The Prospector News

Teck Reports Unaudited First Quarter Results for 2024

You have opened a direct link to the current edition PDF

Open PDF Close
Uncategorized

Share this news article

Teck Reports Unaudited First Quarter Results for 2024

 

 

 

 

 

Teck Resources Limited (TSX: TECK.A and TECK.B) (NYSE: TECK) announced its unaudited first quarter results for 2024.

 

“All outstanding major construction at our QB operation was completed in the first quarter, including the shiploader and molybdenum plant, and we marked the first shipment of concentrate from the completed port facility,” said Jonathan Price, President and CEO. “We had strong first quarter performance across our business, generating $1.7 billion of Adjusted EBITDA1 with steadily increasing quarterly copper production as QB ramp-up advances, and we continued to return cash to shareholders.”

 

Highlights

  • Adjusted EBITDA1 of $1.7 billion in Q1 2024 was driven by strong prices for steelmaking coal and copper, partly offset by lower zinc prices and lower steelmaking coal sales volumes. Profit from continuing operations before taxes was $741 million in Q1 2024.
  • Adjusted profit from continuing operations attributable to shareholders1 was $392 million, or $0.76 per share, in Q1 2024. Profit from continuing operations attributable to shareholders was $343 million, $0.66 per share, in Q1 2024.
  • Our liquidity as at April 24, 2024 is $7.1 billion, including $1.6 billion of cash. Excluding the payment of income taxes of $1.3 billion, primarily related to prior years that was anticipated, we generated cash flows from operations of $1.4 billion in Q1, ending the first quarter with a cash balance of $1.3 billion.
  • We returned a total of $145 million to shareholders in the first quarter through the purchase of $80 million of Class B subordinate voting shares pursuant to our normal course issuer bid, and $65 million paid to shareholders as dividends.
  • Copper production increased 74% to 99,000 tonnes in the first quarter, with QB producing 43,300 tonnes. QB production was higher than the fourth quarter of 2023, as the operation continues to ramp-up. Average copper prices were US$3.83 per pound in the first quarter and following quarter end, spot copper prices reached two year highs, trading in excess of US$4.40 per pound.
  • At QB, construction was completed and demobilization of the construction workforce was substantially advanced by the end of the quarter. We successfully loaded our first vessel using the shiploader, and the molybdenum plant will be ramped-up in the second quarter of 2024.
  • Zinc in concentrate production increased by 10% to 159,800 tonnes in the first quarter, and sales from Red Dog of 84,600 tonnes were within our previously disclosed guidance.
  • Our steelmaking coal business unit generated $1.4 billion in gross profit before depreciation and amortization1 in Q1, with sales volumes of 5.9 million tonnes and an average realized steelmaking coal price of US$297 per tonne.
  • We closed the sale of the 20% minority interest in Elk Valley Resources (EVR), our steelmaking coal business, to Nippon Steel Corporation (NSC) on January 3, 2024, with NSC exchanging its 2.5% interest in Elkview Operations, paying US$1.3 billion in cash on closing, plus US$0.4 billion to be paid to Teck from EVR cash flows. Also, on January 3, 2024, POSCO exchanged its 2.5% interest in Elkview Operations and its 20% interest in the Greenhills joint venture for a 3% interest in EVR.

 

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 Q1 2024

 

Financial Metrics

(CAD$ in millions, except per share data)
Q1 2024 Q1 2023
Revenue $ 3,988 $ 3,785
Gross profit $ 1,289 $ 1,666
Gross profit before depreciation and amortization1 $ 1,919 $ 2,089
Profit from continuing operations before taxes $ 741 $ 1,856
Adjusted EBITDA1 $ 1,693 $ 1,972
Profit from continuing operations attributable to shareholders $ 343 $ 1,166
Adjusted profit from continuing operations attributable to shareholders1 $ 392 $ 930
Basic earnings per share from continuing operations $ 0.66 $ 2.27
Diluted earnings per share from continuing operations $ 0.65 $ 2.23
Adjusted basic earnings per share from continuing operations1 $ 0.76 $ 1.81
Adjusted diluted earnings per share from continuing operations1 $ 0.75 $ 1.78

 

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

  • Construction of QB was completed and demobilization of contractors was substantially advanced at the end of the quarter.
  • We successfully loaded our first vessel of QB concentrate using the shiploader, and the molybdenum plant will be ramped-up in the second quarter of 2024.
  • Our QB2 project capital cost guidance is unchanged at US$8.6–$8.8 billion.
  • Copper production at QB was 43,300 tonnes during the first quarter, an increase from the fourth quarter as ramp-up continues. Our previously disclosed annual production and unit cost guidance for QB is unchanged.
  • We continued to advance our industry-leading copper growth portfolio, with a focus on completing feasibility studies, advancing detailed engineering work, project execution planning and progressing permitting, particularly at the HVC Mine Life Extension, San Nicolás and Zafranal.

 

Safety and Sustainability Leadership

  • Our High-Potential Incident Frequency rate was 0.06 in the first quarter, lower than the same period in 2023.
  • We released our 23rd annual Sustainability Report, outlining Teck’s 2023 sustainability performance, including progress in areas such as decarbonization, diversity and working towards a nature positive future.

 

Guidance

  • There has been no change to our previously disclosed guidance. Our guidance is outlined in summary below and our usual guidance tables, including three-year production guidance, can be found on pages 25 – 29 of Teck’s first quarter results for 2024 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 – Q2 2024  
Red Dog zinc in concentrate sales (000’s tonnes) 50 – 60
Steelmaking coal sales (million tonnes) 6.0 – 6.4
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 first quarter results for 2024.

 

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). Our interim financial results are prepared in accordance with IAS 34, Interim Financial Reporting (IAS 34). 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 from continuing operations attributable to shareholders – For adjusted profit from continuing operations attributable to shareholders, we adjust profit from continuing operations 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 from continuing operations attributable to shareholders as described above.

 

Adjusted profit from continuing operations 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 from continuing operations – Adjusted basic earnings per share from continuing operations is adjusted profit from continuing operations attributable to shareholders divided by average number of shares outstanding in the period.

 

Adjusted diluted earnings per share from continuing operations – Adjusted diluted earnings per share from continuing operations is adjusted profit from continuing operations 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, outbound 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 by-product 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 from Continuing Operations Attributable to Shareholders and Adjusted Profit from Continuing Operations Attributable to Shareholders

 

 

  Three months ended
March 31,
(CAD$ in millions)   2024     2023  
     
Profit from continuing operations attributable to shareholders $ 343   $ 1,166  
Add (deduct) on an after-tax basis:    
QB2 variable consideration to IMSA and ENAMI   10     2  
Environmental costs   (17 )   13  
Inventory write-downs   19      
Share-based compensation   27     18  
Commodity derivatives   2     (4 )
Gain on disposal or contribution of assets   (6 )   (186 )
Elkview business interruption claim       (68 )
Other   14     (11 )
     
Adjusted profit from continuing operations attributable to shareholders $ 392   $ 930  
     
Basic earnings per share from continuing operations $ 0.66   $ 2.27  
Diluted earnings per share from continuing operations $ 0.65   $ 2.23  
Adjusted basic earnings per share from continuing operations $ 0.76   $ 1.81  
Adjusted diluted earnings per share from continuing operations $ 0.75   $ 1.78  
     

 

 

Reconciliation of Basic Earnings per share from Continuing Operations to Adjusted Basic Earnings per share from Continuing Operations

 

 

  Three months ended
March 31,
(Per share amounts)   2024     2023  
     
Basic earnings per share from continuing operations $ 0.66   $ 2.27  
Add (deduct):    
QB2 variable consideration to IMSA and ENAMI   0.02      
Environmental costs   (0.03 )   0.03  
Inventory write-downs   0.04      
Share-based compensation   0.05     0.03  
Commodity derivatives       (0.01 )
Gain on disposal or contribution of assets   (0.01 )   (0.36 )
Elkview business interruption claim       (0.13 )
Other   0.03     (0.02 )
     
Adjusted basic earnings per share from continuing operations $ 0.76   $ 1.81  
 

 

 

Reconciliation of Diluted Earnings per share from Continuing Operations to Adjusted Diluted Earnings per share from Continuing Operations

 

 

  Three months ended
March 31,
(Per share amounts)   2024     2023  
     
Diluted earnings per share from continuing operations $ 0.65   $ 2.23  
Add (deduct):    
QB2 variable consideration to IMSA and ENAMI   0.02      
Environmental costs   (0.03 )   0.03  
Inventory write-downs   0.04      
Share-based compensation   0.05     0.03  
Commodity derivatives    —     (0.01 )
Gain on disposal or contribution of assets   (0.01 )   (0.36 )
Elkview business interruption claim    —     (0.13 )
Other   0.03     (0.01 )
     
Adjusted diluted earnings per share from continuing operations $ 0.75   $ 1.78  
 

 

 

Reconciliation of EBITDA and Adjusted EBITDA

 

 

  Three months ended
March 31,
(CAD$ in millions)   2024     2023  
     
Profit from continuing operations before taxes $ 741   $ 1,856  
Finance expense net of finance income   231     30  
Depreciation and amortization   630     423  
     
EBITDA   1,602     2,309  
     
Add (deduct):    
QB2 variable consideration to IMSA and ENAMI   20     2  
Environmental costs   (29 )   17  
Inventory write-downs   41      
Share-based compensation   35     22  
Commodity derivatives   2     (6 )
Gain on disposal or contribution of assets   (8 )   (258 )
Elkview business interruption claim    —     (102 )
Other   30     (12 )
     
Adjusted EBITDA $ 1,693   $ 1,972  
 

 

 

Reconciliation of Gross Profit Before Depreciation and Amortization

 

 

  Three months ended
March 31,
(CAD$ in millions)   2024     2023  
     
Gross profit $ 1,289   $ 1,666  
Depreciation and amortization   630     423  
     
Gross profit before depreciation and amortization $ 1,919   $ 2,089  
     
Reported as:    
Copper    
Quebrada Blanca $ 66   $ (1 )
Highland Valley Copper   112     136  
Antamina   197     230  
Carmen de Andacollo   (4 )   12  
Other       (4 )
    371     373  
Zinc    
Trail Operations   25     36  
Red Dog   108     127  
Other   (7 )   10  
    126     173  
Steelmaking coal   1,422     1,543  
     
Gross profit before depreciation and amortization $ 1,919   $ 2,089  

 

Posted April 25, 2024

Share this news article

MORE or "UNCATEGORIZED"


OUTCROP SILVER ACHIEVES EXCEPTIONAL RECOVERY OF 96.3% SILVER AND 98.5% GOLD IN UPDATED METALLURGICAL TESTING AT SANTA ANA

Outcrop Silver & Gold Corporation (TSX-V: OCG) (OTCQX: OCGSF)... READ MORE

June 25, 2024

Emerita Intersects High Grade Copper-Gold Mineralization at El Cura; Mobilizes Second Rig to Accelerate El Cura Drill Program

Emerita Resources Corp. (TSX-V: EMO) (OTCQB: EMOTF) (FSE: LLJA) h... READ MORE

June 25, 2024

Troilus Confirms Excellent Metallurgical Recoveries at Zone X22 With Completed Pilot Plant Test Program

Troilus Gold Corp. (TSX: TLG) (OTCQX: CHXMF) (FSE: CM5R) is pleas... READ MORE

June 25, 2024

AERO ENERGY AND FORTUNE BAY INTERSECT STRONG RADIOACTIVITY IN SECOND DRILL HOLE AT THE MURMAC URANIUM PROJECT

Fortune Bay Corp. (TSX-V: FOR) (FWB: 5QN) (OTCQB: FTBYF) is plea... READ MORE

June 25, 2024

Drilling Continues to Expand Gold Zones at OKO – 10.0m @ 9.7 g/t Au & 52.3m @ 2.1 g/t Au

G2 Goldfields Inc. (TSX: GTWO) (OTCQX: GUYGF) is pleased to provi... READ MORE

June 25, 2024

Copyright 2024 The Prospector News