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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

OR

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.

1


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.

2


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.

3


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