Teck Resources Limited Q3 2024 Earnings Call

Overview
Teck Resources Limited (NYSE:TECK) held its Third Quarter 2024 Earnings Call on October 24, announcing significant shareholder returns and a strategic shift towards energy transition metals. Led by CEO Jonathan Price and CFO Crystal Prystai, the company reported strong financial performance with a record shareholder return of $720 million in Q3 and a $1.5 billion debt reduction. Operationally, Teck achieved record copper production despite lower-grade ore and completed the QB2 project, with plans to further increase production by year-end. Adjusted EBITDA more than doubled year-over-year, driven by robust copper and zinc prices.

Key Takeaways

• Transitioned to a pure play in energy transition metals after divesting steelmaking coal interests.
• Record shareholder returns of $720 million for Q3, totaling over $1.3 billion year-to-date.
• Debt reduced by $1.5 billion, achieving a net cash position of $1.8 billion as of September 30, 2024.
• Copper production reached 52,500 tonnes in Q3, with plans to ramp up further by year-end.
• Adjusted EBITDA and EPS significantly increased, despite $828 million impairment charge on Trail operations.
• Zinc gross profit rose to $358 million, benefitting from improved performance at Red Dog.
• Share buybacks to continue at around $400 million per quarter into Q4 and 2025.

Company Outlook

• 2024 copper production guidance narrowed to 420,000–455,000 tonnes.
• Near-term copper projects are advancing towards potential sanctioning in 2025, with expected significant cash flows starting next year.
• Continued focus on balancing growth strategy and shareholder returns, supported by a $3.25 billion share buyback program.

Bearish Highlights

• Anticipated lower high-grade ore production impacts copper guidance.
• Q3 results affected by $828 million impairment charge on Trail operations.

Bullish Highlights

• Strong copper and zinc prices drove financial performance, with copper gross profit at $604 million.
• Zinc segment saw increased gross profit due to higher prices and operational performance.

Questions and Answers Highlights

• CEO Jonathan Price discussed production guidance for 2025, confirming robust designed throughput at the QB site, with potential increases anticipated.
• CFO Crystal Prystai emphasized maintaining cost guidance despite production forecasts.
• Ian Anderson commented on the zinc market, with expectations for sustained strength through 2025 due to concentrate shortages.

Teck Resources continues to evolve into a pure play energy transition metals company, making meaningful operational and financial advancements while managing production guidance and operational costs. The upcoming Strategy Day and site visit on November 5 will offer insights into their strategic direction.

InvestingPro Insights

Teck Resources has strong financial metrics, with a market capitalization of $24.05 billion USD and maintaining dividend payments for 15 consecutive years. Analysts predict profitability this year, supported by reported growth in adjusted EBITDA and robust copper and zinc segment performance. Revenue grew 5.88% in the last twelve months, reflecting operational achievements like record copper production.

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