Teck Resources Limited (NYSE:TCK) Q2 2019 Earnings Conference Call - Final Transcript

Jul 25, 2019 • 11:00 am ET


Teck Resources Limited (NYSE:TCK) Q2 2019 Earnings Conference Call - Final Transcript


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Welcome to the Teck Resources Q2 2019 Earnings Call. [Operator Instructions] Later, we will conduct a question-and-answer session. This conference call is being recorded on Thursday, July 25th, 2019.

Now, I'd like to turn the conference call over to Fraser Phillips, Senior Vice President, Investor Relations and Strategic Analysis. Please go ahead.

Fraser Phillips

Thanks very much, Jen. Good morning, everyone, and thank you for joining us for Teck's Second Quarter 2019 Results Conference Call.

Before we begin, I would like to draw your attention to the caution regarding forward-looking statements on Slide 2. This presentation contains forward-looking statements regarding our business. This slide describes the assumptions underlying those statements. Various risks and uncertainties may cause actual results to vary. Teck does not assume the obligation to update any forward-looking statement. I would also like to point out that we use various non-GAAP measures in this presentation. You can find explanations and reconciliations regarding these measures in the appendix.

With that, I will turn the call over to Don Lindsay, our President and CEO.

Donald R. Lindsay

Thank you, Fraser, and good morning, everyone. We're pretty excited here today. We've got a lot of good news to share, so let's get going.

I'll begin on Slide 3 with highlights from our second quarter, followed by Ron Millos, our CFO, who will provide additional color on the financial results. We'll conclude with a Q&A session, where Ron and I and additional members of our senior management team would be happy to answer any questions. We achieved a number of important milestones in the second quarter that have put Teck in a strong position moving forward. First, we updated our capital allocation policy and increased our share buyback to CAD1 billion. We updated our capital allocation framework to reflect our intention to make additional cash returns to shareholders. I'll speak to this in greater detail later, but we intend to supplement our base dividend with an additional amount of at least 30% of available cash flow through supplemental dividends and/or share repurchases. And I note that a couple of analysts have already missed the fact that that 30% is on top of the base dividend.

Second the BC Government has endorsed the use of saturated rock fills to treat water at our steelmaking coal operations. We have begun construction of an expansion of the saturated rock fill at Elkview. We estimate that over the long-term, saturated rock fills will significantly reduce capital and operating costs compared to tank-based active water treatment facilities of similar capacity.

Third, we are accelerating our innovation-driven efficiency program known as RACE21 to generate an initial CAD150 million in annualized EBITDA improvements by the end of 2019. There'll be much more going on into the future. In addition to RACE21, in light of economic uncertainty and trade tensions, we are actively evaluating further cost reduction initiatives, which can be implemented quickly in the event that commodity markets turn against us. These measures are part of our straightforward strategy of running our operations safely, efficiently