Hello and welcome to the MP Materials Q4 Earnings Call. The conference is now open for questions. Also, as a reminder, this conference is being recorded. If you have any objections, please disconnect at this time. With that, I would like to turn the call over to Martin Sheehan, Head of Investor Relations. Mr. Sheehan, you may begin.

Thank you, operator, and good afternoon, everyone. Welcome to the MP Materials Fourth Quarter 2025 Earnings Conference Call. With me today from MP Materials are Jim Litinsky, Founder, Chairman and Chief Executive Officer; Michael Rosenthal, Founder and Chief Operating Officer; and Ryan Corbett, Chief Financial Officer. As a reminder, today's discussion will contain forward-looking statements relating to future events and expectations that are subject to various assumptions and caveats. Factors that may cause the company's actual results to differ materially from these statements are included in today's presentation, earnings release and in our SEC filings. In addition, we have included some non-GAAP financial measures in this presentation. Reconciliations to the most directly comparable GAAP financial measures can be found in today's earnings release and the appendix to today's slide presentation. Any reference in our discussion today to EBITDA means adjusted EBITDA and tons means metric tons. Finally, the earnings release and slide presentation are available on our website. With that, I'll turn the call over to Jim. Jim?

Thank you, Martin, and thanks, everyone, for joining this afternoon. 2025 was a landmark year for MP Materials. From our transformational partnerships with the Department of Defense and Apple to accelerating growth across our businesses and producing magnets at Independence on commercial scale equipment, we are hitting our stride as America's champion and a vertically integrated global leader in rare earth magnetics. Let's turn to Slide 4. I'll start with the Materials segment and production at Mountain Pass. In 2025, we doubled our NdPr oxide output to 2,599 metric tons. Importantly, we exited the year at an annualized run rate of nearly 4,000 metric tons of separated NdPr oxide. Michael will discuss the latest operational achievements and what we are seeing in Q1 in more detail shortly. As production increased, total oxide sales volumes rose 75% to nearly 2,000 metric tons for the year. This ramp in production and sales comes at an especially favorable time, given that the Price Protection Agreement is now in effect and also that NdPr pricing has climbed significantly over the past several weeks. Customer engagement is strengthening materially, and I will come back to that in a moment. We also exceeded 50,000 metric tons of REO produced in 2025, another record annual performance. We believe we remain the world's second largest producer of total REO, underscoring the exceptional quality of the Mountain Pass asset. As upstream and midstream production expands, demand for NdPr oxide remains robust. This strength was reinforced by the recent signing of a significant long-term NdPr offtake agreement with a new strategic customer, one of America's leading technology and industrial companies. We now have direct strategic agreements with four of the world's leading manufacturers across automotive, consumer electronics and physical AI. These partnerships allow us to scale our NdPr business today with a clear pathway to downstream magnetics growth over time. We continue to advance our heavy rare earth separation circuit and remain on track to begin commissioning midyear. As a result, we expect to produce separated heavy rare earths, specifically dysprosium and terbium, late this year. Finally, within the Materials segment, higher realized prices, PPA benefits and continued cost reductions drove a strong return to profitability, generating $40.3 million of adjusted segment EBITDA in the quarter. Turning to Magnetics. We achieved our target of producing our first magnets on commercial scale equipment at our Independence facility late last year and are now optimizing the startup of the production systems. We are beginning qualification of the commercial processes with our foundational customer and expect initial deliveries and revenue in the second half of the year. At the same time, expansion of both recycling and magnet capacity is underway, which resulted in an additional $32 million prepayment from Apple earned in the fourth quarter and received earlier this month. Another significant milestone this month was the selection of Northlake, Texas as the site for our new 10X facility. We secured more than $200 million in incentives and grants to support the build-out. We expect to break ground imminently with engineering and long lead equipment procurement already well underway. In alignment with the Department of Defense, we are advancing this project with urgency and disciplined execution. Ryan will outline our expected 2026 investment profile as we accelerate the 10X build-out. Production of precursor magnetics products, specifically NdPr metal, continued to advance. We set quarterly records for both production and sales volumes while improving yields, enabling us to sustain strong margins. As a result, the Magnetics segment generated $8.4 million of adjusted EBITDA in the quarter, bringing full year Magnetics EBITDA to $26.4 million. Behind the scenes, our Magnetics team continues to execute at a high level, not only in process optimization but in the development of proprietary intellectual property. As one example, our technical team has materially advanced our grain boundary diffusion capabilities, resulting in a magnet formulation and production process that uses approximately 60% less heavy rare earth content than originally anticipated while still meeting the demanding specifications required for high-performance, high-temperature, EV-grade magnets. Given that our original assumptions were already at the low end of industry norms, this represents a meaningful technical achievement. Reductions of this magnitude reflect the strength of our engineering bench and the discipline of our execution. They also enhance our competitive position. Heavy rare earth elements such as dysprosium and terbium primarily enhance coercivity, improving resistance to demagnetization at elevated temperatures. They do not increase magnetic strength or torque density and in higher concentrations, can even reduce energy product. In many physical AI and humanoid robotics applications, operating temperatures are significantly lower than in EV traction motors, meaning performance is driven more by magnet design, light rare earth optimization and motor architecture than by heavy rare earth content. As magnet technology advances and adoption grows, particularly in physical AI, performance and value creation increasingly centers on NdPr. Accordingly, we expect long-term demand growth and pricing strength for NdPr to far outpace that of dysprosium and terbium. With that, let me turn it over to Ryan.

Thanks, Jim. Turning to Slide 5, we present our consolidated financial results for the year. On the left, revenue increased 10% year-over-year, driven primarily by the ramp-up of oxide sales within the Materials segment as well as initial precursor product sales in the Magnetics segment, which were not present in 2024. We also highlight the contribution from the Price Protection Agreement or PPA income, which totaled $51 million in the quarter. When combined with reported revenue, this effectively reflects realization of the full $110 per unit purchase price floor for sold products along with a strong contribution from stockpiled inventory given the pricing environment in the quarter. In the center of the slide, the combination of earned PPA income and profitable magnetic precursor product sales drove a meaningful improvement in adjusted EBITDA relative to 2024. The resulting increase in adjusted EBITDA was the primary contributor to the year-over-year improvement in adjusted diluted earnings per share. Turning to Slide 6. We present the annual operating metrics for the Materials segment with upstream key performance indicators on the left and midstream KPIs on the right. As Jim noted earlier, upstream performance was particularly strong, with another record year of production of more than 50,000 metric tons of REO in concentrate, a 12% increase compared to 2024. Please note that following the elimination of third-party concentrate sales in mid-2025, we will no longer report upstream sales volumes or realized pricing in future periods. On the right side of the slide, you can see the continued ramp-up of NdPr oxide production, which more than doubled year-over-year to approximately 2,599 metric tons. This increase in production drove a 75% year-over-year increase in NdPr oxide sales volumes to just under 2,000 metric tons. With the implementation of the Price Protection Agreement, we view the realized price metric as less meaningful for investors. Note that we provide both NdPr oxide revenue and sales volumes, which allow you to readily calculate an implied realized price by dividing revenue by volume. As a result, we will no longer present realized price as a formal KPI. And lastly, for the year, turning to Slide 7, we present segment-level financial results, with the Materials segment shown on the left and the Magnetics segment on the right. Within the Materials segment, revenue declined year-over-year, primarily reflecting the cessation of concentrate sales to third parties. This was partially offset by a 75% increase in NdPr oxide sales volumes. Despite the decline in reported revenue, the combination of PPA income and improving unit economics on NdPr oxide sales more than offset the elimination of concentrate sales. As a result, 2025 segment adjusted EBITDA for Materials improved meaningfully year-over-year. On the right side of the slide, following the commencement of magnetic precursor product sales in early 2025, the Magnetics segment generated $66.9 million of revenue and $26.4 million of adjusted EBITDA for the year. Turning to Slide 8 and our quarterly consolidated performance. Year-over-year revenue declined modestly, reflecting the cessation of third-party concentrate sales. This was partially offset by continued growth in NdPr oxide sales and the ramp-up of magnetic precursor product sales. As in prior slides, when PPA income is included, the combined figure provides a representative view of revenue that would have been realized at the $110 per kilogram price floor, along with the contribution from stockpiled contained NdPr. In the center of the slide, adjusted EBITDA improved significantly year-over-year, driven primarily by the improved NdPr economics. The improvement in adjusted EBITDA was also the principal contributor to the increase in adjusted diluted earnings per share for the quarter. Turning to Slide 9. In the Materials segment operating metrics, concentrate production totaled 12,080 metric tons, approximately 600 metric tons higher than the prior year period. Sequentially, it is important to note that the fourth quarter of both 2024 and 2025 included planned maintenance turnarounds for the plant, and as a result, production in those quarters is typically lower sequentially. On the right side of the slide, NdPr oxide production increased 74% year-over-year, driven by continued plant optimization and debottlenecking. Volumes were roughly in line with the third quarter, again, reflecting the downtime of the October maintenance shutdown, followed by the acceleration of production volumes as expected. Michael will provide additional color on our quarterly performance along with his expectations for first quarter production and the anticipated timing of achieving our targeted steady-state production rate of approximately 1,500 metric tons per quarter. We are very pleased with the team's progress on these debottlenecking initiatives. As we discussed last quarter, we have been experiencing a modestly extended lag between production and sales, which generally equates to having approximately one quarter of production in the channel. So as our production has grown, we've seen this inventory in the channel also grow in line. This reflects the continued ramp-up of metal production in Southeast Asia, including the deliberate buildup of on-site inventory required to support continuous 24-hour operations at various partners. As a reminder, the metallization process operates at extremely high temperatures exceeding 1,000 degrees Celsius, and maintaining uninterrupted electrolysis is critical to achieving high yields and low unit costs. As a result, building additional inventory is a necessary and intentional step in efficiently scaling production. However, looking ahead, we expect this lag between production and sales to narrow and improve slightly driven by the ongoing ramp of metallization capacity as well as the incremental demand we have seen for oxide, including significant volumes from the new oxide contract that Jim mentioned earlier. With improving prices and our continued sales and metallization progress, we should see a slightly quicker turn of production levels into sales in Q1. We expect a modest amount of these sales to be intercompany to the Magnetics segment, resulting in some revenue and EBITDA eliminations at the corporate level similar to Q4. Finally, turning to Slide 10. We present our quarterly segment financial results. On the left, Materials segment revenue declined year-over-year, reflecting the elimination of third-party concentrate sales. This was partially offset by higher sales volumes and stronger pricing for NdPr oxide and metal products. Consistent with the consolidated results, the improved NdPr unit economics underpinned by PPA income was the primary driver of both the year-over-year and sequential improvement in Materials segment adjusted EBITDA. On the right of the slide, the Magnetics segment delivered record production and sales volumes during the quarter. However, revenue and segment adjusted EBITDA declined slightly sequentially, which actually reflects improved yields and cost efficiencies, as Jim discussed earlier. Before handing the call off to Michael, I did want to go through a few items with you, starting with pricing. As a reminder, we have several different contract structures, including arrangements that are based on trailing average pricing. As a result, when market pricing increases rapidly, the benefit does not immediately flow through to reported revenue, usually manifesting with about a one-quarter to a one-and-a-half-quarter lag. Importantly, for NdPr products that are sold, we generally earn the PPA based on average contract pricing, so we will see the delta between our contract pricing and the price floor generally recognized in the PPA income line in Q1. It is important to highlight, however, that PPA payments for stockpiled NdPr are calculated based on market pricing without a lag. So as we enter the first quarter and market pricing quickly approached the $110 per kilogram level, we will elect not to take PPA payments on certain stockpiled NdPr materials. As a reminder, collecting PPA is at our discretion, so depending on pricing, we will always have the option to hold concentrate and/or refined product inventory and earn PPA payments on those at a later date. Turning to Magnetics. You will see on the balance sheet that we have approximately $74 million of deferred revenue reported within current liabilities. We expect this deferred revenue to be recognized over the next four quarters at EBITDA margins broadly consistent with what you saw in the fourth quarter. As we approach initial magnet deliveries in the second half of the year, we will provide additional details on our expectations for incremental revenue and margin contribution from magnet production. Needless to say, we are incredibly pleased with the progress our Magnetics team has made in meeting our customer obligations. Turning to the balance sheet. Our significant progress in Q4 resulted in a material expansion of our other receivables balance to over $131 million, reflecting cash that we have received in Q1 or will receive later this year, including over $70 million from the U.S. government from tax credits and PPA payments and the $32 million progress payment related to our engagement with Apple. As it relates to investment, as we begin construction of the 10X facility and advance the expansion of Independence, recycling initiatives and heavy rare earth separations, we expect total capital expenditures to be in the range of $500 million to $600 million in 2026, the vast majority of which reflects accelerated 10X investment and other growth initiatives. We believe our strong liquidity position with more than $1.8 billion of cash on hand, together with future cash flow from operations, provides ample capital to execute on these initiatives. Operating cash flow growth will be driven by recent improvements in pricing, the downside protection provided by the PPA, continued growth in NdPr oxide sales and ongoing improvements in unit costs. Collectively, this positions us well to fully fund the significant value-enhancing projects while maintaining a strong balance sheet. Finally, given the additional complexity associated with the Department of Defense contract, we encourage investors to review our Form 10-K filed today, particularly the financial statement footnotes. With that, I'll turn it over to Michael.

Thank you, Ryan. Turning to Slide 11. This shows some of the major intermediate product sets at Mountain Pass and Independence on the way to producing our finished magnets. Moving to our operations. Q4 capped off a monumental year with very satisfying performance as both Mountain Pass and Independence achieved significant production milestones. At Mountain Pass, we had a solid quarter of concentrate production and another strong quarter of NdPr oxide production. As planned, at Independence, we began producing magnets at commercial scale, starting with raw material that was mined and processed at Mountain Pass and metallized and turned into magnets in Texas. The planned October outage impacted production in upstream and midstream operations. As I previewed on our last call, certain additional required maintenance and some rework resulted in an extended return to normal production, and more products diverted to concentrate versus the refinery in the second half of October. But Mountain Pass exited the quarter with strong momentum, with December achieving record NdPr oxide production at a nearly 4,000 metric ton annualized run rate. We continue to see improved uptime in nearly all circuits and are focused on increasing throughput. In the course of this, we have identified and are addressing some expected and some unexpected bottlenecks. There are no showstoppers, and we expect to overcome these issues steadily throughout 2026. Reiterating what I said last quarter, I expect over 20% sequential production growth in Q1, somewhat slower sequential growth for the subsequent two quarters, followed by a reacceleration towards the end of the year, exiting 2026 approaching our target of 500 tons per month of NdPr oxide production or a 6,000 metric ton annualized run rate. As usual, the timing of scheduled maintenance outages, project tie-ins and other upgrades could impact the exact cadence. At the same time, Mountain Pass continues to prepare for future growth. Construction of our heavy rare earth separation circuits dramatically accelerated in the quarter. Remaining work is largely in piping, electrical instrumentation and process automation scopes. We remain on pace to start commissioning and charging the circuits in the middle of the year. We are also wrapping up restoration and enhancements to our idled chlor-alkali facility with the first train expected to begin commissioning in the second quarter. We have already begun pre-commissioning and checkouts of parts of the brine treatment systems. Since the July 2025 agreement signing, our Mountain Pass team has had a highly productive and interactive engagement with Apple on the recycling effort. We have finalized process design and are excited to start the next stage of engineering. In the fourth quarter, our team at Independence grew rapidly while materially deepening its technical expertise. We successfully linked the poles of our integrated magnet offering by commissioning the complete oxide to finished magnet production process. We are now producing on-spec, high-grade magnets on commercial scale equipment from oxides produced at Mountain Pass. To be clear, we have a long and challenging year ahead of us as we work to troubleshoot, optimize, ramp and expand magnet production. However, we are off to a great start. I am extremely proud of our team. During the fourth quarter, we rapidly advanced procurement and design for the expansion of the Independence facility to support our partnership with Apple. And as Jim and Ryan mentioned, the capital projects, operations and engineering teams are also pushing forward the 10X development according to the aggressive schedule we outlined. In Q4, alloy flake production volume and quality improved dramatically. We also commissioned additional powder production, pressing, sintering, GBD and finishing equipment. We are completing the commissioning required to commence the formal Production Part Approval Process, or PPAP, qualification with GM. We expect this to enable commercial sales of magnets to begin in the second half of this year. While the physical process will be locked, our progress and improvements will continue. At the same time, we are working with an expanding list of potential customers on prototype grades and magnets for both Independence and 10X. I would like to thank our teams for their hard, unwavering effort over the past year. With the foundation and momentum we have built, I am looking forward to another year of impressive execution and new milestones in 2026. With that, I will turn it back to Jim.

Thank you, Michael. As we move beyond the quarter, it is worth stepping back to consider the broader environment in which we are operating. Over the past several years, investors have focused on the rapid build-out of AI infrastructure, data centers, GPUs and large language models. That digital infrastructure layer is now scaling rapidly, and competitive intensity across the ecosystem is increasing. At the same time, across Wall Street, we are beginning to see something new, real concern about disruption. AI is not only a growth driver. It is a deflationary force. Entire categories of software and services are now facing uncertainty around pricing power, competitive moats and ultimately, terminal value. In an AI-accelerated world, many business models are being repriced and in some cases, structurally impaired. History suggests that foundational technologies create value in layers. The rise of electricity did not simply power existing systems. It reorganized the physical economy and enabled entirely new industries. AI is likely to follow a similar path. The next phase of AI is physical. Intelligence is moving from the data centers to the edge into robotics, advanced manufacturing, autonomous systems, defense platforms and electrified mobility. When intelligence becomes embodied, it requires actuation and motion. Motion requires magnets. Rare earth magnetics are not an application layer vulnerable to algorithmic substitution. They are physical infrastructure, essential inputs that convert electrical energy into precise, efficient movement. As intelligence scales into the physical economy, magnet intensity per system increases, not decreases, because precision, torque density and energy efficiency become more critical as systems become more autonomous. In this environment, our positioning is fundamentally different from much of the market. While many companies are confronting uncertainty around their long-term economic durability in an AI world, we are building directly into its structural expansion. Our assets are not lines of code subject to rapid substitution. They are scarce, strategic industrial capacity of growing economic and national importance, capacity that becomes more valuable as the physical AI cycle matures. In moments like this, leadership matters; the countries and companies that control essential industrial capacity shape the trajectory of this new era. We have built MP to be that kind of platform—vertically integrated, technically differentiated, scaled and American. We will remain disciplined and focused on execution. Over time, structural demand paired with thoughtful capital allocation is what drives enduring value. That is the work we are doing deliberately, methodically and with a long-term horizon. With that, I turn it back to the team for Q&A.

The conference is now open for questions. Our first question comes from Lawson Winder with Bank of America.

This has been super helpful, and congratulations on first quarter realizing much higher pricing from your PPA agreement. If I could just ask one and a follow-up, so on the OEM can you tell us whether or not it's a U.S.-based auto OEM? Or is it a foreign OEM?

It's Ryan. I think Jim mentioned in his prepared remarks, while we're not going to get into specific details, this is one of America's leading technology companies. I think what this agreement speaks to broadly is what we've been talking about for a long while, which is accelerating demand for NdPr and the value of the platform that we provide being able to be a solutions provider for these types of companies that are looking to transition their supply chain away from China. Being able to address the various points in the supply chain from raw materials all the way through to magnets, I think is super important.

Okay. No, that's fair. I understand the desire not to give too much detail. And then just on the timeline with 10X, I mean, things seem to be moving quickly here. And we originally thought of 2029 as being kind of a target year. I mean is there a possibility to move that forward? Could 10X potentially be developed slightly more quickly than what you guys had originally envisioned?

Well, 10X procurement and long-lead equipment focus and a lot of design and engineering, I mean, that all really started, Lawson, last July. Once we signed the agreement, we got to work building the new team there, coordinating that new team with our existing team and then thinking about all of the equipment and pieces of the process that we could do while we then ran our process for site selection. What I would say is I've directed the team to think of this project—like you've probably heard the term zero-based budgeting. This is a zero-based days project. We are focused on getting this online as quickly as possible. We've said we'll be commissioning that in 2028. We've made a lot of progress. We think it's on track, and we'll just—we'll keep trying to make up as much time as we can as aggressively as we possibly can, and it's going really well.

Our next question comes from George Gianarikas with Canaccord Genuity.

Wanted to ask about this OEM agreement again. In terms of just how you think about the P&L and the economics behind selling oxide directly versus selling magnets, how do you think about just the trade-off between the two?

George, it's Ryan. I think, importantly, the way we're approaching this is effectively Independence at this point is sold out, and I think we've been clear about our strategy around 10X. Given the offtake that's in place there, we have the luxury of continuing to be extremely methodical in how we deliver commercial syndication from that facility. I think importantly, as I mentioned earlier, we are really the only solutions provider to all of these various OEMs that are really accelerating the look at their supply chain and attempting to transition away from China as quickly as possible. And so the fact that we can play a major role there in providing raw materials into their supply chain immediately and capture that value today while opening up some pretty significant opportunities, I would expect, in the downstream, I think, is hugely value accretive to us. And so as I mentioned in my prepared remarks, having an oxide agreement of this scale certainly does accrue to the benefit of the Materials segment in the near term, both from a working capital perspective, the cadence of sales and of course, the value that we'll realize there from our product given the various stages of development that we're in between scaling Mountain Pass to its ultimate full run rate, while we continue to ramp Independence thoughtfully and get 10X online.

Great. And as a follow-up, I'd love to hear Jim opine on what he thinks is happening to NdPr prices in China.

Well, commodities prices, George, as you know, are always tough. I do think that there's a few things. One, the reaction post our deal, I think the Chinese no longer are going to be as mercantilist because there's no point. And then lastly, I would say that NdPr is seeing demand from what we're seeing around physical AI and kind of what I said in the prepared remarks around a lot of excitement around everything that's happening with respect to motion and the economy. And so I think there's—when you think about critical minerals, there's kind of the scarcity. There's two kinds. There's sort of the heavies and some of the other niche metals where they're just scarce, and we need to get more here because the only option is China. But in general, the demand function for those is somewhat consistent or static; whereas with NdPr, especially because of the restrictions around heavies, what we're seeing—and we're seeing this live. I think we can probably give you a couple of live anecdotes where we've actually seen a major consumer of rare earth magnets completely change their spec overnight to essentially eliminate heavies and focus on shifting towards more NdPr. So what we're seeing is we're seeing the traction motor, the EV and hybrid makers focus on trying to maximize NdPr, shift away from heavies. And actually, we're seeing, again, real-time action on that front that is material to that as well as then all of the other use cases around— I think that NdPr will be obviously the key material of physical AI, and so that's the big growth function there. So when you add it all up, I think, one, it's the market reaction to getting a little bit more of a normalized price in NdPr because we're getting closer to market economics. We're still not there. And then it's a function of some of the existing use cases, where we're seeing real-time substitution towards more NdPr. And then it's a lot of the sort of growth excitement that we're seeing around the board. And I would say, I mentioned this—I kind of referenced this in the prepared remarks, but there's sort of a bifurcation happening. I think NdPr is really the growth commodity, and I think—we'll see continued acceleration in NdPr prices. And I would say that the market environment probably currently maybe overweights pricing in the heavies. I think there's going to end up being a number of sources of heavies globally. We're certainly working on that issue quite a bit. As Michael mentioned, we're going to have our heavy separation online this year. And so I think I wouldn't be surprised if that market actually gets quite saturated over the next few years.

Our next question comes from Brian Lee with Goldman Sachs.

I guess maybe just a follow-up to George's question. There's, in the marketplace, lots of focus and I guess, policy-driven, as well, focus on pricing floors and the like. But Jim, in your prepared remarks, you sounded like there's NdPr upside that needs to be better appreciated and more of a focus here, so—and we have seen some strength here recently. Is there maybe a way to think about what that NdPr pricing level or entitlement could be? You talked about kind of a normalized price. Like what could that be? Or what could that range be over time? And is there a trigger or sort of time frame where you think that could ultimately materialize?

I mean that's such a hard thing. I guess the famous expression predictions tell you more about the prognosticator than the future, but I do think with respect to NdPr, I think I've consistently conveyed the view that I think that if we were actually in sort of a real free market in NdPr, you would see prices materially higher, way higher than today, for sure, into the hundreds of dollars just because of the—what is sort of the adequate return on capital required to bring online projects, right? If we—if there wasn't a nonmarket geopolitical actor in setting prices and it was just sort of what would incentivize capital, I think prices would be materially higher. But the realities of the market are the realities in the market. We don't have a—we've made a lot of progress, obviously, given what we've done with the DoD and given some of the market developments, but we're not fully there, obviously. And then I think on the next piece, it actually comes down to sort of the pace of how quickly physical AI matures. I think we—obviously, you saw our announcement today of an enormous strategic partnership on offtake. I've been actually, I would say, really delightfully surprised at how exciting it has been engagement-wise with various companies, many of which are in the physical AI space or intend to be behind the scenes. And so I do think that that is actually going to create another leg upward, but it's hard to know kind of how quickly that stuff will come online. But I would encourage you, you can obviously do the math around do your own curves on what that means for the market and then obviously sort of from a supply chain standpoint, what's going to happen in the West versus what is sort of Chinese supply for China, particularly because I think robotics is something that is really a dual-use technology, so it's going to be really hard for a lot of Western companies to get licenses for rare earth magnets. And we're seeing that in real time, that there's real concern that the biggest, best technology companies in the world that want to compete are concerned that they're not going to get licenses for this. And obviously, that positions us really well.

Yes. Makes a lot of sense. And just a follow-up on some of the policy stuff that's still circling around the space, Project Vault and Section 232 among others. Are there any implications for you? Is it impacting your business discussions with non-DoD offtake parties or maybe even DoD discussions? And would you expect any impact on pricing? I know it's early and uncertain. But maybe any thoughts around how you might stand to benefit there?

Yes. No, it's a good thought. I think first and foremost, obviously, our deal last year kicked off a big change in our industry, and it opened up the capital markets. And it obviously created a bigger window here for us in the West to work on this problem, and it's exciting. But I think what you're seeing is it's not just the DoD, but there are all aspects of the administration, the main verticals, whether it's state or commerce or treasury or interior or energy. Everybody is focused on this issue. It's a key directive from the President. And so I think when you look through a number of these things, you mentioned Vault and there's FORGE and there's a few others, I would say, they're in various stages of development, each of them. Some require allied nations to kind of come to a view and have a plan. Some are things that are coordination between the private and public sector. What I would say is most of those things are, I would say, somewhat early or at least not done. We would expect to be a big part of how things might form in some of those categories that you mentioned. And so my guess is that any of those things will be very good for us, but there's nothing really tangible yet that I could guide you to specifically.

Our next question comes from Corinne Blanchard with Deutsche Bank.

Could you just talk maybe about the CapEx cadence we can expect for the year guided of $500 million to $600 million, mostly related to the 10X but just wondering how that maybe breaks for the quarter? And a similar question for the EBITDA cadence.

Yes. Sure, Corinne. It's Ryan. As we think about the cadence, there will be quite a bit of lumpiness throughout the year within that range given the fact that we'll have some initial capital spend probably early in the year, particularly on the land that we've just acquired that was announced this morning for our site in Northlake, Texas. Throughout the course of the year, obviously, the portion of that CapEx targeted at 10X will start to scale as we begin construction. And then some of the other parts of the business and growth initiatives that we're working on, namely our engagement with Apple, there's capital spend really throughout the year with probably a slight bend towards the tail end of the year as we get that equipment installed and prepared for 2027 commencement of that agreement. As it relates to the EBITDA cadence, obviously, back to Jim's comment on predicting NdPr prices, I think that's probably going to be the biggest driver here. As you're aware, the upside in NdPr pricing, we maintain all of that ahead of the commissioning of 10X. And so if we see prices continue to perform like they have and continue to go up, obviously, that will shift earnings accordingly. As I talked about in my remarks, obviously, our contracts are all generally priced on approximately a quarter, maybe slightly longer lag, and so this will flow through over time. So you won't see today's spot price hit Q1. You'll see it hit Q2. So I would just keep that in mind as you look at the quarterly cadence.

And if I can for a second question. Can you share like how do you view maybe the best way to access the heavy needs beyond what you already have? Like are you thinking about more recycling? Are you thinking about mine expansion and you're looking at all the peer, M&A? Just trying to figure out.

I think, sorry, Corinne, is the question how are we going to grow supply? Or you said more recycling. And what was the other one?

Yes, so especially like on the heavy side, like how do you approach it? Would it be through M&A or like recycling—recycled content?

Thanks, Corinne. This is Michael. We are certainly looking at recycling as an option, and I think as I've said in the past, we think the integrated nature of our site allows us to avail ourselves of a diverse range of feedstocks. With our agreement with the Department of Defense, we have their support to source feedstocks from around the world. So I think there'll be a mix of perhaps traditional recycling and nontraditional feedstocks. But as Jim mentioned, our progress in reducing our heavy need makes us less overall concerned, but we think we will be the largest producer of heavy rare earths in the Western Hemisphere for as long as you can imagine.

Our next question comes from Carlos De Alba with Morgan Stanley.

Congrats on the progress on the different projects. Just on 10X, just a clarification on the CapEx. In the announcement, you had $1.25 billion plus. I mean can you provide maybe a little bit of color on that plus? Maybe dimension that for us. Quantify that for us just on the modeling side. And then I think there was also a comment that on that release, suggesting that 100% of the 10X and Independence light and heavy rare earth needs will come from the company's Mountain Pass operation. So that means that you will not really depend on third-party heavy rare earths. I just wanted to clarify that given the importance of that aspect.

Yes. Sure, Carlos. I'll start with your last question. We do intend to meet all heavy and light feedstock for both facilities from the Mountain Pass processing facility. As Michael just talked through, we have various initiatives in place in partnership with the Department of Defense, in partnership with Apple from our own sourcing strategies to bring in incremental heavy rare earth feedstock. I think the thing that's really important to understand there as well is when you think about a business model that is centering on third-party feedstocks as part of a supplement to its ability to produce products, you really have to produce both lights and heavies in order to compete in that market. There is no way you can compete economically without being able to extract the value from all of those. And so we are extremely confident in our ability to continue to source third-party feedstock as we are, frankly, as we speak. As it relates to your question on 10X and the capital investment there, given the importance of this, the size of it, we are focused on doing the right thing for our core customer, for our future customers and from a return on invested capital perspective. And so the reality is portions of that facility may grow or shrink over time when we get to sort of our final ultimate design. What we have always done and will continue to do is provide guidance to you all on an annual basis to allow you to sort of track our progress there. As we talked about this year being in the $500 million to $600 million range, that obviously reflects a pretty significant initial investment in bringing that facility online as quickly as we can.

Our next question comes from Laurence Alexander with Jefferies.

Just two quick ones. First, can you give an update on the progress on the Saudi JV and your bandwidth for a similar JV potentially in either Europe or South America? And secondly, can you give an update on your approach to hiring formulation engineers and your strategy towards how many SKUs are you offering to customers? Or are you encouraging them to focus on a narrow number of SKUs?

Sure. Well, on Ma'aden, there's really two tracks. As you know, we signed a binding term sheet late last year. We have to finalize formal documents with our partner in that transaction, the Department of Defense, and then with Ma'aden to kind of do the aggregate JV. Obviously, a lot of the final details need to be associated with our final estimation on the cost of the build, the process flow of the facility. There's a number of pieces that we have to work on to get towards completion on that front. And of course, that means that the second work stream is, from an operating standpoint, Michael and his team are working on that—the process flow, all aspects of how that facility will work. And so there's sort of two main streams there. What I would tell you is, obviously, that is going to be a big, exciting project, but it's going to take some time. I mean, we're going to make sure that that is built right and we're going to do that cautiously and thoughtfully. So we'll do that methodically, I guess, is the best way to say it, and we're continuing to work on that. I think the next question was around South America or Europe. I mean, as you know, as an organization, we are opportunistic. If you look at five years ago today when we went public, when we were just a concentrate business, we didn't even have an employee in our Magnetics business. And you fast forward to today and you look at the scale and the depth of our organization and what we've built. And so I think we can take on a lot of challenges, particularly because I think we are very execution focused, but we move quickly and aggressively. So we will be opportunistic and I think, hopefully, would never be in a position where we'd bite off more than we can chew. So I guess that's a long-winded way of saying, sure, we're going to be opportunistic about lots of things. We certainly have a lot on our plate right now. I think you asked also about recruiting and engineers, and we've certainly built a pretty extraordinary team in our Magnetics business. That team is growing. Getting that project done is no small task. I'm obviously very focused on that. There's a whole team that we've built since we signed that deal last July, and that's really going under—that's underway and going really well. And so we're focused on executing that.

I think the only thing I'd add on that, Laurence, is, in your question about focusing on SKUs, I think—what's interesting is from a magnet formulation perspective, I think Jim made the point earlier, we've seen a really big push from customers to really narrow their focus on heavy rare earth-free or extremely reduced magnet formulations. I think Jim also spoke about the progress that we've made there even versus our initial formula for EV traction motors, as an example, being 60% lower than where we started out, which was already on the low end of sort of market norms. I think what we're also working through right now is I think fundamentally in the Magnetics business, the only way to make the economics work in the early days is to have scale and to be able to build the quality and production quality processes that are necessary for a customer like an automaker. That's what enables you to do all the rest and introduce the incremental industrial complexity of the various SKUs. I think the great thing is with the base under us of sort of these very large customer agreements with GM and Apple, for example, 10X is designed to have a significant amount of incremental flexibility. If you paid attention to our agreements that were filed with the Department of Defense, they spoke to a variety of different magnet specifications and grades that we would agree to mutually. We are—we've already done that with them, and we basically opened up, I think, the vast majority of the market there and what's in our development pipeline. And so we are absolutely building out the capability to take different formulations and different SKUs of various sizes and shapes as we approach 10X.

Our last question comes from Bill Peterson with JPMorgan.

Congrats on the results and all the great information here. Question on, I guess, offtake and further offtake agreements. Do you have—the desire, the bandwidth or the capacity to support additional offtake agreements. Or will this be limited by expansion such as Upstream 60K or having the 10X facility up and running? I think the question's also related to what Jim was discussing earlier about a clear focus of some of your customers on physical AI versus maybe auto where the volumes could be much larger. So just any sense how should we think about future offtake agreements?

Well, Bill, we continue to remain opportunistic. I think certainly, if you think about the scale of demand from automakers, it's almost 30% of magnet content today goes in the automotive supply chain, and nearly 100% of that today is coming out of China. And so just the slice of the pie there that is available as those customers look to diversify their supply chains in today's market is pretty exceptional. I think to Jim's point, what we are starting to see is a really accelerated focus from a variety of other users. I mean, various pieces of physical AI, whether it be robotics and those types of applications or, frankly, a lot of items that go into data centers even are major magnet users. And so there's a whole host of growth vectors within the segment right now that we are also focused on targeting, but we'll continue to be opportunistic.

I think just to add that our upstream business, hopefully approaching 6,000 tons per annum by the end of this year versus our magnet demand immediately leaves room for additional offtake demand. In addition, as we increase third-party feedstocks and recycling, that can provide additional material to continue to provide into the market.

And then I guess the second question is can you just provide us an update on the magnet qualification at your lead auto customer as well as the comments, Michael, you made about the troubleshoot ramp. Like to double click on that. Is there anything to call out there in terms of focus on yields or throughputs? Or I think the technical performance is fine. But just is there anything else you can kind of speak to on that—on the magnet ramp?

I'll start with the latter part. I'll let Ryan handle the PPAP. On the magnet ramp, I think stepping back, thinking about where we were several years ago, I couldn't be more proud, and I also couldn't be more optimistic that our team will be able to tackle this challenge. We know that starting a new facility is challenging, but the challenges we've achieved—overcome so far relative to what we have to do now, I think it's just a focus on execution. And that's what we've done in Mountain Pass, focus on quality and focus on execution for the customer and over time, build the volume. So we'll continue to play that playbook out.

Yes. And on PPAP, Bill, as I said earlier, kind of zooming out, one of the reasons we wanted to start with an automotive customer was our desire to produce magnets at the outset that could withstand some of the highest quality standards that are required for things like EV motors. PPAP is obviously a fairly extensive process. It audits not only the product quality but also the manufacturing processes themselves. You have to demonstrate different run rate scenarios, et cetera. And so frankly, going through that process, we'll continue—as we launch a facility, we'll hone our processes and capabilities, and it's going to put us in a position to accelerate and bring customers like Apple on even more quickly. And so we are just beginning that process. But given our significant engagement from day one in building this plant in partnership with GM, we believe it will be a relatively accelerated process compared to sort of a typical auto supplier qualification. And so that's what informs our guidance in view of back half of the year for salable magnets.

That concludes the question-and-answer portion of today's call. I will now hand the call back to Mr. Litinsky for closing remarks.

Thank you. Well, thank you, everyone. It was a pretty outstanding quarter to a transformational incredible year of 2025 and 2026 is off to a great start. So we will get back to work and see you all soon.