Summary
Targa Resources Corp. (TRGP) reported its financial results for the second quarter and first half of 2019. The company experienced a significant decrease in total revenues, primarily driven by lower commodity prices, particularly for NGLs, natural gas, and condensate. This was partially offset by higher volumes in some areas and fee-based revenue growth. Despite the revenue decline, Targa Resources demonstrated resilience through strong performance in its Gathering and Processing segment, especially in the Permian Basin, and significant growth in its Logistics and Marketing segment. The company continues to invest heavily in growth capital expenditures, particularly in expanding its processing capacity in the Permian and enhancing its NGL logistics infrastructure, including the Grand Prix NGL pipeline. The sale of a 45% interest in Targa Badlands for $1.6 billion provided a substantial cash inflow, which was utilized for debt repayment and general corporate purposes. While the company faces challenges from commodity price volatility and increased operating expenses due to expansion projects, its strategic focus on fee-based services and ongoing infrastructure development positions it for future growth. Investors should monitor the integration of new assets, ongoing capital expenditure execution, and the evolving commodity price environment.
Financial Highlights
47 data points| Revenue | $2.00B |
| Cost of Revenue | $1.36B |
| Gross Profit | $633.70M |
| Operating Income | $113.70M |
| Net Income | -$10.20M |
| EPS (Basic) | $-0.18 |
| EPS (Diluted) | $-0.18 |
| Shares Outstanding (Basic) | 232.40M |
| Shares Outstanding (Diluted) | 232.40M |
Key Highlights
- 1Total revenues decreased by 18% for the three months ended June 30, 2019, compared to the same period in 2018, largely due to lower commodity prices for NGLs, natural gas, and condensate.
- 2The Gathering and Processing segment showed resilience, with inlet volumes increasing significantly in the Permian Midland and Delaware regions, driven by new gas plant additions. However, gross margin in this segment decreased by 6% due to lower commodity prices.
- 3The Logistics and Marketing segment experienced a substantial 42% increase in operating margin, driven by higher transportation and fractionation margin, increased LPG export volumes, and strong marketing performance.
- 4Targa Resources generated significant cash from investing activities, including proceeds from the sale of a 45% interest in Targa Badlands for $1.6 billion, which was used for debt reduction and capital program funding.
- 5Growth capital expenditures increased by 16% for the three months and 36% for the six months ended June 30, 2019, primarily related to the expansion of processing plants in the Permian and the Grand Prix NGL pipeline.
- 6Net income attributable to Targa Resources Corp. significantly decreased, resulting in a net loss for the quarter and year-to-date, driven by lower revenues, higher operating expenses, and increased interest expenses.
- 7The company continued its deleveraging efforts, with financing activities in 2019 including the issuance of new senior notes and the redemption of existing ones, alongside the substantial cash inflow from the Targa Badlands divestiture.