Why Kodiak Gas Services Shares Are Down Today

Kodiak Gas Services, Inc. KGS shares are trading lower after the company reported worse-than-expected fourth-quarter EPS results and issued FY24 guidance.

Revenue of $225.98 million beat the consensus of $224.5 million. Compression Operations segment adjusted gross margin expanded 140 basis points Q/Q. Adjusted EBITDA rose to $113.9 million in the quarter from $103.2 million in the prior year quarter.

The company reported an EPS loss of $(0.09), missing the EPS estimate of $0.29.

Horsepower utilization ended at 99.9% in the year. As of December 31, 2023, the company had total debt outstanding of $1.8 billion.

Outlook: Kodiak Gas expects FY24 adjusted EBITDA of $460 million-$490 million and expects Discretionary Cash Flow of $295 million-$310 million.

Mickey McKee, founder and Chief Executive Officer, said, “As we look forward, customer demand for large horsepower compression infrastructure continues to be strong, particularly in the Permian Basin, where over 70% of our horsepower is deployed. Our fleet is effectively fully utilized, and we expect this trend to last given the robust multi-year outlook for natural gas to supply the coming wave of LNG export projects.” 

“Kodiak is fully contracted on our 2024 new unit deliveries, and deep in discussions with our customers on their 2025 needs.”

In December, the company penned a definitive agreement to acquire CSI Compressco LP CCLP in an all-equity transaction valued at approximately $854 million, including the assumption of $619 million of net debt, based on the closing price of Kodiak’s stock on December 18, 2023. 

Price Action: KGS shares are down 6.08% at $25.04 on the last check Thursday.