MP Materials Corp. / DE

Concentration of Risk: Financial instruments that potentially subject the Company to credit risk consist principally of cash, cash equivalents and short-term investments, and receivables from customers. The Company believes that its credit risk is limited because the Company’s current contracts are with companies that have a reliable payment history. The Company does not believe that it is exposed to any significant risks related to its cash accounts, money market funds, or short-term investments.

As of March 31, 2025, Shenghe was the principal customer of the Materials segment and accounted for more than 60% of the Company’s consolidated revenue for the three months ended March 31, 2025, the vast majority of which related to sales of concentrate, versus more than 80% of the Company’s consolidated revenue for the three months ended March 31, 2024 (see Note 19, “Related-Party Transactions,” for additional information).

Rare earth concentrate is not quoted on any major commodities market or exchange and demand for rare earth concentrate is currently constrained to a relatively limited number of refiners, a significant majority of which are based in China. Uncertainty exists as to the market price of rare earth oxide (“REO”) primarily due to concerns over the global economic conditions and actual or perceived concerns over increases in the supply of or slower growth in the demand for rare earth products. Furthermore, while revenue is generated in the U.S., Shenghe conducts its primary operations in China and may transport and sell products in the Chinese market. Therefore, the Company’s revenue is affected by Shenghe’s ultimate realized prices in China, including the impact of changes in the exchange rate between the Chinese yuan and the U.S. dollar.

In addition, the economic conflict between China and the U.S., marked by recent escalations in trade disputes and the imposition of additional tariffs, has had, and is expected, at least in the near-term, to continue to have, a material negative impact on the Company’s business, revenues, and cash flows. These developments introduce uncertainty regarding potential impacts on the Company’s direct exports, supplier pricing, and the possibility of reciprocal or retaliatory tariffs from other affected countries. Broader trade policies and ongoing political tensions may also reduce trade volumes between major international economies, leading to disruptions in supply chains and financial market instability.

Because the Company’s revenue is derived from the sale of rare earth products, shifts in the market price of these products, including the levying of taxes, tariffs, or other fees, are expected to have a significant negative effect on the Company’s results of operations and cash flows, particularly in its Materials segment. As a result of the item discussed in Note 22, “Subsequent Events,” the Company’s rare earth concentrate revenues are expected to be materially lower through at least the second quarter of 2025 as the Company prioritizes further processing the concentrate into separated rare earth products or stockpiling the concentrate for future use.

Revenue Recognition: For certain product sales primarily within the Magnetics segment, the Company receives requests from customers to temporarily hold purchased products at the Company’s facilities. These products are sold under terms included in bill-and-hold arrangements that may result in different timing for revenue recognition versus shipment. The Company recognizes revenue under these arrangements only when there is a substantive reason for the agreement, the ordered goods are identified separately as belonging to the customer, the goods are currently ready for physical transfer to the customer, and the Company does not have the ability to use the product or to direct it to another customer. Assuming these required revenue recognition criteria are met, revenue is recognized upon completion of product manufacture, which is the point in time control of the product transfers to the customer. See Note 14, “Revenue Recognition,” for additional information.

Performance-based Performance Stock Units: The Company recognizes the performance-based performance stock units’ (“performance-based PSUs”) grant-date fair value as compensation cost on a straight-line basis over the requisite service period if it is probable that a performance condition will be achieved. No compensation cost will be recognized for a performance condition that is not probable of being achieved. The Company will re-evaluate at the end of each reporting period whether or not a performance condition is probable of being achieved. If, based on this re-evaluation, the Company estimates an increase in overall compensation cost, then the Company will recognize a cumulative catch-up of compensation cost in the period of the re-evaluation. Alternatively, if the Company estimates a decrease in overall compensation cost, the Company will defer reversing compensation cost until achievement of the performance condition is estimated to be improbable. Previously recognized compensation costs related to forfeited awards will be reversed in the period the forfeiture actually occurs. See Note 16, “Stockholders’ Equity and Stock-Based Compensation,” for additional information.

Convertible Debt and Embedded Derivatives: The Company accounts for its convertible debt in accordance with Accounting Standards Codification (“ASC”) Subtopic 470-20, “Debt with Conversion and Other Options” (“ASC 470-20”), whereby the convertible instrument is initially accounted for as a single unit of account, unless it contains a derivative that must be bifurcated from the host contract in accordance with ASC Topic 815, “Derivatives and Hedging,” or the substantial premium model in ASC 470-20 applies. When it is determined that an embedded derivative is required to be bifurcated, the Company recognizes the bifurcated embedded derivative, measured at fair value, as a separate derivative asset or liability upon initial recognition and in subsequent periods at fair value with changes in fair value included in profit or loss each reporting period. As of March 31, 2025, the fair value of the redemption feature included in the portion of the 2030 Notes (as defined in Note 10,“Debt Obligations”) that were issued in December 2024 was $7.0 million and is included in “Other non-current assets” within the Company’s unaudited Condensed Consolidated Balance Sheets. The fair value of the same feature as of December 31, 2024, was not material. Changes in the fair value each reporting period are included in “Other income, net” within the

Company’s unaudited Condensed Consolidated Statements of Operations. See Note 17, “Fair Value Measurements,” for additional information.

Recently Adopted Accounting Pronouncements: In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07, “Improvements to Reportable Segment Disclosures” (“ASU 2023-07”), which expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. The Company adopted ASU 2023-07 on a retrospective basis as of December 31, 2024, for annual periods, and for interim periods beginning in 2025. See Note 20, “Segment Reporting,” for additional information.

Recently Issued Accounting Pronouncements: During the three months ended March 31, 2025, there were no accounting pronouncements adopted by the Company that had a material impact on the Company’s unaudited Condensed Consolidated Financial Statements. The Company is currently evaluating the effect of adopting ASU No. 2024-03, “Income Statement—Reporting Comprehensive Income Expense Disaggregation Disclosures” and ASU No. 2024-04, “Induced Conversions of Convertible Debt Instruments” on its disclosures.

Reclassifications: Certain amounts in prior periods have been reclassified to conform to the current year presentation.

NOTE 3—CASH, CASH EQUIVALENTS AND INVESTMENTS

The following table presents the Company’s cash, cash equivalents and short-term investments:

The Company does not intend to sell, nor is it more likely than not that the Company will be required to sell any investments in unrealized loss positions before recovery of their amortized cost basis. The Company did not recognize any credit losses related to its available-for-sale investments during the three months ended March 31, 2025 and 2024. The unrealized losses on the Company’s available-for-sale investments were primarily due to unfavorable changes in interest rates subsequent to initial purchase. None of the available-for-sale investments held as of March 31, 2025, were in a continuous unrealized loss position for greater than 12 months and the unrealized losses and the related risk of expected credit losses were not material.

The Company recognized the following income and expense amounts, all of which are included in “Other income, net” within the Company’s unaudited Condensed Consolidated Statements of Operations:

(1)Includes interest and investment income on the Company’s available-for-sale securities and other money market funds.

As of March 31, 2025, all outstanding available-for-sale investments had contractual maturities within one year and aggregated to a fair value of $719.6 million.

Accrued interest receivable was $0.5 million and $0.6 million as of March 31, 2025 and December 31, 2024, respectively, and is included in “Prepaid expenses and other current assets” within the unaudited Condensed Consolidated Balance Sheets.

NOTE 4—INVENTORIES

The Company’s inventories consisted of the following:

(1)Primarily represents stockpiled ore that is not expected to be processed within the next 12 months as well as certain raw materials that are not expected to be consumed within the next 12 months. The stockpiled ore amounts as of March 31, 2025 and December 31, 2024, were $12.7 million and $12.3 million, respectively.

As of March 31, 2025, the Company determined that a lower of cost or net realizable value reserve of $3.2 million was necessary on certain of the Company’s work in process and finished goods inventories. The reserve recorded as of March 31, 2024, was $6.0 million. The reserve was largely attributable to continued elevated carrying costs of the Company’s production of separated products given the current stage of ramping the midstream operations facilities to normalized production levels. Changes in the reserve are included in “Cost of sales (excluding depreciation, depletion and amortization) (including related party)” within the Company’s unaudited Condensed Consolidated Statements of Operations.

NOTE 5—PROPERTY, PLANT AND EQUIPMENT

The Company’s property, plant and equipment consisted of the following:

Additions to Property, Plant and Equipment: The Company capitalized expenditures related to property, plant and equipment of $34.0 million and $56.6 million for the three months ended March 31, 2025 and 2024, respectively, including amounts not yet paid (see Note 21, “Supplemental Cash Flow Information”). The capitalized expenditures for the three months ended March 31, 2025 and 2024, related primarily to machinery, equipment and assets under construction to support the Company’s Independence Facility, as well as various projects at Mountain Pass, including the separations facility for heavy rare earth elements.

The Company’s depreciation and depletion expense were as follows:

There wereno property, plant and equipment impairments recognized for the three months ended March 31, 2025 and 2024.

NOTE 6—EQUITY METHOD INVESTMENT

The Company’s equity method investment balance, which is included in “Other non-current assets” within the Company’s unaudited Condensed Consolidated Balance Sheets, was $8.8 million and $9.1 million, as of March 31, 2025, and December 31, 2024, respectively, and pertains to the Company’s 49% equity interest in VREX Holdco Pte. Ltd. (“VREX Holdco”). VREX Holdco wholly owns Vietnam Rare Earth Company Limited (“VREX”), which owns and operates a metal processing plant and related facilities in Vietnam. The Company determined that VREX Holdco is a variable interest entity, but that the Company is not the primary beneficiary. Consequently, the Company does not consolidate VREX Holdco, and instead, accounts for its investment in VREX Holdco under the equity method of accounting as it has the ability to exercise significant influence, but not control, over VREX Holdco’s operating and financial policies.

For the three months ended March 31, 2025 and 2024, the Company recognized $0.3 million and $0.1 million of the Company’s share of VREX Holdco’s net loss, respectively, which was included in “Other income, net” within the Company’s unaudited Condensed Consolidated Statements of Operations. As of March 31, 2025, intra-entity profit or loss eliminations were immaterial.

In November 2024, VREX’s metal processing operations in Vietnam were paused. In February 2025, VREX Holdco, the Company, and Shenghe entered into an agreement whereby, subject to any required regulatory approvals, VREX Holdco would return to the Company the dollar amount of the Company’s initial investment, which was $9.7 million, in exchange for its 49% equity interest in VREX Holdco. As a result, as of March 31, 2025, the Company concluded that its equity method investment had not experienced an other-than-temporary decline in value since it expects to receive an amount at least equal to the carrying amount of the investment. No impairment charges were recorded during three months ended March 31, 2025 and 2024. As of March 31, 2025, the Company was not utilizing VREX as a toll processor, and instead, has been using its other toll processors to convert its NdPr oxide into metal.

NOTE 7—INTANGIBLE ASSETS

The Company’s intangible assets were as follows:

Amortization expense related to amortizing intangible assets was $0.3 million for both the three months ended March 31, 2025 and 2024. No impairment charges were recorded during the three months ended March 31, 2025 and 2024.

NOTE 8—ASSET RETIREMENT AND ENVIRONMENTAL OBLIGATIONS

Asset Retirement Obligations

The Company estimates asset retirement obligations based on the requirements to reclaim certain land areas associated with mineral extraction activities and certain related facilities at Mountain Pass. Minor reclamation activities related to discrete portions of the Company’s operations are ongoing. As of March 31, 2025, the Company estimated a significant portion of the cash outflows for major reclamation activities including the retirement of Mountain Pass will be incurred beginning in 2053.

As of March 31, 2025, the credit-adjusted risk-free rate ranged between 6.5% and 11.5% depending on the timing of expected settlement and when the increment was recognized. There were no significant increments or decrements for the three months ended March 31, 2025 and 2024.

The balance as of both March 31, 2025, and December 31, 2024, included current portions of $0.2 million, which are included in “Other current liabilities” within the Company’s unaudited Condensed Consolidated Balance Sheets. The total estimated future undiscounted cash flows required to satisfy the Company’s asset retirement obligations were $51.5 million and $51.6 million as of March 31, 2025, and December 31, 2024, respectively.

Environmental Obligations

The Company has certain environmental monitoring and remediation obligations related to the groundwater contamination in and around Mountain Pass. The Company engages environmental consultants to develop remediation plans and the related cost projections, which are used to develop an estimate of future cash payments to estimate the Company’s environmental obligations. As assessments and remediation progress occur, the Company periodically reviews its estimates and records any necessary adjustments in the period in which new information becomes available.

As of March 31, 2025, the Company estimated the cash outflows related to these environmental activities will be incurred annually over the next 30 years but could be longer. The Company’s environmental obligations are measured at the expected value of future cash outflows discounted to their present value using a discount rate of 4.78%. There were no significant changes in the estimated remaining costs for the three months ended March 31, 2025 and 2024.

The total estimated aggregate undiscounted cost of $39.2 million and $39.5 million as of March 31, 2025, and December 31, 2024, respectively, principally related to groundwater monitoring and remediation activities required by state and local agencies. Based on the Company’s estimate of the cost and timing and the assumption that payments are considered to be fixed and reliably determinable, the Company has discounted the liability. The balances as of March 31, 2025, and December 31, 2024, both included current portions of $0.9 million, which are reported under “Other current liabilities” within the Company’s unaudited Condensed Consolidated Balance Sheets. The non-current portions are included in “Other non-current liabilities” within the Company’s unaudited Condensed Consolidated Balance Sheets.

Financial Assurances

The Company is required to provide certain government agencies with financial assurances relating to closure and reclamation obligations. As of March 31, 2025, and December 31, 2024, the Company had financial assurance requirements of $45.4 million and $45.5 million, respectively, which were satisfied with surety bonds placed with applicable California state and regional agencies.

NOTE 9—ACCRUED LIABILITIES

The Company’s accrued liabilities consisted of the following:

(1)The March 31, 2025, and December 31, 2024, balances both include excise tax liability of $2.0 million.

NOTE 10—DEBT OBLIGATIONS

The Company’s long-term debt, net, was as follows:

Convertible Notes due 2026

In March 2021, the Company issued $690.0 million in aggregate principal amount of 0.25% unsecured convertible senior notes (the “2026 Notes”) at a price of par. Interest on the 2026 Notes is payable on April 1 st and October 1 st of each year, beginning on October 1, 2021.

In March 2024, contemporaneous with the pricing of the 2030 Notes (as defined below), the Company entered into privately negotiated transactions with certain holders of the 2026 Notes to repurchase $400.0 million in aggregate principal amount of the 2026 Notes, using $358.0 million of the net proceeds from the offering of the 2030 Notes. The price the Company paid to repurchase the 2026 Notes,89.5% of par value, was the same for each lender and approximated the trading price of the 2026 Notes at the time of the repurchases. Subsequent to the issuance of the 2030 Notes, the Company repurchased an additional $80.0 million in aggregate principal amount of the 2026 Notes in open market transactions for $70.6 million. As a result of these repurchases in the first quarter of 2024, the Company recorded a $46.3 million gain on early extinguishment of debt included within the Company’s unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2024.

The remaining 2026 Notes outstanding mature, unless earlier converted, redeemed or repurchased, on April 1, 2026, and become convertible at the option of the holder beginning on January 1, 2026, through the business day immediately preceding the maturity date. The initial conversion price of the remaining 2026 Notes is approximately $44.28 per share, or 22.5861 shares per $1,000 principal amount of notes, subject to adjustment upon the occurrence of certain events. As of March 31, 2025, the 2026 Notes are included in “Current portion of long-term debt” within the Company’s unaudited Condensed Consolidated Balance Sheets due to the 2026 Notes becoming convertible within one year.

In March 2024, the Company provided a written notice to the trustee and the holders of the 2026 Notes that it has irrevocably elected to fix the settlement method for all conversions that may occur subsequent to the election date, to a combination of cash and shares of the Company’s common stock with the specified dollar amount, per $1,000 principal amount of the 2026 Notes, of $1,000. As a result, for any conversions of 2026 Notes occurring after the election date, a converting holder will receive (i) up to $1,000 in cash per $1,000 principal amount of the 2026 Notes and (ii) shares of the Company’s common stock for any conversion consideration in excess of $1,000 per $1,000 principal amount of the 2026 Notes converted. Prior to the election being made, the Company could have elected to settle the 2026 Notes in cash, shares of the Company’s common stock or a combination thereof.

Convertible Notes due 2030

In March 2024, the Company issued $747.5 million in aggregate principal amount of 3.00% unsecured convertible senior notes that mature, unless earlier converted, redeemed or repurchased, on March 1, 2030 (the “2030 Notes” and, together with the 2026 Notes, the “Convertible Notes”), at a price of par. Interest on the 2030 Notes is payable on March 1 st and September 1 st of each year, beginning on September 1, 2024.

The 2030 Notes are convertible into cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s election, at an initial conversion price of approximately $21.74 per share, or 45.9939 shares per $1,000 principal amount of 2030 Notes, subject to adjustment upon the occurrence of certain events.

The Company has the option to redeem for cash the 2030 Notes, in whole or in part, beginning on March 5, 2027, if certain conditions are met as set forth in the indenture governing the 2030 Notes. The redemption price is equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest.

Capped Call Options

In March 2024, in connection with the offering of the 2030 Notes, the Company entered into privately negotiated capped call transactions (the “Capped Call Options”) with certain financial institutions (“Counterparties”). The Capped Call Options cover, subject to anti-dilution adjustments substantially similar to those in the 2030 Notes,34.4 million shares of the Company’s common stock, the same number of shares that initially underlie the 2030 Notes issued in March 2024. The Capped Call Options have an expiration date of March 1, 2030, subject to earlier exercise.

The Capped Call Options are expected generally to reduce the potential dilution to the Company’s common stock upon conversion of the 2030 Notes and/or offset cash payments the Company is required to make in excess of the principal amount of the converted 2030 Notes, as the case may be, in the event that the market price per share of the Company’s common stock, as measured under the terms of the Capped Call Options, is greater than the strike price of the Capped Call Options, which initially corresponds to the initial conversion price of the 2030 Notes, or approximately $21.74 per share of common stock, with such reduction and/or offset subject to an initial cap of $31.06 per share of the Company’s common stock.

The Capped Call Options are separate transactions, entered into by the Company with each of the Counterparties, and are not part of the terms of the 2030 Notes. Holders of the 2030 Notes will not have any rights with respect to the Capped Call Options. The Capped Call Options meet the criteria for classification as equity and, as such, are not remeasured each reporting period. During the first quarter of 2024, the Company paid $65.3 million for the Capped Call Options, which was recorded as a reduction to “Additional paid-in capital” within the Company’s unaudited Condensed Consolidated Balance Sheets along with the offsetting associated deferred tax impact of $16.1 million.

The Company elected to integrate the Capped Call Options with those 2030 Notes issued in March 2024 for federal income tax purposes pursuant to applicable U.S. Treasury Regulations. Accordingly, the $65.3 million gross cost of the purchased Capped Call Options will be deductible for income tax purposes as original discount interest over the term of the 2030 Notes.

Interest expense related to the Convertible Notes was as follows:

The debt issuance costs associated with the 2026 Notes and the 2030 Notes are being amortized to interest expense over the terms of each note at effective interest rates of 0.51% and 3.52%, respectively. The remaining term of the 2026 Notes and the 2030 Notes were 1.0 year and 4.9 years, respectively, as of March 31, 2025.

As of March 31, 2025, and December 31, 2024, accrued and unpaid interest pertaining to the Convertible Notes was $2.2 million and $8.7 million, respectively, and is included in “Other current liabilities” within the Company’s unaudited Condensed Consolidated Balance Sheets.

Equipment Notes

The Company has financing agreements for the purchase of certain equipment, including trucks and loaders, graders, and various other machinery. The Company’s equipment notes, which are secured by the purchased equipment, have terms of between 4 years to 6 years and interest rates of between 4.5% and 7.4% per annum.

In December 2024, the Company entered into a secured uncommitted non-revolving credit facility (the “Uncommitted Credit Facility”) with Caterpillar Financial Services Corporation, providing an aggregate borrowing capacity of $25.0 million, which the Company may use only to finance agreed-upon equipment. During the three months ended March 31, 2025, the Company executed promissory notes under the Uncommitted Credit Facility to finance new equipment, including trucks and wheel loaders, for use at Mountain Pass. As of March 31, 2025, the Company had $13.4 million of borrowings outstanding under the Uncommitted Credit Facility. The interest rates for the various borrowings, including existing and any potential future promissory notes executed under the Uncommitted Credit Facility, will approximate market rates at the time of borrowing and will be fixed for the duration of the respective advance. The purchase of the equipment through the execution of these notes is disclosed as a non-cash investing and financing activity in Note 21,“Supplemental Cash Flow Information.”

The current and non-current portions of the equipment notes, which are included within the unaudited Condensed Consolidated Balance Sheets in “Other current liabilities” and “Other non-current liabilities,” respectively, were as follows:

As of March 31, 2025, none of the agreements governing the Company’s indebtedness contain financial covenants.

NOTE 11—LEASES

The Company has operating and finance leases for corporate office space, warehouses, vehicles and equipment used in its operations. The Company’s lease agreements do not contain material residual value guarantees or restrictive covenants. As of March 31, 2025, the Company was not reasonably certain of exercising any material purchase, renewal, or termination options contained within its lease agreements. No right-of-use asset impairment charges were recorded during the three months ended March 31, 2025 and 2024.

Supplemental disclosure for the unaudited Condensed Consolidated Balance Sheets related to the Company’s operating and finance leases is as follows:

NOTE 12—INCOME TAXES

The Company calculates the provision for income taxes during interim reporting periods by applying an estimate of the annual effective tax rate to its year-to-date pretax book income or loss. The tax effects of discrete items, including but not limited to, excess tax benefits or deficiencies associated with stock-based compensation, valuation allowance adjustments based on new evidence, and enactment of tax laws, are reported in the interim period in which they occur. The effective tax rate (income tax expense or benefit as a percentage of income or loss before income taxes) including discrete items was 16.7% and 30.2% for the three months ended March 31, 2025 and 2024. The Company’s effective income tax rate can vary from period to period depending on, among other factors, percentage depletion, executive compensation deduction limitations, the Section 45X Advanced Manufacturing Production Credit (the “45X Credit”), and changes to its valuation allowance against deferred tax assets. Certain of these and other factors, including the Company’s history and future reversals of existing taxable temporary differences, are considered in assessing its ability to realize its net deferred tax assets. As of March 31, 2025, the Company provided a valuation allowance against certain state tax credits that it believes, based on the weight of available evidence, are not more likely than not to be realized.

In March 2024, the Company was awarded a $58.5 million Section 48C Qualifying Advanced Energy Project Tax Credit (the “48C Credit”) to advance the construction on the Independence Facility. The 48C Credit is an investment tax credit equal to 30% of qualified investments for certified projects that meet prevailing wage and apprenticeship requirements and are placed in service after the date of the award. The 48C Credit is not eligible for direct pay (i.e., it is nonrefundable); however, it is transferable to an unrelated taxpayer at a negotiated rate. The current and noncurrent portions of the 48C Credit recognized are included in “Other current liabilities” and “Deferred investment tax credit,” respectively, within the Company’s unaudited Condensed Consolidated Balance Sheets.