Teck Reports Unaudited Fourth Quarter Results for 2023 Strong fourth quarter with cash returned to shareholders and record copper production
VANCOUVER, British Columbia, Feb. 21, 2024 (GLOBE NEWSWIRE) -- Teck Resources Limited (TSX: TECK.A and TECK.B, NYSE: TECK) (Teck) today announced its unaudited fourth quarter results for 2023.
"We had strong fourth quarter performance across our business, generating adjusted EBITDA1 of $1.7 billion in the quarter, returning cash to shareholders and advancing ramp-up of our QB Operations, resulting in Teck's record quarterly copper production," said Jonathan Price, President and CEO. "We are well positioned to deliver on our strategic priorities in 2024 as we execute on the planned separation of our base metals and steelmaking coal businesses while significantly increasing our copper production."
Highlights
- Adjusted EBITDA1 was $1.7 billion in Q4 2023 and $6.4 billion for the year, driven by robust prices for steelmaking coal and copper and higher steelmaking coal sales volumes. Profit from continuing operations before taxes was $694 million in Q4 2023 and $3.9 billion for the year.
- Adjusted profit attributable to shareholders1 of $735 million, or $1.41 per share, in Q4 2023 and $2.7 billion, or $5.23 per share, for the year. Profit from continuing operations attributable to shareholders was $483 million, $0.93 per share, in Q4 2023 and $2.4 billion, $4.70 per share, for the year.
- Our liquidity as at February 21, 2024 is $7.9 billion, including $2.5 billion of cash. We generated cash flows from operations of $1.1 billion in Q4, ending the year with a cash balance of $744 million.
- We returned a total of $765 million to shareholders in 2023 through the purchase of $250 million of Class B subordinate voting shares pursuant to our normal course issuer bid, and $515 million paid to shareholders as dividends. Since 2019, we have returned $3.9 billion to shareholders, including $2.5 billion of Class B subordinate voting share buybacks.
- On February 21, 2024, the Board authorized up to a $500 million share buyback, and approved the payment of our quarterly base dividend of $0.125 per share payable on March 28, 2024 to shareholders of record on March 15, 2024.
- We achieved record quarterly copper production in Q4 2023.
Production and sales volumes in our copper and zinc business units were higher than the same period last year. Quebrada Blanca (QB) production of copper in concentrate was 34,300 tonnes in the fourth quarter and 55,500 tonnes for the year with QB operating near design throughput capacity at the end of 2023.
- Our steelmaking coal business generated $1.4 billion of gross profit before depreciation and amortization1 in Q4 with strong sales volumes of 6.1 million tonnes and realized steelmaking coal prices that averaged US$270 per tonne.
- On November 13, 2023, we announced a transformational transaction to further focus our portfolio on base metals and copper growth, with the full sale of our steelmaking coal business Elk Valley Resources (referred to as EVR). A majority stake in EVR will be sold to Glencore plc (Glencore) at an implied enterprise value of US$9.0 billion and a minority stake was sold to Nippon Steel Corporation (NSC) and POSCO.
- The transactions with NSC and POSCO closed on January 3, 2024, with NSC paying US$1.3 billion in cash on closing.
- We continued to progress our copper growth portfolio in the fourth quarter with the HVC Mine Life Extension project completing the feasibility study and submitting the permit application to the British Columbia regulatory agencies in October 2023, and permit submission to the Mexican regulatory authorities for San Nicolás in January 2024.
Note:
1. This is a non-GAAP financial measure or ratio. See “Use of Non-GAAP Financial Measures and Ratios” for further information.
Financial Summary Q4 2023
| Financial Metrics | ||||
|---|---|---|---|---|
| Q4 2023 | Q4 2022 | |||
| (CAD$ in millions, except per share data) | ||||
| Revenue | $ | 4,108 | $ | 3,140 |
| Gross profit | $ | 1,236 | $ | 1,154 |
| Gross profit before depreciation and amortization1 | $ | 1,784 | $ | 1,538 |
| Profit from continuing operations before taxes | $ | 694 | $ | 594 |
| Adjusted EBITDA1 | $ | 1,703 | $ | 1,333 |
| Profit from continuing operations attributable to shareholders | $ | 483 | $ | 247 |
| Adjusted profit attributable to shareholders1 | $ | 735 | $ | 558 |
| Basic earnings per share from continuing operations | $ | 0.93 | $ | 0.48 |
| Diluted earnings per share from continuing operations | $ | 0.92 | $ | 0.47 |
| Adjusted basic earnings per share1 | $ | 1.41 | $ | 1.09 |
| Adjusted diluted earnings per share1 | $ | 1.40 | $ | 1.07 |
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
- At QB, our focus in the fourth quarter was on achieving reliable and consistent operations. This took longer than expected to achieve and, as a result, production was lower than expected. However, by the end of December, QB was operating near design throughput capacity, and ramp-up continues in 2024, with no change in our previously disclosed annual production guidance.
- At various points during the second half of 2023, each of the operations at QB, including mine operations, crushing, grinding, flotation, tailings, desalination and concentrate handling, all operated at or above design capacity.
- On the QB2 project, construction of the molybdenum plant was substantially complete at the end of 2023 and commissioning is well underway. Ramp-up of the molybdenum plant is expected to be completed by the end of the second quarter of 2024. Additionally, all inwater works at the port have been successfully concluded, and we remain on track to finalize the construction of the offshore facilities at the port by the end of the first quarter of 2024.
- Our previously disclosed QB2 project capital cost guidance is unchanged at US$8.6 — $8.8 billion with US$500 to $700 million expected to be spent in 2024.
- We continue to advance our copper growth portfolio with completion of the feasibility study at HVC Mine Life Extension and further
progression of the feasibility studies at our San Nicolás and Zafranal projects.
- We submitted the environmental permit for the HVC Mine Life Extension to the British Columbia regulator in October 2023, and finalized a Mexican Environmental Impact Assessment (MIA-R) for San Nicolás, which was submitted in January 2024.
- On February 14, 2024, approval of the Modification of Environmental Impact Assessment (MEIA) for the mine life expansion at Antamina was received.
Safety and Sustainability Leadership
- Our High Potential Incident Frequency rate for 2023 remained low at 0.14 but was elevated compared to 2022. In response, we have investigated each incident, shared learnings across the organization and enhanced safety standards focused on managing high potential risk and related critical controls.
- Our QB and Carmen de Andacollo Operations were awarded the Copper Mark in December and in February 2024, our Red Dog Operations was awarded the Zinc Mark in recognition of environmentally and socially responsible operating practices.
- We announced an agreement with shipping company Oldendorff Carriers GmbH & Co. KG (Oldendorff) to use wind propulsion intended to reduce CO2 emissions in our steelmaking coal supply chain. The joint investment will see the vessel Dietrich Oldendorff outfitted with a Flettner Rotor sail system by mid-2024 with emissions savings expected to be in the range of 53% from baseline.
- Teck was named to the S&P Dow Jones Sustainability World Index for the 14th consecutive year, indicating that we are in the top 10 percent of the largest 2,500 companies in the S&P Global Broad Market Index based on long-term economic, environmental and social criteria. We were ranked as one of Canada’s Top 100 Employers in November and recognized in January as one of the 2024 Global 100 Most Sustainable Corporations by Corporate Knights.
Guidance
- On January 15, 2024, we disclosed our 2024 guidance, which is unchanged in this news release.
- Our guidance is outlined in summary below and our usual guidance tables, including three-year production guidance, can be found on pages 26 — 31 of Teck’s fourth quarter results for 2023 at the link below.
| 2024 Guidance – Summary | Current | |
| Production Guidance | ||
| Copper (000’s tonnes) | 465 - 540 | |
| Zinc (000’s tonnes) | 565 - 630 | |
| Refined zinc (000’s tonnes) | 275 - 290 | |
| Steelmaking coal (million tonnes) | 24.0 - 26.0 | |
| Sales Guidance – Q1 2024 | ||
| Red Dog zinc in concentrate sales (000’s tonnes) | 70 - 85 | |
| Steelmaking coal sales (million tonnes) | 5.9 - 6.3 | |
| Unit Cost Guidance | ||
| Copper net cash unit costs (US$/lb.)1 | 1.85 - 2.25 | |
| Zinc net cash unit costs (US$/lb.)1 | 0.55 - 0.65 | |
| Steelmaking coal adjusted site cash cost of sales (CAD$/tonne)1 | 95 - 110 | |
| Steelmaking coal transportation costs (CAD$/tonne) | 47 - 51 |
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 2023.
WEBCAST
Teck will host an Investor Conference Call to discuss its Q4/2023 financial results at 11:00 AM Eastern time, 8:00 AM Pacific time, on February 22, 2024. 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 annual financial statements are prepared in accordance with IFRS® Accounting Standards as issued by the International Accounting Standards Board (IASB). This document refers to a number of non-GAAP financial measures and non-GAAP ratios which are not measures recognized under IFRS Accounting Standards and do not have a standardized meaning prescribed by IFRS Accounting Standards 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 Accounting Standards, 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 as a substitute for other measures of performance prepared in accordance with IFRS Accounting Standards.
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.
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.
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 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.
Profit Attributable to Shareholders and Adjusted Profit Attributable to Shareholders
| Three months | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ended | Year ended | ||||||||||||
| December 31, | December 31, | ||||||||||||
| (CAD$ in millions) | 2023 | 2022 | 2023 | 20221 | |||||||||
| Profit from continuing operations | |||||||||||||
| attributable to shareholders | $ | 483 | $ | 247 | $ | 2,435 | $ | 4,089 | |||||
| Add (deduct) on an after-tax basis: | |||||||||||||
| Asset impairment | — | — | — | 952 | |||||||||
| Loss (gain) on debt purchase | — | (4 | ) | — | 42 | ||||||||
| QB2 variable consideration to IMSA and | |||||||||||||
| ENAMI | 69 | 7 | 95 | 115 | |||||||||
| Environmental costs | 132 | 203 | 123 | 99 | |||||||||
| Inventory write-downs (reversals) | 14 | (2 | ) | 18 | 36 | ||||||||
| Share-based compensation | 4 | 67 | 85 | 181 | |||||||||
| Commodity derivatives | (20 | ) | (18 | ) | 9 | (25 | ) | ||||||
| Loss (gain) on disposal or contribution of | |||||||||||||
| assets | 8 | 6 | (178 | ) | 7 | ||||||||
| Elkview business interruption claim | — | — | (150 | ) | — | ||||||||
| Chilean tax reform | — | — | 69 | — | |||||||||
| Loss from discontinued operations2 | — | — | — | (791 | ) | ||||||||
| Other | 45 | 52 | 201 | 168 | |||||||||
| Adjusted profit attributable to shareholders | $ | 735 | $ | 558 | $ | 2,707 | $ | 4,873 | |||||
| Basic earnings per share from continuing | |||||||||||||
| operations | $ | 0.93 | $ | 0.48 | $ | 4.70 | $ | 7.77 | |||||
| Diluted earnings per share from continuing | |||||||||||||
| operations | $ | 0.92 | $ | 0.47 | $ | 4.64 | $ | 7.63 | |||||
| Adjusted basic earnings per share | $ | 1.41 | $ | 1.09 | $ | 5.23 | $ | 9.25 |
| Adjusted diluted earnings per share | $ | 1.40 | $ | 1.07 | $ | 5.15 | $ | 9.09 |
| Notes: |
1. Adjustments for the twelve months 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.
2. Adjustment required to remove the effect of discontinued operations for the nine months ended September 30, 2022.
Reconciliation of Basic Earnings per share to Adjusted Basic Earnings per share
| Three months ended | Year ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, | December 31, | |||||||||||
| (Per share amounts) | 2023 | 2022 | 2023 | 20221 | ||||||||
| Basic earnings per share from continuing | ||||||||||||
| operations | $ | 0.93 | $ | 0.48 | $ | 4.70 | $ | 7.77 | ||||
| Add (deduct): | ||||||||||||
| Asset impairment | — | — | — | 1.81 | ||||||||
| Loss (gain) on debt purchase | — | (0.01 | ) | — | 0.08 | |||||||
| QB2 variable consideration to IMSA and | ||||||||||||
| ENAMI | 0.13 | 0.01 | 0.18 | 0.22 | ||||||||
| Environmental costs | 0.25 | 0.40 | 0.24 | 0.19 | ||||||||
| Inventory write-downs | 0.02 | — | 0.03 | 0.07 | ||||||||
| Share-based compensation | 0.01 | 0.13 | 0.17 | 0.34 | ||||||||
| Commodity derivatives | (0.04 | ) | (0.04 | ) | 0.02 | (0.05 | ) | |||||
| Loss (gain) on disposal or contribution of | ||||||||||||
| assets | 0.02 | 0.01 | (0.34) | 0.01 | ||||||||
| Elkview business interruption claim | — | — | (0.29) | — | ||||||||
| Chilean tax reform | — | — | 0.13 | — | ||||||||
| Loss from discontinued operations2 | — | — | — | (1.51 | ) | |||||||
| Other | 0.09 | 0.11 | 0.39 | 0.32 | ||||||||
| Adjusted basic earnings per share | $ | 1.41 | $ | 1.09 | $ | 5.23 | $ | 9.25 |
Notes:
1. Adjustments for the twelve months 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.
2. Adjustment required to remove the effect of discontinued operations for the nine months ended September 30, 2022.
Reconciliation of Diluted Earnings per share to Adjusted Diluted Earnings per share
| Three months ended | Year ended | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, | December 31, | ||||||||||||
| (Per share amounts) | 2023 | 2022 | 2023 | 20221 | |||||||||
| Diluted earnings per share from | |||||||||||||
| continuing operations | $ | 0.92 | $ | 0.47 | $ | 4.64 | $ | 7.63 | |||||
| Add (deduct): | |||||||||||||
| Asset impairment | — | — | — | 1.78 | |||||||||
| Loss (gain) on debt purchase | — | (0.01 | ) | — | 0.08 | ||||||||
| QB2 variable consideration to IMSA and | |||||||||||||
| ENAMI | 0.13 | 0.01 | 0.18 | 0.21 | |||||||||
| Environmental costs | 0.25 | 0.39 | 0.23 | 0.18 | |||||||||
| Inventory write-downs | 0.02 | — | 0.03 | 0.07 | |||||||||
| Share-based compensation | 0.01 | 0.13 | 0.16 | 0.34 | |||||||||
| Commodity derivatives | (0.04 | ) | (0.03 | ) | 0.02 | (0.05 | ) | ||||||
| Loss (gain) on disposal or contribution of | |||||||||||||
| assets | 0.02 | 0.01 | (0.33 | ) | 0.01 | ||||||||
| Elkview business interruption claim | — | — | (0.29 | ) | — | ||||||||
| Chilean tax reform | — | — | 0.13 | — | |||||||||
| Loss from discontinued operations2 | — | — | — | (1.48 | ) | ||||||||
| Other | 0.09 | 0.10 | 0.38 | 0.32 | |||||||||
| Adjusted diluted earnings per share | $ | 1.40 | $ | 1.07 | $ | 5.15 | $ | 9.09 |
Notes:
1. Adjustments for the twelve months 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.
2. Adjustment required to remove the effect of discontinued operations for the nine months ended September 30, 2022.
Reconciliation of EBITDA and Adjusted EBITDA
Three months ended Year ended December 31, December 31, (CAD$ in millions) 2023 2022 2023 20221
Profit from continuing operations before
| taxes | $ 694$ | 594$ | 3,944$ | 6,565 |
| Finance expense net of finance income | 54 | 23 | 162 | 150 |
| Depreciation and amortization | 548 | 384 | 1,931 | 1,674 |
| EBITDA | 1,296 | 1,001 | 6,037 | 8,389 |
Add (deduct):
Asset impairment — — — 1,234 Loss (gain) on debt purchase — (5) — 58 QB2 variable consideration to IMSA and
| ENAMI | 115 | (13) | 156 | 188 |
| Environmental costs | 182 | 272 | 168 | 128 |
| Inventory write-downs (reversals) | 20 | (3) | 26 | 50 |
| Share-based compensation | 3 | 88 | 107 | 236 |
| Commodity derivatives | (27) | (24) | 12 | (35 ) |
Loss (gain) on disposal or contribution of
| assets | 11 | 8 | (244) | 9 |
| Elkview business interruption claim | — | — | (221) | — |
| EBITDA from discontinued operations2 | — | — | — | (811 ) |
| Other | 103 | 9 | 326 | 122 |
| Adjusted EBITDA | $ 1,703$ | 1,333$ | 6,367$ | 9,568 |
Notes:
1. Adjustments for the twelve months 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.
2. Adjustment required to remove the effect of discontinued operations for the nine months ended September 30, 2022.
Reconciliation of Gross Profit Before Depreciation and Amortization
Three months ended Year ended December 31, December 31,
| (CAD$ in millions) | 2023 | 2022 | 2023 | 2022 |
| Gross profit | $ 1,236$ | 1,154$ | 5,143$ | 8,571 |
| Depreciation and amortization | 548 | 384 | 1,931 | 1,674 |
Gross profit before depreciation and amortization $ 1,784 $ 1,538 $ 7,074 $ 10,245
Reported as:
Copper
| Highland Valley Copper | $ 101$ | 135$ | 391$ | 738 |
| Antamina | 228 | 220 | 899 | 1,021 |
| Carmen de Andacollo | 34 | 15 | 44 | 73 |
| Quebrada Blanca | (79) | (3) | (61) | 8 |
| Other | (3) | (3) | (8) | (3 ) |
| 281 | 364 | 1,265 | 1,837 |
Zinc
| Trail Operations | 12 | (50) | 103 | (18 ) | |
| Red Dog | 141 | 179 | 611 | 1,060 | |
| Other | (2) | — | (6) | 2 | |
| 151 | 129 | 708 | 1,044 | ||
| Steelmaking coal | 1,352 | 1,045 | 5,101 | 7,364 |
Gross profit before depreciation and amortization $ 1,784 $ 1,538 $ 7,074 $ 10,245
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