Antero Midstream Corp ((AM)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Antero Midstream Corp’s recent earnings call painted a picture of robust financial health, underscored by significant gains in EBITDA and free cash flow. The company also highlighted strategic acquisitions and a concerted effort to reduce debt. However, the call was not without its challenges, as Antero Midstream acknowledged underutilized assets and obstacles in executing new projects.
Strong Financial Performance
Antero Midstream reported a 10% year-over-year increase in adjusted EBITDA, reaching $281 million. This growth was fueled by higher volumes in gathering, processing, and fresh water delivery. The company also saw a remarkable 94% rise in free cash flow after dividends compared to the previous year, reflecting its strong financial footing.
Successful Capital Investment
In the third quarter, Antero Midstream invested $51 million, bringing the year-to-date capital investment to $133 million, which is about 75% of the total budget at the midpoint of guidance. This investment was primarily aimed at expanding and connecting water assets in the Marcellus Shale.
Balance Sheet Improvement
The company made strides in improving its balance sheet by reducing absolute debt by approximately $175 million and lowering leverage by nearly 0.5 turn. Antero Midstream also refinanced its nearest maturity notes to 2033, earning a credit ratings upgrade from Moody’s.
Expansion in Marcellus Shale
Antero Midstream expanded its footprint in the Marcellus Shale by acquiring approximately $260 million worth of assets in the core area. This acquisition resulted in 10 additional locations dedicated to Antero Midstream, bringing the total to 80 locations acquired year-to-date.
Challenges in Implementing Behind-the-Meter Projects
The company faces several hurdles in pursuing behind-the-meter opportunities, including equipment availability and the need for agreements with utilities. As a result, no near-term announcements are expected in this area.
Underutilized Assets
Antero Midstream acknowledged significant underutilized capacity from previous acquisitions, particularly in the Crestwood and Summit assets, which are located in the dry gas and lean gas areas.
Forward-Looking Guidance
Looking ahead, Antero Midstream plans to continue its strategic initiatives and financial performance improvements. The company aims to maintain its capital investment strategy, focusing on expanding water assets in the Marcellus Shale. With a 5% year-over-year increase in gathering and compression volumes and a 10% rise in adjusted EBITDA, Antero Midstream is poised for continued growth. The company’s leverage has been reduced to 2.7x, supported by debt reduction and share repurchases, and it boasts over $870 million in liquidity with no near-term maturities.
In conclusion, Antero Midstream’s earnings call highlighted a strong financial performance with strategic investments and debt reduction efforts. While challenges remain, particularly with underutilized assets and project implementation hurdles, the company’s forward-looking guidance suggests a positive trajectory. Investors will be keen to see how Antero Midstream navigates these challenges and capitalizes on growth opportunities in the coming quarters.