Livent Releases Third Quarter 2022 Results

($ million)

Revised FY 2022
Guidance

Prior FY 2022
Guidance

Actual

FY 2021

Revised

YoY Growth
(midpoint)

Revenue

815 – 845

800 - 860

420

Up 97%

Adj. EBITDA

350 – 370

325 - 375

70

Up 418%

LIVENT CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in millions, except per share data)

Three Months Ended
September 30,

Nine Months Ended
September 30,

2022

2021

2022

2021

Revenue

$           231.6

$           103.6

$           593.8

$           297.5

Costs of sales

112.2

85.3

312.0

245.5

Gross margin

119.4

18.3

281.8

52.0

Selling, general and administrative expenses

15.0

11.8

40.6

34.2

Research and development expenses

0.9

0.8

2.6

2.2

Restructuring and other charges

0.7

1.1

4.6

3.4

Separation-related costs

0.1

0.8

0.5

1.3

Total costs and expenses

128.9

99.8

360.3

286.6

Income from operations before equity in net loss of unconsolidated
affiliate, interest expense, net, loss on debt extinguishment and other gain

102.7

3.8

233.5

10.9

Equity in net loss of unconsolidated affiliate

3.5

1.0

8.4

3.7

Interest expense, net

—

—

—

0.3

Loss on debt extinguishment

0.1

—

0.1

—

Other gain

—

—

(22.2)

—

Income from operations before income taxes

99.1

2.8

247.2

6.9

Income tax expense

21.5

15.4

56.4

13.8

Net income/(loss)

$              77.6

$            (12.6)

$           190.8

$              (6.9)

Net income/(loss) per weighted average share - basic

$              0.43

$            (0.08)

$              1.13

$            (0.05)

Net income/(loss) per weighted average share - diluted

$              0.37

$            (0.08)

$              0.96

$            (0.05)

Weighted average common shares outstanding - basic

179.3

161.6

169.3

152.3

Weighted average common shares outstanding - diluted

209.4

161.6

199.2

152.3

LIVENT CORPORATION

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

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

(Unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

(in Millions)

2022

2021

2022

2021

Net income/(loss)

$                   77.6

$                 (12.6)

$                 190.8

$                   (6.9)

Add back:

Interest expense, net

—

—

—

0.3

Income tax expense

21.5

15.4

56.4

13.8

Depreciation and amortization

6.6

6.2

19.4

18.7

EBITDA (Non-GAAP) ⁽¹⁾

105.7

9.0

266.6

25.9

Add back:

Argentina remeasurement losses ^(a)

1.2

0.9

3.0

4.2

Restructuring and other charges ^(b)

0.7

1.1

4.6

3.4

Separation-related costs ^(c)

0.1

0.8

0.5

1.3

COVID-19 related costs ^(d)

0.6

1.9

2.1

4.2

Loss on debt extinguishment ^(e)

0.1

—

0.1

—

Other loss ^(f)

2.4

1.2

5.9

3.0

Subtract:

Blue Chip Swap gain ^(g)

—

—

(22.2)

—

Argentina interest income ^(h)

—

—

(1.5)

—

Adjusted EBITDA (Non-GAAP) ⁽¹⁾

$                 110.8

$                   14.9

$                259.1

$                  42.0

1.

We evaluate operating performance using certain Non-GAAP measures such as EBITDA, which we define as net income/(loss) 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 and certain other losses. 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/(loss) 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/(loss).

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 nine months ended September 30, 2022 includes $0.2 million and $0.7 million, respectively, of severance costs, for management changes at certain administrative facilities and $0.1 million and $1.0 million, respectively, for miscellaneous nonrecurring costs. The three and nine months ended September 30, 2022 and 2021 includes transaction related legal fees.

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 the partial write off of deferred financing costs for the amendments to our Revolving Credit Facility excluded from our calculation of Adjusted EBITDA because the loss is nonrecurring.

f.

The three and nine months ended September 30, 2022 and 2021 represents our ownership interest (which was 25% prior to June 6, 2022) in certain project-related costs, interest expense and transaction costs incurred for the Nemaska Project, 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 the Nemaska Project on a one-quarter lag basis.

g.

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.

h.

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/(LOSS) (GAAP) TO

ADJUSTED AFTER-TAX EARNINGS (NON-GAAP)

(Unaudited) 

(in Millions, Except Per Share Data)

Three Months Ended September 30,

Nine Months Ended September 30,

2022

2021

2022

2021

Net income/(loss)

$                 77.6

$               (12.6)

$               190.8

$                 (6.9)

Special charges:

Argentina remeasurement losses ^(a)

1.2

0.9

3.0

4.2

Restructuring and other charges ^(b)

0.7

1.1

4.6

3.4

Separation-related costs ^(c)

0.1

0.8

0.5

1.3

COVID-19 related costs ^(d)

0.6

1.9

2.1

4.2

Loss on debt extinguishment ^(e)

0.1

—

0.1

—

Other loss ^(f)

2.4

1.2

5.9

3.0

Blue Chip Swap gain ^(g)

—

—

(22.2)

—

Argentina interest income ^(h)

—

—

(1.5)

—

Non-GAAP tax adjustments ^(j)

2.4

13.4

15.1

8.7

Adjustment for interest, net of tax, on 2025 Notes
assumed converted (Non-GAAP) ⁽ⁱ⁾

—

—

—

0.2

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

$                 85.1

$                   6.7

$               198.4

$                18.1

Diluted earnings/(loss) per common share (GAAP)

$                 0.37

$               (0.08)

$                 0.96

$              (0.05)

Special charges per diluted share, before tax:

Argentina remeasurement losses, per diluted share

0.01

—

0.02

0.02

Restructuring and other charges, per diluted share

—

0.02

0.02

0.02

Separation-related costs, per diluted share

—

—

—

0.01

COVID-19 related costs, per diluted share

—

0.01

0.01

0.02

Other loss, per diluted share

0.01

0.02

0.03

0.02

Blue Chip Swap gain, per diluted share

—

—

(0.12)

—

Non-GAAP tax adjustments, per diluted share

0.02

0.07

0.08

0.06

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

$                 0.41

$                 0.04

$                 1.00

$                0.10

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

209.4

191.2

199.2

181.8

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 special charges 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 nine months ended September 30, 2022 includes $0.2 million and $0.7 million, respectively, of severance costs, for management changes at certain administrative facilities and $0.1 million and $1.0 million, respectively, for miscellaneous nonrecurring costs. The three and nine months ended September 30, 2022 and 2021 includes transaction related legal fees.

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 the partial write off of deferred financing costs for the amendments to our Revolving Credit Facility excluded from our calculation of Adjusted EBITDA because the loss is nonrecurring.

f.

The three and nine months ended September 30, 2022 and 2021 represents our ownership interest (which was 25% prior to June 6, 2022) in certain project-related costs, interest expense and transaction costs incurred for the Nemaska Project, 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 the Nemaska Project on a one-quarter lag basis.

g.

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.

h.

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.

i.

For the three and nine  months ended September 30, 2022 and the three months ended September 30, 2021, all of the interest was capitalized on the 2025 Notes. For the nine months ended September 30, 2021, $8.5 million of the interest on the 2025 Notes was capitalized.

j.

The Company excludes the GAAP tax provision, including discrete items, from the Non-GAAP measure of income, and instead includes a Non-GAAP tax provision based upon the projected 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 interim 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 September 30,

Nine Months Ended September 30,

(in Millions)

2022

2021

2022

2021

Non-GAAP tax adjustments:

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

$             (0.4)

$             (0.9)

$            (1.3)

$            (2.0)

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

—

—

—

0.4

Foreign currency remeasurement and other discrete items ⁽¹⁾

2.8

12.9

14.7

11.7

Blue Chip Swap gain

—

—

2.3

—

Other discrete items

—

1.4

(0.6)

(1.4)

Total Non-GAAP tax adjustments

$               2.4

$             13.4

$            15.1

$             8.7

1.

Three and nine months ended September 30, 2022 includes $2.5 million and $7.7 million income tax expense, respectively, relating to an adjustment for inflation and foreign currency remeasurements in Argentina.

RECONCILIATION OF CASH PROVIDED BY OPERATING ACTIVITIES (GAAP) TO

ADJUSTED CASH PROVIDED BY OPERATIONS (NON-GAAP)

(Unaudited)

Nine Months Ended September 30,

(in Millions)

2022

2021

Cash provided by operating activities (GAAP)

$                  328.2

$                    41.0

Restructuring and other (income)/charges

(0.1)

4.2

Separation-related costs

0.9

1.4

COVID-19 related costs ^(a)

2.1

4.2

Argentina interest income ^(b)

(1.5)

—

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

$                  329.6

$                    50.8

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)

September 30, 2022

December 31, 2021

Long-term debt (GAAP)

$                       241.6

$                    240.4

Current portion of long-term debt (GAAP)

13.5

—

Less: Cash and cash equivalents (GAAP)

(211.6)

(113.0)

Net debt (Non-GAAP) ⁽¹⁾

$                         43.5

$                    127.4

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.

LIVENT CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in Millions)

September 30, 2022

December 31, 2021

Cash and cash equivalents

$                        211.6

$                      113.0

Trade receivables, net of allowance of approximately $0.3 in 2022 and $0.3 in 2021

164.0

96.4

Inventories

141.8

134.6

Other current assets

56.5

55.3

Total current assets

573.9

399.3

Investments

433.9

27.2

Property, plant and equipment, net of accumulated depreciation of $248.3 in 2022
and $243.0 in 2021

882.2

677.9

Right of use assets - operating leases, net

4.9

6.3

Deferred income taxes

0.5

0.9

Other assets

111.9

90.9

Total assets

$                     2,007.3

$                  1,202.5

Short-term debt and current portion of long-term debt

$                          13.5

$                           —

Accounts payable, trade and other

72.2

65.4

Other current liabilities

69.9

62.9

Income taxes

7.4

3.0

Total current liabilities

163.0

131.3

Long-term debt

241.6

240.4

Operating lease liabilities - long-term

4.1

5.4

Contract liability - long-term

198.0

—

Other long-term liabilities

46.0

30.0

Equity

1,354.6

795.4

Total liabilities and equity

$                     2,007.3

$                  1,202.5

LIVENT CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Nine Months Ended September 30,

(in Millions)

2022

2021

Cash provided by operating activities

$                  328.2

$                    41.0

Cash used in investing activities

(225.7)

(74.3)

Cash (used in)/provided by financing activities

(1.0)

216.9

Effect of exchange rate changes on cash

(2.9)

0.1

Increase in cash and cash equivalents

98.6

183.7

Cash and cash equivalents, beginning of period

113.0

11.6

Cash and cash equivalents, end of period

$                  211.6

$                  195.3