MP Materials Corp. / DE

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1—DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Description of Business: MP Materials Corp., including its subsidiaries (the “Company” or “MP Materials”), is the largest producer of rare earth materials in the Western Hemisphere. Headquartered in Las Vegas, Nevada, the Company owns and operates the Mountain Pass Rare Earth Mine and Processing Facility (“Mountain Pass”) located near Mountain Pass, San Bernardino County, California, the only rare earth mining and processing site of scale in North America. Rare earth products are critical inputs in hundreds of existing and emerging applications including electric vehicles, consumer electronics, robotics, drones, wind turbines, and defense applications. Additionally, the Company owns and operates a rare earth metal, alloy and magnet manufacturing facility in Fort Worth, Texas (the “Independence Facility”), where the Company produces and sells magnetic precursor products and commenced manufacturing of neodymium-iron-boron (“NdFeB”) permanent magnets in December 2025. The Company’s operations are organized intotwo reportable segments: Materials and Magnetics. See Note 20, “Segment Reporting,” for additional information.

The Materials segment represents the upstream and midstream operations of the Company, which predominantly consist of Mountain Pass, a fully integrated mining and refining facility producing refined rare earth oxides and related products. The Materials segment generates revenue primarily from sales of neodymium-praseodymium (“NdPr”) oxide and metal, which is largely sold to customers in the United States, Japan, South Korea, and broader Asia. Before ramping the production of NdPr products, the Materials segment historically generated the majority of its revenue from sales of rare earth concentrate.

The Magnetics segment represents the downstream magnet manufacturing and related operations of the Company, which currently consist of (i) the Independence Facility, a fully integrated metal, alloy, and magnet manufacturing plant and (ii) the 10X Facility (discussed below). The Magnetics segment began generating revenue from sales of magnetic precursor products to General Motors Company (NYSE: GM) (“GM”) in the U.S. in the first quarter of 2025.

On July 9, 2025, the Company entered into definitive agreements with the United States Department of War (the “DoW”), formerly known as the Department of Defense, (collectively, the “DoW Transaction Agreements”), establishing a transformational public-private partnership with the DoW to accelerate the build-out of an end-to-end U.S. rare earth magnet supply chain and reduce foreign dependency (the “DoW Transactions”).

In connection with the DoW Transactions, the Company agreed to expand its Independence Facility, construct a second domestic magnet manufacturing facility in Northlake, Texas (the “10X Facility”), which construction commenced in spring 2026, and extend its heavy rare earth elements (“HREE”) refining capability at Mountain Pass. Additionally, pursuant to the DoW Offtake Agreement (as defined in Note 9, “Operating Leases”), the DoW (i) has guaranteed that the 10X Facility will generate at least $140 million of EBITDA (as defined in the DoW Offtake Agreement, and subject to annual escalation) and (ii) is obligated to purchase all of the magnets produced at the 10X Facility (which may instead be commercially syndicated with the DoW’s approval). Separately, the Company entered into an NdPr price floor protection agreement with the DoW (the “Price Protection Agreement” or “PPA”) for the Company’s NdPr products produced at Mountain Pass that are sold (including on an intercompany basis) or produced and stockpiled starting in the fourth quarter of 2025.

The cash flows and profitability of the Company’s operations have historically been significantly affected by the market price of rare earth products, which are generally also impacted by taxes and tariffs. While this volatility has been reduced following the effectiveness of the PPA, certain exposure to market prices remains. The prices of rare earth products are affected by numerous factors beyond the Company’s control. The products of the Company are sold globally, with a focus on accelerating the development of a U.S. supply chain, with export products primarily sold in the Asian market due to the metallization and magnet manufacturing capabilities of the region.

Basis of Presentation: The unaudited Condensed Consolidated Financial Statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial information and with the rules and regulations of the U.S. Securities and Exchange Commission and are presented in U.S. dollars. Accordingly, since they are interim statements, they do not include all of the information and notes required by GAAP for complete consolidated financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.

Results of operations and cash flows for the interim periods presented herein are not necessarily indicative of the results that would be achieved during a full year of operations or in future periods. These unaudited Condensed Consolidated Financial

Statements and notes thereto should be read in conjunction with the Consolidated Financial Statements and notes thereto included in the Company’s Form 10-K.

NOTE 2—SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation: The unaudited Condensed Consolidated Financial Statements include the accounts of MP Materials Corp. and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates: The preparation of the unaudited Condensed Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) the disclosure of contingent assets and liabilities at the date of the unaudited Condensed Consolidated Financial Statements, and (iii) the reported amounts of revenues and expenses during the reporting period. Accordingly, actual results may differ from those estimates.

Concentration of Credit 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.

Concentration of Customer Risk: The concentration of customer risk arises when a significant portion of the Company’s revenue is generated from a small group of customers. Reduction of orders, delay of payments, or termination of contracts by these key customers could have a significant negative effect on the Company’s results of operations and cash flows. The Company’s revenue is derived from sales of rare earth products and, historically, from sales of rare earth concentrate to customers in China, which ceased in July 2025 to align with the terms of the DoW Transaction Agreements. Rare earth concentrate is not quoted on any major commodities market or exchange, and demand is currently constrained to a relatively limited number of refiners, the majority of which are based in China.

For the periods presented below, the following customers accounted for more than 10% of the Company’s total revenue. Customer letter designations may differ from the same designations used in prior-period filings.

For the three and nine months ended September 30, 2026, Customer A in the Materials segment accounted for 33% and 37%, respectively; Customer B in the Materials segment accounted for 23% and 26%, respectively; and Customer C in the Magnetics segment accounted for 12% and 16%, respectively. For the three months ended September 30, 2026, Customer D in the Materials segment accounted for 21%.

For the three and nine months ended September 30, 2025, Customer A in the Materials segment accounted for 35% and 26%, respectively, and Customer C in the Magnetics segment accounted for 41% and 27%, respectively. For the three months ended September 30, 2025, Customer F in the Materials segment accounted for 10%, and for the nine months ended September 30, 2025, Customer E in the Materials segment accounted for 30%.

Recently Adopted Accounting Pronouncements: There were no accounting pronouncements adopted during the nine months ended September 30, 2026, that had a material impact on the Company’s unaudited Condensed Consolidated Financial Statements and accompanying notes, including the following item below.

In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2024-04, “Induced Conversions of Convertible Debt Instruments” (“ASU 2024-04”), which clarifies the criteria for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion (as opposed to a debt extinguishment). The Company adopted ASU 2024-04 as of January 1, 2026, on a prospective basis.

Recently Issued Accounting Pronouncements: There were no accounting pronouncements issued during the nine months ended September 30, 2026, that had or would be expected to have a material impact on the Company’s unaudited Condensed Consolidated Financial Statements and accompanying notes.

The Company is currently evaluating the effect of adopting previously issued accounting pronouncements, including ASU No. 2025-10, “Government Grants—Accounting for Government Grants Received by Business Entities,” and ASU No. 2024-03, “Income Statement—Reporting Comprehensive Income Expense Disaggregation Disclosures,” on its financial statements and disclosures.

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

NOTE 3—PRICE PROTECTION AGREEMENT

The PPA establishes a price floor for the Company’s NdPr products (e.g., concentrate, oxide and metal) (collectively, “NdPr Products”), which commenced on October 1, 2025 and will continue for approximatelyten years through December 31, 2035. Throughout the PPA’s term, the Company has the right to receive cash from, or the obligation to deliver cash to, the DoW based on (i) its designation of NdPr Products produced and/or sold (the “NdPr Designation”) and (ii) the Benchmark Quarterly Average Volume Weighted Price (as defined in the PPA).

At the conclusion of each quarter, the Company may elect, at its option, any of the following NdPr Designations (without duplication):

•“Stockpile” represents produced, but not yet sold NdPr Product,

•“Affiliate sales” represents internally sold NdPr Product, such as sales from the Materials segment to the Magnetics segment, or

•“Third party sales” represents externally sold NdPr Product.

On a quarterly basis, the DoW will pay the Company an amount per NdPr kilogram equivalent included in the NdPr Products equal to the shortfall between $110 and the Benchmark Quarterly Average Volume Weighted Price. Once the 10X Facility reaches full production capacity, and the Benchmark Quarterly Average Volume Weighted Price exceeds $110, the Company will pay the DoW 30% of the amount by which the Benchmark Quarterly Average Volume Weighted Price exceeds $110.

For the three and nine months ended September 30, 2026, the Company recognized $8.1 million and $68.0 million, respectively, in “Price protection agreement income” within the Company’s unaudited Condensed Consolidated Statements of Operations. See Note 13, “Supplemental Balance Sheet Information” for accrued Price protection agreement income amounts within the unaudited Condensed Consolidated Balance Sheets in “Other receivables.”

The right to the price floor protection granted by the DoW under the PPA (the “PPA Upfront Asset”) within the Company’s unaudited Condensed Consolidated Balance Sheets consisted of the following:

Amortization expense related to the PPA Upfront Asset, which was included in “Depreciation, depletion and amortization” within the Company’s unaudited Condensed Consolidated Statements of Operations, was $10.8 million and $32.9 million for the three and nine months ended September 30, 2026, respectively. No such amount was recognized for the three and nine months ended September 30, 2025. No impairment charges were recorded during the three and nine months ended September 30, 2026 and 2025.

NOTE 4—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 and nine months ended September 30, 2026, and 2025. 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 September 30, 2026, 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’s gross realized gains and losses were not material for the three and nine months ended September 30, 2026 and 2025.

The Company’s interest and investment income, which is included in “Other income, net” within the Company’s unaudited Condensed Consolidated Statements of Operations, was as follows:

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

As of September 30, 2026, all outstanding available-for-sale investments, inclusive of certain investments presented as cash equivalents, had contractual maturities within one year and aggregated to a fair value of $1,146.1 million.

NOTE 5—INVENTORIES

The Company’s inventories consisted of the following:

(1)Primarily represents stockpiles of mined ore and bastnaesite concentrate that are not expected to be processed or consumed within the next 12 months. The ore and concentrate amounts were $32.2 million and $51.6 million as of September 30, 2026, respectively, and $24.1 million and $31.7 million as of December 31, 2025, respectively.

During the nine months ended September 30, 2026, and 2025, the Company recorded lower of cost or net realizable value reserves, primarily reflecting adjustments on certain of its non-core products. The changes in these reserves from prior periods are included in “Cost of sales (excluding depreciation, depletion and amortization) (including related party)” within the Company’s unaudited Condensed Consolidated Statements of Operations. For the three and nine months ended September 30, 2026, these changes resulted in a charge of $6.4 million in each period, and for the three and nine months ended September 30, 2025, these changes resulted in a benefit of $0.3 million and a charge of $6.4 million, respectively.

NOTE 6—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 $471.8 million and $118.0 million for the nine months ended September 30, 2026, and 2025, respectively, including amounts not yet paid (see Note 21, “Supplemental Cash Flow Information”) and excluding equipment purchased with promissory notes (see Note 8, “Debt Obligations”). The capitalized expenditures for the nine months ended September 30, 2026 and 2025, related primarily to machinery, equipment and assets under construction to support both the Company’s Independence Facility and 10X Facility, as well as various projects at Mountain Pass, including the HREE Facility (as defined in Note 15, “Government Grants”) and the chlor-alkali facilities.

In April 2026, the Company purchased a 120‑acre site in Northlake, Texas, for approximately $80 million where construction of the 10X Facility is currently underway.

The Company’s depreciation and depletion expenses, net of amounts capitalized into inventory, were as follows:

There wereno property, plant and equipment impairments recognized for the three and nine months ended September 30, 2026 and 2025.

NOTE 7—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 September 30, 2026, 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 September 30, 2026, the credit-adjusted risk-free rate ranged between 6.5% and 8.8% depending on the timing of expected settlement and when the increment was recognized. There were no significant increments or decrements for the three and nine months ended September 30, 2026 and 2025.

The non-current portions of the Company’s asset retirement obligations, which are included in “Other non-current liabilities” within the Company’s unaudited Condensed Consolidated Balance Sheets, were $8.1 million and $7.7 million as of September 30, 2026, and December 31, 2025, respectively. The current portions, which are included in “Other current liabilities” within the Company’s unaudited Condensed Consolidated Balance Sheets, were not material. The total estimated future undiscounted cash flows required to satisfy the Company’s asset retirement obligations were $51.3 million and $51.4 million as of September 30, 2026, and December 31, 2025, respectively.

Environmental Obligations

The Company has certain environmental monitoring and remediation obligations related to the groundwater contamination in and around Mountain Pass. As of September 30, 2026, 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 4.84%. There were no significant changes in the estimated remaining costs for the three and nine months ended September 30, 2026 and 2025.

The total estimated aggregate undiscounted cost of $39.6 million and $40.3 million as of September 30, 2026, and December 31, 2025, respectively, principally related to groundwater monitoring and remediation activities required by state and local agencies. Based on the Company’s estimate of the cost, timing and the assumption that payments are considered to be fixed and reliably determinable, the Company has discounted the liability. The non-current portions of the Company’s environmental obligations, which are included in “Other non-current liabilities” within the Company’s unaudited Condensed Consolidated Balance Sheets, were $18.4 million as of both September 30, 2026, and December 31, 2025. The current portions, which are included in “Other current liabilities” within the Company’s unaudited Condensed Consolidated Balance Sheets, were not material.

Financial Assurances

The Company is required to provide certain government agencies with financial assurances relating to closure and reclamation obligations. As of September 30, 2026, and December 31, 2025, the Company had financial assurance requirements of $46.9 million and $46.2 million, respectively, which were satisfied with surety bonds placed with applicable California state and regional agencies.

NOTE 8—DEBT OBLIGATIONS

The Company’s current and non-current portions of long-term debt were as follows:

Revolving Credit Facility

In August 2025, the Company entered into a credit agreement with JPMorgan Chase Bank, N.A., as administrative agent, and various other lenders, providing a $275.0 million revolving credit facility (the “Revolving Credit Facility”), maturing on August 25, 2030, with a $200.0 million letter of credit facility sublimit (the “Credit Agreement”). As of September 30, 2026, the Company hadno outstanding borrowings under the Revolving Credit Facility, $128.0 million of unused letter of credit capacity, and $203.0 million of remaining borrowing capacity under the Revolving Credit Facility.

Interest rates under the Revolving Credit Facility are variable based on the Secured Overnight Financing Rate (“SOFR”), or at the Company’s option, at a base reference rate equal to the highest of (i) the federal funds rate plus 0.50%, (ii) the rate of interest last quoted by The Wall Street Journal as the “prime rate” in the U.S., (iii) the one-month SOFR rate plus 1.00% or (iv)1.00% (the “Base Rate”), plus, as applicable, a margin ranging from 1.75% to 2.50% per annum for SOFR-based loans and ranging from 0.75% to 1.50% per annum for Base Rate-based loans, in each case, depending on the Company’s total leverage ratio.

The Credit Agreement is subject to financial covenants that are tested at the end of each fiscal quarter. From the inception of the Credit Agreement until the earlier of (i) the fiscal quarter in which Consolidated EBITDA (as calculated and defined in the Credit Agreement) of the Company equals or exceeds $400.0 million for the test period and (ii) the fiscal quarter ending June 30, 2027 (the “Covenant Trigger Event”), the Company must maintain unrestricted cash and Cash Equivalents (as defined in the Credit Agreement, which includes the Company’s short-term investments) of at least $500.0 million. Following the Covenant Trigger Event, the Company is required to maintain a total leverage ratio of less than 4.00:1.00, or 4.50:1.00 for the fiscal quarter of and the three consecutive fiscal quarters following any material acquisition, and a cash interest coverage ratio greater than 3.0:1.0.

The Credit Agreement is guaranteed by the Company and its subsidiaries, subject to certain customary exceptions. Failure to comply with any of the covenants associated with the Credit Agreement could result in a default under its terms. Such a default would permit lenders to accelerate the maturity of the debt and to foreclose upon any collateral securing such debt. The Company was in compliance with the applicable financial covenant contained in the Credit Agreement as of September 30, 2026.

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 was payable on April 1 st and October 1 st of each year, beginning on October 1, 2021.

In March 2024, the Company irrevocably elected to fix the settlement method for all conversions of the 2026 Notes subsequent to the election date, to a combination of cash and shares of the Company’s common stock. As a result, for any conversions of 2026 Notes occurring after the election date, a converting holder would 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.

The 2026 Notes became convertible at the option of the holders beginning on January 1, 2026, through the business day immediately preceding the maturity date, and on April 1, 2026, at the election of their holders, the 2026 Notes were converted upon maturity pursuant to their terms and settled in full. The Company paid the principal amount of $67.5 million in cash and issued 337,741 shares of the Company’s common stock for the conversion consideration in excess of the principal amount.

Convertible Notes due 2030

In March and December 2024, the Company issued $747.5 million and $115.3 million, respectively, for a total of $862.8 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 thereof, 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.

Prior to December 1, 2029, at their election, holders of the 2030 Notes may convert their outstanding notes under the following circumstances: (i) during any calendar quarter commencing with the third quarter of 2024 if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day (the “Stock Price Condition”); (ii) during thefive business day period after anyten consecutive trading day period (the “2030 Notes measurement period”) in which the trading price (as defined in the indenture governing the 2030 Notes) per $1,000 principal amount of 2030 Notes for each trading day of the 2030 Notes measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate on each such trading day; (iii) if the Company calls any or all of the 2030 Notes for redemption, the notes called for redemption may be converted at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date; or (iv) upon the occurrence of specified corporate events set forth in the indenture governing the 2030 Notes. On or after December 1, 2029, and prior to the close of business on the second scheduled trading day immediately preceding the maturity date of the 2030 Notes, holders may convert their outstanding notes at any time, regardless of the foregoing circumstances.

During the quarter ended September 30, 2026, the Stock Price Condition was met. Therefore, the 2030 Notes may be converted at the option of their holders during the three months ending December 31, 2026.

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. The Capped Call Options cover, subject to antidilution 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 intended, subject to the Company’s discretion and depending on whether it elects to exercise its rights under such options, 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. This would apply 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.

Samarium Project Loan

In August 2025, the Company issued a $150.0 million unsecured promissory note to the DoW with a 12-year term, maturing on August 1, 2037 (the “Samarium Project Loan”), which bears interest at a fixed rate of 5.38% per annum, calculated as the 10-year U.S. Treasury constant maturity rate plus 1.00% at the time of funding. Interest on the Samarium Project Loan is payable in cash quarterly in arrears on the 15 th day of each calendar quarter, beginning on October 15, 2025.

Equipment Notes

In December 2024, the Company and Caterpillar Financial Services Corporation entered into an uncommitted credit facility (the “Uncommitted Credit Facility”) with a principal amount of up to $25.0 million, which was subsequently increased to $40.0 million in December 2025. As of September 30, 2026, the Company had $9.7 million of remaining borrowing capacity under the Uncommitted Credit Facility. The promissory notes executed under the Uncommitted Credit Facility to finance new equipment, including trucks and wheel loaders for use at Mountain Pass, have terms between 4 years and 6 years with fixed interest rates between 6.5% and 8.0% per annum. The purchase of 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 September 30, 2026, other than the Credit Agreement, none of the agreements governing the Company’s indebtedness contain financial covenants.

Interest expense, net

Interest expense, net was as follows:

(1)Amounts primarily relate to a significant financing component associated with a long-term customer supply agreement.

The debt issuance costs associated with the 2030 Notes are being amortized to interest expense over their term at an effective interest rate of 3.52%. The 2026 Notes matured on April 1, 2026, and had no remaining unamortized debt issuance costs to be amortized as of this date.

As of September 30, 2026, and December 31, 2025, accrued and unpaid interest pertaining to the Company’s debt obligations was $4.5 million and $10.9 million, respectively, and is included in “Other current liabilities” within the Company’s unaudited Condensed Consolidated Balance Sheets.

NOTE 9—OPERATING LEASES

The Company’s operating leases consist primarily of corporate office space, warehouses, and equipment used in its operations; the Company’s finance leases are not material. The Company’s lease agreements do not contain material residual value guarantees or restrictive covenants. No right-of-use asset impairment charges were recorded during the three and nine months ended September 30, 2026 and 2025.

In July 2025, the Company entered into a magnet offtake agreement with the DoW (the “DoW Offtake Agreement”), which contains an embedded lease. Under this agreement, certain costs related to the development and commissioning of the 10X Facility incurred prior to the date at which the 10X Facility begins operations and is capable of producing any quantity of magnets are reimbursable by the DoW. Reimbursable amounts will be initially deferred as a contract liability and subsequently recognized into revenue as the Company fulfills its obligations under the contract.

As of September 30, 2026, and December 31, 2025, the contract liability for reimbursable amounts, which is included within the unaudited Condensed Consolidated Balance Sheets in non-current “Deferred revenue,” totaled $7.9 million and $2.3 million, respectively. Furthermore, these development and commissioning costs of the 10X Facility subject to reimbursement qualify for capitalization as costs to fulfill a contract with a customer. Accordingly, as of September 30, 2026 and December 31, 2025, the Company capitalized $7.9 million and $2.3 million, respectively, as contract fulfillment costs, which are included within the unaudited Condensed Consolidated Balance Sheets in “Other non-current assets.” These costs will be expensed following the pattern of revenue recognized from the reimbursements under the contract.

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

NOTE 10—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 24.0% and 30.3% for the three and nine months ended September 30, 2026, respectively, as compared to 28.5% and 25.7% for the three and nine months ended September 30, 2025, respectively. During the third quarter of 2026, the Company began applying a valuation allowance to a portion of the deferred tax asset associated with its projected 2026 net operating loss, resulting in a $3.4 million reduction to income tax benefit for the three and nine months ended September 30, 2026.

During the nine months ended September 30, 2026, the Company placed into service certain machinery and equipment at the Independence Facility subject to the Section 48C Qualifying Advanced Energy Project Tax Credit (the “48C Credit”), resulting in a 48C Credit of $8.5 million, net of valuation allowance. The current portion of the 48C Credit, which is included in “Other current liabilities” within the Company’s unaudited Condensed Consolidated Balance Sheets, was not material. The noncurrent portion is included in “Deferred investment tax credit” within the Company’s unaudited Condensed Consolidated Balance Sheets.