DENVER, July 31, 2024 /PRNewswire/ -- Antero Midstream Corporation (NYSE:AM) ("Antero Midstream" or the "Company") today announced its second 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 June 30, 2024. Second Quarter 2024 Highlights: Net Income was $86 million, or $0.18 per diluted share, in line with the prior year quarter on a per share basis Adjusted Net Income was $110 million, or $0.23 per diluted share, a 5% per share increase compared to the prior year quarter (non-GAAP measure) Adjusted EBITDA was $255 million, a 5% increase compared to the prior year quarter (non-GAAP measure) Capital expenditures were $51 million Free Cash Flow after dividends was $43 million, a 41% increase compared to the prior year quarter (non-GAAP measure) Acquired bolt-on Marcellus gathering and compression assets for $70 million Maintained Leverage of 3.1x as of June 30, 2024 (non-GAAP measure) Received an upgrade on corporate and issuer credit ratings to BB+ from S&P Global Ratings Extended credit facility maturity to 2029 and maintained commitments of $1.25 billion Paul Rady, Chairman and CEO said, "During the quarter, Antero Midstream closed on a highly strategic bolt-on acquisition, increasing throughput volumes from our primary investment grade customer, Antero Resources.  This acquisition complements our organic just-in-time business model that generates consistent Free Cash Flow after dividends, which increased 41% year-over-year." Brendan Krueger, CFO of Antero Midstream, said "During 2024, Antero Midstream improved its balance sheet through the successful refinancing of its highest coupon senior notes and the extension of its credit facility to 2029.  Importantly, over the last year, we have reduced our net debt by $120 million and our leverage has declined from 3.5x to 3.1x.  This balance sheet improvement is evidenced by our upgrade from S&P and highlights our consistent Free Cash Flow generation and the accretive nature of the recent bolt-on acquisition." 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." Second Quarter 2024 Financial Results Antero Midstream's second quarter financial and operating results include two months of contribution from the compression and high pressure gathering assets located in Antero Midstream's core West Virginia Marcellus Shale position acquired from Summit Midstream Partners, LP. Low pressure gathering volumes for the second quarter of 2024 averaged 3,258 MMcf/d, a 1% decrease as compared to the prior year quarter.  Compression volumes for the second quarter of 2024 averaged 3,246 MMcf/d, in line with the prior year quarter.  High pressure gathering volumes averaged 2,994 MMcf/d, a 2% increase compared to the prior year quarter.  Fresh water delivery volumes averaged 81 MBbl/d during the quarter, a 23% decrease compared to the second quarter of 2023.  The reduction in fresh water delivery volumes was driven by the previously announced reduction by Antero Resources to one completion crew in early 2024, resulting in fewer completion stages in the second quarter. Gross processing volumes from the processing and fractionation joint venture with MPLX, LP (the "Joint Venture") averaged 1,588 MMcf/d for the second quarter of 2024, a 1% decrease compared to the prior year quarter.  Joint Venture processing capacity was 99% utilized during the quarter based on nameplate processing capacity of 1.6 Bcf/d.  Gross Joint Venture fractionation volumes averaged 40 MBbl/d, a 3% 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 EndedJune 30, Average Daily Volumes: 2023 2024 %Change Low Pressure Gathering (MMcf/d) 3,304 3,258 (1) % Compression (MMcf/d) 3,251 3,246 — High Pressure Gathering (MMcf/d) 2,922 2,994 2 % Fresh Water Delivery (MBbl/d) 105 81 (23) % Gross Joint Venture Processing (MMcf/d) 1,600 1,588 (1) % Gross Joint Venture Fractionation (MBbl/d) 39 40 3 % For the three months ended June 30, 2024, revenues were $270 million, comprised of $229 million from the Gathering and Processing segment and $59 million from the Water Handling segment, net of $18 million of amortization of customer relationships.  Water Handling revenues include $27 million from wastewater handling and high rate water transfer services. Direct operating expenses for the Gathering and Processing and Water Handling segments were $26 million and $30 million, respectively, for a total of $56 million.  Water Handling operating expenses include $24 million from wastewater handling and high rate water transfer services.  General and administrative expenses excluding equity-based compensation were $10 million during the second quarter of 2024.  Total operating expenses during the second quarter of 2024 included $12 million of equity-based compensation expense and $38 million of depreciation. Net Income was $86 million, or $0.18 per diluted share, in line with 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 loss on asset sale, net of tax effects of reconciling items, or Adjusted Net Income, was $110 million.  Adjusted Net Income was $0.23 per diluted share, a 5% per share increase compared to the prior year quarter. The following table reconciles Net Income to Adjusted Net Income (in thousands): Three Months EndedJune 30, 2023 2024 Net Income $ 87,012 86,037 Amortization of customer relationships 17,668 17,668 Loss on early extinguishment of debt — 13,691 Loss on settlement of asset retirement obligations 279 — Loss on asset sale 5,814 1,379 Tax effect of reconciling items(1) (6,109) (8,430) Adjusted Net Income $ 104,664 110,345 (1)       The statutory tax rates for the three months ended June 30, 2023 and 2024 were 25.7% and 25.8%, respectively. Adjusted EBITDA was $255 million, a 5% increase compared to the prior year quarter.  Interest expense was $52 million, a 6% decrease compared to the prior year quarter, driven primarily by lower average total debt.  Capital expenditures were $51 million.  Free Cash Flow before dividends was $152 million, a 9% increase compared to the prior year quarter.  Free Cash Flow after dividends was $43 million, a 41% 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 EndedJune 30, 2023 2024 Net Income $ 87,012 86,037 Interest expense, net 55,388 52,186 Income tax expense 29,095 28,436 Depreciation expense 35,233 37,576 Amortization of customer relationships 17,668 17,668 Loss on asset sale 5,814 1,379 Accretion of asset retirement obligations 44 47 Loss on settlement of asset retirement obligations 279 — Loss on early extinguishment of debt — 13,691 Equity-based compensation 8,499 11,599 Equity in earnings of unconsolidated affiliates (25,972) (27,597) Distributions from unconsolidated affiliates 29,465 33,970 Adjusted EBITDA $ 242,525 254,992 Interest expense, net (55,388) (52,186) Capital expenditures (accrual-based) (48,584) (51,276) Free Cash Flow before dividends $ 138,553 151,530 Dividends declared (accrual-based) (107,927) (108,284) Free Cash Flow after dividends $ 30,626 43,246 The following table reconciles net cash provided by operating activities to Free Cash Flow before and after dividends (in thousands): Three Months Ended June 30, 2023 2024 Net cash provided by operating activities $ 185,586 215,806 Amortization of deferred financing costs (1,483) (1,495) Settlement of asset retirement obligations 537 250 Changes in working capital 2,497 (11,755) Capital expenditures (accrual-based) (48,584) (51,276) Free Cash Flow before dividends $ 138,553 151,530 Dividends declared (accrual-based) (107,927) (108,284) Free Cash Flow after dividends $ 30,626 43,246 Second Quarter 2024 Operating Update During the second quarter of 2024, Antero Midstream connected 11 wells to its gathering system and serviced 19 wells with its fresh water delivery system. Capital Investments Capital expenditures were $51 million during the second quarter of 2024.  The Company invested $41 million in gathering and compression and $10 million in water infrastructure. 2023 ESG Report On July 31, 2024, Antero Midstream published its 2023 ESG Report, marking the Company's 7th year reporting on its environmental, social and governance (ESG) performance.  This year's report highlights the Company's emissions reduction progress, significant local economic impacts, increased water recycling rate, and continued commitment to safety across our operations and can be found at www.anteromidstream.com/esg.  Conference Call A conference call is scheduled on Thursday, August 1, 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, August 8, 2024 at 10:00 am MT at 877-660-6853 (U.S.) or 201-612-7415 (International) using the conference ID: 13743657. 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, August 8, 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 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 net interest expense, income tax expense, depreciation expense, amortization of customer relationships, loss on early extinguishment of debt, loss 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 net interest expense 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 June 30, 2023 2024 Capital expenditures (as reported on a cash basis) $ 42,044 43,399 Change in accrued capital costs 6,540 7,877 Capital expenditures (accrual basis) $ 48,584 51,276 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): June 30, 2024 Bank credit facility $ 555,700 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 $ 3,205,700 Less: Cash and cash equivalents — Consolidated net debt $ 3,205,700 The following table reconciles Net Income to Adjusted EBITDA for the last twelve months as used in this release (in thousands): Twelve Months Ended June 30, 2024 Net Income $ 388,230 Interest expense, net 212,727 Income tax expense 132,446 Depreciation expense 140,301 Amortization of customer relationships 70,672 Accretion of asset retirement obligations 180 Impairment of property and equipment 146 Equity-based compensation 37,706 Equity in earnings of unconsolidated affiliates (110,155) Distributions from unconsolidated affiliates 137,195