MP Materials Corp. (NYSE: MP) (“MP Materials” or the “Company”) today announced financial results for the three months ended June 30, 2023.
“In recent weeks, MP Materials has begun producing refined rare earth products at Mountain Pass, an important milestone for the Company and in returning the full rare earth supply chain to the United States. We expect to report NdPr oxide shipments in the current quarter,“ said James Litinsky, Founder, Chairman and CEO of MP Materials. “While our financials were impacted by weaker commodity pricing, we continue our solid execution in our upstream concentrate business and in our downstream magnetics business in Texas.”
Litinsky added, “Achieving refined rare earth production is a milestone worth celebrating as we work relentlessly towards solidifying MP as the American champion in our industry.”
Second Quarter 2023 Financial and Operational Highlights | |||||||||||||||
For the three months ended
| 2023 vs. 2022 | ||||||||||||||
(unaudited) | 2023 | 2022 | Amount Change | % Change | |||||||||||
Financial Measures: | (in thousands, except per share data) | ||||||||||||||
Revenue(1) | $ | 64,024 | $ | 143,562 | $ | (79,538 | ) | (55 | )% | ||||||
Net income | $ | 7,395 | $ | 73,269 | $ | (65,874 | ) | (90 | )% | ||||||
Adjusted EBITDA(2) | $ | 26,951 | $ | 109,952 | $ | (83,001 | ) | (75 | )% | ||||||
Adjusted Net Income(2)(3) | $ | 17,023 | $ | 79,609 | $ | (62,586 | ) | (79 | )% | ||||||
Diluted EPS | $ | 0.04 | $ | 0.38 | $ | (0.34 | ) | (89 | )% | ||||||
Adjusted Diluted EPS(2) | $ | 0.09 | $ | 0.41 | $ | (0.32 | ) | (78 | )% | ||||||
Key Performance Indicators: | (in whole units or dollars) | ||||||||||||||
REO production volume (MTs) | 10,863 | 10,300 | 563 | 5 | % | ||||||||||
REO sales volume (MTs) | 10,271 | 10,000 | 271 | 3 | % | ||||||||||
Realized price per REO MT(2) | $ | 6,231 | $ | 13,918 | $ | (7,687 | ) | (55 | )% | ||||||
Production cost per REO MT(2) | $ | 1,938 | $ | 1,750 | $ | 188 | 11 | % | |||||||
(1) | The vast majority of our revenue pertains to product sales of our rare earth concentrate. | |
(2) | See “Use of Non-GAAP Financial Measures” below for the definitions of Adjusted EBITDA, Adjusted Net Income, Adjusted Diluted EPS and Production Costs, which is used in the calculation of production cost per REO MT. See tables below for reconciliations of non-GAAP financial measures to their most directly comparable GAAP financial measures. The definition of realized price per REO MT is also included in “Use of Non-GAAP Financial Measures” below. | |
(3) | Effective September 30, 2022, the Company no longer excludes depletion expense for purposes of calculating and presenting Adjusted Net Income, and has retroactively revised the prior year period for comparability purposes. | |
Revenue decreased 55% year-over-year, driven by a 55% decrease in the realized price of rare earth oxide (“REO”) in concentrate partially offset by a 3% increase in sales volumes. The change in realized price reflects a significantly softer pricing environment for rare earth products as compared to the prior year period when recent pricing peaked. Metric tons (“MT”) of REO sold in the quarter increased year-over-year mainly due to the higher production volumes partially offset by further processing a portion of the volume of REO produced from Stage I operations for Stage II commissioning activities. The higher production volumes were driven in part by higher uptime.
Adjusted EBITDA decreased 75% year-over-year, driven by lower per-unit profitability, and higher personnel and other general and administrative costs, as well as advanced projects and development costs. The per-unit profitability decrease was driven primarily by the decline in realized prices discussed above, as well as higher production costs, partially offset by lower shipping costs. Production cost of $1,938 per MT of REO increased 11% year-over-year, mainly due to higher payroll costs, primarily as a result of increased headcount as we expand our workforce and ready our facilities to support separated rare earth (Stage II) production and slightly higher costs of materials and supplies.
Adjusted Net Income decreased by 79% year-over-year to $17.0 million, mainly due to the lower Adjusted EBITDA as well as higher depreciation expense resulting from an increase in capital assets placed into service over the last year. These declines were partially offset by increased interest and investment income earned on an increase in short-term investments as well as lower income tax expense primarily associated with the lower pre-tax income.
Net income decreased 90% year-over-year, primarily due to the factors driving the lower Adjusted Net Income discussed above, as well as costs incurred to support growth initiatives, start-up costs, and costs associated with the removal of legacy facilities at Mountain Pass. These impacts were partially offset by lower stock-based compensation expense compared to the prior year period, mainly due to the timing of grants and the accelerated method of recognizing expense for virtually all of our stock awards.
Diluted earnings per share (“EPS”) decreased 89% year-over-year to $0.04, in line with the lower net income discussed above. Adjusted Diluted EPS decreased 78% to $0.09 in line with the decrease in Adjusted Net Income discussed above.
MP MATERIALS CORP. AND SUBSIDIARIES | ||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
For the three months
| For the six months
| |||||||||||||||
(in thousands, except share and per share data, unaudited) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
Revenue: | ||||||||||||||||
Product sales | $ | 64,001 | $ | 139,183 | $ | 159,667 | $ | 300,938 | ||||||||
Other sales | 23 | 4,379 | 57 | 8,882 | ||||||||||||
Total revenue | 64,024 | 143,562 | 159,724 | 309,820 | ||||||||||||
Operating costs and expenses: | ||||||||||||||||
Cost of sales (excluding depreciation, depletion and amortization) | 22,704 | 22,092 | 46,920 | 45,265 | ||||||||||||
Selling, general and administrative | 18,865 | 18,120 | 38,268 | 38,428 | ||||||||||||
Advanced projects, start-up, development and other | 7,222 | 1,769 | 15,502 | 3,587 | ||||||||||||
Depreciation, depletion and amortization | 12,203 | 5,407 | 20,325 | 10,667 | ||||||||||||
Accretion of asset retirement and environmental obligations | 227 | 419 | 454 | 837 | ||||||||||||
Loss on sale or disposal of long-lived assets, net | 2,320 | 1 | 4,810 | 258 | ||||||||||||
Total operating costs and expenses | 63,541 | 47,808 | 126,279 | 99,042 | ||||||||||||
Operating income | 483 | 95,754 | 33,445 | 210,778 | ||||||||||||
Interest expense, net | (1,392 | ) | (1,326 | ) | (2,751 | ) | (3,231 | ) | ||||||||
Other income, net | 13,821 | 2,212 | 27,514 | 2,406 | ||||||||||||
Income before income taxes | 12,912 | 96,640 | 58,208 | 209,953 | ||||||||||||
Income tax expense | (5,517 | ) | (23,371 | ) | (13,366 | ) | (51,133 | ) | ||||||||
Net income | $ | 7,395 | $ | 73,269 | $ | 44,842 | $ | 158,820 | ||||||||
Earnings per share: | ||||||||||||||||
Basic | $ | 0.04 | $ | 0.42 | $ | 0.25 | $ | 0.90 | ||||||||
Diluted | $ | 0.04 | $ | 0.38 | $ | 0.24 | $ | 0.83 | ||||||||
Weighted-average shares outstanding: | ||||||||||||||||
Basic | 176,984,917 | 176,527,570 | 176,933,605 | 176,442,043 | ||||||||||||
Diluted | 177,859,118 | 193,414,563 | 193,528,819 | 193,452,921 | ||||||||||||
Reconciliation of GAAP Net Income to | ||||||||||||||||
Non-GAAP Adjusted EBITDA | ||||||||||||||||
For the three months
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