Antero Midstream Partners LP (AM)

Interest coverage

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Earnings before interest and tax (EBIT)	US$ in thousands	659,166	611,862	539,466	555,327	-117,638
Interest expense	US$ in thousands	6,004	5,979	5,716	5,549	4,503
Interest coverage		109.79	102.34	94.38	100.08	-26.12

December 31, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $659,166K ÷ $6,004K
= 109.79

The interest coverage ratio is a measure of a company's ability to pay its interest expenses on outstanding debt with its operating income. A ratio below 1 indicates that the company is not generating enough operating income to cover its interest expenses, which can be a sign of financial distress.

In the case of Antero Midstream Partners LP, the interest coverage ratio has shown significant fluctuations over the past years. As of December 31, 2020, the interest coverage ratio was -26.12, indicating that the company's operating income was insufficient to cover its interest expenses, raising concerns about its financial health.

However, there has been a notable improvement in the company's interest coverage ratio in subsequent years. By December 31, 2021, the ratio had improved significantly to 100.08, indicating that the company's operating income exceeded its interest expenses by a significant margin, a positive sign of financial stability.

The trend of improvement continued in the following years, with the interest coverage ratios for December 31, 2022, 2023, and 2024 standing at 94.38, 102.34, and 109.79, respectively. These ratios indicate that Antero Midstream Partners LP maintained a healthy ability to cover its interest payments with its operating income during these periods.

Overall, the improvement in Antero Midstream Partners LP's interest coverage ratio from negative to positive values over the years demonstrates an enhanced financial position and a strengthened capacity to meet its debt obligations.