29 slides from Teck Resources Limited Class A's earnings presentation, Feb 13, 2019
Slide 1: Fourth Quarter 2018 Results
Fourth Quarter 2018 Results February 13, 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: 2018 Highlights
2018 Highlights • Record revenue; record EBITDA; record earnings • Fort Hills fully commissioned in Q4 2018 • QB2 project sanctioned; announced a US$1.2 billion partnership transaction with Sumitomo • Returned significant cash to shareholders: ‒ Paid $115 million in base dividends and $57 million in
Slide 4: Strong 2018 Earnings
Strong 2018 Earnings Q4 2018 2018 Revenue $ 3.2 billion Record $ 12.6 billion Gross profit before depreciation & amortization1 $ 1.4 billion $ 6.1 billion Gross profit $ 1.0 billion $ 4.6 billion EBITDA $ 1.2 billion Record $ 6.2 billion Adjusted EBITDA1 $ 1.3 billion $ 5.4 billion Profit attributab
Slide 5: Earnings and Adjusted Earnings
Earnings and Adjusted Earnings $M Q4 2018 2018 Announced on January 31, 2019 that Q4 2018 earnings and EBITDA1 Profit attributable to shareholders $ 433 $ 3,107 expected to be significantly below Add (deduct): consensus estimates. Debt purchase loss - 19 Bulk of the difference due to three factors D
Slide 6: Steelmaking Coal Business Unit
Steelmaking Coal Business Unit Q4 2018: Steelmaking Coal Prices2 • Strong demand, with record monthly sales in 300 US$/tonne 250 November 200 150 • Quarterly production record of 7.3 Mt 100 • Higher site costs reflect decisions to capture 50 additional margin Argus FOB Australia 12-Month Moving Aver
Slide 7: Copper Business Unit
Copper Business Unit Q4 2018: Cash Unit Costs Stable2 • Lower ore grades at Highland Valley, as expected in the mine plan US$1.77 US$1.76 • Record annual combined copper and zinc 0.50 0.48 US$/lb concentrate production at Antamina 1.27 1.28 • $41 million in inventory write-downs due to decline in co
Slide 8: Zinc Business Unit
Zinc Business Unit Q4 2018: Mined Zinc Production (kt)2 • Red Dog sales of zinc in concentrate were 4.3 kt Up 19 kt below guidance due to timing of consignment sales • Trail Operations impacted by lower metal prices, 169 historically low TC/RCs, and the KIVCET shutdown 150 Looking Forward: • Expect
Slide 9: Energy Business Unit
Energy Business Unit Calendar NYMEX WTI Price3 Q4 2018: 80 • Fort Hills produced at 94% of nameplate capacity; 60 US$/bbl 40 exceeded nameplate capacity in December 20 • The dramatic widening of WCS differentials had a 0 significant negative impact on Q4 results • Decline in WTI price and widening o
Slide 10: Cash Flow
Cash Flow Cash Changes in Q4 2018 3000 1,352 (666) 2500 (173) (131) (86) $ Millions 2000 (75) 30 1,734 1,483 1500 1000 500 0 Cash - start Cash flow PP&E Capitalized Purchase Dividends Debt Other Cash - end of quarter from stripping and paid interest and of quarter operations cancellation finance of
Slide 11: Solid Financial Position
Solid Financial Position Debt Maturity Profile2 1,200 1,000 • ~C$6.6 billion of liquidity1 US$M 800 – Includes committed credit facility, which was increased to 600 US$4 billion and extended to maturity of November 2023 400 • Purchased US$1 billion in near-term debt maturities in 2019 200 0 • No sig
Slide 12: Strong Track Record of Returning Cash to Shareholders
Strong Track Record of Returning Cash to Shareholders ~$5.7 billion returned from January 1, 2003 to December 31, 20181 Dividends1 Share Buybacks1 Cash Returns in H2 2018 • Paid dividend of $0.15/share in December 2018 $4.3 $1.4 ‒ $0.05/share regular quarterly dividend and $0.10/share billion billio
Slide 13: Capital Expenditures Guidance
Capital Expenditures Guidance Sustaining, Major Enhancement, New Mine Development Quebrada Blanca 2 (Teck’s share 2019 (Teck’s share 2019 in CAD$ millions) 2018 Guidance1 in CAD$ millions) 2018 Guidance1 Sustaining QB2 Capital Expenditures $ 414 $ 1,930 Steelmaking coal2 $ 232 $ 540 Total capex, bef
Slide 14: Looking Forward
Looking Forward Multiple catalysts / valuation milestones 2019 2020/2021 Quebrada Blanca Red Dog • Close of partnering transaction by end March • Mill upgrade start up in Q1 2020 Zafranal Neptune Bulk Terminals • Feasibility Study completion and submit SEIA • Upgrade completion in Q3 2020 in H1 High
Slide 15: Appendix
Appendix Teck
Slide 16: Other Operating Income (Expense)
Other Operating Income (Expense) Simplified Settlement Pricing Adjustment Model Simplified Compensation Expense Model Pre-Tax Share-Based Compensation Income (Expense) (C$M) Pre-tax Settlement Pricing Adjustment (C$M) Share-Based Outstanding at Outstanding at Quarterly Pricing Closing Price Closing
Slide 17: Notes
Notes Slide 4: Strong 2018 Earnings 1. Gross profit before depreciation and amortization, adjusted EBITDA, adjusted profit attributable to shareholders, adjusted basic earnings per share and adjusted diluted earnings per share are non-GAAP financial measures. See “Non-GAAP Financial Measures” slides
Slide 18: Notes
Notes Slide 11: Solid Financial Position 1. As at February 12, 2018. Assumes a C$/US$ exchange rate of $1.33. 2. Public notes outstanding as at December 31, 2018. 3. On a go forward basis from January 1, 2019. Assumes US$2.5 billion in project finance loans without deduction of fees and interest dur
Slide 19: Non-GAAP Financial Measures
Non-GAAP Financial Measures EBITDA is profit attributable to shareholders before net finance expense, income and resource taxes, and depreciation and amortization. Adjusted EBITDA is EBITDA before the pre-tax effect of certain types of transactions that in our judgment are not indicative of our norm
Slide 20: Non-GAAP Financial Measures
Non-GAAP Financial Measures Reconciliation of Basic Earnings Per Share Reconciliation of Diluted Earnings Per Share to Adjusted Basic Earnings Per Share to Adjusted Diluted Earnings Per Share Twelve months ended Twelve months ended (C$ in millions) December 31, 2018 (C$ in millions) December 31, 201
Slide 21: Non-GAAP Financial Measures
Non-GAAP Financial Measures Reconciliation of Net Debt-to-Adjusted EBITDA Ratio & Net Debt-to-Debt-Plus-Equity Ratio Twelve months ended (C$ in millions) December 31, 2018 EBITDA (A) $ 6,174 Adjusted EBITDA (B) 5,390 Total debt at period end 5,519 Less: cash and cash equivalents at period end (1,734
Slide 22: Non-GAAP Financial Measures
Non-GAAP Financial Measures Reconciliation of EBITDA and Adjusted EBITDA Reconciliation of Free Cash Flow Twelve months ended 2003 to (C$ in millions) December 31, 2018 (C$ in millions) 2018 Profit attributable to shareholders $ 3,107 Cash Flow from Operations $43,313 Finance expense net of finance
Slide 23: Non-GAAP Financial Measures
Non-GAAP Financial Measures Reconciliation of Gross Profit Reconciliation of Gross Profit Margins Before Depreciation and Amortization Before Depreciation Twelve months ended Twelve months ended (C$ in millions) December 31, 2018 (C$ in millions) December 31, 2018 Gross profit $ 4,621 Revenue Deprec
Slide 24: Non-GAAP Financial Measures
Non-GAAP Financial Measures Steelmaking Coal Unit Cost Reconciliation of Coal Business Unit Reconciliation Adjusted EBITDA Twelve months ended October 1, 2008 to (C$ in millions, except where noted) December 31, 2018 (C$ in millions) December 31, 2018 Cost of sales as reported $ 3,309 Gross Profit $
Slide 25: Non-GAAP Financial Measures
Non-GAAP Financial Measures Copper Unit Cost Reconciliation Twelve months ended Twelve months ended (C$ in millions, except where noted) December 31, 2018 December 31, 2018 Revenue as reported $ 2,714 US$ AMOUNTS1 By-product revenue (A) (472) Average exchange rate (C$/US$) $ 1.30 Smelter processing
Slide 26: Non-GAAP Financial Measures
Non-GAAP Financial Measures Zinc Unit Cost Reconciliation (Mining Operations)1 Twelve months ended Twelve months ended (C$ in millions, except where noted) December 31, 2018 (C$ in millions, except where noted) December 31, 2018 Revenue as reported $ 3,094 Payable pounds sold (millions) (E) 1,035.5
Slide 27: Non-GAAP Financial Measures
Non-GAAP Financial Measures Energy Operating Netback, Bitumen and Blended Bitumen Price Realized Reconciliations1 Twelve months ended Twelve months ended (C$ in millions, except where noted) December 31, 2018 December 31, 2018 Revenue as reported $ 407 Blended bitumen barrels sold (000’s) 8,746 Less
Slide 28: Non-GAAP Financial Measures
Non-GAAP Financial Measures Blended Bitumen Price Realized Reconciliation1 Twelve months ended (C$ in millions, except where noted) December 31, 2018 Revenue as reported $ 407 Less: Non-proprietary product revenue (18) Add back: Crown royalties 14 Blended bitumen revenue (A) $ 403 Blended bitumen ba
Slide 29: Fourth Quarter 2018 Results
Fourth Quarter 2018 Results February 13, 2019