LTHM - Earnings call transcript Q3 2019

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Operator

Good morning and welcome to the Third Quarter 2019 Earnings Release Conference Call for Livent Corporation. All 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 earnings and call. Suzanne. third to quarter XXXX morning you, welcome everyone Livent's Thank

Officer. Joining and and Financial Chief today Executive me are Officer; Gilberto Paul Antoniazzi, Graves, President Chief

along the The today's be with our slide discussion outlook found of will Relations be call. made the can accompanies prepared our presentation our website. XXXX our release, The which that earnings includes Investor section after in available results, remarks from

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

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

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

With over the to call that, turn I'll Paul.

Paul Graves

Thank you, Dan, and good morning, everyone.

look expected and XXXX. memorandum agreement a multi-year we're for to EPS EBITDA adjusted supply for our of I to lithium highlight. like and would for We We production on slide to first and a that understanding projected third few There's able X. a quarter our points Turning volumes lower announced hydroxide revenues. adjusted key a met than provide sales guidance LG with at

no the in which have a fourth to for to compared XXXX have we we're basis additional ensure must XXXX. will inventory to of sufficient decision currently form we commitments build XXXX, year products quarter the in XXXX. production The I a capacity hydroxide for But deliveries effectively customer our making in

expected this inventory EBITDA by is adjusted quarter our in of XXXX. our therefore EPS build, revenues, adjusted inventory for the have lowered corresponding guidance quarter are year and consequence build lowering and also to fourth A full fourth an amount that we the

We our and initiatives progress on we'll capacity our remain an programs this previously announced current committed to expansion call. the provide expansion later in of update

dependent where lithium China, spodumene. product Turning for of have now extent the short-term that cost All for lithium environment on to on price been today. and for largely as declining industry. perspective it's to X. pricing the hydroxide time carbonate and quality, the factors whether slide mix, a producers relationships very of such impact this hydroxide impacted Livent's carbonate, is extent On with product customer in Clearly, structure, exposure challenging the stands or market the in

improve did be in environment third the fourth quarter. and the not in pricing it improving The quarter does not appear to

However, complete about near-term market. prices hydroxide conditions and the the current lithium do industry not lithium a in story especially the tell

battery demanding given applications. with less as as start product stationary storage, such broad largest applications use lithium Let carbonate, me the mobile industrial broad lithium of and by is a volume its e-buses range as devices, which in in well

hydroxide. years. relative as rate, be applications mid-teens for fast XX% to still certainly annual seen While to rates it's appears growing demand And in recent as a from growth at demand growth growing slowing plus these the not

volume from also carbonate in to of the shipped factor. increase oversupply. because well the XX% Lithium biggest is growth being from pricing environment of Australia, The low-teens additional per been spodumene isn't north seen this the single for even rate has XX% has year. China converters supply by affected its The just of or hydroxide although to high

seen in from reestablish pressure on themselves to been downward China, demand additional the notably last absent seen China. price significant confluence supply and few created as look and over carbonate months. in And other we've the has This also brine-based in short-term product price fallen, China in than especially We've of for has high weaker markets the they've Japan seek too, expected rest recent prices producers markets place in pressure China the as years Korea, in producers of market cost especially carbonate of that their world. to

same pricing oversupply in lower for converters. from XXXX, leading driven material to and online China coming also by has plants costs China-based of Hydroxide declined non-integrated in new spodumene, the

several pricing been are the impact for for has this. muted However, reasons to carbonate. There more relative hydroxide,

robust XXXX, a more is be year-over-year product hydroxide than increase. XX% to around estimate for XXX,XXX growth metric demand more worldwide, which we for First, tons

buyer carbonate diversification European Geographically greater This greater the OEMs relatively of and a playing in of as is battery purchaser hydroxide a the Japanese makers, and sourcing cathode markets is battery less the and in material role carbonate between China XXXX, in than the producers in decisions. it segment. we with western hydroxide as a important of notable difference Korean the type saw

Second, are applications relatively achieve And stricter to requirements few for able remain carbonate than counterparts. their consistently lithium the quality hydroxide both have across hydroxide volumes continue producers qualification demanded specifications. and there to multiple today, that

years. relatively recent the than As lower stable result, hydroxide outside in China a year, prices throughout of remained have albeit

hydroxide $X.XX the has Livent's In for than realized declined first of in quarter quarter. dramatically less Livent's very varying been average carbonate per year XXXX, price kilo lithium since stable any by fact, while has lithium price realized the over

expansions delayed China smaller are prices converters Future the in in have believe battery at losses even and idled, is planned financing cash hydroxide from rapidly collapsing canceled, sustainable environment or face being We simply operations approaching with and a not curtailed non-integrated the ton. are of pricing a or applications. spodumene operating demand rising been nickel likely structures current spodumene $XXX existing hydroxide high

our market. development EV the Underpinning confidence of is the longer-term global

stage this related policy not a normal the out lithium Street merely Wall not pause do China in of This by of is but analysts. some growth of shifts data shared sales. new EV sales, believe next While reflects EV Livent's and ahead in of the slowdown but to experts view just independent is is a we current coming suggests a a number of consultants,

to in in launches, themselves makers usage continue these for are into and the paths reaching development We hydroxide. and rely of and model increased positioning number battery heavily now market. XXXX the beginning the on lithium battery and new of development are EV a market lithium for cathode These paths accelerating see leading OEMs The significant indeed in beyond. XXXX models into

today, demand of OEMs same Europe Government policies EV more OEMs in European aggressive China reduction EVs and with for to mandates and more in announcing the mandating the We major see COX force strategies. ever-increasing driving volumes effect. creating China Europe on EVs are and all-in sell

an seeing shift chemistries. sales the nickel data Just acceleration in Cathode as to China supports within battery important, high this we're trend.

of For XXX approach time than to instance, QX QX the NMC start seen NMC more we've first sales in XXX China, in double XXX And we've compared seen to volumes. XXXX. for of volumes sales

see the captures there. the one we overall While can market, the part trend of only data is clearly

see also as adoption recent have supported. announcements We chemistries broader NCA of

performance, visibility supply the slowly coming the becoming launch new clearer. is into Battery supplying get take aspects role by pushing more regard a closer supply who them and volumes we've all key the increased evidenced market, that to commitments models to of in to to as seen. announcements for battery is is safety who, chain making Western active more partnership As are producers are of EVs OEMs EV chain. There to the we with

up materials why bring and cathode also they're year was helps the will explain and take chain is looking certainly material as such to The capacity are we only and of down in-house role critical the to to not hydroxide. the uniform, It battery why interplay fully it's more transparent expect makers that supply a but lithium leading than some better continue start sourcing battery looking improve. still it in at or it

supply evolution of to EV who that increased adoption with leading to reliable specifications with well-known exact battery hydroxide supply grow chain of market. of the supply agreements lithium producers, the high longer-term can provide a The quality and can is

of role to a critical OEMs lithium supply understanding decisions agreement a of producers is the LG. multi-year why with the play in signed battery This history we're Livent and memorandum we directly them. recognized and has long for partnering will pleased always procurement a have have the future with

first supplied on the be hydroxide we XXXX, multi-year in the starting time, a For expect with battery will Livent's lithium significant producers either of OEMs. arrangements majority auto or

Gilberto of our our I'll to quarter on to customer third to now the hand quarter the over inventory build outlook, meet commitments impact fourth and the results in in more hydroxide financial XXXX. including fourth to decision review details quarter

Gilberto Antoniazzi

you, and everyone. good Thank morning, Paul,

on This adjusted both a EPS while two adjusted quarter third revenue XXX to points quarters improvement representing resulted in quarter-over-quarter. combination EBITDA guidance XX%, and basis in our an this now consistent line X, year. the below adjusted with in has with basis of of were and over first Turning of slide sequential expectations EBITDA margin came

Revenue Pricing continue X% primarily $XX out was headwind and a and a volumes carbonate foreign the in decline euro. the constant year-over-year for combination third the to basis both be of for metals for decline realized quarter exchange current hydroxide. on million. average to butyllithium primarily the and due was lithium of The the and of from high-purity higher and RMB lower a on price average

versus XXXX. consistent quarter $XX was quarter costs. second with in driven as margin improved and quarter second quarter was Third adjusted The customer EBITDA million product of lower this as corresponding well first mix improvement and by results

has hydroxide our to in of volumes years and place customer than on has a for contracts. lower that contract large lower price several provided been any one other We the

realized third-party less Additionally, costs we lower from using carbonate.

X, quarter-over-quarter and shown year-over-year just a basis. EBITDA for On we a slide have on bridges on

fast-shifting While adds market and basis, discussed on insights. quarterly comparison we additional a year-over-year performance believe outlook we historically in both have environment, a sequential today's

the this $XX has the see with are over results consistent quarters We adjusted of course and EBITDA of in XXXX, each of very that quarter. we been way million through three our will year,

broader performance the the volatility This industry that lithium are consistent trend our Driving and year. is factors. despite two has this downward characterized

production the online volumes quarter, in China we hydroxide line third XXXX. brought higher First, total the in first while in enabled of

volumes gains by a the that. largely have sequential to source where cost realized produce carbonate we inversely, tailwind. sales volume work need third This offset and decreased to the been recent These in quarter, most party

online. carbonate, until In Argentina declines carbonate to recent comes our continue require purchases. will the certain price carbonate Phase to opportunity in accelerate of XXXX, will provide we expansion third an X in We party

what Livent's in have given product flat portfolio the remained the of carbonate, Second, we average price volumes lithium we And reduced in market. carbonate, from a year. had has sales smaller impact throughout the other pressure seen significant of that price seen than have our

largely is additionally, we areas own by And products China in different with greater have relatively These a operate specified impacted other To tend customers market production their and stability to markets. we significant into conditions. specialty reiterate, businesses are sell process. in business where little with long-standing short-term hydroxide butyllithium our and

fourth on XXXX in carry to Turning quarter now the XXXX metric fourth outlook of has higher the inventory decision commitments. Livent X,XXX to its quarter into X, Slide revised guidance full-year to hydroxide product to and customer ton reflecting and full-year order meet up

overall be in million the range I fourth to in Livent will on and are adjusted details Fourth range share adjusted EBITDA expects further XXXX million. revenue per share $XX customer of per projected our quarter of $X.XX earnings diluted to for million $XX to shortly. $XXX now be $X.XX anticipated XXXX to $XX quarter give the XXXX and commitments million respectively. to

diluted of revenue to range of be adjusted $XXX EBITDA $XXX be in expects the be range in million to Livent share XXXX, million $X.XX of to range $XXX to share. the adjusted to to earnings $XXX the and million per full-year in per million $X.XX For

later quarter year on the these repeat of provide For for further between the this Slide highest has anticipated patterns last adjusted our original Historically, changes to on color and guidance third XXXX. we volume fourth we been perspective additional for in Livent and on want the expected EBITDA X, had quarter of guidance.

second half in this production over additional We year material tons have in repeat historical volumes of higher versus second with first. pattern X,XXX half the the the available seen certainly of

continued comparisons other. of XXXX, customers of hydroxide our few in growth sequential However are that each meet in the prioritizing needs. we our combine quarter those to essentially buildup given factors Rounding offset inventory fourth demand a are the from to for the out

the sequential offset costs. price small a We expect by carbonate fourth favorable in pricing lower quarter and increase in mix modestly

and on of million $XX spent from of cash same through operations items select end X, third statement, Finally by debt adjusted in Livent want on Slide of net period in $XX the on $XXX update million of a the quarter give conclude as to on capital capital with providing I our XXXX. an million. comments of spending as the income the plans. spending We cash few well generated quarter

adjusted In year updating our million. range the for EBITDA $XX conjunction from for are $XX operations we the full to our adjusted with fourth revision guidance quarter, million a cash of to

Our full-year remains guidance $XXX spending the to in range million. for of capital $XXX million

to as capital City. regard outlays spending met this both Argentina certain of year, We update are accelerate plans in fourth will Paul expect items in the closing and number of remarks. in on reflecting progress the on quarter expansion a our made milestones Bessemer on important construction this you his we in cash

With back call to the that will I turn Paul.

Paul Graves

Thank you, Gilberto.

carbonate both first year, at February not not look XXXX butyllithium, high XXXX our our will for specialty will organics. providing we carbonate. and lithium volumes and purity provide production for and chloride today metal Although a do of and in of hydroxide next until LCEs and XXXX be to which lithium hydroxide supports focus full approximately expected guidance lithium on we the want businesses just sales I

can all meet you see even won't As to demand carbonate then enough XXXX. we customer will hydroxide our lithium next on in year will Argentina to this in Slide converted and of be the produce be XX

As buying we a third-party XXXX. will result continue in carbonate

to pricing those carbonate that quarter for see we XXXX, be of we XXXX. and in to we the what purchase achieved part are into the able Given than in terms better expect on year-to-date carbonate fourth first

and certain amounts under expect a in small relationships. longstanding to specialty carbonate existing very commercial We XXXX sell amount small of grades mainly

XXXX in quarter our XXXX if XXXX. peak customers committed hydroxide for supply of significant meet customer to we needs, of our lithium increase new their fourth a for levels hydroxide production inventory volumes the their even customers build existing to volumes is will at XXXX increasing With short we and not commitments. start for sales do fall of looking goal Livent volumes Our to to portion

a understand producers a of have majority commitments cathode little help these more. the To down combination our break you I'll consumers and sales. industrial better up Historically, commitments, customer hydroxide XXXX of our made

mentioned producers. classes volumes hydroxide XXXX OEMs expect to delivered exceed the our LCEs customer I entire majority committed or our hydroxide XXXX first will will of either We But sales earlier, two to that our would automotive be as that the of year volume. are battery these

customers. multiple commitments carbonate long-standing applications geographies customers remainder of primarily hydroxide The as composed of as our lithium volumes well are of and some across to long-standing

will clarity of these We year once on end volumes negotiations. have we've concluded greater

We in XX,XXX this hydroxide therefore carry project into to build tons the up capacity XXXX. annual product to our inventory It drove tons. metric shortfall X,XXX to production up lithium of sales XXXX, higher is that to than decision by

both the in that We meaning have to as available are volume. and higher increase our expansions we we the Argentina XXXX, that of commitments today for at in capacity that support United States, end customers commitments customer our making the will place

wrap-up XXXX. giving for to like key I'd towards on update our priorities by an progress

Argentina. for on our the to end remain committed First, delivering increase track by on milestones announced carbonate as ton for And X,XXX our delivering to expansion remain capacity metric the XXXX. meet mentioned, of key we we Gilberto first plans in

and made camp infrastructure. Recent completing milestones contracts engineering, construction of contracts have and construction we workers and infrastructure, support in union include for water the the earthworks civil commencing region awarding for finalizing construction

sites in start for XXXX. year of the later shipping China at fabrication expansion the in first expect shipments after these Importantly, we arriving process we ready the modules, the of equipment Argentina parts to the have Salar for first and started quarter deployment this and in

Livent see way. our and communities. and commitments local to continue partnership transparency the our with will of undertake We as responsibly, We in continue a and our operations to with engagement between Catamarca operate we communities activities this fulfill to local all full

of Our hydroxide is improving second further the priority capabilities our global network.

bringing XX,XXX total after year both tons in Our have existing capacity of product about per an to China in hydroxide By year U.S. already we as lithium the hydroxide of to U.S. network the per China. of the of is the we City levels at of tons lithium lithium end record X,XXX currently Bessemer running additional hydroxide XXXX, metric and production metric capacity out roughly same expect produce

material All China. serve U.S. of will customers produce the the in we outside

lines we of continue meet operational hydroxide the our to addition, existing customers. In flexibility capabilities our to increasing better processing demands add to our

the other to assess will In geographic hydroxide We specification our to evolve. continue around intend expanding align production as XXXX, especially we also investments world. the locations customers with commitments and to in our keep hydroxide network global to needs

to and direct is efforts focused innovation resources. next-generation towards in metals on the lithium continued lithium Lastly, technology of Livent additional area applications, production its brine particularly

many next-generation advancing for are partnership that customers hydroxide. applications lithium-metal our with are lithium the becoming producers in of increasingly We battery

cost-effective of Our commercial developments work the at an are lithium-metal scale print the allowing to into foils is a potential and offering pre-lithiation technology printable directly investing also to anodes develop commercial lithium-metal scale example we in.

the results how is impact Livent battery OEMs direct our in scale not advanced with the producers. that of applications on and to knowledge lithium a battery significant While at be next in use years, we seeing will our are differentiator few for discussions significant commercial

We're in exploring investing generation technologies. also and next extraction lithium

what Our to example support processing market do the even incremental importantly value. and believe This make. EX serve constantly will most approach look decision of customers. is this. forward need and every to customers our improvements our better ability investment long-term will in growth, Metals everything we in we to and what is help We To sustainability, our efficiencies an will that

questions. back the turn call for now to Dan will I

Daniel Rosen

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

Operator

from [Operator line question Chris Capital Loop of comes first Our Market. Instructions] of Thank Kapsch you. the

line open. is Your

Chris Kapsch

questions. taking morning. Good for Yeah. Thank you my

on the stable market. the this XXXX is selling of generally on the dynamic pricing the stable good commitments? market that could any as into pricing given not sort despite Would volatility. contractual anticipated hydroxide course just way you – stable And fairly there be a some based you So of Is have China XXXX? you've hydroxide much into characterized these during characterization your spot part visibility hydroxide of characterize

Paul Graves

one. Hey, it's a Chris, difficult

for I and the actually we have make to think predictions try that don't it. before data year we it's important next do available

end I looks and on sit what a year's think going clearly we are and with time discuss all as terms our you with other. when know down year the environment what next of like customers, each at the we transact to is

a are degree we existing the contracts think have get place. in I for that of because specifically Livent of stability support long-term from do we

China tried not philosophy to. that into adhere one spot markets selling The of is we've always to

I XXXX frankly think is but relatively than that we a to mean we're was in And a presence China it proportion doesn't our still sales, be with. in to exposure remove more small And our decisions. of won't short-term contracting China. comfortable all meaningful clearly that objective

I of perspective. contracting party a have – before, as with largely the decisions buying aren't think hydroxide I buyer residing material. marginal necessarily the a are But maybe in that counterparties with sitting that Chinese They're mentioned today in different

We premature guidance moment, get give it's year. through of to we a the be out. will will certainly little pricing once the at be we on more that think end But the information what giving

Chris Kapsch

But sort higher product implies. volumes you all but doesn't can slide volume year. your that guess, Fair capture your lines most XX outlook my reference notion of do XX% next which Okay. again, And guess enough. the to of I I and ones, the is important follow-up on it

have outsourcing if carbon line it low some volume diminish source improved like an comment conversion fewer you expectations street that are penalty some pricing China converted priced to observation? where lower-cost able seems like XXXX. for growth, for from it the you margins you're could have on hydroxide the hydroxide is and to there. Any extent EBITDA sales, if with indirectly Maybe If stable – carbonate that that exporting on you're seems with endorsement and there some

Paul Graves

that tell fact year will of for clearly point whether those is we our had in Every in including customers just a go for my before next some it's will is that to going to in with we if the only I'm amounts regards going they important small that products certainly was ways by you what conversations It maybe are process. you next many to have you to, customers degree to the of These for. year. grades tailwinds, about. and to two EBITDA still you shipped as meaningful Clearly, different to And or early from and our small where relevant, for price Wall through product our move possible. as bring made is year conclude on place but for they of that you implications objective me all with we stability our much too are possible. today, out outstanding if year-end EBITDA, to the take way, EBITDA and visibility thing the enough of actual are we as of can fact one in specific grades asking Street patience cares play carry word ask into

at So say, I'm going first you to can as firm with our be to on going be just one look us this year. I and have as for patient next to

Chris Kapsch

Thank enough. you. Fair

Operator

question our the of from Bob line of And Sachs. Goldman Koort next comes

is line Your open.

Bob Koort

Thanks maybe your we the supplies, availability advantage that and a long be and it expect you you there? to is? different you what as to be in talk Paul, ability characterize market sustain market a retain Western you that how to then seems China. premium a And to about long that surety like Can very advantage? produce have hydroxide might within you provide on-spec established it maybe much. of And how able markets conceptualize producers the may of

Paul Graves

has frankly of pretty as of commitments customers one to their people buyer battery is, to the done. trying characteristics to the that we're rests hydroxide decision it's across who when made performance in buying the is of significant today, or some a to increasingly think, hydroxide get moving the I to

into of close so, that are performance attention they battery. extremely paying materials going to the And are the the

more direct supply developing outside bit shift China to the also between the There's business battery inside of than -- own raw a where pass-through. a there's materials, attempt chains for fair rather it in batteries, to just think model a the I I that's an it's say as control industry think, decision over of purchasing and in treat

that as pricing. volatile path, down they they for thing really What means is, looking last is are highly head the that

don't is timeframe. at timeframe for to their disadvantage multi-year be this different Now to a cost people they with And want a a strategy.

And make so, have competitive pricing to the sure we remains regardless.

But dynamic the and multi-year much more very predictability the is over to periods bring input for more to the costs battery. stability

Now, not the cost is giving of regard away, the battery, relatively remains of input the lithium the performance performance a into just to particularly money small part -- that it, anybody extremely battery. and critical Lithium hydroxide an with of remains safety.

cathode again, single proprietary every they their which producer broadly. batteries, cetera, process et a And manufacturing battery share materials frankly of is following don't materials,

of see Korean, European or different in than focused China. is even All we for Japanese, or chain, very creating dynamic a a supply what this

gyrations a selling to offer goes unfolds. greater think I we're a through that or of through and China couple describe next one be model different it discount. short-term price as a the of will wouldn't its as imagine where premium it it necessarily that and roof may it stability be years I just in pricing at a the discount the will I the upwards personally time scenario price.

Bob Koort

appears the fixed approach used different maybe some about producers, or markets have think could just up spot of price I resetting callers. And either if have It auto American those you talked South or brine your in approaches, contract companies, the your annually, through peers guys subject to to I follow on some price. more of a past, cathode

how of had come see in How terms in Thanks. make do seems changing the do approach that then, also, like And industry's through? assets. contracting It you you your challenges brine the sure expansions expansions of to brine market? your

Paul Graves

sneak to contracting way Bob. terms two Good together, questions the of think in I Yes. Look, strategy.

trying have Our contracting -- supply to that has the year arrangements, who strategy maybe pricing they're they up it's overstate been including it strategies Look, that that. strategy. we line contracting own businesses. And their controls end, run how as align I the to their in mean want views this and with to that historically customers

recognize do. customers is to basis are we and contract that to us what on a that frankly, Our job, to those find is values attractive willing and

that to collars, price as fixed-price floating means try that and annual we caps renegotiations. So whether contracts, to somewhat contracts, actually be their agnostic

our best renegotiation. move not us And frequent relationship for we healthy do to anything. just It anything our or requires into isn't for that for

same we to feel get want our market the prices us time, vice if way, to line the sure prices -- an make they versa long-term their open that customers out consistently like those have actually While line. of by in that market and at and

can actually with that frankly, for is a have them. that conversation our with making basis that making in used We being product customers we is early, our that have their The sure processes. Bob, in getting the qualified, product is sure

else. And that quality they are and everything happy with our delivery schedules, the of what produce we

relationship start just rather philosophy. back negotiation. is a proper And can of the a that customer to pricing than have you On the really that,

the to the they is I as than Whether behaves today. And evolving market time were in to to evolve a it the contract different regard differently for to hard that the place certainly me how the I just and predict. and they customer carbonate with today place negotiation, same process. the relationship to is, point feels me fact, market But said would hydroxide over the

As brine tried track. for we remain on Argentina be clear We on expansions and our this. to

again. just to say it I'm going So

moved by as single not production be in to have in we estimates a will day, Argentina. Our when

absolutely is available XXXX. The XXXX, hydroxide That that is remains we're Since on same in true our volume back expansion we've a have the on mechanical the for It in we said in started and so completion we're of the Carolina. project, we that always half on. North track track the still. path that

Bob Koort

you. Thank

Operator

Christopher next with Credit our comes question from line Suisse. Parkinson of And the

Your line is open.

Christopher Parkinson

capacity or quarter. highlight just on you end, It more that on hurdles cash offer lower large expansion? issue. this some the us Thank update during in made it's execute construction to you. also, seems the as little for guide, the mostly But on benchmarks the the additional detail funding then can you've probably the Thank importantly, commissioning? you. you current the initial on given any timing though, And op And you prior hit progress, the must but can you remaining a

Gilberto Antoniazzi

Gilberto here. It's Hi.

expansion, we the taking up Again, a reaffirmed this of have lot again, in our on a invest $XXX shipments for of the between module funding So, solar. capital of have place Paul in as lot the to described the activity we real $XXX million start intention million to constructions the lot QX a year.

lot expanding So this year. expect of a we

nothing million, to is capability everything has expansion. terms $XXX no fund financial with our in In with for of place We our changed. revolver for still have us problems

Paul Graves

Yeah. terms it has the loosely as And Argentina I'll expansion describe of really -- it groups. three too in

broad the team We but listening is wincing sure expansion. put will place on the the to well we underway. The have to I'm camp that is there complete, That's we're in be all complete largely largely it’s saying, cetera complete. need infrastructure phone, infrastructure actually et

The second that to essentially which aspect on water of supply Construction to is and contract. has a is build requires or us That operation, commenced aqueduct. any access brine-based the pipeline we key sustainable a water. of deployed

that, make cold sets underway. as weather next and This summer we down there key to March, back a before so we construction in much is it's time. progress April as again need season can on well It's for us the

related completion, has started. Salar That as remote. the then that, is know the of relocation piece China. you third the is other the and And which physical to process fabrication the in And pretty the carbonate modules

The are of at year the left Almost the to China. have to year and the first modules on. deploying Argentina end in up the about arrive leave all as They'll the of process underway. we'll start modules them goes are or either Salar XXX

extremely of All complex those processes. remain

that know that could to going factor various quite there or it single trip is time. find us delay see us -- what while in never you points you're no we at up And

so, very And about are. good I feel we where

I think have right we team. the

We have the right processes.

have local do the communities that We constructive and logistical some we into when issues. helping extremely relationship run local with authorities, us

we that have to are as So, never, never could progressing hoped. but we say, as feels it me well

Christopher Parkinson

Catamarca some of opportunities looking partnership uncertainty Thank opportunities Got currently diversification see for market? just follow-up, Bessemer the focused being? do on you the Argentina, light the still you for of it or how time quick simply executing broader Are you and in you just a and still City are in the characterize in you.

Paul Graves

delayed hindsight been found places influenced find the in with heavily should have we wishing, And short-term several ourselves ball. conditions. better past crystal we'd a we years we've decisions think, market forward maybe And looking. had too been in to where by ourselves more we've I late

forward to that we we us an take our keep say, can and which remain this in basis. look around little from mean, And we market we expand exploring capacity. can more. makes to think relevant LCE look a in ways I have it I

cost we'll look expansion we us give we do projects, look those and at to to opportunities more partnership to LCEs. just something for And we expertise where real bring capital, continue where we effective think more capital effective opportunities bring and partnership think we than for access

to continue hydroxide. We'll expand in

region geographic market. capacity Our the in and business ton model everybody build is to We intend else. single conversion to don't a exposed specific a different locates model same us of than a business that leaves every little

We to lithium and for And to of what our need today more Europe. be market no U.S. evolves the the amount with with including we'll that increasing hydroxide more about have we asset diversification demand look and footprint. continue there'll and do forward in as other China doubt geographies there's

Christopher Parkinson

Thank you.

Operator

comes of question next line McCarthy Our of Kevin Research. from Vertical

open. is line Your

Kevin McCarthy

those the battery what you've think My you question of How what you other multi-year in you extent a do already majority contracts of significant your to XXXX have or I OEMs. variable examples hydroxide Good indicated for morning. are characterize you each? got have volume is perhaps producers under arrangements that? with supplied be is place auto that visibility is, Paul, words in price as to what there contract are or to In your be? confidence price going would fixed to to extent or either

Paul Graves

of I think each. there's examples

as what their have slightly different additional to talked to come this layer our different demands I demand customers the they've with and we've us volume, contracts And in in in is effectively required as have maybe structures. back able and been for think do long-term prices, in we've commitments static about we're to looked trying past additional their different aren't requirements. terms,

relative happened. we the which opportunity lot market of found both the what pricing are aggregate, to to time arrangement a in two-year is supply basis, one giving we check us at it while predictability same where a and brings on of to the revisit or So

We're actually something as giving what same negotiation reflect feel to customers being continue do a getting disadvantaged? our of ourselves We're to that are frequent a price continuing that allows price we economics down a need path. sure us and to to build both it cost that conversations and you the trying to does have alongside you? we While that we that trying time Are constant both without not customer turn at around the is invest say makes really the to you hey achieve.

And are way. structured the contracts that entirety be to designed their in

I will think demands in XXXX contract have that and into customers go our ask as evolve XXXX, that feel though I and in exactly products. again structure place. kind XXXX as we our It very we change, of as capacity good increases more in for

Kevin McCarthy

may talk then for That's If hydroxide of of I and out that level, slide sales year from likely now sales referenced. XX the turns you volume you the helpful. from would most Maybe to different be kilotons XX that what level to are the a your back And about it reason can that that if circumstance? just confidence. XX coming range

risks but of spoke You next the what year? level bit about growth a the that other around contracts, are sales key

Paul Graves

from that Kevin product acceleration estimate. or take bit today, or be less. it's The reality what little customers one produce and an because could requests demand for say each answer is we see best clearly It's is to more a or clear well And us. quarter requirements more I difficult in a our less we

that spread for single is to so And shouldn't, evenly assumed month. you XX,XXX in be every example, tons going at

can that not happened some delay that taking accelerate in they to past, or change to little tons in a month. more ask It's a cases some, difficult tons XXX their couple you're the new a to when really either away that of basis especially fully a difference or a cataclysmic both massive opposite demand. find contract make a from expect Clearly could In completely year. some month with a customer suddenly or a the patterns you're of that customer shipping a next two and issues XXXX out. demand I when happen of had sold appears customer if those thousand don't they per which we've walks we

Kevin McCarthy

very Yeah. much. Thank you

Operator

of question comes line And of Juvekar next from our Citibank. PJ the

Your line is open.

PJ Juvekar

Hi. morning. Yes. Good

Paul Graves

Good morning, PJ.

PJ Juvekar

lithium long. Paul, chain really the supply is

what today? think inventory hydroxide carbonate market getting you being OEM backed inventory go held in you and China battery more up that batteries do it is look at is When level cathodes, to from or OEMs. Where Is your at intelligence, the You held to at? at level?

Paul Graves

down more. looking a it is with or see know, what of You life else's. reasonably why crystal saying do processed inventory it's why that anybody convinced there I'm ball hydroxide I our better I of And where a I be? prices market product buyers a grade how there out short going know isn't a there can are that see than depending This it the most lithium is we channel. any the well would as at potentially in only on as not what is short-term buy and lot would

out to little see and living the in and hydroxide how or are battery caught hydroxide lot find use ways to been and maybe need some toll I some overcommitted We it themselves to carbonate they've at over process carbonate of people mean places examples and to relatively a purchases to battery feel trying they inventory lot therefore of of they've and shifting up. there a of carbonate of developments we've spodumene other by seen quickly one as that interesting taking into see a us a do for it certainly customers. out certainly year we producers hear this and been where the inventory the chain has

So some battery out of, sort there I sitting unfortunately. visibility frankly at beyond the level a lot the, the carbonate have there's don't or cathode I at do that think inventory of level.

PJ Juvekar

expansion -- Thank and developing be that I would is outside your Europe? the the Okay, thank assume supply that in in in most of How U.S. product of then sold will lithium you. you. China, particularly, hemisphere. of the City And western chain choice Bessemer

Paul Graves

chain a a capabilities relatively small cathode U.S. We it's with in chain battery significant somewhat are have Europe with way battery subsidies whether COX that shift actually through for remains supply mandates We battery see capabilities consumers domestic Europe in or charging the to don't that center and in starting customers see lithium infrastructure we're all hydroxide think EVs and unfortunately I policy in supply decisions I that really over see seeing or to a desire until the demand do manufacture Europe. anytime materials. cathode changing a particularly, changing for production there we soon. and aligned material see building cathode

but I see growing demand that particularly is product mining to we will skeptical think a happy center for expect demand entirely spodumene already do even about But not China. I personally, through processing, -- I'm tell. they'll be sourced or that spodumene time see will a we

by rely going upon. to point is sustainable is for that difficult really that supply well-recognized in at as OEMs all capability, a it's reasonably almost OEMs that it's to many conversion expansion say looking the pinch willing that think look I'm chain I like that China forward we look for with a and

PJ Juvekar

Thank you.

Operator

And of of from our line Seaport Harrison Mike next comes Securities. Global the question

is line Your open.

Mike Harrison

Hi, good morning.

Paul Graves

good Hey, morning.

Mike Harrison

I little Paul, like if situation might was or regime the or anything and have Argentina changes in there? wondering your in plans that? Any any about export a your bit whether capital political on taxes expansion you about talk concerns operations effect control can that or

Paul Graves

FX shown that just federal when tends controls. capital impact Argentina have areas intervention a I highly in government think you we us the that on described to be history has those

typically that country. be mind the putting product foreseeable will a Argentina even years we you the future. into Capital a but and structured dollars We're more. for the into to prevent net five bear for the Just typically four, import always dollars are of next not controls out to in -- or country are taking

not in the direct make big it short-term does so And really difference. a

again coming cost from not held headwinds Now and get with some clearly at the we see that. we when in will past the a XX% plus that we same seen inflation currency future. We've up to it on that the down XX% will rate, is in up end if depreciate continues it artificially

in is federal eye change what that to regard. certainly keeping their on will the we're something policies administration as So be an

really far. course of notes which more exports supportive of of that maybe have all the developing in product Very exported. governance been and to main All positive is perhaps supportive takeaway. giving Very the the so more power that's our very industries, of the extractive regions and stronger of supportive authority

our a with is lot is Catamarca. us really working that local And them. them us the with of partnering with time matters and spend to in relationship For we what administration

understanding but we perfect We past, ourselves in think been put very in haven't a have place with a good where now we've the the I always administration.

stand While there. supportive her re-election, the well remains trying Governor to do and committed did not extremely somebody is down what and to for successor know we very we're

So does at all. expansion it in Argentina our really plans change not

Mike Harrison

And of your purchases third-party then the other I question is had on carbonate.

that of third-party sense And XXXX. to trying expect You I'm or higher had Argentina lower in just carbon disruptions some to you XXXX in purchases get early XXXX? to relative a in your do be

Paul Graves

will the in math XXXX gap maybe think of we're that slide that much be have will so Is have the it producing and much our have the you really can there between in higher. how that little a we to isn't carbonate we the shows different producing, carbonate how that bit set use higher, third-party see will we're year-over-year. to we support in I Look hydroxide, terms carbonate sales, of -- amount out

buying of of not disruptive ourselves for timing disruption effect the some weather We're that our certainly chain that do certainly patterns a unforeseen learned carbonate I such to supply we provide and making in again. us. top and sure have On management Argentina, revisiting regard with we've etcetera to a the of to on think protection disruption allow lesson

Mike Harrison

Thank you very much.

Operator

Bank Byrne America. of comes question next of of our the And from line Steve

open. Your line is

Unidentified Analyst

Matt Steve. is for This on morning. Good

things hydroxide bringing with XXXX and or comments that the being given on to XXXX? kind you of when expansion line the back an in just of of So forward have in volumes fairly say given forward-thinking, volumetrically shift see comments XXXX and be the it to safe And about would next coincidentally will your LG between that contract flat do Argentina? happen is in the to

Paul Graves

volumes. would I'm I'm XXXX capacity we see higher XX,XXX we're I with reality versus to tonnes have volumes and adding in about impressed talking No is, the already long-term carbonate The to a about that XXXX. tons expect XXXX of XXXX little nature it.

out, compared XXXX. about. will And LTE's the of invest to I XXXX-ton looking see unit XXXXX to by City, talking lithium then adding in at I have clearly more produce tonnes Bessemer the by that say put So you can we slide hydroxide we in we're sales of about shouldn't tons able XX,XXX

increase now. some expect would I So

lines demand -- can Just in bear us, responsive and have a takes added to XXXX additional a produce depending we we a be It months that X we're we on in in us time. add demand mind between to tons the tons for short We've We've XX,XXX customers. at timeframe done few the do trying to China. past. XXXX, very for XXXX lithium the that relatively see If being than for and us capacity XX somewhere hydroxide higher in factors.

is this out putting we not choose certainly there in be I'm your in in China a fourth-line the here. It demand that commence and customer there. be may models it may sometime So to if XXXX

Unidentified Analyst

briefly, it XXXX scavenging store the little that can the but Okay. as tons But or in how market? should And through be to out mentioned rolls year? of we maybe nature And does metric that Should to moisture just has on of the a costs you bit volumes But technical it next of and impact it. question. product a you kind that level you loaded front-end can the the implications cadence think the how year? about hydroxide

Paul Graves

to tends actually more biggest to particles the whether of tenancy It's compact. single its hydroxide the than reality that. The maybe size crystal have clump, is factor just or smaller of lithium And the that particles a larger simply is complex on to life biggest sized shelf single that tenancy little the you that factor short drive its ones.

and customers don't to to to harder them to tend tend Clearly smaller small large crystals so storage them they into make better have want particles but ground to tend produce they capabilities, with. crystal a or consistently to and to have be they either like start

All of do the have regard we But We of product shipping a more customers. end those with to the which factors bit expect a product for? life product our customer store issue last little step before that life capability skip we have shelf complete to the long just to generally almost with you we regard. until an it as essentially will make in the shelf impact processing can up always how not so gives us speaking

Operator

Dmitry our question from of next Research. comes And Silversteyn Buckingham

ahead, line Your Please go is open. Dmitry.

line open. is Your

Dmitry Silversteyn

everybody. morning, taking Thanks call. for my Good

to out on to follow-up more what's of quickly going market. wanted sort in looking the the Just to XXXX quarter third just so understand on then

and much to and you caused carbonate take quarter, the demands in all you had revenue So, in of lower which guide sales the down terms stuff. that

So, I understand that.

were expectations I understand of year? not second market your changed the in of to decision the that the What of half I'm the the ramp-up the and the the originally trying being to with with up fourth what the year, make put quarter planned how of selling what for that up do issues quarter catch first asking is I'm half terms third result year the hydroxide of in in the shortfall is to end of by level the the scrambling on? to in guess, you producing you the in the Argentina in from reconcile of you as looking I volume able that that actually were we up in

Paul Graves

me be either the into We we just find in or China then market on much really year of is. QX said line think of its the lithium hydroxide. be. production the with in year, I that a let carbonate instantaneously. we and half produced but the buying we year, The XX% of volumes the in of continue more second comments. been results to to couple to top second it than half first of in differentiate doesn't subsequently into just have product It So, that and did It's Argentina, half the we almost in at move has a the processed what remember into U.S. way where the of mountain then the

line think until second same is Because also of our than of hydroxide meaningfully outputs bring the end have higher China third the we about the mid-teens I hydroxide units. half as the first think the in true first well. didn't on in quarter, half I we

carrying actual Our all production forward. build-up entire the is that are process of volumes talking hydroxide into we're described that just that as and about XXXX we part exactly of we're the in inventory going

Dmitry Silversteyn

I I'll guess Okay. offline. follow-up

second question Is LG. of for a The LG? how contract, business? sort it's minimum length you any commitments the there be the with you, was tell there is you -- going any of this can fact dimensions impactful provide the with other relationship the than memorandum us contracted else can that to this Is of anything about new understanding on of follow-up thing that the

Paul Graves

as said. multi-year we It's Sure.

than vague more would be I to a is sensitive commercially going prefer, I'm you are. So, this agreement. probably but

regard commitments We are sensitive with non-disclosure. we've LG to made to to

going multiple applications. applications you're grades It for that. have lithium on from of is is me with all to multiple going multi-year. So, It EV to is bear applications. is energy lithium hydroxide. hydroxide. into storage of are It They predominantly It

delivering and outside will be material. China, that multiple China of both in and processes We to

delivered be be into their to supply itself will delivered material that others will LG chain. of Some

diversification and – for greater our importantly So both it it does brings as bring products. certainty also we than well greater had

relationship LG So important very us. a it's to with contract a is The pretty to us. important relationship

Dmitry Silversteyn

for you you. that. Okay. Paul, thank Thank

Operator

comes line Jackson last the Markets. of Capital question Our BMO of Joel

Your open. line is

Joel Jackson

Paul. morning, good Hi,

Paul Graves

customer are XXXX. that of minimums? much how versus You locked in talked talk you make locked in tons sure by much maybe about in you be about maybe not Thanks. how is taken? any are you of much the Is on customers? talk of having XX,XXX could meet much your color about How can kind How Can on to give is commitments take-or-pays? how much

Paul Graves

locked in in. XXXX and everybody mean even told think that doesn't necessarily have XXXX locked maybe I should

relationship both up understand making to we I build them. customers we where the what commitments to think us and key with both live to we're

of credible that customers. long-standing lacking I predictability important a XXXX the felt degree us as new have with I some very how have very I that as think no in very of a we sit we somewhat will be market think well from was confidence in degree there customers we unfolds, high very some matter important having XXXX.

confidence we to have in you in myself would how today I your that XXXX the customers. we deliver I either to with our ability that I relationships commitments the into that, have to volume. And to stronger put that think regard of sit think I made business there had be customer regards where came in by to a would high where can nature position suggest I of us our with than yourself the conversations believe personally to mislead of commitments today percentage or putting models. is guys attempted I volume been that a and far the degree on not that, we customer much – we bank out take would if unless a we

Joel Jackson

looking what's finally, like profile that. the for for you those Thank margin from made sales? now right hydroxide third-party on your And Okay. carbonate

Paul Graves

of of it. difference of in hydroxide the the carbonate end it's a It's all, see some a we now – at separately them end, right. first will different same well, mean, use while I the doesn't the customer qualify

profile and in-house party in we to us it charter carbonate different for surprise more buy difference make much So is the us margin what no cost than for The don't relative produce only to we expensive third to carbonate price. is the of it's it. the

Joel Jackson

hydroxide now? on produced those carbonate – third-party those Are money on you from third-party making right

Paul Graves

we hope are and on actually kilo would point organization a reached where we the haven't we losing money every sell. that I charitable

it. on money making are we yes So

Joel Jackson

you. Thank

Operator

the I'll Rosen back closing Daniel for to call Mr. turn now his remarks.

Daniel Rosen

is the we have That you. today. call all Thank for the time

Thanks following the call may any day. additional be you and will have a address to We good have. questions available

Operator

you you. we And Earnings concludes may Corporation's Release for have Call. XXXX that And is the today. disconnect. now Livent Quarter all This the Thank Third Conference time

Livent (LTHM) 6 Nov 192019 Q3 Earnings call transcript