Freeport-McMoRan Inc. (FCX) Earnings Call Transcript & Summary

Hello, and welcome to Freeport-McMoRan Inc. 2020 Annual Meeting of Stockholders. Please note that today's meeting is being recorded. [Operator Instructions] It is now my pleasure to turn today's meeting over to Richard C. Adkerson, Vice Chairman of the Board, President and Chief Executive Officer of Freeport-McMoRan. Mr. Adkerson, the floor is yours.

Thank you. I want to welcome all of you to the 2020 Annual Meeting of Stockholders of Freeport-McMoRan. We appreciate your attendance, your interest and most importantly, your support of the company during these sober times. This, of course, is the first virtual meeting we're having. And again, thank you for joining us. I'm Richard Adkerson, Vice Chairman, President and CEO of the company and Chairman for this meeting. Before I call the meeting to order, I'd like to make a few opening remarks. We are all facing challenging times in our country and across the globe. First, in dealing with the international health crisis, its economic aftermath and widespread and now most recently, the challenges in the U.S. associated with equality and justice. Me personally, this resonates. I grew up in the Deep South in a racially prejudice society. Fortunately, at a young age, I recognized how fundamentally wrong racism and inequality are. Throughout my business career, I've encountered prejudices and social injustice in countries around the world. As a company, we embrace inclusion and diversity in our workplace as a strength. We recognize the importance of equality and respect for one another for the long-term success as an organization and because it's just fundamentally the right thing to do. As a company, we are now focused on protecting the health and safety of our workforce, their families and the communities where we operate and safeguarding our business during this difficult time for all of us. I will now like to call the meeting to order. The meeting will follow the order of business and will be conducted in accordance with the rules of order, copies of which are posted on the webcast screen. Stockholders of record who have joined the meeting today in accordance with the instructions set forth in our proxy materials may vote, view the list of stockholders of record and submit questions pertinent to meeting matters during the meeting. [Operator Instructions] Questions that are pertinent to meeting matters will be answered live during the question-and-answer period. Any questions that cannot be answered due to time constraints can be submitted to Investor Relations as outlined in our proxy materials. As a reminder, if you join today's meeting as a guest, you will not be allowed to vote or submit questions during the meeting. As always, we are available to consider your questions through our communications and Investor Relations team. I would now like to acknowledge my fellow directors. Gerald Ford, our nonexecutive Chairman of the Board, Gerry is also Chair -- also Chairman of the Board of Hilltop Holdings; Lydia Kennard, Lydia is President and CEO of KDG Construction Consulting; Dustan McCoy, Dustan is a retired Chairman and CEO of Brunswick Corporation; John Stephens, our newest Board member, John is Senior Executive Vice President and CFO of AT&T; Fran Townsend, Fran is Executive Vice President of Worldwide Government, Legal and Business Affairs at MacAndrews & Forbes. I would now also like to introduce the following 2 members of our management team participating in today's virtual meeting. David Joint, Vice President, Investor Relations; and Monique Cenac, our Assistant General Counsel and Corporate Secretary of the company, who also is serving as Secretary of the meeting. Also in attendance today are Ron Butler and Brent Papek, partners in Ernst & Young, our independent registered public accounting firm. Ron and Brent are available to respond to appropriate questions during the question-and-answer period. I will now turn the call over -- the meeting over to Ms. Cenac, the Secretary of the meeting today.

Mr. Chairman, a complete list of stockholders entitled to vote at this meeting arranged in alphabetical order, with the address and number of shares of common stock held by each stockholder as of the close of business on April 8, 2020, the record date, is posted on the webcast screen and available for inspection by stockholders during the meeting. This list of stockholders has also been open for examination at the company's headquarters for any purpose relevant to this meeting during ordinary business hours for the past 10 days. I have been informed by the inspector of election that there are present in person, including by remote communication or by proxy, stockholders entitled to vote holding at least the majority of the outstanding shares of common stock on the record date. Accordingly, a quorum is present. We will file with the record of the meeting assigned affidavit evidencing that notice of the meeting accompanied by either a notice of Internet availability of proxy materials or proxy statement, a form of proxy and an annual report have been duly mailed to each stockholder of record. Computershare will serve as inspector of election to tabulate the votes at the meeting. The inspector of election has taken and subscribed an oath, which will be filed with the minutes. I will now turn the meeting back over to the Chairman to comment on our business. Before he begins, I would like to remind everyone that today's presentation and certain of our comments on this live audio webcast include forward-looking statements, and actual results may differ materially. I would like to refer everyone to the risk factors described in our 2019 Form 10-K and our first quarter 2020 Form 10-Q. I will now turn the meeting back over to the Chairman.

Thank you, Monique. As I indicated in my opening remarks, at Freeport, we are prioritizing the health and safety of our workers in dealing with this pandemic. At the same time, we're supporting communities where we operate, and we're serving customers with their ongoing requirements for copper, copper is an essential metal for the global economy. As a leading responsible copper producer, we are committed to all stakeholders. Our focus on workers and communities and the environment have been embedded in our corporate culture for many years. We, as a company [indiscernible] to be successful in generating long-term value for shareholders unless we address sustainability appropriately and effectively. This commitment is being highlighted through our actions in response to the COVID-19 pandemic. Our most recent annual report on sustainability was released today. It's available on our website. It summarizes all of our programs in this highly important and critical area. In addition, I'm pleased to note that we have also published and posted to our website, our first climate report, which details our efforts to date and our plans to address climate-related risks and opportunities going forward. As we protect our workers, we are addressing the current financial challenging that the pandemic has brought on globally, using our deep management experience and successfully responding to past financial check crises. In April, we announced a comprehensive response by our company with carefully planned actions to protect liquidity by cutting costs and maximizing cash flow. Each of our individual mining and processing operations developed a plan to maximize near-term cash flow at low copper prices while protecting long-term asset values. Our revised plans are outlined in a press release and the presentation dated April 24. Copies of these are available at fcx.com. Our actions provide substantial liquidity for our business as we navigate the current business environment, and these plans put us in a strong position as we enter 2021 when we will add large scale, low-cost volumes of production from our Grasberg mine in Papua in Indonesia as we ramp up our underground mines there. Significantly, we preserve our plan to double our cash flow EBITDA in 2021 from 2020 levels and expect to generate strong cash flows beginning in 2021 and continue to be in years beyond. Freeport benefits from extraordinarily long-lived and durable reserves and resources. I'm confident that the plans we are executing will make our assets valuable for shareholders in the future. Freeport is foremost in copper. Looking beyond the troubled current conditions, copper is widely considered the best positioned major commodity from a fundamental supply/demand standpoint. Freeport's portfolio of copper assets is large and high quality. We are an established industry leader as the operator of mines that are among the largest in the world. We operate all of our assets, which provides valuable synergies and flexibility across the portfolio. Our assets are long-lived, and durable with embedded options, reserve and resource growth. Through strong execution over many years, we have earned the trust and respect of our partners, our customers, our suppliers, the financial market and importantly, our workers, the communities and host countries where we operate. Our underground block caving experience is among the most extensive and longest-standing in the history of the global mining industry. This is critically important factor as we transition our Grasberg mine in Papua in Indonesia to become the largest block caving operation in the world. Our experience and battle-tested management team has demonstrated the capabilities to perform in good times and bad. We are confident of our ability to prove our metal as we've done in the past. Thank you. I look forward to any questions that you may have. It is now in order to open the polls and commence the voting by stockholders. As set forth in the company's proxy statement, the stockholders will vote on 3 items. The first item is the election of 6 directors. The second item is the ratification of the appointment of Ernst & Young as the company's independent registered public accounting firm for 2020. And the third item is the approval on an advisory basis of the compensation of the company's named executive officers. There are no other proposals to be voted upon at this meeting since no other proposals were submitted in the manner prescribed in the company's bylaws or in a manner otherwise prescribed for and sanctioned by applicable laws.

I certify that the 3 items you have announced are the only items of business to be properly voted on at the meeting pursuant to the company's bylaws. If you have already submitted your proxy, your vote has been counted, and no further action on your part is necessary. If you are a stockholder entitled to vote and have not yet voted or if you want to change your previously cast vote, please do so now via the website used to access this meeting. The polls will remain open until the Chairman closes them. [Voting]

At this time, we will now address any stockholder questions related to any of the items being voted upon at the meeting that have been submitted. In accordance with the rules of order, the entire question-and-answer period will be limited to a total of 20 minutes. I'll now turn the call over to David Joint, our Vice President of Investor Relations to read any questions we have received before I respond.

Mr. Chairman, there are no questions at this time.

Thank you, David. This concludes the question-and-answer period. The polls are about to close. So if you've not yet voted, please do so now. [Voting]

The polls are now closed on all items of business. It is now 1:15 Eastern Time. I ask the secretary to present to the meeting the preliminary voting results.

Any proxies submitted during the meeting will be included in the final results of the voting. Subject to a final tabulation, we report the following preliminary results provided by the inspector of election: with respect to the election of the 6 nominees for Director, holders representing at least 87% of the votes cast have voted in favor of the election of each Director. Holders representing 99% of the shares of common stock present in person or represented by proxy and entitled to vote on the matter have voted to ratify the appointment of Ernst & Young as the company's independent registered public accounting firm for 2020. 1% have voted against and less than 1% have abstained from voting. Holders representing 87% of the shares of common stock present in person or represented by proxy and entitled to vote on the matter have voted for approval on an advisory basis of the compensation of the company's named executive officers. 13% have voted against and less than 1% have abstained from voting.

I declare that the 6 persons nominated for election as directors have been duly elected. I declare that the appointment of Ernst & Young as the company's independent registered public accounting firm for 2020 has been duly ratified. I declare that the stockholders have approved on an advisory basis, the compensation of the company's named executive officers.

Our current report on Form 8-K will be filed with the SEC within 4 business days, reporting the results of the voting at today's meeting, a copy of which will be available on the company's website.

All items of business have now been completed. There being no further business to come before the meeting, the meeting is now adjourned. Thank you all for attending today's meeting. Operator, you may now conclude the call.

This concludes the meeting. You may now disconnect.