40 slides from Teck Resources Limited Class A's earnings presentation, Feb 21, 2020
Slide 1: Fourth Quarter 2019 Results
Fourth Quarter 2019 Results February 21, 2020
Slide 2: Caution Regarding Forward-Looking Statements
Caution Regarding Forward-Looking Statements Both these slides and the accompanying oral presentation certain forward-looking information and forward-looking statements as defined in applicable securities laws (collectively referred to as forward-looking statements). These statements relate to futur
Slide 3: 2019 Highlights
2019 Highlights • Significant progress on our four key priorities: 1. QB2 construction continues; closed the US$2.5 billion project financing; announced a renewable energy agreement 2. RACE21TM implemented initiatives aimed at achieving $160 million1 in annualized EBITDA2 improvements as of the end
Slide 4: 2019 Earnings
2019 Earnings Impacted by lower commodity prices Q4 2019 2019 Revenue $ 2.7 billion $ 11.9 billion Gross profit before depreciation and amortization1 $ 875 million $ 5.0 billion Gross profit $ 460 million $ 3.3 billion EBITDA (loss)1 $ (755) million $ 2.5 billion Adjusted EBITDA1 $ 649 million $ 4.3
Slide 5: Earnings and Adjusted Earnings
Earnings and Adjusted Earnings Q4 2019 2019 Profit (loss) attributable to shareholders ($ 891) million $ 339 million Add (deduct): Asset impairments 999 million 1,108 million Debt prepayment option gain - (77) million Debt redemption or purchase loss - 166 million Taxes and other 14 million 16 milli
Slide 6: Steelmaking Coal Business Unit
Steelmaking Coal Business Unit Profitability impacted by lower prices Q4 2019 Steelmaking Coal Prices2 (US$/t) • Q4 2019 sales in line with guidance despite logistics Steelmaking coal price has averaged challenges US$180/t2 since January 1, 2008 300 • 2019 production and costs in line with guidance
Slide 7: Copper Business Unit
Copper Business Unit Q4 2019 Cash Unit Costs2 (US$/lb) • Strike action at Carmen de Andacollo resulted in ~9 kt of lost copper production 1.76 Total cash unit costs2 • Increased production at Highland Valley due to higher 1.58 copper grades and recoveries 0.48 Cash margin 0.24 for by-products • Over
Slide 8: QB2 Project Update
QB2 Project Update Progress1 Workforce1,2 25% Overall ~7,500 Earthworks1 Concrete1 47% 29% Engineering, Procurement & Contract Formation1 >95% SAG Mill #1 Shell Lift, January 2020 8
Slide 9: Mine Area
Mine Area Primary Crusher Teck :
Slide 10: Concentrator
Concentrator Grinding Area
Slide 11: Concentrator
Concentrator Floatation Area
Slide 12: Pipelines
Pipelines Pipe Welding Teck
Slide 13: Port Area
Port Area Desalination Plant
Slide 14: Zinc Business Unit
Zinc Business Unit Q4 2019 Cash Unit Costs2 (US$/lb) • Red Dog contained zinc sales1 above guidance at 174 kt • Red Dog production impacted by planned mill shutdowns Total cash unit costs2 0.50 related to the VIP2 project 0.45 • Trail Operations impacted by electrical equipment failure Cash margin 0
Slide 15: Energy Business Unit
Energy Business Unit Q4 2019 Energy Benchmark Pricing (US$/bbl) • Production and unit operating costs continue to 80 80 reflect the Government of Alberta’s production 70 70 60 60 curtailments, but remained within 2019 guidance 50 50 • Fort Hills advanced overburden stripping, resulting 40 40 in high
Slide 16: RACE21
RACE21TM Our innovation-driven business transformation program • Implementing existing, proven technology RACE21TM Future Path to Value across the mining value chain to improve Targeting total of $1 billion annualized EBITDA2 by end of 2021 productivity and lower costs Annualized EBITDA2 $1 billion
Slide 17: Cash Flow
Cash Flow Cash Changes in Q4 2019 ($M) 3000 782 25 14 (883) 2000 1,619 (152) (148) (71) (55) (43) (27) (35) 1,026 1000 0 Cash - start Cash flow from QB2 advances Proceeds from PP&E Capitalized Purchase and Interest and Expenditures Repayment of Dividends paid Other Cash - end of quarter operations f
Slide 18: Cost Reduction Program
Cost Reduction Program Implemented in Q3 2019 in response to global economic uncertainty • Increased our total targeted reductions to ~$610 million of previously planned spending through the end of 2020, vs. the previous target of $500 million - In Q4 2019, achieved ~$210 million of capital and oper
Slide 19: Strong Financial Position
Strong Financial Position • ~C$5.8 billion1 of liquidity; including $532 million1 Note Maturity Profile4 (C$M) in cash Notes outstanding reduced from • US$4.0 billion committed revolving credit facility US$7.2 billion in September 2015 to US$3.2 billion2 recently extended to November 2024 1,200 • In
Slide 20: Summary
Summary Four Key Priorities Transformation Growth Through Neptune Facility Cost Reduction Through Innovation: QB2/QB3 Execution Upgrade Program RACE21TM Focus on health and safety and sustainability leadership 20
Slide 21: Appendix
Appendix Teck
Slide 22: Other Operating Income (Expense)
Other Operating Income (Expense) Simplified Settlement Pricing Adjustment Model Simplified Compensation Expense Model (Pre-tax settlement pricing adjustment in C$M) (Pre-tax share based compensation income / expense in C$M) Quarterly Quarterly Outstanding at Outstanding at Quarterly Pricing Septembe
Slide 23: Notes
Notes Slide 3: 2019 Highlights 1. Based on commodity prices at December 31, 2019: steelmaking coal US$136.50 per tonne, copper US$2.79 per pound, zinc US$1.04 per pound and a C$/US$ exchange rate of $1.30. 2. EBITDA is a non-GAAP financial measure. See “Non-GAAP Financial Measures” slides and “Use o
Slide 24: Notes
Notes Slide 15: Energy Business Unit 1. We include 21.3% of production from Fort Hills, representing our proportionate ownership interest. The 2021-2023 production guidance does not include potential near term debottlenecking opportunities. See Energy business unit section of the Q4 2019 news releas
Slide 25: Non-GAAP Financial Measures
Non-GAAP Financial Measures
Slide 26: Non-GAAP Financial Measures
Non-GAAP Financial Measures EBITDA is profit attributable to shareholders before net finance expense, income and resource taxes, and depreciation and amortization. Adjusted EBITDA is EBITDA before the pre- tax effect of certain types of transactions that in our judgment are not indicative of our nor
Slide 27: Non-GAAP Financial Measures
Non-GAAP Financial Measures Reconciliation of Profit (Loss) and Adjusted Profit Three months ended Three months ended Twelve months ended Twelve months ended (C$ in millions) December 31, 2019 December 31, 2018 December 31, 2019 December 31, 2018 Profit (loss) attributable to shareholders $ (891) $
Slide 28: Non-GAAP Financial Measures
Non-GAAP Financial Measures Reconciliation of Basic Earnings (Loss) Per Share to Adjusted Basic Earnings Per Share Three months ended Three months ended Twelve months ended Twelve months ended (Per share amounts) December 31, 2019 December 31, 2018 December 31, 2019 December 31, 2018 Basic earnings
Slide 29: Non-GAAP Financial Measures
Non-GAAP Financial Measures Reconciliation of Net Debt to EBITDA and Net Debt to Capitalization Ratio Twelve months ended Twelve months ended (C$ in millions) December 31, 2019 December 31, 2018 Profit attributable to shareholders $ 339 $ 3,107 Finance expense net of finance income 218 219 Provision
Slide 30: Non-GAAP Financial Measures
Non-GAAP Financial Measures Reconciliation of EBITDA (loss) and Adjusted EBITDA Three months ended Three months ended Twelve months ended Twelve months ended (C$ in millions) December 31, 2019 December 31, 2018 December 31, 2019 December 31, 2018 Profit (loss) attributable to shareholders $ (891) $
Slide 31: Non-GAAP Financial Measures
Non-GAAP Financial Measures Reconciliation of Gross Profit Before Depreciation and Amortization Three months ended Three months ended Twelve months ended Twelve months ended (C$ in millions) December 31, 2019 December 31, 2018 December 31, 2019 December 31, 2018 Gross profit $ 460 $ 1,011 $ 3,340 $
Slide 32: Non-GAAP Financial Measures
Non-GAAP Financial Measures Reconciliation of Gross Profit Margins Before Depreciation Three months ended Three months ended Twelve months ended Twelve months ended (C$ in millions) December 31, 2019 December 31, 2018 December 31, 2019 December 31, 2018 Revenue Steelmaking coal (E) $ 1,105 $ 1,674 $
Slide 33: Non-GAAP Financial Measures
Non-GAAP Financial Measures Steelmaking Coal Unit Cost Reconciliation Three months ended Three months ended Twelve months ended Twelve months ended (C$ in millions, except where noted) December 31, 2019 December 31, 2018 December 31, 2019 December 31, 2018 Cost of sales as reported $ 864 $ 855 $ 3,4
Slide 34: Non-GAAP Financial Measures
Non-GAAP Financial Measures Copper Unit Cost Reconciliation Three months ended Three months ended Twelve months ended Twelve months ended (C$ in millions, except where noted) December 31, 2019 December 31, 2018 December 31, 2019 December 31, 2018 Revenue as reported $ 592 $ 633 $ 2,469 $ 2,714 By-pr
Slide 35: Non-GAAP Financial Measures
Non-GAAP Financial Measures Zinc Unit Cost Reconciliation (Mining Operations)1 Three months ended Three months ended Twelve months ended Twelve months ended (C$ in millions, except where noted) December 31, 2019 December 31, 2018 December 31, 2019 December 31, 2018 Revenue as reported $ 745 $ 820 $
Slide 36: Non-GAAP Financial Measures
Non-GAAP Financial Measures Zinc Unit Cost Reconciliation (Mining Operations)1 - Continued Three months ended Three months ended Twelve months ended Twelve months ended (C$ in millions, except where noted) December 31, 2019 December 31, 2018 December 31, 2019 December 31, 2018 Payable pounds sold (m
Slide 37: Non-GAAP Financial Measures
Non-GAAP Financial Measures Energy Operating Netback, Bitumen & Blended Bitumen Price Realized Reconciliations1 Three months ended Three months ended Twelve months ended Twelve months ended (C$ in millions, except where noted) December 31, 2019 December 31, 2018 December 31, 2019 December 31, 2018 R
Slide 38: Non-GAAP Financial Measures
Non-GAAP Financial Measures Energy Operating Netback, Bitumen & Blended Bitumen Price Realized Reconciliations1 - Continued Three months ended Three months ended Twelve months ended Twelve months ended (C$ in millions, except where noted) December 31, 2019 December 31, 2018 December 31, 2019 Decembe
Slide 39: Non-GAAP Financial Measures
Non-GAAP Financial Measures Reconciliation of Free Cash Flow 2003 to (C$ in millions) Q4 2019 Cash Flow from Operations $46,587 Debt interest and finance charges paid (5,465) Capital expenditures, including capitalized stripping costs (24,974) Payments to non-controlling interests (NCI) (642) Free C
Slide 40: Fourth Quarter 2019 Results
Fourth Quarter 2019 Results February 21, 2020