Earnings call transcript: Hudbay Minerals Q1 2026 beats forecasts with record revenue

Hudbay Minerals Inc. (HBM) reported its first-quarter 2026 earnings, surpassing expectations with a record-breaking revenue of $757.3 million, an 8.37% surprise over the forecast. The company’s earnings per share (EPS) also exceeded projections, reaching $0.40, a 3.76% surprise. Following these results, Hudbay’s stock saw a modest increase of 0.95%, closing at $31.42.

Hudbay Minerals delivered an exceptional performance in Q1 2026, setting new records in revenue and adjusted EBITDA. The company’s diversified commodity exposure, particularly in gold, provided substantial revenue and acted as a hedge against cost inflation. Operational efficiencies across its global sites contributed to this strong performance.

Hudbay Minerals reported an EPS of $0.40, exceeding the forecast of $0.3855 by 3.76%. Revenue also beat expectations, coming in at $757.3 million compared to the forecasted $698.8 million, marking an 8.37% surprise.

Following the earnings announcement, Hudbay’s stock price rose by 0.95%, reflecting investor confidence in the company’s robust performance. The stock is trading closer to its 52-week high, indicating strong market sentiment. The company’s shares have delivered exceptional returns, with a remarkable 218% gain over the past year and a 44% surge in the last six months alone, according to InvestingPro data. With a market capitalization of $9.27 billion and a P/E ratio of 16.25, investors should note that InvestingPro analysis suggests the stock is currently slightly overvalued relative to its Fair Value. Those seeking deeper insights can access comprehensive analysis through the Pro Research Report, available for HBM and 1,400+ other US equities, transforming complex data into actionable intelligence.

Hudbay projects continued growth with an EPS forecast of $1.59 for FY2026 and $2.30 for FY2027. The company plans to enhance throughput in its Peru operations and advance exploration projects to sustain its growth trajectory. Notably, the company boasts a strong return on equity of 20% and has maintained dividend payments for 17 consecutive years, demonstrating financial discipline. However, investors should be aware that 4 analysts have recently revised their earnings estimates downward for the upcoming period. InvestingPro offers 8 additional exclusive tips for HBM, along with comprehensive financial health scores and expert analysis to help investors make informed decisions.

CEO Peter Kukielski stated, "Our record-breaking quarter reflects our strategic focus on operational excellence and cost management. We are well-positioned to capitalize on favorable market conditions."

Analysts inquired about Hudbay’s strategies to mitigate rising oil costs and its plans for future growth projects. The company highlighted its diversified commodity exposure as a natural hedge and outlined its strategic initiatives to enhance operational efficiency.

Operator: Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Hudbay Minerals Inc. first quarter 2026 results conference call. At this time, all participants are in listen-only mode. Following the presentation, we will conduct a question and answer session. To join the question queue, you may press star then 1 on your telephone keypad. You’ll hear a tone acknowledging your request. Should you need assistance during the conference call, you may reach an operator by pressing star then 0. I would like to remind everyone that this conference call is being recorded on May 1, 2026, at 11:00 A.M. Eastern Time. I would now like to turn the conference over to Candace Brule, Senior Vice President, Capital Markets and Corporate Affairs. Please go ahead.

Candace Brule, Senior Vice President, Capital Markets and Corporate Affairs, Hudbay Minerals Inc.: Thank you, operator. Good morning and welcome to Hudbay’s first quarter 2026 results conference call. Hudbay’s financial results were issued this morning and are available on our website at www.hudbay.com. A corresponding PowerPoint presentation is available in the investor events section of our website. We encourage you to refer to it during this call. Our presenter today is Peter Kukielski, Hudbay’s President and Chief Executive Officer. Accompanying Peter for the Q&A portion of the call will be Eugene Lei, our Chief Financial Officer, and Andre Lauzon, our Chief Operating Officer. Please note that comments made on today’s call may contain forward-looking information. This information, by its nature, is subject to risks and uncertainties. As such, actual results may differ materially from the views expressed today. For further information on these risks and uncertainties, please consult the company’s relevant filings on SEDAR+ and EDGAR.

These documents are also available on our website. As a reminder, all amounts discussed on today’s call are in US dollars unless otherwise noted. Now I’ll pass the call over to Peter Kukielski.

Peter Kukielski, President and Chief Executive Officer, Hudbay Minerals Inc.: Thank you, Candace. Good morning, everyone. Thank you for joining us on today’s call. We’ve had a great start to the year, achieving several key operational, financial, and growth milestones. Hudbay delivered another quarter of record revenue, record adjusted EBITDA, and record adjusted earnings in the first quarter. This was driven by steady operating performance, our focus on cost control, and the continued benefit from margin expansion with our unique mix of copper and gold exposure. Our leading operating cost performance resulted in record low consolidated cash costs in the first quarter, which contributed to continued strong free cash flow generation. With the strong performance in the quarter, all our operations are on track to achieve 2026 production and cost guidance.

Building on our commitment to prudent balance sheet management, we entered the quarter with over $1 billion in cash and cash equivalents, benefiting from $420 million received from Mitsubishi for their initial cash contribution on closing of the Copperworld joint venture transaction in January. Our enhanced financial flexibility has positioned us well to continue advancing the development of Copperworld, reinvest in high return opportunities at each of our operations, and de-risk the Cactus project upon completion of the acquisition of Arizona Sonoran to deliver attractive growth and maximize long-term risk-adjusted returns at each of our operations for stakeholders. Slide 3 provides an overview of our 1st quarter operational and financial performance.

The first quarter demonstrated strong operating performance with higher mill throughput across the three operations compared to the previous quarter, delivering consolidated copper production of 28,000 tons and consolidated gold production of 62,000 ounces. We achieved record quarterly revenues of $757 million and record adjusted EBITDA of $422 million in the first quarter. Cash generated from operating activities was $211 million, remaining relatively consistent with the fourth quarter as a result of favorable changes in non-cash working capital. First quarter adjusted net earnings was a record of $159 million or $0.40 per share, reflecting higher realized metal prices and strong cost control across the operations, resulting in higher gross profit margins.

During the first quarter, we continued to demonstrate industry-leading cost performance, delivering record low consolidated cash costs of negative $1.80 per pound of copper and sustaining cash costs of $0. This incredible cost performance was partially driven by higher gold by-product credits, reflecting the benefits of Hudbay’s unique commodity diversification. Turning to slide 4. Hudbay has delivered several quarters of significant free cash flow generation as a result of steady operating performance, expanding margins from strong copper and gold exposure, our cost control efforts. With our enhanced balance sheet and diversified free cash flow generation, we are well-positioned to fund our attractive growth pipeline. Our cost control efforts are focused on navigating emerging external cost pressures such as higher fuel prices and short-term labor challenges.

We have not experienced any disruption to fuel availability and have been able to mitigate the cost pressures through initiatives to further improve throughput and enhance operating efficiencies. We are well-insulated from external cost pressures due to our diversified platform with significant by-product credits from gold production and the polymetallic nature of our ore deposits. While most of our revenues continue to be derived from copper, revenue from gold represents a meaningful portion of total revenues, with 39% of gross revenues from gold in the first quarter. After accounting for our sustaining capital investments, but before growth investments, we generated $102 million in free cash flow during the quarter, bringing our trailing 12-month free cash flow generation to approximately $400 million.

As mentioned earlier, we ended the first quarter with over $1 billion in cash and cash equivalents, and as of March 31, our total liquidity was $1.4 billion. Our net debt at the end of the quarter was nearly zero, bringing our net debt to EBITDA ratio to its lowest point in more than a decade. Consistent with our prudent balance sheet management and focus on cost of capital, following the quarter, we repaid our outstanding 2026 senior unsecured notes on maturity on April 1. We used a combination of cash on hand and a $272 million draw on our low-cost revolving credit facilities. After giving effect to this repayment, Hudbay’s total liquidity decreased by $473 million to $957 million.

This continues to provide us with significant financial flexibility as we advance Copper World towards a sanctioning decision later this year. Turning to slide 5, the Peru operations continued to demonstrate steady operating performance with production and costs in line with ex