27 slides from Teck Resources Limited Class A's earnings presentation, Apr 23, 2019
Slide 1: First Quarter 2019 Results
First Quarter 2019 Results April 23, 2019
Slide 2: Caution Regarding Forward-Looking Statements
Caution Regarding Forward-Looking Statements 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 Securit
Slide 3: Q1 2019 Highlights
Q1 2019 Highlights • Solid operating performance; no change to 2019 guidance • US$1.2 billion QB2 partnership transaction with Sumitomo (SMM/SC)1 closed on March 29, 2019 • Substantially increased the royalty paid on Poscan’s 20% share of Greenhills production • Returned to investment grade credit r
Slide 4: Solid Q1 2019 Earnings
Solid Q1 2019 Earnings Q1 2019 Q1 2018 Revenue $ 3.1 billion $ 3.1 billion Gross profit before depreciation & amortization1 $ 1.4 billion $ 1.7 billion Gross profit $ 1.0 billion $ 1.4 billion EBITDA $ 1.4 billion $ 1.6 billion Adjusted EBITDA1 $ 1.3 billion $ 1.6 billion Profit attributable to shar
Slide 5: Earnings and Adjusted Earnings
Earnings and Adjusted Earnings Q1 2019 Q1 2018 Profit attributable to shareholders $ 630 million $ 759 million Add (deduct): Debt prepayment option (gain) loss (51) million 9 million Other (11) million (15) million Adjusted profit1 $ 568 million $ 753 million Adjusted basic earnings per share1 $ 1.0
Slide 6: Steelmaking Coal Business Unit
Steelmaking Coal Business Unit Q1 2019: Steelmaking Coal Prices2 • Sales of 6.2 Mt reflects solid demand 300 250 US$/tonne • Higher royalty on Poscan’s share of Greenhills 200 150 production increased revenue by ~$13 million 100 • Higher unit costs as anticipated, reflecting 50 decisions to capture
Slide 7: Copper Business Unit
Copper Business Unit Q1 2019: Production1 • Lower ore grades at Andacollo and Highland Valley, as expected in the respective mine plans Looking Forward: 74 70 • Copper grades at Highland Valley are expected to kt gradually improve through the rest of 2019 • The additional ball mill at Highland Valle
Slide 8: Zinc Business Unit
Zinc Business Unit Q1 2019: Cash Unit Costs3 • Red Dog production disrupted by weather events • Red Dog sales of zinc in concentrate of 131 kt, above guidance of 125-130 kt 0.56 Total cash unit costs 0.47 • Trail Operations results improved from Q4 2018, (0.01) Cash margin (0.03) US$/lb for by-produ
Slide 9: Energy Business Unit
Energy Business Unit Q1 2019: Calendar NYMEX WTI Price3 • Realized price reflects significant narrowing of 80 US$/bbl 60 WCS differentials and higher WTI prices vs. 40 Q4 2018 20 0 • Production and unit operating costs reflect Government of Alberta’s production curtailments WTI/WCS Basis Differentia
Slide 10: Cash Flow Reflects Close of QB2 Partnering Transaction with Sumitomo
Cash Flow Reflects Close of QB2 Partnering Transaction with Sumitomo (SMM/SC) Cash Changes in Q1 20191 4000 520 (482) 1,277 (199) (208) $ Millions 3000 (110) (31) (55) 2,446 2000 1,734 1000 0 Cash - start SMM/SC, net of Cash flow from PP&E Capitalized Buybacks and Interest and Repayment of Other Cas
Slide 11: Strong Financial Position
Strong Financial Position • Strong operating cash flow Note Maturity Profile4 (US$M) 1,200 • ~C$8.7 billion of liquidity1 1,000 8.5% 2024 notes callable ‒ Includes C$2.5 billion in cash, with C$1.3 billion in Chile 800 on June 1, 2019 for development of the QB2 project 600 • No significant note matu
Slide 12: A Transformational Time for Teck
OVERVIEW A Transformational Time for Teck FUTURE VALUE CATALYSTS Potential to Growth through Transformation Cash returns to further reduce Project Satellite QB2/QB3 through shareholders outstanding value creation execution innovation notes COMPELLING VALUE 12
Slide 13: Appendix
Appendix Teck
Slide 14: Other Operating Income (Expense)
Other Operating Income (Expense) Simplified Settlement Pricing Adjustment Model Simplified Compensation Expense Model 100 20 Pre-Tax Share-Based Compensation 75 10 Income (Expense) (C$M) 50 Pre-tax Settlement Pricing 0 25 Q1 2019 Adjustment (C$M) -10 0 -25 Q1 2019 -20 -50 -30 -75 -40 -100 -50 -125 -
Slide 15: Notes
Notes Slide 3: Q1 2019 Highlights 1. Sumitomo and SMM/SC refer to Sumitomo Metal Mining Co. Ltd. (SMM) and Sumitomo Corporation (SC). 2. Liquidity is as at April 22, 2019 and includes $2.5 billion in cash, of which $1.3 billion is in Chile for the development of our QB2 project. Slide 4: Solid Q1 20
Slide 16: Notes
Notes Slide 9: Energy Business Unit 1. We include 21.3% of production from Fort Hills, representing our proportionate ownership interest. Results for 2018 are effective from June 1, 2018. The 2020-2022 production guidance does not include potential near term debottlenecking opportunities. See Energy
Slide 17: Non-GAAP Financial Measures
Non-GAAP Financial Measures EBITDA is profit attributable to shareholders before net finance expense, income and resource taxes, and depreciation and amortization. Adjusted EBITDA is EBITDA before the pre-tax effect of certain types of transactions that in our judgment are not indicative of our norm
Slide 18: Non-GAAP Financial Measures
Non-GAAP Financial Measures Reconciliation of Basic Earnings Per Share Reconciliation of Profit and Adjusted Profit to Adjusted Basic Earnings Per Share Three months ended Three months ended (C$ in millions) March 31, 2019 (C$ in millions) March 31, 2019 Profit attributable to shareholders $ 630 Bas
Slide 19: 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 Three months ended Three months ended Twelve months ended (C$ in millions) December 31, 2018 March 31, 2018 March 31, 2019 March 31, 2019 EBITD
Slide 20: Non-GAAP Financial Measures
Non-GAAP Financial Measures Reconciliation of EBITDA and Adjusted EBITDA Reconciliation of Free Cash Flow Three months ended 2003 to (C$ in millions) March 31, 2019 (C$ in millions) Q1 2019 Profit attributable to shareholders $ 630 Cash Flow from Operations $43,623 Finance expense net of finance inc
Slide 21: Non-GAAP Financial Measures
Non-GAAP Financial Measures Reconciliation of Gross Profit Reconciliation of Gross Profit Margins Before Depreciation and Amortization Before Depreciation Three months ended Three months ended (C$ in millions) March 31, 2019 (C$ in millions) March 31, 2019 Gross profit $ 1,042 Revenue Depreciation a
Slide 22: Non-GAAP Financial Measures
Non-GAAP Financial Measures Steelmaking Coal Unit Cost Reconciliation of Coal Business Unit Reconciliation Adjusted EBITDA Three months ended October 1, 2008 (C$ in millions, except where noted) March 31, 2019 (C$ in millions) to March 31, 2019 Cost of sales as reported $ 826 Gross Profit $ 17,765 L
Slide 23: Non-GAAP Financial Measures
Non-GAAP Financial Measures Copper Unit Cost Reconciliation Three months ended Three months ended (C$ in millions, except where noted) March 31, 2019 March 31, 2019 Revenue as reported $ 630 US$ AMOUNTS1 By-product revenue (A) (74) Average exchange rate (C$/US$) $ 1.33 Smelter processing charges (B)
Slide 24: Non-GAAP Financial Measures
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, 2019 (C$ in millions, except where noted) March 31, 2019 Revenue as reported $ 712 Payable pounds sold (millions) (E) 259.9 Less: Trail
Slide 25: Non-GAAP Financial Measures
Non-GAAP Financial Measures Energy Operating Netback, Bitumen and Blended Bitumen Price Realized Reconciliations1 Three months ended Three months ended (C$ in millions, except where noted) March 31, 2019 March 31, 2019 Revenue as reported $ 212 Blended bitumen barrels sold (000’s) 3,725 Less: Less:
Slide 26: Non-GAAP Financial Measures
Non-GAAP Financial Measures Blended Bitumen Price Realized Reconciliation Three months ended (C$ in millions, except where noted) March 31, 2019 Revenue as reported $ 212 Less: Non-proprietary product revenue (8) Add back: Crown royalties 5 Blended bitumen revenue (A) $ 209 Blended bitumen barrels s
Slide 27: First Quarter 2019 Results
First Quarter 2019 Results April 23, 2019