Atlas Energy Solutions Inc.

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. 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.

Hello and welcome to the Atlas Energy Solutions conference call and webcast for the second quarter of 2026. With us today are John Turner, President and CEO, Blake McCarthy, CFO, Tim Ondrak, President of Power, and Bud Brigham, Executive Chair. John, Blake, and Bud will be sharing their comments on the company's operational financial performance for the second quarter of 2026, after which we will open the call for Q&A. Before we begin our prepared remarks, I would like to remind everyone that this call will include forward-looking statements as defined under the U.S. 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 can learn more about these risks in the annual report on Form 10-K filed with the SEC on February 24, 2026 and our quarterly report on Form 10-Q for the first quarter and current reports on Form 8-K and other SEC filings. You should not place undue reliance on forward-looking statements. 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 gap reconciliation comments and calculations in yesterday's press release. With that said, I will turn the call over to John Turner.

Thanks, Kyle. For the second quarter, Atlas generated revenue of 293.2 million and adjusted EBITDA 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 of 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, so it's primary, permanent power to large-scale users, principally data centers. We signed our first contract in that division this quarter, and our global framework agreement with Caterpillar supports its growth. The second quarter was highlighted by the execution of our first behind-the-meter contract, a 120-megawatt power purchase agreement with a subsidiary of an investment-grade technology infrastructure provider. The economics are as follows. Total project capital is approximately $190 million. We expect the contract to generate approximately $55 million of adjusted free cash flow on an annualized basis once the permanent facility is operating. This is a cash on cash payback of less than 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, 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. We begin installing Atlas equipment for the permanent plant in the third quarter. Commissioning begins in the fourth quarter. The 120-megawatt facility electrifies at the end of the first quarter of 2027. and we began recognizing revenue on this new system in the second quarter of 2027. That sequence is the whole point. This project demonstrates Atlas' full solution approach to the behind-the-meter market, providing customers with a one-call option to solving their power procurement issues in every phase of a project's lifecycle, from powering the pivotal early-stage ramp-up to providing power through the life of the facility. The commercial opportunity set for the permanent behind-the-meter power continues to expand rapidly. As demand for compute capacity explodes with the evolution of AI, we have seen the urgency of our commercial negotiations rise. As the frontier models grow in complexity and ability, the need to accelerate access to token generation rises. The priority placed on access to power is best exemplified by the hyperscalers continuing to build out their internal procurement teams where they have added seasoned power professionals that have accelerated and focused contract negotiations. Over the past few months, we have seen the nature of the power deals we are pursuing evolve from both a size and duration perspective. When we entered into our framework agreement with Caterpillar, we assumed it would take eight 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. 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 eight to ten projects. Additionally, we have seen an increasing appetite, even need, from our prospective customers for longer tenor 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. 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.