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