MP Materials(MP) - 2025 Q2 - Quarterly Report

PART I—FINANCIAL INFORMATION Financial Statements This section presents MP Materials Corp.'s unaudited condensed consolidated financial statements as of June 30, 2025, detailing financial performance, a strategic shift in sales, and the material impact of subsequent transformative partnerships and capital raises Condensed Consolidated Balance Sheets As of June 30, 2025, total assets were $2.34 billion, a slight increase from $2.33 billion at year-end 2024, while total liabilities increased to $1.33 billion from $1.28 billion, primarily due to a rise in current liabilities Balance Sheet Summary (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total cash, cash equivalents and short-term investments | $753,657 | $850,868 | | Total current assets | $960,395 | $1,031,322 | | Total assets | $2,336,187 | $2,333,558 | | Total current liabilities | $266,867 | $164,019 | | Total liabilities | $1,325,637 | $1,278,678 | | Total stockholders' equity | $1,010,550 | $1,054,880 | Condensed Consolidated Statements of Operations For Q2 2025, revenue significantly increased to $57.4 million from $31.3 million in Q2 2024, driven by new magnetic precursor and higher NdPr sales, resulting in a net loss of $30.9 million, an improvement from $34.1 million in the prior-year quarter Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $57,393 | $31,258 | $118,203 | $79,942 | | Operating loss | $(43,882) | $(53,492) | $(78,660) | $(85,924) | | Net loss | $(30,872) | $(34,055) | $(53,520) | $(17,566) | | Diluted loss per share | $(0.19) | $(0.21) | $(0.33) | $(0.28) | Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2025, net cash used in operating activities significantly increased to $66.9 million, while net cash provided by investing activities was $54.0 million, and net cash used in financing activities was $7.7 million Cash Flow Summary for Six Months Ended June 30 (in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(66,853) | $(10,284) | | Net cash provided by investing activities | $53,977 | $10,970 | | Net cash provided by (used in) financing activities | $(7,734) | $31,366 | | Net change in cash, cash equivalents and restricted cash | $(20,610) | $32,052 | Notes to Condensed Consolidated Financial Statements The notes provide critical details on accounting policies and financial results, highlighting segment reporting, the strategic pivot from China sales, new Magnetics segment revenue, and transformative subsequent events including major partnerships with the DoD and Apple, and a significant public stock offering - The company is organized into two reportable segments: Materials (upstream/midstream operations at Mountain Pass) and Magnetics (downstream manufacturing at the Independence Facility)[29] - In July 2025, the company agreed to cease all future sales of its products to China and will not extend the Shenghe Offtake Agreement, aligning with its domestic supply chain objectives and DoD partnership terms[30][40][128] - The Magnetics segment began generating revenue in Q1 2025 from sales of magnetic precursor products to General Motors[31][95] - Subsequent to the quarter end, the company entered into a transformative public-private partnership with the U.S. Department of Defense (DoD), securing a $400 million equity investment, a 10-year NdPr price floor, and a 10-year magnet offtake agreement for a new facility[151] - The company entered a long-term supply agreement with Apple in July 2025, which includes a commitment for $200 million in prepayments from Apple for the purchase of magnets[150] - In July 2025, the company completed a public stock offering, raising net proceeds of approximately $724 million to fund expansion and growth initiatives[149] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) This section details the company's operational and financial performance, emphasizing a strategic pivot driven by major agreements with the DoD and Apple, a significant capital raise, and the expansion of its domestic, vertically integrated supply chain Results of Operations For Q2 2025, total revenue rose 84% to $57.4 million, driven by new Magnetics segment sales and a 283% increase in NdPr oxide and metal revenue, offsetting a 51% decline in rare earth concentrate revenue due to the halt in China shipments Consolidated Results Summary (in thousands) | Metric | Q2 2025 | Q2 2024 | Change $ | Change % | | :--- | :--- | :--- | :--- | :--- | | Total revenue | $57,393 | $31,258 | $26,135 | 84% | | Cost of sales | $50,431 | $41,463 | $8,968 | 22% | | SG&A | $27,429 | $21,434 | $5,995 | 28% | | Net loss | $(30,872) | $(34,055) | $3,183 | 9% | Revenue by Product (in thousands) | Product | Q2 2025 | Q2 2024 | Change $ | Change % | | :--- | :--- | :--- | :--- | :--- | | Rare earth concentrate | $11,877 | $24,426 | $(12,549) | (51)% | | NdPr oxide and metal | $25,045 | $6,531 | $18,514 | 283% | | Magnetic precursor products | $19,861 | $— | $19,861 | N/M | Segment Results The Materials segment's Q2 2025 revenue increased 20% year-over-year to $37.5 million, driven by a surge in NdPr sales, while the new Magnetics segment generated $19.9 million in revenue and $8.1 million in Segment Adjusted EBITDA Materials Segment KPIs (Q2 2025 vs Q2 2024) | KPI | Q2 2025 | Q2 2024 | Change % | | :--- | :--- | :--- | :--- | | REO Production Volume (MTs) | 13,145 | 9,084 | 45% | | REO Sales Volume (MTs) | 2,658 | 5,839 | (54)% | | NdPr Production Volume (MTs) | 597 | 272 | 119% | | NdPr Sales Volume (MTs) | 443 | 136 | 226% | | NdPr Realized Price per KG | $57 | $48 | 19% | Segment Adjusted EBITDA (in thousands) | Segment | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Materials | $(12,678) | $(17,602) | | Magnetics | $8,089 | $(2,824) | Liquidity and Capital Resources As of June 30, 2025, the company held $753.7 million in cash, cash equivalents, and short-term investments, with its liquidity position substantially bolstered by subsequent events in July 2025, including a significant stock offering and major agreements with the DoD and Apple - As of June 30, 2025, the company had $753.7 million of cash, cash equivalents and short-term investments[253] - The cessation of shipments to China had a material negative impact on short-term results and cash flows, but this is expected to be significantly reduced by the DoD's NdPr price protection beginning in Q4 2025[258] - In July 2025, liquidity was substantially strengthened by ~$724 million from a stock offering, a $400 million DoD equity investment, a $150 million DoD loan, and a $200 million prepayment commitment from Apple[149][150][151] - Planned capital expenditures for 2025 are estimated to be between $150 million and $175 million, net of government awards[261] Quantitative and Qualitative Disclosures About Market Risk The company's primary market risks include commodity price and foreign currency fluctuations, though the new DoD partnership significantly mitigates these through a 10-year NdPr price floor and magnet offtake agreement - The company is exposed to commodity price risk, as its results depend on the market prices of rare earth products, particularly NdPr[297][298] - The DoD partnership significantly mitigates NdPr price risk through a 10-year price floor commitment of $110/kg, commencing in Q4 2025[299] - Foreign currency risk exists as market transactions are mainly denominated in Chinese Yuan. The DoD partnership, with its U.S. dollar-based commitments, helps mitigate this exposure[301][302] Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[304] - No changes occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting[305] PART II—OTHER INFORMATION Legal Proceedings The company is not currently a party to any material legal proceedings, though it is engaged in a dispute with a general contractor scheduled for binding arbitration - The company is currently in a dispute with a general contractor for a construction project, which is scheduled to go to binding arbitration[92] - The company states it is not currently a party to any material legal or governmental proceedings[307] Risk Factors This section highlights new material risks related to the DoD partnership, including potential modifications to the deal, restrictive covenants, shareholder dilution from preferred stock conversion, and challenges in fulfilling obligations under new long-term supply agreements - A new primary risk is that the authorization of and continued support for the DoD Transaction Agreements could be modified, challenged, or impaired in the future, which would have a material adverse effect on the business[309] - The DoD agreements contain affirmative and negative covenants that restrict the company's ability to take certain actions, potentially limiting strategic moves such as sales of assets or equity to certain foreign entities[315] - The conversion of the Series A Preferred Stock and exercise of the Warrant held by the DoD would dilute the ownership of common stockholders[317] - The company faces risks in fulfilling its obligations under major supply agreements with the DoD, Apple, and GM, as it involves constructing and scaling new, complex manufacturing facilities[322] Unregistered Sales of Equity Securities and Use of Proceeds No equity securities were repurchased during the three months ended June 30, 2025, and the company's share repurchase program was terminated in July 2025 - No shares were repurchased during the three months ended June 30, 2025[325] - The company terminated its share repurchase program on July 11, 2025[325][107] Mine Safety Disclosures Mine safety disclosures, as required by the Dodd-Frank Act, are provided in Exhibit 95.1 of this Form 10-Q - Mine safety disclosures required by Regulation S-K are provided in Exhibit 95.1[326] Other Information No directors or executive officers adopted, terminated, or modified Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the second quarter of 2025 - No directors or officers adopted, terminated, or modified a Rule 10b5-1 trading plan during the quarter[327] Exhibits This section lists the exhibits filed with the Form 10-Q, including CEO/CFO certifications, mine safety disclosures, and XBRL data files - Lists exhibits filed with the report, including CEO/CFO certifications and XBRL data[328]