Good afternoon. Thank you for attending the MP Materials First Quarter 2024 Earnings Call and Webcast. My name is Victoria, and I'll be your moderator today. [Operator Instructions] I would now like to pass the conference over to your host, Martin Sheehan, Head of Investor Relations. Thank you. You can proceed Martin.

Thank you, operator, and good afternoon, everyone. Welcome to the MP Materials First Quarter 2024 Earnings Conference Call. With me today from MP Materials are James 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'll turn the call over to Jim. Jim?

Thanks, Martin. Hello, everyone. As is our usual program, I will open by covering some year-to-date highlights. Ryan will then go through our financial performance and operating KPIs. Michael will follow that with an overview and updates on Mountain Pass operations. And I will then come back with some closing remarks before Q&A. So let's start on Slide 4. As Michael hinted at on our fourth quarter call, our concentrate production in the first quarter was outstanding. We produced the second highest tonnage of REO in Mountain Pass history. Plant uptime was at near record levels. This was a particularly impressive quarter of upstream execution given that we are operating with the backdrop of continued downstream optimization and site expansion efforts. As discussed in detail last quarter, we are tactically managing our refining ramp in light of the market environment. We are focused on near-term cash flow optimization, while we position for maximum long-term profitability. Consequently, record-level production this quarter meant strong concentrate sales. In addition, the team continued to advance projects on Upstream 60K. Our effort to increase Mountain Pass upstream output by approximately 50% over the next 4 years, with modest levels of incremental investment. We expect this to create significant value for shareholders over time, and we are very pleased with what we are seeing so far in this execution journey. Moving to the midstream. We made our first NDPR metal sales out of Vietnam in the quarter, with most of that going to our Japanese partners through our Sumitomo relationship. We are steadily expanding our ex-China customer base. With initial deliveries of NdPr oxide and metal to these new customers, we are building trust as a reliable supplier of on-spec separated products. We expect these sales to ramp significantly as we support growing downstream demand outside…

Thanks, Jim. Turning to Slide 6. I will walk through our operating metrics for Stage I on the left-hand side of the page and our Stage II metrics on the right. In the Upstream business, we produced 11,151 metric tons of REO in concentrate in the quarter, a 4.5% increase over the last year and over 20% more than Q4 mainly due to near record uptimes and higher feed rates. This higher production, combined with our focus on efficiently increasing NdPr production, we discussed in detail last quarter, resulted in strong sales of REO and concentrate of 9,332 metric tons. This is down year-over-year as we consumed nearly 1/4 of our concentrate production for downstream operations versus last year when we had all of our concentrate production available for sale. Our realized price of REO in concentrate declined to $4,294 per metric ton due to the overall weak market pricing in rare earth materials. As we look at Q2, should prices hold in the mid-$50 per kilogram range for NdPr, we would expect pricing to be down mid-single-digit percentages sequentially as we deal with the slight lag in price realizations. Moving to the right side of the slide. As Michael mentioned in February, NdPr production volumes were roughly in line with our Q4 output at 131 metric tons. As we look at Q2, given some of the continued optimization steps we are taking here in April and May, even with our 1-week plant shutdown, which was just completed, we would expect NdPr production to roughly double in Q2. And as Jim stated, we would expect much more meaningful step-ups in production in the back half of the year, which Michael will discuss shortly. Looking at NdPr sales volumes. We sold 134 metric tons of NdPr on an oxide equivalent basis,…

Thank you, Ryan. Turning to Slide 9. Here is a picture of our Leach Circuit. One of the areas I spoke about last quarter, where our focus is on optimizing NdPr recoveries while sustaining high cerium rejection. And on Slide 10, we have an overhead shot of our Separations Pad. With the light rare separation circuit on the far left to the right of which are our product finishing circuits, water treatment plants and power plant. Slide 11 shows storage racks of our NdPr oxide in 1 metric ton super sacs waiting to be shipped. The highlight of the quarter was, of course, the very strong production in our Upstream business, where with the adjustments made in the prior quarter, we were able to achieve slightly higher throughput per operating hour with a stable recovery and grade. This, combined with less unplanned downtime and better operational execution and some adjustments to the cleaner flotation operation resulted in solid production growth year-over-year. We had a modest headwind from reagent adjustments that temporarily impacted recovery. Looking ahead, the first Upstream 60K projects may begin trial operations in the third quarter. These include enhancements to the grinding circuit and the large-scale pilot flotation cell to improve [ refer ] performance and debottleneck cleaner flotation. As with most new processes, we expect these could cause instability and/or lower uptime before the benefits come through. but we are very excited about the long-term opportunity of both of these projects. As mentioned on last quarter's call, we spent much of the first quarter working to improve the efficiency of our midstream operations. We are making very good progress. As part of these efforts and improvements and given some unforeseen challenges, we ended up temporarily inventorying additional volumes of intermediate streams rather than seeing them through to…

Thanks, Michael. Let's move on to Slide 12, where you can see a gorgeous night shot of our initial magnetics facility in Fort Worth. This looks like a rendering, but actually, it is not. This is real and is the road front side view of our facility that spans 250,000 square feet and houses manufacturing operations, R&D and our magnetics headquarters. As I said earlier, we are making a lot of progress across our businesses. Unfortunately, this was another dismal quarter for NdPr prices. We see some green shoots with recent price action, but the trajectory to a market recovery is, of course, outside of our knowledge and/or control. As I've noted though, I strongly suspect that most of Chinese industry is losing money at these prices. Some of you may have seen headlines about a recent high-level U.S. government visit, including the Treasury Secretary to China last month, where discussions centered around China's state-led economic behavior. I doubt any of us would be surprised if this topic heightened into a hysteric pitch as we approach the election season. Regardless of the cause, there is no doubt that recent market conditions have crushed Western and Allied attempts to broaden private investment in the rare earth supply chain. In addition, with so many investor revisions around expectations for EV penetration or at least the timing of it, critical materials investing in general, especially for those that are battery inputs is out of favor. There are some important distinctions though, for rare earths and permanent magnets that will eventually matter. First, as it relates to EV penetration, there is still growth, albeit slower growth, and hybrids are picking up a lot of the expectations slack. In March, in the U.S., for example, plug-in hybrids grew 56% year-over-year. This resulted in a 19%…

[Operator Instructions] Our first question comes from the line of Matt Summerville with D.A. Davidson & Co. Your line is now open.

Maybe help out a little bit with the expected go-forward ramp cadence on Stage II in the back half. I know what you said kind of qualitatively, Michael. But I guess I'm curious as to at what time or at what price, and I'd like to try and distinguish between the two, do you think the Stage II operation will kind of hit run rate? And is there a price where you're more likely to stockpile WIP or FGI versus put that tonnage into the market? What's the right way to kind of think about how that matrix, and I'm sure it is a matrix, how that all kind of looks here?

Sure. Matt, it's Ryan. I'll start us off and then maybe Michael can give some specific examples. But I think the way to think about it is our viewpoint on ramping methodically based on maximizing cash flow has not changed. I think the great thing about our model here is that we do have a profitable further upstream product that we can sell where there's a significant amount of the profitability embedded. I think the thing that you're hearing from Michael and hearing from us is that we have very clear line of sight at this point given the optimizations that are ongoing and that have already been completed. We're talking about very specific mechanical optimizations where that framework that we laid out of lowering the incremental variable cost is very clearly ahead of us in the near term and over the next several quarters. And so with that, that gives us the confidence to tell you, we see that, and so we can start ramping. And so for sure, we will continue to sort of watch that trade-off between the two, but I think that's the core message. In terms of your question on stockpiling, I think -- what I talked about at the beginning is we have the ability to flex between separated products and more upstream products. And so that's generally how we would think about things. So we're implicitly holding back NdPr production at this point if you think about it that way. And so I don't know, Mike, if you have some thoughts on the specific items you're seeing here to help Matt on timing and quantum.

So Ryan touched upon a lot of it. I think in the second quarter into early third quarter, a lot of these long lead items that have been -- we've been waiting for, should start to be received and installed. We've already started to see it in March and April. On that point, we'll have a greater ability to increase throughput and then we'll still be balancing the fixed and variable cost leverage as we look to how we execute into the market.

And then just as a follow-up question. As it pertains to Upstream 60K, what are maybe the 2 or 3 kind of major milestones we should be looking for out of MP over the next 12 months? And will that 40,000 tons per year to 60,000 tons, will that scale linearly? What's the right way to think about how that scales? Is it more front-end loaded, back-end loaded, et cetera?

Thanks, Matt. In terms of the cadence, I think we said -- I would look to be more back-end loaded. There's going to be a series of incremental improvements, more step function and then perhaps even larger growth initiatives. Obviously, the larger initiatives will be more back-end loaded. But we are optimistic about some of these smaller projects and what they can do. And as I mentioned, we do have two that are coming online at the back of this year. As with all projects, we would assume that initially, there'll be perhaps a negative impact from disruption and our uptime before we start to see the benefit. So I would say early next year before we would expect to start to see the real impact of 60K. But we still work on normal optimizations, and that was what you saw it in this quarter.

The next question comes from the line of George Gianarikas with Canaccord Genuity.

Speaking of value creation, and this is just sort of me reading the tea leaves here a little bit, it appears at a very wealthy individual or entity in Australia appears to be trying to do just that by acquiring significant stakes in several rare earth assets across the western world and maybe trying to cobble them together. To the extent you could share just the -- maybe some line of thinking here, what are the synergies in doing that? And do you kind of see that as a rational response to China Inc. who appears to be trying to make life difficult for several Western suppliers as non-Chinese refining ramps.

Yes, sure. Thanks, George. So I guess that was a creative although somewhat expected way of asking the M&A question. So I appreciate it. So obviously, you're referring to Gena Reinhart and her stake in MP. I mean, for those who don't know, she's certainly a very well-respected investor globally and in Australia, particularly so, I believe she's the richest person in Australia and she took a large stake in us. I think obviously, it speaks to the value that we believe we're creating here at MP and how much value there is in our shares. And so I think that she sees that as far as sort of her motivations or the motivations of other shareholders or conversations that we may have with other shareholders or companies, I'm not going to comment on those kinds of things. But it certainly is -- it certainly always is nice to have a third party that understands your industry very well to recognize that your shares are undervalued.

Okay. And maybe just as a follow-up question. Just curious, to the extent you can bring down costs as you discussed excessively on the call, can you kind of help us understand what your cost per kilogram of NdPr will be as we approach sort of the end of the year? So just trying to understand what where EBITDA positive is for you guys as you become more of a refine [indiscernible] company?

Yes, sure, George. It's Ryan. I'll take that. What I'd say on the cost structure for the midstream business is, certainly, what we're seeing at this point is very much expected as you ramp a plant of the scale that we are. I think when you're operating something of this size under normal utilization levels and with all the puts and takes that we've talked about, the results aren't unexpected. And frankly, we have the data on a circuit-by-circuit basis that's highly granular that gives us a lot of confidence in the go-forward cost structure that we expect to hit. We haven't put a specific dollar figure out there, but we have continued very strong confidence in being best-in-class when it comes to a unit cost perspective in the midstream business. To your question on EBITDA positive, look, we're in this period of transition and in a period of, in a lot of ways, max pain as we ramp it, as we fill the channel, et cetera. And so we do expect this to pass. But I would remind you also that given the puts and takes and the moving pieces for our EBITDA result this quarter, behind all of those things is a highly profitable concentrate business. So think about the fact that we've got this ramp operation in midstream and we're subscale in addition to funding the magnetics business. We continue to have strong cash flow and profitability from the concentrate business. And so we'll continue to execute and optimize over the course of the year and remain very confident in hitting our targets.

Our next question comes from the line of Laurence Alexander with Jefferies.

This is Kevin Estok on for Laurence. I guess my first question is about electronics. So if that cycle turns up, I guess I'm just wondering, do you guys have more leverage to phones and smaller devices or maybe more PCs and desktops?

Sure. This is Ryan. In terms of magnetic content in sort of general consumer electronics. It is a real segment as it relates to magnetic content. I mean it's probably 18% or 20%. So it is real. I think that we've seen a confluence of events over the last 12 months, 18 months really where hard disk drives have been -- had been in a negative cycle. PCs were in a negative cycle. Smartphones were in a negative cycle. So on a per unit basis, these magnets are very small, but in aggregate, they matter. I do think that all of them contribute. And so some of the things that we think about is what we started to see from our customers downstream and the magnetic supply chain, is the start of a more positive cycle in hard disk drives. And as you think about everything you hear out there with for the [indiscernible] AI for the bots. But no, really, that cycle has certainly started to pick back up. And so we're cautiously optimistic that, that can go from a negative contributor to magnetic demand to a positive one here, hopefully, soon.

Okay. Got it. And then I guess my last question, just curious to hear what you're seeing in terms of inventory build downstream or just sort of a inventory level.

Yes, sure. Well, it's interesting, it's always given the concentration in China in our industry, it's always hard to read the tea leaves as you've heard me say a million times. I know that Albemarle came out this morning and said that they were seeing very low levels of inventory, obviously, sort of different vertical, but some of the same effects. So that's a data point out there. We have seen sort of in very recent -- you can see in the last couple of weeks a little pricing green shoots. So it is certainly possible that you'll start to see pickup due to low inventory. Our belief is that inventories are very low and that demand is starting to pick up. But again, I always say that with -- it's just so hard. We always caveat by saying we -- it's outside of our control. We don't know when pricing sort of reverses, but we certainly believe that, that will come.

Our next question comes from the line of Carlos De Alba with Morgan Stanley.

So Ryan, so with the guidance that you provided on volumes for NdPr doubling, I guess maybe a little bit of upside potentially on concentrate, if not flat, but substantial declines in prices. It's going to be tough for EBITDA not to be more negative. But important for us is the cash flow generation, excluding the item, the $228 million, I think you mentioned in total. Excluding those items, how do you see working capital fluctuating in the second quarter? And maybe if you can venture into the third quarter just because in Q1 was obviously a significant use of cash.

Yes. Sure, Carlos. I'll do my best. Obviously, we don't get into quarterly cash flow guidance for a variety of reasons. But I did lay out a couple of pretty discrete and obvious cash flow items just in terms of pretty chunky sales on the NdPr metal side this quarter, which came at the very end. And so from a receivables perspective, that had an impact back on our conversation a moment ago about certain potential transactions that were evaluated. There was a pretty significant use of cash there that we don't expect to repeat. And then just typical timing from other payments that tend to see lower cash flow conversion in the first quarter versus the rest of the year. So a lot of that combined to drive the result in the quarter. I'd say, certainly, as we ramp the plant, things will be lumpy. We are looking to drive incremental production, which, of course, we then need to -- for a lot of it gets sent overseas and tolled, et cetera. And so we've always been very clear that this ramp into Stage II is a major transition for the business. And so that requires some investment in working capital. We think there were discrete items in Q1 that don't repeat. But certainly, the faster we go, that could have some impacts. And so hopefully, that can give you a little bit of color.

All right. And then so you're no longer going to disclose unitary cost, I assume. Is there any -- are you thinking about another metric that help us follow how on a per unit basis, your cost is evolving. Maybe breaking out by, I don't know, Stage II and Stage III.

Yes. I would expect, over time, Carlos, there likely will be a need as we start to recognize revenue in the downstream business to split that out for you. So that is something that's on our agenda once we have material revenue in that business. As I talked about, we already have started to see pretty material cash flow in this quarter with the $50 million prepayment and with more to come. But yes, I think you'll start to see some split out of that. As it relates to cost KPIs on the upstream and midstream part of the business, I think you guys have seen us perform now. I think this is our 14th quarter of reporting. We've had a very consistent cost structure on the upstream side. And so I think it's quite easy to sort of triangulate around that. And then when you think about our plant, which is very, very integrated. And so it gets a little bit harder and less meaningful. And I think we've previewed this now for many, many quarters to try to report stand-alone metrics that try to pull apart -- think about a labor force that's working in the mill pad area. We call the mill pad area. There's actually a lot of separation activities going on up there. And so it really is quite integrated. And so we don't think that stand-alone KPIs are particularly meaningful at this point. And so we point you to, we have no reason to believe that the cost structure will change meaningfully for the upstream business. And in fact, as Upstream 60K comes into play, we expect it to approve. And then with that, you can sort of see the sales that come through on the separated product side and you'll easily be able to back into these metrics yourself. And so that's sort of how we think about the progression of KPIs on that front.

All right. Great. And my last question is on...

Did we lose you? Yes, we got you now.

Sorry, guys. So my last question would be on -- just regarding the -- and I lost my thought on the question. I'll come back later, Okay.

Our next question comes from the line of David Deckelbaum with TD Cowen.

I wanted to ask just on hitting what Stage II in the context of what do you need to achieve to receive the remaining prepayment of $100 million? And is there some circularity around your motivations to ramp stage to hit some of those milestones, either Ryan or Michael or Jim, just to try to understand what needs to be achieved in order to get that? And then I guess, how many tons that's actually prepaying for? Is it the year's worth of output -- excuse me, a year's worth of output or is it longer than that?

Sure, David. It's Ryan, arigato for the question. I think there's probably some confusion on Stage II or Stage III on this front. So the prepayment is for magnetic precursor materials in Stage III. And from that perspective, we don't need to sort of work down the prepayments to receive the ex prepayment. These are operational milestones in the Stage III business. that we have line of sight to over the next 12 months that really have nothing to do with the ramp on the Stage II side. So those ramps are completely discrete and sort of are on their own trajectory. And so sort of regardless of how things go on the Stage II side, we see line of sight on Stage III.

Okay. Yes. Sorry to confuse. I just had thought of this. I know that you guys will consume maybe 600 tons a year of NdPr at Stage III to make 1,000 tons of magnets. I don't know If you to be able to show that you can separate 600 tons a year in order to inherently hit the targets that you would show at Stage III.

Yes. No, it's a fair question. I see where you're going with that, though. But in terms of the operational milestones that we need to show, look, as you've heard from us, we remain incredibly confident and have clear line of sight on ramping Stage II. And so it's not really a matter of if we're able to. It's a matter of when we decide to and Michael talked about all the items that are ahead of us. And so I think, clearly, our main customer probably shares that view, given the focus here on operational milestones are exclusively as they relate to Stage III operational milestones. And so we're excited certainly that we've got this initial prepayment based on a major operational achievement that Jim laid out some of the exciting things that happened over the last quarter. And we do have line of sight to the rest of them. So hopefully, that helps.

Yes. And to be crystal clear for those who are listening Stage III being Fort Worth right? Go ahead. Go ahead, David.

Yes. Jim, this question is mostly for you, but I know you like to put on your strategy, at. So I'm curious with your outlook on potential market tightening and the majority of the market operating sort of below cost. Are you seeing an increased interest. MP has done a lot of organic growth, albeit vertically integrated and you have your Upstream 60K projects. Are you seeing more emphasis on sort of inorganic opportunities and seeing any softness in the market that you would otherwise want to take advantage of here to perhaps expand resource, perhaps expand things like heavy speed. Is that an area where we might expect MP, especially as you get more comfortable on ramping other parts of your supply chain to start looking towards?

Yes. I mean I would say that we get -- you can imagine that we get reach outs, we're considering things at all times, particularly given our seat and our expertise. Given where pricing is, it's just so tough. I mean, when I look at allocating an incremental dollar of capital and particularly given Upstream 60K and all of the great progress that's happening in Fort Worth, the idea of investing in sort of some new greenfield project versus sort of the attractiveness of what we have at MP that's really tough. And frankly, that is the environment. I think given what is happening to pricing, I think it's fair to say that there's been just an overall enormous chill on the private sector investment across the board. And so if the question is, are there projects that will come to us? Yes, will we look at everything, and there's nothing that is imminent that I think would make a ton of sense given the state of the world, I think that the economics are just so tough. And that obviously makes us that much more bullish about our in-place assets is that I think getting more supply online is just that much harder. Certainly, there's a lot of for the private sector, a lot of confidence that's been lost, given how quickly prices sort of came off over the past year. But of course, that's what creates cycles, right? That's what's going to make for such a violent up cycle, again, just like we saw a few years ago. And then probably, if you want a strategic thought, we can go into sort of the longer-term aspects of as electrified penetration really starts to hit over the next few years. And then when we think about robotics on top of that, there's going to be an enormous filing up cycle and sustainable. But again, when and how it starts, we don't know. And so it will probably make other investments interesting. But again, it's always hard to think about the timing and the cost of capital. And right now, I'm really pleased with what we were able to accomplish on the capital structure front this quarter. And I think that's going to be a great value creator for us. And then we'll just take it as it come day by day.

Our next question comes from the line of Lawson Winder with Bank of America.

Michael, you mentioned some mechanical reliability issues that are kind of dogging the ramp-up. But you mentioned it certainly wasn't related to design or material quality, and you elaborated a little on what you thought was driving, could you maybe provide just a little more detail and discussion on what you think is driving that?

Sure, thanks. I guess -- I think some of it relates to initial start-up and commissioning and some operational challenges during commissioning, where we had unusual equipment failures. An example of which would be in one of our filtration circuits where we had an unusual number of pump failures. And then in terms of how that impacts the operation. In order to continue to operate, we were forced to use sort of temporary measures that were inefficient from a process yield, operating and maintenance cost, labor productivity perspective. And so as we are able to bring on kind of the appropriate equipment -- the appropriate permanent equipment that then work quite well. We could see a dramatic impact on the operability, the yield, the reduction in loss and then much lower labor cost and much lower amount of labor allocation to that area and rework. So we've got a number of issues like that, and that sort of underlies the confidence in how the trajectory will improve as the supply chain delivers.

And then would it be fair to say that you've kind of identified the majority of these issues? Are they recurring? And much easy to identify, are there some that you're still trying to figure out?

I would say optimization is a permanent continuous process. So we'll always have these kind of things. Certainly, we've identified all the ones that we see in front of us now. As I've said in the past, we are able to run a lot of the circuits at pretty significant throughput rates. it's kind of pulling it together and sustaining that and having them all run together at the same time. So we could see how the bottlenecks will progress as we ramp. And we're obviously addressing those in advance of being there. But it's really not so much throughput has uptime and reliability.

Okay. Great. And then just one follow-up, if I could. On the plant shutdown, you mentioned the -- that in April, it was a little -- there was one in April. Just any color on future shutdowns for 2024. Would be really helpful.

So each year, we scheduled two longer maintenance outages, one in the spring and one in the fall. So we continue to target that. Given we have the upstream and midstream assets now versus in the past just upstream, there's a little bit of a lag. We first focus on the upstream assets and then some of the midstream assets follow. And then the upstream refills the midstream, we would expect that pattern to continue. Because the midstream is younger, the duration of the downtime in those areas is shorter than in Upstream, but because of the lag in feed and the inventory and inventory there may be the actual outage drags are a little bit longer.

Our next question comes from the line of Bill Peterson with JPMorgan.

I wanted to expand on earlier questions around the demand environment, I guess, in the context of what you're calling, I guess, some kind of imminent violin improvement in fundamentals. If we think about this year's demand environment, EVs is down, but in the U.S. replaced by hydroelectric. You have wind, then you have a lot of the standard HVAC, consumer electronics. Can you walk through the different end markets and what you're seeing...

[indiscernible] for went, 2023 had lower growth in EVs. I think a lot of people say no growth, but growth was very robust. It wasn't as robust as expected. And then you also had some of the cycles I talked about on the electronics side, couple that with [indiscernible] a yes. A version of that, that also not only applies to trying to stoke EV demand but also HVAC appliances, et cetera. And then you're seeing a turn in some of the other electronics. And so again, we can't predict the exact quantum or timing, but it does feel like the things that drove sort of negative revisions last year, hopefully or maybe [indiscernible].

And just adding on to that, that's great. But Bill, in really simple terms, and we've talked about this before, but I think it's definitely worth repeating because it's kind of a simple framework to think about this. Roughly 75% of demand are sort of your -- think of them as your legacy historical use cases, GDP or plus or minus oriented electronics, HVAC, et cetera. But then when you go in the other 25% or sort of the electrification use cases, and those are even despite sort of short-term Wall Street Armageddon in a sense, those are growing very quickly. And so what you have is a base effect, right? You have 75% that can take a macro hit particularly given that it is mainly centered around China where -- if that is a 5% or 10% hit, that can really trump 20%, 30%, 40% growth of these bigger use cases. But there's a compounding effect there, right, is that as that 25% is growing at 30% a year. You look out a few years out and it becomes so much more material relative to overall demand that the sort of the short-term cyclical macro items have much less of an impact and then the reality of the electrification, which has never happened before in our supply chain really starts to impact demand and by the fact that these projects are so long term, that's where you sort of get violent pricing effects when sort of those realizations hit people in real time. Commodities are a spot market. They're not really a long-term pricing market. So even though you can see this coming in the short term, if there's a supply-demand imbalance, the pricing adjusts. And so -- and then lastly, and again, this is longer term, but when…

That's what I understand between the legacy versus growth drivers. So just thinking about capital allocation, I guess, in the context of your bullish outlook looking 2 to 3, 4, 5 years out. Should we think about buybacks being actionable given where you think your share price is today? How should we think about the use of cash from here or further debt pay down? Will you rather kind of keep driving order for things, M&A or otherwise?

Bill, we just bought back 7.3% of the company last month. I think after the bell, Apple, and I'm -- there's lots of excitement on the news, how huge that is. That's 4% of their company, right? So we look at all the press tonight and in the morning about the scale of that buyback, and we did nearly double that last quarter. So I mean, we've certainly -- and for a number of quarters, when prices were much higher, people asked us, and we've said repeatedly, we'll act when we can act in a substantial way with material impact, and we're not going to telegraph these kinds of things. And that will -- that remains the case. And so certainly, our -- we think that there's a lot of value here, and we've sort of made that clear. And -- but I think we've also sort of voted with our purse, so to speak.

We have time for one last question, and that question is going to be from the line of Benjamin Kallo with Baird.

I'll make it quick. You're very passive about demand, and I'm a believer of that, too. I just want to understand about [indiscernible] other part of the investment cases all you're working for is -- if you see the signs of like the bifurcation of pricing a distinction between the Made in America versus China from customers? Or because of the current environment just right now a near term no one really [ cares ], it might not be a fair question with GM all done. But just wondering how those conversations have changed. It's like you said commodity -- and do you think it is to the longer commodity at some point because you've Made in America [indiscernible]?

So Ben, I think I heard most of it. It sounded like you are in car wash or something. I hope you're somewhere for fun. But I think actually -- and so I hinted at this a little bit in the comments. And I think Certainly, as we look at our market today, there's no question that it is effectively, pricing is just effectively controlled in China, right? They're the vast majority of production and downstream usage -- and with the vast majority of their industry operating at a loss, I think it's fair to say that one could conclude that there are others than free market things going on there and that there may be sort of strategic things happening to the pricing in our industry. But if we look around the world, and we've been talking about this for a few years, but I think this year, in particular, it has exploded. There was actually an article on Bloomberg today about [ Geely ] is going to be introducing a product this summer. I guess that was announced at the Beijing Auto Show, there were 100-plus new models there of exciting products that Chinese industry, Chinese OEMs have created at very low cost, but there's a [ Geely ] car that's going to be a very much equivalent of a Model Y that's going to be coming to market substantially cheaper thousands of dollars cheaper. And given sort of the Volvo aspect of it will not be subject to tariff. And I think what you're going to find, and then there were also other stories of BYD building a plant in Mexico, and certainly excess capacity in China that will now make its way around the world. I think the big picture thing here that is so important…

Thank you -- go ahead. I'm so sorry.

Yes, I was just going to conclude and say, Domo arigato, to everybody. Thank you, and we'll see you next quarter.

That concludes today's call. Thank you for your participation, and enjoy the rest of your day.