Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil Hydroworld Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Atlas Energy Solutions Announces Fourth Quarter and Year End 2023 Results; Signs Transformative Agreement to Acquire Hi-Crush Inc. By: Atlas Energy Solutions Inc. via Business Wire February 27, 2024 at 06:30 AM EST Atlas Energy Solutions Inc. (NYSE: AESI) (“Atlas” or the “Company”) today reported financial and operating results for the fiscal year ended December 31, 2023. Year End 2023 Financial Highlights and Operational Updates Total sales of $614.0 million (on sales volumes of 11.0 million tons) Net income of $226.5 million (37% Net Income Margin) Adjusted EBITDA of $329.7 million (54% Adjusted EBITDA Margin) (1) Net cash provided by operating activities of $299.0 million Adjusted Free Cash Flow of $291.1 million (47% Adjusted Free Cash Flow Margin) (1) Dune Express construction remains on-time and on-budget New Kermit facility was fully commissioned in December 2023 Increased quarterly dividend by 5% to $0.21 per share ($0.16 per share fixed, $0.05 per share variable), payable February 29, 2024 Announced transformative acquisition of Hi-Crush Inc. Please refer to our accompanying materials on this acquisition released today Financial Summary For Year Ended December 31, 2023 2022 2021 Sales $ 613,960 $ 482,724 $ 172,404 Net income $ 226,493 $ 217,006 $ 4,258 Net Income Margin 37 % 45 % 2 % Adjusted EBITDA $ 329,655 $ 264,026 $ 71,968 Adjusted EBITDA Margin 54 % 55 % 42 % Net cash provided by operating activities $ 299,027 $ 206,012 $ 21,356 Adjusted Free Cash Flow $ 291,131 $ 228,553 $ 64,253 Adjusted Free Cash Flow Margin 47 % 47 % 37 % (1) Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Free Cash Flow and Adjusted Free Cash Flow Margin are non-GAAP financials measures. See Non-GAAP Financial Measures for a discussion of these measures and a reconciliation of these measures to our most directly comparable financial measures calculated and presented in accordance with GAAP. Bud Brigham, Founder, Executive Chairman and CEO, commented, “This was an exceptional year for Atlas. We completed our IPO, generated Adjusted EBITDA of $329.7 million, grew our dividend to $0.21 per share, placed our new Kermit plant in-service, fully launched our differentiated high-capacity trucking business, kicked-off and have made great progress on the construction of the Dune Express, and shortly after the end of this year signed-up a substantial and exciting acquisition of Hi-Crush. In so many exciting ways, this is a more advanced proppant and logistics business in February 2024 than February 2023, and we are well on our way to achieving our goal of being logistically advantaged to every wellhead in the Permian Basin." John Turner, President & CFO, added, “In our view, the acquisition of Hi-Crush announced today furthers Atlas's position as the premier proppant and logistics provider in the Permian, and as one of the premier producers in all of North America. The strategic benefits are clearly evident as the distributed mining assets add customers in the Midland Basin, further diversifying our customer portfolio. The Kermit assets provide additional reserves and production on the giant open dunes, and the proximity of those assets to our existing operations provide ample opportunity for operational synergies. Additionally, the acquired contracts add significant free cash flow at an attractive valuation, which we expect to accelerate the return of capital to our shareholders. Last but importantly, the distributed mining assets complement and further our logistics mission to remove trucks from the public roadways of the Permian, which drives down costs and emissions while driving up reliability, importantly while also making the roadways safer for the local communities." Year End 2023 Financial Results Total sales for the year ended December 31, 2023 increased $131.2 million, or 27.2% when compared to the year ended December 31, 2022, to $614.0 million. Product sales increased $59.7 million, or 14.6% when compared to the prior year, to $468.1 million, driven by an increase in both sales volumes and sales price (11.0 million tons at $42.63 per ton vs. 10.2 million tons at $40.10 per ton). Given our heavily contracted volume position during the year, this sequential price increase is a function of higher-priced contracts realized during the year. Service sales increased by $71.6 million, or 96.3% when compared to the prior year, to $145.8 million. The increase in service sales was due to an increase in the number of active jobs, as well as by a higher asset utilization on continued customer adoptions of our single- and multi-trailer logistics offerings. Cost of sales (excluding depreciation, depletion and accretion expense) (“cost of sales”) for the year ended December 31, 2023 increased by $61.5 million, or 30.9% when compared to the prior year, to $260.4 million. The increase in our cost of sales was primarily driven by an increase in sales volumes and higher trucking and last mile logistics costs resulting from the increased size and utilization of our fleet, which were partially offset by lower contract mining costs and a lower royalty expense as a result of the removal of the Kermit overriding royalty, which ceased towards the end of the first quarter of 2023 in connection with our initial public offering. Selling, general and administrative expenses (“SG&A”) for the year ended December 31, 2023 increased by $24.3 million, or 100.0% when compared to the prior year, to $48.6 million, driven primarily by increases in wages and benefits as a result of an increased employee base, and higher professional and consulting fees associated with our initial public offering, corporate reorganization and acquisition of Hi-Crush. This includes $5.3 million of non-recurring transaction costs and $7.4 million in stock and unit based compensation. Net income for the year ended December 31, 2023 was $226.5 million, and Adjusted EBITDA for the year ended December 31, 2023 was $329.7 million. Fourth Quarter 2023 Financial Results Fourth quarter 2023 total sales decreased $16.5 million, or 10.5% sequentially, to $141.1 million. Product sales decreased $14.8 million, or 12.9%, sequentially, to $100.0 million (2.6 million tons at $39.00 per ton vs. 2.8 million tons at $40.62 per ton), driven by a decrease in both sales volumes and price, driven primarily by a slow down in drilling and completions activity. Service sales decreased by $1.7 million, or 4.0%, sequentially, to $41.1 million. Fourth quarter 2023 cost of sales decreased by $1.2 million, or 1.8%, sequentially, to $66.6 million, which consists of product costs of sales of $30.3 million and services cost of sales of $36.3 million. SG&A for the fourth quarter of 2023 decreased $0.7 million, or 4.6%, sequentially, to $13.6 million. Net Income for the fourth quarter of 2023 was $36.1 million, representing a decrease of $20.3 million, or 36.0%, sequentially. Adjusted EBITDA for the fourth quarter of 2023 was $68.7 million, representing a decrease of $15.4 million, or 18.3%, sequentially. Liquidity, Capital Expenditures and Other As of December 31, 2023, the Company’s total liquidity was $384.1 million, which was comprised of $210.2 million in cash and cash equivalents (held in cash, CDs, and one- and two-month Treasury bills), $73.9 million of availability under the Company’s ABL Facility, and $100.0 million of availability under the Company's undrawn Delayed Draw Term Loan Facility; the Company had no borrowings outstanding under the ABL Facility and $1.1 million of outstanding undrawn letters of credit. Net cash used in investing activities was $365.5 million for the year ended December 31, 2023, driven largely by costs associated with the construction of the new Kermit facility and construction of the Dune Express. As of December 31, 2023, the Company's fully diluted share count outstanding was 100,025,584. Subsequent Events Acquisition of Hi-Crush Subsequent to year end, Atlas announced that it has entered into a definitive agreement with Hi-Crush Inc. (“Hi-Crush”), pursuant to which Atlas will acquire substantially all of Hi-Crush’s Permian Basin proppant production assets and North American logistics operations in a transaction valued at $450 million. The mix of consideration includes approximately $150 million in cash at close, 9,711,432 million shares of AESI (valued at $175 million), and $125 million in deferred cash in the form of a Seller’s Note. Both the cash consideration and the principal amount of the Seller's Note are subject to revision for customary post-closing adjustments. For more information regarding the transaction, please refer to the Company’s website at https://ir.atlas.energy/ for the acquisition press release and related presentation. Acquisition Financing In connection with the acquisition, we upsized our ABL facility to $125.0 million, with the expectation of drawing $50.0 million at closing. In addition, we installed a new $150.0 million acquisition term loan facility with Stonebriar Commercial Finance. These additional credit facilities will combine to fund the upfront cash consideration agreed to under the Merger Agreement and the near-term growth capital expenditures for OnCore. Quarterly Cash Dividend On February 8, 2024, the Board of Directors (the “Board") of Atlas declared a dividend to common stockholders of $0.21 per share, or approximately $21.0 million in aggregate to shareholders. The dividend includes a $0.16 per share base dividend and a $0.05 per share variable dividend. As previously announced, the dividend will be payable on February 29, 2024 to shareholders of record at the close of business on February 22, 2024. Conference Call Information The Company will host a conference call to discuss financial and operational results on Tuesday, February 27, 2024 at 8:00am Central Time (9:00am Eastern Time). Individuals wishing to participate in the conference call should dial (877) 407-4133. A live webcast will be available at https://ir.atlas.energy/. Please access the webcast or dial in for the call at least 10 minutes ahead of the start time to ensure a proper connection. An archived version of the conference call will be available on the Company’s website shortly after the conclusion of the call. The Company will also post an updated investor presentation titled “Investor Presentation February 2024”, in addition to a "Year End 2023 Capital Projects Update" video, at https://ir.atlas.energy/ in the "Presentations” section under “News & Events” tab on the Company’s Investor Relations webpage prior to the conference call. About Atlas Energy Solutions Our company was founded in 2017 by long-time E&P operators and led by Bud Brigham. Our experience as E&P operators, combined with our unique asset base and focus on using technology to deliver novel solutions to our customers’ toughest challenges and mission-critical needs differentiates us as the proppant and logistics provider of choice in the Permian Basin. Atlas is a leader in the proppant and proppant logistics industry and is currently solely focused on serving customers in the Permian Basin of West Texas and New Mexico, the most active oil and natural gas producing regions in North America. Our Kermit, TX and Monahans, TX facilities are strategically located and specifically designed to maximize reliability of supply and product quality, and our deployment of trucking assets and the Dune Express is expected to drive significant logistics efficiencies. Our core mission is to maximize value for our stockholders by generating strong cash flow and allocating our capital resources efficiently, including providing a regular and durable return of capital to our investors through industry cycles. Further, we recognize that our long-term profitability is maximized by being good stewards of the environments and communities in which we operate. In our pursuit of this mission, we work to improve the processes involved in the development of hydrocarbons, which we believe will ultimately contribute to providing individuals with access to the energy they need to sustain or improve their quality of life in a clean, safe, and efficient manner. We take great pride in contributing positively to the development of the hydrocarbons that power our lives. Cautionary Statement Regarding Forward-Looking Statements This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Statements that are predictive or prospective in nature, that depend upon or refer to future events or conditions or that include the words “may,” “assume,” “forecast,” “position,” “strategy,” “potential,” “continue,” “could,” “will,” “plan,” “project,” “budget,” “predict,” “pursue,” “target,” “seek,” “objective,” “believe,” “expect,” “anticipate,” “intend,” “estimate” and other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters identify forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements about the Hi-Crush Inc. acquisition and the anticipated benefits of such transaction, our business strategy, our industry, our future operations and profitability, expected capital expenditures and the impact of such expenditures on our performance, our financial position, production, revenues and losses, our capital programs, management changes, current and potential future long-term contracts and our future business and financial performance. Although forward-looking statements reflect our good faith beliefs at the time they are made, we caution you that these forward-looking statements are subject to a number of risks and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks include but are not limited to: commodity price volatility stemming from the ongoing armed conflicts between Russia and Ukraine and Israel and Hamas; increasing hostilities and instability in the Middle East; adverse developments affecting the financial services industry; our ability to complete growth projects, including the Dune Express, on time and on budget; the risk that stockholder litigation in connection with our recent corporate reorganization may result in significant costs of defense, indemnification and liability; changes in general economic, business and political conditions, including changes in the financial markets; transaction costs; actions of OPEC+ to set and maintain oil production levels; the level of production of crude oil, natural gas and other hydrocarbons and the resultant market prices of crude oil; inflation; environmental risks; operating risks; regulatory changes; lack of demand; market share growth; the uncertainty inherent in projecting future rates of reserves; production; cash flow; access to capital; the timing of development expenditures; and other factors discussed or referenced in our filings made from time to time with the U.S. Securities and Exchange Commission (“SEC”), including those discussed under the heading “Risk Factors” in our prospectus, dated September 11, 2023, filed with the SEC pursuant to Rule 424(b) under the Securities Act on September 12, 2023 in connection with our recent corporate reorganization, and any subsequently filed Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law. Atlas Energy Solutions Inc. Condensed Consolidated Statements of Income (in thousands, except per share data) Three Months Ended Year Ended December 31, 2023 September 30, 2023 December 31, 2022 December 31, 2023 December 31, 2022 December 31, 2021 (unaudited) (unaudited) (unaudited) Product sales $ 99,988 $ 114,773 $ 121,881 $ 468,119 $ 408,446 $ 142,519 Service sales 41,150 42,843 27,984 145,841 74,278 29,885 Total sales 141,138 157,616 149,865 613,960 482,724 172,404 Cost of sales (excluding depreciation, depletion and accretion expense) 66,567 67,770 67,285 260,396 198,918 84,656 Depreciation, depletion and accretion expense 11,625 10,221 7,791 39,798 27,498 23,681 Gross profit 62,946 79,625 74,789 313,766 256,308 64,067 Selling, general and administrative expense (including stock and unit-based compensation expense of $3,749, $1,414, $135, $7,409, $678, and $129, respectively.) 13,648 14,301 7,903 48,636 24,317 17,071 Operating income 49,298 65,324 66,886 265,130 231,991 46,996 Interest expense, net (2,230 ) (1,496 ) (3,990 ) (7,689 ) (15,760 ) (42,198 ) Other income (8 ) 136 121 430 2,631 291 Income before income taxes 47,060 63,964 63,017 257,871 218,862 5,089 Income tax expense 11,010 7,637 434 31,378 1,856 831 Net income $ 36,050 $ 56,327 $ 62,583 $ 226,493 $ 217,006 $ 4,258 Less: Pre-IPO net income attributable to Atlas Sand Company, LLC — — 54,561 Less: Net income attributable to redeemable noncontrolling interest 313 26,887 66,503 Net income attributable to Atlas Energy Solutions, Inc. $ 35,737 $ 29,440 $ 105,429 Net income per common share Basic $ 0.36 $ 0.51 $ 1.50 Diluted $ 0.36 $ 0.51 $ 1.48 Weighted average common shares outstanding Basic 99,566 57,237 70,450 Diluted 100,242 57,928 71,035 Atlas Energy Solutions Inc. Condensed Consolidated Statements of Cash Flows (in thousands) Three Months Ended Year Ended December 31, 2023 September 30, 2023 December 31, 2022 December 31, 2023 December 31, 2022 December 31, 2021 (unaudited) (unaudited) (unaudited) Operating activities: Net income $ 36,050 $ 56,327 $ 62,583 $ 226,493 $ 217,006 $ 4,258 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion and accretion expense 12,266 10,746 8,089 41,634 28,617 24,604 Loss on extinguishment of debt — — — — — 11,922 Amortization of debt discount 292 231 119 761 457 7,320 Amortization of deferred financing costs 67 79 110 337 442 739 Stock and unit-based compensation 3,749 1,414 135 7,409 678 129 Deferred income tax 10,142 9,432 (2 ) 29,201 (2 ) 360 Interest paid-in-kind through issuance of additional term loans — — — — — 3,039 Repayment of paid-in-kind interest borrowings — — — — — (22,233 ) Commodity derivatives gain — — 15 — (1,842 ) (55 ) Settlements on commodity derivatives — — 141 — 2,137 — Other (4 ) (42 ) 232 139 293 (105 ) Changes in operating assets and liabilities: 22,941 (22,781 ) (21,410 ) (6,947 ) (41,774 ) (8,622 ) Net cash provided by operating activities 85,503 55,406 50,012 299,027 206,012 21,356 Investing activities: Purchases of property, plant and equipment (119,793 ) (98,858 ) (35,428 ) (365,486 ) (89,592 ) (19,371 ) Net cash used in investing activities (119,793 ) (98,858 ) (35,428 ) (365,486 ) (89,592 ) (19,371 ) Financing Activities: Proceeds from equity issuances — — — — — 12,613 Net proceeds from IPO — — — 303,426 — — Payment of offering costs — — — (6,020 ) — — Member distributions prior to IPO — — (15,000 ) (15,000 ) (45,024 ) (10,000 ) Proceeds from term loan borrowings — — — — — 178,200 Principal payments on term loan borrowings — — (7,987 ) (16,573 ) (28,544 ) (172,872 ) Prepayment fee on 2021 Term Loan Credit Facility — (2,649 ) — (2,649 ) — — Debt extinguishment cost — — — — — (4,514 ) Issuance costs associated with debt financing — (3,645 ) — (4,397 ) (233 ) (660 ) Payments under finance and capital leases (69 ) (232 ) (307 ) (2,001 ) (1,010 ) (423 ) Dividends and distributions (20,005 ) (27,158 ) — (62,163 ) — — Net cash provided by (used in) financing activities (20,074 ) (33,684 ) (23,294 ) 194,623 (74,811 ) 2,344 Net increase (decrease) in cash and cash equivalents (54,364 ) (77,136 ) (8,710 ) 128,164 41,609 4,329 Cash and cash equivalents, beginning of period 264,538 341,674 90,720 82,010 40,401 36,072 Cash and cash equivalents, end of period $ 210,174 $ 264,538 $ 82,010 $ 210,174 $ 82,010 $ 40,401 Atlas Energy Solutions Inc. Condensed Consolidated Balance Sheets (in thousands) As of As of December 31,2023 December 31,2022 Assets Current assets: Cash and cash equivalents $ 210,174 $ 82,010 Accounts receivable, including related parties 71,170 74,392 Inventories, prepaid expenses and other current assets 37,342 22,329 Total current assets 318,686 178,731 Property, plant and equipment, net 934,660 541,524 Right-of-use assets 4,151 23,222 Other long-term assets 4,189 7,522 Total assets $ 1,261,686 $ 750,999 Liabilities, redeemable noncontrolling interest, and stockholders' and members' equity Current liabilities: Accounts payable, including related parties $ 61,159 $ 31,799 Accrued liabilities and other current liabilities 31,433 36,289 Current portion of long-term debt — 20,586 Total current liabilities 92,592 88,674 Long-term debt, net of discount and deferred financing costs 172,820 126,588 Deferred tax liabilities 121,529 1,906 Other long-term liabilities 6,921 22,474 Total liabilities 393,862 239,642 Total stockholders' and members' equity 867,824 511,357 Total liabilities, redeemable noncontrolling interest and stockholders’ and members’ equity $ 1,261,686 $ 750,999 Non-GAAP Financial Measures Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Free Cash Flow, Adjusted Free Cash Flow Margin, Adjusted Free Cash Flow Conversion and Maintenance Capital Expenditures are non-GAAP supplemental financial measures used by our management and by external users of our financial statements such as investors, research analysts and others, in the case of Adjusted EBITDA, to assess our operating performance on a consistent basis across periods by removing the effects of development activities, provide views on capital resources available to organically fund growth projects and, in the case of Adjusted Free Cash Flow, assess the financial performance of our assets and their ability to sustain dividends or reinvest to organically fund growth projects over the long term without regard to financing methods, capital structure, or historical cost basis. These measures do not represent and should not be considered alternatives to, or more meaningful than, net income, income from operations, net cash provided by operating activities or any other measure of financial performance presented in accordance with GAAP as measures of our financial performance. Adjusted EBITDA and Adjusted Free Cash Flow have important limitations as analytical tools because they exclude some but not all items that affect net income, the most directly comparable GAAP financial measure. Our computation of Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Free Cash Flow, Adjusted Free Cash Flow Margin, Adjusted Free Cash Flow Conversion and Maintenance Capital Expenditures may differ from computations of similarly titled measures of other companies. Non-GAAP Measure Definitions: We define Adjusted EBITDA as net income before depreciation, depletion and accretion, interest expense, income tax expense, stock and unit-based compensation, loss on extinguishment of debt, unrealized commodity derivative gain (loss), and non-recurring transaction costs. Management believes Adjusted EBITDA is useful because it allows management to more effectively evaluate the Company’s operating performance and compare the results of its operations from period to period and against our peers without regard to financing method or capital structure. We exclude the items listed above from net income in arriving at Adjusted EBITDA because these amounts can vary substantially from company to company within our industry depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired. We define Adjusted EBITDA Margin as Adjusted EBITDA divided by total sales. We define Adjusted Free Cash Flow as Adjusted EBITDA less Maintenance Capital Expenditures. Management believes that Adjusted Free Cash Flow is useful to investors as it provides a measure of the ability of our business to generate cash. We define Adjusted Free Cash Flow Margin as Adjusted Free Cash Flow divided by total sales. We define Adjusted Free Cash Flow Conversion as Adjusted Free Cash Flow divided by Adjusted EBITDA. We define Maintenance Capital Expenditures as capital expenditures excluding growth capital expenditures. Atlas Energy Solutions Inc. – Supplemental Information Reconciliation of Adjusted EBITDA and Adjusted Free Cash Flow to Net Income (unaudited, in thousands) Three Months Ended Year Ended December 31, 2023 September 30, 2023 December 31, 2022 December 31, 2023 December 31, 2022 December 31, 2021 Net income $ 36,050 $ 56,327 $ 62,583 $ 226,493 $ 217,006 $ 4,258 Depreciation, depletion and accretion expense 12,266 10,746 8,089 41,634 28,617 24,604 Interest expense 4,731 4,673 3,993 17,452 15,803 30,290 Income tax expense 11,010 7,637 434 31,378 1,856 831 EBITDA $ 64,057 $ 79,383 $ 75,099 $ 316,957 $ 263,282 $ 59,983 Stock and unit-based compensation 3,749 1,414 135 7,409 678 129 Loss on extinguishment of debt — — — — — 11,922 Unrealized commodity derivative loss — — 1 — 66 (66 ) Non-recurring transaction costs 892 3,281 — 5,289 — — Adjusted EBITDA $ 68,698 $ 84,078 $ 75,235 $ 329,655 $ 264,026 $ 71,968 Maintenance Capital Expenditures $ 12,180 $ 15,557 $ 8,186 $ 38,524 $ 35,473 $ 7,715 Adjusted Free Cash Flow $ 56,518 $ 68,521 $ 67,049 $ 291,131 $ 228,553 $ 64,253 Atlas Energy Solutions Inc. – Supplemental Information Reconciliation of Adjusted Free Cash Flow to Net Cash Provided by Operating Activities (unaudited, in thousands, except percentages) Three Months Ended Year Ended December 31, 2023 September 30, 2023 December 31, 2022 December 31, 2023 December 31, 2022 December 31, 2021 Net cash provided by operating activities $ 85,503 $ 55,406 $ 50,012 $ 299,027 $ 206,012 $ 21,356 Repayment of paid-in-kind interest borrowings — — — — — 22,233 Current income tax expense (benefit)(1) 868 (1,795 ) 436 2,177 1,858 471 Change in operating assets and liabilities (22,941 ) 22,781 21,410 6,947 41,774 8,622 Cash interest expense(1) 4,371 4,363 3,764 16,354 14,904 19,173 Maintenance capital expenditures(1) (12,180 ) (15,557 ) (8,186 ) (38,524 ) (35,473 ) (7,715 ) Non-recurring transaction costs 892 3,281 — 5,289 — — Other 5 42 (387 ) (139 ) (522 ) 113 Adjusted Free Cash Flow $ 56,518 $ 68,521 $ 67,049 $ 291,131 $ 228,553 $ 64,253 Adjusted EBITDA Margin 49 % 53 % 50 % 54 % 55 % 42 % Adjusted Free Cash Flow Margin 40 % 43 % 45 % 47 % 47 % 37 % Adjusted Free Cash Flow Conversion 82 % 81 % 89 % 88 % 87 % 89 % (1) A reconciliation of the adjustment of these items used to calculate Adjusted Free Cash Flow to the Consolidated Financial Statements is included below. Atlas Energy Solutions Inc. – Supplemental Information Reconciliation of Maintenance Capital Expenditures to Purchase of Property, Plant and Equipment (unaudited, in thousands) Three Months Ended Year Ended December 31, 2023 September 30, 2023 December 31, 2022 December 31, 2023 December 31, 2022 December 31, 2021 Maintenance Capital Expenditures, accrual basis reconciliation: Purchases of property, plant and equipment $ 119,793 $ 98,858 $ 35,428 $ 365,486 $ 89,592 $ 19,371 Changes in operating assets and liabilities associated with investing activities(1) (1,828 ) 40,153 6,031 66,132 20,747 2,362 Less: Growth capital expenditures (105,785 ) (123,454 ) (33,273 ) (393,094 ) (74,866 ) (14,018 ) Maintenance Capital Expenditures, accrual basis $ 12,180 $ 15,557 $ 8,186 $ 38,524 $ 35,473 $ 7,715 (1) Positive working capital changes reflect capital expenditures in the current period that will be paid in a future period. Negative working capital changes reflect capital expenditures incurred in a prior period but paid during the period presented. Atlas Energy Solutions Inc. – Supplemental Information Reconciliation of Current Income Tax Expense to Income Tax Expense (unaudited, in thousands) Three Months Ended Year Ended December 31, 2023 September 30, 2023 December 31, 2022 December 31, 2023 December 31, 2022 December 31, 2021 Current tax expense reconciliation: Income tax expense $ 11,010 $ 7,637 $ 434 $ 31,378 $ 1,856 $ 831 Less: deferred tax expense (10,142 ) (9,432 ) 2 (29,201 ) 2 (360 ) Current income tax expense (benefit) $ 868 $ (1,795 ) $ 436 $ 2,177 $ 1,858 $ 471 Atlas Energy Solutions Inc. – Supplemental Information Cash Interest Expense to Income Expense, Net (unaudited, in thousands) Three Months Ended Year Ended December 31, 2023 September 30, 2023 December 31, 2022 December 31, 2023 December 31, 2022 December 31, 2021 Cash interest expense reconciliation: Interest expense, net $ 2,230 $ 1,496 $ 3,990 $ 7,689 $ 15,760 $ 30,276 Less: Interest paid-in-kind through issuance of additional term loans — — — — — (3,039 ) Less: Amortization of debt discount (292 ) (231 ) (119 ) (761 ) (457 ) (7,320 ) Less: Amortization of deferred financing costs (67 ) (79 ) (110 ) (337 ) (442 ) (739 ) Less: Interest income 2,500 3,177 3 9,763 43 14 Less: Other — — — — — (19 ) Cash interest expense $ 4,371 $ 4,363 $ 3,764 $ 16,354 $ 14,904 $ 19,173 View source version on businesswire.com: https://www.businesswire.com/news/home/20240227616947/en/Contacts Investor Contact Kyle Turlington T: 512-220-1200 IR@atlas.energy Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. 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Atlas Energy Solutions Announces Fourth Quarter and Year End 2023 Results; Signs Transformative Agreement to Acquire Hi-Crush Inc. By: Atlas Energy Solutions Inc. via Business Wire February 27, 2024 at 06:30 AM EST Atlas Energy Solutions Inc. (NYSE: AESI) (“Atlas” or the “Company”) today reported financial and operating results for the fiscal year ended December 31, 2023. Year End 2023 Financial Highlights and Operational Updates Total sales of $614.0 million (on sales volumes of 11.0 million tons) Net income of $226.5 million (37% Net Income Margin) Adjusted EBITDA of $329.7 million (54% Adjusted EBITDA Margin) (1) Net cash provided by operating activities of $299.0 million Adjusted Free Cash Flow of $291.1 million (47% Adjusted Free Cash Flow Margin) (1) Dune Express construction remains on-time and on-budget New Kermit facility was fully commissioned in December 2023 Increased quarterly dividend by 5% to $0.21 per share ($0.16 per share fixed, $0.05 per share variable), payable February 29, 2024 Announced transformative acquisition of Hi-Crush Inc. Please refer to our accompanying materials on this acquisition released today Financial Summary For Year Ended December 31, 2023 2022 2021 Sales $ 613,960 $ 482,724 $ 172,404 Net income $ 226,493 $ 217,006 $ 4,258 Net Income Margin 37 % 45 % 2 % Adjusted EBITDA $ 329,655 $ 264,026 $ 71,968 Adjusted EBITDA Margin 54 % 55 % 42 % Net cash provided by operating activities $ 299,027 $ 206,012 $ 21,356 Adjusted Free Cash Flow $ 291,131 $ 228,553 $ 64,253 Adjusted Free Cash Flow Margin 47 % 47 % 37 % (1) Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Free Cash Flow and Adjusted Free Cash Flow Margin are non-GAAP financials measures. See Non-GAAP Financial Measures for a discussion of these measures and a reconciliation of these measures to our most directly comparable financial measures calculated and presented in accordance with GAAP. Bud Brigham, Founder, Executive Chairman and CEO, commented, “This was an exceptional year for Atlas. We completed our IPO, generated Adjusted EBITDA of $329.7 million, grew our dividend to $0.21 per share, placed our new Kermit plant in-service, fully launched our differentiated high-capacity trucking business, kicked-off and have made great progress on the construction of the Dune Express, and shortly after the end of this year signed-up a substantial and exciting acquisition of Hi-Crush. In so many exciting ways, this is a more advanced proppant and logistics business in February 2024 than February 2023, and we are well on our way to achieving our goal of being logistically advantaged to every wellhead in the Permian Basin." John Turner, President & CFO, added, “In our view, the acquisition of Hi-Crush announced today furthers Atlas's position as the premier proppant and logistics provider in the Permian, and as one of the premier producers in all of North America. The strategic benefits are clearly evident as the distributed mining assets add customers in the Midland Basin, further diversifying our customer portfolio. The Kermit assets provide additional reserves and production on the giant open dunes, and the proximity of those assets to our existing operations provide ample opportunity for operational synergies. Additionally, the acquired contracts add significant free cash flow at an attractive valuation, which we expect to accelerate the return of capital to our shareholders. Last but importantly, the distributed mining assets complement and further our logistics mission to remove trucks from the public roadways of the Permian, which drives down costs and emissions while driving up reliability, importantly while also making the roadways safer for the local communities." Year End 2023 Financial Results Total sales for the year ended December 31, 2023 increased $131.2 million, or 27.2% when compared to the year ended December 31, 2022, to $614.0 million. Product sales increased $59.7 million, or 14.6% when compared to the prior year, to $468.1 million, driven by an increase in both sales volumes and sales price (11.0 million tons at $42.63 per ton vs. 10.2 million tons at $40.10 per ton). Given our heavily contracted volume position during the year, this sequential price increase is a function of higher-priced contracts realized during the year. Service sales increased by $71.6 million, or 96.3% when compared to the prior year, to $145.8 million. The increase in service sales was due to an increase in the number of active jobs, as well as by a higher asset utilization on continued customer adoptions of our single- and multi-trailer logistics offerings. Cost of sales (excluding depreciation, depletion and accretion expense) (“cost of sales”) for the year ended December 31, 2023 increased by $61.5 million, or 30.9% when compared to the prior year, to $260.4 million. The increase in our cost of sales was primarily driven by an increase in sales volumes and higher trucking and last mile logistics costs resulting from the increased size and utilization of our fleet, which were partially offset by lower contract mining costs and a lower royalty expense as a result of the removal of the Kermit overriding royalty, which ceased towards the end of the first quarter of 2023 in connection with our initial public offering. Selling, general and administrative expenses (“SG&A”) for the year ended December 31, 2023 increased by $24.3 million, or 100.0% when compared to the prior year, to $48.6 million, driven primarily by increases in wages and benefits as a result of an increased employee base, and higher professional and consulting fees associated with our initial public offering, corporate reorganization and acquisition of Hi-Crush. This includes $5.3 million of non-recurring transaction costs and $7.4 million in stock and unit based compensation. Net income for the year ended December 31, 2023 was $226.5 million, and Adjusted EBITDA for the year ended December 31, 2023 was $329.7 million. Fourth Quarter 2023 Financial Results Fourth quarter 2023 total sales decreased $16.5 million, or 10.5% sequentially, to $141.1 million. Product sales decreased $14.8 million, or 12.9%, sequentially, to $100.0 million (2.6 million tons at $39.00 per ton vs. 2.8 million tons at $40.62 per ton), driven by a decrease in both sales volumes and price, driven primarily by a slow down in drilling and completions activity. Service sales decreased by $1.7 million, or 4.0%, sequentially, to $41.1 million. Fourth quarter 2023 cost of sales decreased by $1.2 million, or 1.8%, sequentially, to $66.6 million, which consists of product costs of sales of $30.3 million and services cost of sales of $36.3 million. SG&A for the fourth quarter of 2023 decreased $0.7 million, or 4.6%, sequentially, to $13.6 million. Net Income for the fourth quarter of 2023 was $36.1 million, representing a decrease of $20.3 million, or 36.0%, sequentially. Adjusted EBITDA for the fourth quarter of 2023 was $68.7 million, representing a decrease of $15.4 million, or 18.3%, sequentially. Liquidity, Capital Expenditures and Other As of December 31, 2023, the Company’s total liquidity was $384.1 million, which was comprised of $210.2 million in cash and cash equivalents (held in cash, CDs, and one- and two-month Treasury bills), $73.9 million of availability under the Company’s ABL Facility, and $100.0 million of availability under the Company's undrawn Delayed Draw Term Loan Facility; the Company had no borrowings outstanding under the ABL Facility and $1.1 million of outstanding undrawn letters of credit. Net cash used in investing activities was $365.5 million for the year ended December 31, 2023, driven largely by costs associated with the construction of the new Kermit facility and construction of the Dune Express. As of December 31, 2023, the Company's fully diluted share count outstanding was 100,025,584. Subsequent Events Acquisition of Hi-Crush Subsequent to year end, Atlas announced that it has entered into a definitive agreement with Hi-Crush Inc. (“Hi-Crush”), pursuant to which Atlas will acquire substantially all of Hi-Crush’s Permian Basin proppant production assets and North American logistics operations in a transaction valued at $450 million. The mix of consideration includes approximately $150 million in cash at close, 9,711,432 million shares of AESI (valued at $175 million), and $125 million in deferred cash in the form of a Seller’s Note. Both the cash consideration and the principal amount of the Seller's Note are subject to revision for customary post-closing adjustments. For more information regarding the transaction, please refer to the Company’s website at https://ir.atlas.energy/ for the acquisition press release and related presentation. Acquisition Financing In connection with the acquisition, we upsized our ABL facility to $125.0 million, with the expectation of drawing $50.0 million at closing. In addition, we installed a new $150.0 million acquisition term loan facility with Stonebriar Commercial Finance. These additional credit facilities will combine to fund the upfront cash consideration agreed to under the Merger Agreement and the near-term growth capital expenditures for OnCore. Quarterly Cash Dividend On February 8, 2024, the Board of Directors (the “Board") of Atlas declared a dividend to common stockholders of $0.21 per share, or approximately $21.0 million in aggregate to shareholders. The dividend includes a $0.16 per share base dividend and a $0.05 per share variable dividend. As previously announced, the dividend will be payable on February 29, 2024 to shareholders of record at the close of business on February 22, 2024. Conference Call Information The Company will host a conference call to discuss financial and operational results on Tuesday, February 27, 2024 at 8:00am Central Time (9:00am Eastern Time). Individuals wishing to participate in the conference call should dial (877) 407-4133. A live webcast will be available at https://ir.atlas.energy/. Please access the webcast or dial in for the call at least 10 minutes ahead of the start time to ensure a proper connection. An archived version of the conference call will be available on the Company’s website shortly after the conclusion of the call. The Company will also post an updated investor presentation titled “Investor Presentation February 2024”, in addition to a "Year End 2023 Capital Projects Update" video, at https://ir.atlas.energy/ in the "Presentations” section under “News & Events” tab on the Company’s Investor Relations webpage prior to the conference call. About Atlas Energy Solutions Our company was founded in 2017 by long-time E&P operators and led by Bud Brigham. Our experience as E&P operators, combined with our unique asset base and focus on using technology to deliver novel solutions to our customers’ toughest challenges and mission-critical needs differentiates us as the proppant and logistics provider of choice in the Permian Basin. Atlas is a leader in the proppant and proppant logistics industry and is currently solely focused on serving customers in the Permian Basin of West Texas and New Mexico, the most active oil and natural gas producing regions in North America. Our Kermit, TX and Monahans, TX facilities are strategically located and specifically designed to maximize reliability of supply and product quality, and our deployment of trucking assets and the Dune Express is expected to drive significant logistics efficiencies. Our core mission is to maximize value for our stockholders by generating strong cash flow and allocating our capital resources efficiently, including providing a regular and durable return of capital to our investors through industry cycles. Further, we recognize that our long-term profitability is maximized by being good stewards of the environments and communities in which we operate. In our pursuit of this mission, we work to improve the processes involved in the development of hydrocarbons, which we believe will ultimately contribute to providing individuals with access to the energy they need to sustain or improve their quality of life in a clean, safe, and efficient manner. We take great pride in contributing positively to the development of the hydrocarbons that power our lives. Cautionary Statement Regarding Forward-Looking Statements This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Statements that are predictive or prospective in nature, that depend upon or refer to future events or conditions or that include the words “may,” “assume,” “forecast,” “position,” “strategy,” “potential,” “continue,” “could,” “will,” “plan,” “project,” “budget,” “predict,” “pursue,” “target,” “seek,” “objective,” “believe,” “expect,” “anticipate,” “intend,” “estimate” and other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters identify forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements about the Hi-Crush Inc. acquisition and the anticipated benefits of such transaction, our business strategy, our industry, our future operations and profitability, expected capital expenditures and the impact of such expenditures on our performance, our financial position, production, revenues and losses, our capital programs, management changes, current and potential future long-term contracts and our future business and financial performance. Although forward-looking statements reflect our good faith beliefs at the time they are made, we caution you that these forward-looking statements are subject to a number of risks and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks include but are not limited to: commodity price volatility stemming from the ongoing armed conflicts between Russia and Ukraine and Israel and Hamas; increasing hostilities and instability in the Middle East; adverse developments affecting the financial services industry; our ability to complete growth projects, including the Dune Express, on time and on budget; the risk that stockholder litigation in connection with our recent corporate reorganization may result in significant costs of defense, indemnification and liability; changes in general economic, business and political conditions, including changes in the financial markets; transaction costs; actions of OPEC+ to set and maintain oil production levels; the level of production of crude oil, natural gas and other hydrocarbons and the resultant market prices of crude oil; inflation; environmental risks; operating risks; regulatory changes; lack of demand; market share growth; the uncertainty inherent in projecting future rates of reserves; production; cash flow; access to capital; the timing of development expenditures; and other factors discussed or referenced in our filings made from time to time with the U.S. Securities and Exchange Commission (“SEC”), including those discussed under the heading “Risk Factors” in our prospectus, dated September 11, 2023, filed with the SEC pursuant to Rule 424(b) under the Securities Act on September 12, 2023 in connection with our recent corporate reorganization, and any subsequently filed Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law. Atlas Energy Solutions Inc. Condensed Consolidated Statements of Income (in thousands, except per share data) Three Months Ended Year Ended December 31, 2023 September 30, 2023 December 31, 2022 December 31, 2023 December 31, 2022 December 31, 2021 (unaudited) (unaudited) (unaudited) Product sales $ 99,988 $ 114,773 $ 121,881 $ 468,119 $ 408,446 $ 142,519 Service sales 41,150 42,843 27,984 145,841 74,278 29,885 Total sales 141,138 157,616 149,865 613,960 482,724 172,404 Cost of sales (excluding depreciation, depletion and accretion expense) 66,567 67,770 67,285 260,396 198,918 84,656 Depreciation, depletion and accretion expense 11,625 10,221 7,791 39,798 27,498 23,681 Gross profit 62,946 79,625 74,789 313,766 256,308 64,067 Selling, general and administrative expense (including stock and unit-based compensation expense of $3,749, $1,414, $135, $7,409, $678, and $129, respectively.) 13,648 14,301 7,903 48,636 24,317 17,071 Operating income 49,298 65,324 66,886 265,130 231,991 46,996 Interest expense, net (2,230 ) (1,496 ) (3,990 ) (7,689 ) (15,760 ) (42,198 ) Other income (8 ) 136 121 430 2,631 291 Income before income taxes 47,060 63,964 63,017 257,871 218,862 5,089 Income tax expense 11,010 7,637 434 31,378 1,856 831 Net income $ 36,050 $ 56,327 $ 62,583 $ 226,493 $ 217,006 $ 4,258 Less: Pre-IPO net income attributable to Atlas Sand Company, LLC — — 54,561 Less: Net income attributable to redeemable noncontrolling interest 313 26,887 66,503 Net income attributable to Atlas Energy Solutions, Inc. $ 35,737 $ 29,440 $ 105,429 Net income per common share Basic $ 0.36 $ 0.51 $ 1.50 Diluted $ 0.36 $ 0.51 $ 1.48 Weighted average common shares outstanding Basic 99,566 57,237 70,450 Diluted 100,242 57,928 71,035 Atlas Energy Solutions Inc. Condensed Consolidated Statements of Cash Flows (in thousands) Three Months Ended Year Ended December 31, 2023 September 30, 2023 December 31, 2022 December 31, 2023 December 31, 2022 December 31, 2021 (unaudited) (unaudited) (unaudited) Operating activities: Net income $ 36,050 $ 56,327 $ 62,583 $ 226,493 $ 217,006 $ 4,258 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion and accretion expense 12,266 10,746 8,089 41,634 28,617 24,604 Loss on extinguishment of debt — — — — — 11,922 Amortization of debt discount 292 231 119 761 457 7,320 Amortization of deferred financing costs 67 79 110 337 442 739 Stock and unit-based compensation 3,749 1,414 135 7,409 678 129 Deferred income tax 10,142 9,432 (2 ) 29,201 (2 ) 360 Interest paid-in-kind through issuance of additional term loans — — — — — 3,039 Repayment of paid-in-kind interest borrowings — — — — — (22,233 ) Commodity derivatives gain — — 15 — (1,842 ) (55 ) Settlements on commodity derivatives — — 141 — 2,137 — Other (4 ) (42 ) 232 139 293 (105 ) Changes in operating assets and liabilities: 22,941 (22,781 ) (21,410 ) (6,947 ) (41,774 ) (8,622 ) Net cash provided by operating activities 85,503 55,406 50,012 299,027 206,012 21,356 Investing activities: Purchases of property, plant and equipment (119,793 ) (98,858 ) (35,428 ) (365,486 ) (89,592 ) (19,371 ) Net cash used in investing activities (119,793 ) (98,858 ) (35,428 ) (365,486 ) (89,592 ) (19,371 ) Financing Activities: Proceeds from equity issuances — — — — — 12,613 Net proceeds from IPO — — — 303,426 — — Payment of offering costs — — — (6,020 ) — — Member distributions prior to IPO — — (15,000 ) (15,000 ) (45,024 ) (10,000 ) Proceeds from term loan borrowings — — — — — 178,200 Principal payments on term loan borrowings — — (7,987 ) (16,573 ) (28,544 ) (172,872 ) Prepayment fee on 2021 Term Loan Credit Facility — (2,649 ) — (2,649 ) — — Debt extinguishment cost — — — — — (4,514 ) Issuance costs associated with debt financing — (3,645 ) — (4,397 ) (233 ) (660 ) Payments under finance and capital leases (69 ) (232 ) (307 ) (2,001 ) (1,010 ) (423 ) Dividends and distributions (20,005 ) (27,158 ) — (62,163 ) — — Net cash provided by (used in) financing activities (20,074 ) (33,684 ) (23,294 ) 194,623 (74,811 ) 2,344 Net increase (decrease) in cash and cash equivalents (54,364 ) (77,136 ) (8,710 ) 128,164 41,609 4,329 Cash and cash equivalents, beginning of period 264,538 341,674 90,720 82,010 40,401 36,072 Cash and cash equivalents, end of period $ 210,174 $ 264,538 $ 82,010 $ 210,174 $ 82,010 $ 40,401 Atlas Energy Solutions Inc. Condensed Consolidated Balance Sheets (in thousands) As of As of December 31,2023 December 31,2022 Assets Current assets: Cash and cash equivalents $ 210,174 $ 82,010 Accounts receivable, including related parties 71,170 74,392 Inventories, prepaid expenses and other current assets 37,342 22,329 Total current assets 318,686 178,731 Property, plant and equipment, net 934,660 541,524 Right-of-use assets 4,151 23,222 Other long-term assets 4,189 7,522 Total assets $ 1,261,686 $ 750,999 Liabilities, redeemable noncontrolling interest, and stockholders' and members' equity Current liabilities: Accounts payable, including related parties $ 61,159 $ 31,799 Accrued liabilities and other current liabilities 31,433 36,289 Current portion of long-term debt — 20,586 Total current liabilities 92,592 88,674 Long-term debt, net of discount and deferred financing costs 172,820 126,588 Deferred tax liabilities 121,529 1,906 Other long-term liabilities 6,921 22,474 Total liabilities 393,862 239,642 Total stockholders' and members' equity 867,824 511,357 Total liabilities, redeemable noncontrolling interest and stockholders’ and members’ equity $ 1,261,686 $ 750,999 Non-GAAP Financial Measures Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Free Cash Flow, Adjusted Free Cash Flow Margin, Adjusted Free Cash Flow Conversion and Maintenance Capital Expenditures are non-GAAP supplemental financial measures used by our management and by external users of our financial statements such as investors, research analysts and others, in the case of Adjusted EBITDA, to assess our operating performance on a consistent basis across periods by removing the effects of development activities, provide views on capital resources available to organically fund growth projects and, in the case of Adjusted Free Cash Flow, assess the financial performance of our assets and their ability to sustain dividends or reinvest to organically fund growth projects over the long term without regard to financing methods, capital structure, or historical cost basis. These measures do not represent and should not be considered alternatives to, or more meaningful than, net income, income from operations, net cash provided by operating activities or any other measure of financial performance presented in accordance with GAAP as measures of our financial performance. Adjusted EBITDA and Adjusted Free Cash Flow have important limitations as analytical tools because they exclude some but not all items that affect net income, the most directly comparable GAAP financial measure. Our computation of Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Free Cash Flow, Adjusted Free Cash Flow Margin, Adjusted Free Cash Flow Conversion and Maintenance Capital Expenditures may differ from computations of similarly titled measures of other companies. Non-GAAP Measure Definitions: We define Adjusted EBITDA as net income before depreciation, depletion and accretion, interest expense, income tax expense, stock and unit-based compensation, loss on extinguishment of debt, unrealized commodity derivative gain (loss), and non-recurring transaction costs. Management believes Adjusted EBITDA is useful because it allows management to more effectively evaluate the Company’s operating performance and compare the results of its operations from period to period and against our peers without regard to financing method or capital structure. We exclude the items listed above from net income in arriving at Adjusted EBITDA because these amounts can vary substantially from company to company within our industry depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired. We define Adjusted EBITDA Margin as Adjusted EBITDA divided by total sales. We define Adjusted Free Cash Flow as Adjusted EBITDA less Maintenance Capital Expenditures. Management believes that Adjusted Free Cash Flow is useful to investors as it provides a measure of the ability of our business to generate cash. We define Adjusted Free Cash Flow Margin as Adjusted Free Cash Flow divided by total sales. We define Adjusted Free Cash Flow Conversion as Adjusted Free Cash Flow divided by Adjusted EBITDA. We define Maintenance Capital Expenditures as capital expenditures excluding growth capital expenditures. Atlas Energy Solutions Inc. – Supplemental Information Reconciliation of Adjusted EBITDA and Adjusted Free Cash Flow to Net Income (unaudited, in thousands) Three Months Ended Year Ended December 31, 2023 September 30, 2023 December 31, 2022 December 31, 2023 December 31, 2022 December 31, 2021 Net income $ 36,050 $ 56,327 $ 62,583 $ 226,493 $ 217,006 $ 4,258 Depreciation, depletion and accretion expense 12,266 10,746 8,089 41,634 28,617 24,604 Interest expense 4,731 4,673 3,993 17,452 15,803 30,290 Income tax expense 11,010 7,637 434 31,378 1,856 831 EBITDA $ 64,057 $ 79,383 $ 75,099 $ 316,957 $ 263,282 $ 59,983 Stock and unit-based compensation 3,749 1,414 135 7,409 678 129 Loss on extinguishment of debt — — — — — 11,922 Unrealized commodity derivative loss — — 1 — 66 (66 ) Non-recurring transaction costs 892 3,281 — 5,289 — — Adjusted EBITDA $ 68,698 $ 84,078 $ 75,235 $ 329,655 $ 264,026 $ 71,968 Maintenance Capital Expenditures $ 12,180 $ 15,557 $ 8,186 $ 38,524 $ 35,473 $ 7,715 Adjusted Free Cash Flow $ 56,518 $ 68,521 $ 67,049 $ 291,131 $ 228,553 $ 64,253 Atlas Energy Solutions Inc. – Supplemental Information Reconciliation of Adjusted Free Cash Flow to Net Cash Provided by Operating Activities (unaudited, in thousands, except percentages) Three Months Ended Year Ended December 31, 2023 September 30, 2023 December 31, 2022 December 31, 2023 December 31, 2022 December 31, 2021 Net cash provided by operating activities $ 85,503 $ 55,406 $ 50,012 $ 299,027 $ 206,012 $ 21,356 Repayment of paid-in-kind interest borrowings — — — — — 22,233 Current income tax expense (benefit)(1) 868 (1,795 ) 436 2,177 1,858 471 Change in operating assets and liabilities (22,941 ) 22,781 21,410 6,947 41,774 8,622 Cash interest expense(1) 4,371 4,363 3,764 16,354 14,904 19,173 Maintenance capital expenditures(1) (12,180 ) (15,557 ) (8,186 ) (38,524 ) (35,473 ) (7,715 ) Non-recurring transaction costs 892 3,281 — 5,289 — — Other 5 42 (387 ) (139 ) (522 ) 113 Adjusted Free Cash Flow $ 56,518 $ 68,521 $ 67,049 $ 291,131 $ 228,553 $ 64,253 Adjusted EBITDA Margin 49 % 53 % 50 % 54 % 55 % 42 % Adjusted Free Cash Flow Margin 40 % 43 % 45 % 47 % 47 % 37 % Adjusted Free Cash Flow Conversion 82 % 81 % 89 % 88 % 87 % 89 % (1) A reconciliation of the adjustment of these items used to calculate Adjusted Free Cash Flow to the Consolidated Financial Statements is included below. Atlas Energy Solutions Inc. – Supplemental Information Reconciliation of Maintenance Capital Expenditures to Purchase of Property, Plant and Equipment (unaudited, in thousands) Three Months Ended Year Ended December 31, 2023 September 30, 2023 December 31, 2022 December 31, 2023 December 31, 2022 December 31, 2021 Maintenance Capital Expenditures, accrual basis reconciliation: Purchases of property, plant and equipment $ 119,793 $ 98,858 $ 35,428 $ 365,486 $ 89,592 $ 19,371 Changes in operating assets and liabilities associated with investing activities(1) (1,828 ) 40,153 6,031 66,132 20,747 2,362 Less: Growth capital expenditures (105,785 ) (123,454 ) (33,273 ) (393,094 ) (74,866 ) (14,018 ) Maintenance Capital Expenditures, accrual basis $ 12,180 $ 15,557 $ 8,186 $ 38,524 $ 35,473 $ 7,715 (1) Positive working capital changes reflect capital expenditures in the current period that will be paid in a future period. Negative working capital changes reflect capital expenditures incurred in a prior period but paid during the period presented. Atlas Energy Solutions Inc. – Supplemental Information Reconciliation of Current Income Tax Expense to Income Tax Expense (unaudited, in thousands) Three Months Ended Year Ended December 31, 2023 September 30, 2023 December 31, 2022 December 31, 2023 December 31, 2022 December 31, 2021 Current tax expense reconciliation: Income tax expense $ 11,010 $ 7,637 $ 434 $ 31,378 $ 1,856 $ 831 Less: deferred tax expense (10,142 ) (9,432 ) 2 (29,201 ) 2 (360 ) Current income tax expense (benefit) $ 868 $ (1,795 ) $ 436 $ 2,177 $ 1,858 $ 471 Atlas Energy Solutions Inc. – Supplemental Information Cash Interest Expense to Income Expense, Net (unaudited, in thousands) Three Months Ended Year Ended December 31, 2023 September 30, 2023 December 31, 2022 December 31, 2023 December 31, 2022 December 31, 2021 Cash interest expense reconciliation: Interest expense, net $ 2,230 $ 1,496 $ 3,990 $ 7,689 $ 15,760 $ 30,276 Less: Interest paid-in-kind through issuance of additional term loans — — — — — (3,039 ) Less: Amortization of debt discount (292 ) (231 ) (119 ) (761 ) (457 ) (7,320 ) Less: Amortization of deferred financing costs (67 ) (79 ) (110 ) (337 ) (442 ) (739 ) Less: Interest income 2,500 3,177 3 9,763 43 14 Less: Other — — — — — (19 ) Cash interest expense $ 4,371 $ 4,363 $ 3,764 $ 16,354 $ 14,904 $ 19,173 View source version on businesswire.com: https://www.businesswire.com/news/home/20240227616947/en/Contacts Investor Contact Kyle Turlington T: 512-220-1200 IR@atlas.energy
Atlas Energy Solutions Inc. (NYSE: AESI) (“Atlas” or the “Company”) today reported financial and operating results for the fiscal year ended December 31, 2023. Year End 2023 Financial Highlights and Operational Updates Total sales of $614.0 million (on sales volumes of 11.0 million tons) Net income of $226.5 million (37% Net Income Margin) Adjusted EBITDA of $329.7 million (54% Adjusted EBITDA Margin) (1) Net cash provided by operating activities of $299.0 million Adjusted Free Cash Flow of $291.1 million (47% Adjusted Free Cash Flow Margin) (1) Dune Express construction remains on-time and on-budget New Kermit facility was fully commissioned in December 2023 Increased quarterly dividend by 5% to $0.21 per share ($0.16 per share fixed, $0.05 per share variable), payable February 29, 2024 Announced transformative acquisition of Hi-Crush Inc. Please refer to our accompanying materials on this acquisition released today Financial Summary For Year Ended December 31, 2023 2022 2021 Sales $ 613,960 $ 482,724 $ 172,404 Net income $ 226,493 $ 217,006 $ 4,258 Net Income Margin 37 % 45 % 2 % Adjusted EBITDA $ 329,655 $ 264,026 $ 71,968 Adjusted EBITDA Margin 54 % 55 % 42 % Net cash provided by operating activities $ 299,027 $ 206,012 $ 21,356 Adjusted Free Cash Flow $ 291,131 $ 228,553 $ 64,253 Adjusted Free Cash Flow Margin 47 % 47 % 37 % (1) Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Free Cash Flow and Adjusted Free Cash Flow Margin are non-GAAP financials measures. See Non-GAAP Financial Measures for a discussion of these measures and a reconciliation of these measures to our most directly comparable financial measures calculated and presented in accordance with GAAP. Bud Brigham, Founder, Executive Chairman and CEO, commented, “This was an exceptional year for Atlas. We completed our IPO, generated Adjusted EBITDA of $329.7 million, grew our dividend to $0.21 per share, placed our new Kermit plant in-service, fully launched our differentiated high-capacity trucking business, kicked-off and have made great progress on the construction of the Dune Express, and shortly after the end of this year signed-up a substantial and exciting acquisition of Hi-Crush. In so many exciting ways, this is a more advanced proppant and logistics business in February 2024 than February 2023, and we are well on our way to achieving our goal of being logistically advantaged to every wellhead in the Permian Basin." John Turner, President & CFO, added, “In our view, the acquisition of Hi-Crush announced today furthers Atlas's position as the premier proppant and logistics provider in the Permian, and as one of the premier producers in all of North America. The strategic benefits are clearly evident as the distributed mining assets add customers in the Midland Basin, further diversifying our customer portfolio. The Kermit assets provide additional reserves and production on the giant open dunes, and the proximity of those assets to our existing operations provide ample opportunity for operational synergies. Additionally, the acquired contracts add significant free cash flow at an attractive valuation, which we expect to accelerate the return of capital to our shareholders. Last but importantly, the distributed mining assets complement and further our logistics mission to remove trucks from the public roadways of the Permian, which drives down costs and emissions while driving up reliability, importantly while also making the roadways safer for the local communities." Year End 2023 Financial Results Total sales for the year ended December 31, 2023 increased $131.2 million, or 27.2% when compared to the year ended December 31, 2022, to $614.0 million. Product sales increased $59.7 million, or 14.6% when compared to the prior year, to $468.1 million, driven by an increase in both sales volumes and sales price (11.0 million tons at $42.63 per ton vs. 10.2 million tons at $40.10 per ton). Given our heavily contracted volume position during the year, this sequential price increase is a function of higher-priced contracts realized during the year. Service sales increased by $71.6 million, or 96.3% when compared to the prior year, to $145.8 million. The increase in service sales was due to an increase in the number of active jobs, as well as by a higher asset utilization on continued customer adoptions of our single- and multi-trailer logistics offerings. Cost of sales (excluding depreciation, depletion and accretion expense) (“cost of sales”) for the year ended December 31, 2023 increased by $61.5 million, or 30.9% when compared to the prior year, to $260.4 million. The increase in our cost of sales was primarily driven by an increase in sales volumes and higher trucking and last mile logistics costs resulting from the increased size and utilization of our fleet, which were partially offset by lower contract mining costs and a lower royalty expense as a result of the removal of the Kermit overriding royalty, which ceased towards the end of the first quarter of 2023 in connection with our initial public offering. Selling, general and administrative expenses (“SG&A”) for the year ended December 31, 2023 increased by $24.3 million, or 100.0% when compared to the prior year, to $48.6 million, driven primarily by increases in wages and benefits as a result of an increased employee base, and higher professional and consulting fees associated with our initial public offering, corporate reorganization and acquisition of Hi-Crush. This includes $5.3 million of non-recurring transaction costs and $7.4 million in stock and unit based compensation. Net income for the year ended December 31, 2023 was $226.5 million, and Adjusted EBITDA for the year ended December 31, 2023 was $329.7 million. Fourth Quarter 2023 Financial Results Fourth quarter 2023 total sales decreased $16.5 million, or 10.5% sequentially, to $141.1 million. Product sales decreased $14.8 million, or 12.9%, sequentially, to $100.0 million (2.6 million tons at $39.00 per ton vs. 2.8 million tons at $40.62 per ton), driven by a decrease in both sales volumes and price, driven primarily by a slow down in drilling and completions activity. Service sales decreased by $1.7 million, or 4.0%, sequentially, to $41.1 million. Fourth quarter 2023 cost of sales decreased by $1.2 million, or 1.8%, sequentially, to $66.6 million, which consists of product costs of sales of $30.3 million and services cost of sales of $36.3 million. SG&A for the fourth quarter of 2023 decreased $0.7 million, or 4.6%, sequentially, to $13.6 million. Net Income for the fourth quarter of 2023 was $36.1 million, representing a decrease of $20.3 million, or 36.0%, sequentially. Adjusted EBITDA for the fourth quarter of 2023 was $68.7 million, representing a decrease of $15.4 million, or 18.3%, sequentially. Liquidity, Capital Expenditures and Other As of December 31, 2023, the Company’s total liquidity was $384.1 million, which was comprised of $210.2 million in cash and cash equivalents (held in cash, CDs, and one- and two-month Treasury bills), $73.9 million of availability under the Company’s ABL Facility, and $100.0 million of availability under the Company's undrawn Delayed Draw Term Loan Facility; the Company had no borrowings outstanding under the ABL Facility and $1.1 million of outstanding undrawn letters of credit. Net cash used in investing activities was $365.5 million for the year ended December 31, 2023, driven largely by costs associated with the construction of the new Kermit facility and construction of the Dune Express. As of December 31, 2023, the Company's fully diluted share count outstanding was 100,025,584. Subsequent Events Acquisition of Hi-Crush Subsequent to year end, Atlas announced that it has entered into a definitive agreement with Hi-Crush Inc. (“Hi-Crush”), pursuant to which Atlas will acquire substantially all of Hi-Crush’s Permian Basin proppant production assets and North American logistics operations in a transaction valued at $450 million. The mix of consideration includes approximately $150 million in cash at close, 9,711,432 million shares of AESI (valued at $175 million), and $125 million in deferred cash in the form of a Seller’s Note. Both the cash consideration and the principal amount of the Seller's Note are subject to revision for customary post-closing adjustments. For more information regarding the transaction, please refer to the Company’s website at https://ir.atlas.energy/ for the acquisition press release and related presentation. Acquisition Financing In connection with the acquisition, we upsized our ABL facility to $125.0 million, with the expectation of drawing $50.0 million at closing. In addition, we installed a new $150.0 million acquisition term loan facility with Stonebriar Commercial Finance. These additional credit facilities will combine to fund the upfront cash consideration agreed to under the Merger Agreement and the near-term growth capital expenditures for OnCore. Quarterly Cash Dividend On February 8, 2024, the Board of Directors (the “Board") of Atlas declared a dividend to common stockholders of $0.21 per share, or approximately $21.0 million in aggregate to shareholders. The dividend includes a $0.16 per share base dividend and a $0.05 per share variable dividend. As previously announced, the dividend will be payable on February 29, 2024 to shareholders of record at the close of business on February 22, 2024. Conference Call Information The Company will host a conference call to discuss financial and operational results on Tuesday, February 27, 2024 at 8:00am Central Time (9:00am Eastern Time). Individuals wishing to participate in the conference call should dial (877) 407-4133. A live webcast will be available at https://ir.atlas.energy/. Please access the webcast or dial in for the call at least 10 minutes ahead of the start time to ensure a proper connection. An archived version of the conference call will be available on the Company’s website shortly after the conclusion of the call. The Company will also post an updated investor presentation titled “Investor Presentation February 2024”, in addition to a "Year End 2023 Capital Projects Update" video, at https://ir.atlas.energy/ in the "Presentations” section under “News & Events” tab on the Company’s Investor Relations webpage prior to the conference call. About Atlas Energy Solutions Our company was founded in 2017 by long-time E&P operators and led by Bud Brigham. Our experience as E&P operators, combined with our unique asset base and focus on using technology to deliver novel solutions to our customers’ toughest challenges and mission-critical needs differentiates us as the proppant and logistics provider of choice in the Permian Basin. Atlas is a leader in the proppant and proppant logistics industry and is currently solely focused on serving customers in the Permian Basin of West Texas and New Mexico, the most active oil and natural gas producing regions in North America. Our Kermit, TX and Monahans, TX facilities are strategically located and specifically designed to maximize reliability of supply and product quality, and our deployment of trucking assets and the Dune Express is expected to drive significant logistics efficiencies. Our core mission is to maximize value for our stockholders by generating strong cash flow and allocating our capital resources efficiently, including providing a regular and durable return of capital to our investors through industry cycles. Further, we recognize that our long-term profitability is maximized by being good stewards of the environments and communities in which we operate. In our pursuit of this mission, we work to improve the processes involved in the development of hydrocarbons, which we believe will ultimately contribute to providing individuals with access to the energy they need to sustain or improve their quality of life in a clean, safe, and efficient manner. We take great pride in contributing positively to the development of the hydrocarbons that power our lives. Cautionary Statement Regarding Forward-Looking Statements This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Statements that are predictive or prospective in nature, that depend upon or refer to future events or conditions or that include the words “may,” “assume,” “forecast,” “position,” “strategy,” “potential,” “continue,” “could,” “will,” “plan,” “project,” “budget,” “predict,” “pursue,” “target,” “seek,” “objective,” “believe,” “expect,” “anticipate,” “intend,” “estimate” and other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters identify forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements about the Hi-Crush Inc. acquisition and the anticipated benefits of such transaction, our business strategy, our industry, our future operations and profitability, expected capital expenditures and the impact of such expenditures on our performance, our financial position, production, revenues and losses, our capital programs, management changes, current and potential future long-term contracts and our future business and financial performance. Although forward-looking statements reflect our good faith beliefs at the time they are made, we caution you that these forward-looking statements are subject to a number of risks and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks include but are not limited to: commodity price volatility stemming from the ongoing armed conflicts between Russia and Ukraine and Israel and Hamas; increasing hostilities and instability in the Middle East; adverse developments affecting the financial services industry; our ability to complete growth projects, including the Dune Express, on time and on budget; the risk that stockholder litigation in connection with our recent corporate reorganization may result in significant costs of defense, indemnification and liability; changes in general economic, business and political conditions, including changes in the financial markets; transaction costs; actions of OPEC+ to set and maintain oil production levels; the level of production of crude oil, natural gas and other hydrocarbons and the resultant market prices of crude oil; inflation; environmental risks; operating risks; regulatory changes; lack of demand; market share growth; the uncertainty inherent in projecting future rates of reserves; production; cash flow; access to capital; the timing of development expenditures; and other factors discussed or referenced in our filings made from time to time with the U.S. Securities and Exchange Commission (“SEC”), including those discussed under the heading “Risk Factors” in our prospectus, dated September 11, 2023, filed with the SEC pursuant to Rule 424(b) under the Securities Act on September 12, 2023 in connection with our recent corporate reorganization, and any subsequently filed Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law. Atlas Energy Solutions Inc. Condensed Consolidated Statements of Income (in thousands, except per share data) Three Months Ended Year Ended December 31, 2023 September 30, 2023 December 31, 2022 December 31, 2023 December 31, 2022 December 31, 2021 (unaudited) (unaudited) (unaudited) Product sales $ 99,988 $ 114,773 $ 121,881 $ 468,119 $ 408,446 $ 142,519 Service sales 41,150 42,843 27,984 145,841 74,278 29,885 Total sales 141,138 157,616 149,865 613,960 482,724 172,404 Cost of sales (excluding depreciation, depletion and accretion expense) 66,567 67,770 67,285 260,396 198,918 84,656 Depreciation, depletion and accretion expense 11,625 10,221 7,791 39,798 27,498 23,681 Gross profit 62,946 79,625 74,789 313,766 256,308 64,067 Selling, general and administrative expense (including stock and unit-based compensation expense of $3,749, $1,414, $135, $7,409, $678, and $129, respectively.) 13,648 14,301 7,903 48,636 24,317 17,071 Operating income 49,298 65,324 66,886 265,130 231,991 46,996 Interest expense, net (2,230 ) (1,496 ) (3,990 ) (7,689 ) (15,760 ) (42,198 ) Other income (8 ) 136 121 430 2,631 291 Income before income taxes 47,060 63,964 63,017 257,871 218,862 5,089 Income tax expense 11,010 7,637 434 31,378 1,856 831 Net income $ 36,050 $ 56,327 $ 62,583 $ 226,493 $ 217,006 $ 4,258 Less: Pre-IPO net income attributable to Atlas Sand Company, LLC — — 54,561 Less: Net income attributable to redeemable noncontrolling interest 313 26,887 66,503 Net income attributable to Atlas Energy Solutions, Inc. $ 35,737 $ 29,440 $ 105,429 Net income per common share Basic $ 0.36 $ 0.51 $ 1.50 Diluted $ 0.36 $ 0.51 $ 1.48 Weighted average common shares outstanding Basic 99,566 57,237 70,450 Diluted 100,242 57,928 71,035 Atlas Energy Solutions Inc. Condensed Consolidated Statements of Cash Flows (in thousands) Three Months Ended Year Ended December 31, 2023 September 30, 2023 December 31, 2022 December 31, 2023 December 31, 2022 December 31, 2021 (unaudited) (unaudited) (unaudited) Operating activities: Net income $ 36,050 $ 56,327 $ 62,583 $ 226,493 $ 217,006 $ 4,258 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion and accretion expense 12,266 10,746 8,089 41,634 28,617 24,604 Loss on extinguishment of debt — — — — — 11,922 Amortization of debt discount 292 231 119 761 457 7,320 Amortization of deferred financing costs 67 79 110 337 442 739 Stock and unit-based compensation 3,749 1,414 135 7,409 678 129 Deferred income tax 10,142 9,432 (2 ) 29,201 (2 ) 360 Interest paid-in-kind through issuance of additional term loans — — — — — 3,039 Repayment of paid-in-kind interest borrowings — — — — — (22,233 ) Commodity derivatives gain — — 15 — (1,842 ) (55 ) Settlements on commodity derivatives — — 141 — 2,137 — Other (4 ) (42 ) 232 139 293 (105 ) Changes in operating assets and liabilities: 22,941 (22,781 ) (21,410 ) (6,947 ) (41,774 ) (8,622 ) Net cash provided by operating activities 85,503 55,406 50,012 299,027 206,012 21,356 Investing activities: Purchases of property, plant and equipment (119,793 ) (98,858 ) (35,428 ) (365,486 ) (89,592 ) (19,371 ) Net cash used in investing activities (119,793 ) (98,858 ) (35,428 ) (365,486 ) (89,592 ) (19,371 ) Financing Activities: Proceeds from equity issuances — — — — — 12,613 Net proceeds from IPO — — — 303,426 — — Payment of offering costs — — — (6,020 ) — — Member distributions prior to IPO — — (15,000 ) (15,000 ) (45,024 ) (10,000 ) Proceeds from term loan borrowings — — — — — 178,200 Principal payments on term loan borrowings — — (7,987 ) (16,573 ) (28,544 ) (172,872 ) Prepayment fee on 2021 Term Loan Credit Facility — (2,649 ) — (2,649 ) — — Debt extinguishment cost — — — — — (4,514 ) Issuance costs associated with debt financing — (3,645 ) — (4,397 ) (233 ) (660 ) Payments under finance and capital leases (69 ) (232 ) (307 ) (2,001 ) (1,010 ) (423 ) Dividends and distributions (20,005 ) (27,158 ) — (62,163 ) — — Net cash provided by (used in) financing activities (20,074 ) (33,684 ) (23,294 ) 194,623 (74,811 ) 2,344 Net increase (decrease) in cash and cash equivalents (54,364 ) (77,136 ) (8,710 ) 128,164 41,609 4,329 Cash and cash equivalents, beginning of period 264,538 341,674 90,720 82,010 40,401 36,072 Cash and cash equivalents, end of period $ 210,174 $ 264,538 $ 82,010 $ 210,174 $ 82,010 $ 40,401 Atlas Energy Solutions Inc. Condensed Consolidated Balance Sheets (in thousands) As of As of December 31,2023 December 31,2022 Assets Current assets: Cash and cash equivalents $ 210,174 $ 82,010 Accounts receivable, including related parties 71,170 74,392 Inventories, prepaid expenses and other current assets 37,342 22,329 Total current assets 318,686 178,731 Property, plant and equipment, net 934,660 541,524 Right-of-use assets 4,151 23,222 Other long-term assets 4,189 7,522 Total assets $ 1,261,686 $ 750,999 Liabilities, redeemable noncontrolling interest, and stockholders' and members' equity Current liabilities: Accounts payable, including related parties $ 61,159 $ 31,799 Accrued liabilities and other current liabilities 31,433 36,289 Current portion of long-term debt — 20,586 Total current liabilities 92,592 88,674 Long-term debt, net of discount and deferred financing costs 172,820 126,588 Deferred tax liabilities 121,529 1,906 Other long-term liabilities 6,921 22,474 Total liabilities 393,862 239,642 Total stockholders' and members' equity 867,824 511,357 Total liabilities, redeemable noncontrolling interest and stockholders’ and members’ equity $ 1,261,686 $ 750,999 Non-GAAP Financial Measures Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Free Cash Flow, Adjusted Free Cash Flow Margin, Adjusted Free Cash Flow Conversion and Maintenance Capital Expenditures are non-GAAP supplemental financial measures used by our management and by external users of our financial statements such as investors, research analysts and others, in the case of Adjusted EBITDA, to assess our operating performance on a consistent basis across periods by removing the effects of development activities, provide views on capital resources available to organically fund growth projects and, in the case of Adjusted Free Cash Flow, assess the financial performance of our assets and their ability to sustain dividends or reinvest to organically fund growth projects over the long term without regard to financing methods, capital structure, or historical cost basis. These measures do not represent and should not be considered alternatives to, or more meaningful than, net income, income from operations, net cash provided by operating activities or any other measure of financial performance presented in accordance with GAAP as measures of our financial performance. Adjusted EBITDA and Adjusted Free Cash Flow have important limitations as analytical tools because they exclude some but not all items that affect net income, the most directly comparable GAAP financial measure. Our computation of Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Free Cash Flow, Adjusted Free Cash Flow Margin, Adjusted Free Cash Flow Conversion and Maintenance Capital Expenditures may differ from computations of similarly titled measures of other companies. Non-GAAP Measure Definitions: We define Adjusted EBITDA as net income before depreciation, depletion and accretion, interest expense, income tax expense, stock and unit-based compensation, loss on extinguishment of debt, unrealized commodity derivative gain (loss), and non-recurring transaction costs. Management believes Adjusted EBITDA is useful because it allows management to more effectively evaluate the Company’s operating performance and compare the results of its operations from period to period and against our peers without regard to financing method or capital structure. We exclude the items listed above from net income in arriving at Adjusted EBITDA because these amounts can vary substantially from company to company within our industry depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired. We define Adjusted EBITDA Margin as Adjusted EBITDA divided by total sales. We define Adjusted Free Cash Flow as Adjusted EBITDA less Maintenance Capital Expenditures. Management believes that Adjusted Free Cash Flow is useful to investors as it provides a measure of the ability of our business to generate cash. We define Adjusted Free Cash Flow Margin as Adjusted Free Cash Flow divided by total sales. We define Adjusted Free Cash Flow Conversion as Adjusted Free Cash Flow divided by Adjusted EBITDA. We define Maintenance Capital Expenditures as capital expenditures excluding growth capital expenditures. Atlas Energy Solutions Inc. – Supplemental Information Reconciliation of Adjusted EBITDA and Adjusted Free Cash Flow to Net Income (unaudited, in thousands) Three Months Ended Year Ended December 31, 2023 September 30, 2023 December 31, 2022 December 31, 2023 December 31, 2022 December 31, 2021 Net income $ 36,050 $ 56,327 $ 62,583 $ 226,493 $ 217,006 $ 4,258 Depreciation, depletion and accretion expense 12,266 10,746 8,089 41,634 28,617 24,604 Interest expense 4,731 4,673 3,993 17,452 15,803 30,290 Income tax expense 11,010 7,637 434 31,378 1,856 831 EBITDA $ 64,057 $ 79,383 $ 75,099 $ 316,957 $ 263,282 $ 59,983 Stock and unit-based compensation 3,749 1,414 135 7,409 678 129 Loss on extinguishment of debt — — — — — 11,922 Unrealized commodity derivative loss — — 1 — 66 (66 ) Non-recurring transaction costs 892 3,281 — 5,289 — — Adjusted EBITDA $ 68,698 $ 84,078 $ 75,235 $ 329,655 $ 264,026 $ 71,968 Maintenance Capital Expenditures $ 12,180 $ 15,557 $ 8,186 $ 38,524 $ 35,473 $ 7,715 Adjusted Free Cash Flow $ 56,518 $ 68,521 $ 67,049 $ 291,131 $ 228,553 $ 64,253 Atlas Energy Solutions Inc. – Supplemental Information Reconciliation of Adjusted Free Cash Flow to Net Cash Provided by Operating Activities (unaudited, in thousands, except percentages) Three Months Ended Year Ended December 31, 2023 September 30, 2023 December 31, 2022 December 31, 2023 December 31, 2022 December 31, 2021 Net cash provided by operating activities $ 85,503 $ 55,406 $ 50,012 $ 299,027 $ 206,012 $ 21,356 Repayment of paid-in-kind interest borrowings — — — — — 22,233 Current income tax expense (benefit)(1) 868 (1,795 ) 436 2,177 1,858 471 Change in operating assets and liabilities (22,941 ) 22,781 21,410 6,947 41,774 8,622 Cash interest expense(1) 4,371 4,363 3,764 16,354 14,904 19,173 Maintenance capital expenditures(1) (12,180 ) (15,557 ) (8,186 ) (38,524 ) (35,473 ) (7,715 ) Non-recurring transaction costs 892 3,281 — 5,289 — — Other 5 42 (387 ) (139 ) (522 ) 113 Adjusted Free Cash Flow $ 56,518 $ 68,521 $ 67,049 $ 291,131 $ 228,553 $ 64,253 Adjusted EBITDA Margin 49 % 53 % 50 % 54 % 55 % 42 % Adjusted Free Cash Flow Margin 40 % 43 % 45 % 47 % 47 % 37 % Adjusted Free Cash Flow Conversion 82 % 81 % 89 % 88 % 87 % 89 % (1) A reconciliation of the adjustment of these items used to calculate Adjusted Free Cash Flow to the Consolidated Financial Statements is included below. Atlas Energy Solutions Inc. – Supplemental Information Reconciliation of Maintenance Capital Expenditures to Purchase of Property, Plant and Equipment (unaudited, in thousands) Three Months Ended Year Ended December 31, 2023 September 30, 2023 December 31, 2022 December 31, 2023 December 31, 2022 December 31, 2021 Maintenance Capital Expenditures, accrual basis reconciliation: Purchases of property, plant and equipment $ 119,793 $ 98,858 $ 35,428 $ 365,486 $ 89,592 $ 19,371 Changes in operating assets and liabilities associated with investing activities(1) (1,828 ) 40,153 6,031 66,132 20,747 2,362 Less: Growth capital expenditures (105,785 ) (123,454 ) (33,273 ) (393,094 ) (74,866 ) (14,018 ) Maintenance Capital Expenditures, accrual basis $ 12,180 $ 15,557 $ 8,186 $ 38,524 $ 35,473 $ 7,715 (1) Positive working capital changes reflect capital expenditures in the current period that will be paid in a future period. Negative working capital changes reflect capital expenditures incurred in a prior period but paid during the period presented. Atlas Energy Solutions Inc. – Supplemental Information Reconciliation of Current Income Tax Expense to Income Tax Expense (unaudited, in thousands) Three Months Ended Year Ended December 31, 2023 September 30, 2023 December 31, 2022 December 31, 2023 December 31, 2022 December 31, 2021 Current tax expense reconciliation: Income tax expense $ 11,010 $ 7,637 $ 434 $ 31,378 $ 1,856 $ 831 Less: deferred tax expense (10,142 ) (9,432 ) 2 (29,201 ) 2 (360 ) Current income tax expense (benefit) $ 868 $ (1,795 ) $ 436 $ 2,177 $ 1,858 $ 471 Atlas Energy Solutions Inc. – Supplemental Information Cash Interest Expense to Income Expense, Net (unaudited, in thousands) Three Months Ended Year Ended December 31, 2023 September 30, 2023 December 31, 2022 December 31, 2023 December 31, 2022 December 31, 2021 Cash interest expense reconciliation: Interest expense, net $ 2,230 $ 1,496 $ 3,990 $ 7,689 $ 15,760 $ 30,276 Less: Interest paid-in-kind through issuance of additional term loans — — — — — (3,039 ) Less: Amortization of debt discount (292 ) (231 ) (119 ) (761 ) (457 ) (7,320 ) Less: Amortization of deferred financing costs (67 ) (79 ) (110 ) (337 ) (442 ) (739 ) Less: Interest income 2,500 3,177 3 9,763 43 14 Less: Other — — — — — (19 ) Cash interest expense $ 4,371 $ 4,363 $ 3,764 $ 16,354 $ 14,904 $ 19,173 View source version on businesswire.com: https://www.businesswire.com/news/home/20240227616947/en/