Atlas Energy Solutions (AESI) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements (Unaudited) Q2 2025 net loss of $5.6 million due to increased expenses, despite asset growth from acquisitions and equity financing Condensed Consolidated Balance Sheets Total assets grew to $2.25 billion by June 30, 2025, driven by the Moser acquisition, with equity increasing from an offering Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Total Current Assets | $334,459 | $289,418 | +15.6% | | Property, plant and equipment, net | $1,551,241 | $1,486,246 | +4.4% | | Goodwill | $137,326 | $68,999 | +99.0% | | Intangible assets, net | $198,155 | $105,867 | +87.2% | | Total Assets | $2,247,775 | $1,972,652 | +14.0% | | Total Current Liabilities | $214,748 | $243,065 | -11.7% | | Long-term debt, net | $492,069 | $466,989 | +5.4% | | Total Liabilities | $976,443 | $936,096 | +4.3% | | Total Stockholders' Equity | $1,271,332 | $1,036,556 | +22.6% | Condensed Consolidated Statements of Operations Q2 2025 net loss of $5.6 million resulted from flat revenue, lower gross profit, and increased operating expenses, a sharp decline from prior year Quarterly Statement of Operations (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Total Revenue | $288,676 | $287,518 | +0.4% | | Gross Profit | $52,139 | $60,355 | -13.6% | | Operating Income | $7,193 | $28,223 | -74.5% | | Net Income (Loss) | $(5,558) | $14,837 | -137.5% | | Diluted EPS | $(0.04) | $0.13 | -130.8% | Six-Month Statement of Operations (in thousands, except per share data) | Metric | H1 2025 | H1 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Total Revenue | $586,267 | $480,185 | +22.1% | | Gross Profit | $106,667 | $129,101 | -17.4% | | Operating Income | $22,524 | $67,900 | -66.8% | | Net Income (Loss) | $(4,339) | $41,624 | -110.4% | | Diluted EPS | $(0.04) | $0.39 | -110.3% | Condensed Consolidated Statements of Cash Flows H1 2025 operating cash flow decreased, with significant investing activities for acquisitions offset by financing from an equity offering and new debt Six-Month Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $81,192 | $100,418 | | Net cash used in investing activities | $(268,770) | $(353,509) | | Net cash provided by financing activities | $194,683 | $147,640 | | Net increase (decrease) in cash | $7,105 | $(105,451) | | Cash and cash equivalents, end of period | $78,809 | $104,723 | Notes to Unaudited Condensed Consolidated Financial Statements Notes detail company structure, recent acquisitions like Moser Energy Systems for $222.9 million, new debt, equity offering, and segment changes - The company now operates under two segments: Sand and Logistics, and the newly formed Power segment resulting from the Moser acquisition[19][20][21] - On February 24, 2025, the company completed the acquisition of Moser Energy Systems for total consideration of $222.9 million, consisting of cash and stock[22][85] - On March 5, 2024, the company completed the acquisition of Hi-Crush's Permian Basin operations for total consideration of $456.1 million[24][98][99] Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes Q2 2025 net loss to flat revenue, lower gross profit, and increased operating expenses, despite new Power segment contributions - Q2 2025 product revenue decreased slightly due to lower proppant prices, offset by higher sales volume and $11.5 million in shortfall revenue[248] - The acquisition of Moser added a new rental revenue stream, generating $16.0 million in Q2 2025[250] - Operating income for Q2 2025 dropped significantly to $7.2 million from $28.2 million in Q2 2024, impacted by higher SG&A, a $4.1 million credit loss expense, and increased amortization from acquisitions[247][256][258] Reconciliation of Net Income (Loss) to Adjusted EBITDA (in thousands) | Line Item | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income (loss) | $(5,558) | $14,837 | $(4,339) | $41,624 | | Depreciation, depletion and accretion | $41,717 | $25,886 | $79,981 | $43,893 | | Interest expense | $14,955 | $12,014 | $28,001 | $18,990 | | Income tax expense (benefit) | $(1,677) | $3,066 | $616 | $11,001 | | Other adjustments | $14,557 | $13,499 | $29,491 | $24,278 | | Adjusted EBITDA | $70,459 | $79,072 | $144,750 | $154,615 | Quantitative and Qualitative Disclosures About Market Risk Market risk profile unchanged since year-end 2024, with reduced interest rate risk but increased credit risk due to a $4.1 million loss - As of June 30, 2025, the company had no variable-rate indebtedness outstanding, mitigating its exposure to interest rate fluctuations[329] - A credit loss expense of $4.1 million was recognized in Q2 2025 related to a dispute with a counterparty over shortfall receivables[330][35] Controls and Procedures Disclosure controls were ineffective as of June 30, 2025, due to an un-remediated material weakness in IT general controls, Moser's controls excluded - A material weakness in IT general controls (ITGCs) related to program change management and logical access, first reported for the year ended December 31, 2024, has not yet been remediated[332][333] - The internal controls of the newly acquired Moser business have been excluded from management's assessment for the quarter, in line with SEC guidance for recent acquisitions[335] PART II. OTHER INFORMATION Legal Proceedings The company faces a derivative and class action lawsuit alleging breach of fiduciary duty related to its Up-C to C corporation reorganization - A shareholder filed a derivative and class action complaint on July 2, 2024, alleging breach of fiduciary duty related to the company's Up-C reorganization[338] Risk Factors New U.S. tariffs, including 10% on imports and 50% on steel, pose a material risk of increased costs and reduced demand - The company identifies new U.S. tariffs, including a 10% general tariff and a 50% tariff on steel imports, as a material risk that could increase input costs and potentially reduce customer demand[341][342] Unregistered Sales of Equity Securities and Use of Proceeds In Q2 2025, the company repurchased 16,380 shares for $200,000, with $199.8 million remaining under its share repurchase program Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased | Average Price Paid Per Share | Total Value (in thousands) | | :--- | :--- | :--- | :--- | | May 2025 | 16,380 | $12.21 | $200 | | Total Q2 | 16,380 | $12.21 | $200 | - As of June 30, 2025, $199.8 million remains available under the company's share repurchase program, which is authorized through December 31, 2026[345][346] Other Information An executive adopted a Rule 10b5-1 trading plan for the potential sale of up to 110,000 shares of common stock - An executive, Chris Scholla, adopted a Rule 10b5-1 trading plan for the potential sale of up to 110,000 shares of common stock[349] Exhibits This section lists exhibits filed with Form 10-Q, including corporate documents, officer certifications, and XBRL data files