Atlas Energy Solutions Announces Commencement of Underwritten Public Offering of Common Stock

Rhea-AI Summary

Atlas Energy Solutions (NYSE: AESI) has announced an underwritten public offering of 10,000,000 shares of common stock. The company plans to grant underwriters a 30-day option for an additional 1,500,000 shares. The net proceeds will be used to:

• Repay indebtedness, including secured PIK toggle seller note and credit facility borrowings
• Fund the cash consideration for the previously announced Moser Energy Systems acquisition
• Support power-related growth capital expenditures post-Moser acquisition

The Moser Acquisition is expected to close in Q1 2025 and is not contingent upon this offering's completion. Goldman Sachs and Piper Sandler are acting as lead-book running managers. The offering will be conducted through an effective shelf registration statement filed with the SEC on May 15, 2024.

Positive

• Potential debt reduction through repayment of existing indebtedness
• Strategic expansion through Moser Energy Systems acquisition
• Additional capital for power-related growth initiatives

Negative

• Potential shareholder dilution from 10,000,000 new shares plus possible 1,500,000 additional shares
• Increased share count may pressure stock price

Insights

Financial Analyst

This equity offering marks a strategic pivot in Atlas Energy Solutions' capital structure and growth strategy. The 10M share offering (plus potential 1.5M additional shares) represents a significant capital raise that will reshape the company's financial position in several key ways:

The multi-purpose use of proceeds demonstrates a comprehensive financial strategy:

• Debt reduction will strengthen the balance sheet by potentially lowering interest expenses and improving credit metrics
• Funding the Moser Energy Systems acquisition through equity rather than debt maintains financial flexibility
• The allocation for power-related growth capital expenditures signals a strategic expansion in the power generation sector

The choice of equity financing over debt is particularly noteworthy in the current high-interest-rate environment. While this approach avoids additional interest burden, it does create dilution for existing shareholders. However, the debt reduction component partially offsets this dilution by improving the company's financial health and reducing future interest expenses.

The flexibility to exercise the Cash Option in the Moser acquisition demonstrates strong market confidence in the offering's success. This strategic acquisition, expected to close in Q1 2025, positions Atlas for expansion in power-related services, potentially creating new revenue streams and operational synergies.

The involvement of Goldman Sachs and Piper Sandler as lead book-runners adds credibility to the offering, suggesting institutional investor interest. The shelf registration's effectiveness indicates thorough regulatory compliance and streamlined execution capability.

AUSTIN, Texas--(BUSINESS WIRE)-- Atlas Energy Solutions Inc. (NYSE: AESI) (“Atlas” or the “Company”) today announced the commencement of an underwritten public offering (the “Offering”) of an aggregate of 10,000,000 shares of its common stock, par value $0.01 per share (“common stock”).

The Company intends to use the net proceeds it receives from the Offering (i) to repay indebtedness, which may include a portion of its secured PIK toggle seller note and outstanding borrowings under its credit facility and term loan credit facility, (ii) to fund a portion of the cash consideration for the Company’s previously announced acquisition of Moser Engine Service, Inc. (d/b/a Moser Energy Systems) (the “Moser Acquisition”), including the election to pay the aggregate transaction consideration in cash in lieu of the issuance of stock consideration (the “Cash Option”) or, if the Cash Option has not been exercised, redemption of the stock consideration, if exercised by the Company, subject to market conditions, and (iii) the remainder, if any, for general corporate purposes, including power-related growth capital expenditures following completion of the Moser Acquisition. The Company expects to close the Moser Acquisition in the first quarter of 2025, subject to customary closing conditions and regulatory approvals. The Moser Acquisition is not contingent upon the completion of this Offering and this Offering is not contingent upon the completion of the Moser Acquisition.

The Company expects to grant the underwriters a 30-day option to purchase up to an additional 1,500,000 shares of common stock at the public offering price, less the underwriting discounts and commissions.

Goldman Sachs & Co. LLC and Piper Sandler & Co. are acting as lead-book running managers for the Offering. The Offering is subject to market and other conditions, and there can be no assurance as to whether or when the Offering may be completed, or as to the actual size or terms of the Offering.

The Offering will be made only by means of a prospectus supplement and the accompanying base prospectus. The Offering is being conducted pursuant to an effective shelf registration statement on Form S-3 (the “Registration Statement”), which was filed with the U.S. Securities and Exchange Commission (the “SEC”) on May 15, 2024, that became effective upon filing and the corresponding prospectus. A preliminary prospectus supplement thereto has been filed with the SEC. Before investing, prospective investors should read the prospectus supplement, the accompanying base prospectus and the documents incorporated by reference therein for more complete information about the Company and the Offering. You may obtain these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, copies of the preliminary prospectus supplement and the accompanying base prospectus related to this Offering, and the final prospectus supplement, when available, may be obtained by contacting:

Goldman Sachs & Co. LLC
Attn: Prospectus Department
200 West Street
New York, NY 10282
Telephone: 1-866-471-2526
Prospectus-ny@ny.email.gs.com

Piper Sandler & Co.
Attn: Prospectus Department
800 Nicollet Mall J12S03
Minneapolis, Minnesota 55402
Telephone: (800) 747-3924
prospectus@psc.com

This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful without registration or qualification under the securities laws of any such state or jurisdiction.

About Atlas Energy Solutions
Atlas Energy Solutions Inc. is a leading proppant producer and proppant logistics provider, serving primarily the Permian Basin of West Texas and New Mexico. We operate 14 proppant production facilities across the Permian Basin with a combined annual production capacity of 29 million tons, including both large-scale in-basin facilities and smaller distributed mining units. We manage a portfolio of leading-edge logistics assets, which includes our 42-mile Dune Express conveyor system. In addition to our conveyor infrastructure, we manage a fleet of over 120 trucks, which are capable of delivering expanded payloads due to our custom-manufactured trailers and patented drop-depot process. Our approach to managing both our proppant production and proppant logistics operations is intently focused on leveraging technology, automation and remote operations to drive efficiencies.

We are a low-cost producer of various high-quality, locally sourced proppants used during the well completion process. We offer both dry and damp sand, and carry various mesh sizes including 100 mesh and 40/70 mesh. Proppant is a key component necessary to facilitate the recovery of hydrocarbons from oil and natural gas wells.

Our logistics platform is designed to increase the efficiency, safety and sustainability of the oil and natural gas industry within the Permian Basin. Proppant logistics is increasingly a differentiating factor affecting customer choice among proppant producers. The cost of delivering sand, even short distances, can be a significant component of customer spending on their well completions given the substantial volumes that are utilized in modern well designs.

We continue to invest in and pursue leading-edge technologies, including autonomous trucking, digital infrastructure, and artificial intelligence, to support opportunities to gain efficiencies in our operations. These technology-focused investments aim to improve our cost structure and also combine to produce beneficial environmental and community impacts.

While our core business is fundamentally aligned with a lower emissions economy, our core obligation has been, and will always be, to our stockholders. We recognize that maximizing value for our stockholders requires that we optimize the outcomes for our broader stakeholders, including our employees and the communities in which we operate. We are proud of the fact that our approach to innovation in the hydrocarbon industry while operating in an environmentally responsible manner creates immense value. Since our founding in 2017, our core mission has been to improve human beings’ access to the hydrocarbons that power our lives while also delivering differentiated social and environmental progress. Our Atlas team has driven innovation and has produced industry-leading environmental benefits by reducing energy consumption, emissions, and our aerial footprint. We call this Sustainable Environmental and Social Progress.

We were founded in 2017 by Ben M. “Bud” Brigham, our Executive Chairman, and are led by an entrepreneurial team with a history of constructive disruption bringing significant and complementary experience to this enterprise, including the perspective of longtime E&P operators, which provides for an elevated understanding of the end users of our products and services. Our executive management team has a proven track record with a history of generating positive returns and value creation. Our experience as E&P operators was instrumental to our understanding of the opportunity created by in-basin sand production and supply in the Permian Basin, which we view as North America’s premier shale resource and which we believe will remain its most active through economic cycles.

Cautionary Statement Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Statements that are predictive or prospective in nature, that depend upon or refer to future events or conditions or that include the words “may,” “assume,” “forecast,” “position,” “strategy,” “potential,” “continue,” “could,” “will,” “plan,” “project,” “budget,” “predict,” “pursue,” “target,” “seek,” “objective,” “believe,” “expect,” “anticipate,” “intend,” “estimate” and other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters identify forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements regarding the size and terms of the Offering and our use of proceeds from the Offering; Atlas’s plans to finance the Moser Acquisition; and the receipt of all necessary approvals to close the Moser Acquisition and the timing associated therewith.

Actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, but not limited to, those discussed or referenced in our filings made from time to time with the SEC, including those discussed in the Registration Statement and the prospectus supplement relating to this Offering, under the heading “Risk Factors” in our Annual Report on Form 10-K, filed with the SEC on February 27, 2024, and any subsequently filed Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, including those discussed in Exhibit 99.3 to our Current Report on Form 8-K filed on January 27, 2025. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250130365347/en/

Investor Contact

Kyle Turlington

5918 W Courtyard Drive, Suite #500

Austin, Texas 78730

United States

T: 512-220-1200

IR@atlas.energy

Source: Atlas Energy Solutions Inc.

FAQ

How many shares is AESI offering in its May 2024 public offering?

AESI is offering 10,000,000 shares of common stock, with an additional 30-day option for underwriters to purchase up to 1,500,000 more shares.

What will Atlas Energy Solutions use the proceeds from its 2024 stock offering for?

The proceeds will be used to repay indebtedness, fund the Moser Energy Systems acquisition, and support power-related growth capital expenditures.

When is the Moser Energy Systems acquisition expected to close?

The Moser Energy Systems acquisition is expected to close in the first quarter of 2025.

Who are the lead-book running managers for AESI's 2024 stock offering?

Goldman Sachs & Co. and Piper Sandler & Co. are acting as lead-book running managers for the offering.

Is AESI's stock offering contingent on the Moser acquisition completion?

No, the stock offering is not contingent upon the completion of the Moser acquisition, and vice versa.