19 slides from Teck Resources Limited Class A's earnings presentation, Oct 26, 2017
Slide 1: Third Quarter 2017 Results
Third Quarter 2017 Results October 26, 2017
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: Third Quarter 2017 Overview
Third Quarter 2017 Overview • Strong steelmaking coal sales, reflecting strong demand • Record zinc production at Antamina for 2nd consecutive quarter • Generating strong cash flow at current prices • Fort Hills construction >96% complete & commissioning accelerated • Received approval for Normal Co
Slide 4: Record Cash Flow Over Past 12 Months
Record Cash Flow Over Past 12 Months Q3 2017 Revenue $ 3.1 billion Gross profit $ 1.5 billion before depreciation & amortization* Adjusted Profit $ 621 million attributable to shareholders Adjusted EBITDA* $ 1.4 billion Generated $6.1 billion in Adjusted EBITDA over the past 12 months1, with an aver
Slide 5: Strong Q3 2017 Earnings
Strong Q3 2017 Earnings $M $/share Profit attributable to shareholders $600 Add (deduct): Debt prepayment option gain (15) Asset sales & provisions (16) Collective agreement charges 28 Break fee - Waneta Dam sale 24 Adjusted profit attributable to shareholders* $621 $1.08 Additional Charges & Events
Slide 6: Copper Highlights
Copper Highlights Q3 2017 C1 Unit Costs1 (US$/lb) • Production improving gradually through the year • C1 unit costs1 down due to strong cash margin for by-products • Highland Valley: 1.34 ‒ New five-year collective agreement ratified ‒ D3 project sanctioned - expected to increase mill 1.27 throughpu
Slide 7: Zinc Highlights
Zinc Highlights Q3 2017 Gross Profit2 • Red Dog: ‒ Sales above guidance, reflecting tight market ‒ Shipping season extended two weeks 387 Collective ‒ VIP2 project sanctioned; expected to increase 334 agreement charge throughput by ~15% • Trail Operations: ‒ New five year collective agreement ratifi
Slide 8: Steelmaking Coal Highlights
Steelmaking Coal Highlights Q3 2017 Historical Average Realized Prices • Strong sales, reflecting strong demand vs. Quarterly Contract Prices3 • Average realized price in historical range at 94% • Record material movement Averaged 94% 2014-2016 350 • Significant increase in gross profit2 vs. Q3 2016
Slide 9: Elk Valley Water Quality Plan Update
Elk Valley Water Quality Plan Update • Successfully tested an additional treatment step to address selenium compounds in effluent from West Line Creek facility ‒ Plant modifications to be completed Q3 2018 • Fording River facility construction to start in 2018 • Spending plans on water treatment del
Slide 10: Fort Hills – Preparing for First Oil
Fort Hills – Preparing for First Oil • Project construction >96% complete • 98% of Fort Hills operations staff hired • Accelerating commissioning via first froth production • Secondary Extraction facilities 95% complete • First oil expected by year end 10 Aerial view of Fort Hills site. Source: Fort
Slide 11: Comprehensive Sales & Logistics Strategy In Place For Blended Bitumen
Comprehensive Sales & Logistics Strategy In Place For Blended Bitumen Teck’s Commercial Activities1 Bitumen production 36 kbpd +Diluent acquisition 11 kbpd =Bitumen blend sales 47 kbpd 11 Secondary Extraction. Source: Fort Hills Energy Limited Partnership, September 2017. 1. Annualized average at fu
Slide 12: High Quality, Lower Carbon Intensity Product
High Quality, Lower Carbon Intensity Product PFT Diluted Bitumen has a Lower Carbon Intensity Than Around Half of the Barrels of Oil Refined in the US, on a Wells-to-Wheels Basis* 600 Total carbon intensity (kgCO2e per barrel of refined products) Carbon intensity of average 550 barrel refined in the
Slide 13: Alberta Distribution Network Ready to Receive Product
Alberta Distribution Network Ready to Receive Product Fort Hills Mine Terminal Northern Courier • Hot bitumen pipeline East Tank Farm • Capacity: ~40 kbpd • Bitumen blending w/condensate • Capacity: ~58 kbpd Norlite Wood Buffalo • Diluent pipeline • Heavy blend pipeline • Capacity: ~18 kbpd • Capaci
Slide 14: Energy Sales & Logistics Strategy Based on Diverse Market Access & Risk Mitigation
Energy Sales & Logistics Strategy Based on Diverse Market Access & Risk Mitigation Sales Mix Market Profile Long term Pipelines: Monthly basis 10 kbpd Contracted capacity on existing Keystone pipeline contracts at at Hardisty to the US Gulf Coast Hardisty 5 kpbd +12 kbpd Contracted capacity on propo
Slide 15: Other Operating Income (Expense)
Other Operating Income (Expense) Simplified Settlement Pricing Adjustment Model Simplified Compensation Expense Model 100 20 Pre-Tax Share-Based Compensation 10 50 Pre-tax Settlement Pricing Income (Expense) (C$M) 0 Adjustment (C$M) 0 -10 Q3 2017 -20 -50 -30 -40 -100 -50 Q3 2017 -150 -60 -$0.75 -$0.
Slide 16: Cash Flow & Liquidity
Cash Flow & Liquidity Cash Changes in Q3 2017 2000 901 (390) (175) 1500 (137) (78) (28) (29) (21) $ Millions 1000 846 $889 500 0 Cash - start Cash flow from PP&E, incl. Fort Capitalized Debt interest and Expenditures on Repayment of Dividends paid Other Cash - end of quarter operations Hills strippi
Slide 17: Strong Financial Position
Strong Financial Position Current Debt Portfolio1 Public Notes Outstanding 8 Public notes outstanding US$4.8B 7 Average coupon 5.7% 6 US$ Billions Weighted average term to maturity ~15 years 5 4 Debt to debt-plus-equity ratio2,4 24% 3 Net debt to debt-plus-equity ratio4 21% Net debt to EBITDA (LTM)
Slide 18: Looking Forward
Looking Forward • Generating strong free cash flow • Preparing for first oil at Fort Hills by year end • Strong financial position 18
Slide 19: Third Quarter 2017 Results
Third Quarter 2017 Results October 26, 2017