Kodiak Gas Services Q3 2026: Beats Estimates, Lifts Guidance

Kodiak Gas Services reported Q3 2026 adjusted EPS of $0.70, beating expectations, with revenue of $401.79 million also ahead of consensus. Revenue grew 24.5% year over year, driven by continued strength in the core compression business and the first full quarters of contribution from the Power Infrastructure segment created through the April 2026 DPS acquisition.

The legacy Compression Infrastructure segment posted record revenue of $318.4 million, holding its adjusted gross margin at 70.0% for a third straight quarter despite inflationary pressures, with fleet utilization running at 98.3%. The newer Power Infrastructure segment added $41.95 million in revenue at a 75.2% adjusted gross margin, up from 64.5% in Q2 2026, as genset pricing improved and units stayed on location longer, increasing revenue visibility.

Site work and equipment setting have commenced on a 76 MW behind-the-meter baseload power contract at a West Texas data center. CEO Mickey McKee noted the milestone directly: "We recently achieved a significant milestone in our Power Infrastructure by commencing initial site work and beginning equipment setting at our data center project in West Texas, which will provide stable revenue in 2027."

Management raised full-year 2026 adjusted EBITDA guidance to a range of $840 million to $860 million and lifted discretionary cash flow guidance to $580 million to $600 million. The quarterly dividend was also increased to $0.51 per share, a 4.1% step up from Q2 2026, signaling that the board is confident enough in cash generation to return more capital even while funding heavy growth spending.

One watch item is free cash flow, which was negative in the quarter as growth capital expenditures remain elevated. Total growth and other capex guidance for the full year stands at $685 million to $765 million, reflecting the company's aggressive build-out of both large-horsepower compression and power infrastructure capacity. The leverage ratio and interest rate exposure tied to SOFR are additional factors investors will want to monitor as the data center contract ramps toward its 2027 revenue start.