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 and Germany; and
- Working with Moelis & Company LLC ("Moelis") to evaluate
financing and strategic alternatives.
Li-Cycle Holdings Corp. (NYSE: LICY) (“Li-Cycle” or the
“Company”), a leading global lithium-ion battery (LIB) resource
recovery company, today announced financial results and business
update for its third quarter ended September 30, 2023.
“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 $375 million loan commitment
as we complete a comprehensive review of the go-forward strategy
for the Rochester Hub,” said Ajay Kochhar, Li-Cycle’s President and
Chief Executive Officer. “Global EV production volumes and battery
material demand continues to be underpinned by strong fundamentals.
With favorable supply and demand dynamics driving the need for
domestic sources of battery material, we continue to see
significant benefits for Li-Cycle’s Spoke & Hub network, and in
particular, the market need for the Rochester Hub.”
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 $560 million. As part of the comprehensive
review, the Company is also examining expected capital cost, timing
of completion and go-forward construction strategy options for the
Rochester Hub project.
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 $375 million through the DOE’s Advanced
Technology Vehicles Manufacturing (“ATVM”) program. The Company is
actively engaged and continues to work closely with the DOE to
satisfy conditions precedent for financial close for the loan for
gross proceeds of up to $375 million as it undertakes its
comprehensive review of the go-forward strategy of the Rochester
Hub. In addition to the conditions precedent to financial close,
the Company will need to meet additional conditions precedent prior
to the first advance including obtaining additional financing to
fund the required base equity commitment. Net proceeds from the
loan will reflect customary deductions such as capitalized interest
and other items.
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 $850 million
to approximately $1.0 billion. This range includes the cost of the
process buildings and warehouse for the Rochester Hub of
approximately $140 million. This total project range is based
solely upon the initial analysis, is subject to a number of
assumptions and is likely to change as the Company continues to
complete its comprehensive review work and determine which options
to pursue accordingly.
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 $4.7 million,
which decreased from $4.9 million in the same period of 2022. The
decrease in product revenue was primarily attributable to lower
sales volumes due to inventory building for the Rochester Hub and
reduction in market prices of cobalt and nickel. This was partially
offset by a higher value product sales mix and higher recycling
fees on feed intake. Total revenues including FMV adjustments were
$4.7 million, compared with $2.8 million last year, and included a
non-cash FMV impact of nil versus an unfavorable FMV impact of $2.1
million last year.
Operating expenses increased to $144.8 million versus $41.9
million in the same period of 2022, driven primarily by the
non-cash Rochester Hub impairment charge, higher personnel costs,
plant facility expenses, and R&D expenses. This was partially
offset by a reduction in raw materials and supplies expenses driven
by lower provision for inventory as a result of lower battery
inventories on hand.
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 $96.5 million.
Net loss was $130.5 million, compared to $20.6 million in the
same period of 2022, and included a fair value gain on financial
instruments of $10.9 million and $19.9 million, respectively.
Adjusted EBITDA1 loss was $38.9 million, compared to a loss of
$35.1 million in the same period of 2022, attributed to higher
expenses relating to expansion of the global network, which more
than offset increased revenue. Additionally, non-cash share-based
compensation decreased to $3.8 million from $4.0 million in the
same period of 2022.
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 Europe. Established in 2016, and with major customers and
partners around the world, Li-Cycle is on a mission to recover
critical battery-grade materials to create a domestic closed-loop
battery supply chain for a clean energy future. The Company
leverages its innovative, sustainable, and patent-protected Spoke
& Hub Technologies™ to provide a safe, scalable,
customer-centric solution to recycle all different types of
lithium-ion batteries. At our Spokes, or pre-processing facilities,
we recycle battery manufacturing scrap and end-of-life batteries to
produce black mass, a powder-like substance which contains a number
of valuable metals, including lithium, nickel, and cobalt. At our
Hubs, or post-processing facilities, we will process black mass to
produce critical battery-grade materials, including lithium
carbonate, nickel sulphate, and cobalt sulphate. For more
information, visit https://li-cycle.com/.
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
U.S. Private Securities Litigation Reform Act of 1995, Section 27A
of the U.S. Securities Act of 1933, as amended, Section 21 of the
U.S. Securities Exchange Act of 1934, as amended, and applicable
Canadian securities laws. Forward-looking statements may generally
be identified by the use of words such as “believe”, “may”, “will”,
“continue”, “anticipate”, “intend”, “expect”, “should”, “would”,
“could”, “plan”, “potential”, “future”, “target” or other similar
expressions that predict or indicate future events or trends or
that are not statements of historical matters, although not all
forward-looking statements contain such identifying words.
Forward-looking statements in this press release include but are
not limited to statements about: the Company taking steps to
conserve cash; the Company undertaking a comprehensive review of
the go-forward strategy for the Rochester Hub project, including an
examination of the expected capital cost, timing of completion and
go-forward strategy options for the project; the favourable supply
and demand dynamics driving the need for domestic sources of
battery materials; the continued significant benefits for
Li-Cycle’s Spoke & Hub network, including the market need for
the Rochester Hub; the continued work with the DOE to satisfy
conditions precedent for financial close of the $375 million loan
commitment; the additional conditions precedent of the DOE Loan in
relation to first advance including obtaining additional financing
to fund the required based equity commitment; the possibility that
the phased approach to the Rochester Hub project would include the
ability to produce intermediate battery metal products and improve
project economics; the expectation that the anticipated aggregate
cost of the existing scope of the Rochester Hub project will
significantly exceed the previously disclosed budget of $560
million; the revised project costs for the options currently under
review possibly being in the range of approximately $850 million to
approximately $1.0 billion, now including the addition of
approximately $140 million for the Rochester Hub process buildings
and warehouse that were previously expected to be funded under a
separate leasing agreement; and the expectation that this total
project range will change as the comprehensive review is completed.
These statements are based on various assumptions, whether or not
identified in this communication, including but not limited to
assumptions regarding the timing, scope and cost of Li-Cycle’s
projects; the processing capacity and production of Li-Cycle’s
facilities; Li-Cycle’s ability to source feedstock and manage
supply chain risk; Li-Cycle’s ability to increase recycling
capacity and efficiency; Li-Cycle’s ability to obtain financing on
acceptable terms; Li-Cycle’s ability to retain and hire key
personnel and maintain relationships with customers, suppliers and
other business partners; general economic conditions; currency
exchange and interest rates; compensation costs; and inflation.
There can be no assurance that such estimates or assumptions will
prove to be correct and, as a result, actual results or events may
differ materially from expectations expressed in or implied by the
forward-looking statements.
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
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