REO Sales and Production Volumes of 10,215 and
10,671 Metric Tons, Respectively
Revenue of $95.7M and Net Income of $37.4M
Adjusted EBITDA of $58.7M
Diluted EPS of $0.20 and Adjusted Diluted EPS
of $0.27
MP Materials Corp. (NYSE: MP) (“MP Materials” or the “Company”),
today announced financial results for the three months ended March
31, 2023.
“MP continued to advance the multiple streams of our business
during the quarter despite weaker recent commodity pricing,” said
Chairman and CEO James H. Litinsky. “At Mountain Pass, we sustained
strong production and sales volumes while simultaneously
commissioning additional Stage II circuits and moving closer to
producing separated rare earth materials. In addition, construction
and engineering of our Stage III magnet facility continues at a
rapid pace, bringing the restoration of the full magnetics supply
chain closer to fruition.”
First Quarter 2023 Financial and Operational
Highlights
For the three months ended
March 31,
2023 vs. 2022
(unaudited)
2023
2022
Amount Change
% Change
Financial Measures:
(in thousands, except per share
data)
Revenue(1)
$
95,700
$
166,258
$
(70,558
)
(42
) %
Net income
$
37,447
$
85,551
$
(48,104
)
(56
)%
Adjusted EBITDA(2)
$
58,700
$
132,257
$
(73,557
)
(56
) %
Adjusted Net Income(2)(3)
$
51,327
$
94,043
$
(42,716
)
(45
)%
Diluted EPS
$
0.20
$
0.45
$
(0.25
)
(56
)%
Adjusted Diluted EPS(2)
$
0.27
$
0.49
$
(0.22
)
(45
)%
Key Performance Indicators:
(in whole units or dollars)
REO production volume (MTs)
10,671
10,828
(157
)
(1
)%
REO sales volume (MTs)
10,215
11,706
(1,491
)
(13
)%
Realized price per REO MT(2)
$
9,365
$
13,818
$
(4,453
)
(32
)%
Production cost per REO MT(2)
$
1,978
$
1,594
$
384
24
%
(1)
The vast majority of our revenue pertains
to product sales of our rare earth concentrate.
(2)
See “Use of Non-GAAP Financial Measures”
below for the definitions of Adjusted EBITDA, Adjusted Net Income,
Adjusted Diluted EPS and Production Costs, which is used in the
calculation of production cost per REO MT. See tables below for
reconciliations of non-GAAP financial measures to their most
directly comparable GAAP financial measures. The definition of
realized price per REO MT is also included in “Use of Non-GAAP
Financial Measures” below.
(3)
Effective September 30, 2022, the Company
no longer excludes depletion expense for purposes of calculating
and presenting Adjusted Net Income, and has retroactively revised
the prior year period for comparability purposes.
Revenue decreased 42% year-over-year, driven by a 32% decrease
in the realized price of rare earth oxide (“REO”) in concentrate as
well as a 13% decline in sales volumes. The change in realized
price reflects a softer pricing environment for rare earth products
as compared to the prior year period when recent pricing peaked.
Metric tons (“MT”) of REO sold in the quarter declined
year-over-year mainly due to the timing of shipments, which
fluctuate quarter-to-quarter but have approximated production
volumes over time.
Adjusted EBITDA decreased 56% year-over-year, driven by lower
per-unit profitability, a decrease in sales volumes, 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 as we expand
our workforce and ready our facilities to support separated rare
earth (Stage II) production. Production cost of $1,978 per MT of
REO increased 24% year-over-year, mainly due to the scale benefits
of higher sales volumes in the prior year period, as well as higher
payroll costs, primarily as a result of increased headcount
discussed above and higher costs of materials and supplies.
Adjusted Net Income decreased by 45% year-over-year to $51.3
million, mainly due to the lower Adjusted EBITDA, 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 56% year-over-year, primarily due to the
factors driving the lower Adjusted Net Income discussed above, as
well as costs incurred to support growth initiatives, start-up
costs, and costs associated with the removal of legacy facilities
at Mountain Pass. These impacts were partially offset by lower
stock-based compensation expense compared to the prior year period,
mainly due to the accounting impact of accelerated amortization of
certain equity grants.
Diluted earnings per share (“EPS”) decreased 56% year-over-year
to $0.20, in line with the lower net income discussed above.
Adjusted Diluted EPS decreased 45% to $0.27 in line with the
decrease in Adjusted Net Income discussed above.
MP MATERIALS CORP. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
For the three months ended
March 31,
(in thousands, except share and per
share data, unaudited)
2023
2022
Revenue:
Product sales
$
95,666
$
161,755
Other sales
34
4,503
Total revenue
95,700
166,258
Operating costs and expenses:
Cost of sales (excluding depreciation,
depletion and amortization)
24,216
23,173
Selling, general and administrative
19,403
20,308
Advanced projects, start-up, development
and other
8,280
1,818
Depreciation, depletion and
amortization
8,122
5,260
Accretion of asset retirement and
environmental obligations
227
418
Loss on sale or disposal of long-lived
assets, net
2,490
257
Total operating costs and expenses
62,738
51,234
Operating income
32,962
115,024
Interest expense, net
(1,359
)
(1,905
)
Other income, net
13,693
194
Income before income taxes
45,296
113,313
Income tax expense
(7,849
)
(27,762
)
Net income
$
37,447
$
85,551
Earnings per share:
Basic
$
0.21
$
0.49
Diluted
$
0.20
$
0.45
Weighted-average shares
outstanding:
Basic
176,881,723
176,355,566
Diluted
193,613,539
193,490,330
Reconciliation of GAAP Net
Income to
Non-GAAP Adjusted
EBITDA
For the three months ended
March 31,
(in thousands, unaudited)
2023
2022
Net income
$
37,447
$
85,551
Adjusted for:
Depreciation, depletion and
amortization
8,122
5,260
Interest expense, net
1,359
1,905
Income tax expense
7,849
27,762
Stock-based compensation expense(1)
7,013
9,773
Start-up costs(2)
4,564
1,508
Transaction-related and other
non-recurring costs(3)
3,322
17
Accretion of asset retirement and
environmental obligations
227
418
Loss on sale or disposal of long
lived-assets, net
2,490
257
Other income, net(4)
(13,693
)
(194
)
Adjusted EBITDA
$
58,700
$
132,257
(1)
Principally included in “Selling, general
and administrative” within our unaudited Condensed Consolidated
Statements of Operations.
(2)
Relates to certain costs 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 amount for the three
months ended March 31, 2023, is 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)
Amount for the three months ended March
31, 2023, is principally comprised of interest and investment
income.
Reconciliation of GAAP Net
Income to
Non-GAAP Adjusted Net
Income
For the three months ended
March 31,
(in thousands, unaudited)
2023
2022
Net income
$
37,447
$
85,551
Adjusted for:
Stock-based compensation expense(1)
7,013
9,773
Start-up costs(2)
4,564
1,508
Transaction-related and other
non-recurring costs(3)
3,322
17
Loss on sale or disposal of long-lived
assets, net
2,490
257
Other
(20
)
(194
)
Tax impact of adjustments above(4)
(3,489
)
(2,869
)
Adjusted Net Income(5)
$
51,327
$
94,043
(1)
Principally included in “Selling, general
and administrative” within our unaudited Condensed Consolidated
Statements of Operations.
(2)
Relates to certain costs 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 amount for the three
months ended March 31, 2023, is 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)
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 20.1% and 25.3% for the three months ended
March 31, 2023 and 2022, respectively.
(5)
Effective September 30, 2022, the Company
no longer excludes depletion expense for purposes of calculating
and presenting Adjusted Net Income, and has retroactively revised
the prior year period for comparability purposes.
Reconciliation of GAAP Diluted
EPS to
Non-GAAP Adjusted Diluted
EPS
For the three months ended
March 31,
(unaudited)
2023
2022
Diluted EPS
$
0.20
$
0.45
Adjusted for:
Stock-based compensation expense
0.04
0.05
Start-up costs
0.02
0.01
Transaction-related and other
non-recurring costs
0.02
0.00
Loss on sale or disposal of long-lived
assets, net
0.01
0.00
Tax impact of adjustments above(1)
(0.02
)
(0.02
)
Adjusted Diluted EPS
$
0.27
$
0.49
Diluted weighted-average shares
outstanding
193,613,539
193,490,330
(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 20.1% and 25.3% for the three months ended
March 31, 2023 and 2022, respectively.
Reconciliation of GAAP Cost of
Sales to
Non-GAAP Production
Costs
For the three months ended
March 31,
(in thousands, unless otherwise stated,
unaudited)
2023
2022
Cost of sales(1)
$
24,216
$
23,173
Adjusted for:
Stock-based compensation expense(2)
(1,122
)
(715
)
Shipping and freight
(2,288
)
(3,244
)
Other
(603
)
(556
)
Production Costs(3)
20,203
18,658
Divided by:
REO sales volume (in MTs)
10,215
11,706
Production cost per REO MT (in
dollars)(3)
$
1,978
$
1,594
(1)
Excluding depreciation, depletion and
amortization.
(2)
Pertains only to the amount of stock-based
compensation expense included in cost of sales.
(3)
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, May 4, 2023. To access
the conference call, participants should dial 1-833-470-1428 and
international participants should dial 1-929-526-1599 and enter the
conference access number 035013. 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 Twitter, 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, 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. 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 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 rollout of the Company’s business strategy, including Stage II
and Stage III, and the timing of achieving expected business
milestones; 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. We define Adjusted EBITDA as our
GAAP net income 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 sale or disposal of
long-lived assets; and other income or loss. Adjusted Net Income is
defined as our GAAP net income excluding the impact of stock-based
compensation expense; start-up costs; transaction-related and other
non-recurring costs; gain or loss on sale or disposal of long-lived
assets; and other items that we do not consider representative of
our underlying operations; adjusted to give effect to the income
tax impact of such adjustments. Adjusted Diluted EPS is defined as
GAAP diluted earnings per share (“EPS”) excluding the per share
impact, using GAAP diluted weighted-average shares outstanding as
the denominator, of stock-based compensation expense; start-up
costs; transaction-related and other non-recurring costs; gain or
loss on sale or disposal of long-lived assets; and other items that
we do not consider representative of our underlying operations;
adjusted to give effect to the income tax impact of such
adjustments. Our key performance indicator, realized price per REO
MT, is calculated as the quotient of: (i) our GAAP product sales
for a given period and (ii) our REO sales volume for the same
period. As we no longer expect to receive any additional tariff
rebates, as we have historically, we no longer utilize Total Value
Realized, which was a non-GAAP financial measure, as the numerator
in the calculation of realized price per REO MT. Production Costs,
which we use to calculate our key performance indicator, production
cost per REO MT, is defined as our 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 attributable to certain other sales, for a
given period. Production cost per REO MT is calculated as the
quotient of: (i) our Production Costs for a given period and (ii)
our REO sales volume for the same 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 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. MP Materials believes
realized price per REO MT is an important measure of the market
price of the Company’s concentrate product. 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. As we
evolve as a business and transition from a producer of rare earth
concentrate to a producer of separated rare earth products upon
completing the commissioning of our 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, we 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 our business or
operating results. 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230504005193/en/
Investors: IR@mpmaterials.com
Media: Matt Sloustcher media@mpmaterials.com
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