MP Materials Corp. 2026 Q2 Earnings Call

Thank you, operator, good afternoon, everyone. Welcome to the MP Materials second quarter 2026 earnings conference call. With me today from MP Materials are James Litinsky, founder, chairman, and Chief Executive Officer, Michael Rosenthal, founder and Chief Operating Officer, and Ryan Corbett, Chief Financial Officer. As a reminder, today's discussion will contain forward-looking statements relating to future events and expectations that are subject to various assumptions and caveats. Factors that may cause the company's actual results to differ materially from these statements are included in today's presentation, earnings release, and in our SEC filings. We have included some non-GAAP financial measures in this presentation. Reconciliations to the most directly comparable GAAP financial measures can be found in today's earnings release and the appendix to today's slide presentation. Any reference in our discussion today to EBITDA means adjusted EBITDA and tons means metric tons.

The earnings release and slide presentation are available on our website. With that, I'll turn the call over to Jim.

Thank you, Martin, thank you all for joining us today. This was another strong quarter of execution as we continued scaling both our materials and magnetics businesses. We expanded production, broadened our product portfolio, advanced commercial magnet manufacturing, and continued building the next phase of our operating platform. Starting with the Materials Segment, we produced 840 metric tons of NdPr, up 41% year-over-year, consistent with our expectations. Despite an extended planned plant shutdown in April, we met our production objectives while continuing to improve throughput as we ramp production at scale. We expect significant volume growth next quarter as we continue progressing toward our targeted year-end NdPr production run rate. Michael will discuss our operational progress in greater detail shortly. Customer demand continues to outpace our production growth.

NdPr sales exceeded 1,000 metric tons for the second consecutive quarter, up 127% year-over-year. As we scale NdPr production, our engineering and operations teams are also advancing three major initiatives: commissioning the heavy rare earth separation circuit, restarting our on-site chlor-alkali facility, and breaking ground on our new recycling facility. Michael will discuss these initiatives in greater detail, but I want to highlight that we are actively commissioning our Dy/Tb circuit and remain on track to begin shipping product from Mountain Pass to Independence later this year. In July, we entered into a long-term agreement to supply gadolinium oxide to a leading U.S. aerospace and defense manufacturer. This is expected to be a sizable nine-figure deal in total over multiple years that expands our heavy rare earth product portfolio at attractive returns. Our heavy rare earth strategy is deliberately disciplined.

We expand our product portfolio where customer demand and attractive returns justify investment, building the material segment one product at a time. We believe this approach can continue to expand both our product portfolio and the segment's long-term earnings power. Our operating progress also translated into strong financial performance. The material segment generated $113.2 million of revenue plus PPA income and $32.5 million of adjusted EBITDA, a $45 million year-over-year improvement. Turning to magnetics, startup and customer qualification activities at Independence continued to advance. During the quarter, we delivered magnets to GM for in-vehicle qualification testing, and we continue to expect to begin commercial shipments in the fourth quarter, followed by a steady production ramp. Precursor production generated adjusted EBITDA margins exceeding 40%, highlighting the earnings potential of the magnetic segment as we continue scaling the business.

Ryan will discuss how the economics of the segment evolve as we ramp commercial magnet production over the coming quarters. At the same time, construction of our 10X facility continues to accelerate. Foundation work is underway. Long lead production equipment has been ordered, and we are prepared to begin vertical construction shortly. As we ramp Independence, we are already building the next phase of America's domestic magnet manufacturing platform. Demand for secure, large-scale magnet manufacturing continues to grow. Structural supply constraints remain, and we continue to see strong interest from customers across automotive, industrial, aerospace, defense, and emerging physical AI applications. With Independence substantially committed and the Department of War supporting the development of 10X, we are able to be disciplined in selecting long-term partners and structuring commercial agreements that reflect the strategic value of domestic magnet manufacturing. We expect to have additional customer announcements over time.

One area of particularly strong interest is autonomous systems. Over the past several months, we have worked with U.S. and allied drone manufacturers to launch Project Swarm, an industrial coordination initiative designed to aggregate and standardize future magnet demand. We have already signed subscription agreements with a number of participants. Rather than asking emerging companies to make long-term purchasing commitments before their products are fully developed, Project Swarm allows them to secure future manufacturing capacity today while preserving the flexibility to continue innovating. Project Swarm reflects our belief that industrial leadership requires more than manufacturing capacity. It also requires helping coordinate the ecosystem around it. By reducing supply chain uncertainty, we can help innovative companies focus on building the next generation of autonomous systems while strengthening America's industrial base and building long-term shareholder value. With that, let me turn the call over to Ryan.

Ryan? Thanks, Jim. The company generated $126.1 million of revenue and PPA income, more than doubling last year's revenue, driven primarily by the 127% increase in sales volumes of NdPr.

The higher revenue and PPA income contributed to consolidated adjusted EBITDA of $28.5 million in the quarter, a $41 million improvement year-over-year. These factors also drove adjusted diluted EPS to improve $0.12 to a loss of $0.01 per share. On a sequential basis, materials revenue plus PPA income was essentially flat, with identical sales volumes and the impact of the price floor. Magnetics revenue declined slightly, which was driven by a much higher proportion of costs being attributable to the startup of magnet production versus precursor product production, which impacts the pricing of our metal products ahead of commercial magnet production.

Consolidated adjusted EBITDA declined modestly, primarily reflecting the costs associated with the planned biannual plant shutdown at Mountain Pass and the transition period at Magnetics ahead of commercial magnet revenue. Looking ahead to Q3, regarding pricing, our current view of sales mix and timing suggests that realized pricing for NdPr oxide sales will be in the high 90s per kilogram, leaving PPA income to come in at roughly $10 per kilogram. With market pricing hovering at about $110 per kilogram in the first part of Q3, we continue to expect minimal PPA income from stockpiled NdPr contained in concentrate that is stored in inventory. We would expect a slight sequential decline in overall PPA income. Given timing of shipments and metallization lead times, we expect sales volumes in the materials segment to be flattish, depending on the ultimate sales mix.

As of June 30th, we had approximately 650 metric tons of NdPr oxide and metal on hand, in transit, at toll processors, or waiting for shipment. Turning to Magnetics, the segment delivered another solid quarter of revenue and EBITDA performance, declining slightly sequentially as we discussed on our last call. This leaves approximately $46 million of prepaid revenue to be earned for magnetic precursor products over the next three to four quarters on a modestly declining basis quarter-to-quarter. Once this prepayment is fully recognized, we will no longer expect to produce these products for external sale and instead will dedicate metal production capacity towards our needs for the manufacture and delivery of finished magnets. As Jim also noted, we expect initial commercial magnet deliveries to start within the fourth quarter, beginning with modest volumes, with capacity ramping over the following quarters.

As I mentioned last quarter, in the short term, financials period to period will be impacted by the eventual roll-off of precursor product deliveries, the early scaling of magnet production, timing of certain product testing milestones at our customers' facilities, as well as investments in our team and product development capabilities. Importantly, these efforts will pay off not only for scaled production for GM, but also our follow-on contracts with Apple and the Department of War, as well as other future customers. Regarding cash flow, CapEx in the quarter was $230.3 million, with a little over 60% attributable to the Magnetics segment. Note that in the second quarter, we acquired the 10X site for approximately $80 million. This brings our year-to-date spend to $308 million as of June 30th. We continue to expect full-year CapEx spend to be in the $500 million to $600 million range.

Lastly, on the balance sheet, we ended the quarter with $1.45 billion of cash and short-term investments. Together with expected improvements to operating cash flow from growing oxide sales, related cost reductions, as well as magnet production, this fully funds our long-term capital plan and preserves our fortress balance sheet. With that, let me turn it over to Michael.