Atlas Energy Solutions Inc (AESI) Q2 2025 Earnings Call Transcript

Atlas Energy Solutions Inc (NYSE: AESI) Q2 2025 Earnings Call dated Aug. 05, 2025

Corporate Participants:

Kyle D. Turlington — Vice President of Investor Relations

John G. Turner — President, CEO & Director

Chris Scholla — Executive VP & President

Blake McCarthy — Chief Financial Officer

Ben M. Brigham — Founder & Executive Chairman

Tim Ondrak — Corporate Participant

Unidentified Speaker

Analysts:

Stephen David Gengaro — Analyst

Derek Podhaizer — Analyst

Jim Rollyson — Analyst

Don Crist — Analyst

Joshua W. Jayne — Analyst

Jeffrey Michael LeBlanc — Analyst

Eddie Kim — Analyst

Presentation:

Operator

Greetings, and welcome to the Second Quarter 2025 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. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Kyle Turlington, Vice President, Investor Relations. Thank you. You may begin.

Kyle D. Turlington — Vice President of Investor Relations

Hello, and welcome to the Atlas Energy Solutions conference call and webcast for the second quarter of 2025. With us today are John Turner, President and CEO; Blake McCarthy, CFO; Chris Scholla, EVP and President of Sand and Logistics; and Ben Brigham, Executive Chairman. We will be sharing our comments on the Company’s operational and financial performance for the second quarter 2025, 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 Securities 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 comments 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 25th, 2025. Our Quarterly report on Form 10-Q for the first quarter, our other quarterly reports on Form 10-Q and current reports on Form 8-K 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 yesterday’s press release. With that said, I will turn the call over to John Turner.

John G. Turner — President, CEO & Director

Thank you, Kyle. For the second quarter, Atlas generated $70.5 million of adjusted EBITDA on $288.7 million of sales, representing a 24% adjusted EBITDA margin. Our second quarter results at the low end of our $70 million to $80 million guidance range reflected the well documented slowdown in Permian Basin completion activity resulting in a slight sequential decline in volumes. This was primarily driven by customer pauses, extended delays between pads and schedule shifts rather than outright crew reductions as operators navigated recent commodity price uncertainty.

For the third quarter, we anticipate a sequential increase in volumes supported by continued market share gains and the strength of our high quality customer base despite persistent challenges in the West Texas oilfield services market through the end of 2025. The Permian Frac crew count, which averaged over 90 active crews in 2024 and peaked at approximately 95 crews by March of 2025 has declined to around 80, the lowest since 2017 excluding the COVID downturn.

This reduction has a magnified impact due to significant Frac efficiencies gains in recent years. Daily sand pump for fleet has more than quadrupled since Atlas’s founding in 2017 and risen approximately 25% since 2023. As a key enabler of this industry transformation, Atlas benefits long term from increased sand consumption, but in today’s market where customers are delaying completions, each crew reduction or delay has a heightened effect.

These efficiency improvements drive better wells and returns for our customers, positioning Atlas as a primary beneficiary when completion activity rebounds. As the Permian’s largest sand and logistics provider, our scale and the cost efficiencies of the Dune Express provide clear operational and economic advantages over competitors, though we remain exposed to further declines in activity. Despite an approximate 15% decline in sand volumes from our first quarter exit rates, we anticipate year over year growth in annual sand volumes driven primarily by our $22 million committed tons for 2025. Based on our internal estimates, Atlas has expanded its market share from just 15% at the time of our IPO to the high 20s by 2024, bolstered by the high crush acquisition to approximately 35% of all sand sold today. As we prepare for the fall RFP season, we expect additional market share gains in 2026 as we secure contracts to optimize our productive capacity and maximize utilization of the Dune Express.

The synergies of our low cost mines and integrated logistics network provide a competitive edge in total delivered sand pricing, which we intend to leverage throughout the contracting season. Spot prices for West Texas sand remain in the mid to high teens, levels insufficient to justify continued reinvestment for much of the industry, particularly as mines face low utilization and challenges absorbing fixed costs. While the supply stack has been resilient until recently, we are now seeing competitors idling underutilized mines and reducing shift schedules.

We expect further supply rationalizations over the next few quarters and believe 2025 will mark the first year since the in-basin sand industries inception that total supply capacity contracts. Combined with rising per fleet sand intensity, this sets the stage for our pricing recovery when completion activity rebounce, a recovery for which Atlas is strategically positioned to capitalize on. The Dune Express is now fully operational with construction and commissioning completed on time, a milestone many consider ambitious.

Currently, the majority of the sand delivery from our Kermit plant utilize the Dune Express at our end of line and state line facilities, which has reduced public road traffic and emissions in the area. During the second quarter, we sent just over 1.5 million tons of profit down the conveyor. With the Dune Express’s operational efficiencies now tangible, customers are actively securing access to its benefits for 2026. Alongside 5 million tons already contracted for next year, we have identified over 12 million tons of additional sales opportunities, signaling strong demand.

There won’t be room for everyone. The second quarter of 2025 represents the first full quarter of our integrated power operations following the acquisition of Moser Energy Systems. The integration of Moser into the Atlas family has surpassed our expectations, reflecting the strong cultural alignment identified during the diligence process. We are increasingly optimistic about the growth potential of our power business. Our commercial team is actively evaluating over 200 megawatts of opportunities across commercial, industrial, microgrid and production support applications. The well documented surge in power demand across the broader economy has significantly expanded our potential customer base beyond our traditional oil and gas operators. As the cost of generating capacity rises in today’s market, our ability to deliver tailored, efficient power configurations to meet customer specific needs has driven strong traction within our existing customer base and into new sectors including manufacturing, technology and other industrial markets.

As we enhance our visibility in the broader power market, we anticipate further diversification of our customers end markets, creating growth opportunities for Atlas that mitigate the volatility of the oil and gas industry. A key commercial objective of the Moser acquisition is to extend the duration of our contracts in this business. While our sales team is securing longer term contracts with key oil and gas operators, the contract duration sought in these emerging markets are significantly longer, often exceeding a decade, a feature we view as highly attractive for stabilizing cash flows and reducing our exposure to historical cyclicality.

Our power team has achieved significant process in enhancing operational efficiencies and expanding manufacturing capacity at our Casper, Wyoming facility, all while maintaining minimal capital expenditure. As we finalize the integration of Moser Energy Systems, I am increasingly confident that our power business will serve as a critical growth driver for Atlas in 2026 and beyond. Following the close of the second quarter, we acquired PropFlow, a patented on-site profit filtration system that enables 24 hour continuous pumping, which Chris Sholl will discuss in further detail here shortly.

Profit filtration has become an increasingly critical aspect of proppant delivery and well site efficiency and the addition of crop flow to the Atlas portfolio positions us with what we believe is the industry’s leading filtration system. I’d like to take a moment to warmly welcome the PropFlow team to the Atlas family. In closing, while we anticipate ongoing challenges in the West Texas oilfield services market through the end of 2025, we believe these conditions will accelerate the necessary steps to rebalance the industry.

For Atlas, these challenges also create significant opportunities. The acquisition of Moser Energy Systems in early 2025 and ProFlow more recently demonstrate our ability to capitalize on difficult market cycles, enabling us to pursue strategic acquisitions and enhance our market position and through cycle earnings potential. We expect our growing structural advantage in sand and logistics to deliver differentiated performance, which will become increasingly evident as industry conditions improve.

Meanwhile, our power business is well positioned to drive sustained growth for Atlas and capitalizing on the secular tailwind shaping the broader power market. Now, I will turn over the call to our EVP and President of Sand and Logistics, Chris Sholla.

Chris Scholla — Executive VP & President

Thanks John. At Atlas, our focus isn’t just selling sand. It’s about unlocking the most cost effective, scalable businesses through logistics, automation and integrated infrastructure. The Permian market is beginning to see that very clearly. We delivered another quarter of record operational performance driven by our focus on customer alignment, relentless pursuit of efficiencies and disciplined capital execution. In May, our Kermit plant and network of OnCore mines both set all time production records. The Dune Express is fully commissioned and has removed almost 8 million sand truck miles from the Delaware Basin public roadways.

Our logistics team set a quarterly volume record of 5.5 million tons delivered to the well site. We have now shipped almost 1,000 truckloads autonomously and this quarter, we achieved our first autonomous multi trailer delivery. Atlas continues to position itself as the logistics and infrastructure backbone of the Permian Basin. Let’s talk about the Dune Express. This system is not just a cost play, it’s a strategic unlock.

For years, a segment of the customer base has been locked in and tethered to legacy providers by high switching costs, fragmented logistics and opaque pricing models. The Dune is changing all of that. By eliminating long haul trucking, reducing delivery volatility and compressing total landed cost, we’re now opening doors to customers in the Delaware Basin that have never sourced a single ton directly from Atlas.

All while reducing the commercial truck traffic on the roads and therefore reducing our industry’s impact on the community. Let me be clear about our long term strategy. We are not content to be a vendor in the portfolio of our customers. Our goal is 100% of the work, 100% of the time. That means when an operator completes a pad in the Permian, Atlas is responsible for the sand from the mine to the wellhead. The reason is simple. Integration outperforms coordination.

We know that if we can control the mine, the inventory, the delivery system and the final hand-off at the well site, we can outperform on cost, reliability and safety. By controlling that entire chain, we are positioned to deliver more than just tons. We can deliver certainty to our customers. This integration is why we are so excited to add PropFlow to our existing portfolio of innovative technologies and further enhance our customer value proposition.

PropFlow is designed to fully eliminate proppant debris at the well site, while also removing the equipment and associated maintenance from the red zone. This technology enables continuous pumping operations for our customers and makes it possible to virtually eliminate operational disruptions. PropFlow’s existing customer base already features blue chip operators and we expect that roster to grow as we support the expansion of its market penetration. Increasingly, our customers are recognizing that we are an operational extension of their completions programs. In our customer base, we’re seeing a clear trend away from spot market relationships and towards fully integrated multi pad structures where Atlas owns a full delivery experience. Approximately 60% of our active last mile crews rely on Atlas to deliver 100% of the sand required for their basin specific completions program. It highlights the trust we have built around execution with our customers and we expect this to shift no stop.

It highlights the trust we have built around execution with our customers and we expect this to shift to deeper, stickier relationships to accelerate as we scale. I will now turn the call over to our Chief financial officer, Blake McCarthy.

Blake McCarthy — Chief Financial Officer

Thanks, Chris. In Q2 2025, Atlas generated revenues of $288.7 million and adjusted EBITDA of $70.5 million, a 24% margin. EBITDA was at the low end of our $70 million to 80 million guidance range as volumes came in slightly below expectations as operator schedule shifts deferred some second quarter volumes into the third quarter. Additionally, cash SG&A was elevated during the quarter due to third party consulting costs and litigation expenses.

Economic and commodity price uncertainty is eliciting cautious behavior from our customers, which led several to defer scheduled completions from the second quarter to later in the calendar year. We expect third quarter volumes to be up in the mid single digits sequentially, with August and September slated to be our strongest volume months of the year, driven by recent customer wins and new Dune Express trials.

We expect our power business to generate incremental sequential growth driven by increased unit deployments. However, a forecasted decline in our average proppant sales price and a reduction in shortfall revenue is expected to more than offset these gains, resulting in a sequential decline in consolidated revenue and EBITDA during the third quarter. Breaking down revenue for the second quarter, proppant sales totaled $126.3 million, logistics contributed $146.4 million and power rentals added $16 million.

Proppant volumes were 5.4 million tons, down approximately 4% from the levels in the first quarter. Average revenue per ton was $23.29, boosted by shortfall revenue from unmet customer pickups. Excluding this, the average price was $21.17 per ton. As of today, we expect our average sales price to decline to approximately $20.50 during the third quarter.

Total cost of sales excluding DD&A was $195.9 million, comprised of $60.9 million in plant operating costs, $123.9 million in service costs, $5.9 million in rental costs and $5.2 million in royalties. Per ton plant operating costs fell to $11.23, excluding royalties. Down from Q1 with further normalization expected in Q3 due to higher anticipated volumes and further operational efficiencies. Cash SG&A for the quarter was $25 million, which included cash transaction expenses and other non-recurring items of $2.2 million netting to $22.8 million on a normalized basis. SG&A is expected to remain around the $22 million to $23 million range in the third quarter due to the aforementioned elevated third party consulting costs and litigation expenses.

DD&A was $40.6 million, net income was negative $5.6 million and earnings per share was a loss of $0.04. Operating cash flow for the second quarter was $88.6 million, a considerable improvement relative to levels in the first quarter, driven primarily by an improvement in working capital intensity that was in turn driven by an improvement in customer collections. Adjusted free cash flow, defined as adjusted EBITDA less maintenance CapEx was $48.9 million or 17% of revenue.

Total CapEx during the second quarter was $34.1 million, consisting of $12.5 million in growth CapEx and $21.6 million in maintenance CapEx, bringing total CapEx for the first half to approximately $69.6 million. We continue to budget $115 million of total CapEx for 2025 and expect our second half CapEx to decline for first half levels. We are maintaining our dividend of $0.25 per share which represents a 7.9 yield as of Friday’s close.

I’ll now turn the call over to our Executive Chairman, Ben Brigham for some closing remarks.

Ben M. Brigham — Founder & Executive Chairman

Thanks, Blake. 40 years in the oil and gas industry imparts a hard knocks education that no classroom can match. Boom and bust cycles drive home a crucial lesson, while upswings rain profits on nearly everyone. True resilience and value are forged in the downturns when prices crater and competitors crumble. This hard won wisdom is the foundation of Atlas. We didn’t build Atlas assuming perpetual $40 sand prices, we supply one of the most volatile commodities in existence.

Recognizing that reality, we engineered Atlas differently as a low cost, high margin operation designed not just to survive volatility, but to thrive amid it. Our reputation as West Texas most reliable proppant supplier wasn’t earned during the easy post founding years. It was forged in the crucible of the 2020 covid downturn when we honored every customer commitment even as competitors abandoned theirs. We’ve only grown stronger since the pandemic.

As the lowest cost proppant producer and a state of the art logistics provider, we boast unique differentiated advantages including the Dune Express, autonomous and multi-trailer trucking and advanced power solutions. Leveraging these strengths while others struggle to stay afloat in the trough we’re playing offense. As we’ve discussed, Atlas hasn’t just expanded our market share in profit and logistics, we’ve also entered new markets. Recent moves like the Moser acquisition earlier this year and last week’s PropFlow deal underscore how we’re uniquely positioned to create value while our competitors are constrained. I can’t predict when this cycle will turn, but I know Atlas will emerge even stronger, poised to capture outsized financial rewards when inevitably does.

That concludes our prepared remarks. Now we’ll open it up for Q&A.

Questions and Answers:

Operator

Thank you. We will now be conducting a question and answer session. [Operator Instructions] Our first question comes from the line of Stephen Gengaro with Stifel. Please proceed with your question. Stephen, are you on mute?

Stephen David Gengaro

Oh, sorry. I appreciate that. Sorry about that. I was on mute. So thanks for taking the question. Good morning. I’d like to start with, you mentioned, we all know the Permian’s been pretty soft. You mentioned where spot prices are, but then you alluded to sort of the share gains that you’ve been seeing. Can you just talk a little bit about more what’s driving those share gains and how you think that plays out over the next several quarters?

John G. Turner

Yeah, thanks, Stephen. This is John, and thanks for the follow up. For 2025, our Permian Frac crew count, peaked at around 95 in the first quarter. Today our data tells us we’re around 80 crews. Others, I know there’s been some other reporting in the market, so that says it’s set. There’s 70 crews active crews out there. So anywhere between 70 and 80. Our, the number of frac crews that we’re supplying sand and logistics on has been pretty flat since the first quarter, say roughly ’24, ’25 depending on just the week.

So obviously flat with the first quarter when there were, 95 crews running. We estimate today, based on the number on a number of, say, 80 crews that we are selling, around 35% of all sand sold in the Permian. This number was high in the high 20s in2024. If our crew count is high and the number is closer to 70 that others reported them. We’re obviously much higher than the 35%, probably between 40% and 45% of the market. So that’s obviously very powerful. And Chris Elite. Chris alluded to this in his comments on the why and I’m just gonna, I’ll just make some comments on why. I kind of see the trend that we see going on and obviously first off is delivering sand. Sand and delivering it to the wellbores. Obviously very important part of the completion process. We started selling sand back in 2018, ’19 and since we started doing that, Atlas has built as a reputation as a reliable sand provider.

Go back to Covid when we were the only sand company that kept both of our mines open. And we’re able to do this because of our low cost operations commitment from Atlas’s owners, executives, employees to be the best service company, period. Fast forward to today and Atlas is such a different company, meaning we’re no longer just a sand provider. After the acquisition of high crush, we now have the largest network of in-basin sand, both wet and dry.

Atlas is built from the ground up the largest logistics offering in the Permian, which includes our own fleet of trucks and our own trailers. And on top of that, we developed an app that really streamlines the management of the logistics function. And we continue to develop this app to upgrade with offerings that make our customers operations more efficient. Add in there the Dune Express, which is probably the biggest game changer, biggest step change in sand and logistics space ever.

Atlas continues to be on the offensive. We continue to make investments and innovate in the mind of lender space. The most recent is the acquisition of PropFlow. Continuous pumping is important to our customers which makes it important to Atlas. Atlas goes the extra mile to meet our customers’ demands and we’re not done yet as we continue to work on the technology and services that are most important to our customers.

And speaking of customers, our customer service, I think if you speak to any of our customers, I think they’ll tell you that they get the best from Atlas and the best of any company. When I was an operator there, there was always, many. This is an area where many of our service companies fell flat. They didn’t necessarily treat us as a partner. Over the years, I’ve made sure that here at Atlas that we excel at customer service.

So those are some of the examples of why and do I think it will continue. And I think the answer to that is yes. I mean over the next past year, we’ve had a number of customers ask us to sole source their sand and logistics. And this will continue because Atlas is committing to being the best service company. And we’ve been here before in these market conditions. We’re currently demonstrating to our customers why we are a valued customer.

Atlas will continue to make those investments and expand and keep continuing to expand software into its valued customers.

Stephen David Gengaro

Great. Thanks. Thank you for the detail. The other question I had was just around capital allocation. It sounds like you’ve had very good success with the trucks from Kodiak to start and I think there’s a lot more on order. And then when you sort of think about capex needs versus capital returns to shareholders and kind of a soft market, how do you prioritize?

Blake McCarthy

Hey, Steve, it’s Blake. Good question. I think just to kind of reiterate what John said, hey, it’s no secret that the West Texas market is pretty tough sledding right now. And the playbook in like a tough market like today’s where the general service industry is, everybody slashes capex and goes to pricing levels and generating cash flow break levels almost immediately in order to preserve some type of utilization, keep the lights on, that ultimately results in an erosion of earnings power and when the cycle recovers because necessary maintenance capital that gets scrapped.

Any type of investment innovation that gets pushed to the side. On the flip side of that, our position as the low cost supplier that enables us to go to those pricing levels while still generating a healthy amount of operating cash flow, which in turn enables us to continue investing in the business while returning capital our shareholders. On the investment side, that’s not to say that we’re going to spend money like truck and sailors in all directions.

But for instance, we’re not currently investing in incremental mines as the West Texas sand supply stack is currently in the process of contracting, which we think is necessary and a long term benefit to Atlas. However, we are continuing to invest in our logistics platform as seen in our recent acquisition of PropFlow, continuing partnership with Kodiak as pointed out and some other things we got in the hopper. We’re focused on widening the gap between us and our competition when it comes to efficiency and customer experience when others are forced to stand still.

And I think that’s going to become very evident when you look at the market share data and our ability to hold crew count flat, while the market has been free fall over the past few months. On the power front, we’re very encouraged by the commercial developments we’ve seen over the last few months. We’re excited to see that begin to bear fruit over the next few quarters. Capital allocation there is a easier discussion as most of those projects we’re pursuing have longer duration contracts attached to them with quick cash flow generation.

So it’s pretty simple return map balancing continue to invest in the business versus returning capital shareholders. Obviously an important leg to that stool too is protecting the balance sheet. I think that the dividend remains very important to us. We are in the midst of a down cycle right now with sand pricing at cash flow break even levels for the industry and we’re still generating cash. So now we have — that means we have to be efficient with our balance sheet management.

We gotta be tight on costs and we’ve got to set a higher return threshold for capex to balance it all. But that’s what this company was built for. We’re investing to make this model even more durable and we’re confident that that’ll really begin to shine through for investors as we work through the rough second half of the year and into 2026. So ultimately this down cycle is going to be proved to be very healthy for the West Texas sand market and the logistics industry. And I think we’re going to be in prime position on the backside. So we’re going to continue to buttress our position.

Stephen David Gengaro

Great. Thanks, Blake. Thanks for all the detail.

Operator

Thank you. Our next question comes from the line of Derek Podhaizer with Piper Sandler. Please proceed with your question.

Derek Podhaizer

Hey, good morning. So John, I thought your commentary around the power business was interesting. It’s the first time you really talked about those opportunities for the business outside of oil and gas. Maybe can you expand on what these entail and maybe help frame for us the size of this opportunity set?

John G. Turner

Yeah, so I’ll go ahead and set this up and then I’ll let Tim answer some of the questions or follow up on it. Tim Ondrak, who’s the head of our power business. The need for power, obviously it’s not constrained just to do. It’s not just specific to the new oil and gas business. Before we acquired Moser, we’ve done a lot of work on different markets and recognize this and whether it be commercial and industrial technology, government data centers or oil and gas, we acquired Moser because it gave us the best platform from which to grow our power business in all these areas.

Moser is about Moser itself. It was much more than a generator shop over the years. Excuse me. Over the years there’s been a — this team has been leading innovations in the mobile power space and that innovation continues today with some really exciting technologies. Moser had a really deep bench of technical talent and since the acquisition, we have made some key additions to the team to enable us to more quickly penetrate these attractive markets.

Whether it be building out micro grids, providing bridge power to permanent power solutions, or providing power service, we believe are often as unique in our space and we are well positioned to serve those markets. As far as the size of those markets, I mean we’re still evaluating that and we mentioned a little bit of that on the call. And Tim, you have anything else you want to say?

Tim Ondrak

Yeah, Derek, Tim Ondrak, how are you? So on these opportunities, we’re not abandoning oil and gas. We still think the oil and gas phase is attractive, but the C&I space tends to come with more unique solutions. We think we’re well positioned to provide those. A lot of those are bridge to permanent solutions, but we’re really a partner and we’re not solving a near term problem where we’re waiting on line power.

We’re solving a permanent solution for somebody that comes with a five to oftentimes 10 or 15 year contract. And so the returns in that space are pretty attractive, especially from a long term cash flow stability standpoint. Some of those are folks in the tech space. They’re in manufacturing, they’re in different industrial processes, where the need for power in the United States has created a situation where they need to bridge that gap. And we’re in a perfect position to provide that.

Derek Podhaizer

Great, helpful comments. And then maybe on just thinking about the supply stack and you guys seem pretty confident that we’re going to see a real supply contraction the first time since in Basin sand mines became a thing. So maybe could you help us understand the tangible evidence and proof points that you’re seeing of these tier two or three minds actually shutting down? And then maybe how much do you think will come offline from the $90 million or $100 million so of supply in the Permian?

Chris Scholla

Yeah, more and this is Chris. I think from a tangible proof evidence, what we’re seeing out there is we do have confirmation that one of the major mines in Kermit has already actually shut down and released everyone except for management out there. And you look at that supply stack and I think from the numbers you threw out while mechanically, that all may be there from a total support basis. Right. You got to have the mechanics, the electricians, the skills, the people to operate all that.

And what we’re seeing here and across the board is lay-offs, reduction in staff, people working to get lean and mean in terms of opex, just to stay alive. Right. And I think that’s really where we see the market going. I think that again, that supply stack out there is probably very overstated as to what can actually be supplied in the market today. We’re already seeing constraints for the first time come to come to fruition.

So, as we move into Q4 with the messy schedule, unknown schedules that are, I think we’ll continue to see, that supply stack diminish down and it’s just a matter of time as to where, our competitors continue to not invest in their facilities and won’t be ready for the uptick.

Derek Podhaizer

Could you quantify? I mean, is it. Are we talking 5 million tons, 10 million tons, 15 million tons potentially being stacked or coming out?

Chris Scholla

Yeah. I would probably say on a total market basis, just my guess, 20% of the market at least is not available.

Derek Podhaizer

Got it. Super helpful. Thanks, guys. I’ll turn it back.

Operator

Thank you. Our next question comes from the line of Jim Rollyson with Raymond James. Please proceed with your question.

Jim Rollyson

Hey, good morning guys. First question, just if you kind of look at the market we’ve had and obviously operators have been very focused on minimizing, well, AFEs and pushing price on service companies as low as they can get it to try and offset oil prices, et cetera. Would love to hear just kind of how you guys are responding to that from a cost perspective, from an operations perspective, et cetera?

Chris Scholla

Yeah, thanks Jim. This is Chris. I’ll take that one. You’re absolutely right. Operator focus on, on lowering well costs, it’s pretty intense right now. I think our sales team hears that just about every week. But at Atlas, we really position ourselves to thrive in exactly that type of market, right. We look at that total delivered value, not just a price point. So looking at that kind of total delivered cost perspective, right, we get a lot of questions on these calls around what’s the price per ton at the sand mine?

And from my perspective, that’s really yesterday’s game. That is the game from five years ago. We really moved on from that and focused on the total delivered costs at the well site. And then as part of that, we’re competing with the reliability and efficiency and ability to execute. So, just walking through, I know John touched on this a little bit, right. But walking through the strategic platform we’ve built to continue to round out that strategy.

We started out as we talked about lowest cost structure on Kermit Monahan’s high quality Dune sand, moved on to vertically integrating into logistics, acquired high crush to give us logistically advantage. The largest network of mine in the Midland Basin, launched the Dune Express, which eliminated all the long haul trucking associated for that in Delaware. And then now we’ve added PropFlow which enables the 24/7 pumping and expands, further into that value chain.

None of these things were done on accident, right. Simply put, we have continued down the strategy of, be the lowest cost structure and be fundamentally lower. I think it’s also, we operate even when the market’s great, we operate lean, right. But it’s not just about being lean at this point. It’s being integrated. We own the largest network of mines. We control the logistics out there and we continue to invest in the technology, large infrastructure and automation where, it truly matters.

That’s really, our differentiating factor. And if you move on and look at our customer base, right, we continue to align with those most efficient operators out there. That really fit with our logistics footprint. But they also have to share our operational philosophy, right. I mean, have we walked away from the low value opportunities to focus on those operators that value, our logistics innovation, the reliability and long term partnerships at play, like absolutely right. I think it’s that type of discipline that’s really allowed us to go capture a higher wallet share from higher quality relationships. That’s really what’s allowing us to grow in this challenging market. I think just to be clear, we’re not out there at this point chasing marginal tons or transactional pricing, just not interested. Right.

We’re continuing to focus on deepening strategic partnerships with the customers that share our long term view of what partnership really looks like.

Jim Rollyson

Thanks for that, Chris. Appreciate it. Follow up question would be you mentioned around Dune Express, obviously challenging time to bring that into the market. Just as kind of all this craziness started happening and obviously it’s customer reluctance to do anything new contracting wise always seems to materialize in these kind of markets. But as you mentioned, a couple of different things about expanding your blue chip customer base and having increased conversations around Dune Express heading into next year.

Would love to kind of get, pick your brain or get your thoughts around how confident you are that you will actually see some of that incremental 12 million tons of volumes that you’re tracking for next year. If it’s — if you’re already having conversations there, just whatever visibility or color you can provide that would be great given the kind of slow start with the market we’re in.

Chris Scholla

Yeah, look, I mean we’re definitely having those conversations I think to kind of kick back a little bit. Right. Take into perspective. A lot of these guys didn’t think that the Dunes Express was actually going to happen and operate efficiently. So, you had a lot of operators really sit back and take this, wait and see perspective and is this going to work? Meanwhile they did have to support their programs in 2025 with those contracts that they had and they continue to kind of sit with those legacy relationships, if you will, that are long standing relationships in the Delaware.

I think as customers have continued to come out and one tour the facility. Look at the Dune Express. It’s a moment of wow, this is really working. This is impressive. Right. Two for those customers that did have those open type of opportunities. We’ve been able to transition one customer that we had one crew with to 100% of their work with three crews now just based on the Dune. We see that trend continuing but look like we’ve hit those early adopters. I think the early majority were hitting in stride. And that late majority from that adoption curve will fall in here soon. But look, the RFP season coming up is really the perfect timing. And quite honestly, some of the first openings that some of our customer base has, that look, these are guys that we haven’t done business with and that’s what really excites us. Right.

You look at historically out there, we’ve got a number of Delaware based operators that we’ve never sold a ton to. And now we’re in direct conversation with those guys from the strategic differentiator that is the Dune.

Jim Rollyson

Perfect. Appreciate it. Thanks.

Operator

Thank you. Our next question comes from the line of Don Crist with Johnson Rice. Please proceed with your question.

Don Crist

Good morning, guys. Thanks for letting me in. I wanted to start with the costs to produce at your mines. Was there something in the quarter that helped you all along with that? Was it a new cutter head or anything like that? Because normally when we see, volumes come in a little bit, we see the cost actually per ton go up a little bit. Was there anything in the background there that we could point to?

Chris Scholla

No, I think operationally, right. We’ve talked a while here in terms of that operational excellence trend and really continuing to operate lean and mean throughout. I think as we continue, when operators sit on us for pricing, we’re doing the same through our value chain. Right. So, we’re going out from a procurement perspective, looking at uncovering every rock, trying to get as lean as mean as we possibly can, but from an operational basis. I think one of the things that you’ll see and you see these operational records being hit by facilities. We do continue to put the volume through those lowest cost facilities out there.

And with Kermit overperforming expectations, that’s really allowed us to move, continue to move down that cost curve. Just a continuation of what we set in place as an operational strategy a year ago. And I think you’ll continue to see that through 2026.

Blake McCarthy

And I think, and I think that, Chris has done an excellent job when it comes to — where we came from and where we are today and where we’re going on this. I mean, that’s like, that’s something I noticed. It’s like, wow, volumes go down, so does our opex per ton. That’s not something you — that you would notice, but I think our operations team has really stepped up and really done a great job understanding what the mission is and the goal is here at Atlas and for Atlas to be obviously profitable and generating cash flow for its investors.

Don Crist

I appreciate that. Color and just one on the power side for me. The conversations that you’re having with operators out there. I’m guessing they’re for larger kind of micro grids, maybe in the 10, 20, 30 megawatt. Any of those — can you elaborate on those conversations, number one. But number two, will any of those contracts that you could potentially sign over the next couple quarters come with any increased capex in the Moser side? Or do you have that covered already?

Tim Ondrak

Yeah. This is Tim again. So, those are definitely projects we’re looking at. Our capex budget is pretty well set for this year. I think when we look at those opportunities, we think we’re in a position to deploy somewhere between 40 and 50 megawatts between now and the end of the year. That’s already built into capex and that allows us to be selective on the project that make the most sense for us. And as John alluded to in his comments, we’re evaluating, over 200 megawatts of opportunities and those kind of come to fruition, in the next 12 months for the majority of them.

And so, as we look at those projects, we’re in a good position to take advantage of them. And I think some of those we can use next year’s capex to take advantage of them. And the operators that are looking at those micro grids a lot of times have a solution in place and the microgrid is the next evolution of their power strategy versus just placing gen sets on one pad and empowering a set of wells on that pad.

Blake McCarthy

And I’d say some of that’s not just that, that 200 megawatts, I mean, that’s just what we’re looking at now. 60% of that is actually on the C&I side too. So I mean, I don’t think it’s too much of a stretch for us to supply that, to supply, to play that market either. I mean, it’s just an extension of what we’re currently doing.

Don Crist

I appreciate the color. I’ll turn it back, thanks.

Operator

Thank you. Our next question comes from the line of Josh Jayne with Daniel Energy Partners. Please proceed with your question.

Joshua W. Jayne

Thanks. Good morning. First one, could you just expand a bit more on the strategic rationale behind the PropFlow acquisition and then maybe in the response could you also give your thoughts on the Wet Sand Market vs Dry Sand Market and if you think that market share for wet sand how you think it ultimately evolves over the next 12 to 24 months?

Blake McCarthy

Yeah. I think you look at PropFlow, they’ve got those innovative technologies that really further enhance our customer value proposition. I think it was the one part of the wet sand value chain that we didn’t have. And going to the blender and that really completes the offering. You look at the again from a customer perspective, it eliminates that equipment in the red zone out there that allows for 24/7 continuous pumping and really enables our customers to continue to get more efficient.

So, to us, after we met the management team, culturally that fit right in but strategically made a ton of sense, as our, as our wet mines continue to be sold out. I think, from a wet and dry perspective look, as we talked about earlier, it’s all about total delivered costs. You’ve got early adopters, you got some customers that are segmented towards, all wet or all dry and some that do both.

But at the end of the day, it really boils down to the total delivered cost and what value efficiency and reliability you’re giving that customer. And again, that’s where our network of minds out there, you’ve got onesie twosies but our network of minds allows us to go supply those customers in full delivered. So I think that from a wet or dry at this point, is there a lot of people in the market going and putting more capital into expansion of mines out there with where we’re at in the market, like I just don’t see that. So I think you’re going to remain pretty, pretty stable of where you’re at today for the foreseeable future.

Joshua W. Jayne

Okay, thanks. And then just a general one on customer mindset and we’ve had a lot of changes in the macro environment over the last 90 to 100 days. Could you just talk through operator mindset and if it’s changed post Liberation day and our operators generally more comfortable today than they were, let’s say, 90 to 100 days ago.

Blake McCarthy

Look, I think from an operator mindset that varies customer. You’ve got, you’ve got your big boys out there that are, that are always going to pump through downturns, may not, 100% you all the way to your small independents that, move quickly in either direction. I think, what you’re seeing is more broadly the perspective of, we’re going to be flat for a little bit and kind of figure out where things go.

I think a lot of our customers are still evaluating exactly what their program looks like in Q4. And I think we’ll have a lot more insight in that September, October timeframe once we get through budget season, and these guys can, can provide their budgets for ’26, but overall, does is there, does there feel like there’s less of a falling knife and more of a sense of stability in the market. Like yeah, I would definitely say you see that from our customers.

Joshua W. Jayne

Understood. Thanks. I’ll turn it back.

Operator

Thank you. Our next question comes from the line of Jeff LeBlanc with TPH. Please proceed with your question.

Jeffrey Michael LeBlanc

Good morning, John and team. Thank you for taking my question. Sorry. I guess the question is in logistics, how should we be thinking about the magnitude of non-Dune Express deliveries over the second half of the year and into 2026 versus I think the number was 4 million tons in Q2?

Chris Scholla

Yeah, it’s about 4 million. I think that we’re looking at pretty flattish Dune Express volumes through the back half of the year for now and then. So with the sequential increase in the total volume should be up mid single digits and absolutely so the non-Dune Express logistics volume should be up approximately in line with those numbers.

Jeffrey Michael LeBlanc

Okay. And then I guess the follow up would be how should we be thinking about the margins on those deliveries versus the Dune Express? And then additionally for Dune Express margins, how’s the progression from single to double or triple trailers going?

Blake McCarthy

The economics from the Dune Express have been there. I think that we’re just right now like it’s, we’re still in that ramping phase. So when we think about the overall logistics margin profile, we have that, approximately flat moving forward just because the Dune Express volumes are expected to be flat. Multi-trailer margins are significantly higher than single trailer Dune Express margins, which are in-turn significantly higher than the traditional logistics margins.

I think that it’s a period of maturation for the overall logistics business as we — we’re pushing people more towards the multi-trailer operations because it is — it’s more efficient for them, it’s more efficient for us. It’s a win-win for all parties. But that takes a bit of time. It involves some changes in how people construct their pads and the mindset around the allocation of equipment around the well site.

So we’re holding people’s hand through that. And I think once people — the people that have, I think as Chris talked about, like the early adopters. Once they’ve gotten going on that, they’re like, wow, this really works. It is exciting and it’s really sticky. So that’s part of just an education phase that we’re working through with our customers.

John G. Turner

Yes. And I think we run that analysis as well in terms of the Dune. And if you look at the — now that we have some stable periods of numbers behind us with the dune. You look at the cost of the dune and, and quite honestly, once we get it sold out, it’s right in-line with our expectations, if not just slightly below that, and that, that moves us from, spreadsheet theory and math to real world transition in the margins.

Jeffrey Michael LeBlanc

Okay, thank you for the color. I’ll hand the call back to the operator. Thank you.

Operator

Thank you. Our next question comes from the line of Eddie Kim with Barclays. Please proceed with your question.

Eddie Kim

Hi, good morning. Just want to circle back on your guidance for 3Q volumes up mid single digits sequentially. I know you mentioned some share gains and deliveries pushed out from 2Q to 3Q, but that still seems surprisingly good given the sequential declines that some of the pressure pumpers have been guiding to. So just curious on your confidence level, there is most of that sort of in hand at this point, or is there some downside risk if Permian fleet count declines more than your current expectations?

Chris Scholla

Well, I mean, there’s always downside, but there’s also upside risk. We have those volume pretty heavily risked. But, I think that like I said, a part of, we keep harping on it like. Atlas is executing right now. And yes, it is a really tough market depending on who you ask, we were down somewhere between 70 to 80 completion crews in West Texas right now. But, we’ve been able to hold that crew count pretty down flat.

And so that’s just, you know, a testament to the good work that our operations team has been put forward. So, think about that kind of sequential 4% to 5% volume growth is where we’re thinking right now in terms of our own internal models.

Eddie Kim

Got it, got it. Yeah, definitely. The market share gains have been pretty impressive. My follow up is just on early expectations on the trajectory of 4Q. I mean, looking back the past two years, your 4Q has declined in a low double digits sequentially from both a revenue and volumes perspective. Any reason this year might look different or should we expect a similar sort of historical seasonality? Any thoughts there would be great.

John G. Turner

Yeah. We see the same seasonality. I mean, I think that’s pretty pervasive across the entire service industry. I think it’s a little early this year. With this type of market, I wouldn’t be surprised if people do take, extended breaks during the holiday season. And it’s Texas too, so they might take some long hunting trips as well. That being said, we do have a number of opportunities. As Chris mentioned, we’re having discussions with some new customers around 2026 and there’s potential trial opportunities and stuff like that. So it’s a little early to see how Q4 shapes up, but I wouldn’t be surprised if you saw just overall industry volumes down quarter.

Eddie Kim

Understood. Understood. Thanks for that. I’ll turn it back.

Unidentified Speaker

Operator, we probably have time for coming up on the hour here, we probably have time for one more question.

Operator

It appears there are no further questions queued up. Therefore, it looks like we have reached the end of the question and answer session. I’d like to turn the floor back to CEO, John Turner for closing remarks.

John G. Turner

All right. Thank you. I’d like to thank our team for all their hard work and our investors for their continued support. While market conditions are not ideal, we’re confident in our strategy and excited about the opportunities ahead as we drive growth in the coming quarters. We look forward to reporting our third quarter numbers. Thanks, guys.

Operator

[Operator Closing Remarks]