KGS 10-K & 10-Q changes, risk factors and insider trading

An investment in our common stock involves a high degree of risk. As described in Part I “Disclosure Regarding Forward-Looking Statements,” this Annual Report contains forward-looking statements regarding us, our business, and our industry. The risk factors described below, among others, could cause our actual results to differ materially from the expectations reflected in the forward-looking statements. The occurrence of one or more of the events or circumstances described in the section titled “Risk Factors,” alone or in combination with other events or circumstances, may materially adversely affect our business, financial condition and operating results. In that event, the trading price of our common stock could decline, and youstockholders could lose all or part of yourtheir investment. Such risks include, but are not limited to:

The demand for Kodiak’s business and services depends upon the continued demand for, and production of, natural gas and oil. The natural gas and oil industry is historically cyclical with levels of activity that are significantly affected by the levels and volatility of natural gas and oil prices. Kodiak may experience fluctuations in operating results as a result of the reactions of Kodiak’s customers to changes in natural gas and oil prices. Demand may be affected by, among other factors, natural gas prices, oil prices, weather, availability of alternative energy sources, governmental regulationsources and the overall demand for energy. Additionally, in response to increased domestic energy costs, a declared national emergency, or other circumstances determined to be in the economic or other interest of the country, the U.S. government could restrict or ban the export of natural or oil, which would affect demand and could adversely affect our business. For example, in January 2024, in response to concerns from environmental groups, the U.S. announced a temporary pause on new authorizations of certain LNG exports, although the pause was subsequently lifted in January 2025. Any prolonged, substantial, material reduction in the demand for natural gas or oil would likely depress the level of production activity and result in a decline in the demand for Kodiak’s business and services, which could result in a reduction in Kodiak’s revenues.

Kodiak’s customers that are significant producers, processors, gatherers and transporters of natural gas and oil may choose to vertically integrate their operations by purchasing and operating their own compression fleets in lieu of using Kodiak’s business and services for a variety of reasons, including customer reactions to changes in the pricing of our services, revised customer capital allocation strategies, failure to meet certain customer safety standards or any other reason. There are many technologies available for the artificial enhancement of oil production, and Kodiak’s customers may elect to use these alternative technologies instead of the gas lift compression Kodiak provides. Such vertical integration or use of alternative technologies could result in decreased demand for Kodiak’s business and services, which may have a material adverse effect on Kodiak’s business, results of operations and financial condition, and reduce its cash available for distribution.

Taxing authorities in the jurisdictions in which Kodiak operates have in the past, and may in the future, audit Kodiak or otherwise challenge the amount of sales tax Kodiak has collected or paid. As a result, Kodiak may incur material unanticipated sales tax liabilities. FromFor example, from October 2019 through April 2023, Kodiak received notices of audits from the State of Texas Comptroller’s office for the periods covering December 2015 through November 2023 (the “Sales Tax Audit”). BasedDuring on2025, Kodiak received a settlement offer from the informationTexas currentlyComptroller’s available,office to resolve certain of the outstanding Texas sales and use tax matters, pursuant to which Kodiak would be subject to interest and penalties for all open periods totaling $28.0 million. Kodiak has accruedaccepted asthe ofTexas DecemberComptroller 31,settlement 2024, a contingent liability of $70.1 millionoffer for the periodsSales setTax forthAudit and is currently in the noticesprocess of audit.reviewing Thisall accrualopen mayperiods not be sufficient to coverwith the expensesTexas andComptroller’s liabilities related to a future audit for such period.office.

No Kodiak considers its relationship with its employees to be satisfactory, and certain of Kodiak’s employees are represented by a union in collective bargaining with Kodiak. However, efforts could be made by employees and third parties from time to time to unionize portions of Kodiak’s workforce. In addition, Kodiak may be subject to strikes or work stoppages and other labor disruptions in the future. Any unionization efforts, collective bargaining agreements or work stoppages could have a materially adverse effect on Kodiak’s operating results or limit its operational flexibility. Further, our response to any union organizing efforts could negatively impact how our brand is perceived by our employees and customers and have material adverse effects on our business and future results.

The substantial majority of the components for Kodiak’s natural gas compression equipment are supplied by a limited number of key vendors. Kodiak’s reliance on these suppliers involves several risks, including price increases and a potential inability to obtain an adequate supply of required components in a timely manner on account of supplier nonperformancenonperformance, extended lead times or otherwise. Kodiak also relies primarily on a limited number of vendors to package and assemble its compression units. Kodiak does not have long-term contracts with these suppliers or packagers, and a partial or complete loss of any of these sources could have a negative impact on Kodiak’s results of operations and could damage its customer relationships. In addition, the preferences of Kodiak’s customers with respect to particular vendors may change, which could require Kodiak to find new vendors. Some of these suppliers manufacture the components Kodiak purchases in a single facility, and any damage to that facility could lead to significant delays in delivery of completed compression units to Kodiak.

Kodiak’s operations are potential targets for terrorist acts and threats, acts of war, social unrest, cyber and physical security attacks, and other disruptive activities of individuals or groups, including by nation states or nation state-sponsored groups. There have been cyber and physical attacks within the energy industry on energy infrastructure in the past and there are likely to be additional attacks in the future. Kodiak and its suppliers and vendors have been subject to, and will likely continue to be subject to, attempts to disrupt operations, any of which could result in a material decrease in revenues and which increase costs to protect, repair, and insureensure Kodiak’s assets and operate its infrastructure, systems, and business.

Kodiak’s operations at customer sites are subject to stringent and complex federal, state and local environmental, health and safety laws and regulations, including laws and regulations governing the discharge of materials into the environment, emissions controls and other environmental protection and occupational health and safety concerns. Environmental laws and regulations, such as CERCLA and comparable state laws, may impose strict, as well as joint and several, liability for environmental contamination, which could render Kodiak potentially liable for remediation costs, natural resource damages, the costs of certain health studies and other damages, regardless of whether Kodiak was responsible for the release or contamination, and even if Kodiak’s operations were lawful at the time of the release or if contamination was caused by third parties.release. In addition, third parties, including neighboring landowners, could file claims for personal injury, property damage and recovery of response costs. Remediation costs and other damages arising as a result of environmental laws and regulations, and costs associated with changes in existing environmental laws and regulations or the adoption of new environmental laws and regulations over time could adversely impact Kodiak’s or its customers’ financial condition or results of operations. Moreover, failure by Kodiak or its customers to comply with these environmental laws and regulations could result in the imposition of administrative, civil and criminal penalties and the issuance of injunctions delaying or prohibiting operations, which could in turn have an adverse impact on Kodiak’s customers and its business.

Kodiak conducts operations in a wide variety of customer locations across the continental U.S. and internationally. Kodiak’s customers are required to hold certain U.S. federal, state or local or other jurisdictional environmental permits or other authorizations and may require new or amended facility permits or licensesauthorizations from time to time with respect to storm water discharges, hydraulic fracturing, waste handling or air emissions relating to equipment operations, including compression units, which subject Kodiak’s customers to new or revised permitting conditions that may be onerous or with respect to which compliance may be costly. TheseNoncompliance permits and authorizations frequently contain numerous compliance requirements, including monitoring and reporting obligations and operational restrictions, such as emissions limits. Given the wide variety of locations in whichby Kodiak’s customers operate, and the number of environmental permits and other authorizations that are applicable to its customers’ operations, Kodiak’s customers may occasionally identify or be notified of violations of or noncompliance with certain requirements existing under various permits or may be required to obtain additional permits. Although Kodiak does not hold the permits, such noncompliance with required permits or the failure to obtain additional permits by Kodiak’s customers could subject its customersthem to future penalties, operating restrictions, or delays in obtaining new or amended permits which could in turn have a material adverse effect on Kodiak’s business, financial condition and results of operations.

In addition,recent years, the EPA proposed rules in November 2021 and 2022issued rules intended to reduce methane emissions from natural gas and oil sources. TheChanges proposedto rulesSubpart wouldOOOO makeincrease the stringency of existing regulations in Subpart OOOOa more stringentstandards and create a Subpart OOOOb to expand reduction requirements for new, modified, and reconstructed natural gas and oil sources, including standards focusing on certain source types that have never been regulated under the CAA (including intermittent vent pneumatic controllers, oil well associated gas, and liquids unloading facilities).sources. In addition, theregulatory proposed rule would establish “Emissions Guidelines,” creating a Subpart OOOOc that wouldchanges require states to develop plans to reduce methane emissions from existing sources that must be at least as effective as presumptive standards set by the EPA. The EPA announced a final ruleHowever, in DecemberJuly 2023, which, among other things, requires the phase out of routine flaring of natural gas from new oil wells and routine leak monitoring at all well sites and compressor stations. Notably,2025, the EPA updatedproposed theextending applicabilitySubpart dateOOOO deadlines for Subparts OOOObsources and OOOOcstates to DecemberJanuary 6,2027. 2022,If meaning that sources constructed prior to that date will be considered existing sources with later compliance dates under state plans. The final rule gives states, along with federal tribes that wish to regulate existing sources, two years to develop and submit their plans for reducing methane from existing sources. The final emissions guidelines under Subpart OOOOc provide three years from the plan submission deadline for existing sources to comply.finalized, Kodiak cannot predict how the EPA and states will implement the final rule; however,regardless, Subpart OOOO regulation of air emissions from the natural gas and oil sector could result in increased expenditures for pollution control equipment, which could impact Kodiak’s customers’ operations and negatively impact Kodiak’s business.

Additionally, ina August2024 2022,rule issued by the PresidentEPA of the United States signed into law the Inflation Reduction Act. Among other things,under the Inflation Reduction Act includes a methane emissions reduction program that amends the CAA to include a Methane Emissions and Waste Reduction Incentive Program for petroleum and natural gas systems. This program requires the EPA to imposeimposed a “waste emissions charge” on certain natural gas and oil sources that are already required to report under the EPA’s Greenhouse Gas Reporting Program.Program Inand order to implement the program, the Inflation Reduction Act required revisions torevised GHG reporting regulations for petroleum and natural gas systems (Subpart W). by 2024. In May 2024, the EPA proposed to expand the scope of the Greenhouse Gas Reporting Program for petroleum and natural gas facilities, as required by the Inflation Reduction Act. Among other things, theThe rule also expands the emissions events that are subject to reporting requirements to include “other large release events” and applies reporting requirements to certain new sources and sectors. TheHowever, rule took effect on January 1, 2025 for reporting year 2025 (duein March 2026) in certain circumstances, with the potential to also impact GHG reporting for reporting year 2024 (due March 2025) in certain circumstances. In November 2024, the EPA finalized a rule implementing the Inflation Reduction Act’s methane emissions charge. The rule includes methodologies for calculating the amount by which a facility’s reported methane emissions are below or exceed the waste emissions thresholds addresses certain exemptions created by the Inflation Reduction Act. The methane emissions charge imposed under the Methane Emissions and Waste Reduction Incentive Program for calendar year 2024 is $900 per ton emitted over annual methane emissions thresholds, and increased to $1,200 in 2025, and will increase to $1,500 in 2026. However, a proposed resolution has recently been filed in Congress under the Congressional Review Act to disapprovedisapproved the methane emissions charge rule.rule Implementationand ofin September 2025, the EPA proposed to suspend GHG reporting for Subpart W until reporting year 2034. Nonetheless, when implemented, such programs could increase Kodiak’s operating costs and accelerate the transition away from fossil fuels, which could in turn have an adverse impact on Kodiak’s customers and thus adversely impact Kodiak’s business.

Supply and demand for natural gas and oil is dependent upon a variety of factors, many of which are beyond Kodiak’s control. These factors include, among others, the potential adoption of new government regulations, including those related to fuel conservation measures and climate change regulations, technological advances in fuel economy, an economy-wide transition to lower GHG energy sources and energy generation devices. For example, legislative, regulatory or executive actions intended to reduce emissions of GHGs could increase the cost of consuming natural gas and oil, thereby potentially causing a reduction in the demand for such products. A broader transition to alternative fuels or energy sources, whether resulting from potential new government regulation, carbon taxes or consumer preferences, could result in decreased demand for natural gas and oil. Efforts by governments, international bodies, businesses and consumers to reduce GHGs and otherwise mitigate the effects of climate change are ongoing. The nature of these efforts and their effects on Kodiak’s business are inherently unpredictable and subject to change. Any decrease in demand for these products could consequently reduce demand for Kodiak’s services or impact Kodiak’s ability to obtain external financing and could have a negative effect on Kodiak’s business.

Although it is not currently possible to predict how any proposed or future executive orders, GHG or climate change legislation or regulation promulgated by Congress, the states or multi-state regions and their respective regulatory agencies will impact Kodiak’s business, anyAny legislation or regulation of GHG emissions that may be imposed in areas in which Kodiak conducts business or on the assets Kodiak operates could result in increased compliance or operating costs, additional operating restrictions or reduced demand for Kodiak’s services, and could have a material adverse effect on Kodiak’s business, financial condition and results of operations.

Apart from governmental regulation, there are also financial risks for companies in the energy sector as certain stockholders and bondholders currently invested in energy companies may elect to shift some or all of their investments toward non-fossil fuel energy sources. In recent years, sustainability goals and programs, which typically include policies, practices and extralegal targets related to environmental stewardship, social responsibility, and corporate governance, have been a focus of investors and stakeholders across the industry. Institutional lenders who provide financing to energy companies such as Kodiak have been more attentive to sustainable lending practices, and although this trend has waned recently, some may elect not to provide traditional energy producers or companies that support such producers with funding. Limitation of investments in and financings for energy companies could result in the restriction, delay or cancellation of infrastructure projects and energy production activities. This potential for reduced access to the capital and financial markets, whether impacting Kodiak’s customers and/or Kodiak’s business, may further adversely affect the demand for and price of Kodiak’s securities.

Furthermore, some scientists have concluded that increasing concentrations of GHGs in the earth’s atmosphere are changing global climate patterns in a manner that results in significant weather-related effects, such as increased frequency and severity of storms, droughts, floods and other such events, in addition to more chronic changes such as shifting temperature, precipitation, and other meteorological patterns. Energy needs could increase or decrease as a result of extreme weather conditions depending on the duration and magnitude of any such climate changes. Increased energy use due to weather changes may require Kodiak to invest in additional equipment to serveAny increased demand. A decrease in energy use due to weather changes may negatively affect Kodiak’s financial condition through decreased revenues. To the extent the frequency of extreme weather events increases, this could impact Kodiak’s operations in various ways, including increase or decrease in energy needs, damage to Kodiak’s facilities interruptions in service or supply chain, increased insurance premiums or increases to Kodiak’s cost of providing service. Such impacts may be proportionately more severe given the geographical concentration of Kodiak’s operations. Demand for Kodiak’s operations also depends in part on the volume of products being produced, processed and/or transported by Kodiak’s customers, which may also be impacted by similar risks. If any of these results occur, it could have an adverse effect onimpact Kodiak’s assets and operations and cause Kodiak to incur costs in preparing for and responding to them.

Litigation risks also are increasing as a number of parties have sought to bring suit againstsue various natural gas and oil companies in state or federal court, alleging, among other things, that such companies created public nuisances by producing fuels that contributed to climate change or alleging that the companies have been aware of the adverse effects of climate change for some time but defrauded their investors or customers by failing to adequately disclose those impacts. Should Kodiak be targeted by any such litigation, it may incur liability, which, to the extent that societal pressures or political or other factors are involved, could be imposed without regard to causation or contribution to the asserted damage, or to other mitigating factors. Moreover,and any such litigation targeting Kodiak’s customers could negatively impact their operation and, in turn, decrease demand for Kodiak’s operations.

Kodiak’s ability to conduct business can be significantly impacted by changes in tariffs, changes or repeals of trade agreements, or the imposition of other trade restrictions or retaliatory actions imposed by various governments. For example, the current U.S. presidentialTrump administration has announced certain changes, and has proposed toadditional significantlychanges, increasein trade policies, including the imposition of significant tariffs on foreign imports intofrom other countries. These actions have resulted in, and are expected to further result in, responsive actions by impacted countries. The imposition of certain tariffs, including the “reciprocal tariffs” announced by the Trump administration, have been introduced and paused on numerous occasions, pending negotiations with the relevant countries. As a result, there continues to be significant uncertainty regarding the extent and duration of applicable tariffs, and their impact on the global economy. While the U.S. oil and asgas ofcompression Februaryindustry 2025,is newlargely domestic, should tariffs wereremain enactedin andplace areon rapidlycertain evolving.other Othercommodities, effectsthere ofis thesepotential changes,for includingadverse responsiveimpact actionsto fromoperating governments,results. Furthermore, any resulting economic downturns or market volatility, could also have significant impacts on Kodiak’s financial results. Kodiak cannot predict what further action may be taken with respect to tariffs or trade relations between the U.S. and other governments, and any further changes in U.S. or international trade policy could have an adverse impact on Kodiak’s business.

Kodiak receives, maintains, and stores the non-public personal information (“PII”) of its employees, vendors, suppliers and customers. The sharing, use, disclosure and protection of this information are governed by the privacy and data security policies maintained by Kodiak. Moreover, there are federal and state laws and regulations regarding privacy and the storing, sharing, use, disclosure, and protection of PII and user data. Specifically, PII is increasingly subject to legislation and regulations in numerous jurisdictions, the intent of which is to protect the privacy of personal information that is collected, processed and transmitted in or from the governing jurisdiction. California enacted a privacy law (the “California Consumer Privacy Act” or “CCPA”) which limits how covered entities may collect and use PII, and which came into effect on January 1, 2020. In addition, California enacted, effective January 1, 2023, a privacy law, the California Privacy Rights Act (the “CPRA”), which significantly modifies the CCPA, including by expanding consumers’ rights with respect to certain PII and creating a new state agency to oversee implementation and enforcement efforts. ThereMoreover, arein more2025, statesCalifornia consideringapproved similaramendments to the CCPA, which became effective January 1, 2026 that place additional requirements on covered entities, including annual cybersecurity audits, privacy laws.risk assessments, and disclosure about companies’ use of artificial intelligence. Other states, including Colorado, Virginia, Connecticut, Texas, and Utah, have enacted privacy laws that similarly regulate covered entities’ collection and use of personal information. Kodiak could be adversely affected if the CCPA, CPRA and other states’ legislation or regulations require changes in Kodiak’s business practices or privacy policies, or if governing jurisdictions interpret or implement their legislation or regulations in ways that negatively affect Kodiak’s business, financial condition and results of operations.

Kodiak relies on its IT systems to operate and record a significant portion of its business. This may include confidential information or PII belonging to Kodiak, Kodiak’s employees, customers, suppliers, or others. Similar to other companies, Kodiak’s systems and networks, and those of third parties with whom Kodiak does business, may be subject to cybersecurity breaches caused by, among other things, illegal hacking, insider threats, computer viruses, phishing, malware, ransomware, extortion, or acts of vandalism or terrorism, or those perpetrated by criminals or nation-state actors. Furthermore, Kodiak may also experiencefaces increased cybersecurity risk as some of its personnel work remotely. Kodiak has experienced cyber incidents in the past, although none have been material or had a material adverse effect on Kodiak’s business or financial condition. Kodiak may experience cybersecurity incidents and security breaches in the future. In addition to Kodiak’s own systems and networks, Kodiak uses third-party service providers to process certain data or information on Kodiak’s behalf. Due to applicable laws and regulations, Kodiak may be held responsible for cybersecurity incidents attributed to Kodiak’s service providers to the extent it relates to information Kodiak shares with them. Although Kodiak seeks service providers that implement and maintain reasonable security measures, Kodiak cannot control third parties and cannot guarantee that a security breach will not occur in their systems or networks.

Despite Kodiak’s efforts to continually refine its procedures, educate its employees, and implement tools and security measures designed to protect against such cybersecurity risks, there can be no assurance that these current or future measures will prevent unauthorized access or detect every type of attempt or attack. Kodiak’s potential future upgrades, refinements, tools and measures may not be completely effective or result in the anticipated improvements, if at all, and may cause disruptions in Kodiak’s IT systems. In addition, the techniques and sophistication used to conduct cyberattacks frequently change and the deployment of evolving artificial intelligence tools could be used to identify vulnerabilities and create more deceptiveeffective phishing attempts. Despite Kodiak’s best efforts, a cyberattack or security breach could go undetected for an extended period of time, and the ensuing investigation of the incident would take time to complete. During that period, Kodiak would not necessarily know the impact to its IT systems, or the costs and actions required to fully remediate, and Kodiak’s initial remediation efforts may not be successful. Additionally, a cyberattack or security breach could be repeated before theyit areis fully contained and remediated. A breach or failure of Kodiak’s systems or networks, critical third-party systems on which Kodiak relies, or those of Kodiak’s customers, vendors or suppliers, could result in an interruption in Kodiak’s operations, unplanned capital expenditures, unauthorized publication of Kodiak’s confidential business or proprietary information, unauthorized release of customer, employee or third-party data, theft or misappropriation of funds, violation of privacy or other laws, and exposure to litigation or indemnity claims including resulting from customer-imposed cybersecurity controls or other related contractual obligations. There could also be increased costs to detect, prevent, respond or recover from cybersecurity incidents that cannot be estimated or predicted and which may not be fully insured by Kodiak’s cyber risk insurance policy. For example, the SEC recentlyhas adopted rules requiring the disclosure of cybersecurity incidents that we determine to be “material,” to be made within four business days of such determination, which can be complex, requiring a number of assumptions based on several factors. It is possible that the SEC may not agree with Kodiak’s determinations, which could result in fines, civil litigation or damage to our reputation. Any breach, or Kodiak’s delay or failure to make adequate or timely disclosures to the public, regulatory or law enforcement agencies or affected individuals following such an event, could have a material adverse effect on Kodiak’s business, reputation, financial position, results of operations and cash flows and cause reputational damage.

Kodiak continues to evaluate technology transformation projects and is dependent upon a variety of information and communication systems to operate its business, including its new ERP system.system that went live in August 2025. Any disruptions, delays or deficiencies in these systems, or in the design or implementation of any new ERP system, could adversely affect Kodiak’s ability to effectively operate and manage information. It is possible that Kodiak may not realize the anticipated benefits from these projects.projects including the new ERP system. Failure to properly or adequately address these issues could impact Kodiak’s ability to perform necessary business operations, which could adversely affect Kodiak’s reputation, competitive position, business, results of operations and financial condition.

Presently, Kodiak employs a limited array of artificial intelligence technology in our business, the use of which introduces us to certain risks including dependency on accurate intelligence performance, potential security breaches, challenges in regulatory compliance, ethical considerations, potential workforce disruption, the risk of intellectual property infringement, and other emerging technology risks. ItKodiak is conceivableconsidering thatnew Kodiakways it might further integrate further artificial intelligence solutions into its information systems in the future, potentially assuming a more critical role in its operations over time. WhileIn Kodiakaddition, safeguardsthe itsartificial assets,intelligence-related including intellectual propertylegal and sensitiveregulatory information,landscape Kodiakis cannotconstantly ensureevolving thatand itstherefore employees,remains contractorsuncertain orand othermay agentsbe wouldinconsistent adherefrom jurisdiction to thosejurisdiction. policies.Kodiak’s Failure or perceived failure by usobligations to addresscomply thesewith risks adequately may negatively impact Kodiak’s operations, reputation and financial performance. Further, navigating continuallythe evolving legal and regulatory requirementslandscape associatedcould withentail implementingsignificant costs or limit its ability to incorporate certain artificial intelligence toolscapabilities into its operations. Kodiak’s competitors or other entities may requirealso significant resources to help ensure compliance with U.S. and international law. Additionally, other unforeseen risks stemming from Kodiak’s use and development ofintegrate artificial intelligence toolsinto their information systems and technologybusiness mayoperations arisemore inswiftly theor futureeffectively thatthan couldKodiak, adverselypotentially affectimpairing Kodiak’sits business,competitive edge and negatively impacting its financial condition and results of operations.performance.

Kodiak has a significant amount of indebtedness. As of December 31, 2024,2025, Kodiak’s total long-term debt was approximately $2.6 billion in aggregate principal amount, including $750$750.0 million principal amount of senior notes due 2029 which were issued February 2, 2024.2024, $770.0 million principal amount of senior notes due 2033 which were issued September 5, 2025, and $630.0 million principal amount of senior notes due 2035 which were issued September 5, 2025.

In addition, Kodiak’s ability to refinance Kodiak’s indebtedness prior to maturity is dependent on the condition of the capital and credit markets and Kodiak’s financial condition. Kodiak can provide no assurance that it will be able to refinance its indebtedness or that any indebtedness incurred to refinance Kodiak’s indebtedness will be on comparable terms. Furthermore, Kodiak’s debt is currently rated by major credit rating agencies. These ratings agencies regularly evaluate Kodiak and its credit ratings based on a number of quantitative and qualitative factors, including Kodiak’s financial strength and conditions affecting the natural gas compression services industry, generally. Kodiak’s credit ratings remain subject to change at any time, and it is possible that a ratings agency may take action to downgrade Kodiak’s credit ratings in the future. A downgrade of Kodiak’s credit ratings in the future could make parties less willing to do business with Kodiak and could negatively impact its ability to access the capital markets and increase the cost of any future debt funding Kodiak may obtain. See the section titled “Risk Factors—Risk Factors Related to Our Business and Our Industry—Kodiak may be unable to access the capital and credit markets or borrow on affordable terms to obtain additional capital that Kodiak may require” of this Annual Report for more information.

We are a leading provider and operator of large horsepower contract compression infrastructure in the U.S.U.S., supporting the critical movement and processing of natural gas across key production regions. Our Contract Services and related services are critical to our customers’ ability to reliably produce, gather and transport natural gas and oil. We are a market leader in the Permian Basin, which is the largest producing natural gas and oil basin in the U.S. We operate our large horsepower compression units primarily under fixed-revenue contracts with many upstream and midstream customers. Our compression assets have long useful lives consistent with the expected production lives of the key regions where we operate. We believe our customer-centric business model positions us as the preferred contract compression operator for our customers and creates long-standing relationships. We strategically invest in the training, development, and retention of our highly skilled and dedicated employees and believe their expertise and commitment to excellence enhances and differentiates our business model. Furthermore, we maintain an intense focus on being one of the most sustainable and responsible operators of contract compression infrastructure.

Unconventional resources, large-scale centralized gathering systems and multi-well pad operations require more compression horsepower than conventional resources, driving demand for our large horsepower compression units. Upstream and midstream companies have increasingly prioritized capital discipline and return of capital to stockholders. We believe that many customers prefer to outsource their compression infrastructure needs in an effort to reduce capital expenditures outside of their core business and benefit from our technical skillskills and expertise.

In recent years, the U.S natural gas and oil industry has faced uncertaintiesongoing uncertainty and pressuresevolving expectations from regulatorsregulators, and shifting sentiments from investorsinvestors, and other stakeholders, primarilystakeholders related to broader adoption of emission reduction targetssustainability and otheroperational sustainabilityefficiency. initiatives. ManySome energy companies, including some of our customers, have announced significantinitiatives aimed at reducing GHG emissionemissions reductionand initiatives.improving environmental performance. A number of our customers are implementing electric compression infrastructureinfrastructure, and we are well positioned to support them in these strategic initiatives.efforts. As stakeholder sentimentspriorities and the regulatory environmentlandscape continue to evolve under the newcurrent U.S. presidential administration, the U.S. natural gas and oil industry willis continueexpected to faceremain unpredictability.subject to varying levels of change and uncertainty.

Approximately 82%82.8% of our existing compression assets are strategically deployed in the Permian Basin and Eagle Ford Shale, which are two of the most significant crude oil and associated gas basins in the U.S. We believe these two regions possess some of the largest and lowest-cost unconventional resourcesresource bases in the U.S. Additionally, there are significant U.S. LNG export projects in development, and overalloverall, LNG export capacity is expected to meaningfully grow over the next decade, in particular along the U.S. Gulf Coast. We expect this growth in Gulf Coast LNG export capacity to translate into continued Permian Basin and Eagle Ford Shale natural gas production growth, requiring substantial additional compression horsepower. We believe the U.S. will play an increasingly important role in global energy security as the world continues to require reliable, affordable and sustainable natural gas and oil production to support increasing global energy demand.

Secondary Offerings and Share Repurchases

On September 12,30, 2024,2025, the Company sold certainits property, plantoperation and equipmentlegal and other assetsentities in the U.S as well as our legal entity in CanadaMexico to a third-party buyer. The majority of the operations were included in the Contract Services segment through the date of sale. At the disposal date, total net assets sold were approximately $18.0$34.3 million, consisting primarily of compression equipment, inventory, and other assets. Upon disposition, we incurred a loss of approximately $7.0$33.3 million included in loss (gain) on sale of assets in our consolidated statementstatements of operations for the year ended December 31, 2024.2025.

The 35.0%1.2% and 30.4%2.5% increases in fleet horsepower and revenue-generating horsepower, respectively, were primarilymainly attributabledriven toby the compressionstrategic assets acquired in the CSI Acquisition and the purchaseacquisition and deployment of new large horsepower compression units.units throughout the period. This was partially offset by the divestiture of assets from our Mexico operations, as well as the sale and scrapping of certain other non-core assets, as part of our ongoing efforts to optimize the fleet and focus on core business segments. The 13.0%4.7% decreaseincrease in revenue-generating horsepower per revenue-generating compression unit was duea to units acquired as partresult of thedeploying CSIthese Acquisitionnew having,large onhorsepower average, less horsepower.units.

The following table presents selected financial and operating information for the periods presented (in thousands):

Contract Services revenue increased $298.6$147.1 million, or 40.6%,14.2%, for the year ended December 31, 20242025, compared to the year ended December 31, 2023.2024. This was primarily duerelated to incrementala revenues$145.2 associated with the CSI Acquisition, which accounted for approximately 22% of consolidated revenue for the year ended December 31, 2024. The remainder of themillion increase in Contractcontract Servicescompression isservices dueas toa result of price increases and an increase in average revenue-generating horsepower, including revenue-generating horsepower andacquired in the CSI Acquisition in 2024. Furthermore, there was also an increase of $6.5$1.9 million related to gas treating and cooling services.

Other Services revenue increased $10.4$1.7 million, or 9.0%,1.4%, for the year ended December 31, 20242025, compared to the year ended December 31, 2023.2024. This increase was primarily due to incrementalincreased revenues associatedfrom withstation theconstruction CSIservices Acquisition,and increasedmaintenance and overhaul services. This increase was partially offset by decreases in other field services, parts sales, increasedand freight and crane charges related to the mobilization of units, increased maintenance and overhaul services, and increased other field services. These increases were offset by a decrease in revenues from station construction services resulting from reduced scope of station projects during the year ended December 31, 2024.units.

Contract Services expenses increased $97.9$18.5 million, or 38.1%,5.2%, for the year ended December 31, 20242025, compared to the year ended December 31, 2023.2024. This increase was primarily due to ana $87.3$33.8 million increase in direct labor expenses related to increased headcount and salaries,expenses, a $13.0$0.2 million increase in lubricant oil and coolant,coolant expenses, and a $12.9$0.1 million increase in gas treating expenses. These increases were partially offset by a $6.9 million decrease in indirect expenses, a $5.5 million decrease in parts used in support of our operations, and a $2.5 million increase in gas treating expenses. The majority of incremental costs were attributable to the CSI Acquisition. These increases were partially offset by a $17.2$3.3 million decrease inrelated indirect expenses and a $0.8 million decrease into sales and use tax accrualimposed relatedon tothe partsconsumption purchases.of taxable materials in operations.

Other Services expenses increased $9.6$3.1 million, or 10.2%,3.0%, for the year ended December 31, 20242025, compared to the year ended December 31, 2023.2024. This increase was primarily due to costsincreased other field service expenses, parts sales expenses, and expenses associated with increased parts sales, increased freight and crane charges related to mobilization of units,units. increasedThis maintenancewas and overhaul services, and increased other field services. These increases werepartially offset by decreasesdecreased inexpenses from station construction service expenses.services.

Depreciation and amortization increased $77.4$15.9 million, or 42.3%,6.1%, for the year ended December 31, 20242025, compared to the year ended December 31, 2023.2024. This was primarily due to an increase in compression equipment and intangible assets acquired through the CSI Acquisition, which resulted in increasedreflects depreciation andon amortizationcapitalized assets associated with thosethe assets.Texas Comptroller sales and use tax audit process, as well as depreciation from new assets placed into service.

Selling, general and administrative expenses increaseddecreased $78.4$7.6 million, or 106.9%,5.0%, for the year ended December 31, 20242025, compared to the year ended December 31, 2023.2024. This decrease was primarily due to a $29.0$13.8 million increasedecrease in professional feesfees, mainlyprimarily related to transactionstransaction costs associated with the CSI Acquisition,Acquisition in the prior year, a $24.8$3.6 million decrease in the provision for credit losses, a $2.1 million decrease in software expense, mainly related to the termination of an agreement as part of the CSI Acquisition, and a $0.8 million decrease in labor and benefits. These decreases were partially offset by a $6.9 million increase in labor and benefits, mainly related to increased headcount and salaries, an $11.7 million increase in stockequity compensation expense related to equity compensation plans, an $8.9 million increase in software expense, and a $6.4$5.9 million increase in other overheadselling, expenses, mostly consisting of insurancegeneral, and facilityadministrative expenses. These increases were offset by a $2.4 million decrease in bad debt expense related to expected credit losses.

Loss (Gain) on Sale of Assets

Our ability to fund operations, finance capital expenditures, service our debt, and pay dividends depends on the levels of our operating cash flows and access to the capital and credit markets. Our primary sources of liquidity are cash flows generated from our operations and our borrowing availability under the ABL Facility. Our cash flow is affected by numerous factors including prices and demand for our compression infrastructure assets and services, conditions in the financial markets and various other factors. We believe cash generated by operating activities will be sufficient to service our debt, fund working capital, fund our estimated capital expenditures and, as our Board may determine from time to time in its discretion, pay dividends.dividends or repurchase shares pursuant to our Share Repurchase Program.

For the year ended December 31, 2024,2025, growth capital expenditures were $286.0$199.5 million, other capital expenditures were $62.8 million and maintenance capital expenditures were $66.2$76.0 million.million Thisas comparescompared to growth capital expenditures of $184.5$227.2 million, other capital expenditure of $58.8 million and maintenance capital expenditures of $37.0$66.2 million for the year ended December 31, 2023.2024. The increasedecrease in growth capital expenditures includes a $22.0 million non-cash sales tax accrual on compression equipment purchases related to audits we are undergoing with the state of Texas. The remaining amounts werewas primarily related to athe larger amounttiming of newcompression horsepowerunit acquiredpurchases innecessary 2024,to ansupport operating capacity demand. The increase in unit growthother capital expenditures was primarily related to upgradesafety andupgrades revamprelated ato largecompression numberequipment of units acquiredpurchased in the CSI Acquisition,Acquisition and significantthe investmentongoing inimplementation compression support equipment to accommodateof a farnew largerbusiness fleet compared to the prior year.system. The increase in maintenance capital expenditures was primarily due to maintenance capital expenditures on the assets acquired in the CSI Acquisition since closing on April 1, 2024 and an increase in unit overhauls scheduled based on the age and operating hours of such units.

Our Board may elect to declare cash dividends on our common stock, subject to our compliance with applicable law, and depending on, among other things, economic conditions, our financial condition, results of operations, projections, liquidity, earnings, legal requirements, and restrictions in the agreements governing our indebtedness (as further discussed herein). If and to the extent our Board were to declare a cash dividend to our stockholders, we expect the dividend to be paid from our Discretionary Cash Flow.

On FebruaryJanuary 3,28, 2025,2026, our Board declared a quarterly dividend of $0.41$0.49 per share of common stock, or approximately $36.0$43.1 million, which was paid on February 21,20, 20252026, to stockholders of record at the close of business on February 14,13, 2025.2026. The declaration and payment of future dividends will be at the discretion of the Board and will depend on future business conditions, financial conditions, results of operations and other factors. Based on current circumstances, we expect to continue to pay comparable cash dividends in the foreseeable future.

Over the long-term, we expect to fund any dividends and our budgeted growth capital expenditures using our Discretionarydiscretionary Cashcash Flow.flow. In the event our Discretionarydiscretionary Cashcash Flowflow is insufficient forto the purpose of fundingfund any such dividends and our budgeted growth capital expenditures for such period, we may fund suchour shortfalldividend or budgeted growth expenditures (i) with additional borrowings under our ABL Facility, which as of December 31, 2024 had $322.5 million availableFacility (subject to the requirement that our availability, in the case of dividends, under the ABL Facility (calculated on a pro forma basis after giving effect to suchthe Specifiedpayment Transaction)of a dividend, is not less than $125,000,000$100,000,000) or (ii) reduceby reducing our growth capital expenditures for such period.expenditures. Any such additional borrowings under our ABL Facility willmay result in an increase in our interest expense forand such period. Anyany such reduction in our growth capital expenditures may result in lower growth in our revenue-generating horsepower in future periods. As of December 31, 2025, we had $1.5 billion available under our ABL Facility.

•Purchase commitments of $168.8$211.2 million, all of which are$192.3 million is expected to be settled within the next twelve months; primarily consisting of future commitments to purchase new compression units ordered but not received. See Note 15. Commitments and Contingencies to the consolidated financial statements included elsewhere in this Annual Report.

The following table summarizes our cash flows for the year ended December 31, 2024, and 2023 (in thousands):

ThereNotwithstanding the below risk factor updates, there have been no material changes to the risk factors previously disclosed in Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

We are a leading provider and operator of large horsepower contract compression infrastructure in the U.S., supporting the critical movement and processing of natural gas across key production regions. Our ContractCompression ServicesInfrastructure segment and related services are critical to our customers’ ability to reliably produce, gather and transport natural gas and oil. We are a market leader in the Permian Basin, which is the largest producing natural gas and oil basin in the U.S. We operate our large horsepower compression units primarily under fixed-revenue contracts with many upstream and midstream customers. Our compression assets have long useful lives consistent with the expected production lives of the key regions where we operate. We believe our customer-centric business model positions us as the preferred contract compression operator for our customers and creates long-standing relationships. We strategically invest in the training, development and retention of our highly skilled and dedicated employees and believe their expertise and commitment to excellence enhances and differentiates our business model. Furthermore, we maintain an intense focus on being one of the most sustainable and responsible operators of contract compression infrastructure.

On April 1, 2026, we completed the previously announced acquisition of Distributed Power Solutions, LLC (“DPS”),DPS, a leading provider of turnkey distributed power generation solutions and behind‑the‑meter power generation solutions. ClosingThe total consideration consisted of $587.3 million of cashcash, (includingreflecting adjustments for certain additional power generation assets purchased sinceprior theto transaction announcement,closing, indebtedness and working capital)capital, and the2.4 issuance of 2,401,278million shares of the Company’s common stock, par value $0.01 per share.share with an estimated fair value of $139.0 million based on the Company’s closing stock price of $57.90 per share, on April 1, 2026. For more information about the acquisition of DPS, please see the Company’s Current Report on Form 8-K filed with the SEC on April 1, 2026. Subsequent to March 31, 2026, and in connection with the acquisition of DPS, we entered into purchase commitments totaling approximately $244.8 million for the acquisition of power generation assets. These commitments are expected to be fulfilled over a period of approximately four years and are intended to support our planned investment in expanding our power generation fleet. As these commitments were entered into after March 31, 2026, they are not reflected in the accompanying financial statements.

The following table summarizes certain horsepower, unit count and horsepower utilization percentages for our compression fleet for the periods presented.

ForAs theof threeJune months ended March 31,30, 2026, fleet horsepower increased 1.2%1.7% and revenue generating horsepower increased 2.5%2.7% compared to threethe monthsprior endedyear March 31, 2025.period. These increases were primarilydriven attributableby toa combination of organic growth and strategic asset acquisition, including the acquisition of over 20,000 horsepower of large compression assets from a prominent oil and gas producer in the Permian Basin in March 2026. This strategic purchase enhanced our fleet’s capacity and operational efficiency. Additionally, the reduction of idle equipment during the period contributed to a more robust and productive fleet profile. These improvements were partially offset by the divestiture and retirement of certain non-core assets during the period, reflecting our ongoing commitment to fleet optimization. The 3.6%4.1% increase in revenue-generating horsepower per revenue-generating compression unit was primarily a result of deploying these new large horsepower units.

Three Months Ended MarchJune 31,30, 2026, compared to the Three Months Ended MarchJune 31,30, 2025

ContractCompression ServicesInfrastructure revenuerevenues increased $18.0$21.6 million, or 6.2%,7.4%, for the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025. This was primarily due to a $17.3$23.4 million increase in Contract Services revenue resulting from pricing increases and an increase andin revenue-generating horsepower. This increase was partially offset by a decrease of $1.0$1.8 million related to gas treating and cooling services.

Other Services revenue decreasedincreased $1.9$13.8 million, or 4.7%,47.1%, for the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025. This reductionincrease was mainly driven by lowerhigher revenues from station construction services alongand withincremental customer-requested services and materials, partially offset by a decline in field service revenue resulting from lower demand for third-party field service work and logistics. These declines were partially offset by strong growth in shop service revenue and incremental customer-requested services and materials.

ContractCompression ServicesInfrastructure operating expenses decreasedincreased $3.0$1.3 million, or 3.2%,1.4%, for the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025. This was primarily due to a $1.7 million decrease in cost of parts utilized to support our operations and a $1.4 million decrease in lubricant oil and coolant costs. These decreases were partially offset by a $1.6$3.6 million increase in direct labor expenses as a result of the incrementalhigher revenue noted above.above, partially offset by a decrease in cost of parts utilized to support our operations.

Other Services operating expenses decreasedincreased $2.6$16.1 million, or 7.4%,72.9%, for the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025. This decreaseincrease was primarily driven by the lowerhigher Other Services revenue across our product lines as noted above.

Depreciation and amortization decreasedincreased $1.8$12.5 million, or 2.6%,18.9%, for the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025. This decreaseincrease was primarily due to fullthe additional depreciation ofand certainamortization on the DPS assets sinceacquired theon threeApril months1, ended2026, Marchpartially 31,offset 2025, as well asby the impact of asset sales and disposals during the current period.

Selling, general and administrative expenses increased $13.9$5.8 million, or 43.0%,16.5%, for the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025.2025, Theprimarily majoritydriven of this increase resulted fromby a $10.8$5.0 million increase in professionalpayroll fees, reflecting higher legalexpenses and transaction-related$3.3 costsmillion related to thein DPS acquisition.Acquisition Additionally,transaction generalcosts, liabilitypartially insuranceoffset expensesby increaseda $2.0$1.9 million compareddecrease toin the prior year period, attributable to both higher premiumsIT and expandedother coverageadministrative requirements in the current market environment.costs.

Loss on sale of assets decreased $8.0$3.6 millionmillion, or 55.2% during the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025. In the firstsecond quarter of 2025, we recognized a net loss of $2.6 million on a sale-leaseback transaction and incurred a $6.6 million loss related to the sale and write-off of certain scrapped assets, neither of which reoccurred in the first quarter of 2026 and both ofassets which contributed to higher loss in that period that was not repeated during the current period.

Interest expense increased $1.5$4.3 million, or 3.2%,9.4%, for the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025. The increase was primarily driven by higher interest expense on our senior notes, reflecting the impact of our debt refinancing activities, including the issuance of the 2031 Senior Notes and redemption of the 2029 Senior Notes during the first quarter of 2026.2026 and the issuance of the 2033 and 2035 Senior Notes during the third quarter of 2025. This increase was partially offset by lower interest expense on our ABL Facility, reflecting reduced borrowings in the current period.

We recognized a $36.5 million loss on extinguishment of debt during the threesix months ended MarchJune 31,30, 2026, primarily due to the early redemption premium of $27.2 million, the write-off of deferred financing costs of $7.8 million, and accrued interest of $1.5 million associated with the defeasance and early redemption of our 2029 Senior Notes following the issuance of the 2031 Senior Notes. No such loss was recognized during the threesix months ended MarchJune 31,30, 2025.

Income tax expense decreased by $7.8$0.1 million,million for the threesix months ended MarchJune 31,30, 2026,2026 compared to the threesix months ended MarchJune 31,30, 2025. This decrease was primarily due to a decrease in pre-tax income of $20.9$1.1 million, as well as tax benefit related to the vesting of restricted stockmillion for the threesix months ended MarchJune 31,30, 2026, compared to the threesix months ended MarchJune 31,30, 2025.

Our ability to fund operations, finance capital expenditures, service our debt and pay dividends depends on our operating cash flows and access to the capital and credit markets. Our primary sources of liquidity are cash flows generated from our operations and our borrowing availability under the ABL Facility. Our cash flow is affected by numerous factors, including prices and demand for our compression and power infrastructure assets and services, conditions in the financial markets and various other factors. We believe cash generated by operating activities will be sufficient to service our debt, fund working capital, fund our estimated capital expenditures in the short-term and long-term and, as our Board may determine from time to time in its discretion, pay dividends or repurchase shares pursuant to our Share Repurchase Program. As of MarchJune 31,30, 2026, we had approximately $1.6$1.7 billion of liquidity consisting of $94.4$137.6 million in cash and cash equivalents and $1.5$1.6 billion available under the ABL Facility.

The compression and power infrastructure businessbusinesses isare capital intensive, requiring significant investment to expand, maintain and upgrade existing operations. Our capital requirements have consisted primarily of, and we anticipate that our capital requirements will continue to consist primarily of, the following:

•Growth Capital Expenditures: capital expenditures made to (1) expand the operating capacity or operating income capacity of assets including, but not limited to, the acquisition of additional compression units and power generation units, balance of plant equipment, upgrades to existing equipment, expansion of supporting infrastructure, and implementation of new technologies, (2) maintain the operating capacity or operating income capacity of assets by acquisition of replacement compression units and power generation units, including their supporting infrastructure, and (3) expand the operating capacity or operating income capacity of existing assets.

•Maintenance Capital Expenditures: periodic capital expenditures incurred at predetermined operating intervals to maintain consistent and reliable operating capacity of our assets over the near term. Such maintenance capital expenditures typically involve overhauls of significant components of our compression units, such as the engine and compressor, pistons, rings, heads, and bearings.bearings, and overhauls of significant components of our power generation units, such as blade repair/replacement, rotor refurbishment and bearing replacement. These maintenance capital expenditures are predictable and the majority of these expenditures are tied to a detailed, unit-by-unit schedule based on hours of operation or age. We utilize a disciplined and systematic asset management program whereby we perform major unit overhauls and engine replacements on a defined schedule based on hours of operation. As a result, our maintenance capital expenditures may vary considerably from year to year based on when such assets were added to the fleet. Maintenance capital expenditures along with regularly scheduled preventive maintenance expenses are typically sufficient to sustain the operating capacity of our assets over the full expected useful life of the compression units and power generation units. Maintenance capital expenditures do not include expenditures to replace compression units and power generation units when they reach the end of their useful lives.