Inflection Point Acquisition Corp. II(IPXXU) - 2025 Q2 - Quarterly Results

Executive Summary & Operational Highlights Executive Commentary & Key Operational Highlights USA Rare Earth prepares for early 2026 production at Stillwater magnet facility, with strong customer interest and supply chain focus - USA Rare Earth is seeing a surge of customer interest as it prepares to begin production at its Stillwater, Oklahoma magnet facility in early 2026[1] - The company has signed 12 initial agreements and is actively engaging with over 70 companies, with the potential to sell out its first 1,200-ton production line prior to commissioning[1][4] - Strategic focus on accelerating and strengthening the mine-to-magnet supply chain through targeted internal investments and strategic opportunities[1] - Operational milestones include the Stillwater, Oklahoma magnet facility being on track for 1Q26 commissioning and successful extraction of gallium and heavy rare earth concentrates from the Round Top deposit[4] - The company expanded its team with key talent in engineering, sales, manufacturing, and finance[4] Financial Performance Overview GAAP Financial Highlights Q2 2025 net loss and loss from operations increased significantly due to financial instrument fair value loss, despite a strong cash balance | Metric | Q2'2025 (QTD, In thousands) | Q2'2024 (QTD, In thousands) | Q2'2025 (YTD, In thousands) | Q2'2024 (YTD, In thousands) | | :-------------------------- | :------------ | :------------ | :------------ | :------------ | | Loss from operations | $(8,804) | $(3,011) | $(17,522) | $(7,709) | | Net loss | $(142,713) | $(2,819) | $(91,031) | $(7,491) | | Diluted net loss per share | $(1.54) | $(0.04) | $(0.99) | $(0.12) | | Net cash used in operating activities | $(7,909) | $(4,044) | $(18,238) | $(8,277) | | Cash (as of period end) | N/A | N/A | $121,791 | $16,761 | - The company ended the quarter with $121.8 million in cash and no significant debt, with a current cash balance of $128.1 million as of August 7, 2025[4] Non-GAAP Financial Highlights Q2 2025 adjusted net loss, excluding financial instrument fair value changes, increased, as did adjusted diluted net loss per common share | Metric | Q2'2025 (QTD, In thousands) | Q2'2024 (QTD, In thousands) | Q2'2025 (YTD, In thousands) | Q2'2024 (YTD, In thousands) | | :-------------------------------- | :------------ | :------------ | :------------ | :------------ | | Adjusted net loss | $(7,844) | $(2,826) | $(16,312) | $(7,299) | | Adjusted net loss per common share - Diluted | $(0.08) | $(0.05) | $(0.18) | $(0.12) | Detailed Financial Statements Condensed Consolidated Balance Sheets Total assets significantly increased to $179.7 million as of June 30, 2025, driven by cash, with liabilities rising due to earnout and warrant liabilities | Metric | June 30, 2025 (In thousands) | December 31, 2024 (In thousands) | | :----------------------------------- | :--------------------------- | :----------------------------- | | Cash and cash equivalents | $121,791 | $16,761 | | Total current assets | $123,545 | $22,273 | | Property, plant and equipment, net | $33,031 | $26,529 | | Total assets | $179,701 | $69,069 | | Accounts payable | $2,238 | $1,823 | | Accrued liabilities | $5,134 | $3,071 | | Earnout liabilities | $100,007 | — | | Warrant liabilities | $169,020 | — | | Total liabilities | $286,393 | $15,125 | | Stockholders' (deficit) equity | $(131,934) | $34,021 | Condensed Consolidated Statements of Operations Q2 2025 net loss significantly increased to $(142,713) thousand, primarily due to a $(134,662) thousand loss on financial instruments and higher operating expenses | Metric | Three Months Ended June 30, 2025 (In thousands) | Three Months Ended June 30, 2024 (In thousands) | Six Months Ended June 30, 2025 (In thousands) | Six Months Ended June 30, 2024 (In thousands) | | :------------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Selling, general and administrative | $6,227 | $1,286 | $13,256 | $3,933 | | Research and development | $2,577 | $1,725 | $4,266 | $3,776 | | Total operating expenses | $8,804 | $3,011 | $17,522 | $7,709 | | Loss from operations | $(8,804) | $(3,011) | $(17,522) | $(7,709) | | (Loss) gain on fair market value of financial instruments | $(134,662) | $229 | $(74,362) | $230 | | Net loss | $(142,713) | $(2,819) | $(91,031) | $(7,491) | | Net loss attributable to common stockholders | $(142,506) | $(2,597) | $(90,674) | $(7,069) | | Net loss per share: Basic and diluted | $(1.54) | $(0.04) | $(0.99) | $(0.12) | Condensed Consolidated Statements of Cash Flows Q2 2025 saw increased cash used in operating and investing activities, offset by a $109,596 thousand financing inflow from PIPE and warrant exercises, leading to substantial cash increase | Metric | Three Months Ended June 30, 2025 (In thousands) | Three Months Ended June 30, 2024 (In thousands) | Six Months Ended June 30, 2025 (In thousands) | Six Months Ended June 30, 2024 (In thousands) | | :------------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Net cash used in operating activities | $(7,909) | $(4,044) | $(18,238) | $(8,277) | | Net cash used in investing activities | $(3,247) | $(36) | $(6,297) | $(1,055) | | Net cash provided by (used in) financing activities | $109,596 | $(167) | $129,565 | $(572) | | Net change in cash and cash equivalents | $98,440 | $(4,247) | $105,030 | $(9,904) | | Cash and cash equivalents, end of period | $121,791 | $3,295 | $121,791 | $3,295 | - Significant cash inflow from financing activities in Q2 2025 included $70,178 thousand from PIPE financing and $21,951 thousand from exercise of warrants[17] Reconciliation of Non-GAAP Financial Measures This reconciliation adjusts GAAP net loss by reversing financial instrument fair value loss/gain to derive adjusted net loss, significantly reducing Q2 2025 reported net loss | Metric | Three Months Ended June 30, 2025 (In thousands) | Three Months Ended June 30, 2024 (In thousands) | Six Months Ended June 30, 2025 (In thousands) | Six Months Ended June 30, 2024 (In thousands) | | :------------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Net loss attributable to common stockholders | $(142,506) | $(2,597) | $(90,674) | $(7,069) | | Reversal of loss (gain) on fair market value of financial instruments | $134,662 | $(229) | $74,362 | $(230) | | Adjusted net loss | $(7,844) | $(2,826) | $(16,312) | $(7,299) | | Adjusted net loss per common share - basic and diluted | $(0.08) | $(0.05) | $(0.18) | $(0.12) | Additional Company Information About USA Rare Earth USA Rare Earth develops a Stillwater, Oklahoma, rare earth magnet plant to establish a domestic supply chain for critical minerals, vital for high-growth sectors and national security - USA Rare Earth is developing a rare earth sintered neo magnet (NdFeB) manufacturing plant in Stillwater, Oklahoma[11] - The company intends to establish domestic rare earth and critical minerals supply, extraction, and processing capabilities to supply its magnet plant and market surplus materials[11] - Rare earth magnets are critical to various industries including defense, automotive, aviation, industrial, AI Robotics, medical, and consumer electronics[11] - USAR's focus on domestic production aligns with national priorities for a sustainable and secure supply of critical materials[11] Forward-looking Statements This disclaimer highlights that forward-looking statements involve risks and uncertainties, potentially causing actual results to differ, including facility development, competition, and going concern - Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from expectations[5] - Key risks include those related to magnet production facility development, competition, profitable growth, customer/supplier relationships, talent retention, rare earth supply/demand, production timing/costs, capital requirements, and going concern ability[5] - The company undertakes no obligation to update any forward-looking statements[5] Use of Non-GAAP Financial Measures This section explains the use of non-GAAP financial measures, such as adjusted net loss, providing supplemental insights into financial trends and operating performance - Non-GAAP financial measures (adjusted net loss, adjusted net loss per common share) are included as supplemental information to GAAP measures[6] - These measures provide useful supplemental information to management and investors regarding financial and business trends and for evaluating ongoing operating results[7] - Adjusted net loss excludes (loss) gain on fair market value of financial instruments from net loss attributable to common stockholders[8] Conference Call and Disclosure Information USA Rare Earth held an August 11, 2025, conference call for Q2 and six-month results, with replay, and uses its investor relations website for Regulation FD compliance - A conference call was held on Monday, August 11, 2025, at 4:00 PM CT / 5:00 PM ET to discuss Q2 and six-month results[9] - Replay information for the conference call is available until September 11, 2025[9] - USA Rare Earth uses the investor relations section on its website (www.usare.com) to comply with Regulation FD disclosure obligations[10]