Antero Midstream Corp (AM)·Q2 2025 Earnings Summary

Executive Summary

• Q2 2025 delivered solid operational growth and cash generation: volumes hit records, GAAP EPS was $0.26 (+44% YoY per-share), Adjusted EPS $0.29, and Adjusted EBITDA rose 11% YoY to $284M, while capex fell 13% YoY, driving Free Cash Flow after dividends to $82M (+89% YoY) .
• Management raised full‑year 2025 guidance: Net Income, Adjusted Net Income and Adjusted EBITDA each +$10M; capex, interest expense and current income tax each -$5M; Free Cash Flow before/after dividends +$25M; dividend maintained at $0.90 .
• Strategic message emphasized AM’s advantaged positioning as the “first mile” to LNG demand on the Gulf Coast and rising Northeast power demand from data centers; leverage declined to 2.8x on debt reduction and FCF deployment, with buybacks totaling ~$83M YTD through July 30 .
• Near‑term stock reaction catalysts: guidance raise and improvements in cash taxes/interest/capex, continued volume strength, and visible optionality around in‑basin data center demand and over‑nameplate JV processing utilization—all with disciplined capital allocation (buybacks and deleveraging) .

What Went Well and What Went Wrong

• What Went Well

  • Record gathering/processing volumes drove 11% YoY Adjusted EBITDA growth to $284M with capex down 13% YoY; FCF after dividends rose 89% YoY to $82M, enabling continued deleveraging and buybacks .
  • 2025 guidance raised across earnings and FCF, while reducing interest, capex, and cash taxes; management now expects to be a non‑material cash taxpayer through at least 2028, aided by tax legislation (bonus depreciation and interest limitation relief) .
  • Strategic positioning: management highlighted AM’s unique “first mile” role connecting low‑cost AR supply to LNG and potential in‑basin data center demand; JV processing ran above nameplate, underscoring tightness and optionality; “well positioned for future growth opportunities.” .

• What Went Wrong

  • GAAP EBITDA (S&P methodology) appears below Street “EBITDA” consensus despite strong operations, reflecting definitional differences vs company Adjusted EBITDA; investors should anchor on company’s Adjusted EBITDA ($284M) and understand S&P vs company taxonomy .
  • Water Handling op expense remained elevated with $32M tied to wastewater/high‑rate transfer, partially offsetting segment revenue gains .
  • Legal overhang: Clearwater facility lawsuit referenced in Q&A with no timeline update (awaiting Colorado Supreme Court), maintaining a non‑fundamental uncertainty .

Financial Results

• GAAP results (company-reported; oldest → newest)

• Margins (S&P Global methodology; values marked with * from S&P Global)

• Segment revenue breakdown

• Operating KPIs (daily averages unless noted)

• Q2 2025 results vs S&P Global consensus (S&P methodology; values marked with *)

Note: The company reports GAAP revenue of $305.5M, which includes a non‑cash reduction for amortization of customer relationships ($17.668M). S&P’s “Revenue actual” of $323.14M effectively adds back this amortization, explaining the higher S&P revenue actual used for estimate comparison . S&P’s “Primary EPS actual” ($0.29) aligns with company Adjusted EPS, whereas GAAP diluted EPS is $0.26; investors should distinguish GAAP vs adjusted results . Values marked with * retrieved from S&P Global.

Guidance Changes

Drivers: throughput outperformance, lower capex, lower interest, and favorable tax legislation (bonus depreciation/interest limitation improvements) .

Earnings Call Themes & Trends

Management Commentary

• CEO Paul Rady: “We gathered 3.5 Bcf/d…a 6% increase YoY and a new company record…we continue to see significant demand growth from Gulf Coast LNG facilities as well as natural gas fired power demand from data center growth in Appalachia…AM is well positioned for future growth opportunities.”
• CFO Brendan Krueger: “Record gathering and processing volumes…led to an 11% YoY increase in EBITDA, while capex declined 13%…This capital efficiency drove an 89% increase in FCF…” .
• CFO (call): Guidance raise drivers include +$10M Adjusted EBITDA (throughput outperformance), -$5M capex, -$5M interest, and reduction of cash taxes to zero due to legislation; not a material cash taxpayer through at least 2028 .
• Capital reuse: “To date we have realized over $50M of savings…five‑year savings estimate (2026–2030) increased from $60M to over $85M.”

Q&A Highlights

• In‑basin demand and data centers: AM could both connect incremental AR volumes (collecting water/LP/compression/HP fees) and build infrastructure spurs under take‑or‑pay for power/microgrid projects; timing TBD, multiple discussions underway .
• Capital allocation: Targeting ~50% of excess FCF to buybacks over a “full‑year” lens, but opportunistic between buybacks and debt paydown; stepped up repurchases in July, still sees equity value; leverage benefits accrue to equity .
• JV capacity: Can run ~10% above nameplate; no imminent need for added processing capacity given mix and pad cadence; current operations above nameplate are manageable .
• Cash taxes: Expect non‑material cash taxpayer through at least 2028; H2 expected to reverse H1 cash taxes .
• Legal: No update on Clearwater facility lawsuit timeline (awaiting Colorado Supreme Court) .

Estimates Context

• Q2 2025 beat on revenue and EPS vs S&P Global consensus; S&P revenue “actual” ($323.14M*) reflects add‑back of amortization of customer relationships vs company GAAP revenue ($305.47M). Primary EPS “actual” ($0.29*) aligns with company Adjusted EPS vs GAAP diluted EPS of $0.26 .
• EBITDA/EBIT comparisons vs S&P consensus show misses using S&P’s GAAP frameworks, while company’s Adjusted EBITDA rose 11% YoY to $284M; investors should reconcile GAAP vs Adjusted definitions when comparing to “consensus” .
• Target Price consensus is $18.64*; estimate counts: EPS (6), revenue (3)*. Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

• Operational momentum: Record volumes and CPI‑escalated fees supported revenue/EPS beats vs S&P consensus, with double‑digit Adjusted EBITDA growth and strong FCF conversion despite lower capex .
• Improved 2025 outlook: Guidance raised across earnings/FCF with lower capex, interest and cash taxes; derisks model and supports higher cash returns and deleveraging .
• Structural demand catalysts: LNG pull‑through and emerging Northeast data center power demand create multi‑year throughput optionality; AM’s “first mile” positioning and AR tie‑in provide durable growth visibility .
• Capital allocation discipline: Balanced between buybacks (accelerated in July) and debt paydown; leverage now 2.8x, leaving capacity for organic growth and opportunistic repurchases .
• Estimate revisions: Street likely to lift FY25 EPS/FCF and modestly raise Adjusted EBITDA consistent with guidance, while normalizing tax and interest assumptions; be mindful of EBITDA definition mismatches in consensus vs company reporting .
• Watch items: Legal case timing (Colorado Supreme Court) and sustained above‑nameplate JV processing; both currently manageable, but worth monitoring for capacity or legal updates .
• Dividend durability: Q2 dividend declared at $0.225/share (annualized $0.90), supported by consistent FCF after dividends and expectation of minimal cash taxes through at least 2028 .

Values marked with * retrieved from S&P Global.