10-Q

Large accelerated filer

Accelerated filer

Non-accelerated
filer

Smaller reporting company

Emerging growth company

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM

10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

Commission File Number:

001-41732

Kodiak Gas Services, Inc.

(Exact Name of Registrant as Specified in its Charter)


Delaware		83-3013440
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

15320 Highway 105 W, Suite 210 Montgomery, Texas		77356
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including

area

code: (936)

539-3300

Securities

registered

pursuant

to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.01 per share	KGS	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐

☒

Indicate by check mark whether the registrant h

submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation

S-T

(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a

non-accelerated

filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule

12b-2

of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule

12b-2

of the Exchange Act). Yes ☐ No ☒

As of August

, 2023, the registrant had 77,400,000 shares of common stock, par value $0.01 per share, outstanding.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this “Report”) contains, and our officers and representatives may from time to time make, “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Forward-looking statements can be identified by words such as: “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “project,” “estimate,” “expect,” “strategy,” “future,” “likely,” “may,” “should,” “will” and similar references to future periods. Examples of forward-looking statements include, among others, statements we make regarding:

•

Expected operating results, such as revenue growth and earnings;

•

Anticipated levels of capital expenditures and uses of capital;

•

Current or future volatility in the credit markets and future market conditions;

•

Expectations of the effect on our financial condition of claims, litigation, environmental costs, contingent liabilities and governmental and regulatory investigations and proceedings;

•

Production and capacity forecasts for the natural gas and oil industry;

•

Strategy for customer retention, growth, fleet maintenance, market position, financial results; and

•

The amount and timing of future dividend payments;

•

Our interest rate hedges; and

•

Strategy for risk management.

Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following:

•

A reduction in the demand for natural gas and oil;

•

The loss of, or the deterioration of the financial condition of, any of our key customers;

•

Nonpayment and nonperformance by our customers, suppliers or vendors;

•

Competitive pressures that may cause us to lose market share;

•

The structure of our Compression Operations contracts and the failure of our customers to continue to contract for services after expiration of the primary term;

•

Our ability to make acquisitions on economically acceptable terms;

•

Our ability to fund purchases of additional compression equipment;

•

A downturn in the economic environment, as well as inflationary pressures;

•

Tax legislation and administrative initiatives or challenges to our tax positions;

•

The loss of key management, operational personnel or qualified technical personnel;

•

Our dependence on a limited number of suppliers;

•

The cost of compliance with existing governmental regulations and proposed governmental regulations, including climate change legislation and regulatory initiatives and stakeholder pressures, including ESG scrutiny;

•

The inherent risks associated with our operations, such as equipment defects and malfunctions;

•

Our reliance on third-party components for use in our IT systems;

•

Legal and reputational risks and expenses relating to the privacy, use and security of employee and client information;

•

Threats of cyber-attacks or terrorism;

•

Our credit agreement contains features that may limit our ability to operate our business and fund future growth and also increases our exposure to risk during adverse economic conditions;

KODIAK GAS SERVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)


	For the Six Months Ended June 30,
	2023			2022
Cash flows from operating activities:
Net income	$	5,174		$	58,456
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense		90,327			85,802
Stock-based compensation expense		908			619
Amortization of debt issuance costs		11,071			5,212
Non-cash lease expense		1,786			1,365
Provision for credit losses		2			85
Inventory reserve		250			250
Gain on sale of fixed assets		(721	)		(7	)
Unrealized loss (gain) on derivatives		21,529			(32,822	)
Deferred tax provision		761			14,974
Changes in operating assets and liabilities:
Accounts receivable, net		(21,705	)		(11,367	)
Inventories		(4,907	)		(5,302	)
Contract assets		(958	)		(3,051	)
Prepaid expenses and other current assets		(10,681	)		(314	)
Accounts payable		10,954			6,436
Accrued and other liabilities		(14,971	)		854
Contract liabilities		29,149			6,457

Net cash provided by operating activities		117,968			127,647

Cash flows from investing activities:
Purchase of capital assets		(94,034	)		(145,952	)
Proceeds from sale of capital assets		1,055			13
Investment in fund		(24	)		(24	)
Other		10			13

Net cash used in investing activities		(92,993	)		(145,950	)

Cash flows from financing activities:
Borrowings on debt instruments		499,279			1,221,161
Payments on debt instruments		(428,812	)		(345,465	)
Payment of debt issuance cost		(32,202	)		(27,561	)
Distributions to parent		(42,300	)		(838,000	)

Net cash (used in) provided by financing activities		(4,035	)		10,135

Net increase (decrease) in cash and cash equivalents		20,940			(8,168	)
Cash and cash equivalents - beginning of period		20,431			28,795

Cash and cash equivalents - end of period	$	41,371		$	20,627

Supplemental cash disclosures:
Cash paid for interest	$	116,370		$	52,204
Cash paid for taxes	$	5,726		$	1,836
Supplemental disclosure of non-cash investing activities:
Change in accrued capital expenditures	$	9,946		$	1,931

See accompanying notes to the unaudited condensed consolidated financial statements.

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KODIAK GAS SERVICES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. Organization and Description of Business

Kodiak Gas Services, Inc. (together with its subsidiaries, referred to as “Kodiak” or the “Company”) began its operations in 2011. On February 8, 2019, Kodiak was acquired by entities affiliated with EQT AB Group. On October 24, 2019, the Company acquired Pegasus Optimization Managers, LLC, a provider of natural gas compression operations.

The Company is an operator of contract compression infrastructure in the U.S, primarily in the Permian Basin and Eagle Ford Shale with additional operations in the Powder River Basin,

Mid-Continent

Region, DJ Basin, Appalachian Basin, Barnett Shale / East Texas Region and Black Warrior Basin. The Company operates its compression units under stable, fixed-revenue contracts with upstream and midstream customers. The Company manages its business through two operating segments: Compression Operations and Other Services. Compression Operations consists of operating Company-owned and customer-owned compression infrastructure for its customers to enable the production, gathering and transportation of natural gas and oil. Other Services consists of station construction, maintenance and overhaul, and other ancillary time and material-based offerings. See Note 18 (“Segments”).

Stock Split

On June 20, 2023, Kodiak’s board of directors approved a

590,000-for-1

split (the “Stock Split”)

of the Company’s

common stock. Prior to the consummation of the initial public offering of the Company’s common stock (the “IPO”), the Company was 100% owned by its Parent, Frontier TopCo Partnership, L.P. (“Kodiak Holdings”). The Stock Split became effective upon filing of the Company’s Amended and Restated Certificate of Incorporation on June 28, 2023 in connection with the IPO. The par value of the Company’s common stock was not adjusted as a result of the Stock Split, however, the number of shares that the Company is authorized to issue increase

d to

750,000,000

. As a result of the Stock Split,

59,000,000

shares of common stock were outstanding. All share and per share data shown in the accompanying condensed consolidated financial statements and related notes has been retroactively revised to give effect to the Stock Split for all periods presented.

IPO

On June 28, 2023, Kodiak’s Registration Statement on Form

S-1

relating to the IPO was declared effective by the U.S. Securities and Exchange Commission (“SEC”) and the shares of its common stock began trading on the New York Stock Exchange on June 29, 2023. On July 3, 2023, Kodiak

issued and sold 16,000,000 shares of common stock at a price to the public of $16.00 per share. Kodiak received net proceeds of approximately $231.4 million,

after deducting expenses and underwriting discounts and commissions payable by the Company.

2. Basis of Presentation and Consolidation

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared on the accrual basis using accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP are not required in these interim financial statements and have been condensed or omitted. Management believes that the information furnished reflects all normal recurring adjustments necessary to fairly present the Company’s consolidated financial position, results of operations and cash flows for the periods indicated. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements presented in Kodiak’s latest annual financial statements included in Kodiak’s final prospectus filed with the SEC on June 30, 2023 pursuant to Rule 424(b)(4) (the "IPO Prospectus"), which contain a more comprehensive summary of the Company’s accounting policies. The interim results reported herein are not necessarily indicative of results for a full year.

These unaudited condensed consolidated financial statements include the accounts of Kodiak and its wholly

owned

subsidiaries. All significant intercompany transactions and balances have been eliminated upon consolidation.

Restatement of Previously Issued Financial Statements

During the preparation and review of the unaudited interim condensed consolidated financial statements for the three and six month periods ended June 30, 2023 and 2022, the Company identified a previously corrected adjusting entry that should have been recorded in the three months ended March 31, 2022. This entry was specific to the unrealized (loss) gain on derivatives and does not impact the six month period ended June 30, 2022 financial statements and does not impact the Company’s Consolidated Financial Statements as of and for the year ended December 31, 2022. See Note 10—Derivative Instruments.

The

foregoing error had no effect on the Company’s revenue and financial covenants. The error does not impact the Company’s cash or liquidity. Similarly, the error did not have an impact on the Company’s operations or business fundamentals.

The Company assessed the materiality of the error in its historical unaudited interim condensed consolidated financial statements in accordance with Accounting Standards Codification (“ASC”) 250, Accounting Changes and Error Corrections, and concluded that the previously issued unaudited condensed consolidated financial statements for the three months ended March 31, 2022 should be restated. The Company corrected for the error by restating amounts previously presented and disclosed in the unaudited condensed consolidated financial statements as of and for the three months ended March 31, 2022. A summary of the effect of the restatements on the unaudited condensed consolidated financial statements as of and for the three months ended March 31, 2022 is as follows (

in thousands, except per share data

Unaudited Condensed Consolidated Statement of Operations


For the three months ended March 31, 2022	As Previously Reported		Restatement Adjustments		As Restated
Unrealized gain on derivatives	$	7,838	$	28,370	$	36,208
Income Tax Expense		8,624		6,754		15,378

Net Income		27,939		21,616		49,555

Basic and diluted earnings per share	$	279,390	$	216,160	$	495,550

Unaudited Condensed Consolidated Statement of Shareholders’ Equity


As of March 31, 2022	As Previously Reported		Restatement Adjustments		As Restated
Retained Earnings	$	116,636	$	21,616	$	138,252

Total stockholder’s equity	$	988,493	$	21,616	$	1,010,109

Unaudited Condensed Consolidated Statement of Cash Flows


For the three months ended March 31, 2022	As Previously Reported			Restatement Adjustments			As Restated
Net income	$	27,939		$	21,616		$	49,555
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Unrealized loss (gain) on derivatives		(7,838	)		(28,370	)		(36,208	)
Deferred tax provision		7,104			6,754			13,858
Changes in Operating assets and liabilities
Prepaid Expenses and other current assets		1,032			(14,185	)		(13,153	)
Accrued and other liabilities		(6,713	)		14,185			7,472

Net cash provided by operating activities	$	54,796		$	—		$	54,796

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Recently Adopted Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)

2016-13,

Financial Instruments—Credit Losses (“Topic 326”): Measurement of Credit Losses on Financial Instruments

which changes the impairment model for financial assets measured at amortized cost and certain other instruments, including trade and other receivables,

held-to-maturity

debt securities and loans, and requires entities to use a new current expected credit loss model that will result in earlier recognition of allowance for losses. The Company adopted this Topic 326 on January 1, 2023. The adoption of this amendment did not have a material impact on the Company’s con

solid

ated financial statements.

3. Revenue Recognition

The following table disaggregates the Company’s revenue by type and timing of provision of services or transfer of goods

(in thousands)


	Three Months Ended June 30,
	2023		2022
Services provided over time:
Compression O perations	$	179,740	$	159,788
Other S ervices		18,357		13,422

Total services provided over time		198,097		173,210

Services provided or goods transferred at a point in time:
Compression O perations		1,879		3,020
Other S ervices		3,330		921

Total services provided or goods transferred at a point in time		5,209		3,941

Total revenue	$	203,306	$	177,151


	Six Months Ended June 30,
	2023		2022
Services provided over time:
Compression O perations	$	354,616	$	315,361
Other S ervices		28,275		22,770

Total services provided over time		382,891		338,131

Services provided or goods transferred at a point in time:
Compression O perations		4,700		4,942
Other S ervices		5,827		2,419

Total services provided or goods transferred at a point in time		10,527		7,361

Total revenue	$	393,418	$	345,492

The Company derives its revenue from contracts with customers, which comprise the following revenue streams:

Compression Operations

Compression Operations consists of operating Company-owned and customer-owned compression infrastructure for the Company’s customers, pursuant to fixed-revenue contracts enabling the production, gathering and transportation of natural gas and oil.

Compression Operations for Company-owned, as well as customer-owned, compressors are generally satisfied over time as services are rendered at selected customer locations on a monthly basis and based upon specific performance criteria identified in the applicable contract. Terms are typically one to seven years and at the end of the term, transition to a

month-to-month

contract if not cancelled by either party. The monthly service for each location is substantially the same service month-to-month over the service contract term. The progress and performance of the service are measured consistently using a straight-line, time-based method as each month passes, because the performance obligations are satisfied evenly over the contract term as the customer simultaneously receives and consumes the benefits provided by the service.

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If variable consideration exists, it is allocated to the distinct monthly service within the series to which such variable consideration relates. The Company has elected to apply the invoicing practical expedient to recognize revenue for such variable consideration, as the invoice corresponds to the value transferred to the customer based on the Company’s performance completed to date.

Service revenue earned primarily on freight and crane charges that are directly reimbursable by the Company’s customers is recognized at the point in time the service is provided and control is transferred to the customer. At such time, the customer has the ability to direct the use of the benefits of such service after the performance obligation is satisfied. The amount of consideration the Company receives and revenue the Company recognizes is based upon the invoice amount.

There are typically no material obligations for returns, refunds, or warranties. The Company’s standard contracts do not usually include

non-cash

consideration.

Other Services

This revenue stream primarily relates to compressor station construction services provided to certain customers and services provided based on time, parts and/or materials with customers.

For most of the Company’s construction contracts, the Company integrates a significant set of tasks and components into a single contract for its customers. Hence, the entire contract is accounted for as one performance obligation. The Company recognizes revenue over time as the Company performance creates or enhances an asset that the customer controls.

For construction services, revenue is recognized using an input method. Measure of the progress towards satisfaction of the performance obligation is based on the actual amount of labor and material costs incurred. The amount of the transaction price recognized as revenue is determined by multiplying the transaction price by the ratio of actual costs incurred to total estimated costs expected for the construction services. Judgment is involved in the estimation of the progress toward completion. Any adjustments to the measure of the progress toward completion is accounted for on a prospective basis. Changes to the scope of service are recognized as an adjustment to the transaction price in the period in which the change occurs.

Services provided based on time spent, parts and/or materials is generally short-term in nature and labor rates and parts pricing is agreed upon prior to commencing the service. As revenue is recognized when time passes, this revenue is recognized at the point and time when the service is rendered.

Contract Assets and Liabilities

The Company recognizes a contract asset when the Company has the right to consideration in exchange for goods or services transferred to a customer. Contract assets are transferred to trade receivables when the rights become unconditional. The Company had contract assets of $

4.5

million, $1.1 million and $

3.6

million as of June 30, 2023, March 31, 2023 and December 31, 2022

, respectively.

The Company records contract liabilities when cash payments are received or due in advance of performance. The Company’s contract liabilities w

ere

86.3 million and $57.1

million, as of June 30, 2023 and December 31, 2022, respectively. As of January 1, 2023 and 2022, the beginning balance

for contract

liabilities were

$57.1 million and $51.2

million, respectively, all of which was recognized as revenue in the six months ended June 30, 2023 and 2022, respectively.

Performance Obligations

As of June 30, 2023, the aggregate amount of transaction price allocated to unsatisfied

erformance obligations related to the Company’s revenue for the Compression Operations segment is $1.1 billion. The Company expects to recognize these remaining performance obligations as follows

(in thousands)


	Remainder of 2023		2024		2025		2026		2027 and thereafter		Total
Remaining performance obligations	$	312,116	$	461,662	$	221,345	$	94,796	$	50,984	$	1,140,903

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4. Accounts Receivable, net

Accounts receivable, net consist of the following (

in thousands


	As of June 30,		As of December 31,
	2023		2022


Accounts receivable	$	120,203	$	98,500
Allowance for credit losses		949		949

Accounts receivable, net	$	119,254	$	97,551

5. Inventories

Inventories consist of the following (

in thousands


	As of June 30,		As of December 31,
	2023		2022


Non-serialized parts	$	66,252	$	61,082
Serialized parts		10,561		11,073

Total inventories	$	76,813	$	72,155

6. Property, Plant and Equipment, Net

Property, plant and equipment, net consist of the following (

in thousands


	As of June 30,			As of December 31,
	2023			2022




Compression equipment	$	3,049,309		$	2,973,599
Trailers and vehicles		8,341			7,193
Field equipment		17,919			15,501
Technology hardware and software		9,736			6,698
Leasehold improvements		2,646			1,947
Shipping containers		3,267			3,137
Furniture and fixtures		1,564			1,519
Capital lease		683			981

Total property and equipment, gross		3,093,465			3,010,575
Less: accumulated depreciation		(606,619	)		(521,893	)

Property, plant and equipment, net	$	2,486,846		$	2,488,682

Depreciation expense was $43.0 million and $85.6 million for the three and six months ended June 30, 2023, respectively, and is recorded within depreciation and amortization on the accompanying condensed consolidated statements of operations. Depreciation expense was $41.0 million and $81.1 million for the three and six months ended June 30, 2022, respectively.

7. Goodwill and Identifiable Intangible Assets, Net

There were no changes in the carrying amount of goodwill during the six months ended June 30, 2023. All of the goodwill was allocated to the Company’s Compression Operations reporting unit.

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The Company’s identifiable intangible assets consist of the following as of June 30, 2023 and December 31, 2022 (

in thousands


	As of June 30, 2023
	Original Cost		Accumulated Amortization			Net Amount		Remaining Weighted Average Amortization Period (years)
Trade name	$	13,000	$	(2,856	)	$	10,144		15.6
Customer relationships		150,000		(32,519	)		117,481		13.3

Total identifiable intangible assets	$	163,000	$	(35,375	)	$	127,625


	As of December 31, 2022
	Original Cost		Accumulated Amortization			Net Amount		Remaining Weighted Average Amortization Period (years)
Trade name	$	13,000	$	(2,531	)	$	10,469		16.1
Customer relationships		150,000		(28,107	)		121,893		13.8

Total identifiable intangible assets	$	163,000	$	(30,638	)	$	132,362

Amortization expense was $2.4 million and $4.7 million for each of the three and six months ended June 30, 2023 and 2022 and is recorded within depreciation and amortization on the condensed consolidated statements of operations.

At June 30, 2023, the following is a summary of future minimum amortization expense for identified in

angible assets (

in thousands


	Amount
Years ending December 31,
Remainder of 2023	$	4,737
2024		9,474
2025		9,474
2026		9,474
2027		9,474
Thereafter		84,992

Total	$	127,625

8. Long-Lived and Other Asset Impairment

Long-lived assets, including property, plant, and equipment, and other finite-lived identifiable intangible assets, are reviewed for impairment whenever events or changes in circumstances, including the removal of compressors from the active fleet, indicate that the carrying amount of an asset may not be recoverable. Such events and changes may include significant changes in performance relative to expected operating results, significant changes in asset use, significant negative industry or economic trends, and changes in the Company’s business strategy, among others. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the assets to estimated future undiscounted net cash flows expected to be generated by the asset. Impairment losses are recognized in the period in which the impairment occurs and represent the excess of the asset carrying value over its estimated future discounted net cash flows. No impairment was recorded for the six months ended June 30, 2023 and 2022. For the six months ended June 30, 2023 and 2022, no triggering event for any long-lived assets was identified.

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9. Debt and Credit Facilities

Debt consists of the following

(in thousands)


	As of June 30,			As of December 31,
	2023			2022

ABL Facility	$	1,824,691		$	1,754,224
Term loan		1,000,000			1,000,000

Total debt outstanding		2,824,691			2,754,224
Less: unamortized debt issuance cost		(55,336	)		(34,205	)

Long-term debt, net of unamortized debt issuance cost	$	2,769,355		$	2,720,019

ABL Facility

As of January 1, 2022, a wholly-owned subsidiary of Kodiak had a revolving-asset backed loan credit facility (the “ABL Facility”) with unaffiliated secured lenders and JPMorgan Chase Bank, N.A., as administrative agent.

On May 19, 2022, wholly-owned subsidiaries of Kodiak entered into the Third Amendment to the Third Amended and Restated Credit Agreement which mainly served to amend the applicable rate from LIBOR to the Secured Overnight Financing Rate (“SOFR”) and allow for the return of capital to the stockholders of Kodiak

in the amount of $838 million by increasing borrowings on the ABL Facility by $225 million, increasing the Term Loan by $600 million and utilizing $13 million of cash on hand. In addition

, the ABL Facility size was increased

from $1.875 billion to $2.050 billion to increase available liquidity under the facility. New lender fees and costs totaling $13.2

million were incurred as a result of the amendment and will be amortized over the life of the loans to interest expense.

On March 22, 2023, wholly-owned subsidiaries of Kodiak entered into the Fourth Amended and Restated Credit Agreement with the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (as amended or restated from time to time, the “ABL Credit Agreement”) which mainly served to extend the maturity date from June 2024 to March 2028. The total facility size was increased

from $2.050 billion to $2.200 billion to increase available liquidity under the facility. New lender fees and costs totaling $31.8 million were incurred and will be amortized over the life of the loans to interest expense. An additional $4.2 million in accrued interest related to exiting lenders was expensed and paid in the period. The remaining unamortized deferred financing costs of $1.2 million associated with the exiting lenders was

written-off

in the period.

Pursuant to the ABL Credit Agreement, the Company must comply with certain restrictive covenants, including a minimum fixed charge coverage ratio of 1.1x and a maximum

Leverage Ratio

. The maximum

Leverage Ratio

(calculated based on the ratio of Consolidated Total Debt to Consolidated EBITDA, each as defined in the ABL Credit Agreement) is 7.25x through the first quarter of 2023; 7.00x thereafter through the third quarter of 2023; 6.75x thereafter through the first quarter of 2024; and 6.50

x in the second quarter of 2024 and thereafter. All loan amounts are collateralized by essentially all the assets of the Company. The Company was in compliance with all covenants as of June 30, 2023 and December 31, 2022.

The ABL Credit Agreement also restricts the Company’s ability to: incur additional indebtedness and guarantee indebtedness; pay dividends or make other distributions or repurchase or redeem equity interests; prepay, redeem or repurchase certain debt; issue certain preferred units or similar equity securities; make loans and investments; sell, transfer or otherwise dispose of assets; incur liens; enter into transactions with affiliates; enter into agreements restricting the Company’s restricted subsidiaries’ ability to pay dividends; enter into certain swap agreements; amend certain organizational documents; enter into sale and leaseback transactions; and consolidate, merge or sell all or substantially all of the Company’s assets.

The applicable interest rates as of June 30, 2023 were 10.25% (prime rate

plus 2.00%

) and 8.34% (Term SOFR rate plus 0.10% plus 3.00%). The applicable interest rates as of December 31, 2022 were 9.50% (prime rate

plus 2.00%

) and 7.60% (Term SOFR rate plus 0.10% plus 3.00%).

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The ABL Facility is a “revolving credit facility” that includes a lock box arrangement whereby, under certain events, remittances from customers are forwarded to a bank account controlled by the administrative agent and are applied to reduce borrowings under the facility. One such event includes “Cash Dominion” and occurs when availability under the agreement falls below a specified threshold (i.e., the greater of $200.0 million or 10% of the aggregate commitments at such time of event). As of June 30, 2023 and December 31, 2022, availability under the agreement was in excess of the specified threshold and as such the entire balance was classified as long-term in accordance with its maturity.

Term Loan

As of January 1, 2022, a wholly-owned subsidiary of Kodiak had a term loan (the “Term Loan”) pursuant to a credit agreement with unaffiliated unsecured lenders and Wells Fargo Bank, N.A., as administrative agent. In May 2022, the Company completed a recapitalization and return of

capital of $838 million to stockholders of Kodiak primarily by increasing the borrowings from the ABL Facility by $225 million and the Term Loan by $600 million per the Amended and Restated Term Loan Credit Agreement entered into by the Company on May 19, 2022 (as amended from time to time, the “Term Loan Credit

Agreement”) and utilizing $13 million of cash on hand.

New lender fees and costs totaling $14.6 million were incurred for this amendment and will be amortized over the life of the loans to interest expense.

On March 31, 2023, the Company’s wholly-owned subsidiary entered into the First Amendment to the Amended and Restated Term Loan Credit Agreement pursuant to which the maturity date was extended to September 22, 2028. Lender fees and costs totaling $0.75 million were incurred for this amendment and will be amortized over the life of the loans to interest expense.

Pursuant to the First Amendment to the Amended and Restated Term Loan Credit Agreement, the Company must comply with certain restrictive covenants, including a maximum

Leverage Ratio

. The maximum

Leverage Ratio

(calculated based on the ratio of Consolidated Total Debt to Consolidated EBITDA, each as defined in the Term Loan Credit Agreement) was 7.50x through the first quarter of 2023; 7.25x thereafter through the third quarter of 2023; 7.00x thereafter through the first quarter of 2024; 6.75x thereafter through the first quarter of 2025; 6.50x thereafter through the first quarter of 2026; 6.25x thereafter through the fourth quarter of 2026; and 6.00x in the first quarter of 2027 and thereafter. The Company was in compliance with all financial covenants as of June 30, 2023 and December 31, 2022.

Borrowings under the Term Loan

bear

the following applicable rates: interest rates

are

based on 6.00% plus an alternate base rate and 7.00% plus an adjusted eurocurrency rate for alternate base rate loans and eurocurrency loans, respectively.

The applicable interest rates were

12.16% and 10.67% as of June 30, 2023 and December 31, 2022, respectively.

Commencing with the fiscal year ending December 31, 2023, an excess cash flow payment that would reduce the principal balance of the Term Loan would have potentially been due 120

days following the end of each fiscal year. This excess cash flow payment was based on the Leverage Ratio (calculated based on the ratio of Consolidated Total Debt to Consolidated EBITDA, each as defined in the Term Loan Credit Agreement) at year end. Based on the calculated ratio, a payment percentage would have been applied to the excess cash flow to determine the amount, if any, due.

The Term Loan Credit Agreement

restricts

certain of Kodiak’s wholly-owned subsidiaries’ ability to

incur additional indebtedness and guarantee indebtedness; pay dividends or make other distributions or repurchase or redeem equity interests; prepay, redeem or repurchase certain debt; issue certain preferred units or similar equity securities; make loans and investments; sell, transfer or otherwise dispose of assets; incur liens; enter into transactions with affiliates; enter into agreements restricting such restricted subsidiaries’ ability to pay dividends; enter into certain swap agreements; amend certain organizational documents; enter into sale and leaseback transactions; and consolidate, merge or sell all or substantially all of such subsidiaries’ assets.

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As of June 30, 2023, the scheduled maturities, without consideration of potential mandatory prepayments, of the long-term debt were as follows (

in thousands


	Amount
Years ended December 31,
Remainder of 2023	$	—
2024		—
2025		—
2026		—
2027		—
Thereafter		2,824,691

Total	$	2,824,691

On July 3, 2023, in connection with the IPO, a subsidiary of Kodiak entered into a Novation, Assignment, and Assumption Agreement with Kodiak Holdings, pursuant to which all of the Company’s remaining obligations under the Term Loan were assumed by Kodiak Holdings, and the Company’s obligations thereunder were terminated effective July 3, 2023. The Company is no longer a borrower or guarantor under, nor otherwise obligated with respect to the debt outstanding under the Term Loan. See Note 19 (“Subsequent Events”) for further details.

Deferred Financing Costs

There were unamortized debt issuance costs of $55.3 million and $34.2 million at June 30, 2023 and December 31, 2022, respectively, which are being amortized over the terms of the ABL Facility and Term Loan. Amortization expense related to these costs of $5.6 million and $11.1 million for the three and six months ended June 30, 2023, are included in interest expense in the accompanying condensed consolidated statements of operations. Amortization expense was $3.4 million and $5.2 million for the three and six months ended June 30, 2022.

10. Derivative Instruments

The Company has entered into interest rate swaps exchanging variable interest rates for fixed interest rates and interest rate collars that fix interest rates within a range through the simultaneous purchase of an interest rate cap and sale of an interest rate floor. The Company has not designated any derivative instruments as hedges for accounting purposes and does not enter into such instruments for speculative or trading purposes. The Company’s cash flow is only impacted when the actual settlements under the derivative contracts result in the Company making a payment to or receiving a payment from the counterparty. Cash flows from all derivative activity for the periods presented appear in the operating section on the condensed consolidated statements of cash flows.

As a result of the increase to the ABL Facility and Term Loan during the year ended 2022, the Company entered into an additional $975.0 million notional amounts of interest rate swaps to comply with hedging requirements set forth in the credit agreements.

On June 29, 2023, the Company terminated all interest rate swaps and collars attributable to the Term Loan and recognized a realized gain of $25.8 million during the period ended June 30, 2023 (the “Term Loan Derivative Settlement”).

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The table below summarizes information related to the notional amount and maturity dates for interest rate swaps at June 30, 2023:


Notional Amount	Maturities
$125,000,000		12/4/2024
$225,000,000		12/5/2024
$200,000,000		6/14/2025
$125,000,000		12/6/2025
$175,000,000		6/14/2026
$125,000,000		6/22/2026
$125,000,000		12/6/2026
$75,000,000		5/18/2027
$100,000,000		5/19/2027
$200,000,000		5/19/2027
$125,000,000		12/6/2027

Of the total notional amount of $1.6

, $0.4

llion

is related to forward dated interest rate swaps with an effective date after June 30, 2023.

The following tables set forth the Company’s assets that were measured at fair value on a recurring basis during the period, by level, within the fair value hierarchy and classification of the Company’s derivative instruments not designated as hedging instruments on the accompanying condensed consolidated balance sheets (

in thousands


	As on June 30, 2023
	Level 1		Level 2		Level 3		Total
Current assets:
Interest rate swaps	$	—	$	—	$	—	$	—

Total current assets	$	—	$	—	$	—	$	—

Non-current assets:
Interest rate swaps	$	—	$	43,811	$	—	$	43,811

Total non-current assets	$	—	$	43,811	$	—	$	43,811

Total	$	—	$	43,811	$	—	$	43,811


	As of December 31, 2022
	Level 1		Level 2		Level 3		Total
Current assets:
Interest rate swaps	$	—	$	823	$	—	$	823

Total current assets	$	—	$	823	$	—	$	823

Non-current assets:
Interest rate swaps	$	—	$	48,955	$	—	$	48,955
Interest rate collars		—		15,562		—		15,562

Total non-current assets	$	—	$	64,517	$	—	$	64,517

Total	$	—	$	65,340	$	—	$	65,340

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The following table summarizes the effects of the Company’s derivative instruments in the condensed consolidated statements of operations (

in thousands


Derivative Instruments Not Designated as Hedging Instrument	Location of Gain (Loss) Recognized	Three Months Ended June 30,
Derivative Instruments Not Designated as Hedging Instrument	Location of Gain (Loss) Recognized	2023			2022

Interest rate swaps	Unrealized (loss) gain on derivatives	$	8,863		$	(7,459	)
Interest rate collars	Unrealized (loss) gain on derivatives		(12,458	)		4,073

Total unrealized loss on derivative			(3,595	)		(3,386	)

Interest rate swaps	Realized gain on derivatives		13,350			—
Interest rate collars	Realized gain on derivatives		12,485			—

Total realized gain on derivatives			25,835			—

Total		$	22,240		$	(3,386	)


Derivative Instruments Not Designated as Hedging Instrument	Location of Gain (Loss) Recognized	Six Months Ended June 30,
Derivative Instruments Not Designated as Hedging Instrument	Location of Gain (Loss) Recognized	2023			2022

Interest rate swaps	Unrealized (loss) gain on derivatives	$	(5,967	)	$	16,413
Interest rate collars	Unrealized (loss) gain on derivatives		(15,562	)		16,409

Total unrealized (loss) gain on derivative			(21,529	)		32,822

Interest rate swaps	Realized gain on derivatives		13,350			—
Interest rate collars	Realized gain on derivatives		12,485			—

Total realized gain on derivatives			25,835			—


Total		$	4,306		$	32,822

The following table summarizes the effects of correcting the restatement in the condensed consolidated statement of operations for the period ended March 31, 2022, as disclosed in Note 2 – Basis of Presentation and Consolidation:


Derivative Instruments Not Designated as Hedging Instrument	Location of Gain Recognized		Three Months Ended March 31,
Derivative Instruments Not Designated as Hedging Instrument	Location of Gain Recognized		As Previously Reported		Restatement Adjustments		As Restated
Interest rate swaps		Unrealized gain on derivatives	$	4,371	$	19,501	$	23,872
Interest rate collars		Unrealized gain on derivatives		3,467		8,869		12,336

Total			$	7,838	$	28,370	$	36,208

11. Fair Value Measurements

The Company’s financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, derivative instruments and long-term debt. The carrying amounts of cash and cash equivalents, accounts receivable, accrued liabilities, and accounts payable are representative of their respective fair values due to the short-term maturity of these instruments. The fair value of debt and contingent consideration are considered Level 3 measurements. These fair value measurements are based on unobservable inputs. The fair value of variable rate long-term debt is based upon the current market rates for debt with similar credit risk and maturity which approximates fair value. Debt includes the ABL Facility and the Term Loan and is shown net of unamortized debt issuance cost in the tables below. The contingent consideration liability is measured at fair value each reporting period and changes in estimates of fair value are recognized in earnings. The fair value estimate reflects the contractual terms of the purchase agreement (e.g., potential payment amounts, length of measurement periods, manner of calculating any amounts due) and utilizes assumptions with regard to future cash flows, probabilities of achieving such future cash flows and a discount rate. Depending on the contractual terms of the purchase agreement, the probability of achieving future cash flows generally represents the only significant unobservable input. There was

no change in the fair value of contingent consideration during the three and six months ended June 30, 2023. See fair value tables below (in thousands):


	As on June 30, 2023
	Level 1		Level 2		Level 3		Total

Debt	$	—	$	—	$	2,769,355	$	2,769,355
Contingent Consideration		—		—		3,700		3,700

Total	$	—	$	—	$	2,773,055	$	2,773,055


	As of December 31, 2022
	Level 1		Level 2		Level 3		Total

Debt	$	—	$	—	$	2,720,019	$	2,720,019
Contingent Consideration		—		—		3,700		3,700

Total	$	—	$	—	$	2,723,719	$	2,723,719

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12. Stockholders’ Equity

Holders

of the Company’s common stock are entitled to one vote for each share. As of June 30, 2023 and December 31, 2022, there were

59,000,000

shares of common stock issued and outstanding. Holders of common stock are entitled to receive, in the event of a liquidation, dissolution or winding up, ratably the assets available for distribution to the stockholders after payment of all liabilities.

As stated in Note 19 (“Subsequent Events”), on July 3, 2023, 16,000,000 shares of common stock were issued and sold as part of the closing of the IPO and on July 13, 2023, the underwriters exercised in full their option to purchase an additional 2,400,000 shares of common stock. After giving effect to these transactions, Kodiak had 77,400,000 shares of common stock issued and outstanding.

Class B and C Profits Interests

Prior to the IPO, Kodiak Holdings issued incentive awards to certain employees of Kodiak Gas Services, LLC (a wholly-owned subsidiary of the Company) in the form of Class B incentive units (“Class B Units”). The Company records a stock-based compensation expense associated with the Class B Units because of the employment relationship of the grantees with Kodiak Gas Services, LLC.

On March 6, 2019, 61,098.4 Class B Units were authorized under the Kodiak Holdings 2019 Class B Unit Incentive Plan for grants to certain employees and

non-employee

board members. These Class B Units are intended to constitute “profits interests” for federal income tax purposes, but constitute a substantive class of equity under GAAP. As of June 30, 2023 and December 31, 2022, there were 61,068.0 authorized Class B Units and 60,363.4 outstanding Class B Units, respectively. There were no Class B Units granted in the six months ended June 30, 2023 or 2022. Twenty-five percent

(25

%) of the Class B Units are subject to time vesting (the “Time-Vesting Units”) and the remaining 75% of the Class B Units are subject to performance-vesting (the “Performance-Vesting Units”). Time-Vesting Units vest in equal annual installments on each of the first five anniversaries of the applicable vesting commencement date, subject to the Class B Unit holder’s continuous service through the applicable vesting date. Performance-Vesting Units vest based on the achievement of certain investor return metrics, subject to the Class B Unit holder’s continuous service through the applicable vesting date. Holders of Class B Units are entitled to distributions on vested awards in accordance with the Kodiak Holdings distribution waterfall. Class B Units are not subject to any conversion rights other than an automatic conversion to Class C incentive units (“Class C Units”) in connection with certain terminations of employment. Each Class C Unit is eligible to receive distributions up to an amount equal to the fair market value of the corresponding converted Class B Unit on the date of conversion. As of June 30, 2023 no material conversions had occurred.

There are no performance hurdles associated with the Time-Vesting Units. The fair value of each incentive award was estimated on its applicable grant date using an option pricing model.

Stock compensation expense is recognized ratably over the vesting period of the awards. During the six months ended June 30, 2023 and 2022, approximately $0.9 million and $0.6 million, respectively, in stock compensation expense was recognized in selling, general and administrative expenses. As of June 30, 2023, there were 3,170.7 unvested Time-Vesting Units, representing $1.3 million in unrecognized stock compensation expense.

2023 Omnibus Incentive Plan

On June 20, 2023, Kodiak’s board of directors authorized and adopted the Kodiak Gas Services, Inc. Omnibus Incentive Plan (the “Omnibus Plan”) for employees, consultants and directors. The Omnibus Plan enables Kodiak’s board of directors (or a committee authorized by Kodiak’s board of directors) to award incentive and

non-qualified

stock options, stock appreciation rights, restricted stock, restricted stock units, stock awards, dividend equivalents, other stock-based awards, cash awards and substitute awards intended to align the interests of service providers, including the Company’s named executive officers, with those of the Company’s stockholders. A total of 6,375,000 shares of common stock have been reserved for issuance pursuant to awards under the Omnibus Plan.

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On June 29, 2023, Kodiak granted 1,297,188 shares of common stock to certain employees, including Kodiak’s named executive officers, pursuant to awards under the Omnibus Plan. 985,313 of the shares were granted pursuant to awards of time-based restricted stock units (“RSUs”) that vest ratably over a three-year period, subject to continuous service through each vesting date. 311,875 of the shares were granted pursuant to awards of performance stock units (“PSUs”) that cliff vest at the end of a three-year performance period, with the ultimate number of shares earned and issued ranging from

0-190%

of the number of shares subject to the PSU award, subject to continuous service through the end of the performance period.

The following table summarizes award activity under the Omnibus Plan for the

six-month

period ending June 30, 2023:


	RSUs				PSUs
	Number of RSUs		Weighted- Average Price		Number of PSUs		Weighted- Average Price
Outstanding at December 31, 2022		—		—		—		—
Granted		985,313	$	16.00		311,875	$	16.00
Vested or exercised		—		—		—		—
Forfeited		—		—		—		—

Outstanding at June 30, 2023		985,313	$	16.00		311,875	$	16.00

Restricted stock awards expected to vest		985,313	$	16.00		311,875	$	16.00

As of June 30, 2023, the total future compensation cost related to unvested equity awards was approximately $20.8 million assuming the performance-based restricted stock units vest at 100% per the terms of the applicable award.

13. Commitments and Contingencies

Purchase Commitments

Purchase commitments of $129.2 million primarily consist of commitments to purchase compression units

that

are expected to be settled within the next twelve months.

Contingent Consideration

The Company agreed to pay, as contingent consideration, up to $3.7 million of certain past due accounts receivable acquired in connection with a prior acquisition, to the seller if collected. The Company records contingent consideration at the acquisition and end of reporting periods at fair value in accrued liabilities. As of June 30, 2023 and December 31, 2022, none of the outstanding receivables had been collected.

Sales Tax Contingency

Between October 2019 and April 2023, the Company received notices from the Texas Comptroller’s office in regards to audits for periods ranging from December 2015 through December 2022. The audits pertain to whether the Company may owe sales tax on certain of its compression equipment that it had purchased during that time period. As of December 31, 2022, the Company had accrued a total amount of $27.8 million for this contingent liability. During the six months ended June 30, 2023, based on current information the Company accrued an additional $0.6 million and as of June 30, 2023, the Company had accrued a total of $28.4 million for this contingent liability.

Legal Matters

From time to time, the Company may become involved in various legal matters. Management believes that there are no legal matters as of June 30, 2023 whose resolution could have a material adverse effect on the unaudited condensed consolidated financial statements.

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		Page
Cautionary Note Regarding Forward-Looking Statements

PART I.	FINANCIAL INFORMATION		1

Item 1.	Financial Statements (Unaudited)		1
	Condensed Consolidated Balance Sheets		1
	Condensed Consolidated Statements of Operations		2
	Condensed Consolidated Statements of Stockholders’ Equity		3
	Condensed Consolidated Statements of Cash Flows		4
	Notes to Unaudited Condensed Consolidated Financial Statements		5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		39
Item 4.	Controls and Procedures		39

PART II.	OTHER INFORMATION		40

Item 1.	Legal Proceedings		40
Item 1A.	Risk Factors		40
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		41
Item 3.	Defaults Upon Senior Securities		41
Item 4.	Mine Safety Disclosures		41
Item 5.	Other Information		41
Item 6.	Exhibits		42

Signatures			43


	As of June 30, 2023		As of December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	41,371	$	20,431
Accounts receivable, net		119,254		97,551
Inventories, net		76,813		72,155
Fair value of derivative instruments		—		823
Contract assets		4,513		3,555
Prepaid expenses and other current assets		20,201		9,520

Total current assets		262,152		204,035
Property, plant and equipment, net		2,486,846		2,488,682
Operating lease right-of-use assets, net		34,799		9,827
Goodwill		305,553		305,553
Identifiable intangible assets, net		127,625		132,362
Fair value of derivative instruments		43,811		64,517
Other assets		577		564

Total assets	$	3,261,363	$	3,205,540

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	35,100	$	37,992
Accrued liabilities		88,440		93,873
Contract liabilities		86,258		57,109

Total current liabilities		209,798		188,974
Long-term debt, net of unamortized debt issuance cost		2,769,355		2,720,019
Operating lease liabilities		29,970		6,754
Deferred tax liabilities		57,916		57,155
Other liabilities		1,449		3,545

Total liabilities		3,068,488		2,976,447

Commitments and contingencies (Note 13)
Stockholders’ Equity:
Common stock, par value $0.01 per share; 750,000,000 shares of common stock authorized, 59,000,000 shares of common stock issued and outstanding as of June 30, 2023 and December 31, 2022		590		590
Additional paid-in capital		—		33,189
Retained earnings		192,285		195,314

Total stockholders’ equity		192,875		229,093

Total liabilities and stockholders’ equity	$	3,261,363	$	3,205,540


	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2023			2022			2023			2022
Revenues:
Compression O perations	$	181,619		$	162,808		$	359,316		$	320,303
Other S ervices		21,687			14,343			34,102			25,189

Total revenues		203,306			177,151			393,418			345,492
Operating expenses:
Cost of operations (exclusive of depreciation and amortization shown below):
Compression O perations		65,017			58,336			127,787			111,273
Other S ervices		18,099			11,774			27,087			20,601
Depreciation and amortization		45,430			43,397			90,327			85,802
Selling, general and administrative expenses		13,438			11,740			26,523			21,570
Gain on sale of fixed assets		(738	)		—			(721	)		(7	)

Total operating expenses		141,246			125,247			271,003			239,239

Income from operations		62,060			51,904			122,415			106,253
Other income (expenses):
Interest expense, net		(60,964	)		(36,829	)		(119,687	)		(62,469	)
Realized gain on derivatives		25,835			—			25,835			—
Unrealized (loss) gain on derivatives		(3,595	)		(3,386	)		(21,529	)		32,822
Other income (expense)		32			(7	)		1			9

Total other expenses		(38,692	)		(40,222	)		(115,380	)		(29,638	)

Income before income taxes		23,368			11,682			7,035			76,615
Income tax expense		5,851			2,781			1,861			18,159

Net income	$	17,517		$	8,901		$	5,174		$	58,456

Earnings per share:
Basic and diluted earnings per share	$	0.30		$	0.15		$	0.09		$	0.99
Weighted-average shares outstanding - basic and diluted		59,000,000			59,000,000			59,000,000			59,000,000


	As of June 30, 2023		As of December 31, 2022
Prepaid insurance	$	6,047	$	3,997
Prepaid rent		799		589
Deferred IPO issuance costs		8,462		3,047
Other		4,893		1,887

Total prepaid expenses and other current assets	$	20,201	$	9,520


	As of June 30, 2023		As of December 31, 2022
Sales tax liability	$	28,406	$	27,820
Accrued interest		7,678		16,347
Accrued bonus		9,034		7,764
Accrued taxes		10,534		9,667
Accrued payroll		2,674		2,744
Accrued legal fee		4,183		1,906
Lease liabilities - current portion		4,853		3,090
Contingent consideration		3,673		3,673
Accrued accounts payable		13,549		14,080
Accrued insurance		710		2,231
Other		3,146		4,551

Total accrued liabilities	$	88,440	$	93,873


	Common Stock
	Shares		Amount		Additional Paid-In Capital			Retained Earnings			Total Stockholders’ Equity


Balance, January 1, 2022		59,000,000	$	590	$	871,403		$	88,078		$	960,071
Equity compensation		—		—		(136	)		619			483
Net income, as restated		—		—		—			49,555			49,555

Balance, March 31, 202 2, as restated		59,000,000	$	590	$	871,267		$	138,252		$	1,010,109

Distribution to parent		—		—		(838,000	)		—			(838,000	)
Net income		—		—		—			8,901			8,901

Balance, June 30, 2022		59,000,000	$	590	$	33,267		$	147,153		$	181,010

Balance, January 1, 2023		59,000,000	$	590	$	33,189		$	195,314		$	229,093
Equity compensation		—		—		(193	)		879			686
Net loss		—		—		—			(12,343	)		(12,343	)

Balance, March 31, 2023		59,000,000	$	590	$	32,996		$	183,850		$	217,436

Distribution to parent						(33,189	)		(9,111	)		(42,300	)
Equity compensation		—		—		193			29			222
Net income		—		—		—			17,517			17,517

Balance, June 30, 2023		59,000,000	$	590	$	—		$	192,285		$	192,875