17 slides from Teck Resources Limited Class A's earnings presentation, Oct 27, 2016
Slide 1: Third Quarter 2016 Results
Third Quarter 2016 Results October 27, 2016
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: Well Positioned to Capitalize on Turn in the Cycle
Well Positioned to Capitalize on Turn in the Cycle • Reduced debt by >US$1B over 12 months • Expect year-end cash balance of ~C$1B • Excellent operating execution • Increasing steelmaking coal production guidance • Continuing to deliver on cost management • Investing for growth 3
Slide 4: Quarterly Financial Results
Quarterly Financial Results Q3 2016 Results Revenues $2.3 Billion Gross profit $817 Million (before depreciation & amortization)* Adjusted EBITDA* $830 Million Profit $234 Million (attributable to shareholders) Adjusted profit $152 Million (attributable to shareholders)* $0.26/share Adjusted profit
Slide 5: Q3 2016 Operational Highlights
Q3 2016 Operational Highlights Production Q3 2016 Change From Q3 2015 Steelmaking coal (Mt) 7.0 ▲ 1.5 Copper (kt) 79 ▼ 9 Zinc in concentrate1 (kt) 169 ▲ 14 Zinc – refined (kt) 83 ▲ 5 Steelmaking Coal Costs2,3 Copper Costs3,4 Unit Cost of Sales down US$5/t C1 Unit Costs down US$0.10/lb Total Cash Uni
Slide 6: Steelmaking Coal Quarterly Results
Steelmaking Coal Quarterly Results Sales (Mt) Realized Price (C$/tonne) Revenue (C$M) 1.1 3% 21% 7.3 868 116 120 6.2 719 Q3 2015 Q3 2016 Q3 2015 Q3 2016 Q3 2015 Q3 2016 Production (Mt) Unit Cost of Sales1 (C$/tonne) Gross Profit2 (C$M) 8% Record 1.5 Total 54% 84 production 77 7.0 307 Transport 36 5.
Slide 7: Strong Recovery in Steelmaking Coal
Strong Recovery in Steelmaking Coal Coal Price Assessments • Market tightness due to: − Global curtailments 260 Quarterly Contract Settlement Argus FOB Australia − Operating day restrictions 240 in China 220 − Weather & transportation 200 issues 180 $ / tonne − Production interruptions 160 − Increas
Slide 8: Expanding Coal Earnings Potential
Expanding Coal Earnings Potential Coal EBITDA & Cash Flow Potential* 5,000 4,500 4,000 3,500 C$ Million 3,000 2016 Guidance Mid-Point Upside Coal production (Mt) 27.25 27.5 2,500 Unit Cost of Sales (C$/t): Site 44 42 2,000 Transportation 34 33 Unit Cost of Sales (C$/t) 78 75 Capitalized Stripping (C
Slide 9: Copper Quarterly Results
Copper Quarterly Results Sales (kt) Realized Price (US$/lb) Revenue (C$M) 7 10% 18% 84 2.42 576 77 2.17 471 Q3 2015 Q3 2016 Q3 2015 Q3 2016 Q3 2015 Q3 2016 Production (kt) C1 Unit Costs1 (US$/lb) Gross Profit2 (C$M) 9 xx% 12% 7% 88 1.44 79 201 176 1.34 Q3 2015 Q3 2016 Q3 2015 Q3 2016 Q3 2015 Q3 2016
Slide 10: Zinc Quarterly Results
Zinc Quarterly Results Zinc Sales (kt) Zinc Realized Price (US$/lb) Revenue (C$M) Conc1 Refined flat 16% 20% 6 200 1.02 966 194 78 78 0.88 805 Q3 2015 Q3 2016 Q3 2015 Q3 2016 Q3 2015 Q3 2016 Q3 2015 Q3 2016 Zinc Production (kt) Lead Production (kt) Gross Profit2 (C$M) Conc1 Refined Conc1 Refined 1 2
Slide 11: Teena/Reward Zinc Project
Teena/Reward Zinc Project TNDD019 38.8 @ 14.7/2.3 3.0 @ 4.6/2.9 6.7 @ 8.2/1.4 TNDD021 19.7 @ 12.9/2.0 7.2 @ 8.0/1.2 Teena 4/Teena 4A 4.8 @ 5.5/2.7 (4) 8.4 @ 12.9/0.2 (4) TNDD009 8.6 @ 7.1/2.7 (4A) 31.9 @ 9.9/1.5 5.0 @ 9.5/1.2 TNDD011 20.4 @ 11.6/1.8 4.7 @ 8.5/1.2 Teena 8 NR Teena 7 NR TNDD010 20.1 @
Slide 12: Fort Hills Project Status & Progress
Fort Hills Project Status & Progress • Construction has surpassed 70% • Off-site fabrication and modularization program completed • Several areas in early commissioning activities • Capex & schedule update expected around year end 12 Source: Suncor. Primary extraction, September 2016.
Slide 13: Cash Flow
Cash Flow Cash Changes in Q3 2016 2500 54 394 854 376 2000 175 $ Millions 88 1500 $1,271 33 $1,113 1000 500 0 Cash - start of Cash flow from Proceeds from Repayment of PP&E, incl. Fort Debt interest Capitalized Other Cash - end of quarter operations & sale of debt Hills and finance stripping quarter
Slide 14: Acting on Debt Reduction
Acting on Debt Reduction • Repurchased public notes in September Debt Levels and October − Face value: US$759M 7.5 − Total cost: US$693M >US$1B − Total pre-tax gain: C$76M 7.0 Reduction − Tranches: 2023, 2035, 2040, 2041, 2042, 2043 6.5 US$ Billions • Annual interest savings: US$43M Current Debt Pro
Slide 15: Quarterly Pricing Adjustments
Quarterly Pricing Adjustments Simplified Pricing Adjustment Model Quarterly Outstanding at Outstanding at Pricing Price 100 Jun. 30, 2016 Sep. 30, 2016 Adjustments Change Q1 2012 Pre-tax Settlement Adjustment (C$M) 50 Q3 2016 Q3 2012 Mlbs US$/lb Mlbs US$/lb US$/lb C$M Q1 2016 Q2 2014 Q3 2013 Q2 2011
Slide 16: Emerging Stronger from this Cycle
Emerging Stronger from this Cycle • Production growth from Fort Hills • No operating assets sold • No equity dilution • Maintaining strong liquidity • Reducing debt, managing maturities Result is higher production per share 16
Slide 17: Third Quarter 2016 Results
Third Quarter 2016 Results October 27, 2016