MP Materials(MP) - 2022 Q2 - Quarterly Report

PART I—FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements and related notes for the periods ended June 30, 2022, and December 31, 2021 Item 1. Financial Statements This section provides the company's unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive income, equity, and cash flows Condensed Consolidated Balance Sheets (unaudited) This section provides a snapshot of the company's financial position, detailing assets, liabilities, and stockholders' equity as of specific dates | (in thousands of US dollars) | June 30, 2022 | December 31, 2021 | | :----------------------------------- | :------------ | :---------------- | | Assets | | | | Total current assets | $1,348,872 | $1,276,807 | | Total non-current assets | $752,367 | $612,859 | | Total assets | $2,101,239 | $1,889,666 | | Liabilities and Stockholders' Equity | | | | Total current liabilities | $66,147 | $59,543 | | Total non-current liabilities | $864,355 | $821,391 | | Total liabilities | $930,502 | $880,934 | | Total stockholders' equity | $1,170,737 | $1,008,732 | | Total liabilities and stockholders' equity | $2,101,239 | $1,889,666 | - Total assets increased by $211.573 million from December 31, 2021, to June 30, 2022, primarily driven by an increase in short-term investments and property, plant and equipment, net[19] - Total stockholders' equity increased by $162.005 million, largely due to retained earnings growth[19] Condensed Consolidated Statements of Operations (unaudited) This section details the company's revenues, costs, and net income over specific reporting periods | (in thousands of US dollars, except share and per share data) | For the three months ended June 30, 2022 | For the three months ended June 30, 2021 | For the six months ended June 30, 2022 | For the six months ended June 30, 2021 | | :---------------------------------------------- | :--------------------------------------- | :--------------------------------------- | :------------------------------------- | :------------------------------------- | | Total revenue | $143,562 | $73,118 | $309,820 | $133,089 | | Total operating costs and expenses | $47,808 | $40,653 | $99,042 | $78,915 | | Operating income | $95,754 | $32,465 | $210,778 | $54,174 | | Income before income taxes | $96,640 | $33,330 | $209,953 | $53,940 | | Net income | $73,269 | $27,166 | $158,820 | $43,285 | | Basic EPS | $0.42 | $0.16 | $0.90 | $0.25 | | Diluted EPS | $0.38 | $0.15 | $0.83 | $0.24 | - Net income for the three months ended June 30, 2022, increased by 170% to $73.269 million from $27.166 million in the prior year period[21] - For the six months ended June 30, 2022, net income surged by 267% to $158.820 million from $43.285 million in the prior year period[21] Condensed Consolidated Statements of Comprehensive Income (unaudited) This section presents net income and other comprehensive income components, reflecting total changes in equity from non-owner sources | (in thousands of US dollars) | For the three months ended June 30, 2022 | For the three months ended June 30, 2021 | For the six months ended June 30, 2022 | For the six months ended June 30, 2021 | | :--------------- | :--------------------------------------- | :--------------------------------------- | :------------------------------------- | :------------------------------------- | | Net income | $73,269 | $27,166 | $158,820 | $43,285 | | Other comprehensive loss, net of tax: Net unrealized losses on available-for-sale securities | $(416) | — | $(416) | — | | Total comprehensive income | $72,853 | $27,166 | $158,404 | $43,285 | - Total comprehensive income for the three months ended June 30, 2022, was $72.853 million, including $0.416 million in net unrealized losses on available-for-sale securities[22] Condensed Consolidated Statements of Changes in Stockholders' Equity (unaudited) This section outlines the changes in stockholders' equity, including net income, stock-based compensation, and other adjustments | (in thousands of US dollars, except share data) | Balance as of April 1, 2022 | Stock-based compensation | Shares used to settle payroll tax withholding | Net income | Unrealized losses on available for-sale securities | Balance as of June 30, 2022 | | :-------------------------------- | :-------------------------- | :----------------------- | :-------------------------------------------- | :--------- | :----------------------------------------------- | :-------------------------- | | Total Stockholders' Equity | $1,090,368 | $7,718 | $(202) | $73,269 | $(416) | $1,170,737 | - Stockholders' equity increased from $1,008.732 million as of January 1, 2022, to $1,170.737 million as of June 30, 2022, primarily due to net income of $158.820 million and stock-based compensation of $17.897 million[24] Condensed Consolidated Statements of Cash Flows (unaudited) This section details cash inflows and outflows from operating, investing, and financing activities | (in thousands of US dollars) | For the six months ended June 30, 2022 | For the six months ended June 30, 2021 | | :-------------------------------- | :------------------------------------- | :------------------------------------- | | Net cash provided by operating activities | $219,862 | $47,969 | | Net cash used in investing activities | $(716,649) | $(44,566) | | Net cash provided by (used in) financing activities | $(18,784) | $670,490 | | Net change in cash, cash equivalents and restricted cash | $(515,571) | $673,893 | | Cash, cash equivalents and restricted cash ending balance | $665,586 | $1,206,333 | - Net cash provided by operating activities significantly increased by $171.893 million to $219.862 million for the six months ended June 30, 2022, compared to the prior year period[171] - Net cash used in investing activities increased substantially by $672.083 million to $716.649 million, primarily due to purchases of short-term investments and increased capital expenditures for Stage II and Fort Worth Facility[173] - Net cash used in financing activities was $18.784 million for the six months ended June 30, 2022, a significant change from $670.490 million provided in the prior year, which included proceeds from Convertible Notes issuance[174] Notes to Condensed Consolidated Financial Statements (unaudited) This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements NOTE 1—DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION This note describes the company's core business as a rare earth materials producer and its strategic expansion projects - MP Materials is the largest producer of rare earth materials in the Western Hemisphere, operating the Mountain Pass Rare Earth Mine and Processing Facility[29] - The company is advancing its Stage II optimization project to separate individual rare earth elements and began construction on its Stage III downstream expansion (Fort Worth Facility) for rare earth metal, alloy, and magnet manufacturing[30] - A definitive long-term supply agreement was signed with General Motors Company (GM) in April 2022 to supply U.S.-sourced rare earth materials, alloy, and finished magnets for EV motors, with production expected to begin in late 2023[30] NOTE 2—SIGNIFICANT ACCOUNTING POLICIES This note outlines the key accounting principles and judgments applied in preparing the financial statements - Shenghe, a related party, accounted for over 90% of product sales as of June 30, 2022, exposing the company to credit risk and market price fluctuations in China[38] - The COVID-19 pandemic has caused significant shipping delays and supply chain disruptions, contributing to cost and schedule pressures on the Stage II optimization project, though it has not reduced production or sales to date[39][40] - Short-term investments, primarily U.S. treasury and agency securities, are classified as available-for-sale securities and recorded at fair value, with unrealized non-credit related losses reported in accumulated other comprehensive loss[43][45] NOTE 3—RELATIONSHIP AND AGREEMENTS WITH SHENGHE This note details the company's commercial agreements and financial relationship with Shenghe, a key related party - In March 2022, the Company entered into a new two-year offtake agreement with Shenghe, replacing the A&R Offtake Agreement, with an option for a one-year extension[48] - Under the new Offtake Agreement, Shenghe is the exclusive distributor of rare earth concentrate in China on a 'take or pay' basis, with the Company retaining discretion for direct global sales of non-concentrate products[49] - The Prepaid Balance from prior agreements with Shenghe was fully repaid in March 2022, leading to the termination of the A&R Offtake Agreement[55][72] NOTE 4—CASH, CASH EQUIVALENTS AND INVESTMENTS This note provides a breakdown of the company's liquid assets and short-term investment portfolio | (in thousands of US dollars) | June 30, 2022 (Fair Value) | December 31, 2021 (Fair Value) | | :--------------------------------------- | :--------------------------- | :----------------------------- | | Cash and cash equivalents | $664,457 | $1,179,297 | | Short-term investments | $599,666 | — | | Total cash, cash equivalents and short-term investments | $1,264,123 | $1,179,297 | - The company's cash and cash equivalents decreased by $514.84 million, while short-term investments of $599.666 million were added, resulting in a net increase of $84.826 million in total cash, cash equivalents, and short-term investments from December 31, 2021, to June 30, 2022[56] - Unrealized losses on available-for-sale investments totaled $0.537 million as of June 30, 2022, primarily due to unfavorable changes in interest rates, with no credit losses recognized[56][57] NOTE 5—INVENTORIES This note details the composition and valuation of the company's inventory, including materials, in-process goods, and finished products | (in thousands of US dollars) | June 30, 2022 | December 31, 2021 | | :--------------- | :------------ | :---------------- | | Materials and supplies | $12,186 | $10,711 | | In-process | $28,455 | $25,574 | | Finished goods | $1,603 | $2,407 | | Total inventory | $42,244 | $38,692 | - Total inventory increased by $3.552 million from December 31, 2021, to June 30, 2022, primarily in materials and supplies and in-process inventory[59] - No write-down of inventories was recorded for the three and six months ended June 30, 2022, compared to a $1.8 million non-cash write-down in the prior year period for unusable low-grade stockpile inventory[61] NOTE 6—PROPERTY, PLANT AND EQUIPMENT This note provides information on the company's fixed assets, including additions, depreciation, and depletion expenses | (in thousands of US dollars) | June 30, 2022 | December 31, 2021 | | :--------------------------------- | :------------ | :---------------- | | Property, plant and equipment, net | $749,848 | $610,612 | - Net property, plant and equipment increased by $139.236 million, driven by $154.4 million in capitalized expenditures for the six months ended June 30, 2022, primarily for Stage II optimization and the Fort Worth Facility (Stage III)[62] - The company received $5.1 million in reimbursements from the DOD for its Stage II optimization project and was awarded a $35.0 million contract to build a heavy rare earth elements (HREE) processing facility at Mountain Pass[63][64] | (in thousands of US dollars) | For the three months ended June 30, 2022 | For the three months ended June 30, 2021 | For the six months ended June 30, 2022 | For the six months ended June 30, 2021 | | :--------------- | :--------------------------------------- | :--------------------------------------- | :------------------------------------- | :------------------------------------- | | Depreciation expense | $2,257 | $1,890 | $4,358 | $3,419 | | Depletion expense | $3,075 | $4,686 | $6,144 | $9,217 | NOTE 7—DEBT OBLIGATIONS This note details the company's outstanding debt, including convertible notes, offtake advances, and equipment notes | (in thousands of US dollars) | June 30, 2022 | December 31, 2021 | | :--------------------------------------- | :------------ | :---------------- | | Convertible Notes due 2026 (net carrying amount) | $676,683 | $674,927 | | Offtake Advances (net carrying amount) | — | $16,082 | | Equipment notes (total) | $8,369 | $9,661 | - The $690.0 million aggregate principal amount of 0.25% unsecured green convertible senior notes mature on April 1, 2026, and are convertible at an initial price of $44.28 per share[67] - The Offtake Advances debt to Shenghe was fully repaid in March 2022, resulting in a decrease in interest expense for the three and six months ended June 30, 2022[72][156] - The Paycheck Protection Loan of $3.4 million was forgiven in June 2021, recognized as a gain in 'Other income'[73] NOTE 8—ASSET RETIREMENT AND ENVIRONMENTAL OBLIGATIONS This note outlines the company's estimated liabilities for asset retirement and environmental remediation activities - Asset retirement obligations (ARO) are estimated at $18.162 million as of June 30, 2022, with major reclamation cash outflows expected to begin in 2057[19][78] - A revised reclamation plan was submitted to San Bernardino County in March 2022, following re-zoning of certain properties, which may obviate current demolition and reclamation requirements[79] - Environmental obligations for groundwater contamination monitoring and treatment are estimated at an undiscounted cost of $27.4 million as of June 30, 2022, with cash outflows incurred annually over the next 26 years[83][85] NOTE 9—INCOME TAXES This note provides details on the company's income tax expense, effective tax rates, and deferred tax assets and liabilities | Effective Tax Rate | For the three months ended June 30, 2022 | For the three months ended June 30, 2021 | For the six months ended June 30, 2022 | For the six months ended June 30, 2021 | | :----------------- | :--------------------------------------- | :--------------------------------------- | :------------------------------------- | :------------------------------------- | | Effective tax rate | 24.2% | 18.5% | 24.4% | 19.8% | - The effective tax rate increased year-over-year, primarily due to state income tax expense and a deduction limitation on officer's compensation, partially offset by the California competes tax credit[86][158] NOTE 10—COMMITMENTS AND CONTINGENCIES This note discloses the company's material commitments and potential contingent liabilities, including legal proceedings - The company is not currently a party to any material legal or governmental proceedings[205] - In October 2021, the company entered into a memorandum of understanding to settle a former employee's labor lawsuit for $1.0 million, including legal fees, pending court approval[89] NOTE 11—STOCK-BASED COMPENSATION This note details the expense recognized for stock options, restricted stock units, and other equity-settled awards | (in thousands of US dollars) | For the three months ended June 30, 2022 | For the three months ended June 30, 2021 | For the six months ended June 30, 2022 | For the six months ended June 30, 2021 | | :--------------- | :--------------------------------------- | :--------------------------------------- | :------------------------------------- | :------------------------------------- | | Stock-based compensation expense | $7,440 | $4,498 | $17,213 | $10,171 | | Capitalized to PP&E, net | $300 | — | $700 | — | - Stock-based compensation expense increased by $3.0 million and $7.6 million for the three and six months ended June 30, 2022, respectively, primarily due to a restricted stock unit grant to the CEO in Q4 2021[91][151] NOTE 12—FAIR VALUE MEASUREMENTS This note describes the valuation methodologies and hierarchy used for financial instruments measured at fair value - The company classifies financial instruments into a fair value hierarchy (Level 1, 2, or 3) based on the observability of inputs[92] - Cash, cash equivalents, restricted cash, short-term investments, and Convertible Notes are classified as Level 1, reflecting quoted prices in active markets[94][95][96] - Equipment notes are classified as Level 2, while Offtake Advances were classified as Level 3 as of December 31, 2021, due to unobservable inputs in their valuation model[97][98] NOTE 13—EARNINGS PER SHARE This note presents basic and diluted earnings per share calculations, including the impact of potentially dilutive securities | (in thousands of US dollars, except share and per share data) | For the three months ended June 30, 2022 | For the three months ended June 30, 2021 | For the six months ended June 30, 2022 | For the six months ended June 30, 2021 | | :---------------------------------------------- | :--------------------------------------- | :--------------------------------------- | :------------------------------------- | :------------------------------------- | | Basic EPS | $0.42 | $0.16 | $0.90 | $0.25 | | Diluted EPS | $0.38 | $0.15 | $0.83 | $0.24 | | Weighted-average shares outstanding, basic | 176,527,570 | 172,677,923 | 176,442,043 | 170,810,353 | | Weighted-average shares outstanding, diluted | 193,414,563 | 193,145,644 | 193,452,921 | 186,282,857 | - Diluted EPS increased significantly to $0.38 for Q2 2022 (from $0.15 in Q2 2021) and $0.83 for YTD 2022 (from $0.24 in YTD 2021), reflecting higher net income[21][102] - The assumed conversion of Convertible Notes and restricted stock contributed to the diluted weighted-average shares outstanding[101] NOTE 14—RELATED-PARTY TRANSACTIONS This note discloses transactions with related parties, including product sales and purchases with Shenghe | (in millions of US dollars) | For the three months ended June 30, 2022 | For the three months ended June 30, 2021 | For the six months ended June 30, 2022 | For the six months ended June 30, 2021 | | :-------------- | :--------------------------------------- | :--------------------------------------- | :------------------------------------- | :------------------------------------- | | Product sales to Shenghe | $131.6 | $72.2 | $286.6 | $131.9 | | Other sales (REF) to Shenghe | $4.4 | — | $8.5 | — | | Purchases from Shenghe | $1.4 | $1.4 | $2.6 | $2.1 | | Accounts receivable from Shenghe | $29.6 (as of June 30, 2022) | $49.9 (as of Dec 31, 2021) | | | - Product sales to Shenghe increased significantly, reflecting higher demand for rare earth products[103][141][143] - Other sales to Shenghe, primarily rare earth fluoride (REF) stockpiles, contributed $4.4 million and $8.5 million for the three and six months ended June 30, 2022, respectively[103][145] NOTE 15—SUPPLEMENTAL CASH FLOW INFORMATION This note provides additional details on non-cash investing and financing activities and other cash flow disclosures | (in thousands of US dollars) | For the six months ended June 30, 2022 | For the six months ended June 30, 2021 | | :------------------------------------------------ | :------------------------------------- | :------------------------------------- | | Cash paid for interest | $1,040 | $134 | | Cash payments related to income taxes | $16,621 | $2 | | Property, plant and equipment purchased but not yet paid | $31,839 | $17,372 | | Revenue recognized in exchange for debt principal reduction | $13,566 | $22,901 | - Cash payments for income taxes increased substantially to $16.621 million for the six months ended June 30, 2022, from $2 thousand in the prior year[105] - Non-cash revenue recognized in exchange for debt principal reduction decreased to $13.566 million for the six months ended June 30, 2022, from $22.901 million in the prior year, reflecting the full repayment of Offtake Advances[105][172] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section discusses MP Materials' financial condition, operational results, liquidity, and capital resources, highlighting strategic initiatives and performance drivers Overview This section introduces MP Materials as a leading rare earth producer and outlines its multi-stage optimization and vertical integration strategy - MP Materials is the largest rare earth materials producer in the Western Hemisphere, operating the Mountain Pass facility, which supplied approximately 15% of global rare earth content in 2021[107] - The company is executing a multi-stage optimization plan: Stage I (mining, comminution, beneficiation, tailings management) is complete; Stage II aims to produce separated rare earth oxides; and Stage III involves building a metal, alloy, and magnet manufacturing facility in Fort Worth, Texas, with a supply agreement with GM[109][110][111] - Neodymium-praseodymium (NdPr) is a critical rare earth element for advanced technologies like electric vehicles, wind turbines, and defense systems, driving substantial demand growth[108] Key Performance Indicators This section presents key operational metrics, including production volume, sales volume, realized prices, and production costs per REO MT | Indicator | For the three months ended June 30, 2022 | For the three months ended June 30, 2021 | Change (%) | For the six months ended June 30, 2022 | For the six months ended June 30, 2021 | Change (%) | | :-------------------------- | :--------------------------------------- | :--------------------------------------- | :--------- | :------------------------------------- | :------------------------------------- | :--------- | | REO production volume (Metric Tons) | 10,300 | 10,305 | (0.05)% | 21,128 | 20,154 | 4.83% | | REO sales volume (Metric Tons) | 10,000 | 9,877 | 1.25% | 21,706 | 19,670 | 10.35% | | Realized price per REO MT (US dollars) | $13,918 | $7,343 | 89.53% | $13,864 | $6,620 | 109.43% | | Production cost per REO MT (US dollars) | $1,750 | $1,538 | 13.78% | $1,666 | $1,507 | 10.55% | - Realized price per REO MT increased significantly by 89.53% for the three months and 109.43% for the six months ended June 30, 2022, reflecting higher demand for rare earth products[112][141][143] - Production cost per REO MT increased by 13.78% for the three months and 10.55% for the six months ended June 30, 2022, due to higher materials, supplies, payroll, and energy costs, despite production efficiencies[112][147][148] Key Factors Affecting Our Performance This section discusses market demand, strategic initiatives, competitive landscape, and operational efficiencies influencing the company's performance - Demand for REE is driven by growth in clean-energy, transportation, high-technology, critical defense, and industrial applications, particularly for NdPr and permanent magnets[121] - The company benefits from trends like geographic supply chain diversification, U.S. government initiatives for domestic mineral supply, and ESG mandates, but faces competition from lower-cost Chinese producers and potential technological shifts[122] - Stage II aims to lower REE separation costs by optimizing the facility process, including reintroducing an oxidizing roasting circuit and utilizing the natural gas-powered combined heat and power (CHP) plant, which restarted in December 2021[124][126] - The company is pursuing vertical integration into NdPr metal alloys and magnets (Stage III) and magnet recycling, with the Fort Worth Facility and a $35.0 million DOD contract for heavy rare earth elements (HREE) processing at Mountain Pass[127][128][129] - Mountain Pass has proven and probable reserves of 2.1 million short tons of REO, with an expected mine life of approximately 35 years as of September 30, 2021[130] Recent Developments This section highlights recent strategic agreements and the impact of external factors like the COVID-19 pandemic on operations - A new two-year offtake agreement with Shenghe became effective in March 2022, designating Shenghe as the exclusive distributor of rare earth concentrate in China on a 'take or pay' basis[132][133] - The COVID-19 pandemic has caused significant shipping delays and supply chain disruptions, leading to cost and schedule pressures on the Stage II optimization project, though production and sales have not been reduced[136][137] Results of Operations This section analyzes the company's financial performance, including revenue, operating income, net income, and adjusted EBITDA | (in thousands of US dollars) | For the three months ended June 30, 2022 | For the three months ended June 30, 2021 | Change ($) | Change (%) | For the six months ended June 30, 2022 | For the six months ended June 30, 2021 | Change ($) | Change (%) | | :------------------------------------ | :--------------------------------------- | :--------------------------------------- | :--------- | :--------- | :------------------------------------- | :------------------------------------- | :--------- | :--------- | | Total revenue | $143,562 | $73,118 | $70,444 | 96% | $309,820 | $133,089 | $176,731 | 133% | | Operating income | $95,754 | $32,465 | $63,289 | 195% | $210,778 | $54,174 | $156,604 | 289% | | Net income | $73,269 | $27,166 | $46,103 | 170% | $158,820 | $43,285 | $115,535 | 267% | | Adjusted EBITDA | $109,952 | $46,447 | $63,505 | 137% | $242,209 | $79,447 | $162,762 | 205% | | Adjusted Net Income | $81,941 | $33,440 | $48,501 | 145% | $178,278 | $56,646 | $121,632 | 215% | - Revenue growth was driven by higher REO sales volume (1% for Q2, 10% for YTD) and a significantly higher realized price per REO MT (90% for Q2, 109% for YTD), reflecting strong demand[141][143] - Cost of sales increased due to higher REO sales volume and increased production cost per REO MT, influenced by higher materials, supplies, payroll, and energy costs following the CHP plant restart[147][148] - Selling, general and administrative expenses increased due to higher stock-based compensation and personnel costs, while advanced projects, development and other costs rose due to Stage II and Stage III start-up expenses[151][153] Quarterly Performance Trend This section presents a historical overview of key operational metrics across several quarters, highlighting trends in production, sales, prices, and costs | (in whole units or dollars) | FY2022 Q2 | FY2022 Q1 | FY2021 Q4 | FY2021 Q3 | FY2021 Q2 | FY2021 Q1 | FY2020 Q4 | FY2020 Q3 | FY2020 Q2 | | :-------------------------- | :-------- | :-------- | :-------- | :-------- | :-------- | :-------- | :-------- | :-------- | :-------- | | REO production volume (Metric Tons) | 10,300 | 10,828 | 10,261 | 11,998 | 10,305 | 9,849 | 9,337 | 10,197 | 9,287 | | REO sales volume (Metric Tons) | 10,000 | 11,706 | 9,674 | 12,814 | 9,877 | 9,793 | 10,320 | 9,429 | 10,297 | | Realized price per REO MT (US dollars) | $13,918 | $13,818 | $10,101 | $7,693 | $7,343 | $5,891 | $4,070 | $3,393 | $3,093 | | Production cost per REO MT (US dollars) | $1,750 | $1,594 | $1,525 | $1,449 | $1,538 | $1,475 | $1,589 | $1,389 | $1,412 | - Realized price per REO MT has shown a consistent upward trend from Q2 2020 ($3,093) to Q2 2022 ($13,918)[160] - Production cost per REO MT has fluctuated but generally remained within a range of $1,389 to $1,750 over the presented quarters, with Q2 2022 showing an increase[160] Liquidity and Capital Resources This section assesses the company's ability to meet its short-term and long-term financial obligations, including cash position, debt, and capital expenditure plans - As of June 30, 2022, the company had $1,264.1 million in cash, cash equivalents, and short-term investments, and $690.0 million in principal amount of long-term debt[161] - The company expects to incur up to approximately $500 million in capital costs in 2022 for Stage II optimization, the HREE separation facility, and the Fort Worth Facility (Stage III), with further costs anticipated in 2023 and 2024[164] - The Convertible Notes, issued in March 2021, have an aggregate principal amount of $690.0 million and mature on April 1, 2026, with proceeds intended for eligible 'green projects'[166][167] - The Offtake Advances debt to Shenghe was fully repaid in March 2022, eliminating a significant long-term obligation[168][169] Non-GAAP Financial Measures This section defines and reconciles non-GAAP financial measures used by management to evaluate the company's performance - The company uses non-GAAP financial measures such as Total Value Realized, Production Costs, Adjusted EBITDA, Adjusted Net Income, Adjusted Diluted EPS, and Free Cash Flow to supplement GAAP results and evaluate performance[176] | (in thousands of US dollars) | For the three months ended June 30, 2022 | For the three months ended June 30, 2021 | For the six months ended June 30, 2022 | For the six months ended June 30, 2021 | | :--------------- | :--------------------------------------- | :--------------------------------------- | :------------------------------------- | :------------------------------------- | | Adjusted EBITDA | $109,952 | $46,447 | $242,209 | $79,447 | | Adjusted Net Income | $81,941 | $33,440 | $178,278 | $56,646 | | Adjusted Diluted EPS | $0.43 | $0.18 | $0.93 | $0.31 | | Free Cash Flow | N/A | N/A | $102,408 | $3,278 | - Adjusted EBITDA increased by 137% for the three months and 205% for the six months ended June 30, 2022, reflecting strong operational performance[139] - Free Cash Flow for the six months ended June 30, 2022, was $102.408 million, a significant increase from $3.278 million in the prior year, indicating improved cash generation after capital expenditures[195] Critical Accounting Policies This section discusses accounting policies requiring significant judgment and estimation, which are crucial to understanding the financial statements - There have been no significant changes in the company's critical accounting policies during the three months ended June 30, 2022[197] Recently Adopted and Issued Accounting Pronouncements This section outlines new accounting standards adopted or issued that may impact the company's financial reporting - There were no new accounting pronouncements recently issued or effective during the three and six months ended June 30, 2022, that had or would be expected to have a material impact on the Company's unaudited Condensed Consolidated Financial Statements[46][198] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section discusses the company's exposure to market risks, primarily interest rate risk, and assesses its potential impact on financial instruments - The company had $1,264.1 million in cash, cash equivalents, and short-term investments as of June 30, 2022, with $1,234.5 million invested in money market funds, U.S. Treasury, and agency securities, exposing it to interest rate risk[199] - A hypothetical 100-basis point increase in interest rates as of June 30, 2022, would not have a material impact on the value of the company's cash equivalents or short-term investments[201] - No material changes in market risk exposures were identified for the three months ended June 30, 2022, compared to the Form 10-K for the year ended December 31, 2021[201] Item 4. Controls and Procedures This section confirms the effectiveness of the company's disclosure controls and procedures and reports no material changes to internal control over financial reporting during the quarter - The company's disclosure controls and procedures were evaluated and deemed effective as of June 30, 2022[202] - No changes occurred during the fiscal quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[203] PART II—OTHER INFORMATION This section includes disclosures on legal proceedings, risk factors, mine safety, and a list of exhibits Item 1. Legal Proceedings This section states that the company is not currently involved in any material legal or governmental proceedings - The company is not currently a party to any material legal or governmental proceedings, and none are threatened[205] Item 1A. Risk Factors This section indicates that there have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K - There have been no material changes to the risk factors disclosed in the company's Form 10-K for the year ended December 31, 2021[206] Item 4. Mine Safety Disclosures This section refers to Exhibit 95.1 for information regarding mine safety violations and other regulatory matters - Mine safety disclosures are provided in Exhibit 95.1 to this Form 10-Q[207] Item 6. Exhibits This section lists all exhibits filed as part of the Form 10-Q, including certifications, mine safety disclosures, and XBRL documents - The exhibits include CEO and CFO certifications (31.1, 31.2, 32.1, 32.2), Mine Safety Disclosure (95.1), and various Inline XBRL documents (101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE, 104)[208] SIGNATURES This section contains the official signatures, certifying the filing of the Form 10-Q by MP Materials Corp. on August 5, 2022 Signatures This section confirms the official signing of the Form 10-Q by the Chief Financial Officer on August 5, 2022 - The report was signed by Ryan Corbett, Chief Financial Officer, on behalf of MP Materials Corp. on August 5, 2022[213]