Atlas Energy Solutions Inc.

Greetings. Welcome to Atlas Energy Solutions Incorporated first quarter 2024 financial and operational results conference 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 during the conference, 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, Vice President, Investor Relations. Thank you. You may begin.

Hello, and welcome to the Atlas Energy Solutions conference call and webcast for the first quarter of 2024. With us today are Bud Brigham, Executive Chairman, and John Turner, CEO, President, and Chief Financial Officer. Bud and John will be sharing their comments on the company's operational financial performance for the first quarter of 2024, after which we will open the call for Q&A. Before we begin our prepared remarks, I would like to remind everyone that the call will include forward-looking statements as defined under the U.S. securities laws. Such statements are based on the current information and management 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 outcome and results could differ materially. You can learn more about these risks in the annual report on Form 10-K we filed with the SEC on February 27, 2024, our quarterly reports on Form 10-Q, and our other SEC filings. You should not place undue reliance on forward-looking statements, and we undertake no obligation to update these forward-looking statements. We will also make reference to certain non-GAAP financial measures such as adjusted EBITDA, adjusted free cash flow, and other operating metrics and statistics. You will find the GAAP reconciliation comments and calculations in the morning's press release. With that said, I will turn the call over to Bud Brigham.

Thank you, Kyle, and thanks to everyone for joining us today for our first quarter conference call. In addition to reviewing our first quarter results, we'll spend some time this morning providing an update on the great progress we are making integrating High Crushing Atlas since the closing of that acquisition in early March. Additionally, we also need to discuss the recent fire at the Kermit facility, and perhaps more importantly, the impressive response from our team to maintain both safety on site and reliable supply of sand to our customers throughout the disruptive event. I will go ahead and state that no other profit producer could have possibly continued delivering profit to their customers the way Atlas has. Our differentiated scale, recently enhanced by our acquisition of High Crush and their great people, our associated production redundancies, and our geographically distributed production assets uniquely position Atlas to continue reliably serving our customers, even through rare, unexpected disruptions. and whether it's a fire, severe weather, or traffic accidents, disruptions do occur. Atlas makes the Permian supply chain more reliable and sustainable. Briefly reviewing the events, around noon on Sunday, April 14th, a fire broke out at our Atlas Kermit facility, damaging equipment involved in our feed system, which takes sand from the separation and drying process to our silos. Due to the quick actions of our employees and quick response from the West Odessa, Kermit, Monahans, and Andrews Fire Departments, the rest of the plant, including all production centers, was unscathed. This incident was limited to affecting our ability to load trucks at Kermit and did not impact our ability to produce sand. Thankfully, and most importantly, we quickly ascertained that all of our employees and vendors were safe and accounted for. I want to again thank the first responders and our team of wonderful employees here at Atlas for keeping everyone safe and limiting the damage to the plant. Within hours of the incident, our sales and supply chain teams began notifying our customers of the event and also began taking the steps to ensure their supply needs would continue to be met, resulting in uninterrupted service and zero sand-related non-productive time at customer well sites through the incident. Again, I think it's obvious that no other company could have accomplished this. In under 48 hours, mobile loadout equipment and mobile silos began showing up at our Kermit plant to lay the groundwork for a temporary loadout solution while we began conducting repairs. Within 11 days from the fire, we reopened the Kremit facility and began loading trucks with sand. Today, the Kremit facility is loading close to 6,000 tons of sand, which is about a third of our throughput prior to the incident. By the end of this month, we expect to receive all of the necessary equipment to completely rebuild the damaged feed system, and we expect the damaged portion of the Kremit plant to be fully restored by the end of June. This quick turnaround is another clear demonstration of Atlas's unique culture. Our exceptional team collaborated across our entire platform of distributed assets almost instantaneously. The pace at which they moved was almost shocking. To think that we reopened a current facility within just 11 days of the fire still seems unbelievable. But knowing the quality of our people, I know at this point that I shouldn't be surprised. When you partner with Atlas, you can count on quality and reliability, even under extreme circumstances. Again, it's thanks to our great people, our innovative culture, our unmatched scale, our relationships, and our diverse distributed assets that we are uniquely able to perform through these disruptions. I could not be prouder of how we have responded to this unexpected setback. With respect to the incident at Kermit, We wanted to provide more information about what happened and the improvements we are making to address the risk of a repeat event in the future. We see these events as opportunities to make Atlas better. First, now that we have completed a root cause analysis, there are a number of contributing factors that combined to result in the fire starting in the feed system between the plant and the silos. These factors included mechanical and process failures. We are responding by taking a number of actions to improve our systems and processes to protect us from the risk of reoccurrence. For example, in the near term, we have enhanced and increased inspections and preventative maintenance procedures. In addition, some of the technological enhancements in the design and construction of the Dune Express, specifically the multi-layered belt detection system and more advanced auto lubricating systems will be installed in our feed systems at the plants. This is important to spend a moment on. The five years of design and the significant investments in technology we've made in planning the Dune Express, particularly in automation around preventative maintenance events, addresses the risk of an incident like this occurring on the Dune Express. For example, In addition to the smart idlers we've been discussing previously, we will have dual monitors on the pulley bearings for two separate systems, one for preventative maintenance and the other for real-time monitoring and prevention of catastrophic failures, as well as dual monitors for belt detection and slippage with interlocks to stop the conveyor if the belt is loose or slipping. The system will be hardwired to shut down the conveyor if a fault is detected. Further, all pulley bearings will be auto-lubricated, which will mitigate the risk of incidents. Lastly on the Dune Express, monitors, sensors, and cameras will provide real-time data and security along the 42-mile conveyor route. I believe the Dune Express is likely the most technologically advanced bulk material conveyor ever built. Wrapping up my section. Subsequent to the closing of the High Crush acquisition, the board of directors named John Turner as chief executive officer, effective March 6, 2024. As executive chairman, I will remain very active in the company's operations, continuing to provide leadership ideas and vision to the company's management team. And I will continue to focus on identifying innovative strategic opportunities. John and I were founders of Atlas back in 2017, and as a proven oil and gas entrepreneur, John has been and will continue to lead our outstanding management team to successfully manage day-to-day operations while building Atlas into the premier profit and logistics company in our highly competitive industry. Atlas has a big future, and I believe John's leadership and executive experience Working with the rest of our outstanding management team will result in continued innovation and growth to continue creating shareholder value. In addition to the much-deserved promotion of John Turner, effective May 13th, Atlas is pleased to announce the appointment of Blake McCarthy as Chief Financial Officer of Atlas. Blake most recently served as President of NOV Grant Pratico. We welcome Blake aboard. and are excited to have his leadership and expertise to help guide Atlas into the future. With that, I will now pass the call over to John.