Atlas Energy Solutions NYSE: AESI reported second-quarter revenue of $293.2 million and adjusted EBITDA of $49.5 million, representing an adjusted EBITDA margin of about 17%, as the company advanced its private-power business while navigating uneven conditions in West Texas sand and logistics markets.
President and CEO John Turner said the quarter was highlighted by Atlas’ first long-term behind-the-meter power contract: a 120-megawatt power purchase agreement with a subsidiary of an investment-grade technology infrastructure provider. The project, located in Socorro, Texas, is expected to require about $190 million of capital and generate approximately $55 million in annualized adjusted free cash flow once the permanent facility is operating.
Atlas expects the project’s cash-on-cash payback to be less than three and a half years, though Turner cautioned that those economics are specific to the contract, counterparty and site and should not be applied to future projects. The capital required for the project is within the company’s previously announced capital budget, he said.
Socorro Project Targets Revenue in 2027
Atlas has completed construction of a 26-megawatt facility that is currently powering the Socorro site during the customer’s construction and testing phase. The company plans to begin installing permanent Atlas equipment in the third quarter, with commissioning expected to start in the fourth quarter. The 120-megawatt permanent facility is expected to electrify at the end of the first quarter of 2027, with revenue recognition beginning in the second quarter of next year.
Turner said the company’s long-term behind-the-meter power unit is focused primarily on supplying permanent power to large-scale users, including data centers. Atlas also operates an oilfield power business that sells generation capacity to oil and gas operators in multiple basins.
The company expects its oilfield power fleet to exit 2026 with between 180 megawatts and 200 megawatts deployed, with most of that capacity under long-term agreements. Atlas said it is prioritizing longer-tenure contracts rather than pursuing near-term deployments.
Beyond the 120 megawatts allocated to the Socorro project, Atlas expects to receive another 120 megawatts of equipment at the end of 2026 and 350 megawatts during 2027. Turner said the company’s available capacity and ability to provide engineering, construction, operations and maintenance services position it to compete for larger private-power projects.
Management said prospective data-center projects have increased in size and duration. Turner said Atlas initially expected it would take eight to 10 projects to contract its Caterpillar-supported equipment capacity, but it now believes two to four projects could potentially contract its remaining uncommitted capacity. Prospective customers are also increasingly seeking 15- to 20-year agreements, compared with earlier expectations centered on 10-year terms.
Sand Volumes Flat, Pricing Strategy Shifts
Second-quarter proppant sales volumes were flat sequentially at approximately 5.6 million tons, while the average proppant sales price was about $17.70 per ton. Late-June rig moves and changes in customer completion schedules weighed on volumes, though July volumes recovered to approximately 2 million tons.
Chief Financial Officer Blake McCarthy described the West Texas sand and logistics market as “nuanced.” While Permian rig activity has increased, completion activity has remained largely static, he said. McCarthy cited thin drilled-but-uncompleted well inventories, longer planning cycles for larger pads and constraints in Permian gas takeaway capacity as factors limiting completions activity.
Atlas expects activity to begin ramping moderately in the fourth quarter as customers prepare for 2027, according to McCarthy. The company’s current third-quarter sand-volume outlook ranges from 5.3 million tons to 6 million tons, reflecting both scheduled customer breaks and a deliberate shift in commercial strategy.
Management said it is holding the line on pricing for certain sand tenders rather than pursuing volume at lower rates. Turner said Atlas is willing to trade near-term volumes in an effort to drive a broader market pricing recovery. McCarthy said the company believes industry nameplate capacity overstates the sand market’s true productive capacity because some facilities have received limited maintenance investment.
McCarthy also cited tightening truck availability, higher freight rates and higher diesel costs as potential contributors to non-productive time for operators. Atlas said it is partially insulated from logistics inflation through the Dune Express conveyor system and autonomous truck deployments.
Logistics, Autonomous Deliveries and Cost Trends
Atlas’ last-mile team shipped a quarterly record of 6 million tons during the second quarter. The company completed more than 4,600 autonomous deliveries, up 70% from the first quarter, and set quarterly volume records on the Dune Express.
The company is targeting autonomous operations on public roads by the middle of 2027, subject to regulatory and operational milestones. Management said expanding the geographic areas served by autonomous trucks and increasing the fleet size could reduce exposure to driver availability and third-party trucking cost inflation.
Second-quarter logistics margins were 14%, supported by record volumes, an improving rate environment and Dune Express utilization. Atlas expects third-quarter logistics margins to remain solidly in the double digits.
Proppant plant operating costs, including royalties, were approximately $12.39 per ton in the second quarter, down from the first quarter. Atlas expects third-quarter operating expense per ton to be flat to lower depending on volumes, as plant-efficiency initiatives continue.
Capital Spending and Outlook
Growth capital expenditures totaled approximately $131.5 million in the second quarter, primarily related to Atlas’ initial Caterpillar power-generation equipment order. Maintenance capital expenditures were $14.6 million.
Atlas budgeted about $200 million of capital spending for the second half of 2026, maintaining its full-year capital expenditure guidance of $350 million to $375 million. Approximately $175 million to $190 million of that spending is tied to the private-grid power business, including about $110 million for the contracted Socorro facility.
Following its convertible debt issuance in April and second-quarter equipment payments, Atlas had approximately $168 million of cash and $125 million of undrawn availability under its asset-based lending facility, McCarthy said. He said future financing for additional power projects would most likely involve debt financing supported by signed contracts and creditworthy counterparties.
For the third quarter, Atlas expects adjusted EBITDA of $30 million to $45 million, with the variability primarily tied to sand and logistics volumes. Management expects meaningful sequential improvement in the fourth quarter, with current expectations matching or exceeding second-quarter results based on already allocated volumes and communicated customer completion schedules.
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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