Summary
Targa Resources Corp. (TRC) reported mixed results for the three and six months ended June 30, 2015. The company experienced a significant decline in revenues primarily due to lower commodity prices, which outpaced the positive impact of increased volumes and the inclusion of recently acquired assets from Targa Pipeline Partners LP (TPL). Despite revenue pressures, TRC demonstrated operational resilience, with gross and operating margins showing improvement year-over-year, driven by the TPL acquisition and expansion projects. However, a substantial increase in depreciation and amortization expenses, higher interest expenses stemming from increased borrowings related to the Atlas mergers, and notable losses on debt redemptions/amendments significantly impacted net income. The company ended the period with a strengthened liquidity position.
Financial Highlights
50 data points| Gross Profit | $471.30M |
| Operating Income | $112.40M |
| Net Income | $15.20M |
| EPS (Basic) | $0.27 |
| EPS (Diluted) | $0.27 |
| Shares Outstanding (Basic) | 55.90M |
| Shares Outstanding (Diluted) | 56.10M |
Key Highlights
- 1Revenues declined by 15% and 21% for the three and six months ended June 30, 2015, respectively, primarily due to lower commodity prices.
- 2Gross and operating margins improved by 20% and 17% (three months) and 14% and 13% (six months), respectively, indicating operational efficiencies and contributions from recent acquisitions.
- 3Net income available to common shareholders decreased significantly, falling by 42% for the three-month period and 60% for the six-month period, largely due to higher operating expenses, depreciation, amortization, and interest expenses.
- 4The company completed significant merger and acquisition activities in early 2015, including the Atlas mergers (ATLS and APL), which substantially increased its asset base and goodwill ($557.9 million).
- 5Total debt increased substantially to $5.92 billion as of June 30, 2015, up from $3.07 billion at year-end 2014, reflecting financing for the Atlas mergers.
- 6Liquidity remained strong, with total consolidated cash and cash equivalents of $105.7 million and total liquidity of $230.2 million for TRC and $787.0 million for the Partnership.
- 7The company incurred substantial losses on debt redemptions and amendments, totaling $3.8 million for the quarter and $12.9 million for the six months.