Fourth Quarter 2018 Results February 13, 2019
Caution Regarding Forward-Looking Statements Both these slides and the accompanying oral presentation contain certain forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 and forward-looking information within the meaning of the Securities Act (Ontario). Forward-looking statements can be identified by the use of words such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variation of such words and phrases or state that certain actions, events or results “may”, “could”, “should”, “would”, “might” or “will” be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Teck to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. The forward-looking statements in these slides and the oral presentation include estimates, forecasts, and statements as to management’s expectations and guidance with respect to, among other matters, business unit and commodity production guidance, cost guidance, expectations for production at each of our operations, sales guidance, capital expenditure guidance, expectation for improvement of copper grades at Highland Valley, availability of our credit facilities, Teck’s share of remaining equity capital for the QB2 project and timing of contributions, the timing of closing of the transaction relating to QB2, the potential for an additional return of capital to shareholders following closing of the QB2 transaction, QB2 capital costs, our expectations regarding the projects and transactions described on the slide titled “Looking Forward Multiple catalyst/valuation milestones”, the expectations underlying our guidance, and our expectations regarding our business and markets. These forward-looking statements involve numerous assumptions, risks and uncertainties and actual results may vary materially. These statements are based on a number of assumptions, including, but not limited to, assumptions regarding general business and economic conditions, interest rates, the supply and demand for, inventories of, and the level and volatility of prices of coal, copper, zinc and other primary metals and minerals produced by Teck as well as oil, natural gas and petroleum products, the timing of receipt of regulatory and governmental approvals for Teck’s development projects and other operations, Teck’s costs of production and production and productivity levels, as well as those of its competitors, power prices, market competition, the accuracy of Teck’s reserve estimates (including, with respect to size, grade and recoverability) and the geological, operational and price assumptions on which these are based, tax benefits, the resolution of environmental and other proceedings, assumptions regarding the impact of our cost reduction program on our operations, our ongoing relations with our employees and partners and joint venturers, performance by customers and counterparties of their contractual obligations, and the future operational and financial performance of the company generally. Assumptions are also referred to in the footnotes included in these slides. Assumptions regarding returns of cash to shareholders include assumptions regarding our future business and prospects, other uses for cash or retaining cash, timing and amount of Teck’s equity contributions for QB2 assume that the project spending does not increase and contributions are required in accordance with the current project schedule, the timing of closing of the transaction is subject to customary closing conditions, including regulatory approvals, and may be delayed and closing might not occur if those closing conditions cannot be satisfied in the time required under the transaction agreement. The foregoing list of assumptions is not exhaustive. Events or circumstances could cause actual results to differ materially. Factors that may cause actual results to vary include, but are not limited to: adverse developments in business and economic conditions in the principal markets for Teck’s products, in credit markets, or in the supply, demand, and prices for metals and other commodities to be produced, changes in interest and currency exchange rates, failure of customers or counterparties to perform their contractual obligations, inaccurate geological or metallurgical assumptions (including with respect to the size, grade and recoverability of mineral reserves and resources), changes in taxation regimes, legal disputes or unanticipated outcomes of legal proceedings, unanticipated operational difficulties (including failure of plant, equipment or processes to operate in accordance with specifications or expectations, cost escalation, unavailability of materials and equipment, government action or delays in the receipt of permits or government approvals, industrial disturbances or other job action, and unanticipated events related to health, safety and environmental matters), political risk, social unrest, lack of available financing for Teck or its partners or co-venturers, and changes in general economic conditions or conditions in the financial markets. Our Fort Hills project is not controlled by us and construction and production schedules may be adjusted by our partners. Statements concerning future production costs or volumes are based on numerous assumptions of management regarding operating matters and on assumptions that demand for products develops as anticipated, that customers and other counterparties perform their contractual obligations, that operating and capital plans will not be disrupted by issues such as mechanical failure, unavailability of parts and supplies, labour disturbances, interruption in transportation or utilities, adverse weather conditions, and that there are no material unanticipated variations in the cost of energy or supplies. Statements regarding anticipated coal sales volumes and average coal prices for the quarter depend on timely arrival of vessels and performance of our coal-loading facilities, as well as the level of spot pricing sales. We assume no obligation to update forward-looking statements except as required under securities laws. Further information concerning risks and uncertainties associated with these forward-looking statements and our business can be found in our Annual Information Form for the year ended December 31, 2017, filed under our profile on SEDAR (www.sedar.com) and on EDGAR (www.sec.gov) under cover of Form 40-F, as well as subsequent filings that can also be found under our profile. 2
2018 Highlights • Record revenue; record EBITDA; record earnings • Fort Hills fully commissioned in Q4 2018 • QB2 project sanctioned; announced a US$1.2 billion partnership transaction with Sumitomo • Returned significant cash to shareholders: ‒ Paid $115 million in base dividends and $57 million in supplemental dividends ‒ Purchased $189 million or 6.3 million Class B shares (full year) • Moody’s upgrade to investment grade in January 2019 • Royalty on Posco Canada’s 20% share of Greenhills production substantially increased from January 1, 2019 • Recognized as one of Canada’s Top 100 Employers • Recognized as the top-ranked Metals and Mining company in the 2019 Global 100 Most Sustainable Corporations 3
Strong 2018 Earnings Q4 2018 2018 Revenue $ 3.2 billion Record $ 12.6 billion Gross profit before depreciation & amortization 1 $ 1.4 billion $ 6.1 billion Gross profit $ 1.0 billion $ 4.6 billion EBITDA $ 1.2 billion Record $ 6.2 billion Adjusted EBITDA 1 $ 1.3 billion $ 5.4 billion Profit attributable to shareholders $ 433 million Record $ 3.1 billion Adjusted profit attributable to shareholders 1 $ 500 million $ 2.4 billion Adjusted basic earnings per share 1 $ 0.87/share $ 4.13/share Adjusted diluted earnings per share 1 $ 0.86/share $ 4.07/share 4 1. Non-GAAP Financial Measure. See appendix for reconciliation.
Earnings and Adjusted Earnings $M Q4 2018 2018 Announced on January 31, 2019 that Q4 2018 earnings and EBITDA 1 Profit attributable to shareholders $ 433 $ 3,107 expected to be significantly below consensus estimates. Add (deduct): Debt purchase loss - 19 Bulk of the difference due to three factors Debt prepayment option loss 24 31 that we do not adjust for, which together Asset sales - (809) reduced earnings by $0.30/share and EBITDA by $195 million: Foreign exchange gain (3) (8) 1. Energy impacted by decline in WTI price and Environmental provisions 13 13 dramatic widening of WCS differentials Asset impairments 30 30 2. Trail Operations impacted by lower metal Other 3 (11) prices, historically low TC/RCs, and the Adjusted profit 1 $ 500 $ 2,372 KIVCET shutdown Adjusted basic earnings per share 1 $ 0.87 $ 4.13 3. Inventory write-downs related to decline in commodity prices ($80 million pre-tax) Adjusted diluted earnings per share 1 $ 0.86 $ 4.07 5 1. Non-GAAP Financial Measure. See appendix for reconciliation.
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