FREEPORT-MCMORAN INC (FCX)·Q3 2025 Earnings Summary

Executive Summary

• Solid headline quarter despite Indonesia suspension: revenue $6.97B and adjusted EPS $0.50 beat consensus; GAAP EPS $0.46. Unit net cash costs held at $1.40/lb as higher by‑product credits offset lower Indonesia volumes . Versus Q2, revenue declined on Indonesia disruption; versus Q3’24, revenue rose on stronger realizations .
• Significant update to FY25 outlook post-incident: FY25 copper/gold sales cut to ~3.5Bn lbs/1.05Moz (from 3.95Bn/1.3Moz) and C1 cost raised to $1.68/lb; FY25 OCF guided to ~$5.5B at $4.75/lb Cu; FY25 capex trimmed to ~$4.5B (from $4.9B) .
• Grasberg restart plan: PB2/PB3 targeted for 2Q26, PB1 South mid‑2027, PB1C end‑2027; risk mitigations include concrete plugs isolating PB1C and new imaging (muon) technology; government aligned on approach .
• Capital discipline and liquidity: net debt ex‑downstream project debt ~$1.7B; cash $4.3B; no 2026 note maturities; dividend $0.15/share and $3B remaining buyback authorization maintained .
• Stock catalysts: clarity on Indonesia ramp schedule and insurance recoveries (coverage up to $700mm for underground losses), U.S. copper COMEX premium dynamics, and scaling of leach initiative in Americas .

What Went Well and What Went Wrong

• What Went Well

  • Pricing and costs: Average realized copper price rose to $4.68/lb (vs $4.54 in Q2; $4.30 YoY), and consolidated C1 costs held at $1.40/lb, below July guidance on stronger by‑product credits .
  • Balance sheet resilience: Cash $4.3B, total debt $9.3B, no senior note maturities in 2026; net debt ex‑PTFI downstream ~$1.7B supports dividend and optionality .
  • Technology and process advances: Leach initiative contributed 56M lbs in Q3 (154M YTD), with target of 300M lbs in 2026; adoption of muon imaging to improve cave shape monitoring .

• What Went Wrong

  • Indonesia mud rush: Operations suspended following Sept 8 incident causing 7 fatalities and ~90M lbs Cu / ~80k oz Au production impact in Q3; Q4 assumes minimal Indonesia contribution .
  • Guidance reset: FY25 copper/gold sales lowered to ~3.5Bn lbs/1.05Moz and C1 cost raised to $1.68/lb vs prior $3.95Bn/1.3Moz and $1.55/lb, reflecting phased restart .
  • Idle facility costs: Q3 included $171mm of idle facility and recovery costs (excluded from C1); Q4 is expected to include ~+$450mm of expensed idle costs as mining remains largely paused in Indonesia .

Financial Results

Financials vs prior year, prior quarter, and estimates

Estimates vs actuals (Street consensus*)

Values with asterisks (*) retrieved from S&P Global.

Segment and volumes

Americas vs Indonesia unit cost framework (C1)

Non‑GAAP adjustments

• Adjusted net income excludes $48mm after‑tax charges ($0.04/share) in Q3, primarily idle facility and recovery costs related to the incident, plus smelter remediation and other items .

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “Our strong third‑quarter 2025 results were overshadowed by the tragic incident at our Grasberg operation in September… we remain steadfast in our commitment to prioritize the safety of our workforce above all else.” — Kathleen Quirk, CEO .
• “We’re putting plugs in the panels in PB1C… five plugs… done before we get PB2 started up.” — Management on safety mitigations .
• “PB2 and PB3 are scheduled to begin ramp‑up of production in the second quarter of 2026… PB1 South mid‑2027… PB1C end of 2027.” — Operations update .
• “We’re progressing efforts to extend PTFI’s operating rights beyond 2041… expect to submit a formal application for extension prior to the end of the year.” — Strategic outlook .

Q&A Highlights

• Safety and restart approval: Indonesian authorities have been embedded with FCX since day one; conceptually approved the path; PB2/PB3 restart contingent on concrete plugs and ventilation reinstatement .
• Q4 idle costs: ~+$450mm of idle facility/depreciation to be expensed, winding down through 2026 as ramp progresses; excluded from C1 cost metrics .
• Capex placeholder and insurance: ~+$250mm placeholder for equipment/chute replacements embedded in 2026 capex; separate from up to $700mm insurance coverage .
• Technology mitigations: Hammer drilling to dewater mud zone could deliver holes every other day; muon imaging reinstalls to monitor cave geometry and flow .
• U.S./Americas outlook: Leach program on track to ~300M lbs in 2026 with additive and heat scaling; U.S. net cash costs expected to trend down as volumes/efficiencies improve .

Estimates Context

• FCX beat Street on revenue and adjusted EPS: $6.97B vs $6.73B*, and $0.50 vs $0.41*; gains supported by stronger realized prices and lower‑than‑guided C1 costs from by‑product credits, partially offset by Indonesia volume shortfall . Values with asterisks (*) retrieved from S&P Global.
• Estimate revisions likely: FY25 sales and C1 cut/raise respectively, plus Q4 idle costs, imply lower FY25 EBITDA/FCF vs prior Street models; multi‑year ramp plan offers 2027–2028 EBITDA step‑up once GBC is restored .

Key Takeaways for Investors

• Near‑term headwind, medium‑term setup: Q4 idle costs and minimal Indonesia volumes pressure FY25 prints; staged ramp and clearer risk mitigations support recovery from 2Q26 onward .
• Pricing leverage intact: Higher realized copper (COMEX premium) and by‑product credits cushioned margins; monitor U.S. tariff cost pass‑throughs .
• Capital discipline and liquidity mitigate risk: Capex deferrals, $4.3B cash, low net debt ex‑project finance, and no 2026 maturities provide flexibility to execute the restart plan while maintaining base/variable dividend .
• Watch insurance proceeds and regulatory milestones: Potential recoveries (up to $700mm) and IUPK extension progress could de‑risk cash flows and valuation .
• Operational catalysts: Execution on concrete plugs, de‑mud/damage cleanup, muon imaging deployment, and PB2/PB3 restart milestones into 2Q26 .
• Americas growth lever: Leach scale‑up and U.S. projects (Bagdad, Lone Star, El Abra) remain key medium‑term contributors independent of Indonesia timing .
• Risk monitor: Indonesia restart timing/conditions, commodity prices, and potential tariff‑related cost inflation in U.S. supply chains .