Exceeded 40,000 metric tons of REO production
for the third consecutive year
Commenced production of separated rare earth
products
Produced 200 metric tons of NdPr oxide in
2023
Generated $253.4 million of revenue in 2023
Produced $24.3 million of net income and
Adjusted EBITDA of $102.5 million in 2023
MP Materials Corp. (NYSE: MP) (“MP Materials” or the “Company”)
today announced its financial results for the fourth quarter and
full year ended December 31, 2023.
Full Year 2023
Highlights
- Produced 41,557 metric tons of rare earth oxides (“REO”) in
concentrate
- Produced 200 metric tons of NdPr oxide
- Sold 36,837 metric tons of REO, generating revenue of $253.4
million
- Produced net income of $24.3 million and Adjusted EBITDA of
$102.5 million
- Ended 2023 with $997.8 million of cash, cash equivalents and
short-term investments and $307.8 million of net cash on the
balance sheet
- Secured significant NdPr oxide-to-metal tolling capacity to
expand midstream sales opportunities
- Began installation of metal and alloy production equipment in
Fort Worth, Texas, magnetics facility
- Started trial production of NdPr metal
Fourth Quarter 2023
Highlights
- Production of 9,257 metric tons of REO in concentrate
- Sales volumes of 7,174 metric tons of REO in concentrate
- Production of 150 metric tons of NdPr oxide
- Sales of 10 metric tons of NdPr oxide
“MP executed diligently throughout 2023 despite formidable
market headwinds. We exceeded 40,000 tons of REO production for the
third consecutive year, achieved first production and sales of
NdPr, and added substantial depth to our team and capability set,”
said MP Materials Chairman and CEO, James Litinsky. “Our magnetics
division completed construction in Fort Worth and began trial
production of rare earth metal. Given the challenging pricing
environment, MP remains steadfast in our conservative approach to
capital deployment while we seek to create significant shareholder
value through the cycle.”
Fourth Quarter 2023 Financial and Operational
Highlights
For the three months ended
December 31,
2023 vs. 2022
(unaudited)
2023
2022
Amount Change
% Change
Financial Measures:
(in thousands, except per share
data)
Revenue(1)
$
41,205
$
93,245
$
(52,040
)
(56
)%
Net income (loss)
$
(16,259
)
$
67,007
$
(83,266
)
N/M
Adjusted EBITDA(2)
$
1,300
$
55,050
$
(53,750
)
(98
)%
Adjusted Net Income (Loss)(2)
$
(3,998
)
$
78,786
$
(82,784
)
N/M
Diluted EPS
$
(0.09
)
$
0.36
$
(0.45
)
N/M
Adjusted Diluted EPS(2)
$
(0.02
)
$
0.42
$
(0.44
)
N/M
Key Performance Indicators
(“KPIs”)(3):
(in whole units or dollars)
Rare earth concentrate
REO Production Volume (MTs)
9,257
10,485
(1,228
)
(12
)%
REO Sales Volume (MTs)
7,174
10,816
(3,642
)
(34
)%
Realized Price per REO MT
$
5,622
$
8,515
$
(2,893
)
(34
)%
Production Cost per REO MT(2)
$
2,393
$
1,928
$
465
24
%
Separated NdPr products
NdPr Production Volume (MTs)
150
N/A
N/A
N/A
NdPr Sales Volume (MTs)
10
N/A
N/A
N/A
NdPr Realized Price per KG
$
70
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 December
31, 2022.
(1)
The vast 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), Adjusted Diluted
EPS and Production Costs, which is used in the calculation of
Production Cost per REO MT. Beginning with the first quarter of
2024, the Company will no longer present Production Cost per REO
MT, which is a metric focused solely on concentrate production, and
accordingly, Production Costs. See tables below for reconciliations
of non-GAAP financial measures to their most directly comparable
GAAP financial measures.
(3)
During 2023, upon production of separated products, management
identified three new KPIs of the Company’s business. See “Key
Performance Indicators” below for definitions and further
information.
Revenue declined 56% year-over-year, due to a 34% decrease in
sales volumes as well as a 34% decline in realized sales prices of
REO in concentrate. The 34% decrease in metric tons (“MTs”) sold
was mainly due to the transition to midstream production of NdPr
oxide as well as slightly lower upstream production volumes. The
34% decline in realized prices was mainly due to the significantly
softer pricing environment for rare earth products as compared to
the prior year period. The softer pricing was mostly driven by
lower growth in magnetic products demand. The 12% decrease in
production volumes compared to the fourth quarter of 2022 was due
to a higher unplanned downtime in the current quarter.
Adjusted EBITDA declined 98% year-over-year, driven by lower
per-unit profitability, as well as higher personnel and other
general and administrative costs. The per-unit profitability
decline was driven primarily by the lower realized prices discussed
above, as well as higher production costs per MT. Production cost
of $2,393 per MT of REO increased 24% year-over-year mainly due to
the descaling impact of lower REO sales, a longer and more detailed
plant turnaround and higher payroll costs year-over-year from the
implementation of our Stage II strategy. Also impacting the
comparison was a write-down of $2.3 million on certain inventories
attributable to elevated carrying costs of initial production of
separated products. Higher general and administrative costs were
driven by higher corporate personnel and infrastructure costs
required to further build out our corporate infrastructure in
support of our downstream expansion.
In the quarter, the Company recorded an Adjusted Net Loss of
$4.0 million compared to Adjusted Net Income of $78.8 million in
the prior year period. The change was primarily driven by the lower
Adjusted EBITDA as well as higher depreciation expense and a lower
income tax benefit in the current quarter. Higher depreciation
expense resulted from an increase in capital assets placed into
service over the last year, mostly related to Stage II refining
upgrades. The change in income tax benefit was primarily due to a
tax benefit derived from the timing of capital assets placed into
service and the related impact on certain other deductions in the
prior year period. Also impacting the comparison was higher
interest and investment income earned in the current quarter.
Net loss was $16.3 million compared to net income of $67.0
million in the prior year period. The change was driven by the
trends discussed above impacting Adjusted Net Income/(Loss) in
addition to higher start-up and transaction costs in the current
quarter compared to last year.
Diluted EPS was $(0.09) and Adjusted Diluted EPS was $(0.02) in
the current quarter mainly due to the change from net income to a
net loss and Adjusted Net Income to Adjusted Net Loss,
respectively, as discussed above.
Full Year 2023 Financial and Operational Highlights
For the year ended
December 31,
2023 vs. 2022
(unaudited)
2023
2022
Amount Change
% Change
Financial Measures:
(in thousands, except per share
data)
Revenue(1)
$
253,445
$
527,510
$
(274,065
)
(52
)%
Net income
$
24,307
$
289,004
$
(264,697
)
(92
)%
Adjusted EBITDA(2)
$
102,502
$
388,631
$
(286,129
)
(74
)%
Adjusted Net Income(2)
$
71,378
$
320,557
$
(249,179
)
(78
)%
Diluted EPS
$
0.14
$
1.52
$
(1.38
)
(91
)%
Adjusted Diluted EPS(2)
$
0.39
$
1.68
$
(1.29
)
(77
)%
Key Performance Indicators:(3)
(in whole units or dollars)
Rare earth concentrate
REO Production Volume (MTs)
41,557
42,499
(942
)
(2
)%
REO Sales Volume (MTs)
36,837
43,198
(6,361
)
(15
)%
Realized Price per REO MT
$
6,854
$
11,974
$
(5,120
)
(43
)%
Production Cost per REO MT(2)
$
2,058
$
1,728
$
330
19
%
Separated NdPr products
NdPr Production Volume (MTs)
200
N/A
N/A
N/A
NdPr Sales Volume (MTs)
10
N/A
N/A
N/A
NdPr Realized Price per KG
$
70
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 year ended December 31,
2022.
(1)
The vast 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, Adjusted Diluted EPS and
Production Costs, which is used in the calculation of Production
Cost per REO MT. Beginning with the first quarter of 2024, the
Company will no longer present Production Cost per REO MT, which is
a metric focused solely on concentrate production, and accordingly,
Production Costs. See tables below for reconciliations of non-GAAP
financial measures to their most directly comparable GAAP financial
measures.
(3)
During 2023, upon production of separated products, management
identified three new KPIs of the Company’s business. See “Key
Performance Indicators” below for definitions and further
information.
Revenue declined 52% year-over-year, driven by a decrease in the
realized sales prices of REO in concentrate as well as lower
volumes sold. The 43% decrease in realized sales price was
primarily due to lower growth in magnetic products demand, which
negatively impacted the price of REO. The 15% decrease in MTs sold
was mainly due to the start-up of Stage II operations as a
significant portion of REO produced during the year was used to
charge the Stage II circuits, establish separations work-in-process
inventory, or produce packaged and finished separated rare earth
products, instead of being sold as REO in concentrate. Production
volumes were down slightly in 2023 mainly due to higher unplanned
downtime in the fourth quarter.
Adjusted EBITDA decreased 74% year-over-year, driven by lower
per-unit profitability, decreased sales volumes, as well as higher
personnel and other general and administrative costs. Per-unit
profitability was impacted by the lower realized prices discussed
above, as well as higher production costs per MT of REO. Production
cost of $2,058 per MT of REO increased 19% year-over-year, mainly
driven by higher payroll costs, including the increase in employee
headcount to support the expansion of operations, and to a lesser
extent, higher materials and supplies costs as well as higher
property and other taxes. Also impacting the comparison was a
write-down of $2.3 million on certain inventories attributable to
elevated carrying costs of initial production of separated
products. Higher general and administrative costs were driven by
higher corporate personnel and infrastructure costs required to
further build out corporate infrastructure in support of our
downstream expansion.
Adjusted Net Income was $71.4 million compared to $320.6 million
in the prior year. The change was mainly due to the lower Adjusted
EBITDA discussed above, as well as higher depreciation expense
resulting from an increase in capital assets placed into service
over the last year, mostly related to Stage II refining upgrades.
Also impacting the comparison was higher interest and investment
income earned, and lower income tax expense mostly related to the
lower pre-tax income.
Net income was $24.3 million compared to $289.0 million in the
prior year, driven primarily by the change in Adjusted Net Income
discussed above, as well as higher start-up, transaction and
demolition costs in 2023. Net income in 2023 was also impacted by
lower stock-based compensation expense. Diluted EPS declined 91%
year-over-year to $0.14 and Adjusted Diluted EPS decreased 77% to
$0.39, both mainly due to the decrease in net income and Adjusted
Net Income discussed above.
MP MATERIALS CORP. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
December 31,
(in thousands, except share and per
share data, unaudited)
2023
2022
Assets
Current assets
Cash and cash equivalents
$
263,351
$
136,627
Short-term investments
734,493
1,045,718
Total cash, cash equivalents and
short-term investments
997,844
1,182,345
Accounts receivable
10,029
32,856
Inventories
95,182
57,554
Government grant receivable
19,302
—
Prepaid expenses and other current
assets
8,820
21,073
Total current assets
1,131,177
1,293,828
Non-current assets
Property, plant and equipment, net
1,158,054
935,743
Operating lease right-of-use assets
10,065
99
Inventories
13,350
5,744
Equity method investment
9,673
—
Intangible assets, net
8,881
89
Other non-current assets
5,252
2,284
Total non-current assets
1,205,275
943,959
Total assets
$
2,336,452
$
2,237,787
Liabilities and stockholders’
equity
Current liabilities
Accounts and construction payable
$
27,995
$
15,326
Accrued liabilities
73,939
56,939
Income taxes payable
—
21,163
Other current liabilities
6,616
4,053
Total current liabilities
108,550
97,481
Non-current liabilities
Asset retirement obligations
5,518
5,295
Environmental obligations
16,545
16,580
Long-term debt, net
681,980
678,444
Operating lease liabilities
6,829
15
Deferred government grant
17,433
—
Deferred income taxes
130,793
122,353
Other non-current liabilities
3,025
4,985
Total non-current liabilities
862,123
827,672
Total liabilities
970,673
925,153
Commitments and contingencies
Stockholders’ equity:
Preferred stock ($0.0001 par value,
50,000,000 shares authorized, none issued and outstanding in either
year)
—
—
Common stock ($0.0001 par value,
450,000,000 shares authorized, 178,082,383 and 177,706,608 shares
issued and outstanding, as of December 31, 2023 and December 31,
2022, respectively)
17
18
Additional paid-in capital
979,891
951,008
Retained earnings
385,726
361,419
Accumulated other comprehensive income
145
189
Total stockholders’ equity
1,365,779
1,312,634
Total liabilities and stockholders’
equity
$
2,336,452
$
2,237,787
MP MATERIALS CORP. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
For the three months ended
December 31,
For the year ended December
31,
(in thousands, except share and per
share data, unaudited)
2023
2022
2023
2022
Revenue:
Rare earth concentrate
$
40,329
$
92,098
$
252,468
$
517,267
NdPr oxide and metal
695
—
695
—
Other rare earth products
181
1,147
282
10,243
Total revenue
41,205
93,245
253,445
527,510
Operating costs and expenses:
Cost of sales (excluding depreciation,
depletion and amortization)
23,577
24,536
92,714
92,218
Selling, general and administrative
21,416
19,707
79,245
75,857
Depreciation, depletion and
amortization
18,633
5,593
55,709
18,356
Start-up costs
5,205
3,782
21,330
7,551
Advanced projects and development
5,346
1,806
14,932
4,249
Other operating costs and expenses
656
355
7,234
1,868
Total operating costs and expenses
74,833
55,779
271,164
200,099
Operating income (loss)
(33,628
)
37,466
(17,719
)
327,411
Interest expense, net
(1,107
)
(1,331
)
(5,254
)
(5,786
)
Other income, net
14,078
10,953
56,048
19,527
Income (loss) before income
taxes
(20,657
)
47,088
33,075
341,152
Income tax benefit (expense)
4,398
19,919
(8,768
)
(52,148
)
Net income (loss)
$
(16,259
)
$
67,007
$
24,307
$
289,004
Earnings (loss) per share:
Basic
$
(0.09
)
$
0.38
$
0.14
$
1.64
Diluted
$
(0.09
)
$
0.36
$
0.14
$
1.52
Weighted-average shares
outstanding:
Basic
177,619,628
176,646,587
177,181,661
176,519,203
Diluted
177,619,628
193,494,131
178,152,212
193,453,087
MP MATERIALS CORP. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
For the year ended December
31,
(in thousands, unaudited)
2023
2022
Operating activities:
Net income
$
24,307
$
289,004
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, depletion and
amortization
55,709
18,356
Accretion of asset retirement and
environmental obligations
908
1,477
Accretion of discount on short-term
investments
(26,316
)
(9,958
)
Loss on disposals of long-lived assets,
net
808
391
Stock-based compensation expense
25,236
31,780
Accretion of debt discount and
amortization of debt issuance costs
3,536
4,034
Write-down of inventories
2,285
—
Revenue recognized in exchange for debt
principal reduction
—
(13,566
)
Deferred income taxes
8,455
17,789
Decrease (increase) in operating
assets:
Accounts receivable
22,827
18,153
Inventories
(47,099
)
(24,314
)
Government grant receivable
(19,302
)
—
Prepaid expenses, other current and
non-current assets
2,377
(8,223
)
Increase (decrease) in operating
liabilities:
Accounts payable and accrued
liabilities
11,305
1,962
Income taxes payable
(21,163
)
17,700
Deferred government grant
19,120
—
Other current and non-current
liabilities
(294
)
(1,071
)
Net cash provided by operating
activities
62,699
343,514
Investing activities:
Additions to property, plant and
equipment
(261,897
)
(326,595
)
Purchases of short-term investments
(1,185,477
)
(2,779,666
)
Proceeds from sales of short-term
investments
507,736
1,463,160
Proceeds from maturities of short-term
investments
1,015,190
281,000
Investment in equity method investee
(9,673
)
—
Proceeds from sale of property, plant and
equipment
18
—
Proceeds from government awards used for
construction
2,800
5,130
Net cash provided by (used in) investing
activities
68,697
(1,356,971
)
Financing activities:
Principal payments on debt obligations and
finance leases
(2,732
)
(5,834
)
Tax withholding on stock-based awards
(7,185
)
(18,357
)
Net cash used in financing activities
(9,917
)
(24,191
)
Net change in cash, cash equivalents and
restricted cash
121,479
(1,037,648
)
Cash, cash equivalents and restricted cash
beginning balance
143,509
1,181,157
Cash, cash equivalents and restricted
cash ending balance
$
264,988
$
143,509
Reconciliation of cash, cash
equivalents and restricted cash:
Cash and cash equivalents
$
263,351
$
136,627
Restricted cash, current
1,290
6,287
Restricted cash, non-current
347
595
Total cash, cash equivalents and
restricted cash
$
264,988
$
143,509
Reconciliation of GAAP Net
Income (Loss) to Non-GAAP Adjusted EBITDA
For the three months ended
December 31,
For the year ended December
31,
(in thousands, unaudited)
2023
2022
2023
2022
Net income (loss)
$
(16,259
)
$
67,007
$
24,307
$
289,004
Adjusted for:
Depreciation, depletion and
amortization
18,633
5,593
55,709
18,356
Interest expense, net
1,107
1,331
5,254
5,786
Income tax expense (benefit)
(4,398
)
(19,919
)
8,768
52,148
Stock-based compensation expense(1)
6,195
6,761
25,236
31,780
Initial start-up costs(2)
5,133
3,729
20,607
7,432
Transaction-related and other costs(3)
4,311
1,146
11,435
1,784
Accretion of asset retirement and
environmental obligations(4)
227
222
908
1,477
Loss on disposals of long-lived assets,
net(4)(5)
429
133
6,326
391
Other income, net(6)
(14,078
)
(10,953
)
(56,048
)
(19,527
)
Adjusted EBITDA
$
1,300
$
55,050
$
102,502
$
388,631
(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)
The year ended December 31, 2023, includes $5.5 million in
demolition costs associated 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)
Principally comprised of interest and investment income.
Reconciliation of GAAP Net
Income (Loss) to
Non-GAAP Adjusted Net Income
(Loss)
For the three months ended
December 31,
For the year ended December
31,
(in thousands, unaudited)
2023
2022
2023
2022
Net income (loss)
$
(16,259
)
$
67,007
$
24,307
$
289,004
Adjusted for:
Stock-based compensation expense(1)
6,195
6,761
25,236
31,780
Initial start-up costs(2)
5,133
3,729
20,607
7,432
Transaction-related and other costs(3)
4,311
1,146
11,435
1,784
Loss on disposals of long-lived assets,
net(4)(5)
429
133
6,326
391
Other
(9
)
(26
)
(51
)
(273
)
Tax impact of adjustments above(6)
(3,798
)
454
(16,482
)
(6,716
)
Release of valuation allowance
—
(418
)
—
(2,845
)
Adjusted Net Income (Loss)
$
(3,998
)
$
78,786
$
71,378
$
320,557
(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)
The year ended December 31, 2023, includes $5.5 million in
demolition costs associated 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)
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
23.7%, 25.9%, (3.9)% and 16.3%, for the three months and years
ended December 31, 2023 and 2022, respectively.
Reconciliation of GAAP Diluted
Earnings (Loss) per Share to
Non-GAAP Adjusted Diluted
EPS
For the three months ended
December 31,
For the year ended December
31,
(unaudited)
2023
2022
2023
2022
Diluted earnings (loss) per
share
$
(0.09
)
$
0.36
$
0.14
$
1.52
Adjusted for:
Stock-based compensation expense
0.03
0.03
0.13
0.16
Initial start-up costs
0.03
0.02
0.11
0.04
Transaction-related and other costs
0.02
0.01
0.06
0.01
Loss on disposals of long-lived assets,
net
—
—
0.03
—
Tax impact of adjustments above(1)
(0.01
)
—
(0.08
)
(0.04
)
Release of valuation allowance
—
—
—
(0.01
)
Adjusted Diluted EPS
$
(0.02
)
$
0.42
$
0.39
$
1.68
Diluted weighted-average shares
outstanding
177,619,628
193,494,131
178,152,212
193,453,087
Assumed conversion of Convertible
Notes(2)
—
—
15,584,409
—
Adjusted diluted weighted-average
shares outstanding(2)
177,619,628
193,494,131
193,736,621
193,453,087
(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
23.7%, 25.9%, (3.9)% and 16.3%, for the three months and years
ended December 31, 2023 and 2022, respectively.
(2)
The Convertible Notes were antidilutive for GAAP purposes for the
year ended December 31, 2023; however, for purposes of calculating
Adjusted Diluted EPS, we have added back the assumed conversion of
the Convertible Notes since they would not be antidilutive when
using Adjusted Net Income as the numerator in the calculation of
Adjusted Diluted EPS.
Reconciliation of GAAP Cost of
Sales to
Non-GAAP Production
Costs
For the three months ended
December 31,
For the year ended December
31,
(in thousands, unless otherwise stated,
unaudited)
2023
2022
2023
2022
Cost of sales (excluding depreciation,
depletion and amortization)
$
23,577
$
24,536
$
92,714
$
92,218
Adjusted for:
Stock-based compensation expense(1)
(1,173
)
(743
)
(3,932
)
(2,853
)
Shipping and freight(2)
(1,335
)
(2,454
)
(7,485
)
(13,002
)
Write-down of inventories(3)
(2,285
)
—
(2,285
)
—
Other(4)
(1,616
)
(490
)
(3,198
)
(1,715
)
Production Costs(5)
17,168
20,849
75,814
74,648
Divided by:
REO Sales Volume (in MTs)
7,174
10,816
36,837
43,198
Production Cost per REO MT (in
dollars)(5)
$
2,393
$
1,928
$
2,058
$
1,728
(1)
Pertains only to the amount of stock-based compensation expense
included in “Cost of sales (excluding depreciation, depletion and
amortization)” within our unaudited Condensed Consolidated
Statements of Operations.
(2)
Includes $1.3 million for the year ended December 31, 2022, of
shipping and freight costs associated with sales of rare earth
fluoride (“REF”) stockpiles.
(3)
Amount pertains to a write-down of non-concentrate inventories,
which is included in “Cost of sales (excluding depreciation,
depletion and amortization)” within our unaudited Condensed
Consolidated Statements of Operations.
(4)
Amounts for the three months and year ended December 31, 2023,
pertain to costs (excluding shipping and freight) associated with
non-concentrate products. Amount for the year ended December 31,
2022, pertains primarily to costs (excluding shipping and freight)
attributable to sales of REF stockpiles.
(5)
See “Use of Non-GAAP Financial Measures” below for definition and
further information.
Conference Call Details
MP Materials will host a conference call to discuss these
results at 2:00 p.m. Pacific Time, Thursday, February 22, 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 762562. 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 sales of separated
NdPr oxide in the first quarter of 2024 and throughout all of 2024,
the expected cash flows of the early production of magnetic
precursor products in Stage III and associated expected magnetic
precursor products prepayments, 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 Section III, including
production delays; risks related to the Company entering into
agreements with customers for prepayment of magnetic precursor
products, including NdPr metal; 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),
Adjusted Diluted EPS, and Production Costs, 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; 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; 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; and the
release of valuation allowance. 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; 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; and the release of valuation allowance. Production
Costs, which we use to calculate our KPI, Production Cost per REO
MT (see “Key Performance Indicators” below), is defined as GAAP
cost of sales (excluding depreciation, depletion and amortization),
less stock-based compensation expense included in cost of sales,
shipping and freight costs, and costs not attributable to
concentrate sales, for a given period.
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. Furthermore, MP Materials believes Production Cost per REO
MT, which utilizes the non-GAAP financial measure, Production
Costs, is a key indicator of the Company’s concentrate production
efficiency. 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 NdPr
product, the latter 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 for 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.
Production Cost per REO MT is calculated as the quotient of: (i)
the Company’s Production Costs (see “Use of Non-GAAP Financial
Measures” above) for a given period and (ii) the Company’s REO
Sales Volume for the same period. Production Cost per REO MT is a
key indicator of the Company’s concentrate production
efficiency.
As our business continues to evolve and transitions from
production of rare earth concentrate to production of separated
rare earth products, the metrics that management uses to evaluate
the business may continue to change or be revised. For example,
beginning with the first quarter of 2024, we will no longer present
Production Cost per REO MT, which is a metric focused solely on
Stage I concentrate operations, as it will no longer be meaningful
in evaluating and understanding our business or operating results.
Accordingly, we will also no longer present Production Costs.
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 separating
and finishing capacity and efficiency.
NdPr Sales Volume for a given period is calculated in MTs and on
an NdPr oxide-equivalent basis (see example 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. For example, assuming a material
conversion ratio of 1.25, a sale of 100 MTs of NdPr metal would be
included in this KPI as 125 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 is 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/20240222345443/en/
Investors: IR@mpmaterials.com
Media: Matt Sloustcher media@mpmaterials.com
MP Materials (NYSE:MP)
Historical Stock Chart
From Oct 2024 to Nov 2024
MP Materials (NYSE:MP)
Historical Stock Chart
From Nov 2023 to Nov 2024
