icon
icon
icon
icon
Upgrade
icon

Antero Midstream (AM) Q3 Earnings call transcript Oct 31, 2024

AInvestFriday, Nov 1, 2024 2:11 am ET
2min read

The third quarter earnings call for Antero Midstream, a leading midstream energy company, provided a comprehensive update on the company's financial health and strategic initiatives. The call, led by executives including Paul Rady, Justin Agnew, Brendan Krueger, and Michael Kennedy, highlighted the company's strong financial performance and strategic positioning, with a focus on capital efficiency, international premiums, and operational highlights.

Capital Efficiency and Accelerated Investments

Paul Rady, CEO and President of Antero Resources and Antero Midstream, began the call by discussing the company's 2024 capital budget and the accelerated investments in the third quarter. The company has successfully executed on its capital program, with $56 million invested in the third quarter, representing 35% of the full-year budget. This acceleration was due to favorable weather conditions and is expected to result in a significant decline in capital expenditures in the fourth quarter. The company also highlighted the progress on the Torreys Peak compressor station, which is expected to come online in the second quarter of 2025, adding 160 million cubic feet a day of capacity to the system.

International Premiums and Free Cash Flow

Brendan Krueger, CFO of Antero Midstream, provided a detailed overview of the company's financial performance for the third quarter. The company reported EBITDA of $256 million, a 2% increase year-over-year, and a 32% increase in free cash flow after dividends. The company's unhedged free cash flow breakevens are well below peers, indicating a significant competitive advantage in terms of operational efficiency and access to international markets. Antero Resources' propane exports on the Mariner East pipeline, which benefits from strong international demand and export constraints along the Gulf Coast, have contributed to these favorable free cash flow breakevens.

Consistent Free Cash Flow Generation and Future Outlook

Brendan Krueger also emphasized the company's consistent free cash flow generation since the third quarter of 2022, totaling over $350 million over the last two years. This demonstrates the company's ability to internally finance both organic capital programs and acquisitions. Looking ahead to 2025, the company expects further growth in EBITDA and free cash flow, positioning it well to return incremental capital to shareholders.

Shareholder Questions and Outlook

During the Q&A session, analysts asked questions about the impact of deferrals in Antero Resources' activities on Antero Midstream's results and the potential drivers of growth in 2025. The company reaffirmed its expectation for mid-single-digit growth on the gathering side, with volumes expected to be consistent year-over-year. The company also addressed the potential use of proceeds from the Veolia payment and the possibility of buybacks, depending on the company's debt and leverage targets.

Conclusion

Antero Midstream's third quarter earnings call underscored the company's strong financial performance, strategic positioning, and operational efficiency. The company's capital efficiency, international premiums, and consistent free cash flow generation are key strengths that position it well for future growth and value creation. As the company continues to execute on its strategic initiatives and navigate the evolving energy landscape, investors and stakeholders will closely monitor its performance and outlook.

Disclaimer: the above is a summary showing certain market information. AInvest is not responsible for any data errors, omissions or other information that may be displayed incorrectly as the data is derived from a third party source. Communications displaying market prices, data and other information available in this post are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any security. Please do your own research when investing. All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit, or protect against loss in a down market.