Livent Releases Second Quarter 2023 Results

($ million)

FY 2023
Guidance

Actual

FY 2022

YoY

Growth

Revenue

1,025 – 1,125

813

Up 26% – 38%

Adj. EBITDA

530 – 600

367

Up 45% – 64%

LIVENT CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in millions, except per share data)

Three Months Ended June 30,

Six Months Ended June 30,

2023

2022

2023

2022

Revenue

$           235.8

$           218.7

$          489.3

$          362.2

Costs of sales

92.4

116.2

179.9

199.8

Gross margin

143.4

102.5

309.4

162.4

Selling, general and administrative expenses

17.6

13.8

33.9

25.6

Research and development expenses

1.0

0.8

2.0

1.7

Restructuring and other charges

24.2

2.9

26.1

3.9

Separation-related costs

—

0.3

—

0.4

Total costs and expenses

135.2

134.0

241.9

231.4

Income from operations before equity in net loss of
unconsolidated affiliates and other gain

100.6

84.7

247.4

130.8

Equity in net loss of unconsolidated affiliates

7.2

2.7

15.3

4.9

Other gain

(11.4)

(8.2)

(11.4)

(22.2)

Income from operations before income taxes

104.8

90.2

243.5

148.1

Income tax expense

14.6

30.2

38.5

34.9

Net income

$             90.2

$             60.0

$          205.0

$          113.2

Net income per weighted average share - basic

$             0.50

$             0.36

$             1.14

$             0.69

Net income per weighted average share - diluted

$             0.43

$             0.31

$             0.98

$             0.58

Weighted average common shares outstanding - basic

179.7

166.6

179.6

164.2

Weighted average common shares outstanding - diluted

209.5

196.5

209.3

194.0

LIVENT CORPORATION

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

RECONCILIATION OF NET INCOME (GAAP) TO ADJUSTED EBITDA (NON-GAAP)

(Unaudited)

Three Months Ended June 30,

Six Months Ended June 30,

(in Millions)

2023

2022

2023

2022

Net income

$                   90.2

$                   60.0

$                 205.0

$                 113.2

Add back:

Income tax expense

14.6

30.2

38.5

34.9

Depreciation and amortization

7.0

6.4

13.8

12.8

EBITDA (Non-GAAP) ⁽¹⁾

111.8

96.6

257.3

160.9

Add back:

Argentina remeasurement losses ^(a)

4.8

0.8

8.9

1.8

Restructuring and other charges ^(b)

24.2

2.9

26.1

3.9

Separation-related costs ^(c)

—

0.3

—

0.4

COVID-19 related costs ^(d)

—

0.7

—

1.5

Other loss ^(e)

5.1

1.9

11.0

3.5

Subtract:

Blue Chip Swap gain ^(f)

(11.4)

(8.2)

(11.4)

(22.2)

Argentina interest income ^(g)

—

—

—

(1.5)

Adjusted EBITDA (Non-GAAP) ⁽¹⁾

$                 134.5

$                   95.0

$                 291.9

$                 148.3

1.

We evaluate operating performance using certain Non-GAAP measures such as EBITDA, which we define as net income plus interest expense, net, income tax expense and depreciation and amortization; and Adjusted EBITDA, which we define as EBITDA adjusted for restructuring and other charges, separation-related costs, COVID-19 related costs and other losses/(gains). Management believes the use of these Non-GAAP measures allows management and investors to compare more easily the financial performance of its underlying business from period to period. The Non-GAAP information provided may not be comparable to similar measures disclosed by other companies because of differing methods used by other companies in calculating EBITDA and Adjusted EBITDA. This measure should not be considered as a substitute for net income or other measures of performance or liquidity reported in accordance with U.S. GAAP. The above table reconciles EBITDA and Adjusted EBITDA from net income.

a.

Represents impact of currency fluctuations on tax assets and liabilities and long-term monetary assets associated with our capital expansion as well as foreign currency devaluations. The remeasurement losses are included within "Cost of sales" in our condensed consolidated statement of operations but are excluded from our calculation of Adjusted EBITDA because of: i.) their nature as income tax related; ii.) their association with long-term capital projects which will not be operational until future periods; or iii.) the severity of the devaluations and their immediate impact on our operations in the country.

b.

We continually perform strategic reviews and assess the return on our business. This sometimes results in management changes or in a plan to restructure the operations of our business. As part of these restructuring plans, demolition costs and write-downs of long-lived assets may occur. The three and six months ended June 30, 2023 includes costs related to the Transaction of $18.8 million and the Bessemer City plant fire loss of $5.0 million. The three and six months ended June 30, 2022 includes costs related to the Transaction of $2.2 million.

c.

Represents legal and professional fees and other separation-related activity.

d.

Represents incremental costs associated with COVID-19 recorded in "Cost of sales" in the condensed consolidated statement of operations, including but not limited to, incremental quarantine-related absenteeism, incremental facility cleaning costs, COVID-19 testing, pandemic-related supplies and personal protective equipment for employees, among other costs; offset by economic relief provided by foreign governments.

e.

Represents our ownership interest (which is 50% and was 25% prior to June 6, 2022) in costs incurred for certain project-related costs to align Nemaska Lithium Inc.'s ("NLI's") reported results with Livent's capitalization policies and interest expense incurred by NLI, all included in Equity in net loss of unconsolidated affiliates in our condensed consolidated statement of operations. The Company accounts for its equity method investment in the NLI on a one-quarter lag basis.

f.

Represents the gain from the sale in Argentina pesos of Argentina Sovereign U.S. dollar-denominated bonds and is excluded from Adjusted EBITDA because it is nonrecurring.

g.

Represents interest income received from the Argentina government for the period beginning when the recoverability of certain of our expansion-related VAT receivables were approved by the Argentina government and ending on the date when the reimbursements were paid by the Argentina government but is excluded from our calculation of Adjusted EBITDA because of its association with long-term capital projects which will not be operational until future periods.

RECONCILIATION OF NET INCOME (GAAP) TO

ADJUSTED AFTER-TAX EARNINGS (NON-GAAP)

(Unaudited)

(in Millions, Except Per Share Data)

Three Months Ended June 30,

Six Months Ended June 30,

2023

2022

2023

2022

Net income

$           90.2

$           60.0

$        205.0

$        113.2

Special charges:

Argentina remeasurement losses ^(a)

4.8

0.8

8.9

1.8

Restructuring and other charges ^(b)

24.2

2.9

26.1

3.9

Separation-related costs ^(c)

—

0.3

—

0.4

COVID-19 related costs ^(d)

—

0.7

—

1.5

Other loss ^(e)

5.1

1.9

11.0

3.5

Blue Chip Swap gain ^(f)

(11.4)

(8.2)

(11.4)

(22.2)

Argentina interest income ^(g)

—

—

—

(1.5)

Non-GAAP tax adjustments ^(h)

(5.6)

14.9

(6.3)

12.7

Adjusted after-tax earnings (Non-GAAP) ⁽¹⁾

$        107.3

$           73.3

$        233.3

$        113.3

Diluted earnings per common share (GAAP)

$           0.43

$           0.31

$           0.98

$           0.58

Special charges per diluted share, before tax:

Argentina remeasurement losses, per diluted share

0.02

—

0.04

0.01

Restructuring and other charges, per diluted share

0.12

0.01

0.12

0.02

COVID-19 related costs, per diluted share

—

—

—

0.01

Other loss, per diluted share

0.02

0.01

0.05

0.01

Blue Chip Swap gain, per diluted share

(0.05)

(0.04)

(0.05)

(0.12)

Non-GAAP tax adjustments, per diluted share

(0.03)

0.08

(0.03)

0.07

Diluted adjusted after-tax earnings per share (Non-GAAP) ⁽¹⁾

$           0.51

$           0.37

$           1.11

$           0.58

Weighted average common shares outstanding - diluted (Non-GAAP)
used in diluted adjusted after-tax earnings per share computations

209.5

196.5

209.3

194.0

1.

The Company believes that the Non-GAAP financial measures "Adjusted after-tax earnings" and "Diluted adjusted after-tax earnings per share" provide useful information about the Company's operating results to management, investors and securities analysts. Adjusted after-tax earnings excludes the effects of nonrecurring charges/(income) and tax-related adjustments. The Company also believes that excluding the effects of these items from operating results allows management and investors to compare more easily the financial performance of its underlying business from period to period. Diluted adjusted after-tax earnings per share (Non-GAAP) is calculated using weighted average common shares outstanding - diluted.

a.

Represents impact of currency fluctuations on tax assets and liabilities and long-term monetary assets associated with our capital expansion as well as foreign currency devaluations. The remeasurement losses are included within "Cost of sales" in our condensed consolidated statement of operations but are excluded from our calculation of Adjusted EBITDA because of: i.) their nature as income tax related; ii.) their association with long-term capital projects which will not be operational until future periods; or iii.) the severity of the devaluations and their immediate impact on our operations in the country.

b.

We continually perform strategic reviews and assess the return on our business. This sometimes results in management changes or in a plan to restructure the operations of our business. As part of these restructuring plans, demolition costs and write-downs of long-lived assets may occur. The three and six months ended June 30, 2023 includes costs related to the Transaction of $18.8 million and Bessemer City plant fire loss of $5.0 million. The three and six months ended June 30, 2022 includes costs related to the Transaction of $2.2 million.

c.

Represents legal and professional fees and other separation-related activity.

d.

Represents incremental costs associated with COVID-19 recorded in "Cost of sales" in the condensed consolidated statement of operations, including but not limited to, incremental quarantine-related absenteeism, incremental facility cleaning costs, COVID-19 testing, pandemic related supplies and personal protective equipment for employees, among other costs; offset by economic relief provided by foreign governments.

e.

Represents our ownership interest (which is 50% and was 25% prior to June 6, 2022) in costs incurred for certain project-related costs to align NLI's reported results with Livent's capitalization policies and interest expense incurred by NLI, all included in Equity in net loss of unconsolidated affiliate in our condensed consolidated statement of operations. The Company accounts for its equity method investment in NLI on a one-quarter lag basis.

f.

Represents the gain from the sale in Argentina pesos of Argentina Sovereign U.S. dollar-denominated bonds and is excluded from Adjusted EBITDA because it is nonrecurring.

g.

Represents interest income received from the Argentina government for the period beginning when the recoverability of certain of our expansion-related VAT receivables were approved by the Argentina government and ending on the date when the reimbursements were paid by the Argentina government but is excluded from our calculation of Adjusted EBITDA because of its association with long-term capital projects which will not be operational until future periods.

h.

The company excludes the GAAP tax provision, including discrete items, from the Non-GAAP measure "Diluted adjusted after-tax earnings per share", and instead includes a Non-GAAP tax provision based upon the annual Non-GAAP effective tax rate. The GAAP tax provision includes certain discrete tax items including, but not limited to: income tax expenses or benefits that are not related to operating results in the current year; tax adjustments associated with fluctuations in foreign currency remeasurement of certain foreign operations; certain changes in estimates of tax matters related to prior fiscal years; certain changes in the realizability of deferred tax assets and related accounting impacts; and changes in tax law. Management believes excluding these discrete tax items assists investors and securities analysts in understanding the tax provision and the effective tax rate related to operating results thereby providing investors with useful supplemental information about the company's operational performance. The income tax expense/(benefit) on special charges/(income) is determined using the applicable rates in the taxing jurisdictions in which the special charge or income occurred and includes both current and deferred income tax expense/(benefit) based on the nature of the Non-GAAP performance measure.

Three Months Ended June 30,

Six Months Ended June 30,

(in Millions)

2023

2022

2023

2022

Non-GAAP tax adjustments:

Income tax benefit on restructuring, separation-related and other corporate
costs

$            (2.3)

$            (1.0)

$            (2.8)

$            (0.9)

Revisions to our tax liabilities due to finalization of prior year tax returns

(0.1)

—

(0.1)

—

Foreign currency remeasurement and other discrete items ⁽¹⁾

(4.3)

15.8

(3.1)

11.9

Blue Chip Swap gain

1.2

0.9

1.2

2.3

Other discrete items

(0.1)

(0.8)

(1.5)

(0.6)

Total Non-GAAP tax adjustments

$            (5.6)

$            14.9

$            (6.3)

$            12.7

RECONCILIATION OF CASH PROVIDED BY OPERATING ACTIVITIES (GAAP) TO

ADJUSTED CASH PROVIDED BY OPERATIONS (NON-GAAP)

(Unaudited)

Six Months Ended June 30,

(in Millions)

2023

2022

Cash provided by operating activities (GAAP)

$                  181.6

$                    61.2

Restructuring and other charges/(income)

10.4

(0.4)

Separation-related costs

—

0.6

COVID-19 related costs ^(a)

—

1.5

Argentina interest income ^(b)

—

(1.5)

Adjusted cash provided by operations (Non-GAAP) ⁽¹⁾

$                  192.0

$                    61.4

1.

The Company believes that the Non-GAAP financial measure "Adjusted cash provided by operations" provides useful information about the Company's cash flows to investors and securities analysts. Adjusted cash provided by operations excludes the effects of transaction-related cash flows. The Company also believes that excluding the effects of these items from cash provided by operating activities allows management and investors to compare more easily the cash flows from period to period.

a.

Represents incremental costs associated with COVID-19 recorded in "Cost of sales" in the condensed consolidated statement of operations, including but not limited to, incremental quarantine-related absenteeism, incremental facility cleaning costs, COVID-19 testing, pandemic-related supplies and personal protective equipment for employees, among other costs; offset by economic relief provided by foreign governments.

b.

Represents interest income received from the Argentina government for the period beginning when the recoverability of certain of our expansion-related VAT receivables were approved by the Argentina government and ending on the date when the reimbursements were paid by the Argentina government but is excluded from our calculation of Adjusted cash provided by operations because of its association with long-term capital projects which will not be operational until future periods.

RECONCILIATION OF LONG-TERM DEBT (GAAP) AND CURRENT PORTION OF LONG-TERM DEBT (GAAP)
AND CASH AND CASH EQUIVALENTS (GAAP) TO

NET DEBT (NON-GAAP)

(Unaudited)

(in Millions)

June 30, 2023

December 31, 2022

Long-term debt (GAAP) ^(a)

$                       242.7

$                    241.9

Less: Cash and cash equivalents (GAAP)

(167.8)

(189.0)

Net debt (Non-GAAP) ⁽¹⁾

$                          74.9

$                       52.9

1.

The Company believes that the Non-GAAP financial measure "Net debt" provides useful information about the Company's cash flows and liquidity to investors and securities analysts.

a.

Presented net of unamortized transaction costs of $3.1 million and $3.9 million as of June 30, 2023 and December 31, 2022, respectively. As of June 30, 2023 and December 31, 2022, the Company had no debt maturing within one year.

LIVENT CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in Millions)

June 30, 2023

December 31, 2022

Cash and cash equivalents

$                      167.8

$                      189.0

Trade receivables, net of allowance of approximately $0.3 in 2023 and 2022

122.3

141.6

Inventories

197.8

152.3

Other current assets

44.8

61.1

Total current assets

532.7

544.0

Investments

455.7

440.3

Property, plant and equipment, net of accumulated depreciation of $265.7 in 2023
and $253.1 in 2022

1,137.4

968.3

Right of use assets - operating leases, net

6.8

4.8

Deferred income taxes

0.1

0.4

Other assets

151.1

116.4

Total assets

$                  2,283.8

$                  2,074.2

Accounts payable, trade and other

$                        80.5

$                        81.7

Contract liabilities - short term

2.3

15.5

Other current liabilities

58.7

51.5

Total current liabilities

141.5

148.7

Long-term debt

242.7

241.9

Contract liability - long-term

198.0

198.0

Other long-term liabilities

48.6

42.6

Equity

1,653.0

1,443.0

Total liabilities and equity

$                  2,283.8

$                  2,074.2

LIVENT CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Six Months Ended June 30,

(in Millions)

2023

2022

Cash provided by operating activities

$                  181.6

$                    61.2

Cash used in investing activities

(180.2)

(124.1)

Cash (used in)/provided by financing activities

(21.6)

0.2

Effect of exchange rate changes on cash

(1.0)

(1.3)

Decrease in cash and cash equivalents

(21.2)

(64.0)

Cash and cash equivalents, beginning of period

189.0

113.0

Cash and cash equivalents, end of period

$                  167.8

$                    49.0