Q1 2025 Freeport-McMoRan Inc Earnings Call
Ladies and gentlemen, thank you for standing by. Welcome to the Freeport-McMoRan's first quarter conference call. At this time all participants are in a listen-only mode.
Later, we will conduct a question and answer session.
If you wish to ask a question during the Q&A session, press star one on your touchstone phone. If you require assistance during the conference, please press star zero. I would now like to turn the conference over to Mr. David Joint by private and investor relations. Please go ahead, sir Thank you very much.
David Joint: Thank you, Regina, and good morning, everyone. Welcome to the Freeport-McMoRan conference call.
Earlier this morning, we reported FCX first quarter, 2025 operating and financial results. A copy of today's release with supplemental schedules and slides are available on our website, fcx.com
David Joint: Today's conference call is being broadcast live on the Internet. Anyone waiting to listen to the conference call by accessing our website homepage and clicking on the webcast link.
David Joint: In addition to annals and investors, the financial press has been invited to listen to today's call
David Joint: A replay of the webcast will be available on our website later today.
David Joint: Before we begin our comments, we'd like to remind everyone that today's press release in certain of our comments on the call include non-GAAP measures in forward-looking statements
David Joint: and Action Results made differ materially. Please refer to the cautionary language in our press release and slides into the risk factor described in our SEC filings, all of which are available on our website.
David Joint: Also on the call with me today are Richard Adkerson, Chairman of the Board of FCX, Kathleen Quirk, President and Chief Executive Officer, Marie Robertson, Executive Vice President and Chief Financial Officer, and other senior members of our management team
Speaker Change: Richard will make some opening remarks, Kathleen and Marie will review our slide materials and then we'll open up the call for questions
Richard.
Thank you David, and thank you all for joining us [inaudible]
Speaker Change: Kathleen and our team will review the details of the quarter and our outlook
Team Freeport is executing well in a complex environment.
Over the years, we've got a lot of experience in doing just that. [inaudible]
Facing problems with resilience and alertness.
and successfully executing our plans.
Government policy and tears are dominating financial markets
Speaker Change: At Freeport, we are focused on the basics to drive long-term value.
Our strategy has been clear for many years.
centered on being a global leader in copper.
Speaker Change: We have built our business with large-scale copper-producing assets and a long-term pipeline of organic growth projects [inaudible]
Speaker Change: supported by a strong balance sheet and a clearly articulated financial policy.
Speaker Change: This strategy places Freeport in a strong position before the world is heading [inaudible]
Speaker Change: Copper is an essential metal for the future and Freeport is foremost in copper
Speaker Change: We also have significant financial exposure to Zod and the world-class Muslim business.
Speaker Change: Kathleen and our senior management team are engaged in important initiatives to support the strategy.
as you will see, we're making significant positive progress.
Speaker Change: Our team is driving efficiencies and reducing costs while setting up the next generation of copper development projects
Speaker Change: Winery in March.
Speaker Change: <unk> celebrated its fifth anniversary in Indonesia this but.
Speaker Change: My first trip in Indonesia was 35 years ago.
Speaker Change: Hi, I'm delighted.
Speaker Change: With our current positive relationship with the government under.
Speaker Change: Under President <unk> leadership.
Speaker Change: We are well positioned in working together to secure long term operating rights for this incredible asset.
Speaker Change: It's the world's second largest copper mine in one of the world's largest go lives.
Speaker Change: All of this will generate large values.
Speaker Change: We're all stakeholders for decades to come.
Speaker Change: Gasoline.
Speaker Change: Thank you Richard and I'm going to start on slide three with our first quarter highlights.
Speaker Change: We have production of copper and gold were in line with our expectations going into the year incorporating planned maintenance activities at Grasberg.
Speaker Change: We exceeded expectations on copper sales and as we flagged in our March 31st update our gold shipments were impacted by timing.
Speaker Change: Unit costs were similar to what we guided to in January for the quarter and a bit better than our late March update and we generated $1 $9 billion and EBITDA with expectations that margins and cash flows will benefit from improved results in the balance of the year.
Speaker Change: Importantly, our annual sales guidance is on track and we expect operating and financial performance to improve significantly in the balance of the year.
Speaker Change: To put this in context compared with the first quarter levels, a quarterly copper sales volumes are expected to average about 20% more than the balance of the year.
Speaker Change: <unk> sales are expected to average nearly four times, the first quarter rates and unit net cash costs are expected to be 30% lower on average in the remaining quarters.
Speaker Change: This will drive a strong.
Speaker Change: Strong performance and free cash flow and the balance of 2025 and continuing over the next several years.
Speaker Change: Other notable highlights in the quarter.
Speaker Change: <unk> solid progress on the smelter.
Speaker Change: Repairs tracking ahead of plan continued momentum on our low cost lead generation projects in the U S.
Speaker Change: The premium we are receiving on our U S copper sales, which we'll talk more about.
Speaker Change: Favorable gold pricing and the advancement of Optionality in our organic growth portfolio, we're well positioned for the future as a leader in the global copper industry and we remain focused on operational excellence and our innovative and exciting growth pipeline to drive our future results.
Speaker Change: We took advantage of recent market to market volatility as you see in year to date have repurchased two 3 million shares in the open market for approximately $80 million.
Speaker Change: On the next slide slide four we are summarizing our priorities for 2025.
Speaker Change: We cover these on our January call and these areas are defining our everyday pursuit of value creation.
Speaker Change: The first one is executing our plans safely and efficiently that remains a top priority.
Speaker Change: Teen Freeport has a history of strong execution delivering on our plan volume's cost targets and capital projects.
Speaker Change: Flea and efficiently.
Opportunities to capture upside values.
Speaker Change: Given the inflationary pressures in recent years, we're particularly focused on aggressive cost management and driving our costs lower particularly in the U S.
Speaker Change: Our second key focus area in scaling the leach opportunity, we've talked a lot about that in recent years achievement of our targets and significantly enhance margins and profitable ability. We continue to target a 40% increase in our run rate to achieve 300 million pounds per annum by the end of the year.
Speaker Change: And on our path to 800 million pounds per annum in the future.
Speaker Change: Third is the <unk> smelter.
Speaker Change: Team has expedited the repair process and set us up for startup by the end of May that's about one months sooner than the earlier schedule. Our startup has been derisked and success here will be beneficial as we work to extend our operating lives long term in Indonesia.
Speaker Change: We see innovation as a major value driver for our business, we're pursuing aggressively new tool to enable better productivity and cost performance.
Speaker Change: And we're continuing to build optionality in our growth portfolio for the next generation of copper producing assets, we have key milestones identified three major projects.
Speaker Change: That we're pursuing and in the Americas.
Speaker Change: Turning to the copper markets, we've got some commentary on slide five.
Speaker Change: Market fundamentals remain positive and that's underpinned by koppers, increasing use in the global economy to drive electrification.
Speaker Change: Copper prices during the quarter traded between $3 94 per pound and $4 53 per pound on the London metals exchange and reached a new high of $5 22 per pound on the U S. Comex exchange in March.
Speaker Change: U S tariff policy has heavily influenced sentiment on the global economy in recent weeks, but the facts are the copper demand remained strong globally and benefit from the secular trends and major new investments and power infrastructure technology de carbonization and transfer.
Speaker Change: Rotation.
Speaker Change: The U S remains strong supported by rising demand for electrical power, and where you're seeing improving demand trends in China, which has been particularly strong year to date and also green shoots in Europe.
Speaker Change: The fundamentals of the copper markets are among the most compelling of any commodity or macro sentiment impacts short term pricing, we recognized that market analysts expect a tight market in 2025 and are projecting demand growth to outpace available supplies as we go forward.
Speaker Change: Freeport is in a great position to increase volumes in the coming years to meet rising demand.
Speaker Change: We'll talk about on slide six U S copper pricing in the freemium is currently priced in.
Speaker Change: To the U S copper market, we present information on regional premiums and the ongoing U S investigation on copper for considering a potential tariffs in late February the Trump administration issued an executive order identifying copper as a critical material and instruct.
Speaker Change: The secretary of Commerce to conduct an investigation into the copper market and the impact of imports on National security.
Speaker Change: The U S. Currently imports approximately half of its copper requirements.
Speaker Change: The domestic supplies in the U S. The rest of them are majority produced by Freeport.
Speaker Change: The investigation, which is expected to be completed by November and potentially sooner well also cover recommendations to provide incentives to increase domestic production and policies to strengthen the U S copper supply chain, including permitting reforms.
Speaker Change: While koppers currently exempt from the new tariffs the outcome of this investigation may lead to tariffs on imported copper and markets have begun to price in a potential tariffs as you can see from the growing U S premium.
Speaker Change: For background, the reference price for Freeport's International operations utilize the London metals exchange and then the U S which comprises about one third of our copper sales our sales contracts are based on the comex exchange prices pricing hit.
Speaker Change: Historically the pricing on the two exchanges have been similar but in recent months. The U S pricing has reflected market expectations for tariffs on U S imports and this premium has widened over time and is currently approximately 13% above L. O me there.
Speaker Change: This equates to about 57 cents per pound as of yesterday.
Speaker Change: And that premium currently implies an approximate 800 million dollar.
Speaker Change: Bottomline annual financial benefit on Freeport's U S copper sales for.
Speaker Change: For reference the tariff on steel and aluminum is 25% compared to the current.
Speaker Change: Market premium of 13% for copper.
As Freeport has not taken a position on whether or not copper tariffs should be imposed.
Speaker Change: But we have highlighted in our public comment submission some of the items for consideration and <unk>.
Speaker Change: The potential broader impact of tariffs on the economy inflation and where U S. Domestic copper production is currently placed on the global cost curve.
Speaker Change: We also highlighted in our comments the importance of Freeport to U S. Copper supply the critical role we play in supplying 70% of the U S domestically sourced refined copper and the opportunity we have at Freeport for U S brownfield growth and top of supplies.
Speaker Change: And the next slide we highlight our Freeport as America's top of champion and we appreciate the administration's recognition of copper as a critical mineral and the actions by the U S government to provide permitting reforms and incentives to boost domestic production.
Speaker Change: Freeport is an iconic American copper producer and is by far the largest contributor to the U S copper market with an established and successful franchise dating back to the late 18 hundreds.
Speaker Change: We employ a large workforce of 30 that 39000 people, including contractors, mostly in rural communities in the U S and have earned the trust of the communities, where we operate in the southwestern United States and with our U S copper customers some of whom have play.
Speaker Change: Trust in us to source all of their copper requirements.
Speaker Change: Our operations in the United States are fully integrated with mines in smelting and refining facilities and innovative leach processes at efficiently produced for fine cathode.
Speaker Change: Freeport is well positioned to grow in the U S. As you'll see from our pipeline, we've got sizeable resource position and brownfield expansion opportunities.
Speaker Change: Turning to our global operations for the first quarter on slide eight we will provide some operating highlights by geographic region.
Speaker Change: Starting with the U S. We continue to make progress on enhancing efficiencies and improving costs and margins.
Speaker Change: Our operating teams are benefiting from data analytics to identify the highest value opportunity for efficiency gains and to assist in decision making to eliminate efficiency losses.
Speaker Change: On the cost front improve retention of our of our workforce has allowed us to rebuild skills within our workforce with lower reliance on more expensive contractors as an example contractor hours at morency, our largest mine in the U S are down about 20% or.
Speaker Change: The last few quarters as.
Speaker Change: As we look forward, we expect production in the U S to increase in 2025 compared to 2024 and also to increase further in 2026 and 2027.
Speaker Change: Absent changes in commodity based input costs, we're targeting unit cost to trend lower each year over the three year period.
Speaker Change: Our autonomous haul truck conversion at Bagdad is going very well that is going to allow us to test the potential for this application for potential use at other locations in the U S.
Speaker Change: Bagdad, we've already converted 12 of 33 autonomous trucks, we have them in service now and we expect to have the balance in service over the next several months.
Speaker Change: We are confident in further scaling in our innovative Leach program.
Speaker Change: <unk> got several projects underway using existing technologies to achieve our targeted 40% increase in run rate to 300 million pounds per annum.
Speaker Change: Low cost copper by year end 'twenty 25, we're also integrating new technology and automation to optimize performance in our basic mining functions.
Speaker Change: And believe there is significant potential for value creation through meaningful cost reduction, which would enhance margins and expand reserves from known mineralization, which is currently economically limited under our current reserve pricing. We can do this through further using and integrating new.
Speaker Change: <unk> technology into our basic operations.
Speaker Change: Also continuing to follow and pursue the potential for U S.
Speaker Change: Legislation to recognize copper as a critical mineral and bring eligibility consistent with other critical minerals for a potential tax credit of 10% of our operating costs in the U S.
Speaker Change: Turning to South America, the team at our Cerro Verde operations posted another solid quarter.
Speaker Change: With improved mill rates, better recoveries and higher molybdenum volumes that helped us mitigate the impact of lower ore grades.
Speaker Change: Our unit net cash cost in the quarter or 20 cents per pound lower than the comparable quarter last year.
Speaker Change: At El Abra in Chile, we are positive about testing and initiative to add heat. So our leach process, which has promised to provide incremental near term production and.
Speaker Change: And we continue to advance our major projects that are Laura in partnership with Codelco, which would capitalize on our large resource we have defined and brings substantial scale and operating efficiencies to this.
Speaker Change: High class mine.
Speaker Change: And Indonesia as we've already discussed our operating rates in the quarter were impacted by maintenance on one of our Sag mills that resulted in a 25% reduction in mill rates during the quarter.
Speaker Change: The maintenance work was timed to coincide with our with our work to extend our export permit.
Speaker Change: Was received in mid March.
Speaker Change: As we look forward, we expect strong production from Grasberg in the balance of the year with 2025 annual sales of $1 6 billion pounds of copper and one 6 million ounces of gold at a net cash credit of 47 cents per pound mainly in our gold revenues.
Speaker Change: Were more than offset all of our production costs.
Speaker Change: The team has made outstanding progress in completing the smelter repairs.
Speaker Change: And as I mentioned, we're a bit ahead of schedule.
Speaker Change: The precious metals refinery as Richard referenced was inaugurated by the President of Indonesia in March and is ramping up to full capacity.
Speaker Change: Successful completion of these projects position us to advance approval for extension of our operating rights in the second half of this year.
Speaker Change: Turning to our growth, which we're really excited about.
Speaker Change: As we look forward, we see a world that will require additional copper supplies to support energy infrastructure, New technologies and more advanced societies, and Freeport is really well positioned.
Speaker Change: With an extensive copper resource position and a broad range of projects in various stages of development.
Speaker Change: These initiatives as you can see from this chart on slide nine total 2.5 billion pounds of copper per annum.
Speaker Change: And those can be developed from freeport's known resources in jurisdictions, where we have established history and experience.
Speaker Change: Projects in Indonesia also have the benefit of high gold content that go along with the copper. So they really are supercharged from a from an economic standpoint.
Speaker Change: Because all of these projects are brownfield in nature, we benefit from leveraging existing infrastructure experienced workforces and relationships with key stakeholders to move more quickly with less risk than a greenfield project.
Speaker Change: In the U S. These projects include the incremental lease volumes of 600 million pounds per annum as I mentioned, we're already hit the initial target of 200 and are going to 800 million pound pounds per annum over the next three to five years.
Speaker Change: The Baghdad expansion, which we're where we're currently evaluating and potential expansion to double the production and the Safford Lone Star District, which is an enormous district with enormous amounts of of copper that we're excited about the future on it.
Speaker Change: South America, we and our partner Codelco are planning a major expansion at a libra through the addition of a new concentrator, which would provide 750 million pounds of incremental copper per annum.
Speaker Change: We're in the process of completing our permit application and we expect to file the application by the end of this year.
Speaker Change: In Indonesia after successfully developing several world class underground ore bodies were now progressing development of the two gene Lee our development and we expect to commence production here Bobby.
Speaker Change: End of this decade by 2030.
Speaker Change: We're also conducting additional exploration below our existing deep M. M O Z ore body and we expect that an extension of our operating rights beyond 2041, well setup for additional long term development options in this highly attractive district.
Speaker Change: Our objective is to move quickly to define the opportunities and value potential and allocate capital on a risk reward basis to provide profitable growth options for the future. There are additional details on these projects on slide 25, and the reference materials.
Speaker Change: As usual, we will continue to be disciplined in our approach targeting opportunities that enhance long term value.
Speaker Change: Several of these projects are in advanced stages, particularly the reach initiative, where we can have near term impact.
Speaker Change: We're providing near term low cost.
Speaker Change: Incremental pounds and then we've also have medium term.
Speaker Change: Opportunities and longer term optionality in our portfolio.
Marie Robertson: I'd now like to ask Marie Robertson to.
Review, our financial outlook and then we'll take your questions.
Marie Robertson: Sorry.
Marie Robertson: Thanks caffeine.
Speaker Change: Just moving to slide 10, we show our three year outlook for south volumes of copper gold and molybdenum.
Marie Robertson: Oh got it set a training period is consistent with our previous estimates.
Marie Robertson: And for 2025 U S represents 33% of our consolidated copper sales.
Marie Robertson: South America around 27% in Indonesia, approximately 40%.
Speaker Change: That's Kathy mentioned earlier continued fixating on the key initiatives would provide upside to these estimates.
Speaker Change: On slide 22 of the reference materials, we provide quarterly forecast.
Speaker Change: Sales in the balance of the year substantially higher than first quarter levels.
Speaker Change: Our current estimate for net unit costs for the full year 2025.
Speaker Change: <unk> $3000 for gold and $20. Similarly is approximately $1 50 per pound.
Speaker Change: Lower than our previous guidance of $1 60 per pound.
Speaker Change: Unit costs and the balance of the year reflect improved operating rates compared with the first quarter.
Speaker Change: The gatehouse off the cost by region are presented on slide 21 in the reference materials.
Speaker Change: Okay.
Speaker Change: Moving to slide 11, putting together a projected volumes and cost estimates, we say modal results for EBITDA and cash flow at various copper prices ranging from $4 per pound to $5 per pound.
Speaker Change: These motor mobile results using the average of 2026 in 2027 current volume and cost estimates and holding Gulf at $3000 per ounce and molybdenum flat at $20 per pound.
Speaker Change: Annual EBITDA would range from $11 billion per annum at photo of Copa.
Speaker Change: If a $15 billion per annum at Firestone.
Speaker Change: With operating cash flows ranging from $8 billion per year at $4, five or $11 billion at five helicopter.
Speaker Change: These estimates assume no premium on a U S copper asset.
Speaker Change: Copper sales.
Speaker Change: If we apply the current premium of 13% and EBIT.
Speaker Change: EBITDA and operating cash flows would increase by approximately $800 million.
Speaker Change: Yeah.
Speaker Change: We started sensitivities to various commodities on the rise.
Speaker Change: We are highly leveraged to copper prices with eight to 10 cents per pound change equating to approximately $425 million in annual EBITDA.
Speaker Change: We will also benefit from improving gold prices with each dollar per ounce change in price approximating $150 million in annual EBITDA.
Speaker Change: No long life assets and large scale production, we are well positioned to generate substantial cash flow to fund future organic growth and cash returns under our performance based Pat framework.
Speaker Change: Slide 12 shows our current forecast for capital expenditures in 2025 and 2026.
Speaker Change: Again capital expenditures are similar to our previous guidance expected to approximate $4 $4 billion in 2025 and 2026.
Speaker Change: But discretionary projects approximated $1 billion in 2024 and are expected to approximate 161 $7 billion paid here in 2020 five 'twenty six.
Speaker Change: Roughly 50% related to the kitchen, and the development and the LNG project at Grasberg.
Speaker Change: The balance includes acceleration of tailings and other infrastructure to support that that got expansion.
Speaker Change: A couple of second approach it.
Speaker Change: It should be completed in the first half of 2026.
Speaker Change: And allocate it kept a lot of interest.
Speaker Change: The discretionary cap category reflects the capital investments, we're making in new value enhancing projects.
Speaker Change: Under our financial policy offended with the 50% of available cash.
Speaker Change: Distributed.
Speaker Change: Deep project, which is detailed on slide it says eating the reference materials.
Will benefit our results in the future.
Speaker Change: And we will continue to be disciplined in allocating capital to projects and enhance our position and generate attractive returns.
Speaker Change: This is consistent with our track record of efficient capital allocation and value driven approach.
Speaker Change: On slide to attain.
Speaker Change: We reiterate the financial policy priorities things it on a strong balance sheet.
Speaker Change: Cash returns to shareholders and investment in value enhancing growth projects.
Our balance sheet and solid investment grade ratings solid credit metrics and flexibility, we can now get targets to execute on our projects.
Speaker Change: We do not have any significant debt maturities until 2027.
Speaker Change: In addition to paying our first quarter base and variable dividend, we have repurchase $80 million of common stock in the open market year to date.
Speaker Change: In total we have.
Speaker Change: $5 billion to shareholders through dividends and share purchases.
Speaker Change: I don't think that financial policy of returning 50% of excess cash flow in 2021.
Speaker Change: And we have an attractive feature of long term portfolio as we've previously discussed that will enable us to continue to build long term value for shareholders.
Speaker Change: <unk>, 50%.
Speaker Change: We actively monitor the current market conditions and carefully manage the timing of that project to ensure financial flexibility remain strong.
Speaker Change: Our global team is focused on driving value in our business.
Speaker Change: Committed to strong execution of that funds, providing cash to invest in profitable growth.
Speaker Change: And returning cash to shareholders.
Speaker Change: And just on slide 14.
Speaker Change: In today's presentation.
Speaker Change: Paul it's large scale.
Speaker Change: Prison producing assets.
Speaker Change: Actionable low risk scores.
Speaker Change: Our leadership in the global copper industry.
Speaker Change: Significant exposure to a rising gold price and an advantageous U S footprint all provide a strong foundation for the future.
Speaker Change: Thanks for your attention I'll now hand, it back to caffeine and we'll take your questions.
Speaker Change: Thank you Maria we're ready for questions.
Speaker Change: And ladies and gentlemen, we will now begin the question and answer session.
Speaker Change: If you wish to ask a question press star one on your Touchtone phone.
Speaker Change: If your question has been answered or you wish to remove yourself from the queue. Please press star one again, if you are using a speakerphone. Please pick up your handset before pressing the numbers.
Speaker Change: We ask that you limit your questions to one if you have additional questions. Please return to the queue.
Speaker Change: One moment please for our first question.
Speaker Change: And the first question comes from Carlos de Alba with Morgan Stanley. Your line is open.
Speaker Change: Good morning, everyone. Thank you very much.
Speaker Change: And I wanted to check.
Speaker Change: Check with you what is the expected cost reduction or efficiency gains in terms of volumes that you would expect for the backpack autonomous haulage system. When it is fully in place and running.
Speaker Change: As a.
Speaker Change: A range it would be quite useful just to get a sense of the potential lift in.
Speaker Change: And results.
Speaker Change: Thank you Carlos I'm real excited about what the autonomous haulage will allow us to do at Bagdad and this was one of the sites that we had struggled with over the pandemic period in keeping staffing.
Speaker Change: Levels, and and with high rates of turnover, there and this very remote location.
Speaker Change: Yeah. It is it affected our cost structure and our efficiencies.
Speaker Change: And so what we see here is.
Speaker Change: With this project done it'll reduce the amount of people, we need to hire for an expansion and it'll leverage leverage us to be able to get consistent and safe results without without having to hire a higher.
Speaker Change: People. So the project itself as an attractive rate of return on its on its face the the capital cost that I'm that we're incurring for that for that project and we've got some details on in the back reference materials, but the the capital costs.
Speaker Change: Self is to convert these old trucks isn't the $80 million range.
Speaker Change: And the project itself will will produce a a good rate of return.
Speaker Change: And allow us again to leverage to to to expand that operation in the future. So its strategic for US. It's also very strategic from the perspective of allowing us potentially to adopt this at other sites.
Speaker Change: Within within the U S and it could have meaningful impact for us.
Speaker Change: And in general Carlos in terms of the the the targets for our cash costs in the U S.
Speaker Change: We have a target.
Speaker Change: To get to within the 20th 27 time frame to get to an average costs of in the 250 range. We're currently around $3.
Speaker Change: And we've got projects underway now that will allow us to bring our costs in the U S down and so we're targeting over.
Speaker Change: Over the next couple of years to get to on average a $2.50 per pound and we're not going to stop there. So I'm a big big focus of ours in the U S is on bringing down that unit costs to look more like it it doesn't in South America, even though we've got lower grades in the U S.
Speaker Change: Thank you very much.
Speaker Change: And your next question comes from the line of Liam Fitzpatrick with Deutsche Bank. Your line is open.
Speaker Change: Yes.
Liam Fitzpatrick: Good morning Catherine.
Speaker Change: <unk> zone on Indonesia, and the new smelter and how about mix into the.
Speaker Change: The concentrate export permit are you aiming to proactively extend the.
Speaker Change: The allowance to export concentrate beyond the mid year point.
Speaker Change: Or could we again see a situation whether it relates to shipments in Q3, and then linked to that can you give any sort of color or guidance on how long you expect the new smelter to take to ramp up towards full full capacity. Thank you.
Speaker Change: Okay. Thank you Lam I'm Gonna, let let kory talk about the smelter ramp up course Stevens and he's he's over there right now.
Speaker Change: But in terms of the first question on our on our sales forecast.
Speaker Change: We have enough quota within the approved a level that we got in March.
Speaker Change: To meet our our sales targets for for this year.
Speaker Change: We're assuming that.
Speaker Change: That that we export through the September.
Speaker Change: Time frame of the license and then in the fourth quarter.
Speaker Change: We would be using our our existing our.
Speaker Change: Our existing smelters not just the new smelter at man you are but also in the established smelter we have at P. T. Smelting. So we within our guidance that we show.
Speaker Change: That's within within our permit limits, if we need to get for some reason if we produce more we need to get more flexibility will go in and speak with the government about it but at this point in time.
Speaker Change: We have sufficient room under our permits us to meet our sales targets for this year.
Speaker Change: The work we're doing on the start up is as comprehensive we were fortunate that our Freeport as an organization has a lot of experience with smelters of course, we have the smelter.
Speaker Change: And well the Spain that we've operated for some time, we have a smelter here in the U S. As well and then we have in partnership with Mitsubishi The smelter in Indonesia, So we're calling on resources internal resources external resources.
Speaker Change: To plan and efficient startup and and and Corey If you want to add just some color on our startup plans and and and how how this how this will play out smelters are complex and we understand that and that's why we've done so much free planning their complex too.
Speaker Change: Startup and we recognize that but the core of why don't you to cover how we're how we're planning to sequence to startup.
Speaker Change: Sure.
Speaker Change: Yes.
Speaker Change: Mechanical repairs are essentially complete.
Speaker Change: Pre commissioning and commissioning activities in the.
Speaker Change: Area, where the fire was.
Speaker Change: Well underway.
Speaker Change: The remainder of the facility.
Speaker Change: The teams have been.
Speaker Change: Refining their operating practices.
Speaker Change: Going through drills.
Speaker Change: <unk>.
Speaker Change: Yeah.
Speaker Change: Basically operating those facilities those other unit operations.
Speaker Change: In preparation to combine everything with the main smelter coming online so both furnaces are hot.
Speaker Change: <unk> already.
Speaker Change: Teams have been practicing we've got maintenance teams.
Speaker Change: Support from an operations and <unk>.
Speaker Change: Contractors' with experience.
Speaker Change: So in the May timeframe, we're going to start the process up and will essentially ramp up to 100% capacity over a six month period.
Speaker Change: And plan to run 2026 at 100% capacity throughout.
Speaker Change: Okay. That's great. Thank you.
Speaker Change: And your next question comes from the line of Katia Johnson with BMO capital markets. Your line is open.
Katia Johnson: Thank you for thank.
Katia Johnson: Thank you for taking my questions, maybe on the potential bad debt expansion, if I'm not mistaking the feasibility study was completed in 'twenty three.
Katia Johnson: The $3 5 billion Capex still attainable in this environment, especially with tariffs and other inflationary pressures.
Katia Johnson: We are reviewing that now and and and we do that with all of our projects to keep them fresh and.
Katia Johnson: So we're going through a process to review review all the economics associated with the project.
Katia Johnson: Capital and operating costs, and and so that that will be part of the decision, making that we and we make them you know and we will.
Katia Johnson: Until the end of this year, where we're wanting to get the the autonomous.
Katia Johnson: Trucks in place because that will allow us to manage the workforce that we have now and as I said before not not have to rely on a big hiring program and less experienced people. So that's the important part of it.
Katia Johnson: Also doing some work some some infrastructure work with with boosted housing we're doing infrastructure work on our tailings facilities to put us in a position so that when we do make the decision we can do it in a in a in a in a derisk fashion and a more fast track fashion, but we want to make sure that.
Katia Johnson: The economics are are robust.
Katia Johnson: These are this is an option for us it is.
Katia Johnson: With the reserves are there and this will allow us to bring forward those values and bring forward reserves, but but we it's not something we have to do and we can assess the right timing we want to we want our brand to market at a time when we can do it efficiently and generate the returns so that'll be that'll.
Katia Johnson: Part of our analysis touch as we go through the the the balance of this year and to your point to better understand the tariffs as well.
Kathleen Quirk: Thanks Kathleen.
Kathleen Quirk: And your next question comes from the line of Timna Tanners with Wolfe Research. Your line is open.
Timna Tanners: Hey, good morning I.
Timna Tanners: I wanted to ask a bigger picture question, if I could in light of the different levels of support being provided to the copper industry from.
Timna Tanners: From the U S government or are there any measures that you can take to accelerate some of these efforts.
Timna Tanners: Do you think about adding smelting the world is oversupplied clearly, but not in the U S. Any update on that forty-five ex benefits I just like to hear about what incremental you might be able to do given the new initiatives that we hear about them from the Trump administration. Thanks again thanks.
Timna Tanners: Thanks Timna.
Timna Tanners: Actually Freeport is in a terrific position to expand its U S production, we already had several things underway.
Timna Tanners: As we talked about were fully integrated so where we're producing.
Timna Tanners: Concentrate and those go to our smelter in Arizona, We also a big part of what we do in the U S. As you know is is as leach production, where we don't need a smelter and we can produce a leach pounds very efficiently we were already on that path to IND.
Speaker Change: Kris R. R R Leach production capacity and again.
Timna Tanners: Produce refined copper.
Timna Tanners: We've got innovation around leaching concentrate we've got a we got a facility, which we're expanding in in the U S to two to Leach concentrates again that avoids the big capital intensity of a smelter and then potentially you know longer.
Timna Tanners: Ron can look at but potentially expanding the Miami smelter them to produce more cathode there even as a potential you know one of the one of the areas that the U S is interested in is there's a lot of scrap produced in the in the U S that ends up getting export it we're going to look into 10 Freeport.
Timna Tanners: Use of existing infrastructure and low low capital intensity projects to potentially a process scrap material in the U S. So.
Timna Tanners: Of all the things out there that you hear about.
Timna Tanners: Freeport really is in a good position.
Timna Tanners: Because our projects are brownfield in nature, we have infrastructure, we have the workforce in the area. We have community support and so you know I feel in many ways a freeport as opposed to a child when it comes to what the U S is trying to achieve in.
Timna Tanners: And bringing back.
Timna Tanners: Spanning copper production in the U S. Now we recognize that the U S has.
Timna Tanners: Some real positives in its regulatory framework, but the resources as is as you're aware are generally lower grade them are more mature and generally lower grade than some of the operations internationally. So that's where these.
Timna Tanners: Incentives come in to really support.
Timna Tanners: Not only the base production in the U S, but incentivize a new new new investments in new production and that's why we're interested in the 45 ex potential credits, where I'm. The executive order already says that copper is a key.
Timna Tanners: <unk> mineral, but we need to have legislation.
Timna Tanners: To modify the treasury regulations to to allow for copper to be listed under 45 acts of the IRA ought.
Timna Tanners: To be eligible for the 10% production credit that would be very very helpful. But as you know with tax policy, there's a lots of pluses and minuses and give and takes going on and so we'll just have to keep advocating for the benefits to the U S National security of having copper produced domestically.
Timna Tanners: Sickly and that's something that we'll continue to work on but Timna, we have great opportunities in the U S. This lone Star District has a huge resource them, we have visions that the lone Star Safford district could be another morency.
Timna Tanners: <unk> with both bleach production and concentrate production in the future of course, we talked about Baghdad, we talked about our wage initiative.
Timna Tanners: So we're in we're in really good position to help the U S and its objective sue to bring more copper production into into the U S.
Timna Tanners: Okay. Thanks for the overview, we will look forward to updates from you and from the administration. Thanks again.
Timna Tanners: Okay.
Speaker Change: And your next question comes from the line of Daniel Major with UBS. Your line is open.
Daniel Major: Hi, Thanks for taking my questions.
Daniel Major: Can I ask a question on the.
Daniel Major: Change in the cost guidance for North America.
Daniel Major: The site production delivery costs have increased somewhat but not that much but in.
Daniel Major: No six in the presentation it said that this.
Daniel Major: Excluding the impact of.
Speaker Change: Additional tariff costs can you give us a sense of what those impacts are.
Daniel Major: You mentioned, a 5% increase in.
Speaker Change: Cost of purchased inputs, how much of your cost base does that account for.
Daniel Major: And what's the upside to this number.
Speaker Change: If you're unable to mitigate.
Daniel Major: Some of those impacts.
Speaker Change: Thank you for the question we did we did disclose in our in our earnings release when these tariffs came out.
Speaker Change: We began talking with our suppliers are the direct impacts that we have.
Speaker Change: And where we're the vendor of record R. R. A T.
Speaker Change: Ariel and we're working them to.
Speaker Change: To diversify our supply chain to mitigate those impacts the bigger impact as we're working with our suppliers is.
Speaker Change: Potentially the cost that they can that they incur on the various components that they.
Speaker Change: Purchase and as you can imagine it gets complicated because it's just not one supply chain. They have multi you know when their fabricating something they have multiple supply chains that are involved and so they're going through.
Speaker Change: And analysis themselves to understand what the potential impacts are.
Speaker Change: And what they can do to potentially.
Speaker Change: Diversify their their sources to mitigate these impacts.
Speaker Change: The.
Speaker Change: When we look at our overall costs in the U S.
Speaker Change: About 40%.
Speaker Change: Of those costs are related to two to labor and and and and services that that wouldn't be subject to tariffs.
Speaker Change: So it's it's it's the balance the other piece that we applied the the estimate of a 5% to of that when you look at the components of the of the potential five per cent impact.
Speaker Change: The biggest driver is the 145%.
Speaker Change: Chinese tariffs.
Speaker Change: And while the dollar amount as we've if we as we've talked with our vendors the dollar amount of.
Speaker Change: Chinese purchase components and their supply chain is not significant the magnitude of 145% is what what adds up quickly and so if that's reduced and if we can mitigate that.
Speaker Change: This this tariff impact.
Speaker Change: M will be reduced significantly potential impact will be reduced significantly I'm confident that working with our suppliers, we can find ways to to mitigate these impacts.
Speaker Change: We wanted to set up a system to really understand the various components. So that when we get a attempt from a vendor to pass through something that we can confirm and verify and that we can work collaboratively with them to source our products.
Speaker Change: That that they do not have high tariffs with them. So I feel confident that we can we can mitigate this we all would love to see them more certainty and and these issues get resolved them because it does impact. These these these conversations and trade flows et cetera.
Speaker Change: But I do feel confident that that we can find ways to mitigate these these potential impacts.
Speaker Change: Okay. Thanks.
Speaker Change: Just a quick follow up on the same subject what proportion of the cost base is exposed to energy, particularly oil obviously, we're seeing some benefit there.
Speaker Change: We haven't we have not.
Speaker Change: We basically use the same oil price assumption in our in our guidance that we used at the start of the year and you are right to say that there is there is benefit we purchase about mm 100 million gallons of of of diesel.
Speaker Change: And in the U S and right now the price is probably right.
Speaker Change: 20 cents, a gallon or so less than than than what we assumed in our original forecast going into the quarter.
Speaker Change: Great. Thanks, a lot.
Speaker Change: Electricity is another component and and we have seen some some pressures in that area, we have seen some.
Speaker Change: Some slight tick up in electricity, but just in the oil component that is that the that the and when I'm talking about 100 million gallons. That's that's specific to North America.
Speaker Change: Great. Thanks, a lot.
Speaker Change: Yeah.
Speaker Change: Your next question comes from the line of Chris <unk> with Jefferies. Your line is open.
Speaker Change: Alright, Thanks, operator, Hi, Kathleen and Richard Murray, you hope you're doing well.
Speaker Change: Just wanted to comment on.
Speaker Change: Just wanted to ask on the buyback.
Speaker Change: You've been running at a net debt level thats well below where.
Speaker Change: Your targeted net debt threshold.
Speaker Change: And you know you're kind of entering this period now where free cash flow should materially improvement you have is comex premium you have high gold prices, you're going to have rising volumes first in the U S coming down I mean, everything's kind of heading in the right direction.
Speaker Change: Cash flow should get very strong in your share price has been kind of a victim of the macro and it's been it's been relatively weak recovering a little bit now, but still at a low level and you know back when your stock was in the fifties and free cash flow was zero. It made sense to not be maybe not be really accelerating the pace of the buybacks, but I would think.
Where we are today and where you're heading the the attractiveness of repurchasing your shares.
Speaker Change: Almost can't be beaten and especially when you consider you know that just focuses on kind of pivots.
Speaker Change: Pivot to growth.
Speaker Change: You can shrink your share count you can grow your volumes and a per share basis.
Speaker Change: In an accretive way.
Speaker Change: And you can use free cash flow to do that and maintain a very strong balance sheet, which is a pretty compelling combination of factors. So just really wondering how you're thinking about.
Speaker Change: Remember potentially ramping up the buyback as market conditions continue to be as they are I mean.
Speaker Change: Back in the thirties do you just buyback more aggressively now or or do you want to save money for the capital projects you have in the pipeline. Thank you.
Speaker Change: Thank you for that Chris and N and we're balancing all of those things, but we agree with what you what everything you just said.
Speaker Change: And particularly as we go through the balance of this year.
Speaker Change: We've got you know the first quarter, we had this this maintenance and some from some timing in the numbers, but as we go through the balance of the year or cash flow should improve you you highlighted the potential premium if that continues that will allow us to have more free.
Speaker Change: Cash flow that goes right to the bottom line and so we you know we see the disconnect in the long term.
Speaker Change: Our outlook for the company in terms of what the value of these assets are relative to how our stock has been.
Speaker Change: It performed relative to these macro issues.
Speaker Change: And so we really want to be aggressive about about the buyback, but we also want to make sure. We're balancing our objectives to maintain a strong balance sheet and to and and pursue our growth plan. So we're gonna be balancing all of that we've got a established policy.
Speaker Change: To to direct free cash flows to to shareholder returns and as cash flows free cash flows increase that'll give us this opportunity so but in general what everything you said, we agree with and Richard I don't know if you want to.
Speaker Change: Add anything to those comments.
Speaker Change: Yes.
Speaker Change: Well, Chris I'll, just say I'm totally aligned with what you said you know as chairman of the company and the shareholder.
Speaker Change: Agree totally with that youre going to be.
Speaker Change: History has taught us to be disciplined, but we're in such good shape.
Speaker Change: As.
Speaker Change: Cash flows increase.
Speaker Change: We will.
Speaker Change: Talk with our board and I believe we will have great support for.
Speaker Change: Buying more shares back.
Speaker Change: That's great. Thank you for that.
Speaker Change: Our next question comes from Bob Brackett with Bernstein Research Your line is open.
Bob Brackett: Thanks, Good morning, returning back to Baghdad to X extension, if I think about the discretionary capex being put into Baghdad to X expansion this year.
Bob Brackett: Almost half a billion you've cited a few hundred million 300 million, perhaps next year.
Bob Brackett: If the price of admission is $3 5 billion and you've effectively sunk approaching 800 million. The investment decision is always going to be a money for decision making.
Bob Brackett: Make it more and more obvious to Baghdad to actually move forward.
Bob Brackett: One one thing to keep in mind on the money, we're spending right now in at Baghdad.
Bob Brackett: A good bit of that.
Bob Brackett: Is money that we would have to spend in any case in the future to build up the infrastructure for tailings. So at some point you run out of tailing storage and you need to you need the storage there that we'd need over time so.
Bob Brackett: The the money that were spending now doesn't commit as to the project. It just accelerates when we would've otherwise had to spend the money. So it's really a.
Bob Brackett: A low risk <unk>.
Bob Brackett: Investment that we're making to put us in a position that when the project is ready to go.
Bob Brackett: And when the when the decisions made there that we can we don't have to spend the money and we don't have to to take the time to put this the starter dam in.
Bob Brackett: So this funding that we're doing now is not part of the three and a half there may be some small amounts as part of the three and a half but this bonding is principally related to tailings infrastructure that we'd have to do any way down the road.
Bob Brackett: And we're drilling it.
Bob Brackett: Discretionary because we don't have to do it now.
Bob Brackett: So we decided tomorrow not too.
Bob Brackett: Not to move forward right now with Bagdad, we'd probably differ.
Bob Brackett: This the spending on on the on the tailings infrastructure.
Bob Brackett: Very clear.
Bob Brackett: Yeah.
Speaker Change: And your next question comes from the line of Lawson Winder with Bank of America Securities. Your line is open.
Lawson Winder: Thank you very much operator, good morning, Richard Kathleen and thank you for fitting me in.
Speaker Change: Just thinking about.
Speaker Change: The U S policy environment, and the fact that Freeport is by far the largest player in the United States.
Speaker Change: And then looking at it from a merger and acquisition overlay point of view I mean does it make sense for freeport to potentially be accumulating assets in the U S. Today.
Speaker Change: Yeah.
Lawson Winder: We always look Lawson.
Lawson Winder: We always look at it and the opportunities.
Lawson Winder: We have a.
Lawson Winder: Very sizeable resource position in the U S.
Lawson Winder: We have you know the leach stockpiles, which is a huge resource and then we additionally have them very significant undeveloped resources in our footprint.
Lawson Winder: So we have a very long term pipeline in the U S. But if there are opportunities.
Lawson Winder: For synergies or things that we could.
Lawson Winder: Enhance our position we are certainly certainly interested in in and and in looking at those things and there's a lot you know theres a lot more activity in the U S. A lot more projects.
Lawson Winder: Potential projects in the U S than there has been in the past.
Lawson Winder: Many of those don't have smelters.
Lawson Winder: And while you know people have historically thought you know its not great to hear.
Lawson Winder: Invest money in smelters, we already have the smelter we already have the tank house capacity to make refined copper we already have the concentrate leach facilities that are expandable. So we have a lot of things that could provide you know potential synergies.
Lawson Winder: And well so we'll continue to look but we already have a very strong position.
Lawson Winder: That that the in the U S.
Lawson Winder: Okay, great. Thank you so much.
Lawson Winder: Yes.
Lawson Winder: Yeah.
Speaker Change: And our next question comes from the line of Brian Macarthur with Raymond James Your line is open.
Brian Macarthur: Good morning, and thank you for taking my question you.
Speaker Change: You talked about earlier in Indonesia.
Speaker Change: Permits to the September 30th then you can use the smelter in the fourth quarter to meet your shipments. This year and you also took down your guidance for cost. This year was that just the gold price being higher or did you make an assumption that the seven and a half.
Speaker Change: Percent export tax went away in the fourth quarter in Indonesia, because the smelter is up and running or is should I think of that.
Speaker Change: Duty going away as an upside as they go into 2026 or how do you see that developing.
Speaker Change: In times of our our Indonesian costs for the year, we had projected a net credit of 27 cents and announced 40. So most of that is related to the change in and byproduct credits.
Speaker Change: So that's that's what most of it's related to.
Speaker Change: We we only pay a duty on.
Speaker Change: Sales that are exported.
Speaker Change: A concentrate sales and so in the fourth quarter. We we don't have projected to pay a duty in the fourth quarter, because where we're using our internal smelters, but that was the timing the timing may have changed from from our last update but it is a.
Speaker Change: Hole, we only in our in our previous estimates only include a duties for what we were exporting.
Speaker Change: Great. Thanks, very much that's very clear.
Speaker Change: Thank you and then I just wanted to say Cory and his team have just done.
Speaker Change: Outstanding job is unfortunate we have thus far it was a force majeure event.
Speaker Change: And we have a lot of uncertainty going into dealing with them the payers.
Speaker Change: And these guys are just glad we job in making the progress we've made to date.
Speaker Change: Thanks, very much Richard and Kathleen.
Speaker Change: Our last question comes from the line of Bill Peterson with Jpmorgan. Your line is open.
Bill Peterson: Yes, hi, good morning team and thanks for sneaking me in.
Bill Peterson: Mr. Brown on reaching your your reaching your sustained $200 billion for your I guess, you saw a modest decline in the first quarter of quarter on quarter.
Bill Peterson: Was this decline just kind of typical variability and maybe more importantly, looking at what are the key areas to improve to reach your 75 million pounds.
Bill Peterson: Italy rate exiting the year I guess, how should we think about the trajectory.
Bill Peterson: In terms of getting to the 300 million pound per year run rate.
Bill Peterson: We have several projects that are underway.
Bill Peterson: These are not.
Bill Peterson: You don't require new technologies. This is the scaling effort of essentially scaling up what we're already doing.
Bill Peterson: Some examples of that include where we're in a.
Bill Peterson: Well, we called Leach everywhere, where we already have identified areas within the stockpile.
Bill Peterson: That were difficult to get to them physically.
Bill Peterson: And so we've come up with a a way to lay the irrigation lines using <unk>.
Bill Peterson: Helicopters that we assemble a long.
Bill Peterson: Very long football field of irrigation lines in a helicopter goes in places these.
Bill Peterson: Irrigation lines in areas that are that are very hard to get to we are increasing the number of helicopter trips.
Bill Peterson: That we were doing previously that was part of the reason why some of the projects that we had in the first quarter. We came in very close to what we thought but we probably could have got produce a little bit more if if if if our projects had been bid.
Bill Peterson: And on schedule, but by the end of the year, we're going to have more runs of helicopters and not just at morency, where we're starting this technique at other other sites. The other thing that we have had success with is what we call deep.
Bill Peterson: Raffinate drilling.
Bill Peterson: Where instead of just letting the solutions a drip from irrigation lines at the top of the stockpile, we're actually drilling.
Bill Peterson: And putting solutions targeted solution at strategic places within the stockpile that our data analytics and sensors have told us would benefit from more direct application of solutions and so we've we end and end with some third parties have figured out a way.
Bill Peterson: To scale the deep raffinate drilling.
Bill Peterson: And you know taking some pages from what's being used in other industries, we're able to apply the deep drilling at a bigger scale. We've got several of those are in place now.
Bill Peterson: To to that that'll boost production in the future. We're also and this is separate from getting to the 300, but we also have some trials going on with new additives that we.
Bill Peterson: We have successfully tested.
Bill Peterson: Testing in a lab and are doing it at scale.
Bill Peterson: And some of those strategic stockpiles and so we've got an additive tests going on now.
Bill Peterson: And the results of that will will will be very helpful for us to guide our future. The other thing that we're doing that will help us as we look into 2026 and beyond to get to the 400 level is heat trials, where.
Bill Peterson: We started we it's been proven that the hotter the temperature within these stockpiles the better the recovery of copper and we started with insulating the stockpiles to two two to retain heat and now we've got a project to actually heat the.
Bill Peterson: The raffinate injection the solution, that's going into the stockpiles, where we've got a project that of Libra that that we expect will will allow us to start testing heat there in in 2026.
Bill Peterson: And then we've got opportunities big opportunities at Morency.
Bill Peterson: And one of the heat sources that we're pursuing that morency us geothermal thing, which would be very low cost. So there are some new technologies that we're pursuing that would help us go from 300.
Bill Peterson: Beyond but to get to 300, we feel confident we can do it with existing technologies just doing it at scale.
Speaker Change: Okay. Thanks, if I can follow up on the leaching and also the last part of your answer I guess in terms of the supply chain. Both the raw materials additives equipment heating sources are you using non Chinese sources for these I guess correct me she.
Speaker Change: Projects and I guess on the path to 800 or are you able to achieve out of the non China supply chain any more of a point can you achieve this with a U S based supply chain.
Speaker Change: We are testing a variety of of of additives and that's a big point of what one of what we're looking at is.
Speaker Change: Is it does he added to work number one and is there a robust supply chain for that that additive and it did answer your question. What we've identified does not rely on on China.
Speaker Change: In there is there is some of the product that's produced in the U S.
Speaker Change: Some of the technology is not necessarily use technology, but but that's part of what we're doing is making sure. There's a that you don't just go down a path and you don't have a supply chain for this additive.
Speaker Change: And that there's efficient ways to recycle the additive as well so you minimize the use of it. So there were a number of things going on but were really excited bill about about the potential here and there's no better company that can take advantage of this given you know we've.
Speaker Change: Got 40 billion pounds of copper sitting in stockpiles that we thought was waste before and now we're very excited about you know essentially having a a new mine in the U S. A new low cost mine in the U S.
Speaker Change: Producing 800 million pounds, a year essentially so it's very very exciting.
Speaker Change: Perfect. Thanks, again, and nice job on a quarterly execution.
Now, we will turn the call over to management for any closing remarks.
Speaker Change: Thank you everyone for your participation and we look forward to continuing to keep you updated if you have any follow ups, David is available to them to address them. Thanks, so much for your attention and interest.
Speaker Change: Thank you all.
Speaker Change: Ladies and gentlemen that concludes our call for today. Thank you for your participation and you may now disconnect.
Speaker Change: Yeah.
Yeah.
Speaker Change:
Speaker Change: Yeah.
Speaker Change:
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: [noise].