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Antero Midstream Corporation delivered a strong Q1 2026, highlighted by the closing of its largest-ever acquisition and a 5% increase in Adjusted EBITDA to $288 million. Despite challenging winter weather, the company maintained operational continuity and generated $85 million in free cash flow after dividends. A significant focus for the remainder of the year is the integration of the newly acquired assets, which requires approximately $25 million in capital. The water system component of this integration is on track for completion by year-end, paving the way for high-single-digit EBITDA growth in 2027. Management is also increasingly optimistic about incremental demand from data centers and local power projects in Northern West Virginia, where AM’s status as a primary infrastructure builder provides a strategic advantage. With a leverage ratio trending toward 3.0x and high-return organic projects in the pipeline, the company remains confident in its 2026 guidance. The synergy between AM and its upstream partner, Antero Resources, continues to drive capital efficiency and reliable volume growth across its rich and dry gas systems, supporting a bullish long-term outlook for the company.

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Full Earnings Call Transcript — Q1 • 2026-04-30

Operator: Greetings, and welcome to the Antero Midstream Corporation First Quarter 2026 Earnings Call. At this time, participants are in a listen-only mode. A question and answer session will follow a formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce Dan Katzenberg, Vice President of Investor Relations. Thank you. You may begin.
Dan Katzenberg: Thank you for joining us for Antero Midstream Corporation's first quarter investor conference call. I will spend a few minutes going through the financial and operating highlights, and then we will open it up for Q&A. I would also like to direct you to the homepage of our website at anteromidstream.com, where we have provided a separate earnings call presentation that will be reviewed during today's call. Today's call may contain certain non-GAAP financial measures. Please refer to our earnings press release for important disclosures regarding such measures. Joining me on the call today are Michael Kennedy, CEO and President of Antero Midstream Corporation; Justin Agnew, CFO of Antero Midstream Corporation; and Brendan E. Krueger, CFO of Antero. With that, I will turn the call over to Michael Kennedy.
Michael Kennedy: Thanks, Dan. Good morning, everyone. I will start my comments on Slide three. The first quarter of 2026 was an exciting quarter for Antero Midstream Corporation as we continued to make progress on our strategic initiatives. We successfully navigated adverse winter weather conditions and delivered another quarter of EBITDA and free cash flow growth. In addition, we closed the company's largest acquisition to date in February, which was ahead of our initial expectations. These achievements highlight two of Antero Midstream Corporation's greatest strengths: a world-class asset base in the lowest-cost basin in North America and the hard work and dedication from our team. As we look ahead, recent geopolitical events and data center announcements highlight the significant demand growth for U.S. energy both domestic and abroad. Given this outlook, we are focused on enhancing connectivity within our operating areas, particularly in the dry gas area and the newly acquired assets, providing cost-effective integrated solutions for this demand growth. Our balance sheet, scale, and integrated planning with our investment-grade producer position us well to capitalize on these growth opportunities. Now let us move on to Slide four to highlight some of our 2026 growth projects. At the end of the first quarter, we commissioned our dry gas compression expansion depicted on the right-hand side of the page. This station utilized relocated and repurposed units to support our first dry gas Marcellus pad in over a decade. During the first quarter, we also commenced our initial water system integration efforts. This capital investment to connect Antero Midstream Corporation's water system to the acquired water system is on track to be completed by year-end and will allow AM to begin servicing completions on the acquired assets in 2027. Today, there are currently three rigs running on AM-dedicated acreage on the rich gas system, one in the dry gas system, and one on the acquired blended system. This balanced and consistent development program delivers low-cost volume growth and is expected to drive high-single-digit EBITDA growth for the foreseeable future. In summary, we are off to a great start in 2026 executing our capital-efficient growth plan. Beyond our base business, we continue to be active in opportunities to further extend and enhance that growth outlook to support the increasing demand for natural gas. With that, I will turn the call over to Justin.
Justin Agnew: Thanks, Mike. I will start with our first quarter highlights on Slide five. During the first quarter, we took over operations of our newly acquired assets right in the middle of winter [inaudible]. As you can see from our results, we did not experience any outages during the storm, highlighting the benefit of integrated planning and communication between the upstream and midstream businesses. Adjusted EBITDA for the first quarter was $288 million, which was a 5% increase year-over-year, driven by an increase in gathering, compression, and processing volumes. During the quarter, we generated $192 million of free cash flow before dividends and $85 million of free cash flow after dividends, which was an 8% increase year-over-year. This cash flow was used to finance a portion of the acquisition and opportunistically repurchase shares on the open market. Importantly, even after a $1.1 billion acquisition and share repurchases, we exited the quarter with leverage in the low three-times range and over $800 million of liquidity. Looking ahead to the next few quarters, we expect an increase in capital expenditures as we take advantage of improved construction season conditions, in line with our full-year budget. In addition, we expect to see gradual EBITDA growth throughout the year driven by increasing gathering and freshwater delivery volumes. This cash flow profile results in declining leverage throughout the year towards 3.0 times at year-end 2026, in line with our long-term target. In summary, we continue to build on the growth and momentum from our organic investments and accretive acquisitions. These results place us on track to achieve our 2026 guidance, which remains unchanged, and position us well for capital-efficient growth over the next several years. With that, operator, we are ready to take questions.
Operator: Thank you. We will now open the call for questions. At this time, we will conduct our question and answer session. Our first question comes from John Mackay with Goldman Sachs. Please state your question.
John Mackay: Hey, guys. Thank you for the time. Maybe we will start on the in-basin demand side of things. There are a couple of projects floating around, a lot of eyeballs on Monarch, etcetera. I know you guys are saying it is kind of too early; you touched on this in the AR call as well. But do you mind framing up what you could see the opportunity set for AM looking like here, and if you want to use a generic kind of EBITDA per gigawatt or anything like that, just frame up how you are thinking about the AM side of things here?
Michael Kennedy: We are not going to use a generic metric there, but AM is participating in all of those because the vast majority of these need some infrastructure—laterals off existing pipe that Brendan talked about, water infrastructure build-out from the existing infrastructure—and AM has a seat at the table in all those discussions. As I mentioned, we are the industrial builder of Northern West Virginia. We built all of this infrastructure. It has all been a greenfield expansion for us across gathering, compression, processing, and water as we built out the whole system here. So we are the builder of choice, and that is part of the attraction of what AR and AM bring. It is an integrated development between upstream and midstream. We have the resource, and we have the ability to build the infrastructure.
John Mackay: Maybe just to clarify, any sense you could give on how long of a timeline would be needed to support a larger project?
Michael Kennedy: We are mainly talking about everything in-state, so it would not be that long of a timeline. It would be our typical kind of high-pressure build in year one to two to three, not five years out.
John Mackay: Great. And then second question for me: You mentioned the high-single-digit growth target. Could you frame that up a little bit around what that implies for AR's underlying growth? AR came out with a higher growth pace on the last quarter call. Just trying to figure out where that shakes out and then what the AM algorithm off that is. Thanks.
Michael Kennedy: That is off the base business. You get to the high single digit just from integrating the water system in 2027, so just servicing AR from a water perspective gets you that high single digit. If AR actually does pursue three rigs and two completions crews and does not build DUCs and actually completes those, you would be in excess of that high-single-digit EBITDA growth in 2027 and 2028.
John Mackay: I appreciate that. Thank you.
Michael Kennedy: Thank you.
Operator: Your next question comes from Ivan Scotto with UBS. Please state your question.
Ivan Scotto: Hi, team. Thanks for taking the question. I wanted to ask for any additional color you have on how much capital is needed to fully integrate the acquired HG assets, and also how far along that process you think you are at this point?
Michael Kennedy: I think it is $25 million, and we are probably halfway through. I mentioned that the water system, which we cemented in the first quarter, will be done by year-end. The gathering system, which was almost all already integrated, I think it was $5 million to connect that. So it is really around the water, and we are in the midst of it and should be completed by year-end.
Ivan Scotto: Okay. Great. And then just looking forward, where do you feel most of your opportunity set is for incremental returns in the future?
Michael Kennedy: I would say around these data center local power projects. Our base business delivers very high rates of return; it is in the high teens to 20% return on invested capital in the base, and we have that fully mapped out. We have built the whole backbone of the system—the whole water pipes and the large gathering system that we have—so the incremental returns will be building off of that and building off of our relationship with AR and our own ability to build industrial projects in Northern West Virginia. That is the next leg. The base is terrific, with high-single-digit EBITDA growth that we have had for quite some time and will continue going forward, but incremental growth and returns from that will be from these local demand projects.
Operator: Thank you. There appear to be no additional requests for questions at this time. I will hand the floor back to our management team for closing remarks. Thank you.
Dan Katzenberg: Thank you for joining us on today's earnings conference call. Feel free to reach out with any further questions. Have a good day.
Operator: Thank you. That concludes today's call. All parties may disconnect.