Teck(TECK) - 2025 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported an adjusted EBITDA of $722 million for Q2 2025, reflecting a 3% increase compared to the same period last year, primarily due to strong performance in the zinc segment and reduced corporate overhead costs [28][29][30] - Year-to-date, the company has returned over $1.1 billion to shareholders through dividends and share buybacks, with $548 million returned in Q2 alone [29][39] Business Line Data and Key Metrics Changes - In the copper segment, gross profit before depreciation and amortization declined by 3% to $673 million, attributed to lower copper prices and higher operating costs, despite stable production levels at 109,000 tonnes [31][33] - The zinc segment saw a significant improvement, with gross profit before depreciation and amortization increasing by 137% to $159 million, driven by higher byproduct revenues and lower operating costs [36][37] Market Data and Key Metrics Changes - The company acknowledged risks to production guidance for QB due to ongoing TMS development work, revising its outlook to 210,000 to 230,000 tonnes for the year [22][21] - The Highland Valley Copper mine life extension project is expected to produce an average of 132,000 tonnes of copper annually over its life, with capital costs estimated between CAD 2.1 billion to CAD 2.4 billion [19][20] Company Strategy and Development Direction - The company is focused on advancing its copper growth strategy while returning cash to shareholders, with plans to double copper production by the end of the decade [9][23] - The sanctioning of the Highland Valley Copper mine life extension project is seen as foundational to the company's future copper production growth [23][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in overcoming current operational constraints related to TMS development, maintaining guidance for 2026 production levels [46][50] - The company remains committed to safety and sustainability, achieving recognition as one of Corporate Knight's Best 50 Corporate Citizens in Canada for the 19th consecutive year [12] Other Important Information - The company has a strong liquidity position with $8.9 billion available, including $4.8 billion in cash, and has reduced its debt by $2 billion since 2024 [40][41] - The company is actively working on optimizing its operations and exploring growth opportunities through capital-efficient projects [26][27] Q&A Session Summary Question: Impact of tailings issue on QB and future investments - Management acknowledged that TMS development work has limited online time for QB but expects to resolve these issues without additional capital investment next year [46][49] Question: CapEx guidance for the second half of the year - Management confirmed that the increased CapEx guidance is primarily due to the sanctioning of the Highland Valley project and ongoing TMS development costs [54][56] Question: Ship loader repairs and CapEx impact - Management indicated that repairs to the ship loader are ongoing, with no production impact due to alternative shipping arrangements [64][66] Question: Sequencing of Zafranal and San Nicolas projects - Management noted that Zafranal is more advanced in permitting but both projects are considered options for future development [67][68] Question: Technical report for Highland Valley extension - A technical report is expected to be published in August, detailing the throughput and production profile for the Highland Valley project [70][72] Question: Incremental CapEx for QB's TMF - Management clarified the distinction between project CapEx and sustaining CapEx, emphasizing the ongoing nature of TMS development costs [100][101]