10-QPeriod: Q3 FY2022

Targa Resources Corp. Quarterly Report for Q3 Ended Sep 30, 2022

Filed November 3, 2022For Securities:TRGP

Summary

Targa Resources Corp. (TRGP) reported strong financial performance for the nine months ended September 30, 2022, with total revenues increasing by 42% to $16.4 billion, driven by higher commodity prices and increased volumes across its gathering and processing, and logistics and transportation segments. Net income attributable to common shareholders saw a significant 81% increase to $578.9 million compared to the same period last year. The company executed a substantial acquisition in the Delaware Basin for approximately $3.5 billion, significantly expanding its footprint in that key region and integrating valuable natural gas gathering, treating, and processing assets. Targa also undertook strategic debt management, including significant new debt issuances and redemptions, and successfully redeemed all outstanding Series A Preferred Stock. Despite increased interest expenses due to higher borrowings, the company maintained compliance with its debt covenants and ended the period with substantial liquidity.

Financial Highlights

49 data points
Beta

Revenue

$5.36B

19.7% Gross Margin

Net Income

$193.10M

3.6% Net Margin

EPS (Diluted)

$0.84

Total Assets

$19.39B

Cash & Equivalents

$192.90M

Free Cash Flow

$63.70M

Financial Statements
Beta
Revenue$5.36B
Cost of Revenue$4.31B
Gross Profit$1.05B
Operating Income$430.00M
Net Income$193.10M
EPS (Basic)$0.85
EPS (Diluted)$0.84
Shares Outstanding (Basic)226.60M
Shares Outstanding (Diluted)230.30M

Key Highlights

  • 1Total revenues increased by 42% year-over-year to $16.4 billion for the nine months ended September 30, 2022, driven by higher commodity prices and volumes.
  • 2Net income attributable to common shareholders grew by 81% to $578.9 million for the nine months ended September 30, 2022.
  • 3Completed a major acquisition in the Delaware Basin for approximately $3.5 billion, significantly expanding the company's midstream infrastructure assets in a key growth area.
  • 4Successfully redeemed all outstanding Series A Preferred Stock in May 2022, simplifying the capital structure.
  • 5Increased borrowings to fund acquisitions and capital projects, leading to higher interest expenses, but maintained compliance with all debt covenants.
  • 6Generated $1.84 billion in cash flow from operating activities for the nine months ended September 30, 2022, demonstrating strong operational cash generation.
  • 7Announced several new growth projects, including multiple new natural gas processing plants in the Permian Basin and a new NGL pipeline, signaling continued investment in future growth.

Frequently Asked Questions

Targa Resources experienced a significant increase in total revenues, up 42% year-over-year to $16.4 billion for the nine months ended September 30, 2022. This growth was primarily driven by higher commodity prices for NGLs, natural gas, and condensate, as well as increased NGL and natural gas volumes across its operations. The Logistics and Transportation segment also saw substantial growth due to higher fees from midstream services, including gathering and processing, transportation, and fractionation.

The acquisition of Lucid Energy Delaware, LLC for approximately $3.5 billion was a major strategic move for Targa Resources. It significantly expanded the company's presence in the Delaware Basin, adding substantial natural gas gathering, treating, and processing infrastructure. This integration is expected to enhance Targa's Permian Delaware operations and contribute to future growth, though it also led to increased debt levels and related interest expenses.

Targa Resources actively manages its capital structure through a combination of debt issuance, repayment, and equity management. In the first nine months of 2022, the company raised significant capital through senior notes and a term loan facility to fund acquisitions. It also redeemed its Series A Preferred Stock and made principal repayments on various credit facilities. Importantly, Targa reported compliance with all its debt covenants as of September 30, 2022, indicating a well-managed debt profile despite increased borrowings.

Targa Resources is actively investing in future growth through significant capital expenditure programs. The company announced the construction of several new natural gas processing plants in the Permian Basin (Permian Midland and Permian Delaware regions) and a new NGL pipeline (Daytona NGL Pipeline). These expansions and new infrastructure projects are designed to capitalize on anticipated production growth and enhance Targa's midstream service offerings, particularly in key resource plays.