MP Materials Q2 2026 Earnings Call Transcript

MP Materials (NYSE: MP ) reported second-quarter financial results on Thursday. The transcript from the company's second-quarter earnings call has been provided below. This content is powered APIs. For comprehensive financial data and transcripts, visit View the webcast at Summary MP Materials reported strong Q2 2026 results with a 41% year-over-year increase in NdPr production, despite a planned plant shutdown.

The company secured a long-term agreement for gadolinium oxide with a major aerospace and defense manufacturer, expanding its heavy rare earth product portfolio. Revenue for the quarter more than doubled from last year, driven by a 127% increase in NdPr sales volumes, with adjusted EBITDA improving significantly year over year. The Magnetics segment is progressing, with initial commercial magnet deliveries to begin in Q4 2026, supported by strong demand from customers like GM and Apple.

MP Materials continues to advance strategic initiatives, including the development of its TenX facility and Project Swarm, aiming to standardize and secure future magnet manufacturing capacity. Management emphasized the importance of building capabilities for long-term resilience and strategic value, highlighting ongoing investments in infrastructure and partnerships. Full Transcript OPERATOR Hello and welcome to the MP Materials Q2 2026 earnings call. We ask that you please hold all questions until the completion of the formal remarks, as at which time you'll be given instructions for the question and answer session.

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. Martin Sheehan, Sr. Vice President, Investor Relations Thank you, operator. And good afternoon everyone.

Welcome to the MP Materials second quarter 2026 earnings conference call. With me today from MP Materials are Jim Litinsky (Founder, Chairman and Chief Executive Officer) Jim Latinsky, founder, chairman and chief. And increasingly by pairing long term strategic partnerships with contracted cash flows that allow us to keep building through change, we believe that approach allows us to pursue long term opportunities while managing risk along the way. With that, I'll open it up for questions.

OPERATOR Hello and welcome to the MP Materials Q2 2026 earnings call. We ask that you please hold all questions until the completion of the formal remarks, at which time you'll be given instructions for the question and answer session. 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. Martin Sheehan, Sr.

Vice President, Investor Relations Thank you, operator, and good afternoon, everyone. Welcome to the MP Materials second quarter 2026 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 Litinsky (Founder, Chairman and Chief Executive Officer) Thank you, Martin, and 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 and 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. Importantly, 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 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 DyTb circuit and remain on track to begin shipping product from Mountain Pass to Independence later this year. 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 materials 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.

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 magnetics 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 TenX 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 Defense supporting the development of TenX, 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. 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 Corbett, Chief Financial Officer Thanks, Jim. 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. 5 million in the quarter, a $41 million improvement year over year.

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 semiannual 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 kg, leaving PPA income to come in at roughly $10 per kg with market pricing hovering at about $110 per kg. In the first part of Q3, we continue to expect minimal PPA income from stockpiled NdPr contained in concentrate that is stored in inventory, so 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 Defense, as well as other future customers. 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 to $600 million range. 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. Michael Rosenthal, Chief Operating Officer Thanks, Ryan. Operationally, it was another solid quarter across both the Materials and Magnetics divisions as we continued to increase production while investing in the next phase of growth at Mountain Pass.

Results were generally in line with expectations. Upstream production was solid. As we noted on our Q1 call, Q2 included our scheduled semiannual maintenance outage, and results reflected the normal effects of shutdown, maintenance, and restart activities associated with that work. Unrelated projects extended the downtime and that, along with the effects of certain pilot testing, contributed to the year-over-year comparisons.

During the quarter, we advanced several important initiatives in the upstream business, including a full-plant reagent trial that delivered very encouraging results when implemented. We expect this change to sustain current performance while affording a positive impact on reclaimed water quality and providing greater resiliency in our supply chain, albeit at a modestly higher direct cost. We also expanded pilot testing of a new pre-float process that we now anticipate implementing at scale by 2028.

This initiative will improve concentrate quality, but more important benefits may be realized in our midstream circuits with lower operating costs, improved uptime, and higher finished product quality. As I have discussed previously, we continue to look for both traditional and innovative ways to unlock additional value from the world-class Mountain Pass orebody. We are highly encouraged by early exploratory drilling results that suggest the potential for additional ore within the existing pit contours.

Combined with ongoing advancements in flotation performance, a growing ability to manage variability in ore and gangue mineralogy, and several promising ore pre-concentration initiatives, I am increasingly confident in the long-term development potential of this unique asset. More to come on this in the coming quarters. In our midstream operations, performance continues to show significant year-over-year growth and steady sequential improvement. Adjusted for scheduled downtime, most of our circuits are performing very well, and we are seeing encouraging progress across the operation through targeted equipment upgrades and process enhancements.

We are addressing the handful of circuits that continue to present reliability challenges affecting yield and throughput. While intermittent one-off issues occasionally impact production, overall plant reliability, throughput, and operational consistency continue to trend in the right direction. Based on current performance, I expect Q3 NdPr production to exceed 1,000 metric tons. The past three months have been particularly fruitful for our growth initiatives.

In May, we achieved mechanical completion of our first heavy rare earth separation circuit. Since then, the team has been focused on punch list completion, equipment checkouts, and completing initial commissioning activities. We are preparing to introduce feed to the circuit imminently. While the exact ramp will ultimately depend on the realities of commissioning a new circuit at scale and prioritizing quality over quantity, we remain on track to produce terbium and dysprosium later this year.

We also made significant progress on our samarium program, advancing both engineering and procurement, and are planning first production in 2028. As Jim noted, we are excited to have secured a long-term commercial arrangement for gadolinium at attractive economics. Combined with the technical success of an extended pilot campaign, we are now moving forward with engineering and procurement to complete the gadolinium separation project on a similar timeline.

In the quarter, we finished clearing land and demolition of previously retired assets and are planning to break ground this month on an expanded area that will house both magnet recycling and additional heavy rare earth separation and finishing. This marks another important step in expanding the range of products and value-added capabilities at Mountain Pass. Lastly, we continue to make meaningful forward progress on our chlor-alkali recommissioning effort. Several important milestones were achieved during the quarter, including bringing additional brine pretreatment online.

We are already seeing positive results in crystallizer performance, providing an encouraging early indication of the operational benefits we expect the chlor-alkali project to deliver. Our Magnetics operation also had an extremely productive quarter. We made substantial progress in GM customer qualification activities while continuing to scale towards 24/7 production across all major processes. Importantly, we are now demonstrating the capability and consistency required to support our customers' volume ramp, clearing one of the most important milestones in the qualification process.

Achieving these milestones required extraordinary effort across the organization.