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Targa Resources Q3 Earnings Beat on Permian Volume Strength
TRGPTarga(TRGP) ZACKS·2024-11-12 13:05

Core Viewpoint - Targa Resources Corp. (TRGP) reported strong third-quarter earnings driven by robust volumes in the Permian Basin, increased NGL sales, and lower product costs, despite a slight decline in revenues due to lower natural gas prices and hedging impacts [1][2]. Financial Performance - Earnings per share for Q3 2024 were 1.75,exceedingtheZacksConsensusEstimateof1.75, exceeding the Zacks Consensus Estimate of 1.58 and up from 0.97inthesamequarterlastyear[1].−Totalrevenuesreached0.97 in the same quarter last year [1]. - Total revenues reached 3.9 billion, a decrease of 1.1% year-over-year, and fell short of the Zacks Consensus Estimate of 4.2billion[2].−AdjustedEBITDAforthequarterwas4.2 billion [2]. - Adjusted EBITDA for the quarter was 1.1 billion, an increase from 840.2millionintheprioryear[2].DividendandShareRepurchase−Targadeclaredaquarterlycashdividendof840.2 million in the prior year [2]. Dividend and Share Repurchase - Targa declared a quarterly cash dividend of 0.75 per share, amounting to an annualized 3,withtotalcashdividendsofapproximately3, with total cash dividends of approximately 164 million to be distributed on November 15 [3]. - The company repurchased over 1.1 million shares for approximately 167.9millionatanaveragepriceof167.9 million at an average price of 146.02 per share, with 1.1billionremaininginitssharerepurchaseprogramasofSeptember30[4].OperationalHighlights−SignificantvolumeswererecordedinthePermianBasin,withthenewGreenwoodIIplantachievinghighutilization[5].−TheGatheringandProcessingsegmentreportedanoperatingmarginof1.1 billion remaining in its share repurchase program as of September 30 [4]. Operational Highlights - Significant volumes were recorded in the Permian Basin, with the new Greenwood II plant achieving high utilization [5]. - The Gathering and Processing segment reported an operating margin of 584.3 million, up 16% year-over-year, although it missed the consensus estimate [6]. - The Logistics and Transportation segment saw an operating margin of 619.2million,a35619.2 million, a 35% increase year-over-year, surpassing the consensus estimate [7]. Volume and Cost Metrics - Fractionation volumes increased by 20% year-over-year to 953.8 thousand barrels per day, while NGL pipeline transportation volumes rose by 26% [8]. - Product costs were 2.4 billion, down 12% from the previous year, while operating expenses increased by 8% to 301million[9].BalanceSheetandDebt−AsofSeptember30,Targahadcashandcashequivalentsof301 million [9]. Balance Sheet and Debt - As of September 30, Targa had cash and cash equivalents of 127.2 million and long-term debt of 13.6billion,resultinginadebt−to−capitalizationratioofapproximately76.213.6 billion, resulting in a debt-to-capitalization ratio of approximately 76.2% [10]. Future Guidance - For 2024, Targa anticipates adjusted EBITDA to exceed the upper end of its guidance range of 3.95 billion to 4.05billion,drivenbyincreasedinfrastructurespending[11].−Thecompanyplanstoincreaseitscommondividendto4.05 billion, driven by increased infrastructure spending [11]. - The company plans to increase its common dividend to 1.00 per share for Q1 2025, pending approval [12]. - The East Pembrook plant is expected to be completed ahead of schedule in Q2 2026, with new gas processing plants in the Permian expected to commence operations in 2026 [13].