--12-31falseQ30001984060--12-310001984060aesi:FirstAmendmentToTwoThousandTwentyThreeTermLoanCreditAgreementMember2024-01-012024-09-300001984060aesi:FirstAmendmentToTwoThousandTwentyThreeTermLoanCreditAgreementMember2024-07-012024-09-300001984060us-gaap:CommonClassAMemberus-gaap:IPOMember2023-03-132023-03-130001984060aesi:ProductsAndServicesMemberus-gaap:AccountsReceivableMemberus-gaap:CustomerConcentrationRiskMemberaesi:CustomerThreeMember2024-01-012024-09-300001984060aesi:HiCrushMember2024-07-012024-09-300001984060aesi:ProductivePlantPropertiesMember2023-12-310001984060us-gaap:ProductMember2023-07-012023-09-300001984060us-gaap:RestrictedStockUnitsRSUMember2023-12-310001984060us-gaap:IPOMember2023-03-132023-03-130001984060aesi:TwoThousandTwentyThreeABLCreditFacilityMember2024-01-012024-09-300001984060aesi:FinanceLeaseAssetsMember2023-07-312023-07-310001984060aesi:TwoThousandTwentyThreeABLCreditFacilityMember2024-07-012024-09-300001984060aesi:TwoThousandTwentyThreeABLCreditFacilityMemberus-gaap:FairValueInputsLevel1Memberaesi:QuotedPricesValuationTechniqueMember2023-12-310001984060aesi:ShortfallRevenuesMember2024-01-012024-09-3000019840602022-07-282022-07-280001984060us-gaap:FurnitureAndFixturesMembersrt:MaximumMember2024-09-300001984060us-gaap:RestrictedStockUnitsRSUMember2023-07-012023-09-300001984060us-gaap:RestrictedStockUnitsRSUMember2024-01-012024-09-300001984060us-gaap:RelatedPartyMember2023-12-310001984060us-gaap:CommonStockMemberus-gaap:CommonClassAMember2023-01-012023-09-300001984060us-gaap:AdditionalPaidInCapitalMember2024-01-012024-09-300001984060srt:MinimumMemberaesi:TwoThousandTwentyThreeTermLoanCreditFacilityMember2023-07-310001984060us-gaap:GeneralPartnerMember2023-01-012023-09-300001984060aesi:PubcoMergerMemberaesi:NewAtlasCommonStockMember2024-09-300001984060aesi:AnthemVenturesLlcMember2023-12-310001984060aesi:O2024Q1DividendsMember2024-02-082024-02-080001984060us-gaap:AdditionalPaidInCapitalMember2024-09-300001984060aesi:EarthResourcesLlcMember2023-01-012023-12-310001984060srt:ParentCompanyMember2024-01-012024-09-300001984060aesi:TwoThousandTwentyThreeABLCreditFacilityMembersrt:MaximumMemberus-gaap:SecuredOvernightFinancingRateSofrOvernightIndexSwapRateMember2024-01-012024-09-300001984060us-gaap:RoyaltyAgreementsMembersrt:MinimumMember2024-01-012024-09-300001984060aesi:FinanceLeasesLiabilitiesMember2023-07-312023-07-310001984060aesi:EquipmentFinancingAgreementsMembersrt:MaximumMember2024-01-012024-09-300001984060aesi:TwoThousandTwentyThreeTermLoanCreditFacilityMembersrt:MaximumMember2023-07-310001984060srt:MaximumMemberaesi:LogisticEquipmentMember2024-09-300001984060aesi:OtherIndebtednessMemberus-gaap:FairValueInputsLevel1Memberaesi:QuotedPricesValuationTechniqueMember2024-09-300001984060aesi:TwoThousandTwentyThreeTermLoanCreditFacilityMember2024-09-300001984060aesi:PriorToInitialPublicOfferingAndReorganizationMemberus-gaap:GeneralPartnerMember2023-01-012023-09-300001984060us-gaap:RetainedEarningsMember2023-09-300001984060srt:MinimumMemberaesi:LogisticEquipmentMember2024-09-300001984060us-gaap:PerformanceSharesMembersrt:MaximumMember2024-01-012024-09-300001984060aesi:ProductsAndServicesMemberus-gaap:AccountsReceivableMemberus-gaap:CustomerConcentrationRiskMemberaesi:CustomerFourMember2023-01-012023-12-310001984060aesi:OtherIndebtednessMember2024-09-300001984060aesi:TwoThousandTwentyThreeABLCreditFacilityMemberus-gaap:FairValueInputsLevel1Memberaesi:QuotedPricesValuationTechniqueMember2024-09-300001984060aesi:TwoThousandTwentyThreeABLCreditFacilityMemberus-gaap:LetterOfCreditMember2023-02-220001984060aesi:TwoThousandTwentyThreeTermLoanCreditFacilityMember2024-01-012024-09-300001984060aesi:EarthResourcesLlcMember2024-07-012024-09-300001984060aesi:ProductsAndServicesMemberus-gaap:AccountsReceivableMemberus-gaap:CustomerConcentrationRiskMemberaesi:CustomerThreeMember2023-01-012023-12-310001984060aesi:TwoThousandTwentyThreeABLCreditFacilityMember2023-07-012023-09-300001984060srt:MaximumMemberus-gaap:ComputerEquipmentMember2024-09-300001984060srt:ParentCompanyMemberaesi:LegacyOwnersMember2024-09-3000019840602024-01-012024-09-300001984060aesi:TwoThousandTwentyThreeTermLoanCreditFacilityMember2024-07-012024-09-300001984060us-gaap:PerformanceSharesMember2024-09-300001984060aesi:FirstAmendmentToTwoThousandTwentyThreeAblCreditAgreementMemberaesi:NewLenderMember2024-09-300001984060us-gaap:AdditionalPaidInCapitalMember2023-01-012023-09-300001984060us-gaap:FairValueInputsLevel2Memberus-gaap:MarketApproachValuationTechniqueMemberaesi:TwoThousandTwentyThreeTermLoanCreditFacilityMember2023-12-310001984060aesi:TwoThousandTwentyThreeABLCreditFacilityMember2024-09-300001984060us-gaap:TradeNamesMember2024-09-3000019840602023-09-300001984060aesi:AnthemVenturesLlcMember2024-01-012024-09-3000019840602023-03-132023-03-130001984060us-gaap:ServiceMember2023-01-012023-09-300001984060aesi:AfterInitialPublicOfferingAndReorganizationMember2023-01-012023-09-300001984060aesi:HiCrushMemberus-gaap:CustomerRelationshipsMember2024-03-050001984060aesi:DeferredCashConsiderationNoteMember2024-01-012024-09-300001984060us-gaap:FairValueInputsLevel2Memberus-gaap:MarketApproachValuationTechniqueMemberaesi:TwoThousandTwentyThreeTermLoanCreditFacilityMember2024-09-300001984060srt:MinimumMemberaesi:AtlasSandCompanyLlcMember2024-01-012024-09-300001984060aesi:O2024Q3DividendsMember2024-08-012024-08-010001984060aesi:SparePartsInventoriesMember2024-09-300001984060aesi:AddtLoanMember2024-09-300001984060us-gaap:RelatedPartyMember2024-09-300001984060us-gaap:CommonStockMember2024-01-012024-09-300001984060us-gaap:RestrictedStockUnitsRSUMember2023-01-012023-09-300001984060us-gaap:EquipmentMember2024-09-300001984060us-gaap:GeneralPartnerMember2022-12-310001984060aesi:DepreciationDepletionAndAccretionExpenseMember2024-01-012024-09-300001984060aesi:InAGoodMoodMember2023-01-012023-09-3000019840602024-10-240001984060aesi:InAGoodMoodMember2023-12-3100019840602023-07-012023-09-300001984060aesi:EarthResourcesLlcMember2023-07-012023-09-300001984060aesi:TwoThousandTwentyThreeABLCreditFacilityMember2023-02-222023-02-220001984060aesi:KermitFacilityMember2024-01-012024-09-300001984060aesi:BuildingsAndLeaseholdImprovementsMembersrt:MaximumMember2024-09-300001984060aesi:EarthResourcesLlcMember2023-01-012023-09-300001984060us-gaap:CommonStockMembersrt:ParentCompanyMemberus-gaap:CommonClassAMember2024-09-300001984060aesi:AnthemVenturesLlcMember2023-07-012023-09-300001984060us-gaap:IncomeApproachValuationTechniqueMember2024-09-300001984060aesi:FirstAmendmentToTwoThousandTwentyThreeTermLoanCreditAgreementMember2024-02-262024-02-260001984060aesi:TransportationAndLogisticsEquipmentMember2022-05-162022-05-160001984060aesi:ShortfallRevenuesMember2024-07-012024-09-300001984060us-gaap:ServiceMember2024-07-012024-09-300001984060aesi:DeferredCashConsiderationNoteMemberaesi:HiCrushMember2024-07-012024-09-300001984060us-gaap:LandMember2024-09-300001984060aesi:DredgesAndRelatedEquipmentMember2022-07-282022-07-280001984060srt:MinimumMember2023-07-012023-09-300001984060aesi:TwoThousandTwentyThreeABLCreditFacilityMembersrt:MaximumMember2023-02-220001984060aesi:LogisticEquipmentMember2024-09-300001984060us-gaap:LeaseholdImprovementsMember2023-12-310001984060srt:MinimumMemberus-gaap:ComputerEquipmentMember2024-09-300001984060aesi:ProductsAndServicesMemberaesi:CustomerTwoMemberus-gaap:AccountsReceivableMemberus-gaap:CustomerConcentrationRiskMember2023-01-012023-12-310001984060aesi:EarthResourcesLlcMember2024-01-012024-09-300001984060us-gaap:CommonStockMember2023-12-310001984060aesi:InAGoodMoodMember2024-01-012024-09-300001984060aesi:AddtLoanMember2023-12-310001984060us-gaap:ProductMember2024-01-012024-09-300001984060us-gaap:ProductMember2024-07-012024-09-300001984060aesi:TwoThousandTwentyThreeABLCreditFacilityMemberus-gaap:LetterOfCreditMember2024-09-300001984060us-gaap:SellingGeneralAndAdministrativeExpensesMember2024-01-012024-09-300001984060aesi:O2024Q2DividendsMember2024-05-062024-05-060001984060aesi:TwoThousandTwentyThreeABLCreditFacilityMemberus-gaap:BorrowingsMember2024-09-300001984060srt:RestatementAdjustmentMember2024-07-012024-09-300001984060srt:MaximumMember2024-07-012024-09-300001984060us-gaap:CustomerRelationshipsMember2024-09-3000019840602024-07-012024-09-300001984060aesi:DeferredCashConsiderationNoteMember2024-09-300001984060us-gaap:CommonStockMemberus-gaap:CommonClassAMember2023-09-300001984060aesi:EquipmentFinancingAgreementsMember2024-01-012024-09-300001984060aesi:ProductivePlantPropertiesMember2024-09-3000019840602023-12-310001984060srt:MinimumMemberus-gaap:FurnitureAndFixturesMember2024-09-300001984060aesi:PriorToInitialPublicOfferingAndReorganizationMember2023-01-012023-09-300001984060aesi:HiCrushMember2024-03-050001984060aesi:InAGoodMoodMember2024-09-300001984060us-gaap:LetterOfCreditMemberaesi:FirstAmendmentToTwoThousandTwentyThreeAblCreditAgreementMember2024-09-300001984060srt:RestatementAdjustmentMember2024-09-300001984060us-gaap:RetainedEarningsMemberaesi:AfterInitialPublicOfferingAndReorganizationMember2023-01-012023-09-300001984060aesi:HiCrushMember2024-09-300001984060us-gaap:CommonStockMemberaesi:LegacyOwnersMemberaesi:ClassAAndClassBMember2024-09-300001984060aesi:ProductsAndServicesMemberus-gaap:AccountsReceivableMemberus-gaap:CustomerConcentrationRiskMemberaesi:CustomerFourMember2024-01-012024-09-300001984060aesi:TwoThousandTwentyThreeABLCreditFacilityMember2023-12-310001984060us-gaap:ComputerEquipmentMember2023-12-310001984060us-gaap:PerformanceSharesMember2023-01-012023-09-300001984060aesi:HiCrushMember2024-03-052024-03-050001984060aesi:EquipmentFinancingAgreementsMember2024-09-3000019840602023-10-022023-10-020001984060us-gaap:IPOMember2023-03-130001984060aesi:O2024Q3DividendsMember2024-07-012024-09-300001984060us-gaap:SellingGeneralAndAdministrativeExpensesMember2023-07-012023-09-300001984060aesi:DeferredCashConsiderationNoteMember2023-12-310001984060aesi:TwoThousandTwentyThreeTermLoanCreditFacilityMember2023-07-312023-07-310001984060aesi:TwoThousandTwentyThreeABLCreditFacilityMemberaesi:FixedChargeCoverageRatioMember2024-01-012024-09-300001984060srt:ParentCompanyMemberus-gaap:CommonClassBMember2024-09-300001984060aesi:ShortfallRevenuesMember2023-01-012023-09-300001984060aesi:DelayedDrawTermLoansMemberaesi:TwoThousandTwentyThreeTermLoanCreditFacilityMember2023-07-312023-07-310001984060aesi:TwoThousandTwentyThreeABLCreditFacilityMember2024-03-052024-03-0500019840602023-10-020001984060aesi:FirstAmendmentToTwoThousandTwentyThreeAblCreditAgreementMemberaesi:ExistingLendersMember2024-09-300001984060aesi:HiCrushMember2024-01-012024-09-300001984060srt:MinimumMember2024-09-300001984060aesi:BrighamLandManagementLlcMember2024-09-3000019840602024-09-3000019840602023-01-012023-09-300001984060aesi:EquipmentFinancingAgreementsMembersrt:MinimumMember2024-01-012024-09-300001984060us-gaap:ServiceMember2024-01-012024-09-300001984060us-gaap:PreferredStockMember2024-09-300001984060aesi:OtherIndebtednessMemberus-gaap:FairValueInputsLevel1Memberaesi:QuotedPricesValuationTechniqueMember2023-12-310001984060aesi:BrighamLandManagementLlcMember2024-07-012024-09-300001984060us-gaap:ConstructionInProgressMember2023-12-310001984060aesi:FirstAmendmentToTwoThousandTwentyThreeAblCreditAgreementMemberaesi:FixedChargeCoverageRatioMember2024-01-012024-09-300001984060us-gaap:CommonStockMemberaesi:LongTermIncentivePlanMember2024-09-300001984060aesi:SparePartsInventoriesMember2024-03-050001984060aesi:AtlasSandCompanyLlcMemberaesi:FirstAmendmentToTwoThousandTwentyThreeAblCreditAgreementMember2024-01-012024-09-300001984060us-gaap:LandMember2023-12-310001984060us-gaap:FairValueInputsLevel2Memberus-gaap:MarketApproachValuationTechniqueMemberaesi:AddtLoanMember2023-12-310001984060aesi:AnthemVenturesLlcMember2023-01-012023-09-300001984060aesi:SparePartsInventoriesMembersrt:RestatementAdjustmentMember2024-09-300001984060us-gaap:CommonStockMemberaesi:LongTermIncentivePlanMember2023-03-080001984060us-gaap:RestrictedStockUnitsRSUMember2024-07-012024-09-300001984060aesi:FirstAmendmentToTwoThousandTwentyThreeAblCreditAgreementMember2024-01-012024-09-300001984060aesi:HiCrushMemberaesi:DeferredCashConsiderationNoteMemberus-gaap:PaymentInKindPIKNoteMember2024-03-290001984060srt:MaximumMember2024-01-012024-09-300001984060aesi:HiCrushMemberus-gaap:TradeNamesMember2024-03-052024-03-050001984060us-gaap:RetainedEarningsMember2023-12-310001984060aesi:InAGoodMoodMember2024-07-012024-09-3000019840602022-12-310001984060aesi:TwoThousandTwentyThreeABLCreditFacilityMemberaesi:AtlasSandCompanyLlcMember2024-01-012024-09-300001984060srt:MaximumMember2024-09-300001984060srt:MinimumMemberaesi:BuildingsAndLeaseholdImprovementsMember2024-09-300001984060us-gaap:SellingGeneralAndAdministrativeExpensesMember2024-07-012024-09-300001984060aesi:TwoThousandTwentyThreeTermLoanCreditFacilityMember2023-01-012023-09-300001984060aesi:DepreciationDepletionAndAccretionExpenseMember2023-07-012023-09-300001984060aesi:BrighamLandManagementLlcMember2023-07-012023-09-300001984060us-gaap:PerformanceSharesMember2024-01-012024-09-300001984060us-gaap:CommonStockMember2024-02-082024-02-080001984060us-gaap:IPOMember2023-12-310001984060srt:MinimumMemberaesi:PlantFacilitiesAndEquipmentMember2024-09-300001984060aesi:ShortfallRevenuesMember2023-07-012023-09-300001984060aesi:O2024Q4DividendsMemberus-gaap:SubsequentEventMember2024-10-242024-10-240001984060srt:ParentCompanyMemberus-gaap:CommonClassAMember2024-09-300001984060aesi:BrighamLandManagementLlcMember2024-01-012024-09-300001984060us-gaap:ServiceMember2023-07-012023-09-3000019840602024-03-052024-03-050001984060aesi:HiCrushMember2024-09-302024-09-300001984060aesi:TwoThousandTwentyThreeABLCreditFacilityMembersrt:MinimumMemberus-gaap:SecuredOvernightFinancingRateSofrOvernightIndexSwapRateMember2024-01-012024-09-300001984060aesi:DamagedDredgeAssetMemberaesi:KermitFacilityMember2024-01-012024-09-300001984060us-gaap:PerformanceSharesMember2023-07-012023-09-300001984060aesi:HiCrushMemberaesi:DeferredCashConsiderationNoteMember2024-03-290001984060us-gaap:IPOMember2022-12-3100019840602023-01-012023-12-310001984060aesi:TwoThousandTwentyThreeABLCreditFacilityMember2023-01-012023-09-300001984060aesi:HiCrushMemberaesi:DeferredCashConsiderationNoteMember2023-12-292024-03-290001984060us-gaap:CommonStockMember2024-05-062024-05-060001984060aesi:O2024Q1DividendsMember2024-01-012024-03-310001984060us-gaap:CommonStockMember2024-09-300001984060aesi:DeferredCashConsiderationNoteMemberaesi:HiCrushMember2024-01-012024-09-300001984060srt:RestatementAdjustmentMember2024-01-012024-09-300001984060us-gaap:EquipmentMember2023-12-310001984060srt:MaximumMember2023-01-012023-09-300001984060aesi:AnthemVenturesLlcMember2024-07-012024-09-300001984060us-gaap:FairValueInputsLevel2Memberaesi:DeferredCashConsiderationNoteMemberus-gaap:MarketApproachValuationTechniqueMember2024-09-300001984060us-gaap:ProductMember2023-01-012023-09-300001984060aesi:DepreciationDepletionAndAccretionExpenseMember2024-07-012024-09-300001984060aesi:FirstAmendmentToTwoThousandTwentyThreeTermLoanCreditAgreementMember2024-09-300001984060us-gaap:CommonStockMemberus-gaap:CommonClassBMember2023-01-012023-09-300001984060us-gaap:ComputerEquipmentMember2024-09-300001984060aesi:AddtLoanMember2024-01-012024-09-300001984060aesi:TwoThousandTwentyThreeABLCreditFacilityMember2024-03-050001984060aesi:OtherIndebtednessMember2023-12-3100019840602024-03-050001984060aesi:TwoThousandTwentyThreeABLCreditFacilityMemberus-gaap:StandbyLettersOfCreditMember2023-12-310001984060aesi:TwoThousandTwentyThreeABLCreditFacilityMemberus-gaap:LineOfCreditMember2023-02-220001984060aesi:DeferredCashConsiderationNoteMember2024-07-012024-09-300001984060aesi:TwoThousandTwentyThreeABLCreditFacilityMember2024-09-300001984060us-gaap:RetainedEarningsMember2024-01-012024-09-300001984060aesi:AtlasSandCompanyLlcMembersrt:MaximumMember2024-01-012024-09-300001984060aesi:HiCrushMemberus-gaap:CommonStockMember2024-03-050001984060us-gaap:ConstructionInProgressMember2024-09-300001984060aesi:ProductsAndServicesMemberaesi:CustomerOneMemberus-gaap:AccountsReceivableMemberus-gaap:CustomerConcentrationRiskMember2024-01-012024-09-300001984060aesi:InAGoodMoodMember2023-07-012023-09-300001984060us-gaap:LineOfCreditMemberaesi:IncrementalTermLoanMemberaesi:FirstAmendmentToTwoThousandTwentyThreeTermLoanCreditAgreementMember2024-02-262024-02-260001984060us-gaap:SellingGeneralAndAdministrativeExpensesMember2023-01-012023-09-300001984060us-gaap:FairValueInputsLevel2Memberus-gaap:MarketApproachValuationTechniqueMemberaesi:AddtLoanMember2024-09-300001984060us-gaap:LineOfCreditMemberaesi:IncrementalTermLoanMemberaesi:FirstAmendmentToTwoThousandTwentyThreeTermLoanCreditAgreementMember2024-02-260001984060aesi:ProductsAndServicesMemberaesi:CustomerTwoMemberus-gaap:AccountsReceivableMemberus-gaap:CustomerConcentrationRiskMember2024-01-012024-09-300001984060aesi:HiCrushMemberus-gaap:CustomerRelationshipsMember2024-03-052024-03-050001984060us-gaap:RetainedEarningsMember2023-01-012023-09-300001984060us-gaap:CommonClassAMemberus-gaap:IPOMember2023-03-130001984060srt:MinimumMemberus-gaap:LicenseMember2024-09-300001984060us-gaap:OfficeEquipmentMember2023-12-310001984060aesi:AssetDamagedByFireMemberaesi:KermitFacilityMember2024-01-012024-09-300001984060srt:MaximumMemberaesi:PlantFacilitiesAndEquipmentMember2024-09-300001984060aesi:ProductsAndServicesMemberaesi:CustomerOneMemberus-gaap:AccountsReceivableMemberus-gaap:CustomerConcentrationRiskMember2023-01-012023-12-310001984060us-gaap:RestrictedStockUnitsRSUMember2024-09-300001984060aesi:DepreciationDepletionAndAccretionExpenseMember2023-01-012023-09-300001984060aesi:DeferredCashConsiderationNoteMemberus-gaap:FairValueInputsLevel2Memberus-gaap:MarketApproachValuationTechniqueMember2023-12-310001984060us-gaap:LeaseholdImprovementsMember2024-09-300001984060aesi:AnthemVenturesLlcMember2024-09-3000019840602022-05-162022-05-160001984060aesi:InitialTermLoanMemberaesi:TwoThousandTwentyThreeTermLoanCreditFacilityMember2023-07-310001984060us-gaap:OfficeEquipmentMember2024-09-300001984060aesi:BrighamLandManagementLlcMember2023-12-310001984060us-gaap:CommonStockMemberus-gaap:CommonClassBMember2023-09-300001984060us-gaap:PerformanceSharesMember2023-12-310001984060aesi:O2024Q2DividendsMember2024-04-012024-06-300001984060us-gaap:LicenseMembersrt:MaximumMember2024-09-300001984060aesi:LogisticEquipmentMember2023-12-310001984060aesi:HiCrushMembersrt:RestatementAdjustmentMember2024-01-012024-09-300001984060aesi:O2024Q4DividendsMemberus-gaap:SubsequentEventMember2024-10-012024-12-310001984060aesi:BrighamLandManagementLlcMember2023-01-012023-09-300001984060aesi:DelayedDrawTermLoansMemberaesi:TwoThousandTwentyThreeTermLoanCreditFacilityMember2023-07-310001984060aesi:TwoThousandTwentyThreeTermLoanCreditFacilityMember2023-07-012023-09-300001984060us-gaap:PerformanceSharesMember2024-07-012024-09-300001984060aesi:FirstAmendmentToTwoThousandTwentyThreeAblCreditAgreementMember2024-09-300001984060us-gaap:AdditionalPaidInCapitalMember2023-12-310001984060aesi:LegacyOwnersMember2024-09-300001984060us-gaap:PerformanceSharesMembersrt:MinimumMember2024-01-012024-09-300001984060aesi:TwoThousandTwentyThreeABLCreditFacilityMemberus-gaap:StandbyLettersOfCreditMember2024-09-300001984060aesi:HiCrushMemberus-gaap:TradeNamesMember2024-03-05xbrli:purexbrli:sharesiso4217:USDiso4217:USDxbrli:shares

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, 2024

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: 001-41828

 

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

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 24, 2024, the registrant had 110,216,836 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

4

 

Notes to Unaudited Condensed Consolidated Financial Statements

5

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

31

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

50

Item 4.

Controls and Procedures

50

 

 

 

PART II.

OTHER INFORMATION

51

 

 

 

Item 1.

Legal Proceedings

51

Item 1A.

Risk Factors

51

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

51

Item 3.

Defaults Upon Senior Securities

51

Item 4.

Mine Safety Disclosures

51

Item 5.

Other Information

51

Item 6.

Exhibits

52

SIGNATURES

53

 

 

 

 


 

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,

 

 

2024

 

 

2023

 

 

(Unaudited)

 

 

 

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

78,637

 

 

$

210,174

 

Accounts receivable

 

 

179,924

 

 

 

71,170

 

Inventories

 

 

15,777

 

 

 

6,449

 

Spare part inventories

 

 

22,123

 

 

 

15,408

 

Prepaid expenses and other current assets

 

 

20,052

 

 

 

15,485

 

Total current assets

 

 

316,513

 

 

 

318,686

 

Property, plant and equipment, net

 

 

1,449,540

 

 

 

934,660

 

Operating lease right-of-use assets

 

 

13,730

 

 

 

3,727

 

Finance lease right-of-use assets

 

 

5,917

 

 

 

424

 

Goodwill

 

 

75,219

 

 

 

 

Intangible assets

 

 

109,281

 

 

 

1,767

 

Other long-term assets

 

 

3,290

 

 

 

2,422

 

Total assets

 

$

1,973,490

 

 

$

1,261,686

 

Liabilities and stockholders' equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

124,770

 

 

$

60,882

 

Accounts payable - related parties

 

 

235

 

 

 

277

 

Accrued liabilities

 

 

68,458

 

 

 

28,458

 

Current portion of long-term debt

 

 

36,219

 

 

 

 

Current portion of operating lease liabilities

 

 

5,832

 

 

 

1,249

 

Current portion of finance lease liabilities

 

 

3,035

 

 

 

158

 

Current portion of deferred revenue

 

 

6,837

 

 

 

 

Other current liabilities

 

 

12,786

 

 

 

1,568

 

Total current liabilities

 

 

258,172

 

 

 

92,592

 

Long-term debt, net of discount and deferred financing costs

 

 

439,043

 

 

 

172,820

 

Deferred tax liabilities

 

 

207,182

 

 

 

121,529

 

Operating lease liabilities

 

 

8,400

 

 

 

3,498

 

Finance lease liabilities

 

 

3,155

 

 

 

264

 

Deferred revenue

 

 

951

 

 

 

 

Asset retirement obligation

 

 

8,662

 

 

 

2,705

 

Other long-term liabilities

 

 

1,744

 

 

 

454

 

Total liabilities

 

 

927,309

 

 

 

393,862

 

Commitments and contingencies (Note 9)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock, $0.01 par value; 500,000,000 authorized; no shares issued and outstanding as of September 30, 2024 and December 31, 2023.

 

 

 

 

 

 

Common Stock, $0.01 par value, 1,500,000,000 shares authorized, 109,874,855 and 100,025,584 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively.

 

 

1,098

 

 

 

1,000

 

Additional paid-in-capital

 

 

1,045,083

 

 

 

908,079

 

Retained earnings (Accumulated deficit)

 

 

 

 

 

(41,255

)

Total stockholders' equity

 

 

1,046,181

 

 

 

867,824

 

Total liabilities and stockholders’ equity

 

$

1,973,490

 

 

$

1,261,686

 

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

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Product sales

 

$

145,347

 

 

$

114,773

 

 

$

386,989

 

 

$

368,131

 

Service sales

 

 

159,087

 

 

 

42,843

 

 

 

397,630

 

 

 

104,691

 

Total sales

 

 

304,434

 

 

 

157,616

 

 

 

784,619

 

 

 

472,822

 

Cost of sales (excluding depreciation, depletion and accretion expense)

 

 

225,347

 

 

 

67,770

 

 

 

534,229

 

 

 

193,829

 

Depreciation, depletion and accretion expense

 

 

26,069

 

 

 

10,221

 

 

 

68,271

 

 

 

28,173

 

Gross profit

 

 

53,018

 

 

 

79,625

 

 

 

182,119

 

 

 

250,820

 

Selling, general and administrative expense (including stock and unit-based compensation expense of $6,289, $1,414, $15,961, and $3,660, respectively)

 

 

25,463

 

 

 

14,301

 

 

 

80,737

 

 

 

34,988

 

Amortization expense of acquired intangible assets

 

 

3,744

 

 

 

 

 

 

8,573

 

 

 

 

Loss on disposal of assets

 

 

8,574

 

 

 

 

 

 

19,672

 

 

 

 

Insurance recovery (gain)

 

 

 

 

 

 

 

 

(10,000

)

 

 

 

Operating income

 

 

15,237

 

 

 

65,324

 

 

 

83,137

 

 

 

215,832

 

Interest (expense), net

 

 

(11,193

)

 

 

(1,496

)

 

 

(26,629

)

 

 

(5,459

)

Other income

 

 

289

 

 

 

136

 

 

 

450

 

 

 

438

 

Income before income taxes

 

 

4,333

 

 

 

63,964

 

 

 

56,958

 

 

 

210,811

 

Income tax expense

 

 

415

 

 

 

7,637

 

 

 

11,416

 

 

 

20,368

 

Net income

 

$

3,918

 

 

$

56,327

 

 

$

45,542

 

 

$

190,443

 

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.

 

$

3,918

 

 

$

29,440

 

 

$

45,542

 

 

$

69,692

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per common share

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.04

 

 

$

0.51

 

 

$

0.42

 

 

$

1.22

 

Diluted

 

$

0.04

 

 

$

0.51

 

 

$

0.42

 

 

$

1.21

 

Weighted average common shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

109,883

 

 

 

57,237

 

 

 

107,570

 

 

 

57,189

 

Diluted

 

 

111,078

 

 

 

57,928

 

 

 

108,562

 

 

 

57,746

 

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'

 

 

Old Atlas

 

 

Old Atlas

 

 

New Atlas

 

 

Additional

 

 

 

 

 

Stockholders'

 

 

 

 

Noncontrolling

 

 

Equity

 

 

Class A

 

 

Class B

 

 

Common Stock

 

 

Paid-In-

 

 

Retained Earnings

 

 

and Members'

 

 

 

Interest

 

 

Value

 

 

Shares

 

 

Value

 

 

Shares

 

 

Value

 

 

Shares

 

 

Value

 

 

Capital

 

 

(Accumulated Deficit)

 

 

Equity

 

 

Balance at December 31, 2023

 

$

 

 

$

 

 

 

 

 

$

 

 

 

 

 

$

 

 

 

100,026

 

 

$

1,000

 

 

$

908,079

 

 

$

(41,255

)

 

$

867,824

 

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

45,542

 

 

 

45,542

 

 

Dividends

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(66,157

)

 

 

(4,287

)

 

 

(70,444

)

 

Dividend equivalent rights

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,784

)

 

 

 

 

 

(1,784

)

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

15,961

 

 

 

 

 

 

15,961

 

 

Issuance of Common Stock upon vesting of RSUs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

138

 

 

 

1

 

 

 

(1

)

 

 

 

 

 

 

 

Equity issued in connection with Hi-Crush Transaction

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9,711

 

 

 

97

 

 

 

188,985

 

 

 

 

 

 

189,082

 

 

Balance at September 30, 2024

 

$

 

 

$

 

 

 

 

 

$

 

 

 

 

 

$

 

 

 

109,875

 

 

$

1,098

 

 

$

1,045,083

 

 

$

 

 

$

1,046,181

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Redeemable

 

 

Members'

 

 

Old Atlas

 

 

Old Atlas

 

 

New Atlas

 

 

Additional

 

 

 

 

 

Stockholders'

 

 

 

 

Noncontrolling

 

 

Equity

 

 

Class A

 

 

Class B

 

 

Common Stock

 

 

Paid-In-

 

 

Retained Earnings

 

 

and Members'

 

 

 

Interest

 

 

Value

 

 

Shares

 

 

Value

 

 

Shares

 

 

Value

 

 

Shares

 

 

Value

 

 

Capital

 

 

(Accumulated 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

 

 

771,345

 

 

 

(550,918

)

 

 

39,148

 

 

 

391

 

 

 

42,852

 

 

 

429

 

 

 

 

 

 

 

 

 

(221,247

)

 

 

 

 

 

(771,345

)

 

Issuance of Class A common stock in
IPO, net of offering costs

 

 

 

 

 

 

 

 

18,000

 

 

 

180

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

291,056

 

 

 

 

 

 

291,236

 

 

Deferred tax liability arising
from 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.

3


 

Atlas Energy Solutions Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

 

 

Nine Months Ended

 

 

September 30,

 

 

2024

 

 

2023

 

Operating activities:

 

 

 

 

 

 

Net income

 

$

45,542

 

 

$

190,443

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation, depletion and accretion expense

 

 

70,865

 

 

 

29,368

 

Amortization expense of acquired intangible assets

 

 

8,573

 

 

 

 

Amortization of debt discount

 

 

2,535

 

 

 

469

 

Amortization of deferred financing costs

 

 

318

 

 

 

270

 

Loss on disposal of assets

 

 

19,672

 

 

 

 

Stock and unit-based compensation

 

 

15,961

 

 

 

3,660

 

Deferred income tax

 

 

10,433

 

 

 

19,059

 

Other

 

 

(1,655

)

 

 

143

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

(22,361

)

 

 

(28,893

)

Accounts receivable - related party

 

 

 

 

 

868

 

Inventories

 

 

(5,093

)

 

 

1,653

 

Spare part inventories

 

 

(3,613

)

 

 

(4,141

)

Prepaid expenses and other current assets

 

 

(2,387

)

 

 

(10,355

)

Other long-term assets

 

 

(412

)

 

 

(1,681

)

Accounts payable

 

 

27,373

 

 

 

3,877

 

Accounts payable - related parties

 

 

(42

)

 

 

93

 

Deferred revenue

 

 

(5,460

)

 

 

 

Accrued liabilities and other liabilities

 

 

25,358

 

 

 

8,691

 

Net cash provided by operating activities

 

 

185,607

 

 

 

213,524

 

Investing activities:

 

 

 

 

 

 

Purchases of property, plant and equipment

 

 

(297,552

)

 

 

(245,693

)

Hi-Crush acquisition, net of cash acquired

 

 

(142,233

)

 

 

 

Proceeds from insurance recovery

 

 

10,000

 

 

 

 

Net cash used in investing activities

 

 

(429,785

)

 

 

(245,693

)

Financing Activities:

 

 

 

 

 

 

Principal payments on term loan borrowings

 

 

(9,931

)

 

 

(16,573

)

Proceeds from borrowings

 

 

198,500

 

 

 

 

Issuance costs associated with debt financing

 

 

(1,183

)

 

 

(4,397

)

Payments under finance leases

 

 

(1,774

)

 

 

(1,932

)

Repayment of notes payable

 

 

(2,527

)

 

 

 

Dividends and distributions

 

 

(70,444

)

 

 

(42,158

)

Net proceeds from IPO

 

 

 

 

 

303,426

 

Payment of offering costs

 

 

 

 

 

(6,020

)

Member distributions

 

 

 

 

 

(15,000

)

Prepayment fee on 2021 Term Loan Credit Facility

 

 

 

 

 

(2,649

)

Net cash provided by financing activities

 

 

112,641

 

 

 

214,697

 

Net increase (decrease) in cash and cash equivalents

 

 

(131,537

)

 

 

182,528

 

Cash and cash equivalents, beginning of period

 

 

210,174

 

 

 

82,010

 

Cash and cash equivalents, end of period

 

$

78,637

 

 

$

264,538

 

Supplemental cash flow information

 

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

 

Interest

 

$

27,602

 

 

$

10,735

 

Taxes

 

$

2,275

 

 

$

11,403

 

Supplemental disclosure of non-cash investing activities:

 

 

 

 

 

 

Property, plant and equipment in accounts payable and accrued liabilities

 

$

44,654

 

 

$

46,710

 

Asset retirement obligations incurred

 

$

6,743

 

 

$

847

 

Hi-Crush acquisition consideration, equity issuance

 

$

189,082

 

 

$

 

Hi-Crush acquisition consideration, Deferred Cash Consideration Note

 

$

107,189

 

 

$

 

Equipment assets acquired through debt

 

$

5,012

 

 

$

 

Redeemable noncontrolling interest cumulative adjustment to redemption value

 

$

 

 

$

185,412

 

Finance lease assets acquired through debt

 

$

 

 

$

39,454

 

Finance lease liabilities converted to debt

 

$

 

 

$

42,795

 

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

4


 

Atlas Energy Solutions Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

Note 1 – Business and Organization

Atlas Energy Solutions Inc., a Delaware corporation (f/k/a New Atlas HoldCo. Inc.) (“New Atlas” and together with its subsidiaries “we,” “us,” “our,” or the “Company”), was formed on June 28, 2023, pursuant to the laws of the State of Delaware, and is the successor to AESI Holdings Inc. (f/k/a Atlas Energy Solutions Inc.), a Delaware corporation (“Old Atlas”). New Atlas is a holding company and the ultimate parent company of Atlas Sand Company, LLC (“Atlas LLC”), a Delaware limited liability company formed on April 20, 2017. Atlas LLC is a producer of high-quality, locally sourced 100 mesh and 40/70 sand used as a proppant during the well completion process. Proppant is necessary to facilitate the recovery of hydrocarbons from oil and natural gas wells. One hundred percent of Atlas LLC’s sand reserves are located in Texas within the Permian Basin and operations consist of proppant production and processing facilities, including four facilities near Kermit, Texas (together, the “Kermit facilities”), a fifth facility near Monahans, Texas (the “Monahans facility”), and the OnCore distributed mining network.

We are currently building a logistics platform with the goal of increasing the efficiency, safety and sustainability of the oil and natural gas industry within the Permian Basin. This will include the Dune Express, an overland conveyor infrastructure solution currently under construction, coupled with our growing fleet of fit-for-purpose trucks and trailers.

We sell products and services primarily to oil and natural gas exploration and production companies and oilfield services companies primarily under supply agreements and also through spot sales on the open market.

Initial Public Offering

On March 13, 2023, Old Atlas completed its initial public offering (the “IPO”) of 18,000,000 shares of Class A common stock, par value $0.01 per share (the “Old Atlas Class A Common Stock”) at a price of $18.00 per share. The IPO generated $324.0 million of gross proceeds and net proceeds of approximately $291.2 million. The gross proceeds were offset by $20.6 million of underwriting discounts and commissions, $5.9 million of current offering costs in 2023, and $6.3 million in offering costs paid in 2022.

Reorganization

In connection with the IPO and pursuant to a master reorganization agreement dated March 8, 2023, by and among Old Atlas, Atlas Sand Management Company, LLC, a Texas limited liability company (“ASMC”), Atlas LLC, Atlas Sand Holdings, LLC, a Delaware limited liability company (“Holdings”), Atlas Sand Operating, LLC, a Delaware limited liability company (“Atlas Operating”), Atlas Sand Holdings II, LLC, a Delaware limited liability company (“Holdings II”), Atlas Sand Management Company II, LLC, a Delaware limited liability company (“ASMC II”), and Atlas Sand Merger Sub, LLC, a Delaware limited liability company (“Merger Sub”), Old Atlas and the parties thereto completed certain restructuring transactions (the “Reorganization”). As part of the Reorganization:

Merger Sub merged with and into Atlas LLC, with Atlas LLC surviving as a wholly-owned subsidiary of Atlas Operating;
Holdings, Holdings II and ASMC II were formed (collectively with ASMC, the “HoldCos”), through which certain holders who previously held membership interests in Atlas LLC (the “Legacy Owners”) were issued the membership interests in Atlas Operating, as represented by a single class of common units (“Operating Units”);
certain Legacy Owners, through the HoldCos, transferred all or a portion of their Operating Units and voting rights, as applicable, in Atlas Operating to Old Atlas in exchange for an aggregate of 39,147,501 shares of Old Atlas Class A Common Stock and, in the case of Legacy Owners that continued to hold Operating Units through the HoldCos, an aggregate of 42,852,499 shares of Class B Common Stock, par value $0.01 per share, of Old Atlas (the “Old Atlas Class B Common Stock,” and together with the Old Atlas Class A Common Stock, the “Old Atlas Common Stock”), so that such Legacy Owners that continued to hold Operating Units also held, through the HoldCos, one share of Old Atlas Class B Common Stock for each Operating Unit held by them immediately following the Reorganization;
the 1,000 shares of Old Atlas Class A Common Stock issued to Atlas LLC at the formation of Old Atlas were redeemed and canceled for nominal consideration; and
Old Atlas contributed all of the net proceeds received by it in the IPO to Atlas Operating in exchange for a number of Operating Units equal to the number of shares of Old Atlas Class A Common Stock outstanding after the IPO, and Atlas Operating further contributed the net proceeds received to Atlas LLC.

5


 

As a result of the Reorganization, (i) Old Atlas’s sole material asset consisted, and still consists, of Operating Units, (ii) Atlas Operating’s sole material asset consisted, and still consists, of 100% of the membership interests in Atlas LLC and (iii) Atlas LLC owned, and still owns, all of the Company’s operating assets. Old Atlas is the managing member of Atlas Operating and is responsible for all operational, management and administrative decisions relating to Atlas LLC’s business and consolidates the financial results of Atlas LLC and its subsidiaries.

As a result of the IPO and Reorganization:

the Legacy Owners collectively owned all of the outstanding shares of Old Atlas Class B Common Stock and 39,147,501 shares of Old Atlas Class A Common Stock, collectively representing 82.0% of the voting power and 68.5% of the economic interest of Old Atlas (and 82.0% of the economic interest of Atlas LLC, including both direct and indirect ownership interests) at the closing of the IPO and Reorganization;
Old Atlas owned an approximate 57.1% interest in Atlas Operating; and
the Legacy Owners that continued to hold Operating Units collectively owned an approximate 42.9% interest in Atlas Operating.

On March 13, 2023, the date on which Old Atlas closed the IPO, a corresponding deferred tax liability of approximately $27.5 million was recorded associated with the differences between the tax and book basis of the investment in Atlas LLC. The offset of the deferred tax liability was recorded to additional paid-in capital. As there was no change in control of Atlas Operating, Atlas LLC, or the businesses or subsidiaries held by Atlas LLC as a result of the Reorganization, purchase accounting was not required and the Legacy Owners’ interests in Operating Units were recognized as a noncontrolling interest in Atlas Operating.

On September 13, 2023, we distributed the Operating Units and shares of Old Atlas Common Stock previously held by the HoldCos to the Legacy Owners in accordance with the distribution provisions of each respective HoldCo operating agreement. Immediately following the distribution, the Legacy Owners held shares of Old Atlas Class A Common Stock or Old Atlas Class B Common Stock (and corresponding Operating Units) directly.

Up-C Simplification

On October 2, 2023, Old Atlas and the Company completed the Up-C Simplification (as defined below) contemplated by the Master Reorganization Agreement (the “Master Reorganization Agreement”), dated as of July 31, 2023, by and among the Company, Old Atlas, Atlas Operating, AESI Merger Sub Inc., a Delaware corporation (“PubCo Merger Sub”), Atlas Operating Merger Sub, LLC, a Delaware limited liability company (“Opco Merger Sub” and, together with PubCo Merger Sub, the “Merger Subs”), and Holdings, in order to, among other things, reorganize under a new public holding company (the “Up-C Simplification”).

Pursuant to the Master Reorganization Agreement, (a) PubCo Merger Sub merged with and into Old Atlas (the “PubCo Merger”), as a result of which (i) each share of Old Atlas Class A Common Stock then issued and outstanding was exchanged for one share of Common Stock of New Atlas, par value $0.01 per share (the “New Atlas Common Stock” or the “Common Stock”), (ii) all of the shares of Old Atlas Class B Common Stock then issued and outstanding were surrendered and cancelled for no consideration and (iii) Old Atlas survived the PubCo Merger as a direct, wholly-owned subsidiary of the Company; and (b) Opco Merger Sub merged with and into Atlas Operating (the “Opco Merger” and, together with the PubCo Merger, the “Mergers”), as a result of which (i) each Operating Unit then issued and outstanding, other than those Operating Units held by Old Atlas, was exchanged for one share of New Atlas Common Stock and (ii) Atlas Operating became a wholly-owned subsidiary of New Atlas.

In connection with the Up-C Simplification:

each share of Old Atlas Class A Common Stock issued and outstanding immediately prior to the effective time of the Mergers (the “Effective Time”) was exchanged for one share of New Atlas Common Stock and the holders of Old Atlas Class A Common Stock became stockholders of New Atlas;
all of the Old Atlas Class B Common Stock issued and outstanding immediately prior to the Effective Time was surrendered and cancelled for no consideration;
each Operating Unit issued and outstanding immediately prior to the Effective Time, other than Operating Units held by Old Atlas, was exchanged for one share of New Atlas Common Stock, and the holders of such Operating Units became stockholders of New Atlas;
Old Atlas continues to hold all of the issued and outstanding Operating Units it held as of immediately prior to the Effective Time, such Operating Units were otherwise unaffected by the Up-C Simplification (including the Opco Merger), and such Operating Units, together with the Operating Units received by New Atlas in connection with the Opco Merger, constitute all of the Operating Units currently issued and outstanding;
Old Atlas became a direct, wholly-owned subsidiary of New Atlas, and all of the Old Atlas Class A Common Stock then held by New Atlas was recapitalized into a single share;

6


 

as of the Effective Time, New Atlas assumed (a) the Atlas Energy Solutions Inc. Long Term Incentive Plan (the “LTIP”), (b) all awards of restricted stock units and performance share units, in each case, whether vested or unvested, that were then outstanding under the LTIP, (c) the grant notices and agreements evidencing such awards, and (d) the then remaining unallocated share reserve issuable under the LTIP; and the terms and conditions that were in effect immediately prior to the Up-C Simplification under each outstanding award assumed by New Atlas continue in full force and effect after the Up-C Simplification, with certain exceptions to reflect the completion of the Up-C Simplification, such as each award denominated with reference to shares of New Atlas Common Stock instead of Old Atlas Class A Common Stock and the performance share unit awards being in reference to performance of New Atlas instead of performance of Old Atlas (with respect to the portion of the applicable performance period following the Up-C Simplification);
as of the Effective Time, (a) New Atlas assumed Old Atlas’s existing Management Change in Control Severance Plan (and each participation agreement thereunder that was then outstanding) and (b) the terms and conditions of the director compensation program applicable to members of the board of directors of Old Atlas (and any committees thereof) were applied instead to members of the board of directors of New Atlas (the “Board”) (and, any committees thereof) (and any portion of such compensation to be granted in the form of equity-based awards will be granted in awards denominated with reference to shares of New Atlas Common Stock instead of Old Atlas Class A Common Stock); and