Slide 1: Fourth Quarter and Full Year 2023 Earnings Supplement
Fourth Quarter and Full Year 2023 Earnings Supplement February 15, 2024 | TARGA RESOURCES CORP.
Slide 2: Forward Looking Statements
Forward Looking Statements Certain statements in this presentation 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 fac
Slide 3: 2023 in Review – Continuing to Execute Across Strategic Priorities
2023 in Review – Continuing to Execute Across Strategic Priorities Integrated NGL business and strong business fundamentals continue to drive increasing cash flow outlook RECORD RECORD ~$800MM Volumes Adjusted EBITDA Capital Returned ▪ Permian volumes averaged ~5.3 ▪ Adjusted EBITDA(2) +22% ▪ Increa
Slide 4: Operational Performance – Gathering & Processing Segment
Operational Performance – Gathering & Processing Segment 4Q23 Highlights Field G&P Natural Gas Inlet Volumes and NGL Production Field G&P Natural Gas Inlet Volumes 6,400 900 ▪ Record Targa volumes in the Permian Basin attributable to continued strong activity levels across Permian Midland and 5,600
Slide 5: Operational Performance – Logistics & Transportation Segment
Operational Performance – Logistics & Transportation Segment 4Q23 Highlights NGL Pipeline Transportation, Fractionation, and LPG Export Services ▪ Record NGL pipeline transportation and fractionation volumes driven by higher supply primarily from Targa’s Permian G&P systems ▪ Record LPG export volum
Slide 6: Financial Performance – 4Q 2023 vs. 4Q 2022
Financial Performance – 4Q 2023 vs. 4Q 2022 14% increase in adjusted EBITDA(1) G&P segment operating margin decreased $8 million(2) L&T segment operating margin increased $113 million + Higher Permian inlet volumes driven by system expansions and continued strong producer + Higher NGL pipeline trans
Slide 7: Financial Performance – 4Q 2023 vs. 3Q 2023
Financial Performance – 4Q 2023 vs. 3Q 2023 14% increase in adjusted EBITDA(1) G&P segment operating margin increased $31 million(2) L&T segment operating margin increased $97 million + Higher Permian inlet volumes driven by system expansions and continued strong producer + Higher NGL pipeline trans
Slide 8: Business Mix – 4Q 2023
Business Mix – 4Q 2023 Field Gathering & Processing Business Mix – Segment Logistics & Transportation Operating Margin(1) Operating Margin Operating Margin 100% 100% 75% 75% 50% 49% / 51% 50% 25% 25% 0% Gathering & Processing Logistics & Transportation 0% 1 4Q23E Central Marketing & Other(2) LPG Exp
Slide 9: 2024 Outlook
2024 Outlook Increasing system volumes drive strong projected growth in Adjusted EBITDA +8% YoY growth in Adjusted EBITDA driven by: 2024 ESTIMATES ✓ Continued Permian volume growth ✓ Higher G&P and L&T system volumes Adjusted EBITDA(1) $3,700 - $3,900 million ✓ FY contributions from system expansio
Slide 10: Illustrative Capital Spending Summary
Illustrative Capital Spending Summary Capital spending at ~5.5x multiple drives ~$300MM+ of YoY increasing EBITDA Estimated Growth Capex to Estimated Growth Capex to Support Continued Maintain Current Volumes(1) Permian Growth(2) Maintain Volumes ~$250MM ~$250MM ▪ Gathering, compression, treating Ga
Slide 11: EBITDA Growth Outlook and Ramping FCF Profile
EBITDA Growth Outlook and Ramping FCF Profile Permian volume growth outlook and the completion of integrated NGL projects drive compelling adjusted FCF (1) outlook Industry Leading Adjusted EBITDA Growth(1) Capex Meaningfully Steps Down in 2025 $5.0 $5.0 $4.0 $4.0 Adjusted EBITDA (1) Net Growth Cape
Slide 12: Strong Growth Supports Increasing Return of Capital
Strong Growth Supports Increasing Return of Capital Completion of announced growth projects expected to drive meaningful ramp in adjusted FCF(1) profile Continued Adjusted EBITDA(1) growth + meaningful step down in capex = Significant FCF ▪ Permian growth drives increasing system volumes, driving st
Slide 13: Appendix and Reconciliations
Appendix and Reconciliations Q4 2023 EARNINGS SUPPLEMENT PRESENTATION 13
Slide 14: Hedge Disclosures
Hedge Disclosures Hedges provide cash flow stability and reduce exposure to commodity prices on non fee-based G&P contract exposure FIXED PRICE SWAPS Volumes Hedged Wtd. Avg. Hedge Price Volumes Hedged Wtd. Avg. Hedge Price 2024 2025 Natural Gas 105,377 $3.01 58,179 $3.55 (MMBtu/d; $/MMBtu) Wtd Avg
Slide 15: Non-GAAP Financial Measures
Non-GAAP Financial Measures This presentation includes the Company’s non-GAAP financial measures: adjusted EBITDA, adjusted operating margin, distributable cash flow, and adjusted free cash flow. The following tables provide reconciliations of these non-GAAP financial measures to their most directly
Slide 16: Non-GAAP Measures Reconciliation
Non-GAAP Measures Reconciliation Three Months Ended, December 31, 2023 September 30, 2023 December 31, 2022 (in millions) Reconciliation of Net income (loss) attributable to Targa Resources Corp. to Adjusted EBITDA Net income (loss) attributable to Targa Resources Corp. $ 299.6 $ 220.0 $ 318.0 Inter
Slide 17: Non-GAAP Measures Reconciliation
Non-GAAP Measures Reconciliation Year Ended December 31, 2023 2022 2021 2020 2019 (In millions) Reconciliation of Net income (loss) attributable to Targa Resources Corp. to Adjusted EBITDA, Distributable Cash Flow and Adjusted Free Cash Net income (loss) attributable to Targa Resources Corp. $ 1,345
Slide 18: Non-GAAP Measures Reconciliation
Non-GAAP Measures Reconciliation Three Months Ended, December 31, 2023 September 30, 2023 December 31, 2022 (in millions) Gathering and Processing Segment Operating margin $ 536.3 $ 505.0 $ 544.0 Operating expenses 185.7 189.6 177.3 Adjusted operating margin $ 722.0 $ 694.6 $ 721.3 Logistics and Tra
Slide 19: Non-GAAP Measures Reconciliation
Non-GAAP Measures Reconciliation Full Year 2024E (in millions) Reconciliation of Estimated Net Income attributable to Targa Resources Corp. to Estimated Adjusted EBITDA Net income attributable to Targa Resources Corp. $ 1,185.0 Interest expense, net 730.0 Income tax expense 475.0 Depreciation and am
Slide 20: General Inquiries/Corporate Headquarters
GENERAL INQUIRIES/CORPORATE HEADQUARTERS 811 LOUISIANA STREET, SUITE 2100 HOUSTON, TX 77002 Targa is a leading provider of midstream services and is one of the largest independent midstream PHONE: 713.584.1133 infrastructure companies in North America. Our operations are critical to the efficient, s