MP Materials says Q2 net income down 90% due to lower rare earth prices

(Kitco News) - On Thursday, rare earth metals producer MP Materials (NYSE: MP) announced that in Q2 2023, the company produced 10,863 tonnes of rare earth oxides (REO), up 5.5% from Q2 2022 (10,300 tonnes).

The company said that its Q2 2023 revenue decreased 55% year-over-year to $64 million, driven by a 55% decrease in the realized price of rare earth oxide in concentrate partially offset by a 3% increase in sales volumes.

MP Materials added that the change in realized price reflects a “softer” pricing environment for rare earth products as compared to the prior year period when recent pricing peaked.

According to a news release, production cost of $1,938 per metric ton of REO increased 11% year-over-year, mainly due to higher payroll costs and slightly higher costs of materials and supplies.

Adjusted EBITDA decreased 75% year-over-year to $27 million, driven by lower per-unit profitability, and higher personnel and other general and administrative costs, as well as advanced projects and development costs.

Adjusted net income decreased by 79% year-over-year to $17 million, mainly due to the lower adjusted EBITDA as well as higher depreciation expense resulting from an increase in capital assets placed into service over the last year.

The company’s net income decreased 90% year-over-year to $7.4 million, primarily due to the factors driving the lower adjusted net income, as well as costs incurred to support growth initiatives, start-up costs, and costs associated with the removal of legacy facilities at Mountain Pass.

Diluted earnings per share decreased 89% year-over-year to $0.04, in line with the lower net income. Adjusted diluted earnings per share decreased 78% to $0.09, in line with the decrease in adjusted net income.

“In recent weeks, MP Materials has begun producing refined rare earth products at Mountain Pass, an important milestone for the company and in returning the full rare earth supply chain to the United States. We expect to report NdPr oxide shipments in the current quarter,” said James Litinsky, Founder, Chairman and CEO of MP Materials. “While our financials were impacted by weaker commodity pricing, we continue our solid execution in our upstream concentrate business and in our downstream magnetics business in Texas.”

MP Materials is the largest producer of rare earth materials in the Western Hemisphere. The company owns and operates the Mountain Pass rare earth mine and processing facility in California, North America's only active and scaled rare earth production site.

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