Kodiak Gas Services, Inc. · NYSE:KGS
Kodiak Gas Services — Investor Presentation (November 2024)
27 slides from Kodiak Gas Services's investor presentation, November 2024
Slide 1: Investor Presentation November 2024
INVESTOR PRESENTATION November 2024
Slide 2: Disclaimer
Disclaimer Cautionary Note Regarding Forward-Looking Statements. This presentation 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 We Move Energy. Reliably. Market Cap $3.1 billion Safely. Enterprise Value 8% Responsibly. 2% $5.7 billion Northern Rockies North
Slide 4: Investment Thesis
Investment Thesis Leading Market Position ► Purpose-built fleet of 4.4 million HP1 ► Market leader with 2.9 million HP of compression in the Permian1 Industry Leader in Both Growth & Utilization ► 0 to 4.4 million horsepower in 13 years ► 99% utilization rate on >1,000 HP units1 Attractive Industry
Slide 5: Q3 2024 Financial & Operational Highlights
Q3 2024 Financial & Operational Highlights Total Contract Services Free Revenues Adjusted Gross Margin Cash Flow1 $325 million 66% $53 million +5% vs Q2 2024 +2% vs Q2 2024 >100% vs Q2 2024 Quarterly Adjusted EBITDA1 ($M) $168 $154 Operational Statistics $118 $110 $114 50K HP 96% $108 $106 Increase
Slide 6: Delivering Profitable Growth
Delivering Profitable Growth Driving Margin Expansion Contract Services Adjusted Gross Margin1 Redeployed 38K horsepower of 66% formerly idle units 1% Added 50K new horsepower at Cost 1% Rationalization market rates 64% Revenue per HP Transaction synergy realization Growth and continued cost managem
Slide 7: The Kodiak Difference
The Kodiak Difference Every aspect of the business is geared towards providing superior service as defined by industry-leading mechanical availability Purpose-Built Fleet Industry Leading Training Program1 Large HP fleet engineered for liquids-rich basins ~19,000 Hours of Technical Training ~1,800 H
Slide 8: Continuing to Increase Shareholder Diversity & Liquidity
Continuing to Increase Shareholder Diversity & Liquidity Top 5 Shareholders Equity Ownership (% of fully diluted shares outstanding)1 (% of fully diluted shares outstanding)1 January 2024 September 2024 6% 84% 64% 37% 57% Top 5 Shareholders Remaining Shareholders Improved Shareholder Liquidity Publi
Slide 9: Industry Leading Shareholder Returns at an Attractive Valuation
Industry Leading Shareholder Returns at an Attractive Valuation Creating Value for Shareholders 14.9x EV/2025 Adj. EBITDA1 ► Valuation provides the potential for further upside 11.1x ► Shareholder return program provides attractive 8.8x 8.9x 8.2x cash return 130% KGS AROC USAC Midstream S&P 500 Peer
Slide 10: Industry Leading Compression Capacity
Industry Leading Compression Capacity 2.9 million ~1,150 ~99% Permian horsepower Average Permian Large horsepower horsepower per unit utilization rate1 Top 3 North America Contract Compression Providers = ~75% of the outsourced market2 United States Compression Market3 HP (in millions) % Outsourced
Slide 11: 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 Bcf per day Ford 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 ~3.5 million horsep
Slide 12: 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 2 ~ 3 - 10 ~128-135 CENTERS AND ARTIFICIAL 04 INTELLIGENCE PROJECTED TO DRIVE SURGE IN POWER DEMAND 2023 LNG Mexico Power/ Other 2030 Construction of Data Centers2 15% Forecaste
Slide 13: Compression Demand Outlook
Compression Demand Outlook ► Based on midpoint of power demand forecast range - U.S. gas demand expected to increase by 28 Bcf/d by 2030 ► An increase of ~2.4 million horsepower per year through 2030 would be required to meet this demand ► Demand forecast greatly exceeds capacity additions by contra
Slide 14: Compression Industry Has Displayed Capital Discipline
Compression Industry Has Displayed Capital Discipline Compression industry capital spending remains below …while costs to add HP have historical levels1… risen significantly2 $1,600 millions Bcf/d 140 $ Capex per HP Compression CapEx 130 ~$1,200 $1,400 Dry Gas Production $1,347 120 $1,200 $1,070 M 1
Slide 15: Multiple Compression Touch Points
Multiple Compression Touch Points Gas Processing Centralized Gathering Gas Lift Systems Permian Basin Residue Haynesville Compression Shale NATURAL GAS GROWTH 2020-2024E1 Bcf/d 8.8 3.2 3x – 4x Compression Required in the Permian Basin Permian Basin Haynesville vs Haynesville 1 EIA Short-Term Energy
Slide 16: Premier Customer Base Drives Growth & Stability
Premier Customer Base Drives Growth & Stability Continuous HP Growth¹ Customers by Credit Rating2 Customers by Type3 2019 – 2023 CAGR 6% 40% 34% 60% 66% Investment Grade Upstream 2019 2020 2021 2022 2023 Sept. '24 Non-Investment Grade Midstream 1 Reflects end-of-period revenue-generating HP 2 Based
Slide 17: Contract Structure Supports Cash Flow Visibility
Contract Structure Supports Cash Flow Visibility Percent of Month-to-Month Contracts1 Fixed monthly revenue 1 with multi-year terms HP with Remaining 89% Contract Term Annual inflation index 11% 2 adjustments HP on Month-to-Month Contract Term Advance billing improves 3 working capital cycle Weighte
Slide 18: Steady Business in Any Commodity Price Environment
Steady Business in Any Commodity Price Environment Quarterly Contract Services Adjusted Gross Margin1 ($M) 200 20 Kodiak Contract Services Adj. Gross Margin ($M) $188 180 Average WTI Crude Oil Price ($/bbl) $177 18 Average Henry Hub Price ($/MMBtu) 160 16 140 14 $126 $128 $121 $115 $117 120 $112 12
Slide 19: 2024 Capital Plan
2024 Capital Plan Full Year Capital Spending1 2024 New Units New Unit CapEx Other >95% $270 - $300 Permian focused Million 2024e CapEx >2,000 HP Average horsepower per unit Maintenance CapEx New Unit Horsepower (in thousands) 48 50 140K 42 Organic increase 18 – 22 horsepower in the first nine months
Slide 20: Full-year 2024 Guidance
Full-year 2024 Guidance (All amounts below are in thousands except per share amounts and percentages) Low High Adjusted EBITDA (1) $ 600,000 $ 610,000 Discretionary Cash Flow (1)(2) $ 365,000 $ 385,000 Segment Information Contract Services revenues $ 1,020,000 $ 1,040,000 Contract Services Adjusted
Slide 21: No Near-Term Debt Maturities
No Near-Term Debt Maturities Reduced High Yield Borrowing Costs2 12% 9.9% <3.5x 6.5% 10% 8% 6.3% Target leverage ratio by Weighted average 6% year-end 2025 borrowing cost1 4% 2% 0% Kodiak’s Debt Maturity Profile3 2,000 ABL Facility Senior Unsecured Notes $1,892 1,600 1,200 ~4 years ($M) 800 $750 400
Slide 22: 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 $0.41 per share ~7-9% grow
Slide 23: 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 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) 3Q 2023 2Q 2024 3Q 2024 (in thousands) 3Q 2023 2Q 2024 3Q 2024 Total revenues $230,983 $309,653 $324,647 Net cash provided by operating activiti
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 Contract Services 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q (in thousands) 2020 2020 2020 2020 2021 2021 2021 2021 2022 2022 2022 2022 2023 2023 2023 2023 2024 2024 2024 Total Revenues $13
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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