$MP MP Materials Q1 2026 Earnings Conference Call

Hello and welcome to the MP Materials Q1 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 Shien, head of investor relations. Mr. Shien, you may begin.

Thank you, operator, and good afternoon, everyone. Welcome to the MP Materials first 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 presentation. Any reference in our discussion to EBITDA means adjusted EBITDA and tons means metric tons. Finally, the earnings release and the slide presentation are available on our website. With that, I'll turn the call over to Jim. Jim,

Thanks, Jim. At the consolidated level, the company generated $132.9 million of revenue and PPA income, representing a 28% sequential increase from the fourth quarter, along with $36.6 million of adjusted EBITDA. These results were driven by the record NdPr oxide sales volumes, higher market prices, and PPA income. These factors also drove adjusted diluted EPS to 3 cents per share compared to a loss of 12 cents per share in the first quarter of last year. On a sequential basis, adjusted EBITDA declined modestly, primarily reflecting the composition of PPA income in the prior quarter. As of March 31st, we had approximately 815 tons of NdPr oxide and metal on hand, in transit at toll processors, or waiting for shipment. Regarding pricing, most contracts continue to price on approximately a one-quarter lag to prevailing NdPr market prices, with shipment timing driving some puts and takes. Based on our current view of sales mix and timing, we expect second quarter realized pricing to be in the low to mid-90s per kilogram, with the PPA agreement mostly offsetting any difference between our realized price and the $110 per kilogram floor. As concentrate production available for stockpiling continues to decline with the ongoing ramp-up of our mid-stream operations, and with NdPr market prices remaining close to or above the $110 per kilogram floor, we do not expect to generate a material amount of PPA income from stockpiled concentrate in the coming quarters. Turning to magnetics, as Jim noted, the segment delivered another solid quarter of revenue and EBITDA performance. This leaves approximately $62 million of prepaid revenue to be earned for magnetic precursor products over the next four quarters on a modestly declining basis quarter to quarter. Once this prepayment is fully recognized, we would no longer expect to produce such products for external sale and instead will dedicate metal production capacity towards our needs for the manufacture and delivery of finished magnets. We continue to expect initial magnet revenue in the second half of 2026, beginning with modest deliveries as capacity ramps over the following several quarters. While financials quarter-to-quarter will be impacted by the eventual rolloff of precursor product deliveries, the early scaling of magnet production, timing of certain product testing milestones at our customer, as well as investments in our team and product development capabilities in the short term, we are setting the stage for scaled manufacturing for and strong financial performance from our marquee contracts with GM, Apple, and the Department of Defense. We remain very pleased with the progress from the team and the significant strategic and financial opportunity in magnetics where our scaled vertical platform meaningfully sets us apart. Regarding cash flow, capex in the quarter was $77.4 million, with about 60% attributable to the magnetic segment. Second quarter capex will step up meaningfully as we acquired the 10X site, broke ground, and are accelerating construction. We continue to expect full-year capex of $500 to $600 million. Lastly, we ended the quarter with $1.7 billion of cash and short-term investments on the balance sheet. Together with strong operating cash flow, this fully funds our long-term capital plan and preserves our fortress balance sheet. With that, let me turn the call over to Michael. Michael,

Thanks, Ryan. As discussed, we delivered a solid quarter of production at Mountain Pass, with concentrate recovery and grade performing particularly well. That performance stands out even as we continue to experiment with new processes and across different components of our ore body. These efforts are yielding valuable insights that are informing operational optimizations, and we are encouraged by the potential to translate those learnings into sustained performance gains. In our mid-stream operation, prior process enhancements contributed to strong NdPr production during the quarter. Importantly, we see meaningful opportunity for improvement across roasting and leaching and product finishing circuits. Over time, we expect these initiatives to increase production volumes and reduce costs. As planned, we successfully concluded our semiannual maintenance outage in April, which included installation and commissioning periods associated with several projects. These projects caused a slightly slower resumption to normal production, and as such, we expect to achieve a single-digit quarter-over-quarter decline in NdPr oxide production in Q2, followed by significant sequential growth in Q3 as the benefits are fully realized over a full three-month period. Following the commissioning of the remaining commercial-scale processes at Independence in Q4, we are now focused on ramping the facility, driving throughput, improving yields, and ultimately stabilizing operations. This is detailed, painstaking work that takes time to fully optimize, but we are making good progress. We have a strong and growing team in place, and the core processes are translating effectively from development into production. The magnetic performance of our commercial magnets is meeting customer specifications, confirming that the system is operating as intended at scale. In parallel with the commercial ramp, our product development efforts are advancing. This includes new magnet grades and specifications with improved underlying chemistry, including materially reduced heavy rare earth content. This work is aligned with customer programs including Apple and the Department of Defense. As our magnet recipe roadmap expands, we are positioning the platform to address a broad portion of the commercial market, including emerging applications such as robotics, drones, and defense with meaningfully reduced and in some cases no heavy rare earth content. Back at Mountain Pass, we expect to begin recommissioning the first phase of our chlor-alkali capability in short order, representing an important resiliency and efficiency opportunity. While our primary reagents, hydrochloric acid and sodium hydroxide, are available domestically and are not directly impacted by recent global supply chain disruptions, chlor-alkali provides a compelling opportunity to further reduce external dependencies, lower our environmental footprint, and reduce costs over time. Our heavier earth separation circuit remains on schedule to begin commissioning in Q2 and to produce terbium and dysprosium later this year. In addition to those products, the circuit will generate two intermediate feed streams: mixed samarium-europium-gadolinium and holmium-thulium-plus-yttrium concentrate that we can either store for future separation or sell to third parties, supporting broader supply chain development. Under our agreement with the Department of Defense, we are committed to producing high-purity samarium oxide, and we continue to make steady progress on plans for that product alongside the potential for gadolinium oxide production and other attractive HREE product capabilities. Separately, our magnet recycling line in Mountain Pass, developed in support of our Apple agreement, has completed conceptual design and is further advancing engineering and procurement. This line represents both an important strategic asset and a compelling business opportunity, closing the loop on our end-to-end capabilities and creating an incremental source of third-party feedstocks containing both light and heavy rare earths. In addition to breaking ground at 10X, our expansion efforts at Independence towards 3,000 metric tons of annual magnet capacity, also in support of our Apple agreement, continues to advance. Design is nearing completion, all major equipment is now on order, and we remain on track to achieve our targeted startup production dates. Overall, this was a very solid quarter of execution across the business. We delivered stable upstream performance, continued to advance our mid-stream operations, confirmed the viability of our commercial magnet processes, and made steady progress across a broad set of growth initiatives. As we move through the remainder of the year, our focus remains on disciplined execution, applying what we learn, and converting that progress into higher output, lower costs, and an increasingly integrated operation. I'm encouraged by where we are, continuously impressed by the ingenuity and grit of our team, and optimistic about the path forward. With that, I will turn it back to Jim.

Thank you. At this time, if you'd like to ask a question, please click on the raised hand button, which can be found on the black bar at the bottom of your screen. When it is your turn, you'll receive a message on your screen from the host allowing you to talk, and then you'll hear your name called. Please accept, unmute your audio, and ask your question. We'll wait one moment to allow the queue to form. We'll take our first question from George Rokus with Canaccord Genuity. Please unmute your line and ask a question.

Hi everyone. Can you hear me? Yes. Hey George. Oh, hey. Thank you for taking my questions. Jim, you just sort of addressed this and I'm sure you've noticed, but there's now a lot of momentum outside of MP to build a western magnetic set of champions, and you've been on the journey for some time. And as you move toward your 10,000-ton target, how would you characterize the knowledge or operational moat you've built through stages one and three? And specifically, if you're a greenfield competitor today, what are the primary set of barriers to catching up?

It's okay to pitch Adamas, it's so great. And just one quick follow-up. How are you adjusting, if at all, your metalization strategy as you ramp production in magnets? Thank you.

Sure. Yeah, thanks, George. Our view is to have a hybrid approach where we continue to operate and expand our capability at Independence. We will have capability at 10X, and we're talking to domestic and international partners on further metalization. We currently utilize certain toll processors, and we expect to continue to use that while we look at other, you know, low-cost metalization options around the world.

Thanks. Thanks.

Next question. Our next question comes from Brian Lee with Goldman Sachs. Please go ahead and ask your question.

Hey guys, how's it going? Thanks for taking my questions. I guess first question I had was just around the materials segment EBITDA margins. They were pretty healthy here, maybe ahead of expectations. Would you say that's fair? And you know, is that related to better price or are you seeing anything on the cost side as well? Maybe if you can walk us through some of the puts and takes, and then also how to think about, you know, EBITDA margins off these levels going forward as, you know, as volumes ramp.

Yeah. Hey, Brian, it's Ryan. Thanks for the question. I think as we look at the performance in the materials segment, you know, certainly we were pleased with Michael and his team's ability to continue to ramp production ahead of expectations there. So, you know, I think that's great. We also had a very successful sales quarter. As we've talked about in the past, you know, there are always quarterly puts and takes on shipment timing as it relates to, you know, sales recognized ultimately in that three-month period, but certainly with the, you know, exciting new partner we announced last quarter, you know, we were able to start deliveries into that contract as well. And so that drove some incremental strength in sales volumes. You know, I think that we continue to see a clear path to us pulling costs out of that business. You know, we see no material change to the trajectory that we've laid out as we get ultimately to run-rate volumes and stably operating at run-rate volumes. And so, you know, we still continue to march towards that. You know, we have work to do there, but I think that the path is quite clear. So I don't expect that there's really anything in this quarter that, you know, caught us materially by surprise. I think we're really just heads down in execution mode, continuing to move towards our ultimate targeted throughput and targeted cost structure.

Okay, great. Helpful. Appreciate that. And then maybe just bigger picture, you know, a lot of good operational milestones here and discussion, but on the customer development side, I know, you know, last quarter you had announced a new customer. I know it's not reasonable to assume a new customer every quarter, but can you speak to kind of where the engagement activity levels are and then kind of how you're looking to secure more offtakes and maybe what types of customers you're most engaged with here? Thank you.

All right, makes sense. I'll pass it on. Thanks, guys.

Our next question comes from Corin Blanchard with Deutsche Bank Research. Please go ahead with your question.

Hey, good afternoon, guys. Thank you for taking my question. Can you maybe talk about the cadence of production that you're expecting for the rest of the year? And then my second question would be maybe like a general view on, you know, the Middle East conflict, any change in customer approach or demand. Thank you.

Okay. Great. Thanks. As I mentioned in my prepared remarks, we expect production of NdPr in the second quarter to be down slightly quarter-over-quarter. We do expect the third quarter to show a material improvement again. And then I expect continued progress towards reaching our 500-ton-per-month run rate by the end of this year. So no real change to what we previously discussed.

Thank you. As a reminder, if you would like to ask a question, please click on the raise hand button which can be found on the black bar at the bottom of your screen. We'll take our next question from Lawson Wind with Bank of America Securities. Please go ahead with your question. Lawson, please go ahead with your question.

Okay. Thank you very much, operator. Good evening, gentlemen. Nice quarter, great update with Independence. The ramp up appears to be going extremely well. At this point, I expect you to be somewhat close to knowing a sensible timeline to reaching nameplate capacity of a thousand tons on the first phase. Is that something you could start to guide us to now? And then I have a follow-up on that one.

And a follow up on that would just be thinking about 10X and really the second part of Independence with Apple. I mean, how would you frame the timing of the next phase and then 10X given the first of Independence learnings that you've already had at Independence?

Thank you very much. Our next question comes from Bill Peterson with JP Morgan. Please unmute your line and ask your question.

Yeah. Hi, good afternoon. Thanks for taking the question and nice job on the quarterly execution. I want to ask a few questions just as sort of follow-ups but maybe with some more precision on some previously asked questions. So, taking the cost side. So, a year ago you had a cost bridge outlining a target to drive cost from over $60 per kilogram down to 40 on higher utilization fixed cost absorption as well as benefits from the chlor-alkali. You discussed the chlor-alkali earlier, but as a snapshot, I wanted to check on where you are on that journey. Notwithstanding the second quarter impact from downtime as well as your path to get to that prior target.

Yeah, sure, Bill. It's Ryan. Thanks for the question. I think as I laid out before, with all of the inputs we sort of put into that guidance, we don't see any meaningful deviation from our ultimate plan. I think if you think about taking a snapshot in time in any given quarter making let's call it roughly a thousand tons last quarter there are a lot of different ways to make a thousand tons, some are lower cost some are higher cost and I think certainly as we move towards stably producing at our run rate target that is going to unlock that operating leverage that we've talked about. Within any single quarter there are a lot of moving pieces on investing in this debottlenecking as we speak and then certainly I think one of the impacts that you're seeing right now where you don't have perfect visibility into the standalone NDPR operation is the fact that we're investing quite heavily, that shows up in the P&L in ramping staffing for the heavy separation facility as well as getting ahead of ramping for team and tools for that chlor-alkali plant ahead of it being online. And so when you fast forward over the next several quarters, you combine getting to our targeted throughput and you bring these operations online is when you'll really start to see the leverage flow through.

Yeah. Thanks for that context. And then maybe following up on Lawson's question. So like to clarify the magnet revenue trajectory for the balance of the year into next year, taking into consideration the declining pure precursor sales ahead of the finished magnet ramp for your customer. So I guess in essence, should we assume overall revenues in the magnet segment would decline at some point in the back half of the year early next year before ramping as the finished magnets ramp? Just trying to get a sense for how we should model that business from revenue side.

Yeah, look, I think what we see right now is obviously getting through the PPAP process is going to unlock moving into revenue on the magnet side. The reality is we are producing behind the scenes, but we need to get into a salable PPAP status to start recognizing revenue there. And so certainly, I think we gave you the moving pieces of the remaining deferred revenue that will roll off and sort of start to decline sequentially. And then, we are working as quickly as we can to pick up the delta there on the magnet side. But we'll keep you updated as we get through these next couple of quarters. I think the reality for us is zooming out for a second certainly heads down executing there's going to be lumpiness in the next several quarters but if you look at sort of how Jim explained where we are in this business, the operation that we see right now, magnetic characteristics of our parts are performing extremely well and so we've proven out at this point that we can take what we've done on smaller scale and scale it up and so it's just a matter of time. And so, we're looking forward obviously to layering in increasing volumes once we're through the PPAP process, bringing in our next set of customers. And so, over the next several quarters, that financial model will certainly start to play out.

Yeah, thanks Ryan and thanks to the team for all the insights.

Our next question comes from Davis Sunderland with Baird. Please go ahead with your question.

Hey, good evening guys. Thank you for the time. I appreciate you taking my questions. I actually wanted to start by going back to one of the parts of Lawson's question as well, just on 10X. Ryan, appreciate you talking about the learnings and wondering if you guys could just expand maybe on how the learnings from Independence might make 10X more efficient on a dollars per capacity basis or timeline or any other metrics on how version 2.0 might be better than the first, if you will.

Sure. Well, certainly we've learned a huge amount over the last couple of years in designing, building, and then ramping new facilities. So, there's a lot of engineering that can be to some extent copy and paste. We don't need to reestablish certain vendor relationships. We leverage the existing knowledge. So, the design process will be a lot faster and less prone to mistake, change order, rework, etc. So, certainly the pace of engineering design construction will be a lot faster than expected. We also think the ramp of Independence over starting last year and through this year and beyond will give us tremendous insight into knowing great magnets, driving cost down. And so that will be applied from day one into operation of 10X. And the fact that our teams will be able to travel between the two different sites will enable us to leverage that knowledge without having to rebuild at all. So we certainly expect 10X to be significantly smoother in terms of startup than we will look back on for Independence. But of course the scale that we're doing, additional products, complexity, there'll be no doubt its share of challenges as well.

Super helpful. Thank you both. And maybe just one more maybe a boring housekeeping question, but probably for you, Ryan. I just wonder if you could talk at all about contract adjusters or any other inflation protection mechanisms you guys might have to I guess mitigate the impact of increased shipping and logistics cost or maybe this will manifest in a longer than typical sales leg or any other considerations there and thank you guys very much.

Sure. Yeah, as it relates to the materials segment at least, the shipping and logistics component at least from sort of a cost of fulfillment perspective is extremely minimal relative to the cost of the product. And so even with sort of inflation out there in logistics costs I don't expect that to be a material driver of the business. As it relates to the cost structure in materials, certainly, we've heard other producers, particularly those that are relying on sulfuric for their process talk about challenges and cost challenges there. I think we're fortunate that, as Michael mentioned, those are not the materials that we use in our process. And so, of course, we're not immune from sort of general inflation. Gasoline and diesel certainly are used in our mining fleet, but that is a very small proportion of the cost structure. And so overall there we feel pretty good. And then magnetics is sort of a bit of a different beast in terms of the way we've set up the contracting. I would say that without getting into details of individual contracts we have always been thoughtful about protecting ourselves from raw material price increases wherever they come from. Any type of raw materials. And so we feel quite good about how we've contracted around that.

Our next question comes from Max Geral with... Please unmute your line and ask your question. We'll take the next question from Sam Brandis with Redbush Securities. Please unmute your line and ask a question.

Hi. Can you guys hear me? Okay.

Hey. So Jim, with your framing as NDPR oxide as the binding constraint for non-China magnet production over the next five plus years, it's definitely compelling with 6,000 tons announced scaling towards 100,000 plus limited feedstock. With Independence essentially spoken for between GM and Apple as you guys mentioned and 10X building out, how are you thinking about the right balance between locking in additional long-term offtake agreements and also preserving optionality to capture pricing and margin as the supply and demand balance.

Great. No, that was very helpful. And to kind of follow up, so you framed the physical AI, drones, robotics, autonomous defense systems as another step change demand accelerant for the industry and for MP Materials in particular. As you talk to customers across these emerging verticals, how are you sizing incremental NDPR demand pull from physical AI relative to the more established EV and traditional defense channels and how does that reshape how you're thinking about 10X capital allocation and the pace of sub expansion beyond that?

Thank you very much. That was extremely helpful.

Our last question comes from Carlos Alba with Morgan Stanley. Please go ahead and ask your question.

Yeah, thank you very much. Can you hear me?

Great. Hey, thanks Jimmy. So just Jim, sorry just one question. Given the discrepancy between supply and demand that you just alluded to, a very strong outlook for NDPR. Have you assessed what the incentive price would be for NDPR capacity or supply to possibly respond to the demand that we see ahead of us?

Yeah, that makes sense. It's very clear what you alluded to. Thank you for that. Maybe look it was a very solid quarter, right? Maybe the only thing that I would say is cash from operations surprised a little bit to the downside. Maybe we should have just been smarter given the pace in which the company is right now. How do you see that in the coming quarter so that maybe we fine-tune our model more closely to reality.

Yeah. Hey Carlos, it's Ryan. I'd say in general Q1 tends to be our weakest working capital cash flow quarter. There's a lot of, prepayments for certain things that occur in the first quarter of the year. Employee compensation, all of those sorts of things from a working capital perspective end up being a drag in Q1 that's not really repeated throughout the rest of the year. Other than that, it's really just puts and takes. Certainly, there are pieces of the earnings pool at this point, and pretty significant amounts of sales that, we're starting to collect on as we speak. And so, it's really just a timing issue of working capital.

All right, fantastic. Thank you very much, Amy. Ryan, strong quarter. Congrats.

This concludes the question and answer portion of today's call. I will now hand the call back to management for closing remarks.