Freeport-McMoRan sold 1 billion pounds of copper and 409,000 ounces of gold, up 24% and 59%, respectively, compared to the year-ago period. That enabled the company to generate strong adjusted income of $1.6 billion, or $1.07 per share. That beat the analysts' consensus estimate by $0.15 per share. The company also benefited from higher metals prices -- copper was up 18.2% while gold was 12.1% higher -- and low average unit costs of $1.33 per pound of copper during the quarter.
The copper miner also generated healthy operating cash flow of $1.7 billion. That enabled it to fund $700 million of capital expenses while returning $1.1 billion to investors via its share repurchase program.
However, what caught investors by surprise was its outlook. Freeport-McMoRan trimmed its second-quarter sales outlook from 1.075 billion pounds to 1.04 billion pounds. It also cut its guidance for the third and fourth quarters. The company also expects its copper costs to average $1.44 a pound this year. This lower production and higher expenses will impact its margins and earnings in the coming quarters.
Freeport-McMoRan took advantage of strong copper and gold prices in the first quarter to deliver better-than-expected earnings. Unfortunately, its sales outlook overshadowed those strong results. However, as long as copper demand remains robust, Freeport should continue generating a lot of cash that it can use to expand its future output and reward shareholders.