DENVER, April 24, 2024 /PRNewswire/ -- Antero Midstream Corporation (NYSE:AM) ("Antero Midstream" or the "Company") today announced its first quarter 2024 financial and operating results. The relevant unaudited condensed consolidated financial statements are included in Antero Midstream's Quarterly Report on Form 10-Q for the three months ended March 31, 2024. First Quarter 2024 Highlights: Gathering and processing volumes increased by 4% and 6%, respectively, compared to the prior year quarter Placed in service the Grays Peak compressor station with an initial capacity of 160 MMcf/d Net Income was a company record $104 million, or $0.21 per diluted share, a 17% per share increase compared to the prior year quarter Adjusted Net Income was $117 million, or $0.24 per diluted share, a 14% per share increase compared to the prior year quarter (non-GAAP measure) Adjusted EBITDA was $265 million, a 10% increase compared to the prior year quarter (non-GAAP measure) Capital expenditures were $30 million, an 11% decrease compared to the prior year quarter Free Cash Flow after dividends was $74 million, a 62% increase compared to the prior year quarter (non-GAAP measure) Leverage declined from 3.3x at year-end 2023 to 3.1x as of March 31, 2024 (non-GAAP measure) Paul Rady, Chairman and CEO said, "Antero Midstream delivered another exceptional quarter with double-digit Adjusted EBITDA growth combined with double-digit declines in capital expenditures year-over-year. As a result, Antero Midstream generated $74 million of Free Cash Flow after dividends during the quarter, which is over 60% higher than last year. These results highlight the value of Antero's integrated planning and development program in Appalachia." Brendan Krueger, CFO of Antero Midstream, said "With the Free Cash Flow after dividends generated during the quarter, we made significant progress towards our 3.0x Leverage target, reducing Leverage from 3.3x at year-end to 3.1x at the end of the quarter.  We continue to expect to achieve the 3.0x Leverage target in 2024, which will position us well to pursue further return of capital to shareholders." For a discussion of the non-GAAP financial measures, including Adjusted EBITDA, Adjusted Net Income, Leverage, Free Cash Flow after dividends, and Net Debt see "Non-GAAP Financial Measures." First Quarter 2024 Financial Results Low pressure gathering volumes for the first quarter of 2024 averaged 3,301 MMcf/d, a 4% increase as compared to the prior year quarter. Compression volumes for the first quarter of 2024 averaged 3,260 MMcf/d, a 4% increase compared to the prior year quarter. High pressure gathering volumes averaged 2,966 MMcf/d, a 6% increase compared to the prior year quarter. Fresh water delivery volumes averaged 113 MBbl/d during the quarter, an 8% decrease compared to the first quarter of 2023. Gross processing volumes from the processing and fractionation joint venture with MPLX, LP (the "Joint Venture") averaged 1,602 MMcf/d for the first quarter of 2024, a 6% increase compared to the prior year quarter. Joint Venture processing capacity was approximately 100% utilized during the quarter based on nameplate processing capacity of 1.6 Bcf/d. Gross Joint Venture fractionation volumes averaged 40 MBbl/d, an 11% increase compared to the prior year quarter. Joint Venture fractionation capacity was 100% utilized during the quarter based on nameplate fractionation capacity of 40 MBbl/d. Three Months Ended March 31, Average Daily Volumes: 2023 2024 % Change Low Pressure Gathering (MMcf/d) 3,171 3,301 4 % Compression (MMcf/d) 3,137 3,260 4 % High Pressure Gathering (MMcf/d) 2,801 2,966 6 % Fresh Water Delivery (MBbl/d) 123 113 (8) % Gross Joint Venture Processing (MMcf/d) 1,508 1,602 6 % Gross Joint Venture Fractionation (MBbl/d) 36 40 11 % For the three months ended March 31, 2024, revenues were $279 million, comprised of $218 million from the Gathering and Processing segment and $61 million from the Water Handling segment, net of $18 million of amortization of customer relationships. Water Handling revenues include $24 million from wastewater handling and high rate water transfer services and approximately $1 million of third-party revenues. Direct operating expenses for the Gathering and Processing and Water Handling segments were $26 million and $28 million, respectively, for a total of $54 million. Water Handling operating expenses include $22 million from wastewater handling and high rate water transfer services. General and administrative expenses excluding equity-based compensation were $12 million during the first quarter of 2024. Total operating expenses during the first quarter of 2024 included $9 million of equity-based compensation expense and $37 million of depreciation. Net Income was $104 million, or $0.21 per diluted share, a 17% per share increase compared to the prior year quarter. Net Income adjusted for amortization of customer relationships, loss on early extinguishment of debt, loss on settlement of asset retirement obligation and gain on asset sale, net of tax effects of reconciling items, or Adjusted Net Income, was $117 million. Adjusted Net Income was $0.24 per share, a 14% per share increase compared to the prior year quarter. The following table reconciles Net Income to Adjusted Net Income (in thousands): Three Months Ended March 31, 2023 2024 Net Income $ 86,507 103,926 Amortization of customer relationships 17,668 17,668 Loss on early extinguishment of debt — 59 Loss on settlement of asset retirement obligations 341 — Gain on asset sale (245) — Tax effect of reconciling items(1) (4,567) (4,565) Adjusted Net Income $ 99,704 117,088 (1)       The tax rates for the three months ended March 31, 2023 and 2024 were 25.7% and 25.8%, respectively. Adjusted EBITDA was $265 million, a 10% increase compared to the prior year quarter, driven primarily by volumetric growth and the expiration of the low pressure gathering rebate program. Interest expense was $53 million, a 2% decrease compared to the prior year quarter, driven by lower average total debt, partially offset by higher interest rates on our revolving credit facility borrowings. Capital expenditures were $30 million, an 11% decrease compared to the prior year quarter. Free Cash Flow before dividends was $182 million, a 19% increase compared to the prior year quarter. Free Cash Flow after dividends was $74 million, a 62% increase compared to the prior year quarter. The following table reconciles Net Income to Adjusted EBITDA and Free Cash Flow before and after dividends (in thousands): Three Months Ended March 31, 2023 2024 Net Income $ 86,507 103,926 Interest expense, net 54,624 53,308 Income tax expense 31,670 36,488 Depreciation expense 35,196 37,095 Amortization of customer relationships 17,668 17,668 Gain on asset sale (245) — Accretion of asset retirement obligations 44 44 Loss on settlement of asset retirement obligations 341 — Loss on early extinguishment of debt — 59 Equity-based compensation 6,327 9,327 Equity in earnings of unconsolidated affiliates (24,456) (27,530) Distributions from unconsolidated affiliates 34,105 34,960 Adjusted EBITDA $ 241,781 265,345 Interest expense, net (54,624) (53,308) Capital expenditures (accrual-based) (33,603) (29,772) Free Cash Flow before dividends $ 153,554 182,265 Dividends declared (accrual-based) (107,923) (108,279) Free Cash Flow after dividends $ 45,631 73,986 The following table reconciles net cash provided by operating activities to Free Cash Flow before and after dividends (in thousands): Three Months Ended March 31, 2023 2024 Net cash provided by operating activities $ 182,719 210,561 Amortization of deferred financing costs (1,474) (1,655) Settlement of asset retirement obligations 158 164 Changes in working capital 5,754 2,967 Capital expenditures (accrual-based) (33,603) (29,772) Free Cash Flow before dividends $ 153,554 182,265 Dividends declared (accrual-based) (107,923) (108,279) Free Cash Flow after dividends $ 45,631 73,986 First Quarter 2024 Operating Update Gathering and Processing — During the first quarter of 2024, Antero Midstream connected 12 wells to its gathering system. Additionally, at the end of the first quarter Antero Midstream placed into service its Grays Peak compressor station with an initial capacity of 160 MMcf/d. This station utilized compressor units relocated from underutilized areas, which resulted in approximately $15 million of capital savings. The Grays Peak station will service future development in the liquids-rich midstream corridor of the Marcellus Shale and bring Antero Midstream's total compression capacity to 4.7 Bcf/d. Capital Investments Capital expenditures were $30 million during the first quarter of 2024. The company invested $25 million in gathering and compression and $5 million in water infrastructure. West Virginia University Engineering Program Gift Antero Midstream and Antero Resources Corporation (NYSE:AR) announced a $4,000,000 gift to West Virginia University to support undergraduate and graduate students in Petroleum and Natural Gas Engineering. The gift also established an Antero Professorship, and helped develop a new Master's Degree program in Petroleum Midstream Engineering. This Petroleum Midstream Engineering Program will be the first of its kind in the United States. Conference Call A conference call is scheduled on Thursday, April 25, 2024 at 10:00 am MT to discuss the financial and operational results.  A brief Q&A session for security analysts will immediately follow the discussion of the results.  To participate in the call, dial in at 877-407-9126 (U.S.), or 201-493-6751 (International) and reference "Antero Midstream."  A telephone replay of the call will be available until Thursday, May 2, 2024 at 10:00 am MT at 877-660-6853 (U.S.) or 201-612-7415 (International) using the conference ID: 13743602. To access the live webcast and view the related earnings conference call presentation, visit Antero Midstream's website at www.anteromidstream.com.  The webcast will be archived for replay until Thursday, May 2, 2024 at 10:00 am MT. Presentation An updated presentation will be posted to the Company's website before the conference call. The presentation can be found at www.anteromidstream.com on the homepage. Information on the Company's website does not constitute a portion of, and is not incorporated by reference into this press release. Non-GAAP Financial Measures and Definitions Antero Midstream uses certain non-GAAP financial measures. Antero Midstream defines Adjusted Net Income as Net Income plus amortization of customer relationships, loss on early extinguishment of debt, loss on settlement of asset retirement obligations and loss (gain) on asset sale, net of tax effect of reconciling items. Antero Midstream uses Adjusted Net Income to assess the operating performance of its assets. Antero Midstream defines Adjusted EBITDA as Net Income plus interest expense, net, income tax expense, depreciation expense, amortization of customer relationships, loss on early extinguishment of debt, loss (gain) on asset sale, accretion of asset retirement obligations, impairment of property and equipment, loss on settlement of asset retirement obligations, and equity-based compensation expense, excluding equity in earnings of unconsolidated affiliates, plus distributions from unconsolidated affiliates. Antero Midstream uses Adjusted EBITDA to assess: the financial performance of Antero Midstream's assets, without regard to financing methods, capital structure or historical cost basis; its operating performance and return on capital as compared to other publicly traded companies in the midstream energy sector, without regard to financing or capital structure; and the viability of acquisitions and other capital expenditure projects. Antero Midstream defines Free Cash Flow before dividends as Adjusted EBITDA less interest expense, net and accrual-based capital expenditures. Capital expenditures include additions to gathering systems and facilities, additions to water handling systems, and investments in unconsolidated affiliates. Capital expenditures exclude acquisitions. Free Cash Flow after dividends is defined as Free Cash Flow before dividends less accrual-based dividends declared for the quarter. Antero Midstream uses Free Cash Flow before and after dividends as a performance metric to compare the cash generating performance of Antero Midstream from period to period. Adjusted EBITDA, Adjusted Net Income, and Free Cash Flow before and after dividends are non-GAAP financial measures. The GAAP measure most directly comparable to these measures is Net Income. Such non-GAAP financial measures should not be considered as alternatives to the GAAP measures of Net Income and cash flows provided by (used in) operating activities. The presentations of such measures are not made in accordance with GAAP and have important limitations as analytical tools because they include some, but not all, items that affect Net Income and cash flows provided by (used in) operating activities. You should not consider any or all such measures in isolation or as a substitute for analyses of results as reported under GAAP. Antero Midstream's definitions of such measures may not be comparable to similarly titled measures of other companies. The following table reconciles cash paid for capital expenditures and accrued capital expenditures during the period (in thousands): Three Months Ended March 31, 2023 2024 Capital expenditures (as reported on a cash basis) $ 42,957 35,073 Change in accrued capital costs (9,354) (5,301) Capital expenditures (accrual basis) $ 33,603 29,772 Antero Midstream defines Net Debt as consolidated total debt, excluding unamortized debt premiums and debt issuance costs, less cash and cash equivalents. Antero Midstream views Net Debt as an important indicator in evaluating Antero Midstream's financial leverage. Antero Midstream defines leverage as Net Debt divided by Adjusted EBITDA for the last twelve months. The GAAP measure most directly comparable to Net Debt is total debt, excluding unamortized debt premiums and debt issuance costs. The following table reconciles consolidated total debt to consolidated net debt, excluding debt premiums and issuance costs, ("Net Debt") as used in this release (in thousands): March 31, 2024 Bank credit facility $ — 7.875% senior notes due 2026 547,900 5.75% senior notes due 2027 650,000 5.75% senior notes due 2028 650,000 5.375% senior notes due 2029 750,000 6.625% senior notes due 2032 600,000 Consolidated total debt $ 3,197,900 Less: Cash and cash equivalents (26,088)