Q4 2019 Earnings Presentation 2.20.20
Safe HarborStatement Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: Certain statements in this presentation are forward-looking statements. In some cases, you can identify these statements by forward- looking words such as “may,” “might,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” or “continue,” the negative of these ter ms and other comparable terminology. These forward-looking statements, which are subject to risks, uncertainties and assumptions about Livent, may include projections of Livent’s future financial performance, Livent’s anticipated growth strategies and anticipated trends in Livent’s business. These statements are only predictions based on Livent’s current expectations and projections about future events. There are important factors that co uld cause Livent’s actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements, including a decline in the growth in demand for electric vehicles; adverse global economic conditions; the success of Livent’s research and development efforts; volatility in the price for performance lithiu m compounds; risks relating to Livent’s planned production expansion and related capital expenditures; reduced customer demand, or delays in gro wth of customer demand, for higher performance lithium compounds, the potential development and adoption of battery technologies that do not rely on performance lithium compounds as an input; risks inherent in international operations and sales, including political, financial and operational risks specific to Argentina, China and other countries where Livent has active operations; customer concentration and the possible loss of, or significant reduction in orders from, large customers; failure to satisfy customer quality standards; fluctuations in the price of energy and certain raw materials; failure to achieve the expected benefits of Livent’s separation from FMC as well as the other factors describe d under the caption entitled “Risk Factors” in Livent’s 2018 Form 10 -K filed with the Securities and Exchange Commission on February 28, 2019, and subsequent Forms 10-Q filed with the Securities and Exchange Commission. Although Livent believes the expectations reflected in the forward-looking statements are reasonable, Livent cannot guarantee future results, level of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. We are under no duty to update any of these forward-looking statements after the date of this presentation to conform our prior statements to actual results or revisedexpectations. Non-GAAP FinancialTerms In these slides, Livent uses the financial measures adjusted earnings per diluted share, Adjusted EBITDA, and adjusted cash from operations. These terms are not calculated in accordance with generally accepted accounting principles (GAAP). Livent has posted supplemental information on the web at www.livent.com, including reconciliations of non-GAAP financial measures to the most directly comparable financial measure calculated and presented in accordance with GAAP. Although we provide forecasts for adjusted earnings per diluted share, Adjusted EBITDA, and adjusted cash from operations, we are not able to forecast the most directly comparable measures calculated and presented in accordance with GAAP. Certain elements of the composition of the GAAP amounts are not predictable, making it impractical for us to forecast such GAAP measures or to reconcile corresponding non-GAAP financial measures to such GAAP measures without unreasonable efforts. For the same reason, we are unable to address the probable significance of the unavailable information. Such elements include, but are not limited to, restructuring, transaction related charges, and related 2 cash activity. As a result, no GAAP outlook is provided.
Highlights • Provides Full Year 2020 Financial Guidance • Reaffirms and Details 2020 Sales Volume Growth • Slows Pace of Near-Term Capacity Expansion 3
Current Market Conditions • Increased lithium demand; record hydroxide demand growth • Announcements of cancelled and delayed capacity expansions • Spodumene production reduced; excess inventory remains • Excess conversion capacity remains (primarily China) • Increased near-term uncertainty in China 4
Reported Financial Results Q4 Full Year Q4 2019 Q3 2019 Q4 vs. Q3 2019 2018 2019 vs. 2018 Revenue $78 $98 (20%) $388 $443 (12%) GAAP $0 $18 (100%) $50 $127 (60%) Net Income Adjusted $16 $28 (43%) $100 $183 (45%) EBITDA (1) GAAP (2) (2) 0¢ 12¢ (100%) 34¢ 99¢ NM EPS Adjusted 5¢ 12¢ (58%) 42¢ 91¢ (54%) EPS (1) Note: Amounts in millions of USD, except earnings per diluted share. (1) Denotes non-GAAP financial term. (2) Assumes 127.7 million weighted average shares outstanding for 2018. For the portion of 2018 prior to our initial public offering, the weighted average shares outstanding were calculated using 123.0 million shares, which was the number of shares issued to FMC in part in exchange for the 5 asset contribution by FMC to us (excludes 23.0 million shares of common stock subsequently issued as part of the public offering).
Full Year 2020 Outlook Full Year 2019A Full Year 2020E Revenue $388 $375 - $425 Adjusted EBITDA (1) $100 $60 - $85 Adjusted EPS (1)(2) 42¢ 18¢ - 31¢ Note: Amounts in millions of USD, except adjusted earnings per diluted share. (1) Denotes non-GAAP financial term. 6 (2) Adjusted EPS calculated using approximately 146.7 million weighted average diluted shares outstanding.
Full Year 2020 Outlook (cont’d) 2019 2020E (000 LCE tons) Hydroxide / Carbonate (1) ~17.0 22.5 - 24.5 Other LCEs (2) ~4.0 ~4.0 ~30% increase Total LCEs ~21.0 26.5 - 28.5 at midpoint (1) 1 LCE ton is equivalent to c.1.1 product tons of hydroxide. 7 (2) Other LCEs includes Butyllithium, High Purity Lithium Metal and Other Specialty Compounds.
Full Year 2020 Outlook Compared to 2019 Driver EBITDA Impact Commentary / Expectations • Volume Increase ~30% increase in total LCEs sold Third-Party • Consumption of additional ~5kT of third Decrease Carbonate Costs party carbonate • Average realized hydroxide price low-to- mid-teens percent lower Price / Mix Decrease • Lower average realized carbonate pricing • BuLi pricing flat • Cost & Other Flat to Slight Decrease FX, raw materials 8
Cash Flow and Capital Spending Full Year Outlook 2019 2018 '19 vs. '18 2020 Cash From Operations (GAAP) $58 $92 ($34) Adjusted Cash from Operations (1) $90 $101 ($11) $75 - $95 Capital Spending (1)(2) ($189) ($78) ($110) ($200) - ($230) Of which: Growth ($153) ($46) ($107) (~$185) Maintenance ($36) ($32) ($4) (~$30) Note: Amounts in millions of USD; numbers may not tie due to rounding. (1) Denotes non-GAAP financial term. 9 (2) Includes capital expenditures and other investing activities.
Capacity Expansion Update Expected Completion Status Lithium Carbonate (Argentina) • Construction Camps Complete N/A • Infrastructure In Progress 2020 • Modular Carbonate Units In Progress H2 2020 • Installation Commence H2 2020 Early 2021 • Start-up Mid-2021 Lithium Hydroxide (U.S.) • Modular Hydroxide Units In Progress H2 2020 • Installation Commence Early 2021 Early 2021 • Start-up Mid-2021 10
Market Outlook • Evolution of downstream EV supply chain (battery, OEMs) • New EV model launch announcements • China reaffirms supportive government policies • EU regulation driving faster OEM adoption • Increasing focus on sustainability profile of EV supply chain 11
Appendix
Q4 and Full Year 2019 Financial Bridges Q4 2019 vs. Q3 2019 FY 2019 vs. FY 2018 $443 $98 ($11) $78 $1 $388 ($39) ($0) ($4) ($20) Revenue Volume Price / F/X Revenue Revenue Volume Price / F/X Revenue Q3 2019 Mix Q4 2019 2018 Mix 2019 $183 $28 ($2) ($39) $1 $100 $16 ($9) ($39) ($3) ($4) ($1) Adj. Volume Price / Cost F/X Adj. Adj. Volume Price / Cost F/X Adj. EBITDA Mix & Other EBITDA EBITDA Mix & Other EBITDA Q3 2019 (1) Q4 2019 (1) 2018 (1) 2019 (1) 13 Note: Amounts in millions of USD; numbers may not tie due to rounding; (1) Denotes non-GAAP financial term.
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