10-QPeriod: Q3 FY2013

Targa Resources Corp. Quarterly Report for Q3 Ended Sep 30, 2013

Filed November 5, 2013For Securities:TRGP

Summary

Targa Resources Corp. (TRGP) reported strong performance for the nine months ended September 30, 2013, with revenues increasing to $4.40 billion compared to $4.36 billion in the prior year period. Net income available to common shareholders saw a significant increase to $44.6 million from $26.9 million, reflecting improved operational execution and strategic investments. The company's financial position strengthened, with total assets growing to $5.73 billion from $5.11 billion year-over-year. Key drivers for this growth included increased volumes across its gathering, processing, and logistics segments, complemented by higher realized prices for natural gas and condensate. The company also made strategic debt management moves, including the redemption of certain senior notes, contributing to a more robust financial structure. These positive trends highlight Targa's ability to capitalize on market opportunities and expand its midstream infrastructure footprint. The company continues to invest in growth projects, evidenced by significant capital expenditures. The commissioning of Cedar Bayou Fractionators Train 4 and Phase I of the international export expansion project are significant achievements that are expected to enhance future revenue streams and market reach. The Badlands acquisition, though subject to contingent payments, is being integrated and is anticipated to drive future volume growth. Despite some challenges, such as lower NGL prices and operational issues at certain joint ventures, Targa Resources demonstrated resilience and strategic focus, positioning itself for continued growth in the midstream energy sector.

Financial Highlights

48 data points
Beta

Net Income

$16.30M

EPS (Diluted)

$0.39

Total Assets

$5.73B

Cash & Equivalents

$83.70M

Free Cash Flow

-$187.20M

Financial Statements
Beta
Gross Profit$297.00M
Operating Income$88.50M
Interest Expense$33.40M
Net Income$16.30M
EPS (Basic)$0.39
EPS (Diluted)$0.39
Shares Outstanding (Basic)41.60M
Shares Outstanding (Diluted)42.10M

Key Highlights

  • 1Revenues increased by 1% to $4.40 billion for the nine months ended September 30, 2013, compared to $4.36 billion in the same period of 2012.
  • 2Net income available to common shareholders significantly grew by 66% to $44.6 million for the nine months ended September 30, 2013, from $26.9 million in the prior year.
  • 3Total assets increased by 12% to $5.73 billion as of September 30, 2013, from $5.11 billion as of December 31, 2012, indicating asset growth and expansion.
  • 4The company reported a substantial increase in operating margin by 4% to $542.6 million for the nine months ended September 30, 2013, from $519.4 million in 2012.
  • 5Significant capital expenditures were made, totaling $727.1 million for the nine months ended September 30, 2013, primarily for expansion projects.
  • 6Strategic debt management included the redemption of $100 million in 6.375% Senior Notes and the entire outstanding balance of 11.25% Senior Notes due 2017, resulting in losses on debt redemption but improving the debt profile.
  • 7Commissioning of Cedar Bayou Fractionators Train 4 and Phase I of the international export expansion project in August and September 2013, respectively, expanding capacity and export capabilities.

Frequently Asked Questions

For the nine months ended September 30, 2013, Targa Resources Corp. reported a 1% increase in revenues to $4.40 billion, compared to $4.36 billion in the same period of 2012. Net income available to common shareholders showed significant growth, rising by 66% to $44.6 million from $26.9 million. The company's asset base also expanded, with total assets growing to $5.73 billion.

Key growth drivers included increased throughput volumes across gathering and processing segments, higher realized prices for natural gas and condensate, and expansion in logistics and marketing operations, particularly with LPG exports. Strategic initiatives included the commissioning of new fractionation capacity (Cedar Bayou Fractionators Train 4) and international export facilities, significant capital investments in expansion projects, and strategic debt redemptions to optimize the company's capital structure.

Targa Resources engaged in strategic debt management, including the redemption of its 6.375% Senior Notes due 2022 and the 11.25% Senior Notes due 2017. The company also issued $625.0 million in 4.25% Senior Notes in May 2013, using the proceeds to reduce borrowings under its credit facility. Despite incurring losses on debt redemptions, these actions aimed to improve the overall debt profile and reduce future interest expenses.

Targa Resources faces risks common to the midstream energy sector, including volatility in commodity prices (natural gas, NGLs, crude oil), changes in demand for its services, competition, regulatory changes, and the ability to access debt and equity markets. Specific risks highlighted include the reliance on third-party infrastructure, operational challenges at joint ventures, and counterparty credit risk for derivative contracts.