Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis should be read in conjunction with the financial statements and related notes presented in this Quarterly Report on Form 10-Q (this "Report"), as well as our audited financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (the "Annual Report"), filed with the U.S. Securities and Exchange Commission (the "SEC") on February 24, 2026.

Cautionary Note Regarding Forward-Looking Statements

This Report contains forward-looking statements that are subject to risks and uncertainties. All statements, other than statements of historical fact included in this Report, regarding our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this Report, the words "may," "forecast," "continue," "could," "would," "will," "plan," "believe," "anticipate," "intend," "estimate," "expect," "project" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on our current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements described under the section titled "Risk Factors" included in this Report and in our Annual Report, and our Quarterly Report on Form 10-Q for the quarters ended March 31, 2026 and June 30, 2026, filed with the SEC on May 5, 2026 and August 4, 2026, respectively. By their nature, forward-looking statements involve known and unknown risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Although we believe that the forward-looking statements contained in this Report are based on reasonable assumptions, you should be aware that many factors could affect our actual financial results or results of operations and could cause actual results to differ materially from those in such forward-looking statements, including but not limited to:

We caution you that these forward-looking statements are subject to numerous risks and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks include, but are not limited to, the risks described under the section titled "Item 1A. Risk Factors" in this Report and the risk factors disclosed under the heading "Risk Factors" included in our Annual Report.

You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date of this Report. Should one or more of the risks or uncertainties described in this Report occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements. All forward-looking statements, expressed or implied, included in this Report are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue. Except as otherwise required by applicable law, we disclaim any duty to update any forward-looking statements to reflect events or circumstances after the date of this Report.

Overview

Atlas Energy Solutions Inc., a Delaware corporation (f/k/a New Atlas HoldCo. Inc.) ("New Atlas" and together with its subsidiaries "we," "us," "our," or the "Company"), was formed on June 28, 2023, pursuant to the laws of the State of Delaware, and is the successor to AESI Holdings Inc. (f/k/a Atlas Energy Solutions Inc.), a Delaware corporation ("Old Atlas"). New Atlas is a holding company and the ultimate parent company of Atlas Sand Company, LLC ("Atlas LLC"), a Delaware limited liability company and Atlas Energy Solutions ProjectCo Holdings, LLC ("ProjectCo Holdings"), a Texas limited liability company. The Company has two segments, the sand and logistics segment and the power segment.

We are a low-cost producer of high-quality, locally sourced 100 mesh and 40/70 sand used as a proppant during the well completion process. Proppant is necessary to facilitate the recovery of hydrocarbons from oil and natural gas wells. One hundred percent of our sand reserves are located in Texas within the Permian Basin and our operations consist of proppant production and processing facilities, including four facilities near Kermit, Texas (together, the "Kermit facilities"), a fifth facility near Monahans, Texas (the "Monahans facility"), and the OnCore distributed mining network.

We operate a differentiated logistics platform that is designed to increase the efficiency, safety and sustainability of the oil and natural gas industry primarily within the Permian Basin. This includes our fleet of fit-for-purpose trucks, trailers, wellsite equipment, and the Dune Express, an overland conveyor infrastructure solution. We have also begun integrating autonomous driving technologies in certain of our fit-for-purpose trucks, creating the first semi-autonomous oilfield logistics network in an effort to increase our automation of the oil and gas proppant supply chain.

We also provide distributed power solutions through a fleet of natural gas-powered reciprocating generators and microgrids primarily supporting production and artificial lift operations across major United States resource basins. Our generators are designed for heavy-duty, harsh environments for mission critical power needs. Our in-house manufacturing and remanufacturing capabilities, coupled with critical in-field service, provide quality control and standardization across the fleet ensuring market-leading uptime.

Recent Developments

Purchase Commitments

On July 23, 2026, Atlas Energy Solutions ProjectCo, LLC, a Texas limited liability company and an indirect wholly owned subsidiary of the Company ("ProjectCo") entered into a purchase commitment for power equipment for approximately $43.1 million with 10% downpayment and progress billings, subject to customary terms and conditions and applicable shipping and taxes. Delivery of equipment is expected to take place in 2027. This purchase commitment is supported by a cost reimbursement agreement entered into by Atlas Energy Solutions Shackelford 1, LLC ("Shackelford"), a Texas limited liability company and an indirect wholly owned subsidiary of the Company, with a leading frontier AI lab, which is also the intended off taker for the power generation project.

On September 18, 2026, Shackelford entered into a Purchase Agreement (the "BoP Purchase Agreement") with Wyoming Machinery Company d/b/a Energy Solutions, a Wyoming corporation ("WMC"), for the purchase of balance-of-plant equipment (the "BoP Equipment") for a specific power generation project. Under the BoP Purchase Agreement, WMC will procure and make available for shipment between June 2027 and December 2027 the BoP Equipment for an aggregate purchase price of approximately $340.5 million, payable in installments from September 2026 through May 2027, with 10% of the purchase price withheld until WMC completes its obligations under the BoP Purchase Agreement. Shackelford may terminate the BoP Purchase Agreement as to all or any portion of the BoP Equipment for convenience upon not less than 14-day prior written notice, in which case Shackelford must pay amounts then due and WMC's documented cancellation costs and reasonable internal costs, overhead and profit attributable to work performed through termination, subject to WMC's obligation to mitigate any such costs. The BoP Purchase Agreement is supported by a cost reimbursement agreement entered into by Shackelford with a leading frontier AI lab, which is also the intended off taker for the power generation project.

On September 18, 2026, Shackelford also entered into a separate Purchase Agreement (the "Generator Purchase Agreement") with WMC for the purchase of approximately 328 MW of power generation equipment, associated equipment and project engineering services (the "Generator Equipment") for an aggregate purchase price of approximately $273.0 million, payable in installments from September 2026 through January 2028. The purchase price includes tariffs, which are passed through at the actual amounts charged by Caterpillar Inc. ("Caterpillar") and paid or payable by WMC and are subject to adjustment for any increase, decrease, exemption, refund or credit in the applicable tariff amounts. The Generator Equipment is scheduled to be ready to ship between April 2027 and February 2028. Subject to confirmation from Caterpillar, the execution of the Generator Purchase Agreement satisfies a portion of the purchase obligation of ProjectCo, under the previously announced Global Framework Agreement between ProjectCo and Caterpillar (the "GFA").

On September 21, 2026, ProjectCo entered into a purchase commitment for power equipment for approximately $220.2 million with 15% downpayment and progress billings, subject to customary terms and conditions and applicable shipping and taxes. Delivery of equipment is expected to take place in 2027. This purchase commitment is supported by a cost reimbursement agreement entered into by ProjectCo with a leading frontier AI lab, which is also the intended off taker for the ProjectCo Project.

On September 24, 2026, ProjectCo entered into a purchase commitment for power equipment for approximately $27.9 million with progress billings, subject to customary terms and conditions and applicable shipping and taxes. Delivery of equipment is expected to take place in 2028. This purchase commitment is supported by a cost reimbursement agreement entered into by ProjectCo with a leading frontier AI lab, which is also the intended off taker for the ProjectCo Project.

For additional information on the purchase commitments, refer to Note 9 - Commitments and Contingencies of the unaudited condensed consolidated financial statements (the "Financial Statements") included elsewhere in this Report.

Financial Developments

2023 ABL Credit Agreement

On August 28, 2026 and October 2, 2026, the Company drew down $30.0 million and $15.0 million, respectively, under the 2023 ABL Credit Facility (defined below under Debt Agreements) for general corporate purposes.

Sixth Amendment to the 2023 ABL Credit Agreement

On September 30, 2026, Atlas LLC and certain subsidiaries of the Company entered into that certain Sixth Amendment to Loan, Security and Guaranty Agreement (the "Sixth ABL Amendment"), among Atlas LLC, as the borrower, the subsidiary guarantors party thereto, the lenders party thereto and Bank of America, N.A., as administrative agent. The Sixth ABL Amendment amends that certain Loan, Security and Guaranty Agreement, dated as of February 22, 2023, as amended, to, among other things, permit an internal reorganization of certain of the Company's subsidiaries.

Bridge Loan Credit Agreement

On October 22, 2026 (the "Effective Date"), ProjectCo (the "Borrower") and certain of its affiliates entered into a credit agreement (the "Bridge Loan Credit Agreement") with Goldman Sachs Bank USA, as administrative agent ("GS"), and the lenders party thereto (collectively, the "Lenders"), pursuant to which the Lenders committed to provide term loans in an aggregate principal amount of up to $424 million, with the ability to request up to $286 million of incremental commitments, subject to lender consent and other conditions. The Borrower expects to use the proceeds of such term loans to finance the purchase of certain qualifying equipment for two power generation projects, to reimburse affiliates for certain equipment costs previously funded and to pay related fees and expenses.

Borrowings under the Bridge Loan Credit Agreement bear interest, at the Borrower's option, at a rate equal to either (i) Adjusted Term Secured Overnight Financing Rate ("SOFR") Rate plus 2.50% or (ii) the Alternate Base Rate plus 1.50% (each as defined in the Bridge Loan Credit Agreement), with each margin increasing by 0.50% beginning six months after the Effective Date. The Borrower is also required to pay a commitment fee of 0.50% per annum on undrawn commitments and a duration fee of 0.50% of the aggregate commitments on each six-month anniversary of the Effective Date on which loans remain outstanding.

The Bridge Loan Credit Agreement contains certain covenants that the Company considers customary for a facility of this type, including, but not limited to, limitations on the Borrower's and certain of its subsidiaries' incurrence of additional debt, granting of liens, and making dispositions, investments and restricted payments. The Bridge Loan Credit Agreement does not include financial maintenance covenants.

The Borrower is required to make prepayments with payments received under the cost reimbursement agreements supporting the financed equipment, the proceeds of certain indebtedness, including long-term project financing, upon the issuance of certain equity securities, and upon certain asset dispositions and casualty events. The outstanding amounts under the Bridge Loan Credit Agreement will mature 180 days after the Effective Date, subject to a one-time option to extend the maturity by 184 days upon the satisfaction of certain conditions, including the consent of the Lenders.

To secure borrowings under the Bridge Loan Credit Agreement, the Borrower and certain of its subsidiaries have pledged substantially all of their assets and the Borrower's direct parent has pledged the equity interests of the Borrower as collateral to GS for the benefit of the Lenders. The Borrower's obligations under the Bridge Loan Credit Agreement are guaranteed on an unsecured basis by the Company.

Borrowings under the Bridge Loan Credit Agreement are subject to acceleration upon the occurrence of events of default that the Company considers customary, including, among others, the failure to pay principal or interest, violation of covenants, default on other indebtedness and the termination of certain material contracts.

On October 22, 2026, ProjectCo drew down $171.2 million under the Bridge Loan Credit Agreement to purchase certain power equipment.

Recent Trends and Outlook

Drilling and completions activity is highly correlated to commodity prices. West Texas Intermediate crude oil averaged $87.22 per barrel in the third quarter of 2026, roughly a 32.7% increase year over year versus $65.74 per barrel in the third quarter of 2025. The near-term price outlook remains volatile amid rapidly changing U.S. - Iran relations, with expected continued increases in the fourth quarter of 2026 due to East-West pipeline attacks in Saudi Arabia. Longer term, global economic growth, energy security priorities, and projected multi-year increases in power consumption could bolster demand for both crude and natural gas.

Demand for the Company's power generation is driven by accelerating U.S. power needs set against constrained grid infrastructure. Aging transmission and distribution networks and demand growth from data centers and reshored manufacturing are expected to drive increasing need for distributed power. Grid constraints also create bridge power opportunities for industrial and construction projects awaiting permanent grid solutions. This demand growth coincides with well-documented challenges to U.S. grid reliability and generation capacity.

How We Generate Revenue

Sand and Logistics Segment

We generate revenue by mining, processing and distributing proppant that our customers use in connection with their operations. We sell proppant to our customers under supply agreements or as spot sales at prevailing market rates, which is dependent upon the cost of producing proppant, the proppant volumes sold and the desired margin and prevailing market conditions.

We also generate product revenue from the sale of logistics equipment to customers. Logistics equipment revenues are derived from sales agreements with customers for certain equipment.

Revenues also include charges for sand logistics services provided to our customers. Our logistics service revenue fluctuates based on several factors, including the volume of proppant transported, the distance between our facilities and our customers, and prevailing freight rates. Revenue is generally recognized as products are delivered and services are provided in accordance with the contract.

Some of our contracts contain shortfall provisions that calculate agreed upon fees that are billed when the customer does not satisfy the minimum purchases over a period of time defined in each contract.

Power Segment

We generate revenue through the rental of our power equipment. Power equipment rentals are performed under a variety of contract structures. We also generate product revenue from the sale of power equipment to customers. Power equipment revenues are derived from sales agreements with customers for certain equipment.

Costs of Conducting Our Business

Sand and Logistics Segment

We incur operating costs primarily from direct and indirect labor, freight charges, utility costs, fuel and maintenance costs and royalties. We incur labor costs associated with employees at our proppant production facilities, which represent the most significant cost of converting proppant to finished product. Our proppant production facilities undergo maintenance to minimize unscheduled downtime and ensure the ongoing quality of our proppant and ability to meet customer demands. We may incur variable utility costs in connection with the operation of our processing facilities, primarily natural gas and electricity, which are both susceptible to market fluctuations. We lease equipment in many areas of our operations, including our proppant production hauling equipment. We incur variable royalty expense and/or delay rentals related to our agreements with the owners of our reserves. In addition, other costs including overhead allocation, depreciation and depletion are capitalized as a component of inventory and are reflected in cost of sales when inventory is sold. Our logistics services incur operating costs primarily composed of variable freight charges from trucking companies' delivery of sand to customer wellsites, equipment leases, direct and indirect labor, fuel and maintenance costs and royalties.

Power Segment

We have expenses comprising our cost of sales (excluding depreciation, depletion, and accretion expense) of (i) direct labor costs, and related travel and lodging expenses, (ii) generator transportation costs and (iii) the costs of maintaining our equipment. A large portion of our cost of sales (excluding depreciation, depletion, and accretion expense) related to rental revenue are variable based on the number of generators deployed with customers.

How We Evaluate Our Operations

Non-GAAP Financial Measures

Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Free Cash Flow, Adjusted EBITDA less Capital Expenditures, Adjusted Free Cash Flow Margin, Adjusted EBITDA less Capital Expenditures Margin, Adjusted Free Cash Flow Conversion, Contribution Margin, Maintenance Capital Expenditures and Net Debt are non-GAAP supplemental financial measures used by our management and by external users of our Financial Statements such as investors, research analysts and others, in the case of Adjusted EBITDA, to assess our consolidated operating performance on a consistent basis across periods by removing the effects of development activities, provide views on capital resources available to organically fund growth projects and, in the case of Adjusted Free Cash Flow and Adjusted EBITDA less Capital Expenditures, assess the financial performance of our assets and their ability to sustain dividends or reinvest to organically fund growth projects over the long term without regard to financing methods, capital structure or historical cost basis.

We define Adjusted EBITDA as net income before depreciation, depletion and accretion expense, amortization expense of acquired intangible assets, interest expense, income tax expense, stock and unit-based compensation, loss on extinguishment of debt, loss on disposal of assets, insurance recovery (gain), unrealized commodity derivative gain (loss), litigation-related costs, net, other acquisition related costs, and other non-recurring costs. Management believes Adjusted EBITDA is useful because it allows them to more effectively evaluate our consolidated operating performance and compare the results of our operations from period to period and against our peers without regard to our financing methods or capital structure. We exclude the items listed above from net income in arriving at Adjusted EBITDA because these amounts can vary substantially from company to company within our industry depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired. Certain prior period litigation-related costs, net and certain non-recurring costs are now included as an add-back to Adjusted EBITDA in order to conform to the current period presentation and to more accurately describe the Company's consolidated operating performance and results period-over-period.

We define Adjusted EBITDA Margin as Adjusted EBITDA divided by total revenue.

We define Adjusted Free Cash Flow as Adjusted EBITDA less Maintenance Capital Expenditures. We define Adjusted EBITDA less Capital Expenditures as Adjusted EBITDA less cash used in investing activities. We believe that Adjusted Free Cash Flow and Adjusted EBITDA less Capital Expenditures are useful to investors as they provide measures of the ability of our business to generate cash.

We define Adjusted Free Cash Flow Margin as Adjusted Free Cash Flow divided by total revenue.

We define Adjusted EBITDA less Capital Expenditures Margin as Adjusted EBITDA less Capital Expenditures divided by total revenue.

We define Adjusted Free Cash Flow Conversion as Adjusted Free Cash Flow divided by Adjusted EBITDA.

We define Contribution Margin as gross profit plus depreciation, depletion and accretion expense.

We define Maintenance Capital Expenditures as capital expenditures excluding growth capital expenditures, reconstruction of previously incurred growth capital expenditures, equipment assets acquired through debt, and asset retirement obligations. Certain prior period capital expenditures were reclassified to conform to the current period presentation and to more accurately describe the Company's consolidated operating performance and results period-over-period.

We define Net Debt as total debt, net of discount and deferred financing costs, plus finance right-of-use lease liabilities, less cash and cash equivalents.

Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Free Cash Flow, Adjusted EBITDA less Capital Expenditures, Adjusted Free Cash Flow Margin, Adjusted EBITDA less Capital Expenditures Margin, Adjusted Free Cash Flow Conversion, Contribution Margin, Maintenance Capital Expenditures and Net Debt do not represent and should not be considered alternatives to, or more meaningful than, net income, income from operations, net cash provided by operating activities or any other measure of financial performance presented in accordance with GAAP as measures of our financial performance. Adjusted EBITDA, Adjusted Free Cash Flow, and Adjusted EBITDA less Capital Expenditures have important limitations as analytical tools because they exclude some but not all items that affect net income, the most directly comparable GAAP financial measure. Our computation of Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Free Cash Flow, Adjusted Free Cash Flow Margin, Adjusted EBITDA less Capital Expenditures, Adjusted EBITDA less Capital Expenditures Margin, Adjusted Free Cash Flow Conversion, Contribution Margin, Maintenance Capital Expenditures and Net Debt may differ from computations of similarly titled measures of other companies.

The following table presents a reconciliation of Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Free Cash Flow, Adjusted EBITDA less Capital Expenditures, Adjusted Free Cash Flow Margin, Adjusted EBITDA less Capital Expenditures Margin, Adjusted Free Cash Flow Conversion, Contribution Margin, Maintenance Capital Expenditures and Net Debt to the most directly comparable GAAP financial measure for the periods indicated.

(1) Represents insurance recovery (gain) related to the dredge mining assets at the Kermit facility.

(2) Represents litigation-related costs that are unrelated to our core ongoing business operations, including external legal fees and probable settlement fees, net of insurance.

(3) Other non-recurring costs includes loss on early payoff of lease financing, legal fees related to the Company's potential reincorporation from Delaware to Texas, legal and consulting fees related to significant customer negotiations, credit loss expense due to a dispute with a counterparty, costs incurred during our 2025 Term Loan Credit Facility (defined below under Debt Agreements) transaction, and other infrequent and unusual costs which include Northeast logistic shutdown cost of $1.4 million for the three and nine months ended September 30, 2026.

(4) Represents transaction costs incurred in connection with acquisitions, including fees paid to finance, legal, accounting and other advisors, employee retention and benefit costs, and other operational and corporate costs.

(5) A reconciliation of these items used to calculate Adjusted Free Cash Flow to comparable GAAP measures is included below.

(6) Positive working capital changes reflect capital expenditures in the current period that will be paid in a future period. Negative working capital changes reflect capital expenditures incurred in a prior period but paid during the period presented. In addition, this amount includes equipment assets acquired through debt and asset retirement obligations.

Factors Affecting the Comparability of Our Results of Operations

M&A Activity

On February 24, 2025, the Company completed the transactions contemplated by that certain Stock Purchase Agreement (the "Moser Purchase Agreement") by and among Wyatt Holdings, LLC, a Delaware limited liability company and an indirectly wholly-owned subsidiary of the Company (the "Purchaser"), Moser Holdings, LLC, a Delaware limited liability company (the "Seller"), and for the limited purposes set forth therein, the Company (together with the Purchaser and the Seller, the "Parties"), pursuant to which the Purchaser acquired (i) 100% of the authorized, issued and outstanding equity ownership interests in Moser Acquisition, Inc., a Delaware corporation ("Moser AcquisitionCo"), and (ii) Moser Engine Service, Inc. (d/b/a Moser Energy Systems), a Wyoming corporation and a wholly-owned subsidiary of Moser AcquisitionCo (such transaction, the "Moser Acquisition"), collectively referred to as "Moser."

Under the terms and conditions of the Moser Purchase Agreement, the aggregate consideration paid to the Seller in the Moser Acquisition (the "Moser Consideration") consisted of (i) $180.0 million in cash and (ii) approximately 1.7 million shares of Common Stock (the "Moser Stock Consideration"), issued at the closing of the Moser Acquisition. The Moser Consideration is subject to customary post-closing adjustments. Additional information on these transactions can be found in Note 3 - Acquisitions of the Financial Statements included elsewhere in this Report.

Results of Operations

(Unaudited)

(In thousands)

Three Months Ended September 30, 2026 Compared to Three Months Ended September 30, 2025

Product Revenue. Product revenue decreased by $9.6 million to $97.9 million for the three months ended September 30, 2026, as compared to $107.5 million for the three months ended September 30, 2025. Sand and logistics product revenue decreased by $12.4 million to $94.4 million for the three months ended September 30, 2026, as compared to $106.8 million for the three months ended September 30, 2025. There was a decrease in proppant prices between the periods which contributed to a $18.4 million decrease in product revenue. The decrease was partially offset by an increase in proppant sales volumes and logistics equipment sales volumes between periods which contributed to a $6.0 million increase in product revenue. Power product revenue increased by $2.8 million to $3.5 million for the three months ended September 30, 2026, as compared to $0.7 million for the three months ended September 30, 2025. The increase was due to more power equipment units sold in 2026 compared to 2025.

Service Revenue. Services revenue, which includes freight for last-mile logistics services, increased by $5.1 million to $140.8 million for the three months ended September 30, 2026, as compared to $135.7 million for the three months ended September 30, 2025. There was an increase in sales volumes shipped to last-mile logistics customers between periods which contributed to a $4.9 million increase in service revenue along with a $0.2 million increase in prices between periods.

Rental Revenue. Rental revenue increased by $12.7 million to $29.1 million for the three months ended September 30, 2026, as compared to $16.4 million for the three months ended September 30, 2025. The increase was primarily driven by higher utilization of our power equipment and a shift in our rental fleet mix toward higher-capacity power equipment, which commands higher rental rates.

Cost of sales (excluding depreciation, depletion and accretion expense). Cost of sales (excluding depreciation, depletion and accretion expense) increased by $20.3 million to $215.5 million for the three months ended September 30, 2026, as compared to $195.2 million for the three months ended September 30, 2025.

Cost of sales (excluding depreciation, depletion and accretion) related to product revenue increased by $6.7 million to $78.0 million for the three months ended September 30, 2026, as compared to $71.3 million for the three months ended September 30, 2025. Sand and logistics cost of sales related to product revenue increased by $4.9 million to $75.9 million for the three months ended September 30, 2026, as compared to $71.0 million for the three months ended September 30, 2025. This increase was due to increased production resulting in increased production costs between periods. Power cost of sales related to product revenue increased by $1.8 million to $2.1 million for the three months ended September 30, 2026, as compared to $0.3 million for the three months ended September 30, 2025. The increase was due to more power equipment units sold between periods.

Cost of sales (excluding depreciation, depletion and accretion expense) related to services increased by $10.9 million to $128.7 million for the three months ended September 30, 2026, as compared to $117.8 million for the three months ended September 30, 2025. The increase was due to increased volumes delivered to last-mile logistics customers between periods resulting in higher logistics costs.

Cost of sales (excluding depreciation, depletion, and accretion expense) related to rentals increased by $2.7 million to $8.8 million for the three months ended September 30, 2026, as compared to $6.1 million for the three months ended September 30, 2025. The increase was primarily driven by higher utilization of our power equipment between periods.

Depreciation, depletion and accretion expense. Depreciation, depletion and accretion expense increased by $6.5 million to $47.1 million for the three months ended September 30, 2026, as compared to $40.6 million for the three months ended September 30, 2025. Sand and logistics depreciation, depletion and accretion expense increased by $2.7 million to $40.7 million for the three months ended September 30, 2026, as compared to $38.0 million for the three months ended September 30, 2025, due to an increase in depreciable assets placed into service when compared to the prior period. Power depreciation, depletion and accretion expense increased by $3.8 million to $6.4 million for the three months ended September 30, 2026, as compared to $2.6 million for the three months ended September 30, 2025, due to an increase in depreciable assets placed into service when compared to the prior period.

Selling, general and administrative expense. Selling, general and administrative expense increased by $2.5 million to $38.8 million for the three months ended September 30, 2026, as compared to $36.3 million for the three months ended September 30, 2025. The increase is due to an increase of $3.5 million driven by salaries and benefits, depreciation expense, and other corporate expenses. This increase was partially offset by a decrease in certain acquisition related costs and non-recurring costs of $1.0 million for the three months ended September 30, 2026, as compared to the three months ended September 30, 2025.

Our selling, general and administrative expense includes the non-cash expense for stock-based compensation expense for equity awards granted to our employees. For the three months ended September 30, 2026, stock-based compensation expense was $8.7 million, as compared to $9.3 million of stock-based compensation expense for the three months ended September 30, 2025.

Amortization expense of acquired intangible assets. Amortization expense of acquired intangible assets remained materially consistent at $6.4 million for the three months ended September 30, 2026, as compared to $5.9 million for the three months ended September 30, 2025. The activity was primarily due to the amortization of intangible assets associated with acquisitions.

Interest (expense), net. Interest expense, net increased by $1.9 million to $16.9 million for the three months ended September 30, 2026, as compared to $15.0 million for the three months ended September 30, 2025. The increase is driven by the interest expense associated with finance leases and the Lease Documents (defined below under Debt Agreements).

Income tax expense (benefit). Income tax benefit increased by $0.9 million to $10.7 million of income tax benefit for the three months ended September 30, 2026, as compared to $9.8 million of income tax benefit for the three months ended September 30, 2025. The increase is primarily attributable to a decrease in income before income taxes and an increase in percentage depletion in excess of basis for the three months ended September 30, 2026, as compared to the three months ended September 30, 2025.

Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025

Product Revenue. Product revenue decreased by $63.4 million to $310.4 million for the nine months ended September 30, 2026, as compared to $373.8 million for the nine months ended September 30, 2025. Sand and logistics product revenue decreased by $71.6 million to $301.2 million for the nine months ended September 30, 2026, as compared to $372.8 million for the nine months ended September 30, 2025. There was a decrease in proppant prices between the periods which contributed to a $62.3 million decrease in product revenue. Additionally, a decrease in shortfall revenue contributed to a $22.0 million decrease in product revenue. The decrease was partially offset by an increase in proppant sales volumes and logistics equipment sales volumes between periods which contributed to a $12.7 million increase in product revenue. Power product revenue increased by $8.2 million to $9.2 million for the nine months ended September 30, 2026, as compared to $1.0 million for the nine months ended September 30, 2025. The increase was due to more power equipment units sold in 2026 compared to 2025.

Service Revenue. Services revenue, which includes freight for last-mile logistics services, increased by $10.0 million to $442.6 million for the nine months ended September 30, 2026, as compared to $432.6 million for the nine months ended September 30, 2025. There was an increase in sales volumes shipped between the periods which contributed to a $29.2 million increase in service revenue. The increase was partially offset by a decrease in prices between the periods which contributed to a $19.2 million decrease in service revenue.

Rental Revenue. Rental revenue increased by $34.2 million to $73.6 million for the nine months ended September 30, 2026, as compared to $39.4 million for the nine months ended September 30, 2025. The increase was primarily driven by higher utilization of our power equipment and a shift in our rental fleet mix toward higher-capacity power equipment, which commands higher rental rates.

Cost of sales (excluding depreciation, depletion and accretion expense). Cost of sales (excluding depreciation, depletion and accretion expense) increased by $53.6 million to $650.8 million for the nine months ended September 30, 2026, as compared to $597.2 million for the nine months ended September 30, 2025.

Cost of sales (excluding depreciation, depletion and accretion) related to product revenue increased by $23.0 million to $230.8 million for the nine months ended September 30, 2026, as compared to $207.8 million for the nine months ended September 30, 2025. Sand and logistics cost of sales related to product revenue increased by $18.0 million to $225.3 million for the nine months ended September 30, 2026, as compared to $207.3 million for the nine months ended September 30, 2025. This increase was due to increased production resulting in increased production costs between periods. Power cost of sales related to product revenue increased by $5.0 million to $5.5 million for the nine months ended September 30, 2026, as compared to $0.5 million for the nine months ended September 30, 2025. The increase was due to more power equipment units sold between periods.

Cost of sales (excluding depreciation, depletion and accretion expense) related to services increased by $21.3 million to $396.4 million for the nine months ended September 30, 2026, as compared to $375.1 million for the nine months ended September 30, 2025. The increase was due to increased volumes delivered to last-mile logistics customers between periods resulting in higher logistics costs.

Cost of sales (excluding depreciation, depletion, and accretion expense) related to rentals increased by $9.3 million to $23.6 million for the nine months ended September 30, 2026, as compared to $14.3 million for the nine months ended September 30, 2025. The increase was primarily driven by higher utilization of our power equipment between periods.

Depreciation, depletion and accretion expense. Depreciation, depletion and accretion expense increased by $20.0 million to $138.3 million for the nine months ended September 30, 2026, as compared to $118.3 million for the nine months ended September 30, 2025. Sand and logistics depreciation, depletion and accretion expense increased by $8.8 million to $120.9 million for the nine months ended September 30, 2026 as compared to $112.1 million for the nine months ended September 30, 2025, due to an increase in depreciable assets placed into service when compared to the prior period. Power depreciation, depletion and accretion expense increased by $11.2 million to $17.4 million for the nine months ended September 30, 2026, as compared to $6.2 million for the nine months ended September 30, 2025, due to an increase in depreciable assets placed into service when compared to the prior period.

Selling, general and administrative expense. Selling, general and administrative expense increased by $8.8 million to $113.9 million for the nine months ended September 30, 2026, as compared to $105.1 million for the nine months ended September 30, 2025. The increase is due to an increase of $1.7 million from stock-based compensation and an increase of $15.8 million driven by consulting and professional fees, net of insurance proceeds (see Note 2- Summary of Significant Accounting Policies- Legal Insurance Proceeds), salaries and benefits, depreciation expense, and other corporate expenses. This increase was partially offset by a decrease in certain acquisition related costs and non-recurring costs of $8.7 million for the nine months ended September 30, 2026, as compared to the nine months ended September 30, 2025.

Our selling, general and administrative expense includes the non-cash expense for stock-based compensation expense for equity awards granted to our employees. For the nine months ended September 30, 2026, stock-based compensation expense was $25.9 million, as compared to $24.2 million of stock-based compensation expense for the nine months ended September 30, 2025.

Credit loss expense. Credit loss expense decreased by $4.2 million to de minimis for the nine months ended September 30, 2026, as compared to $4.2 million for the nine months ended September 30, 2025, due to certain shortfall receivables. See Note 2 - Summary of Significant Accounting Policies - Accounts Receivable and Allowance for Credit Losses for more information.

Amortization expense of acquired intangible assets. Amortization expense of acquired intangible assets increased by $2.2 million to $19.3 million for the nine months ended September 30, 2026, as compared to $17.1 million for the nine months ended September 30, 2025. The increase was primarily due to the amortization of intangible assets associated with acquisitions in 2025, as there were nine full months of activity from the Moser Acquisition for the nine months ended September 30, 2026, as compared to seven full months of activity from the Moser Acquisition for the nine months ended September 30, 2025. See Note 3 - Acquisitions for more information.

Litigation settlement expense, net. Litigation settlement expense, net is $2.6 million for the nine months ended September 30, 2026, as compared to no litigation settlement expense, net for the nine months ended September 30, 2025, due to the Ayers litigation. See Note 9 - Commitment and Contingencies for more information.

Insurance recovery (gain). Insurance recovery is $3.3 million for the nine months ended September 30, 2026, due to an insurance claim for the damaged dredge asset. See Note 6 - Property, Plant and Equipment, Net - Impairment or Disposal of Long-Lived Assets and Insurance Proceeds for more information. There was no insurance recovery for the nine months ended September 30, 2025.

Interest (expense), net. Interest expense, net increased by $7.1 million to $49.0 million for the nine months ended September 30, 2026, as compared to $41.9 million for the nine months ended September 30, 2025. The increase is driven by interest expense associated with finance leases, the Lease Documents, and equipment finance notes.

Loss on early payoff of lease financing. Loss on early payoff of lease financing is $6.8 million for the nine months ended September 30, 2026, as compared to no loss on early payoff of lease financing for the nine months ended September 30, 2025. See Note 7 - Leases for more information.

Income tax expense (benefit). Income tax benefit increased by $22.4 million to $31.6 million of income tax benefit for the nine months ended September 30, 2026, as compared to $9.2 million of income tax benefit for the nine months ended September 30, 2025. The increase is primarily attributable to a decrease in income before income taxes and an increase in percentage depletion in excess of basis for the nine months ended September 30, 2026, as compared to the nine months ended September 30, 2025.

Liquidity and Capital Resources

Overview

Our primary sources of liquidity to date have been capital contributions from our owners, cash flows from operations, equity offerings, the 2031 Notes, and borrowings under our previous term loan credit facilities, and our previous asset-based loan credit facilities. Going forward, we expect our primary sources of liquidity to be cash flows from operations, proceeds from the issuance of the 2031 Notes, availability under our 2023 ABL Credit Facility as amended, the Bridge Loan Credit Agreement or any other credit facility or lease agreements we enter into in the future and proceeds from any future issuances of debt or equity securities. We expect our primary use of capital will be used for investing in our business, specifically for acquisition of fit-for-purpose equipment used in our logistics platform, and power-related growth capital expenditures. In addition, we have routine facility upgrades and additional ancillary capital expenditures associated with, among other things, contractual obligations and working capital obligations.

As of September 30, 2026, we had working capital, defined as current assets less current liabilities, of $60.0 million and $94.4 million of availability under the 2023 ABL Credit Facility. Our cash and cash equivalents totaled $22.3 million.

Cash Flow

The following table summarizes our cash flow for the periods indicated:

Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025

Net Cash Provided by Operating Activities. Net cash provided by operating activities was $41.8 million and $113.6 million for the nine months ended September 30, 2026 and 2025, respectively. Net loss adjusted to net cash provided by operating activities for the nine months ended September 30, 2026 resulted in a cash increase of $52.0 million, as compared with a cash increase of $132.8 million for the nine months ended September 30, 2025. This change was primarily due to lower earnings in 2026. The remaining movement was due to changes in net working capital.

Net Cash Used in Investing Activities. Net cash used in investing activities was $355.3 million and $325.2 million for the nine months ended September 30, 2026 and 2025, respectively. The increase in cash used is primarily attributable to capital spending, primarily from the power segment, during the nine months ended September 30, 2026 when compared to the nine months ended September 30, 2025. This increase is partially offset by the $204.2 million used in the acquisitions that occurred during the nine months ended September 30, 2025, as compared to no such activity for the nine months ended September 30, 2026.

Net Cash Provided by Financing Activities. Net cash provided by financing activities was $295.1 million and $181.2 million for the nine months ended September 30, 2026 and 2025, respectively. The increase is primarily attributable to the $436.5 million provided by the 2031 Notes for the nine months ended September 30, 2026, as compared to no such activity for the nine months ended September 30, 2025. The increase was also attributable to the $92.3 million used in dividends distributed for the nine months ended September 30, 2025, as compared to no such activity for the nine months ended September 30, 2026. In addition, the increase was attributable to $101.3 million used for payment of the Deferred Cash Consideration Note (defined below under Debt Agreements) for the nine months ended September 30, 2025 as compared to $11.1 million used for payment on the Deferred Cash Consideration Note for the nine months ended September 30, 2026. The increase provided by financing activities was partially offset by $253.1 million provided in the Equity Offering (defined below under Debt Agreements) that occurred for the nine months ended September 30, 2025, as compared to no such activity for the nine months ended September 30, 2026. The proceeds from term loan borrowings also contributed to partially offset the overall increase in financing activities as we had $188.8 million of proceeds for the nine months ended September 30, 2025 as compared to no such activity for the nine months ended September 30, 2026. In addition, the $49.7 million used in the Capped Call Transactions for the nine months ended September 30, 2026, as compared to no such activity for the nine months ended September 30, 2025, contributed to partially offset the increase.

Capital Requirements

Our primary growth and technology initiatives include continued acquisition of fit-for-purpose equipment used in our logistics platform and power-related growth capital expenditures. In addition to capital expenditures, we have certain contractual long-term capital requirements associated with our lease and royalty payments and debt. See Note 7 - Leases, Note 8 - Debt and Note 9 - Commitments and Contingencies of the Financial Statements included elsewhere in this Report. Our current level of maintenance capital expenditures is expected to remain within our cash on hand and internally generated cash flow.

We intend to fund our capital requirements through our primary sources of liquidity, which include cash on hand, cash flows from operations, and proceeds from the issuance of the 2031 Notes and, if needed, availability under our 2023 ABL Credit Facility and the Bridge Loan Credit Agreement.

Debt Agreements

2031 Convertible Notes and Capped Call Transaction

2031 Convertible Notes

On April 9, 2026, the Company, issued $450.0 million aggregate principal amount of its 0.50% Convertible Senior Notes due 2031 (the "2031 Notes" and the offering of the Notes, the "2031 Notes Offering"), which included the exercise in full of the initial purchasers' (the "Initial Purchasers") option to purchase up to an additional $60.0 million principal amount of 2031 Notes. The 2031 Notes were issued pursuant to, and are governed by, an indenture (the "Indenture"), dated as of April 9, 2026, between the Company and U.S. Bank Trust Company, National Association, as trustee (the "Trustee").

The 2031 Notes are the Company's senior, unsecured obligations and are (i) senior in right of payment to the Company's indebtedness that is expressly subordinated in right of payment to the 2031 Notes; (ii) equal in right of payment to any of the Company's unsecured indebtedness that is not so subordinated; (iii) effectively junior to the Company's secured indebtedness, to the extent of the value of the assets securing that indebtedness; and (iv) structurally junior to all indebtedness and other liabilities (including trade payables) of the Company's subsidiaries.

The Company will pay interest on the 2031 Notes at an annual rate of 0.50%, payable semi-annually in arrears on April 15 and October 15 of each year, beginning on October 15, 2026. The 2031 Notes will mature on April 15, 2031, unless earlier converted, redeemed or repurchased. Before January 15, 2031, noteholders will have the right to convert their 2031 Notes only in certain circumstances and during specified periods. From and after January 15, 2031, noteholders may convert their 2031 Notes at any time at their election until the close of business on the second scheduled trading day immediately before the maturity date. The Company will settle conversions by paying or delivering, as applicable, cash, shares of the Company's Common Stock (defined in Note 10 - Stockholders Equity), or a combination of cash and the Company's Common Stock, at its election. The initial conversion rate is 68.9275 shares of Common Stock per $1,000 principal amount of 2031 Notes, which represents an initial conversion price of approximately $14.51 per share of Common Stock and a premium of approximately 30% over the last reported sale price of $11.16 per share of the Company's Common Stock on the New York Stock Exchange on April 6, 2026. The conversion rate and conversion price will be subject to adjustment upon the occurrence of certain events.

The 2031 Notes include an aggregate discount to the Initial Purchasers of $13.5 million and $1.1 million in deferred financing fees. These amounts are recorded as a direct reduction from the carrying amount of the debt obligation on the Company's condensed consolidated balance sheets and are amortized to interest expense using the effective interest method. Interest expense associated with the 2031 Notes was $0.6 million and $1.1 million for the three and nine months ended September 30, 2026, respectively, and the interest expense associated with the discount and deferred financing costs was $0.8 million and $1.4 million for the three and nine months ended September 30, 2026, respectively.

The 2031 Notes are redeemable, in whole or in part (subject to certain limitations described below), at the Company's option at any time, and from time to time, on or after April 20, 2029 and prior to the 41st scheduled trading day immediately before the maturity date, at a cash redemption price equal to the principal amount of the 2031 Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date, but only if the last reported sale price per share of the Common Stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which the Company provides notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption. However, the Company may not redeem less than all of the outstanding 2031 Notes unless at least $100.0 million aggregate principal amount of the 2031 Notes are outstanding and not subject to redemption as of, and after giving effect to, delivery of the relevant notice of redemption. If a fundamental change (as defined in the Indenture) occurs, then, subject to limited exceptions, noteholders may require the Company to repurchase the 2031 Notes at a cash repurchase price equal to the principal amount of the 2031 Notes to be repurchased, plus accrued and unpaid interest to, but excluding any repurchase date. In addition, if the effective date of a "make-whole fundamental change" (as defined in the Indenture) occurs prior to the maturity date of the 2031 Notes or if the Company gives a notice of redemption with respect to any or all of the 2031 Notes, the Company will, in certain circumstances, increase the conversion rate for a holder who elects to convert its 2031 Notes in connection with such make-whole fundamental change or convert its 2031 Notes called for redemption (or deemed called for redemption) in connection with such notice of redemption, as the case may be.

The 2031 Notes have customary provisions relating to the occurrence of "Events of Default" (as defined in the Indenture), which include the following: (i) a default in any payment of interest on, or payment of principal of, the 2031 Notes when due and payable (which, in the case of a default in the payment of interests on the 2031 Notes, will be subject to a 30-day cure period); (ii) a default in the Company's obligation to convert a 2031 Note upon the exercise of the conversion right with respect thereto, if such default continues for five business days; (iii) the Company's failure to send certain notices under the Indenture within specified periods of time; (iv) the Company's failure to comply with certain covenants in the Indenture relating to the Company's ability to consolidate with or merge with or into, or sell, convey, transfer or lease all or substantially all of the assets of the Company and its subsidiaries, taken as a whole, to another person (other than to one or more of the Company's direct or indirect wholly owned subsidiaries); (v) a default by the Company in its other obligations or agreements under the Indenture or the 2031 Notes if such default is not cured or waived within 60 days after notice is given in accordance with the Indenture; (vi) certain defaults by the Company or any of its significant subsidiaries with respect to indebtedness for borrowed money of at least $50,000,000; and (vii) certain events of bankruptcy, insolvency and reorganization with respect to the Company or any of its significant subsidiaries.

If an Event of Default involving bankruptcy, insolvency and reorganization with respect to the Company occurs, then the principal amount of, and all accrued and unpaid interest on, all of the 2031 Notes then outstanding will immediately become due and payable without any further action or notice by any person. If any other Event of Default occurs and is continuing, then the Trustee, by notice to the Company, or noteholders of at least 25% of the aggregate principal amount of the 2031 Notes then outstanding, by notice to the Company and the Trustee, may declare the principal amount of, and all accrued and unpaid interest on, all of the 2031 Notes then outstanding to become due and payable immediately. Notwithstanding anything to the contrary described above, the Company may elect that the sole remedy for any Event of Default relating to certain failures by the Company to comply with certain reporting covenants in the Indenture consists, for the first 365 days after the occurrence of such Event of Default, exclusively of the right of the noteholders to receive additional interest on the 2031 Notes. If the Company has made such an election, then on the 366th day after such Event of Default (if such Event of Default is not cured or validly waived in accordance with the Indenture prior to such 366th day), such additional interest will cease to accrue and the 2031 Notes will be subject to acceleration. In the event the Company does not make such an election, or the Company has made such election but does not pay the additional interest when due, the 2031 Notes will be immediately subject to acceleration.

In accordance with ASC 470, "Debt," the 2031 Notes are carried at amortized cost and recorded as a long term liability, under long-term debt on the condensed consolidated balance sheets, as the 2031 Notes mature in 2031 and do not contain any substantive redemption features that are likely to require acceleration.

The Company received approximately $386.2 million of net proceeds from the 2031 Notes Offering, after deducting underwriting and offering fees and after using $49.7 million of the net proceeds to fund the costs of entering into the Capped Call Transactions (as defined herein). The Company used $66.2 million of the net proceeds to pay down outstanding borrowings under the Lease Documents and $76.9 million of the net proceeds to pay down the 2023 ABL Credit Facility. The Company expects to use the remainder of the net proceeds for general corporate purposes, including to purchase a portion of the power generation equipment under the GFA, along with balance of plant and supporting equipment.

Capped Call Transactions

On April 6, 2026, concurrently with the pricing of the 2031 Notes, and on April 7, 2026, in connection with the exercise in full by the Initial Purchasers of their option to purchase additional 2031 Notes, the Company entered into privately negotiated capped call transactions (the "Capped Call Transactions") with an affiliate of one of the Initial Purchasers and certain other financial institutions (the "Option Counterparties"). The Capped Call Transactions initially cover, subject to anti-dilution adjustments substantially similar to those applicable to the 2031 Notes, the number of shares of the Company's Common Stock that initially underlie the 2031 Notes, and are expected generally to reduce potential dilution to the Company's Common Stock upon any conversion of 2031 Notes and/or offset any potential cash payments the Company is required to make in excess of the principal amount of converted 2031 Notes, as the case may be, with such reduction and/or offset subject to a cap. The cap price of the Capped Call Transactions is initially $22.32 per share (subject to adjustment under the terms of the Capped Call Transactions), which represents a premium of 100% over the last reported sale price of $11.16 per share of the Company's Common Stock on April 6, 2026. The cost of the Capped Call Transactions was $49.7 million.

The Capped Call Transactions are separate transactions, each entered into between the Company and the applicable Option Counterparty, and are not part of the terms of the 2031 Notes and will not change any holder's rights under the 2031 Notes or the Indenture. Holders of the 2031 Notes will not have any rights with respect to the Capped Call Transactions.

The Capped Call Transactions related to the 2031 Notes are included in additional paid-in capital in the condensed consolidated balance sheets as of September 30, 2026, with no remeasurement in subsequent periods as the 2031 Notes and Capped Call Transactions, taken together, meet the tax integration criteria for equity classification.

The Company elected to integrate the 2031 Notes and related Capped Call Transactions for federal income tax purposes pursuant to applicable U.S. Treasury Regulations. As a result of this election, for U.S. federal income tax purposes, the $49.7 million premium paid for the Capped Call Transactions is treated as original issue discount on the resulting synthetic debt instruments that generally is deductible over the term of the 2031 Notes. The Company recorded a deferred tax asset of $10.8 million with respect to the 2031 Notes, which represents the tax benefit of these deductions with an offsetting entry to additional paid-in capital.

2025 Term Loan Credit Facility

On February 21, 2025, Atlas LLC entered into a credit agreement (the "2025 Term Loan Credit Agreement") with Stonebriar Commercial Finance LLC ("Stonebriar"), as administrative agent and initial lender, pursuant to which Stonebriar extended Atlas LLC a term loan credit facility comprised of a $540.0 million single advance term loan that was made on February 21, 2025 (the "2025 Term Loan Credit Facility").

The 2025 Term Loan Credit Facility is payable in eighty-five consecutive monthly installments, consisting of forty-eight monthly installments of combined principal and interest, thirty-six installments of interest only payments, and a final payment of the remaining outstanding principal balance at maturity. The 2025 Term Loan Credit Facility has a final maturity date of March 1, 2032. The 2025 Term Loan Credit Facility bears interest at a rate equal to 9.51% per annum.

The 2025 Term Loan Credit Facility includes a discount of $20.2 million and de minimis deferred financing fees. As discussed below (2023 Term Loan Credit Facility), the 2025 Term Loan Credit Facility also includes previously unamortized debt discount and deferred financing fees of $7.7 million associated with prior Stonebriar borrowings. These amounts are recorded as a direct reduction from the carrying amount of the debt obligation on the Company's condensed consolidated balance sheets and are amortized to interest expense using the effective interest method. Interest expense associated with the 2025 Term Loan Credit Facility was $12.3 million and $36.8 million for the three and nine months ended September 30, 2026, respectively, and was $12.8 million and $31.0 million for the three and nine months ended September 30, 2025, respectively. The interest expense associated with the discount and deferred financing costs was $1.0 million and $2.7 million for the three and nine months ended September 30, 2026, respectively, and was $0.8 million and $1.9 million for the three and nine months ended September 30, 2025, respectively.

In the event that the Leverage Ratio (as defined under the 2025 Term Loan Credit Agreement) as of the end of any fiscal quarter ending on or after June 30, 2025 is equal to or greater than 2.5:1.0, Atlas LLC will be required to prepay the 2025 Term Loan Credit Facility with 50% of Excess Cash Flow (as defined under the 2025 Term Loan Credit Agreement) for the fiscal quarter period most recently ended less the aggregate amount of optional prepayments of the 2025 Term Loan Credit Facility made during such period.

Atlas LLC may voluntarily redeem the loan outstanding under the 2025 Term Loan Credit Facility, provided that any such prepayment shall include a prepayment fee equal to the sum of the Make-Whole Amount (as defined in under the 2025 Term Loan Credit Agreement) plus (a) three percent (3%) of the principal amount being repaid if such prepayment occurs on or prior to February 21, 2028, (b) two percent (2%) of the principal amount being repaid if such prepayment occurs after February 21, 2028 but on or prior to February 21, 2029 and (c) one percent (1%) of the principal amount being repaid if such prepayment occurs thereafter. The Make-Whole Amount shall equal zero (0) when calculating any prepayment made after February 21, 2027. Upon the maturity of the 2025 Term Loan Credit Facility, the entire unpaid principal amount of the loan outstanding thereunder, together with interest, fees and other amounts payable in connection with the facility, will be immediately due and payable without further notice or demand.

Dividends and distributions to equity holders are permitted to be made pursuant to certain limited exceptions and baskets described in the 2025 Term Loan Credit Agreement and otherwise generally subject to certain restrictions set forth in the 2025 Term Loan Credit Agreement, including the requirement that no Event of Default (as defined under the 2025 Term Loan Credit Agreement) has occurred and is continuing.

The 2025 Term Loan Credit Facility includes certain non-financial covenants, including but not limited to restrictions on incurring additional debt and certain distributions. The 2025 Term Loan Credit Facility is subject to two financial covenants, which require that the Loan Parties (as defined in the 2025 Term Loan Credit Agreement) maintain a maximum Leverage Ratio of 4.0 to 1.0 and a minimum Liquidity (as defined in the 2025 Term Loan Credit Agreement) of $40,000,000. Such financial covenants are tested as of the last day of each fiscal quarter.

The Company used the proceeds from the 2025 Term Loan Credit Facility (i) to refinance the existing 2023 Term Loan Credit Facility and the ADDT Loan (as defined below), (ii) to finance the cash consideration for the Moser Acquisition, and (iii) for general corporate purposes.

The 2025 Term Loan Credit Facility is unconditionally guaranteed, jointly and severally, by Atlas LLC and its subsidiaries and secured by substantially all of the assets of Atlas LLC and its subsidiaries. The 2025 Term Loan Credit Facility is also unconditionally guaranteed on an unsecured basis by the Company.

As of September 30, 2026, Atlas LLC was in compliance with the covenants of the 2025 Term Loan Credit Facility.

Deferred Cash Consideration Note

On March 5, 2024, the Company completed the acquisition of the Permian Basin proppant production and logistics businesses and operations of Hi-Crush Inc., a Delaware corporation ("Hi-Crush"), in exchange for mixed consideration, subject to customary post-closing adjustments (the "Hi-Crush Transaction"), pursuant to that certain Agreement and Plan of Merger, dated February 26, 2024 (the "Hi-Crush Merger Agreement"), by and among the Company, Atlas LLC, Wyatt Merger Sub 1 Inc., a Delaware corporation and direct, wholly-owned subsidiary of Atlas LLC, Wyatt Merger Sub 2, LLC, a Delaware limited liability company and direct, wholly-owned subsidiary of Atlas LLC, Hi-Crush, each stockholder of Hi-Crush as of immediately prior to the effective time of the mergers pursuant to the Hi-Crush Merger Agreement (each a "Hi-Crush Stockholder" and, collectively, the "Hi-Crush Stockholders"), Clearlake Capital Partners V Finance, L.P., solely in its capacity as the Hi-Crush Stockholders' representative and HC Minerals Inc., a Delaware corporation (collectively, the "Parties").

In accordance with the Hi-Crush Merger Agreement, the Company issued a secured PIK toggle seller note in an aggregate principal amount of $111.3 million, with a final maturity date of January 31, 2026 (the "Deferred Cash Consideration Note"). The Deferred Cash Consideration Note was part of the consideration transferred and valued at fair value at the acquisition date. This amount was subject to adjustments as set forth in the Hi-Crush Merger Agreement. In January 2026, the Deferred Cash Consideration Note increased by $1.1 million in accordance with settlement terms from the Hi-Crush Merger Agreement.

The Deferred Cash Consideration Note bears interest at a rate of 5.00% per annum if paid in cash, or 7.00% per annum if paid in kind. Interest on the Deferred Cash Consideration Note is payable quarterly in arrears beginning March 29, 2024 through maturity. The Company did not have interest expense associated with the Deferred Cash Consideration Note for the three months ended September 30, 2026, and had de minimis interest expense for the nine months ended September 30, 2026. Interest expense associated with the Deferred Cash Consideration Note was $0.1 million and $1.0 million for the three and nine months ended September 30, 2025, respectively.

The Deferred Cash Consideration Note included $4.6 million of debt discount and approximately $0.1 million deferred financing costs. The discount and deferred financing costs are a direct reduction from the carrying amount of the debt obligation on the Company's condensed consolidated balance sheets and are amortized to interest expense using the effective interest method. The Company did not have interest expense associated with the discount and deferred financing costs for the three months ended September 30, 2026, and had interest expense of approximately $0.2 million associated with the discount and deferred financing costs for the nine months ended September 30, 2026. Interest expense associated with the discount and deferred financing costs were approximately $0.7 million and $1.9 million in total for the three and nine months ended September 30, 2025, respectively.

Atlas LLC's obligations under the Deferred Cash Consideration Note are secured by certain of the assets acquired in connection with the Hi-Crush Transaction. The Deferred Cash Consideration Note is also unconditionally guaranteed by Atlas LLC on an unsecured basis.

Repayment of the Deferred Cash Consideration Note

In February 2025, the Company used a portion of the proceeds from an underwritten public offering of 11.5 million shares of Common Stock at a public offering price of $23.00 per share on February 3, 2025 (the "Equity Offering") to repay $101.3 million of the outstanding principal balance of the Deferred Cash Consideration Note. The remaining $11.1 million of principal was paid at maturity.

2023 Term Loan Credit Facility

On July 31, 2023, Atlas LLC entered into a credit agreement (the "2023 Term Loan Credit Agreement") with Stonebriar, as administrative agent and initial lender, pursuant to which Stonebriar extended Atlas LLC a term loan credit facility comprising a $180.0 million single advance term loan that was made on July 31, 2023 (the "Initial Term Loan") and commitments to provide up to $100.0 million of delayed draw (the "DDT Loan") term loans (collectively, the "2023 Term Loan Credit Facility"), which was subsequently amended to provide an additional delayed draw term loan (the "ADDT Loan") in the aggregate principal amount of $150.0 million and increase the existing DDT Loan by an aggregate principal amount of $100.0 million to a total of $200.0 million.

On February 21, 2025, Atlas LLC entered into the 2025 Term Loan Credit Agreement with Stonebriar, proceeds from which were used to repay $332.4 million of the remaining principal and $1.8 million of accrued interest of the Initial Term Loan, the DDT Loan, and the ADDT Loan. As this transaction was accounted for as a modification under ASC 470, "Debt," these fees paid to the lender, as well as previously unamortized debt discount and deferred financing fees associated with the Initial Term Loan, the DDT Loan, and the ADDT Loan of $7.7 million were deferred and recorded as a direct reduction from the carrying amount of the debt obligation on the condensed consolidated balance sheets. These deferred costs are amortized to interest expense using the effective interest method. In connection with this refinancing, on February 21, 2025, we incurred prepayment fees on the Initial Term Loan, the DDT Loan, and the ADDT Loan of $13.3 million. The Company recorded the prepayment fees as additional debt discount and amortizes the amount as an adjustment over the remaining term of the modified debt instrument.

2023 ABL Credit Facility

On February 22, 2023, Atlas LLC, certain of its subsidiaries, as guarantors, Bank of America, N.A., as administrative agent (the "ABL Agent"), and certain financial institutions party thereto as lenders (the "2023 ABL Lenders") entered into a Loan, Security and Guaranty Agreement (the "2023 ABL Credit Agreement") pursuant to which the 2023 ABL Lenders provide revolving credit financing to the Company in an aggregate principal amount of up to $75.0 million (the "2023 ABL Credit Facility"), with Availability (as defined in the 2023 ABL Credit Agreement) thereunder subject to a "Borrowing Base" as described in the 2023 ABL Credit Agreement. The 2023 ABL Credit Facility includes a letter of credit sub-facility, which permits issuance of letters of credit up to an aggregate amount of $25.0 million. The 2023 ABL Credit Agreement maturity date was extended, with the ABL Amendment (defined below), from February 22, 2028 to the earliest of (a) February 26, 2029; (b) the date that is 91 days prior to the maturity date for any portion of the Term Loan Debt (as defined in the ABL Amendment); or (c) any date on which the aggregate Commitments terminate thereunder.

Atlas LLC may also request swingline loans under the 2023 ABL Credit Agreement in an aggregate principal amount not to exceed $7.5 million. During the nine months ended September 30, 2026 and the year ended December 31, 2025, Atlas LLC had no outstanding swingline loans under the 2023 ABL Credit Facility.

Borrowings under the 2023 ABL Credit Facility bear interest, at Atlas LLC's option, at either a base rate or Term SOFR (as defined in the 2023 ABL Credit Agreement), as applicable, plus an applicable margin based on average Availability as set forth in the 2023 ABL Credit Agreement. Term SOFR loans bear interest at Term SOFR for the applicable interest period plus an applicable margin, which ranges from 1.50% to 2.00% per annum based on average Availability as set forth in the 2023 ABL Credit Agreement. Base rate loans bear interest at the applicable base rate, plus an applicable margin, which ranges from 0.50% to 1.00% per annum based on average Availability as set forth in the 2023 ABL Credit Agreement. In addition to paying interest on outstanding principal under the 2023 ABL Credit Facility, Atlas LLC is required to pay a commitment fee which ranges from 0.375% per annum to 0.500% per annum with respect to the unutilized commitments under the 2023 ABL Credit Facility, based on the average utilization of the 2023 ABL Credit Facility. Atlas LLC is required to pay customary letter of credit fees, to the extent that one or more letter of credit is outstanding. For the three and nine months ended September 30, 2026, we recognized $0.1 million and $0.4 million, respectively, of interest expense, unutilized commitment fees and other fees under the 2023 ABL Credit Facility, classified as interest expense. For the three and nine months ended September 30, 2025, we recognized $0.1 million and $0.4 million, respectively, of interest expense, unutilized commitment fees and other fees under the 2023 ABL Credit Facility, classified as interest expense. The 2023 ABL credit facility included $1.0 million in deferred financing costs that are recorded under other long-term assets on the condensed consolidated balance sheets and are amortized on a straight-line basis over the life of the agreement.

The Borrowing Base was initially set at $75.0 million and the amount of available credit changes every month, depending on the amount of eligible accounts receivable and inventory we have available to serve as collateral. With the First Amendment to the 2023 ABL Credit Agreement, discussed below, the Borrowing Base increased to $125.0 million. The Borrowing Base components are subject to customary reserves and eligibility criteria.

On March 5, 2024 and November 12, 2024, the Company drew down $50.0 million and $20.0 million, respectively, under the 2023 ABL Credit Facility for general corporate purposes. In February 2025, the Company used a portion of the proceeds from the Equity Offering to repay the $70.0 million of the outstanding principal balance of the 2023 ABL Credit Facility.

On July 25, 2025, the Company drew down $25.0 million under the 2023 ABL Credit Facility to fund cash consideration for the PropFlow Acquisition. On October 30, 2025 and January 30, 2026, the Company drew down $25.0 million and $25.0 million, respectively, under the 2023 ABL Credit Facility for general corporate purposes. On April 13, 2026, the Company paid the $75.0 million balance of the 2023 ABL Credit Facility along with $1.9 million of accrued interest and fees.

On August 28, 2026, the Company drew down $30.0 million under the 2023 ABL Credit Facility for general corporate purposes.

The Company had interest expense of $0.2 million and $1.3 million for the three and nine months ended September 30, 2026, respectively. The Company had interest expense of $0.3 million and $0.9 million for the three and nine months ended September 30, 2025, respectively. The draws included $0.3 million in debt issuance costs and $0.5 million in deferred financing costs. These costs are recorded under other long-term assets on the condensed consolidated balance sheets and are amortized on a straight-line basis over the life of the agreement. Interest expense associated with the amortization of these costs were $0.1 million and $0.3 million for the three and nine months ended September 30, 2026, respectively. Interest expense associated with the amortization of these costs were $0.1 million and $0.2 million for the three and nine months ended September 30, 2025, respectively.

The 2023 ABL Credit Facility requires that if Availability is less than the greater of (i) 12.50% of the Borrowing Base and (ii) $7.5 million, Atlas LLC must maintain a Fixed Charge Coverage Ratio (as defined in the 2023 ABL Credit Agreement) of at least 1.00 to 1.00 while a Covenant Trigger Period (as defined in the 2023 ABL Credit Agreement) is in effect.

Under the 2023 ABL Credit Agreement, Atlas LLC is permitted to make payments of dividends and distributions pursuant to certain limited exceptions and baskets set forth therein and otherwise generally subject to certain restrictions described therein, including that (i) no Event of Default (as defined under the 2023 ABL Credit Agreement) has occurred and is continuing, and (ii) no loans and no more than $7.5 million in letters of credit that have not been cash collateralized are outstanding, and liquidity exceeds $30.0 million at all times during the 30 days prior to the date of the dividend or distribution; provided that if any loans are outstanding or outstanding letters of credit exceed $7.5 million and no Event of Default has occurred and is continuing, then Atlas LLC is permitted to make payments of dividends and distributions if, (i) Availability (as defined under the 2023 ABL Credit Agreement) is higher than the greater of (a) $12 million and (b) 20% of the pro forma Borrowing Base then in effect and during the 30 days prior to the date of the dividend or distribution as if such dividend or distribution had been made at the beginning of such period, or if (ii) (a) Availability is higher than the greater of (x) $9 million and (y) 15% of the pro forma Borrowing Base then in effect and during the 30 days prior to the date of the dividend or distributions as if such dividend or distribution had been made at the beginning of such period and (b) the Fixed Charge Coverage Ratio (as defined under the 2023 ABL Credit Agreement), as calculated on a pro forma basis, is greater than 1.00 to 1.00, as provided under the 2023 ABL Credit Agreement. Additionally, Atlas LLC may make additional payments of dividends and distributions in qualified equity interests and may make Permitted Tax Distributions (as defined under the 2023 ABL Credit Agreement).

As of September 30, 2026, Atlas LLC had $30.0 million in outstanding borrowings and $0.6 million in outstanding letters of credit under the 2023 ABL Credit Facility. Additionally, as of September 30, 2026, the Borrowing Base was $125.0 million, and Availability was $94.4 million.

The 2023 ABL Credit Facility contains certain customary representations and warranties, affirmative and negative covenants, and events of default. As of September 30, 2026, the Company was in compliance with the covenants under the 2023 ABL Credit Facility.

The 2023 ABL Credit Facility is unconditionally guaranteed, jointly and severally, by Atlas LLC and its subsidiaries and secured by substantially all of the assets of Atlas LLC and its subsidiaries.

Subsequent to September 30, 2026, the Company drew down $15.0 million on October 2, 2026, under the 2023 ABL Credit Facility, for general corporate purposes.

First Amendment to the 2023 ABL Credit Agreement

On February 26, 2024, Atlas LLC and certain other subsidiaries of the Company entered into the First Amendment to Loan, Security and Guaranty Agreement (the "ABL Amendment"), among Atlas LLC, the subsidiary guarantors party thereto, the lenders party thereto and the ABL Agent, which amends the 2023 ABL Credit Agreement.

The ABL Amendment increased the revolving credit commitment to $125.0 million. The existing lenders increased their commitment by $25.0 million which resulted in a debt modification under ASC 470, "Debt." The ABL Amendment also added a new lender with a $25.0 million commitment, thus creating a new debt arrangement under ASC 470, "Debt." The deferred financing costs and debt issuance cost will be amortized on a prospective basis over the term of the agreement. The maturity date of the 2023 ABL Credit Agreement was extended from February 22, 2028 to the earliest of (a) February 26, 2029; (b) the date that is 91 days prior to the maturity date for any portion of the Term Loan Debt (as defined in the ABL Amendment); or (c) any date on which the aggregate Commitments terminate hereunder.

The ABL Amendment requires that if Availability is less than the greater of (i) 12.50% of the Borrowing Base and (ii) $12.5 million, Atlas LLC must maintain a Fixed Charge Coverage Ratio (as defined in the 2023 ABL Credit Agreement) of at least 1.00 to 1.00 while a Covenant Trigger Period (as defined in the 2023 ABL Credit Agreement) is in effect.

Under the ABL Amendment, Atlas LLC is permitted to make payments of dividends and distributions pursuant to certain limited exceptions and baskets set forth therein and otherwise generally subject to certain restrictions described therein, including that (i) no Event of Default (as defined under the 2023 ABL Credit Agreement) has occurred and is continuing, and (ii) no loans and no more than $7.5 million in letters of credit that have not been cash collateralized are outstanding, and liquidity exceeds $30.0 million at all times during the 30 days prior to the date of the dividend or distribution; provided that if any loans are outstanding or outstanding letters of credit exceed $7.5 million and no Event of Default has occurred and is continuing, then Atlas LLC is permitted to make payments of dividends and distributions if, (i) Specified Availability (as defined under the 2023 ABL Credit Agreement) is higher than the greater of (a) $20.0 million and (b) 20% of the pro forma Borrowing Base then in effect and during the 30 days prior to the date of the dividend or distribution as if such dividend or distribution had been made at the beginning of such period, or if (ii) (a) Specified Availability is higher than the greater of (x) $15.0 million and (y) 15% of the pro forma Borrowing Base then in effect and during the 30 days prior to the date of the dividend or distributions as if such dividend or distribution had been made at the beginning of such period and (b) the Fixed Charge Coverage Ratio (as defined under the 2023 ABL Credit Agreement), as calculated on a pro forma basis, is greater than 1.00 to 1.00, as provided under the 2023 ABL Credit Agreement. Additionally, Atlas LLC may make additional payments of dividends and distributions in qualified equity interests and may make Permitted Tax Distributions (as defined under the 2023 ABL Credit Agreement).

Second Amendment to the 2023 ABL Credit Agreement

On January 27, 2025, Atlas LLC and certain other subsidiaries of the Company entered into that certain Second Amendment to Loan, Security and Guaranty Agreement (the "Second ABL Amendment"), among Atlas LLC, as the borrower, the subsidiary guarantors party thereto, the lenders party thereto and Bank of America, N.A., as the ABL Agent. The Second ABL Amendment amends that certain Loan, Security and Guaranty Agreement dated as of February 22, 2023, as amended.

The Second ABL Amendment permitted the Company and its applicable affiliates to enter into the Second Term Loan Amendment, pursuant to which the principal amount of the existing DDT Loan was increased by an aggregate principal amount of $100.0 million.

Third Amendment to the 2023 ABL Credit Agreement

On February 21, 2025, Atlas LLC and certain other subsidiaries of the Company entered into that certain Third Amendment to Loan, Security and Guaranty Agreement (the "Third ABL Amendment"), among Atlas LLC, as the borrower, the subsidiary guarantors party thereto, the lenders party thereto and Bank of America, N.A., as the ABL Agent. The Third ABL Amendment amends that certain Loan, Security and Guaranty Agreement dated as of February 22, 2023, as amended.

The Third ABL Amendment permitted the Company and its applicable affiliates to enter into the 2025 Term Loan Credit Agreement, pursuant to which Atlas LLC borrowed $540.0 million from Stonebriar in a single advance term loan that was made on February 21, 2025.

Fourth Amendment to the 2023 ABL Credit Agreement

On December 26, 2025, Atlas LLC and certain other subsidiaries of the Company entered into that certain Fourth Amendment to Loan, Security and Guaranty Agreement (the "Fourth ABL Amendment"), among Atlas LLC, as the borrower, the subsidiary guarantors party thereto, the lenders party thereto and Bank of America, N.A., as the ABL Agent. The Fourth ABL Amendment amends that certain Loan, Security and Guaranty Agreement dated as of February 22, 2023, as amended.

The Fourth ABL Amendment permitted the Company to form Atlas Energy Solutions Socorro, LLC ("Socorro") (f/k/a Galt Power Solutions LLC), a Texas limited liability company and an indirect wholly owned subsidiary of the Company, and to unconditionally guarantee Socorro's obligations under the Lease Agreement.

Fifth Amendment to the 2023 ABL Credit Agreement

On April 9, 2026, Atlas LLC and certain subsidiaries of the Company entered into that certain Fifth Amendment to Loan, Security and Guaranty Agreement (the "Fifth ABL Amendment"), among Atlas LLC, as the borrower, the subsidiary guarantors party thereto, the lenders party thereto and Bank of America, N.A., as administrative agent. The Fifth ABL Amendment amends that certain Loan, Security and Guaranty Agreement, dated as of February 22, 2023, as amended, to, among other things, permit the issuance of the 2031 Notes and entry into the Capped Call Transactions.

Sixth Amendment to the 2023 ABL Credit Agreement

On September 30, 2026, Atlas LLC and certain subsidiaries of the Company entered into that certain Sixth Amendment to Loan, Security and Guaranty Agreement (the "Sixth ABL Amendment"), among Atlas LLC, as the borrower, the subsidiary guarantors party thereto, the lenders party thereto and Bank of America, N.A., as administrative agent. The Sixth ABL Amendment amends that certain Loan, Security and Guaranty Agreement, dated as of February 22, 2023, as amended, to, among other things, permit an internal reorganization of certain of the Company's subsidiaries.

Other Indebtedness

The Company has other indebtedness of $32.6 million of equipment finance notes as of September 30, 2026. There was $0.3 million and $1.1 million interest expense for the three and nine months ended September 30, 2026, respectively. There was $0.1 million and $0.2 million interest expense for the three and nine months ended September 30, 2025, respectively. These equipment finance notes have terms ending in March 2027 through December 2032 and certain interest rates ranging from 2.24% to 10.89%.

Master Lease Agreement and Interim Funding Agreement

On December 26, 2025, the Company, entered into a master lease agreement (the "Lease Agreement") by and between Socorro, as lessee, and Stonebriar, as lessor, and an Interim Funding Agreement (the "Interim Funding Agreement" and, together with the Lease Agreement, the "Lease Documents"), by and between Socorro and Stonebriar, pursuant to which Socorro assigned a reservation agreement (the "Reservation Agreement") for the manufacture of approximately 240 MW of power generation equipment (the "Equipment") to Stonebriar and Stonebriar agreed to lease such power generation equipment back to Socorro.

Pursuant to the Lease Documents, Stonebriar will make periodic advances up to $385.0 million and Socorro will make payments to Stonebriar in two phases: (i) monthly rental payments in the amount of the unpaid balance of the aggregate amounts advanced by Stonebriar multiplied by a lease rate factor equal to a per annum rate equal to the sum of one-month SOFR plus 635 basis points and (ii) once Equipment (as defined in the Interim Funding Agreement) under the Reservation Agreement is delivered to and accepted by Socorro, monthly rental payments in an amount set forth in the applicable Schedule (as defined in the Interim Funding Agreement) relating to such Equipment. The Lease Agreement provides that Socorro may terminate the Lease Agreement (x) prior to the Term Expiration Date (as defined in the Lease Agreement) for an early termination price set forth on the Schedule for such Equipment or (y) on the Term Expiration Date as set forth on the Schedule for such Equipment, in each case, subject to certain terms and conditions described in the Lease Agreement. The obligations under the Lease Agreement are guaranteed on an unsecured basis by the Company.

On April 15, 2026, the Company paid down $61.1 million of outstanding borrowings under the Lease Documents. The Company incurred $4.9 million on an early payoff premium and $1.9 million in prepaid expenses associated with the financing lease. These expenses are recorded under loss on early payoff of lease financing on the condensed consolidated statements of operations for the nine months ended September 30, 2026. There was interest expense of $0.8 million and $2.5 million for the three and nine months ended September 30, 2026, respectively, from the amortization of deferred financing costs associated with the Lease Documents. Refer to Note 9 - Commitments and Contingencies for additional information on this commitment.

On August 28, 2026, the Company and Stonebriar mutually terminated the Lease Documents.

Critical Accounting Policies and Estimates

As of September 30, 2026, there have been no material changes to our critical accounting policies and related estimates previously disclosed in our Annual Report, except in connection with the Property, Plant and Equipment policy. Management no longer considers the depletion estimate critical due to the nature and materiality of the activity. Refer to the accounting policies discussed in the notes to our Financial Statements under Note 2 - Summary of Significant Accounting Policies.

Impairment of Property, Plant and Equipment

We evaluate long-lived assets for potential impairment indicators whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If such a review should indicate that the carrying amount of long-lived assets is not recoverable, the Company will reduce the carrying amount of such assets to fair value.

Business Combinations

We allocate the purchase price of any business we acquire to the identifiable assets acquired and liabilities assumed based on their estimated fair values. Any excess purchase price over the fair value of the net identifiable assets acquired is recorded as goodwill. We use all available information to estimate fair values, including quoted market prices, the carrying value of acquired assets and assumed liabilities and valuation techniques such as discounted cash flows, relief-from-royalty method, with or without method, multi-period excess earnings method, or cost to recreate method. We engage third-party appraisal firms to assist in the fair value determination of identifiable long-lived assets, identifiable intangible assets, as well as any contingent consideration that provides for additional consideration to be paid to the seller if certain future conditions are met. These estimates are reviewed during the measurement period and adjusted as soon as the necessary information becomes available but no later than one year from the acquisition date. The judgments made in determining the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, can materially impact our financial condition or results of operations. The purchase price associated with business combinations can include a holdback liability. The holdback is subject to changes from estimated to actual net working capital amounts and other customary purchase price adjustments. The holdback amount is based on management's best estimate and may be subject to further adjustments. This amount is recorded in other current liabilities on our condensed consolidated balance sheets. For further discussion on our recently completed acquisitions, see Note 3 - Acquisitions, to the accompanying Financial Statements included elsewhere in this Report.

Valuation of Goodwill and Acquired Intangible Assets

We assess our goodwill for impairment annually on October 1, or whenever events or circumstances indicate that the carrying amount of goodwill may not be recoverable. We determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value after considering qualitative, market and other factors. If it is necessary to perform the quantitative assessment to determine if our goodwill is impaired, the fair value is determined using significant unobservable inputs, or Level 3 in the fair value hierarchy. If the carrying amount exceeds the fair value, an impairment loss is recognized in the current period in an amount equal to the excess. The expected future cash flows used for impairment reviews and related fair value calculations are based on subjective, judgmental assessments of the discount rate, projected volumes of sand sold, and product revenue. The acquired definite-lived intangible assets are evaluated for impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For further discussion on goodwill impairment, see Note 4 - Goodwill and Acquired Intangible Assets, to the accompanying Financial Statements included elsewhere in this Report.