New Atlas Energy Solutions Stock

Greetings. Welcome to Atlas Energy Solutions, Inc. Second Quarter 2026 Earnings Call. [Operator Instructions] Please note, this conference is being recorded.

I will now turn the conference over to Kyle Turlington, Investor Relations. Thank you. You may begin.

Hello, and welcome to the Atlas Energy Solutions Conference Call and Webcast for the Second Quarter of 2026. With us today are John Turner, President and CEO; Blake McCarthy, CFO; Tim Ondrak, President of Power; and Bud Brigham, Executive Chair. John, Blake and Bud will be sharing their comments on the company's operational and financial performance for the second quarter of 2026, after which we will open the call for Q&A.

Before we begin our prepared remarks, I would like to remind everyone that this call will include forward-looking statements as defined under the U.S. 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 filed with the SEC on February 24, 2026, and our quarterly report on Form 10-Q for the first quarter 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 such as 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.

Thanks, Kyle. For the second quarter, Atlas generated revenue of $293.2 million and adjusted EBITDA of $49.5 million, which represents an EBITDA margin of approximately 17%. Blake will cover the financial detail later on the call.

Before I get into the quarter, let me lay out how our Power business is organized because we get a lot of questions about it. We have 2 divisions. Oilfield power sells generation to oil and gas operators across many basins, and we expect that fleet to exit this year with 180 megawatts to 200 megawatts deployed, the majority of which are under long-term agreements. Long-term behind-the-meter power sells primary permanent power to large-scale users, principally data centers. We signed our first contract in that division this quarter, and our Global Framework Agreement with Caterpillar supports its growth.

The second quarter was highlighted by the execution of our first behind-the-meter contract, a 120-megawatt power purchase agreement with a subsidiary of an investment-grade technology infrastructure provider. The economics are as follows: total project capital is approximately $190 million. We expect the contract to generate approximately $55 million of adjusted free cash flow on an annualized basis once the permanent facility is operating. This is a cash-on-cash payback of less than 3.5 years. These economics are specific to this contract, this counterparty and this site and should not be applied to future projects.

Just as important, the capital required to build this facility sits inside the capital guidance we gave you last quarter. We are not raising our previously announced capital budget to fund this growth. The site is in Socorro, Texas, and here's the full sequence. We have completed construction of a 26-megawatt facility that is powering the site today through the customer's construction and testing phase.

We began installing Atlas equipment for the permanent plant in the third quarter. Commissioning begins in the fourth quarter. The 120-megawatt facility electrifies at the end of the first quarter of 2027, and we began recognizing revenue on this new system in the second quarter of 2027. That sequence is the whole point. This project demonstrates Atlas' full solution approach to the behind-the-meter market, providing customers with a one call option to solving their power procurement issues in every phase of a project's life cycle from powering the pivotal early-stage ramp-up to providing power through the life of the facility.

The commercial opportunity set for the permanent behind-the-meter power continues to expand rapidly. As demand for compute capacity explodes with the evolution of AI, we have seen the urgency of our commercial negotiations rise. As the frontier models grow in complexity and ability, the need to accelerate access to token generation rises. The priority placed on access to power is best exemplified by the hyperscalers continuing to build out their internal procurement teams where they have added seasoned power professionals that have accelerated and focused contract negotiations.

Over the past few months, we have seen the nature of the power deals we are pursuing evolve from both a size and duration perspective. When we entered into our framework agreement with Caterpillar, we assumed it would take 8 to 10 projects to fully contract the capacity we place on order. We were very confident we could do so, but we expected it would require a significant commercial effort.

As our commercial capabilities have become more apparent with prospective customers, we have found the scale of the projects on which we are engaged has grown significantly in magnitude. Thus, it is becoming increasingly more likely that 2 to 4 projects could contract our remaining uncommitted capacity compared with our previous assumption of 8 to 10 projects. Additionally, we have seen an increasing appetite, even need from our prospective customers for longer tenure contracts. With grid access becoming increasingly difficult to secure on any predictable time line, prospective customers are embracing island power as a long-term solution for their sites.

Initially, we were looking at 10-year contracts as a sweet spot, but we are increasingly seeing a desire for 15- to 20-year terms from our prospective customers as they look to derisk power supply to their facilities for the long term. With potential customers looking to execute on the prerogative of procuring long-term island power quickly, we are finding that our strategy of providing a full-service solution from early engineering through full life cycle maintenance and operations is gaining traction.

Prospective data center customers are looking to us to solve the entirety of the power problem. They don't want to provide specifics on engineering or equipment. They want to provide a load quantum with productive load swings and a reliability metric. They want us to provide a system that achieves their goals in the shortest amount of time and with the partner they can trust to operate for the long term.

Lastly, we are not seeing potential deals shifting to the right. There is a sense of urgency to get projects moving forward. We expect the industry to see additional contract activity over the coming weeks and months, and we believe Atlas is well positioned to compete for those opportunities. Outside of the 120 megawatts attached to our recently announced projects, we have an additional 120 megawatts arriving at the end of this year and another 350 megawatts scheduled for delivery over the course of 2027.

The availability of this 470 megawatts for deployment in 2027 with a clear line of sight on a steady ramp phase lines up well with the requests we are seeing from our prospective customers, putting Atlas in a strong competitive position. We believe our contracted backlog has the potential to evolve meaningfully in the second half of this year. We will announce new contracts when they are signed.

A question we often get is, what are the competitive advantages for Atlas and Power? And why is Atlas the right partner in long-term private power solutions? Atlas has built over $1 billion worth of infrastructure projects, which includes many of the lowest cost mining facilities in West Texas, along with a first-of-its-kind 42-mile conveyor with the Dune Express. We designed, engineered, constructed, powered and now operate these projects.

Large complex construction projects are in our DNA. That significant expertise is being called on in the markets today as our power customers are facing new challenges that demand precise execution. As customers like data center operators increasingly look to private power, they demand confidence that their power provider has the depth and experience to deliver on time and on budget.

As our power business grows, you will see how our engineering and execution expertise transforms the way companies attain the critical power they need. The equipment you choose and the construction partners you pick will matter. Innovation is the core to the Atlas culture. We're the only company to dredge mine in the Permian, the first to deliver frac sand autonomously in the Permian, the only company offering multi-trailer sand deliveries, and we built the longest sand conveyor system in North America to change the way sand is delivered in the Northern Delaware Basin. We plan to bring that same outside of the box mentality to the private power market.

In our oilfield power assets, we continue to see strong contracting momentum. This quarter, we signed additional contracts and agreements for current and future megawatt placements and now expect total oilfield megawatts deployed to exit the year between 180 and 200 megawatts, the majority of which will be under long-term agreements. We are being very deliberate about the placement of our current oilfield fleet, prioritizing longer tenure agreements over near-term deployments. We anticipate continued desire from our customer base to sign agreements to secure their power needs as traditional utility power time lines continue to slip.

We are also seeing growing interest in microgrid systems utilizing Atlas' battery technology. With this technology, we can hybridize customer locations to increase reliability. Our hybrid technology combines our affordable generators, a robust battery system and a control software that manages site loads and power availability, which leads to a more robust service for our customers and our operating efficiencies for Atlas. Demand for private power is robust, and we believe we are still in the early stages of a major infrastructure growth cycle. We have the right equipment, the right strategy and most importantly, the right people.

I will turn the call over to our CFO, Blake McCarthy, to expand on what we are seeing in our Sand and Logistics segments.

Thanks, John. If I were to pick a word to describe the current West Texas sand and logistics market, it would be nuanced. Macro conditions have improved significantly over the first half of the year. And while geopolitical events continue to drive volatility, we believe that the supply-demand balance for crude oil has been dramatically altered and the fundamental floor for oil prices has been lifted.

We are obviously not the only ones to share this view as the Permian rig count has grown 17% since the start of the Iran conflict. This growth has been led by the private operators who are the most apt to respond to changes in the commodity price backdrop. Assuming our view is correct, we would not be surprised to see the public E&Ps ramp activity next year once they have refreshed their capital budgets.

Despite the growth in rig activity, completion activity has nearly remained static, which is what drives demand for our business. This is due to a number of factors. For one, operator DUC inventories were already thin in early 2026, with oil placement activity highly aligned with completion schedules. As pad sizes have grown and even with today's efficient drilling operations, it takes extended time and planning for new pads to be constructed and wellbores to be placed to enable simul-frac operations.

In addition, gas takeaway capacity in the Permian remains an issue. While this will be partially alleviated as more than 4.5 Bcf of incremental pipeline capacity comes on in the back half of this year, it has certainly put a cap on the activity of a few operators year-to-date, particularly in the Delaware Basin. As we mentioned on our last call, we don't expect frac fleet additions beyond the marginal view we saw in April until later this year as operators attempt to gain comfort with the strip amidst the volatility. However, based on recent customer conversations, we expect activity levels to begin ramping moderately in Q4 in a calendar seasonal way as customers look to hit 2027 running.

Pressure pumpers are displaying discipline in not bringing incremental equipment to market until pricing improves on their current utilized fleets. And with the lack of readily available equipment and crews on the sidelines, there's a significant lag approximately 2 months between when a customer can contract the fleet and when completion operations actually begin.

Touching on the supply-demand balance of the actual sand market, it is our view that the market is much tighter than current pricing and market sentiment would suggest. Sand is the ultimate commodity and then a little bit of oversupply quickly leads to the price falling to the marginal cost of production for the industry. And inversely, just a little undersupply can lead to a rapid spike in prices. While nameplate capacity would suggest that there's still quite a way to go before the industry comes into balance, we believe these figures could radically overstate the true productive capacity of the industry.

Over the past 3 years, maintenance CapEx has been an afterthought to a broad swath of the market. And based on recent spot sales to customers experiencing nonproductive time due to waiting on sand, it appears incremental production in the Permian is still limited. This trend is likely to become more apparent as the broader industry moves closer to full utilization.

We're beginning to hear more anecdotes of competitor facilities struggling operationally as they attempt to ramp production and it's causing us to reconsider our earlier math that it's going to take 4 to 6 net completion crew additions for the market to reach tight conditions. We believe the market is rapidly approaching a period of true capacity discovery. We think it's time to force the issue.

Nonproductive time or NPT is likely to become a hot button issue for the industry before that point is reached, driven not by sand supply, but by truck availability. Trucking rates have stabilized at much higher levels and with continued price increases in the national over-the-road freight market, driver shortages in the Permian have become more acute.

To add on top of the higher hauling rates, the spike in diesel prices has dramatically increased the overall cost of hauling sand. While Atlas is partially insulated from some of this inflation due to the advantages of the Dune Express and our use of autonomous trucks, we are beginning to see our competitors who have been loath to raise logistics pricing negatively impacted operationally from these developments.

In June alone, we took over 2 wellsite jobs mid completion as competitors simply could not secure drivers at the rates they were offering. We expect this trend to become more common in the back half of the year. And with oil prices where they are, delays in monetizing resources in the ground become significantly more punitive to operators.

To be blunt, we expect operators will need to pay higher rates to avoid NPT related to both sand and trucking beginning in Q3 and accelerating in Q4, which we expect to benefit Atlas. This commercial strategy is intended to reinforce the value of execution reliability. Atlas provides a superior level of execution reliability in our clientele, enabled by the investments we have made in our plants, our logistics infrastructure and most importantly, our people. However, at times, we can become victims of our own success.

When we do our jobs well enough, customers can begin to take that level of service for granted. For more than a year, we've been willing to price our services at levels where our customer base can enjoy the operational efficiencies of the Atlas network and realize price savings, a strategy that has resulted in us gaining market share. We believe we have done what was needed to rationalize the market. It is our belief that many of our competitors' minds have been severely impaired operationally and the market needs a period of true capacity discovery. Thus, at this point, we are choosing to hold the line on pricing on certain tenders in the market.

Some customers may prioritize the lowest cost option on paper, which, in our opinion, will highlight the difference between the service providers who can deliver and those who simply cannot. We expect this will test both the industry's true productive capacity and operators' tolerance for nonproductive time.

Second quarter sand volumes were approximately 5.6 million tons, which was below our expectations as rig moves and completion schedule changes negatively impacted volumes in late June. July volumes recovered nicely to approximately 2 million tons. Full third quarter volume expectations remain a bit up in the air due to our aforementioned commercial strategy as well as some scheduled breaks and customer completion schedules.

The current expectations range from approximately 5.3 million to 6 million tons, which is admittedly a wide range. However, we believe this near-term uncertainty is necessary to properly set the stage for the more important contracting season at year-end. It's worth noting that our completion schedule for Q4 is already positioned for a strong close to the year, representing the highest volume quarter of the year on an already allocated tons basis as some key customers are positioning themselves to close the year with gathering momentum.

Our last mile team set a quarterly record for shipments at 6 million tons. During the second quarter, we made more than 4,600 autonomous deliveries, up 70% from the first quarter. Our partnership with Kodiak has begun to result in significant productivity gains, which we expect to accelerate as new operational milestones are reached that will expand the operational footprint trucks are able to reach. We are targeting operations on public roads by the middle of next year, subject to regulatory and operational milestones. Additionally, we set quarterly volume records down the Dune Express.

Moving to our financials. Second quarter 2026 revenue was approximately $293.2 million. Total proppant sales volume was flat sequentially at 5.6 million tons. Our average sales price for proppant for the second quarter was approximately $17.70 per ton. Second quarter cost of sales, excluding DD&A, were $221.3 million, consisting of $66.1 million in proppant plant and logistics equipment operating costs, $1.4 million from power equipment costs, $140.7 million of service costs, $8.8 million in rental costs and $4.3 million in royalties.

For the second quarter, our per ton proppant plant operating costs were approximately $12.39, including royalties, down from the first quarter. OpEx per ton for the third quarter is expected to be flat to down, depending on total volumes as our plant operational efficiency initiatives continue to bear fruit.

Our logistics business posted strong sequential improvement in the second quarter on the back of record volumes, an improving rate environment and strong utilization of Dune Express. Q2 logistics margins were 14%. For the third quarter, margins are expected to stay solidly in the double digits.

Our power business also reported strong sequential growth with improved utilization in our oilfield power fleet and the start-up of operations at our new facility in Socorro, Texas. Q3 contribution from this business is expected to display continued improvement as we deploy larger portions of that fleet under long-term agreements.

Q2 adjusted cash SG&A, excluding extraordinary litigation expenses and other nonrecurring items, was $24.3 million. SG&A is expected to average approximately $22 million to $24 million for the third quarter, excluding legal fees from litigation and contracting activities. Growth CapEx for the quarter was approximately $131.5 million, the majority of which was tied to our initial Cat (sic) [ Caterpillar ] power generation equipment order. Maintenance CapEx was $14.6 million.

CapEx for the second half of the year is budgeted to be approximately $200 million, which keeps our full year capital spending inside our full year 2026 guidance range of $350 million to $375 million. The vast majority of that, approximately $175 million to $190 million is attached to the build-out of our private grid power business. It's worth noting that approximately $110 million of second half growth CapEx is connected to the build-out of our already contracted facility in Socorro that will begin generating meaningful cash flow in Q2 of '27.

As a reminder, we expect this to generate approximately $55 million of adjusted free cash flow per annum. The remainder relates to purchase obligations under our Caterpillar Global Framework Agreement, which we announced in March. This is not new spending. It is the fulfillment of an order already on the books.

Maintenance spending for our legacy business is expected to take a step down as we have completed the majority of our larger initiatives at plants. Maintenance capital spending for our sand and logistics business is expected to average approximately $5 million to $7.5 million per quarter in the second half of the year, supporting the free cash flow generation ability of that business.

On the heels of our successful convertible issuance in April, the combination of Atlas' available liquidity and the positive free cash flow from our sand and logistics business is more than enough to satisfy our upcoming capital needs.

Looking ahead to the third quarter, overall sand and logistics sales volume remain the biggest barrier, while we expect continued improvement in our production costs in power. The combination of planned customer breaks and exercising more discipline on outstanding tenders is expected to result in a temporary step back in overall volumes in order to drive longer-term price improvement. For Q3, we currently expect EBITDA in the range of $30 million to $45 million.

As mentioned earlier, we expect the fourth quarter to show meaningful sequential improvement based on already allocated volumes and customer completion schedules that have been communicated to us with current expectations, matching or exceeding Q2 results.

I will now hand the call back to John.

Thanks, Blake. I want to reiterate Blake's comments about the shift in our commercial strategy. This is an intentional strategic decision. We are holding price on certain sand tenders rather than chasing volume, and we are willing to trade near-term volumes to do it. We believe this will drive the market to realize the rationalization in productive capacity and logistics capability that has transpired across the West Texas sand industry and serve as a catalyst for a pricing recovery.

I will now hand the call off to our Executive Chairman, Bud Brigham, for some closing remarks before we turn the call over to Q&A.

Thank you, John. In late July and early August across most of the country, everyone gets excited about the upcoming football season. At this point in the year, every football team is still undefeated. I call it the talking season. But in the case of power, it seems the market hasn't appreciated the fact that Atlas has moved beyond the talking season. We've already begun putting points up on the scoreboard.

It reminds me a bit of the cynicism surrounding our first company, Brigham Exploration, when we were pioneering horizontal drilling and multistage fracking in the Bakken nearly 20 years ago. Most people did not believe horizontal fracking would work in oil. Over the next 5 years, we not only proved them wrong, we led the way, delivering superior production and economic performance. About 5 years later, we did it again with Brigham Resources in the Permian.

8 years ago, we faced the same skepticism about the viability of local sand when we started Atlas. We went on to build the largest state-of-the-art frac sand plants in the country and meaningfully improved economics for Permian operators. Then again, just 3 years ago, many said we couldn't build North America's largest conveyor system to move proppant 42 miles into the heart of the Delaware Basin. Of course, we did.

We love these challenges. We're very, very good at them. Nobody builds large-scale energy infrastructure as successfully as Atlas. And here we are again this time with an extraordinary opportunity in private power. Even with our first contract, the skeptics are once more out in force. That's fine. We've been here before. I have complete confidence in our team, our strategy and the partners we've chosen. We look forward and are excited to changing the narrative.

Thank you for joining us today. I'll now turn the call over to operator for Q&A.

[Operator Instructions] Our first question is from Jim Rollyson with Raymond James.

John, your commentary kind of around the pace of data center deals was interesting and maybe stands out a little bit from at least the color we've heard so far this quarter. Can you just maybe expand about what you're seeing in terms of project size, scope, timing, all those kinds of things? I thought it was interesting that placing that capacity with 2 or 3 or 4 customers is a departure, but I'd love to just get a little more color there and what we can expect coming through the second half.

Yes. Sure, Jim. Thanks for the question. Obviously, we're not seeing every deal that's out there, but what we are seeing is that there's an intense urgency from our potential customers to get contracts signed and things are moving on. I guess things are moving in order to get those projects derisked and those time lines derisked. The counterparties we're negotiating with are looking to move as quickly as they can, and that makes -- obviously, that's in months and not years.

Obviously, these deals don't happen overnight. They're $1 billion dollar deals that take very long -- with very long durations, it takes a long time to negotiate. And they are also running these deals and -- or for the power deals, are also running those in parallel with these data center lease negotiations, which are pretty complicated as well, if not more complicated. So when you get all these contracts together and once we get our contract negotiated, there's multiple things that have to happen before a contract could be signed.

So there's a lot of moving parts there. But what we have been seeing is we have been seeing an urgency to get deals signed. We've been seeing the size of these deals increase. We've been seeing the tenor of these deals increase from -- when I'm talking about what we were seeing, say, 6 months ago. So obviously, very positive from our -- on our standpoint. We haven't really announced any -- we won't be announcing any deals until we have a contract signed, but we are working on those.

Got it. Appreciate that. And as a follow-up, maybe for Blake, can you expand a little bit, Blake, on the volume guidance, like pretty wide range, obviously, for 3Q? And I guess just trying to understand how much of that is the customer breaks versus kind of you electing to maybe hold the line on volumes to get better pricing going into next year? And kind of tied to that is how comfortable you are with the 4Q implied ramp?

Yes. Yes. That's a great question. I was expecting that one. I think it's a completely fair characterization that it's quite a bit of variability there. So yes, as you pointed out, there's a number of moving pieces in Q3.

So first, we do have some key customers that are taking short crew breaks during the quarter as they prepare to ramp up in Q4. That probably represents, say, 50% of the variance. And so that includes some customers that are transitioning pumping providers as they secure new equipment and they move to bigger frac designs. With the ramp in activity for some of these key customers, we are on course for a very strong Q4, and that's without incremental volume wins.

However, the other impact is going to come from our shift in our commercial strategy. And that's the one where there is a bit of question mark, and that's why you have that wide range. So for more than a year, we've been following the playbook, which is say, you're the low-cost provider of commodity and service. So when the market is oversupplied, yes, you got to price it at the marginal price of production for the industry or slightly below in order to gain market share and force the market to rationalize.

We've done that, and we've caused a lot of pain in the market. Most of our competition, they've laid off crews. They've cut maintenance spending to 0 and to the point where some of them even have padlocks on front gates. So however, just because the mine is kind of limping along, doesn't mean that it's theoretical sand, it isn't being bid in the projects. So all of this like theoretical nameplate capacity, what I call zombie mines is being bid into customer tenders for sand. And it's creating this perception that there's still an ample oversupply of sand in the market. And we just simply don't think that's the case.

But we think that doesn't really matter until our customer base thinks it too. So as long as Atlas is willing to match the competing bids in the market, customers can continue to hammer on price while still enjoying access to our service and our execution reliability. And so it's not until we got to draw a line in the sand and let them go test the waters elsewhere. So you kind of shine a light on the market and what's reality.

So we have to create a catalyst for that light to get shone on what these mines can actually produce, what competing haulers really have to charge to deliver the sand and who can really orchestrate all the different moving pieces to run these -- to get sand on site because we make it an afterthought, and we've made it easy. It's a little bit of a victim of our own success. When you do your job well, sometimes it gets taken for granted. And so our expectations are that NPT, which we have tried to make a thing of the past in West Texas, it's about to become a pretty big issue for some operators.

So at the end of the day, this is going to allow us to obtain more value for our products and services. We think that it's going to set us up very well for RFP season for 2027 and the execution of the strategy that -- it's going to give us a hammer when it comes to negotiations.

Our next question is from Stephen Gengaro with Stifel.

So can I start with sort of the CapEx question? I mean we hear a lot from companies this quarter as far as kind of CapEx per megawatt deployed in the power business. And I think we're hearing numbers like around $1 million for the generating equipment per megawatt and maybe like 1.6 to 1.7 for sort of all-in balance of plant. What are you guys seeing? And are you seeing kind of inflation in those numbers?

Thanks, Stephen. I'm going to let Tim jump in with all the details because he's the guy at the coal face, but just to lead, like this is something that we've been pretty vocal about for some time and that we -- it's really customer and project dependent.

So hey, like answer for me these questions, like what's the load profile the customer requires for their objectives? What type of system resiliency and reliability metrics do they insist on? Those all have knock-on impacts to the overall cost of the system. And therefore, the price, which is why we've always said from the beginning that the best lens through which to review these projects is unlevered project IRR because the variables on the front end are -- they're apt to change, and thus the cash flow stream has to change, too.

Tim, do you want to jump into the deeps?

Yes. I think Blake gave some good color and to answer that question. The CapEx ranges we're seeing on projects can be anywhere from $1.5 million a megawatt to $2.5 million a megawatt. And again, those are really informed by what is the system intended to do versus cost inflation. It's really scope inflation. And I think we're seeing hyperscaler teams getting a little more in the weeds on what is engineering asking for versus what is procurement willing to put forward.

And there's a lot of difference in a system that's designed to 5 9s versus 3 9s. And so we're seeing a little bit more thought go into what actually works, what's deliverable and what's cost efficient in that case. So as they build out those teams, we're getting better answers from them on what they're willing to live with from reliability, availability and what they need on load steps.

Yes. I think the key thing, Stephen, is that we're not necessarily seeing cost inflation as much as we're seeing like that scope expansion. And then I think you are -- the hyperscalers have gotten more sophisticated, as Tim pointed out, like they've added significant like deal/procurement talent, which is -- they are getting smarter about the dollars they're spending, where they're like very much the -- hey, what do we need versus what do we want?

Got it. Okay. That makes sense. When we think about -- and you talked a little bit about sort of your balance sheet liquidity and kind of how you fund the growth. Just remind us your planned deployments of power over the next couple of years and how you think about paying for that? And obviously, given the dynamics you just mentioned, it's going to vary a little bit by which projects are signed. But how do we think about that?

Yes, yes. So during Q2, we did make some large payments for the initial order of Cat generators we're receiving this year. So as I've said in the prepared remarks, we still have another $200 million of CapEx planned for the back half of the year and 90-plus percent of that is going to the rest of the Cat deliveries, down -- including, and then also down payments on our 2027 orders and ancillary equipment for our currently under construction deployment in Socorro and some other longer lead time items for other projects.

So thinking about the liquidity following the convertible raise in April and the Q2 Cat payments, we currently have approximately $168 million of cash on the balance sheet and approximately $125 million of undrawn capacity on our ABL.

Additionally, I think it's key to reiterate that the CapEx for our sand and logistics will now truly reflect the low capital intensity nature of that business. So we're effectively done with the major CapEx projects we have planned for that business this year. So CapEx for that business steps down to that $5 million to $7.5 million range for that business moving forward.

Additionally, the CapEx cycle for oilfield power business has also matured. So both of those businesses are going to start spitting off cash. So we're more than good when it comes to our near-term obligations. That's not to say we won't need incremental capital for the projects we are currently negotiating. And we have already, in fact, made significant equity investments into those prospective projects. So funding for those projects is most likely to come in the form of debt financing, which we won't be putting on the balance sheet until we have hard contracts with great counterparties in hand.

Our next question is from Doug Becker with Capital One.

It seems like you're having some good success in the oilfield power side of the business. Just curious if there's any consideration to deploy some more capacity into that, presumably higher shorter-term returns. But the power contracts, the longer-term data center-related contracts can take long term -- take a while to finalize. Just wanted to get your thoughts on that balancing data center versus maybe some shorter-term oilfield work.

Yes. Go ahead, Tim.

Yes. I think we'll continue to deploy assets into the oilfield power space. We've become a lot more selective about that over the last 6 months. We want to deploy those with some tenor. We want to deploy them where we've got some density. And that's how we pick up efficiencies and continue to operate that business.

But it's a great business. The levers to scale that business up are much shorter than the levers to scale a business that's supporting industrial power data centers. And so to answer your question, it's really continues to be opportunity driven where we've got good relationships with good customers that have an outlook for meeting those assets for a period of time that we like, we'll continue to deploy into that space.

That sounds good. And maybe switching gears to the logistics business. Margins in March were kind of the mid-teens, finished below 13% for the full second quarter. Everything seems to be lining up to really favor the Dune Express. So kind of curious why we're not seeing margins maybe improve more than just kind of solidly into double digit going forward this year.

Yes. For the Q2 moving pieces, you did have like there is a lag in terms of like as I talked about like third-party carrier rates continue to march up, the over-the-road national freight market continues to strengthen and that starts to pull, suck drivers out of West Texas. And so your cost -- there's a lag in your cost going up on the third-party carrier rates and as you start to amend your own hauling rates. So that actually is a tailwind on pricing.

As you look ahead to the second half, it's more a knock-on effect of -- to that -- again, there's kind of some flex in that guidance, and that's related more to -- it's like tied to the volume guidance on the sand side, where obviously, there's a fixed cost absorption piece of that. So it's -- again, it's loose guidance based upon more like, "Hey, we're drawing this line in the sand." We're like starting to move rates." And we think that there might be a quarter of kind of a, hey, this kind of pushing the market and an initial reaction and then finishing off with a strong Q4.

But we are seeing tightening in the trucking market, [ absolutely ]

Our next question is from Scott Gruber with Citigroup.

I appreciate the pricing discipline here as demand improves. But I'm trying to get a sense of what this could mean for your average pricing. There was something like $4 a ton spread between some of the contracts you had coming into the year and more recent sales.

So just thinking through like if the market comes to meet you at your line, does your average pricing as you head into '27 does it kind of stay flat around the $18.50 you posted in 2Q? Is it trending higher? Just trying to get a sense of kind of where the realized price could go given the dynamics you have in the book today.

So thinking about '27 pricing. Obviously, we're not going to guide that yet, but what we're trying to do -- like as you've touched on, we are positioning ourselves to strengthen our position come RFP season where it's, like I said, shine a light on the true productive capacity of the market. We do have a significant portion of the book turning over for '27. So in the event that we are able to achieve the pricing move, the increases that we're looking for, that would result in accretive pricing to the average price of sand.

Got you. So the simple way to put it, like -- I'm not trying to pin you down on exact numbers around your strategy. But your strategy, if successful, if the market comes to meet you, that would be to move higher in your realized pricing heading into next year? Is that fair?

Yes.

Yes, yes.

Yes, 100%.

Okay. Okay. Just wanted to clarify that. I appreciate it. And then the progress with Kodiak on autonomous trucking is good to see. Maybe you could just provide some more color. You mentioned 100 trucks on the road in a year or so. Kind of when does this start impacting the financials? What do we see in terms of your cost base with 100 trucks running? And then as you scale it up, ultimately, what could this mean for your financials?

I guess, really, the first thing that we need to do is for us to start seeing the benefits from that, thanks Scott, on that is we really need to start expanding the horizon for which these trucks -- these autonomous trucks serve. They're serving in a couple of heat zones right now and activity moves in and out of those heat zones. But in order to maximize the benefit on autonomous delivery, we're going to need to maximize the number of well sites we can serve with that.

So number one, the first thing we needed to do is we needed to be able to get those trucks into other heat zones.

Broaden the area.

And broaden in the area. The second thing we needed to do is obviously is to increase the number of trucks. So by the middle of next year, I mean, that's a pretty aggressive -- I mean, pretty lofty goal, but I mean, Atlas is planning on being on over the road as far as what it's going to mean for our margins?

Yes. I mean like just touching on Doug's earlier question, right, like there was that lag effect in the cost of drivers going up and then the actual accretion into your hauling rates. And so you basically eliminate that variability, right, where -- so as the trucking market tightens, you keep that cost stable and it just -- it becomes actual pure accretion. And so it also derisks our logistics operations and that as the number of crews expands, it's just -- one of the bigger risks is, "Hey, can we get enough -- can you get enough third-party drivers? Can you get enough trucks?" And that becomes less and less of -- like a smaller question mark when you've got more of the autonomous trucks on the road.

Yes. With all the initiatives coming around with commercial driver's license and foreign CDLs, I mean that's going to be -- that's going to make a big impact on the trucking market going forward.

Our next question is from Michael Scialla with Stephens Inc.

Blake, you said you wouldn't bring debt on the balance sheet unless you have contracts to underpin the new power requirements. I guess, I want to see how you're thinking about absolute debt levels or net debt or leverage, however you want to look at it? What kind of targets are you looking to stay below as you build out the power business?

Yes. I mean I think on the front end of this build-out, the leverage ratios do start to blow out before like those first key projects start spitting off cash. I think that, that's pretty common across the space. Once you get these projects online, though, they significantly start to -- they delever themselves very quickly.

You're looking at cash-on-cash payback on these projects in the -- kind of the 5- to 6-year range. And so it's -- like you're probably looking at standard project financing like equity to debt ratios of anywhere from 30% to 40% equity, 60% to 70% debt. So when you think about those cash-on-cash paybacks, you quickly -- you get 3x. And this -- again, like -- and that's -- the OFS guy in me is like, "Well, that's too much debt." But when you have these contracts that, we're talking 15, 20 years, like hard concrete terms, like that's actually a very strong leverage position.

Yes. Understood. A big trade-off there. I guess I also wanted to see on your third quarter guidance, EBITDA guidance, you obviously have a range in there. And I assume most of that range is because of the range you talked about on sand production, having a pretty wide range with that. Can you break down the EBITDA, how much you're anticipating from sand versus logistics versus power?

I mean if you think about like all -- like 100% of that variance is going to be coming from the sand and logistics side. So power EBITDA will be up slightly as we get a full quarter of deployment of that temporary -- that small facility that we put in place for the construction phase of the Socorro project, and then continued gains on the oilfield power side. The sand and logistics -- like sand and logistics are really very closely correlated. And so again, on that variance, about, say, 40% of that is due to [indiscernible] customers have communicated to us like, "Hey, we're going to be taking a short sailing"

Our next question is from Chuck DeVore, private investor.

I'm going to go ahead and finish that question. Sorry, our system muted. So about 40% of that is coming from those customer breaks. There's 30-, 45-day breaks in the quarter, so in front of their ramps into Q4 into 2027. The rest of that delta is coming from the kind of unknown response that we're planning for in terms of the shift in commercial strategy. And that really sums that up.

Sorry about the interruption.

Our next question is from [ Chuck DeVore, ] private investor.

I know that we don't often like to consider things like public policy and politics, but I noticed that Texas Governor, Greg Abbott, I think just yesterday, announced a pause for data center construction insofar as data centers that connect to the grid. There's a lot of resentment in rural Texas. We got a midterm coming up.

The other thing that happened this week was that the Lieutenant Governor and the key Chairman of a Senate Committee called on ERCOT and the PUC to delay the construction of the 765-kilovolt lines heading into the Permian. This would seem to demand additional thermal generation in the Permian if you're not going to build those lines. Are things like this -- could these 2 public policy changes increase the demand for your power services in the Permian?

Yes. Thanks, Chuck. Obviously, these are pretty new that are off the -- as far as policies go, obviously, we don't agree with them. But I mean, yes, this is a tailwind that could happen for Atlas and any -- it's really any -- I guess, anybody -- any company that has additional power or has power assets available that can be immediately deployed over the next couple of years. I think this is going to be a huge tailwind for -- look, I mean, we are already seeing companies -- I think a lot of the hyperscalers are already -- have already come to grips with this and are already starting to provide or look for their own behind-the-meter power solutions.

And I think we're just going to continue to see that. I think anything -- I think it's also going to push a number of companies out into West Texas that are going to start locating data centers out there and their projects out there. But yes, this is a very big tailwind, and we've been seeing this. And I think you're starting to see the urgency from a number of customers, a number of users or folks that are looking for power that we really turn into those companies that have access to that power.

Yes. Chuck, like just to follow up on John -- what John said there, it's like we've really seen this coming for about 12 months now. We've touched on it on a few prior calls of like these kind of political headwinds with respect to the grid.

And I would say that our prospective customer base like totally gets it, where they're no longer thinking about these projects. And I think that's why you've seen this increase in the tenor of the contracts where if you rewound 18, 24 months ago, people were talking about, hey, 5-, 7-year contracts. Now, we're talking 15 to 20 because they're just, hey, like we're just not going to even think about the grid.

Like you look at the backlog, you look at the requirements like the capital requirements that have to post up on the front end of that with still question marks around it. It's just easier for them to just be like, you know what, like we're going to take care of this ourselves. And eventually, like on top of that, they get higher reliability, there's significantly better resiliency, a system that's designed for their uses. And when you think about that, the combination of that, you can't -- you're not getting 4 or 3 9s in the grid, right? You're like lucky if you get 98%.

And so when you're thinking about what they're trying -- the applications that they're going for, it was never the ideal solution for them. And now with these political headwinds, I think it's gotten even more significant. And so we just see them thinking about these more as the permanent solution.

Yes. And that's precisely the reason why we signed the Global Framework Agreement with Cat. I mean, we realized that this power -- the demand for power was coming behind the meter and the winners are going to be the ones that have the power to deploy.

Our next question is from Alexa Breno with Goldman Sachs.

We wanted to ask, as we think about the commercial pipeline of opportunities on the power side, can you just talk about what that split could look like in terms of the oil and gas and then some of those larger projects?

Yes. So the majority of our pipeline is going to be larger projects. And in oil and gas, we know that universe. We've got roughly 40 megawatts that we could deploy into that space. And those are megawatts that are -- that's on the ground or in process. In the larger power space, our opportunity set, it's roughly 8 to 10 gigawatts. And that's where it was on our last quarterly call. There's been projects that have kind of moved in and out. And keep in mind, that's kind of pre-Governor Abbott's announcement yesterday.

But those projects have grown in scale from the discussions that we had 6 months ago, 9 months ago. And we're seeing the nodes that customers are coming to us to solve in that kind of 500 megawatt and up range. And I think in a lot of those conversations, that's a start. That's kind of what they need to get off the ground and some of those campuses have designs on 1, 2 or even 3 gigawatts of behind-the-meter power for all the reasons that John and Blake just talked about in the last question.

Okay. That's very helpful. And then maybe just a follow-up. Can you talk a little bit more this kind of pricing piece that you're talking about on the logistics side? What type of margins are you targeting there? You kind of talked about a commercial strategy and part of the reason the 3Q guide might be a little lower than we anticipated. So how do we think about what you're targeting and what 4Q could potentially look like, assuming those numbers come to fruition?

Yes. It's more about like I think that it's bigger than just, hey, we're targeting this margin profile. It's more that like there is -- if you look at the nameplate capacity for the Permian, like if you just add up all the mines out there and based on like, "Hey, this is what this was built to for a nameplate capacity." Like it would point you to, "Hey, there is a lot of sand available." And we know that like even at our own facilities where we've been spending significant maintenance CapEx, like there is a delta between our nameplate capacity and our effective productive capacity.

And like we're -- we know for a fact that like ours are the best maintained mines in the Permian Basin, like bar none. So then you look at all these other ones where like they've just been running at anywhere from 0% to 20% utilization for the last 2 years. And like they're held together with duct tape and bailing wire. And that nameplate capacity, like it's just this like theoretical sand, but it's still being like bid into these tenders and used by the operators as a hammer on pricing.

And when we talk about this like, hey, you just need a few grains of sand of undersupply for pricing to really move. And when you talk about the incremental on that, right, everybody understands that pricing incremental margin is 100%. And so, it starts to move very quickly and have a huge impact on our income statement. And so it's really like this is a -- okay, hey, like we've got to -- like until we actually like just say, hey, like you know what, like just go test it with those guys. Let's go see if it's real. And until you shine that light on the fact that, hey, all of a sudden, like you're starting to have wellsite NPT issues and things like that, that theoretical sand is always going to be there.

And then it becomes -- you change that from, hey, it's no longer a theoretical sand, it's just nonexistent sand and you actually have like hard data on what the productive capacity is of the entire industry. I think that there's a pretty quick tightening and it just changes the positioning when it comes to those negotiations quite a bit.

On the logistics side, it's very similar. It's all tied together. There is just a -- in terms of traditional trucking, it's a very tight market. We have been insulated from that by our advantages, right? The Dune Express reduces our reliance on third-party trucks significantly. If you move somebody else and they're doing it all through trucks, like you're going to have 3x the number of trucks you need to service your wells. That creates a big problem that I think that -- and that's going to result in even more inflation on trucker rates. And if people are like if they're not willing to push the rates that they're charging the operators, they're just not going to have the trucks. And so this is kind of a grand experiment, but I think that it's going to result in quite some -- pretty strong findings.

Thank you. This will conclude our question-and-answer session. I would like to turn the floor back over to management for closing comments.

Yes. Thank you, everybody, for attending the call or sitting on the call. I'll just close by saying we like where we are, where we sit today with Atlas. We have 2 good businesses and real advantages in both and a team that knows how to execute. There's work in front of us, and we're clear-eyed about it, and we're going to keep our heads down, do the work and let the results speak for themselves. We look forward to reporting our third quarter numbers. Thank you.

Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.

Hello, and welcome to Atlas Energy Solutions Operations Update for the second quarter of 2026. Today, we'll cover our rapidly growing power business and share important progress in our sand logistics operation. Let me start with the milestone we're especially proud of. Earlier this year, Atlas was contracted to build 120-megawatt power facility for an investment-grade technology infrastructure provider. Under power purchase agreement, Atlas is delivering turnkey construction of the facility. Once completed, we will own and operate the plant for the duration of the contract.

Atlas is giving this customer a significant advantage by delivering long-term power in stages. This allows them to start operations early before the campus is fully built. Then they can scale up on our plant as demand grows. We've already delivered Phase 1, allowing them to begin operational testing right away. We expect the full 120 megawatts to be operational by the end of the first quarter of 2027. It was a strong quarter across both of our businesses -- the demand for distributed power has never been greater. Tim Ondrak, our SVP and President of Power, will now walk you through what we see across the markets for private power solutions.

Thanks, John. The commercial opportunity set for permanent behind-the-meter power continues to expand rapidly. The demand for compute capacity is exploding with the evolution of AI. And with it, Atlas has seen urgency in our commercial negotiations rise. Over the past few months, we have seen the nature of the power deals we are pursuing evolve in both size and duration. Simply put, our customers are seeking more power for longer.

Atlas' ability to provide approximately 470 megawatts of power for start-up in 2027 positions us very well with the time lines of high-priority projects and our prospective customers. Combined with our experience executing infrastructure projects at scale, Atlas has positioned itself very well to be a key partner as these projects take off. We expect our contracted backlog to look quite different by year-end. Our oilfield power business is seeing stronger contracting momentum as well.

This quarter, we signed additional contracts and agreements for current and future asset placements. These contracts will take our dedicated capacity beyond 50% of our availability by the end of 2026. We anticipate 180 to 200 total megawatts deployed in our oilfield power business by year-end, which represents effective full utilization of this fleet. We are seeing strong interest in the contracting of microgrid systems utilizing Atlas Energy's battery technology. With this technology, we can hybridize customer locations to increase reliability of those critical sites.

Our hybrid technology combines our portable generators, a robust battery system and control software that manages sites for load and power. Our CFO, Blake McCarthy, will now expand on the tailwinds forming in our sand and logistics business units.

Thanks, Tim. Atlas' Sand and logistics operations reported improved profitability in the second quarter. While Q2 volumes were less than expected due to rig moves and completion schedule changes, our operational efficiency initiatives resulted in improved fixed costs at our plants. We expect these efficiency improvements to continue in the back half of the year. Our Last Mile team set a quarterly ship volume record, over 6 million tons delivered, resulting in a meaningful step-up in profitability.

Inflation within the trucking market has become more apparent. Atlas' investments in the Dune Express and autonomous trucking have become key differentiators in our ability to derisk customers' operations. The Dune Express is meeting growing demand with greater efficiency and safety. During the quarter, we set another quarterly record for volume shipped down the Dune Express. With national over-the-road freight rates continuing to climb, the availability of drivers in the Permian continues to be strained.

Dune Express' ability to enable significantly higher turns of our trucking assets and driver base is a key advantage, partially insulating Atlas from the broader market inflation. An innovation that continues to grow in importance is our use of autonomous trucking. Atlas operates 28 Kodiak-enabled autonomous trucks, the largest known fleet of driverless trucks in North America. We completed more than 4,600 autonomous deliveries during the quarter. Additionally, Kodiak's technology continues to improve, enabling the first double and triple trailer autonomous deliveries during the quarter.

Importantly, Kodiak and Atlas expect to have our fleet operating on public roads in 2027, dramatically expanding the reach of our autonomous fleet. Timing will be subject to regulatory and operational milestones. As autonomous trucking continues to evolve in its capabilities, we remain on track for our fleet to reach 100 autonomous trucks by the summer of 2027. Improved macro conditions for the oil and gas industry are setting the stage for improved completion activity in the Permian. However, volatility in the market is leading most operators to take a measured approach to incremental activity.

As overall industry proppant demand grows, we believe the lack of sustaining investment by the broader industry is likely to become apparent. This may result in a reevaluation of current opinions on the supply-demand balance in the West Texas sand market. Over the past 6 quarters, Atlas has used its position as the low-cost producer of sand to cement our position with key customers. We provide a level of service and execution reliability that is not duplicated in the market. As such, we are beginning to exercise more pricing discipline around the volumes we sell and the customers for whom we choose to work. We believe this is an important next step as we set Atlas up to maximize success in 2027.

Thanks, Blake. Our sand and logistics team continue to deliver for our customers. We have spent years developing innovative solutions to become the leading provider of sand and logistics. As the market tightens in the coming quarters, the value of our scale will become even more apparent as customers turn to us to solve their most pressing challenges. When a customer turns to Atlas for power, we handle all of it.

We design it, engineer it, build it, operate it more than $1 billion in infrastructure solution to customers looking to solve their power issues that set us apart. As hyperscalers power, they need a partner with the depth to carry the project through its full life cycle from design throughout the entirety of its operations -- they need it on time and on budget. In a market where power itself is a scarce resource, the reason companies are choosing to partner with Atlas comes down to something simple. We have the power.

The equipment is secured and ready to deploy on the time lines they need. As our power business grows, that's exactly what you'll see. I want to thank my colleagues, Tim and Blake, for sharing these updates, and thank you for joining us today. For more details, please join us on our second quarter investor call that's on Tuesday, August 4, at 9:00 a.m. Central Daylight Time.

Greetings, and welcome to the Atlas Energy Solutions First Quarter 2026 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Kyle Turlington, Vice President of Investor Relations. Thank you. You may begin.

Hello, and welcome to the Atlas Energy Solutions Conference Call and Webcast for the first quarter of 2026. With us today are John Turner, President and CEO; Blake McCarthy, CFO; Tim Ondrak, President of Power; and Bud Brigham, Executive Chair. John, Blake and Bud will be sharing their comments on the company's operational and financial performance for the first quarter of 2026, after which we will open the call for Q&A.

Before we begin our prepared remarks, I would like to remind everyone that this call will include forward-looking statements as defined under the U.S. 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 filed with the SEC on February 24, 2026, and our quarterly report on Form 10-Q for the first quarter and current reports on Form 8-K and our 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 such as 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. Before turning to the quarter, I want to frame where Atlas stands today. On the sand and logistics side, the West Texas market is turning. Trucking rates have moved meaningfully off their lows. Logistics margins expanded from low single digits in January to mid-teens by March. Completion activity is building and our mining operations are effectively sold out. On the power side, we have signed a global framework agreement with Caterpillar securing 1.4 gigawatts of generation capacity, and we have just announced our first private grid power purchase agreement, a 120-megawatt deployment drawn from our initial 240-megawatt November order with Caterpillar. The strategic and commercial momentum heading into the balance of the year is the strongest it has been in some time.

Turning to our first quarter results. Atlas generated revenue of $265.5 million and EBITDA of $28.4 million, representing an EBITDA margin of 11%. Results were impacted by severe winter weather, elevated maintenance at our Kermit facility and higher third-party logistics costs. Each of these items has been resolved, and we expect underlying margins to normalize beginning in the second quarter as the headwinds roll off and contracted volumes ramp. The clearest signal of the demand recovery is in our bone book of business. Customer volumes have moved our mining operations to a sold-out position for the second quarter at current production rates. And we expect our plants to remain very busy for the balance of the year. As contracts roll off or if we elect to increase production, additional sand sales this year should come at higher pricing. The macro backdrop is supportive.

WTI is hovering near $100 a barrel and the 2027 strip has moved higher, but we want to be clear that our outlook is anchored in customer commitments and completion activity we can see today, not in any single price level holding. While the West Texas sand and logistics market has been in a rut for the better part of 2 years, Atlas never stopped investing in our infrastructure. When the markets get tight, our investment in our plants, logistics network and last mile equipment reinforce our position as the most reliable supplier in the Permian.

Now let me turn to power, where we are deploying capital with the same operating discipline that built our sand and logistics franchise and where we believe Atlas' industrial capabilities translate directly. We have intentionally structured our power strategy differently from some peers by pursuing full scope power purchase agreements in which Atlas owns and operates a complete solution, including balance of plant. This creates stickier, longer-term customer relationships, provides significant advantages at contract renewal, delivers superior reliability compared to the grid in many cases, allows for greater pricing flexibility once equipment costs are recovered and creates high barriers for competitors due to the sump cost and complexity of the facility. With grid constraints likely to persist for years, we believe this PPA model is the right long-term strategy for our shareholders.

In November, Atlas placed an initial order with Caterpillar for 240 megawatts of power generation equipment, sized in response to specific customer projects. As commercial momentum built early this year, we recognize the generational nature of this opportunity and entered into a separate global framework agreement with Caterpillar that secures an additional 1.4 gigawatts of power generation assets for delivery between 2027 and 2029. Together, with the initial 240-megawatt order, these commitments support our objective of owning and operating more than 2 gigawatts by 2030. The announcement of a global framework agreement immediately elevated our commercial position. Our commercial team went from hunting deals to being hunted. With power generation equipment in short supply, our secured supply chain and our ability to offer surety of delivery have moved us from medium-sized industrial projects into serious contention for data center deployments.

On April 1, we announced our first private grid power purchase agreement, a 120-megawatt deployment that will be supplied from the initial 240-megawatt November order. The PPA carries an initial 5-year term with 2 additional 5-year extension options. Equipment delivery and construction are expected to begin later this year with commissioning targeted for the first half of 2027. We expect this 120-megawatt deployment to generate approximately $50 million to $55 million of adjusted free cash flow on an annualized basis once fully deployed. To support the customer during construction and commissioning, we have already begun providing bridge power with mobile generators. The combination of these bridge deployments and other recently executed microgrid deployments is expected to contribute approximately $35 million in incremental adjusted EBITDA over the remaining 9 months of 2026, weighted toward the back half of the year as deployment ramp.

Finally, in April, we successfully priced $450 million of 0.5% convertible senior notes due 2031. Concurrently, we entered into a capped call transaction with initial cap price of $22.32 per share, a 28% premium over last Thursday's closing price of $17.38. We used a portion of the $386 million in net proceeds to pay down our outstanding balance under our ABL and outstanding advances under our master lease agreement and interim funding agreement. We intend to use a portion of the remaining net proceeds to finance the initial 240-megawatt order. On a cash coupon basis, this transaction reduces cash interest expense of this quantum of capital from high single digits to 0.5%. The cap call meaningfully mitigates dilution up to the cap price, though we recognize residual equity optionality remains embedded in the structure.

In summary, Atlas is well positioned to grow our power business from expected deployments of roughly 550 megawatts next year to approximately 2 gigawatts by the end of the decade. Combined with a recovering sand and logistics business, this trajectory would meaningfully transform our cash flow profile and create substantial long-term value for our shareholders.

With that, I will now turn the call over to our CFO, Blake McCarthy, who will review our financials in more detail and provide an update on our sand and logistics operations.

Thanks, John. At the time of our Q4 call, we were probably a bit more bullish about the prospects for oil than most industry prognosticators, as we are forecasting global oil supply and demand coming into balance later this year. Regardless, we are aligned with most forecasts that call for slightly flat to down U.S. activity levels in 2026. Well, as is par for the course in the oil field, the backdrop has changed in a hurry. The turmoil in the Middle East and its impact on global oil trade flow have led to a rapid recalibration of oil prices. While none of us are sure how the current conflict will end, hopefully, peacefully and quickly, we're increasingly confident that the floor on oil prices over the medium term has risen significantly.

The commodity markets are signaling an increase in the call on U.S. unconventional production. While we've seen some signs of customers bringing activity schedules forward, the number of true completion crew additions in the Permian remains in the low single digits thus far. The potential recovery in West Texas activity in 2026 will likely look quite different from the recovery post-COVID. Customers aren't sitting on a massive inventory of DUCs like they were coming out of the pandemic. And honestly, the service industry doesn't have the ready-to-go idle equipment stock it did at that time. 

Instead, ramping production will require rig additions, rigs that will need to be recruited, completion spreads that will require crew-ups, and likely capital upgrades and ancillary services will need to be secured. Current pricing levels for all of these just don't justify the investments service providers will need to make to meet incremental customer demand. Thus, we are likely at the front end of a pricing recovery across the North American services complex. 

It's still very early, and the wild volatility we've seen in the commodity tape based on who's tweeting what certainly doesn't inspire extreme confidence, but the realities of the impact that current geopolitical events are having on physical global inventories are becoming increasingly self-evident, and the strip always eventually responds in kind. While we expect the larger operators to take a more cautious approach to activity additions in the near-term, the universe of smaller operators will likely front run the big boys as they historically have always moved to maximize their value capture during both markets. The West Texas oil patch is a small community that thrives on industry chatter, and we're starting to hear the right things about activity increases in the second half of the year. 

Thus far, we have seen a few operators take advantage of an elevated strip to accelerate what remains at their drilled uncompleted inventory, which directly led to us adding 1 million tons of incremental allocated volume through year-end. The limited response by most public E&Ps to date is not all that surprising, as they will likely evaluate the 2027 curve around midyear prior to making capital allocation decisions. 

It's not going to take many crew additions for the sand supply to get tightened. Today, we estimate approximately 75 frac crews operating in the Permian. Due to the increase in sand intensity of completion processes over the past few years, we believe a 10% increase in frac activity would conservatively add north of 7 million tons of incremental sand demand. Based on what we know about the market, it's going to be tough for the industry to produce enough to meet that demand, much less transported to the well sites. While we haven't seen meaningful improvement in pricing just yet, you can feel the stage is getting set. 

While we remain cautiously optimistic on higher mine gate pricing, we have already witnessed higher logistics pricing. Last year was the perfect storm for poor logistics pricing. Post liberation day, we saw both falling activity in the Permian, along with weakening trucking rates nationally. Adding the impact of the June Express ramping midyear, and trucking rates fell below the levels we saw during COVID in the second half of last year. Margins for third-party trucking rigs turned negative in the fourth quarter. That rubber band finally snapped in early January as a small ramp in activity exposed the fragility of the logistics network in the Permian. We saw a spike in trucking rates even before the Iran conflict, and late February, higher diesel prices led to another round of rate increases. 

In the over-the-road market nationwide, tender rejection rates in March were approximately 14%, defined as typical of seasonal dips. This signifies a tighter, more expensive freight market with rates holding more than 800 basis points higher than 2025 levels. Rising rates nationally will pull rates higher in West Texas as carriers must now keep up with the over-the-road market. Although there is always a lag in passing those higher rates through to our customers, we did witness mid-teen logistics margins in March compared to the low single-digit margins in January and February. 

Higher trucking rates can also be a tailwind for higher mine gate pricing. Disadvantaged mines that are several mileage bands further away from activity sites are less competitive when hauling rates normalize. Higher rates also make the value proposition of the Dune Express even more obvious. Trucking rates in West Texas likely have more room to run as rates in the Permian are still about 10% below national over-the-road rates. Historically, Permian trucking rates are usually at a premium to the over-the-road market due to the wear and tear of driving on lease roads. Increased logistics pricing typically front runs increased mine gate pricing, so the improvements we are seeing now are very welcome. 

Moving to our financials. First quarter 2026 revenue of $265.5 million broke down to the following: proppant sales totaled $105.6 million, power equipment sales, $3.3 million; logistics, $139.1 million, and power rentals added $17.5 million. Total proppant sales volume was up sequentially to 5.7 million tons, which does not include approximately 130,000 tons of third-party sand purchases. 

Our logistics business set a quarterly delivery record of 5.5 million tons. Our average sales price for proppant for the first quarter was approximately $18.19 per ton, not including shortfall revenue of $1.9 million. For the second quarter, we expect volumes to be up sequentially, with the average sales price to be slightly below $18 per ton. We are effectively sold out for Q2. 

First quarter cost of sales, excluding DD&A, were $214 million, consisting of $74.7 million in proppant plant operating costs, $2.1 million for power equipment costs, $127 million of service costs, $5.9 million in rental costs, and $4.3 million in royalties. For the first quarter, per-ton proppant plant operating costs were approximately $13.86, including royalties, up sequentially from the fourth quarter. Higher expenses related to maintenance activities following the winter storm at our flagship current facility were the primary driver of the elevated OpEx per ton. 

Q1 cash SG&A, excluding litigation and nonrecurring items, was $23.3 million. SG&A, excluding litigation expenses, is expected to average approximately $21 million to $22 million for the remainder of the year, per quarter. Growth CapEx for the quarter was $7 million, the majority of which was tied to our Power segment and maintenance CapEx of $24.6 million. Q1 will represent the high watermark for capital spending in our Standard Logistics business for 2026, as spending was primarily tied to essential equipment and preparatory work ahead of the Twinkle dredge deliveries. 

We are adjusting our 2026 CapEx guidance to approximately $350 million to $375 million due to bringing the 240-megawatt purchase on the balance sheet with the recent convertible offering. Maintenance CapEx of approximately $45 million is planned, with approximately $305 million to $330 million dedicated to growth, the vast majority of which is tied to the build-out of our private grid power business. 

Looking ahead to the second quarter, we are forecasting sequentially improved sales volume. We are effectively sold out of our productive capacity for the second quarter, as the step-up in production would likely require incremental personnel that current sand prices do not justify. Additionally, our visibility to second-half activity levels and, consequently, volumes is improving rapidly. Due to the increased fixed cost absorption and improved production efficiency, OpEx per ton is forecast to climb in the second quarter to approximately $12.75. OpEx per ton is expected to continue improving over the remainder of the year as new operating processes have begun bearing fruit at our fixed mines. 

In the first quarter, our logistics business was impacted by a spike in third-party trucking rates and a late-quarter increase in diesel prices. However, as mentioned, logistics margins improved progressively throughout the quarter from low single digits in January to mid-teens by March. We are currently forecasting mid-teens logistics margins for Q2. 

Additionally, as previously mentioned, Atlas's power business is building contracting momentum rapidly. During the first quarter, the company executed multiple contracts spanning upstream and midstream microgrid projects and bridge power deployments in the commercial industrial market. We expect to generate approximately $35 million in incremental adjusted EBITDA over the remaining 9 months of 2026 from bridge and microgrid deployments. 

Looking at the current run rate for March EBITDA and with the incremental contributions coming from our Power segment, we expect Q2 EBITDA to be approximately $50 million.

I will now hand the call over to our Executive Chairman, Bud Brigham, for some closing remarks before we turn the call over for Q&A.

Thank you, Blake. First, I'm going to start with some context for my comments. It was 35 years ago as a young geophysics that I sit out on my own with a small amount of capital and founded Brigham Exploration. Our plan was ambitious to leverage cutting-edge technology to out-innovate the competition and create lasting value for shareholders. By hiring exceptional people, aligning them tightly with our investors and empowering them in an entrepreneurial innovative culture, that model delivered 3 IPOs and numerous successful exits. Along the way, our E&P companies drove several industry-transforming advancements.

In the 1990s, we pioneered the use of 3D seismic, delivering unprecedented exploration success rates, leading to our first IPO in 1997. In 2004, we were an early mover with horizontal fracking in the oil plays and built a position in the Bakken. In 2007 and 2008, we began outperforming peers in the Bakken, in part by increasing frac stages. In 2009, we completed the first successful 2-mile-long lateral with over 20 frac stages, which extended the Bakken play more than 70 miles to the west and accelerated development across all the major U.S. shale basins. And in 2014 and '15, Brigham Resources successful wells extended the Delaware Basin significantly to the south. Then in 2017, we founded Atlas and brought that same innovative spirit to oilfield services with 4 more first.

First, our team designed, permitted and built the industry's first and only long-distance sand conveyor system, widely believed impossible at the time, which reliably delivers premium proppant 42 miles into the heart of America's most prolific producing region. We were also the first to autonomously truck proppant, the first with double and triple trailer configurations in U.S. oil fields and the first and only company to dredge mine proppant in the Permian Basin. As John and Blake have shared, we're only getting started. Our proven ability to innovate and execute large complex infrastructure projects gives us a unique advantage in addressing today's energy challenges. And of course, over that 35-year career, I've experienced many cycles and disruptions, but I've never seen demand inflections as powerful as the ones we're witnessing today.

As the largest premier proppant and logistics provider in the world, we stand ready to respond. We are exceptionally well-positioned to support the delivery of incremental oil supply to meet global demand, demand which has only intensified with the recent Middle East disruption. As in the prior up cycles, we are positioned to deliver strong cash flow growth via proppant and logistics over the next several years. But what makes this cycle strikingly different for Atlas is that we're also optimally positioned to help meet America's rapidly expanding power needs. Our recently announced power contract, combined with the global framework agreement we just signed with Caterpillar, gives us both surety of supply and the scale to be a leading player in the fast-growing private power market. With these milestones and those still to come, we are clearly signaling our capabilities to both investors and customers facing acute grid constraints across Texas and the United States. The future for Atlas and Power is here, and I believe we're emerging as a leader in this critical market.

Thank you for joining us today. I'll now turn the call over to the operator for Q&A.

[Operator Instructions] The first question is from James Rollyson from Raymond James.

John, maybe start with you on a question on power. If we go back just a quarter ago, you were kind of focused on the commercial and industrial space, obviously targeting a specific customer with the original 240 megawatts. And as you've upped that ante by a pretty large amount with the global framework agreement with Caterpillar, and you guys mentioned that people are now calling you instead of the other way around. I'm curious if that end customer has shifted over to the data center guys or not just given the magnitude of the power you guys are looking to add.

Yes. Thanks, Jim. I'll start, and then, Tim, you can add to this. Yes, Jim, you're right. I mean the GFA or the global framework agreement has had a profound impact on Atlas' commercial opportunity set. Before the agreement, our pipeline was weighted towards smaller industrial deployments. The combination of secured supply and access to the premium equipment from Caterpillar has changed the customer conversation that's really been overnight. Both the size of deployments we're being invited into and the quality of the counterparties has significantly changed as well. And then like I mentioned on my call, I mean, reverse inquiries are now active. We're having a lot of reverse customer inquiries now on a daily basis. And that's a meaningful part of why we're so optimistic about our path forward with power. Tim, do you want to add anything to that?

Yes. I think as John mentioned, we're getting a lot of inbounds. And the goal of signing the global framework agreement was to secure power for the opportunity sets that we had in front of us, which were heavily weighted towards as John mentioned, smaller industrial deployments. And when I say small, they're 50 to a couple of hundred megawatts. And since signing the global framework agreement, we've started to get some inquiries from some of the bigger data center projects. So, I think our queue going into that as far as an opportunity set was roughly 4 megawatts or 4 gigawatts. And I would say, since signing that agreement, that queue has grown to somewhere between probably 8 and 10 gigawatts. And these are quality projects where we've gone through a stage of vetting to see if they're real and have determined that as the project moves forward, we would like to participate.

It sounds like you can place a lot of equipment with a smaller number of customers. And then maybe as a follow-up, kind of switching gears over to the sand and logistics business. Blake, you talked about incremental opportunities and kind of how -- we've heard this earnings season, some of that early indication of recovery of activity in the U.S. land and obviously, the Permian will be part of that. But I'm curious, as you think about incremental sand volumes where you're sold out today, what kind of price level do you need for sand to actually consider adding to your capacity, mining capacity to actually provide that sand?

Yes, that's a good question, Jim. And I think that, that question basically assumes that at any one point, a player has control over the price of sand, which, as you know, I mean, it is such a hyper volatile commodity where, as we talked about in the past, right, supply gets a little bit over demand just on a macro basis, and it quickly falls to that marginal price of production for the industry, which is where it's been at for over 18 months now. And the thing about sand is though it is the critical raw material to the completion process. It gets a little bit undersupplied and it doesn't just move $3, $4. It moves up in a hurry.

I think that as the largest player, right now, there hasn't been a lot of movement in price. We've seen some stuff around the margins. I think one encouraging thing we've seen is some of the more astute operators have tried to move forward their RFP processes where typically, we're not talking about this stuff until November. And some of the smarter guys are doing exactly what I would do, which is like, hey, the writing is on the wall on this, things are going to tighten up. If I could lock in now, that sure be good for my well cost come '27 and going forward. I think that where we stand is like, hey, we're more than happy to help you secure your volumes, but we're not going to lock in these prices for the long-term. So that's a bit of give and take.

In terms of adding production, for us, like if you look at where we're at now versus what our nameplate is, like there's still some upside. But that really would require adding ships and probably some minimal capital investment. And it's just something that we're not really going to be doing until you get to north of that $23 to $25 range on sand pricing because that's really where the industry starts earning its cost of capital. In a perfect world, we keep sand in those type of normalized prices. That's really a sweet spot for Atlas, and it doesn't encourage incremental supply. But sand always moves -- when it goes down, it goes down in a hurry, when it goes up, it usually goes way higher than we ever expect. So, it's something that we're watching very closely.

Yes. I think one thing to note is back in 2021, sand was around $20 per ton. We got to March of '22, it was north of $30 on its way to $40 a ton. So, like Blake said, I mean, sand prices swing wide. I mean, they're obviously very volatile. So, it's just something that -- when that supply-demand balance when we're undersupply, when that shifts, it shifts quickly.

The next question is from Derek Podhaizer from Piper Sandler.

So encouraging to hear all the comments around the logistics margins going from the low-single digits to about the mid-teens here and guiding that for the next quarter. On the trucking rates specifically, how should we think about what a 10% uplift in the Permian activity would do to those trucking rates, which appear to be already tightening. Blake, I think you said they're still 10% below the national average. So maybe just some additional color around where you think trucking rates can go if we do get an uptick in activity here.

Yes. That's a great question, Derek. Apologies in that trying to pin down where trucking rates are right now is like trying to hold on to Greece pig. There's a lot of moving variables. Yes, as I mentioned in the prepared remarks, the typical relationship with over-the-road, like over-the-road national freight right now versus Permian rates is inverted. Typically, you need rates at like a 10% to 20% premium to over the road to incentivize drivers and truck owners to beat up their assets in the oilfield. But currently, Permian rates are still at a discount.

The other thing that we're really watching is diesel. That's a direct hit in the wallet for trucking owner operators. And while most of our customers have been quick to work with us on passing those costs through, we have heard quite a few anecdotes that certain operators refusing to accept those pass-throughs or only accepting a percentage of that. In my opinion, that's really shortsighted as trucking margins were already razor thin across the industry. So if not in the red for the smaller trucking companies. So, forcing them to eat the rapid diesel inflation just invites a trucking crunch.

And we're starting to see that as industry watchers can tell you that several trucking companies are choosing to park assets versus operating at a loss. That's continued tightening in the trucking market. That's something we're certainly watching as the higher trucking rates go, the more important the location of your mines and the breadth of your logistics network, the more important that becomes. So, the combination of our mobile mines in the Midland Basin and of course, logistical advantages provided by the Dune Express for our fixed mines that service the Delaware, that puts Atlas in a really strong position versus many of our competitors' mines and actually probably adds to our ability to push mine gate pricing.

In terms of what it means in terms of like, hey, you see a 10% move in trucking rates and what that does to our margin profile. That advantage, that margin advantage provided by the Dune Express, that just throws gas on that fire, right? Because if you're taking those trucking rates are being forced by cost inflation to the owner operators, yes, we get hit on that on the final haul from like end of line or from the state line facility to the well site, but it's such a smaller percentage of the overall logistical haul because of how much of that chunk of that haul is covered by the Dune Express. And so, it becomes -- it really starts to push our incrementals. We were encouraged to see the improvement from the low-single digits into the mid-teens. We're watching that now and expecting it to kind of be in that mid-teens margins through this quarter. But as we move into the back half of the year, it's certainly something we're going to start pushing.

Yes. And I think the diesel prices, I mean, that's obviously a big tailwind on the Dune Express because that's electric, moving that sand 42 miles via an electric conveyor that's also big. And I also think there's also a shortage of trailers lead time on those trailers. Now a lot of your trailer manufacturing comes from Mexico, there's a tariff on it. So, I think you're going to start seeing shortages in a lot of places here as we move through the -- as we move into the rest of the year.

That's all really helpful color. Right. So, we talked about the demand is not a problem. Maybe thinking about the supply side. I think in previous calls, we've talked about the Tier 2, Tier 3 sand mines out there. I think we've had something around like 20% of supply coming out of the market. But if there's going to be this call on demand around, I think you said 7 million tons for this year if we start adding completion crews back. How do you think about those mines being incentivized to come back to the market? Because when these mines shutter, they never truly shutter or come out of the market and they can come back to life pretty quickly. So, have you surveyed and kind of looked around the supply stack to see which mines have the ability to come back, maybe some that have been truly taken out of the market? Just maybe some comments and color around the supply stack as you see it today and what it could -- and how it could respond if there is a big call on demand.

Yes. I can start with that. I mean we can only go by experience of what we've seen in the past back when prices really started when we saw this change flip in the supply and demand balance. I think a lot of -- a number of mines that had been open, had closed were slow to open their doors and commit a lot of capital until they had longer-term contracts. And so I think that's really going to impact that. I also think your proximity mines are going to be a lot more advantaged position here because of where diesel rates are and where the trucking rates are. Do you want to add anything?

Yes, that interplay between just the logistics haul, right? Like it's not just their cost to produce at the mine, but it's also how mines that are located at the kind of the fringes of the plays. If you got a mine that's to the extreme south or something like that, like with what you're seeing in terms of diesel inflation, those haul become really cost prohibitive. And so, you really need to see mine gate pricing move in a big way to incentivize those mines to really to gear up. And like John said, like it's it'd be a little foolhardy to do it like without, hey, I can get a spot sale here at this price, which would -- if I extrapolate that out 2 years, it incentivizes that capital investment. But if you don't have a contract, that's a heck of a bet.

And related to all that, we should also mention personnel. I mean, it's a real challenge to find labor that can operate these plants. And so that's going to be a challenge as well.

And really, the data center boom that's going on in what I would call Central Texas, maybe Central West Texas a little bit, around Abilene and places like that, is really pulling a lot of workers out of the oilfield right now. And so, because there's all this construction trades and things like that, that's typically where we go to pull our manpower from. It's making it difficult to hire. So, there are a lot of other factors going on here than there were back when these mines opened in 2022. I mean, there's a lot more going on.

The next question is from Sean Mitchell from Daniel Energy Partners.

Maybe turning back to power, can you guys talk about the specific equipment that CAT is providing to you in this global framework agreement and why these units are probably well suited for the private grid versus other options?

Yes. Sean, this is Tim. I'll take that question. The assets we're purchasing from CAT are really two engine platforms. One is a medium-speed engine, one is a high-speed engine. Those are both designed to operate in continuous duty. The medium-speed is a 4-megawatt unit. The high-speed engine is a 2.5-megawatt engine. And we feel like these are assets that we want to own and operate for decades. They each have different characteristics that help support our customer needs. So, it's really kind of project-specific on what units we would put on specific projects. But our confidence is not only in the history of those engines -- I think one of them has not had a design change in 20 years, which tells us it's out doing the work and will continue to.

And the other has had some design changes, there are some different models available to us under that agreement. And we can use those models to match customer demand just depending on load requirements on an operating basis. But what excites us about both of those is that they come from probably the most respected OEM in that space, and really in several spaces, in Caterpillar. The backing we get from that helps us predict maintenance costs, helps us to address issues quickly if they arise, and ultimately supports a Tier 1 portfolio of assets that we operate for customers.

The next question is from Scott Gruber from Citigroup.

Maybe turning to the OpEx side on your sand production business, I want to double check the OpEx per ton guide embedded in the Q2 EBITDA guidance. I think I heard $12.45 per ton, so I want to check that. And then obviously improvement will come with the new dredges, where do you think OpEx per ton lands now on a normalized basis, and when do you think you can get there?

So a correction on that, Scott, the OpEx per ton guide for Q2 -- embedded in the Q2 guide is $12.75. Yes, thanks for clarifying. I have a tendency to trip over my own tongue.

Yes, I think that we're obviously, it's a fixed-cost absorption business. And so, the more - now that we're starting to get closer to sold out, that is sold out for Q2 at the current production capacity, that's obviously a tailwind. We're still in the process of commissioning the new dredges at the flagship Kermit mine. Once we get those on, that's going to lower our variable cost, and that will start to flow through in terms of operating leverage. As we push forward through the year, that will continue to trend down. We'll probably get an 11-handle on it towards the September–October timeframe. Obviously, that continues to be based around volume.

But longer-term, our mines have been operating at elevated OpEx for a while now, but we still got -- our goal is to get back to the high 10s on a full run-rate basis once we get them optimized across the company. And we've got -- I think there's a lot of stuff going on under the hood that we're very excited about in terms of process improvements at the plants, more efficient maintenance, and things like that. And we're really making some real headway there. And so, I think it would continue to be a positive trend as we work through the rest of the year.

I appreciate that. And then turning back to logistics, obviously encouraging trends on the trucking side, and you mentioned how that will -- is there a positive influence on Dune Express pricing? I'm wondering kind of the timing around that poll. Are your Dune Express volumes, is the pricing on those volumes locked in for the year, or could those reset at some point this year?

A lot of those contracts have either biannual or quarterly pricing visits. Right now, like I said, it's still early, so you haven't seen much movement in terms of actual sand pricing. You have seen movement in trucking rates. With the Dune Express volumes, we really look at those kind of as a total cost of delivered tons. So, like, yeah, we add those together, and it's through the lens that we want the operator to look at, because that's certainly going to be to our advantage as we move through this cycle. It's probably more, you know, as later in the year, it might be a slight tailwind. For those bigger contracts, it's going to be a bigger tailwind as we move into '27.

But our trucking pricing resets a lot more frequently than sand pricing does. Yeah, it's quarterly on the sand pricing. I mean, on the trucking prices, sorry.

Yeah, I got you. But those kind of integrated deliveries, the upside really comes next year on the margin front.

That'll probably be the biggest lever.

The next question is from Keith Mackey from RBC Capital Markets.

Maybe just sticking on the sand price theme, can you just comment on your contract durations and contract amounts? Roughly how much of your sand could reprice between now and the end of the year based on the contract or agreement schedule that you currently have in place?

Yeah. We tend to try to contract as much of our sand as possible through the RFP process. I think that there's probably in terms of stuff that's fully free float to spot. If you look at the back half of the year, we could probably reprice up to 20, 25% of our contract portfolio. On top of that, as people look to lock in tons for '27, that probably opens the conversation to, hey, let's move the entire contract to move levels there. So, there is some upside to pricing as we move through the rest of the year, but it's really to reprice the entire contract portfolio. It's going to be kind of as you move into that full 2027 RFP season.

Okay. Makes sense. And then can you just run us through a little bit more on the dredge implementation and the timelines there for the new twinkle dredges that you've got coming in? And just how does that align with the OpEx per ton guidance that you've been running us through, Blake?

On the timing, the first twinkle dredge on location, it's built. They're expanding -- they're big in the pond right now. We would expect that dredge to be floated probably by the end of the quarter, when I say quarter -- into the second quarter. The other -- the second dredge arrives here, I believe, starts arriving here probably in June sometime. And then I think they've got to construct the dredge on site. And I would say that we probably won't see a full impact on our -- from the dredge probably until end of the year, fourth quarter, maybe. I mean, because I don't think we -- while they'll both be floated probably in the third quarter, I think it's going to be -- give some time for us to commission them and get them running where they need to be. So, I mean, the guidance that we've given, I don't think it incorporates this.

So, there's no impact from that in Q2. And then the way to think of that from a model mechanic standpoint is that right now, that variable cost of sand is closer to $5.50 to $5.75. When those dredges get running, that number gets -- has a four handle on it. And so that really starts to flow through in terms of, like I said, the variable cost operating leverage.

The next question is from Don Crist from Johnson Rice.

On the global framework agreement, I just wanted to ask about the delivery schedule. Is it pretty constant over the '27 through '29 period? Or is it more back-end weight? Just kind of any color around the delivery schedule on that GSA?

Yes, Don. So, the delivery schedule on 2027 is kind of last three quarters of the year. We've still got 120 megawatts from our first order kind of pre-framework agreement that we expect to be able to slot in there. And then in 2028, it's fairly constant and accelerates as far as overall size of megawatts in our delivered slots.

Yes. So, I think it's more weighted to '27 and '28 with a lesser commitment in '29. But as Tim and John talked so enthusiastically about, like as we move forward and actually start to contract some of these assets, we'll probably be looking -- we have the ability to upsize that commitment at the later stages of the contract and it's something that we're going to be exploring.

And just from a kind of contract timing, would your -- and I know it's very fluid and these things have to go through boards and all kinds of things. But just are you -- is your goal to have that contracted, that incremental capacity contracted, say, nine months before it is delivered or is that too aggressive?

I think what we found out and obviously, what others have found out is that talking about timing on these contracts is very difficult. But our goal is to get it contracted as soon as we can. But I don't want to put out any timelines out there because they take time. And these are very complicated transactions, complicated contracts and it takes a while for negotiation because we're talking about 15- to 20-year power agreements with counterparties. And so, we don't want to put a timeline on that what our goal is. I mean we just want to make sure that it's contracted when we start deploying it.

Yes. The one thing I will say is that compute power is a real bottleneck. And so, there is a lot of urgency to move from this customer base. And so obviously, there's urgency on our end is like, hey, we want to get these contracts. There is a lot of urgency from them that's like, hey, I need this power and I need this timeline. And there is a considerable construction runway where you actually go from, hey, we signed a contract to where they're actually providing power or getting -- we're providing power to them. And so, it is to both parties' advantage for these negotiations to move as quickly as possible. But as John said, they're really complicated negotiations big contracts. And so, each one is like an M&A transaction. And so -- and when you're signing contracts of this term, it's infrastructure. You want to make sure you get it right because you got to live with those contracts for a very long time.

Yes. And I think the other element that has kind of changed the dynamics around those discussions is just the number of inbounds we've gotten and the counterparties. And so, when we look to build a contracted business that's 15-, 20-year commitments, I think we did a great job on asset selection in the global framework agreement. I think we've got a great team. And the other part that makes a good deal is a good counterparty that we want to work with for that period of time. And so given what's in our pipeline and how quickly it's expanded, we're in a very fortunate position where we've got a little more say in who our counterparties are going to be for those contracts. And so obviously, something we're all looking forward to, and we'll share details as they come.

I appreciate the color. When a 500-megawatt contract can be well over $2 billion. It's understandable that it takes a while to get across the finish line. So, rooting for you.

There are no further questions at this time. I would like to turn the floor back over to John Turner for closing comments.

Yes. Thank you, operator. And I want to thank everyone for all the questions today. And before we close, I want to step back from the quarter and tell you why I believe Atlas looks fundamentally different 2 years from now than it did or than it does today. Start with what we announced last month, the 120-megawatt power deal, the power purchase agreement that we signed on April 1, which is expected to generate $50 million to $55 million of annual adjusted free cash flow once it's fully deployed.

Returns on individual contracts will vary. They will depend on the customer and the market, term length, contract structure, et cetera. We would not expect every megawatt across our portfolio, our broader portfolio to deploy at these same economics. But this contract is a meaningful proof point of what the model can produce, and it represents a small fraction of the 2 gigawatts we expect to own and operate by 2030.

We're not a company adding power at the margin. We're building a long-duration contracted cash flow stream on top of the sand and logistics franchise that is self-inflected at this time as well. And we are doing it with secured supply from Caterpillar at a moment when -- and obviously, Caterpillar is a great counterparty. And it's at a moment when generation equipment is one of the scarcest assets in the U.S. economy. And the logistics business is the engine that funds this transformation. And that engine is accelerating. We're effectively sold out as we've talked about for the second quarter. We talked about our logistics margins are now running in the mid-teens with that strength expected to carry through the second quarter, and we are guiding to approximately $50 million of EBITDA in the second quarter, which is roughly 76% sequential increase from the first quarter.

The conditions Blake described, limited completion crew availability, tight equipment and rising trucking market rates, historically, we're the most reliable supplier in the basin and that is Atlas. And we've seen that in the past. We've also recently positioned our balance sheet to fund this growth without compromising returns. We talked about that through the convertible pricing and which, I guess, -- and then as Bud noted, in his 35 years in the industry, he has never seen two demand inflections of this magnitude converge at the same time, surging global oil demand on one side and then the acute U.S. power constraints on the other. And Atlas is positioned itself to serve both of those. And we have the assets, the contracts, the supply chain and the capital to deliver, and we intend to.

Thank you for your time and your questions and your continued support. We look forward to updating you guys on our progress next quarter.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Greetings, and welcome to Atlas Energy Solutions, Inc. Fourth Quarter and Year-End 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Kyle Turlington, VP, Investor Relations. Thank you. You may begin.

Hello, and welcome to the Atlas Energy Solutions conference call and webcast for the Fourth Quarter of 2025. With us today are John Turner, President and CEO; Blake McCarthy, CFO; Tim Ondrak, President of Power; and Bud Brigham, Executive Chairman. John, Blake and Bud will be sharing their comments on the company's operational and financial performance for the fourth quarter of 2025, after which we will open the call for Q&A.

Before we begin our prepared remarks, I would like to remind everyone that this call will include forward-looking statements as defined under the U.S. 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 will file with the SEC on February 24, 2026, our quarterly reports on Form 10-Q and current reports on Form 8-K in our 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 such as 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. For the fourth quarter, Atlas generated $36.7 million of adjusted EBITDA on $249 million of revenue representing a 15% adjusted EBITDA margin. For the full year 2025, we delivered $221.7 million of adjusted EBITDA on $1.1 billion of revenue, achieving a 20% adjusted EBITDA margin. Our Q4 results exceeded our initial expectations. Volumes came in at 5.3 million tons flat sequentially with the third quarter. The typical end of year seasonality was notably muted as customers took minimal downtime around the holidays, this was particularly encouraging following the steep decline in West Texas completion activity we experienced over the summer.

It now appears that most operators have adjusted their activity levels to align with the $50 to $60 WTI strip and are comfortable maintaining operations at these levels. The quarter also marked the highest utilization we've seen to date on the Dune Express as Delaware Basin customers increasingly recognize the efficiency and reliability benefits of this system brings to their logistics supply chains. We view this as a strong indicator of the system's performance heading into 2026.

In November, we announced the order of 240 megawatts of power generation equipment, accelerating our strategic evolution into a leading provider of behind the meter, long-term power solutions across a broad range of domestic industries. We see the evolving power market over the next decade as a truly generational opportunity, and we're moving aggressively to capitalize on it. After years of relatively flat U.S. electricity consumption, the grid is now confronting surge demand, which hit record levels in 2025 and is projected to grow by as much as 25% by 2030, driven by the explosive expansion of data centers and the resurgence in domestic manufacturing.

Utilities are struggling to keep pace amid infrastructure constraints and reliability challenges or rising residential electricity prices up 7.4% in 2025 alone are creating political and economic pressure for more affordable dependable alternatives. This dynamic is pushing developers to secure dedicated behind-the-meter power assets to derisk their projects and meet time lines. For many of these companies, grid constraints represent a new and urgent challenge compressing decision-making windows dramatically.

Since the summer of 2024, Atlas has been positioned in itself as the go-to solution in this space. The Moser acquisition completed this time last year provided a cash flow platform and critical engineering expertise that complements our strength in large-scale project execution. Over the past 9 months, we've been actively transitioning the business from a traditional short-term generator rental model to add power as a service approach, selling electrons under longer-term arrangements. This shift has involved upgrading communication systems, refining our sales process and focusing our commercial efforts towards customers seeking dense long-term deployments. We're encouraged by the progress we reached a tipping point in this transformation.

Earlier this year, we successfully deployed our first microgrid with the Permian E&P customer, which has since been upsized. In the first quarter of 2026 alone, we anticipate deploying at least 30 megawatts under long-term microgrid multi-basin contracts with the E&P and midstream customers. Based on our current pipeline, we are targeting more than 50% of our existing fleet under long-term contracts by year-end. January also marked the initial deployment of our patented hybrid battery solution, which integrates with generators as a grid-forming system, delivering meaningful improvements in cost and maintenance efficiency, the commercial potential for this technology extends far beyond the oilfield. While these advancements in our existing power business are promising, the larger behind-the-meter projects represent a true step change opportunity for Atlas. We have active commercial negotiations underway and expect to provide greater visibility on equipment placement and the resulting economic impact to Atlas in the near term.

Our pipeline features a broad range of behind-the-meter power projects across multiple industries, including energy, data centers, manufacturing and others with contract terms typically spanning 5 to 15 years, creating durable long-term cash flows. We have particular strength and see especially compelling risk-adjusted returns in projects in the 50 to 500-megawatt range where our modular platform enables efficient execution and high density deployments. At the same time, our differentiated track record with large CapEx infrastructure projects such as our high-capacity plants in the Dune Express conveyor system, combined with our scalable design and growing expertise advantage us for the execution of even larger scale opportunities as customer demand intensifies.

The opportunity set continues to expand rapidly, with several prospects advancing from initial discussions to formal proposals and active negotiations. We are targeting more than 500 megawatts deployed across our fleet in 2027 with the potential for substantial additional growth beyond that as we secure larger-scale projects and build on our initial orders. The ordered equipment is slated for delivery starting in the second half of 2026 with energization targeted to begin in Q1 2027. Each of these projects has the potential to meaningfully enhance Atlas' cash flow profile and I am very excited to share more details with you as we close transactions. So stay tuned for the updates.

I will now turn the call over to our CFO, Blake McCarthy, through our financials in more detail.

Thanks, John. The underlying performance in our sand and logistics business improved in the fourth quarter despite a continued challenging pricing environment. Plant operating expense per ton declined sequentially to $12.28 despite elevated costs in October related to the operational challenges in Q3 and higher maintenance spending during December. Our cost of production, although improved, remain elevated at our flagship Kermit complex to the current limitations on our dredge fee. This is expected to be alleviated with the deployment of our 2 new [ Twinkle ] dredges, which are scheduled for commissioning in the second quarter.

The market backdrop for West Texas sand and logistics remains challenging with current pricing at the industry's marginal cost of production. Premium completion activity is expected to be down year-over-year, although it appears to have stabilized at Q4 levels for now. Despite the challenging market environment, Atlas' commercial team has positioned us well to grow volumes in 2026. Leading on our cost advantage mines and logistics network, we were able to increase our share of current customer sand procurement spend while also adding some key new customer relationships we expect to grow and scale over the course of 2026 and beyond.

The current oil macro environment remains quite opaque, so we don't have significant visibility into all of our customers' full year plans, but our Q1 schedule is very busy. The sales volume is expected to be up approximately 10% sequentially and further growth expected in the second quarter. The winter storm at the end of January impacted everyone's operations in the Permian, and we lost approximately 4 days of production and deliveries. This temporary shutdown is expected to negatively impact Q1 EBITDA by approximately $6 million. However, I'm proud to say Atlas was the last sand provider delivering in the Delaware before we had to shut down due to [ ICE ]. The fact that was made possible by the Dune Express removing so much road mileage and the related risks.

Speaking of the Dune Express, it continues to run extremely well. January 12 marked the 1-year anniversary of its first commercial delivery, and thanks to our partners, I'm proud to announce that we have eliminated more than 21 million miles of truck traffic in the Delaware Basin. We are very proud of the fact that the Dune Express is materially improving quality of life and safety for families in the broader community in the region. The Dune Express achieved record shipments in the fourth quarter of approximately 2.1 million tons including a monthly shipment record in November of 760,000 tons.

For the first quarter, we expect new customer wins and continued spot volumes to drive improvements in Dune Express volumes and believe we are positioned to deliver north of 10 million tons visa Dune Express this year. We are grateful to our customers for partnering with us to make the Permian Basin a safer place to live and work.

All that said, the obvious question is, if the Dune Express is working so well, why were the Q4 service margins, so weak. While Q4 numbers were burdened by large load bonuses to ensure driver availability through the holidays, the real answer to that question is simply pricing. Logistics pricing in the Permian has fallen to completely unsustainable levels, well below those seen during COVID. To compete with the Dune Express, we have seen increasingly irrational behavior from some of our logistics competitors, which we believe sets both them and their customers up for eventual problems and disruptions. We believe several companies are currently delivering standard prices where they are effectively subsidizing their customers. Thus, the margin differential provided by the Dune Express is there, it's just partially insulating us from historically bad pricing.

Encouragingly, we are seeing signs of this market beginning to break the other way. Third-party trucking rates are beginning to see upward momentum, echoing what we're seeing in the broader over-the-road market. That is typically the first sign that trucking companies are tired of subsidizing their customers, and as a result, margins have to come up. In November, Atlas introduced our first last-mile storage file system to the market. While other power systems in the market essentially used mining equipment that has been [indiscernible] for the oilfield, our system is built for purpose.

Today, we have 6 systems in place to support our wet sand operations with testing underway for deploying the system in dry sand operations. These systems are key to continuing our further enabling of our customers' continuous pumping initiatives, which are driving record sand consumption per completion group. While the market for sand logistics in 2026 looks like it will remain challenging, we are looking to take advantage of the weaker market conditions to cement Atlas' position as the provider of choice. The pricing pendulum in our industry has swung too far for too long, and the pricing over vantage is certainly tight. We're hearing more anecdotes of competitors struggling to fill customer obligations. And I'll echo the comments from the large cap oilfield services calls when I say that it's only going to take a very small increase in completions activity for pricing to move.

This RFP season, we saw market share shift to the higher quality suppliers with fewer volumes being spread amongst the lower-quality mines. The supply demand for sand in the Permian is much tighter than the market realizes, especially for dry sand. On our last conference call, we set a cost savings target of $20 million in annualized savings. As it stands today, we have executed upon that target through a combination of the elimination of third-party last mile equipment, reductions in rental equipment headcount optimization and procurement savings. Despite the early success of these efforts, we will continue to push for further cost optimization as we look to lower the fixed cost structure of our business across the organization.

Moving to our financials. As John touched on earlier, Atlas recorded full year 2025 revenue of $1.1 billion. Total company adjusted EBITDA was $221.7 million or 20% of revenue. De-constructing full year revenues, [ proppant ] sales totaled $478 million on volumes of 21.6 million tons, while Logistics & Power contributed $558.8 million and $58.5 million, respectively.

Fourth quarter 2025 revenue of $249.4 million broke down to the following: profit sales totaled $105.2 million. Logistics contributed $126.1 million and Power rentals added $18.1 million. Total proppant sales volume was slightly up sequentially to 5.3 million tons, while our logistics business delivered approximately 4.9 million tons. Our average sales price for the fourth quarter was approximately $19.85 per ton.

For the first quarter, we expect volumes to be up approximately 10% sequentially, with the average sales price of sand to be approximately $18 per ton. Q4 cost of sales excluding DD&A were $187.3 million, consisting of $60.6 million in plant operating costs, $115.2 million of service costs, $7 million in rental costs and $4.5 million in royalties.

For the fourth quarter, our per ton plant operating costs were approximately $12.28, including royalties, down sequentially from the third quarter, but still elevated versus our normalized levels. Higher volumes and a reduction in extraneous costs at the plants for Q3 levels drove the lower plant operating costs. For the first quarter, we expect our OpEx per ton to be approximately in line with the levels in the fourth quarter, reflecting the impact of the [indiscernible] weather in January.

Over the course of 2026, we expect to see improvements in our realized variable costs as the new dredges are commissioned at our Kermit facility. Cash SG&A for the quarter was $22.6 million, SG&A, excluding litigation expenses, is expected to decline in the first quarter due to our previously announced cost-cutting initiatives. Adjusted for cash flow, which we define as adjusted EBITDA less maintenance CapEx, was $22.9 million or 9% of revenue. Growth CapEx equated to $5.1 million, the majority of which was tied to our Power segment and maintenance CapEx during the quarter was $14.4 million. The elevated maintenance CapEx spend was primarily tied to preparations related to the dredging and wet plant operations at Kermit, ahead of the [ Tweak ] Dredge deliveries. We expect cash capital spending in 2026 to be approximately $55 million down significantly year-over-year and heavily weighted to the first half.

Maintenance CapEx of approximately $45 million is planned with approximately $10 million dedicated to growth, evenly split between sand and logistics and power. Additionally, we expect to make progress payments on the 240 megawatts of power assets we have on order as they begin to be delivered over the course of the second half of the year. These payments will be financed from our recently announced lease facility with [ Eldridge ] and are expected to total approximately $190 million over the course of the second half of the year. Net interest expense is expected to be approximately $16.5 million per quarter in the first and second quarters, rising to approximately $20.5 million in the third quarter and $22 million in the fourth quarter.

As John also touched on in his remarks, our plants have begun the year quite busy with WTI prices hovering around $60, oil prices will dictate if we continue to keep this pace up. We have a clear line of sight on strong volumes for the first half of this year, but many of our customers are taking a wait-and-see approach with respect to their second half completion schedules. Our recent market share gains are a testament to Atlas' efforts to position ourselves as the reliable partner of choice to the best operators in the Permian Basin.

For the first quarter, while volumes are expected to be up sequentially, the expected decline in sales price per ton, combined with the lost days of revenue due to the winter storm will be a headwind to margins. Additionally, our logistics business was burdened by load bonuses to ensure driver availability around the turn of the calendar, which will mute logistics margins improvement until later in the quarter. Additionally, the power business is expected to generate a greater contribution sequentially. Thus, we expect EBITDA to be approximately flat with Q4 levels with the company exiting the quarter at a higher run rate in March versus January.

I will now hand the call over to our Executive Chairman, Bud Brigham, for some closing remarks before we turn the call over for some Q&A.

Thanks, Blake. While we're navigating another cyclical trough in oil prices, the future for Atlas has never been brighter. Just as we were ideally positioned for the post-COVID Permian recovery, which substantially expanded our cash flows, we're primed for the inevitable rebound in oil and gas activity today. But in addition, as I stated on our last call, we're going hybrid.

Today, Atlas is lighting the groundwork for transformative long-term growth through behind-the-meter power contracts. These 5 to 15-year agreements are expected to deliver robust revenue visibility paired with predictable costs, including fixed and stable expenses for SG&A, maintenance and interest complementing our powerful but more volatile oil and gas revenue streams. Our proven expertise in large-scale infrastructure amplified by the Moser acquisition, uniquely equips us to power the surge in AI, robotics and manufacturing. We see these initial permanent power projects as a strategic springboard, drawing in more customers and building a portfolio of assets that generate steady recurring cash flows.

As discussed by John, demand for behind-the-meter power is accelerating rapidly fueled by rising costs and potential grid shortfalls that are pushing commercial, industrial and data center users towards swift commitments for bridge and permanent solutions. We are witnessing a seismic shift in power sourcing. To borrow from our partners at Bloom Energy, on-site power has evolved from a last resort to a business necessity. U.S. power demand is growing at its fastest rate in decades.

Let me emphasize, the Atlas investment story is more exciting than ever. Chronic underinvestment in exploration spending coupled with shales maturation and steep decline rates sets the stage for what I believe will be a prolonged upcycle. While most U.S. shale basins struggle with inventory depletion, the Permian, where Atlas leads in proppant production and logistics will be key to meeting rising oil demand. Even at today's cyclical lows in sand and logistics pricing our low-cost model shines through, thanks to the Dune Express and efficient mining operations. When activity rebounds and it's a question of when, not if, we anticipate stronger utilization, pricing and margins, sparking a sharp profitability upturn. By investing ahead of this oil up cycle, while we are also launching our high potential power business, Atlas offers investors dual catalysts for substantial growth.

I'm deeply grateful to our exceptional team, the true innovators fueling our advancements. Their dedication has me more optimistic than ever about Atlas' future. Thank you for joining our fourth quarter and year-end conference call. I'll now hand it over to the operator for Q&A.

[Operator Instructions] Our first question is coming from Jim Rollyson of Raymond James.

John, you talked a bit about the power side. Obviously, a quarter ago, you ordered the 240 megawatts. I'm pretty sure you mentioned then you had line of sight on customer opportunities there. You've since secured financing, which I presume doesn't happen without similar line of sight. So maybe just an update on kind of what's taken a little while on getting that contracted. And do you have good line of sight on where that equipment is actually going at this point since we're less than a year out from this deployment?

Yes. Great question, Jim. Thanks for asking. Yes, we do have strong visibility into the customers that are expected to take the substantial majority of this equipment package which is on track for delivery, I think deliveries up, they began in late 2026. These are high-quality creditworthy counterparties that are across diversified markets and have indicated a meaningful follow-on requirements beyond their initial commitment providing for clear pathways for additional equipment orders and sustained growth into the future.

Our strategies still remain solely focused on behind-the-meter power solutions. And we're not pursuing grid interconnected or utilities [indiscernible] said, we are delivering reliable on-site power directly to customers facing grid constraints. In many cases, these engagements begin with Bridge power to address immediate needs, which generate significant near-term cash flow and accelerates our path to full development. These bridge arrangements quickly transitioned in the long term behind-the-meter agreements that we primarily are working on as customers recognize a prolonged grid time lines and value of our integrated approach.

So yes, the answer to that is, yes, we do have clear line of sight on [indiscernible] those are and expect to be reporting on that here shortly.

Appreciate that. And maybe as a follow-up is kind of related here. is I've watched this market evolve and different players kind of approach this in different ways. It seems like there's 2 strategies I've seen one being guys that are just providing power equipment basically on a rental basis.

And then the second being guys that are providing the entire solution, all the balance of plant, et cetera. I'm kind of curious if you could elaborate on kind of which strategy fits yours and how you see the return opportunity there.

Yes, go ahead. I'm going to [indiscernible]. And then we have Tim Ondrak, our leader Power business, you can obviously talk more intelligently about it as well. But it's a really good question, Jim. Like there's -- there's obviously the equipment, and that's what I think most people in the market have a much clear line sight of the costs and therefore, you rent for y, and you have return, but when you get into these behind-the-meter solutions, right, depending on the function -- like the function of the facility, there's different requirements for the balance of plant, different [indiscernible] equipment that you need. And so that can change that dollar per megawatt provided both on the front end and then therefore, what you have to charge.

Our strategy has been like let's get it really early with some of these customers that we know they are making big investments in facilities and they're facing -- they've been -- the grid has indicated they like, hey, you're not getting on for what you require. Really just to understand what they're trying to accomplish within their activities and do a lot of front-end engineering to really meet their needs. And that can have a pretty broad range in terms of what like, one, what our facility on cost; and two, that we have to charge them because we're always going to be targeting a strong unlevered return on our capital deployed.

And obviously, when it comes to return on equity, the leverage you use on these, that gets pretty attractive. So thinking about like these first ones, there's going to be a pretty broad range, and that's why we're excited to share the economics on things. And we'll be very transparent about that as we consolate deals.

And I also think that it is the reason why it's taken a little longer to side. Another comment on the why it's taken so long to sign these agreements is that these just aren't generator rental agreements. These are actually -- you have to go in and do planning, engineering. Do you have to line up all the equipment. You have to do -- there's a lot of different things that you have to do on that front. So I think that's why it's taking longer than [indiscernible].

It also makes those facilities much stickier because it's fit for purpose.

Yes. And I think just to kind of close out, I think our strategy is bridge to permanent. And when we look at the thesis that really drives that we view power as a structural need. And so depending on the utility region and where folks are building out their facilities, those delays can be 2028 all the way up to -- I think we've heard 2034 from some people. And so when a customer looks at what their power need is as they start their facilities, it can be substantially less than their growth intentions. And so the model that we have to execute on that is to provide mobile power generation into a permanent facility that meets that long-term need and get the customer to a place where they don't need to worry about a utility time line, and they get worried about operating their business.

The next question is coming from Derek Podhaizer of Piper Sandler.

I want to keep going on the economics question. So obviously, there are some numbers out there we talk about plus or minus $300,000 per megawatt per year of EBITDA. Kind of compare that to your current financing costs. Maybe just help us understand when you talk about the resets, building the facility, the balance of plan included in there, how should we think about the economics in the earnings of these potential projects that you're working on? Just maybe a little bit of help around that as far as some of the numbers that we're hearing out in the market.

Yes, I'll start off and Blake and he could chime -- he can follow up. I mean economics, obviously, like we've said earlier, depending on a number of factors. If you talk about balance of plant facility development, those are common and our turnkey behind the meter solutions and then obviously balance that with the initial contract term, we'll be focused on longer-term contract structure for stability our goal is attractive internal rights of return, well above our cost of capital in the initial term with upside from extensions and expansions. Do you want to add to that?

Yes. Derek, kudos to you, I'm really glad you asked this question. So I think it's a great question because I know people want to have some type of metric to plug in their estimates. John's comment on IRR is probably the best way to back to order that. So for these projects, we're targeting unlevered IRR in the high teens, which we find very attractive, considering the contract in nature of these cash flows. So when you layer on any type of leverage on top of those cash flows, the returns on equity, as I mentioned, gets very attractive. Thus like from a like long-term perspective, I think that people talk about that like $300 per megawatt. That's probably a good proxy for just equipment alone but it's a little too simple when it comes to like you're actually doing these bespoke power facilities.

So I think that using that IRR and hey, we disclose kind of the -- obviously, the magnitude of our facility has been disclosed. I think that's a good way to kind of backdoor into getting there. You should be able to use that in the cost of equipment. You got to do a decent proxy for cash flows that we expect off these projects.

Got it. Okay. Great. That's super helpful. And then just a follow-up as far as a question around lead times for your additional equipment going 400 to 500 megawatts of deployed capacity. Is this going to be a continuation of the 240 megawatts of those larger 4-megawatt recipes that you recently ordered? And if so, how should we think about when you'd be able to get those deliveries and the lead times around that? And then really beyond the potential 500 megawatts maybe line of sight on the future orders beyond the 500?

Yes. I mean thanks, Derek. I'll take that question. If anybody -- but Tim, if you want to chime in on this. I mean our relationships with the key OEMs and our differentiated track record of execution of large-scale infrastructure projects continue -- those continue to be major advantages, which enabled us to initially secure the 240 megawatts of the [ 4 megawatt restating ] units that are going to be delivered for later in 2026 and also gave us also enabled us to maintain a solid line of sight to additional equipment for high-quality opportunities in more than 2 gigawatt pipeline that we're talking about. These relationships are ion trust, scale and early positioning have given us access to redirected capacity from delight projects elsewhere in the industry.

So lead times for additional 4-megawatt recips are now extended into late 2027, which reflects the strong industry-wide demand for behind-the-meter generation equipment. That said, our recent $375 million lease facility provides flexible nondilutive support [indiscernible] our needs, allowing milestone payments during the fact in the conversion into term finance upon delivery. That is -- this has been instrumental in funding our initial 240-megawatt commitment and positions us well for near-term deployments as we move towards our target of 500 megawatts by 2027.

So with the majority of that under long-term contract, as far as beyond 2027, particularly as we pursue larger denser behind-the-meter opportunities across diversified end markets. We anticipate needed additional financial support further equipment orders. We've actively evaluated offices that along our disciplined capital approach, leveraging our proven track record with financing strong cash flow generation from bridge to permanent transitions.

I think that as far as additional equipment packages, I mean, yes, right now, the package that we've acquired is the 4-megawatts resets. I mean, there could be other potential opportunities out there, and I'll let Tim comment more on that.

Yes. So Derek, I think there's equipment available. Yes, I think if you look at global capacity, a lot of it has been backlogged. I think there's been a lot of announcements publicly to kind of back into what may be left. So we really see 2 pools of equipment that come available. The first pool is where you have to be in the market, you have to be talking to people and orders cancel or portions of orders can we be delayed. And so there's equipment that comes to market.

And I think there's a second where OEMs are doing the same thing that we're doing where they're out building relationships with the groups that are putting these in place. And I think as John alluded to, we're in a strong position to take advantage of those relationships. If you look at the folks that are on this team and the relationships that they bring and then you look at the reputation of Atlas in being able to manage and develop these substantial projects. And I think that gives confidence to OEMs that when they place assets with Atlas, it's going to be a good long-term relationship and it's going to give all of us a good name. So I think that's what we're leaning into. And we've got line of sight into the equipment that we would use to take us to that 500 megawatts.

Our next question is coming from Stephen Gengaro of Stifel.

I guess staying on the power theme, one of the things we've sort of learned over the last couple of years was there's a skill set required to sort of deploy these assets at the site and operate them effectively and efficiently. Can you talk about sort of your internal expertise to execute these behind the meter projects?

Yes. I'll lead off on that and then again, [indiscernible] again much more well spoken on this subject. But when you think about the history of Atlas, right, I mean we've got a lot of experience in building big complicated facilities, right? So we constructed the Kermit and the [ Monahans ] facilities from whether it's just a bunch of turn out there in West Texas to some of the sophisticated and manufacturing facilities in the industry.

And then you got to remember that we're the guys that I thought it was a good idea to build a 42-mile conveyor belt in the middle of the desert, which take a lot of people roll their eyes at that concept and that alone and behold, here we are a year later and it's that's moving. So I think that when we had these initial conversations, people are like, wow, these guys are good at building complicated infrastructure projects from the ground up. And then you combine that with the electrical expertise that we've brought in-house with the Moser acquisition, and then we haven't been sitting on our hands since we did that deal. We've been bringing in quite a bit of talent, some really, really strong people in terms of adding to that roster.

And when you combine those 2 things, it becomes really powerful and then you -- as people learn about Atlas and this [indiscernible] but this is a different customer set than we've ever dealt with, right? This isn't just the 25 E&Ps that we all know and love. It is -- this is across the broader economy. And so there's a lot of education about who is Atlas that we have to do with them. And once they start to see like who we are and what we've done, they get a lot of comfort around that. And then we bring in some of our electrical experts, and they start to wow them with their knowledge, those commercial discussions progressed pretty quickly.

I'll turn it over to Tim for actual specifics, though.

Yes. So I think, Blake touched on a couple of things there. I think first and foremost, when we acquired Moser, we got a team with a 50-year operating history. And so that was a great place to start from a talent perspective. We added to that team with some outside talent that have helped us substantially in the C&I and the larger megawatt deployments. And that from a long-term perspective, we've built an operating team with 20-plus years of experience in operating large engine systems. And so we really think combining all of those things, we're able to deliver at the same level of execution that we've delivered in the sand and logistics space. And brought that over to the power space.

Okay. No, that's helpful. That's good color. The other question I had is, and you -- you mentioned, I think, in response to a prior question, the sort of the delays in grid interconnection. And you also, I think, made a comment about you sort of think about this as a bridge to permanent power. But it feels to us like that bridge to permanent power is pretty long. And I was just curious what you're hearing on the utility interconnection side and kind of the cues for larger loads to be delivered. And how that kind of impacts your planning and thought process?

Yes. So I think that's a big question. And I think that's a big question because when you look at the utility network in the United States, it is incredibly complicated, right? The rules change sometimes as you cross the street. And so when we're talking to folks about their projects, every one of them has a different story with similar themes. And the similar theme is that utilities aren't going to get there. And so they need to look at what they call a bridge solution, but I think when you really understand the challenges that the utility space, and you see projects from the utilities push in different districts to understand that, that's going to going to affect really the entire industry.

And so what we're hearing from utilities and I think I mentioned this earlier, it's anywhere from 2028 to 2034 for [indiscernible] explode to interconnect, and that's kind of across the U.S. and there's some places where you can pull data points that say it's longer and shorter. But if you take that perspective, what we're really talking about is infrastructure. And so you could bridge that, and I think we've got a good solution to bridge that. We've got 200 megawatts plus of bridge equipment in what we acquired from Moser but our -- again, our thesis is this is a long-term infrastructure play. And so that bridge system has some disadvantages and the way you solve some of those disadvantages, whether they're fuel efficiency, footprint, whatever is you install a long-term system that is designed to sit in place and operate.

We talk about 5- to 10-year contracts, 15-year contracts. But really, these are 30-year facilities if they need to be. And so we think that structural shift in this market is going to benefit those that take ownership of that and all their own systems today. And we think the broader grid really benefits from private capital installing broad infrastructure really across the entire United States.

I mean, Stephen, it's such a fluid space too. Like I feel like every morning, there's 4 or 5 headlines around that interconnect to getting longer and pushing to the right. And I think we're all pretty big believers in that there's going to be more and more pressure on the utilities to probably stiff arm some of these interconnects, too, just because we think that affordability is going to become a bigger and bigger buzzword in political landscape.

And it's just -- it's probably in everybody's best interest for the private sector to solve this problem as opposed to leaning on the public utilities to get it done.

Yes, even if they can get power from the grid. They can't get all of their power from the grid. So I mean, like Tim said, we're not only talking to end users. We're talking to the providers. And these are the -- this is what we're getting from the providers is that we may be able to provide some of the power, but we're not going to be able to provide all the power. And they're also being told that in order for us to provide you power, you need to show us that you can provide yourself, supply yourself with a certain amount of power to get that additional power from the grid.

So obviously, there's a lot going on, a lot changing here, but that's kind of [indiscernible].

Yes. And I think the one last point I'll make on that is we're at and we're talking to people every day that are looking at big projects. And the 2 things that are most consistent are, one, the utility has moved the goal on what they're actually going to show up to that they're not going to be default request for power.

The next question is coming from Doug Becker of Capital One.

Thank you, John. I think the questions are really appropriately focused on power up into this point, but I did want to touch base on the sand and logistics business. First half volumes look very good. I appreciate the lack of visibility around the second half of the year. But any type of range you could provide for production growth for the full year to kind of give us some goalpost to think about.

Yes. I mean it's a good question. And start for being okay, but right now -- and I appreciate that part of our customers too, is that the outlook is a little okay. I think that if you rewind 3 months ago, it seemed like every macro note you're reading was point of oil being $45 to $50 at this point in the year, and you were sitting at 66 WTI granted, there's a lot of geopolitical risk premium built into that. But I don't think any of us think we live in a world where it's not going to be geopolitical risk.

So our commercial team did a great job of going out there and we told they'll get the volumes. And they went out there and they did that. And it sets us up for a very strong first half. That being said, there's -- a lot of our customers were -- they're like, hey, like we've got our schedule for the first 6 months of the year. And we'd like to leave a little bit of optionality on what our plans are scheduled looks like in the second half of the year. So I think a lot of that is dependent on the commodity table. Right now from where we sit, our expectations are for our overall volumes to be up year-over-year. And that would imply and that gives us appreciate that, that's a pretty big window in terms of second half volumes because we do expect to have pretty significant volumes in the first half of the year.

That being said, like the pricing environment remains pretty challenging. So that obviously a headwind. But we're -- so that has us focused on things in control, which is driving down the variable cost of our production at the plants. We're pretty excited about the dredge commissionings that we've got coming up later this quarter into Q2. That's going to drive some significant improvements in our Kermit facility I think that really our objective on the sand and logistics side is to just really cement ourselves as the leading sand logistics provider of Permian and position ourselves so that when the cycle does turn that. We're that sticky supplier quality that pay -- nobody wants us not to be delivering sand on to their well site because we make it where their operations doesn't have to think about it.

That's fair. On the logistics side, I highlighted the trucking challenges, but I pointed out some upward momentum in trucking rates. Just any color on the margin outlook in logistics for this year after a pretty slow start on the margin front with the Dune Express?

Yes, that's a good question. I try to give a little transparency on that because I think it's a question we get a lot. We're positioned to move to improve off the low base. We ended 2025 at started 2026 with. So during both late Q4 and early Q1, our logistics business was burdened by a pretty heavy load bonuses that we offer to third-party carriers to ensure that we have the drivers available to meet customer needs during the holiday season and to ensure delivery when, quite frankly, the weather is pretty miserable, which certainly was in January.

Additionally, as we mentioned in the prepared remarks, like I said, our sales team was -- they were really feeling their [indiscernible] for the contracting season. So they've done a great job securing pretty attractive work in what is a really tough market. And that includes a good amount of work that's going to drive incremental Dune Express volumes, which is the biggest driver of creating more margin differential in a weak pricing environment. Yes, so from a numbers perspective, Doug, I think logistics margins in Q1 probably going to look pretty similar to Q4, with December of last year and January of this year, representing low points. The Q2 is currently -- like I'm lose projections right now, but take a nice step up into the double digits, maybe not quite mid-teens, but a nice step-up and a huge relative gap to where the rest of the market is.

The next question is coming from [ John Daniel ] of Daniel Energy Partners.

Thanks for having me. First question is, can you speak to the actual number of the volume of power inquiries coming from the E&P operators for microgrids? And then have you tried or will you try to tie sand volumes to contracts for that power?

John, yes. So the volume of increase on microgrids coming from E&P. I think what we're seeing is a little bit base independent but in probably are 2 of our 3 most active basins I would say about half of the new requests coming in for well site generators are in some type of microgrid system. And that's typically tying anywhere the production from anywhere from 2 to maybe 4 pads together. But we expect that as the year progresses, we will allocate more and more units to those types of systems.

As far as China, the sand volumes to the power, that's obviously a good idea. We like to be -- we want to be a broad provider of solutions for our customers. Now a lot of the teams that deal with those are separate. You got completion teams that are working versus the production team is there mostly different in a lot of these organizations. But from a sales standpoint, we're always working to be a better solutions provider for our customers. So they're not going to count that out of the question.

Our next question is coming from Eddie Kim of Barclays.

Just wanted to circle back to the volumes theme. You mentioned that you're adding -- sorry, you're in discussions on adding new customers this year, and are you taking greater share of the wallet with your existing customers. and it seems like you've been successful with that. Just to be clear, are those wins fully reflected in your first quarter volume guidance? Or do those volumes really start to kick in later in the year?

I would say those wins are not necessarily reflected in our first quarter volumes. I mean first quarter volumes are always going to be depressed some because of the weather. But I would expect to see some of those impacts kicking in as we move. But you're going to see some in the first quarter and then it's going to kick in second and third.

Yes. I mean, like there's always a ramp in customer activity. January always starts a bit slow and we have steady ramp through the course of the quarter. And then that winter storm in January, obviously, it topped out about 4.5 days of operations out there for everybody. So not fully reflected in those volumes. We -- our expectation is for Q2 volumes to be a step-up from Q1.

Got it. Got it. And then just sticking to that -- on that theme. I mean, you mentioned strong volumes in the first half, but customers taken sort of a wait-and-see approach in the second half. I guess, just based on your conversations, it seems like E&Ps might not really be buying the $65 WTI oil price right now? And are they -- do you think, still operating as if were in kind of the mid-50s environment. And I mean, just curious what oil price do you think we'd have to get down to for them to consider a volume reduction in the second half of the year?

Yes. I think that there budgets for this year raised based around like $50 to $55 oil. And I think today's activity in West Texas is reflective of that commodity strip. And they're not going to deviate from they just set those CapEx budgets, and they're not going to deviate from that just on gyrations in the commodity price. But the longer the commodity price stays up and people get more comfortable with it, but I'm sure they're not complaining about the incremental cash flows. They've got -- they're ripping off right now.

I mean the investment cycle is -- I mean, [indiscernible] time line is pretty short. So they can wait longer with these shale wells to go out and make a decision. So I think, like Blake said, they're kind of where they are now. And if that continues, you'll probably see steady activity through the end of the year, but it just depends on where prices go.

The next question is coming from Michael Scialla of Stephens.

You mentioned the last mile storage system. I just wanted to ask about that allows continuous pumping of wet sand. You said you're testing the dry sand solution. What needs to happen there for that to be successful? And what could the opportunity be for that system to worked?

Yes. So earlier this year -- or last year, we launched a system that was designed for really well site, increasing the amount of sand that's delivered to the well site, timeliness of that that's going to increase the efficiencies to enable operators to pump down ball or sand. We've been seeing -- and we kicked this off on the West sand side. We have all of the systems deployed right now. And we do have a number of our customers that are using them that want more.

As far as the dry sand goes, there's still going to be some work that we're going to have to do on that front. And as far as timing goes, it's way to be seen, but there's some testing that we're working on and we'll be able to comment more about that here later. But we do -- what we are seeing the results of that are promising. And I think some of the things -- some of the things you're going to see going forward is continuous pumping. A lot of our customers are asking and requiring it because and you're starting to see some significant results from our delivery of sand to the well site that enables things to think like the Dune Express and our West sand offerings. And then this is just another step in that direction of helping our customers with their needs and providing them with solutions that work that enable them to accomplish their goals.

Yes. And the continuous pumping thing is such an important trend in our space. Those are our -- the completion crews we're providing sand to that are on continuous public operations. But the amount of sand they pump monthly is multiples of what you see from a traditional [ Zipper ]. And -- but the big constraint, right, is it becomes wellsite footprint things like boxes and silos, they are after their constraints, right? And so the pile system, but going to piles, obviously, it allows you to put more sand in one spot but what we think our system does is it enables to do piles but to do it very efficiently and we cleansing and combine that with the [ PropLo ] technology. It is a key enabler of very, very efficient cutaneous pumping operations. And it's something that just continues to push that tailwind of the sand intensity of each individual completion crew, which we think long term is a win.

When people stop planning budgets around $50 oil and maybe get a little bit more comfortable around something like $65 plus, you see a little bit more incremental activity. We think the market tightens up [indiscernible].

Appreciate that detail. Also I wanted to ask about your -- you mentioned your hybrid power system, I guess what differentiates that what's the opportunity for those assets look like?

Yes. So the hybrid power system is essentially combines battery technology that we've developed in-house, owned the patents on, and that was that was funded through the grant the legacy Moser business obtained in 2018. And what that system essentially does is [ hyperdisens ] with our existing generators and it controls the operation of those generators so that they run at essentially a peak load and the battery then distributes power into that system shuts the generator all.

And so what it does is it lowers the run time on those generators, which expense maintenance cycles from essentially once a month service to once every 45 days as much as once every 60 days, it lowers the fuel cost for our operators, and it decreases the risk of a shutdown event on the customer's location which those are not good for downhole pump switches primarily what we do in that business. And so we're pretty excited about the potential to deploy that at scale in the legacy Moser business. We think it's differentiated. We've proven it on multiple well sites but I think when you apply that to the broader industry outside of oil and gas, it's got uses really across every industry where folks want clean, reliable power.

And that battery system provides clean reliable power that can integrate with whatever systems they're using, whether they're prime power systems or backup systems.

Our final question today is coming from Jeff LeBlanc of TPH.

I want to see if you could provide some color on the expected cost savings over the second half of the year once the [ Twinkle ] dredges come online and...

You want to go to the cost savings that we're going to expect in the second half of the year once the dredges come on?

Yes. Yes. So we -- we haven't had a steady dredge feed at our primary permit facility for going on over a year now. And that facility is really designed to have clean, steady dredge feed. And so what that's created is just different bottlenecks of the process that has elevated the OpEx per ton coming out of that facility versus I think when that facility is cook it, it is our lowest -- it's the lowest cost facility in the entire Permian Basin.

So as those 2 dredges come on and -- but just to highlight that these are -- these [indiscernible] dredges, we've had a Winkle dredge in the fleet got one fleet now, and that is the most consistent producer we've got -- so we're very confident and we think they're the [ F-150 ] dredges. Getting those online will significantly enhance the quality of our dredge feed, which has just really positive knock-on fix the entire process. It proves [indiscernible] operations, they produce stress on the drivers. It just makes the whole facility run more efficiently.

If you think about that, our overall variable costs probably have been elevated by the buck across the complex because of that [indiscernible] issues. And so that's over the course of the first half of the year. that will flow on. And there -- so it's -- again, it's a pretty big circular reference though, in terms of the overall OpEx per ton just because so much of that is based on volume throughput and that's dependent on customer activity in the second half. But if you were to just extrapolate first half activity in the second half, you'd see a pretty significant improvement in OpEx per ton as we work through the year.

Thank you. At this time, I'd like to turn the floor back over to Mr. Turner for closing comments.

Thank you, operator, and thank you all for joining us today and for all the great questions. We truly appreciate the time you've taken with us. To our [indiscernible] team, thank you for all the hard work. To our customers thank for your partnership and trust. And our investors, thank you for your committed and continued support, believe in Atlas. We look forward. They're excited about reporting our results going for 2026 and our first quarter results here in 2 or 3 months.

Thanks, everyone, for joining, and that is the call. Thank you.

Ladies and gentlemen, thank you for your participation. This concludes today's event. You may disconnect your lines or log off the webcast at this time, and enjoy the rest of your day.

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" Raymond James & Associates, Inc., Research Division

" Piper Sandler & Co., Research Division

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" Stifel, Nicolaus & Company, Incorporated, Research Division

" Capital One Securities, Inc., Research Division

" RBC Capital Markets, Research Division

" Daniel Energy Partners, LLC

" Barclays Bank PLC, Research Division

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" Omega Family Office

Greetings, and welcome to the Atlas Energy Solutions Third Quarter 2025 Financial and Operational Results Conference Call. 

[Operator Instructions]

Please note, this conference is being recorded. I will now turn the conference over to your host, Kyle Turlington. Please go ahead.

Hello, and welcome to the Atlas Energy Solutions Conference Call and Webcast for the Third Quarter of 2025.

With us today are John Turner, President and CEO; Blake McCarthy, Executive Vice President and CFO; and Bud Brigham, Executive Chair. We will be sharing their comments on the company's operational and financial performance for the third quarter of 2025, after which we will open the call for Q&A. 

Before we begin our prepared remarks, I would like to remind everyone that this call will include forward-looking statements as defined under the U.S. 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 25, 2025, our quarterly reports on Form 10-Q for the first quarter and second quarter, our other quarterly reports on Form 10-Q, and current reports on Form 8-K, and our 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 such as 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. Before we begin our prepared remarks, I'd like to extend our deepest condolences to David Smith's family and our friends at Pickering Energy Partners.

Dave was more than a respected analyst. He was a true friend. His kindness, humor, and generosity touched everyone fortunate enough to know him. We are deeply saddened by his loss. Godspeed, David. 

For the quarter, Atlas generated $40.2 million of adjusted EBITDA on $260 million of revenue, delivering a 15% adjusted EBITDA margin.

Despite an exceptionally weak West Texas completions market, we generated meaningful adjusted free cash flow, a clear statement of the strength of our competitive moat with our cost-advantaged mines and integrated logistics network. 

Our third-quarter volumes came in at 5.25 million tons, a slight sequential decline from the second quarter, but a significant deviation from our expectations, which were based on completion schedules communicated to us by our customers.

As more of our customers shift to fixed percentage contracts, we're increasingly dependent on tight alignment and transparency with their plans. 

During the quarter, several key customers made the tough but prudent call to slow or pause completion activity into 2026 to preserve 2025 capital budgets.

We expect fourth-quarter volumes to step down again sequentially due to typical seasonality and a continuation of customer intention to slow capital spend on completions, thus pushing those expected volumes into 2026. 

However, encouragingly, we have seen some customers who paused all completions activity earlier in the year resume operations in October. Our current estimate for our fourth quarter sand volumes is approximately 4.8 million tons, which we forecast to be our low point during the cycle.

Customers have already begun communicating their early 2026 plans, which imply improving volumes early in the calendar. 

OpEx per ton, including royalties, rose to $13.52, driven primarily by challenges with the dredge feed and wet shed at Kermit. These issues triggered elevated third-party service costs and downtime that inflated Kermit's operating costs, particularly in September.

While we continue to deal with these issues in October, the plant is returning to a more normal state of operations, and we expect these cost pressures to ease as the quarter progresses. 

Importantly, we remain on track to take delivery and commission 2 new dredges early in the second quarter of 2026, which we expect to unlock significant capacity and cost efficiencies.

Our logistics business delivered 5.3 million tons, a modest decline from the second quarter. The well-documented slowdown in Permian completions activity has driven trucking rates to below even COVID-era levels.

We're actively optimizing costs and efficiencies, but we're also intentionally carrying some extra capacity into the fourth quarter to ensure that we're ready to meet anticipated 2026 demand. 

The Permian frac crew count, which averaged more than 90 in 2024 and peaked at approximately 95 in March of this year, dropped to around 80 crews entering the third quarter and has likely declined further in the fourth quarter.

With WTI prices trading around $60 and a little incentive for operators to ramp activity, we remain cautious about a broad recovery in early 2026. 

But we are increasingly optimistic about our progress in gaining market share through this downturn. That's why owning the lowest cost to produce sand reserves, pairing them with an extensive logistics network, and amplifying it with the Dune Express was central to the strategy.

Downturns are where you grind out the hard yards; up cycles are where you reap the rewards. That's the oil and gas business, and specifically oilfield services for you. 

So we're focused on what we can control. We have launched a company-wide initiative to maximize efficiencies with an initial target of $20 million in annual cost savings.

Using our scale and cost advantage, we're attacking the market while competitors pull back. While we will have a more concrete grasp of total wides in the coming weeks, we are well-positioned for our core plants to be highly utilized in 2026, and we are growing more confident by the day that the Dune Express will exceed 10 million tons next year, a major ramp from 2025. 

Atlas has now achieved scale in the sand and logistics business, where additional investments currently yield more risk due to the inherent cyclicality of the oil and gas industry.

It has been a tough oil and gas market in the Permian, and incremental growth investments in sand and logistics are not currently justified by the returns available in this pricing environment. 

9 months ago, we entered the power business on the thesis that the tailwinds were very broad, deep, and durable. Today, that thesis has proven true, well beyond our original expectations.

The world turns to the oil and gas industry to solve complex energy problems in times of turmoil. Now it's turning into firms with oilfield DNA to close the massive gap in power generation.

Electrification, the resurgence of domestic manufacturing, and now the explosive power demands of AI and computing have turned a capacity-constrained grid into a crisis. 

For years, power was a line item, often an afterthought. Today, it's the most critical assumption in any growth model. Relying on the grid now carries unacceptable risk of delays, cost escalation, or outright failure. For large capital projects, dedicated behind-the-meter power is quickly becoming a must-have. 

When we entered the power space, we saw this trend coming. Our legacy business generates strong through-cycle cash flows, but it's volatile.

Power offers decades-plus contracts uncorrelated to oilfield swings, delivering a level of stability and sustainability that fundamentally changes Atlas' cash flow profile. 

The Moser acquisition wasn't about additional EBITDA. It was about the addition of a base platform on which to build and grow this business.

We've since added significant industry talent and expertise from outside oil and gas, and it's paying off fast. Our opportunity pipeline is now approaching 2 gigawatts in potential projects, and we're in active commercial dialogue for large load, long-term power solutions.

These are customers looking for fully integrated permanent power solutions to power their own significant investments, which are otherwise at risk due to the lack of access to reliable grid power. Atlas is ready to be their solution. 

We are targeting having more than 400 megawatts deployed across our power business by early 2027, with the majority under long-term contracts.

In order to achieve this target and indicative of our growing confidence in the pace of negotiations, we have placed an order for more than 240 megawatts of new, more power generation assets with a blue-chip equipment provider. 

Meanwhile, our legacy motor fleet, while not high-density, excels at delivering flexible near-term bridge power. In a market starving for generation assets, this capability opens doors.

It lets us solve immediate pain points, builds trust, and pivots the conversations to permanent contracted power, exactly what the market demands and what we're built to deliver. 

We have been relatively quiet about the evolution of our power platform for the past several quarters, but the combination of the major platform, the talent we have brought into the organization, the strong macro tailwinds and our opportunity set becoming more concrete has made it apparent this transformation is changing the complexion of Atlas at a pace that is gaining speed faster than we imagined.

This brings me to the subject of the dividend. 

As announced last night, we have made the difficult but necessary decision to temporarily suspend the dividend. Returning capital to shareholders has always been a core part of Atlas' DNA.

Management is fully aligned with investors. But our mandate is to maximize long-term value creation for Atlas shareholders. That means protecting our balance sheet and optimizing growth above all else.

While Atlas's base business continues to generate cash in what we believe is our cyclical low for our sand and logistics business, our current level of profitability does not cover the entirety of the dividend. 

Additionally, and importantly, the opportunities being presented in the power market are potentially game-changing for Atlas, but they do require capital.

The size of the dividend represents a potential roadblock to our ability to pursue these opportunities and secure optimal financing. The project should bring stable, financeable cash flows and high-quality counterparties, enhancing our ability to resume and sustain shareholder returns, and maximizing long-term value creation for our shareholders is management's core mission. 

Importantly, we chose the word suspension deliberately. We expect this pause and return of capital to be temporary. The steps we are taking today are making Atlas stronger, not just to survive through the cycles, but to power through them.

I'll turn the call over to our CFO, Blake McCarthy.

Thanks, John. In Q3 2025, Atlas generated revenues of $259.6 million and adjusted EBITDA of $40.2 million, a 15% margin.

EBITDA fell more than forecast due to the aforementioned fall in customer demand, elevated operating expenses at our Kermit facility, and margin pressure in our logistics business.

OpEx per ton, including royalties, was $13.52 and higher than anticipated. Cash SG&A was elevated during the quarter due to litigation expenses. 

Excluding litigation expense, cash SG&A was in line. We expect fourth quarter volumes to decline sequentially to approximately 4.8 million tons.

While we do expect some degree of seasonality during the quarter, it will be partially offset by new customer additions and a resumption of completion activity from current customers.

Our average proppant sales price is expected to be slightly under $20 per ton for the fourth quarter. OpEx per ton is expected to be up slightly from third-quarter levels due to lower sequential volumes and the elevated expenses related to resolving the wet shed issues at Kermit. 

OpEx per ton is expected to normalize in the first quarter of 2026 due to an increase in scheduled customer volumes and a return to more normal operations at Kermit, with further improvement expected in the second quarter with the commissioning of the new dredges. 

Logistics margins are expected to decline sequentially with seasonality and planned customer crew rings. We expect our power business to be up slightly, driven by increased unit deployments. 

Breaking down revenue for the third quarter, profit sales totaled $106.8 million, logistics contributed $135.7 million, and power rentals added $17.1 million.

Proppant volumes were 5.25 million tons, slightly lower than the second quarter. Average revenue per ton was $20.34. We did not record any shortfall in revenue this quarter.

Total cost of sales, excluding DD&A, was $195.2 million, comprised of $66.3 million in plant operating costs, $117.8 million in service costs, $6.4 million in rental costs, and $4.7 million in royalties. 

Cash SG&A for the quarter was $25.5 million, which included cash transaction expenses and other nonrecurring items of $1.3 million. SG&A is expected to remain around third-quarter levels due to the aforementioned litigation expenses.

DD&A was $40.6 million. Net loss was $23.7 million, and net loss per share was $0.19. Adjusted free cash flow, defined as adjusted EBITDA less maintenance CapEx, was $22 million or 8% of revenue.

Total accrued CapEx during the third quarter was $30.5 million, consisting of $12.3 million in growth CapEx and $18.2 million in maintenance CapEx, bringing total accrued CapEx for the first 9 months to approximately $100.1 million. 

We continue to budget $115 million of total CapEx for 2025. Fourth quarter adjusted EBITDA is expected to be down sequentially, driven primarily by lower sales volumes and logistics margins related to end-of-year seasonality.

Before I hand the call over to Ben, I'd like to give a little detail on our efficiency initiative and the goals we have set internally and expect to hold ourselves to for investors.

As John mentioned, Atlas's core strategy is based around being the most efficient supplier of sand and logistics in the Permian Basin, and having our overall cost structure optimized is key to the execution of that strategy.

Thus, we have set a near-term cost savings target of $20 million annualized for the organization. These savings are expected to be realized through rightsizing of our corporate G&A, the fixed cost structure of our operations, and a heightened focus on procurement savings. 

We expect to begin realizing some of these savings as early as this quarter, with the full impact flowing through our financials by mid-2026. This is simply good corporate hygiene and necessary following 3 successful acquisitions since the beginning of 2024.

Atlas is designed to generate cash through the cycle, and exercises like this ensure that we will maximize cash flow generation through the cycle. I'll now turn the call over to our Executive Chairman, Ben Brigham, for some closing remarks.

Thank you, Blake. While our operations are logistically located in the field, our corporate headquarters are right here in Austin, Texas, home to Circuit of the Americas, where the U.S. Formula 1 Grand Prix debuted in 2012.

Just over a decade ago, in 2014, F1 went hybrid, introducing a revolutionary dual power architecture that paired the traditional engine with advanced energy recovery systems. 

The impact was profound. Last time fell by 3 to 5 seconds, a monumental gain in a sport decided by 10 of a second. With dual power sources, F1 became faster, more efficient, and more sustainable than ever, fueling record profitability, global viewership, and enduring relevance. That's the perfect metaphor for Atlas today. We've gone hybrid.

With the acquisition of Moser Energy Systems, we've layered a stable, high-growth power generation platform on top of our industry-leading oilfield foundation. 

This isn't mere diversification. It's strategic synergy engineered to: one, smooth volatility in oil and gas cycles; two, accelerate growth in high-demand, high-margin power markets; and three, deliver predictable, resilient cash flows for shareholders.

The tailwinds are unlike anything I've seen in my career. We now see the convergence of explosive growth in AI infrastructure, advanced manufacturing, grid reliability, and next-generation energy systems.

Markets where distributed, efficient, always-on power is mission-critical.

Regarding our core proppant and logistics business, we estimate our Permian market share has grown during this down cycle to about 35%, and early RFP season signals suggest it will grow further next year. That's a direct result of our unmatched advantages and performance.

As Blake and John noted, a key driver will be a meaningful ramp in Dune Express utilization beginning in 2026. 

Finally, on the dividend. I don't take this decision lightly. Dividends are a vital signal of value creation and transparency. However, to optimize capital allocation and maximize long-term shareholder value, especially given the transformative opportunities in power, a temporary suspension is the right move.

And as one of the largest shareholders and your Executive Chairman, returning capital to owners remains a top priority. This is a strategic pause, not a retreat.

That concludes our prepared remarks for the third quarter. I'll now turn the call over to the operator for Q&A.

[Operator Instructions]

And our first question will come from Jim Rollyson with Raymond James.

I don't know if it's John or Bud, but you guys have obviously historically been quiet on the power business. And obviously, that changed with your release last night. And plan to deploy more than 400 megawatts in a new strategic order.

Can you maybe just back up and spend a minute on how your thought process has changed? What's your updated power strategy, and how Moser fits into that, given the equipment differences, please?

Yes. Jim, this is John. I'll take that question. We've been intentionally tight-lipped until now about our power business because we wanted to share targets that were backed by a clear line of sight execution.

Our power strategy really hasn't changed. We're simply advanced to the next phase of the next quarter. From the start, we knew success required an established platform with deep power expertise far beyond just ordering generators.

The acquisition of Moser delivered exactly that: a seasoned team in engineering controls and manufacturing. We've since bolstered that with talent, experience in large-scale permanent projects, EPC partnerships, and negotiating long-term power purchase agreements to support our major investments. 

The secular tailwinds here are explosive, comparable to the oil and gas business in the mid-2000s when China became a super consumer. But with far broader customer depth, power is now the critical bottleneck across revolutionary U.S. growth areas from AI to electrification, solving that offers high equity returns and stability.

Unlike the whipsaw of the oil and gas business, power delivers predictable long-term cash flows, making it far easier to justify sustained investments. 

Strategically, it's a straightforward position ourselves as an integrated power producer, behind-the-meter power provider of choice for building, owning, and operating bespoke solutions.

To scale, we're augmenting our assets with higher density generation as evidenced by today, our 400-plus megawatt deployment target by early 2027, and the large equipment order we've actually placed. 

Now, as far as where Moser plays into that, our legacy business is mission-critical to our power charge strategy. It solves the current real-world data crisis, I mean, crisis right now, data centers and industrial projects are being built without assured power.

Counterparties have invested billions in facilities at risk, staying dark and grid connections delayed 3 to 5 years. 

Our existing assets deliver immediate bridge power. We deploy proven in-place generation to projects operational now. These solutions aren't space-optimal, but they're vastly better than 0 output.

Customers aren't waiting for perfect. They're choosing to stay in business. This positions power as a strategic enabler, not just a legacy unit. It generates stable cash flow, derisks customer commitments, and buys time to scale permanent power solutions.

In short, the legacy Moser business isn't just fitting into the strategy; it's unlocking it.

And as a follow-up, sticking to that same topic, I presume you have contracts or a line of sight to contracts to justify ordering the 240 megawatts of new capacity? And if so, do you guys plan, like some of the others in this business, to use those contracts to finance the equipment, kind of generally externally, other than deposits?

Yes. I mean, the answer to that question, as far as line of sight to contracts, the answer to that is yes, we wouldn't have ordered the equipment unless we had line of sight on contracts, and those negotiations are currently ongoing.

I'll let Blake talk about the financing piece of it.

Yes. I mean, with respect to the financing, like we're thinking through the lens of more like project financing, ask where, as John said, these are permanent power solutions.

That's one of the key things about the equipment we're ordering. They're built to go into place and be stationary, and operate under very, very long-term contracts. And as such, that type of cash flow is very financeable.

So, certainly thinking about it long-term financing there. And the capital providers see the same market trends that we all see. And so, it's something that is very accessible right now.

Our next question comes from Derek Podhaizer with Piper Sandler.

Maybe just sticking to the power theme. Can you help us understand the equipment that you ordered, the 240 megawatts from the third party? If you can provide us who the third party? I think you said there are 4-megawatt units.

Are these turbines or these natural gas reciprocating engines? Maybe just a little bit more color on the actual equipment would be helpful.

Yes. Derek, this is Tim Ondrak, and I'll take that question. So, we're not going to disclose the OEM on the equipment, but these are resi units. We like resi units for a couple of different reasons. And those come down to efficiencies and redundancies.

So, these are higher density. They're a 4-megawatt gross output. And again, we like them because of the responsiveness of the redundancy.

Yes. As we mentioned that these are designed to be put in place and not moved. So these aren't trailer-mounted or anything like that.

These are effectively creating many power plants, or not even many, but power plants that go in place, and they stay there under a long-term contract.

Then maybe just on the CapEx related to the orders, maybe on a cost per megawatt basis. And does this include the balance of plant or any sort of battery that you'll need to support some of the high transient loads for some of these projects?

Yes. So the order includes the balance of plant, and I think, looking at it, we're in line with what others in the market have reported on a cost per megawatt.

Until we have all of our contracts negotiated on the EPC side, I don't think we're ready to give a full cost per megawatt on the entire package.

Moving on to Stephen Gengaro with Stifel.

You mentioned some of the higher operating costs at Kermit in the quarter. Can you talk about what caused those costs and how we should think about them when they normalize?

Yes. So the issue at Kermit was really at Kermit was related to tailings in the pond where those tailings are kept.

Our tailings are the waste product that remains after we extract the sand. We deposit tailings in the ponds where reserves have already been removed.

And so every so often, a tailings pond fills up, and we have to go build a new pond. And this is all done in accordance with our 10-year mining plan. And so in August, we noticed that our current pond, which we were using, was near full.

We began to build a new pond, but we were not able to build the new pond in time. So we had to put tailings into the pond where we were mining sand.

The introduction of tailings to that pond led to inefficiencies in our wet plant and the Canyon process. So we ended up having to rerun all the wet sand that we had washed through the wash process the second time, which significantly increased our cost and also impacted the time it took for the sand to dry, and also led to elevated costs in the drying process.

We have a new tailings pond that has been built. It was really the last pond we were mining reserves from. And the current dredges have been moved to their next reserve pond. And when the new dredges arrive in 2026, we'll open up another reserve pond.

So we're also installing equipment to monitor the flow of tailings in the pond, so we'll be better informed and can better plan in the future. I would suspect that we're going to continue to see some elevated costs here as we begin the fourth quarter, but those costs are going to decline as we continue.

And then once we bring those new dredges on next year, you're going to continue to see cost efficiencies and costs go down.

The other one I just had was as we think about the balance sheet, maybe, Blake, on '26 capital spending, do you have an early read and maybe even the split between power and the sand business?

Yes, yes. We're still definitely in the middle of the '26 budgeting process. But I don't think it's going out on a limb, I want to say that CapEx in '26 is going to be down from '25 levels and likely very close to the maintenance levels we've always talked about, and I'm talking cash CapEx.

With current conditions in the oil and gas market, the current price of sand, and incremental growth investments just aren't justified by the returns you can obtain in the market right now.

So we're going to spend enough to keep the plants in good working condition and keep the Dune Express humming, but it's going to be significantly near year.

With respect to the power CapEx, like I said, we're looking at the first large order through the lens of more project financing capital. And this initial order will have a minimal impact on '26 cash CapEx.

That being said, the pace at which these projects are progressing, they're moving at a speed that we need to ensure that we're positioned to act. At times, this may require us to make down payments with cash before financing is fully secured, and we need cash on hand to do that.

So that was currently a key part of the calculus of suspending the dividend so that we continue to build cash so that we're armed to take advantage of the opportunities down there.

Our next question comes from Doug Becker with Capital One.

You're targeting to have more than 400 megawatts deployed by early '27. Just want to get a sense for how that reconciles with having about 225 megawatts of capacity in August and the old target of increasing 310 megawatts by the end of 2026.

And just simplistically thinking about it, this would imply more capacity deployed than 400 megawatts.

Doug, it was a little garbled in the beginning, but I think what your question was is that with the target, the 400-plus target, how does that fit with the initial targets we gave when we announced the Moser acquisition? Is that correct?

Exactly.

I'll start, and others can add. When we originally announced our Moser acquisition, we talked about 2 numbers. We talked about our total fleet, and then we also talked about the deployed.

So let's go look at what nameplate capacity was when we acquired Moser. It was 212 megawatts is which was in the presentation, what we announced.

By the end of 2026, on the legacy fleet, that number is going to grow to 262 around 260. And then by the end of 2026, that number is going to be around 280 megawatts.

You add so then on top of that, so that's total deployed. Then, if you add what we're adding to new, that's going to be another 240 megawatts. So your total deployable or nameplate capacity of our plant is going to be 500-plus megawatts.

Now, if we go back, when we're talking about 400 megawatts, we're talking about what's deployed. That's not our nameplate capacity. That's what deployed.

So when we bought Moser and announced it, our total deployed at that time was around 130 megawatts. That number will be around 160 by the end of 2025, and that number will grow to 180 to 200 by the end of 2026.

So we continue to grow the Moser fleet. But then, if you add on top of that, you add with the new order of 240, you get 400-plus megawatts of deployed power.

So we continue to grow that legacy business. And with the addition of these new assets, that's just an addition to that. Nothing's really changed.

Yes. And I think to distill it down to probably what matters most to you guys is that at the time of the acquisition, we talked about, hey, we're going to grow the fleet to 310 megawatts, and that's going to translate to an exit EBITDA run rate at the end of '26 to approximately $8 million.

With this new target, the power EBITDA target is revised up. And so think about it as we're allocating incremental capital to a very high-return investment opportunity.

Yes. And I think just add a little more color to the fleet. So when we guided to -- I think it was 310 megawatts, which was based on our production capacity.

So we have actually done some things to increase our production capacity, but we also want to be opportunistic with a portion of our fleet. We've got a portion that's out today working with oil and gas.

We've got the new equipment that we've ordered that we expect to be deployed late 2026, early '27. And then we've got a portion of our fleet that allows us to be opportunistic to provide these bridge power solutions that end up leading to our team developing a bespoke, permanently installed solution.

And so that flexibility and manufacturing capacity allow us to do that, and we'll continue to be opportunistic as we look to grow those megawatt numbers.

Yes. And I think that's a really key point, Doug, is that with respect to the Moser assets, they provide a vital link for a lot of these permanent power opportunities.

These are customers that are coming to us in a bit of a state of panic, where they're like, hey, we've made hundreds of millions, billion-dollar investments in these facilities. And now we're being told, like, hey, like, yes, you can connect to the grid and you're going to get a fraction of what you actually need to run the facility.

And they're like, well, hey, like we need to get into Phase 1 immediately, we need power now. And the thing is with these assets that actually, for the equipment you need for the permanent solutions, there are lead times on this.

So there's a gap there. And most are assets, while not ideal from a footprint standpoint, that's a heck of a lot better than the lights not being on. And so it pulls forward the revenue opportunity for us, but more importantly, it allows them to operate their facilities.

And we think, a key advantage in terms of these conversations where, hey, like we can be the problem solver for you.

Yes. As we said earlier, the legacy business is a critical part of our business, and it's unlocking the permanent power business for us.

Maybe just thinking about the market for reciprocating engines, a number of other players have announced orders without contracts signed.

I think they probably have a good line of sight. But how do you assess just the supply of uncontracted recip capacity and how that plays into contracting for Atlas over the next several months?

So I think the market for any type of natural gas-fired generation equipment is incredibly tight right now.

And so when you go back to the press release we put out on the 240 megawatts of power that we bought, I think it was critical for us to get a hold of those assets. And that allows us to end up deploying them.

I think when you look at the rest of the market, there are only so many engine blocks that are manufactured every year. And so we will continue to be opportunistic when assets become available if they fit solutions for customers that we're talking to.

And the comments that John and Blake made about the motor platform opening doors for us, we expect the same thing out of these equipment orders, that they continue to open doors.

And while we're in active negotiations for placing that 240 megawatts, we expect that that will bring more folks to the table. And when you go back to retaining capital in the business, we're doing that so we can act on all these opportunities.

Yes. I think it's really hard to understate the rate of growth that we're seeing in the opportunity set.

Like, just over the last 3 months, we talked about that tangible opportunity set approaching 2 gigawatts. That was a heck of a lot smaller just 3 months ago. And it's increasing at a pace. And we drafted that number 2 weeks ago. And since then, the number of phone calls we've gotten, I think we updated that number, it's probably moving up.

So the demand growth, I think Bud said, like he hasn't seen anything like this in his entire career, it's pretty wild. And I think we're all just trying to sprint to keep up with it.

We'll go next to Keith MacKey with RBC Capital Markets.

Maybe just continuing on the power generation opportunity. Can you just discuss a little bit more about what's in that 2 gigawatt number that you put out there for the potential market opportunity?

What types of opportunities are those comprised of? Where do you see that growing over time? That type of commentary would be helpful.

Yes. So I think I can give a little bit of color on that. So I think when you look at that 2 gigawatts, there's a core of that that will continue to belong to oil and gas, and that's in the applications that we're using our units in today.

It's in microgrids to continue to support oil and gas development. So that's going to be about 10% of our mix and our opportunity set. I think there's another 40% that's in C&I opportunities, which I would take the univers groups of our opportunities.

I would say everything that's not a data center is a C&I opportunity. That's how we're defining that. So about half that opportunity set is C&I and oil and gas. And the other 50% is going to be data centers. And so we're getting a lot of inbounds from data centers.

We're not actively hunting that market. But I think because we have power, they're finding us, and a lot of them are these smaller bridge opportunities where the conversation immediately goes to, can you solve this near term, and what solutions do you have for the long term?

The near term could be 3 years, maybe longer.

A lot of that's driven by equipment lead times and what the proper solution looks like for that customer. And so again, we think we're uniquely positioned to provide a bridge that opens these doors for permanent installs that are 10-, 15-, 20-year power plants.

When you look at that split, 90% of that -- let's talk about the C&I space. In the C&I space, we're looking at 10-plus-year contracts on supplying that power. So these are all very attractive opportunities from a risk-adjusted basis for us to deploy capital.

And I know Blake touched on the EBITDA or earnings generation and the increased target for what you can generate with the megawatts you'll have in the field.

Would you be able to just put some maybe guideposts around how you're thinking about that? I know others in the market have said it's somewhere between a 4 to 6x EBITDA build multiple for the CapEx for these types of opportunities.

Would you be roughly within that range? I know certainly a sensitive time for the negotiations, but any way we can think about the earnings power of this new opportunity would be helpful.

Yes. I'm going to refrain from going into specifics just because we have ongoing negotiations.

But I think that with respect to how you think about it, I wouldn't be too far off on the EBITDA per megawatt generation that you've seen from others in the space.

Moving on to Sean Mitchell with Daniel Energy Partners.

Just one for me. Just when you talk to your OEMs, I mean, I know you're not providing who's building these for you, but just OEMs at large, what are lead times like for gas recip engines today? And where is that going over the next 2 years?

Yes. So it varies, but the majority of the OEMs we're talking to are taking orders for 2028 and beyond delivery.

It really depends on what you're looking for. I think there are some large players out there that have recently announced bigger deals and bigger orders. And so that has sucked up some of these blocks into 2030.

And so, like I said, it varies. But typically, it's going to be 2028, and maybe there's somebody who has canceled an order, and we can step in and be opportunistic with picking up those assets if we've got line of sight to.

Yes. And that's why it's so critical, though, that we're armed with capital to pass on it. These slots are very valuable, and we're not the only ones looking to take advantage of them.

So when an opportunity arises that aligns with the commercial opportunity, we have to be positioned to move quickly.

And then maybe Blake or John, just as you think about the traditional business and the 10 million tons Dune Express at some point, I mean, if we're at a $65 world next year or through next year, what price do you think these guys are going to get back to work? Because it feels like everybody is taking a pause right now.

Yes. I think that it's just it's continuing at the current pace. Like, I think everybody is just waiting to see which way the wind blows.

I think guys like you are part of the problem. We all read the same stuff where it's like, hey, the price of oil is going to fall off here in the next 6 weeks. And so when crude hangs in the low 60s, but there's a risk that it's going to fall to the low 50s, nobody is going to put more equipment to work. 

On the flip side of that is that you are starting to see the production statistics start to move in the right direction. But I think it's just a wait-and-see. And then there's no impetus right now at the tail end of the year for people to spend more CapEx.

So I think that we'll see the customers are a bit opaque in terms of, like, what their plans are. And I think that's because they're working through their own budgeting processes.

But the signals that we have received through RFP season thus far have been very encouraging from our standpoint, and just in terms of being able to gather incremental share. 

And so like that's what we're focused on right now. Our expectation right now is that '26 is more of the same that we've seen in '25. And so it's up to us to go execute in that type of market. We know the playbook, and we're ready to go.

Our next question comes from Eddie Kim with Barclays.

Just on the power business, do you currently contemplate the entirety of the 240 megawatts you just ordered to be deployed on a single project?

Or is it going to be split up into multiple different projects? And just based on your discussion of the end markets, it feels like the 240 megawatts is going to be deployed in something other than like a Permian micgrid supporting artificial lift, so likely in other C&I or data centers.

Would that be a fair assessment to make?

So we don't expect that to be deployed in the oil and gas. We've got multiple opportunities that 240 megawatts could deploy into. I would expect that it's probably not more than 2, and it potentially could go to one project.

My follow-up is on the base business, and apologies if I missed this. I know you haven't provided 2026 guidance yet, but any way you could help us think about your volumes for next year, even just directionally?

It feels apparent that the Permian frac crew count is going to be down next year on a year-over-year basis. So, should we expect a similar trajectory for your volumes sold as a base case and maybe flat year-over-year in an upside case scenario? Just any thoughts there would be helpful.

Yes. This is Bud. I might start, and these guys may add to my comments. Blake touched on it that none of us have a really good sense of when oil is going to bottom.

And of course, oil drives sand consumption, whether that's the fourth quarter or whether it pushes out through 2026, it's really hard to say. But my personal view is that for Atlas, in terms of where we sit in this trough that the fourth quarter is the trough for Atlas, in part because our competition is getting weaker. 

We are the lowest cost producer, and we have significant logistical advantages, including, of course, the Dune Express. So, as we mentioned, our market share has grown.

We think that will continue to happen through next year. And so that's why I feel like this is likely our trough from an Atlas perspective, even if oil prices do stay soft, which is probably likely through 2026.

But we all know that the longer oil prices are down at these levels, the stronger. The upswing is going to be on the other side. And that's when Atlas is really going to be poised to perform extremely well.

Yes. And we're running through the RFP season right now. I said this in my comments. Everything is looking really good right now. I mean, we're looking like, as far as the volumes go, I mean, like Bud said, we're going to gain share. It's not good.

Pricing is low, but we're doing what we should with our low-cost advantage. I mean, most other folks aren't producing any cash flow in the sand and logistics business.

But we obviously still have really good margins and are generating cash flow. It's not the cash flow we want to generate, but it's good cash flow, and we're positioning ourselves for the upswing. 

I also think the adoption of the Dune Express was muted last year, with Liberation Day happening. But we are getting an opportunity to fill out those tons this year with opportunities that are coming up.

So we're going to have more about that as we move into the fourth quarter, and when we report next year, we're going to have more to talk about. But we're optimistic about the volumes we're going to see next year.

Lee Cooperman with Omega Family Office has our next question.

I tuned in a little bit late. I apologize if this question was addressed. Have you suspended your buyback program? Number one? Number two, how much stock have you bought back at what prices did you pay when you bought it back?

So we still have a $200 million share buyback authorization in place. We executed a very small amount of that a quarter ago, but we did not execute any during this current quarter.

So, that is certainly when there are multiple means of returning capital to shareholders, and we're always looking for the highest return means of increasing shareholder value. We do think that the power opportunity is a once-in-a-generation opportunity. 

We announced the 240-megawatt order yesterday. This won't be the only one. We had the confidence to make this order because of where we are in negotiations.

But I said that's 240 megawatts compared to an opportunity set that is rapidly, rapidly expanding. And so we are working to continue to grow that announcement training. 

That being said, based on our current forecast, we should be building cash over the course of 2026. And that creates a lot of optionality with respect to how we deploy that.

Where the stock is currently trading, we think management believes that it's significantly below the intrinsic value of the stock, and that's certainly a very high return way of creating capital value for shareholders.

Despite the elimination of dividends, you would not rule out stock repurchase as a use of capital.

No, sir, by no means.

This now concludes our question-and-answer session. I would like to turn the floor back over to John Turner for closing comments.

I want to thank everyone for participating. Thank you to our employees for all the hard work. To our customers and partners, thank you for your continued confidence. And to our shareholders, thank you for your support as we build the future together.

We look forward to reporting our fourth quarter results and talking more about 2026 and some of the exciting developments that are happening on the power side at our next call. Thank you.

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines and have a wonderful day.