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Teck Resources (TECK) Q4 Earnings & Sales Lag Estimates, Up Y/Y

·6 min read

Teck Resources Ltd TECK reported fourth-quarter 2021 adjusted earnings per share (EPS) of $2.02, missing the Zacks Consensus Estimate of $2.04. The bottom line surged 470% from the prior-year quarter, driven by higher prices of its principal products. These were partly offset by lower sales volumes, higher operating costs and the strengthening of the Canadian dollar.

Including one-time items, the company reported EPS of $2.17 against the prior-year quarter’s loss per share of 67 cents.

Net sales amounted to $3,495 million, surging 78% year over year. The top line also missed the Zacks Consensus Estimate of $3,695 million.

The steelmaking coal sales volumes declined 23% year over year to 5.1 million tons and were lower than the company’s guidance owing to logistics chain disruptions resulting from the floods in British Columbia (B.C) and extremely cold weather in late December. Of this, the company sold 1.8 million tons of steelmaking coal to China. The copper sales volume declined 11% year over year in the fourth quarter due to the unfavorable impact of B.C floods on Highland Valley Copper (HVC) sales volume. Zinc sales volume declined 11% year on year owing to a late start to the shipping season, weather-related delays at Red Dog and operational issues at Trail operation.

The gross profit, before depreciation and amortization, came in at $1,968 million compared with the year-ago quarter’s $701 million. The gross margin came in at 56.3% compared with the year-ago quarter’s 35.6%. The adjusted EBITDA was $2,001 million, up 210% from the year-earlier period’s levels. The EBITDA margin came in at 57% in the fourth quarter compared with the year-earlier quarter’s 33%.

Teck Resources Ltd Price, Consensus and EPS Surprise

Teck Resources Ltd Price, Consensus and EPS Surprise
Teck Resources Ltd Price, Consensus and EPS Surprise

Teck Resources Ltd price-consensus-eps-surprise-chart | Teck Resources Ltd Quote

Segment Performance

The Steelmaking Coal segment reported sales of $1,813 million, reflecting a year-over-year jump of 174%. The segment reported an operating profit of $1,185 million against the operating loss of $70 million in the prior-year quarter.

The Copper segment’s net sales climbed 16% year over year to $733 million in the December-end quarter. The segment’s operating profit was $532 million in the reported quarter compared with the year-ago quarter’s $305 million.

The Zinc segment’s net sales were up 38% year over year to $783 million during the reported quarter. The segment’s operating profit surged 133% to $175 million during this period.

The Energy segment’s net sales surged 55% year over year to $167 million in the fourth quarter. The segment incurred an operating loss of $30 million compared with the prior-year quarter’s $510 million.

Financials

Teck Resources generated a cash flow of $3,760 million from operating activities in 2021 compared with $1,231 million in 2020. The company had cash and cash equivalents of $1,133 million at the end of 2021 compared with $354 million at 2020-end. Total debt was $6,403 million at the end of 2021 compared with $5,470 million at the end of the prior year.

Project Updates

The progression of its flagship QB2 copper growth was completed 77% during the fourth quarter. Teck Resources continues to expect the first production in the second half of 2022.

2021 Performance

Teck Resources reported an adjusted EPS of $4.52 in 2021 compared with 78 cents reported in the prior year. Earnings beat the Zacks Consensus Estimate of $4.39. Including one-time items, the bottom line came in at $4.25 against a loss of $1.21 per share in 2020.

Sales were up 61% year over year to $10.74 billion. The top line missed the Zacks Consensus Estimate of $10.89 billion.

Guidance

Teck Resources expects steelmaking coal production between 24.5 million tons and 25.5 million tons for 2022. Copper production is anticipated within 273,000-290,000 tons. Zinc production is projected between 630,000 tons and 665,000 tons. The company estimates Bitumen production for 2022 between 12 million barrels and 14.4 million barrels.

For first-quarter 2022, the company expects sales of zinc in concentrate in the range of 130,000-150,000 tons at Red Dog. Steelmaking coal sales are projected to be 6.1-6.5 million tons for the first quarter. The company will continue to prioritize the available spot sales to China. The sales to Chinese customers are priced at the CFR China price assessments, which are higher than the FOB Australia price assessments, thereby boosting its overall realized price.

Price Performance

The company’s shares have soared 67.8% in the past year compared with the industry’s rally of 8.3%.

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Zacks Rank & Stocks to Consider

Teck Resources currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space include Commercial Metals Company CMC, AdvanSix Inc ASIX and Allegheny Technologies Incorporated ATI. While CMC and ASIX sport a Zacks Rank #1 (Strong Buy), ATI carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Commercial Metals has a projected earnings growth rate of 62% for the current fiscal year. The Zacks Consensus Estimate for CMC's current fiscal year earnings has been revised upward by 23% in the past 60 days.

Commercial Metals beat the Zacks Consensus Estimate for earnings in three of the trailing four quarters and missed once, the average surprise being 13.1%. CMC’s shares have surged around 44.7% in a year.

AdvanSix has an expected earnings growth rate of 14.6% for the current year. The Zacks Consensus Estimate for ASIX’s current-year earnings has been revised upward by 9.7% in the past 60 days.

AdvanSix beat the Zacks Consensus Estimate for earnings in three of the trailing four quarters, the average surprise being 23.6%. ASIX has appreciated around 30.1% in a year.

Allegheny has an expected earnings growth rate of 661.5% for the current year. The Zacks Consensus Estimate for ATI's current-year earnings has been revised 45.6% upward in the past 60 days.

Allegheny beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 127.2%. ATI has rallied around 20.9% over a year.


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