Freeport-McMoran Inc. 2026 Q3 Earnings Call

Please go ahead, sir. Thank you, Regina, and good morning, everyone.

Welcome to the Freeport conference call. Earlier this morning, FCX reported its third quarter operating and financial results. A copy of today's press release with supplemental schedules and slides are available on our website, fcx.com. Today's conference call is being broadcast live on the internet. Anyone may listen to the conference call by accessing our website homepage and clicking on the webcast link. A replay of the webcast will be available on our website later today. Before we begin our comments, we would like to remind everyone that today's press release and certain of our comments on the call include non-GAAP measures and forward-looking statements, and actual results may differ materially.

Please refer to the cautionary language included in our press release in slides and to the risk factors described in our SEC filings, all of which are available on our website. Also on the call with me today are Richard Adkerson, Chairman of the Board, Kathleen Quirk, President and Chief Executive Officer, Maree Robertson, Executive Vice President and Chief Financial Officer, and other members of our management team. Richard will make some opening remarks, Kathleen and Maree will review our slide materials, and then we'll open up the call for questions.

Richard? Thanks, David. We appreciate you all for joining us today.

We've been looking forward to speaking with you about our strong third quarter results and our positive outlook for the future. We are pleased and proud of our team with the steady progress throughout the year achieved on the Grasberg ramp up and with our initiatives across our business to drive value. As we look forward, the table is set for growing our volumes in the near term, medium term, and longer term, supported by our portfolio of long-lived assets and by a qualified and experienced team. Leaders in Indonesia have expressed support for the extension of our operating rights beyond 2041. We continue to work with the Ministry of Energy and Mineral Resources on documentation to implement the memorandum of understanding we signed with the government of Indonesia. Freeport's growth plans match up exceptionally well with accelerating requirements for copper.

Electrification continues to advance at a rapid pace, bigger and faster than we've seen in the past, and copper is the metal of electrification. The world requires a lot more copper, and supplies are challenged. Freeport is particularly well-positioned to grow with the market. After working in this industry for decades, today's opportunity, where structural trends point to multiyear period of significant demand growth, is unique. We at Freeport have the right assets at the right time. With a strong team in the Freeport family and our strong financial positions, we are well-positioned to capture this opportunity for the benefit of our shareholders and all our stakeholders.

Kathleen? Great. Thank you, Richard, and thank all of you for participating on today's call, where we'll review our third quarter performance and update you on our initiatives, projects, and future outlook.

Today, we will be discussing our team's work across our global business to build value. Our solid progress and momentum to safely and sustainably restore large-scale production at Grasberg, drive operational excellence and new technology initiatives in the Americas, and advance plans for value-enhancing organic growth. Starting on slide 3, we show the highlights of our third quarter performance. Copper sales have increased in each of the last three quarters, and we expect fourth quarter sales to be the strongest of the year by far. Steady progress continues at Grasberg, with 67% ramp up achieved, and confidence is building toward full scale.

Strong operational execution, combined with the favorable metal price backdrop, provided significant margins, cash flows, and earnings. The diversity of our portfolio and pricing leverage for our U.S. business comes through in the results. Operating income for our U.S. mining operations more than doubled in the third quarter compared with last year's third quarter, with strong conversion to the bottom line. This contributed to an increase of over 80% in our consolidated net income compared with the year ago quarter. The progress achieved during 2026 sets us up for growing volumes and improving financial performance as we look ahead to 2027 and 2028. Additionally, we are advancing our future growth plans with a series of projects in progress. We returned nearly $1 billion to shareholders year to date, including $300 million in share purchases.

Our financial position remains strong, and as we look ahead, growing volumes combined with a positive market environment for our products sets us up for significant increase in cash flows to support our value-enhancing investment program and increasing returns to shareholders. Moving to the copper markets on slide 4. As a leading global supplier of refined copper, Freeport has strategic significance and is strongly positioned to benefit from copper's essential and increasingly important role in societies around the world. Copper's superior conductivity makes it the metal of electrification, and the global economy is rapidly becoming more electrified. Globally, copper demand is expected to rise in a number of applications, including the massive requirements for the power grid to support new technologies.

LME copper prices averaged $6.09 per pound year to date through September, and currently approximate $6.58 per pound on the LME, an increase of 16% since the start of the year. Our U.S. customers report robust copper demand associated with growing requirements for electricity and energy infrastructure, data center builds, and in the transportation sector. Copper continues to be strategically significant to China as the world's largest consumer to support its domestic power grid, technology advancement, and manufacturing of autos and consumer goods for growing exports. The sizable movement of product to U.S. warehouses continues, resulting in tight market conditions in the major consuming regions outside of the U.S. The situation underscores the strategic role of copper in the global economy, and supply chains to support future growth. The signals we see are clearly pointing to requirements for additional copper supplies to meet growing demand.

At Freeport, we have a valuable, geographically diverse portfolio of integrated copper assets with large-scale production facilities that are difficult to replicate, long life reserves and resources, and a portfolio of low risk, brownfield expansion opportunities to serve a growing market. I'm going to move to the operating highlights on slide five, where we summarize the highlights by geographic region. Starting with the U.S., we continue to focus on operating disciplines to improve efficiencies and productivity to grow production despite low ore grades. We were successful in improving our mining rates compared with the year ago quarter. However, an abnormally high frequency of extreme weather events in the third quarter, which have continued in the fourth quarter, disrupted some of the momentum achieved earlier in the year.

We are deploying new technology tools to enhance our operating models and are investing in more efficient trucks and mining equipment to support our objective of increasing U.S. production and reducing costs. We continue to pursue an exceptional opportunity to unlock meaningful value through application of new technologies for recovering copper in our leaching processes. Data from our work to date is supportive of a potential breakthrough, and we are looking forward to what we'll learn as we go through to 2027 as high-potential, next generation proprietary additives are deployed in the field. In South America, our flagship Cerro Verde operation in Peru continues to demonstrate solid operating performance and productivity consistent with a large-scale, world-class operation. At El Abra in Chile, ore grades and operating rates were impacted during the quarter by mine sequencing to address slope management.