24 slides from Teck Resources Limited Class A's earnings presentation, Feb 12, 2015
Slide 1: Fourth Quarter & Full Year 2014 Results
Fourth Quarter & Full Year 2014 Results February 12, 2015
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: Controlling the Controllables
Controlling the Controllables • Solid performance – met or exceeded guidance - Record coal production - Record throughput at Antamina - Record zinc production at Red Dog • Significantly reduced controllable operating costs and planned capex • Maintained a strong balance sheet 3
Slide 4: Overview - Full Year Results
Overview - Full Year Results 2014 Results Revenues $ 8.6 Billion Gross profit $ 2.9 Billion (before depreciation & amortization) EBITDA $ 2.3 Billion Profit $ 362 Million (attributable to shareholders) Adjusted profit* (attributable to shareholders) of $452M, or $0.78/share 4 * Non-GAAP financial me
Slide 5: Solid Delivery Against 2014 Guidance
Solid Delivery Against 2014 Guidance Original Guidance Actual Results Steelmaking Coal Coal production 26–27 Mt 26.7 Mt Record coal production Coal site costs C$55-60 /t C$54 /t1 Coal transportation costs C$38-42 /t C$38 /t Combined coal costs C$93-102 /t C$92 /t Combined coal costs US$84-92
Slide 6: Overview – Quarterly Results
Overview – Quarterly Results Q4 2014 Results Revenues $ 2.3 Billion Gross profit $ 757 Million (before depreciation & amortization) EBITDA $ 582 Million Profit $ 129 Million (attributable to shareholders) Adjusted profit* (attributable to shareholders) of $116M, or $0.20/share 6 * Non-GAAP financial
Slide 7: Q4 2014 Operational Highlights
Q4 2014 Operational Highlights • Operations performed well - Record coal production overall, and at Elkview and Fording River - Zinc in concentrate and refined zinc production also up - Completed Pend Oreille restart under budget - Significant operating cost reductions • $0.45/share dividend announc
Slide 8: Steelmaking Coal Quarterly Results
Steelmaking Coal Quarterly Results Sales (Mt) Realized Price (C$/tonne) Revenue (C$M) 6.5 flat 6.5 149 123 963 824 Q4 2013 Q4 2014 Q4 2013 Q4 2014 Q4 2013 Q4 2014 Production (Mt) Unit Costs (C$/tonne) Gross Profit1 (C$M) 94 91 6.8 352 6.7 Inventory 3 4 Transport 39 234 39 Site 52 48 Q4 2013 Q4 2014
Slide 9: Met Coal Market Rebalancing; Higher Prices in C$ Terms
Met Coal Market Rebalancing; Higher Prices in C$ Terms Coal Prices By Currency Argus FOB Australia • ~30 Mt cutbacks announced, slowly being implemented 160 150 • Require additional cutbacks to AUS$ achieve market balance 140 $ / tonne 130 • US coal production high end of cost CDN$ curve and no curr
Slide 10: Copper Quarterly Results
Copper Quarterly Results Sales (kt) Realized Price (US$/lb) Revenue (C$M) 3.26 99 2.98 86 762 656 Q4 2013 Q4 2014 Q4 2013 Q4 2014 Q4 2013 Q4 2014 Production (kt) Total Cash Unit Costs1 (US$/lb) Gross Profit2 (C$M) 105 1.69 1.55 384 83 274 Q4 2013 Q4 2014 Q4 2013 Q4 2014 Q4 2013 Q4 2014 Increased thr
Slide 11: Copper Surplus Forecast Declining
Copper Surplus Forecast Declining Wood Mackenzie Forecast Wood Mackenzie Forecast Refined Copper Surplus 2014 Refined Copper Surplus 2015 900 900 2014 Surplus: 2015 Surplus: 800 1.20% of global demand 800 1.39% of global demand 700 700 600 600 Thousand Tonnes Thousand Tonnes 500 500 400 400 300 300
Slide 12: Zinc Quarterly Results
Zinc Quarterly Results Zinc Sales (kt) Zinc Realized Price (US$/lb) Revenue (C$M) Conc1 Refined 1.04 179 73 flat 73 775 0.89 147 649 Q4 2013 Q4 2014 Q4 2013 Q4 2014 Q4 2013 Q4 2014 Q4 2013 Q4 2014 Zinc Production (kt) Lead Production (kt) Gross Profit2 (C$M) Conc1 Refined Conc Refined 248 73 37 69 2
Slide 13: Zinc Inventories Declining
Zinc Inventories Declining LME Zinc Stocks - 11 Years LME Zinc Stocks – Since Dec 2012 120¢ 250¢ 1,400 1,200 1,200 100¢ 200¢ 1,100 1,000 80¢ thousand tonnes 1,000 thousand tonnes 150¢ 800 60¢ US¢/lb US¢/lb 900 100¢ 600 40¢ 800 400 50¢ 200 20¢ 700 0¢ 0 0¢ 600 2003 2004 2005 2006 2007 2008 2009 2010 2
Slide 14: Fort Hills Project Update
Fort Hills Project Update River Water Intake Ore Prep Plant Robson Primary Admin Complex Lodge Separation Cells Primary Extraction Utilities & Cogen Secondary Extraction Column Flotation Bldg Tailings Construction Trailers Area Tailings Pumphouse Bldg Flare Area • Project achieved all critical miles
Slide 15: Fort Hills' Economics Robust
Fort Hills’ Economics Robust1 $70 WTI & $90 WTI & Fort Hills Free Cash Flow Yield4 Potential Contribution $0.80 $0.90 from Fort Hills CAD/USD CAD/USD Sensitivity to WTI Price 25% Teck’s share of annual production 13 Mbpa 13 Mbpa (36,000 bpd) Estimated netback2 ~$54/bbl ~$63/bbl 20% Estimated operati
Slide 16: Significant Benefits from Low Oil Prices
Significant Benefits from Low Oil Prices Low oil price benefits Teck overall in the near-term • Reduces operating costs by hundreds of millions of dollars annually1 • Accompanied weaker Canadian dollar improves EBITDA by hundreds of millions of dollars annually2 Reduces budget and schedule pressure
Slide 17: Cash Flow
Cash Flow Cash Changes in Q4 2014 3000 +$743 ($420) 2500 ($167) ($50) +$70 $2,029 2000 $1,853 $ Millions 1500 1000 500 0 Cash - start of quarter Cash flow from PP&E, incl. Fort Hills Capitalized stripping Debt interest & FX, distributions to Cash - quarter end operations & working principal non-cont
Slide 18: Pricing Adjustments
Pricing Adjustments Outstanding at Outstanding at December 31, 2014 September 30, 2014 Pounds (M) US$/lb Pounds (M) US$/lb • Negative pricing adjustments Copper 208 2.86 224 3.04 of $70M in Q4 2014 Zinc 117 0.99 164 1.04 • Driven by quarterly change in Simplified Pricing Adjustment Model key commodi
Slide 19: Strong Balance Sheet & Liquidity
Strong Balance Sheet & Liquidity Liquidity of >C$5B, including C$2B cash and unused US$3B line of credit Investment Grade Rating $3,000 • Debt-to-debt-plus-equity of 31% • US$300M of notes due to end of 2016 • Weighted average maturity ~14 years $2,000 ~US$1.75 B • Weighted average coupon (interest
Slide 20: 2015 Production & Site Cost Guidance
2015 Production & Site Cost Guidance Actual 2014 2015 Guidance Steelmaking Coal Coal production 26.7 Mt 26.5-27.5 Mt Coal site costs C$54 /t1 C$49-53 /t Coal transportation costs C$38 /t C$37-40 /t Combined coal costs C$92 /t C$86-93 /t Combined coal costs US$84 ~US$69-74 /t2 Copper Copper productio
Slide 21: 2015 Capital Expenditures Guidance
2015 Capital Expenditures Guidance Major New Mine Capitalized ($M) Sustaining Enhancement Development Sub-total Stripping Total Coal $100 $45 $ - $145 $490 $635 Copper 200 15 105 320 225 545 Zinc 180 - - 180 60 240 Energy - - 910 910 - 910 Corporate 10 - - 10 - 10 TOTAL $490 $60 $1,015 $1,565 $775 $
Slide 22: Leverage to Strong Commodities
Leverage to Strong Commodities Production Unit of Estimated Estimated Guidance1 Change Profit2 EBITDA2 Coal 27 Mt US$1/tonne $21M / $1 ∆ $32M / $1 ∆ Copper 350 kt US$0.01/lb $5M / $.01 ∆ $8M / $.01 ∆ Zinc 935 kt US$0.01/lb $8M / $.01 ∆ $12M / $.01 ∆ $C/$US C$0.01 $32M / $.01 ∆ $52M / $.01 ∆ Volume a
Slide 23: Near-Term Priorities
Near-Term Priorities Controlling the controllables Focused on conserving cash Maintaining a strong financial position 23
Slide 24: Fourth Quarter & Full Year 2014 Results
Fourth Quarter & Full Year 2014 Results February 12, 2015