Atlas Energy Solutions (NYSE:AESI) reported third-quarter revenue of $267.8 million and adjusted EBITDA of $30.3 million, representing an adjusted EBITDA margin of 11.3%, as lower sand volumes and higher operating costs per ton weighed on results.
President and CEO John Turner said results came in at the low end of the company’s guidance range after Atlas declined to match low-priced bids from certain competitors. The decision reduced third-quarter sales volumes but was intended to protect pricing discipline and make room for higher-quality customer demand, he said.
“We held our pricing and let some customers go rather than match bids from competitors selling below where we were willing to sell,” Turner said. Atlas expects sand volumes and profitability to improve in the fourth quarter.
Sand volumes expected to recover
CFO Blake McCarthy said overall sales volumes and Dune Express volumes declined during the quarter because of vacancies created by the rejected bids. Sand revenue fell 8.3% sequentially, while overall plant operating expenses rose to $13.96 per ton, including royalties, particularly at the company’s Kermit facility.
Atlas used the lower activity at Kermit to complete work on its water supply and wet shed. McCarthy said the work led to meaningfully improved output and costs in October. The company expects operating expenses per ton to improve to about $13 in the fourth quarter and remain at that level into 2027.
The company expects fourth-quarter sales volumes of 5.7 million to 6.1 million tons, compared with 5.4 million tons in the third quarter. Atlas also said it had line of sight to more than 23 million allocated tons for 2027, at pricing roughly in line with 2026 levels. McCarthy said that figure could serve as a baseline expectation for next year’s volumes.
While sand pricing remains in the $16-to-$18-per-ton range, management expressed a more constructive outlook for logistics pricing amid driver shortages in West Texas. Atlas began passing through higher rates during the third quarter. Logistics margins were about 11%, excluding expenses related to the closure of its Northeast region, and are expected to increase to roughly 14% to 15% in the fourth quarter.
Turner said the company expects “double-digit increases” in logistics pricing next year as trucking companies find more attractive opportunities serving data-center construction and other markets.
Autonomous trucking fleet expands
Atlas had received 37 Kodiak-powered autonomous trucks as of the end of the third quarter. The fleet completed more than 9,000 autonomous deliveries during the period, nearly doubling sequentially from the second quarter.
The company expects to operate about 45 Kodiak trucks by year-end and 100 by the middle of next year. Atlas is targeting public-road operations by mid-2027, subject to regulatory and operating milestones. Management said the autonomous-trucking program, combined with the Dune Express system, could strengthen the company’s delivery reliability as driver availability tightens.
Data-center power projects advance
Atlas continued to emphasize its expansion into behind-the-meter power for data centers. Turner said the company’s strategy involves securing generation equipment, executing energy services agreements, arranging long-term financing and delivering power.
During the quarter, Atlas signed two cost reimbursement agreements, or CRAs, with a frontier artificial-intelligence laboratory. One agreement covers balance-of-plant equipment for a substantial portion of the generation equipment Atlas secured through its Caterpillar global frame agreement. The other covers an additional 283 megawatts of generation equipment.
The customer’s commitment under the CRAs helped Atlas arrange a $424 million bridge facility with Goldman Sachs and Barclays. The company had drawn $171 million as of the call and expects further draws during the fourth quarter as progress payments come due. The facility is priced at SOFR plus 250 basis points.
Atlas said it was in late-stage commercial negotiations for two significant data-center projects with the AI lab. Management expects both energy services agreements to be signed by year-end, saying that timing is necessary to support the projects’ targeted first power in late 2027. The projects are expected to ramp through 2028, with one continuing into 2029.
McCarthy said the anticipated 15- to 20-year contracts would include fixed monthly capacity charges, with an additional variable component designed to cover operating and maintenance costs. He said comparable long-duration projects can support leverage of up to 90%, though Atlas expects to be more conservative. Management discussed a potential financing mix of 80% to 90% debt and 10% to 20% equity.
Turner said Atlas does not plan to issue equity for the projects before the energy services agreements are executed. Any equity or equity-linked securities would complement debt financing, with the company seeking to minimize dilution and prioritize cash-flow accretion. Atlas continues to expect adjusted EBITDA paybacks of five to six years and unlevered returns in the mid- to high-teens for the projects.
Socorro construction and capital outlook
Atlas also provided an update on its Socorro project, a permanent 120-megawatt plant supported during construction by a 26-megawatt mobile facility. All generator pads have been poured, 15 of 30 generators have been delivered, and construction of foundations and underground electrical infrastructure has been completed, according to Turner.
The company expects the permanent plant to be operational at the end of the first quarter and to begin recognizing revenue early in the second quarter. Once operating, the facility is projected to generate $50 million to $55 million in annual adjusted free cash flow.
Atlas said Texas has paused air-permit approvals for data-center projects. One Atlas permit was submitted before the pause and is currently on hold, according to Tim Ondrak, president of the company’s power business. Management said the company could move projects and dedicated equipment to other states if the Texas pause becomes extended.
Third-quarter growth capital expenditures totaled about $181.9 million, including roughly $160 million related to the company’s November 2025 equipment order and the Socorro build-out. Maintenance capital expenditures were $5 million. Atlas expects fourth-quarter capital spending of $315 million to $345 million and now expects full-year capital expenditures to approach $700 million.
For the fourth quarter, Atlas forecast adjusted EBITDA of $40 million to $50 million, supported by expected sequential improvements across its sand, logistics and power operations.
About Atlas Energy Solutions (NYSE:AESI)
Atlas Energy Solutions Inc (NYSE:AESI) is an energy-services company that supplies proppant and logistics solutions to oil and natural gas producers. Its primary products include frac sand, which is used in hydraulic fracturing to help keep underground rock fractures open and improve the flow of hydrocarbons.
The company operates sand mines, processing facilities, and related infrastructure in the Permian Basin of West Texas. In addition to producing and selling proppant, Atlas provides transportation, storage, and last-mile delivery services designed to move sand from its facilities to well sites.
