Atlas Energy Solutions Inc. (NYSE: AESI) (“Atlas” or the
“Company”) today reported financial and operating results for the
first quarter of 2023.
First Quarter 2023 Highlights
- Total sales of $153.4 million (on sales volumes of 2.8 million
tons)
- Net Income of $62.9 million (41.0% margin)
- Adjusted EBITDA of $84.0 million (54.8% Adjusted EBITDA Margin)
(1)
- Net Cash Provided by Operating Activities of $54.2 million
- Adjusted Free Cash Flow of $76.9 million (50.1% Adjusted Free
Cash Flow Margin) (1)
- Commenced construction of the Dune Express in March 2023
- Kermit expansion remains on time and on budget
- The Board of Directors declared a quarterly variable dividend
of $0.15 per share of Class A common stock and a corresponding
distribution of $0.15 per Unit for holders of Atlas Sand Operating,
LLC Units
Financial Summary
For the Three Months Ended March 31,
December 31,
2023
2022
(unaudited, $ in thousand) Sales
$
153,418
$
149,865
Net Income
$
62,905
$
62,583
Net Income Margin
41
%
42
%
Adjusted EBITDA (1)
$
84,033
$
75,235
Adjusted EBITDA Margin (1)
55
%
50
%
Net Cash Provided by Operating Activities
$
54,235
$
50,012
Adjusted Free Cash Flow (1)
$
76,919
$
67,049
Adjusted Free Cash Flow Margin (1)
50
%
45
%
(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 a tremendous quarter for Atlas and a great start to the
year. We set a Company record for quarterly sales volumes at 2.8
million tons which annualizes to a run-rate of over 11.0 million
tons per year. We generated $84.0 million in Adjusted EBITDA and
given our low levels of required maintenance capital expenditures
we converted over 91% of that Adjusted EBITDA to Adjusted Free Cash
Flow. We also declared a $0.15 per share dividend this quarter, our
sixth distribution.”
Bud Brigham continued, “In terms of growth capex, we are
progressing nicely on our Kermit facility expansion, which we
expect to come online, on-time and on-budget, later this year,
which should increase our Company’s production approximately 50%.
Importantly, we’ve officially kicked off the process of building
the Dune Express, which included the placement of orders for long
lead time equipment.”
John Turner, President & CFO, added, “Atlas is in a great
position on the heels of an excellent first quarter for this fiscal
year 2023. Our balance sheet and liquidity positions are strong,
with $352.7 million of cash on the balance sheet, an undrawn ABL
facility providing for $73.9 million of borrowing capacity and a
modest $167.8 million of total debt between our term loan and
various equipment leasing facilities as of the end of the first
quarter. The rollout of our logistics platform continues to
progress well, as we delivered nearly 200 payloads in excess of 70
tons per truck in the first quarter of 2023. We are intently
focused on delivering attractive rates of return on our on-going
growth projects, and we continue to see strength in the Permian
Basin sand and logistics markets.”
First Quarter 2023 Financial Results
First quarter 2023 product sales increased $6.3 million, or
5.1%, sequentially, to $128.1 million, driven by a combination of
both additional sales volumes and higher average minegate pricing
(2.8 million tons at $46.45 per ton vs. 2.7 million tons at $45.69
per ton). First quarter 2023 service sales decreased by $2.7
million, or 9.7%, sequentially, to $25.3 million. The decrease in
service sales was associated with softer freight pricing
experienced during the period.
First quarter 2023 cost of goods sold (excluding depreciation,
depletion and accretion expense) (“COGS”) decreased by $ 4.7
million, or 7.0%, sequentially, to $62.6 million. The decrease in
our COGS was primarily driven by a meaningful reduction in contract
labor costs associated with the ongoing transition to bring our
dredge mining operations fully in-house and a reduction in last
mile logistics costs.
Selling, general and administrative expenses (“SG&A”) for
the first quarter of 2023 increased $0.6 million, or 7.6%,
sequentially, to $8.5 million, driven by increases in stock and
unit-based compensation.
Net income for the first quarter of 2023 increased $0.3 million,
or 0.5%, as compared to the fourth quarter of 2022, to $62.9
million. The increase in our net income was primarily associated
with higher revenue generation which was partially offset by higher
taxes for the period.
Adjusted EBITDA for the first quarter of 2023 increased by $8.8
million, or 11.7%, as compared to the fourth quarter of 2022, to
$84.0 million.
Liquidity, Capital Expenditures and Other
As of March 31, 2023, the Company’s total liquidity was $426.6
million, which was comprised of $352.7 million in cash and cash
equivalents (held in cash, CDs, and 4-week Treasury bills) and
$73.9 million of availability under the Company’s ABL 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 $60.9 million during
the first quarter of 2023, driven largely by costs associated with
the Kermit Plant expansion project and the payments for long-lead
time equipment for the construction of the Dune Express. The Kermit
Plant expansion is progressing on-time and on-budget. We expect the
additional 5.0mmtpy to come online during the fourth quarter of
this year.
As of March 31, 2023, Atlas had 100,000,000 shares of common
stock outstanding, comprised of 57,147,501 shares of Class A common
stock outstanding (representing 57.1% of the total voting power)
and 42,852,499 shares of Class B common stock outstanding
(representing 42.9% of the total voting power).
Quarterly Dividend
On May 8, 2023, the Board of Directors (the “Board) of Atlas
declared a quarterly variable dividend to Class A common
stockholders of $0.15 per share. The Board also declared a
corresponding distribution of $0.15 per Unit for holders of Units
of Atlas Sand Operating, LLC. The dividend will be payable on May
22, 2023 to holders of record of Class A common stock and Units at
the close of business on May 15, 2023.
John Turner, President & CFO added, “Atlas has demonstrated
its ability to generate meaningful cash flow across industry
cycles. Given our continued cash generation, we are well positioned
to return capital to shareholders. We are committed to creating
long-term value for our shareholders through a balanced strategy of
returning cash to shareholders and reinvesting our cash flow at
high rates of return.”
Conference Call Information
The Company will host a conference call to discuss financial and
operational results on Tuesday, May 9, 2023 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 has also posted an updated investor presentation
titled “Investor Presentation May 2023” at https://ir.atlas.energy/
in the "Presentations” section under “News & Events” tab on the
Company’s Investor Relations webpage.
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 in 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. 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 our business strategy, our industry, our future
operations and profitability, expected capital expenditures and the
impact of such expenditures on our performance, 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 continued impacts of COVID-19,
including any new strains or variants, the ongoing war in Ukraine,
adverse developments affecting the financial services industry, our
ability to complete growth projects, including the Dune Express, on
time and on budget, 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
final prospectus, dated March 8, 2023, filed with the SEC pursuant
to Rule 424(b) under the Securities Act on March 10, 2023 in
connection with our initial public offering. 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
(unaudited, $ in thousands,
except per share data)
For the Three Months
Ended
March 31,
December 31,
2023
2022
(unaudited, $ in thousand) Product sales
$
128,142
$
121,881
Service sales
25,276
27,984
Total sales
153,418
149,865
Cost of sales (excluding depreciation, depletion and accretion
expense)
62,555
67,285
Depreciation, depletion and accretion expense
8,519
7,791
Gross profit
82,344
74,789
Selling, general and administrative expense (including stock and
unit-based expense of $622 and $135 for the three months ended
March 31, 2023 and December 31, 2022, respectively)
8,504
7,903
Operating income
73,840
66,886
Interest expense, net
(3,442
)
(3,990
)
Other income
184
121
Income before income taxes
70,582
63,017
Income tax expense
7,677
434
Net income
$
62,905
$
62,583
Less: Pre-IPO net income attributable to Atlas Sand Company, LLC
54,561
Less: Net income attributable to redeemable noncontrolling interest
6,610
Net income attributable to Atlas Energy Solutions, Inc.
$
1,734
Net income per Class A common share Basic
$
0.03
Diluted
$
0.03
Weighted average Class A common shares outstanding Basic
57,148
Diluted
57,408
Atlas Energy Solutions
Inc.
Condensed Consolidated
Statements of Cash Flows
(unaudited, $ in thousands)
For the Three Months
Ended
March 31,
December 31,
2023
2022
(unaudited, $ in thousand) Operating Activities: Net
income
$
62,905
$
62,583
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation, depletion and accretion expense
8,808
8,089
Amortization of debt discount
118
119
Amortization of deferred financing costs
87
110
Stock and unit-based compensation
622
135
Deferred income tax
3,808
(2
)
Commodity derivatives gain
-
15
Settlements on commodity derivatives
-
141
Other
206
232
Changes in operating assets and liabilities
(22,319
)
(21,410
)
Net cash provided by operating activities
54,235
50,012
Investing Activities: Purchases of property, plant
and equipment
(60,940
)
(35,428
)
Net cash used in investing activities
(60,940
)
(35,428
)
Financing Activities: Net proceeds from IPO
303,426
-
Payment of offering costs
(1,581
)
-
Payments on term loan borrowings
(8,226
)
(7,987
)
Issuance costs associated with debt financing
(530
)
-
Payments under finance leases
(738
)
(307
)
Member distributions
(15,000
)
(15,000
)
Net cash provided by (used in) financing activities
277,351
(23,294
)
Net increase (decrease) in cash and cash equivalents
270,646
(8,710
)
Cash and cash equivalents, beginning of period
82,010
90,720
Cash and cash equivalents, end of period
$
352,656
$
82,010
Atlas Energy Solutions
Inc.
Condensed Consolidated Balance
Sheets
($ in thousands)
As of As of March 31, 2023 December
31, 2022 (unaudited) Assets Current assets: Cash and
cash equivalents
$
352,656
$
82,010
Accounts receivable, including related parties
95,112
74,392
Inventories, prepaid expenses and other current assets
22,886
22,329
Total Current Assets
470,654
178,731
Property, plant and equipment, net
601,964
541,524
ROU Assets
29,151
23,222
Other long-term assets
2,099
7,522
Total Assets
$
1,103,868
$
750,999
Liabilities, redeemable noncontrolling interest and
stockholders’ and members’ equity Current liabilities: Accounts
payable, including related parties
$
34,512
$
31,799
Accrued liabilities and other current liabilities
44,616
36,289
Current portion of long-term debt
25,102
20,586
Total Current Liabilities
104,230
88,674
Long-term debt, net of discount and deferred financing costs
114,018
126,588
Deferred tax liabilities
23,467
1,906
Other long-term liabilities
27,733
22,474
Total Liabilities
269,448
239,642
Redeemable noncontrolling interest
777,955
-
Total stockholders' and members' equity
56,465
511,357
Total liabilities, redeemable noncontrolling interest and
stockholders’ and members’ equity
$
1,103,868
$
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 (loss) before
depreciation, depletion and accretion, interest expense, income tax
expense, stock and unit-based compensation, gain (loss) on
extinguishment of debt and unrealized commodity derivative gain
(loss). 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)
For the Three Months Ended March
31, December 31,
2023
2022
(unaudited, $ in thousand) Net income
$
62,905
$
62,583
Depreciation, depletion and accretion expense
8,808
8,089
Interest expense
4,021
3,993
Income tax expense
7,677
434
EBITDA
83,411
75,099
Stock and unit-based compensation expense
622
135
Unrealized commodity derivative gain
-
1
Adjusted EBITDA
84,033
75,235
Maintenance Capital Expenditures
7,114
8,186
Adjusted Free Cash Flow
$
76,919
$
67,049
Atlas Energy Solutions Inc. –
Supplemental Information
Reconciliation of Adjusted
Free Cash Flow to Net Cash Provided by Operating Activities
(unaudited, $ in thousands)
For the Three Months Ended
March 31,
December 31,
2023
2022
(unaudited, $ in thousand) Net cash provided by
operating activities
$
54,235
$
50,012
Current income tax expense (1)
3,869
436
Change in operating assets and liabilities
22,319
21,410
Cash interest expense (1)
3,816
3,764
Maintenance Capital Expenditures
(7,114
)
(8,186
)
Other
(206
)
(387
)
Adjusted Free Cash Flow
$
76,919
$
67,049
Adjusted EBITDA Margin
55
%
50
%
Adjusted Free Cash Flow Margin
50
%
45
%
Adjusted Free Cash Flow Conversion
92
%
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)
For the Three Months Ended March
31, December 31,
2023
2022
(unaudited, $ in thousand) Maintenance capital expenditures, accrual basis
reconciliation: Purchase of
property, plant and equipment
$
60,940
$
35,428
Changes in operating assets and liabilities associated with
investing activities (1)
6,811
6,031
Less: Growth capital expenditures
(60,637
)
(33,273
)
Maintenance Capital Expenditures, accrual basis
$
7,114
$
8,186
(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)
For the Three Months
Ended
March 31,
December 31,
2023
2022
(unaudited, $ in thousand) Current tax expense reconciliation
Income tax expense
$
7,677
$
434
Less: deferred tax liabilities
(3,808
)
2
Current income tax expense
$
3,869
$
436
Atlas Energy Solutions Inc. –
Supplemental Information
Cash Interest Expense to
Income Expense, Net
(unaudited, $ in thousands)
For the Three Months Ended March
31, December 31,
2023
2022
(unaudited, $ in thousand) Cash
interest expense reconciliation
Interest expense, net
$
3,442
$
3,990
Less: Amortization of debt discount
(118
)
(119
)
Less: Amortization of deferred financing costs
(87
)
(110
)
Less: Interest income
579
3
Cash interest expense
$
3,816
$
3,764
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230508005684/en/
Investor Contact Kyle Turlington T: 512-220-1200
IR@atlas.energy
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