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Freeport (FCX) Misses Earnings and Revenue Estimates in Q1

Zacks Equity Research

Freeport-McMoRan Inc. FCX logged profits (attributable to common stock) of $31 million or 2 cents per share in first-quarter 2019, down around 96% from $692 million or 47 cents in the year-ago quarter.

The bottom line in the reported quarter excludes net charges of $36 million or 3 cents per share. The results were also hurt by lower copper production and prices.

Barring one-time items, adjusted earnings came in at 5 cents per share, which missed the Zacks Consensus Estimate of 8 cents.

Revenues went down around 22% year over year to $3,792 million. Also, the figure trailed the Zacks Consensus Estimate of $3,817.3 million.

Freeport-McMoRan Inc. Price, Consensus and EPS Surprise

 

Freeport-McMoRan Inc. Price, Consensus and EPS Surprise | Freeport-McMoRan Inc. Quote

Operational Update

Copper production fell around 18% year over year to 780 million pounds in the reported quarter.

Consolidated sales from mines were 784 million pounds of copper, 242,000 ounces of gold and 22 million pounds of molybdenum. Copper sales volume fell 21% year over year.

Consolidated average unit net cash costs of $1.78 per pound of copper for the first quarter were higher than 98 cents reported in the year-ago quarter.

Average realized price for copper was $2.90 per pound, down around 7% from $3.11 a year ago. Average realized price per ounce for gold fell around 2% to $1,291 from $1,312 in the year-ago quarter. Average realized price per pound for molybdenum was $12.69, up 6% year over year.

Financial Position

Cash and cash equivalents at the end of the quarter were $2,833 million, down roughly 23% year over year. The company had long-term debt of $9.9 billion, down around 11% year over year.

Freeport’s operating cash flows were $534 million in the quarter.

Guidance

Freeport anticipates consolidated sales volumes for 2019 to be roughly 3.3 billion pounds of copper, 0.8 million ounces of gold and 94 million pounds of molybdenum, including 800 million pounds of copper, 265,000 ounces of gold and 25 million pounds of molybdenum for second-quarter 2019.

For 2019, the company expects operating cash flows to be roughly $2.3 billion. Capital expenditures are expected to be around $2.5 billion, which includes $1.5 billion for major mining projects mainly related to underground development in Grasberg, Indonesia, and development of the Lone Star copper leach project.

Price Performance

Freeport’s shares have lost 11.6% in the past year compared with the industry’s 20.5% decline.



 

Zacks Rank & Key Picks

Freeport currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the basic materials space include Sandstorm Gold Ltd. SAND, Flexible Solutions International Inc. FSI and W. R. Grace & Co. GRA.

Sandstorm Gold has an expected earnings growth rate of 200% for the current year and carries a Zacks Rank #1 (Strong Buy). The company’s shares have gained around 16% over the past year.  You can see the complete list of today’s Zacks #1 Rank stocks here.

Flexible Solutions has an expected earnings growth rate of 171.4% for the current year and carries a Zacks Rank #2 (Buy). Its shares have rallied roughly 90% in the past year.

W. R. Grace has an expected earnings growth rate of 10.4% for the current year and carries a Zacks Rank #2. Its shares have gained around 9% in the past year.

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