Atlas Energy Solutions Inc. (NYSE:AESI) Q4 2023 Earnings Conference Call February 27, 2024 9:00 AM ET Company Participants Kyle Turlington - VP, IR Bud Brigham - Chairman and CEO John Turner - President and CFO Brian Leveille - VP, Finance Conference Call Participants Don Crist - Johnson Rice Luke Lemoine - Piper Sandler Jim Rollyson - Raymond James Sean Mitchell - Daniel Energy Partners Operator Greetings. Welcome to the Atlas Energy Solutions' Acquisition of Hi-Crush and 2023 Fourth Quarter Results. At th ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2023 OR ☐ 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 001-41828 t Atlas Energy Solutions Inc. (Exact name of Registrant as specified in its Charter) (State or other jurisdiction of incorporat ...

Fourth Quarter and Year End 2023 Results [Financial and Operational Highlights](index=1&type=section&id=Financial%20and%20Operational%20Highlights) Atlas Energy Solutions reported strong financial performance for the full year 2023, with significant growth in sales and Adjusted EBITDA, alongside key operational achievements and a transformative acquisition Full Year Financial Summary (2021-2023) | Metric | 2023 (in thousands) | 2022 (in thousands) | 2021 (in thousands) | | :--- | :--- | :--- | :--- | | Sales | $613,960 | $482,724 | $172,404 | | Net Income | $226,493 | $217,006 | $4,258 | | Net Income Margin | 37% | 45% | 2% | | Adjusted EBITDA | $329,655 | $264,026 | $71,968 | | Adjusted EBITDA Margin | 54% | 55% | 42% | | Net cash provided by operating activities | $299,027 | $206,012 | $21,356 | | Adjusted Free Cash Flow | $291,131 | $228,553 | $64,253 | - Announced a transformative agreement to acquire Hi-Crush Inc., which is expected to further Atlas's position as a premier proppant and logistics provider in the Permian Basin[1](index=1&type=chunk)[5](index=5&type=chunk)[6](index=6&type=chunk) - Key operational milestones in 2023 included completing the IPO, placing the new Kermit plant in-service, launching a high-capacity trucking business, and making significant progress on the Dune Express construction[5](index=5&type=chunk) - The quarterly dividend was increased by **5%** to **$0.21 per share**, consisting of a **$0.16 fixed** and **$0.05 variable component**[5](index=5&type=chunk)[17](index=17&type=chunk) [Detailed Financial Results](index=2&type=section&id=Detailed%20Financial%20Results) The company experienced significant year-over-year growth in 2023, driven by higher sales volumes and prices, though the fourth quarter saw a sequential decline in sales due to a slowdown in activity [Full Year 2023 Financial Results](index=2&type=section&id=Full%20Year%202023%20Financial%20Results) For the full year 2023, total sales grew 27.2% to $614.0 million, driven by a 14.6% increase in product sales and a 96.3% surge in service sales, supported by higher volumes and improved pricing Full Year 2023 vs 2022 Sales Performance | Sales Category | 2023 Sales ($M) | 2022 Sales ($M) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Product Sales | $468.1 | $408.4 | +14.6% | | Service Sales | $145.8 | $74.3 | +96.3% | | **Total Sales** | **$614.0** | **$482.7** | **+27.2%** | - The increase in product sales was driven by a rise in both sales volumes (**11.0 million tons** vs. **10.2 million tons**) and average sales price (**$42.63/ton** vs. **$40.10/ton**)[6](index=6&type=chunk) - Cost of sales increased by **30.9% YoY** to **$260.4 million** due to higher sales volumes and increased trucking and logistics costs[7](index=7&type=chunk) - SG&A expenses doubled to **$48.6 million**, primarily due to increased wages, and professional fees associated with the IPO, corporate reorganization, and the Hi-Crush acquisition, including **$5.3 million** in non-recurring transaction costs[8](index=8&type=chunk) [Fourth Quarter 2023 Financial Results](index=2&type=section&id=Fourth%20Quarter%202023%20Financial%20Results) In the fourth quarter of 2023, total sales decreased 10.5% sequentially to $141.1 million, attributed to a slowdown in drilling and completions activity that impacted both sales volumes and pricing Q4 2023 vs Q3 2023 Financial Performance | Metric | Q4 2023 ($M) | Q3 2023 ($M) | Sequential Change (%) | | :--- | :--- | :--- | :--- | | Total Sales | $141.1 | $157.6 | -10.5% | | Product Sales | $100.0 | $114.8 | -12.9% | | Net Income | $36.1 | $56.3 | -36.0% | | Adjusted EBITDA | $68.7 | $84.1 | -18.3% | - The decline in product sales was driven by decreases in both sales volumes (**2.6 million tons** vs. **2.8 million tons**) and average price (**$39.00/ton** vs. **$40.62/ton**)[10](index=10&type=chunk) [Liquidity and Capital Expenditures](index=3&type=section&id=Liquidity%20and%20Capital%20Expenditures) As of December 31, 2023, Atlas maintained a strong liquidity position of $384.1 million, with net cash used in investing activities primarily allocated to the new Kermit facility and Dune Express project - Total liquidity as of year-end 2023 was **$384.1 million**, composed of **$210.2 million** in cash and cash equivalents, **$73.9 million** available under the ABL Facility, and **$100.0 million** available under the Delayed Draw Term Loan Facility[12](index=12&type=chunk) - Net cash used in investing activities totaled **$365.5 million** for the year, largely for the construction of the new Kermit facility and the Dune Express[13](index=13&type=chunk) - The company's fully diluted share count outstanding was **100,025,584** as of December 31, 2023[14](index=14&type=chunk) [Subsequent Events](index=3&type=section&id=Subsequent%20Events) Following the year-end, Atlas announced a definitive agreement to acquire Hi-Crush's Permian assets for $450 million and secured additional financing, while also declaring a quarterly cash dividend [Acquisition of Hi-Crush](index=3&type=section&id=Acquisition%20of%20Hi-Crush) Atlas entered into a definitive agreement to acquire Hi-Crush's Permian Basin assets and North American logistics operations for $450 million, funded by a mix of cash, stock, and a deferred seller's note, supported by upsized credit facilities Hi-Crush Acquisition Consideration | Consideration Type | Value ($M) | | :--- | :--- | | Cash at Close | ~$150 | | AESI Shares | $175 (9.7M shares) | | Deferred Cash (Seller's Note) | $125 | | **Total Value** | **$450** | - Financing for the acquisition includes upsizing the ABL facility to **$125.0 million** and adding a new **$150.0 million** acquisition term loan facility[16](index=16&type=chunk) [Quarterly Cash Dividend](index=3&type=section&id=Quarterly%20Cash%20Dividend) On February 8, 2024, the Board of Directors declared a quarterly dividend of $0.21 per common share, payable on February 29, 2024, comprising a $0.16 base and $0.05 variable component - A dividend of **$0.21 per share** was declared, comprising a **$0.16 base dividend** and a **$0.05 variable dividend**[17](index=17&type=chunk) - The dividend is payable on **February 29, 2024**, to shareholders of record as of **February 22, 2024**[17](index=17&type=chunk) [Company Overview](index=4&type=section&id=Company%20Overview) Founded in 2017, Atlas Energy Solutions is a leading provider of proppant and logistics services exclusively serving the Permian Basin, focused on maximizing stockholder value through strong cash flow generation and disciplined capital allocation - Atlas is a leader in the proppant and proppant logistics industry, with a sole focus on the Permian Basin[22](index=22&type=chunk) - The company operates strategically located facilities in Kermit, TX, and Monahans, TX, designed to maximize supply reliability and product quality[22](index=22&type=chunk) - The core mission is to maximize stockholder value by generating strong cash flow and providing a regular return of capital to investors[23](index=23&type=chunk) [Financial Statements and Non-GAAP Reconciliations](index=6&type=section&id=Financial%20Statements%20and%20Non-GAAP%20Reconciliations) This section provides the condensed consolidated financial statements for the fourth quarter and full year ended December 31, 2023, including detailed definitions and reconciliations of non-GAAP financial measures to their nearest GAAP equivalents [Condensed Consolidated Financial Statements](index=6&type=section&id=Condensed%20Consolidated%20Financial%20Statements) The financial statements detail the company's performance, showing total sales of $614.0 million and net income of $226.5 million for the year ended December 31, 2023, with total assets growing to $1.26 billion due to investments in property, plant, and equipment Key Income Statement Data (Year Ended Dec 31, 2023) | Metric | Amount (in thousands) | | :--- | :--- | | Total Sales | $613,960 | | Gross Profit | $313,766 | | Operating Income | $265,130 | | Net Income | $226,493 | Key Cash Flow Data (Year Ended Dec 31, 2023) | Metric | Amount (in thousands) | | :--- | :--- | | Net cash provided by operating activities | $299,027 | | Net cash used in investing activities | $(365,486) | | Net cash provided by financing activities | $194,623 | | Net increase in cash | $128,164 | Key Balance Sheet Data (As of Dec 31, 2023) | Metric | Amount (in thousands) | | :--- | :--- | | Total Current Assets | $318,686 | | Property, plant and equipment, net | $934,660 | | **Total Assets** | **$1,261,686** | | Total Current Liabilities | $92,592 | | Total Liabilities | $393,862 | | **Total Stockholders' Equity** | **$867,824** | [Non-GAAP Financial Measures and Reconciliations](index=9&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations) This section defines non-GAAP metrics like Adjusted EBITDA and Adjusted Free Cash Flow, which management uses to evaluate operating performance and cash generation, providing detailed reconciliations to their nearest GAAP equivalents - The company defines Adjusted EBITDA as net income adjusted for items like depreciation, interest, taxes, stock-based compensation, and non-recurring transaction costs[38](index=38&type=chunk) Reconciliation of Net Income to Adjusted EBITDA (FY 2023) | Metric | Amount (in thousands) | | :--- | :--- | | Net Income | $226,493 | | Depreciation, depletion and accretion | $41,634 | | Interest expense | $17,452 | | Income tax expense | $31,378 | | Stock and unit-based compensation | $7,409 | | Non-recurring transaction costs | $5,289 | | **Adjusted EBITDA** | **$329,655** | Reconciliation of Adjusted EBITDA to Adjusted Free Cash Flow (FY 2023) | Metric | Amount (in thousands) | | :--- | :--- | | Adjusted EBITDA | $329,655 | | Less: Maintenance Capital Expenditures | $(38,524) | | **Adjusted Free Cash Flow** | **$291,131** |

AUSTIN, Texas--(BUSINESS WIRE)--Atlas Energy Solutions Inc. (NYSE: AESI) (“Atlas” or the “Company”) today reported financial and operating results for the fiscal year ended December 31, 2023. Year End 2023 Financial Highlights and Operational Updates Total sales of $614.0 million (on sales volumes of 11.0 million tons) Net income of $226.5 million (37% Net Income Margin) Adjusted EBITDA of $329.7 million (54% Adjusted EBITDA Margin) (1) Net cash provided by operating activities of $299.0 million ...

AUSTIN, Texas--(BUSINESS WIRE)--Atlas Energy Solutions Inc. (NYSE: AESI) (“Atlas” or the “Company”) today announced that it has entered into a definitive agreement with Hi Crush Inc. ("Hi-Crush") to acquire all of Hi-Crush’s Permian Basin proppant production assets and North American logistics operations in a transaction valued at $450 million (1). The transaction consideration includes $150 million in up-front cash, $175 million in shares of common stock of AESI and $125 million in deferred cash payments ...

The upstream business of the integrated energy players is highly exposed to volatility in oil and gas prices. Also, the spike in input price in refining activities is making the outlook for the Zacks Oil & Gas US Integrated industry gloomy.Among the companies in the industry that are likely to survive the business challenges are DT Midstream Inc (DTM) , Equitrans Midstream Corporation (ETRN) and Atlas Energy Solutions Inc. (AESI) .About the Industry The Zacks Oil & Gas US Integrated industry comprises compa ...

Group 1 - Atlas Energy Solutions Inc. appointed Mike Howard to its Board of Directors, enhancing its governance with his extensive experience in the midstream energy sector [1] - Mike Howard is the Chairman and CEO of Howard Midstream Energy Partners, LLC, which operates critical energy infrastructure across multiple states and Mexico, bringing over 28 years of industry experience [1] - The company aims to leverage Howard's insights to drive future success and navigate challenges in the oil and gas industry [1] Group 2 - Atlas Energy Solutions was founded in 2017 and focuses on proppant and logistics services in the Permian Basin, a key area for oil and natural gas production in North America [2] - The company operates strategically located facilities in Kermit and Monahans, Texas, designed to ensure reliable supply and high product quality [2] - Atlas Energy Solutions emphasizes the use of technology to address customer challenges and improve logistics efficiency in the proppant industry [2] Group 3 - The core mission of Atlas Energy Solutions is to maximize shareholder value through strong cash flow and efficient capital allocation, while also providing regular returns to investors [3] - The company is committed to environmental stewardship and community engagement, believing that responsible hydrocarbon development contributes to energy access and quality of life [3] - Atlas Energy Solutions takes pride in its role in the sustainable development of hydrocarbons that power modern life [3]

AUSTIN, Texas--(BUSINESS WIRE)--Atlas Energy Solutions Inc. (NYSE: AESI) (“Atlas” or the “Company”) today announced that the Board of Directors (the “Board) has declared a dividend of $0.21 per outstanding share of Atlas common stock, to be paid on February 29, 2024, to holders of record of our common stock at the close of business on February 22, 2024. This represents a 5% increase from the prior quarter’s dividend. About Atlas Energy Solutions Our company was founded in 2017 by long-time E&P operators ...

AUSTIN, Texas--(BUSINESS WIRE)--Atlas Energy Solutions Inc. (NYSE: AESI) (“Atlas” or the “Company”) today announced that on Tuesday, February 27, 2024, it will issue its fourth quarter and year end 2023 earnings release before market open and will host a conference call to discuss financial and operational results at 8:00am Central Time (9:00am Eastern Time). A live webcast will be available at https://ir.atlas.energy/. Please join the webcast at least 10 minutes ahead of the start time to ensure a proper ...

Atlas Energy Solutions Inc. (NYSE:AESI) Q3 2023 Earnings Conference Call October 31, 2023 10:00 AM ET Company Participants Kyle Turlington - Vice President, Investor Relations Bud Brigham - Chairman & Chief Executive Officer Chris Scholla - Chief Supply Chain Officer John Turner - President & Chief Financial Officer Jeff Allison - Executive Vice President-Sales & Marketing Brian Leveille - Vice President, Finance Conference Call Participants Luke Lemoine - Piper Sandler Derek Podhaizer - Barclays Jim Rolly ...