Atlas Energy Solutions Inc. Q4 FY2024 earnings call

• 2025 is a transformational year for Atlas; on January 12, first commercial delivery off the Dune Express; on January 24, delivered 100 loads of proppants using first two robo trucks; since IPO in March 2023, significant progress made in Dune Express, autonomous driving technology, and multi-trailer operations.
• Mosier Energy Systems acquisition closed on February 19, 2025; Mojo platform provides new growth avenue into distributed power market, with plan to grow fleet from 212 megawatts to approximately 310 megawatts by end of 2026.
• In Permian profit market, customers are committing 100% of 2025 sand volumes to Atlas; spot prices spiked due to seasonal recovery and production issues but are expected to gradually return to normalcy later in the year.
• Dune Express commissioning on schedule, on track to reach full target capacity in second quarter; autonomous trucking program making advancements, with two Kodiak-enabled autonomous trucks having completed ~300 deliveries by end of January, and transitioning to autonomous deliveries off Dune Express.

Total company's adjusted EBITDA was $288.9 million or 27% of revenue. Logistics revenue for the year was $140.5 million. Fourth quarter of 2024, reported total sales of $271.3 million and adjusted EBITDA of $63.2 million or 23.3% of revenue. Revenue from proppant sales was $128.4 million. Total profit sales volumes per quarter declined sequentially to 5.1 million tons. The decline was driven primarily by the seasonal slowdown in activity witnessed in the Permian as operators exhausted capital budgets. Our Encore distributed mining network set a quarterly volume record. Average revenue per ton for the quarter was $25.31, bolstered by contractual payments related to required customer stand pickups not made during the holiday slowdown. Adjusted for these payments, average sales price for the fourth quarter was $23.28 per ton. Service sales (logistics) revenue was $142.9 million for the quarter. Total cost of sales for Atlas excluding DD and A for the quarter were $191 million, consisting of $61 million of plant operating costs, $124.3 million related to service costs, and $5.7 million in royalties. Per ton plant operating costs were $12.02 per ton, excluding royalties, which was down sequentially from the third quarter but still elevated versus normalized levels.

• Total CapEx for 2025 is expected to be approximately $115 million, with $27 million budgeted for expanding the asset base at Mosier and the remainder evenly split between growth and maintenance for prop and logistics business.
• Expect Q1 2025 adjusted EBITDA to be between $75 million and $85 million.
• Expect to sell north of 25 million tons in 2025, which compares to around 20 million tons sold in 2024.
• Raised quarterly dividend to $0.25 per share, a 4% increase.

• Weather events can impact mining and logistics operations; extreme cold in January and February hit competitors harder who haven't invested heavily in maintenance.
• Competitor pricing pressures, with some competitors throwing out desperation pricing during RFP season, but seeing more rational behavior now.
• Supply chain and operational challenges related to ramping up volumes and ensuring full effective utilization of Dune Express.

Q: Can you speak to how much volume you have moved down the Dune Express thus far since commissioning in early January and gating factors to full effective utilization by midyear?

A: Chris Scholla mentioned they were running close to 50%-60% of capacity today, had some startup and optimization issues but solutions in place, with planned downtime in March, and ramping up daily run time to reach full capacity in Q2.

Q: How is Atlas balancing capital allocation between organic portfolio opportunities and returning cash to shareholders?

A: John Turner said goal is to keep base dividend stable, with opportunities in organic portfolio based on highest return, and new term loan freeing up cash flow for returns to investors or additional high-return investments.

Q: Talk about future plans for Mosier Energy Systems, including potential for bigger turbines or expansion?

A: John Turner and Blake McCarthy mentioned Mosier acquisition is first investment in power platform, with ability to grow organically, manufacturing capacity giving flex to ramp up, and excitement about innovation and disruption in the market.

Q: Cost savings of using autonomous versus regular driver trucks and plans for autonomous trucking business?

A: Chris Scholla said Kodiak is a great partner, with performance-based deal, and inflection point for scaling and margin improvement between 50-70 trucks in service, currently delivering on lease roads with light traffic and low speeds.

Q: Thoughts on sand pricing progression and cost profile for the full year?

A: Chris Scholla said team is making process improvements, expecting fixed cost leverage to flow through to OpEx per ton, with volume uptick in Q1 and more in Q2, and continuing focus on process improvements and optimization projects.