KGS - Earnings call transcript Q2 2024 | Kodiak Gas Services, Inc.

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Operator

Greetings, and welcome to the Kodiak Gas Services Second Quarter 2024 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Graham Sones, Vice President, Investor Relations. Thank you.

You may begin.

Graham Sones

Good morning. us to Kodiak results. review joining call Services you webcast and second appreciate for Gas the conference We quarter XXXX from Griggs, are Executive today the President Participating Chief and Mickey Officer; Financial Chief McKee, John Officer. and company

call Information replay will call Following August United that high-level information the will as for financial you're our XXXX. how by by on and beliefs Q&A. information phone kodiakgas.com. Please commentary call quarter this the until can to And outlook comments of XXXX today, note during this any available a current provide our via XX, time XXXX. such may reading. The views, management the may and accurate my be and There statements second securities and replay XX, within call updated statements our available. listing of advised speaks access before the webcast the on forward-looking of on based longer the federal also August management replay Investors Mickey website These Kodiak's made no States that of results on be found reflect forward-looking the remarks, of therefore, today's as transcript currently on John assumptions contain information company, opening tab be the reported meaning only or on laws. at of

are actual release, management. uncertainties to give correct. The and can expectations will in reasonable, be on will that non-GAAP expressed include differ Although we website. management most are results, yesterday's made from to risks, statements achievements GAAP today our the found assurance comments referenced measures statements reconciliations comparable by financial believe earnings or in materially also measures. included statements various forward-looking prove to which certain or be the Details expectations the such contingencies these no can performance could the and in cause And company's those

over earnings our McKee. this we website. And Mr. Additionally, like on may our I'd during presentation Kodiak's reference now morning call posted Mickey that the call, to the CEO, was turn Mickey? to

Robert McKee

thank I first all and by safety. Graham, you joining Thanks, to want us talking begin for about today.

and And want always we safety to the U.S. We want contract in X.Xx employees every each sure and and goes minute upgrades, families to compression this market. The the in in being anniversary the our an home opportunities all this market. XXXX. topic for and first, shareholder a think our We fleet on rewarded priority to invest combined of initiatives our passed employees, a that quarterly chance per is to of have and compelling And shareholders embodies recently we'll that to strong discussed the first As at approved public at sound and X% to and employee broader with make truly of as to our assets Kodiak every currently philosophy Kodiak, our significant Kodiak return X-year focus the operating making health thank night. over most relentless employee safety a done, the we pleased begin we to time. We An focus Kodiak, acquisition We every significantly returns customer talk accretive continue high-grade safe take our recently were down and our to has the take to minute given goal well-covered a and grow to improve The way I X,XXX X.Xx our organically a space. I adopted evaluate their highly in highly company, on Safety to we Thursday, generated public. further between IPO the balance contract through disciplined assets and industry over increased our CSI. we driving we disposing time closing capital share. have the safety, a given have flow. the of making largest drive us to see noncore horsepower, dividend strengthened living our identify that customer strong idle compression fleet the cash the compression not helped through the emissions returned margins $X.XX announce fleet well is demand period market. And our of the that gave We've completed that by Kodiak growth while contract Board compression multiple the on place leverage to to increase the end company in our the CSI leader investment over XXX,XXX since Kodiak what base. about accretive of to XX% by acquired balance We our within and this make or acquisition our environment service, accomplished in and acquisition, at redeploying return provider and has last dividend. going to total has we're sheet, attractive whose outperforming

However, execute. some to that time takes

sits Our XX%. at utilization currently

large that core of target fleet of was excess focus However, full the horsepower XX%. the of of the acquisition CSI utilization assets and in the Kodiak remains at group the legacy effectively

levels, the large remains In horsepower utilization market. entire tightness fact, to to in continuing contribute the to the -- at elevated industry continuing group this in historically

look to opportunistically assets idle redeploy plan to refurbish and Going and upgrade the them. we forward,

fleet our opportunities We also and to to direction. philosophy our for strategic plan core operations, with operating high-grade constantly consistent evaluate the

units domestically our U.S. our about into also operations, Canada. our with our a but in represent our entered release, U.S. an units internationally. consistent sell and our simplifies count recently and large Divesting focus noted portion these agreement As significant to of we X% and horsepower reduces horsepower, both compression. on significantly is the only small press assets These unit in of horsepower revenue-generating

initial expect low of cost raising $XX greatly synergy and range versus acquisition to the million the of Next, I We've X combined we $XXX the on integration cost now $XX our to be $XXX what's synergies the market, our discuss million We that as year operating our company north the exceed for will strength And now underlying million of would months detail. million a been process. energies is are guidance full end and one like full compression the revised initial to estimate. forecast. Based to now. guiding clear for will these and synergies EBITDA John year discuss in we our in adjusted XXXX. contract outlook more our

EBITDA Yesterday, the of combined the results. Now we released our fleet power with and results our to quarter another financial of have adjusted second mentioned. only discuss $XXX million, earnings that record realize I revenues let's second including as and synergies begun XXXX quarter of just million $XXX quarter we

Turning to our reporting segments.

Contract our now presentation, Services quarter in second into detailed and we streams Other our revenue Services. As X earnings buckets. classify

As Contract recurring core visible, up flows Services stable contracted contracted Services company. highly implies, cash for like encompasses the services contract compression, the of revenue treating. These name contract contract make and Contract Demand our the strong. operations remain

in the the that XX,XXX over fleet had units point a to compression All XX came X,XXX thing historical second fleet idle above fleet. integrating the our And we averaging through costs also renewal with current just to selling market. up During current the of our during recontracting quarter added also spot tremendous units were we success the and business at days, a over mid-XXs. average. significantly horsepower, equipment horsepower we quarter, want in I rates horsepower large to low margin were acquired closer unit above In to new and average. One assets, and is out back the rates, for to deployed per returning after acquisition, the CSI

a This adjusted feat. Matching deliver For able gross what did an combined impressive company Contract the the quarter, XXXX. in XX% in was quarter for margin comparable is as of to Kodiak a we Services.

consists stated and flow there back us and are business We're are sales of additional our segment. compression further to we our that This we predictable can newly support our base. we significant Services help margin our customer to earlier, segment I expansion. Switching believe our minimal provide our As expanded construction station cash capital service service but that generate into synergies investment customers, that require Other additional aftermarket invest for less allowing core offerings, to free about excited business. opportunities capture high-quality and primarily

customer our already Looking have CapEx XXXX. units growth as be Approximately meet of half for into XXXX we and new aggressively to will have horsepower electric electric looking spend entire demand. converting customers signed horsepower for to contracted our next also additions we selectively year contracts XXXX, units horsepower and towards effectively are are large motor-driven now

core our always motor-driven we're the ensure Basin, Permian While a busy compression to losing with we're customers' compression future fleet, is constraints original investing grid that are in our motor-driven synergy the in going we integration our and on for applications solution. that extremely pleased horsepower you electric to increasing a strategy. In are goal. summary, exceed without in we or large our is electric gas well on to positioned given meet needs feasible CSI results second track we I that the for well, remind our quarter focus significantly acquisition. are electric But closing engine now The not included quarter should

high-grade our and and that's into of meet our positioned reliable of to the forecasting repositioning believe indicates of increased incremental in in top beyond. be we that has revised to It's decade. expected the gas of partner be production well to to the prices And capacity to service used the clear U.S. that our increasing see to to and half end compression of continued compression years. The evaluating ninefold horsepower our to XXXX fleets, dividend, the more double LNG generation needs Whether on affordable required is require been ERCOT, capacity natural second and in infrastructure most service the team going momentum opportunities is fleet add enter significant will the continue than its commercial demand terminals of Kodiak Our fuel that PJM export we choice. coming by and electric while increase choice. gas or actively guidance and waves the offerings. We electricity

our focus review our Griggs now will mechanical will financial guidance. I our continue John? pass updated Our on from highlights peers. And and separate availability to to and industry-leading to customers quarter John and the position employees, us call market second

John Griggs

for we're is Thank the in this outlook here lot results what proud had going more past last things feat factoring and the over impacted team right easier be after said, of on the was strong, no be because in on combining you. couldn't Mickey the us, unique and everyone particular, to the is my X small lying bright. think Needless we the handle. year quarter, solid. the seen remainder company. echo said not, we've same underlying few year and it's the from It's public it parts getting track around say, that future months. I'd the I of companies in were I and the a are the if and hardest I'll for behind but

results, I more dive cost our like We synergies. into touch million integration more quarterly Before I'd a initially our to than of annual on $XX identified and communicated success. bit

we're as a few that Probably we're to to exists. the math figure that in, simplest the Now months million. $XX mentioned, Mickey explain operating way

we But 'XX, includes synergies. cost about to results. calendar expect During realize $XX of only remember, net in X combined quarters that million

So capture is deal we XXXX. think majority synergies from been we the we in expect to realized, ultimate already and rest of garner have the the cost implication that the the

our a highlight aspects I'll quarter second results. Now few of

cycle. are acquisition closed in that on not comparisons Given many cases, X, all that the year-over-year in April

and margin. Included on troubled in operations services of $X.X So increases I'm activities. Adjusted for but in last $XXX years post-acquisition growth change owned in parts in EBITDA compressors. taxes stemming review year, charges of fleet going are in of for increase avoid from consumption AR and a the a million, $X.X driven sales at largely million $XXX Total it from from by were rate the related doing spanning figure comprehensive to the million the SG&A acquisition, about use to with also contract organic XX% recontracting reserve step and cost charges And several continued that. revenues accounts. CSI million that was potential quarter in came

where adjusted particular would things quarter with Excluding forward. for line items, EBITDA see million, that move we those more a figure been we in X have almost the as margin $XXX are in

Looking our segments. at

adjusted Mickey the an percentage revenues changed reporting our were Contract million As quarter X Services, with In of we discussed, segments. $XXX margin XX%. for gross have

segment, QX we a and part XX%. Mickey for in market improvement margin tight expect from business CSIs some serve the business quarter-to-quarter, legacy of cash compression, revenues As part price as margin mentioned, and station and revenues in see better field expansion Services with construction our come horsepower Revenues gross allows million $XX remains combination roll segment management. In incremental and Other of Other of sales. we were large us an cost forward will business shop of to this our the Kodiak's minimal services Most variability to that through requires generates Services aftermarket from flow. and continue from have segment our capital the customers, in to this and adjusted but

In expenditures came second maintenance quarter, capital in terms $XX of CapEx the for million. at

going representative is several is Our the when function that rate representative we and quarters. units million quarter, fleet. maintenance will the a the forward. of the our But but run by items for year depending not rate a being couple to and view the run spend growth for as quarter equipment age the the next of hours generally includes of and $XX Net were was of CapEx upon of added unique vary

roughly is placed equipment accruals Texas the service for taxes in on several noncash in was potential past over $XX that and use First, sales million into compressor years.

standards. Second we last represents mission a and quarter up that to make system the items to of that CapEx to need equipment that out Kodiak called variety CSI get upgrades the a of and is fleet we portion safety-related transaction-related

new related For the and between real optimization second spend million which $XXX in guiding CapEx, half $XXX of and units, and safety-related the includes estate we're year, non-unit growth spend, upgrades activity. aforementioned the to some million

year-end. incremental of this ownership CapEx, an before part horsepower we take XX,XXX As expect growth to of approximately

Moving to sheet. balance the

had we of unsecured XXXX February consisting in and XX, we senior borrowings $XXX billion, facility. of ABL under the $X.X issued June our in debt million As notes

Our with the credit ended agreement on leverage the approximately we revolver. ratio was X.Xx, availability and quarter million $XXX of

XXXX Let's turn to outlook. updated the

range the includes that will and For million. $X.XX estimate CSI XX synergies, $XXX will Kodiak billion and which billion. between $XXX we expect year, months adjusted revenue we $X.XX months with of and X range of between And full million EBITDA only

adjusted by segment. In Services segment, me are $X.XX we segment billion that Let margins XX% $X forecasting between gross revenue to down break year full our XX%. with Contract of and billion,

constructive between expense XX% outlook cash million focus and of our to confident on we're high-quality ability forecasting adjusted Given on $XXX the Services management increase our Other our dynamics, gross utilization, our In in flows. segment, progress and synergies, increasing segment million, $XXX XX%. segment and full to we market are our revenue long-term year margins and

CapEx. to Turning

CSI and We that expect come $XX a CapEx our between full to in higher months. year million, for than $XX guidance bit million maintenance prior assets few now we've owned the a

in approved repeat growth without $XXX dividend equates be our for a price. August presenting it we a Friday, know, you growth for discussed per of participation my $X.XX related CapEx, per between We're forecasting board will excluding for on a as prepared of million it million paid terms our wrap company the accrual sales level X.X% an This XX. $XXX dividend, In share in this support. annualized expect Friday's stock to way CapEx yield up, sense you more the this things to $X.XX I'll and share, hand roughly an previously. spending capital tax give normalized of the the $XX for back combined we're based your items I to that That's the it quarterly to future. To which for don't X% transaction-related in million and of year, full from to comments. Thank Mickey. closing increase

Robert McKee

focused dedication makes our a we further would delivering to by team proud year Gas are in in their and not safety excellence. I'm integration, for public. in be Thanks, I'm extraordinary for commitment to the and special, this customers and to of thank while the Each members' industry results. their what dividend. John. Kodiak staying without position our men what an our since Kodiak and shareholders has reward leader to going up, investment increasing To I we're this great work company hard Services of on wrap Kodiak very women want accomplished happy

questions. great of line this we We open into head point, have the the for we second as momentum half Operator? will up the year. At

Operator

first And question Instructions] from Sachs. [Operator our John with Mackay Goldman comes

John Mackay

forward I understand I deal. bit would revenue thoughts like a on here. on wanted Yes, hear that, forward? guidance outlook for I CSI from specifically, the very giving about your love start for as going 'XX the outlook a EBITDA talked medium-term we haven't of to And little growth maybe not synergies business. to potential you're then part

growth as of maybe So that if that frame part could you outlook?

Robert McKee

this listening positive. outlook John, Mickey. think is Thanks Yes. this I I forward really Look, for morning. is the mean,

pretty for the for you think way on growth the of been the of of we'll framed think And what -- look type the of year, be growth that of quarter above standard EBITDA a think $XXX kind we in years you can EBITDA that be a over kind transactional minus of of and year on where perspective has growth that, we'll for million is up kind rate our I standard it at of pretty representative going of kind in the throughout layer then run CapEx. kind amount we a is adjustments EBITDA forward. onetime of I on if where

from can be. of of quarterly we that is out that to we'll idea EBITDA And you that and pretty business. where So on we're And investing a our I easy predict. got you've the annualize I -- the layer and it's in growth pretty some business growth think CapEx think think kind good

now. quarter question that for evaluate really only We've about business to days now. only XX I have owned I John, we the of to mean, right data the to this a think get synergies, revenue

here, kind guidance had and really too of will to early forward-looking good we're of there. I -- not some on kind give give you tell tell it that is too early to synergies we've any ready wins outlook revenue really early So there. kind any but to and of quantify

John Mackay

little to side. appreciate bit I that. electrification the a switching Maybe gears just

CapEx comments kind Mickey, overall maybe important customers a prepared about of level, in are of does we're to to your competitor's in shift from is and run bit, their them? to high the And ] thinking this you of talking What on a I kind USSC deal, mean, we all what with trend hearing the just Archrock your rate this guys, in this from discipline? looks industry's little saw curious different terms how like this needs. how up You a remarks, what at current direction. I'd capital be [ your

Robert McKee

capital think don't the all, the at it changes I discipline John. in industry

I customer electric-driven the view remarks, it pockets motor going it highly where base. power think specialized access CapEx projects machines. that about that base there is electrification makes of sense Those to that some are is of in mixed kind are are the from forward and process has I locations. We doesn't sense. We're looking is to prepared pockets other our of and electrification for on make going coming in existing XXXX spend our going can said as tell you for some half at, have -- our to on those that customer a that are where

are going back are really electrification; forward Some electrification. with others pushing from

a some industry type other different that a very those. than we're of I electric animal smaller large of because horsepower when to going equipment there's that is different motor-driven from very power you large on, focus things to horsepower that equipment. And demand type on of horsepower in look equipment going think comes continue are electric motor-driven the at the

don't be of what in going we're forward, participating and like at think looking it. on we're at it, future, future. We dominate doing So going want electric I what going be type on the part to but we ] the in to it's realm. all be We're motor-driven focused we and focused we're think to going said, good we're of [ that's these really to and

Operator

next comes Our from Raymond Jim question Rollyson James. with

James Rollyson

the just that's that of the just But could kind were a a at of think the first of period of you do the day, horsepower next batch obviously, as at ongoing be you just maybe and sell reminder, the looking of fleet end the kind of -- be maybe ultimately, are going handful to some maybe for Mickey, you And stuff noncore, look kind And what kind you how proceeds? horsepower you even of you time. got that smaller you in that then you reminder to you of process. and think range the over quarters, the what do the sell? with would proceeds of much of acquired likely to maybe of capacity of

Robert McKee

Yes.

I be going think, there. to look, pretty and hit miss it's

kind got it's be of of bit like give a I and first kind be -- going it's between $XX we're $XX framework probably at of of going horsepower fleet revenue is we've that's is think you large -- selling what type our about less million annual -- -- the -- million than this a fleet of to that margin that batch to margin sub to XX something some a think to is little contributing.

I that at that you're think for that get than we looking so a And trade what we less equipment. multiple at,

And $XX numbers. the dollars, talking on of and talking we're to of of into so numbers that baked about already, you're a those revenue guiding about you're north are billion revenue that's be not $X already guidance company million big

already expect So -- that. that's we

the rig type of large from worth that of to to probably we oily we're divest fleet basin at is looking total XXX,XXX drive can I what we're overall, horsepower, investors. flows densification to kind look and in again, U.S., type really of noncore horsepower liquids are for create that of long horsepower basin life that perspective, a XXX,XXX of do, margins our sticky we which higher cash and of type So have equipment domestic ourselves horsepower that think to trying

James Rollyson

that's makes get just was trying magnitude. before, to you said sense, a It I Yes. what it's

share your -- interesting presentation that outsourced any outlook or we horsepower guys demand. Do up if needs to of of of but we can a growth some now terms million how we're large any from your between of the in or can pace to the And on, fleet orders today, helps. headed? mid-XX that equation you we've side kind you math Archrock the Mickey, And horsepower we and outsourced relative just what I'm incremental is new keeping any orders to on of gas So a that tracking? is, even Just been relative and how you view have obviously the and for compression those done customer-owned with and track of consolidating in got this that doing volumes. with Archrock, that color kind kind have have your can curious where have customer demand view up curious that side track from color to are keeping perspective seems be match orders U.S.A.

Robert McKee

Yes.

in that is, not me that's of with dollars on well cash only share you're this that losing our of and in amount x excess big going to we don't my capital driven but market the our ask if spend we're today year We seeing DAC the kind we're going market in to have I in opportunities meaningful is, flows deploy we're, way. And And I think a considerably. industry, discipline think think an data, to "Hey, the that any sitting real pretty that I capital we're industry, guys Jim. spend that public not by our you answer of industry, grow, that CapEx." growth have to and but in-sourced saying, here it as I what today. mean in

to share industry we're us collectively, in-sourced market had that say outsourced me as the to ask losing I'd but today. an today, industry you if So

Operator

Barclays. Our comes next Theresa question from with Chen

Theresa Chen

love compression little think in to more on how over and long do outlook and the will I'd you a this demand bit long-term, the tightness dig for supply persist? and medium Mickey,

Robert McKee

we've this type of us. years of got joining I for many I thanks don't think Theresa, history. know, many,

we've from of got and to at LNG So on, gas look has plants the that demand somewhere. supply side if -- come coming you the business

AI center-driven data demand power. for about talk You and

are day. And demand to And that the of there's that's going the XX if there supply that power that coming to kind anywhere think eye-opening. that are XX on is the of demand out that stats natural interesting be all people with you demand from I probably some what get to of low profile extraordinary. power if be estimates gas too, even towards you're us, a is of really really underestimating from going for just side to Bcf profile, feed that -- demand,

data of And it And so saying kind it's even type become of and -- before in for center I'm a a industry. has be expert buzzword an year we've not able conversation to AI predict the require been the natural same natural do more producing at what that going it's power of But U.S. what today the I than compression. time, the gas gas is lot demand. know and a to is and to requires

think I drill $X the prices like to range feel to today, at gas natural lower doesn't at economical Haynesville wells. they're it's where

and industry an a the grow Permian this having a oily back well. a the increased mean our talk that that's still opportunities a look our where where putting natural industry, with what's going what we're So Ford it's kind where of I long-term majority us that like and And need our about looked to I overbuilding. I industry again, the have an at revenues. We we great people have from the question equipment come stickiness to to short-term of it. than the didn't create go we're where not gas situation years CapEx that and Eagle in industry Basin, That's the we priority, you -- our with basins like you feeling I I at as the mistakes many, fine. is their of not going -- mean, it's committing have to -- of guidance many very -- Jim's It's comments position, has made made that's to but more is it's we industry side. the in for we have that's supply It's as -- time in to. today. consistent happening oversupply some overbuilding past in before and This CapEx are competitors well-behaved acting -- year, have

that we're environment demand what where we're up, position future the showing And continually discipline an is say for or ramping really think me odd we're I like. we're think the decade underestimating dynamic in demand last to restricting so for a we're collectively. And but seems probably this set that today. I that of in is it's that, dynamic It a I a think that where all runway X. supply looks to an amazing from that And sort have and could

Theresa Chen

about maybe growth. trajection it. that you comments the back Got different and And going for of to your Thank answer. nuanced many avenues

belt under CSI for and within fragmentation what market the with industry, is your your from in landscape do your assets thereof this position X-plus point, here, the view your terms whole position or lack of months and So what the M&A? the on you M&A in given view at as

Robert McKee

we've on and lots synergy have to our the frankly. looking, to and of were we we've we employees We're strong we think ago. of CSI do. that in shareholders, a work to now business short to sigh the right in that for be that about for lot a over runway [indiscernible] making on excited that made minute focused quite M&A continue now. I business and Kodiak for breathing that the potential tremendous deliver building of quarter to got now, Probably we're a know right that we're of really We've the that going the we're relief sure active at in company, public -- And now. But owned a right advantage talked to a but say newly do, making we've hear sure market. focus about probably not left grace a progress. multi-decade to take I there, that build our we're got is hard-working term, a lot to that foundation

Operator

Company. Everen next Zack Van Our Instructions] with question comes [Operator from TPH &

Zackery Van Everen

Just line going compression back idle rough you to estimate of refurbish on to the guys can amount bring market. that you have horsepower the be? a and comment kind of of the Do might that and back time

Robert McKee

the before, -- talking of think we're Yes. fleet. Probably the you're of horsepower large portion type said of utilized segment segment, very -- about roughly, not kind but in highly I like of I

horsepower XX,XXX or is probably opportunity the X over XX,XXX X the think I to months. next So maybe

of but to take And get a or so put we're that doing little some to horsepower about focused able pretty those. some opportunities low be kind XX,XXX and impact advantage bit the But range. and on right little might kind available opportunities between. in could equipment -- Those the medium opportunity fewer in I now less year we be and to that able are in some might present of that there a that today. small wins have sure and which of. And demand there to that. Probably on where there in XXX over work, bulk is back -- be are we'll we'll of range, range be that think probably fleet a redeploy There not another units there's to to next it's horsepower CSI farther XX,XXX to the horsepower, the horsepower that idle the of ton legacy X,XXX are going dollars, itself was the --

deploy side. in to got opportunities to you've think some large, So horsepower the medium continue in I

Zackery Van Everen

amount contract the this a also CSI? there a just That's then one brought to you. go was from Or the super on were noise up base $XX guess, kind I of maybe number just Got And We side. in monthly around compression on QX to below $XX close happened of this that all renewals in decent rates QX. up? saw that kind of helpful.

Robert McKee

think -- of contracts and that -- mean I it numbers Yes. was some was thing. had with the some renewals that on renewal both, were be don't we I in honest to kind you, good have success Zack. I there. And there There side, on horsepower of knows kind horsepower equipment a CSI the has we me, average has revenue everybody the rate. average expected but of did same a per higher of dollar as executed smaller blended kind we as front

And blended unit, so our fleet bit. a because in per revenue drives a our average per horsepower up smaller of little with kind horsepower it it's

John Griggs

small a is come lower large just for labor best because more higher business. the finish and to horsepower. John, in revenue be on margin than always will smaller returns will It that that parts horsepower. pieces it horsepower carries thought, And this horsepower and has too, because expensive from The a that

Operator

Stifel. question next with Selman comes from Akyol Our

Selman Akyol

number 'XX? continue look sort being to into higher go as So half that talked about well XXXX, set and expect would for to with and pretty deployments you into today, of you out electric move XXXX you you

Robert McKee

stay be a would would I expect deployments will the same. to I it's Yes, that might the it think it but XXXX probably up on minimally little side. I expect much drive bit, that at least electric

Selman Akyol

on electric convert units Understood. the works take and redeploy work refurbish to to everywhere, back over of smaller and there horsepower. an some fleet, them? opportunity Is doesn't And to opportunity it those to going those of electric then better the kind just again, and the CSI

Robert McKee

want There to horsepower we decision small spend large deploying we want be a to going the or going have on stuff. that capital electric allocation on could spend that to to make be that to if -- to capital converting we're that's horsepower potentially, capital

an is -- in type we'll I the there opportunity, not horsepower to business. be or small explore So electric want probably think, that we that whether of

strategy. but traditionally a I I has market out traditionally been our think think focus our there, been is not there that and that's

that So we need to discuss forward. going

Selman Akyol

it. Got and need they're to this for to longer referring that, that just about I own companies willing terms of for I runway to they're losing part thinking this compression, I'm and units years? they're think and one share to just of themselves. market in last going those XX-plus in the that guess, you're the capital And seeing also guess then one, the And commit therefore,

Robert McKee

And what combined takes conventional Permian type highest We've in too. This it underestimated had everybody about our it tightness I've to can but a takes -- is causing outsource a kind horsepower compression had, a the got has reservoir drastically ever equipment, access it basin industry it if there gas. what company would, especially talked out Xx is just here that industry and of I think that it that to in, buy outsource segment of they oil think in to is the produce that's I large -- lot spending capital in of resources. And it they're the the tremendous produce this extensively horsepower than before, Well, market. the lot of traditionally this more they wide. amount of X pretty they takes utilization to that we've to

we more expensive takes it today. lot so it of just a more is think and is And horsepower, -- horsepower

as as used everybody's go buys dollar horsepower. less of So CapEx to it far doesn't and

things the in-source forced this is translate to these because a kind market all and are producing country tremendous kind into produce they to. it's of amount traditionally to effect. probably what horsepower So than producers gas like more would oil of Permian and in mid taken of And of streamers the

John Griggs

we the our said I'll the control majors of a very now large expensive more acreage lot large you've we also calculus. the track in come we're but private industry, the ever. The for the in side, of finish to a business by base very competitors, presentations the It's our about independents meetings on It's capital-intensive get a and too. and a and different startups That's talking difficult our terms the and thought, than public in that just it's the that It's where is what We've to discipline. to all harder the business. customer Permian. adding majority with easy companies slide are market, to lot of seen capital list kind of in in consolidating.

we the operators horsepower. back the again companies' leads is do to really a customers control have public are most from their growth believe too, of where in own industry, that which necessity is the have that, the XX% so And us investing XX%, coming of necessity, a in the

Operator

you. there hand floor remarks. questions back further are this time. And at closing the to Thank I'll management no for

Robert McKee

our thanks forward with call. you, speaking third to Bye. you after and to our Thank quarter. for the again today we operator, look participating We everyone in report results

Operator

good day. This concludes today's conference. All parties can disconnect. Have a

Kodiak Gas Services (KGS) 13 Aug 242024 Q2 Earnings call transcript