Molycorp (NYSE: MCP) Reports Second Quarter 2014 Financial Results
Greenwood Village, CO (August 6, 2014) – Molycorp, Inc. (NYSE: MCP) (“Molycorp” or the “Company”) today announced financial and operating results for the second quarter 2014.
The Company reported second quarter product sales volume of 2,996 metric tons (mt), a 15% decrease over the first quarter 2014, at an average selling price (“ASP”) of $39.02/kg, a 16% increase over the preceding quarter’s ASP of $33.69/kg.
Net revenues for the second quarter were $116.9 million, a 1% decrease from the first quarter 2014.
The Company reported a net loss of $0.37 per share for the quarter. The Company reported a net loss of $0.29 per share for the quarter on an adjusted non-GAAP basis.
Molycorp’s Resources segment, comprised of its Mountain Pass, California rare earth mine and processing facility, sold 974 mt of rare earth oxide (“REO”) equivalent products for $10.0 million in revenues. ASP for the quarter was $10.30/kg. Production volume for the quarter was 1,639 mt, a 48% increase over first quarter production of 1,111 mt. Cash cost for production dropped to $16.54/kg, a 39% decrease over production cash costs of $27/kg in the previous quarter.
The Company’s Chemicals and Oxides segment sold 1,582 mt and reported $48.6 million in revenues. The slight decrease in volume was offset by higher ASP due to a favorable increase of Nd and Pr in the product mix.
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Its Magnetic Materials and Alloys segment sold 1,383 mt of magnetic powders. Revenues for the segment were $54.4 million on ASP of $39.31/kg.
Finally, Molycorp’s Rare Metals segment reported sales volume of 79 mt on revenues of $15.9 million. ASP for the segment was $201.81/kg.
MOLYCORP ANNOUNCES COMMITMENT FOR A $400 MILLION FINANCING ARRANGEMENT
In a separate press release, the Company announced that it has entered into a commitment letter for a $400 million financing arrangement with funds managed by Oaktree Capital Management, L.P. (“Oaktree”). Under the arrangement, Oaktree will provide Molycorp and certain of the Company’s subsidiaries up to $400 million in secured financing through credit facilities and the sale and leaseback of certain equipment at the Company’s Mountain Pass facility (the “Financings”). $250 million of the Financings will be available to be borrowed at the closing of the Financings, with the remaining $150 million available until April 30, 2016 if Molycorp satisfies certain financial and operational conditions. The closing of the Financings is subject to the satisfaction of certain customary closing conditions. More details are available in the Company press release announcing this commitment.
SECOND QUARTER 2014 RESULTS
The Company reported consolidated net revenues of $116.9 million, a 1% decrease over the first quarter of 2014.
During the second quarter, the Company sold 2,996 mt of product at an ASP of $39.02/kg, and generated a gross loss of $16.6 million. This compares to sales volumes of 3,518 mt at an ASP of $33.69/kg and a gross loss of $23.1 million during the first quarter of 2014. The Company produced 1,639 mt of rare earth oxides at its Mountain Pass facility during the second quarter, a 48% increase over first quarter production. The Company continues to optimize operations, ahead of certain de-bottlenecking projects.
Molycorp reported a loss attributable to common stockholders of $83.9 million, or $0.37 per share. Adjusted loss per share of $0.29 in the second quarter does not reflect out-of-ordinary business expenses, and certain other non-cash items.
The Company reported negative cash flows from operating activities of $72.5 million for the quarter ended June 30, 2014, and had $156.4 million in cash and cash equivalents as of June 30, 2014.
During the three months ended June 30, 2014, Molycorp’s capital expenditures were $15.0 million on a cash basis.
Detailed financial tables released as part of Molycorp’s Q2 2014 financial results can be seen here.
CONFERENCE CALL TOMORROW AT 9:00 A.M. EASTERN STANDARD TIME
Molycorp will conduct a conference call on Thursday, August 7, 2014 to discuss these results at 9:00 a.m. EST, hosted by Geoff Bedford, President and Chief Executive Officer, and Michael Doolan, Executive Vice President and Chief Financial Officer. Investors interested in participating in the live call from the U.S. should dial +1 (800) 884-5695 and reference passcode number 14991030. Those calling from outside the U.S. should dial +1 (617) 786-2960 and reference the same passcode as above.
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. A PowerPoint presentation that will be broadcast live via webcast during the conference call will be made available on the website immediately prior to the call.
NON-GAAP ADJUSTED NET LOSS, OIBDA and ADJUSTED OIBDA
Adjusted Net Loss excludes certain non-cash items and other out-of-ordinary business expense and operational expansion items. The Company defines OIBDA as operating income before depreciation, amortization and accretion. Adjusted OIBDA consists of OIBDA excluding certain non-cash items and other out-of-ordinary business expense and operational expansion items. Adjusted Net Loss, OIBDA and Adjusted OIBDA are all non-GAAP financial measures. There have been no changes in the calculation method of previously disclosed non-GAAP financial measures. The Company’s management believes adjusting out these items from Net Loss and OIBDA, including but not limited to purchase accounting adjustments, stock-based compensation, out-of-ordinary expenses/income, asset impairment charges and other miscellaneous charges, is useful to investors because it provides an overall understanding of the Company’s historical financial performance and future prospects. Management believes that Adjusted Net Loss, OIBDA and Adjusted OIBDA are an indication of the Company’s base-line performance. Exclusion of these items permits evaluation and comparison of results for the Company’s core business operations, and it is on this basis that management internally assesses the Company’s performance.
For more information:
Jim Sims, +1 (303) 843-8062
Vice President, Corporate Communications
Brian Blackman, +1 (303) 843-8067
Vice President, Investor Relations
Molycorp is the only advanced material manufacturer in the world that both controls a world-class rare earth resource and can produce high-purity, custom engineered rare earth products to meet increasingly demanding customer specifications. A globally integrated manufacturer, the Company produces a wide variety of specialized products from 13 different rare earths (lights, mids and heavies), the transition metal yttrium, and five rare metals (gallium, indium, rhenium, tantalum and niobium). With 26 locations across 11 countries, Molycorp also produces rare earth magnetic materials through its Molycorp Magnequench subsidiary, including neodymium-iron-boron (“NdFeB”) magnet powders, used to manufacture bonded NdFeB permanent rare earth magnets. Through its joint venture with Daido Steel and the Mitsubishi Corporation, Molycorp manufactures next-generation, sintered NdFeB permanent rare earth magnets. The Company also markets and sells a line of rare earth-based water treatment products. 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: the need to secure additional capital to implement Molycorp’s business plans, and Molycorp’s ability to successfully secure any such capital, including the ability to successfully complete the Financings; Molycorp’s ability to optimize production at its Mountain Pass rare earth mine and processing facility, which we refer to as the Molycorp Mountain Pass facility, and the ability to develop internal and external demand for REO and other downstream products, including the ability to operate at commercial production rates and competitive cash production costs, in each case within the projected time frame; the success of Molycorp’s cost mitigation efforts in connection with the optimization of the Molycorp Mountain Pass facility, which, if unsuccessful, might cause its costs to exceed budget; the final costs of Molycorp’s planned capital projects, which may differ from estimated costs; Molycorp’s ability to achieve fully the strategic and financial objectives related to the acquisition of Molycorp Canada, including the acquisition’s impact on Molycorp’s financial condition and results of operations; unexpected costs or liabilities that may arise from the acquisition, ownership or operation of Molycorp Canada; risks and uncertainties associated with intangible assets, including any future goodwill impairment charges; market conditions, including prices and demand for Molycorp’s products; Molycorp’s ability to control its working capital needs; foreign exchange rate fluctuations; the development and commercialization of new products; unexpected actions of domestic and foreign governments; various events which could disrupt operations, including natural events and other risks; uncertainties associated with Molycorp’s reserve estimates and non-reserve deposit information, including estimated mine life and annual production; uncertainties related to feasibility studies that provide estimates of expected or anticipated costs, expenditures and economic returns, REO prices, production costs and other expenses for operations, which are subject to fluctuation; uncertainties regarding global supply and demand for rare earths materials; uncertainties regarding the results of Molycorp’s exploratory drilling programs; Molycorp’s ability to enter into additional definitive agreements with its customers and its ability to maintain customer relationships; Molycorp’s sintered neodymium-iron-boron rare earth magnet joint venture’s ability to successfully manufacture magnets within its expected timeframe; Molycorp’s ability to successfully integrate other acquired businesses; Molycorp’s ability to maintain appropriate relations with unions and employees; Molycorp’s ability to successfully implement its vertical integration 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; and the outcome of the current stockholder class action litigation and derivative litigation, including any actions taken by government agencies in connection therewith.
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, 2013 and of the Company’s Quarterly Reports on Form 10-Q. Any forward-looking statement contained in this release or the Annual Report on Form 10-K or the Quarterly Reports 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.
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