Atlas Energy Solutions (AESI) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenues reached $288 million, up 49% sequentially, driven by the Hi-Crush acquisition and logistics expansion, with a full quarter of Hi-Crush results included.

• Adjusted EBITDA was $72 million (25% margin), net income was $14.8 million (5% margin), and Adjusted Free Cash Flow was $67 million (23% margin).

• The Kermit plant fire in April caused operational challenges and $11.1 million in asset losses, but the facility was fully rebuilt by end of June with enhanced safety features and $10 million insurance recovery recognized.

• Dune Express conveyor construction is on time and on budget, with commissioning expected by year-end 2024.

• Declared dividends of $0.21, $0.22, and $0.23 per share in Q1, Q2, and post-quarter, respectively, moving to a fixed ordinary dividend structure.

Financial highlights

• Q2 2024 total sales were $288 million on 4.9 million tons, with product sales of $128 million and service sales of $159 million, reflecting Hi-Crush integration.

• Cost of sales (ex-DD&A) was $202 million; plant OpEx (ex-DD&A) was $68 million ($13.84/ton), elevated due to Kermit fire impacts.

• Q2 SG&A was $27 million, inflated by $6 million in acquisition costs and $5 million in stock-based comp.

• Operating cash flow was $61 million; adjusted free cash flow was $67 million (23% margin).

• Net cash used in investing activities increased to $353.5 million, mainly due to the Hi-Crush acquisition and capital spending.

Outlook and guidance

• Q3 2024 volumes expected to rise ~20% sequentially as Kermit ramps up, with EBITDA guidance of $90–$100 million and a higher exit run rate.

• Dune Express conveyor system remains on track for Q4 2024 launch.

• SG&A expected to normalize to ~$15 million in Q3.

• CapEx to decline significantly in 2025 as Dune Express completes.

• Management expects stable Permian Basin proppant supply in H2 2024, with potential tightening in 2025 if commodity prices rise.