10-QPeriod: Q2 FY2021

Targa Resources Corp. Quarterly Report for Q2 Ended Jun 30, 2021

Filed August 5, 2021For Securities:TRGP

Summary

Targa Resources Corp. (TRGP) reported its Q2 2021 results, showcasing a significant rebound from the challenges faced in 2020, particularly driven by higher commodity prices and volumes. Total revenues more than doubled year-over-year to $3.42 billion, with commodity sales seeing a substantial 141% increase due to higher NGL, natural gas, and condensate prices and volumes. The company demonstrated improved profitability, with net income attributable to common shareholders rising to $34.4 million from $48.9 million in the prior year's quarter, which included a significant impairment charge in 2020. This improved performance is further reflected in the non-GAAP measures, with Adjusted EBITDA increasing by 31% year-over-year to $460 million. Financially, Targa Resources has been actively managing its debt structure, including issuing new senior notes and redeeming older ones. The company ended the quarter with $209.0 million in cash and cash equivalents and substantial liquidity through its revolving credit facilities. Despite ongoing market volatility and risks, the company's operational performance and financial management indicate a positive trajectory.

Financial Highlights

48 data points
Beta

Revenue

$3.42B

20.7% Gross Margin

Net Income

$56.20M

1.6% Net Margin

EPS (Diluted)

$0.15

Total Assets

$15.41B

Cash & Equivalents

$209.00M

Free Cash Flow

$521.10M

Financial Statements
Beta
Revenue$3.42B
Cost of Revenue$2.71B
Gross Profit$706.90M
Operating Income$245.80M
Net Income$56.20M
EPS (Basic)$0.15
EPS (Diluted)$0.15
Shares Outstanding (Basic)228.60M
Shares Outstanding (Diluted)231.30M

Key Highlights

  • 1Total revenues surged by 124% year-over-year to $3.42 billion for the three months ended June 30, 2021, driven by strong performance in commodity sales.
  • 2Net income attributable to common shareholders improved significantly to $34.4 million in Q2 2021, compared to $48.9 million in Q2 2020, which was heavily impacted by a $2.4 billion impairment charge.
  • 3Adjusted EBITDA increased by 31% to $460.0 million for the quarter, indicating strong operational profitability.
  • 4The company successfully issued $1.0 billion in 4% Senior Notes due 2032 in February 2021 and used a portion of the proceeds to redeem existing senior notes, strengthening its debt profile.
  • 5Liquidity remains robust, with $209.0 million in cash and cash equivalents and $2.93 billion in total liquidity available through credit facilities as of July 30, 2021.
  • 6Capital expenditures were lower year-over-year, reflecting the completion of major growth projects, with a focus on maintenance and strategic growth projects going forward.
  • 7The company is actively managing its operations and financial condition amidst market volatility, including risks associated with commodity prices and weather events.

Frequently Asked Questions

Targa Resources reported a strong financial performance in the second quarter of 2021, with total revenues increasing by 124% to $3.42 billion, primarily driven by higher commodity prices and volumes. Net income attributable to common shareholders was $34.4 million, a significant improvement from the prior year, which was impacted by a large impairment charge. Adjusted EBITDA also saw a substantial increase of 31% to $460.0 million, indicating improved operational profitability.

The company is actively managing its debt structure. In February 2021, they issued $1.0 billion in new senior notes and used some of the proceeds to redeem older, higher-coupon debt. Targa Resources maintained a healthy liquidity position, ending the quarter with $209.0 million in cash and cash equivalents and over $2.9 billion in total availability under its credit facilities. They remain compliant with debt covenants.

Targa Resources operates primarily in two segments: Gathering and Processing, and Logistics and Transportation. Both segments showed improved performance in Q2 2021 compared to Q2 2020. The Gathering and Processing segment's operating margin increased by 27% to $301.2 million, driven by higher natural gas inlet volumes and realized commodity prices. The Logistics and Transportation segment's operating margin rose by 26% to $291.4 million, fueled by increased pipeline throughput, fractionation volumes, and export volumes.

Targa Resources highlighted several risks, including volatility in commodity prices, potential impacts of extreme weather events (such as the February 2021 winter storms), and counterparty credit risk. They also noted potential impacts from evolving regulatory environments and the ongoing uncertainty surrounding the long-term effects of the COVID-19 pandemic, though they reported no material issues currently.