MP - Earnings call transcript Q1 2022

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day and thank you for standing by. Welcome to the MP Materials First Quarter 2022 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your speaker today, Martin Sheehan, Head of Investor Relations. ahead. go Please

Martin Sheehan

Officer; and first operator, from everyone. to Financial Chief Welcome Materials and Operating Thank Corbett, Ryan XXXX good earnings Materials' Chief Executive and Chairman quarter Jim today Rosenthal, call. MP Chief are Officer; you, Officer. Litinsky, day, Michael With MP me

cause subject remarks, Factors Before relating and events release, to opening reminder, company’s filings. to assumptions SEC discussion caveats. as the are and various get may to in and included we from our will results today’s that future statements expectations a our these earnings to in differ contain statements actual that forward-looking presentation, today’s materially are

financial to to our financial earnings addition, in adjusted most Reconciliations reference this measures have today’s release. found Any to presentation. today GAAP EBITDA. the can the in presentation some In be we and appendix non-GAAP means EBITDA measures to discussion comparable included directly

release that, on and available slide are the Finally, Jim. to turn the over I’ll earnings Jim? presentation With website. our call

Jim Litinsky

Martin for to KPI on a X you the in progress Ryan's and this of to a get come I'll I'll X, moment, and us all all then the just Q&A. to review joining thank first it quarter. and had followed up great financial We update by Stages afternoon. you open details. back Thanks and our highlights on we'll

$XXX.X maintained the performance. higher benefited This from in XXX% realized discipline, up to performance. respectively. metric slide tons started market million. Operational XX%, in and get financial We pricing represents metric financial on and volumes and growth In of than Adjusted drive That four. more and EBITDA of are management, up cost executed sold XX% cost production million. the produced than to XX,XXX year-over-year let's was was year-over-year record $XXX.X well a resulted So, REO. XXX% we prices. throughout Revenue execution, what tons quarter, more and sales quarter, our XX,XXX

expanded XXX%. XX in the margin we EBITDA of $X.XX particularly adjusted per XX%, diluted backdrop. and are global and when consider These earned results, points Our increase to adjusted exceptional an industry share EPS, we

reporting this in our challenges costs. companies We sector earnings in season seen and production have wide around having of

consistency our while team at not improvement take continues and levels. flotation for continuous process, on We keeping world-class in focus to logistics uptimes granted. Our do

combined We over challenges means economics continue are shipping, to to overcome cost suppliers, MP labor. with discipline, efforts, these and All positioning strict per with improve we ton time.

vast earth We price REO is together, we In highly oxide of operations it value. With prices strong kilogram. the correlated during benefited also generated for $XXX nearly to XX% from contained the the concentrate in is as quarter. Putting NdPr, realized the our NDPR it a majority our market NdPr cash distribution for rare market from certainly NDPR all of of exceeded quarter. February, significant the pricing

attractive economic Our downstream million flow. during free $XX is making still in Stage quarter. position. cash X business flow our we substantial in in free an expansion, million towards the cash and generated normalized offtake our After investments generated agreement over MP $XXX completing

an the concerns, highs. NdPr high macro We for though, and should current of capital not are developments investing while flow February opportunities primary us generating those growth the our geopolitical business. market There impacts free following Ukraine will lockdowns could connection from between our countermeasures in ways specifically a China China. Recent the I note, the our obvious in direct in in and back the return insights cash closely, sheet Russian business. driver situation much balance has transform are strengthening lockdowns COVID that recent rare pulled from do are implemented on potentially invasion We provide that of earth COVID industry. idiosyncratic some I the and see not But impact Ukraine two COVID can of China. pricing into

The transportation. global bottlenecks first in is congestion potential or

we Shanghai ports divert the as become there as through significant regularly. ships transit more ship from Shanghai ultimately earth congested offload not are pick Shanghai other that in more port no through the volumes closed, generally ports refiners Shanghai we do it was or or Should could up use in recently cause to delays province. While products major rare do

date. issues on experienced not have We any significant this to

this We monitor would will to as you continue expect. situation

couple or or that certain was short significantly blip months as chain issues This may other major bottlenecks add short-term lower OEMs. a in clearly pressures disruptions government component at this in including transactions are rationality the demand. that and encouraging Secondly, seen there address the times. market, shut back return shutdown rhetoric have magnetics have ultimately China at might that you in I be NdPr unfolds, are trying EV reports nature. of were this a also have manufacturing What But in the followed some dynamic and heard, likely by resulting term with we slowed as forces pricing. facilities shipping supply on supply issues near-term of businesses, China impacting production would companies, of kind and Chinese a inflationary prices, historically to downstream limited to is with manufacturers down

And Western industry market XX electric the Research, this as year-to-date to top vehicle in OEMs. coming Morgan according just that of sales years. materials In Stanley lot industry needs more are OEMs does Chinese for incentivize four the production share Chinese means battery and fact, to global the a

across as transition and challenging innings real is This NPEs global growth prices demand they in prospects, even will be to are of for As amidst and short said retreating we to electrification economic times, the do appears I bullish rare will earth very economy. landscape. very the term, global but many do have the the a what in early geopolitical

Texas magnet and and detail continue parallel in Ryan's and also is our to X Stage in the make during going track of to transitions, facility construction more across remarks. is progress we quarter. of after I'm and X X Stages underway. Speaking stages on ramping X cover construction X initial

So detail. with Ryan KPIs to I it financials over will in and Ryan? discuss that, turn to our more

Ryan Corbett

Thanks, Jim.

really of provide the six. extra mentioned, color metrics. some left general the seen I'll upward volumes, company. slide trend strong We've earths with Turning production our error. another is this Starting you bottom for of a reagent as on was are plenty some and chart, in result to of technology, testing on rare percentage trial the the through and we recovering of which key

term, process we've priority discussed for additional believe never and that our the those preparation make remains And are continue can percentages in long equipment a we these improvements previously, X. to as recovery Importantly, there to are the Stage line. we upgrades but straight over higher drive improvements

volumes. move XX% spot would just metric closely RMB, point in generally is out of realized for The the a that downwards covered There addition inventory quarter-over-quarter our adjusted ton realized VAT price Moving to impact. Chinese chart, pricing the right pricing correlated per NdPr what getting team top the one-month is the on regards to shipments. to roughly remarks, quarters port, well roughly lag domestic and XX% this in both to Jim contracts situation but job logistics around, to overseas. in year-over-year the a some the did of produced we in the based of shipments, the increase of shipment prior With also of and can the and driving timing majority on I in the lag both due the to quarter, that a the opening his great from actual

to realized so Jim And is to graph ton pricing As solid we're actually quarter. lastly, pricing through in NdPr hit last to continue February, impact range. flowing recent right costs, investments of down the price. This a are in year's the recent with very be high QX quarter roughly see the consistent sequentially, our the $X,XXX mentioned, hit metric These late per when about production associated we X% our And the remained P&L. future our we that bottom of growth Stage costs to making slide. first and the on in expect lower excluding equal in X, $X,XXX versus

increased Stage per ability roughly about year-over-year the with basis, X, metric as quarter. combined ton the includes in On cost This well marketplace, in associated the related higher commissioning. and compares really our hiring year plant, heat ton with totaled costs the X efficiencies. inflation quarter-over-quarter. the $XXX were to X% the up reported metric team's a incremental $XXX production operating X Given in as per with the hiring These offset Stage about of of associated including The $XXX prior for ahead power Stage commissioning are costs costs and period. we to and X% with reported pleased advanced costs

stable separations. execution Stage Having and as per in plant less processes as as and is operational, processes we've well the be the X costs, currently from power investment two source operational continue a generating CHP commissioning. our plant Stage and which facilities strategically in equipment, such, temporary now, plant recommissioning the the of year. few we run This for invaluable important dissipating for certain plant our our end the power own new X calls, critical about gas represents combined treatment our are unit inefficiency and power for to of operations until natural online the further As output experience of quarter, compliance online the of early give operating on power in ensuring in of of highlights Stage water our minimum needed reduce have bring the significant of Bringing to our this to leaching needs, The our $XXX to for minimizes were commissioning than which site type more power talked team and will the and will half Stage roasting, at load infrastructure, are is course, the troubleshoot essential the excess has which complex at and power. of quarters like commissioned. X Stage ahead the ensure plant once separation next X employees Stage significantly as versus associated hone Right X plenty heat increase integrating plant capabilities Stage time impact will, strong risks operational a X, prior primarily because is X we excess cost power banks. in improvement little the processes we fed and of our time prior to

the and is for other points impact preparation two metric haven't just I'll portion turn to the already to ton slide of focus mentioned, Stage I related in X. $XXX that advanced we As hiring on discussed. per X,

margins on in our our the The price. market First, our allowing the show way, to adjusted of XX% adjusted right, instead chart net the business strong from EBITDA year. the forward. of benefit a continue to position show speaks us strength truly same volumes a and cost to we on bottom adjusted we profitability the quarter, like the progression to curve. impressive strong leverage production per thing. share We'll from the And achieved on number, in thanks second, income display in diluted Either and cost MP's earnings impressive now model quarters. the discipline, enviable margins prior past highlights over going

we XXXX. As issued a in a QX of convert reminder,

share shares stock. common Our bonds average underlying the these into diluted the as count, of impact excludes therefore, if converted

year, will enterprise convertible count diluted are debt this, share to investors the we remind reported this convert. of XXX.XX assumed GAAP. making conversion shares I shares notes notes in totaled reduce from million diluted to QX XX.X remember as also shares, For includes our calculations, $XXX that GAAP million converted count they and million those as by of be share which must under fully GAAP the in utilizing the common analysts approximately value our assumed the gross our With

on X. discussion to Turning flow slide cash the

when current flow the paydown flowing we regarding maintenance under as quarter. adjust the out our normalized of paydown, You we X of the February, for the as free the that, operations for had impressive And work logistics simultaneously I that in That's with costs and preponderance who will to potential or cash as Japanese complete for capital our volume briefly certain material In the with of to off-take we X follow-on distributors last via of we concentrate we although we significant to end customers growth and our both generated Stage China. minimize reseller $XXX of offers most relationships And call, purchases can mentioned well a direct off-take, balancing arrangement effectively China, Stage agreement. decided operational contract, our the the of we our XX% million both an P&L. as maintain in-place balance third-party our through several desire see process at the to maintenance China, exclusive risk, modest, who in will and remain prior look to off-take did completed our pricing roughly new revenues. our make we Shenghe distribute realized very concentrate. products X. on to enter market CapEx other point with the sell significant Shenghe direct we adjustment into remains customers would as of directly, via certain in Stage to our end Under of this currently the in our including maximize customers

it should back direct sales for distribute to Jim. as to. the the flexibility Stage choose relationships We that, this maintain to products prepare will continue X to we transition foster oxide with Jim? we to over our And via turn separated arrangement to I'll sales

Jim Litinsky

Thanks, Ryan.

discuss quarter. to on has on work our progress X reaccelerated XX slide in to turn Stage expansion parallel the downstream site. Let's

substantially and portions. have light the completed for procurement separation engineering rare We

the including to EPC on fitters, electricians. rights workers, with accelerate ramp pipe work. entering They've further a construction labor a and implemented mill Our of craft peak in night also shift iron recently site,

We processes product leverage separations cracking These for significant separations. and will individual will light-heavy also making operation. our other include The rare to building certain finishing. shared line parts of will existing on and with facilities infrastructure used separation and expanded be retired the earth be additional separation are heavy progress existing

installation demo to leasing new finishing and building and in interior begun in for the preparation equipment. have separations existing the We cracking legacy, particularly equipment, the of

to The beginning X. is of being the government initial right our magnetics Stage to grounds facility nice the leaders. Last a Moving the Worth. formal ceremony construction in a on site build on more Fort with celebrate of and held civic picture overhead to we prepared the than month, at XXX

for that federal we us from grateful ceremony, them showing supply joined supplying had the to a General forward brought state Motors the executed across awesome. customer. we at definitive, our look magnets our it platform. also automotive for news as agreement, the and officials. are other support models the could share of so bipartisan We foundational strong EV, looks Hummer which GM ultimate long-term also local, well many making GMC as great GM We

have Stage procurement for for long facility. are also the We accelerating commenced and equipment X hiring lead

most We of have a are number technical Worth opportunities. of which Fort job openings currently, in

this interested home, who is helping chain touch. listening please in knows get anyone if if or So interested in someone might be bring us supply

me heard scale talent you've talent, say As scale. begets before, begets

proud. are We that building national magnetics an champion integrated should make all Americans

join the to that very of And note, MP. on at So am us. continue we build proud culture I

a without employees Our quarter lost celebrate To month a maniacal this of appreciation Keeping further we operational two on non-executive all challenging focus years infectious. fantastic hope just critical to are that results while and are This the this that our we us, we passion in as at past safety mission team evidence a our safe landscape for onetime a is not more this injury. for our marked people at We commitment. building around execution. and we work milestone, for right believe the now, MP. important time our special requires to long-term could doing bonus of such the issued is feel been conviction. culture We've and and all world, look we

risks I is it risk. that is the in zero of even Ukraine significant it The reminder in should enormous between warnings, seem entire of for sourced electrification sometimes before can times, countries questions. open issue pie while let's stakes A security a gas can this globe, be liabilities. is Russia we And good a semiconductor the so their sum the offers like long-term about does one and supply as especially challenging evolution the in enormous of all chain that, for news am and on be region areas single economy of adversaries. is the across severe Europe come. Operator, need needs. relying even up natural another these the bold is to rising. for for exchange that are to savings succeed, of We also short-term head Several it, tragedy an outside seeing hopeful for Just capturing The We benefit consequences With of existential build much sustainability. bring in Operator? the and years helping the where growing opportunity. not to more the

Operator

Thank you. first question. your Matt [Operator Summerville. Instructions] question And our ask is Please from

open. line Your is

Matt Summerville

costs, QX how sitting have in now further and costs, with couple here? how it be should QX about, to a that number, production Maybe and And going we production we're is in evening. how is Good thinking we a here from ramp QX? so a that Thanks. think on about I $XXX ramps, And then, Ryan, should then, ton if indeed follow-up. production

Jim Litinsky

ahead. go Ryan, Matt, Hey

Ryan Corbett

Hey level, what Matt, is I that running costs some in Stage as power the at combined point, which we plant is $XXX current its on of think million, heat the for at for I this that that of excess represents, and the X. requirements experienced the called incremental power out,

fall would year. are would Stage slightly probably hang if that I around infrastructure we're won't we year. to of build that measure And increase that that at team ahead the participating we'll levels of will in crew and ahead that that portion relatively These our of certainly, of be the would site. for these the of of point team in immediately be the are continue the there example, specific a throughout for we're the X all to are that things not on the commissioning, actively you P&L operators for example, similar commissioning assets, at embedded the members I that represent, increased fashion then, shared they're to expect rest much bringing a So our for into bringing certain the folks maintenance circuits talking at on, throughout us COGS say about as this expect

so production I'd this at and outside the number? you folks number in of production as going well increase of the next end expect start into the those year, year in year And to of a as an the over of early both see, period slight increase the and the production

Matt Summerville

upside of remarks, more And about bit should and still little a think, that had now, that making. you. via in how thinking curious, then X mentioned could of mind give certainly bottlenecks your that further? upgrades, be a Stage you we out room envelope Stage some long-term detail understand you mention bearing pushing are in really sit otherwise you're on, Ryan, Thank biggest X on I it. and you as Stage keep Got for follow-up, you Maybe And timing as production as the be investments has to I that then, I'd where laser-focused would here today, that that. -- from X the we be

Ryan Corbett

on Well, that one…

Jim Litinsky

Stage you and have to hit Michael Yeah, can you X then, want finish up.

Ryan Corbett

probably you're Mike, positioned to there. yeah best give color Exactly, some

Michael Rosenthal

for marginal and as recovery, the apply think maybe diminishing about and with concentrate grade The anything law But I the to said increasingly Thanks potential. optimistic technology opportunity certainly known said I Matt. to to throughput else. the returns we've of automation or our applies question. additional our our as operation improve I'm the Sure, in past,

these are implemented likely opportunities of year. be game Some are more to this changer not

more we'll be improvements. year, on this incremental So focused

are, mining is bottleneck. a the where bottlenecks not of terms certainly In

in it So the is processing operation.

although to up. more do initial things we But if in will reached that So can where would is grinding yet. now those order anticipate to we say, opportunities to we where there open the right identify the circuit bottlenecks, throughput haven't slightly we that see increase see is, in continue I we

opportunity So production. and our long-term, the pretty concentrate improve quantity quality to see I tremendous a of

Michael Rosenthal

properly the the a of of that. unfolds. this done And would and Stage year for we gear as getting And but just in as for And is our site then online, safely activity on you lot add, year be rest primary of I getting X primary kind obviously, that's can of Matt, focus our in your preparation question, for you said up course, focus. as that imagine, the the there'll

Matt Summerville

to I'm QX, real we maintenance? for quick. then And just change Are still this in more at at it. looking changed Got X QX outages, maintenance timing or normal in in going scheduled all? has Any year's one that sneak Stage

Jim Litinsky

No standpoint financial change. cover or from to change standpoint, you on But but operating want Ryan, anything if no that an

Ryan Corbett

just And week very That's last Yes. right. turnaround schedule completed No. successful we to and the a year. last here no versus actually change

as So looked opposed the year-over-year they in XXXX. to compares will be up how lined

Matt Summerville

you, Great. guys. Understood. Thank

Ryan Corbett

Thank you.

Operator

Thank you. our next De Alba. is Carlos from And question

Your line open. is

Carlos De Alba

afternoon. Good morning. Good

Jim Litinsky

afternoon. Good

Carlos De Alba

Good good. a you inventory the had is much. question but I you you Thank you a Good -- or so the years. afternoon. bit first that questions, have, very more shipped to the All one currently situation quarter. maybe related than for little

disruption on situations? share coming comments the ports terms in to potential the or have second you back maybe for ports the and the are then we where fourth also. logistics should you you give there and already we what If for can color average quarter, going production, that maintenance your us quarter. to should the can -- look happening production had How What is of You shipments given -- your be or in those are And two in the you material? will key shipped that and about port China. to

Jim Litinsky

Yes. Michael, ports about And then and second take then, I'll back Sure. Ryan, you why first don't then. you the part part? come take the the

Ryan Corbett

hear give Sure. you. thinking to production Hey, we Carlos, good specific On don't guidance. obviously, from about production,

here year just comparing the applies the year-over-year. asked outage. had and terms Matt maintenance then in a what similar think maintenance of of timing last outages I QX

slight an then perspective, And built the course to shipping to the from production port over last terms imagine from turnaround? our preponderance The production. of in in able sort year addition cadence the so impact in to continues of the up the the the to that as evolve. can inventory some of we to situation from quarter were had you a obviously, of transit look of inventory get of And as maintenance indicative I would

were court and quarter pleased this get fits always to in our I with but is to it starts. ability material we think

And call of so want out sort nothing trends there's it? take to I that seen call point don't I at we've in that -- just particular. the Mike, anything really would out typical the think really specific you this do there to of so rest

Michael Rosenthal

the Sure. Tianjin, Liaodong. ones Luzhu ones terms ports the that in Yes, are in Qingdao primary Those Occasionally, to, ship [ph]. of we are biggest

Carlos De Alba

Got there. you, the Michael, it. have roughly, you X do Stage give you Thank less, the guys. comment project? in since start physical us the of of And we of Stage to you More you trials can to the concentrate of or maybe expect rough as could when -- and and consignor the a idea X completion dry progression of

Michael Rosenthal

hope. piping is then are the in latter already. wrapping electrical, the can and broad dates of will commissioning or That comes installed I Ryan site the said, progress, of that begin the the though, strokes, ahead It's number along that increased, sequentially in But lot of call facility. steel project, Jim in and moving touch a and process hope leaves civil the we end do the couple erection the dryer also ancillary Ryan along next rest of is work of structural the to the dates. shift the nice operations on to Jim progress first. the we're in months, or the physical center craft nicely. a starting complete add at primary has on generalities. on always is on equipment of steel and of the up of sort which is And schedule. we equipment, A lot with of the trial

that that run at have So commissioning continuously that rest we'll to assume prior we're of hoping circuit, to point. doesn't the it but the

Jim Litinsky

last expect that Jim. it's normalized believe in mechanically rate be run track. by the call production hit year-end we to on XXXX, we Carlos, and remains complete on I said that Yes. sometime and

the So in we've of lot a made quarter. progress

Carlos De Alba

maybe Ryan. for great. one Sounds And last

-- you now that there the do Shanghai. you is your the [ph] paid is particular with have Now prepayment you agreement, cash had the renew that flow that agreement going have paid in change how down But to offtake? you down Shanghai, offtake the anything and Shanghai you with operations that were

Ryan Corbett

of not flow debt had treatment of sort portion that's that dollar every new operating that of of sort cash that in roughly have do GAAP paydown, that was effectively transitioning one seen Yes, this Sure. into revenue the but came balance is the an key benefits from offtake as we a the you through would agreement paydown. $X.XX non-cash our of result

will shown, the that economics net dissimilar of it agreement are commission fees away, on basis. go are portion of So broad and the into are that a whatever primarily not sort built

So already price. in realized for accounted our that's

the that portion the away. that from entirety so that that perspective, go And impact of from of will cash flow had we negative

else flow. real a benefit all So equal, operating cash to

Carlos De Alba

Sounds very much good. guys. Excellent, thank you

Ryan Corbett

Thanks, Carlos.

Next question?

Operator

Thank you.

Deckelbaum. is next Our David from question

line Your open. is

David Deckelbaum

guys. Ryan. Hey are you for and you Jim confirm, I How guys. Thank question. taking my just wanted to

the guess -- structural shift cost, incremental any of through there is having steel of X or year? remainder this the the part -- plan, in was crews of running the night installations, result is this on the I the the be With you'd part this crew, one is this construction addition this does that is or assumption original of

Jim Litinsky

in some feel then I'll with Ryan, to free thoughts Well, chime and finish.

-- issues we world of said, As you is all has handling can project. this been the we've sorts over has. as everyone much we the been this kind few imagine, sort as in a supply the in pretty huge And quarters, a last of chain back if think of

rest can with so made on moving with as get make thing been we you managing on real -- of manage time certainly, in that. economically And so one have sort and and going of that And day-to-day. the construction schedules. we've this parts of this doing If many the been time that that out effectively job clear we're you job. done gets And to we repercussions kind and we've of can so whack, imagine, that can sure

there fired, was So it's first much the night the the would the shot -- time. got lion's how sort like say you're all moves But it's it hard doing that a of in over what of plans share to obviously, say shift plan, the I is was battle into same. plan original of because original

working And so been -- we've out that.

So much we have -- of you done I exactly is of night might quickly we as kind trying as possible. think a shift to anticipated. and back get we're work couldn't tell helpful so certainly, if the how night this shift But

think related calls, prior utilized on I we're we've DCAS also because DCAS we a mentioned project.

we're kind where the our of in about we to feel our as remain the we what we the -- are can we where CapEx see and far trying last ondof kind so then of so respect you all expectations as track project levers. to good call, And the outline utilize financially. on with in gave And budget, quarter, with an

David Deckelbaum

the month last be for sales. I Jim. sales. for, concentrate forward, marketed to remaining heavies it the just I NDPR separation sales But Shanghai? And once be that, with understand running. stockpiling circuits would be by you just going renewed for you're Shanghai those Certainly, the guess or the and Appreciate going up would I cover any does Shanghai yes, guess, using maybe lights, agreement concentrate residual

Jim Litinsky

Yes.

the finish. then and on Ryan, you don't heavies. right why I'll you're So agreement, address the

Ryan Corbett

Sure.

obviously, And Shanghai term focus, initial obligation the a the of company's sales. part the the So on with it's take-or-pay with an the primarily time-based, for renewal option. and is agreement at the option so concentrate is that,

particularly to my desire. of strategy. obviously through flexibility, sales on particular markets we up direct building should to we'll in mentioned Chinese Japan ultimate course, Shanghai certain of products and Asian distribute our of the distributing continue again, the customers continue downstream in to in as agreement so market as, focus directly to sell-through us ours, U.S. on does our continue give I relationships at well option and and As into This focus the separated Southeast via our remarks, we

David Deckelbaum

a maybe another target -- That's a GM it. X, Appreciate if is also for first is and just around time relationship timing this contractual around is there. could as magnetic contracts, around – I any flake customer? anchor and your But with or one sales but element production Stage GM there timing an there there to products magnetic with

Jim Litinsky

stated but disclosed, of of to David. and go you question, into relative components. there's rehash But color can't the get from maybe I'll and that contract there. we specifics two product give great So we've main some that I sort expanded what the

online XXXX to we'll so GM, alloy delivering to selling that when late expect magnets will start next year. And them. XXXX come We and to late is be then

the as that X investments. made to back step on clear I'll to so separated single businesses. very general businesses You will, so make the of Stages We’ve sort if need details, get and terms, as we and I viewed we X can Peter in Paul but we you don't imagine downstream -- We very that speak. specific customer

we have of undertaking an to are capital and what on supply. attractive that So for return the need step we the strategic nature

in what sort would long-term So you agreement be do that we nature. very of I would clearly any do that would – that fits it can imagine said we

the this LTM you as And with is covering so stated I’ll sort of of as in across publicly course, has specific the haven't leave disclosed of that, But platform. we release, time GM press sort but lines. said and

coming the and so models come. have scale cool can And at you that of all they look what's to the out

they their quite to so bit grow as a come business. of And there's demand

Ryan, you don't want to So that? know, add on I do anything

Ryan Corbett

your completely I all No, with agree Jim. comments,

I across strong a Certainly, demand to of of a think lot continue we variety see the industries. it. you from Board hit

separate that that that meeting I that given we focus having certainly contracts Jim's and needs, putting setting closely think the we're up we that, our into very something are And are the point balancing. but to us customers' so obviously ground, being of the businesses significant protecting on capital that's sure

David Deckelbaum

Ryan in queue. time. the Thanks, the get Jim and for I'll

Jim Litinsky

David. Thanks

David Deckelbaum

entertaining the for Take music care. as thanks whole always. And

Jim Litinsky

glad enjoyed you that. I’m David, And

David Deckelbaum

Yes.

Jim Litinsky

Thanks.

operator. question, next Our

Operator

And you. Sathish is question from yes next Thank – Kasinathan. our

is line open. Your

Sathish Kasinathan

on my actually for X again. is first My Thanks Hi. Stage question taking questions. Yes.

the has So up expansion potential current XX clearly, to plan. times X significant Stage

more So I or commission the and on of was is tons wondering color capacity, moving meaning expanding strategy. if you Texas Is beyond you could with a plant provide more more the XXXX target? the any story, X,XXX and growth consider first capacity is would simultaneously to priority here growth your

Jim Litinsky

Yes. Satish. Hey,

XX correct Worth we So, sort times is, not that capacity is thing, kind well, which of just of I just stated as we the believe can of I of initial go. what to the want facility one do where Fort

that bit think Certainly, Mountain that. actually quite a output this times. Pass from our I think But is larger goes than so I -- XX would it's industry dynamic.

to mean, what we'll We and/or the And is by we of continue an think doing just going of are build think we're beginning restate area. importance, mean, day. the continues We the nature in to clear business. to grow world, kind I strategic attractive very working buy I such on from that JV in that in I to the just obvious, made this but strengthen say, parallel. what's would the given the we're I

that, So don't thoughtful to this is sign get right a execute I to main in I we're just we customers. want conversations. done And think lots imagine of the and thing our make we We sure want to way. here you deals, do that could having this that, want for

scale would believe out just that longer see ore the as I existing of if which our would opportunity, XXx, the exceeds say look that term, the the sort business, magnetics of So body. -- for be that, the we the I you of next kind step the growth

a growth execute, to champion, national fully on national western we in are lot ahead we team, West. And and so, huge the we integrated prepared look in creating believe champion it's at There's of and are anybody if I around our believe are remarks, we opportunity. magnetics, -- And billions the but said so in years we we focused a that as a

Sathish Kasinathan

color. the next for Thanks my ties it down Yes. to actually, And question.

the XXx. that expansion even said you is potential So, than more

the and probably third-party on recycling depends all feedstock opportunities. it So

Jim Litinsky

Yes.

Sathish Kasinathan

third-party or quantify So any color early? recycling, feed the is what and it from opportunity in of you -- too provide stock terms or can

Jim Litinsky

Well, you're Yes. right.

feed. as think think come look that was whole having of I just is, loop loop about well that, tell needs consume magnetics from And And And why this when taken at we work parallel. think much and on there's you so a as capability, would been goal recycling so, we what the that, to that third-party capital third-party other have variety that's because the while, is, in for and us we see we've of parties. think the I opportunities that reason supply these the process, our bring going And online. the to provide for there's for our are that closed believe attractive And can you internally -- this grow. waste process, space. we hard into will, we chain both, things as to production more that so work to a I have for I around, positions kind if to us We a want to, that be obviously, frankly,

provide think real a an we can I so, other parties to product solution obviously, now, into to And sell that us. alternative only is Right intermediate the China.

chain, have to And source out to And a will timing, frankly, who people so, Western to to advantage. of people we'll of have as cost of as to be to the supply there extent course. our our shareholders are hand, helping take should. third-party a that there feed build together then extent the ability that obviously, But want benefit to and demand put the project the competitive lend and underestimated a we

when positions us than just think opportunity really say just is business bigger well. that XXx, And magnetics it I we so the just growing. And is mean I the

there. And there's a think out to be be a just there'll of more. Of competition we lot needs There lot that opportunity. course,

the wouldn't is today growth concept. existing cap the And what just at so output I is our

Sathish Kasinathan

for a congrats Okay. quarter. great Thanks color the on and

Jim Litinsky

you. Thank Yeah.

Operator

Thank you. next question And Gianarikas. our is from George

is line open. Your

George Gianarikas

taking Thanks Hey, for my guys. good question. afternoon

Jim Litinsky

Yeah. Hey, Geroge.

hello. course, Of

George Gianarikas

parties you've you Is it a MDPR. for, So Is want various the buy given third magnet the your Stage think long that lots direct for more possible like for firm that deal, over to looking of working X term? you're becoming you something maker or maybe towards discussed ambitions sign have a are about to only opportunities deal magnet you therefore, and third when to you'd your through that for parties. just a leaning just metal full landscape, deals start, with with the and

Jim Litinsky

want Sure, come What opportunistic, think as George. that is the I that at and this so we critical but that the earlier, said I kind our -- profit. thoughtful we think dollars again downstream the we of most originally though say I transforms of what investors, of business. the were we I as strategic sort is what say is what today, grow of have That's would It about we about would total business, right? just We to return. rehashing and more just right? nature world

we make the like something certainly feel will opportunity anything a do that from long of maximize very ourselves. just will and period And so we set time, could you for over to we EPR us. But and sense want certainly that do

George Gianarikas

NdPr seem of industries perfectly in of recent And The correlated along I been price the then on moving being to to those from to I comments. time comments have where fall the from XXX China. with know about XXX, the don't

we -- mechanism is quickly its and the I'm can which turn and share second, quickly was So you think market? that first could that to turn whether assessment of terms just And I off? the -- what curious as get that lifted And price how supply of that the your landscape in can to come curious in particularly supply it can decline? about How happened? a you dynamics how capacity. what China as I'm somewhat quickly like do about China opaque said on is is supply on the second, lot question through a from

Jim Litinsky

George. Great Sure. question,

be happens what about -- months I touched say would this saw this, kind I There X this there the there's a lot adoption in of I -- says And government is, government iron speculation there's and might the was the but in I So Xx we probably is what analogy, in put it obviously, of it a we'll an talked the think and way, -- think higher what on earlier and West. then is when than of ore. much down. typically it six happens China, imperfect

want where show that typically will you a policy. people to have will so reaction following that they're And

at time, happen small will, up of of lower system, but then transactions if prices, they'll some a play. we'll and the see typically come you little you'll it go a freeze sort demand so be back bit. into will And supply will kind little And by and and amounts,

ultimately, because to And has -- what so happen. that's

quite moved there prices there a this had the similar inflation that in think I so There's is sense bit. as concerns about is here. that over And

just the perspective house demonstrate -- -- say so think this some And would and I an again, said is the there tighter the producers, our attempt I vehicle by pricing. four to is material. MP to the in What of this are this, was I share OEMs. that need on Chinese the top battery remarks, have electric And Chinese global OEMs ultimately, XX but market the people

US world, of but that's just the -- heard bigger still competitors a as supply. space, the And would expect of around same. and in I copper market supply, you're alone, just all and from capital need a so and the forget right? in and forget more champion come the if We these passes, You've expect lot at at that commodities seeing drones, So, stuff, the their OEMs. in to mountain to things, don't obviously, some think wind, auto think illogical -- think the -- that, now obviously, aluminum fully global of major the the challenged we be it given of rehash OEMs, long-term need And government look and there we I the kind lot we needs there's three need that chain to geopolitically out Just OEM it push I the the Chinese it's of rest -- more this to to don't our you needs lot turbines, right? I seem when the it subsidize output national a and appreciate, period whether of downstream more need to is right? severely that example, rhetoric the is to now, of doesn't of that's the me we or I I isn't the world head trend look especially happening. takes, that, that yet economy into that to supply everything the for just they're or that expand in there time think again, electrification any these enough

the versus lot going that this if thinking the think think product wouldn't And cycle the you'd and new there And last decade, about about decade that going of world if the when the a to that I push will. essentially Western forward subsidizing to is down producers. product, material prices was then sort it be sort economy Chinese OEMs new needs make is of forward everyone decade. people kind to the so, of to you are level change, have the going own make the their they're be for of downstream where need destroy the isn't And that, sense environment of competition. and I you not their imagine to OEMs is going enough dynamic trouble their have think their that Western A sure they that and that and They've moved need. subsidize to what Chinese

I do all I yeah, and prices world add up And it's pause. And I will know you But backed here from believe I that is, still. up, temporary don't but shutdown. materially belief brief go so the anyway, believe long a that our higher if how will, is pause. and this it that production Certainly, is a

George Gianarikas

One more, okay? if that's may, I

Jim Litinsky

course, Of yeah.

George Gianarikas

chain build the said done. Just trying plenty you magnetic hasn't that on talent, of a that you're to really been in US, time

you lot of the have mentioned at you I mean do And end so, a your pool? reps you how talent that about the feel of talk.

X So that Stage operate X? could think and to are there roles people that particularly fill both you you the Stage need

Jim Litinsky

the at for have is about talent And talking struggle our Yes. really that hire would our Worth. have seen, Mountain Fort -- I pretty every there frankly, in that differentiating factor. at motivates There's we a But I a no thing advantage was in is a said seeing that, DoD the -- President We're mean, for is that. it's it's what nonpolitical, -- right? going we're and is mission right? the are company frankly, first, we there's you right? to announced I place, -- And contract no and heavies, that may say both people, Pass much is over question there's all

the or But we wants a right the is chain. join have of Clearly, is what production. of political we lot got to to political Everybody we're we've is doing speed, get in what on whether diversity spectrum rehash you a us spectrum, wants left Everybody don't more side doing the that American sustainably. all of what to supply doing, hiring see again, do. the everybody some wants relative of are environmental of of need producer we're we things jobs. as so other the support gain of to the attributes a And because, lot in to talent side that

of mission. are so continue our we there people lot to to a And find attracted that

it's that But talent advantage. we And just, we much and want to in a to struggle be talent word the out able as there, get obviously, that think of can. get so we need. I And we we'll people think source as the spread for

time. the all us joining been people incredible have We

George Gianarikas

Thanks guys.

Jim Litinsky

of course. Yeah,

Next question.

Operator

you. Thank

question next Our Subash from is Chandra.

open. line is Your

Subash Chandra

you. been This -- asked wasn't, have might Thank it have if went it my over might been head. question answered

to are Just to to to now partnerships X additional for curious, with open is ventures or get the structure point? still pretty well settled get contract, Stage GM the joint existing that or you

Jim Litinsky

-- sure want say not I'm one do you to more that I Well, time?

Subash Chandra

Yeah, sure.

is or point, additional venture? now settled still if where build on to are right pretty you bringing So a sole the GM basis your way structured you it the by just I deal can production, if for that about that the have at you're much joint I curious a was $XXX open million right way talked X, growth. think you've now, first joint to Stage you venture this

Jim Litinsky

sure. Yeah,

automotive customer on So, and Fort of are Worth the only it’s the customer that. well, not facility, exclusive. a the not they're few They but things foundational

magnetics grow, us, want to for here for them, us should to business. And so to want expect And they frankly, successful. to you we're us -- build a it's be

to that is then facility. over and of that right? we exclusive the that, facilities. well additional all customers nothing you And in beyond, so you and have the can as see And in additional in answer time, automotive other about and customers, you above. There's XXx imagine, as and see about expect facility customers could additional will in think we're thinking So I as verticals future

Subash Chandra

venturing in the interested XXX% you, a for be will business business business? joint not magnetics magnetics the in organic So

Jim Litinsky

today, that, I certainly, it an We're say mean, as say growing that team. that wouldn't have I We're I we mean, outstanding that stands I Well, would team. building facility. --

facility. the already build we shareholders, well and create as value. original we our we we'll if go on think extent ultimately, building mission, mean, partnerships other and/or customers for we interesting But it back that again, the that call, things, for to for to our As said we'll can JV buy there consider value are to we're create execute and I sure.

Subash Chandra

like Okay. a And million, game certainly Got then now talked the how feel it. about $XXX to the of you? so inflation, just million an does a right quarter. inches $XXX update, and every But bit it you quite seems

Jim Litinsky

it what year, in forgetting. say year this go time I some some is, call, believe it was I after you kind Well, time would Yeah. – ago. think a said, think I if our August, back, QX last of I was I'm I I about but

we And will a immune And transitory. you it. when house would have that have been analogy. oil sure that not tell at positioning reverberating shocks other. continues MP, focused we and employees our Our as disruption were chain of can were obviously, demand way. you I time world in that would need number expectation supply making can crisis play view I are of to the we years because as view. was that the be is a the the about sort very been What for say – of kind best XXXX disruption right? to of My the And at that, has about we've to inflation, I supply that out we're people chain for talking internally Our used and we all I

build have people's I but little, incredible a it if to that getting to share inflation. growing culture. incomes by owner-operator an sure your We've income an team. you're make tried help We real to nominal doesn't because want right, grow, is

of So every all want grow join single we when them to and employee. well, people them, MP, do

that, we and we because it if the you the won't much assets, of immune had in-place grows time expensive. all that that be again, to scale competitive I our capital advantage But of gets even stuff and our is just inflation. it – actually harder had would much you tell just not more And what so

would inflation. I bigger that in it right but is inflationary believe think if environment, whether peak the more we Who we've over X% if knows, that, we still is X% years. peak kind last the while, I think that's years. continue that argue several the question, over that now, misses talk So this is had I which was lot a – coming of the for But I it's the not a inflation even probably stabilize than

what so because if next particularly in-place story great means of And that that the decade, sell grow we bit, that is lines have for value a is story. get turn off continue the growth largest it the will assets to the little we time Again, which a growth electrification. those is still into

environment. we I good what that XXX, will tell immune, we able inflationary and an feel will see the it in today. but planned we so as We be And beneficiary be that. we about is be to yes, So feel you we would a good number about not on

the seen things, if good months cost If picture think broader material kind really will right? of that that would course, we that this doing that anything but other space feel space is real few in we're get And not that cost we'll a do would that within world. a if Xx – we've is six months I number. you're this thought on something and that in that. disruptive space, x, to the space, well, an environment extent in could I we so at is the the bigger, of beyond thought or basis last mining change there's a in grow ago, it inflationary that this we we But are it's will -- like a done, that growing that mean

Subash Chandra

Right.

to Good Got Okay. hear it. Thanks.

Jim Litinsky

Yeah. Sure.

Operator

Thank is Matt from And next our you. question Summerville.

open. line Your is

Matt Summerville

a the a have With call I over is to… little really know respect bit. quick just I follow-up. running

Ryan Corbett

problem. No

Ryan Corbett

something you do is we start third-parties startup? looking to start up a what immediately something think as X that I'm your cutover being running? cadence How X asking, you'll do Stage for do year Is that with point thinking customers you start Stage non-Chinese that basically material. a to after at about of should Jim? you outbound be and transacting Is what after to the

Jim Litinsky

site sudden, of had about Oh, on mean, and people we was XXXX, and this I Well, we I yeah, Stage no Matt. we it back one. we're a that about sales all to sure, we we've go right? turnaround mean day always. a So If day we're looking a having been thinking eight had magnetic at since business, X thinking

while. And downstream points you for so been supply in from can plenty that at about had we've And of imagine chain. the a thinking parties a we've variety inbounds of that various

will of our like And Stage -- want be we're something will just challenge that. just to -- have and a in maximize to so downstream no benefits I on you chime would be to broader shortage believe people the we frankly, get that's the Ryan product. but who kind to or But challenge of thought, of I the the know that don't this share X if, Michael,

Matt Summerville

for Thank understood. it, that. Got you

Jim Litinsky

Yeah. Sure.

Operator

our question And … last

Jim Litinsky

will we one last think now. take I

Operator

Carlos. Yes Alba. Carlos from question last De

Your line is open.

Carlos De Alba

quite going just It's be effective Hi. went to This the to brief. in XX% on is up rate, QX. around tax

few a quite last we even of large the last QX than saw think in I greater quarters, number what year XXXX. we in saw

a if can forward? Ryan going wonder, you I little us give color or Jim of So bit

Jim Litinsky

Yeah.

take why that? Of Ryan, course, don't you

Ryan Corbett

is we've Hey completing construction would I obviously, On and perspective on is Stage say our obviously, what say rate scale tax on to as if effective what see assets discussed can plans the line that, Sure, we potential take those on assets. we've I significant have X an does of that, on a bonus impacts what is, would of depreciation our from pretty the is, that Carlos. bringing given as

in we're And so, are income you what the and bonus in got so and of net in deductions those when taxable depreciation we lower effectively a of significant so down bring get you limited some likely rate account its find amount effective tax tax that into a but the very the does rate this able being of actually over year. the a way to beneficial position cash the year, perspective of attractive have GAAP course stop from

the area this closer to couple you next reevaluate to say around So we'll see is here reasonable Stage service I get of as would what likely in that for of quarters, and we X. continue

Carlos De Alba

Great. Thank you much. very

Ryan Corbett

Thank you.

Operator

Thank no time. are you. comments. call And the to I there further Mr. at this Litinsky questions would like over back for turn to closing to

Jim Litinsky

Well, quarter was everyone. great Sure. us. to a for It just want I thank

get we'll we'll work Good now. just talk soon. everyone And night. so And safe. back to you to Stay

Operator

you Thank And this for concludes today's conference participating. call.

may You disconnect. now

MP Materials (MP) 6 May 222022 Q1 Earnings call transcript