Q2 2024 MP Materials Corp Earnings Call
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Operator: 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. At this time, all lines are in a listen only mode.
Harry: 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. At this time, all participant lines are in a listen only mode. There'll be an opportunity for question and answers after management's prepared remarks.
Operator: There will be an opportunity for questions and answers after management's prepared remarks. If you would like to enter the queue for questions, you may do so by dialing a star followed by one on your telephone keypad. I would now like to hand the conference over to Martin Sheehan, Head of Investor Relations. Thank you.
Harry: If you would like to enter the queue for questions, you may do so by dialing star followed by one on your telephone keypad. I would now like to hand the conference over to Martin Sheehan, Head of Investor Relations. Thank you, please go ahead.
Martin Sheehan: Thank you, operator, and good afternoon, everyone. Welcome to the Mp Materials second quarter 2024 earnings conference call. With me today from Mp Materials are Jim Litinsky, founder, chairman, and chief executive officer; Michael Rosenthal, founder and chief operating officer; and Ryan Corbett, chief financial officer. As a reminder, today's discussion will contain forward-looking statements relating to future events and expectations that are subject to various assumptions and caveats. Factors that may cause the company's actual results to differ materially from these statements are included in today's presentation, earnings release, and in our SEC filing.
Martin Sheehan: As a reminder, today's discussion will contain forward-looking statements relating to future events and expectations that are subject to various assumptions and caveats.
Martin Sheehan: In addition, we have included some non-GAAP financial measures in this presentation. Reconciliations to the most directly comparable GAAP financial measures can be found in today's earnings release and the appendix to today's slide presentation. Finally, the earnings release and slide presentation are available on our website. With that, I'll turn the call over to Jim.
Jim Litinsky: Thanks, Martin. Hello, everyone. As is our usual program, I will review the quarter at a high level. Ryan will then cover our financial performance and operating KPIs. Michael will follow with an overview and updates on mountain pass operations. And I will then return with closing remarks before Q&A.
Speaker Change: Thanks, Martin. Hello, everyone. As is our usual program, I will review the quarter at a high level. Ryan will then cover our financial performance and operating KPIs. Michael will follow with an overview and updates on mountain pass operations.
Jim Litinsky: So let's get to it on slide four. This was a very challenging quarter, operationally and financially. Production in our upstream business was hindered by rig damage and a thickener that impacted operations for about three weeks. This was our biggest disruption in seven years.
Speaker Change: This was a very challenging quarter, operationally and financially.
Martin Sheehan: This was our biggest disruption in seven years.
Jim Litinsky: Michael and Ryan will provide a lot more detail later in the call, but suffice to say, the unanticipated downtime impacted REO production as well as our financial performance in the quarter. In about an hour, though, when we finish this call, this top quarter will be completely behind us as the team responds to the recent adversity in our usual unwavering fashion. Production momentum coming out of Q2 and into Q3 has been very strong.
Speaker Change: Michael and Ryan will provide a lot more detail later in the call, but suffice to say, the unanticipated downtime impacted REO production as well as our financial performance in the quarter.
Martin Sheehan: In about an hour, though, when we finish this call, this top quarter will be completely behind us as the team responded to the recent adversity in our usual unwavering fashion.
Speaker Change: Production momentum coming out of Q2 and into Q3 has been very strong.
Jim Litinsky: In Q2, we actually achieved our second best quarter of upstream productivity, measured by REO produced per hour of uptime. In other words, when the upstream was operating, the team ran it about as efficiently as ever, and we are building on that momentum going into Q3. So, while it is still early, Q3 appears on track for record levels of upstream production. Some of this production growth is from early results in our upstream 60K optimization effort.
Speaker Change: Some of this production growth is from early results in our Upstream 60K optimization efforts.
Jim Litinsky: Through these efforts, we are already seeing higher recoveries out of the upstream, which is promising and bodes well for the future. Unfortunately, our Q2 results today reflect the financial impact of repair costs and loss deficiencies in one of our most challenging operating periods to date, as well as a continued weak pricing environment. But we are confident that beneath those headlines, the silver lining of this quarter is that we responded well to an unanticipated challenge and accomplished a lot in the upstream that should position us well going forward. Moreover, and despite all the upstream challenges. We more than doubled NDPR production in the quarter to over 270 tons.
Martin Sheehan: Through these efforts, we are already seeing higher recoveries out of the upstream, which is promising and bodes well for the future.
Speaker Change: So, unfortunately, our Q2 results today reflect the financial impact of repair costs and loss deficiencies in one of our most challenging operating periods to date, as well as a continued weak pricing environment.
Jim Litinsky: This is the best midstream result we have achieved to date, and we expect another 50% increase in NDPR production in Q3. During the past two months, we have seen improvements which will continue to drive down NDPR production costs in the coming quarters. We are not where we want to be yet, but we expect per unit cost to materially improve as production ramps up. This progress is well aligned with customer development activities. In the quarter, we signed an agreement for a substantial commitment of NDPR Oxide with a new customer, a household named Global Automaker.
Jim Litinsky: We expect to begin delivering NDPR to them later this year, ramping into 2025. We also were awarded a contract to supply NDPR to the Department of Defense in addition to our existing contract to provide land. Finally...
Jim Litinsky: In our downstream business, as we mentioned last quarter, we achieved important milestones in producing magnet precursor products, unlocking a $50 million prepayment in the quarter. I would also like to add that we expect to earn approximately $190 million of incremental cash sources from additional customer prepayments and tax credits by the end of 2025. This means we still expect to maintain our strong balance sheet, even as we complete the remaining investments in our magnetics facility, ramp up our midstream production at Mountain Pass, and navigate a weak pricing environment.
Speaker Change: Finally, in our downstream business, as we mentioned last quarter, we achieved important milestones in producing magnet precursor products, unlocking a $50 million prepayment in the quarter.
Speaker Change: I would also like to add that we expect to earn approximately $190 million of incremental cash sources from additional customer prepayments and tax credits by the end of 2025.
Jim Litinsky: Installation and commissioning activities at the factory are progressing, and we remain on track to begin commercial production of NDPR metal later this year. In support of product development, we have commissioned our prototype production line and analytical lab. The prototype line has all the equipment needed to transform metal into a finished magnet, which enables us to produce prototype magnet precursor materials and finish magnets and optimize our processes at the kilogram scale using equipment similar to, and in many cases manufactured by the same vendors, as our commercial scale equipment. In recent weeks, we made our first magnets from powder to finish and made significant progress on our grain boundary diffusion process.
Speaker Change: The prototype line has all the equipment needed to transform metal into a finished magnet, which enables us to produce prototype magnet precursor materials and finish magnets and optimize our processes at the kilogram scale using equipment similar to
Speaker Change: and in many cases manufactured by the same vendors as our commercial scale equipment.
Speaker Change: In recent weeks, we made our first magnets from powder to finish magnet and made significant progress on our grain boundary diffusion process.
Jim Litinsky: In our accompanying in-house laboratories at Fort Worth, which we commissioned in the quarter, we are now able to validate magnet and magnet precursor materials without enduring lengthy third-party turnaround times. These are critical steps on the road to producing high-quality magnets for our customers. With that, I will turn it over to Ryan to run through our KPIs and our financials for the quarter. Okay, Ryan?
Speaker Change: In our accompanying in-house laboratories at Fort Worth, which we commissioned in the quarter, we are now able to validate magnet and magnet precursor materials without enduring lengthy third-party turnaround times.
Speaker Change: These are critical steps on the road to producing high-quality magnets for our customers.
Ryan Corbett: Thanks, Jim. Moving to slide six, you will see the impact of the extended downtime on our production in the quarter. We produced 9,084 metric tons of REO in concentrate, about 16% less than a year ago and 19% lower than last quarter, which was the second highest quarter of production in our history. This unplanned downtime was on top of our usual planned downtime of about one week for plant maintenance. As Jim mentioned, we had significant damage to the rakes in one of our thickeners soon after we completed our planned maintenance shutdown.
Speaker Change: With that, let me turn it over to Ryan to run through our KPIs and our financials for the quarter. Ryan?
Ryan: As Jim mentioned, we had significant damage to the rakes in one of our thickeners, soon after we completed our planned maintenance shutdown.
Ryan Corbett: Unfortunately, without these rakes operating, the whole upstream operation had to shut down. The lower production volumes, some impact of shipment timing, as well as more concentrate being refined to NDPR, all combined to reduce REO sales volumes to 5,839 metric tons. To give you a sense of the drivers of the sequential sales volume decline of roughly 3,500 metric tons, approximately 60% of the decline was due to lower upstream production.
Ryan: Unfortunately, without these rakes operating, the whole upstream operation had to shut down.
Ryan: to give you a sense of the drivers of the sequential sales volume decline of roughly 3,500 metric tons.
Speaker Change: Approximately 60% of the decline was due to the lower upstream production. About 30% was due to higher consumption of concentrate into the midstream circuits as NDPR production ramped up, while the remainder was due to shipment timing.
Ryan Corbett: About 30% was due to higher consumption of concentrate into the midstream circuits as NDPR production ramped up, while the remainder was due to shipment. The temporarily lower upstream sales volume, along with one-time repair costs, combined to drive rapid descaling in the upstream, and therefore much higher than normal production costs in the quarter. As Jim stated, we return to strong, efficient production in June and July. In fact, we expect Q3, if current production trends remain intact, may be one of our best upstream quarters ever.
Ryan: The temporarily lower upstream sales volume along with one-time repair costs combine to drive rapid descaling in the upstream business.
Ryan: and therefore much higher than normal production costs in the quarter.
Speaker Change: As Jim stated, we return to strong, efficient production in June and July . In fact, we expect Q3, if current production trends remain intact, may be one of our best upstream quarters ever.
Ryan Corbett: Finishing off the discussion on the upstream, realized pricing in the quarter was approximately $4,183 per metric ton, in line with the guidance we provided back in early May. Moving to our midstream KPIs, NDPR production more than doubled to 272 metric tons in the quarter, while sales of NDPR were in line with the prior quarter's production at 136. NDPR realized pricing in the quarter was roughly $48 per kilogram.
Jim: Finishing off the discussion on the upstream, realized pricing in the quarter was approximately $4,183 per metric ton in line with the guidance we provided back in early May.
Jim: Moving to our midstream KPIs, NDPR production more than doubled to 272 metric tons in the quarter, while sales of NDPR were in line with the prior quarter's production at 136 tons.
Ryan: NDPR realized pricing in the quarter was roughly $48 per kilogram.
Ryan Corbett: All of these metrics were in line with our guidance provided in May. Looking forward to Q3. As of today, we would expect concentrate production volumes slightly above our typical levels in a non-shutdown situation. Sales volumes will benefit from the higher production, but will be partially offset by the higher pull-through of concentrate into the midstream circuits as we ramp NDPR production, which, as Jim mentioned, we expect at least a 50% sequential increase in Q3, while sales volumes are expected to be approximately in line with Q2's production of 272 million barrel
Ryan: All of these metrics were in line with our guidance provided in May.
Jim: Sales volumes will benefit from the higher production, but will be partially offset by the higher pull-through of concentrate into the midstream circuits as we ramp NDPR production volumes.
Jim: Which, as Jim mentioned, we expect at least a 50% sequential increase in Q3, while sales volumes are expected to be approximately in line with Q2's production of 272 metric tons.
Ryan Corbett: Recall, as we discussed in May and as you saw this quarter, NDPR sales volumes will lag production volumes by about one quarter on average, partially due to the metallization process and the initial build out of our separated product sales. As for pricing, we would expect Q3 pricing to be down low single-digit percentages sequentially for both REO and concentrate and NDPR oxides. Moving to slide 7, on the far left side, you can see the impact of the lower concentrate sales volumes, the lower NDPR pricing, and the longer sales cycle for NDPR sales on our revenue.
Speaker Change: Moving to slide 7, on the far left side you can see the impact of the lower concentrate sales volumes, the lower NDPR pricing, and the longer sales cycle for NDPR sales on our revenue trends.
Ryan Corbett: It is important to remember that as we transition from upstream concentrate sales to NDPR oxide and metal sales, concentrate sales will initially decline more quickly than our NDPR sales will ramp up. We are in the heart of this transition period, a critical juncture we have long warned investors about as we evolve into a fully integrated miner and refiner. Unfortunately, the financial impacts of this transition were compounded by additional unplanned downtime and repair costs this quarter, alongside what would have already been a significant investment period. Moving to the middle and right of the slide, we posted an adjusted EBITDA loss of $27.1 million and an adjusted diluted loss per share of 17 cents in the quarter due to several factors.
Ryan: Unfortunately, the financial impacts of this transition were compounded by additional unplanned downtime and repair costs this quarter, alongside what would have already been a significant investment period.
Ryan: Moving to the middle and right of the slide, we posted an adjusted EBITDA loss of $27.1 million and adjusted diluted loss per share of $0.17 in the quarter due to several factors.
Ryan Corbett: First, as we have discussed over the last few quarters, our midstream operation is currently subscale as we ramp production of NDPR and other separated products. This quarter, we absorbed the impact of higher-than-target variable costs as we optimized production, as well as difficult fixed-cost absorption at these lower production levels. This temporary period of subscale production resulted in us taking an inventory reserve of $11.8 million in the quarter.
Ryan: First, as we have discussed over the last few quarters, our midstream operation is currently subscale as we ramp production of NDPR and other separated products.
Ryan: This quarter, we absorbed the impact of higher-than-target variable costs as we optimized production, as well as difficult fixed-cost absorption at these lower production levels. This temporary period of subscale production resulted in us taking an inventory reserve of $11.8 million in the quarter.
Ryan Corbett: This relates to the currently elevated cost of production versus the continued pressure on market prices. The second major impact in the quarter was the unplanned downtime, which showed up in lost production and revenue and also combined to create both higher per unit production costs and one-time repair expenses hitting P&A. The concentrate unit cost of production was impacted by inefficiencies in the start-stop, lower fixed cost absorption, and higher repair and maintenance expenses from our planned maintenance shutdowns.
Ryan: The concentrate unit cost of production was impacted by inefficiencies in the start-stop, lower fixed cost absorption, and higher repair and maintenance expenses from our planned maintenance shutdown.
Ryan Corbett: This impacts both the concentrate cost of goods sold directly but also found its way into our separated product production costs in the quarter, given the interconnectedness of our operation. Further, this quarter's earnings were impacted by several million dollars of costs associated with the repair of the Thickner Rakes, including for equipment, labor, and contractor costs.
Ryan: This impacts both the concentrate cost of goods sold directly, but also found its way into our separated product production costs in the quarter, given the interconnectedness of our operation.
Ryan: Further, this quarter's earnings were impacted by several million dollars of costs associated with the repair of the Thickner Rakes, including for equipment, labor, and contractor costs.
Ryan Corbett: This impact, of course, we expect to be one time in May. Lastly, recall that even at these low prices, at normal production levels, our concentrate business generates $2,000 to $3,000 of gross margin per ton of REO in concentrate sold. As we ramp up the refining operation, we are temporarily trading some level of profitable concentrate sales for temporarily unprofitable NDPR sales in this subscaled state. We are also investing working capital dollars into the transition as our sales and tolling channels for separated products build.
Ryan: This impact, of course, we expect to be one time in nature.
Ryan: Lastly, recall that even at these low prices, at normal production levels, our concentrate business generates $2,000 to $3,000 of gross margin per ton of REO in concentrate sold.
Ryan: As we ramp the refining operation, we are temporarily trading some level of profitable concentrate sales for temporarily unprofitable NDPR sales in this subscaled state.
Ryan: We are also investing working capital dollars into the transition as our sales and tolling channels for separated products build.
Ryan Corbett: But, as we have highlighted for the last few quarters, this is why we are being methodical in our midstream production ramp, and we remain confident that, over the long term, this is an investment we will be happy to have made. Recently, we have made very good progress in optimizing the incremental variable costs we are seeing, and importantly, we see a clear path to further optimization of variable costs and right sizing of fixed cost absorption as we push forward in our ramp over the coming quarter.
Ryan Corbett: Importantly, we expect that the combination will reduce our per unit production costs materially. I want to reemphasize what Jim pointed out: over the last 8 to 10 weeks, we have returned the upstream to its high production, low cost profile that you are all used to seeing.
Ryan: Importantly, we expect that the combination will reduce our per unit production costs materially.
Ryan Corbett: We have also made significant progress in midstream optimization, both in terms of cost and production. While our midstream cost structure won't be at target for several more quarters as we continue to ramp up and react to bottlenecks, we see very clear signs of early success that will bear fruit over time. I would also point out that despite a challenging quarter financially, our balance sheet remains in great shape. Again, we received a $50 million customer prepayment for Magnet Precursor Materials in April and expect another $100 million of additional prepayments over the next year. In addition, we will earn and, for the majority, expect to receive cash for the various IRA tax credits approaching another $90 million through 2025.
Ryan: We have also made significant progress in midstream optimization, both in terms of cost and production levels.
Ryan: I would also point out that despite a challenging quarter financially, our balance sheet remains in great shape.
Ryan: In addition, we will earn, and for the majority expect to receive cash, for the various IRA tax credits approaching another $90 million through 2025.
Michael Rosenthal: This provides a further buttress to an already strong balance sheet as we complete Fort Worth and invest in the separated product transition, following which we expect operating cash flows to meaningfully improve. With that, let me turn it to Michael to give you some of the technical details and updates on the operations.
Ryan: With that, let me turn it to Michael to give you some of the technical details and updates on the operations. Michael?
Michael Rosenthal: Thanks, Ryan. On slide eight, we have a drone shot from above the pit. You can see the upper rim of the pit in the foreground with the separation pad on the right side.
Michael: Thanks, Ryan.
Michael Rosenthal: For those of you who haven't seen it before, the very long building on the right is our light rare earth separations facility, where we separate NDPR from lanthanum and any remaining cerium. Moving to our operations, second quarter performance was severely impacted by rake damage in one of our thickeners that Jim and Ryan described. This issue impacted production for approximately three weeks on top of the planned one-week semiannual maintenance outage during the quarter.
Michael: For those of you who haven't seen it before, the very long building on the right is our light rare earth separations facility, where we separate NDPR from lanthanum and any remaining cerium.
Ryan: This issue impacted production for approximately three weeks, on top of the planned one-week semi-annual maintenance outage during the quarter.
Michael Rosenthal: Our teams, supported by certain contractors and service providers, worked tirelessly and around the clock to restore full operation. We resumed partial operations with some concentrate production only 10 days after the incident. However, for the duration of the repairs and improvements, concentrate quantity, grade, and stability were meaningfully impacted. The reduction in upstream production reduced concentrate sales and curtailed feedstock for midstream operations for several weeks from mid-May into early June.
Ryan: Our teams, supported by certain contractors and service providers, worked tirelessly and around the clock to restore full operation.
Ryan: So, for the duration of the repairs and improvements, concentrate quantity, grade, and stability were meaningfully impacted.
Ryan: The reduction in upstream production reduced concentrate sales and curtailed feedstock for midstream operations for several weeks from mid-May into early June .
Michael Rosenthal: This was easily the biggest disruption our operation has sustained in the past seven years. While we are not happy about the incident, the creative and coordinated efforts of our team through this challenge were remarkable and inspiring, and we finished the quarter having produced more than 9,000 tons of REO and concentrate. Once normal operations were restored, we accelerated the progress we had been making on all fronts, and it's quite satisfying to see the momentum we are building in many areas. Concentrate production per operating hour improved, and June represented one of our best months ever, with higher production at higher grades.
Ryan: This was easily the biggest disruption our operation has sustained in the past seven years.
Ryan: While we are not happy about the incident, the creative and coordinated efforts of our team through this challenge were remarkable and inspiring, and we finished the quarter having produced more than 9,000 tons of REO in concentrate.
Ryan: Concentrate production per operating hour improved and June represented one of our best months ever with higher production at higher grade.
Michael Rosenthal: In addition, we are beginning to realize some of the efficiency gains in our midstream business that I discussed on previous calls. Notwithstanding the extra downtime that impacted feedstock for the midstream operation into June, we were able to approximately double NDPR oxide production quarter over quarter. NDPR oxide quality has been very good, as has the quality of NDPR metal that is now being consistently delivered to our magnet maker customers.
Ryan: In addition, we are beginning to realize some of the efficiency gains in our midstream business that I discussed on previous calls.
Ryan: Notwithstanding the extra downtime that impacted feedstock for the midstream operations into June , we were able to approximately double NDPR oxide production quarter over quarter.
Ryan: NDPR oxide quality has been very good, as is the quality of NDPR metal that is now being consistently delivered to our magnet maker customers.
Michael Rosenthal: Mechanical reliability of our new assets remains one of the biggest challenges in the midstream operation, but we are seeing noticeable improvement, largely corresponding to process maturity and as certain supply chain impediments are resolved. As I look ahead to the balance of the year, we will remain focused on uptime and executing certain projects in our upstream business and balancing uptime, process optimization, and production costs in our midstream circuits. Strong concentrate production has continued into Q3.
Michael Rosenthal: We are optimistic that non-capital related optimizations we have implemented this year have moved our grade recovery curve favorably. These optimizations may free up real estate in our concentrator facility for future improvements and or growth. Separately, we have two upstream 60K related capital projects that will begin commissioning this quarter, but we wouldn't count on any benefits until next year. The first is a large-scale pilot of alternative flotation equipment.
Michael Rosenthal: The second is the more sizable investment in our grinding circuit that we hope will ensure a tighter and more favorable grind distribution that should improve recovery and throughput potential. In the midstream circuits, with improved mechanical stability, we are starting to achieve higher availability. As our teams gain experience and confidence, our execution is improving, and we are able to work through issues that previously slowed production. However, as we have done so, we have identified a handful of process bottlenecks. And we have straightforward plans to address many of these through the balance of the year. Our processes to recycle our wastewater are a good example.
Ryan: As our teams gain experience and confidence, our execution is improving, and we are able to work through issues that previously slowed production. However, as we have done so, we have identified a handful of process bottlenecks, and we have straightforward plans to address many of these through the balance of the year.
Michael Rosenthal: These circuits remove impurities from our process wastewater, allowing us to recycle the water and minimize or eliminate the need for fresh water in our midstream processes. They are, therefore, critical circuits for water balance, environmental sustainability, and operating costs. When not running to their potential, they have proved a modest impediment to higher throughput and uptime. In recent weeks, we have greatly improved their performance in all operating environments, allowing for greater uptime in the rest of the plant in subsequent periods.
Speaker Change: They are therefore critical circuits for water balance, environmental sustainability, and operating cost.
Michael Rosenthal: We're also laser focused on improving the NDPR recoveries in our leach circuit, where, despite success in cerium rejection, we see a huge opportunity for improved NDPR recovery and even better cerium rejection. Incremental progress will be a major contributor to better leverage of our reagent consumption site-wide. The impact of this is material, as reagents represent our largest production cost category. Another opportunity was realized in late Q2 and early Q3. We completed the replacement of both turbines in our power plant that had reached the end of their operating life.
Ryan: We are also laser-focused on improving the NDPR recoveries in our leach circuit, where, despite success in cerium rejection, we see a huge opportunity for improved NDPR recovery and even better cerium rejection.
Ryan: Incremental progress will be a major contributor to better leverage of our reagent consumption site-wide.
Speaker Change: Another opportunity was realized in late Q2 and early Q3.
Michael Rosenthal: This was completed with less interruption to operations than feared and allows us greater power production capability at lower cost. We now expect to be able to sustain our current operations on one turbine for a larger portion of time, even as we ramp up the chemical plant further, resulting in lower heat rates and better than previously assumed cost performance. We are very pleased with the outcome and congratulate our Utilities, E&I, Process Controls, and Commissioning teams on an excellent job.
Speaker Change: We are very pleased with the outcome and congratulate our utilities, E&I, process controls, and commissioning teams on the excellent job.
Michael Rosenthal: Summing up the above and assuming the continuation of current trends, we are expecting a strong quarter of concentrate production and at least 50% quarter over quarter NDPR oxide production growth in Q3 versus Q2. July results put us on this path. With that, I will turn it back to Jim.
Speaker Change: Summing up the above and assuming the continuation of current trends, we are expecting a strong quarter of concentrate production and at least 50% quarter-over-quarter NDPR oxide production growth in Q3 versus Q2.
Speaker Change: With that, I will turn it back to Jim.
Jim Litinsky: Thank you, Michael. Let's turn to slide nine with the recent shot of the magnetics facility at dusk. To wrap up, this was undoubtedly our worst financial performance quarter as a public company.
Jim: Thank you, Michael. Let's turn to slide 9 with the recent shot of the Magnetics Facility at dusk.
Speaker Change: To wrap up, this was undoubtedly our worst financial performance quarter as a public company.
Jim Litinsky: I hope I have always been clear that these kinds of quarters can happen once in a while. But as I said earlier, beyond the surface results, we made a substantial amount of progress. Our team is spectacular and relentless, notwithstanding MP's unwavering nature. However, pricing conditions remain outside our control. We do know that no producers are thriving at these prices, not even in China.
Jim: I hope I have always been clear that these kinds of quarters can happen once in a while.
Jim: But as I said earlier, beyond the surface results, we made a substantial amount of progress. Our team is spectacular and relentless.
Speaker Change: Notwithstanding MP's unwavering nature, pricing conditions remain outside our control.
Speaker Change: We do know that no producers are thriving at these prices, not even in China.
Jim Litinsky: These market conditions have now destroyed most of the hoped-for projects from just a couple years ago, despite the efforts and investments of many governments. Chinese control over the vast majority of the supply chain remains. Rare earths, therefore, continue to be at the center of a highly charged geopolitical environment. In June, China tightened regulations over its domestic industry.
Speaker Change: These market conditions have now destroyed most of the hoped-for projects from just a couple years back.
Speaker Change: Despite the efforts and investments of many governments,
Ryan: Chinese control over the vast majority of the supply chain remains.
Ryan: Rare Earths, therefore, continue to be at the center of a highly charged geopolitical environment.
Ryan: In June , China tightened regulations over its domestic industry.
Jim Litinsky: Meanwhile, in the West, leaders are pursuing new protective measures of their own. And with an election season in full swing, the criticality of our supply chain is one of the very few things upon which politicians in Washington agree. How this shakes out over a quarter or two is always uncertain. But what remains certain is the strategic, irreplaceable value of the platform we are building at MP. In recent weeks, our team has turned a corner at Mountain Pass, both on cost structure and ramp-up, and we are now positioned to scale volumes and complete our evolution as a fully integrated producer of refined rare earths. The timing aligns well with customer development activities.
Speaker Change: How this shakes out over a quarter or two is always uncertain, but what remains certain is the strategic, irreplaceable value of the platform we are building at MP.
Ryan: In recent weeks, our team has turned a corner at Mountain Pass, both on cost structure and ramp, and we are now positioned to scale volumes and complete our evolution as a fully integrated producer of refined rare earths.
Ryan: The timing aligns well with customer development activities. As I mentioned at the outset, we recently added another household name automaker to our growing client list.
Jim Litinsky: As I mentioned at the outset, we recently added another household name automaker to our growing client list. Between this new agreement and new and expanded agreements tied to our Sumitomo distributorship, a significant portion of our anticipated NDPR production at full capacity is now committed. With our products now qualified by some of the most scrupulous end use manufacturers and magnet makers outside of China, MP's position as the American champion is now cemented.
Ryan: Between this new agreement and new and expanded agreements tied to our Sumitomo distributorship, a significant portion of our anticipated NDPR production at full capacity is now committed.
Jim Litinsky: Our downstream magnetics business is approaching a similar inflection point, and later this year, it will return large-scale rare earth metal production to the United States for the first time in many decades. In July, Michael and I celebrated the seventh anniversary of the acquisition of the Mountain Pass Mine and the founding of Mp Materials.
Ryan: Our downstream magnetics business is approaching a similar inflection point, and later this year will return large-scale rare-earth metal production to the United States for the first time in many decades.
Ryan: In July , Michael and I celebrated the seventh anniversary of the acquisition of the Mountain Pass Mine and the founding of Mp Materials.
Jim Litinsky: We are incredibly proud of the team we've built, the progress we have made, and even more excited about the future. In a geopolitically charged, increasingly electrified world with billions of AI-enabled robots, whether on wheels or legs, MP's products, technology, and platform matter. I believe our long-term success is necessary and inevitable. With that, we're happy to take your questions. Operator.
Ryan: In a geopolitically charged, increasingly electrified world with billions of AI-enabled robots, whether on wheels or legs, MP's products, technology, and platform matters.
Ryan: With that, we're happy to take your questions.
Operator: Thank you. If you would like to ask a question, please dial star followed by one on your telephone keypad now. If you change your mind, please dial star followed by two to exit the queue. And finally, when preparing to ask your question, please ensure that your phone is unmuted locally.
Speaker Change: Thank you. If you would like to ask a question, please dial star followed by 1 on your telephone keypad now. If you change your mind, please dial star followed by 2 to exit the queue. And finally, when preparing to ask your question, please ensure that your phone is unmuted locally.
David Deckelbaum: Our first question today is from the line of David Deckelbaum of TD Cowan. Please go ahead. Your line is open. Thanks, Jim, Ryan, and Michael. Thanks for taking my questions and thanks for all the details. I'm glad to see you guys putting this quarter behind you.
Speaker Change: Thanks Jim, Ryan, and Michael. Thanks for taking my questions and thanks for all the details. I'm glad to see you guys putting this quarter behind you.
Michael Rosenthal: I'm curious, Michael, if you can talk a little bit about this first upstream 60K milestone with the pilot testing around flotation. That test, I think, is anticipated to begin this quarter or the third quarter. How do we think about that in relation to the impact on your current operation? Thanks for the question. This initial test, we don't expect it to have any material impact on the operation, will be running a slipstream through this equipment to see the performance, but we do expect it to ultimately, I live. [inaudible] The potential for more temporary interference with the current operation, but like I said, I'm very excited about that one, particularly next year. Appreciate the color.
Speaker Change: I'm curious, Michael, if you can talk a little bit about just with this this first upstream 60K milestone with the pilot testing around flotation.
Speaker Change: That test I think is anticipated to begin this quarter in the third quarter. How do we think about that in relation to the impact on your current operations?
Michael: Thanks for the question. In terms of
Speaker Change: This initial test, we don't expect it to have any material impact on the operation. We'll be running a slipstream through this equipment to see the performance, but we do expect it to ultimately lead to
Speaker Change: I live.
Ryan: results even as a pilot and then we can look to scale that if the results are successful. We've already tried similar equipment, slightly smaller scale and been very pleased with these.
Speaker Change: Oh,
Speaker Change: The grinding circuit investment that I mentioned is slightly bigger than it does have.
Ryan: Temporary interference with the current operation, but like I said, I'm very excited about that one, particularly next year.
Ryan Corbett: Ryan, I'm curious, just as we kind of navigate this year of weak prices, I think you guys highlighted still a robust cash position even with the downtime this quarter. Just talking about, I think, the $150 million or so of prepayment and, I guess, some tax receipts that you anticipate, you just kind of rehashed the timeline and the conditions that you have to meet in order to receive those payments. Yeah, sure, David, happy to. As you saw this quarter, we received the first $50 million of that $150 million set of prepayments for the downstream business.
Speaker Change: I appreciate the color.
Ryan: Now, Ryan, I'm curious, just as we kind of navigate this year of weak prices, I think you guys highlighted still a robust cash position even with the downtime this quarter.
Ryan: Just talking about, I think, the $150 million or so of prepayment and I guess some tax receipts that you anticipate, you just kind of rehash the timeline and the conditions that you have to meet in order to receive those payments?
Ryan: Yeah, sure, David. Happy to.
Speaker Change: As you saw this quarter, we received the first $50 million of that $150 million set of prepayments for the downstream business.
Ryan Corbett: The way to think about the upcoming $100 million is that it will be unlocked by further operational progress on the downstream business as we move towards commercial production of metal in Fort Worth and continue to build up our metal making capabilities to support magnet making there. And so we expect to receive the totality of that over the next 12 months. In terms of the incremental dollars that we flagged that are part of the various tax credits that we intend to receive, you saw actually in Q4 of last year a receivable of nearly $20 million which relates to a 45x tax credit which we expect to receive in the not too distant future here upon the filing of our 2023 tax return. So that's a pretty near-term receipt.
Speaker Change: The way to think about the upcoming $100 million is that is unlocked by further operational progress.
Ryan: on the downstream business as we move towards commercial production of metal in Fort Worth.
Ryan: and continue to build up our metal making capabilities to support magnet making there. And so we expect to receive the totality of that over the next 12 months.
Ryan: You saw, actually in Q4 of last year, a receivable of nearly $20 million.
Lawrence Alexander: The other elements of 45x relate to the ongoing 45x credits that we'll earn via production over the course of this year and next. In addition to that, as we announced, I guess it was last quarter, the 58 and a half million dollars of 48 C tax credits for our investment in Fort. We expect to likely receive about $30 million of that in cash next year. And the remainder of that is also available for us to monetize in a variety of different fashions, you know, earlier in the 2025 timeframe, or we can sort of allow that to play out over a longer period of time.
Ryan: In addition to that, as we announced, I guess it was last quarter, is the $58.5 million of 48C tax credit for our investment in Fort Worth.
Ryan: We expect to likely receive about $30 million of that in cash next year.
Lawrence Alexander: But suffice to say, we've got a lot of opportunity to continue to support really healthy liquidity and the balance sheet as we invest here. Thanks, guys. Our next question today is from the line of Lawrence Alexander of Jeffreys. Please go ahead. Your line is open.
Ryan: Or we can sort of allow that to play out over a longer period of time, but suffice to say, we've got a lot of opportunity to continue to support really healthy liquidity and the balance sheet as we invest here.
Speaker Change: Our next question today is from the line of Lawrence Alexander of Jeffreys. Please go ahead, your line is open.
Kevin S.: This is Kevin S. from Lawrence. Thank you for taking my questions. I'm not sure if you can answer the specifics around this, but I guess I just wanted to get a sense of maybe the size of the commitment that you have with the automaker that you announced today, or maybe the length of the agreement, and maybe the same for the Department of Defense supply contracts. I mean, just, you know, any specifics that you can offer would be helpful.
Ryan: Hi, good evening. This is Kevin Estacon for Lawrence. Thank you for taking my questions. I'm not sure if you can answer
Kevin Estacon: or maybe the length of time of the agreement and maybe the same for the Department of Defense supply contracts. I mean, just, you know, any specifics that you can offer would be helpful. Thank you.
Ryan Corbett: Thank you. Yeah, sure. It's Ryan.
Ryan Corbett: I'll take that. In terms of the OEM commitment, that is a multi-year commitment with deliveries starting this year and ramping up through 25 in the following year. We expect that, over the medium term, this commitment will represent a double-digit percentage of our total targeted output. So it's a pretty significant commitment for us, which we're very excited about. And I think stepping back and taking both this commitment and the DOD purchase agreement in context, which I'll give you some details about in a moment, I think it really is emblematic of some of the comments that Jim made about the importance of what we're doing.
Speaker Change: stepping back and taking both this commitment and the DOD purchase agreement in context, which I'll give you some details about in a moment.
Ryan Corbett: I think, rewinding to many, many years ago when we started on this mission, the thought that a global automotive OEM would be reaching all the way upstream to directly make this type of commitment was unheard of. And so I think that that speaks to the progress that we've made, both as an industry and the increasing importance of our industry and what we produce. The DOD agreement is a pretty modest agreement, so that was announced by them as well.
Ryan Corbett: It's about $11 million commitment from them for the national defense stockpile. But again, emblematic of continued support from the Department of Defense, which we're very happy about. Yeah, sure. Great. Thank you.
Speaker Change: The DOD agreement is a pretty modest agreement, so that was...
Ryan Corbett: I appreciate that. And I guess it's my last question. You know, I guess in terms of the Chinese economy and the weakness, they're possible stimulus. So put some takes and obviously, there's a flow through into, you know, you know, pricing. I guess, just curious to get what your guys' take on the economy; maybe your outlook on the Chinese economy would be helpful. Sure. Yeah, so the Chinese economy is still pretty challenging. I think we've been seeing that writ large around the earnings season this year across corporate America. You know, we see that too; property, everything related to it is very weak.
Speaker Change: You know, we see that, too. Property, everything related to it is very weak. You know, it's really just an overall...
Ryan Corbett: You know, it's really just an overall negative environment with respect to industrial production and consumer spending. So, you know, we don't really have any different views than sort of what you've been hearing around the board with respect to what's going on in China. I would say, though, as it relates to, you know, underlying NDPR demand, anecdotally, we do see, you know, the Chinese industry growing abroad, particularly in the global South and, you know, sort of South America and Sub-Saharan Africa.
Speaker Change: So, you know, we don't really have any different views than sort of what you've been hearing around the board with respect to what's going on in China.
Ryan Corbett: So when you think about sort of the pace of what's happening in the Chinese economy, I would say that one mitigant is that Chinese industry is, you know, sort of attempting to make up for that with growth around the world, particularly in our space. And so I do think that, and again, as you know, I always try to caveat these answers with respect to commodity prices. We don't know, but I do think that in the medium to long term, the things that we're seeing continue to show that the medium and long-term demand picture is very bright from China all the way around the world. Okay, thank you very much. The next question is from the line of Matt Somerville of D.A. Davidson.
Speaker Change: We don't know, but I do think that in the medium to long term, the things that we're seeing continue to show that the medium and long term demand picture is very bright from China all the way around the world.
Matt Somerville: Please go ahead. Your line is open. Yeah, thanks. A couple questions just back to Jim. I'd like to just pick your brain a little bit. What was sort of the criteria you used to make the strategic decision to align yourself with this particular automotive OEM for this agreement? And, you know, to Ryan's comment, double digits can mean a lot. Is there a way that you can maybe kind of narrow that down a bit?
Matt Somerville: And more so, curious as to whether or not this is causing panic, maybe too strong of a word, but causing other OEMs to come knocking on the door, so to speak, or lining up at the door to find out. Sure, Matt, I'll, I'm going to steal that one from Jim quickly.
Speaker Change: Also curious as to whether or not this is causing panic, maybe too strong of a word, but causing other OEMs to come knocking on the door, so to speak, or lining up at the door to try and get in.
Ryan Corbett: Just, you know, you're right, double digits is pretty broad. I can narrow that down to, to say, low double digits and, you know, obviously, we want to respect our customers' wishes and not get into specific details on any individual contract. But I think that as we look around the world, we certainly are seeing a lot of interest in our commodity, as I mentioned. And I think that what we are most focused on is maximizing the realized price that we receive for a product that we believe is incredibly important.
Speaker Change: on any individual contract. But I think that as we look around the world, you know, we certainly are seeing a lot of interest.
Speaker Change: in our commodity, as I mentioned.
Speaker Change: And I think that what we are most focused on is maximizing the realized price that we receive for a product that we believe is incredibly important.
Ryan Corbett: And obviously, as we look at contract structure, pricing, and all those things go together, you know, we are going to prioritize customers that are thoughtful over the long term and are looking at this as partners. And so that's certainly what we did with General Motors with the downstream business. That's absolutely what we're doing with other OEM partners in the midstream business. And so it's something that we're, you know, we're certainly very pleased about.
Ryan Corbett: In terms of other automakers panicking, you know, I wouldn't call it quite a panic at this point, but certainly, there's a whole host of things that we've seen over the course of the last several months that have really, I think, re-energized despite all of the headlines and sort of the Wall Street malaise on the electric vehicle trend. We've seen a lot of activity, you know, certainly the tariff announcement by the current administration that may have caused a little bit of, maybe you could call it panic in terms of automakers really being interested in what we're doing from the magnetic side.
Speaker Change: In terms of other automakers,
Speaker Change: panicking. You know, I wouldn't put it quite a panic at this point, but certainly, you know, there's a whole host of things that we've seen over the course of the last several months that have really, I think, re-energized despite all of the headlines and sort of the Wall Street malaise on the electric vehicle trend.
Speaker Change: We've seen a lot of activity.
Speaker Change: You know, certainly the tariff announcement by the current administration.
Speaker Change: You know, that maybe caused a little bit of, maybe you could call it panic, in terms of automakers really being interested in what we're doing from the magnetic side. But, you know, overall, we're really pleased to continue to build up our book of customers with, you know, blue-chip automakers.
Ryan Corbett: But, you know, overall, we're really pleased to continue to build up our book of customers with blue chip automakers. Thank you, and then maybe for Michael, is there any way to kind of talk about, based on the progress you're seeing or you saw in Q2, where you're tracking thus far in Q3 and your goal relative to that 50% production output increase of NDPR oxide? Is there any way to talk about where you hope to exit the year on a run rate basis in terms of NDR production? [inaudible] It's still early, so it's hard to... I don't know if I can give a clear answer on that, and I'd rather not.
Speaker Change: Thank you. And then maybe.
Michael: For Michael, is there any way to kind of talk about based on the progress you're seeing or you saw in Q2 where you're tracking thus far in Q3 and your goal relative to that 50% production output increase of NDPR oxide?
Speaker Change: Is there any way to talk about where you hope to exit the year on a run rate basis in terms of NDR production?
Speaker Change: It's still early, so it's hard to...
Michael Rosenthal: But I would say that whereas in the past we saw a greater bottleneck to production, we're now really working on optimizing and balancing the throughput and, sorry, availability of equipment and getting that up and then pushing the throughput further. And whereas in the past, we may have seen more bottlenecks to availability, those are being released, and we expect to see significant improvement. I stated that July puts us on that path to 50% growth; it's probably where I'll leave it, but I do believe there's a significant opportunity for continued growth in the fourth quarter. Tim Horton, I don't know if you want to add anything.
Speaker Change: Availability of equipment and getting that up and then pushing the throughput further. And whereas in the past we may have seen more bottlenecks to availability, those are being released and we expect to see significant improvement. I stated that July puts us...
Speaker Change: On that path to the 50% growth, it's probably where I'll leave it, but I do believe there's significant opportunity for continued growth in the fourth quarter.
Ryan Corbett: Thank you guys. Yeah, the one thing I'd add is, I think the reason you're probably sensing a little bit of a, you know, a shift in tone from us on this is, I think, where we've progressed on understanding and getting our arms around the various moving pieces on incremental variable costs. We're sort of at the point from a cost structure perspective in the midstream business where, you know, getting to our targeted cost structure at this point is more of a denominator issue.
Speaker Change: Kimber, and I don't know if you want to add anything. Thank you, guys.
Kimber: Yeah, the one thing I'd add is I think the reason, you know, Matt, you're probably sensing a little bit of a, you know, a shift in tone from us on this is I think where we've progressed on
Kimber: understanding and getting our arms around the various moving pieces on incremental variable cost.
Speaker Change: We're sort of at the point from a cost structure perspective in the midstream business where
Ryan Corbett: So this is more about pushing forward on our volume ramp, which will effectively have the cost structure taken care of. Um, and so, you know, obviously, Michael talked through some of the steps along the way, but we're very, very pleased to see that progress. And so I think that enables us to be, you know, even more tactical in how we approach the ramp here over the course of the year. And so, as Michael said, it's early to give specific numbers on volume because there are so many different ways to get to a particular volume number.
Speaker Change: you know, getting to our targeted cost structure at this point is more a denominator issue. So this is more about pushing forward on our volume ramp will effectively have the cost structure take care of itself.
Speaker Change: And so, you know, obviously, Michael talked through some of the steps along the way, but we're very, very pleased to see that progress.
Michael: And so I think that enables us to be, you know, even more tactical in how we approach the ramp here over the course of the year. And so, as Michael said, it's early to give specific numbers on volume because there are so many different ways to get to a particular volume number. We want to get there in the most efficient way possible, which is consistent with what we've told you over the last couple quarters.
Ryan Corbett: We want to get there in the most efficient way possible, which is consistent with what we've told you over the last couple. And then I'll just add since to do the trifecta here, so you hear from all three of us on this one, I think, you know, obviously, this tough quarter numbers aside, you know, to see the scale of this ramp happening, you know, in the, in the, you know, ordinarily, if you just sort of look at our industry or similar industries, when you're ramping up a multi-billion dollar refinery, you know, these, these things take time.
Speaker Change: And then I'll just add, since, to do the trifecta here, so you hear from all three of us on this one, I think, you know, obviously this tough quarter numbers aside,
Speaker Change: You know, to see the scale of this ramp happening, you know, in the, you know, ordinarily if you just sort of look at our industry or similar industries,
Speaker Change: When you're ramping up a multi-billion dollar refinery...
Ryan Corbett: And, you know, ordinarily, if you were looking at this with respect to another business that, you know, might not have an existing operation within it, you know, you'd obviously see numbers and ramp, and you wouldn't think much of it.
Speaker Change: You know, these things take time.
Speaker Change: And, you know, ordinarily, if you were looking at this with respect to another business that, you know, might not have an existing operation within it, you know, you'd obviously see numbers and ramp and you wouldn't think much of it. And so the fact that the scale of this ramp.
Jim Litinsky: And so the fact that the scale of this ramp, you know, is sort of happening as impressively as it is with with Michael and the team in Mount Pass, I think is, you know, I'm, I'm very pleased of what's happening out there. And I really do think again, you know, tough quarters number aside, you know, and, and, and obviously, you know, we have to keep executing, but but this is a really, really impressive ramp that is happening. And, you know, obviously, hopefully we expect that to remain the case throughout the rest of the year. Great.
Michael: You know, it's sort of happening as impressively as it is with with Michael and the team in Mount Pass, I think, is.
Speaker Change: I'm very pleased of what's happening out there. And I really do think, again, tough quarters number aside, and obviously, we have to keep executing, but this is a...
Speaker Change: really really impressive ramp that is happening and you know obviously hopefully we expect that to remain the case throughout the rest of the year.
Speaker Change: Thank you guys.
George Gianarikas: Thank you, guys. The next question today is from the line of George Gianarikas of Canaccord Genuity. Please go ahead. Your line is open. Hi, everyone. Good afternoon. And thank you for taking my questions. I guess I just want to start with, I was wondering if the song choice was intentional during the waiting period.
Speaker Change: The next question today is from the line of George Gianarikas of Canaccord Genuity. Please go ahead, your line is open.
George Gianarikas: Hi everyone, good afternoon and thank you for taking my questions. I guess I just want to start with, I was wondering if the song choice was intentional during the waiting period?
George Gianarikas: I assume that I'm old enough to know what it was, and hopefully, things only do get better. So, again, first question. Well, I'll take I'll take that real quick, just so you know, you know, that that's, I appreciate you recognizing the song that is a song about resilience and powering forward. And, and so we're, you know, we're very methodical about our song selection, as you know, every quarter. So I think one of these days we'll have to put together a Spotify list of all of our pre-quarter songs so you have them in one place. But, you know, that was a deliberate selection.
Speaker Change: I assume that I'm old enough to know what it was, and hopefully things only do get better.
Speaker Change: So, again, first question.
Speaker Change: Well, I'll take that real quick, just so you know, that's...
Speaker Change: I appreciate you recognizing the song. That is a song about resilience and powering forward. And so we're very methodical about our song selection, as you know, every quarter. So I think one of these days we'll have to put together a Spotify list of all of our...
Speaker Change: are pre-quarter songs so you have them in one place, but that was a deliberate selection.
Ryan Corbett: So maybe to focus on the OEM division for oxide. I'm curious as to what if you were the ones who drove the decision around oxide sales versus magnet sales, or was that something that the, Sure, George. It's Ryan.
Speaker Change: nice
Speaker Change: So, maybe to focus on the OEM decision for oxide, I'm curious as to what...
Speaker Change: If you're the ones who drove the decision around oxide sales versus magnet sales or was that something that the OEM chose?
Ryan Corbett: You know, that's something that is sort of, you know, Mutual, I would say. The reality, though, is that with our current design capacity in for worth, we're fully committed there at this point. And so, you know, to bring another significant automotive OEM on board would entail incremental capital investment there, which is something that we do look very hard at, but obviously, our focus at this point is delivering for GM. I think the thing to think about is the size of our upstream business, at least for the near and medium term, as many, many multiples of the size of the downstream business.
Ryan: Sure, George, it's Ryan. You know, that's something that is sort of, you know.
Speaker Change: Mutual, I would say. The reality, though, is that with our current design capacity in Fort Worth, you know, we're fully committed there at this point. And so, you know, to bring another significant automotive OEM on would entail incremental capital investment there, which is something that we do look very hard at, but obviously our focus at this point is delivering for GM.
Ryan Corbett: And so what we're focused on is ensuring, as I said, aligning ourselves with partners that may be long-term partners across all pieces of the business over the course of time. But certainly, you know, we need to prioritize given we've done a great job on the downstream in terms of sales. We need to prioritize continuing to push forward and align with the right partners on the. And do you know, perchance... who will be making the magnets for that OEM part? I wouldn't want to comment specifically on that.
Ryan: I think the thing to think about is the size of our upstream business, at least for the near and medium term, is many, many multiples of the size of the downstream business. And so what we're focused on is ensuring, as I said, aligning ourselves with partners that may be long-term partners across
Ryan: You know, all pieces of the business over the course of time, but certainly, you know, we need to prioritize given, you know, we've done a great job on the downstream in terms of in terms of sales, we need to prioritize continuing to push forward and align with the right partners on the midstream.
Speaker Change: And do you know perchance who will be making the magnets for that OEM partner?
Ryan Corbett: I think what I'd say about that in general, though, is we have seen some continued development in the market for ex-China magnet production in broader Southeast Asia. And so, you know, that opens up opportunities for us both to sell directly to those existing and future magnet makers, as well as, of course, these types of agreements where we're providing the material directly to the end consumer. Thank you. Maybe as a last question if someone asked.
Speaker Change: I wouldn't want to comment specifically. I think what I'd say about that in general, though, is
Ryan Corbett: We have seen some continued development in the market for ex-China magnet production in broader Southeast Asia.
Speaker Change: And so, you know, that opens up opportunities for us both to sell directly to those existing and future magnet makers, as well as, of course, these types of agreements where we're providing the material directly to the end customer.
Speaker Change: Thank you. Maybe as a last question, if someone asked...
George Gianarikas: Previous questioner on the state of Chinese demand, but I'm curious, share your thoughts around Chinese supply. Clearly, you know, some of the major Finders are losing money at current levels. Just curious as to, Jim, what your thoughts are on the sustainability of that, and whether or not we could see a little bit of a supply shortage, at least less growth or a supply reduction going forward. What are your thoughts on what exactly is happening?
Speaker Change: Previous question on the...
Speaker Change: around the state of Chinese demand, but I'm curious if you share your thoughts around Chinese supply. Clearly, you know, some of the major refiners are losing money at current levels.
I'm just curious as to, Jim, what your thoughts are on the sustainability of that and whether or not we could see a little bit of a supply, at least less growth or a supply reduction going forward. What are your thoughts on what exactly is happening there? Thank you.
Jim Litinsky: Sure, sure, well, with my usual caveat that it is always very difficult to read the tea leaves in China, what I would say is that it's very clear that there's losses, and I think there's a struggle in the supply chain there, because nobody is doing well in this environment with prices where they are. That is very clear. I do think that there were some recent headlines about China cracking down on illegal production, and I think that there's intent of the government to continue with, frankly, what's been going on for the last few years to crack down on illegal behavior kind of inside and outside the country, and I do think that when you think about sort of having a fully burdened cost of production, when you get a lot of that out, that is constructive for pricing and confidence and, frankly, better for the environment.
Speaker Change: Sure.
Jim: Sure, well, with my usual caveat that it is always very difficult to read the tea leaves in China.
Jim Litinsky: What I would say is that it's very clear that there's losses and I think there's a struggle in the supply chain there because nobody is doing well in this environment with prices where they are.
Speaker Change: Very clear.
Speaker Change: I do think that, you know, there were some recent headlines about China cracking down on illegal production, and I think that there's intent.
Jim Litinsky: of the government to continue with, frankly, what's been going on for the last few years to crack down on illegal behavior, kind of inside and outside the country. And I do think that...
Speaker Change: When you think about having a fully burdened cost of production, when you get a lot of that out, that is constructive for pricing and confidence, and frankly, better for the environment.
Jim Litinsky: And so I think in the backdrop of what is clearly a challenged macro environment, there are a lot of good, good trends that suggest that when we see the, you know, the, the upcycle, it should be good. And then lastly, and just kind of going back to what I said earlier, we do continue to see substantial international investment from major Chinese downstream producers. You know, I think we don't see those, you know. We're in the US, we see a lot of headlines, obviously, about our OEMs and our market. But let's not forget, obviously, China's the largest auto market in the world, but then there's the rest of the world.
Speaker Change: And so I think in the, you know, in the backdrop of what is clearly a challenged macro environment, there are a lot of
Jim Litinsky: Good, good trends that, you know, that suggests that when we, you know, sort of see the, the, the up cycle that it should be good. And then lastly, and just kind of going back to.
Speaker Change: what I said earlier, we do continue to see
Speaker Change: substantial international investment from major Chinese downstream producers. You know, I think we don't see those, you know, we're in the US.
Speaker Change: We see a lot of headlines, obviously, about our OEMs and our market, but let's not forget, obviously, China is the largest auto market in the world, but then there's the rest of the world.
Jim Litinsky: And you're seeing real penetration there from the Chinese OEMs and announcements around, you know, factories and localized production. And so I do think when we think about upstream supply, you know, the Chinese industry has to continue to supply its producers around the world, but at some point, you do sort of cross that threshold where they're not going to want to have big upstream losses to be supplying local competitors sitting next to them in factories that they have.
Speaker Change: And you're seeing real penetration there from the Chinese OEMs and announcements around factories and localized production. And so, I do think when we think about the upstream supply,
Jim Litinsky: You know, the Chinese industry has to continue to...
Jim Litinsky: supply its producers going around the world.
Jim Litinsky: But at some point, you do sort of...
Jim Litinsky: cross that threshold where
Speaker Change: They're not going to want to have big upstream losses to be supplying.
Jim Litinsky: So I do think, again, with the caveat that, you know, nobody knows about prices, you know, I do think that the pendulum, which, you know, obviously was very excited a couple years ago one way, has swung too far the other way, and, you know, it should recover at some point. Our next question today is from the line of Lawrence Winder of Bank of America Merrill Lynch. Please go ahead; your line is open. Yeah, thanks, operator. It's Lawson Winder at the Bank of America.
Speaker Change: and local competitors sitting next to them in factories that they have.
Jim Litinsky: I do think, again, you know, with always the caveat that, you know, nobody knows about prices.
Jim Litinsky: You know, I do think that the pendulum had, which, you know, obviously was very excited a couple years ago one way, has swung too far the other way and, you know, it should recover at some point.
Lawson Winder: Thank you.
Speaker Change: Our next question today is from the line of Lawrence Winder of Bank of America Merrill Lynch. Please go ahead, your line is open.
Jim Litinsky: Yep, thanks operator. It's Lawson Winder at Bank of America. Thanks very much and thanks for the presentation today. I wanted to ask, just get your thoughts on the magnetic business and
Lawson Winder: Thanks very much. And thanks for the presentation today. I wanted to just get your thoughts on the magnetic business and, you know, with commercial production being targeted for the end of this year, how do you think about that becoming EBITDA positive? Is that something that will happen this year? Do we think about that happening? 25.
Speaker Change: With commercial production being targeted for the end of this year, how do you think about that becoming EBITDA positive? Is that something that will happen this year? Do we think about that happening?
Ryan Corbett: And then what's the ramp-up on the EBITDA contribution from the Magnetic? Sure, this is Ryan. I'll take that. We do expect once we are producing products in the downstream business, and just to clarify in terms of the production targets, we aim to be in production with precursor products containing metal at the end of this year. We're still targeting production of magnets at the end of 2025. But in the downstream business, when we do start production, and so I think the fair read-through is for 2025, we absolutely do expect a positive EBITDA contribution from that business nearly immediately as we bring it on.
Speaker Change: 25, and then what's the ramp on the EBITDA contribution from the Magnetist business?
Ryan Corbett: Sure, this is Ryan. I'll take that.
Ryan Corbett: We do expect, once we are producing products in the downstream business, and just to clarify in terms of the production targets, we aim to be in production with precursor products, with metal at the end of this year. We're still targeting
Speaker Change: Production of Magnets at the end of 2025.
Ryan Corbett: But in the downstream business, when we do start production, and so I think the fair read-through is for 2025, we absolutely do expect a positive EBITDA contribution from that business.
Ryan Corbett: Certainly, we've been investing in that business over the last several years and several quarters, and you've seen within some of our G&A and R&D type of line items on the P&L, increased investments there. But we do expect, as we start making commercial product, there to be both gross profit and nicely EBITDA positive. In terms of your question on ramp and timing, we haven't gotten into specific details there.
Ryan Corbett: you know, nearly immediately as we bring it on. Certainly, we've been...
Ryan Corbett: You know investing in that business over the last
Ryan Corbett: several years and several quarters, and you've seen within some of our, you know, G&A and R&D type of line items on the P&L, increased investments there. But we do expect, as we have, you know, as we start making commercial product there, to be both gross profit and nicely depositive in that business.
Ryan Corbett: As you would imagine, with any type of launch of a new product and new process, not too dissimilar to the midstream operation, it will take time to reach full targeted throughput. And so we expect to embark on that very methodically as well. And so that will be, of course, reaching our targeted throughput of 1,000 tons of NDFEB magnets will be over a multi-year period. And I would just add, you know, particularly given, you know, I think, I think, given our tough quarter that hopefully is now behind us after this call. But, as a reminder, you know, given that question that when we think about Fort Worth a little over 2 years ago, that was just a grassy field.
Ryan Corbett: In terms of your question on on ramp and timing, you know, we haven't gotten into specific details there as you'd imagine with any type of
Jim Litinsky: And this is a highly complex product. And so the team has been, you know, executing really well. And to think that, you know, now we're in this place where, yeah, we're going to be EBITDA positive so quickly building something from scratch going into, you know, a business that is, you know, brand new for us, and, frankly, the West is, really remarkable. So we're moving as quickly as we can on that front. Yeah, great points, Jim. Thanks for those.
Jim Litinsky: executing really well and to think that you know now we're in this place where yeah we're going to be EBITDA positive so quickly building something from scratch going into you know a business that that is brand new for us and frankly the West is is really remarkable so we're moving as quickly as we can on that front.
Lawson Winder: And then also thinking about 2025 from a CapEx point of view, obviously, it's early. And I know, I know you guys probably aren't prepared to provide specific guidance, but just directionally thinking about, you know, what you provided for guidance for 24. Could you perhaps speak to the rough magnitude and direction of the CapEx move, sort of like 24 to 25?
Lawson Winder: And then also thinking about 2025 from a CapEx point of view, obviously it's early and I know you guys probably aren't prepared to provide specific guidance, but just directionally thinking about what you provided for guidance for 2024.
Lawson Winder: Could you perhaps speak to the rough magnitude and direction of the CAPEX move, sort of like 24 to 25?
Ryan Corbett: Yeah, I think it's early for us to get into any sort of 2025 discussion. Obviously, as you would expect, we are laser focused on return on invested capital and ensuring that we've got a robust and healthy balance sheet. But at this point, it's too early to talk about 2025.
Ryan Corbett: Yeah, I think it's early for us to get into any sort of 2025 discussion. Obviously, as as you would expect,
Ryan Corbett: We are laser focused on return on invested capital and ensuring that we've got a robust and healthy balance sheet.
Ryan Corbett: You know, we're halfway through 2024, and you've seen our results from a capital deployment perspective there. And what I would say is that we gave a range of 200 to 250 in CapEx for 2024, and just looking at the progress to date, we're likely coming in at the low end of that, certainly with our focus on trying to be as capital efficient as possible in the current pricing environment. Okay, thank you very much.
Ryan Corbett: But at this point, it's early to talk about 25. We're halfway through 24, and you've seen our results from a capital deployment perspective there. And what I would say is that we gave a range of 200 to 250 in CapEx for 2024, and just looking at the progress to date, we're likely coming in at the low end of that, certainly with our focus on trying to be as capital efficient as possible in the current pricing environment. Thank you.
Ryan Corbett: Okay, thank you very much.
Bill Peterson: Our next question today is from the line of Bill Peterson of J.P. Morgan. Please go ahead, your line is open, and thanks for providing all the details. Two questions. So first, coming back to the magnet discussion, so we discuss commissioning the prototype production, I guess, can you provide additional color on the progress thus far? Have you been able to produce any material that is meeting any sort of initial customer specifications or expectations? And then perhaps perhaps you can shed some light on the next steps or next few quarters in terms of optimizing performance and the manufacturing scale? Sure, I'll try to give you some color there.
Bill Peterson: Our next question today is from the line of Bill Peterson of J.P. Morgan. Please go ahead, your line is open.
Speaker Change: Yeah, good afternoon. Thanks for providing all the details.
Speaker Change: A few questions, so first coming back to the magnet discussion, so you discussed commissioning the prototype production.
Bill Peterson: I guess, can you provide additional color on the progress thus far? Have you been able to produce any material that are meeting any sort of initial customer specifications or expectations? And then maybe perhaps you can shed some light on the next steps or the next few quarters in terms of optimizing performance and the manufacturing scale-up?
Ryan Corbett: You know, I think I would split the discussion on progress and process development into a conversation around metal versus a conversation around magnets. We discussed, I think it was last quarter or the quarter before, a successful commercial scale pilot of our metal making technology and equipment in a pilot facility. That is what we're bringing to bear on the Dallas-Fort Worth facility by the end of this year. And so, you know, we feel very good about that given the fact that we've sort of proven out our approach to that.
Ryan Corbett: Sure, I'll try to give you some color there. I think I would split the discussion on progress and process development into a conversation around metal versus a conversation around magnets.
Ryan Corbett: We discussed, I think it was last quarter or the quarter before, a successful commercial-scale pilot of our metalmaking technology and equipment.
Ryan Corbett: in a pilot facility. That is what we're bringing to bear in the Dallas-Fort Worth facility by the end of this year. And so, you know, we feel very good about that given the fact that we've sort of proven out, you know, our approach to that.
Ryan Corbett: As it relates to magnets specifically, I think the beauty of building this business from scratch is that we've been able to engage with our customers, I think, in a very thoughtful way to think about commercialization of this from the very beginning. And so, you know, from our perspective, thinking about the types of magnets that we'll produce, the mix of magnets, the number of SKUs, the performance characteristics, et cetera, and we've been focused on ensuring that we are biting off more than we can chew here in the near term. So, you know, we are absolutely not approaching this from the perspective of taking on, you know, a hundred different SKUs.
Ryan Corbett: As it relates to Magnet specifically, I think the beauty of building this business from scratch is that we've been able to engage
Ryan Corbett: with our customer, I think, in a very thoughtful way to think about commercialization of this from the very get-go. And so, you know, from our perspective, thinking about
Ryan Corbett: the types of magnets that we'll produce, the mix of magnets, the number of skews.
Ryan Corbett: The performance characteristics, et cetera, and we've been focused on ensuring that we are, you know, biting off what we expect to be able to chew here in the near term. And so, you know, we are, we are absolutely not approaching this.
Ryan Corbett: We're thinking about this absolutely from the point of view of being able to commercialize rapidly. What we've seen from the pilot production facility so far is, and again, I don't think we want to pat ourselves on the back too much on this, but we have gone from, you know, metal to a finished magnet at, you know, performance characteristics that we're pretty happy with already in this plant. And so, you know, when we talk about being in production with magnets at the end of 2025, we get this question a lot: you know, what? How are you going to be able to do that?
Ryan Corbett: What we've seen from the pilot production facility so far
Ryan Corbett: And again, I don't think we wanted to pat ourselves on the back too much on this, but we have gone from metal to a finished magnet at performance characteristics that we're pretty happy with already in this plant.
Ryan Corbett: And so, you know, when we talk about being in production with magnets at the end of 2025,
Ryan Corbett: Are you going to be meeting specifications? And so if we're already making magnets at the pilot plant, clearly we're working on dialing in all of those processes, our process development and technology, starting now through the end of next year to be sure that we're ready to produce at a commercial scale for GM. It's not lost on us that the automotive supply chain is not the easiest to qualify for.
Ryan Corbett: How are you going to be able to do that? Are you going to be beating SPAC? And so if we're already making magnets at the pilot plant, clearly we're working on dialing in all of those processes, our process development and technology, starting now through the end of next year to be sure that we're ready to produce a commercial scale for GM.
Ryan Corbett: You know, it's not lost on us that the automotive supply chain is not the easiest to qualify into, and so, you know, that also explains part of the significant hiring that we've had down in Fort Worth to ensure that we're ready for qualification, PPAP, etc.
Ryan Corbett: And so, you know, that also explains part of the significant hiring that we've had down in Fort Worth to ensure that we're ready for qualification for PPAP. Yeah, thanks for that. Next question is on robotics, and I know your entry song last quarter was around robotics, but, you know, you have discussed for a few quarters this being an area for growth, but I guess, have you begun direct discussions with any companies in the robotics value chain or magnet suppliers in that space?
Ryan Corbett: Yeah, thanks for that. Next question is on robotics, and I know I think your entry song last quarter was around robotics, but...
Speaker Change: You know, you have discussed a few quarters of this being an area for growth, but I guess have you begun direct discussions with any companies in the robotics value chain or magnet suppliers in that space?
Ryan Corbett: I guess, thinking about potential supply agreements, given, you know, you spoke to the OEM one earlier, and you also spoke earlier that some of your, I guess, a large chunk of your volumes are going to eventually be spoken for. Just thoughts around what could happen in that space.
Ryan Corbett: I guess, thinking about potential supply agreements given, you know, you spoke to the OEM one earlier and you also spoke earlier that some of your, I guess, a large chunk of your volumes are going to eventually be spoken for. Just thoughts around what could happen in that space.
Jim Litinsky: Sure, and a great question. I spend a lot of time thinking about this because, as we look around at all of the headlines and investment that are going into AI and now into robotics, what they call physical AI, there's no question that there's a lot of excitement in this area. And so we expect this to be sort of a game changer demand stream. Obviously, and I hope I've sort of said this thoughtfully the last couple of quarters when we've discussed this, obviously, this is a few years down the line as far as something that is of scale.
Jim Litinsky: Sure, and you know, great question. I spend a lot of time thinking about this because as we look around at all of the headlines and investment that are going into AI and now in robotics, what they call physical AI.
Jim Litinsky: You know, there's no question that there's a lot of excitement in this area, and so we expect this to be sort of a game-changer demand stream.
Jim Litinsky: Obviously, and I hope I've sort of said this thoughtfully the last couple quarters when we've discussed this, you know, obviously this is, you know,
Jim Litinsky: a few years down the line as far as something that is of scale. I mean, but I would say that this is all happening so fast. The advancements that we're seeing out there, and obviously you can, you know, follow a lot of this stuff yourself,
Jim Litinsky: I mean, but I would say that this is all happening so fast. The advancements that we're seeing out there, and obviously, you can follow a lot of this stuff yourself, pretty remarkable. And, you know, without mentioning whether or not we've had discussions with a particular robotics company or producer or whatever, you know, certainly you can look at who the leaders are. And obviously, you know, sort of, I would say, one of the most notable leaders out there that is talking about this is certainly Tesla with Optimus.
Jim Litinsky: It's pretty remarkable.
Jim Litinsky: And, you know, without mentioning whether or not we've had discussions with a particular robotics company or producer or whatever, you know, certainly you can, you can look at, you know, who the leaders are and obviously, you know, sort of, I would say, one of the most notable leaders out there is that that is talking about this is certainly Tesla with Optimus.
Jim Litinsky: And if, you know, we've seen discussions that, you know, Musk believes that that will lead to 30 trillion dollars in the Tesla market cap and, you know, talking about 10 or 20 billion humanoid robots. And what I would say is, if you believe that that is one 10th directionally correct, one 20th directionally correct, it is a game because there is, you know, typically two to five times the amount of rare earth magnet content in a humanoid robot than there would be in an EV, and then we're talking about many multiples of potential production.
Jim Litinsky: And if, you know, we've seen discussion that, you know, that Musk believes that that will lead to 30 trillion of Tesla market cap and, you know, talking about 10 or 20 billion humanoid robots.
Jim Litinsky: And what I would say is, if you believe that that is one-tenth directionally correct, one-twentieth directionally correct, it is a game-changer for rare-earth magnetics multiples to what EVs were.
Jim Litinsky: because there's, you know, typically two to five times the amount of rare earth magnet content in a, you know, humanoid robot than there would be in an EV, and then we're talking about many multiples of potential production. Again, this is all sort of...
Jim Litinsky: Again, this is all sort of long term, but this is happening so fast that it's really exciting. But, you know, again, I caveat it with, you know, this is something that is a few years out. I understand. Thank you. And we have time for one last question today, which will come from the line of Benjamin Kallo of Baird. Please go ahead. Your line is now open. Hey guys, good afternoon. This is Davis Thunderlin on for Ben.
Jim Litinsky: long-term, but this is happening so fast that it's really exciting. But, you know, again, I caveat it with, you know, this is something that is a few years out.
Davis Thunderlin: Understood, thanks again.
Speaker Change: Thank you and we have time for one last question today which will come from the line of Benjamin Cullow of Baird. Please go ahead your line is now open.
Benjamin Kallo: Thank you for sneaking me in here. Just rewinding, maybe all the way back to the beginning, Jim, in your prepared remarks, I think you talked about NDPR production costs coming down materially over the next couple of quarters. I'm just wondering if you or Michael could give some color as to what material means, maybe if we should expect a linear decline or step changes and anything you can say qualitatively about the levers for this cost improvement. Thanks guys. I'm going to hand that one to my CFO. I'll tap out of that. Yeah, no; I'm happy to take it.
Benjamin Kallo: Hey guys, good afternoon. This is Davis Thunderlin on for Ben. Thank you for sneaking me in here at the end
Speaker Change: Just rewinding, maybe all the way back to the beginning, Jim, in your prepared remarks, I think you talked about NDPR production costs coming down materially over the next couple quarters.
Speaker Change: I'm just wondering if you or Michael could give some color as to what materially means. Maybe if we should expect a linear decline or step changes.
Speaker Change: Anything you can say qualitatively about the levers for this cost improvement. Thanks, guys.
Speaker Change: I'm going to hand that one to my CFO. I'll tap out of that.
Ryan Corbett: We made a couple of comments on this, and I think the important thing to think about in terms of our progression on the cost structure is that we talked about for the last couple of quarters, really getting our arms around the incremental variable costs and the items that were driving that and ensuring that we were not ramping in the face of very suboptimal incremental variable costs. I think the important thing that we've found over the last quarter or so is really getting our arms around that, and so we're not where we want to be, but I sort of think about it as when we started to ramp up the plan, it was sort of trying to figure out where the pins are. Now we know exactly where the pins are.
Ryan Corbett: Yeah, no, I'm happy to take it. You know, we made a couple of comments on this, and I think the important thing to think about in terms of our progression on the cost structure is that
Ryan Corbett: You know, we talked about for the last couple of quarters, you know, really getting our arms around the incremental variable costs and the items that were driving that and ensuring that we were not ramping in the face of, you know, very suboptimal incremental variable costs.
Ryan Corbett: I think the important thing that we've found over the last quarter or so is really getting our arms around that, and so we're not where we want to be, but I sort of think about it as
Ryan Corbett: We just need to knock them down. And so we know what we need to execute on, and the team is working tirelessly to execute on them as it relates to the variable costs. And so what that really leaves us with is, you know, with the data that we've seen on a circuit by circuit basis over the last several months. What this becomes is a denominator thing.
Ryan Corbett: When we started to ramp the plan, it was sort of trying to figure out where the pins are. Now we know exactly where the pins are, we just need to knock them down. And so we know, you know, we know what we need to execute on, and the team is working tirelessly to execute on them.
Ryan Corbett: as it relates to the variable costs.
Ryan Corbett: And so what that really leaves us with is, you know, with the data that we've seen on a circuit-by-circuit basis over the last several months,
Ryan Corbett: You know, this is really about ensuring that we are able to maintain the proper uptime. And then as we sort of check that box, continue to push throughput and rinse and repeat and bring more denominators into that equation. Uh, you know, because that's going to be really what gets us to our targeted cost structure. And so a lot of it really depends on exactly what the volumes are and exactly how we get there.
Ryan Corbett: What this becomes is a denominator band.
Ryan Corbett: This is really about ensuring that we are able to maintain the proper uptime. And then as we sort of check that box, continue to push throughput and rinse and repeat, and bring more denominator into that equation.
Ryan Corbett: because that's going to be really what gets us to our targeted cost structure. So a lot of it really depends on exactly what the volumes are and exactly how we get there. So it's tough to give you a ton of specifics other than in all the scenarios that we've modeled out, we absolutely, from what we see now, believe that as we drive volume towards our targeted throughput, we will get to our targeted cost structure. It's just a matter of us.
Ryan Corbett: And so, you know, it's tough to give you a ton of specifics other than, you know, in all the scenarios that we've modeled out, we absolutely believe from what we see now that as we drive volume towards our targeted throughput, we will get to our targeted cost structure.
Ryan Corbett: It's just a matter of us continuing to execute over the next several. I appreciate it, guys. Thank you, and I would now like to hand the call back over to Mr. Litinsky for any final comments. Yes, thank you. And thank you, everyone. And I guess I will officially say good riddance to this Q2. And I would say, for those of us who spend a lot of time on these things, I would say there are bad quarters that are bad, and then there are bad quarters that have a lot of good in them. And I would put this in the latter category.
Ryan Corbett: continuing to execute over the next several quarters.
Ryan Corbett: Got it. Thanks, Ryan. Appreciate it, guys.
Speaker Change: Thank you and I would now like to hand the call back over to Mr. Litinsky for any final comments.
Ryan Corbett: Yes, thank you. And thank you everyone.
Ryan Corbett: I guess I will officially say good riddance to this Q2, and I would say, for those of us who spend a lot of time on these things, I would say there are bad quarters that are bad, and then there are bad quarters that have a lot of good in them, and I would put this in the latter category.
Jim Litinsky: We really responded extraordinarily well to some unanticipated downtime, and things are really humming. And we feel very good about the progress that we made last quarter, that we're making this quarter, and we're excited to talk to you next quarter. So thanks, everyone. Thank you. This will conclude Mp Materials' second quarter 2024 earnings call and webcast. You may now disconnect your line.
Jim Litinsky: you know, we really responded.
Jim Litinsky: extraordinarily well to some unanticipated downtime and things are really humming and we feel, you know, very good about the progress that we made last quarter, that we're making this quarter, and we're excited to talk to you next quarter. So, thanks everyone.
Jim Litinsky: Thank you. This will conclude the MP materials, second quarter 2024 earnings call and webcast.
Speaker Change: You may now disconnect your lights.