10-KPeriod: FY2021

Targa Resources Corp. Annual Report, Year Ended Dec 31, 2021

Filed February 24, 2022For Securities:TRGP

Summary

Targa Resources Corp. reported a significant financial recovery in 2021 compared to the challenging prior year, driven by strong commodity prices and increased volumes across its midstream operations. The company's "Gathering and Processing" and "Logistics and Transportation" segments both experienced growth in adjusted operating margins. Key strategic developments include expansions in the Permian Basin with new processing plants coming online or under construction, and a focus on capital allocation through dividend increases and share repurchases. Financially, Targa Resources demonstrated improved profitability and cash flow generation, with adjusted EBITDA and distributable cash flow significantly increasing. The company also strengthened its financial position by refinancing its credit facilities. Despite the positive performance, Targa Resources faces ongoing risks related to commodity price volatility, regulatory changes, and operational hazards, which are detailed in the risk factors section of the report.

Financial Highlights

49 data points
Beta

Revenue

$16.95B

19.0% Gross Margin

Net Income

$71.20M

0.4% Net Margin

EPS (Diluted)

$-0.07

Total Assets

$15.21B

Cash & Equivalents

$158.50M

Free Cash Flow

$1.80B

Financial Statements
Beta
Revenue$16.95B
Cost of Revenue$13.73B
Gross Profit$3.22B
Operating Income$864.80M
Net Income$71.20M
EPS (Basic)$-0.07
EPS (Diluted)$-0.07
Shares Outstanding (Basic)228.60M
Shares Outstanding (Diluted)228.60M

Key Highlights

  • 1Targa Resources reported a strong financial rebound in 2021, with revenues more than doubling compared to 2020, largely due to higher commodity prices and increased volumes.
  • 2Adjusted EBITDA increased by 25% to $2,052.0 million in 2021, and Distributable Cash Flow rose by 31% to $1,541.4 million, indicating improved profitability and cash generation.
  • 3The company is expanding its Permian Basin infrastructure with the construction of multiple new natural gas processing plants, including the Legacy, Legacy II, and Midway plants, expected to come online in 2022 and 2023.
  • 4Targa Resources returned capital to shareholders through a dividend increase in early 2022 and continued its common share repurchase program, repurchasing $40 million in the fourth quarter of 2021.
  • 5The company refinanced its credit facilities in February 2022, securing a new revolving credit facility of up to $2.75 billion, demonstrating proactive financial management.
  • 6Despite the positive results, Targa Resources acknowledges ongoing risks, including commodity price volatility, potential impacts of climate change regulations, and operational hazards.
  • 7The company's "Gathering and Processing" segment saw a 30% increase in operating margin, while the "Logistics and Transportation" segment experienced a 12% increase in operating margin year-over-year.

Frequently Asked Questions

In 2021, Targa Resources saw a significant financial turnaround. Total revenues increased by 105% to $16,949.8 million. Adjusted EBITDA grew by 25% to $2,052.0 million, and Distributable Cash Flow increased by 31% to $1,541.4 million, reflecting improved operational performance and favorable market conditions.

Targa Resources is actively expanding its infrastructure, particularly in the Permian Basin. Key growth initiatives include the construction of new cryogenic natural gas processing plants such as the Legacy plant (expected Q4 2022), Legacy II plant (expected Q2 2023), and Midway plant (expected Q3 2023) to accommodate increasing production in the region.

The company is actively managing its debt. In early 2022, Targa Resources entered into a new $2.75 billion revolving credit facility, replacing its previous credit facilities, which provides enhanced financial flexibility. They also continue to focus on deleveraging and achieving investment-grade ratings. Shareholder returns are supported by an increased common dividend and an ongoing share repurchase program.

Targa Resources identifies several key risks, including the impact of volatile commodity prices (natural gas, NGLs, crude oil) on its cash flow, operational risks such as pipeline disruptions and accidents, regulatory and environmental risks (including those related to climate change and ESG matters), and risks associated with competition and the ability to secure new supply sources to offset natural production declines.