Highlights
- Li-Cycle and Glencore to commence definitive feasibility study
(DFS) to co-develop Portovesme Hub, expected to be largest resource
recovery facility to produce key recycled critical battery
materials in Europe;
- Advanced the construction of Rochester Hub, maintaining budget
and schedule to commence commissioning in late 2023;
- Optimized North American Spoke network for battery material
feed with solid operating performance; Advanced development of
three European Spokes, with Germany start-up on track for
mid-2023;
- Completed definitive agreement with VinES, the largest battery
manufacturer in Vietnam;
- Progressed $375 million loan commitment from U.S. Department of
Energy (DOE), with close on track for mid-2023; and
- Cash on hand of $409.2 million as of March 31, 2023.
Li-Cycle Holdings Corp. (NYSE:
LICY) (“Li-Cycle” or the “Company”), an industry leader in
lithium-ion battery (LIB) resource recovery and the leading LIB
recycler in North America, today announced financial and operating
results for its first quarter ended March 31, 2023. Revenues from
product sales and recycling services before fair market value
adjustments were $7.7 million, which increased from $3.6 million in
the same period of 2022. Total revenues were $3.6 million, compared
with $8.0 million last year, and included an unfavorable non-cash
fair market value metal pricing impact of $4.1 million, driven by a
decline in cobalt and nickel prices, versus a benefit of $4.4
million in the prior year.
“As we indicated at the end of March, we continue to deliver on
our strategic objectives and further Li-Cycle’s position as a
leading pure-play resource recovery player in the battery supply
chain. In North America, our operational Spokes continue to
demonstrate strong production results to provide the future feed to
our Rochester Hub, which remains on track to commence commissioning
in late 2023,” said Ajay Kochhar, Li-Cycle’s President and Chief
Executive Officer.
“Consistent with our strategy, we are extending the modular
approach deployed in North America to Europe. With three Spokes in
development, supported by numerous commercial contracts, we are
excited to proceed with the next step in our strategy of ‘closing
the loop’. Building on our strong partnership with Glencore, we
plan to jointly study the feasibility of a European Hub that is
expected to be the largest source of recycled battery-grade
lithium, nickel, and cobalt in the continent. The development plan
leverages Glencore’s existing metallurgical site, at Portovesme, in
Sardinia, Italy, to process up to 50,000 to 70,000 tonnes of black
mass annually, or the equivalent of up to 600,000 electric
vehicles.”
Commercial Arrangements
On April 12, 2023, Li-Cycle and VinES, the largest battery
manufacturer in Vietnam, signed a definitive agreement for a
long-term recycling relationship. From 2024, Li-Cycle will become
the strategic and preferred recycling partner for
Vietnamese-sourced battery materials of VinES. The agreement
further contemplates the possible construction of a dedicated Spoke
located close to the VinES manufacturing site in Vietnam. An
investment decision regarding the dedicated Spoke facility is
expected to be made in 2025. In the meantime, Li-Cycle will process
VinES material utilizing Li-Cycle’s North American Spoke
network.
Global Network Expansion Update
We continued to make great progress developing and
operationalizing our network growth plans in both North America and
Europe.
The Rochester Hub has continued to make significant strides on
construction milestones, with procurement of long lead process
equipment ahead of schedule and detailed engineering largely
completed. The project remains on schedule for commissioning in
late 2023 with construction costs within budget, trending at the
higher end of the $486 million to $560 million range.
On May 9, 2023, Li-Cycle announced the Company has signed a
Letter of Intent with Glencore, one of the world's largest globally
diversified natural resource companies, to jointly study the
feasibility of, and later, to develop a new Hub facility in
Portovesme, Italy. The Hub would produce critical battery
materials, including nickel, cobalt, and lithium from recycled
battery content. Li-Cycle and Glencore will jointly commence a DFS
for this project in mid-2023, with expected completion by mid-2024.
Subject to final investment decision by the parties, the project
would proceed to construction, with commissioning expected to
commence in late 2026 to early 2027. Once operational, the
Portovesme Hub is expected to have an annual processing capacity of
up to 50,000 to 70,000 tonnes of black mass, or the equivalent of
up to 600,000 electric vehicles.
Balance Sheet Position
At March 31, 2023, Li-Cycle had cash on hand of $409.2 million.
During the quarter, the Company's capital spend was $86.3 million,
primarily driven by purchases of equipment and construction
materials for the Rochester Hub.
On February 27, 2023, the Company entered into a conditional
commitment with the DOE for a loan of up to $375 million through
its Advanced Technology Vehicles Manufacturing Program, in support
of the Rochester Hub development. This strategic financing achieves
the Company's goal of executing on debt financing that optimizes
its capital structure and provides increased financial flexibility
to fund future network growth plans. The Company is currently on
track to close the transaction in mid-2023.
Financial Results for the Three Months Ended March 31,
2023
Revenues from product sales and recycling services before fair
market value adjustments were $7.7 million, which increased from
$3.6 million in the same period of 2022. The increase in product
revenue was primarily attributable to the higher sales volume from
the continued growth of the Company’s customer base, the expanding
operations of the Company’s Spoke facilities, and the benefit of a
higher sales value mix, partially offset by a reduction in market
prices of cobalt and nickel. Total revenues were $3.6 million,
compared with $8.0 million last year, and included an unfavorable
non-cash fair market value metal pricing impact of $4.1 million
versus a benefit of $4.4 million, respectively, driven by the
decline in cobalt and nickel prices.
Operating expenses increased to $42.7 million versus $29.1
million in the same period of 2022, driven primarily by higher raw
material and supply costs due to increased volume of production
coupled with higher average material costs. In addition, other
expenses were higher due to the expansion of the Company's global
Spoke network and the construction of the Rochester Hub.
Net loss was $39.4 million, compared to $10.1 million in the
same period of 2022, and included a fair value loss on financial
instruments of $0.7 million and a gain of $14.9 million,
respectively.
Adjusted EBITDA1 loss was $35.2 million, compared to a loss of
$19.5 million in the same period of 2022, attributed to higher
expenses in support of the Company’s expansion of the global Spoke
network and the construction of the Rochester Hub. Additionally,
non-cash share-based compensation decreased to $3.2 million from
$7.0 million in the same period of 2022.
Webcast and Conference Call Information
Company management will host a webcast and conference call on
Monday, May 15, 2023, at 8:30 a.m. Eastern Time. 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)
518-9783 Participant Code: LICYQ123 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 on a mission to leverage its innovative
Spoke & Hub Technologies™ to provide a customer-centric,
end-of-life solution for lithium-ion batteries, while creating a
secondary supply of critical battery-grade materials. Lithium-ion
rechargeable batteries are increasingly powering our world in
automotive, energy storage, consumer electronics, and other
industrial and household applications. The world needs improved
technology and supply chain innovations to better manage battery
manufacturing waste and end-of-life batteries, and to meet the
rapidly growing demand for critical and scarce battery-grade raw
materials through a closed-loop solution. 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
March 31,
Unaudited - $ millions
2023
2022
Net loss
$
(39.4
)
$
(10.1
)
Income Tax
0.1
—
Depreciation
3.7
1.9
Interest expense
3.9
3.8
Interest income
(5.0
)
(0.2
)
EBITDA
(36.7
)
(4.6
)
Non-recurring costs
0.8
—
Fair value (gain) loss on financial
instruments¹
0.7
(14.9
)
Adjusted EBITDA (loss)
$
(35.2
)
$
(19.5
)
1 Fair value (gain) loss on financial
instruments relates to convertible debt, and to warrants, which
were redeemed and no longer outstanding as of March 31, 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 expectation regarding the
commencement and completion of a definitive feasibility study with
Glencore to co-develop the Portovesme Hub; the expectation that the
Portovesme Hub would be the largest resource recovery facility to
produce key recycled critical battery materials in Europe, with the
processing capacity of approximately 50,000 to 70,000 tonnes of
black mass per year; the expectation regarding the start-up of
Germany Spoke; the expectation that Li-Cycle will continue to
further its position as a leading pure-play resource recovery
player in the battery supply chain; the expectation that, from
2024, Li-Cycle will become VinES’ strategic and preferred recycling
partner for VinES’ Vietnamese-sourced battery materials; the
expectation regarding the possible construction of a dedicated
Spoke located close to VinES’ manufacturing site in Vietnam; the
expectation that an investment decision regarding the dedicated
Spoke facility in Vietnam will be made in 2025; the expectation
that, subject to final investment decision by the parties, the
Portovesme Hub project would proceed to construction, with
commissioning expected to commence in late 2026 to early 2027; the
expectation that the Portovesme Hub would produce critical battery
materials, including nickel, cobalt, and lithium from recycled
battery content; Li-Cycle’s expectation that it will receive a loan
of up to $375 million from the DOE, and that the transaction will
close in mid- 2023; and the timing of expected commencement of
commissioning of the Rochester Hub and its construction costs.
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 are not guarantees of
future performance. 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 if its operations are
disrupted; additional funds required to meet Li-Cycle’s capital
requirements in the future not being available to Li-Cycle on
acceptable terms or at all when it needs them; 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 securing 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;
unfavorable 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 if it
fails to develop and maintain a proper and effective internal
control over financial reporting. These and other risks and
uncertainties related to Li-Cycle’s business are described in
greater detail in the section entitled “Risk Factors” and “Key
Factors Affecting Li-Cycle’s Performance” in its Annual Report on
Form 20-F filed with the U.S. Securities and Exchange Commission
and the Ontario Securities Commission in Canada. 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
statement.
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
March 31,
December 31,
Unaudited $ millions, as at
2023
2022
Assets
Current assets
Cash and cash equivalents
$
409.2
$
517.9
Accounts receivable
3.7
4.3
Other receivables
5.7
10.0
Prepayment and deposits
78.2
95.2
Inventories
5.1
8.3
501.9
635.7
Non-current assets
Plant and equipment
295.6
210.4
Right-of-use assets
49.0
50.8
Other assets
4.1
4.2
348.7
265.4
Total assets
$
850.6
$
901.1
Liabilities
Current liabilities
Accounts payable and accrued
liabilities
$
53.5
$
75.9
Lease liabilities
5.5
5.6
59.0
81.5
Non-current liabilities
Lease liabilities
46.9
48.3
Convertible debt
282.3
272.9
Restoration provisions
0.4
0.4
329.6
321.6
Total liabilities
388.6
403.1
Equity
Share capital
775.4
772.4
Other reserves
19.1
18.7
Accumulated deficit
(332.4
)
(293.0
)
Accumulated other comprehensive loss
(0.3
)
(0.3
)
Equity attributable to the Shareholders of
Li-Cycle Holdings Corp.
461.8
497.8
Non-controlling interest
0.2
0.2
Total equity
462.0
498.0
Total liabilities and equity
$
850.6
$
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 March 31,
2023
2022
Revenue
Product sales
$
3.1
$
7.7
Recycling services
0.5
0.3
3.6
8.0
Expenses
Employee salaries and benefits
14.8
10.3
Share-based compensation
3.2
7.0
Office, administrative and travel
4.5
3.1
Professional fees
3.0
3.2
Raw materials and supplies
8.7
1.1
Depreciation
3.7
1.9
Plant facilities
1.9
0.9
Marketing
0.7
0.6
Freight and shipping
0.8
0.3
Research and development
0.5
0.5
Change in finished goods inventory
(0.9
)
0.2
Other
1.8
—
Operating expenses
42.7
29.1
Loss from operations
(39.1
)
(21.1
)
Other income (expense)
Interest income
5.0
0.2
Interest expense and other costs
(4.5
)
(4.1
)
(Loss) gain on financial instruments
(0.7
)
14.9
(0.2
)
11.0
Net loss before taxes
(39.3
)
(10.1
)
Income tax
0.1
—
Net loss
$
(39.4
)
$
(10.1
)
Net loss attributable to
Shareholders of Li-Cycle Holdings
Corp.
$
(39.4
)
$
(10.1
)
Non-controlling interest
—
—
Net loss and comprehensive loss
$
(39.4
)
$
(10.1
)
Loss per common share - basic and
diluted
$
(0.22
)
$
(0.06
)
Li-Cycle Holdings Corp.
Condensed consolidated interim
statements of cash flows
Unaudited $ millions, for the three months
ended March 31,
2023
2022
Operating activities
Net loss for the period
$
(39.4
)
$
(10.1
)
Items not affecting cash
Share-based compensation
3.2
7.0
Depreciation
3.7
1.9
Foreign exchange loss on translation
0.2
0.3
Loss (gain) on financial instruments
0.7
(14.9
)
Interest expense
4.0
3.8
Interest paid
(1.0
)
(0.5
)
Interest received
5.3
0.2
Interest income
(5.0
)
(0.2
)
(28.3
)
(12.5
)
Changes in non-cash working capital
items
Accounts receivable
0.6
(5.9
)
Other receivables
4.1
(0.1
)
Prepayments and deposits
(3.3
)
(7.8
)
Inventories
3.2
(2.0
)
Accounts payable and accrued
liabilities
3.0
9.5
Cash used by operating
activities
(20.7
)
(18.8
)
Investing activities
Purchases of plant and equipment
(106.6
)
(17.5
)
Prepaid equipment deposits
20.3
1.1
Cash used by investing
activities
(86.3
)
(16.4
)
Financing activities
Repayment of lease principal
(1.7
)
(1.1
)
Cash used by financing
activities
(1.7
)
(1.1
)
Net change in cash and cash
equivalents
(108.7
)
(36.3
)
Cash and cash equivalents, beginning of
the period
517.9
563.7
Cash and cash equivalents, end of the
period
$
409.2
$
527.4
Non-cash investing activities
Purchase of plant and equipment in
payables and accruals
$
25.4
$
4.6
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/20230515005309/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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