Targa Resources Corp. recently reported its first-quarter earnings for 2025, which saw the company miss analyst estimates for both earnings per share (EPS) and revenue. Despite these challenges, Targa achieved a record adjusted EBITDA of $1,178.5 million, marking a 22% increase from the same period last year.
The company’s net income for the first quarter was $270.5 million, slightly down from $275.2 million in the previous year. However, this figure does not align with the net income attributable to common shareholders, which was reported at $200 million, reflecting a significant decrease from the $275.2 million in the first quarter of 2024. This discrepancy is due to adjustments related to noncontrolling interests and other factors.
Revenue for the quarter was $4,561.5 million, falling short of the estimated $4,898.66 million. This shortfall was primarily due to lower sales of commodities, which decreased by 1% compared to the previous year. Fees from midstream services, however, saw a 9% increase, reaching $677.1 million.
Targa’s strong adjusted EBITDA performance was driven by contributions from the Badlands transaction and higher marketing margins. Despite winter weather events impacting volumes in both the Gathering and Processing (G&P) and Logistics and Transportation (L&T) segments, the company managed to maintain flat operating margins in these areas.
The L&T segment benefited from increased optimization opportunities, which helped offset lower NGL pipeline transportation volumes.
The company also announced significant financial moves, including the repurchase of $214 million worth of common shares through April 2025. Additionally, Targa declared an annual common dividend of $4.00 per share, marking a 33% increase from the previous year. This dividend reflects the company’s commitment to rewarding shareholders despite the current revenue challenges.
Looking ahead, Targa expects full-year 2025 adjusted EBITDA to range between $4.65 billion and $4.85 billion, supported by forecasted growth in its Permian G&P footprint. The company anticipates net growth capital expenditures to remain between $2.6 billion and $2.8 billion for the year.
While Targa’s Q1 earnings missed expectations, the company’s strategic investments and operational adjustments position it for potential future growth. The focus on enhancing shareholder value through dividends and share repurchases underscores its commitment to navigating current market challenges effectively.