Atlas Energy Solutions Inc. Fair Value Disclosure
Note 17 – Fair Value Measurements
The following table sets forth the Company’s assets and liabilities that were recognized at fair value (in thousands):
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Quoted Prices in Active Markets for Identical Assets |
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Significant Other Observable Inputs |
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Significant Other Unobservable Inputs |
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December 31, 2025 |
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Level 1 |
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Level 2 |
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Level 3 |
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Total |
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Liabilities |
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Contingent consideration (1) |
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$ |
— |
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$ |
— |
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$ |
1,890 |
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$ |
1,890 |
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Total |
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$ |
— |
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$ |
— |
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$ |
1,890 |
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$ |
1,890 |
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(1) Contingent consideration is presented under other long-term liabilities in the consolidated balance sheets.
Fair Value of Contingent Consideration:
The fair value measurement of contingent consideration is determined using Level 3 inputs. The Company’s contingent consideration represents a component of the total purchase consideration for the PropFlow Acquisition. The measurement is calculated using unobservable inputs based on the Company’s own assessment of achievement of certain performance goals. The Company estimated the fair value of the contingent consideration based on the Monte Carlo simulation model. Refer to Note 3 - Acquisitions for further discussion.
The following table summarizes the changes in the fair value of contingent consideration (in thousands):
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For the Year Ended December 31, 2025 |
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Beginning Balance |
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$ |
— |
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PropFlow Acquisition |
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5,250 |
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(1) |
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(3,360 |
) |
Ending Balance |
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$ |
1,890 |
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(1) Fair value changes are presented under change in fair value of contingent consideration on the consolidated statement of operations.
Financial Instruments Not Carried at Fair Value:
The Company’s other financial instruments not carried at fair value consist primarily of debt instruments which are measured at carrying value. Refer to Note 2 - Summary of Significant Accounting Policies for further discussion.
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.