Non-GAAP Financial Measures
This proxy statement includes the Company’snon-GAAP financial measures: Adjusted EBITDA and adjusted cash flow from operations. The Company utilizesnon-GAAP measures to analyze the Company’s performance. The GAAP measures most directly comparable to thesenon-GAAP measures are income (loss) from operations, Net income (loss) attributable to Targa Resources Corp. and segment operating margin. Thesenon-GAAP measures should not be considered as an alternative to GAAP measures and have important limitations as analytical tools. Investors should not consider these measures in isolation or as a substitute for analysis of the Company’s results as reported under GAAP. Additionally, because the Company’snon-GAAP measures exclude some, but not all, items that affect income and segment operating margin, and are defined differently by different companies within the Company’s industry, the Company’s definitions may not be comparable with similarly titled measures of other companies, thereby diminishing their utility. Management compensates for the limitations of the Company’snon-GAAP measures as analytical tools by reviewing the comparable GAAP measures, understanding the differences between the measures and incorporating these insights into the Company’s decision-making processes.
Adjusted EBITDA
The Company defines adjusted EBITDA as Net income (loss) attributable to Targa Resources Corp. before interest, income taxes, depreciation and amortization, and other items that the Company believes should be adjusted consistent with the Company’s core operating performance. The adjusting items are detailed in the adjusted EBITDA reconciliation table and its footnotes. Adjusted EBITDA is used as a supplemental financial measure by the Company and by external users of the Company’s financial statements such as investors, commercial banks and others to measure the ability of the Company’s assets to generate cash sufficient to pay interest costs, support the Company’s indebtedness and pay dividends to the Company’s investors.
Adjusted Cash Flow from Operations
The Company defines adjusted cash flow from operations as adjusted EBITDA less cash interest expense on debt obligations and cash taxes. Adjusted cash flow from operations is a performance measure used by the Company and by external users of the Company’s financial statements, such as investors, commercial banks and research analysts, to assess the Company’s ability to generate cash earnings (after servicing the Company’s debt and funding capital expenditures) to be used for corporate purposes, such as payment of dividends, retirement of debt or redemption of other financing arrangements.
| Targa Resources Corp. | Proxy Statement | 2 0 2 5 A N N U A L M E E T I N G O F S T O C K H O L D E R S | 74 |
|---|
Reconciliation
The following tables reconcile thenon-GAAP financial measures used by management to the most directly comparable GAAP measures for the periods indicated.
| Year Ended December 31, |
|---|
| 2024 | 2023 | 2022 | 2021 | 2020 | 2019 |
|---|
| (In millions) |
|---|
| Reconciliation of Net income (loss) attributable to Targa Resources Corp. to Adjusted EBITDA and Adjusted Cash Flow from Operations |
|---|
| Net income (loss) attributable to Targa Resources Corp. | $ 1,312.0 | $ 1,345.9 | $ 1,195.5 | $ 71.2 | $ (1,553.9) | $ (209.2) |
|---|
| Income attributable to TRP preferred limited partners | — | — | — | — | 15.1 | 11.3 |
|---|
| Interest (income) expense, net (1) | 767.2 | 687.8 | 446.1 | 387.9 | 391.3 | 337.8 |
|---|
| Income tax expense (benefit) | 384.5 | 363.2 | 131.8 | 14.8 | (248.1) | (87.9) |
|---|
| Depreciation and amortization expense | 1,423.0 | 1,329.6 | 1,096.0 | 870.6 | 865.1 | 971.6 |
|---|
| Impairment of long-lived assets | — | — | — | 452.3 | 2,442.8 | 225.3 |
|---|
| (Gain) loss on sale or disposition of business and assets | (3.1) | (5.3) | (9.6) | 2.0 | 58.4 | 71.1 |
|---|
| Write-down of assets | 6.2 | 6.9 | 9.8 | 10.3 | 55.6 | 17.9 |
|---|
| (Gain) loss from financing activities (2) | 0.8 | 2.1 | 49.6 | 16.6 | (45.6) | 1.4 |
|---|
| (Gain) loss from sale of equity-method investment | — | — | (435.9) | — | — | (69.3) |
|---|
| Transaction costs related to business acquisition (3) | — | — | 23.9 | — | — | — |
|---|
| Equity (earnings) loss | (9.4) | (9.0) | (9.1) | 23.9 | (72.6) | (39.0) |
|---|
| Targa Resources Corp. | Proxy Statement | 2 0 2 5 A N N U A L M E E T I N G O F S T O C K H O L D E R S | 75 |
|---|
| Year Ended December 31, |
|---|
| 2024 | 2023 | 2022 | 2021 | 2020 | 2019 |
|---|
| (In millions) |
|---|
| Distributions from unconsolidated affiliates and preferred partner interests, net | 25.3 | 18.6 | 27.2 | 116.5 | 108.6 | 61.2 |
|---|
| Change in contingent considerations | — | — | — | 0.1 | (0.3) | 8.7 |
|---|
| Compensation on equity grants | 63.2 | 62.4 | 57.5 | 59.2 | 66.2 | 60.3 |
|---|
| Risk management activities | 164.6 | (275.4) | 302.5 | 116.0 | (228.2) | 112.8 |
|---|
| Severance and related benefits (4) | — | — | — | — | 6.5 | — |
|---|
| Noncontrolling interests adjustments (5) | 3.9 | (3.7) | 15.8 | (89.4) | (224.3) | (38.5) |
|---|
| Litigation expense (6) | 4.1 | 6.9 | — | — | — | — |
|---|
| Adjusted EBITDA | $ 4,142.3 | $ 3,530.0 | $ 2,901.1 | $ 2,052.0 | $ 1,636.6 | $ 1,435.5 |
|---|
| Interest expense on debt obligations (7) | (752.4) | (675.8) | (447.6) | (376.2) | (388.9) | (342.1) |
|---|
| Cash taxes | (17.5) | (13.6) | (6.7) | (2.7) | 44.4 | — |
|---|
| Adjusted Cash Flow from Operations | $ 3,372.4 | $ 2,840.6 | $ 2,446.8 | $ 1,673.1 | $ 1,292.1 | $ 1,093.4 |
|---|
| (1) | Includes the change in estimated redemption value of the mandatorily redeemable preferred interests. Effective September 2022, we redeemed our joint venture partner’s mandatorily redeemable preferred interests in the two joint ventures that, separately, owned a 100% interest in the WestOK natural gas gathering and processing system and a 72.8% undivided interest in the WestTX natural gas gathering and processing system |
| (2) | Gains or losses on debt repurchases or early debt extinguishments. |
| (3) | Includes financial advisory, legal and other professional fees, and other one-time transaction costs. |
| (4) | Represents one-time severance and related benefit expense related to the Company’s cost reduction measures. |
| (5) | Represents adjustments related to our subsidiaries with noncontrolling interests, including depreciation and amortization expense as well as earnings for certain plants within our WestTX joint venture not subject to noncontrolling interest. |
| (6) | Charges related to litigation resulting from winter storm in February 2021 unreflective of our ongoing core operations. |
| (7) | Excludes amortization of interest expense. The year ended December 31, 2024 includes $55.8 million of interest expense associated with the Splitter Agreement ruling. |
| Targa Resources Corp. | Proxy Statement | 2 0 2 5 A N N U A L M E E T I N G O F S T O C K H O L D E R S | 76 |
|---|
| Full Year2025E |
|---|
| Reconciliation of Estimated Net Income attributable to Targa Resources Corp. to Estimated Adjusted EBITDA · (in millions) |
|---|
| Net income attributable to Targa Resources Corp. | $1,765.0 |
|---|
| Interest expense, net | 875.0 |
|---|
| Income tax expense | 510.0 |
|---|
| Depreciation and amortization expense | 1,535.0 |
|---|
| Equity earnings | (20.0) |
|---|
| Distributions from unconsolidated affiliate | 25.0 |
|---|
| Compensation on equity grants | 65.0 |
|---|
| Noncontrolling interests adjustments (1) | (5.0) |
|---|
| Estimated Adjusted EBITDA | 4,750.0 |
|---|
| (1) | Represents adjustments related to our subsidiaries with noncontrolling interests, including depreciation and amortization expense as well as earnings for certain plants within our WestTX joint venture not subject to noncontrolling interest. |
| Targa Resources Corp. | Proxy Statement | 2 0 2 5 A N N U A L M E E T I N G O F S T O C K H O L D E R S | 77 |
|---|
Targa Resources Corp. 2025 Annual Meeting of Stockholders May 20, 2025 8:00 a.m. Central Time 811 Louisiana Street Suite 2100 Houston, Texas 77002 This proxy is solicited by the Board of Directors The undersigned stockholder(s) of Targa Resources Corp. hereby acknowledge receipt of the Notice of Annual Meeting of Stockholders, the Proxy Statement for the 2025 Annual Meeting of Stockholders (the “Annual Meeting”) and the Form 10-K for the fiscal year ended December 31, 2024 and hereby appoint Jennifer R. Kneale and Gerald R. Shrader, or either of them, as proxies, each with the power of substitution, to represent and vote the shares of the undersigned, with all the powers which the undersigned would possess if personally present, at the Annual Meeting to be held on May 20, 2025 or at any postponement or adjournment thereof. The undersigned hereby revokes all proxies previously given by the undersigned to vote at the Annual Meeting or any postponement or adjournment thereof. Should the undersigned be present and choose to vote at the Annual Meeting, and once the Corporate Secretary is notified of the decision to terminate this proxy, then the power of the proxies will be terminated. The shares represented by this proxy, when properly executed, will be voted in the manner directed by the undersigned stockholder(s). If no direction is made, this proxy will be voted FOR all nominees listed in Item 1 and FOR Items 2 and 3. If any other matters come properly before the meeting, the persons named in this proxy will vote in their discretion pursuant to Rule 14a-4(c) of the Securities Exchange Act of 1934. Continued and to be signed on the reverse side ▲ PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED. ▲ Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held May 20, 2025. The Proxy Statement is available at web.viewproxy.com/Targa/2025
Please mark your votes like thisThe Board of Directors recommends a vote FOR each of the nominees listed in Item 1 and FOR Items 2 and 3.1. To elect the four Class III Directors named in the proxy statement, each to serve until the 2028 2. To ratify the selection of PricewaterhouseCoopers LLP as the Company’sannual meeting of stockholders. independent auditors for 2025. FOR AGAINST ABSTAIN 01 Waters S. Davis, IV FOR AGAINST ABSTAIN02 Rene R. Joyce 3. To approve, on an advisory basis, the compensation of the Company’s named03 Caron A. Lawhorn executive officers for the fiscal year ended December 31, 2024.04 Matthew J. Meloy FOR AGAINST ABSTAIN Date Signature DO NOT PRINT IN THIS AREA Signature Please sign exactly as name(s) appears hereon. Joint owners should each(Shareholder Name & Address Data) When signing as attorney, executor, administrator, corporate officer, guardian, or custodian, please give full title. CONTROL NUMBERAddress Change: (If you noted Please indicate if you any Address Changes above, plan to attend this meeting o please mark box.) o ï± PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED. ï± TARGA RESOURCES CORP. As a shareholder of Targa Resources Corp., you have the option of voting your shares electronically through theInternet or on the telephone, eliminating the need to return the proxy card. Your electronic vote authorizes thenamed proxies to vote your shares in the same manner as if you marked, signed, dated and returned the proxycard. Votes submitted electronically over the Internet or by telephone must be received by 11:59 p.m. CT onMay 19, 2025. SCAN TO CONTROL NUMBER VIEW MATERIALS & VOTE w PROXY VOTING INSTRUCTIONS Please have your 11-digit control number ready when voting by Internet or Telephone INTERNET TELEPHONE MAILVote Your Proxy on the Internet: Vote Your Proxy by Phone: Vote Your Proxy by Mail:Go to www.AALVote.com/TRGP Call 1 (866)804-9616 Have your proxy card available Use any touch-tone telephone to Mark, sign, and date your proxywhen you access the above vote your proxy. Have your proxy card, then detach it, and returnwebsite. Follow the prompts to card available when you call. it in the postage-paid envelopevote your shares. Follow the voting instructions to provided. vote your shares.
