Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries MP Materials Reports Second Quarter 2023 Results By: MP Materials via Business Wire August 03, 2023 at 16:05 PM EDT Commenced production of separated rare earth products Initial NdPr oxide shipments expected in Q3 Stage I REO sales and production volumes of 10,271 and 10,863 metric tons, respectively Revenue of $64.0M and net income of $7.4M Adjusted EBITDA of $27.0M Diluted EPS of $0.04 and Adjusted Diluted EPS of $0.09 MP Materials Corp. (NYSE: MP) (“MP Materials” or the “Company”) today announced financial results for the three months ended June 30, 2023. “In recent weeks, MP Materials has begun producing refined rare earth products at Mountain Pass, an important milestone for the Company and in returning the full rare earth supply chain to the United States. We expect to report NdPr oxide shipments in the current quarter,“ said James Litinsky, Founder, Chairman and CEO of MP Materials. “While our financials were impacted by weaker commodity pricing, we continue our solid execution in our upstream concentrate business and in our downstream magnetics business in Texas.” Litinsky added, “Achieving refined rare earth production is a milestone worth celebrating as we work relentlessly towards solidifying MP as the American champion in our industry.” Second Quarter 2023 Financial and Operational Highlights For the three months ended June 30, 2023 vs. 2022 (unaudited) 2023 2022 Amount Change % Change Financial Measures: (in thousands, except per share data) Revenue(1) $ 64,024 $ 143,562 $ (79,538 ) (55 )% Net income $ 7,395 $ 73,269 $ (65,874 ) (90 )% Adjusted EBITDA(2) $ 26,951 $ 109,952 $ (83,001 ) (75 )% Adjusted Net Income(2)(3) $ 17,023 $ 79,609 $ (62,586 ) (79 )% Diluted EPS $ 0.04 $ 0.38 $ (0.34 ) (89 )% Adjusted Diluted EPS(2) $ 0.09 $ 0.41 $ (0.32 ) (78 )% Key Performance Indicators: (in whole units or dollars) REO production volume (MTs) 10,863 10,300 563 5 % REO sales volume (MTs) 10,271 10,000 271 3 % Realized price per REO MT(2) $ 6,231 $ 13,918 $ (7,687 ) (55 )% Production cost per REO MT(2) $ 1,938 $ 1,750 $ 188 11 % (1) The vast majority of our revenue pertains to product sales of our rare earth concentrate. (2) See “Use of Non-GAAP Financial Measures” below for the definitions of Adjusted EBITDA, Adjusted Net Income, Adjusted Diluted EPS and Production Costs, which is used in the calculation of production cost per REO MT. See tables below for reconciliations of non-GAAP financial measures to their most directly comparable GAAP financial measures. The definition of realized price per REO MT is also included in “Use of Non-GAAP Financial Measures” below. (3) Effective September 30, 2022, the Company no longer excludes depletion expense for purposes of calculating and presenting Adjusted Net Income, and has retroactively revised the prior year period for comparability purposes. Revenue decreased 55% year-over-year, driven by a 55% decrease in the realized price of rare earth oxide (“REO”) in concentrate partially offset by a 3% increase in sales volumes. The change in realized price reflects a significantly softer pricing environment for rare earth products as compared to the prior year period when recent pricing peaked. Metric tons (“MT”) of REO sold in the quarter increased year-over-year mainly due to the higher production volumes partially offset by further processing a portion of the volume of REO produced from Stage I operations for Stage II commissioning activities. The higher production volumes were driven in part by higher uptime. Adjusted EBITDA decreased 75% year-over-year, driven by lower per-unit profitability, and higher personnel and other general and administrative costs, as well as advanced projects and development costs. The per-unit profitability decrease was driven primarily by the decline in realized prices discussed above, as well as higher production costs, partially offset by lower shipping costs. Production cost of $1,938 per MT of REO increased 11% year-over-year, mainly due to higher payroll costs, primarily as a result of increased headcount as we expand our workforce and ready our facilities to support separated rare earth (Stage II) production and slightly higher costs of materials and supplies. Adjusted Net Income decreased by 79% year-over-year to $17.0 million, mainly due to the lower Adjusted EBITDA as well as higher depreciation expense resulting from an increase in capital assets placed into service over the last year. These declines were partially offset by increased interest and investment income earned on an increase in short-term investments as well as lower income tax expense primarily associated with the lower pre-tax income. Net income decreased 90% year-over-year, primarily due to the factors driving the lower Adjusted Net Income discussed above, as well as costs incurred to support growth initiatives, start-up costs, and costs associated with the removal of legacy facilities at Mountain Pass. These impacts were partially offset by lower stock-based compensation expense compared to the prior year period, mainly due to the timing of grants and the accelerated method of recognizing expense for virtually all of our stock awards. Diluted earnings per share (“EPS”) decreased 89% year-over-year to $0.04, in line with the lower net income discussed above. Adjusted Diluted EPS decreased 78% to $0.09 in line with the decrease in Adjusted Net Income discussed above. MP MATERIALS CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS For the three months ended June 30, For the six months ended June 30, (in thousands, except share and per share data, unaudited) 2023 2022 2023 2022 Revenue: Product sales $ 64,001 $ 139,183 $ 159,667 $ 300,938 Other sales 23 4,379 57 8,882 Total revenue 64,024 143,562 159,724 309,820 Operating costs and expenses: Cost of sales (excluding depreciation, depletion and amortization) 22,704 22,092 46,920 45,265 Selling, general and administrative 18,865 18,120 38,268 38,428 Advanced projects, start-up, development and other 7,222 1,769 15,502 3,587 Depreciation, depletion and amortization 12,203 5,407 20,325 10,667 Accretion of asset retirement and environmental obligations 227 419 454 837 Loss on sale or disposal of long-lived assets, net 2,320 1 4,810 258 Total operating costs and expenses 63,541 47,808 126,279 99,042 Operating income 483 95,754 33,445 210,778 Interest expense, net (1,392 ) (1,326 ) (2,751 ) (3,231 ) Other income, net 13,821 2,212 27,514 2,406 Income before income taxes 12,912 96,640 58,208 209,953 Income tax expense (5,517 ) (23,371 ) (13,366 ) (51,133 ) Net income $ 7,395 $ 73,269 $ 44,842 $ 158,820 Earnings per share: Basic $ 0.04 $ 0.42 $ 0.25 $ 0.90 Diluted $ 0.04 $ 0.38 $ 0.24 $ 0.83 Weighted-average shares outstanding: Basic 176,984,917 176,527,570 176,933,605 176,442,043 Diluted 177,859,118 193,414,563 193,528,819 193,452,921 Reconciliation of GAAP Net Income to Non-GAAP Adjusted EBITDA For the three months ended June 30, For the six months ended June 30, (in thousands, unaudited) 2023 2022 2023 2022 Net income $ 7,395 $ 73,269 $ 44,842 $ 158,820 Adjusted for: Depreciation, depletion and amortization 12,203 5,407 20,325 10,667 Interest expense, net 1,392 1,326 2,751 3,231 Income tax expense 5,517 23,371 13,366 51,133 Stock-based compensation expense(1) 5,730 7,440 12,743 17,213 Start-up costs(2) 3,828 812 8,392 2,320 Transaction-related and other non-recurring costs(3) 2,160 119 5,482 136 Accretion of asset retirement and environmental obligations 227 419 454 837 Loss on sale or disposal of long lived-assets, net(4) 2,320 1 4,810 258 Other income, net(5) (13,821 ) (2,212 ) (27,514 ) (2,406 ) Adjusted EBITDA $ 26,951 $ 109,952 $ 85,651 $ 242,209 (1) Principally included in “Selling, general and administrative” within our unaudited Condensed Consolidated Statements of Operations. (2) Relates to certain costs included in “Advanced projects, start-up, development and other” within our unaudited Condensed Consolidated Statements of Operations that do not qualify for capitalization incurred in connection with the initial commissioning and starting up of our separations capability at Mountain Pass and our metal alloy and magnet-making capabilities at Fort Worth prior to the achievement of commercial production. These costs include payroll of employees directly involved in such commissioning activities, training costs, costs of testing and commissioning the new circuits and processes, and other related costs. Given the nature and scale of the related costs and activities, management does not view these as normal, recurring operating expenses, but rather as non-recurring investments to develop such capabilities. Therefore, we believe it is useful and necessary for investors to understand our core operating performance in current and future periods by excluding the impact of these start-up costs. (3) The majority of the amounts for the three and six months ended June 30, 2023, are included in “Advanced projects, start-up, development and other” within our unaudited Condensed Consolidated Statements of Operations, and pertains to legal, professional services, and other costs associated with non-recurring transactions. (4) Amounts for the three and six months ended June 30, 2023, principally relate to demolition costs incurred in connection with demolishing and removing certain out-of-use older facilities and infrastructure from the Mountain Pass site to accommodate future expansion in rare earth processing. (5) Principally comprised of interest and investment income. Reconciliation of GAAP Net Income to Non-GAAP Adjusted Net Income For the three months ended June 30, For the six months ended June 30, (in thousands, unaudited) 2023 2022 2023 2022 Net income $ 7,395 $ 73,269 $ 44,842 $ 158,820 Adjusted for: Stock-based compensation expense(1) 5,730 7,440 12,743 17,213 Start-up costs(2) 3,828 812 8,392 2,320 Transaction-related and other non-recurring costs(3) 2,160 119 5,482 136 Loss on sale or disposal of long-lived assets, net(4) 2,320 1 4,810 258 Other (21 ) (30 ) (41 ) (224 ) Tax impact of adjustments above(5) (4,389 ) (2,002 ) (7,878 ) (4,871 ) Adjusted Net Income(6) $ 17,023 $ 79,609 $ 68,350 $ 173,652 (1) Principally included in “Selling, general and administrative” within our unaudited Condensed Consolidated Statements of Operations. (2) Relates to certain costs included in “Advanced projects, start-up, development and other” within our unaudited Condensed Consolidated Statements of Operation that do not qualify for capitalization incurred in connection with the initial commissioning and starting up of our separations capability at Mountain Pass and our metal alloy and magnet-making capabilities at Fort Worth prior to the achievement of commercial production. These costs include payroll of employees directly involved in such commissioning activities, training costs, costs of testing and commissioning the new circuits and processes, and other related costs. Given the nature and scale of the related costs and activities, management does not view these as normal, recurring operating expenses, but rather as non-recurring investments to develop such capabilities. Therefore, we believe it is useful and necessary for investors to understand our core operating performance in current and future periods by excluding the impact of these start-up costs. (3) The majority of the amounts for the three and six months ended June 30, 2023, are included in “Advanced projects, start-up, development and other” within our unaudited Condensed Consolidated Statements of Operations, and pertains to legal, professional services, and other costs associated with non-recurring transactions. (4) Amounts for the three and six months ended June 30, 2023, principally relate to demolition costs incurred in connection with demolishing and removing certain out-of-use older facilities and infrastructure from the Mountain Pass site to accommodate future expansion in rare earth processing. (5) Tax impact of adjustments is calculated using an adjusted effective tax rate, which excludes the impact of discrete tax costs and benefits, to each adjustment. The adjusted effective tax rates were 31.3%, 25.1%, 24.0% and 24.7% for the three and six months ended June 30, 2023 and 2022, respectively. (6) Effective September 30, 2022, the Company no longer excludes depletion expense for purposes of calculating and presenting Adjusted Net Income, and has retroactively revised the prior year period for comparability purposes. Reconciliation of GAAP Diluted EPS to Non-GAAP Adjusted Diluted EPS For the three months ended June 30, For the six months ended June 30, (unaudited) 2023 2022 2023 2022 Diluted EPS $ 0.04 $ 0.38 $ 0.24 $ 0.83 Adjusted for: Stock-based compensation expense 0.03 0.04 0.07 0.09 Start-up costs 0.02 — 0.04 0.01 Transaction-related and other non-recurring costs 0.01 — 0.03 — Loss on sale or disposal of long-lived assets, net 0.01 — 0.02 — Tax impact of adjustments above(1) (0.02 ) (0.01 ) (0.04 ) (0.02 ) Adjusted Diluted EPS $ 0.09 $ 0.41 $ 0.36 $ 0.91 Diluted weighted-average shares outstanding 177,859,118 193,414,563 193,528,819 193,452,921 Assumed conversion of Convertible Notes(2) 15,584,409 — — — Adjusted diluted weighted-average shares outstanding 193,443,527 193,414,563 193,528,819 193,452,921 (1) Tax impact of adjustments is calculated using an adjusted effective tax rate, which excludes the impact of discrete tax costs and benefits, to each adjustment. The adjusted effective tax rates were 31.3%, 25.1%, 24.0%, and 24.7% for the three and six months ended June 30, 2023 and 2022, respectively. (2) The Convertible Notes were antidilutive for GAAP purposes for the three months ended June 30, 2023. For purposes of calculating Adjusted Diluted EPS, we have added back the assumed conversion of the Convertible Notes since they would not be antidilutive when using Adjusted Net Income as the numerator in the calculation of Adjusted Diluted EPS. Reconciliation of GAAP Cost of Sales to Non-GAAP Production Costs For the three months ended June 30, For the six months ended June 30, (in thousands, unless otherwise stated, unaudited) 2023 2022 2023 2022 Cost of sales (excluding depreciation, depletion and amortization) $ 22,704 $ 22,092 $ 46,920 $ 45,265 Adjusted for: Stock-based compensation expense(1) (795 ) (506 ) (1,917 ) (1,221 ) Shipping and freight (1,995 ) (3,508 ) (4,283 ) (6,752 ) Other (11 ) (580 ) (614 ) (1,136 ) Production Costs(2) 19,903 17,498 40,106 36,156 Divided by: REO sales volume (in MTs) 10,271 10,000 20,486 21,706 Production cost per REO MT (in dollars)(2) $ 1,938 $ 1,750 $ 1,958 $ 1,666 (1) Pertains only to the amount of stock-based compensation expense included in cost of sales. (2) See “Use of Non-GAAP Financial Measures” below for definition and further information. Conference Call Details MP Materials will host a conference call to discuss these results at 2:00 p.m. Pacific Time, Thursday, August 3, 2023. To access the conference call, participants should dial 1-833-470-1428 and international participants should dial 1-929-526-1599 and enter the conference access number 297364. The live audio webcast along with the press release and accompanying slide presentation, will be accessible at investors.mpmaterials.com. A recording of the webcast will also be available following the conference call. About MP Materials MP Materials (NYSE: MP) produces specialty materials that are vital inputs for electrification and other advanced technologies. MP’s Mountain Pass facility is America’s only scaled rare earth production source. The Company is currently expanding its manufacturing operations downstream to provide a full supply chain solution from materials to magnetics. More information is available at https://mpmaterials.com/. Join the MP Materials community on X, YouTube, Instagram and LinkedIn. We routinely post important information on our website, including corporate and investor presentations and financial information. We intend to use our website as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD. Such disclosures will be included in the Investors section of our website. Accordingly, investors should monitor such portion of our website, in addition to following our press releases, Securities and Exchange Commission filings and public conference calls and webcasts. Forward-Looking Statements This press release contains certain statements that are not historical facts and are forward-looking statements for purposes of the safe harbor provisions under the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as “estimate,” “plan,” “project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,” “seek,” “will,” “target,” or similar expressions that predict or indicate future events or trends or that are not statements of historical matters. These forward-looking statements include, but are not limited to, statements regarding the continued demand for rare earth markets and the market for rare earth materials generally, future demand for electric vehicles and magnets, estimates and forecasts of our results of operations and other financial and performance metrics, the Company’s ability to control costs, and the Company’s Stage II and Stage III projects, including the Company’s ability to achieve run rate production of separated rare earth materials and production of magnetic alloy and magnets. Such statements are all subject to risks, uncertainties and changes in circumstances that could significantly affect the Company’s future financial results and business. Accordingly, the Company cautions that the forward-looking statements contained herein are qualified by important factors that could cause actual results to differ materially from those reflected by such statements. These forward-looking statements are subject to a number of risks and uncertainties, including fluctuations and uncertainties related to demand for and pricing of rare earth products; changes in domestic and foreign business, market, financial, political and legal conditions; changes in demand for NdFeB magnets; the effects of competition on the Company’s future business; risks related to the rollout of the Company’s business strategy, including Stage II and Stage III, and the timing of achieving expected business milestones; risks related to the Company’s long-term agreement with General Motors, including the Company’s ability to produce and supply NdFeB magnets; the impact of the global COVID-19 pandemic, on any of the foregoing risks; risks related to current and future governmental and environmental laws, regulations, licenses or legal requirements; and those risk factors discussed in the Company’s filings with the Securities and Exchange Commission, including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other documents filed by the Company with the Securities and Exchange Commission. If any of these risks materialize or our assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. The Company does not intend to update publicly any forward-looking statements except as required by law. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this earnings release may not occur. Use of Non-GAAP Financial Measures This press release references certain non-GAAP financial measures, including Adjusted EBITDA, Adjusted Net Income, Adjusted Diluted EPS, and Production Costs. We define Adjusted EBITDA as our GAAP net income before interest expense, net; income tax expense or benefit; and depreciation, depletion and amortization; further adjusted to eliminate the impact of stock-based compensation expense; start-up costs; transaction-related and other non-recurring costs; accretion of asset retirement and environmental obligations; gain or loss on sale or disposal of long-lived assets; and other income or loss. Adjusted Net Income is defined as our GAAP net income excluding the impact of stock-based compensation expense; start-up costs; transaction-related and other non-recurring costs; gain or loss on sale or disposal of long-lived assets; and other items that we do not consider representative of our underlying operations; adjusted to give effect to the income tax impact of such adjustments. Adjusted Diluted EPS is defined as GAAP diluted earnings per share (“EPS”) excluding the per share impact, using adjusted diluted weighted-average shares outstanding, of stock-based compensation expense; start-up costs; transaction-related and other non-recurring costs; gain or loss on sale or disposal of long-lived assets; and other items that we do not consider representative of our underlying operations; adjusted to give effect to the income tax impact of such adjustments. Our key performance indicator, realized price per REO MT, is calculated as the quotient of: (i) our GAAP product sales for a given period and (ii) our REO sales volume for the same period. Production Costs, which we use to calculate our key performance indicator, production cost per REO MT, is defined as our GAAP cost of sales (excluding depreciation, depletion and amortization), less stock-based compensation expense included in cost of sales, shipping and freight costs, and costs attributable to certain other sales, for a given period. Production cost per REO MT is calculated as the quotient of: (i) our Production Costs for a given period and (ii) our REO sales volume for the same period. MP Materials’ management uses Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted EPS to compare MP Materials’ performance to that of prior periods for trend analyses and for budgeting and planning purposes. MP Materials believes Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted EPS provide useful information to management and investors regarding certain financial and business trends relating to MP Materials’ financial condition and results of operations. MP Materials believes that the use of Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted EPS provide an additional tool for investors to use in evaluating projected operating results and trends. MP Materials believes realized price per REO MT is an important measure of the market price of the Company’s concentrate product. Furthermore, MP Materials believes production cost per REO MT sold, which utilizes the non-GAAP financial measure, Production Costs, is a key indicator of the Company’s concentrate production efficiency. As we evolve as a business and transition from a producer of rare earth concentrate to a producer of separated rare earth products upon completing the commissioning of our Stage II project, the metrics that management anticipates using to evaluate the business may change or be revised. For example, in completing the transition to separated rare earth products, we may determine that production cost per REO MT, which is a metric focused solely on Stage I concentrate operations, and consequently, Production Costs, are no longer meaningful in evaluating and understanding our business or operating results. MP Materials’ method of determining these non-GAAP measures may be different from other companies’ methods and, therefore, may not be comparable to those used by other companies and MP Materials does not recommend the sole use of these non-GAAP measures to assess its financial performance. Management does not consider non-GAAP measures in isolation or as an alternative or to be superior to financial measures determined in accordance with GAAP. The principal limitation of non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in MP Materials’ financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgments by management about which expense and income are excluded or included in determining these non-GAAP financial measures. In order to compensate for these limitations, management presents reconciliations of such non-GAAP financial measures to the most directly comparable GAAP financial measures. View source version on businesswire.com: https://www.businesswire.com/news/home/20230803934080/en/Contacts Investors: IR@mpmaterials.com Media: Matt Sloustcher media@mpmaterials.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
MP Materials Reports Second Quarter 2023 Results By: MP Materials via Business Wire August 03, 2023 at 16:05 PM EDT Commenced production of separated rare earth products Initial NdPr oxide shipments expected in Q3 Stage I REO sales and production volumes of 10,271 and 10,863 metric tons, respectively Revenue of $64.0M and net income of $7.4M Adjusted EBITDA of $27.0M Diluted EPS of $0.04 and Adjusted Diluted EPS of $0.09 MP Materials Corp. (NYSE: MP) (“MP Materials” or the “Company”) today announced financial results for the three months ended June 30, 2023. “In recent weeks, MP Materials has begun producing refined rare earth products at Mountain Pass, an important milestone for the Company and in returning the full rare earth supply chain to the United States. We expect to report NdPr oxide shipments in the current quarter,“ said James Litinsky, Founder, Chairman and CEO of MP Materials. “While our financials were impacted by weaker commodity pricing, we continue our solid execution in our upstream concentrate business and in our downstream magnetics business in Texas.” Litinsky added, “Achieving refined rare earth production is a milestone worth celebrating as we work relentlessly towards solidifying MP as the American champion in our industry.” Second Quarter 2023 Financial and Operational Highlights For the three months ended June 30, 2023 vs. 2022 (unaudited) 2023 2022 Amount Change % Change Financial Measures: (in thousands, except per share data) Revenue(1) $ 64,024 $ 143,562 $ (79,538 ) (55 )% Net income $ 7,395 $ 73,269 $ (65,874 ) (90 )% Adjusted EBITDA(2) $ 26,951 $ 109,952 $ (83,001 ) (75 )% Adjusted Net Income(2)(3) $ 17,023 $ 79,609 $ (62,586 ) (79 )% Diluted EPS $ 0.04 $ 0.38 $ (0.34 ) (89 )% Adjusted Diluted EPS(2) $ 0.09 $ 0.41 $ (0.32 ) (78 )% Key Performance Indicators: (in whole units or dollars) REO production volume (MTs) 10,863 10,300 563 5 % REO sales volume (MTs) 10,271 10,000 271 3 % Realized price per REO MT(2) $ 6,231 $ 13,918 $ (7,687 ) (55 )% Production cost per REO MT(2) $ 1,938 $ 1,750 $ 188 11 % (1) The vast majority of our revenue pertains to product sales of our rare earth concentrate. (2) See “Use of Non-GAAP Financial Measures” below for the definitions of Adjusted EBITDA, Adjusted Net Income, Adjusted Diluted EPS and Production Costs, which is used in the calculation of production cost per REO MT. See tables below for reconciliations of non-GAAP financial measures to their most directly comparable GAAP financial measures. The definition of realized price per REO MT is also included in “Use of Non-GAAP Financial Measures” below. (3) Effective September 30, 2022, the Company no longer excludes depletion expense for purposes of calculating and presenting Adjusted Net Income, and has retroactively revised the prior year period for comparability purposes. Revenue decreased 55% year-over-year, driven by a 55% decrease in the realized price of rare earth oxide (“REO”) in concentrate partially offset by a 3% increase in sales volumes. The change in realized price reflects a significantly softer pricing environment for rare earth products as compared to the prior year period when recent pricing peaked. Metric tons (“MT”) of REO sold in the quarter increased year-over-year mainly due to the higher production volumes partially offset by further processing a portion of the volume of REO produced from Stage I operations for Stage II commissioning activities. The higher production volumes were driven in part by higher uptime. Adjusted EBITDA decreased 75% year-over-year, driven by lower per-unit profitability, and higher personnel and other general and administrative costs, as well as advanced projects and development costs. The per-unit profitability decrease was driven primarily by the decline in realized prices discussed above, as well as higher production costs, partially offset by lower shipping costs. Production cost of $1,938 per MT of REO increased 11% year-over-year, mainly due to higher payroll costs, primarily as a result of increased headcount as we expand our workforce and ready our facilities to support separated rare earth (Stage II) production and slightly higher costs of materials and supplies. Adjusted Net Income decreased by 79% year-over-year to $17.0 million, mainly due to the lower Adjusted EBITDA as well as higher depreciation expense resulting from an increase in capital assets placed into service over the last year. These declines were partially offset by increased interest and investment income earned on an increase in short-term investments as well as lower income tax expense primarily associated with the lower pre-tax income. Net income decreased 90% year-over-year, primarily due to the factors driving the lower Adjusted Net Income discussed above, as well as costs incurred to support growth initiatives, start-up costs, and costs associated with the removal of legacy facilities at Mountain Pass. These impacts were partially offset by lower stock-based compensation expense compared to the prior year period, mainly due to the timing of grants and the accelerated method of recognizing expense for virtually all of our stock awards. Diluted earnings per share (“EPS”) decreased 89% year-over-year to $0.04, in line with the lower net income discussed above. Adjusted Diluted EPS decreased 78% to $0.09 in line with the decrease in Adjusted Net Income discussed above. MP MATERIALS CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS For the three months ended June 30, For the six months ended June 30, (in thousands, except share and per share data, unaudited) 2023 2022 2023 2022 Revenue: Product sales $ 64,001 $ 139,183 $ 159,667 $ 300,938 Other sales 23 4,379 57 8,882 Total revenue 64,024 143,562 159,724 309,820 Operating costs and expenses: Cost of sales (excluding depreciation, depletion and amortization) 22,704 22,092 46,920 45,265 Selling, general and administrative 18,865 18,120 38,268 38,428 Advanced projects, start-up, development and other 7,222 1,769 15,502 3,587 Depreciation, depletion and amortization 12,203 5,407 20,325 10,667 Accretion of asset retirement and environmental obligations 227 419 454 837 Loss on sale or disposal of long-lived assets, net 2,320 1 4,810 258 Total operating costs and expenses 63,541 47,808 126,279 99,042 Operating income 483 95,754 33,445 210,778 Interest expense, net (1,392 ) (1,326 ) (2,751 ) (3,231 ) Other income, net 13,821 2,212 27,514 2,406 Income before income taxes 12,912 96,640 58,208 209,953 Income tax expense (5,517 ) (23,371 ) (13,366 ) (51,133 ) Net income $ 7,395 $ 73,269 $ 44,842 $ 158,820 Earnings per share: Basic $ 0.04 $ 0.42 $ 0.25 $ 0.90 Diluted $ 0.04 $ 0.38 $ 0.24 $ 0.83 Weighted-average shares outstanding: Basic 176,984,917 176,527,570 176,933,605 176,442,043 Diluted 177,859,118 193,414,563 193,528,819 193,452,921 Reconciliation of GAAP Net Income to Non-GAAP Adjusted EBITDA For the three months ended June 30, For the six months ended June 30, (in thousands, unaudited) 2023 2022 2023 2022 Net income $ 7,395 $ 73,269 $ 44,842 $ 158,820 Adjusted for: Depreciation, depletion and amortization 12,203 5,407 20,325 10,667 Interest expense, net 1,392 1,326 2,751 3,231 Income tax expense 5,517 23,371 13,366 51,133 Stock-based compensation expense(1) 5,730 7,440 12,743 17,213 Start-up costs(2) 3,828 812 8,392 2,320 Transaction-related and other non-recurring costs(3) 2,160 119 5,482 136 Accretion of asset retirement and environmental obligations 227 419 454 837 Loss on sale or disposal of long lived-assets, net(4) 2,320 1 4,810 258 Other income, net(5) (13,821 ) (2,212 ) (27,514 ) (2,406 ) Adjusted EBITDA $ 26,951 $ 109,952 $ 85,651 $ 242,209 (1) Principally included in “Selling, general and administrative” within our unaudited Condensed Consolidated Statements of Operations. (2) Relates to certain costs included in “Advanced projects, start-up, development and other” within our unaudited Condensed Consolidated Statements of Operations that do not qualify for capitalization incurred in connection with the initial commissioning and starting up of our separations capability at Mountain Pass and our metal alloy and magnet-making capabilities at Fort Worth prior to the achievement of commercial production. These costs include payroll of employees directly involved in such commissioning activities, training costs, costs of testing and commissioning the new circuits and processes, and other related costs. Given the nature and scale of the related costs and activities, management does not view these as normal, recurring operating expenses, but rather as non-recurring investments to develop such capabilities. Therefore, we believe it is useful and necessary for investors to understand our core operating performance in current and future periods by excluding the impact of these start-up costs. (3) The majority of the amounts for the three and six months ended June 30, 2023, are included in “Advanced projects, start-up, development and other” within our unaudited Condensed Consolidated Statements of Operations, and pertains to legal, professional services, and other costs associated with non-recurring transactions. (4) Amounts for the three and six months ended June 30, 2023, principally relate to demolition costs incurred in connection with demolishing and removing certain out-of-use older facilities and infrastructure from the Mountain Pass site to accommodate future expansion in rare earth processing. (5) Principally comprised of interest and investment income. Reconciliation of GAAP Net Income to Non-GAAP Adjusted Net Income For the three months ended June 30, For the six months ended June 30, (in thousands, unaudited) 2023 2022 2023 2022 Net income $ 7,395 $ 73,269 $ 44,842 $ 158,820 Adjusted for: Stock-based compensation expense(1) 5,730 7,440 12,743 17,213 Start-up costs(2) 3,828 812 8,392 2,320 Transaction-related and other non-recurring costs(3) 2,160 119 5,482 136 Loss on sale or disposal of long-lived assets, net(4) 2,320 1 4,810 258 Other (21 ) (30 ) (41 ) (224 ) Tax impact of adjustments above(5) (4,389 ) (2,002 ) (7,878 ) (4,871 ) Adjusted Net Income(6) $ 17,023 $ 79,609 $ 68,350 $ 173,652 (1) Principally included in “Selling, general and administrative” within our unaudited Condensed Consolidated Statements of Operations. (2) Relates to certain costs included in “Advanced projects, start-up, development and other” within our unaudited Condensed Consolidated Statements of Operation that do not qualify for capitalization incurred in connection with the initial commissioning and starting up of our separations capability at Mountain Pass and our metal alloy and magnet-making capabilities at Fort Worth prior to the achievement of commercial production. These costs include payroll of employees directly involved in such commissioning activities, training costs, costs of testing and commissioning the new circuits and processes, and other related costs. Given the nature and scale of the related costs and activities, management does not view these as normal, recurring operating expenses, but rather as non-recurring investments to develop such capabilities. Therefore, we believe it is useful and necessary for investors to understand our core operating performance in current and future periods by excluding the impact of these start-up costs. (3) The majority of the amounts for the three and six months ended June 30, 2023, are included in “Advanced projects, start-up, development and other” within our unaudited Condensed Consolidated Statements of Operations, and pertains to legal, professional services, and other costs associated with non-recurring transactions. (4) Amounts for the three and six months ended June 30, 2023, principally relate to demolition costs incurred in connection with demolishing and removing certain out-of-use older facilities and infrastructure from the Mountain Pass site to accommodate future expansion in rare earth processing. (5) Tax impact of adjustments is calculated using an adjusted effective tax rate, which excludes the impact of discrete tax costs and benefits, to each adjustment. The adjusted effective tax rates were 31.3%, 25.1%, 24.0% and 24.7% for the three and six months ended June 30, 2023 and 2022, respectively. (6) Effective September 30, 2022, the Company no longer excludes depletion expense for purposes of calculating and presenting Adjusted Net Income, and has retroactively revised the prior year period for comparability purposes. Reconciliation of GAAP Diluted EPS to Non-GAAP Adjusted Diluted EPS For the three months ended June 30, For the six months ended June 30, (unaudited) 2023 2022 2023 2022 Diluted EPS $ 0.04 $ 0.38 $ 0.24 $ 0.83 Adjusted for: Stock-based compensation expense 0.03 0.04 0.07 0.09 Start-up costs 0.02 — 0.04 0.01 Transaction-related and other non-recurring costs 0.01 — 0.03 — Loss on sale or disposal of long-lived assets, net 0.01 — 0.02 — Tax impact of adjustments above(1) (0.02 ) (0.01 ) (0.04 ) (0.02 ) Adjusted Diluted EPS $ 0.09 $ 0.41 $ 0.36 $ 0.91 Diluted weighted-average shares outstanding 177,859,118 193,414,563 193,528,819 193,452,921 Assumed conversion of Convertible Notes(2) 15,584,409 — — — Adjusted diluted weighted-average shares outstanding 193,443,527 193,414,563 193,528,819 193,452,921 (1) Tax impact of adjustments is calculated using an adjusted effective tax rate, which excludes the impact of discrete tax costs and benefits, to each adjustment. The adjusted effective tax rates were 31.3%, 25.1%, 24.0%, and 24.7% for the three and six months ended June 30, 2023 and 2022, respectively. (2) The Convertible Notes were antidilutive for GAAP purposes for the three months ended June 30, 2023. For purposes of calculating Adjusted Diluted EPS, we have added back the assumed conversion of the Convertible Notes since they would not be antidilutive when using Adjusted Net Income as the numerator in the calculation of Adjusted Diluted EPS. Reconciliation of GAAP Cost of Sales to Non-GAAP Production Costs For the three months ended June 30, For the six months ended June 30, (in thousands, unless otherwise stated, unaudited) 2023 2022 2023 2022 Cost of sales (excluding depreciation, depletion and amortization) $ 22,704 $ 22,092 $ 46,920 $ 45,265 Adjusted for: Stock-based compensation expense(1) (795 ) (506 ) (1,917 ) (1,221 ) Shipping and freight (1,995 ) (3,508 ) (4,283 ) (6,752 ) Other (11 ) (580 ) (614 ) (1,136 ) Production Costs(2) 19,903 17,498 40,106 36,156 Divided by: REO sales volume (in MTs) 10,271 10,000 20,486 21,706 Production cost per REO MT (in dollars)(2) $ 1,938 $ 1,750 $ 1,958 $ 1,666 (1) Pertains only to the amount of stock-based compensation expense included in cost of sales. (2) See “Use of Non-GAAP Financial Measures” below for definition and further information. Conference Call Details MP Materials will host a conference call to discuss these results at 2:00 p.m. Pacific Time, Thursday, August 3, 2023. To access the conference call, participants should dial 1-833-470-1428 and international participants should dial 1-929-526-1599 and enter the conference access number 297364. The live audio webcast along with the press release and accompanying slide presentation, will be accessible at investors.mpmaterials.com. A recording of the webcast will also be available following the conference call. About MP Materials MP Materials (NYSE: MP) produces specialty materials that are vital inputs for electrification and other advanced technologies. MP’s Mountain Pass facility is America’s only scaled rare earth production source. The Company is currently expanding its manufacturing operations downstream to provide a full supply chain solution from materials to magnetics. More information is available at https://mpmaterials.com/. Join the MP Materials community on X, YouTube, Instagram and LinkedIn. We routinely post important information on our website, including corporate and investor presentations and financial information. We intend to use our website as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD. Such disclosures will be included in the Investors section of our website. Accordingly, investors should monitor such portion of our website, in addition to following our press releases, Securities and Exchange Commission filings and public conference calls and webcasts. Forward-Looking Statements This press release contains certain statements that are not historical facts and are forward-looking statements for purposes of the safe harbor provisions under the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as “estimate,” “plan,” “project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,” “seek,” “will,” “target,” or similar expressions that predict or indicate future events or trends or that are not statements of historical matters. These forward-looking statements include, but are not limited to, statements regarding the continued demand for rare earth markets and the market for rare earth materials generally, future demand for electric vehicles and magnets, estimates and forecasts of our results of operations and other financial and performance metrics, the Company’s ability to control costs, and the Company’s Stage II and Stage III projects, including the Company’s ability to achieve run rate production of separated rare earth materials and production of magnetic alloy and magnets. Such statements are all subject to risks, uncertainties and changes in circumstances that could significantly affect the Company’s future financial results and business. Accordingly, the Company cautions that the forward-looking statements contained herein are qualified by important factors that could cause actual results to differ materially from those reflected by such statements. These forward-looking statements are subject to a number of risks and uncertainties, including fluctuations and uncertainties related to demand for and pricing of rare earth products; changes in domestic and foreign business, market, financial, political and legal conditions; changes in demand for NdFeB magnets; the effects of competition on the Company’s future business; risks related to the rollout of the Company’s business strategy, including Stage II and Stage III, and the timing of achieving expected business milestones; risks related to the Company’s long-term agreement with General Motors, including the Company’s ability to produce and supply NdFeB magnets; the impact of the global COVID-19 pandemic, on any of the foregoing risks; risks related to current and future governmental and environmental laws, regulations, licenses or legal requirements; and those risk factors discussed in the Company’s filings with the Securities and Exchange Commission, including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other documents filed by the Company with the Securities and Exchange Commission. If any of these risks materialize or our assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. The Company does not intend to update publicly any forward-looking statements except as required by law. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this earnings release may not occur. Use of Non-GAAP Financial Measures This press release references certain non-GAAP financial measures, including Adjusted EBITDA, Adjusted Net Income, Adjusted Diluted EPS, and Production Costs. We define Adjusted EBITDA as our GAAP net income before interest expense, net; income tax expense or benefit; and depreciation, depletion and amortization; further adjusted to eliminate the impact of stock-based compensation expense; start-up costs; transaction-related and other non-recurring costs; accretion of asset retirement and environmental obligations; gain or loss on sale or disposal of long-lived assets; and other income or loss. Adjusted Net Income is defined as our GAAP net income excluding the impact of stock-based compensation expense; start-up costs; transaction-related and other non-recurring costs; gain or loss on sale or disposal of long-lived assets; and other items that we do not consider representative of our underlying operations; adjusted to give effect to the income tax impact of such adjustments. Adjusted Diluted EPS is defined as GAAP diluted earnings per share (“EPS”) excluding the per share impact, using adjusted diluted weighted-average shares outstanding, of stock-based compensation expense; start-up costs; transaction-related and other non-recurring costs; gain or loss on sale or disposal of long-lived assets; and other items that we do not consider representative of our underlying operations; adjusted to give effect to the income tax impact of such adjustments. Our key performance indicator, realized price per REO MT, is calculated as the quotient of: (i) our GAAP product sales for a given period and (ii) our REO sales volume for the same period. Production Costs, which we use to calculate our key performance indicator, production cost per REO MT, is defined as our GAAP cost of sales (excluding depreciation, depletion and amortization), less stock-based compensation expense included in cost of sales, shipping and freight costs, and costs attributable to certain other sales, for a given period. Production cost per REO MT is calculated as the quotient of: (i) our Production Costs for a given period and (ii) our REO sales volume for the same period. MP Materials’ management uses Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted EPS to compare MP Materials’ performance to that of prior periods for trend analyses and for budgeting and planning purposes. MP Materials believes Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted EPS provide useful information to management and investors regarding certain financial and business trends relating to MP Materials’ financial condition and results of operations. MP Materials believes that the use of Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted EPS provide an additional tool for investors to use in evaluating projected operating results and trends. MP Materials believes realized price per REO MT is an important measure of the market price of the Company’s concentrate product. Furthermore, MP Materials believes production cost per REO MT sold, which utilizes the non-GAAP financial measure, Production Costs, is a key indicator of the Company’s concentrate production efficiency. As we evolve as a business and transition from a producer of rare earth concentrate to a producer of separated rare earth products upon completing the commissioning of our Stage II project, the metrics that management anticipates using to evaluate the business may change or be revised. For example, in completing the transition to separated rare earth products, we may determine that production cost per REO MT, which is a metric focused solely on Stage I concentrate operations, and consequently, Production Costs, are no longer meaningful in evaluating and understanding our business or operating results. MP Materials’ method of determining these non-GAAP measures may be different from other companies’ methods and, therefore, may not be comparable to those used by other companies and MP Materials does not recommend the sole use of these non-GAAP measures to assess its financial performance. Management does not consider non-GAAP measures in isolation or as an alternative or to be superior to financial measures determined in accordance with GAAP. The principal limitation of non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in MP Materials’ financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgments by management about which expense and income are excluded or included in determining these non-GAAP financial measures. In order to compensate for these limitations, management presents reconciliations of such non-GAAP financial measures to the most directly comparable GAAP financial measures. View source version on businesswire.com: https://www.businesswire.com/news/home/20230803934080/en/Contacts Investors: IR@mpmaterials.com Media: Matt Sloustcher media@mpmaterials.com
Commenced production of separated rare earth products Initial NdPr oxide shipments expected in Q3 Stage I REO sales and production volumes of 10,271 and 10,863 metric tons, respectively Revenue of $64.0M and net income of $7.4M Adjusted EBITDA of $27.0M Diluted EPS of $0.04 and Adjusted Diluted EPS of $0.09
MP Materials Corp. (NYSE: MP) (“MP Materials” or the “Company”) today announced financial results for the three months ended June 30, 2023. “In recent weeks, MP Materials has begun producing refined rare earth products at Mountain Pass, an important milestone for the Company and in returning the full rare earth supply chain to the United States. We expect to report NdPr oxide shipments in the current quarter,“ said James Litinsky, Founder, Chairman and CEO of MP Materials. “While our financials were impacted by weaker commodity pricing, we continue our solid execution in our upstream concentrate business and in our downstream magnetics business in Texas.” Litinsky added, “Achieving refined rare earth production is a milestone worth celebrating as we work relentlessly towards solidifying MP as the American champion in our industry.” Second Quarter 2023 Financial and Operational Highlights For the three months ended June 30, 2023 vs. 2022 (unaudited) 2023 2022 Amount Change % Change Financial Measures: (in thousands, except per share data) Revenue(1) $ 64,024 $ 143,562 $ (79,538 ) (55 )% Net income $ 7,395 $ 73,269 $ (65,874 ) (90 )% Adjusted EBITDA(2) $ 26,951 $ 109,952 $ (83,001 ) (75 )% Adjusted Net Income(2)(3) $ 17,023 $ 79,609 $ (62,586 ) (79 )% Diluted EPS $ 0.04 $ 0.38 $ (0.34 ) (89 )% Adjusted Diluted EPS(2) $ 0.09 $ 0.41 $ (0.32 ) (78 )% Key Performance Indicators: (in whole units or dollars) REO production volume (MTs) 10,863 10,300 563 5 % REO sales volume (MTs) 10,271 10,000 271 3 % Realized price per REO MT(2) $ 6,231 $ 13,918 $ (7,687 ) (55 )% Production cost per REO MT(2) $ 1,938 $ 1,750 $ 188 11 % (1) The vast majority of our revenue pertains to product sales of our rare earth concentrate. (2) See “Use of Non-GAAP Financial Measures” below for the definitions of Adjusted EBITDA, Adjusted Net Income, Adjusted Diluted EPS and Production Costs, which is used in the calculation of production cost per REO MT. See tables below for reconciliations of non-GAAP financial measures to their most directly comparable GAAP financial measures. The definition of realized price per REO MT is also included in “Use of Non-GAAP Financial Measures” below. (3) Effective September 30, 2022, the Company no longer excludes depletion expense for purposes of calculating and presenting Adjusted Net Income, and has retroactively revised the prior year period for comparability purposes. Revenue decreased 55% year-over-year, driven by a 55% decrease in the realized price of rare earth oxide (“REO”) in concentrate partially offset by a 3% increase in sales volumes. The change in realized price reflects a significantly softer pricing environment for rare earth products as compared to the prior year period when recent pricing peaked. Metric tons (“MT”) of REO sold in the quarter increased year-over-year mainly due to the higher production volumes partially offset by further processing a portion of the volume of REO produced from Stage I operations for Stage II commissioning activities. The higher production volumes were driven in part by higher uptime. Adjusted EBITDA decreased 75% year-over-year, driven by lower per-unit profitability, and higher personnel and other general and administrative costs, as well as advanced projects and development costs. The per-unit profitability decrease was driven primarily by the decline in realized prices discussed above, as well as higher production costs, partially offset by lower shipping costs. Production cost of $1,938 per MT of REO increased 11% year-over-year, mainly due to higher payroll costs, primarily as a result of increased headcount as we expand our workforce and ready our facilities to support separated rare earth (Stage II) production and slightly higher costs of materials and supplies. Adjusted Net Income decreased by 79% year-over-year to $17.0 million, mainly due to the lower Adjusted EBITDA as well as higher depreciation expense resulting from an increase in capital assets placed into service over the last year. These declines were partially offset by increased interest and investment income earned on an increase in short-term investments as well as lower income tax expense primarily associated with the lower pre-tax income. Net income decreased 90% year-over-year, primarily due to the factors driving the lower Adjusted Net Income discussed above, as well as costs incurred to support growth initiatives, start-up costs, and costs associated with the removal of legacy facilities at Mountain Pass. These impacts were partially offset by lower stock-based compensation expense compared to the prior year period, mainly due to the timing of grants and the accelerated method of recognizing expense for virtually all of our stock awards. Diluted earnings per share (“EPS”) decreased 89% year-over-year to $0.04, in line with the lower net income discussed above. Adjusted Diluted EPS decreased 78% to $0.09 in line with the decrease in Adjusted Net Income discussed above. MP MATERIALS CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS For the three months ended June 30, For the six months ended June 30, (in thousands, except share and per share data, unaudited) 2023 2022 2023 2022 Revenue: Product sales $ 64,001 $ 139,183 $ 159,667 $ 300,938 Other sales 23 4,379 57 8,882 Total revenue 64,024 143,562 159,724 309,820 Operating costs and expenses: Cost of sales (excluding depreciation, depletion and amortization) 22,704 22,092 46,920 45,265 Selling, general and administrative 18,865 18,120 38,268 38,428 Advanced projects, start-up, development and other 7,222 1,769 15,502 3,587 Depreciation, depletion and amortization 12,203 5,407 20,325 10,667 Accretion of asset retirement and environmental obligations 227 419 454 837 Loss on sale or disposal of long-lived assets, net 2,320 1 4,810 258 Total operating costs and expenses 63,541 47,808 126,279 99,042 Operating income 483 95,754 33,445 210,778 Interest expense, net (1,392 ) (1,326 ) (2,751 ) (3,231 ) Other income, net 13,821 2,212 27,514 2,406 Income before income taxes 12,912 96,640 58,208 209,953 Income tax expense (5,517 ) (23,371 ) (13,366 ) (51,133 ) Net income $ 7,395 $ 73,269 $ 44,842 $ 158,820 Earnings per share: Basic $ 0.04 $ 0.42 $ 0.25 $ 0.90 Diluted $ 0.04 $ 0.38 $ 0.24 $ 0.83 Weighted-average shares outstanding: Basic 176,984,917 176,527,570 176,933,605 176,442,043 Diluted 177,859,118 193,414,563 193,528,819 193,452,921 Reconciliation of GAAP Net Income to Non-GAAP Adjusted EBITDA For the three months ended June 30, For the six months ended June 30, (in thousands, unaudited) 2023 2022 2023 2022 Net income $ 7,395 $ 73,269 $ 44,842 $ 158,820 Adjusted for: Depreciation, depletion and amortization 12,203 5,407 20,325 10,667 Interest expense, net 1,392 1,326 2,751 3,231 Income tax expense 5,517 23,371 13,366 51,133 Stock-based compensation expense(1) 5,730 7,440 12,743 17,213 Start-up costs(2) 3,828 812 8,392 2,320 Transaction-related and other non-recurring costs(3) 2,160 119 5,482 136 Accretion of asset retirement and environmental obligations 227 419 454 837 Loss on sale or disposal of long lived-assets, net(4) 2,320 1 4,810 258 Other income, net(5) (13,821 ) (2,212 ) (27,514 ) (2,406 ) Adjusted EBITDA $ 26,951 $ 109,952 $ 85,651 $ 242,209 (1) Principally included in “Selling, general and administrative” within our unaudited Condensed Consolidated Statements of Operations. (2) Relates to certain costs included in “Advanced projects, start-up, development and other” within our unaudited Condensed Consolidated Statements of Operations that do not qualify for capitalization incurred in connection with the initial commissioning and starting up of our separations capability at Mountain Pass and our metal alloy and magnet-making capabilities at Fort Worth prior to the achievement of commercial production. These costs include payroll of employees directly involved in such commissioning activities, training costs, costs of testing and commissioning the new circuits and processes, and other related costs. Given the nature and scale of the related costs and activities, management does not view these as normal, recurring operating expenses, but rather as non-recurring investments to develop such capabilities. Therefore, we believe it is useful and necessary for investors to understand our core operating performance in current and future periods by excluding the impact of these start-up costs. (3) The majority of the amounts for the three and six months ended June 30, 2023, are included in “Advanced projects, start-up, development and other” within our unaudited Condensed Consolidated Statements of Operations, and pertains to legal, professional services, and other costs associated with non-recurring transactions. (4) Amounts for the three and six months ended June 30, 2023, principally relate to demolition costs incurred in connection with demolishing and removing certain out-of-use older facilities and infrastructure from the Mountain Pass site to accommodate future expansion in rare earth processing. (5) Principally comprised of interest and investment income. Reconciliation of GAAP Net Income to Non-GAAP Adjusted Net Income For the three months ended June 30, For the six months ended June 30, (in thousands, unaudited) 2023 2022 2023 2022 Net income $ 7,395 $ 73,269 $ 44,842 $ 158,820 Adjusted for: Stock-based compensation expense(1) 5,730 7,440 12,743 17,213 Start-up costs(2) 3,828 812 8,392 2,320 Transaction-related and other non-recurring costs(3) 2,160 119 5,482 136 Loss on sale or disposal of long-lived assets, net(4) 2,320 1 4,810 258 Other (21 ) (30 ) (41 ) (224 ) Tax impact of adjustments above(5) (4,389 ) (2,002 ) (7,878 ) (4,871 ) Adjusted Net Income(6) $ 17,023 $ 79,609 $ 68,350 $ 173,652 (1) Principally included in “Selling, general and administrative” within our unaudited Condensed Consolidated Statements of Operations. (2) Relates to certain costs included in “Advanced projects, start-up, development and other” within our unaudited Condensed Consolidated Statements of Operation that do not qualify for capitalization incurred in connection with the initial commissioning and starting up of our separations capability at Mountain Pass and our metal alloy and magnet-making capabilities at Fort Worth prior to the achievement of commercial production. These costs include payroll of employees directly involved in such commissioning activities, training costs, costs of testing and commissioning the new circuits and processes, and other related costs. Given the nature and scale of the related costs and activities, management does not view these as normal, recurring operating expenses, but rather as non-recurring investments to develop such capabilities. Therefore, we believe it is useful and necessary for investors to understand our core operating performance in current and future periods by excluding the impact of these start-up costs. (3) The majority of the amounts for the three and six months ended June 30, 2023, are included in “Advanced projects, start-up, development and other” within our unaudited Condensed Consolidated Statements of Operations, and pertains to legal, professional services, and other costs associated with non-recurring transactions. (4) Amounts for the three and six months ended June 30, 2023, principally relate to demolition costs incurred in connection with demolishing and removing certain out-of-use older facilities and infrastructure from the Mountain Pass site to accommodate future expansion in rare earth processing. (5) Tax impact of adjustments is calculated using an adjusted effective tax rate, which excludes the impact of discrete tax costs and benefits, to each adjustment. The adjusted effective tax rates were 31.3%, 25.1%, 24.0% and 24.7% for the three and six months ended June 30, 2023 and 2022, respectively. (6) Effective September 30, 2022, the Company no longer excludes depletion expense for purposes of calculating and presenting Adjusted Net Income, and has retroactively revised the prior year period for comparability purposes. Reconciliation of GAAP Diluted EPS to Non-GAAP Adjusted Diluted EPS For the three months ended June 30, For the six months ended June 30, (unaudited) 2023 2022 2023 2022 Diluted EPS $ 0.04 $ 0.38 $ 0.24 $ 0.83 Adjusted for: Stock-based compensation expense 0.03 0.04 0.07 0.09 Start-up costs 0.02 — 0.04 0.01 Transaction-related and other non-recurring costs 0.01 — 0.03 — Loss on sale or disposal of long-lived assets, net 0.01 — 0.02 — Tax impact of adjustments above(1) (0.02 ) (0.01 ) (0.04 ) (0.02 ) Adjusted Diluted EPS $ 0.09 $ 0.41 $ 0.36 $ 0.91 Diluted weighted-average shares outstanding 177,859,118 193,414,563 193,528,819 193,452,921 Assumed conversion of Convertible Notes(2) 15,584,409 — — — Adjusted diluted weighted-average shares outstanding 193,443,527 193,414,563 193,528,819 193,452,921 (1) Tax impact of adjustments is calculated using an adjusted effective tax rate, which excludes the impact of discrete tax costs and benefits, to each adjustment. The adjusted effective tax rates were 31.3%, 25.1%, 24.0%, and 24.7% for the three and six months ended June 30, 2023 and 2022, respectively. (2) The Convertible Notes were antidilutive for GAAP purposes for the three months ended June 30, 2023. For purposes of calculating Adjusted Diluted EPS, we have added back the assumed conversion of the Convertible Notes since they would not be antidilutive when using Adjusted Net Income as the numerator in the calculation of Adjusted Diluted EPS. Reconciliation of GAAP Cost of Sales to Non-GAAP Production Costs For the three months ended June 30, For the six months ended June 30, (in thousands, unless otherwise stated, unaudited) 2023 2022 2023 2022 Cost of sales (excluding depreciation, depletion and amortization) $ 22,704 $ 22,092 $ 46,920 $ 45,265 Adjusted for: Stock-based compensation expense(1) (795 ) (506 ) (1,917 ) (1,221 ) Shipping and freight (1,995 ) (3,508 ) (4,283 ) (6,752 ) Other (11 ) (580 ) (614 ) (1,136 ) Production Costs(2) 19,903 17,498 40,106 36,156 Divided by: REO sales volume (in MTs) 10,271 10,000 20,486 21,706 Production cost per REO MT (in dollars)(2) $ 1,938 $ 1,750 $ 1,958 $ 1,666 (1) Pertains only to the amount of stock-based compensation expense included in cost of sales. (2) See “Use of Non-GAAP Financial Measures” below for definition and further information. Conference Call Details MP Materials will host a conference call to discuss these results at 2:00 p.m. Pacific Time, Thursday, August 3, 2023. To access the conference call, participants should dial 1-833-470-1428 and international participants should dial 1-929-526-1599 and enter the conference access number 297364. The live audio webcast along with the press release and accompanying slide presentation, will be accessible at investors.mpmaterials.com. A recording of the webcast will also be available following the conference call. About MP Materials MP Materials (NYSE: MP) produces specialty materials that are vital inputs for electrification and other advanced technologies. MP’s Mountain Pass facility is America’s only scaled rare earth production source. The Company is currently expanding its manufacturing operations downstream to provide a full supply chain solution from materials to magnetics. More information is available at https://mpmaterials.com/. Join the MP Materials community on X, YouTube, Instagram and LinkedIn. We routinely post important information on our website, including corporate and investor presentations and financial information. We intend to use our website as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD. Such disclosures will be included in the Investors section of our website. Accordingly, investors should monitor such portion of our website, in addition to following our press releases, Securities and Exchange Commission filings and public conference calls and webcasts. Forward-Looking Statements This press release contains certain statements that are not historical facts and are forward-looking statements for purposes of the safe harbor provisions under the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as “estimate,” “plan,” “project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,” “seek,” “will,” “target,” or similar expressions that predict or indicate future events or trends or that are not statements of historical matters. These forward-looking statements include, but are not limited to, statements regarding the continued demand for rare earth markets and the market for rare earth materials generally, future demand for electric vehicles and magnets, estimates and forecasts of our results of operations and other financial and performance metrics, the Company’s ability to control costs, and the Company’s Stage II and Stage III projects, including the Company’s ability to achieve run rate production of separated rare earth materials and production of magnetic alloy and magnets. Such statements are all subject to risks, uncertainties and changes in circumstances that could significantly affect the Company’s future financial results and business. Accordingly, the Company cautions that the forward-looking statements contained herein are qualified by important factors that could cause actual results to differ materially from those reflected by such statements. These forward-looking statements are subject to a number of risks and uncertainties, including fluctuations and uncertainties related to demand for and pricing of rare earth products; changes in domestic and foreign business, market, financial, political and legal conditions; changes in demand for NdFeB magnets; the effects of competition on the Company’s future business; risks related to the rollout of the Company’s business strategy, including Stage II and Stage III, and the timing of achieving expected business milestones; risks related to the Company’s long-term agreement with General Motors, including the Company’s ability to produce and supply NdFeB magnets; the impact of the global COVID-19 pandemic, on any of the foregoing risks; risks related to current and future governmental and environmental laws, regulations, licenses or legal requirements; and those risk factors discussed in the Company’s filings with the Securities and Exchange Commission, including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other documents filed by the Company with the Securities and Exchange Commission. If any of these risks materialize or our assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. The Company does not intend to update publicly any forward-looking statements except as required by law. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this earnings release may not occur. Use of Non-GAAP Financial Measures This press release references certain non-GAAP financial measures, including Adjusted EBITDA, Adjusted Net Income, Adjusted Diluted EPS, and Production Costs. We define Adjusted EBITDA as our GAAP net income before interest expense, net; income tax expense or benefit; and depreciation, depletion and amortization; further adjusted to eliminate the impact of stock-based compensation expense; start-up costs; transaction-related and other non-recurring costs; accretion of asset retirement and environmental obligations; gain or loss on sale or disposal of long-lived assets; and other income or loss. Adjusted Net Income is defined as our GAAP net income excluding the impact of stock-based compensation expense; start-up costs; transaction-related and other non-recurring costs; gain or loss on sale or disposal of long-lived assets; and other items that we do not consider representative of our underlying operations; adjusted to give effect to the income tax impact of such adjustments. Adjusted Diluted EPS is defined as GAAP diluted earnings per share (“EPS”) excluding the per share impact, using adjusted diluted weighted-average shares outstanding, of stock-based compensation expense; start-up costs; transaction-related and other non-recurring costs; gain or loss on sale or disposal of long-lived assets; and other items that we do not consider representative of our underlying operations; adjusted to give effect to the income tax impact of such adjustments. Our key performance indicator, realized price per REO MT, is calculated as the quotient of: (i) our GAAP product sales for a given period and (ii) our REO sales volume for the same period. Production Costs, which we use to calculate our key performance indicator, production cost per REO MT, is defined as our GAAP cost of sales (excluding depreciation, depletion and amortization), less stock-based compensation expense included in cost of sales, shipping and freight costs, and costs attributable to certain other sales, for a given period. Production cost per REO MT is calculated as the quotient of: (i) our Production Costs for a given period and (ii) our REO sales volume for the same period. MP Materials’ management uses Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted EPS to compare MP Materials’ performance to that of prior periods for trend analyses and for budgeting and planning purposes. MP Materials believes Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted EPS provide useful information to management and investors regarding certain financial and business trends relating to MP Materials’ financial condition and results of operations. MP Materials believes that the use of Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted EPS provide an additional tool for investors to use in evaluating projected operating results and trends. MP Materials believes realized price per REO MT is an important measure of the market price of the Company’s concentrate product. Furthermore, MP Materials believes production cost per REO MT sold, which utilizes the non-GAAP financial measure, Production Costs, is a key indicator of the Company’s concentrate production efficiency. As we evolve as a business and transition from a producer of rare earth concentrate to a producer of separated rare earth products upon completing the commissioning of our Stage II project, the metrics that management anticipates using to evaluate the business may change or be revised. For example, in completing the transition to separated rare earth products, we may determine that production cost per REO MT, which is a metric focused solely on Stage I concentrate operations, and consequently, Production Costs, are no longer meaningful in evaluating and understanding our business or operating results. MP Materials’ method of determining these non-GAAP measures may be different from other companies’ methods and, therefore, may not be comparable to those used by other companies and MP Materials does not recommend the sole use of these non-GAAP measures to assess its financial performance. Management does not consider non-GAAP measures in isolation or as an alternative or to be superior to financial measures determined in accordance with GAAP. The principal limitation of non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in MP Materials’ financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgments by management about which expense and income are excluded or included in determining these non-GAAP financial measures. In order to compensate for these limitations, management presents reconciliations of such non-GAAP financial measures to the most directly comparable GAAP financial measures. View source version on businesswire.com: https://www.businesswire.com/news/home/20230803934080/en/
