Release Date: February 20, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• MP Materials Corp (NYSE:MP) achieved two critical milestones in Q4 2024: starting production of NdPr metal and initiating trial production of automotive-grade magnets.
• The company secured a substantial direct volume commitment of NdPr from a top five global automaker, now supplying three of the five largest non-China automakers.
• MP Materials Corp (NYSE:MP) managed to push out the majority of its debt maturities to 2030 and retired over 90% of its 2026 notes at a discount.
• The company received $100 million in customer prepayments in 2024 and expects an additional $50 million prepayment in the coming months.
• MP Materials Corp (NYSE:MP) is positioned to lead in securing a competitive and risk-free supply chain for industries of the future, with a focus on scaling its fully integrated rare earth supply chain.

Negative Points

• The decline in NdPr pricing has negatively impacted MP Materials Corp (NYSE:MP)'s bottom line, with market prices dropping to approximately $50 per kilogram.
• Production costs for separated products remain temporarily elevated as the company continues to optimize processes and ramp production levels.
• The company experienced a $21.5 million inventory write-down during the year, partially offset by a $12.2 million tax credit.
• MP Materials Corp (NYSE:MP) reported a negative EBITDA of $1.3 million for the quarter, reflecting challenges in profitability.
• The company anticipates continued investment in its magnetics segment, with an expected increase in operating costs and capital expenditures.

Q & A Highlights

• Warning! GuruFocus has detected 6 Warning Signs with MP.

Q: How should we think about the cadence in NdPr volume ramping throughout the year and the exit rate in 2026? How does the current pricing environment inform your ramp plans? A: As mentioned earlier, our focus in 2024 was on stability and uptime. In 2025, we will emphasize uptime and throughput, aiming for significant volume growth and a return to profitability. We expect improvement in the first quarter and are confident about growth after the early Q2 outage. (Michael, CEO)

Q: What is your view on China's plan to prohibit non-state companies from mining rare earths, and how might it affect the market? A: It's challenging to predict Chinese regulatory changes, but this aligns with past policies of consolidating the market into two super majors. This could mean more quota allocation and enforcement by these players, potentially leading to supply discipline and higher pricing. (Michael, CEO)

Q: Can you provide more details on the financial impact of the transition from concentrate to separated products? A: The transition has temporarily increased costs per unit of production as we operate at roughly a third of our targeted throughput for NdPr oxide. Despite this, we have a clear path to profitability as we ramp up production and optimize processes. (Ryan, CFO)

Q: What are the expectations for capital expenditures in 2025, and how will they be allocated? A: We expect to spend roughly $150 to $175 million in 2025, split evenly between the Materials and Magnetics segments. Investments will focus on high-return growth projects, including upstream 60k, recommissioning of facilities, and magnet production capabilities. (Ryan, CFO)

Q: How is MP Materials positioned to benefit from the growing demand for NdFeB magnets driven by electrification and AI? A: We are well-positioned to lead in securing a competitive supply chain for rare earth magnets, crucial for industries like robotics and defense. Our integrated supply chain and advancements in magnetics business will deliver long-term value as demand grows. (Michael, CEO)

For the complete transcript of the earnings call, please refer to the full earnings call transcript.