Q2 2026 Atlas Energy Solutions Inc Earnings Call

August 4, 2026

Operator: Energy Solutions Inc. Q2 2026 earnings call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Kyle Turlington, Investor Relations. Thank you. You may begin.

Speaker #1: Energy Solutions, Incorporated, 2nd Quarter, 2026 earnings call. At this time, all participants are in a listed-only mode; a question-and-answer session will follow the formal presentation.

Speaker #1: If anyone should require operator assistance, please press star 0 on your telephone keypad. Please note this conference is being recorded; I will now turn the conference over to Kyle Turlington, Investor Relations.

Speaker #1: Thank you. You may begin.

Speaker #2: Hello and welcome to the Atlas Energy Solutions conference call and webcast for the 2nd Quarter of 2026. With us today are John Turner, President and CEO; Blake McCarthy, CFO; Tim Ondrag, President of Power; and Bud Brigham, Executive Chair.

Kyle Turlington: Hello, and welcome to the Atlas Energy Solutions conference call and webcast for Q2 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 Q2 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 US security 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.

Speaker #2: John, Blake, and Bud will be sharing their comments on the company's operational and financial performance for the 2nd Quarter of 2026, after which we will open the call for Q&A.

Speaker #2: 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. Security Laws.

Speaker #2: 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.

Speaker #1: Greetings. Welcome to Atlas Energy Solutions Incorporated's second quarter 2026 earnings call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation.

Speaker #2: 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 1st Quarter, and current reports on Form 8-K and other SEC filings.

Speaker #1: If anyone should require operator assistance, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Kyle Turlington, investor relations.

Kyle Turlington: You can learn more about these risks in the annual report on Form 10-K filed with the SEC on 24 February 2026, and our quarterly report on Form 10-Q for Q1, and current reports on Form 8-K and other SEC filings. You should not place undue reliance on forward-looking statements. 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.

Speaker #1: Thank you. You may begin.

Speaker #2: 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.

Speaker #2: You should not place undue reliance on forward-looking statements; 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.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: Before we begin our prepared remarks, I would like to remind everyone that this call will include forward-looking statements as defined under U.S. securities laws.

Speaker #3: Thanks, Kyle. For the 2nd Quarter, Atlas generated revenue of $293.2 million and adjusted EBITDA of $49.5 million, which represents an EBITDA margin of approximately 17%.

John Turner: Thanks, Kyle. For Q2, 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 two divisions, oil field power, so generation to oil and gas operators across many basins, and we expect that fleet to exit this year with 180 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 Caterpillar Global Framework Agreement supports its growth.

Speaker #2: Such statements are based on 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.

Speaker #3: 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.

Speaker #2: 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.

Speaker #3: Because we get a lot of questions about it. We have two divisions: oil-fueled power, soil generation to oil and gas operators across many basins; and we expect that fleet to exit this year with 180 to 200 megawatts deployed, the majority of which are under long-term agreements.

Speaker #2: You should not place undue reliance on forward-looking statements; 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.

Speaker #3: Long-term, behind-the-meter power source 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.

Speaker #3: The 2nd Quarter was highlighted by the execution of our first behind-the-meter contract, $120 megawatt power purchase agreement with a subsidiary of an investment-grade technology infrastructure provider.

John Turner: 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.

Speaker #2: You will find the GAAP reconciliation comments and calculations in yesterday's pressure release. With that said, I will turn the call over to John Turner.

Speaker #3: 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%.

Speaker #3: 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.

Speaker #3: 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.

Speaker #3: 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.

Speaker #3: Because we get a lot of questions about it. We have two divisions. Oil-fueled power sales generation to oil and gas operators across many basins.

Speaker #3: 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.

Speaker #3: And we expect that fleet to exit this year with 180 to 200 megawatts deployed, the majority of which are under long-term agreements. Long-term behind-the-meter power sales, primarily permanent power to large-scale users, principally data centers.

Speaker #3: The site is in Socorro, Texas, and here is 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.

John Turner: We have completed the construction of a 26-megawatt facility that is powering the site today through the customer's construction and testing phase. We begin installing Atlas equipment for the permanent plant in Q3. Commissioning begins in Q4. The 120-megawatt facility electrifies at the end of Q1 2027, and we begin recognizing revenue on this new system in Q2 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.

Speaker #3: 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 million power purchase agreement with a subsidiary of an investment-grade technology infrastructure provider.

Speaker #3: We began installing Atlas equipment for the permanent plant in the 3rd Quarter, commissioning begins in the 4th Quarter, the $120 megawatt facility electrifies at the end of the 1st Quarter of 2027, and we begin recognizing revenue on this new system in the 2nd Quarter of 2027.

Speaker #3: 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.

Speaker #3: That sequence is the whole point. This project demonstrates Atlas's 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 lifecycle: from powering the pivotal early-stage ramp-up to providing power through the life of the facility.

Speaker #3: 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.

Speaker #3: 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.

Speaker #3: The commercial opportunities 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.

John Turner: 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 placed on order. We were very confident we could do so, but we expected it would require significant commercial effort.

Speaker #3: The site is in Socorro, Texas, and here is the full sequence. We have completed construction of a 26-megawatt facility that is powering the site today.

Speaker #3: 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.

Speaker #3: 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.

Speaker #3: The $120 megawatt facility electrifies at the end of the first quarter of 2027. And we begin recognizing revenue on this new system in the second quarter of 2027.

Speaker #3: 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.

Speaker #3: That sequence is the whole point. This project demonstrates Atlas's 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 lifecycle: from powering the pivotal early-stage ramp-up to providing power through the life of the facility.

Speaker #3: When we entered into our framework agreement with Caterpillar, we assumed it would take 8 to 10 projects to fully contract the capacity we placed on order.

Speaker #3: We were very confident we could do so, but we expected it would require 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.

Speaker #3: 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.

John Turner: 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 increase in appetite, even need, from our prospective customers for longer tenure contracts. With grid access becoming increasingly difficult to secure on any predictable timeline, 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 de-risk power supply to their facilities for the long term.

Speaker #3: 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.

Speaker #3: 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 who have accelerated and focused contract negotiations.

Speaker #3: Additionally, we have seen an increasing appetite—even need—from our prospective. Longer, tenure contracts. With grid access becoming increasingly difficult to secure on any predictable timeline, prospective customers are embracing island power as a long-term solution for their sites.

Speaker #3: 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.

Speaker #3: Initially, we were looking at tenure 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 de-risk power supply to their facilities for the long term.

Speaker #3: When we entered into our framework agreement with Caterpillar, we assumed it would take 8 to 10 projects to fully contract the capacity we placed on order.

Speaker #3: 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 lifecycle maintenance and operations is gaining traction.

John Turner: 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 lifecycle maintenance and operations is gaining traction. Prospective data center customers are looking to us to solve the entirety of the power problem. They do not 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 a 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.

Speaker #3: 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 low quantum with productive load swings and a reliability metric.

Speaker #3: 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.

Speaker #3: 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 timeline, prospective customers are embracing island power as a long-term solution for their sites.

Speaker #3: 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.

Speaker #3: 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.

Speaker #3: 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 de-risk power supply to their facilities for the long term.

John Turner: 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 project, 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.

Speaker #3: Outside of the $120 megawatts attached to our recently announced project, we have an additional $120 megawatts arriving at the end of this year and another $350 megawatt scheduled for delivery over the course of 2027.

Speaker #3: The availability of this $470 megawatt for deployment in 2027, with a clear line of sight on a steady ramp phase lines up well with the request we are seeing from our prospective customers.

Speaker #3: 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.

Speaker #3: 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.

Speaker #3: They want to provide a low 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 a partner they can trust to operate for the long term.

Speaker #3: 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?

John Turner: A question we often get is, "What are the competitive advantages for Atlas in power, and why is Atlas the right partner in long-term private power solutions?" Atlas has built over USD 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 market 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.

Speaker #3: Atlas is built over a billion dollars' 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.

Speaker #3: 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 are increasingly look to private power; they demand confidence that their power provider has the depth and experience to deliver on time and on budget.

Speaker #3: Outside of the 120 megawatts attached to our recently announced project, 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.

Speaker #3: The availability of this 470 megawatt 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.

Speaker #3: 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.

Speaker #3: As our power business grows, you will see how our engineering and execution expertise transforms the way companies obtain the critical power they need. The equipment you choose and the construction partners you pick will matter.

John Turner: As our power business grows, you will see how our engineering and execution expertise transforms the way companies obtain 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 are 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 into 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.

Speaker #3: 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?

Speaker #3: 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 into the northern Delaware Basin.

Speaker #3: Atlas is built over a billion dollars' 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.

Speaker #3: 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 are increasingly looking to private power, they demand confidence that their power provider has the depth and experience to deliver on time and on budget.

Speaker #3: 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.

Speaker #3: 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.

John Turner: 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 timelines continue to slip. We are also seeing growing interest in microgrid systems utilizing Atlas's battery technology. With this technology, we can hybridize customer locations to increase reliability. Our hybrid technology combines our portable 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.

Speaker #3: The majority of which will be under a long-term agreements. We are being very deliberate about the placement of our current oilfield fleet. Prioritizing longer tenure agreement over near-term deployments.

Speaker #3: We anticipate continued desire from our customer base to sign agreements to secure their power needs as traditional utility power timelines continue to slip. We are also seeing growing interest in microgrid systems utilizing Atlas's battery technology.

Speaker #3: Innovation is the core to the Atlas culture. We are 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 into the northern Delaware Basin.

Speaker #3: With this technology, we can hybridize customer locations to increase reliability. Our hybrid technology combines our portable generators, a robust battery system, and a controlled software that manages site loads and power availability, which leads to a more robust service for our customers and our operating efficiencies for Atlas.

Speaker #3: 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.

Speaker #3: 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.

John Turner: 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.

Speaker #3: I will turn the call over to our CFO, Blake McCarthy, to expand on what we are seeing in our sand and logistics segments.

Speaker #3: 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 timelines continue to slip.

Speaker #2: 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.

Blake McCarthy: 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 H1 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.

Speaker #3: We are also seeing growing interest in microgrid systems utilizing Atlas's battery technology. With this technology, we can hybridize customer locations to increase reliability. Our hybrid technology combines our portable generators, a robust battery system, and a controlled software that manages site loads and power availability, which leads to a more robust service for our customers and our operating efficiencies for Atlas.

Speaker #2: We are obviously not the only ones to share this view, as the Permian recount has grown 17% since the start of the Iran conflict.

Speaker #2: 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 EMPs ramp activity next year once they have refreshed their capital budgets.

Speaker #2: Despite the growth in rig activity, completion activity has merely remained static. Which is what drives demand for our business. This is due to a number of factors.

Blake McCarthy: Despite the growth in rig activity, completion activity has merely 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 entering 2026, with well 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 well bores to be placed to enable simulfrac 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 H2 of this year, it has certainly put a cap on the activity of a few operators year to date, particularly in the Delaware Basin.

Speaker #3: 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.

Speaker #2: For one, operator duck inventories were already thin in early 2026. With well-placed and activity highly aligned with completion schedules. As pad sizes have grown and even with today's efficient drilling operations, it takes extended time in planning for new pads to be constructed and well-bores to be placed to enable simul frac operations.

Speaker #3: I will turn the call over to our CFO, Blake McCarthy, to expand on what we are seeing in our sand and logistics segments.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: As we mentioned on our last call, we don't expect frac fleet additions beyond the marginal few we saw in April until later this year.

Blake McCarthy: As we mentioned on our last call, we do not expect frac fleet additions beyond the marginal few 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 counterseasonal way as customers look to hit 2027 running. Pressure pumpers are displaying discipline and not bringing incremental equipment to market until pricing improves on their current utilized fleets. With the lack of readily available equipment and crews on the sidelines, there is a significant lag, approximately 2 months, between when a customer can contract a 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.

Speaker #2: As operators attempt to gain comfort with the strip in midst of the volatility. However, based on recent customer conversations, we expect activity levels to begin ramping moderately in Q4 and encounter seasonal way as customers look to hit 2027 running.

Speaker #2: 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.

Speaker #2: Pressure pumpers are displaying discipline and 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 is a significant lag approximately two months between when a customer can contract a fleet and when completion operations actually begin.

Speaker #2: Despite the growth in rig activity, completion activity has merely remained static, which is what drives demand for our business. This is due to a number of factors.

Speaker #2: For one, operator duck inventories were already thin in our 2026. With well-placed and activity highly aligned with completion schedules. As pad sizes have grown and even with today's efficient drilling operations, it takes extended time in planning for new pads to be constructed and well-bores to be placed, to enable simul frac operations.

Speaker #2: 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.

Speaker #2: Sand is the ultimate commodity, and that a little bit of oversupply quickly leads to the price falling to the marginal cost of production for the industry.

Blake McCarthy: Sand is the ultimate commodity in that a little bit of oversupply quickly leads to the price falling to the marginal cost of production for the industry. Inversely, just a little undersupply can lead to a rapid spike in prices. While nameplate capacity would suggest that there is still quite a way to go before the industry comes into balance, we believe these figures dramatically 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. Based on recent spot sales to customers experiencing non-productive 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.

Speaker #2: 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.

Speaker #2: And inversely, just a little undersupply can lead to a rapid spike in prices. While nameplate capacity would suggest that there is still quite a way to go before the industry comes into balance, we believe these figures dramatically overstate the true productive capacity of the industry.

Speaker #2: As we mentioned on our last call, we don't expect frac fleet additions beyond the marginal few we saw in April, until later this year.

Speaker #2: Over the past three 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.

Speaker #2: As operators attempt to gain comfort with the strip in the midst of the volatility. However, based on recent customer conversations, we expect activity levels to begin ramping moderately in Q4 and in a seasonal way as customers look to hit 2027 running.

Speaker #2: 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 four to six net completion crew additions for the market to reach tight conditions.

Blake McCarthy: We are beginning to hear more anecdotes of competitor facilities struggling operationally as they attempt to ramp production, and it is causing us to reconsider our earlier math that it is 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 is time to force the issue. Non-productive 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.

Speaker #2: Pressure pumpers are displaying discipline and 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 is a significant lag, approximately two months, between when a customer can contract a fleet and when completion operations actually begin.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: Sand is the ultimate commodity, and a little bit of oversupply quickly leads to the price falling to the marginal cost of production for the industry.

Speaker #2: 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.

Speaker #2: 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 operators who have been low to rate logistics pricing.

Blake McCarthy: 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 well site 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.

Speaker #2: Negatively impacted operationally from these developments. In June alone, we took over two wellsite jobs mid-completion as competitors simply could not secure drivers at the rates they were offering.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: This commercialist strategy is intended to reinforce the value of execution reliability. Atlas provides a superior level of execution reliability to our clientele, enabled by the investments we have made in our plants, our logistics infrastructure, and most importantly, our people.

Blake McCarthy: Atlas provides a superior level of execution reliability to 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 have 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.

Speaker #2: 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.

Speaker #2: 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.

Speaker #3: 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 low to raised logistics pricing, negatively impacted operationally from these developments.

Speaker #2: 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.

Speaker #2: 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.

Speaker #3: In June alone, we took over two 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.

Speaker #2: 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.

Blake McCarthy: 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 non-productive time. Q2 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 Q3 volume expectations remain a bit up in the air due to our aforementioned commercial strategy, as well as some scheduled breaks in customer completion schedules. The current expectations range from approximately 5.3 to 6 million tons, which is admittedly a wide range.

Speaker #3: 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.

Speaker #2: 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.

Speaker #3: This commercialist strategy is intended to reinforce the value of execution reliability. Atlas provides a superior level of execution reliability to our clientele, enabled by the investments we have made in our plants, our logistics infrastructure, and most importantly, our people.

Speaker #2: 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.

Speaker #3: 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.

Speaker #2: As well as some schedule breaks and customer completion schedules, the current expectations range from approximately 5.3 to 6 million tons, which is admittedly a wide range.

Speaker #3: 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.

Speaker #2: 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.

Blake McCarthy: However, we believe this near-term uncertainty is necessary to properly set the stage for the more important contracting season at year-end. It is 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 Q2, we made more than 4,600 autonomous deliveries, up 70% from Q1. Our partnership with Kodiak Robotics 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.

Speaker #3: 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.

Speaker #3: 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.

Speaker #2: 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 of 70% from the first quarter.

Speaker #3: 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.

Speaker #2: 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.

Blake McCarthy: 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, Q2 2026 revenue is approximately $293.2 million. Total proppant sales volume was flat sequentially at 5.6 million tons. Our average sales price for proppant for Q2 was approximately $17.70 per ton. Q2 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 Q2, our per ton proppant plant operating costs were approximately $12.39, including royalties, down from Q1.

Speaker #3: 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.

Speaker #2: Additionally, we set quarterly volume records down the Dune Express. Moving to our financials, second quarter 2026 revenue is approximately $293.2 million. Total profit sales volume was flat sequentially at 5.6 million tons.

Speaker #3: As well as some scheduled breaks in customer completion schedules, the current expectations range from approximately 5.3 to 6 million tons, which is admittedly a wide range.

Speaker #2: Our average sales price for profit 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 profit in plant and logistics equipment operating costs.

Speaker #3: 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 tonnes basis, as some key customers are positioning themselves to close the year with gathering momentum.

Speaker #2: 1.4 million from power equipment costs, 140.7 million of service costs, 8.8 million of rental costs, and 4.3 million of royalties. For the second quarter, our per-ton profit plant operating costs were approximately $12.39, including royalties, down from the first quarter.

Speaker #3: 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.

Speaker #2: 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.

Blake McCarthy: OPEX per ton for Q3 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 Q2 on the back of record volumes, an improving rate environment, and strong utilization of the Dune Express. Q2 logistics margins were 14%. For Q3, 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 startup 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 non-recurring items, was $24.3 million.

Speaker #3: 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.

Speaker #2: Our logistics business posted strong sequential improvement in the second quarter on the back of record volumes and improving rate environment and strong utilization of the Dune Express.

Speaker #2: 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 startup of operations that our new facility in Socorro, Texas.

Speaker #3: Additionally, we set quarterly volume records down the Dune Express. Moving to our financials, second quarter 2026 revenue is approximately 293.2 million. Total profit sales volume was flat sequentially at 5.6 million tons.

Speaker #2: These three contributions 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 non-recurring items, was 24.3 million.

Speaker #3: Our average sales price for profit 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 profit in plant and logistics equipment operating costs.

Speaker #3: 1.4 million from power equipment costs, 140.7 million of service costs, 8.8 million of rental costs, and 4.3 million of royalties. For the second quarter, our per-ton profit in plant operating costs were approximately $12.39, including royalties, down from the first quarter.

Speaker #2: SG&A is expected to average approximately 22 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 power generation equipment order.

Blake McCarthy: SG&A is expected to average approximately $22 to $24 million for Q3, 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 power generation equipment order. Maintenance CapEx was $14.6 million. CapEx for H2 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 to $375 million. The vast majority of that, approximately $175 to $190 million, is attached to the build-out of our private grid power business. It is worth noting that approximately $110 million of H2 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 2027.

Speaker #2: 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 to $375 million.

Speaker #3: 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.

Speaker #3: Our logistics business posted strong sequential improvement in the second quarter on the back of record volumes and improving rate environment and strong utilization of the Dune Express.

Speaker #2: The vast majority of that, approximately $175 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.

Speaker #3: 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 startup of operations at our new facility in Socorro, Texas.

Speaker #2: As a reminder, we expect this to generate approximately $55 million of adjusted free cash flow per annum. The remainder relates to purchase obligations that are a caterpillar global framework agreement, which we announced in March.

Blake McCarthy: 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 and plans. Maintenance capital spending for our standard logistics business is expected to average approximately $5 to $7.5 million per quarter in H2 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 standard logistics business is more than enough to satisfy our upcoming capital needs.

Speaker #3: These three contributions from this business are 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 non-recurring items, was $24.3 million.

Speaker #2: 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 and plans.

Speaker #3: SG&A is expected to average approximately $22 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 power generation equipment order.

Speaker #2: Maintenance capital spending for our standard logistics business is expected to average approximately 5 to 7.5 million per quarter in the second half of the year.

Speaker #2: Supporting the free cash flow generation ability of that business. On the heels of our successful convertible issuance in April, the combination of Atlas's available liquidity and the positive free cash flow from our standard logistics business is more than enough to satisfy our upcoming capital needs.

Speaker #3: 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 to $375 million.

Speaker #2: Looking ahead to the third quarter, overall standard logistics sales volume remain the biggest barrier while we expect continued improvement in our production costs and power spend.

Blake McCarthy: Looking ahead to Q3, overall sand and logistics sales volume remain the biggest variable. While we expect continued improvement in our production costs and power sales, 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 Q4 to show meaningful sequential improvement based on already allocated volumes to 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.

Speaker #3: The vast majority of that, approximately $175 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.

Speaker #2: 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.

Speaker #2: 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.

Speaker #3: As a reminder, we expect this to generate approximately $55 million of adjusted free cash flow per annum. The remainder relates to purchase obligations that are our caterpillar global framework agreement, which we announced in March.

Speaker #2: That have been communicated to us with current expectations matching or exceeding Q2 results. I will now hand the call back to John.

Speaker #3: 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 and plans.

Speaker #1: Thanks, Mike. 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.

John Turner: 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.

Speaker #3: Maintenance capital spending for our standard logistics business is expected to average approximately 5 to 7.5 million per quarter in the second half of the year, supporting the free cash flow generation ability of that business.

Speaker #3: On the heels of our successful convertible issuance in April, the combination of Atlas's available liquidity and the positive free cash flow from our standard logistics business is more than enough to satisfy our upcoming capital needs.

Speaker #1: We believe this will drive the market to realize the rationalization and productive capacity and logistics capability that has transpired across the West Texas sand industry and serve as a catalyst for a pricing recovery.

Speaker #3: Looking ahead to the third quarter, overall standard logistics sales volume remained the biggest barrier while we expect continued improvement in our production costs and power spend.

Speaker #1: I will now hand the call off to our executive chairman, Fred Brigham, for some closing remarks before we turn the call over to Q&A.

Speaker #3: 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.

Speaker #3: 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.

Bud Brigham: 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. 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 Company, when we were pioneering horizontal drilling and multi-stage fracking in the Bakken nearly 20 years ago. Most people did not believe horizontal fracking would work in oil. Over the next five years, we not only proved them wrong, we led the way, delivering superior production and economic performance. About five years later, we did it again with Brigham Resources in the Permian.

Speaker #3: 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.

Speaker #3: 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.

Speaker #3: 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 multi-stage fracking in the Balkans nearly 20 years ago.

Speaker #3: I will now hand the call back to John.

Speaker #1: 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.

Speaker #3: Most people did not believe horizontal fracking would work in oil. Over the next five years, we not only proved them wrong, we led the way, delivering superior production and economic performance.

Speaker #1: We believe this will drive the market to realize the rationalization, productive capacity, and logistics capability that has transpired across the West Texas sand industry and serve as a catalyst for a pricing recovery.

Speaker #3: About five years later, we did it again with Brigham Resources in the Permian. Eight years ago, we faced the same skepticism about the viability of local sand when we started Atlas.

Bud Brigham: Eight 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 three 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. 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.

Speaker #1: I will now hand the call off to our executive chairman, Brad Brigham, for some closing remarks before we turn the call over to Q&A.

Speaker #3: We went on to build the largest state-of-the-art fracked sand plants in the country, and meaningfully improved economics for Permian operators. Then again, just three years ago, many said we couldn't build North America's largest conveyor system to move profit 42 miles into the heart of the Delaware Basin.

Speaker #2: 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.

Speaker #2: 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.

Speaker #3: 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.

Speaker #2: 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 multi-stage fracking in the Balkans nearly 20 years ago.

Speaker #3: 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.

Speaker #2: Most people did not believe horizontal fracking would work in oil. Over the next five years, we not only proved them wrong, we led the way, delivering superior production and economic performance.

Speaker #3: 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.

Speaker #2: About five years later, we did it again with Brigham Resources in the Permian. Eight years ago, we faced the same skepticism about the viability of local sand when we started Atlas.

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

Speaker #4: Thank you. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue.

Operator: Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. We ask that you please limit to 1 question and 1 follow-up question. Our first question is from Jim Rollyson with Raymond James. Please proceed.

Operator: Thank you. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. We ask that you please limit to one question and one follow-up question. Our first question is from Jim Rollyson with Raymond James. Please proceed.

Speaker #2: We went on to build the largest state-of-the-art fracked sand plants in the country, and meaningfully improved economics for Permian operators. Then again, just three years ago, many said we couldn't build North America's largest conveyor system to move profit 42 miles into the heart of the Delaware Basin.

Speaker #4: You may press star two if you would like to remove your question from the queue. And for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Speaker #4: We ask that you please limit to one question and one follow-up question. Our first question is from Jim Rollison with Raymond James. Please proceed.

Speaker #2: 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.

Speaker #5: Hey, good morning, guys. 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.

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

Speaker #2: 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.

Speaker #5: 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 the placing that capacity with two or three or four 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.

Speaker #2: 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.

Speaker #1: Yeah, 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.

John Turner: Yeah, sure, Jim. Thanks for the question. Obviously we are not seeing every deal that is out there, but what we are seeing is that there is 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 de-risked and those timelines de-risked. The counterparties we are negotiating with are looking to move as quickly as they can, and that makes, obviously that is in months and not years. Obviously these deals do not happen overnight. They are billion-dollar deals that take very long durations. With very long durations, it takes a long time to negotiate. They are also running these deals, or for the power deals, they are also running those in parallel with these data center lease negotiations, which are pretty complicated as well, if not more complicated.

Speaker #4: Thank you. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue.

Speaker #1: I guess things are moving in order to get those projects de-risked and those timelines de-risked. The counterparties, we're negotiating with, are looking to move as quickly as they can and that makes obviously that's in months.

Speaker #4: We ask that you please limit to one question and one follow-up question. Our first question is from Jim Rollyson with Raymond James. Please proceed.

Speaker #1: And not years. Obviously, these deals don't happen overnight. They're billion-dollar deals. They take very long duration with very long durations. It takes a long time to negotiate.

Speaker #5: Hey, good morning, guys. John, your commentary 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.

Speaker #1: And they are also running these deals 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.

Speaker #1: So when you get all these contracts together and once we get our offer once we get our contract negotiated, there's multiple things that have to happen before a contract could be signed.

John Turner: When you get all these contracts together and once we get our contract negotiated, there are multiple things that have to happen before a contract can be signed. So there is a lot of moving parts there. But what we have been seeing is we have been seeing an urgency to get deals signed. We have been seeing the size of these deals increase. We have been seeing the tenor of these deals increase. I am talking about what we were seeing, say, 6 months ago. So obviously very positive from our standpoint. We have not really announced any. We will not be announcing any deals until we have a contract signed. But we are working on those.

Speaker #1: 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.

Speaker #1: I guess things are moving in order to get those projects de-risked and those timelines de-risked. The counterparties we're negotiating with are looking to move as quickly as they can, and obviously that's been in months and not years.

Speaker #1: 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, six months ago.

Speaker #1: So obviously, very positive from 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 this.

Speaker #1: Obviously, these deals don't happen overnight. They're billion-dollar deals. They take very long duration with very long durations. It takes a long time to negotiate.

Speaker #5: Got it. Appreciate that. And as a follow-up, maybe for Blake, can you expand a little bit, Blake, on the volume guidance? 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.

Jim Rollyson: Got it. Appreciate that. As a follow-up, maybe for Blake, can you expand a little bit, Blake, on the volume guidance, a pretty wide range obviously for Q3. 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. Tied to that is how comfortable you are with the Q4 implied ramp.

Speaker #1: And they are also running these deals—or 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.

Speaker #1: Yeah, yeah. That's a great question. I was expecting that one. I think it's completely fair characterization that it's quite a bit of variability there.

Blake McCarthy: Yeah, that is a great question. I was expecting that one. I think it is completely fair characterization that it is quite a bit of variability there. So yeah, as you pointed out, there are a number of moving pieces in Q3. 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. 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. That is without incremental volume wins.

Speaker #1: 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.

Speaker #1: So yeah, 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.

Speaker #1: 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, six months ago.

Speaker #1: 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 frack designs.

Speaker #1: So, obviously, very positive from 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.

Speaker #1: With the ramp inactivity for some of these key customers, we are on course for a very strong Q4. And that's without incremental volume wins.

Speaker #5: Got it. Appreciate that. And as a follow-up, maybe for Blake, can you expand a little bit, Blake, on the volume guidance? Pretty wide range, obviously, for Q3 3 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 Q4 implied ramp.

Speaker #1: 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.

Blake McCarthy: However, the other impact is going to come from our shift in our commercial strategy. That is the one where there is a bit of a question mark, and that is why you have that wide range. For more than a year, we have been following the playbook, which is say you are the low-cost provider of a commodity and a service. When the market is oversupplied, you have 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 have done that, and we have caused a lot of pain in the market. Much of our competition, they have laid off crews, they have cut maintenance spending to zero, to the point where some of them even have padlocks on the front gates.

Speaker #1: 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 a commodity.

Speaker #1: And a service. So when the market is oversupplied, 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.

Speaker #1: Yeah, yeah. That's a great question. I was expecting that one. I think it's a completely fair characterization that there's quite a bit of variability there.

Speaker #1: We've done that. And we've caused a lot of pain in the market. Much of our competition, it's laid off crews. They cut maintenance spending to zero.

Speaker #1: So yeah, as you pointed out, there are a number of moving pieces in Q3. So, first, we do have some key customers that are taking short crew breaks during the quarter.

Speaker #1: And to the point where some of them even have padlocks on the front gates. So however, just because of mine is kind of limping along, doesn't mean that it's theoretical sand.

Blake McCarthy: However, just because a mine is kind of limping along, does not mean that its theoretical sand is not being bid in the projects. All of this like theoretical nameplate capacity, what I call zombie mines, being bid into customer tenders for sand, it is creating this perception that there is still an ample oversupply of sand in the market. We just simply do not think that is the case. We think that does not really matter until our customer base thinks it too. 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. It is not until we have 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 is reality.

Speaker #1: 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 move to bigger frack designs.

Speaker #1: It isn't being bid in the projects. So all of this theoretical nameplate capacity of what I call zombie mines is being bid into customer tenders for sand.

Speaker #1: With the ramp inactivity for some of these key customers, we are on course for a very strong Q4. And that's without incremental volume wins.

Speaker #1: 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.

Speaker #1: 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.

Speaker #1: 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.

Speaker #1: So for more than a year, we've been following the playbook, which is to say, you're the low-cost provider of a commodity and a service. So when the market is oversupplied, you've 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.

Speaker #1: 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.

Speaker #1: We've done that, and we've caused a lot of pain in the market. Much of our competition has laid off crews. They've cut maintenance spending to zero.

Speaker #1: So we have to create a catalyst for that light to get shown 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.

Blake McCarthy: We have to create a catalyst for that light to get shown 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 get sand on site. Because we make it an afterthought, and we have made it easy. It is a little bit of victim of our own success. When you do your job well, sometimes it gets taken for granted. Our expectations are that NPT, which we have tried to make a thing of the past in West Texas, it is about to become a pretty big issue for some operators. 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 is going to set us up very well for RFP season for 2027.

Speaker #1: And to the point where some of them even have padlocks on the front gates. So, however, just because mine is kind of limping along doesn't mean that it's theoretical sand.

Speaker #1: Because we make it an afterthought and we've made it easy. It's a little bit of victim of our own success. When you do your job well, sometimes it gets taken for granted.

Speaker #1: It isn't being bid in the projects. So all of this theoretical nameplate capacity, what I call zombie minds, is being bid into customer tenders for sand.

Speaker #1: And so our expectations are that NPT, which we have tried to make a thing in the past in West Texas, is about to become a pretty big issue for some operators.

Speaker #1: 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.

Speaker #1: 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 our PCs and for 2027.

Speaker #1: But we think that doesn't really matter until our customer base thinks so 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.

Speaker #1: And the execution of the strategy that's it's going to give us a hammer when it comes to negotiations.

Blake McCarthy: The execution of the strategy that it is going to give us a hammer when it comes to negotiations.

Speaker #3: Our next question is from Steven Janjaro with Steeple. Please proceed.

Operator: Our next question is from Stephen Gengaro with Stifel. Please proceed.

Speaker #1: And so, it's not until we've got to draw a line in the sand and let them go test the waters elsewhere that you kind of shine a light on the market and what's reality.

Speaker #2: Thank you. Good morning, everybody.

Stephen Gengaro: Thank you. Good morning, everybody.

Speaker #1: Or Steven.

Blake McCarthy: Morning, Stephen.

Speaker #4: Or Steven.

Tim Ondrak: Morning, Stephen.

Speaker #2: 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.

Stephen Gengaro: 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'll hear 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?

Speaker #1: So we have to create a catalyst for that light to get shown on what these minds 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.

Speaker #2: And I think we'll hear numbers like around a million bucks for the generating equipment per megawatt and maybe like 1/6 to 1/7 for sort of all-in balance of plant.

Speaker #1: 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 expectation is that NPT, which we have tried to make a thing in the past in West Texas, is about to become a pretty big issue for some operators.

Speaker #2: What are you guys seeing and are you seeing kind of inflation in those numbers?

Speaker #1: Thanks, Steven. I'm going to let Tim jump in with all the details because he's the guy at the Coalface. But just to lead, this is something that we've been pretty vocal about for some time.

Blake McCarthy: Thanks, Steven. 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, this is something that we've been pretty vocal about for some time, in that we always say it's really customer and project dependent. So, hey, answer for me these questions. 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 apt to change, and thus the cash flow stream has to change, too. Tim, you want to jump into the deeps?

Blake McCarthy: 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, this is something that we've been pretty vocal about for some time, in that we always say it's really customer and project dependent. So, hey, answer for me these questions. 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 apt to change, and thus the cash flow stream has to change, too. Tim, you want to jump into the deeps?

Speaker #1: 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 our PCs and for 2027.

Speaker #1: And that we really say it's really customer and project dependent. So hey, answer for me these questions. What's the load profile the customer requires for their objectives?

Speaker #1: And the execution of the strategy, that's what's going to give us a hammer when it comes to negotiations.

Speaker #1: 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.

Speaker #2: Our next question is from Stephen Gengaro with Q4. Please proceed.

Speaker #3: Thank you. Good morning, everybody.

Speaker #1: Where's Stephen?

Speaker #6: Where's Stephen?

Speaker #3: 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.

Speaker #1: Because the variables on the front end are they're apt to change. And that's the cash flow stream has to change too. Can you want to jump into the details?

Speaker #3: And I think we'll hear numbers like around a million bucks for the generating equipment per megawatt and maybe like one-sixth to one-seven for sort of all-in balance of plant.

Speaker #4: Yeah. I think to Blake gave some good color and to answer that question, the CapEx ranges we're seeing on projects can be anywhere from a million five a megawatt to two and a half million a megawatt.

Tim Ondrak: Yeah. I think Blake gave some good color and to answer that question, the CapEx ranges we are seeing on projects can be anywhere from USD 1.5 million a megawatt to USD 2.5 million a megawatt. And again, those are really informed by what is the system intended to do versus cost inflation. It is really scope inflation. And I think we are 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 is a lot of difference in a system that is designed to five nines versus three nines. And so we are seeing a little bit more thought go into what actually works, what is deliverable, and what is cost efficient in that case.

Speaker #3: What are you guys seeing and are you seeing kind of inflation in those numbers?

Speaker #4: 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 does engineering asking for versus what does procurement willing to put forward.

Speaker #1: Thanks, Stephen. I'm going to let Tim jump in with all the details because he's the guy at the Coalface. But just to lead, this is something that we've been pretty vocal about for some time.

Speaker #1: And that we really say it's really customer and project dependent. So hey, answer for me these questions. What's the load profile the customer requires for their objectives?

Speaker #4: And there's a lot of difference in a system that's designed to five nines versus three nines. And so we're seeing a little bit more thought go into what actually works, what's deliverable, and what's cost efficient.

Speaker #1: 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 with which to review these projects is unlevered project IRR.

Speaker #4: 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.

Speaker #1: Because the variables on the front end are they're apt to change. And that's the cash flow stream has to change too. Can you want to jump into the details?

Tim Ondrak: As they build out those teams, we are getting better answers from them on what they are willing to live with from reliability, availability, and what they need on load steps.

Speaker #1: Yeah, I think I think the key thing, Steven, is that we're not necessarily seeing cost inflation as much as we're seeing that scope expansion.

Blake McCarthy: Yeah, I think the key thing, Stephen, is that we are not necessarily seeing cost inflation as much as we are seeing that scope expansion. And then I think the hyperscalers have got more sophisticated, as Tim pointed out. They have added significant deal/procurement talent, which is they are getting smarter about the dollars they are spending, where they are like very much the, "Hey, what do we need versus what do we want?

Speaker #1: And then I think the hyperscalers have gotten more sophisticated as Tim pointed out. They've added significant deal slash procurement talent which is they're getting they are getting smarter about the dollars they're spending where they're like it very much the hey, what do we need versus what do we want?

Speaker #2: 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.

Stephen Gengaro: Got it. Okay. That makes sense. When we think about, and you talked a little bit about 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 is going to vary a little bit by which projects are signed, but how do we think about that?

Speaker #4: And there's a lot of difference in a system that's designed to five-nines versus three-nines. And so we're seeing a little bit more thought go into what actually works, what's deliverable, and what's cost efficient.

Speaker #2: 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.

Speaker #2: But how do we think about that?

Speaker #1: Yeah. Yeah. So during Q2, we did make some large payments for the initial order of CAD generators. We're receiving this year. So as I said in the prepared remarks, we still have another 200 million of CapEx planned for the back half of the year.

Blake McCarthy: Yeah. During Q2, we did make some large payments for the initial order of Cat generators we are receiving this year. As I said in the prepared remarks, we still have another $200 million of CapEx planned for the back half of the year, and 90%-plus of that is going to the rest of the Cat deliveries, and then also down payments on our 2027 orders and ancillary equipment for our currently under construction deployment of Socorro and some other longer lead time items for other projects. 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.

Blake McCarthy: Yeah. During Q2, we did make some large payments for the initial order of Cat generators we are receiving this year. As I said in the prepared remarks, we still have another $200 million of CapEx planned for the back half of the year, and 90%+ of that is going to the rest of the Cat deliveries, and then also down payments on our 2027 orders and ancillary equipment for our currently under construction deployment of Socorro and some other longer lead time items for other projects. 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.

Speaker #1: Yeah, I think the key thing, Stephen, is that we're not necessarily seeing cost inflation as much as we're seeing that scope expansion. And then I think the hyperscalers have gotten more sophisticated, as Tim pointed out.

Speaker #1: And 90 plus percent of that is going to the rest of the CAD deliveries. 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.

Speaker #1: They've added significant deal-slash-procurement talent, which means they're getting smarter about the dollars they're spending. They're very much in the mode of, "Hey, what do we need versus what do we want?"

Speaker #1: So thinking about the liquidity, following the convertible raise in April and the Q2 CAD payments, we currently have approximately 168 million of cash on the balance sheet.

Speaker #3: 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.

Speaker #1: And approximately 125 million of undrawn capacity on our ABL. Additionally, I think it's key to reiterate that the CapEx for our standard logistics will now truly reflect the low capital intensity nature of that business.

Blake McCarthy: Additionally, I think it is key to reiterate that the CapEx for our standard logistics will now truly reflect the low capital intensity nature of that business. We are effectively done with the major CapEx projects we had planned for that business this year. 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 our oilfield power business has also matured. Both of those businesses are going to start spitting off cash. We are more than good when it comes to our near-term obligations. That is not to say we will not need incremental capital for the projects we are currently negotiating. We have already, in fact, made significant equity investments into those prospective projects.

Speaker #3: Just remind us of 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.

Speaker #1: So we're effectively done with the major CapEx projects we had planned for that business this year. So CapEx for that business steps down to that 5 to 7 and a half million dollar range.

Speaker #3: But how do we think about that?

Speaker #1: For that business moving forward. Additionally, the CapEx cycle for oil field power business has also matured. So both of those businesses are going to start spinning off cash.

Speaker #1: 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.

Speaker #1: And 90 plus percent of that is going to the rest of the CAD deliveries. 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.

Speaker #1: But we have already made significant equity investments into those prospective projects. So funding for those projects is most likely to come in the form of debt financing.

Blake McCarthy: Funding for those projects is most likely to come in the form of debt financing, which we will not be putting on the balance sheet until we have hard contracts with great counterparties in hand.

Speaker #1: Which we won't be putting on the balance sheet until we have hard contracts with great counterparties in hand.

Speaker #1: So thinking about the liquidity, following the convertible raise in April in the Q2 CAD payments, we currently have approximately 168 million of cash on the balance sheet.

Speaker #2: Great. Okay. Thank you for the details.

Stephen Gengaro: Great. Okay. Thank you for the details.

Speaker #3: Our next question is from Doug Becker with Capital One. Please proceed.

Operator: Our next question is from Doug Becker with Capital One. Please proceed.

Speaker #1: And approximately $125 million of undrawn capacity on our ABL. Additionally, I think it's key to reiterate that the CapEx for our standard logistics will now truly reflect the low capital intensity nature of that business.

Speaker #2: Thank you. It seems like you're having some good success in the oil field power side of the business. Just curious if there's any consideration to deploy some more capacity into that.

Doug Becker: Thank you. It seems like you are having some good success in the oilfield power side of the business. Just curious if there is any consideration to deploy some more capacity into that. Presumably, either 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.

Speaker #1: So we're effectively done with the major CapEx projects we had planned for that business this year. So CapEx for that business steps down to that $5 to $7.5 million range.

Speaker #2: 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 oil field.

Speaker #1: For that business moving forward. Additionally, the CapEx cycle for the oilfield power business has also matured, so both of those businesses are going to start spinning off cash.

Speaker #1: Okay. Go ahead, Kim.

Blake McCarthy: Yeah. Go ahead, Tim.

Speaker #4: Yeah. I think we'll continue to deploy assets into the oil field power space. We've become a lot more selective about that over the last six months.

Speaker #1: 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.

Tim Ondrak: Yeah. I think, we will continue to deploy assets into the oilfield power space. We have 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 have got some density. That is how we pick up efficiencies and continue to operate that business. But it is a great business. The levers to scale that business up are much shorter than the levers to scale a business that is supporting industrial power data centers. To answer your question, it really continues to be opportunity-driven. When we have got good relationships with good customers that have an outlook for needing those assets for a period of time that we like, we will continue to deploy into that space.

Speaker #1: And we have already made significant equity investments into those prospective projects. So funding for those projects is most likely to come in the form of debt financing.

Speaker #4: We want to deploy those with some tenure. We want to deploy them where we've got some density and that's how we pick up efficiencies and continued to operate that business.

Speaker #1: Which we won't be putting on the balance sheet until we have hard contracts with great counterparties in hand.

Speaker #4: 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.

Speaker #3: Great. Okay. Thank you for the details.

Speaker #2: Our next question is from Doug Becker with Capital One. Please proceed.

Speaker #3: Thank you. It seems like you're having some good success in the oil field power side of the business. Just curious if there's any consideration to deploy some more capacity into that.

Speaker #4: And so to answer your question, it's really continues to be opportunity driven. When 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.

Speaker #3: 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 oil field work.

Speaker #2: 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.

Doug Becker: Sounds good. Maybe switching gears to the logistics business. Margins in March were kind of the mid-teens, finished below 13% for the full Q2. Everything seems to be lining up to really favor the Dune Express. Curious why we are not seeing margins maybe improve more than just kind of solidly in the double digit, going forward this year.

Speaker #1: Yeah. Go ahead, Kim.

Speaker #4: Yeah. I think we'll continue to deploy assets into the oil field power space. We've become a lot more selective about that over the last six months.

Speaker #2: Everything seems to be lining up to really a 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.

Speaker #4: We want to deploy those with some tenure. 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.

Speaker #1: Yeah. For the Q2 moving pieces, you did have there is a lag in terms of as I talked about third-party carrier rates continue to march up.

Blake McCarthy: Yeah. For the Q2 moving pieces, you did have there is a lag in terms of as, I talked about third-party carrier rates continue to march up. The over-the-road national freight market continues to strengthen, and that starts to pull truck drivers out of West Texas. There is a lag in your costs 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 H2, it is more a knock-on effect of, yeah, again, there is kind of some flex in that guidance, and that is related more to, it is tied to the volume guidance on the sand side, where obviously there is a fixed cost absorption piece of that. So, again, it is loose guidance based around more like, hey, we are drawing this line in the sand.

Speaker #4: 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.

Speaker #1: The over the road national freight market continues to strengthen and that starts to pull suck drivers out of West Texas. And so you're cost you're there's a lag and your cost going up on the third-party carrier rates.

Speaker #4: And so to answer your question, it's really continues to be opportunity-driven. When 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.

Speaker #1: 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 that again, there's kind of some flex in that guidance.

Speaker #3: 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.

Speaker #1: And that's related more to 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 about more like, "Hey, we're drawing this line in the sand.

Speaker #3: Everything seems to be lining up to really a favor the Dune Express. So kind of curious why we're not seeing margins maybe improve more than just kind of solving the double digit going forward this year.

Speaker #1: We're 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."

Blake McCarthy: We are starting to move rates, and we think that there might be the former of kind of a, hey, this kind of pushing the market and an initial reaction, and then finishing off with a strong Q4.

Speaker #1: Yeah. For the Q2 moving pieces, you did have that there is a lag, in terms of, as I talked about, third-party carrier rates continue to march up.

Speaker #4: But we are seeing tightening in the trucking market.

Tim Ondrak: We are seeing tightening in the trucking market.

Speaker #1: The over-the-road national freight market continues to strengthen and that starts to pull suck drivers out of West Texas. And so you're there's a lag and your costs going up on the third-party carrier rates.

Speaker #1: Sure.

Blake McCarthy: Sure.

Speaker #2: Got it. Thank you.

Doug Becker: Got it. Thank you.

Speaker #3: Our next question is from Scott Gruber with Citigroup. Please proceed.

Operator: Our next question is from Scott Gruber with Citigroup. Please proceed.

Speaker #2: Yes. Good morning. And I appreciate the pricing discipline here is demand improves. But I'm trying to get a sense of what this could mean for your average pricing there's something like $4 a ton spread between some of the contracts you had coming into the year and more recent sales.

Scott Gruber: Yes, good morning, and appreciate the pricing discipline here as demand improves. I am trying to get a sense of what this could mean for your average pricing. There is something like a $4 a ton spread between some of the contracts you have coming into the year and more recent sales. Just thinking through, if the market comes to meet you at your line, does your average pricing as you head into 2027, does it kind of stay flat around the $18.50 you posted in Q2? 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.

Speaker #1: And that's related more to—tied to the volume guidance on the sand side, where obviously there's a fixed cost absorption piece of that. So, again, it's loose guidance based around more like, "Hey, we're drawing this line in the sand."

Speaker #2: So just thinking through 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 1850 you posted in Q2?

Speaker #2: 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.

Speaker #1: We're starting to move rates, and we think that there might be a quarter of kind of a, "Hey, this is kind of pushing the market," and an initial reaction, and then finishing off with a strong Q4.

Speaker #1: So thinking about '27 pricing, obviously not going to guide that yet, but what we're trying to do as you 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.

Blake McCarthy: So thinking about 2027 pricing? Obviously, not going to guide that yet, but what we are trying to do, as you touched on, we are positioning ourselves to strengthen our position come off season where it is, 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 in it for 2027. So, in the event that we are able to achieve the pricing move, the increases that we were looking for, that would result in accretive pricing to the average price of sand.

Speaker #4: But we are seeing tightening in the trucking market.

Speaker #1: Sure.

Speaker #3: Got it. Thank you.

Speaker #2: Our next question is from Scott Gruber with Citigroup. Please proceed.

Speaker #3: Yes. Good morning. And I appreciate the pricing discipline here is demand improves. But I'm trying to get a sense of what this could mean for your average pricing.

Speaker #1: We do have a significant portion of the book turning over and 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.

Speaker #3: There's 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 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 1850 you posted in Q2?

Speaker #2: Gotcha. So the simple way to put it, I'm not trying to pin you down on exact numbers around your strategy, but your strategy of successful if the market comes to meet you that would be to move higher in your realized pricing heading into next year?

Scott Gruber: Got you. The simple way to put it, I am 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?

Speaker #3: 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.

Speaker #2: Is that fair?

Speaker #1: Yes.

Speaker #4: Yes. Absolutely.

John Turner: Yes.

Blake McCarthy: Yes, absolutely.

Speaker #1: Yes. 100%.

John Turner: Yes, 100%.

Speaker #2: Okay. Okay. Just wanted to clarify that. Appreciate it. And then the progress with Kodiak, and autonomous trucking is good to see. Maybe you could just provide some more color.

Scott Gruber: Okay, just wanted to clarify that. Appreciate it. The progress with Kodiak, and 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. 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?

Speaker #1: So, thinking about '27 pricing—obviously, not going to guide that yet—but what we're trying to do, as you touched on, is position ourselves to strengthen our position come RFP season where, like I said, we can shine a light on the true productive capacity of the market.

Speaker #2: 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?

Speaker #2: And 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?

Speaker #1: We do have a significant portion of the book turning over and it. 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 a creative pricing to the average price of sand.

Speaker #4: I guess really the first thing that we need to do is for us to start seeing the benefit from that thanks Scott on that is we really need to start expanding the horizon for which these trucks these autonomous trucks serve.

John Turner: I guess, really the first thing that we need to do is for us to start seeing the benefit from that. Thanks, Scott, on that is we really need to start expanding the horizon for which these autonomous trucks serve. They are 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 are 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.

Speaker #3: Gotcha. So the simple way to.

Speaker #4: They're serving in a couple of key 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.

Speaker #4: So number one, the first thing we needed to do was we needed to be able to get those trucks into other heat zones and broaden to the area.

Scott Gruber: Broaden

Scott Gruber: Broaden.

John Turner: and broaden the area. The second thing we needed to do is obviously to increase the number of trucks. So, by the middle of next year, that is a pretty lofty goal, but Atlas is planning on being on over the road. As far as what it is going to mean for our margins.

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

Speaker #4: The second thing we needed to do is to 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.

Speaker #4: As far as what it's going to mean for our margins.

Speaker #1: Yeah. I mean, just as touching on Doug's earlier question, right? There was that lag effect of the cost of drivers going up and then the actual accretion into your hauling rates.

Blake McCarthy: Yeah, just touching on Doug's earlier question. There was that lag effect of the cost of drivers going up and then the actual accretion into your hauling rates. So, you basically eliminate that variability. Where as the trucking market tightens, you keep that cost stable and it becomes actual pure accretion. It also de-risks our logistics operations in that, as the number of crews expands, it is just one of the bigger risks is, hey, can you get enough third-party drivers? Can you get enough trucks? That becomes less and less of a smaller question mark when you have got more of the autonomous trucks on the road.

Speaker #1: And so you basically eliminate that variability, right, where so as the trucking market tightens, you keep that cost stable and it just becomes actual pure accretion.

Speaker #1: And so it also de-risks our logistics operations in that as the number of crews expands, it's just one of the bigger risk is, "Hey, can we get enough can you get enough third-party drivers?

Speaker #1: 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.

Speaker #4: Yeah. With all the initiatives coming around with commercial drivers license and foreign CDLs, I mean, that's going to be a that's going to make a big impact on the trucking market going forward.

John Turner: Yeah. With all the initiatives coming around with commercial driver's license and foreign CDLs, that is going to make a big impact on the trucking market going forward.

Speaker #3: Our next question is from Michael Scalala with Stevensing. Please proceed.

Operator: Our next question is from Michael Scialla with Stephens Inc. Please proceed.

Speaker #2: Good morning. Blake, you said you wouldn't bring debt on the balance sheet unless you have contracts to underpin the new power requirements. So 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.

Michael Scialla: Good morning. Blake, you said you wouldn't bring debt on the balance sheet unless you have contracts to underpin the new power requirements. I just 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?

Speaker #2: What kind of targets are you looking to stay below as you build out the power business?

Speaker #1: Yeah. I mean, I think on the front end of this build-out, the leverage ratio is due start to blow out before those first key projects start spinning off cash.

Blake McCarthy: Well, I think on the front end of this build-out, the leverage ratios do start to blow out before 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 de-lever themselves very quickly. You're looking at cash on cash payback on these projects in the five, six-year range. You're probably looking at standard project financing, like equity to debt ratios of anywhere from 30% to 40% equity, 60% to 70% debt. When you think about those cash on cash paybacks, you quickly get sub 3x. 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, that's actually a very strong leverage position.

Speaker #1: I think that that's pretty common across the space. Once you get these projects online, though, they significantly start to they deliver themselves very quickly.

Speaker #1: You're looking at cash on cash payback on these projects and kind of the five, six-year range. And so it's you're probably looking at standard project financing like equity to debt ratios of anywhere from 30 to 40 percent equity 60 to 70 percent debt.

Speaker #1: So when you think about those cash on cash paybacks, you quickly you get some three times and this, again, and that's the OSS guy in me is like, "Well, that's too much debt." But when you have these contracts that are we're talking 15, 20 years hard concrete terms, that's actually a very strong leverage position.

Speaker #2: Yeah. Understood. Big trade-off there. I guess also wanted to see on your third quarter guidance, EBITDA guidance, you obviously have a range in there.

Michael Scialla: Yeah, understood. Big trade-off there. I guess, also wanted to see on your Q3 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?

Speaker #2: 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.

Speaker #2: Can you break down the EBITDA? How much you're anticipating from sand versus logistics versus power?

Speaker #1: I mean, if you think about all 100% of that variance is going to be coming from the sand and logistics side. So power EBITDA will be up slightly.

Blake McCarthy: If you think about 100% of that variance is going to be coming from the sand and logistics side. Power EBITDA will be up slightly, as we get a full order of deployment of that temporary or that small facility that we put in place for the construction phase of the Socorro project. Then continued gains on the oil field power side. The sand and logistics are really very closely correlated. Again, on that variance about say 40% of that is due to customers have communicated to us like, "Hey, we're going to be taking a short sailing.

Speaker #1: As we get a full quarter of deployment of that temporary or that small facility, that we put in place, for the construction phase of the squirrel project.

Speaker #1: And then continued gains on the oil field power side. The sand and logistics are really very closely correlated. And so again, on that variance about say 40% of that is due to customers have communicated to us like, "Hey, we're going to be taking a short and say.

70% debt. Um, so when you think about those cash on cash, paybacks uh you know, you quickly, you know, you get sub, you know, 3 3 times um and this again like and that's you know, the offs guy in me is like wait, that's too much debt. But when you have these contracts that are, you know, we're talking, you know, 15, 20 years, like hard concrete terms, like that's actually a very strong leverage position.

Speaker #3: Our next question is from Chuck Devore private investor. Please proceed.

Operator: Our next question is from Chuck DeVore, Private Investor. Please proceed.

Yeah. Understood um the trade-off there. Um I guess um also wanted to see on your uh your third quarter guidance EB, dog guidance. Um you obviously have a a range in there and I assume most of that range is because of the the range you talked about on

Speaker #4: Hey, 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.

John Turner: Hey, I'm going to go ahead and finish that question. Sorry, our system muted.

Blake McCarthy: Hey, I'm going to go ahead and finish that question. Sorry, our system muted.

Blake McCarthy: About 40% of that is coming from those customer breaks. There is a 30 to 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 are planning for in terms of the shift in commercial strategy. That really sums that up. Sorry about the interruption.

Speaker #4: There's 30 to 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.

Uh, sand production, you know, having a pretty wide range with that—can you break down the EBITDA, how much you're anticipating from that?

Sand versus Logistics versus Power.

Speaker #4: And that really sums that up. Sorry about the interruption.

Speaker #1: Yeah. Go ahead.

Speaker #2: All right. Thanks.

John Turner: Yeah. Go ahead.

John Turner: All right, thanks.

Scott Gruber: All right, thanks.

Speaker #3: Our next question is from Chuck Devore private investor. Please proceed.

Operator: Our next question is from Chuck DeVore, private investor. Please proceed.

Speaker #2: Yes. Thank you very much. I know that we don't often like to consider things like public policy and politics, but I noticed that Texas Governor Greg Abbott this I think just yesterday announced a pause for data center construction insofar as data centers that connect to the grid.

Chuck DeVore: Yes, thank you very much. I know that we do not 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 is 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 Public Utility Commission 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 are not going to build those lines. Are things like this, could these two public policy changes increase the demand for your power services in the Permian?

Um, I mean, I if you think about like all all like a 100% of that variance is going to be coming from from the standard Logistics side. So, uh, Power EBA will be up slightly, uh, as we, you know, you get a full order of, um, deployment of that of that, that, that temporary for that small facility. The, the that we put in place, uh, for the construction phase of the squirrel project. Um, and

And continued gains on the oil field power side.

Speaker #2: 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.

Uh, the sand was just like sand and Logistics are really are very uh, closely correlated. And so um you know, again on that variance about uh, you know, say 40% of that is due to

Customers have communicated to us, like, "Hey, we're going to be taking a short—" and say, like,

Our next question is from Chuck Doerr, private investor. Please proceed.

Speaker #2: 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 two public policy changes increase the demand for your power services in the Permian?

Hey, 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 are, say, 30- to 45-day breaks in the quarter – so that's in front of their ramps in Q4 into 2027. The rest of that delta is coming from...

Speaker #4: Yeah. 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.

John Turner: Yeah. Thanks, Chuck. Obviously, these are pretty new that are off, as far as policies go. Obviously, we don't agree with them. Yes, this is a tailwind that could happen for Atlas, and it's really any customer. 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. We are already seeing companies. I think a lot of the hyperscalers 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 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.

The kind of unknown response that we're, you know, planning for, in terms of the shift in commercial strategy.

And that really sums that up.

Sorry about the interruption.

Go ahead. All right, thanks.

Our next question is from Chuck Doerr, private investor. Please proceed.

Speaker #4: 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 in our already starting to provide our look for their own behind-the-meter power solutions.

Speaker #4: And I think we're just going to continue to see that. I think anything I think I think it's also going to push a number of companies out into what Texas that are going to start locating data centers out there in their projects out there.

Yes, thank you very much. I know that we don't often like to consider things like public policy and politics but I noticed that Texas governor, Greg Abbott this. I think just yesterday announced a pause for data center uh Construction in so far as data centers that connect to the grid. Uh there's a lot of resentment in rural Texas. We got a midterm coming up. The other thing that happened this week was that uh the lieutenant governor and the key chairman of a senate committee uh called on earth and the puc to delay.

Speaker #4: 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're really turning into those companies that have access to that power.

John Turner: Yes, this is a very big tailwind, and we've been seeing this.

Blake McCarthy: Yeah.

John Turner: 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 it into those companies that have access to that power.

Speaker #1: Yeah. Just to follow up on John what John said there, it's like we've really seen this come in for about 12 months now. We've touched on it on a few prior calls of these kind of political headwinds with respect to the grid.

Blake McCarthy: Yeah. Chuck, just to follow up on 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 these kind of political headwinds with respect to the grid. I would say that our prospective customer base 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 contracts where, if you rewound 18, 24 months ago, people were talking about, hey, five, seven-year contracts. Now we're talking 15 to 20 because they're just, "Hey, Bud, we're just not going to even think about the grid." If you look at the backlog, you look at the requirements, like the capital requirements that they would have to post up on the front end of that with still question marks around it.

Uh, the construction of the 765 kilovolt lines heading into the Permian, uh, this would seem to demand additional, um, thermal generation in the Permian. If you're not going to build those lines or things like this, could these two public policy, uh, changes, uh, increase the demand for your power services in the Permian?

Speaker #1: And I would say that our prospective customer base 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, if people were talking about, "Hey, 5, 7-year contracts," and we're talking 15 to 20 because they're just paid we're just not going to even think about the grid.

Yeah, thanks Chuck. Um, you know, obviously, these are pretty new that are off the, you know, as far as policies. Go obviously, we don't agree with them. But I mean, yes, this is a Tailwind, um, that could happen for for Atlas and any, it's really any c, any any, I guess anybody, any company that has, uh, 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, we are already

Speaker #1: You look at the backlog, you look at the requirements like the capital requirements that they have to post up on the front end of that with still question marks around it.

Speaker #1: It's just easier for them to just be like, "You know what? We're going to take care of this ourselves." And eventually, on top of that, they get higher reliability.

Blake McCarthy: It is just easier for them to just be like, "You know what? We are going to take care of this ourselves." Eventually, on top of that, they get higher reliability. There is significantly better resiliency, a system that is designed for their usage. When you think about that, the combination of that, you are not getting three nines from the grid, right? You are lucky if you are getting 98%. When you are thinking about what they are trying, the applications that they are going for, it was never the ideal solution for them. Now with these political headwinds, I think it has gotten even more significant. We see them thinking about these more as the permanent solution.

Seeing companies, I think, I think a lot of the hyperscalers are already have already come to grips with this in our in our already. Starting to provide our 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.

Speaker #1: There's significantly better resiliency. A system that's designed for their uses. And when you think about that, that combination of that, you're not getting four or three nines from the grid, right?

You know, 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.

Speaker #1: You're lucky if you're getting 98%. And so when you're thinking about what they're trying the applications that they're going for, it's it was never the ideal solution for them.

Um, but yes, this is a very big tailwind and we've been seeing this, and I think, uh, you're starting to see the urgency, um,

Speaker #1: 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.

Speaker #4: Yeah. And that's precisely the reason why we signed the Global Framework Agreement with CAD. I mean, we realize that this power demand for power was coming behind the meter.

John Turner: Yeah. That is precisely the reason why we signed the Caterpillar Global Framework Agreement with Caterpillar. 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.

Speaker #4: And the winners are going to be the ones that have the power to deploy.

Speaker #3: Our next question is from Alexa Breno with Goldman Sachs. Please proceed.

Operator: Our next question is from Alexa Petrick with Goldman Sachs. Please proceed.

Operator: Our next question is from Alexa Prena with Goldman Sachs. Please proceed.

Speaker #5: Hey, team. And thanks for taking our question. 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?

Alexa Petrick: Hey, team, and thanks for taking our question. 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?

Alexa Prena: Hey, team, and thanks for taking our question. 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?

Speaker #4: Yeah. So the majority of our pipeline is going to be larger projects. In oil and gas, we know that universe. We've got roughly 40 megawatts that we could deploy into that space.

Tim Ondrak: Yeah. The majority of our pipeline is going to be larger projects. In oil and gas, we know that universe. We have roughly 40 megawatts that we could deploy into that space. And those are megawatts that is on the ground or in process. In the larger power space, our opportunity set, it is roughly 8 to 10 gigawatts, and that is where it was on our last quarterly call. There have been projects that have kind of moved in and out. Keep in mind, that is 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. We are seeing the nodes that customers are coming to us to solve in that kind of 500 megawatt and up range.

That we really turned into those companies have access to that power. Yeah sure. Like just to follow up on John, what's John said there? It's like we we've really seen this come in for about 12 months now you know we've touched on it on a few prior calls of like these kind of political headwinds with respect to the grid and uh I I would say that our 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, you know, if you rewound 1824 months ago, people were talking about, hey 5 7, year contracts. We're talking about 15 to 20 because they're just paid, but we're just not going to even think about the grid. Like it's, you look at you, look at the backlog, you look at the requirements, like the capital requirements that they're, they're 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 just higher reliability. They

Speaker #4: And those are megawatts that's on the ground or in process. In the larger power space, our opportunity sets it's roughly 8 to 10 gigawatts.

Speaker #4: 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.

Significantly uh, better resiliency a system that's designed designed for their uses. And when you think about that those that combination of that, uh, you know, if you can't, you're not getting 439 from the grid, right? You're like lucky if you're getting 98%. And so, when you're thinking about what they're trying the applications that they're they're going for its it was never the ideal solution for them. And now with these political headwinds, I think it's gotten even more significant. And so I I we just see them thinking about these more as

Speaker #4: But those projects have grown in scale from the discussions that we had six months ago, nine 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.

Be permanent solution. Yeah. And you know, that's precisely the reason why we signed the global framework agreement with CAD. I mean, if we, we realize that this power, the demand for power was coming and behind the meter and it's got the, the winters are going to be the ones that have the have the power to deploy.

Speaker #4: 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 one, two, or even three gigawatts.

Our next question is from Alexa Reno with Goldman Sachs, please proceed.

Blake McCarthy: I think, in a lot of those conversations, that is a start. That is 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.

Hey team, and thanks for taking our question.

Speaker #4: Of behind-the-meter power for all the reasons that John and Blake just talked about in the last question.

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 oil and gas and then some of those larger projects?

Speaker #5: 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?

Alexa Petrick: Okay. That is very helpful. Maybe just a follow-up. Can you talk a little bit more, this pricing piece that you are talking about on the logistics side, what type of margins are you targeting there? You talked about a commercial strategy and part of the reason the Q3 guide might be a little lower than we anticipated. How do we think about what you are targeting and what Q4 could potentially look like, assuming those numbers come to fruition?

Alexa Prena: Okay. That is very helpful. Maybe just a follow-up. Can you talk a little bit more, this pricing piece that you are talking about on the logistics side, what type of margins are you targeting there? You talked about a commercial strategy and part of the reason the Q3 guide might be a little lower than we anticipated. How do we think about what you are targeting and what Q4 could potentially look like, assuming those numbers come to fruition?

Speaker #5: 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.

Speaker #5: So how do we think about what you're targeting and what 4Q could potentially look like assuming those numbers come to fruition?

Yeah. Um, so the the majority of our pipeline is going to be larger projects, um, in in oil and gas, you know, we know that Universe, we've got, you know, roughly 40 megawatts, uh, that we could deploy into that space. Uh, and those are, you know, those are megawatts that are that's on the ground or, or in process.

In the larger power space.

our opportunity said, uh, you know, it's

Speaker #2: Yeah. It's more about I think that it's bigger than just, "Hey, we're targeting this margin profile." It's more that there is if you look at the nameplate capacity for the 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." It would point you to, "Hey, there is a lot of sand available." And we know that even at our own facilities where we've been spending significant maintenance capex, there's a delta between our nameplate capacity and our effective productive capacity.

Blake McCarthy: Yeah. I think that it is bigger than just, "Hey, we are targeting this margin profile." It is more that if you look at the nameplate capacity for the, if you just add up all the mines out there, and based on, "Hey, this is what this was built to for a nameplate capacity." It would point you to, "Hey, there is a lot of sand available." We know that even at our own facilities where we have been spending significant maintenance CapEx, there is a delta between our nameplate capacity and our effective productive capacity. We know for a fact that ours are the best-maintained mines in the Permian Basin, bar none. Then you look at all these other ones where they have just been running at anywhere from 0% to 20% utilization for the last 2 years, and they are held together with duct tape and bailing wire.

Roughly 8 to 10 gigawatts.

And that's where it was on our last quarterly call. There's been projects that kind of moved in and out and and keep in mind, that's, you know, kind of pre Governor Abbott's announcement, uh, yesterday.

But those projects have grown in scale from the discussions that we had, you know, six months ago, nine months ago.

Speaker #2: And we know for a fact that ours are the best maintained mines in the Permian Basin. Bar none. So then you look at all these other ones where they've just been running at anywhere from 0 to 20 percent utilization for the last two years.

and we're seeing the notes that that customers are coming to us to solve in that kind of 500 megawatt and up range. And I think, you know, in a lot of those conversations, that's a start, um, that's kind of what they need to get off the ground. And some of those campuses have designs on, you know, 1 2, or or even 3, gigawatts of behind the meter power, you know, for for all the reasons that that John and Blake just talked about, uh, in the last question,

Speaker #2: And they're held together with duct tape and baling wire. And that nameplate capacity it's just this it's theoretical sand. But it's still being bid into these tenders and used by the operators as a hammer on pricing.

Blake McCarthy: And that nameplate capacity, it is theoretical sand. But it is still being bid into these tenders and used by the operators as a hammer on pricing. We talk about this like, "Hey, you just need a few grains of sand of undersupply for pricing to really move." When you talk about the incremental on that, everybody understands that the pricing incremental margin is 100%. So, it starts to move very quickly and have a huge impact on our income statement. So it is really like this is a, "Okay, hey, until we actually just say, 'Hey, you know what? Just go test it with those guys. Go see if it is real.'" Until you shine that light on the fact that, hey, all of a sudden you are starting to have well site NPT issues and things like that theoretical sand is always going to be there.

Speaker #2: And 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%.

Okay, that's very helpful and then maybe just a follow-up. Can, can you talk a little bit more that this kind of, you know, pricing piece that you're talking about? On the logistics side? What type of margins are you targeting? There are, you kind of talked about a commercial strategy and 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 Fork you could potentially look like assuming? Uh those numbers come to fruition.

yeah, it it's

Speaker #2: 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, we've got to until we actually just say, "Hey, you know what?

Operator: Greetings. Welcome to Atlas Energy Solutions Inc. Q2 2026 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Kyle Turlington, Investor Relations. Thank you. You may begin.

Operator: Greetings. Welcome to Atlas Energy Solutions Incorporated Q2 2026 Earnings Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Kyle Turlington, Investor Relations. Thank you. You may begin.

It's more about, you know, like I I think that it's it's a it's bigger than just hey, we're targeting this margin profile. It it's more that like there is if you look at the name plate capacity for the per. 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 name plate capacity.

Speaker #2: Just go test it with those guys. Go see if it's real." And until you shine that light on the fact that, "Hey, all of a sudden, you're starting to have well-side NPT issues and things like that," that theoretical sand is always going to be there.

Like it would point you to, hey, there is a lot of sand available.

And, you know, we know that, uh,

Speaker #2: And then it becomes you change that from, "Hey, it's no longer a theoretical sand. It's just non-existent sand." And you actually have hard data on what the productive capacity is of the entire industry.

Blake McCarthy: Then you change that from, "Hey, it is no longer a theory, a theoretical sand, it is just nonexistent sand," and you actually have hard data on what the productive capacity is of the entire industry. I think that there is a pretty quick tightening, and it just changes the positioning when it comes to those negotiations quite a bit. On the logistics side, it is very similar. It is all tied together. In terms of traditional trucking, it is a very tight market. We have been insulated from that by our advantages. The Dune Express, where it reduces our reliance on third-party trucks significantly. You move somebody else, and they are doing it all through trucks. You are going to 3x the number of trucks you need to service your wells. That creates a big problem, and that is going to result in even more inflation on trucker rates.

Speaker #2: 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.

Kyle Turlington: Hello, welcome to the Atlas Energy Solutions conference call and webcast for Q2 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 Q2 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 US securities laws. Such statements are based on 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.

Kyle Turlington: Hello, welcome to the Atlas Energy Solutions conference call and webcast for Q2 2026. 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 Q2 2026, after which we will open the call for Q&A.

Speaker #2: 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 advantage with right.

Like, bar none. So then, um, you look at all these other ones where, like, they've just been running at anywhere from zero to 20% utilization for the last two years, and like, you know, they're held together with duct tape and baling wire. And that nameplate capacity, like, it's just this, like—it's, you know, it's theoretical sand. Um, but it's still being, like, bid into these tenders and used by the operators as a hammer on pricing, and—

Speaker #2: The Dune Express reduces our reliance on third-party trucks significantly. We moved to somebody else, and they're doing it all through trucks. You're going to 3X the number of trucks you need to service your wells.

Kyle Turlington: Before we begin our prepared remarks, I would like to remind everyone that this call will include forward-looking statements as defined under the US security 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 know, we talked about this, like, you know, hey, you just need a few grains of sand of undersupply for pricing to really do.

Speaker #2: 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 if they're not willing to push the rates that they're charging the operators, they're just not going to have the trucks.

Um, and when you talk about the incremental on that, right? Everybody understands that, you know, the pricing incremental margin is 100%. And so, uh, it starts to move very quickly and have a huge impact on our income statement.

Blake McCarthy: If people are not willing to push the rates that they are charging the operators, they are just not going to have the trucks. So this is a grand experiment, but I think that it is going to result in quite some pretty strong findings.

Speaker #2: And so this is kind of a grand experiment, but I think that it's going to result in quite some pretty strong findings.

Uh and so it's really like this is a okay. Hey like we've got to like until we actually like just say like hey like you know what like

Kyle Turlington: You can learn more about these risks in the annual report on Form 10-K filed with the SEC on 24 February 2026, and our quarterly report on Form 10-Q for Q1 and current reports on Form 8-K and other SEC filings. You should not place undue reliance on forward-looking statements. 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.

Speaker #5: Thank you. This will conclude our question and answer session. I would like to turn the floor back over to management for closing comments.

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

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

Speaker #4: Yes. Thanks. Thank you, everybody, for attending the call or sitting on the call. I'll just close by saying we like where we are or we sit today with Atlas.

Kyle Turlington: 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.

John Turner: Yes. Thank you, everybody, for attending the call or sitting on the call. I will just close by saying, we like where we are, where we sit today with Atlas. We have two good businesses and real advantages in both, and a team that knows how to execute. There is work in front of us, and we are clear-eyed about it, and we are going to keep our heads down, do the work, and let the results speak for themselves. We look forward to reporting our Q3 numbers. Thank you.

Just just, just go test it with those guys. Let's, 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, you know, wellside, npt issues, and things like that, it that that theoretical sand is always going to be there. And then, you know, then it becomes you change that from. Hey, it's no longer from a theory, a theoretical sand, it's just non-existent sand. And you actually have like hard data on what the productive capacity is of the entire industry.

I think that there's a, a pretty quick tightening and it just um, changes the uh,

Speaker #4: We have two good businesses and really 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.

The positioning when it comes to those negotiations, quite a bit, um, on the logistics side, it's very similar—it's all tied together. Uh, there is just a, um,

John Turner: Thanks, Kyle. For Q2, 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 two divisions, oil field power, so generation to oil and gas operators across many basins, and we expect that fleet to exit this year with 180 to 200 MW 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.

Speaker #4: 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.

Speaker #4: Thank you.

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

It it just, in terms of traditional Trucking, it's a very tight Market. Um, we have been insulated from that by our advantages, right? The Dune express it. Reduces our Reliance on third-party truck, significance.

John Turner: We have two divisions, oil field power, so generation to oil and gas operators across many basins, and we expect that fleet to exit this year with 180 to 200MW 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.

We moved to somebody else and they're doing it all through trucks. Like you're going to 3x the, the number of trucks, you need to service your, your wells that creates a, a big problem that I think that. Um, and that's going to result in even more inflation on trucker rates. And if people are like, if they're not not willing to push the, the race that they're, you know, charging, the The Operators, they're just not going to have the trucks. Um and so you know this is, you know, kind of a grand experiment. But I think that it's um 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.

John Turner: Q2 was highlighted by the execution of our first behind-the-meter contract: a 120 MW 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 three and a half 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. Here is the full sequence.

John Turner: The Q2 was highlighted by the execution of our first behind the meter contract, a 120MW 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 three and a half years.

Yes, thanks. Thank you, everybody, for attending the call or sitting on the call. Um, you know,

I'll just close by saying, um, we like where we are, where we sit today with Atlas. Um, we have two good businesses and real advantages in both, and a team that knows how to execute.

John Turner: 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. Here is the full sequence.

There's work in front of us and we're clear-eyed about it. 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.

John Turner: We have completed the construction of a 26 MW facility that is powering the site today through the customer's construction and testing phase. We begin installing Atlas equipment for the permanent plant in the Q3. Commissioning begins in the Q4. The 120 MW facility electrifies at the end of the Q1 2027. We begin recognizing revenue on this new system in the Q2 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.

John Turner: 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.

John Turner: 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 placed on order. We were very confident we could do so. We expected it would require significant commercial effort.

John Turner: 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.

John Turner: 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 eight to 10 projects to fully contract the capacity we placed on order. We were very confident we could do so. We expected it would require significant commercial effort.

John Turner: 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 two to four projects could contract our remaining uncommitted capacity compared with our previous assumption of 8 to 10 projects. Additionally, we have seen an increase in appetite, even need, from our prospective customers for longer tenure contracts. With grid access becoming increasingly difficult to secure on any predictable timeline, 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. We are increasingly seeing a desire for 15 to 20-year terms from our prospective customers as they look to de-risk power supply to their facilities for the long term.

John Turner: With grid access becoming increasingly difficult to secure on any predictable timeline, 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. We are increasingly seeing a desire for 15 to 20-year terms from our prospective customers as they look to de-risk power supply to their facilities for the long term.

John Turner: 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 lifecycle 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 a 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.

John Turner: We expect the industry to see additional contract activity over the coming weeks and months. We believe Atlas is well-positioned to compete for those opportunities. Outside of the 120 megawatts attached to our recently announced project, 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 request 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 H2 of this year. We will announce new contracts when they are signed.

John Turner: A question we often get is, what are the competitive advantages for Atlas in 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.

John Turner: As our power business grows, you will see how our engineering and execution expertise transforms the way companies obtain 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. We built the longest sand conveyor system in North America to change the way sand is delivered into 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. We now expect total oilfield megawatts deployed to exit the year between 180 and 200 megawatts.

John Turner: The majority of which will be under our 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 timelines continue to slip. We are also seeing growing interest in microgrid systems utilizing Atlas's battery technology. With this technology, we can hybridize customer locations to increase reliability. Our hybrid technology combines our portable 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.

John Turner: 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.

Blake McCarthy: 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.

Blake McCarthy: 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 H1 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.

Blake McCarthy: Despite the growth in rig activity, completion activity has merely 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 entering 2026, with well 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 well bores to be placed to enable simultaneous 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 H2 of this year, it has certainly put a cap on the activity of a few operators here to date, particularly in the Delaware Basin.

Blake McCarthy: As we mentioned on our last call, we don't expect frac fleet additions beyond the marginal few 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 counterseasonal way, as customers look to hit 2027 running. Pressure pumpers are displaying discipline and not bringing incremental equipment to market until pricing improves on their currently utilized fleets. With the lack of readily available equipment and crews on the sidelines, there's a significant lag—approximately two months—between when a customer can contract a 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.

Blake McCarthy: As we mentioned on our last call, we don't expect frac fleet additions beyond the marginal few 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 counterseasonal way as customers look to hit 2027 running. Pressure pumpers are displaying discipline and not bringing incremental equipment to market until pricing improves on their current utilized fleets. 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 a 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.

Blake McCarthy: Sand is the ultimate commodity, a little bit of oversupply quickly leads to the price falling to the marginal cost of production for the industry. 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 dramatically 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. Based on recent spot sales to customers experiencing non-productive 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.

Blake McCarthy: We're beginning to hear more anecdotes of competitor facilities struggling operationally as they attempt to ramp production. 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. Non-productive 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, 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.

Blake McCarthy: 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 well site 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, 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.

Blake McCarthy: Atlas provides a superior level of execution reliability to 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.

Blake McCarthy: 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 Q2, we made more than 4,600 autonomous deliveries, up 70% from Q1. Our partnership with Kodiak has begun to result in significant productivity gains, which we expect to accelerate as new operational milestones are reached that'll expand the operational footprint trucks are able to reach.

Blake McCarthy: 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, Q2 2026 revenue is approximately $293.2 million. Total proppant sales volume was flat sequentially at 5.6 million tons. Our average sales price per proppant for Q2 was approximately $17.70 per ton. Q2 cost of sales, excluding DD&A, were $221.3 million, consisting of $66.1 million in proppant plant logistics equipment operating costs, $1.4 million from power equipment costs, $140.7 million of service cost, $8.8 million in rental costs, and $4.3 million in royalties. For Q2, our per ton proppant plant operating costs were approximately $12.39, including royalties, down from Q1.

Blake McCarthy: OpEx per ton for Q3 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 Q2 on the back of record volumes, an improving rate environment, and strong utilization of the Dune Express. Q2 logistics margins were 14%. For Q3, 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 non-recurring items, was $24.3 million.

Blake McCarthy: SG&A is expected to average approximately $22 million to $24 million for Q3, 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 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 buildout of our private grid Power business. It is worth noting that approximately $110 million of second-half growth CapEx is connected to the buildout of our already contracted facility in Socorro that will begin generating meaningful cash flow in Q2 of 2027.

Blake McCarthy: SG&A is expected to average approximately $22 million to $24 million for Q3, 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 power generation equipment order. Maintenance CapEx was $14.6 million. CapEx for H2 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 is worth noting that approximately $110 million of H2 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 2027.

Blake McCarthy: 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 and plans. Maintenance capital spending for our standard logistics business is expected to average approximately $5 million to $7.5 million per quarter in H2 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 standard logistics business is more than enough to satisfy our upcoming capital needs.

Blake McCarthy: Looking ahead to Q3, overall sand and logistics sales volume remain the biggest variable. While we expect continued improvement in our production costs at PowerSand, 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 Q4 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.

Bud Brigham: 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. 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 multi-stage fracking in the Bakken nearly 20 years ago. Most people did not believe horizontal fracking would work in oil. Over the next five years, we not only proved them wrong, we led the way, delivering superior production and economic performance. About five years later, we did it again with Brigham Resources in the Permian.

Bud Brigham: Eight 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. Again, just three 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 good at them. Nobody builds large-scale energy infrastructure as successfully as Atlas. 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.

Bud Brigham: Eight 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. Again, just three 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 good at them. Nobody builds large-scale energy infrastructure as successfully as Atlas. 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.

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

Operator: Thank you. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. We ask that you please limit yourself to one question and one follow-up question. Our first question is from James Rollyson with Raymond James. Please proceed.

Jim Rollyson: Hey, good morning, guys. John, your commentary 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 the placing that capacity with two or three or four customers is a departure. I'd love to just get a little more color there on what we can expect coming through the H2.

John Turner: Yeah, 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 de-risked and those timelines de-risked. 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 billion-dollar deals with very long durations that takes a long time to negotiate. They are also running these deals, or for the power deals, they're also running those in parallel with these data center lease negotiations, which are pretty complicated as well, if not more complicated.

John Turner: 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 can be signed. There's a lot of moving parts there. 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. I'm talking about what we were seeing, say, six months ago. Obviously, very positive on our standpoint. We won't be announcing any deals until we have a contract signed. We are working on those.

Jim Rollyson: Got it. Appreciate that. As a follow-up, maybe for Blake—can you expand a little bit, Blake, on the volume guidance? Pretty wide range, obviously, for Q3. I guess just trying to understand how much of that is the customer breaks versus you electing to maybe hold the line on volumes to get better pricing going into next year. Tied to that is how comfortable you are with the Q4 implied ramp.

Jim Rollyson: Got it. Appreciate that. As a follow-up, maybe for Blake, can you expand a little bit, Blake, on the volume guidance? Pretty wide range, obviously, for Q3. I guess just trying to understand how much of that is the customer breaks versus you electing to maybe hold the line on volumes to get better pricing going into next year. Tied to that is how comfortable you are with the Q4 implied ramp.

Blake McCarthy: Yeah. 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. Yeah, as you pointed out, there's a number of moving pieces in Q3. 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. 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. That's without incremental volume wins.

Blake McCarthy: However, the other impact is going to come from our shift in our commercial strategy, that's the one where there is a bit of a question mark, that's why you have that wide range. For more than a year, we've been following the playbook, which is, hey, you're the low-cost provider of a commodity and a service. When the market is oversupplied, 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, we've caused a lot of pain in the market. Much of our competition, they've laid off crews, they've cut maintenance spending to zero, to the point where some of them even have padlocks on the front gates.

Blake McCarthy: However, just because a mine is kind of limping along, doesn't mean that its theoretical sand isn't being bid in the projects. All of this theoretical nameplate capacity, what I call zombie mines, is being bid into customer tenders for sand. It's creating this perception that there's still an ample oversupply of sand in the market, we just simply don't think that's the case. We think that doesn't really matter until our customer base thinks it too. 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. 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.

Blake McCarthy: We have to create a catalyst for that light to get shown 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 get sand on-site. We make it an afterthought, and we've made it easy. It's a little bit of victim of our own success. When you do your job well, sometimes it gets taken for granted. Our expectations are that NPT, which we have tried to make a thing of the past in West Texas, is about to become a pretty big issue for some operators. 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.

Blake McCarthy: We have to create a catalyst for that light to get shown 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 get sand on-site. We make it an afterthought, and we've made it easy. It's a little bit of victim of our own success. When you do your job well, sometimes it gets taken for granted. Our expectations are that NPT, which we have tried to make a thing of the past in West Texas, is about to become a pretty big issue for some operators. 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. The execution of the strategy, it's going to give us a hammer when it comes to negotiations.

Blake McCarthy: The execution of the strategy—it's going to give us a hammer when it comes to negotiations.

Operator: Our next question is from Stephen Gengaro with Stifel. Please proceed.

Stephen Gengaro: Thank you. Good morning, everybody.

Blake McCarthy: Morning, Stephen.

John Turner: Morning, Stephen.

Blake McCarthy: Morning, Stephen.

Stephen Gengaro: 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 MW deployed in the power business, and I think we're hearing numbers around $1 million for the generating equipment per MW 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?

John Turner: Thanks, Stephen. I'm going to let Tim jump in with all the details, because he's the guy at the coal face. Just to lead, this is something that we've been pretty vocal about for some time, in that it's really customer and project dependent. Hey, answer for me these questions: 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. The variables on the front end, they're apt to change, and thus the cash flow stream has to change, too. Tim, you want to jump into the deeps?

John Turner: Thanks, Stephen. I'm going to let Tim jump in with all the details because he's the guy at the coal face. Just to lead, this is something that we've been pretty vocal about for some time, in that it's really customer and project dependent. Hey, answer for me these questions. 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. The variables on the front end, they're apt to change, and thus the cash flow stream has to change, too. Tim, you want to jump into the deeps?

Tim Ondrak: Yeah. I think to

Tim Ondrak: Yeah. I think to, Blake gave some good color. To answer that question, the CapEx ranges we're seeing on projects can be anywhere from $1.5 million a megawatt to $two and a half million a megawatt. Again, those are really informed by what is the system intended to do, versus cost inflation. It's really scope inflation. 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. There's a lot of difference in a system that's designed to five nines versus three nines. We're seeing a little bit more thought go into what actually works, what's deliverable, and what's cost efficient in that case. 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.

Tim Ondrak: Blake gave some good color. To answer that question, the CapEx ranges we're seeing on projects can be anywhere from $1.5 million a megawatt to $two and a half million a megawatt. Again, those are really informed by what is the system intended to do, versus cost inflation. It's really scope inflation. 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. There's a lot of difference in a system that's designed to five nines versus three nines. We're seeing a little bit more thought go into what actually works, what's deliverable, and what's cost efficient in that case.

Tim Ondrak: 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.

Blake McCarthy: Yeah.

Stephen Gengaro: Okay.

Blake McCarthy: I think the key thing, Stephen, is that we're not necessarily seeing cost inflation as much as we're seeing that scope expansion. I think the hyperscalers have got more sophisticated, as Tim pointed out. They've added significant deal/procurement talent, which is they are getting smarter about the US dollars they're spending, where they're like, very much the, Hey, what do we need versus what do we want?

Stephen Gengaro: Got it. Okay. That makes sense. When we think about, and you talked a little bit about your balance sheet liquidity and 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. Obviously, given the dynamics you just mentioned, it is going to vary a little bit by which projects are signed, but how do we think about that?

Blake McCarthy: Yeah. During Q2, we did make some large payments for the initial order of Caterpillar generators we are receiving this year. As I said in the prepared remarks, we still have another $200 million of CapEx planned for the back half of the year, and 90%+ of that is going to the rest of the Caterpillar deliveries, and also down payments on our 2027 orders and ancillary equipment for our currently under construction deployment of Socorro and some other longer lead time items for other projects. Thinking about the liquidity, following the convertible raise in April, and the Q2 Caterpillar payments, we currently have approximately $168 million of cash on the balance sheet and approximately $125 million of undrawn capacity on our ABL.

Blake McCarthy: Additionally, I think it is key to reiterate that the CapEx for our standard logistics will now truly reflect the low capital intensity nature of that business. We are effectively done with the major CapEx projects we had planned for that business this year. CapEx for that business steps down to that five to seven and a half million dollar range for that business moving forward. Additionally, the CapEx cycle for our oil field power business has also matured. Both of those businesses are going to start spitting off cash. We are more than good when it comes to our near-term obligations. That is not to say we will not need incremental capital for the projects we are currently negotiating. We have already, in fact, made significant equity investments into those prospective projects.

Stephen Gengaro: Great. Okay. Thank you for the details.

Operator: Our next question is from Doug Becker with Capital One. Please proceed.

Doug Becker: Thank you. It seems like you are having some good success on the oil field power side of the business. Just curious if there is any consideration to deploy some more capacity into that. Presumably, you could have either shorter-term returns with the power contracts, whereas the longer-term data center–related contracts can take a while to finalize. Just wanted to get your thoughts on balancing the data center business versus maybe some shorter-term oil field work.

Doug Becker: Thank you. It seems like you are having some good success in the oil field power side of the business. Just curious if there is any consideration to deploy some more capacity into that. Presumably, either 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 oil field work.

Blake McCarthy: Yeah, go ahead, Tim.

Tim Ondrak: Yeah, 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 six months. We want to deploy those with some tenor. We want to deploy them where we've got some density. That's how we pick up efficiencies and continue to operate that business. It's a great business. The levers to scale that business are much shorter than the levers to scale a business that's supporting industrial power data centers. To answer your question, it really continues to be opportunity-driven. When we've got good relationships with good customers that have an outlook for needing those assets for a period of time that we like, we'll continue to deploy into that space.

Tim Ondrak: Yeah, I think we'll continue to deploy assets into the oil field power space. We've become a lot more selective about that over the last six months. We want to deploy those with some tenor. We want to deploy them where we've got some density. That's how we pick up efficiencies and continue to operate that business. It's a great business. The levers to scale that business are much shorter than the levers to scale a business that's supporting industrial power data centers. To answer your question, it really continues to be opportunity driven. When we've got good relationships with good customers that have an outlook for needing those assets for a period of time that we like, we'll continue to deploy into that space.

Doug Becker: That sounds good. Maybe switching gears to the logistics business. Margins in March were kind of the mid-teens, finished below 13% for the full Q2. Everything seems to be lining up to really favor the Dune Express. Kind of curious why we're not seeing margins maybe improve more than just kind of solidly into double digit, going forward this year.

Blake McCarthy: Yeah. For the Q2 moving pieces, there is a lag in terms of, as I talked about, third-party carrier rates continue to march up. The over-the-road national freight market continues to strengthen, and that starts to pull sub-drivers out of West Texas. 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. That actually is a tailwind on pricing. As you look ahead to the H2, it's more a knock-on effect of, again, there's kind of some flex in that guidance, and that's related more to, it's tied to the volume guidance on the sand side, where obviously there's a fixed cost absorption piece of that. Again, it's loose guidance based around more like, "Hey, we're drawing this line in the sand.

Blake McCarthy: We're starting to move rates." We think that there might be a quarter of kind of a, hey, this kind of pushing the market and an initial reaction, then finishing off with a strong Q4.

John Turner: We are seeing tightening in the trucking market.

Blake McCarthy: Sure.

Doug Becker: Got it. Thank you.

Operator: Our next question is from Scott Gruber with Citigroup. Please proceed.

Scott Gruber: Yes, good morning. Appreciate the pricing discipline here as demand improves. I am trying to get a sense of what this could mean for your average pricing. There is something like $4 a ton spread between some of the contracts you have coming into the year and more recent sales. Just thinking through, if the market comes to meet you at your line, does your average pricing as you head into 2027, does it kind of stay flat around the $18.50 you posted in Q2? Is it trending higher? Just trying to get a sense of where the realized price could go given the dynamics that you have in the book today.

Blake McCarthy: Thinking about 2027 pricing—obviously, we're not going to guide that yet. But, as you touched on, what we're trying to do is position ourselves to strengthen our position come RFP season, where, like I said, we're trying to shine a light on the true productive capacity of the market. We do have a significant portion of the book turning over in 2027. In the event that we are able to achieve the pricing moves, the increases that we were looking for, that would result in accretive pricing to the average price of sand.

Blake McCarthy: Thinking about 2027 pricing? Obviously, not going to guide that yet, but what we're trying to do, as you 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 in it for 2027. In the event that we are able to achieve the pricing move, the increases that we were looking for, that would result in accretive pricing to the average price of sand.

Scott Gruber: Got you.

Q2 2026 Atlas Energy Solutions Inc Earnings Call

Request DemoDemo

Atlas Energy Solutions Inc

Earnings