exv99w1
Exhibit 99.1
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1000 Louisiana, Suite 4300 |
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Houston, TX 77002 |
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713.584.1000 |
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www.targaresources.com |
Targa Resources Partners LP and Targa Resources Corp. Report
First Quarter 2011 Financial Results
HOUSTON May 5, 2011 Targa Resources Partners LP (NYSE: NGLS) (Targa Resources Partners or
the Partnership) and Targa Resources Corp. (NYSE: TRGP) (TRC or the Company) today reported
first quarter 2011 results. First quarter 2011 net income attributable to Targa Resources Partners
was $37.8 million or $0.37 per diluted limited partner unit, compared to a net income attributable
to Targa Resources Partners of $42.6 million or $0.14 per diluted limited partner unit for the
first quarter of 2010. Net income for the first quarters of 2011 and 2010 included a $0.2 million
non-cash loss and a $17.2 million non-cash gain related to derivative instruments, respectively.
The Partnerships first quarter of 2010 also included $15.6 million in affiliate and allocated
interest expense for periods prior to the acquisitions of assets from TRC by the Partnership. The
Partnership reported Adjusted EBITDA of $107.4 million for the first quarter of 2011 compared to
$97.5 million for the first quarter of 2010.
The Partnerships distributable cash flow for the first quarter 2011 of $72.1 million corresponds
to distribution coverage of approximately 1.3 times the $55.2 million in total distributions to be
paid on May 13, 2011 (see the section of this release entitled Targa Resources Partners Non-GAAP
Financial Measures for a discussion of Adjusted EBITDA, gross margin, operating margin and
distributable cash flow, 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 very pleased with our first quarter operating and financial results which were driven by
strong performance across all operating segments, said Rene Joyce, Chief Executive Officer of the
Partnerships general partner and of Targa Resources Corp. We have also recently completed several
key growth initiatives. Our 78 MBbl/d CBF expansion has been placed in commercial service, we
successfully closed the acquisition of the Channelview Refined Products and Crude Terminal Facility
(Channelview Terminal), and we entered into a multi-year LPG export deal at our Galena Park
Marine Terminal. The scale and diversity of our operations combined with our focus on execution
allow us to capitalize on strong industry fundamentals that are driving volume growth both in
liquids-rich natural gas production and in NGL supplies. These dynamics support our gathering and
processing volumes, drive growth in our fee-based Downstream Business, and contribute to operating
margin expansion and organic growth opportunities across our businesses.
On April 11, 2011, the Partnership announced a cash distribution for the first quarter of 2011 of
55.75¢ per common unit, or $2.23 per unit on an annualized basis. The cash distribution will be
paid on May 13, 2011 on all outstanding common units to holders of record as of the close of
business on April 21, 2011. The total distribution to be paid is $55.2 million, with $40.8 million
to the Partnerships third-party limited partners, and $6.5 million, $6.8 million and $1.1 million
to TRC for its ownership of common units, incentive distribution rights and its 2% general partner
interest in the Partnership, respectively.
Targa Resources Partners Capitalization, Liquidity and Financing Update
Total funded debt at the Partnership as of March 31, 2011 was $1,179.1 million including $201.3
million outstanding under the Partnerships $1.1 billion senior secured revolving credit facility,
$209.1 million of 81/4% senior unsecured notes due 2016, $72.7 million of 111/4% senior unsecured notes
due 2017 (the 111/4% Notes), $250.0 million of 77/8% senior unsecured notes due 2018, $483.6 million
of 67/8% senior unsecured notes due 2021 (the 67/8% Notes) and $37.6 million of unamortized
discounts.
At March 31, 2011, the Partnership had available revolver capacity of $785.1 million, after giving
effect to $113.6 million in outstanding letters of credit, and had $63.6 million of cash resulting
in total liquidity of $848.7 million.
On January 24, 2011, the Partnership completed a public offering of 8,000,000 common units
representing limited partner interests in the Partnership, providing net proceeds of $259.3
million. Pursuant to the exercise of the underwriters overallotment option on February 3, 2011,
the Partnership sold an additional 1,200,000 common units, providing net proceeds of approximately
$38.8 million. In addition, the general partner contributed $6.3 million for 187,755 general
partner units to maintain its 2% interest. The net proceeds from the offering were used to reduce
borrowings under the Partnerships senior secured credit facility.
On February 2, 2011, the Partnership closed a private placement of $325.0 million in aggregate
principal amount of 67/8% Notes resulting in net proceeds of $319.0 million after deducting expenses
of the offering.
On February 4, 2011, the Partnership exchanged $158.6 million principal amount of its 67/8% Notes
plus payments of $28.6 million including $0.9 million of accrued interest for $158.6 million
aggregate principal amount of its 111/4% senior unsecured notes. The debt covenants related to the
remaining $72.7 million of face value 111/4% notes were removed as the Partnership received
sufficient consents in connection with the exchange offer to amend the indenture governing the
notes.
The Partnership estimates that its total capital expenditures for 2011 will be approximately $285.0
million gross and $250 million net of non-controlling interests share and reimbursements. The
Partnership also estimates that approximately 20-25% of the $250 million net capital expenditures
will be for maintenance. This amount excludes the $29.0 million acquisition of the Channelview
Terminal.
Targa Resources Corp. First Quarter 2011 Financial Results
Targa Resources Corp., the parent of Targa Resources Partners, today reported its first quarter
2011 results. The Company, which at March 31, 2011 owned a 2.0% general partner interest (held
through its 100% ownership interest in the general partner of the Partnership), all of the
incentive distribution rights (IDRs) and 11,645,659 common units of the Partnership, presents its
results consolidated with those of the Partnership.
Net income attributable to Targa Resources Corp. was $6.8 million for the first quarter 2011,
compared with $21.9 million for the first quarter 2010.
2
Total first quarter 2011 distributions to be paid on May 13, 2011 by the Partnership to the Company
will total approximately $14.4 million with $6.5 million, $1.1 million and $6.8 million paid with
respect to common units, general partner interests and incentive distribution rights, respectively.
On April 11, 2011, the Company declared a quarterly cash dividend of 27.25¢ per common share, or
$1.09 per common share on an annualized basis, representing an approximate 6% increase over the
annualized rate paid with respect to the prorated dividend for the portion of the fourth quarter of
2010 that the Company was public. Total cash dividends will be paid May 17, 2011 on all outstanding
common shares to holders of record as of the close of business on April 21, 2011.
The Companys distributable cash flow for the first quarter 2011 of $13.2 million corresponds to
dividend coverage of approximately 1.15 times the $11.5 million in total declared dividends to be
paid on May 17, 2011 (see the section of this release entitled Targa Resources Corp. Non-GAAP
Financial Measures for a discussion of distributable cash flow and reconciliations of this measure
to its most directly comparable financial measure calculated and presented in accordance with
GAAP).
Targa Resources Corp. Capitalization, Liquidity and Financing Update
Total funded debt of the Company as of March 31, 2011, excluding debt of the Partnership, was $89.3
million. The Company also has access to the full amount of its $75.0 million senior secured
revolving credit facility due 2014.
The Companys cash balance, excluding cash held at the Partnership and its subsidiaries, was $84.1
million as of March 31, 2011, resulting in total liquidity of $159.1 million.
On April 26, 2011 certain of the Companys shareholders sold, in a secondary public offering,
5,650,000 shares of common stock under a new registration statement on Form S-1 at a net price of
$30.65 per share, providing net proceeds of $173.2 million to the selling stockholders. The
Company received no proceeds from the sale of shares by the selling stockholders. Pursuant to the
exercise of the underwriters overallotment option, certain of the selling stockholders also sold
an additional 847,500 shares of common stock, providing net proceeds of $26.0 million. The Company
incurred approximately $0.8 million of expenses in connection with the offering.
Conference Call
Targa Resources Partners and Targa Resources Corp. will host a joint conference call for investors
and analysts at 11:30 a.m. Eastern Time (10:30 a.m. Central Time) on May 5, 2011 to discuss first
quarter 2011 financial results. The conference call can be accessed via Webcast through the Events
and Presentations section of the Partnerships website at www.targaresources.com, by going directly
to http://ir.targaresources.com/events.cfm?company=LP or by dialing 877-881-2598. The pass code for
the dial-in is 61835740. Please dial in ten minutes prior to the scheduled start time. A replay
will be available approximately two hours following completion of the Webcast through the
Investors section of the Partnerships website. Telephone replay access numbers are 800-642-1687
or 706-645-9291 with pass code 61835740 and will remain available, along with the Webcast, until
May 19, 2011.
3
Targa Resources Partners Consolidated Financial Results of Operation
With the closing of the acquisitions of the Permian Business, Coastal Straddles, Versado and VESCO
in 2010 and in accordance with the accounting treatment for entities under common control, the
results of operations of the Partnership include the historical results of the Permian Business,
Coastal Straddles, Versado and VESCO for all periods presented.
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Three Months Ended March 31, |
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2011 |
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2010 |
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(In millions except per unit data) |
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Revenues |
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$ |
1,614.5 |
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$ |
1,483.8 |
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Product purchases |
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1,400.6 |
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1,297.9 |
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Gross margin |
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213.9 |
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185.9 |
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Operating expenses |
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65.9 |
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62.2 |
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Operating margin |
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148.0 |
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123.7 |
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Depreciation and amortization expense |
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42.7 |
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42.0 |
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General and administrative expense |
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31.8 |
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25.0 |
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Income from operations |
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73.5 |
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56.7 |
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Interest expense, net |
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(27.5 |
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(31.0 |
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Equity in earnings of unconsolidated investment |
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1.7 |
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0.3 |
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Gain (loss) on mark-to-market derivative instruments |
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25.4 |
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Other |
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(0.2 |
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Income tax expense |
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(1.8 |
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(1.5 |
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Net income (loss) |
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45.7 |
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49.9 |
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Less: Net income attributable to noncontrolling interest |
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7.9 |
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7.3 |
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Net income (loss) attributable to Targa Resources Partners LP |
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$ |
37.8 |
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$ |
42.6 |
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Net income attributable to predecessor operations |
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$ |
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$ |
30.1 |
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Net income (loss) attributable to general partner |
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7.6 |
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3.1 |
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Net income attributable to limited partners |
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30.2 |
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9.4 |
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Net income attributable to Targa Resources Partners LP |
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$ |
37.8 |
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$ |
42.6 |
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Basic and diluted net income per limited partner unit |
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$ |
0.37 |
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$ |
0.14 |
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Financial data: |
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Adjusted EBITDA (1) |
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$ |
107.4 |
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$ |
97.5 |
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Distributable cash flow (2) |
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72.1 |
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76.4 |
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(1) |
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Adjusted EBITDA is net income before interest, income taxes, depreciation and amortization,
gains or losses on debt repurchases and non-cash risk management activities related to
derivative instruments. |
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(2) |
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Distributable cash flow is net income attributable to Targa Resources Partners LP plus
depreciation and amortization, deferred taxes and amortization of debt issue costs included in
interest expense, adjusted for losses (gains) on mark-to-market derivative contracts and debt
repurchases, less maintenance capital expenditures (net of any reimbursements of project
costs). |
4
Targa Resources Partners Review of Consolidated First Quarter Results
Three Months Ended March 31, 2011 Compared to Three Months Ended March 31, 2010
Consolidated revenues (including the impacts of hedging) increased due to higher net impact of
realized commodity prices ($19.8 million), and NGL and natural gas sales volumes ($107.9 million)
and higher fee-based and other revenues ($10.2 million), partially offset by lower condensate sales
volumes ($7.2 million).
Consolidated operating margin increased $24.3 million, reflecting higher gross margin partially
offset by increased operating expenses. The increase in consolidated gross margin reflects higher
revenues of $130.7 million partially offset by increases in product purchase costs of $102.7
million. The increase in consolidated operating expenses of $3.7 million primarily reflects
increased compensation and benefits and fuel, utilities and catalyst costs.
See Targa Resources Partners Review of Segment Performance for additional information
regarding changes in the components of operating margin on a disaggregated basis.
The increase in depreciation and amortization expenses of $0.7 million reflects $2.0 million of
depreciation expense related to new assets placed in service since the first quarter of 2010 less
the $1.3 million impact of assets that have become fully depreciated.
General and administrative expenses increased $6.8 million reflecting higher allocations by the
Company for salaries, burden and incentive compensation.
The decrease in interest expense was primarily due to a lower level of borrowings, partially offset
by a higher effective interest rate.
Mark-to-market gain decreased $25.4 million. This variance is attributable to the accounting
treatment of commodity hedges related to the Permian and Versado acquisitions during 2010. Under
common control accounting, these hedges did not qualify for hedge accounting treatment for
predecessor periods prior to our acquisition of the assets. Therefore, changes in fair value for
these instruments were recorded in earnings. These derivative instruments were designated as hedges
as of the date of these acquisitions, and therefore changes in value subsequent to those dates are
recorded in other comprehensive income until the underlying transactions settle. The Partnership
did not have mark-to-market gains on these derivatives during the first quarter of 2011, and will
not have future mark-to-market gains or losses unless the hedges are de-designated.
Targa Resources Partners Review of Segment Performance
The following discussion of segment performance includes inter-segment revenues. The Partnership
views segment operating margin as an important performance measure of the core profitability of its
operations. This measure is a key component of internal financial reporting and is reviewed for
consistency and trend analysis. For a discussion of operating margin, see Targa Resources
PartnersNon-GAAP Financial MeasuresOperating Margin. Segment operating financial results and
operating statistics include the effects of intersegment transactions. These intersegment
transactions have been
5
eliminated from the consolidated presentation. For all operating statistics presented, the
numerator is the total volume or sales for the period and the denominator is the number of calendar
days for the period.
The Partnership reports its operations in two divisions: (i) Natural Gas Gathering and Processing,
consisting of two reportable segments (a) Field Gathering and Processing and (b) Coastal
Gathering and Processing; and (ii) Logistics and Marketing, consisting of two reportable segments
(a) Logistics Assets and (b) Marketing and Distribution. The financial results of the
Partnerships hedging activities are reported in Other.
Field Gathering and Processing Segment
The Field Gathering and Processing segment gathers and processes natural gas from the Permian Basin
in West Texas and Southeast New Mexico, and the Fort Worth Basin, including the Barnett Shale, in
North Texas. The segments processing plants include nine owned and operated facilities.
The following table provides summary data regarding results of operations of this segment for the
periods indicated:
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Three Months Ended March 31, |
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2011 |
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2010 |
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($ in millions except price data) |
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Gross margin |
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$ |
87.9 |
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$ |
90.1 |
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Operating expenses |
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26.8 |
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21.8 |
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Operating margin |
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$ |
61.1 |
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$ |
68.3 |
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Operating statistics: |
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Plant natural gas inlet, MMcf/d |
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Permian |
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122.7 |
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124.7 |
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SAOU |
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107.2 |
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91.5 |
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North Texas System |
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184.5 |
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173.9 |
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Versado |
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158.4 |
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186.4 |
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572.8 |
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576.5 |
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Gross NGL production, MBbl/d |
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Permian |
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14.5 |
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14.1 |
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SAOU |
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16.5 |
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14.2 |
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North Texas System |
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20.9 |
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19.8 |
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Versado |
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17.4 |
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21.2 |
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69.5 |
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69.3 |
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Natural gas sales, BBtu/d (1) |
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263.1 |
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253.5 |
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NGL sales, MBbl/d (1) |
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56.4 |
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55.2 |
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Condensate sales, MBbl/d (1) |
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2.3 |
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2.5 |
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Average realized prices (2): |
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Natural gas, $/MMBtu |
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3.81 |
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5.17 |
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NGL, $/gal |
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1.11 |
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1.00 |
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Condensate, $/Bbl |
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91.04 |
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76.04 |
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6
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(1) |
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Segment operating statistics include the effect of intersegment sales, which have been
eliminated from the consolidated presentation. For all volume statistics presented, the
numerator is the total volume sold during the quarter and the denominator is the number of
calendar days during the applicable period. |
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(2) |
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Average realized prices exclude the impact of hedging activities. |
Three Months Ended March 31, 2011 Compared to Three Months Ended March 31, 2010
The $2.2 million decrease in gross margin for 2011 was primarily due to lower natural gas
sales prices ($32.1 million), lower condensate sales volumes ($1.5 million) and higher product
purchases ($6.7 million), partially offset by higher NGL and condensate sales prices ($28.2
million), higher natural gas and NGL sales volumes ($9.1 million) and higher fee based and other
revenues ($1.0 million). Plant inlet volumes were essentially flat, with the impact of volumes
associated with new well connects at the North Texas and SAOU systems offset by volume decreases
due to severe cold weather in January and February 2011 and operational outages combined with
production declines at the Partnerships Versado system. The increased natural gas and NGL sales
volumes were due primarily to higher NGL content in supply from new well connects and slightly
lower plant recoveries offsetting the impact of lower plant inlet volumes.
The $5.0 million increase in operating expenses was primarily due to higher fuel, utilities and
catalyst costs ($1.6 million), higher system maintenance expenses ($1.4 million) driven by severe
cold weather and operational outages, as well as higher compensation and benefit costs ($1.0
million), and higher contract and professional service expenses ($1.0 million).
Coastal Gathering and Processing Segment
The Coastal Gathering and Processing segment assets are located in the onshore and near offshore
region of the Louisiana Gulf Coast and the Gulf of Mexico. With the strategic location of the
Partnerships assets in Louisiana, it has access to the Henry Hub, the largest natural gas hub in
the U.S., and a substantial NGL distribution system with access to markets throughout Louisiana and
the southeast U.S.
7
The following table provides summary data regarding results of operations of this segment for the
periods indicated:
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Three Months Ended March 31, |
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2011 |
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2010 |
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($ in millions except price data) |
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Gross margin |
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$ |
46.5 |
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$ |
37.4 |
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Operating expenses |
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10.2 |
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9.9 |
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Operating margin |
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$ |
36.3 |
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$ |
27.5 |
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Operating statistics: |
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Plant natural gas inlet, MMcf/d (1) |
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LOU |
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173.1 |
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213.4 |
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Coastal Straddles |
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943.4 |
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1,135.0 |
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VESCO |
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479.3 |
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406.7 |
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1,595.8 |
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1,755.1 |
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Gross NGL production, MBbl/d |
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LOU |
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6.9 |
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8.0 |
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Coastal Straddles |
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17.1 |
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20.1 |
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VESCO |
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25.6 |
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21.3 |
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49.6 |
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49.4 |
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Natural gas sales, Bbtu/d (2) |
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254.2 |
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313.9 |
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NGL sales, MBbl/d (2) |
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43.5 |
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43.4 |
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Condensate sales, MBbl/d (2) |
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0.3 |
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1.2 |
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Average realized prices (3): |
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Natural gas, $/MMBtu |
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4.15 |
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5.26 |
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NGL, $/gal |
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1.21 |
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1.09 |
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Condensate, $/Bbl |
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92.23 |
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77.28 |
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(1) |
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The majority of the Coastal Straddles plant volumes are gathered on third party
offshore pipeline systems and delivered to the plant inlets. |
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(2) |
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Segment operating statistics include the effect of intersegment sales, which have been
eliminated from the consolidated presentation. For all volume statistics presented, the
numerator is the total volume sold during the quarter and the denominator is the number of
calendar days during the applicable period. |
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(3) |
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Average realized prices exclude the impact of hedging activities |
Three Months Ended March 31, 2011 Compared to Three Months Ended March 31, 2010
The $9.1 million increase in gross margin for the three months ended March 31, 2011 is primarily
due to an increase in NGL and condensate sales prices ($20.3 million), an increase in NGL sales
volumes ($0.6 million), an increase in fee-based and other revenues ($1.5 million) and a decrease
in commodity sales purchases ($46.3 million), partially offset by a decrease in natural gas sales
prices ($25.5 million) and a decrease in natural gas and condensate sales volumes ($34.1 million).
The decreases in plant inlet
volumes were largely attributable to a decline in traditional wellhead and offshore supply volumes
but higher liquids pricing more than offset the volume declines resulting in higher operating
margin.
8
Logistics Assets Segment
The Logistics Assets segment is involved in transporting, storing, and fractionating mixed NGLs;
storing, terminaling and transporting finished NGLs; and storing and terminaling crude and refined
products. The Partnerships logistics assets are generally connected to and supplied, in part, by
its Natural Gas Gathering and Processing segments and are predominantly located at Mont Belvieu,
Texas and Southwestern Louisiana. This segment also includes the activities associated
with the recent acquisition of the Channelview Refined Products and Crude Terminal Facility.
The following table provides summary data regarding results of operations of this segment for the
periods indicated:
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
2011 |
|
|
2010 |
|
|
|
($ in millions) |
|
Gross margin |
|
$ |
42.3 |
|
|
$ |
37.6 |
|
Operating expenses |
|
|
20.0 |
|
|
|
26.4 |
|
|
|
|
|
|
|
|
Operating margin |
|
$ |
22.3 |
|
|
$ |
11.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating statistics(1): |
|
|
|
|
|
|
|
|
Fractionation volumes, MBbl/d |
|
|
209.3 |
|
|
|
209.6 |
|
Treating volumes, MBbl/d |
|
|
10.2 |
|
|
|
7.6 |
|
|
|
|
(1) |
|
Segment operating statistics include the effect of intersegment sales, which have been
eliminated from the consolidated presentation. For all volume statistics presented, the
numerator is the total volume sold during the quarter and the denominator is the number of
calendar days during the applicable period. |
Three Months Ended March 31, 2011 Compared to Three Months Ended March 31, 2010
The $4.7 million increase in gross margin reflects higher terminaling and storage revenue ($4.9
million) at the Partnerships Mont Belvieu and Galena Park terminals. The increase in terminaling
revenue at the Partnerships Mont Belvieu terminal is primarily due to supply services to
petrochemical customers. At the Partnerships Galena Park terminal, the increase is due to expanded
LPG export services. The acquisition of the Channelview Terminal also contributed to the higher
terminaling and storage revenues.
The $6.4 million decrease in operating expenses was primarily due to a favorable system product
gain/loss ($2.6 million), lower natural gas price for fuel to fractionators ($1.7 million) and less
cost associated with fractionation maintenance.
Marketing and Distribution Segment
The Marketing and Distribution segment covers all activities required to distribute and market raw
and finished natural gas liquids and all natural gas marketing activities. It includes (1)
marketing of the Partnerships own natural gas liquids production and purchasing natural gas
liquids products in selected
9
United States markets; (2) providing liquefied petroleum gas balancing
services to refinery customers; (3) transporting, storing and selling propane and providing related
propane logistics services to multi-state retailers, independent retailers and other end users; and
(4) marketing natural gas available to the Partnership from its Natural Gas Gathering and
Processing division and the purchase and resale of natural gas in selected United States markets.
The following table provides summary data regarding results of operations of this segment for the
periods indicated:
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
2011 |
|
|
2010 |
|
|
|
($ in millions, except price data) |
|
Gross margin |
|
$ |
44.6 |
|
|
$ |
30.9 |
|
Operating expenses |
|
|
11.9 |
|
|
|
11.2 |
|
|
|
|
|
|
|
|
Operating margin |
|
$ |
32.7 |
|
|
$ |
19.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating statistics (1): |
|
|
|
|
|
|
|
|
Natural gas sales, BBtu/d |
|
|
664.3 |
|
|
|
609.3 |
|
NGL sales, MBbl/d |
|
|
272.4 |
|
|
|
246.4 |
|
Natural gas, $/MMBtu |
|
|
4.07 |
|
|
|
5.23 |
|
NGL realized price, $/gal |
|
|
1.28 |
|
|
|
1.20 |
|
|
|
|
(1) |
|
Segment operating statistics include the effect of intersegment sales, which have
been eliminated from the consolidated presentation. For all volume statistics presented,
the numerator is the total volume sold during the quarter and the denominator is the number
of calendar days during the applicable period. |
Three Months Ended March 31, 2011 Compared to Three Months Ended March 31, 2010
The $13.7 million increase in gross margin was due to higher NGL volumes ($118.0 million) and
natural gas volumes ($25.9 million), higher NGL prices ($76.4 million) offset by lower natural gas
prices ($69.7 million), and higher fee-based and other revenues ($1.2 million), offset by increased
product purchases
($138.2 million). Factors contributing to higher operating margins in the first quarter of 2011
included increased west coast propane sales and increased export sales.
Other
Other includes the impact on operating margin of the Partnerships hedging activities.
Three Months Ended March 31, 2011 Compared to Three Months Ended March 31, 2010
As of the three months ended March 31, 2011, the Partnerships cash flow hedging program
decreased gross margin by $4.4 million compared to $3.0 million for the same period during 2010,
reflecting higher commodity prices on forward-selling hedge contracts.
10
About Targa Resources Corp. and Targa Resources Partners
Targa Resources Corp. owns a 2% general partner interest (which the Company holds through its 100%
ownership interest in the general partner of the Partnership), all of the outstanding incentive
distribution rights (IDRs) and a portion of the outstanding limited partner interests in Targa
Resources Partners LP.
Targa Resources Partners is a publicly traded Delaware limited partnership that is a leading
provider of midstream natural gas and natural gas liquid services in the United States. The
Partnership is engaged in the business of gathering, compressing, treating, processing and selling
natural gas, storing, fractionating, treating, transporting and selling natural gas liquids, or
NGLs, and NGL products and storing and terminaling refined petroleum products and crude oil. The
Partnership owns an extensive network of integrated gathering pipelines and gas processing plants
and currently operates along the Louisiana Gulf Coast primarily accessing the offshore region of
Louisiana, the Permian Basin in West Texas and Southeast New Mexico and the Fort Worth Basin in
North Texas. Additionally, the Partnerships natural gas liquids logistics and marketing assets are
located primarily at Mont Belvieu and Galena Park near Houston, Texas and in Lake Charles,
Louisiana with terminals and transportation assets across the United States. Targa Resources
Partners is managed by its general partner, Targa Resources GP LLC, which is indirectly wholly
owned by Targa Resources Corp.
The principal executive offices of Targa Resources Corp. and Targa Resources Partners are located
at 1000 Louisiana, Suite 4300, Houston, TX 77002 and their telephone number is 713-584-1000. For
more information please go to www.targaresources.com
Targa Resources Partners Non-GAAP Financial Measures
This press release includes the non-GAAP financial measures Adjusted EBITDA, gross margin,
operating margin and distributable cash flow. The following tables provide reconciliations of these
non-GAAP financial measures to their most directly comparable GAAP measures. The Partnerships
non-GAAP financial measures should not be considered as alternatives to GAAP measures such as net
income, operating income, net cash flows provided by operating activities or any other GAAP measure
of liquidity or financial performance.
Distributable Cash Flow The Partnership defines distributable cash flow as net income
attributable to Targa Resources Partners LP plus depreciation and amortization, deferred taxes and
amortization of debt issue costs included in interest expense, adjusted for losses (gains) on
mark-to-market derivative contracts and debt repurchases, less maintenance capital expenditures
(net of any reimbursements of project costs). Distributable cash flow is a significant performance
metric used by the Partnership and by external users of its financial statements, such as
investors, commercial banks and research analysts to compare basic cash flows generated by the
Partnership (prior to the establishment of any retained cash reserves by the board of directors of
the Partnerships general partner) to the cash distributions it expects to pay its unitholders.
Using this metric, management can quickly compute the coverage ratio of estimated cash flows to
planned cash distributions. Distributable cash flow is also an important financial
measure for the Partnerships unitholders since it serves as an indicator of the Partnerships
success in providing a cash return on investment. Specifically, this financial measure indicates to
investors whether or not the Partnership is generating cash flow at a level that can sustain or
support an increase in its quarterly distribution rates. Distributable cash flow is also a
quantitative standard used throughout the
11
investment community with respect to publicly-traded
partnerships and limited liability companies because the value of a unit of such an entity is
generally determined by the units yield (which in turn is based on the amount of cash
distributions the entity pays to a unitholder). The economic substance behind the Partnerships use
of distributable cash flow is to measure the ability of its assets to generate cash flow sufficient
to make distributions to its investors. The GAAP measure most directly comparable to distributable
cash flow is net income attributable to Targa Resources Partners LP.
Distributable cash flow should not be considered as an alternative to GAAP net income attributable
to Targa Resources Partners LP. Distributable cash flow is not a presentation made in accordance
with GAAP and has important limitations as an analytical tool. You should not consider
distributable cash flow in isolation or as a substitute for analysis of the Partnerships results
as reported under GAAP. Because distributable cash flow excludes some, but not all, items that
affect net income and is defined differently by different companies in the Partnerships industry,
the Partnerships definition of distributable cash flow may not be comparable to similarly titled
measures of other companies, thereby diminishing its utility. Management compensates for the
limitations of distributable cash flow as an analytical tool by reviewing the comparable GAAP
measures, understanding the differences between the measures and incorporating these insights into
its decision making processes.
The following table presents a reconciliation of net income attributable to Targa Resources
Partners LP to distributable cash flow for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
2011 |
|
|
2010 |
|
|
|
(In millions) |
|
Reconciliation of net income attributable to Targa
Resources Partners LP to distributable cash flow: |
|
|
|
|
|
|
|
|
Net income attributable to Targa Resources Partners LP |
|
$ |
37.8 |
|
|
$ |
42.6 |
|
Affiliate and allocated interest expense |
|
|
|
|
|
|
15.6 |
|
Depreciation and amortization expenses |
|
|
42.7 |
|
|
|
42.0 |
|
Deferred income tax expense |
|
|
0.4 |
|
|
|
0.7 |
|
Amortization in interest expense |
|
|
1.8 |
|
|
|
1.3 |
|
Risk management activities |
|
|
0.2 |
|
|
|
(17.2 |
) |
Maintenance capital expenditures |
|
|
(12.8 |
) |
|
|
(6.8 |
) |
Other (1) |
|
|
2.0 |
|
|
|
(1.8 |
) |
|
|
|
|
|
|
|
Distributable cash flow |
|
$ |
72.1 |
|
|
$ |
76.4 |
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Includes reimbursements of certain environmental maintenance capital expenditures
by TRC and the noncontrolling interests portion of maintenance capital expenditures and
depreciation expense. |
Adjusted EBITDAThe Partnership defines Adjusted EBITDA as net income before interest, income
taxes, depreciation and amortization, gains or losses on debt repurchases and non-cash risk
management activities related to derivative instruments. Adjusted EBITDA is used as a supplemental
financial measure by management and by external users of the Partnerships financial statements such as
investors, commercial banks and others.
12
The economic substance behind managements use of Adjusted EBITDA is to measure the ability of the
Partnerships assets to generate cash sufficient to pay interest costs, support indebtedness and
make distributions to unitholders. The GAAP measures most directly comparable to Adjusted EBITDA
are net cash provided by operating activities and net income attributable to Targa Resources
Partners. The Partnerships non-GAAP financial measure of Adjusted EBITDA should not be considered
as an alternative to GAAP net cash provided by operating activities and GAAP net income. Adjusted
EBITDA is not a presentation made in accordance with GAAP and has important limitations as an
analytical tool. You should not consider Adjusted EBITDA in isolation or as a substitute for
analysis of the Partnerships results as reported under GAAP. Because Adjusted EBITDA excludes
some, but not all, items that affect net income and net cash provided by operating activities and
is defined differently by different companies in the Partnerships industry, the Partnerships
definition of Adjusted EBITDA may not be comparable to similarly titled measures of other
companies. Management compensates for the limitations of Adjusted EBITDA as an analytical tool by
reviewing the comparable GAAP measures, understanding the differences between the measures and
incorporating these insights into its decision-making processes.
The following table presents a reconciliation of net cash provided by operating activities to Targa
Resources Partners L.P. Adjusted EBITDA for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
2011 |
|
|
2010 |
|
|
|
(In millions) |
|
Reconciliation of net cash provided by operating activities
to Targa Resources Partners L.P. Adjusted EBITDA: |
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
$ |
98.6 |
|
|
$ |
120.4 |
|
Net income attributable to noncontrolling interests |
|
|
(7.9 |
) |
|
|
(7.3 |
) |
Interest expense, net (1) |
|
|
25.7 |
|
|
|
14.1 |
|
Current income tax expense |
|
|
1.4 |
|
|
|
0.8 |
|
Other (2) |
|
|
(2.0 |
) |
|
|
(2.4 |
) |
Changes in operating assets and liabilities which used (provided) cash: |
|
|
|
|
|
|
|
|
Accounts receivable and other assets |
|
|
(71.3 |
) |
|
|
(87.4 |
) |
Accounts payable and other liabilities |
|
|
62.9 |
|
|
|
59.3 |
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
$ |
107.4 |
|
|
$ |
97.5 |
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Net of amortization of debt issuance costs, discount and premium included in interest
expense of $1.8 million and $1.2 million for the three months ended March 31, 2011 and
2010. Excludes affiliate and allocated interest expense. |
|
(2) |
|
Includes equity earnings from unconsolidated investments net of distributions,
accretion expenses associated with asset retirement obligations, amortization of stock
based compensation and gain (loss) on sale of assets. |
13
The following table presents a reconciliation of net income attributable to Targa Resources
Partners L.P. to Adjusted EBITDA for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
2011 |
|
|
2010 |
|
|
|
(In millions) |
|
Reconciliation of net income attributable to
Targa Resources Partners LP to Adjusted EBITDA: |
|
|
|
|
|
|
|
|
Net income attributable to Targa Resources Partners LP |
|
$ |
37.8 |
|
|
$ |
42.6 |
|
Add: |
|
|
|
|
|
|
|
|
Interest expense, net (1) |
|
|
27.5 |
|
|
|
31.0 |
|
Income tax expense |
|
|
1.8 |
|
|
|
1.5 |
|
Depreciation and amortization expenses |
|
|
42.7 |
|
|
|
42.0 |
|
Risk management activities |
|
|
0.2 |
|
|
|
(17.2 |
) |
Noncontrolling interests adjustment |
|
|
(2.6 |
) |
|
|
(2.4 |
) |
|
|
|
|
|
|
|
Adjusted EBITDA |
|
$ |
107.4 |
|
|
$ |
97.5 |
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Includes affiliate and allocated interest expense. |
Gross Margin. Gross margin is defined as revenues less purchases. It is impacted by volumes and
commodity prices as well as by the Partnerships contract mix and hedging program. The Partnership
defines Natural Gas Gathering and Processing gross margin as total operating revenues from the
sales of natural gas and NGLs plus service fee revenues, less product purchases, which consist
primarily of producer payments and other natural gas purchases. Logistics Assets gross margin
consists primarily of service fee revenue. Gross margin for Marketing and Distribution equals total
revenue from service fees and NGL sales, less cost of sales, which consists primarily of NGL
purchases, transportation costs and changes in inventory valuation. The gross margin impact of cash
flow settlements are reported in Other.
Operating Margin. Operating margin is an important performance measure of the core profitability of
the Partnerships operations. The Partnership defines operating margin as gross margin less
operating expenses. Natural gas and NGL sales revenue includes settlement gains and losses on
commodity hedges.
The GAAP measure most directly comparable to gross margin and operating margin is net income. Gross
Margin and operating margin are not alternatives to GAAP net income, and have important limitations
as analytical tools. You should not consider gross margin and operating margin in isolation or as
substitutes for analysis of the Partnerships results as reported under GAAP. Because gross margin
and operating margin exclude some, but not all, items that affect net income and are defined
differently by different companies in the Partnerships industry, the Partnerships definition of
gross margin and operating margin may not be comparable to similarly titled measures of other
companies, thereby diminishing their utility. Management compensates for the limitations of gross
margin and operating margin as analytical tools by reviewing the comparable GAAP measures,
understanding the differences between the measures and incorporating these insights into its
decision-making processes. Management reviews business segment gross margin and operating
margin
monthly as a core internal management process. The Partnership believes that investors benefit from
having access to the same financial
measures that its management uses in evaluating our operating results. Gross margin and operating
14
margin provide useful information to investors because they are used as supplemental financial
measures by the Partnership and by external users of the Partnerships financial statements,
including investors and commercial banks to assess:
|
|
|
the financial performance of the Partnerships assets without regard to financing
methods, capital structure or historical cost basis; |
|
|
|
|
the Partnerships operating performance and return on capital as compared to other
companies in the midstream energy sector, without regard to financing or capital structure;
and |
|
|
|
|
the viability of acquisitions and capital expenditure projects and the overall rates of
return on alternative investment opportunities. |
Management compensates for the limitations of gross margin and operating margin as an analytical
tool by reviewing the comparable GAAP measure, understanding the differences between the measures
and incorporating these insights into its decision-making processes.
The following table presents a reconciliation of gross margin and operating margin to net income
for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
2011 |
|
|
2010 |
|
|
|
(In millions) |
|
Reconciliation of gross margin and
operating margin to net income (loss): |
|
|
|
|
|
|
|
|
Gross margin |
|
$ |
213.9 |
|
|
$ |
185.9 |
|
Operating expenses |
|
|
(65.9 |
) |
|
|
(62.2 |
) |
|
|
|
|
|
|
|
Operating margin |
|
|
148.0 |
|
|
|
123.7 |
|
Depreciation and amortization expenses |
|
|
(42.7 |
) |
|
|
(42.0 |
) |
General and administrative expenses |
|
|
(31.8 |
) |
|
|
(25.0 |
) |
Interest expense, net |
|
|
(27.5 |
) |
|
|
(31.0 |
) |
Income tax expense |
|
|
(1.8 |
) |
|
|
(1.5 |
) |
Other, net |
|
|
1.5 |
|
|
|
25.7 |
|
|
|
|
|
|
|
|
Net income |
|
$ |
45.7 |
|
|
$ |
49.9 |
|
|
|
|
|
|
|
|
Targa Resources Corp. Non-GAAP Financial Measures
This press release includes the non-GAAP financial measure distributable cash flow. The following
table provides a reconciliation of this non-GAAP financial measure to its most directly comparable
U.S. GAAP measure. Distributable cash flow should not be considered as an alternative to GAAP
measures such as net income or any other GAAP measure of liquidity or financial performance.
Distributable Cash Flow The Company defines distributable cash flow as net income
attributable to the Targa Resources Corp excluding the Partnerships earnings, plus depreciation
and amortization of Non-Partnership assets, Non-Partnership deferred taxes, distributions that are
attributable to the current
period of the Partnership, losses (gains) on mark to market derivative contracts and certain
pre-IPO tax
15
impacts. Distributable cash flow is a significant performance metric used by the
Company and by external users of the Companys financial statements, such as investors, commercial
banks, research analysts and others to compare basic cash flows generated by the Company to the
cash dividends the Company expects to pay its shareholders. Using this metric, management can
quickly compute the coverage ratio of estimated cash flows to planned cash dividends. Distributable
cash flow is also an important financial measure for the Companys shareholders since it serves as
an indicator of the Companys success in providing a cash return on investment. Specifically, this
financial measure indicates to investors whether or not the Company is generating cash flow at a
level that can sustain or support an increase in the Companys quarterly dividend rates.
Distributable cash flow is also a quantitative standard used throughout the investment community
because the share value is generally determined by the shares yield (which in turn is based on the
amount of cash dividends the entity pays to a shareholder). The economic substance behind the
Companys use of distributable cash flow is to measure the ability of the Companys assets to
generate cash flow sufficient to pay dividends to the Companys investors.
The GAAP measure most directly comparable to distributable cash flow is net income. Distributable
cash flow should not be considered as an alternative to GAAP net income. Distributable cash flow is
not a presentation made in accordance with GAAP and has important limitations as an analytical
tool. You should not consider distributable cash flow in isolation or as a substitute for analysis
of our results as reported under GAAP. Because distributable cash flow excludes some, but not all,
items that affect net income and is defined differently by different companies in our industry, our
definition of distributable cash flow may not be compatible to similarly titled measures of other
companies, thereby diminishing its utility.
Management compensates for the limitations of distributable cash flow as an analytical tool by
reviewing the comparable GAAP measure, understanding the differences between the measures and
incorporating these insights into its decision making process.
The following table presents a reconciliation of net income of Targa Resources Corp. to
distributable cash flow for the periods indicated:
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, 2011 |
|
|
|
(in millions) |
|
Reconciliation of net income attributable to Targa
Resources Corp. to Distributable Cash Flow |
|
|
|
|
Net income of Targa Resources Corp. |
|
$ |
40.8 |
|
Less: Net income of Targa Resources Partners LP |
|
|
(45.7 |
) |
|
|
|
|
Net income (loss) for TRC Non-Partnership |
|
|
(4.9 |
) |
Plus: TRC Non-Partnership Income Tax Expense |
|
|
4.0 |
|
Plus: Distributions declared by the Partnership(1) |
|
|
14.4 |
|
Plus: Non-cash loss (gain) on hedges |
|
|
(0.6 |
) |
Plus: Depreciation Non-Partnership assets |
|
|
0.7 |
|
Current Cash Tax Expense for TRC Non-Partnership(2) |
|
|
(0.4 |
) |
|
|
|
|
Distributable cash flow |
|
$ |
13.2 |
|
|
|
|
|
|
|
|
(1) |
|
Distributions from the Partnerships earnings for the three months ending March 31,
2011. The distributions were announced on April 11, 2011 and will be paid on May 13, 2011. |
16
|
|
|
(2) |
|
Excludes $1.2 million of non-cash current tax expense arising from amortization of
deferred tax assets from drop down gains realized for tax purposes and paid in 2010. Also,
excludes $2.5 million of current tax expense from the $88.0 million reserve established at the
IPO to fund taxes related to deferred tax gains. |
Forward-Looking Statements
Certain statements in this release are forward-looking statements. All statements, other than
statements of historical facts, included in this release that address activities, events or
developments that the Partnership and the Company expect, believe or anticipate 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 Partnerships and the Companys control, which could cause
results to differ materially from those expected by management of the Partnership and 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 and natural
gas liquids, 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 Partnerships
and the Companys filings with the Securities and Exchange Commission, including their Annual
Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Neither the
Partnership nor the Company 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
Matthew Meloy
Senior Vice President, Chief Financial Officer and Treasurer
17
TARGA RESOURCES PARTNERS LP
FINANCIAL SUMMARY (unaudited)
CONSOLIDATED BALANCE SHEETS
(In millions)
|
|
|
|
|
|
|
|
|
|
|
March 31, |
|
|
December 31, |
|
|
|
2011 |
|
|
2010 |
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
63.6 |
|
|
$ |
76.3 |
|
Trade receivables, net |
|
|
444.1 |
|
|
|
466.1 |
|
Inventory |
|
|
5.1 |
|
|
|
50.3 |
|
Assets from risk management activities |
|
|
19.6 |
|
|
|
25.2 |
|
Other current assets |
|
|
1.0 |
|
|
|
2.9 |
|
|
|
|
|
|
|
|
Total current assets |
|
|
533.4 |
|
|
|
620.8 |
|
|
|
|
|
|
|
|
Property, plant and equipment, net |
|
|
2,530.1 |
|
|
|
2,495.2 |
|
Long-term assets from risk management activities |
|
|
14.9 |
|
|
|
18.9 |
|
Other long-term assets |
|
|
62.3 |
|
|
|
51.5 |
|
|
|
|
|
|
|
|
Total assets |
|
$ |
3,140.7 |
|
|
$ |
3,186.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND PARTNERS CAPITAL |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities |
|
$ |
507.3 |
|
|
$ |
575.6 |
|
Liabilities from risk management activities |
|
|
56.1 |
|
|
|
34.2 |
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
563.4 |
|
|
|
609.8 |
|
|
|
|
|
|
|
|
Long-term debt payable to third parties |
|
|
1,179.1 |
|
|
|
1,445.4 |
|
Long-term liabilities from risk management activities |
|
|
55.5 |
|
|
|
32.8 |
|
Other long-term liabilities |
|
|
51.2 |
|
|
|
49.3 |
|
|
|
|
|
|
|
|
|
|
Owners equity: |
|
|
|
|
|
|
|
|
Targa Resources Partners LP owners equity |
|
|
1,157.2 |
|
|
|
919.8 |
|
Noncontrolling interests in subsidiaries |
|
|
134.3 |
|
|
|
129.3 |
|
|
|
|
|
|
|
|
Total owners equity |
|
|
1,291.5 |
|
|
|
1,049.1 |
|
|
|
|
|
|
|
|
Total liabilities and owners equity |
|
$ |
3,140.7 |
|
|
$ |
3,186.4 |
|
|
|
|
|
|
|
|
18
TARGA RESOURCES PARTNERS LP
FINANCIAL SUMMARY (unaudited)
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per unit amounts)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
2011 |
|
|
2010 |
|
REVENUES |
|
$ |
1,614.5 |
|
|
$ |
1,483.8 |
|
Product purchases |
|
|
1,400.6 |
|
|
|
1,297.9 |
|
Operating expenses |
|
|
65.9 |
|
|
|
62.2 |
|
Depreciation and amortization expenses |
|
|
42.7 |
|
|
|
42.0 |
|
General and administrative expenses |
|
|
31.8 |
|
|
|
25.0 |
|
|
|
|
|
|
|
|
Total costs and expenses |
|
|
1,541.0 |
|
|
|
1,427.1 |
|
|
|
|
|
|
|
|
INCOME FROM OPERATIONS |
|
|
73.5 |
|
|
|
56.7 |
|
Other income (expense): |
|
|
|
|
|
|
|
|
Interest expense from affiliate |
|
|
|
|
|
|
(13.5 |
) |
Interest expense allocated from Parent |
|
|
|
|
|
|
(2.1 |
) |
Other interest expense, net |
|
|
(27.5 |
) |
|
|
(15.4 |
) |
Equity in earnings of unconsolidated investments |
|
|
1.7 |
|
|
|
0.3 |
|
Gain (loss) on mark-to-market derivative instruments |
|
|
|
|
|
|
25.4 |
|
Other income (expense) |
|
|
(0.2 |
) |
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes |
|
|
47.5 |
|
|
|
51.4 |
|
Income tax (expense) benefit: |
|
|
(1.8 |
) |
|
|
(1.5 |
) |
|
|
|
|
|
|
|
NET INCOME |
|
|
45.7 |
|
|
|
49.9 |
|
Less: Net income attributable to noncontrolling interests |
|
|
7.9 |
|
|
|
7.3 |
|
|
|
|
|
|
|
|
NET INCOME ATTRIBUTABLE TO TARGA
RESOURCES PARTNERS LP |
|
$ |
37.8 |
|
|
$ |
42.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to predecessor operations |
|
$ |
|
|
|
$ |
30.1 |
|
Net income attributable to general partner |
|
|
7.6 |
|
|
|
3.1 |
|
Net income attributable to limited partners |
|
|
30.2 |
|
|
|
9.4 |
|
|
|
|
|
|
|
|
Net income (loss) attributable to Targa Resources Partners LP |
|
$ |
37.8 |
|
|
$ |
42.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net income per limited partner unit |
|
$ |
0.37 |
|
|
$ |
0.14 |
|
|
|
|
|
|
|
|
Basic and diluted weighted average limited partner units outstanding |
|
|
82.3 |
|
|
|
68.0 |
|
19
TARGA RESOURCES PARTNERS LP
FINANCIAL SUMMARY (unaudited)
CONSOLIDATED CASH FLOW INFORMATION
(In millions)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
2011 |
|
|
2010 |
|
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
Net income |
|
$ |
45.7 |
|
|
$ |
49.9 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
Amortization in interest expense |
|
|
1.8 |
|
|
|
1.2 |
|
Amortization in general and administrative expense |
|
|
0.2 |
|
|
|
0.1 |
|
Interest expense on affiliate and allocated indebtedness |
|
|
|
|
|
|
15.6 |
|
Depreciation and other amortization expense |
|
|
42.7 |
|
|
|
42.0 |
|
Accretion of asset retirement obligations |
|
|
0.9 |
|
|
|
0.8 |
|
Deferred income tax expense |
|
|
0.4 |
|
|
|
0.7 |
|
Equity in earnings of unconsolidated investment, net of distributions |
|
|
(1.7 |
) |
|
|
0.4 |
|
Risk management activities |
|
|
0.2 |
|
|
|
(18.6 |
) |
Changes in operating assets and liabilities: |
|
|
8.4 |
|
|
|
28.3 |
|
|
|
|
|
|
|
|
Net cash used by operating activities |
|
|
98.6 |
|
|
|
120.4 |
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
Outlays for property, plant and equipment |
|
|
(55.5 |
) |
|
|
(18.9 |
) |
Business acquisition |
|
|
(29.0 |
) |
|
|
|
|
Investment in unconsolidated affiliate |
|
|
(4.4 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities |
|
|
(88.9 |
) |
|
|
(18.9 |
) |
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
Proceeds from borrowings under credit facility |
|
|
268.0 |
|
|
|
63.9 |
|
Repayments of credit facility |
|
|
(832.0 |
) |
|
|
(225.2 |
) |
Proceeds from issuance of senior notes |
|
|
325.0 |
|
|
|
|
|
Cash paid on note exchange |
|
|
(27.7 |
) |
|
|
|
|
Proceeds from equity offerings |
|
|
304.4 |
|
|
|
143.1 |
|
Costs incurred in connection with financing arrangements |
|
|
(6.2 |
) |
|
|
|
|
Contributions from parent |
|
|
2.5 |
|
|
|
|
|
Distributions to unitholders |
|
|
(53.5 |
) |
|
|
(38.8 |
) |
Distributions under common control |
|
|
|
|
|
|
(17.8 |
) |
Contributions from noncontrolling interest |
|
|
0.6 |
|
|
|
|
|
Distribution to noncontrolling interests |
|
|
(3.5 |
) |
|
|
(1.9 |
) |
|
|
|
|
|
|
|
Net cash provided in financing activities |
|
|
(22.4 |
) |
|
|
(76.7 |
) |
|
|
|
|
|
|
|
Net change in cash and cash equivalents |
|
|
(12.7 |
) |
|
|
24.8 |
|
Cash and cash equivalents, beginning of period |
|
|
76.3 |
|
|
|
90.9 |
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period |
|
$ |
63.6 |
|
|
$ |
115.7 |
|
|
|
|
|
|
|
|
20
TARGA RESOURCES CORP.
FINANCIAL SUMMARY (unaudited)
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
2011 |
|
|
2010 |
|
REVENUES |
|
$ |
1,618.1 |
|
|
$ |
1,483.6 |
|
Costs and expenses: |
|
|
|
|
|
|
|
|
Product purchases |
|
|
1,400.6 |
|
|
|
1,297.7 |
|
Operating expenses |
|
|
66.0 |
|
|
|
62.3 |
|
Depreciation and amortization expenses |
|
|
43.4 |
|
|
|
42.8 |
|
General and administrative expenses |
|
|
34.6 |
|
|
|
26.0 |
|
|
|
|
|
|
|
|
Total costs and expenses |
|
|
1,544.6 |
|
|
|
1,428.8 |
|
|
|
|
|
|
|
|
INCOME FROM OPERATIONS |
|
|
73.5 |
|
|
|
54.8 |
|
Other income (expense): |
|
|
|
|
|
|
|
|
Interest expense, net |
|
|
(28.5 |
) |
|
|
(27.5 |
) |
Equity in earnings of unconsolidated investments |
|
|
1.7 |
|
|
|
0.3 |
|
Gain (loss) on debt repurchases |
|
|
|
|
|
|
(17.4 |
) |
Gain on early debt extinguishment |
|
|
|
|
|
|
28.9 |
|
Gain (loss) on mark-to-market derivative instruments |
|
|
|
|
|
|
(0.3 |
) |
Other income (expense), net |
|
|
(0.1 |
) |
|
|
0.1 |
|
|
|
|
|
|
|
|
Income before income taxes |
|
|
46.6 |
|
|
|
38.9 |
|
Income tax (expense) benefit: |
|
|
(5.8 |
) |
|
|
(3.0 |
) |
|
|
|
|
|
|
|
NET INCOME |
|
|
40.8 |
|
|
|
35.9 |
|
Less: Net income attributable to noncontrolling interest |
|
|
34.0 |
|
|
|
14.0 |
|
|
|
|
|
|
|
|
NET INCOME (LOSS) ATTRIBUTABLE TO TARGA RESOURCES |
|
|
6.8 |
|
|
|
21.9 |
|
Dividends on Series B preferred stock |
|
|
|
|
|
|
(4.6 |
) |
Undistributed earnings attributable to preferred shareholders |
|
|
|
|
|
|
(17.3 |
) |
|
|
|
|
|
|
|
Net income (loss) available to common shareholders |
|
$ |
6.8 |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) available per common share basic |
|
$ |
0.17 |
|
|
$ |
|
|
|
|
|
|
|
|
|
Net income (loss) available per common share diluted |
|
$ |
0.16 |
|
|
$ |
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding basic |
|
|
40.9 |
|
|
|
3.9 |
|
Weighted average shares outstanding diluted |
|
|
41.3 |
|
|
|
3.9 |
|
21
TARGA RESOURCES CORP.
FINANCIAL SUMMARY (unaudited)
KEY TARGA RESOURCES CORP. BALANCE SHEET ITEMS
(In millions)
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, 2011 |
|
Cash and cash equivalents: |
|
|
|
|
TRC Non-Partnership |
|
$ |
84.1 |
|
Targa Resources Partners |
|
|
63.6 |
|
|
|
|
|
Total cash and cash equivalents |
|
$ |
147.7 |
|
|
|
|
|
Long-term Debt: |
|
|
|
|
TRC Non-Partnership |
|
$ |
89.3 |
|
Targa Resources Partners |
|
|
1,179.1 |
|
|
|
|
|
Total long-term debt |
|
$ |
1,268.4 |
|
|
|
|
|
22