Good afternoon, ladies and gentlemen. Thank you for joining today's MP Materials Second Quarter 2023 Earnings Call and Webcast. My name is Tia, and I will be your moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions-and-answers at the end. [Operator Instructions] I would now like to pass the conference over to your host, Head of Investor Relations, Martin Sheehan. Please proceed.

Thank you, operator and good afternoon, everyone. Welcome to the MP Materials second quarter 2023 earnings conference call. With me today from MP Materials are Jim Litinsky, Founder, Chairman, and Chief Executive Officer; Michael Rosenthal, Founder and Chief Operating Officer; and Ryan Corbett, Chief Financial Officer. As a reminder, today’s discussion will contain forward-looking statements relating to future events and expectations that are subject to various assumptions and caveats. Factors that may cause the company’s actual results to differ materially from these statements are included in today’s presentation, earnings release and in our SEC filings. In addition, we have included some non-GAAP financial measures in this presentation. Reconciliations to the most directly comparable GAAP financial measures can be found in today’s earnings release and the appendix to today’s slide presentation. Any reference in our discussion today to EBITDA means adjusted EBITDA. Finally, the earnings release and slide presentation are available on our website. With that, I will turn the call over to Jim. Jim?

Thanks, Martin, and thank you all for joining us today. Let me give you a brief overview of today's call. To begin, I will discuss the second quarter and more recent highlights. Ryan will then run through the financials and KPIs, followed by Michael, who will review Stage 2 progress. I will then provide some closing commentary before Q&A. So let's begin on Slide 4 and jump right to the middle of the slide under Stage 2 for important and exciting news. We have officially started production of separated rare earth at Mountain Pass. Michael and the team have done an incredible job on Stage 2, particularly over the last several months to advance commissioning. Let me be very clear, we still have a lot of work to do to get each circuit to operate reliably and ramp up production volumes, but the chemistry and separation processes are working as expected. We expect to begin shipping separated NdPr oxide to customers this quarter. So with the critical caveat that we must still work relentlessly towards our mission. I want to reiterate that achieving refined rare earth production is a milestone worth accelerating for all of us at MP, our shareholders, as well as everyone in America. Moving back to the left of the slide, in the second quarter, we achieved record Stage 1 production for a quarter, which included a planned maintenance shutdown. In fact, this was our third highest quarterly production volume ever with the only two greater quarters being ones where we did not have a one week plan shutdown. This translated into strong financial performance despite difficult pricing comparisons, and Ryan will provide more detail on this in a moment. Nonetheless, the team's Stage 1 execution this quarter was very impressive, especially when we consider all the activity on our site related to Stage 2 commissioning and those achievements. Lastly, our Stage 3 downstream magnetics business continues to advance across many functions. We are now installing some of the first metal and alloy making equipment in our Fort Worth facility. Other key equipment is in transit, with the goal to begin installation during the remainder of the year. Fort Worth is going to be the epicenter of magnetics in the Western world. Along with the scale of the metal, alloy, and magnet manufacturing, we are establishing a state-of-the-art, R&D, piloting and product development area at the facility. Some of this equipment is already in the process of being installed, and we continue to make important hires across the magnetic team. In fact, MP, the company overall just surpassed the 600 employee mark. Yet as we add depth and expertise across our sites in Mountain Pass, Dallas, Fort Worth and Las Vegas, we remain maniacally focused on preserving our owner operator culture. With that, let me turn it over to Ryan. Ryan?

Thanks, Jim. Turning to Slide 6. As Jim mentioned, Stage 1 production continued at impressive rates, as we produce 10,863 tons of REO in concentrate in the quarter. Modest improvements in uptime or grade and feed rate combined to drive a 5% increase in production volumes compared to last year. The improved fee grade and feed rate combined with strong recoveries to produce the second highest plant productivity, which we measure in tons of REO per hour of uptime in our history, demonstrating the steady progress in improving efficiency in the flotation process. Moving to sales volumes, the higher production led to 3% growth in sold volume, reaching 10,271 metric tons in the quarter. This is despite an increasing amount of production being sent through the various Stage 2 circuits as we commission them. As a reminder, we expect about two weeks of production or a bit under 2,000 metric tons of REO to be absorbed permanently into the downstream circuits as Stage 2 production ramps. And through June, we have seen about one-third of that total consumed. The last two-thirds will likely be consumed and therefore not available for sale over the next two quarters. Realized pricing in the quarter fell 55% year-over-year, driven by the decline in the price of NdPr, which represents the lion’s share of the value of the REOs and concentrate. The decline was slightly better than we thought it would be when we last spoke in May as NdPr pricing had a modest uptick for part of the quarter. Since then, pricing has again fallen into the low to mid-$60 per kilogram. And as such, right now, we are likely to see a low-teens percentage decline in sequential realized prices in Q3. And lastly, on the far right, production costs climbed 11% over last…

Thanks, Ryan. Turning to Slide 8. Q2 was a very productive and busy quarter for the Mountain Pass operation. Concentrate production and product grade increased modestly year-over-year, despite the semiannual plant shutdown. This is partially attributable to less unplanned downtime and is a solid accomplishment considering the very intense cross training, personnel reallocation, and resource sharing challenges presented by the Stage 2 commissioning. The results also led to some extent the fruits of continued optimization efforts in metallurgy and operational execution. As a reminder, we expect generally stable Stage 1 production year-over-year in the short term. But hope to achieve periodic step changes in output tied to certain discrete projects in our pipeline. Commissioning activity and breadth (ph) accelerated throughout the quarter and into Q3. All Stage 2 circuits are now in active operation. My previous comments remain valid. Commissioning is a process that demands patience and perseverance with very hard lot steps forward and frustrating setbacks. However, overall, I'm quite encouraged with the progress. Most importantly, we have so far avoided any major health and safety incidents that we cannot become complacent. I'd like to thank our employees throughout the organization for their hard work, flexibility, and resilience during this stressful time. In Q2 and more so into Q3, we began bulk and individual separations and began product finishing. In Q3, we expect to begin modest shipments of NdPr oxide along with lanthanum and cerium products and the production of SEG Plus. We are pleased that the process chemistry and major equipment appear capable of operating in line with the Stage 2 design basis. We view this as a major success given the complexity of the process. Our confidence extends across the hydro metallurgy, rare separation, and product finishing circuits, but it is still early days and each piece…

Thanks, Michael. Before we go to Q&A, I wanted to provide some updated perspective on our industry and the general supply demand environment, both present and future. NdPR pricing remained weak throughout the quarter, trading in an approximate range in the low to mid-60s per kilogram. This was mainly a continuation of the conditions we discussed in May. We see the electric vehicle and e-mobility categories experiencing strong growth. We expect those to continue to grow at least 20% to 30% per year for quite some time. However, industrial applications, wind turbines, hard disk drives, speakers for PCs and smartphones and other consumer electronics applications have been weak throughout 2023. Certainly, the economic conditions in China are hitting those categories significantly. As a reminder, though, the split between electric transport and then all the other industrial and consumer applications in our industry is currently approximately 25% to 75%, respectively. This means that in the near term, a 5% hiccup in those traditional spaces can effectively wipe out the accelerating demand in EVs. Of course, this is a short term phenomenon. because the compounding effect of growth verticals begins to trump the influence of legacy industries within a couple years. Then, of course, the volatile nature here works both ways. On the supply side, we think 2023 has been impacted by the reopening of the border between Myanmar and China. We understand that there was a fair amount of pent up inventory from Myanmar mining production that entered China over the first six months of the year. I would encourage anyone interested to Google for stories about toxic rare earth mining and human rights abuses in Myanmar. This supply obviously interferes with normal market forces and more importantly of course, American National Security and Humanity. We expect though that this relative…

Absolutely. We will now begin the Q&A session. [Operator Instructions] The first question comes from the line of Matt Summerville with D.A. Davidson. Please proceed.

Thanks. Good evening. Two questions, I think. First, Jim, the comment you made around Myanmar, can you talk about whether you think that supply spigot, if you will, inbound into China has normalized at this point or do you still feel like there's still some excess inventory to be brought over the border, so to speak? Well, I guess that's literal.

Sure. Hey, Matt. Thanks for the question. So Myanmar is tough to really know. But what I would say is what we -- it was -- that border was shut off for the most part and there was a lot of inventory that built. And from everything that we have heard that was sort of a huge rush of supply that came through kind of throughout this year, so we think it's sort of a onetime impact of excess supply. And our -- we believe there's been a recent crackdown on that. And so I guess that's a long-winded way of saying our belief is that, that's pretty transitory. But as an impact, obviously, that supply exists in some form, but that's what we see from this standpoint.

Got it. And then just as a follow-up. I was wondering if you could comment on now that you've produced on-spec material, what kind of first pass yield you're seeing out of the separation and finishing operations and how that compares to where you thought those first pass yields would be?

Thanks for the question. This is Michael. I guess there are so many parts of the process it’s hard to give you a single answer. We don't expect our initial production yields to -- from concentrate to finished product to be at our desired long-term yields we expect there will be significant improvement. But I guess what I would say is that we started up our separation process with equipment that had produced on spec material in the past and was restarted in a manner to quickly produce on spec and we're quite pleased with how the separation circuits are working and similarly optimistic about how the finishing processes will work. I'll probably leave it at that lets you follow up.

No, we can leave it there. Thanks, Michael.

Thanks, Matt.

Thank you. The next question comes from the line of Carlos De Alba with Morgan Stanley. Please proceed.

Yeah. Thank you. Good afternoon, everyone. So Michael, I just wanted to follow up on the discussion on Stage II. And so, is it fair to say then based on the comments that you had earlier that all critical steps, all critical processes have been running and are running, and it's now just a matter of fine tuning and making sure that you can run all the circuits and all those processes in a consistent manner and then just improving, I guess, of time and your metrics like that, but the critical steps are already all running and you feel comfortable with that?

I think that's a pretty fair statement. Certainly, the product finishing is last in line and we can't put the proxy materials into parts of those circuits to run them, so they've had less time, I would say, slightly less -- yeah, certainly, there's a little bit more work to do before we can -- just to say that all of the bugs are worked out or were 100% confident, but I would say that's not chemistry there, that's just kind of physical material processing. But otherwise, I think your statement is correct. The general processes are working. We feel comfortable that what we've designed is able to perform to the design basis of our circuits and that with time, we'll get to greater throughput, reliability and performance yield.

All right. That's quite encouraging. And then would you -- how do you feel that you are measuring against the timetable that you had plan or defined for the ramp-up of Stage II? Are you on time, you think you are a little bit ahead, or are you a little bit behind schedule? How would you characterize that?

Yeah. I think we've said all along that the process will be non-linear, so it's sort of hard to kind of benchmark against the unexpected. We knew there'd be a lot of unexpected challenges and we continue to see that play out. Certainly, there are many challenges we anticipated and then challenges in places that we thought would be a little bit easier, overall, really proud of the team and how they're working through those challenges and feel comfortable that the targets we set out remain our targets.

Right. No, fair enough. And maybe last question for Ryan. What could comment on the cash flow generation in the quarter? I think I calculate -- we calculate something around $10 million in 2Q. That was below our expectations, both consensus and our own despite the fact that you guys bid on EBITDA, right, both also the consensus and our number. So some color there would be great.

Sure. Hey, Carlos. I think probably the missing piece on consensus versus what we actually achieved was likely a fairly significant mid-$20 million cash tax payment relating to prior year taxes. And so obviously, as you know, often a mismatch between P&L timing and cash flow timing on that cash tax payment. So that is the vast majority of the delta. Obviously, if you normalize for that, we would have probably significantly beat consensus on those numbers.

All right. Thanks. Thank you.

Thank you. The next question comes from the line of George Gianarikas with Canaccord Genuity. Please proceed.

Hey. Good afternoon, everyone and thanks for taking my question. I just like maybe a little bit of an update as you now start to ramp and the NdPr production to what you think your production costs per kilogram will be going forward?

Sure. Hey, George. We'll stick with George G. Well, I can take that. It's Ryan. I think what I'd say on production cost is obviously it's early. I think we've been very clear that the early production is going to come at a different cost structure than the run rate production, of course, as you'd expect. We are obviously very proud of our position on the cost curve that's well demonstrated in our Stage I business. We continue to have significant confidence in maintaining that lead in that position on the cost curve as we transition to Stage II separated product production. We gave a little color to investors and analysts when we originally went public on where we think roughly cost per kilogram would be for NdPr. There are a lot of things that since then have changed, namely commodity reagents, but there's also a lot that has stayed the same. And so this is something that I think other than major commodities and inflation, as Michael laid out, with the chemistry working the way that we expect, that is the fundamental driver of the economic framework that will be made out to all of you. And so we don't expect that to change, which is super encouraging.

Great. Thank you. And maybe as a follow-up, last quarter, Jim, you made a statement that you think that at $60 a kilogram that China Inc. is likely unprofitable. Is that still your view? And do you suspect that in and around this price range, we should see some stabilization?

Hey, George. Thanks. Yes, prices in May were roughly around where they are today. So that statement is still true. I mean we – it’s always very difficult to read the tea leaves in China. And if you recall, and I said something like this last quarter, but it’s difficult because there’s always the ability to sort of shift various things across various entities as they do in the supply chain or in the stream, if you will. So -- but from everything that we see, that remains the case and so it is encouraging. And as I said in the prepared remarks, we think that those -- these items are behind somewhat behind us. And so pricing feels more stable here. And I would argue that for all the reasons I’ve stated that, that downside volatility that we saw, there’s always not if or when likelihood that there’s that upside volatility the other way, right? It gets reflective, but we shall see.

Thanks.

Thanks. Next question?

The next question comes from the line of David Deckelbaum with TD Cowen. Please proceed.

Thanks for your time guys. Jim, I'm tempted to ask you about the time line for getting Daft Punk (ph) to work at Mountain Pass. But I guess, I'll hold off on that one. But the -- I am curious as you think about, I thought the idea was in the second quarter that you all would be withholding some inventory or perhaps a greater amount of inventory to be used in the Stage II testing, I just wanted to confirm whether that had happened or not. And if we should still be anticipating that you're effectively still selling a significant amount of concentrate in the back half of this year.

Yeah. Hey, David. It's Ryan. I can take that. What I've laid out in the prepared remarks was absolutely a reiteration of that expectation that there's a pretty significant amount of inventory that gets consumed into the [indiscernible] recommissioned. We had talked about roughly two weeks’ worth or let's call it, just shy of 2,000 tons of REO. We, as of June 30 had consumed about one-third of that. And so it's safe to say that the remainder of that will get consumed as we ramp and hopefully as quickly as possible. And so I would absolutely expect as you model out Q3 and even Q4 to think about not just the impact of the rest of that inventory getting consumed as effectively line fill into the downstream circuits. But in addition, I talked a little bit, in remarks about the sales cycle as we transition to separated products. And so with that, I just want to reiterate, obviously, the timing there as we start to consume that REO in concentrate into the downstream circuits, converted into separated product and then either sell it on or bring it to tollers to be -- to turn into metal and sell to our ultimate customers. There's also the timing impact of that longer sales cycle. And certainly, as you'd expect, as we ramp our separated product production, and as we sort of continue to fill that channel, particularly the metal production channel, this will get lapped and will be a onetime impact, but it is important to think about over the next few quarters the impact that, that will have on the financial model.

Hey, Ryan. That's a nice segue into my follow-up, which is just for my own edification. The sales cycle is expected to be six months for getting the NdPr metal because I guess when you sell concentrate, Chancas taking delivery of that cargo at the port, so you can recognize revenue as soon as that we support versus when you're using a tolling arrangement? You don't recognize revenue until the product that's still, I guess, technically your resource until it ends up in the hands of the customer?

Sure. It's a good question. I'd say 6 months is probably not the right answer there. Certainly, it's significantly longer than our current sales cycle for concentrate. To clarify the prepared remarks that I think you're keying in on, what we had talked about is separated NdPr production NdPr oxide production and shipments that are happening later in this quarter. So later in Q3, likely much of that revenue could be Q1 revenue. So end of Q3, beginning of Q1 is not quite six months. Shorter than that for sure. However, longer than exactly what you laid out, that our sales cycle is right now, that we deliver product to the port at Long Beach and title transfers there. That's when our revenue recognition happens for concentrate today. I flag though that not all separated products will be subject to the longer sales cycle. Part of our products will remain our products as they get told into metal and then the revenue recognition is likely at the port in Southeast Asia when it’s delivered to customers, to be distributed to broader Asia into Japan primarily. There will be instances where we sell oxide at the Port of Long Beach as well. And so there really will be a mix. What I mentioned, and I think it’s important to keep in mind, just for the next quarter or 2 is that our early NdPr oxide shipments likely will be told into metal. And so these early shipments sort of to help you guys think about your models, will likely be subject to that longer sales cycle. But as we carry forward and sort of start to make more product and broaden the customer base and things like that, there will be a mix.

Yeah. Thanks for the clarification, Ryan.

Yeah. Thanks. Next question?

The next question comes from the line of Lawson Winder with Bank of America. Please proceed.

Thank you, operator and good evening, gentlemen. Nice quarter and great update. Okay. So I wanted to try and put a bit of a finer point on the ramp up. Should we still be modeling a run rate of 6,000 tons of NdPr in for full year 2024?

I'm happy to start. It's Ryan, and then Michael you anything else to talk about on the commissioning side, feel free to jump in. But what I would say is, frankly, a reiteration of Michael's commentary that based on what we've seen run rate production at the end of the year remains our goal. It's nonlinear. It's difficult to perfectly forecast, but that very much remains our goal there are certain areas that I'm sure Mike can better expand on that will continue to tweak to improve throughput and all that versus what we're seeing now. As you think about '24 though, I'd say it's kind of early to predict exactly what our output and importantly, sales volumes will be for 2024 at this point. We've got a lot of work to do, as I mentioned, in the coming months to finish commissioning and to ramp production. And so I'd say stay tuned. We'll continue to update you on the progress, and we'll let you on calls going forward. But as we always do, we will formulate our 2024 or our next year production and sales plan based on customer demand and on market conditions once we get closer to that time period.

You actually -- you touched on a really interesting point there, and that is formulating your sales based on market conditions. So I mean one of your competitors made some comments along those lines recently. Is that, is that how you kind of think about the market? I mean if the market is not willing to take the material does MP just hold it back?

It's a great question. We -- I think the great thing about what we've built here is a platform where we have product flexibility, right? We have the ability to produce Stage I product, Stage II products. We're making great progress on Stage III. And we have that as a lever to pull as well. And so we always as a management team are focused on maximizing shareholder value. And so if that means changing the product mix for a period of time, so be it.

But to be clear, we have not seen any pushback or any lack of demand. We have lots of conversations and lots of demand. And the goal now is to thoughtfully build out our sales channel and think about the full downstream of our business.

Okay. Yeah. That's great color. And then maybe just finally, I wanted to kind of understand the heavy rare earth separation circuit, is that going to ramp up right on the back of this? Could we be modeling some costs for that in 2024? Or is this something that's going to happen a little later on, like maybe '25 or '26. And if it is happening next year, how should we kind of think about that in terms of like impact on NdPr?

Yeah. Well, no, by the way, I'm glad you raised that since you mentioned one of our peers, I'm guessing you're wondering about heavies. And there's probably just for understanding the overall project, maybe just a little important background for those who don't know. But early in '22, both us and Lynas were given awards by the Department of Defense. Actually, our award was announced by the President himself to us. And so that was exciting. We talked about that. And then there was an announcement of something with our peer a couple of days ago. But what I would tell you on that is I think it's pretty clear that DoD understand the importance of a level playing field and good competition across the spectrum here. And we are fiduciaries, and you can imagine that given how much has changed since early last year in the world that we would certainly expect to proceed with projects that we believe are economically attractive and that we believe are at a -- we believe we have a good competitive position. So I think what I'm trying to get at in being is sort of direct as I can, is that you should expect, if you kind of heard everything I just said that we are in discussions, and we believe that we will have equal support or similar support for our mission with respect to heavy. So I think that that's a very positive thing that we recently saw. And so I think I would leave it at that as far as the heavy project is related, just to say that, again, you can probably deduce from what I'm saying that I think that we will continue to expect some good things on that front. And then lastly, I think you asked about timing. The heaviest project is to be online for the magnetics business, and that timing remains on track.

Thanks so much, guys. Great quarter.

Sure. Thanks.

Thank you. The next question comes from the line of Laurence Alexander with Jefferies. Please proceed.

Good afternoon. I guess, first of all, could you just give a quick update on your thoughts around CapEx for this year and next year, just given kind of the milestones you've hit and kind of the inflationary pressures we're hearing about from other companies.

Yeah. Sure. Hey, Laurence. It's Ryan. We mentioned earlier on in the call that our original CapEx guidance for the year of $300 million remains intact. And we tend not to give CapEx guidance further out than that. But what we have laid out, obviously, a couple of years ago in laying out sort of the broader capital plan across Stage II and Stage III was that $700 million investment and that also remains on track. Certainly, as you know, the Stage II spend is essentially behind us, except for some small items from a timing perspective. And so there are other projects that we're continually investing in and out in past, in addition, of course, to our Stage III business. And so we've done about $130 million year-to-date in CapEx. We continue to see that $300 million is a fair number to model for the rest of the year.

And then just to clarify two points you made in the earlier in the Q&A. With respect to the kind of 6,000 production run rate, given the lag you were talking about in terms of flowing through the P&L, were you trying to get at that the comparable run rate for 2024 would be 75%, 80% of that? And then I guess the other issue is with respect to the prices the ASPs on Stage II that you will flow through the P&L, can we assume that you are using -- that you'll be able to realize market prices or will there be some level of discount either through due to partnership arrangements or because you're kind of building relationships with customers who you expect to translate into magnet customers? Can you just give a sense for what, how closely we should hold you to whatever kind of public market indexes we use for Stage II?

Yeah. I can take both of those. As it relates to the timing and the sales cycle, I don't think we were trying to make any specific comment as to 2024. I think that -- we're actually trying to avoid that since we don't give guidance. But what I'd say on that is if you have an assumption and our goal has remained to get to run rate production by the end of 2023. We've also tried to consistently flag, of course, that the overlap from a timing perspective of production and sales that we experienced now is not the same correlation in production and sales that we'll experience once we're producing separated products. And so I think you're on the right track. But certainly, if you were modeling 100% run rate starting 12/31, you would not have 6,000 tons of NdPr sold necessarily recognized as revenue in 2024. I think that's a fair statement. Remind me your second point, question there.

Just how closely should your pricing going before to ASP at the time.

Yeah. On pricing, look, we will have a variety of different contract structures that are based on the indices that we all look at. I think the thing that will be interesting there as well is a difference potentially in timing and then a variety of different contract structures as it relates to realized price versus market price. So I think as we get closer to more significant sales volume, we'll continue to keep you updated there, but there's not going to be an easy pinpoint for me to be able to give you at this point to say, hey, take market and mattered. But we'll do our best to keep you updated from a modeling perspective as we get closer.

And just, I guess, with respect to kind of one other question earlier, just to help us understand the gains here, if you were to decide that you were to produce the rare NdPr, but then keep it off the market, what's the shelf life of the product? How long could you hold it off the market and still monetize it at the same economics?

Mike, well, just to be clear, we don't have any expectation of keeping product off the market at this time. So I don't know, is that...

It's [indiscernible] yeah.

Yeah. I guess in theoretical terms, I don't believe there should be a shelf life for oxide metal or alloy may have considerations of oxidizing.

Yeah. Okay. Thanks.

Thank you. The next question comes from the line of Gabby Sinha (ph) with La Klein Capital (ph). Please proceed.

Yeah. Hi. Thanks for taking my question. Just quickly on your production facility in Texas. So could you confirm if your megacity is covered under 48C and if you get ITCs that we can count on?

Sure. We had a little too hearing you, but I think the question was about 48C. Is that right?

Right. If you magnet facility investment is covered under the 48C.

Right. On that point, since we spoke about this last, there have been some further updates and clarifications regarding 48C and how it relates to our Stage III business and our DFW facility. I think the important update there was from treasury and DOE that magnetic was specifically called out as a priority, that said, it's definitely too early to know if we will directly benefit from this program at this specific facility. And as you can expect for competitive reasons, we're not going to discuss specific support we may or may not be seeking from the federal government in a competitive process. But you could certainly expect that we're always monitoring these sorts of opportunities and will avail ourselves of any opportunities that arise.

Thank you. I think we can do one more.

Thank you.

The final question comes from Carlos De Alba with Morgan Stanley. Please proceed.

Yeah. Thank you. I will keep it [indiscernible]. Just wanted to see if you have any color on start-up cost. I know those are normalized EBITDA, but just how do you see the progression? They came down quarter-on-quarter. Is this a trend that we should expect to continue or not really?

Carlos and Bob, I thought you were coming back on to congratulate us on our big milestone this quarter. But I guess...

That goes without saying. That goes without saying.

Go ahead, Ryan.

No, it's a fair question. I'd say the reason you probably saw it come down a little bit sequentially, is that we started to enter into more normalized operations on various circuits as we bring them online and process order. So as we've talked about consistently, we've been bringing each step of the process online, testing it, getting it up to sort of what we would consider commercial operations. And so since we had been running some of the most upstream parts of the circuits for a relatively significant period of time since we got into June, part of those costs kind of fell out of the start-up category. I think that, that phenomenon will continue, but we've rapidly added significantly more circuits into ongoing operation very recently. And so by their very nature, sort of start-up and nonrecurring costs are very difficult to model and predict. But I would say a fair way to estimate is, I think our Q2 numbers are probably fair to think about for Q3 and Q4 and then, obviously, would tail off very meaningfully.

All right. Thank you very much.

Thanks, Carlos.

There are no additional questions left at this time. I will now hand it back to Jim Litinsky. Please proceed.

Thanks. I just wanted to say this was a an exciting milestone for us. And so we're -- I'm really proud of the team for the hard work, and we'll get back to work over here, and we look forward to talking to you all next quarter. Thanks, everyone.

That concludes today's conference call. Thank you. You may now disconnect your lines.