Kodiak Gas Services has lowest debt ratio in its history, aims lower

By Devika Patel

Knoxville, Tenn., March 11 – Kodiak Gas Services Inc. brought its debt to EBIT leverage ratio down to a record 3.96x at the end of last year and plans to bring this down even further to 3.5x or lower by the end of 2025.

“We achieved a milestone debt to EBIT leverage ratio of under 4x at the end of 2023, the lowest in the history of our company and a mark we expect to continue to be able to push down,” president and chief executive officer Mickey McKee said on the company’s fourth quarter and year ended Dec. 31, 2023 earnings conference call on Friday.

“We remain on track to return to achieve our long-term leverage target of 3.5x or less by year-end 2025,” executive vice president and chief financial officer John Griggs said on the call.

In February, the company sold $750 million of 7¼% notes due 2029.

“Last month, we issued $750 million of 7¼% senior unsecured notes due 2029,” Griggs said.

“As a debut issuer, we were very pleased with both the credit ratings we achieved and the pricing.

“It’s clear that ratings agencies and debt investors wholly subscribed to the current strength and future outlook of the U.S. compression market, as well as the durability and quality of Kodiak's cash flows,” Griggs said.

Total revenues for the fourth quarter of 2023 were $226 million, compared to $179.8 million for the fourth quarter of 2022. Total revenues in 2023 were $850.4 million, compared to $707.9 million for 2022.

Adjusted EBITDA for the quarter ended Dec. 31, 2023 was $113.9 million, compared to $103.2 million for the quarter ended Dec. 31, 2022.

Adjusted EBITDA was $438.1 million for the year, compared to $399 million for 2022.

Cash and cash equivalents were $5,562,000 as of Dec. 31, 2023, compared to $20,431,000 as of Dec. 31, 2022.

Long-term debt, net of unamortized debt issuance cost, was $1,791,460,000 as of Dec. 31, 2023, compared to $2,720,019,000 as of Dec. 31, 2022.

Based in Montgomery, Tex., Kodiak supplies contract labor and mechanical expertise for end users of compression, dehydration, processing and treating equipment.

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