Freeport-McMoRan, Inc.

Ladies and gentlemen, thank you for standing by. Welcome to the Freeport McMoran third 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 one on your touchtone phone. If you require assistance during the conference, please press star zero. I would now like to hand the conference over to Ms. Kathleen Quirk, President and Chief Financial Officer. Please go ahead, ma'am.

Great, thank you and good morning everyone and welcome to the Freeport-McMoran conference call. Earlier this morning we reported our third quarter 2021 operating and financial results and a copy of today's press release and the 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 Ann Olson 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 FCX's SEC filings. On the call with me today, Richard Atterson, our chairman and chief executive officer, Mark Johnson, our COO of Indonesia, Josh Olmstead, our chief operating officer for the Americas, Steve Higgins, our chief administrative officer, Rick Coleman, who runs our engineering and construction business, and Mike Kendrick, who runs our molybdenum business. I'll start by briefly summarizing our financial results, and then we'll turn the call over to Richard, who will go through the materials in our slide presentation materials. After our formal remarks, we'll take your questions. Today, FCX reported third quarter 2021 net income attributable to common stock of $1.4 billion. That was 94 cents per share. an adjusted net income attributable to common stock of 1.3 billion, or 89 cents per share. The 89 cents per share excludes net credits totaling 5 cents a share, primarily associated with tax credits related to the release of valuation allowances at PT Freeport Indonesia, and a gain on the sale of FCX's remaining cobalt business. The details of our adjusted net income are reflected in our press release on page Roman numeral 7. We generated adjusted EBITDA for the third quarter of roughly $3 billion, and we've got a reconciliation of the EBITDA on page 37 of our slide deck. Favorable results in the third quarter reflect strong execution by our team, growing our production volume safely, efficiently, and responsibly. Our sales volumes for the quarter for copper exceeded a billion pounds. That approximated our prior estimate in July of 2021 and was above the year-ago period. Gold sales of 400,000 ounces were approximately 12% higher than our prior estimate and also significantly above the year-ago period. We also benefited from positive pricing for copper. Our third quarter average realized copper price was $4.20 per pound. That was substantially above the year ago period. And gold prices were slightly below the year ago period. We also benefited from improved molybdenum prices in the quarter, where prices nearly doubled from the year ago period. Net unit cash costs were $1.24 per pound in the third quarter. That was lower than our estimate going into the period, and we had some good performance from our leach production, which reduced our unit production costs in the period. Generated strong cash flows, and we've been doing that every quarter this year, generating $2 billion of operating cash flow, which exceeded capital spending of roughly $500 million during the quarter. Our balance sheet is strong. We ended the quarter with consolidated debt of $9.7 billion, and consolidated cash of $7.7 billion, which resulted in net debt of $2 billion. We had no borrowings under our credit facility and had $3.5 billion available. We also announced today some liability management where we called for redemption. Our outstanding notes due 2022 That has a total principal amount of $524 million. I'll now like to turn the call over to Richard, who will be referring to the slide presentation materials. Richard, go ahead.

Thanks, everyone. Thank you for joining our call. I'm really pleased to be able to review our strong performance for this quarter. where we are with the company. It's a special time. Several years ago in a call, I said if we could be fortunate enough to ramp up our underground production at Grasberg at the same time we had a positive copper market, it would be a great time for Freeport, and this is really a great time for us. We're going to focus on the future, but just one comment. I was last at Jobsite two years ago in October, And we were just completing the mining of the open pit and starting the ramp up of the Grassberg block cave. And so during this two year period, our progress has been nothing short of remarkable. And I really congratulate our team and the job site, but also in the Americas for what we've been able to accomplish, even in the face of all the distractions and challenges that COVID brought on. I hope you and all your family and your colleagues are staying healthy. This thing's not over. We're keeping our guards up. I encourage you to as well. We have at Freeport had a successful program to get vaccines to our people internationally. Over 90% of our people in South America are now vaccinated and 85% in Papua and Indonesia are vaccinated. We continue to be challenged at some of our operations in the United States, which is common across our country, unfortunately, but we're encouraging our people and making some progress there. But the news is we've been able to meet the challenge of COVID and accomplish what we're reporting to you today. Our copper volumes have grown over 20% from a year ago. And that reflects this really exceptional execution of our business. With these prices that we have today, we're generating very strong margin. Our EBITDA doubled from a year ago. Our strong operating cash flows that Kathleen mentioned in the quarter are really exceptional, particularly when you looked at our capital expenditures were only $500 million. Now, this is generating cash flows to now that we've met our debt target, and we met that at the end of June, way ahead of what we anticipated at the beginning of the year. We're now focused on managing these cash flows, and that's a happy time for us looking at investments for our long-term future. At the same time, we're being able to increase returns to shareholders and maintain a really strong balance sheet, which is going to be a real hallmark of our company going forward. Everybody's focused on carbon reduction and climate initiatives and COP26 coming up next month. It's going to be all over the papers. We published our second report on our climate initiatives. We put a lot more resources into it. We're really focused on it. As a company, Compared with other natural resource companies, we have much limited Scope 3 emissions and other natural resources. And we're really focused on our Scope 1 and 2 emissions and have a plan to achieve targets that we believe are realistic and achievable. We and the other 28 members of ICMM International Council of Mining and Metals, which I chair, have signed a commitment to work towards having zero net carbon emissions by 2050. And everybody's working hard on it. We're also continuing to make progress to certify all of our operations with the International Copper Association's copper mark. And this just clearly demonstrates our commitment to responsible production. You recall that I became chairman earlier this year. And when that occurred, I made a real commitment to build the kind of board that the company like ours really needs and deserves. We've added four new members in 2021. We added two this quarter, Marcelo Donatio and Sarah Lewis. That brings us to a total of eight independent directors, which have a broad range of experience, and it's going to be a real strength of our company going forward. Underlying all of this is the fundamental outlook for copper is incredibly favorable. Copper's role in the economy, and as the economy changes with global investments in infrastructure, and I know we have a controversy here, but industries are going to develop The world is getting increasingly focused on electrification with modern technology and intelligence. And then a new major element that people are talking about and recognizing now for demand that's coming, it's not here in real significance now, is energy making to reduce carbon. And across the board, those investments result in significant demands for copper. And then you've got, and we'll talk about this more, the commodity really supported by supply factors. I mentioned our climate report. It was reported in September. It's on our website. I encourage you all to take a look at it. It really details work in a much more comprehensive way than we did in our first report last year. about how our company will work to reduce greenhouse gas emissions and how we're approaching climate scenario analysis and we're reporting in line with recommendations of the task force and climate related financial disclosures we are as a company and as an organization firmly committed to this uh we we see it now every day operations in the west and and hurricanes on the gulf coast weather patterns all around the world. We all know we need our part for our company. As I said, as the rest of the world, the rest of the industry, it's going to create a lot of copper demand. We established a target to reduce our greenhouse gas emissions in Indonesia by 30%, which is a new target for us. We have this aspirational goal of net zero by 2050. Our two big issues are, one, the coal-powered power plant in Indonesia. A lot of power required for our massive operations there.