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Targa Resources (TRGP) Q1 Earnings Miss Estimates, Rise Y/Y
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Targa Resources Corp. (TRGP - Free Report) reported first-quarter 2024 earnings of $1.22 per share, which missed the Zacks Consensus Estimate of $1.35. The underperformance could be attributed to lower commodity sales and increased operating expenses. However, the bottom line improved from the year-ago quarter’s level of 3 cents.
Revenues totaled $4.6 billion, up 0.9 % year over year, due to strong volumes across its systems. The top line also beat the Zacks Consensus Estimate of $4.3 billion.
The company’s adjusted EBITDA for the first quarter totaled $966.2 million, up from $940.6 million in the prior-year period. Targa reported higher liquefied petroleum gas ("LPG") export volumes from its Permian.
The company bought back 1,186,444 shares of its common stock. These were acquired at an average price of $104.26 per share, amounting to a total net expenditure of $124 million. By Mar 31, 2024, the company still had $646.4 million available for further repurchases under its $1.0 billion common share buyback initiative.
On Apr 11, Targa declared a quarterly cash dividend of 75 cents per common share or $3 on an annualized basis for the first quarter of 2024. This dividend represents a 50% increase from the year-ago quarter’s level. The dividend will be paid out on May 15, 2024, to shareholders of record as of Apr 30, 2024.
Targa Resources, Inc. Price, Consensus and EPS Surprise
Gathering and Processing: The segment recorded an operating margin of $556.4 million, up 3% from $538.4 million recorded in the year-ago period.
This primarily reflects higher Permian Basin volumes that increased 11% year over year to an average of 5,395 million cubic feet per day.
Logistics and Transportation: This unit mainly reflects the company’s downstream operations. Its operating margin of $532.1 million increased 1% year over year. The rise was due to higher pipeline transportation and fractionation margins and higher LPG export margins.
TRGP’s fractionation volumes totaled 797.2 thousand barrels per day, up 5% from 758.8 recorded a year ago. NGL pipeline transportation volumes were up 34% year over year, and NGL sales also improved 22% during the same time frame.
Costs, Capex & Balance Sheet
Targa incurred product costs of $3.2 billion in the first quarter, up 6.6% from the year-ago quarter’s level. At the same time, the company reported operating expenses of $278 million, up 7.7% from the year-ago quarter’s level of $258.2 million.
The company spent $685.8 million on growth capital programs compared with $415.4 million in the year-ago period.
As of Mar 31, 2024, TRGP had cash and cash equivalents of $109.9 million and long-term debt of $12.5 billion, with a debt-to-capitalization of around 74%.
Growth Projects Update
The Zacks Rank #2 (Buy) company is currently commissioning its new 120 MBbl/d Train 9 fractionator in Mont Belvieu, TX, on time and within budget.
The company also continues to build its 275 MMcf/d Greenwood II plant in Permian Midland, as well as its 230 MMcf/d Roadrunner II and 275 MMcf/d Bull Moose plants in Permian Delaware.
Targa's Logistics and Transportation segment includes the 120 MBbl/d Train 10 fractionator in Mont Belvieu, the Daytona NGL Pipeline, and the reactivation of Gulf Coast Fractionators. Targa remains on track to complete the previously disclosed expansions.
In May 2024, the company announced plans to build a new 275 MMcf/d cryogenic natural gas processing plant in Permian Midland (the "Pembrook II plant") and a new 150 MBbl/d fractionator in Mont Belvieu ("Train 11"). The Pembrook II plant is set to begin operations in the fourth quarter of 2025, while Train 11 will start in the third quarter of 2026.
Guidance
The company expects adjusted EBITDA in the $3.7-$3.9 billion range for 2024.
The company also expects 2024 growth capital expenditures between $2.3 billion and $2.5 billion, with net maintenance capital spending of $225 million.
The company expects net growth capital expenditures to be around $1.4 billion for 2025.
Important Energy Earnings So Far
While we have discussed Targa Resources’s first-quarter results in detail, let’s take a look at some other key energy reports of this season.
EOG Resources, Inc. (EOG - Free Report) , an American energy company engaged in hydrocarbon exploration, announced first-quarter 2024 adjusted earnings per share of $2.82, which beat the Zacks Consensus Estimate of $2.70. The bottom line also increased from the year-ago quarter’s level of $2.69. Strong quarterly results were primarily driven by higher total production volumes.
Total quarterly revenues of $6.1 billion beat the Zacks Consensus Estimate of $5.9 billion. The top line also improved from the prior-year quarter’s level of $6.04 billion. As of Mar 31, 2024, EOG had cash and cash equivalents worth $5.3 million and a long-term debt of $3.8 billion.
SLB (SLB - Free Report) , the largest oilfield contractor, announced first-quarter 2024 earnings of 75 cents per share (excluding charges and credits), which beat the Zacks Consensus Estimate of 74 cents. The bottom line also increased from the year-ago quarter’s level of 63 cents.
SLB’s strong quarterly earnings resulted from higher evaluation and stimulation activities in the international market. As of Mar 31, 2024, the company had approximately $3.5 billion in cash and short-term investments, and a long-term debt of $10.7 billion.
Independent oil refiner and marketer Valero Energy (VLO - Free Report) reported first-quarter 2024 adjusted earnings of $3.82 per share, which beat the Zacks Consensus Estimate of $3.18, driven by a decline in total cost of sales. Adjusted operating income in the Refining segment totaled $1.7 billion, down from $4.1 billion in the year-ago quarter. The figure, however, was above our estimate of $1.6 billion.
Valero’s total cost of sales declined to $29.8 billion from the year-ago figure of $32.1 billion. The figure was also below our estimate of $30.4 billion, primarily due to lower material costs and operating expenses. The first-quarter capital investment totaled $661 million, of which $563 million was allotted for sustaining the business.
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Targa Resources (TRGP) Q1 Earnings Miss Estimates, Rise Y/Y
Targa Resources Corp. (TRGP - Free Report) reported first-quarter 2024 earnings of $1.22 per share, which missed the Zacks Consensus Estimate of $1.35. The underperformance could be attributed to lower commodity sales and increased operating expenses. However, the bottom line improved from the year-ago quarter’s level of 3 cents.
Revenues totaled $4.6 billion, up 0.9 % year over year, due to strong volumes across its systems. The top line also beat the Zacks Consensus Estimate of $4.3 billion.
The company’s adjusted EBITDA for the first quarter totaled $966.2 million, up from $940.6 million in the prior-year period. Targa reported higher liquefied petroleum gas ("LPG") export volumes from its Permian.
The company bought back 1,186,444 shares of its common stock. These were acquired at an average price of $104.26 per share, amounting to a total net expenditure of $124 million. By Mar 31, 2024, the company still had $646.4 million available for further repurchases under its $1.0 billion common share buyback initiative.
On Apr 11, Targa declared a quarterly cash dividend of 75 cents per common share or $3 on an annualized basis for the first quarter of 2024. This dividend represents a 50% increase from the year-ago quarter’s level. The dividend will be paid out on May 15, 2024, to shareholders of record as of Apr 30, 2024.
Targa Resources, Inc. Price, Consensus and EPS Surprise
Targa Resources, Inc. price-consensus-eps-surprise-chart | Targa Resources, Inc. Quote
Operational Performance
Gathering and Processing: The segment recorded an operating margin of $556.4 million, up 3% from $538.4 million recorded in the year-ago period.
This primarily reflects higher Permian Basin volumes that increased 11% year over year to an average of 5,395 million cubic feet per day.
Logistics and Transportation: This unit mainly reflects the company’s downstream operations. Its operating margin of $532.1 million increased 1% year over year. The rise was due to higher pipeline transportation and fractionation margins and higher LPG export margins.
TRGP’s fractionation volumes totaled 797.2 thousand barrels per day, up 5% from 758.8 recorded a year ago. NGL pipeline transportation volumes were up 34% year over year, and NGL sales also improved 22% during the same time frame.
Costs, Capex & Balance Sheet
Targa incurred product costs of $3.2 billion in the first quarter, up 6.6% from the year-ago quarter’s level. At the same time, the company reported operating expenses of $278 million, up 7.7% from the year-ago quarter’s level of $258.2 million.
The company spent $685.8 million on growth capital programs compared with $415.4 million in the year-ago period.
As of Mar 31, 2024, TRGP had cash and cash equivalents of $109.9 million and long-term debt of $12.5 billion, with a debt-to-capitalization of around 74%.
Growth Projects Update
The Zacks Rank #2 (Buy) company is currently commissioning its new 120 MBbl/d Train 9 fractionator in Mont Belvieu, TX, on time and within budget.
The company also continues to build its 275 MMcf/d Greenwood II plant in Permian Midland, as well as its 230 MMcf/d Roadrunner II and 275 MMcf/d Bull Moose plants in Permian Delaware.
Targa's Logistics and Transportation segment includes the 120 MBbl/d Train 10 fractionator in Mont Belvieu, the Daytona NGL Pipeline, and the reactivation of Gulf Coast Fractionators. Targa remains on track to complete the previously disclosed expansions.
In May 2024, the company announced plans to build a new 275 MMcf/d cryogenic natural gas processing plant in Permian Midland (the "Pembrook II plant") and a new 150 MBbl/d fractionator in Mont Belvieu ("Train 11"). The Pembrook II plant is set to begin operations in the fourth quarter of 2025, while Train 11 will start in the third quarter of 2026.
Guidance
The company expects adjusted EBITDA in the $3.7-$3.9 billion range for 2024.
The company also expects 2024 growth capital expenditures between $2.3 billion and $2.5 billion, with net maintenance capital spending of $225 million.
The company expects net growth capital expenditures to be around $1.4 billion for 2025.
Important Energy Earnings So Far
While we have discussed Targa Resources’s first-quarter results in detail, let’s take a look at some other key energy reports of this season.
EOG Resources, Inc. (EOG - Free Report) , an American energy company engaged in hydrocarbon exploration, announced first-quarter 2024 adjusted earnings per share of $2.82, which beat the Zacks Consensus Estimate of $2.70. The bottom line also increased from the year-ago quarter’s level of $2.69. Strong quarterly results were primarily driven by higher total production volumes.
Total quarterly revenues of $6.1 billion beat the Zacks Consensus Estimate of $5.9 billion. The top line also improved from the prior-year quarter’s level of $6.04 billion. As of Mar 31, 2024, EOG had cash and cash equivalents worth $5.3 million and a long-term debt of $3.8 billion.
SLB (SLB - Free Report) , the largest oilfield contractor, announced first-quarter 2024 earnings of 75 cents per share (excluding charges and credits), which beat the Zacks Consensus Estimate of 74 cents. The bottom line also increased from the year-ago quarter’s level of 63 cents.
SLB’s strong quarterly earnings resulted from higher evaluation and stimulation activities in the international market. As of Mar 31, 2024, the company had approximately $3.5 billion in cash and short-term investments, and a long-term debt of $10.7 billion.
Independent oil refiner and marketer Valero Energy (VLO - Free Report) reported first-quarter 2024 adjusted earnings of $3.82 per share, which beat the Zacks Consensus Estimate of $3.18, driven by a decline in total cost of sales. Adjusted operating income in the Refining segment totaled $1.7 billion, down from $4.1 billion in the year-ago quarter. The figure, however, was above our estimate of $1.6 billion.
Valero’s total cost of sales declined to $29.8 billion from the year-ago figure of $32.1 billion. The figure was also below our estimate of $30.4 billion, primarily due to lower material costs and operating expenses. The first-quarter capital investment totaled $661 million, of which $563 million was allotted for sustaining the business.