Kodiak Gas Services, Inc. · NYSE:KGS
Kodiak Gas Services — Investor Presentation (November 2023)
25 slides from Kodiak Gas Services's investor presentation, November 2023
Slide 1: Critical. Energy. Infrastructure. Investor Presentation
CRITICAL. ENERGY. INFRASTRUCTURE. INVESTOR PRESENTATION NOVEMBER 2023 KGS NYSE
Slide 2: Disclaimer
Disclaimer Forward Looking Statements. This presentation, 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. Forward-looking statements are neithe
Slide 3: Kodiak Overview
Kodiak Overview GAS COMPRESSION IS MISSION-CRITICAL TO NATURAL GAS & OIL PRODUCTION ▪ Leading provider of domestic energy infrastructure, enabling the reliable and secure AT-A-GLANCE flow of natural gas and oil to feed growing global demand ▪ NYSE: KGS (June 2023 IPO) ▪ Purpose-built fleet of over 3
Slide 4: Compression Required Throughout U.S. Energy Value Chain
Compression Required Throughout U.S. Energy Value Chain Centralized Gas Lift Gathering Systems Gas Processing Large horsepower, centralized facilities used to pressurize gas lift systems for field-wide reinjection to lift oil Large scale gathering facilities to collect natural gas and boost pressure
Slide 5: Global Energy Demand Will Continue to Grow
Global Energy Demand Will Continue to Grow GLOBAL DEMAND FOR NATURAL GAS & OIL EXPECTED TO OUTPACE POPULATION GROWTH ▪ EIA projects that population growth combined with increased per capita energy consumption will drive a 34% increase in global energy consumption from 2022 to 20501 ▪ Renewables will
Slide 6: U.S. Positioned to Take Advantage Through LNG Exports
U.S. Positioned to Take Advantage Through LNG Exports U.S. LNG – CLEAN, SECURE AND AFFORDABLE ENERGY FOR THE WORLD ▪ Abundant reserves position the U.S. to supply the world’s growing gas needs ▪ New export terminals have increased U.S. liquefied natural gas (LNG) exports every year since 2016 ▪ Germ
Slide 7: Kodiak Compression Fleet is Well-Positioned
Kodiak Compression Fleet is Well-Positioned Kodiak Owned Units U.S. LNG Export Capacity (Bcf/d) In Service 14.4 Under Construction 16.9 Approved 13.2 Potential Capacity 44.6 >90% of potential export capacity located on Gulf Coast Permian Sabine Pass Eagle Ford Cameron Port Arthur Golden Pass Calcasi
Slide 8: Permian Basin is THE Growth Engine of U.S. Production
Permian Basin is THE Growth Engine of U.S. Production BEST WELL ECONOMICS ATTRACT OUTSIZED SHARE OF INVESTMENT WTI Price to Cover Operating Expenses Permian Share of U.S. Land Rigs $45 $40 Permian $33 All Other $31 $29 $29 50% 50% Other U.S. Permian Other U.S. Eagle Ford Midland Delaware (Non-shale)
Slide 9: Kodiak's Fleet Was Purpose-Built for the Permian Basin
Kodiak’s Fleet Was Purpose-Built for the Permian Basin THE RIGHT EQUIPMENT FOR TODAY’S HIGHEST-DEMAND APPLICATIONS ▪ Large horsepower focus - average of 1,058 HP/unit1 ▪ Youngest fleet among public peers – average fleet age of ~4 years1 ▪ Compression systems designed for liquids-rich basins ▪ Suitab
Slide 10: Systematic Approach to Operations
Systematic Approach to Operations RIGOROUS ENGINE AND COMPRESSOR MAINTENANCE ▪ Data-driven, preventative maintenance strategy ▪ Program systemically ensures that unit engines are effectively “zero-houred” every ~10 years ▪ Standardized equipment optimizes efficiency of maintenance program Investing
Slide 11: Contract Structure Supports Cash Flow Visibility
Contract Structure Supports Cash Flow Visibility 1 FIXED MONTHLY REVENUE with multi-year terms 2 Annual Producer Price Index rate adjustments 3 Advance billing improves working capital cycle 4 98% mechanical availability guarantee 5 Customer bears mobilization and demobilization costs Percent of Mon
Slide 12: Premier Customer Base Supports Superior Growth
Premier Customer Base Supports Superior Growth Continuous HP Growth¹ Customers by Credit Rating2 Customers by Type3 3,132 3,210 2,933 2,747 2,601 53% 55% 47% 45% 2019 2020 2021 2022 Q3 2023 Investment Grade Non-Investment Grade Upstream Midstream 1 Reflects end-of-period revenue-generating HP, in th
Slide 13: Best Workforce in the Industry
Best Workforce in the Industry ~800 DEDICATED EMPLOYEES ▪ Emphasis on training and career advancement ▪ Multiple local and national top workplace awards ▪ All employees are shareholders KODIAK GAS SERVICES November 2023 Investor Presentation 13 | 13
Slide 14: Experienced and Diverse Leadership Team
Experienced and Diverse Leadership Team Mickey McKee John Griggs Chad Lenamon President & Chief Executive Officer Chief Financial Officer Chief Operations Officer Industry experience: 20 years Industry experience: 23 years Industry experience: 25 years • Formed Kodiak in 2010 • Served as CFO since j
Slide 15: Industry Leader in Sustainability Initiatives
Industry Leader in Sustainability Initiatives Key Milestones and Awards Environmental Highlights Low Emissions Fleet Renewable RenewableSourced SourcedElectricity Electricity 2020 Established formal ESG Committee >95% 100% of fleet is lower of our offices are powered emissions capable by electricity
Slide 16: 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 3,608 3,388 3,448 3,310 3,396 3,247 3,132 3,210 3,200 2,933 2,997 2,964 2,747 2,601 Q3 2019 Q3 Q3 2019 2020 2021 2022 2020 2021 2022 2019 2020 2021 2022 2023 2023 2
Slide 17: 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) Average Henry Hub Price ($/MMBtu) 140 14 $121 120 $115 $117 12 $108.87 $112 $108 $104 $105 $104 100
Slide 18: 2023 Third Quarter Financial Highlights
2023 Third Quarter Financial Highlights ▪ Significant de-levering through IPO ▪ Reduced debt by $1 billion in July 2023; covenant leverage of 4.07x at 9/30/23 ▪ Hedged ~70% of interest rate exposure through June 2025; next debt maturity is March 2028 ▪ Large horsepower/Permian focus has yielded stro
Slide 19: Capital Allocation Framework
Capital Allocation Framework Adjusted EBITDA1 Stable and growing cash flow base insulated from short-cycle commodity price swings Cash Interest Cash Taxes Maintenance Capex (-) ~70% of floating exposure hedged ~$2B NOLs provide tax shield through 2030 Predictable based on fleet age and hours (=) Dis
Slide 20: Full-Year 2023 Guidance
Full-Year 2023 Guidance (All amounts below are in thousands except per share amounts and percentages) Full-Year 2023 Guidance Low High Adjusted EBITDA (1) $ 430,000 $ 440,000 Discretionary Cash Flow (1)(2) $ 235,000 $ 245,000 Dividends per share (3) $ 0.38 $ 0.38 Segment Information Compression Oper
Slide 21: Thank You! Contact
4 ™ @ . KODIAK,» |x NYSE. THANK YOU! CONTACT: GRAHAM SONES | VP,IR IR@KODIAKGAS.cOM
Slide 22: Supplemental Slides
Danlgioa | = SUPPLEMENTAL SLIDES
Slide 23: 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 2022 3Q 2023 (in thousands) 3Q 2022 3Q 2023 Net cash provided by operating activities $59,207 $85,731 Total revenues $182,645 $230,983 Mainte
Slide 24: Reconciliation of Non-GAAP Financial Measures (cont'd)
Reconciliation of Non-GAAP Financial Measures (cont’d) Gross Margin to Adjusted Gross Margin Net Cash Provided by Operating Activities to DCF and FCF Net Cash Provided by Operating Activities to DCF and FCF (in thousands) 2020 2021 2022 (in thousands) 2020 2021 2022 Total revenues $532,420 $606,375
Slide 25: Reconciliation of Non-GAAP Financial Measures (cont'd)
Reconciliation of Non-GAAP Financial Measures (cont’d) Compression Operations Gross Margin to Compression Operations Adjusted Gross Margin 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 Total Revenues $131,616 $1
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