Atlas Energy Solutions Inc. Q2 FY2025 earnings call

• Permian Basin: Slowdown in completion activity led to slight sequential decline in volumes in Q2. Anticipate sequential increase in volumes in Q3 supported by market share gains. Permian frac crew count has declined to around 80. Atlas benefits long term from industry transformation but exposed to further activity declines. Market share expanded from 15% at IPO to high 20s by 2024 and to approx 35% today.
• Dune Express: Fully operational, reduced sand truck miles, set production records in May. Changes customer dynamics by eliminating long-haul trucking, reducing delivery volatility, compressing total landed cost.
• Moser Energy Systems: Integration surpassed expectations, commercial team evaluating over 200 MW of opportunities across various applications. Power business sees growth potential with longer-term contracts in emerging markets.
• PropFlow: Acquired, adds patented on-site profit filtration system enabling 24-hour continuous pumping, enhancing proppant delivery and wellsite efficiency.

For the second quarter, Atlas generated $70.5 million of adjusted EBITDA on $288.7 million of sales, representing a 24% adjusted EBITDA margin. Proppant sales totaled $126.3 million. Logistics contributed $146.4 million, and power rentals added $16 million. Proppant volumes were 5.4 million tons, down approximately 4% from 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, average sales price is expected to decline to approximately $20.50 during the third quarter.

• For Q3, anticipate sequential increase in volumes supported by market share gains, but forecasted decline in average proppant sales price and reduction in shortfall revenue expected to result in sequential decline in consolidated revenue and EBITDA.
• Expect third quarter volumes to be up in the mid-single digits sequentially, with August and September slated to be strongest volume months.
• Budget $115 million of total CapEx for 2025 and expect second half CapEx to decline to first half levels.
• Maintain dividend of $0.25 per share.

• Exposure to further declines in Permian activity as customers delay completions.
• Commodity price uncertainty leading to customer pauses, schedule shifts, etc.
• Supply stack rationalization challenges with competitors idling mines and reducing shift schedules which could impact market dynamics.

Q: Stephen Gengaro asked about what's driving share gains in the Permian and if it will continue.

A: John Turner said share gains are due to being a reliable sand provider, having the largest network of in-basin sand and logistics, Dune Express, innovation in mine and blender space, and excellent customer service. He thinks it will continue as customers are asking for sole sourcing.

Q: Stephen，Gengaro asked about capital allocation in soft market.

A: Blake McCarthy said as low-cost supplier, can go to pricing levels generating cash flow while returning capital to shareholders. Invest in logistics platform like PropFlow and Kodiak trucks, focus on widening gap with competition.

Q: Derek Podhaizer asked about power business opportunities outside oil and gas.

A: John Turner said acquired Moser for platform to grow in various markets, Tim Ondrak added they provide unique solutions in C&I space with long-term contracts.

Q: Derek Podhaizer asked about supply stack contraction.

A: Chris Scholla said there's confirmation of a major mine shutting down, seeing layoffs and reduction in staff, and 20% of market supply may not be available， Q: James Rollyson asked about responding to operators minimizing well AFEs.

A: Chris Scholla said focus on total delivered value, own largest network of mines, control logistics, invest in technology, align with efficient operators.

Q: James Rollyson asked about confidence in Dune Express incremental volumes.

A: Chris Scholla said having conversations, early adopters are seeing benefits, RFP season is good timing.

Q: Donald Crist asked about mine production costs.

A: Chris Scholla said operationally lean, Kermit overperforming helping move down cost curve.

Q: Donald Crist asked about power contracts and CapEx.

A: Tim Ondrak said projects are in CapEx budget, evaluating over 200 MW of opportunities.

Q: Josh Jayne asked about PropFlow acquisition rationale and wet vs dry sand.

A: John Turner said PropFlow enhances customer value proposition, completes wet sand，value chain, total delivered cost is key for wet/dry.

Q: Josh Jayne asked about operator mindset.

A:，John Turner said varies by customer, but more stability seen.

Q: Jeff LeBlanc asked，about logistics deliveries and margins.

A: Chris Scholla said Dune Express volumes flat, non-Dune Express up mid-single digits, Dune Express margins higher with multi-trailer.

Q: Eddie Kim asked about confidence in 3Q volume guidance.

A: John Turner said volumes are heavily risked, Atlas executing well despite tough，market，