10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-41640

Atlas Energy Solutions Inc.

(Exact Name of Registrant as Specified in its Charter)


Delaware	88-0523830
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
5918 W. Courtyard Drive, Suite 500 Austin, Texas	78730
(Address of principal executive offices)	(Zip Code)

(512) 220-1200

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading
Symbol(s)

Name of each exchange on which registered

Class A common stock, par value $0.01 per share

AESI

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ No ☒*

* The registrant completed its initial public offering on March 13, 2023 and, accordingly, has not been subject to the reporting requirements under Section 13 or 15(d) of the Securities Exchange Act of 1934 as amended for the past 90 days.

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☐
Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of July 26, 2023, the registrant had 57,147,501 shares of Class A common stock, $0.01 par value per share, and 42,852,499 shares of Class B common stock, $0.01 par value per share, outstanding, for a combined total of 100,000,000 shares of common stock outstanding.

Table of Contents


		Page
PART I.	FINANCIAL INFORMATION	1

Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations	2
	Condensed Consolidated Statements of Stockholders' and Members' Equity and Redeemable Noncontrolling Interest	3
	Condensed Consolidated Statements of Cash Flows	4
	Notes to Unaudited Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	36
Item 4.	Controls and Procedures	36

PART II.	OTHER INFORMATION	38

Item 1.	Legal Proceedings	38
Item 1A.	Risk Factors	38
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	39
Item 3.	Defaults Upon Senior Securities	39
Item 4.	Mine Safety Disclosures	39
Item 5.	Other Information	39
Item 6.	Exhibits	39
SIGNATURES		41

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Atlas Energy Solutions Inc.

Condensed Consolidated Balance Sheets

(In thousands, except share data)


	June 30,		December 31,
	2023		2022
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	341,674	$	82,010
Accounts receivable		85,940		73,341
Accounts receivable - related parties		—		1,051
Inventories		3,301		5,614
Spare part inventories		13,506		10,797
Prepaid expenses and other current assets		9,847		5,918
Total current assets		454,268		178,731
Property, plant and equipment, net		700,018		541,524
Finance lease right-of-use assets		36,609		19,173
Operating lease right-of-use assets		4,188		4,049
Other long-term assets		3,537		7,522
Total assets	$	1,198,620	$	750,999
Liabilities, redeemable noncontrolling interest, and stockholders' and members' equity
Current liabilities:
Accounts payable	$	47,681	$	31,645
Accounts payable - related parties		177		154
Accrued liabilities		51,380		30,630
Current portion of long-term debt		29,746		20,586
Other current liabilities		12,224		5,659
Total current liabilities		141,208		88,674
Long-term debt, net of discount and deferred financing costs		101,201		126,588
Deferred tax liabilities		39,070		1,906
Other long-term liabilities		38,012		22,474
Total liabilities		319,491		239,642
Commitments and contingencies (Note 7)
Redeemable noncontrolling interest		802,443		—
Stockholders’ / members’ equity:
Members' equity		—		511,357
Preferred stock, $0.01 par value; 500,000,000 authorized; no shares issued and outstanding as of June 30, 2023		—		—
Class A common stock, $0.01 par value, 1,000,000,000 shares authorized, 57,147,501 shares issued and outstanding as of June 30, 2023		571		—
Class B common stock, $0.01 par value, 500,000,000 shares authorized, 42,852,499 shares issued and outstanding as of June 30, 2023		429		—
Additional paid-in-capital		44,150		—
Retained earnings		31,536		—
Total stockholders' and members' equity		76,686		511,357
Total liabilities, redeemable noncontrolling interest and stockholders’ and members’ equity	$	1,198,620	$	750,999

The accompanying notes are an integral part of these condensed consolidated financial statements.

Atlas Energy Solutions Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands, except per share data)


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2023			2022			2023			2022
Product sales	$	125,216		$	112,531		$	253,358		$	167,343
Service sales		36,572			18,792			61,848			23,834
Total sales		161,788			131,323			315,206			191,177
Cost of sales (excluding depreciation, depletion and accretion expense)		63,504			47,050			126,059			71,495
Depreciation, depletion and accretion expense		9,433			6,404			17,952			12,571
Gross profit		88,851			77,869			171,195			107,111
Selling, general and administrative expense (including stock and unit-based compensation expense of $1,624, $178, $2,246, and $383, respectively.)		12,183			5,365			20,687			10,640
Operating income		76,668			72,504			150,508			96,471
Interest expense, net		(521	)		(3,904	)		(3,963	)		(7,894	)
Other income		118			514			302			1,608
Income before income taxes		76,265			69,114			146,847			90,185
Income tax expense		5,054			593			12,731			818
Net income	$	71,211		$	68,521		$	134,116		$	89,367
Less: Pre-IPO net income attributable to Atlas Sand Company, LLC		—						54,561
Less: Net income attributable to redeemable noncontrolling interest		32,693						39,303
Net income attributable to Atlas Energy Solutions, Inc.	$	38,518					$	40,252

Net income per Class A common share
Basic	$	0.67					$	0.70
Diluted	$	0.67					$	0.70
Weighted average Class A common shares outstanding
Basic		57,148						57,148
Diluted		57,420						57,420

The accompanying notes are an integral part of these condensed consolidated financial statements.

Atlas Energy Solutions Inc.

Condensed Consolidated Statements of Stockholders' and Members' Equity and Redeemable Noncontrolling Interest

(Unaudited)

(In thousands)


	Redeemable			Members'																	Stockholders'
	Noncontrolling			Equity			Class A				Class B				Additional			Retained			and Members'
	Interest			Value			Shares		Value		Shares		Value		Paid-In-Capital			Earnings			Equity
Balance at December 31, 2022	$	—		$	511,357			—	$	—		—	$	—	$	—		$	—		$	511,357
Member distributions prior to IPO		—			(15,000	)		—		—		—		—		—			—			(15,000	)
Net income prior to IPO and reorganization		—			54,561			—		—		—		—		—			—			54,561
Effect of Reorganization and reclassification to redeemable noncontrolling interest (Note 1)		771,345			(550,918	)		39,148		391		42,852		429		(221,247	)		—			(771,345	)
Issuance of common stock in IPO, net of offering costs		—			—			18,000		180		—		—		291,056			—			291,236
Deferred tax liability arising from the IPO		—			—			—		—		—		—		(27,537	)		—			(27,537	)
Stock-based compensation		—			—			—		—		—		—		1,878			—			1,878
Net income after IPO and Reorganization		39,303			—			—		—		—		—		—			40,252			40,252
$0.15/share Class A common stock dividend		—			—			—		—		—		—		—			(8,572	)		(8,572	)
$0.15/unit distribution to Atlas Sand Operating, LLC unitholders		(6,428	)		—			—		—		—		—		—			—			—
Dividend equivalent rights ($0.15 per share)		—			—			—		—		—		—		—			(144	)		(144	)
Other distributions to redeemable non-controlling interest unitholders		(1,777	)		—			—		—		—		—		—			—			—
Balance at June 30, 2023	$	802,443		$	—			57,148	$	571		42,852	$	429	$	44,150		$	31,536		$	76,686

	Redeemable			Members'																	Stockholders'
	Noncontrolling			Equity			Class A				Class B				Additional			Retained			and Members'
	Interest			Value			Shares		Value		Shares		Value		Paid-In-Capital			Earnings			Equity
Balance at December 31, 2021	$	—		$	338,697			—	$	—		—	$	—	$	—		$	—		$	338,697
Member distributions		—			(15,024	)		—		—		—		—		—			—			(15,024	)
Unit-based compensation expense		—			383			—		—		—		—		—			—			383
Net income		—			89,367			—		—		—		—		—			—			89,367
Balance at June 30, 2022	$	—		$	413,423			—	$	—		—	$	—	$	—		$	—		$	413,423

The accompanying notes are an integral part of these condensed consolidated financial statements.

Atlas Energy Solutions Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)



	Six Months Ended June 30,
	2023			2022
Operating activities:
Net income	$	134,116		$	89,367
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and accretion expense		18,622			13,229
Amortization of debt discount		238			222
Amortization of deferred financing costs		191			223
Stock and unit-based compensation		2,246			383
Deferred income tax		9,627			—
Commodity derivatives gain		—			(1,173	)
Settlements on commodity derivatives		—			871
Other		185			(250	)
Changes in operating assets and liabilities:
Accounts receivable		(12,598	)		(44,544	)
Accounts receivable - related party		868			55
Inventories		2,313			684
Spare part inventories		(2,737	)		(2,447	)
Prepaid expenses and other current assets