Atlas Energy Solutions Inc. Q3 FY2025 earnings call

Key Points:

• John Turner mentioned Atlas generated $40.2 million adjusted EBITDA on $260 million revenue with a 15% margin. Despite weak West Texas completions, generated adjusted free cash flow. Volume was 5.25 million tons, slightly down from prior quarter. Kermit plant had elevated costs due to tailings issues but expected to normalize.
• Blake McCarthy noted Q3 revenues $259.6M, adjusted EBITDA $40.2M. Expected Q4 volumes to decline to ~4.8M tons. Average proppant sales price ~$20 per ton. Announced $20M annual cost savings efficiency initiative.
• Ben Brigham compared Atlas to F1 going hybrid, stating power business is a strategic synergy to smooth oil/gas cycles, accelerate growth in power markets, and deliver resilient cash flows. Mentioned Permian market share grew to ~35% and targeting over 400 MW deployed in power by early 2027.

For the third quarter, Atlas generated $260 million in revenue. Segment breakdown: Profit sales totaled $106.8 million, logistics contributed $135.7 million, and power rentals added $17.1 million. Proppant volumes were 5.25 million tons, with an average revenue per ton of $20.34. Adjusted EBITDA was $40.2 million, resulting in a 15% adjusted EBITDA margin. OpEx per ton, including royalties, was $13.52 due to issues at the Kermit facility.

Guidance:

• Expect Q4 volumes to step down to ~4.8 million tons due to seasonality and customer capital spend slowdown.
• Target to have more than 400 megawatts deployed across power business by early 2027.
• 2026 CapEx expected to be down from 2025 levels, with focus on power opportunities and maintaining core assets.

Risks:

• Challenges at Kermit facility with tailings leading to elevated costs.
• Volatility in oil and gas market affecting proppant and logistics volumes.
• Supply chain and lead time issues for gas reciprocating engines impacting power equipment deployment.

Q: Jim Rollyson asked about the power business strategy and how Moser fits in.

A: John Turner responded that power strategy has clear execution line of sight, Moser provided power expertise, and legacy business unlocks permanent power solutions.

Q: Derek Podhaizer asked about the 240 MW equipment ordered.

A: Tim Ondrak said equipment are resi units, higher density, and Blake McCarthy mentioned they're for stationary permanent power solutions with project financing potential.

Q: Stephen Gengaro asked about Kermit's elevated costs.

A: John Turner explained tailings pond issues led to inefficiencies in wet plant and drying process, new pond built and new dredges to improve in 2026.

Q: Doug Becker asked about power deployment targets.

A: John Turner and Blake McCarthy explained deployment targets align with contracts and project financing, with power EBITDA target revised up.

Q: Keith MacKey asked about 2 gigawatt power opportunity.

A: John Turner said it includes oil/gas, C&I, and data centers, with 50% being data centers.

Q: Sean Mitchell asked about gas recip engine lead times.

A: John Turner said majority OEMs have 2028+ delivery, Blake McCarthy added capital is needed to act on opportunities.

Q: Edward Kim asked about power project deployment and 2026 base business volumes.

A: John Turner said 240 MW not for oil/gas, Bud Brigham and Blake McCarthy discussed 2026 volumes expected to gain share despite oil price uncertainty.

Q: Lee Cooperman asked about buyback program.

A: Blake McCarthy said $200M buyback authorization still in place, no execution in current quarter, but power opportunity is prioritized.