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Freeport's (FCX) Earnings Beat Estimates in Q1, Sales Miss
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Freeport-McMoRan Inc. (FCX - Free Report) reported net loss (attributable to common stock) of $491 million or 34 cents per share in first-quarter 2020 against net income of $31 million or 2 cents in the year-ago quarter.
Barring one-time items, adjusted loss per share came in at 16 cents, which was narrower than the Zacks Consensus Estimate of a loss of 22 cents.
Revenues fell 26.2% year over year to $2,798 million. The figure also missed the Zacks Consensus Estimate of $2,973.3 million.
Freeport-McMoRan Inc. Price, Consensus and EPS Surprise
Copper production fell 6.3% year over year to 731 million pounds in the first quarter.
Consolidated sales from mines fell 7% year over year to 729 million pounds of copper. The company produced 156,000 ounces of gold and 19 million pounds of molybdenum during the quarter.
Consolidated average unit net cash costs per pound of copper were $1.90, up 6.7% from $1.78 reported in the year-ago quarter.
Average realized price for copper was $2.43 per pound, down 16.2% year over year. Average realized price per ounce for gold increased 24.4% year over year to $1,606. Average realized price per pound for molybdenum was $11.10, down 12.5% year over year.
Financial Position
Cash and cash equivalents at the end of the first quarter were $1,602 million, down 43.5% year over year. The company’s long-term debt was around $9,829 million.
Cash flows used in operations were $38 million in the quarter under review against $534 million generated in the prior-year quarter.
Guidance
For 2020, Freeport now anticipates consolidated sales volumes to be 3.1 billion pounds of copper, down from 3.5 billion pounds expected earlier.
It expects gold sales volumes of 780,000 ounces in 2020, up from 775,000 ounces projected earlier. The company now expects sales of 80 million pounds of molybdenum, down from 88 million pounds expected earlier.
Revised Operating Plan
Freeport issued a revised operating plan with focus on maximizing cash flow and liquidity in a weak as well as uncertain economic environment. The company is implementing a series of actions to reduce operating costs and capital spending.
For 2020, the company intends to reduce operating costs by nearly $1.3 billion (or around 18%) and lower capital expenditures by roughly 30% or $800 million. It also plans to lower estimated exploration and administrative costs by around 20% (roughly $100 million) in 2020. Moreover, the company expects copper sales volumes in the Americas to reduce by around 15%.
Price Performance
Freeport’s shares have lost 36% in the past year compared with the industry’s 29.4% decline.
Zacks Rank & Key Picks
Freeport currently carries a Zacks Rank #3 (Hold).
Newmont has an expected earnings growth rate of 90.2% for 2020. The company’s shares have surged 97.5% in the past year.
Barrick has an expected earnings growth rate of 60.8% for 2020. Its shares have returned 108.3% in the past year.
Franco-Nevada has an expected earnings growth rate of 19.2% for 2020. The company’s shares have soared 91% in the past year.
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Freeport's (FCX) Earnings Beat Estimates in Q1, Sales Miss
Freeport-McMoRan Inc. (FCX - Free Report) reported net loss (attributable to common stock) of $491 million or 34 cents per share in first-quarter 2020 against net income of $31 million or 2 cents in the year-ago quarter.
Barring one-time items, adjusted loss per share came in at 16 cents, which was narrower than the Zacks Consensus Estimate of a loss of 22 cents.
Revenues fell 26.2% year over year to $2,798 million. The figure also missed the Zacks Consensus Estimate of $2,973.3 million.
Freeport-McMoRan Inc. Price, Consensus and EPS Surprise
Freeport-McMoRan Inc. price-consensus-eps-surprise-chart | Freeport-McMoRan Inc. Quote
Operational Update
Copper production fell 6.3% year over year to 731 million pounds in the first quarter.
Consolidated sales from mines fell 7% year over year to 729 million pounds of copper. The company produced 156,000 ounces of gold and 19 million pounds of molybdenum during the quarter.
Consolidated average unit net cash costs per pound of copper were $1.90, up 6.7% from $1.78 reported in the year-ago quarter.
Average realized price for copper was $2.43 per pound, down 16.2% year over year. Average realized price per ounce for gold increased 24.4% year over year to $1,606. Average realized price per pound for molybdenum was $11.10, down 12.5% year over year.
Financial Position
Cash and cash equivalents at the end of the first quarter were $1,602 million, down 43.5% year over year. The company’s long-term debt was around $9,829 million.
Cash flows used in operations were $38 million in the quarter under review against $534 million generated in the prior-year quarter.
Guidance
For 2020, Freeport now anticipates consolidated sales volumes to be 3.1 billion pounds of copper, down from 3.5 billion pounds expected earlier.
It expects gold sales volumes of 780,000 ounces in 2020, up from 775,000 ounces projected earlier. The company now expects sales of 80 million pounds of molybdenum, down from 88 million pounds expected earlier.
Revised Operating Plan
Freeport issued a revised operating plan with focus on maximizing cash flow and liquidity in a weak as well as uncertain economic environment. The company is implementing a series of actions to reduce operating costs and capital spending.
For 2020, the company intends to reduce operating costs by nearly $1.3 billion (or around 18%) and lower capital expenditures by roughly 30% or $800 million. It also plans to lower estimated exploration and administrative costs by around 20% (roughly $100 million) in 2020. Moreover, the company expects copper sales volumes in the Americas to reduce by around 15%.
Price Performance
Freeport’s shares have lost 36% in the past year compared with the industry’s 29.4% decline.
Zacks Rank & Key Picks
Freeport currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the basic materials space are Newmont Corporation (NEM - Free Report) , Barrick Gold Corporation (GOLD - Free Report) and Franco-Nevada Corporation (FNV - Free Report) . While Newmont and Barrick sport a Zacks Rank #1 (Strong Buy), Franco-Nevada carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Newmont has an expected earnings growth rate of 90.2% for 2020. The company’s shares have surged 97.5% in the past year.
Barrick has an expected earnings growth rate of 60.8% for 2020. Its shares have returned 108.3% in the past year.
Franco-Nevada has an expected earnings growth rate of 19.2% for 2020. The company’s shares have soared 91% in the past year.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>