| Principal Accounting Policies and Related Financial Information | Principal Accounting Policies and Related Financial Information Basis of presentation and principles of consolidation . In this Annual Report on Form 10-K the results of the Company as of December 31, 2024 and for the year ended December 31, 2024 include the operations and financial positions of Allkem. Because Arcadium Lithium plc is the successor company to Livent in the Allkem Livent Merger, which closed on January 4, 2024, we are presenting the results of predecessor Livent’s operations for the years ended December 31, 2023 and 2022, which do not include the financial positions or operations of Allkem. Refer to Note 4 for further information related to the Allkem Livent Merger. The accompanying consolidated financial statements are presented on a consolidated basis and include all of the accounts and operations of Livent and its majority-owned subsidiaries. For entities that we control, but own less than 100%, we record the minority ownership as noncontrolling interest. The financial statements reflect the financial position, results of operations and cash flows of Arcadium Lithium in accordance with U.S. GAAP. All significant intercompany accounts and transactions are eliminated in consolidation. Going Concern These consolidated financial statements have been prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplate the realization of assets and settlement of liabilities in the normal course of business as they come due. In assessing whether the going concern assumption is appropriate, management takes into account all available information about the future, which is at least, but not limited to, twelve months from the date of issuance of these consolidated financial statements. Pursuant to the Rio Tinto Transaction Agreement, while the Rio Tinto Transaction is pending, we are restricted or prohibited from certain non-ordinary course capital expenditures without the consent of Rio Tinto and are required to use commercially reasonable efforts to continue our existing expansion plans. Additionally, during that same time, we are subject to various restrictions under the Rio Tinto Transaction Agreement on raising additional capital, issuing additional equity or debt, and pursuing certain activities that could use significant amounts of our liquidity, including assuming or incurring additional debt, repurchasing equity, and entering into certain acquisition and disposition transactions, among other restrictions without the consent of Rio Tinto, which is not to be unreasonably withheld. We are permitted to continue to borrow under our Revolving Credit Facility, under existing project financing arrangements, and in connection with letters of credit entered into in the ordinary course of business. Rio Tinto has agreed to cooperate with the Company to facilitate any necessary or appropriate actions and arrangements with respect to the Company's indebtedness in anticipation of the Rio Tinto Transaction. The Company meets its liquidity needs, including those related to the consummation of the Rio Tinto Transaction, through available cash, cash generated from operations, borrowings under the committed Revolving Credit Facility, and other potential financing strategies available to us. As of December 31, 2024, we had cash and cash equivalents of $93.2 million and the remaining borrowing capacity under our Revolving Credit Facility, subject to meeting our debt covenants, was $139.2 million, including letters of credit utilization. Our net leverage ratio is determined, in large part, by our ability to manage the timing and amount of our capital expenditures, which due to certain provisions in the Rio Tinto Transaction Agreement, is less certain and outside of our control. Our net leverage ratio is also determined by our ability to achieve forecasted operating results and to pursue other working capital financing strategies that may be available to us, which is less certain and outside our control. The Company has incurred negative cash flow from operating and investing activities of $176.0 million and $445.3 million, respectively, for the year ended December 31, 2024 and projects insufficient liquidity in its future cash flows due to various standard restrictions under the Rio Tinto Transaction Agreement that raise substantial doubt about its ability to continue as a going concern. On January 22, 2025, the Company entered into a commitment letter with Rio Tinto plc, whereby Rio Tinto plc (or an affiliate thereof) has committed to provide Arcadium Lithium Financing IRL Designated Activity Company a first lien secured term loan facility of $200 million (the "Pari Passu Term Loan") and a second lien secured term loan facility of $300 million (the "Junior Term Loan"), together the "Rio Tinto Term Loans." The Pari Passu Term Loan will be secured by first-priority liens on the same assets that secure the existing Revolving Credit Facility and the Junior Term Loan will be secured by second-priority liens on the same assets that secure the existing Revolving Credit Facility. The obligations under the Rio Tinto Loans will be guaranteed by the same entities that guarantee the obligations under the existing Revolving Credit Facility. The proceeds of the Rio Tinto Term Loans may be used for certain capital expenditures payments of the Company and its subsidiaries. The principal amount of the Rio Tinto Term Loans, together with accrued and unpaid interest thereon, will be due and payable on September 1, 2027, consistent with the existing Revolving Credit Facility. The Rio Tinto Term Loans will be subject to the same financial covenants as the existing Revolving Credit Facility which will require the maintenance of a maximum leverage ratio and a minimum interest coverage ratio. On January 30, 2025, pursuant to the Pari Passu Term Loan, we received $199.5 million cash proceeds, net of financing fees of $0.5 million. See Note 17 for details. Management continuously monitors the Company’s cash resources against its short-term cash commitments to ensure there is sufficient liquidity to fund its obligations for at least twelve months from the financial statement issuance date. Management evaluates the Company’s liquidity to determine if there is substantial doubt about its ability to continue as a going concern. In preparing this going concern assessment, management applies significant judgment in estimating future cash flow requirements of the Company based on budgets and forecasts, which includes developing assumptions related to the estimation of amount and timing of future cash outflows and inflows. As noted above, the Rio Tinto Transaction Agreement prohibits the Company’s ability to pursue working capital financing strategies that otherwise may be available to us before the closing of the Rio Tinto Transaction, and the Pari Passu Term Loan limits our ability to manage the timing and amount of certain capital expenditures. Based on its assessment, including near term expected cash flows and limitations under the Rio Tinto Transaction Agreement to seek additional capital resources or curtail certain spending since October 2024, management estimates that current available liquidity and forecasted net cash flows will not be sufficient to meet the Company’s obligations, commitments and budgeted expenditures for the next twelve months from the consolidated financial statements issuance date and therefore substantial doubt exists about the Company’s ability to continue as a going concern. Shareholder and all regulatory approvals have been received for the Rio Tinto Transaction as of February 13, 2025 and the transaction is expected to close shortly after the sanction hearing for the Royal Court of Jersey set on March 5, 2025. If the transaction does not close, contractual limitations would cease on the Company’s ability to manage its working capital strategies in October 2025. In that case, the Company’s ability to continue developing its portfolio of expansion projects is dependent on, among other factors, whether the Company can obtain the necessary financing through a combination of, but not limited to, the issuance of debt financing, equity, government funding, and financing and/or prepayments from existing or future customers. However, there is no assurance that the Company will be successful in attracting additional funding. Even if additional financing is available, it may not be available on terms favorable to the Company. Failure to secure additional financing on favorable terms when it becomes required would have an adverse effect on the Company’s financial position and on its ability to execute its business plan. These consolidated financial statements do not reflect the adjustments to the carrying values of assets and liabilities and the reported expenses and balance sheet classifications that would be necessary if the Company were unable to realize its assets and settle its liabilities as a going concern in the normal course of operations. Such adjustments could be material. Earnings per share . The weighted average ordinary shares outstanding for both basic and diluted earnings per share for all periods presented was calculated in accordance with ASC 260, Earnings Per Share. Estimates and assumptions . In preparing the financial statements in conformity with U.S. GAAP we are required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from these estimates under different assumptions or conditions, but we do not believe such differences will materially affect our financial position, results of operations or cash flows. Cash equivalents . We consider investments in all liquid debt instruments with original maturities of three months or less to be cash equivalents. Restricted cash. As of December 31, 2024, Arcadium had restricted cash of $18.1 million on deposit with Mizuho as collateral for the Project Loan Facility and $5.3 million on deposit as cash backing for a letter of credit. The restricted cash is classified within Other non-current assets in the Company's consolidated balance sheets. The following tables provide a reconciliation of Cash and cash equivalents and restricted cash reported within Arcadium's consolidated balance sheets: Year ended December 31, (in Millions) 2024 2023 (1) Cash and cash equivalents $ 93.2 $ 237.6 Restricted cash - Other non-current assets 23.4 — Total Cash and cash equivalents and restricted cash $ 116.6 $ 237.6 _________________________ 1. Represents the financial position of predecessor Livent as of December 31, 2023 which does not include the financial position of Allkem. Trade receivables, net of allowance, and other receivables . Trade receivables consist of amounts owed to us from customer sales and are recorded when revenue is recognized. The allowance for trade receivables represents our best estimate of the probable losses associated with potential customer defaults. In developing our allowance for trade receivables, we use a two stage process which includes calculating a formula to develop an allowance to appropriately address the uncertainty surrounding collection risk of our entire portfolio and specific allowances for customers where the risk of collection has been reasonably identified either due to liquidity constraints or disputes over contractual terms and conditions. Our method of calculating the formula consists of estimating the recoverability of trade receivables based on historical experience, current collection trends, and external business factors such as economic factors, including regional bankruptcy rates, and political factors. Our analysis of trade receivable collection risk is performed quarterly, and the allowance is adjusted accordingly. One of our subsidiaries that conducts business within Argentina has outstanding receivables due from the Argentina government, which primarily represent export tax and export rebate receivables. As with all outstanding receivable balances, we continually review recoverability by analyzing historical experience, current collection trends and regional business and political factors among other factors. Inventories . Inventories are stated at the lower of cost or net realizable value. Inventory costs include those costs directly attributable to products before sale, including all manufacturing overhead but excluding distribution costs. All inventories are determined on a first-in, first-out ("FIFO") basis. Property, plant and equipment . We record property, plant and equipment, including capitalized interest, at cost. We recognize acquired property, plant and equipment, from acquisitions at its estimated fair value. Depreciation is calculated principally on a straight-line basis over the estimated useful lives of the assets. The major classifications of property, equipment and software, including their respective expected useful lives, consisted of the following: Asset type Useful Life Land — Land improvements 20 years Buildings 20-40 years Mining rights 33 years Machinery and Equipment 3-18 years Software 3-10 years Gains and losses are reflected in income upon sale or retirement of assets. Expenditures that extend the useful lives of property, plant and equipment or increase productivity are capitalized. Ordinary repairs and maintenance are expensed as incurred through operating expense. Capitalized interest . For the years ended December 31, 2024, 2023 and 2022 we capitalized interest expense of $24.9 million , $16.8 million and $15.8 million, respectively. These costs were associated with the construction of certain long-lived assets and have been capitalized as part of the cost of those assets. We amortize capitalized interest over the estimated useful lives of the assets. Impairments of long-lived assets . We review the recoverability of the net book value of long-lived assets whenever events and circumstances indicate ("triggering events") that the net book value of an asset may not be recoverable from the estimated undiscounted future cash flows expected to result from its use and eventual disposition. In cases where a triggering event occurs and undiscounted expected future cash flows are less than the net book value, we recognize an impairment loss equal to the amount by which the net book value exceeds the fair value of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell. We recorded a non-cash impairment charge of $51.7 million for the year ended December 31, 2024, related to our Mt Cattlin spodumene operation in Western Australia. See Note 11 for details. Deferred compensation plan . We have established a trust fund administered by a third party to provide funding for benefits payable under the Arcadium Non-qualified Saving Plan ("NQSP") to which highly compensated Arcadium employees can elect to defer part of their compensation. The assets held in the trust consist of money market investments, a managed portfolio of equity securities and Arcadium ordinary shares. For each reporting period, the Company records a net mark-to-market adjustment to Selling, general and administrative expense in our consolidated statements of operations for the investments in the trust fund and the corresponding obligation to participants in the NQSP. The money market investments and equity securities assets are included in Other assets in the accompanying consolidated balance sheets. The investments in Arcadium ordinary shares under the NQSP are included in Treasury shares on our consolidated balance sheets. The deferred compensation obligation to participants is included in Other long-term liabilities on our consolidated balance sheets. See Note 21 and Note 23 for additional details on the NQSP deferred compensation plan. 4.125% Convertible Senior Notes due 2025 (the "2025 Notes") . We account for our 2025 Notes under Accounting Standards Update ("ASU") No. 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity ("ASU 2020-06"). Financial instruments . Our financial instruments include cash and cash equivalents, trade receivables, other current assets, investments held in trust fund, trade payables, debt, derivatives and amounts included in accruals meeting the definition of financial instruments. Trade receivables and trade payables are recorded at carrying value, which approximates fair value due to the short-term nature of the instruments. Investments held in trust are for the NQSP as discussed in "Deferred compensation plan" subsection above. The Company enters into derivative contracts to hedge exposures and the associated assets or liabilities are recorded in our consolidated balance sheets and the gains or losses associated with these transactions are included in the consolidated statements of operations. Equity method investments. We stop applying the equity method when we have reduced the value of our equity method investment, commitments and additional investments (i.e., loans or advances) in the investee to zero. If the investee subsequently reports net income, we resume applying the equity method when our share of that net income is equal to the suspended losses (i.e., our share of the investee's net losses not previously recognized). If facts and circumstances indicate that a decrease in value of the investment has occurred that is other than temporary, we recognize an impairment loss equal to an amount by which the carrying amount exceeds the fair value of the equity method investment. There were no impairments during the three years ended December 31, 2024. Leases. The Company determines if an arrangement is a lease at the inception of the contract. Our operating leases are included in Operating lease right-of-use ("ROU") assets, Operating lease liabilities - current, and Operating lease liabilities - long term in the consolidated balance sheets. The operating lease ROU assets and operating lease liabilities are recognized based on the present value of future minimum lease payments over the lease term at commencement date. As most of our leases do not provide an implicit interest rate, we utilize an estimated incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. In determining the discount rate used in the present value calculation, the Company has elected to apply the portfolio approach for leases provided the leases commenced at or around the same time. This election allows the Company to account for leases at a portfolio level provided that the resulting accounting at this level would not differ materially from the accounting at the individual lease level. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The Company has elected not to separate lease and non-lease components and accounts for each separate lease component and non-lease component associated with that lease component as a single lease component. Operating lease ROU assets include all contractual lease payments and initial direct costs incurred less any lease incentives. Facility leases generally only contain lease expense and non-component items such as taxes and pass-through charges. Additionally, we have elected not to apply the recognition requirements of ASC 842 to leases which have a lease term of less than one year at the commencement date. Most of the Company's leases for corporate facilities contain terms for renewal and extension of the lease agreement. The exercise of lease renewal options is generally at the Company’s sole discretion. The Company includes the lease extensions when it is reasonably certain we will exercise the extension. The Company’s lease agreements do not contain any material variable lease payments, material residual value guarantees or any material restrictive covenants. We currently do not have any finance leases. See Note 22 for information on related disclosures regarding leases. Restructuring and other charges . We continually perform strategic reviews and assess the return on our businesses. This sometimes results in a plan to restructure the operations of our business. We record an accrual for severance and other exit costs under the provisions of the relevant accounting guidance. Additionally, as part of these restructuring plans, write-downs of long-lived assets may occur. Two types of assets are impacted: assets to be disposed of by sale and assets to be abandoned. Assets to be disposed of by sale are measured at the lower of carrying amount or estimated net proceeds from the sale. Assets to be abandoned with no remaining future service potential are written down to amounts expected to be recovered. The useful life of assets to be abandoned that have a remaining future service potential are adjusted and depreciation is recorded over the adjusted useful life. Restructuring and other charges also includes transaction costs related to the Allkem Livent Merger and the Rio Tinto Transaction. Finite-lived intangible assets . Finite-lived intangible assets consist of patents, which are amortized over a period of approximately 15 years. We evaluate the recovery of our finite-lived intangible assets by comparing the net carrying value of the asset group to the undiscounted net cash flows expected to be generated from the use and eventual disposition of that asset group when events or changes in circumstances indicate that its carrying amount may not be recoverable. If the carrying amount of the asset group is not recoverable, the fair value of the asset group is measured and if the carrying amount exceeds the fair value, an impairment loss is recognized. Goodwill . We account for goodwill and other intangibles acquired in a business combination in conformity with current accounting guidance, which requires goodwill and indefinite-lived intangible assets to not be amortized. The Company performs its annual goodwill impairment test in the fourth quarter of each year as of October 31 or upon the occurrence of events or changes in circumstances that would more likely than not reduce the fair value of its reporting units below their carrying amounts. We test goodwill for impairment by comparing the estimated fair value of our reporting units to the related carrying value. Our reporting units are either our operating business segment or one level below our operating business segment for which discrete financial information is available and for which operating results are regularly reviewed by the business management. In applying the goodwill impairment test, the Company initially performs a qualitative test ("Step 0"), where it first assesses qualitative factors to determine whether it is more likely than not that the fair value of the reporting units is less than its carrying value. Qualitative factors may include, but are not limited to, economic conditions, industry and market considerations, cost factors, overall financial performance of the reporting units and other entity and reporting unit specific events. If after assessing these qualitative factors, the Company determines it is "more-likely-than-not" that the fair value of the reporting unit is less than the carrying value, the Company performs a quantitative test ("Step 1"). During Step 1, the Company estimates the fair value using a discounted cash flow model. Impairment evaluations of goodwill could result in a reduction in our recorded asset values which could have a material adverse effect on our financial position and results of operations. We perform reviews of goodwill on an annual basis, or more frequently if triggering events indicate a possible impairment. We test goodwill at the reporting unit level by comparing the carrying value of the net assets of the reporting unit, including goodwill, to the reporting unit's fair value. If the carrying values of goodwill exceed their fair value, the goodwill would be considered impaired. If any impairment or related charge is warranted, our financial position and results of operations could be materially affected. Any such impairment or related charge could be a result of, for example, sustained declines in the Company’s share price; the deterioration of the cost of equity or debt capital increases due to valuations for comparable companies or comparable acquisitions valuations; or the deterioration of the outlook for future cash flows for the reporting unit due to but not limited to, increased competition, changes to discount rate, downward forecast revisions, restricted plans or changes in applicable regulations affecting our business. The Company performed a qualitative Step 0 test for its goodwill balance in the fourth quarters of 2024 and 2023 and concluded that no impairment existed as of December 31, 2024 and 2023 because it was not more likely than not that the fair value of the reporting unit was less than its carrying value. Revenue recognition . Revenue from product sales is recognized when we satisfy a performance obligation by transferring the promised goods to a customer, that is, when control of the good transfers to the customer. The customer is then invoiced at the agreed-upon price with payment terms generally ranging from 30 to 180 days. See Note 7 for further details regarding revenue recognition. In determining when the control of goods is transferred, we typically assess, among other things, the transfer of title and risk of loss and the shipping terms of the contract. We record amounts billed for shipping and handling fees as revenue. Costs incurred for shipping and handling are recorded in Cost of sales. When we perform shipping and handling activities after the transfer of control to the customer (e.g., when control transfers prior to delivery), they are considered fulfillment activities, and accordingly, the costs are accrued to Cost of sales when the related revenue is recognized. Amounts billed for sales and use taxes, VAT, and certain excise and other specific transactional taxes imposed on revenue-producing transactions are presented on a net basis and excluded from revenue in the consolidated statements of operations. We record a liability until remitted to the respective taxing authority. We satisfy our obligations by transferring goods and services in exchange for consideration from customers. The timing of performance sometimes differs from the timing of when the associated consideration is received from the customer, thus resulting in the recognition of a contract asset or liability. These may arise from provisional pricing within certain of our customer contracts, or if the customer’s payment of consideration is received prior to completion of our related performance obligation. Provisional pricing results in variable consideration which we estimate by using an expected value method taking into account all information that is reasonably available including publicly available pricing forecasts. We only include variable consideration within the transaction price to the extent that it is probable that a significant reversal in the amount of revenue recognized will not occur. Research and Development . Research and development costs are expensed as incurred. Income and other taxes . We provide current income taxes on income reported for financial statement purposes adjusted for transactions that do not enter into the computation of income taxes payable and recognize deferred tax liabilities and assets for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities. Prior to the Separation, pursuant to the tax matters agreement with FMC, in jurisdictions where we file consolidated returns with FMC, we have recorded our allocated share of the consolidated liability as part of the income tax payable in our consolidated balance sheets. In taxing jurisdictions where we file as a standalone entity we have recorded the tax liability/benefit to income tax payable/receivable. We do not provide income taxes on the equity in undistributed earnings of consolidated foreign subsidiaries as it is our intention that such earnings will remain invested in those companies. Segment information. In January 2024, Arcadium Lithium completed the Allkem Livent Merger. See Note 4, Allkem Livent Merger for further details. Following the closing of the Allkem Livent Merger, we currently operate as one reportable segment based on the commonalities among our products and services. See Note 6, Segment Reporting for further details. Share-based compensation . Share-based compensation expense for the three years ended December 31, 2024 has been recognized for all share options and other equity-based arrangements. Share-based compensation cost is measured at the date of grant, based on the fair value of the award, and is recognized over the employee’s requisite service period. We made a policy election to recognize forfeitures in share-based compensation expense as they occur. See Note 18 for more information. Environmental obligations . We provide for environmental-related obligations when they are probable and amounts can be reasonably estimated. Included in our Environmental liabilities are costs for the operation, maintenance and monitoring of site remediation plans ("OM&M"). Such reserves are based on our best estimates for these OM&M plans. Over time we may incur OM&M costs in excess of these reserves which could be significant. Environmental remediation charges represent the costs for the continuing charges associated with environmental remediation at operating sites from previous years and from products that are no longer manufactured. Arcadium Lithium has two environmental remediation sites located in North Carolina, United States and Québec, Canada. The charge associated with the cost of remediation for the years ended December 31, 2024, 2023 and 2022 are $4.3 million, $0.8 million and $1.2 million, respectively. These amounts are recorded as a component within " Restructuring and other charges Foreign currency . We translate the assets and liabilities of our foreign operations at exchange rates in effect at the balance sheet date. For foreign operations for which the functional currency is not the U.S. dollar, we record translation gains and losses as a component of accumulated other comprehensive loss in equity. The foreign operations’ statements of operations are translated at the monthly exchange rates for the period. Transactions denominated in foreign currency other than our functional currency of the operation are recorded upon initial recognition at the exchange rate at the date of the transaction. After initial recognition, monetary assets and liabilities denominated in foreign currency are remeasured at each reporting date into the functional currency at the exchange rate at that date. Exchange rate differences are recognized as foreign currency transaction gain or loss recorded as a component of Cost of sales in our consolidated statements of operations. We recorded transaction and remeasurement (gains)/losses of $(185.6) million, $68.9 million and $7.0 million for the years ended December 31, 2024, 2023 and 2022, respectively. Mine development costs. Mine development costs include expenditures incurred during the search for mineral resources as well as the determination of the technical feasibility and commercial viability of extracting the mineral resource, and stripping costs of removing overburden and waste materials to access the mineral body at an open pit mine. The Company capitalizes exploration and evaluation ("E&E") expenditures to Property, Plant and Equipment ("PP&E") under a successful efforts basis when proven and probable reserves are established for the sites where E&E activities are being performed. E&E assets recognized as part of business combinations are also capitalized. All other E&E expenditures are expensed. Stripping costs incurred prior to the production phase are capitalized to PP&E during the development of an open pit mine. When multiple open pits exist at a mining complex utilizing common processing facilities, such pre-production stripping costs are capitalized at each pit. The removal, production, and sale of de minim |
