Kodiak Gas Services Inc

Equity Research 6 August 2026 | 7:37PM EDT

Kodiak Gas Services Inc. (KGS): First Take: Strong 2Q26; Compression Solid, Power Capex Tightened

Kodiak (KGS, Buy) reported 2Q26 adj. EBITDA of $217m, above GSe and John Mackay | consensus of $216m/$213m (+1%/+2%). Higher compression margin (better fees Goldman Sachs & Co. LLC and lower costs) vs. our model offset slightly lower power margin. Looking forward, Jackie Koletas management revised FY26 guidance to $830-860m (from $820-860m prior) | partially on lower compression costs. On the call, we expect margin trajectory and Goldman Sachs & Co. LLC

cost inflation assumptions to be in focus for 2H26 after compression peer AROC Olivia Foster | disclosed anticipated lube oil cost pressure for 2H26 with earnings this week. Goldman Sachs & Co. LLC Elsewhere, KGS announced a purchase leaseback agreement which occurred in Ben Lund 3Q26, further supporting long term cash flow growth. We see ongoing compression | Goldman Sachs & Co. LLC strength this quarter as validating for the core business and believe it should be supportive for the stock following material underperformance last week, well below our implied base business value (low $60/sh). For KGS’s power business, the company tightened its capex expectations for the year following payment time clarity with its recent framework agreement announcement with Baker Hughes. We expect commentary on the power business to be most top of mind following LBRT and PUMP earnings where commercial opportunities for data centers screen smaller (though higher in MW size) and upfront payment costs (particularly for data center applications) have risen. As noted last week, we remain confident in KGS’s ability to execute in BTM. On the call, we look for updates on power contract agreement progress and extended timing of deployments and views on power engine terminal value. For its compression business, we focus on compression margin trajectory, and upside to its long-term CAGR from here.

n Fleet HP below GSe, up QoQ on revenue generating HP: Fleet horsepower at the end of the quarter came in at 4.495m, +18k HP higher QoQ. Revenue generating horsepower at the end of the quarter came in at 4.413m, in-line with GSe. Utilization was 98.2%, above our expectation of 98.05%. n Pricing better than GSe, up QoQ: Pricing (end-of-period revenue per HP per month) came in at $23.80, above GSe of $23.71. This is up +2% vs. 1Q26 and +5% YoY. n Compression Services gross margin was better vs. GSe and down QoQ: Gross

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Goldman Sachs Kodiak Gas Services Inc. (KGS)

margin for the Compression segment margin was 70.0%, lower than 1Q26 at 70.6%, though above our expectations of 69.0%. n Power margin was just below GSe: Gross margin for the Power business was $21m vs. GSe of $23m.

Guidance. Management increased the bottom end of FY26 EBITDA guidance to $830-860m (from $820-860m) vs. GSe of $842m and consensus of $843m. All segment revenue expectations were maintained while lower expected compression costs (better margins) drive the more constructive outlook for 2026. Total capex guidance was revised to $805-$895m from $770-920m prior, below GSe of $1,087m and vs. consensus of $846m. Lower assumed power growth spending offset modestly higher compression capital (which reflects a recent purchase leaseback in 3Q26). For 2Q26, KGS reported $275m of total spend vs. GSe of $307m and consensus of $289m. The difference is largely attributable to timing of upfront power payments.

Continued investment in compression. In 3Q26, KGS exercised a buyout related to operating lease arrangements for 43k HP compression equipment for $33m. We look for more color on the implied…