10-Q

AESI

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 September 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: 001-41828

Atlas Energy Solutions Inc.

(Exact Name of Registrant as Specified in its Charter)


Delaware	93-2154509
(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 ☐

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 October 30, 2023, the registrant had 100,025,584 shares of common stock, $0.01 par value per share, 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	5
	Notes to Unaudited Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	43
Item 4.	Controls and Procedures	43

PART II.	OTHER INFORMATION	44

Item 1.	Legal Proceedings	44
Item 1A.	Risk Factors	44
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	44
Item 3.	Defaults Upon Senior Securities	44
Item 4.	Mine Safety Disclosures	44
Item 5.	Other Information	44
Item 6.	Exhibits	44
SIGNATURES		46

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Atlas Energy Solutions Inc.

Condensed Consolidated Balance Sheets

(In thousands, except share data)


	September 30,			December 31,
	2023			2022
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	264,538		$	82,010
Accounts receivable		102,234			73,341
Accounts receivable - related parties		—			1,051
Inventories		3,961			5,614
Spare part inventories		14,911			10,797
Prepaid expenses and other current assets		15,880			5,918
Total current assets		401,524			178,731
Property, plant and equipment, net		828,997			541,524
Finance lease right-of-use assets		496			19,173
Operating lease right-of-use assets		3,960			4,049
Other long-term assets		4,294			7,522
Total assets	$	1,239,271		$	750,999
Liabilities, redeemable noncontrolling interest, and stockholders' and members' equity
Current liabilities:
Accounts payable	$	57,520		$	31,645
Accounts payable - related parties		247			154
Accrued liabilities		38,836			30,630
Current portion of long-term debt		—			20,586
Other current liabilities		3,956			5,659
Total current liabilities		100,559			88,674
Long-term debt, net of discount and deferred financing costs		172,511			126,588
Deferred tax liabilities		48,679			1,906
Other long-term liabilities		6,363			22,474
Total liabilities		328,112			239,642
Commitments and contingencies (Note 7)
Redeemable noncontrolling interest		987,151			—
Stockholders’ / members’ equity:
Members' equity		—			511,357
Preferred stock, $0.01 par value; 500,000,000 authorized; no shares issued and outstanding as of September 30, 2023		—			—
Class A common stock, $0.01 par value, 1,000,000,000 shares authorized, 57,767,399 shares issued and outstanding as of September 30, 2023		577			—
Class B common stock, $0.01 par value, 500,000,000 shares authorized, 42,258,185 shares issued and outstanding as of September 30, 2023		423			—
Additional paid-in-capital		—			—
Accumulated deficit		(76,992	)		—
Total stockholders' and members' equity		(75,992	)		511,357
Total liabilities, redeemable noncontrolling interest and stockholders’ and members’ equity	$	1,239,271		$	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						Nine Months Ended
	September 30,						September 30,
	2023			2022			2023			2022
Product sales	$	114,773		$	119,222		$	368,131		$	286,565
Service sales		42,843			22,460			104,691			46,294
Total sales		157,616			141,682			472,822			332,859
Cost of sales (excluding depreciation, depletion and accretion expense)		67,770			60,138			193,829			131,633
Depreciation, depletion and accretion expense		10,221			7,136			28,173			19,707
Gross profit		79,625			74,408			250,820			181,519
Selling, general and administrative expense (including stock and unit-based compensation expense of $1,414, $160, $3,660, and $543, respectively.)		14,301			5,774			34,988			16,414
Operating income		65,324			68,634			215,832			165,105
Interest expense, net		(1,496	)		(3,876	)		(5,459	)		(11,770	)
Other income		136			902			438			2,510
Income before income taxes		63,964			65,660			210,811			155,845
Income tax expense		7,637			604			20,368			1,422
Net income	$	56,327		$	65,056		$	190,443		$	154,423
Less: Pre-IPO net income attributable to Atlas Sand Company, LLC		—						54,561
Less: Net income attributable to redeemable noncontrolling interest		26,887						66,190
Net income attributable to Atlas Energy Solutions, Inc.	$	29,440					$	69,692

Net income per Class A common share
Basic	$	0.51					$	1.22
Diluted	$	0.51					$	1.21
Weighted average Class A common shares outstanding
Basic		57,237						57,189
Diluted		57,928						57,746

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			Accumulated			and Members'
	Interest			Value			Shares		Value		Shares			Value			Paid-In-Capital			Deficit			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		—			—			—		—		—			—			3,290			—			3,290
Net income after IPO and Reorganization		66,190			—			—		—		—			—			—			69,692			69,692
$0.35/share Class A common stock dividend		—			—			—		—		—			—			—			(20,002	)		(20,002	)
$0.35/unit distribution to Atlas Sand Operating, LLC unitholders		(14,998	)		—			—		—		—			—			—			—			—
Dividend equivalent rights ($0.35 per share)		—			—			—		—		—			—			—			(296	)		(296	)
Other distributions to redeemable non-controlling interest unitholders		(7,158	)		—			—		—		—			—			—			—			—
Redemption of operating units of Atlas Sand Operating, LLC for Class A common stock		(13,640	)		—			594		6		(594	)		(6	)		13,640			—			13,640
Deferred tax liability arising from the redemption of operating units of Atlas Sand Operating, LLC for Class A common stock		—			—			—		—		—			—			(176	)		—			(176	)
Issuance of common stock upon vesting of RSUs, net of shares withheld for income taxes		—			—			25		—		—			—			—			—			—
Adjustment of redeemable noncontrolling interest to redemption amount		185,412			—			—		—		—			—			(59,026	)		(126,386	)		(185,412	)
Balance at September 30, 2023	$	987,151		$	—		$	57,767	$	577	$	42,258		$	423		$	—		$	(76,992	)	$	(75,992	)

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 (Continued)

(Unaudited)

(In thousands)


	Redeemable		Members'
	Noncontrolling		Equity			Class A				Class B				Additional		Accumulated		Stockholders'
	Interest		Value			Shares		Value		Shares		Value		Paid-In-Capital		Deficit		and Members'
Balance at December 31, 2021	$	—	$	338,697			—	$	—		—	$	—	$	—	$	—	$	338,697
Member distributions		—		(30,024	)		—		—		—		—		—		—		(30,024	)
Unit-based compensation expense		—		543			—		—		—		—		—		—		543
Net income		—		154,423			—		—		—		—		—		—		154,423
Balance at September 30, 2022	$	—	$	463,639			—	$	—		—	$	—	$	—	$	—	$	463,639

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)


	Nine Months Ended
	September 30,
	2023			2022
Operating activities:
Net income	$	190,443		$	154,423
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and accretion expense		29,368			20,528
Amortization of debt discount		469			338
Amortization of deferred financing costs		270			332
Stock and unit-based compensation		3,660			543
Deferred income tax		19,059			—
Commodity derivatives gain		—			(1,857	)
Settlements on commodity derivatives		—			1,996
Other		143			61
Changes in operating assets and liabilities:
Accounts receivable		(28,893	)		(43,144	)
Accounts receivable - related party		868			90
Inventories		1,653			(481	)
Spare part inventories		(4,141	)		(3,333	)
Prepaid expenses and other current assets		(10,355	)		1,205
Other long-term assets		(1,681	)		(5,150	)
Accounts payable		3,877			7,301
Accounts payable - related parties		93			(433	)
Deferred revenue		—			6,703
Accrued liabilities and other liabilities		8,691			16,878
Net cash provided by operating activities		213,524			156,000
Investing activities:
Purchases of property, plant and equipment		(245,693	)		(54,164	)
Net cash used in investing activities		(245,693	)		(54,164	)
Financing Activities:
Net proceeds from IPO		303,426			—
Payment of offering costs		(6,020	)		—
Member distributions prior to IPO		(15,000	)		(30,024	)
Principal payments on term loan borrowings		(16,573	)		(20,557	)
Prepayment fee on 2021 Term Loan Credit Facility		(2,649	)		—
Issuance costs associated with debt financing		(4,397	)		(233	)
Payments under finance leases		(1,932	)		(703	)
Dividends paid to Class A common stockholders		(20,002	)		—
Distributions paid to Atlas Sand Operating, LLC unitholders		(22,156	)		—
Net cash provided by (used in) financing activities