In its Third Quarter 2023 Earnings Release Conference Call, Livent Corporation (NYSE:LTHM) reported an 8% YoY increase in adjusted EBITDA to $120 million, with a flat margin compared to the previous quarter and a nine percentage point higher margin than the same quarter last year. The company revised its full-year 2023 financial guidance primarily due to lower expected volumes sold and a smaller expected price increase YoY. It now projects full-year 2023 revenue to be in the range of $890 million to $940 million and adjusted EBITDA to be in the range of $500 million to $530 million, representing a significant growth of 13% and 14% respectively.
Key takeaways from the call include:
- The company provided an update on its capacity expansion projects, including the challenges faced in the commissioning process of their first phase lithium carbonate expansion in Argentina. They no longer expect incremental expansion volumes to be available for sale in 2023 but anticipate a substantial portion of the capacity to be available in 2024.
- Livent's lithium hydroxide expansions in the US and China are progressing on track, with the completion of a 15,000 metric ton hydroxide facility in China targeted for before year-end 2023.
- Livent discussed the feasibility study for the Whabouchi mine portion of the Nemaska Lithium Project, highlighting its attractive scale, relative cost position, strategic location, and favorable sustainability profile. The total capital requirement for the project is projected at approximately $1.6 billion.
- The company provided an update on its pending merger with Allkem, which is expected to close by the end of 2023. The combined company will be named Arcadium Lithium and will trade on the NYSE under the ticker ALTM.
- Livent discussed the recent decline in lithium market prices and provided their perspectives on the factors driving these movements. They highlighted that the market conditions do not reflect equilibrium supply-demand conditions for lithium and emphasized the strong long-term demand growth for high-quality products.
- The company expects to produce and sell higher volumes in 2024, generating higher cash flow. Livent also highlighted the upcoming merger with Allkem, which is expected to bring tangible benefits in 2024, including improved product flows, lower operating costs, and run rate synergies of $125 million.
Livent also discussed the progress of its merger with Allkem, stating that the merger has received all required pre-closing regulatory approvals, except for foreign investment screening in Australia. Shareholder approval is expected to take place in late Q4, and the merger is set to close by the end of 2023. The company also addressed concerns about a potential slowdown in demand, stating that they do not see any significant changes in the market and that supply will continue to be the constraint on demand.
In terms of supply chain constraints, Livent mentioned that supply will continue to be a constraint on demand for the foreseeable future. They also revised down their guidance primarily due to volume, but offset by cost improvements. They discussed potential funding for the Nemaska project and stated that they expect to fund their portion internally. The company expressed interest in exploring M&A opportunities in Australia and mentioned the disconnect between value and early-stage projects. They stated that they want to have a significant mining presence in Australia.
Lastly, Livent highlighted its strategy of maximizing the sale price of its lithium units and reducing pricing volatility to create predictability of earnings. The company expects its cash flow to continue growing due to locked-in prices and predictable profitability. They also mentioned that tolling is not a sensible option for their new hydroxide capacity and that purchasing third-party carbonate is a possibility.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.