Li-Cycle Holdings Corp (LICY) Q3 2024 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reflects positive sentiment due to strategic financing through a DOE loan, strong long-term strategy with secured offtake agreements, and expected significant revenue growth. Financial metrics show improved revenue and cost management, despite some operational risks and market dynamics challenges. The 10% production tax credit further supports the positive outlook. The absence of negative sentiment in the Q&A section reinforces the positive rating. The stock is likely to react positively in the short term, with potential gains between 2% to 8%.
Key Financial Performance
Total Revenue $8.4 million (up 79% year-over-year); increase reflects higher recycling service revenue, higher metal prices, favorable mix of constituent metals, and lower unfavorable noncash fair value pricing adjustments.
Cost of Sales $20 million (down approximately 3% year-over-year); decrease due to lower production levels, offset by an increase in service revenue costs due to new service contracts.
SG&A Expenses $12.9 million (down 50% year-over-year from $25.9 million); primarily driven by lower recurring personnel costs resulting from restructuring initiatives.
Adjusted EBITDA Improved year-over-year; largely driven by a decrease in SG&A and higher revenue.
Net Cash Outflows $27 million less than the previous quarter; driven by lower expenditures from cash conservation initiatives and $1.1 million raised through the ATM program.
Black Mass Production 1,459 tonnes produced in Q3 2024 (up from 892 tonnes in Q3 2023); reflects increased production efforts.
You have reached the limit. Sign up to access full content
Get started
Operating Highlights
Loan Agreement: Closed an agreement with the U.S. Department of Energy for a loan of up to $475 million to support the Rochester Hub project.
MHP Production: Secured an offtake agreement with Glencore for 100% of MHP production at the Rochester Hub.
Market Positioning: Li-Cycle is positioned as a critical battery material supplier in the U.S. battery supply chain, with strong bipartisan support for battery recycling.
EV Market Growth: Projected CAGR of approximately 20% for EV sales in North America from 2025 to 2030, increasing the supply of recycling materials.
Operational Efficiencies: Curtailing operations at New York Spoke and continuing closure activities at Ontario Spoke to optimize Spoke network.
Production Increase: Produced 1,459 tonnes of black mass in Q3 2024, showing progressive growth each quarter.
Strategic Financing: The DOE loan is a key component of the full funding package needed to restart construction of the Rochester Hub.
Long-term Strategy: Focus on building a self-sufficient and financially accretive Spoke business utilizing Gen 3 technology.
You have reached the limit. Sign up to access full content
Get started
Risk or Challenges
Loan Agreement Risks: The loan agreement with the U.S. Department of Energy for $475 million is contingent upon meeting certain conditions, including a base equity contribution of approximately $92 million and obtaining additional financing of about $173 million. Failure to meet these conditions could delay or jeopardize the project.
Construction Restart Risks: The company is actively evaluating financing and strategic alternatives for a full funding package needed to restart construction of the Rochester Hub. Any delays in securing this funding could impact the timeline for the project.
Market Dynamics Risks: The battery supply chain is experiencing dynamic market conditions, which could affect the availability of recycling materials and the overall demand for battery recycling services.
Operational Risks: Li-Cycle has curtailed operations at its New York Spoke and is continuing closure activities at its Ontario Spoke, which may impact production capacity and revenue generation.
Economic Factors: The company acknowledges the current industry headwinds affecting the electric vehicle market, which could influence the supply of battery materials available for recycling.
Regulatory Risks: While there is bipartisan support for battery recycling, any changes in regulations or government policies could impact the financial incentives and operational framework for the Rochester Hub.
You have reached the limit. Sign up to access full content
Get started
Guidance & Outlook
DOE Loan Agreement: Li-Cycle has closed an agreement with the U.S. Department of Energy for a loan of up to $475 million, an increase of $100 million over a previously announced commitment. This loan supports the development of the Rochester Hub project.
Rochester Hub Project: The Rochester Hub is expected to be North America's first commercial-scale hydrometallurgical resource recovery facility, producing battery-grade lithium carbonate and mixed hydroxide precipitate (MHP).
Spoke Optimization: Li-Cycle is focusing on optimizing its Spoke network to build a self-sufficient and financially accretive Spoke business, particularly in Arizona, Alabama, and Germany.
MHP Production: Li-Cycle has secured an offtake agreement with Glencore for all MHP production, establishing a strong market foundation for the Rochester Hub.
Revenue Expectations: Li-Cycle anticipates significant revenue growth as the Rochester Hub becomes operational, with expected production of approximately 8,250 tonnes of battery-grade lithium carbonate and 72,000 tonnes of MHP.
Long-term Financial Projections: The company expects the supply of recycling materials to increase by up to 3x by 2030, driven by the rise in EV sales and end-of-life battery feedstock availability.
Tax Credit Guidance: The finalized U.S. 45X tax credit provides a 10% production tax credit on lithium carbonate produced at the Rochester Hub, available through 2032.
You have reached the limit. Sign up to access full content
Get started
Shareholder Return Plan
Loan Agreement: Li-Cycle has closed an agreement with the U.S. Department of Energy for a loan of up to $475 million to support the development of the Rochester Hub project.
Loan Details: The loan includes a principal amount of up to $445 million and capitalized interest of up to $30 million during the construction period, with a final maturity on March 15, 2040.
Production Tax Credit: The U.S. 45X tax credit provides a 10% production tax credit on lithium carbonate expected to be produced at the Rochester Hub, available through 2032.
You have reached the limit. Sign up to access full content
Get started
Key Q&A
Q:Review of Unclear Management Responses
A:No specific questions were asked during the session.
You have reached the limit. Sign up to access full content
Get started
Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
EV
Gen
Hub Slide
Li Cycle
MHP scope
New York
advance
base equity
battery grade
battery recycling
cost project
credit
equity contribution
equivalent
funding package
goal
grade lithium
increase
interest
ion battery
lithium carbonate
lithium ion
metal price
nickel cobalt
objective
offtake
project completion
requirement
reserve account
self Spoke
service
tonne
LICY Transcript
Li-Cycle Holdings Corp (LICY) Q3 2024 Earnings Call Transcript
Positive11-9
The earnings call reflects positive sentiment due to strategic financing through a DOE loan, strong long-term strategy with secured offtake agreements, and expected significant revenue growth. Financial metrics show improved revenue and cost management, despite some operational risks and market dynamics challenges. The 10% production tax credit further supports the positive outlook. The absence of negative sentiment in the Q&A section reinforces the positive rating. The stock is likely to react positively in the short term, with potential gains between 2% to 8%.
Li-Cycle Holdings Corp. (LICY) Q2 2024 Earnings Call Transcript
Neutral8-9
Li-Cycle Holdings Corp. (LICY) Q1 2024 Earnings Call Transcript
Neutral5-12
Li-Cycle Holdings Corp. (LICY) Q4 2023 Earnings Call Transcript
Unknown3-19
The earnings call highlights increased production and sales, but financial health is strained with rising costs and significant adjusted EBITDA losses. The Q&A reveals uncertainty in strategic execution and timelines, along with unclear management responses. While revenue increased, the financial guidance is weak, and concerns about liquidity persist. These factors suggest a negative sentiment, likely leading to a stock price decline.
LICY Report
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
How soon is the transcript available after the earnings call ends?
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
Is the transcript edited or altered in any way?
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
Why do some answers appear as “Unclear” or “Inaudible”?
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
