Operating income in Q1 2023 was lower due to a combination of **lower revenues** and **higher costs**. Revenues dropped primarily because of reduced sales volumes of copper and gold along with a decrease in the average realized price for copper, which significantly impacted overall income. Additionally, **increased production costs**—including a rise in unit net cash costs for copper from **$1.33 per pound to $1.76 per pound**—and higher expenses related to maintenance, supplies, and energy further strained profitability. Operational challenges such as a significant weather event in Indonesia and civil unrest in Peru also disrupted production, contributing further to the decline in operating income.  **[0000831259-23-000016_a1q2023exhibit991.htm:3]** **[0000831259-23-000023_fcx-20230331.htm:25]** **[0000831259-23-000023_fcx-20230331.htm:21]** **[FCX_3247028_2]** 

Why was Operating income so low in Q1 2023?

The surge was driven by **net revisions to long-term historical environmental obligations**, which increased by **$56 million** in Q1 2023, reflecting adjustments made to FCX's long-term environmental responsibilities.  **[0000831259-23-000023_fcx-20230331.htm:28]** 

What drove the surge in Environmental obligations in Q1 2023?

The documents indicate that the **mining exploration and research expenses** for FCX increased from **$25 million** in Q2 2022 to **$42 million** in Q2 2023. However, they do not provide specific reasons for this spike. Instead, the documents mention that FCX’s exploration activities generally focus on identifying potential mineral reserve and resource additions at its operating mines and select properties on care and maintenance status.  **[0000831259-23-000029_a2q2023exhibit991.htm:11]** 

Why did Mining exploration expenses spike in Q2 2023?

The drop in net income attributable to common stockholders in Q1 2023 was primarily driven by a mix of factors. **Lower copper and gold sales volumes** were a key contributor, as the transition of PT-FI's commercial arrangement to a tolling arrangement deferred approximately **110 million pounds of copper** and **110 thousand ounces of gold** from Q1 2023 production.  **[0000831259-23-000023_fcx-20230331.htm:21]** **[0000831259-23-000023_fcx-20230331.htm:25]** **[0000831259-23-000016_a1q2023exhibit991.htm:25]**  Additionally, the **average realized copper price** fell from **$4.66 per pound** to **$4.11 per pound**, which further pressured revenues.  **[0000831259-23-000016_a1q2023exhibit991.htm:3]** **[0000831259-23-000023_fcx-20230331.htm:25]**  There were also **increases in costs**, including higher unit net cash costs for copper and elevated site production and delivery costs, which added to expenses.  **[0000831259-23-000016_a1q2023exhibit991.htm:3]** **[0000831259-23-000023_fcx-20230331.htm:25]**  Operational challenges stemming from a significant weather event in Indonesia, civil unrest in Peru, and productivity issues in the U.S. compounded these issues.  **[0000831259-23-000023_fcx-20230331.htm:21]**  Moreover, **higher capital expenditures** (rising from **$723 million** to **$1,121 million**) along with increased **net charges** (from **$38 million** to **$94 million**) also played a role in the decline.  **[0000831259-23-000016_a1q2023exhibit991.htm:21]** **[0000831259-23-000016_a1q2023exhibit991.htm:3]** 

Why did net income attributable to common stockholders drop in Q1 2023?

The decline in Q1 2023 revenues was due to a combination of factors. **Lower sales volumes** were a primary driver, with copper sales volumes decreasing by **192 million pounds** and gold sales volumes declining by **139 thousand ounces** compared to Q1 2022. Additionally, there were **lower average realized prices**, with copper prices dropping from **$4.66 per pound to $4.11 per pound**. Furthermore, a transition to a **tolling arrangement** led to the deferral of approximately **110 million pounds of copper and 110 thousand ounces of gold** from Q1 2023 production to future periods. These elements together resulted in a significant revenue decline.  **[0000831259-23-000023_fcx-20230331.htm:26]** **[0000831259-23-000023_fcx-20230331.htm:17]** **[0000831259-23-000016_a1q2023exhibit991.htm:3]** **[0000831259-23-000023_fcx-20230331.htm:25]** **[0000831259-23-000016_a1q2023exhibit991.htm:24]** 

Why did Revenues decline in Q1 2023?

ff6bb7569d0fd18fd88b5021123774f9690a6a713a3aed8ac3c7d48d978ebc2e

The marked increase in operating cash flows in Q1 2024 was driven by several factors, including **higher net income**, an increase in **depreciation, depletion, and amortization**, and higher **net charges for environmental and asset retirement obligations**. Additionally, **changes in working capital**—notably a significant inflow from accrued income taxes and the timing of other tax payments—contributed to the improvement, along with overall **strong operational performance** in copper and gold sales.  **[0000831259-24-000013_a1q2024exhibit991.htm:21]** **[0000831259-24-000013_a1q2024exhibit991.htm:1]** **[0000831259-24-000019_fcx-20240331.htm:21]** 

What drove the marked increase in Operating Cash Flow in Q1 2024?

The significant jump in environmental charges in Q1 2024 was driven by several factors. **FCX’s net charges increased from $117 million in Q1 2023 to $224 million in Q1 2024**, primarily due to substantial charges across different areas. In mining operations, the company recorded **$256 million** in asset retirement obligation additions tied to revised closure plans and updated cost estimates under the Global Industry Standard on Tailings Management. For oil and gas properties, **$109 million** was charged related to production, delivery, and assumed abandonment obligations following bankruptcies of other companies. Additionally, environmental obligations saw **$56 million** in adjustments for remediation activities at a former processing facility in Steubenville, Ohio, and groundwater remediation at a historical smelter site in Blackwell, Oklahoma.  **[0000831259-24-000019_fcx-20240331.htm:15]** **[0000831259-24-000019_fcx-20240331.htm:48]** **[0000831259-24-000031_fcx-20240630.htm:18]** 

What led to the significant jump in environmental charges in Q1 2024?

The documents do not provide a definitive explanation for the negative value reported in Q1 2024. One potential interpretation is that unique accounting adjustments or timing differences in customer payments might have contributed to the negative figure of **(582) million USD** reported in Q1 2024.  **[0000831259-24-000019_fcx-20240331.htm:2]**  Another document highlighted that factors such as higher sales volumes and changes in commodity prices can affect the accounts receivable balance, though it did not explicitly link these factors to a negative result.  **[0000831259-24-000019_fcx-20240331.htm:1]** **[0000831259-24-000013_a1q2024exhibit991.htm:20]** 

Why did Accounts Receivable swing to a negative value in Q1 2024?

The dramatic change in **Inventories** in Q1 2024 was driven by several factors. **Operational adjustments** in FCX's production and delivery—impacted by variability in ore grades and shipment timing—played a significant role.  **[0000831259-24-000013_a1q2024exhibit991.htm:25]** **[0000831259-24-000019_fcx-20240331.htm:21]**  In addition, **deferred profits** from intercompany sales, which are only recognized when final sales to third parties occur, contributed to the variation in inventory levels.  **[0000831259-24-000013_a1q2024exhibit991.htm:25]** **[0000831259-24-000013_a1q2024exhibit991.htm:19]**  **Copper market dynamics**, including changes driven by fluctuating prices such as the recorded average of **$4.01 per pound** for provisionally priced copper sales, also had an influence.  **[0000831259-24-000013_a1q2024exhibit991.htm:25]**  Lastly, ongoing **Indonesia smelter projects**, notably the construction of the Manyar smelter, affected inventory levels through the reallocation of materials and resources.  **[0000831259-24-000019_fcx-20240331.htm:21]** 

What caused the dramatic change in Inventories in Q1 2024?

The documents do not provide a detailed explanation for the increased capital expenditures. However, they indicate that Freeport-McMoRan is involved in various development activities and potential expansion projects—specifically mentioning the potential expansion of the **Bagdad operation in Arizona** and projects at the **Safford/Lone Star operation**—which could be contributing factors.  **[0000831259-24-000013_a1q2024exhibit991.htm:5]** 

What factors contributed to the increased Capex for North America copper mines in Q1 2024?

887b19433de5f78a99fd39096d03ab3861f8236eff1884581f128b4388af8da9

Cash and cash equivalents (USD, millions)

Restricted cash and cash equivalents (USD, millions)

Trade accounts receivable (USD, millions)

Value added and other tax receivables (USD, millions)

Inventories: Product (USD, millions)

Materials and supplies, net (USD, millions)

Mill and leach stockpiles (USD, millions)

Other current assets (USD, millions)

Total current assets (USD, millions)

Property, plant, equipment and mine development costs, net (USD, millions)

Long-term mill and leach stockpiles (USD, millions)

Other assets (USD, millions)

Total assets (USD, millions)

Accounts payable and accrued liabilities (USD, millions)

Accrued income taxes (USD, millions)

Current portion of debt (USD, millions)

Current portion of environmental and asset retirement obligations (USD, millions)

Dividends payable (USD, millions)

Total current liabilities (USD, millions)

Long-term debt, less current portion (USD, millions)

Environmental and asset retirement obligations, less current portion (USD, millions)

Deferred income taxes (USD, millions)

Other liabilities (USD, millions)

Total liabilities (USD, millions)

Common stock (USD, millions)

Capital in excess of par value (USD, millions)

Accumulated deficit (USD, millions)

Accumulated other comprehensive loss (USD, millions)

Common stock held in treasury, at cost (USD, millions)

Total stockholders’ equity (USD, millions)

Noncontrolling interests (USD, millions)

Total equity (USD, millions)

Total liabilities and equity (USD, millions)

3ad9848e73999be5f96065888d438bb7bd2a290021b12d5eec190cd12a271bbc

Revenues (USD, millions)

Total cost of sales (USD, millions)

Operating income (USD, millions)

Interest expense, net (USD, millions)

Income before income taxes and equity in affiliated companies’ net earnings (USD, millions)

Provision for income taxes (USD, millions)

Net income (USD, millions)

b4cf01f56097c841c36bafe4a53afbab39c830856ab4505e1ed9d5dd668222e5

Net cash provided by operating activities (USD, millions)

Net cash used in investing activities (USD, millions)

Net cash used in financing activities (USD, millions)

Net (decrease) increase in cash, cash equivalents and restricted cash and cash equivalents (USD, millions)

042121ec4b88fc378df94cda4fa24a88387cfc7ba8480f30baa79c68f52fccfe

96140f5dd0d94f5a5bc070888ee8a1b577727749280000ec5bed4368c8a0fc0b

Adjustments for Non-Cash Items [USD, Millions]

Stock-Based Compensation [USD, Millions]

Changes in Working Capital [USD, Millions]

Capital Expenditures (CapEx) [USD, Millions]

Proceeds from Debt [USD, Millions]

Repayments of Debt [USD, Millions]

Share Repurchases [USD, Millions]

Dividend Payments [USD, Millions]

Net Change in Cash [USD, Millions]

da29f3ba37eebe2df074a36c105f80df227e4697d357f9349e5579129e05367d

29a84f711ed9a5de7a0c3e700449b7d3becd0e1cdf5479910767a9e38d246695

Gross profit per pound of copper (By-Product Method) for South America operations (USD per pound)

Gross profit per pound of copper (Co-Product Method) for South America operations (USD per pound)

Unit net cash costs of copper (By-Product Method) for South America operations (USD per pound)

Unit net cash costs of copper (Co-Product Method) for South America operations (USD per pound)

Copper sales volumes for South America operations (millions of recoverable pounds)

Gross profit per pound of copper (By-Product Method) for North America copper mines (USD per pound)

Copper sales volumes for North America copper mines (millions of recoverable pounds)

Gross profit per pound of copper (By-Product Method) for Indonesia operations (USD per pound)

Unit net cash costs of copper (By-Product Method) for Indonesia operations (USD per pound)

Copper sales volumes for Indonesia operations (millions of recoverable pounds)

Gold sales volumes for Indonesia operations (thousands of recoverable ounces)

Molybdenum sales volumes for Molybdenum mines (millions of recoverable pounds)

53823c048eac777790996670de67d86366ed30f7cdb575a70469e6941601b1a6

fcb2a36cd430cbc4fc4069eb93b52b7995d27db572a112d9634f90c07aceeb19

3c6d5ee9fe8e8e7ca22587003b3f2202c630d3ea46c78327f74529c140f1a106

FREEPORT-MCMORAN (FCX)

Financials