38 slides from Teck Resources Limited Class A's earnings presentation, Oct 24, 2019
Slide 1: Third Quarter 2019 Results
Third Quarter 2019 Results October 24, 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 Securiti
Slide 3: Q3 2019 Highlights
Q3 2019 Highlights • QB2 construction continues; targeted completion Q4 2021 • Continuing to advance RACE21TM; expect to generate $150 million in annualized EBITDA1 improvements by year end • Named to the Dow Jones Sustainability World Index for the 10th straight year; top-ranked mining company on b
Slide 4: Q3 2019 Earnings
Q3 2019 Earnings Impacted by lower prices for all of our key commodities Q3 2019 Q3 2018 Revenue $ 3.0 billion $ 3.2 billion Gross profit before depreciation and amortization1 $ 1.2 billion $ 1.4 billion Gross profit $ 787 million $ 1.0 billion EBITDA1 $ 1.0 billion $ 2.1 billion Adjusted EBITDA1 $
Slide 5: Earnings Adjustments in Q3 2019
Earnings Adjustments in Q3 2019 Q3 2019 Q3 2018 Profit attributable to shareholders $ 369 million $ 1,281 million Add (deduct): Debt prepayment option (gain) loss - (17) million Debt redemption loss - 19 million Gain on sale of Waneta Dam - (812) million Taxes and other 34 million (5) million Adjust
Slide 6: Steelmaking Coal Business Unit
Steelmaking Coal Business Unit Q3 2019 Steelmaking Coal Prices2 (US$/t) • Sales of 6.1 Mt below guidance; though demand Steelmaking coal price2 has averaged remained strong US$181/t since January 1, 2008 • Production records at Line Creek, Greenhills Operations 300 Looking Forward 250 • Expect sales
Slide 7: Copper Business Unit
Copper Business Unit Q3 2019 Cash Unit Costs (US$/lb) • Copper production increased by 10% from a year ago, primarily due to higher copper grades, mill Total cash 1.75 unit costs2 throughput and recoveries at Highland Valley, in line 1.62 with guidance 0.46 Cash margin for by-products 0.31 • Lower t
Slide 8: QB2 Project Update
QB2 Project Update1 Engineering1 Commitments1 ~95% ~65% Procurement1 Progress1 ~92% ~17.6% Overall Contracting1 Workforce4 ~97% +5,000 Photo: SAG Mill number 1 – Concrete and rebar placement 8
Slide 9: Concentrator - Grinding Area
Concentrator Grinding Area Teck
Slide 10: Concentrator - Flotation Area
Concentrator Flotation Area
Slide 11: Port Area - Desalination Plant
Port Area Desalination Plant
Slide 12: Zinc Business Unit
Zinc Business Unit Q3 2019 Red Dog Contained Zinc Sales1 (kt) • Red Dog contained zinc sales1 above guidance at 171 kt • Net cash unit costs2 reflect higher 2019 TC/RC 171 benchmark terms 151 • Trail Operations impacted by electrical equipment failure in the zinc refinery; expect repairs to be compl
Slide 13: Energy Business Unit
Energy Business Unit Q3 2019 Energy Benchmark Pricing (US$/bbl) • Gross profit declined in Q3 2019 from Q2 2019, 80 80 70 70 primarily reflecting the decline in the price of WTI 60 60 and the widening of heavy differentials 50 50 • Production and unit operating costs continue to 40 40 reflect the Go
Slide 14: Cash Flow
Cash Flow Cash Changes in Q3 2019 ($M) 4000 406 (824) 3000 1,062 (180) (159) 2000 (104) (28) (83) 1,619 1,529 1000 0 Cash - start Cash flow from Equity PP&E Purchase and Capitalized Interest and Dividends paid Other Cash - end of quarter operations contribitions by cancellation of stripping finance
Slide 15: Strong Financial Position
Strong Financial Position • ~C$6.8 billion of liquidity1; including $1.6 billion in Note Maturity Profile4 (C$M) cash, $1.0 billion in Chile for QB2 development Notes outstanding reduced from • US$4.0 billion committed revolving credit facility; US$7.2 billion to US$3.2 billion 1,200 maturity extend
Slide 16: Cost Reduction Program
Cost Reduction Program Implementing a company-wide cost reduction program in response to current global economic uncertainty • We are targeting total reductions of ~$500 million from previously planned spending through the end of 2020 - $170 million for the balance of 2019: $120 million in capex and
Slide 17: A Transformational Time for Teck
A Transformational Time for Teck Future Value Catalysts Positioned For Transformation Growth Through Cash Returns Through Innovation: QB2/QB3 Execution to Shareholders RACE21TM Compelling Value 17
Slide 18: Appendix
Appendix Teck
Slide 19: Other Operating Income (Expense)
Other Operating Income (Expense) Simplified Settlement Pricing Adjustment Model Simplified Compensation Expense Model (Pre-tax settlement pricing adjustment in C$M) (Pre-tax share based compensation income / expense in C$M) Outstanding at Outstanding at Pricing Outstanding at Outstanding at Quarterl
Slide 20: Notes
Notes Slide 3: Q3 2019 Highlights 1. EBITDA is a non-GAAP financial measure. See “Non-GAAP Financial Measures” slides and “Use of Non-GAAP Financial Measures” section of the Q3 2019 news release for further information. 2. Liquidity is as at October 23, 2019. Slide 4: Q3 2019 Earnings 1. Gross profi
Slide 21: Notes
Notes Slide 13: Energy Business Unit 1. We include 21.3% of production from Fort Hills, representing our proportionate ownership interest. Results for 2018 are effective from June 1, 2018. The 2020-2022 production guidance does not include potential near term debottlenecking opportunities. See Energ
Slide 22: Non-GAAP Financial Measures
Non-GAAP Financial Measures
Slide 23: Non-GAAP Financial Measures
Non-GAAP Financial Measures EBITDA is profit attributable to shareholders before net finance expense, income and resource taxes, and depreciation and amortization. Adjusted EBITDA is EBITDA before the pre- tax effect of certain types of transactions that in our judgment are not indicative of our nor
Slide 24: Non-GAAP Financial Measures
Non-GAAP Financial Measures Reconciliation of Basic Earnings Per Share to Adjusted Basic Earnings Per Share Three months ended Three months ended (C$ in millions) September 30, 2019 September 30, 2018 Basic earnings per share $ 0.66 $ 2.23 Add (deduct): Debt prepayment option loss (gain) - (0.03) De
Slide 25: 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 Nine months ended Nine months ended Twelve months ended (C$ in millions) December 31, 2018 September 30, 2018 September 30, 2019 September 30,
Slide 26: Non-GAAP Financial Measures
Non-GAAP Financial Measures Reconciliation of EBITDA and Adjusted EBITDA Three months ended Three months ended (C$ in millions) September 30, 2019 September 30, 2018 Profit attributable to shareholders $ 369 $ 1,281 Finance expense net of finance income 56 74 Provision for income taxes 171 329 Depre
Slide 27: Non-GAAP Financial Measures
Non-GAAP Financial Measures Energy Business EBITDA by Entity Three months ended Three months ended (C$ in millions) September 30, 2019 September 30, 2018 Reported as: Reported as: Other Other Energy Fort Hills Energy Energy Fort Hills Energy Profit (loss) before taxes $ (2) $ 7 $ (9) $ (24) $ (21) $
Slide 28: Non-GAAP Financial Measures
Non-GAAP Financial Measures Reconciliation of Gross Profit Before Depreciation and Amortization Three months ended Three months ended (C$ in millions) September 30, 2019 September 30, 2018 Gross profit $ 787 $ 1,009 Depreciation and amortization 436 380 Gross profit before depreciation and amortizat
Slide 29: Non-GAAP Financial Measures
Non-GAAP Financial Measures Reconciliation of Gross Profit Margins Before Depreciation Three months ended Three months ended (C$ in millions) September 30, 2019 September 30, 2018 Revenue Steelmaking coal (E) $ 1,277 $ 1,505 Copper (F) 601 611 Zinc (G) 902 884 Energy (H) 255 209 Total $ 3,035 $ 3,20
Slide 30: Non-GAAP Financial Measures
Non-GAAP Financial Measures Steelmaking Coal Unit Cost Reconciliation Three months ended Three months ended (C$ in millions, except where noted) September 30, 2019 September 30, 2018 Cost of sales as reported $ 852 $ 871 Less: Transportation (237) (250) Depreciation and amortization (203) (176) Inve
Slide 31: Non-GAAP Financial Measures
Non-GAAP Financial Measures Copper Unit Cost Reconciliation Three months ended Three months ended Three months ended Three months ended (C$ in millions, except where noted) September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018 Revenue as reported $ 601 $ 611 US$ AMOUNTS1 By-pro
Slide 32: Non-GAAP Financial Measures
Non-GAAP Financial Measures Zinc Unit Cost Reconciliation (Mining Operations)1 Three months ended Three months ended Three months ended Three months ended (C$ in millions, except where noted) September 30, 2019 September 30, 2018 (C$ in millions, except where noted) September 30, 2019 September 30,
Slide 33: Non-GAAP Financial Measures
Non-GAAP Financial Measures Energy Operating Netback1 Three months ended Three months ended (C$ in millions, except where noted) September 30, 2019 September 30, 2018 Revenue as reported $ 255 $ 209 Less: Cost of diluent for blending (79) (66) Non-proprietary product revenue (7) (18) Add back: Crown
Slide 34: Non-GAAP Financial Measures
Non-GAAP Financial Measures Bitumen Price Realized Reconciliation1 Three months ended Three months ended September 30, 2019 September 30, 2018 Blended bitumen barrels sold (000’s) 4,240 3,105 Less: diluent barrels included in blended bitumen (000’s) (932) (621) Bitumen barrels sold (000’s) (B) 3,308
Slide 35: Non-GAAP Financial Measures
Non-GAAP Financial Measures Blended Bitumen Price Realized Reconciliation1 Three months ended Three months ended (C$ in millions, except where noted) September 30, 2019 September 30, 2018 Revenue as reported $ 255 $ 209 Less: Non-proprietary product revenue (7) (18) Add back: Crown royalties 6 7 Ble
Slide 36: Non-GAAP Financial Measures
Non-GAAP Financial Measures Reconciliation of EBITDA Margin (C$ in millions) Nine months ended September 30, 2019 Coal Copper Red Dog Other1 Teck Earnings before taxes 1,558 289 504 (454) 1,897 Adjust non-controlling interest (NCI) for earnings attributable to shareholders (31) (6) - - (37) Deprecia
Slide 37: Non-GAAP Financial Measures
Non-GAAP Financial Measures Reconciliation of Coal Business Unit Reconciliation of Free Cash Flow Adjusted EBITDA October 1, 2008 2003 to (C$ in millions) to September 30, 2019 (C$ in millions) Q3 2019 Gross Profit $ 18,918 Cash Flow from Operations $45,805 Add back: Depreciation and amortization 6,
Slide 38: Third Quarter 2019 Results
Third Quarter 2019 Results October 24, 2019