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MP Materials says Q1 net income down 56% y-o-y on lower rare earth prices

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(Kitco News) - On Thursday, rare earth metals producer MP Materials (NYSE: MP) announced that in Q1 2023, the company produced 10,671 tonnes of rare earth oxides (REO), in line with Q1 2022 (10,828 tonnes).

The company said that its Q1 2023 revenue decreased 42% year-over-year to $95.7 million, driven by a 32% decrease in the realized price of rare earth oxide in concentrate as well as a 13% decline 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 $1,978 per metric ton of REO increased 24% year-over-year, mainly due to the scale benefits of higher sales volumes in the prior year period, as well as higher payroll costs, primarily as a result of increased headcount and higher costs of materials and supplies.

Adjusted EBITDA decreased 56% year-over-year to $58.7 million, driven by lower per-unit profitability, a decrease in sales volumes, and higher personnel and other general and administrative costs, as well as advanced projects and development costs.

Adjusted net income decreased by 45% year-over-year to $51.3 million, mainly due to the lower adjusted EBITDA. Net income decreased 56% year-over-year to $37.4 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 56% year-over-year to $0.20, in line with the lower net income. Adjusted diluted earnings per share decreased 45% to $0.27 in line with the decrease in adjusted net income.

“MP continued to advance the multiple streams of our business during the quarter despite weaker recent commodity pricing,” said Chairman and CEO James H. Litinsky. “At Mountain Pass, we sustained strong production and sales volumes while simultaneously commissioning additional Stage II circuits and moving closer to producing separated rare earth materials. In addition, construction and engineering of our Stage III magnet facility continues at a rapid pace, bringing the restoration of the full magnetics supply chain closer to fruition.”

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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