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(Exact Name of Registrant as Specified in its Charter)

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

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 x No o

Indicate by check mark whether the registrant has 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 x No o

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. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of May 6, 2026, the registrant had 88,771,027 shares of common stock, par value $0.01 per share, outstanding.

This Quarterly Report on Form 10-Q (this “Report”) contains “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, including the integration of acquired businesses and assets into our operations, and our ability to service our indebtedness;

•Anticipated levels of capital expenditures and uses of capital;

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

•Potential or pending acquisition transactions or other strategic transactions, the timing thereof, the receipt of necessary approvals to close such acquisitions, our ability to finance such acquisitions, and our ability to achieve the intended operational, financial, and strategic benefits from any such transactions;

•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 and financial results;

•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 place undue reliance 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;

•Our ability to successfully integrate any acquired businesses, including DPS, and realize the expected benefits thereof in the expected timeframe or at all;

•Our ability to source and fund purchases of additional compression and power generation equipment;

•Changes in the distributed power industry, including any decreases in the demand for electricity and distributed power;

•A deterioration in general economic, business, geopolitical or industry conditions, including as a result of the conflict between Russia and Ukraine, the conflict and potential regime change in Iran as well as other hostilities in the Middle East and developments between the United States and Venezuela, inflation, and slow economic growth in the United States;

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

•The outcome of any pending internal review or any future related government enforcement actions;

•Tax legislation and the impact of changes to applicable tax laws, including the passage of the One Big Beautiful Bill Act, 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 and new governmental regulations, as well as the associated uncertainty given the current U.S. federal government administration;

•Changes in trade policies and regulations, including increases or changes in duties, current and potentially new tariffs or quotas and other similar measures, as well as the potential direct and indirect impact of retaliatory tariffs and other actions;

•The cost of compliance with regulatory initiatives and stakeholders’ pressures, including sustainability and corporate responsibility;

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

•Our reliance on third-party components for use in our information technology (“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;

•Agreements that govern our debt contain features that may limit our ability to operate our business and fund future growth and also increase our exposure to risk during adverse economic conditions;

•Volatile and/or elevated interest rates and associated central bank policy actions;

•Our ability to access the capital and credit markets or borrow on affordable terms (or at all) to obtain additional capital that we may require;

•Major natural disasters, severe weather events or other similar events that could disrupt operations;

•Unionization of our labor force, labor interruptions and new or amended labor regulations;

•Renewal of insurance;

•The effectiveness of our disclosure controls and procedures; and

•Such other factors set forth in Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, and the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of this Report.

Any forward-looking statement made by us in this Report is based only on information currently available to us and speaks only as of the date on which it is made. Except as may be required by applicable law, we undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise.

Kodiak Gas Services, Inc. (the “Company” or “Kodiak”) is an operator of contract compression infrastructure and related services primarily in the U.S. The Company operates compression units under primarily fixed-revenue contracts with upstream and midstream customers.

Kodiak operates its business and the majority of the Company’s assets and liabilities under its subsidiary Kodiak Gas Services, LLC (“Kodiak Services”). Kodiak is the primary beneficiary of Kodiak Services, which is a variable interest entity, since the Company has the power to direct the activities that most significantly impact Kodiak Services’ economic performance and the Company has the right (and obligation) to receive benefits (and absorb losses) of Kodiak Services that could be potentially significant to the Company.

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission pertaining to interim financial information. As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP have been condensed or omitted. Therefore, these financial statements should be read in conjunction with the audited consolidated financial statements, and notes thereto, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. These unaudited condensed consolidated financial statements include the accounts of Kodiak and its subsidiaries. All significant intercompany transactions and balances have been eliminated upon consolidation.

In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses (DISE) and in January 2025, the FASB issued ASU 2025-01,Clarifying the Effective Date. These updates require disaggregated disclosure of specific expense categories, including purchases of inventory, employee compensation, depreciation, and amortization, within relevant income statement captions and the total amount of selling expenses. This guidance is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. We are currently evaluating the impact of this standard on our disclosures.

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

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 Company has the right to bill.

The Company had contract assets of $7.7 million and $5.2 million as of March 31, 2026, and December 31, 2025, respectively. As of January 1, 2026 and 2025, the beginning balances for contract assets were $5.2 million and $7.6 million, respectively.

The Company records contract liabilities when cash payments are received or due in advance of performance. The Company’s contract liabilities were $92.4 million and $94.5 million as of March 31, 2026, and December 31, 2025, respectively. As of January 1, 2026, and 2025, the beginning balances for contract liabilities were $94.5 million and $73.1 million, all of which was recognized as revenue in the three months ended March 31, 2026, and 2025, respectively.

As of March 31, 2026, we had $1.6 billion of remaining performance obligations related to our Contract Services segment.

The Company expects to recognize these remaining performance obligations as follows:

As of March 31, 2026, the aggregate amount of transaction price allocated to unsatisfied performance obligations related to the Company’s revenue for the Other Services segment is $31.4 million, all of which is expected to be recognized by December 31, 2026.

The allowances for credit losses were $14.2 million and $13.0 million as of March 31, 2026, and December 31, 2025, respectively, which represents the Company’s best estimate of the amount of probable credit losses included within the Company’s existing accounts receivable balance.

The changes in the Company’s allowance for credit losses were as follows:

Inventories consisted of the following:

Property, plant and equipment, net consisted of the following:

Depreciation expense was $64.3 million and $66.4 million for the three months ended March 31, 2026, and 2025, respectively, and is recorded within depreciation and amortization in the accompanying condensed consolidated statements of operations.

There were no changes in the carrying amount of goodwill for the three months ended March 31, 2026. All goodwill was allocated to the Company’s Contract Services reporting unit.

The Company’s identifiable intangible assets were as follows:

Amortization expense was $3.9 million and $3.4 million for the three months ended March 31, 2026, and 2025, respectively, and is recorded within depreciation and amortization in the condensed consolidated statements of operations.

As of March 31, 2026 and December 31, 2025, the remaining weighted average amortization period for identifiable intangible assets recognized is 10.8 years and 11.0 years, respectively.

Estimated future amortization expense related to intangible assets as of March 31, 2026 is as follows:

Long-term debt consisted of the following:

The ABL Facility is a revolving credit arrangement with a lockbox feature, where customer payments may be sent to a bank account managed by the agent and used to pay down borrowings if availability drops below $100 million for five consecutive business days. As of March 31, 2026, and December 31, 2025, availability exceeded this threshold, so the balance was classified as long-term in accordance with its maturity.

The Defeasance required a cash outlay of $785.5 million, which was irrevocably deposited with the trustee to fund interest payments on the 2029 Senior Notes through April 10, 2026, when the 2029 Senior Notes were redeemed at a premium, as well as fund the redemption of the 2029 Senior Notes in full. As a result of the Defeasance, the Company recognized a loss on early extinguishment of debt of $36.5 million for the three months ended March 31, 2026, which represents 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.

The 2031 Senior Notes are redeemable at the Company’s option, in whole or in part, prior to April 1, 2028, at a redemption price equal to 100% of their principal amount plus a “make-whole” premium and any accrued and unpaid interest up to the redemption date. This make-whole premium is determined as the excess, if any, of the present value at such time of the redemption plus any required interest payments through April 1, 2028, discounted semi-annually to the redemption date using the applicable treasury rate plus 0.50% over the principal amount of the 2031 Senior Notes. Prior to April 1, 2028, the Company may also redeem up to 40% of the aggregate principal amount of the 2031 Senior Notes using an amount not greater than the net cash proceeds from certain equity offerings at a redemption price of 105.875% of the principal amount plus any accrued and unpaid interest up to the redemption date, provided that at least 50% of the original aggregate principal amount remains outstanding following such redemption and the redemption occurs within 180 days following the equity offering’s closing.

On or after April 1, 2028, Kodiak Services may, on one or more occasions, redeem any or all of the 2031 Senior Notes at the redemption prices set forth below plus accrued and unpaid interest up to the redemption date, beginning on April 1 of the specified years indicated below.

Fees and costs totaling $14.3 million were incurred related to the 2031 Senior Notes and are amortized over the life of the notes to interest expense.

On September 5, 2025, Kodiak Services issued $600.0 million in aggregate principal amount of 6.50% senior unsecured notes due 2033 (the “2033 Senior Notes”). On September 22, 2025, Kodiak Services completed a private offering of an additional $170.0 million of 2033 Senior Notes for $173.4 million. The excess fair value above the face value was recognized as a bond premium, which is amortized as a reduction in interest expense over the remaining term of the 2033 Senior Notes. The net proceeds from the 2033 Senior Notes were used by the Company to repay a portion of the debt outstanding under the ABL Facility.

The 2033 Senior Notes can be redeemed by the Company on or after October 1, 2028, at specified redemption prices plus accrued and unpaid interest. Additionally, prior to October 1, 2028, the Company may redeem up to 40% of the 2033 Senior Notes using proceeds from certain equity offerings at specified redemption prices and make-whole premiums plus any accrued and unpaid interest provided at least 50% of the original principal remains and redemption occurs within 180 days of the offering.

On September 5, 2025, Kodiak Services issued $600.0 million in aggregate principal amount of 6.750% senior unsecured notes due 2035 (the “2035 Senior Notes”). Subsequently, on September 22, 2025, Kodiak Services completed a private offering of an additional $30.0 million of 2035 Senior Notes for $30.9 million. The excess fair value above the face value was recognized as a bond premium, which is amortized as a reduction in interest expense over the remaining term of the 2035 Senior Notes. The net proceeds from the 2035 Senior Notes were utilized for the same purposes described above for the 2033 Senior Notes.

The 2035 Senior Notes can be redeemed by the Company on or after October 1, 2030, at specified redemption prices plus accrued and unpaid interest. Additionally, prior to October 1, 2030, the Company may redeem up to 40% of the 2035 Senior Notes using proceeds from certain equity offerings at specified redemption prices and make-whole premiums plus any accrued and unpaid interest provided at least 50% of the original principal remains and redemption occurs within 180 days of the offering.

The indentures governing the 2031 Senior Notes, 2033 Senior Notes and 2035 Senior Notes contain covenants that limit the ability of the Company and its restricted subsidiaries from actions such as distributing or redeeming equity, making certain investments, incurring additional debt, creating liens, selling assets, merging, engaging in affiliate transactions, and forming unrestricted subsidiaries, with some exceptions. Most restrictions terminate if the 2031 Senior Notes, 2033 Senior Notes and 2035 Senior Notes receive investment grade ratings from any two of Moody’s, S&P, and Fitch, and no default exists. The indentures also include standard events of default.

As of March 31, 2026, the scheduled maturities of the Company’s long-term debt were as follows:

The Company has entered into an interest rate swap, exchanging variable interest rates for fixed interest rates. The interest rate swap was designated as a cash flow hedge derivative instrument, and management evaluated hedge effectiveness and determined it to be highly effective as of March 31, 2026. See Note 10. Fair Value Measurements for details on the valuation of the interest rate swap.

The table below summarizes the amortization schedule related to the interest rate swap, which matures on September 5, 2030:

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

The Company’s financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable, derivative instruments and long-term debt. The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable are representative of their respective Level 1 fair values due to the short-term maturity of these instruments.

The Company’s ABL Facility applies floating interest rates to outstanding amounts; therefore, the carrying amount of the ABL Facility approximates its Level 3 fair value. The fair value of our senior notes is determined using Level 2 inputs, relying on quoted prices in less active markets.

The Company records derivative instruments at fair value using Level 2 inputs of the fair value hierarchy. The interest rate swap is valued using a discounted cash flow analysis based on available market data on the expected cash flows of each derivative using observable inputs, including interest rate curves and credit spreads. See Note 9. Derivative Instruments for more details.

The following table summarizes the fair value of our interest rate swap, measured at fair value on a recurring basis, and our long‑term debt disclosed at fair value:

Kodiak’s board of directors (“Board”) has authorized a share repurchase program of up to $100.0 million of the Company’s outstanding common stock (the “Share Repurchase Program”) through December 31, 2026. As of March 31, 2026, $31.7 million remains available for repurchase under the Share Repurchase Program.

Holders of the Company’s preferred stock are entitled to one vote for each share, voting proportionally with holders of common stock. The preferred stock lacks economic benefits beyond its par value of $0.01 per share (with a maximum value of $50,000), as it does not participate in earnings or cash dividends of Kodiak. Rather, it solely represents a voting share. Each preferred stock holds an equal number of OpCo Units, representing economic interests in Kodiak’s subsidiary, Kodiak Services. Each OpCo Unit is redeemable at the option of the holder for (i) one share of common stock (along with cancellation of a corresponding share of preferred stock) or (ii) cash at Kodiak Services’ election, and subject to certain conditions. On or after April 1, 2029, Kodiak shall have the right to effect redemption of such OpCo Units (along with corresponding share of preferred stock). The OpCo Units represent and are accounted for as noncontrolling interests in Kodiak Services. For the three months ended March 31, 2026, and the year ended December 31, 2025, a total of 0.1 million and 0.5 million, respectively, shares of preferred stock and OpCo Units were converted into an equivalent number of common stock shares.

On June 20, 2023, Kodiak’s Board 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 (or a committee authorized by Kodiak’s Board) 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. As of March 31, 2026, a total of 6.1 million shares of common stock has been reserved for issuance pursuant to awards under the Omnibus Plan.

Restricted stock units (“RSUs”) are time-based units that vest ratably over a three-year period, subject to continuous service through each vesting date. Stock-based compensation for RSUs is recognized on a straight-line basis over the requisite service period.

Performance stock units (“PSUs”) cliff vest at the end of a three-year performance period, with the ultimate number of shares earned and issued ranging from 0 - 200% of the number of shares subject to the PSU award based on the Company's achievement of certain predefined internal targets and the Company’s performance relative to its peers as described in the underlying PSU agreement, subject to continuous service through the end of the performance period. With respect to each PSU, each PSU holder is granted associated dividend equivalents rights. In the event that the Company declares and pays a regular cash dividend, on the record date for such dividend, the Company will accrue a dividend equivalent based on the number of PSUs expected to vest. The fair value of the market condition within the PSUs is determined using a Monte Carlo valuation model. Stock-based compensation for PSUs is recognized on a straight-line basis over the vesting period based on the probable performance outcome. The Company reassesses the probability of achieving the performance targets each reporting period and adjusts compensation expense accordingly.

The following table summarizes award activity under the Omnibus Plan for the three months ended March 31, 2026:

As of March 31, 2026, the total future compensation cost related to non-vested equity awards was approximately $50.8 million to be recognized over the weighted-average period of 2.4 years, assuming the performance-based restricted stock units vest at 135%, pursuant to the terms of the applicable award. During the three months ended March 31, 2026, and 2025, approximately $5.9 million and $7.0 million, respectively, in equity compensation expense was recognized in selling, general and administrative expenses.

The following table summarizes the Company’s dividends declared and paid in each of the quarterly periods of 2026 and 2025:

Subsequent to quarter end, on May 7, 2026, the Company’s Board declared a cash dividend of $0.49 per share for the quarter ended March 31, 2026, which is payable on May 28, 2026, to shareholders of record as of the close of business on May 18, 2026 (the “Common Stock Dividend”). In conjunction with the Common Stock Dividend, Kodiak Services declared a distribution on its units of $0.49 per unit payable on May 28, 2026 to all unitholders of record of Kodiak Services as of the close of business on May 18, 2026.

As of March 31, 2026, and December 31, 2025, the Company had accrued capital expenditures of $15.5 million and $23.0 million, respectively. These amounts were included in accounts payable or accrued liabilities in the condensed consolidated balance sheets. Amounts exclude accrued capital expenditures related to the sales tax contingency accrual.

Purchase commitments primarily consist of future commitments to purchase new compression and power generation units that have been ordered but not yet received. As of March 31, 2026, these commitments amounted to $276.4 million, of which $241.9 million is expected to be settled within the next twelve months.

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 November 2023. The audits pertain to whether the Company may owe sales and use tax on certain of its compression equipment and parts that it purchased and used during that time period. As of March 31, 2026 and December 31, 2025, the Company’s associated liability was $66.0 million and $102.3 million, respectively, relating solely to the Texas portion of the sales and use tax.

During the first quarter of 2026, the Company resolved outstanding Texas sales and use tax matters with the Texas Comptroller’s office related to certain prior periods. The settlement, which included applicable interest for the periods under review, was paid in full. The amount settled had previously been recognized in prior years, reflecting management’s earlier assessment of the liability.

From time to time, the Company may become involved in various legal matters. Management believes that as of March 31, 2026, there are no legal matters whose resolution could have a material adverse effect on the unaudited condensed consolidated financial statements.

In the first quarter of 2025, the Company received a report regarding certain payments to local government officials in Mexico that commenced prior to the Company’s acquisition of its Mexican business in connection with the acquisition of CSI Compressco LP (the “CSI Acquisition”) that presented potential compliance issues under U.S. law. In response, the Company retained outside counsel to conduct an internal investigation of the reported payments, including whether any payments made may have indirectly benefited individuals associated with certain criminal cartel organizations, some of which may be designated as foreign terrorist organizations (FTOs) and Specially Designated Global Terrorists (SDGTs) per Executive Order 14157 of January 20, 2025. The investigation determined that certain payments likely were made to persons associated with an organization designated as an FTO or SDGT. The payments appear to have been made in order to protect employees of the Mexican business from threats of harm or harassment, and to ensure access to work sites. The aggregate amount of these payments was not material. The Company sold its operations and legal entities in Mexico on September 30, 2025.

The Company voluntarily self-reported this matter to governmental authorities in the United States, including the Department of Justice (“DOJ”) and the Office of Foreign Assets Control (“OFAC”), and is cooperating with the investigative steps being taken by the DOJ and OFAC into the matter as a result of the voluntary self-disclosure. The Company also voluntarily self-reported to the SEC and intends to cooperate fully should there be any investigation by the Commission. This matter could result in U.S. governmental authorities seeking criminal and/or civil sanctions, including monetary fines and penalties, against the Company, as well as requiring additional changes to the Company’s business practices and compliance programs. To the extent any of the payments at issue are determined to be illegal in a foreign jurisdiction, it is possible that there could be civil or criminal penalties assessed in that jurisdiction.

Although the Company does not expect the findings from the investigation or actions taken by governmental authorities to have a significant adverse impact on its business, results of operations, financial condition and cash flows, there can be no assurance as to the ultimate outcome of these matters at this time.

As of March 31, 2026, there was $1.4 million of letters of credit outstanding under the ABL Facility mainly to support the Company's obligations to construct a gas compression station on behalf of a customer.

Accrued liabilities consist of the following:

For the three months ended March 31, 2026, and 2025, the Company recorded income tax expense of $2.8 million and $10.5 million, respectively. The effective tax rate was approximately 13.4% and 25.3% for the three months ended March 31, 2026, and 2025, respectively. The Company’s effective tax rate for the three months ended March 31, 2026, differs from the U.S. statutory tax rate of 21% primarily due to a tax benefit on the vesting of restricted stock. The Company’s effective tax rate for the three months ended March 31, 2025, differs from the U.S. statutory tax rate of 21% primarily due to state income taxes.

The Company did not have any uncertain tax benefits as of March 31, 2026, and December 31, 2025. For the three months ended March 31, 2026 and 2025, the Company had no accrued interest or penalties related to uncertain tax positions, and no amounts were recognized in the condensed consolidated statements of operations.

The Company manages its business through two operating segments: Contract Services and Other Services. Contract Services consists of operating Company-owned compression, customer-owned compression, and gas treating and cooling infrastructure, pursuant to fixed-revenue contracts, to enable the production, gathering and transportation of natural gas and oil. Other Services consists of a broad range of services to support ancillary needs of customers, including station construction, maintenance and overhaul, freight and crane charges, and other time and material-based offerings.

Our Chief Executive Officer, also our chief operating decision maker (“CODM”), assesses the performance of each segment based on adjusted gross margin. This metric is calculated by subtracting specific costs of service, such as cost of operations, from revenues directly attributable to the segment. Adjusted gross margin is a key tool used by the CODM for annual budgeting, monthly forecasting, and determining how to allocate capital and resources across the segments.

The following tables represent financial metrics by segment:

The following table reconciles adjusted gross margin to income before income taxes:

Basic earnings per share is computed using the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share of common stock is computed by using the weighted average shares of common stock outstanding, including the dilutive effect of restricted stock units and performance stock units based on an average share price during the period. For the three months ended March 31, 2026, and 2025, 115.0 thousand and 15.0 thousand unvested RSUs and PSUs, respectively, were excluded from the calculation of potential dilutive common shares due to their anti-dilutive impact.

The computations of basic and diluted earnings per share were as follows:

On April 1, 2026, the Company completed the acquisition of Distributed Power Solutions, LLC (“DPS”), a provider of turnkey distributed and behind‑the‑meter power generation solutions. DPS has been rebranded as Kodiak Power Solutions, a division of the Company. Kodiak Services acquired 100% of the outstanding equity interests of DPS. The acquisition expands the Company’s platform beyond contract compression into distributed power generation and adds generation capacity, with customers across data center, microgrid, manufacturing and energy infrastructure end markets.

The total consideration consisted of $587.3 million of cash, including adjustments for certain additional power generation assets purchased since the transaction announcement, indebtedness and working capital, and the issuance of 2,401,278 shares of the Company’s common stock, par value $0.01 per share with an estimated fair value of $139.0 million based on the Company’s closing stock price 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.

Due to the limited time since the closing of the acquisition, the initial valuations and accounting for this business combination are incomplete as of the issuance date of these condensed consolidated financial statements. As a result, certain disclosures required by ASC 805, including the allocation of the purchase price, the fair values of assets acquired and liabilities assumed, acquisition‑related costs, and the supplemental pro forma revenue and earnings for the combined entity have not yet been determined as the pro forma adjustments are expected to consist of estimates for the depreciation and amortization of property, plant and equipment assets, respectively, which will result from the purchase price allocation and determination of the fair values for the asset acquired.

In connection with the closing of the acquisition of DPS, we entered into a Registration Rights Agreement (the “Registration Rights Agreement”) with Mustang PRS, LLC and Louisiana Machinery Company, L.L.C. (together, the “Holders”), pursuant to which, among other things, the Holders were granted customary rights to require us to file and maintain the effectiveness of a shelf registration statement with respect to the re-sale of the Common Stock received by the Holders, along with customary piggyback registration rights.

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 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.

As of March 31, 2026, we managed our business through two operating segments: Contract Services and Other Services. Contract Services consists of operating Company-owned and customer-owned compression, and gas treating and cooling infrastructure, pursuant to fixed-revenue contracts to enable the production and gathering of natural gas and oil. Other Services consists of a broad range of services to support ancillary needs of our customers, including station construction, customer-owned compressor maintenance and overhaul, the provision of freight and crane services and other time and material-based offerings. Our Other Services offerings are often cross-sold with Contract Services.

The acquisition of DPS (as defined below) was completed subsequent to the three months ended March 31, 2026. We expect that the recently acquired distributed power business will primarily be incorporated into a new reportable segment, Power Infrastructure beginning in the second quarter of fiscal year 2026. Certain ancillary services associated with the distributed power business, which are similar to those previously included in our operations, will be classified under our Other Services reportable segment. On a prospective basis, we expect to rename our Contract Services reportable segment to Compression Infrastructure. It is important to note that these changes to our reportable segments will be implemented in future periods and have not been implemented for the current period. For the current Quarterly Report on Form 10-Q for the period ended March 31, 2026, all financial information, disclosures, and discussion continue to be presented based on our existing reportable segments as of the reporting date.

On April 1, 2026, we completed the previously announced acquisition of Distributed Power Solutions, LLC (“DPS”), a leading provider of turnkey distributed power generation solutions and behind‑the‑meter power generation solutions. Closing consideration consisted of $587.3 million of cash (including adjustments for certain additional power generation assets purchased since the transaction announcement, indebtedness and working capital) and the issuance of 2,401,278 shares of the Company’s common stock, par value $0.01 per share. 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.

On March 20, 2026, we completed the private offering of $1.0 billion in 5.875% senior unsecured notes due 2031, issued at par and guaranteed on a senior unsecured basis by the Company and certain subsidiaries. The proceeds from the offering were used to redeem the outstanding 7.25% Senior Notes due 2029 at a redemption price equal to 103.625% of the $750.0 million aggregate principal amount, plus accrued and unpaid interest.