MP Materials Corp. reported third quarter results with a number of milestones achieved.

“We reached a major milestone by beginning the commissioning of our Stage II assets starting with the concentrate drying and roasting circuits. We also completed the building shell of our Stage III magnetics facility in just seven months,” said MP Materials Chairman and CEO, James H. Litinsky. “In addition to advancing key projects, we grew our engineering and operations organization significantly while maintaining strong concentrate production and sales. We continue to focus on the methodical execution of our strategy to restore the full rare earth supply chain to American shores, which is of tremendous consequence to U.S. competitiveness and to our shareholders.”

The company reported that revenue increased 25 percent year-over-year, driven by an increase in the realized price of rare earth oxide (REO) in concentrate partially offset by lower sales volumes. The 51 percent increase in realized price compared to the third quarter of 2021 was due to higher demand for rare earths driving increased market prices. Total metric tons of REO sold in the quarter declined 17 percent year-over-year mainly due to lower production volumes, which declined due to lower feed grade and mineral recoveries compared to the prior year period, as well as the timing of shipments, which fluctuate quarter-to-quarter but approximate production volumes over time.

Adjusted EBITDA increased 34 percent year-over-year, driven by higher per-unit profitability, partially offset by lower sales volumes and higher personnel and other general and administrative costs, as well as advanced projects and development costs. Per-unit profitability improvements were driven primarily by higher realized prices. Excluding the impact of expenses associated with the Stage II optimization project, third quarter production costs increased slightly year-over-year mainly due to the scale benefits of record production in the prior year period. On a reported basis, production cost of $1,653 per MT of REO increased 14 percent year-over-year, due to the scale benefits mentioned above, as well as the impacts of higher materials, supplies and payroll costs, including an increase in employee headcount to support the expansion of Stage II operations, as well as higher energy costs incurred following the restart of our combined heat and power plant in the current quarter.

Adjusted Net Income increased by 41percent year-over-year to $68.1 million, mainly due to the higher Adjusted EBITDA, increased interest and investment income earned on an increase in short-term investments and a reduction in depreciation as a result of a decrement to our asset retirement obligation as well as a decline in depletion expense resulting from the longer expected useful life of the mine, all in the third quarter of 2022. Adjusted Net Income was negatively impacted by higher income tax expense associated with an increase in pre-tax income. Effective Sept. 30, 2022, the Company no longer excludes depletion expense when calculating and presenting Adjusted Net Income and Adjusted Diluted EPS. For purposes of comparability, we have revised the prior year periods for this change.

Net income increased 48 percent year-over-year, driven by the higher Adjusted Net Income discussed above partially offset by higher non-cash, stock-based compensation expense in the third quarter of 2022.

Diluted earnings per share (EPS) increased 43 percent year-over-year to $0.33, driven by the higher net income discussed above. Adjusted Diluted EPS increased 38 percent to $0.36 due to the increase in Adjusted Net Income discussed above.