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Antero Midstream Corp (AM)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered solid growth: revenue rose to $287.5M, Adjusted EBITDA to $274.3M (+8% YoY), and diluted EPS to $0.23, with Free Cash Flow after dividends up 91% YoY to $92.8M .
  • Segment mix improved sequentially as Water Handling revenue stepped up ($62.1M vs. $44.3M in Q3) on higher completion activity, while Gathering & Processing held steady (~$225M) .
  • 2025 guide introduced: Net Income $445–$485M, Adjusted EBITDA $1.08–$1.12B, capex $170–$200M, and Free Cash Flow after dividends $250–$300M (assuming $0.90 annual dividend), implying mid-single-digit EBITDA growth and a ~10% FCF after dividends increase at the midpoint .
  • Management emphasized increased return of capital flexibility after meeting the 3.0x leverage target, with a nascent buyback program ($29M in Q4) and a stated framework to split post-dividend FCF roughly 50/50 between buybacks and debt reduction going forward .
  • Consensus estimate data from S&P Global was unavailable at time of analysis; beat/miss vs. Street cannot be assessed today.*

What Went Well and What Went Wrong

What Went Well

  • Record cash generation metrics: Q4 Adjusted EBITDA grew 8% YoY to $274M and Free Cash Flow after dividends rose 91% YoY to $93M, enabling debt reduction and buybacks .
  • Water Handling outperformance: Fresh water delivery volumes rose 21% YoY to 114 MBbl/d, lifting water revenue to $62M (vs. $44M in Q3) as AR completed a DUC pad in December, with cadence suggesting more water in Q2 2025 .
  • Confident 2025 outlook: “We expect another year of increases in our EBITDA and Free Cash Flow after dividends,” positioning AM “for further debt reduction and increases in return of capital to shareholders” .

What Went Wrong

  • Core gas throughput slightly softer YoY: Low-pressure gathering (-3%) and compression (-2%) declined versus Q4 2023; JV processing was down 2% YoY, though capacity remained fully utilized .
  • Operating cost headwinds in water: Water Handling operating expenses were $30M (including $22M for wastewater and high-rate transfer), partly offsetting revenue gains .
  • Legal overhang: Management noted no additional disclosure on the Veolia litigation beyond the 10-K and that outcomes/timing remain uncertain; any proceeds would be allocated across debt paydown and buybacks .

Financial Results

Headline metrics (comparisons: YoY vs Q4’23 and sequential vs Q3’24)

MetricQ4 2023Q3 2024Q4 2024
Revenue ($M)$260.170 $269.870 $287.477
Net Income ($M)$100.447 $99.740 $111.189
Diluted EPS ($)$0.21 $0.21 $0.23
Adjusted EBITDA ($M)$253.969 $256.463 $274.274
Interest Expense ($M)$52.000 $51.812 $49.721
Capital Expenditures ($M, accrual)$45.536 $56.265 $24.011
Free Cash Flow before Dividends ($M)$156.433 $148.386 $200.542
Free Cash Flow after Dividends ($M)$48.492 $40.088 $92.807
  • Commentary: Sequential step-up in revenue and EBITDA in Q4 was driven by higher water activity and CPI-based fee escalators, while capex fell sharply QoQ, boosting FCF after dividends .

Segment revenue breakdown (sequential)

Segment Revenue ($M)Q3 2024Q4 2024
Gathering & Processing$225.576 $225.358
Water Handling$44.294 $62.119
Total$269.870 $287.477

Operating KPIs

KPIQ4 2023Q3 2024Q4 2024
Low Pressure Gathering (MMcf/d)3,377 3,277 3,276
Compression (MMcf/d)3,343 3,269 3,266
High Pressure Gathering (MMcf/d)3,047 3,046 3,045
Fresh Water Delivery (MBbl/d)94 71 114
JV Processing (MMcf/d)1,649 1,620 1,622
JV Fractionation (MBbl/d)40 40 40

Average realized fees (Q4 2024)

  • Low-pressure gathering: $0.36/Mcf
  • Compression: $0.21/Mcf
  • High-pressure gathering: $0.23/Mcf
  • Fresh water delivery: $4.31/Bbl

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Income ($M)FY 2025n/a445–485 New FY25 guide
Adjusted Net Income ($M)FY 2025n/a500–540 New FY25 guide
Adjusted EBITDA ($M)FY 2025n/a1,080–1,120 New FY25 guide
Capital Expenditures ($M)FY 2025n/a170–200 New FY25 guide
Interest Expense ($M)FY 2025n/a195–205 New FY25 guide
Cash Taxes ($M)FY 2025n/a0–10 New FY25 guide
FCF Before Dividends ($M)FY 2025n/a690–730 New FY25 guide
Dividend per Share ($)FY 2025n/a0.90 (annualized) Maintained annual run rate
FCF After Dividends ($M)FY 2025n/a250–300 New FY25 guide
Quarterly Dividend ($/sh)Q4 2024Prior $0.225$0.225 declared Maintained
  • FY 2024 (as of Q3): At the time, AM lowered Net Income and Adjusted Net Income midpoints and raised interest expense midpoint vs. prior guide (midpoint changes: NI -$25M, Adj NI -$15M, Interest +$10M) .

Earnings Call Themes & Trends

TopicQ2 2024 (7/31)Q3 2024 (10/30–10/31)Q4 2024 (2/13)Trend
AI/data centersNot discussed in releaseNot discussed in releaseEarly-stage data center discussions tied to AR transport portfolio; AM would participate as AR’s midstream partner New/Watchlist
AR activity/throughputOne completion crew reduced water YoY; bolt-on acquisition closed AR volumes steady; expecting lower Q4 capex after Q3 acceleration Expect ~2 rigs and just over 1 completion crew; low single-digit throughput growth on AM system in 2025 Stable to modest growth
Water businessWater down 23% YoY (Q2) Water down 33% YoY (Q3) Step-up on DUC completion; FY25 water volumes similar YoY with seasonal cadence (more in Q2) Improving into Q4/FY25
Capital allocationBalance sheet improvement; S&P upgrade to BB+ Continued debt paydown; leverage 3.1x Achieved 3.0x; initiated buybacks; 50/50 FCF split (buybacks/debt) after dividends Increasing return of capital
Regulatory/legalNot mentionedNot mentionedVeolia litigation update constrained; potential proceeds timing/outcome uncertain Uncertain but manageable
Leverage/debt3.1x; refinanced notes, extended revolver 3.1x; path to 3.0x in Q4 <3.0x by year-end 2024; lower interest expected in 2025 Deleveraging achieved

Management Commentary

  • Strategy and capital efficiency: “In 2024, we generated EBITDA of $1.05 billion… and an ROIC of 19%, which was a company record… just-in-time capital investment… and accretion from our bolt-on acquisition… contributed to the increase in ROIC” .
  • 2025 execution priorities: ~$170–$200M capex with ~$85M for G&P (including the Torrey’s Peak compressor, 160 MMcf/d capacity by Q2’25) and ~$85M for expanding an integrated water system across the southern Marcellus .
  • Return of capital and leverage: “We expect another year of increases in our EBITDA and Free Cash Flow after dividends… positions us well for further debt reduction and increases in return of capital” .
  • CFO tone on 2025: “We expect… low single-digit throughput growth… combined with annual CPI adjustments to our fees, results in mid-single-digit EBITDA growth… expect lower interest expense in 2025… generate $250–$300M in free cash flow after dividends” .

Q&A Highlights

  • Data center opportunities: Early-stage discussions linked to AR’s Appalachian position and transport portfolio; AM would be involved as AR’s primary midstream provider if such opportunities materialize .
  • 2025 volumes and AR activity: Low single-digit volume growth anticipated at AM from AR’s plan (2 rigs, just over 1 completion crew), plus CPI escalators supporting mid-single-digit EBITDA growth .
  • Veolia litigation: No new details beyond the 10‑K; any proceeds would be allocated across debt reduction and share repurchases depending on timing .
  • Water system build-out: $85M across projects creates an integrated system enabling capital-efficient AR development in southern Marcellus and reduced incremental infrastructure needs for AM over time .
  • Capital allocation cadence: Post-dividend FCF likely allocated ~50% to buybacks and ~50% to further deleveraging on a go-forward basis .

Estimates Context

  • We attempted to retrieve S&P Global consensus for Q4 2024 (EPS, revenue, EBITDA) but it was unavailable due to a data access limit today. As a result, we cannot characterize Q4 results as beats or misses vs. Street in this report.*
  • Directionally, the company delivered YoY growth across revenue, Adjusted EBITDA, and EPS, and a strong sequential step-up in Free Cash Flow after dividends driven by lower capex and higher water activity .

Key Takeaways for Investors

  • Q4 showed healthy operational leverage: higher water revenues, CPI-linked fees, and lower capex drove a sharp FCF after dividends inflection to $93M; this supports continued buybacks and deleveraging into 2025 .
  • 2025 guide targets mid-single-digit EBITDA growth with $250–$300M FCF after dividends at $0.90 annual dividend; the mix of low-single-digit throughput growth plus fee escalators underpins visibility .
  • Balance sheet trajectory remains supportive: leverage is now below 3.0x, and interest expense is expected to fall in 2025, enhancing cash conversion .
  • Capital allocation framework is increasingly shareholder-friendly: management has begun repurchases ($29M in Q4) and plans a roughly 50/50 split of post-dividend FCF between buybacks and debt reduction .
  • Watch water cadence and data center optionality: a stronger water quarter could be Q2’25 given completion timing; early data center discussions in Appalachia could evolve into a medium-term incremental demand catalyst if realized .
  • Near-term trading implication: Absent Street comparables, the narrative centers on durable cash generation, incremental buybacks, and visible 2025 growth—factors that typically support midstream rerating when combined with balance sheet improvement .

*Estimates and consensus values were unavailable from S&P Global at the time of this analysis due to access limits.

Citations:

  • Q4 2024 8‑K + Exhibit 99.1 (press release and financials):
  • Q4 2024 press release (duplicate of Exhibit 99.1 content):
  • Earnings call transcript (Q4 2024):
  • Return of capital press release (Jan 14, 2025):
  • Prior quarters for trend analysis: Q3 2024 8‑K ; Q2 2024 press release