Teck Resources Q1 Earnings Call Highlights

Key Points

• Adjusted EBITDA more than doubled to $2.1 billion as Teck generated about $1.0 billion of operating cash flow in Q1, lifted its net cash position to CAD 488 million and reported liquidity of roughly $9.8 billion.
• Record copper sales and stronger margins drove performance: copper production rose 32% to 140,000 tonnes with copper prices averaging about $5.83/lb, unit costs fell and management left 2026 production guidance unchanged.
• Merger of equals with Anglo American is progressing with South Korean regulatory approval and China review ongoing, and Teck expects closing within about 12–18 months while advancing integration planning.

Teck Resources NYSE: TECK reported what management repeatedly characterized as a strong start to 2026, driven by record copper sales volumes, higher commodity prices, and improved profitability at its Trail Operations. During the company’s first-quarter earnings call, CEO Jonathan Price said Teck’s “adjusted EBITDA more than doubled to $2.1 billion” and pointed to “robust cash generation” that strengthened the balance sheet over the quarter.

Financial performance and cash generation

Price said first-quarter cash flow from operations totaled $1.0 billion, helping lift Teck’s net cash position by $338 million during the quarter to $488 million. He also noted that Teck continued to build cash after quarter-end, adding nearly $300 million since March 31, and said liquidity stood at $9.8 billion “as of yesterday.”

CFO Crystal Prystai attributed the quarter’s performance to a mix of higher prices and volumes, saying adjusted EBITDA rose 125% year over year to CAD 2.1 billion, with margins expanding to 53% from 40%. She said copper prices averaged a “record $5.83 U.S. per pound” and noted a “meaningful contribution from increased by-product revenue particularly from silver.”

Prystai also highlighted the contribution from Trail Operations, where Teck has been executing an “optimized feed strategy.” Gross profit before depreciation and amortization from Trail rose to CAD 258 million from CAD 80 million in the prior-year period.

On the balance sheet, Prystai said operating cash flow was achieved despite an CAD 834 million working-capital build that reflected seasonal outflows, annual royalty payments, and higher receivables tied to higher sales volumes and prices. She said Teck maintained investment-grade credit ratings and paid its regular annual dividend of $0.50 per share, or $61 million in the quarter.

Copper segment: record sales and lower unit costs

In Teck’s copper segment, Prystai said gross profit before depreciation and amortization increased 158% year over year to CAD 1.8 billion, with margin improving to 62% from 47%. Copper production rose 32% to 140,000 tonnes, including QB output of 56,000 tonnes.

Prystai said Teck achieved record quarterly copper sales at QB of 70,000 tonnes, exceeding production as the company drew down inventory built at the end of 2025. She noted sales were supported by “normal operations at the ship loader at QB’s port facility,” after repairs were completed and the ship loader returned to service in February.

Across the copper portfolio, Prystai said Highland Valley production increased by 11,000 tonnes year over year due to higher throughput and grades, partially offset by lower recoveries as feed continued to be “dominated by sulfur ore from the Lornex pit.” Antamina production increased by 41,000 tonnes due to higher-grade copper-only ore as expected in the mine plan, and Carmen de Andacollo rose to 14,000 tonnes on higher grades and recoveries.

Teck’s copper net cash unit costs improved year over year, down $0.27 per pound, which Prystai attributed to higher production, lower smelter processing charges, and higher by-product credits including silver and molybdenum at QB and Highland Valley.

Looking ahead, management kept guidance unchanged. Prystai said Teck continues to expect copper production of 455,000 to 530,000 tonnes in 2026, compared with 454,000 tonnes last year.

Zinc and Trail Operations: higher prices and operating discipline

In zinc, Prystai said gross profit before depreciation and amortization increased 72% to CAD 387 million, helped by higher commodity prices and Trail performance. Zinc gross profit margin expanded to 37% from 29%.

At Red Dog, zinc production of 106,000 tonnes reflected lower grades as expected in the mine plan. Prystai said zinc sales were above Teck’s quarterly guidance range of 52,000 tonnes. Zinc net cash unit costs fell $0.18 per pound year over year due to higher by-product revenue—“largely driven by increased silver prices”—and lower smelter processing charges.

At Trail Operations, refined zinc production rose 16,000 tonnes year over year as the Zinc Electrolytic Plant ran at full capacity. For the second quarter, Prystai said Teck expects Red Dog zinc sales of 30,000 to 40,000 tonnes, consistent with normal seasonality. Annual zinc guidance for 2026 to 2028 remained unchanged.

Responding to analyst questions about Trail’s sustainability, Prystai said future profitability will depend heavily on commodity prices, treatment charge (TC) conditions, and FX rates. Brock Gill, SVP of Operations, said two key profitability drivers have been feedstock optimization and plant capacity, and noted planned shutdowns in May and October lasting about 15 to 20 days each. Ian Anderson, EVP and chief commercial officer, told analysts Teck’s feed profile has remained “stable and optimized,” comprising both Red Dog and third-party feed, and said the quarter’s improvement was “really… the increase in pricing.”

QB tailings facility progress and Highland Valley extension work

Operationally, Price pointed to “continued operational stability” at QB. He said first-quarter production of 56,000 tonnes was in line with the prior quarter despite a planned maintenance shutdown and a shorter operating month in February. Mill availability was 92%, lower quarter over quarter due to scheduled January maintenance, while asset utilization was 87%, which Price said remained above the range assumed in Teck’s 2026 guidance.

On the QB tailings management facility (TMF), Price said Teck completed Rock Bench Four in the quarter and advanced paddock construction and sand dam development. He said sand deposition rates improved and that Teck expects continued improvement through the year. Teck now expects to complete Rock Bench Five by the end of the second quarter. Price said that if Rock Bench Five is delivered as expected, Teck anticipates it can operate through the remainder of 2026 “unconstrained by the dam and by tailings capacity.”

In response to questions on timing for permanent TMF infrastructure, SVP of Latin America operations Dale Webb said the key driver is reaching steady-state tailings dam operations, which Teck expects by year-end. Webb said installation would require an operating window without additional lifts, adding that timing is under review; he also referenced “a period of time in 2022” while describing preliminary thinking. Price emphasized the timing “poses no risk to production guidance.”

At Highland Valley, Price said the Mine Life Extension (MLE) project is progressing to plan, with detailed engineering more than 90% complete and procurement awards over 95% complete. Teck invested $188 million in the project during the quarter. Price reaffirmed capital guidance of $900 million to $1.2 billion for 2026 (a peak spending year) and $2.1 billion to $2.4 billion overall. Brock Gill said Teck expects “some additional downtime in the second half of the year” associated with mill conversion and connecting new equipment, but management reiterated guidance remained unchanged.

Merger progress, regulatory approvals, and other updates

Price said Teck made progress toward completing its “merger of equals with Anglo American,” noting regulatory approval from South Korea and that approval in China is advancing. He said Teck continues to expect closing “within 12 to 18 months from the announcement last September.”

On China’s review, Price told analysts interactions with SAMR are proceeding normally, with both parties responding to information requests. He said Teck has not received any requests for remedies and does not see a change to the expected closing timeline.

Teck also discussed potential TSX index inclusion for the combined entity. Investor relations VP Emma Chapman said Teck is seeing “positive momentum” from S&P and the TSX to find a practical solution to retain indexation, noting an ongoing consultation process and that timing is still uncertain.

Separately, Price said Teck continues to see potential value from a possible combination between QB and Collahuasi, describing work underway on scoping studies, permitting strategies, and stakeholder engagement, though he said there was “nothing concrete to announce.” He also said Teck has “no specific plans” to monetize its net profits interest (NPI) royalty at Fourmile at this time.

Closing the call, Price summarized Teck’s near-term priorities as securing remaining merger approvals and advancing integration planning, maintaining safe and predictable operations, progressing QB’s TMF to steady-state operations this year, and continuing construction at Highland Valley’s MLE project.

About Teck Resources NYSE: TECK

Teck Resources Ltd. is a diversified natural resource company headquartered in Canada that explores for, develops and produces a portfolio of metallic and energy commodities. Its core businesses center on copper, steelmaking (metallurgical) coal and zinc, with related smelting and refining activities. Teck supplies raw materials and intermediate products to global steelmakers, metals markets and industrial customers, and operates integrated mining and processing facilities as well as earlier-stage exploration and development projects.

The company's operations and projects are located across multiple geographies, with a significant presence in western Canada and North America and additional exploration and development activities in Latin America.

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