Hello, and welcome to the MP Materials First Quarter 2025 Earnings Call. We ask that you please hold all questions until the completion of the formal remarks, at which time, you'll be given instructions for the question-and-answer session. Also, as a reminder, this conference is being recorded. If you have any objections, please disconnect at this time. With that, I would like to turn the call over to Martin Sheehan, Head of Investor Relations. Mr. Sheehan, you may begin.

Thank you, operator, and good afternoon, everyone. Welcome to the MP Materials first quarter 2025 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 to EBITDA means adjusted EBITDA, and tons means metric tons. Finally, the earnings release and slide presentation are available on our website. With that, I'll turn the call over to Jim. Jim?

Thank you, Martin, and good evening, everyone. This past month has been one of the most consequential in our company's history, fast-moving, challenging, deeply clarifying, and ultimately energizing. For years, we have warned that the global rare earth supply chain was built on a single point of failure. With China's sweeping tariffs and export restrictions, that geopolitical fault line has now become a commercial reality. Regardless of how trade negotiations evolve from here, the system as it existed is broken, and the rare earth humpty-dumpty, so to speak, is not getting put back together. What is now abundantly clear is that the United States must urgently accelerate its full-scale domestic rare earth magnetic supply chain. This is not just about supply security. It is about the future of national defense, with systems like drones, robotics, and other forms of physical AI, and is about securing trillions of dollars in downstream enterprise value. The events of the past month are a powerful validation of the strategy we have pursued since founding MP. I know some of you will focus on our decision to halt shipments of rare earth concentrate to China. We will speak to the near-term implications and take your questions shortly. But let me be clear. We have prepared for this moment since day one. We are now at an inflection point, not just for MP, but for the country. The vulnerabilities in global supply chains are no longer theoretical. They are central to United States economic and national security. What we are witnessing is the beginning of a generational industrial realignment. Our vertically integrated model, developed with conviction and discipline over years, has positioned MP as America's national champion in rare earth magnetics, serving as the natural partner of choice for the country's most consequential manufacturers across automotive,…

Thanks, Jim. Moving to slide 6, our consolidated revenue, shown on the left side of the page, increased 25% year-over-year, driven primarily by the 246% increase in NdPr sales volumes, as well as the initial sales of magnet precursor materials in the quarter. Consolidated adjusted EBITDA declined $1.5 million year-over-year to negative $2.7 million. The driver of our EBITDA results continues to be the transition to producing separated products, such as NdPr oxide, which also has the effect of reducing concentrate sales. Our per unit production costs for separated products are declining, but still temporarily elevated as we continue to optimize our processes and ramp production levels towards our targeted throughput. I will have more on this in a moment. Adjusted diluted EPS fell from negative $0.04 a year ago to negative $0.12 this year, primarily due to higher interest expense from the issuance of our 2030 convert, lower interest income, as well as higher depreciation from new assets brought into service over the last year. Recall, also, that first quarter 2024 GAAP EPS was impacted by a $46.3 million non-cash gain associated with the early extinguishment of the majority of our 2026 convertible notes. Turning to slide 7 and the material segment KPIs. On the left side are Upstream KPIs, and on the right side are the KPIs for the Midstream. On the far left, you can see another very strong quarter of REO production at 12,213 metric tons, up nearly 10% compared to last year's first quarter. This is virtually all driven by stronger recoveries from our Upstream 60K projects which Michael will provide some additional detail on shortly. As Jim mentioned, this was our second best quarter of production ever and our best first quarter on record. As we push more of that production through the Midstream…

Thanks Ryan. The Materials segment had a good quarter. Upstream concentrate production was strong with improved recovery, solid grade and good uptime. As alluded to in our last call, in January, we were hampered by somewhat poor settling and dewatering of concentrate and tailings that impacted throughput and uptime. This was in the range of normal process variability, though the new Upstream 60K assets somewhat compounded the challenge. We have since put the issues behind us. Throughout the quarter, we made further progress in those two previously commissioned Upstream 60K circuits. For the quarter as a whole, both generated positive impact. About 30% of our feed is now passing through the first of these assets, which is generating 65% final grade and high recovery in one pass. The cyclone and screening circuit, the newer of the two, has also largely stabilized and is contributing to improved recovery as well. Over time, we expect a significant narrowing of our grind distribution, and this will contribute to further improvements in mineral recovery and grade. We are working with the vendor of the screens to incorporate screening materials better suited to the fact that our concentrator operates on nearly 100% recycled water. The Midstream circuits made significant progress in the quarter. I am pleased that we were able to sustain stronger uptime while increasing throughput. We did have a couple of short, though untimely, unplanned maintenance interruptions in two primary circuits that impacted our overall Midstream production. As we progress through our ramp, we expect these types of events to continue, though hopefully to moderate in their impact and become less frequent. We experienced a similar pattern of issues during the ramp of our Upstream business in 2018 through 2019, on the way to achieving 93% or greater uptime and above nameplate throughput…

Thanks, Michael. Let me summarize things. This past month validated the strategy we have pursued since founding MP to build a fully integrated rare earth supply chain that supports American industry and security. We delivered record NdPr oxide production, achieved our first on-spec metal production for GM, and turned EBITDA positive in our Magnetics Division, and our ramp is just beginning. We have reached an inflection point, geopolitically, commercially, and industrially, and MP is now well positioned as the national champion in rare earth magnetics. With intensifying engagement from both government and industry, and our execution already underway, we are transforming from a producer into a pillar of American industrial resilience. With that, let's open the call for questions. Operator?

[Operator Instructions] Our first question will come from David Deckelbaum with TD Cowen.

Thanks, everyone, and I appreciate you guys taking my questions today. Jim, perhaps for you, I think you highlighted, just given the backdrop of what's happening now globally, you're talking to more partners out there. I'm interested in just some additional details there. You obviously are not short on capital right now. When you think about ways that partners might be able to help you accelerate your business or look at other opportunities or shoring up other parts of your supply chain, where do you see sort of the most white space for MP to create value here?

Sure. Hey, David. Hopefully, you appreciated the words freak out from the song.

Of course. It's chic.

Yes. I mean that's really the best way to describe it. This has been, I think, post-liberation day has been one of the busiest months of all of our lives. Industry players, government, we're talking to government on pretty much a daily basis. The cutoff, this idea that there was a threat that has now been utilized has really changed psychology, I think, from everybody across the board. And so I mean, I think there's frankly, a lot of confusion in the supply chain. I mean, we'll see what happens in Switzerland this weekend. But there's talk of potential shutdowns. I think you heard Ford mentioned rare earths specifically on their call, Tesla mentioned it pretty much every household name that you could think of in auto, in defense, we've had sort of some contact or another or visits, it's really been quite remarkable. And obviously sort of validating to the approach that we've had the whole time to be vertically integrated and really focus on bringing this capability back. To answer your question specifically, the point I wanted to make on that is that if you look at all these conversations, the key question is, is how can you do this faster? How can you accelerate this, everyone wants us to go faster. And the point that we like to make is that we've invested a lot of capital. And we've taken a lot of risk. And now we were in a much better place, I think, thanks to the efforts of MP. And any additional capital that we put to work, I mean, we've always had, as you know, a pretty high threshold for return on capital to kind of put downstream capital to work. But as we do that, particularly to the extent that we were to go faster, we expect scaled commitments. And or obviously, there's a variety of ways to get there with respect to commitments and other capital. And so I, the takeaway that I think you should take from that is that I think that the validation and the supply chain should lead to the extent that we are putting incremental capital to work, the returns are going to be pretty extraordinary, or we're not going to put the capital to work. So we feel really good about the dialogue. Obviously, we'll just be cautious and thoughtful about what steps we take. And again we don't want to take on anything that we don't think we can execute. But I will say again aside from the firehose aspect of it, it's really exciting.

Absolutely. Historic times. But just as a follow up, I'd be interested just how you all are thinking about the heavies you pointed out, you want to bring on your own separation circuit next year. How do you think about managing that heavy supply chain vis-a-vis Independence? You obviously successfully sold some magnetic precursor. But how do you think about managing that feed as you move toward permanent magnets towards the end of the year?

Yes, hey, David, it's Ryan. It's a good question. We've talked about, obviously, the precursor sales already beginning, and then moving into commercial production at the end of the year. As you can probably see, and obviously, you don't get the detail that I do on the balance sheet. But we've been very thoughtful about this risk for a very long time, about the potential for heavy rare earths becoming an issue. And so what I'd say is we got ahead of the issue, and we have the relevant amount of material stockpiled to supply ourselves for startup of the Independence facility. And then obviously, Michael and his team are executing rapidly to bring our own facility and operations online to be able to produce from the Mountain Pass ore I think the other thing that we're seeing that Jim laid out well is with the increased focus on the industry. I think a further appreciation for what Mountain Pass brings to the table as a potential refiner of choice globally for other heavy rich feedstocks, the fact that we've got the baseline production of the significant ore feed that we've got from our own mine, allows us to be probably the most flexible buyer of potential third party feedstock to refine and bring into the fold in the United States and potentially for ourselves. And the other part of this that you hear a lot of sort of pinpoint solutions to some of these problems. But I think the great thing about our integrated strategy also is the ability to recycle. And so with Independence, and with incremental focus on this industry, we believe recycling is another pretty significant potential source of incremental heavy feedstock. And so suffice to say, we feel good about where we're positioned right now. And where that could lead us for the future of Independence.

Our next question will come from Bill Peterson with JPMorgan.

Yes, hi, good afternoon. Thanks for taking the questions and for providing all the details. I wanted to ask about stage two and your ability to push more product in there. Recognize that Michael provided a lot of color on the efforts you're making to improve efficiencies and throughput and so forth, but how should we think about your production and sales volume in the second quarter and into the back half of the year? Just basically in what areas have you been able to kind of increase your throughput and utilizations?

Thanks Bill. As mentioned, we are targeting to increase production in Q2 versus Q1 despite the outage and some other events. And then we'd expect further growth in Q3 without having a scheduled outage. Beyond that, for the foreseeable future, I'd suggest that the trajectory of growth should at least proceed along the lines that we've seen historically. Unfortunately, anything can happen any day, so it's hard to give a longer term prediction, but we're really optimistic that the process is working, the chemistry is working, and it's just a matter of execution and working through the issues towards reaching our ultimate targets.

Yes, thanks for that. And this is somewhat of an industry question, but also, I think it's maybe part of your own development efforts, but what are your thoughts on thrifting or limiting or eliminating the use of heavies? Maybe how should we think about content and maybe the vehicles today versus robotics and other areas? Just kind of what are your expectations about lowering the content and what are you doing specifically in terms of kind of thrifting within your own development efforts?

Yes, thanks, Bill. And this is Jim. That's obviously been a topic that we've had since the very beginning, since we built the magnetics business. We have over 100 people in the magnetics business today. You've seen that facility. We have 40 engineers. And really from day one, we've had a team working on formulations, IP, thinking about how we get to where we want to get. And obviously, we're now making auto grade magnets, which are the hardest ones to make. And so suffice to say that I think we've generated a central repository of some pretty extraordinary IP and knowledge. And you can imagine that quite a bit of that focus is on the concept of thrifting and reduction. And obviously, depending on the use case, the heavies can be less or more in the case of, say, robotics and drones, it might be less than, say, auto. The last thing I would say, and touching upon something Ryan mentioned at the end of what he said that does sort of tie into this whole issue of material, is just the inherent advantage that we have with the ability to have the vertically integrated assets and recycling. And so the fact that we can take swarf and obviously, eventually, when we're fully normalized, we've got a lot to do to kind of ramp everything up. But the fact that we have the ability to input material back into our process is an enormous advantage. I mean, particularly now, I think with this issue being so topical, rare earth magnetics, and I think you see probably a number of upstarts out there trying to form capital. And we wish them all well. We hope a number are successful. But I have to say, I find it really difficult to see how a standalone producer can succeed relative to somebody who's vertically integrated. When you think about, in the case of a typical auto application, you may have 20% or 30% of the material in the finishing process is cut. And sometimes in the case of consumer electronics, like a smartphone, it could be more than half of the material falls off the production line as you're finishing it or somewhere in the process. And so our ability to kind of think holistically about the business, the use of material, one, from an IP-heavy standpoint, all the way downstream, but all the way really from the resource through downstream and figure out how to maximize throughout the process, we think it's just an inherent advantage to our vertical integration that, again, allows us to be, hopefully over time, substantially low-cost than anybody else, but frankly, able to survive in a very competitive landscape where others are just sort of structurally uneconomic.

Yes, thanks, Jim and Michael, for sharing insights, and good luck navigating the fast and furious environment.

Our next question comes from Laurence Alexander with Jefferies.

So good afternoon. Could you touch on two things? One is your working capital needs for the balance of the year and as you ramp up and how that ties into your views on what is appropriate minimum cash balance in this environment. And second is, have you had any, are you seeing any real shift in automaker discussions in terms of somebody else sort of coming in to help you scale up? And is your priority in negotiations your overall return on capital? Is it to get capital to help fund a ramp? Can you just give a sense for what your relative priorities might be?

Sure, hey Laurence, it's Ryan. I think an important thing to keep in mind in terms of where we sit today in our growth plan and from a balance sheet perspective is, if you look at sort of the state of our various growth projects, we're really entering the harvesting mode of what has been a pretty significant amount of investment over the last several years. And so with that and with the fact that we are accelerating pretty rapidly, as Michael touched on, our Midstream production, our sales of concentrate, which I'm sure is where this question is coming from, from a working capital perspective, we're always going to be a smaller and smaller part of the business. And I think it's easy enough for everyone to sort of model out our cost of production there. And assume we don't sell any [con] until we're fully ramped. I mean, this is a pretty small working capital use that we view really as that and as something that was sort of an inevitability as we continue to scale the business. And so given the state of our balance sheet, which remains incredibly strong, we're not thinking remotely in terms of minimum cash. I think we have ample cash on the balance sheet which would be further supported by some of the things I laid out in my prepared remarks regarding prepayments from our foundational customer, as well as another $50 million coming from our tax credits from 2024 which we expect to continue to be a source of cash on a go forward basis. So we continue to feel very comfortable from that perspective. As it relates to your second question on what is our priority? Every single deal is different. The analogy of drinking from a fire hose, I think was a pretty apt one that Jim mentioned. The desire from a pretty wide swath of names you would know that want to see us in production yesterday from a magnetics perspective is pretty large. And so every single deal is different. I think what we're prioritizing is capitalizing on what feels like a real sort of generational opportunity to make this business many multiples of its current size. And so that may come in various forms. And I think how Jim laid it out in terms of we've done the hard work already, there's a lot more hard work to come. But I think the amount of capital that we've put to work, we expect to see pretty significant commitments from industry and or government alongside us to continue to accelerate this.

Yes, and I'll just touch on that. I referenced this in one of the earlier questions, but I just want to make sure people understand this point. As we think about what's happening in the trade war, obviously there's sort of tariffs both ways, but they're as it stands right now, and of course this could all change tomorrow, but they're pretty much going back to the beginning in April, rare earth magnets are not leaving China. This is an enormous source of leverage against our government. And so this is a key national security industry. And so irrespective of which way this goes, and obviously we hope that the world evolves in a thoughtful, constructive way, that's great for America and good for everyone. But regardless of how this goes, this is a point that can no longer be on the table. I think there's a, and again, we speak to the government pretty much on a daily basis. And I think there is widespread recognition that this issue must be taken off the table going forward. And so the scale of what needs to happen is pretty remarkable. And we are the national champion here. I mean, we are, thanks to us, we're years and billions ahead. And the question is just how we can sort of lead that effort and to do something like that. Our expectation is that it should be rewarding for our shareholders.

Our next question will come from Matt Summerville with DA Davidson.

Yes, excuse me, thank you. I wanted to just putting aside for a second quote, help you might get from industry or government. Are you running, I want to make sure I understand this, are you running a different stage 2 playbook today or a different magnetics ramp playbook today in order to, as you put it in your press release from a couple weeks ago, accelerate that stage 2 capacity or that stage 2 ramp and fast track magnets? I guess I'm trying to understand, has the operational playbook evolved in the last month?

Hi, this is Michael. I would say, in general, we've been trying to ramp as quickly as possible. At the margin, however, with what's going on, we are refocusing all of the operation to maximize and optimize the ability to ramp the Midstream assets. So at the margin, focusing on our concentrate production that best supports the Midstream operation, but in general, basically the same. For the magnetics business, I think it's business as usual, although thinking more about what ways we can leverage existing capacity or think about how capacity expansion might look, as we talked about, within the existing footprint or outside of it.

Thanks, and then I just want to be clear relative to a prior question on the heavy side of things. Is there a certain intersection, if you will, that you have to get to between how the magnetics facility ramps and how your Stage 2 separation, or excuse me, your heavy separation operation ramps such that you can remain sort of self-sufficient for somewhat of an extended period of time? Or are you out kind of actively shopping and actively looking to stockpile either spent magnets or other third-party feedstock? Because, I mean, to Jim's point, if earlier magnets aren't leaving China, I imagine there's probably not a lot of heavy rare earth refined heavy leaving China either, although I could be mistaken.

Yes, Matt, it's Ryan. To clarify, we are in a position to be self-sufficient as it stands. We've gotten ahead of this issue and have the required feedstock and required end products from a heavy rare earth perspective to continue to scale Independence on the schedule that we've anticipated.

Our next question will come from Benjamin Kallo with Baird.

Hey, guys, thanks for taking my question. How do you guys think about just the timelines? I know you're prioritizing the government industry, lots of different options, but how fast do you think some of this stuff moves? And I think that someone asked it earlier, just where in, I guess, stage one, two, or three do you think that you would -- if you had an investment or a partnership where that would occur? And I have a follow-up.

Yes, hey, Ben, it's Ryan. I think to your last part of the question, where do we see opportunity? I think what we've seen in this environment over the last month or so has been incredibly validating of the vertical integration strategy that we've pursued over the last several years, right. It's important for us to continue to support a diverse magnetics industry, both in the United States and globally, but really what we are seeing a massive acceleration and interest in is having magnetics' true magnet capacity in the United States at scale. It's something that we have always said is an imperative for industry, an imperative for national security, and so the level of interest there is like frankly nothing I've ever seen before. So we will continue to be extremely thoughtful there on how and when. It's very hard to give you a perfect timeline, but for context, magnetics was an idea on a piece of paper in 2020. We made our first hire in 2021. We broke ground on a state-of-the-art facility in 2022, and here we are in May of 2025. And we have an EBITDA positive business. So from that perspective, I think we've got a pretty good track record of going fast when we're going Greenfield. And certainly there were probably a lot of opportunities to do Brownfield and do other things of that sort. So it really depends on the opportunity. We see a lot of opportunities. And so it's sort of an unsatisfying answer in the sense that I can't give you something specific, but we're very, very excited about the activity that we see.

And throughout earnings season, there's some companies that are kind of assuming the trade war deescalates. And I think Jim, you kind of alluded to this. Do you think that you lose momentum if that occurs or is it because this happened that this is going to stay fresh in everyone's memory and the momentum continues for you guys?

Sure. It's a great question. Well, first let's start with, if it doesn't deescalate, I would not be shocked if we see factory shutdowns next month, whether it's aerospace or auto or consumer products. You'd be amazed at how many different things have magnets in them. You'd be amazed at how many producers out there have suppliers that they didn't realize had magnets in their product. And it, so it is a big issue to the extent that there's a deal this weekend and everything is calm. My guess would be that you're going to see a variety of reactions there. There's, I think it's fair to say that most parties are in crisis mode right now because it's a crisis. There's probably some that will relax and not learn the lesson the second time around, so to speak. There are some that will have learned the lesson this time. And there are some that will be in crisis mode still because they'll recognize. So I think it'll be a mix, but I can tell you without any reservation, it is very clear that physical AI is the future of warfare, drones, robotics and those kinds of things. And it is very clear that the United States government, and obviously I don't speak for them, but in my impression from conversations with them and the Department of Defense, et cetera, is that there's a full on recognition that we can't be reliant on Chinese magnetics for national security purposes. And in particular, I would say the defense tech space how, how does exciting defense tech startup or prime or whatever, no longer answer the question of where their supply chain comes from for this exact reason. So I don't know to what extent memories will get short if there's a deal next week, so to speak. But there will be enough for us to do that. It won't matter.

Our last question comes from Corinne Blanchard with Deutsche Bank.

Hey, good evening team. Thanks for taking my question. I'm going to go on the obvious here question, but I really want to understand what's your strategy in term of the shipment that I'm not going anymore to China. And I think the question is probably like a, a 40 check question here, but how long can you go without the shipment coming out? What's your view on stockpiling production? If in three to six months, we're still in the same situation. So just trying to understand I would say the key tech inputs here and how they're going, and that could impact your EBITDA and just your strategy on six to nine months.

So Corinne, in the beginning, you cut in and out there like Spies Like Us, if you've ever seen that scene with Chevy Chase, but I think that you want to, do you stockpile?

Yes, sure. I can jump in. It's Ryan. I think I got the full question and jump in Corinne if I missed parts, but I think the important thing to keep in mind is if you think about how low cost, we are from a cost of production perspective for concentrate, stockpiling a half a year of concentrate production as an example is like low tens of millions of dollars of working capital, which given the scale of the cash on our balance sheet is not something that we lose a ton of sleep over. I think the reality has always been that the sales of concentrate were always declining and rapidly declining. The better we do on Midstream ramp. And the important thing as well as having that concentrated inventory, the profit is deferred, but it's not lost. We will take that product and we will refine it over time. And I actually think that having some level of con inventory is actually advantageous for a variety of reasons that we're happy to get into, but from that perspective, it's something that we've got the land at Mountain Pass. You've been out there; you've seen the scale of the site. There's plenty of room to store con. And so I think Jim laid out what our strategy is going to be. And so this is sort of always been in some ways in eventuality, this is a little bit of unexpected turn perhaps, but one that we've actually prepared for in many, many ways.

Hey, I'm back. I don't know if you have one more minute. Hey, I think they had put me on mute, but I mean, just for me to understand. So outside of your production, how much is non-China? I think that's what investors are trying to understand.

All of it, Corinne. We're not sending anything to China right now.

And you have the domain for all that production ex China.

Correct. And given what we've seen in the last several weeks, we're incredibly optimistic about the ex-China supply chain.

That concludes the question-and-answer portion of today's call. I will now hand the call back to Mr. Litinsky for closing remarks.

All right. Well, thank you everyone. Obviously, it was a very exciting quarter for us execution wise across the board. And I think geopolitics kept us a little busy and may for some time. So we will get back to work and see you all soon. Thanks.