Kodiak Gas Services, Inc. · NYSE:KGS
Kodiak Gas Services — Investor Presentation (June 2024)
27 slides from Kodiak Gas Services's investor presentation, June 2024
Slide 1: Investor Presentation June 2024
INVESTOR PRESENTATION June 2024
Slide 2: Disclaimer
Disclaimer Cautionary Note Regarding Forward-Looking Statements. This news release contains, and our officers and representatives may from time to time make, “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Fo
Slide 3: Overview: We Move Energy. Reliably. Safely.
Overview A leading provider of domestic energy infrastructure, enabling the reliable and secure flow of natural gas and oil to feed growing global demand AT-A-GLANCE 1, 2, 3 We Move Energy. Reliably. Market Cap $2.5 billion Safely. Enterprise Value 8% Northern Rockies Responsibly. 2% $5.0 billion No
Slide 4: Investment Thesis
Investment Thesis Leading Market Position ► Purpose-built fleet of 4.4 million HP1 ► Market leader with 2.8 million HP in the Permian Industry Leader in Both Growth & Utilization ► 0 to 4.4 million horsepower in 12 years ► ~97% utilization rate Attractive Industry Fundamentals ► Highly visible, mult
Slide 5: Kodiak Standalone Q1 2024 Financial & Operational Highlights
Kodiak Standalone Q1 2024 Financial & Operational Highlights Total Compression Discretionary Revenues Operations Cash Flow $215 million 66% AGM $72 million +13% vs Q1 2023 +120 bps vs Q1 2023 +45% vs Q1 2023 Quarterly Adjusted EBITDA ($M) $118 Operational Statistics $114 $110 29K HP $108 $103 $106 9
Slide 6: Latest Milestone Drives Kodiak to a Market Leading Position
Latest Milestone Drives Kodiak to a Market Leading Position May 2010 Kodiak Gas Services founded October 2019 April 2022 4.4 million 3 HP November 2018 2.4 million HP million 1 HP million HP YE 2013 YE 2014 YE 2015 YE 2016 YE 2017 YE 2018 YE 2019 YE 2020 YE 2021 YE 2022 YE 2023 4/1/2024 February Oct
Slide 7: Pro Forma Industry Leading Compression Capacity
Pro Forma Industry Leading Compression Capacity 2.8 million ~1,150 ~97% Permian Average Permian Total company horsepower horsepower per unit utilization rate Top 3 Contract Compression Providers = >70% of the outsourced market1 North America Market Contract Compression1 HP % 4.4 Outsourced (contract
Slide 8: Conviction Around Cost Synergies
Conviction Around Cost Synergies Annual Run-Rate Cost Synergies Identified Cost Synergies >$20 million ► Eliminating duplicate public company costs ► Optimizing G&A across the company ► Improving purchasing power ► Increasing supply chain optimization ► Eliminating redundant facilities JUNE 2024 / 8
Slide 9: LNG Driving U.S. Natural Gas Demand Outlook
LNG Driving U.S. Natural Gas Demand Outlook North American LNG Demand2 ► Associated natural gas from the Permian and the Eagle Ford Bcf per day are expected to be one of the primary supply sources for Gulf Coast LNG projects ► Kodiak is a leader in the Permian and Eagle Ford with ~3.4 million horsep
Slide 10: Data Centers & AI Expected to Drive A Surge in Power Demand
Data Centers & AI Expected to Drive A Surge in Power Demand U.S. Gas Demand Outlook Bcf per day RAPID ACCELERATION OF DATA ~ 3 - 10 ~128-135 CENTERS AND ARTIFICIAL INTELLIGENCE PROJECTED TO DRIVE SURGE IN POWER DEMAND 2023 LNG Mexico Power/ 2030 Other Construction of Data Centers2 15% Forecasted gro
Slide 11: Compression Demand Outlook
Compression Demand Outlook ► Based on midpoint of power demand forecast range - U.S. gas demand to increase by 28 Bcf/d by 2030 ► An increase of ~2.2 million horsepower per year through 2030 required to meet this demand U.S. U.S. Compression Compression Intensity × Gas Demand Outlook = Demand Outloo
Slide 12: Multiple Compression Touch Points
Multiple Compression Touch Points Gas Processing Residue Centralized Compression Gathering Gas Lift Systems Permian Basin Haynesville Shale NATURAL GAS GROWTH 2020-20231 Bcf/d 7.8 3x – 4x 5.2 Compression Required in the Permian Basin vs Haynesville 1 EIA Drilling Productivity Report Permian Basin Ha
Slide 13: Compression Industry Has Displayed Capital Discipline
Compression Industry Has Displayed Capital Discipline Compression industry capital spending …while costs to add HP remains below historical levels1… have risen significantly2 $1,600 millions Bcf/d 140 $ Capex per HP ~$1,200 Compression CapEx 130 $1,400 $1,347 Dry Gas Production 120 $1,200 $1,070 M 3
Slide 14: Operational Systems Designed to Maximize Mechanical Availability
Operational Systems Designed to Maximize Mechanical Availability Every aspect of the business is geared towards providing superior service as defined by industry leading mechanical availability >99% Mechanical Availability Over Past 5 Years Rigorous Engine and Superior Training = Superior Inventory
Slide 15: Premier Customer Base Drives Growth & Stability
Premier Customer Base Drives Growth & Stability Continuous HP Growth¹ Customers by Credit Rating2 Customers by Type2 2019 – 2023 CAGR 6% 46% 45% 54% 55% 2019 2020 2021 2022 2023 2024 Investment Grade Upstream Non-Investment Grade Midstream 1 Reflects end-of-period Revenue-generating HP 2 Based on Re
Slide 16: Contract Structure Supports Cash Flow Visibility
Contract Structure Supports Cash Flow Visibility 1 Fixed monthly revenue with multi-year terms Percent of Month-to-Month Contracts1 88% HP with Remaining Contract Term 2 Annual inflation index adjustments HP on Month-to-month Contract Term 3 Advance billing improves working capital cycle 12% Weighte
Slide 17: Strategy Translates Into Industry-Leading Growth and Utilization
Strategy Translates Into Industry-Leading Growth and Utilization End-of-period Revenue-Generating HP by Company (in thousands)1,2 3,926 3,607 3,434 3,388 3,448 3,259 3,310 3,247 3,132 3,200 2,933 2,997 2,964 2,747 2,601 2019 2020 2021 2022 2023 2019 2020 2021 2022 2023 2019 2020 2021 2022 2023 Avera
Slide 18: Steady Business in any Commodity Price Environment
Steady Business in any Commodity Price Environment Quarterly Compression Operations Adjusted Gross Margin ($M) Kodiak Compression Operations Adj. Gross Margin ($M) Average WTI Crude Oil Price ($/bbl) $126 $128 $121 Average Henry Hub Price ($/MMBtu) $117 $115 $112 $104 $108 $104 $105 $97 $94.53 $94 $
Slide 19: Capital Allocation Priorities
Capital Allocation Priorities Returning capital to Investing Reducing shareholders in increasing leverage and through an fleet capacity that further balance attractive dividend exceeds internal sheet improvements hurdle rate Dividends Organic Growth Improving Balance Sheet $0.38 per share ~7-9% grow
Slide 20: No Near-Term Maturities
No Near-Term Maturities Kodiak’s Debt Maturity Profile1 <3.5x 2,000 ~4 years Focused on achieving Until First Debt Maturity leverage ratio of 3.5x 1,800 in March 2028 or below by year-end 1,600 Drawn upon closing of CSI 2025 acquisition3 1,400 1,200 >$375 million $1,131 Availability on the ($M) 1,00
Slide 21: Full-year 2024 Guidance
Full-year 2024 Guidance (All amounts below are in millions) Low High Total Revenues $ 1,125 $ 1,175 Adjusted EBITDA (1) $ 580 $ 610 Discretionary Cash Flow (1)(2) $ 360 $ 390 Capital Expenditures Growth capital expenditures, net (3) $ 215 $ 235 Maintenance capital expenditures $ 55 $ 65 1 The Compan
Slide 22: Industry Leader in Sustainability Initiatives
Industry Leader in Sustainability Initiatives Established Published Hart Energy Recognized as a Received Established ‘Bears formal ESG inaugural recognizes Kodiak best place to work Top Workplaces Academy’, a training Committee sustainability report as first-ever ESG Top – Houston Business USA Award
Slide 23: Kodiak's Value Proposition
Kodiak’s Value Proposition Leading Market Position Industry Leader in Both Growth & Utilization Attractive Industry Fundamentals We Move Energy. Reliably. Strong and Stable Cash Returns Safely. Responsibly. JUNE 2024 / 2 3
Slide 24: Supplemental Slides
Danlgioa | = SUPPLEMENTAL SLIDES
Slide 25: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Gross Margin to Adjusted Gross Margin Net Cash Provided by Operating Activities to DCF and FCF (in thousands) 1Q 2023 1Q 2024 (in thousands) 1Q 2023 1Q 2024 Total revenues $190,112 $215,492 Net cash provided by operating activities $32,290 $51,542 Mainte
Slide 26: Reconciliation of Non-GAAP Financial Measures (cont'd)
Reconciliation of Non-GAAP Financial Measures (cont’d) Gross Margin to Adjusted Gross Margin for Compression Operations 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q (in thousands) 2020 2020 2020 2020 2021 2021 2021 2021 2022 2022 2022 2022 2023 2023 2023 2023 2024 Total Revenues $131,616 $123,
Slide 27: Thank You
KODIAK.> | | GAS SERVICES’, \ 2 < mm), ge THANK YOU! CONTACT: GRAHAM SONES | VP,IR IR@KODIAKGAS.cOM NYSE.
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