income approach to forecast future cash flows, including revenue and operating income growth rates, discount rates and other factors.

While we believe that our estimates of current value are reasonable, if actual results differ from the estimates and judgments used including such items as future cash flows and the volatility inherent in markets which we serve, impairment charges against the carrying value of those assets could be required in the future.

While we believe that our estimates of current fair value are reasonable, if actual results differ from the estimates and judgments used including such items as future cash flows and the volatility inherent in markets which we serve, impairment charges against the carrying value of those assets could be required in the future.

Stock-based Compensation

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We do not estimate expected forfeitures, but recognize them as they occur.

See Note 12 (“Stockholders' Equity”) for additional information related to stock based compensation.

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Stockholders’ Equity for additional information related to stock-based compensation.

Earnings Per Share

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Diluted earnings per share is computed by dividing net income attributable to common stockholders by the Basic Weighted Average Shares Outstanding plus all potential dilutive common shares outstanding during the period.

For the year ended December 31, 2023, the Company had 268,388 dilutive common shares outstanding.

The Company did not have any dilutive common shares outstanding during the years ended December 31, 2022 and 2021, respectively.

Earnings Per Share of Common Stock for additional information related to earnings per share.

Debt Issuance Costs

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Unamortized debt issuance costs are recorded as a direct deduction from the carrying amount of the related loans on the consolidated balance sheets.

Costs incurred in connection with revolving credit facilities are capitalized and amortized over the term of the loan.

Derivative Instruments

In accordance with ASC Topic 815, Derivatives and Hedging (“ASC Topic 815”), the Company recognizes derivative instruments on the consolidated balance sheets at fair value and classifies them as current or long-term depending on the maturity of the derivative instrument and whether the net carrying value is in a net liability position.

The Company recognizes derivative instruments on the consolidated balance sheets at fair value and classifies them as current or long-term depending on the maturity of the derivative instrument and whether the net carrying value is in a net liability position.

The accounting for changes in the fair value of derivatives depends on the intended use of the derivative and whether the Company has elected to designate the derivative as being in a hedging relationship.

Currently, the Company’s interest rate swaps and interest rate collars are intended to economically hedge certain risks (“economic hedges”).

The Company has elected not to apply hedge accounting to these instruments under ASC Topic 815 and does not enter into such instruments for speculative purposes;

accordingly, all realized and unrealized gains and losses on derivative instruments have been recognized in the accompanying consolidated statements of operations as gain (loss) on derivatives.

The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and deferred tax liabilities for the expected future tax consequences of events that have been included in the financial statements.

Under this method, the Company determines deferred tax assets and deferred tax liabilities on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse.

Currently, the Company’s interest rate swaps are intended to economically hedge certain risks (“economic hedges”).

The Company has elected not to apply hedge accounting to these instruments and does not enter into such instruments for speculative purposes;

accordingly, all realized and unrealized gains and losses on derivative instruments have been recognized in the accompanying consolidated statements of operations as gain on derivatives.

We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and deferred tax liabilities for the expected future tax consequences of events that have been included in the financial statements.

Under this method, we determine deferred tax assets and deferred tax liabilities on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse.

The effect of a change in tax rates on deferred tax assets and deferred tax liabilities is recognized in income in the period that includes the enactment date.

Management is not aware of any changes in tax laws or rates that would have a material impact on our financial position, results of operations or cash flows.

The Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized.

In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, carryback potential if permitted under the tax law, and results of recent operations.

The Company records a valuation allowance when it is more likely than not that some portion or all of the deferred tax assets will not be realized.

If the Company does not generate, or expect to generate, sufficient taxable income, we may not realize the full benefit from our deferred tax assets, which would require us to record a valuation allowance in our tax provision in future years.

As of each reporting date, we consider new evidence to evaluate the realizability of our net deferred tax asset position by assessing the available positive and negative evidence.

Changes to the valuation allowance are reflected in the statement of operations.

If the Company determines that it would not be able to realize its deferred tax assets in the future, in excess of their net recorded amount, the Company would increase the valuation allowance against deferred tax assets, which would increase the provision for income taxes.

We recognize deferred tax assets to the extent that we believe that these assets are more likely than not to be realized.

In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, carryback potential if permitted under the tax law, and results of recent operations.

If we determine that we would be able to realize our deferred tax assets in the future, in excess of their net recorded amount, we would make an adjustment to the valuation allowance against deferred tax assets, which would reduce the provision for income taxes.

The Company applies a “more-likely-than-not” recognition threshold for all tax uncertainties.

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However, fiscal years 2020 and later remain subject to examination by the IRS and respective states in the U.S.

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On August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”) was enacted into law.

The IRA contained significant tax law changes, including a corporate alternative minimum tax (“CAMT”) of 15% on adjusted financial statement income for applicable corporations, and a 1% excise tax on stock repurchases after December 31, 2022.

The IRA also extended certain federal tax credits and creates new tax credits to promote sustainability initiatives.

The Company examined the IRA and determined that it did not have a material impact on the consolidated financial statements.

The IRA contains significant tax law changes, including a corporate alternative minimum tax (“CAMT”) of 15% on adjusted financial statement income for applicable corporations, and a 1% excise tax on stock repurchases after December 31, 2022.

The IRA also extends certain federal tax credits and creates new tax credits to promote sustainability initiatives.

The Company examined the IRA and determined that it does not have a material impact on the consolidated financial statements.

The Company will continue to monitor this legislation as additional guidance is issued by the U.S.

Treasury Department.

In December 2021, the Organization for Economic Co-operation and Development ("OECD") published Model Global Anti-Base Erosion rules under Pillar Two.

The model rules seek to ensure that multinational corporations pay tax at a minimum rate of 15% in each jurisdiction in which they do business.

Various countries in which we operate have implemented Pillar Two rules which became effective starting in 2024.

The Company analyzed the enacted legislation and determined that it did not have a material impact on our financial statements.

The Company will continue to evaluate Pillar Two legislation as it is enacted to determine its impact on the tax provision.

Fair Value Measurements

The Company uses any of three valuation approaches to measure fair value:

the market approach, the income approach, and the cost approach in determining the appropriate valuation methodologies based on the nature of the asset or liability being measured and the reliability of the inputs used in arriving at fair value.

The Company records certain financial assets and liabilities at fair value.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

These fair value measurements incorporate nonperformance risk (i.e., the risk that an obligation will not be fulfilled) and credit risk.

The Company follows the provisions of ASC 820, Fair Value Measurements (“ASC 820”) for non-financial assets and liabilities measured on a non-recurring basis such as on a potential impairment loss related to goodwill and long-lived assets and assets and liabilities acquired in a business combination.

These measurements would be based on Level 3 inputs such as unobservable inputs, complex models, management estimates and sensitivity analysis.

The inputs used in applying valuation techniques include assumptions that market participants would use in pricing the asset or liability (i.e., assumptions about risk).

Inputs may be observable or unobservable.

The Company uses observable inputs in the Company’s valuation techniques and classifies those inputs in accordance with the fair value hierarchy established by applicable accounting guidance, which prioritizes those inputs.

The fair value hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement).

In the absence of active markets for identical assets or liabilities, such measurements involve developing assumptions based on market observable data and, in the absence of such data, internal information that is consistent with what market participants would use in a hypothetical transaction that occurs at the measurement date.

Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our market assumptions.

Preference is given to observable inputs.

The three levels of the valuation hierarchy are defined as follows:

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The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

As of December 31, 2023 and 2022, the Company’s financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, derivative instruments and long-term debt.

The carrying amounts of cash and cash equivalents, accounts receivable, and accounts payable are representative of their respective Level 1 fair values due to the short-term maturity of these instruments.

The Company's long-term debt applies floating interest rates to outstanding amounts;

therefore, the carrying amount of the ABL facility approximates its Level 3 fair value.

The Company records derivative instruments at fair value using level 2 inputs of the fair value hierarchy.

The interest rate swaps and interest rate collar are valued using a discounted cash flow analysis on the expected cash flows of each derivative using observable inputs including interest rate curves and credit spreads.

See Note 10 (“Derivative Instruments”) and Note 11 (“Fair Value Measurements”) for more details.

The contingent consideration liability from a prior year acquisition is measured at fair value each reporting period, using Level 3 unobservable inputs such as probability assessments of future cash flows, and changes in estimates of fair value are recognized in earnings.

See Note 11 (“Fair Value Measurements”) for more details.

Fair Value Measurements for more details.

Concentrations of Credit Risk

The Company’s assets that are potentially subject to concentrations of credit risk are cash and cash equivalents and trade accounts receivable and contract assets.

Cash balances are maintained in financial institutions which at times exceed

Table of Conten ts

federally insured limits.

The Company’s assets that are potentially subject to concentrations of credit risk are cash and cash equivalents, trade accounts receivable and contract assets.

Cash balances are maintained in financial institutions which at times exceed federally insured limits.

The Company monitors the financial condition of the financial institutions in which accounts are maintained and has not experienced any losses in such accounts.

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Major customers are defined as those individually comprising more than 10% of our revenues or accounts receivable, net balance.

For the years ended December 31, 2023 and 2022, one customer comprised 12 % of total revenues and all of these revenues were related to the Compression Operations segment.

For the year ended December 31, 2021, two customers comprised 12 % of total revenues each, and all of these revenues were related to the Compression Operations segment.

As of December 31, 2023 one customer comprised 14 % of the Company's accounts receivable, net balance.

As of December 31, 2022, two customers each comprised 11 % of the accounts receivable, net balance, respectively.

Recently Adopted Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (“Topic 326”):

Measurement of Credit Losses on Financial Instruments.

Topic 326 states the Company is required to use an expected-loss model for its marketable debt securities, available-for sale, which requires that credit losses be presented as an allowance rather than as an impairment write-down.

Reversals of credit losses (in situations in which the estimate of credit losses declines) is permitted in the reporting period that the change occurs.

GAAP prohibits reflecting reversals of credit losses in current period earnings.

The amendments in this update were adopted on January 1, 2023 using the modified retrospective approach and did not have a material impact on our consolidated financial statements.

In March 2020, the FASB issued ASU No.

2020-03, Codification Improvements to Financial Instruments, (“ASU 2020-03”).

ASU 2020-03 improves and clarifies various financial instruments topics, including the current expected credit loss standard (“CECL”).

ASU 2020-03 includes seven different issues that describe the areas of improvement and the related amendments to GAAP, intended to make the standards easier to understand and apply by eliminating inconsistencies and providing clarifications.

This guidance is effective for the Company for fiscal years beginning after December 15, 2022.

The Company adopted ASU 2016-13 as of January 1, 2023.

Upon adoption, the amendments do not have a material impact on our consolidated financial statements.

For the year ended December 31, 2024, one customer comprised approximately 13 % of total revenues.

For each of the years ended December 31, 2023 and 2022, one customer comprised approximately 12 % of total revenues.

All of these revenues were related to the Contract Services segment.

As of December 31, 2024 and 2023, one customer comprised 12 % and 14 %, respectively, of the Company's accounts receivable, net balance.

Recently Issued Accounting Pronouncements

In November 2023, FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures ("ASU 2023-07"), which improves reportable segment disclosure requirements through enhanced disclosures about significant segment expenses.

The amendments in this update are effective for annual periods beginning after December 15, 2023, and interim periods within annual periods beginning after December 15, 2024.

Early adoption is permitted.

ASU 2023-07 is to be applied on a retrospective basis.

In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures , which is intended to enhance the transparency and decision usefulness of income tax disclosures.

The amendment requires the annual financial statements to include consistent categories and greater disaggregation of information in the rate reconciliation, and income taxes paid disaggregated by jurisdiction.

The guidance is effective for annual reporting periods beginning after December 15, 2024, with early adoption permitted, and should be applied on a prospective basis, with a retrospective option.

We are currently evaluating the impact of this standard on our disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures ("ASU 2023-09"), which is intended to enhance the transparency and decision usefulness of income tax disclosures.

The amendments in ASU 2023-09, requires the annual financial statements to include consistent categories and greater disaggregation of information in the rate reconciliation, and income taxes paid disaggregated by jurisdiction.

ASU 2023-09 is effective for the Company’s annual reporting periods beginning after December 15, 2024, with early adoption permitted, and should be applied on a prospective basis, with a retrospective option.

In November 2024, the FASB issued ASU No.

2024-03, Disaggregation of Income Statement Expenses (DISE) , which requires the disaggregated disclosure of specific expense categories, including purchases of inventory, employee compensation, depreciation, and amortization, within relevant income statement captions and the total amount of selling expenses.

This guidance is effective for annual periods beginning after December 15, 2026, and interim periods within

fiscal years beginning after December 15, 2027, with early adoption permitted.

We are currently evaluating the impact of this standard on our disclosures.

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Recently Adopted Accounting Pronouncements

In November 2023, FASB issued ASU 2023-07, Segment Reporting:

Improvements to Reportable Segment Disclosures , which requires a public business entity to disclose its significant segment expense categories and amounts for each reportable segment.

A significant segment expense is an expense that is significant to the segment, regularly provided to or easily computes from information regularly provided to the chief operating decision maker ("CODM"), and included in the reported measure of segment profit or loss.

The guidance is effective for annual periods beginning after December 15, 2023, and interim periods within annual periods beginning after December 15, 2024.

The adoption of this ASU did not have a material effect on our consolidated financial statements, other than the newly required disclosures.

Segments for the inclusion of the new required disclosures.

Acquisitions and Divestitures

Merger with CSI Compressco

On April 1, 2024, the Company completed the acquisition of 100 % of the issued and outstanding partnership interests of CSI Compressco pursuant to the terms of the Merger Agreement, dated December 19, 2023 (the “Merger Agreement”), for total consideration of $ 342.3 million, consisting of the issuance of the equity shares in the CSI Acquisition.

CSI Compressco provides contract services related to the exploration and production of oil and natural gas, including natural gas compression services and treating services, aftermarket services, and the sale of compressor package parts and components manufactured by third-party suppliers.

Strategically, the CSI Acquisition is expected to afford us the opportunity to capture significant synergies associated with our product and service offerings, further penetrate new and existing markets, and achieve administrative efficiencies and other strategic benefits.

Under the Merger Agreement, CSI Compressco unitholders received 0.086 shares of common stock, par value $ 0.01 per share, of Kodiak (“common stock”) for each CSI Compressco common unit owned, and certain CSI Compressco unitholders meeting specified requirements (the “Electing Unitholders”) elected to receive limited liability company units (“OpCo Units”) representing economic interests in Kodiak Services (along with an equal number of shares of Kodiak’s non-economic voting preferred stock), for each CSI Compressco common unit they held.

Each OpCo Unit is redeemable at the option of the holder for (i) one share of common stock (along with cancellation of a corresponding share of preferred stock) or (ii) cash at Kodiak Services’ election, following a 180 days post-closing lock-up and subject to certain conditions.

On or after April 1, 2029, Kodiak shall have the right to effect redemption of such OpCo Units.

The OpCo Units represent and will be accounted for as noncontrolling interests in Kodiak Services.

Each share of preferred stock entitles the holder to one vote per share, voting proportionally with holders of common stock.

The preferred stock lacks economic benefits beyond its par value of $ 0.01 per share (with a maximum value of $ 50,000 ), as it does not participate in earnings or cash dividends of Kodiak.

Rather, it solely represents a voting share.

Pursuant to the Merger Agreement, the Company issued 6,785,712 shares of common stock and 5,562,273 shares of preferred stock (with an equal number of OpCo Units) with an estimated fair value of $ 342.3 million based on the Company’s stock price on April 1, 2024 of $ 27.72 .

Additionally, subsequent to the close of the CSI Acquisition, the Company used additional draws on the ABL Facility of $ 651.8 million to repay, terminate and/or redeem all of CSI Compressco’s existing outstanding indebtedness, except for certain equipment financing obligations, and pay fees and expenses related to the 2029 Senior Notes offering and the CSI Acquisition.

Debt and Credit Facilities for further description.

Our preliminary allocation of the purchase price to the estimated fair value of the CSI Compressco net assets is as follows ( in thousands ):

Fair value of consideration transferred $ 342,285

Recognized amounts of identifiable assets acquired and liabilities assumed

Cash and cash equivalents $ 9,458

Receivables 48,890

Inventory 40,738

Prepaid expenses & other current assets 8,638

Intangible assets (1)

Property, plant and equipment 813,783

Right of use assets 26,044

Deferred tax assets 17

Other non-current assets 3,110

Total assets acquired 998,181

Deferred tax liabilities 29,695

Long term debt 627,953

Other current liabilities 86,267

Other non-current liabilities 21,870

Total liabilities assumed 765,785

Total identifiable assets acquired less liabilities assumed $ 232,396

Goodwill acquired $ 109,889

Identifiable intangibles acquired include customer relationships and trade names with a fair value of $ 41.1 million and $ 6.4 million, respectively.

Estimated useful lives are 15 and 5 years, respectively.

The weighted average amortization period for identifiable intangible assets recognized is 13.2 years.

The purchase price was allocated to the assets acquired and liabilities assumed based on our estimates of fair value estimated as of the acquisition date.

The methodologies used, and key assumptions made, were based on a combination of the income approach, market approach, and cost approach.

The assumptions and inputs incorporated within the fair value estimates are subject to considerable management judgement and are based on industry, market, and economic conditions prevalent at the time of the acquisition.

As of December 31, 2024, we have substantially completed the allocation of the consideration.

The primary areas in which the preliminary purchase price allocation is not yet finalized relate to the deferred income taxes and residual goodwill.

We will complete the purchase price allocation and valuation during the first quarter of 2025.

During the year ended December 31, 2024, we recognized measurement period adjustments of $ 12.1 million, primarily related to updated valuations of property, plant and equipment, intangible assets, and deferred tax liabilities.

The measurement period adjustment increased goodwill acquired from $ 97.8 million to $ 109.9 million.

The fair value of the assets acquired and liabilities assumed are categorized in the following levels:

Level 1 - Cash and cash equivalents;

based on observable inputs such as quoted prices in active markets at the measurement date for identical assets or liabilities.

Level 2 - Receivables, inventory, right of use assets, prepaid expenses and other current assets, other non-current assets, long term debt and other current and non-current liabilities;

based on inputs that are observable such as quoted prices in markets that are not active (e.g.

quoted pricing on CSI Compressco’s debt), or inputs which are observable, for substantially the full term of the asset or liability.

Level 3 - Intangible assets, property, plant and equipment, and sales tax liability;

based on unobservable inputs for which there is little or no market data and which assumption are made about how market participants would price the assets or liabilities.

The Company used a combination of the income, cost and market approaches based on various assumptions and inputs.

Goodwill of $ 109.9 million arising from the CSI Acquisition is supported by the strategic benefits and expected synergies to be generated from the CSI Acquisition.

Goodwill is not deductible for tax purposes and has been allocated to our Contract Services reportable segment.

The acquired property, plant and equipment is stated at fair value, and depreciation on the acquired property, plant and equipment is computed using the straight-line method over the estimated remaining useful lives of each asset in line with the Company’s policies.

It is impracticable to determine the revenue and earnings recorded in the consolidated statements of operations for the year ended December 31, 2024 as we initiated the integration of a substantial portion of CSI Compressco into our ongoing operations following the close of the CSI Acquisition.

In addition, acquisition-related costs of approximately $ 26.3 million were incurred during the year ended December 31, 2024 related to external legal fees, transaction consulting fees, and due diligence costs.

These costs have been recognized in selling, general and administrative expenses in the consolidated statements of operations.

Unaudited Supplemental Pro Forma Financial Information

The following unaudited supplemental pro forma information has been prepared as though the CSI Acquisition had occurred on January 1, 2023.

The pro forma information is presented for illustrative purposes only and is based on estimates and assumptions we deemed appropriate.

The following pro forma information is not necessarily indicative of the historical results that would have been achieved if the acquisition had occurred in the past, and our operating results may have been different from those reflected in the pro forma information below.

Therefore, the pro forma information should not be relied upon as an indication of the operating results that we would have achieved if the transaction had occurred on January 1, 2023 or the future results that we will achieve after the transactions.

The pro forma results include certain adjustments, primarily due to increases in interest expense due to additional borrowings incurred to finance the acquisition and amortization of debt issuance costs and depreciation and amortization expense.

Non-recurring acquisition related costs including transaction costs, such as legal, accounting, valuation and other professional services as well as integration costs such as severance are included within the pro forma revenue and net income below.

Year Ended December 31,

Revenue $ 1,256,421 $ 1,236,509

$ 59,945 $ 17,968

Sale of Assets

On September 12, 2024, the Company sold certain property, plant and equipment and other assets in the U.S.

as well as our legal entity in Canada to a third-party buyer.

The majority of the operations were included in the Contract Services segment through the date of sale.

Total net assets sold were approximately $ 18.0 million, consisting primarily of compression equipment, inventory, and other assets.

Upon disposition, we incurred a loss of approximately $ 7.0 million included in loss (gain) on sale of assets in our consolidated statements of operations for the year ended December 31, 2024.

On December 9, 2024, we sold certain assets and our legal entity in Argentina.

The majority of the operations were included in the Contract Services segment through the date of sale.

The transaction constituted the sale of a business for accounting purposes.

Total assets sold primarily consisted of approximately $ 10.8 million in property, plant and equipment, $ 2.7 million in accounts receivable, and $ 2.2 million in inventory.

We recognized a loss of $ 13.6 million, which is included in loss (gain) on sale of assets in our consolidated statements of operations for the year ended December 31, 2024.

Revenue Recognition

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Services provided over time:

Compression Operations $ 728,032 $ 646,281 $ 573,073

Contract Services $ 1,032,493 $ 728,032 $ 646,281

Other Services 56,512 89,402 46,971

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Services provided or goods transferred at a point in time:

Compression Operations 7,573 8,676 9,997

Contract Services 1,680 7,573 8,676

Other Services 68,626 25,374 5,985

Total services provided or goods transferred at a point in time 70,306 32,947 14,661

Total revenue $ 850,381 $ 707,913 $ 606,375

Total revenues $ 1,159,311 $ 850,381 $ 707,913

The Company derives its revenue from contracts with customers, which comprise the following revenue streams:

Compression Operations

Compression Operations consists of operating Company-owned and customer-owned compression infrastructure for our customers, pursuant to fixed-revenue contracts enabling the production, gathering and transportation of natural gas and oil.

Compression Operations for Kodiak-owned, as well as customer-owned, compressors are generally satisfied over time as services are rendered at selected customer locations on a monthly basis and based upon specific performance criteria identified in the applicable contract.

Terms are typically one to seven years and at the end of the term, transition to a month-to-month contract if not cancelled by either party.

The monthly service for each location is substantially the same service month to month and is promised consecutively over the service contract term.

The progress and performance of the service are measured consistently using a straight-line, time-based method as each month passes, because the performance obligations are satisfied evenly over the contract term as the customer simultaneously receives and consumes the benefits provided by the service.

Consistent with the satisfaction of the performance obligations the customer renders payment for services over time in accordance with the terms of the contract.

Contract Services

Contract Services consists of operating Company-owned compression, customer-owned compression and gas treating and cooling infrastructure for the Company's customers, pursuant to primarily fixed-revenue contracts enabling the production, gathering and transportation of natural gas and oil.

Contract Services for Kodiak-owned compressors, customer-owned compressors, as well as gas treating equipment, are generally satisfied over time, as services are rendered for selected customer locations on a monthly basis and based upon specific performance criteria set forth in the applicable contract.

Terms are typically one to seven years and at the end of the term, transition to a month-to-month term if not cancelled by either party.

The monthly service for each location is substantially the same service month to month and is promised consecutively over the contract term.

The progress and performance of the service are measured consistently using a straight-line, time-based method;

the performance obligations are satisfied evenly over the contract term as the customer simultaneously receives and consumes the benefits provided by the service.

Consistent with the Company's satisfaction of its performance obligations, the customer renders payment for services over time in accordance with the terms of the contract.

If variable consideration exists, it is allocated to the distinct monthly service within the series to which such variable consideration relates.

The Company has elected to apply the invoicing practical expedient to recognize revenue for such variable consideration, as the invoice corresponds to the value transferred to the customer based on our performance completed to date.

Service revenue earned primarily on freight and crane charges that are directly reimbursable by our customers are recognized at the point in time the service is provided and control is transferred to the customer.

At such time, the customer has the ability to direct the use of the benefits of such service after the performance obligation is satisfied.

The amount of consideration we receive and revenue we recognize is based upon the invoice amount.

The Company has elected to apply the right to invoice practical expedient to recognize revenue for such variable consideration, as the invoice corresponds to the value transferred to the customer based on the Company's performance completed to date.

There are typically no material obligations for returns, refunds, or warranties.

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Other Services

Other Services relates to compressor station construction services provided to certain customers and services provided based on time, parts and/or materials with contracted customers.

For most of the Company’s construction contracts, the customer contracts with the Company to provide a service of integrating a significant set of tasks and components into a single contract.

Other Services consists of a full range of services to support any ancillary needs of customers, including station construction, customer-owned compression maintenance and overhaul, freight and crane charges, and other time and material-based offerings.

For most of the Company’s station construction contracts, the customer contracts with the Company to provide a service of integrating a significant set of tasks and components into a single contract.

Hence, the entire contract is accounted for as one performance obligation.

The Company recognizes revenue over time as the Company's performance creates or enhances an asset that the customer controls as the asset is created or enhanced.

The Company recognizes revenue over time as the Company's performance creates or enhances an asset that the customer, in turn, controls.

For construction contracts, revenue is recognized using an input method.

Measure of the progress towards satisfaction of the performance obligation is based on the actual amount of labor and material costs incurred.

The amount of the transaction price recognized as revenue each

Table of Conten ts

reporting period is determined by multiplying the transaction price by the ratio of actual costs incurred to date to total estimated costs expected for the construction services.

Payment terms and conditions vary by contract although terms generally include a requirement of payment upon completion of a milestone.

The amount of the transaction price recognized as revenue each reporting period is determined by multiplying the transaction price by the ratio of actual costs incurred to date to total estimated costs expected for the construction services.

Payment terms and conditions vary by contract, but contract terms generally include a requirement of payment upon completion of a milestone.

Judgment is involved in the estimation of the progress to completion.

Any adjustments to the measure of the progress to completion is accounted for on a prospective basis.

Changes to the scope of service is recognized as an adjustment to the transaction price in the period in which the change order is agreed upon and executed.

adjustments to the measure of the progress to completion is accounted for on a prospective basis.

Changes to the scope of service are recognized as an adjustment to the transaction price in the period in which the change order is agreed upon and executed.

Losses on construction contracts, if any, are recognized in the period when the estimated loss is determined.

There have been no losses recognized in the years ended December 31, 2024, 2023 and 2022, respectively.

Service provided based on time spent, parts and/or materials is generally short-term in nature and labor rates and parts pricing is agreed upon prior to commencing the service.

The Company applies an estimated gross margin percentage, which is fixed based on historical time and materials-based service, to actual costs incurred.

As revenue is recognized when time is incurred, this revenue is recognized at a point and time when the service is rendered.

Services provided based on time spent, parts and/or materials are generally short-term in nature and labor rates and parts pricing are agreed upon prior to commencing the service.

Since revenue is recognized when time is incurred, this revenue is recognized at a point in time when the service is rendered.

At such time, the customer has the ability to direct the use of the benefits of such service after the performance obligation is satisfied.

The amount of consideration we receive and revenue we recognize is based upon the invoice amount.

Contract Assets and Liabilities

The Company recognizes a contract asset when the Company has the right to consideration in exchange for goods or services transferred to a customer.

Contract assets are transferred to trade receivables when the rights become unconditional.

The Company had contract assets of $ 17.4 million and $ 3.6 million as of December 31, 2023, and December 31, 2022, respectively.

There was no contract asset balance as of January 1, 2022.

Contract assets are transferred to trade receivables when the Company has the right to bill.

The Company had contract assets of $ 7.6 million and $ 17.4 million as of December 31, 2024 and 2023, respectively.

The Company records contract liabilities when cash payments are received or due in advance of performance.

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Performance Obligations

As of December 31, 2023, the aggregate amount of transaction price allocated to unsatisfied performance obligations related to the Company’s revenue for the Compression Operations segment is $ 1.1 billion.

As of December 31, 2024, the aggregate amount of transaction price allocated to unsatisfied performance obligations related to the Company’s revenue for the Contract Services segment is $ 1.5 billion.

The Company expects to recognize these remaining performance obligations as follows (in thousands) :

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As of December 31, 2024, the aggregate amount of transaction price allocated to unsatisfied performance obligations related to the Company’s revenue for the Other Services segment is $ 10.2 million, all of which is expected to be recognized by December 31, 2025.

Table of Conten ts

Accounts Receivable, net

Accounts receivable, net consist of the following ( in thousands ):

As of December 31,

2023 2022 2021

Accounts receivable $ 121,242 $ 98,500 $ 81,708

Allowance for credit losses 8,050 949 959

Accounts receivable, net $ 113,192 $ 97,551 $ 80,749

The allowance for credit losses were $ 12.6 million and $ 8.0 million as of December 31, 2024 and 2023, respectively, which represents our best estimate of the amount of probable credit losses included within our existing accounts receivable balance.

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Balance at January 1, 2022 $ 959

Current-period benefit from expected credit losses ( 538 )

Write-offs charged against allowance ( 10 )

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Current-period provision for expected credit losses 7,101

Write-offs charged against allowance ( 10 )

Balance at December 31, 2023 8,050

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Inventories, net

Inventories consist of the following ( in thousands ):

Inventories, net consisted of the following ( in thousands ):

As of December 31,

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Serialized parts 12,167 13,454

Total inventories $ 76,238 $ 72,155

Table of Conten ts

Inventory reserve ( 1,886 ) —

Inventories, net $ 103,341 $ 76,238

Property, Plant and Equipment, net

Property, plant and equipment, net consist of the following ( in thousands ):

Property, plant and equipment, net consisted of the following ( in thousands ):

As of December 31,

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Furniture and fixtures 2,650 2,053

Other 374 981

Land 1,000 743

Total property, plant and equipment, gross 4,325,595 3,229,751

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Trailers and vehicles 5 years

Leasehold improvements Shorter of remaining lease term or 5 years

Leasehold improvements Remaining lease term, no less than 1 year

Furniture and fixtures 7 years

Other Shorter of remaining lease term or estimated useful life

Table of Conten ts

Other Estimated useful life or 1 year

Goodwill and Identifiable Intangible Assets, net

There were no changes in the carrying amount of goodwill during the years ended December 31, 2023, 2022, or 2021.

All goodwill was allocated to the Company’s Compression Operations reporting unit.

The Company’s identifiable intangible assets consist of the following as of December 31, 2023 and 2022 ( in thousands ):

As of December 31, 2023

Original Cost Accumulated

Amortization Net Amount Remaining Weighted

Average Amortization

Period (years)

Trade name $ 13,000 $ ( 3,181 ) $ 9,819 15.1

Customer relationships 150,000 ( 36,931 ) 113,069 12.8

Total identifiable intangible assets $ 163,000 $ ( 40,112 ) $ 122,888

As of December 31, 2022

The carrying amount of goodwill, including changes therein is shown below ( in thousands ):

Balance as of December 31, 2023 $ 305,553

Acquisition of CSI Compressco 97,837

Measurement period adjustment (1)

Allocated to disposal group (2)

Balance as of December 31, 2024 $ 415,213

Acquisitions and Divestitures for additional information related to the CSI acquisition.

Acquisitions and Divestitures for additional information related to the sale of assets.

Intangible Assets

The Company’s identifiable intangible assets were as follows ( in thousands ):

As of December 31, 2024 As of December 31, 2023

Original Cost Accumulated

Amortization Net Amount Remaining Weighted

Average Amortization

Period (years)

Amortization Net Amount Original Cost Accumulated

Amortization Net Amount

Trade name $ 19,400 $ ( 4,791 ) $ 14,609 $ 13,000 $ ( 3,181 ) $ 9,819

Customer relationships 191,100 ( 47,809 ) 143,291 150,000 ( 36,931 ) 113,069

Internal use software 4,847 — 4,847 — — —

Total identifiable intangible assets $ 215,347 $ ( 52,600 ) $ 162,747 $ 163,000 $ ( 40,112 ) $ 122,888

Amortization expense was $ 9.5 million for each of the years ended December 31, 2023, 2022, and 2021 and is recorded within depreciation and amortization on the consolidated statements of operations.

As of December 31, 2023, the following is a summary of future minimum amortization expense for identified intangible assets ( in thousands ):

Amortization expense was $ 12.5 million, $ 9.5 million and $ 9.5 million for the years ended December 31, 2024, 2023 and 2022, respectively, and is recorded within depreciation and amortization on the consolidated statements of operations.

As of December 31, 2024 and 2023, the remaining weighted average amortization period for identifiable intangible assets recognized is 12.4 and 13.0 years, respectively.

Estimated future amortization expense related to intangible assets as of December 31, 2024, is as follows ( in thousands ):

Years ending December 31,

2025 $ 13,561

Thereafter 91,323

Total $ 122,888

The Company maintains operating leases that grant us the right to use compression equipment, office spaces and certain corporate equipment.

The Company maintains operating and finance leases that grant us the right to use compression equipment, office spaces and certain corporate equipment.

The Company’s leases have remaining lease terms of up to 15 years, some of which include options that permit renewals for additional periods.

We are not, however, reasonably certain to exercise any renewal options and accordingly have not included those renewal periods in the remaining lease terms.

We are not, however, reasonably certain to exercise any

renewal options and accordingly have not included those renewal periods in the remaining lease terms.

Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Table of Conten ts

Balance sheet information related to the Company’s operating leases is as follows (in thousands) :

Leases are presented in our consolidated balance sheet as follows (in thousands) :

As of December 31,

Classification 2024 2023

ROU asset, net Operating lease right-of-use assets, net $ 33,716 $ 9,827

Right-of-use Assets:

Operating leases Operating lease right-of-use assets, net $ 53,754 $ 33,716

Finance leases Finance lease right-of-use assets, net $ 5,696 $ —

Lease liabilities:

Operating lease liabilities:

Current Accrued liabilities $ 9,930 $ —

Noncurrent Operating lease liabilities 49,748 34,468

$ 34,468 $ 9,844

The components of total operating lease expense are as follows (in thousands) :

Total operating lease liabilities $ 59,678 $ 34,468

Finance lease liabilities:

Current Accrued liabilities $ 1,928 $ —

Noncurrent Finance lease liabilities 3,514 —

Total finance lease liabilities $ 5,442 $ —

The components of total lease cost were as follows (in thousands) :

For the Year Ended December 31,

Operating lease cost $ 6,536 $ 3,349

Short-term lease cost 1,132 337

Total lease cost $ 7,668 $ 3,686

2024 2023 2022

Operating lease expense:

Operating lease expense $ 14,993 $ 6,536 $ 3,349

Short-term lease expense 4,287 1,132 337

Total operating lease expense 19,280 7,668 3,686

Finance lease expense:

Amortization of leased assets 1,421 — —

Interest on lease liabilities 202 — —

Total finance lease expense 1,623 — —

Total lease expense $ 20,903 $ 7,668 $ 3,686

The short-term lease cost disclosed above reasonably reflects the Company’s ongoing short-term lease commitments.

These lease costs are primarily recorded within cost of operations.

Supplemental information related to the Company’s operating leases were as follows:

As of December 31,

Supplemental information related to the Company’s operating and finance leases were as follows:

For the Year Ended December 31,

(in thousands, except years and percentages) 2024 2023 2022

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Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows for operating leases $ 5,800 $ 3,332

Operating cash flows - operating leases $ 16,879 $ 5,800 $ 3,332

Operating cash flows - finance leases $ 319 $ — $ —

Right-of-use assets obtained in exchange for lease obligations:

Operating leases $ 12,894 $ 28,353 $ 1,203

Finance leases $ 7,111 $ — $ —

Weighted-average remaining lease term:

Operating leases 7.50 years 3.55 years

Weighted-average discount rate for operating leases 9.5 % 5.3 %

As of December 31, 2023, the Company does not have any additional operating leases that have not yet commenced.

Table of Conten ts

Maturities of operating lease liabilities associated with ROU assets as of December 31, 2023 were as follows ( in thousands ):

Operating leases 6.56 years 7.50 years 3.55 years

Finance leases 3.07 years — —

Weighted-average discount rate:

Operating leases 9.5 % 9.5 % 5.3 %

Years ended December 31,

Finance leases 6.1 % — % — %

Future minimum lease payments, under non-cancelable operating and finance leases with terms in excess of one year, as of December 31, 2024 are as follows ( in thousands):

Operating leases Finance leases

Year ended December 31,

2025 $ 14,999 $ 1,853

2026 13,833 1,975

2027 10,737 1,704

2028 9,157 491

Thereafter 25,472 —

Total lease payments 82,952 6,023

Interest ( 19,306 )

Total lease liabilities, net of imputed interest $ 34,468

imputed interest ( 23,274 ) ( 581 )

Total lease liabilities $ 59,678 $ 5,442

As of December 31, 2024, we had an additional operating lease that has not yet commenced for office space with lease obligations of $ 8.1 million.

The operating lease will commence starting in 2029 with a lease term of approximately 7 years.

Long-Lived and Other Asset Impairment

For the year ended December 31, 2024, we determined that certain events occurred to a group of non-operating compression units associated with a certain customer in bankruptcy that indicated the carrying value of assets may not be recoverable.

As a result, we recorded an impairment of compression equipment of $ 9.9 million.

No impairment was recorded, and no triggering events were identified for the years ended December 31, 2023 and 2022.

Debt and Credit Facilities

Debt consists of the following (in thousands) :

Long-term debt consisted of the following (in thousands) :

As of December 31,

ABL Facility $ 1,875,097 $ 1,830,346

Term Loan — 1,000,000

2029 Senior Notes 750,000 —

Total debt outstanding 2,625,097 1,830,346

unamortized deferred financing costs ( 38,886 ) ( 34,205 )

unamortized debt issuance costs ( 43,188 ) ( 38,886 )

Long-term debt, net of unamortized debt issuance cost 2,581,909 1,791,460

A wholly-owned subsidiary of Kodiak had a revolving asset-based loan credit facility (the “ABL Facility”) with unaffiliated secured lenders and JPMorgan Chase Bank, N.A., as administrative agent.

On May 19, 2022, wholly-owned subsidiaries of Kodiak entered into the Third Amendment to the Third Amended and Restated Credit Agreement which mainly served to amend the applicable rate from LIBOR to the Secured Overnight Financing Rate (“SOFR”) and allow for the return of capital to the parent of Kodiak in the amount of $ 838 million by increasing borrowings on the ABL Facility by $ 225 million, increasing the Term Loan by $ 600 million and utilizing $ 13 million of cash on hand.

In addition, the ABL Facility size was increased from $ 1.9 billion to $ 2.1 billion to increase available liquidity under the facility.

New lender fees and costs totaling $ 13.2 million were incurred as a result of the amendment and will be amortized over the life of the loan to interest expense.

On March 22, 2023, wholly-owned subsidiaries of Kodiak entered into the Fourth Amended and Restated Credit Agreement with the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (as amended or restated from time to time, the “ABL Credit Agreement”) which mainly served to extend the maturity date from June 2024 to March 2028.

The total facility size was increased from $ 2.1 billion to $ 2.2 billion to increase available liquidity under the facility.

New lender fees and costs totaling $ 31.8 million were incurred and will be amortized over the life of the loan to interest expense.

An additional $ 4.2 million in accrued interest related to exiting lenders was expensed and paid in the period.

The remaining unamortized debt issuance costs of $ 1.2 million associated with the exiting lenders was written-off in interest expense, net in the period.

On May 31, 2023, the ABL Credit Agreement was amended to, among other things, permit distributions of over allotment proceeds from the IPO and revise the terms related to the payment and prepayment of the Term Loan.

On June 27, 2023, the ABL Credit Agreement was further amended to remove the ability to make distributions related to over allotment proceeds from the IPO and to instead require prepayment of the obligations upon the issuance of any equity interests by Kodiak pursuant to the over allotment in the IPO.

In connection with the IPO, the Company became a borrower under the ABL Facility.

Other borrowings 5,739 —

Total long-term debt and other borrowings $ 2,587,648 $ 1,791,460

Kodiak and its subsidiary, Kodiak Services, are borrowers under a revolving asset-based loan credit facility (the “ABL Facility”) with unaffiliated secured lenders and JPMorgan Chase Bank, N.A., as administrative agent.

On March 22, 2023, Kodiak and Kodiak Services entered into the Fourth Amended and Restated Credit Agreement with the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (as amended or restated from time to time, the “ABL Credit Agreement”) which mainly served to extend the maturity date to March 2028.

The total commitments under the facility are $ 2.2 billion.

As of December 31, 2024, there was $ 2.4 million in letters of credit outstanding under the ABL Facility.

Table of Conten ts

Pursuant to the ABL Credit Agreement, the Company must comply with certain restrictive covenants, including a minimum interest coverage ratio of 2.5 x and a maximum Leverage Ratio (calculated based on the ratio of Consolidated Total Debt to Consolidated EBITDA, each as defined in the ABL Credit Agreement).

The maximum Leverage Ratio is (i) 5.25 to 1.00 for the fiscal quarters ending September 30, 2023 and December 31, 2023, (ii) 5.00 to 1.00 for the fiscal quarter ending March 31, 2024, (iii) 4.75 to 1.00 for the fiscal quarter ending June 30, 2024 and (iv) 4.50 to 1.00 for each fiscal quarter ending on or after September 30, 2024.

All loan amounts are collateralized by essentially all the assets of the Company.

The Company was in compliance with all covenants as of December 31, 2023.

Pursuant to the ABL Credit Agreement, the Company must comply with certain restrictive covenants, including a minimum interest coverage ratio of 2.5 x and a maximum Leverage Ratio (calculated based on the ratio of Total Indebtedness to EBITDA, each as defined in the ABL Credit Agreement), and beginning for the quarter ended June 30, 2024, a Secured Leverage Ratio (calculated based on the ratio of Senior Secured Debt to EBITDA).

The maximum Leverage Ratio is (i) 5.75 to 1.00 through the fiscal quarter ending March 31, 2025 and (ii) 5.25 to 1.00 for each fiscal quarter thereafter.

The maximum Secured Leverage Ratio is (i) 3.75 to 1.00 through the fiscal quarter ending March 31, 2025 and (ii) 3.25 to 1.00 for each fiscal quarter thereafter.

The ABL Credit Agreement also restricts the Company’s ability to:

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and consolidate, merge or sell all or substantially all of the Company’s assets.

The applicable interest rates as of December 31, 2023 were 10.00 % (prime rate plus 2.00 %) and 8.50 % (Term SOFR rate plus 0.10 % plus 2.75 %).

The applicable interest rates as of December 31, 2022 were 9.50 % (prime rate plus 2.00 %) and 7.60 % (Term SOFR rate plus 0.10 % plus 3.00 %).

We pay an annualized commitment fee of 0.25 % on the unused portion of our ABL Facility if borrowings are greater than 50 % of total commitments and 0.50 % on the unused portion on the ABL Facility if borrowings are less than 50 % of total commitments.

The ABL Facility is a “revolving credit facility” that includes a lock box arrangement whereby, under certain events, remittances from customers are forwarded to a bank account controlled by the administrative agent and are applied to reduce borrowings under the facility.

One such event occurs if availability under the ABL Credit Agreement falls below a specified threshold (i.e., the greater of $ 200 million or 10 % of the aggregate commitments at the time of measurement).

As of December 31, 2023 and December 31, 2022, availability under the ABL Facility was in excess of the specified threshold and as such the entire balance was classified as long-term in accordance with its maturity.

The ABL Facility is a “revolving credit facility” that includes a lockbox arrangement whereby, under certain events, remittances from customers are forwarded to a bank account controlled by the administrative agent and are applied to reduce borrowings under the facility.

One such event occurs if availability under the ABL Credit Agreement falls below a specified threshold (i.e., $ 125 million for five ( 5 ) consecutive days until such time availability is greater than $ 125 million for twenty ( 20 ) consecutive days).

As of December 31, 2024 and 2023, availability under the ABL Facility was in excess of the specified threshold and as such the entire balance was classified as long-term in accordance with its maturity.

Third Amendment to Fourth Amended and Restated Credit Agreement

On January 22, 2024, Kodiak entered into the Third Amendment to the ABL Credit Agreement (the “Third Amendment”).

The Third Amendment, among other things, amended certain provisions of the ABL Facility (i) to accommodate the consummation of the transactions contemplated by the Merger Agreement (see Note 3.

Acquisitions and Divestitures) and (ii) to account for the Company’s organizational structure after giving effect to the transactions contemplated by the Merger Agreement.

Lender fees and costs totaling $ 2.9 million were incurred related to the Third Amendment and will be amortized over the life of the ABL Credit Agreement to interest expense.

In addition, the Third Amendment amended the ABL Facility to (i) update the maximum secured leverage ratio to (x) 3.75 to 1.00 for the first four fiscal quarters after the Company issues any unsecured indebtedness and (y) 3.25 to 1.00 for each fiscal quarter thereafter, (ii) modify the triggers for commencing a “cash dominion” period (i.e., a period when the administrative agent applies proceeds in the deposit accounts to reduce borrowings under the ABL Credit Agreement) (iii) include customary provisions relating to the designation of “unrestricted subsidiaries” (i.e., subsidiaries that are not required to become loan parties or be bound by the covenants contained in the ABL Credit Agreement), (iv) provide that only material domestic restricted subsidiaries are required to become guarantors and collateral grantors under the ABL Facility, and (v) permit the Company and its restricted subsidiaries to incur additional indebtedness and liens and to make additional investments, dividends, distributions, redemptions and dispositions.

Interest is payable monthly.

Depending on the loan type elected by the Company, interest accrues based on variable rates of SOFR plus an applicable rate ranging from 2 % to 3 % or prime rate plus an applicable rate ranging from 1 % to 2 % depending on the type of loan and the leverage ratio.

The weighted average interest rate as of December 31, 2024 and 2023, was 6.8 % and 8.8 %, respectively, excluding the effect of interest rate swaps.

The Company pays an annualized commitment fee of 0.25 % on the unused portion of its ABL Facility if borrowings are greater than 50 % of total commitments and 0.50 % on the unused portion of the ABL Facility if borrowings are less than 50 % of total commitments .

All obligations under the ABL Facility are collateralized by essentially all the assets of the Company.

We were in compliance with all covenants as of December 31, 2024 and 2023.

2029 Senior Notes

On February 2, 2024, Kodiak Services issued $ 750.0 million aggregate principal amount of 7.25 % senior notes due 2029 (the “2029 Senior Notes”), pursuant to an indenture, by and among the Company as guarantor and certain other subsidiary guarantors party thereto and U.S.

Bank Trust Company, National Association, as trustee.

Prior to February 15, 2026, the Company may redeem all or part of the 2029 Senior Notes at a redemption price equal to 100 % of the principal amount of the 2029 Senior Notes plus a make-whole premium, plus accrued and unpaid interest.

This make-whole premium is determined as the excess, if any, of (a) the present value at such time of (i) the redemption price of the 2029 Senior Notes at February 15, 2026 plus (ii) any required interest payments due through February 15, 2026, computed using a discount rate equal to the applicable treasury rate plus 0.50 %, discounted to the redemption date on a semi-annual basis, over (b) the principal amount of the 2029 Senior Notes.

Prior to February 15, 2026, the Company may also redeem up to 40 % of the aggregate principal amount of the 2029 Senior Notes, limited to the net cash proceeds of one or more equity offerings, at a redemption price of 107.25 % of the principal amount of the 2029 Senior Notes to be redeemed, plus any accrued and unpaid interest, as long as at least 50 % of the aggregate principal amount of the 2029 Senior Notes originally issued remains outstanding after each such redemption and the redemption occurs within 180 days after the date of the closing of such equity offering.

On and after February 15, 2026, the Company may redeem all or a portion of the 2029 Senior Notes, along with accrued and unpaid interest at the redemption prices (expressed as percentages of principal amount) as follows, if redeemed during the twelve-month period beginning on February 15 of the years indicated below:

2026 103.625 %

2027 101.813 %

2028 and thereafter 100.000 %

If the Company or Kodiak Services experiences certain kinds of changes of control and Moody’s Investors Service, Inc.

(“Moody’s”), S&P Global Ratings (“S&P”) or Fitch Ratings, Inc.

(“Fitch”) decreases their rating of the 2029 Senior Notes as a result thereof within 60 days, holders of the 2029 Senior Notes will be entitled to require Kodiak Services to repurchase all or any part of that holder’s notes at a price of 101 % of the aggregate principal amount of the notes repurchased, plus accrued and unpaid interest, if any, on the notes repurchased to the date of settlement.

The Indenture contains certain covenants that limit the ability of the Company and its restricted subsidiaries, including Kodiak Services, to make distributions on, purchase or redeem the Company’s equity interests or repurchase or redeem contractually subordinated indebtedness;

make certain investments;

incur or guarantee additional indebtedness, issue any disqualified stock, or issue other preferred securities (other than non-economic preferred securities);

create or incur certain liens to secure indebtedness;

sell or otherwise dispose of assets;

consolidate with or merge with or into another person;

enter into transactions with affiliates;

and create unrestricted subsidiaries.

If the 2029 Senior Notes achieve an investment grade rating from any two of Moody’s, S&P and Fitch and no default under the Indenture exists, many of the foregoing covenants will terminate.

The Indenture also contains customary events of default.

Fees and costs totaling $ 13.4 million were incurred related to the 2029 Senior Notes and will be amortized over the life of the 2029 Senior Notes to interest expense.

The proceeds from the 2029 Senior Notes were used to repay a portion of the outstanding indebtedness under the ABL Facility and to pay related fees and expenses in connection with the 2029 Senior Notes offering.

In connection with the close of the CSI Acquisition on April 1, 2024, the Company used proceeds from additional draws on the ABL Facility to repay, terminate and/or redeem all of CSI Compressco’s existing outstanding indebtedness, except for certain equipment financing obligations, and pay fees and expenses related to the notes offering and the CSI Acquisition.

A wholly owned subsidiary of Kodiak had a term loan (the “Term Loan”), pursuant to a credit agreement with unaffiliated unsecured lenders and Wells Fargo Bank, N.A., as administrative agent.

In May 2022, the Company completed a recapitalization and distribution of $ 838 million to the parent of Kodiak primarily by increasing the borrowings from the ABL Facility by $ 225.0 million and the Term Loan by $ 600 million per the Amended and Restated Term Loan Credit Agreement entered into by the Company on May 19, 2022 (as amended from time to time, the “Term Loan Credit Agreement”) and utilizing $ 13 million of cash on hand.

New lender fees and costs totaling $ 14.6 million were incurred for this amendment and will be amortized over the life of the loan to interest expense.

On March 31, 2023, the Company’s wholly-owned subsidiary entered into the First Amendment to the Amended and Restated Term Loan Credit Agreement pursuant to which the maturity date was extended to September 22, 2028.

Lender fees and costs totaling $ 0.8 million were incurred for this amendment and were amortized over the life of the loan to interest expense.

On June 29, 2023, the Company terminated all interest rate swaps and collars attributable to the Term Loan and recognized a gain on derivatives and received cash of $ 25.8 million during the period ended June 30, 2023 (the “Term Loan Derivative Settlement”).

On July 3, 2023, in connection with the IPO, the Company used the net proceeds from the IPO, together with the proceeds resulting from the Term Loan Derivative Settlement and borrowings under the ABL Facility, to repay $ 300 million of borrowings outstanding under the Term Loan.

Additionally, a subsidiary of Kodiak entered into a Novation, Assignment, and Assumption Agreement (“Novation Agreement”) with Kodiak Holdings, pursuant to which all of the Company’s remaining obligations under the Term Loan were assumed by Kodiak Holdings, and the Company’s obligations thereunder were terminated.

The Company is no longer a borrower or guarantor under, nor otherwise obligated with respect to the debt outstanding under the Term Loan.

On June 29, 2023, the Company terminated all interest rate swaps and collars attributable to the Term Loan and recognized a gain on derivatives and received cash of $ 25.8 million (the “Term Loan Derivative Settlement”).

On July 3, 2023, in connection with the initial public offering (“IPO”), the Company used the net proceeds from the IPO, together with the proceeds resulting from the Term Loan Derivative Settlement and borrowings under the ABL Facility, to repay $ 300 million of borrowings outstanding under the Term Loan.

Additionally, a subsidiary of Kodiak entered into a Novation, Assignment, and Assumption Agreement (“Novation Agreement”) with Frontier TopCo Partnership, L.P.

(“Kodiak Holdings”), an affiliate of EQT and holder of record of Kodiak Gas Services, Inc.

common stock, pursuant to which all of the Company’s remaining obligations under the Term Loan were assumed by Kodiak Holdings, and the Company’s obligations thereunder were terminated.

The Company is no longer a borrower or guarantor and is not otherwise obligated with respect to the debt outstanding under the Term Loan.

As part of the $ 300 million repayment of the Term Loan, unamortized debt issuance costs of $ 4.4 million and fees of $ 2.4 million were recorded to loss on extinguishment for the year ended December 31, 2023.

The carrying value of the Term Loan novated under the Novation Agreement of $ 689.8 million (comprised of $ 700.0 million of principal balance less $ 10.2 million of unamortized debt issuance costs) was considered an equity transaction with the Parent and recorded to additional paid-in capital in the statement of stockholder's equity.

Table of Conten ts

As of December 31, 2023, the scheduled maturities, without consideration of potential mandatory prepayments, of the long-term debt were as follows ( in thousands ):

Years ended December 31,

The carrying value of the Term Loan novated under the Novation Agreement of $ 689.8 million (comprised of $ 700.0 million of principal balance less $ 10.2 million of unamortized debt issuance costs) was considered an equity transaction with the parent and recorded to additional paid-in capital in the consolidated statement of stockholder's equity.

As of December 31, 2024, the scheduled maturities, without consideration of potential mandatory prepayments, of the Company's long-term debt were as follows ( in thousands ):

Year ended December 31,

2028 1,875,097

Total $ 2,630,836

Debt Issuance Costs

The total remaining unamortized debt issuance costs of $ 43.2 million, as of December 31, 2024, are being amortized over the respective terms of the ABL Facility and 2029 Senior Notes.

As of December 31, 2023, debt issuance costs of $ 38.9 million were being amortized over the term of the ABL Facility.

Amortization expense related to these costs of $ 12.0 million, $ 13.6 million and $ 13.7 million for year ended December 31, 2024, 2023 and 2022, respectively, are included in interest expense in the accompanying consolidated statements of operations.

Other Borrowings

Upon the completion of the CSI Acquisition, the Company has finance agreements with a third-party in the amount of $ 11.4 million to finance certain compression equipment.

The notes were payable in monthly installments totaling $ 0.7 million for 36 months.

As of December 31, 2024, amounts due under the finance agreements totaled $ 5.7 million.

The current portion of this amount, $ 5.3 million, is classified in accrued liabilities and the long-term portion, $ 0.4 million, is classified in other long-term liabilities on the accompanying consolidated balance sheet.

Derivative Instruments

The Company has entered into interest rate swaps exchanging variable interest rates for fixed interest rates and in prior periods, entered into interest rate collars that fix interest rates within a range through the simultaneous purchase of an interest rate cap and sale of an interest rate floor.

The Company has entered into interest rate swaps exchanging variable interest rates for fixed interest rates.

In prior periods, the Company entered into interest rate collars that fixed interest rates within a range through the simultaneous purchase of an interest rate cap and sale of an interest rate floor.

The Company has not designated any derivative instruments as hedges for accounting purposes and does not enter into such instruments for speculative or trading purposes.

The Company’s derivative instruments are recognized on the consolidated balance sheets at fair value and classified as current or long-term depending on the maturity date of the derivative instrument and whether the net carrying value is in a net asset or net liability position.

Realized and unrealized gains and losses associated with the derivative instruments are recognized in gain on derivatives within the consolidated statements of operations.

On June 29, 2023, the Company terminated $ 750 million of notional amounts related to interest rate swaps and collars attributable to the Term Loan and recognized a gain on derivatives of $ 25.8 million during the year ended December 31, 2023.

The table below summarizes information related to the notional amount and maturity dates for interest rate swaps at December 31, 2024:

Notional Amount Effective date Maturities

Notional Amount Effective Date Maturity Date

$ 200,000,000 6/16/2022 6/14/2025

15 unchanged sentences

Total gain on derivatives $ 24,017 $ 20,266 $ 83,116

Table of Conten ts

Fair Value Measurements

The following table summarizes the fair value of the Company's interest rate swaps and collars and contingent consideration ( in thousands ):

As of December 31, 2023

The Company’s financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable, derivative instruments and long-term debt.

The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable are representative of their respective Level 1 fair values due to the short-term maturity of these instruments.

The Company’s ABL Facility applies floating interest rates to outstanding amounts;

therefore, the carrying amount of the ABL Facility approximates its Level 3 fair value.

The fair value of the 2029 Senior Notes is determined using Level 2 inputs, relying on quoted prices in less active markets.

The Company records derivative instruments at fair value using Level 2 inputs of the fair value hierarchy.

The interest rate swaps are valued using a discounted cash flow analysis based on available market data on the expected cash flows of each derivative using observable inputs, including interest rate curves and credit spreads.

Derivative Instruments for more details.

The contingent consideration liability from a prior year acquisition is measured at fair value each reporting period, using Level 3 unobservable inputs (such as probability assessments of future cash flows), and changes in estimates of fair value are recognized in earnings.

We consider the inputs for our long-lived asset impairment calculations to be Level 3 inputs in the fair value hierarchy.

Long-Lived and Other Asset Impairment for additional information.

The following table summarizes the fair value of the Company's interest rate swaps, contingent consideration, the ABL Facility, and the 2029 Senior Notes ( in thousands ):

Carrying Value As of December 31, 2024

Level 1 Level 2 Level 3 Total

2 unchanged sentences

Contingent consideration 3,651 — — 3,651 3,651

As of December 31, 2022

2029 Senior Notes 750,000 — 765,483 — 765,483

ABL Facility 1,875,097 — — 1,875,097 1,875,097

Carrying Value As of December 31, 2023

Level 1 Level 2 Level 3 Total

1 unchanged sentence

Interest rate swap- non-current 14,256 — 14,256 — 14,256

Interest rate collars — 15,562 — 15,562

Contingent consideration 3,673 — — 3,673 3,673

ABL Facility 1,830,346 — — 1,830,346 1,830,346

Stockholders’ Equity

Holders of the Company’s common stock are entitled to one vote for each share.

As of December 31, 2023 and December 31, 2022, there were 77,400,000 and 59,000,000 shares of common stock issued and outstanding, respectively.

Holders of common stock are entitled to receive, in the event of a liquidation, dissolution or winding up, ratably the assets available for distribution to the stockholders after payment of all liabilities.

On July 3, 2023, 16,000,000 shares of common stock were issued and sold as part of the closing of the IPO, resulting in net proceeds of $ 230.8 million, after deducting expenses and underwriting discounts and commissions payable by us.

On July 3, 2023, 16.0 million shares of common stock were issued and sold as part of the closing of the IPO, resulting in net proceeds of $ 230.8 million, after deducting expenses and underwriting discounts and commissions payable by us.

On July 13, 2023, the underwriters exercised in full their option to purchase additional shares of common stock pursuant to the underwriting agreement relating to the IPO.

On July 13, 2023, the Company issued and sold an additional 2,400,000 shares of common stock at a price to the public of $ 16.00 per share.

On July 13, 2023, the Company issued and sold an additional 2.4 million shares of common stock at a price to the public of $ 16.00 per share.

The Company received net proceeds of approximately $ 36.2 million, after deducting underwriting discounts and commissions payable.

The net proceeds were used for repayment of existing indebtedness and general corporate purposes.

After giving effect to these transactions, Kodiak had 77,400,000 shares of common stock issued and outstanding.

The Company has not issued or sold any additional shares of common stock since July 13, 2023.

On October 24, 2023 the Company's board of directors declared an initial cash dividend of $ 0.38 per share of common stock, or $ 1.52 per share of common stock on an annualized basis, for the third quarter of 2023.

The cash dividend of approximately $ 29.8 million was paid on November 10, 2023 to all stockholders of record as of the close of business on November 3, 2023.

Subsequently, on January 29, 2024 our board of directors declared a quarterly cash dividend of $ 0.38 shares of common stock for the fourth quarter of 2023.

The cash dividend of approximately $ 29.8 million was paid on February 23, 2024.

Class B and C Profits Interests

Prior to the IPO, Kodiak Holdings issued incentive awards to certain employees of Kodiak Gas Services, LLC (a wholly-owned subsidiary of the Company) in the form of Class B incentive units (“Class B Units”).

The Company records stock-based compensation expense associated with the Class B Units because of the employment relationship of the grantees with Kodiak Gas Services, LLC.

On March 16, 2019, 61,098.4 Class B Units were authorized under the Kodiak Holdings 2019 Class B Unit Incentive Plan for grants to certain employees and non-employee board members.

These Class B Units are intended to constitute “profits interests” for federal income tax purposes, but constitute a substantive class of equity under GAAP.

As of December 31, 2023, there were 60,406.9 authorized Class B Units and 57,058.5 were outstanding.

As of December 31, 2022, there were 61,068.0 authorized Class B Units and 60,363.4 were outstanding.

There were no Class B Units granted in the year ended December 31, 2023.

There were 2,861.0 and 57,502.4 , Class B Units granted in the year ended December 31, 2022 and

Table of Conten ts

2021, respectively.

Twenty-five percent ( 25 %) of the Class B Units are subject to time vesting (the “Time-Vesting Units”) and the remaining seventy-five percent ( 75 %) of the Class B Units are subject to performance-vesting (the “Performance-Vesting Units”).

Time-Vesting Units vest in equal annual installments on each of the first five anniversaries of the applicable vesting commencement date, subject to the Class B Unit holder’s continuous service through the applicable vesting date.

Performance-Vesting Units vest based on the achievement of certain investor return metrics, subject to the Class B Unit holder’s continuous service through the applicable vesting date.

Holders of Class B Units are entitled to distributions on vested awards in accordance with the Kodiak Holdings distribution waterfall.

Class B Units are not subject to any conversion rights other than an automatic conversion to Class C incentive units (“Class C Units”) in connection with certain terminations of employment.

Each Class C Unit is eligible to receive distributions up to an amount equal to the fair market value of the corresponding converted Class B Unit on the date of conversion.

As of December 31, 2023, no material conversions had occurred.

There are no performance hurdles associated with the Time-Vesting Units.

The fair value of each incentive award was estimated on its applicable grant date using an option pricing model.

Stock compensation expense is recognized ratably over the vesting period of the awards.

During the years ended December 31, 2023, 2022, and 2021, approximately $ 1.6 million, $ 1.0 million, and $ 1.2 million, respectively, in stock compensation expense was recognized in selling, general and administrative expenses.

As of December 31, 2023, there were 3,005.5 unvested Time-Vesting Units, representing $ 0.3 million in unrecognized stock compensation expense.

After giving effect to these transactions, Kodiak had 77.4 million shares of common stock issued and outstanding as of December 31, 2023.

On April 1, 2024, 6.8 million shares of common stock and 5.6 million of preferred shares were issued in connection with the CSI Acquisition.

Share Repurchases

On September 11, 2024, the Company repurchased 1.0 million shares of common stock from Kodiak Holdings in a private transaction at a price of $ 25.00 per share for an aggregate purchase price of $ 25.0 million.

In November 2024, the Kodiak’s board of directors (“Board”) approved a share repurchase program to buy up to an aggregate of $ 50.0 million of our outstanding common stock (the “Share Repurchase Program”), which expires on December 31, 2025.

On November 14, the Company repurchased shares of common stock from Kodiak Holdings in a private transaction, pursuant to the Share Repurchase Program, at an average price of $ 34.50 for an aggregate purchase price of $ 15.0 million.

As of December 31, 2024, $ 35.0 million remains available for repurchase.

The following table summarizes repurchases of our common stock for the year ended December 31, 2024:

(in thousands, except per share amounts) Year ended December 31, 2024

Total cost of shares repurchased $ 40,000

Average price per share $ 27.88

Total number of shares repurchased 1,435

The above shares are currently held in treasury stock.

Treasury stock purchases are accounted for under the cost method whereby the cost of the acquired stock is recorded as treasury stock.

Gains and losses on the subsequent reissuance of shares are credited or charged to additional paid-in capital using the average-cost method.

Preferred stock

Our preferred stock consists of 50,000,000 authorized shares as of December 31, 2023, of which none are issued.

Holders of the Company’s preferred stock are entitled to one vote for each share, voting proportionally with holders of common stock.

The preferred stock lacks economic benefits beyond its par value of $ 0.01 per share (with a maximum value of $ 50,000 ), as it does not participate in earnings or cash dividends of Kodiak.

Rather, it solely represents a voting share.

Each preferred stock holds an equal number of OpCo Units, representing economic interests in Kodiak’s subsidiary, Kodiak Services.

On or after April 1, 2029, Kodiak shall have the right to effect redemption of such OpCo Units (along with corresponding share of preferred stock).

The OpCo Units represent and will be accounted for as noncontrolling interests in Kodiak Services.

As of December 31, 2024, a total of 4.7 million shares of preferred stock and OpCo Units had been converted into an equivalent number of common stock shares.

No such conversions had occurred as of December 31, 2023.

2023 Omnibus Incentive Plan

On June 20, 2023, Kodiak’s board of directors authorized and adopted the Kodiak Gas Services, Inc.

On June 20, 2023, Kodiak’s Board authorized and adopted the Kodiak Gas Services, Inc.

Omnibus Incentive Plan (the “Omnibus Plan”) for employees, consultants and directors.

The Omnibus Plan enables Kodiak’s board of directors (or a committee authorized by Kodiak’s board of directors) to award incentive and non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, stock awards, dividend equivalents, other stock-based awards, cash awards and substitute awards intended to align the interests of service providers, including the Company’s named executive officers, with those of the Company’s stockholders.

A total of 6,375,000 shares of common stock have been reserved for issuance pursuant to awards under the Omnibus Plan.

On June 29, 2023, Kodiak granted 1,297,188 shares of common stock equity awards to certain employees, including Kodiak’s named executive officers, pursuant to awards under the Omnibus Plan.

The Omnibus Plan enables Kodiak’s Board (or a committee authorized by Kodiak’s Board) to award incentive and non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, stock awards, dividend equivalents, other stock-based awards, cash awards and substitute awards intended to align the interests of service providers, including the Company’s named executive officers, with those of the Company’s stockholders.

A total of 6.4 million shares of common stock have been reserved for issuance pursuant to awards under the Omnibus Plan.

Restricted Stock Units

Of the total shares of common stock equity awards granted on June 29, 2023, 985,313 shares were granted pursuant to awards of time-based restricted stock units (“RSUs”) that vest ratably over a three-year period, subject to continuous service through each vesting date.

On December 8, 2023, the Company provided employees who were eligible to receive cash payments of long-term incentive awards granted in January 2023 under the Company’s 2020 Long-Term Incentive Plan (the “LTIP Plan”) the opportunity to make an election to receive a grant of RSUs that vest ratably over a three year period in lieu of cash payments.

See Note 18 (“Long-Term Incentive Plan”) for additional details.

Upon exercising the employees’ elections to convert the cash payments into RSUs, 138,430 RSUs were granted.

Restricted stock units (“RSUs”) are time-based units that vest ratably over a three-year period, subject to continuous service through each vesting date.

Stock-based compensation for RSUs is recognized on a straight-line basis over the requisite service period.

Performance Stock Units

Of the total shares of common stock equity awards granted on June 29, 2023, 311,875 shares were granted pursuant to awards of performance stock units (“PSUs”) that cliff vest at the end of a three-year performance period, with the ultimate number of shares earned and issued ranging from 0 - 190 % of the number of shares subject to the PSU award, subject to continuous service through the end of the performance period.

The performance criteria for the PSUs are a combination of:

(1) Discretionary Cash Flow (“DCF”) ( 30 % weight);

(2) Consolidated Net Leverage Ratio (“CNLR”) ( 30 % weight);

(3) Absolute Total Shareholders' Return (“ATSR”) ( 30 % weight);

and (4) and ESG Scorecard ( 10 % weight) (each as defined below), in each case, during the Performance Period.

DCF is calculated based on the three-year cumulative Adjusted EBITDA less net cash taxes, less net cash interest, less maintenance capital expenditures, all as reported in the financial statement reconciliations provided in the Company’s public filings, measured over the period from January 1, 2023 through December 31, 2025;

CNLR is calculated as of the

Table of Conten ts

last day of the fiscal quarter ending December 31, 2025, as the ratio of (a) Total Indebtedness (as defined in the ABL Credit Agreement) minus Cash, in each case, as of such date to (b) LQA Adjusted EBITDA (defined as EBITDA (as defined in

the ABL Credit Agreement) for the fiscal quarter ending December 31, 2025, multiplied by four).

ATSR is determined on an annualized basis over the relevant performance period for the beginning and ending 20-day volume-weighted average price, as adjusted for dividends paid.

• The vesting of the PSUs based on DCF, CNLR, and ATSR will each be (i) 200 % if the Company achieves performance at maximum;

(ii) 100 % if the Company achieves performance at target;

(iii) 50 % if the Company achieves performance at threshold level;

and (iv) 0 % if the Company achieves performance at below threshold;

• The vesting of the PSUs based on ESG Scorecard will be (i) 100 % if the Company achieves ESG scorecard and (ii) 0 % if the Company does not achieve ESG Scorecard.

The following table summarizes award activity under the Omnibus Plan for the year ending December 31, 2023:

Performance stock units (“PSUs”) cliff vest at the end of a three-year performance period, with the ultimate number of shares earned and issued ranging from 0 - 190 % of the number of shares subject to the PSU award based on the Company's achievement of certain predefined internal targets and the Company's performance relative to its peers as described in the underlying performance share unit agreement, subject to continuous service through the end of the performance period.

With respect to each PSU, each PSU holder is granted associated dividend equivalents rights.

In the event that the Company declares and pays a regular cash dividend, on the record date for such dividend, the Company will accrue a dividend equivalent based on the number of PSUs expected to vest.

The fair value of the market condition within the PSUs is determined using a Monte Carlo valuation model.

Stock-based compensation for PSUs is recognized on a straight-line basis over the vesting period based on the probable performance outcome.

The Company reassesses the probability of achieving the performance targets each reporting period and adjusts compensation expense accordingly.

CSI Compressco Long Term Incentive Plan

In connection with the CSI Acquisition, we assumed the CSI Compressco LP Third Amended and Restated 2011 Long Term Incentive Plan (“2011 Plan”) and outstanding unvested RSU awards originally granted by CSI Compressco under 2011 Plan that were held by former CSI Compressco employees continuing their employment with Kodiak post-acquisition.

These assumed awards were converted into 145,302 RSU awards under the Omnibus Plan and will vest in accordance with their original terms, generally over 3 years.

Awards cancelled or forfeited, and shares withheld to satisfy tax withholding obligations, become available for future issuance.

The following table summarizes award activity under the Omnibus Plan for the years ended December 31, 2024 and 2023:

RSUs Weighted-

4 unchanged sentences

Granted 513,659 25.29 261,767 28.88

Converted awards (1)

145,302 20.40 — —

Vested or exercised ( 317,766 ) 18.50 ( 6,285 ) 18.70

Forfeited ( 231,168 ) 17.74 ( 18,522 ) 19.51

Performance adjustment (2)

— — 207,190 21.11

Outstanding at December 31, 2024 1,189,109 $ 19.81 756,025 $ 22.16

Stock awards expected to vest 1,189,109 $ 19.81 756,025 $ 22.16

Represents awards originally granted under CSI Compressco's 2011 Plan, which were subsequently converted into RSU awards under the Omnibus Plan.

Represents additional shares expected to vest based on the probability of the performance conditions exceeding the target level.

As of December 31, 2024, the total future compensation cost related to non-vested equity awards was approximately $ 26.2 million assuming the performance-based restricted stock units vest at 138 % per the terms of the applicable award.

During the year ended December 31, 2023, approximately $ 4.3 million in stock compensation expense was recognized in selling, general and administrative expenses.

There was no such expense recorded for the year ended December 31, 2022 and 2021.

The total tax benefit related to stock based compensation recorded as deferred tax assets was $ 0.9 million for the year ended December 31, 2023.

There were no tax benefits recorded for the year ended December 31, 2022 and 2021.

During the years ended December 31, 2024 and 2023, approximately $ 17.7 million and $ 5.9 million in stock compensation expense was recognized in selling, general and administrative expenses, respectively.

There was no such expense under the Omnibus Plan recorded for the year ended December 31, 2022.

The total tax benefit related to stock-based compensation recorded as deferred tax assets was $ 3.3 million, $ 0.9 million and zero for the years ended December 31, 2024, 2023 and 2022, respectively.

The following table summarizes dividends declared and paid in each of the quarterly periods shown of 2024 and 2023:

Dividends per Common Share Dividends Paid

(in thousands)

Q1 $ 0.38 $ 29,815

Q2 $ 0.38 $ 32,578

Q3 $ 0.41 $ 35,113

Q4 $ 0.41 $ 36,380

Q4 $ 0.38 $ 29,793

On February 3, 2025, the Company’s Board declared a cash dividend of $ 0.41 per share for the quarterly period ended December 31, 2024, which is payable on February 21, 2025, to shareholders of record as of the close of business on February 14, 2025 (the “Common Stock Dividend”) and, in conjunction with the Common Stock Dividend, Kodiak Services declared a distribution on its units of $ 0.41 per unit payable on February 21, 2025 to all unitholders of record of Kodiak Services as of the close of business on February 14, 2025.

Commitments and Contingencies

1 unchanged sentence

As of December 31, 2024, 2023 and 2022, the Company has accrued capital expenditures of $ 12.5 million, $ 30.5 million and $ 28.8 million, respectively.

These amounts were included in accounts payable or accrued liabilities on the consolidated balance sheet.

These amounts were included in accounts payable or accrued liabilities on the consolidated balance sheets.

Purchase Commitments

6 unchanged sentences

Sales Tax Contingency

Between October 2019 and April 2023, the Company received notices from the Texas Comptroller’s office in regards to audits for periods ranging from December 2015 through December 2022.

The audits pertain to whether the Company may owe sales tax on certain of its compression equipment that it had purchased during that time period.

During the year ended December 31, 2022 the Company accrued an additional contingent liability of $ 6.5 million, and as of December 31, 2022, the Company had accrued a total amount of $ 27.8 million.

During the year ended December 31, 2023, based on current

Table of Conten ts

information the Company accrued an additional $ 1.0 million and as of December 31, 2023, the Company had accrued a total of $ 28.8 million included as accrued liabilities on the consolidated balance sheets.

Between October 2019 and April 2023, the Company received notices from the Texas Comptroller’s office in regards to audits for periods ranging from December 2015 through November 2023.

The audits pertain to whether the Company may owe sales and use tax on certain of its compression equipment and parts that it had purchased and used during that time period.

During the year ended December 31, 2023, the Company accrued a total amount of $ 28.8 million.

During the year ended December 31, 2024, based on current information Company accrued an additional $ 42.1 million and as of December 31, 2024, of which $ 15.0 million is related to fair value adjustments associated with purchase price allocation of the CSI Acquisition.

As of December 31, 2024, the Company had accrued a total of $ 70.9 million included as accrued liabilities on the consolidated balance sheet for all compression equipment and parts purchased and used as of the balance sheet date.

Legal Matters

3 unchanged sentences

As of December 31, 2024, there was $ 2.4 million of letters of credit outstanding under the ABL Facility mainly to support the Company's obligations to construct a gas compression station on behalf of a customer.

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following ( in thousands ):

As of December 31,

Prepaid insurance $ 2,353 $ 3,997

Interest rate swap receivable 2,025 —

Prepaid vehicle allowance 1,130 1,081

Deferred project costs 737 —

Prepaid rent 532 589

Deferred IPO issuance costs — 3,047

Other 3,577 806

Total prepaid expenses and other current assets $ 10,353 $ 9,520

Accrued Liabilities

Accrued liabilities consist of the following ( in thousands ):

Accrued liabilities consisted of the following ( in thousands ):

As of December 31,

Sales tax liability $ 70,927 $ 28,847

Accrued bonus 13,259 7,764

Accrued accounts payable 15,506 14,080

Accrued interest 48,561 8,313

Station project accrual 7,797 —

Accrued taxes 6,415 9,667

Accrued professional fee 6,015 2,663

Contingent consideration 3,673 3,673

Accrued payroll 3,321 2,744

Accrued insurance 856 2,231

Accrued compensation 22,403 16,580

Lease liabilities - current portion 11,858 —

Station project accrual 9,385 7,797

Equipment financing - current portion 5,344 —

Accrued accounts payable 1,104 15,506

Other 19,150 20,035

Total accrued liabilities $ 188,732 $ 97,078

Table of Conten ts

Income tax expense (benefit) consisted of the following (in thousands):

Years Ended December 31

Income before income taxes consists of the following ( in thousands ):

Year Ended December 31,

2024 2023 2022

Income before income taxes:

United States $ 74,650 $ 35,136 $ 139,357

Foreign 1,258 — —

Total income before income taxes $ 75,908 $ 35,136 $ 139,357

Income tax expense consisted of the following ( in thousands ):

Year Ended December 31,

2024 2023 2022

Current income taxes:

1 unchanged sentence

State and local 4,085 2,539 3,045

Foreign 1,578 — —

Total current tax 10,145 7,207 5,791

2 unchanged sentences

State and local 1,499 5,883 1,597

Foreign ( 414 ) — —

Total deferred tax 15,429 7,863 27,301

Income tax (benefit) expense $ 15,070 $ 33,092 $ ( 58,573 )

Income tax expense $ 25,574 $ 15,070 $ 33,092

The effective tax rates on continuing operations for the years ended December 31, 2024, 2023 and 2022 were 33.7 %, 42.9 %, and 23.8 %, respectively.

The reconciliation of the effective tax rate to the U.S.

federal statutory tax rate of 21% for each period presented is as follows ( in thousands ):

Years Ended December 31

The table below reconciles these effective tax rates with the U.S.

federal statutory income tax rate as follows ( in thousands ):

Year Ended December 31,

2024 2023 2022

2 unchanged sentences

State, net of federal benefit 5,135 — —

Non-deductible expenses 925 163 93

Change in valuation allowance 519 — ( 83,607 )

Nondeductible expenses 2,251 6,135 3,664

Stock based compensation windfall ( 896 ) — —

Nondeductible loss on sale of receivables 2,979 925 163

Valuation allowance 546 519 —

Impact of operating in foreign jurisdictions 1,749 — —

Tax related to basis difference in investment in subsidiaries ( 2,658 ) — —

Other 524 112 —

Income tax (benefit) expense $ 15,070 $ 33,092 $ ( 58,573 )

The Company's effective tax rate differs from the statutory rate primarily due to state tax expense.

During the year ended December 31, 2023, the Company's state tax expense increased in part due to the revaluation of deferred taxes due to increased investment in various states.

Income tax expense $ 25,574 $ 15,070 $ 33,092

The Company's effective tax rate for the year ended December 31, 2024 differs from the statutory rate primarily due to state tax expense, a non-deductible loss on the sale of receivables related to the disposition of our Argentina business and deferred tax recorded on the Company's investment in Kodiak Services.

During the year ended December 31, 2023, the

Company's effective tax rate differs from the statutory rate primarily due to state tax expense which increased in part due to the revaluation of deferred taxes due to increased investment in various states.

The Company’s deferred tax position reflects the net tax effects of the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax reporting.

Significant components of the deferred tax assets and liabilities are as follows ( in thousands ):

Years Ended December 31

Year Ended December 31,

Deferred tax assets:

1 unchanged sentence

Interest expense carryforward 87,039 66,547

Deferred compensation 2,169 —

Other assets 2,869 971

4 unchanged sentences

Investment in subsidiaries ( 549,819 ) ( 540,481 )

Property, plant and equipment ( 34,157 ) —

Other liabilities ( 3,767 ) —

Total gross deferred tax liabilities ( 587,743 ) ( 540,481 )

Net deferred tax liabilities $ ( 103,826 ) $ ( 62,748 )

Table of Conten ts

Deferred Tax Assets and Liabilities

6 unchanged sentences

The Company has assessed the provisions of Section 382 and Section 383 and determined there to be no impact to the expected realization of Company’s federal deferred tax balances.

A valuation allowance of $ 0.5 million has been placed on state tax deferred tax assets that have a limited life and may not be used due to limitations on annual use.

As of December 31, 2024 and 2023 a valuation allowance of $ 0.7 million and $ 0.5 million, respectively, has been placed on state tax deferred tax assets that have a limited life and may not be used due to limitations on annual use.

Federal and State Net Operating Losses

As of December 31, 2023, we have gross federal tax net operating loss carryforwards of $ 1.9 billion and IRC Section 163(j) interest carryforwards of $ 299 million which have an indefinite life,We have gross post-apportionment state net operating loss carryforwards of $ 454 million which have various useful lives.

As of December 31, 2024, we have gross federal tax net operating loss carryforwards of $ 1.8 billion and IRC Section 163(j) interest carryforwards of $ 376.0 million which have an indefinite useful life.

We have gross post-apportionment state net operating loss carryforwards of $ 437.0 million which have various useful lives.

Uncertain Tax Benefits

2 unchanged sentences

The Company did not have any uncertain tax benefits as of December 31, 2024 and 2023.

As of December 31, 2023 and 2022, the Company had no accrued interest or penalties related to uncertain tax positions and no amounts had been recognized in the consolidated statement of operations.

December 31, 2024 and 2023, the Company had no accrued interest or penalties related to uncertain tax positions and no amounts had been recognized in the consolidated statements of operations.

As of December 31, 2024, tax years 2021 and forward are subject to examination by the tax authorities in the U.S.

4 unchanged sentences

Long-Term Incentive Plan

The Company contributes to a plan that was established to offer added cash basis incentives for the retention of key employees established under the Company’s LTIP Plan.

Vesting of granted LTIP awards is time-based and the only remaining condition is contingent on providing subsequent services as an employee at the time of vesting.

The awards vest, and pay out in cash ratably ( 25 %) during January of each year, over a four-year period, during which time the awards are generally forfeitable in the event of employment termination other than for death, disability, or qualifying retirement.

Based on an expected probability of future payments, the Company’s obligations related to the LTIP Plan totaled $ 4.4 million and $ 5.4 million as of December 31, 2023 and 2022, respectively.

The non-current liability was $ 2.1 million and $ 4.4 million as of December 31, 2023 and 2022, respectively.

In prior years, the Company contributed to a plan that was established to offer added cash basis incentives for the retention of key employees established under the Company’s 2020 Long-Term Incentive Plan (the “LTIP Plan”).

On December 8, 2023, the Company provided employees who were eligible to receive these cash payments of long-term incentive awards granted in January 2023 the opportunity to make an election to receive a grant of RSUs that vest ratably over a three-year period in lieu of cash payments.

Upon exercising the employees’ elections to convert the cash payments into RSUs, 138,430 RSUs were granted.

As a result of the conversion, the Company had no obligations related to the LTIP Plan and no non-current liability as of December 31, 2024.

Based on an expected probability of future payments, the Company’s obligations related to the LTIP Plan totaled $ 4.4 million as of December 31, 2023.

The non-current liability was $ 2.1 million as of December 31, 2023.

The Company manages its business through two operating segments:

Compression Operations and Other Services.

Other Services consists of a full range of contract services to support the needs of customers, including station construction, maintenance and overhaul, and other ancillary time and material based offerings.

Table of Conten ts

The chief operating decision maker evaluates performance and allocates resources based on the gross margin of each segment, which consists of revenues directly attributable to the specific segment less all costs of service directly attributable to the specific segment.

Revenue includes only sales to external customers, all of whom are located in the United States, the country in which the Company is domiciled.

Costs of service directly attributable to a specific segment includes cost of operations and depreciation and amortization.

Depreciation and amortization for the Compression Operations segment was $ 182.9 million, $ 174.5 million, and $ 160.0 million for the years ended December 31, 2023, 2022, and 2021, respectively.

All long-lived assets are located in the United States.

Contract Services and Other Services.

Contract Services consists of operating Company-owned and customer-owned compression, and gas treating and cooling infrastructure, pursuant to primarily fixed-revenue contracts to enable the production and gathering of natural gas and oil.

Other Services consists of a full range of contract services to support ancillary needs of customers, including station construction, maintenance and overhaul, freight and crane charges and other time and material-based offerings.

Our Chief Executive Officer, also our CODM, assesses the performance of each segment based on adjusted gross margin.

This metric is calculated by subtracting specific costs of service, such as cost of operations, from revenues directly attributable to the segment.

Adjusted gross margin is a key tool used by the CODM for annual budgeting, monthly forecasting, and determining how to allocate capital and resources across the segments.

Revenue includes only sales to external customers.

The following table represents financial metrics by segment ( in thousands ):

Compression Operations Other Services Total

Contract Services Other Services Total

Year Ended December 31, 2024

Revenue $ 735,605 $ 114,776 $ 850,381

Gross margin 295,644 20,997 316,641

Revenues $ 1,034,173 $ 125,138 $ 1,159,311

Cost of operations (exclusive of depreciation and amortization) 355,016 103,360 458,376

Adjusted gross margin 679,157 21,778 700,935

Total assets 4,398,127 36,996 4,435,123

1 unchanged sentence

Year Ended December 31, 2023

Revenue $ 654,957 $ 52,956 $ 707,913

Gross margin 254,779 11,320 266,099

Revenues $ 735,605 $ 114,776 $ 850,381

Cost of operations (exclusive of depreciation and amortization) 257,092 93,779 350,871

Adjusted gross margin 478,513 20,997 499,510

Total assets 3,211,801 32,305 3,244,106

1 unchanged sentence

Year Ended December 31, 2022

Revenue $ 583,070 $ 23,305 $ 606,375

Gross margin 230,212 5,941 236,153

Revenues $ 654,957 $ 52,956 $ 707,913

Cost of operations (exclusive of depreciation and amortization) 225,715 41,636 267,351

Adjusted gross margin 429,242 11,320 440,562

Total assets 3,184,286 21,254 3,205,540

Capital expenditures 259,349 — 259,349

The following table reconciles total gross margin to income before income taxes ( in thousands ):

The following table reconciles adjusted gross margin to income before income taxes ( in thousands ):

Year Ended December 31,

2024 2023 2022

Total gross margin $ 316,641 $ 266,099 $ 236,153

Selling, general and administrative expenses ( 73,308 ) ( 44,882 ) ( 37,665 )

Adjusted gross margin:

Contract Services $ 679,157 $ 478,513 $ 429,242

Other Services 21,778 20,997 11,320

Depreciation and amortization (1)

( 260,272 ) ( 182,869 ) ( 174,463 )

Long-lived asset impairment ( 9,921 ) — —

Gain (loss) on sale of property, plant and equipment 777 874 ( 426 )

Interest expense, net ( 222,514 ) ( 165,867 ) ( 84,640 )

Selling, general and administrative expenses ( 151,680 ) ( 73,308 ) ( 44,882 )

(Loss) gain on sale of assets ( 29,612 ) 777 874

Interest expense ( 197,144 ) ( 222,514 ) ( 165,867 )

Loss on extinguishment of debt — ( 6,757 ) —

2 unchanged sentences

Income before income taxes $ 75,908 $ 35,136 $ 139,357

All depreciation and amortization is related to the Contract Services segment.

Earnings Per Share of Common Stock

Basic earnings per share is computed using the weighted average number of shares of common stock outstanding during the period.

Diluted earnings per share of common stock is computed by using the weighted average shares of common stock outstanding, including the dilutive effect of restricted stock units and performance stock units based on an average share price during the period.

For the years ended December 31, 2023, 2022, and 2021, there were no anti-dilutive shares,

Table of Conten ts

respectively.

The computations of basic and diluted earnings per share for the years ended December 31, 2023, 2022, and 2021 are as follows:

share price during the period.

For the purpose of calculating basic and diluted earnings per share, net income attributed to noncontrolling interest and the corresponding preferred shares outstanding are excluded from the calculations.

For the year ended December 31, 2024, 98.0 thousand unvested PSUs were excluded from the calculation of the potential dilutive common shares because their inclusion would be anti-dilutive.

For the year ended December 31, 2023, and 2022 there were no anti-dilutive shares, respectively.

The computations of basic and diluted earnings per share were as follows:

Year Ended December 31,

(in thousands, except share and per share data) 2023 2022 2021

Net income $ 20,066 $ 106,265 $ 180,963

(in thousands, except per share data) 2024 2023 2022

Net income attributable to common shareholders $ 49,895 $ 20,066 $ 106,265

expense attributable to non-forfeitable RSUs ( 1,812 ) — —

Net income used in basic and diluted earnings per share $ 48,083 $ 20,066 $ 106,265

Basic weighted average shares of common stock 83,094 68,059 59,000

1 unchanged sentence

Diluted weighted average shares of common stock 85,170 68,327 59,000

Basic earnings per share of common stock $ 0.29 $ 1.80 $ 3.07

Diluted earnings per share of common stock $ 0.29 $ 1.80 $ 3.07

Subsequent Events

Third Amendment to Fourth Amended and Restated Credit Agreement

On January 22, 2024, Kodiak entered into the Third Amendment to the ABL Credit Agreement (the “Third Amendment”).

The Third Amendment, among other things, amended certain provisions of the ABL Facility (i) to accommodate the consummation of the transactions contemplated by the Agreement and Plan of Merger, dated as of December 19, 2023, by the Merger Agreement and (ii) to account for the Company’s organizational structure after giving effect to the transactions contemplated by the Merger Agreement.

In addition, the Third Amendment amended the ABL Facility to (i) increase the maximum Leverage Ratio which will begin to be tested after we issue any unsecured indebtedness, to (x) 3.75 to 1.00 for the first four fiscal quarters after we issue any unsecured indebtedness and (y) 3.25 to 1.00 for each fiscal quarter thereafter, (ii) modify the triggers for commencing a “cash dominion” period (i.e., a period when the Administrative Agent applies proceeds in our deposit accounts to reduce borrowings under the ABL Credit Agreement) such that a “cash dominion” period will commence when availability under the ABL Credit Agreement is less than $ 125 million for five consecutive business days or if certain types of events of default occur (although this change will effectively be unwound if the Merger provided for in the Merger Agreement do not occur on or prior to the Reversion Date (as defined in the ABL Credit Agreement)), (iii) include customary provisions relating to the designation of “unrestricted subsidiaries” (i.e., subsidiaries that are not required to become loan parties or be bound by the covenants contained in the ABL Credit Agreement), (iv) provide that only material domestic restricted subsidiaries are required to become guarantors and collateral grantors under the ABL Facility and (v) permit the Company and its restricted subsidiaries to incur additional indebtedness and liens and to make additional investments, dividends, distributions, redemptions and dispositions.

2029 Notes Indenture

On February 2, 2024, Kodiak Gas Services, LLC, a Delaware limited liability company and wholly owned subsidiary of Kodiak Gas Services, Inc.

(“Kodiak Services”), issued $ 750,000,000 aggregate principal amount of Kodiak Services’ 7.250 % senior notes due 2029 (the “Notes”), pursuant to an indenture, dated February 2, 2024, by and among the Company, Kodiak Gas Services, Inc., certain other subsidiary guarantors party thereto and U.S.

Bank Trust Company, National Association, as trustee.

The net proceeds from the Notes were used to repay a portion of the outstanding indebtedness under the ABL Facility and to pay related fees, costs, premiums and expenses in connection therewith and with the Company’s acquisition of CSI Compressco.

In connection with closing of the acquisition CSI Compressco, the Company intends, using proceeds from additional draws on the ABL Facility, to repay, terminate and/or redeem all of the CSI Compressco’s existing long-term indebtedness.

See Note 1 (“Organization and Description of Business”) for additional details.

Basic earnings per share $ 0.58 $ 0.29 $ 1.80

Diluted earnings per share $ 0.56 $ 0.29 $ 1.80

For the year ended December 31, 2024, the effect of dilutive securities includes 0.9 million, 0.3 million and 0.8 million RSUs, PSUs and OpCo Units held by noncontrolling interest, respectively.

For the year ended December 31, 2023, the effect of dilutive securities includes 0.2 million and 21.0 thousand of RSUs and PSUs, respectively.

Related Party Transactions

During March 2022, the Company entered into a master services agreement with IFS North America, Inc., a related party controlled by EQT AB, for a system license subscription and accompanying cloud hosting service to facilitate the implementation of the Company’s enterprise resource planning system.

Subsequent to closing the CSI Acquisition, the Company terminated the initial contract and entered into a new master services agreement for the combined company.

As of December 31, 2024, total purchases under this agreement since inception were approximately $ 9.4 million, inclusive of contract termination costs.

Total cost during the years ended December 31, 2024 and 2023 were approximately $ 7.4 million and $ 1.2 million, respectively.

A portion of these costs were capitalized as internal-use software within intangible asset in the consolidated balance sheets, see Note 8.

Goodwill and Identifiable Intangible Assets, net.

The remaining costs incurred were recognized in selling, general and administrative expenses in the consolidated statements of operations.

Additionally, the Company incurred a cost of operations expense related to Contract Services of $ 0.1 million during the year ended December 31, 2023.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures