32 slides from Teck Resources Limited Class A's earnings presentation, Apr 21, 2020
Slide 1: First Quarter 2020 Results
First Quarter 2020 Results April 21, 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: First Quarter 2020 Highlights
First Quarter 2020 Highlights Our focus is on managing the risks around COVID-19 • Created $20 million COVID-19 response fund Elkview Plant Expansion Completed • All of our managed sites are currently operating • No material impact to sales or shipments to date $135M investment • Suspended all previ
Slide 4: First Quarter 2020 Earnings
First Quarter 2020 Earnings Q1 2020 Q1 2019 Revenue $ 2.4 billion $ 3.1 billion Gross profit before depreciation and amortization1 $ 776 million $ 1.4 billion Gross profit $ 398 million $ 1.0 billion EBITDA1 $ 45 million $ 1.4 billion Adjusted EBITDA1 $ 608 million $ 1.4 billion Profit (loss) attrib
Slide 5: First Quarter 2020 Earnings and Adjusted Earnings
First Quarter 2020 Earnings and Adjusted Earnings Reflects changes to our calculations of adjusted profit attributable to shareholders1 (C$M) Q1 2020 Q1 2019 Profit (loss) attributable to shareholders $ (312) $ 630 Add (deduct) on an after-tax basis: Asset impairment 474 - COVID-19 costs 22 - Enviro
Slide 6: COVID-19 Response
COVID-19 Response • Remote work implemented where feasible • Reduced on-site crews at sites to support physical distancing • Comprehensive measures at all sites: o Enhanced cleaning / disinfecting protocols o Physical distancing – no large group meetings; reduced occupancy on buses Crew bus cleaning
Slide 7: Steelmaking Coal Business Unit
Steelmaking Coal Business Unit Strong Finish to Q1 2020 Steelmaking Coal Prices2 (US$/t) • Sales exceeded guidance at 5.7 million tonnes Steelmaking coal price has averaged US$180/t2 since January 1, 2008 • Adjusted site cash cost of sales1 were well below our previously issued guidance at $63 per t
Slide 8: Copper Business Unit
Copper Business Unit Q1 2020 Cash Unit Costs1 (US$/lb) • Copper production was similar to Q1 last year Total cash • Lower unit costs reflect our cost reduction program 1.85 unit costs1 and favourable exchange rates 0.30 Cash margin 1.55 • QB2 construction activities temporarily suspended for by-prod
Slide 9: Zinc Business Unit
Zinc Business Unit Q1 2020 Cash Unit Costs1 (US$/lb) • Red Dog zinc in concentrate sales consistent with quarterly guidance at 134 thousand tonnes 0.47 Total cash 0.46 unit costs1 • Higher zinc in concentrate production at Red Dog 0.01 • Lower total cash unit costs1 before by-products 0.03 Cash marg
Slide 10: Energy Business Unit
Energy Business Unit Q1 2020 Energy Benchmark Pricing (US$/bbl) • Realized prices and operating results significantly 80 80 affected by a material decline in global benchmark 70 70 crude prices 60 60 • Non-cash, pre-tax impairment charge of $647 million 50 50 related to Fort Hills ($474 million afte
Slide 11: Cash Flow
Cash Flow Cash Changes in Q1 2020 ($M) 2000 220 61 (818) 279 1,026 1000 (207) (172) (109) (43) (27) 9 219 0 Cash - start Cash flow from Net change in Proceeds from PP&E Purchase and Capitalized Interest and Repayment of Dividends paid Other Cash - end of quarter operations debt investments and cance
Slide 12: COVID-19 Expenditures
COVID-19 Expenditures Accounting Treatment Q1 2020 COVID-19 Expenditures: • Related to capital projects: expensed $44 million before tax as incurred in “Other Operating Expense” Operations • Related to production: expensed as $7M incurred in “Cost of Sales”; Will not be QB2 included in inventory val
Slide 13: Cost Reduction Program
Cost Reduction Program • In Q4 2019: - Achieved ~$210 million of capital and operating reductions, exceeding our target of $170 million - Increased our total targeted reductions to ~$610 million of previously planned spending through the end of 2020, vs. the previous target of $500 million • On Apri
Slide 14: Strong Financial Position
Strong Financial Position Solid Liquidity No Significant Note Maturities until 2035 • ~C$5.8 billion1 of liquidity as of April 20, 2020 • Notes outstanding reduced from US$7.2 billion • US$4.0 billion revolving credit facility is in September 2015 to US$3.2 billion2 committed to Q4 2024 • ~US$500 mi
Slide 15: Looking Forward
Looking Forward • Focused on managing the risks around COVID-19 • Continuing to advance our key priorities to generate long term value for shareholders: 1. QB2 Project 2. RACE21TM 3. Neptune Facility Upgrade 4. Cost Reduction Program • Strong financial position 15
Slide 16: Appendix
Appendix Teck
Slide 17: Other Operating Income (Expense)
Other Operating Income (Expense) Simplified Settlement Pricing Adjustment Model Simplified Compensation Expense Model (Pre-tax settlement pricing adjustment in C$M) (Pre-tax share based compensation income / expense in C$M) Quarterly Quarterly Outstanding at Outstanding at Quarterly Pricing December
Slide 18: Notes
Notes Slide 3: First Quarter 2020 Highlights 1. Based on an initial investment of $135 million and the cost savings and higher average pricing for Elkview coal and assuming US$150 per tonne benchmark coal pricing and a Canadian to US dollar exchange rate of $1.38. EBITDA is a non-GAAP financial meas
Slide 19: Non-GAAP Financial Measures
Non-GAAP Financial Measures
Slide 20: Non-GAAP Financial Measures
Non-GAAP Financial Measures Our financial results are prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board. This presentation refers to a number of Non-GAAP Financial Measures which are not measures recognized under
Slide 21: Reconciliation of Profit (Loss) and Adjusted Profit
Non-GAAP Financial Measures Reconciliation of Profit (Loss) and Adjusted Profit Three months ended Three months ended (C$ in millions) March 31, 2020 March 31, 2019 Profit (loss) attributable to shareholders $ (312) $ 630 Add (deduct): Asset impairment 474 - COVID-19 costs 22 - Environmental costs (
Slide 22: Reconciliation of Basic Earnings Per Share to Adjusted
Non-GAAP Financial Measures Reconciliation of Basic Earnings (Loss) Per Share to Adjusted Basic Earnings (Loss) Per Share Three months ended Three months ended (Per share amounts) March 31, 2020 March 31, 2019 Basic earnings (loss) per share $ (0.57) $ 1.11 Add (deduct): Asset impairment 0.87 - COVI
Slide 23: Reconciliation of Diluted Earnings Per Share to Adjusted
Non-GAAP Financial Measures Reconciliation of Diluted Earnings (Loss) Per Share to Adjusted Diluted Earnings Per Share Three months ended Three months ended (Per share amounts) March 31, 2020 March 31, 2019 Basic earnings (loss) per share $ (0.57) $ 1.10 Add (deduct): Asset impairment 0.87 - COVID-1
Slide 24: Reconciliation of EBITDA and Adjusted EBITDA
Non-GAAP Financial Measures Reconciliation of EBITDA (loss) and Adjusted EBITDA Three months ended Three months ended (C$ in millions) March 31, 2020 March 31, 2019 Profit (loss) attributable to shareholders $ (311) $ 644 Finance expense net of finance income 47 54 Provision for (recovery of) income
Slide 25: 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 (C$ in millions) March 31, 2020 March 31, 2019 Gross profit $ 398 $ 1,042 Depreciation and amortization 378 373 Gross profit before depreciation and amortization $ 77
Slide 26: Steelmaking Coal Unit Cost Reconciliation
Non-GAAP Financial Measures Steelmaking Coal Unit Cost Reconciliation Three months ended Three months ended (C$ in millions, except where noted) March 31, 2020 March 31, 2019 Cost of sales as reported $ 777 $ 826 Less: Transportation costs (242) (240) Depreciation and amortization (175) (183) Invent
Slide 27: Copper Unit Cost Reconciliation
Non-GAAP Financial Measures Copper Unit Cost Reconciliation Three months ended Three months ended (C$ in millions, except where noted) March 31, 2020 March 31, 2019 Revenue as reported $ 570 $ 630 By-product revenue (A) (77) (74) Smelter processing charges (B) 37 43 Adjusted revenue $ 530 $ 599 Cost
Slide 28: Zinc Unit Cost Reconciliation (Mining Operations)
Non-GAAP Financial Measures Zinc Unit Cost Reconciliation (Mining Operations)1 Three months ended Three months ended (C$ in millions, except where noted) March 31, 2020 March 31, 2019 Revenue as reported $ 608 $ 712 Less: Trail Operations revenues as reported (452) (471) Other revenues as reported (
Slide 29: Zinc Unit Cost Reconciliation - Continued
Non-GAAP Financial Measures Zinc Unit Cost Reconciliation (Mining Operations)1 - Continued Three months ended Three months ended (C$ in millions, except where noted) March 31, 2020 March 31, 2019 Payable pounds sold (millions) (E) 251.3 259.9 Per unit amounts (C$/lb) Adjusted cash cost of sales (D/E
Slide 30: Energy Operating Netback and Bitumen Price Reconciliations
Non-GAAP Financial Measures Energy Operating Netback, Bitumen & Blended Bitumen Price Realized Reconciliations Three months ended Three months ended (C$ in millions, except where noted) March 31, 2020 March 31, 2019 Revenue as reported $ 176 $ 212 Less: Cost of diluent for blending (97) (73) Non-pro
Slide 31: 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 (C$ in millions, except where noted) March 31, 2020 March 31, 2019 Per barrel amounts (C$) Bitumen price realized1 (A/B) $ 23.12 $ 48.42 Cr
Slide 32: First Quarter 2020 Results
First Quarter 2020 Results April 21, 2020