Targa Resources (TRGP) Q2 2024 earnings summary

Executive summary

• Achieved record Q2 2024 adjusted EBITDA of $984.3 million, up 25% year-over-year and 2% sequentially, driven by strong Permian, NGL transportation, and fractionation volumes.

• Net income attributable to common shareholders was $298.5 million, down 9% from Q2 2023, with diluted EPS of $1.33.

• Brought new fractionation and processing assets online, including Train 9 and Roadrunner II, both highly utilized.

• Announced participation in the Blackcomb Pipeline JV (17.5% stake), and new Permian plants to support growth.

• Repurchased a record $355 million in common shares and authorized a new $1 billion buyback program.

Financial highlights

• Q2 2024 revenues were $3.56 billion, up 5% year-over-year; adjusted EBITDA was $984.3 million, up from $789.1 million in Q2 2023.

• Net income for Q2 2024 was $358.9 million, with $298.5 million attributable to common shareholders.

• Adjusted cash flow from operations was $808.5 million; adjusted free cash flow was negative $43.0 million due to high capex.

• Permian natural gas inlet volumes averaged 5.7 Bcf/d, NGL pipeline transportation averaged 784,000 bpd, and fractionation volumes averaged 902,000 bpd.

• Net leverage ratio at quarter end was 3.6x; total consolidated debt was $13.57 billion; liquidity stood at $1.6 billion.

Outlook and guidance

• Raised full-year 2024 adjusted EBITDA guidance midpoint to $4 billion (range $3.95–$4.05 billion), a 5% increase, reflecting higher Permian and system volumes.

• 2024 net growth capital expenditures estimated at $2.7 billion, with maintenance capex at $225 million.

• 2025 capital spending expected to step down to ~$1.7 billion, with free cash flow and shareholder returns increasing.

• Expect low double-digit percentage Permian volume growth in 2024, with strong growth into 2025.

• 90% of FY24 operating margin is fee-based, with non-fee G&P margin hedged through 2026.