kgs-20240331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

____________________

FORM 10-Q

____________________

(Mark One)


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024


o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________ to _____________

Commission File Number: 001-41732

____________________

Kodiak Gas Services, Inc.

(Exact Name of Registrant as Specified in its Charter)

____________________


Delaware						83-3013440
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

9950 Woodloch Forest Drive, Suite 1900 The Woodlands, Texas						77380
(Address of principal executive offices)						(Zip Code)

Registrant’s telephone number, including area code: (936) 539-3300

____________________

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

Title of each class

Trading

Symbol(s)

Name of each exchange

on which registered

Common stock, par value $0.01 per share

KGS

New York Stock Exchange

____________________

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.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

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 9, 2024, the registrant had 84,294,141 shares of common stock, par value $0.01 per share, outstanding.

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		Page
Cautionary Note Regarding Forward-Looking Statements

PART I.	FINANCIAL INFORMATION	1

Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets	2
	Condensed Consolidated Statements of Operations	3
	Condensed Consolidated Statements of Stockholders’ Equity	4
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Unaudited Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35
Item 4.	Controls and Procedures	36

PART II.	OTHER INFORMATION	37

Item 1.	Legal Proceedings	37
Item 1A.	Risk Factors	37
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37
Item 3.	Defaults Upon Senior Securities	37
Item 4.	Mine Safety Disclosures	37
Item 5.	Other Information	37
Item 6.	Exhibits	37

Signatures		39

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

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, 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 transactions, our ability to finance such transactions, and our ability to achieve the intended operational, financial and strategic benefits from any such transactions;

•Expected synergies and efficiencies to be achieved as a result of the CSI Acquisition;

•Expectations regarding leverage and dividend profile as a result of the CSI Acquisition, including the amount and timing of future dividend payments;

•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;

•Our 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;

•The structure of our Compression Operations contracts and the failure of our customers to continue to contract for services after expiration of the primary term;

•Our ability to successfully integrate any acquired businesses, including CSI Compressco, and realize the expected benefits thereof;

•Our ability to fund purchases of additional compression equipment;

•A deterioration in general economic, business, geopolitical or industry conditions, including as a result of the conflict between Russia and Ukraine and the Israel-Hamas War, inflation and slow economic growth in the United States;

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

•Tax legislation 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;

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•The cost of compliance with existing and new governmental regulations, including climate change legislation;

•The cost of compliance with regulatory initiatives and stakeholders’ pressures, including environmental, social and governance scrutiny;

•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 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;

•Volatility in interest rates;

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

•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, 2023, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections 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.

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

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KODIAK GAS SERVICES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in thousands, except share and per share data)


	As of March 31, 2024		As of December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	9,306	$	5,562
Accounts receivable, net	143,237		113,192
Inventories, net	82,906		76,238
Fair value of derivative instruments	4,226		8,194
Contract assets	18,330		17,424
Prepaid expenses and other current assets	5,250		10,353
Total current assets	263,255		230,963
Property, plant and equipment, net	2,561,558		2,536,091
Operating lease right-of-use assets, net	32,444		33,716
Goodwill	305,553		305,553
Identifiable intangible assets, net	120,520		122,888
Fair value of derivative instruments	32,465		14,256
Other assets	636		639
Total assets	$	3,316,431	$	3,244,106
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	60,721	$	49,842
Accrued liabilities	108,851		97,078
Contract liabilities	68,332		63,709
Total current liabilities	237,904		210,629
Long-term debt, net of unamortized debt issuance cost	1,828,259		1,791,460
Operating lease liabilities	33,901		34,468
Deferred tax liabilities	69,009		62,748
Other liabilities	2,385		2,148
Total liabilities	$	2,171,458	$	2,101,453
Commitments and contingencies (Note 13)
Stockholders’ equity:
Preferred stock, par value $0.01 par value; 50,000,000 shares of preferred stock authorized, zero issued as of March 31, 2024, and December 31, 2023, respectively	—		—
Common stock, par value $0.01 per share; 750,000,000 shares of common stock authorized, 77,434,577 and 77,400,000 shares of common stock issued and outstanding as of March 31, 2024, and December 31, 2023, respectively	774		774
Additional paid-in capital	965,732		963,760
Retained earnings	178,467		178,119
Total stockholders’ equity	1,144,973		1,142,653
Total liabilities and stockholders’ equity	$	3,316,431	$	3,244,106

See accompanying notes to the unaudited condensed consolidated financial statements.

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KODIAK GAS SERVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(in thousands, except share and per share data)


	For the Three Months Ended March 31,
	2024		2023
Revenues:
Compression Operations	$	193,399	$	177,697
Other Services	22,093		12,415
Total revenues	215,492		190,112
Operating expenses:
Cost of operations (exclusive of depreciation and amortization shown below):
Compression Operations	65,882		62,770
Other Services	17,684		8,988
Depreciation and amortization	46,944		44,897
Selling, general and administrative	24,824		13,085
Loss on sale of property, plant and equipment	—		17
Total operating expenses	155,334		129,757
Income from operations	60,158		60,355
Other income (expenses):
Interest expense, net	(39,740)		(68,662)
Gain (loss) on derivatives	19,757		(7,995)
Other expense	(68)		(31)
Total other expenses, net	(20,051)		(76,688)
Income (loss) before income taxes	40,107		(16,333)
Income tax expense (benefit)	9,875		(3,990)
Net income (loss)	$	30,232	$	(12,343)
Basic and diluted earnings per share
Basic net earnings (loss) per share	$	0.39	$	(0.21)
Diluted net earnings (loss) per share	$	0.39	$	(0.21)
Basic weighted average shares of common stock outstanding	77,432,283		59,000,000
Diluted weighted average shares of common stock outstanding	78,102,450		59,000,000

See accompanying notes to the unaudited condensed consolidated financial statements.

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KODIAK GAS SERVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(UNAUDITED)

(in thousands, except share data)


	Common Shares
	Shares	Amount		Additional Paid- In Capital		Retained Earnings		Total Stockholders’ Equity
Balance, January 1, 2023	59,000,000	$	590	$	33,189	$	195,314	$	229,093
Equity compensation - profits interests	—	—		(193)		879		686
Net loss	—	—		—		(12,343)		(12,343)
Balance, March 31, 2023	59,000,000	$	590	$	32,996	$	183,850	$	217,436

Balance, January 1, 2024	77,400,000	$	774	$	963,760	$	178,119	$	1,142,653
Equity compensation - profits interests, net of forfeitures	—	—		—		161		161
Equity compensation - Omnibus Plan, net of forfeitures	—	—		2,687		—		2,687
Offering costs	—	—		(421)		—		(421)
Dividends and dividend equivalents paid to stockholders ($0.38 per common share)	—	—		—		(30,052)		(30,052)
Restricted Stock Units vested under the Omnibus Plan, net of 14,698 shares withheld for taxes	34,577	—		(294)		—		(294)
Net income	—	—		—		30,232		30,232
Other	—	—		—		7		7
Balance, March 31, 2024	77,434,577	$	774	$	965,732	$	178,467	$	1,144,973

See accompanying notes to the unaudited condensed consolidated financial statements.

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KODIAK GAS SERVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)


	Three Months Ended March 31,
	2024		2023
Cash flows from operating activities:
Net income (loss)	$	30,232	$	(12,343)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	46,944		44,897
Stock-based compensation expense	2,848		879
Amortization of debt issuance costs	2,643		5,445
Non-cash lease expense	1,200		774
Provision for credit losses	85		2
Inventory reserve	126		125
Loss on sale of property, plant and equipment	—		17
Change in fair value of derivatives	(14,241)		17,934
Deferred tax provision (benefit)	6,261		(2,521)
Changes in operating assets and liabilities:
Accounts receivable	(30,130)		(20,935)
Inventories	(6,794)		(2,993)
Contract assets	(906)		2,504
Prepaid expenses and other current assets	5,103		(7,522)
Accounts payable	(2,324)		(839)
Accrued and other liabilities	5,872		(9,741)
Contract liabilities	4,623		7,607
Net cash provided by operating activities	51,542		23,290
Cash flows from investing activities:
Purchase of property, plant and equipment	(60,153)		(48,581)
Proceeds from sale of property, plant and equipment	—		32
Other	3		(25)
Net cash used in investing activities	(60,150)		(48,574)
Cash flows from financing activities:
Borrowings on debt instruments	1,008,476		248,300
Payments on debt instruments	(957,975)		(197,569)
Payment of debt issuance cost	(7,594)		(31,878)
Offering costs	(446)		—
Cash paid for shares withheld to cover taxes	(294)		—
Dividends paid to stockholders	(29,815)		—
Net cash provided by financing activities	12,352		18,853
Net increase (decrease) in cash and cash equivalents	3,744		(6,431)
Cash and cash equivalents - beginning of period	5,562		20,431
Cash and cash equivalents - end of period	$	9,306	$	14,000
Supplemental cash disclosures:
Cash paid for interest	$	32,023	$	67,419
Cash paid for taxes	$	—	$	—
Supplemental disclosure of non-cash investing activities:
(Increase) decrease in accrued capital expenditures	$	(9,890)	$	7,962
Supplemental disclosure of non-cash financing activities:
Dividends equivalent	$	(237)	$	—
Accrued debt issuance cost	$	(8,752)	$	—

See accompanying notes to the unaudited condensed consolidated financial statements.

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KODIAK GAS SERVICES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. Organization and Description of Business

Kodiak Gas Services, Inc. (the “Company” or “Kodiak”) is an operator of contract compression infrastructure and related services in the U.S. The Company operates compression units under fixed-revenue contracts with upstream and midstream customers. The Company manages its business through two operating segments: Compression Operations and Other Services. Compression Operations consists of operating Company-owned and customer-owned compression infrastructure to enable the production, gathering and transportation of natural gas and oil. Other Services consists of station construction, maintenance and overhaul, plus other ancillary time and material-based offerings.

See Note 18 (“Segments”) to the Company’s condensed consolidated financial statements.

Merger with CSI Compressco

On April 1, 2024 (the “Closing Date”), the Company completed its acquisition of CSI Compressco LP (“CSI Compressco” and such acquisition, the “CSI Acquisition”), pursuant to the terms of that certain Agreement and Plan of Merger, dated as of December 19, 2023, by and among the Company; Kodiak Gas Services, LLC (“Kodiak Services”), a Delaware limited liability company and then wholly owned subsidiary of Kodiak; Kick Stock Merger Sub, LLC, a Delaware limited liability company and indirect, wholly owned subsidiary of Kodiak; Kick GP Merger Sub, LLC, a Delaware limited liability company and wholly owned subsidiary of Kodiak Services; Kick LP Merger Sub, LLC, a Delaware limited liability company and wholly owned subsidiary of Kodiak Services; CSI Compressco LP, a Delaware limited partnership; and CSI Compressco GP LLC (“CSI Compressco GP”), a Delaware limited liability company and the general partner of CSI Compressco (the “Merger Agreement”), See Note 20 (“Subsequent Events”) to the Company’s condensed consolidated financial statements for more information.

2. Basis of Presentation and Consolidation

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and with the instructions to Form 10-Q and Article 10 of Regulation S-X for interim financial information. These unaudited condensed consolidated financial statements include the accounts of Kodiak and its wholly owned subsidiaries. All significant intercompany transactions and balances have been eliminated upon consolidation.

It is the Company’s opinion that all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. The Company’s results of operations for the interim periods presented are not necessarily indicative of the results that may be expected for the full year. For further information, refer to the Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. Certain prior period amounts have been reclassified to conform to the current period presentation.

Recently Issued Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which improves reportable segment disclosure requirements through enhanced disclosures about significant segment expenses. The amendments in this update are effective for annual periods beginning after December 15, 2023, and interim periods within annual periods beginning after December 15, 2024. Early adoption is permitted. ASU 2023-07 is to be applied on a retrospective basis. The Company is currently evaluating the impact of this standard on its disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), which is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in ASU 2023-09 require the annual financial statements to include consistent categories, greater disaggregation of information in the rate reconciliation and income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for the Company’s annual reporting periods beginning after December 15, 2024, with early adoption permitted, and should be applied on a prospective basis, with a retrospective option. The Company is currently evaluating the impact of this standard on its disclosures.

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3. Revenue Recognition

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


	Three Months Ended March 31,
	2024		2023
Services provided over time:
Compression Operations	$	191,719	$	174,876
Other Services	18,553		5,399
Total services provided over time	210,272		180,275
Services provided or goods transferred at a point in time:
Compression Operations	1,680		2,821
Other Services	3,540		7,016
Total services provided or goods transferred at a point in time	5,220		9,837
Total revenue	$	215,492	$	190,112

The Company derives its revenue from contracts with customers, which comprise the following revenue streams:

Compression Operations

Compression Operations consists of operating Company-owned and customer-owned compression infrastructure for the Company’s customers, pursuant to fixed-revenue contracts, enabling the production, gathering and transportation of natural gas and oil.

Compression Operations for Kodiak-owned, as well as customer-owned, compressors are generally satisfied over time, as services are rendered for selected customer locations on a monthly basis and based upon specific performance criteria set forth in the applicable contract. Terms are typically one to seven years, and at the end of the term, transition to a month-to-month term if not cancelled by either party. The monthly service for a location is substantially the same service month to month and is promised consecutively over the contract term. The progress and performance of the service are measured consistently using a straight-line, time-based method; the performance obligations are satisfied evenly over the contract term as the customer simultaneously receives and consumes the benefits provided by the service. Consistent with Kodiak's satisfaction of its performance obligations, the customer renders payment for services over time in accordance with the terms of the contract.

If variable consideration exists, it is allocated to the distinct monthly service within the series to which such variable consideration relates. The Company has elected to apply the right to invoice practical expedient to recognize revenue for such variable consideration, as the invoice corresponds to the value transferred to the customer based on the Company’s performance completed to date.

Service revenue earned primarily on freight and crane charges that are directly reimbursable by the Company’s customers is recognized at the point in time the service is provided, and control is transferred to the customer. At such time, the customer has the ability to direct the use of the benefits of such service after the performance obligation is satisfied. The amount of consideration the Company receives and the amount of revenue the Company recognizes is based upon the invoice amount.

There are typically no material obligations for returns, refunds or warranties. The Company’s standard contracts do not usually include non-cash consideration.

Other Services

Other Services consists of compressor station construction services provided to certain customers and services provided based on time, parts and/or materials with customers.

For most of the Company’s construction contracts, the customer contracts with the Company to provide a service of integrating a significant set of tasks and components into a single contract. Hence, the entire contract is accounted for as one performance obligation. The Company recognizes revenue over time as the Company’s performance creates or enhances an asset that the customer, in turn, controls as the asset is created or enhanced. For construction contracts,

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revenue is recognized using an input method. Measure of the progress towards satisfaction of the performance obligation is based on the actual amount of labor and material costs incurred. The amount of the transaction price recognized as revenue each reporting period is determined by multiplying the transaction price by the ratio of actual costs incurred to date to total estimated costs expected for the construction services. Payment terms and conditions vary by contract, but contract terms generally include a requirement of payment upon completion of a milestone. Judgment is involved in the estimation of the progress to completion. Any adjustments to the measure of the progress to completion is accounted for on a prospective basis. Changes to the scope of service are recognized as an adjustment to the transaction price in the period in which the change order is agreed upon and executed. Losses on construction contracts, if any, are recognized in the period when the estimated loss is determined. There have been no losses recognized in the three months ended March 31, 2024 and 2023.

Services provided based on time spent, parts and/or materials are generally short-term in nature and labor rates and parts pricing are agreed upon prior to commencing the service. The Company applies an estimated gross margin percentage, which is fixed based on historical time and materials-based service, to actual costs incurred. Since revenue is recognized when time is incurred, this revenue is recognized at a point and time when the service is rendered.

Contract Assets and Liabilities

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 right to bill. The Company had contract assets of $18.3 million and $17.4 million as of March 31, 2024, and December 31, 2023, respectively. There was a $3.6 million contract asset balance as of January 1, 2023.

The Company records contract liabilities when cash payments are received or due in advance of performance. The Company’s contract liabilities were $68.3 million and $63.7 million as of March 31, 2024, and December 31, 2023. As of January 1, 2024, and January 1, 2023, the beginning balances for contract liabilities were $63.7 million and $57.1 million, all of which was recognized as revenue in the three months ended March 31, 2024, and March 31, 2023, respectively.

Performance Obligations

As of March 31, 2024, the aggregate amount of transaction price allocated to unsatisfied performance obligations related to the Company’s revenue for the Compression Operations segment is $1.0 billion.

The Company expects to recognize these remaining performance obligations as follows (in thousands):


	Remainder of 2024		2025		2026		2027		2028 and thereafter		Total
Remaining performance obligations	$	469,869	$	344,515	$	151,988	$	52,650	$	10,535	$	1,029,556

As of March 31, 2024, the aggregate amount of transaction price allocated to unsatisfied performance obligations related to the Company’s revenue for the Other Services segment is $20.4 million, of which $19.2 million is expected to be recognized by December 31, 2024.

4. Accounts Receivable, net

Accounts receivable, net consist of the following (in thousands):


	As of March 31, 2024		As of December 31, 2023
Accounts receivable	$	151,287	$	121,242
Allowance for credit losses	8,050		8,050
Accounts receivable, net	$	143,237	$	113,192

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The allowances for credit losses were $8.1 million and $8.1 million as of March 31, 2024, and December 31, 2023, 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 are as follows (in thousands):


	Allowances for Credit Losses
Balance at January 1, 2023	$	949
Current-period provision for expected credit losses	7,101
Write-offs charged against allowance	—
Balance at December 31, 2023	$	8,050
Current-period provision for expected credit losses	85
Write-offs charged against allowance	(85)
Balance at March 31, 2024	$	8,050

5. Inventories, net

Inventories consist of the following (in thousands):


	As of March 31, 2024		As of December 31, 2023
Non-serialized parts	$	65,494	$	62,784
Serialized parts	17,412		13,454
Total inventories, net	$	82,906	$	76,238

6. Property, Plant and Equipment, net

Property, plant and equipment, net consist of the following (in thousands):


	As of March 31, 2024		As of December 31, 2023
Compression equipment	$	3,230,227	$	3,166,214
Field equipment	19,945		19,286
Buildings and shipping containers	14,102		11,942
Technology hardware and software	11,404		11,161
Trailers and vehicles	10,366		9,885
Leasehold improvements	9,949		8,093
Furniture and fixtures	2,594		2,053
Land	743		743
Other	216		374
Total property, plant and equipment, gross	3,299,546		3,229,751
Less: accumulated depreciation	(737,988)		(693,660)
Property, plant and equipment, net	$	2,561,558	$	2,536,091

Depreciation expense was $44.6 million and $42.5 million for the three months ended March 31, 2024, and March 31, 2023, respectively, and is recorded within depreciation and amortization on the accompanying condensed consolidated statements of operations.

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7. Goodwill and Identifiable Intangible Assets, net

There were no