Atlas Energy Solutions Inc. Q3 FY2024 earnings call

• Bud Brigham highlighted the progress of the Dune Express project, with major highway and lease road crossings complete and over 95% of the belt placed. - John Turner discussed issues at the Kermit plant, including a fire in April, a damaged dredge, and pivoting to a new dredge manufacturer. He also mentioned the start of construction of a road and offload system connecting to the Dune Express. - Chris Scholla talked about operational improvements at Kermit, including increased delivery percentages and new volume records, and outlined the multiyear operational excellence road map.

For the third quarter of 2024, Atlas reported revenues of $304 million, up 6% sequentially. Product sales were approximately $145.3 million on volumes of 6.0 million tons, yielding an average sales price of approximately $24.34 per ton. Service revenues were approximately $159.1 million. Adjusted EBITDA was $71.1 million, or 23% of revenue, and net income was $3.9 million, or 1% of revenue.

• Expect Q4 EBITDA levels to be flat to down relative to Q3. - Increasing dividend to $0.24 per share, a 5% increase. - Board authorized a share repurchase program to repurchase up to $200 million of outstanding stock over the next two years.

• Market conditions causing pricing volatility in the sand market; current prices at unsustainable levels. - Operational issues at Kermit plant impacting OpEx, though improving sequentially. - Dependence on trucking rates, which could compress margins for the Dune Express in the short term.

Q: Jim Rollyson from Raymond James asked about issues at Kermit and OpEx trend.

A: John Turner and Chris Scholla discussed operational improvements at Kermit, including new leadership and process changes leading to improved volumes. Blake McCarthy talked about OpEx improving sequentially but not reaching normalized levels until 2025 due to dredge delays.

Q: Kurt Hallead from Benchmark asked about volume decline and Dune Express margin changes.

A: Blake McCarthy mentioned uncertainty in Q4 volume due to holiday slowdown, but positive 2025 conversations. John Turner discussed trucking rate impacts on Dune Express margins but emphasized long-term advantages of the asset.

Q: Keith MacKey from RBC Capital Markets asked about CapEx and buyback utilization.

A: Blake McCarthy said 2025 CapEx will be down, and buyback is part of capital allocation to return cash to shareholders as free cash flow increases.

Q: David Smith from Pickering Energy Partners asked about Dune Express commercial delivery cadence.

A: John Turner and Chris Scholla discussed ramp-up period for Dune Express, expecting full utilization mid-2025.

Q: Sean Mitchell from Daniel Energy Partners asked about sand mix change.

A: John Turner and Chris Scholla talked about location and efficiency of sand assets being key, not specifically wet vs dry sand mix.

Q: Neil Mehta from Goldman Sachs Asset Management asked about OpEx evolution and return of capital.

A: Chris Scholla discussed OpEx improvement through operational changes and Blake McCarthy talked about buybacks vs dividends, with both being used to return capital to shareholders.