Kodiak Gas Services launches public stock offering

THE WOODLANDS, Texas - Kodiak Gas Services, Inc. (NYSE: KGS), a prominent provider of contract compression services in the U.S., has initiated a public offering of 4,853,556 shares of its common stock. The shares are being offered by an affiliate of EQT (ST:EQTAB) Infrastructure funds. The selling stockholder is also providing underwriters a 30-day option to purchase up to an additional 728,034 shares. The offering's completion is subject to market conditions, and there are no guarantees it will proceed.

Concurrently, Kodiak intends to privately repurchase $15 million worth of its common stock from the selling stockholder at the public offering price. This repurchase is contingent on the offering's closure and will be deducted from the total number of offered shares, resulting in an offering size of 6,000,000 shares minus the repurchased amount. Following this transaction, Kodiak will still have $35 million available for share repurchases under its existing program, which is authorized through December 31, 2025.

Barclays (LON:BARC), Goldman Sachs & Co. LLC, and J.P. Morgan are serving as joint book-running managers for the offering. The shares are available through a prospectus supplement and an accompanying base prospectus, part of an automatic shelf registration statement effective July 10, 2024. Interested parties can obtain these documents from the SEC's website or directly from the managing banks.

Kodiak, headquartered in The Woodlands, Texas, is a key player in the natural gas and oil infrastructure, providing services to producers and midstream customers. The company's role is essential in the production and transportation of these energy resources.

The press release includes forward-looking statements regarding the offering and its potential completion. However, these statements are subject to risks, uncertainties, and assumptions, and actual results may differ materially from those projected.

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

In other recent news, Kodiak Gas Services reported robust earnings and revenue results, with an EBITDA of $154 million closely aligning with expectations, and a projected run-rate EBITDA of $162 million after adjustments for non-recurring items. The company also increased its quarterly cash dividend by 8% to $0.41 per share. In addition, Kodiak authorized a $50 million stock repurchase program.

Kodiak initiated a public offering of approximately 6.14 million shares by an affiliate of EQT Infrastructure funds and announced plans to repurchase $25 million of its common stock from the selling stockholder in a separate private transaction. The company recently filed a prospectus supplement allowing certain selling stockholders to resell up to 5,562,273 shares of its common stock.

Analyst firms have provided positive assessments of Kodiak Gas Services. RBC Capital Markets maintained its Outperform rating on Kodiak shares and increased the company's price target to $40.00. Mizuho (NYSE:MFG) initiated coverage on the stock with an Outperform rating and a price target of $36.00. Citi also initiated coverage on the company, assigning a Buy rating. These are recent developments for Kodiak Gas Services.

InvestingPro Insights

Kodiak Gas Services, Inc. (NYSE: KGS) has shown impressive financial performance, which adds context to its recent public offering announcement. According to InvestingPro data, the company's revenue growth has been robust, with a 33.77% increase over the last twelve months as of Q3 2024. This strong growth trajectory is further emphasized by a quarterly revenue growth of 40.55% in Q3 2024, indicating accelerating momentum.

The company's profitability metrics are also noteworthy. Kodiak boasts a gross profit margin of 59.86% and an operating income margin of 24.71% for the last twelve months, suggesting efficient operations and strong pricing power in its contract compression services.

InvestingPro Tips highlight that Kodiak's net income is expected to grow this year, which aligns with the company's expansion efforts and the current offering. Additionally, the stock has shown a strong return over the last year, with a price total return of 109.28% as of the latest data. This performance may have contributed to the company's decision to repurchase shares, potentially seeing them as undervalued despite the recent gains.

It's worth noting that Kodiak operates with a significant debt burden, as pointed out by one of the InvestingPro Tips. This context makes the public offering and share repurchase strategy particularly interesting, as it may be part of a broader financial management plan.

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

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