Li-Cycle Reports Third Quarter 2022 Financial Results; Continuing Advancement of Spoke & Hub Network Strategy
Li-Cycle Holdings Corp. (NYSE: LICY) reported third-quarter results for the period ending July 31, 2022. Revenue from product sales rose to $5.4 million, a significant increase from $1.3 million in Q3 2021. However, total revenues reached $(2.0) million due to a non-cash fair market value pricing adjustment of $(7.3) million. Operating expenses surged to $32.5 million, leading to a net loss of approximately $27.5 million. The company retains $649.0 million in cash, bolstered by recent investments and financing. The construction progress at the Rochester Hub is on schedule, with commissioning expected in 2023.
- Revenue from product sales increased to $5.4 million, up from $1.3 million in Q3 2021.
- Cash on hand stands at $649.0 million, providing ample liquidity for project pipelines.
- Strategic partnerships with LG Chem and Glencore bolstered the balance sheet with $250 million in investments.
- Total revenues of $(2.0) million included a $(7.3) million fair market value adjustment.
- Net loss increased to approximately $27.5 million from $6.9 million in Q3 2021.
- Operating expenses rose to $32.5 million due to rapid expansion, impacting profitability.
-
Progressed construction at the Rochester Hub; on track to commence commissioning in stages in calendar 2023;
-
Completed Arizona Spoke optimization projects, with Spoke now nearing target throughput; extended the same improvements to the Alabama Spoke, with production expected to start towards the end of the fourth quarter;
-
Secured strategic sites for
Norway and Germany Spokes, with equipment fabrication underway;
-
Updated FY2022 black mass production target to 3,500 to 3,800 tonnes, reflecting moderate delay in timing to enable Spoke optimization projects; and
-
Funded sufficiently for the current project pipeline with
cash on hand as of$649.0 million July 31, 2022 .
“During the quarter, we continued to advance development at our Rochester Hub, which is on track to start commissioning in stages in 2023. We also took deliberate steps to optimize operations at our new Spoke facilities in
“Since the completion of these optimization projects, the Arizona Spoke is now nearing target throughput and has been demonstrating higher recovery yields in black mass. We are leveraging the process improvements and key lessons learned from the Arizona Spoke, not only for the Alabama Spoke, but also for our future Spoke locations in
"We continue to see robust battery supply from our global customers and are making strides in strategically advancing our Spoke & Hub network to align with their growing needs. The recent enactment of the Inflation Reduction Act in the
Third Quarter Financial Results Ended
Revenues from product sales and recycling services of
Operating expenses were
Net loss for the quarter was approximately
Adjusted EBITDA1 loss for the quarter was
Balance Sheet Position
During the quarter, the Company invested
In addition, the Company continues to evaluate multiple capital sources, including but not limited to debt-based financing alternatives, such as traditional corporate debt, project financing, government-related funding, and funding from potential strategic partners to further strengthen its balance sheet, optimize its capital structure and provide additional financial flexibility for its next phase of growth.
Webcast and Conference Call Information
Company management will host a webcast and conference call on
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) 518-9783
Participant Code: LICYQ322
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
Non-IFRS Financial Measures
Adjusted EBITDA (loss)
The table below reconciles Adjusted EBITDA (loss) to net profit (loss):
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Three months ended |
Nine months ended |
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2022 |
2021 |
2022 |
2021 |
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(Unaudited - dollar amounts in thousands) |
|||||||
|
|
|||||||
Net profit (loss) |
(27,522) |
(6,897) |
(19,625) |
(21,591) |
||||
Income tax |
— |
— |
5 |
— |
||||
Depreciation |
2,969 |
697 |
6,790 |
1,831 |
||||
Interest expense |
1,523 |
437 |
7,168 |
931 |
||||
EBITDA (loss) |
(23,030) |
(5,763) |
(5,662) |
(18,829) |
||||
Foreign exchange (gain) loss |
|
|
|
|
||||
Fair value (gain) loss on financial instruments (1) |
(8,567) |
509 |
(62,300) |
2,433 |
||||
Forfeited |
— |
— |
— |
2,000 |
||||
Adjusted EBITDA (loss) |
(31,597) |
(5,254) |
(67,962) |
(14,396) |
||||
(1) Fair value gain on financial instruments relates to warrants and convertible debt |
Forward-Looking Statements
Certain statements contained in this press release may be considered “forward-looking statements” within the meaning of the
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
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Condensed consolidated interim statements of financial position |
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As at |
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(Unaudited - expressed in |
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$ |
$ |
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Assets |
|
|
|
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Current assets |
|
|
|
||
Cash and cash equivalents |
|
649,026,466 |
596,858,298 |
||
Accounts receivable |
5,267,403 |
4,072,701 |
|||
Other receivables |
4,220,123 |
973,145 |
|||
Prepayments and deposits |
93,722,271 |
8,585,224 |
|||
Inventory |
5,900,931 |
1,259,581 |
|||
|
|
758,137,194 |
611,748,949 |
||
|
|
|
|
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Non-current assets |
|
|
|
||
Plant and equipment |
89,753,260 |
26,389,463 |
|||
Right-of-use assets |
54,912,574 |
27,009,760 |
|||
Other assets |
2,109,568 |
— |
|||
|
|
146,775,402 |
53,399,223 |
||
|
|
|
|
||
|
|
904,912,596 |
665,148,172 |
||
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|
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Liabilities |
|
|
|
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Current liabilities |
|
|
|
||
Accounts payable and accrued liabilities |
38,458,692 |
18,701,116 |
|||
Lease liabilities |
5,478,799 |
2,868,795 |
|||
Loans payable |
|
7,495 |
7,752 |
||
|
|
43,944,986 |
21,577,663 |
||
|
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|
|
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Non-current liabilities |
|
|
|
||
Lease liabilities |
51,486,271 |
26,496,074 |
|||
Loans payable |
|
26,335 |
31,996 |
||
Convertible debt |
284,853,896 |
100,877,838 |
|||
Warrants |
— |
82,109,334 |
|||
Restoration provisions |
|
434,489 |
334,233 |
||
|
|
336,800,991 |
209,849,475 |
||
|
|
|
|
||
|
|
380,745,977 |
231,427,138 |
||
|
|
|
|
||
Shareholders' equity |
|
|
|
||
Share capital |
768,608,594 |
672,079,154 |
|||
Contributed surplus |
|
16,238,257 |
3,026,721 |
||
Accumulated deficit |
|
(260,647,570) |
(241,088,229) |
||
Accumulated other comprehensive loss |
|
(296,612) |
(296,612) |
||
Equity attributable to the Shareholders of |
|
523,902,669 |
433,721,034 |
||
Non-controlling interest |
263,950 |
— |
|||
Total equity |
|
524,166,619 |
433,721,034 |
||
|
|
904,912,596 |
665,148,172 |
|
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|
|
|
||||
Condensed consolidated interim statements of comprehensive loss |
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Three and nine months ended |
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(Unaudited - expressed in |
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Three months ended |
Nine months ended |
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|
2022 |
2021 |
2022 |
2021 |
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|
$ |
$ |
$ |
$ |
||||
|
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Revenue |
|
|
|
|
||||
Product sales |
(2,338,949) |
1,593,563 |
9,574,620 |
2,682,531 |
||||
Recycling services |
372,510 |
115,560 |
950,134 |
301,216 |
||||
|
(1,966,439) |
1,709,123 |
10,524,754 |
2,983,747 |
||||
|
|
|
|
|
||||
Expenses |
|
|
|
|
||||
Employee salaries and benefits |
9,525,996 |
3,476,995 |
28,633,550 |
7,722,475 |
||||
Professional fees |
4,184,457 |
1,216,310 |
10,618,212 |
4,218,362 |
||||
Share-based compensation |
3,998,966 |
298,489 |
13,675,130 |
1,307,874 |
||||
Raw materials and supplies |
3,571,752 |
1,109,582 |
6,802,193 |
2,003,939 |
||||
Office, administrative and travel |
5,293,879 |
431,881 |
11,287,158 |
1,053,766 |
||||
Depreciation |
2,969,337 |
697,604 |
6,790,188 |
1,830,603 |
||||
Research and development |
514,769 |
576,551 |
1,384,635 |
1,928,582 |
||||
Freight and shipping |
671,358 |
155,456 |
1,469,203 |
587,953 |
||||
Plant facilities |
1,073,881 |
227,942 |
2,494,919 |
676,278 |
||||
Marketing |
661,749 |
160,479 |
1,858,324 |
465,269 |
||||
Change in Finished Goods Inventory |
81,820 |
(475,862) |
82,807 |
(1,120,755) |
||||
|
32,547,964 |
|
7,875,427 |
|
85,096,319 |
|
20,674,346 |
|
|
|
|
|
|
||||
Loss from operations |
(34,514,403) |
|
(6,166,304) |
|
(74,571,565) |
|
(17,690,599) |
|
|
|
|
|
|
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Other (income) expense |
|
|
|
|
||||
Fair value (gain) loss on financial instruments |
(8,567,022) |
508,850 |
(62,300,143) |
2,433,196 |
||||
Interest expense |
3,533,007 |
437,163 |
9,725,534 |
932,497 |
||||
Foreign exchange (gain) loss |
51,691 |
(214,496) |
180,534 |
536,216 |
||||
Interest income |
(2,010,423) |
|
(503) |
|
(2,557,099) |
|
(1,725) |
|
|
(6,992,747) |
|
731,014 |
|
(54,951,174) |
|
3,900,184 |
|
|
|
|
|
|
||||
Net loss |
(27,521,656) |
(6,897,318) |
(19,620,391) |
(21,590,783) |
||||
|
|
|
|
|
||||
Income tax |
— |
— |
5,000 |
— |
||||
|
|
|
|
|
|
|
|
|
Net loss and comprehensive loss |
(27,521,656) |
(6,897,318) |
(19,625,391) |
(21,590,783) |
||||
|
|
|
|
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Net loss attributable to |
|
|
|
|
||||
Shareholders of |
(27,479,280) |
(6,897,318) |
(19,559,341) |
(21,590,783) |
||||
Non-controlling interest |
(42,376) |
|
— |
|
(66,050) |
|
— |
|
Net loss and comprehensive loss |
(27,521,656) |
(6,897,318) |
(19,625,391) |
(21,590,783) |
||||
|
|
|
|
|
||||
Loss per common share - basic and diluted |
(0.16) |
(0.07) |
(0.12) |
(0.23) |
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Condensed consolidated interim statements of cash flows |
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Three and nine months ended |
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(Unaudited - expressed in |
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Three months ended |
Nine months ended |
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|
2022 |
2021 |
2022 |
2021 |
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|
$ |
$ |
$ |
$ |
||||
Operating activities |
|
|
|
|
||||
Net loss for the period |
(27,521,656) |
(6,897,318) |
(19,625,391) |
(21,590,783) |
||||
Items not affecting cash |
|
|
|
— |
||||
Share-based compensation |
3,998,966 |
298,489 |
13,675,130 |
1,307,874 |
||||
Depreciation |
2,969,337 |
697,604 |
6,790,188 |
1,830,603 |
||||
Amortization of government grants |
— |
(26,887) |
— |
(92,926) |
||||
Loss on disposal of assets |
— |
— |
— |
13,399 |
||||
Foreign exchange (gain) loss on translation |
(103,895) |
(152,562) |
(561,803) |
509,195 |
||||
Fair value (gain) loss on financial instruments |
(8,567,022) |
508,850 |
(62,300,143) |
2,433,196 |
||||
Interest and accretion on convertible debt |
2,886,555 |
— |
8,094,918 |
— |
||||
|
(26,337,715) |
(5,571,824) |
(53,927,101) |
(15,589,442) |
||||
Changes in non-cash working capital items |
|
|
|
|
||||
Accounts receivable |
6,233,862 |
(1,467,219) |
(1,194,702) |
(2,309,564) |
||||
Other receivables |
(2,655,693) |
(37,157) |
(3,246,978) |
(56,188) |
||||
Prepayments and deposits |
(5,914,245) |
(2,668,131) |
(3,543,585) |
(7,118,905) |
||||
Inventory |
(2,468,948) |
(719,231) |
(4,641,350) |
(1,322,927) |
||||
Accounts payable and accrued liabilities |
5,953,737 |
6,518,975 |
2,729,377 |
9,830,211 |
||||
|
(25,189,002) |
(3,944,587) |
(63,824,339) |
(16,566,815) |
||||
|
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|
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Investing activity |
|
|
|
|
||||
Purchases of plant and equipment |
(29,555,201) |
(5,804,757) |
(45,037,303) |
(10,903,007) |
||||
Prepaid equipment deposits |
(42,745,602) |
(794,002) |
(62,591,565) |
(1,163,841) |
||||
Prepaid construction charges |
(9,812,572) |
— |
(21,891,269) |
— |
||||
Proceeds from disposal of plant and equipment |
— |
— |
— |
16,866 |
||||
|
(82,113,375) |
(6,598,759) |
(129,520,137) |
(12,049,982) |
||||
|
|
|
|
|
||||
Financing activities |
|
|
|
|
||||
Proceeds from private share issuance, net of share issuance costs |
— |
— |
— |
21,620,000 |
||||
Proceeds from public share issuance, net of share issuance costs |
49,698,756 |
— |
49,698,756 |
— |
||||
Proceeds from exercise of stock options |
— |
169,105 |
— |
169,105 |
||||
Proceeds from exercise of warrants |
— |
— |
65,180 |
— |
||||
Proceeds from convertible Debt |
198,682,238 |
— |
198,682,238 |
— |
||||
Proceeds from loans payable |
— |
7,000,000 |
— |
10,091,220 |
||||
Proceeds from government grants |
— |
26,887 |
— |
92,926 |
||||
Capital contribution from the holders of non-controlling interest |
— |
— |
330,000 |
— |
||||
Repayment of lease liabilities |
(1,366,336) |
(204,231) |
(3,258,899) |
(530,953) |
||||
Repayment of loans payable |
(1,548) |
(423,595) |
(4,631) |
(1,138,336) |
||||
|
247,013,110 |
6,568,166 |
245,512,644 |
30,303,962 |
||||
|
|
|
|
|
||||
Net change in cash and cash equivalents |
139,710,733 |
(3,975,180) |
52,168,168 |
1,687,165 |
||||
Cash and cash equivalents, beginning of period |
509,315,733 |
6,325,902 |
596,858,298 |
663,557 |
||||
Cash and cash equivalents, end of period |
649,026,466 |
2,350,722 |
649,026,466 |
2,350,722 |
||||
|
|
|
|
|
||||
Non-cash investing activities |
|
|
|
|
||||
Purchase of plant and equipment in payables and accruals |
(12,653,536) |
22,392 |
17,028,199 |
2,655,301 |
||||
Non-cash financing activities |
|
|
|
|
||||
Equity issued for non-cash costs |
— |
— |
— |
455,055 |
||||
|
|
|
|
|
||||
Interest paid |
(648,032) |
(437,163) |
(1,632,196) |
(932,497) |
____________________________
1 Adjusted EBITDA is not a recognized measure under IFRS. See Non-IFRS Financial Measures section of this press release, including for a reconciliation of Adjusted EBITDA to net profit (loss).
View source version on businesswire.com: https://www.businesswire.com/news/home/20220914005397/en/
Investors: investors@li-cycle.com
Media: media@li-cycle.com
Source:
FAQ
What were Li-Cycle's revenues for the third quarter of 2022?
What caused the net loss reported by Li-Cycle in Q3 2022?
How much cash does Li-Cycle currently have on hand?
What is Li-Cycle's production target for FY2022?