Antero Midstream (AM) Q4 2025 Earnings Transcript

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DATE

Feb. 12, 2026 at 12 p.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Michael Kennedy
• Chief Financial Officer — Justin Agnew
• Senior Vice President, Finance — Dan Katzenberg

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TAKEAWAYS

• Acquisition of HG Mid -- Closed for $1.1 billion, adding over 400 undeveloped locations dedicated to Antero Midstream Corporation (NYSE:AM) for 2026 capital allocation.
• Adjusted EBITDA -- $285 million in the quarter, up 4% year over year, driven by higher gathering and compression volumes.
• Full-year EBITDA growth -- 7% year-over-year increase, marking eleven consecutive years of EBITDA growth since IPO.
• Free cash flow after dividends -- $85 million generated in the quarter, and $325 million for the year, representing a 30% year-over-year increase; quarterly free cash flow was used for debt reduction and $48 million in share repurchases.
• Capital budget for 2026 -- Estimated at $190 million-$220 million, covering well connects, compression asset relocation, water system integration, and dry gas expansion.
• 2026 outlook: Adjusted EBITDA and free cash flow -- Forecast of over $1.2 billion in adjusted EBITDA (8% year-over-year growth) and $360 million free cash flow after dividends (11% year-over-year increase).
• Leverage -- Reduced to 2.7x and expected to remain in the low-3x range under the 2026 capital plan.
• Return on invested capital (ROIC) -- Achieved 20% for 2025, highlighting capital efficiency.
• Dividend policy -- Plans to maintain an annual dividend of $0.90 per share in 2026.

SUMMARY

The call detailed the closing of the HG Mid acquisition, immediately increasing Antero Midstream Corporation's asset base and future development projects. Management outlined forecasted double-digit growth in free cash flow after dividends and high single-digit EBITDA growth for 2026, targeting continued capital efficiency and disciplined capital allocation. The company described the integration of newly acquired water assets as a driver for incremental water segment growth starting in 2027.

• Kennedy said, "we can achieve this growth with very modest capital budgets, which allows us to further expand our free cash flow after dividends in 2027."
• Shareholder returns in 2026 will be balanced between debt reduction and share repurchases.
• Management stated there is no anticipated increase in capital outlays beyond the outlined 2026 capital budget despite higher development activity.
• The three-rig, two-crew program on dedicated acreage is expected to support mid- to high-single-digit EBITDA growth through and beyond 2027.

INDUSTRY GLOSSARY

• ROIC (Return on Invested Capital): A performance measure expressing net operating profit after tax as a percentage of total invested capital, used by midstream companies to gauge capital efficiency and value creation.
• Gathering and compression volumes: The amount of natural gas or liquids transported and pressurized through a network of pipelines and compressor stations before reaching processing or market delivery points within a midstream system.

Full Conference Call Transcript

Michael Kennedy: Thanks, Dan. Good morning, everyone. We recently closed the acquisition of HG Mid for $1,100,000,000. This bolt-on asset in the core of the Marcellus Shale adds over 400 highly economic undeveloped locations dedicated to Antero Midstream Corporation that immediately compete for development capital and infrastructure projects in 2026. This asset is a strategic fit in Antero Midstream Corporation’s portfolio and will follow our just-in-time capital investment strategy that generates consistent and repeatable free cash flow. Looking back at 2025, we generated EBITDA growth of 7% year over year, which marked our eleventh consecutive year of growth since our IPO in 2014.

Free cash flow after dividends increased by 30%, driven by capital efficient organic growth and throughput from Antero Resources Corporation. In 2026, this EBITDA and free cash flow growth continues, as we expect 8% year-over-year EBITDA growth and 11% year-over-year free cash flow growth. Looking ahead further to 2027, we expect another year of high single-digit EBITDA growth as we realize the full benefits of the acquisition and synergies, including the integration of the water system and Antero Resources Corporation running a three-rig, two-completion-crew development program on our dedicated acreage.

Justin will go into the details in his remarks, but the integrated water system combined with our investment in dry gas assets provides high visibility into growth at Antero Midstream Corporation. Importantly, we can achieve this growth with very modest capital budgets, which allows us to further expand our free cash flow after dividends in 2027. With that, I will turn the call over to Justin Agnew.

Justin Agnew: Thanks, Michael. I will start with our fourth quarter and full-year highlights on slide number four. Adjusted EBITDA was $285,000,000 during the quarter, which was a 4% increase year over year driven by an increase in gathering and compression volumes. During the quarter, we generated $85,000,000 of free cash flow after dividends, which we used to reduce leverage to 2.7x and repurchased approximately $48,000,000 of Antero Midstream Corporation shares. For the full year, we generated a company record free cash flow after dividends of $325,000,000, which is a 30% increase compared to 2024. This free cash flow growth, driven by capital efficiencies from leveraging our existing assets, generated a 20% return on invested capital, or ROIC, in 2025.

Now let us move on to slide number five titled “2026 Capital Budget.” In 2026, we have budgeted a capital investment of $190,000,000 to $220,000,000. The capital budget includes our blocking-and-tackling well connect and water capital, construction and relocation of compression assets, high-pressure gathering trunk lines, and capital to integrate the water systems. It also includes expansion capital on the dry gas portion of the acreage to enhance downstream deliverability to multiple long-haul pipelines. These projects will unlock significant optionality and improve reliability in the dry gas regime that we do not currently have today.

I will finish my comments on slide number six titled “2026 Guidance and Outlook.” This guidance includes the impact of the acquisition and divestiture with contributions to guidance based on closing dates of each transaction. For 2026, we are forecasting adjusted EBITDA of over $1,200,000,000 from this point, an 8% increase year over year. As Michael mentioned, after we finish the integration of the acquired water assets in 2026, we expect further growth in the water business in 2027 as we begin servicing locations on HG acquired acreage.

After interest, a capital budget of $190,000,000 to $220,000,000, and an attractive $0.90 per share dividend, we are forecasting to generate free cash flow after dividends of $360,000,000, or an 11% increase compared to 2025. Consistent with our historical approach, we expect a balanced return of capital program in 2026 in the form of debt reduction and share repurchases. This allows us to maintain a strong balance sheet with leverage in the low-3x range. Core to Antero Midstream Corporation’s strategy, the recent acquisition highlights the benefit of lower leverage and debt reduction, which allowed us to flex the balance sheet for the HG acquisition.

This improves after-tax accretion and, more importantly, allows the value to accrete to our existing shareholders without the need for equity financing. In summary, we expect 2026 to be yet another year of EBITDA expansion, high capital efficiency, and, most importantly, double-digit free cash flow growth. Our organic growth strategy, coupled with a highly accretive acquisition that is fully financed, positions us well to build upon momentum created in 2025. With that, operator, we are ready to take questions.

Operator: Thank you. Our first question is from John Ross Mackay with Goldman Sachs. Please proceed.

John Ross Mackay: Good morning. Thank you for the time. I want to start on the growth outlook. I understand 2026 and 2027 have some tailwinds from M&A in the headline numbers. What does the longer-term growth look like once the assets are fully up and running, if you are running a three-rig and two-crew program?

Michael Kennedy: John, good question. That three-rig, two-crew program does provide continued growth even past 2027, about a couple hundred million a day of growth on throughput volume. So expect that to continue. I think it would still be in the mid- to high-single-digit EBITDA growth like we have experienced over our last eleven years, and we will have in 2025 and 2026. I think that is pretty fair to generate those types of growth in 2027 and beyond.

John Ross Mackay: That is clear. I appreciate it. And then on the Antero Resources Corporation side, you were talking about some growth upside plans. You gave the color on the Antero Resources Corporation call, but maybe walk us through the thought process there and what that means both from an EBITDA growth standpoint and a capital standpoint if you move to that higher potential target?

Michael Kennedy: Yes, that is the great thing about it. There is really no capital for Antero Midstream Corporation outside of what Justin outlined. It is right in the heart of our field. We already have all the big trunk lines. We have whatever pipelines are necessary. We have the water. A lot of this is dry gas, so it does not need further processing. So really nothing different than these capital budgets that we have experienced over the past couple of years for Antero Midstream Corporation.

For Antero Resources Corporation, Antero Resources Corporation is well-positioned partly because of Antero Midstream Corporation, but also because of firm transport optionality around dry gas, being in the right part of the country, and having the ability to transport our gas to the Gulf Coast for LNG. So a lot of different demand centers are coming Antero Resources Corporation’s way. So Antero Resources Corporation is the likely company and most well-positioned to meet the growing demand over the next five to ten years.

John Ross Mackay: All right, that is clear. I appreciate the time.

Operator: There are no further questions at this time. I would like to turn the conference back over to Dan Katzenberg for closing remarks.

Dan Katzenberg: Thank you, everyone, for joining us on the call today. Please reach out with any questions that you have. Have a good day.

Operator: Thank you. This will conclude today’s conference. You may disconnect your lines at this time.

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