Commenced shipments and ramping production of
NdPr oxide
Announces “Upstream 60K” strategy targeting
~50% expansion of REO output at Mountain Pass
Stage I REO sales and production volumes of
9,177 and 10,766 metric tons, respectively
Revenue of $52.5M and net loss of $4.3M
Adjusted EBITDA of $15.6M
Diluted loss per share of $0.02 and Adjusted
Diluted EPS of $0.04
MP Materials Corp. (NYSE: MP) (“MP Materials” or the “Company”),
today announced financial results for the three months ended
September 30, 2023.
“In the third quarter, we produced separated NdPr on U.S. soil,
repatriating a critical national security capability. This is a
tremendous milestone for the company and American supply chain
independence writ large,” said James Litinsky, Founder, Chairman
and CEO of MP Materials. “Our financial results reflect solid
operational performance against a weak pricing backdrop. In
addition, we are excited to announce “Upstream 60K” where we will
target a 50% increase in REO production within four years with
modest incremental investment. In addition, we have begun trial
production of NdPr metal and continue to make steady progress in
our magnetics business, both technically and commercially.”
Third Quarter 2023 Financial and
Operational Highlights
For the three months ended
September 30,
2023 vs. 2022
(unaudited)
2023
2022
Amount Change
% Change
Financial Measures:
(in thousands, except per share
data)
Revenue(1)
$
52,516
$
124,445
$
(71,929
)
(58
)%
Net income (loss)
$
(4,276
)
$
63,177
$
(67,453
)
N/M
Adjusted EBITDA(2)
$
15,551
$
91,372
$
(75,821
)
(83
)%
Adjusted Net Income(2)
$
7,026
$
68,119
$
(61,093
)
(90
)%
Diluted earnings (loss) per share
$
(0.02
)
$
0.33
$
(0.35
)
N/M
Adjusted Diluted EPS(2)
$
0.04
$
0.36
$
(0.32
)
(89
)%
Key Performance Indicators
(“KPIs”)(3):
Rare earth concentrate
(in whole units or dollars)
REO Production Volume (MTs)
10,766
10,886
(120
)
(1
)%
REO Sales Volume (MTs)
9,177
10,676
(1,499
)
(14
)%
Realized Price per REO MT
$
5,718
$
11,636
$
(5,918
)
(51
)%
Production Cost per REO MT(2)
$
2,020
$
1,653
$
367
22
%
Separated NdPr products
NdPr Production Volume (MTs)
50
N/A
N/A
N/A
NdPr Sales Volume (MTs)
—
N/A
N/A
N/A
N/M = Not meaningful.
N/A = Not applicable as there was neither
NdPr production nor sales volume in these periods.
(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. See tables below for
reconciliations of non-GAAP financial measures to their most
directly comparable GAAP financial measures.
(3)
During the third quarter of 2023, upon
production of separated products, management identified two new
metrics as KPIs of the Company’s business. See “Key Performance
Indicators” below for definitions and further information.
Revenue decreased 58% year-over-year, driven by a 51% decrease
in the realized price of rare earth oxide (“REO”) in concentrate as
well as a 14% decrease 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. The decrease
in REO sales volume was due to the start-up of separated rare earth
(Stage II) production, as a sizeable portion of the REO produced,
which could otherwise have been sold as rare earth concentrate, was
used to charge the Stage II circuits, establish separations
work-in-process inventory, or produce packaged and finished
separated rare earth products. REO production volumes were
relatively unchanged year-over-year.
Adjusted EBITDA decreased 83% 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 $2,020 per MT of REO increased 22%
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 Stage II production, and to a lesser
extent, higher material and supply costs.
Adjusted Net Income decreased by 90% year-over-year to $7.0
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 $67.5 million year-over-year to a net loss
of $4.3 million, 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 $0.35
year-over-year to a diluted loss per share of $0.02, in line with
the change in net income discussed above. Adjusted Diluted EPS
decreased $0.32 to $0.04 in line with the decrease in Adjusted Net
Income discussed above.
MP MATERIALS CORP. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands, except share and per
share data, unaudited)
September 30, 2023
December 31, 2022
Assets
Current assets
Cash and cash equivalents
$
547,668
$
136,627
Short-term investments
536,994
1,045,718
Total cash, cash equivalents and
short-term investments
1,084,662
1,182,345
Accounts receivable
13,180
32,856
Inventories
77,179
57,554
Income taxes receivable
4,128
2,201
Prepaid expenses and other current
assets
9,162
18,872
Total current assets
1,188,311
1,293,828
Non-current assets
Property, plant and equipment, net
1,097,727
935,743
Operating lease right-of-use assets
10,346
99
Inventories
12,589
5,744
Intangible assets, net
9,179
89
Other non-current assets
4,070
2,284
Total non-current assets
1,133,911
943,959
Total assets
$
2,322,222
$
2,237,787
Liabilities and stockholders’
equity
Current liabilities
Accounts payable, construction payables
and accrued liabilities
$
92,096
$
72,265
Income taxes payable
—
21,163
Operating lease liabilities
728
84
Other current liabilities
4,188
3,969
Total current liabilities
97,012
97,481
Non-current liabilities
Asset retirement obligations
5,462
5,295
Environmental obligations
16,554
16,580
Long-term debt, net
681,094
678,444
Operating lease liabilities
7,014
15
Deferred income taxes
135,435
122,353
Other non-current liabilities
3,578
4,985
Total non-current liabilities
849,137
827,672
Total liabilities
946,149
925,153
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, 177,802,600 and 177,706,608 shares
issued and outstanding, as of September 30, 2023, and December 31,
2022, respectively)
17
18
Additional paid-in capital
974,103
951,008
Retained earnings
401,985
361,419
Accumulated other comprehensive income
(loss)
(32
)
189
Total stockholders’ equity
1,376,073
1,312,634
Total liabilities and stockholders’
equity
$
2,322,222
$
2,237,787
MP MATERIALS CORP. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
For the three months ended
September 30,
For the nine months ended
September 30,
(in thousands, except share and per
share data, unaudited)
2023
2022
2023
2022
Revenue:
Rare earth concentrate
$
52,472
$
124,231
$
212,139
$
425,169
Other rare earth products
44
214
101
9,096
Total revenue
52,516
124,445
212,240
434,265
Operating costs and expenses:
Cost of sales (excluding depreciation,
depletion and amortization)
22,217
22,417
69,137
67,682
Selling, general and administrative
19,561
17,722
57,829
56,150
Advanced projects, start-up, development
and other
10,209
2,625
25,711
6,212
Depreciation, depletion and
amortization
16,751
2,096
37,076
12,763
Accretion of asset retirement and
environmental obligations
227
418
681
1,255
Loss on disposals of long-lived assets,
net
1,087
—
5,897
258
Total operating costs and expenses
70,052
45,278
196,331
144,320
Operating income (loss)
(17,536
)
79,167
15,909
289,945
Interest expense, net
(1,396
)
(1,224
)
(4,147
)
(4,455
)
Other income, net
14,456
6,168
41,970
8,574
Income (loss) before income
taxes
(4,476
)
84,111
53,732
294,064
Income tax benefit (expense)
200
(20,934
)
(13,166
)
(72,067
)
Net income (loss)
$
(4,276
)
$
63,177
$
40,566
$
221,997
Earnings (loss) per share:
Basic
$
(0.02
)
$
0.36
$
0.23
$
1.26
Diluted
$
(0.02
)
$
0.33
$
0.22
$
1.16
Weighted-average shares
outstanding:
Basic
177,231,717
176,543,624
177,034,068
176,476,276
Diluted
177,231,717
193,409,857
193,632,662
193,438,939
MP MATERIALS CORP. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
For the nine months ended
September 30,
(in thousands, unaudited)
2023
2022
Operating activities:
Net income
$
40,566
$
221,997
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, depletion and
amortization
37,076
12,763
Accretion of asset retirement and
environmental obligations
681
1,255
Accretion of discount on short-term
investments
(17,334
)
(3,921
)
Loss on disposals of long-lived assets,
net
410
258
Stock-based compensation expense
19,041
25,019
Accretion of debt discount and
amortization of debt issuance costs
2,650
3,153
Revenue recognized in exchange for debt
principal reduction
—
(13,566
)
Deferred income taxes
13,156
62,561
Decrease (increase) in operating
assets:
Accounts receivable
19,676
34,991
Inventories
(25,498
)
(22,386
)
Income taxes receivable
(1,927
)
(3,857
)
Prepaid expenses, other current and
non-current assets
490
1,339
Increase (decrease) in operating
liabilities:
Accounts payable and accrued
liabilities
8,601
(1,271
)
Income taxes payable
(21,163
)
(3,463
)
Other current and non-current
liabilities
55
(453
)
Net cash provided by operating
activities
76,480
314,419
Investing activities:
Additions to property, plant and
equipment
(188,927
)
(214,332
)
Purchases of short-term investments
(705,241
)
(1,358,390
)
Proceeds from sales of short-term
investments
461,042
313,865
Proceeds from maturities of short-term
investments
769,907
212,000
Proceeds from government awards used for
construction
1,050
5,130
Net cash provided by (used in) investing
activities
337,831
(1,041,727
)
Financing activities:
Principal payments on debt obligations and
finance leases
(2,101
)
(5,139
)
Tax withholding on stock-based awards
(6,476
)
(14,296
)
Net cash used in financing activities
(8,577
)
(19,435
)
Net change in cash, cash equivalents and
restricted cash
405,734
(746,743
)
Cash, cash equivalents and restricted cash
beginning balance
143,509
1,181,157
Cash, cash equivalents and restricted
cash ending balance
$
549,243
$
434,414
Reconciliation of cash, cash
equivalents and restricted cash:
Cash and cash equivalents
$
547,668
$
427,969
Restricted cash, current
1,228
5,915
Restricted cash, non-current
347
530
Total cash, cash equivalents and
restricted cash
$
549,243
$
434,414
Reconciliation of GAAP Net
Income (Loss) to Non-GAAP Adjusted EBITDA
For the three months ended
September 30,
For the nine months
ended September 30,
(in thousands, unaudited)
2023
2022
2023
2022
Net income (loss)
$
(4,276
)
$
63,177
$
40,566
$
221,997
Adjusted for:
Depreciation, depletion and
amortization
16,751
2,096
37,076
12,763
Interest expense, net
1,396
1,224
4,147
4,455
Income tax expense (benefit)
(200
)
20,934
13,166
72,067
Stock-based compensation expense(1)
6,298
7,806
19,041
25,019
Start-up costs(2)
7,082
1,383
15,474
3,703
Transaction-related and other
non-recurring costs(3)
1,642
502
7,124
638
Accretion of asset retirement and
environmental obligations
227
418
681
1,255
Loss on disposals of long-lived assets,
net(4)
1,087
—
5,897
258
Other income, net(5)
(14,456
)
(6,168
)
(41,970
)
(8,574
)
Adjusted EBITDA
$
15,551
$
91,372
$
101,202
$
333,581
(1)
Principally included in “Selling, general
and administrative” within our unaudited Condensed Consolidated
Statements of Operations.
(2)
Relates to certain costs included in
“Advanced projects, start-up, development and other” within our
unaudited Condensed Consolidated Statements of Operations that do
not qualify for capitalization incurred in connection with the
initial commissioning and starting up of our separations capability
at Mountain Pass and our metal alloy and magnet-making capabilities
at Fort Worth prior to the achievement of commercial production.
These costs include payroll of employees directly involved in 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
develop such 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.
(3)
The majority of the amounts are included
in “Advanced projects, start-up, development and other” within our
unaudited Condensed Consolidated Statements of Operations, and
pertains to legal, professional services, and other costs
associated with non-recurring transactions.
(4)
Amounts for the three and nine months
ended September 30, 2023, principally relate 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)
Principally comprised of interest and
investment income.
Reconciliation of GAAP Net
Income (Loss) to
Non-GAAP Adjusted Net
Income
For the three months ended
September 30,
For the nine months ended
September 30,
(in thousands, unaudited)
2023
2022
2023
2022
Net income (loss)
$
(4,276
)
$
63,177
$
40,566
$
221,997
Adjusted for:
Stock-based compensation expense(1)
6,298
7,806
19,041
25,019
Start-up costs(2)
7,082
1,383
15,474
3,703
Transaction-related and other
non-recurring costs(3)
1,642
502
7,124
638
Loss on disposals of long-lived assets,
net(4)
1,087
—
5,897
258
Other
(1
)
(23
)
(42
)
(247
)
Tax impact of adjustments above(5)
(4,806
)
(2,299
)
(12,684
)
(7,170
)
Release of valuation allowance(6)
—
(2,427
)
—
(2,427
)
Adjusted Net Income
$
7,026
$
68,119
$
75,376
$
241,771
(1)
Principally included in “Selling, general
and administrative” within our unaudited Condensed Consolidated
Statements of Operations.
(2)
Relates to certain costs included in
“Advanced projects, start-up, development and other” within our
unaudited Condensed Consolidated Statements of Operations that do
not qualify for capitalization incurred in connection with the
initial commissioning and starting up of our separations capability
at Mountain Pass and our metal alloy and magnet-making capabilities
at Fort Worth prior to the achievement of commercial production.
These costs include payroll of employees directly involved in 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
develop such 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.
(3)
The majority of the amounts are included
in “Advanced projects, start-up, development and other” within our
unaudited Condensed Consolidated Statements of Operations, and
pertain to legal, professional services, and other costs associated
with non-recurring transactions.
(4)
Amounts for the three and nine months
ended September 30, 2023, principally relate 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)
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 29.8%, 26.7%, 23.8% and 24.4% for the
three and nine months ended September 30, 2023 and 2022,
respectively.
(6)
Reflects the impact of a release of a
portion of our valuation allowance.
Reconciliation of GAAP Diluted
Earnings (Loss) per Share to
Non-GAAP Adjusted Diluted
EPS
For the three months ended
September 30,
For the nine months ended
September 30,
(unaudited)
2023
2022
2023
2022
Diluted earnings (loss) per
share
$
(0.02
)
$
0.33
$
0.22
$
1.16
Adjusted for:
Stock-based compensation expense
0.03
0.04
0.10
0.13
Start-up costs
0.04
0.01
0.08
0.02
Transaction-related and other
non-recurring costs
0.01
—
0.04
—
Loss on disposals of long-lived assets,
net
0.01
—
0.03
—
Tax impact of adjustments above(1)
(0.03
)
(0.01
)
(0.07
)
(0.03
)
Release of valuation allowance
—
(0.01
)
—
(0.01
)
Adjusted Diluted EPS
$
0.04
$
0.36
$
0.40
$
1.27
Diluted weighted-average shares
outstanding(2)
177,231,717
193,409,857
193,632,662
193,438,939
Assumed conversion of restricted
stock(3)
582,144
—
—
—
Assumed conversion of restricted stock
units(3)
438,803
—
—
—
Adjusted diluted weighted-average
shares outstanding(2)(3)
178,252,664
193,409,857
193,632,662
193,438,939
(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 29.8%, 26.7%, 23.8%, and 24.4% for the
three and nine months ended September 30, 2023 and 2022,
respectively.
(2)
The Convertible Notes were antidilutive
for both generally accepted accounting principles in the United
States (“GAAP”) purposes and for purposes of calculating Adjusted
Diluted EPS for the three months ended September 30, 2023.
(3)
The assumed conversion of restricted stock
and restricted stock units was antidilutive for GAAP purposes for
the three months ended September 30, 2023. For purposes of
calculating Adjusted Diluted EPS, we have added back the assumed
conversion of restricted stock and restricted stock units 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
September 30,
For the nine months ended
September 30,
(in thousands, unless otherwise stated,
unaudited)
2023
2022
2023
2022
Cost of sales (excluding depreciation,
depletion and amortization)
$
22,217
$
22,417
$
69,137
$
67,682
Adjusted for:
Stock-based compensation expense(1)
(842
)
(889
)
(2,759
)
(2,110
)
Shipping and freight
(1,867
)
(3,796
)
(6,150
)
(10,548
)
Other
(968
)
(89
)
(1,582
)
(1,225
)
Production Costs(2)
18,540
17,643
58,646
53,799
Divided by:
REO Sales Volume (in MTs)
9,177
10,676
29,663
32,382
Production Cost per REO MT (in
dollars)(2)
$
2,020
$
1,653
$
1,977
$
1,661
(1)
Pertains only to the amount of stock-based
compensation expense included in “Cost of sales” within our
unaudited Condensed Consolidated Statements of Operations.
(2)
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, November 2, 2023. 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 access number 294962. 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 words such as
“estimate,” “plan,” “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 continued demand for rare earth markets
and the market for rare earth materials generally, future demand
for electric vehicles and magnets, estimates and forecasts of our
results of operations and other financial and performance metrics,
the Company’s ability to control costs, 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; risks related to our Stage II
operations and our ability to separate 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; 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 our assumptions prove
incorrect, actual results could differ materially from the results
implied by these forward-looking statements. The Company does not
intend to update publicly any forward-looking statements 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, 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; start-up costs; transaction-related and other
non-recurring 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 as GAAP net income or loss excluding the impact of
stock-based compensation expense; start-up costs;
transaction-related and other non-recurring 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 (“EPS”) excluding the per share impact, using adjusted
diluted weighted-average shares outstanding, of stock-based
compensation expense; start-up costs; transaction-related and other
non-recurring 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, 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, 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, and
Adjusted Diluted EPS provide an additional tool for investors to
use in evaluating projected operating results and trends.
Furthermore, MP Materials believes Production Cost per REO MT sold,
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 a key
indicator of the Company’s concentrate production efficiency.
As MP Materials continues to evolve as a business and
transitions from a producer of rare earth concentrate to a producer
of separated rare earth products upon completing the commissioning
of the Company’s Stage II project, the metrics that management
anticipates using to evaluate the business may change or be
revised. For example, in completing the transition to separated
rare earth products, management may determine that Production Cost
per REO MT, which is a metric focused solely on Stage I concentrate
operations, and consequently, Production Costs, are no longer
meaningful in evaluating and understanding the Company’s business
or operating results.
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.
Our 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231102969476/en/
Investors: IR@mpmaterials.com
Media: Matt Sloustcher media@mpmaterials.com
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