Antero Midstream (AM) Q4 Results - Feb 13

[dan_s]

On February 12th Antero Midstream Corporation (NYSE: AM) ("Antero Midstream" or the "Company") announced its fourth quarter 2024 financial and operating results and 2025 guidance. The relevant consolidated financial statements are included in Antero Midstream's Annual Report on Form 10-K for the year ended December 31, 2024.

Fourth Quarter 2024 Highlights:

Net Income was $111 million, or $0.23 per diluted share, a 10% per share increase compared to the prior year quarter

Adjusted Net Income was $124 million, or $0.26 per diluted share, an 8% per share increase compared to the prior year quarter (non-GAAP measure) < Agrees with my forecast.

Adjusted EBITDA was $274 million, an 8% increase compared to the prior year quarter (non-GAAP measure)

Capital expenditures were $24 million, a 47% decrease compared to the prior year quarter

Free Cash Flow after dividends was $93 million, a 91% increase compared to the prior year quarter (non-GAAP measure)

Repurchased 1.9 million shares for $29 million < More than I expected.

Full Year 2024 Highlights:

Net Income was $401 million, or $0.83 per diluted share, an 8% per share increase compared to the prior year

Adjusted EBITDA was $1.05 billion, a 6% increase compared to the prior year (non-GAAP measure) < Compares to my forecast of $1.036 billion.

Capital expenditures were $161 million, a 13% decrease compared to the prior year

Free Cash Flow after dividends was $250 million, a 61% increase compared to the prior year (non-GAAP measure)

Leverage declined to below 3.0x as of December 31, 2024 (non-GAAP measure)

2025 Guidance Highlights:

Net Income of $445 to $485 million, representing GAAP earnings of $0.92 to $1.00 per share

Adjusted EBITDA of $1.08 to $1.12 billion, a 5% increase compared to 2024 at the midpoint (non-GAAP measure)

Capital expenditures of $170 to $200 million

Free Cash Flow after dividends of $250 to $300 million assuming an annualized dividend of $0.90 per share, a 10% increase compared to 2024 at the midpoint (non-GAAP measures)

Paul Rady, Chairman and CEO said, "Antero Midstream delivered an exceptional year in 2024 with throughput, Net Income, Adjusted EBITDA, and Free Cash Flow setting company records. This Free Cash Flow growth in 2024 provided us with the ability to internally finance an accretive bolt-on acquisition, reduce absolute debt, pay an attractive dividend and repurchase shares in 2024."

Brendan Krueger, CFO of Antero Midstream, said "In 2024, Antero Midstream reduced its absolute debt by nearly $100 million and reduced leverage to under 3.0x. This absolute debt and leverage reduction positioned us to commence our share repurchase program during the fourth quarter of 2024, repurchasing $29 million of shares."

Mr. Krueger added, "Looking ahead to 2025, we expect another year of increases in our EBITDA and Free Cash Flow after dividends. This positions us well for further debt reduction and increases in return of capital to shareholders."

Share Repurchases

During the fourth quarter of 2024, Antero Midstream repurchased 1.9 million shares for $29 million. Antero Midstream had approximately $471 million of remaining capacity under its $500 million authorized share repurchase program as of December 31, 2024.

2025 Guidance < All close to my 2025 forecast.

Antero Midstream is forecasting Net Income of $445 to $485 million and Adjusted Net Income (adjusted for amortization of customer relationships and effective tax rate impact) of $500 to $540 million. The Company is forecasting Adjusted EBITDA of $1.08 to $1.12 billion, which represents a 5% increase compared to 2024 at the midpoint. This Adjusted EBITDA growth is driven by low-single digit year-over-year throughput growth and inflation adjustments to Antero Midstream's fixed fees. Antero Midstream expects to service 70 to 75 wells with its fresh water delivery system, with the wells having an average lateral length of approximately 13,200 feet. The Company's 2025 guidance includes approximately $135 to $145 million of combined distributions from its interests in the processing and fractionation joint venture with MPLX, LP (the "Joint Venture") and in Stonewall Gathering LLC ("Stonewall Joint Venture").

Antero Midstream is forecasting a capital budget of $170 to $200 million. The midpoint of the 2025 capital budget includes approximately $85 million of investment in gathering and compression infrastructure for low pressure gathering connections and compression. Antero Midstream has budgeted an investment of $85 million for water infrastructure in 2025, primarily focused on the expansion to the southern Marcellus liquids-rich midstream corridor. This investment in wastewater blending and pipeline infrastructure creates one integrated water system in the Marcellus Shale, allowing for future capital efficient development across the entire liquids-rich midstream corridor. The Company is also budgeting $10 to $15 million of capital contributions to the Stonewall Joint Venture to increase its capacity.

Antero Midstream is forecasting Free Cash Flow before dividends of $690 to $730 million and Free Cash Flow after dividends of $250 to $300 million for 2025, assuming an annualized dividend of $0.90 per share. This represents a 10% increase in Free Cash Flow after dividends at the midpoint of guidance compared to 2024.

[dan_s]

AM's detailed guidance for 2025 and their stock buybacks being more aggressive than I expected them to be, increases my valuation by $1 to $17/share.

AM''s relationship with Antero Resources (AR) generates steady revenue growth. With more operating cash flow this year, they might increase the dividend, but for now it sounds like they will keep buying back a lot of stock.

AM is an "Income + Growth" stock. For now, the dividend stays at $0.225/quarter for ~5.4% yield.

My updated forecast/valuation model has been posted to the EPG website.

[KGardiner]

Dan, is there an updated AM Forecast post earnings?

Thanks
Kevin

[dan_s]

Our most recent profile date for AM is dated February 24. I will repost it so it will show up on the EPG website home page in a minute.

When I posted it to the website back in February, I did not put it under the High Yield tab so when it dropped off of the home page (which only shows the 10 most recent postings) it disappeared.

The tariffs should not have an impact on the midstream companies (AR, ENB, OKE, PAA/PAGP). Their pipes will remain full unless there is a major recession in the U.S.

[KGardiner]

Thanks Dan