MP Materials Earnings Beat, Expansion On Track; MP Stock Rises

MP Materials (MP) easily cleared second-quarter earnings and sales estimates on Thursday afternoon. The sole U.S.-based supplier of rare earth materials benefited from higher pricing for rare earth oxide. MP stock rose in early Friday stock market action.

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Currently, MP Materials produces rare earth concentrate that it ships to China for processing. However, MP’s Stage II operations now under construction at its Mountain Pass, Calif., site will process its concentrate into separated rare earth oxides that will be sold directly to end customers. Stage III involves turning NdPr into alloy flake and permanent magnets.

MP Expansion Update

“We continue to progress toward completing Stage II construction, targeted for year end, and our initial Stage III magnetics facility in Texas is rapidly taking shape.” CEO Jim Litinsky said in an earnings statement.

In the Q2 earnings call, Litinksy said MP is “tracking for a late 2023 start of product for magnetic alloy.”

General Motors (GM) has a deal to be the foundational customer of MP’s Fort Worth magnetics facility, as it tries to lock down the supply of permanent magnets for its Ultium battery EVs, including the Hummer, Silverado and Cadillac Lyriq. Permanent magnets only add about $100-$200 to the cost of an EV, yet they play an important role in optimizing motor performance and improving vehicle range.

On MP’s Q4 earnings call on Feb. 24, CEO Jim Litinsky explained the significance of Stage II and Stage III in financial terms.

Based on market prices at the time, Litinsky said MP Materials had reached an EBITDA run rate of $450 million-$500 million. Once Stage II processing and the Fort Worth, Texas, facility — the first of multiple potential Stage III magnetics plants — were up and running, EBITDA would double to $900 million-$1 billion.

Under the Manchin-brokered tax-spending-and-climate bill, electric vehicles would need an increasing share of battery materials to be processed in North America to quality for federal EV credits.

EV Batteries: Racing For A Breakthrough

MP Materials Earnings

MP earnings rose 139% to 43 cents a share vs. forecasts of 35 cents. Revenue grew 96% to $143.56 million, beating estimates of $128.75 million.

MP said realized prices per metric ton of rare earth oxide rose 1% from Q1 and 90% from a year ago. Production volume fell 5% on the quarter and was flat from a year ago.

CFO Ryan Corbett noted on the earnings call that both Q2 and Q4 “generally have lower output” due to one-week shutdowns for preventative plant maintenance. While Q3 production should return to Q1 levels, Corbett said MP might have a “slightly longer” outage in Q4 amid commissioning of its Stage II facility.

MP Stock

Following the earnings report, MP stock rose 2.7% to 36.00 in early Friday trade. Shares rose 1.1% in Thursday’s regular trading.

MP stock, which hit a 52-week low on July 15, has rallied past its 50-day moving average this week. However, MP stock is still below its 200-day line and down about 42% from its record of 60.19 on March 30.

MP Materials results follow booming earnings and guidance from lithium producer Albemarle (ALB) and a more modest boost to the outlook from Livent (LTHM).

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