LTHM - Earnings call transcript Q4 2019

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Operator

Good morning and welcome to the Fourth Quarter and Full Year 2019 Earnings Release Conference Call for the 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. Kelsey. fourth 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 any our be ask any call. Paul will questions address prepared that Gilberto per and to caller. happy additional We limited to the We after would to

and we forward-looking in factors, Exchange including, uncertainties discussion let begin, those Commission. you remind but will not before limited statements that identified and subject include are Securities release to in our today's the and risks concerning But that factors our specific me various with filings to

results Information EPS during presented we as based website. for financial of best on non-GAAP risks judgment income upon adjusted based represents terms, as refer information. these which our Reconciliations other terms, uncertainties. today's and discussion on statements may on conference will may are call, provided all to these earnings focus vary references. and Today's well Actual today's our

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

Paul Graves

earnings key a Thank we you, release. Dan. And will part good with Slide topics that few of today evening, There are Start X. everyone. address as

financial guidance detail its the provided further on We'll has Livent today. into year guidance First for full ahead. this go

lower year-over-year, January, lithium more volumes as of and XXXX we profitability be in than average lower in carbonate. higher pricing are early party as consumption expecting sold are realized third announced But offset by we highest to

and year, the growth Livent for total range In from XX% roughly due terms wider context arising expects this Coronavirus. total higher half a inherent the reaffirms the XXXX. of than in to guidance LCEs XXXX its usual guiding in volume impact to potential the the sale versus are of first uncertainty LCE part in We prior

first side demand Again, reflecting on the the of uncertainty year. this the in half inherent

highlighting and are and where volume more shift lithium on is how depending where We may carbonate opportunities that sales arise. we demand towards

continue will drivers energy as increase strategic we to applications. behind of will And decision hydroxide they chemistries use their to the volumes capital these customers provide key based projects. the We programs storage on expansion update of execution provide significant the and to in slow down finally, Livent's an

market I X, today discussing XXXX. some want the lithium XXXX and and Slide where On to time stands implications for spend its

electric in a by Clearly, begin Chinese saw what change in in a was me characterizing slowdown there growth XXXX. XXXX, we driven subsidies. Let in vehicle largely demand by

by demand to healthy tons. XXX,XXX then rate, XX% continued year-on-year demand exceed lithium over Even at with lithium a grow LCE increasing to

XXX,XXX in just grew from tons XX,XXX implying Specifically under product growth approximately estimate over to for XXXX, we demand XX% year-on-year hydroxide, tons

If grew from not which the for XX% you strip out likely around energy industrial by year. applications did hydroxide for applications, for demand meaningfully storage the lithium base demand change,

supply of with combined course a term spodumene this Despite an increase came output in increasing as online. or Chinese XXXX demand, lithium over of This non-contracted conversion in market from new the due in pricing was to experience increase short Australia significant the capacity. largely decline an new supply

lithium the of converters the portion meaningful separate produced was producers that A the from products. China was capacity non-integrated, final meaning conversion spodumene the

responsible operating elevated in supply, which lower the for It levels, increased spodumene pricing pressure resulting non-integrated from excess supply was converters. is and inventory therefore largely this rates, chain

growing future today's this pricing need the sustainable and increasingly especially and given chain demand. in lithium supply short represents industry, for clear to not is model. inherent levels the marginal the term producer of hydroxide part output carbonate this cost meet that given the the that today in for lithium the is It industry to inefficiencies growing are invest It

Recent Not have justify to financing seen current we investment across most in non-existent. a underscored have just projects been prices. the essentially at traditional is projects announcements surprisingly, sources where it challenging number how industry of development

difficulty volume alone, own to who capitalized or of additions pullbacks XXX,XXX and in extends LCE From three few have planned tons taken producers the these anticipated next in new been out entrants plans delays in expansion years. the supply lithium announced returns. revised better This roughly last light of their in producers months of have

even have low profitability. companies reached prices, impacted disclosed today's a some have struggling operations. we've existing a with Beyond cost struggle costs expansion delays point position their to relatively prices cost producers at Higher also and achieve have operating cancellations, where cover to

we've hard at resources continue curtailing production it costs, concluded above barely like to deplete a produces and little rock that prices result. finite significantly to concentrate makes operating And seen are as cash that sense

should In light down slowing this, is capacity Livent its of surprise all that as of it come no expansion. own

production these as expect cuts, latter of We market particularly and begin the the see into head and the XXXX early to XXXX. that we impact part expansion of will

and our will year levels near an see We in spodumene term be pricing inflection grow. remain in cautious expect therefore remains there not as the when recovery XXXX inventory elevated In any continues to an in from worked primarily we levels that for to guidance. the indicating need to the due through have to however, in today's oversupply, total included market demand

themselves. the created the by have facing we’ve restarted our may uncertainty also of Year in our Lunar operations after In the China markets. all on we're Coronavirus Today, New no issues the had and immediate particularly it and have term, the at end the plants impact operating

associated getting plants, in of the products shipping and has in and both some materials raw across disruption, borders China to However, products issues terms transportation Asian other customers created with provincial countries. to our and logistics moving

on the will is the headwinds epidemic. today challenge there competitors. our of result larger that impact restrictions the be of of some customers The half is year and this as will a It first understanding clear be what in these

China we to cannot have we compared any recovered on impact Consequently, be prior will operations. in the with resumes this predict certainty wider to ranges closely years. uncertainty of how reflect what yet And we therefore understand much are watching reasonable attempted for will And business guidance normal XXXX. to this our be once

now to Gilberto, programs. over to before I financial more on to and outlook, review our will XXXX return quarter the fourth give hand expansion color results the I of current status

Gilberto Antoniazzi

you, everyone. Thank evening, Good And Paul.

out in Turning results financial close to to Slide X our XXXX.

EBITDA million per the For of of earnings reported of adjusted XXXX, adjusted fourth $XX and quarter million revenue we $X.XX. share $XX of

provided Versus performance were that due by by was about primarily tons sold to anticipated, into XXXX fewer customers. than orders product impacted largely original XXX hydroxide of lithium guidance November, delayed

for carbonate continue QX, while to relatively for decline. remain pricing pricing realized hydroxide average flat compared to Sequentially,

full EBITDA For share million and was was adjusted $XXX XXXX revenue year per $X.XX. million, earnings was adjusted $XXX

lower was driven sales were volumes Higher offset and lower decline volumes The pricing. a decline by hydroxides sold. year-over-year revenue volume in by carbonate

hydroxide prices a realized We with price of XX both by decline hydroxide. and carbonate carbonate than in average percentage roughly falling more points also saw

Average pricing for a butyllithium were and currency on metals high higher constant purity basis.

exports the largest higher were expenses on contributors party on side, incurred cost airfreight the profitability year-over-year of to the the low and Specifically China. VAT cost third carbonate, from purchased onetime

resulted incurring in caused limited recall, you Argentina XXXX we that last in material. costs, with disruptions inventory. additional supply airfreighting As year chain first including the rain of event abnormal An certain our quarter in began

customer Argentina that our above the additional hydroxide source meant we third-party initial had Additionally, carbonate to to XXXX roughly production carbonate feed tons plan in commitments. of lost

purchased third in used hydroxides commitments. ultimately The tons We be XXXX and customer remainder XXXX tons roughly hydroxide XXXX about in will of carbonate meat using sales. XXXX we party to

higher reduced in exports the was while Chinese total rate volumes. sold a XXXX on costs XXXX, due out on to VAT results. lastly, basis Rounding And higher incur we dollar

Foreign for the and Exchange was on a from the RMB top-line, headwind the euro. the year primarily

the peso. than the valuation Although benefit in offset it Argentine cost was more from by

to now XXXX. for our guidance and Slide X Turning year full

We is XXXX to million, to range by being be basis $XXX portfolio of driven primarily midpoint. price across with mid-teens. volumes an higher expect in revenue offset average results by by price down above million This the LCE at $XXX lower on just the

adjusted $X.XX and per growth to Slide respectively. expected $XX per $XX provide EBITDA earnings share projected $X.XX of to in diluted be in X, XXXX. share million Livent's adjusted on detail are million sales and a XXXX further range we to On volume

lithium sell I'd like LCE increase an of XXXX XXXX at to sales XX,XXX your two the to volumes tons call we implying points XX% from midpoint in roughly to. plan are a of On to basis, There our up attention range. guidance

and and First will line hydroxide you see LCEs. that are projecting carbonate showing lithium one sales as as total we volumes item

in less XXXX stated than to carbonate of tons While we XXXX. sell an previously intention

so. Paul As to plans to our want we higher sense want it sure you enough should flexibility we make sell in do volumes mentioned earlier,

few a would we The not thousand customer carbonate be sales to the hydroxide and will more any expense exceed than sales of not expect tons. at commitments

other we butyllithium, Second, and sales to volumes purity high now product LCEs namely provided have related specialty lines, other for metals projected compounds. our

from we the On X a performance year. projected volumes for flat over lithium as XXXX adjusted year these we remain year. These relatively to feedstock prior additional drivers products chloride EBITDA or are provide all on Slide and expect derived key detail in compounds versus sales

First, sold are than which production volumes. are The inventory volumes roughly our to roughly LCEs we versus higher X,XXX annual carry tons commitments. sales order forward meet expect by product achievable to hydroxide to the capacity grow decision customer in given total of XX% sales XXXX

represents tons carbonate, own of will we produced Argentina. on of out increase party our lithium to third hydroxide incremental X,XXX an compared XXXX to operations to when carbonate To carbonate need reach costs of compared party to up sales usage. adds of cost third volumes of which use these This low our use rely X,XXX tons to

Additionally, average for low in to we percent to the realized expect lithium lower XXXX pricing mid-teens XXXX. for price average realized be hydroxide than

down We again to year-over-year. pricing expect carbonate also be

of expect are we raw from compared as last inflation to some to well both finally year. slight inputs respect anticipating FX relatively and flat key to on And our we With volumes some as headwind. pricing additional material butyllithium, be costs

plans as to X update by spending flow conclude detail. give before addresses Paul on commenting this an XXXX in more want on on cash our capital well Slide I as for you

For our $XX XXXX from line the adjusted operations full in with cash year expectations. of Livent generated million

of cash million. We for with million. the fourth in million We in while our ended $XXX of the accelerated to expected, XXXX guidance $XXX as year. the quarter spending million $XXX net And total capital [indiscernible] was of deployed that the below spend spending

spending in total in projecting in we For as of across Argentina XXXX inclusive of are to range the growth capital, for as This million. number capital $XXX is to million main the spending $XXX expenditures well business. be predominantly

to expansion As infrastructure us capacity and future related through drive that front as is we will a expansion Argentina XXXX throughout loaded phases. XXXX reminder in both capital build in out

call the turn will to I that, back With Paul.

Paul Graves

Thank you, Gilberto.

execution are in we what near most As the our announcement, revisiting January term for Livent's we plans. mentioned is appropriate expansion strategy

me Let being by start clear.

underpins that not have strategy the them Our changed. on expansions themselves

a growing We remain and our expanding in of in growth execution plans. hydroxide capabilities is pace the to adjusting. to Argentina the carbonate committed customers' to operations low expansions of way the of It our cost support

As conditions. expansion the revised it's preserve Livent be part in these our of in financial market slowing carbonate will flexibility to Argentina, primarily one plan, phase down

on have outlined Slide key hit milestones. expansion we we As XX to continued our

fully from We had construction camps. have yards in have Are a underway And China. in Argentina build completed carbonate number infrastructure in out. the of fabrication arrive key modules

to have We modules units of the these winter, carbonate after the Argentine the elected push the until installation into startup which mid-XXXX. delay of will first

to was XXXX completion we're align shifting also additional from hydroxide the this. expansion lined timeframe our Argentina, process, current carbonate ton up with for hydroxide our to the expansion Since

expect to from of up coming whom increase ramp not look as subsequent needs impact purchases revised customers, that Livent with first to the many of in We year to XXXX their timeline do larger a will years. the see ability this our meet they to

based In critically agile this environment, planning. our know rapidly our and fluid adapt and it on in dynamics we we commitments. And and will customer plans stay market is to flexible shifting capital important remain

I'd Slide we finish some and key developments XX today, by in on like look to to as mind ahead. keep sharing

traction. to the First, relative is to gaining even shift just clear that increasingly ago, EVs a it's few years

announced in apparent and the remains the pace if, well predict substantial of term the the deployed Even being partnerships producers, as near battery difficult. as This across between to in supply chain. OEMs and the all capital is ability the very committed

much supply new It's of EV and part of even Global active are electrification growing engaging the also road. vehicles more the OEMs the the on number down as further more of in number production, nearing strategies. their chain visible models electric in

side. chain meeting supply supply from set with struggles been have demand driven the the as by plans the There some OEMs. more up challenges the electrification side than targets keep their challenges sales appear these The to to announced be to ambitious OEMs

been as China have to forecasted top noting regions that to reason electric there several signals for a key worth over example, of be sales. It's there lack largely battery sufficient examples Europe, a the of suppliers For and growth years. demand from also changing OEMs for coming referencing both specifically tier next positive supply the due vehicles from few continue

towards issuing year media XXXX is This its by one market that it be list significant in and China began this cuts in despite strong its phase just out. example growing a actions commitment making to leading China a electrification. of the a to reiterate statement from will a any policy potential EV subsidy that rumors to global push not the playing of role

electric gap, that widely more compliant with OEMs levels. be as penalties risk being to market to a continue viewed Europe financial the year to will China While need or COX largest reputational begin XXXX emission vehicles, sell vehicles electric from close is when will avoid the as to not for

still the in momentum, of with it’s year, overall Despite the some year-over-year, data electric levels to in While auto January continue in coming early initial all-time the some is countries. penetration vehicles down Europe on in positive. very Western reaching market Europe highs gain of being out

there X.X investment X EUR unlocking additional has support and development, additional been additional in private with and European towards of capital plans expected technology EUR Commission's battery of the production. term planned Longer pledge announcements battery material European an billion billion

of on the chains the that particularly, And chain. supply of the topic. sustainability Localization axis. been focus with of greater concentration also cannot overall a an profile increasing is supply China lithium current the supply happen has growing Australia there realization was for There this a EV

goals, and to they usage, especially topics community importance vehicle water the more broadly, realities Today, local ESG time. and impact is Given being electric carbon of conscious examined that as is all an and the vehicles consumers continue transition grow in only environmentally when to this OEMs principles area electric that rooted an green are such over footprint, will by production. consider

focusing including Argentina. We're be doing as a operate strengthening producer, the sustainability on with work efforts program the to around especially the proud year for the public Livent’s of world We've ongoing sustainable tailoring last communities responsible efforts spent where our we're partner closely we a and the standalone company, our to future. in

In the move will of local lithium updates provide we this work on as other excited through we stakeholders. closely challenges XXXX. experienced the ahead. to a and closing, to intend recent And number front customers, we communities despite We a about continue whole, by opportunities the with key industry as are

cost Livent are nature The lithium developing second battery generation none reliability, differentiators our products, reputation OEMs, quality leading producers automotive our brand based and with for investment low sustainable is engineer future and next our success. that to in partnerships and of operations, all that continued key position safety our and for

to back turn Dan the for call now I'll questions.

Daniel Rosen

Thank you you Q&A the now Kelsey, begin Paul. section. may

Operator

Bob with of from line your the Goldman Koort And comes Instructions] [Operator question first Sachs.

Dylan Campbell

Campbell like for net installation the delaying here the sounds and carbonate curious you're Bob. Quick Don that net are they of is kind kind This is, module. of your on what position be carbonate. carbonate morning. questions It rationale I'm cost would a short saver. Good of on considering the on

of kind And we've of you then China? carbonate to sales. shift response second the on that recent volumes use could more I Is guess LFP there guess the in you heard carbonate. I to on lithium question mentioned chatter capitals

Paul Graves

order. So those in me questions let let me tackle that

want flexibility. our So is financial make the we simply rationale sure that to very we protect

time. was we to about clear periods of pretty leverage that the EBITDA reaching reaching think we're in for being something I times X of comfortable see we've been debt past points

going sense north frankly, feel makes comfortable decision on we flexibility that, sheet. don't made pace that. slowdown of that the more to and to we the maintain order to in And out balance it execution financial But the

as build It's future. punitive pricing is is an the Granted, it interesting off not relative it buying be the with of where to carbonate will carbonate perhaps in trade as cost today. the

those we're And by delaying really doing ability months, the so, what costs to X is down. take

the it's say the wasn't will I for while basis decision. it's while

likely way one or the other, delay well. think have had expansion as to I we would

certainly it some modules given carbonate getting going the to there. issues our have certainly Coronavirus, have We are China, the slowdown module of fabrication out

as And past. into we've feet the installations in where the run spoken level is winter winter. an about it think not to quickly XX,XXX particularly I do of these We the Argentine above sea easy middle at in

winter. that in our expectation So construction it the be doing never was would we

And that so on we've basis. it delayed

driven It's we more it. customers customers. of In supply try We the be if there lithium we and have strategic to can carbonate terms them hydroxide. instead always of that asking Frankly, the around ship certainly and lithium not carbonate. conversation our sit by about is carbonate

in just customers. have both. and therefore many them that Certainly the Many short-term multiple responding customers their make they of signals capitals a types need our of for from received of are themselves to

It hydroxide are environment ability to And our us very and cost selling at developments and you flexibility The to the will feels at little and of certainly generally. pace in there's between the carbonate something technology where appreciate. they bring develop. which fluidity, won't switch be that customers we that this a still if really and about lot is

to out we be year few reaching a will we thought I I basis. would to us. don't can't a that be. this volumes that our for and suddenly do us tons be on that expect than certainly value massive They carbonate thousand imagine ability But peaking originally higher to

Dylan Campbell

driving what's and the production I production like in CapEx. at And that? the XXXX grows CapEx plans, or plans, looks That's on Okay. guess and it helpful. question less XXXX Despite a expansion clarification

Paul Graves

are have be construction first projects, frankly lithium the we completed. will of phase the as hydroxide will Yes, the where so in we

just next till that we be them to So delay want will install year. the and modules will completed,

in -- we in aspects down. the And started a these complex hit of it's infrastructure And Argentina. and going these going some finish complete to if continue once them Argentina to look, slow we're key project to we've And deadlines, have we’re to not rollout.

running from is capital have the this over simply it would delay costs just project. was expected XXXX into year roll for spending always been of of peak XXXX Some that It a regardless XXXX.

Dylan Campbell

you. Thank it. Got

Operator

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

Christopher Parkinson

you. Thank

demand further lot you Can it of and justifiably your of side a on a to from and XXXX so you've specifically, on comment spend your the development hit you you XXXX chain technologies. on adoption MCA little in and heard So and supply this the supply bit. the time pertains outlook NMC and as

is Just quo, that on new you've front there anything kind status is which or of it given? already the

Paul Graves

absolute that of demand I high That's in what mid certainly year-over-year. LCE percentage in for see continues levels teen terms the of what we to in No, think rate climb on an demand, lithium basis XXXX. to happening

hydroxide, we're the reflects a which growth And see higher continuing rate shift to certainly nickel lithium that in applications. faster to

people more a nickel have I think we frankly there out high applications lot realize. today than

hydroxide think and the traveled getting of that's as I point materials the on are confused some that applications MCA XX% focus challenges that lithium and of some on in we're of the today fact the people into commercial NMC And XXX nickel. lot north making a or tipping those this of use. into NMCA really

or materials shifting but really not today So cathode the a to the it hasn't may be not that over broader adoption are of rapidly be changed. case MCA, XXX, hydroxide, it's it while certainly may

Christopher Parkinson

pace relates context your expansion I investors How outlook? of to take construction maintain to of long-term announcement and margin the financial delay Argentinean, intermediate the flexibility. your the to your in in understand the should Korean

intermediate margin possibly any you're supply there's understand we of color assess and to long to should term how a third would Just running. benefit kind reducing framework? We party appreciated. you. give But to that the could on Thank be you natural once up

Paul Graves

it'll deal I'll what All means it side different frankly. But a with with the that end at I that's we're carbonate real of pointing Yeah. be clearly, is change in but of phase that does XXXX the expansion, first anything doesn't it more going be months, is which cost middle is [indiscernible] six of it of going conversation, you're instead to short for the to, the of XXXX. change it, think only really because completely line

The this behind there benefits significant phase infrastructure that were right the We’ve structured will into so phase. that. follow second second carryover

to so, and back we running. go a not position first once expect And carbonate into phase up short that do is

where the change basis of obviously expect cost it currency in And some term for hasn't been don't to get years. again we that we its inflation the either. movements Argentina, in and depreciation changed structure cost for allowing can So really really several has short remains

Christopher Parkinson

Thank you.

Operator

comes of with Capital. from line the Loop Kapsch question Chris Your

Chris Kapsch

the or Yeah, there based Question pricing Is about drift another? in sort in good and versus for afternoon. what is way your could any can locked for of XXXX. characterize one pricing you what year outlook way full

basis reconcile The reason supplied your because versus are texts of in what you saying what trying is year, earlier on against just is over I'm asking pricing right guidance we're a now. this said primarily lot downward versus of I'm my granted, the revisionary I understand the to oppose

definitely there's hydroxide of evidence market. tightening in But hydroxide more

perhaps I circumstances [indiscernible] introduced example, earlier week. increase they know XX% last it's but unique For price around

shift pricing as inventories. But we could not the favoring there's you given notion alluded inventory, as exit be a XXXX. that to in is in hydroxide that hydroxide improving There the because the hydroxide tightening channel just much demand hydroxide

that the So favorable you in -- more exit are hydroxide that's just that you just Thanks. outlook kind of locked we that there or confirm pricing you of of sort asking sort you the conveyed why could pricing as I'm is on possibility XXXX? the

Paul Graves

there's year Thanks tradeoff Sure. heart Hi, you this to to challenges the some had we've a terms decisions of that the that of of make. come key make. of we've Clearly, the really one in we for had Chris. can

over balance here lock of or have sit hard but here, will so from And to rolled in? we that. expectation bunch tried contracts and do recovery sort leave there We in anyway. pricing on a all a be open we when that predict more it's to we it the of do pricing Do

and to changed those from change haven't so didn't XXXX. And XXXX prices

customers year we though other that. those pick even where just year, elected lower we to to the have customers over it's the nature pricing of chose We

the I as in an second guidance, increase of year. in half the Our said, pricing does assume not

see material external about Dan some successfully. plants commentary seen bringing that seen online the [ph]. people I Fang challenges you've from same announcements like We've hydroxide

And going happen. you the is to suggests tightening that so, yes, data points can see certainly

really to difficult the that a today, impacts to That question it's Chris the of not Because impact China. at the market. just it's answer It's as changing. chain. that's China whether We're disruption in doesn't look normal frankly, impact throughout the supply

our And It's batteries that even the the directly doesn't or if materials. lithium themselves it impact for the today. build example, or it's to supply case difficult cathode certainly vehicles chain, more

have So material for even and the batteries enough enough other batteries not other components. the if you parts there have

So whether it's whether pass seeing the the you seeing to are fact all very just or walk in you to and are frankly through in fact out difficult signals noise at noise moment.

Chris Kapsch

major chains China. But how Okay. just affect to early see guess way the this been thinking how follow it's sourcing just OEs. I of as supply rely and disruptive supply up may from a on sort given that of too it's and maybe And in chain Coronavirus

competitive and maybe conversion Given as that little you North say a matures evolves position industry notwithstanding or in of you that conversion on -- happens guess, put of in have would thoughts the that any a you? vast some in China hydroxide worse this others. Do your majority bit competitive I positioning better of Carolina,

rely where China. Thanks. on to that a have place to want converging conversations less they for may how involve you sense point going where to downstream out in are any that feel customers Any overtime? play Do takes

Paul Graves

it Coronavirus be this. a there's Look, is concentration end I soon users concern driving in many about capacity been a whether China. for amongst been for too of know direct conversion while particularly the a factor to think there has will there while But is and a the OEMs,

least lithium and pressure around perspective think spend the to my that that. is time more that. environmental do lot do supply from But recent months, the I and And pressure really has is to is understanding produced. changed political chains. truly to changing There's localize what OEMs how at desire in a There's where specifically,

any with. and they've like they a it cetera. different deal nickel, It's certainly not material copper, And starting PGMs understand that things are like other and on is had isn't cobalt, that to differently it to basis behaves like aluminum, produced et ever

appears is they Australia started you at and X% it material chain is that shipped localize. Because most being do to of levels. their scratch to the extremely so And concentration mined raw in the and head difficult how localize supply when say, that

conversations be into they then have When they more question, more come say opponent different have a the able is and us, you that ask to this So answer Europe into it the and a to is us we model explain turn to U.S.? lot it. localized your around to yes, and do

are like. the making I want future moment who to would basis. look preferences for express not for depending on ask their to questions. are supply people what it where we one they is, starting suggest But that that certainly that actual decisions are they at on chain the And point

Operator

of Research. Kevin question next your McCarthy comes line And from on with the Vertical

Kevin McCarthy

growth growth of that X% which level of erosion reconcile in indicate reconcile on questions your X evening, to Can at seems the in the sales sales imply help volume to trying XXXX, Slide with you that midpoint Good low me and the price you that? on to guidance mid-teens. XX%

Paul Graves

Sure.

very on on I we probably cautious are mix. it's that fair pricing and say think being to

carbonate You'd also shifted hydroxide assumption notice that a into there well. as we

in we carbonate. continued and decline Absolutely sure a a price price decline So hydroxide. have for

another particularly light. largely that a feedstock to are price We've day set is and also or as carbonate referenced ones declines have

based of it incentive carbonate metal Some of becomes and create the have more products. metals that with based an to pricing businesses that chloride into declining we convert where

as price So we also in certain have significant well. some areas declines other quite

as in minds. any much this. probably it's say being that's no maybe away market people's said, some is I the that of think what's of But guidance, where I I in we're said, driving is, to whatsoever today. revenue little a cautious And there changes that overly as assumption fair that price from

Kevin McCarthy

Okay.

company, average higher less total is is, follow greater price that? than case mid-teens And the that sell it so is you the the something could or it XX% rather is the a than Paul, what that erosion while a embedded as could be up, is case volume

Paul Graves

little further the a think across I goes already bit is going to There's pricing both. certainly agreed don't contracts. committed I and see that of because mix of how than just teens. much of from a mid-teens high potential our much that it

some Frankly, not it's perfectly have I And there of that in volumes. we at honest. be profitable have we there, business volumes we particularly to volume are you likely look less think the out that mains more sell when the that

It's profitable. that no just to important more sense. for that profitable It's customers make and placed more with hugely not ones but going with going we're not And reason. little customers to be the place

doesn't for the evolve an China way, that it those recover the and in market. sake We market get second sell we volumes from the doesn't it. pull in half the impact finally year, of if the If them do won't just we'll just of

maybe So you estimates in should is of than assume of price. flexibility volume the that there there's at in degree flexibility why a that degree

Kevin McCarthy

guidance embedded amount capital second And What or helpful. I XXXX? question Gilberto. in for source I flow a of usage That's working if cash that's may, from operations Understood. range your for had is the

Gilberto Antoniazzi

CapEx of beginning guide midpoint we we of of or as expect up inventory midpoint naturally terms And [ph]. cash of million year, about build with the of a of generate capital the $XX XXX we Kevin. So working lot in

we as earlier mentioned to call going generation cash well. this we this in the draw inventory metric is tons for that our accelerate as X,XXX on And

is So than guidance. actually that's why our cash higher our outlook for EBITDA

Kevin McCarthy

Okay.

cash you then to trade capital. working liberate So plan from some

Gilberto Antoniazzi

Yeah. [Multiple speakers]

Operator

PJ question Juvekar Citi. comes from next your And with of line the

P.J. Juvekar

Yeah. Good Hey afternoon. Paul.

supply on be that reliant the how supply and US? see China that for mentioned in desire behind, chain US And government seems developing the to industry but is you anything Europe chain. do as less you the know, lobby the become to in is You there lagging to doing

Paul Graves

locally and that of in locally production you infrastructure can't it's is got issue US cathode The the chemical lack US in inputs the really less case. more move until the lagging you've and anything is, the materials. cathode that's really frankly lithium than that like else material really And the the

there And material support are localization and based for EU and reasons. state to there's also important in or for some support there multiple out people more certainly that producers pretty in There's Europe Europe, more Europe. committed cathode

know know parts don't to resources large perfectly bottoming don't I appetite U.S. operations. know We have going this. to I'm mining are how there the evolve it's have in and honest, Europe. in spodumene markets I what of

clear in when this not you result place get entirely that think It's a acknowledgement that there's and to take costs. an appetite local that into I also will actually mining communities. Europe recognition the there's higher in an anyway, for

world the very that producers Europe of the that other that in see solar it get parts capital intensive the that them even or energy know paying extra will costs don't acceptable in or other We energy material be more. to either. I are wind though way sources, in renewable as

produced simple how these So it solution to that the good not dynamics carbonate as to solution. a the is term locally take everybody long very it. so as of many Europe, we what parties there's is understood that way is use starting But do. in which one be in clearly convert localizes America mean, by we think a and not more interested to not South I clearly simple is a I

P.J. Juvekar

Okay. And back to Livent. coming then

outlook in on you all cash? around mentioned the your XXXX, fund beyond XXXX? can million that $XXX $XXX CapEx that, still your that particularly on lithium, mark. million And today your to CapEx then is What to cadence in internal that You based

Paul Graves

terms own short had today in ideal, of so not funding have A answer that internal little is we flow the It's cash Right. on of it's of clearly years generation I ago. better couple yes. touch don't same we our a XXXX. mean, The the that cash.

ability just done as have expansion honest frankly, be get do slowdown No, I'll it will won't. But certainly with it this we to the take straightforward. is quickly? that very my But you on

think coming to market take hey, are will saying, risk be speaking, a delay capacity that that I will the take customers there the online. is risk, we'll new

quite will We're create future. down. likely prices market. the in We oversupply a spike listening drive take to that That's to is market that's the prices advantage recognize decision making. to And the in the of today we

slowing We'll down. capacity frankly, taking without can risk. financial as at slower it add are quick add We a undue We'll we as pace.

Gilberto Antoniazzi

as said, CapEx asked. PJ for XXXX, you you as regarding the

Argentina, up the million. combined normally million, And in the in BC. to $XXX finishing all something the $XXX it Phase but between also be we expansion So we're X expect about to in [indiscernible] 'XX, $XX XXXX have looking the million, continue the ramping month, expansion, at, will magnitude

P.J. Juvekar

Okay. Great. Thank you.

Operator

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

Steve Byrne

fixed to for These costs hydroxide. this volume X,XXX parties Do Is you purchasing do of capacity your absorb in meet converting third conversion into China? you're to profitable tons from of need commitments or carbonate that this you? and to

Paul Graves

into in lithium me we tons that let so from year, embedded tons the this we P&L or brought carbonate. question, is carbonate forward carbonate good is of inventory XXXX of lithium just actually X,XXX purchase some XXXX. lithium But impact will The quickly X,XXX the that

doing we the a them off of operate flat have They variable costs costs any without can the out, certainly because higher way can we plants we to but We're any turn not all. at operating them. our have plants fee, it don't them run on, China fixed meaningful turn

if make to turn clear, we we'll profitably, do very And X,XXX just product with three been them. them. can't always it tons We've of that the lines small them sell doesn't sense off, this will we lines, something run

we to This lines turn cost buy need off the can battery don't business burden of we And that. or lines example, into don't of we have it's that doing certainly slowdown, question certainly we we for grades. to use valid have a from convert multiple one But do carbonate those is profitable a hydroxide, to if so today. will some

So And gives saving. in use that we as what can have a a us units. those lot cost purchasing to of flexibility we

efficient, are especially ones China. plans very the in Our

we incur to no with the that So costs the competitive what fixed do and is U.S. even we competitive with cost in allocate variable

and China the makes business And do it benefits will to is. we it customers. today not if of our on do only want compared we It so rest today business. term it be And can we great still and what to business even pricing still certainly what make our for that particular money is sense long for

not on small basis. non-strategic to will amounts be sell trying to that customers non-important, We

Steve Byrne

selective of evaporation for down continually Do to could Paul, eliminate in that history and ponds. the improving evaporation potential that you you solutions see long get there a improving where reducing And, the absorption the ponds? amount point technology you the of brine to Argentina got the of and the

Paul Graves

question. Good

technical yes. that team to evaporation would short love ponds. answer -- eliminate plan retire do is Our we the absolutely a We evaporation have ponds. our to to The

keep ones. the We will smaller

to month see have large very ponds, two after absorption the you basically of in with a we selective out of the Chile. ponds come fraction the then evaporation we the similar pre-evaporation ponds sure so finishing or much And types of for what much, I'm of about have smaller it's brine-based size, process.

those part plans as will two absolutely expansion the We reasons. eliminate for of evaporation pre

the a Chile is them We so know still of valuable evaporation is that it important. and One as could not much him water in is perhaps of we let just environment. lot where a resource scarce water leaves and critically but in

the to ponds that. it's evaporation does pre eliminating reduce that to loss and first important And us that water

salt to buildup expensive ponds. maintain. The lot plenty second in We is a that bottom these had the of of

is sodium magnesium the which to of another or also few have that That another chloride the bottom way remove up itself waste And creates you to pond. so one salt. product years But and in drain is expensive. every the build them

answer to we will we ponds. couple absolutely those years be say, of evaporation retiring that will next So yeah, expect long within pre the

Steve Byrne

you. Thank

Operator

Harrison your And comes next Seaport Mike question with Global. from

Mike Harrison

quarter on XXXX. you XXXX? low $XX like all something implies apologize I for Hi, the $XX of expected at earnings off I this. cadence in end, afternoon. Obviously, guidance million your a was million coming missed we're EBITDA $XX QX can $XX comment And at good the that But EBITDA. in if million million a

on the of year? the over how So that thoughts progresses course any

Paul Graves

response a Clearly, the how to ultimately much going and our of finds anybody. My his huge be how part China the going the how and of to customers, we've be is is given business through disruption another first way surprise of given more our China. that challenged of and much to somewhere product our in Yeah. year seen much

that the the first I it certainly in we're to data in the know or lose to is expecting that second be second we yet half from don't than half. So whether seen have the get that in confidence how half deep I've first the we will how the back lasts everything weaker even fact long half.

half softer. reasonably second confidently to There going be around questions all certainly, of is say I can to is that those. were But first compared what the the half,

Mike Harrison

your maybe they I are assumed during Alright, us on them guess you those delay? them. that a customers contracts help they bit take in of guess, saw can volumes of understand delays little And that have and maybe would deliveries? what's would when led you in terms I your what QX, the to to customer committed give color give that have flexibility take around that I

Paul Graves

is fluid a structures. complex own -- had the we have customers changing demand this orders, they that, of question on themselves market. mentioned Look before, it's demand, We've customers changing their side. changing a Number as

reason we what the that much today making. who degree is single supply uncertainty flux no and over they're maybe than And have higher behind a with constant so of there's in this some chain these delays perhaps making other of how

not various not especially to in multiple it's contracts do Our customers of interest ones. life customers have don't lithium on product that think contracts with does shelf as carbonate. force need -- have to frankly we hydroxide We types it. long anybody's as Lithium

customer material It is them need healthy view relationship don't not that a in a with point take at that force they in to our to time.

from take committed of live up tended they've this the see We volumes that life that find on And we when overtime. basis commitments, contract our have customers up to of to to us. their take today, still they holding

the Sometimes at to the least, us customers they that's we yet up and downside their they that's have delays volume think. major or don't not the to they it times an short And And have any But take other more term. in commitments. in than in it not certainly upside to term. living quickly short have

Mike Harrison

much. very Thanks

Operator

your the last with from of comes And question Capital Joel line BMO Jackson Markets.

Joel Jackson

CapEx good up follow question. evening. and on of expansion to want Hi, I the some the

what here, head think hydroxide you next expansion over out or maybe down kind carbon budget the would the would adding next or expansion. phase hydroxide phase cadence capital be XXXX your project here round as the next So then carbon phase the of beyond as how of of And first thing? on 'XX, of or you lag your capacity of phase

Paul Graves

the weird evening, Yeah, It's way to an on by call, good saying say. Joel. have analyst I good evening

of phases groups; clearly Argentina, So, one to designed phase two was into and expansion continue we with and two The phases ahead four. and break to two go three essentially then it. will

do go two and one hand And in phases really hand.

start So attention to phase come even slowdown our capital real once phase in one two turn spending before is XXXX. in likely hence to to we'll no completed, completed, it's

side, or some On any not element to in or the other add unit more we units anything hydroxide China. expect in maybe of hydroxide than do visibility today a

compared an a another I it's in to opportunity we think do as you for relatively to low add small the in But capital that outlay US. us, that's very see China know, way unit it we in just China. different a

on we're and see down the capital think decisions that’s -- capital The in described at you ramp a ramp a basis significant in make commitments I to what we down not will any or to word, spending Beyond XXXX. in moment. XXXX, spending just on yet that look, going I we've made only

then with hydroxide there's I we certainly that not commitments, a appropriate think commitment more we're carbonate, making move the we phases that if conditions either reserve will likelihood into or lithium right change, make if but market today. customers that

Joel Jackson

in that now, nothing's addition ton in but hydroxide, addition more to in so interpret right or plan finish a may ton I the somewhere, China Just that bit add that's have book right the little to hydroxide XXXX you now. carbonate the you XXXX will

Paul Graves

this. lithium in with Argentina. XXXX we two When the in carbonate another done tons of Phase And

carbonate, hydroxide. compared to of the we XX,XXX about than today, double tons more So more have will

Joel Jackson

first you the do might than down, you year if so don't anything that. And get other

down be might cost would capital maintenance to get true might you like year, What a year XXXX. that be? first The

Paul Graves

second be place. of probably XXXX we’ll Yeah, that in half

So on a correct. full year basis 'XX

Joel Jackson

just you Are view gets on law assuming full question into Argentine And other royalty? have export regulated you new time? my the Okay. a that give was,

Gilberto Antoniazzi

to that's issued, the to President referring has be must the one previous You be supposed that finished.

So that go has still. this year to

haven't we was from different what heard said So before. anything

Joel Jackson

You are term. looking at short

Paul Graves

Yes.

Joel Jackson

very you much. Thank

Operator

Corporation for release that concludes call. This time have full the And and we that Thank you. year Livent fourth conference earnings XXXX is quarter all the today.

Livent (LTHM) 20 Feb 202019 Q4 Earnings call transcript