MP Materials Corp. Q3 FY2025 earnings call

• Materials segment delivered an outstanding quarter with NdPr oxide production records and REO/concentrate production at high levels. • Midstream production ramped nicely, targeting throughput towards end of 2026. • Completed semi-annual maintenance turnaround with debottlenecking efforts. • Progressed on heavy rare earth circuit with engineering and equipment procurement, targeting mid-2026 commissioning. • Magnetics segment received Apple prepayment and continued commissioning at Independence towards year-end magnet production start.

In the Materials segment, NdPr oxide production reached 721 metric tons, a 21% sequential increase and 51% year-over-year increase, with 721 metric tons exceeding the high side of the quarter's outlook and marking a record. REO and concentrate production was the second highest in history. Midstream production achieved approximately 50% of the targeted output. Separated product sales volumes had nearly 20% sequential growth and 30% year-over-year growth. In the Magnetics segment, MP received the first $40 million prepayment for magnet production from recycled materials under the Apple agreement, and commissioning at Independence was on track to begin commercial scale magnet production by year-end.

• Expect to return to profitability in Q4 2025. • Targeted throughput for midstream business towards end of 2026. • Anticipate next significant prepayment from Apple in Q4. • Plan to start commissioning heavy rare earth circuit in mid-2026.

• Execution risk related to meeting operational and contractual milestones. • Market dynamics and competition in the rare earths industry posing challenges to maintaining market position and profitability.

Q: Hello, and welcome to the MP Materials Q3 Earnings Call. [Operator Instructions] Also, as a reminder, this conference is being recorded. If you have any objections, please disconnect at this time. With that, I would like to turn the call over to Martin Sheehan, Head of Investor Relations. Mr. Sheehan, you may begin.

A: Thank you, operator, and good afternoon, everyone. Welcome to the MP Materials Third Quarter 2025 Earnings Conference Call. With me today from MP Materials are Jim 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. In addition, 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. Finally, the earnings release and slide presentation are available on our website. With that, I'll turn the call over to Jim. Jim?

Q: Yes. I'm wondering, I guess, with your current stockpile, SEG+ stockpile, how long could that support your heavy production once fully ramped? And I guess you talked about engaging with other heavy feedstock suppliers. Are these foreign suppliers, domestic suppliers? I guess in the context of -- you're mentioning that there's not a lot of viable options out there in terms of orebodies. I wanted to get some more context on what type of feedstocks you may have or maybe if M&A may come into consideration.

A: Yes, Bill, it's Ryan. I'll start and let Michael take some of that. In terms of the SEG+ stockpile, we have several hundred tons on an REO basis of SEG stockpiled. Obviously, we are producing SEG every single day, and so from that perspective, we feel good about our inventory at this time to be available for us to commission that circuit and charge that circuit. And certainly, as we've discussed, we believe, with our own internal feedstock, we will be able to satisfy the demands of the Independence facility with that. I'll turn it over to Michael for the rest of the question.

Q: Nice quarter and once again, a very interesting and fascinating update. May I ask about the -- a couple of things? So just on the heavy rare earths, there's the dysprosium and terbium, 200 kilotons annually. How is that roughly split? And then secondly, on the heavies, there's the samarium loan. As the name implies, there are other rare earths that the DOE would like to access. What's the time line to producing some of those other rare earth metals that are particularly of interest in the DoD. And has the DoD set any deadlines?

A: This is Michael. Thanks for the question. In our orebody, the general ratio of dysprosium to terbium is about 3:1, so that would be kind of the approximate mix. Some of the other third-party feedstocks and recycled material may have slightly different mix, so ultimate production may differ from that to some extent. In terms of other heavy rare earth production, we have made a commitment to produce samarium in 2028, so samarium oxide, and we feel very comfortable with that type of time frame. We have made no sort of public commitments to produce any other heavy rare earth, although gadolinium would be a logical next one to produce probably around the same time frame. As for the others, I think we are eager and in discussions with various other parties domestically and in allied countries about offtake of our other materials for them to process into other rare earths. But to the extent there's strong demand or need, we're capable of doing further separations.

Q: Okay. That's very fascinating. And then can I ask about the Apple $200 million prepayment? I had not expected $40 million to be paid in Q3 so quickly. Can you help us understand a time line under which the remaining $160 million would be prepaid?

A: Sure. It's Ryan. We are thrilled to surprise you to the upside. We can't get into contract specifics, but certainly, the way this was designed was to continue to provide capital for this build-out as we hit certain operational milestones. We actually expect a next payment of relative scale coming up in Q4. And I think that, over time, as we execute on this plan, we've laid out initial magnet volumes targeting mid-'27 and recycling close behind, you'll continue to see those prepayments on that schedule.