Highlights
- Continued to work closely with U.S. Department of Energy
(“DOE”) on key technical, financial and legal workstreams to
advance towards definitive financing documentation for a loan for
gross proceeds of up to $375 million;
- Largest customer source of revenue in 1H 2024 was a leading
U.S.-headquartered vertically integrated EV and battery
manufacturer with a substantial global EV market share;
- Record quarterly revenue of $8.4 million, representing a 133%
year-over-year increase;
- Selling, general & administrative ("SGA") expenses
decreased 39% year-over-year to $15.3 million, mainly due to the
Company's cost reduction initiatives;
- Exploring financing and strategic options to increase near-term
liquidity;
- Advanced go-forward strategy for Rochester Hub project
execution plan for proposed mixed hydroxide precipitate (“MHP”)
scope, and refined cost estimates with the local market; and
- Continuing to review and optimize Spoke network, including
transitioning the Ontario Spoke from operational pause to
closure.
Li-Cycle Holdings Corp. (NYSE: LICY) ("Li-Cycle" or the
“Company"), a leading global lithium-ion battery resource recovery
company, today announced financial results and business updates for
its second quarter ended June 30, 2024.
“During the second quarter of 2024, we continued to work closely
with the U.S. Department of Energy on key technical, financial and
legal workstreams to advance towards reaching an agreement on
definitive financing documentation, execution thereof, and
satisfying conditions precedent for loan disbursements,” said Ajay
Kochhar, Li-Cycle’s President and CEO. “We have advanced the
go-forward strategy for the Rochester Hub project and gained
continued commercial traction across our business to build on our
position as a leading global recycling partner."
Financing and DOE Loan Update
Li-Cycle continues to work closely with the DOE on key
technical, financial and legal workstreams to advance toward
reaching an agreement on definitive financing documentation,
execution thereof, and satisfying conditions precedent for loan
disbursements, including obtaining additional financing required by
the Company to fund a base equity contribution and account funding
requirements before drawing down on the DOE Loan.
In addition, the Company is also exploring financing and
strategic alternatives to increase near-term liquidity.
Rochester Hub Project
Li-Cycle continued its comprehensive review of its Rochester Hub
project, including advancing the go-forward strategy of the project
execution plan for the proposed MHP scope. The Company has also
refined its cost estimates with the local market as part of its
evaluation of the total project cost estimate for the MHP scope,
which remains unchanged at approximately $960 million.
Commercial Highlights
Li-Cycle continued to gain commercial traction during the second
quarter and focused on the processing of EV battery packs to
leverage the processing capabilities of the Company’s Generation 3
Spokes. Approximately 40% of the Company’s global feedstock in Q2
2024 were EV battery packs and four of its top five customers were
among the largest global EV OEMs.
During the first half of 2024, Li-Cycle's largest customer
source of revenue was a U.S.-headquartered vertically integrated EV
and battery manufacturer with a substantial global EV market share.
In Q2 2024, the Company announced a recycling partnership with
Daimler Truck North America and widened its commercial footprint in
Europe for feedstock to the Germany Spoke.
Review of Q2 2024 Financial Results
The Company achieved record total revenue of $8.4 million, a
133% increase from total revenue of $3.6 million in 2023. Total
revenue includes revenue from product sales, which take into
account the impact of non-cash fair value pricing adjustments, and
recycling services. The total revenue increase was mainly due to
higher recycling services revenue of $3.2 million, versus $0.5
million in 2023. Product revenue also increased, which was largely
due to favorable fair value pricing adjustment of $0.2 million,
versus an unfavorable adjustment of $1.7 million in the prior
year.
Total cost of sales decreased 4% to $19.4 million versus $20.2
million in 2023. Total cost of sales includes costs attributable to
product sales and recycling services. The reduction in total cost
of sales was primarily due to a 11% decrease in costs attributable
to product sales, partially offset by an increase in costs
attributable to recycling services. Cost of sales attributable to
product sales decreased as a result of lower black mass production,
partially offset by increased operational costs associated with
repair and maintenance activities.
SG&A expenses decreased 39% to $15.3 million versus $24.9
million in 2023, primarily due to decreased recurring personnel
costs driven by restructuring initiatives implemented since the
pause of construction at the Rochester Hub.
Other income increased to $18.7 million, compared to $10.9
million in the same period last year, primarily due to favorable
fair value adjustments of the Company’s financial instruments
offset by an increase in interest expense.
Net loss improved to $8.2 million, compared to $31.9 million in
2023, which was primarily due to the decrease in SG&A and other
expense.
Adjusted EBITDA1 loss improved to $23.4 million, compared to an
adjusted EBITDA loss of $41.3 million in 2023. This was largely
driven by the decrease in SG&A, cost of sales, and higher
revenue partially offset by restructuring fees.
The Company incurred capital expenditures of $15.4 million in
the six months ended June 30, 2024 compared to capital expenditures
of $164.9 million in the same period last year primarily due to the
pause of construction at the Rochester Hub. The capital
expenditures consisted of payments made for equipment and
construction materials purchased during previous periods for the
Rochester Hub and Germany Spoke.
1
Adjusted EBITDA is not a recognized
measure under U.S. GAAP. See the Non-GAAP Financial Measures
section of this press release for a description of how Adjusted
EBITDA is calculated and a reconciliation of Adjusted EBITDA to net
income (loss)
Balance Sheet Position
As of June 30, 2024, Li-Cycle had cash and cash equivalents of
$57.0 million, compared to $109.1 million at March 31, 2024. The
decrease was primarily driven by changes in working capital and
investing activities partially offset by lower SG&A.
Webcast and Conference Call Information
On Thursday, August 8, 2024, at 8:30 a.m. Eastern Time, Company
management will host a webcast and conference call to provide a
business update including a review of these results. The related
presentation materials for the webcast and conference call will be
made available on the investor section of the Li-Cycle website:
https://investors.li-cycle.com/overview/default.aspx
Investors may listen to the conference call live via audio-only
webcast or through the following dial-in numbers:
Domestic: (800) 579-2543 International: (203)
518-9814 Participant Code: LICYQ224 Webcast:
https://investors.li-cycle.com
A replay of the conference call/webcast will also be made
available on the Investor Relations section of the Company’s
website at https://investors.li-cycle.com.
About Li-Cycle Holdings Corp.
Li-Cycle (NYSE: LICY) is a leading global lithium-ion battery
resource recovery company. Established in 2016, and with major
customers and partners around the world, Li-Cycle’s mission is to
recover critical battery-grade materials to create a domestic
closed-loop battery supply chain for a clean energy future. The
Company leverages its innovative, sustainable and patent-protected
Spoke & Hub Technologies™ to recycle all different types of
lithium-ion batteries. At our Spokes, or pre-processing facilities,
we recycle battery manufacturing scrap and end-of-life batteries to
produce black mass, a powder-like substance which contains a number
of valuable metals, including lithium, nickel and cobalt. At our
future Hubs, or post-processing facilities, we plan to process
black mass to produce critical battery-grade materials, including
lithium carbonate, for the lithium-ion battery supply chain. For
more information, visit https://li-cycle.com/.
Results of Operations Summary1
Three months ended June
30,
Six months ended June
30,
$ millions, except per share data
2024
2023
Change
2024
2023
Change
Financial highlights
Revenue
$
8.4
$
3.6
$
4.8
$
12.6
$
7.2
$
5.4
Cost of sales
(19.4
)
(20.2
)
0.8
(37.3
)
(39.3
)
2.0
Selling, general and administrative
expense
(15.3
)
(24.9
)
9.6
(45.9
)
(47.6
)
1.7
Research and development
(0.6
)
(1.3
)
0.7
(0.5
)
(2.2
)
1.7
Other income (expense)
18.7
10.9
7.8
(73.8
)
13.6
(87.4
)
Income tax
—
—
—
—
(0.1
)
0.1
Net loss
(8.2
)
(31.9
)
23.7
(144.9
)
(68.4
)
(76.5
)
Adjusted EBITDA1 loss
(23.4
)
(41.3
)
17.9
(50.8
)
(79.2
)
28.4
Loss per common share - basic and
diluted
(0.36
)
(1.45
)
1.09
(6.44
)
(3.08
)
(3.37
)
Net cash used in operating activities
$
(37.3
)
$
(38.7
)
$
1.4
$
(72.0
)
$
(63.8
)
$
(8.2
)
As at
June 30, 2024
December 31, 2023
Change
Cash and cash equivalents
Cash and cash equivalents balance2
$
57.0
$
70.6
$
(13.6
)
1
Adjusted EBITDA is a non-GAAP financial
measure and does not have a standardized meaning under U.S. GAAP.
Refer to the section titled "Non-GAAP Financial Measures" below,
including a reconciliation to comparable U.S. GAAP financial
measures.
2
Excludes restricted cash of $9.6 million
as of June 30, 2024, and restricted cash of $9.7 million as of
December 31, 2023.
Non-GAAP Financial Measures Adjusted EBITDA
(loss)
Li-Cycle reports its financial results in accordance with
accounting principles generally accepted in the United States of
America (“U.S. GAAP”). The Company makes references to certain
non-GAAP measures, including adjusted EBITDA (loss). These measures
are not recognized measures under U.S. GAAP, do not have a
standardized meaning prescribed by U.S. GAAP and are therefore
unlikely to be comparable to similar measures presented by other
companies. Rather, these measures are provided as additional
information to complement those U.S. GAAP measures by providing a
further understanding of the Company’s results of operations from
management’s perspective. Accordingly, they should not be
considered in isolation nor as a substitute for the analysis of the
Company’s financial information reported under U.S. GAAP.
Li-Cycle defines Adjusted EBITDA as earnings before depreciation
and amortization, interest expense (income), income tax expense
(recovery) adjusted for items that are not considered
representative of ongoing operational activities of the business
and items where the economic impact of the transactions will be
reflected in earnings in future periods. Adjustments relate to fair
value loss on financial instruments, debt extinguishment loss and
certain non-recurring expenses. Foreign exchange (gain) loss is
excluded from the calculation of Adjusted EBITDA. The following
table provides a reconciliation of net loss to Adjusted EBITDA
(loss).
Three months ended June
30,
Six months ended June
30,
Unaudited - $ millions
2024
2023
2024
2023
Net loss
$
(8.2
)
$
(31.9
)
$
(144.9
)
$
(68.4
)
Income tax
—
—
—
(0.1
)
Depreciation and amortization
2.6
2.0
6.8
3.9
Interest expense
15.6
0.1
27.1
1.2
Interest income
(0.9
)
(4.2
)
(1.5
)
(9.2
)
EBITDA (loss)
$
9.1
$
(34.0
)
$
(112.5
)
$
(72.6
)
Debt extinguishment loss
—
—
58.9
—
Restructuring fees1
2.2
—
13.7
—
Fair value gain on financial
instruments2
(34.7
)
(7.3
)
(10.9
)
(6.6
)
Adjusted EBITDA (loss)
$
(23.4
)
$
(41.3
)
$
(50.8
)
$
(79.2
)
1
Restructuring charges include: expense
related to the workforce reduction approved by the Board on March
25, 2024 which provided certain executives and non-executives with
contractual termination benefits as well as one-time termination
benefits; Special Committee retainers; professional fees, including
legal fees incurred as a result of the three shareholder suits, and
the mechanic’s liens filed following the construction pause at the
Rochester Hub; and expenses related to the implementation of the
Cash Preservation Plan.
2
Fair value gain on financial instruments
relates to convertible debt.
Cautionary Notes - Forward-Looking Statements and Unaudited
Results
Certain statements contained in this press release may be
considered “forward-looking statements” within the meaning of the
U.S. Private Securities Litigation Reform Act of 1995, Section 27A
of the U.S. Securities Act of 1933, as amended, Section 21 of the
U.S. Securities Exchange Act of 1934, as amended, and applicable
Canadian securities laws. Forward-looking statements may generally
be identified by the use of words such as “believe”, “may”, “will”,
“continue”, “anticipate”, “intend”, “expect”, “should”, “would”,
“could”, “plan”, “potential”, “future”, “target” or other similar
expressions that predict or indicate future events or trends or
that are not statements of historical matters, although not all
forward-looking statements contain such identifying words.
Forward-looking statements in this press release include but are
not limited to statements about: additional financing required to
fund a base equity contribution and account funding requirements
before drawing down on the DOE loan; and Li-Cycle's ability to
explore financing and strategic alternatives to increase
liquidity.
These statements are based on various assumptions, whether or
not identified in this communication, including but not limited to
assumptions regarding the timing, scope and cost of Li-Cycle’s
projects, including paused projects; the processing capacity and
production of Li-Cycle’s facilities; Li-Cycle’s ability to source
feedstock and manage supply chain risk; Li-Cycle’s ability to
increase recycling capacity and efficiency; Li-Cycle’s ability to
obtain financing on acceptable terms; the success of Li-Cycle's
cash preservation plan; the outcome of the go-forward strategy of
the Rochester Hub; Li-Cycle’s ability to retain and hire key
personnel and maintain relationships with customers, suppliers and
other business partners; expectations related to the outcome of
future litigation; general economic conditions; currency exchange
and interest rates; compensation costs; and inflation. There can be
no assurance that such estimates or assumptions will prove to be
correct and, as a result, actual results or events may differ
materially from expectations expressed in or implied by the
forward-looking statements.
These forward-looking statements are provided for the purpose of
assisting readers in understanding certain key elements of
Li-Cycle’s current objectives, goals, targets, strategic
priorities, expectations and plans, and in obtaining a better
understanding of Li-Cycle’s business and anticipated operating
environment. Readers are cautioned that such information may not be
appropriate for other purposes and is not intended to serve as, and
must not be relied on, by any investor as a guarantee, an
assurance, a prediction or a definitive statement of fact or
probability.
Forward-looking statements involve inherent risks and
uncertainties, most of which are difficult to predict and many of
which are beyond the control of Li-Cycle and are not guarantees of
future performance. Li-Cycle believes that these risks and
uncertainties include, but are not limited to, the following:
Li-Cycle’s inability to develop the Rochester Hub as anticipated or
at all, and other future projects including its Spoke network
expansion projects in a timely manner or on budget or that those
projects will not meet expectations with respect to their
productivity or the specifications of their end products; risk and
uncertainties related to Li-Cycle’s ability to continue as a going
concern; Li-Cycle’s insurance may not cover all liabilities and
damages; Li-Cycle’s reliance on a limited number of commercial
partners to generate revenue; Li-Cycle’s failure to effectively
remediate the material weaknesses in its internal control over
financial reporting that it has identified or its failure to
develop and maintain a proper and effective internal control over
financial reporting; and risks of litigation or regulatory
proceedings that could materially and adversely impact Li-Cycle’s
financial results. These and other risks and uncertainties related
to Li-Cycle’s business are described in greater detail in the
sections entitled "Item 1A. Risk Factors" and “Item 7. Management’s
Discussion and Analysis of Financial Condition and Results of
Operation—Key Factors Affecting Li-Cycle’s Performance” in its
Annual Report on Form 10-K and the sections entitled "Part II.
Other Information—Item 1A. Risk Factors" and “Part I. Financial
Information—Item 2. Management’s Discussion and Analysis of
Financial Condition and Results of Operation—Key Factors Affecting
Li-Cycle’s Performance” in its Quarterly Reports on Form 10-Q, in
each case filed with the U.S. Securities and Exchange Commission
and the Ontario Securities Commission in Canada. Because of these
risks, uncertainties and assumptions, readers should not place
undue reliance on these forward-looking statements. Actual results
could differ materially from those contained in any forward-looking
statement.
Li-Cycle assumes no obligation to update or revise any
forward-looking statements, except as required by applicable laws.
These forward-looking statements should not be relied upon as
representing Li-Cycle’s assessments as of any date subsequent to
the date of this press release.
Unaudited condensed consolidated
interim balance sheets
All dollar amounts presented are expressed
in millions of US dollars except share and per share amounts
June 30,
December 31,
2024
2023
Assets
Current assets
Cash and cash equivalents
$
57.0
$
70.6
Restricted cash
9.6
9.7
Accounts receivable, net
5.7
1.0
Other receivables
1.5
1.9
Prepayments, deposits and other current
assets
21.4
56.2
Inventories, net
9.1
9.6
Total current assets
104.3
149.0
Non-current assets
Property, plant and equipment, net
697.8
668.8
Operating lease right-of-use assets
89.9
56.4
Finance lease right-of-use assets
—
2.2
Other assets
7.9
9.6
795.6
737.0
Total assets
$
899.9
$
886.0
Liabilities
Current liabilities
Accounts payable
$
103.6
$
134.5
Accrued liabilities
26.1
17.6
Deferred revenue
0.6
0.2
Operating lease liabilities
9.3
4.4
Total current liabilities
139.6
156.7
Non-current liabilities
Accounts payable
6.3
—
Deferred revenue
5.3
5.3
Operating lease liabilities
85.6
56.2
Finance lease liabilities
—
2.3
Convertible debt
426.4
288.1
Asset retirement obligations
1.0
1.0
524.6
352.9
Total liabilities
$
664.2
$
509.6
Equity
Common stock and additional paid-in
capital
Authorized unlimited shares, Issued and
outstanding - 22.5 million shares at June 30, 2024 (22.2 million
shares at December 31, 2023)
652.5
648.3
Additional paid-in capital
Accumulated deficit
(416.5
)
(271.6
)
Accumulated other comprehensive loss
(0.3
)
(0.3
)
Total equity
235.7
376.4
Total liabilities and equity
$
899.9
$
886.0
Unaudited condensed consolidated
interim statements of operations and comprehensive loss
All dollar amounts presented are expressed
in millions of US dollars except share and per share amounts
For the three months ended June
30, 2024
For the three months ended June
30, 2023
For the six months ended June 30,
2024
For the six months ended June 30,
2023
Revenue
Product revenue
$
5.2
$
3.1
$
7.1
$
6.2
Recycling service revenue
3.2
0.5
5.5
1.0
Total revenue
8.4
3.6
12.6
7.2
Cost of sales
Cost of sales - Product revenue
(17.9
)
(20.2
)
(34.9
)
(39.3
)
Cost of sales - Recycling service
revenue
(1.5
)
—
(2.4
)
—
Total cost of sales
(19.4
)
(20.2
)
(37.3
)
(39.3
)
Selling, general and administrative
expense
(15.3
)
(24.9
)
(45.9
)
(47.6
)
Research and development
(0.6
)
(1.3
)
(0.5
)
(2.2
)
Loss from operations
$
(26.9
)
$
(42.8
)
$
(71.1
)
$
(81.9
)
Other income (expense)
Interest income
0.9
4.2
1.5
9.2
Interest expense
(15.6
)
(0.1
)
(27.1
)
(1.2
)
Foreign exchange gain (loss)
(1.3
)
(0.5
)
(0.2
)
(1.0
)
Fair value gain on financial
instruments
34.7
7.3
10.9
6.6
Debt extinguishment loss
—
—
(58.9
)
—
$
18.7
$
10.9
$
(73.8
)
$
13.6
Net loss before taxes
$
(8.2
)
$
(31.9
)
$
(144.9
)
$
(68.3
)
Income tax
—
—
—
(0.1
)
Net loss and comprehensive loss
$
(8.2
)
$
(31.9
)
$
(144.9
)
$
(68.4
)
Net loss and comprehensive loss
attributable to
Shareholders of Li-Cycle Holdings
Corp.
(8.2
)
(32.0
)
(144.9
)
(68.3
)
Non-controlling interest
—
(0.1
)
—
(0.1
)
Loss per common share - basic and
diluted
$
(0.36
)
$
(1.45
)
$
(6.44
)
$
(3.08
)
Unaudited condensed consolidated
interim statements of cash flows
All dollar amounts presented are expressed
in millions of US dollars except share and per share amounts
For the six months ended June
30,
2024
2023
Operating activities
Net loss for the period
$
(144.9
)
$
(68.4
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Share-based compensation
4.2
6.9
Depreciation and amortization
6.8
3.9
Foreign exchange loss on translation
—
0.4
Fair value (gain) on financial
instruments
(10.9
)
(6.6
)
Bad debt expense
—
1.1
Inventory write downs to net realizable
value
(0.2
)
(0.2
)
Loss on write off of fixed assets
0.1
—
Interest and accretion on convertible
debt
27.1
1.2
Interest paid
(0.3
)
—
Debt extinguishment loss
58.9
—
Non-cash lease expense
(0.5
)
(0.1
)
(59.7
)
(61.8
)
Changes in working capital items:
Accounts receivable
(4.7
)
2.3
Other receivables
0.4
5.0
Prepayments and deposits
(2.3
)
(12.1
)
Inventories
0.8
5.3
Deferred revenue
0.4
5.4
Accounts payable and accrued
liabilities
(6.9
)
(7.9
)
Net cash used in operating
activities
$
(72.0
)
$
(63.8
)
Investing activities
Purchases of property, plant, equipment,
and other assets
(15.4
)
(164.9
)
Net cash used in investing
activities
$
(15.4
)
$
(164.9
)
Financing activities
Proceeds from convertible debt
75.0
—
Payments of transaction costs
(1.3
)
—
Purchase of non-controlling interest
—
(0.4
)
Net cash provided (used in) by
financing activities
$
73.7
$
(0.4
)
Net change in cash, cash equivalents and
restricted cash
(13.7
)
(229.1
)
Cash, cash equivalents and restricted
cash, beginning of period
80.3
517.9
Cash, cash equivalents and restricted
cash, end of period
$
66.6
$
288.8
Supplemental non-cash investing
activities:
Purchases of property and equipment
included in liabilities
$
12.6
$
9.8
Supplemental information:
Bad debt recovery
$
1.0
$
—
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240808793034/en/
Investor Relations & Media Louie Diaz Sheldon D'souza
Investor Relations: investors@li-cycle.com Media:
media@li-cycle.com
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