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    USAR
    Earnings call· Jun 2026(Q2 FY26)

    USA Rare Earth Q2 FY26 earnings call USAR

    Aug 10, 2026 Source

    Executive summary

    USA Rare Earth Q2 FY26 — Integrated Supply Chain and Strategic Acquisitions Drive Growth

    USA Rare Earth is rapidly building an integrated rare earth value chain outside of China, driven by strategic acquisitions and internal capability development. The company is positioning itself as a key player in the emerging non-China tier of the rare earth market, focusing on securing feedstock and scaling production to meet critical demand. Leadership transition is underway, with a new CEO taking the helm in October to continue this expansion.

    Highlights

    5

    • Acquisition of Serra Verde, providing the only scaled operating source of light and heavy magnetic rare earths outside Asia, expected to close shortly after August 28 shareholder vote.

    • Secured definitive documentation with the Department of Commerce for a milestone-based CapEx reimbursement program, validating asset base and growth plans.

    • First commercial production of Yttrium metal at LCM in April, essential for high-temperature aerospace and semiconductors.

    • Produced first commercial grade dysprosium and NdPr oxide samples from recycled magnet manufacturing swarf in July, demonstrating advanced processing capability.

    • Secured MOUs and LOIs covering 2,500 metric tons of annual demand with large multinationals, with production purchase orders already in hand.

    Concerns

    3

    • Gross margins were impacted by higher raw material input costs, particularly in heavy rare earths, due to industry-wide supply challenges.

    • Reported a net loss attributable to common stockholders of $10.3 million, or $0.05 per share, including a noncash fair value adjustment of $22.4 million.

    • Adjusted net loss was $33.5 million or $0.15 per share, reflecting significant M&A legal and consulting costs.

    Guidance & targets

    15
    CategoryTargetConfidence
    Serra Verde Annualized EBITDA
    $600 million
    high materiality
    High
    Serra Verde Trio Production Capacity
    6,400 metric tons
    high materiality
    High
    Round Top Commercial Operations
    late 2028
    high materiality
    High
    Magnet and Metal Manufacturing Capacity (US)
    10,000 tons
    high materiality
    High
    Stillwater Magnet Run Rate Capacity
    600 metric tons
    medium materiality
    High
    Stillwater Magnet Run Rate Capacity
    1,200 metric tons
    medium materiality
    High
    Stillwater Team Size
    200 people
    low materiality
    High
    Stillwater AS9100 Certification
    achieved
    low materiality
    High
    First Magnet Sales
    by the end of the year
    medium materiality
    High
    Round Top Definitive Feasibility Study (DFS) Completion
    year-end
    medium materiality
    High
    Round Top S-K 1300 Publication
    early 2027
    medium materiality
    High
    Blacksburg Facility Operational
    early 2028
    medium materiality
    High
    Blacksburg Facility Shell Completion
    end of 2027
    low materiality
    High
    Blacksburg Metal Making Capacity
    5,000 metric tons
    medium materiality
    High
    Blacksburg Magnet Making Capacity
    6,400 metric tons
    medium materiality
    High

    Operational metrics

    13
    Revenue
    $6 million
    Q2 FY26

    Derived from metal and alloy making business at LCM.

    Operating expenses
    $45 million
    Q2 FY26

    Includes higher M&A legal and consulting costs, partially offset by lower R&D costs.

    Net loss attributable to common stockholders
    $10.3 million
    Q2 FY26

    Includes a noncash fair value adjustment of approximately $22.4 million related to warrant and earn-out liabilities.

    Adjusted net loss
    $33.5 million
    Q2 FY26

    Excluding noncash fair value adjustment.

    Adjusted net loss per share
    $0.15
    Q2 FY26

    Excluding noncash fair value adjustment.

    Cash and cash equivalents
    $1.5 billion
    Q2 FY26

    Provides flexibility for organic and inorganic growth.

    Capital expenditures
    $66 million
    Q2 FY26

    Total capital expenditures for the quarter.

    Dysprosium oxide price
    up over 90%YoY
    CY26

    Reflects scarcity in the Western market.

    Yttrium oxide price
    over 60%
    since March

    Reflects scarcity in the Western market, only recently tracked.

    Heavy rare earth distribution
    above 70%
    Q2 FY26

    Confirmed by early assay results from resource upgrade drilling program.

    Magnet swarf recycling potential
    20% to 30%
    future

    Potential contribution of recycled swarf to overall supply.

    Stillwater team size
    140 people
    Q2 FY26

    Current headcount at the Stillwater facility.

    Stillwater quality certification
    ISO 9001
    current

    Current quality management standard at Stillwater.

    Industry KPIs

    3
    MetricValueDetails
    Growth project CAPEX first production—
    Ore grade recovery drilling by depositabove 70%%
    Production sales volume by metal and by mine6,400 metric tonsmetric tons

    Orderbook & backlog

    1
    Magnet MOUs and LOIs2,500 metric tonsQ2 FY26

    Represents annual demand, with several converted to production purchase orders. Company is looking to expand this demand further.

    Deals & partnerships

    5
    Serra VerdeAcquisition of a scaled operating source of both light and heavy magnetic rare earths outside Asia.

    Shareholder vote on August 28, 2026, is the last remaining hurdle. No more regulatory hurdles in Brazil.

    CaresterInvestment bringing world-class heavy rare earth processing capability and intellectual property into the platform.

    Part of building an integrated value chain.

    Department of CommerceSigned definitive documentation for a milestone-based CapEx reimbursement program.

    Viewed as validation of asset base, business model, and growth plans, significantly derisks path to full scale production. Protects U.S. taxpayer and aligns private capital with government investment.

    TMRCConsolidates ownership interest in Round Top.

    Allows for streamlined operations, governance, and decision-making for the Round Top project.

    Texas Semiconductor Innovation Fund and U.S. Department of EnergyReceived grants to advance the company's platform.

    Provides further external validation that the platform is essential national infrastructure.

    Capital programs

    4
    Serra Verde Optimization and Growth Projectrecommissioning

    Aims to increase efficiency and production capacity. Developing as expected toward restart of commercial production and ramp-up on time and within budget.

    Blacksburg U.S. Magnet and Metals Facilityunderway
    Spent to date: ground broken
    Start: Q2 FY26

    Benefit: 5,000 metric tons metal making, 6,400 metric tons magnet making

    Selected Blacksburg, South Carolina, for the second U.S. magnet and metals facility. Long lead time equipment ordered. Shell expected to be completed by end of 2027, operational early 2028.

    Round Top Resource Upgrade Drilling Programunderway
    Spent to date: 10,000 feet drilled
    Start: Q2 FY26

    Benefit: additional core

    Drilling over 10,000 feet of additional core across a 3-rig campaign. Early assay results are in line with expectations for resource grade and confirm heavy rare distribution above 70%.

    Wheat Ridge Hydrometallurgical Facilitycommissioned

    Benefit: 3 demonstration circuits (Round Top flow sheet, third-party MREC separation, magnet swarf recycling)

    Commissioned in June. Data from circuits will feed DFS for Round Top and design/engineering of consolidated separation plan. Also plans forward-looking materials work using quantum computing, AI, and digital twins in partnership with Colorado School of Mines and DOE.

    Risks & headwinds

    2
    Higher raw material input costsQ2 FY26

    impacted gross margins

    Mitigation: Actively engaging with alternative supply sources ahead of anticipated access to feedstock from Serra Verde and Carester; position in supply-constrained market provides opportunity to establish appropriate non-China pricing.

    Single-source dependency on strategic competitor (China)current

    Chinese government's recent export restrictions on Western companies

    Mitigation: Building an integrated rare earth platform outside of China to anchor the non-China tier and be a partner of choice; developing capabilities at each link of the value chain.

    What to watch in Q3 FY26

    5

    Serra Verde Acquisition Close

    shortly after August 28, 2026
    CurrentShareholder vote on August 28, 2026
    TargetAcquisition closed

    Why it matters

    The closing of Serra Verde is critical for securing a scaled operating source of heavy rare earths outside Asia, foundational to the company's integrated supply chain strategy.

    So the Serra Verde transaction is in the process of being closed, the shareholder vote, which is the last remaining hurdle is on August 28, and we'll be closing the transaction shortly after that, there are no more regulatory hurdles with regard to that transaction.

    Q&A highlights

    5

    Can you confirm the 2,500 metric tons in PPOs and clarify if these are long-term arrangements? Also, elaborate on the 'positive momentum in pricing' and when it will be reflected.

    Confirmed 2,500 metric tons represents annual demand, with plans to expand further. Supply agreements range from single purchase orders to annual agreements, with future potential for offtake agreements. Stated that higher prices have already been implemented and will be seen in upcoming quarters.

    “Yes. I mean that is 2,500 tons of annual demand. And we are looking at expanding that currently well beyond that. So the additional customers that we talked about, the more than 100 that are in the pipeline and the other 20 that we talked about that are near-term qualification are going to build that demand further. And our supply agreements are going to range from single purchase orders to annual agreements. And then over time, as we've talked about, we will enter into selectively into offtake agreements based upon the economics of the transactions.”

    asked by Neal Dingmann · answered by William Steele

    2 min read6 chapters

    Detailed Narrative

    01

    Strategic Acquisitions and Integrated Value Chain

    USA Rare Earth is aggressively building an integrated rare earth value chain spanning three continents, from mining to finished magnets. Key acquisitions this quarter include Serra Verde, providing a scaled source of light and heavy magnetic rare earths outside Asia, and Carester, bringing heavy rare earth processing IP. The company also selected Blacksburg, South Carolina, for its second U.S. magnet and metals facility, with groundbreaking already initiated. This strategy aims to anchor the non-China rare earth supply chain.

    02

    Government Validation and Support

    The company signed definitive documentation with the Department of Commerce for a milestone-based CapEx reimbursement program, which management views as a validation of its assets and growth plans. This financing aligns private capital with government investment and derisks the path to full-scale production. Additionally, grants from the Texas Semiconductor Innovation Fund and the U.S. Department of Energy further validate the platform as essential national infrastructure.

    03

    Operational Milestones and R&D Progress

    USA Rare Earth achieved several operational milestones, including the recommissioning of Serra Verde's optimization project, first commercial production of Yttrium metal at LCM, and commissioning of the hydrometallurgical facility in Wheat Ridge, Colorado. The company also produced its first commercial grade dysprosium and NdPr oxide samples from recycled magnet manufacturing swarf. R&D efforts are focused on developing new magnet grades, formulations, and processing capabilities, including quantum computing and AI partnerships.

    04

    Market Dynamics and Customer Engagement

    The rare earth market is characterized by scarcity, particularly for heavy rare earths outside China, leading to significant price increases (e.g., dysprosium oxide up 90%, Yttrium oxide up 60%). A two-tier market is emerging, with companies seeking reliable non-China supply. USA Rare Earth is engaging deeply with over 30 potential customers for Round Top's non-magnetic oxides and over 100 potential customers for magnets, with MOUs/LOIs covering 2,500 metric tons and production purchase orders in hand.

    05

    Leadership Transition

    Barbara Humpton announced her departure as CEO, effective October 1, with Thras Moraitis taking over. She expressed confidence in the transition, highlighting the strong team and integrated platform built during her tenure. The change is framed as a continuation of the company's bold vision for scaling and expanding its platform, with a focus on seamless execution through the handoff.

    06

    Financial Performance and Capital Position

    Q2 revenues from LCM's metal and alloy making business were approximately $6 million. The company reported an adjusted net loss of $33.5 million, or $0.15 per share, primarily due to higher M&A-related costs and raw material input costs. USA Rare Earth ended the quarter with a strong cash position of approximately $1.5 billion, providing flexibility for organic and inorganic growth initiatives. Capital expenditures for the quarter totaled $66 million.

    AI-generated summary of the company’s earnings call. Not investment advice.