Kodiak Gas Services, Inc. (KGS)
Profitability ratios
Return on sales
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Gross profit margin | 38.01% | 37.24% | 62.23% | 65.34% | 38.97% |
| Operating profit margin | 21.52% | 29.32% | 31.37% | 31.16% | 31.63% |
| Pretax margin | 6.55% | 4.13% | 19.69% | 20.18% | 1.00% |
| Net profit margin | 4.30% | 2.36% | 15.01% | 29.84% | -0.41% |
The profitability ratios of Kodiak Gas Services, Inc. over the period from 2020 to 2024 display notable fluctuations and evolving trends.
The gross profit margin experienced a significant increase from 38.97% in 2020 to a peak of 65.34% in 2021, indicating an improvement in the company's ability to control costs relative to revenues. However, this margin declined to 62.23% in 2022 and further decreased to 37.24% in 2023, before a slight recovery to 38.01% in 2024. This pattern suggests that while the company initially enhanced its gross profitability, subsequent operational or market pressures affected this metric, leading to a retreat towards the levels observed in 2020.
The operating profit margin remained relatively stable from 2020 through 2022, hovering around 31%, but showed a declining trend in 2023 and 2024, where it decreased to 29.32% and then more substantially to 21.52%, respectively. This indicates a reduction in operational efficiency or increased operating expenses affecting the company's ability to convert sales into operating income.
The pretax margin exhibits a stark contrast across the periods. In 2020, it was extremely low at 1.00%, reflecting minimal profit before taxes. This improved markedly to 20.18% in 2021 and remained high at 19.69% in 2022, suggesting a significant enhancement in pre-tax profitability, possibly driven by improved operational performance or favorable market conditions. However, in 2023, the pretax margin declined sharply to 4.13%, with a slight recovery to 6.55% in 2024, indicating some resurgence in pre-tax profitability but remaining substantially below 2021 levels.
The net profit margin further illustrates the company's profitability profile. It was negative at -0.41% in 2020, signaling a loss, but surged to 29.84% in 2021, aligning with the pretax margin improvement and indicating a substantial turnaround in net profitability. In 2022, the net margin moderated to 15.01%, but declined sharply again to 2.36% in 2023. A modest recovery to 4.30% is observed in 2024, suggesting ongoing challenges in maintaining high profitability levels post-2021, with the margins reflecting volatility and potential headwinds impacting bottom-line results.
Overall, Kodiak Gas Services, Inc. demonstrated a strong recovery and improved profitability in 2021 relative to 2020, but experienced declines in subsequent years, particularly in operating efficiency and net profitability. The recent years indicate subdued profitability margins compared to the peak in 2021, and ongoing fluctuations highlight the importance of operational and market factors affecting profitability sustainability.
Return on investment
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 5.62% | 7.69% | 6.93% | 6.27% | 5.11% |
| Return on assets (ROA) | 1.12% | 0.62% | 3.32% | 6.01% | -0.07% |
| Return on total capital | 20.08% | 22.55% | 135.09% | 23.92% | 22.30% |
| Return on equity (ROE) | 3.67% | 1.76% | 46.39% | 18.85% | -0.29% |
The profitability ratios of Kodiak Gas Services, Inc. from December 31, 2020, to December 31, 2024, exhibit notable fluctuations over the period, reflecting evolving operational efficiency and financial leverage.
The Operating Return on Assets (Operating ROA) demonstrated steady improvement, increasing from 5.11% in 2020 to 6.27% in 2021, further rising to 6.93% in 2022, and reaching a peak of 7.69% in 2023. However, in 2024, it declined to 5.62%, indicating a reduction in operating efficiency or profitability relative to total assets.
The Return on Assets (ROA), which accounts for net income including non-operating items, displayed considerable variability. It was slightly negative at -0.07% in 2020, then surged to 6.01% in 2021, followed by a decrease to 3.32% in 2022. In 2023, ROA decreased further to 0.62%, and in 2024, it modestly increased to 1.12%, suggesting a contraction in overall profitability with intermittent recovery.
Return on total capital saw a significant jump in 2022, reaching 135.09% from 23.92% in 2021, indicating a substantial increase in returns generated relative to the capital employed, possibly driven by extraordinary gains or leverage effects. In subsequent years, the ratio stabilized to 22.55% in 2023 and slightly declined to 20.08% in 2024, aligning with a normalization in profitability levels.
The Return on Equity (ROE) illustrates substantial volatility. It was negative at -0.29% in 2020, shifted to a strong positive of 18.85% in 2021, and peaked markedly at 46.39% in 2022, reflecting increased profitability attributable to shareholders. However, ROE significantly declined to 1.76% in 2023 and further to 3.67% in 2024, indicating a reduction in net income generated per equity dollar and a potential decrease in leverage or operational efficiency.
Overall, the trend suggests that Kodiak Gas Services experienced growth in profitability measures in 2021 and 2022, with some peak performance in 2022, followed by a decline in subsequent years. These fluctuations may be associated with operational challenges, changes in market conditions, or shifts in leverage, warranting closer examination of income statement and capital structure dynamics over this period.