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Molycorp, Inc. (MCP)

Q4 2012 Earnings Conference Call

March 14, 2013 16:30 ET


Constantine Karayannopoulos - President and Chief Executive Officer

Michael Doolan - Executive Vice President and Chief Financial Officer


Brian Lee - Goldman Sachs

Jeff Kramer - Morgan Stanley

Chris Kovacs - Robert W. Baird

Paretosh Misra - Morgan Stanley

Zach Zolnierz - GMP Securities



Good day, ladies and gentlemen, and welcome to the Fourth Quarter and Fiscal Year 2012 Molycorp Earnings Conference Call. My name is Derrick, and I will be your operator for today. At this time, all participants are in a listen-only mode. We shall facilitate a question-and-answer session at the end of the conference. (Operator Instructions) As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the conference over to Mr. Brian Blackman, Senior Manager of Investor Relations. Please proceed.

Brian Blackman - Senior Manager, Investor Relations

Thank you, operator and good day everyone. Thank you for joining us on today’s call. As you all know, we just released our financial and operating results for the fourth quarter and year end 2012. Our press release is posted on the Investor Relations section of our website under This call is being webcast and a replay as well as a transcript will be archived on the company’s website. For those of you dialed into the call, a slideshow that accompanies our prepared remarks is available on the Investor page Molycorp’s website as well. For those of you listening by webcast, the slides will be presented in your webcast player, where you advance the slides on your own.

During the course of this call, we will make forward-looking statements and I direct you to slide number 2 for our disclaimers. All statements that address expectations or projections about the future are forward-looking statements. Although they reflect our current expectations, these statements are not guarantees of future performance, but involve a number of risks and assumptions. We urge you to review Molycorp’s SEC filings for disclosure of some of the risk factors that could cause actual results to differ materially. We will also refer to non-GAAP measures and request that you review the reconciliations to the GAAP statements provided with our earnings news release on our website. We will also refer to non-GAAP financial measures and you can find reconciliations to those most directly comparable GAAP financial measures in our earnings release also posted on our website.

As you can see on slide three, joining us today is Molycorp’s President and Chief Executive Officer, Constantine Karayannopoulos, and our Executive Vice President and Chief Financial Officer, Michael Doolan. I would now like to turn the call over to Constantine.

Constantine Karayannopoulos - President and Chief Executive Officer

Thanks, Brian and hello everyone. Let me begin with slide four. 2012 was a year of significant change for Molycorp. First, we successfully transitioned from what was largely a development company to what is now a global operations and production company. Molycorp is the world’s only fully integrated global solution for reliable rare earth supply. By combining the world’s best rare earth resource at Mountain Pass with the world’s best rare earth processing capabilities from Molycorp Canada and Silmet, we are now vertically integrated on a global scale from a world-class upstream rare earth resource to some of the world’s most advanced downstream rare earth processing facilities. Second, we have now completed the construction and commissioning of all key production assets in our new state-of-the-art Mountain Pass facility and we are ramping up to full scale commercial operations and delivering feedstock to our value-added downstream processing centers.

Third, we secured additional capital, including January’s equity and convertible debt raise and we believe that we are now sufficiently capitalized to complete our ramp up to our initial production run rate of 19,050 metric tons at Mountain Pass and to operate in 2013 with a reasonable cash cushion. Fourth, we accomplished all of these things in over the past 15 months while growing market share in several areas and navigating through some pretty challenging headwinds in the global rare earth markets.

Now, my goal going forward for this company is to sharpen our focus on building greater value for our shareholders. Our priorities in this effort will be to instill greater discipline and accountability across the company, improve performance across all business units, and make sure we achieve our cost savings – our cost savings goals, which will involve reductions in overhead spending and headcount. All across the Molycorp enterprise, our people are going to run this business as owners rather than managers. I will provide investors on today’s call with an update on the progress we are making at Mountain Pass and on global market trends we are seeing across our business segments. But first let me have Michael provide details on our Q4 and full years 2012 financial performance. Michael?

Michael Doolan - Executive Vice President and Chief Financial Officer

Okay, thanks Constantine, and again good afternoon to everyone. Excuse me, first a quick summary of the full year on slide six. We reported net revenue of $528.9 million, a 33% increase over revenues in 2011 of $396.8 million. That included of course approximately six months of new revenue from the Molycorp Canada acquisition. And during the year we sold more than 9,200 metric tons of products. Our gross margins for the full year across all segments compressed to 3.3%. Our EBITDA contribution was negative for the year. However, on an adjusted basis EBITDA was a positive $111 million. And we also reported a full year net loss attributable to common stockholders of $460.9 million or a loss of $4.31 per share. Adjusted non-GAAP net loss was $39.2 million or an adjusted loss of $0.37 per share.

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