Teck Resources Limited (TSX: TECK.A and TECK.B) (NYSE: TECK) announced its unaudited third quarter results for 2021.
“The extremely favourable commodity price environment – particularly for steelmaking coal – combined with solid operational performance resulted in record quarterly adjusted EBITDA and record adjusted profit in the third quarter,” said Don Lindsay, President and CEO. “Heading into the fourth quarter, we are focused on continuing to optimize sales and production to capitalize on high commodity prices and advancing our priority QB2 copper project.”
Highlights
Note:
Financial Summary Q3 2021
Financial Metrics (CAD$ in millions, except per share data) |
Q3 2021 | Q3 2020 | ||||
Revenues | $ | 3,970 | $ | 2,291 | ||
Gross profit | $ | 1,662 | $ | 291 | ||
Gross profit before depreciation and amortization1 | $ | 2,093 | $ | 703 | ||
Adjusted EBITDA1 | $ | 2,096 | $ | 638 | ||
Profit attributable to shareholders | $ | 816 | $ | 61 | ||
Adjusted profit attributable to shareholders1 | $ | 1,015 | $ | 130 | ||
Basic earnings per share | $ | 1.53 | $ | 0.11 | ||
Diluted earnings per share | $ | 1.51 | $ | 0.11 | ||
Adjusted basic earnings per share1 | $ | 1.91 | $ | 0.24 | ||
Adjusted diluted earnings per share1 | $ | 1.88 | $ | 0.24 |
Note:
1. Non-GAAP Financial Measure. See “Use of Non-GAAP Financial Measures” section of the MD&A for further information and reconciliation.
Key Updates
Executing on our copper growth strategy – QB2 a long-life, low-cost operation with major expansion potential
Steelmaking coal supply chain transformation – providing optionality and reliability in a high-price environment
Liquidity
Guidance
2021 Guidance – Summary |
|
Production Guidance | |
Copper (000’s tonnes) | 275 – 290 |
Zinc (000’s tonnes) | 605 – 630 |
Refined zinc (000’s tonnes) | 285 – 290 |
Steelmaking coal (million tonnes) | 25 – 26 |
Bitumen (million barrels) | 6.6 – 8.1 |
Sales Guidance – Q4 2021 | |
Red Dog zinc in concentrate sales (000’s tonnes) | 140 – 155 |
Steelmaking coal sales (million tonnes) | 6.4 – 6.8 |
Unit Cost Guidance | |
Copper net cash unit costs (US$/lb.) | $ 1.30 – 1.40 |
Zinc net cash unit costs (US$/lb.) | $ 0.35 – 0.40 |
Steelmaking coal adjusted site cash cost of sales (CAD$/tonne) | $ 59 – 64 |
Steelmaking coal transportation costs (CAD$/tonne) | $ 39 – 42 |
Bitumen adjusted operating costs (CAD$/barrel) | $ 40 – 44 |
Click here to view Teck’s full third quarter results for 2021.
USE OF 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 and do not have a standardized meaning prescribed by IFRS or Generally Accepted Accounting Principles (GAAP) in the United States.
The Non-GAAP Measures described below do not have standardized meanings under IFRS, may differ from those used by other issuers, and may not be comparable to such measures as reported by others. These measures have been derived from our financial statements and applied on a consistent basis as appropriate. We disclose these measures because we believe they assist readers in understanding the results of our operations and financial position and are meant to 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, we adjust profit 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. We believe adjusted profit helps us and readers better understand the results of our normal operating activities and the ongoing cash generating potential of our business.
Adjusted basic earnings per share – Adjusted basic earnings per share is adjusted profit divided by average number of shares outstanding in the period.
Adjusted diluted earnings per share – Adjusted diluted earnings per share is adjusted profit divided by average number of fully diluted shares in a period.
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.
The adjustments described above to profit attributable to shareholders and 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 the 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.
Profit (Loss) and Adjusted Profit
Three months ended September 30, |
Nine months ended September 30, |
||||||||||||||
(CAD$ in millions) | 2021 | 2020 | 2021 | 2020 | |||||||||||
Profit (loss) attributable to shareholders | $ | 816 | $ | 61 | $ | 1,381 | $ | (400 | ) | ||||||
Add (deduct) on an after-tax basis: | |||||||||||||||
Asset impairment | — | — | — | 474 | |||||||||||
COVID-19 costs | — | 64 | — | 233 | |||||||||||
QB2 variable consideration to IMSA and ENAMI | 97 | — | 140 | (34 | ) | ||||||||||
Environmental costs | 49 | 27 | 60 | 9 | |||||||||||
Inventory write-downs (reversals) | — | 11 | (6 | ) | 76 | ||||||||||
Share-based compensation | 28 | 18 | 62 | 13 | |||||||||||
Commodity derivatives | 10 | (26 | ) | 5 | (31 | ) | |||||||||
Other | 15 | (25 | ) | 38 | (27 | ) | |||||||||
Adjusted profit attributable to shareholders | $ | 1,015 | $ | 130 | $ | 1,680 | $ | 313 | |||||||
Basic earnings per share | $ | 1.53 | $ | 0.11 | $ | 2.60 | $ | (0.75 | ) | ||||||
Diluted earnings per share | $ | 1.51 | $ | 0.11 | $ | 2.56 | $ | (0.75 | ) | ||||||
Adjusted basic earnings per share | $ | 1.91 | $ | 0.24 | $ | 3.16 | $ | 0.58 | |||||||
Adjusted diluted earnings per share | $ | 1.88 | $ | 0.24 | $ | 3.11 | $ | 0.58 | |||||||
Reconciliation of Basic Earnings per share to Adjusted Basic Earnings per share
Three months ended September 30, |
Nine months ended September 30, |
||||||||||||||
(Per share amounts) | 2021 | 2020 | 2021 | 2020 | |||||||||||
Basic earnings (loss) per share | $ | 1.53 | $ | 0.11 | $ | 2.60 | $ | (0.75 | ) | ||||||
Add (deduct): | |||||||||||||||
Asset impairment | — | — | — | 0.88 | |||||||||||
COVID-19 costs | — | 0.12 | — | 0.43 | |||||||||||
QB2 variable consideration to IMSA and ENAMI | 0.18 | — | 0.26 | (0.06 | ) | ||||||||||
Environmental costs | 0.09 | 0.05 | 0.11 | 0.02 | |||||||||||
Inventory write-downs (reversals) | — | 0.02 | (0.01 | ) | 0.14 | ||||||||||
Share-based compensation | 0.05 | 0.04 | 0.12 | 0.03 | |||||||||||
Commodity derivatives | 0.02 | (0.05 | ) | 0.01 | (0.06 | ) | |||||||||
Other | 0.04 | (0.05 | ) | 0.07 | (0.05 | ) | |||||||||
Adjusted basic earnings per share | $ | 1.91 | $ | 0.24 | $ | 3.16 | $ | 0.58 | |||||||
Reconciliation of Diluted Earnings per share to Adjusted Diluted Earnings per share
Three months ended September 30, |
Nine months ended September 30, |
||||||||||||||
(Per share amounts) | 2021 | 2020 | 2021 | 2020 | |||||||||||
Diluted earnings (loss) per share | $ | 1.51 | $ | 0.11 | $ | 2.56 | $ | (0.75 | ) | ||||||
Add (deduct): | |||||||||||||||
Asset impairment | — | — | — | 0.88 | |||||||||||
COVID-19 costs | — | 0.12 | — | 0.43 | |||||||||||
QB2 variable consideration to IMSA and ENAMI | 0.18 | — | 0.26 | (0.06 | ) | ||||||||||
Environmental costs | 0.09 | 0.05 | 0.11 | 0.02 | |||||||||||
Inventory write-downs (reversals) | — | 0.02 | (0.01 | ) | 0.14 | ||||||||||
Share-based compensation | 0.05 | 0.04 | 0.11 | 0.03 | |||||||||||
Commodity derivatives | 0.02 | (0.05 | ) | 0.01 | (0.06 | ) | |||||||||
Other | 0.03 | (0.05 | ) | 0.07 | (0.05 | ) | |||||||||
Adjusted diluted earnings per share | $ | 1.88 | $ | 0.24 | $ | 3.11 | $ | 0.58 | |||||||
Reconciliation of EBITDA and Adjusted EBITDA
Three months ended September 30, |
Nine months ended September 30, |
||||||||||||||
(CAD$ in millions) | 2021 | 2020 | 2021 | 2020 | |||||||||||
Profit (loss) | $ | 840 | $ | 25 | $ | 1,392 | $ | (471 | ) | ||||||
Finance expense net of finance income | 55 | 63 | 157 | 224 | |||||||||||
Provision for (recovery of) income taxes | 514 | 19 | 932 | (116 | ) | ||||||||||
Depreciation and amortization | 431 | 412 | 1,179 | 1,104 | |||||||||||
EBITDA | 1,840 | 519 | 3,660 | 741 | |||||||||||
Add (deduct): | |||||||||||||||
Asset impairment | — | — | — | 647 | |||||||||||
COVID-19 costs | — | 107 | — | 336 | |||||||||||
QB2 variable consideration to IMSA and ENAMI | 97 | — | 168 | (56 | ) | ||||||||||
Environmental costs | 67 | 37 | 82 | 12 | |||||||||||
Inventory write-downs (reversals) | — | 18 | (10 | ) | 111 | ||||||||||
Share-based compensation | 35 | 25 | 82 | 18 | |||||||||||
Commodity derivatives | 14 | (35 | ) | 7 | (42 | ) | |||||||||
Other | 43 | (33 | ) | 63 | (36 | ) | |||||||||
Adjusted EBITDA | $ | 2,096 | $ | 638 | $ | 4,052 | $ | 1,731 | |||||||
Reconciliation of Gross Profit Before Depreciation and Amortization
Three months ended September 30, |
Nine months ended September 30, |
|||||||||||||||
(CAD$ in millions) | 2021 | 2020 | 2021 | 2020 | ||||||||||||
Gross profit | $ | 1,662 | $ | 291 | $ | 3,005 | $ | 828 | ||||||||
Depreciation and amortization | 431 | 412 | 1,179 | 1,104 | ||||||||||||
Gross profit before depreciation and amortization | $ | 2,093 | $ | 703 | $ | 4,184 | $ | 1,932 | ||||||||
Reported as: | ||||||||||||||||
Copper | ||||||||||||||||
Highland Valley Copper | $ | 292 | $ | 121 | $ | 688 | $ | 291 | ||||||||
Antamina | 252 | 173 | 708 | 356 | ||||||||||||
Carmen de Andacollo | 59 | 31 | 165 | 107 | ||||||||||||
Quebrada Blanca | 7 | 11 | 29 | 18 | ||||||||||||
Other | — | — | — | — | ||||||||||||
610 | 336 | 1,590 | 772 | |||||||||||||
Zinc | ||||||||||||||||
Trail Operations | 34 | 14 | 74 | 38 | ||||||||||||
Red Dog | 333 | 255 | 549 | 529 | ||||||||||||
Other | (1 | ) | 14 | 10 | 31 | |||||||||||
366 | 283 | 633 | 598 | |||||||||||||
Steelmaking coal | 1,120 | 120 | 1,989 | 761 | ||||||||||||
Energy | (3 | ) | (36 | ) | (28 | ) | (199 | ) | ||||||||
Gross profit before depreciation and amortization | $ | 2,093 | $ | 703 | $ | 4,184 | $ | 1,932 | ||||||||
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