Atlas Energy Solutions (AESI) risk factors, FY2025 10-K

Risks Related to Our Business and Operations

1. 01Our business operations depend on the level of activity in the oil and natural gas industries, which experience substantial volatility
2. 02Our business is subject to the cyclical nature of our customers’ businesses and the oil and natural gas and power industry
3. 03Decreased demand for proppant or the development of technically- and cost-effective alternative proppants or new processes to replace hydraulic fracturing would negatively impact our business
4. 04Our future performance in the proppant market will depend on our ability to succeed in competitive markets and on our ability to appropriately react to potential fluctuations in demand for, and supply of, our products and services
5. 05The carrying value of our property, plant and equipment (“PP&E”) is subject to impairment chargesNew
6. 06Our distributed power segment is dependent on its relationships with key suppliers to obtain equipment for its business
7. 07Many of our power systems involve long sales cycles
8. 08Our customers may not continue to outsource their power system needs49% rewritten
9. 09We depend on a few customers for a significant portion of our power solutions segment revenues, and the loss of one or more significant customers could affect our ability to maintain the revenues of our power solutions segment41% rewritten
10. 10Distributed power solutions in some applications compete with access to the grid25% rewritten
11. 11We expect our power segment to face significant competition in the future as the mobile power industry evolvesNew
12. 12Operation of power generation facilities involves significant risks and hazards customary to the power industry, which we cannot assure our insurance will be adequate to coverNew
13. 13Expected demand growth from the technology sector, manufacturing industry, and other uses of electricity, which have driven recent improvements in the outlook for the competitive power generation market, may not actually occur or be sustainedNew
14. 14We may be unable to adapt our distributed power technologies to meet increasing customer needs and power loads, which could result in increased unexpected operational downtime or outages at our power generation facilities and in increased expenses and reduced revenuesNew
15. 15Supplier concentration at certain of our power generation facilities and the inability of suppliers to meet their obligations may expose us to significant financial credit or performance risksNew
16. 16We may not own the land on which our power generation facilities are located, which could result in disruption to our operationsNew
17. 17Changes in U.S. trade policy and the impact of tariffs could adversely affect our business, results of operations and financial positionNew
18. 18Past performance by members of our management team, our directors or their respective affiliates may not be indicative of our future performance or an investment in us
19. 19The transportation industry is subject to possible legislative and regulatory changes that may affect the economics of the industry by requiring changes in operating practices or by changing the demand or the cost of providing truckload services
20. 20Our operations are subject to operational hazards and inherent risks, some of which are beyond our control, and some of which may not be fully covered by insurance
21. 21facility shutdowns in response to environmental regulatory actions
22. 22Our ability to produce our products economically and in commercial quantities could be impaired if we are unable to acquire adequate supplies of water for our dredging operations
23. 23Failure to maintain effective quality control systems at our mining and production facilities could have an adverse effect on our business, financial condition and operations
24. 24Given the nature of our proppant production operations, we face a material risk of liability, delays and increased cash costs of production from environmental and industrial accidents and operational breakdowns
25. 25Successful operation of the Dune Express will depend on certain factors that may be outside of our control, and the storage and transportation capacity or other anticipated benefits of our Dune Express may not be achieved
26. 26Increased stakeholder and market attention to ESG and conservation matters may adversely impact our business and access to capital
27. 27Our business may suffer if we lose or are unable to attract and retain members of our workforce
28. 28A shortage of skilled labor together with rising labor costs in the excavation industry may further increase operating costs, which could adversely affect our business, results of operations and financial condition
29. 29Inaccuracies in our estimates of sand reserves and resource deposits, or deficiencies in our title to those deposits, could result in our inability to mine the deposits or require us to pay higher than expected costs
30. 30assumptions concerning future effects of regulation, including the issuance of required permits and taxes by governmental agencies
31. 31All of our product revenue is currently generated at facilities in West Texas. Any adverse developments at those facilities could have an adverse effect on our business, financial condition and results of operations
32. 32Our operations consume large amounts of natural gas and electricity. An increase in the price or a significant interruption in the supply of these or any other energy sources could have an adverse effect on our business, financial condition and results of operations38% rewritten
33. 33A large portion of our revenue is generated by our top 10 customers, and the loss of or a significant reduction in purchases by our largest customers could adversely affect our business, financial condition and results of operations
34. 34Our business and operations depend on our and our customers’ ability to obtain and maintain necessary permits
35. 35Our supply agreements may preclude us from taking advantage of increasing prices for proppant or mitigating the effect of increased operational costs during the term of those contracts
36. 36A proppant production facility closure entails substantial costs, and if we close any of our facilities sooner than anticipated, our results of operations may be adversely affected
37. 37Certain of our contracts contain provisions requiring us to deliver minimum amounts of sand-based proppant. If we are unable to meet our minimum requirements under these contracts, we may be required to pay penalties or the contract counterparty may be able to terminate the agreement
38. 38Currently, a majority of our operations are concentrated in the Permian Basin, making us vulnerable to risks associated with operating in a limited geographic area
39. 39An increase in the supply of proppant having similar characteristics as the proppant we produce could make it more difficult for us to renew or replace our existing contracts on favorable terms, or at all
40. 40Our results of operations are significantly affected by the market price of sand-based proppant, which has been historically subject to substantial price fluctuations
41. 41Market prices are affected by numerous factors beyond our control, including, among others, demand for high quality sand-based proppant, the availability and relative cost of alternate sources of sand, drilling and completion activity in the Permian Basin, prevailing commodity prices and overall economic activity30% rewritten
42. 42Our E&P customers’ operations are subject to operating risks that are often beyond our control and could have an adverse effect on our business, financial condition and results of operations
43. 43There are complex software and technology systems that need to be developed in coordination with our technology partner in connection with our autonomous trucking initiative, and there can be no assurance such systems will be successfully developed or implemented for use in our applications or at all
44. 44Any unauthorized control or manipulation of the information and operational technology systems in our autonomous proppant-delivery vehicles could result in loss of customer confidence in us and the products and services we provide
45. 45Our use of autonomous proppant-delivery vehicles is subject to evolving laws and regulations that could impose legal limitations or substantial costs on our ability to commercially deploy our vehicles
46. 46Natural disasters and unusual weather conditions could disrupt business and result in operational delays and otherwise have an adverse effect on our business
47. 47Our acquisitions, dispositions and investments may not result in anticipated benefits and may present risks not originally contemplated, which may have a material adverse effect on our liquidity, financial condition and results of operations

Risks Related to Our Financial Condition

1. 48Our indebtedness could adversely affect our financial flexibility and our competitive position42% rewritten
2. 49engage in certain other transactions without the prior consent of the lenders
3. 50increasing our borrowing costs or otherwise limiting our ability to borrow additional funds for the execution of our business strategy

Risks Related to Our Organizational Structure and Ownership of the Common Stock

1. 51We may not resume our dividend program and there is no guarantee that we will repurchase shares of our Common Stock in the future38% rewritten
2. 52Future sales of Common Stock in the public market, or the perception that such sales may occur, could reduce the trading price of the Common Stock, and any additional capital raised by us through the sale of equity or convertible securities may dilute your ownership in our Company56% rewritten
3. 53Certain of the Principal Stockholders will have the ability to direct the voting of a significant proportion of the voting power of the Common Stock, and their interests may conflict with those of other stockholders
4. 54provides that if the Principal Stockholders or any member of the Board who is not at the time an officer of the Company or their respective affiliates becomes aware of a potential business opportunity, transaction or other matter, they will have no duty to communicate or offer that opportunity to the Company
5. 55Anti-takeover provisions in our organizational documents might discourage or delay acquisition bids or merger proposals, which may adversely affect the market price of the Common Stock and limit the price investors might be willing to pay in the future for the Common Stock
6. 56establish advance notice requirements for nominations of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings
7. 57We may issue preferred stock the terms of which could adversely affect the voting power or value of the Common Stock
8. 58The Company’s structure following the Up-C Simplification may impact our ability to offer equity consideration in acquisitive transactions on a tax-deferred basis, which could increase the price we must pay in such acquisition or adversely affect our ability to compete with other potential acquirors

Risks Related to Environmental, Mining and Other Regulations

1. 59Silica-related health issues and legislation, including compliance with existing or future regulations relating to respirable crystalline silica, or litigation could have an adverse effect on our business, reputation or results of operations
2. 60Spot inspections at mines with a history of repeated silica overexposures to closely monitor and evaluate health and safety conditions
3. 61In addition, pursuant to the initiative, MSHA stated that the DOL’s Educational Field and Small Mine Services staff will provide compliance assistance and outreach to mine operators, unions and other mining community organizations to promote and advance protections for miners
4. 62requirements to perform site investigatory, remedial, or other corrective actions or the incurrence of capital expenditures
5. 63Our and our customers’ operations are subject to a number of risks arising out of the threat of climate change, including regulatory, political, litigation and financial risks, which could result in increased operating and capital costs for our customers and reduced demand for our products and services38% rewritten
6. 64Restrictions on our operations and those of our customers intended to protect certain species of wildlife could have an adverse impact on our ability to expand some of our existing operations or limit our customers’ ability to develop new oil and natural gas wells
7. 65Any restrictions on oil and natural gas development on federal lands have the potential to adversely impact our operations and the operations of our customers57% rewritten
8. 66Multiple aspects of our and our customers’ operations are subject to occupational health and safety standards, including our mining operations, our trucking operations, and including standards relating to employee exposure to crystalline silica27% rewritten
9. 67We and our customers are subject extensive permitting regulations and obligations. Our or our customers’ failure to obtain, maintain, renew, or comply with the terms of the permits we require to operate may adversely affect our results of operations
10. 68Pandemics, epidemics or disease outbreaks, such as the COVID-19 pandemic, may disrupt our business and operations, which could materially affect our financial condition, results of operations and forward-looking expectations
11. 69Our business and operations could suffer in the event of cybersecurity breaches, information and operational technology system failures, network disruptions or other cyber-security risks. A cyber incident could occur and result in information theft, data corruption, operational disruption and/or financial loss
12. 70We may be unable to generate sufficient cash to service all of our indebtedness and financial commitments
13. 71tax effects of share-based compensationNew
14. 72Our future tax liabilities may be greater than expected if our net operating loss (“NOL”) are limitedNew
15. 73We are subject to counterparty credit risk. Nonpayment or nonperformance by our customers, suppliers or vendors could have an adverse effect on our business, liquidity, financial condition and results of operations
16. 74If we fail to comply with the restrictions and covenants in our debt agreements, there could be an event of default under the terms of such agreements, which could result in an acceleration of payment
17. 75Our stock prices and trading volumes could be volatile, and you may not be able to resell shares of your Common Stock when desired, at or above the price you paid, or at all
18. 76the realization of any of the risks described under this “Risk Factors” section
19. 77If securities or industry analysts do not publish research or reports or publish unfavorable research about us, the price and trading volume of our Common Stock could decline