Executive Summary

Q1 2024 delivered strong top-line growth post Hi-Crush acquisition: total sales rose 37% q/q to $192.7M; Adjusted EBITDA was $75.5M (39% margin) while net income was $26.8M (14% margin) .
Mix shifted to services (logistics) and non-recurring costs elevated SG&A ($10.6M transaction costs, $4.2M stock comp), compressing margins versus prior periods; management flagged near-term margin pressure before improving in 2025 with Dune Express .
The Board increased the quarterly dividend 5% to $0.22/share (base $0.16, variable $0.06), payable May 23, 2024; management emphasized ongoing return of capital and confidence in 2024/2025 execution .
Kermit facility fire (April 14) was rapidly mitigated; plant reopened within 11 days and expected fully restored by end of Q2; management guided a Q2 EBITDA impact of $20–$40M but asserted no impact to Dune Express timeline (Q4 2024) .
Stock catalysts: execution on Kermit rebuild and containment of Q2 impact, continued contracting at mid-20s $/ton, commissioning milestones for dredges in Q2/Q3, and visible Dune Express progress toward Q4 start-up .

What Went Well and What Went Wrong

What Went Well

Scale benefits and integration momentum: service sales surged 93% q/q to $79.2M, aided by increased active jobs and the 27-day contribution from Hi-Crush; volumes rose to 3.9M tons (+54% q/q) .
Operational resilience at Kermit: facility reopened 11 days post-incident via temporary loadout; management expects full restoration by end of Q2; no impact to Dune Express timing .
Strategic initiatives advancing: two new dredges floated and commissioning slated by end of June; Dune Express construction “on time and on budget,” with commissioning planned late Q3/early Q4 .

Notable quote: “We are already realizing benefits from the [Hi-Crush] transaction through increased scale… Our response to the recent mechanical fire at our Kermit facility was swift and decisive… We expect to continue servicing our customers while we finish up the repairs” — John Turner, CEO .

What Went Wrong

Margin compression and cost inflation: cost of sales (ex DDA) rose 60% q/q to $106.7M, primarily Hi-Crush contribution; SG&A jumped 114% q/q to $29.1M on $10.6M non-recurring transaction costs and $4.2M stock comp .
Pricing headwind: average sales price ~$29/ton in Q1, below Q4 and indicative of lower contracted/spot pricing; management is signing 2024 contracts “mid-20s” $/ton .
Near-term EBITDA impact: guidance for a $20–$40M Q2 EBITDA headwind due to Kermit (third-party volumes, lost spot sales, higher temporary loadout OpEx), though insurance expected to cover rebuild costs (minus $250k deductible) .

Financial Results

Metric	Q1 2023	Q4 2023	Q1 2024
Total Sales ($USD Millions)	$153.4	$141.1	$192.7
Net Income ($USD Millions)	$62.9	$36.1	$26.8
Net Income Margin (%)	41%	26%	14%
Adjusted EBITDA ($USD Millions)	$84.0	$68.7	$75.5
Adjusted EBITDA Margin (%)	55%	49%	39%
Diluted EPS ($)	$0.03	$0.36	$0.26
Cash from Operations ($USD Millions)	$54.2	$85.5	$39.6
Adjusted Free Cash Flow ($USD Millions)	$79.3	$56.5	$71.1
vs Estimates (Sales, EPS)	N/A – S&P Global consensus unavailable	N/A – S&P Global consensus unavailable	N/A – S&P Global consensus unavailable

Segment Breakdown

Segment ($USD Millions)	Q1 2023	Q4 2023	Q1 2024
Product Sales	$128.1	$100.0	$113.4
Service Sales	$25.3	$41.2	$79.2
Total Sales	$153.4	$141.1	$192.7

KPIs

KPI	Q1 2023	Q4 2023	Q1 2024
Sales Volumes (million tons)	—	—	3.9
Avg Sales Price ($/ton)	—	~$39	~$29
Plant Operating Cost ($/ton)	—	$10.63	$10.88
Liquidity ($USD Millions)	—	—	$360.9
Cash & Equivalents ($USD Millions)	$352.7	$210.2	$187.1
Total Debt ($USD Millions)	—	$181.0 (term loan only)	~$481.0 (management disclosure)
Last-mile Crews (count)	—	—	28 (24 Permian); >50% volumes via last-mile
Weighted Avg Diluted Shares (millions)	57.4	100.2	103.8

Notes: Adjusted EBITDA excludes stock/unit-based compensation and non-recurring transaction costs; Q1 non-recurring transaction costs were $10.571M and stock comp $4.206M .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Adjusted EBITDA (Company)	FY 2024	$425–$475M (post Hi-Crush, issued 2/27/24)	No update on full-year; Q2 headwind below	Maintained FY; near-term pressure
EBITDA Impact from Kermit	Q2 2024	N/A	$20–$40M impact	New downside
Adjusted EBITDA Margin	2024 vs 2025	N/A	Decline in 2024 as logistics mix ramps; improvement in 2025 with Dune Express	Directional change
Dune Express Timing	2024	Q4 2024 “on time/on budget”	Reaffirmed Q4 2024; commissioning late Q3/early Q4	Maintained
Dividend per Share	Q2 2024	$0.21 (Q4 2023 total)	$0.22 (base $0.16 + variable $0.06); payable 5/23/24	Raised 5%
Maintenance Capex	FY 2025	$50–$60M	~$60M	Maintained upper bound
Pricing (Contracted)	FY 2024	Combined basis $26–$28/ton	Signing contracts mid-$20s/ton	Slightly lower vs 2023

Earnings Call Themes & Trends

Topic	Q3 2023 (Prior-2)	Q4 2023 (Prior-1)	Q1 2024 (Current)	Trend
Dune Express progress	On time/on budget; major materials ordered	On time/on budget; 90% materials ordered; $400M total	>200 workers; crossings completed; 95% belt staged; commissioning late Q3/early Q4	Advancing to commissioning
Dredge cost efficiency	New dredges mid-2024 to cut OpEx	Cost floor ~$6.5–7.5/ton when dredging	$3/ton OpEx reduction at Kermit; 2025 OpEx target ~$9/ton	Improving cost trajectory
Pricing & contracts	6.2Mt contracted for 2024; stratified market	Combined 2024 pricing $26–$28/ton; ~80% contracted	Contracts signed mid-$20s/ton; ~80% contracted volumes	Lower price, high contracted mix
Supply chain/operations	Logistics footprint expanding; drop-depots	120 trucks; logistics revenue growth	Kermit fire response; reopened in 11 days; no Dune impact	Resilience evidenced
Regulatory/legal	Dunes sagebrush lizard risk mitigated via CCA	—	—	Stable; no new issues
Capital returns	Dividend $0.20	Dividend $0.21	Dividend $0.22; buybacks not prioritized	Gradual dividend increases

Management Commentary

“The first quarter was a monumental one… closing of the Hi-Crush acquisition… We’re looking forward to the remainder of the year… we began producing sand from the eighth OnCore mine… Our response to the recent mechanical fire at our Kermit facility was swift and decisive” — John Turner (CEO) .
“No other proppant producer could have… continued delivering… the way Atlas has… We reopened the Kermit facility within just 11 days… expect… fully restored by the end of June” — Bud Brigham (Executive Chairman) .
“We are well on our way to a fourth quarter 2024 commercial in-service date for the Dune Express” — John Turner .
“We’re going to increase our dividend 5% to $0.22 per share… current annualized dividend yield of 4%” — John Turner .
“Once… two dredges [are] fully set up… probably around a $3 decrease in cost per ton… [and] ~$9 per ton OpEx [target] for next year” — John Turner .

Q&A Highlights

Kermit incident impact and recovery: Q2 EBITDA impact guided at $20–$40M; insurance expected to cover rebuild cost minus $250k; full operations expected in Q3 post ramp .
Cost roadmap: dredges expected to reduce OpEx by ~$3/ton at Kermit; longer-term company OpEx target ~$9/ton in 2025, with further synergy potential from integration .
Contracting and pricing: 2024 contracts being signed in mid-$20s/ton; ~80% of volumes contracted; mix shift to logistics (lower margin) expected in 2024 .
Dune Express contracting and adoption: customers enthusiastic; delivery crews in Delaware growing; multi-trailer and drop-depot buildout continues ahead of commissioning .
Capital allocation: focus on dividends over buybacks in near term; maintenance capex around $60M from 2025, enabling higher distributions once growth capex subsides .

Estimates Context

We attempted to retrieve S&P Global consensus (EPS and revenue) for Q1 2024; data were unavailable due to system limits. As a result, estimate comparisons are not provided. Values would have been retrieved from S&P Global if available.
Near-term estimate implications: management’s Q2 EBITDA impact ($20–$40M) and 2024 margin mix (higher logistics) suggest consensus should adjust downward for Q2 profitability and near-term margins, while 2025 margins should adjust upward on Dune Express start-up .

Key Takeaways for Investors

Near-term: expect a transitory Q2 EBITDA headwind ($20–$40M) from Kermit; monitor pace of rebuild completion (late June) and normalization in Q3 .
Mid-term: Dune Express commissioning late Q3/early Q4 and commercial start in Q4 is intact; margin uplift in 2025 from midstream-like logistics and dredge efficiencies is a central thesis .
Contracting/pricing: high contracted mix (~80%) de-risks volumes, but 2024 pricing mid-$20s/ton and logistics mix will pressure margins versus 2023; focus on volume resilience and execution .
Cash returns: dividend raised to $0.22/share; with growth capex peaking in 2024, 2025 maintenance capex (~$60M) supports increased distributions and deleveraging .
Integration benefits: Hi-Crush adds Midland presence and logistics scale; synergy opportunities (dredge mining, tie-ins) underpin cost reductions and throughput reliability .
Execution watchpoints: on-time dredge commissioning (by end of June), Dune Express construction milestones, contracting progression, and permanent Kermit repair .
Trading lens: Q2 print likely soft on EBITDA; constructive setup into H2 as Kermit normalizes and Dune Express nears commissioning; valuation could rerate on visibility to 2025 margin/cash flow profile .

Citations: All figures and statements are sourced from company filings and transcripts: .

Atlas Energy Solutions Inc. (AESI)·Q1 2024 Earnings Summary