Li-Cycle (LICY) 7 Nov 242024 Q3 Earnings call transcript

Hello, everyone, and welcome to the Li-Cycle Holdings Corp. Q3 2024 Financial Results. My name is Charlie, and I'll be coordinating the call today. [Operator Instructions] I will now hand over to our host, Louie Diaz of Li-Cycle, to begin. Louie, please go ahead.

operator. you, Thank thank business and for for us joining X-month Good and you, review Li-Cycle's XXXX. XX, update ended results of for period afternoon, September everyone, unaudited the financial

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

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

and Louie, afternoon. X. Slide you, Thank good on Starting

commitment We for million to and that diligence. values the have support an conditional development announce loan expected and over technical, $XXX of York. This closed previously of with legal we our loan Li-Cycle. loan Energy project an finalized New is up Rochester for and company the Hub a detailed excited a battery upstate to of announced agreement lithium-ion $XXX million Department the $XXX first in financial to sustainable This following are of to a market, due the flagship of U.S. is increase be materials milestone significant for million, DOE

only are loan. DOE's a the is company years recent significant of finalize to fifth which of the close direct in needed We and the to loan ATVM diligence the amount work indicative under program,

and for supply the materials America. domestic battery work chain strong supply an for of battery development we a loan with like is underscores technology strategic importance We're partner North in Hub commercial-scale chain. The to carbonate which critical project. agreement also is lithium-ion battery hydrometallurgical Rochester of is domestic product to battery expected low-cost vote optimize supplier for critical a We'd hydroxide battery-grade for of a and goal source patented lithium long-term a producing thank recycled recycling Li-Cycle structure. the and Our which in the sincerely nickel, capital financing We're support role our as and manganese grateful materials the we how for confidence to their containing of support executing cobalt Hub mixed continued precipitate domestic a intermediate or Rochester U.S. financing, underpin will DOE be significant and recovery batteries, the first material as achieves of metals. This North and our America's resource facility build a bipartisan critical for including recycling MHP, sustainable help our chain. of strong debt can them the pleased our supply to battery

to the Slide to offers and step additional financing at to relative facility X alternatives third-party Turning our goal a up $XX million Principal rate the term. Rochester and for to during maturity payable advance. for period. Final some of The Hub amount period date critical capitalized includes restarting interest other us details with up The is interest more construction is loan. fixed applicable date loan project. a will from long-dated each million the available the construction the construction not the towards XX, X an no XXXX, $XXX principal approximately importantly, terms is of the million attractive approximately of advance years and and on facility maturity interest rate loan treasury on $XXX for The of during to U.S. to spread. and first March of XX-year be loan the after

certain of $XX incurred of completing advance requirements, includes project yet paid, to project. the first XX, including million base not is the The contribution to is but equity base commitments conditions satisfaction XXXX. The equity September subject contribution which of costs our for settling or the to and as waiver related loan approximately

represent also contribution prior and remaining advance. components we note, to million of of amounts of equity change letters can equity Additionally, base first reserves prior that are of be contribution a be need also million need approximately are will for There the via to significant financing fund approximately our the account to based of satisfied obtain first these reserve Of portion These on advance. current estimates, requirements credit. among $XXX may to other first to advance. base satisfied $XX which

project. not the of construction, also back to Funding project of of and the detail, loan for reserve to the of on part these accounts requirements CapEx include reserve account or be Spoke reserves For of to is ramp-up capital the mechanical some before majority the reserves the The expected the expenditures. are released completion. company added through completion

and evaluating Hub. the for package construction financing actively are funding of strategic to full Rochester a restart alternatives We needed

X. Slide to Turning

strong Today, to for our DOE year, key objectives. a priority make the We loan. progress closing completed on U.S. the we continue

a to funding project, the will for of component. which a key secure under assist also is Our key package restart of are: to DOE in needed the equity The loan. next of Hub needed first steps loan construction full for Rochester funding full the of access the funding DOE contribution our first, package objectives base the advance

the for strong and are technical Spoke analysis great including We've the review Second, a the ongoing complete project, completing on our framework commercial progress [ scope. decision economic made Hub on MHP includes ] In parallel with optimizing this comprehensive our our review the which of and of the establishing for work objectives, a on go-forward technical we network. impairments. scope continuing MHP these effort,

a to assets We are to extract identifying Spoke business. value self-sufficient from accretive financially and more ways these build

our on have focused optimization Gen at curtailed the operations Spoke Spokes and work, closure previously of York are We Ontario are in X Arizona, as our part our continuing activities we and Spoke as Alabama and New indicated. Germany, at

have metals. precursor to of a offtake our production. Slide be agreement the supplying combination an manganese MHP be MHP to battery covering to recap to cathode and industry. processed a a nickel, will X at of Turning mass Black of we refiner secured process. could with cobalt for Hub ahead our sold produce case, MHP the Glencore, all In the MHP, of

Rochester long existing We agreements Glencore. produced at for sulfates. project the and we the Traxys In Hub of nickel retain the lithium carbonate term, the to and with offtake also produce cobalt have optionality

and actually For was for clarity, the of part production the it pilot completed included The is originally candidate large-scale of remains not is our planned. company, as in program technology and to new lithium in XXXX carbonate MHP XXXX process portfolio. our

Slide X for the to update on Hub the and Turning project scope. an MHP Rochester

Rochester project. excited review of As the the to mentioned, Hub completed we are technical have

continue also estimated The to at of go-forward plan. approximately completion unchanged the cost $XXX to advance We mechanical capital is total the execution project project million.

is project the for costs. complete ramp-up of through completion the working mechanical of approximately commitments to not is capital but and does inclusive commissioning, total which financing not cost project million. The estimated to of capital, current approximately working paid or $XXX incurred yet $XX include costs cost million, Our

to remains production XX,XXX lithium of and The black tonnes of MHP. an of annually. X,XXX mass We expect to up approximately at tonnes annual of tonnes expected capacity up processing approximately XX,XXX carbonate battery-grade nameplate

last that the Glencore note we've the into produce offtake entered XXX% agreement existing we an like Glencore Traxys' the Hub I'd these week, covering of with rights we affected to MHP production Hub. and not of covering from announced at carbonate As by offtake amendments. the Rochester lithium are

market commercial the that partners framework we these strong pleased a We're Rochester for continue provides strong our amended construction goal industry to With of the towards foundation to restarting work have as project. established we have of Hub. a agreements,

point financial battery profile. pool Spoke based to diverse revenue based discount metal recycling are our currently batteries. and some prices, black on this We'll revenues the at X. Slide And is produce evolution current Li-Cycle's black This services this sell of expected and of goal lithium-ion make at materials to self-sufficient. of a with a for Turning sale. A metal look business to financially under contractual our part we from mass revenue that to is and cases, provide mass all take the pay accretive for and of of of suppliers in on results in prices optimization arrangements. corresponding the We initiative

metal materials, of we revenue carbonate of the for highlighting change the to are production a with key prices which utilize the sense the at battery the to consistent in anticipate The feedstock for produce mass the will production step a these previous scope, lithium under planned. evolution. Utilizing underlying the the equivalents sulfates should with significant represent of Our nickel long-term forecasted It and the our will chart, MHP, is Rochester Hub unlocking in goal our Hub is mid- our that value. worth MHP expected incremental black cobalt give bottom Li-Cycle's operationalization inflection profile. critical point metal battery-grade and of you Hub, of

updates. vertically revenue largest source X is a the months Turning first integrated EV established global to of commercial base in We've including broad an which X headquartered and customers, supply U.S. and for diversified battery QX. of battery for and a the Li-Cycle's of leading of Slide overview year our customer manufacturer,

to demonstrate our leveraging our and continue and X types to customers. We form all our support independent factor processing particularly of of chemistry, are lithium-ion Gen expertise technology in batteries,

part X large chart, leverage pack battery The value in formats, a our manufacturing make Gen we of bar provided scrap scrapping to includes on our processing the the material. by on shown up large focus capabilities process feed. As which differentiators Spoke input battery continues to manufacturing this

reflected continue recycling the for partners X see OEMs. feed partner to our as for in differentiated Notably, amongst were energy technologies global our during and position intake battery, leading broad-based top global for We storage EV our a of support preferred EV X largest OEMs. QX

on highlights for black mass production XX Spoke Slide to and our Turning initiatives. optimization

During each the black our mass and Spokes X,XXX progressively produced equivalents, tonnes year. of quarter, this higher quarter

Spoke our Our take business towards Spoke self-sufficient a goal also near-term securing on to is work further financially steps financing. business. a accretive will Building support creating

As packs noted, need which prioritizing Spokes, can are our Gen X without for process the full battery dismantling. we

throughput maximize recoveries, Spoke and black to of We enhance our facilities and are costs optimizing quality sustain the rates our and mass. reduce

last revenue. quarters, our of addition, in In the share are you've recycling few as services seen a growing

Craig We with and and working it build as York the activities initiatives financials. I'll of on focus Spoke our Spoke line provide strategy, these the Ontario to business. In are New Gen turn indicated. at our previously With at now will have review we Spokes over a that, self-sufficient curtailed a Spoke our operations closure X continue to on continuing to

Thank Ajay. you,

for to Highlights of third include SG&A XXXX the Slide a results. lower XXXX and third review of growth for quarter strong quarter financial XX XXXX. our revenue year-over-year versus Turning

highlight million $X.X metals fair the adjustments. to in than that also almost equivalents prices with continued revenue was last increased lower the the pleased unfavorable and were to quarter mass we versus our year, recycling We'd QX in XXX X,XXX XX% from sold higher XXXX. Total positive mass sold for constituent in favorable noncash with in Black million. This is increased and demonstrating consistent mix production production compared lower metal pricing the $X.X year-to-date of the service year. revenue, same higher value that sold QX tonnes the momentum this quarterly and XXXX, increase record reflects to to prior tonnes black see Although of revenue revenue period like year. increased

to compared year new million. Moving to $XX attributable cost X% service at an cost result due product Cost year This of lower was approximately slightly last sales, in to decreased of offset increase to revenue sales of last of by of production levels. contracts attributable service revenue were to $X.X a sales which million to compared as lower entered.

implemented has million lower and pleased year-over-year construction XXXX to pause driven $XX.X SG&A personnel restructuring note in a initiatives primarily XX% improved of in resulting by Hub. Adjusted the driven $XX.X million are decreased from that costs Rochester the recurring by We EBITDA SG&A the higher to revenue. versus decrease of since largely

quarter, This turn cash net outflows were now it quarter, previous $XX raised lower $X.X conservation initiatives program. I ATM driven cash and our the Ajay. to our by our less expenditures than from back will million million through

Thanks, Craig.

XX. want to provide market update battery I to Turning an the in on chain. today's Slide supply dynamics

this of in for factors: supply of and of and XX% first, year battery second, current industry CAGR Li-Cycle and America critical fundamentals supply a the has chain. The XXXX recycling headwinds. domestic been despite the a long-term from material post-processing XXXX to dynamic, EVs While building sales of capacity; believe shows strong for the increasing chart due approximately the with on left X rising we the to support materials the North localized remain continued lack

of well increase to in the remains more by becomes positioned widespread As the the capacity recycling. which available. part long-term To is XXXX current the large bridge Hub. driven the increase makes post-processing XXXX, Xx right, is end-of-life currently supports the to the projected feedstock supply strong up with to gap of fundamentals EV in domestic versus near shown to largely in materials Li-Cycle of on recycling summarize, Rochester available with manufacturing The feedstock. By large midterm a our of industry materials recycling scrap, recycling increase battery help battery the as materials adoption by recycling for battery

circular battery to XX. be company. and believe critical chain to and We current supply towards our Turning includes energy direct Slide the Hub the industry tax also notable A the will positive independence trends U.S. the example continue recently battery financial provides incentives development credit, material the the for domestic, a supply to of supports finalized chain. U.S. which guidance XXX and on a

a is for help and clear the for help indirect Rochester including XX% believe production in and as be that Specifically, Hub, economic country. produced understanding and expected of includes battery available topic XXXX. In carbon credit be to and and building it a continues the are that recycling through a the there battery lithium direct to Rochester strong U.S., on bipartisan production at the is costs tax the national will domestically investors create certain the supply forward We trends both of interests these chain our momentum Li-Cycle security value and stakeholders. Hub positive is create

key XX Turning and to and objectives. Slide go-forward to our reiterate strategy

First, we completed priority finalizing have by key DOE the loan. a today

which we Second, meeting first the the construction DOE funding are package Hub a financing project, loan. for strategic actively full to and of of needed restart includes for Rochester advance options the requirements evaluating

secure, we're decision, will to the looking the significant made next advancements final comprehensive our our network Rochester maximize package accretive updated And that build review the which we Third, formal Spoke the financially and finally, to Hub. this financing technology. of working Gen underpinned investment once business value we will mark step, ready, our X on across on a And review. to the by are continuing or by full be a be focuses completion Spoke of will FID,

Before to thank I and continuing support. our we our partners get to for Q&A, their employees want

through work milestones we're dedication opportunities. company, able clear for and have has been While groups. XX focused questions. capitalizing now months these very dynamic have the support challenges to we're objectives ready and on these our been we of because going significant achieve Li-Cycle the for Operator, on forward, last and of

over hand further team or to on [Operator Instructions] call, for management the remarks. registered today's We so final have back any no I'll callers

you. Thank

through to in believe will we going of at dynamic continue role fundamental market great near that even discussed, and material in energy strongly we've and the period Li-Cycle bipartisan and critical as secular topic long the been term, strongly in term. securing discussed, this course, independence tailwinds, play as with So and the

updates continue to forward Thank progress. you. look we further So everyone as with providing to we

Thank gentlemen, joining. this for today's and concludes call. Ladies you

now disconnect may lines. You your