Li-Cycle Reports Third Quarter 2023 Financial Results and Provides Business Update
- The company is actively engaged with the U.S. Department of Energy to secure a loan commitment of up to $375 million, reflecting a positive outlook for the project's future financial support.
- Global EV production volumes and battery material demand continue to drive the need for domestic sources of battery material, presenting significant benefits for Li-Cycle’s Spoke & Hub network and the Rochester Hub in particular.
- Escalating costs for the Rochester Hub led to a significant budget overrun, resulting in a non-cash impairment charge of $96.5 million and a net loss of $130.5 million for Q3 2023.
Highlights
- Progressing comprehensive review of the Rochester Hub project;
-
Continuing to work closely with the
U.S. Department of Energy (DOE) to satisfy conditions precedent for financial close of the loan commitment for gross proceeds of up to ;$375 million -
Prioritizing Generation 3 full pack processing Spokes in
the United States andGermany ; and - Working with Moelis & Company LLC ("Moelis") to evaluate financing and strategic alternatives.
“In conjunction with the pause in the Rochester Hub project announced in late October, we have initiated a comprehensive review. We have performed an initial analysis of options for completion of the Rochester Hub, and we are taking steps to conserve cash. Additionally, we remain actively engaged and continue to work closely with the DOE to satisfy conditions precedent for financial close for the
Update on Rochester Hub Project
On October 23, 2023, the Company announced that it was pausing construction work on the Rochester Hub project, pending completion of a comprehensive review of the go-forward strategy for the project. The Company has recently experienced escalating costs and, accordingly, the anticipated aggregate cost of the existing scope of the project is expected to significantly exceed the previously disclosed budget of
As previously announced, the Company entered into a conditional commitment in February 2023 with the DOE for a loan for gross proceeds of up to
The pause on the Rochester Hub project gives the Company the opportunity to better phase the project with the current timing and evolution of the battery recycling and EV markets and to optimize construction and contracting strategy. The phased approach may include the ability to produce intermediate battery metal products such as mixed hydroxide precipitate and improve project economics. The Company has performed an initial analysis of options for completion of the Rochester Hub and is continuing to develop a more detailed analysis. Based on the initial analysis and depending on the option selected, the Company has determined that the revised project costs could be in the range of approximately
Financial Results for the Three Months Ended September 30, 2023
Revenues from product sales and recycling services before non-cash fair market value (FMV) adjustments were
Operating expenses increased to
In light of escalating costs for the Rochester Hub, an impairment assessment of the carrying value of the Company’s assets was performed in accordance with IFRS reporting guidelines, as at September 30, 2023. The Company recognized a non-cash impairment charge in the amount of
Net loss was
Adjusted EBITDA1 loss was
Webcast and Conference Call Information
Company management will host a webcast and conference call on Monday, November 13, 2023, at 4:15 p.m. Eastern Time. The related presentation materials for the webcast and conference call will be made available on the Investor Relations 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: LICYQ323
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 and North America’s largest pure-play lithium-ion battery recycler, with a rapidly growing presence across
Non-IFRS Financial Measures
Adjusted EBITDA (loss)
The table below reconciles adjusted EBITDA (loss) to net loss:
|
Three months ended |
Nine months ended |
||||||||||||||
September 30, |
September 30, |
|||||||||||||||
Unaudited - $ millions |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Net loss |
$ |
(130.5 |
) |
$ |
(20.6 |
) |
$ |
(205.2 |
) |
$ |
(58.8 |
) |
||||
Income tax |
|
— |
|
|
— |
|
|
0.1 |
|
|
— |
|
||||
Depreciation |
|
4.6 |
|
|
3.3 |
|
|
12.3 |
|
|
7.8 |
|
||||
Interest expense |
|
4.0 |
|
|
5.9 |
|
|
11.5 |
|
|
13.5 |
|
||||
Interest income |
|
(2.6 |
) |
|
(3.8 |
) |
|
(11.8 |
) |
|
(5.3 |
) |
||||
EBITDA |
|
(124.5 |
) |
|
(15.2 |
) |
|
(193.1 |
) |
|
(42.8 |
) |
||||
Impairment |
|
96.5 |
|
|
— |
|
|
96.5 |
|
|
— |
|
||||
Non-recurring costs |
|
— |
|
|
— |
|
|
0.3 |
|
|
— |
|
||||
Fair value gain on financial instruments¹ |
|
(10.9 |
) |
|
(19.9 |
) |
|
(17.5 |
) |
|
(42.5 |
) |
||||
Adjusted EBITDA (loss) |
$ |
(38.9 |
) |
$ |
(35.1 |
) |
$ |
(113.8 |
) |
$ |
(85.3 |
) |
¹ Fair value (gain) loss on financial instruments relates to convertible debt, and to warrants, which were redeemed and no longer outstanding as of September 30, 2022. |
Li-Cycle reports its financial results in accordance with the International Financial Reporting Standards (“IFRS”). The Company makes references to certain non-IFRS measures, including adjusted EBITDA. These measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS 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 IFRS measures by providing a further understanding of the Company’s results of operations from management’s perspective. Accordingly, it should not be considered in isolation nor as a substitute for the analysis of the Company’s financial information reported under IFRS. Adjusted EBITDA is defined 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 (gains) losses on financial instruments and certain non-recurring expenses. Foreign exchange (gain) loss is excluded from the calculation of Adjusted EBITDA.
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
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 which may cause actual results to differ materially from the forward-looking information. Li-Cycle believes that these risks and uncertainties include, but are not limited to, the following: Li-Cycle’s inability to economically and efficiently source, recover and recycle lithium-ion batteries and lithium-ion battery manufacturing scrap, as well as third party black mass, and to meet the market demand for an environmentally sound, closed-loop solution for manufacturing waste and end-of-life lithium-ion batteries; Li-Cycle’s inability to successfully implement its global growth strategy, on a timely basis or at all; Li-Cycle’s inability to manage future global growth effectively; Li-Cycle’s inability to develop the Rochester Hub, 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; Li-Cycle’s failure to materially increase recycling capacity and efficiency; Li-Cycle may engage in strategic transactions, including acquisitions, that could disrupt its business, cause dilution to its shareholders, reduce its financial resources, result in incurrence of debt, or prove not to be successful; one or more of Li-Cycle’s current or future facilities becoming inoperative, capacity constrained or disrupted; additional funds required to meet Li-Cycle’s liquidity needs and capital requirements in the future not being available to Li-Cycle on acceptable terms or at all when it needs them; risk and uncertainties related to Li-Cycle's ability to continue as a going concern; uncertainty related to the success of the cash preservation plan and related workforce reductions; Li-Cycle expects to continue to incur significant expenses and may not achieve or sustain profitability; problems with the handling of lithium-ion battery cells that result in less usage of lithium-ion batteries or affect Li-Cycle’s operations; Li-Cycle’s inability to maintain and increase feedstock supply commitments as well as secure new customers and off-take agreements; a decline in the adoption rate of EVs, or a decline in the support by governments for “green” energy technologies; decreases in benchmark prices for the metals contained in Li-Cycle’s products; changes in the volume or composition of feedstock materials processed at Li-Cycle’s facilities; the development of an alternative chemical make-up of lithium-ion batteries or battery alternatives; Li-Cycle’s revenues for the Rochester Hub are derived significantly from a single customer; Li-Cycle’s insurance may not cover all liabilities and damages; Li-Cycle’s heavy reliance on the experience and expertise of its management; Li-Cycle’s reliance on third-party consultants for its regulatory compliance; Li-Cycle’s inability to complete its recycling processes as quickly as customers may require; Li-Cycle’s inability to compete successfully; increases in income tax rates, changes in income tax laws or disagreements with tax authorities; significant variance in Li-Cycle’s operating and financial results from period to period due to fluctuations in its operating costs and other factors; fluctuations in foreign currency exchange rates which could result in declines in reported sales and net earnings; unfavourable economic conditions, such as consequences of the global COVID-19 pandemic; natural disasters, unusually adverse weather, epidemic or pandemic outbreaks, cyber incidents, boycotts and geo-political events; failure to protect or enforce Li-Cycle’s intellectual property; Li-Cycle may be subject to intellectual property rights claims by third parties; 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; the potential for our directors and officers who hold Company common shares to have interests that may differ from the interests of other shareholders; risks related to adoption of the Shareholder Rights Plan and the volatility of the price of Li-Cycle's common shares. These and other risks and uncertainties related to Li-Cycle’s business and the assumptions on which the forward-looking information is based are described in greater detail in the section entitled “Item 3. Key Information - Risk Factors” included in the Annual Report, and under “Key Factors Affecting Li-Cycle’s Performance” and elsewhere in the Management’s Discussion & Analysis of Financial Condition and Results of Operations of the Company for the three and nine months ended September 30, 2023 and 2022. 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 statements.
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.
Li-Cycle Holdings Corp. |
|
|
||||||
Condensed consolidated interim statements of financial position |
||||||||
|
|
|
||||||
Unaudited $ millions, as at |
September 30, 2023 |
December 31, 2022 |
||||||
|
|
|
||||||
Assets |
|
|
||||||
Current assets |
|
|
||||||
Cash and cash equivalents |
$ |
137.4 |
|
$ |
517.9 |
|
||
Accounts receivable |
|
2.3 |
|
|
4.3 |
|
||
Other receivables |
|
3.5 |
|
|
10.0 |
|
||
Prepayment and deposits |
|
51.8 |
|
|
95.2 |
|
||
Inventories |
|
3.9 |
|
|
8.3 |
|
||
|
|
198.9 |
|
|
635.7 |
|
||
|
|
|
||||||
Non-current assets |
|
|
||||||
Plant and equipment |
|
484.3 |
|
|
210.4 |
|
||
Right-of-use assets |
|
65.6 |
|
|
50.8 |
|
||
Other assets |
|
12.1 |
|
|
4.2 |
|
||
|
|
562.0 |
|
|
265.4 |
|
||
Total assets |
$ |
760.9 |
|
$ |
901.1 |
|
||
|
|
|
||||||
Liabilities |
|
|
||||||
Current liabilities |
|
|
||||||
Accounts payable and accrued liabilities |
$ |
99.1 |
|
$ |
75.9 |
|
||
Lease liabilities |
|
5.7 |
|
|
5.6 |
|
||
|
|
104.8 |
|
|
81.5 |
|
||
|
|
|
||||||
Non-current liabilities |
|
|
||||||
Lease liabilities |
|
61.8 |
|
|
48.3 |
|
||
Deferred revenue |
|
5.3 |
|
|
— |
|
||
Convertible debt |
|
282.8 |
|
|
272.9 |
|
||
Restoration provisions |
|
2.6 |
|
|
0.4 |
|
||
|
|
352.5 |
|
|
321.6 |
|
||
Total liabilities |
|
457.3 |
|
|
403.1 |
|
||
|
|
|
||||||
Equity |
|
|
||||||
Share capital |
|
779.3 |
|
|
772.4 |
|
||
Other reserves |
|
22.7 |
|
|
18.7 |
|
||
Accumulated deficit |
|
(498.1 |
) |
|
(293.0 |
) |
||
Accumulated other comprehensive loss |
|
(0.3 |
) |
|
(0.3 |
) |
||
Equity attributable to the Shareholders of Li-Cycle Holdings Corp. |
|
303.6 |
|
|
497.8 |
|
||
Non-controlling interest |
|
— |
|
|
0.2 |
|
||
Total equity |
|
303.6 |
|
|
498.0 |
|
||
Total liabilities and equity |
$ |
760.9 |
|
$ |
901.1 |
|
||
The accompanying notes are an integral part of the condensed consolidated interim financial statements.
Li-Cycle Holdings Corp. |
|
|
||||||||||||||
Condensed consolidated interim statements of loss and comprehensive loss |
||||||||||||||||
|
|
|
||||||||||||||
Unaudited $ millions except for per share amounts, for the |
Three months ended September 30, |
Nine months ended September 30, |
||||||||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Revenue |
|
|
|
|
||||||||||||
Product sales |
$ |
3.5 |
|
$ |
2.3 |
|
$ |
9.7 |
|
$ |
9.6 |
|
||||
Recycling services |
|
1.2 |
|
|
0.5 |
|
|
2.2 |
|
|
1.2 |
|
||||
|
|
4.7 |
|
|
2.8 |
|
|
11.9 |
|
|
10.8 |
|
||||
|
|
|
|
|
||||||||||||
Expenses |
|
|
|
|
||||||||||||
Employee salaries and benefits |
|
16.5 |
|
|
10.4 |
|
|
47.3 |
|
|
32.7 |
|
||||
Share-based compensation |
|
3.8 |
|
|
4.0 |
|
|
10.7 |
|
|
15.5 |
|
||||
Office, administrative and travel |
|
5.8 |
|
|
5.9 |
|
|
16.9 |
|
|
13.2 |
|
||||
Professional fees |
|
6.4 |
|
|
4.5 |
|
|
14.0 |
|
|
12.1 |
|
||||
Raw materials and supplies |
|
4.8 |
|
|
10.5 |
|
|
19.2 |
|
|
14.3 |
|
||||
Depreciation |
|
4.6 |
|
|
3.3 |
|
|
12.3 |
|
|
7.8 |
|
||||
Plant facilities |
|
3.2 |
|
|
1.1 |
|
|
7.1 |
|
|
3.0 |
|
||||
Marketing |
|
0.6 |
|
|
0.5 |
|
|
2.1 |
|
|
1.9 |
|
||||
Freight and shipping |
|
1.0 |
|
|
0.5 |
|
|
2.7 |
|
|
1.7 |
|
||||
Research and development |
|
2.2 |
|
|
0.5 |
|
|
3.5 |
|
|
1.4 |
|
||||
Change in finished goods inventory |
|
(0.6 |
) |
|
0.7 |
|
|
0.1 |
|
|
0.7 |
|
||||
Other |
|
— |
|
|
— |
|
|
1.2 |
|
|
— |
|
||||
Impairment |
|
96.5 |
|
|
— |
|
|
96.5 |
|
|
— |
|
||||
Operating expenses |
|
144.8 |
|
|
41.9 |
|
|
233.6 |
|
|
104.3 |
|
||||
|
|
|
|
|
||||||||||||
Loss from operations |
|
(140.1 |
) |
|
(39.1 |
) |
|
(221.7 |
) |
|
(93.5 |
) |
||||
|
|
|
|
|
||||||||||||
Other income (expense) |
|
|
|
|
||||||||||||
|
|
|
|
|
||||||||||||
Interest income |
|
2.6 |
|
|
3.8 |
|
|
11.8 |
|
|
5.3 |
|
||||
Interest expense and other costs |
|
(3.9 |
) |
|
(5.2 |
) |
|
(12.7 |
) |
|
(13.1 |
) |
||||
Gain on financial instruments |
|
10.9 |
|
|
19.9 |
|
|
17.5 |
|
|
42.5 |
|
||||
|
|
9.6 |
|
|
18.5 |
|
|
16.6 |
|
|
34.7 |
|
||||
|
|
|
|
|
||||||||||||
Net loss before taxes |
|
(130.5 |
) |
|
(20.6 |
) |
|
(205.1 |
) |
|
(58.8 |
) |
||||
Income tax |
|
— |
|
|
— |
|
|
0.1 |
|
|
— |
|
||||
Net loss |
$ |
(130.5 |
) |
$ |
(20.6 |
) |
$ |
(205.2 |
) |
$ |
(58.8 |
) |
||||
|
|
|
|
|
||||||||||||
Net loss attributable to |
|
|
|
|
||||||||||||
Shareholders of Li-Cycle Holdings Corp. |
$ |
(130.5 |
) |
$ |
(20.5 |
) |
$ |
(205.1 |
) |
$ |
(58.7 |
) |
||||
Non-controlling interest |
|
— |
|
|
(0.1 |
) |
|
(0.1 |
) |
|
(0.1 |
) |
||||
Net loss and comprehensive loss |
$ |
(130.5 |
) |
$ |
(20.6 |
) |
$ |
(205.2 |
) |
$ |
(58.8 |
) |
||||
|
|
|
|
|
||||||||||||
Loss per common share - basic and diluted |
$ |
(0.73 |
) |
$ |
(0.12 |
) |
$ |
(1.16 |
) |
$ |
(0.34 |
) |
||||
Li-Cycle Holdings Corp. |
|
|
|
|
||||||||||||
Condensed consolidated interim statements of cash flows |
||||||||||||||||
Unaudited $ millions, for the |
Three months ended September 30, |
Nine months ended September 30, |
||||||||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Operating activities |
|
|
|
|
||||||||||||
Net loss |
$ |
(130.5 |
) |
$ |
(20.6 |
) |
$ |
(205.2 |
) |
$ |
(58.8 |
) |
||||
Items not affecting cash |
|
|
|
|
||||||||||||
Share-based compensation |
|
3.8 |
|
|
4.0 |
|
|
10.7 |
|
|
15.5 |
|
||||
Depreciation |
|
4.6 |
|
|
3.3 |
|
|
12.3 |
|
|
7.8 |
|
||||
Foreign exchange (gain) loss on translation |
|
(0.8 |
) |
|
(1.4 |
) |
|
(0.4 |
) |
|
(1.5 |
) |
||||
Fair value (gain) loss on financial instruments |
|
(10.9 |
) |
|
(19.9 |
) |
|
(17.5 |
) |
|
(42.5 |
) |
||||
Impairment |
|
96.5 |
|
|
— |
|
|
96.5 |
|
|
— |
|
||||
Interest expense |
|
4.2 |
|
|
5.9 |
|
|
11.9 |
|
|
13.6 |
|
||||
Interest paid |
|
(1.2 |
) |
|
(0.8 |
) |
|
(3.0 |
) |
|
(1.7 |
) |
||||
Interest received |
|
3.4 |
|
|
2.3 |
|
|
13.3 |
|
|
3.8 |
|
||||
Interest income |
|
(2.6 |
) |
|
(3.8 |
) |
|
(11.8 |
) |
|
(5.3 |
) |
||||
|
|
(33.5 |
) |
|
(31.0 |
) |
|
(93.2 |
) |
|
(69.1 |
) |
||||
Changes in non-cash working capital items |
|
|
|
|
||||||||||||
Accounts receivable |
|
(1.4 |
) |
|
2.9 |
|
|
2.0 |
|
|
2.3 |
|
||||
Other receivables |
|
0.6 |
|
|
(0.6 |
) |
|
4.9 |
|
|
(2.9 |
) |
||||
Prepayments and deposits |
|
(3.2 |
) |
|
7.4 |
|
|
(13.4 |
) |
|
(5.8 |
) |
||||
Inventory |
|
(1.4 |
) |
|
1.8 |
|
|
4.4 |
|
|
(2.1 |
) |
||||
Accounts payable and accrued liabilities |
|
14.7 |
|
|
8.3 |
|
|
7.0 |
|
|
25.6 |
|
||||
Deferred Revenue |
|
(0.1 |
) |
|
— |
|
|
5.3 |
|
|
— |
|
||||
Net cash used in operating activities |
|
(24.3 |
) |
|
(11.2 |
) |
|
(83.0 |
) |
|
(52.0 |
) |
||||
|
|
|
|
|
||||||||||||
Investing activities |
|
|
|
|
||||||||||||
Purchases of plant and equipment |
|
(177.3 |
) |
|
(36.7 |
) |
|
(340.9 |
) |
|
(90.3 |
) |
||||
Prepaid equipment deposits |
|
54.0 |
|
|
(21.5 |
) |
|
51.0 |
|
|
(50.8 |
) |
||||
Net cash used in investing activities |
|
(123.3 |
) |
|
(58.2 |
) |
|
(289.9 |
) |
|
(141.1 |
) |
||||
|
|
|
|
|
||||||||||||
Financing activities |
|
|
|
|
||||||||||||
Restricted cash |
|
(2.2 |
) |
|
— |
|
|
(2.2 |
) |
|
— |
|
||||
Proceeds from private share issuance, net of share issuance costs |
|
— |
|
|
— |
|
|
— |
|
|
49.7 |
|
||||
Proceeds from convertible debt |
|
— |
|
|
— |
|
|
— |
|
|
198.7 |
|
||||
Capital contribution from the holders of non-controlling interest |
|
— |
|
|
— |
|
|
— |
|
|
0.3 |
|
||||
Purchase of non-controlling interest |
|
— |
|
|
— |
|
|
(0.4 |
) |
|
— |
|
||||
Repayment of lease principal |
|
(1.6 |
) |
|
(1.3 |
) |
|
(5.0 |
) |
|
(3.7 |
) |
||||
Net cash (used in) from financing activities |
|
(3.8 |
) |
|
(1.3 |
) |
|
(7.6 |
) |
|
245.0 |
|
||||
|
|
|
|
|
||||||||||||
Net change in cash and cash equivalents |
|
(151.4 |
) |
|
(70.7 |
) |
|
(380.5 |
) |
|
51.9 |
|
||||
Cash and cash equivalents, beginning of the period |
|
288.8 |
|
|
686.3 |
|
|
517.9 |
|
|
563.7 |
|
||||
Cash and cash equivalents, end of the period |
$ |
137.4 |
|
$ |
615.6 |
|
$ |
137.4 |
|
$ |
615.6 |
|
||||
|
|
|
|
|
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/20231113091568/en/
Investor Relations
Nahla Azmy
Sheldon D'souza
Email: investors@li-cycle.com
Media
Louie Diaz
Email: media@li-cycle.com
Source: Li-Cycle Holdings Corp.
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