10-QPeriod: Q1 FY2011

Targa Resources Corp. Quarterly Report for Q1 Ended Mar 31, 2011

Filed May 6, 2011For Securities:TRGP

Summary

Targa Resources Corp. (TRC) reported its first quarter 2011 financial results, showcasing a notable increase in revenues driven by higher natural gas and NGL sales volumes and improved commodity prices. The company successfully managed operating expenses, leading to a significant expansion in operating margin. While TRC's consolidated net income saw a slight decrease year-over-year, primarily due to a substantial rise in non-controlling interests, the underlying operational performance of its midstream subsidiary, Targa Resources Partners LP (TRP), remained robust. TRP's strategic initiatives, including the acquisition of a refined products terminal and debt management, position it for continued growth. Investors should note the company's focus on cash flow generation and dividend payouts, supported by the stable performance of its gathering, processing, and logistics assets.

Financial Highlights

30 data points
Beta

Net Income

$6.80M

EPS (Diluted)

$0.16

Total Assets

$3.32B

Cash & Equivalents

$147.70M

Free Cash Flow

$13.10M

Financial Statements
Beta
Gross Profit$217.40M
Operating Expenses$1.55B
Operating Income$73.50M
Interest Expense$28.50M
Net Income$6.80M
EPS (Basic)$0.17
EPS (Diluted)$0.16
Shares Outstanding (Basic)40.90M
Shares Outstanding (Diluted)41.30M

Key Highlights

  • 1Consolidated revenues increased by 9% to $1.62 billion, driven by higher sales volumes and commodity prices.
  • 2Operating margin saw a significant increase of 23% to $151.5 million, reflecting improved gross margins and controlled operating expenses.
  • 3The company completed the acquisition of a refined petroleum products and crude oil storage and terminaling facility for $29.0 million.
  • 4Targa Resources Partners LP successfully issued $325 million in 6.875% Senior Notes due 2021, strengthening its balance sheet.
  • 5Net income attributable to Targa Resources Corp. decreased to $6.8 million from $21.9 million in the prior year, largely due to a significant increase in non-controlling interests.
  • 6The company announced a cash dividend of $0.2725 per share for the quarter, totaling $11.5 million.
  • 7Cash provided by operating activities was $70.1 million, a slight decrease from $76.0 million in the prior year, impacted by changes in working capital.

Frequently Asked Questions

The primary driver of the revenue increase was higher net impact of realized commodity prices, coupled with increased NGL and natural gas sales volumes, and higher fee-based and other revenues.

The decrease in net income attributable to Targa Resources Corp. was primarily due to a significant increase in net income attributable to noncontrolling interests, which more than offset the improvements in operating income and the overall net income.

Targa Resources Partners LP (TRP) has been actively managing its debt by issuing new senior notes and using the proceeds to reduce borrowings under its credit facility. The company's liquidity is supported by cash generated from operations and available borrowing capacity under its credit facilities, enabling it to fund operations, capital expenditures, and dividend payments.

The acquisition of the Channelview Terminal broadens Targa's Logistics Assets segment and strengthens its presence in the refined petroleum products and crude oil storage and terminaling market. The terminal's location and potential for expansion offer strategic advantages for integration with existing operations and future growth.