Earnings call transcript: Atlas Energy Q2 2025 misses EPS, revenue beats

Atlas Energy Solutions Inc. reported its second-quarter 2025 earnings, revealing a significant miss on earnings per share (EPS) but a strong revenue beat. The company posted an EPS of -$0.04, falling short of the forecasted $1.08, marking a surprise of -103.7%. Despite this, Atlas achieved actual revenue of $288.7 million, surpassing the expected $239.17 million by 20.71%. Following the earnings release, the stock experienced a 2.42% increase to $12.4, although pre-market trading saw a decline of 1.13%. According to InvestingPro analysis, the company’s current valuation suggests it may be undervalued, with two analysts recently revising their earnings expectations downward for the upcoming period.

Key Takeaways

• Atlas Energy reported a significant EPS miss but exceeded revenue expectations.
• Stock price rose by 2.42% after the earnings announcement.
• The company increased its market share in Permian sand to 35%.
• Logistics operations delivered record volumes, despite a decline in frac crew count.
• Future guidance suggests a potential decline in revenue and EBITDA for Q3.

Company Performance

Atlas Energy Solutions demonstrated resilience in a challenging market, increasing its market share in the Permian sand sector to 35%. The company reported record logistics volumes and continued to invest in innovation, such as the Dune Express logistics system. Despite a decline in proppant volumes, Atlas maintained a robust operating cash flow and adjusted free cash flow.

Financial Highlights

• Revenue: $288.7 million, up from the forecasted $239.17 million.
• EPS: -$0.04, missing the forecast of $1.08.
• Adjusted EBITDA: $70.5 million with a 24% margin.
• Proppant sales: $126.3 million.
• Logistics revenue: $146.4 million.
• Operating cash flow: $88.6 million.

Earnings vs. Forecast

Atlas Energy’s Q2 2025 earnings report highlighted a stark contrast between its EPS and revenue outcomes. The EPS miss of -103.7% was significant, while the revenue beat of 20.71% was a positive surprise. This divergence indicates potential operational challenges despite strong sales performance.

Market Reaction

Following the earnings release, Atlas Energy’s stock price increased by 2.42% to $12.4. However, pre-market trading showed a 1.13% decline. The stock has faced significant pressure, down 41.46% over the past six months, trading between $11.76 and $26.86 over the past year. InvestingPro data reveals the company maintains strong liquidity with a current ratio of 1.62, though it trades at a relatively high P/E multiple of 46.42.

Outlook & Guidance

Looking ahead, Atlas Energy anticipates a mid-single-digit increase in Q3 volumes, although it expects a sequential decline in revenue and EBITDA. The company plans to maintain its $115 million CapEx budget and sees its power business as a critical growth driver. InvestingPro subscribers have access to additional insights through the comprehensive Pro Research Report, which includes detailed analysis of Atlas Energy’s growth prospects, financial health metrics, and industry positioning among 1,400+ top US stocks.

Executive Commentary

• Bud Brigham, Executive Chair, emphasized resilience: "While upswings rain profits on nearly everyone, true resilience and value are forged in the downturns."
• Chris Schola, EVP Sand and Logistics, stated: "We are not content to be a vendor in the portfolio of our customers. Our goal is 100% of the work 100% of the time."
• CEO John Turner highlighted expansion: "Atlas will continue to make those investments and expand and keep continuing to expand its offering to its valued customers."

Risks and Challenges

• Supply chain disruptions may impact future operations.
• Market saturation in the sand industry could limit growth.
• Economic downturns may affect demand for energy solutions.
• Regulatory changes in the energy sector pose potential risks.
• Competitive pressures from other sand and logistics providers.

Q&A

During the earnings call, analysts inquired about market share gains and power market opportunities. Executives detailed the Dune Express logistics strategy and addressed potential supply stack rationalization, emphasizing the company’s commitment to innovation and customer service.

Full transcript - Atlas Energy Solutions Inc (AESI) Q2 2025:

Conference Operator: Greetings, and welcome to the Second Quarter twenty twenty five Financial and Operational Results Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Kyle Turlington, Vice President, Investor Relations.

Thank you. You may begin.

Kyle Turlington, Vice President, Investor Relations, Atlas Energy Solutions: Hello, and welcome to the Atlas Energy Solutions conference call and webcast for the 2025. With us today are John Turner, President and CEO Blake McCarthy, CFO Chris Schola, EVP and President of Sandman Logistics and Bud Brigham, Executive Chair. We will be sharing our comments on the company’s operational and financial performance for the second quarter twenty twenty five, after which we will open the call for Q and A. Before we begin our prepared remarks, I would like to remind everyone that this call will include forward looking statements as defined under The U. S.

Securities laws. Such statements are based on the current information and management’s expectations as of this statement and are not guarantees of future performance. Forward looking statements involve certain risks, uncertainties and assumptions that are difficult to predict. As such, our actual comments and results could differ materially. You You can learn more about these risks in the annual report on Form 10 ks we filed with the SEC on 02/25/2025, our quarterly report on Form 10 Q for the first quarter, our other quarterly reports on Form 10 Q and current reports on Form eight ks and our other SEC filings.

You should not place undue reliance on forward looking statements, and we undertake no obligation to update these forward looking statements. We will also make reference to certain non GAAP financial measures such as adjusted EBITDA, adjusted free cash flow and other operating metrics and statistics. You will find the GAAP reconciliation comments and calculations in yesterday’s press release. With that said, I will turn the call over to John Turner.

John Turner, President and CEO, Atlas Energy Solutions: Thank you, Kyle. For the second quarter, Atlas generated $70,500,000 of adjusted EBITDA on $288,700,000 of sales, representing a 24% adjusted EBITDA margin. Our second quarter results at the low end of our 70,000,000 to $80,000,000 guidance range reflected the well documented slowdown in Permian Basin completion activity, resulting in a slight sequential decline in volumes. This was primarily driven by customer pauses, extended delays between pads and scheduled shifts rather than outright crew reductions as operators navigated recent commodity price uncertainty. For the third quarter, we anticipate a sequential increase in volumes supported by continued market share gains and the strength of our high quality customer space despite persistent challenges in the West Texas oilfield services market through the 2025.

The Permian Frac crew count, which averaged over 90 active crews in 2024 and peaked at approximately 95 crews by March 2025 has declined to around 80, the lowest since 2017 excluding the COVID downturn. This reduction has a magnified impact due to significant frac efficiencies gains in recent years. Daily sand pump per fleet has more than quadrupled since Atlas’ founding in 2017 and risen approximately 25% since 2023. As a key enabler of this industry transformation, Atlas benefits long term from increased sand consumption, but in today’s market where customers are delaying completions, each crew reduction or delay has a heightened effect. These efficiency improvements drive better wells and returns for our customers, positioning Atlas as a primary beneficiary when completion activity rebounds.

As the Permian’s largest sand and logistics provider, our scale and the cost efficiencies of the Dune Express provide clear operational and economic advantages over competitors, though we ran exposed to further declines in activity. Despite an approximate 15% decline in sand volumes from our first quarter exit rates, we anticipate year over year growth in annual sand volumes driven primarily by our 22,000,000 committed tons for 2025. Based on our internal estimates, Atlas has expanded its market share from just 15% at the time of our IPO to the high 20s by 2024 bolstered by the Hi Crush acquisition to approximately 35% of all sand sold today. As we prepare for the fall RFP season, we expect additional market share gains in 2026 as we secure contracts to optimize our productive capacity and maximize utilization of the Dune Express. The synergies of our low cost mines and integrated logistics network provide a competitive edge in total delivered sand pricing, which we intend to leverage throughout the contracting season.

Spot prices for West Texas sand remain in the mid to high teens, levels insufficient to justify continued reinvestment for much of the industry, particularly as mines face low utilization and challenges absorbing fixed costs. While the supply stack has been resilient until recently, we are now seeing competitors idling underutilized mines and reducing shift schedules. We expect further supply rationalizations over the next few quarters and believe 2025 will mark the first year since the in basin sand industry’s inception that total supply capacity contracts. Combined with rising per fleet sand intensity, this sets the stage for our pricing recovery when completion activity rebounds, a recovery for which Atlas is strategically positioned to capitalize on. The Dune Express is now fully operational with construction and commissioning completed on time, a milestone many consider ambitious.

Currently, the majority of the sand deliveries from our Kermit plant utilize the Dune Express at our end of line and state line facilities, which has reduced public road traffic and admissions in the area. During the second quarter, we sent just over 1,500,000.0 tons of profit down the conveyor. With the Dune Express’ operational efficiencies now tangible, customers are actively securing access to its benefits for 2026. Alongside 5,000,000 tons already contracted for next year, we have identified over 12,000,000 tons of additional sales opportunities, signaling strong demand. There won’t be room for everyone.

The 2025 represents the first full quarter of our integrated power operations following the acquisition of Mosier Energy Systems. The integration of Mosier into the Atlas family has surpassed our expectations, reflecting the strong cultural alignment identified during the diligence process. We are increasingly optimistic about the growth potential of our Power business. Our commercial team is actively evaluating over 200 megawatts of opportunities across commercial, industrial, micro grid and production support applications. The well documented surge in power demand across the broader economy has significantly expanded our potential customer base beyond our traditional oil and gas operators.

As the cost of generating capacity rises in today’s market, our ability to deliver tailored, efficient power configurations to meet customer specific needs has driven strong traction within our existing customer base and into new sectors including manufacturing technology and other industrial markets. As we enhance our visibility in the broader power market, we anticipate further diversification of our customers’ end markets, creating growth opportunities for Atlas that mitigate the volatility of the oil and gas industry. A key commercial objective of the Moser acquisition is to extend the duration of our contracts in this business. While our sales team is securing longer term contracts with key oil and gas operators, the contract duration sought in these emerging markets are significantly longer, often exceeding a decade, a feature we view as highly attractive for stabilizing cash flows and reducing our exposure to historical cyclicality. Our Power team has achieved significant process in enhancing operational efficiencies and expanding manufacturing capacity at our Casper, Wyoming facility, all while maintaining minimal capital expenditure.

As we finalize the integration of Mosier Energy Systems, I am increasingly confident that our Power business will serve as a critical growth driver for Atlas in 2026 and beyond. Following the close of the second quarter, we acquired PropFlo, a patented on-site proppant filtration system that enables twenty four hour continuous pumping, which Chris Scholl will discuss in further detail here shortly. PropFlo filtration has become an increasingly critical aspect of proppant delivery and wellsite efficiency and the addition of PropFlo to the Atlas portfolio positions us with what we believe is the industry’s leading filtration system, I’d like to take a moment to warmly welcome the PropFlo team to the Atlas family. In closing, while we anticipate ongoing challenges in the West Texas oilfield services market through the 2025, we believe these conditions will accelerate the necessary steps to rebalance the industry. For Atlas, these challenges also create significant opportunities.

The acquisition of Mosier Energy Systems in early twenty twenty five and Profla more recently demonstrate our ability to capitalize on difficult market cycles, enabling us to pursue strategic acquisitions and enhance our market position and through cycle earnings potential. We expect our growing structural advantage in sand and logistics to deliver differentiated performance, which will become increasingly evident as industry conditions improve. Meanwhile, our power business is well positioned to drive sustained growth for Atlas, capitalizing on the secular tailwind shaping the broader power market. Now I will turn over the call to our EVP and President of Sand and Logistics, Chris Schola.

Chris Schola, EVP and President of Sand and Logistics, Atlas Energy Solutions: Thanks, John. At Atlas, our focus isn’t just selling sand. It’s about unlocking the most cost effective, scalable businesses through logistics, automation and integrated infrastructure. The Permian market is beginning to see that very clearly. We delivered another quarter of record operational performance driven by our focus on customer alignment, relentless pursuit of efficiencies and disciplined capital execution.

In May, our Kermit plant and network of Encore mines both set all time production records. The Dune Express is fully commissioned and has removed almost 8,000,000 sand truck miles from the Delaware Basin public roadways. Our logistics team set a quarterly volume record of 5,500,000 tons delivered to the well site. We have now shipped almost 1,000 truckloads autonomously and this quarter we achieved our first autonomous multi trailer delivery. Atlas continues to position itself as the logistics and infrastructure backbone of the Permian Basin.

Let’s talk about the Dune Express. This system is not just a cost play, it’s a strategic unlock. For years, a segment of the customer base has been locked in and tethered to legacy providers by high switching costs, fragmented logistics and opaque pricing models. The dude is changing all of that. By eliminating long haul trucking, reducing delivery volatility and compressing total landed cost, we’re now opening doors to customers in the Delaware Basin that have never sourced a single ton directly from Atlas, all while reducing the commercial truck traffic on the roads and therefore reducing our industry’s impact on the community.

Let me be clear about our long term strategy. We are not content to be a vendor in the portfolio of our customers. Our goal is 100% of the work 100% of the time. That means when an operator completes a pad in the Permian, Atlas is responsible for the sand from the mine to the wellhead. The reason is simple, integration outperforms coordination.

We know that if we can control the mine, the inventory, the delivery system and the final hand off at the well site, we can outperform on cost, reliability and safety. By controlling that entire chain, we are positioned to deliver more than just tons, we can deliver certainty to our customers. This integration is why we are so excited to add PropFlo to our existing portfolio of innovative technologies and further enhance our customer value proposition. PropFlo is designed to fully eliminate proppant debris at the well site while also removing the equipment and associated maintenance from the resin. This technology enables continuous pumping operations for our customers and makes it possible to virtually eliminate operational disruptions.

Crop Flow’s existing customer base already features blue chip operators and we expect that roster to grow as we support the expansion of its market penetration. Increasingly, our customers are recognizing that we are an operational extension of their completions programs. In our customer base, we’re seeing a clear trend away from spot market relationships and towards fully integrated multi pad structures where Atlas owns a full delivery experience. Approximately 60% of our active last mile crews rely on Atlas to deliver 100% of the sand required for their basin specific completions program. It highlights the trust we have built around execution with our customers and we expect this to shift to stop.

It highlights the trust we have built around execution with our customers and we expect this to shift to deeper, stickier relationships to accelerate as we scale. I will now turn the call over to our Chief Financial Officer, Blake McCarthy.

Blake McCarthy, CFO, Atlas Energy Solutions: Thanks, Chris. In Q2 twenty twenty five, Atlas generated revenues of $288,700,000 and adjusted EBITDA of $70,500,000 a 24% margin. EBITDA was at the low end of our 70,000,000 to $80,000,000 guidance range as volumes came in slightly below expectations as operator schedule shifts deferred some second quarter volumes into the third quarter. Additionally, cash SG and A was elevated during the quarter due to third party consulting costs and litigation expenses. Economic and commodity price uncertainty is eliciting cautious behavior from our customers, which led several to defer scheduled completions from the second quarter to later in the calendar year.

We expect third quarter volumes to be up in the mid single digits sequentially with August and September slated to be our strongest volume months of the year, driven by recent customer wins and new Dune Express trials. We expect our Power business to generate incremental sequential growth, driven by increased unit deployments. However, a forecasted decline in our average proppant sales price and a reduction in shortfall revenue is expected to more than offset these gains, resulting in a sequential decline in consolidated revenue and EBITDA during the third quarter. Breaking down revenue for the second quarter, proppant sales totaled $126,300,000 Logistics contributed 146,400,000.0 and Power Rentals added $16,000,000 Proppant volumes were 5,400,000 tons, down approximately 4% from the levels in the first quarter. Average revenue per ton was $23.29 boosted by shortfall revenue from unmet customer pickups.

Excluding this, the average price was $21.17 per ton. As of today, we expect our average sales price to decline to approximately $20.5 during the third quarter. Total cost of sales excluding DD and A was $195,900,000 comprised of $60,900,000 in plant operating costs, dollars 123,900,000.0 in service costs, 5,900,000.0 in rental costs and $5,200,000 in royalties. Per ton plant operating costs fell to $11.23 excluding royalties, down from Q1 with further normalization expected in Q3 due to higher anticipated volumes and further operational efficiencies. Cash SG and A for the quarter was $25,000,000 which included cash transaction expenses and other non recurring items of $2,200,000 netting to $22,800,000 on a normalized basis.

SG and A is expected to remain around the $22,000,000 to $23,000,000 range in the third quarter due to the aforementioned elevated third party consulting costs and litigation expenses. DD and A was $40,600,000 net income was negative 5,600,000.0 and earnings per share was a loss of $04 Operating cash flow for the second quarter was $88,600,000 a considerable improvement relative to levels in the first quarter, driven primarily by an improvement in working capital intensity that was in turn driven by an improvement in customer collections. Adjusted free cash flow defined as adjusted EBITDA less maintenance CapEx was $48,900,000 or 17 percent of revenue. Total CapEx during the second quarter was $34,100,000 consisting of $12,500,000 in growth CapEx and $21,600,000 in maintenance CapEx, bringing total CapEx for the first half to approximately $69,600,000 We continue to budget $115,000,000 of total CapEx for 2025 and expect our second half CapEx to decline for first half levels. We are maintaining our dividend of $0.25 per share, which represents a 7.9% yield as of Friday’s close.

I’ll now turn the call over to our Executive Chairman, Bud Brigham for some closing remarks.

Bud Brigham, Executive Chair, Atlas Energy Solutions: Thanks Blake. Forty years in oil and gas industry imparts a hard knocks education that no classroom can match. Boom and bust cycles drive home a crucial lesson. While upswings rain profits on nearly everyone, true resilience and value are forged in the downturns when prices crater and competitors crumble. This hard won wisdom is the foundation of Atlas.

We didn’t build Atlas assuming perpetual $40 sand prices. We supply one of the most volatile commodities in existence. Recognizing that reality, we engineered Atlas differently as a low cost, high margin operation designed in post founding years, it was forged in the crucible of the twenty twenty COVID downturn when we honored every customer commitment even as competitors abandoned theirs. We’ve only grown stronger since the pandemic. As the lowest cost proppant producer and a state of the art logistics provider, we boast unique differentiated advantages including the Doon Express, autonomous and multi trader trucking and advanced power solutions.

Leveraging these strengths, while others struggle to stay afloat in this trough, we’re playing offense. As we’ve discussed, Atlas hasn’t just expanded our market share in profit and logistics, we’ve also entered new markets. Recent moves like the Mosier acquisition earlier this year and last week’s PropFlo deal underscore how we’re uniquely positioned to create value while our competitors are constrained. I can’t predict when this cycle will turn, but I know Atlas will emerge even stronger poised to capture outsized financial rewards when it inevitably does. That concludes our prepared remarks.

Now we’ll open it up for Q and A.

Conference Operator: Thank you. We will now be conducting a question and answer session. Our Our first question comes from the line of Steven Gengaro with Stifel. Please proceed with your question.

Kyle Turlington, Vice President, Investor Relations, Atlas Energy Solutions: Steven, you on mute?

Steven Gengaro, Analyst, Stifel: Sorry. I appreciate that. Sorry about that. I was on mute. So thanks for taking the question.

Good morning. I’d like to start with you mentioned we all know that Permian has been pretty soft. You mentioned where spot prices are, but then you alluded to sort of the share gains that you’ve been seeing. Can you just talk a little bit about more what’s driving those share gains and how you think that plays out over the next several quarters?

John Turner, President and CEO, Atlas Energy Solutions: Yes. Thanks, Stephen. This is John. And yes, thanks

Eddie Kim, Analyst, Barclays: for the

John Turner, President and CEO, Atlas Energy Solutions: follow-up. For 2025, our Permian frac crew count peaked at around 95 in the first quarter. Today, our data tells us we’re around 80 crews. Others I know there’s been some other reporting in the market, so that says it’s set. There’s 70 crews active crews out there, so anywhere between seventy and eighty.

Our the number of frac crews that we’re supplying sand and logistics on has been pretty flat since the first quarter, say roughly 24, 25 depending on just the week. So obviously flat with the first quarter when there were 95 crews running. We estimate today based on the number of say 80 crews that we are selling around 35% of all sand sold in the Permian. This number was high in the high 20s in 2024. So that’s obviously very powerful.

And Chris alluded to this in his comments on the why and I’m just going to I’ll just make some comments on why I kind of see the trend that we see going on. And obviously, first off is delivering sand and delivering it to the wellbores, obviously, a very important part of the completion process. We started selling sand back in 2018, 2019. And since we started doing that, Atlas has built us a reputation as a reliable sand provider. Go back to COVID when we were the only sand company that kept both of our mines open.

We’re able to do, this because of our low cost operations commitment from Atlas’ owners, executives, employees to be the best service company, period. Fast forward to today, and Atlas is such a different company, meaning we’re no longer just a sand provider. After the acquisition of Hi Crush, we’re now the largest network of in basin sand, both wet and dry. Atlas is built from the ground up, the largest logistics operator in the Permian, which includes our own fleet of trucks and our own trailers. And on top of that, we developed an app that really streamlines the management of the logistics function and we continue to develop this app to upgrade with offerings that make our customers’ operations more efficient.

Add in there the DIN Express, which is probably the biggest game changer, biggest step change in sand and logistics space ever. Atlas continues to be on the offensive. We continue to make investments and innovate in the mind of lender space. The most recent is the acquisition of Proflow. Continuous pumping is important to our customers, which makes it important to Atlas.

Atlas goes the extra mile to meet our customers’ demands, and we’re not done yet as we continue to work on the technology and services that are most important to our customers. And then speaking of customers, our customer service, I think if you speak to any of our customers, I think they’ll tell you that they get the best from Atlas and the best of any company. When I was an operator, there was there was always, you know, many this is an area where many of our our service companies fell flat. They didn’t they didn’t necessarily treat us as a partner. Now over the years, I’ve made sure that here at Atlas that we excel at customer service.

So those are some of the examples of why. And do I think it will continue? I think the answer to that is yes. I mean, over the past year, we’ve had a number of customers ask us to sole source sole source their sand and logistics. And this will continue because Atlas is committed to being the best service company.

And we’ve been here before these market conditions. We’re currently demonstrating to our customers while we are a valued customer. Atlas will continue to make those investments and expand and keep continuing to expand its offering to its valued customers.

Steven Gengaro, Analyst, Stifel: Great. Thanks. Thank you for the detail. The other question I had was just around capital allocation. It sounds like you’ve had very good success with the trucks from Kodiak to start, and I think there’s a lot more on order.

And then when you sort of think about CapEx needs versus capital returns to shareholders in kind of a soft market? How do you prioritize?

Blake McCarthy, CFO, Atlas Energy Solutions: Hey, Steve, it’s Blake. Good question. I think just to kind of reiterate what John said, hey, it’s no secret that the West Texas market is pretty tough sledding right now. And the playbook in like a tough market like today is where the general service industry is everybody slashes CapEx and goes to pricing levels to generate cash flow breakeven levels almost immediately in order to preserve some type of utilization to keep the lights on. You know, that ultimately results in our erosion of earnings power and, you know, when the cycle recovers because necessary maintenance capital, that gets scrapped, any type of investment innovation that gets pushed to the side.

On the flip side of that, our position is the low cost supplier that enables us to go to those pricing levels while still generating a healthy amount of operating cash flow, which in turn enables us to continue investing in the business while returning capital to our shareholders. On the investment side, that’s not to say that we’re going to spend money like truck and sailors in all directions. But for instance, we’re not currently investing in incremental mines as the West Texas sand supply stack is currently in the process of contracting, which we think is necessary and a long term benefit to Atlas. However, we are continuing to invest in our logistics platform as seen in our recent acquisition of Proplo, continued partnership with Kodiak as pointed out and some other things we got in the hopper. We’re focused on widening the gap between us and our competition when it comes to efficiency and customer experience when others are forced to standstill.

And I think that’s going to become very evident when you look at the market share data and our ability to hold crew count flat while the market has been free fall over the past few months. On the power front, we’re very encouraged by the commercial developments we’ve seen over the last few months. We’re excited to see that begin to bear fruit over the next few quarters. Capital allocation there is a easier discussion as most of those projects we’re pursuing have longer duration contracts attached to them with quick cash flow generation. So it’s pretty simple return math.

Balancing, continuing to invest in the business versus turning capital to shareholders, obviously, an important leg to that stool too is protecting the balance sheet. I think that the dividend remains very important to us. We are in the midst of a down cycle right now with sand pricing at cash flow breakeven levels for the industry, and we’re still generating cash. So now we have that means we have to be efficient with our balance sheet management. We got to be tight on costs and we’ve got to set a higher return threshold for CapEx to balance it all.

But that’s what this company was built for. We’re investing to make this model even more durable, and we’re confident that, that will really begin to shine through for investors as we work through the rough second half of the year and into 2026. So ultimately, this down cycle is going to be proved to be very healthy for the West Texas sand market and the logistics industry. And I think we’re going be in prime position on the backside. So we’re going to continue to buttress our position.

Steven Gengaro, Analyst, Stifel: Great. Thanks, Blake. Thanks for all the detail.

Conference Operator: Thank you. Our next question comes from the line of Derek Pottweiser with Piper Sandler. Please proceed with your question.

Derek Pottweiser, Analyst, Piper Sandler: Hey, good morning. So John, I thought your commentary around the power business was interesting. It’s the first time you really talked about those opportunities for the business outside of oil and gas. Maybe can you expand on what these entail and maybe help frame for us the size of this opportunity set?

John Turner, President and CEO, Atlas Energy Solutions: Yes. So I’ll I’ll go ahead and and and set this up, and then I’ll let Tim answer the the some of the questions, or follow-up on it. Tim OnTrak, who’s the head of our power business. You know, the need for power, you know, obviously is not constrained just to do it. It’s not just specific to the oil and gas business.

Before we acquired Mosier, we’ve done a lot of work on different markets and recognize this. And whether it be commercial and industrial technology, government data centers or oil and gas, We acquired Mosier because it gave us the best platform from which to grow our power business in all these areas. Mosier is about Mosier itself. It was much more than a generator shop. Over the years, excuse me, over the years there’s been a this team has been leading innovations in mobile power space, and that innovation continues today with some really exciting technologies.

Moser had a really deep bench of technical talent and since the acquisition, we have made some key additions to the team that enable us to more quickly penetrate these attractive markets. Whether it be building out microgrids, providing bridge power, the permanent power solutions or providing power as a service, we believe are often as unique in our space and we are well positioned to serve those markets. As far as the size of those markets, I mean, we’re still we’re still evaluating that and we we mentioned a little bit of that on the call. And Tim, do have anything else you wanna say?

Blake McCarthy, CFO, Atlas Energy Solutions: Yeah. Derek, Tim Ondrok. How are you? So on on these opportunities, we’re not we’re not abandoning oil and gas. We still think the oil and gas space is attractive.

But the C and I space tends to come with more unique solutions. We think we’re well positioned to provide those. A lot of those are bridge to permanent solutions over really partner. And we’re not solving, you know, a near term problem while we’re waiting on line power. We’re solving a permanent solution for somebody that comes with a a five to, you know, oftentimes ten or fifteen year contract.

And so the returns in that space are are pretty attractive, especially from a long term cash flow stability standpoint. Yeah. Some of those are folks in the in the tech space. They’re in manufacturing. They’re in different industrial processes where the need for power in The United States has created a situation where they need to bridge that gap, and we’re in a perfect position to provide that.

Derek Pottweiser, Analyst, Piper Sandler: Great. That’s helpful comments. And then, maybe on just thinking about the supply stack and you guys seem pretty confident that we’re going to see a real supply contraction the first time since in basin sand mines became a thing. So maybe can you help us understand the tangible evidence and proof points that you’re seeing of these Tier two or three minutees actually shutting down? And then maybe how much do you think will come offline from the $90,000,000 or $100,000,000 so of supply in the Permian?

Chris Schola, EVP and President of Sand and Logistics, Atlas Energy Solutions: Morning. This is Chris. I think, from a tangible proof evidence, we’re seeing out there is we do have confirmation that one of the major mines in Kermit has already actually shut down and released everyone except for, you know, management out there. And and you look at that supply stack, and I think, you know, from a a you know, the numbers you threw out, while mechanically that all may be there, From a total support basis, right, you gotta have the mechanics, the electricians, the skills, the the people to operate all that. And what what we’re seeing here in, you know, across the board is, you know, layoffs, reduction in staff, people working to get lean and mean in terms of of OpEx just to stay alive.

Right? And and I think that’s really where, you know, we we see the market going. I think that that, again, that supply stack out there is probably very overstated as to what what can actually be supplied in the market today. We’re already seeing, you know, constraints for the first time come to come to fruition. So, you know, as we move into to q four with, you know, the the messy schedule, unknown schedules that that are, I think we’ll continue to see, you know, that supply stack diminish down.

And it’s just a matter of time as to where, you know, our competitors continue to to not, you know, invest in their facilities and and won’t be ready for the uptake.

Derek Pottweiser, Analyst, Piper Sandler: Could you quantify? I mean, is it are we talking five, ten, 15,000,000 tons potentially being stacked or coming out?

Chris Schola, EVP and President of Sand and Logistics, Atlas Energy Solutions: Yes. I would probably say on a total market basis, just my gut, 20% of the market at least is not available.

Derek Pottweiser, Analyst, Piper Sandler: Got it. Super helpful. Thanks, guys. I’ll turn it back.

Conference Operator: Thank you. Our next question comes from the line of Jim Rollison with Raymond James. Please proceed with your question.

Jim Rollison, Analyst, Raymond James: Hey, good morning guys. First question, just if you kind of look at the market we’ve had and obviously operators have been very focused on minimizing well AFEs and pushing price on service companies as low as they can get it to try and offset oil prices etcetera. Would love to hear just kind of how you guys

Chris Schola, EVP and President of Sand and Logistics, Atlas Energy Solutions: cost is it’s pretty intense right now. I think our our sales team hears that just about every week. You know, but at Atlas, we really position ourselves to to thrive in exactly that type of market. Right? We look at that total delivered value, not just a a price point.

So looking at at that kind of total delivered cost perspective. Right? We get a lot of questions, you know, on these calls around, you know, what’s the price per ton of the sand mine. And, you know, from my perspective, that’s that’s really yesterday’s game. Right?

That is that is the game from five years ago. We really moved on from that and focused on, you know, the the total delivered costs at the well site. And then as part of that, right, we’re competing with the reliability and efficiency and ability to to execute. So, you know, just walking through, I know John touched on this a little bit. Right?

But but walking through the strategic platform we’ve built to continue to round out that strategy. We started out, as we’ve talked about, lowest cost structure on current Monahan’s high quality dune sand, moved on to, you know, vertically integrating in the logistics, you know, acquired Hi Crush to give us logistically advantage the largest network of mine in the Midland Basin, You know, launched the Dune Express, which eliminated all the long haul trucking associated for that in Delaware. And then now we’ve added prop flow, which enables the twenty four seven pumping and expands, you know, further into that value chain. None of these things were were done on accident. Right?

Simply put, we we have continued down the strategy of, you know, be the lowest cost structure and and be fundamentally lower. I think I think it’s also, you know, we operate even even when the market’s great, we operate lean. Right? But it’s not just about being lean at this point. It’s being it’s being integrated.

You know, we we own the largest network of mines. We control the logistics out there, and we continue to invest in the technology, large infrastructure, and automation where where it truly matters. That’s that’s really, you know, our differentiating factor. If you if you move on and look at at our customer base. Right?

We continue to align with those most efficient operators out there that they really fit with our logistics footprint. But they also have to share our operational philosophy. Right? I mean, we walked away from the low value opportunities to focus on those operators that that value, you know, our logistics innovation, the reliability, and and long term partnerships that have played, like, absolutely. Right?

I think it’s that type of discipline that’s really allowed us to go capture a higher, you know, wallet share from higher quality relationships. That’s that’s really what’s allowing us to to grow in this challenging market. And think just to be clear, we’re we’re not out there at this point chasing marginal tons or transactional price. Just not interested. Right?

We’re continuing to focus on deepening strategic partnerships with the customers that share our long term view of what partnership really looks like.

Jim Rollison, Analyst, Raymond James: Thanks for that, Chris. Appreciate it. Follow-up question would be, you mentioned around Dune Express. Obviously, challenging time to bring that into the market just as kind of all this craziness started happening. And obviously, it’s customer reluctance to do anything new contracting wise is always seems to materialize in these kind of markets.

But as you mentioned a couple of different things about expanding your blue chip customer base and having increased conversations around Dune Express heading into next year, would love to kind of get pick your brain or get your thoughts around how confident you are that you’ll actually see some of that incremental 12,000,000 tons of volumes that you’re tracking for next year. If it’s if you’re already having conversations there, just whatever visibility or color you can provide that would be great given the kind of slow start with the market we’re in.

Chris Schola, EVP and President of Sand and Logistics, Atlas Energy Solutions: Yes. Look, I mean, we’re definitely having those conversations. I think to kind of kick back a little bit, right, taking the perspective, a lot of these guys didn’t think that Dungeon Express was actually going to happen and operate efficiently. So you had a lot of operators really sit back and take this wait and see perspective and is this gonna work. You know, meanwhile, they they did have to support their programs in 2025 with with those contracts that they had.

And And they continue to to, you know, kind of sit with those those legacy relationships, if you will, that are that are long standing relationships in in the Delaware. I think as as customers have continued to come out and, you know, one, you know, tour the facility, look at the Dunespress. It’s it’s a it’s a moment of, wow, this is really working. This is impressive. Right?

You know, two, we’ve for for those customers that that did have, you know, those those open type of of opportunities, you know, we’ve been able to transition one customer that we had one crew with to a 100% of their work with three crews now just based on on the dune. We see that trend continuing, you know, but look, like, we’ve we’ve hit those early adopters. I think the early majority, we’re we’re hitting in stride and and that late majority from that adoption curve will fall in here soon, you know. But with the RFD season coming up is is really the perfect timing. And and quite honestly, some of the first openings that some of our customer base has that look, these are guys that we haven’t done business with, and that’s what really excites us.

Right? You look at historically, you know, out there, we’ve got a number of of Delaware Basin operators that we’ve never sold a ton to. And now we’re in direct conversation with those guys from, you know, the strategic differentiator that is the dude.

Jim Rollison, Analyst, Raymond James: Perfect. Appreciate it. Thanks.

Conference Operator: Thank you. Our next question comes from the line of Don Kress with Johnson Rice. Please proceed with your question.

Kyle Turlington, Vice President, Investor Relations, Atlas Energy Solutions0: Good morning, guys. Thanks for letting me in. I wanted to start with the costs to produce at your mines. Was there something in the quarter that helped you all along with that? Was it a new cutter head or anything like that?

Because normally when we see volumes come in a little bit, we see the cost actually per ton go up a little bit. Was there anything in the background there that that we could point to?

Chris Schola, EVP and President of Sand and Logistics, Atlas Energy Solutions: No. I think I think operationally, right, we’ve talked we’ve talked a while here in in terms of that operational excellence trend and really, you know, continuing to operate lean and mean throughout. I think, you know, as we as we continue when when, you know, operators hit on us for pricing, we’re we’re doing the same through our value chain. Right? So, you know, we’re going out from a procurement perspective looking at uncovering every rock, trying to get, you know, as lean as Venus as we possibly can.

But, you know, from a from a operational basis, I think one of the things that that you’ll see and and you see these these operational records being hit by facilities, we do continue to, you know, put the volume through those lowest cost facilities out there. And, you know, with Kermit over performing expectations, that’s really allowed us to to move continue to move down that cost curve. You know, just a continuation of of what we set in place as a operational strategy a year ago, And I think you’ll continue to see that through 2026.

John Turner, President and CEO, Atlas Energy Solutions: And I think that Chris has done an excellent job when it comes to where we came from and where we are today and where we’re going on this. I mean, that’s something I noticed. It’s like, wow, volumes go down That’s not something you that you would notice. But I think our operations team has really stepped up and really done a great job understanding what the what the what the mission is and the goal is here at at Atlas and and and for Atlas to be, obviously profitable and generating cash flow for its investors.

Kyle Turlington, Vice President, Investor Relations, Atlas Energy Solutions0: I appreciate that color. And just one on the power side for me. The conversations that you’re having with operators out there, I’m guessing they’re for larger kind of micro grids maybe in the ten, twenty, 30 megawatt. Any of those can you elaborate on those conversations? Number one.

But number two, will any of those contracts you could potentially sign over the next couple of quarters come with any increased CapEx in the motor side? Or do you have that covered already?

Blake McCarthy, CFO, Atlas Energy Solutions: Yes. This is Tim again. So those are those are definitely projects we’re looking at. You know, our CapEx budget is is pretty well set for this year. I think, you know, when we when we look at those opportunities, we think we’re in a position to deploy somewhere between forty and fifty megawatts between now and the end of the year.

That’s already built into CapEx and that allows us to be selective on the project that make the most sense for us. And as John alluded to in his comments, you know, we’re we’re evaluating, you know, over 200 megawatts of opportunities. And, you know, those those kind of come to fruition, you know, in the next twelve months for the majority of them. And so as we as we look at those projects, we’re we’re in a good position to take advantage of them. And, you know, I think some of those we can we can use next year’s CapEx to to take advantage of them.

And the operators that are looking at those micro grids, a lot of times have a solution in place and the microgrid is the next evolution of their power strategy versus, just placing gensets on on one pad and, empowering a set of wells on that pad.

John Turner, President and CEO, Atlas Energy Solutions: And I’d say some of that’s not just that that 200 megawatts. I mean, that’s just what we’re looking at now. 60% of that is is actually on the C and I side too. So I mean, and I don’t think it’s too much of a stretch for us to supply that to to to to explain that market either. I mean, it’s just an extension of what we’re currently doing.

Kyle Turlington, Vice President, Investor Relations, Atlas Energy Solutions0: I appreciate the color. I’ll turn it back. Thanks.

Conference Operator: Thank you. Our next question comes from the line of Josh Jain with Daniel Energy Partners. Please proceed with your question.

Kyle Turlington, Vice President, Investor Relations, Atlas Energy Solutions1: Thanks. Good morning. First one, could you just expand a bit more on the strategic rationale behind the Propflo acquisition? And then maybe in the response, could you also give your thoughts on the wet sand market versus dry sand market? And if you think that, market share for wet sand, how how you think it ultimately evolves over the next twelve to twenty four months?

Chris Schola, EVP and President of Sand and Logistics, Atlas Energy Solutions: Yeah. I think, you know, you look at you look at prop flow, you know, they they’ve got those innovative technologies that that really further enhance our our customer value proposition. I think it was the one part of the wet sand value chain that that we didn’t have, right, and and go into the blender, and that really completes the offering. You know, you look at the again, from a customer perspective, you know, it eliminates that equipment in the red zone out there that allows for twenty four seven continuous pumping and really enables our customers to continue to get more efficient. So, you know, to to us, you know, after we met the management team, you know, culturally that fit right in, but strategically made a ton of sense, you know, as our as our wet mines continue to be continue to be sold out.

I think, you know, from a from a wet and dry perspective, you know, look, as we talked about earlier, it’s all about total delivered cost. Right? You got early adopters. You got some customers that that are segmented towards, you know, all wet or all dry and some that some that do both. But at the end of the day, it really really boils down to, you know, the total delivery cost and what what value, efficiency, and reliability you’re you’re giving that customer.

And and again, right, that’s where our our network of minds out there. You got onesie twosies, but our network of minds allows us to go, you know, supply those customers in full, you know, delivered. So I I think that, you know, from a wet or dry at this point is is there a lot of lot of people in the market going and putting more capital into expansion of minds out there with with the with with where we’re at in the market. Like, I just don’t see that. So I think you’re gonna remain pretty pretty stable of where you’re at today for the for the foreseeable future.

Kyle Turlington, Vice President, Investor Relations, Atlas Energy Solutions1: Okay. Thanks. And then just a general customer mindset. Mean, we’ve had a lot of changes in the macro environment over the last ninety to one hundred days. Could you just talk through operator mindset and if it’s changed post Liberation Day?

And are operators generally more comfortable today than they were, let’s say, you know, ninety to a hundred days ago?

Chris Schola, EVP and President of Sand and Logistics, Atlas Energy Solutions: Look, I think from an operator mindset that that varies customer to customer. Right? You’ve got you’ve got your big boys out there that are that are always gonna pump through downturns. May may not, you know, 100%, you all the way to your small independents that that, you know, move move quickly in either direction. I think I think what you’re seeing is more broadly, the perspective of, you know, we’re gonna be flat for a little bit and kinda figure out where things go.

I think a lot of our customers are still evaluating exactly what what their program looks like in q four. And I think we’ll have a lot more insight in that, you

Conference Operator: know,

Chris Schola, EVP and President of Sand and Logistics, Atlas Energy Solutions: September, October time frame once we get through budget season, you know, and these guys can can provide their budgets for ’26. You know, but but overall, does is there does there feel like there’s a there’s less of a falling knife and more of a sense of stability in the market? But, I would I would I would definitely say, you know, we see that from our customers.

Kyle Turlington, Vice President, Investor Relations, Atlas Energy Solutions1: Understood. Thanks. I’ll turn it back.

Conference Operator: Thank you. Our next question comes from the line of Jeff Leblanc with TPH. Please proceed with your question.

Kyle Turlington, Vice President, Investor Relations, Atlas Energy Solutions2: Good morning, John and team. Thank you for taking my question. I guess the question I had Sorry. Guess the question is in logistics, how should we be thinking about the magnitude of non Dune Express deliveries over the second half of the year and into 2026 versus I think the number was 4,000,000 tons in Q2?

Blake McCarthy, CFO, Atlas Energy Solutions: Yes. I think it’s yes, it’s about 4,000,000. I think that we’re looking at pretty flattish express volumes through the back half of the year, for now. And then, so with the sequential increase in, you know, the total volume should be up mid single digits. And so, I mean, certainly, the non GeneXpress logistics volume should be up approximately in line with those numbers.

Kyle Turlington, Vice President, Investor Relations, Atlas Energy Solutions2: Okay. And then I guess the follow-up would be, how should we be thinking about the margins on those deliveries versus the Dune Express? And then additionally for Dune Express margins, how is the progression from single to double or triple trailers going?

Blake McCarthy, CFO, Atlas Energy Solutions: The economics from the Dune Express have been there. I think that we’re just right now, like it’s we’re still in that ramping phase. So, when we think about the overall logistics margin profile, we have that approximately flat, moving forward just because the Dune Express volumes are expected to be flat. Multi trailer margins are significantly higher than single trailer Dune Express margins, which are in turn significantly higher than the traditional logistics margins. I think that it’s a period of maturation for the overall logistics business as we we’re pushing people more towards the multi trailer operations because it is it’s more efficient for them, it’s more efficient for us, it’s a win win for all parties.

But that takes a bit of time. It involves some changes in how people construct their pads and the mindset around the allocation of equipment around the well site. And so you know, we’re we’re holding people’s hand through that. And, you know, I think once people the people that have, I think as Chris talked about, like, the early adopters, you know, once they’ve gotten going on that, they’re like, wow, this this really works. It is exciting.

It’s really sticky. So, you know, that’s part of a just an education phase that we’re we’re working through with our customers.

Chris Schola, EVP and President of Sand and Logistics, Atlas Energy Solutions: Yeah. I think I think if you if, you know, we run that analysis as well in terms of, you know, the June. If you look at the the now that we have, you know, some some stable periods of of of numbers behind us with the Dune, you look at the cost of the Dune and and quite honestly, once we get it sold out, it’s right in line with our expectations, if not just slightly below that. You know, and that that moves us from, you know, spreadsheet theory and math to to real world, you know, transition in the margins.

Kyle Turlington, Vice President, Investor Relations, Atlas Energy Solutions2: Okay. Thanks for the color. I’ll hand the call back to the operator. Thank you.

Conference Operator: Thank you. Our next question comes from the line of Eddie Kim with Barclays. Please proceed with your question.

Eddie Kim, Analyst, Barclays: Hi, good morning. Just want to circle back on your guidance for 3Q volumes up mid single digits sequentially. I know you mentioned some share gains and deliveries pushed out from 2Q to 3Q, that still seems surprisingly good given the sequential declines that some of the pressure pumpers have been guiding to. So just curious on confidence level there. Is most of that sort of in hand at this point?

Or is there some downside risk if Permian fleet count declines more than your current expectations?

Blake McCarthy, CFO, Atlas Energy Solutions: Well, I mean, there’s always downside, but there’s also upside risk. We have those volumes pretty heavily risked. But I think that, like I said, a part of we keep harping on it like Atlas is executing right now. And yes, it is a really tough market, depending on who you ask. We were somewhere between 70 to 80 completion crews in West Texas right now.

But we’ve been able to hold that crew count pretty darn flat. And so that’s just a testament to the good work that our operations team has been put forward. So that’s think about that kind of sequential 4% to 5% volume growth is where we’re thinking right now in terms of our own internal models.

Eddie Kim, Analyst, Barclays: Got it. Got it. Yes. And definitely, market share gains have been pretty impressive. My follow-up is just on early expectations on the trajectory of 4Q.

I mean looking back the past two years, your 4Q has declined in the low double digits sequentially from both a revenue and volumes perspective. Any reason this year might look different? Or should we expect a similar sort of historical seasonality? Any thoughts there would be great.

Blake McCarthy, CFO, Atlas Energy Solutions: Yes. We see the same seasonality. I mean, I think that’s pretty pervasive across the entire service industry. I think it’s a little early this year. I with this type of market, I wouldn’t be surprised if people do take extended breaks during the holiday season.

And it’s Texas too, so they might take some long hunting trips as well. That being said, you know, we do have a number of opportunities. We’re we’re as Chris mentioned, we’re having discussions with some new customers, around 2026. And there’s, you know, potential, trial opportunities and stuff like that. So it’s a little early to see how Q4 shapes up.

But I wouldn’t be surprised if you saw just overall industry volumes down quarter over quarter.

Eddie Kim, Analyst, Barclays: Understood. Understood. Thanks for that. I’ll turn it back.

Kyle Turlington, Vice President, Investor Relations, Atlas Energy Solutions: Operator, we probably have time for coming up on the hour here. We probably have time for one more question.

Conference Operator: It appears there are no further questions queued up. Therefore, it looks like we have reached the end of the question and answer session. I’d like to turn the floor back to CEO, John Turner, for closing remarks.

John Turner, President and CEO, Atlas Energy Solutions: All right. Thank you. I’d like to thank our team for all their hard work and our investors for their continued support. While market conditions are not ideal, we’re confident in our strategy and excited about the opportunities ahead as we drive growth in the coming quarters. We look forward to reporting our third quarter numbers.

Thanks guys.

Conference Operator: Thank you. This concludes today’s conference, and you may disconnect your lines at this time. Thank you for your participation.

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