Antero Midstream Shares (NYSE:AM) Take Out Multi Year High On Solid Earnings

In the competitive energy sector, Antero Midstream Corporation (NYSE: AM) has affirmed its stability with first-quarter 2024 earnings that broadly aligned with expert predictions and showcased a surge in revenue. T

he quarter's performance reflects how the company has navigated the complexities of the market, particularly in the natural gas segment.

The quarterly highlights, (with year on year, same quarter comparison):

• Net Income increased 17% to $104 million
• EBITDA up 10% to $265 million
• EPS $0.21 (consensus expectation $0.23)
• Increased gathering and processing volumes by 4% and 6%
• Free cash flow increased 62%, to $74million
• Capex reduced by 11% to $30million

Antero Midstream reported an adjusted earnings per share of 24 cents for the first quarter, which is in step with the consensus. This shows the company's ability to meet market expectations and consolidate its financial standing among investors and stakeholders.

“Antero Midstream delivered another exceptional quarter with double-digit Adjusted EBITDA growth combined with double-digit declines in capital expenditures year-over-year.”

Paul Rady, Chairman and CEO

The company saw a considerable 1.8% increase in total quarterly revenues, which amounted to $279.05 million. This figure surpassed the estimate of $274.46 million by 1.62%, suggesting that Antero Midstream is expanding its revenue streams effectively and outperforming market forecasts.

One of the critical drivers underpinning this quarterly outcome was the pronounced boost in compression volumes, highlighting Antero Midstream's capacity optimisation. Average daily compression volumes scaled up to 3,260 million cubic feet, reflecting a significant increase from the previous year's quarter. Similarly, high-pressure gathering volumes swelled to 2,966 MMcf/d, advancing from the figures recorded in the year-ago period.

Encouragingly, the company's control over direct operating expenses revealed efficiency gains. Antero Midstream reduced these expenses from $57.9 million to $53.9 million year-over-year, which could positively impact profit margins and operational nimbleness.

Nevertheless, total operating expenses edged upward to $112.8 million in the first quarter of 2024. This increment underscores the need to carefully balance cost management with operational expansion, an ongoing challenge for firms in the natural resources sector.

In a broader financial context, Antero Midstream reported cash and cash equivalents of $26.1 million, coupled with a substantial long-term debt portfolio amounting to $3,174.9 million as of March 31, 2024. This leverage level will likely continue to be a critical management focus for maintaining liquidity and funding operations.

As for the path ahead, Antero Midstream reaffirmed its adjusted EBITDA guidance for 2024. The company anticipates an adjusted EBITDA in the range of $1,020-$1,060 million, marking a 5% increase from the previous year. This outlook suggests that the company is optimistic about its continued financial growth and operational efficiency.

Moreover, the company is projecting free cash flows after dividends to be in the range of $235-$275 million for 2024. This projection not only underpins Antero Midstream's commitment to shareholder returns but also reflects its confidence in generating strong operational cash flow in the forthcoming period.

The stock continues to set new multi year highs, and whilst the numbers were steady, some misses on the cards means that operational efficiency will continue to hold importance in the months to come. Credit still in the bank for Antero.