INDIA Newswire - 13 May 2024
(c)2005 - Electronic News Publishing - http://www.indiapublishing.co.uk
Release date- 10052024 - TORONTO - Li-Cycle Holdings Corp. (NYSE: LICY) ('Li-Cycle' or the 'Company'), a leading global lithium-ion battery resource recovery company, today announced financial results and business updates for its first quarter ended March 31, 2024.
'During the first quarter of 2024, we advanced our comprehensive review of the Rochester Hub go-forward plan and continue to work closely with the U.S. Department of Energy on key technical, financial, and legal workstreams to advance toward definitive financing documentation required for a loan for gross proceeds of up to $375 million,' said Ajay Kochhar, Li-Cycle's President and CEO. 'We also strengthened our commercial partnerships in both North America and Europe which makes us well-placed to be a preferred sustainable recycler in the global battery supply chain.'
Financing and Liquidity
Li-Cycle completed key initiatives during the quarter to enhance its liquidity position, including important interim financing steps as part of its overall funding strategy. The Company has also continued to work closely with the U.S. Department of Energy (DOE) Loan Programs Office on key technical, financial, and legal workstreams to advance toward definitive financing documentation required for closing a loan for gross proceeds of up to $375 million. The Company is also reviewing the potential mixed hydroxide precipitate (MHP) approach for the Rochester Hub with the DOE.
On February 7, 2024, the Company received approval from the German state of Saxony-Anhalt for a grant of up to EUR6.4 million (approximately $6.9 million) for its Germany Spoke. In late April 2024, the Company received the first EUR5.3 million (approximately $5.8 million) tranche of the grant.
On March 25, 2024, an affiliate of Glencore completed its $75 million investment in Li-Cycle through the purchase of a senior secured convertible note. The investment demonstrates Glencore's continued endorsement of Li-Cycle and its patented technology and further strengthens the companies' long-term partnership.
On March 26, 2024, the Company announced a strategic decision to transition from its regional management structure to a centralized model to better position Li-Cycle for future success and increase efficiencies. Li-Cycle also reduced its workforce as part of its Cash Preservation Plan. These steps are expected to generate approximately $10 million in payroll and benefit cost savings on an annualized basis. The Company estimates that it will incur non-recurring charges of approximately $8.3 million in connection with the workforce reductions, mostly in relation to severance payments.
Rochester Hub Project
Li-Cycle progressed the comprehensive review of its Rochester Hub project, including advancing work with the local market to refine go-forward cost estimates for the mixed hydroxide precipitate (MHP) approach. The Company had previously confirmed the technical viability of the MHP process through an internal technical review. The MHP process involves the production of two key products: battery-grade lithium carbonate and MHP, which contains nickel, cobalt, and manganese. Both of these key products have established markets and are critical for the battery supply chain.
Commercial Highlights
The Company strengthened its global commercial partnerships during the first quarter, which provided further validation of Li-Cycle's sustainable recycling technology and makes us well-placed to be a preferred global recycling partner.
In Europe, the Company signed a new recycling agreement, and expanded and amended two existing agreements, for modules and full-pack batteries with three of the largest automotive EV original equipment manufacturers (OEMs) in the continent. Li-Cycle now has recycling contracts with four of the largest automotive EV OEMs in Europe. The Company also signed a new agreement with a major EV battery supplier and a global battery cell manufacturer in Europe.
In North America, Li-Cycle entered into two new recycling agreements with EV OEMs for full battery packs and extended an existing agreement with a leading battery cell manufacturer.
Review of Q1 2024 Financial Results
Total revenue includes revenue from product sales, recycling services and non-cash fair market value (FMV) pricing adjustments. Revenue from product sales and recycling services, which excludes fair market value pricing adjustments, were $4.6 million compared to $7.7 million in the same period of 2023. The decrease was primarily attributable to lower nickel and cobalt prices and a change in the mix of constituent payable metals in the products sold, partially offset by an increase in recycling service revenue and a higher amount of black mass sold. Total revenues increased 17% to $4.2 million versus $3.6 million in 2023, which was impacted by lower unfavorable FMV pricing adjustment of $0.4 million versus an unfavorable adjustment of $4.1 million in the prior year.
Cost of sales decreased 12% to $16.8 million versus $19.1 million in Q1 2023. Cost of sales attributable to product revenue decreased by $3.2 million or 17% compared to last year as a result of decreased black mass production levels, partially offset by increased operational costs associated with repair and maintenance activities. Cost of sales attributable to service revenue increased by $0.9 million compared to last year due to new service contracts entered into after Q1 2023.
Selling, general & administrative (SG&A) expenses increased to $31.7 million versus $22.7 million in 2023, primarily due to higher non-recurring professional fees related to the Rochester Hub pause and legal fees associated with the Company's pending litigation of $7.9 million, as well as $5.1 million of severance costs resulting from the workforce reduction announced in March 2024. This was partially offset by lower recurring personnel and other administration costs of $3.7 million.
Other expense was $92.5 million, compared with other income of $2.7 million in the same period last year, primarily due to the debt extinguishment loss of $58.9 million and unrealized fair value loss on financial instruments of $23.8 million relating to the amendment and restatement of the terms of the unsecured convertible notes issued by Li-Cycle to Glencore in 2022.
Net loss was $136.7 million, compared to $36.5 million in 2023, which was primarily due to an increase in other expense as described above.
Adjusted EBITDA1 loss was approximately $27.4 million, compared to an Adjusted EBITDA loss of $37.9 million in 2023. This was largely driven by higher revenue and lower cost of sales, partially offset by higher SG&A expenses. The primary difference between adjusted EBITDA and net loss is the exclusion of the debt extinguishment loss related to the unsecured convertible notes that Li-Cycle issued to Glencore in 2022, unrealized fair value loss on financial instruments and restructuring fees related to the workforce reduction and professional fees related to the Rochester Hub project pause.
The Company incurred capital expenditures of $6.2 million compared to capital expenditures of $86.3 million in the same period last year primarily due to the pause of construction at the Rochester Hub. The capital expenditures consisted of payments made for equipment and construction materials purchased during previous periods for the Rochester Hub and Germany Spoke.
Balance Sheet Position
As of March 31, 2024, Li-Cycle had cash and cash equivalents of $109.1 million, compared to $70.6 million at December 31, 2023. The increase was primarily driven by the proceeds received from the recently completed Glencore senior secured convertible note investment, partially offset by cash used in operating activities.
Webcast and Conference Call Information
On Friday, May 10, 2024, at 8:30 a.m. Eastern Time, Company management will host a webcast and conference call to provide a business update including a review of these results. The related presentation materials for the webcast and conference call will be made available on the investor 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) 343-5419
International: (203) 518-9731
Participant Code: LICYQ124
About Li-Cycle Holdings Corp.
Li-Cycle (NYSE: LICY) is a leading global lithium-ion battery resource recovery company. Established in 2016, and with major customers and partners around the world, Li-Cycle's mission is 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 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 future Hubs, or post-processing facilities, we plan to process black mass to produce critical battery-grade materials, including lithium carbonate, for the lithium-ion battery supply chain.
LI-CYCLE HOLDINGS CORP. 
