Teck Reports Unaudited Fourth Quarter Results for 2022 High commodity prices drive record annual financial performance
VANCOUVER, British Columbia, Feb. 21, 2023 (GLOBE NEWSWIRE) -- Teck Resources Limited (TSX: TECK.A and TECK.B, NYSE: TECK) (Teck) today announced its unaudited fourth quarter results for 2022.
"We achieved a number of financial performance records in 2022, driven by the continued strong commodity price environment and the resilience of our teams, who successfully managed through short-term production challenges in the fourth quarter,” said Jonathan Price, CEO. “We are well positioned to execute on our strategic priorities in 2023 and expect a transformational year with the commissioning and ramp-up of our QB2 project."
Highlights
- Adjusted profit attributable to shareholders1 of $558 million or $1.09 per share in Q4 2022 and a record $4.9 billion or $9.25 per share for the year.
- Profit from continuing operations attributable to shareholders of $247 million or $0.48 per share in Q4 2022 and a record $4.1 billion or $7.77 per share for the year.
- Adjusted EBITDA1 was $1.3 billion in Q4 2022 and a record $9.6 billion for the year. Profit before tax from continuing operations was $594 million in Q4 2022 and $6.6 billion for the year.
- We generated cash flows from operations of $8.0 billion in the year, ending the year with a cash balance of $1.9 billion. Our liquidity as at February 20, 2023 is $8.2 billion, including $2.8 billion of cash.
- We have continued to de-lever our balance sheet, purchasing and redeeming US$1.0 billion of our notes between January 2022 and February 2023.
- On February 18, 2023, the Board approved a $0.625 per share dividend, including a $0.50 per share supplemental dividend, payable on March 31, 2023 to shareholders of record on March 15, 2023, and authorized up to a $250 million share buyback.
- At QB2, we are in commissioning of Line 1 at the concentrator and making final preparations to feed ore to the mills.
- Our QB2 capital cost guidance remains unchanged from our previous disclosures.
- In Q4 2022, our copper business unit gross profit declined by 44% from a year ago due to a decrease in the average realized copper price to US$3.72 per pound and lower sales volumes.
- In Q4 2022, our zinc business unit gross profit decreased by 74% from a year ago primarily due to a decline in the average realized zinc price to US$1.38 per pound and the impact of the extended major maintenance activities on the KIVCET boiler at our Trail Operations.
- Gross profit in our steelmaking coal business unit decreased by 42% in Q4 2022 compared to the same period last year due to a decrease of 21% in realized steelmaking coal prices, a two-month plant outage at our Elkview Operations and the impact of extreme weather events in December on our logistics chain.
- We completed the sale of our interest in Fort Hills to Suncor Energy Inc. (Suncor) and TotalEnergies EP Canada Ltd. (TotalEnergies) for aggregate gross proceeds of approximately $1 billion in cash on February 2, 2023. We do not anticipate any tax payable on the disposal.
- Our High Potential Incident Frequency for the full year 2022 was the lowest ever at a rate of 0.10, down 23% compared to 2021.
- We were named to the S&P Dow Jones Sustainability World Index for the 13th consecutive year and recognized as the #1 company in the Metals and Mining sector. We were recognized in January as one of the 2022 Global 100 Most Sustainable Corporations by Corporate Knights.
- Teck Resources Limited announced today the reorganization of its business to separate Teck into two independent, publicly-listed companies: Teck Metals Corp. and Elk Valley Resources Ltd. We also announced a proposed six-year sunset for the multiple voting rights attached to the Class A common shares of Teck. Please refer to our separate news releases with respect to these matters.
Note:
1. This is a non-GAAP financial measure or ratio. See “Use of Non-GAAP Financial Measures and Ratios” for further information.
Financial Summary Q4 2022
| Financial Metrics Q4 2022 Q4 2021 (CAD$ in millions, except per share data) | ||
| Revenue Gross profit Gross profit before depreciation and amortization1 Profit from continuing operations before taxes Adjusted EBITDA1 Profit from continuing operations attributable to shareholders Adjusted profit attributable to shareholders1 Basic earnings per share from continuing operations Diluted earnings per share from continuing operations Adjusted basic earnings per share1 Adjusted diluted earnings per share1 | $ 3,140 $ 1,154 $ 1,538 $ 594 $ 1,333 $ 247 $ 558 $ 0.48 $ 0.47 $ 1.09 $ 1.07 | $ 4,196 $ 2,114 $ 2,489 $ 2,246 $ 2,521 $ 1,534 $ 1,377 $ 2.88 $ 2.83 $ 2.58 $ 2.54 |
| Note: |
1. This is a non-GAAP financial measure or ratio. See “Use of Non-GAAP Financial Measures and Ratios” for further information.
Key Updates
Executing on our Copper Growth strategy – QB2 a long-life, low-cost operation with major expansion potential
- QB2 is in commissioning of Line 1 at the concentrator and making final preparations to feed ore to the mills. Our focus continues to be on system completion and handover as part of the continuous commissioning and ramp-up plan through 2023.
- Our QB2 construction capital cost guidance remains unchanged from our prior disclosure.
- We continue to expect QB2 to reach full capacity by end of 2023. As a result of recent changes to IFRS, we are required to recognize sales proceeds and related costs associated with products sold during the ramp-up and commissioning phase of QB2 through earnings rather than capitalizing these amounts. We expect this to increase our unit operating costs1 for QB2 during ramp-up. Once QB2 is running at full production rates, we expect the average net cash unit costs1 will be between US$1.40 per pound and US$1.60 per pound.
- Copper production from 2024 to 2026 is expected to be between 545,000 and 640,000 tonnes per year, including QB2.
Note:
1. This is a non-GAAP financial measure or ratio. See “Use of Non-GAAP Financial Measures and Ratios” for further information.
Sustainability leadership
- Teck is currently ranked #1 in the Metals and Mining Industry on the S&P Corporate Sustainability Assessment, #3 in the Diversified Metals industry by Sustainalytics, #1 among North America Metals and Mining Companies by Moody's ESG and ranked AA by MSCI for ESG performance.
- We announced a long-term clean power purchase agreement with AES Andes to provide 1,069 Gigawatt hours per year of energy that will result in QB2 having 100% clean renewable power starting in 2025.
Guidance
| • On January 30, 2023, we disclosed our 2023 guidance. Guidance | ||
| disclosed in this news release is unchanged from our previous | ||
| disclosures. | ||
| • Summary guidance for 2023 is outlined below and our usual guidance | ||
| tables, including three-year production guidance, | can be found on pages | |
| 27 — 32 of Teck’s full fourth quarter results for 2022 at the link below. |
| 2023 Guidance – Summary | Current | |
| Production Guidance | ||
| Copper (000’s tonnes) | 390 - 445 | |
| Zinc (000’s tonnes) | 645 - 685 | |
| Refined zinc (000’s tonnes) | 270 - 290 | |
| Steelmaking coal (million tonnes) | 24.0 - 26.0 | |
| Sales Guidance – Q1 2023 | ||
| Red Dog zinc in concentrate sales (000’s tonnes) | 165 - 185 | |
| Steelmaking coal sales (million tonnes) | 6.0 - 6.4 | |
| Unit Cost Guidance | ||
| Copper net cash unit costs (US$/lb.)1 | 1.60 - 1.80 |
| Zinc net cash unit costs (US$/lb.)1 | 0.50 - 0.60 | ||
| Steelmaking coal adjusted site cash cost of sales | 88 - 96 | ||
| (CAD$/tonne)1 | |||
| Steelmaking coal transportation costs (CAD$/tonne) | 45 - 48 | ||
| Note: |
1. This is a non-GAAP financial measure or ratio. See “Use of Non-GAAP Financial Measures and Ratios” for further information.
Click here to view Teck’s full fourth quarter results for 2022.
WEBCAST
Teck will host an Investor Conference Call to discuss its Q4/2022 financial results at 8:00 AM Eastern time, 5:00 AM Pacific time, on February 21, 2023. A live audio webcast of the conference call, together with supporting presentation slides, will be available at our website at www.teck.com. The webcast will be archived at www.teck.com
Reference:
Fraser Phillips, Senior Vice President, Investor Relations and Strategic Analysis: 604.699.4621
Chris Stannell, Public Relations Manager: 604.699.4368
USE OF NON-GAAP FINANCIAL MEASURES AND RATIOS
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 and non-GAAP ratios which are not measures recognized under IFRS and do not have a standardized meaning prescribed by IFRS or by Generally Accepted Accounting Principles (GAAP) in the United States.
The non-GAAP financial measures and non-GAAP ratios described below do not have standardized meanings under IFRS, may differ from those used by other issuers, and may not be comparable to similar financial measures and ratios reported by other issuers. These financial measures and ratios have been derived from our financial statements and applied on a consistent basis as appropriate. We disclose these financial measures and ratios because we believe they assist readers in understanding the results of our operations and financial position and provide further information about our financial results to investors. These measures should not be considered in isolation or used in substitute for other measures of performance prepared in accordance with IFRS.
Adjusted profit attributable to shareholders – For adjusted profit attributable to shareholders, we adjust profit (loss) attributable to shareholders as reported to remove the after-tax effect of certain types of transactions that reflect measurement changes on our balance sheet or are not indicative of our normal operating activities.
EBITDA – EBITDA is profit before net finance expense, provision for income taxes, and depreciation and amortization.
Adjusted EBITDA – Adjusted EBITDA is EBITDA before the pre-tax effect of the adjustments that we make to adjusted profit attributable to shareholders as described above.
Adjusted profit attributable to shareholders, EBITDA, and Adjusted EBITDA highlight items and allow us and readers to analyze the rest of our results more clearly. We believe that disclosing these measures assists readers in understanding the ongoing cash generating potential of our business in order to provide liquidity to fund working capital needs, service outstanding debt, fund future capital expenditures and investment opportunities, and pay dividends.
Gross profit before depreciation and amortization – Gross profit before depreciation and amortization is gross profit with depreciation and amortization expense added back. We believe this measure assists us and readers to assess our ability to generate cash flow from our business units or operations.
Unit costs – Unit costs for our steelmaking coal operations are total cost of goods sold, divided by tonnes sold in the period, excluding depreciation and amortization charges. We include this information as it is frequently requested by investors and investment analysts who use it to assess our cost structure and margins and compare it to similar information provided by many companies in the industry.
Adjusted site cash cost of sales – Adjusted site cash cost of sales for our steelmaking coal operations is defined as the cost of the product as it leaves the mine excluding depreciation and amortization charges, out-bound transportation costs and any one-time collective agreement charges and inventory write-down provisions.
Total cash unit costs – Total cash unit costs for our copper and zinc operations includes adjusted cash costs of sales, as described below, plus the smelter and refining charges added back in determining adjusted revenue. This presentation allows a comparison of total cash unit costs, including smelter charges, to the underlying price of copper or zinc in order to assess the margin for the mine on a per unit basis.
Net cash unit costs – Net cash unit costs of principal product, after deducting co-product and by-product margins, are also a common industry measure. By deducting the co- and by-product margin per unit of the principal product, the margin for the mine on a per unit basis may be presented in a single metric for comparison to other operations.
Adjusted cash cost of sales – Adjusted cash cost of sales for our copper and zinc operations is defined as the cost of the product delivered to the port of shipment, excluding depreciation and amortization charges, any one-time collective agreement charges or inventory write-down provisions and byproduct cost of sales. It is common practice in the industry to exclude depreciation and amortization as these costs are non-cash and discounted cash flow valuation models used in the industry substitute expectations of future capital spending for these amounts.
Adjusted operating costs – Adjusted operating costs for our energy business unit is defined as the costs of product as it leaves the mine, excluding depreciation and amortization charges, cost of diluent for blending to transport our bitumen by pipeline, cost of non-proprietary product purchased and transportation costs of our product and non-proprietary product and any one-time collective agreement charges or inventory write-down provisions.
Adjusted basic earnings per share – Adjusted basic earnings per share is adjusted profit attributable to shareholders divided by average number of shares outstanding in the period.
Adjusted diluted earnings per share – Adjusted diluted earnings per share is adjusted profit attributable to shareholders divided by average number of fully diluted shares in a period.
Adjusted site cash cost of sales per tonne – Adjusted site cash cost of sales per tonne is a non-GAAP ratio comprised of adjusted site cash cost of sales divided by tonnes sold. There is no similar financial measure in our consolidated financial statements with which to compare. Adjusted site cash cost of sales is a non-GAAP financial measure.
Profit Attributable to Shareholders and Adjusted Profit Attributable to Shareholders
| Year ended | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Three months ended | ||||||||||||
| December 31, | ||||||||||||
| December 31, | ||||||||||||
| (CAD$ in millions) | 20221 | 20212 | 20224 | 20212 | ||||||||
| Profit attributable to shareholders1 | $ | 247 | $ | 1,487 | $ | 4,089 | $ | 2,868 | ||||
| Add (deduct) on an after-tax basis: | ||||||||||||
| Asset impairment | — | (150 | ) | 952 | (150 | |||||||
| Loss on debt purchase | (4 | ) | — | 42 | — | |||||||
| QB2 variable consideration to IMSA and | ||||||||||||
| ENAMI | 7 | (16 | ) | 115 | 124 | |||||||
| Environmental costs | 203 | 19 | 99 | 79 | ||||||||
| Inventory write-downs (reversals) | (2 | ) | 8 | 36 | 2 | |||||||
| Share-based compensation | 67 | 32 | 181 | 94 | ||||||||
| Commodity derivatives | (18 | ) | 10 | (25 | ) | 15 | ||||||
| Loss from discontinued operations for | ||||||||||||
| the nine months ended September 30, | ||||||||||||
| 20223 | — | — | (791 | ) | — | |||||||
| Other | 58 | (13 | ) | 175 | 25 | |||||||
| Adjusted profit attributable to | ||||||||||||
| shareholders | $ | 558 | $ | 1,377 | $ | 4,873 | $ | 3,057 | ||||
| Basic earnings per share1 | $ | 0.48 | $ | 2.79 | $ | 7.77 | $ | 5.39 | ||||
| Diluted earnings per share1 | $ | 0.47 | $ | 2.74 | $ | 7.63 | $ | 5.31 | ||||
| Adjusted basic earnings per share | $ | 1.09 | $ | 2.58 | $ | 9.25 | $ | 5.74 | ||||
| Adjusted diluted earnings per share | $ | 1.07 | $ | 2.54 | $ | 9.09 | $ | 5.66 |
Notes:
1. Amounts for the three months and year ended December 31, 2022 are for continuing operations only.
2. Amounts for the three months and year ended December 31, 2021 are as previously reported.
3. Adjustment required to remove the effect of discontinued operations for the nine months ended September 30, 2022.
4. Adjustments for the year ended December 31, 2022 are the nine months ended September 30, 2022 as previously reported plus the three months ended December 31, 2022 for continuing operations.
Reconciliation of Basic Earnings per share to Adjusted Basic Earnings per share
| Year ended | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Three months ended | ||||||||||||
| December 31, | ||||||||||||
| December 31, | ||||||||||||
| (Per share amounts) | 20221 | 20212 | 20224 | 20212 | ||||||||
| Basic earnings per share1 | $ | 0.48 | $ | 2.79 | $ | 7.77 | $ | 5.39 | ||||
| Add (deduct): | ||||||||||||
| Asset impairment | — | (0.28 | ) | 1.81 | (0.28 | |||||||
| Loss on debt purchase | (0.01 | ) | — | 0.08 | — | |||||||
| QB2 variable consideration to IMSA and | ||||||||||||
| ENAMI | 0.01 | (0.03 | ) | 0.22 | 0.23 | |||||||
| Environmental costs | 0.40 | 0.04 | 0.19 | 0.15 | ||||||||
| Inventory write-downs (reversals) | — | 0.01 | 0.07 | — | ||||||||
| Share-based compensation | 0.13 | 0.06 | 0.34 | 0.18 | ||||||||
| Commodity derivatives | (0.04 | ) | 0.02 | (0.05 | ) | 0.03 | ||||||
| Loss from discontinued operations for | ||||||||||||
| the nine months ended September 30, | ||||||||||||
| 20223 | — | — | (1.51 | ) | — | |||||||
| Other | 0.12 | (0.03 | ) | 0.33 | 0.04 | |||||||
| Adjusted basic earnings per share | $ | 1.09 | $ | 2.58 | $ | 9.25 | $ | 5.74 |
Reconciliation of Diluted Earnings per share to Adjusted Diluted Earnings per share
| Year ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Three months ended | |||||||||||
| December 31, | |||||||||||
| December 31, | |||||||||||
| (Per share amounts) | 20221 | 20212 | 20224 | 20212 | |||||||
| Diluted earnings per share1 | $ | 0.47 | $ | 2.74 | $ | 7.63 | $ | 5.31 | |||
| Add (deduct): | |||||||||||
| Asset impairment | — | (0.28 | ) | 1.78 | (0.28 | ||||||
| Loss on debt purchase | (0.01 | ) | — | 0.08 | — |
| QB2 variable consideration to IMSA and | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ENAMI | 0.01 | (0.03 | ) | 0.21 | 0.23 | |||||||
| Environmental costs | 0.39 | 0.04 | 0.18 | 0.15 | ||||||||
| Inventory write-downs (reversals) | — | 0.01 | 0.07 | — | ||||||||
| Share-based compensation | 0.13 | 0.06 | 0.34 | 0.18 | ||||||||
| Commodity derivatives | (0.03 | ) | 0.02 | (0.05 | ) | 0.03 | ||||||
| Loss from discontinued operations for | ||||||||||||
| the nine months ended September 30, | ||||||||||||
| 20223 | — | — | (1.48 | ) | — | |||||||
| Other | 0.11 | (0.02 | ) | 0.33 | 0.04 | |||||||
| Adjusted diluted earnings per share | $ | 1.07 | $ | 2.54 | $ | 9.09 | $ | 5.66 |
Notes:
1. Amounts for the three months and year ended December 31, 2022 are for continuing operations only.
2. Amounts for the three months and year ended December 31, 2021 are as previously reported.
3. Adjustment required to remove the effect of discontinued operations for the nine months ended September 30, 2022.
4. Adjustments for the year ended December 31, 2022 are the nine months ended September 30, 2022 as previously reported plus the three months ended December 31, 2022 for continuing operations.
Reconciliation of EBITDA and Adjusted EBITDA
| Year ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Three months ended | December 31, | ||||||||||
| December 31, | |||||||||||
| (CAD$ in millions) | 20221 | 20212 | 20224 | 20212 | |||||||
| Profit before taxes1 | $ | 594 | $ | 2,208 | $ | 6,565 | $ | 4,532 | |||
| Finance expense net of finance income | 23 | 53 | 150 | 210 | |||||||
| Depreciation and amortization | 384 | 404 | 1,674 | 1,583 | |||||||
| EBITDA | 1,001 | 2,665 | 8,389 | 6,325 | |||||||
| Add (deduct): | |||||||||||
| Asset impairment | — | (215 | ) | 1,234 | (215 | ||||||
| Loss on debt purchase | (5 | ) | — | 58 | — | ||||||
| QB2 variable consideration to IMSA and | |||||||||||
| ENAMI | (13 | ) | (27 | ) | 188 | 141 |
| Environmental costs | 272 | 26 | 128 | 108 | ||||||
| Inventory write-downs (reversals) | (3 | ) | 11 | 50 | 1 | |||||
| Share-based compensation | 88 | 43 | 236 | 125 | ||||||
| Commodity derivatives | (24 | ) | 15 | (35 | ) | 22 | ||||
| Loss from discontinued operations for | ||||||||||
| the nine months ended September 30, | ||||||||||
| 20223 | — | — | (811 | ) | — | |||||
| Other | 17 | 3 | 131 | 66 | ||||||
| Adjusted EBITDA | $ | 1,333 | $ | 2,521 | $ | 9,568 | $ | 6,573 |
Notes:
1. Amounts for the three months and year ended December 31, 2022 are for continuing operations only.
2. Amounts for the three months and year ended December 31, 2021 are as previously reported.
3. Adjustment required to remove the effect of discontinued operations for the nine months ended September 30, 2022.
4. Adjustments for the year ended December 31, 2022 are the nine months ended September 30, 2022 as previously reported plus the three months ended December 31, 2022 for continuing operations.
Reconciliation of Gross Profit Before Depreciation and Amortization
| Year ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Three months ended | |||||||||
| December 31, | |||||||||
| December 31, | |||||||||
| (CAD$ in millions) | 2022 | 2021 | 2022 | 2021 | |||||
| Gross profit | $ | 1,154 | $ | 2,114 | $ | 8,571 | $ | 5,214 | |
| Depreciation and amortization | 384 | 375 | 1,674 | 1,487 | |||||
| Gross profit before depreciation and | |||||||||
| amortization | $ | 1,538 | $ | 2,489 | $ | 10,245 | $ | 6,701 | |
| Reported as: | |||||||||
| Copper | |||||||||
| Highland Valley Copper | $ | 135 | $ | 195 | $ | 738 | $ | 883 |
| Antamina | 220 | 284 | 1,021 | 992 | |||||||
| Carmen de Andacollo | 15 | 44 | 73 | 209 | |||||||
| Quebrada Blanca | (3 | ) | 13 | 8 | 42 | ||||||
| Other | (3 | ) | — | (3 | ) | — | |||||
| 364 | 536 | 1,837 | 2,126 | ||||||||
| Zinc | |||||||||||
| Trail Operations | (50 | ) | 10 | (18 | ) | 84 | |||||
| Red Dog | 179 | 273 | 1,060 | 822 | |||||||
| Other | — | 2 | 2 | 12 | |||||||
| 129 | 285 | 1,044 | 918 | ||||||||
| Steelmaking coal | 1,045 | 1,668 | 7,364 | 3,657 | |||||||
| Gross profit before depreciation and | |||||||||||
| amortization | $ | 1,538 | $ | 2,489 | $ | 10,245 | $ | 6,701 |
CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS
This news release contains certain forward-looking information and forwardlooking statements as defined in applicable securities laws (collectively referred to as forward-looking statements). These statements relate to future events or our future performance. All statements other than statements of historical fact are forward-looking statements. The use of any of the words “anticipate”, “plan”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “predict”, “potential”, “should”, “believe” and similar expressions is intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. These statements speak only as of the date of this news release.
These forward-looking statements include, but are not limited to, statements concerning: our focus and strategy; anticipated global and regional supply, demand and market outlook for our commodities; the proposed separation of our business into two independent, publicly-listed companies; terms and conditions of the Separation, including the expected distribution of EVR shares and cash, available consideration election for shareholders and the Transition Capital Structure to be retained by Teck; the timing for completion of the Separation; the tax and accounting treatment for the Separation; the proposed transaction to eliminate the multiple voting rights attached to the Class A common shares; expectation that QB2 will be a long-life, low-cost operation with major expansion potential; QB2 capital cost guidance and development capital spending in 2023; estimated timing of first copper from Line 1 at QB2; expectation that QB2 will be commissioned in 2023 and