25 slides from Teck Resources Limited Class A's earnings presentation, Jul 26, 2018
Slide 1: Second Quarter 2018 Results
Second Quarter 2018 Results July 26, 2018
Slide 2: Forward Looking Information
Forward Looking Information Both these slides and the accompanying oral presentation contain certain forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 and forward- looking information within the meaning of the Securities Act (Ontario)
Slide 3: Highlights from Q2 2018
Highlights from Q2 2018 Commercial production achieved at Fort Hills Another quarter of strong operating results Improved guidance in Copper, Zinc and Energy business units Expect close of the Waneta Dam transaction on July 26th Named to the Best 50 Corporate Citizens of Canada list 3
Slide 4: Strong Quarterly Earnings
Strong Quarterly Earnings Q2 2018 Q2 2017 Revenue $3.0 billion $2.8 billion Gross profit before depreciation & amortization1 $1.6 billion $1.4 billion Gross profit $1.2 billion $1.1 billion Adjusted EBITDA1 $1.4 billion $1.3 billion Profit attributable to shareholders $634 million $580 million Adjus
Slide 5: Earnings Adjustments in Q2 2018
Earnings Adjustments in Q2 2018 $M Q2 2018 Q2 2017 Profit attributable to shareholders $634 $580 Add (deduct): Debt repurchase losses - 27 Debt prepayment option loss (gain) 15 (17) Asset sales & provisions 3 (1) Foreign exchange (gains) losses 1 (9) Collective agreement charges - - Other - - Adjust
Slide 6: Steelmaking Coal Business Unit
Steelmaking Coal Business Unit Q2 2018: Steelmaking Coal Prices Trading • Orders in place to exceed sales guidance of ~6.7 Mt Near the 10-Year Average of US$180/t2 • Sales volumes impacted by ~300 kt lost rail capacity due to strike preparation at CP Rail’s operations • Record material movement in H
Slide 7: Copper Business Unit
Copper Business Unit Q2 2018: Net Cash Costs3 (US$/lb) • Strong results on higher price/volumes & lower costs Down US$0.05/lb • Higher than expected grades at Highland Valley $1.26 $1.21 • Record quarterly zinc production at Antamina • QB2 detailed engineering 70% complete Q2 2017 Q2 2018 Gross Prof
Slide 8: Zinc Business Unit
Zinc Business Unit Q2 2018: Zinc in Concentrate Production1,2 (kt) • Strong results on higher price/volumes Up 25 kt • Higher production at Red Dog vs. Q2 2017 160 135 • Net cash unit costs after by-product credits above annual guidance, consistent with seasonal pattern Looking Forward Q2 2017 Q2 20
Slide 9: Energy Business Unit
Energy Business Unit Q2 2018: Operating Netback 3 June • Commercial production achieved at Fort Hills (C$/bbl bitumen) 2018 • Fort Hills plant start up exceeded expectations for Bitumen price realized $64.59 production volumes and product quality • Unusually wet weather impacted June / July producti
Slide 10: Solid Financial Position
Solid Financial Position Debt Maturity Profile3 • >$5.6B of liquidity, with ~$1.7B in cash + 1,200 1,000 Repaid in US$3B undrawn credit line1 800 February US$M 600 • Expect to close the Waneta Dam transaction 400 on July 26th = additional $1.2B cash2 200 0 • No significant debt maturities prior to 2
Slide 11: Cash Flow
Cash Flow Cash Changes in Q2 2018 2500 1,107 (345) (175) 2000 (119) (70) (28) 52 1,631 $ Millions 1500 1,209 1000 500 0 Cash - start Cash flow from PP&E Capitalized Expenditures Debt interest Dividends paid Other Cash - end of quarter operations stripping of financial and finance of quarter investme
Slide 12: Looking Forward
Looking Forward Multiple catalysts / valuation milestones Quebrada Blanca 2 NuevaUnión • Permit in Q3 2018 • Feasibility Study completion by Q3 2019 • Partnership transaction likely in Q4 2018 • Sanctioning decision possible in Q4 2018 Fort Hills San Nicolás • Full production by beginning of Q4 2018
Slide 13: Appendix
Appendix Teck
Slide 14: Pre-Tax Share-Based Compensation
Other Operating Income (Expense) Simplified Settlement Pricing Adjustment Model Simplified Compensation Expense Model Pre-Tax Share-Based Compensation Income (Expense) (C$M) Pre-tax Settlement Pricing Adjustment (C$M) Share-Based Outstanding at Outstanding at Quarterly Pricing Closing Price Closing
Slide 15: Notes
Notes Slide 4: Strong Quarterly Earnings 1. Gross profit before depreciation and amortization, adjusted EBITDA, adjusted profit attributable to shareholders, adjusted basic earnings per share and adjusted diluted earnings per share are non-GAAP financial measures. See “Non-GAAP Financial Measures” s
Slide 16: Notes
Notes Slide 8: Zinc Business Unit 1. Metal contained in concentrate. 2. We include 22.5% of production and sales from Antamina, representing our proportionate equity interest in Antamina. Total zinc production and sales include co-product zinc production and zinc from our Copper business unit. 3. Zi
Slide 17: Notes
Notes Slide 10: Solid Financial Position 1. As at July 25, 2018. 2. Closing of the Waneta Dam transaction is subject to receipt of regulatory approval and other customary conditions. 3. Public notes outstanding as at June 30, 2018. 4. Net debt/net debt-plus-equity for Diversified Peers and North Ame
Slide 18: Non-GAAP Financial Measures
Non-GAAP Financial Measures EBITDA is profit attributable to shareholders before net finance expense, income and resource taxes, and depreciation and amortization. Adjusted EBITDA, as disclosed on slide 4 is EBITDA before the pre-tax effect of certain types of transactions that in our judgment are n
Slide 19: Non-GAAP Financial Measures
Non-GAAP Financial Measures Reconciliation of Basic Earnings Per Share Reconciliation of EBITDA and Adjusted EBITDA to Adjusted Basic Earnings Per Share Six months ended Six months ended (C$ in millions) June 30, 2018 (C$ in millions) June 30, 2018 Earnings per share $2.43 Profit attributable to sha
Slide 20: Non-GAAP Financial Measures
Non-GAAP Financial Measures Reconciliation of Net Debt-to-Adjusted EBITDA Ratio & Net Debt-to-Debt-Plus-Equity Ratio (A) (B) (C) (A-B+C) Twelve months ended Six months ended Six months ended Twelve months ended (C$ in millions) December 31, 2017 June 30, 2017 June 30, 2017 June 30, 2018 Adjusted EBI
Slide 21: Non-GAAP Financial Measures
Non-GAAP Financial Measures Steelmaking Coal Unit Cost Reconciliation Six months ended (C$ in millions, except where noted) June 30, 2018 Cost of sales as reported $ 1,583 Less: Transportation (470) Depreciation and amortization (373) Adjusted cash cost of sales $ 740 Tonnes sold (millions) 12.7 Per
Slide 22: Non-GAAP Financial Measures
Non-GAAP Financial Measures Copper Unit Cost Reconciliation Six months ended Six months ended (C$ in millions, except where noted) June 30, 2018 (C$ in millions, except where noted) June 30, 2018 Revenue as reported $ 1,470 US$ AMOUNTS By-product revenue (A)1 (257) Average exchange rate (C$/US$) $ 1
Slide 23: Non-GAAP Financial Measures
Non-GAAP Financial Measures Zinc Unit Cost Reconciliation (Mining Operations)1 Six months ended Six months ended (C$ in millions, except where noted) June 30, 2018 (C$ in millions, except where noted) June 30, 2018 Revenue as reported $ 1,390 Payable pounds sold (millions) (C) 389.6 Less: Trail Oper
Slide 24: Non-GAAP Financial Measures
Non-GAAP Financial Measures Operating Netback Reconciliation One month ended One month ended (C$ in millions, except where noted) June 30, 2018 (C$ in millions, except where noted) June 30, 2018 Revenue as reported $ 78 Blended bitumen barrels sold (000s of barrels) 1,162 Less: Less: diluent barrels
Slide 25: Second Quarter 2018 Results
Second Quarter 2018 Results July 26, 2018