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Targa Resources Corp. Reports Fourth Quarter and Full Year 2017 Financial Results and Provides 2018 Operational and Financial Guidance


HOUSTON, Feb. 15, 2018 (GLOBE NEWSWIRE) — Targa Resources Corp. (NYSE:TRGP) (“TRC”, the “Company” or “Targa”) today reported fourth quarter and full year 2017 results.

Fourth Quarter and Full Year 2017 Financial Results

Fourth quarter 2017 net income (loss) attributable to Targa Resources Corp. was $283.1 million compared to ($150.8) million for the fourth quarter of 2016. The fourth quarter of 2017, in connection with the Company’s initial analysis of the impact of the U.S. government’s recently enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”), included a discrete net deferred tax benefit of $269.5 million. For the full year 2017, net income (loss) attributable to Targa Resources Corp. was $54.0 million compared to ($187.3) million for 2016.

The Company reported earnings before interest, income taxes, depreciation and amortization, and other non-cash items (“Adjusted EBITDA”) of $328.4 million for the fourth quarter of 2017 compared to $297.6 million for the fourth quarter of 2016. For the full year 2017, Adjusted EBITDA was $1,139.8 million compared to $1,064.9 million for 2016 (see the section of this release entitled “Targa Resources Corp. – Non-GAAP Financial Measures” for a discussion of Adjusted EBITDA, distributable cash flow, gross margin and operating margin, and reconciliations of such measures to their most directly comparable financial measures calculated and presented in accordance with U.S. generally accepted accounting principles (“GAAP”)).

“We are pleased with our performance during 2017, as increasing system volumes in both our Gathering and Processing and Downstream segments drove Adjusted EBITDA to exceed our previously communicated full year 2017 expectations,” said Joe Bob Perkins, Chief Executive Officer of the Company. “Looking forward, we are well positioned to benefit from continued producer activity and the increasing downstream market demand for hydrocarbons. 2018 will be a transitional year for Targa as we continue to invest in attractive opportunities to further integrate and grow our asset footprint, and as we look forward, we remain focused on executing our strategic priorities that are expected to generate significant Adjusted EBITDA growth over the long term.”

On January 18, 2018, TRC declared a quarterly dividend of $0.91 per share of its common stock for the three months ended December 31, 2017, or $3.64 per share on an annualized basis. Total cash dividends of approximately $199.1 million will be paid on February 15, 2018 on all outstanding shares of common stock to holders of record as of the close of business on February 1, 2018. Also on January 18, 2018, TRC declared a quarterly cash dividend of $23.75 per share of its Series A Preferred Stock. Total cash dividends of approximately $22.9 million were paid on February 14, 2018 on all outstanding shares of Series A Preferred Stock to holders of record as of the close of business on February 1, 2018.

The Company reported distributable cash flow for the fourth quarter of 2017 of $274.6 million compared to total common dividends to be paid of $199.1 million and total Series A Preferred Stock dividends to be paid of $22.9 million, resulting in dividend coverage in excess of 1.2 times with respect to the fourth quarter of 2017.

For the full year 2017, distributable cash flow of $851.8 million resulted in approximately 1.0 times dividend coverage on the common and Series A Stock dividends paid with respect to 2017.

Fourth Quarter 2017 – Capitalization, Liquidity and Financing

The Company’s total consolidated debt as of December 31, 2017 was $5,053.0 million including $435.0 million outstanding under TRC’s $670.0 million senior secured revolving credit facility due 2020. The consolidated debt included $4,618.0 million of Targa Resource Partners LP (“TRP” or “the Partnership”) debt, net of $30.0 million of debt issuance costs, with $20.0 million outstanding under TRP’s $1.6 billion senior secured revolving credit facility due 2020, $350.0 million outstanding under TRP’s accounts receivable securitization facility and $4,278.0 million of outstanding TRP senior notes, net of unamortized premiums.

As of December 31, 2017, TRC had available borrowing capacity under its senior secured revolving credit facility of $235.0 million. TRP had $20.0 million of borrowings outstanding under its $1.6 billion senior secured revolving credit facility and $27.2 million in outstanding letters of credit, resulting in available senior secured revolving credit facility capacity of $1,552.8 million at the Partnership. Total consolidated liquidity of the Company as of December 31, 2017, including $137.2 million of cash, was approximately $1.9 billion.

In October 2017, the Partnership issued $750.0 million aggregate principal amount of 5% Senior Notes due January 2028. The Partnership used the net proceeds of $744.1 million after costs from this offering to redeem its 5% Senior Notes due 2018, reduce borrowings under its credit facilities, and for general partnership purposes.

2018 Financial and Operational Expectations

For 2018, assuming NGL composite barrel prices average $0.67 per gallon, crude oil prices average $58 per barrel and natural gas prices average $2.75 per MMbtu for the year, Targa estimates Adjusted EBITDA to be between $1,225 million and $1,325 million.

Targa estimates 2018 net growth capital expenditures to be approximately $1.6 billion, based on currently announced projects and other identified spending. Targa expects that additional growth capital projects will be identified throughout the year, which would increase 2018 net growth capital expenditures.  Net maintenance capital expenditures for 2018 are estimated to be approximately $120 million.

Given the continued producer activity around its systems, Targa estimates that 2018 Field Gathering and Processing (“G&P”) natural gas inlet volumes will average between 3,150 million cubic feet per day (“MMcf/d”) and 3,350 MMcf/d, with the midpoint representing an 18% increase over 2017 Field G&P average natural gas inlet volumes. In the Permian Basin, Targa estimates average G&P natural gas inlet volumes will be between 1,550 MMcf/d and 1,650 MMcf/d, with the midpoint representing a 25% increase over 2017 Permian G&P average natural gas inlet volumes. In SouthOK, SouthTX and the Badlands, Targa estimates 2018 average natural gas inlet volumes will be higher than average 2017 volumes, and Targa also estimates higher average crude gathered volumes in both the Permian and Badlands year over year. Targa estimates that these volume increases will be partially offset by lower volumes in WestOK and North Texas.

Conference Call

The Company will host a conference call for the investment community at 11:00 a.m. Eastern time (10:00 a.m. Central time) on February 15, 2018 to discuss fourth quarter 2017 results and its 2018 operational and financial outlook. The conference call can be accessed via webcast through the Events and Presentations section of Targa’s website at www.targaresources.com, by going directly to http://ir.targaresources.com/trc/events.cfm or by dialing 877-881-2598. The conference ID number for the dial-in is 1389043. Please dial in ten minutes prior to the scheduled start time. A replay will be available approximately two hours following the completion of the webcast through the Investors section of the Company’s website. Presentation slides will also be available in the Events and Presentations section of the Company’s website, or directly at http://ir.targaresources.com/trc/events.cfm.

Forward-Looking Statements

Certain statements in this release are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, included in this release that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future, are forward-looking statements. These forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of uncertainties, factors and risks, many of which are outside the Company’s control, which could cause results to differ materially from those expected by management of the Company. Such risks and uncertainties include, but are not limited to, weather, political, economic and market conditions, including a decline in the price and market demand for natural gas, natural gas liquids and crude oil, the timing and success of business development efforts; and other uncertainties. These and other applicable uncertainties, factors and risks are described more fully in the Company’s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2016, and any subsequently filed Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. The Company does not undertake an obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Contact investor relations by phone at (713) 584-1133.

Sanjay Lad
Director – Investor Relations

Jennifer Kneale
Vice President – Finance



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