Kodiak Gas authorizes $50M stock repurchase program

THE WOODLANDS, Texas - Kodiak Gas Services, Inc. (NYSE: KGS), the United States' largest provider of contract compression services, has announced the launch of a share repurchase program. The company's Board of Directors has given the green light for Kodiak to buy back up to $50 million of its common stock. The repurchase initiative commenced on the day of the announcement and is set to expire on December 31, 2025.

The repurchases may be executed through open market transactions or privately negotiated deals, depending on market conditions, legal requirements, and other factors. The company specified that any open market repurchases would align with Rule 10b-18 under the Securities Exchange Act of 1934. Kodiak may also implement Rule 10b5-1 plans to streamline the repurchase process.

Kodiak has clarified that there is no obligation to purchase any specific number of shares, and the program may be suspended or terminated at any time. Factors such as stock price, business and market conditions, and other investment opportunities will influence the timing and volume of shares repurchased.

Kodiak plays a pivotal role in the energy infrastructure, providing services essential for the production and transport of natural gas and oil. Their operations span across high-volume gas gathering systems, processing facilities, and natural gas transmission systems, offering contract compression and related services to a variety of customers in the oil and gas industry.

This share repurchase program announcement contains forward-looking statements, which are based on current expectations and projections about future events. Kodiak has cautioned that these statements are subject to risks and uncertainties that could cause actual results to differ materially from the anticipated outcomes.

The information provided is based on a press release statement from Kodiak Gas Services, Inc.

In other recent news, robust earnings and revenue results have been reported by Kodiak Gas Services. The company posted an EBITDA of $154 million, aligning closely with expectations and a projected run-rate EBITDA of $162 million after adjustments for non-recurring items. Additionally, they increased their quarterly cash dividend by 8% to $0.41 per share.

Kodiak Gas Services also initiated a public offering of approximately 6.14 million shares by an affiliate of EQT (ST:EQTAB) Infrastructure funds and announced plans to repurchase $25 million of its common stock from the selling stockholder in a separate private transaction. Furthermore, the company recently filed a prospectus supplement allowing certain selling stockholders to resell up to 5,562,273 shares of its common stock, linked to the redemption of common units representing limited liability company interests in a Kodiak Gas Services subsidiary.

RBC Capital Markets maintained its Outperform rating on Kodiak Gas Services shares and increased the company's price target to $40.00, following strong financial results. The company's performance has been buoyed by sustained strong demand for high-pressure compression services, according to the analyst from RBC Capital Markets. Other analyst firms such as Citi, Redburn-Atlantic, Mizuh, and Truist Securities have also given favorable ratings and increased their price targets for Kodiak. These are recent developments for Kodiak Gas Services.

InvestingPro Insights

Kodiak Gas Services' recent announcement of a $50 million share repurchase program aligns with several positive financial indicators highlighted by InvestingPro data. The company's strong financial performance is evident in its impressive revenue growth of 33.77% over the last twelve months, with an even more robust quarterly revenue growth of 40.55% in Q3 2024. This growth trajectory supports the company's decision to allocate capital towards share repurchases.

InvestingPro Tips reveal that Kodiak has delivered a strong return over the last year, with a remarkable 109.28% price total return. This performance is complemented by the company's profitability over the last twelve months, suggesting a solid financial foundation for the buyback program.

However, investors should note that Kodiak is trading at a high earnings multiple, with a P/E ratio of 139.27. This valuation metric indicates that the market has high growth expectations for the company, which the share repurchase program may help to support.

For those interested in a deeper analysis, InvestingPro offers 13 additional tips for Kodiak Gas Services, providing a more comprehensive view of the company's financial health and market position.

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