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Teck Resources (TECK - Free Report) reported fourth-quarter 2023 adjusted earnings per share (EPS) of $1.02, beating the Zacks Consensus Estimate of $1.01. The bottom line increased 29% from the year-ago quarter. Earnings benefited from higher steelmaking coal sales volumes and copper prices, which were partially offset by lower steelmaking coal and zinc prices.
Results were also impacted by increased unit costs across TECK’s operations, which include higher costs, reflecting the ongoing production ramp-up at Quebrada Blanca Operations.
Including one-time items, the company reported EPS of 68 cents in the fourth quarter of 2023 compared with the year-ago quarter’s earnings of 38 cents per share.
Teck Resources Ltd Price, Consensus and EPS Surprise
Net sales amounted to $3.02 billion, indicating a 30.5% year-over-year improvement. The top line missed the consensus estimate of $3.12 billion.
The gross profit was CAD$1.24 billion ($0.91 billion), up 16% from the year-ago quarter. The gross margin was 30.1% compared with the year-ago quarter’s 36.8%.
The adjusted EBITDA was CAD$1.7 billion ($1.25 billion), which marked 28% growth from the year-earlier period. The EBITDA margin was 41.5% in the quarter under review compared with the year-ago quarter’s 42.5%.
Segment Performances
The Steelmaking Coal segment reported sales of CAD$2.27 billion ($1.67 billion), reflecting a year-over-year increase of 35%. The segment reported gross profit of CAD$1.08 billion ($0.8 billion), which was up 28% from the fourth quarter of 2022.
The Copper segment’s net sales surged 52% year over year to CAD$1.14 billion ($0.84 billion) in the reported quarter. The segment’s gross profit was CAD$81 million ($60 million) in the reported quarter, which marked a 67% plunge from the year-ago quarter.
The Zinc segment’s net sales were down 1.4% year over year to CAD$701 million ($515 million) in the reported quarter. The segment’s gross profit improved 25% to CAD$71 million ($52 million).
Cash Flow & Balance Sheet
Teck Resources generated a cash flow of CAD$1.13 billion ($828 million) from operating activities in the fourth quarter of 2023, up 21% year over year. The company had cash and cash equivalents of CAD$0.7 billion ($0.5 billion) at the end of 2023 compared with CAD$1.9 billion at the end of 2022. Total debt was CAD$6 billion ($4.4 billion) at the end of 2023.
On Feb 21, 2024, TECK’s board authorized up to a $500 million share buyback and also approved the payment of a quarterly base dividend of 12.50 cents per share. The dividend will be paid on Mar 28, 2024, to shareholders of record as of Mar 15, 2024.
Guidance
Teck Resources expects steelmaking coal production to be between 24 million tons and 26 million tons for 2024. Copper production is anticipated to be 465,000-540,000 tons. Zinc production is projected between 565,000 tons and 630,000 tons. Refined zinc is estimated between 275,000 tons and 290,000 tons.
For first-quarter 2024, the company expects sales of zinc in concentrate of 70,000-85,000 tons at Red Dog. Steelmaking coal sales are projected to be 5.9-6.3 million tons for the quarter.
Fiscal 2023 Results
Teck Resources reported adjusted EPS of $3.82 in 2023, beating the Zacks Consensus Estimate of $3.81. Compared with EPS of $7.01 in 2023, the figure marked a decline of 45.5%.
Including one-time items, the company reported EPS of $3.40 in 2023 compared with $4.76 in 2022.
Net sales amounted to $15 billion in 2023, indicating a 13% year-over-year decline. The top line missed the Zacks Consensus Estimate of $11.25 billion.
Sale of Steelmaking Coal Unit
On Nov 13, 2023, Teck Resources announced that it has agreed to sell its entire stake in its steelmaking coal business, Elk Valley Resources (“EVR”), for an implied enterprise value of $9 billion. The majority of the sale (77%) will be made to Glencore plc (GLNCY - Free Report) and 20% to Nippon Steel Corporation. Proceeds will be used to strengthen TECK’s balance sheet while returning cash to shareholders. It will help the company focus on growing its extensive copper portfolio and thereby capitalize on the energy transition trend.
Glencore will acquire a 77% stake in EVR for $6.9 billion in cash. The deal, subject to customary closing adjustments, is expected to close by the third quarter of 2024.
Nippon Steel Corporation completed the acquisition of the 20% interest in EVR on Jan 3, 2024, with a payment of $1.3 billion in cash to Teck.
POSCO (PKX - Free Report) has taken up the remaining 3% interest in EVR, in exchange for the company’s current 2.5% interest in Elkview Operations and 20% interest in the Greenhills joint venture.
Until the deal is closed, Teck will continue to operate the steelmaking coal business and will retain all cash flows, which are estimated to be around $1 billion.
Price Performance
The company’s shares have dipped 1.2% in the past year compared with the industry’s 0.3% decline.
Image Source: Zacks Investment Research
Zacks Rank & Stocks to Consider
Teck Resources currently carries a Zacks Rank #3 (Hold).
The Zacks Consensus Estimate for Carpenter Technology’s 2024 earnings is pegged at $3.96 per share. The consensus estimate for 2024 earnings has moved 11% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 14.3%. CRS shares have gained 34% in a year.
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Teck Resources (TECK) Q4 Earnings Beat Estimates, Rise Y/Y
Teck Resources (TECK - Free Report) reported fourth-quarter 2023 adjusted earnings per share (EPS) of $1.02, beating the Zacks Consensus Estimate of $1.01. The bottom line increased 29% from the year-ago quarter. Earnings benefited from higher steelmaking coal sales volumes and copper prices, which were partially offset by lower steelmaking coal and zinc prices.
Results were also impacted by increased unit costs across TECK’s operations, which include higher costs, reflecting the ongoing production ramp-up at Quebrada Blanca Operations.
Including one-time items, the company reported EPS of 68 cents in the fourth quarter of 2023 compared with the year-ago quarter’s earnings of 38 cents per share.
Teck Resources Ltd Price, Consensus and EPS Surprise
Teck Resources Ltd price-consensus-eps-surprise-chart | Teck Resources Ltd Quote
Net sales amounted to $3.02 billion, indicating a 30.5% year-over-year improvement. The top line missed the consensus estimate of $3.12 billion.
The gross profit was CAD$1.24 billion ($0.91 billion), up 16% from the year-ago quarter. The gross margin was 30.1% compared with the year-ago quarter’s 36.8%.
The adjusted EBITDA was CAD$1.7 billion ($1.25 billion), which marked 28% growth from the year-earlier period. The EBITDA margin was 41.5% in the quarter under review compared with the year-ago quarter’s 42.5%.
Segment Performances
The Steelmaking Coal segment reported sales of CAD$2.27 billion ($1.67 billion), reflecting a year-over-year increase of 35%. The segment reported gross profit of CAD$1.08 billion ($0.8 billion), which was up 28% from the fourth quarter of 2022.
The Copper segment’s net sales surged 52% year over year to CAD$1.14 billion ($0.84 billion) in the reported quarter. The segment’s gross profit was CAD$81 million ($60 million) in the reported quarter, which marked a 67% plunge from the year-ago quarter.
The Zinc segment’s net sales were down 1.4% year over year to CAD$701 million ($515 million) in the reported quarter. The segment’s gross profit improved 25% to CAD$71 million ($52 million).
Cash Flow & Balance Sheet
Teck Resources generated a cash flow of CAD$1.13 billion ($828 million) from operating activities in the fourth quarter of 2023, up 21% year over year. The company had cash and cash equivalents of CAD$0.7 billion ($0.5 billion) at the end of 2023 compared with CAD$1.9 billion at the end of 2022. Total debt was CAD$6 billion ($4.4 billion) at the end of 2023.
On Feb 21, 2024, TECK’s board authorized up to a $500 million share buyback and also approved the payment of a quarterly base dividend of 12.50 cents per share. The dividend will be paid on Mar 28, 2024, to shareholders of record as of Mar 15, 2024.
Guidance
Teck Resources expects steelmaking coal production to be between 24 million tons and 26 million tons for 2024. Copper production is anticipated to be 465,000-540,000 tons. Zinc production is projected between 565,000 tons and 630,000 tons. Refined zinc is estimated between 275,000 tons and 290,000 tons.
For first-quarter 2024, the company expects sales of zinc in concentrate of 70,000-85,000 tons at Red Dog. Steelmaking coal sales are projected to be 5.9-6.3 million tons for the quarter.
Fiscal 2023 Results
Teck Resources reported adjusted EPS of $3.82 in 2023, beating the Zacks Consensus Estimate of $3.81. Compared with EPS of $7.01 in 2023, the figure marked a decline of 45.5%.
Including one-time items, the company reported EPS of $3.40 in 2023 compared with $4.76 in 2022.
Net sales amounted to $15 billion in 2023, indicating a 13% year-over-year decline. The top line missed the Zacks Consensus Estimate of $11.25 billion.
Sale of Steelmaking Coal Unit
On Nov 13, 2023, Teck Resources announced that it has agreed to sell its entire stake in its steelmaking coal business, Elk Valley Resources (“EVR”), for an implied enterprise value of $9 billion. The majority of the sale (77%) will be made to Glencore plc (GLNCY - Free Report) and 20% to Nippon Steel Corporation. Proceeds will be used to strengthen TECK’s balance sheet while returning cash to shareholders. It will help the company focus on growing its extensive copper portfolio and thereby capitalize on the energy transition trend.
Glencore will acquire a 77% stake in EVR for $6.9 billion in cash. The deal, subject to customary closing adjustments, is expected to close by the third quarter of 2024.
Nippon Steel Corporation completed the acquisition of the 20% interest in EVR on Jan 3, 2024, with a payment of $1.3 billion in cash to Teck.
POSCO (PKX - Free Report) has taken up the remaining 3% interest in EVR, in exchange for the company’s current 2.5% interest in Elkview Operations and 20% interest in the Greenhills joint venture.
Until the deal is closed, Teck will continue to operate the steelmaking coal business and will retain all cash flows, which are estimated to be around $1 billion.
Price Performance
The company’s shares have dipped 1.2% in the past year compared with the industry’s 0.3% decline.
Image Source: Zacks Investment Research
Zacks Rank & Stocks to Consider
Teck Resources currently carries a Zacks Rank #3 (Hold).
A better-ranked stock from the basic materials space is Carpenter Technology Corporation (CRS - Free Report) , which currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Carpenter Technology’s 2024 earnings is pegged at $3.96 per share. The consensus estimate for 2024 earnings has moved 11% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 14.3%. CRS shares have gained 34% in a year.