Li-Cycle (LICY) 8 Aug 242024 Q2 Earnings call transcript

Good day. My name is Ashley, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Second Quarter 2024 Li-Cycle Holdings Earnings Call and Webcast. [Operator Instructions] I will now turn the call over to Louis DS, VP, Corporate Affairs. Please go ahead.

you. Thank thank review joining interim financial June XXXX. and business for period everyone, XX, and update results you, morning, us for Li-Cycle's ended Good for the

President with Chief Cunningham, Officer. from We and Financial formal start Executive Officer; today Ajay will Kochhar, and Chief Craig remarks

are to to not the call future this turn to pleased date website should not to upon otherwise, or Exchange to whether in relied call. or and events filings investors.li-cycle.com. any call, our many Li-Cycle most which section in of the be of forward-looking then will of Ajay. With information, this our date statements and subject could can are current statements with as investors.li-cycle.com. of on Investor our which documents and Commission Relations or beyond and representing during on call, be our reports making a press call written do duty subsequent except are of website release made On time forward-looking Canada. results past predict control if including Ahead Securities that, of discussed the Q&A and can any These found to to factors our call oral, found will Li-Cycle significant Ontario We new of a session. We These and of and assumptions U.S. in because undertake of any based which to from at plans, with the Li-Cycle. expectations, statements be this today's assumptions, key follow be risks Commission issued management or from reflect a any are conference Securities incorrect presentation, statements, at release, update the assessments materially this uncertainties, the which during as required. on forward-looking time press I'm Actual difficult differ estimates this as

are Thank call progress Louis, of first provided and quarter earnings review on you, On on Rochester also of construction key the for restart everyone. updates Hub. made our financial comprehensive Starting we to discuss achieving our steps May, second the mentioned and update and in objectives our towards share our good the on pleased Today, morning, an previously to operating we quarter on the X. we've Slide additional results. taken

We key our continue objectives. progress to on make

First, U.S. closing loan the remains top our DOE priority.

continue loan conditions documentation We definitive work to financing programs satisfying to advance DOE and disbursements. the loan for closely towards with office precedent

financial evaluate alternatives, strategic to options exploring continue our liquidity. near-term to financing additional and including increase we Second,

Third, we work have part advanced the of Rochester our project for cost, the evaluating local as the our precipitate the the plan project execution mixed proposed refined Hub Rochester also for We estimates MHP cost hydroxide on go-forward total market comprehensive and or we review Hub. advanced the of process.

Finally, and we optimizing Spoke our are network. reviewing

exploring are key from focus network our ways to transitioning paused We to a extract Generation from operations closure on value Ontario Spoke and Spoke our facilities. to the X our more

ISO certifications secured meeting are announce for Spoke that we the standards. to addition, global In Germany pleased

We will our review continue operations. our of strategic

an $XXX a for up update status loan of process Slide for condition proceeds on to for current regarding recommended the Turning the X to [ ] of gross DOE the million.

to As process, finalizing application step can we loan. DOE's in and you we loan see, the of X remain the committed remain

produce the proposed to confirming project advancing the satisfying thereof go-forward On financial with earnings loan Rochester Since then, we the update for for March, streams key Rochester an MHP the in financing agreement continue an the Hub. and strategy MHP DOE legal the an completed project scope. MHP disbursements. During and Turn conditions reaching Rochester part call proposed Slide the technical, the progress advance our work execution and to and on had change we've as on documentation, closely to for that review, precedent work significant QX, X to This we QX development definitive our work technical on Hub internal in for execution of carbonate project includes Hub. reported plan lithium made we scope on viability stream. of technical the the towards

project Additionally, estimated construction with similar approximately our at we is consideration the for $XXX million cost the Rochester recent local for major to market, commitments MHP including the scope, work to date. refined complete cost current cash of is local market estimates with the contracts, the of Hub which inclusive substantially

scope total now product positively, to and quite note We the In are on scope continue assumptions MHP will estimates be refined advanced. comprehensive and these proposed same MHP For at complete we cost for several the work. subject review summary, is estimate the remains our as clarity the work technical that approximately $XXX million. to

our U.S.-headquartered base leading Slide a to integrated supply battery updates. is broadly of for X global which of first overview global for largest Turning and EV OEMs. our X including Li-Cycle's X year. for during of the a customers, top an among manufacturer, of diversified source feed Notably, the the of customer partners intake We've largest revenue EV vertically half battery QX established commercial were

input form differentiators Spoke of XX% processing processed the input materials the and We packs in of continue battery for a in Gen total packs the our X [indiscernible] Europe. Germany value be our represented We feedstock for large QX. battery Spoke We've our feed widened by in material. in also our portion chemistry. types Spoke footprint focused provided demonstrate approximately at all batteries, EV battery to commercial and remain of capabilities processing EV continue factor to our on this leverage to expertise independent

the North announced a America partnership Daimler to batteries. during Truck we recycle quarter, well with As

support technologies a preferred storage Finally, we leading for OEMs. EV battery broad-based recycling in and global to continue see position our as partner reflected differentiated for our energy

Slide to Turning X.

Spoke some highlights For of operations. our

equivalents. our quarter, and X,XXX the approximately tons mass During of Spokes produced black

And We for our our quality network optimize environmental, increased highlighting our and Spoke, Spoke to standards. our secured continued Alabama at certifications and rates commitment the to throughput We global highest ISO have health Germany sustainability and have Spokes. and have transitioning focus Spoke are to highlights optimization been since our where closure for our the operations XXXX to Ontario we order Slide related November Turn to on facilities. the at X initiatives finally, X Spokes. priority some to Gen in Arizona paused

Our financially goal is to take near-term towards accretive Spokes. steps creating

global line Gen and Spokes and rates are with This these X a As share of noted, full comprise maximize sustain fully partners leverage feed capabilities. our large and the In battery process need throughput OEM our priorities our to intake. prioritizing aim we this, Spokes, packs battery of to aligns we for our which without can X Gen EV who dismantling. battery with

optimizing our conversion the market. competitiveness are costs We also product our to increase in

of you recycling revenue our We're As XX% can of are our growing the revenue. services quarter, the in share assessing approximately first half in see this year. of

and leverage these X value to our Spokes We will on of continue differentiators revenue. the focusing Gen generic services

We a providing call are strategic further strategic on provide partners and XXXX. support these details to initiatives financials. to on over optimization our of in look now our execute QX and forward to working with Spoke With review to turn the the Craig I'll plans and that,

versus period in tonnes sales with million value for equivalents, the second which the results. were last and review reflects to Highlights $X.X X,XXX Ajay. SG&A the of lower revenue Trying mass adjustments of XXXX of X,XXX approximately recycling sold the adjustment and $X.X quarter Slide XXXX cost revenue from revenue Total include our million, sales black quarterly a for company. prior fair X of and $X.X were increase year. financial versus year. you, for XXXX. Thank favorable quarter Starting tonnes of a second to and pricing an million XXX% same record the increased This record higher noncash unfavorable versus

costs lower due Spoke repairs levels, sales, X% results with to to versus attributable new or to of $XX.X last XXXX. Moving to product Cost Cost contracts increased due compared to service partially $XX.X million sales revenue by decreased activities. last to $X.X to million in by the to compared cost & XX% maintenance year year's $X.X sales offset attributable million of decreased of revenue service entered. production associated million which

construction to resulting SG&A our initiatives XX% $XX.X implemented also $XX.X versus XXXX, by the million in $X.X primarily the largely Hub. since of are to driven has driven that from We Rochester a EBITDA million cost in Adjusted well a restructuring fees. in as of loss decrease was of lower costs as SG&A, personnel note revenue pleased restructuring by decreased the sales pause million and recurring higher

the quarter cash $XXX.X by higher Ajay. end SG&A. of activities, and due As working it of of I first This is Li-Cycle now of June to turn at million has mainly cash lower XX, partially offset will the million XXXX, $XX and equivalents investing to back XXXX. capital versus

seeing we're to current to conclude Turning supply XX. across battery the dynamics want chain. by industry the addressing I Slide

North illustrates XX% XX% sources fundamentals the deficit XXXX challenges, sales for achieving supply and there of in electric a the third-party in expected continue through While the of X to CAGR localization trend projecting adoption supply believe the battery are chain. of recent Li-Cycle pace long-term America, the industry despite to off from drivers: main towards vehicles decade. have Notably, chart and CAGR end with left we The been capacity XXXX. the increasing robust the approximately rising a the through recycling on current the the processing of continued post of headwinds,

and forms for is market feedstock the is there continuing driven the midterm, for remain seeing right, batteries. to lithium-ion materials the if to is the play expected adoption recent to is pivotal recycling Li-Cycle transition the is growth materials for still post-processing longer-term industry XXXX, by helping being the the fundamentals for the largely In XXXX is with levels. near capitalize in gigafactory challenges the an of to recycling the from demand we of to as scrap are Despite is on versus depicted manufacturing end-of-life different As well significant support well these By Hub to recycling towards The Rochester opportunities a all increase in rate growth decade. on recycling. in dynamics growth growth role supply strong underway, The clear battery at EV expanding in the increase end a of gap this term. by discount. of the up even chain recycling positioned supply in Xx projected to capacity. supplementing a fill near these battery

concern. towards to also positive a encouraging localization the backdrop, XX. and provide We the [indiscernible] company. This will Slide of tax incentives chain to supply and reducing includes and Act, onshore build seen trend supply foreign critical Europe have on In continue potential a U.S. to domestic external our North reduce we for support on America be bipartisan jobs to the industry more local recently, in clean-energy continued Reduction the minerals battery reliance from U.S., on production believe to and favorable entities Inflation imports. the chains. in various reliance Turning tariffs continue capacity and

the the Slide ongoing growth capacity reiterate the EV post-processing and the Hub recycling stakeholders. the underpinning of value the chain, objectives. Rochester our position demand in to support create Li-Cycle Turn defined go-forward our strategy of of adoption long-term development strategically to will localization With supply and the continued for for to and and XX key

First, we financing agreement reaching definitive loan. for on on an focused documentation are the DOE

financing strategic evaluating our liquidity. are to and we bolster options Second,

Third, we the provide initiatives network. complete to the details with lastly, optimization tuned further our partners expect we the QX. across for review aim on strategic And MHP Hub. working our and of Spoke Rochester to in Spoke maximize to our value we as Stay strategic scope are comprehensive

questions. wanted I Q&A, Operator, opportunities. to year, the partners continuing our clear their this and capitalizing for objectives on get over and our half we Li-Cycle's thank are now on of focused we're second our to support. employees for Before ready we

question will Doug LPL first [Operator take from Paul Financial. Instructions] We our with

where Can some color how the or close? for we're more X X you takes the loan long this step in step provide to on possibly at

to at up. back, say just in to a of step I'd lot So from momentum the of probably progress focus lot level, see take picking a -- a a the subject high recently DOE

stage contextualize we before is last to just it. the close. Now This

conditional a a been pause, And been to the a had here the then, Since agreement. strategy. a XXXX, we February of we've obviously, for we've back so shift enclosed in We in proposed between. got while, bit

and into on market progressed, on the focused Within The side from the market well side technical, perspective. The been been MHP has definitive there we're focused phase, also financial well are mentioned. that That work technical reintegrating documents as view that very basically progressed. is has financial closing X That's the financial those financing streams. There's the scope. and legal. really

Do date you of have an closing? anticipation

this that. to as for this we're to my towards continuing I is I can progress So as close. think And exceedingly tell priority organization, possible ] at a you top we're top time, moving It's the and [ priority.

[Operator Instructions] O'Keefe with from Matthew will Fitzgerald. next question Cantor take We our

the a had Just comprehensive question review. on

of Some how your there. on to operational. your lithium you addition made revenue be get on going good and of are -- and mean, Maybe of And is a sort And could progress you more timing-wise pricing current been that how on in prices component view could you is is I very pricing sounds much of like being kind just this important comment -- I'm work? has expect sort how comment impacting review? stream to completed? when the wondering, needed on you make that, if this that metal to

pricing. metal review I'll the So about first, let and maybe start a talk bit little of then influence me on

it review, a the technical the has been necessary the QX part, a we simple about. thing lot talking So part viability technical been that I what about for the of there's vis-a-vis the was part break has part, for in talked big yes, the presentation by So completed. refine estimate we also technical in a going and which, to I DOE. market financial internal to activity think then There's just was local to did CapEx, the a [indiscernible] terms. about right? keep way, And talked we this a

And So the great. that's you CapEx also we done didn't change estimate. as saw,

working period then does DOE which package Within And on the you're really, part there's that mean, second is we're about of full what nickel, So I and part, the obviously, cobalt what at soft you're the is for prices. the a financing then driving into Yes, in we're at. mean financial that it. cornerstone at -- we've the current really it getting that, in metal lithium. look, been a feeds

we -- unlike is sole economics. gotten have forecast basket have and But current at any producing otherwise, when to we we we're X lithium you, get the where We'll be still there. benefits a Obviously, know, have the get we this as even there it. we can reliant see of pursuing accretive I given those, as wouldn't never not you really one tell project. on One those of they're obviously of we into expected be, prices

economics. So another maybe see where are way current talking that's of we about the prices and how

have not your DOE, different they that the I ask way? expectation mean, price hurdles Can mean, on? I a of deck for but little you of kind targets for a bit they're focused or just with you? putting sort Or I you, in discussions hurdles, do they or are in some

is the and given -- brands that ] that's of have broadly. So a I'm of sort and commodity underwriting to debt what These on on that's it's be, speaking, they loan. do right? can sort prices zone [indiscernible] a its talk say So what folks [indiscernible] obviously, it's an most of sort aren't it demand. are there is a would But been speaking bullish because what expectation, at broadly level, used just I business experience typically like based high not equity [

Instructions] that appear at this Ajay over questions for turn it to any time. I'll no have closing [Operator remarks. call the And we does further back

update on we So to as soon. mentioned, and our with execute given trends favorable on industry, objectives, the a providing Thank clear our I to our you you. forward continued further excited look we're in progress long-term

today's you. program. this you And Thank participation. conclude your Thank does for

time. You disconnect any may at