# Antero Midstream (AM) — Financial Analysis

**Exchange:**   
**Coverage as of:** 2026-Q2  
**Updated:** 2026-06-10  
**Tier:** Free primer (step 2 of 19)  
**Sibling pages:** /stocks/AM/thesis · /stocks/AM/memo

## Financial Snapshot

---
source: coverage-next-full
ticker: AM
step: 04
title: Financial Quality & Adversarial Sweep
created: 2026-06-09
---

### Step 04 — Financial Quality: Antero Midstream (AM)

#### 1. Statement Quality Assessment

**Overall quality: HIGH**

AM files as a US C-Corp under GAAP, audited by Deloitte & Touche LLP. The financial statements are straightforward for a fee-based midstream operator: revenue recognition is clear (volume × rate), D&A is the primary non-cash item, and there are no complex derivative positions on the income statement (AM doesn't trade commodities). [S2]

**Key accounting observations:**

| Item | Assessment | Notes |
|------|-----------|-------|
| Revenue recognition | Clean | Volume × contractual rate; no variable consideration complexity |
| D&A method | Straight-line | Pipelines ~25–30 years useful life; appropriate for infrastructure |
| Goodwill/intangibles | Minimal | Primarily a PP&E business; limited acquisition goodwill pre-HG |
| HG Acquisition accounting | Purchase price allocation pending | $1.1B closed Feb 3, 2026; FY2025 financials pre-HG. Step-up will increase D&A ~$30–40M/year (estimated) |
| Pension/OPEB | None | C-Corp converted 2019; clean balance sheet |
| Related-party transactions | Significant, disclosed | All revenue and operating contracts with AR (disclosed in 10-K) |
| Equity-based compensation | ~$21M/year (FY2025) | Non-cash; reasonable vs. peers; adds to GAAP expense |

#### 2. Non-GAAP Reconciliation

AM reports Adjusted EBITDA as its primary operating metric. The bridge from GAAP Net Income:

| Item | FY2025 (est.) |
|------|-------------|
| Net Income (GAAP) | $413M |
| + Interest Expense | +$160M |
| + Income Tax Expense | +$21M |
| + D&A | +$182M |
| = EBITDA | ~$776M |
| + Equity-based comp | +$21M |
| + Transaction costs (HG acq.) | +$73M |
| = Adjusted EBITDA | ~$870M |

*Sources: XBRL data [S1], 10-K [S2], StockAnalysis [S3] — exact bridge not publicly filed; estimated from disclosed components.*

**Quality of Adj. EBITDA:** Management add-backs are standard for infrastructure (non-cash items, one-time transaction costs). Transaction costs of $73M for HG Acquisition in FY2025 are genuinely one-time. No "adjusted" revenue add-backs or recurring "non-recurring" items.

#### 3. Key Financial Ratios — Trend Analysis

##### Profitability

| Metric | FY2022 | FY2023 | FY2024 | FY2025 |
|--------|--------|--------|--------|--------|
| Gross Margin | ~79% | ~80% | ~80% | ~79% |
| EBITDA Margin (adj.) | ~72% | ~73% | ~73% | ~73% |
| Net Margin (GAAP) | ~33% | ~34% | ~34% | ~35% |
| Operating Cash Flow Margin | ~78% | ~79% | ~76% | ~78% |

*Source: [S1][S3] — margins are highly stable, consistent with regulated-utility-like economics*

##### Leverage

| Metric | FY2022 | FY2023 | FY2024 | FY2025 | FY2026E |
|--------|--------|--------|--------|--------|---------|
| Total Debt ($M) | ~$3,000M | ~$3,100M | ~$3,100M | $3,250M | ~$3,600M |
| Net Debt / EBITDA | ~3.6x | ~3.3x | ~2.9x | 2.7x | ~3.0x |
| Interest Coverage (EBITDA/Int.) | ~4.8x | ~5.0x | ~5.1x | ~5.4x | ~6.5x |
| Debt/Total Capital | ~60% | ~58% | ~55% | ~53% | ~54% |

*Source: [S1][S3][S5] — leverage is on a clear downward trajectory pre-HG; HG causes modest step-up but covered by higher EBITDA*

##### Capital Efficiency

| Metric | FY2022 | FY2023 | FY2024 | FY2025 |
|--------|--------|--------|--------|--------|
| CapEx / Revenue | ~22% | ~15% | ~14% | ~15% |
| FCF Conversion (FCF/EBITDA) | ~62% | ~70% | ~79% | ~87% |
| OCF / Revenue | ~77% | ~77% | ~76% | ~78% |
| Return on Assets | ~8% | ~8% | ~9% | ~9% |

*FCF conversion improving as CapEx program winds down — the core capital-light thesis*

#### 4. Earnings Quality Assessment

**HIGH** — AM's earnings quality is superior to most midstream peers:
- 100% fee revenue → no commodity price volatility in revenue line
- No mark-to-market derivatives in income statement (unlike upstream producers)
- OCF closely tracks EBITDA (~78% OCF margin vs. ~73% EBITDA margin — difference explained by working capital timing and interest payments, not earnings manipulation)
- D&A is the primary GAAP earnings adjustment; PP&E is the real productive asset base

**Concern to note:** Related-party transactions (100% of revenue from AR) are extensively disclosed in the 10-K but create audit challenges — arm's-length pricing validation relies on the original contract terms. Deloitte has issued clean audit opinions without qualification. [S2]

#### 5. Adversarial Research Sweep

*Note: This analysis is based on filings, press releases, and web-sourced data. Earnings call transcripts were not reviewed (coverage-next-full path).*

##### Short Reports & Negative Research
- No active short reports identified via web search as of June 2026 [S7]
- Short interest: ~2-3% of float (low; not a heavily shorted stock) [S5]
- No activist investor campaigns identified

##### Legal / Regulatory Investigations
- No SEC or DOJ investigations disclosed in 10-K risk factors or recent 8-Ks [S2]
- No material pending litigation beyond routine commercial disputes (disclosed as immaterial in 10-K)

##### Key Disclosed Risks from 10-K [S2]
1. **Single-customer concentration:** AR represents 100% of revenue. Any AR financial distress could trigger minimum volume shortfalls. *Assessment: AR is BBB-/Ba1 investment-grade; this risk is real but manageable.*
2. **Leverage:** $3.25B debt ($3.6B pro forma post-HG) with revolving credit facility maturing 2028 and 2026/2027 notes maturing. *Assessment: Debt maturities are laddered; refinancing risk is minimal given FCF coverage.*
3. **Environmental:** Produced water handling subject to evolving WV and OH regulations on disposal/recycling. *Assessment: AM has invested in produced water recycling; compliant.*
4. **Henry Hub price impact on AR:** If gas prices collapse to <$2/MMBtu for sustained period, AR may reduce drilling, reducing throughput. *Assessment: Natural gas demand tailwinds (LNG, AI) make sustained $2/MMBtu scenario increasingly unlikely.*
5. **AR volume commitments:** While take-or-pay protections exist, the actual minimum commitment levels are not publicly disclosed in detail. *Assessment: Given 29% cross-ownership, AR has strong incentive to maintain volumes.*

##### Financial Red Flags Check
- ✓ No goodwill impairments
- ✓ No restatements of prior financials
- ✓ No going-concern qualifications
- ✓ No unusual related-party transactions beyond disclosed AR contracts
- ✓ D&A rates consistent with industry (useful life 25–30 years for pipelines)
- ✓ No unusual working capital movements

**No material adversarial findings.** AM's principal risk is concentration, which is fully disclosed, not hidden.

#### Source Index

| ID | Source | Description | Date |
|----|--------|-------------|------|
| S1 | SEC EDGAR XBRL | CIK 0001623925 company facts | 2026-06-09 |
| S2 | 10-K FY2025 | Annual report filed 2026-02-11 | 2026-06-09 |
| S3 | StockAnalysis.com | Standardized financials | 2026-06-09 |
| S5 | Consensus estimates | Web search (Tavily) | 2026-06-09 |
| S7 | Industry research | Web search (Tavily) | 2026-06-09 |

## Deeper Financial Analysis

The fundamental tier ($1.00) adds 8 dimensions not included here:

- Revenue Breakdown — segment revenue, geographic mix, product-line margins
- Financial Trends — QoQ momentum, leading indicators, inflection points
- Balance Sheet — debt structure, dilution risk, working capital dynamics
- Capital Allocation — ROIC, buyback cadence, reinvestment efficiency
- Earnings Analysis — beats/misses, guidance vs actuals, transcript highlights
- Competitive Positioning — market share, pricing power, peer benchmarks
- Industry Context — TAM, sector tailwinds/headwinds, regulatory backdrop

**API endpoint:** GET /api/v1/research/AM/fundamental

## Navigation

- Overview: /stocks/AM
- Financials (this page): /stocks/AM/financials
- Thesis: /stocks/AM/thesis
- Investment Memo: /stocks/AM/memo
- Coverage universe: /stocks