Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil Hydroworld Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries MP Materials Reports First Quarter 2024 Results By: MP Materials via Business Wire May 02, 2024 at 16:05 PM EDT REO production of 11,151 metric tons, the second highest ever Initial design capacity (1,000 mt) of magnetics facility fully committed Repurchased 13.0 million shares of common stock, or 7.3% of shares outstanding, for $15.43 per share Issued $747.5 million of new 3.0% convertible notes due 2030 Repurchased $480.0 million of existing convertible notes due 2026 for $428.6 million Awarded $58.5 million tax credit to advance U.S. rare earth magnet manufacturing MP Materials Corp. (NYSE: MP) (“MP Materials” or the “Company”), today announced financial and operational results for the three months ended March 31, 2024. “The MP team continues to execute, delivering the second highest quarterly REO production ever at Mountain Pass,” said James Litinsky, Founder, Chairman, and CEO of MP Materials. “Despite the continued difficult pricing environment, we believe we enhanced MP’s intrinsic value with significant progress across our separations operation, our Upstream 60K expansion, and our magnetics business in Texas.” Litinsky continued, “Moreover, given our strong balance sheet, we were able to be opportunistic in a substantial way across our capital structure in March. We repurchased the majority of our shorter-dated debt at roughly 89 cents on the dollar, pushed out most of our debt maturities to 2030 at a low coupon and, most importantly, repurchased 7.3% of the Company. We believe methodical execution, both operationally and financially, throughout the cycle will prove to be a powerful source of incremental value creation for our shareholders.” First Quarter 2024 Financial and Operational Highlights For the three months ended March 31, 2024 vs. 2023 (unaudited) 2024 2023 Amount Change % Change Financial Measures: (in thousands, except per share data) Revenue(1) $ 48,684 $ 95,700 $ (47,016 ) (49)% Net income $ 16,489 $ 37,447 $ (20,958 ) (56)% Adjusted EBITDA(2) $ (1,233 ) $ 58,700 $ (59,933 ) N/M Adjusted Net Income (Loss)(2) $ (7,492 ) $ 51,327 $ (58,819 ) N/M Diluted EPS $ (0.08 ) $ 0.20 $ (0.28 ) N/M Adjusted Diluted EPS(2) $ (0.04 ) $ 0.27 $ (0.31 ) N/M Key Performance Indicators: Rare earth concentrate (in whole units or dollars) REO Production Volume (MTs) 11,151 10,671 480 4% REO Sales Volume (MTs) 9,332 10,215 (883 ) (9)% Realized Price per REO MT $ 4,294 $ 9,365 $ (5,071 ) (54)% Separated NdPr products NdPr Production Volume (MTs) 131 N/A N/A N/A NdPr Sales Volume (MTs) 134 N/A N/A N/A NdPr Realized Price per KG $ 62 N/A N/A N/A N/M = Not meaningful. N/A = Not applicable as there was neither NdPr production nor sales volume in the three months ended March 31, 2023. (1) The majority of the Company’s revenue pertains to sales of its rare earth concentrate product. (2) See “Use of Non-GAAP Financial Measures” below for the definitions of Adjusted EBITDA, Adjusted Net Income (Loss) and Adjusted Diluted EPS. Beginning with the first quarter of 2024, the Company no longer presents Production Cost per REO MT, which was a metric focused solely on concentrate production. See tables below for reconciliations of non-GAAP financial measures to their most directly comparable GAAP financial measures. Revenue decreased 49% year-over-year to $48.7 million, driven by a 54% decrease in the realized price of rare earth oxide (“REO”) in concentrate and a 9% decrease in REO sales volumes partially offset by initial sales of separated NdPr. The change in realized price reflects a continued softer pricing environment for rare earth products as compared to the prior year period. The decrease in REO sales volume was due to the start-up of separated rare earth (Stage II) production, as a significant portion of the REO produced, which could otherwise have been sold as rare earth concentrate, was used for work-in-process or to produce packaged and finished separated rare earth products. REO production volumes increased 4% year-over-year primarily due to higher uptimes and feed rates. Adjusted EBITDA declined to $(1.2) million driven mainly by the lower revenue as discussed above, as well as higher cost of sales, personnel and other general and administrative costs. The increase in cost of sales was mostly driven by production costs related to the start of Stage II production, including a $6.0 million reserve which was largely attributable to elevated carrying costs of the initial production of separated products given the early stage of ramping the Stage II facilities to normalized production levels. Adjusted Net Income (Loss) decreased to $(7.5) 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. Also impacting the comparison was higher interest expense, mainly due to the newly issued 2030 convertible notes, as well as slightly lower interest income. These changes were partially offset by lower income tax expense mainly associated with lower pre-tax income. Net income decreased $21.0 million year-over-year to $16.5 million, primarily due to the factors driving the lower Adjusted Net Income (Loss) discussed above, partially offset by a $46.3 million gain associated with the early extinguishment of a portion of convertible notes due in 2026. Diluted earnings per share (“EPS”) decreased $0.28 year-over-year to a diluted loss per share of $(0.08), in line with the change in net income discussed above. Adjusted Diluted EPS decreased $0.31 to $(0.04) in line with the decrease in Adjusted Net Income (Loss) discussed above. MP MATERIALS CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS March 31, 2024 December 31, 2023 (in thousands, except share and per share data, unaudited) Assets Current assets Cash and cash equivalents $ 296,468 $ 263,351 Short-term investments 650,299 734,493 Total cash, cash equivalents and short-term investments 946,767 997,844 Accounts receivable 21,600 10,029 Inventories 108,509 95,182 Government grant receivable 19,302 19,302 Prepaid expenses and other current assets 10,021 8,820 Total current assets 1,106,199 1,131,177 Non-current assets Property, plant and equipment, net 1,196,486 1,158,054 Operating lease right-of-use assets 9,705 10,065 Inventories 14,531 13,350 Equity method investment 9,647 9,673 Intangible assets, net 8,582 8,881 Other non-current assets 8,889 5,252 Total non-current assets 1,247,840 1,205,275 Total assets $ 2,354,039 $ 2,336,452 Liabilities and stockholders’ equity Current liabilities Accounts and construction payable $ 26,139 $ 27,995 Accrued liabilities 73,987 73,939 Other current liabilities 7,420 6,616 Total current liabilities 107,546 108,550 Non-current liabilities Asset retirement obligations 5,576 5,518 Environmental obligations 16,532 16,545 Long-term debt, net 935,585 681,980 Operating lease liabilities 6,573 6,829 Deferred government grant 18,349 17,433 Deferred income taxes 121,877 130,793 Other non-current liabilities 4,247 3,025 Total non-current liabilities 1,108,739 862,123 Total liabilities 1,216,285 970,673 Commitments and contingencies Stockholders’ equity: Preferred stock ($0.0001 par value, 50,000,000 shares authorized, none issued and outstanding in either period) — — Common stock ($0.0001 par value, 450,000,000 shares authorized, 178,319,495 and 178,082,383 shares issued, and 165,307,107 and 178,082,383 shares outstanding, as of March 31, 2024, and December 31, 2023, respectively) 18 17 Additional paid-in capital 938,209 979,891 Retained earnings 402,215 385,726 Accumulated other comprehensive income (loss) (130 ) 145 Treasury stock, at cost, 13,012,388 and 0 shares, respectively (202,558 ) — Total stockholders’ equity 1,137,754 1,365,779 Total liabilities and stockholders’ equity $ 2,354,039 $ 2,336,452 MP MATERIALS CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS For the three months ended March 31, (in thousands, except share and per share data, unaudited) 2024 2023 Revenue: Rare earth concentrate $ 40,076 $ 95,666 NdPr oxide and metal 8,327 — Other rare earth products 281 34 Total revenue 48,684 95,700 Operating costs and expenses: Cost of sales (excluding depreciation, depletion and amortization) 35,594 24,216 Selling, general and administrative 21,267 19,403 Depreciation, depletion and amortization 18,385 8,122 Start-up costs 1,287 4,669 Advanced projects and development 4,206 3,611 Other operating costs and expenses 377 2,717 Total operating costs and expenses 81,116 62,738 Operating income (loss) (32,432 ) 32,962 Interest expense, net (2,857 ) (1,359 ) Gain on early extinguishment of debt 46,265 — Other income, net 12,657 13,693 Income before income taxes 23,633 45,296 Income tax expense (7,144 ) (7,849 ) Net income $ 16,489 $ 37,447 Earnings (loss) per share: Basic $ 0.09 $ 0.21 Diluted $ (0.08 ) $ 0.20 Weighted-average shares outstanding: Basic 174,556,850 176,881,723 Diluted 186,791,826 193,613,539 MP MATERIALS CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS For the three months ended March 31, (in thousands, unaudited) 2024 2023 Operating activities: Net income $ 16,489 $ 37,447 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation, depletion and amortization 18,385 8,122 Accretion of asset retirement and environmental obligations 231 227 Accretion of discount on short-term investments (8,493 ) (8,842 ) Gain on early extinguishment of debt (46,265 ) — Loss (gain) on disposals of long-lived assets, net 45 (5 ) Stock-based compensation expense 7,467 7,013 Amortization of debt issuance costs 913 882 Lower of cost or net realizable value reserve 5,991 — Deferred income taxes 7,144 7,377 Decrease (increase) in operating assets: Accounts receivable (11,571 ) 11,611 Inventories (20,943 ) (5,024 ) Government grant receivable (1,617 ) — Prepaid expenses, other current and non-current assets (3,243 ) 123 Increase (decrease) in operating liabilities: Accounts payable and accrued liabilities (7,633 ) (3,586 ) Deferred government grant 1,489 — Other current and non-current liabilities 485 146 Net cash provided by (used in) operating activities (41,126 ) 55,491 Investing activities: Additions to property, plant and equipment (51,838 ) (74,462 ) Purchases of short-term investments (390,608 ) (320,884 ) Proceeds from sales of short-term investments 22,954 447,227 Proceeds from maturities of short-term investments 460,110 410,307 Proceeds from government awards used for construction 96 — Net cash provided by investing activities 40,714 462,188 Financing activities: Proceeds from issuance of long-term debt 747,500 — Payment of debt issuance costs (15,125 ) — Payments to retire long-term debt (428,599 ) — Purchase of capped call options (65,332 ) — Repurchases of common stock (200,764 ) — Principal payments on debt obligations and finance leases (811 ) (846 ) Tax withholding on stock-based awards (3,949 ) (5,976 ) Net cash provided by (used in) financing activities 32,920 (6,822 ) Net change in cash, cash equivalents and restricted cash 32,508 510,857 Cash, cash equivalents and restricted cash beginning balance 264,988 143,509 Cash, cash equivalents and restricted cash ending balance $ 297,496 $ 654,366 Reconciliation of cash, cash equivalents and restricted cash: Cash and cash equivalents $ 296,468 $ 651,215 Restricted cash, current 692 2,552 Restricted cash, non-current 336 599 Total cash, cash equivalents and restricted cash $ 297,496 $ 654,366 Reconciliation of GAAP Net Income to Non-GAAP Adjusted EBITDA For the three months ended March 31, (in thousands, unaudited) 2024 2023 Net income $ 16,489 $ 37,447 Adjusted for: Depreciation, depletion and amortization 18,385 8,122 Interest expense, net 2,857 1,359 Income tax expense 7,144 7,849 Stock-based compensation expense(1) 7,467 7,013 Initial start-up costs(2) 1,173 4,564 Transaction-related and other costs(3) 3,797 3,322 Accretion of asset retirement and environmental obligations(4) 231 227 Loss on disposals of long-lived assets, net(4)(5) 146 2,490 Gain on early extinguishment of debt(6) (46,265 ) — Other income, net(7) (12,657 ) (13,693 ) Adjusted EBITDA $ (1,233 ) $ 58,700 (1) Principally included in “Selling, general and administrative” within our unaudited Condensed Consolidated Statements of Operations. (2) Included in “Start-up costs” within our unaudited Condensed Consolidated Statements of Operations and excludes any applicable stock-based compensation, which is included in the “Stock-based compensation expense” line above. Relates to certain costs incurred in connection with the commissioning and starting up of our initial separations capability at Mountain Pass and our initial magnet-making capabilities at Fort Worth prior to the achievement of commercial production. These costs include labor of incremental employees hired in advance to work directly on 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 initially develop our separations and magnet-making 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. To the extent additional start-up costs are incurred in the future to expand our separations and magnet-making capabilities after initial achievement of commercial production (e.g., significantly expanding production capacity at an existing facility or building a new separations or magnet manufacturing facility), such costs would not be considered an adjustment for this non-GAAP financial measure. (3) Principally included in “Advanced projects and development” within our unaudited Condensed Consolidated Statements of Operations, and pertains to legal, consulting, and advisory services, and other costs associated with specific transactions, including potential acquisitions, mergers, or other investments. (4) Included in “Other operating costs and expenses” within our unaudited Condensed Consolidated Statements of Operations. (5) Amount for the three months ended March 31, 2023, principally related 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. (6) Pertains to the gain recognized on the repurchase of $480.0 million aggregate principal amount of our 0.25% unsecured senior convertible notes due 2026 (the “2026 Notes”) in March 2024. (7) Principally comprised of interest and investment income. Reconciliation of GAAP Net Income to Non-GAAP Adjusted Net Income (Loss) For the three months ended March 31, (in thousands, unaudited) 2024 2023 Net income $ 16,489 $ 37,447 Adjusted for: Stock-based compensation expense(1) 7,467 7,013 Initial start-up costs(2) 1,173 4,564 Transaction-related and other costs(3) 3,797 3,322 Loss on disposals of long-lived assets, net(4) 146 2,490 Gain on early extinguishment of debt(5) (46,265 ) — Other — (20 ) Tax impact of adjustments above(6) 9,701 (3,489 ) Adjusted Net Income (Loss) $ (7,492 ) $ 51,327 (1) Principally included in “Selling, general and administrative” within our unaudited Condensed Consolidated Statements of Operations. (2) Included in “Start-up costs” within our unaudited Condensed Consolidated Statements of Operations and excludes any applicable stock-based compensation, which is included in the “Stock-based compensation expense” line above. Relates to certain costs incurred in connection with the commissioning and starting up of our initial separations capability at Mountain Pass and our initial magnet-making capabilities at Fort Worth prior to the achievement of commercial production. These costs include labor of incremental employees hired in advance to work directly on 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 initially develop our separations and magnet-making 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. To the extent additional start-up costs are incurred in the future to expand our separations and magnet-making capabilities after initial achievement of commercial production (e.g., significantly expanding production capacity at an existing facility or building a new separations or magnet manufacturing facility), such costs would not be considered an adjustment for this non-GAAP financial measure. (3) Principally included in “Advanced projects and development” within our unaudited Condensed Consolidated Statements of Operations, and pertains to legal, consulting, and advisory services, and other costs associated with specific transactions, including potential acquisitions, mergers, or other investments. (4) Included in “Other operating costs and expenses” within our unaudited Condensed Consolidated Statements of Operations. Amount for the three months ended March 31, 2023, principally related 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) Pertains to the gain recognized on the repurchase of $480.0 million aggregate principal amount of our 2026 Notes in March 2024. (6) 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 28.8% and 20.1% for the three months ended March 31, 2024 and 2023, respectively. Reconciliation of GAAP Diluted Earnings (Loss) per Share to Non-GAAP Adjusted Diluted EPS For the three months ended March 31, (unaudited) 2024 2023 Diluted earnings (loss) per share $ (0.08 ) $ 0.20 Adjusted for: Stock-based compensation expense 0.04 0.04 Initial start-up costs 0.01 0.02 Transaction-related and other costs 0.02 0.02 Loss on disposals of long-lived assets, net — 0.01 Gain on early extinguishment of debt (0.27 ) — Tax impact of adjustments above(1) 0.06 (0.02 ) 2026 Notes if-converted method(2) 0.18 — Adjusted Diluted EPS $ (0.04 ) $ 0.27 Diluted weighted-average shares outstanding(3) 186,791,826 193,613,539 Assumed conversion of 2026 Notes(3) (12,234,976 ) — Adjusted diluted weighted-average shares outstanding(3) 174,556,850 193,613,539 (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 28.8% and 20.1% for the three months ended March 31, 2024 and 2023, respectively. (2) For the three months ended March 31, 2024, since the 2026 Notes were dilutive for purposes of computing GAAP diluted earnings (loss) per share but antidilutive for purposes of computing Adjusted Diluted EPS, within this reconciliation, we have included this adjustment to reverse the impact of applying the if-converted method to the 2026 Notes in the computation of GAAP diluted earnings (loss) per share. (3) For the three months ended March 31, 2024, since the 2026 Notes were dilutive for purposes of computing GAAP diluted earnings (loss) per share but antidilutive for purposes of computing Adjusted Diluted EPS, the adjusted diluted weighted-average shares outstanding exclude the potentially dilutive securities associated with the 2026 Notes. Conference Call Details MP Materials will host a conference call to discuss these results at 2:00 p.m. Pacific Time, Thursday, May 2, 2024. To access the conference call, participants should dial 1-833-470-1428 and international participants should dial 1-404-975-4839 and enter the conference ID number 469929. 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 the words such as “estimate,” “plan,” “shall,” “may,” “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 price and market for rare earth materials, the continued demand for rare earth materials and the market for rare earth materials generally, future demand for electric vehicles and magnets, estimates and forecasts of the Company’s results of operations and other financial and performance metrics, including NdPr oxide production and shipments, expected NdPr oxide production and sales in the second quarter and throughout all of 2024, the Company’s share repurchase program, the expected cash flows of the early production of magnetic precursor products in Stage III and associated expected magnetic precursor products prepayments and timing thereof, the expected timing for receipt of the 48C tax credits, expected capital expenditures in Stage II and Stage III, expected net cash on the balance sheet at the end of 2024, the Company’s ability to control costs and expenses, the Company’s Upstream 60K strategy, including statements regarding the timing, costs and ability to increase REO production, 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 Company’s Upstream 60K strategy, including delays in completion, unexpected costs and expenses and timing for obtaining regulatory approvals; 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 in Stage II and Stage III; risks related to the Company’s Stage II operations and the Company’s ability to achieve run rate production of separated rare earth materials; risks related to the Company’s long-term agreement with General Motors, including the Company’s ability to produce and supply NdFeB magnets; risks related to expected sales of separated NdPr oxide due to various risks, including demand and pricing for separated NdPr oxide; risks related to the Company’s ability to develop magnetic precursor products in Stage III, including production delays; risks related to the Company entering into agreements with customers for prepayment of magnetic precursor products, including NdPr metal; risks associated with the terms of the new 3% convertible notes due 2030; risks related to the share repurchase program and whether it will be fully consummated or will enhance long-term stockholder value; 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 the assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. The Company does not intend to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, 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 (Loss), and Adjusted Diluted EPS, which have not been prepared in accordance with GAAP. MP Materials defines Adjusted EBITDA as GAAP net income or loss 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; initial start-up costs; transaction-related and other costs; accretion of asset retirement and environmental obligations; gain or loss on disposals of long-lived assets; gain or loss on early extinguishment of debt; and other income or loss. MP Materials defines Adjusted Net Income (Loss) as GAAP net income or loss excluding the impact of stock-based compensation expense; initial start-up costs; transaction-related and other costs; gain or loss on disposals of long-lived assets; gain or loss on early extinguishment of debt; and other items that management does not consider representative of our underlying operations; adjusted to give effect to the income tax impact of such adjustments. MP Materials defines Adjusted Diluted EPS as GAAP diluted earnings or loss per share excluding the per share impact, using adjusted diluted weighted-average shares outstanding, of stock-based compensation expense; initial start-up costs; transaction-related and other costs; gain or loss on disposals of long-lived assets; gain or loss on early extinguishment of debt; and other items that management does not consider representative of our underlying operations; adjusted to give effect to the income tax impact of such adjustments. In addition, when appropriate, we include an adjustment to reverse the impact of applying the if-converted method to our 2026 Notes if necessary to reconcile between GAAP diluted earnings or loss per share and Adjusted Diluted EPS. When applicable, adjusted diluted weighted-average shares outstanding reflect the anti-dilutive impact of our capped call options entered into in connection with the issuance of our 3.00% unsecured senior convertible notes due March 2030. MP Materials’ management uses Adjusted EBITDA, Adjusted Net Income (Loss), 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 (Loss), 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’ management believes that the use of Adjusted EBITDA, Adjusted Net Income (Loss), and Adjusted Diluted EPS provides an additional tool for investors to use in evaluating projected operating results and trends. 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. Key Performance Indicators REO Production Volume is measured in MTs, the Company’s principal unit of sale for its concentrate product. This measure refers to the REO content contained in the rare earth concentrate we produce and, beginning in the second quarter of 2023, includes volumes fed into downstream circuits for commissioning and starting up our separations facilities and for producing separated rare earth products, a portion of which is also included in our KPI, NdPr Production Volume. REO Production Volume is a key indicator of the Company’s mining and concentrate processing capacity and efficiency. REO Sales Volume for a given period is calculated in MTs. A unit, or MT, is considered sold once we recognize revenue on its sale as determined in accordance with GAAP. REO Sales Volume is a key measure of the Company’s ability to convert its concentrate production into revenue. Realized Price per REO MT for a given period is calculated as the quotient of: (i) the Company’s rare earth concentrate sales, which is determined in accordance with GAAP, for a given period and (ii) the Company’s REO Sales Volume for the same period. Realized Price per REO MT is an important measure of the market price of the Company’s concentrate product. NdPr Production Volume is measured in MTs, the Company’s principal unit of sale for its NdPr separated products. NdPr Production Volume refers to the volume of finished and packaged NdPr oxide produced at Mountain Pass for a given period. NdPr Production Volume is a key indicator of the Company’s separations and finishing capacity and efficiency. Our NdPr Sales Volume for a given period is calculated in MTs and on an NdPr oxide-equivalent basis (as further discussed below). A unit, or MT, is considered sold once we recognize revenue on its sale, whether sold as NdPr oxide or NdPr metal, as determined in accordance with GAAP. For NdPr metal sales, the MTs sold and included in NdPr Sales Volume are calculated on the basis of the volume of NdPr oxide used to produce such NdPr metal. We utilize an assumed material conversion ratio of 1.20, such that a sale of 100 MTs of NdPr metal would be included in this KPI as 120 MTs of NdPr oxide-equivalent. NdPr Sales Volume is a key measure of our ability to convert our production of separated NdPr products into revenue. We expect to have a mix of contracts with customers where we will sell NdPr as (i) oxide, (ii) metal, where the amount of oxide required to produce such metal is variable, and (iii) metal, where we have a guarantee of the amount produced and sold based on the amount of oxide consumed. Among other factors, differences between quarterly NdPr Production Volume and NdPr Sales Volume may be caused by the time required for the conversion of NdPr oxide to NdPr metal, including time in-transit. NdPr Realized Price per kilogram (“KG”) for a given period is calculated as the quotient of: (i) our NdPr oxide and metal sales, which are determined in accordance with GAAP, for a given period and (ii) our NdPr Sales Volume for the same period. NdPr Realized Price per KG is an important measure of the market price of our NdPr products. View source version on businesswire.com: https://www.businesswire.com/news/home/20240502887432/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 First Quarter 2024 Results By: MP Materials via Business Wire May 02, 2024 at 16:05 PM EDT REO production of 11,151 metric tons, the second highest ever Initial design capacity (1,000 mt) of magnetics facility fully committed Repurchased 13.0 million shares of common stock, or 7.3% of shares outstanding, for $15.43 per share Issued $747.5 million of new 3.0% convertible notes due 2030 Repurchased $480.0 million of existing convertible notes due 2026 for $428.6 million Awarded $58.5 million tax credit to advance U.S. rare earth magnet manufacturing MP Materials Corp. (NYSE: MP) (“MP Materials” or the “Company”), today announced financial and operational results for the three months ended March 31, 2024. “The MP team continues to execute, delivering the second highest quarterly REO production ever at Mountain Pass,” said James Litinsky, Founder, Chairman, and CEO of MP Materials. “Despite the continued difficult pricing environment, we believe we enhanced MP’s intrinsic value with significant progress across our separations operation, our Upstream 60K expansion, and our magnetics business in Texas.” Litinsky continued, “Moreover, given our strong balance sheet, we were able to be opportunistic in a substantial way across our capital structure in March. We repurchased the majority of our shorter-dated debt at roughly 89 cents on the dollar, pushed out most of our debt maturities to 2030 at a low coupon and, most importantly, repurchased 7.3% of the Company. We believe methodical execution, both operationally and financially, throughout the cycle will prove to be a powerful source of incremental value creation for our shareholders.” First Quarter 2024 Financial and Operational Highlights For the three months ended March 31, 2024 vs. 2023 (unaudited) 2024 2023 Amount Change % Change Financial Measures: (in thousands, except per share data) Revenue(1) $ 48,684 $ 95,700 $ (47,016 ) (49)% Net income $ 16,489 $ 37,447 $ (20,958 ) (56)% Adjusted EBITDA(2) $ (1,233 ) $ 58,700 $ (59,933 ) N/M Adjusted Net Income (Loss)(2) $ (7,492 ) $ 51,327 $ (58,819 ) N/M Diluted EPS $ (0.08 ) $ 0.20 $ (0.28 ) N/M Adjusted Diluted EPS(2) $ (0.04 ) $ 0.27 $ (0.31 ) N/M Key Performance Indicators: Rare earth concentrate (in whole units or dollars) REO Production Volume (MTs) 11,151 10,671 480 4% REO Sales Volume (MTs) 9,332 10,215 (883 ) (9)% Realized Price per REO MT $ 4,294 $ 9,365 $ (5,071 ) (54)% Separated NdPr products NdPr Production Volume (MTs) 131 N/A N/A N/A NdPr Sales Volume (MTs) 134 N/A N/A N/A NdPr Realized Price per KG $ 62 N/A N/A N/A N/M = Not meaningful. N/A = Not applicable as there was neither NdPr production nor sales volume in the three months ended March 31, 2023. (1) The majority of the Company’s revenue pertains to sales of its rare earth concentrate product. (2) See “Use of Non-GAAP Financial Measures” below for the definitions of Adjusted EBITDA, Adjusted Net Income (Loss) and Adjusted Diluted EPS. Beginning with the first quarter of 2024, the Company no longer presents Production Cost per REO MT, which was a metric focused solely on concentrate production. See tables below for reconciliations of non-GAAP financial measures to their most directly comparable GAAP financial measures. Revenue decreased 49% year-over-year to $48.7 million, driven by a 54% decrease in the realized price of rare earth oxide (“REO”) in concentrate and a 9% decrease in REO sales volumes partially offset by initial sales of separated NdPr. The change in realized price reflects a continued softer pricing environment for rare earth products as compared to the prior year period. The decrease in REO sales volume was due to the start-up of separated rare earth (Stage II) production, as a significant portion of the REO produced, which could otherwise have been sold as rare earth concentrate, was used for work-in-process or to produce packaged and finished separated rare earth products. REO production volumes increased 4% year-over-year primarily due to higher uptimes and feed rates. Adjusted EBITDA declined to $(1.2) million driven mainly by the lower revenue as discussed above, as well as higher cost of sales, personnel and other general and administrative costs. The increase in cost of sales was mostly driven by production costs related to the start of Stage II production, including a $6.0 million reserve which was largely attributable to elevated carrying costs of the initial production of separated products given the early stage of ramping the Stage II facilities to normalized production levels. Adjusted Net Income (Loss) decreased to $(7.5) 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. Also impacting the comparison was higher interest expense, mainly due to the newly issued 2030 convertible notes, as well as slightly lower interest income. These changes were partially offset by lower income tax expense mainly associated with lower pre-tax income. Net income decreased $21.0 million year-over-year to $16.5 million, primarily due to the factors driving the lower Adjusted Net Income (Loss) discussed above, partially offset by a $46.3 million gain associated with the early extinguishment of a portion of convertible notes due in 2026. Diluted earnings per share (“EPS”) decreased $0.28 year-over-year to a diluted loss per share of $(0.08), in line with the change in net income discussed above. Adjusted Diluted EPS decreased $0.31 to $(0.04) in line with the decrease in Adjusted Net Income (Loss) discussed above. MP MATERIALS CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS March 31, 2024 December 31, 2023 (in thousands, except share and per share data, unaudited) Assets Current assets Cash and cash equivalents $ 296,468 $ 263,351 Short-term investments 650,299 734,493 Total cash, cash equivalents and short-term investments 946,767 997,844 Accounts receivable 21,600 10,029 Inventories 108,509 95,182 Government grant receivable 19,302 19,302 Prepaid expenses and other current assets 10,021 8,820 Total current assets 1,106,199 1,131,177 Non-current assets Property, plant and equipment, net 1,196,486 1,158,054 Operating lease right-of-use assets 9,705 10,065 Inventories 14,531 13,350 Equity method investment 9,647 9,673 Intangible assets, net 8,582 8,881 Other non-current assets 8,889 5,252 Total non-current assets 1,247,840 1,205,275 Total assets $ 2,354,039 $ 2,336,452 Liabilities and stockholders’ equity Current liabilities Accounts and construction payable $ 26,139 $ 27,995 Accrued liabilities 73,987 73,939 Other current liabilities 7,420 6,616 Total current liabilities 107,546 108,550 Non-current liabilities Asset retirement obligations 5,576 5,518 Environmental obligations 16,532 16,545 Long-term debt, net 935,585 681,980 Operating lease liabilities 6,573 6,829 Deferred government grant 18,349 17,433 Deferred income taxes 121,877 130,793 Other non-current liabilities 4,247 3,025 Total non-current liabilities 1,108,739 862,123 Total liabilities 1,216,285 970,673 Commitments and contingencies Stockholders’ equity: Preferred stock ($0.0001 par value, 50,000,000 shares authorized, none issued and outstanding in either period) — — Common stock ($0.0001 par value, 450,000,000 shares authorized, 178,319,495 and 178,082,383 shares issued, and 165,307,107 and 178,082,383 shares outstanding, as of March 31, 2024, and December 31, 2023, respectively) 18 17 Additional paid-in capital 938,209 979,891 Retained earnings 402,215 385,726 Accumulated other comprehensive income (loss) (130 ) 145 Treasury stock, at cost, 13,012,388 and 0 shares, respectively (202,558 ) — Total stockholders’ equity 1,137,754 1,365,779 Total liabilities and stockholders’ equity $ 2,354,039 $ 2,336,452 MP MATERIALS CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS For the three months ended March 31, (in thousands, except share and per share data, unaudited) 2024 2023 Revenue: Rare earth concentrate $ 40,076 $ 95,666 NdPr oxide and metal 8,327 — Other rare earth products 281 34 Total revenue 48,684 95,700 Operating costs and expenses: Cost of sales (excluding depreciation, depletion and amortization) 35,594 24,216 Selling, general and administrative 21,267 19,403 Depreciation, depletion and amortization 18,385 8,122 Start-up costs 1,287 4,669 Advanced projects and development 4,206 3,611 Other operating costs and expenses 377 2,717 Total operating costs and expenses 81,116 62,738 Operating income (loss) (32,432 ) 32,962 Interest expense, net (2,857 ) (1,359 ) Gain on early extinguishment of debt 46,265 — Other income, net 12,657 13,693 Income before income taxes 23,633 45,296 Income tax expense (7,144 ) (7,849 ) Net income $ 16,489 $ 37,447 Earnings (loss) per share: Basic $ 0.09 $ 0.21 Diluted $ (0.08 ) $ 0.20 Weighted-average shares outstanding: Basic 174,556,850 176,881,723 Diluted 186,791,826 193,613,539 MP MATERIALS CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS For the three months ended March 31, (in thousands, unaudited) 2024 2023 Operating activities: Net income $ 16,489 $ 37,447 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation, depletion and amortization 18,385 8,122 Accretion of asset retirement and environmental obligations 231 227 Accretion of discount on short-term investments (8,493 ) (8,842 ) Gain on early extinguishment of debt (46,265 ) — Loss (gain) on disposals of long-lived assets, net 45 (5 ) Stock-based compensation expense 7,467 7,013 Amortization of debt issuance costs 913 882 Lower of cost or net realizable value reserve 5,991 — Deferred income taxes 7,144 7,377 Decrease (increase) in operating assets: Accounts receivable (11,571 ) 11,611 Inventories (20,943 ) (5,024 ) Government grant receivable (1,617 ) — Prepaid expenses, other current and non-current assets (3,243 ) 123 Increase (decrease) in operating liabilities: Accounts payable and accrued liabilities (7,633 ) (3,586 ) Deferred government grant 1,489 — Other current and non-current liabilities 485 146 Net cash provided by (used in) operating activities (41,126 ) 55,491 Investing activities: Additions to property, plant and equipment (51,838 ) (74,462 ) Purchases of short-term investments (390,608 ) (320,884 ) Proceeds from sales of short-term investments 22,954 447,227 Proceeds from maturities of short-term investments 460,110 410,307 Proceeds from government awards used for construction 96 — Net cash provided by investing activities 40,714 462,188 Financing activities: Proceeds from issuance of long-term debt 747,500 — Payment of debt issuance costs (15,125 ) — Payments to retire long-term debt (428,599 ) — Purchase of capped call options (65,332 ) — Repurchases of common stock (200,764 ) — Principal payments on debt obligations and finance leases (811 ) (846 ) Tax withholding on stock-based awards (3,949 ) (5,976 ) Net cash provided by (used in) financing activities 32,920 (6,822 ) Net change in cash, cash equivalents and restricted cash 32,508 510,857 Cash, cash equivalents and restricted cash beginning balance 264,988 143,509 Cash, cash equivalents and restricted cash ending balance $ 297,496 $ 654,366 Reconciliation of cash, cash equivalents and restricted cash: Cash and cash equivalents $ 296,468 $ 651,215 Restricted cash, current 692 2,552 Restricted cash, non-current 336 599 Total cash, cash equivalents and restricted cash $ 297,496 $ 654,366 Reconciliation of GAAP Net Income to Non-GAAP Adjusted EBITDA For the three months ended March 31, (in thousands, unaudited) 2024 2023 Net income $ 16,489 $ 37,447 Adjusted for: Depreciation, depletion and amortization 18,385 8,122 Interest expense, net 2,857 1,359 Income tax expense 7,144 7,849 Stock-based compensation expense(1) 7,467 7,013 Initial start-up costs(2) 1,173 4,564 Transaction-related and other costs(3) 3,797 3,322 Accretion of asset retirement and environmental obligations(4) 231 227 Loss on disposals of long-lived assets, net(4)(5) 146 2,490 Gain on early extinguishment of debt(6) (46,265 ) — Other income, net(7) (12,657 ) (13,693 ) Adjusted EBITDA $ (1,233 ) $ 58,700 (1) Principally included in “Selling, general and administrative” within our unaudited Condensed Consolidated Statements of Operations. (2) Included in “Start-up costs” within our unaudited Condensed Consolidated Statements of Operations and excludes any applicable stock-based compensation, which is included in the “Stock-based compensation expense” line above. Relates to certain costs incurred in connection with the commissioning and starting up of our initial separations capability at Mountain Pass and our initial magnet-making capabilities at Fort Worth prior to the achievement of commercial production. These costs include labor of incremental employees hired in advance to work directly on 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 initially develop our separations and magnet-making 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. To the extent additional start-up costs are incurred in the future to expand our separations and magnet-making capabilities after initial achievement of commercial production (e.g., significantly expanding production capacity at an existing facility or building a new separations or magnet manufacturing facility), such costs would not be considered an adjustment for this non-GAAP financial measure. (3) Principally included in “Advanced projects and development” within our unaudited Condensed Consolidated Statements of Operations, and pertains to legal, consulting, and advisory services, and other costs associated with specific transactions, including potential acquisitions, mergers, or other investments. (4) Included in “Other operating costs and expenses” within our unaudited Condensed Consolidated Statements of Operations. (5) Amount for the three months ended March 31, 2023, principally related 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. (6) Pertains to the gain recognized on the repurchase of $480.0 million aggregate principal amount of our 0.25% unsecured senior convertible notes due 2026 (the “2026 Notes”) in March 2024. (7) Principally comprised of interest and investment income. Reconciliation of GAAP Net Income to Non-GAAP Adjusted Net Income (Loss) For the three months ended March 31, (in thousands, unaudited) 2024 2023 Net income $ 16,489 $ 37,447 Adjusted for: Stock-based compensation expense(1) 7,467 7,013 Initial start-up costs(2) 1,173 4,564 Transaction-related and other costs(3) 3,797 3,322 Loss on disposals of long-lived assets, net(4) 146 2,490 Gain on early extinguishment of debt(5) (46,265 ) — Other — (20 ) Tax impact of adjustments above(6) 9,701 (3,489 ) Adjusted Net Income (Loss) $ (7,492 ) $ 51,327 (1) Principally included in “Selling, general and administrative” within our unaudited Condensed Consolidated Statements of Operations. (2) Included in “Start-up costs” within our unaudited Condensed Consolidated Statements of Operations and excludes any applicable stock-based compensation, which is included in the “Stock-based compensation expense” line above. Relates to certain costs incurred in connection with the commissioning and starting up of our initial separations capability at Mountain Pass and our initial magnet-making capabilities at Fort Worth prior to the achievement of commercial production. These costs include labor of incremental employees hired in advance to work directly on 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 initially develop our separations and magnet-making 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. To the extent additional start-up costs are incurred in the future to expand our separations and magnet-making capabilities after initial achievement of commercial production (e.g., significantly expanding production capacity at an existing facility or building a new separations or magnet manufacturing facility), such costs would not be considered an adjustment for this non-GAAP financial measure. (3) Principally included in “Advanced projects and development” within our unaudited Condensed Consolidated Statements of Operations, and pertains to legal, consulting, and advisory services, and other costs associated with specific transactions, including potential acquisitions, mergers, or other investments. (4) Included in “Other operating costs and expenses” within our unaudited Condensed Consolidated Statements of Operations. Amount for the three months ended March 31, 2023, principally related 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) Pertains to the gain recognized on the repurchase of $480.0 million aggregate principal amount of our 2026 Notes in March 2024. (6) 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 28.8% and 20.1% for the three months ended March 31, 2024 and 2023, respectively. Reconciliation of GAAP Diluted Earnings (Loss) per Share to Non-GAAP Adjusted Diluted EPS For the three months ended March 31, (unaudited) 2024 2023 Diluted earnings (loss) per share $ (0.08 ) $ 0.20 Adjusted for: Stock-based compensation expense 0.04 0.04 Initial start-up costs 0.01 0.02 Transaction-related and other costs 0.02 0.02 Loss on disposals of long-lived assets, net — 0.01 Gain on early extinguishment of debt (0.27 ) — Tax impact of adjustments above(1) 0.06 (0.02 ) 2026 Notes if-converted method(2) 0.18 — Adjusted Diluted EPS $ (0.04 ) $ 0.27 Diluted weighted-average shares outstanding(3) 186,791,826 193,613,539 Assumed conversion of 2026 Notes(3) (12,234,976 ) — Adjusted diluted weighted-average shares outstanding(3) 174,556,850 193,613,539 (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 28.8% and 20.1% for the three months ended March 31, 2024 and 2023, respectively. (2) For the three months ended March 31, 2024, since the 2026 Notes were dilutive for purposes of computing GAAP diluted earnings (loss) per share but antidilutive for purposes of computing Adjusted Diluted EPS, within this reconciliation, we have included this adjustment to reverse the impact of applying the if-converted method to the 2026 Notes in the computation of GAAP diluted earnings (loss) per share. (3) For the three months ended March 31, 2024, since the 2026 Notes were dilutive for purposes of computing GAAP diluted earnings (loss) per share but antidilutive for purposes of computing Adjusted Diluted EPS, the adjusted diluted weighted-average shares outstanding exclude the potentially dilutive securities associated with the 2026 Notes. Conference Call Details MP Materials will host a conference call to discuss these results at 2:00 p.m. Pacific Time, Thursday, May 2, 2024. To access the conference call, participants should dial 1-833-470-1428 and international participants should dial 1-404-975-4839 and enter the conference ID number 469929. 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 the words such as “estimate,” “plan,” “shall,” “may,” “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 price and market for rare earth materials, the continued demand for rare earth materials and the market for rare earth materials generally, future demand for electric vehicles and magnets, estimates and forecasts of the Company’s results of operations and other financial and performance metrics, including NdPr oxide production and shipments, expected NdPr oxide production and sales in the second quarter and throughout all of 2024, the Company’s share repurchase program, the expected cash flows of the early production of magnetic precursor products in Stage III and associated expected magnetic precursor products prepayments and timing thereof, the expected timing for receipt of the 48C tax credits, expected capital expenditures in Stage II and Stage III, expected net cash on the balance sheet at the end of 2024, the Company’s ability to control costs and expenses, the Company’s Upstream 60K strategy, including statements regarding the timing, costs and ability to increase REO production, 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 Company’s Upstream 60K strategy, including delays in completion, unexpected costs and expenses and timing for obtaining regulatory approvals; 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 in Stage II and Stage III; risks related to the Company’s Stage II operations and the Company’s ability to achieve run rate production of separated rare earth materials; risks related to the Company’s long-term agreement with General Motors, including the Company’s ability to produce and supply NdFeB magnets; risks related to expected sales of separated NdPr oxide due to various risks, including demand and pricing for separated NdPr oxide; risks related to the Company’s ability to develop magnetic precursor products in Stage III, including production delays; risks related to the Company entering into agreements with customers for prepayment of magnetic precursor products, including NdPr metal; risks associated with the terms of the new 3% convertible notes due 2030; risks related to the share repurchase program and whether it will be fully consummated or will enhance long-term stockholder value; 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 the assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. The Company does not intend to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, 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 (Loss), and Adjusted Diluted EPS, which have not been prepared in accordance with GAAP. MP Materials defines Adjusted EBITDA as GAAP net income or loss 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; initial start-up costs; transaction-related and other costs; accretion of asset retirement and environmental obligations; gain or loss on disposals of long-lived assets; gain or loss on early extinguishment of debt; and other income or loss. MP Materials defines Adjusted Net Income (Loss) as GAAP net income or loss excluding the impact of stock-based compensation expense; initial start-up costs; transaction-related and other costs; gain or loss on disposals of long-lived assets; gain or loss on early extinguishment of debt; and other items that management does not consider representative of our underlying operations; adjusted to give effect to the income tax impact of such adjustments. MP Materials defines Adjusted Diluted EPS as GAAP diluted earnings or loss per share excluding the per share impact, using adjusted diluted weighted-average shares outstanding, of stock-based compensation expense; initial start-up costs; transaction-related and other costs; gain or loss on disposals of long-lived assets; gain or loss on early extinguishment of debt; and other items that management does not consider representative of our underlying operations; adjusted to give effect to the income tax impact of such adjustments. In addition, when appropriate, we include an adjustment to reverse the impact of applying the if-converted method to our 2026 Notes if necessary to reconcile between GAAP diluted earnings or loss per share and Adjusted Diluted EPS. When applicable, adjusted diluted weighted-average shares outstanding reflect the anti-dilutive impact of our capped call options entered into in connection with the issuance of our 3.00% unsecured senior convertible notes due March 2030. MP Materials’ management uses Adjusted EBITDA, Adjusted Net Income (Loss), 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 (Loss), 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’ management believes that the use of Adjusted EBITDA, Adjusted Net Income (Loss), and Adjusted Diluted EPS provides an additional tool for investors to use in evaluating projected operating results and trends. 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. Key Performance Indicators REO Production Volume is measured in MTs, the Company’s principal unit of sale for its concentrate product. This measure refers to the REO content contained in the rare earth concentrate we produce and, beginning in the second quarter of 2023, includes volumes fed into downstream circuits for commissioning and starting up our separations facilities and for producing separated rare earth products, a portion of which is also included in our KPI, NdPr Production Volume. REO Production Volume is a key indicator of the Company’s mining and concentrate processing capacity and efficiency. REO Sales Volume for a given period is calculated in MTs. A unit, or MT, is considered sold once we recognize revenue on its sale as determined in accordance with GAAP. REO Sales Volume is a key measure of the Company’s ability to convert its concentrate production into revenue. Realized Price per REO MT for a given period is calculated as the quotient of: (i) the Company’s rare earth concentrate sales, which is determined in accordance with GAAP, for a given period and (ii) the Company’s REO Sales Volume for the same period. Realized Price per REO MT is an important measure of the market price of the Company’s concentrate product. NdPr Production Volume is measured in MTs, the Company’s principal unit of sale for its NdPr separated products. NdPr Production Volume refers to the volume of finished and packaged NdPr oxide produced at Mountain Pass for a given period. NdPr Production Volume is a key indicator of the Company’s separations and finishing capacity and efficiency. Our NdPr Sales Volume for a given period is calculated in MTs and on an NdPr oxide-equivalent basis (as further discussed below). A unit, or MT, is considered sold once we recognize revenue on its sale, whether sold as NdPr oxide or NdPr metal, as determined in accordance with GAAP. For NdPr metal sales, the MTs sold and included in NdPr Sales Volume are calculated on the basis of the volume of NdPr oxide used to produce such NdPr metal. We utilize an assumed material conversion ratio of 1.20, such that a sale of 100 MTs of NdPr metal would be included in this KPI as 120 MTs of NdPr oxide-equivalent. NdPr Sales Volume is a key measure of our ability to convert our production of separated NdPr products into revenue. We expect to have a mix of contracts with customers where we will sell NdPr as (i) oxide, (ii) metal, where the amount of oxide required to produce such metal is variable, and (iii) metal, where we have a guarantee of the amount produced and sold based on the amount of oxide consumed. Among other factors, differences between quarterly NdPr Production Volume and NdPr Sales Volume may be caused by the time required for the conversion of NdPr oxide to NdPr metal, including time in-transit. NdPr Realized Price per kilogram (“KG”) for a given period is calculated as the quotient of: (i) our NdPr oxide and metal sales, which are determined in accordance with GAAP, for a given period and (ii) our NdPr Sales Volume for the same period. NdPr Realized Price per KG is an important measure of the market price of our NdPr products. View source version on businesswire.com: https://www.businesswire.com/news/home/20240502887432/en/Contacts Investors: IR@mpmaterials.com Media: Matt Sloustcher media@mpmaterials.com
REO production of 11,151 metric tons, the second highest ever Initial design capacity (1,000 mt) of magnetics facility fully committed Repurchased 13.0 million shares of common stock, or 7.3% of shares outstanding, for $15.43 per share Issued $747.5 million of new 3.0% convertible notes due 2030 Repurchased $480.0 million of existing convertible notes due 2026 for $428.6 million Awarded $58.5 million tax credit to advance U.S. rare earth magnet manufacturing
MP Materials Corp. (NYSE: MP) (“MP Materials” or the “Company”), today announced financial and operational results for the three months ended March 31, 2024. “The MP team continues to execute, delivering the second highest quarterly REO production ever at Mountain Pass,” said James Litinsky, Founder, Chairman, and CEO of MP Materials. “Despite the continued difficult pricing environment, we believe we enhanced MP’s intrinsic value with significant progress across our separations operation, our Upstream 60K expansion, and our magnetics business in Texas.” Litinsky continued, “Moreover, given our strong balance sheet, we were able to be opportunistic in a substantial way across our capital structure in March. We repurchased the majority of our shorter-dated debt at roughly 89 cents on the dollar, pushed out most of our debt maturities to 2030 at a low coupon and, most importantly, repurchased 7.3% of the Company. We believe methodical execution, both operationally and financially, throughout the cycle will prove to be a powerful source of incremental value creation for our shareholders.” First Quarter 2024 Financial and Operational Highlights For the three months ended March 31, 2024 vs. 2023 (unaudited) 2024 2023 Amount Change % Change Financial Measures: (in thousands, except per share data) Revenue(1) $ 48,684 $ 95,700 $ (47,016 ) (49)% Net income $ 16,489 $ 37,447 $ (20,958 ) (56)% Adjusted EBITDA(2) $ (1,233 ) $ 58,700 $ (59,933 ) N/M Adjusted Net Income (Loss)(2) $ (7,492 ) $ 51,327 $ (58,819 ) N/M Diluted EPS $ (0.08 ) $ 0.20 $ (0.28 ) N/M Adjusted Diluted EPS(2) $ (0.04 ) $ 0.27 $ (0.31 ) N/M Key Performance Indicators: Rare earth concentrate (in whole units or dollars) REO Production Volume (MTs) 11,151 10,671 480 4% REO Sales Volume (MTs) 9,332 10,215 (883 ) (9)% Realized Price per REO MT $ 4,294 $ 9,365 $ (5,071 ) (54)% Separated NdPr products NdPr Production Volume (MTs) 131 N/A N/A N/A NdPr Sales Volume (MTs) 134 N/A N/A N/A NdPr Realized Price per KG $ 62 N/A N/A N/A N/M = Not meaningful. N/A = Not applicable as there was neither NdPr production nor sales volume in the three months ended March 31, 2023. (1) The majority of the Company’s revenue pertains to sales of its rare earth concentrate product. (2) See “Use of Non-GAAP Financial Measures” below for the definitions of Adjusted EBITDA, Adjusted Net Income (Loss) and Adjusted Diluted EPS. Beginning with the first quarter of 2024, the Company no longer presents Production Cost per REO MT, which was a metric focused solely on concentrate production. See tables below for reconciliations of non-GAAP financial measures to their most directly comparable GAAP financial measures. Revenue decreased 49% year-over-year to $48.7 million, driven by a 54% decrease in the realized price of rare earth oxide (“REO”) in concentrate and a 9% decrease in REO sales volumes partially offset by initial sales of separated NdPr. The change in realized price reflects a continued softer pricing environment for rare earth products as compared to the prior year period. The decrease in REO sales volume was due to the start-up of separated rare earth (Stage II) production, as a significant portion of the REO produced, which could otherwise have been sold as rare earth concentrate, was used for work-in-process or to produce packaged and finished separated rare earth products. REO production volumes increased 4% year-over-year primarily due to higher uptimes and feed rates. Adjusted EBITDA declined to $(1.2) million driven mainly by the lower revenue as discussed above, as well as higher cost of sales, personnel and other general and administrative costs. The increase in cost of sales was mostly driven by production costs related to the start of Stage II production, including a $6.0 million reserve which was largely attributable to elevated carrying costs of the initial production of separated products given the early stage of ramping the Stage II facilities to normalized production levels. Adjusted Net Income (Loss) decreased to $(7.5) 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. Also impacting the comparison was higher interest expense, mainly due to the newly issued 2030 convertible notes, as well as slightly lower interest income. These changes were partially offset by lower income tax expense mainly associated with lower pre-tax income. Net income decreased $21.0 million year-over-year to $16.5 million, primarily due to the factors driving the lower Adjusted Net Income (Loss) discussed above, partially offset by a $46.3 million gain associated with the early extinguishment of a portion of convertible notes due in 2026. Diluted earnings per share (“EPS”) decreased $0.28 year-over-year to a diluted loss per share of $(0.08), in line with the change in net income discussed above. Adjusted Diluted EPS decreased $0.31 to $(0.04) in line with the decrease in Adjusted Net Income (Loss) discussed above. MP MATERIALS CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS March 31, 2024 December 31, 2023 (in thousands, except share and per share data, unaudited) Assets Current assets Cash and cash equivalents $ 296,468 $ 263,351 Short-term investments 650,299 734,493 Total cash, cash equivalents and short-term investments 946,767 997,844 Accounts receivable 21,600 10,029 Inventories 108,509 95,182 Government grant receivable 19,302 19,302 Prepaid expenses and other current assets 10,021 8,820 Total current assets 1,106,199 1,131,177 Non-current assets Property, plant and equipment, net 1,196,486 1,158,054 Operating lease right-of-use assets 9,705 10,065 Inventories 14,531 13,350 Equity method investment 9,647 9,673 Intangible assets, net 8,582 8,881 Other non-current assets 8,889 5,252 Total non-current assets 1,247,840 1,205,275 Total assets $ 2,354,039 $ 2,336,452 Liabilities and stockholders’ equity Current liabilities Accounts and construction payable $ 26,139 $ 27,995 Accrued liabilities 73,987 73,939 Other current liabilities 7,420 6,616 Total current liabilities 107,546 108,550 Non-current liabilities Asset retirement obligations 5,576 5,518 Environmental obligations 16,532 16,545 Long-term debt, net 935,585 681,980 Operating lease liabilities 6,573 6,829 Deferred government grant 18,349 17,433 Deferred income taxes 121,877 130,793 Other non-current liabilities 4,247 3,025 Total non-current liabilities 1,108,739 862,123 Total liabilities 1,216,285 970,673 Commitments and contingencies Stockholders’ equity: Preferred stock ($0.0001 par value, 50,000,000 shares authorized, none issued and outstanding in either period) — — Common stock ($0.0001 par value, 450,000,000 shares authorized, 178,319,495 and 178,082,383 shares issued, and 165,307,107 and 178,082,383 shares outstanding, as of March 31, 2024, and December 31, 2023, respectively) 18 17 Additional paid-in capital 938,209 979,891 Retained earnings 402,215 385,726 Accumulated other comprehensive income (loss) (130 ) 145 Treasury stock, at cost, 13,012,388 and 0 shares, respectively (202,558 ) — Total stockholders’ equity 1,137,754 1,365,779 Total liabilities and stockholders’ equity $ 2,354,039 $ 2,336,452 MP MATERIALS CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS For the three months ended March 31, (in thousands, except share and per share data, unaudited) 2024 2023 Revenue: Rare earth concentrate $ 40,076 $ 95,666 NdPr oxide and metal 8,327 — Other rare earth products 281 34 Total revenue 48,684 95,700 Operating costs and expenses: Cost of sales (excluding depreciation, depletion and amortization) 35,594 24,216 Selling, general and administrative 21,267 19,403 Depreciation, depletion and amortization 18,385 8,122 Start-up costs 1,287 4,669 Advanced projects and development 4,206 3,611 Other operating costs and expenses 377 2,717 Total operating costs and expenses 81,116 62,738 Operating income (loss) (32,432 ) 32,962 Interest expense, net (2,857 ) (1,359 ) Gain on early extinguishment of debt 46,265 — Other income, net 12,657 13,693 Income before income taxes 23,633 45,296 Income tax expense (7,144 ) (7,849 ) Net income $ 16,489 $ 37,447 Earnings (loss) per share: Basic $ 0.09 $ 0.21 Diluted $ (0.08 ) $ 0.20 Weighted-average shares outstanding: Basic 174,556,850 176,881,723 Diluted 186,791,826 193,613,539 MP MATERIALS CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS For the three months ended March 31, (in thousands, unaudited) 2024 2023 Operating activities: Net income $ 16,489 $ 37,447 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation, depletion and amortization 18,385 8,122 Accretion of asset retirement and environmental obligations 231 227 Accretion of discount on short-term investments (8,493 ) (8,842 ) Gain on early extinguishment of debt (46,265 ) — Loss (gain) on disposals of long-lived assets, net 45 (5 ) Stock-based compensation expense 7,467 7,013 Amortization of debt issuance costs 913 882 Lower of cost or net realizable value reserve 5,991 — Deferred income taxes 7,144 7,377 Decrease (increase) in operating assets: Accounts receivable (11,571 ) 11,611 Inventories (20,943 ) (5,024 ) Government grant receivable (1,617 ) — Prepaid expenses, other current and non-current assets (3,243 ) 123 Increase (decrease) in operating liabilities: Accounts payable and accrued liabilities (7,633 ) (3,586 ) Deferred government grant 1,489 — Other current and non-current liabilities 485 146 Net cash provided by (used in) operating activities (41,126 ) 55,491 Investing activities: Additions to property, plant and equipment (51,838 ) (74,462 ) Purchases of short-term investments (390,608 ) (320,884 ) Proceeds from sales of short-term investments 22,954 447,227 Proceeds from maturities of short-term investments 460,110 410,307 Proceeds from government awards used for construction 96 — Net cash provided by investing activities 40,714 462,188 Financing activities: Proceeds from issuance of long-term debt 747,500 — Payment of debt issuance costs (15,125 ) — Payments to retire long-term debt (428,599 ) — Purchase of capped call options (65,332 ) — Repurchases of common stock (200,764 ) — Principal payments on debt obligations and finance leases (811 ) (846 ) Tax withholding on stock-based awards (3,949 ) (5,976 ) Net cash provided by (used in) financing activities 32,920 (6,822 ) Net change in cash, cash equivalents and restricted cash 32,508 510,857 Cash, cash equivalents and restricted cash beginning balance 264,988 143,509 Cash, cash equivalents and restricted cash ending balance $ 297,496 $ 654,366 Reconciliation of cash, cash equivalents and restricted cash: Cash and cash equivalents $ 296,468 $ 651,215 Restricted cash, current 692 2,552 Restricted cash, non-current 336 599 Total cash, cash equivalents and restricted cash $ 297,496 $ 654,366 Reconciliation of GAAP Net Income to Non-GAAP Adjusted EBITDA For the three months ended March 31, (in thousands, unaudited) 2024 2023 Net income $ 16,489 $ 37,447 Adjusted for: Depreciation, depletion and amortization 18,385 8,122 Interest expense, net 2,857 1,359 Income tax expense 7,144 7,849 Stock-based compensation expense(1) 7,467 7,013 Initial start-up costs(2) 1,173 4,564 Transaction-related and other costs(3) 3,797 3,322 Accretion of asset retirement and environmental obligations(4) 231 227 Loss on disposals of long-lived assets, net(4)(5) 146 2,490 Gain on early extinguishment of debt(6) (46,265 ) — Other income, net(7) (12,657 ) (13,693 ) Adjusted EBITDA $ (1,233 ) $ 58,700 (1) Principally included in “Selling, general and administrative” within our unaudited Condensed Consolidated Statements of Operations. (2) Included in “Start-up costs” within our unaudited Condensed Consolidated Statements of Operations and excludes any applicable stock-based compensation, which is included in the “Stock-based compensation expense” line above. Relates to certain costs incurred in connection with the commissioning and starting up of our initial separations capability at Mountain Pass and our initial magnet-making capabilities at Fort Worth prior to the achievement of commercial production. These costs include labor of incremental employees hired in advance to work directly on 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 initially develop our separations and magnet-making 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. To the extent additional start-up costs are incurred in the future to expand our separations and magnet-making capabilities after initial achievement of commercial production (e.g., significantly expanding production capacity at an existing facility or building a new separations or magnet manufacturing facility), such costs would not be considered an adjustment for this non-GAAP financial measure. (3) Principally included in “Advanced projects and development” within our unaudited Condensed Consolidated Statements of Operations, and pertains to legal, consulting, and advisory services, and other costs associated with specific transactions, including potential acquisitions, mergers, or other investments. (4) Included in “Other operating costs and expenses” within our unaudited Condensed Consolidated Statements of Operations. (5) Amount for the three months ended March 31, 2023, principally related 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. (6) Pertains to the gain recognized on the repurchase of $480.0 million aggregate principal amount of our 0.25% unsecured senior convertible notes due 2026 (the “2026 Notes”) in March 2024. (7) Principally comprised of interest and investment income. Reconciliation of GAAP Net Income to Non-GAAP Adjusted Net Income (Loss) For the three months ended March 31, (in thousands, unaudited) 2024 2023 Net income $ 16,489 $ 37,447 Adjusted for: Stock-based compensation expense(1) 7,467 7,013 Initial start-up costs(2) 1,173 4,564 Transaction-related and other costs(3) 3,797 3,322 Loss on disposals of long-lived assets, net(4) 146 2,490 Gain on early extinguishment of debt(5) (46,265 ) — Other — (20 ) Tax impact of adjustments above(6) 9,701 (3,489 ) Adjusted Net Income (Loss) $ (7,492 ) $ 51,327 (1) Principally included in “Selling, general and administrative” within our unaudited Condensed Consolidated Statements of Operations. (2) Included in “Start-up costs” within our unaudited Condensed Consolidated Statements of Operations and excludes any applicable stock-based compensation, which is included in the “Stock-based compensation expense” line above. Relates to certain costs incurred in connection with the commissioning and starting up of our initial separations capability at Mountain Pass and our initial magnet-making capabilities at Fort Worth prior to the achievement of commercial production. These costs include labor of incremental employees hired in advance to work directly on 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 initially develop our separations and magnet-making 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. To the extent additional start-up costs are incurred in the future to expand our separations and magnet-making capabilities after initial achievement of commercial production (e.g., significantly expanding production capacity at an existing facility or building a new separations or magnet manufacturing facility), such costs would not be considered an adjustment for this non-GAAP financial measure. (3) Principally included in “Advanced projects and development” within our unaudited Condensed Consolidated Statements of Operations, and pertains to legal, consulting, and advisory services, and other costs associated with specific transactions, including potential acquisitions, mergers, or other investments. (4) Included in “Other operating costs and expenses” within our unaudited Condensed Consolidated Statements of Operations. Amount for the three months ended March 31, 2023, principally related 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) Pertains to the gain recognized on the repurchase of $480.0 million aggregate principal amount of our 2026 Notes in March 2024. (6) 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 28.8% and 20.1% for the three months ended March 31, 2024 and 2023, respectively. Reconciliation of GAAP Diluted Earnings (Loss) per Share to Non-GAAP Adjusted Diluted EPS For the three months ended March 31, (unaudited) 2024 2023 Diluted earnings (loss) per share $ (0.08 ) $ 0.20 Adjusted for: Stock-based compensation expense 0.04 0.04 Initial start-up costs 0.01 0.02 Transaction-related and other costs 0.02 0.02 Loss on disposals of long-lived assets, net — 0.01 Gain on early extinguishment of debt (0.27 ) — Tax impact of adjustments above(1) 0.06 (0.02 ) 2026 Notes if-converted method(2) 0.18 — Adjusted Diluted EPS $ (0.04 ) $ 0.27 Diluted weighted-average shares outstanding(3) 186,791,826 193,613,539 Assumed conversion of 2026 Notes(3) (12,234,976 ) — Adjusted diluted weighted-average shares outstanding(3) 174,556,850 193,613,539 (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 28.8% and 20.1% for the three months ended March 31, 2024 and 2023, respectively. (2) For the three months ended March 31, 2024, since the 2026 Notes were dilutive for purposes of computing GAAP diluted earnings (loss) per share but antidilutive for purposes of computing Adjusted Diluted EPS, within this reconciliation, we have included this adjustment to reverse the impact of applying the if-converted method to the 2026 Notes in the computation of GAAP diluted earnings (loss) per share. (3) For the three months ended March 31, 2024, since the 2026 Notes were dilutive for purposes of computing GAAP diluted earnings (loss) per share but antidilutive for purposes of computing Adjusted Diluted EPS, the adjusted diluted weighted-average shares outstanding exclude the potentially dilutive securities associated with the 2026 Notes. Conference Call Details MP Materials will host a conference call to discuss these results at 2:00 p.m. Pacific Time, Thursday, May 2, 2024. To access the conference call, participants should dial 1-833-470-1428 and international participants should dial 1-404-975-4839 and enter the conference ID number 469929. 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 the words such as “estimate,” “plan,” “shall,” “may,” “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 price and market for rare earth materials, the continued demand for rare earth materials and the market for rare earth materials generally, future demand for electric vehicles and magnets, estimates and forecasts of the Company’s results of operations and other financial and performance metrics, including NdPr oxide production and shipments, expected NdPr oxide production and sales in the second quarter and throughout all of 2024, the Company’s share repurchase program, the expected cash flows of the early production of magnetic precursor products in Stage III and associated expected magnetic precursor products prepayments and timing thereof, the expected timing for receipt of the 48C tax credits, expected capital expenditures in Stage II and Stage III, expected net cash on the balance sheet at the end of 2024, the Company’s ability to control costs and expenses, the Company’s Upstream 60K strategy, including statements regarding the timing, costs and ability to increase REO production, 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 Company’s Upstream 60K strategy, including delays in completion, unexpected costs and expenses and timing for obtaining regulatory approvals; 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 in Stage II and Stage III; risks related to the Company’s Stage II operations and the Company’s ability to achieve run rate production of separated rare earth materials; risks related to the Company’s long-term agreement with General Motors, including the Company’s ability to produce and supply NdFeB magnets; risks related to expected sales of separated NdPr oxide due to various risks, including demand and pricing for separated NdPr oxide; risks related to the Company’s ability to develop magnetic precursor products in Stage III, including production delays; risks related to the Company entering into agreements with customers for prepayment of magnetic precursor products, including NdPr metal; risks associated with the terms of the new 3% convertible notes due 2030; risks related to the share repurchase program and whether it will be fully consummated or will enhance long-term stockholder value; 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 the assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. The Company does not intend to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, 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 (Loss), and Adjusted Diluted EPS, which have not been prepared in accordance with GAAP. MP Materials defines Adjusted EBITDA as GAAP net income or loss 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; initial start-up costs; transaction-related and other costs; accretion of asset retirement and environmental obligations; gain or loss on disposals of long-lived assets; gain or loss on early extinguishment of debt; and other income or loss. MP Materials defines Adjusted Net Income (Loss) as GAAP net income or loss excluding the impact of stock-based compensation expense; initial start-up costs; transaction-related and other costs; gain or loss on disposals of long-lived assets; gain or loss on early extinguishment of debt; and other items that management does not consider representative of our underlying operations; adjusted to give effect to the income tax impact of such adjustments. MP Materials defines Adjusted Diluted EPS as GAAP diluted earnings or loss per share excluding the per share impact, using adjusted diluted weighted-average shares outstanding, of stock-based compensation expense; initial start-up costs; transaction-related and other costs; gain or loss on disposals of long-lived assets; gain or loss on early extinguishment of debt; and other items that management does not consider representative of our underlying operations; adjusted to give effect to the income tax impact of such adjustments. In addition, when appropriate, we include an adjustment to reverse the impact of applying the if-converted method to our 2026 Notes if necessary to reconcile between GAAP diluted earnings or loss per share and Adjusted Diluted EPS. When applicable, adjusted diluted weighted-average shares outstanding reflect the anti-dilutive impact of our capped call options entered into in connection with the issuance of our 3.00% unsecured senior convertible notes due March 2030. MP Materials’ management uses Adjusted EBITDA, Adjusted Net Income (Loss), 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 (Loss), 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’ management believes that the use of Adjusted EBITDA, Adjusted Net Income (Loss), and Adjusted Diluted EPS provides an additional tool for investors to use in evaluating projected operating results and trends. 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. Key Performance Indicators REO Production Volume is measured in MTs, the Company’s principal unit of sale for its concentrate product. This measure refers to the REO content contained in the rare earth concentrate we produce and, beginning in the second quarter of 2023, includes volumes fed into downstream circuits for commissioning and starting up our separations facilities and for producing separated rare earth products, a portion of which is also included in our KPI, NdPr Production Volume. REO Production Volume is a key indicator of the Company’s mining and concentrate processing capacity and efficiency. REO Sales Volume for a given period is calculated in MTs. A unit, or MT, is considered sold once we recognize revenue on its sale as determined in accordance with GAAP. REO Sales Volume is a key measure of the Company’s ability to convert its concentrate production into revenue. Realized Price per REO MT for a given period is calculated as the quotient of: (i) the Company’s rare earth concentrate sales, which is determined in accordance with GAAP, for a given period and (ii) the Company’s REO Sales Volume for the same period. Realized Price per REO MT is an important measure of the market price of the Company’s concentrate product. NdPr Production Volume is measured in MTs, the Company’s principal unit of sale for its NdPr separated products. NdPr Production Volume refers to the volume of finished and packaged NdPr oxide produced at Mountain Pass for a given period. NdPr Production Volume is a key indicator of the Company’s separations and finishing capacity and efficiency. Our NdPr Sales Volume for a given period is calculated in MTs and on an NdPr oxide-equivalent basis (as further discussed below). A unit, or MT, is considered sold once we recognize revenue on its sale, whether sold as NdPr oxide or NdPr metal, as determined in accordance with GAAP. For NdPr metal sales, the MTs sold and included in NdPr Sales Volume are calculated on the basis of the volume of NdPr oxide used to produce such NdPr metal. We utilize an assumed material conversion ratio of 1.20, such that a sale of 100 MTs of NdPr metal would be included in this KPI as 120 MTs of NdPr oxide-equivalent. NdPr Sales Volume is a key measure of our ability to convert our production of separated NdPr products into revenue. We expect to have a mix of contracts with customers where we will sell NdPr as (i) oxide, (ii) metal, where the amount of oxide required to produce such metal is variable, and (iii) metal, where we have a guarantee of the amount produced and sold based on the amount of oxide consumed. Among other factors, differences between quarterly NdPr Production Volume and NdPr Sales Volume may be caused by the time required for the conversion of NdPr oxide to NdPr metal, including time in-transit. NdPr Realized Price per kilogram (“KG”) for a given period is calculated as the quotient of: (i) our NdPr oxide and metal sales, which are determined in accordance with GAAP, for a given period and (ii) our NdPr Sales Volume for the same period. NdPr Realized Price per KG is an important measure of the market price of our NdPr products. View source version on businesswire.com: https://www.businesswire.com/news/home/20240502887432/en/
