Closing Bell - Closing Bell Overtime: Tesla Soars After Reporting Earnings; Cleveland-Cliffs, Freeport-McMoRan CEOs On Latest Quarters 4/23/24

Episode Date: April 23, 2024

Tesla surged in after-hours trading after reporting results. ARK’s Tasha Keeney and former Tesla board member Steve Westly weigh in on next steps for the automaker. Other earnings include Texan Instruments, Visa, Mattel, Seagate and Chubb. Cleveland-Cliffs had its worst day in more than 3 years; CEO Lourenco Goncalves discusses the recent quarter and the stock reaction. Plus, Freeport-McMoRan CEO Richard Adkerson on global copper demand and why he sees the beginnings of a recovery worldwide. 

Well, we've got another close in the green, another more than 1% move higher for the NASDAQ as a tentative comeback may begin some momentum. That is the scorecard on Wall Street, but winners stay late. Welcome to Closing Bell Overtime. I'm John Fort with Morgan Brennan. Well, Tesla headlining a huge hour of earnings reports that are coming your way. Snapping a losing streak today, a six-day losing streak, but still sitting near its lowest levels in more than a year. And also reporting this hour, Visa, Texas Instruments, Mattel, Chubb, and many others that we will be monitoring. But as we await those earnings, let's bring in our market panel. Vital Knowledge founder Adam Crisafulli and CNBC senior markets commentator Mike Santoli. Adam, I'll go to you first because it really seems like it was earnings that were driving the narrative as we did see this rebound in the equity markets today.

You also saw yields come off a bit here. Is this enough? Can we say that the pullback has happened and now we are turning a corner again? Yeah, I think you saw in the last several days, you know, the early morning dive lower Friday before the open off of the Israel strike in Iran, I think that was kind of a sustainable chop right now. And in the last couple of days, we had some dovish data this morning with the flash PMIs that helped bring yields a little bit off their highs. And then you had a bunch of encouraging earnings from across a variety of industries, GM, GE, Pfizer. You know, there were just a bunch of updates from critical areas of the economy that were

encouraging. I think a combination of all that, you unwound a lot of the technical excesses in the last several weeks in the sell-off. All that helped to drive this rebound, and it probably has some more legs to go. I don't think we'll be setting fresh highs in the S&P in the immediate term, but definitely the price action, the technical landscape does feel a lot better than it did, you know, even just in the middle of last week. Yeah. Mike Santoli, I mean, we can talk about the fact that every sector was in the green today except for materials, but it was big tech leading the charge. This is a big week for big tech. It starts here in the next couple of minutes with Tesla. Have we seen the bar lowered enough that earnings are going to springboard past it? Well, I think you did on Friday seen the bar lowered enough that earnings are going to springboard past it?

Well, I think you did on Friday see the bar lowered enough for most of these names. I think Spotify today was a good example of that, just getting back all of its recent losses on a pretty decent number, even though it wasn't a blowout. So, yeah, I think so. I mean, to some degree, it's muscle memory. I'm with Adam in saying a V bottom right back to the highs in the broad market or in the NASDAQ, probably not the likeliest scenario, but so far it's encouraging the market's been able to find its footing here. All right, Mike, hold tight. We got Texas Instruments earnings out. The stock is higher in overtime. Christina Parts-Nevillis has the numbers. Christina. Stock's higher because EPS came in at $1.20, which is higher than what the street

anticipated on revenues of $3.66 billion, also slightly higher than the street anticipated. What we care about is Q2 guidance. The company did post a range that fell in line with estimates. There was one line that did stand out. Revenue decreased 16% from the same quarter a year ago, 10% sequentially,

as revenue declined across all end markets, something we also heard from TSMC. But nonetheless, you can see shares are popping over 6% right now on the top and bottom line beat. And so far, Q2 revenue guidance that fell in line. Guys? All right. Christina, thank you. Adam Cresafulli, I am wondering right now, Texas instruments aside for a moment, though, it is interesting,

especially since it doesn't seem like this is a blowout, but the stock's still moving higher, which has been a bit unusual for some of the results lately. How much does Tesla still matter either to the big tech trade or to the growth trade right now? I mean, it matters, of course, to like ARK's main fund for, I'm sorry, Tesla's out. Is that what I'm hearing? And we are going through it. So as we wait for those numbers, how much does this matter even beyond Tesla, Adam? So I think with Tesla, what's really been happening is you've obviously had weeks of bad news.

You've had poor deliveries. You've had job cuts. I think really what's occurring is kind of the market's perception of this company is shifting away from it being a tech giant, you know, comparable to a Google or a Meta and more towards a traditional oil firm. And I think that's kind of responsible for a lot of the poor price action that you've seen.

And so it will be interesting, you know, not so much in the Q1 numbers, but on the call tonight, I think there'll be an effort to kind of reshift the narrative back to looking at Tesla through the lens of technology. But I think that's kind of the real battle right now in the market. What is Tesla defining it? Is it a tech company with software revenue streams and services? Or is it just an auto company with auto-like margins and auto-like growth? And I think that's kind of the real dilemma now that the market's trying to grapple with. Mike Santoli, I'm really eager to hear what these numbers

are because the stock right now is up more than seven and a half percent in overtime. And of course, this is just an initial reaction. Put that into context for us, because so much is going to depend on what the language is on the conference call. How much does that matter for Tesla in particular, since so many are watching this stock so closely? Yeah, I mean, any sort of, I guess, volume guidance, deliveries guidance that has some credence to it, because the story has changed from we're supply constrained, we sell every car we can make to obviously not being able to have enough demand to keep your margins and prices up. Stocks down 40 percent year to date coming into this. So

obviously, we definitely had a stampede out of it. So we'll see if it was less bad than maybe people were bracing for in terms of the actual numbers. I'm on the side of Tesla kind of was never a bellwether for much except for a certain category of investor risk appetite where you had this sort of go-go, we're just going to pay any premium for something that we believe is one of these multi-year winners. I think that game more or less ended a while back. Okay. So, Adam, as we do continue to go through the results for Tesla here, I mean, looking at GM this morning

and the fact that we got commentary from that company about possible profitability, more profitability within the EV segment in the second half of this year, signs of recovery writ large across the broader market here, potentially? Yeah, I mean, I think GM, you know, is encouraging. And they also, you know, they're benefiting from a broad product lineup of traditional ICE cars, hybrids, and EVs. They also have a very reasonable multiple. And so that helps give, you know, provide a lot of downside support for the stock, whereas Tesla, you know, it's a single category product with EVs. And then the multiple support is certainly not nearly what it is with a Ford or a GM. But you had a lot of big industrial companies today. It's

UPS, it's GM, GE, all of which had relatively sanguine things to say about the underlying economy. And so it's certainly encouraging. Tesla. Phil LeBeau has the numbers for us. Phil, there's a lot here in the summary. Morgan, it's a miss on the top and the bottom line for Tesla. We're going to start crunching the numbers within the numbers. But let me give you the top and the bottom line. First of all, bottom line, they earned 45 cents a share in the first quarter. The street was expecting 51 cents a share, so a miss by six cents a share. Revenue coming in at 21.03 billion, light of estimates, which were at 22.15 billion. So in the top of the bottom line, you've got a miss there. And then one other note regarding guidance on deliveries for 2024. We were looking for a number. We have not come across one yet,

except for language similar to what we heard in the fourth quarter that they expect notably lower deliveries this year, 2024, compared to 2023. What does that mean in terms of specifics? Haven't come across that yet, guys. But again, you have a miss on the top and the bottom line for Tesla. We're going to dive into the numbers, look at things like automotive gross margins, excluding credits, et cetera. And we'll have that for you in just a bit. So I hate to ask a question, Phil, that that has no answer that a reporter can give. But have you seen anything in this report yet that would explain why the stock spiked up almost, you know, eight percent initially? Now it's down around three. Maybe it's just algorithms out there or some initial anything. Not not yet. Not yet. John have not come across something.

And there may be something within these numbers that you when you start crunching them and going through it and you say, OK, not as bad as we were expecting. Or when you look at the energy storage business, maybe there's some indication of some some news in there that will give people some optimism here. But nothing at this point that you can hang your hat on and say, well, that's exactly why the stock has moved higher. Okay. Well, we know you've got 31 pages in this report to go through. So, Phil, we'll let you get back to it. In the meantime, just taking a look even at page one here, John, I mean, they're talking about increased AI training compute by more than 130 percent in Q1, record energy storage deployment produced over a thousand cyber trucks. We don't really talk very much about cyber trucks in a single week in April.

And talking again about the fact that the future is not only electric, but, quote, unquote, also autonomous. Perhaps teasing ahead to that robot taxi announcement we get in August. Yeah, I know you're very skeptical about this and be careful out there. It's a stock that's being watched very closely. It was initially up like eight. Then it was just down around two and a half a bit. Now it's up and forth. It's going to be a long afternoon for those trading tests. Yeah. And we're going to continue to pull on the threads here. Adam Christofoli, though, I mean, we've been talking about and debating whether the AI trade has gotten long in the tooth, and Tesla is one of those names, for better or worse, as we do talk about

robo-taxis and debate the future of that and what that looks like, whether it comes, whether regulators actually even approve such a thing. This is a company that has a lot of AI talent in it. Elon Musk has talked about the fact that it's been hard to hang on to that talent, and we have seen this reemergence just this week of companies, and we'll see more of it, of companies with artificial intelligence. Yeah, I mean, you know, Tesla's been talking about AI with their Dojo initiative, and they talk about how it's critical for their full self-driving, which is critical for autonomous driving down the road. So, you know, they certainly do like to incorporate a lot of AI into the narrative, and I'm sure we'll hear a lot about that tonight.

It's not really moving the needle on earnings or revenue yet for the company, and I think that's kind of the big problem. There's been a lot of rhetoric about how important AI is, but it hasn't really shown up financially. And so I think a company like Meta tomorrow or Microsoft on Thursday, those are where you're really seeing AI drive enormous earnings and revenue. I think that's really kind of what investors are really looking for. And actually, tomorrow morning, there's a company, Vertib, which will be a very important barometer for kind of just data center construction for people looking for the next AI data point.

OK. And IBM, too. Yes, IBM, too. In the meantime, Visa earnings are out. That stock higher by about 2% in overtime. Kate Rooney has the numbers. Kate? Yeah, John. So it was a beat for Visa on the top and bottom line, at least. We're looking through for some guidance as well. EPS number $2.51. That was a 7-cent beat for Visa. Revenues of $8.78 billion. That grew 10% year over year.

Higher than expected. Street was looking for $8.78 billion. That grew 10% year over year. Higher than expected. Street was looking for $8.6 billion or so on revenue. Quote here from the CEO talking about results being driven by stable consumer spending. And some of the payment flows. They're also looking here at payment volume, which was up 8% cross-border volume. That's a key higher margin area for Visa and the card companies. That was up 16%. Process transactions overall up 11%. And then it looks like the outlook here, guys, net revenue growth,

they're expecting low double-digit revenue growth, which is what the street was looking for. They were looking for management to really reiterate that guide. So that could be helping shares here, guys. Back over to you. All right. Speaks to the international travel boom that continues that we've been seeing with airlines, too. Kate Rooney, thank you. Mattel earnings are out. Courtney Reagan has those numbers. Hey, Court. Yeah, here's about international toy sales here, Morgan. So

Mattel actually beating on the bottom line with a smaller than expected adjusted loss of five cents. The street was expecting that loss to be around 12 cents per share. However, Mattel's revenues are coming in short at $810 million compared to $832 million for the consensus. They did also beat their adjusted gross margin at 48.3%. The street was looking for that to be just about 46%. They are reiterating their 2024 guidance, so they're still seeing their adjusted EPS between 135 and 145 a share. The street is sitting at 139. The CEO is talking about trends in consumer demand for the products actually improving throughout the quarter. They do intend to outpace the industry, thus gaining market share throughout this year. If you look at the gross billing, so this is what's been

invoiced to customers that buy these Mattel products, North America was up just 1%, international low down 4%, and then just divided by categories quickly, dolls, worldwide gross billings down 4%, the infant-toddler preschool category down 10% worldwide for gross billings, vehicles up 5%, and then the action figures, building sets, and games category was flat for those worldwide billings. Vehicles up 5%. And then the action figures, building sets, and games category was flat for those worldwide billings. But shares higher by about 4% for Mattel on this mixed report, but largely better than expected. Back over to you. Okay. A little surprised Barbie wasn't a little stronger with the dolls.

Hot wheels, though. Yeah. Okay. Yeah. A lot of that in my house right now. Well, go Ken. Seagate earnings are out. That stock higher almost 3%. Kate Rogers has the numbers. Kate. Hi, John. Yeah, the stock higher on this mixed report for the third quarter here. Seagate EPS beat 33 cents adjusted, better than the 29 cents that analysts were looking for. Revenues a miss here, 1.66 billion for the third quarter, a bit lower than the 1.68 billion the street was looking for. In terms of its outlook, Q4 adjusted EPS outlook stronger than anticipated,

sees $0.70 to $0.60 estimated. Q4 revenues outlook is in line with estimates. And as you can see, the stock is higher, as you said, by just under 3% now. Back over to you. All right. Thank you, Kate. Mike Santella, we haven't heard from you in a bit here. It seems like controlling the bottom line results is the biggest theme here in why some of these stocks are in the green. Yeah, the ones that could do it. I mean, obviously, Mattel's working on the fourth straight year of flat revenues.

It's all about cost cutting and a margin story. And similar with Seagate, I would say on Tesla, I don't know if this is really getting the pop, but they seem to be pulling forward what they're promising in terms of the rollout of new models versus their previous schedule in the second half of 2025. That's part of the release. I think people are trying to seize on that to say maybe there is going to be a lower cost, kind of not hybrid in terms of fuel, but hybrid in terms of the current platform and new platform of vehicles. So just throwing that out there for a stock that's traded in the last five months between 260 and 140. So, you know, the fact that it's at 155 doesn't necessarily tell us the overall story has changed. All right, Mike, thank you. Adam, thank you as well. And of course, Mike, we're going to

see you a little bit later in the hour. Phil LeBeau got more on Tesla as well. Phil? You got to read through it all before you finally get the little nugget that tells you why the stock is moving higher. The concern has been, are they not going to be developing a new, lower-priced vehicle? Well, they do say within their release that they have updated their future vehicle lineup to accelerate the launch of a new vehicle, the start of production, lower priced, more modestly priced vehicle in the second half of 2025. These new vehicles, according to the report, including more affordable models, will utilize aspects of the current platform. So it's not saying, hey, it's model two. They are saying that there are more affordable priced models, that some of them will start production in the second half of 25. That's the kind of definitive

piece of information that investors were looking for and that Wall Street were looking for. Because when you look at the numbers, it's not a good quarter, guys. A couple other ones that I wanted to share with you. Free cash flow, negative free cash flow. And I can't remember the last time Tesla had a quarter of negative free cash flow, negative 2.5 billion free cash flow. Gross auto margins excluding zero emission vehicle credits. At one time, this was up around 26, 27 percent, down to 11.6 percent in the first quarter. Gives you some perspective, guys. Also, operating profit margin of 5.5 percent. Gives you some perspective, guys. Also, operating profit margin of 5.5%. Gives you some perspective of the pressure that Tesla felt in the first quarter.

Okay, quickly, Phil, if it's cheaper models that utilize aspects of the current platform, is that lipstick on more price cuts? No. I think what it is, is we are going to be coming out with some lower priced models, not necessarily. So you're suggesting, John, are they going to take the Model 3 and strip it down even further and have Model 3 Lite? No, I think what they're saying is they will take what they have from the Model 3 and the Model Y, those will be incorporated into some lower priced models. That's just my take in terms of reading the release at this point. The key being, if they're going into production in the second half of 25 with more modestly priced models,

that's exactly what the street wants to hear. The street is not focused on robo-taxi. That may be Elon Musk's dream in terms of taking this company there someday. That's not what the street wants to hear over the next couple of years. What they want to hear is what they saw from Tesla in this release. And obviously, we'll be at the point of a lot of questions this afternoon during the analyst call. What do they mean in terms of more modestly priced models that will go into production in the second half of next year? Yeah, I realize we need more details on that. But quickly, Phil, does that mean we can put to bed this Reuters report that everybody's been talking about, despite the fact that Elon Musk

basically batted it down, although not with not a lot of detail on X a couple weeks ago. The one that said that they were going to scrap doing a Model 2 altogether. Yeah, I think and there were a couple of reports after that, Morgan, where people came out who had talked with executives within the company who said, look, they're still working on this. RoboTaxi is going to be getting more attention, but we're not done coming out with lower priced models. All right. Great clarification. Phil, thanks. Let's talk more Tesla with Tasha Keeney of ARK Invest and Steve Wesley of the Wesley Group, also a former Tesla board member. Welcome, both of you. Steve, I'm trying to figure out how you get out of a, if you're Tesla, you get out of a price competition, you know, cheaper Chinese EV situation by, you

know, through price cuts and a cheaper car that has aspects of the current platform. What's the optimistic scenario here, Steve, that you see? Look, you've got to get a $25,000 car out to market. And let's be honest, this was a terrible quarter. Year-over-year decline in Q1 sales haven't happened in four years. Poor Cybertruck numbers, increasing competition for BYD, Hyundai, Kia, 40% decline in share price. It doesn't get much tougher than that. On top of this, Elon's putting

huge amount of pressure on the big August 8th robo taxi event. And my gut is anything less than an earth shattering news on full self-driving and no 25K car could trigger a sale off. Right now, Tesla needs to focus and they need to get dates for bringing that new $25,000 car to market. If they do that, there's a lot of silver lining out there for them. Tasha, your price target on Tesla is more than 10x up from here. So what is it that convinces investors in this situation that Tesla is worth that? Yeah, well, you know, let's talk about earth shattering. I can't think of anything more earth shattering than a car that drives itself. And I think that's exactly what people should be focused on. So, yes, our previously published price target was $2,000 per share by 2027. We're updating that now. So look out for that research. But we think that two thirds of the enterprise value in that year could be attributable to a robo-taxi network. To ignore this is crazy in my mind. I think that this Tesla will be one of the greatest AI companies of our generation

because of this. What's important now is we're hearing that they're investing in compute. They're mentioning in the letter that compute resources up 130% for the quarter. They'll continue to invest in compute. We want them to do that because the way that they have tuned the full self-driving neural net architecture is such that they have this amazing data set, millions of cars on the road, over 2 million miles of driving data per day to train from. And for a while they were compute constrained,

and that's not the case anymore. So basically, you know, new problems arise and they just need the compute to solve it. And now they're, you know, have that or at least have line of sight to having that. I think that's huge. So I'm super excited for the RoboTaxi event later this year. Okay. Steve, I mean, to even get, let's put the regulatory approvals that are going to be necessary aside for a moment, to even get to true autonomous driving and the realization of this on a mass scale in a way that's potentially financially meaningful for a Tesla, how much hinges on the fact that you need a lower priced car, you need scale, more vehicles on the road to fully deploy full self-driving and to fully realize software

and services? You and what Phil just said is exactly right. Robo taxis will be the biggest deal in the world, but that's five, 10, 12 years out. That's just aspirational talk. Tesla's got to figure out what they're doing for the next three years. And the short answer to that is the $25,000 car. I drive a Tesla, full self-driving. It's extraordinary. And Tesla and Waymo are the leaders. Let's give them credit. But they're at maybe 98%, 99%. Before you have full self-driving robotaxis, you have to be at 99.9999. That is years out. Tesla's got to fill that gap. There is some silver lining here. Look, they still control 51% of the EV market in the United States more than all other companies combined. That's great. They're dominant in Europe. They have work to do in China. That's

why they're bringing prices down. They control the charging network largely in North America and Europe. All other automakers are gravitating. They're going to use Tesla's network. And I don't think Tesla will be bashful about raising prices there. And their energy division is growing at record rates. $6 billion last year should be at $10 billion by the next couple of years. And there are a lot of talk about their new out-of-box manufacturing process that could cut costs another third. So lower battery costs, better manufacturing, some silver lining.

They're going to have to scramble to get through this next three years because all autonomous driving and robo taxis ain't going to be here anytime soon. Yeah. Tasha, in the meantime, I realize robo taxi is a big part of the long-term price target at ARK, but auto gross margins, ex-credits, 11.6%. We've seen that come down pretty dramatically, in part because Tesla has waged this price war, put pressure on prices of its own cars as it does see increased competition. How much does that matter, especially when you do have negative free cash flow and the investments necessary to realize that next chapter that you're talking about with Tesla, money's going to matter. Yeah, you know, I do think money is going to matter. I'd say, you know, from a cost perspective,

I mean, we know that because Tesla is lowering the prices on its vehicles, it's just going to be even tougher for other automakers to compete. And I mean, they say it in their letter, other traditional automakers are actually pulling back on their electric vehicle plans, which is a humongous mistake and in fact might just cement their extinction from my perspective. You know, we've done a lot of work,

my colleague Sam Khoras on Wright's law. And we think that battery costs are declining in line with Wright's law, which means that for every cumulative doubling in production, you get a reduction in price. So, you know, we see Tesla, they mentioned in the letter that COGS for the cost of goods sold for the Model Y are at all time lows. You know, we expect those to continue to come down. And now that they've cut prices, I mean, I'd be shaking in my boots if I was a traditional automaker. And, you know, just quickly on Robotaxi, I think that

AI has continued to surprise us. And in fact, we published in our Big Ideas report this year that if you look at the forecast of when we think we'll get artificial general intelligence, they've been decreasing pretty significantly over the past year or so. And that's because AI improvements are actually hard to predict. You know, the night before ChatGPT came out, I don't think any of us knew what it was going to look like. These things happen overnight. I think Waymo has proved that it's possible because there's already robo-taxis today on roads in the U.S. They're paying passengers. And I think Tesla's going to be the first to do it at scale.

So I wouldn't sleep on that opportunity. Okay. Tasha Keeney and Steve Wesley, thanks for joining us. As we do await the earnings call for Tesla. Shares are higher right now. And of course, whatever comments we're going to get out of Elon Musk, which tends to move the stock. All right. Well, Texas Instruments just out with earnings at the top of the hour, getting a big pop, turning positive on the year. Up next, we're going to ask an analyst what he wants to hear from management on that earnings call, which kicks off in just

a few moments. stay with us. Welcome back to Overtime. Chubb earnings are out. Contessa Brewer has the numbers for us. Hi, Contessa. Morgan, we have a beat here on the top and bottom lines. Chubb reporting revenue of $10.59 billion. The street was expecting $10.29. And EPS here coming in with an adjusted $5.41 against the estimate of $5.31, so a 10-cent beat. And look, you know that there

are people who are opening their insurance bills, and they want to know why they're so high. Chubb says it's among the best rates and pricing overall in the property and casualty part of their business in North America that they've seen in the last four or five quarters. And even so, the loss costs, what they pay out for claims, remaining steady here. Other news today that they are acquiring Healthy Paws from Aon. That's a pet insurance niche market, really, but a lot of growth potential, Chubb says. So that's the news coming in today. You can see the stock is up fractionally in aftermarket trading. Morgan?

All right, I'll take it. Contessa, thank you. People like their pets. Well, yes. Let's get another check on Texas Instruments. Meanwhile, up better than 5.5% in overtime. Beat on the top and bottom line. Joining us now, Christopher Rowland from Susquehanna.

Christopher, so the midpoint of the Q2 revenue guide, I think, was a beat. But we're coming off of a quarter where the executives over at Texan were talking about increasingly weak environment for industrial weakness and automotive as well. Inventory rebalance issues. How much will inventories and even that industrial commentary matter on this call? Those three things you just mentioned, auto, industrial, and inventory, are probably going to be the key debatable points and things that people are waiting for on this report. In addition to that, their CapEx cycle, any other changes in CapEx planning, cash flow, these are some other things we would be interested in. So this is a stock that's flattish for the year at this point. I

mean, it's been chomping around for quite a while, for arguably like three years now. Are they better positioned now? Is this a place where investors can think about starting to build more of a position? They are undergoing a massive decade-long capex cycle here. They are building fab after fab, trying to get ahead of the capacity they think they're going to need for the next semiconductor cycle. And this is the debate among investors. This is also perhaps why the stock has been so flat over the past few years. It's this spending cycle. And that really is what's determining the stock price for TI in this down part of the semiconductor cycle overall.

Given the revenue forecast, the bullish revenue forecast for the current quarter, can we say a bottom is in for industrial and automotive and markets? And if so, what's the read-through to others in the semi-space? Yeah, I'm not going to make a call on the bottom just yet. I don't think TI is going to make a call on the bottom here. There are a number of players, particularly in automotive, who are now four plus quarter kind of transition here in automotive. And this is only the second quarter of that. So I don't know if they're going to be ready to call a bottom either. OK, it'll be interesting. We know on the steel side, auto has been strong.

We're going to hear about that from Cleveland Cliff CEO and just a little bit later in the show. In the meantime, Christopher Rowland, thanks for joining us to talk about Texas Instruments, which is higher right now in overtime. $70 billion copper miner Freeport McMoran just out with earnings this morning, topping estimates on strong copper sales. We're going to talk to the company's CEO about those results and his read on the global economy when Overtime comes back. Welcome back to Overtime. Shares of miner Freeport-McMoran falling today despite topping Wall Street estimates for our first quarter profit. Strong gold and copper prices helping boost results. The stock ending about 2% lower today as copper futures pulled back,

perhaps some profit taking in that market. Joining us now, Freeport Mac Moran, chairman and CEO Richard Adkerson. Richard, it's so great to have you on. Thanks for joining us. Good to be on, Morgan. Good to see you. So I do want to start with the fact that we saw copper production increase in the first quarter. Copper sales were up 33 percent year on year, which was above guidance as well. You and I have had this conversation about a long term mismatch in the market as we do see some of these secular growth trends around things like electrification, infrastructure. Now you could even argue digitization with things like data centers. Are we starting to see that materialize? Clearly. I mean, copper prices have moved up from roughly the 370 a pound

level to 440 or so now. And the tone of the market from people who follow it closely are reflecting more of the positions that we've been talking about for such a long time. The fundamentals for copper are very good, both from a demand standpoint and the challenges in meeting supply. So when we talk about Dr. Copper, I mean, we also talk about how it's a barometer for the health of the global economy. What are we seeing? How is China factoring in? Well, China is important to the market for copper. It consumes more than 50 percent of the copper within china and going into 2023 there was a massive concern about china because of its issues in the property sector but china end up having growth during 2023 from investments in its grid and in

the green economy and so forth and And the outlook for China is better. It still has its question marks. But the day's world is different. It doesn't rely totally on China for growth. Growth in the developed world is coming about from the factors you just mentioned, as well as continued growth in the less developed world. So the outlook for copper is very positive. I've never been more enthusiastic about it.

OK. How do you navigate and, I guess, de-risk for a year that is rife with politics and geopolitics, not just here stateside, but also in key markets like, for example, Indonesia, where you have a big operation? Yeah, no question. I mean, politics in a number of countries around the world are very complicated. At the end of the day, ours is a very long-term business. I mean, it takes many years to develop new production, to add new production online. And then when you do develop mines, they have decades of life. And so we just have to have a long-term focus on our business. The key to our business is execution, execution, execution. And that's been a hallmark of Freeport. We've been able

to execute our business plans very effectively. And this quarter showed that. Have to ask about gold because you don't just pull copper out of the ground, you pull gold out of the ground. We've seen it trading at record highs. Your outlook? Gold for us is a byproduct of our major copper mine in Papua in Indonesia. It is among the very largest single gold mines in the world, and it's an important factor in the profitability of that mine. In this most recent quarter, our gold production with the current high gold price was sufficiently large to cover all of our operating costs for that mine, and that's the second largest

copper mine in the world. So it's important, but it's not in terms of our consolidated totals. It's less than 10 percent of our revenues, but it's important byproduct factor for that mine. OK, Richard, it's great to have you on for what I believe is our last earnings interview together before you hand the reins over to Kathleen Quirk. So it's been great to speak with you and we appreciate your time and insights today. Richard Adkerson of Freeport-McMoran. Good. Thanks, Morgan. I'm going to continue as chairman and continue to support Kathleen and our team as we go forward. All right. Great to hear from him. And coming up from copper to steel, the head of Cleveland Cliffs joins us exclusively as his stock

turns in its worst day of the year after a miss on earnings. We'll be right back. Well, coming up, Cleveland Cliffs CEO is going to join us exclusively as shares fall hard on an earnings miss. And take a look at GE Aerospace flying to new highs today after it reported its final quarter as a consolidated company GE Aero which became independent this month raising full-year profit forecasts as aftermarket services soar according to CEO Larry Culp and as the company continues to work through supply chain challenges to deliver more jet engines

defense business posting solid growth too but on Boeing supplies LEAP engines to the 737 MAX. Culp telling me, quote, we're well calibrated with Boeing as we are with Airbus and our other airframe customers. For LEAP engine deliveries in 2024, though, GE Aerospace is trimming growth estimates to a forecast of 10 to 15 percent increase this year. That's versus the original 20 to 25 percent increase. Perhaps a precursor to Boeing's own results and production outlook tomorrow when we get those results. Overtime. We'll be right back. Welcome back to a very busy overtime session. Tesla missing on EPS and revenue, but the stock is higher on commentary about a more affordable model.

See it up there now, 8% plus. Texas Instruments jumping as well, about 5% right now after beating on both lines. Visa topping estimates on both lines, up 3%. Payment volumes up 8%. And, well, there's a downside always. Check out solar company Enphase Energy down about 5% after earnings came in at $0.35 a share, missing by $0.05. Revenue and guidance were light as well. Well, another earnings mover, Cleveland Cliffs, tumbling today after missing first quarter estimates.

It's the biggest drop since February of 2021. The company announcing a $1.5 billion share buyback, saying it's a better use of capital than M&A at current valuations. Joining us now in an exclusive interview is Cleveland Cliffs CEO Lorenzo Gonsalves. Lorenzo, great to have you. So you talked about, you know, 600 million plus that you spent in the quarter average buying back stock, average price of $18.79 a share. It's cheaper now. You're saying you're aggressively going after that and that you're not doing any M&A or looking at any M&A that would prevent you from buying back these shares. But what does that mean? Right. You're looking for deals with stock. Do you still have enough liquidity to do any M&A that you might want to do? Good afternoon, John. Always a pleasure speaking with you. Yeah, we have the liquidity to pursue further buybacks. We need to continue to return capital to the shareholders.

That's our commitment. And yeah, the market will give me the opportunity to do that. The current stock price, the closing price today is below the average of the acquisition that we made with the $1 billion buyback. So yeah, we will continue to do that. Well, more broadly, give us your take on the macro environment and its impact on you, both from a labor perspective and then also from an end market demand perspective.

We see Texas Instruments, it's higher after hours today, but it's been talking about overall demand weakness in areas like industrial that I would think might affect the demand for some of what you're putting out as well. Look, in our specific business, the biggest problem is not the macro as a whole, is the perception of the macro. We started the quarter, if you recall, with the people believing that we would have three cuts of rates by the Fed. And then during the quarter, we went to no cuts.

Now there's talk even about further rate increase. And that creates a situation that clients get paralyzed, particularly in distribution, in service centers. And these are the guys that move a lot of volume, and they can go in and out. Other sectors, like automotive, they don't have the luxury to do that because they have plans to run. So we were victims of this uncertainty, particularly in January and February. Things did not improve in March from the perception standpoint, but then these clients

were so low in inventory that they had no option they had to buy. So March was our best month of the quarter and April so far so good. So things are improving. Yeah. You talked a lot about strength in the auto sector. You're the largest steelmaker supplying into the auto industry. And you also talked about the recovery we're starting to see in steel prices, too. So I wonder, we've got more sanctions on some Russian made steel. And now we've got talk from the Biden administration here in the U.S. about more tariffs on some imported steel, namely from China. Is this good for you and your business? Yeah, look, it's not only good for us and for our business, but it's necessary.

We continue to fight over capacity in the world. We continue to fight unfair trade into the United States. And it's not just Russia or just China. It's a combination of everybody, and particularly with a landing ground that was created in Mexico that puts steel from virtually everywhere in the world inside the USMCA. So we need to stop this thing that using Mexico as a dumping ground, a transshipment ground for reaching the market in the United States.

That's our biggest problem at this point. Okay. I want to go back to M&A for a minute. Are you still in the market? Would you still be in the market for U.S. steel if this deal with Nippon is scuttled? And I ask that knowing that last month you made a couple comments that got my attention here. On Bloomberg, you said that you discussed with the U.S. government prior to making the offer that you wanted to make sure there'd be a clear path,

a path to clear antitrust. And you also talked about, or at least my colleague, David Faber, talked about you talking about the fact that the union is just not going to negotiate with Nippon. So we know that's going through regulatory review right now. Is your expectation that that deal is not going to get through? I don't believe that that deal will close. What I told you on December 18, Morgan, around this time of the day, so after market closed on the day the deal was announced on December 18, 2023 is still valid today. I don't believe that that deal will close. The USW will not cut the deal with Nippon Steel. And at this point, it would be better for all the players,

all the participants in this bought deal to have President Biden in an act of mercy to put them out of their misery. But if they don't, the deal will linger around for a few more months or maybe a year, and the USW will not cut the deal, and then the deal will just fail. Lorenzo, I want to go back to something that you said earlier when I was asking about the macro, and you talked about the impact of these changing rate expectations, perception of the macro. What's going to unfreeze those customers who have gone from expecting cuts to now, you say, perhaps thinking that that hikes could be coming? What is it going to take certainty wise to unfreeze them? I think the biggest problem, John, is the talk around when one day

one of the Fed presidents says, oh, I think it would be three cuts. And then the other day, another one said, no, I think it would be only one. And then the other day said, oh, might have some increases. And then comes Chairman Powell and talks for two hours in a row. And of course, people will scrutinize every single word out of his mouth. So what we need is clarity. If we're going to cut, cut. If we're not going to cut, don't cut. And if we're going to increase rates, do it.

But just don't leave us in limbo, because we don't live in a world of words. We live in a world of action, in real life. And the lives of several people, several families are on the line. And there are the consequences of the actions of these people that talk a lot. Okay. Lorenzo Gonsalves, CEO of Cleveland Cliffs. Thanks for joining us. Always a pleasure. Thanks a lot. Up next, the M&A news that sent shares of HashiCorp soaring 20 percent, well, close to about 19 percent higher today. What the CEO told us just a few weeks ago about his company's cash position. You're going to want to hear that. We'll be right back.

Welcome back. We have another big earnings day tomorrow before the bell, AT&T and Boeing. In overtime tomorrow, we've got numbers from Meta, Ford, Chipotle. Chipotle CEO Brian Nicol will join us exclusively tomorrow after the results cross. You do not want to miss that. And, of course, we're going to have other AI players after the bell, too. IBM service now. We will indeed. Yeah, IBM's coming out with results tomorrow. Today, though, the Wall Street Journal reporting IBM is near a deal to buy software

company HashiCorp, sending those shares sharply higher, ended up almost 19 percent. I asked HashiCorp CEO Dave McJanet about the company's cash position when he joined us on overtime back in March. We flipped into the cash flow generation mode a couple of quarters ago, and we indicated from here forward, we expect to be cash flow from operations generating. And that puts us in a good, comfortable position to be able to decide what best to do with the capital we have in our balance sheet. We have about $1.3 billion in capital on our balance sheet, which is certainly large enough to sustain what we need to do. And we just think the time is right. Well, Arvind Krishna at IBM likes cash flow, so not sure how much behind this story,

but perhaps we'll find out more tomorrow. Yeah. In the meantime, we've got the Tesla earnings call kicking off here momentarily. That's going to be one to watch with that stock moving here in overtime. And, of course, the bar had been set very low coming into these results because it has had such a rough first quarter. For sure. Also tomorrow, ServiceNow. This, you know, speaking of, you know, AI, of cloud, this is an important name to watch because I've said it before. It's just about the fastest growing enterprise software company at scale. So what do they do on results?

What do they do on guide? How aggressive are they there when so many other companies are facing pressures? Yeah. In the meantime, we had the stocks or major averages finishing the day higher two days in a row now. Can that continue? That's going to do it for us here at Overtime. Fast Money starts now.