USA Rare Earth, Inc. Class A Common Stock 2026 Q2 Earnings Call

Good afternoon and welcome to USA Rare Earth's 2026 second quarter earnings conference call. With me today are Barbara Humpton, Chief Executive Officer, and Rob Steele, Chief Financial Officer. Following Barbara and Rob's updates across our business and quarterly results, we will open the lines for Q&A. I would like to remind participants that today's discussion may contain forward-looking statements. Please refer to the press release and our SEC filings for a discussion of risk factors. Listeners who do not have a copy of the press release or associated presentation may access these documents by visiting the investor relations section of the company's website. With that, I'll turn the call over to Barbara.

Thank you, J.B. Let me start with the progress we made this quarter as a company and the vision we have going forward. USA Rare Earth is building the global leader in rare earths. Every link from the rock in the ground to the finished magnet and beyond across three continents. These materials sit inside the motors, servos, semiconductors, aircraft, robotics, medical devices, and defense systems a modern economy runs on. For a generation, the capability to produce them has been consolidated almost entirely into one country. We're putting it back into allied hands, and we're doing it now. This ranks among the most vital industrial projects underway today, and I want to be clear about our ambition. We intend to lead it. For decades, price governed this industry because availability was assumed. Availability, or lack thereof, is what governs the rare earth industry now.

Once a company understands what an interruption will do to its production line, its commitments, and its business model, availability drives every decision that follows. The consequence of being wrong is existential. The Chinese government's recent export restrictions on Western companies, including USA Rare Earth, crystallize that risk. For us, they reinforce why this company exists. For the rest of the industry, they're a wake-up call. More and more companies have now concluded that single source dependency on a strategic competitor, one that has become a geostrategic adversary, is a risk they can no longer tolerate. That conclusion is driving companies to rebuild their supply chains around long-term, reliable, and trustworthy sources. A two-tier market is emerging. A China tier and a new non-China tier. The two price differently, contract differently, and behave differently.

We are building USA Rare Earth to anchor the non-China tier and to be its partner of choice. Outside of China, heavy rare earths used in magnets are scarcer today than at any point in recent memory, and pricing reflects this reality. Western prices for dysprosium oxide, for example, are up over 90% in 2026 alone, as measured by Benchmark Mineral Intelligence, reaching nearly $2,000 per kilogram in August, over nine times the price of the product in China. This same tightness runs across other rare earths and critical minerals such as lutetium, gallium, gadolinium, hafnium, zirconium, and yttrium. Western prices for yttrium oxide, which has only started to be tracked within the last year since it essentially does not exist outside in the West, has risen over 60% since March and is over 200 times the price in China.

Scarcity is the defining condition of this industry today. Availability is the lens I would ask you to apply to our strategy, which is to supply these scarce materials responsibly at scale. Scaling requires capabilities that are themselves significant barriers to entry, as very few companies outside of China can do this work because it is largely a lost art in the West. That is what makes the integrated value chain we are building so valuable. A mine without processing is a stranded asset. Processing without metal and alloy-making capability is a science project. A magnet manufacturing facility without a secure, heavy, rare earth feedstock is a zombie. Tolling any of these steps through an adversary is a bottleneck. That is why we have to link this chain together and why we moved so urgently to build capability at each link. This quarter is when that architecture snapped together.

In the second quarter, we announced three significant events. First, our intent to acquire Serra Verde, which will give us the only scaled operating source of both light and heavy magnetic rare earths outside Asia. Second, we announced our investment in Carester, bringing world-class heavy rare earth processing capability and intellectual property into the platform. Third, we selected Blacksburg, South Carolina for our second U.S. magnet and metals facility, where we have already broken ground and ordered long lead time equipment. Underpinning all of this was our signing definitive documentation with the Department of Commerce following an exceptionally rigorous diligence process that included site visits, multiple RFPs, and coordination across numerous agencies. Beyond the capital already appropriated to reimburse us for our expenses, we view these agreements as a validation of our asset base, our business model, and our growth plans, and they significantly de-risk our path to full-scale production.

Even as we assembled these pieces, we advanced our capabilities at each link in our platform. At Serra Verde, the optimization and growth project, which aims to increase efficiency and production capacity, is in the process of recommissioning. The project is developing as expected toward the restart of commercial production and ramp up at the mine and processing operation on time and within budget. In April, we announced our first commercial production of yttrium metal at Less Common Metals, one of very few producers outside China of a metal essential to high-temperature aerospace applications and high-performance semiconductors. In May, we announced grants from the Texas Semiconductor Innovation Fund and the U.S. Department of Energy to advance our platform, providing further external validation that our platform is essential national infrastructure. In June, we commissioned our hydrometallurgical facility in Wheat Ridge, Colorado.

Last month, in July, we produced our first commercial-grade dysprosium and NdPr oxide samples from our own recycled magnet manufacturing SWARF. One of the few Western producers able to execute this technically demanding process outside Asia. Lastly, just last week, we closed on the acquisition of Texas Mineral Resources Corp., which consolidates our ownership interest in Round Top and allows for streamlined operations, governance, and decision-making. The new paradigm is evident in the commercial pull we are seeing. An underappreciated feature of this market is that only half of rare earth demand comes from permanent magnets. The other half is demand for the elements themselves, in catalysts, phosphors, polishing compounds, et cetera. Nowhere is this more evident than in the work we are advancing at Round Top.

We have already engaged over 30 potential customers, many of them large multinationals, on offtake for the non-magnetic oxides and other products Round Top will produce. We are working closely with several of them on Memorandums of Understanding, joint development agreements, and other avenues of innovation. This deep engagement extends to our midstream and downstream businesses. More and more customers are no longer asking whether they need a non-China supply, but are now asking how quickly we can deliver one. Many are sourcing outside China for the first time in decades, if not ever, and are still learning where these capabilities exist. We engineer alongside them. In some cases, we have been working with customer engineering teams for six months or more on specifications, tolerances, and qualification protocols. We see this customer intimacy as a competitive differentiator.

These are often multi-decade decisions for our clients, designing our material into platforms that will exist for years, and the length of our sales cycle respects the commitment this represents. Let me close with where we are going. On August 28th, there will be a shareholder vote to approve the acquisition of Serra Verde. Upon closing, we will have mining, processing, metal and alloy making, and magnet manufacturing spanning three continents. Our work from here is to move material through every link at scale, to convert qualification into contracts, and to become the supplier the West builds around. My proudest accomplishment is that we have built a company that attracts the most capable people in our industry. Over the past year, world-class experts have chosen to join us. Entire organizations chose to join us, too.

The teams at Less Common Metals, Carester, and Serra Verde each had a choice about their future, and each chose this platform. In an industry where capabilities outside China are limited, this may be our most durable advantage. It is also why I have such confidence in this next chapter. This is the last quarterly call I will host as CEO, as Thras Moraitis takes over on October 1st. The board of directors has had a bold vision for this company, and I am proud to have been part of it. Thras shares this vision for scaling and expanding our platform. I could not be more confident handing him the baton, and I intend to run hard straight through the handoff. There is a great deal to accomplish between now and October 1st. It has been a privilege to help build and lead this company.

I'm proud of what the team has accomplished, and I'm even more excited about what it will accomplish next. With that, let me hand it to Rob.

Thank you, Barbara. Before I begin, I'd like to say on behalf of the more than 325 employees of USA Rare Earth, thank you for your vision, your leadership, and your belief in what we could accomplish together. Since you joined us last October, that conviction has helped transform our ambition into reality. As you described, we are helping to define a new industry paradigm. Building an integrated rare earth platform outside of China takes capital, technical depth, government relationships, and the ability to execute multiple complex work streams at once. What matters is relentless commitment, character, and operational excellence. The steps Barbara described are evidence of all three. We said what we would do, and then we went out and did it and more.