Kodiak Gas Services Inc

Equity Research 20 August 2026 | 6:32AM EDT

Kodiak Gas Services Inc. (KGS): 2Q26 Recap: Top-Tier Execution on Compression as Demand Grows; Plus Power Momentum

Following 2Q26 earnings for Kodiak Gas Services (KGS), we refresh our John Mackay | estimates. 2Q26 results were solid, highlighted by stronger than expected Goldman Sachs & Co. LLC compression margins. Looking forward, 2026 EBITDA guidance was increased to Jackie Koletas $830-860m (from $820-860m prior), vs. new GSe/consensus of $838m/$847m, | partially after a ~$33m operating lease buyback in July. Compression margins remain Goldman Sachs & Co. LLC

a focus on the back of higher lube oil costs (second largest opex line item after Olivia Foster | labor), but management highlighted confidence in their ability to manage these costs Goldman Sachs & Co. LLC through ongoing efficiencies and technology investments - constructive in our view Ben Lund given pressure seen at peers in the quarter. We expect these operational | Goldman Sachs & Co. LLC improvements to provide momentum into later 2027 and 2028+ as lube oil costs normalize, adding to our already constructive compression outlook with pricing continuing to move higher (particularly as Permian gas supply outperformance drives accelerating demand). Elsewhere, commentary on the power business was constructive - particularly relative to investor concerns after challenging peer updates. As expected, larger commercial updates should come later in the year, though the company highlighted a limited notice to proceed (LNTP) for a West Texas data center for power in early 2027. While smaller (<100 MW), we view it as a critical first step toward broader contracting success and look for the announcement of large deals from here. We largely raise our estimates to reflect a stronger compression margin outlook, more than offsetting the impact of slightly deferred power deployments in 2027. We maintain our long-term power capacity expectations (GSe 1.5 GW by 2030), pending further visibility into the commercial pipeline. We now forecast a 16% 2025-30 EBITDA CAGR (15% previously) and increase our PT to $90 (from $89). With the stock at ~$60, we continue to believe the stock is pricing in minimal credit for power currently. We maintain our Buy rating.

Earnings Summary and Key Takeaways

Earnings Summary Strong 2Q26. KGS reported EBITDA of $217m vs. GSe and consensus of $216m/$213m (+1%/+2%). Slightly lower power margin on its legacy DPS business was offset by stronger compression margin (both higher prices and lower costs).

Guidance increased. KGS revised 2026 EBITDA guidance to $830-860m (from $820-860m prior) on lower compression costs. Revenue expectations for all

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Goldman Sachs Kodiak Gas Services Inc. (KGS)

segments were maintained, though compression gross margin expectations improved to 69.0%-70.05% from 68.5%-70% prior. First, KGS realized stronger gross margin in 2Q26 with cost efficiencies continuing to outperform in addition to supportive pricing. Gross margin is expected to decline into 2H26 as lube oil costs increase, though its recent purchase of an operating lease in 3Q26 partially offsets and supports higher gross margin guidance expectations for YE26. The power segment is expected to generate more significant growth in 2027+, with revenue and gross margin guidance maintained for the year.

n The compression business remains strong. The contract compression market remains strong, characterized by ongoing supply-side tightness. Lead times remain above +180 weeks for new 3600 compression engine units. As a result, KGS has secured long term packages for 2027 through 2029 deliveries to mitigate these…