Summary of AESI Q2 2026 Earnings Call

1Key Financial Results and Metrics

Revenue: $293.2 million

Adjusted EBITDA: $49.5 million (EBITDA margin of approximately 17%)

Proppant Sales Volume: 5.6 million tons (flat sequentially)

Average Sales Price for Proppant: $17.70 per ton

Cost of Sales: $221.3 million

Growth CapEx: $131.5 million, primarily for Caterpillar power generation equipment

Maintenance CapEx: $14.6 million

Q3 EBITDA Guidance: Expected range of $30 million to $45 million, with a strong Q4 anticipated.

2Strategic Updates and Business Highlights

Power Business Growth:

Signed a 120-megawatt power purchase agreement with a technology infrastructure provider, expected to generate $55 million in annual adjusted free cash flow once operational.

The company is expanding its behind-the-meter power solutions, with a focus on long-term contracts (15-20 years) due to increasing demand from data centers.

The oilfield power segment is also seeing strong contracting momentum, with expectations to deploy 180-200 megawatts by year-end.

Logistics and Sand Business:

The logistics segment showed improvement with record volumes and a margin of 14%.

The Dune Express logistics system is enhancing operational efficiency and reducing reliance on third-party trucking.

3Forward Guidance and Outlook

Q3 Expectations:

Anticipated sand and logistics sales volume is uncertain due to customer breaks and a strategic shift towards pricing discipline.

Q4 is expected to show significant improvement based on already allocated volumes and customer completion schedules.

Long-Term Outlook:

The company is well-positioned for growth in the private power market, with an anticipated backlog of contracts.

Continued investment in infrastructure and technology is expected to enhance competitive positioning.

4Bad News, Challenges, or Points of Concern

Volume Variability: Q3 volume guidance is wide due to customer breaks and a strategic decision to prioritize pricing over volume, creating uncertainty.

Market Conditions: The logistics market remains tight, with rising costs due to driver shortages and increased trucking rates, which could pressure margins.

Competitive Pressures: The company is facing challenges from competitors with lower operational efficiencies, which could impact pricing and market dynamics.

5Notable Q&A Insights

Contracting Urgency: There is an increasing urgency among potential customers for long-term contracts, reflecting a shift in market dynamics.

CapEx Considerations: CapEx for power projects is expected to be project-dependent, with a range of $1.5 million to $2.5 million per megawatt.

Debt Management: The company plans to avoid adding debt until contracts are secured, emphasizing a cautious approach to leverage.

Political and Regulatory Environment: Recent policy announcements in Texas may create additional demand for private power solutions, potentially benefiting AESI. Overall, AESI is navigating a complex market landscape with a focus on strategic growth in its power and logistics segments while managing challenges related to volume variability and competitive pressures.