10-KPeriod: FY2018

Targa Resources Corp. Annual Report, Year Ended Dec 31, 2018

Filed March 1, 2019For Securities:TRGP

Summary

Targa Resources Corp. (TRGP) reported its 2018 financial and operational results, highlighting robust growth and strategic investments in its midstream energy infrastructure. The company saw increased revenues driven by higher volumes across its Gathering and Processing and Logistics and Marketing segments, particularly in key basins like the Permian. Significant capital expenditures were directed towards organic growth projects, including expansions of processing plants and pipeline systems, such as the Grand Prix NGL Pipeline and the Gulf Coast Express Pipeline. The company also focused on strengthening its financial position through debt management and equity issuances, while maintaining a consistent dividend payout. Key financial metrics like Adjusted EBITDA and Distributable Cash Flow showed positive year-over-year growth, reflecting the company's operational efficiency and its fee-based business model's resilience. Looking ahead, Targa Resources is positioned to capitalize on continued producer activity, driven by its strategic asset locations and integrated service offerings. The company continues to invest in expanding its midstream capabilities, aiming to enhance its competitive positioning and deliver long-term value to shareholders. Despite a dynamic energy market, Targa's diversified asset base, fee-based contracts, and strategic growth initiatives provide a solid foundation for future performance.

Financial Highlights

49 data points
Beta

Revenue

$10.48B

21.4% Gross Margin

Net Income

$1.60M

0.0% Net Margin

EPS (Diluted)

$-0.53

Total Assets

$16.94B

Cash & Equivalents

$232.10M

Free Cash Flow

-$1.97B

Financial Statements
Beta
Revenue$10.48B
Cost of Revenue$8.24B
Gross Profit$2.25B
Operating Income$237.50M
Net Income$1.60M
EPS (Basic)$-0.53
EPS (Diluted)$-0.53
Shares Outstanding (Basic)224.20M
Shares Outstanding (Diluted)224.20M

Key Highlights

  • 1Targa Resources reported increased revenues and operating margin in 2018, driven by higher volumes and commodity prices in its Gathering and Processing and Logistics and Marketing segments.
  • 2Significant capital investments totaling $3.3 billion were made in growth projects, including expansions in the Permian Basin and the development of the Grand Prix NGL Pipeline.
  • 3The company raised substantial capital through debt and equity offerings, strengthening its balance sheet and liquidity position.
  • 4Adjusted EBITDA grew by 20% year-over-year to $1.37 billion, and Distributable Cash Flow increased by 11% to $942 million, demonstrating operational and financial strength.
  • 5Targa is actively expanding its midstream infrastructure, with multiple new processing plants and pipeline projects expected to come online in 2019 and 2020.
  • 6The company reported strong safety and compliance performance, aligning with its commitment to responsible operations.
  • 7Strategic asset sales, like the divestiture of its inland marine barge business and refined products terminals, are being utilized to optimize the portfolio and manage debt.

Frequently Asked Questions

In 2018, Targa Resources reported revenues of $10.48 billion, a gross margin of $2.25 billion, and an operating margin of $1.52 billion. Adjusted EBITDA increased by 20% year-over-year to $1.37 billion, and Distributable Cash Flow grew by 11% to $942 million, indicating solid operational and financial performance.

Targa Resources is focused on organic growth and strategic acquisitions. In 2018, capital expenditures for growth projects totaled $3.33 billion, primarily directed towards expanding its gathering and processing infrastructure in key basins like the Permian and developing significant pipeline projects such as the Grand Prix NGL Pipeline. These investments are aimed at increasing capacity and enhancing its integrated midstream service offerings.

Targa Resources has a substantial debt load but has been actively managing its capital structure. In early 2019, it issued $1.5 billion in senior notes to refinance existing debt. Additionally, the company entered into agreements to sell a 45% interest in its North Dakota assets for $1.6 billion, with proceeds expected to be used for debt reduction and general corporate purposes. The company also amended and extended its credit facilities, increasing borrowing capacity and extending maturity dates, demonstrating a focus on maintaining financial flexibility.

Targa Resources faces several risks, including the volatility of commodity prices (natural gas, NGLs, and crude oil), which directly impacts its 'percent-of-proceeds' contracts. Other significant risks include substantial indebtedness, potential downgrades in credit ratings, dependence on customer creditworthiness, operational risks associated with midstream infrastructure, and the potential impact of environmental regulations and climate change policies. The company actively uses hedging strategies to mitigate some of these commodity price risks.