Freeport-McMoRan, Inc.

Ladies and gentlemen, thank you for standing by. Welcome to the Freeport-McMoran Second Quarter Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. If you wish to ask a question during the Q&A session, press star 1 on your touch-tone phone. If you require assistance during the conference, please press star 0. I would now like to turn the conference over to Ms. Kathleen Quirk, President and Chief Financial Officer. Please go ahead, ma'am.

Thank you and good morning and welcome to the Freeport-McMoran second quarter conference call. FCX released our results earlier this morning and a copy of today's press release and slides are available on our website at fcx.com. Our conference call today is being broadcast live on the internet and anyone may listen to the call by accessing our website homepage and clicking on the webcast link for the conference call. In addition to analysts and investors, the financial press has been invited to listen to today's call, and a replay of the webcast will be available on our website later today. Before we begin our comments, we'd like to remind everyone that today's press release and certain of our comments on the call include forward-looking statements, and actual results may differ materially. We'd like to refer everyone to the cautionary language included in our press release and presentation materials and to the risk factors described in our SEC filings. On the call with me today, Richard Atkerson, our chairman and chief executive officer, Mark Johnson, our chief operating officer for Indonesia, Josh Onsred, our chief operating officer for the Americas, Mike Kendrick, who leads our molybdenum business, Rick Coleman, who leads our construction and growth projects, and Steve Higgins, our chief administrative officer. I'll start by briefly summarizing our financial results, and then we'll turn the call over to Richard, who will review our outlook and the slide presentation materials that have been provided to you. As usual, after our remarks, we'll open up the call for questions. Today, FCX reported second quarter 2021 net income attributable to common stock of $1.08 billion, or 73 cents per share. That included net charges totaling $56 million, or 4 cents per share, detailed on page Roman numeral 7 of our press release. Adjusted net income attributable to common stock totaled $1.14 billion, or 77 cents per share. Our adjusted EBITDA for the second quarter of 2021 totaled 2.7 billion, and you can find a reconciliation of our EBITDA calculations on page 35 of our slide deck materials. We had a strong second quarter. Our copper sales of 929 million pounds and gold sales of 305,000 ounces were significantly above the year-ago quarter. but our sales were approximately 5% lower for copper and 8% lower for gold relative to our recent estimates, primarily reflecting the timing of shipments from Indonesia. Our annual guidance is consistent with our prior estimates. Our results in the second quarter benefited from strong pricing. Our second quarter averaged realized copper price of $4.34 a pound, was 70% higher than a year ago quarterly average. Our net unit cash cost of 148 per pound of copper on average in the second quarter was slightly above our estimate going into the quarter of 142 per pound, but that primarily related to non-recurring charges associated with a new four-year labor agreement at Cerro Verde. Operating cash flow generation was extremely strong, totaling $2.4 billion during the quarter. That included $0.5 billion of working capital sources. And our operating cash flow significantly exceeded our capital expenditures of $433 million during the quarter. Our consolidated debt totaled $9.7 billion at the end of June. And our consolidated cash and cash equivalents totaled $6.3 billion at the end of June. Net debt was $3.4 billion at the end of the quarter. And we achieved our targeted net debt level several months ahead of our schedule. I'd now like to turn the call over to Richard, and we'll be reviewing the slide materials that have been provided.

Go ahead, Richard. Thanks, everybody, for joining us. We are really pleased to report in what's now becoming a string of really strong operating performances for our company. And with this great positive outlook for our business, we're all really enthusiastic about it. Hoping all of you are staying healthy through this pandemic. Vaccinations are giving us an opportunity to protect ourselves and those around us. And we're working hard to encourage our people globally to take full advantage of this opportunity whenever possible. Our teams are working safely. We remain diligent with our COVID protocols that have been so effective. With the recent rise in cases globally, we are refocusing, redoubling our efforts, restoring some protocols that we had loosened to keep our team and community safe. Our results in the second quarter demonstrate really strong execution of our plans. really strong and favorable pricing for our product. Kathleen mentioned the shipping issue. Logistics is an issue globally. We basically met or slightly exceeded our production targets. We've been able to ship everything we produce. We would have beat our sales target. We also, common in the mining industry, had some one-off type issues affecting production. Without those and with shipping, we would have had a real strong beat on our previous guidance. Really important, our Grassberg underground ramp-up is proceeding on schedule. This is a remarkable and I would say a historic success for both our company and even the mining industry. Our team in Indonesia is doing remarkable and outstanding work, and this is building value for our shareholders. and long-term sustainable low-cost values for the future. Production, we're making money in the Americas, copper prices, production in the U.S. is increasing. Our Lone Star project in eastern Arizona is really exciting. We have a series of ongoing value-enhancing opportunities in the U.S. In front of us in South America, our teams in Peru and Chile, are navigating the pandemic. Effectively, we're restoring production that we had curtailed a year ago. We have achieved these outstanding financial results with the work and investments we've been making for many years. We're now generating significant cash flows, which will be sustainable for years in the future. This quarter alone, we had $2 billion in cash flow after capital spending. That's just remarkable considering where we were just a year ago. That being mentioned, and it's notable, that we reached our debt target several months earlier than our forecast earlier this year.