39 slides from Teck Resources Limited Class A's earnings presentation, Jul 27, 2021
Slide 1: Second Quarter 2021 Results
Second Quarter 2021 Results July 27, 2021
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: Delivering on Our Key Priorities
Delivering on Our Key Priorities Solid performance at our priority projects • Best quarterly progress to date at QB2 despite acute COVID-19 conditions in Chile • Neptune port upgrade is ramping up to full capacity Significant improvement in quarterly financial results, with Adjusted EBITDA1 up 104%
Slide 4: Financial Overview
Financial Overview Q2 2021 Q2 2020 Revenues $ 2.6 billion $ 1.7 billion Gross profit before depreciation and amortization1 $ 1.1 billion $ 453 million Gross profit $ 689 million $ 139 million Adjusted EBITDA1 $ 989 million $ 485 million Profit (loss) attributable to shareholders $ 260 million $ (149
Slide 5: Copper Business Unit
Copper Business Unit Q2 2021 Copper EBITDA1 ($M) • 385% increase in EBITDA1 vs. Q2 2020, driven $424M increase in Q2 2021 vs. Q2 2020 Non-controllable $411M Controllable $13M by substantially higher copper prices and sales Cash $477M Non-Cash ($66M) All Cash • Higher production primarily from Antami
Slide 6: Executing on Our Copper Growth Strategy via QB2
Executing on Our Copper Growth Strategy via QB2 Solid progress - best quarter to date • Despite largest COVID-19 case surge to date in Chile • Rigorous testing and protocols are key success factors • Critical path through the grinding circuit on plan • Aggressive ramp-up hiring underway Project comp
Slide 7: QB2 Concentrator
QB2 Concentrator Aerial view of grinding (background), flotation (middle ground) and thickeners (foreground) May 2021
Slide 8: QB2 Tailings Management Facility
QB2 Tailings Management Facility Starter dam construction well advanced May 2021
Slide 9: QB2 Port Offshore
QB2 Port Offshore Marine works for the jetty advancing from several workfronts May 2021
Slide 10: QB2 Pipeline
QB2 Pipeline 36” water pipe and 8” concentrate pipe in trench (port in background) May 2021
Slide 11: Zinc Business Unit
Zinc Business Unit Q2 2021 Zinc EBITDA1 ($M) • Strong production at Red Dog $22M decrease in Q2 2021 vs. Q2 2020 Non-controllable $70M Controllable ($92M) • Red Dog zinc in concentrate sales of 39 kt Cash $56M Non-Cash $14M All Cash 300 were consistent with our quarterly guidance • Total cash unit c
Slide 12: Steelmaking Coal Business Unit
Steelmaking Coal Business Unit Q2 2021 Steelmaking Coal EBITDA1 ($M) • Sales were 6.2 Mt, in line with guidance $273M increase in Q2 2021 vs. Q2 2020 Non-controllable $203M Controllable $70M • Average realized price reflects ~2 Mt sold to Cash $167M Non-Cash $36M All Cash 600 Chinese customers at hi
Slide 13: Neptune Upgrade in Ramp Up Phase Across the Site
Neptune Upgrade in Ramp Up Phase Across the Site • Ramp up is continuing as planned • Equipment performing according to, or better than, plan • First steelmaking coal unloaded using the new double rail car dumper on April 19, 2021 • Ongoing shiploading, including the largest cape size vessel ever ha
Slide 14: Neptune Terminal
Neptune Terminal Double Dumper Indexer June 2021
Slide 15: Neptune Terminal
Neptune Terminal The largest cape size vessel to ever be loaded at Neptune May 2021
Slide 16: Energy Business Unit
Energy Business Unit Q2 2021 Energy EBITDA1 ($M) • Results improved from Q2 2020, primarily $56M increase in Q2 2021 vs. Q2 2020 Non-controllable $100M Controllable ($44M) due to higher Western Canadian Select prices Cash $106M Non-Cash All Cash • This was partially offset by higher unit operating (
Slide 17: Higher Profit and Adjusted Profit
Higher Profit and Adjusted Profit Q2 2021 Q2 2020 Profit (loss) attributable to shareholders $ 260 million $ (149) million Add (deduct): COVID-19 costs - 147 million Environmental costs 44 million 69 million Inventory write-downs (reversals) - 38 million Share-based compensation 24 million 17 millio
Slide 18: Cash Flow
Cash Flow Cash Changes in Q2 2021 ($M) 1000 575 (1,048) 750 500 369 337 (26) (32) 110 (77) 10 (26) 38 (6) 5 312 250 (175) (50) 10 298 0 -250 -500 Cash - start Cash flow from PP&E Capitalized Expenditures on Proceeds from Proceeds from Revolving credit Redemption, Repayment of QB2 advances Interest a
Slide 19: Strong Financial Position
Strong Financial Position Balance Sheet Steelmaking Coal Prices7 (US$/t) • Rated investment grade by all four agencies Since January 1, 2011, the FOB Australia price has averaged • No significant note maturities prior to 20301 ~US$170/t, or ~US$180/t on an inflation-adjusted basis 400 Liquidity • C$
Slide 20: Poised for Growth
Poised for Growth Right Right Right Right Opportunities Assets Approach Team Strong demand for Industry leading Highest standards Our people deliver our metals and copper growth, of sustainability in the optimal mix of minerals, led by strengthening everything we do, industry leading growth and exis
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) 50 30 10 Q2 2021 -10 -30 -50 -70 -$12 -$8 -$4 $0 $4 $8 $12 Change in TECK B
Slide 23: Endnotes
Endnotes Slide 3: Delivering on Our Key Priorities 1. Adjusted EBITDA is a non-GAAP financial measures. See “Non-GAAP Financial Measures” slides and “Use of Non-GAAP Financial Measures” section of the Q2 2021 news release for further information. Slide 4: Financial Overview 1. Gross profit before de
Slide 24: Endnotes
Endnotes Slide 19: Strong Financial Position 1. As at June 30, 2021. 2. As at July 26, 2021. 3. As at July 26, 2021. The sensitivity of our EBITDA to changes in the Canadian/U.S. dollar exchange rate and commodity prices, before pricing adjustments, based on our current balance sheet, our 2021 mid-r
Slide 25: Non-GAAP Financial Measures
Non-GAAP Financial Measures
Slide 26: Non-GAAP Financial Measures
Non-GAAP Financial Measures Our financial results are prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board. This document refers to a number of Non-GAAP Financial Measures which are not measures recognized under IFRS
Slide 27: Non-GAAP Financial Measures
Non-GAAP Financial Measures Cash margins for by-products – Cash margins for by-products is revenue from by- and co-products, less any associated cost of sales of the by and co-product. In addition, for our copper operations, by-product cost of sales also includes cost recoveries associated with our
Slide 28: Non-GAAP Financial Measures
Non-GAAP Financial Measures Reconciliation of Profit (Loss) and Adjusted Profit Three months Six months ended June 30, ended June 30, (CAD$ in millions) 2021 2020 2021 2020 Profit (loss) attributable to shareholders $ 260 $ (149) 565 $ (461) Add (deduct) on an after-tax basis: Asset impairment — — —
Slide 29: Non-GAAP Financial Measures
Non-GAAP Financial Measures Reconciliation of Basic Earnings (Loss) Per Share to Adjusted Basic Earnings (Loss) Per Share and Reconciliation of Diluted Earnings (Loss) Per Share to Adjusted Diluted Earnings Per Share Three months Six months Three months Six months ended June 30, ended June 30, ended
Slide 30: Non-GAAP Financial Measures
Finance expense net of finance income 268 161 102 209 Non-GAAP Financial Measures Provision for (recovery of) income taxes (192) (135) 418 361 Depreciation and amortization 1,510 692 748 1,566 EBITDA $ 642 $ 222 $ 1,820 $ 2,240 Add (deduct): Asset impairment 1,244 647 — 597 COVID-19 costs 336 229 —
Slide 31: Non-GAAP Financial Measures
Non-GAAP Financial Measures Reconciliation of EBITDA and Adjusted EBITDA Three months Six months ended June 30, ended June 30, (CAD$ in millions) 2021 2020 2021 2020 Profit (loss) $ 260 $ (185) $ 552 $ (496) Finance expense net of finance income 51 114 102 161 Provision for (recovery of) income taxe
Slide 32: Non-GAAP Financial Measures
Non-GAAP Financial Measures Reconciliation of Gross Profit Before Depreciation and Amortization and Reconciliation of Gross Profit (Loss) Margins Before Depreciation Three months Six months Three months Six months ended June 30, ended June 30, ended June 30, ended June 30, (CAD$ in millions) 2021 20
Slide 33: Non-GAAP Financial Measures
Cost of sales as reported $ 392 $ 302 $ 793 $ 716 Less: Non-GAAP Financial Measures Depreciation and amortization By-product cost of sales (C) (89) (20) (71) (5) (185) (40) (177) (25) Adjusted cash cost of sales (D) $ 283 $ 226 $ 568 $ 514 Payable pounds sold (millions) (E) 140.7 116.4 284.1 272.2 P
Slide 34: Non-GAAP Financial Measures
By-product revenues (A) — (10) (2) (12) Smelter processing charges (B) 28 53 103 130 Non-GAAP Financial Measures Adjusted revenue Cost of sales as reported Less: $ $ 127 400 $ $ 214 406 $ $ 437 845 $ $ 539 895 Trail Operations cost of sales as reported (489) (405) (928) (868) Other cost of sales as
Slide 35: Non-GAAP Financial Measures
Non-GAAP Financial Measures Steelmaking Coal Unit Cost Reconciliation Three months Six months ended June 30, ended June 30, (CAD$ in millions, except where noted) 2021 2020 2021 2020 Cost of sales as reported $ 879 $ 734 $ 1,730 $ 1,511 Less: Transportation costs (A) (258) (197) (514) (439) Deprecia
Slide 36: Non-GAAP Financial Measures
Add back: crown royalties (D) 3 — 4 3 Adjusted revenue (A) $ 95 $ 10 $ 177 $ 85 Non-GAAP Financial Measures Cost of sales as reported Less: Depreciation and amortization $ 198 (22) $ 140 (22) $ 394 (42) $ 438 (55) Inventory write-down — (23) — (46) Cash cost of sales $ 176 $ $ 206 95 $ 352 $ 337 Les
Slide 37: Non-GAAP Financial Measures
Non-GAAP Financial Measures Energy Operating Netback, Bitumen & Blended Bitumen Price Realized Reconciliations and Adjusted Operating Costs and Adjusted Operating Costs1 Three months Six months ended June 30, ended June 30, (CAD$ in millions, except where noted) 2021 2020 2021 2020 Revenue as report
Slide 38: Non-GAAP Financial Measures
Non-GAAP Financial Measures Reconciliation of Free Cash Flow (C$ in millions) 2003 to Q2 2021 Cash Flow from Operations $49,310 Debt interest paid (6,010) Capital expenditures, including capitalized stripping costs (30,828) Payments to non-controlling interests (NCI) (620) Free Cash Flow $11,852 Div
Slide 39: Second Quarter 2021 Results
Second Quarter 2021 Results July 27, 2021