Executive Summary

KGS delivered record Q1 results and raised FY25 guidance. Revenue was $329.6M, up ~6% sequentially; Adjusted EBITDA was $177.7M; diluted EPS (GAAP) was $0.33. Management cited recontracting at higher rates, operational efficiencies, and strong large-horsepower demand as key drivers .
Versus S&P Global consensus, KGS beat on revenue ($329.6M vs $325.9M*) and Primary EPS ($0.429 vs $0.379*). S&P EBITDA actual (standard calc) was $169.5M vs $172.1M consensus*, while company-reported Adjusted EBITDA was higher at $177.7M, reflecting non-GAAP adjustments .
FY25 guidance raised: Adjusted EBITDA to $695–$725M (low end +$10M), DCF to $430–$455M, Contract Services adjusted GM% to 66.5–68.5%; capex recast into Growth ($180–$205M) and Other ($60–$65M), with total growth+other reduced by $10M at the high end vs prior $685–$725M, DCF $425–$450M, Contract Services adj GM% 66.0–68.0%, Growth capex $240–$280M .
Potential stock catalysts: reinforced pricing power (monthly $/HP rose to $22.48 from $21.97), high utilization (96.9% fleet; ~99% large horsepower), dividend raised 10% to $0.45, and share repurchases, alongside clearer FY25 trajectory and leverage reduction to 3.7x .

What Went Well and What Went Wrong

What Went Well
- Pricing and mix: Contract Services monthly $/HP increased to $22.48 from $21.97 QoQ; Contract Services adjusted GM% rose to ~67.7% (up ~100 bps QoQ), reflecting recontracting at market rates, high-grading, and efficiency gains .
- Utilization and growth: Fleet utilization increased to 96.9%, with ~49,000 HP of new large horsepower deployed and strong large-HP demand (~99% utilized per management) .
- Capital returns and balance sheet: Dividend increased 10% to $0.45; ~$10M buybacks at ~$36.87; leverage improved to 3.7x with ~81% of interest expense fixed .
What Went Wrong
- Adjusted EBITDA margin ticked down slightly to 53.9% from 54.6% QoQ, partly due to mix and small “immaterial” items despite overall beat; Other Services adj GM% was 13.4%, below last year’s 20.0% .
- Loss on sale of assets of $9.2M; depreciation and amortization remained high at $70.5M, continuing to weigh on GAAP earnings .
- Free cash flow declined sequentially to $47.2M from $56.7M, with higher growth/other capex outlays partly offset by asset sale proceeds .

Financial Results

Headline metrics vs prior periods and consensus (oldest → newest):

Metric	Q1 2024	Q4 2024	Q1 2025	Q1 2025 Consensus
Revenue ($USD Millions)	$215.5	$309.5	$329.6	$325.9*
Diluted EPS (GAAP) ($)	$0.39	$0.21	$0.33	Primary EPS: $0.379*
Adjusted EBITDA ($USD Millions)	$117.8	$169.1	$177.7	EBITDA: $172.1* (S&P EBITDA actual: $169.5*)
Adjusted EBITDA Margin (%)	54.6%	54.6%	53.9%	—
Contract Services Adjusted GM %	65.9%	66.7%	67.7%	—

Notes: Consensus values marked with an asterisk are from S&P Global (see Estimates Context for details). Company Adjusted EBITDA is non-GAAP as reconciled in filings .

Segment breakdown (oldest → newest):

Segment Metric	Q1 2024	Q4 2024	Q1 2025
Contract Services Revenue ($M)	$193.4	$280.2	$289.0
Contract Services Adjusted GM ($M)	$127.5	$187.0	$195.7
Contract Services Adjusted GM (%)	65.9%	66.7%	67.7%
Other Services Revenue ($M)	$22.1	$29.3	$40.7
Other Services Adjusted GM ($M)	$4.4	$4.2	$5.5
Other Services Adjusted GM (%)	20.0%	14.5%	13.4%

KPIs (as of quarter-end unless noted; oldest → newest):

KPI	Q1 2024	Q4 2024	Q1 2025
Fleet Horsepower	3,290,971 HP	4,402,747 HP	4,422,914 HP
Revenue-Generating Horsepower	3,285,592 HP	4,250,499 HP	4,284,103 HP
Fleet Utilization (%)	99.8%	96.5%	96.9%
Deployed New HP (during quarter)	—	—	48,900 HP
Rev-Gen HP per Unit	1,072	926	943
Contract Services $/HP/Month	—	$21.97	$22.48

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Adjusted EBITDA	FY 2025	$685–$725M	$695–$725M	Raised (low end +$10M)
Discretionary Cash Flow	FY 2025	$425–$450M	$430–$455M	Raised
Contract Services Revenue	FY 2025	$1.15–$1.20B	$1.15–$1.20B	Maintained
Contract Services Adjusted GM %	FY 2025	66.0–68.0%	66.5–68.5%	Raised
Other Services Revenue	FY 2025	$160–$180M	$160–$180M	Maintained
Other Services Adjusted GM %	FY 2025	14.0–17.0%	14.0–17.0%	Maintained
Maintenance Capex	FY 2025	$75–$85M	$75–$85M	Maintained
Growth Capex	FY 2025	$240–$280M	$180–$205M (recast)	Recast/Reduced in sum
Other Capex	FY 2025	—	$60–$65M	New category
Total Growth + Other Capex	FY 2025	$240–$280M	$240–$270M	Reduced (high end −$10M)
Dividend (Quarterly)	FY 2025	—	$0.45 declared (+10% QoQ)	Increased

No explicit OpEx, OI&E, or tax rate quantitative guidance was provided beyond non-GAAP guidance ranges .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2024, Q4 2024)	Current Period (Q1 2025)	Trend
AI/technology initiatives	Focus on margin improvement and synergies; efficiency emphasis	Implementing machine learning for condition-based maintenance; investing in industrial AI; ERP rollout	Strengthening adoption and operational impact
Supply chain	Tight markets; high utilization	Tariff impact expected low single-digit; main components sourced in N. America; shop/engine lead times ~45–50 weeks	Manageable cost risk; supply remains tight
Tariffs/macro	Raised 2024 guidance despite macro volatility	Business resilient to oil price volatility; LNG/power demand tailwinds; “Trump administration” LNG approvals cited	Macro supportive for gas and compression
Product performance	High demand for large HP; record adj EBITDA	Large HP ~99% utilized; monthly $/HP up QoQ; recontracting at higher rates	Sustained pricing power and utilization
Regional trends	Permian strength (70% of HP)	Remains Permian-led; can redeploy to other basins if needed	Permian central; optionality preserved
Regulatory/legal	—	LNG approvals, tariffs discussion; minimal OpEx/CapEx impact expected	Monitoring; immaterial financial impact
Workforce/training	—	New training center to address Permian labor constraints	Investments to support growth and margins

Management Commentary

“We recontracted a significant amount of horsepower at market rates... This helped drive a sequential increase in revenue and adjusted gross margin percentage in our Contract Services segment.” – Mickey McKee, CEO .
“Adjusted EBITDA for the quarter was just under $178 million... we did have a handful of individually immaterial items... that, when summed up, boosted adjusted EBITDA by about $1.5 million.” – John Griggs, CFO .
“We raised our contract services adjusted gross margin percentage to 66.5% to 68.5% and increased the midpoint of our adjusted EBITDA and discretionary cash flow guidance.” – John Griggs, CFO .
“Overall, we do not expect our OpEx or our CapEx to be impacted by tariffs by more than a low single-digit percentage in any given year.” – Mickey McKee, CEO .

Q&A Highlights

Guidance confidence and sensitivities: Narrow FY25 range reflects high visibility; key swing factor is recontracting execution and inflation assumptions (including tariffs) .
Outsourcing vs in-sourcing: Potential shift to outsourced compression as customers balance capex/opex; more likely reflected in 2026 budgets .
Capital allocation: Committed to 3.5x year-end leverage; opportunistic buybacks and support for expected continued block sales by EQT; confident in intrinsic value .
Pricing/margins drivers: Mix shift to large HP, AI-enabled maintenance extending cycles, fleet repositioning from exits and non-core divestitures, and training investments .
Supply chain and lead times: Engines ~45–50 weeks; packager/shop capacity also a bottleneck; supply tight, supporting pricing .
Strategic optionality/M&A: Open to bolt-ons post-CSI integration; fully contracted 2025 new units; early 2026 contracting progressing .

Estimates Context

Q1 2025 vs S&P Global consensus: Revenue $329.6M vs $325.9M* (beat), Primary EPS $0.429 vs $0.379* (beat), S&P EBITDA (standard) “actual” $169.5M vs $172.1M consensus* (slight miss on S&P definition), while company-reported Adjusted EBITDA was $177.7M (non-GAAP) .
Implications: Raised FY25 ranges (EBITDA, DCF, Contract Services adj GM%) and stronger pricing/utilization likely prompt upward estimate revisions for FY25 EBITDA midpoint and margin assumptions; capex recast signals lower total growth+other spend at the high end .

Values marked with an asterisk (*) are retrieved from S&P Global.

Metric	Q1 2025 Consensus	Q1 2025 Actual (per S&P)	Reported Company Figure
Revenue ($M)	325.9*	329.6*	329.6
Primary EPS ($)	0.379*	0.429*	Diluted GAAP EPS: 0.33
EBITDA ($M)	172.1*	169.5*	Adjusted EBITDA: 177.7

Key Takeaways for Investors

Pricing power intact: Recontracting at higher rates and mix toward large HP continue to expand Contract Services margins; watch monthly $/HP and renewal cadence for sustainability .
Utilization supports cycle durability: Fleet utilization rose to 96.9%, with large HP effectively ~99% utilized—a buffer against pricing erosion absent a severe downturn .
Guidance credibility improved: FY25 EBITDA low-end raised; DCF and margin ranges lifted; capital framework tightened via capex recast and high-end reduction—enhancing FCF visibility .
Capital returns and deleveraging: Dividend up 10% to $0.45 and opportunistic buybacks alongside trajectory to 3.5x leverage by year-end; expect continued share absorption in secondary activity .
Tariff and supply chain risks manageable: Management expects low single-digit OpEx/CapEx impact, with North American sourcing and contract inflation escalators offsetting .
Operational tech edge: Machine learning for condition-based maintenance and workforce training should underpin margin resilience and technician productivity .
Watchlist into Q2: Renewal/pricing outcomes, large HP delivery/lead times, Other Services project cadence, and any delta between S&P EBITDA vs company Adjusted EBITDA framing in sell-side models .

Sources:

Q1 2025 8-K/Press Release (financials, guidance, KPIs, dividend, leverage): .
Q1 2025 Earnings Call (prepared remarks, Q&A, pricing, $/HP, tariffs, supply chain, capex, buybacks): .
Prior quarters for trend/guidance baselines: Q4 2024 8-K (financials, guidance, utilization, segment margins): ; Q3 2024 8-K (record EBITDA/FCF, utilization, segment data): .

S&P Global disclaimer: Consensus and S&P “actual” values marked with an asterisk (*) are retrieved from S&P Global.

Kodiak Gas Services, Inc. (KGS)·Q1 2025 Earnings Summary