LTHM - Earnings call transcript Q2 2019

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Operator

Good morning and welcome to the second quarter 2019 earnings release conference call for the Livent Corporation. Phone lines will be placed on listen-only mode throughout the conference. After the speakers' presentation, there will be a question-and-answer period.

I will now turn the conference over to Mr. Daniel Rosen, Manager, Investor Relations for the Livent Corporation. Mr. begin. may you Rosen,

Daniel Rosen

Good call. and Casey. second to quarter earnings morning, you, welcome everyone, Livent's Thank

today Paul The discussion from me earnings available Gilberto after accompanies Joining on are available results, will release, Antoniazzi, Officer; Chief our call. The XXXX the Chief be and which Executive our includes made Financial outlook, with website. today's Officer. along slide our that Graves, presentation our President are and remarks prepared

to Paul to after and address questions. Gilberto We Following address our available any limited your questions the would be be would prepared two that ask directly remarks, any additional to We will caller. call. be questions happy per

filings upon in based best Securities release various but Before based those remind will vary that information. we forward-looking our Exchange discussion not our factors today's let uncertainties. concerning our identified today's on you me with in specific represents Information factors, judgment and Commission. limited risks these uncertainties subject to, and the including, statements risks begin, may to include presented that results are and and Actual

discussion of Today's well our terms, adjusted focus refer may other income Paul. for conference which With are during website. as I'll to financial we these non-GAAP terms as call that, to references. over EPS today's will statements and on the all call, on Reconciliations earnings provided turn

Paul Graves

morning, today. the Good on their begin perspectives I industry. our select trajectory conclude brief full-year second-quarter by latest reviewing then implication near-term by current I'll Dan. and our of longer-term dynamics and everyone. then Gilberto spending our the will market financial business plans. and and will data you, capital discuss of for followed Thank guidance, both providing by third-quarter Livent's results, a overview XXXX's

during quarter, year. than million, quarter increase line was all the and a lower This Revenue So, driven partially Slide in revenue, by expected X% hydroxide our on EBITDA, volumes, and both year-over-year mix performed higher price basis, EPS impact on the led a metals and last with or the products. offset was X, revenue. our constant by with average carbonate $XXX had in adjusted adjusted XX% sales high-purity second turning guidance. as a a to lithium business for performance overall on and currency in higher by were butyllithium lithium and negative XX% and average price realized Prices on decrease in year-over-year

foreign exchange from Our a and the added the notably most of euro. headwind X%, RMB

the made to halfway of X. run to sold that allowed its We XXXX, year material performance now wider to I production the of felt the first our same of lithium year that the important through operate date a in we're number levels our on the range compared business half increase XXXX. in a approximately to under Argentina conditions. us our XX% total So, period have over it Slide by significantly of in and improve of LCEs improvements review operational to in rate was increased ability Livent

further even half in and XXXX stronger half As total we XX% this with the first in expect second than over to over compared year, the higher up improve XXXX. will of available volumes discuss later of detail, to half XX% we second the more seasonally LCEs of

of at total roughly increase We over network, hydroxide XX% annual hydroxide Another production China the hydroxide record year third the during Livent's our in in XX,XXX over to line year. expanded capacity through big operating with quarter, this production. lithium quarter is into tons. taking the first China driver brought LCEs We're second of hydroxide in levels up network currently volumes

customers some ability product to manufacturing our produce a units. supplying Just of important, our across multiple consistent demonstrating we're from larger as locations,

and government. we the of and Catamarcan take track successfully production from be commitment XXXX. track, we worker importantly, project, units to of first we on continue later facilities, have units labor recognize meet X,XXX-ton to online very we year. to the the executed we first carbonate bring the In modular onsite Argentina, remain and milestones construction responsibility seriously. and which operate, expect Argentina permits housing this built phase agreements, end the communities local critical we that is shipped XX,XXX-ton The on the to expansion Most a We've to obtained we critical in we the by for we this

will approach continue expansion partnership-based in to to our We take Argentina. a

assets debottlenecking production from Separate activities concluded in our have recently our we on capacity existing Argentina. undertakings, expansion

generate We an this annual incremental basis. on as tons X,XXX much as will that expect of LCEs

have are capacity a improvements of a production in struggled our of to quality testament targeted the success region been continue the our proud team. others where both meet and make strength has levels, we We and and expertise to operational to

There to last have costs in been a few as drive higher compared factors year. come that XXXX Livent's have together to

as out such disruptions rate Some fluctuations. control, weather-related exchange been have foreign our factors of and

However, needed our third-party lithium to that, outpace comes us feed Gilberto. demand particular, to online. expansion carbonate, we to and hydroxide to expect over continues do produce phase first of will carbonate carbonate to -- the product This our our units. our from in it I purchase turn With so ability until customers to to required continue sufficient has

Gilberto Antoniazzi

Thank and everyone. you, morning, good Paul,

adjusted sales. lower the the consistent growth were offset Volume line X, be of our in $XX our with lithium of of delivery increased hydroxide Slide driven year-over-year quarter drivers was to but primary EBITDA decline continues to carbonate million partially guidance, expectations. Turning by to our the by with for customers, and

While also driven higher hydroxide were customer the in particularly our certain previous highlighted as volumes calls. carbonate we quarter, in realized largely and a costs mix, China. of by sold earnings third-party we in mix pricing the in purchase The during by driven quarter favorable higher carbonate, lower incurred was price largely

Argentine and impacting exchange revenues Foreign had earnings, RMB a with costs. on the also peso negative and primarily effect euro impacting the

the is million, essentially Slide $XXX-XXX quarter, the to now flat revenue be third half the in adjusted midpoint the the $XX-XX of the of is as the at year, continues. year in higher expected volumes to with range last first X, Turning for prices compared $X.XX-X.XX. EPS range of and and EBITDA expect in trend we be Adjusted of average seen expected range, million to be in lower to the

the EPS slightly full of EBITDA with For and our adjusted of the in year, $X.XX-X.XX. we midpoint, million, to XXXX expected reaffirming the be XXXX the $XXX-XXX at $XXX-XXX projected range revenue between adjusted in is are guidance. range above

sold, to clear, forecasting we improved come in of will year. price the in second-half and the Turning to are the simply, first X second Livent's XXXX, comparison from and between improvements put be now not second performance meaningful increase Slide volume of a half and half a

to have lithium carbonate. to increases the available half year. notably expect hydroxide for These volume as first products, sale LCEs more be We compared of and will most across in our this over XX% but lithium

X,XXX importantly, from have about tons additional to three own is expect of increase our More operations. This we by material factors. driven

do expect in not year. in rain of repeat First, to January half the the event Argentina second the we

volumes half Second, have two historically, for we account half. productions the volumes of second majority of second factors the seen in in the expected increased of seasonally These year. higher the

recently benefit will thoughts debottlenecking completed and also actions experience were We position. [Audio that from the our Gap]

reassess demands City expansion based necessary evaluate hydroxide the needs our in our customers, investing We lithium plants the customers. to of committed plans. on constantly hydroxide remain meet to specific and Bessemer expansion capacity our our of as We lithium the by shown

additional creating of units. geographical the of part suitable we're As to network by most increase process, hydroxide operational our this involves for locations global looking which flexibility broader a an assessment

will we decisions However, we only commitments final customers. sufficient make have our investment when from

of with capacity call customers respect the conversations investments. that, We future to some have back with our I'll started already Paul. largest to With turn over hydroxide

Paul Graves

giving high-level demand key with of to XXXX. update lithium ago. like six that positive indicators as Gilberto. had a before X is Slide prevent perspective. are There is, today we increasing to by are you, from expected than There prices Thank markets to the months in a on from lot fundamentals want a overhang better the supply Livent's looking though, I conclude likely market, what

previously supply growing are and not forecast, we today's longer-term does demand slowing, environment additions giving faster However, pricing reflect the confidence us outlook. is had that than

sales be same through last the Passenger in XX% the vehicles period China electric continues period. EV roughly up for to were market were first compared sales year and of The this to year, half globally the in very up strong. XX% over

period, EV with battery capacity and sold China the combine is sales in can lithium the size, total was average for we higher when that of same importantly, consumption. megawatt-hours it this that drives ultimately, we roughly EVs XXX% see in More battery reported metric passenger

sales ahead of through quarter, suggests surprisingly, are our approaching trend, over the months, XXX,XXX-XXX,XXX roughly to tons, chemistries, data, six year-over-year metric same that of product the Based year, sales NMC up XX,XXX global tons compared QX this XXXX with For of XX% XXX, data reported first we implied product double and Not were tons recent are XXX, XXXX. product hydroxide NMC hydroxide year. the sales significantly to an as such period was market metric XX,XXX XX-XX% given most in this compared China hydroxide NCA, in increase June forecast increasing to on XXXX. alone. in demand metric sales last higher-nickel Independent last

for demand discussions have our numbers XXXX own customers have with XXXX more once market QX We our will beyond. forecast needs had their and data revisit we about and

involvement and drivers key one vehicle direction of providing chain. global which auto this that increased faster is growth supply believe from the We clarity the the greater is of entire electric throughout OEMs,

Many OEMs multiple beyond, technology, vehicle number precise with battery as of prepare. and to are more specifications in launches being firmer basis, for with are new size. battery suppliers, important typically cathode pack a taking vehicle type, to steps announcing on now As a they're commitments and prepare platform battery and XXXX

to of taking engaging roadmaps, important, in clearly plan their also onwards. we're as processes, of the more batteries just producers, battery Just qualification but raw helped of as purchasing for agreements more more materials. are The has, production own activity XXXX they hydroxide greater the OEMs not seeing result, place themselves, look as a and battery involvement the directly by they and the turn, qualification cathode battery establish producers in

of size, that each the qualify or needed, directly companies a platform OEMs resulting brine-based customer the to meet battery or number requested, cost making it for stringent looking are are to as from whether required challenging the is and engaged, greater it being particle more hydroxide lithium, because of we important, also processes Equally lithium relates of to suppliers variety they of whether this more the requirements. directly of translate produced proliferation result. even get to carbonate. are specifications spodumene levels, or on forms slower time the This producers, rapid limit in qualify vehicle. hydroxide are and a specifications levels, seeing moisture is As impurity more A into qualification

of the Australia. to Consumers are situation is of that the for supply are like China, inventory environment capacity more hydroxide which negative impact year. as is but having brought recover, has does on there until been China, pricing in lower also Much it which is is this of on also and inventory oversupply and meaningful when lithium this of comment Australian likely inventory consumed. inventory products half continued inventory the the expecting I'd the but a this spodumene prices XXXX, and miners on have Australia do in points in first market, in levels quickly. excess to so There pricing in likelihood for to

per built continuously Hydroxide been the has inventory reflecting down. to ahead ton demand, plants run incentive at economic of producers costs to keep Chinese

hydroxide shorter prices. pushed life, However, further market, therefore and on creating has pressure the being into is a shelf

ESS is to particularly Korea notably the most and away of of outside inventory expected carbonate-based toward chemistries the a number rapid of in China. for temporary due of is batteries the market. than some suspension production hydroxide-based factors, chemistries customers, elevated Carbonate EV move from at more This

do complete, the cathode is largely in held However, they it important so start the inventory customers much coming operating quickly. view with views when with lower that now factor inventory but as of a given levels. pricing This do very we to surprise, trends months, at will destocking believe our hydroxide prices not producers increase, in broadly an is to is

scale, construction that connected point is converters last indicate final cost the reports supply the more isn't spodumene for delayed, of observation prices at Perhaps lower outside China the many economically which on in China, reinvestment hydroxide hold production, to altogether. Australia in long announced for market. costs are or current build as costs costs, in is being marginal prices My them clearly and At spodumene additions costs operating crucially, are being believe increasingly are previously costs projects today. run. too the situation as for to my insufficient about are even allowing they current pricing in at-mine in the cover sustainable for high important, where operating Spodumene of operating expansions put are to to supply hydroxide being third-party simply both reduced be input with them forecasted and spodumene both also And many are viable that delayed, capital we plants reassessed, producers.

are new in is all. are nontraditional but if XXXX not surprisingly, given until to projects we up due sources largely traditional enhanced Not will of financing start the financing environment unlikely to prohibitively supply. Much XXXX are the production commence unavailable, at or while this XXXX impact for in, expensive, additions later,

meet the adding increasingly to decade and and will we call on not but next So, the now requirements the remain positive environment. customers, our questions. long-run capabilities to while conclude, the just beyond. on today, remain we the turn I environment, needed the pricing over to to are pricing We back Dan of cautious capacity committed for the XXXX

Daniel Rosen

Thank begin the may you Paul. you, Q&A Casey, now session.

Operator

Thank Instructions] your you. Chris first Please [Operator with Loop Markets. question Capital Kapsch go comes ahead. And, from

Your open. line is

Chris Kapsch

that costs your looking Can up the mentioned more integrated in characterize at for implied that those second stalled you just to VAT reduced expenses. have pricing, "Western" Are down, China. the the customers out that back partly battery good the do I'm just picking on it's and the be their expectations or operations if nature is on purchases customers pushed you guys would morning. of Yes, that curious Chinese previously In therefore China? they in be on demand tend had of half, there?

Paul Graves

data, Hi, sit if later, migration here year, back that what levels the more It's at When probably were double really confidently look this just the was of Chris. started demand cathodes delayed and Thanks. stand in nine accurate we're Frankly, the be January we to seeing about board. those. directionally months, said It's is in recall to ton data are let's and at of the six think is we a across see accurate, the while particularly it's you we I lithium Paul. months we both we and they the June -- in -- data important sit China purchases what look where that six pounds. when we was hydroxide and, -- monthly high-nickel today, and talking not or necessarily February, to clear ramp-up that

purchases Chinese producers QX. the and Chinese Both went as and in arms Korean of we late Japanese all are increasing their through

or the month from that to supply where for in is both of a so Now, see and coming not full-year spits August long enough domestic are out, July I and looking battery purchases data we're really the chains to a us think but second international make half two year. Chinese clearly, prediction,

Chris Kapsch

even more some that production involved brine complex where, in specifying hard you could, more I chemistries given in specifically, are beneficial coming if the or getting cycle then, of benefits cathode versus the have that asset getting out feedstocks cathode producers from. the advanced Livent, or something you of could steady the feeds comment qualification and that, those And on to Okay. you Argentina? for feel it If on for rock, your OEs you. is comments the thank some state your Is ultimately,

Paul Graves

product. -- suddenly that is out at the going and in looking that battery spodumene-based broader -- will are to sustainability, preferable cetera. intensity et from expect hydroxide, is that entire the there them market the of don't They're a and, brine-based environmental rejecting but It there of market. be carbon product in production their who I selling part small around on the companies footprint be saying essentially their a basis, the their will are start perspective, fact, own lower to in process

are that products We into. customers the also it have requiring different application goes depending much completely very on

much a way an by application, producers. very what We're the e-mobility seeing across looking a required, is the expect We specification of and single the for unlike but or a and their really OEM upon that it's first give by rather material, is will will of three be will end by is tool directly to dictate the application, consumers this in than very sliding driven four, the application. the the time, depend "consumers," -- either maker specific batteries. few their It same the the us essentially, for it -- entirely I depend, or they power into have customer larger consumer being required the what cathode the a going table purchases, instead consumable upon and sheet years in ago, mean scooter they'll a or whether -- not

think And so, in will question, term I to more the more fragmentation it answer complexity. short your just and create

back We we a think four that year, point, each questions make operate fifth stand specifications? our to just of which of at I process. they add going wrestling one currently lines questions segment are think to given those still in we These have add complexity decisions all meet. independent late production we're about we us with, be tailor do the perfectly and having are different different qualification next we honest, I this of lines already are to -- we'll processes and market run should for producing five and to

Operator

from comes Credit Parkinson Please go ahead. Christopher Your next question with Suisse.

Your is line open.

Christopher Parkinson

you Great, budget? on XX,XXX on the detail appreciated. offer ability any thank just et Thank be met, conviction will on some and bottlenecks, tons potential and on cetera, on time further you've you. in regarding your additional key milestones Argentina your color bring clarity Can to Any you.

Paul Graves

is remote to It's from, you unique Argentina the have frankly, in country world, of are maybe operating perspective, a a part Argentina different additional places. engineering perspective, complex to process communities logistical know. of will there capacity political a from It's other an The complex in to in and are complex that Argentina. and and one, on it's Sure. bringing that as we that's sensitivities

because the are permits, I think of into have there challenges around to have to us close with think the in been permissions, we project and into and local people, that you is I of you and have infrastructure to or is sense with focus is that you has infrastructure, that so laws about logistics to part that that ensuring process that been largely local requirements you as for have -- there, infrastructure-building, real parties the have with real to you authorities we that These key misunderstandings, the much content training how and make, -- our put very that and are in no place labor are the all largely are a correct the all requirements need there a maintenance to that relationship is there and local regard have local of this going the partnership once get most local to need of world, we local ancillary being have parties of that a benefit commitments employees. developed involved. all there make

build unit. We track or permits, contracts construction an to of put in been the to in go-live themselves. fabrication end-of-XXXX received contracts need construction the construction have some carbonate China We've in stay that units of on key Catamarca able the These actual for on environmental permits either the the that carbonate the the first in they need contracts half companies in also for put separately place. place with are first are to year we to we yards

an really of We've down far on for. that into key us we and go areas, we are track milestones, track when this hit list our to they multiple go-live, so end-of-XXXX year. So, matters get this we're to on everyone -- fall

Christopher Parkinson

of obviously been we're Thanks. a first this longer-term parts half in year, of a there have story. moving during Obviously, the lot but

about differences 'XX. down the and we we're on heading the addressing Just per-ton VAT As for derive Chinese any environment internally think Thank from normalized into your just color the third-party basis, on a can structure tons that the ramp? XXXX, procured break how you North product you. versus and general just America 'XX cost

Paul Graves

Sure.

environment, we've that I leakage serve production China think we this all, normalized to I first to local the would -- to go VAT generally. about markets, expect export, expect of What time. largely would we -- in mean? expect does in we maybe local so be We talked expect most away more wouldn't primarily producing over that think for than

more we've VAT through As seen into we go it's highly likely exporting XXXX and down. volumes to China, get more and out will XXXX, into and that therefore, are of decrease, demand start of will we China the the migration as

case we've Our the for all are in cetera, think think brine really -- case a general level the in the it as production the debate all low-cost per that royalties producing lithium largely who's continue carbonate producers be times that but We I for and were prices kilo and somewhere facility. on I will in that Argentina, talked expansions be about $X.XX-X.XX past going America doesn't quite a forward, -- is South in to will this fundamentally, the depending well. lowest, our in change and carbonate few Chile, what range, et can and

Operator

Kevin go Your McCarthy next from comes with Vertical ahead. Research. question Please

line open. is Your

Kevin McCarthy

expectations. I about morning. good to your ask Yes, wanted pricing

XXXX but In price quarters? that order do commented of What for from in for not your you level? need assuming need think price you guidance, couple stability achieve price? that to what in the your next order to achieve I other expectations do here Gilberto words, you are are

Paul Graves

Sure.

volumes the area. -- not. production favorable to broadly have butyllithium in higher think contacted metal all this many first versus have exposed guys Pricing the customers. that is but are slightly into still not decades, for seeing business -- been market that in year there the I see a significant low-single-digit half. in processes, you the pieces be have of largely is have into These be likely to trends with second and, half the product out largely business that and in other the We forces and in certainly down their that percent, customers to if that break own all high-purity specialties that up, the business up second and you with pricing half and to us that are typically years, our specified we're pieces

you low exposure a as have, carbonate. know, relatively We to

is -- to is expectation carbonate -- half be second going first the Our that we down half in second while pricing more sell will to half.

a largely think into pre-agreed we the in do we're the in of market-based the and I carbonate to lot happened, markets into has selling is pricing that be contracts, outside pressure factored fall but in pricing still into -- our is, market, -- long-term that carbonate a expect guidance. some price applied

different a is Hydroxide story.

areas two have We of demand.

We contracts proportion customers years. perform, markets to subject contracts, continue than that are volumes, but comfortable pricing more have we the have the Those higher going that a market-based by been the contracts, those have to pricing. with to in take way, we place with remains are for also the line in continue a few into

in contracts at be have expectations. realized half because those will contracted guidance the price hydroxide contracted sales see are market second do mix half. We average least been we to will first for in in that the at prices the down is of prices our be and that down expectation today. first Our at compared in It forecasts half have double-digit in some or below percent benefit our the our that a

low-priced about our the relatively nature the in have benefit mix as guidance hydroxide we've in on favor, shift given. of customer but forecasting contracts, a Just in we're long-term second of sales a those already that we've contracts, in actually, going we of so they're certainly is when a the half, bit we the decline in mentioned think pricing past,

Kevin McCarthy

color there. I Paul. appreciate helpful, very That's the

along Secondly, Thank you supply will do RMB to China think at a dispute what then, your wanted you fronts. I and escalation you. ask if is of trade of affect sensitivity? How the couple about chain, all,

Paul Graves

we've -- U.S.-to-China before we no have either trade think I So, direction. mentioned in

have impact to China doesn't of it touch the product other basis, an are there U.S., China, our product U.S.-produced and so on it goes of tariff have us, does on but that as doesn't areas. a significant direct into none in concerns our All we what clearly,

We China, for to in is the a of very terms so China, in profitability. but into we RMB. RMB. us mentioned XX% You About RMB a have revenue of have exposure is do headwind little our depreciating cost

I think we're from already. a seeing perspective, it supply chain

we we to think us our you way I to produce convert process --because that more production will we will hydroxide. expect carbonate, carbonate we the heard local, of become convert mention that

We will markets. produce locally increasingly for local

I think we a will trend. similar likely seeing already see -- are -- and

is to think to I expecting facilities was and China that. in battery outside or in assembly or who anybody battery production to export materials cathode materials China them produce China likely revisit

I think battery do it and more so China, supply will, in fact, into production chain move of quickly. the more

Operator

go line question comes PJ Please Juvekar Your next Citi. of from from the ahead.

is line Your open.

PJ Juvekar

hi. Good Yes, morning, Paul.

Paul Graves

P.J. morning, Good

PJ Juvekar

cathode what chemistries, guys get the quarter, sounded about give also want quarter. mentioned that? on update so you some Can I to you older on like a are changed in us Because Paul, the more to commercialized, upbeat, last an going longer know taking quarter, you talked that high-nickel batteries this like you and LFP. lot XXX to

Paul Graves

reality I the "when," battery hydroxide as remains of "if," conversation. chemistry Well, the to XXX with a shift and has "when," conversation shift all, first as time basically, basis every "if," remains not The passed, the of to for mentioned, a EV customer. not

take And environment. assume a last lot we a is miss. of statement They have will forever, what people our seem is variable and a that I very really situation when our dynamic so, to it timing think and

and first NCA not mean chemistry perspective the by there XXXX with do feels we that, and ahold some is to of, high-nickel best get easy data again, and total in customers, quarter I it our about us -- -- and was -- but believe to and XX% production that what's with XXX of out in conversations so, quarter second that We with production. China, our own of of and purely

production because cathodes cathode total in a of those QX, of to percentages, relatively we're from that's was XX% QX seeing seeing Now, production to important we're shift up understand so low high-nickel shift materials. -- the

where applications, materials foremost cathode those the into little seeing and non-EV maybe feels finding a first We're way safety different. environment their

what I to and story growth chemistries. XXX are dying NNC We or even LFP be maybe the seeing XXX in believe

they rapidly in it like XXX certain in While quickly -- based will continue quickly sure to a about more is EV chemistries. data whether than anything feels shift. large it's QX have non-passenger applications, seeing and That's the the stationary on toward high-nickel applications, moving we storage roadmap to for for QX or more meaningful more passenger EVs grow XX% technology have. We're

is and in not; is product hydroxide-based. it carbonate-based. more of more that of bear materials and XXX batteries. blends, of in blended it we're more seeing mind, cathode are Most these Some so content together, seeing also most is We're

not so, I pull, of the combination them battery if -- well we're also producers a OEMs look putting applications, the seeing but a into those given think when of as continued And in in specifications will, the higher what drive growth you ramp-up by being data curve, the materials, the the safely battery we product continues basically at as the learning to only making areas. to of XXX

PJ Juvekar

you mostly bit carbonate to of second spread you use it And, thank little on my do in is question playing in but hydroxide. quarter. think, when see in we'll compressed, second the and second hydroxide I is that -- spread How helpful, you. carbonate, That's do buy important in sell a half? That out that's

Paul Graves

to expect are to future the heard happen two think may have starting in times say maybe me I already. disconnects that happen few a you that I

so, the of completely supply a carbonate driven and around they're is world, and speaking, separately. by at of disconnect One demand own disconnected, and little second them in is independent characteristics, generally between the you of the them now to and the pricing won't be markets a hydroxide. have look They from but their rest China a both disconnect

I is look, most on market think prices, supply carbonate, understand not it probably depending though, converted fundamentally, by you what to maybe where produce we could situation spodumene today all parity -- even a much premium speaking, over more more to What really, premium you you where market hydroxide, have have is when was it's today. in all of producers rationale than a cost we premium and generally hydroxide today's the in from produce It's not slightly place to of and carbonate, in carbonate. to the lower going had at hydroxide we a characteristics. cost hydroxide have from a is for place at at a today, and where driven

I sheets a being it we been product China just lithium -- at surprised think hydroxide a with to frankly Chinese pace all low moment, an at which with own come our incentive face in demand, even financing relatively the at produced, their producer they a certain which that produced hydroxide pace has cannot margin. -- at the we've it's and pressures sell online. and I capacity see pace relative have what don't being that product, specifications, but in is is if the to balance it's to with -- continue

And disconnect so, that I think starting is to happen.

we you, I pricing will happen. but markets it completely two think to Where do a greater those future. the characteristics difficult find answer will think for much of it continue goes is to in I between question independence more and different

Operator

Your next go Sachs. of from Koort comes ahead. Please with line the Goldman Bob question

Your line open. is

Dylan Campbell

half like maybe What decline Dylan on to the it flow This just from for compare your Bob. for XX%. drives the the that flow looks Good at the of...slightly is below When XXX% EBITDA first in that EBITDA, CFO half was shy year, implied in about conversion and EBITDA? look morning. Campbell I to cash operations and year of guidance second from of is cash

Paul Graves

straightforward. put this having like I

an capital Chinese part working of the of working of that our first inherited, a capital question. complex the taking are some those spent company, chain. We loosely as part called we independent partners, out supply it's with arrangements the simplifying year and think I and supply what

the half build our largely we're going of a of -- think of in in working see of of with the I in year, expectation second that build more normal higher reverse timing-driven again, the a QX. receivables, capital, form sales, to working

it's capital So, than of really talked shift about. working nothing we've plans more the that

Dylan Campbell

pretty given non-integrated terms cost marginal interesting you've of in past, color the In producer. for lithium a helpful. That's

ton but how that curious with for the the I'm non-integrated view something producer? think lithium above last $XX,XXX.XX -- I price just on was a marginal does your carbonate, compare

Paul Graves

or $X.XX quality generally including factors is pricing, variables by somewhere a in impacts their pricing, it, get as this $X,XXX.XX-X,XXX.XX -- non-integrated spodumene the when pretty matter, which, and, marginal almost observation China off carbonate $XXX.XX driver but kilo is $X.XX-X.XX between verified of the spodumene are marginal which that so other producer which production. and the a into that again, our operating of to that pricing probably straightforward. The see ton of math of cost you rates, speaking, equates a ton, the The independent producer of marginal cost is today, we biggest -- down and feedstock both of by a producer. hydroxide consistency There single

Operator

Byrne next Please with comes of Your Steve Bank the America. go question of ahead. from line

open. is line Your

Steve Byrne

a little pace price in Would would is carbonate of more all that that Paul, shift in about shift shift, bit say over talk premium this I view? premium you hydroxide that and cathode to accelerate wanted XXX. technology the at the relevant a to your lower for in

Paul Graves

all, it's I cost while no at still honest. an for that Lithium important, of remains, don't XXX. perfectly important most the structure be think part relevant means to by

think availability is for I some going a challenging the lithium qualified question of producers. to continue of to be hydroxide

while creates opening times Price is lithium I need and to and "I take have I times price to the customer I'm it around moment, easy XXXX," much me wouldn't a in to and saying, it's statement at critically in we caught conversation, in think given get hydroxide customers face a up value, eight every and three XXXX, sometimes, turning important. by different and us somewhere much but four that between as again is important. as

materials consumer. capital raw the to the this producer, case that them OEM. mind the his ultimate speaking, passing of in generally on Bear passing on to He's cost battery is in a

paying driving price. conversation be to price the market-based that that conversation sure market OEM We about make to is prevailing the and tended So, different the to want pricing. OEM's a as anybody we're as much has is not else,

All don't just never different they the going take come conversations where different transparency. because a that battery from profitability interesting prefer seeing is real OEMs index in dynamic the our chain the frankly, that the it, at price to expectations delay don't because of pricing. they and is an on of hydroxide costs any Others, the so, like we're chemistries." this incentive What It's "Because to the angles, we're cathode and heard and to I've understand that of land lithium of conversation. down? not say, the as costs introduction OEM, some their own challenge that see

Steve Byrne

Okay.

being some for on taken guidance volume about your slip of the that back-end volumes actually implied You the contracted what's talk are and second be outlook risk and loaded end. Can in could kind of half XXXX? that volume second your how by comment of for the into much half, volumes year could significant you the

Paul Graves

think demand them. flip of a volume what that some So, could we're in I've XXXX. mentioned, as acceleration into Again, customers, seeing of from is not delaying I indications an

or to We will, of still have where forward determined. certain QX are is who this been demand talking bring in fall and may "We three, How or is more and how starting with that we've two be some conversations that year." a much to into XXXX customers say, that about fact, now month

for of demand half at from on between half, I the is depending expectation, when the market it's or largely and volume look in consistent revenue XX-XX% the exposed half revenue conditions. year year, to first second contracted total we of perspective, our of where either that with think variability, the pricing a second the

Operator

go question Please Falcao next of Alex HSBC. with comes from Your the ahead. line

line open. is Your

Alex Falcao

have Good morning guidance. regarding everyone. question yearly I a your you, thank and

production, dramatic also you I to from your -- that or EBITDA, implies think production it on guidance If you. quarter. if of a that's if about coming comes wanted Thank fourth in solely for back increase the just third-quarter for know pricing. increase the for in-house

Paul Graves

we'll mentioned So, so price with second have numbers volume of available production the production, tons earlier, think key of have fourth assumptions around earlier I quarter, in a it, be of for of cost a of fourth-quarter assumptions, that about decline just additional let in our is our additional to for to regard that online just forecast, meaningful to we ourselves metrics and the the me X,XXX forecast few I Most maybe you we is coming Argentina. help put so and a what as our are will recognize we in in us asking product lot mentioned half couple own of I but a from those individuals.

a between market today's in Product we tailwind VAT. On product we At as sold of year, we'd somewhere into additional of region $X.XX-X.XX Argentina in of have less our mix, customer mix. million leakage talked that, today's -- contribution $X-X back make at somewhere value kilo or, well pricing, forecast expect in we important end to an the of shift of is top from expect on produced the as about beneficial have too, of from to the cost environment.

And around certain margins and costs so, mix step-up what volume-driven QX areas. slightly helped in we're seeing lower by out the a favorable performance is largely in in

Alex Falcao

and capex Okay. the And, lower explain that, that flow well, lower could I also following think right? up on cash as generation

Paul Graves

a question. is really capex timing just The

the project. is door cash the guys date on a determine out capital many that project easier it's to what to over other capital the is you in the which goes have sure of I'm seen total than it As projects, cost predict

than in history of over-forecasting forecasting a -- -- similar many organizations have as actually We do flows this or do. cash to they sooner business perhaps happen

the now of though, It on said. line than capital still we with in here is of the sales As XXXX are result spend in we higher buildup total in as that previous I be in collections than absolutely mentioned half that the sit with place for the August, the frankly, will happen forecasts cash a really much -- have when slower clarity previously cost we working impact regard of timing of of rather for cost. not, inventory an earlier, in as generation, to be where assumption year capital is over buildup pace XXXX. likely will that more to flow The lower will is QX, It capital sorry, take capex. back

Operator

from Your the Please from BMO line Joel go Markets. comes next question ahead. Capital of Jackson

Your line is open.

Joel Jackson

a made comments start you maybe little ago. up could some following by while Paul, with morning. you good Hi,

specs elaborate You customers whether are about you on want specifics spodumene. please? or talked some from that, even with hydroxide more brine changing, produced the from how it for Could

Paul Graves

Sure.

think I there certainly... are

chemistries them, to cathode talk not XXX about same. is with are I'm there so but sure technologies multiple As the know, in out you there we'll regard XXX, everybody's

NCA. NMC, We variations on of variations have

their into this We we so, have, merging once you on. I frankly, get technologies. to Particularly, differences, XXX, all and sure simply NCA factory a see material because differentiate producers NMC, put, a cathode platforms, their and and is the OEM, the consumer, important see product ultimate merging many -- ultimately the the than perhaps, of talking you specified most start and more between important vehicles. into producers making to are most and to product, importantly, similarities tell looking NMC -- NCA you going

continues Part -- as contributor of when biggest fact as built lots conversation finished electric the to of carbon an single that internal security, be -- the the are supply themselves a exposure, engine. well chain that either broader materials than vehicle actually being battery has combustion environmental the footprint seen an it's higher supply footprint what vehicle. of how we've to press chain around an is And, electric

the is that at brine. entirely Again, factor only essentially hydroxide is from the fundamental be -- most we push customers only to supply not chain particularly in And -- today. would driving lithium, debate that a I work. does making where wouldn't and not can look a a that push carbonate to notion customers it the Today, think through therefore purchases that the it's in market, carbon-intensive and hydroxide demonstrate chain produced is some it how shift the just carbon how to of prevalent, how do European-based can accelerated is back are preferring, in the restricting I one this supply operations, exposed complexity some to of to for so, are moving got they that of -- product, the there at low method one that the happening -- broad, lithium sustainability more footprint. is but itself want quickly moment be the say reflect but cases, has and carbonate-to-hydroxide-based their conversations

Joel Jackson

Thanks for that.

exposed -- in price just but on to this or a could or that up people year question, demand bit variabilities. second half volumes following in around on danced this, talked be Just I another you kind revenues to answer you giving of of want the XX-XX% about the an to little understand of

So, customers that the clarify, that, the ago but XX-XX% the about the little just including you XX-XX% if on a for would price was priced bit take revenues months be butyllithium, is to really on a the please? at just volume of hydroxide volumes? few is it, than call that or more then, talked it of And that that what's that is, Could going contract. -- or on on non-take-or-pays took would it you wouldn't, they they just clarify now, risk

Paul Graves

try. I'll

not year business our half of that was One challenge, the first of in realities the of the frankly, our is demand-based.

it is and but price-based. was willing insufficient happening not With produced from contracted, us convert product it, hydroxide, buy price. as to the is -- had we take carbonate, and that was to that so, customers what were product sure, -- yes, not right in-house carbonate, sell at it challenge economical was to Our

supply selling make not been the down. down, demand. it's around business demand price base negative looked than on in fair a we making could frankly pricing is I money anything at of them at prices, our pricing think and Once to say the biggest those we I'll keep the impact that, to that us so, lack has point problem just exposure that driving a -- not today driving

buy economic just fundamentally a it's... a producing kilo home we in because internally Customers for first at buying it carbonate in significantly changes and $X.XX-X.XX relative I do for find of is year, what to about half that profitably, the factor very different with carbonate that to so quarter. second us being the conversation think forced did a the less

QX previous customers buy. -- been tons reading sometimes, keep the customers at they try because of continue and 'XX. hydroxide in bids QX all I'll but data, reconcile out than quarter the seen -- than qualifying our QX that significantly two to of higher we have were to purchases were lithium Again, -- in quarters there's the of hydroxide in were the a per or month data hundred individual that from 'XX last hydroxide of couple We've lots first a much we've had of who X,XXX of in best the the couple of different have it hydroxide month and data there we tons out buying put have significantly not Purchases so, months.

perspective, price. stand purchases. but their So, view, all not we accelerating or happening, are on the our actual They us our debate continuing, by did from in to can commitments why customers volume their that's

Operator

Please the from Your next ahead. from comes go Instinet. of question line Yefremov Aleksey Nomura

is line Your open.

Aleksey Yefremov

Good you. everyone. Thank morning,

third question Argentina on related quarter, guidance. restricted that, normal Will to still operations? volume currently to your back third-quarter Just be is a and the you in on

Paul Graves

to We will Argentina for be We most QX plant in clearly, restricted debottlenecking lost of still. volumes took in do on the volume. some down July, so we've some

it while volume in to then one, material, won't and to to be QX. in of as and that into It's Argentina, largely that to place. take a inventory we I'm only few it in can the process not can a today, Our it. know, lithium-chloride the carbonate the product. is until available available It so means a very convert brine We lag time right higher weeks build not end but is form sale up producing do can rates carbonate we're is have not simple product, seaborne it's the is and place. there's you get for time the into get and in to ramp-up then period it takes running. and today really right saleable What QX at This based, we of producing once start either are us sure that real that, or of but of a

Aleksey Yefremov

Understood. demand for And, China. your dynamics in about commentary you thank Paul,

in quarter are a two So, to destock? telling prices and Was trying do subsidies versus saw picture in demand in following read changed an the in second in any what happening have you And, you how what's do the a Has growth demand change us, July versus -- quarter? lot square China? that the I'm it the second inventory question what related on and to reconcile?

Paul Graves

XXX,XXX of than XXXX, There's about no XXX,XXX to seen about produced. situation. doubt far be our be may is is, but is bearish said, as demand that We've the -- the supply going hydroxide tons estimate purchased we in I best think more situation tons

you you I lot hold we'd market shelf so, available It the is a B). where than single Why A). expected, into finite inventories volume And has has pricing who, hydroxide demand to a more of a there's life, and when do have and biggest think first only a the not destocked. situation foremost, would relative customer today driver

see the price going You the future? in down

think in decline we've of expectations of hydroxide. producer upon minds prices, seen the material destocking a at marginal to in but cost that yourself based spodumene-based a capital hydroxide hydroxide, I production there's -- so put we've So, lithium been at consumer as seen spodumene the of producer, rational of

today. have you inventory the destock to going You're

future the defer be it than to will because to purchases price the lower is future going You're the today. in

huge spodumene you what increase month. If anything you output, recovering a soon, see incentive anytime look more at a have in and see pricing than spodumene so story don't spodumene continued in the any don't you do buy given to need you of

Frankly, The going into I producer the carbonate. unit, them There's I a -- and in an think questions. hydroxide can on them to in humidity-controlled Meanwhile, just asking hold to on. it run it a long a start that always not the sits in spodumene-based turn wants we've you're -- run that's comes produce temperature-controlled or as to longer though, more it's -- hydroxide? How back product. lithium of particularly itself larger if what carbonate, seen warehouse supply Unlike incentive, going out flat particularly lumps.

path supply As a of that need is at changes." to to the as fail being start today clumping specifications I material, situation head pushed consumer and starts that into so until that to you I customers, going it market, coming have on rather saying, need is rational that and of "I'm what and hydroxide moisture is immediately down any in the of just the looking buy lithium you

Operator

question Please comes Global go Mike Seaport line ahead. the Harrison last from Your Securities. of from

open. is line Your

Mike Harrison

Hi, good morning.

Paul Graves

Good morning.

Mike Harrison

QX. visibility it's the range maybe Looking to at you for year QX, that maybe into like a but the this about range you on guidance, $X see have for range uncertainties million kind of for EBITDA, a talk you'd implies variables of a million $XX point? you relative and where the full at is some Can million what going or $XX QX,

Paul Graves

on we valid a deliver observation. look truth The two that I have think major guidance not. it's out, whether when variables is or impacting we we

One that, of our It'll ability difference is deliver suggesting them I factors. first This but foremost, big by just would to a a deliver I'm volumes dunk. say to and have easily and about. be it and it's on a to that do, production. those not challenge, is suggesting various upset Argentinian us. we easy pretty It's we not I'm equally talked it's brine-based not can make to slam

else. is the mentioned, anything just than on product higher margin significantly we As self-produced

no significant wouldn't year. second be in I second think maybe pretty prices I price risk say higher some the lithium that pricing we the those continue we in of way, -- variables to with environment. stability, year. the in a that average have assumed said, movements second surprised, the but is expected, we been like half continued in have The regard realized We've there hydroxide than the more have to less as reductions I hydroxide. We've and the higher here, half in been in in There's seen stability than than to doubt expected. two that's We've carbonate of by would we'd

Mike Harrison

of some the the hydroxide Chinese the of production regarding from in specifications. is context question second of increasing these My converters

it, to wondering to going specifications? and you're you unique over specifications. going like meet difficult capable be in they time, Just what are tighter converters of or increasing meeting these improve terms How are of somewhat is your in feel these ability capabilities, those to do

Paul Graves

It's an interesting question.

I do. able specifications producers be believe generally this. most Chinese on take ultimately speaking, my that meeting something to that will Here's do is

I our produce think of producers of hydroxide product. some lithium today, very strongest who are a Chinese competitors high-quality

supply a biggest see seen do is is today, over have When greater going demands that will side. being because and it like a again plant produce producing the seven you these the the that or who a it. vary, specifications you consumption single of wouldn't and I physical different tighten, think little you the and specifications case little those if are us some to relaxed specifications, placed properties we -- and lowest a I underestimate see get on need looser, question, -- the think by just We've our how continue. five, six, way, of produce from over to when to isn't is that by have supply you're product. tight, to frankly, simply we more customers, is by I consumers trend depending produce it on on

is through. three lithium I it's they have think by and seen supply to so aligning has into to for every go to chain every needs, It factor. isn't only those the and degree and or manage this we've a I a to maybe customer clear customers more more suppliers specifications, be to guy hydroxide of produce want a still of to with producer is see think, a going specific will of and think easy producing that what me also think so evolution or that so, producers willing that's platform, able good factory the we'll I chains, not way, each I two increasingly material platforms supply in that specific these breadth

Operator

call to back turn closing remarks. And, over for the I will Daniel now Rosen

Daniel Rosen

you be additional we call That Thanks day. to any have We'll the today. the and may you. a questions great for address the available all have. have lot, time Thank a following call is

Operator

Corporation's includes Livent time the Thank all This today. release that's second quarter conference we for call. And, earnings XXXX have the you.

Livent (LTHM) 7 Aug 192019 Q2 Earnings call transcript