Atlas Energy Solutions Inc (AESI) 2024 Q4 法說會逐字稿

Greetings, and welcome to Atlas Energy Solutions Fourth Quarter and Year-End 2024 Financial and Operational Results Conference Call.

(Operator Instructions) As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Kyle Turlington, Vice President, Investor Relations.

Thank you.

You may begin.

Hello, and welcome to the Atlas Energy Solutions conference call and webcast for the fourth quarter of 2024.

With us today are Bud Brigham, Executive Chair; John Turner, President and CEO; Blake McCarthy, CFO; and Chris Scholla, COO; Bud, John, Blake and Chris will be sharing their comments on the company's operational and financial performance for the fourth quarter of 2024 and after which we will open the call today.

Before we begin our prepared remarks, I would like to remind everyone that this call will include forward-looking statements as defined under the US securities laws.

Such statements are based on the current information and management's expectations as of this statement and are not guarantees of future performance.

Forward-looking statements involve certain risks, uncertainties and assumptions that are difficult to predict.

As such, our actual outcomes and results could differ materially.

You can learn more about these risks in the annual report on Form 10-K we filed with the SEC on February 27, 2024, our quarterly reports on Form 10-Q and current reports on Form 8-K and other SEC filings.

You should not place undue reliance on forward-looking statements, and we undertake no obligation to update these forward-looking statements.

We will also make reference to certain non-GAAP financial measures in adjusted EBITDA adjusted free cash flow and other operating metrics and statistics.

You will find the GAAP reconciliation comments and calculations in yesterday's press release.

With that said, I will turn the call over to John Turner.

Thank you, Kyle, and thanks to everyone for joining us today to discuss our full year and fourth quarter 2024 operational and financial results. 2025 is set to be a transformational year for Atlas and we have come out of the blocks at a full sprint.

On January 12, we announced our first commercial delivery of the Dune Express.

Our team is now focused on ramping our volumes working towards our goal of full effective utilization by midyear, if not sooner.

Additionally, on January 24, we announced that we had delivered 100 loads of proppant utilizing our first two robo trucks, which are semi trucks equipped with a self-driving system enabled through our partnership with Kodiak robotics.

By the end of this month, we expect the number to have grown to approximately 300 loads.

I want to take a minute to look back to Atlas' IPO in March of 2023 and demonstrate how much has changed since that time.

At the time of our IPO, the Dune Express was just a 42-mile right of way.

Today, we are making commercial deliveries off the second longest conveyor ever built.

We encountered quite a few eye roles when we said we were going to bring autonomous driving technology to the oil fields of

(inaudible).

Today, Atlas is now running the world's first commercial driverless delivery operation and will soon be doing autonomous deliveries off the Dune Express.

The concept of multi-trailer operation was viewed as a novelty.

Today, we are doing multi-trailer deliveries of the Dune Express, delivering 70 to 100 tons per driver versus over-the-road deliveries of approximately 24 tons.

Back in March of 2023, Atlas' annual productive capacity stood at around 11 million tons with no wet sand offering, and we were running only 11 last motors that delivered just 20% of our total sales volumes.

Today, our productive capacity is nearly 2.5 times with the largest wet sand offering in the Permian, and our logistics operation is currently running (inaudible) crews delivering more than 80% of our total sales volumes.

Since our IPO, we have also completed two estimation acquisitions that have expanded our solutions offering while enhancing our cash flow generation.

Finally, at the time of the IPO, we can't reinforce that shareholder returns andU critically, return of capital to shareholders were core to Atlas' corporate DNA.

On February 19, we announced a 4% increase to our quarterly dividend from $0.24 a share to $0.25 a share, which represents a 67% increase from our initial dividend of $0.15 a share.

We talked a big game during our IPO, and while we have certainly had some bumps in the road, we have delivered on those promises.

I could not be prouder of what our team has accomplished and the milestones we have achieved, but this is only the beginning for Atlas.

Yesterday, we closed on the acquisition of Moser Energy Systems, our platform investment into the distributed power market.

With this large fleet of natural gas-powered reciprocating generators the (inaudible) platform provides us with a new avenue of growth into a rapidly expanding market.

Moser also provides a greater degree of cash flow durability by adding significant exposure to the more stable production phase of the OFS value chain.

As discussed on our call on January 27, we currently plan to Moser's fleet from its current size of 212 megawatts to approximately 310 megawatts by the end of 2026.

Customer reception to the Moser acquisition has been very positive to say the least, reinforcing our initial investment thesis.

As we work through the integration process, if this customer interest begins to translate into hard contracts, we have ample room to accelerate the growth of this platform.

To our new team members joining us from Moser, welcome aboard, it's going to be a fun ride.

Turning back to our profit and logistics business.

The Permian proppant market is beginning to show early signs of the healing we have been looking for.

Spot sand prices fell to cyclical lows during the fourth quarter, driven by reduced customer demand related to seasonal slowdown and competitors throwing out desperation (inaudible) pricing during the RFP season.

Coming into the RFP season with the imminent commercial deployment of the Dune Express, we armed our sales force with the objective to go out there and seize the volumes with our best customers.

However, we certainly were not willing to contract our volumes at the desperation pricing thrown out there by our more distressed competitors.

Fortunately, the key customers we have been targeting recognize at outsourcing their sand and supply and delivery to distressed providers just take a few bucks per ton as a recipe for disaster.

Instead, we are seeing customers choose to commit 100% of their 2025 sand volumes to Atlas, their partner of choice in profit, supply and logistics.

They correctly identified that they can rely on Atlas to eliminate the operational headache that sand can represent in the oilfield.

And when things do go wrong, we will break our back making things right which is why we entered the year in a highly contracted position that we expect to grow over the coming weeks.

Since the turn of the year and with the great hope of large RFP volume wins memory for many of our competitors, we have seen much more rational behavior on the pricing front.

The combination of the seasonal recovery and completion activity and recent production issues across the industry due to extremely cold weather led to a spike in spot prices over the last few weeks, while spot prices have since moderated, we don't expect them to return to lows of the fourth quarter anytime soon.

Additionally, as some of the more disadvantaged mines continue to struggle with underutilization, we are actively watching for supply attrition in the market.

Consequently, we are reasonably bullish about a gradual return (inaudible) and sand pricing, although at this point, we don't expect that until late in the year.

With that, I'll now turn the call over to Chris Scholla to provide more detail around the commission on Dune Express and our exciting leap into drivers deliveries.

Thanks, John.

We continue to make significant progress in the operational ramp-up of the Dune Express.

The commissioning process remains on schedule.

And while there are still components and processes that require optimization, we are pleased with the same progress thus far.

Infrastructure systems of this size and scale don't simply reach full capacity at the flip of a switch.

It takes time and meticulous refinement.

That said, over the first two months of operation, we have seen a strong and consistent ramp remain on track to reach our full target capacity sometime in the second quarter.

Another key milestone was achieved in December.

When we completed the construction of a 2-mile caliche road an onload facility, connecting our legacy high-crush Kermit mines to the Dune Express.

This provides incremental flex volumes to the system, allowing us to better optimize silo volumes across multiple distribution points.

The Dune Express is a highly sophisticated logistics ecosystem that requires close synchronization between our mining operations and logistics teams, and we are making rapid strides toward our desired end state.

In addition, we are making meaningful advancements in our autonomous trucking program.

By the end of this month, our two Kodiak enabled autonomous trucks will have completed approximately 300 deliveries in the Delaware Basin and we've already begun transitioning autonomous deliveries off the Dune Express.

As we further integrate autonomy into our operations, we moved closer to our ultimate goal of delivering sand directly to customer well sites without human intervention.

Lastly, I want to take a moment to recognize the incredible team that is making this all possible.

As John mentioned earlier, this has required long days and even longer nights, and I'm extremely proud of our Atlas team.

What was once an ambitious vision is now becoming a market-changing reality and this is a testament to the team's hard work and dedication.

With that, I will now turn the call over to our CFO, Blake McCarthy, for a financial update.

Thanks, Chris.

Atlas recorded full year 2024 revenue of $1.1 billion.

Total company's adjusted EBITDA was $288.9 million or 27% of revenue.

Logistics revenue for the year was $540.5 million.

For the fourth quarter of 2024, we reported total sales of $271.3 million and adjusted EBITDA of $63.2 million or 23.3% of revenue.

Revenue from profit sales was $128.4 million.

Total pro sales volumes for the quarter declined sequentially to 5.1 million tons.

The decline was driven primarily by the seasonal slowdown in activity witnessed in the Permian as operators exhausted capital budgets.

Despite the slowdown witnessed during the quarter, our Encore distributed mining networks set a quarterly volume record.

Our average revenue per ton for the quarter was $25.31 which was bolstered by contractual payments related to required comersand pickups, not made during the holiday slowdown.

Adjusted for these payments, average sales price for the fourth quarter was $23.28 per tonne.

The sequential decline in realized pricing relative to those of the third quarter was less than expected due primarily to contracted volumes representing a larger percentage of the overall volume mix.

Moving to service sales, which is revenue generated by our logistics operations, we reported revenue of $142.9 million for the quarter.

Total cost of sales for Atlas, excluding DD&A for the quarter were $191 million, consisting of $61 million of planned operating costs, $124.3 million related to service costs and $5.7 million in royalties.

For the fourth quarter, our per ton plant operating costs were $12.02 per ton, excluding royalties, which was down sequentially from the third quarter but still elevated versus our normalized levels.

Lower volumes and plant optimization expenses related to our previously announced initiatives in Q3 drove the elevated fourth quarter plant operating costs.

We expect OpEx per ton cost to further normalize in the first quarter, primarily driven by higher volumes and more efficient operations.

Cash SG&A expense for the quarter was $19.1 million elevated relative to our historical levels by consulting and litigation expenses.

Interest expense for the quarter was $12.3 million.

Depreciation, depletion and amortization expense for the quarter was $30.4 million.

Net income was $14.4 million or 5.3% of revenue, and earnings per share was $0.13.

Net cash provided by operating activities for the quarter was $70.9 million.

Adjusted EBITDA for the period was $63.2 million and adjusted EBITDA margin of 23.3%.

Adjusted free cash flow, which we define as adjusted EBITDA less maintenance CapEx for the quarter was $47.9 million or 17.7% of revenue.

Growth CapEx during the quarter equated to $50 million, which included construction of the Dune Express ancillary doing express expenditures like the sand highway and offload facilities and upgrades to our primary permit plan.

Maintenance CapEx during the quarter was $15.3 million.

As John mentioned earlier, we are raising our quarterly dividend to $0.25 per share, which represents a 4% increase and equates approximately to a 4.8% (inaudible) yield.

Accounting for our latest dividend announcement, we have paid out $252 million in total dividends and distribution since inception.

The combination of our recent equity offering to raise $254.1 million of net proceeds from the sale of shares of our common stock after deducting the writing discounts and commissions and our recently announced debt refinancing simplifies our go-forward capital structure, collapsing four different loan facilities into a single term loan and reduces our annual debt service costs.

This should enable increased optionality as we look to optimally redeploy go-forward free cash flow through a combination of growth investment opportunities and return of capital to shareholders.

As John also touched on in his remarks, we expect our plants to be quite busy this year.

Today, we have approximately 22 million tons committed in 2025 and expect that (inaudible) 25 million tonnes in relatively short order.

We expect to sell north of 25 million tons in 2025, which compares to around 20 million tons sold in 2024.

Our recent market share gains are a testament to Atlas' efforts to position itself as the reliable partner of choice to the best operators in the Permian Basin.

Average sales price for the year is expected to be in the low 20s.

With the construction of the Dune Express completed, our capital spending will come down significantly year-over-year.

Total CapEx for 2025 is currently expected to be approximately $115 million, of which $27 million is budgeted for expanding the asset base of Moser.

The remainder is evenly split between growth and maintenance for our proppant and logistics business.

With the turn of the calendar, our customers are now looking to deploy their refreshed capital budgets and are actively ramping activity despite recent disruptions caused by colder weather.

Consequently, we expect Q1 volumes to be up 10% to 15% sequentially relative to Q4 levels.

For the first quarter 2025, we expect adjusted EBITDA to be between $75 million and $85 million.

As the year progresses, we expect our financials to more fully reflect the accretive impact of the Dune Express on our logistics margins. and expect Q1 to represent the lowest quarter for this fiscal year.

Based on current market conditions and our expectations of incremental customer demand, we expect full year 2025 adjusted EBITDA to be north of $100 million inclusive (inaudible) of contribution from the Moser acquisition.

For future reporting, we will break out our power business as a separate segment.

Before we open up the call for Q&A, a few comments from our Chairman, Bud Brigham.

Thank you, Blake.

I just want to briefly piggyback and amplify some of John's earlier comments about just how all our outlets has come since we founded the company.

Growing up in Midland, I have vivid memories of visiting the nearby sand buns for picnics and birthday parties.

Looking back now, it seems crazy that as recently as 2017, the majority of the sand being pumped downhole in the Permian wells was shipped from Wisconsin mines that were 1,200 miles away, very expensive, complex and unreliable supply chain.

Over the last seven years, Atlas has delivered a continuum of constructive disruptions, enhancing Permian as the premier producing region in the country and as a more efficient, reliable and safer energy factory on the ground.

First, it was the state-of-the-art plants we built at (inaudible) uniquely included redundancy conveyors and remote automation from here in Austin.

Later, we added the Encore mobile mines with our Hi-Crush acquisition.

And now we've completed the revolutionary Dune Express, a project that many thought was a pipe dream, which effectively extends our permit mines 42 miles to the west into the premier producing region in the entire country.

As a result of these Atlas innovations, we are now delivering sand with less than 20 trucking miles.

That's a reduction from 1,200 miles of rail and trucking to less than 20 miles via increasingly efficient, automated and safer delivery systems.

Our last mile deliveries are increasingly via multi trailers and we're continuing to stay in driverless deliveries with our (inaudible) autonomous technologies.

As we've stated before, Atlas is uniquely positioned to modernize proppant and logistics systems in the Permian Basin and we are doing just that with much more to come.

I will briefly summarize some high-level facts about Atlas position in the proppant and logistics space.

Today, Atlas is the largest and lowest-cost proppant producer in the Permian, and that's for both wet and dry sand.

We are also the largest last mile provider.

We are now running the world's first proppant conveyor system and the world's first driverless oilfield delivery operation.

We are both logistically and cost advantaged to almost every drilling operation in the Midland and Delaware basins.

As the Permian continues to mature into a factory model with increasingly scaled operators, scale and automation for proppant and logistics are increasingly essential.

Atlas is unique and differentiated.

We are the one-stop shop for the largest raw material and delivery systems in the Permian energy manufacturing process.

And now we are also beginning our journey into distributed power generation with Moser Energy Systems.

Our team is very excited about collaborating with the great Moser innovators to find ways to innovate, disrupt and grow in the power market to solve problems for our E&P customers that we proudly serve.

In closing, our mission is to improve human beings access to the hydrocarbons that power our lives.

And by doing so, we maximize the value creation for our shareholders.

As we celebrate our two-year anniversary as a public company and approach 8 years as a company, we remain steadfastly committed to that mission.

I could not be prouder of our talented and inspirational employees who come to work every day delivering on that mission.

They are making the Permian Basin a more efficient, safer and cleaner place to work and live.

Last and importantly, as mentioned, given our core commitment to our shareholders, accounting for the latest dividend announcement, I am proud to proclaim that since inception, Atlas has paid out $252 million in cash distributions with more to come.

This is only the beginning for Atlas.

With that, I would like to now turn the call back to the operator for Q&A.

Thank you.

The floor is now open for questions.

(Operator Instructions)

Keith MacKey, RBC Capital Markets.

Hi, good morning and thanks for all the colors so far.

I just wanted to start out on the Dune Express.

Can you speak to maybe how much volume you've moved down the Dune thus far since the commissioning in early January there?

And maybe some of the gating factors that are required to get to that full effective utilization by midyear there?

Yes.

Thanks, Keith.

This is Chris Scholla.

Look, I think reflecting back right, hindsight fee in 2020 years ago, we really should have said we were launching Q1 of 2025 rather than kicking off a project leading into the Christmas and New Year's holiday.

That always has a bit of an impact.

And on that note, I do want to give a big thank you to our employees and vendors that really supported us over the holiday launch of this project.

In general, we really haven't had to overcome any serious obstacles.

I mean we had some programming issues when we started out this kind of slowed us in December and January, but that was really just start-up and optimization, synchronization of the system, if you will.

We had to work through some power issues, but we have solutions there and are making really great improvements.

We're already running close to 50% to 60% of capacity today.

There will be some planned downtime in March as a startup, you got to go tighten up that belt.

But I would say, overall, the ramp phase is really going as expected.

We've already proven running the belt at a full capacity instantaneous run rate.

And at this point in time, it's really about increasing our daily run time through reducing the system nuisance trips and working to eliminate and reduce that daily planned commissioning downtimes.

Yes.

If you think about it from a financial perspective, the full impact and logistics margins won't be fully realized until the year.

But it will be a steady accretive tailwind as we work through the first half.

So the tonne delivered (inaudible) our highest margin tons by far.

So as we go from marginal amounts in early January, the full run rate in Q2, margins realized by our logistics business.

Those will steadily increase Q3, representing the first quarter of full financial impact, bringing logistic margins into the mid- to high 20s.

So with respect to the first half, the impact is obviously smallest in Q1 as we made our first commercial delivery in January and have been ramping since then.

So while it is in a straight line, flip points us to getting to our target annual run rate of 10 million to 11 million tonnes on an annualized basis at some point in Q2.

So if you think about it, marginal impact in Q1, more of a tailwind in Q2 and full impact in the second half from a modeling perspective.

Got it.

That's helpful.

Maybe just turning to capital allocation.

See if you expecting to spend $115 million CapEx this year, which certainly is down year-over-year.

But can you maybe speak to how you're balancing some of the opportunities that you see in the organic portfolio now with returning cash to shareholders?

Do you have an expected free cash allocation in terms of split between returns and growth and other things?

Or is it really just on a highest return basis?

This is John.

Our goal is to keep the base dividend at a level where investors can be confident that they're going to get to cash every quarter, no matter what the market conditions.

And so we're obviously looking to stress our cash flows our opportunities right now from the standpoint of our CapEx expenditures next year or based on simply what's the best return possible to our investors.

And so as we continue to go throughout the year, I mean, we're just not going to raise our dividend significantly.

We're going to continue to grow that dividend.

Moving into the Moser acquisition is going to give us the ability to launch some of that volatility associated with the completion side of the business.

So yes, I mean, in 2024 -- I mean, 2025, we do have some growth initiatives going on there that are going to -- that are high-return projects.

We're going to continue to evaluate those and continue to deploy capital with those types of investments.

But then our goal is to continue to raise continue to raise the dividend and also look at other opportunities to potentially stock buybacks.

I mean, our Board initiated a stock buyback program earlier last year.

And -- but one thing is, obviously, last year, we were looking at a lot of amortization and debt pay down.

So when you look at our new term loan, that frees up some cash flow for us to either return to the investors or make additional investments into these higher returning projects.

Got it.

Thanks for that color.

That's it for me.

Don Crist, Johnson Rice.

Morning guys, and thanks for letting me in.

I wanted to start with Moser.

Congrats on getting that closed quickly and obviously, it's a different market than some of the other companies that have entered that market and more of a rental market that Moser operates in today.

Can you talk about your future plans?

Is there plans to go into bigger turbines?

Or kind of what are your overall arching plans for that segment as you kind of roll everything together?

Yes.

Don, I'll start on that and then others can chime in.

I mean when we entered into the -- when we acquired Moser or made the acquisition, we were obviously, thinking it's a good platform for Atlas to expand in the power business.

Right now, there's a significant need for power in the oil field.

I don't necessarily see the need for (inaudible) than what you see in other parts and other areas of the power business, but we have a pretty high return on our investments.

And -- but that -- we can grow that organically, and we have some ability to expand pretty rapidly that those investments on the Moser platform.

But we're always going to keep our eye out for areas and other parts of the power business that makes sense for us to go into.

Yes, just feedback on that.

We view the Moser acquisition as the first investment in a power platform that we think we can grow very significantly to the overall portfolio.

And that's not necessarily just our M&A, although it never roll out that out if the right deal presents itself.

The manufacturing capacity at Moser, which is something that (inaudible) business, gives us a lot of (inaudible) to ramp up the growth in that business.

So it concrete customer demand is there to justify the investments.

we can ramp that up rather quickly.

Additionally, a lower private itself on leading with innovation and disruption.

And we think there's a lot of room for that in this market.

So we don't want to just be swinging

(inaudible).

Luckily, we have people on that the team much more the beta hit the ground running, and they're going to start making this in this market, and we're really excited to see what they're going to do.

I appreciate that color.

And one on the autonomous trucking, a lot of us 2.5 years ago before you went public, we're a little bit skeptical of that business, but you all really grown that and made big strides there.

Can you talk about, number one, the cost savings of using autonomous versus a regular driver truck?

And what are your plans going forward?

How big can that business be just on the autonomous side?

Yes.

This is Chris Scholla, I could take that one.

Look, I think Kodiak has been a great partner, and these guys have done everything they've said that they would do, right?

They've delivered their technology actually a bit ahead of schedule.

But look, I mean, the do we have with them, it's a performance-based deal.

So as long as they keep executing on that trend, you're going to see our fleet really continue to grow.

I think on the scaling and margin improvement, most new businesses, they don't really see a huge pop there until you reach scale.

And I think that inflection point occurs with us somewhere between 50 to 70 trucks in service.

And you look at -- to answer your question on the growth potential of this, right, you look at all the deliveries we've made to date, that's been on lease roads with light traffic, right, low speeds, 25 miles an hour.

So it may be a bit too early to tell when we'll start seeing those over-the-road type deliveries.

But once those capabilities include over the road, I think you'll see our autonomous fleet really expand quickly.

And just one clarification.

If I remember correctly, isn't about 80% or 70% or something like that of the cost of operating the truck labor?

Yes, sir.

I appreciate it.

I'll turn it back.

Sean Mitchell, Daniel Energy Partners.

Hey guys, thanks for taking my question.

Maybe for Blake, the industry at large has kind of been I guess, prepared for what I would call flat to down activity in the US for 2025.

This would be kind of the second year, I would call flattish activity in North America.

What are you guys seeing?

And we're seeing service companies like buy power companies get into the power business.

But what are you seeing in terms of deal flow from a standpoint of consolidating the proppant market in the US and/or when are we potentially going to see some of these people go away in the proppant market?

Or do you have an opinion or thoughts around that?

Well, I always have opinion, Sean.

I don't know if much at work.

But I think that in terms of deal flow, I think we saw a lot of consolidation opportunities to late last year where people were proactively reaching out to us.

But I think we've been pretty public about we are very happy with where our same line portfolio sits within the Permian Basin, right, where if you think about the Atlas legacy assets, we had the best assets from reserves and an OpEx per ton standpoint.

And when we acquired Hi-Crush, we acquired a portfolio that set a (inaudible) to us on the cost curve.

And so a lot of the stuff that would be available to us from an expansion standpoint would be dilutive to our overall portfolio, and we don't want to really undermine the overall portfolio at this point.

Thinking about the sand market overall, I think that in John's comments, there was some positive undertones with respect to what we're seeing in the sand market.

So I think the extreme cold events that we had in January and last week, we suppose some of the fertility they characterize the overall same network in West Texas.

Everyone plans for there to be weather in January and February.

But it was really, really cold.

And that has an effect on both mining and logistics operations.

So we had our own issues that are baked into guidance, but I think these weather events because some of our competitors have been investing heavily into maintenance, much harder.

And sand spying got really short in the market in hurried there shows to help delicate that balances.

So we saw sand prices spike significantly in those leases.

And while they've come back down to earth on, they have to come close to getting back to the mid-teens levels that we've grown around the toll market.

We think that's a really healthy development.

Market certainly isn't fully healed yet, but we are seeing much more rational behavior from our competitors around pricing.

And I think I see people actually thinking about the margin of production.

When you're running a skeleton crew on a mine that you have a hard ceiling on what you can produce.

And your OpEx per ton is significantly higher than it would be if your facility is at full utilization, the fixed cost levers in this business is just so high.

So when they have an opportunity for response and sales, they had to sell in production at that elevated level because you're not going to be adding a second shift as there's confidence that the volume offtake will be there.

So it's a difficult situation to be in.

It's a bit of a double sword.

So you're likely not covering overhead at these levels, but you don't want to put a gasoline fire either.

So it's a tough situation for a lot of players out there.

And I think that gives you some insight to why we think supply attrition is going to continue to play out.

Yes, that's great color.

One -- maybe one more for me.

Just you have a slide in the back, I think Slide 17, where you show Permian frac count?

It's essentially been, I don't know, I want to call it flat between 90 and 100 frac fleets in the Permian Basin for the past four years, but you actually show sand or proppant volume trending higher, and it looks like that continues again this year even with frac count potentially going lower.

I think a lot of this is driven by what you say in your slide deck, (inaudible) fracs.

My question to you guys is, are you seeing -- I mean, obviously, we know the big E&Ps that have large-scale development doing

(inaudible).

Are we starting to see some of the other operators participate in the (inaudible) travel frac on the completion side?

Yes.

This is Chris.

At this point, we really are seeing that trend expand out.

I mean, one of our smaller independents that have been with us for years are kicking off their first time on.

I think that's just a great example of continuing to roll out, if you will, that effectiveness of the technology, the factory on the ground.

And as these technology and completion enhancements from the big guys, I think there is a little bit of copy cow out there, right?

And we're seeing that trend continue across the board.

Okay, that's helpful thanks guys I'll turn it back.

Atidrip Modak, Goldman Sachs.

Hi, good morning.

I think you guys talked about 25 million tonnes in volumes for the full year and then you mentioned some key customers as well.

So I was just wondering if you can talk about what share is of that as the key customers?

Where is the pricing conversation with them?

And maybe if you can talk about the longer-term activity expectations of those customers based on your conversations?

Well, we're going to avoid overall market share conversations.

But I think that -- as John talked about, we set a hard floor on pricing during our season.

We know that we offer certainly manage reliability and better on all service levels and operators can they know how it's going to be there. (inaudible) on time, and we -- we're not going to -- we do everything we can not to be the reason that people have non site.

So we take that very, very seriously and that tends to pay us dividends when it comes to our customer relationships.

And that's evident by if there's some customers are coming to partnering with Atlas on 100% of their (inaudible) not something that we've seen in the past.

So I think that's just a proof that the market and the customers show the reliability, the durability and the lines they put on Atlas as a stand logistics provider.

Yes, it was a key differentiator during this resets that operators knew -- it's one thing to be like, okay, hey, I can get to keep the sand -- but it might not be there in June and July because those guys might not be there.

And they note that Atlas is going to be there and that we're going to do everything we can to partner with them for the long term and our set did a fantastic job of going out there and getting those volumes.

And so we feel really good about where we're at.

That makes sense.

And then maybe on the mine side, if you can give us your latest thoughts are on the cost profile progression?

I know you talked about the fourth quarter numbers, but just if you can give us how we should think about the progression on there for the full year.

Yes.

So we'll continue to -- so -- we actually saw like on the ground level, significant improvements just in processes and stuff like that.

That team is doing a great job.

It just didn't really flow through the financials just as you had the step down in volumes with the seasonal holiday slowdown.

If you come back into with reloaded capital budgets, we'll see that volume uptick up in Q1 and even more so in Q2.

And so you'll see that fixed cost leverage start to flow through to the X per ton.

So thinking about getting to high tens in the Q1 level in Q1 numbers and continued improvement through midyear is a pretty, we're on other from a modeling perspective.

We won't get back to our full optimal levels until early 2026, as we talked about when we get those new dredges in our primary current mine.

But there's -- we're continuing to focus on process improvements and optimization projects.

They're doing a fantastic job.

So we'll continue to see that accretive tailwind to the financials as we look through the year.

That's awesome.

Thank you guys.

David Smith, Pickering Energy Partners.

Hey, good morning and thank you for taking my question.

Most of my questions were asked or addressed in the prepared remarks, but sorry, if I didn't catch this, did you mention where your current contract coverage sits for the year?

We end the contracts pretty much in every quarter, maybe with the exception of the late third quarter.

But we are attracting sand and listing services throughout the year.

Appreciate it.

And I was curious if you see interest from customers to sign longer-term contracts?

And if so, how do you think about the trade-off between interest in longer duration versus relatively lower current prices?

Yes.

I think for us, we really -- as John mentioned earlier, we've really seen customers a pull from customers to move to more Generis type model, 100% supply, here's my frac schedule you guys cover it.

And I think that all comes with our ability to execute, continue to work with our customers and proactively remove those bottlenecks.

So look for a 3- to 5-year term, are you probably going to have a little bit lower pricing on long-term deals than spot pricing or 6-month arrangements.

Yes, absolutely, right.

But I think that's made up for in volume by far.

And from a total customer perspective.

That's what we really want to do is partner with our customers, continue to get 100% of their volumes and execute and remove bottlenecks in their operation.

Appreciate the color.

That's it for me.

Thank you.

Michael Scialla, Stephens.

Hi, good morning.

Blake, could you say again how much of the CapEx is going towards growth.

I hope (inaudible) I missed it.

And can you give any detail on what those growth opportunities look like?

Yes.

So just the CapEx breakdown, again, so we're guiding to $115 million for 2025 CapEx, $27 million of that is committed to growing the most platform, and the remainder is evenly split between maintenance and growth for our legacy business.

On the growth CapEx side, for the legacy business, we continue to invest into our logistics and last-mile operations.

We've got some exciting projects there that have a fantastic return profiles, and we're really excited to share those with -- the Street over the coming months.

Okay.

Can you talk about any of the opportunities on the power gen side in that $27 million?

I think you had mentioned that there are some applications that could require more than 10 megawatts anything there in particular that is worth noting?

Yes.

So in that number -- and so in that $27 million promoter in that -- within that the cumulative Moser number, that includes a small amount -- a very small amount of maintenance.

But what really attracted us to this investment was their internal manufacturing capacity and the return profile on those generators with their cost basis is just so fantastic.

So that number, as we talked about, includes growing that megawatt base from 212 megawatts to 310 by the end of 2026 so we'll be working to fully deploy the existing fleet, which requires some remanufacturing work and then on top of that, adding new capacity.

So that's going to be -- that Moser contribution is going to grow between now and the end of the year.

And we're John mentioned that it was kind of a throwaway comment a little bit, but customer response to this acquisition has been really positive.

So it's sales guys are always complaining.

They're their jobs hard.

But when the phone -- when their job consists of picking up the phone and adding customer inquiries, it gets a little easier.

And we're getting quite a few of those.

And so certainly given us some food for thought about how we want to think about the growth potential of this business because it's been a little over wealth at this point.

Sounds good.

Thank you.

Kurt Hallead, Benchmark.

Hey, good morning everybody.

So I had a couple of follow-ups.

I think, John, in your commentary, you referenced that you expect sand pricing to return to normalized levels.

And as we know in this business, I'm not really sure what normalize this anymore.

But in the context of that, is the mid kind of 20s per ton, what you would consider normalized in today's environment?

I mean [mid to low 20s] is what I would sit normalized.

I mean we were really referring to what was going on in the fourth quarter.

Right, right.

Yes.

So -- okay, that's fine.

And then second question is on the Moser acquisition, you referenced, again, some commentary about some things dependent upon additional, I guess, offtake arrangements or contracts or whatever.

In your initial press release, you referenced measures we run in about, let's call it, $45 million of annualized EBITDA on a 10 losing basis, you guys.

So just can you help me connect the dots.

So it sounds like there's already contracts in place.

So what was the commentary about depending on other contracts being signed?

That was what Blake was referring to is we've had a lot of positive feedback from our customer base on the acquisition of Moser, which kind of really reaffirms our decision to make the acquisition.

And we don't have anything necessarily in a hard contract right now, but that's something that we're working on.

And it's obviously something that we can easily bring on additional volume and capacity if we need to with our manufacturing operations.

So that's really what that's talking about here.

Okay.

And then maybe one for Bud.

Bud, you started the business around frac sand and evolve that into a premium logistics services business, and now you're adding on to some power solutions.

So -- maybe you could share with us kind of what your vision is over the next 3 to 5 years in terms of building out these 3 pieces?

Or you got a couple of lower things up your sleeve?

(inaudible)

(inaudible) non-user business and royalty business.

Can you repeat that question? We were having a little hard time hearing you.

Look, Bud, you started this business, right, with rand and you layered on a premium logistics services and now -- are you rolling into Power Solutions.

So I'm just kind of curious what you see over the next 3, 5 years?

Are these the kind of 3 core building blocks?

Or do you have a couple more tricks up your sleeve to speak.

Well, I think I mean, certainly, Atlas as demonstrated by the Moser acquisition provides a unique and platform for Valens in the whole field.

First profit is missing critical for every single well in the oil field and then the delivery of that profit, the logistics is in a growth to the efficiency of the factory on the ground.

So I think there's going to continue to be more opportunities to innovate and associated with that green shoots for Atlas again, most and construed power and oil field is just one example of that.

I do think the other companies are really just providing liquidity and bringing sophistication and experience and acknowledge to the other asset classes in the Permian.

One of the things that came up earlier that I think is important maybe I'll just in (inaudible) out is that as the oil field becomes more efficient, and you see that with the drilling rigs, and you see that with the frac crews.

They tend to -- those efficiencies (inaudible) that equipment.

But Atlas is on the other side of that because as the spreads get more efficient, that just means more sand consumption.

So we're kind of the inverse of and benefit from that in a way kind of like a midstream enterprise.

There's going to be more sand flow anywhere else in the Permian.

So I just think Atlas is have a great place in terms of as the Permian development accelerates with the larger scale operators with larger operations.

Atlas has the scale and the technology to complement the operators and to reliably buying them the services that they need.

Hopefully, that helps you a little bit.

Absolutely.

Donna, we coming up the top of the hour.

I think we have time for one more question.

That was it.

Okay.

We're showing no further question in the queue.

Mr. Turner, do you have any closing comments?

Yes.

I want to thank everybody for coming to join us for this call.

So we're very excited about what Atlas has done and about the future.

And Atlas is -- we look forward to reporting our first quarter results and operational results here in a few months.

Thanks.

Ladies and gentlemen, this concludes today's event.

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