41 slides from Teck Resources Limited Class A's earnings presentation, Oct 27, 2020
Slide 1: Third Quarter 2020 Results
Third Quarter 2020 Results October 27, 2020
Slide 2: Caution Regarding Forward-Looking Statements
Caution Regarding Forward-Looking Statements Both these slides and the accompanying oral presentation certain forward-looking information and forward-looking statements as defined in applicable securities laws (collectively referred to as forward-looking statements). These statements relate to futur
Slide 3: Third Quarter 2020 Highlights
Third Quarter 2020 Highlights • Strong recovery from Q2 2020, with significant improvement in results despite ongoing challenges with COVID-19 • Progressing execution of our major projects: ‒ Neptune facility upgrade progressing in line with budget and schedule ‒ QB2 construction ramping back up tow
Slide 4: Third Quarter 2020 Earnings
Third Quarter 2020 Earnings Strong recovery from Q2 2020 despite ongoing challenges with COVID-19 Q3 2020 Q3 2019 Revenue $ 2.3 billion $ 3.0 billion Gross profit before depreciation and amortization1 $ 703 million $ 1.2 billion Gross profit $ 291 million $ 787 billion EBITDA1 $ 519 million $ 1.0 bi
Slide 5: Key Updates: Steelmaking Coal Business
Key Updates: Steelmaking Coal Business Restructuring our cost base • Adjusted site cash cost of sales1 declined to $67 per tonne in Q3 2020; expected to be <$60 per tonne in December due to: - A planned decline in strip ratios - Elkview plant expansion - Closure of our higher cost Cardinal River Ope
Slide 6: Key Updates: Neptune Facility Upgrade
Key Updates: Neptune Facility Upgrade Secures a low-cost, reliable supply chain for our steelmaking coal business • Continue to advance the facility upgrade project in line with the previously announced capital estimate and schedule • The planned five-month shutdown of terminal operations concluded
Slide 7: Key Updates: QB2
Key Updates: QB2 Executing on our copper growth strategy In Q3 2020, the project continued its staged ramp up of the construction workforce towards pre-COVID-19 levels, as planned • >7,000 people currently on site; targeting over 9,000 by the end of the year • All major contractors remobilized and w
Slide 8: Key Updates: Safety and Sustainability Leadership
Key Updates: Safety and Sustainability Leadership • COVID-19 protocols remain in place - Continued focus on preventative measures, controls and compliance, and integration into our “new normal” • Ranked in the • Top-ranked mining • 31% lower year-to-date High Potential 100th percentile company 2019
Slide 9: Steelmaking Coal Business Unit
Steelmaking Coal Business Unit Q3 2020 Steelmaking Coal EBITDA1 ($M) • Sales were 5.1 Mt, within our guidance range ($523M) decrease in Q3 2020 vs. Q3 2019 • Adjusted site cash cost of sales2 of $67 per tonne 800 Non-controllable ($393M) Controllable ($130M) Cash ($391M) Non- All Cash reflect lower
Slide 10: Copper Business Unit
Copper Business Unit Q3 2020 Copper EBITDA1 ($M) • Antamina performed well at full production rates, $14M increase in Q3 2020 vs. Q3 2019 following a temporary shutdown due to COVID-19 400 Non-controllable $23M Controllable ($9M) Cash ($43M) Non- All Cash in Q2 2020 Cash • Lower mill throughput at H
Slide 11: Zinc Business Unit
Zinc Business Unit Q3 2020 Zinc EBITDA1 ($M) • Red Dog zinc sales of 175 kt, in line with guidance $17M increase in Q3 2020 vs. Q3 2019 • Red Dog production improved significantly Non-controllable $25M Controllable ($8M) 400 Cash $7M Non- All Cash from Q2 2020 Cash 18 (11) 10 (7) 273 ‒ Operating res
Slide 12: Energy Business Unit
Energy Business Unit Q3 2020 Energy EBITDA1 ($M) • Realized prices and operating results were ($73M) decrease in Q3 2020 vs. Q3 2019 significantly impacted by lower production and a Non-controllable ($23M) Controllable ($50M) 100 Cash ($23M) Non- All Cash material decline in benchmark oil prices vs.
Slide 13: Cash Flow
Cash Flow Cash Changes in Q3 2020 ($M) 1500 390 (589) 1250 1000 540 750 (110) (104) (54) (41) (27) 62 403 500 336 250 0 Cash - start Net proceeds from Cash flow from PP&E Capitalized Interest and Expenditures on Repayment of Dividends paid Other Cash - end of quarter debt operations stripping financ
Slide 14: COVID-19 Impact on our Business
COVID-19 Impact on our Business • In Q2 2020, all mines recovered from COVID-19 Expenditures COVID-19 production disruptions $130 million in Q3 2020 • Expensed $130 million in Q3 2020: - $107 million related to the temporary Finance expense $23M Other operating suspension and remobilization of QB2 i
Slide 15: Cost Reduction Program (CRP)
Cost Reduction Program (CRP) • Achieved significant total reductions to September 30, 2020: ‒ ~$270 million in operating cost reductions ‒ ~$550 million in capital cost reductions • Our cost reduction program has been included in our guidance since Q3 2019 • Reductions are against expected spending
Slide 16: Strong Financial Position
Strong Financial Position Liquidity remains strong No significant note maturities prior to 2030 • C$6.8 billion1,2 of liquidity available Note Maturity Profile as at September 30, 2020 (C$M) • US$5.0 billion of committed revolving credit facilities 1,200 ‒ US$4.0 billion maturing November 2024 1,000
Slide 17: Summary
Summary • Quality operating assets in stable jurisdictions • Copper growth strategy - funded and being implemented • Continuing to advance our key priorities to generate long term value for shareholders: 1. QB2 project 2. Neptune facility upgrade 3. RACE21TM 4. Cost Reduction Program Teck is well-po
Slide 18: Appendix
Appendix Teck
Slide 19: Other Operating Income (Expense)
Other Operating Income (Expense) Simplified Settlement Pricing Adjustment Model Simplified Compensation Expense Model (Pre-tax settlement pricing adjustment in C$M) (Pre-tax share based compensation income / expense in C$M) Quarterly Quarterly Outstanding at Outstanding at Quarterly Pricing June 30,
Slide 20: Notes
Notes Slide 3: Third Quarter 2020 Highlights 1. Steelmaking coal unit costs are reported in Canadian dollars per tonne. Non-GAAP financial measures. See “Non-GAAP Financial Measures” slides and “Use of Non-GAAP Financial Measures” section of the Q3 2020 news release for further information. Slide 4:
Slide 21: Non-GAAP Financial Measures
Non-GAAP Financial Measures
Slide 22: Non-GAAP Financial Measures
Non-GAAP Financial Measures Our financial results are prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board. This document refers to a number of Non-GAAP Financial Measures which are not measures recognized under IFRS
Slide 23: Non-GAAP Financial Measures
Non-GAAP Financial Measures Net cash unit costs – Net cash unit costs of principal product, after deducting co-product and by-product margins, are also a common industry measure. By deducting the co- and by-product margin per unit of the principal product, the margin for the mine on a per unit basis
Slide 24: Reconciliation of Profit (Loss) and Adjusted Profit
Non-GAAP Financial Measures Reconciliation of Profit (Loss) and Adjusted Profit Three months ended Three months ended Nine months ended Nine months ended (C$ in millions) September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 Profit (loss) attributable to shareholders $ 61 $ 369
Slide 25: Reconciliation of Basic EPS to Adjusted Basic EPS
Non-GAAP Financial Measures Reconciliation of Basic Earnings (Loss) Per Share to Adjusted Basic Earnings (Loss) Per Share Three months ended Three months ended Nine months ended Nine months ended (Per share amounts) September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 Basic ea
Slide 26: Reconciliation of Diluted EPS to Adjusted Diluted EPS
Non-GAAP Financial Measures Reconciliation of Diluted Earnings (Loss) Per Share to Adjusted Diluted Earnings Per Share Three months ended Three months ended Nine months ended Nine months ended (Per share amounts) September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 Diluted ear
Slide 27: Reconciliation of Net Debt to Adjusted EBITDA Ratio
Non-GAAP Financial Measures Reconciliation of Net Debt to Adjusted EBITDA Ratio (A) (B) (C) (A+B+C) Twelve months ended Nine months ended Nine months ended Twelve months ended (C$ in millions) December 31, 2019 September 30, 2019 September 30, 2020 September 30, 2020 Profit (loss) $ (588) $ 1,267 $
Slide 28: Reconciliation of Net Debt to Adjusted EBITDA Ratio - Continued
Non-GAAP Financial Measures Reconciliation of Net Debt to Adjusted EBITDA Ratio - Continued (A) (B) (C) (A+B+C) Twelve months ended Nine months ended Nine months ended Twelve months ended (C$ in millions) December 31, 2019 September 30, 2019 September 30, 2020 September 30, 2020 Total debt at period
Slide 29: Reconciliation of EBITDA and Adjusted EBITDA
Non-GAAP Financial Measures Reconciliation of EBITDA and Adjusted EBITDA Three months ended Three months ended Nine months ended Nine months ended (C$ in millions) September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 Profit (loss) $ 25 $ 373 $ (471) $ 1,267 Finance expense net
Slide 30: Reconciliation of EBITDA by Business Unit
Non-GAAP Financial Measures Reconciliation of EBITDA by Business Unit (C$ in millions) Steelmaking Coal Copper Zinc Energy Corporate Total Q3 2020 Profit (loss) before taxes as reported $ (113) $ 84 $ 162 $ (65) $ (24) $ 44 Add (deduct): Depreciation and amortization 183 104 99 26 - 412 Net finance
Slide 31: Reconciliation of Gross Profit Before Depreciation and Amortization
Non-GAAP Financial Measures Reconciliation of Gross Profit Before Depreciation and Amortization Three months ended Three months ended Nine months ended Nine months ended (C$ in millions) September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 Gross profit $ 291 $ 787 $ 828 $ 2,88
Slide 32: Reconciliation of Gross Profit Margins Before Depreciation
Non-GAAP Financial Measures Reconciliation of Gross Profit (Loss) Margins Before Depreciation Three months ended Three months ended Nine months ended Nine months ended (C$ in millions) September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 Revenues Steelmaking coal (E) $ 699 $ 1
Slide 33: Steelmaking Coal Unit Cost Reconciliation
Non-GAAP Financial Measures Steelmaking Coal Unit Cost Reconciliation Three months ended Three months ended Nine months ended Nine months ended (C$ in millions, except where noted) September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 Cost of sales as reported $ 762 $ 852 $ 2,2
Slide 34: Copper Unit Cost Reconciliation
Non-GAAP Financial Measures Copper Unit Cost Reconciliation Three months ended Three months ended Nine months ended Nine months ended (C$ in millions, except where noted) September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 Revenue as reported $ 624 $ 601 $ 1,599 $ 1,877 By-pr
Slide 35: Zinc Unit Cost Reconciliation (Mining Operations)
Non-GAAP Financial Measures Zinc Unit Cost Reconciliation (Mining Operations)1 Three months ended Three months ended Nine months ended Nine months ended (C$ in millions, except where noted) September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 Revenue as reported $ 874 $ 902 $
Slide 36: Zinc Unit Cost Reconciliation - Continued
Non-GAAP Financial Measures Zinc Unit Cost Reconciliation (Mining Operations)1 - Continued Three months ended Three months ended Nine months ended Nine months ended (C$ in millions, except where noted) September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 Payable pounds sold (m
Slide 37: Energy Operating Netback and Bitumen Price Reconciliations
Non-GAAP Financial Measures Energy Operating Netback, Bitumen & Blended Bitumen Price Realized Reconciliations Three months ended Three months ended Nine months ended Nine months ended (C$ in millions, except where noted) September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 Re
Slide 38: Energy Operating Netback Reconciliations - Continued
Non-GAAP Financial Measures Energy Operating Netback, Bitumen & Blended Bitumen Price Realized Reconciliations - Continued Three months ended Three months ended Nine months ended Nine months ended (C$ in millions, except where noted) September 30, 2020 September 30, 2019 September 30, 2020 September
Slide 39: Reconciliation of Coal Business Unit Adjusted EBITDA
Non-GAAP Financial Measures Reconciliation of Coal Business Unit Adjusted EBITDA October 1, 2008 to (C$ in millions) September 30, 2020 Gross Profit $ 19,400 Add back: Depreciation and amortization 7,649 Gross profit, before depreciation and amortization $ 27,049 Deduct: Other costs (430) Adjusted E
Slide 40: Reconciliation of Free Cash Flow
Non-GAAP Financial Measures Reconciliation of Free Cash Flow (C$ in millions) 2003 to Q3 2020 Cash Flow from Operations $47,556 Debt interest and finance charges paid (5,756) Capital expenditures, including capitalized stripping costs (27,552) Payments to non-controlling interests (NCI) (642) Free C
Slide 41: Third Quarter 2020 Results
Third Quarter 2020 Results October 27, 2020