Targa Resources Q1 Earnings Miss Estimates, Expenses Increase Y/Y

Core Viewpoint - Targa Resources Corp. (TRGP) reported disappointing first-quarter 2025 results, with adjusted earnings per share of 91 cents, missing the Zacks Consensus Estimate of $2.04, primarily due to lower volumes in the Permian Basin and increased operating expenses [1][2]. Financial Performance - Total quarterly revenues were $4.6 billion, matching the prior-year quarter but missing the Zacks Consensus Estimate of $5.3 billion, attributed to lower commodity sales [2] - Adjusted EBITDA for the first quarter was $1.2 billion, an increase from $966.2 million in the prior-year period [2]. Dividend and Share Repurchase - Targa raised its quarterly cash dividend to $1 per common share, totaling approximately $217 million to be distributed on May 15, 2025 [3]. - The company repurchased 651,163 shares for about $124.9 million at an average price of $191.86 per share, with $890.5 million remaining in its share repurchase program as of March 31, 2025 [4]. Operational Updates - Ongoing projects include construction at several plants in the Permian Basin, with the Pembrook II plant expected to begin operations by the third quarter of 2025 [5][6]. - The Gathering and Processing segment reported an operating margin of $602.2 million, up 8% year over year but below the consensus estimate [6][7]. - The Logistics and Transportation segment's operating margin increased 22% year over year to $646.7 million, also missing the consensus estimate [8]. Volume and Cost Analysis - Gathering and Processing volumes increased 11.3% year over year to an average of 6,006 MMcf/d, but fell short of the consensus mark [7]. - Fractionation volumes rose 23% year over year to 979.9 thousand barrels per day, while NGL pipeline transportation volumes increased 18% [9]. - Product costs were $3.3 billion, up 1% year over year, and operating expenses rose 9% to $303.6 million [11]. Capital Expenditures and Guidance - Targa's growth capital expenditures for 2025 are projected between $2.6 billion and $2.8 billion, with maintenance capital expenditures at $250 million [14]. - The company anticipates full-year adjusted EBITDA of $4.65-$4.85 billion, expecting significant growth in the second half of 2025 [13].