Yahoo Finance Antero Midstream Corp (AM) (Q1 2024) Earnings Call Transcript Highlights: Record Cash Flows and ...
Free Cash Flow Before Dividends: $182 million, a company record.
Free Cash Flow After Dividends: $74 million, also a company record.
EBITDA Growth: Double-digit increase, specifics not quantified.
Capital Expenditure: Double-digit decline year-over-year, specifics not quantified.
Leverage: Reduced to 3.1x from 3.3x at year-end 2023.
Gathering Volumes: Increased by 4% compared to the previous year.
Processing Volumes: Increased by 6% compared to the previous year.
Debt Reduction: Absolute debt reduced during the quarter.
Release Date: April 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Could you touch on the theme of increased demand for power related to AI and data centers and the opportunity set that AM has? A: Paul M. Rady, President, Chairman & CEO of Antero Midstream, explained that Antero Resources (AR) is focusing on directing all its gas to the Gulf Coast, where it expects to receive premium pricing due to high demand, including from AI and data centers. This strategy underpins AM's investments and provides visibility into long-term asset development.
Q: With AM nearing its 3x leverage target, how should we think about the timing of buybacks and capital allocation priorities between M&A and buybacks? A: Brendan E. Krueger, CFO of Antero Midstream, indicated that as the company approaches its leverage target, it will evaluate options including share buybacks, further debt reduction, or executing bolt-on acquisitions. He emphasized that share buybacks currently make a lot of sense but will be assessed upon reaching the leverage target.
Q: Are there more bolt-on opportunities that look attractive, and has the capital allocation stack changed? A: Brendan E. Krueger reiterated that share buybacks continue to be a sensible option for return of capital. However, the company remains open to bolt-on opportunities with high asset visibility, similar to past acquisitions.
Q: What could be the impact on AM volumes if AR defers one pad due to current dry gas pricing? A: Michael N. Kennedy, Senior VP of Finance & Director at Antero Midstream, clarified that the deferral would not impact AM volumes this year as it would not come online within the year.
Q: Does the revised guidance on liquids-rich areas by AR provide more confidence around your volume forecast? A: Brendan E. Krueger confirmed that the revised guidance by AR is driven by the liquid side and does not change AM's volume forecast, which remains solid.
Q: Could you elaborate on the decision to buy back debt in Q1 and whether your capital allocation framework assumes further debt paydown this year? A: Brendan E. Krueger explained that the decision to repurchase senior notes was influenced by the preference to reduce cash on the balance sheet rather than holding it. As AM approaches its 3x leverage target, further debt paydown will be considered as part of its capital allocation strategy.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
