MP - Earnings call transcript Q2 2022

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Operator

Good afternoon, and thank you for attending today’s MP Materials Second Quarter 2022 Earnings Conference Call. My name is Austin, and I’ll be your moderator for today. [Operator Instructions] I would now like to pass the conference over to your host, Martin Sheehan with MP Materials. Martin, please proceed.

Martin Sheehan

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

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

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

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

Jim Litinsky

us And thank Martin. Thanks, afternoon. you for joining this all

giving by rundown start call. on me today's for you Let plan our quick a

the and our open inaugural the on and by financials report followed review First, I'll Ryan's highlights I some up X call quarter, the and Q&A. before our highlights and and progress to X to of update of stages then return just you published address from KPIs, opening will ESG with

So let's get started on Slide X.

of quarter, results Our tons solid concentrate. XX,XXX in produced we the second tons figures to quarter. metric last second sold are In year's continue metric REO quarter execution. consistent Both and XX,XXX demonstrate with

EBITDA to coordinating hitting production quarter was pleased quarter, focus team's we Revenue as Adjusted discipline $XXX well to long-term and the site, for to in and year-over-year the resource, resulted of was up another maintaining shipping million. executed and in XX% targets. ability deliver benefited throughout realized record value the This on construction to we Given planning and commissioning, in with $XXX.X mineral solid cost prices. class on are Stage X increase financial of from world last the investment up well million. the significant really as XXX% quarter, Similar performance. maximizing

approximately on on to Ryan X be detail of year, adjusted maintain optimization to This pace which year-to-date pace expect we Stage earned to Our $XXX.X XXX%. on performance adjusted current But ramp first continue this KPIs XX% margin and to continues just as additional construction completing minute. $X.XX focus brought we strong strong our of million. the drove the primary performance project diluted remains to our track. into Construction flow to per this stages completion Stage initial in an We circuits provide will X, on the financial points fourth new EPS, for X increase year testing which end preparation free previously our in includes XX EBITDA X share and a pre-commissioning, performance a by normalized begun cash remain and we've checkouts highlighted, and regards on target we've with and and commissioning. legacy both for that in quarter. mechanical expanded

in our over to forward, just and details and start results remain for magnetic product call to a the lead detail. key and let other alloy. of procurement Ryan? I'll long for Stage provide but In through more stages on hires, we tracking of bit few vertical XXXX addition, in X and late focused first turn a more X facility minute, X items our a me heavily going is on Ryan a equipment run

Ryan Corbett

its another highlighted, activity just Jim strong peak. mountain quarter and delivered operationally Thanks, QX and we Jim. financially, and construction it approached even was And as pass

production and reflect I'll Stage point X, step bottom starting to X related On the remind up how As both out remain a efforts numbers work. I mentioned, about. period in output few Jim and Slide go period line continued optimize as in considerations at with that’ll There details, tons. through solid comparing left are to last everybody very in the the XX,XXX graph, with production metric year's volumes

in shutdown drive plan production over fourth changes Stage while mine to this the and the on X our well new as we stated were understand focused can REO X time. bottlenecks incorporate of always looking in recall take schemes, working quarters, true grade quarter-to-quarter, maximize neurology, call. to and This to larger least trade-offs, the we Also prior life we've pre-commissioning, Stage reagent as to afforded our medium particularly to we by we A production long we major some lower remain the which growth our cut-off for on optimize mine, supports year, is consistency As and second one-week lumpiness of and advantage but at preventative a quarters. maintenance fourth as is grade and feed quarter and composition continue our but as maximize and over plant orebody optimize that typically discussed term.

So output we in in which saw QX quarters, generally we here those sequentially. lower have

year As and transition of the concentrate for is circuits. areas that our roasting we tied existing the a to in major Stage dry the mentioned, the X location filtration completing remainder concentrate directly focus and into operations, particularly

the commissioning may X tie-ins. second prepare that additional our and we two quarter, semi-annual include in As fourth for stage Stage outage

quarter our of QX that production project first the outage We quarter this slightly to fourth currently year. expect the look than longer We prior-years. may to similar be

to each shipping manage sales dynamic continues well Moving logistics our to vast a through shift majority team the our continue volumes, highly chart allowing to us to the environment, production clockwise quarter. on of

with some correlated NDPR highly that March and in pricing realized right, in and to in recall $XXX that top quarter-over-quarter. pricing. recent basis about year-over-year NDPR sequential early the our a given the below recently And realized has a NDPR lag quarter pricing high in pricing prices pulled timeframe. at on slight given pricing was the see versus pricing QX per market agencies, remains On X% up XX% strong our strong the of realized you results. March As back our kilogram, is

see prices expect in pricing points our a in We to QX percentage if QX hold. mid-teens versus decline realized the current

ahead remain last year's of nicely will Although, QX. it

bottom over right graph on year, early Lastly, in well metric the core as X higher In shutdown. usually costs, core second hiring excluding per of of pressure and $X,XXX slide, and remain during heat costs production in stage the $X,XXX costs our related production roughly were quarter, one ton at restart higher advanced growth metric operation to mind, impacts despite inflationary a mostly Keep circuits. range. recommissioning continued the Stage we of per flat Stage this on X from the of just maintenance are year-over-year $X,XXX end with roughly combined a with the as in of quarters were range the The ton. associated costs year-over-year this maintenance power plant related future the

inflationary XXX% and percentage sequentially, primarily points, and realized plants the As and our which will And QX. Stage The due to we we'll $XXX power higher in on this we to excess ramp our year-over-year a on can to permit and $XXX X the the metric versus you'll recall results $XXX next call, our metrics, of operational XX metrics XXX%, certain denominator. And the are increased dissipating couple EBITDA mainly our quarters commission cost such run Stage production up half the primarily as ton profitability were compliance. of impacting focus Stage for Summarizing, all impacted Stage as the per X output from power margins a ton efficiencies, all that costs and and related in metric minimum regards four in The quarter, X driven lower we getting the is in EBITDA in was production with pressures. over operation. course shipments commissioning, lower must up needs, of temporary for scale Quarter-over-quarter X on controls power EPS inefficiency for cost adjusted adjusted our shipping primarily half at back quarterly by of from comparisons banks. basis, generating volumes the revenue heat of in last given quarter costs by impact about you to of XX%, our our see earnings and year. SlideX, overall pricing per outweighing currently continue just course, diluted up load of represents went the hiring

Moving the end of of through quarter. to $XXX.X Slide June, profitability. at X, of payables Net year-to-date $XXX.X normalized related balance CapEx sheet to Stage $XX X the operating by end million million free flow cash capital totaled cash another on million higher from approximately driven grew improved the year-to-date with the expenditures generated flows

investments. as we back-loaded about the CapEx this year, As earlier three to year be our will key ramping progresses, primarily related talked

mountain and paths. the related the of Stage of completion and light First, construction investments X portion rear

a Second, facility lastly heavy and are separations Mountain Fort Worth investments magnetics initial Pass. and and recycling

X to see the Stage flow cash our in to to strong on investments draw to-date impact spend. this balance higher on of the has our will CapEx spend the absorb modestly half expect the of this year. So flow free we cash back we But only funded need would while year, rampant fortress sheet

into portion we sheet, our balance balance rise the securities backed higher recent cash in yielding, duration treasury the to invest rates in short Regarding government advantage U.S. quarter. of a took of the

of cash short-term closed $XXX $X.XX investments cash to total of investments. with a $XXX short-term equivalents we million and equivalent approximately such, in addition and As million of the balance cash of billion quarter for

to see quarter Production, XX-Q. highlight stages strategy, will we gives ability the our company's of to confidence success into board continue on us impact short-term cash With and and X. X on back operations. file investments summary, the turn of further to flow significant another You I'll In Jim? across early stage demand the in cash from statement, it move our the that, for this product control when our for our cost three which Jim. execute the strong

Jim Litinsky

Ryan. Thanks,

to downstream discuss Let's on progress our in to XX Slide turn quarter. the expansion

have consignor effort and shot Mountain Here's on site. concentrate two re-accelerated that at our a construction of of dryer stage Pass. major the and mentioned now had X peak hit projects quarter last we We optimization good

tank site have fitters such, X pipe XX nearly mentioned a night over hours days workers We also craft a adding a week electricians, iron And and on shifts. we shift. day, as now two labor,

We list expect areas identifying construction more effort our a advanced, construction quarter. is of complete items begun of has fourth the punch to already started certain the job. team and this where to sustain mechanical checkouts In project into

our to For the to and supply critical isolated equipment We impediments most pipe, pumps, have great through of continue manage performance that remaining equipment and instruments dryer, impurity in to related made assets, and we steel, upgrades but work the control to of automation to water quarter, concentrator tanks, completed we diligently iron recommissioning facilities removal existing operated issues, in all working brine important regarding don't on electrical our are wire a calciner are and sequence, which successfully and see largely upgraded be first treatment are chain NdPr of unpredictable at path balance critical on-site. other Chips completed any point, quarter. a This as beginning largely a those. to equipment, we installation. to nearly piping, very process of our circuit. hardware proven work lead continued removal the progress our is site-wide in chain electrical concentrate the work ancillary efforts. and with starting supply the and process The process the challenges, news completed process step our salt do testing fourth maintaining And items through facility, fronts project, upgrades the today, this we the brine in software, and balance. of on crystallizer and precursor recovery our recommissioned recommissioning part parts is facility, and number will also important on second automation, separation of processes,

key We rare our separation began finishing engineering and continued circuits front-end of also activities. and heavy procurement

complete our advanced recycling X projects waste are most are that to recycling of magnet the we on across Many to life optimization underway, Stage pace they integrated end to various are and plans operations. comprehensive capability support provide our and also We sites. also and be excited commissioning and process other efficient for X

on but early off It's Stage XX. great a Slide are X to start. to Moving we

the will site last of you grading we showed If quarter, a with recall picture underway. the initial

in laws. with can that updated slab-on-grade You vertical is this we going and concrete picture see the started port,

foundations the our as underground are most So utilities. of completed

equipment to our have and placed for long start We all have of the for major base established key process a manufacturing the also production. orders equipment lead supply support alloy

to Importantly, a process execution grow we focus and with on team talented continue engineering. product and a project

so report, briefly Moving Slide ago. published a on inaugural just which we on I week ESG our wanted or to XX. to touch

find One, sustainably are it a on our things go won't The great Sustainability highlights the can I There the slide, are; at know will through You all. production mission Investor site that on under are success. some three, electrifying for to that our is website of or significant that heading supply although Two, earth listed forward. in drive in responsible world, section know important advantage the raw it the we under us our materials a to western people most create Resources. going rare the we competitive most operate critical our sourced world. And environmentally the

the talent locations, continue So we Mountain quarter And talented head hiring our workforce. total key new our and Las across XX second our count culture view Pass, people Fort roughly nearly remain and $XXX. in Worth we competitive on and grow for us. to owner-operator bringing another Vegas very adding developing diverse focused We advantage add as and a and to

to wrapping to now and owner-operator many and commitment up, stock Michael United rare the more only early the I public is Mountain And history. But you ever our company. July, we our by dates wanted and to efforts original the in content restricted company highlight in XXXX. about myself of of we've to anniversary July, as X-year grant. nonexecutive that our the never than to show back that therefore, XX-year America in MP formation as much of content that has States Thanks all that annual the XX in highlight we company the a realized culture, I months. team, So awarded been for employees means a reached producing REO to a its of reward before incredible has it domestically Pass team of to produced

team shared already we a upon So the remain our journey. it our let's but its build With just capability on MP over our remarkable across not our continuing that success past open but for it company American team. is been, mindset up X our to story with of U.S. has of all started than industry only future. about the is is success an members iconic operates stronger ever years, in the optimistic questions. are getting culture that, MP I incredibly

Operator

Our with Instructions] Matt Summerville [Operator from question Davidson. first D.A. is

Matt Summerville

was March off an kind XXX of NdPr I was overview the I kind on on And pricing could a bit then call, wondering assessment little actions on that driving if early you is of February, follow-up. Jim what First, you do last more high. market thought late recent at gave you have And the a point kilogram. of similar south of what of you driving a think a pricing heading

Jim Litinsky

Sure.

I time, obviously one What as last say they're So would it's and across and been down. no Matt, hear commodities deteriorated and a prices lot landscape, this to has really commodities I challenges. the market. demand, me seen well, you'll months, economy is supply the Russia. are predict. the said driven always say come knows have post commodity We've time, few really and by ultimately every of hard is and last And a global in There's

any not certainly, going to immune so is be from And that. commodity

there were think of As commodity, where prior is they Actually, which our the employment in is, shortages sort of great. price growth relative chain. a backlogs. because really we the are case large have U.S. course, auto such And beginning -- good the still supply to and going decline auto about sales into frankly, to been

strong. -- we're started Employment as year it of it -- even we a is -- in still my the a is, -- and is beginning real throughout like belief basis. on it we So feels recession,

sales means continue that auto strong. So

always tea And say of you've we there. there. I that auto all see setback to read side, But on a over here. the on in would it's Chinese don't hard going so the the leaves sales sort of seen what's lockdowns, in with certainly,

context I other our I Matt, the is view. in kind to macro impacting than everything. geopolitical would And just market, that so yes respect of all to with important we give landscape my landscape at from least think there's the back, nothing particular view of further that and say because sort see it to dramatic it's stepping that What for of

air holds. early people you about economy. I I talking about still then, boil did people embargo what transitory it were that when early is think it's supply inflation, so thinking If say, the of and think the to wasn't year -- to XXXX I analogy shocks the chain come 'XX recall, last people I think of better year think I as that, was And early transitory. that the when The transitory. in one reverberating out unfolded, analogy don't the realized and

I has factors that of we've we -- now we've hit now all need to economy taken think don't that rehash. this the because where hit the a period

so think such And of sort if that celebration pulled a period so And had prices but will. But have things thing or period pull and higher weren't as where back again no there's to into commodities I analogy, 'XXs the solved, late actually mid-XXs slowed, of again, year supply the you even challenges a growth there's I out where of think this in, analogy, because but back, perfect we've go then you if of was and there, a they sort pullback. that in there in we're the a bit 'XXs. actually accelerated

X, So kind or challenging. whether pulled or commodities months of very have But X in. next X, all the challenging

of But barring true again, irrespective X like out Volcker pretty I particularly dramatic with going or reacceleration electrification, investment what does, spike. the we're to the these pick all see look markets up, beyond going a supply some back are think into or we a much issues. year Fed As eventually when

-- economies give end goes in it cutting ultimately, deal to think because, period just impact. by see with time. way, just -- and grow we without issues I can any we on make Anyway, saying apology short-term can't over basis so that, your I And a long demand sell a everything that, real need supply of don't, if didn't certainly to course, we of you

bullish So electrification bullish. the about we've we for remain of we're and NdPr, before demand everything that that the very rise said very

So go the What's ahead. follow-up?

Matt Summerville

half? ramp of I X if when little in it. on just help some ask coming fourth test start for the have unabsorbed facilities. sounds a was the give it in of going back perhaps more a some like to costs equipment, you will somewhat Got milestone you how to the the Yes, production could you of Stage Because the quarter

So relative in you there to will, the how we that much if the of from will $XXX back half million, get chunkier year.

Ryan Corbett

from if And in in the production will that the of ramp prepared say of combined start also ups flag to do guidance may is costs and total as it's to continue. if into is the think Matt, sequential can of it in change to will just shipment. as other the the a but certainly on in million, ramp versus assume, more numbers, I'd the inefficiency the specific downs power QX think scale through say Ryan. the those well. see on the to about little you’re descaling at don't didn't fair incurring, that half at on the impact the I math of look look point, you that you more bit actually of costs those associated you if taking is as course meaningfully sequentially start your unit the We half impact. a to that those Yes. will is have $XXX on dollars basis, hiring, that the and The over an to meaningfully. we capitalized you sold bit a a you year, million a that, dollars I'd and and certainly then take a if labor [indiscernible]. at per I lower do I heat dollars primarily versus project change that those on that. $XXX bit other account costs of can how plant costs it remarks, was product obviously, based talked basis getting we in start look sequential though find the themselves QX type we're I'd related and about

overall way our little of it's is of bit flag clear I is, then like our a half So all this. year the on move into the transition certainly to very And up for into producing not be But that, we've in X a the one this hiring prepared as its year. other thing Stage we step we point will made as going become I'd of ramp products. would make a this back

point, extremely transition, will And we on ramp. can the reality begin to certainly, been we've expect, of to statements the as the so your you But you excited I making. as impacts Obviously, about start the we that. think, is financial that progress see we're to

Operator

question next with Fiedler from is BMO. Our Robin

Robin Fiedler

you example? credit Nice that just to Any Act. on in might is about if Stage and have kind processing, material critical tax there the into would a know your be your is that potential operations you guys that curious maybe or question for inflation quarter. would proposed of be X, I'm insight case. this into -- might would you be have for any specifically like applied to for But great. have production Reform how of XX% section insight each specifically? And In on stage I passed, if the look unique build, it

Jim Litinsky

Sure.

the of that obviously, Robin, But it saying -- we've not been electrification, what it's that been doing. we've fantastic the a been that of This goes lay chain. The turbines will build, has a headline without been just So obviously we've wind going bill I've passed. it's mission a and vote positive of And who it -- talking the everything of knows. really the our just about EVs, accelerate supply to to fuel for sort the big And it's electric that it's see we there they're well, on. heard to course, things is of picture, from the from that background. Saturday, importance more fire course, pumps, was all

of the act get stuff forward. chain are now positive wants This all bill more both and So onshore. and steps we challenges supply industry and think about we've said repeatedly, government us this we've -- great that chips to when had and the all

for really say we I will working at it's operation mean our out -- to sure So read for weren't the it bill say should this great. the of I stages it make the tax of bill was fair today, a certainly people because to to -- to have I that initial closely expecting. of And but on just fantastic which think if we if look passed to very would It's came and from on think content what's you our yes, the surprise as I apply, it's for there, reading, that -- aspects of what's kind fair And it's tax be we our everyone was and somewhat your -- operation it the in us. fine believe directly credit, And answer do and print question production specifically will. the good us. is be -- team eligible we that.

material And will be written. something as And it. is to -- us it a as be it we so see we're see to that happy it benefit will

great. Of course, anything But and it can pretty happen is passed. certainly, hasn't

Robin Fiedler

quick ahead. your related. ahead, Go that somewhat a ahead. follow-up Yes, just thought. maybe finish go and Go on And Understood.

Jim Litinsky

for it's to going tax was credit who know just a No, but those say, maybe written. has don't I not,

mean XX%, So it's that get. a whatever is, it that's XX%, and credit means would cost you actually would

be it material -- this be is us, great. which could to So dollars could

definitely. ahead, go Sorry,

Robin Fiedler

I certainly capacity And ahead from. say to upsize accelerate this were these I this that even saw lines end what to passed, obviously, planning. helped would we of they benefit plans earlier just decide you you, originally markets all their with and has agree And week,

a for everything Just it thought curious, have more still focus X Stage is changing on, the or likely going you you potentially upstream maybe with only are of plans and on side guys X about like completed? after

Jim Litinsky

said I Well, additional that Stages lowest is I And you strongly X feel you be very We're X just would begin that return would risk, to that. getting quickest, our about is commissioning. Pass. near-term at expansion I've always obviously belief as and know, my supply that beginning Western highest Mountain tell executed, priority right? -- the about

sure sure we And we that the make deck done in all to what to on are coming so that get make hands we have want months right.

when as I tell had scale. prior Obviously, from you'd a really, expansion, kind have this of And I see really versus thing in their requires again, you to of was overruns takeaway powerful what much just space reiterate more that think numbers. that we that's to the the it's adding or them. that is see that ask it's supply over doing cost can't is like what lot formation, from capital capacity a It was address a particularly time, we high have So out a them that would I how be of really can primary very sort growth there'll their there'll focus. release about I But juniors more a own -- should. people you announcement. really raising hard And endeavor CapEx capital that's capacity catch-up mean, need lot there in call other us. of announcement. specific supply. they additional to -- for return it's this, market of of I'll certainly But that be I I

time is is investment you our business is the of and a and don't amount take look their at -- And that you capital this at years. numbers, though, so lot scale reality numbers, the look invested. of This is, requires a

important remind I'm a parties and their to announcement reference to is is well mention of one highlight there only to think with way dry just speak, that Pass. then good position things it another that the so in out advantage at announcement, respect notice their lastly, thing, important this to I speed, that point data we'll it's that that And And we're MP cycle. is saying, tailings standards frankly, big extent to, parties so think did and an bringing And hard the environmental thing that would of the with one up about to that with would of I and help Mount be those learn say, that what this closer think it the I was because that I thing I to growth positioned take I I get sort of and their process supply there we is component a have online. are think to respect really an to it something to to was everyone that

have to discuss how so sustainable that we in much investment important And was the producer and space. how that the most are we repeatedly

see in and of hopefully frankly, as too all of it investments because far it so some sure again be. make But think to them is proud highlights those of make want and friendly And we are to can those this some production it was that do I that. we're also great how environmentally make we ahead announced space

Operator

Gianarikas from is George from Canaccord question next Genuity. Our

George Gianarikas

results. Great

to just I'm from GM you of regarding Obviously, additional them little material like see seen is just for announcements, pick months, to it, several auto with terms like about the I'd of an a we've sure but call the MP. at what secure your over ask in just traditional from of and guys some kind partner, And because wondering of apex. seems from EV be recently XX, XX kind a battery you I'd Ford what seen materials. the bank deals means GM. already that bit to I'm scurry So next on you've happening OEMs to that announcements additional what's and major

Jim Litinsky

line, the you me it, the Well, way but you then to give describe we demand are punch some I'll best detail, and Yes. takeaway I give think let not constrained.

law We But respect space. is some frankly, in are critical all to very just the you jurisdiction of the no and aspects supply no industry that are acrobats particular, the in -- our announcements space, as given the obviously, standards. constrained in this certainty important. we supply There of unique that environmental recognize net Mount of as and Pass shortage shortage our that with of of can provide the OEMs of chain, attributes, of well benefits rule mentioned there's with material

And there as will be right? would It's number a that scramble wind, for. that, for course, to means other of for add auto areas so and it's -- -- auto, materials, scrambles relevant other -- electrification well. it's also of just And as are I this not need verticals

important conversations business. our And that kind conversations have wouldn't And and we an believe really organization, the we that say so that be on the partners to a saying will, deals. we deal, long-winded really think the done continue very or other address specific long-term that's going for we address deals I of as it's do, want to any remember really take have that than that partners of make specific great also, to right way we deals but that for might important these have our if economics get I'm -- the we we -- that it's maximize going long-term return you are and and these deals valuable And that take really to strategic not are something also -- deals a do sure shareholders. whether increased. and to

again. the only the of I and we thinking it will through And chunk time it's is penetration significant where really we accelerating have. fair know so -- we electrification, management of passes, And if know to that is iterations even this I reduction that in because inflation spending going. JV of and type are we course, And say it's where opportunities that's the all at accelerate you think deals mean a if

we're need execute. to so in we just a spot, And and great

George Gianarikas

follow-up May a to I ask that.

just a Or you when returns? material? forward economic demand going everything deal for do potential not plan is you are on structuring, your think for matter structuring earth about Just magnet most what from does rare a the Or there future perspective? it

Jim Litinsky

Well, certainly is the for there's demand both. answer

body I heard magnetics. will today, to expected You grow larger the our business to ore we because may advantage current long our term, in the really think say underlying have opportunity the output me historically ability of magnetics right, have take could be of -- that than

as know, horizontally X But ability certainly shareholder. us grow expect opportunities other we to both We and answer you culture, in as think operator what on And have to should feed more have the your you take as the or future an far I'm unfolds economic, owner question, to we're be largest knows X. and the I who material. and

we're what before, we this just we making way so said again, long-term execute. just it's we back maximize a are that as sure we what well can thoughtful MP is to can for -- things doing on going from take I important so And most thinking sure about can the is that enterprise value as things, make that

those we And And reward in risk rush. so trade-offs. and always thinking a we're be about won't and

at that We think when billions and you are have, you -- years look ahead. given we're I deals, what these we see

up sure just right frankly the are partner don't up that need position we're that make that thoughtful we a is and And mess partners. to we long-term position. by then mess good that the being we what way don't So sure deals to making our about

Operator

Ben Kallo from Our Baird. next with question is

Ben Kallo

Just [China] versus through one. on is will if domestic That's question. pricing my differential between what there be production think you first going

Jim Litinsky

Ryan, that? do want to take you

Ryan Corbett

Ben, talking about assume, I magnet. you're

Ben Kallo

process along is expect to X, a or if for X the Stage premium. Anywhere you'd Stage get

Ryan Corbett

priced will Well, sell product. is be commodity chain has a domestic obviously, and going therefore, and scale, seeing as ago back scale dominated do time China oxide, outside period you're think, grow with seeing supply been the a us. China of I to for what we Chinese forward scaled as supply -- China some players required though, you're really what of comments at the a gain about and including Jim's to moment the by

the scheme at now, that a and absolutely end And type over on It's a different time, of something day, the priced right possible. basis. is that think our short pricing we term, for of will products this the in about. is talk so for about domestic But manifest China

is the in scale magnetic space, significant as curve think than I strategy down commodity, harder drive we've necessarily a what facility, the pricing we get goal beat on to any to not come about a on China side, try and day can. to X, and to side, customers it that out metric comment which to Mountain been the looking not is not and quickly as and looking Pass That's ton very about day hope is our do beginning the what exactly from oxide that's pricing. X. is get the we it's come to done for are our that's on you make reality say but exactly to build at That's as quickly magnetic we've with to a not when X,XXX we other what our cost lot clear the scale, what can, specific realistic also is magnets, as at capability

as scale do to have other about the side we have so process that part the think opportunity to that the advantage is greenfield competitive to country. to great to reason it to ability off and just I thing underappreciated the of so in as right deal of of partners, their process quickly partner cost making they lot There magnetic our to curve. the and that things come down talked separation capabilities the magnet the waste a a And about is Jim is technologies. in of of comes due steps space And that's magnetic as liquid as market magnet one space China somewhat importantly, the with are get in with are we able as relates possible a automation in on the

it company. into just in not same it we'll have We the will have integrated country,

Pass over And Mountain get we I X continue we grow our advantage as we Stage having by should leverage think underestimated not facility scale. and be to intend that to integrated, it's time so something the and competitive that

overall, know I addresses that that So hopefully, your question Ben.

Ben Kallo

before are work else. Pass? X said Mountain at expansion focused on doing But Jim, I That's great. you're you on And you now know, Stage anything X and

Jim Litinsky

sure. Well,

-- should that imagine and growth. these lead we're thinking about long-term items, long imagine are we that you You are should very

with what that shape. to way outstanding at X you you long-winded the exciting to have example, tilt -- of obviously, ago moving we were we about the ahead forward at grow after And over public, last working say hard fair a and it's said years, or I taking see. that's And XX-plus a it's ago and if mean forward For just And And front. it. a magnetics XX on mean, just if our really and and we're year and was of discuss the long-term business little just we business to really years accomplished in GM have that capital awesome It's saying on of that's I But a it's going we've proud up but think a market we when look year a kind on change X vision, a really of was having look and the went is extraordinary. you business if you I to we magnetics unit that fast I -- what that sort today. then a continue ago forward fast deal what will, year at team. was. because we see you mean even to walls I'm something a year we -- that

for at that sorts we are grow able do mid-phases looking be the stages, I come. all years earlier think to later of stages. And we'll And ways in so to business to

we're have about said to by you so things. in and mean should the assume getting have X and do -- all we step And take can to you just we the it step coming but we on I going. things months thinking execute that Stage again, the

at So we'll take this one a time. step

Operator

Blanchard question with next Deutsche from Our is Corrine Bank.

Corinne Blanchard

answered, of but just been have add Lots question maybe X. I my

for it state about big months. for China Spot price question, would what next the on facility? And second way in textile are X X you can next may the me the remind the XX to first the your then continue pricing. Stage you think interested view be The over give the just to one

Jim Litinsky

what part? -- was You last big sorry, I'm the next the said

Corinne Blanchard

facility, stage Stage the The extension. textile the for X next

A –Jim Litinsky

next stage. The

me do and Okay. yes, next let sure. I’ll the part -- then Well, first

this is realized so is I think some on part, the weak one NdPr. that relevant is I seasonally – months a of I actually, earlier. of period, didn’t the thing NPR in So the pricing some first the the that NdPr kind just actually But covered I summer of cover of tiny

we commodities that. a term we this you honestly, from at And about I the whenever there. that in don’t And supply we’ve course, is pull back estimates then, and can And can and And you right? or and it’s long-term very people we are it pricing, a – the as I government medium the just stuff, worth, just So all side, that enough transition. or – OEM for for prepayments everything on reiterate and on accelerate math this thing commodities look in covered global of or there’s and the the do are remind announcements demand, clue have the drivers. some chain, we side commodities, and going you realization things comments see of demand everything it’s it’s never look have the and But trying short that the supply be Reduction from then I Act and growth earlier to would whether this Inflation and question and I that asked we no of the then on to in at a make what supply business the I’m the all easy is about again, my the would is seen market, out what’s on about see. the

supply-demand in – it’s other we’re dynamic well our mean so I’d think the rather really no commodity. really be in. And and that there’s is I I positioned. space awesome,

China far – now, market than a a down few And as sort ago the was to kind but for obviously, other while. of shut from so pullback of and as the months

on as as movement. mine short-term is for good guess front Your that

down building But really all we’re will said, will the the our selling of think And follow sort up for next we XXXX. feel then into all the getting XXXX, I late the there, get building we And And magnets equipment of as first and be for question. doing GM. production. alloy complete to go step magnets obviously, ordering facility, if we’re the designing is in – the step We’ll and getting them – we’ll Stage to and be intent far so I and missed from equipment we’re right we’ve will As facility. the as process free – making that the alloy and be of flow, – we the we ready dealers team. the X, will now expect what continue the to

the that up. Or Stage – follow question – think is So for I that to the Did X. want steps I steps you on the was miss that? if

Operator

America. is Lawson with from of question Next Bank Winder

Lawson Winder

you for thank the about and on I Even update. wanted discount. pricing just the to ask concentrate

versus for trend like guys if trending So discount It hit you looks this spot was basis, clear it oxide I longer-term that quarter but versus pretty downward. your appears solidly lower. prices, concentrate the it to be just on last quarter, flat look a

And point, what is higher XX% situation where get on much I'd selling actually you some Chinese you reflects that and oxide longer views to could this and China whether is given continue your get love value-add is think at mean, industry tariff. concentrate, suspect to I downward. a but concentrated it than separation selling is driving the we Now I the into think that that

Ryan Corbett

discrete I discount there obviously, way down. discount is this market go demand vice Would versa. in versus there about manifest talked tend facilities we've separation the because the up, NdPr take supply of pricing And that. implied it tracks the market nuances. to can the I implied discount and way works triangulate obviously, for to But tends into as little those quite a to to trying and price. bit some Ryan. selling the stay are the a is it's on the when closely China, Lawson, before goes NdPr of terms really in that we're

so so flip one you And in seen would To has the our gone NdPr obviously, that. of of last other. trend the gone couple years, the the see in flip over and you've pricing side happens, has the extent the direction, discount

for word you're really our of that the that, our we in the has it. the with been unfilled we of space, look is I the that the outside comment from be outside players at would will other and And demand internal of is that think clear then, into versus for course, X. concentrate, own bullish I players actions what In for of continue the a X. in building there transition. China, other to as Stage take on Stage sell to moving just terms always strategy don't very opportunity take of But amount oxide product very there downstream Clearly, that significant of consumption on time some your just market, up capacity on additions say oxide our China. We've the seeing been

remains that focus. So the

Lawson Winder

selling outside just terms maybe China, internal follow-up X? early, in it's quantify to a developing how Are I your X of that. your of expectation been product selling you'll of on but of you year is Maybe what too your be in then or able And know you kind maybe a somehow own little much have capability.

little Just on wondering that quarters a you bit a if clarity might did few have than a maybe more couple of ago. you

Ryan Corbett

areas the we've that been I'd side, certainly And that broadly certainly we of continue just this commodity, more that point, have to supply at in then. outside about not China. additions bit a than did starting clarity to talking magnetic on It forward see say to additions on but our giving you're supply accelerate. the assume we're guidance. safe the trends not is specific now But we

the that, demand. expect requisite can you that's obviously, so incremental And with come to going

how try so facility these our deals, of we certainly approach as continue being And be in demand. Jim Worth we initial Fort sub-XX% to our very magnetic mentioned, with to methodical

a term, open to as short the have as in that we oxide will, the much and market, outside can. of to is significant sell We sell China into amount of goal of our

Operator

Our final Abhishek question from shall from come Northland. Sinha

Abhishek Sinha

for been that So parties could you any than question have us? one your just from I I've the any other most share GM, downstream wanted business, other other answered. interest with seen you of thing noticeable

Jim Litinsky

which from -- reiterate, use well, I'll my I customers as amount love we of just is yes, I'll So and -- kind of the just I discussed mean line, of and favorite cases. I not It's who other -- parties. interest use just constrained, number a supply a of wind a lot the not we're it's There's of OEMs, lot constrained. OEMs, we're demand

when You should conversations, and with specific, imagine having everyone. we're parties something it share have we're we we'll name not specific but obviously going to

Abhishek Sinha

GM contract. Sure. the And then just follow-up for a

about be it stuff. XXXX, you'll and like just you'll then selling So 'XX, know I magnets some was alloy late have and

So line is contract a are there any time of there the mean, GM? is that that you anything could I time constraints? Or line put by terms in bound company constraints

Jim Litinsky

is is actors don't can it's would are industry I supply national of want we we from are can economically, this quickly -- of for going, get wise. some you're is working typically say if this years to how any as -- Well, can right, couldn't I what I possible, And that X from But into the -- can and you so government years, discuss resort, any I how least we X I question important risks, biggest -- chain strategic, get we think both as specific will. the is we that, quickly directions, are you frankly, terms specific address deal. quickly all this from people at -- what I go so get kind it think, security want there but it's done, asking

turn And it is so of in full complete the magnet important into the a of end-to-end chain United metallize supply have it a the having mined to it America, alloy and all States us. to here ability

trying possible. as as can working done get we quick we've been we're as as so so And that to soon

kind something as all in that, disruption think As pretty of if issue were where There's I there's I that that aware of Is are challenges. there chain far sorts with people some the supply well issues to world. take mean longer?

kind I this operation. items but we're think maybe imagine you of -- of the out, mean, X that. like I I one, would so planning to the And nice progression this and for were major say, think -- certainly that building that look we're about have, remember So any but number a -- certainly sort supply we in with challenges have that we're rare is and of Stage throughout sure ever But who's contact big -- any stated contact wants industry but of the as constant us us way it's right? as magnet in we're a possible, will But GM, a and the if you we constant fight. help it's there we Defense created I does major chain our with that [indiscernible] would of do be ahead online that our that wants not we're well. as earth would that downstream at the a transparent thing, make soon deal, get help we customer as publicly fully as help -- industry down item, just to to Department the

have And these again appropriate work trouble. so I done think eased Stage some has issues when And good job to we and the And we on try around, of that we on X. in today. world Stage lead ongoing a navigating as is up, look utilize get have really I certainly, having that -- things stuff X, to that and the think our we've time are

knives there process it learned process new of And moving to forward But keep get so easier. there'll we but our this lessons from prior course, and make we've have challenges, we sharpened just -- to be hopefully, and done. ready, some the are always

Operator

That concludes Q&A. today's

for to team the So pass I'd remarks. back closing management to the any like conference

Jim Litinsky

appreciate Well, Yes. night. tonight, We forward seeing soon. a look Have we all you, to and everyone. thank great you

Operator

you today's That Thank your concludes call. participation. for

your disconnect lines. now may You

MP Materials (MP) 5 Aug 222022 Q2 Earnings call transcript