Molycorp Reports Fiscal Year 2012 Results

FSC / Press Release 
Molycorp Reports Fiscal Year 2012 Results 
. In 2012, the Company transitioned from a development stage company to a
vertically integrated global producer of advanced rare earth materials, with
full-year revenues of $528.9 million, a 33% increase over the prior year
(including approximately six months of revenue from newly acquired Neo Material
Technologies, now known as Molycorp Canada). Fourth quarter 2012 revenues were
$134.3 million, a 1% year-over-year increase and a 35% decrease from the
previous quarter. 
. For the full year, the Company reported a net loss of $4.31 per share, which
includes a goodwill impairment charge of $258.3 million and an impairment charge
of other long-lived assets of $11.9 million. These impairment charges, combined,
comprised approximately $2.51 per share of the total net loss. The Company
reported a loss of $0.37 per share for the full year on an adjusted non-GAAP
basis, taking into account operational expansion items, out-of-ordinary business
expenses, and certain non-cash items. 
. All key production assets at the Company's new Mountain Pass Rare Earth
Facility are now operational and ramping up to the facility's initial annual run
rate of 19,050 metric tons ("mt") of rare earth oxides ("REO") equivalent
expected by mid-year 2013. 
Greenwood Village, CO US, March 14, 2013 /FSC/ - Molycorp, Inc (MCP - New York),
("Molycorp" or the "Company") today announced financial and operating results
for the full fiscal year and fourth quarter 2012. 
The Company reported consolidated net revenues of $528.9 million during 2012, a
33% increase over the full year 2011, including approximately six months of
revenues from newly acquired Molycorp Canada assets. The Company sold 9,223 mt
of product across its business segments, net of intercompany sales, at an
average sales price, or ASP, of $57.35 per kilogram and generated a gross profit
of $17.3 million in 2012, as compared to $218.9 million during the prior year.
Gross profit decreased from the prior year as a result of significantly lower
pricing and increased production costs, offset in part by increased volumes and
the partial-year inclusion of Molycorp Canada. 
Molycorp reported a loss attributable to common stockholders of $460.9 million,
or a loss of $4.31 per share. Earnings decreased substantially from the prior
year as a result of lower selling prices, increased costs, and large long-lived
assets impairment charges, offset in part by increased volumes and expanded
product offerings. Adjusted loss per share of $0.37 in fiscal 2012 eliminates
the effect of operational expansion items, out-of-ordinary business expenses,
and certain other non-cash items. 
The majority of the long-lived assets impairment charges were determined as a
result of the Company testing the recoverability of its goodwill and other
intangible assets, for which it recorded a total impairment charge of
approximately $264.3 million in the fourth quarter of 2012. Circumstances that
negatively affected the Company's fair value estimate of the reporting units
where goodwill was impaired included: a longer-than-anticipated soft pricing
environment for rare earths and certain rare metals; loss of some end markets
due to high rare earths prices in 2011 not returning to lower levels as quickly
as anticipated; stalled growth for some new bonded magnet applications due to a
peak in neodymium prices in 2011; and delays in ramping up its Molycorp Mountain
Pass facility that deferred the Company's ability to enter into longer-term
contracts. Circumstances leading to the impairment of other intangible assets
included lower margins forecast due to certain patents expiration in 2014. The
goodwill and other intangible assets impaired were substantially derived from
the Molycorp Canada acquisition. 
Year-over-year comparisons of the Company's operating results during 2012, 2011,
and 2010 are significantly affected by the Molycorp Canada acquisition on June
11, 2012, the Molycorp Silmet acquisition on April 1, 2011, and the Molycorp
Metals and Alloys acquisition on April 15, 2011. 
"The economics of our model of vertical integration on a global basis remain
strong," said Molycorp President and CEO Constantine Karayannopoulos. "During
2012, we reported strong top-line performance and improved our market share in
several areas. We are now sharpening our focus on building greater value for our
shareholders. With continuing discipline and a strong focus on cost containment,
we expect to continue to execute on our business plan and set the course for an
improved balance sheet." 
"Our fundamental strategy going forward is to return confidence to rare earth
customers through supply security and price visibility," Karayannopoulos added.
"We are focusing on fueling the growth engine of our value-added processing
assets in Molycorp Canada with low-cost, high volume production from our
world-class Mountain Pass resource. That means we must complete our current
production ramp at Mountain Pass and bring it to full-scale commercial run
rates; instill greater discipline and accountability across the Company; improve
performance across all business units; and make sure we achieve our cost savings
and capital reduction goals." 
The Company reported consolidated net revenue of $134.3 million during the
fourth quarter 2012, a 1% year-over-year increase and a 35% decrease compared to
the previous quarter. 
In the fourth quarter of 2012, the Company sold 3,102 mt of product across its
business segments, net of intercompany sales, at an ASP of $43.28 per kilogram
realizing a gross loss of $20.5 million, compared to a gross profit of $70.3
million in the prior-year period and a gross profit of $10.9 million in the
prior quarter. Gross profit decreased from the prior-year period due to lower
pricing and increased costs of sales related to abnormal costs associated with
lower production and inventory write-downs. 
Molycorp reported a loss attributable to common stockholders of $362.4 million,
or a loss of $2.91 per share. Earnings decreased substantially from the prior
year as a result of lower selling prices, increased costs and large impairment
charges, offset in part by increased volumes and expanded product offerings.
Adjusted loss per share of $0.45 in the fourth quarter of 2012 eliminates the
effects of operational expansion items, out-of-ordinary business expenses, and
certain other non-cash items. 
The Company had negative cash flows from operating activities of $89.6 million
during the year, and had $227.8 million in cash and cash equivalents on hand as
of December 31, 2012. Subsequent to the year-end, the Company received $414.2
million, net of underwriting discounts and commissions, in the aggregate from a
common stock offering and a convertible notes offering. 
During the full year 2012, Molycorp's cash capital expenditures were $791.5
million. For the full year 2013, the Company estimates that it will incur cash
capital expenditures of up to $450 million, which includes capital related
accounts payable of $162.2 million. Approximately $60 million of this
anticipated cash capital expenditure related to further capacity expansion of
the Molycorp Mountain Pass facility may be considered discretionary. As such,
the Company may elect to defer this discretionary portion. 
The Company expects its financial performance for the first half of 2013 is
likely to be slightly weaker than the third and fourth quarters of 2012. This is
due to typical seasonality resulting in slow global rare earth sales in the
first quarter combined with the expectation that its Mountain Pass Facility will
not achieve full-scale commercial production until mid-year 2013. 
However, the Company expects global supply and demand for rare earth oxides will
approach a healthier balance during 2013, and pricing within many key
applications of rare earths will be beneficial to both customers and suppliers.
The Company's 2013 demand forecasts are relatively robust for the following
downstream markets: automotive catalysts, fluid cracking catalysts, and the
automotive and small battery sectors. Weaker or negative near-term growth is
forecast in the multi-layer ceramic capacitor, glass polishing, and
neodymium-iron-boron ("NdFeB") magnet sectors. 
With regard to NdFeB magnets, the Company is cautiously optimistic about the
potential for its new MQ2 magnetic materials product line, which has
demonstrated a superior retention of magnetic flux at elevated temperatures
without the need for additional dysprosium or terbium, relatively high-priced
and scarce "heavy" rare earths. 
Molycorp will conduct a conference call today to discuss these results at 4:30
p.m. EST, hosted by Constantine Karayannopoulos, 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 (866) 831-6162 and reference passcode number 64941332. Those
calling from outside the U.S. should dial +1 (617) 213-8852 and use the same
confirmation number. 
There will also be a simultaneous live audio webcast available on the Investor
Relations section of the Company's website at 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 following the call. 
Adjusted EPS is a non-GAAP measure that excludes certain non-cash items and
other out-of-ordinary operational and business expansion items. The Company's
management believes adjusting out these items, 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 adjusted EPS is 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. 
# # # 
 Company Contacts: 
Jim Sims, +1 (303) 843-8062 
Vice President Corporate Communications 
Brian Blackman, +1 (303) 843-8067 
Senior Manager, Investor Relations 
The financial tables from this release can be viewed here: 
One of the world's leading manufacturers of custom engineered rare earth and
rare metal products, Molycorp is vertically integrated from its world-class rare
earth resource to its advanced downstream processing facilities. With 26
locations across 11 countries, the Company also produces rare earth magnetic
materials through its Molycorp Magnequench subsidiary, including
neodymium-iron-boron, or NdFeB, magnet powders, used to manufacture bonded NdFeB
permanent rare earth magnets. Through its Intermetallics Japan joint venture
with Daido Steel and the Mitsubishi Corporation, Molycorp manufactures
next-generation, sintered NdFeB permanent rare earth magnets. Through its
Molycorp Advanced Water Technologies subsidiary, the Company markets and sells
its proprietary, cerium-based advanced water purification technology called
SorbX(tm) for use in municipal and industrial wastewater treatment, recreational
water, and pool and spa water treatment markets. For more information please
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
potential need to secure additional capital to implement Molycorp's business
plans, and Molycorp's ability to successfully secure any such capital;
Molycorp's ability to complete its planned capital projects, such as its
modernization and expansion efforts, including the achievement of an annual
production rate of 19,050 metric tons at the Mountain Pass rare earth mine and
processing facility, which management refers to as Project Phoenix Phase 1, and
the second phase capacity expansion plan, which management refers to as Project
Phoenix Phase 2, and reach full planned production rates for REO and other
planned downstream products, in each case within the projected time frame; the
success of Molycorp's cost mitigation efforts in connection with Project
Phoenix, which if unsuccessful, might cause its costs to exceed budget; the
final costs of Molycorp's planned capital projects, such as Project Phoenix
Phase 1 and Project Phoenix Phase 2, which may differ from estimated costs;
Molycorp's ability to successfully integrate Neo Material Technologies, Inc.
(now Molycorp Canada), with its operations; 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; and risks and
uncertainties associated with intangible assets, including any future goodwill
impairment charges. Also as a result of the Molycorp Canada acquisition,
Molycorp's business performance may be materially affected by a number of other
factors and uncertainties including, but not limited to: the rate of exchange of
the U.S. dollar to the Canadian dollar, the Japanese yen, and the Chinese
Renminbi; new products pricing; the competitive environment for these new
products; unexpected actions of domestic and foreign governments; and various
events which could disrupt operations, including natural events and other risks.
Other risk factors and uncertainties that may cause actual results to differ
materially from expected results include: 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 "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, 2012 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. 
The press release can be viewed in its entirety at the following location: 
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-0- Mar/14/2013 21:34 GMT
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