The following discussion and analysis of financial condition, results of operations, liquidity and capital resources should be read in conjunction with, and is qualified in its entirety by, the unaudited Condensed Consolidated Financial Statements and the notes thereto included in this Quarterly Report on Form 10-Q (“Form 10-Q”), and the Consolidated Financial Statements and notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in the Annual Report on Form 10-K for the year ended December 31, 2025 (“Form 10-K”). This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. The actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, but not limited to, those set forth under “Part II. Item 1A. Risk Factors” and elsewhere in this Form 10-Q and “Part I. Item 1A. Risk Factors” and elsewhere in our Form 10-K. See also “Cautionary Note Regarding Forward-Looking Statements.”
Business Overview
MP Materials Corp., including its subsidiaries (“we,” “our,” “us” and the “Company”), is the largest producer of rare earth materials in the Western Hemisphere. We own and operate 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, we own and operate a rare earth metal, alloy and magnet manufacturing facility in Fort Worth, Texas (“Independence” or the “Independence Facility”).
Our reportable segments, which are primarily based on our internal organizational structure and types of products, are our two operating segments—Materials and Magnetics.
The Materials segment represents our upstream and midstream operations, which primarily consist of Mountain Pass, a fully integrated mining and refining facility producing refined rare earth oxides (“REO”) and related products. The Materials segment generates revenue primarily from sales of neodymium-praseodymium (“NdPr”) oxide and metal, primarily sold to customers in the United States, Japan, South Korea, and broader Asia. The Materials segment historically generated the majority of its revenue from sales of rare earth concentrate into the Chinese market.
The Magnetics segment represents our downstream magnet manufacturing and related operations, 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 a single customer in the U.S., in the first quarter of 2025, and commenced the manufacturing of neodymium-iron-boron (“NdFeB”) permanent magnets in December 2025.
Certain rare earth elements (“REE”) serve as critical inputs for the rare earth magnets inside the electric motors and generators powering carbon-reducing technologies such as hybrid and electric vehicles (referred to collectively as “xEVs”), advanced electronics, aerospace and defense systems, energy products, robotics and many other high-growth, advanced technologies. Our integrated operations combine low production costs with high environmental standards, thereby restoring American leadership to a critical industry with a strong commitment to sustainability.
Recent Developments
10X Facility
In February 2026, we announced the selection of a 120‑acre site in Northlake, Texas, for our second domestic magnet manufacturing facility (the “10X Facility”), as discussed further below. We closed on the purchase of this land in April 2026 at a cost of approximately $80 million where construction of the 10X Facility is currently underway.
NdPr Offtake Agreement
In February 2026, we entered into an NdPr offtake agreement with a leading U.S. technology and industrial company for the purchase of a significant volume of NdPr products.
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Factors Affecting Our Performance
We believe we are uniquely positioned to capitalize on the trends of electrification and supply chain security, particularly as domestic industrial supply chain initiatives advance. Our continued success depends to a significant extent on our ability to take advantage of the following opportunities and meet the challenges associated with them.
Demand for REE
The drivers for REE demand are a diverse array of growing end markets, including electric mobility; physical AI; industrial, consumer and professional service robotics; renewable power generation; energy-efficient motors, pumps, and compressors; consumer and medical applications; critical defense systems; and catalysts and phosphors.
Throughout 2025, China imposed and expanded export controls and restrictions on certain rare earths and related materials, requiring companies to secure special export licenses and obtain Chinese government approval for exports of products containing even small amounts of Chinese-origin rare earths, among other restrictions. While in November 2025 the U.S. reached a trade and economic deal in which China agreed to suspend implementation of the expanded export controls and to suspend retaliatory tariffs and non-tariff measures imposed since March 2025, these developments have led and continue to lead to several market trends, which may or may not be permanent, including volatility and disruptions in global supply chains, shortages of rare earth elements, potential price volatility, and an increased demand for alternative supply chains outside of China, all of which, if sustained, may have a material impact on the demand for our products.
These developments further catalyzed action by a number of governments and rare earth users to accelerate geographic supply chain diversification for REE products. In particular, the U.S. government has implemented a number of initiatives to restore domestic supply of critical minerals. We believe we are uniquely positioned to benefit from this trend.
Maximizing Upstream and Midstream Production Efficiency
After an initial ramp and optimization period, we have produced at least 40,000 MTs of REO in concentrate each year since 2021, culminating in record production levels exceeding 50,000 MTs. These results were achieved by optimizing the reagent scheme, adjusting process temperatures, improving tailings facility management, and committing to operational excellence. Our initiative to optimize upstream operations has enabled us to attain what we believe to be world-class production cost levels for rare earth concentrate.
In November 2023, we announced our “Upstream 60K” strategy whereby we intend to grow our annual REO Production Volume to approximately 60,000 MTs via investments in further beneficiation capacity and through better usage of lower-grade ore and other underutilized parts of the Mountain Pass ore body.
Midstream operations produce separated REE from our rare earth concentrate. The optimization of our refining capabilities incorporated upgrades and enhancements to the prior facility process flow to produce separated REE at a lower cost while minimizing our impact on the environment. More specifically, we have reintroduced an oxidizing roasting circuit, reoriented portions of the plant process flow, increased product finishing capacity, improved wastewater management, and made other improvements to materials handling and storage. The reintroduction of the oxidizing roasting circuit allows subsequent stages of the production process to occur at lower temperatures, and with lower volumes of materials and reagents, which supports lower operating and maintenance costs and higher uptime than would otherwise be achievable.
The success of our business reflects our ability to continue to manage our costs and drive scale. Our upstream production achievements have provided economies of scale to lower production costs per MT of REO produced in concentrate. Furthermore, our midstream process flow was designed to capitalize on the inherent advantages of the bastnaesite ore at Mountain Pass, which is well-suited to low-cost refining by selectively eliminating the need to carry cerium, a lower-value element, through the separations process. Additionally, our location and integration offer cost and transportation advantages that create efficiencies in production, security of incoming supplies and shipping of our final products.
During the second half of 2023, we began producing separated rare earth products, including NdPr oxide, which represents a majority of the value contained in our concentrate. We continue to expect that it may take many quarters to achieve our designed throughput of NdPr oxide. However, as we increase production over time, we expect to reduce our per-unit production costs. Until such time that we achieve our designed throughputs of separated products, including heavy rare earth elements (“HREE”), we may experience unstable operations and elevated costs of our initial production of such products.
In the second half of 2026, we expect to begin refining HREE with initial production of terbium and dysprosium. As part of our partnership with the United States Department of War (the “DoW”), we have committed to further extend our HREE
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refining capabilities to include the separation of samarium oxide and to recommission the chlor-alkali facilities at Mountain Pass. Additionally, as part of our agreement with Apple Inc. (NASDAQ: AAPL) (“Apple”), we will develop and install scaled magnet recycling capabilities at Mountain Pass with dedicated capacity for both NdPr and heavy rare earth separation.
We currently generate our revenue primarily from our Materials segment, which operates a single site in a single location, and any stoppage in activity, including for reasons outside of our control, could adversely impact our production, results of operations and cash flows.
Development of Our Downstream Manufacturing Capabilities
We are in the final stages of commissioning magnet manufacturing equipment at Independence and continue to develop engineering and manufacturing technology to process NdPr oxide and metal into NdFeB magnets. Our operations also incorporate magnet recycling capabilities. These initiatives are central to our long-term strategy to become a leading, integrated global supplier of rare earth magnets. We believe this vertical integration is a core competitive advantage in the production of a critical industrial output. Furthermore, we expect our downstream manufacturing operations to benefit from geopolitical developments, including initiatives to repatriate critical materials supply chains, including those supported by our agreements with General Motors Company (NYSE: GM) (“GM”), the DoW and Apple.
Our Independence Facility converts NdPr oxide produced at Mountain Pass into permanent magnets and its precursor products, with integrated capabilities to support magnet recycling. Our operations are expected to progress in phases, with magnet production volumes increasing over time as additional capabilities are commissioned and scaled. As part of our partnership with the DoW, we committed to expand capacity of the Independence Facility to a projected 3,000 MTs of magnets annually. Output from the Independence Facility is expected to support a range of end markets, including electric vehicles, robotics, semiconductor manufacturing, clean energy, electronics and defense technologies.
In late 2024, we commissioned electrowinning capabilities at the Independence Facility to produce NdPr metal from NdPr oxide. Additionally, in 2025, we added strip casting capabilities to produce NdFeB alloy flake, a key precursor product that is utilized as the material feedstock for magnet manufacturing. We also began trial production of automotive-grade, sintered NdFeB magnets at our new product introduction (“NPI”) facility within the Independence Facility and recently commenced manufacturing NdFeB magnets on the industrial scale equipment.
In the first quarter of 2025, we commenced sales of magnetic precursor products, primarily NdPr metal. We expect to continue selling magnetic precursor products ahead of fully commissioning our magnet manufacturing capabilities, which commissioning began in late 2025. After the Independence Facility is commissioned and scaled, we expect to primarily sell permanent magnets.
In July 2025, we entered into definitive agreements with the DoW 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. In connection with these agreements, the Company committed to construct the 10X Facility. We expect to invest more than $1.25 billion in this project, which is supported by approximately $200 million of state and local incentive packages, as well as a 10‑year magnet offtake agreement with the DoW. The 10X Facility is expected to begin commissioning in 2028, and once completed and scaled, it will produce an estimated 7,000 metric tons (“MTs”) of magnets per year. When combined with the Independence Facility’s 3,000 MTs per year of magnets, our overall U.S. rare earth magnet production capacity will expand to an estimated 10,000 MTs per year.
While we have grown increasingly confident about our future outlook with the progress made to-date, there are inherent risks in finalizing construction and developing the process technology for magnet manufacturing. For instance, unforeseen delays in construction or the installation of specific equipment may occur, or our products may fail to satisfy customer expectations, which could adversely affect both the amount and timing of our revenue from permanent magnets and precursor products.
Our Mineral Reserves
Our ore body has proven over more than 70 years of operations to be one of the world’s largest and highest-grade rare earth resources. As of December 31, 2025, SRK Consulting (U.S.), Inc., an independent consulting firm that we retained to assess our reserves, estimated total proven and probable reserves of 1.96 million short tons of REO contained in 28.96 million short tons of ore at Mountain Pass, with an average ore grade of 5.89%. These estimates use an estimated economical cut-off grade of 2.50% total rare earth oxide. Based on these estimated reserves and our expected annual production rate of REO upon production ramp-up of our midstream operations, our expected mine life was approximately 28 years as of December 31, 2025.
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Over time, we expect to be able to continue to grow our expected mine life through additional exploratory drilling and improved processing capabilities, which may result in changes to various assumptions underlying our mineral reserve estimate.
Mining activities in the U.S. are heavily regulated, particularly in California. Regulatory changes may make it more challenging for us to access our reserves. In addition, new mineral deposits may be discovered elsewhere, which could make our operations less competitive.
Key Performance Indicators
In evaluating the performance of our Materials segment, we use the key performance indicators (“KPIs”) outlined below. Our calculations of the KPIs presented may differ from similar measures published by other companies in our industry or in other industries. See the “Materials Segment” section below for further discussion of year-over-year changes in KPIs. Since the Magnetics segment only recently commenced production, we have not established any KPIs for its operations.
NdPr Production Volume
We measure our NdPr Production Volume for a given period in MTs, our principal unit of sale for our NdPr separated products. NdPr Production Volume refers to the volume of finished and packaged NdPr oxide produced at Mountain Pass for a given period. NdPr Production Volume is a key indicator of the separating and finishing capacity and efficiency of our midstream operations.
NdPr Sales Volume
Our NdPr Sales Volume for a given period is calculated in MTs and on an NdPr oxide-equivalent basis (as further discussed below). NdPr Sales Volume is a key measure of our ability to convert our production of separated NdPr products into revenue. A unit, or MT, is considered sold once the Materials segment recognizes revenue on its sale, whether sold as NdPr oxide or NdPr metal, as determined in accordance with GAAP. For these NdPr metal sales, the MTs sold and included in NdPr Sales Volume are calculated based on the volume of NdPr oxide used to produce such NdPr metal. In the first quarter of 2026, to better reflect current contractual production yields, we began to utilize an assumed material conversion ratio of 1.25, such that a sale of 100 MTs of NdPr metal would be included in this KPI as 125 MTs of NdPr oxide-equivalent. Prior to this update, we utilized an assumed material conversion ratio of 1.20. The prior period amounts have not been recast. Beginning with the fourth quarter of 2025, NdPr Sales Volume for the Materials segment includes intercompany sales made to the Magnetics segment.
For the Materials segment, we have a mix of contracts with customers where we sell NdPr as oxide or metal. Among other factors, differences between quarterly NdPr Production Volume and NdPr Sales Volume may be caused by the time required for the conversion of NdPr oxide to NdPr metal, including time in-transit, as well as differences in actual versus assumed yields of oxide to metal in the calculation of NdPr Sales Volume.
REO Production Volume
We measure our REO-equivalent production volume for a given period in MTs, our principal unit of sale for our concentrate product historically. This measure refers to the REO content contained in the rare earth concentrate we produce and includes volumes fed into downstream circuits for producing separated rare earth products, a portion of which is also included in our KPI, NdPr Production Volume. REO Production Volume is a key indicator of the mining and processing capacity and efficiency of our upstream operations.
The rare earth concentrate is a processed, concentrated form of our mined rare earth-bearing ores. While our unit of production and sale is a MT of contained REO, the actual weight of our rare earth concentrate is significantly greater, as the concentrate also contains non-REO minerals, loss-on-ignition, and residual moisture from the production process. We target REO content of greater than 60% per dry MT of concentrate (referred to as “REO grade”). The elemental distribution of REO in our concentrate is relatively consistent over time and production lot. We consider this the natural distribution, as it reflects the distribution of elements contained, on average, in our ore.
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Results of Operations
Comparison of the Three and Six Months Ended June 30, 2026 and 2025
Consolidated Results
For the three months ended June 30, Change For the six months ended June 30, Change
(in thousands, except per share data and percentages) 2026 2025 $ % 2026 2025 $ %
Total revenue $ 108,490 $ 57,393 $ 51,097 89 % $ 199,139 $ 118,203 $ 80,936 68 %
Net loss $ (20,296) $ (30,872) $ 10,576 34 % $ (28,264) $ (53,520) $ 25,256 47 %
Basic loss per common share $ (0.11) $ (0.19) $ 0.08 42 % $ (0.16) $ (0.33) $ 0.17 52 %
Diluted loss per common share $ (0.11) $ (0.19) $ 0.08 42 % $ (0.16) $ (0.33) $ 0.17 52 %
Adjusted EBITDA(1) $ 28,493 $ (12,535) $ 41,028 N/M $ 65,103 $ (15,231) $ 80,334 N/M
Adjusted Net Income (Loss)(1) $ (2,089) $ (21,374) $ 19,285 90 % $ 4,563 $ (41,272) $ 45,835 N/M
Adjusted Diluted EPS(1) $ (0.01) $ (0.13) $ 0.12 92 % $ 0.02 $ (0.25) $ 0.27 N/M
N/M = Not meaningful.
(1) Non-GAAP financial measures are defined and reconciled to the most directly comparable GAAP financial measures in the “Non-GAAP Financial Measures” section below.
Revenue
NdPr oxide and metal revenue consists of sales of NdPr oxide and metal produced at Mountain Pass under our distribution agreement with Sumitomo Corporation of Americas, under an offtake agreement with a leading U.S. technology and industrial company entered into during the first quarter of 2026, as well as other sales under individual sales agreements.
Rare earth concentrate revenue consisted of sales of traditional and roasted rare earth concentrate. For the majority of our sales of rare earth concentrate, the sales price was based on a preliminary market price (net of taxes, tariffs, and certain other agreed charges) per MT, with an adjustment for the ultimate market price of the product realized upon final sale, including the impact of changes in exchange rates.
Magnetic precursor products revenue consists of sales of magnetic precursor products, including NdPr metal, produced at the Independence Facility and sold in the U.S. Sales of these products commenced in the first quarter of 2025 pursuant to a long-term supply agreement with GM.
For the three months ended June 30, Change For the six months ended June 30, Change
(in thousands, except percentages) 2026 2025 $ % 2026 2025 $ %
NdPr oxide and metal $ 94,434 $ 25,045 $ 69,389 277 % $ 165,570 $ 49,366 $ 116,204 235 %
Rare earth concentrate — 11,877 (11,877) N/M — 41,992 (41,992) N/M
Magnetic precursor products 16,524 19,861 (3,337) (17) % 37,602 25,052 12,550 50 %
Other revenue 1,195 610 585 96 % 2,236 1,793 443 25 %
Intersegment eliminations(1) (3,663) — (3,663) N/M (6,269) — (6,269) N/M
Total revenue $ 108,490 $ 57,393 $ 51,097 89 % $ 199,139 $ 118,203 $ 80,936 68 %
N/M = Not meaningful.
(1) Represents the elimination of intersegment revenues associated with NdPr oxide sales made by the Materials segment to the Magnetics segment.
Consolidated total revenue increased for the three and six months ended June 30, 2026, as compared to the respective prior year periods, driven by higher revenue in the Materials Segment, due to the continued ramping of production and sales of separated products, as well as higher market prices, partially offset by the cessation of our concentrate sales in July 2025. Additionally, consolidated total revenue for the six months ended June 30, 2026, benefited from an increase in revenue from magnetic precursor products associated with the ramp in production year over year in our Magnetics Segment. See the “Segment Results” section below for further discussion of changes in revenue.
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Price protection agreement income
Our Price Protection Agreement with the DoW (“PPA”) for our NdPr products (e.g., concentrate, oxide and metal) (collectively, “NdPr Products”) commenced on October 1, 2025. Given market prices for NdPr Products during the periods presented below, we recognized price protection agreement income (“PPA Income”) based on the right to receive cash from the DoW for the difference between $110 per kilogram equivalent of NdPr included in the NdPr Products and the Benchmark Quarterly Average Volume Weighted Price (as defined in the PPA) for the NdPr Products produced at Mountain Pass that were sold or produced and stockpiled during the three and six months ended June 30, 2026. A substantial majority of the PPA Income recognized during the three and six months ended June 30, 2026, pertained to sales to third parties.
For the three months ended June 30, Change For the six months ended June 30, Change
(in thousands) 2026 2025 $ % 2026 2025 $ %
Price protection agreement income $ 17,580 $ — $ 17,580 N/M $ 59,853 $ — $ 59,853 N/M
N/M = Not meaningful.
Cost of sales (excluding depreciation, depletion and amortization)
Cost of sales (excluding depreciation, depletion and amortization) (“COS”) consists of mining, processing, separations, and metal making-related labor costs (including wages and salaries, benefits, bonuses, and stock-based compensation); mining, processing, separations, and metal making-related supplies and reagents; parts and labor for the maintenance of our mining fleet and processing and separating facilities; other facilities-related costs (such as property taxes and utilities); packaging materials; and shipping and freight costs.
For the three months ended June 30, Change For the six months ended June 30, Change
(in thousands, except percentages) 2026 2025 $ % 2026 2025 $ %
Cost of sales (excluding depreciation, depletion and amortization) $ 72,292 $ 50,431 $ 21,861 43 % $ 146,537 $ 99,262 $ 47,275 48 %
The increases in COS for the three and six months ended June 30, 2026, were driven by higher sales of NdPr oxide and metal during the current year periods as NdPr Sales Volumes for these periods increased by 127% and 122%, respectively, over the prior year’s respective periods. Furthermore, NdPr oxide and metal per-unit production costs are necessarily higher than those of rare earth concentrate due to the additional processing required. Such costs pertain primarily to chemical reagents, employee labor, maintenance expenses, and consumables. COS for the three and six months ended June 30, 2026, also benefited from a higher Section 45X Advanced Manufacturing Production Credit (the “45X Credit”), which resulted in lower COS year over year of $3.5 million and $7.9 million, respectively, for the three and six months ended June 30, 2026.
As we produce and sell more separated products at Mountain Pass, we expect that COS may continue to increase throughout 2026 even as certain per-unit production efficiencies and economies of scale are expected to be achieved. Accordingly, in future periods, increases in sales of NdPr oxide, metal, and/or heavy rare earths may result in higher year-over-year COS. Additionally, should we further ramp the production of magnetic precursor products as well as magnets at Independence, COS may also increase.
Selling, general and administrative
Selling, general and administrative (“SG&A”) expenses consist primarily of personnel costs (including salaries, benefits, bonuses, and stock-based compensation) of our administrative functions such as executives, accounting and finance, legal, and information technology; professional services (including legal, regulatory, audit and others); software-related costs; certain engineering expenses; insurance, license and permit costs; corporate office lease cost; office supplies; and certain environmental, health and safety expenses.
For the three months ended June 30, Change For the six months ended June 30, Change
(in thousands, except percentages) 2026 2025 $ % 2026 2025 $ %
Selling, general and administrative $ 35,164 $ 27,429 $ 7,735 28 % $ 68,804 $ 51,595 $ 17,209 33 %
The increases in SG&A expenses for the three and six months ended June 30, 2026, as compared to the respective prior year periods, were driven primarily by higher personnel costs, which increased by $7.1 million and $14.3 million, respectively,
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primarily due to the continued growth in our employee headcount to support our downstream expansion, as well as higher stock-based compensation expense, which was impacted by the increased headcount and performance-based stock awards recently granted.
Depreciation, depletion and amortization
Depreciation, depletion and amortization (“DD&A”) primarily consists of depreciation of property, plant and equipment, depletion of mineral rights and beginning with the fourth quarter of 2025, amortization of the right to the price floor protection granted by the DoW under the PPA.
For the three months ended June 30, Change For the six months ended June 30, Change
(in thousands, except percentages) 2026 2025 $ % 2026 2025 $ %
Depreciation, depletion and amortization $ 35,379 $ 20,777 $ 14,602 70 % $ 67,516 $ 42,161 $ 25,355 60 %
The year-over-year increases in DD&A for the three and six months ended June 30, 2026, primarily reflect $10.9 million and $22.1 million, respectively, of amortization related to the price protection agreement upfront asset, with no comparable expense in the respective prior year periods.
Start-up costs
Start-up costs relate to costs associated with restarting an existing facility or commissioning a new facility, circuit or process of our production, manufacturing, or separations facilities prior to the achievement of commercial production, that do not qualify for capitalization. Such costs, which are expensed as incurred, include certain salaries and wages, outside services, parts, raw materials, training, and utilities, among other items, used or consumed directly in these start-up activities.
For the three months ended June 30, Change For the six months ended June 30, Change
(in thousands, except percentages) 2026 2025 $ % 2026 2025 $ %
Start-up costs $ 14,428 $ 761 $ 13,667 N/M $ 20,317 $ 1,737 $ 18,580 N/M
N/M = Not meaningful.
The year-over-year increases in start-up costs for the three and six months ended June 30, 2026, were attributable primarily to the ramp-up of start-up activities for magnet production and chlor-alkali facilities. More specifically, a significant portion of the start-up costs for the three and six months ended June 30, 2026, pertained to non-inventoriable labor and material costs associated with initial production of magnets at Independence. As we continue to ramp up start-up activities related to these and other initiatives, including those associated with our HREE Facility, we expect that start-up costs may continue to increase in future periods before declining once we reach commercial production for these capabilities.
Advanced projects and development
Advanced projects and development consists principally of costs incurred to support growth initiatives, including business and corporate development, as well as costs incurred in connection with research and development of new processes or to significantly enhance our existing processes.
For the three months ended June 30, Change For the six months ended June 30, Change
(in thousands, except percentages) 2026 2025 $ % 2026 2025 $ %
Advanced projects and development $ 1,283 $ 2,496 $ (1,213) (49) % $ 3,188 $ 2,970 $ 218 7 %
The year-over-year decrease in advanced projects and development for the three months ended June 30, 2026, was primarily due to the transaction costs incurred in the prior year period associated with the establishment of our partnership with the DoW.
Other operating costs and expenses (income), net
Other operating costs and expenses (income), net consists primarily of legal settlements, accretion of asset retirement and environmental obligations, gains or losses on disposals of long-lived assets, including demolition costs, and other operating expenses.
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For the three months ended June 30, Change For the six months ended June 30, Change
(in thousands) 2026 2025 $ % 2026 2025 $ %
Other operating costs and expenses (income), net $ (447) $ (619) $ 172 28 % $ 8,781 $ (862) $ 9,643 N/M
N/M = Not meaningful.
The year-over-year increase for the six months ended June 30, 2026, was primarily attributable to an $8.8 million settlement of a construction-related litigation matter. See Note 11, “Commitments and Contingencies,” in the notes to the unaudited Condensed Consolidated Financial Statements for additional details.
Interest expense, net
Interest expense, net principally consists of the expense associated with the 3.00% per annum coupon interest rate and amortization of the debt issuance costs on our 2030 Notes (as defined below), as well as interest expense associated with the Samarium Project Loan (as defined below), offset by interest capitalized to property, plant and equipment.
For the three months ended June 30, Change For the six months ended June 30, Change
(in thousands, except percentages) 2026 2025 $ % 2026 2025 $ %
Interest expense, net $ 9,703 $ 5,414 $ 4,289 79 % $ 19,549 $ 13,029 $ 6,520 50 %
Interest expense, net for the three and six months ended June 30, 2026, increased year over year primarily due to the interest expense associated with the issuance of the Samarium Project Loan in August 2025, partially offset by higher capitalized interest in the current year periods, which has increased as we continue commissioning our magnet manufacturing capabilities at the Independence Facility, have begun construction of our 10X Facility, and continue progressing on various projects at Mountain Pass.
Other income, net
Other income, net consists of interest and investment income and non-operating gains or losses. Interest and investment income is principally generated from accretion of the discount on such investments.
For the three months ended June 30, Change For the six months ended June 30, Change
(in thousands, except percentages) 2026 2025 $ % 2026 2025 $ %
Other income, net $ 12,397 $ 6,572 $ 5,825 89 % $ 32,723 $ 21,790 $ 10,933 50 %
Other income, net for the three and six months ended June 30, 2026, increased year over year primarily as a result of $5.5 million and $12.9 million, respectively, of higher interest and investment income earned on our short-term investments and interest-bearing demand deposit accounts, driven by the increase in our short-term investments balance as a result of the funds received as part of our partnership with the DoW (the “DoW Transactions”) as well as an offering of shares of our common stock in 2025.
Income tax benefit
Income tax expense or benefit consists of an estimate of U.S. federal and state income taxes in the jurisdictions in which we conduct business, adjusted for federal, state and local allowable income tax benefits, the effect of permanent differences and any valuation allowance against deferred tax assets.
For the three months ended June 30, Change For the six months ended June 30, Change
(in thousands, except percentages) 2026 2025 $ % 2026 2025 $ %
Loss before income taxes $ (29,335) $ (42,724) $ 13,389 31 % $ (42,977) $ (69,899) $ 26,922 39 %
Income tax benefit $ 9,039 $ 11,852 $ (2,813) (24) % $ 14,713 $ 16,379 $ (1,666) (10) %
Effective tax rate 30.8 % 27.7 % 34.2 % 23.4 %
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The effective tax rate for the three and six months ended June 30, 2026, differed from the statutory tax rate of 21% primarily due to the 45X Credit and excess tax benefits associated with stock-based compensation, offset by a deduction limitation on officers’ compensation. The effective tax rate for the three and six months ended June 30, 2025, differed from the statutory tax rate of 21% primarily due to the 45X Credit, percentage depletion, and state income tax benefit, offset by a deduction limitation on officers’ compensation and a valuation allowance on California Competes Tax Credits. For additional information on the 45X Credit, see Note 15, “Government Grants,” in the notes to the unaudited Condensed Consolidated Financial Statements.
Segment Results
Materials Segment
The Materials segment operates Mountain Pass, which produces refined REO and related products as well as, historically, rare earth concentrate products. The Materials segment operating results include intercompany sales made by the Materials segment to the Magnetics segment.
KPIs
For the three months ended June 30, Change For the six months ended June 30, Change
(in whole units, except percentages) 2026 2025 Unit % 2026 2025 Unit %
Separated NdPr products(1)
NdPr Production Volume (MTs) 840 597 243 41 % 1,757 1,160 597 51 %
NdPr Sales Volume (MTs) 1,006 443 563 127 % 2,012 907 1,105 122 %
Rare earth concentrate(1)
REO Production Volume (MTs) 11,072 13,145 (2,073) (16) % 24,055 25,358 (1,303) (5) %
(1) See the “Key Performance Indicators” section above for further discussion of the definitions of our KPIs.
Revenue, PPA Income, and Segment Adjusted EBITDA
For the three months ended June 30, Change For the six months ended June 30, Change
(in thousands, except percentages) 2026 2025 $ % 2026 2025 $ %
Revenue:
NdPr oxide and metal $ 94,434 $ 25,045 $ 69,389 277 % $ 165,570 $ 49,366 116,204 235 %
Rare earth concentrate — 11,877 (11,877) N/M — 41,992 $ (41,992) N/M
Other revenue 1,195 610 585 96 % 2,236 1,793 443 25 %
Total revenue $ 95,629 $ 37,532 $ 58,097 155 % $ 167,806 $ 93,151 $ 74,655 80 %
Price protection agreement income $ 17,580 $ — $ 17,580 N/M $ 59,853 $ — $ 59,853 N/M
Segment Adjusted EBITDA(1) $ 32,505 $ (12,678) $ 45,183 N/M $ 69,237 $ (8,920) $ 78,157 N/M
N/M = Not meaningful.
(1) See Note 20, “Segment Reporting,” in the notes to the unaudited Condensed Consolidated Financial Statements for additional information on the calculation of Segment Adjusted EBITDA.
The increases in NdPr oxide and metal revenue for the three and six months ended June 30, 2026, as compared to the respective prior year periods, were primarily driven by higher market prices, as well as higher NdPr Sales Volume, which increased by 127% and 122%, respectively, as a result of continuing to ramp our production of separated products. The year-over-year decreases in rare earth concentrate revenue for the three and six months ended June 30, 2026, were driven by the July 2025 cessation of all sales to customers in China.
The increases in Materials Segment Adjusted EBITDA for the three and six months ended June 30, 2026, when compared to the respective prior year periods, were driven primarily by the increases in total revenue, as discussed above, as well as the PPA Income. These increases were netted against higher segment cost of sales (excluding depreciation, depletion and amortization and stock-based compensation expense), which increased year over year by $29.1 million and $51.4 million, respectively, driven primarily by the year-over-year increases in NdPr Sales Volume.
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Magnetics Segment
The Magnetics segment includes (i) the Independence Facility, where we produce and sell magnetic precursor products and commenced manufacturing NdFeB permanent magnets in December 2025 and (ii) the 10X Facility, which is currently under construction.
Revenue and Segment Adjusted EBITDA
For the three months ended June 30, Change For the six months ended June 30, Change
(in thousands, except percentages) 2026 2025 $ % 2026 2025 $ %
Revenue:
Magnetic precursor products $ 16,524 $ 19,861 $ (3,337) (17) % $ 37,602 $ 25,052 $ 12,550 50 %
Segment Adjusted EBITDA(1) $ 7,532 $ 8,089 $ (557) (7) % $ 17,124 $ 8,582 $ 8,542 100 %
(1) See Note 20, “Segment Reporting,” in the notes to the unaudited Condensed Consolidated Financial Statements for additional information on the calculation of Segment Adjusted EBITDA.
The increase in the production of magnetic precursor products at the Independence Facility for the six months ended June 30, 2026 drove both the higher sales of magnetic precursor products recognized in the current period under the long-term supply agreement with GM, as well as the year-over-year increase in Magnetics Segment Adjusted EBITDA. Revenue from magnetic precursor products decreased for the three months ended June 30, 2026, primarily due to the start-up of magnet production and its impact on the pricing mechanism for those products, which resulted in a proportionally lower amount of costs being allocated to magnetic precursor products rather than initial magnet products. We continue to expect that the historical trend of Magnetics revenue and Segment Adjusted EBITDA will be impacted by the volumes of precursor products produced and sold, and in the future, permanent magnets.
Under our long-term supply agreement with GM, as of June 30, 2026, we collected all required prepayments for the sale of magnetic precursor products (i.e., NdPr metal) totaling $150.0 million. As of this same date, we had sold $104.5 million of magnetic precursor products to GM and remain obligated to transfer the remaining $45.5 million, which we anticipate will be satisfied within one year after June 30, 2026. Upon fulfilling our remaining commitment, we do not anticipate additional sales of magnetic precursor products to GM. However, we currently anticipate that we will begin sales of finished magnets to GM in 2026, prior to fulfilling our remaining commitment regarding magnetic precursor products.
Corporate Expenses and Other
Corporate expenses and other is primarily comprised of the operating results of other business activities that exclude our Materials and Magnetics segments and include costs incurred at the corporate level that are not allocated to the operating segments, specifically relating to executive compensation, investor relations, other corporate costs, and the remaining unallocated costs for shared service functions such as legal, information technology, human resources, finance and accounting and supply chain. Corporate expenses and other excludes stock-based compensation expense.
For the three months ended June 30, Change For the six months ended June 30, Change
(in thousands, except percentages) 2026 2025 $ % 2026 2025 $ %
Corporate expenses and other $ 10,983 $ 7,946 $ 3,037 38 % $ 20,570 $ 14,893 $ 5,677 38 %
The increases in corporate expenses and other for the three and six months ended June 30, 2026, as compared to the respective prior year periods, were driven primarily by higher personnel costs (other than stock-based compensation expense) related to administrative personnel, professional service fees, as well as expenses related to corporate travel.
Liquidity and Capital Resources
Liquidity refers to our ability to generate sufficient cash flows to meet the cash requirements of our business operations, including working capital and capital expenditure needs, contractual obligations, debt service and other commitments. In addition to net cash from operating activities, which includes advanced payments from customers for future goods and services, our principal sources of liquidity have been issuances of long-term debt and offerings of shares of our common stock, most recently in July 2025, and the Series A Cumulative Perpetual Convertible Preferred Stock (the “Series A Preferred Stock”) issued in July 2025 as part of the DoW Transactions. As of June 30, 2026, we had $1.5 billion of cash, cash equivalents and
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short-term investments and $1.0 billion of principal amount of long-term debt and equipment notes, including $5.1 million classified as current.
Our results of operations and cash flows are significantly impacted by the market prices of rare earth products. Uncertainty continues to exist as to the market price of rare earth products primarily due to actual or perceived concerns over increases in the supply of and/or decreases in demand for rare earth products as well as global economic conditions. However, with the commencement of the PPA on October 1, 2025, and starting with the fourth quarter of 2025, this negative impact was significantly reduced as the PPA began to provide us with pricing stability, including on stockpiled inventory.
While the DoW Transactions, together with our supply agreements with GM and Apple, provide a measure of certainty with respect to both near- and longer-term demand for our products and related revenues, there are still significant factors that could negatively impact our liquidity, particularly in the longer-term, many of which remain largely uncertain and dependent on future developments that cannot be accurately predicted at this time, such as: our ability to accelerate our downstream operations and expansion, achieve our business milestones, and perform the obligations under our customer supply agreements, our ability and that of the U.S. Government to perform our respective obligations under the definitive agreements with the DoW, as well as further changes in trade policies in the United States, China or other countries, including the implementation of new tariffs, increases in or reductions of existing tariffs, or the taking of other actions.
Our current working capital needs relate mainly to our mining, beneficiation, and separation operations, as well as our magnet manufacturing activities. These needs have increased materially in recent years as we have ramped up the production and sales of separated rare earth products. In addition, they have also increased as a result of the DoW Transactions and our agreement with Apple. Furthermore, we expect working capital requirements to continue increasing in 2026 and beyond as we scale separated rare earth production at Mountain Pass and further advance our downstream magnetics operations and initiatives at Independence, and in the future, the 10X Facility. This includes the production and sales of magnetic precursor products, the commissioning of our magnet manufacturing capabilities, as well as a build-up of raw materials and parts necessary to support these initiatives. We believe that our cash flows from operations and cash on hand are adequate to meet our liquidity requirements for the foreseeable future.
The completion of our mission to become a fully integrated domestic magnetics producer is expected to be capital intensive. Our principal capital expenditure requirements relate mainly to further investing in Mountain Pass, including the development of our facility to process HREE at Mountain Pass (the “HREE Facility”), recommissioning the chlor-alkali facilities, development of recycling capabilities, Upstream 60K, and other growth and investment projects, completing the commissioning of our magnet manufacturing capabilities at Independence, construction of the 10X Facility, as well as periodic repairs and maintenance costs. We expect to spend between $500 million and $600 million of capital costs in 2026 (net of any proceeds from government awards received). Our future capital requirements will also depend on several other factors, including market conditions, de-bottlenecking initiatives, decisions regarding downstream production capability, and potential acquisitions.
Our estimated costs or estimated time to complete and commission these projects may increase, potentially significantly, due to factors outside of our control. While we believe that we have sufficient cash resources to fund these initiatives and operating working capital in the near term, we cannot assure this. If our available resources prove inadequate to fund our plans or commitments, we may be forced to revise our strategy and business plans or could be required, or elect, to seek additional funding through public or private equity or debt financings; however, such funding may not be available on terms acceptable to us, if at all. Any delays in our ongoing capital projects or substantial cost increases, including construction costs and related materials costs related to their execution, could significantly impact our ability to maximize our revenue opportunities and adversely impact our business and cash flows.
Debt and Other Long-Term Obligations
Revolving Credit Facility: In August 2025, we 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 June 30, 2026, we had no 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 our 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 our total leverage ratio.
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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 the fiscal quarter in which our Consolidated EBITDA (as calculated and defined in the Credit Agreement) equals or exceeds $400.0 million for the test period and the fiscal quarter ending June 30, 2027 (the “Covenant Trigger Event”), we must maintain unrestricted cash and cash equivalents of at least $500.0 million. Following the Covenant Trigger Event, we are 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 us and our 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. We are in compliance with the applicable financial covenant contained in the Credit Agreement as of June 30, 2026.
2026 Notes: In March 2021, we 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 1st and October 1st of each year, beginning on October 1, 2021.
In March 2024, we 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 our 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 our 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, we could have elected to settle the 2026 Notes in cash, shares of our 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. We paid the principal amount of $67.5 million in cash and issued 337,741 shares of our common stock for the conversion consideration in excess of the principal amount.
2030 Notes: In March 2024, we 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 1st and September 1st of each year, beginning on September 1, 2024.
The 2030 Notes are convertible into cash, shares of our common stock or a combination thereof, at our 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 our 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 the five business day period after any ten 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 our common stock and the conversion rate on each such trading day; (iii) if we call 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 June 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 September 30, 2026.
We have 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.
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Capped Call Options: In March 2024, in connection with the offering of the 2030 Notes, we 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 our 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 our discretion and depending on whether we elect to exercise our rights under such options, to reduce the potential dilution to our common stock upon conversion of the 2030 Notes and/or offset cash payments we are 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 our 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 our common stock.
Samarium Project Loan: In August 2025, we 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 15th day of each calendar quarter, beginning on October 15, 2025.
Equipment Notes: In December 2024, we 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. We executed promissory notes under the Uncommitted Credit Facility to finance new equipment, including trucks and wheel loaders, for use at Mountain Pass. As of June 30, 2026, we had $10.9 million of remaining borrowing capacity under the Uncommitted Credit Facility. Our equipment notes, which are secured by the purchased equipment, had $29.1 million in principal outstanding as of June 30, 2026.
See Note 8, “Debt Obligations,” in the notes to the unaudited Condensed Consolidated Financial Statements for further information on our debt obligations.
Leases: We have lease arrangements for certain equipment and facilities, including office space, warehouses, and equipment used in our operations. As of June 30, 2026, we had future expected lease payment obligations totaling $22.2 million, with $4.9 million due within the next 12 months. Our finance leases were not material. See Note 9, “Operating Leases,” in the notes to the unaudited Condensed Consolidated Financial Statements for further information.
Asset Retirement and Environmental Obligations: See Note 7, “Asset Retirement and Environmental Obligations,” in the notes to the unaudited Condensed Consolidated Financial Statements for our estimated cash requirements to settle asset retirement and environmental obligations.
Cash Flows
The following table summarizes our cash flows:
For the six months ended June 30, Change
(in thousands, except percentages) 2026 2025 $ %
Net cash provided by (used in):
Operating activities $ 4,939 $ (66,853) $ 71,792 N/M
Investing activities $ (654,760) $ 53,977 $ (708,737) N/M
Financing activities $ (87,922) $ (7,734) $ (80,188) N/M
N/M = Not meaningful.
Net Cash Provided by (Used in) Operating Activities: Net cash provided by operating activities was $4.9 million for the six months ended June 30, 2026, as compared to the net cash used in operating activities of $66.9 million in the prior year period, driven primarily by the increase in product sales, as well as the $93.3 million received from the DoW for the PPA Income recognized in the fourth quarter of 2025 and the first quarter of 2026, with no comparable cash inflow in the prior year period. Additionally, we received $19.0 million related to the 45X Credit claimed on our 2024 federal tax return during the six months ended June 30, 2026. Offsetting these items was the recognition of $50.0 million of deferred revenue related to a prepayment for magnetic precursor products in the prior year period, with no comparable cash inflows in the current year period.
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Net Cash Provided by (Used in) Investing Activities: Net cash used in investing activities was $654.8 million for the six months ended June 30, 2026, as compared to the net cash provided by investing activities of $54.0 million in the prior year period, driven primarily by higher purchases of short-term investments in the current year period, offset partially by higher cash receipts from sales and maturities of short-term investments in the current year period, resulting in a net increase of cash used in investing activities of $434.6 million. Furthermore, additions to property, plant and equipment increased for the six months ended June 30, 2026, by $248.2 million when compared to the prior year period, and related primarily to (i) an increase in construction spend on certain projects, such as the HREE Facility, the expansion of the Independence Facility, (ii) a portion of an arbitration award payment that was made in the second quarter of 2026 that pertained directly to the cost of the constructed assets, and (iii) initial purchases for the 10X Facility, including a purchase of land for approximately $80 million in April 2026.
Net Cash Used in Financing Activities: Net cash used in financing activities increased by $80.2 million for the six months ended June 30, 2026, as compared to the prior year period, driven primarily by the principal repayment to settle in full our 2026 Notes in the second quarter of 2026, as well as tax withholding on stock-based awards.
Non-GAAP Financial Measures
We present Adjusted EBITDA, Adjusted Net Income (Loss), Adjusted Diluted EPS, and Free Cash Flow, which are non-GAAP financial measures that we use to supplement our results presented in accordance with GAAP. These measures may be similar to measures reported by other companies in our industry and are regularly used by securities analysts and investors to measure companies’ financial performance. Adjusted EBITDA, Adjusted Net Income (Loss), Adjusted Diluted EPS, and Free Cash Flow are not intended to be substitutes for any GAAP financial measures and, as calculated, may not be comparable to other similarly titled measures of performance or liquidity of other companies within our industry or in other industries.
Adjusted EBITDA
We define Adjusted EBITDA as our GAAP net income or loss before interest expense, net; income tax expense or benefit; and depreciation, depletion and amortization; further adjusted to eliminate the impact of stock-based compensation expense; initial start-up costs; transaction-related and other costs; accretion of asset retirement and environmental obligations; gain or loss on disposals of long-lived assets; other income or loss; and other items that we do not consider representative of our underlying operations. We present Adjusted EBITDA because it is used by management to evaluate our underlying operating and financial performance and trends. Adjusted EBITDA excludes certain expenses that are required in accordance with GAAP because they are non-recurring, non-cash or are not related to our underlying business performance. This non-GAAP financial measure is intended to supplement our GAAP results and should not be used as a substitute for financial measures presented in accordance with GAAP.
The following table presents a reconciliation of our Adjusted EBITDA, which is a non-GAAP financial measure, to our net income or loss, which is determined in accordance with GAAP:
For the three months ended June 30, For the six months ended June 30,
(in thousands) 2026 2025 2026 2025
Net loss $ (20,296) $ (30,872) $ (28,264) $ (53,520)
Adjusted for:
Depreciation, depletion and amortization 35,379 20,777 67,516 42,161
Interest expense, net 9,703 5,414 19,549 13,029
Income tax benefit (9,039) (11,852) (14,713) (16,379)
Stock-based compensation expense(1) 11,287 5,427 24,154 12,780
Initial start-up costs(2) 13,588 634 18,441 1,406
Transaction-related and other costs(3) (285) 5,128 10,204 7,944
Accretion of asset retirement and environmental obligations(4) 385 372 771 745
Loss (gain) on disposals of long-lived assets, net(4) 168 (991) 168 (1,607)
Other income, net (12,397) (6,572) (32,723) (21,790)
Adjusted EBITDA $ 28,493 $ (12,535) $ 65,103 $ (15,231)
(1)Principally included in “Selling, general and administrative” within our unaudited Condensed Consolidated Statements of Operations.
(2)Included in “Start-up costs” within our unaudited Condensed Consolidated Statements of Operations and excludes any applicable stock-based compensation, which is included in the “Stock-based compensation expense” line above. Primarily relates to certain costs incurred in connection with
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the commissioning and starting up of our initial magnet-making capabilities at the Independence Facility prior to the achievement of commercial production.
(3)Pertains to legal, consulting, and advisory services, and other costs associated with specific matters or transactions, including litigation matters, potential acquisitions, mergers, or other investments. For the three and six months ended June 30, 2026, amount is principally included in “Other operating costs and expenses (income), net” within our unaudited Condensed Consolidated Statements of Operations. The six months ended June 30, 2026, includes $8.8 million related to the settlement of a construction-related litigation matter. For the three and six months ended June 30, 2025, amount is principally included in “Selling, general and administrative” within our unaudited Condensed Consolidated Statements of Operations. The three and six months ended June 30, 2025, include $1.8 million of transaction costs to establish our partnership with the DoW.
(4)Included in “Other operating costs and expenses (income), net” within our unaudited Condensed Consolidated Statements of Operations.
Adjusted Net Income (Loss) and Adjusted Diluted EPS
We calculate Adjusted Net Income (Loss) as our GAAP net income or loss excluding the impact of stock-based compensation expense; initial start-up costs; transaction-related and other costs; gain or loss on disposals of long-lived assets; change in fair value of derivative instruments; and other items that we do not consider representative of our underlying operations; adjusted to give effect to the income tax impact of such adjustments. We calculate Adjusted Diluted EPS as our GAAP diluted earnings or loss per common share, excluding the per-share impact of each adjusting item described in the previous sentence (the numerator) divided by the adjusted diluted weighted-average shares outstanding (the denominator).
Adjusted Net Income (Loss) and Adjusted Diluted EPS exclude certain expenses that are required in accordance with GAAP because they are non-recurring, non-cash, or not related to our underlying business performance. To calculate the income tax impact of such adjustments on a year-to-date basis, we utilize an effective tax rate equal to our income tax expense or benefit excluding material discrete costs and benefits, with any impacts of changes in effective tax rate being recognized in the current period. We present Adjusted Net Income (Loss) and Adjusted Diluted EPS because it is used by management to evaluate our underlying operating and financial performance and trends. These non-GAAP financial measures are intended to supplement our GAAP results and should not be used as a substitute for financial measures presented in accordance with GAAP.
The following table presents a reconciliation of our Adjusted Net Income (Loss), which is a non-GAAP financial measure, to our net income or loss, which is determined in accordance with GAAP:
For the three months ended June 30, For the six months ended June 30,
(in thousands) 2026 2025 2026 2025
Net loss $ (20,296) $ (30,872) $ (28,264) $ (53,520)
Adjusted for:
Stock-based compensation expense(1) 11,287 5,427 24,154 12,780
Initial start-up costs(2) 13,588 634 18,441 1,406
Transaction-related and other costs(3) (285) 5,128 10,204 7,944
Loss (gain) on disposals of long-lived assets, net(4) 168 (991) 168 (1,607)
Change in fair value of derivative instrument(5) 1,223 2,529 (2,875) (4,468)
Tax impact of adjustments above(6) (7,774) (3,229) (17,265) (3,807)
Adjusted Net Income (Loss) $ (2,089) $ (21,374) $ 4,563 $ (41,272)
(1)Principally included in “Selling, general and administrative” within our unaudited Condensed Consolidated Statements of Operations.
(2)Included in “Start-up costs” within our unaudited Condensed Consolidated Statements of Operations and excludes any applicable stock-based compensation, which is included in the “Stock-based compensation expense” line above. Primarily relates to certain costs incurred in connection with the commissioning and starting up of our initial magnet-making capabilities at the Independence Facility prior to the achievement of commercial production.
(3)Pertains to legal, consulting, and advisory services, and other costs associated with specific matters or transactions, including litigation matters, potential acquisitions, mergers, or other investments. For the three and six months ended June 30, 2026, amount is principally included in “Other operating costs and expenses (income), net” within our unaudited Condensed Consolidated Statements of Operations. The six months ended June 30, 2026, includes $8.8 million related to the settlement of a construction-related litigation matter. For the three and six months ended June 30, 2025, amount is principally included in “Selling, general and administrative” within our unaudited Condensed Consolidated Statements of Operations. The three and six months ended June 30, 2025, include $1.8 million of transaction costs to establish our partnership with the DoW.
(4)Included in “Other operating costs and expenses (income), net” within our unaudited Condensed Consolidated Statements of Operations.
(5)Included in “Other income, net” within our unaudited Condensed Consolidated Statements of Operations.
(6)Tax impact of adjustments is calculated using an adjusted effective tax rate, which excludes the impact of discrete tax costs and benefits, applied to each adjustment. The adjusted effective tax rates were 29.9%, 34.5%, 25.4% and 23.7% for the three and six months ended June 30, 2026 and 2025, respectively.
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The following table presents a reconciliation of our Adjusted Diluted EPS, which is a non-GAAP financial measure, to our diluted earnings or loss per common share, which is determined in accordance with GAAP:
For the three months ended June 30, For the six months ended June 30,
2026 2025 2026 2025
Diluted loss per common share $ (0.11) $ (0.19) $ (0.16) $ (0.33)
Adjusted for:
Stock-based compensation expense 0.06 0.04 0.13 0.08
Initial start-up costs 0.08 — 0.10 0.01
Transaction-related and other costs — 0.03 0.05 0.05
Loss (gain) on disposals of long-lived assets, net — (0.01) — (0.01)
Change in fair value of derivative instrument 0.01 0.02 (0.01) (0.03)
Tax impact of adjustments above(1) (0.05) (0.02) (0.09) (0.02)
Adjusted Diluted EPS $ (0.01) $ (0.13) $ 0.02 $ (0.25)
Diluted weighted-average shares outstanding 178,409,085 163,834,693 178,215,393 163,799,713
Assumed conversion of Series A Preferred Stock(2) — — 13,320,013 —
Assumed conversion of Warrant(2) — — 5,625,340 —
Assumed conversion of 2026 Notes(2) — — 201,759 —
Assumed conversion of restricted stock units(2) — — 1,034,255 —
Assumed conversion of performance stock units(2) — — 513,241 —
Adjusted diluted weighted-average shares outstanding 178,409,085 163,834,693 198,910,001 163,799,713
(1)Tax impact of adjustments is calculated using an adjusted effective tax rate, which excludes the impact of discrete tax costs and benefits, applied to each adjustment. The adjusted effective tax rates were 29.9%, 34.5%, 25.4% and 23.7% for the three and six months ended June 30, 2026 and 2025, respectively.
(2)For the six months ended June 30, 2026, these shares were antidilutive for GAAP purposes. For purposes of calculating Adjusted Diluted EPS, we have added back the assumed conversion of these shares since they would not be antidilutive when using Adjusted Net Income as the numerator in the calculation of Adjusted Diluted EPS.
Free Cash Flow
We calculate Free Cash Flow as net cash provided by or used in operating activities less additions to property, plant and equipment, net of proceeds from government awards used for construction. We believe Free Cash Flow is useful for comparing our ability to generate cash with that of our peers. The presentation of Free Cash Flow is not meant to be considered in isolation or as an alternative to cash flows from operating activities and does not necessarily indicate whether cash flows will be sufficient to fund cash needs.
The following table presents a reconciliation of our Free Cash Flow, which is a non-GAAP financial measure, to our net cash provided by (used in) operating activities, which is determined in accordance with GAAP:
For the six months ended June 30,
(in thousands) 2026 2025
Net cash provided by (used in) operating activities $ 4,939 $ (66,853)
Additions to property, plant and equipment, net(1) (307,711) (47,273)
Free Cash Flow $ (302,772) $ (114,126)
(1)Amount for the six months ended June 30, 2025, is net of $12.2 million in proceeds from government awards used for construction.
Critical Accounting Estimates
A complete discussion of our critical accounting estimates is included in our Form 10-K for the year ended December 31, 2025. There have been no significant changes in our critical accounting estimates during the three months ended June 30, 2026.
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Recently Adopted and Issued Accounting Pronouncements
Recently adopted and issued accounting pronouncements are described in Note 2, “Significant Accounting Policies,” in the notes to the unaudited Condensed Consolidated Financial Statements.