Kodiak Gas Services to Replace NV5 Global in S&P 600

Kodiak Gas Services (KGS) will replace NV5 Global (NVEE) in the S&P SmallCap 600 effective August 6, as Acuren is acquiring NV5 Global in a deal expected to be completed soon.

Kodiak Gas Services, Inc. (KGS) will replace NV5 Global, Inc. (NVEE) in the S&P SmallCap 600 effective August 6, 2025, as Acuren Corporation (TIC) is acquiring NV5 Global in a deal expected to be completed soon. This move underscores the growing importance of energy infrastructure in the investment landscape and the strategic positioning of KGS.

The S&P SmallCap 600, a widely followed benchmark, includes companies with market capitalizations between $1.2 billion and $8 billion. KGS's inclusion validates its financial discipline and operational strength, as evidenced by its Q1 2025 results, which included record $177.7 million in adjusted EBITDA and a 67.7% Contract Services adjusted gross margin [1].

KGS's addition to the index is significant for several reasons. First, it signals a potential re-rating of small-cap energy plays, driven by enhanced liquidity, increased institutional ownership, and a recalibration of valuation metrics. Historically, S&P SmallCap 600 additions have acted as liquidity multipliers, attracting passive and active fund flows and reducing bid-ask spreads [1].

Second, KGS's inclusion aligns with the index's quality tilt, which historically outperforms the Russell 2000 by emphasizing earnings stability and low leverage. KGS's long-term, fixed-revenue contracts with premier producers in the Permian, Marcellus, and Haynesville basins provide insulation from commodity price volatility, further reinforcing its strategic positioning [1].

The merger between Acuren and NV5 Global, which is expected to close soon, is a notable development for both companies. NV5 Global's stockholders approved the merger with Acuren during a Special Meeting held on July 31, 2025, with a majority of votes cast in favor [3]. The merger is subject to customary closing conditions and is anticipated to close in August 2025.

In conclusion, the addition of KGS to the S&P SmallCap 600 is a strategic move that reflects the evolving energy landscape and the growing importance of energy infrastructure. For investors, this inclusion offers a compelling risk-rebalance opportunity, with KGS's forward EBITDA yield of ~13.3% and 2.0% dividend yield positioning it as a high-conviction play [1]. However, risks persist, including a prolonged energy downturn or rising interest rates, which could pressure KGS's $2.6 billion debt load. These risks are mitigated by its long-term contract structure and high-margin services, but they warrant close monitoring.

References:
[1] https://www.ainvest.com/news/kodiak-gas-services-inclusion-smallcap-600-catalyst-energy-sector-valuation-rating-2508/
[3] https://www.quiverquant.com/news/NV5+Global%2C+Inc.+Announces+Stockholder+Approval+for+Merger+with+Acuren+Corporation