Highlights
Continued to work closely with U.S. Department of Energy (“DOE”) on key technical, financial and legal workstreams to advance towards definitive financing documentation for a loan for gross proceeds of up to $375 million;
Largest customer source of revenue in 1H 2024 was a leading U.S.-headquartered vertically integrated EV and battery manufacturer with a substantial global EV market share;
Record quarterly revenue of $8.4 million, representing a 133% year-over-year increase;
Selling, general & administrative ("SGA") expenses decreased 39% year-over-year to $15.3 million, mainly due to the Company's cost reduction initiatives;
Exploring financing and strategic options to increase near-term liquidity;
Advanced go-forward strategy for Rochester Hub project execution plan for proposed mixed hydroxide precipitate (“MHP”) scope, and refined cost estimates with the local market; and
Continuing to review and optimize Spoke network, including transitioning the Ontario Spoke from operational pause to closure.
Li-Cycle Holdings Corp. ("Li-Cycle" or the “Company"), a leading global lithium-ion battery resource recovery company, announced financial results and business updates for its second quarter ended June 30, 2024.
“During the second quarter of 2024, we continued to work closely with the U.S. Department of Energy on key technical, financial and legal workstreams to advance towards reaching an agreement on definitive financing documentation, execution thereof, and satisfying conditions precedent for loan disbursements,” said Ajay Kochhar, Li-Cycle’s President and CEO. “We have advanced the go-forward strategy for the Rochester Hub project and gained continued commercial traction across our business to build on our position as a leading global recycling partner."
Financing and DOE Loan Update
Li-Cycle continues to work closely with the DOE on key technical, financial and legal workstreams to advance toward reaching an agreement on definitive financing documentation, execution thereof, and satisfying conditions precedent for loan disbursements, including obtaining additional financing required by the Company to fund a base equity contribution and account funding requirements before drawing down on the DOE Loan.
In addition, the Company is also exploring financing and strategic alternatives to increase near-term liquidity.
Rochester Hub Project
Li-Cycle continued its comprehensive review of its Rochester Hub project, including advancing the go-forward strategy of the project execution plan for the proposed MHP scope. The Company has also refined its cost estimates with the local market as part of its evaluation of the total project cost estimate for the MHP scope, which remains unchanged at approximately $960 million.
Commercial Highlights
Li-Cycle continued to gain commercial traction during the second quarter and focused on the processing of EV battery packs to leverage the processing capabilities of the Company’s Generation 3 Spokes. Approximately 40% of the Company’s global feedstock in Q2 2024 were EV battery packs and four of its top five customers were among the largest global EV OEMs.
During the first half of 2024, Li-Cycle's largest customer source of revenue was a U.S.-headquartered vertically integrated EV and battery manufacturer with a substantial global EV market share. In Q2 2024, the Company announced a recycling partnership with Daimler Truck North America and widened its commercial footprint in Europe for feedstock to the Germany Spoke.
Review of Q2 2024 Financial Results
The Company achieved record total revenue of $8.4 million, a 133% increase from total revenue of $3.6 million in 2023. Total revenue includes revenue from product sales, which take into account the impact of non-cash fair value pricing adjustments, and recycling services. The total revenue increase was mainly due to higher recycling services revenue of $3.2 million, versus $0.5 million in 2023. Product revenue also increased, which was largely due to favorable fair value pricing adjustment of $0.2 million, versus an unfavorable adjustment of $1.7 million in the prior year.
Total cost of sales decreased 4% to $19.4 million versus $20.2 million in 2023. Total cost of sales includes costs attributable to product sales and recycling services. The reduction in total cost of sales was primarily due to a 11% decrease in costs attributable to product sales, partially offset by an increase in costs attributable to recycling services. Cost of sales attributable to product sales decreased as a result of lower black mass production, partially offset by increased operational costs associated with repair and maintenance activities.
SG&A expenses decreased 39% to $15.3 million versus $24.9 million in 2023, primarily due to decreased recurring personnel costs driven by restructuring initiatives implemented since the pause of construction at the Rochester Hub.
Other income increased to $18.7 million, compared to $10.9 million in the same period last year, primarily due to favorable fair value adjustments of the Company’s financial instruments offset by an increase in interest expense.
Net loss improved to $8.2 million, compared to $31.9 million in 2023, which was primarily due to the decrease in SG&A and other expense.
Adjusted EBITDA 1 loss improved to $23.4 million, compared to an adjusted EBITDA loss of $41.3 million in 2023. This was largely driven by the decrease in SG&A, cost of sales, and higher revenue partially offset by restructuring fees.
The Company incurred capital expenditures of $15.4 million in the six months ended June 30, 2024 compared to capital expenditures of $164.9 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 June 30, 2024, Li-Cycle had cash and cash equivalents of $57.0 million, compared to $109.1 million at March 31, 2024. The decrease was primarily driven by changes in working capital and investing activities partially offset by lower SG&A.
Webcast and Conference Call Information
On Thursday, August 8, 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) 579-2543
International: (203) 518-9814
Participant Code: LICYQ224
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 .
