Kodiak Gas Services, Inc. · NYSE:KGS
Kodiak Gas Services — Investor Presentation (September 2024)
27 slides from Kodiak Gas Services's investor presentation, September 2024
Slide 1: Investor Presentation September 2024
INVESTOR PRESENTATION September 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, 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 4.5 million HP1 ► Market leader with 2.8 million of large HP compression in the Permian1 Industry Leader in Both Growth & Utilization ► 0 to 4.5 million horsepower in 13 years ► ~98% utilization rate on >1,000 HP units1 Attractive In
Slide 5: Q2 2024 Financial & Operational Highlights
Q2 2024 Financial & Operational Highlights Total Contract Services Discretionary Revenues Revenue Cash Flow1 $310 million $276 million $91 million +44% vs Q1 2024 +43% vs Q1 2024 +26% vs Q1 2024 Quarterly Adjusted EBITDA1 ($M) $154 Operational Statistics $118 $114 $108 $110 41,500 HP 98% $106 $102 $
Slide 6: Industry Leading Shareholder Returns at an Attractive Valuation
Industry Leading Shareholder Returns at an Attractive Valuation Creating Value for Shareholders EV/2025 Adj. EBITDA1 ► Valuation provides the potential for further upside 13.5x ► Shareholder return program provides attractive 10.0x 8.8x cash return 7.2x 8.2x 86% KGS AROC USAC Midstream Peers S&P 500
Slide 7: Latest Milestone Drives Kodiak to a Market Leading Position
Latest Milestone Drives Kodiak to a Market Leading Position June 2024 April 2022 May 2010 Kodiak Gas Services founded October 2019 4.5 3 million November 2018 2.4 million HP 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 6/30/2024 F
Slide 8: CSI Acquisition Synergy Estimate Raised to $30M+
CSI Acquisition Synergy Estimate Raised to $30M+ Operations / Supply Chain Run-Rate Cost Synergies ► Optimized labor force and real estate Exceed Expectations footprint ► Consolidated supply contracts (lube $35 >$30 oil, spare parts, telemetry) million $30 ► In-sourced certain repair & maintenance c
Slide 9: Industry Leading Compression Capacity
Industry Leading Compression Capacity 2.8 million ~1,150 ~98% Permian Average Permian Large horsepower 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 10: 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 11: 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 12: 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 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 Bcf/d 140 millions Compression CapEx $ Capex per HP ~$1,200 130 $1,400 Dry Gas Production $1,347 120 $1,200 $1,070 M $
Slide 14: Multiple Compression Touch Points
Multiple Compression Touch Points Gas Processing Residue Centralized Compression Gathering Gas Lift Systems Permian Basin Haynesville Shale NATURAL GAS GROWTH 2020-2024E1 Bcf/d 3x – 4x 8.8 Compression Required 3.2 in the Permian Basin vs Haynesville 1 EIA Short-Term Energy Outlook Permian Basin Hayn
Slide 15: 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 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% 43% 34% 57% 66% 2019 2019 2020 2020 2021 2021 2022 2022 2023 2023 2024 1H ‘24 Investment Grade Upstream Non-Investment Grade Midstream 1 Reflects end-of-period Rev
Slide 17: Contract Structure Supports Cash Flow Visibility
Contract Structure Supports Cash Flow Visibility 1 Fixed monthly revenue Percent of Month-to-Month Contracts1 with multi-year terms 89% HP with Remaining Contract Term 2 Annual inflation index adjustments 11% HP on Month-to-Month Contract Term 3 Advance billing improves 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 Margin ($M) 180 Kodiak Contract Services Adj. Gross Margin ($M) $177 20 Average WTI Crude Oil Price ($/bbl) 160 Average Henry Hub Price ($/MMBtu) 18 16 140 $126 $128 $121 14 120 $115 $117 $112 $108 $104 $10
Slide 19: 2024 Capital Plan
2024 Capital Plan Full Year Capital Spending1 2024 New Units Other New Unit CapEx >95% $270 - $300 Permian focused Million 2024e CapEx >2,000 HP Maintenance Average horsepower per unit CapEx New Unit Horsepower (in thousands) 48 50 – 55 90K 42 Organic increase horsepower in 1H24 18 – 20 Q1 2024 Q2 2
Slide 20: No Near-Term Debt Maturities
No Near-Term Debt Maturities Reduced High Yield Borrowing Costs2 <3.5x 12% 6.4% 10% 9.9% Target leverage ratio by Weighted average 8% year-end 2025 borrowing cost1 6.2% 6% 4% 2% 0% Kodiak’s Debt Maturity Profile3 2,000 1,800 1,600 ABL Facility Senior Unsecured Notes $1,786 1,400 1,200 ($M) 1,000 800
Slide 21: 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 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: Supplemental Slides
Danlgioa | = SUPPLEMENTAL SLIDES
Slide 24: New Segment Revenue Breakout
New Segment Revenue Breakout ► Contract compression – provide turnkey Contract Services compression services with Kodiak-owned HP contracted, fixed-fee ► Contract operations – operate customer- 64% recurring revenues owned HP for a fee Q2 2024 Adjusted Gross Margin1 ► Gas Treating – fee-based amine
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) 2Q 2023 1Q 2024 2Q 2024 (in thousands) 2Q 2023 1Q 2024 2Q 2024 Total revenues Net cash provided by operating activities $94,678 $51,542 $121,082
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 (in thousands) 2020 2020 2020 2020 2021 2021 2021 2021 2022 2022 2022 2022 2023 2023 2023 2023 2024 2024 Total Revenues $131,616 $1
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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