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Molycorp Reports Record Fiscal Year 2011 Results
02/27/2012 - Molycorp, Inc. announced net income attributable to common stockholders of $26.6 million on net revenues of $132.9 million for the fourth quarter, and record net income attributable to common stockholders of $117.5 million on net revenues Net revenues of $396.8 million for the full year ended December 31, 2011.
Molycorp, Inc. announced net income attributable to common stockholders of $26.6 million on net revenues of $132.9 million for the fourth quarter, and record net income attributable to common stockholders of $117.5 million on net revenues Net revenues of $396.8 million for the full year ended December 31, 2011.
Management Comments — “2011 was a very successful year of accomplishment for Molycorp,” said Mark Smith, Molycorp President and CEO. “We solidly turned the corner to profitability and we registered net sales of nearly $400 million. We kept Project Phoenix tracking to an accelerated timeline, and succeeded in becoming the world’s first company outside of China to assemble a fully integrated rare earth mine-to-magnets supply chain. We continue to produce and commercialize new products. And, we remain laser-focused on ensuring that we are operating at peak performance so we can meet growing global demand for rare earths for years to come.”
“This Company is all about execution … about delivering what we said we would deliver,” Smith said. “I could not be more proud of the performance of the Molycorp family.”
Fourth Quarter Results — Net revenues of $132.9 million reflect a 3.7% decrease from $138.0 million in the previous quarter (3Q-2011) and significant increase from revenues of $21.7 million in the year-ago fourth quarter. By contrast, Smith noted, a weighted basket1 of rare earths -- cerium oxide, lanthanum oxide, and didymium oxide -- declined 47% over the Q3-Q4 period of 2011, according to prices published by Metal-Pages.com. Molycorp sales volumes of cerium-based products sequentially grew 237%.
Gross profit was $70.3 million, a decrease of 14.7% from the previous quarter (3Q-2011) due primarily to higher raw material and chemical costs, and a slight change in product mix. Gross margin of 52.9% decreased 6.8 percentage points compared to the prior quarter.
Operating income was $46.0 million, down from operating income of $66.9 million during the previous quarter. The decrease was primarily attributed to higher costs of goods sold and higher general administrative costs. However, Q4 operating income was up significantly from an operating loss of $9.9 million during the year-ago fourth quarter.
Net income attributable to common stockholders was $26.6 million ($0.26 per diluted share). Adjusted EPS ($0.41 per diluted share) takes into account certain non-cash and other out-of-ordinary operational and business expansion items as compared to U.S. GAAP earnings per share.
Record Full Year Results — Net revenues of $396.8 million reflect a $361.7 million increase from $35.2 million for 2010. The increase was due to higher volumes out of Mountain Pass, higher pricing, and expanded sales from the Silmet and MMA operations, which were acquired in the second quarter of 2011.
Gross profit was $218.9 million, a substantial increase compared to a gross loss of $2.4 million during the prior year. Gross margin was 55.2% for the year, compared to a negative margin of 6.9% during 2010. Operating income for the full year 2011 was $152.9 million, up from an operating loss of $51.2 million during the full year 2010.
The company generated record net income attributable to common stockholders of $117.5 million ($1.27 per diluted share) for 2011 compared to a loss of $50.8 million ($0.81 per diluted share) in 2010. On a non-GAAP, adjusted basis, 2011 diluted earnings per share was $1.73.
Milestone Achievements — Molycorp achieved a number of critical business and operational milestones in 2011, and into the opening weeks of 2012, including:
· Formally launched the sequential start-up of its new Project Phoenix facility at Mountain Pass this week.
o Active mining at a full mine production rate of approximately 2,800 short tons of fresh rare earth ore is in full swing and has been underway for several weeks.
o Mechanical completion of the new Crushing Facility has been achieved and the crusher is operational.
o Mechanical completion and steam testing of the initial Cracking Facility has been achieved and feedstock from stockpiled material has successfully been fed into the system.
o The first test firing of the turbines in the onsite Combined Heat and Power (CHP) plant will occur this week.
· Assembled the components of its mine-to-magnets strategy by adding metal and alloy manufacturing capabilities, through acquisitions of its Molycorp Metals and Alloy and Molycorp Silmet subsidiaries, and by signing an agreement to form a joint venture with Daido Steel and Mitsubishi Corp. to manufacture permanent rare earth magnets. Construction of the magnet production facility is underway, and operations are expected to commence by the end of 2012.
· Achieved its 2011 contracting goal for Phase 1 production capacity, with 78% of Phase 1 being signed in customer agreements or reserved for XSORBX™ production.
· Sold a total of 55 tonnes of its proprietary cerium-based XSORBX™ products in 2011, and is on track to sell 20% of its Phase 1 production capacity through XSORBX™ products by the end of 2013.
· Entered into a three-year supply agreement with Hitachi Metals for rare earth magnetic materials, such as didymium metal and alloy, and lanthanum oxide.
· Made a strategic investment in Boulder Wind Power, which has developed a rare earth magnet powered wind turbine generator that relies on permanent rare earth magnets that require no dysprosium, a rare earth that is truly scarce in today’s markets.
· Increased the company’s strategic flexibility through a $390 million capital investment commitment from Molymet.
2012 Outlook — As of February 23, 2012, the company is re-affirming its annual production of REO equivalent products to be in a range of 8,000 to 10,000 tonnes for the full year. The company believes it is positioned for year-over-year sales growth, given existing customer orders and a growing pipeline of global business opportunities.
The company also anticipates a change to the cost of goods sold (COGS) related to Project Phoenix ramping, as well as higher production costs on a consolidated basis. As a result of costs necessary to successfully prepare for the accelerated completion of Project Phoenix, the ramp-up to Phase 1 production levels, and increased chemical costs, Molycorp is estimating that COGS will increase slightly in 2012 on a per-kilogram basis of REO equivalent. Many of these increases however, are expected to normalize moving into 2013 when the company reaches higher production levels. The company added that it has sufficient working capital to execute on its stated strategy and its balance sheet remains strong.
“Our primary focus remains on executing Project Phoenix and bringing a stable supply of rare earth products to global markets,” continued Smith, commenting on the new outlook. “As we begin the sequential start-up of Project Phoenix, we are shifting into a year of transition to test and ramp our new production capacity. We remain on track in making the necessary investments in our business, to improve our operating and financial performance, and deliver sustainable value for all Molycorp shareholders.”
