• EBITDA (2024): $1.05 billion, marking the 10th consecutive year of growth.
• Return on Invested Capital (ROIC) (2024): 19%, a company record.
• Capital Expenditures (2025 Budget): $170 million to $200 million.
• Fourth Quarter EBITDA (2024): $274 million, an 8% increase year over year.
• Free Cash Flow After Dividends (Q4 2024): $93 million, a 91% increase year over year.
• Debt Reduction (Q4 2024): Over $50 million, achieving a 3 times leverage target.
• Share Repurchase (Q4 2024): Almost $30 million of shares repurchased.
• Free Cash Flow After Dividends (Full Year 2024): $250 million, a company record.
• Debt Reduction (Full Year 2024): Almost $100 million.
• 2025 Free Cash Flow Guidance: $250 million to $300 million after dividends, a 10% increase year over year at the midpoint.
• Dividend (2025): Expected to maintain $0.90 per share.

• Warning! GuruFocus has detected 1 Warning Sign with MONRF.

Release Date: February 13, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Antero Midstream Corp (NYSE:AM) achieved its 10th consecutive year of EBITDA growth, generating $1.05 billion in 2024.
• The company set a record with a 19% return on invested capital (ROIC) in 2024.
• Free cash flow after dividends increased by 91% year over year, allowing for significant debt reduction and share repurchases.
• AM's 2025 capital budget focuses on efficient capital allocation, with investments in organic growth and strategic joint ventures.
• The company plans to maintain a $0.90 per share dividend while allocating additional free cash flow to share repurchases and debt reduction.

Negative Points

• The company's 2025 guidance indicates only low-single-digit throughput growth, which may not meet higher growth expectations.
• There is uncertainty surrounding the outcome of the Veolia lawsuit, which could impact financial planning.
• The water infrastructure investment of $85 million may not yield immediate returns, as benefits are tied to future development.
• AM's reliance on Antero Resources for primary customer activity could pose risks if Antero Resources' production levels fluctuate.
• The company's share repurchase program, while beneficial, may not fully utilize the $500 million authorization, as only $29 million was executed in the recent quarter.

Q & A Highlights

Q: Can you discuss Antero Resources' plans regarding future data center deals and how these might impact Antero Midstream? A: Brendan Krueger, CFO, mentioned that Antero Resources is well-positioned in Appalachia for potential data center opportunities. While discussions are ongoing, it's still early, and Antero Midstream, as the primary midstream service provider, would be involved in these discussions if they materialize.

Q: With Antero Resources' increased production guidance, could we see higher activity levels in 2025? A: Brendan Krueger explained that Antero Resources has a drilling joint venture, which will result in low-single-digit volume growth at Antero Midstream. This, combined with CPI escalators on fees, is expected to drive mid-single-digit EBITDA growth in 2025.

Q: Can you provide more details on the Veolia lawsuit and the potential use of the $19 million received for attorney fees? A: Brendan Krueger stated that there are no additional disclosures beyond the 10-K, as the appeal process is ongoing. If cash flow from the lawsuit materializes, it will likely be allocated towards debt reduction and share buybacks.

Q: Could you elaborate on the $85 million investment in water infrastructure in 2025 and the expected cost efficiencies? A: Brendan Krueger noted that the investment is for projects like the integrated water system in the Marcellus, which allows Antero Resources to develop the entire field efficiently. This should reduce overall capital spend on infrastructure in the southern portion and enhance operational flexibility.

Q: How should we think about capital allocation, particularly regarding M&A, buybacks, and debt reduction? A: Brendan Krueger indicated that Antero Midstream evaluates M&A opportunities based on returns compared to debt reduction and share buybacks. A 50-50 mix of free cash flow after dividends between share repurchases and debt paydown is a likely approach moving forward.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.