27 slides from Teck Resources Limited Class A's earnings presentation, Oct 29, 2009
Slide 1: 3rd Quarter 2009 Investor Conference Call and Webcast
3rd Quarter 2009 Investor Conference Call and Webcast October 29, 2009
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: Forward Looking Information
Forward Looking Information These forward-looking statements involve numerous assumptions, risks and uncertainties and actual results may vary materially. These statements are based on a number of assumptions, including, but not limited to, assumptions regarding general business and economic conditi
Slide 4: Q3 Investor Conference Call Speakers
Q3 Investor Conference Call • Speakers Don Lindsay President & CEO Ron Millos SVP Finance & CFO 4
Slide 5: 3rd Quarter 2009 Highlights
3rd Quarter 2009 Highlights • Revenues $2,131 million – Record Quarter • Operating Profit before D&A $969 million – Highest since Q3 2007 record results • Net Earnings $609 million – 3rd Highest Ever • Acquisition Debt reduced to US$2.7 billion – Original amount US$9.8 billion 5
Slide 6: 3rd Quarter 2009 Earnings
3rd Quarter 2009 Earnings* Q3 Earnings per Share (C$) 1.25 Q3 Q3 Q2 1.00 2009 2008 2009 Net 0.75 Earnings* $583 $427 $523 0.50 $1.02 ($millions) $0.95 EPS $1.02 $0.95 $1.07 0.25 0.00 2009 2008 *Net Earnings from Continuing Operations **Restated to account for Pogo and Hemlo as discontinued operation
Slide 7: Comparative Earnings
Comparative Earnings ($ millions, net of taxes) Q3 '09 Q3 '08 Q2 '09 Earnings as Reported $609 $424 $570 (Earnings) loss from discontinued Ops (26) 3 (49) Derivative (gains) losses (16) (15) 31 Asset Sales & Other (3) (9) (13) F/X Gains (311) - (413) Debt Refinancing & Impairment Charges 84 - 87 Tax
Slide 8: Quarterly Average Prices
Quarterly Average Prices US$ CDN$ Q3 '09 Q3 '08 Q3 '09 Q3 '08 Copper ($/lb) $2.65 $3.48 $2.92 $3.62 - 19% Zinc ($/lb) $0.80 $0.80 $0.88 $0.83 + 6% Lead ($/lb) $0.87 $0.87 $0.96 $0.90 + 7% Coal ($/t) $ 137 $ 245 $ 152 $ 252 - 40% CAD / USD $1.10 $1.04 Zinc, Copper & Lead are LME market prices Coal is
Slide 9: Quarterly Metal Prices
Quarterly Metal Prices USc/lb Copper – LME Stocks & Price 320 400 Stocks 300 Price Qtr end $2.78 280 350 260 Qtr avg $2.65 Usc/lb Lead – LME Stocks & Price 240 300 120 150 Stocks Qtr end $1.03 Price 220 110 130 Qtr open $2.29 200 250 100 110 Jul Aug Sep 90 90 Usc/lb Zinc – LME Stocks & Price 80 Qtr
Slide 10: Coal
Coal Q3 Q3 Q2 2009 2008 2009 Coal – Mt * Production 5.3 2.8 4.3 Sales 5.7 3.1 5.0 Average Price (US$/tonne) 137 245 165 (C$/tonne) 152 252 191 C$ millions Financial Results Revenue 869 600 954 Operating Profit 389 362 515 (Before Depreciation) * Direct and indirect shares. Prior to October 30th 2008
Slide 11: Copper
Copper Q3 Q3 Q2 Copper in Concentrate (kt) 2009 2008 2009 Production 50 53 52 Sales 58 52 40 Copper Cathode (kt) Production 26 26 26 Sales 28 27 18 Moly in Concentrate (M lbs) Production 1.9 1.7 1.8 Sales 2.1 1.6 1.8 Financial Results C$ millions Revenue 642 522 408 Operating Profit 308 452 187 (Bef
Slide 12: Andacollo Concentrate Project
Andacollo Concentrate Project Coarse Ore Conveyor Pebble Crusher Cyclones SAG Mill Ball Mill Main Sub Station Flotation Lime Plant Regrind Concentrate Thickener 12
Slide 13: Zinc
Zinc Q3 Q3 Q2 2009 2008 2009 Zinc in concentrate – kt Production 182 168 173 Sales 191 224 118 Refined Zinc – kt Production 56 70 60 Sales 59 64 63 Lead in Concentrate – kt Production 32 31 31 Sales 72 81 0 Refined Lead – kt Production 19 18 19 19 20 20 Sales Financial Results C$ millions Revenue 62
Slide 14: Q3 Investor Conference Call Speakers
Q3 Investor Conference Call • Speakers Don Lindsay President & CEO Ron Millos SVP Finance & CFO 14
Slide 15: Debt Position
Debt Position at September 30, 2009 US$ Millions Bridge Debt 0 Term Debt 2,692 2009 Notes 4,225 Pre-2009 Notes 1,200 Antamina credit facility 93 Other 114 Unamortized discount and issue costs (391) Total Debt 7,933 Net Debt to Net Debt Plus Equity ~ 34% 15
Slide 16: Debt Amendment
Debt Amendment Term Debt Repayment Schedule US$Millions 1,200 2010 2011 2012 1,000 800 600 400 200 0 Pre-Amendment Pre-Amendment Post Amendment & Asset Sales & Post Asset Sales & Post Asset Sales and cash sweep and cash sweep 16
Slide 17: 3rd Quarter 2009 - Cash Changes
3rd Quarter 2009 - Cash Changes $Millions Cash Flow from Operations 584 Working Capital Changes 188 Capital Expenditures (126) Investments (52) Restricted Cash Increase (165) Repayment of Debt (1,964) Equity Issue 1,660 Exchange, Discontinued Ops & Other 207 Cash & STI Decrease 332 17
Slide 18: Final Pricing Revenues
Final Pricing Revenues Outstanding from Q2 & Settled in Q3 Valued Settled Revenue Adj. (C$ M) M lbs US$/lb M lbs US$/lb Before Tax* After Tax* Copper 88 $2.31 82 $2.62 24 Zinc 118 $0.71 118 $0.76 4 Lead 0 n/a 0 n/a 0 Other 0 Total $28 $17 Adjustments on Sales within Q3 $79 $50 Total Final Pricing Ad
Slide 19: Hedges
Hedges Copper • None – all matured in July 2009 Currency • US$548 million @ C$1.13 / $US thru Q1 2010 19
Slide 20: Currency Sensitivity
Currency Sensitivity Annualized Equivalents – Hedge Matures Q1 2010 Change in Net Earnings ($M) per 1c increase in CAD/USD W/O Debt Fx Gain With Debt Fx Gain (Loss) in Earnings (Loss) in Earnings W/O Currency (26) (4) Hedge With Currency (19) 3 Hedge Cash Impact Earnings Impact 20
Slide 21: Tax Rate
Tax Rate • Tax provision of $180 M ~ 21.38% effective rate • Capital gains treatment of F/X gain significantly impacts effective rate • “Regular” tax rate without F/X gain would be ~33% – Lower than normal due to higher earnings in lower tax rate jurisdictions • Historically, tax provision has been
Slide 22: Q3 Investor Conference Call Speakers
Q3 Investor Conference Call • Speakers Ron Millos SVP Finance & CFO Don Lindsay President & CEO 22
Slide 23: Non-core Asset Sale Status
Non-core Asset Sale Status • Gold Portfolio – Lobo-Marte sold for US$141m Closed – Hemlo sold for US$65m Closed – Pogo sold for US$245m Closed – Andacollo gold stream proposed sale for US$218M cash and 1.2m Royal Gold shares Awaiting resolution of water rights permitting issues – Morelos proposed sa
Slide 24: Term Loan Outlook
Term Loan Outlook Forecast Term Loan Repayment and Leverage Ratio 3,000 3.50x 2,500 3.00x 2,000 2.50x Term Loan Balance (US$M) Leverage Ratio 1,500 2.00x 1,000 1.50x Cash flow could 500 accelerate term 1.00x debt repayment 0 0.50x Q3'09 Q4'09 Q1'10 Post Q1'10 Dummy Q3 2009 Balance Planned Asset Sale
Slide 25: Financial Priorities
Financial Priorities • Our top priorities remain: Pay down the acquisition debt as quickly as possible Restore investment grade credit rating • Target debt to capitalization ratio of 25% to 30% • Target debt to EBITDA ratio of 2.5x • Improved credit metrics will accelerate meeting agency guidelines
Slide 26: Summary
Summary • Strong asset base and cash flow generation • Asset sale processes complete • Debt re-scheduled, significantly reduced and/or refinanced • Balance sheet strength being restored • Focused on continuing debt reduction • Targeting Investment Grade • Advancing organic growth projects 26
Slide 27: 3rd Quarter 2009 Investor Conference Call and Webcast
3rd Quarter 2009 Investor Conference Call and Webcast October 29, 2009