LTHM - Earnings call transcript Q1 2020

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Operator

Good morning and welcome to the First Quarter 2020 Earnings Release Conference Call for the Livent Corporation. [Operator Instructions]

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

Daniel Rosen

Good earnings and call. Tina. first to quarter XXXX evening 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 available call. with found slide after the section remarks the The Relations our Investor accompanies will from presentation our today’s in our release, discussion can that earnings be website. prepared of results, be made

will be our available address and prepared Following remarks, your Gilberto Paul questions. to

two that per to ask We any be questions limited to We questions happy caller. would address after be would the additional any call.

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

Information Actual our reconciliation these and references most information. comparable Definitions financial measure based relations results these financial provided to directly on Today’s investor metrics. in may to discussion presented today’s risks website. best presented on as a upon GAAP, include as well are and with will non-GAAP our uncertainties. based represents accordance the judgment various terms, calculated vary of

over And with I’ll to turn Paul. call that, the

Paul Graves

the on everyone. future coronavirus Thank all potential want of to few pandemic in of discussed and There you, address and current impact which good novel Dan, key and evening context the today, a its are topics we Livent. will be

us a and customers. special and employees to the work while around serve environment, and have doing hard would Before operate give to safe to of all world. so I maintain Livent our our working to allowed thanks healthy continuing like Their a resilience

during their and asked lot all. these a and commitment We them, truly times for us challenging have appreciate of focus

state an lunar all safety mandatory Apart continued due break of quarantine, of our new and albeit to stoppage operate, in and China the have are around world health a additional beginning all production begin, extended of from national Argentina sites to outbreak, fully that pleased protocols. a with COVID-XX operational. at our the facilities are two-week we To in to year the

ability have dedicated around pandemic the place a the strong we Our teams through has testament to in and world. the operate to been

outside the coronavirus that became our a China, began it cash as the Second, flow as and to broader the take spread market, us to require well of impact us would clear more liquidity. as business, on to approach disciplined management to potential

allows forecasted the half, suspend $XXX capital In action capital decision to cut March, This in we to our XXXX spending all made million. us work by globally. expansion approximately to

committed current the While projects expansion long-term plans, we environment. decision capital was remain all prudent temporarily to fully the suspending capacity take to our in

maximum times in challenging In We and amendment believe credit our ample provide six addition, we through the revolver closely our our near-term increase will amend provide net his relationship XXXX, to will this facility to X.X environment. liquidity versus EBITDA leverage to worked lenders comments. through with Gilberto more allowed details times previously. our

market. will latest lithium views we on third, And our the share

so potential done expect to XXXX, the in be has longer-term far, pandemic coronavirus what and the what Specifically, we implications. impact

steps the February, early to Slide following have China regional on our resume operations were situation, keep to actions safely we various employees coronavirus been lunar By new we and the in broadly, diligently addressing given Asia implemented able monitoring and safe. a Starting more year and taking since outbreak decisive prepared extended response team holiday. presence of in pandemic slides, X China, Livent’s early the we our when formed

run of to This have without today the supply during China, clear safety when to our Even people once global issues logistical able period We were China leverage minimize our customers. that borders been protocols and we early and provincial were start China in to and in at since significant meant needed chain products became products able also there we same maintain we then. moving disruption react across challenges in confidently delivering to quickly so. to outside do could the any it major sites in

Informed by able the and early Pandemic in employees, form our to customers we around was the when world. in experience worldwide to Asia, and communities March quickly clear. Since Team severity then, and of our of well-being Response continue Livent safety the Global a the became spread prioritize virus

manufacturing world safely industrial essential, than the running. vital medical make from to we of our critical components are to more Many equipment. applications ever; disinfectants, but We lithium all pharmaceutical in keep also products only energy needs the storage, sites now took used and actions that not of in ingredients in

and operations could closely safety, that social basis. continue and ensure visitor split These we authorities we compromising employees without and designations, shifts to procedures on our national with measures. screenings, essential develop strict and health local person medical To distancing includes and on site-by-site institute a and worked

in with Argentine of and and weeks reflects preparedness officials countrywide during downtime. the Argentina to resume only develop We with administer the and of to operations closely collaboration federal quarantine worked to of practical commitment after protocols mandatory level local operations. Our provincial set responsible two government Livent’s and the safe a

Salar processing Since and operating have then, we facilities incident. been our the at without

support in to ambulance Equipment support help position our those for transportation providing Personal the an are this to used engage air personnel opportunity communities. be and communities. in with Argentina, a in Protective services pandemic local we to UK From to grateful essential donating also have in and medical We our further as and

seeing too not industry. I what Now on attempt the we to are impact current to today. focus the of will on actually on COVID-XX speculate instead much, but lithium will

forecast First, I lithium visibility mean near by term remainder XXXX. And there this, in demand. ability reduced is our to the of

auto penetration World prolonged of been impacted. sales rates to broad shutdowns. implications market vehicle electric this plant A notably large by the the higher, part were vehicle and can in volumes attributed quarter, the first and have negatively the while of XX% disruption OEM passenger to declined be total

impact by coronavirus varied greatly the and also has timing, overall of The region. duration

For much new in as versus year-to-date as after the March, Chinese units roughly retail energy XX,XXX Further, in auto vehicle just XX% despite earlier example, China’s improved final flat to over surged sales of down roughly being year. being last XX% in down to week April, sales month-over-month XXX% year-over-year March.

many be plants OEM the in Europe Meanwhile, with government and remain most U.S. due the to to down impacted. quarter restrictions, expected shut second the

is is items spending important, as for the pre-COVID anything average larger at not Just this such true and as consumer levels, autos. like especially clearly

quickly supply levels prior difficult is how and consumer It spending will predict of return rebound, chains to when manufacturing to or will activity.

further. of volume unclear still the will or second contact it remainder in with some is needs the for half this regarding year, While we remain pushed close in whether demand XXXX recovered customers of out be

an result vehicle manufacturing is in delayed This several in understandably more capital electric plants there environment focus by at managing in is upcoming working restarting on than may building amplified launches where customers. Delays our months. inventory being

However, objectives, fundamental a substantially from EVs OEMs any line-up or altering standpoint, of back we of their seen not electrification evidence for their pulling from have launch.

stringent quality chain, electric directly and for an interest certain of key the In their greater fact, seen sustainability. as we of more sourcing aspects use opportunity on and supply location in more to taking standards a from to engage manufacturing sites setting have vehicle OEMs this

commercial period Put attractive OEM a efforts development way, scarce are time. such and that allocating technologies With capital and projects with rather driving. platforms or uncertain a OEMs be we models, long historical over future managing go than focus resources R&D will towards sustainable autonomous of see heightened their on towards spend, seeing own another platforms ICE we EV as

prior of state put was by sitting capabilities to slowdown in which additional we a downward shorter-term coronavirus, waiting be albeit China wide on quarters Moving a of of especially entered by demand, driven side. lithium as pressure such the year that This concentrate, general range a evident market, shipped pricing. continued supply The on oversupply, near-term which particularly in been has to with markets the spodumene uncontracted in the this fed processed. quality oversupply was in China, in

or volume given into was uncertainty. broader the from share take enter There little agreements, annual new to urgency of in the also first customers commitments quarter, their market

dynamic near-to-medium on resume the and We through the customers expect assess production this as own demand. impact to middle end-market continue year of their term this to work

discussed pricing pressure lithium we well cancelled of as or output capacity demand result lithium with projects, near-term as continues, postponed as reductions expansion due quarter, sustained a trend and announced to industry-wide weaker coronavirus. Last weakness pricing. This the

in still in the relatively Production hopes improves. date to costs remaining modest, declines covering been higher producers cost reflecting continue many of the to cash their market for until operation have incentive the

production not period reductions an over we feasible the further to this However, expect in and see we believe in months. coming is extended

time the development, in chain challenges into further lithium supply Additionally, delaying them expected restrictions there already been and for to have with production. government coronavirus-related bring projects

beyond projects cancelled will though, or number for industry the growing we importantly have implications expansion broader move XXXX. the More of postponed as

and have both come delays established as few lithium from quarters. last and types, of new and cancellations over well announcements tons expansion industry in In carbonate over or XXX seen we aggregate, These thousand have players. hydroxide geography the all as worth resource

Current reasonable options the non-existent assets several have lithium to market. notable challenged limited severely return illustrated distressed lithium any in financing prices have today’s investment and hurdles,

and widened OEMs changed While governments prior current market, beyond support materially demand to continues the near-term global from the not due have forecasts to lithium in have XXXX and in from positioning significantly expectations. demand uncertainty that levels

months the global as environment demand and we predicted production of believe business rapid be supply would we the electric as accelerates, a tightening have few a picks normalizes So up than more there much demand vehicle will just ago. balance

I will Gilberto. call over now to turn the

Gilberto Antoniazzi

evening, good and everyone. Paul, you, Thank

quarter Livent’s first Turning to now performance.

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

as most Our impact were a from and There was sold lower demand. deferred of lithium in as driven build-up, the whole. inventory for operating the the work customers average to decline notably industry on both they by Livent while pricing. revenue lower results volumes, in environment The limit some their crisis end-market assessing challenging China, reflected and a purchases

and impacted lithium XX lower carbonate. were pricing using hydroxide third-party sales purchased Margins by

notably work half carbonate sales of the the through the from inventory roughly forward hydroxide as first expect margin higher impact We X,XXX carried XXXX hydroxide to we of XXXX. third-party in tons using purchased from be

Moving now position. to liquidity Livent’s

liquidity and to Livent the recognized increased global focus inherent As the of cash flow began an when China, for on outside need impacting uncertainty coronavirus the economy management. and Paul spread mentioned the earlier,

reflecting in City, capital action first pause when globally. approximately Bessemer of announced million, half, North XXXX both all the and capital $XXX Argentina expansion in expansion Carolina. to spending we to Our for in We cut work projected was decision public work the suspension March,

to spending the resume into well to have Quarterly first cost our effectively continuing as year the confident us The to project been down allow rest we come on will committed decision from halt in And made quarter. quarter. interim expansion the expansion will first that then until points for not the work quickly stopping orders strategic We significantly goals. the of focused was remain key in capacity at from items fulfill and as to possible. and customers our long-term remain since

it’s While expansion, when before will we normalized cannot we intend to date unlikely specific industry resume a that to returns more it provide conditions. for currently the be

to existing we Livent’s amend Moving to with worked balance Slide liquidity to sufficient closely sheet, our our with uncertainty. respect this support time provide X credit operations to of during facility to relationship lenders

have increased versus provides we previously. up to times have a through revolver, limit evaluated. for COVID-XX covenant on limit the We safeguard XXXX, This leverage higher EBITDA against allowing net scenarios our leverage times stress-case that X.X X

spending reducing will while all on We remain managing also diligently non-essential focused capital. in working areas,

Looking our to capital that existing lenders XXXX supports to beyond $XXX evaluate requirements. revolver work Livent’s alternative debt our XXXX, better we long-term structures in maturing beyond with continue million

light the address and in In April. To issued full evolving guidance. conclude the uncertainty my topic global want XXXX to economy, withdrew impact broader its guidance coronavirus remarks, year of in of Livent I of pandemic the previously early the

intention two to and purchases. customer carbonate that Argentina, weeks run third-party XXXX, of expect XXXX we’ll volumes hydroxide we this stoppage our with year-over-year. of all year in inventory in into flat We we of minimizing lithium to meeting sell now all carried carbonate the Following while the tons demands production hydroxide operations plan be X,XXX

not we in inventory We demand. any intend look will visibility. outlook a a We once to in greater speculation to build provide of an have rebound financial updated

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

Paul Graves

that beyond focus themes hold challenges conclude Thank I industry. some by the on to near-term longer-term want true looking the our you, of to in continue to Gilberto.

to These implications change, engine changed. to that the key sales, While around electric bring in to manufacturing scale well have downturn shift believe fundamentals fundamental the parity demand as around there no coronavirus-led increased there vehicles uncertainty world, EVs is battery technology near-term the on that the cleaner is for drivers and changed. as are driving lithium indication electrification include climate electric the vehicles. meaningfully cost We that and and of advancements longer-term a has strong not do vehicle with support combustion regulatory fight towards air internal will push

vehicles hydroxide EV shift auto and increased And emission dates. in compliance In move government the highs federal also bought timeframe. or vehicles penetration continues, Chinese industry, XXXX despite be sales cathodes recently through announced year-to-date, that lithium rates energy new exempt down are all-time stepping in COX is program as also the another down The at to it of XXXX electric broadly. XXXX previous subsidy energy NEV more the over the government Europe, we display The both although closer being storage purchase expiration, taxes. significantly of commitment use of in to from will from that its XXXX subsidies to extended

With increased chemistries has technologies, NCM which respect XXX. there been on require hydroxide, focus cathode high lithium nickel to beyond an

and the use There blends come have incorporating in vehicle developments China have content. other Additional cathodes. of electric models been LFP-based several success recent NCMA of new nickel using announcements from NCA, higher and

of the carbonate use cathode, or demand. hydroxide, no in way of hydroxide is use can higher which this contradictory to higher However, legacy trend

high-nickel energy specifications stated always applications shorter-range have requiring name can have commercial not to a devices storage cathodes. applications, few. vehicles, storage or performance We mobile stationary all that This include and will

of demand larger for will of long-term share that OEMs technology higher we electric at storage battery carbonate be and to to grow project assumption the storage continue rate increasing year-on-year hydroxide premier With said, improve, we than critical still a As energy energy that continues out make an and under up platforms, plan global vehicle products market. that the solutions. operate and will importance both roll

over greater there demand long-term. the to will given announced is plans, development reduction lithium the the over in uncertainty come significant of Finally, and where supply expansion from future meet to medium-

near-term the current demand period is has pricing be made the current depressed industry. to drawn for uncertainty on, ultimately over issue clear few the are the that challenges is last focused While of model will industry-wide the creating of this our And that industry most debate back players the lithium future quarters supply. business

heightened but integrated chain, are supply have that a auto qualified directly become has ensuring demand been OEMs focus not resource, As and electric needs on supply more there involved there chemicals that the lithium in only increasing path a is fully over capacity between vehicle higher time. partners to to meet

prices, blend market out projects the average by see to that viable for capital. we economically little current there are not there mean when China a across market, at no I reasonable just the looking invested be prices unsustainably low However, on considered prices and of that the geographies, in development lithium can return all

to not longer-term and industry predictability ensure again. with supply or In there greater growth continues grow projects customers pricing order before fact, lithium commitments accelerating be do must of cost in In start even capital. future of the cover demand, at these invest firmer lithium to from for our can prices that to majority up their keep

has and chain of greater the and portion industry visible so pandemic. the single meet OEMs have region on coronavirus on the placed onset of the a impact supplier In storage produced greater the not is their Asia addition, number more needs chains the significant importance on reliant lithium of reasons. energy of from supply localizing of a spread production. The reinforced the importance being being from been disruption benefits the where of to parts has today, a China of global represent for to lithium the supply

in serve network, use to global U.S. customers manufacturing our from with lower growing. comes from particularly from ability been not as lithium our production, material China and China, with valuable due hydroxide in as products to well the that is that lithium EV supply a the customers. both through of chains been Livent’s built third-party hydroxide ability do our security China to the capacity while supply to run And compound has importance of recent cost, has most capital alternate production

has to IPO. element standalone larger with to to electric models to we vehicles, we Livent unfinished multiple the number of since as practice The rooted sustainability principles be world. magnified push reduce are focused been materials of of objectives, out and global sold on believe there also the Europe electric sharply footprint in will as and intermediate be especially around a scale, a time part products vehicles the EV carbon-conscious of focus localization this OEM on bigger in or increases. the its its company as own transition carbon-intense a shipping expect is rolled the in behind raw locations And

be framework, of our we year. provided As releases broader revised outlining of a well efforts, series these part ESG sustainability be as our part of as this as launching will program, to throughout

believe as of Livent conditions, with to nature our position lithium generation partnerships OEMs, beyond lithium closing, investment next developing products, cost In prime leading our our market operations, looks automotive that and battery current brine-based improved of core low in sustainable advantages, to dynamics. and the beneficiary engineered continued us the our we return market a be producers and

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

Daniel Rosen

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

Operator

first Please is Goldman your Bob go from with Koort And Instructions] question [Operator Sachs. ahead.

Dylan Campbell

somewhat XXXX. on hit impact Campbell backload for on Good seeing of morning. up insulated from there second similar? most something shutdown of the the and quarter as week This catch half of manufacturers Bob. be that would you competitors is the second your Are Last one of orders Dylan battery noted would OEMs

Paul Graves

just amongst We’ve all factories issue where battery in Look, parts of certainly well, had certainly build down finished the not chain. customers. times as in Asia – at ours complicated supply enough the industry cells the because are question an I capability. industry of in simple battery seen shortness our using not dynamics of a about downtime mean, materials but certainly not is available, being seen we’ve an same coronavirus as many conversations not that a closed the There it’s of it’s it’s to simply as U.S. more and our an large been and the this because is impact.

willing buildup OEM, being We’ve products, seen to the started consumer, their through flows, tension the fund was chain. to between a also who these supply cash particularly the buying back ultimate look at some own who of inventory not

trend we opportunity of work, take some certainly more months we’ve build producers yes, environment. sustainable have that not seen current than in the couple will a seen I’m well, a at that that battery inventory. much, particularly So, practice really continue for the to it’s sure

Dylan Campbell

Got little a it. talk of evaluation for of I And could And options a your with downstream pathway type bearing the is guess some you debt about then alternative player? for there some structures? bit agreement of type

Paul Graves

the covenant to more with put putting we’re accelerate place. have makes of in the for profile permanent about the talk debt now me debt of projects. very Look, a to the financial capital wanted first. revolver sense And to but clear it’s structure structure to this, piece Look, never and restrictions long-term for just Let frankly, capital we capital really business, at early that’s that that designed wasn’t be of is in designed using I ours. a going was likely we’re a stages think what with seeing process

to on from do duration that, will We profile. the much certainty longer what challenges debt greater less and liquidity we more focus around

you’re the maybe clarify you part me there. what could And of second your just question, asking

Dylan Campbell

end kind were with given pre-purchase type supply is pathway Yes, securing referencing? that or I type agreement or producer of guess EV feature there emphasis you the of for of that the I for any downstream product mean, with some of battery

Paul Graves

technologies, if a The Yes. whether new have a build is expand, downstream you an challenge on you’re your Look, to capital pretty that’s whether you that’s battery interesting with it’s consumer whether or significant it’s some to calls right, to downstream yourself, plants. fund producer, question. new that have

frankly more offering understand It’s logic And take the is the the jury’s so certainly it industry on can them allow is prices. consumers we capital whether to for lithium little better that and those that price and a itself out also sometimes to certainty difficult lithium. some can see think around by the thing. right while the deploy at still of you investible to very look economics order in look down in thing to large way this price to greater the or And to at just of finance I lithium and

these that to the to there’s are of have high having further conversation industry that like yet demand to industry happen, ever to While At it’s and us enable be not a can and provide And our down I going supply one you’re is think or I’m sure. reckoning for on on will ever pushed to lithium going provide to we ever to sure is overbuilding side, get be place who ours things an while going where to to the anybody point, we’re a a ready them either enough industry, to have are while keep disruptions, going have as financing. prices the growth quite in of street. out those either some such wants capital third-party you but in that go to COVID-XX for

Dylan Campbell

you. Thank

Operator

from comes question Markets. Loop ahead. with go Please Capital Kapsch next Our Chris

Paul Graves

Hey, Chris, if hear you’re there, you. we can’t

Daniel Rosen

to move on we next don’t the Why question?

Operator

Parkinson question Suisse. is from Chris Credit Your next with

Paul Graves

have you Chris, the problem challenges we is Hey your there? asker side Tina, with? are having some a or question technical of that lines on we Hey, just this

Operator

we I technical issue. believe a be may having moment. One

Operator

line participate? Chris can Kapsch, Okay. Your you is open.

Chris Kapsch

Chris Kapsch. it’s Hi, Yes.

Paul Graves

Chris. now. We you hear Great. can Hey,

Chris Kapsch

Sorry about on. don’t I what’s going that. know

your of for has – curve characterized has integrated don’t blanked the but, demand XX so the like apologies out So if industry this been pushed I was minutes, competitors so lithium to larger addressed already, somebody one I right.

as fundamental very much in see you the like mentioned You place. drivers

that would that here, pushed do curve or just you were little least based has on your focus insights semantics to there relationships you you feel concur at the maybe just that, your bit, right, talking maybe a like about as the – with So near-term, Could more usual? it’s on demand business then disruption. near-term

Paul Graves

love disagree I would mine and a competitor on of never eminent such with such matters.

is – characterized there’s just I the the have point shape for data don’t to eight pushed out it’s months, a think whether months. today heard valid think by XXXX. to I’ve will year turn in it’s and sometimes others of lost characterized of a be a I one, don’t different of I to enough I skip it XXXX, sure. a XXXX I’ve it’ll out year, bit curve six know that. and year of growth kind a

I absolutely plausible think an that’s scenario.

early the again, year XXXX largely because it’s going know maybe Although, because how half XXXX. it’s about even this just of the to to end first really back be hard of the of people to by and second is see half driven feel

What we XXXX vocal by heard though commitments generally of commitment volume our and customers. to is beyond a speaking XXXX, have some quite

just the to think So any are because to we constraint, do XXXX be pressure look by we little we of going an that delayed capital? and their dynamic saying, deploy EVs. you as time will a while they’re own It’s they material when I them look, less much enter projects may we capital they say, of are want that where that this launch interesting these think material, down be all not in under just assume they taking most should

closed autonomous internal engines generators combustion and lot the that obviously us capital looking cases. revenue to putting be down clear electric increasingly a spending And while – near-term the whatever they’re or right maybe we and reinvesting do their lies, are think inevitably what becomes in like future less it things their certain has on driving our now saying, doubling maybe probably to electrification vehicles. is look, where at many I reason, which as patterns, towards right should to plants for they’re in or happen aren’t that’s of changing And

probably portfolio electric think it to realize more their starting even fleet. towards a I they’re transition rapidly accelerates that predominantly

Chris Kapsch

which just XXXX that ramping then it. about to halting And your, generally demand it fulfilling you maybe out of feel of curtailment expansion, you those the mentioned, their referencing with timeframe. suspension how terms albeit, demand, Got more you’re bit sort of requirements, happens, magnitude your a CapEx do the assuming little or of in of pushed in

Paul Graves

on it there’s It’s pure and put question finance two to I’m now maybe Yeah. a for elements piece been and what behind do, or build either longer maybe that then the – build same little carbonate. hydroxide Argentina to construction but bit from the carbonate to in carbonate, a to capital ability single up little on more to ask moment, and the to more level we’ve line at we with was going engineering go a piece one the trying side a us. perspective, bit the largest expansions

still there then think year all in too we XX,XXX and combine is at clearly X,XXX bring or thing other for is now on right late, that get a X,XXX, we’re tons is closely opportunities that and and another I now of looking at us one we delayed, try very one instead while phase Argentina once. to phases tons, it one two so

to up we do bigger in single increments. And trying in a smaller a so step have that go than it

difficult And frankly, Argentina. to movement between this today, move practicality It’s we’re doing enlarging in There’s that. look in because taking long, hard a at It’s a is people Argentina lockdown. of provinces. the no very we��re around. difficult complete

can’t You meet certainly – in can’t people. and fly

look can So expansion we short-term to restriction now sort to that on to we does start answer question like. our start activities the of ramp shape get through of what and the up the we so can have this then

changed, curve likely like just plans on but expand demand certainly will the to our haven’t and is quite take a again, We different shape.

Operator

And our Credit with next is Parkinson question Chris Suisse. from

Chris Parkinson

you. Thank Great.

just on can a on some expansion the quite net or you almost for of of the effect year. a which hit little, a bit now, basically going this more just on little hit kind it’s been the You cost time honestly given but magnitude about deferral, the curve,

of Just to and So estimates? where kind has a thought you’ve both hit product beliefs context how that? hydroxide just lot if how plan current regard XXXX, Forget of you the curve? your changed process and that XXXX, keep quality, carbonate do in cost for you around down right. – your of the kind XXXX, seen the And a believe of could to in things see that you you. you also your but Thank should on

Paul Graves

Yes. I’m I’m much have curve sure that on really honest. the cost Thanks, completely Chris. thoughts changed if not our

think have and in very continue both two got carbonate producers. different really I and to you’ve hydroxide,

a you at have at very able $XXX of and close have to to a some can fully and you least then Greenbushes, is of very of producer spodumene they with low non-integrated prices parts you as their continuously low in produce the my $XXX today through The move take there producer. integrated probably view, some spodumene that mines. different non-integrated You – level the producer at miners ton and exception, When nobody out of advantage prices. look a

they’ve costs. spodumene raw and that’s at next so play in through found batteries. these on prices personally at the spodumene. environment cost And the imposed upon a profit operating, for an find bring has that to tighter fascinating that in pressure the been of of to economics these the as also I are and where find we leveraged being really no heavily frictional what on it standards material We’ve on there’s has future because a XX% allowed found capacity is profitability China, other because they they’ve quality for way fall difficult $XXX about been a conversion you non-integrated $XXX the meet time had from cost also and but biggest its to desire generation there’s the are to a increasingly their that at ton, them single by move input same reinvestment it tight-knit

months case. or that four been two through customers the actually new six as successfully were There that maybe the more remains and crew found in getting really last we so become we’ve that’s carbonate usual but entrance the and or them especially hydroxide. more three clear of people whether qualified seen or or nine in And we’ve few very coming that to qualifying

you is to see people we The comments to have I by in all time report depreciation, distribution, we profit or second all a do brought I costs but corporate higher still of just when cost freight that cost down of you curve that as math well price. we curve higher. bear, I the curve, bury production logistics, frankly a commentary is breakeven, you you understand, I a point breakeven that an lots need – because profit duty, the operating people if may think and breakeven to that XX% from on always But look marginal of level, brought through typically okay, cash that’s the sit to. when mean, that producers price zero And mean about operating yourself, as in the various at time sound which about the say you the by low XX% look

operating can’t You with finance zero profits.

nothing your to going fine that’s just do grow, you’re and if assets expand. run So not not more,

cetera. cover that interest, more to you your earn need Now to expense, than et

us And you’ve independent So reinvestment we’re when line need. what I we our look at requirements. is per kilo the and again patterns the hydroxide, reinvestment meet quality of that’s we’re trying a of of needs in to observers telling is that well marginal curve, especially and to for got in an producer customers that keep that’s define level cost can find and the double-digit the either curve assuming going appropriate carbonate that that’s all think the with demand they to in you hit and sort

maybe because one conditions the steps that simple on market a building an can or not of iron a depending it’s curve easy copper as so just cost and have steps. So it of distort fluid any ore very multiple in very, those it’s it

Chris Parkinson

helpful That’s a very color.

did guidance, as kind of combining you be the broadly? kind Thank your base from would your of And perspective, given projections? top from your getting case of regarding back the scenario own down, disappointing the for obviously, terms a you understanding, in you. – phases kind what for a project. hit just your scenario what would would Just of what track? scenario, flow thought your And your current the cash process of you but mean that just view little very on the expectations on can’t This give

Paul Graves

when Chris, whether on you’re expansion back you So, say the track, on when with you or –? – back talking getting say Argentina track, about

Chris Parkinson

Correct.

Paul Graves

of I in is through say first we’re thing in long Argentina. anything first cannot And Argentina. Okay. Yes. a Well, look, the we Yes. would the expansion way do phase

any do to permitted not We’re construction.

permitted out not people working. there We’re to have

from demobilization started of And so of projects we the we’ve but have not Salar. process only the stopped, actually

great switch, the do the not be frankly we in is Southern up. have capital flicking when order It’s And through to to XXXX winter. going convince So profitability to a go that us commercial certainly be, of it’s to what be up, until just anybody on clearly in hemisphere it’s to terms of to remobilizing. going to start going to allow we hard we’re to back XXXX us whole process level happen get to and not going going in to our start to clarity extend normal about

decision couple more in of back XXXX the of early that likely half it months. the remain and the is than to next expect is I XXXX So in

can a that possibly that volume I uncertain extra when bring to bring will would lot more do a highly it, than now that on reengineer double it’s well still product the we online it If that or year, project, take successfully environment. a of mean we right than the will will expect but more us year the though more a

already. external I’m of that Argentina ask to that by, that we’re that world. one I’m with the many just what lowest I’m cost for producer in had disappointed disappointing us disappointed place. of created so lithium think factors in not continue. me I expansion. me problems this And would operations able that be to product we’re I remain disappointed it’s these we’ve the have disappointed to

Chris Parkinson

you. Thank

Operator

with Partners. the Vertical Research of next line Our Kevin is from McCarthy question

Kevin McCarthy

run lithium seeing the you and I a if C, metal. A, in lithium you’re patterns hydroxide, what evening, and was your butyllithium on with products here wondering and there? Yes. Good today are could portfolio demand B, through comment similarities regard to Paul, for, the of What differences

Paul Graves

is going business into is application is a of metal priority non-rechargeable as mean, small we lithium diverse right. that ion sell business batteries and high again used Sure. but of small the a metal different, it’s in that it’s much more fundamentally business. most a a lithium small it butyllithium Well, largely today, The applications delivers GDP-driven business. sure I’m are just couple business, The I

that It’s don’t reasons. general largely hold a a it’s good frankly customers very also any inventory but product business, for industrial

the so business. when the And major major system lower going a people issues areas, major, slack year we’ve rubber that pharmaceuticals continue and people to certainly be indications produce, major, the are this seen butyllithium there’s in not are lot producing products and to producing demand and that in other not or whatever is of for devices medical

We closures, the have plant there noise automotive even small. some space seen relatively tire in they’ve driven by but been really

hydroxide is it we’re, far commitment it’s of that’s frankly stress me up that seen So reasonably customers many in What feels still held It’s around. XXXX. we’ve so our I business frankly think business. towards because to Lithium very more complicated a to that’s far early is I battery and talking so the platforms a continued well.

their orders leadership producers might they Because But of building frankly, automotive a they think part with should the trigger for what for outs. call and place from reluctance the how aggressively guidance the waiting on to go the product. get the on themselves still process I the about the are with build OEMs some battery I and pull and

COVID and have you again It’s again, in because February starting storage of very to now. probably a Asia. that’s market see slows now such the hydroxide not It’s down. see read while a hydroxide today it the at off And January, we as the where and especially world difficult rest And because But side a market in pick-up to demand tightening drop we’re with certainly moment. not, the big of so time it the the at it’s energy much feels demand. right look supply distorted

Kevin McCarthy

to relates industry you consolidation. for Thank potential for that. My second question

seen press Talison. Tianqi in stake divestures made indicating Australia, of out You��ve reports that probably

incumbents out look the do do will and aren’t industry companies at it’ll years, And think capital. exactly new if you think over look few think Energy that you swimming catalyze in do the are consolidate? like? in you do, play you it, that the path needs process out? does the you look what next constrained, or entrants to excess I If how pools of come As

Paul Graves

long Okay. call? How got on the we left

quickly. reasonably do and that try me Let

is that’s stronger one that and that case. distress, think when would I a a is I’m thing but the of a that that, a I say result comes financial is along, company big entirely single in if specific that but company can competitor both in related imagine have sure factors distress, financial company I as you to important frankly that not that

that pretty headwinds there’s a, industry there’s significant also some specific think drives company challenges. I some but

solves to think We enough this near face they who don’t much. right frankly normal of that access know that subject don’t need face anybody all now. too to I feels them. We them. them industry I pressures is to of in opportunities take anywhere the in have that commercial all advantage front they problem that consolidation capital

see very supply a to a entrant not lithium for and our consolidation sympathy I to is that’s deep their and an wants maybe issue you see want to take a a out board really ours lot and can You the difficult argument Possibly. of result, excess industry? as have have you pockets but with industry. new a into turn to buy that say in therefore industry would that Could understand and who I if up this you anybody to predict. industry difficult I It’s a coming say, company. go

new be more effective immature financial see industry It’s six, entrant. last me or the happening Let two still stage business where the how you a maybe to out easy for might the present to story it’s talk years shapes and and a strategy been business very more through and in this years. not model M&A an what’s early waiting you a over seven sell five, three

no, all more. I said, really a see I say frankly of don’t see the I opposite of that lot consolidation.

willing new far to risk take fewer will have or I the to being into I think being able the entrants jump to market.

easily think anybody, few for financially of this quality almost years impossible in your the just be to resource next into the market. enter it’s regardless going to of I

Kevin McCarthy

Okay. Thanks. I thoughts. appreciate your

Operator

Our next is with Harrison of from question Seaport Mike line the Global.

Mike Harrison

light macro or from wondering, here question difficult demand all I bit little the or on, demand recovery. very on OEM vehicle in of pace terms but consumer Hi, was understand that little And to out, in more. inventory can electric levels good the maybe if on obviously, dig shed I a what inventory of difficulty a the more evening. figure forecasting you’re and you situation seeing wondering I bit was

demand get to just a little a accurately of and de-stock could sense having component back sales Really that out or play cycle a restock number, trying how that a inventory volume when there. get we track bit to more numbers versus maybe

Gilberto Antoniazzi

not do try inventory. me been seen with would a a customers Again, because lithium let hydroxide inventory without clear excess future may and excess levels Well, generally levels that. to levels of one inventory not, view supplier day finished lithium say That the demand But for doesn’t low demand rebounding like have feel of speaking, have talk Sure. it I reasons. about hydroxide a does we at it’s appear or pretty be side. just what multiple at is to difficult lot inventory

have industry the customers way inventory largely long of just it’s have run future a built carbonate had carbonate the as efficient Lithium for operations. carbonate, buildup well as contracted we’ve over who sits lithium clearly. time seen most ahead your to some a because quite because of certain who built inventory suppliers at at And

so not? you afford And can if you and can it, why

of in sat China the of And processed. but from activity because see to the in spodumene of months. seen that last been China we’ve has four China, a or shipping It certainly moved to in concentrate, spodumene inventory We an levels. suppliers probably own Australia of lack concentrate much inventory excess couple continued that three hasn’t from a largely of their waiting be in

been own their to their it’s case. levels production to this the inventory down certainly producer’s some clearly that, of you shipments, compare fallen spodumene So when have

is generally So, I speaking, a bit of story. a chain, lithium the think mixed throughout

can that if It’s get the pretty of you I that quickly. any frankly anytime supply of most side of carbonate But to disappear going that question happen be chain to will the then piece in of not probably probably And which about pieces do inventory actually pickup think production only demand, think of rapid I I’m not kind that soon. quickly the spodumene increase predict guys, their a enough. time. not that’s will

Mike Harrison

getting I special the was about the covenant just that to thought the then They right. also wondering process or number? six All EBITDA willing times flexibility. were Understood. number about something largest there give the Was was on, additional you? And

Gilberto Antoniazzi

want larger covenant number, to relief. it. it. it’s part it The think when want We the wants the it comes covenant. It all this, close you The Because don’t know, good no, any nobody to banks of is more don’t I doesn’t frankly, special look, run dynamic. create to anything,

the slightest the our to one bank and so the even and on issue. objective side on covenants side And make number is not sure that

that so of amount our target And what question the really was right was for covenant the of us. frames what to for relief going be

Mike Harrison

Thanks much. Understood. very

Operator

with is from America. Bank of next Steve Our Byrne question

Steve Byrne

given the question. to relief follow-up a and a a year. for X.X months XXXX? that you. limits covenant times challenge is ratio XXXX there on in for of first Is need that EBITDA, XX Is it’s Thank trailing relief going you a in that in tough like to potentially the quarter not XXXX, Yes. be I’d

Paul Graves

bank with these will it more different that’s by our end are. trailing yes the a not be report is covenants. But Look, to case and the those trailing EBITDA before quite EBITDA as one right, externally. in piece changes number the debt, same always the there’s we Yeah. is XXXX you’re always appropriate where it the to adjustments a as number. They’re out that year, but facility them we a frankly There’s and tweaks debt expectation has of of is that covenants taken

we’ve the facility with investment As say, what the and longer structure structure intent FMC. such process banks from a place profile to It temporary and to started in it more phases is look, through was type always from, is to a we inherited than profile something what that Livent let’s because, sense our conversation Gilberto of our already this this. facility mentioned, earnings be our got a liquidity is, that the makes was capital it to of term put that us first designed

expect get done year. that would some this we so point at And to

Steve Byrne

there’s membrane some another ask an lithium down you to the your lead that of to technologies management wanted waste. ponds? that you lead I Phase brine looking might other technology front And Is Paul. that of technologies of evaporation the a Does least Argentina. existing for alternative looking set in down help more deferral can there to and menu this productivity X of there? interesting help that over you is, in increase path of extract that, you is less as building that understand that at on Thank anything about development

Paul Graves

No, decommissioning evaporation not clear, be new just actually ponds, building our to ones. we’re

difference. important have deal a don’t of an that’s think waste. I great We

think expensive was and as part XX% existing expansion Our north They’re don’t I evaporation said, frankly need yield ponds. them. because our for our really really for needed we them. to four is actually plans They without aren’t and technology. of decommission We them turns from the we brine comes And out it the And are I now have to again, to don’t well four, of as maintain. use process. certainly expensive build they, lithium

to about, people we’ll definitions this started hear We’ve talk direct that it. and talk since you the lithium some facility early use of XXs technology. you we when extraction late lithium have of direct continue a about extraction different people been XXs, So, and in practicing lot

see [indiscernible] don’t technology Argentina. a our in a change making on I no, So yield was

Steve Byrne

you. Thank

Operator

Jackson with Joel is question BMO Capital Our from next Markets.

Joel Jackson

challenges as Hi, save the possible just not as project to good up commentary, to But road. here. do at state Paul right sheet best appreciate company, down the protect the projects, good expansion now, stop and the money, why try pick I the able to the right given be wanting them a stop to afternoon. the balance now, about really

Paul Graves

So understand we’ve when project, Joel. you the say not why all stopped stop I projects. sure it’s I’m

Joel Jackson

stopped. million Right? few say $XX last in of But capital. the growth you a CapEx to left the be you’ve Well, of going is million year. $XX got quarters

Gilberto Antoniazzi

Right, right.

the door that. the going is let’s sure spent getting the stuff majority we of same as timing the the or as work just, that we we We So done. let’s Right?. contracting paying not of or in the commitment I’m don’t out vast already pay on The the be clear stopped. advance. cash is Because for you know, don’t, before

commitments And so work project what of done. you’re capital runoff the on for seeing already there is the the

So frankly, being work there done. no is

carbonate both units, hydroxide China units, to There’s in largely a because they’re small amount modular complete, being they and the done complete. are still the

capital but since amount to hasn’t go it’s not new perfectly some and there to been the be no there’s going So, initiated will huge spending them. no new a But be completing honest, March of into contracts, start now.

that our a this And for so is already our just like timing they’ve frankly engineers normal contractors, work of paying our done. suppliers,

Joel Jackson

helpful. building you’re carbonate rates. for the to We’ve That’s tons a of then bring phases seen going together, ramp-up slug. And inventory. their that’s XX,XXX challenge one capacity good in and Tal on two really to pretty if Thanks. operating chunk It’s SQM

year? for So what what you time change, think that is the, that to that be are too dig trying one strategy, at much concerns much potential strategy when about the there could

Paul Graves

level quite actually and simply to me to reason The than perspective any now way and longer try material hydroxide question. it’s comes carbonate. seeking risk did that the happy more and all it engineering online it was to try and a great we now from of expansion for said, that we gives that in the and years not actually the been Bear XXXX perspective. would in could along. we balance I bring because bring be few I’ve as technical a before it phase that be supply perspective that same I mind, if an it at get a on It’s do a likely did

the And we there. cost of of are down one carbonate lowest world’s producers

go today, project same. we’ve to I does It are And the I think And great in it perspective we’ve doesn’t success otherwise to does not doing of me once be it’s And we that given the risk what where much. from XXXX going everything confidence one think different of online. risks maybe certainly and all really have as I that do execution take so it out two believe bringing technical That’s isn’t. and market we or it’s different the the phases in risks. It’s probably in thought. that isn’t it concern that built at personally learned with say it may when a lithium will as come XXXX it’s the that the our not

Joel Jackson

Thank you.

Operator

next Juvekar comes question Our Citigroup. with from P.J.

P.J. Juvekar

you. are how Paul, to you? from Hey hear Good

Paul Graves

I’m hear well you well, P.J., as to good you P.J.

P.J. Juvekar

bit one comprehensive I but it’s question got question. a

spends that will on localizing and chains Asia that So a you and its you being and from built for think the it’s who or lithium in can the and important hydroxide mind built these move the Do plants talk does it, that happen? supply mean mean? heavy guys money? are U.S. lines the do that in when see chain have – because chains of sort about and you Does Is industry away auto industry supply lithium you Europe supply you what timeframe plants more really when

Paul Graves

little it’s it’s back are. challenges But do and and critical, a in understand step what can order and let’s question, what short you a critical the can’t just a what, Like P.J.

should we first spodumene and much plants at to cost of the The you material production we mines Chile close the the the seen the If challenges in to in you and Australia, Argentina develop really otherwise. I But where we’ve we’ve, terms cathode and know biggest right? are as that put Argentina single of capital supply, or operating can. think are want as localize to is, and suddenly conversion building factor businesses. success is And frankly you resource resources not going

think that thing so shipping different world. first the form, to around and do only to cost a lithium that to that that’s sit only of got model start shipping the resources And that. about into business who to back a to carbonate, carbonate there’s so concentrate spodumene we But lithium it. there’s do hydroxide is now to can to you have available way into have based allows us carbonate clearly come stop the And and one capability actually many so limited, low brine do us many actually

how not so either And you or production of carbonate. easy to the localize it’s see hydroxide

mine bigger be Europe or perfectly localize are the the what you maybe it is moment. maybe second materials. active localize outside which one. There’s a if second And the a there’s if way, honest, resource against localizing the a you’re very one with step which at going think can’t a the the few along then your active one against? I plants maybe consumer, there’s you is big but or cathode you challenge, the to in with Cause localizing is cathode can ultimate, Asia being material built

challenge So, remote cathode I your markets. material think it’s Europe diverse still but then markets, chain urban or the but has get plants, Asian geographic whether a supply is to resources, trying this a is is Europe there, various concentrated that U.S., very

will with It don’t is that P.J. an is wrestling key what I localization question mean? for and question take. think how And trying to question. understand you, answer every environmentally the long So seller is of is the how really easy conscious short far can it to sensitive, really, consumer does sensitive vehicles real we have a answer localize and that carbon I

P.J. Juvekar

that you Thank explanation. Great. very for much

Operator

now And over call remarks. hand now to Dan I back closing will Rosen the for

Daniel Rosen

have That’s Thank the call the we time you, today. all for Tina.

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

Operator

again you today. Thank us joining conference call. for does This today’s conclude

may disconnect. now You

Livent (LTHM) 11 May 202020 Q1 Earnings call transcript