MP Materials Corp. / DEMP

MP Materials Corp. / DE Leases Disclosure

10-KFiled Feb 26, 20263 min read
OPERATING LEASES
The Company’s operating leases consist primarily of corporate office space, warehouses, and equipment used in its operations; the Company’s finance leases are not material.
Lease terms on the Company’s operating leases range from approximately one month to eight years. The majority of these leases require fixed monthly lease payments that may be subject to annual increases throughout the lease term. The Company’s lease agreements do not contain material residual value guarantees or restrictive covenants. Certain leases include renewal options at the election of the Company to extend the lease for an additional one to five years. As of December 31, 2025, the Company was not reasonably certain of exercising any material purchase, renewal, or termination options contained within its lease agreements. No ROU asset impairment charges were recorded during the years ended December 31, 2025, 2024 and 2023.
The Company determined that the DoW Offtake Agreement contains an embedded lease of the 10X Facility as a result of the DoW’s (i) right to obtain substantially all of the economic benefits of the 10X Facility and (ii) ability to direct the use of the 10X Facility for magnet production. See Note 3, “Public-Private Partnership with U.S. Department of War,” for more information about the DoW Offtake Agreement.
Under the terms of the DoW Offtake Agreement, certain costs related to the development and commissioning of the 10X Facility incurred prior to the Commercial Operation Date are reimbursable by the DoW. Reimbursements will be initially deferred as a contract liability and subsequently recognized into revenue as the Company fulfills its obligations under the contract. As of December 31, 2025, the contract liability for these reimbursements, which is included within the Consolidated Balance Sheets in non-current “Deferred revenue,” totaled $2.3 million. Furthermore, certain of these development and commissioning costs of the 10X Facility qualify for capitalization as costs to fulfill a contract with a customer. As of December 31, 2025, the Company capitalized $2.3 million of these contract fulfillment costs, which are included within the Consolidated Balance Sheets in “Other non-current assets.” These costs will be expensed following the pattern of revenue recognized from the reimbursements under the contract.
Total operating lease cost included the following components:
Location on Consolidated Statements of Operations
For the year ended December 31,
(in thousands)202520242023
Operating lease cost
Primarily Selling, general and administrative
$3,039 $1,916 $1,328 
Short-term lease cost
Primarily Cost of sales (excluding depreciation, depletion and amortization) (including related party)
3,670 3,163 2,134 
$6,709 $5,079 $3,462 
Information related to our operating lease terms and discount rates was as follows:
December 31,
20252024
Weighted-average remaining lease term
3.6 years5.7 years
Weighted-average discount rate
6.5 %6.9 %
As of December 31, 2025, the maturities of the Company’s operating lease liabilities were as follows:
(in thousands)
Period:
2026$3,863 
20273,851 
20282,758 
20291,436 
20301,227 
Total lease payments13,135 
Less: Imputed interest(1,490)
Total$11,645 
Supplemental disclosure for the Consolidated Balance Sheets related to the Company’s operating leases is as follows:
Location on Consolidated Balance Sheets
December 31,
(in thousands)20252024
Operating leases:
Right-of-use assets
Other non-current assets
$13,214 $8,680 
Operating lease liability, currentOther current liabilities$3,216 $1,066 
Operating lease liability, non-current
Other non-current liabilities
8,429 5,798 
Total operating lease liabilities$11,645 $6,864 

Historical Timeline

Fiscal YearFiled
2025Feb 26, 2026Showing above
2024Feb 28, 2025
2023Feb 28, 2024

About Leases Disclosures

Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.

Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.

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