Kodiak Gas Services, Inc. (KGS)

Cash conversion cycle

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Days of inventory on hand (DOH)	days	52.49	52.14	98.51	83.97	50.98
Days of sales outstanding (DSO)	days	82.24	56.06	52.13	48.61	44.75
Number of days of payables	days	29.24	34.08	51.87	65.29	37.53
Cash conversion cycle	days	105.49	74.11	98.77	67.29	58.20

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 52.49 + 82.24 – 29.24
= 105.49

The cash conversion cycle (CCC) of Kodiak Gas Services, Inc. over the period from December 31, 2020, to December 31, 2024, exhibits notable fluctuations, reflecting shifts in the company's operational efficiency and working capital management.

At the end of 2020, the CCC stood at approximately 58.20 days, indicating a relatively efficient cycle where the company's cash was tied up for just under two months in inventory and receivables relative to its payables. Moving into 2021, the CCC increased noticeably to approximately 67.29 days, signifying a lengthening period during which cash was invested in working capital components before collection or disbursement.

This upward trend continued sharply through 2022, with the CCC reaching approximately 98.77 days. The significant expansion suggests delays or inefficiencies in converting operational activities into cash, potentially driven by longer days sales outstanding, increased inventory holding periods, or delays in payable settlements.

Interestingly, at the end of 2023, there was a reduction in the CCC to about 74.11 days, implying some operational improvements or strategic adjustments that enhanced cash flow management. Despite this decrease, the cycle remained substantially longer than the levels observed prior to 2022.

However, by the end of 2024, the CCC extended again to approximately 105.49 days, representing a return to, and surpassing, previous peak levels. The elongation indicates that the company's cash conversion process became less efficient, with cash remaining invested in working capital components for a longer duration.

Overall, the trend in Kodiak Gas Services' CCC indicates periods of operational variability. The cyclical increases suggest potential challenges in receivables collection, inventory management, or payables timing. The occasional reductions point to efforts at operational improvement, though the overall tendency toward longer cycles signifies areas for potential strategic focus to enhance liquidity and working capital management.