Targa Resources Corp Reports Q4 2024 Earnings Missing Estimates
Targa Resources Corp. (TRGP) reported adjusted earnings of $1.44 per share for the fourth quarter of 2024, falling short of the Zacks Consensus Estimate of $1.88. This disappointing result was primarily due to lower volumes in the Permian Basin.
Nevertheless, TRGP’s earnings improved from $1.23 reported in the same quarter last year, reflecting a notable increase attributed to strong NGL sales performance.
Revenue Growth Amid Challenges
In the fourth quarter, Targa’s total revenues climbed to $4.4 billion, compared to $4.2 billion in the prior-year quarter. This performance also exceeded the Zacks Consensus Estimate of $4.1 billion. The revenue increase was mainly driven by higher commodity sales and increased fees from midstream services.
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Targa Resources, Inc. Price, Consensus and EPS Surprise
The company’s adjusted EBITDA for Q4 totaled $1.1 billion, which is a rise from the $959.9 million recorded in the same period last year.
Dividend Declaration and Share Repurchase
On January 16, 2025, Targa declared a cash dividend of 75 cents per common share for Q4 2024, amounting to an annualized total of $3. The company distributed approximately $164 million in cash dividends to shareholders of record on February 14, 2025, as of the close of business on January 31, 2025.
During the quarter, Targa repurchased 610,683 shares, spending about $108 million at an average price of $176.86 per share. The company reported it still has over $1 billion left in its share repurchase program as of December 31, 2024.
Furthermore, Targa achieved record full-year and Q4 volumes for Permian, NGL transportation, fractionation, and LPG exports. Notably, the company completed its new 275 million cubic feet per day Greenwood II plant and the 120,000 barrels per day Train 10 fractionator. Operations of the new Bull Moose plant and an 800 MMcf/d front-end treater in Permian Delaware also began.
Targa additionally announced the initiation of several new projects. These include an intra-Delaware Basin through Grand Prix NGL Pipeline, a new 150 thousand Bbl/d fractionator in Mont Belvieu, and enhancements to LPG export capabilities at Targa’s Galena Park Marine Terminal, which will boost capacity to approximately 19 million barrels per month.
Segmental Performance Overview
Gathering and Processing: This segment reported an operating margin of $598.9 million, up 11.75% from $536.3 million in the same quarter last year, though it did not meet the Zacks Consensus Estimate of $620 million. The growth reflects a 14.9% increase in Permian Basin volumes, which averaged 6,065.2 MMcf/d, but still fell short of the consensus mark of 6,171 MMcf/d.
Logistics and Transportation: This unit showed an operating margin of $656.2 million, an increase of 18.4% year-over-year, surpassing the Zacks Consensus Estimate of $624 million. The growth is attributed to heightened pipeline transportation and fractionation volumes, along with stronger LPG export margins. Increased NGL supply from Targa’s Permian G&P operations and the completion of the Daytona NGL Pipeline also contributed to this performance.
TRGP achieved fractionation volumes of 1,089.5 thousand barrels per day, a 29% increase from 844.8 thousand barrels per day in the previous year, exceeding the Zacks Consensus Estimate of 1,023 thousand barrels per day. NGL pipeline transportation volumes rose by 21%, with export volumes increasing by 5% and NGL sales improving by 9% in the same timeframe.
Cost Breakdown and Financial Stability
In the fourth quarter, Targa incurred product costs of $2.9 billion, which represents a marginal increase of 1% from the previous year. Operating expenses rose to $305.8 million, a 13% increase from $269.5 million reported in the prior-year quarter. The company invested $819.7 million in growth capital programs, compared to $636 million a year earlier.
As of December 31, 2024, TRGP maintained cash and cash equivalents of $157.3 million against long-term debt of $13.8 billion, resulting in a debt-to-capitalization ratio of approximately 76.2%.
Outlook for 2025
Looking ahead to 2025, Targa expects its full-year adjusted EBITDA to fall between $4.65 billion and $4.85 billion, with the midpoint indicating a 15% growth compared to 2024. The company anticipates significant advancements in its Permian G&P operations, predicting record-setting volumes in Permian production, NGL pipeline transportation, fractionation, and LPG exports, surpassing previous records.
Targa’s operational outlook for 2025 relies on assumptions of Waha natural gas prices averaging $1.55 per MMBtu, NGL composite barrel prices at $0.65 per gallon, and crude oil prices at around $70 per barrel. The company projects net growth capital expenditures between $2.6 billion and $2.8 billion, alongside net maintenance capital expenditures of approximately $250 million.
Additionally, for Q1 2025, Targa plans to propose a 33% increase in its quarterly common dividend to $1.00 per share ($4.00 annualized), pending board approval. If approved, this increase will take effect in Q1 2025, with payment due in May. Targa is committed to enhancing shareholder returns through higher dividend distributions and strategic share repurchases.
Zacks Rank and Comparisons with Industry Peers
Currently, TRGP holds a Zacks Rank of #2 (Buy).
Other midstream service companies that have recently reported earnings include MPLX LP (MPLX), Cheniere Energy, Inc. (LNG), and TC Energy Corporation (TRP).
You can see the complete list of today’s Zacks #1 Rank stocks here.
MPLX and Cheniere Energy Report Mixed Fourth Quarter Results
MPLX LP (MPLX), a midstream energy services company based in Findlay, OH, announced its fourth-quarter 2024 earnings of $1.07 per unit. This result exceeded the Zacks Consensus Estimate of $1.04. However, earnings are down from $1.10 in the same quarter last year.
Total revenues for MPLX in the quarter reached $3.06 billion, falling short of the Zacks Consensus Estimate of $3.08 billion. This figure marks an increase from the prior year’s $2.97 billion.
The unexpected earnings performance was largely attributed to higher throughputs and enhanced contributions from recent acquisitions in the Utica and Permian Basins. Nevertheless, these advantages were somewhat countered by increased total costs and expenses.
Cheniere Energy’s Strong LNG Shipments Drive Profits
In another report, Cheniere Energy, Inc. (LNG), located in Houston, TX, revealed a fourth-quarter 2024 adjusted profit of $4.33 per share, beating the Zacks Consensus Estimate of $2.69. The company’s success stems from strong liquefied natural gas (LNG) shipments, with 606 trillion British thermal units (TBtu) loaded during the period, surpassing the consensus expectation of 582 TBtu.
Despite the strong performance, this figure is a decline from the previous year’s $5.76 per share due to rising operating costs and expenses.
As of December 31, 2024, Cheniere reported approximately $2.6 billion in cash and cash equivalents, alongside net long-term debt of $22.6 billion, yielding a debt-to-capitalization ratio of 69.2%.
TC Energy’s Earnings Exceed Estimates Despite Previous Year Decline
TC Energy Corporation (TRP), a natural gas transmission company, posted fourth-quarter 2024 adjusted earnings of 75 cents per share, exceeding the Zacks Consensus Estimate of 68 cents. The strong performance can be attributed to positive results in its Mexico Natural Gas Pipelines and Power and Energy Solutions segments.
However, TC Energy’s bottom line decreased from 99 cents per share reported in the year-ago period. The decline is linked to weaker results from the Canadian Natural Gas Pipelines and U.S. Natural Gas Pipelines segments.
The company’s quarterly revenues were $2.6 billion, which surpassed the Zacks Consensus Estimate by $130 million, though this figure reflects a 17.8% decline from last year. TC Energy’s comparable EBITDA stood at C$2.6 billion, down slightly from C$2.7 billion in the same quarter last year.
Additionally, the board of directors at TC Energy declared a quarterly dividend of 85 Canadian cents per common share for the quarter ending March 31, 2025. This represents a 3.3% increase from the previous quarter and will be payable on March 31 to shareholders on record as of March 14, raising the annualized dividend to C$3.40 per share.
Bruce Power Achieves High Availability
In the same quarter, Bruce Power reported an impressive 99% availability. The cogeneration power plant fleet also performed strongly, achieving 98% availability due to a reduction in forced outages and successful completion of planned maintenance.
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
