10-QPeriod: Q1 FY2020

FREEPORT-MCMORAN INC Quarterly Report for Q1 Ended Mar 31, 2020

Filed May 7, 2020For Securities:FCX

Summary

Freeport-McMoRan Inc. (FCX) reported a net loss of $491 million, or $0.34 per diluted share, for the first quarter of 2020, a significant downturn from a net income of $31 million in the same period last year. This decline was primarily driven by lower average realized prices for copper and molybdenum, coupled with a substantial increase in metals inventory adjustments due to declining commodity prices. The company also faced operational challenges due to the COVID-19 pandemic, leading to revised operating plans that include significant reductions in operating costs and capital expenditures. Despite the challenging near-term outlook, FCX is strategically adjusting its operations to maximize cash flow and preserve liquidity. This includes cost-saving measures, reduced capital spending, and optimized mine plans. The company maintains a strong liquidity position with substantial availability under its revolving credit facility, and has no senior notes maturing until 2022. The long-term outlook for copper remains positive, and FCX is focused on executing its revised plans to navigate current market conditions and capitalize on future recovery.

Financial Highlights

48 data points
Beta

Revenue

$2.80B

-11.1% Gross Margin

Net Income

-$491.00M

-17.5% Net Margin

EPS (Diluted)

$-0.34

Total Assets

$40.22B

Cash & Equivalents

$1.60B

Free Cash Flow

-$38.00M

Financial Statements
Beta
Revenue$2.80B
Cost of Revenue$3.11B
Gross Profit-$310.00M
SG&A Expenses$110.00M
Operating Expenses$3.27B
Operating Income-$473.00M
Net Income-$491.00M
EPS (Basic)$-0.34
EPS (Diluted)$-0.34
Shares Outstanding (Basic)1.45B
Shares Outstanding (Diluted)1.45B

Key Highlights

  • 1Net loss of $491 million ($0.34/share) in Q1 2020, a significant decline from net income of $31 million ($0.02/share) in Q1 2019.
  • 2Revenues decreased to $2.8 billion from $3.8 billion year-over-year, impacted by lower sales volumes and prices for copper and molybdenum.
  • 3Significant metals inventory adjustments of $222 million were recorded in Q1 2020, compared to $57 million in Q1 2019, due to declining commodity prices.
  • 4FCX has revised its 2020 operating plans, projecting $1.3 billion in reduced operating costs and $800 million in reduced capital expenditures, driven by the COVID-19 pandemic.
  • 5The company maintained strong liquidity with $1.6 billion in cash and cash equivalents and $3.5 billion available under its revolving credit facility at March 31, 2020.
  • 6FCX suspended its quarterly cash dividend and does not expect to declare dividends in 2020 due to current market conditions.

Frequently Asked Questions

The primary drivers of FCX's net loss in the first quarter of 2020 were lower average realized prices for copper and molybdenum, a significant increase in metals inventory adjustments due to declining commodity prices, and reduced sales volumes, all exacerbated by the impact of the COVID-19 pandemic on the global economy and commodity markets.

FCX has implemented revised operating plans focused on maximizing cash flow and protecting liquidity. These plans include significant reductions in operating costs (estimated $1.3 billion) and capital expenditures (estimated $800 million) for 2020, adjustments to mine plans and milling rates, and a reduction in projected sales volumes. The company has also suspended its quarterly dividend.

At March 31, 2020, FCX reported $1.6 billion in cash and cash equivalents and had approximately $3.5 billion in availability under its revolving credit facility. The company has no senior notes maturing until 2022 following recent debt transactions.

The COVID-19 pandemic has significantly impacted FCX's operations, leading to revised operating plans, reduced production and sales volumes, and temporary shutdowns or reduced operations at mines like Cerro Verde in Peru. The company has implemented extensive health and safety protocols to mitigate the spread of the virus.