Targa sold a little more and kept considerably more of the money. Revenue rose 4.2% to $4.4 billion in the three months ended June 30, while operating income climbed 19.4% to $1.2 billion.
The margin figures moved more sharply than revenue. Operating margin reached 27.8%, up 3.5 percentage points from the comparable period. Net income rose 21.5% to $764.6 million, and diluted EPS rose 23.3% to $3.54 as the diluted share count edged down.
The balance-sheet changes were mixed. Accounts receivable increased 38.6% to $2.0 billion, while inventory fell 29.7% to $311.7 million. Cash rose 17.0% to $132.3 million, but growth capital expenditures increased 12.4%, reaching 22.4% of revenue.
Targa says the margin improvement came from more natural-gas inlet volume in the Permian, which lifted fee-based margin. Lower natural-gas prices partly offset that benefit. Fee-based revenue is less exposed to commodity prices than buying and selling the molecules themselves, so volume was doing the heavier lifting in this period.
Management’s explanation is specific about where the volume came from:
"The increase in natural gas inlet volumes in the Permian was attributable to the addition of the Pembrook II plant during the third quarter of 2025, the Bull Moose II plant during the fourth quarter of 2025, the Falcon II plant during the first quarter of 2026, the East Pembrook plant during the second quarter of 2026, continued strong producer activity and the acquisition of certain assets in the Permian Basin during the first quarter of 2026."
Targa Resources, 10-Q, Aug. 6, 2026.
New plants, an acquisition, and producer activity all added throughput. The filing also says depreciation and amortization rose because of the Permian assets, finance leases, and system expansions, reflecting the associated increase in depreciation and amortization.
Cash generation improved on a reported margin basis, with free cash flow margin up 1.9 percentage points. Targa attributed higher operating cash flow primarily to lower payments for product purchases as natural-gas and NGL prices fell, partly offset by lower customer collections, higher operating costs, hedging payments, and interest on debt.
That is the filing’s central trade-off. The business produced higher margins from more fee-based volume, while the cash profile reflected both the price environment and the cost of building out that volume. Interest expense also rose because borrowings were higher, although capitalized interest offset part of the increase.
The company’s annual results show operating margin rising from 16.4% in 2023 to 19.6% in 2025, giving the latest improvement some history behind it. The newer issue is more concrete: the three-month comparison shows receivables expanding far faster than sales, and Targa does not disclose the reason for that gap in the supplied filing text.
Targa’s next quarterly report will add the useful comparison: whether receivables and cash moved back toward sales, or whether the larger balance continued alongside construction spending. More fee-based volume, more capital, and more receivables: midstream math rarely gets to be just one thing.
Source: Targa Resources’ Form 10-Q filed Aug. 6, 2026.