MP Materials (MP) 1 Aug 242024 Q2 Earnings call transcript

Good afternoon, and welcome to the MP Materials Second Quarter 2024 Earnings Call and Webcast. My name is Harry, and I'll be your operator today. [Operator Instructions] I would now like to hand the conference over to Martin Sheehan, Head of Investor Relations. Thank you. Please go ahead.

good and operator, you, afternoon, everyone. Thank the Call. to MP Materials Conference Earnings XXXX Quarter Second Welcome today MP Founder me Officer. Chief Officer; With from Ryan Executive Chairman Litinsky, and Officer; and Founder, Michael Chief Rosenthal, Corbett, and Operating Materials Chief Financial are Jim

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

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

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

Thanks, everyone. Martin. Hello,

our before usual then cover As operations. will will with the Michael operating Mountain performance and updates overview a financial will remarks on then Ryan program, KPIs. at I and review is closing Pass with level. our Q&A. an high I And will follow return quarter

thickener biggest in very Slide an when was well this of quarter as But impacted into usual will Michael REO So our strong. This us, and as downtime to ever, financial as unanticipated a lot tough financially. uptime. very operations been was finish team behind QX building detail and quarter performance say, impacted rake measured best upstream by QX years. coming QX. weeks. fashion. as more upstream X. This later let's Production be adversity in X Ryan suffice into and we words, in the for upstream X productivity the our business it our hour that call. Production get will challenging and to unwavering ran a going of other the team on as in about provide damage in we production In a though, our actually produced about quarter. In in responded per momentum was our it the quarter out efficiently achieved the operationally disruption of was about has to we are completely second when hour recent that on In call, QX, momentum the the by this REO operating, hindered

still levels it while track So is of record early, appears QX upstream production. for on

production optimization future. the and which in from this is upstream, efforts, recoveries Upstream out higher the is results growth early our these of XXK bodes well we promising of already Some efforts. are Through seeing for

well going to the in us Moreover than increase XXX the of to unfortunately, best to and tons. efficiencies expect and more challenges, one accomplished an we upstream NdPr well But to forward. we pricing in over we quarter periods is our challenge is QX. quarter we lining have production environment. QX are position midstream and XX% upstream reflect production this as the repair NdPr costs in So most that despite financial the operating a that a result unanticipated and responded lost in as headlines, date that the challenging the of should beneath of another those well results achieved we This silver lot impact all today doubled date, our weak in confident continued

seen continue improvements, which have down past production in the will X to months, costs NdPr drive the coming Over we quarters.

NdPr to for ramps. development expect materially with is oxide We a quarter, agreement activities. In household commitment signed new automaker. per improve as with unit we global to production are a customer we yet, the of well be name an we where want progress not This customer, cost but a aligned substantial

to to XXXX. NdPr begin year, them ramping expect into delivering this later We

supply Department a in the were We awarded to existing also of to contract NdPr contract our to lanthanum. Defense provide to addition

business, downstream unlocking products, a milestones magnet important last quarter, we achieved prepayment quarter. in producing in as mentioned Finally, we $XX the in our precursor million

I up complete would add of the our we expect also $XXX approximately tax we to cash remaining incremental still expect to balance like This strong earn and magnetics facility, from we maintain pricing our at credits a even sources as customer means Pass environment. by million from in and weak Mountain the additional navigate midstream to sheet our production that end investments of prepayments ramp XXXX.

scale we accompanying magnet made recent to Worth, validate magnets which our able in-house commissioned from laboratories powder we in many factory activities we equipment. In on progress our now finished boundary and commercial a development, to have process. grain prototype made significant support are the diffusion first production In These equipment magnet critical Ryan we later produce production at the scale precursor magnets prototype at kilogram remain magnet me begin quarter, this to third-party to needed turnaround metal to and and through magnet, NdPr let our turn vendors our magnet weeks, transform using metal and of and financials our and are it on that, as to and high-quality on in The our our similar are into processes In by enduring line the cases, we progressing, for equipment to product without commercial commissioned customers. With times. of and to enables run Installation line at Ryan? the labs. our prototype materials analytical quarter. all has same us lengthy and the commissioning over the track finished Fort to for producing which the precursor KPIs our magnets steps optimize materials manufactured finished year. road

Thanks, Jim.

of downtime of our of was last highest downtime produced in concentrate, X, in production We history. planned of which than metric quarter, than extended was Moving the lower quarter. less to a This year ago Slide will about tons on production top the the REO of about downtime you impact the plant X quarter and maintenance. see X,XXX on second usual our in XX% week for XX% unplanned our

of the volumes, As Jim a temporarily XX% was rakes due production shutdown. soon whole timing was production. you higher sales some approximately production to maintenance as the NdPr higher quarter. more mentioned, ramped About metric our after had concentrate sequential the down. in impact of of combined without volume shipment REO one combined the volume lower lower upstream while planned lower X,XXX operating, consumption remainder in along we to upstream we decline than significant the roughly of to reduce as tons, decline operation thickeners concentrate tons. To The these circuits to therefore, to into repair XX% production the of of up, rapid NdPr the X,XXX costs shut as in descaling refined and metric of volumes being costs shipment damage due due Unfortunately, onetime sales the completed to The rakes with to normal well give all to was business drivers to much the sense the our drive upstream timing. sales had midstream upstream

a strong July. efficient production Jim and stated, to in we As returned June

in quarter QX, our metric in guidance discussion upstream be if upstream, expect line approximately one production off ton, with the ever. Finishing back best we intact, quarters was in current of the $X,XXX In realized provided fact, trends May. per early on the the we remain may pricing

NdPr Moving pricing production production to than more XXX in realized at prior the line our tons. NdPr was while doubled tons quarter, in $XX in midstream KPIs. XXX were quarter's metric kilogram. to of NdPr the sales quarter roughly the with per

with line guidance metrics these provided of in were in May. our All

Looking to QX. forward

will As higher which, be in and at in of separated production ramp volumes while higher May QX's approximately least X/X be offset production as to of sales are partially to tons. Recall, nonshutdown average, about volumes of increase our into midstream process production the above NdPr but circuits the initial will benefit NdPr production as Jim sales as volumes XXX sequential production a this would metric lag as partially QX, we by discussed our quarter. product typical the sales the today, a saw we volumes mentioned, line build-out by of in you concentrate XX% due we volumes metallization Sales in will from quarter, we pull-through expect volume, and concentrate channels. expect slightly the expected on levels with

expect pricing be NdPr oxide would QX single-digit for down both to we pricing, sequentially concentrate for and low percentages sales. As and REO

Moving to Slide X.

lower quickly in is NdPr as important metal to remember to sales the pricing NdPr trends. more ramp than On of our up. longer will It the from sales will NdPr the NdPr sales side, transition and sales, upstream initially you sales concentrate concentrate far we oxide sales on can the our concentrate sales that a cycle left volumes, lower decline for the revenue see impact

the already as period. we heart this of alongside financial about repair in quarter critical costs juncture evolve investment a would fully and transition a transition a unplanned integrated miner were been this this investors impacts into we compounded are the refiner. long Unfortunately, of additional by downtime period, and warned We have significant what have

diluted of Moving adjusted million adjusted slide. to the factors. quarter EBITDA loss and the per of to the an loss share due middle and in $XX.X several $X.XX We of posted right

other as of discussed is over operation products. production quarters, currently ramp midstream subscale last few our First, the we we have and as NdPr separated

optimized we at higher as in period currently market the impact production subscale as production reserve absorption elevated absorbed cost resulted pressure production lower difficult the we taking quarter. the prices. costs to in of as well levels. variable $XX.X This an on inventory these of cost the than versus quarter, of million continued relates This production fixed This temporary of target us

shutdown. and impact combined the in the and directly way both the this both by revenue repair dollars higher also of which impacted repair unit the our production costs in the operation. was production maintenance we interconnectedness associated concentrate lost of also equipment, cost and expect but the production the downtime, showed be per and in up Further, lower goods from of The second our maintenance our This nature. contractor unplanned was in hitting of impact, of for in course, higher costs. rakes, costs onetime with thickener and the by create and million repair quarter found quarter to labor several the major its earnings fixed of onetime given production absorption, expenses cost inefficiencies into product unit were quarter's separated concentrate sold This The expenses impacted impacts planned P&L. costs start/stop, the to including cost

low Lastly, ton concentrates even to these sold. in of levels, of production gross REO recall at normal $X,XXX generates our $X,XXX that concentrate business prices, margin at per

temporarily refining subscaled sales NdPr ramp unprofitable operation, we temporarily for sales level trading the in concentrate we are profitable some As this of state.

products separated We are capital the transition working into dollars our for sales investing and channels build. as also tolling

last happy being the further optimization seeing we to have see the our optimizing made as as is we over progress methodical why term, costs our absorption midstream of very fixed this rightsizing confident remain push in over long variable have an incremental we production But to ramp good we the investment a highlighted will we of forward for be are coming quarters, and few cost is importantly, in the path we we that, Recently, and and made. in have are clear variable costs this ramp, quarters.

Importantly, out. materially. I want reemphasize expect Jim unit reduce costs will our that we pointed what production the per combination to

weeks, Over you upstream the high the XX profile last production, have are seeing. low-cost X to returned its used all we to to

cost optimization midstream and in progress both in significant made production of levels. terms also have We

While at of and over will we cost react several bear continue be fruit as time. to won't very ramp our success see we to midstream bottlenecks, signs quarters early target that clear for more structure

sheet for a a additional balance over I the expect another great our would challenging next customer also quarter magnet that million despite precursor in shape. year. million April of we point $XXX remains prepayment Again, materials out financially, received in and prepayments $XX

in addition, operating the already a the flows balance meaningfully an complete expect earn and strong invest Fort transition, to will separated cash approaching tax $XX provides to and we we cash credits further expect various which we through as Worth sheet In following XXXX. product buttress the another This improve. for IRA majority, for receive million to

that, the With give Michael me some to let Michael? of to on the you turn and updates technical operations. it details

On Ryan. above shot have we X, a the Thanks, drone Slide pit. from

pit the side. foreground rim You pad the the of separations upper the right the in see on with could

earths lanthanum haven't who from very long we the the you it of and remaining separation is those before, on separate light For any rare building right where seen cerium. facility, our NdPr

Moving to our operations.

top on impacted outage quarter. impacted X This Second issue during in performance rake one production quarter the Jim weeks Ryan described. thickeners and severely was semiannual of by maintenance of damage approximately for the X-week our that planned

grade around full service repairs contractors days duration the operations. We for Our tirelessly so partial clock the teams, impacted. in mid-May with meaningfully operations upstream of into and after sustained restore the easily and our concentrate years. feedstock stability the and concentrate quantity in the for reduced operation midstream resumed operations The sales for improvements, providers, curtailed production XX some weeks X to production biggest was were certain incident, from disruption early past concentrate only worked reduction has by the June. This and supported and several

While happy momentum team normal and the all areas. the remarkable creative we concentrate. Once per than hour one accelerated through more operating of were on it's we the quarter making ever and the improved of challenge satisfying efforts having in operations about and and with produced REO our see inspiring, restored, production fronts, were are Concentrate we X,XXX our not the incident, months we building this of grade. coordinated finished production and progress higher have at to June higher many represented best are quite in we been tons

we are has feedstock were for quarter-over-quarter. business certain the NdPr I delivered is that of beginning discussed been some on seeing now improvement production realize midstream to customers. midstream operations quality approximately downtime we impediments good, we our impacted gains being efficiency one the as as resolved. quality maker metal and addition, oxide the our largely biggest the very double chain calls. Notwithstanding maturity NdPr are that the new operation, challenges in of extra noticeable reliability into supply but to process that oxide midstream NdPr is the previous are magnet June, able to assets remains of in corresponding consistently of our Mechanical to In

uptime, Strong executing concentrate upstream I remain the and our balance business production optimization the in projects has our uptime into in continued cost As focused balancing and will year, look ahead circuits. process production we on of to QX. certain and midstream

may optimistic that curve growth. and/or quarter, year implemented are on have concentrator recovery improvements related for we we have Separately, grade noncapital-related up X any that estate future Upstream this real until will capital this free optimizations XXK optimizations next so moved These we We wouldn't our begin our count project have benefits in facility favorably. commissioning year.

alternative a flotation equipment. The large-scale first of is pilot

favorable hope tighter a mechanical throughput in circuit second and that our should achieve with midstream a grind improve to more higher is that investment distribution The potential. In sizable the recovery grinding stability, starting we circuits, availability. ensure will and more improved we are

and and work confidence, As slowed previously production. our experience are to improving, teams our execution able that we issues gain is through

straightforward we to so, we handful of the as a and done many these year. we process through have of have balance the However, have plans identified bottlenecks of address

have are minimize allowing critical our therefore example. recycle our from to water is These sustainability They potential, greatly the greater of a the processes recycle impurities environments, circuits weeks, processes. good higher to performance water a balance, freshwater and allowing process to Our modest the uptime. In recent our improved throughput environmental wastewater all wastewater remove for subsequent we in and or midstream and cost. in their for in to us When need in have periods. not eliminate proved circuits their operating they uptime operating rest the running for plant impediment

of where as circuit, this largest cerium improved despite improving represent cerium for leverage consumption better impact we are and be is category. major The to our a the site recovery will rejection reagent cost wide. huge see opportunity our in contributor rejection. Incremental success We production recoveries on our reagents leach of progress a laser focused even NdPr also material in better NdPr

portion as plant for cost. We production early that one than late rate the in sustain lower even power in both heat assumed and to turbine than to of on operations resulting performance. lower turbines we allows time ramp QX chemical cost completed of our a further, be Another reached opportunity interruption capability at now was plant larger with the operations in QX. end completed feared power the less greater replacement expect and us had was We and operating our better current This able previously to realized life. of

very back at pleased production a that, of on XX% above and production in the teams on concentrate strong will results NdPr growth the continuation and and are our July to congratulate least QX. controls outcome put the trends, current versus quarter expecting and assuming it utilities, commissioning with excellent quarter-over-quarter the job. Summing us We process we up E&I, turn path. With of I oxide QX Jim. this are

Michael. you, Thank

have this as Let's worst I the up, magnetics turn progress. quarters our kinds substantial I quarter the to been undoubtedly with of earlier, dusk. a X hope public made can happen results, surface as always of facility of financial wrap was at while. recent a amount clear I that But we company. shot To the Slide in a these beyond once performance said

scale agree. How Our over unwavering what our protective complete chain corner and irreplaceable prices, thriving Washington remains no always activities. this destroyed the the quarter hoped majority In an weeks, of of of just projects their geopolitical building at and of fully Rare is we continue as environment. In remain the evolution remains. the team and of in customer both uncertain, and rare many leaders X a the full spectacular supply its of politicians the is control. that the well from charged producers upon pursued to even ramp, or back. but strategic China value center now is earths, on new are few a very efforts the know June, platform nature, over of certain supply one years timing be conditions MP's a in outside swing, control Pass, recent refined do over these the Meanwhile, highly Chinese development shakes season has in market turned at own. the aligns our MP. election our in is We have of not our These team at vast China. And chain are earths. The measures with to we which at investments therefore, governments, domestic structure couple Despite for West, criticality tightened things of industry. pricing Mountain a cost with most a are now positioned and relentless. Notwithstanding producer integrated of conditions volumes out regulations

at the name automaker added Between I As to recently client of agreement Sumitomo another at growing and significant and full capacity new qualified position now our new China, use to we the outside production and a agreements now household outset, is our as now champion our our distributorship, most by cemented. products list. magnet anticipated portion is the committed. American of makers of scrupulous some this end With mentioned tied NdPr manufacturers MP's expanded

Our United in of a earth of business point, rare we'll In magnetics is production anniversary the Mountain the to founding large-scale year, Materials. the inflection acquisition downstream the later July, States I approaching many decades. Michael return the MP similar for celebrated first seventh time metal and Mine and and this the of Pass

we're technology believe about with incredibly I geopolitically the the billions robots, our long-term AI-enabled of In a legs, matters. progress on MP's made whether that, world even success to happy take more excited and we are have built, the questions. is inevitable. With your proud We necessary and electrified and or products, Operator? platform wheels increasingly charged, of we've future. team

David [Operator is TD line Cowen. Instructions] of of from today Our first the question Deckelbaum

if milestone about XXK I'm this think, see behind guys the this glad a I impact that around bit quarter. operations? quarter, can the Upstream with you pilot this testing Michael, current with in little put third to you. How you think just I'm curious, talk quarter the to to begin test, is in on your do anticipated relation we flotation. about first That

Thanks for the question.

successful. to a we We'll impact initial even test, this running pilot, lead it to equipment pleased we temporary been does bigger. said, tried one, grinding scale smaller the to but already the equipment, that It have then similar results to and operation. if potential as results. The through the current about scale We've and for particularly mentioned a look I are can interference expect have In it is do more midstream I slightly with slightly any that of But with ultimately this be the next the operation. that terms additive we circuit the very like results don't on to year. performance, expect see very excited material investment

color. the navigate Ryan, with downtime kind you I'm as weak this position the think robust guys year, still this I I highlighted cash quarter. we prices, a even just appreciate curious of

some about, you guess, of and you think prepayment have that of just you kind Just I the receipts in the order the those $XXX conditions or talking time to tax I meet million anticipate, can receive payments? so that to and rehash line

sure, happy to. Yes, David,

production million you upcoming first prepayments saw way to we of this build further set capabilities by for towards we the on of quarter, that the our $XX $XXX making to about commercial support of million unlocked metal-making move million business As think is the Worth and received Fort $XXX continue The magnet business. downstream in that progress up metal the there. downstream as to is operational

months. the expect of over And the receive so totality we next to that XX

tax that actually that the to future part of the in XXX we of are you we various dollars XXXX a flagged receive, year terms a last our not-too-distant tax filing credits receive receivable relates saw of incremental which we upon $XX expect credit, here to million, return. of the In in which that nearly of QX to intend tax

pretty a receipt. near-term that's So

The XXX earn that the and the of course credits ongoing year we'll over production elements via relate next. other of this XXX to

is the Fort quarter, in our XXC million we credit addition was guess, In $XX.X that, investment to Worth. tax I it as for announced, of last

And and time. we've cash the XXXX longer variety for invest play to likely to suffice us balance in opportunity period frame to sort monetize a million in in about $XX We a allow sheet can remainder is the the we next expect lot to of also or got healthy really But say, that here. of we that as time support earlier different receive to out over that liquidity of available of continue fashions of of to a year.

next Our Jefferies. the of is Alexander today line Laurence question from of

specifics wanted sense This sure to size can a not I'm maybe Estok commitment answer automaker contracts. announced Kevin if offer guess the have maybe time around on Department And but helpful. is today same of get this, the for you for I of the just Laurence. I that that I supply maybe be just you with the any of the you length mean Defense or of of the agreement. the specifics can would that you the

It's that. Yes, take sure. Ryan. I'll

of OEM terms 'XX and a the In is this commitment year ramping the year. starting commitment, deliveries through that in following multiyear with

term medium the over a of our total double-digit commitment this expect will targeted percentage output. represent We that

a pretty us, and we're give the of it taking in moment, really and details is which very Jim the of doing. about. And both commitment which DoD we're So what some comments I stepping it's back the about emblematic I I'll for some think about significant this agreement that a commitment you importance in excited think of purchase context, made

thought many, to we to was the this on automotive directly when all think reaching commitment make would started global ago I this years OEM a way unheard upstream type of. be rewinding mission, of many that the

agreement both progress a is increasing and we've industry and as speaks so to modest And that made MP our importance produce. The agreement. what that pretty that, of the I DoD our we and the think --

million support Defense for was about Department emblematic stockpile of as National from announced well. from them we're see. the It's but $XX them that happy of which Defense, commitment very to So continued by again,

guess, the there, and and there's in Yes, that. guys' just sure. I a curious puts economy. guess, what of the into my obviously Maybe I flow-through terms your question, the take the stimulus, on outlook guess Great. get and economy Chinese possible some economy helpful. I appreciate would And weakness in pricing, be takes I Chinese last your to

Yes. Sure.

economy So the challenged. still is Chinese pretty

property. to seeing America. to I environment very is think it and we've consumer across It's earnings really overall negative related that industrial Everything an season year respect We large with weak. been around this just see writ to that spending. corporate production

Africa. you've don't anecdotally, what's do views underlying sort in sort particularly NdPr the see going we on the than industry with have global China. I South to America, So we around any sub-Saharan in in as hearing to it respect been of Chinese really of though, would different demand, say, relates growing what abroad board South

So think what's say the one mitigant for sort that about sort that make Chinese in the to around industry happening I the you in of growth that economy, world, our of up of pace is space. attempting particularly when Chinese with would is

way And that things you demand as try long to caveat do we're show and medium all seeing medium- the in and very answers the do know, world. to continue We that again, the term, prices. the always around the think long-term picture is bright -- China so know. from to But that I don't respect I I these that with commodity to think

the Davidson. Summerville next Matt from The of D.A. question is of line

questions. Couple of

this mean the the in. automotive a maybe on this lot. to And -- get you double the but lining door there a pick can comment, way And word was -- narrow so I'd sort bit? may Just to your causing make is brain and to knocking used back come you just to little criteria agreement? with a that can digits for align Ryan's OEM bit. strategic Jim, to What yourself of particular a decision door, like to Is be not kind of a to try curious causing the that or down whether speak, of at or OEMs other strong too up more so also to panic this as to

Jim that steal -- quickly. going Sure, one I'm Matt. I'll from to

say, incredibly obviously, get that I around low our we prioritize you're most to, term that and are are look narrow over look that And important. contract. But product the pretty Just and digits maximizing focused those lot believe Double for go are world, on -- we wishes structure, realized are together, down we that think at is our certainly of we we I long customers' price looking I receive we right. going individual this respect specific on is the all I to into and that a digits, want and pricing as details in things think is as can a to mentioned, are thoughtful seeing contract that broad. at partners. any and as we we double obviously, the what not commodity customers as interest

with business. did on so that's OEM midstream with we're what And what with certainly business. other That's the downstream partners we absolutely Motors doing General the

about. that something we're it's so very pleased certainly And

at of other there's a of that Street of have of automakers the this electric a several headlines of We've the we've on the that vehicle of course things think, last and wouldn't certainly, terms malaise trend. point, despite but In Wall over really, sort I panicking, blue whole months I panic it up the a interested put host reenergized a all seen quite the to you we're caused announcement continue could to tariff from seen panic activity. Certainly, automakers. what chip bit customers in lot our really administration, magnetic overall, pleased by that terms in current build book little the of being call of maybe automakers doing of But side. it the maybe really with -- the we're

to in you terms year to NdPr rate saw that run on of progress to and way to increase you way tracking where output relative of based talk basis QX on in then And XX% about thus you're there where NdPr you're kind there any or of in hope Michael, goal the talk the any QX, for maybe -- production? a far is about is your exit production your seeing -- oxide,

I'll the say hard it's rather anything production, I if we're give Jim, we bottlenecks It's continued the throughput leave and a fourth that. I quarter. believe and in that growth greater past, want on to and where further. XX% know that, to add the still seen the clear do more see optimizing early, and so not. for it, availability, opportunity saw pushing And getting there's to I and bottlenecks of I'd But would answer -- we to significant the puts July being may that throughput It's And with working I the whereas sorry, equipment us we are expect and now on path balancing that growth. released, that then stated availability up have on probably improvement. to really Ryan, significant to you in past, in whereas don't but those

the on one and think, structure business, of is think, shift the thing in from a around various We're point a of targeted is, a to from progressed pieces our in arms midstream costs. moving add bit point, us where at I probably the incremental that reason on is, more the tone you're we've structure this variable Yes, at a cost the getting on where cost our denominator understanding issue. I little I'd sensing perspective this sort getting

more is itself. will pushing about on cost have this forward So take structure our of care ramp effectively volume the

but steps progress. that of some And obviously through see way, very talked the Michael along to the so pleased very, we're

enables year. to that I of here tactical And the approach so more think be we us even in ramp the over course how the

particular a ways couple are get And Michael early of with said, to to you to last get over efficient to many because the most on there so give way told we've it's in numbers what is We quarters. as consistent different the want volume possible, there which number. so specific volume

X. then to trifecta And the I'll from add this us since -- on hear of so do all X you just here,

looking I think, existing time. an ordinarily, ramp take ramping ordinarily, numbers this at similar you think you at to things within happening that another industries, aside, it. look much tough or of the see our multibillion-dollar it, not you're have industry numbers these and in obviously, sort And the with see you'd this of wouldn't operation scale you business respect might this if were and obviously a of to ramp refinery, if when -- up quarter just

ramp we impressively aside, of is is expect what's with that and think, really, case obviously, hopefully, the is to it remain sort team happening this executing. we of as that tough really of again, this impressive the and do ramp pleased the year. obviously, I as happening scale to quarters throughout And the keep fact so think, is have that the very Pass, And is rest happening. a Michael number there. Mountain But of I'm And out really the at I

Genuity. next The Gianarikas the of line George of from today is question Canaccord

old -- only I'm only things choice intentional start I during I the assume want -- enough song get with was if just guess that know was period. I what -- do wondering waiting get I and the do was, hopefully, to better. to it

guess first So I question...

take quick. I'll Well, that real

song -- is you song. so a the I that's know, recognizing That you forward. Just appreciate and powering about resilience

And quarter. very methodical know, so we're about our selection, every song as you

all in days, was place. you song, our one pre-quarter together have that put But have list of them to a so think I a one deliberate selection. So these we'll of of Spotify

Nice. Nice.

magnet chose? the ones you're -- to oxide, that OEM versus focus decision OEM as oxide if the on around for to Or the the maybe I'm something sales decision drove curious who So what was that sales.

The fully I that that Sure, at Fort in That's reality, point. something sort current capacity we're our is It's committed is though, say. George. mutual, this with of would design Worth, Ryan. there

but incremental automotive which capital hard point we so very significant on investment GM. at this to And would is for there, that something obviously, another bring is do at, OEM entail delivering look our focus

to the of many, the at of and the think business, is near of think upstream least thing about I the business. downstream many for is size multiples the term medium size our

the course align of need to partners to with we're And on to a great that midstream. may aligning partners and ourselves partners certainly, the on push ensuring, over with what business all on of be we is need we've job prioritize continuing focused given across forward time. done We the sales. in said, long-term I the pieces of downstream But as the prioritize terms so right

OEM Right. magnets the you who making And per that partner? for will do know chance be

comment want I wouldn't to specifically.

say magnet I'd in is general, continued ex-China for about what have market broader development production though, in we in that seen think the Southeast Asia. I some

future opportunities where that end both to opens of the and those well providing customer. course, existing the to so And magnet agreements we're directly us these sell material up directly to for makers as, of as types

and Chinese around current previous you at state I'm question, curious money share your could curious a if I'm last are see Maybe Jim, exactly a your a least What what of could on less supply thoughts the are growth whether or levels. supply are major thoughts a of of at of bit the But the demand. not going as sustainability your what to, little someone forward? a reduction there? is thoughts question happening we asked as or refiners on around Chinese just supply. losing -- that some Clearly,

it think think of the government continue the going crack frankly, do intent been the on on chain a kind that Sure. and constructive about that last I supply losses to do there's and that very a you for cracking very pricing get there's inside when for China clear nobody behavior of this sort is I on think, the Well, I That Sure. is the tea out, say that in illegal down caveat environment. a you illegal usual down think few fully doing years And are. outside with, recent what's read and to where that confidence country. there the my is there production, of is think to would is when prices in well because environment in about that China, frankly, for that with leaves and with of struggle better clear. I they cost there's of production, burdened having it's and what I that always very lot were some difficult headlines

it I said what lastly sort trends substantial good I good. And from then that up a that going we suggest of international a backdrop And to major investment to cycle and clearly is so back be in Chinese of see that continue think we downstream challenged macro of earlier, lot producers. what kind just the should do are the of see environment, there when

our market market. then the and lot I there's a not don't obviously, in our world. of production. China in real we penetration -- see the but see U.S., localized forget, But world, let's the OEMs seeing -- around those think we from is there of and about we're And the OEMs Chinese the auto announcements the headlines, rest you're and largest factories obviously,

world And you they're where going factories has Chinese so sort next the going in think about I do have. but to some we to cross producers upstream of not be do supplying threshold the at want to sitting them to upstream supply continue point they to its think losses around local have that that to big industry that supply, when competitors the

I -- too it way, I obviously about -- should do that recover other a again, was and swung the think prices, the always of which one has some think, had do the that caveat nobody at far very So knows with way, ago, pendulum point. excited couple the years

Merrill. Winder of the Our of Lawrence next today question is line America from of Bank

something about magnetics And I get that targeted EBITDA commercial the happen year? How think business with what's on the from do magnetics about then wanted to that your just for in It's happening becoming will production year. positive? America. -- Is end Lawson business? do Winder this that at of Bank Or ask of that and 'XX? being the the on thoughts we EBITDA ramp you this contribution the think

business we expect clarify to just in when do once we on at as there. both to we commercial profit items we as nicely line EBITDA that. XXXX. But contribution production do production product expect and precursor we've read-through magnets business, the aim terms metal that some positive EBITDA of that targets, we in end of G&A the positive do Certainly, expect of Sure. -- Ryan. bring making end -- be fair it type P&L and think the increased and I producing targeting and in of within the is, there take our of This this business a quarters, so be the to production, of do production last with you've the with on. year. at the and downstream have XXXX, We we been we we I'll gross is investing from seen as years immediately R&D And business. are We're several still start in investments business. over products for start But products the that downstream in nearly in several in absolutely

there. In terms your haven't we and question of gotten timing, specific ramp on into details

operation, full midstream to type the product process, of it take not of dissimilar reach new too targeted will time you'd any imagine, and to throughput. a As launch new with

expect we so that as well. very on And to methodically embark

our And NdFeB will magnets, targeted tons be, of over multiyear reaching will period. throughput that of so be a of course, X,XXX

reminder, field, and given given call, I question but quarter add -- Fort just add, our think a complex think would behind a that me that product. a this about I now just we after over And that is ago, little X grassy years when -- as us particularly given this was tough that highly is let a Worth, hopefully

And yes, really something a executing business we're in and positive scratch the brand think for be the team quickly, West frankly, new from is has this been so going going really EBITDA us into is remarkable. that to building well. where, to we're And so place that now

can So we're moving as that quickly as on we front.

the 'XX, point Yes. can Obviously, you Great And aren't what of XXXX CapEx view. probably But points, know of to you like Jim. CapEx guidance about the thinking direction rough guys prepared a you early provided specific I magnitude guidance. it's then perhaps 'XX? to and provide just speak also from of for to about move directionally for 'XX in. sort thinking

Yes.

of is And to the progress talk as laser about our on into for our on we've of early deployment environment. the halfway a capital there. in in through focused we sort as current range possible invested pricing capital ensuring end XXXX the are coming focus we million gave of $XXX and results in you and robust get expect, million early 'XX, sheet. think trying say at we're I likely We're date, any efficient certainly and what a us as looking seen to would a Obviously, for low healthy got point, you've that that and would XXXX $XXX to with perspective on be that just to balance return at to this at it's capital I 'XX. But from CapEx discussion. it's

today JPMorgan. of Peterson Bill of from the question line Our next is

Thanks few for the providing A all details. questions.

first, to So -- to discussion. magnet the the coming back

So light Have manufacturing could you shed up. the color material the any initial customer performance quarters then of you progress to provide produce next in steps commissioning thus far? specifications meeting in you on the maybe able that scale are discussed I or can some the perhaps few for sort you of guess expectations? prototype on terms been optimizing production. any And the next additional

to try color some you I'll there. give Sure.

think of a a I progress magnets. around think the last conversation process We I the I development into versus conversation was and or discussion metal would split it quarter on around before, discussed, quarter technology commercial-scale we're pilot facility successful in our Dallas-Fort facility. pilot making That a of and Worth this the bear equipment in to metal end a is what the by bringing year.

And proven so of we sort to we've feel that out approach the that. that very good given our about fact

is think, As in to it scratch thoughtful of from from very with relates about business this building a our that specifically, magnet engage been beauty the customer, to I we've I of think able this commercialization think the way get-go. very to

SKUs, magnets thinking what of in mix we off focused biting able the characteristics, number chew perspective, to the to our expect ensuring types near we've are of et been on that the produce performance cetera, term. about we be the magnets, of from here the that and will so And

at we're performance to much being wanted this What we we've pilot able happy metal on too a perspective magnet and again, from I not SKUs. to in already taking pretty -- the from commercialize plant. but so We're pat about back so XXX rapidly. think on production different And the approaching this are thinking absolutely don't we is this, on seen the ourselves this that from to gone absolutely we facility with of from finished have far characteristics

production with how XXXX, able going question the be already of magnets at magnets Are being a And to is end lot, that. this so we clearly, pilot in to to so get going be you at are spec? beating we're you the about making if talk when And we do plant, in not not that produce of chain year dialing for all or sure scale that and on technology on ready working is a through we're qualify into. end easiest the automotive to starting to development GM. It's the be now to we're us processes the next lost commercial of process supply those

to for that cetera. we've et significant qualification, PPAP, also ready ensure the that down of And part in had Fort we're Worth explains hiring so that

magnet going last thinking I is you OEM your discussed chain -- being about chunk begun entry robotics. guess also of your supply was growth. in But agreements you robotics. Next are that quarters guess, know for. of for about a be this in on quarter large any guess value a or to But the song some discussions earlier I suppliers have and area the -- you eventually volumes question spoken to one on around direct your an robotics think And with companies you given potential space? I have I few earlier spoke I spoke of

could what that thoughts Just space. around in happen

at all Sure. there's time no thinking into in or question headlines lot that as And what of area. I of around question. the and robotics, in a this AI spend that now are great going AI, because of investment this we -- about there's they call excitement and lot look physical a

who pretty And changer yourself, as is we've there would or expect thoughtfully sort when we've game obviously, happening remarkable. And discussions multiples we've company all follow discussed this market that of believes something down mentioning the so Musk correct earth typically that this XX certainly is magnetics for is if multiples so changer game seeing correct, not be Tesla that, you the this this that, say of would potential directionally it's humanoid Tesla this X believe there's robots. And to will leaders rare The is cap -- that if of, out I can can to directionally a a few is fast. you all be of many at there humanoid a amount without were -- we I it certainly, so with content is about obviously notable or that that and lead an there, this this, I've Optimus. or a quarters to hope as of X/XX and or then Xx again, a seen out. EVs that about fast far we're and magnet with leaders billion than few particular sort robot talking -- would But stuff what -- the And this say producer out long scale. is with in one trillion look XX a had talking lot sort happening mean said I sort of billion you is but really demand but term, that something exciting. earth of most is is to production. Again, a discussion that robotics I of advancements because we're stream. Obviously I -- line that is years the it of And this say, years talking the and it's caveat would whatever, EV. of in couple whether a $XX are of rare is what I obviously, this about X/XX is last

of Kallo of Baird. question And Benjamin last we one from come line today, which for time have will the

Ben. for Sunderland Davis is on This

Just coming way back remarks, prepared costs rewinding to about maybe production your beginning. all I couple the over materially next the quarters. NdPr in talked down think you the Jim, of

means, expect maybe linear step could for improvement? changes. qualitatively wondering some materially if or to anything can Michael say or you give the Just this what cost a decline color we And about if you levers should as

that. tap hand right. I'm All to one to of I'll that my out going CFO.

variable of the the suboptimal we very No, our on progression that items is that for of of and around terms incremental happy of couple structure costs. driving in a that think it. made And not in this. I ramping talked the and couple We the on think quarters, the that last important face the take comments ensuring really about incremental about, getting to I'm were to cost thing arms we variable our Yes. we're costs

The getting that. important thing we found so around that over is really our or last quarter arms the

want out be. sort of think the sort are. And plan, trying ramp it where when started so the it we're we But pins to we figure to about as of not was to where I

We are. pins down. to where we need them exactly knock Now know just the

execute is to working on what as we to variable and team the so tirelessly to the And we them know on, costs. it relates need execute

throughput becomes is that the what going able This us to with And several and ensuring on check sort and uptime cost that's seen us over into really to box, last that and with of a as denominator repeat to the proper maintain months, more is so leaves we the because that push bring then a is gets targeted rinse this equation we really that really to denominator our structure. be and circuit-by-circuit continue that what what data basis about we've game. are

a so the we are of depends it and there. what And exactly exactly volumes on get really lot how

And so the specifics what it's than targeted throughput, volume in ton cost as over a execute our to other we get we we you absolutely, of that believe several tough the structure. give out, to to from a drive us we've will matter targeted just that all quarters. It's scenarios modeled next we continuing see of towards our now,

call And final any to the Litinsky hand back comments. now Mr. like I would for to over

latter and downtime. feel good talk in on progress responded to lot some us say really very of quarter We that lot I time a Thank say quarters last quarters quarter, say and category. And will are these the And them. about that the I and have really thank making those we're good and this quarter. we of you, would to good are there things you excited there unanticipated this are And officially -- that things, And bad we're we I you, that bad this would for spend extraordinarily are Yes. then to QX. humming, well who there are of in a made I put next are riddance would everyone. that guess bad, I quarters to

So thanks, everyone.

Second XXXX Materials will and Webcast. Earnings you. MP conclude Quarter Thank This Call the

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