Freeport To Redeem 2 Series Of Senior Notes Worth $454M

Freeport-McMoRan Inc. (NYSE:FCX) issued notices to redeem $454 million total principal amount of Freeport and Freeport-McMoRan Oil & Gas LLC senior notes on Apr 4.

The move will result in total cash interest cost savings worth $30 million per year. Freeport expects to realize a net gain of roughly $10 million in second-quarter 2018 with regards to these redemptions.

Notably, Freeport had total debt of $13.1 billion and consolidated cash of about $4.4 billion at the end of 2017. Following these redemptions and the Mar 15 repayment at maturity of the company’s 2.375% senior notes, Freeport’s total debt will come down to roughly $11.2 billion.

Freeport’s shares have gained 26.8% in the last six months, outperforming the industry’s 18% growth.

Freeport reported net income (attributable to common stock) of 71 cents per share for fourth-quarter 2017 compared with 21 cents recorded a year ago. Adjusted earnings were 51 cents a share in the quarter, which beat the Zacks Consensus Estimate of 49 cents.

Revenues went up around 15.2% year over year to $5,041 million in the quarter, surpassing the Zacks Consensus Estimate of $4,811.2 million.

Freeport remained focused on reducing debt during the quarter. The company repaid $1.7 billion of debt (including the redemption of $617 million of senior notes due 2020) during the fourth quarter.

For 2018, the company expects operating cash flows to exceed $5.8 billion (including $0.3 billion in working capital and other tax payments) and capital expenditures to be around $2.1 billion. These include $1.2 billion for major mining projects mainly related to underground development in the Grasberg and the Lone Star oxide project.

Zacks Rank & Stocks to Consider

Freeport currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Steel Dynamics, Inc. (NASDAQ:STLD) , Westlake Chemical Corporation (NYSE:WLK) and United States Steel Corporation (NYSE:X) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Steel Dynamics has an expected long-term earnings growth rate of 12%. Its shares have soared 39.2% over the last six months.

Westlake Chemical has an expected long-term earnings growth rate of 12.2%. Its shares have moved up 48.1% over the past six months.

U.S. Steel has an expected long-term earnings growth rate of 8%. Its shares have rallied 61.7% over the last six months.

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