Atlas Energy Solutions (US:AESI)2025-11-04 21:42Acquisitions - Atlas LLC acquired PropFlow, LLC for approximately $25.0 million in cash, with potential contingent earn-out consideration of up to $15.0 million based on revenue targets in fiscal years 2027 and 2028[243]. - The Moser Acquisition was completed for a total consideration of $180.0 million in cash and approximately 1.7 million shares of Common Stock[245]. - The company completed the Moser Acquisition on February 24, 2025, for cash consideration of $180.0 million, impacting operational results comparability[275]. - The Hi-Crush Transaction was completed on March 5, 2024, with cash consideration of $140.1 million, affecting year-over-year operational results[274]. Financial Performance - Net income for the three months ended September 30, 2025, was $(23,721) thousand, compared to $3,918 thousand for the same period in 2024[266]. - Adjusted EBITDA for the three months ended September 30, 2025, was $40,186 thousand, down from $71,051 thousand in 2024, representing a decrease of approximately 43.4%[266]. - Adjusted Free Cash Flow for the three months ended September 30, 2025, was $21,984 thousand, compared to $58,669 thousand in 2024, indicating a decline of about 62.5%[267]. - Total revenue for the nine months ended September 30, 2025, was $184,936 thousand, compared to $225,666 thousand for the same period in 2024, showing a decrease of about 18.1%[266]. - Total revenue for the three months ended September 30, 2025, was $259.6 million, down from $304.4 million in the same period of 2024, representing a decrease of approximately 14.7%[277]. - Gross profit for the three months ended September 30, 2025, was $23.8 million, a significant decrease from $53.0 million in 2024[277]. - Adjusted EBITDA Margin for the three months ended September 30, 2025, was approximately 22.0% compared to 32.0% in 2024, indicating a decline of 10 percentage points[266]. - Net cash provided by operating activities for the three months ended September 30, 2025, was $32,447 thousand, down from $85,189 thousand in 2024, a decrease of about 61.9%[267]. - Net cash provided by operating activities was $113.6 million for the nine months ended September 30, 2025, down from $185.6 million for the same period in 2024[311]. Revenue Breakdown - Product revenue decreased by $38.5 million to $106.8 million for the three months ended September 30, 2025, compared to $145.3 million for the same period in 2024, primarily due to lower proppant prices and sales volume[278]. - Service revenue decreased by $23.4 million to $135.7 million for the three months ended September 30, 2025, compared to $159.1 million in 2024, attributed to lower sales volumes shipped to last-mile logistics customers[279]. - Rental revenue for the three months ended September 30, 2025, was $17.1 million, resulting from the acquisition of Moser, with no rental revenue reported in the same period of 2024[280]. - Product revenue decreased by $14.2 million to $372.8 million for the nine months ended September 30, 2025, compared to $387.0 million for the same period in 2024[292]. - Service revenue increased by $35.0 million to $432.6 million for the nine months ended September 30, 2025, compared to $397.6 million for the same period in 2024[293]. Costs and Expenses - Maintenance Capital Expenditures for the three months ended September 30, 2025, were $18,202 thousand, up from $12,382 thousand in 2024, reflecting an increase of approximately 47.2%[267]. - The company incurred interest expense of $15,155 thousand for the three months ended September 30, 2025, compared to $11,831 thousand in 2024, representing an increase of approximately 27.5%[266]. - Cost of sales related to services decreased by $18.7 million to $117.8 million for the three months ended September 30, 2025, compared to $136.5 million for the same period in 2024[283]. - Selling, general and administrative expense increased by $10.8 million to $36.3 million for the three months ended September 30, 2025, compared to $25.5 million for the same period in 2024[286]. - Depreciation, depletion, and accretion expense increased by $50.0 million to $118.3 million for the nine months ended September 30, 2025, compared to $68.3 million for the same period in 2024[299]. Debt and Financing - Total debt as of September 30, 2025, was $556.5 million, an increase from $475.3 million in 2024[272]. - Atlas LLC entered into a 2025 Term Loan Credit Facility with a principal amount of $540.0 million, bearing interest at a rate of 9.51% per annum[316][317]. - The proceeds from the 2025 Term Loan were used to refinance the existing 2023 Term Loan Credit Facility, finance the Moser Acquisition, and for general corporate purposes[323]. - The Deferred Cash Consideration Note issued as part of the Hi-Crush Merger Agreement has a principal amount of $111.3 million, with interest rates of 5.00% per annum if paid in cash, or 7.00% if paid in kind[325]. - The 2023 ABL Credit Facility provides revolving credit financing of up to $75.0 million, with a scheduled maturity date of February 22, 2028[331]. - Atlas LLC drew down $25.0 million under the 2023 ABL Credit Facility for the PropFlow Acquisition, with interest expense of $0.3 million for the three months ended September 30, 2025[336]. - As of September 30, 2025, Atlas LLC had $25.0 million in outstanding borrowings and $0.3 million in outstanding letters of credit under the 2023 ABL Credit Facility, with a Borrowing Base of $112.9 million and Availability of $87.6 million[339]. - The ABL Amendment increased the revolving credit commitment to $125.0 million, with existing lenders increasing their commitment by $25.0 million and a new lender adding another $25.0 million[342]. - Atlas LLC has other indebtedness of $17.5 million in equipment finance notes as of September 30, 2025, with interest rates ranging from 2.24% to 10.89%[349]. Operational Insights - Revenue generation is primarily from mining, processing, and distributing proppant, with fluctuations based on production costs, volumes sold, and market conditions[253]. - Logistics service revenue is influenced by the volume of proppant transported, distance to customers, and prevailing freight rates[254]. - The company operates a differentiated logistics platform to enhance efficiency and sustainability in the oil and gas industry within the Permian Basin[241]. - The company has begun integrating autonomous driving technologies into its logistics operations, aiming to create a semi-autonomous oilfield logistics network[241]. - The company’s sand reserves are entirely located in Texas within the Permian Basin, supporting its proppant production and processing operations[240]. Market Conditions - The price for West Texas Intermediate crude oil decreased by approximately 9%, ending the third quarter of 2025 at $63.96 per barrel compared to $70.24 per barrel in the same quarter of 2024[248]. - The U.S. government announced a 10% tariff on product imports and a 50% tariff on steel imports, which may increase raw material input costs for the company and its customers[250]. - The anticipated increase in demand for power generation in the U.S. is driven by data centers, artificial intelligence, and other advanced technologies, coinciding with existing constraints on the electrical grid[249]. Tax and Compliance - Income tax expense decreased by $20.6 million to $(9.2) million for the nine months ended September 30, 2025, compared to $11.4 million for the same period in 2024[307]. - As of September 30, 2025, Atlas LLC was in compliance with the financial covenants of maintaining a maximum Leverage Ratio of 4.0 to 1.0 and a minimum Liquidity of $40 million[324][322]. - There have been no material changes to the company's critical accounting policies and estimates as of September 30, 2025[350].