Pilbara Minerals (ASX: PLS) has returned to the dividend ranks after a three-year absence, with a sharp improvement in lithium prices helping the Western Australian miner deliver record production and a major recovery in earnings for the 2026 financial year, capping a turnaround from the loss recorded the year before.

Earnings swing on record production

Revenue jumped 152% to $1.93 billion in FY26, while underlying EBITDA climbed from $97 million to $1.1 billion. The bottom line swung from a $196 million net loss in FY25 to a $526 million net profit.

The stronger result was supported by a 17% increase in spodumene production to 879,500 tonnes, a record from its flagship Pilgangoora operation in Western Australia's Pilbara region, achieved at an average realised price of $2,164 per tonne for 5.2% spodumene concentrate.

First dividend since 2023

PLS will pay a fully franked final dividend of 5 cents per share, representing a $161 million distribution and marking the company's first dividend since 2023.

The reinstatement restores a practice from the FY22 and FY23 lithium boom, when PLS was a regular payer — including special dividends — before the price collapse forced it to conserve cash, and it underlines the shift from capital preservation back to shareholder returns as cash flows recover.

Lithium prices more than four times June 2025 level

The lithium price recovery has transformed the earnings picture across the sector. A 6% spodumene concentrate price of $US2,350 per tonne is now more than four times the $US580 level recorded in June 2025.

The June 2025 trough marked the low point of a downturn that began in late 2022, when spodumene traded above $US8,000 per tonne, and the prolonged slump forced miners across the Australian hard-rock sector to cut output or idle plants.

That improvement has allowed PLS to move away from the defensive, capital-preservation approach adopted during the lithium downturn and begin putting more capital towards growth.

Growth projects back in focus

The company restarted the Ngungaju processing plant — placed on care and maintenance in late 2024 as prices slumped — during FY26, and continued progressing the P2000 and Colina projects. PLS approved $175 million of pre-investment funding for P2000 in June.

P2000 is the plan to lift Pilgangoora's processing capacity towards around two million tonnes a year, while Colina is a lithium project in Brazil secured through PLS's 2024 acquisition of Latin Resources, extending the company's growth pipeline beyond the Pilbara.

The stronger lithium market is being driven by demand from electric vehicles and battery storage, while expectations of tighter supply have improved sentiment towards producers that previously cut or suspended capacity during the downturn.

Sustainability of the recovery in focus

For investors, the key question is how sustainable the current lithium recovery will prove to be. PLS has significantly greater earnings leverage to higher prices now that production has increased, but that same exposure means weaker lithium prices could quickly affect margins and cash generation.

The last cycle is a reminder of how quickly the picture can change, with the 2021–22 price boom giving way to the slump that only bottomed in mid-2025.

PLS shares have more than doubled over the past year, reaching $5.07 and giving the company a market value of $16.3 billion.

The FY26 result therefore marks a major change in the investment story. PLS is no longer simply positioning itself to survive a weak lithium cycle; it is now generating significant cash from stronger prices, returning capital to shareholders through its reinstated dividend, and investing in further production growth.