10-QPeriod: Q1 FY2013

FREEPORT-MCMORAN INC Quarterly Report for Q1 Ended Mar 31, 2013

Filed May 6, 2013For Securities:FCX

Summary

Freeport-McMoRan Inc. (FCX) reported its first quarter 2013 financial results, showing a decrease in net income attributable to common stockholders to $648 million, or $0.68 per diluted share, compared to $764 million, or $0.80 per diluted share, in the same period of 2012. This decline was primarily driven by lower average realized prices for copper and gold, which outpaced increased sales volumes in copper. The company's balance sheet strengthened with a significant increase in cash and cash equivalents to $9.6 billion, bolstered by recent debt financings totaling $6.5 billion in senior notes and a $4.0 billion bank term loan aimed at funding pending acquisitions of Plains Exploration & Production Company (PXP) and McMoRan Exploration Co. (MMR).

Financial Highlights

44 data points
Beta

Revenue

$4.58B

33.5% Gross Margin

Net Income

$648.00M

14.1% Net Margin

EPS (Diluted)

$0.68

Total Assets

$42.59B

Cash & Equivalents

$9.60B

Free Cash Flow

$831.00M

Financial Statements
Beta
Revenue$4.58B
Cost of Revenue$3.05B
Gross Profit$1.53B
SG&A Expenses$113.00M
Operating Expenses$3.23B
Operating Income$1.35B
Net Income$648.00M
EPS (Basic)$0.68
EPS (Diluted)$0.68
Shares Outstanding (Basic)950.00M
Shares Outstanding (Diluted)953.00M

Key Highlights

  • 1Net income attributable to FCX common stockholders decreased to $648 million ($0.68/share) in Q1 2013 from $764 million ($0.80/share) in Q1 2012, primarily due to lower commodity prices.
  • 2Consolidated revenues remained stable at $4.6 billion for both Q1 2013 and Q1 2012.
  • 3Cash and cash equivalents significantly increased to $9.6 billion at March 31, 2013, from $3.7 billion at December 31, 2012, largely due to new debt financings.
  • 4The company issued $6.5 billion in senior notes and secured a $4.0 billion term loan to finance pending acquisitions of PXP and MMR.
  • 5Sales volumes for copper increased year-over-year, driven by higher production in Indonesia and Africa, while gold sales volumes decreased due to anticipated lower ore grades in Indonesia.
  • 6FCX acquired a cobalt chemical refinery in Finland for $355 million on March 29, 2013, expanding its product portfolio and end-market access.
  • 7Pending acquisitions of Plains Exploration & Production Company (PXP) and McMoRan Exploration Co. (MMR) were expected to close in the second quarter of 2013, subject to shareholder approvals.

Frequently Asked Questions

The primary driver for the decrease in net income was lower average realized prices for copper and gold. Although copper sales volumes increased, the decline in prices had a more significant impact on overall profitability. Additionally, gold sales volumes decreased due to anticipated lower ore grades in Indonesia.

Freeport-McMoRan financed these pending acquisitions through a combination of debt issuances. This included $6.5 billion in senior notes issued in March 2013 and a $4.0 billion bank term loan. The proceeds were intended to fund the cash portion of the merger consideration and refinance certain indebtedness of the acquired companies.

FCX views the long-term outlook for copper positively, supported by supply limitations and global economic demand. While acknowledging recent price declines due to slowing growth in China and other economies, the company believes underlying fundamentals remain strong. Projected consolidated copper sales volumes for 2013 were estimated at 4,300 million pounds.

Yes, on March 29, 2013, FCX acquired a cobalt chemical refinery in Kokkola, Finland, through a joint venture for $355 million. This acquisition enhances their cobalt marketing position and provides direct end-market access for cobalt hydroxide production.