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Investing.com -- Atlas Energy Solutions Inc. (NYSE:AESI) shares plunged 13% in after-hours trading Monday after the company reported a significant earnings miss for the third quarter and announced the suspension of its quarterly dividend amid challenging market conditions.
The energy services provider posted a loss of -$0.19 per share for Q3, falling well short of analyst expectations for earnings of $1.07 per share. Revenue came in at $259.6 million, exceeding the consensus estimate of $237.1 million but declining 14.7% compared to the $304.4 million reported in the same quarter last year.
The company’s financial performance deteriorated significantly from the previous quarter, with Adjusted EBITDA dropping to $40.2 million from $70.5 million in Q2, representing a 43% sequential decline. Adjusted EBITDA margin fell to 15% from 24% in the prior quarter.
"Despite an exceptionally weak West Texas completions market, Atlas generated meaningful Adjusted Free Cash Flow, a testament to the strength of our competitive position and cost-advantaged mines and logistics network," said John Turner, President & CEO. "These results were achieved despite a challenging third quarter, marked by softer than expected customer demand and higher operating costs at Kermit due to issues with the dredge feed and the wet plant."
In response to the difficult operating environment, Atlas has instituted a company-wide efficiency initiative targeting $20 million in annualized cost savings and suspended its quarterly dividend to preserve capital.
Bud Brigham, Executive Chairman, explained the dividend suspension as "a deliberate choice to safeguard our balance sheet’s long-term strength while unlocking the flexibility to capitalize on transformative growth opportunities, especially in our power platform."
Looking ahead, Atlas expects further weakness in Q4, projecting lower sequential Adjusted EBITDA with volumes for its Sand & Logistics business forecast at approximately 4.8 million tons. The company cited year-end seasonality as a factor, though noted this would be partially offset by new customer additions and resumption of completion activity from current customers.
Despite near-term challenges, Atlas remains optimistic about its power business, which it says has witnessed rapid expansion with commercial opportunities approaching 2 gigawatts for permanent power installations.
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