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USA Rare Earth, Inc. (USAR)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 was USAR’s first quarter as a public company; results showed a GAAP diluted EPS of $0.58 driven by a $60.3M non-cash mark-to-market gain, while operating performance reflected pre-revenue scale-up investments .
  • Adjusted net loss per share was $(0.19), reflecting higher SG&A tied to the SPAC merger and initial build-out activities; operating loss was $(8.7)M YoY vs $(4.7)M .
  • Guidance focused on commissioning the Stillwater magnet plant, with 2025 quarterly OpEx of $8–$9M and 2025 capex of $60–$65M; tariffs could add single-digit millions worst-case .
  • Near-term catalysts include government support efforts, additional customer MOUs, and August flow-sheet update for the Round Top deposit; management emphasized a “Manhattan Project” moment for domestic rare earths and magnets .

What Went Well and What Went Wrong

What Went Well

  • “We have raised over $100 million since the start of the year…opened our Innovations Lab…moving quickly to commission the first line of our 310,000-square-foot magnet facility” .
  • First customer MOU signed for up to ~20 tons per year starting 2026; pipeline spans EV, aerospace, auto supply, industrial, robotics, medical, defense, and consumer products .
  • Round Top progress: produced dysprosium oxide >99% purity and advanced proprietary ion-exchange processing; plan to finalize flow sheet and provide an August update .

What Went Wrong

  • Operating performance was weak (pre-revenue): operating loss $(8.718)M; SG&A rose with merger-related costs (~$3.7M) and early hiring ahead of ramp .
  • Adjusted net loss per share $(0.19) despite GAAP profit, underscoring reliance on non-cash gains vs core operations; EBITDA likely below consensus given scale-up .
  • Execution risks cited: older core equipment needs thorough testing; specialized talent must be added; tariffs may inflate capex (single-digit millions worst-case) .

Financial Results

Core metrics (YoY comparison; prior quarter unavailable)

MetricQ1 2024Q1 2025
Selling, General & Administrative ($USD Millions)$2.647 $7.029
Research & Development ($USD Millions)$2.051 $1.689
Total Operating Costs & Expenses ($USD Millions)$4.698 $8.718
Operating Income (Loss) ($USD Millions)$(4.698) $(8.718)
Net Income (Loss) Attributable to Common ($USD Millions)$(4.472) $51.832
Diluted EPS ($USD)$(0.11) $0.58
Adjusted Net Loss ($USD Millions)$(4.473) $(8.468)
Adjusted Net Loss per Share ($USD)$(0.11) $(0.19)
Cash & Cash Equivalents ($USD Millions)$7.542 $23.351

Notes:

  • No revenue line was reported in Q1 2025 or Q1 2024; operating loss equaled operating expenses, highlighting pre-revenue status .

Actual vs S&P Global Consensus (Q1 2025)

MetricQ1 2025 ActualQ1 2025 Consensus
Diluted EPS ($USD)$0.58 $(0.04)*
Adjusted EPS ($USD)$(0.19) $(0.04)*
EBITDA ($USD Millions)$(8.685)*$(3.75)*
  • Bold highlights: GAAP EPS was a significant beat vs consensus due to a non-cash $60.3M warrant/earn-out revaluation; however, Adjusted EPS and EBITDA were a significant miss vs consensus, reflecting higher OpEx ahead of revenue ramp .
  • Values retrieved from S&P Global.*

KPIs

KPIQ1 2025Commentary
Headcount (employees)~40 as of 3/31/25 Expected to more than double by year-end to support plant commissioning
Cash Position ($USD Millions)$23.4 (3/31/25) ; >$100 (5/9/25) PIPE $75M and ~$15M forward purchase exercises bolster liquidity
2025 Quarterly OpEx ($USD Millions)$8–$9 Reflects hiring and infrastructure investments
2025 Capex ($USD Millions)$60–$65 Finishing equipment orders in U.S./Korea/Japan; tariffs risk single-digit millions
Customer MOU (tons/yr)Up to ~20 tpy Ramp will start later in 2026; mix of second-source and sole-source opportunities

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Quarterly Operating ExpensesFY 2025N/A$8–$9M per quarter Initiated
Capital ExpendituresFY 2025N/A$60–$65M Initiated
Tariff Impact on CapexFY 2025N/AWorst-case single-digit millions Initiated
Commissioning of Magnet Plant (First Line)1H 2026N/ACommission first line; target 600 tpy initial, augment to 1,200 tpy by YE 2026 Initiated
First-Line Revenue PotentialSteady-stateN/A~$150–$200M annually at 1,200 tpy Initiated
Full Plant CapacityMulti-yearN/APath to 5,000 tpy under right financing conditions Initiated

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 & Q-1)Current Period (Q1 2025)Trend
Magnet Plant CommissioningN/AAggressive but achievable plan; finishing equipment ordered; initial 600 tpy, scaling to 1,200 tpy by YE 2026 Initiated/Scaling
Customer Pipeline & MOUsN/AFirst MOU ~20 tpy; diverse pipeline across EV, aerospace, industrial, medical, defense, consumer; 3–6 month qualification for SMBs Building Momentum
Financing & Government SupportN/A$100M+ cash post-PIPE; government incentives actively pursued; financing is gating factor for accelerating scale Improving Access
Feedstock StrategyN/AComfortable on light REE feedstock for initial years; heavies constrained by export controls; initial customers don’t require heavies Manageable Near-Term
Round Top DevelopmentN/A>99% purity oxides; multi-stage plan (flow sheet, PFS, pilot); August update targeted Advancing R&D
Tariffs/MacroN/APotential capex inflation single-digit millions; premium pricing vs China; aligned with national supply-chain priorities Headwind/Support Mix

Management Commentary

  • “We are experiencing a ‘Manhattan Project’ moment in America…we are determined to deliver for the American people” .
  • “Capital is the fuel that will run this machine…if we are able to obtain the capital we need to accelerate our strategy, we will certainly seek to do so” .
  • “Our goal is to fill the capacity of our first line by the end of 2026 or early 2027” .
  • “We have raised over $100 million since the start of the year…started prototyping magnets…moving quickly to commission the first line” .
  • “We have separated many of the rare earths from Round Top ore into individual oxides that exceed 99% purity using our proprietary ion exchange technology” .

Q&A Highlights

  • Customer MOU specifics: ~20 tons/year; initial ramp later in 2026; mix of second-source and new programs; premium pricing expected vs China, in line with non-China producers .
  • Qualification timing: 3–6 months for small/medium customers; 1–2 years for auto OEMs .
  • Equipment/scale: existing backbone initially supports ~600 tpy; incremental equipment needed to reach 1,200 tpy; finishing equipment ordered, tailored to pipeline .
  • Financing/government: customer funding possible for bespoke needs; active engagement in Washington; expect supportive stance but timing uncertain .
  • Feedstock: comfortable on light REEs for initial customers; heavy REEs constrained; early customers don’t require heavies .
  • Round Top economics/ownership: TMRC partnership ~81%/19%; USAR controls management; timeline to EBITDA positivity more likely in 2027 after capacity fill .

Estimates Context

  • Consensus indicates Q1 2025 Primary EPS of $(0.04)* vs GAAP diluted EPS $0.58 (beat due to non-cash $60.3M warrant/earn-out revaluation); Adjusted EPS $(0.19) (miss) .
  • Consensus EBITDA $(3.75)M* vs actual EBITDA around $(8.685)M*, consistent with elevated SG&A and pre-revenue operations .
  • Revenue consensus unavailable*, consistent with the company not reporting revenue in Q1 2025 .
  • Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Expect near-term operational losses and cash burn as USAR commissions the Stillwater plant; quarterly OpEx $8–$9M and capex $60–$65M guided for 2025 .
  • GAAP EPS strength is non-operational; focus on adjusted metrics and EBITDA for underlying trajectory; adjusted EPS $(0.19) and EBITDA below consensus highlight scale-up costs .
  • Customer diversification strategy reduces single-customer risk; watch for additional MOUs and qualification milestones in 2H25 as prototypes move through testing .
  • Government incentives and financing are pivotal catalysts; successful awards/arrangements could accelerate capacity build toward 5,000 tpy .
  • Feedstock strategy mitigates heavy-REE constraints initially; product mix targets magnets not requiring heavies, aiding early ramp reliability .
  • August flow-sheet update is a key event for Round Top; successful PFS/pilot progression would de-risk long-term integrated supply economics .
  • Trading implications: headline beats on GAAP EPS are optical; the narrative that moves the stock will center on funding progress, equipment commissioning, customer qualification wins, and visible government support .