10-QPeriod: Q3 FY2021

FREEPORT-MCMORAN INC Quarterly Report for Q3 Ended Sep 30, 2021

Filed November 5, 2021For Securities:FCX

Summary

Freeport-McMoRan Inc. (FCX) reported strong financial results for the nine months ended September 30, 2021, driven by significantly higher commodity prices for copper and gold, coupled with increased sales volumes. Net income attributable to common stockholders surged to $3.2 billion, a substantial improvement from a net loss of $109 million in the same period last year. This robust performance led to a significant reduction in net debt, from $6.1 billion at the end of 2020 to $2.0 billion by September 30, 2021. The company also demonstrated a commitment to returning value to shareholders by reinstating a cash dividend and announcing a new $3.0 billion share repurchase program. Looking ahead, FCX anticipates continued strong operating cash flows and is strategically investing in its long-lived, high-quality copper assets, including advancing underground mining operations in Indonesia and exploring growth opportunities in North and South America.

Financial Highlights

50 data points
Beta

Revenue

$6.08B

41.6% Gross Margin

Net Income

$1.40B

23.0% Net Margin

EPS (Diluted)

$0.94

Total Assets

$46.92B

Cash & Equivalents

$7.67B

Free Cash Flow

$1.97B

Financial Statements
Beta
Revenue$6.08B
Cost of Revenue$3.55B
Gross Profit$2.53B
SG&A Expenses$102.00M
Operating Expenses$3.62B
Operating Income$2.46B
Net Income$1.40B
EPS (Basic)$0.95
EPS (Diluted)$0.94
Shares Outstanding (Basic)1.47B
Shares Outstanding (Diluted)1.48B

Key Highlights

  • 1Net income attributable to common stockholders reached $3.2 billion for the first nine months of 2021, a significant increase from a net loss of $109 million in the prior year period.
  • 2Consolidated revenues more than doubled to $16.7 billion for the first nine months of 2021, compared to $9.7 billion in the same period of 2020, driven by higher commodity prices and sales volumes.
  • 3Net debt was reduced significantly to $2.0 billion as of September 30, 2021, down from $6.1 billion at December 31, 2020, reflecting strong cash flow generation.
  • 4The company declared a quarterly cash dividend of $0.075 per share and announced a new $3.0 billion share repurchase program, indicating a focus on shareholder returns.
  • 5PT Freeport Indonesia's (PT-FI) underground mining ramp-up is on track, expected to reach full annualized production targets by year-end 2021, supporting future production growth.
  • 6The company is advancing projects for additional domestic smelter capacity in Indonesia, including a new greenfield smelter and expansion of PT Smelting, with significant capital expenditures planned.
  • 7FCX ended the period with strong liquidity, reporting $7.7 billion in cash and cash equivalents and $3.5 billion in availability under its revolving credit facility.

Frequently Asked Questions

The primary drivers were significantly higher average realized prices for copper and gold, alongside increased sales volumes. Higher commodity prices, particularly for copper, directly boosted revenues and operating income. The successful ramp-up of underground mining operations at PT Freeport Indonesia also contributed to higher sales volumes, further enhancing financial results.

Freeport-McMoRan significantly reduced its net debt to $2.0 billion by September 30, 2021, down from $6.1 billion at the end of 2020. This was achieved through strong operating cash flow generation. The company maintains robust liquidity, with $7.7 billion in cash and cash equivalents and $3.5 billion available under its revolving credit facility as of the reporting date.

FCX has a clear financial policy focused on maintaining a strong balance sheet while increasing cash returns to shareholders and investing in growth. This includes a base dividend and a performance-based payout framework. The company reinstated its cash dividend and announced a substantial $3.0 billion share repurchase program. Strategically, FCX is investing in significant growth projects, including advancing underground mining in Indonesia and evaluating expansions at its North and South American operations, alongside the development of new smelting capacity in Indonesia.

While the company reported strong results, potential risks include ongoing environmental remediation obligations (e.g., Newtown Creek), legacy litigation such as asbestos and talc claims with ongoing bankruptcy proceedings, and potential tax assessments in Indonesia related to mine development costs. The company also highlights the inherent volatility of commodity prices and the complexities of its international operations, including regulatory and political risks in Indonesia.