|Molycorp Reports Record Financial Performance in Q3 2011
--> Project Phoenix Accelerated
--> Company Sets Records for Sales, Margin, and Income
The Company’s “Project Phoenix” modernization and expansion project has been accelerated to target Phase 1 production run rate of 19,050 metric tons per year by September 30, 2012, three months earlier than originally planned. Mechanical completion of Phase 2 has been accelerated by six months to year-end 2012.
Company achieves record sales in Q3 of $138.1 million, a 39% increase over Q2 2011.
Average sales price (ASP) rose 75% to $131.19 per kilogram of REO equivalent versus $75.14 in Q2 2011.
Q3 gross margin increased to a record 63%, up from 57% in Q2 2011.
Record operating income increased 72% to $72.1 million over Q2 2011.
Q3 EPS of $0.52 per diluted share, or $0.67 adjusted for certain non-cash and other out-of-ordinary items (non-GAAP), per diluted share.
Greenwood Village, CO (November 10, 2011, 4:01 p.m. Eastern) – Molycorp, Inc. (NYSE: MCP) (“Molycorp” or the “Company”) today announced financial and operating results for the third quarter of 2011, which included record performance in sales, margin, and income.
RECORD SALES, MARGIN, AND INCOME
The Company generated record sales of $138.1 million in Q3 2011, a 39% increase as compared to sales of $99.6 million in Q2 2011 and significantly higher than $8.5 million in Q3 2010. Sequential growth resulted from increased sales volume of lanthanum and didymium as well as a robust pricing environment across all products.
Record operating income in Q3 increased 72% to $72.1 million as compared to Q2 2011, a material increase from the operating loss of $(10.2 million) in Q3 2010.
Net income attributable to common stockholders increased 4% to $45.3 million, from $43.5 million in Q2 2011. Diluted earnings per share for Q3 2011 was $0.52, in-line with Q2 2011 of $0.52. Non-GAAP diluted earnings per share was $0.67, as compared to $0.56 per diluted share in Q2 2011. Non-GAAP earnings per share adjusts certain non-cash and other out-of-ordinary items as compared to U.S. GAAP earnings per share.
COMPANY ACCELERATING PROJECT PHOENIX
Molycorp’s “Project Phoenix” modernization and expansion plan at its flagship Mountain Pass, California rare earth facility has been accelerated, with the Company now expecting to achieve its Phase 1 production run rate of 19,050 metric tons per year by September 30, 2012, three months earlier than originally planned. The Company’s Board of Directors authorized an additional investment of $114 million to fund the acceleration, which includes contingency funds. The acceleration of Project Phoenix Phase 1 will increase the Company’s estimated 2012 production by approximately 3,500 metric tons of Rare Earth Oxide equivalent (“REO”), to between 8,000 and 10,000 metric tons.
The project acceleration will also advance mechanical completion of Project Phoenix Phase 2 by six months, allowing the Company the capability of producing at an annual rate of 40,000 metric tons per year as early as mid-2013, if customer demand warrants.
“During the third quarter, we achieved record sales, margin, and income,” said Mark Smith, Molycorp President and Chief Executive Officer. “This is a phenomenal accomplishment by our Molycorp family, particularly as we have simultaneously announced accelerated plans for Project Phoenix Phase 1 and 2 at Mountain Pass.”
“In addition, we are pleased to have signed a new three-year agreement with the United Steelworkers, opened a customer service office in Japan, expanded initial sales of XSORBX, and announced our four-pronged strategy for heavy rare earth elements,” Smith said. “We continue to see favorable global market trends for rare earths, and our team is working hard to provide an increased, stable supply of rare earth products for these markets.”
Other milestones during Q3 and the first several weeks of Q4 included the Company’s $20 million investment in Boulder Wind Power and its acquisition of the remaining Molycorp Sillamäe shares for $10 million.
The Company achieved consolidated sales of $138.1 million for Q3 2011. This does not include an additional $37.2 million of intercompany sales, such as feedstock sent from Molycorp Mountain Pass to Molycorp Sillamäe for additional processing into higher-value products, and other intercompany sales. Gross sales at Molycorp Mountain Pass grew 64% to $124.9 million as compared to Q2 2011. The growth in Molycorp Mountain Pass gross sales was driven both by higher realized prices and by higher didymium and lanthanum product sales volumes, and was offset by lower cerium sales volume. Molycorp Sillamäe recorded sales of $35.9 million during the quarter, while Molycorp Tolleson recognized $14.4 million of sales in the period.
Molycorp Mountain Pass sold 1,002 gross metric tons of REO equivalent products, a slight increase over Q2 2011 and a 92% year-over-year increase. Mountain Pass realized an average sales price of $124.65 per kilogram of REO equivalent. Molycorp Sillamäe’s sales in Q3 2011 included 384 gross metric tons of REO equivalent products at an average sales price of $57.08 per kilogram and also included 88 metric tons of rare metals (niobium and tantalum) at an average sales price of $151.50 per kilogram. Molycorp Tolleson sold alloys, including neodymium-iron-boron and samarium-cobalt alloy, containing approximately 52 metric tons REO equivalent products to contribute $14.4 million in sales.
UPDATED Q4 2011 & FY 2012 PRODUCTION GUIDANCE
The following table provides ranges for expected production of rare earth products at Molycorp’s three production facilities for the remainder of 2011 (prior to our acquisitions in April 2011). The Company has also established an annual production guidance range for 2012, and anticipates production of REO equivalent products to be in a range of 8,000 metric tons to 10,000 metric tons for the full year.
CONFERENCE CALL TODAY AT 4:30 P.M. EASTERN
Molycorp will conduct a conference call today to discuss these results at 4:30 p.m. EST, hosted by Mark Smith, Chief Executive Officer, and Jim Allen, Chief Financial Officer. Investors interested in participating in the live call from the U.S. should dial +1 (888) 334-3032 and reference confirmation number 7475624. Those calling from outside the U.S. should dial +1 (719) 457-2674 and use the same confirmation number. A telephone replay will be available approximately two hours after the call concludes through Thursday, November 24, 2011 by dialing +1 (877) 870-5176 from the U.S., or +1 (858) 384-5517 from international locations, and entering passcode: 7475624.
There will also be a simultaneous live audio webcast available on the Investor Relations section of the Company's website at www.molycorp.com/investors. The webcast will be archived on the website for 180 days.
Various financial statements and tables released as part of Molycorp's Q3 earnings can be seen here.
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For more information:
Jim Sims, +1 (303) 843-8062
Vice President Corporate Communications
Brian Blackman, +1 (303) 843-8067
Senior Manager, Investor Relations
With offices in the U.S., Europe, and Japan, Molycorp, Inc. is the largest rare earth oxide (REO) producer outside of China. In addition to its current production of rare earth oxides at its flagship rare earth mine and processing facility at Mountain Pass, California, the Company produces rare earth metals, rare earth alloys (such as neodymium-iron-boron and samarium-cobalt alloys) and rare metals such as niobium and tantalum. The rare earths and rare metals Molycorp produces are critical inputs in existing and emerging applications including: clean energy technologies, such as hybrid and electric vehicles and wind power turbines; multiple high-tech uses, including fiber optics, lasers and hard disk drives; numerous defense applications, such as guidance and control systems and global positioning systems; advanced water treatment technology for use in industrial, military and outdoor recreation applications; and other technologies. For more information, please visit http://www.molycorp.com.
Safe Harbor Statement Regarding Forward-Looking Statements
This release contains forward-looking statements that represent Molycorp’s beliefs, projections and predictions about future events or Molycorp’s future performance. Forward-looking statements can be identified by terminology such as “may,” “will,” “would,” “could,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue” or the negative of these terms or other similar expressions or phrases. These forward-looking statements are necessarily subjective and involve known and unknown risks, uncertainties and other important factors that could cause Molycorp’s actual results, performance or achievements or industry results to differ materially from any future results, performance or achievement described in or implied by such statements.
Factors that may cause actual results to differ materially from expected results described in forward-looking statements include, but are not limited to: Molycorp’s ability to secure additional capital to implement its business plans; Molycorp’s ability to complete its initial modernization and expansion efforts, including the accelerated start-up of the Mountain Pass facility, which management refers to as Project Phoenix Phase 1, and the second phase capacity expansion plan, which management refer to as Project Phoenix Phase 2, and reach full planned production rates for REOs and other planned downstream products; the final costs of the Project Phoenix Phase 1, including with accelerated start-up of the Mountain Pass facility, and Project Phoenix Phase 2, which may differ from estimated costs; uncertainties associated with Molycorp’s reserve estimates and non-reserve deposit information; uncertainties regarding global supply and demand for rare earths materials; Molycorp’s ability to successfully integrate recently acquired businesses; Molycorp’s ability to reach definitive agreements for a joint venture to manufacture neodymium-iron-boron permanent rare earth magnets; Molycorp’s ability to maintain appropriate relations with unions and employees; Molycorp’s ability to successfully implement its “mine-to-magnets” strategy; environmental laws, regulations and permits affecting Molycorp’s business, directly and indirectly, including, among others, those relating to mine reclamation and restoration, climate change, emissions to the air and water and human exposure to hazardous substances used, released or disposed of by Molycorp; and uncertainties associated with unanticipated geological conditions related to mining.
For more information regarding these and other risks and uncertainties that Molycorp may face, see the section entitled “Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 and of the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2011. Any forward-looking statement contained in this press release or the Annual Report on Form 10-K or the Quarterly Report on Form 10-Q reflects Molycorp’s current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to Molycorp’s operations, operating results, growth strategy and liquidity. You should not place undue reliance on these forward-looking statements because such statements speak only as to the date when made. Molycorp assumes no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future, except as otherwise required by applicable law.