Targa Resources Corp. TRGP reported fourth-quarter 2023 earnings of $1.23 per share, which missed the Zacks Consensus Estimate of $1.49. The bottom line also deteriorated from the year-ago quarter’s level of $1.38. The underperformance could be attributed to lower commodity sales.

Revenues totaled $4.2 billion, down 8.7% year over year. The top line also missed the Zacks Consensus Estimate of $4.5 billion.

The company’s adjusted EBITDA for the fourth quarter totaled $959.9 million, up from $840.4 million in the prior-year period.

Distributable cash flow amounted to $709.7 million, about 8.3% higher than $655.5 million recorded a year ago.

On Jan 18, Targa declared a quarterly cash dividend of 50 cents per common share or $2 on an annualized basis for the fourth quarter of 2023. The dividend was paid out on Feb 15, 2024, to shareholders of record as of Jan 31, 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 $536.3 million, down 1.4% from $544 million recorded in the year-ago period.

This primarily reflects higher Permian Basin volumes that increased 11.2% year over year to an average of 5,280.8 million cubic feet per day.

Logistics and Transportation: This unit mainly reflects the company’s downstream operations. Its operating margin of $554.2 million increased 25.5% year over year.

The rise was due to various factors, including increased marketing margin and higher volumes of pipeline transportation and fractionation. The higher marketing margin was a result of increased optimization opportunities.

TRGP’s fractionation volumes totaled 844.8 thousand barrels per day, up 13.5% from 744.4 recorded a year ago.

NGL pipeline transportation volumes were up 43.7% year over year, and NGL sales also improved 30.8% during the same time frame.

Costs, Capex & Balance Sheet

Targa incurred product costs of $2.9 billion in the fourth quarter, down 12.1% from the year-ago quarter’s level.

The company spent $636 million on growth capital programs compared with $552.4 million in the year-ago period.

As of Dec 31, 2023, TRGP had cash and cash equivalents of $141.7 million and long-term debt of $12.3 billion, with a debt-to-capitalization of around 81.8%.

Guidance

The company expects adjusted EBITDA in the $3.7-$3.9 billion range for 2024.

It also anticipates 2024 growth capital expenditures between $2.3 billion and $2.5 billion, with net maintenance capital spending of $225 million.