Atlas Energy Solutions Q1 Earnings Call Highlights

Key Points

• First‑quarter results were weighed down by severe winter weather, elevated maintenance at Kermit and higher third‑party logistics costs, producing $265.5 million in revenue and $28.4 million of EBITDA (11% margin); management says those headwinds are resolved and expects underlying margins to normalize beginning in Q2 with roughly $50 million of EBITDA anticipated.
• The West Texas sand and logistics market is “turning,” with logistics margins expanding to the mid‑teens by March, Atlas reporting sequentially higher proppant volumes and being effectively sold out for Q2, giving the company pricing leverage if supply tightness continues.
• Atlas’ power business accelerated after a global framework with Caterpillar that secures 1.4 GW of capacity (2027–29) and an initial 240 MW order, plus a 120 MW private‑grid PPA expected to generate $50–55 million of annualized adjusted free cash flow; the company raised $450 million of 0.5% convertible notes and raised 2026 CapEx guidance to $350–$375 million to fund the build‑out.

Atlas Energy Solutions NYSE: AESI executives told investors the company is seeing improving conditions in West Texas sand and logistics, while its emerging private power business has accelerated with new equipment supply commitments and a first private grid power purchase agreement.

First-quarter results impacted by weather and costs

President and CEO John Turner said first-quarter performance was affected by “severe winter weather,” “elevated maintenance at our Kermit facility,” and higher third-party logistics costs. Atlas reported revenue of $265.5 million and EBITDA of $28.4 million, an 11% EBITDA margin, Turner said. He added that the issues have been resolved and management expects “underlying margins to normalize beginning in the second quarter as the headwinds roll off and contracted volumes ramp.”

Chief Financial Officer Blake McCarthy broke down revenue as $105.6 million from proppant sales, $139.1 million from logistics, $17.5 million from power rentals, and $3.3 million from power equipment sales. Proppant sales volume rose sequentially to 5.7 million tons, which McCarthy said does not include about 130,000 tons of third-party sand purchases. The logistics business delivered a quarterly record of 5.5 million tons.

Atlas’ average proppant sales price in the quarter was approximately $18.19 per ton, excluding $1.9 million of shortfall revenue, McCarthy said. For the second quarter, management expects sequentially higher volumes and an average sales price “slightly below $18 per ton,” with Atlas “effectively sold out for Q2.”

On costs, McCarthy said first-quarter cost of sales (excluding depreciation, depletion and amortization) totaled $214 million, including $74.7 million of proppant plant operating costs, $127 million of service costs, and $4.3 million in royalties, among other items. Per-ton proppant plant operating costs were approximately $13.86 including royalties, elevated due to maintenance following the winter storm at Kermit. Cash SG&A (excluding litigation and non-recurring items) was $23.3 million; McCarthy said SG&A excluding litigation is expected to average about $21 million to $22 million per quarter for the rest of the year.

Signs of a turning market in West Texas logistics

Turner said the West Texas sand and logistics market is “turning,” with trucking rates “moved meaningfully off their lows.” He said logistics margins expanded from “low single digits in January to mid-teens by March,” a progression McCarthy also cited, and management forecast “mid-teens logistics margins for Q2.”

McCarthy attributed the early-year trucking spike to the fragility of the Permian logistics network as activity ticked up, followed by diesel-related increases later in the quarter. He noted that in the nationwide over-the-road market, tender rejection rates in March were about 14%, which he said signaled a tighter and more expensive freight market with rates “more than 800 basis points higher than 2025 levels.” He added that Permian trucking rates remain roughly 10% below national over-the-road rates, and argued that higher trucking rates can also support higher mine-gate pricing by disadvantaging more distant mines.

During Q&A, McCarthy said he expects the integrated logistics advantage of Atlas’ network, including the Dune Express conveyor, to become more valuable as trucking costs rise. Turner also pointed to diesel as a “big tailwind” for Dune Express given that it is “electric moving that sand…42 miles via an electric conveyor.”

Proppant: sold out in Q2, pricing leverage tied to supply-demand shifts

Management said improving demand has pushed Atlas’ mining operations to a “sold-out position for the second quarter at current production rates,” with Turner saying the company expects plants to “remain very busy for the balance of the year.” Turner also said that as contracts roll off or if Atlas chooses to increase production, “additional sand sales this year should come at higher pricing.”

McCarthy emphasized that, while completion crew additions in the Permian remain “in the low single digits thus far,” Atlas has already added “1 million tons of incremental allocated volume through year-end” as some operators accelerated activity. He estimated roughly 75 frac crews operating in the Permian, and said a 10% increase in frac activity would “conservatively add north of 7 million tons of incremental sand demand,” given higher sand intensity in completions.

In response to an analyst question on when Atlas might add mining capacity, McCarthy said the company is not likely to add shifts and minimal capital required for higher production “until you get to north of that, you know, $23-$25 range on sand pricing,” describing that level as where “the industry starts earning its cost to capital.” Turner added context on historical volatility, noting that sand pricing can move quickly when the market becomes undersupplied.

On contract repricing, McCarthy said that looking into the back half of the year, Atlas could potentially reprice “up to…20-25% of our contract portfolio,” while broader repricing is more likely as the company moves into the 2027 request-for-proposal cycle.

Power business: Caterpillar supply, first private grid PPA, and bridge deployments

Turner highlighted what he called a key milestone for Atlas’ power strategy: a global framework agreement with Caterpillar that secures 1.4 gigawatts (GW) of generation capacity for delivery between 2027 and 2029. That agreement follows an initial November order for 240 megawatts (MW) of equipment. Turner said the combined commitments support Atlas’ objective of owning and operating more than 2 GW by 2030.

On April 1, the company announced its first private grid power purchase agreement (PPA): a 120 MW deployment to be supplied from the initial 240 MW order. Turner said the PPA has an initial five-year term with two additional five-year extension options. He said equipment delivery and construction are expected to begin later this year, with commissioning targeted for the first half of 2027. Once fully deployed, Atlas expects the 120 MW deployment to generate about $50 million to $55 million of annualized adjusted free cash flow, Turner said. He also noted Atlas has begun providing bridge power with mobile generators during construction and commissioning.

McCarthy said the combination of bridge power deployments and other microgrid projects is expected to contribute about $35 million of incremental Adjusted EBITDA over the remaining nine months of 2026, “weighted toward the back half of the year as deployments ramp.” McCarthy added that, based on March EBITDA run-rate and incremental power contributions, Atlas expects second-quarter EBITDA of about $50 million.

During Q&A, Turner and President of Power Tim Ondrak said the Caterpillar framework agreement changed Atlas’ commercial opportunity set, with Turner saying the company now receives “reverse customer inquiries” daily. Ondrak said that while the opportunity set had been “heavily weighted” toward smaller industrial deployments of “50 to a couple hundred MW,” Atlas has begun receiving inquiries from larger data center projects. Ondrak said the opportunity “queue” increased from roughly 4 GW to “somewhere between probably 8 GW and 10 GW” following the agreement, after vetting projects for quality and viability.

Ondrak also described the Caterpillar equipment Atlas is purchasing as two engine platforms designed for continuous duty: a 4 MW medium-speed unit and a 2.5 MW high-speed unit. He said Atlas views them as assets it wants to own and operate for “decades,” citing Caterpillar’s reputation and support as key to reliability and maintenance predictability.

Capital structure and 2026 capital spending outlook

Turner said Atlas in April priced $450 million of 0.5% convertible senior notes due 2031 and entered into a capped call transaction with an initial cap price of $22.32 per share, which he said was a 28% premium to the referenced closing price of $17.38. Turner said the company received $386 million in net proceeds and used a portion to pay down its asset-based lending facility balance and outstanding advances under master lease and interim funding arrangements. He said Atlas intends to use part of the remaining proceeds to finance the initial 240 MW order, and argued that on a cash coupon basis the transaction reduces the cash interest cost “from high single digits to 0.5%.”

McCarthy said growth capital expenditures were $7 million in the quarter, mostly tied to power, and maintenance CapEx was $24.6 million. He said Atlas is adjusting its 2026 CapEx guidance to approximately $350 million to $375 million due to bringing the 240 MW purchase on balance sheet with the recent convertible offering. Management’s plan includes about $45 million of maintenance CapEx and $305 million to $330 million of growth spending, with “the vast majority” tied to the private grid power build-out.

On proppant plant costs, McCarthy guided to second-quarter OpEx per ton of approximately $12.75, down from the first quarter, due to improved fixed-cost absorption and production efficiency. He also discussed progress on commissioning new dredges at the Kermit mine, while Turner said the first “Twinkle” dredge is on location and is expected to be floated by the end of the second quarter, with a second dredge expected to begin arriving in June. Turner said the full impact likely would not be felt until later in the year as commissioning progresses.

In closing remarks, Turner said Atlas is “not a company adding power at the margin” but is building “a long-duration contracted cash flow stream” alongside a sand and logistics business that is “accelerating.” Executive Chairman Bud Brigham also argued Atlas is positioned for what he described as two major demand inflections—oilfield activity and power needs—saying he has “never seen demand inflections as powerful as the ones we’re witnessing today.”

About Atlas Energy Solutions NYSE: AESI

Atlas Energy Solutions NYSE: AESI is an independent energy infrastructure company specializing in the development and operation of low-carbon and renewable natural gas (RNG) projects alongside complementary clean energy offerings. Through its diversified platform, the company seeks to deliver decarbonization solutions across heavy-duty transportation and industrial markets, leveraging technologies that reduce greenhouse gas emissions while providing reliable fuel and energy services.

The company’s core business activities encompass four primary segments.

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