Company Leadership Change - Champion Electric Metals Inc. announced the resignation of President and CEO Jonathan Buick for health reasons, while he will remain on the Board of Directors [1] - Nicholas Konkin has been appointed as Interim President and CEO to ensure continuity during this transition [2] Leadership Commentary - Director Patrick Highsmith praised Jonathan Buick's leadership and contributions, highlighting his role in pivoting the company towards lithium and securing a major lithium project [3] - Nicholas Konkin emphasized the strength of the company's underlying assets and his immediate priority to strengthen the company's foundation to capitalize on the upcoming metals bull market [4] Company Overview - Champion Electric is focused on advancing its lithium properties in Quebec, Canada, and cobalt properties in Idaho, United States, along with owning gold and polymetallic projects in Idaho [4] - The company is committed to being a responsible environmental steward and engaging local communities in its operations [4]

[Glossary of Terms](index=4&type=section&id=Glossary%20of%20Terms) This section provides definitions for key terms and abbreviations used throughout the report, including financial instruments, company entities, and industry-specific terminology, to ensure clarity and consistent understanding - Defines key terms such as '2025 Notes,' 'Allkem,' 'EV,' 'Nemaska Lithium,' 'NewCo,' and 'Transaction' to aid in understanding the report[10](index=10&type=chunk) [Part I - Financial Information](index=5&type=section&id=Part%20I%20-%20FINANCIAL%20INFORMATION) This section presents Livent Corporation's unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2023 and 2022, along with management's discussion and analysis of financial condition and results of operations, market risk disclosures, and controls and procedures [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section provides the unaudited condensed consolidated financial statements, including statements of operations, comprehensive income, balance sheets, cash flows, and equity, along with detailed notes explaining significant accounting policies, revenue recognition, investments, debt, and other financial disclosures [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Condensed Consolidated Statements of Operations (Three Months Ended September 30) | Metric (in Millions, Except Per Share Data) | 2023 | 2022 | Change (YoY) | | :------------------------------------------ | :--- | :--- | :----------- | | Revenue | $211.4 | $231.6 | -$20.2 (-8.7%) | | Gross margin | $116.5 | $119.4 | -$2.9 (-2.4%) | | Income from operations before income taxes | $96.7 | $99.1 | -$2.4 (-2.4%) | | Net income | $87.4 | $77.6 | +$9.8 (+12.6%) | | Net income per weighted average share - basic | $0.49 | $0.43 | +$0.06 (+14.0%) | | Net income per weighted average share - diluted | $0.42 | $0.37 | +$0.05 (+13.5%) | Condensed Consolidated Statements of Operations (Nine Months Ended September 30) | Metric (in Millions, Except Per Share Data) | 2023 | 2022 | Change (YoY) | | :------------------------------------------ | :--- | :--- | :----------- | | Revenue | $700.7 | $593.8 | +$106.9 (+18.0%) | | Gross margin | $425.9 | $281.8 | +$144.1 (+51.1%) | | Income from operations before income taxes | $340.2 | $247.2 | +$93.0 (+37.6%) | | Net income | $292.4 | $190.8 | +$101.6 (+53.2%) | | Net income per weighted average share - basic | $1.63 | $1.13 | +$0.50 (+44.2%) | | Net income per weighted average share - diluted | $1.40 | $0.96 | +$0.44 (+45.8%) | [Condensed Consolidated Statements of Comprehensive Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Condensed Consolidated Statements of Comprehensive Income (Three Months Ended September 30) | Metric (in Millions) | 2023 | 2022 | Change (YoY) | | :------------------- | :--- | :--- | :----------- | | Net income | $87.4 | $77.6 | +$9.8 (+12.6%) | | Other comprehensive loss, net of tax | ($2.2) | ($5.9) | +$3.7 (+62.7%) | | Comprehensive income | $85.2 | $71.7 | +$13.5 (+18.8%) | Condensed Consolidated Statements of Comprehensive Income (Nine Months Ended September 30) | Metric (in Millions) | 2023 | 2022 | Change (YoY) | | :------------------- | :--- | :--- | :----------- | | Net income | $292.4 | $190.8 | +$101.6 (+53.2%) | | Other comprehensive loss, net of tax | ($1.1) | ($11.3) | +$10.2 (+90.3%) | | Comprehensive income | $291.3 | $179.5 | +$111.8 (+62.3%) | [Condensed Consolidated Balance Sheets](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheets (as of September 30, 2023 vs. December 31, 2022) | Metric (in Millions) | Sep 30, 2023 | Dec 31, 2022 | Change | | :------------------------------- | :----------- | :----------- | :----- | | Total current assets | $478.2 | $544.0 | -$65.8 | | Total assets | $2,361.1 | $2,074.2 | +$286.9 | | Total current liabilities | $138.3 | $148.7 | -$10.4 | | Total current and long-term liabilities | $620.5 | $631.2 | -$10.7 | | Total equity | $1,740.6 | $1,443.0 | +$297.6 | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows (Nine Months Ended September 30) | Metric (in Millions) | 2023 | 2022 | Change (YoY) | | :------------------------------- | :--- | :--- | :----------- | | Cash provided by operating activities | $261.8 | $328.2 | -$66.4 (-20.2%) | | Cash used in investing activities | ($315.5) | ($225.7) | -$89.8 (-39.8%) | | Cash used in financing activities | ($21.5) | ($1.0) | -$20.5 (-2050.0%) | | (Decrease)/increase in cash and cash equivalents | ($76.4) | $98.6 | -$175.0 | | Cash and cash equivalents, end of period | $112.6 | $211.6 | -$99.0 (-46.8%) | [Condensed Consolidated Statements of Equity](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity) Condensed Consolidated Statements of Equity (as of September 30, 2023) | Metric (in Millions) | Sep 30, 2023 | Dec 31, 2022 | Change | | :------------------------------- | :----------- | :----------- | :----- | | Common Stock | $0.1 | $0.1 | $0.0 | | Capital in Excess of Par Value | $1,166.7 | $1,160.4 | +$6.3 | | Retained Earnings | $626.8 | $334.4 | +$292.4 | | Accumulated Other Comprehensive Loss | ($52.1) | ($51.0) | -$1.1 | | Treasury Stock | ($0.9) | ($0.9) | $0.0 | | Total Equity | $1,740.6 | $1,443.0 | +$297.6 | - As of September 30, 2023, there were **179,729,437 shares** of Common Stock outstanding, an increase from 179,548,550 shares as of December 31, 2022[5](index=5&type=chunk)[68](index=68&type=chunk) [Notes to the Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) [Note 1: Description of the Business](index=13&type=section&id=Note%201%3A%20Description%20of%20the%20Business) - Livent Corporation manufactures a wide range of lithium products, primarily for lithium-based batteries, specialty polymers, and chemical synthesis applications[29](index=29&type=chunk) - A major growth driver for lithium is the increasing adoption of electric vehicles (EVs) and other energy storage applications, with significant growth in Asia, Europe, and North America[29](index=29&type=chunk)[30](index=30&type=chunk) [Note 2: Principal Accounting Policies and Related Financial Information](index=13&type=section&id=Note%202%3A%20Principal%20Accounting%20Policies%20and%20Related%20Financial%20Information) - The condensed consolidated financial statements are prepared in accordance with SEC interim reporting requirements and U.S. GAAP, with certain information condensed or omitted[31](index=31&type=chunk) - Livent entered into a Transaction Agreement on May 10, 2023 (amended August 2, 2023) with Allkem Limited and NewCo for a merger of equals, stock-for-stock transaction, expected to close by the end of calendar year 2023[32](index=32&type=chunk) - Livent's stockholders will receive **2.406 shares** of NewCo for each Livent share, resulting in Allkem shareholders holding approximately **56%** and Livent stockholders **44%** of NewCo's shares post-transaction[32](index=32&type=chunk) - A **$64.6 million** termination fee may be payable by either party under certain conditions if the Transaction Agreement is terminated[32](index=32&type=chunk) - Livent realized a gain of **$10.0 million** and **$21.4 million** for the three and nine months ended September 30, 2023, respectively, from transferring U.S. dollars into Argentina via the Blue Chip Swap method[36](index=36&type=chunk) [Note 3: Recently Issued and Adopted Accounting Pronouncements and Regulatory Items](index=14&type=section&id=Note%203%3A%20Recently%20Issued%20and%20Adopted%20Accounting%20Pronouncements%20and%20Regulatory%20Items) - Refer to Note 3 in the 2022 Annual Report on Form 10-K for information on recently issued and adopted accounting pronouncements and regulatory items[37](index=37&type=chunk) [Note 4: Revenue Recognition](index=14&type=section&id=Note%204%3A%20Revenue%20Recognition) Disaggregated Revenue by Geographical Region (in Millions) | Region | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | North America | $31.9 | $46.8 | $124.5 | $109.3 | | Latin America | $0.1 | $0.7 | $1.8 | $1.8 | | Europe, Middle East & Africa | $15.6 | $30.1 | $72.0 | $76.8 | | Asia Pacific | $163.8 | $154.0 | $502.4 | $405.9 | | **Consolidated Revenue** | **$211.4** | **$231.6** | **$700.7** | **$593.8** | Disaggregated Revenue by Major Product Category (in Millions) | Product Category | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :----------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Lithium Hydroxide | $142.8 | $118.4 | $449.2 | $299.5 | | Butyllithium | $49.6 | $88.2 | $188.3 | $203.1 | | High Purity Lithium Metal and Other Specialty Compounds | $10.0 | $11.9 | $39.6 | $42.0 | | Lithium Carbonate and Lithium Chloride | $9.0 | $13.1 | $23.6 | $49.2 | | **Consolidated Revenue** | **$211.4** | **$231.6** | **$700.7** | **$593.8** | - For the three months ended September 30, 2023, two customers accounted for approximately **28%** and **25%** of consolidated revenue, and the top 10 customers accounted for approximately **78%**[39](index=39&type=chunk) - The company has multi-year take-or-pay supply agreements with customers, with approximately **$1.7 billion** in expected revenue over the next six years[45](index=45&type=chunk) [Note 5: Inventories, Net](index=15&type=section&id=Note%205%3A%20Inventories%2C%20Net) Inventories, Net (in Millions) | Category | Sep 30, 2023 | Dec 31, 2022 | Change | | :------------------------ | :----------- | :----------- | :----- | | Finished goods | $70.1 | $44.6 | +$25.5 | | Semi-finished goods | $88.6 | $57.1 | +$31.5 | | Raw materials, supplies, and other | $44.0 | $50.6 | -$6.6 | | **Inventories, net** | **$202.7** | **$152.3** | **+$50.4** | [Note 6: Investments](index=16&type=section&id=Note%206%3A%20Investments) - Livent holds a **50% equity interest** in Nemaska Lithium Inc. (NLI), a non-public mining company developing the Nemaska Lithium Project in Québec, Canada[48](index=48&type=chunk)[49](index=49&type=chunk) - The company recorded an equity in net loss of unconsolidated affiliate of **$6.7 million** and **$22.0 million** for the three and nine months ended September 30, 2023, respectively, related to NLI[49](index=49&type=chunk) - The carrying amount of the equity interest in Nemaska Lithium was **$500.7 million** as of September 30, 2023, up from **$437.1 million** at December 31, 2022[49](index=49&type=chunk) [Note 7: Restructuring and Other Charges](index=16&type=section&id=Note%207%3A%20Restructuring%20and%20Other%20Charges) Restructuring and Other Charges (in Millions) | Category | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :---------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Severance-related and exit costs | $0.0 | $0.4 | $2.4 | $0.9 | | Costs related to the Transaction | $13.6 | $0.1 | $32.3 | $2.3 | | Bessemer City plant fire - gain, net of insurance recoveries | ($5.0) | $0.0 | $0.0 | $0.0 | | Environmental remediation | $0.1 | $0.1 | $0.4 | $0.3 | | Other | ($0.1) | $0.1 | ($0.4) | $1.1 | | **Total Restructuring and other charges** | **$8.6** | **$0.7** | **$34.7** | **$4.6** | - A fire at Livent's Bessemer City facility on June 26, 2023, destroyed a warehouse and its contents, resulting in a **$5.0 million gain** (net of insurance recoveries) for the three months ended September 30, 2023. Production lines for lithium hydroxide, butyllithium, and catalyst grade lithium metal resumed quickly, while pharmaceutical grade lithium carbonate resumed in October 2023, and high purity lithium metal is expected back online by year-end 2023[52](index=52&type=chunk)[53](index=53&type=chunk) [Note 8: Income Taxes](index=17&type=section&id=Note%208%3A%20Income%20Taxes) Income Tax Expense and Effective Tax Rate | Period | Income Tax Expense (in Millions) | Effective Tax Rate | | :----------------------------------- | :------------------------------- | :----------------- | | Three Months Ended September 30, 2023 | $9.3 | **9.6%** | | Three Months Ended September 30, 2022 | $21.5 | **21.7%** | | Nine Months Ended September 30, 2023 | $47.8 | **14.1%** | | Nine Months Ended September 30, 2022 | $56.4 | **22.8%** | - The effective tax rate is determined using an estimated annual effective tax rate (EAETR) methodology, adjusted for discrete items, and can be volatile due to changes in income projections, tax laws, and audits[55](index=55&type=chunk)[56](index=56&type=chunk) [Note 9: Debt](index=17&type=section&id=Note%209%3A%20Debt) Long-term Debt (in Millions) | Debt Type | Interest Rate | Maturity Date | Sep 30, 2023 | Dec 31, 2022 | | :-------------------------------------- | :------------ | :------------ | :----------- | :----------- | | Revolving Credit Facility | 7.17% (SOFR) / 9.25% (Base) | 2027 | $0.0 | $0.0 | | 4.125% Convertible Senior Notes due 2025 | 4.125% | 2025 | $245.8 | $245.8 | | Transaction costs - 2025 Notes | | | ($2.7) | ($3.9) | | **Total long-term debt** | | | **$243.1** | **$241.9** | - Holders of the 2025 Notes have the option to convert their notes through December 31, 2023, and also from October 20, 2023, until 35 trading days after the effective date of the proposed Transaction with Allkem. The conversion rate is **114.4885 shares** of common stock per **$1,000** principal amount[60](index=60&type=chunk)[61](index=61&type=chunk)[62](index=62&type=chunk) - Livent was in compliance with all debt covenants (maximum first lien leverage ratio of **3.5** and minimum interest coverage ratio of **3.5**) as of September 30, 2023[65](index=65&type=chunk) [Note 10: Equity](index=20&type=section&id=Note%2010%3A%20Equity) Common Stock Issued and Outstanding | Category | Issued | Treasury | Outstanding | | :---------------------------------------- | :------------ | :------------ | :------------ | | Balance as of December 31, 2022 | 179,652,125 | (103,575) | 179,548,550 | | RSU awards | 129,379 | — | 129,379 | | Stock option awards | 55,937 | — | 55,937 | | Purchases of treasury stock - NQSP | — | (4,543) | (4,543) | | Issuance of common stock - conversion of 2025 Notes | 114 | — | 114 | | **Balance as of September 30, 2023** | **179,837,555** | **(108,118)** | **179,729,437** | - Accumulated other comprehensive loss (AOCL), net of tax, increased from **($51.0) million** at December 31, 2022, to **($52.1) million** at September 30, 2023, primarily due to foreign currency adjustments[70](index=70&type=chunk) - Livent paid no dividends for the three and nine months ended September 30, 2023 and 2022, and does not expect to pay any in the foreseeable future[72](index=72&type=chunk) [Note 11: Earnings Per Share](index=20&type=section&id=Note%2011%3A%20Earnings%20Per%20Share) Basic and Diluted Earnings Per Share (Three Months Ended September 30) | Metric (in Millions, Except Per Share Data) | 2023 | 2022 | | :------------------------------------------ | :--- | :--- | | Net income | $87.4 | $77.6 | | Weighted average common shares outstanding - basic | 179.7 | 179.3 | | Dilutive share equivalents from share-based plans | 1.5 | 2.0 | | Dilutive share equivalents from 2025 Notes | 28.1 | 28.1 | | Weighted average common shares outstanding - diluted | 209.3 | 209.4 | | Basic earnings per common share | $0.49 | $0.43 | | Diluted earnings per common share | $0.42 | $0.37 | Basic and Diluted Earnings Per Share (Nine Months Ended September 30) | Metric (in Millions, Except Per Share Data) | 2023 | 2022 | | :------------------------------------------ | :--- | :--- | | Net income | $292.4 | $190.8 | | Weighted average common shares outstanding - basic | 179.7 | 169.3 | | Dilutive share equivalents from share-based plans | 1.5 | 1.8 | | Dilutive share equivalents from 2025 Notes | 28.1 | 28.1 | | Weighted average common shares outstanding - diluted | 209.3 | 199.2 | | Basic earnings per common share | $1.63 | $1.13 | | Diluted earnings per common share | $1.40 | $0.96 | - For the three and nine months ended September 30, 2023, **181,024** and **146,770 stock options**, respectively, were anti-dilutive and excluded from diluted EPS calculation because their exercise price (**$23.33 per share**) was greater than the average market price[77](index=77&type=chunk) [Note 12: Financial Instruments, Risk Management and Fair Value Measurements](index=22&type=section&id=Note%2012%3A%20Financial%20Instruments%2C%20Risk%20Management%20and%20Fair%20Value%20Measurements) - Livent uses derivative financial instruments, primarily foreign exchange forward contracts, to mitigate currency risk from international operations (Euro, British pound, Chinese yuan, Japanese yen), but does not hedge Argentine peso risk due to limited availability and high cost[83](index=83&type=chunk)[85](index=85&type=chunk) - As of September 30, 2023, the net derivative financial instrument position was a net asset of **$0.3 million**, with open forward contracts to buy, sell, or exchange foreign currencies with a U.S. dollar equivalent of approximately **$12.4 million** designated as cash flow hedges and **$112.1 million** not designated as cash flow hedges[87](index=87&type=chunk)[91](index=91&type=chunk)[93](index=93&type=chunk) - The estimated fair value of debt was **$533.2 million**, with a carrying amount of **$243.1 million**, as of September 30, 2023, classified as Level 2 in the fair value hierarchy[82](index=82&type=chunk) [Note 13: Commitments and Contingencies](index=26&type=section&id=Note%2013%3A%20Commitments%20and%20Contingencies) - Livent is involved in various legal proceedings, including customs and tax audits in Argentina related to lithium carbonate exports from 2015-2022[104](index=104&type=chunk)[108](index=108&type=chunk) - In June 2023, the company paid **$21.7 million** under protest for export duties and interest claimed by Argentine Customs Authorities for 2018-2022 exports, with cases remaining in discussion[116](index=116&type=chunk) Operating Lease Costs and Liabilities (in Millions) | Metric | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :----------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Operating lease cost | $0.4 | $0.3 | $1.0 | $1.0 | | Short-term lease cost | $0.1 | $0.1 | $0.3 | $0.3 | | **Total lease cost** | **$0.5** | **$0.4** | **$1.3** | **$1.3** | | Cash paid for operating leases | $0.4 | $0.3 | $1.1 | $1.0 | - As of September 30, 2023, operating leases had a weighted average remaining lease term of **17.3 years** and a weighted average discount rate of **6.5%**. Total future minimum lease payments are **$11.5 million**[112](index=112&type=chunk)[113](index=113&type=chunk) [Note 14: Supplemental Information](index=28&type=section&id=Note%2014%3A%20Supplemental%20Information) Prepaid and Other Current Assets (in Millions) | Category | Sep 30, 2023 | Dec 31, 2022 | Change | | :---------------------------- | :----------- | :----------- | :----- | | Tax related items | $25.4 | $22.0 | +$3.4 | | Prepaid expenses | $6.7 | $11.6 | -$4.9 | | Argentina government receivable | $5.7 | $6.7 | -$1.0 | | Other receivables | $9.5 | $7.4 | +$2.1 | | Bank Acceptance Drafts | $0.0 | $6.9 | -$6.9 | | Derivative assets | $0.3 | $0.0 | +$0.3 | | Other current assets | $5.2 | $6.5 | -$1.3 | | **Total** | **$52.8** | **$61.1** | **-$8.3** | Other Assets (in Millions) | Category | Sep 30, 2023 | Dec 31, 2022 | Change | | :---------------------------- | :----------- | :----------- | :----- | | Argentina government receivable | $105.3 | $80.3 | +$25.0 | | Advance to contract manufacturers | $26.3 | $17.2 | +$9.1 | | Long-term raw materials inventory | $1.3 | $1.6 | -$0.3 | | Tax related items | $4.0 | $3.7 | +$0.3 | | Capitalized software, net | $1.2 | $1.4 | -$0.2 | | Other assets | $17.8 | $12.2 | +$5.6 | | **Total** | **$155.9** | **$116.4** | **+$39.5** | - A judicial decision in Argentina allows the government to reimburse **$34.8 million** of U.S. dollar-denominated export tax receivables in Argentine pesos at historical exchange rates, potentially leading to a loss of up to **$33.8 million**, though Livent has appealed[117](index=117&type=chunk) Accrued and Other Current Liabilities (in Millions) | Category | Sep 30, 2023 | Dec 31, 2022 | Change | | :-------------------------------- | :----------- | :----------- | :----- | | Accrued payroll | $25.8 | $19.8 | +$6.0 | | Restructuring reserves | $2.2 | $3.1 | -$0.9 | | Retirement liability - 401k | $2.1 | $2.6 | -$0.5 | | Derivative liabilities | $0.0 | $0.0 | $0.0 | | Environmental reserves, current | $0.6 | $0.6 | $0.0 | | Severance | $0.0 | $0.1 | -$0.1 | | Other accrued and other current liabilities | $24.3 | $11.2 | +$13.1 | | **Total** | **$55.0** | **$37.4** | **+$17.6** | Other Long-term Liabilities (in Millions) | Category | Sep 30, 2023 | Dec 31, 2022 | Change | | :-------------------------------- | :----------- | :----------- | :----- | | Deferred compensation plan obligation | $6.1 | $5.1 | +$1.0 | | Contingencies related to uncertain tax positions | $6.8 | $5.7 | +$1.1 | | Self-insurance reserves | $1.4 | $1.5 | -$0.1 | | Asset retirement obligations | $0.2 | $0.2 | $0.0 | | Other long-term liabilities | $2.9 | $3.4 | -$0.5 | | **Total** | **$17.4** | **$15.9** | **+$1.5** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Livent's financial performance, including an overview of its business, key highlights for Q3 2023, a business update on market conditions and operational challenges, the 2023 business outlook, detailed results of operations, and an analysis of liquidity and capital resources. It also includes forward-looking statements and critical accounting estimates [Special Note Regarding Forward-Looking Information](index=30&type=section&id=Special%20Note%20Regarding%20Forward-Looking%20Information) - The report contains forward-looking statements about future financial performance, growth strategies, business trends, and the proposed transaction with Allkem, which are subject to known and unknown risks and uncertainties[121](index=121&type=chunk)[122](index=122&type=chunk) - Investors are cautioned not to place undue reliance on these statements, and the company is not obligated to publicly revise or update them[124](index=124&type=chunk) [Application of Critical Accounting Estimates](index=30&type=section&id=Application%20of%20Critical%20Accounting%20Estimates) - Financial statements require management judgments, assumptions, and estimates, particularly for revenue recognition, trade receivables collectability, impairment of long-lived assets, and income taxes[125](index=125&type=chunk)[127](index=127&type=chunk) - Despite global economic uncertainty (inflation, rising interest rates, conflicts), the company is not aware of specific events requiring updates to estimates or materially affecting asset/liability carrying values as of the report date[127](index=127&type=chunk) [Overview](index=30&type=section&id=Overview) - Livent is a fully integrated lithium company focused on producing high-performance lithium compounds, especially battery-grade lithium hydroxide, for the rapidly growing EV and energy storage battery markets[128](index=128&type=chunk)[129](index=129&type=chunk) - The company also supplies butyllithium for polymers and pharmaceuticals, and high purity lithium metal for aerospace and non-rechargeable batteries, leveraging 80 years of production experience and customer relationships[129](index=129&type=chunk)[130](index=130&type=chunk) [Third Quarter 2023 Highlights](index=32&type=section&id=Third%20Quarter%202023%20Highlights) - Livent entered into a Transaction Agreement with Allkem Limited for a merger of equals, stock-for-stock transaction, expected to close by the end of calendar year 2023[131](index=131&type=chunk) Key Financial Highlights (Three Months Ended September 30, 2023 vs. 2022) | Metric (in Millions) | 2023 | 2022 | Change (YoY) | | :------------------- | :--- | :--- | :----------- | | Revenue | $211.4 | $231.6 | -$20.2 (-9%) | | Net income | $87.4 | $77.6 | +$9.8 (+13%) | | Adjusted EBITDA | $119.7 | $110.8 | +$8.9 (+8%) | - Revenue decrease was due to lower lithium carbonate and butyllithium pricing/volumes, partially offset by increased lithium carbonate volumes and higher lithium hydroxide pricing. Net income increased due to a **$10 million gain** from Argentina bond sales and lower income tax, despite lower gross margin and higher restructuring charges[132](index=132&type=chunk) [Business Update](index=33&type=section&id=Business%20Update) - The global demand for lithium products remains strong, driven by EV adoption, but the company faces challenges from inflation, high energy costs, supply chain disruptions, global conflicts, and higher interest rates[135](index=135&type=chunk) - Argentina operations face unique challenges including high inflation, a weakening currency, political uncertainty, and foreign exchange restrictions impacting imports and expansion project delays[137](index=137&type=chunk) - EV market trends include record sales in China (with increased LFP and PHEV share), strong growth in the U.S. despite IRA tax credit changes, and some demand reduction in Europe. Global price reductions in lithium chemicals are creating commercial and financial pressures[138](index=138&type=chunk)[139](index=139&type=chunk) - Management is monitoring key material matters including the Allkem transaction, global expansion, Nemaska Lithium Project development, political/economic instability in Argentina, lithium market volatility, inflation, interest rates, supply chain issues, IRA impact, energy costs, global conflicts, potential U.S. government shutdown, and cybersecurity risks[140](index=140&type=chunk) [2023 Business Outlook](index=34&type=section&id=2023%20Business%20Outlook) - Livent expects total volumes sold in 2023 to be roughly flat year-over-year due to commissioning delays in lithium carbonate expansion, but this is not expected to impact 2024 volumes[141](index=141&type=chunk) - The company anticipates higher year-over-year average realized pricing on a lithium carbonate equivalent (LCE) basis and lower costs (primarily raw materials and third-party purchases), leading to higher profitability compared to full year 2022[141](index=141&type=chunk) [Results of Operations](index=35&type=section&id=Results%20of%20Operations) Consolidated Results of Operations (Three Months Ended September 30) | Metric (in Millions) | 2023 | 2022 | Change (YoY) | | :------------------- | :--- | :--- | :----------- | | Revenue | $211.4 | $231.6 | -$20.2 (-9%) | | Gross margin | $116.5 | $119.4 | -$2.9 (-2%) | | SG&A expenses | $13.2 | $15.0 | -$1.8 (-12%) | | Restructuring and other charges | $8.6 | $0.7 | +$7.9 (+1129%) | | Equity in net loss of unconsolidated affiliate | $6.7 | $3.5 | +$3.2 (+91%) | | Income tax expense | $9.3 | $21.5 | -$12.2 (-57%) | | Net income | $87.4 | $77.6 | +$9.8 (+13%) | | Adjusted EBITDA (Non-GAAP) | $119.7 | $110.8 | +$8.9 (+8%) | Consolidated Results of Operations (Nine Months Ended September 30) | Metric (in Millions) | 2023 | 2022 | Change (YoY) | | :------------------- | :--- | :--- | :----------- | | Revenue | $700.7 | $593.8 | +$106.9 (+18%) | | Gross margin | $425.9 | $281.8 | +$144.1 (+51%) | | SG&A expenses | $47.1 | $40.6 | +$6.5 (+16%) | | Restructuring and other charges | $34.7 | $4.6 | +$30.1 (+654%) | | Equity in net loss of unconsolidated affiliate | $22.0 | $8.4 | +$13.6 (+162%) | | Income tax expense | $47.8 | $56.4 | -$8.6 (-15%) | | Net income | $292.4 | $190.8 | +$101.6 (+53%) | | Adjusted EBITDA (Non-GAAP) | $411.6 | $259.1 | +$152.5 (+59%) | - The increase in net income for Q3 2023 was primarily due to a **$10 million gain** from Argentina bond sales and lower income tax expense, partially offset by a decrease in gross margin and higher restructuring charges related to the Allkem transaction[152](index=152&type=chunk) - The increase in net income for YTD 2023 was primarily due to higher gross margin (**$144.1 million**) and lower income tax expense, partially offset by higher restructuring charges (**$34.5 million**) and increased equity in net loss of unconsolidated affiliate (**$13.6 million**)[159](index=159&type=chunk) [Liquidity and Capital Resources](index=38&type=section&id=Liquidity%20and%20Capital%20Resources) Cash and Cash Equivalents (in Millions) | Period | Cash and Cash Equivalents | | :-------------------- | :------------------------ | | Sep 30, 2023 | $112.6 | | Dec 31, 2022 | $189.0 | - Cash provided by operating activities decreased to **$261.8 million** for YTD 2023 from **$328.2 million** for YTD 2022, primarily due to increased inventories and decreased accounts payable, despite higher net income[162](index=162&type=chunk) - Cash used in investing activities increased to **$315.5 million** for YTD 2023 from **$225.7 million** for YTD 2022, driven by higher capital expenditures for expansion projects and increased investment in Nemaska Lithium[163](index=163&type=chunk) - Cash used in financing activities increased to **$21.5 million** for YTD 2023 from **$1.0 million** for YTD 2022, mainly due to a **$21.7 million** payment to Argentina Customs Authorities[164](index=164&type=chunk) - Livent has **$479.2 million** remaining borrowing capacity under its Revolving Credit Facility as of September 30, 2023, and estimates 2023 total capital spending to be **$325 million to $375 million**[165](index=165&type=chunk)[166](index=166&type=chunk) - The company expects adequate liquidity for the next 12 months through available cash, cash from operations, and Revolving Credit Facility borrowings, despite challenges in expansion projects and increasing energy costs, inflation, and interest rates[169](index=169&type=chunk)[170](index=170&type=chunk) [Contractual Obligations and Commercial Commitments](index=39&type=section&id=Contractual%20Obligations%20and%20Commercial%20Commitments) - No significant changes to contractual commitments have occurred during the period ended September 30, 2023, compared to those disclosed in the 2022 Annual Report on Form 10-K[172](index=172&type=chunk) [Climate Change](index=39&type=section&id=Climate%20Change) - A detailed discussion related to climate change can be found in Part II, Item 7 of the 2022 Annual Report on Form 10-K[173](index=173&type=chunk) [Off-Balance Sheet Arrangements](index=39&type=section&id=Off-Balance%20Sheet%20Arrangements) - Livent does not have any off-balance sheet arrangements that are material or reasonably likely to have a current or future material effect on its financial condition, revenues, expenses, results of operations, liquidity, capital expenditures, or capital resources[174](index=174&type=chunk) [Derivative Financial Instruments and Market Risks](index=39&type=section&id=Derivative%20Financial%20Instruments%20and%20Market%20Risks) - Livent uses derivative contracts to manage market risks related to commodity prices, interest rates, and foreign currency exchange rates, aiming to minimize cash flow exposure[175](index=175&type=chunk) - As of September 30, 2023, the net derivative financial instrument position was a net asset of **$0.3 million**, with foreign currency hedges placed for 2023 projected exposure[177](index=177&type=chunk) - The company is exposed to currency risk from operations in Euro, British pound, Chinese yuan, Argentine peso, and Japanese yen, but does not hedge Argentine peso risk due to limited availability and high cost[178](index=178&type=chunk) - A sensitivity analysis shows that an instantaneous **10% strengthening** of hedged currencies would result in a net liability position of **($1.1) million**, while a **10% weakening** would result in a net asset position of **$1.4 million**[179](index=179&type=chunk)[180](index=180&type=chunk) - As of September 30, 2023, Livent had no interest rate swap agreements and no outstanding balances under the Revolving Credit Facility[181](index=181&type=chunk)[182](index=182&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=40&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section refers to the detailed disclosures on market risk, including derivative financial instruments and foreign currency exchange rate risk, provided within Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations - Information on quantitative and qualitative disclosures about market risk is incorporated by reference from 'Derivative Financial Instruments and Market Risks' under Item 2[183](index=183&type=chunk) [Item 4. Controls and Procedures](index=40&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, with the CEO and CFO's participation, concluded that the company's disclosure controls and procedures were effective as of September 30, 2023. No material changes in internal control over financial reporting occurred during the quarter - As of September 30, 2023, the company's disclosure controls and procedures were deemed effective to provide reasonable assurance that required information is recorded, processed, summarized, and reported timely[184](index=184&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended September 30, 2023[185](index=185&type=chunk) [Part II - Other Information](index=41&type=section&id=Part%20II%20-%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, unregistered sales of equity securities, other information including a 10b5-1 trading plan, and a list of exhibits filed with the report [Item 1. Legal Proceedings](index=41&type=section&id=Item%201.%20Legal%20Proceedings) Livent is involved in various legal proceedings in the ordinary course of business, but based on current information and reserves, no known legal proceeding is expected to have a material adverse effect on its financial position, liquidity, or results of operations - No known legal proceeding is expected to have a material adverse effect on the company's financial position, liquidity, or results of operations, based on current information and established reserves[187](index=187&type=chunk) - There are no material changes from legal proceedings previously disclosed in the 2022 Annual Report on Form 10-K, except as noted in Note 13 of the condensed consolidated financial statements[187](index=187&type=chunk) [Item 1A. Risk Factors](index=41&type=section&id=Item%201A.%20Risk%20Factors) This section highlights risks related to the proposed merger with Allkem Limited, including uncertainties in closing conditions, potential regulatory impositions, the impact of termination, and disruptions to business operations. It also addresses operational risks such as cybersecurity breaches [Risks Relating to the Proposed Transaction with Allkem Limited](index=41&type=section&id=Risks%20Relating%20to%20the%20Proposed%20Transaction%20with%20Allkem%20Limited) - The completion of the Allkem transaction is subject to numerous conditions, including shareholder and regulatory approvals, and may not be completed, or could be delayed, impacting anticipated benefits[189](index=189&type=chunk)[190](index=190&type=chunk) - Regulatory entities may impose conditions (e.g., divestitures, restrictions) that could reduce the anticipated benefits of the transaction or prevent its closing[192](index=192&type=chunk)[193](index=193&type=chunk)[194](index=194&type=chunk) - Termination of the transaction could adversely affect Livent's business, stock price, and relationships, and may require a **$64.6 million** termination fee under certain circumstances[195](index=195&type=chunk)[196](index=196&type=chunk) - The pendency of the transaction could disrupt business operations, affect relationships with stakeholders, divert management resources, and potentially lead to loss of personnel, customers, or suppliers[197](index=197&type=chunk) - Restrictions in the Transaction Agreement limit Livent's ability to pursue alternative business strategies or competing transaction proposals, potentially limiting value for stockholders[198](index=198&type=chunk)[199](index=199&type=chunk) - Shareholder class actions or derivative lawsuits related to the transaction could result in substantial costs, divert resources, and potentially delay or prevent the transaction[200](index=200&type=chunk)[201](index=201&type=chunk) [Operational Risks](index=43&type=section&id=Operational%20Risks) - Cybersecurity breaches or disruptions to information technology systems (both internal and third-party Business Partners) could lead to data leakage, business disruptions, loss of assets (including trade secrets), litigation, regulatory violations, and reputational damage[202](index=202&type=chunk)[203](index=203&type=chunk)[204](index=204&type=chunk) - The company relies on Business Partners for security measures, and their failures could result in significant resource expenditure to mitigate impacts and prevent future incidents[204](index=204&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=44&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the repurchases of common shares by the Livent Non-Qualified Savings Plan (NQSP) trustee during the third quarter of 2023, noting that these are not part of publicly announced stock repurchase programs Repurchases of Common Shares (Three Months Ended September 30, 2023) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | | :-------------------------- | :------------------------------- | :--------------------------- | | July 1 through July 31, 2023 | 244.7 | $26.53 | | August 1 through August 31, 2023 | 297.3 | $21.75 | | September 1 through Sep 30, 2023 | 1,168.4 | $18.76 | | **Total Q3 2023** | **1,710.4** | **$20.39** | - Shares were reacquired by the trustee of the Livent NQSP through open-market purchases related to employee investments, not part of publicly announced stock repurchase programs[208](index=208&type=chunk) [Item 5. Other Information](index=45&type=section&id=Item%205.%20Other%20Information) This section discloses a Rule 10b5-1 trading plan adopted by the company's Vice President and Chief Financial Officer, Gilberto Antoniazzi, for the sale of 20,343 shares upon stock option exercise, effective from November 15, 2023, to December 29, 2023, or earlier termination conditions - Gilberto Antoniazzi, VP and CFO, adopted a Rule 10b5-1 trading plan to sell **20,343 shares** upon stock option exercise, with sales commencing November 15, 2023, and terminating by December 29, 2023, or earlier under specified conditions[210](index=210&type=chunk) - No other directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended September 30, 2023[211](index=211&type=chunk) [Item 6. Exhibits](index=45&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including amendments to the Transaction Agreement, certifying statements from the CEO and CFO, and the Interactive Data File - The report includes exhibits such as amendments to the Transaction Agreement (dated August 2, 2023, and November 5, 2023), Certifying Statements of the CEO and CFO (pursuant to Sections 302 and 1350 of Sarbanes-Oxley Act), and an Interactive Data File (Inline XBRL)[214](index=214&type=chunk) [Signatures](index=46&type=section&id=Signatures) This section contains the required signatures for the Quarterly Report on Form 10-Q, confirming its submission on behalf of Livent Corporation by its Vice President and Chief Financial Officer, Gilberto Antoniazzi - The report was signed by Gilberto Antoniazzi, Vice President and Chief Financial Officer, on November 9, 2023, on behalf of Livent Corporation[216](index=216&type=chunk)[217](index=217&type=chunk)

[Glossary of Terms](index=4&type=section&id=Glossary%20of%20Terms) This section defines key terms and abbreviations, detailing the proposed merger with Allkem, financial instruments, and operational subsidiaries - The proposed transaction involves a merger of equals, stock-for-stock transaction between Livent and Allkem, expected to close by the **end of calendar year 2023**. Livent stockholders will receive **2.406 shares of NewCo** for each Livent share[10](index=10&type=chunk) - Livent owns a **50% equity interest** in Nemaska Lithium Inc. (NLI), which is developing the Whabouchi Mine and a lithium hydroxide conversion plant in Québec, Canada[10](index=10&type=chunk) Part I - FINANCIAL INFORMATION [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This item includes Livent Corporation's unaudited condensed consolidated financial statements for the three and six months ended June 30, 2023 and 2022, comprising statements of operations, comprehensive income, balance sheets, cash flows, and equity, along with detailed explanatory notes [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section presents the unaudited condensed consolidated statements of operations for the three and six months ended June 30, 2023 and 2022 Three Months Ended June 30 (YoY) | Metric | 2023 (Millions) | 2022 (Millions) | Change (%) | | :--------------------------------- | :-------------- | :-------------- | :--------- | | Revenue | $235.8 | $218.7 | +7.8% | | Cost of sales | $92.4 | $116.2 | -20.5% | | Gross margin | $143.4 | $102.5 | +39.9% | | Income from operations | $100.6 | $84.7 | +18.8% | | Net income | $90.2 | $60.0 | +50.3% | | Basic EPS | $0.50 | $0.36 | +38.9% | | Diluted EPS | $0.43 | $0.31 | +38.7% | Six Months Ended June 30 (YoY) | Metric | 2023 (Millions) | 2022 (Millions) | Change (%) | | :--------------------------------- | :-------------- | :-------------- | :--------- | | Revenue | $489.3 | $362.2 | +35.1% | | Cost of sales | $179.9 | $199.8 | -9.9% | | Gross margin | $309.4 | $162.4 | +90.5% | | Income from operations | $247.4 | $130.8 | +89.1% | | Net income | $205.0 | $113.2 | +81.1% | | Basic EPS | $1.14 | $0.69 | +65.2% | | Diluted EPS | $0.98 | $0.58 | +69.0% | [Condensed Consolidated Statements of Comprehensive Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This section provides the unaudited condensed consolidated statements of comprehensive income for the three and six months ended June 30, 2023 and 2022 Three Months Ended June 30 (YoY) | Metric | 2023 (Millions) | 2022 (Millions) | | :--------------------------------- | :-------------- | :-------------- | | Net income | $90.2 | $60.0 | | Foreign currency translation adjustments | $(1.0) | $(4.4) | | Derivative instruments (net of tax) | $0.4 | $(0.1) | | Comprehensive income | $89.6 | $55.5 | Six Months Ended June 30 (YoY) | Metric | 2023 (Millions) | 2022 (Millions) | | :--------------------------------- | :-------------- | :-------------- | | Net income | $205.0 | $113.2 | | Foreign currency translation adjustments | $0.5 | $(5.4) | | Derivative instruments (net of tax) | $0.6 | $0.0 | | Comprehensive income | $206.1 | $107.8 | [Condensed Consolidated Balance Sheets](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section details the unaudited condensed consolidated balance sheets as of June 30, 2023, and December 31, 2022 Balance Sheet Highlights (June 30, 2023 vs. December 31, 2022) | Metric | June 30, 2023 (Millions) | December 31, 2022 (Millions) | Change (%) | | :--------------------------------- | :----------------------- | :----------------------- | :--------- | | Total current assets | $532.7 | $544.0 | -2.1% | | Investments | $455.7 | $440.3 | +3.5% | | Property, plant and equipment, net | $1,137.4 | $968.3 | +17.5% | | Total assets | $2,283.8 | $2,074.2 | +10.1% | | Total current liabilities | $141.5 | $148.7 | -4.8% | | Total current and long-term liabilities | $630.8 | $631.2 | -0.1% | | Total equity | $1,653.0 | $1,443.0 | +14.6% | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section presents the unaudited condensed consolidated statements of cash flows for the six months ended June 30, 2023 and 2022 Six Months Ended June 30 (YoY) | Metric | 2023 (Millions) | 2022 (Millions) | Change (%) | | :--------------------------------- | :-------------- | :-------------- | :--------- | | Cash provided by operating activities | $181.6 | $61.2 | +196.7% | | Cash used in investing activities | $(180.2) | $(124.1) | +45.2% | | Cash (used in)/provided by financing activities | $(21.6) | $0.2 | -10900% | | Decrease in cash and cash equivalents | $(21.2) | $(64.0) | -66.9% | | Cash and cash equivalents, end of period | $167.8 | $49.0 | +242.4% | - The increase in cash provided by operating activities was primarily driven by an increase in net income and a decrease in trade receivables, partially offset by an increase in inventories and a decrease in accounts payable[171](index=171&type=chunk) - The increase in cash used in investing activities was primarily due to higher capital expenditures for expansion projects and a **$29.5 million investment** in Nemaska Lithium[173](index=173&type=chunk) [Condensed Consolidated Statements of Equity](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity) This section outlines the unaudited condensed consolidated statements of equity for the six months ended June 30, 2023 and 2022 Equity Balance (June 30, 2023 vs. December 31, 2022) | Metric | June 30, 2023 (Millions) | December 31, 2022 (Millions) | | :--------------------------------- | :----------------------- | :----------------------- | | Common Stock | $0.1 | $0.1 | | Capital In Excess of Par | $1,164.3 | $1,160.4 | | Retained Earnings | $539.4 | $334.4 | | Accumulated Other Comprehensive Loss | $(49.9) | $(51.0) | | Treasury Stock | $(0.9) | $(0.9) | | Total Equity | $1,653.0 | $1,443.0 | - Key changes for the six months ended June 30, 2023, include **$205.0 million in net income**, **$4.0 million from stock compensation plans**, **$0.5 million in foreign currency translation adjustments**, and **$0.6 million in net hedging gains**[27](index=27&type=chunk) [Notes to the Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanatory notes supporting the condensed consolidated financial statements [Note 1: Description of the Business](index=13&type=section&id=Note%201%3A%20Description%20of%20the%20Business) This note describes Livent Corporation's business, focusing on lithium product manufacturing for EV and energy storage markets - Livent Corporation manufactures a wide range of lithium products used primarily in lithium-based batteries, specialty polymers, and chemical synthesis applications[30](index=30&type=chunk) - A major growth driver for lithium is the increasing adoption of electric vehicles (EVs) and other energy storage applications[30](index=30&type=chunk) - Livent is one of the primary producers of performance lithium compounds, with significant growth occurring in Asia, Europe, and North America, driven by lithium-ion battery development[31](index=31&type=chunk) [Note 2: Principal Accounting Policies and Related Financial Information](index=13&type=section&id=Note%202%3A%20Principal%20Accounting%20Policies%20and%20Related%20Financial%20Information) This note details Livent's principal accounting policies, including information on the proposed merger with Allkem and specific financial transactions - Livent entered into a Transaction Agreement on May 10, 2023 (amended August 2, 2023) with Allkem Limited for a merger of equals, stock-for-stock transaction, expected to close by the **end of calendar year 2023**. Livent stockholders will receive **2.406 shares of NewCo** for each Livent share[33](index=33&type=chunk) - The Transaction Agreement includes a **$64.6 million termination fee** payable by either party under certain specified conditions[33](index=33&type=chunk) - Livent realized an **$11.4 million gain** for the three and six months ended June 30, 2023, from a 'Blue Chip Swap' transaction in Argentina, involving the purchase and sale of Argentina Sovereign U.S. dollar-denominated bonds due to exchange controls[37](index=37&type=chunk) [Note 3: Recently Issued and Adopted Accounting Pronouncements and Regulatory Items](index=14&type=section&id=Note%203%3A%20Recently%20Issued%20and%20Adopted%20Accounting%20Pronouncements%20and%20Regulatory%20Items) This note refers to the 2022 Annual Report for information on recently issued and adopted accounting pronouncements - This note refers to Note 3 of the 2022 Annual Report on Form 10-K for information on recently issued and adopted accounting pronouncements[38](index=38&type=chunk) [Note 4: Revenue Recognition](index=14&type=section&id=Note%204%3A%20Revenue%20Recognition) This note provides disaggregated revenue information by geographical region and product category for the three months ended June 30 Disaggregated Revenue by Geographical Region (Three Months Ended June 30, YoY) | Region | 2023 (Millions) | 2022 (Millions) | Change (%) | | :---------------------- | :-------------- | :-------------- | :--------- | | North America | $40.7 | $41.2 | -1.2% | | Latin America | $0.0 | $1.1 | -100% | | Europe, Middle East & Africa | $23.5 | $32.0 | -26.5% | | Asia Pacific | $171.6 | $144.4 | +18.8% | | **Consolidated Revenue** | **$235.8** | **$218.7** | **+7.8%** | Disaggregated Revenue by Product Category (Three Months Ended June 30, YoY) | Product Category | 2023 (Millions) | 2022 (Millions) | Change (%) | | :--------------------------------------- | :-------------- | :-------------- | :--------- | | Lithium Hydroxide | $153.6 | $113.6 | +35.2% | | Butyllithium | $62.4 | $81.2 | -23.1% | | High Purity Lithium Metal and Other Specialty Compounds | $14.7 | $16.7 | -12.0% | | Lithium Carbonate and Lithium Chloride | $5.1 | $7.2 | -29.2% | | **Consolidated Revenue** | **$235.8** | **$218.7** | **+7.8%** | - For the three months ended June 30, 2023, two customers accounted for approximately **24% and 23% of consolidated revenue**, respectively, and the top 10 customers accounted for approximately **72%**[40](index=40&type=chunk) [Note 5: Inventories, Net](index=16&type=section&id=Note%205%3A%20Inventories%2C%20Net) This note details the composition of inventories, net, as of June 30, 2023, and December 31, 2022 Inventories, Net (June 30, 2023 vs. December 31, 2022) | Category | June 30, 2023 (Millions) | December 31, 2022 (Millions) | Change (%) | | :-------------------------- | :----------------------- | :----------------------- | :--------- | | Finished goods | $51.0 | $44.6 | +14.3% | | Semi-finished goods | $103.7 | $57.1 | +81.6% | | Raw materials, supplies, and other | $43.1 | $50.6 | -14.8% | | **Inventories, net** | **$197.8** | **$152.3** | **+29.9%** | [Note 6: Investments](index=17&type=section&id=Note%206%3A%20Investments) This note describes Livent's equity interest in Nemaska Lithium Inc. and related financial impacts - Livent accounts for its **50% equity interest** in Nemaska Lithium Inc. (NLI) as an equity method investment. NLI is a non-public mining company in the development stage, focused on the Nemaska Lithium Project[50](index=50&type=chunk)[51](index=51&type=chunk) - Livent recorded a **$7.2 million loss** for the three months and **$15.3 million loss** for the six months ended June 30, 2023, related to its equity interest in NLI, reflecting project-related costs[51](index=51&type=chunk) - In Q3 2023, Livent invested an additional **$18.9 million cash** in Nemaska Lithium, maintaining its **50% ownership stake**[52](index=52&type=chunk) [Note 7: Restructuring and Other Charges](index=17&type=section&id=Note%207%3A%20Restructuring%20and%20Other%20Charges) This note outlines restructuring and other charges, including costs related to the Allkem transaction and a plant fire loss Restructuring and Other Charges (Three Months Ended June 30, YoY) | Category | 2023 (Millions) | 2022 (Millions) | | :--------------------------------- | :-------------- | :-------------- | | Severance-related and exit costs | $0.7 | $0.0 | | Costs related to the Transaction | $18.8 | $2.2 | | Bessemer City plant fire loss | $5.0 | $0.0 | | Environmental remediation | $0.1 | $0.1 | | Other | $(0.4) | $0.6 | | **Total** | **$24.2** | **$2.9** | - A fire occurred at Livent's Bessemer City plant on June 26, 2023, destroying a warehouse. The company recorded a **$5.0 million loss** for clean-up, disposal, and destroyed assets[54](index=54&type=chunk)[55](index=55&type=chunk) - Most production lines at the Bessemer City plant resumed operation by June 29, 2023, but smaller units for high purity lithium metal and pharmaceutical grade lithium carbonate may take several months to restore[54](index=54&type=chunk) [Note 8: Income Taxes](index=17&type=section&id=Note%208%3A%20Income%20Taxes) This note presents income tax expense and effective tax rates for the three and six months ended June 30 Income Tax Expense and Effective Tax Rate (Three Months Ended June 30, YoY) | Metric | 2023 (Millions) | 2022 (Millions) | Effective Tax Rate (2023) | Effective Tax Rate (2022) | | :------------------ | :-------------- | :-------------- | :------------------------ | :------------------------ | | Income tax expense | $14.6 | $30.2 | 13.9% | 33.5% | Income Tax Expense and Effective Tax Rate (Six Months Ended June 30, YoY) | Metric | 2023 (Millions) | 2022 (Millions) | Effective Tax Rate (2023) | Effective Tax Rate (2022) | | :------------------ | :-------------- | :-------------- | :------------------------ | :------------------------ | | Income tax expense | $38.5 | $34.9 | 15.8% | 23.6% | - The decrease in income tax expense for Q2 2023 was primarily due to an increase in forecasted jurisdictional mix of earnings with lower statutory rates and a decrease in foreign currency impacts in Argentina[159](index=159&type=chunk)[160](index=160&type=chunk) [Note 9: Debt](index=19&type=section&id=Note%209%3A%20Debt) This note details Livent's long-term debt, including convertible senior notes and compliance with debt covenants Long-term Debt (June 30, 2023 vs. December 31, 2022) | Debt Type | June 30, 2023 (Millions) | December 31, 2022 (Millions) | | :--------------------------------- | :----------------------- | :----------------------- | | 4.125% Convertible Senior Notes due 2025 | $245.8 | $245.8 | | Transaction costs - 2025 Notes | $(3.1) | $(3.9) | | **Total long-term debt** | **$242.7** | **$241.9** | - Holders of the 2025 Notes have the option to convert through September 30, 2023, as the common stock price met the **130% conversion price threshold**[63](index=63&type=chunk) - Livent was in compliance with all debt covenants as of June 30, 2023, including a maximum allowable first lien leverage ratio of **3.5** and a minimum allowable interest coverage ratio of **3.5**. The Revolving Credit Facility had **$478.8 million available funds**[66](index=66&type=chunk)[68](index=68&type=chunk) [Note 10: Equity](index=21&type=section&id=Note%2010%3A%20Equity) This note provides information on Livent's common stock, accumulated other comprehensive loss, and dividend policy - As of June 30, 2023, Livent had **179,715,389 shares of common stock** outstanding[71](index=71&type=chunk) Accumulated Other Comprehensive Loss (June 30, 2023 vs. December 31, 2022) | Category | June 30, 2023 (Millions) | December 31, 2022 (Millions) | | :--------------------------------- | :----------------------- | :----------------------- | | Foreign currency adjustments | $(50.5) | $(51.0) | | Derivative Instruments | $0.6 | $0.0 | | **Total** | **$(49.9)** | **$(51.0)** | - Livent paid no dividends for the three and six months ended June 30, 2023 and 2022, and does not expect to pay any in the foreseeable future[75](index=75&type=chunk) [Note 11: Earnings Per Share](index=21&type=section&id=Note%2011%3A%20Earnings%20Per%20Share) This note presents basic and diluted earnings per share for the three and six months ended June 30 EPS (Three Months Ended June 30, YoY) | Metric | 2023 | 2022 | | :--------------------------------- | :----- | :----- | | Basic EPS | $0.50 | $0.36 | | Diluted EPS | $0.43 | $0.31 | EPS (Six Months Ended June 30, YoY) | Metric | 2023 | 2022 | | :--------------------------------- | :----- | :----- | | Basic EPS | $1.14 | $0.69 | | Diluted EPS | $0.98 | $0.58 | - For the three and six months ended June 30, 2023, options to purchase **1,085 shares of common stock** at an average exercise price of **$23.33 per share** were anti-dilutive and excluded from diluted EPS[80](index=80&type=chunk) [Note 12: Financial Instruments, Risk Management and Fair Value Measurements](index=22&type=section&id=Note%2012%3A%20Financial%20Instruments%2C%20Risk%20Management%20and%20Fair%20Value%20Measurements) This note discusses Livent's use of derivative financial instruments for risk management and fair value measurements - Livent uses foreign exchange forward contracts to mitigate currency risk, primarily for the Euro, British pound, Chinese yuan, and Japanese yen, but does not hedge Argentine peso risks[86](index=86&type=chunk)[88](index=88&type=chunk) - As of June 30, 2023, the net derivative financial instrument position was a net asset of **$0.8 million**. Open cash flow hedge contracts had a U.S. dollar equivalent of approximately **$28.2 million**, and non-designated forward contracts had approximately **$115.2 million**[90](index=90&type=chunk)[94](index=94&type=chunk)[96](index=96&type=chunk) - The fair value hierarchy classifies investments in deferred compensation plans as **Level 1** and derivatives (foreign exchange) and 2025 Notes as **Level 2**[82](index=82&type=chunk)[83](index=83&type=chunk)[85](index=85&type=chunk)[104](index=104&type=chunk) [Note 13: Commitments and Contingencies](index=26&type=section&id=Note%2013%3A%20Commitments%20and%20Contingencies) This note outlines Livent's commitments and contingencies, including customs audits, export duties, and operating lease liabilities - Livent's Argentine subsidiary, MdA, is subject to customs audits and transfer pricing audits. In June 2023, Livent paid a **$21.7 million deposit** under protest to Argentine Customs Authorities for claimed export duties[112](index=112&type=chunk)[113](index=113&type=chunk)[123](index=123&type=chunk) - As of June 30, 2023, all leases are operating leases with a weighted average remaining lease term of **17.3 years** and a weighted average discount rate of **6.5%**[114](index=114&type=chunk)[117](index=117&type=chunk) Operating Lease Liabilities Maturity Analysis (Undiscounted Cash Flows) | Period | Undiscounted cash flows (Millions) | | :---------------- | :------------------------------- | | Remainder of 2023 | $0.7 | | 2024 | $1.5 | | 2025 | $1.5 | | 2026 | $0.7 | | 2027 | $0.3 | | Thereafter | $7.5 | | **Total future minimum lease payments** | **$12.2** | [Note 14: Supplemental Information](index=28&type=section&id=Note%2014%3A%20Supplemental%20Information) This note provides supplemental details on prepaid and other current assets, other assets, and accrued and other current liabilities Prepaid and Other Current Assets (June 30, 2023 vs. December 31, 2022) | Category | June 30, 2023 (Millions) | December 31, 2022 (Millions) | | :-------------------------- | :----------------------- | :----------------------- | | Tax related items | $25.5 | $22.0 | | Prepaid expenses | $9.0 | $11.6 | | Argentina government receivable | $6.2 | $6.7 | | Other receivables | $1.2 | $7.4 | | Bank Acceptance Drafts | $0.5 | $6.9 | | Derivative assets | $0.8 | $0.0 | | Other current assets | $1.6 | $6.5 | | **Total** | **$44.8** | **$61.1** | Other Assets (June 30, 2023 vs. December 31, 2022) | Category | June 30, 2023 (Millions) | December 31, 2022 (Millions) | | :-------------------------- | :----------------------- | :----------------------- | | Argentina government receivable | $108.5 | $80.3 | | Advance to contract manufacturers | $19.4 | $17.2 | | Long-term raw materials inventory | $1.2 | $1.6 | | Tax related items | $3.9 | $3.7 | | Capitalized software, net | $1.4 | $1.4 | | Other assets | $16.7 | $12.2 | | **Total** | **$151.1** | **$116.4** | Accrued and Other Current Liabilities (June 30, 2023 vs. December 31, 2022) | Category | June 30, 2023 (Millions) | December 31, 2022 (Millions) | | :-------------------------- | :----------------------- | :----------------------- | | Accrued payroll | $18.2 | $19.8 | | Restructuring reserves | $2.7 | $3.1 | | Retirement liability - 401k | $1.4 | $2.6 | | Environmental reserves, current | $0.6 | $0.6 | | Other accrued and other current liabilities | $31.6 | $11.2 | | **Total** | **$54.5** | **$37.4** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Livent's financial performance, condition, and future outlook, including a discussion of key business developments, operational challenges, and strategic initiatives [Special Note Regarding Forward-Looking Information](index=30&type=section&id=Special%20Note%20Regarding%20Forward-Looking%20Information) This note cautions readers about forward-looking statements, which are subject to risks and uncertainties and are not subject to public revision - The report contains forward-looking statements based on current views and assumptions, which involve known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially[131](index=131&type=chunk) - Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date made. The company is under no duty to publicly revise or update these statements[133](index=133&type=chunk) [Application of Critical Accounting Estimates](index=30&type=section&id=Application%20of%20Critical%20Accounting%20Estimates) This note identifies critical accounting estimates, such as revenue recognition and asset valuation, which are subject to global economic uncertainties - Critical accounting estimates, reviewed with the Audit Committee, include revenue recognition, collectability of trade receivables, impairment and valuation of long-lived assets, and income taxes[134](index=134&type=chunk)[135](index=135&type=chunk)[136](index=136&type=chunk) - These estimates may be impacted by global economic uncertainties such as inflation, rising interest rates, and geopolitical conflicts[136](index=136&type=chunk) [Overview](index=30&type=section&id=Overview) This section provides an overview of Livent's business as a fully integrated lithium company focused on high-performance compounds for EV and energy storage markets - Livent is a pure-play, fully integrated lithium company focused on producing high-performance lithium compounds for the rapidly growing EV and energy storage battery markets[137](index=137&type=chunk) - Primary products include battery-grade lithium hydroxide, lithium carbonate, butyllithium, and high purity lithium metal[137](index=137&type=chunk) - The company aims to capitalize on the accelerating trend of electrification, leveraging its **80 years of experience**, global capabilities, and deep customer relationships[138](index=138&type=chunk)[139](index=139&type=chunk) [Second Quarter 2023 Highlights](index=32&type=section&id=Second%20Quarter%202023%20Highlights) This section highlights key financial performance and strategic developments for the second quarter of 2023, including the proposed merger with Allkem - Livent entered into a Transaction Agreement on May 10, 2023, for a merger of equals with Allkem Limited, expected to close by the **end of calendar year 2023**[140](index=140&type=chunk) Financial Performance (Three Months Ended June 30, YoY) | Metric | 2023 (Millions) | 2022 (Millions) | Change (%) | | :--------------------------------- | :-------------- | :-------------- | :--------- | | Revenue | $235.8 | $218.7 | +7.8% | | Net income | $90.2 | $60.0 | +50.3% | | Adjusted EBITDA (Non-GAAP) | $134.5 | $95.0 | +41.6% | - Performance was driven by higher pricing and sales volumes for lithium hydroxide and a favorable mix of raw materials costs, partially offset by decreased butyllithium sales volumes and lower lithium carbonate and butyllithium pricing[140](index=140&type=chunk) [Other Events During the Quarter](index=33&type=section&id=Other%20Events%20During%20the%20Quarter) This section details other significant events during the quarter, including a payment to Argentine Customs and a fire at the Bessemer City plant - On June 16, 2023, Livent's Argentine subsidiary paid a **$21.7 million deposit** under protest to Argentine Customs Authorities for claimed export duties from 2018-2022[143](index=143&type=chunk) - A fire at the Bessemer City plant on June 26, 2023, resulted in a **$5.0 million loss** for clean-up and destroyed assets. Most production lines resumed quickly, but smaller units will take several months to restore[144](index=144&type=chunk) [Business Update](index=33&type=section&id=Business%20Update) This section provides an update on the lithium market, operational challenges, and strategic monitoring efforts amidst global economic uncertainties - The lithium market remains strong due to increased EV adoption, but Livent faces challenges from inflation, high energy costs, supply chain disruptions, and political/economic instability in Argentina, including currency restrictions limiting imports[145](index=145&type=chunk)[147](index=147&type=chunk) - The global EV manufacturing industry is experiencing uncertainties, including normalizing inventory in China, changes to U.S. tax credits, and price reductions by leading EV manufacturers, which may impact customer demand[148](index=148&type=chunk) - Management is monitoring global expansion efforts, the Allkem transaction, Nemaska Lithium Project development, lithium supply/demand balance, changing lithium prices, and macroeconomic factors[149](index=149&type=chunk) [2023 Business Outlook](index=34&type=section&id=2023%20Business%20Outlook) This section outlines Livent's business outlook for 2023, anticipating higher volumes, pricing, and profitability, alongside increased operational costs - Livent expects higher volumes, particularly in the **second half of 2023** due to new production units, and higher average pricing across its lithium products, leading to increased profitability versus 2022[150](index=150&type=chunk) - Higher costs are anticipated in 2023, primarily related to royalties, the ramping up of new production units, and general inflationary pressures[150](index=150&type=chunk) [Results of Operations](index=35&type=section&id=Results%20of%20Operations) This section analyzes Livent's financial results, comparing performance for the three and six months ended June 30, 2023, against the prior year [Three Months Ended June 30, 2023 vs. 2022](index=36&type=section&id=Three%20Months%20Ended%20June%2030%2C%202023%20vs.%202022) This section compares Livent's financial performance for the three months ended June 30, 2023, against the same period in 2022 - Revenue increased by **8% to $235.8 million**, driven by higher lithium hydroxide pricing and sales volumes, partially offset by decreased butyllithium sales and pricing[154](index=154&type=chunk) - Gross margin surged by **40% to $143.4 million**, primarily due to higher lithium hydroxide performance and favorable raw material costs[155](index=155&type=chunk) - Net income increased by **50% to $90.2 million**, benefiting from higher lithium hydroxide performance, favorable raw material mix, and lower income tax expense, despite higher restructuring charges and equity losses from unconsolidated affiliates[161](index=161&type=chunk) [Six Months Ended June 30, 2023 vs. 2022](index=37&type=section&id=Six%20Months%20Ended%20June%2030%2C%202023%20vs.%202022) This section compares Livent's financial performance for the six months ended June 30, 2023, against the same period in 2022 - Revenue grew by **35% to $489.3 million**, driven by higher pricing across all products and increased lithium hydroxide sales volumes[162](index=162&type=chunk) - Gross margin increased by **91% to $309.4 million**, primarily due to higher pricing across all products, higher lithium hydroxide sales volumes, and a favorable mix of raw materials costs[163](index=163&type=chunk) - Net income surged by **81.1% to $205.0 million**, driven by higher pricing, lithium hydroxide volumes, and favorable raw material mix, partially offset by increased expenses and equity losses from unconsolidated affiliates[168](index=168&type=chunk) [Liquidity and Capital Resources](index=38&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses Livent's cash position, operating and investing cash flows, and expected liquidity needs and capital spending - Cash and cash equivalents decreased to **$167.8 million** as of June 30, 2023, from **$189.0 million** at December 31, 2022[170](index=170&type=chunk) - Cash provided by operating activities significantly increased to **$181.6 million** for the six months ended June 30, 2023, from **$61.2 million** in the prior year, driven by higher net income and decreased trade receivables[171](index=171&type=chunk) - Cash used in investing activities increased to **$180.2 million**, primarily due to higher capital expenditures for expansion projects and a **$29.5 million investment** in Nemaska Lithium. Cash used in financing activities was **$(21.6) million**, largely due to a **$21.7 million payment** to Argentina Customs Authorities[173](index=173&type=chunk)[174](index=174&type=chunk) - Livent expects to meet its liquidity needs through available cash, cash from operations, and its **$478.8 million Revolving Credit Facility**. Estimated 2023 capital spending is **$325 million to $375 million**[175](index=175&type=chunk)[176](index=176&type=chunk)[180](index=180&type=chunk) [Derivative Financial Instruments and Market Risks](index=39&type=section&id=Derivative%20Financial%20Instruments%20and%20Market%20Risks) This section details Livent's use of derivative financial instruments to manage market risks, including foreign currency exposure - Livent uses derivative financial instruments, primarily foreign exchange forward contracts, to manage market risks related to commodity prices, interest rates, and foreign currency exchange rates[186](index=186&type=chunk) - The company is exposed to currency risk from the Euro, British pound, Chinese yuan, Argentine peso, and Japanese yen, but does not hedge Argentine peso risks due to limited availability and high cost of suitable instruments[189](index=189&type=chunk) - As of June 30, 2023, Livent had a net derivative financial instrument position of a net asset of **$0.8 million** and no interest rate swap agreements[188](index=188&type=chunk)[192](index=192&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=41&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This item refers to the 'Derivative Financial Instruments and Market Risks' section within Item 2 for all required disclosures regarding quantitative and qualitative information about market risk - Information required by this item is provided in 'Derivative Financial Instruments and Market Risks' under Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations[194](index=194&type=chunk) [Item 4. Controls and Procedures](index=41&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, with the participation of the CEO and CFO, concluded that Livent's disclosure controls and procedures were effective as of June 30, 2023. There were no material changes in internal control over financial reporting during the quarter - Livent's disclosure controls and procedures were effective as of June 30, 2023, providing reasonable assurance that required information is recorded, processed, summarized, and reported timely[195](index=195&type=chunk) - There were no changes in internal control over financial reporting during the quarter ended June 30, 2023, that materially affected or are reasonably likely to materially affect, internal control over financial reporting[196](index=196&type=chunk) Part II - OTHER INFORMATION [Item 1. Legal Proceedings](index=42&type=section&id=Item%201.%20Legal%20Proceedings) Livent is involved in various legal proceedings in the ordinary course of business, including workers' compensation matters. Based on current information and established reserves, management does not believe the ultimate resolution of any known legal proceeding will have a material adverse effect on the company's financial position, liquidity, or results of operations, with no material changes from prior disclosures except as noted in Note 13 - Livent is involved in legal proceedings in the ordinary course of business, including workers' compensation matters[199](index=199&type=chunk) - Based on current information and established reserves, management does not believe the ultimate resolution of any known legal proceeding will have a material adverse effect on the company's financial position, liquidity, or results of operations[199](index=199&type=chunk) - There are no material changes from the legal proceedings previously disclosed in the 2022 Annual Report on Form 10-K, except as set forth in Note 13[199](index=199&type=chunk) [Item 1A. Risk Factors](index=42&type=section&id=Item%201A.%20Risk%20Factors) This section updates the risk factors from the 2022 Annual Report on Form 10-K, with a primary focus on risks related to the proposed transaction with Allkem Limited and operational risks, including cybersecurity. The completion of the Allkem transaction is subject to various conditions and potential delays, and its termination could negatively impact Livent, potentially requiring a $64.6 million fee [Risks Relating to the Proposed Transaction with Allkem Limited](index=42&type=section&id=Risks%20Relating%20to%20the%20Proposed%20Transaction%20with%20Allkem%20Limited) This section outlines risks associated with the proposed merger with Allkem, including completion uncertainties, regulatory conditions, and potential termination fees - The completion of the proposed transaction with Allkem is uncertain and subject to numerous conditions, including shareholder and regulatory approvals, which could delay or prevent its closing[201](index=201&type=chunk)[202](index=202&type=chunk) - Regulatory and governmental entities may impose conditions on consents that could reduce the anticipated benefits of the transaction or prevent its completion[204](index=204&type=chunk)[205](index=205&type=chunk) - Termination of the Transaction Agreement could negatively impact Livent's business, stock price, and relationships, and may require Livent to pay Allkem a **$64.6 million termination fee** under certain circumstances[207](index=207&type=chunk)[208](index=208&type=chunk) [Operational Risks](index=44&type=section&id=Operational%20Risks) This section details operational risks, primarily focusing on cybersecurity breaches and disruptions to information technology systems - Livent's business and operations are vulnerable to cybersecurity breaches and disruptions to its information technology systems, as well as those of third-party Business Partners[214](index=214&type=chunk) - Such incidents could lead to data leakage, business disruptions, loss of assets (including trade secrets), litigation, regulatory violations, reputational damage, and increased costs, materially affecting financial condition or results of operations[215](index=215&type=chunk) - Reliance on Business Partners for security measures means their failures could require significant resources from Livent to mitigate impacts and develop protections[216](index=216&type=chunk) [Forward-Looking Information](index=45&type=section&id=Forward-Looking%20Information) This section cautions against undue reliance on forward-looking statements and clarifies the company's non-obligation to revise them - Readers are cautioned not to place undue reliance on any forward-looking statements contained herein, which speak only as of the date made[217](index=217&type=chunk) - The company specifically declines to undertake any obligation to publicly revise any forward-looking statements to reflect events or circumstances after their date or the occurrence of anticipated or unanticipated events[217](index=217&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=45&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Livent did not have any publicly announced stock repurchase programs. However, the trustee of the Livent Non-Qualified Savings Plan (NQSP) reacquires shares of Livent common stock through open-market purchases for employee investments, with 934.8 shares purchased in Q2 2023 at an average price of $23.06 per share - Livent has no publicly announced stock repurchase programs[220](index=220&type=chunk) NQSP Share Repurchases (Q2 2023) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | | :------------------------------- | :------------------------------- | :--------------------------- | | April 1 through April 30, 2023 | 424.3 | $20.66 | | May 1 through May 31, 2023 | 260.3 | $24.27 | | June 1 through June 30, 2023 | 250.2 | $25.86 | | **Total Q2 2023** | **934.8** | **$23.06** | - Shares are reacquired by the trustee of the Livent NQSP through open-market purchases for employee investments and are held in a trust fund as treasury stock[220](index=220&type=chunk) [Item 5. Other Information](index=46&type=section&id=Item%205.%20Other%20Information) During the second quarter of 2023, none of Livent's directors or officers adopted or terminated any Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements - None of Livent's directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2023[222](index=222&type=chunk) [Item 6. Exhibits](index=46&type=section&id=Item%206.%20Exhibits) This item lists the exhibits filed with the Form 10-Q, including the Transaction Agreement with Allkem and its amendment, certifying statements from the CEO and CFO, and the Interactive Data File - Key exhibits include the Transaction Agreement (May 10, 2023) and its Amendment (August 2, 2023) with Allkem, Certifying Statements of the Chief Executive Officer and Chief Financial Officer (pursuant to Sections 302 and 1350 of the Sarbanes-Oxley Act), and the Interactive Data File (Inline XBRL)[225](index=225&type=chunk) [Signatures](index=47&type=section&id=Signatures) This section contains the official signatures for the report, dated August 3, 2023 - The report was signed on August 3, 2023, by Gilberto Antoniazzi, Vice President and Chief Financial Officer of Livent Corporation[228](index=228&type=chunk)

[Glossary of Terms](index=4&type=section&id=Glossary%20of%20Terms) This section provides definitions for specialized terms used throughout the financial report [Part I - FINANCIAL INFORMATION](index=5&type=section&id=Part%20I%20-%20FINANCIAL%20INFORMATION) This part presents Livent Corporation's unaudited condensed consolidated financial statements and management's discussion and analysis for the period [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents Livent Corporation's unaudited condensed consolidated financial statements for the three months ended March 31, 2023 and 2022, including statements of operations, comprehensive income, balance sheets, cash flows, and equity, along with detailed notes on accounting policies, revenue recognition, investments, debt, equity, and other financial instruments [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This statement details Livent Corporation's revenues, costs, and net income for the three months ended March 31, 2023 and 2022 | Metric (in Millions, Except Per Share Data) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Revenue | $253.5 | $143.5 | | Cost of sales | $87.5 | $83.6 | | Gross margin | $166.0 | $59.9 | | Selling, general and administrative expenses | $16.3 | $11.8 | | Research and development expenses | $1.0 | $0.9 | | Restructuring and other charges | $1.9 | $1.0 | | Separation-related costs | $— | $0.1 | | Total costs and expenses | $106.7 | $97.4 | | Income from operations before equity in net loss of unconsolidated affiliates and other gain | $146.8 | $46.1 | | Equity in net loss of unconsolidated affiliates | $8.1 | $2.2 | | Other gain | $— | $(14.0) | | Income from operations before income taxes | $138.7 | $57.9 | | Income tax expense | $23.9 | $4.7 | | Net income | $114.8 | $53.2 | | Net income per weighted average share - basic | $0.64 | $0.33 | | Net income per weighted average share - diluted | $0.55 | $0.28 | | Weighted average common shares outstanding - basic | 179.6 | 161.7 | | Weighted average common shares outstanding - diluted | 209.2 | 191.4 | [Condensed Consolidated Statements of Comprehensive Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This statement presents Livent Corporation's net income and other comprehensive income or loss components for the specified periods | Metric (in Millions) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Net income | $114.8 | $53.2 | | Other comprehensive income/(loss), net of tax: | | | | Foreign currency translation gain/(loss) arising during the period | $1.5 | $(1.0) | | Total foreign currency translation adjustments | $1.5 | $(1.0) | | Unrealized hedging gains, net of tax | $0.2 | $0.1 | | Total derivative instruments | $0.2 | $0.1 | | Other comprehensive income/(loss), net of tax | $1.7 | $(0.9) | | Comprehensive income | $116.5 | $52.3 | [Condensed Consolidated Balance Sheets](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This statement provides a snapshot of Livent Corporation's assets, liabilities, and equity as of March 31, 2023, and December 31, 2022 | Metric (in Millions) | March 31, 2023 | December 31, 2022 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | **ASSETS** | | | | Cash and cash equivalents | $194.1 | $189.0 | | Trade receivables, net | $112.9 | $141.6 | | Inventories, net | $184.1 | $152.3 | | Prepaid and other current assets | $67.5 | $61.1 | | Total current assets | $558.6 | $544.0 | | Investments | $453.3 | $440.3 | | Property, plant and equipment, net | $1,040.0 | $968.3 | | Total assets | $2,180.3 | $2,074.2 | | **LIABILITIES AND EQUITY** | | | | Accounts payable, trade and other | $64.7 | $81.7 | | Accrued and other current liabilities | $36.2 | $37.4 | | Total current liabilities | $132.1 | $148.7 | | Long-term debt | $242.3 | $241.9 | | Total current and long-term liabilities | $619.3 | $631.2 | | Total equity | $1,561.0 | $1,443.0 | | Total liabilities and equity | $2,180.3 | $2,074.2 | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement outlines Livent Corporation's cash inflows and outflows from operating, investing, and financing activities | Metric (in Millions) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Cash provided by operating activities | $102.9 | $10.8 | | Cash used in investing activities | $(98.1) | $(55.4) | | Cash (used in)/provided by financing activities | $(0.1) | $0.1 | | Effect of exchange rate changes on cash and cash equivalents | $0.4 | $— | | Increase/(decrease) in cash and cash equivalents | $5.1 | $(44.5) | | Cash and cash equivalents, beginning of period | $189.0 | $113.0 | | Cash and cash equivalents, end of period | $194.1 | $68.5 | - Cash payments for income taxes, net of refunds, were **$1.9 million** in Q1 2023 and **$2.4 million** in Q1 2022. Cash payments for interest were **$5.5 million** for both periods. Capitalized interest expense was **$3.9 million** in Q1 2023 and **$4.0 million** in Q1 2022[23](index=23&type=chunk) [Condensed Consolidated Statements of Equity](index=12&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity) This statement details changes in Livent Corporation's shareholders' equity for the three months ended March 31, 2023 | Metric (in Millions) | Balance as of Dec 31, 2022 | Net Income | Stock Compensation Plans | Exercise of Stock Options | Shares Withheld for Taxes | Net Hedging Gains | Foreign Currency Translation Adjustments | Balance as of Mar 31, 2023 | | :------------------------------------------ | :------------------------- | :--------- | :----------------------- | :------------------------ | :-------------------------- | :---------------- | :--------------------------------------- | :------------------------- | | Common Stock, $0.001 Per Share Par Value | $0.1 | $— | $— | $— | $— | $— | $— | $0.1 | | Capital In Excess of Par Value | $1,160.4 | $— | $1.9 | $0.1 | $(0.5) | $— | $— | $1,161.9 | | Retained Earnings | $334.4 | $114.8 | $— | $— | $— | $— | $— | $449.2 | | Accumulated Other Comprehensive Loss | $(51.0) | $— | $— | $— | $— | $0.2 | $1.5 | $(49.3) | | Treasury Stock | $(0.9) | $— | $— | $— | $— | $— | $— | $(0.9) | | **Total Equity** | **$1,443.0** | **$114.8** | **$1.9** | **$0.1** | **$(0.5)** | **$0.2** | **$1.5** | **$1,561.0** | [Notes to the Condensed Consolidated Financial Statements](index=14&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements [Note 1: Description of the Business](index=14&type=section&id=Note%201%3A%20Description%20of%20the%20Business) Livent Corporation manufactures a diverse range of lithium products, primarily for lithium-based batteries, specialty polymers, and chemical synthesis. The company anticipates significant growth driven by the increasing adoption of electric vehicles (EVs) and other energy storage applications, with major market growth in Asia, Europe, and North America - Livent manufactures lithium products for lithium-based batteries, specialty polymers, and chemical synthesis applications[31](index=31&type=chunk) - A major growth driver for lithium is the increasing adoption of electric vehicles (**EVs**) and other energy storage applications[31](index=31&type=chunk) - Significant market growth for lithium chemicals is occurring in Asia, followed by Europe and North America, primarily due to lithium-ion battery development[32](index=32&type=chunk) [Note 2: Principal Accounting Policies and Related Financial Information](index=14&type=section&id=Note%202%3A%20Principal%20Accounting%20Policies%20and%20Related%20Financial%20Information) The condensed consolidated financial statements are prepared in accordance with SEC interim reporting requirements and U.S. GAAP, with certain information condensed or omitted. The unaudited interim results are not indicative of full-year performance and should be read in conjunction with the 2022 Annual Report on Form 10-K - Financial statements prepared in accordance with **SEC interim reporting requirements** and **U.S. GAAP**[33](index=33&type=chunk) - Certain notes or financial information are condensed or omitted as permitted for interim reporting[33](index=33&type=chunk) - Unaudited interim results are not necessarily indicative of full-year results and should be read with the **2022 Annual Report on Form 10-K**[33](index=33&type=chunk) [Note 3: Recently Issued and Adopted Accounting Pronouncements and Regulatory Items](index=14&type=section&id=Note%203%3A%20Recently%20Issued%20and%20Adopted%20Accounting%20Pronouncements%20and%20Regulatory%20Items) For information regarding recently issued and adopted accounting pronouncements and regulatory items, readers are directed to Note 3 of the company's consolidated financial statements in its 2022 Annual Report on Form 10-K - Refer to **Note 3 in Part II, Item 8 of the 2022 Annual Report on Form 10-K** for more information on recently issued and adopted accounting pronouncements and regulatory items[34](index=34&type=chunk) [Note 4: Revenue Recognition](index=14&type=section&id=Note%204%3A%20Revenue%20Recognition) Revenue is disaggregated by geographical area and product category, showing significant growth in Asia Pacific and North America, and strong performance in Lithium Hydroxide and Butyllithium. The company has a high customer concentration and substantial multi-year take-or-pay supply agreements Disaggregated Revenue by Geographical Region (in Millions) | Geographical Region | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------ | :-------------------------------- | :-------------------------------- | | North America | $51.9 | $21.3 | | Latin America | $1.8 | $— | | Europe, Middle East & Africa | $32.8 | $14.7 | | Asia Pacific | $167.0 | $107.5 | | **Consolidated Revenue** | **$253.5** | **$143.5** | - For Q1 2023, China, the U.S., South Korea, and Japan were countries with sales exceeding **10% of consolidated revenue**, totaling **$88.4M**, **$50.2M**, **$35.1M**, and **$33.4M** respectively[35](index=35&type=chunk) - Two customers accounted for approximately **25%** and **19% of consolidated revenue** in Q1 2023, and the top 10 customers accounted for approximately **68% of consolidated revenue**[36](index=36&type=chunk) Disaggregated Revenue by Major Product Category (in Millions) | Product Category | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--------------------------------- | :-------------------------------- | :-------------------------------- | | Lithium Hydroxide | $152.7 | $67.5 | | Butyllithium | $76.3 | $33.7 | | High Purity Lithium Metal and Other Specialty Compounds | $15.0 | $13.4 | | Lithium Carbonate and Lithium Chloride | $9.5 | $28.9 | | **Consolidated Revenue** | **$253.5** | **$143.5** | - The aggregate amount of revenue expected to be recognized related to multi-year take-or-pay supply agreements is approximately **$1.8 billion** over the next six years[42](index=42&type=chunk) [Note 5: Inventories, Net](index=15&type=section&id=Note%205%3A%20Inventories%2C%20Net) The company's net inventories increased to $184.1 million as of March 31, 2023, from $152.3 million at December 31, 2022, primarily driven by an increase in semi-finished goods Inventories, Net (in Millions) | Inventory Category | March 31, 2023 | December 31, 2022 | | :----------------- | :------------- | :---------------- | | Finished goods | $49.8 | $44.6 | | Semi-finished goods | $100.7 | $57.1 | | Raw materials, supplies, and other | $33.6 | $50.6 | | **Inventories, net** | **$184.1** | **$152.3** | [Note 6: Investments](index=16&type=section&id=Note%206%3A%20Investments) Livent holds a 50% equity interest in Nemaska Lithium Inc., a non-public mining company developing the Nemaska Lithium Project. The investment is accounted for using the equity method, resulting in a higher net loss from unconsolidated affiliates in Q1 2023 due to project-related costs - Livent owns a **50% equity interest** in Nemaska Lithium Inc. (**NLI**), a non-public mining company developing the Nemaska Lithium Project in Québec, Canada[45](index=45&type=chunk)[46](index=46&type=chunk) - The investment is accounted for as an **equity method investment** on a one-quarter lag basis[46](index=46&type=chunk) Equity in Net Loss of Unconsolidated Affiliates (in Millions) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Equity in net loss of unconsolidated affiliates | $8.1 | $2.2 | | Carrying amount of equity interest in Nemaska Lithium | $449.3 (as of Mar 31, 2023) | $437.1 (as of Dec 31, 2022) | [Note 7: Restructuring and Other Charges](index=16&type=section&id=Note%207%3A%20Restructuring%20and%20Other%20Charges) Total restructuring and other charges increased to $1.9 million in Q1 2023 from $1.0 million in Q1 2022, primarily due to higher severance-related and exit costs Restructuring and Other Charges (in Millions) | Charge Category | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------------ | :-------------------------------- | :-------------------------------- | | Severance-related and exit costs | $1.7 | $0.5 | | Environmental remediation | $0.1 | $0.1 | | Other | $0.1 | $0.4 | | **Total Restructuring and other charges** | **$1.9** | **$1.0** | [Note 8: Income Taxes](index=16&type=section&id=Note%208%3A%20Income%20Taxes) The company determines its interim tax provision using an estimated annual effective tax rate (EAETR) methodology. Income tax expense significantly increased in Q1 2023 to $23.9 million, resulting in an effective tax rate of 17.2%, compared to $4.7 million and 8.1% in Q1 2022 - Interim tax provision is determined using an **Estimated Annual Effective Tax Rate (EAETR) methodology**[48](index=48&type=chunk) Income Tax Expense and Effective Tax Rate (in Millions) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Income tax expense | $23.9 | $4.7 | | Effective tax rate | 17.2% | 8.1% | [Note 9: Debt](index=17&type=section&id=Note%209%3A%20Debt) Livent's long-term debt remained stable at $242.3 million as of March 31, 2023, primarily consisting of 4.125% Convertible Senior Notes due 2025, which are now convertible at the option of holders. The company also maintains a $500 million Revolving Credit Facility with $485.1 million available and is in compliance with all debt covenants Long-Term Debt (in Millions) | Debt Instrument | March 31, 2023 | December 31, 2022 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | 4.125% Convertible Senior Notes due 2025 | $245.8 | $245.8 | | Transaction costs - 2025 Notes | $(3.5) | $(3.9) | | **Total long-term debt** | **$242.3** | **$241.9** | - Holders of the **2025 Notes** have the option to convert all or any portion of their notes through **June 30, 2023**, due to the common stock price exceeding **130% of the conversion price**[53](index=53&type=chunk) - The company has a **$500 million senior secured revolving credit facility**, with **$485.1 million available funds** as of March 31, 2023, and was in compliance with all debt covenants (maximum first lien leverage ratio of **3.5**, minimum interest coverage ratio of **3.5**)[55](index=55&type=chunk)[56](index=56&type=chunk) [Note 10: Equity](index=18&type=section&id=Note%2010%3A%20Equity) Livent's total equity increased to $1,561.0 million as of March 31, 2023, driven by net income and stock compensation plans. The company does not expect to pay dividends in the foreseeable future Common Stock Issued and Outstanding | Metric | Balance as of Dec 31, 2022 | RSU Awards | Stock Option Awards | Purchases of Treasury Stock - NQSP | Balance as of Mar 31, 2023 | | :------------------------------------------ | :------------------------- | :--------- | :------------------ | :--------------------------------- | :------------------------- | | Issued | 179,652,125 | 53,374 | 10,273 | — | 179,715,772 | | Treasury | (103,575) | — | — | (1,898) | (105,473) | | **Outstanding** | **179,548,550** | **53,374** | **10,273** | **(1,898)** | **179,610,299** | Accumulated Other Comprehensive Loss (in Millions) | Metric | As of Dec 31, 2022 | Other Comprehensive Losses Before Reclassifications | As of Mar 31, 2023 | | :------------------------------------------ | :----------------- | :-------------------------------------------------- | :----------------- | | Foreign currency adjustments | $(51.0) | $1.5 | $(49.5) | | Derivative Instruments | $— | $0.2 | $0.2 | | **Accumulated other comprehensive loss, net of tax** | **$(51.0)** | **$1.7** | **$(49.3)** | - The company paid **no dividends** for the three months ended March 31, 2023 and 2022, and does not expect to pay any in the foreseeable future[62](index=62&type=chunk) [Note 11: Earnings Per Share](index=18&type=section&id=Note%2011%3A%20Earnings%20Per%20Share) Basic earnings per common share increased to $0.64 in Q1 2023 from $0.33 in Q1 2022, while diluted EPS rose to $0.55 from $0.28. The calculation includes dilutive share equivalents from share-based plans and 2025 Notes, with certain stock options being anti-dilutive in Q1 2023 Earnings Per Share Calculation (in Millions, Except Share and Per Share Data) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Net income | $114.8 | $53.2 | | Weighted average common shares outstanding - basic | 179.6 | 161.7 | | Dilutive share equivalents from share-based plans | 1.5 | 1.6 | | Dilutive share equivalents from 2025 Notes | 28.1 | 28.1 | | Weighted average common shares outstanding - diluted | 209.2 | 191.4 | | Basic earnings per common share | $0.64 | $0.33 | | Diluted earnings per common share | $0.55 | $0.28 | - Options to purchase **182,109 shares** of common stock at an average exercise price of **$23.33 per share** were anti-dilutive in Q1 2023 and excluded from diluted EPS calculation[67](index=67&type=chunk) [Note 12: Financial Instruments, Risk Management and Fair Value Measurements](index=19&type=section&id=Note%2012%3A%20Financial%20Instruments%2C%20Risk%20Management%20and%20Fair%20Value%20Measurements) Livent uses derivative financial instruments, primarily foreign exchange forward contracts, to manage currency risk exposures in various foreign currencies, excluding the Argentine peso. The company applies hedge accounting for cash flow hedges and recognizes fair value changes for non-designated derivatives in earnings. The fair value of debt is significantly higher than its carrying amount, and financial instruments are categorized into a three-level fair value hierarchy - The estimated fair value of the company's debt was **$675.8 million**, while the carrying amount was **$242.3 million** as of March 31, 2023. The **2025 Notes** are classified as **Level 2** in the fair value hierarchy[72](index=72&type=chunk) - The company uses foreign exchange forward contracts to reduce the effects of fluctuating foreign currency exchange rates, primarily for the Euro, British pound, Chinese yuan, and Japanese yen. It does not hedge Argentine peso risks[75](index=75&type=chunk) - As of March 31, 2023, the company had open foreign currency forward contracts in Accumulated Other Comprehensive Loss (**AOCL**) with a net after-tax gain position of **$0.2 million** designated as cash flow hedges[77](index=77&type=chunk) - Open forward contracts not designated as cash flow hedging instruments had a U.S. dollar equivalent of approximately **$112.2 million** as of March 31, 2023[81](index=81&type=chunk) Pre-tax Gain or (Loss) Recognized in Income on Derivatives Not Designated as Cash Flow Hedging Instruments (in Millions) | Derivative Type | Location of Gain or (Loss) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------------ | :------------------------- | :-------------------------------- | :-------------------------------- | | Foreign Exchange contracts | Cost of sales | $2.1 | $(1.6) | | **Total** | | **$2.1** | **$(1.6)** | [Note 13: Commitments and Contingencies](index=23&type=section&id=Note%2013%3A%20Commitments%20and%20Contingencies) Livent is involved in various legal proceedings, including customs and tax audits in Argentina, for which a reasonable estimate of potential loss cannot currently be determined. The company's operating leases have a weighted average remaining term of 7.3 years and total future minimum lease payments of $6.7 million (undiscounted) - The company is a party to various legal proceedings, including customs audits (**2015-2019, 2021, 2022**) and transfer pricing audits (**2017, 2018**) by Argentine authorities related to Lithium Carbonate exports[94](index=94&type=chunk)[96](index=96&type=chunk)[97](index=97&type=chunk) - A range of reasonably possible liabilities for Argentine customs and tax matters cannot be currently estimated[97](index=97&type=chunk) - All leases are operating leases, with a weighted average remaining lease term of **7.3 years** and a weighted average discount rate of **5.2%** as of March 31, 2023[98](index=98&type=chunk)[102](index=102&type=chunk) Maturity Analysis of Operating Lease Liabilities (Undiscounted Cash Flows in Millions) | Period | Undiscounted Cash Flows | | :--------------- | :---------------------- | | Remainder of 2023 | $1.0 | | 2024 | $1.4 | | 2025 | $1.4 | | 2026 | $0.6 | | 2027 | $0.3 | | Thereafter | $2.0 | | **Total future minimum lease payments** | **$6.7** | | Less: Imputed interest | $(1.1) | | **Total** | **$5.6** | [Note 14: Supplemental Information](index=25&type=section&id=Note%2014%3A%20Supplemental%20Information) This note provides detailed breakdowns of prepaid and other current assets, other assets, accrued and other current liabilities, and other long-term liabilities, highlighting significant items such as Argentina government receivables and deferred compensation plan obligations Prepaid and Other Current Assets (in Millions) | Category | March 31, 2023 | December 31, 2022 | | :-------------------------- | :------------- | :---------------- | | Tax related items | $18.7 | $22.0 | | Prepaid expenses | $10.1 | $11.6 | | Argentina government receivable | $7.2 | $6.7 | | Bank Acceptance Drafts | $18.8 | $6.9 | | Derivative assets | $0.3 | $— | | **Total** | **$67.5** | **$61.1** | Other Assets (in Millions) | Category | March 31, 2023 | December 31, 2022 | | :-------------------------- | :------------- | :---------------- | | Argentina government receivable | $81.7 | $80.3 | | Advance to contract manufacturers | $20.2 | $17.2 | | Long-term raw materials inventory | $1.6 | $1.6 | | Tax related items | $3.9 | $3.7 | | Capitalized software, net | $1.4 | $1.4 | | Other assets | $13.4 | $12.2 | | **Total** | **$122.2** | **$116.4** | Accrued and Other Current Liabilities (in Millions) | Category | March 31, 2023 | December 31, 2022 | | :-------------------------- | :------------- | :---------------- | | Accrued payroll | $13.2 | $19.8 | | Restructuring reserves | $2.9 | $3.1 | | Retirement liability - 401k | $0.7 | $2.6 | | Environmental reserves, current | $0.6 | $0.6 | | Severance | $— | $0.1 | | Other accrued and other current liabilities | $18.8 | $11.2 | | **Total** | **$36.2** | **$37.4** | Other Long-Term Liabilities (in Millions) | Category | March 31, 2023 | December 31, 2022 | | :-------------------------- | :------------- | :---------------- | | Deferred compensation plan obligation | $6.2 | $5.1 | | Contingencies related to uncertain tax positions | $6.1 | $5.7 | | Self-insurance reserves | $1.5 | $1.5 | | Asset retirement obligations | $0.2 | $0.2 | | Other long-term liabilities | $4.1 | $3.4 | | **Total** | **$18.1** | **$15.9** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Livent's financial condition and results of operations for the three months ended March 31, 2023, highlighting significant revenue and net income growth driven by higher pricing and lithium hydroxide sales volumes. It also discusses critical accounting estimates, business outlook, liquidity, capital resources, and market risks, while acknowledging global economic uncertainties and operational challenges [SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION](index=27&type=section&id=SPECIAL%20NOTE%20REGARDING%20FORWARD-LOOKING%20INFORMATION) This section provides important cautionary statements regarding the forward-looking nature of certain information presented in the report - The report contains forward-looking statements identified by words like 'will likely result,' 'expect,' 'believe,' 'anticipates,' 'predicts,' 'forecasts,' 'estimates,' 'projects,' 'potential,' or 'intends'[114](index=114&type=chunk) - These statements are based on current views and assumptions and involve known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially[114](index=114&type=chunk) - Investors are cautioned not to place undue reliance on forward-looking statements, and the company is under no duty to publicly revise or update them[116](index=116&type=chunk) [APPLICATION OF CRITICAL ACCOUNTING ESTIMATES](index=27&type=section&id=APPLICATION%20OF%20CRITICAL%20ACCOUNTING%20ESTIMATES) This section discusses the significant judgments, assumptions, and estimates inherent in the company's financial reporting - Financial statements require management judgments, assumptions, and estimates that can materially impact financial condition and results of operations[117](index=117&type=chunk) - Critical accounting estimates, involving significant measurement uncertainty and subjectivity, are reviewed with the Audit Committee[118](index=118&type=chunk) - Despite global economic uncertainties (inflation, rising interest rates, Ukraine conflict), the company is not aware of specific events requiring an update to estimates or materially affecting asset/liability carrying values as of the report date[119](index=119&type=chunk) [OVERVIEW](index=27&type=section&id=OVERVIEW) This section provides a high-level introduction to Livent Corporation's business, products, and strategic focus - Livent Corporation is a pure-play, fully integrated lithium company with approximately **80 years of production experience**[120](index=120&type=chunk)[121](index=121&type=chunk) - Primary products include battery-grade lithium hydroxide, lithium carbonate, butyllithium, and high purity lithium metal, critical for **EV** and energy storage battery markets[120](index=120&type=chunk)[122](index=122&type=chunk) - The company's strategy focuses on supplying high-performance lithium compounds to the rapidly growing **EV** and broader energy storage battery markets[120](index=120&type=chunk) [First Quarter 2023 Highlights](index=28&type=section&id=First%20Quarter%202023%20Highlights) This section summarizes Livent Corporation's key financial and operational achievements for the first quarter of 2023 Q1 2023 Financial Highlights (in Millions) | Metric | Q1 2023 | Q1 2022 | Change (%) | | :-------------------- | :------ | :------ | :--------- | | Revenue | $253.5 | $143.5 | 76.6% | | Net income | $114.8 | $53.2 | 115.8% | | Adjusted EBITDA | $157.4 | $53.3 | 195.3% | - The lithium market remains strong, driven by increased **EV adoption** and energy storage applications, despite global economic challenges like inflation, high energy costs, and supply chain disruptions[123](index=123&type=chunk) - Operations in Argentina face unique challenges including high inflation, a weakening currency, political uncertainty, and foreign currency restrictions impacting imports for operations and expansion projects[125](index=125&type=chunk) - Key matters management is monitoring include global expansion efforts, the Nemaska Lithium Project, lithium supply/demand balance, changing lithium prices, inflation, interest rates, currency fluctuations, recession prospects, and global supply chain issues[128](index=128&type=chunk) [2023 Business Outlook](index=29&type=section&id=2023%20Business%20Outlook) This section outlines Livent Corporation's expectations for its business performance and market conditions in 2023 - For 2023, Livent expects **higher volumes**, particularly in the second half due to new production units ramping up, and **higher average pricing** across its lithium products[129](index=129&type=chunk) - **Higher profitability** is anticipated versus 2022, with the outlook increased after achieving higher realized prices in the first quarter[129](index=129&type=chunk) - **Higher costs** are also expected compared to the prior year, mainly related to royalties, the ramp-up of new production units, and general inflationary pressures[129](index=129&type=chunk) [RESULTS OF OPERATIONS](index=30&type=section&id=RESULTS%20OF%20OPERATIONS) This section provides a detailed analysis of Livent Corporation's financial performance for the three months ended March 31, 2023 and 2022 Consolidated Results of Operations (in Millions) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Revenue | $253.5 | $143.5 | | Cost of sales | $87.5 | $83.6 | | Gross margin | $166.0 | $59.9 | | Selling, general and administrative expenses | $16.3 | $11.8 | | Research and development expenses | $1.0 | $0.9 | | Restructuring and other charges | $1.9 | $1.0 | | Separation-related costs | $— | $0.1 | | Total costs and expenses | $106.7 | $97.4 | | Income from operations before equity in net loss of unconsolidated affiliates and other gain | $146.8 | $46.1 | | Equity in net loss of unconsolidated affiliates | $8.1 | $2.2 | | Other gain | $— | $(14.0) | | Income from operations before income taxes | $138.7 | $57.9 | | Income tax expense | $23.9 | $4.7 | | Net income | $114.8 | $53.2 | Non-GAAP Reconciliation (in Millions) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Net income | $114.8 | $53.2 | | Add back: Income tax expense | $23.9 | $4.7 | | Add back: Depreciation and amortization | $6.8 | $6.4 | | **EBITDA (Non-GAAP)** | **$145.5** | **$64.3** | | Add back: Argentina remeasurement losses | $4.1 | $1.0 | | Add back: Restructuring and other charges | $1.9 | $1.0 | | Add back: Separation-related costs | $— | $0.1 | | Add back: COVID-19 related costs | $— | $0.8 | | Add back: Other loss | $5.9 | $1.6 | | Subtract: Blue Chip Swap gain | $— | $(14.0) | | Subtract: Argentina interest income | $— | $(1.5) | | **Adjusted EBITDA (Non-GAAP)** | **$157.4** | **$53.3** | [Revenue](index=31&type=section&id=Revenue) This section analyzes the drivers and changes in Livent Corporation's revenue for the first quarter of 2023 - Revenue for Q1 2023 increased by **$110.0 million**, or approximately **77%**, to **$253.5 million**, compared to **$143.5 million** in Q1 2022[133](index=133&type=chunk) - The increase was driven by **higher pricing** across all products and **higher lithium hydroxide sales volumes**, partially offset by a decrease in lithium carbonate sales volumes[133](index=133&type=chunk) [Gross margin](index=31&type=section&id=Gross%20margin) This section examines the factors influencing Livent Corporation's gross margin performance in the first quarter of 2023 - Gross margin for Q1 2023 increased by **$106.1 million**, or approximately **177%**, to **$166.0 million**, compared to **$59.9 million** in Q1 2022[134](index=134&type=chunk) - The increase was primarily due to **higher pricing** across all products and **higher lithium hydroxide sales volumes**, partially offset by decreased lithium carbonate sales volumes and higher raw material and other operating costs[134](index=134&type=chunk) [Selling, general and administrative expenses](index=31&type=section&id=Selling%2C%20general%20and%20administrative%20expenses) This section details the changes and primary drivers of Livent Corporation's selling, general, and administrative expenses - Selling, general and administrative expenses for Q1 2023 increased by **$4.5 million**, or approximately **38%**, to **$16.3 million**, compared to **$11.8 million** in Q1 2022[135](index=135&type=chunk) - The increase was primarily due to **higher professional fees** and **employee compensation**[135](index=135&type=chunk) [Equity in net loss of unconsolidated affiliate](index=31&type=section&id=Equity%20in%20net%20loss%20of%20unconsolidated%20affiliate) This section explains the increase in Livent Corporation's equity in net loss from its unconsolidated affiliate - Equity in net loss of unconsolidated affiliate increased by **$5.9 million** to **$8.1 million** in Q1 2023, compared to **$2.2 million** in Q1 2022[136](index=136&type=chunk) - This increase is attributed to **project-related costs** incurred by Nemaska Lithium as it finalizes late-stage engineering work[136](index=136&type=chunk) [Income tax expense](index=31&type=section&id=Income%20tax%20expense) This section analyzes the changes in Livent Corporation's income tax expense and effective tax rate - Income tax expense increased to **$23.9 million** in Q1 2023, compared to **$4.7 million** in Q1 2022[137](index=137&type=chunk) - The increase was primarily due to **higher income from operations** and fluctuations in foreign currency impacts in Argentina (**$2.5 million** in Q1 2023 vs. **$(4.3) million** in Q1 2022)[137](index=137&type=chunk) [Net income](index=31&type=section&id=Net%20income) This section details the significant increase in Livent Corporation's net income and its contributing factors - Net income for Q1 2023 increased by **$61.6 million**, or approximately **116%**, to **$114.8 million**, compared to **$53.2 million** in Q1 2022[138](index=138&type=chunk) - The increase was primarily driven by **higher pricing** across all products and **higher lithium hydroxide sales volumes**, partially offset by decreased lithium carbonate sales volumes, higher raw material and operating costs, increased equity in net loss of unconsolidated affiliates, and higher income tax expense[138](index=138&type=chunk) - Q1 2022 included a **$14.0 million gain** from the sale of Argentina Sovereign U.S. dollar-denominated bonds[138](index=138&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=32&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) This section discusses Livent Corporation's cash position, cash flow activities, and available funding for operations and investments - Primary sources of cash are **operations** and borrowings under the **Revolving Credit Facility**[139](index=139&type=chunk) Cash and Cash Equivalents (in Millions) | Metric | March 31, 2023 | December 31, 2022 | | :-------------------- | :------------- | :---------------- | | Cash and cash equivalents | $194.1 | $189.0 | | Cash held by foreign subsidiaries | $32.7 | N/A | Cash Flow Activities (in Millions) | Activity | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Cash provided by operating activities | $102.9 | $10.8 | | Cash used in investing activities | $(98.1) | $(55.4) | | Cash (used in)/provided by financing activities | $(0.1) | $0.1 | - The increase in cash from operating activities was driven by **higher net income** and **decreased trade receivables**, partially offset by increased inventories and decreased accounts payable[142](index=142&type=chunk) - The increase in cash used in investing activities was primarily due to a **$20.2 million investment in Nemaska Lithium** and the absence of **$14.0 million proceeds from bond sales** in Q1 2022[143](index=143&type=chunk) - Remaining borrowing capacity under the Revolving Credit Facility was **$485.1 million** as of March 31, 2023[145](index=145&type=chunk) - Estimated 2023 total capital spending is in the range of **$325 million to $375 million**[146](index=146&type=chunk) - The company believes available cash, cash from operations, and borrowing availability will provide **adequate liquidity for the next 12 months**[150](index=150&type=chunk) [Commitments and Contingencies](index=32&type=section&id=Commitments%20and%20Contingencies) This section refers to detailed information on Livent Corporation's various commitments and potential liabilities - Refer to **Note 13** of the condensed consolidated financial statements for detailed information on commitments and contingencies[151](index=151&type=chunk) [Contractual Obligations and Commercial Commitments](index=33&type=section&id=Contractual%20Obligations%20and%20Commercial%20Commitments) This section confirms no significant changes to Livent Corporation's contractual obligations since the last annual report - There have been **no significant changes** to contractual commitments during the period ended March 31, 2023, compared to those disclosed in the **2022 Annual Report on Form 10-K**[152](index=152&type=chunk) [Climate Change](index=33&type=section&id=Climate%20Change) This section directs readers to the company's annual report for a comprehensive discussion on climate change-related matters - A detailed discussion related to climate change can be found in **Part II, Item 7 of the 2022 Annual Report on Form 10-K**[153](index=153&type=chunk) [Off-Balance Sheet Arrangements](index=33&type=section&id=Off-Balance%20Sheet%20Arrangements) This section confirms that Livent Corporation has no material off-balance sheet arrangements impacting its financial condition - The company does not have any **off-balance sheet arrangements** that are material to investors or are reasonably likely to have a current or future effect on its financial condition, revenues, expenses, results of operations, liquidity, capital expenditures, or capital resources[154](index=154&type=chunk) [DERIVATIVE FINANCIAL INSTRUMENTS AND MARKET RISKS](index=33&type=section&id=DERIVATIVE%20FINANCIAL%20INSTRUMENTS%20AND%20MARKET%20RISKS) This section discusses Livent Corporation's exposure to market risks and its strategies for managing them using derivative instruments - The company's earnings, cash flows, and financial position are exposed to market risks from fluctuations in commodity prices, interest rates, and foreign currency exchange rates[155](index=155&type=chunk) - A controlled program of risk management, including derivative contracts with major financial institutions, is used to minimize exposure[155](index=155&type=chunk) - As of March 31, 2023, the net derivative financial instrument position was a **net asset of $0.3 million**[157](index=157&type=chunk) [Foreign Currency Exchange Rate Risk](index=33&type=section&id=Foreign%20Currency%20Exchange%20Rate%20Risk) This section details Livent Corporation's exposure to foreign currency fluctuations and its hedging strategies, excluding the Argentine peso - The company is exposed to currency risk from sales, purchases, expenses, and intercompany loans denominated in currencies other than the U.S. dollar, primarily the Euro, British pound, Chinese yuan, Argentine peso, and Japanese yen[158](index=158&type=chunk) - Foreign currency debt and forward foreign exchange contracts are used to reduce net asset exposure and hedge firm/highly anticipated foreign currency cash flows, but the company does not hedge Argentine peso risks due to limited availability and high cost of suitable derivative instruments[158](index=158&type=chunk) Sensitivity Analysis: 10% Change in Foreign Currency Exchange Rates (in Millions) | Metric | Net asset position as of March 31, 2023 | Net liability position with 10% strengthening | Net asset position with 10% weakening | | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :------------------------------------ | | Net asset/(liability) position | $0.3 | $(3.3) | $3.2 | [Interest Rate Risk](index=33&type=section&id=Interest%20Rate%20Risk) This section describes Livent Corporation's exposure to interest rate changes on its debt portfolio - The company's debt portfolio includes **fixed-rate (2025 Notes)** and **variable-rate (Revolving Credit Facility)** debt[162](index=162&type=chunk) - As of March 31, 2023, there were **no outstanding balances** under the Revolving Credit Facility[162](index=162&type=chunk) - The company can use interest rate swap agreements to manage interest rate exposure, but had **none** as of March 31, 2023[161](index=161&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=34&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section refers to the 'Derivative Financial Instruments and Market Risks' discussion within Item 2 for all required quantitative and qualitative disclosures regarding market risk - Information required by this item is provided in '**Derivative Financial Instruments and Market Risks**' under **Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations**[163](index=163&type=chunk) [Item 4. Controls and Procedures](index=34&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, with the participation of the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 31, 2023. No material changes in internal control over financial reporting occurred during the quarter - The company's disclosure controls and procedures were evaluated and concluded to be **effective** as of March 31, 2023[164](index=164&type=chunk) - **No changes** in internal control over financial reporting occurred during Q1 2023 that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[165](index=165&type=chunk) [Part II - OTHER INFORMATION](index=35&type=section&id=Part%20II%20-%20OTHER%20INFORMATION) This part includes information on legal proceedings, risk factors, equity sales, and exhibits for Livent Corporation [Item 1. Legal Proceedings](index=35&type=section&id=Item%201.%20Legal%20Proceedings) Livent is involved in routine legal proceedings, and based on current information and reserves, no material adverse effect on financial position, liquidity, or results of operations is expected. This section incorporates by reference relevant details from Note 13 of the condensed consolidated financial statements - The company is involved in legal proceedings in the ordinary course of business, including workers' compensation matters[167](index=167&type=chunk) - Based on currently available information and established reserves, **no material adverse effect** on financial position, liquidity, or results of operations is expected from known legal proceedings[167](index=167&type=chunk) - This section incorporates by reference information from **Note 13** to the condensed consolidated financial statements[167](index=167&type=chunk) [Item 1A. Risk Factors](index=35&type=section&id=Item%201A.%20Risk%20Factors) This section directs readers to review the comprehensive risk factors detailed in Part I, Item 1A of the company's 2022 Annual Report on Form 10-K, noting that additional, currently unknown or immaterial risks could also adversely affect the business - Readers should carefully consider the risk factors discussed in **Part I, Item 1A of the 2022 Annual Report on Form 10-K**[168](index=168&type=chunk) - Additional risks and uncertainties not currently known or deemed immaterial may also adversely affect the business, financial condition, or future results[168](index=168&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=35&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section summarizes the repurchases of Livent's common stock for the three months ended March 31, 2023, which were conducted by the trustee of the Livent Non-Qualified Savings Plan (NQSP) for employee investments, with no publicly announced stock repurchase programs Repurchases of Common Shares (Q1 2023) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | | :------------------------------------------ | :------------------------------- | :--------------------------- | | January 1 through January 31, 2023 | 220.4 | $28.18 | | February 1 through February 28, 2023 | 336.8 | $29.50 | | March 1 through March 31, 2023 | 1,341 | $27.81 | | **Total Q1 2023** | **1,898.2** | **$28.15** | - Shares were reacquired by the trustee of the **Livent NQSP** for investments by employees in the company's common stock[172](index=172&type=chunk) - The company has **no publicly announced stock repurchase programs**[172](index=172&type=chunk) [Item 6. Exhibits](index=36&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed as part of the Quarterly Report on Form 10-Q, including interactive data files, the compensation policy for non-employee directors, and certifying statements from the CEO and CFO - Exhibits include **Interactive Data File (101)**, the cover page in **Inline XBRL (104)**, Livent Corporation Compensation Policy for Non-Employee Directors (**10.1**), and Certifying Statements from the CEO and CFO (**31.1, 31.2, 32.1, 32.2**)[173](index=173&type=chunk)[174](index=174&type=chunk) [SIGNATURES](index=37&type=section&id=SIGNATURES) This section contains the formal certification and signing of the quarterly report by an authorized officer - The report was signed on behalf of Livent Corporation by **Gilberto Antoniazzi, Vice President and Chief Financial Officer**, on **May 4, 2023**[177](index=177&type=chunk)

[Report Information](index=1&type=section&id=Report%20Information) Livent Corporation filed its Form 10-K annual report for the year ended December 31, 2022, registered in Delaware, trading as LTHM on the NYSE, and classified as a well-known seasoned issuer and large accelerated filer [Filing Details](index=1&type=section&id=Filing%20Details) Livent Corporation filed its Form 10-K annual report for the year ended December 31, 2022, registered in Delaware, and listed on the NYSE as LTHM - Livent Corporation filed its Form 10-K annual report for the year ended December 31, 2022[1](index=1&type=chunk) - The company is incorporated in Delaware, with its principal executive offices in Philadelphia, and phone number 215-299-5900[2](index=2&type=chunk) Filing Details | Metric | Detail | | :--- | :--- | | Ticker Symbol | LTHM | | Exchange | New York Stock Exchange | | Well-Known Seasoned Issuer | Yes | | Large Accelerated Filer | Yes | [Market Value and Shares Outstanding](index=3&type=section&id=Market%20Value%20and%20Shares%20Outstanding) As of June 30, 2022, the aggregate market value of the company's voting stock held by non-affiliates was approximately $4.04 billion, with 179,548,550 shares of common stock outstanding as of December 31, 2022 Market Value and Shares Outstanding | Metric | Amount/Quantity | | :--- | :--- | | Aggregate Market Value of Voting Stock Held by Non-Affiliates (June 30, 2022) | $4,040,080,313 | | Shares of Common Stock Outstanding (December 31, 2022) | 179,548,550 shares | [Documents Incorporated by Reference](index=3&type=section&id=Documents%20Incorporated%20by%20Reference) Portions of the proxy statement for the company's 2023 Annual Meeting of Stockholders are incorporated by reference into Part III of this 10-K report - Portions of the proxy statement for the 2023 Annual Meeting of Stockholders are incorporated by reference into Part III of this 10-K report[7](index=7&type=chunk) [Note Regarding Industry and Market Data](index=6&type=section&id=Note%20Regarding%20Industry%20and%20Market%20Data) The report includes market and industry statistics from reliable industry publications, but these forward-looking statements are not independently verified and should not be unduly relied upon - Market and industry statistics in the report are from industry publications deemed reliable, but not independently verified, and the company does not guarantee their accuracy or completeness[23](index=23&type=chunk) - Projections and other forward-looking information involve uncertainties and should not be unduly relied upon by investors[23](index=23&type=chunk) [Glossary](index=5&type=section&id=Glossary) This section defines key terms and abbreviations used in the report, covering financial, operational, legal, environmental, and social governance (ESG) aspects, such as 2025 Notes, AOCL, EV, LCE, and REACH - The glossary defines key terms and abbreviations used in the report, including financial, operational, legal, environmental, and social governance (ESG) aspects[20](index=20&type=chunk)[21](index=21&type=chunk) [PART I](index=7&type=section&id=PART%20I) This section provides a comprehensive overview of Livent Corporation's business, including its core operations, strategic initiatives, competitive advantages, and various risk factors [Item 1. Business](index=7&type=section&id=Item%201.%20Business) Livent Corporation is a pure-play, fully integrated lithium company focused on high-performance lithium compounds, strategically positioned to meet the growing demand from the EV and battery markets - Livent Corporation is a pure-play, fully integrated lithium company with nearly 80 years of production experience, specializing in high-performance lithium compounds[26](index=26&type=chunk) - Key products include battery-grade lithium hydroxide, lithium carbonate, butyllithium, and high-purity lithium metal, used in electric vehicles, batteries, polymers, and pharmaceuticals[26](index=26&type=chunk)[27](index=27&type=chunk) - The company's strategy focuses on the electric vehicle and broader battery markets while maintaining leadership in butyllithium and high-purity lithium metal[26](index=26&type=chunk) [Company Formation and Core Business](index=7&type=section&id=Company%20Formation%20and%20Core%20Business) Livent Corporation, spun off from FMC Corporation in 2018, specializes in producing high-performance lithium compounds essential for electric vehicles, batteries, polymers, and pharmaceuticals - Livent Corporation was incorporated in Delaware on February 27, 2018, completed its initial public offering in October 2018, and separated from FMC Corporation in March 2019[24](index=24&type=chunk) - The company is a pure-play, fully integrated lithium company, with key products including battery-grade lithium hydroxide, lithium carbonate, butyllithium, and high-purity lithium metal[26](index=26&type=chunk) - These products are critical inputs for high-performance applications such as electric vehicles (EVs) and the broader battery market, polymers, pharmaceutical products, and aerospace lightweight materials[26](index=26&type=chunk)[27](index=27&type=chunk) [Livent Strategy](index=8&type=section&id=Livent%20Strategy) Livent's strategy leverages the growing demand for high-performance lithium compounds driven by EV sales, investing in assets, technology, and talent to expand capacity, diversify supply, and advance sustainable practices - The company's strategy is to capitalize on the demand for high-performance lithium compounds driven by EV sales growth, investing in assets, technology, and talent to meet customer needs[29](index=29&type=chunk)[30](index=30&type=chunk) - Capacity expansion plans include: lithium hydroxide expansion in Bessemer City, North Carolina (mechanically complete by end of 2022), lithium carbonate expansion in Argentina (two phases online in early 2023 and 2024, totaling **70,000 metric tons** capacity), and **15,000 metric tons** of lithium hydroxide capacity construction in China (mechanically complete by end of 2023)[31](index=31&type=chunk)[32](index=32&type=chunk) - The company seeks to diversify lithium supply sources, including further expansion of its Argentine operations, increasing its stake in Nemaska Lithium Inc., acquiring new resources, or entering long-term agreements[35](index=35&type=chunk) - The company is committed to R&D, developing next-generation lithium compounds (e.g., LIOVIX®), and continuously improving extraction and processing technologies to meet evolving customer needs and reduce its environmental footprint[36](index=36&type=chunk)[37](index=37&type=chunk) - The company prioritizes talent investment, attracting and retaining research scientists, engineers, and technical sales personnel through training and development, and fostering an inclusive and positive work environment[38](index=38&type=chunk) - Sustainability is a core company value, aiming to integrate ESG considerations into business decisions and striving to be a benchmark for sustainability, transparency, and independent verification in the lithium industry[39](index=39&type=chunk)[40](index=40&type=chunk) [Financial Information About Our Business](index=9&type=section&id=Financial%20Information%20About%20Our%20Business) Operating as a single reportable segment, Livent's revenue primarily derives from lithium product sales, with anticipated growth in lithium hydroxide, lithium carbonate, and Asian operations driven by the expanding EV and energy storage markets - The company operates as a single reportable business segment, with primary revenue derived from the sale of lithium products[42](index=42&type=chunk) - Revenue from lithium hydroxide, lithium carbonate, and Asian operations is expected to increase with the growth of the electric vehicle and energy storage battery markets[43](index=43&type=chunk) [Business Overview and Competitive Advantages](index=9&type=section&id=Business%20Overview%20and%20Competitive%20Advantages) Livent holds a leading reputation in high-performance lithium compounds, recognized globally for its battery-grade lithium hydroxide, leveraging its vertically integrated production from low-cost Argentine lithium deposits and proprietary process knowledge - The company is one of the few lithium suppliers whose battery-grade lithium hydroxide is qualified by global customers in the EV market[44](index=44&type=chunk) - The company is a vertically integrated lithium producer, possessing one of the lowest-cost lithium deposits globally (Salar del Hombre Muerto, Argentina) and an industry-leading sustainability footprint[45](index=45&type=chunk) - The company has proprietary process knowledge to produce high-quality, low-impurity lithium carbonate and lithium chloride, with global manufacturing capabilities in the U.S., U.K., and China[45](index=45&type=chunk)[46](index=46&type=chunk) [Capacity and Production](index=10&type=section&id=Capacity%20and%20Production) As of December 31, 2022, Livent's lithium product capacity and production data show increased output for lithium hydroxide and butyllithium, a decrease for high-purity lithium metal, and stable theoretical capacity for basic lithium products with an overall increase in total LCE production 2020-2022 Lithium Product Capacity and Production (MT) | Product Category | Product | 2022 Capacity (MT) | 2022 Production (MT) | 2021 Capacity (MT) | 2021 Production (MT) | 2020 Capacity (MT) | 2020 Production (MT) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | High-Performance Lithium | Lithium Hydroxide | 30,000 | 21,493 | 25,000 | 19,671 | 25,000 | 14,686 | | | Butyllithium | 3,265 | 2,520 | 3,265 | 2,549 | 3,265 | 2,180 | | | High-Purity Lithium Metal | 250 | 88 | 250 | 156 | 250 | 160 | | Basic Lithium | Lithium Carbonate | 18,000 | 16,950 | 18,000 | 15,542 | 18,000 | 15,589 | | | Lithium Chloride | 9,000 | 4,750 | 9,000 | 3,723 | 9,000 | 4,836 | | Total Basic Lithium Production (LCE) | | | 20,500 | | 18,500 | | 19,500 | [Products and Markets](index=11&type=section&id=Products%20and%20Markets) Livent offers a range of high-performance lithium compounds customized for specific customer applications in EVs, greases, polymers, pharmaceuticals, and primary batteries, leveraging long-term partnerships and vertical integration - The company's high-performance lithium compounds are produced to customer-specific application and performance requirements, serving as critical inputs in their manufacturing processes[54](index=54&type=chunk) High-Performance Compounds and Their Applications | Product Category | Differentiated Advantage | End-Use Applications | | :--- | :--- | :--- | | Battery-Grade Lithium Hydroxide | One of few major suppliers for EV applications; balanced capacity in U.S. and China; EV application qualified products; 25+ years of collaboration with EV and battery value chain customers; ability to sell multiple lithium products to customers | Electric Vehicles | | Battery-Grade Lithium Carbonate | One of the lowest-cost lithium producers globally; strong sustainability profile for Argentine brine and lithium carbonate operations; strong sustainability profile for U.S. and China lithium hydroxide operations | Electric Vehicles | | Non-Battery Lithium Hydroxide | Focus on applications with high grease performance requirements; decades of stable customer relationships; high level of technical service | High-Performance Greases | | Butyllithium | Regional manufacturing facilities support global customers | Polymers, Pharmaceuticals | | High-Purity Lithium Metal and Other Specialty Products | One of few high-purity lithium metal producers, only fully vertically integrated producer in the West; niche high-value specialty applications | Primary Batteries | | Other Specialty Products | Lithium phosphate, pharmaceutical-grade lithium carbonate, high-purity lithium chloride, and specialty organometallics | | [Competition and Industry Overview](index=11&type=section&id=Competition%20and%20Industry%20Overview) The global lithium compound market is experiencing significant growth driven by lithium-ion battery development, with Livent competing through advanced technology, high product quality, cost efficiency, and sustainable practices, leveraging its low-cost Argentine brine resources - The global lithium compound market growth is significant, primarily driven by the development and manufacturing of lithium-ion battery cathode materials, currently concentrated in Asia, with future capacity increases expected in Europe and North America[56](index=56&type=chunk) - Market entry barriers include lithium raw material supply, ability to produce quality and quantity, technical expertise, and development timelines[56](index=56&type=chunk) - Livent's competitive advantages include advanced technology, high product quality, reliability, customer and technical service, cost efficiency, safety and sustainability, and low-cost lithium brine resources from Salar del Hombre Muerto, Argentina, coupled with a vertically integrated manufacturing approach[58](index=58&type=chunk) - Key competitors include Albemarle Corporation and Ganfeng Lithium[58](index=58&type=chunk) [Growth Drivers](index=12&type=section&id=Growth%20Drivers) Strong growth in electric vehicle sales is the primary driver for lithium demand, with high-nickel cathode and LFP materials further boosting battery-grade lithium hydroxide and carbonate, alongside opportunities in renewable energy storage - Electric vehicle (EV) sales are projected to grow significantly, reaching approximately **39 million and 73 million units by 2030 and 2040**, respectively, with penetration rates of **40% and 73%**, according to BloombergNEF and EV Volumes[59](index=59&type=chunk) - Continued strong demand for high-nickel content cathode materials will drive demand for battery-grade lithium hydroxide, while the proliferation of lithium iron phosphate (LFP) cathode materials will boost lithium carbonate demand[63](index=63&type=chunk) - The combination of solar and wind installations with lithium-ion battery energy storage systems also presents growth opportunities for the company[62](index=62&type=chunk) [Raw Materials](index=13&type=section&id=Raw%20Materials) Livent primarily sources lithium from Argentina's Salar del Hombre Muerto, utilizing proprietary processes, but faces risks from water access, energy supply expansion, and volatile raw material prices, with costs increasing to 18% of total revenue in 2022 - The company's primary raw material is lithium, predominantly sourced from lithium brine resources in Salar del Hombre Muerto, Argentina, extracted using proprietary selective adsorption and solar evaporation processes[68](index=68&type=chunk) Argentina Lithium Product Production (kMT) | Product | 2022 Production (kMT) | 2021 Production (kMT) | 2020 Production (kMT) | | :--- | :--- | :--- | :--- | | Lithium Carbonate | 17 | 16 | 16 | | Lithium Chloride | 5 | 4 | 5 | | Total Basic Lithium Production (LCE) | 20.5 | 18.5 | 19.5 | - The company holds water rights and energy supply contracts, but water rights grants and energy supply expansions face uncertainties, potentially leading to delays or rejections[73](index=73&type=chunk)[74](index=74&type=chunk)[76](index=76&type=chunk) - Key raw materials include soda ash, solvents, butyl chloride, hydrochloric acid, quicklime, metals, and caustic soda, with significant cost fluctuations; in 2022, major raw material costs accounted for **18% of total revenue**, up from **14% in 2021** and **13% in 2020**[79](index=79&type=chunk) [Seasonality](index=14&type=section&id=Seasonality) Livent's Argentine operations are subject to seasonal weather, particularly rainfall and evaporation rate changes, which impact evaporation pond concentrations and thus lithium carbonate and chloride production, as seen with reduced output from heavy rains in late 2021 - Operations in Argentina are affected by seasonal weather, including evaporation rates and rainfall, which impact evaporation pond concentrations and downstream production processes[80](index=80&type=chunk) - Unusually heavy rains in late 2021 resulted in a reduction of approximately **500 metric tons of lithium carbonate production**[81](index=81&type=chunk) [Argentine Law and Regulation](index=15&type=section&id=Argentine%20Law%20and%20Regulation) Livent's Argentine operations are governed by the Argentine Mining Code and Investment Law, and despite a 30-year fiscal stability certificate, the company faces challenges from export taxes, the recent elimination of export rebates, and provincial efforts to declare lithium a strategic mineral - The company's operations in Argentina are subject to federal and provincial regulations, including the Argentine Mining Code and the Argentine Mining Investment Law[82](index=82&type=chunk)[86](index=86&type=chunk) - The company benefits from a 30-year fiscal stability certificate but faces challenges from export taxes, such as those imposed on lithium products in 2018 and 2020[86](index=86&type=chunk)[87](index=87&type=chunk) - In January 2023, Argentina's Ministry of Economy eliminated the export rebate regime for lithium products, with a presidential decree in February formally removing all lithium export rebates[87](index=87&type=chunk) - Argentine authorities set reference prices for certain grades of lithium carbonate exports in 2022, with exports below these prices potentially facing investigations and higher taxes[87](index=87&type=chunk) [Environmental Laws and Regulations](index=15&type=section&id=Environmental%20Laws%20and%20Regulations) Livent adheres to global environmental, health, and safety regulations like REACH, K-REACH, and TSCA, which may increase costs or reduce demand, and manages cleanup liabilities for hazardous substances, such as remediation at its Bessemer City facility, with provisions for environmental liabilities - The company complies with various federal, state, local, and foreign environmental, health, and safety laws and regulations, including REACH (EU), K-REACH (South Korea), and TSCA (U.S.)[89](index=89&type=chunk)[90](index=90&type=chunk)[91](index=91&type=chunk)[92](index=92&type=chunk) - REACH and K-REACH regulations may lead to increased raw material and product sales costs, potentially reducing product demand[91](index=91&type=chunk) - The company may incur investigation and cleanup liabilities for releases or exposures to hazardous substances and waste, such as ongoing remediation at its Bessemer City, North Carolina facility[93](index=93&type=chunk) - The company accrues for environmental liabilities based on the probability and reasonably estimable amount of contingent environmental matters[95](index=95&type=chunk)[96](index=96&type=chunk) [Human Capital Management](index=16&type=section&id=Human%20Capital%20Management) Livent views employees as core assets, with global headcount growing 21.4% in 2022 due to capacity expansion, and is committed to talent attraction, retention, safety, DE&I, competitive compensation, and career development, overseen by the Board's Compensation and Organizational Development and Sustainability Committees - In 2022, the company's global headcount increased by **21.4% year-over-year**, primarily driven by lithium capacity expansions in the U.S. and Argentina[99](index=99&type=chunk) - The company implements a comprehensive lifecycle talent management strategy, from recruitment to retirement, to support employee development and career goals, with a **voluntary turnover rate of 7.6% in 2022**[100](index=100&type=chunk)[116](index=116&type=chunk) - Employee safety, health, and well-being are core company values, with **two recordable injuries reported globally in 2022**[101](index=101&type=chunk)[104](index=104&type=chunk) - The company is committed to Diversity, Equity, and Inclusion (DE&I); as of December 31, 2022, global employee composition was **75% male and 24% female**, with **45% female representation in the senior leadership team**[109](index=109&type=chunk) - The company offers competitive compensation and benefits, conducting regular pay equity analyses, which found no systemic gender or racial pay gaps in 2022[119](index=119&type=chunk)[110](index=110&type=chunk) [Social Responsibility and Sustainability](index=20&type=section&id=Social%20Responsibility%20and%20Sustainability) Livent integrates strong Corporate Social Responsibility (CSR) principles, achieving EcoVadis Gold and top-tier sustainability ratings, actively participating in responsible mining initiatives, and supporting global communities through various engagement activities - The company is committed to strong Corporate Social Responsibility (CSR) principles, encompassing occupational health and safety, employee experience, DE&I, community engagement, environmental action, and human rights[125](index=125&type=chunk) - Livent received an **EcoVadis Gold sustainability rating for three consecutive years**, placing it in the top 5% of over 90,000 companies globally, and was rated in the top tier of sustainable lithium producers in Benchmark Mineral Intelligence's inaugural ESG report[127](index=127&type=chunk) - The company is an official member of the Initiative for Responsible Mining Assurance (IRMA), completed a site assessment of its Fenix operations in Argentina, and participates in a BMW Group and BASF-sponsored sustainable water study[127](index=127&type=chunk) - The company supports global communities through philanthropic donations, employee volunteering, infrastructure development, and local capacity building, focusing on safety, STEM education, health and nutrition, and poverty alleviation[128](index=128&type=chunk)[129](index=129&type=chunk) [Code of Ethics and Business Conduct](index=21&type=section&id=Code%20of%20Ethics%20and%20Business%20Conduct) The company maintains a Code of Ethics and Business Conduct applicable to all directors, officers, employees, suppliers, and contractors, guiding their behavior in their work with Livent - The company is subject to a Code of Ethics and Business Conduct, applicable to all directors, officers (including the Chief Executive Officer, Chief Financial Officer, and Controller), employees, suppliers, and contractors[130](index=130&type=chunk) [Item 1A. Risk Factors](index=22&type=section&id=Item%201A.%20Risk%20Factors) This section details various risks Livent Corporation faces, including those related to growth strategy, market dynamics, financial stability, operations, regulatory compliance, and common stock ownership, which could materially impact its business and financial condition - The company's business faces various risks, including inherent industry risks and company-specific risks, which could materially and adversely affect its liquidity, competitive position, business, reputation, operating results, capital condition, or financial condition[132](index=132&type=chunk)[134](index=134&type=chunk) [Growth Strategy Risks](index=22&type=section&id=Growth%20Strategy%20Risks) Livent's growth hinges on sustained demand for high-performance lithium compounds, particularly in the EV market, but faces uncertainties in complex, capital-intensive expansion projects, resource acquisition, and R&D success - The company's growth depends on the continued growth in demand for high-performance lithium compounds, especially the adoption rate of electric vehicles and the development of next-generation high-nickel battery technologies[135](index=135&type=chunk) - Production expansion projects are complex, require significant capital expenditures, and face risks related to technology, construction, water/energy supply, regulatory approvals, labor, and material shortages, potentially leading to increased costs or project delays[136](index=136&type=chunk) - Failure to acquire or develop economically viable additional lithium reserves, difficulties in integrating future acquisitions, or unsuccessful R&D efforts could materially and adversely affect the company's future growth[137](index=137&type=chunk)[139](index=139&type=chunk)[141](index=141&type=chunk) [Market Risks](index=23&type=section&id=Market%20Risks) Livent's sales and profitability are vulnerable to lithium price volatility, global economic downturns, high customer concentration, and evolving battery technologies, alongside intense competition from other producers and alternative materials - Fluctuations in lithium prices could materially and adversely affect the company's business, financial condition, and operating results, especially when contracts adopt index or variable pricing[142](index=142&type=chunk) - Deterioration in global economic conditions or downturns in customer end markets could negatively impact the company's sales and profitability[144](index=144&type=chunk)[145](index=145&type=chunk) - A significant portion of the company's revenue comes from a few customers, and the loss of a major customer or a substantial reduction in orders could have a material adverse effect[146](index=146&type=chunk) - The company faces intense competition from other lithium producers and alternative materials or technologies, and failure to compete effectively could lead to a decline in market share[147](index=147&type=chunk)[148](index=148&type=chunk) [Financial Risks](index=24&type=section&id=Financial%20Risks) Livent's operating results may fluctuate due to product mix, technology changes, exchange rates, interest rates, and inflation, while investments like Nemaska Lithium carry uncertainty. The company relies on operating cash flow and external financing, facing capital market uncertainties, and its 2025 convertible notes could impact liquidity or cause dilution - The company's operating results are influenced by product mix, customer mix, product quality requirements, technological trends, lithium compound supply and demand, exchange rates, interest rates, inflation, and raw material prices, potentially leading to quarterly and annual fluctuations[149](index=149&type=chunk)[150](index=150&type=chunk) - Investment in the Nemaska Lithium project carries uncertainties, may not be completed on time or within budget, and as a joint venture, the company lacks control over its management and operations, potentially leading to unrealized investment benefits or additional losses[152](index=152&type=chunk)[153](index=153&type=chunk) - The company relies on operating cash flow and external financing to support growth and capital needs, and uncertainties in global capital and credit markets could affect its ability to obtain financing and its cost[154](index=154&type=chunk) - The conditional conversion feature of the 2025 convertible senior notes could affect the company's liquidity or result in equity dilution, and the company may not have sufficient cash flow to repay its debt[156](index=156&type=chunk)[158](index=158&type=chunk) [Operational Risks](index=26&type=section&id=Operational%20Risks) Livent's global operations face risks from currency fluctuations, geopolitical tensions, trade barriers, corruption, global events, rising energy prices, inflation, and supply chain disruptions, with specific political, financial, and operational challenges in Argentina, alongside cybersecurity, intellectual property, and joint venture risks - The company's global operations face risks from currency fluctuations, geopolitical tensions, trade barriers, corruption, global events (such as the war in Ukraine), rising energy prices, inflation, and supply chain disruptions[159](index=159&type=chunk)[160](index=160&type=chunk)[161](index=161&type=chunk)[163](index=163&type=chunk) - Lithium extraction and production operations in Argentina face specific risks including high inflation, government intervention, tax law changes (e.g., export taxes and elimination of export rebates), reliance on mining rights, natural disasters (e.g., earthquakes and heavy rainfall), water rights restrictions, foreign exchange controls, labor issues, and political instability[165](index=165&type=chunk)[166](index=166&type=chunk)[167](index=167&type=chunk) - The company's operations and suppliers may be affected by natural disasters, epidemics (such as COVID-19), and other catastrophic events, leading to production interruptions, supply chain delays, and increased costs[168](index=168&type=chunk)[169](index=169&type=chunk)[172](index=172&type=chunk)[173](index=173&type=chunk)[175](index=175&type=chunk) - Failure to meet customer qualification and quality standards, volatility in raw material and energy prices, loss of key personnel, cybersecurity breaches, and inadequate intellectual property protection could adversely affect the company's business[176](index=176&type=chunk)[180](index=180&type=chunk)[182](index=182&type=chunk)[184](index=184&type=chunk)[185](index=185&type=chunk) - Joint ventures, affiliated entities, and contract manufacturers may not operate according to their business plans, and partners may fail to fulfill their obligations, which could adversely affect the company's operating results[190](index=190&type=chunk) [Regulatory and Governmental Risks](index=33&type=section&id=Regulatory%20and%20Governmental%20Risks) Livent faces various legal and regulatory proceedings with uncertain outcomes, high compliance costs for stringent environmental, health, and safety laws, and potential financial impacts from changes in tax policies or audits - The company faces various legal and regulatory proceedings, the outcomes of which may differ from expectations, leading to changes in liability estimates[197](index=197&type=chunk)[198](index=198&type=chunk) - The company's operations, facilities, products, and raw materials are subject to stringent federal, state, local, and foreign environmental, health, and safety laws and regulations, incurring high compliance costs, with violations potentially leading to fines, sanctions, or operational disruptions[199](index=199&type=chunk)[200](index=200&type=chunk)[201](index=201&type=chunk) - Regulations such as REACH and K-REACH may lead to increased compliance costs and reduced product demand[205](index=205&type=chunk) - Changes in tax policies, implementation of new tax laws (such as the U.S. Inflation Reduction Act), or tax audits could materially impact the company's financial performance, including fluctuations in effective tax rates and additional tax burdens[206](index=206&type=chunk)[208](index=208&type=chunk) [Risks Related to Ownership of Our Common Stock](index=34&type=section&id=Risks%20Related%20to%20Ownership%20of%20Our%20Common%20Stock) Livent's stock price may fluctuate significantly due to market conditions, operating performance, capital decisions, competition, regulatory developments, and macroeconomic events, while Delaware law and company bylaws contain anti-takeover provisions, and the absence of dividend payments may deter some investors - The company's stock price may fluctuate significantly due to various factors, including market conditions, operating performance, capital decisions, competition, regulatory developments, and macroeconomic events[209](index=209&type=chunk)[210](index=210&type=chunk) - Certain anti-takeover provisions in Delaware law and the company's certificate of incorporation and bylaws (e.g., staggered board, no authorized blank check preferred stock, 80% vote for certain business combinations) could deter third-party acquisitions of the company[213](index=213&type=chunk) - The company has not paid any cash dividends in the past and has no plans to do so in the foreseeable future, which may affect the willingness of some investors to purchase its stock[214](index=214&type=chunk) [SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION](index=36&type=section&id=SPECIAL%20NOTE%20REGARDING%20FORWARD-LOOKING%20INFORMATION) This report contains forward-looking statements based on current views and assumptions, involving known and unknown risks, uncertainties, and other factors that could cause actual results to differ materially, and readers should not unduly rely on them - This report contains forward-looking statements based on the company's current views and assumptions, involving known and unknown risks, uncertainties, and other factors[216](index=216&type=chunk)[217](index=217&type=chunk) - Actual results may differ materially from forward-looking statements, and the company cautions readers not to unduly rely on them, with no obligation to update these statements[217](index=217&type=chunk)[218](index=218&type=chunk) [Item 1B. Unresolved Staff Comments](index=36&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments in this report - There are no unresolved staff comments in this report[219](index=219&type=chunk) [Item 2. Properties](index=37&type=section&id=Item%202.%20Properties) Livent operates six manufacturing facilities across five countries, holds lithium extraction operations and long-term mining rights in Argentina's Salar del Hombre Muerto, and has a 50% economic interest in Canada's Nemaska Lithium project through a joint venture - The company owns six manufacturing facilities across five countries (five operational) and has lithium extraction operations and long-term mining rights in Salar del Hombre Muerto, Argentina[221](index=221&type=chunk)[222](index=222&type=chunk) - The company holds a **50% economic interest** in the Nemaska Lithium project in Canada through a joint venture, which is in the exploration and development phase[226](index=226&type=chunk)[273](index=273&type=chunk) [Operational Facilities](index=37&type=section&id=Operational%20Facilities) Livent operates five manufacturing facilities across five countries, with one in India currently idle, and maintains ten sales, marketing, R&D, and administrative offices in eight countries, including its leased Philadelphia headquarters and a Bessemer City R&D facility - The company owns six manufacturing facilities across five countries, with five currently operational; the facility in Patancheru, India, was idle as of December 31, 2022[221](index=221&type=chunk) - The company maintains ten sales, marketing, R&D, and administrative offices in eight countries, including its leased administrative office in Philadelphia, Pennsylvania, and an R&D facility in Bessemer City, North Carolina[221](index=221&type=chunk) Major Production and Administrative Facilities | Location | Function | Leased/Owned | | :--- | :--- | :--- | | Philadelphia, U.S. | Corporate Headquarters | Leased | | Bessemer City, U.S. | Manufacturing & R&D | Owned | | Fénix, Argentina | Lithium Extraction & Manufacturing | Owned | | Güemes, Argentina | Manufacturing | Owned | | Bromborough, U.K. | Manufacturing & Sales | Leased | | Zhangjiagang, China | Manufacturing | Land Use Rights, Buildings Owned | | Whabouchi Mine, Canada | Lithium Extraction & Manufacturing (Under Development) | 50% Equity Interest | | Bécancour, Canada | Manufacturing (Under Development) | 50% Equity Interest | [Mineral Properties Overview](index=37&type=section&id=Mineral%20Properties%20Overview) As of December 31, 2022, Livent's mineral assets include a producing lithium brine asset in Salar del Hombre Muerto, Argentina, and a 50% economic interest in the Nemaska Lithium exploration-stage asset in Quebec, Canada, through a joint venture - As of December 31, 2022, the company owns two mineral properties: a producing asset in Salar del Hombre Muerto, Argentina, and an exploration-stage asset in Quebec, Canada, through Nemaska Lithium[226](index=226&type=chunk) - The Nemaska Lithium asset includes the Whabouchi mine and a lithium hydroxide conversion facility in Bécancour, as part of the Nemaska Lithium project[226](index=226&type=chunk) [Argentina Lithium Brine Production at SdHM](index=39&type=section&id=Argentina%20Lithium%20Brine%20Production%20at%20SdHM) Total lithium brine production at Livent's SA plant in Salar del Hombre Muerto, Argentina, remained stable at 4,903 metric tons of elemental lithium in 2022, compared to 4,932 metric tons in 2021 and 4,708 metric tons in 2020 Argentina SdHM Lithium Brine Annual Production (MT Elemental Lithium) | Year | Total Lithium Production (MT) | | :--- | :--- | | 2022 | 4,903 | | 2021 | 4,932 | | 2020 | 4,708 | [Mineral Resources and Reserves](index=39&type=section&id=Mineral%20Resources%20and%20Reserves) As of December 31, 2022, Livent holds substantial lithium mineral resources and reserves at Salar del Hombre Muerto, Argentina, with total measured and indicated resources of 597,000 metric tons of elemental lithium and proven and probable reserves of 731,000 metric tons, supporting a 40-year mine life SdHM Mineral Resource Estimates (as of December 31, 2022, thousand metric tons elemental lithium) | Category | Quantity (thousand metric tons) | Depth Interval (meters below surface) | | :--- | :--- | :--- | | Measured Mineral Resources | 370 | 0-40 | | Indicated Mineral Resources | 228 | 40-100 | | **Total Measured and Indicated Mineral Resources** | **597** | | | Inferred Mineral Resources | 892 | 100-200 | | **Total Measured, Indicated, and Inferred Mineral Resources** | **1,489** | | SdHM Mineral Reserve Estimates (as of December 31, 2022, thousand metric tons elemental lithium) | Category | Quantity (thousand metric tons) | | :--- | :--- | | Proven Mineral Reserves | 153 | | Probable Mineral Reserves | 578 | | **Total Mineral Reserves** | **731** | - Reserve estimates are based on a **40-year mine life plan (2023-2062)**, projected to remain profitable above an economic cut-off grade of **218 mg/L**[236](index=236&type=chunk)[248](index=248&type=chunk) - Economic analysis assumes a battery-grade lithium carbonate price of **$20,000 per metric ton LCE** and an estimated production cost of approximately **$4,700 per metric ton LCE**[248](index=248&type=chunk) [Mineral Concession Rights and Royalties](index=44&type=section&id=Mineral%20Concession%20Rights%20and%20Royalties) Livent's Argentine subsidiary, MdA, holds mineral concessions for approximately 327 square kilometers in Salar del Hombre Muerto, subject to annual fees and a 3% wellhead value royalty to Catamarca province, with total payments of $24.1 million in 2022, and ongoing boundary disputes with Salta province - MdA holds mineral concessions for approximately **327 square kilometers** in Salar del Hombre Muerto, valid until mineral depletion, subject to annual fees and active exploitation[253](index=253&type=chunk) - MdA is required to pay a semi-annual "canon" fee and a **3% wellhead value royalty** to Catamarca province, along with additional monthly contributions and Corporate Social Responsibility (CSR) expenditures[255](index=255&type=chunk) Mineral Concession Related Payments (million USD) | Year | Total Payments (million USD) | | :--- | :--- | | 2022 | 24.1 | | 2021 | 5.5 | | 2020 | 5.9 | - The company faces a long-standing boundary dispute with Salta province, which claims entitlement to royalties from minerals within the disputed area[257](index=257&type=chunk) [Operations, Accessibility and Infrastructure](index=45&type=section&id=Operations%2C%20Accessibility%20and%20Infrastructure) Lithium extraction and production at Salar del Hombre Muerto, operational since 1998, utilize proprietary processes, solar evaporation, and chemical treatment, supported by on-site natural gas generators and water wells, with products transported by road to Argentine and Chilean ports - Lithium extraction and production operations at Salar del Hombre Muerto began in 1998, employing proprietary processes to extract lithium from brine, followed by solar evaporation and chemical treatment to produce lithium carbonate and lithium chloride[259](index=259&type=chunk)[260](index=260&type=chunk)[261](index=261&type=chunk) - On-site energy is provided by natural gas generators, and fresh water is sourced from dams and groundwater wells; products are transported by road to Argentine and Chilean ports, then shipped to manufacturing facilities and customers[262](index=262&type=chunk)[263](index=263&type=chunk) - As of December 31, 2022, the carrying value of the SdHM asset and its related property, plant, and equipment was approximately **$513.7 million**[266](index=266&type=chunk) [Exploration and Expansion Activities](index=46&type=section&id=Exploration%20and%20Expansion%20Activities) Livent is undertaking a multi-phase capacity expansion at Salar del Hombre Muerto, with Phase 1 doubling total lithium capacity to approximately 40,000 metric tons LCE/year by 2023-2024, Phase 2 adding 30,000 metric tons LCE/year by late 2025, and Phase 3 aiming for 100,000 metric tons LCE by 2030 - The company is undertaking a capacity expansion at Salar del Hombre Muerto, with Phase 1 expected to be completed in 2023 and 2024, doubling total lithium capacity to approximately **40,000 metric tons LCE per year**[268](index=268&type=chunk) - Phase 2 expansion is projected to come online by the end of 2025, adding **30,000 metric tons LCE per year** of capacity, including a new selective adsorption plant, carbonate plant, and supporting infrastructure[269](index=269&type=chunk) - Phase 3 expansion aims to leverage existing infrastructure to increase total lithium capacity to approximately **100,000 metric tons LCE by 2030**[270](index=270&type=chunk) [Other Property—Nemaska Lithium](index=46&type=section&id=Other%20Property%E2%80%94Nemaska%20Lithium) Livent, through its wholly-owned subsidiary QLP, holds a 50% economic interest in Nemaska Lithium Inc. (NLI), which is developing the Whabouchi mine and Bécancour lithium hydroxide conversion facility in Quebec, with Livent providing technical, marketing, and sales support - Livent, through its wholly-owned subsidiary QLP, holds a **50% economic interest** in Nemaska Lithium Inc. (NLI), which is developing the Whabouchi mine and Bécancour lithium hydroxide conversion facility in Quebec[273](index=273&type=chunk)[275](index=275&type=chunk) - The Nemaska Lithium project is currently in late-stage engineering and site clearing, with NLI planning to complete a feasibility study soon to define mineral resources and reserves[275](index=275&type=chunk) - Livent is expected to provide technical advisory, marketing, and sales support to NLI[276](index=276&type=chunk) [Internal Controls for Mineral Estimates](index=47&type=section&id=Internal%20Controls%20for%20Mineral%20Estimates) Mineral resource and reserve estimates are prepared by Qualified Persons, reviewed by third-party consultants and independent laboratories, and subject to QC/QA procedures, acknowledging inherent risks from geological complexity, data interpretation, and macroeconomic changes - Mineral resource and reserve estimates are prepared by Qualified Persons (QPs) and reviewed by third-party consultants and independent laboratories[277](index=277&type=chunk) - The company has established Quality Control and Quality Assurance (QC/QA) procedures, including independent checks and duplicate sampling by third-party laboratories, to ensure the accuracy of the estimation process[279](index=279&type=chunk)[280](index=280&type=chunk) - The company recognizes inherent risks in mineral estimates, such as geological complexity, data interpretation, changes in operating methods, macroeconomic conditions, and new data, all of which could affect future profitability[281](index=281&type=chunk) [Item 3. Legal Proceedings](index=47&type=section&id=Item%203.%20Legal%20Proceedings) Information regarding legal proceedings is provided by reference to the detailed discussions on environmental obligations and commitments and contingencies in the notes to the consolidated financial statements - Information on legal proceedings can be found in the "Environmental Obligations" and "Commitments and Contingencies" sections of the notes to the consolidated financial statements[282](index=282&type=chunk) [Item 4. Mine Safety Disclosures](index=47&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section on mine safety disclosures is not applicable - Mine safety disclosures are not applicable[283](index=283&type=chunk) [Item 4A. Information About Our Executive Officers](index=47&type=section&id=Item%204A.%20Information%20About%20Our%20Executive%20Officers) This section provides names, ages, positions, and business experience of Livent Corporation's executive officers, including Paul W. Graves (President & CEO), Gilberto Antoniazzi (VP & CFO), and Sara Ponessa (VP, General Counsel & Secretary), noting the team's diversity as of December 31, 2022 - Executive officers include Paul W. Graves (President, Chief Executive Officer, and Director), Gilberto Antoniazzi (Vice President and Chief Financial Officer), and Sara Ponessa (Vice President, General Counsel, and Secretary)[284](index=284&type=chunk) Executive Officer Diversity (as of December 31, 2022) | Gender | Male | Female | | :--- | :--- | :--- | | Number of Executive Officers | 2 | 1 | | Number of Hispanic or Latino Individuals | 1 | 1 | | Number of White Individuals | 1 | — | | Nationality: UK | 1 | — | | Nationality: Brazil | 1 | — | | Nationality: US (Puerto Rico) | — | 1 | [PART II](index=49&type=section&id=PART%20II) This section covers Livent's common stock market, shareholder matters, and issuer equity purchases, along with management's discussion and analysis of financial condition, operating results, market risks, and detailed financial statements [Item 5. Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=49&type=section&id=Item%205.%20Market%20for%20the%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Livent's common stock trades on the NYSE under LTHM, with 2,219 record holders and approximately 165,206 beneficial owners as of February 21, 2023; the company has no plans for future cash dividends and repurchased 522.8 shares of common stock in Q4 2022 at an average price of $25.30 per share - Livent common stock trades on the New York Stock Exchange under the symbol **LTHM**; as of February 21, 2023, the company had **2,219 record holders** and approximately **165,206 beneficial owners**[289](index=289&type=chunk) - The company's Board of Directors had not declared any quarterly dividends as of December 31, 2022, and does not anticipate paying any dividends in the foreseeable future[290](index=290&type=chunk) Issuer Purchases of Equity Securities in Q4 2022 | Period | Total Number of Shares Purchased | Average Price Paid per Share (USD) | | :--- | :--- | :--- | | October 1 to October 31, 2022 | 139.2 | 28.18 | | November 1 to November 30, 2022 | 156.3 | 29.50 | | December 1 to December 31, 2022 | 227.3 | 20.65 | | **Total Q4 2022** | **522.8** | **25.30** | - The company has no publicly announced stock repurchase programs[295](index=295&type=chunk) [Item 6. [RESERVED]](index=49&type=section&id=Item%206.%20%5BRESERVED%5D) This section is reserved [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=50&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section discusses Livent Corporation's financial condition and operating results for the year ended December 31, 2022, highlighting significant revenue and profitability growth driven by pricing, alongside increased operating costs and Nemaska Lithium investment losses, with a positive outlook for 2023 sales and pricing - Livent Corporation is a pure-play, fully integrated lithium company focused on high-performance lithium compounds, with key products including battery-grade lithium hydroxide, lithium carbonate, butyllithium, and high-purity lithium metal[298](index=298&type=chunk) - In 2022, the company experienced significant revenue and profitability growth, primarily driven by increased product pricing, though operating costs and Nemaska Lithium investment losses also rose[302](index=302&type=chunk)[307](index=307&type=chunk) - The COVID-19 pandemic and its consequences continued to negatively impact the company's business, operations, and financial results in 2022, particularly in China, leading to supply chain disruptions and increased costs[300](index=300&type=chunk)[301](index=301&type=chunk) - The company anticipates higher lithium product volumes and average pricing in 2023, leading to higher profitability, but also expects higher costs related to royalties, new production unit startups, and general inflationary pressures[304](index=304&type=chunk) - The company maintains liquidity through cash flow from operations and its revolving credit facility, planning **$325 million to $375 million in capital expenditures for 2023** to support capacity expansion[319](index=319&type=chunk)[331](index=331&type=chunk) [OVERVIEW](index=50&type=section&id=OVERVIEW) Livent Corporation is a pure-play, fully integrated lithium company specializing in high-performance lithium compounds, strategically focused on the rapidly expanding electric vehicle and battery markets while maintaining leadership in butyllithium and high-purity lithium metal - Livent Corporation is a pure-play, fully integrated lithium company with a long history of producing high-performance lithium compounds[298](index=298&type=chunk) - Key products include battery-grade lithium hydroxide, lithium carbonate, butyllithium, and high-purity lithium metal, which are critical inputs for electric vehicles and the broader battery market, as well as other high-performance applications[298](index=298&type=chunk)[299](index=299&type=chunk) - The company's strategy is to focus on supplying high-performance lithium compounds to the rapidly growing electric vehicle and energy storage battery markets, while maintaining its global leadership position in butyllithium and high-purity lithium metal[298](index=298&type=chunk) [2022 Highlights](index=50&type=section&id=2022%20Highlights) Livent Corporation achieved significant financial growth in 2022, with revenue reaching $813.2 million, a 93.5% increase year-over-year, alongside substantial improvements in gross margin, adjusted EBITDA, and net income, primarily driven by product pricing 2022 Key Financial Data | Metric | 2022 (million USD) | 2021 (million USD) | Year-over-Year Change | | :--- | :--- | :--- | :--- | | Revenue | 813.2 | 420.4 | Increase 392.8 (93.5%) | | Gross Margin | 395.7 | 88.4 | Increase 307.3 (347.6%) | | Net Income | 273.5 | 0.6 | Increase 272.9 | | Adjusted EBITDA | 366.7 | 69.5 | Increase 297.2 (427.6%) | - Revenue growth was primarily attributable to **higher pricing across all products**, partially offset by slightly lower volumes[302](index=302&type=chunk) - Gross margin and Adjusted EBITDA growth were primarily attributable to **higher pricing across all products**, partially offset by increased logistics, raw material, and other operating costs, and slightly lower volumes[302](index=302&type=chunk) [COVID-19 Impacts](index=50&type=section&id=COVID-19%20Impacts) The COVID-19 pandemic continued to negatively impact Livent's business, operations, and financial performance in 2022, with ongoing supply chain disruptions and logistics delays, and the spread of the virus in China expected to further affect efficiency and increase global expansion costs - In 2022, the COVID-19 pandemic and its consequences continued to negatively impact the company's business, operations, and financial results[300](index=300&type=chunk) - Following the Chinese government's abandonment of its "zero-COVID" strategy, the spread of the virus is expected to continue affecting the efficiency of the company's facilities, contract manufacturers, supply chain, and logistics[301](index=301&type=chunk) - The pandemic led to increased costs and extended delivery times for global expansion efforts, and higher operating expenses for COVID-19 testing, personal protective equipment, and cleaning/sanitization[301](index=301&type=chunk)[302](index=302&type=chunk) [2023 Outlook](index=51&type=section&id=2023%20Outlook) Livent anticipates higher lithium product volumes and average pricing in 2023, leading to increased profitability, but expects rising costs due to royalties, new production unit startups, and general inflationary pressures - The company expects higher lithium product volumes and average pricing in 2023, leading to **higher profitability**[304](index=304&type=chunk) - Costs are anticipated to be higher in 2023 compared to the prior year, primarily related to royalties, new production unit startups, and general inflationary pressures[304](index=304&type=chunk) [Results of Operations — Years Ended December 31, 2022 and 2021](index=52&type=section&id=Results%20of%20Operations%20%E2%80%94%20Years%20Ended%20December%2031%2C%202022%20and%202021) Livent's operating results significantly improved in 2022, with revenue increasing 93% to $813.2 million and net income rising to $273.5 million from $0.6 million in 2021, primarily driven by higher product pricing, despite increased operating costs and Nemaska Lithium investment losses Comparison of Operating Results for 2022 and 2021 (million USD) | Metric | 2022 | 2021 | Change | | :--- | :--- | :--- | :--- | | Revenue | 813.2 | 420.4 | Increase 392.8 | | Cost of Sales | 417.5 | 332.0 | Increase 85.5 | | Gross Margin | 395.7 | 88.4 | Increase 307.3 | | Selling, General and Administrative Expenses | 55.2 | 49.9 | Increase 5.3 | | Research and Development Expenses | 3.9 | 3.0 | Increase 0.9 | | Restructuring and Other Charges | 7.5 | 3.8 | Increase 3.7 | | Separation-Related Costs | 0.7 | 2.0 | Decrease 1.3 | | Operating Income | 328.4 | 29.7 | Increase 298.7 | | Equity in Net Loss of Unconsolidated Affiliates | 15.1 | 5.5 | Increase 9.6 | | Other Income | (22.2) | — | Increase 22.2 | | Income Tax Expense | 61.9 | 23.3 | Increase 38.6 | | Net Income | 273.5 | 0.6 | Increase 272.9 | | Adjusted EBITDA (Non-GAAP) | 366.7 | 69.5 | Increase 297.2 | - Revenue growth was primarily driven by **higher pricing across all products**, partially offset by slightly lower volumes[311](index=311&type=chunk) - Gross margin growth was primarily driven by **higher pricing across all products**, partially offset by increased logistics, raw material, and other operating costs, and slightly lower volumes[312](index=312&type=chunk) - The increase in equity in net loss of unconsolidated affiliates was primarily due to the company's increased ownership stake in NLI (from **25% to 50%**) and higher project-related development costs[315](index=315&type=chunk) - Net income significantly increased, partly due to a **$22.2 million gain** from the sale of Argentine sovereign dollar-denominated bonds in 2022[318](index=318&type=chunk) [Liquidity and Capital Resources](index=55&type=section&id=Liquidity%20and%20Capital%20Resources) Livent's liquidity stems from operating cash flow and a revolving credit facility, with cash and equivalents at $189 million as of December 31, 2022, and $198 million in customer prepayments received; the company plans $325-375 million in 2023 capital expenditures for expansion and seeks diversified financing for the Nemaska Lithium project - As of December 31, 2022, cash and cash equivalents were **$189 million**, up from **$113 million in 2021**[320](index=320&type=chunk) - In Q3 2022, the company received **$198 million in customer prepayments** under long-term supply agreements for battery-grade lithium hydroxide deliveries[321](index=321&type=chunk) - The company has a **$500 million senior secured revolving credit facility**, with **$485.1 million of borrowing capacity remaining** as of December 31, 2022[323](index=323&type=chunk)[330](index=330&type=chunk) - Cash flow from operating activities was **$454.7 million in 2022**, cash used in investing activities was **$364.7 million**, and cash used in financing activities was **$12.5 million**[326](index=326&type=chunk)[327](index=327&type=chunk)[328](index=328&type=chunk) - The company expects total capital expenditures in 2023 to be between **$325 million and $375 million** to support capacity expansions in Argentina and the U.S.[331](index=331&type=chunk) - The company will seek various sources, including third-party debt financing, government funding, customer prepayments, and existing shareholder contributions, to fund the Nemaska Lithium project[333](index=333&type=chunk) [Contractual Obligations and Commercial Commitments](index=56&type=section&id=Contractual%20Obligations%20and%20Commercial%20Commitments) As of December 31, 2022, Livent has significant committed contractual obligations, primarily for raw material purchases, with expected cash payments of $4.9 million in 2023 and $2.8 million in 2024 Raw Material Purchase Obligations (million USD) | Year | Expected Cash Payments (million USD) | | :--- | :--- | | 2023 | 4.9 | | 2024 | 2.8 | [Climate Change](index=56&type=section&id=Climate%20Change) Climate change poses physical risks to Livent's operations, impacting lithium extraction, production, and transportation, while increasing regulatory and customer demands for emissions and water reduction; Livent supports electric mobility through its products and has adopted the TCFD framework since 2020 - Climate change may have physical impacts on the company's operations, including changes in rainfall patterns, droughts, sea level changes, and extreme weather events, potentially affecting lithium extraction, production, and transportation[337](index=337&type=chunk) - The company faces stricter customer and regulatory requirements to accelerate greenhouse gas and water usage reductions, including achieving a net-zero emissions target by 2040[337](index=337&type=chunk) - As a critical part of the EV and battery supply chain, Livent supports electric mobility and the transition away from fossil fuels by providing lithium products, and has implemented the TCFD framework since 2020 to assess and disclose climate-related risks and opportunities[339](index=339&type=chunk)[340](index=340&type=chunk) [Recently Issued and Adopted Accounting Pronouncements and Regulatory Items](index=57&type=section&id=Recently%20Issued%20and%20Adopted%20Accounting%20Pronouncements%20and%20Regulatory%20Items) The company adopted FASB ASU No. 2021-10 (Government Assistance) and ASU No. 2020-04 (Reference Rate Reform), neither of which had a material impact on its consolidated financial statements - The company adopted FASB ASU No. 2021-10 (Government Assistance), requiring disclosure of government assistance information, but it had no material impact on the consolidated financial statements[428](index=428&type=chunk) - The company adopted FASB ASU No. 2020-04 (Reference Rate Reform), which had no material impact on the consolidated financial statements[429](index=429&type=chunk) [Off-Balance Sheet Arrangements](index=57&type=section&id=Off-Balance%20Sheet%20Arrangements) Livent Corporation has no off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on its financial condition, results of operations, or liquidity - The company has no off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on its financial condition, results of operations, or liquidity[342](index=342&type=chunk) [Critical Accounting Estimates](index=57&type=section&id=Critical%20Accounting%20Estimates) Livent's consolidated financial statements rely on management's critical accounting estimates and assumptions for revenue recognition, trade receivables, impairment of long-lived assets and equity investments, and income taxes, which involve high uncertainty and complex judgments, potentially affected by global economic disruptions - Critical accounting estimates include revenue recognition, collectibility of trade receivables, impairment and valuation of long-lived assets and equity investments, and income taxes[343](index=343&type=chunk)[345](index=345&type=chunk)[346](index=346&type=chunk)[347](index=347&type=chunk)[348](index=348&type=chunk) - These estimates involve a high degree of uncertainty and complex judgments, and may be affected by disruptions in global economic and financial markets, such as the COVID-19 pandemic[343](index=343&type=chunk)[344](index=344&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures about Market Risk](index=59&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Livent's profitability, cash flows, and financial position are exposed to market risks from commodity prices, interest rates, and foreign exchange rates, managed through risk management programs including derivatives, primarily hedging EUR, GBP, RMB, and JPY, but not ARS - The company faces market risks from fluctuations in commodity prices, interest rates, and foreign exchange rates, and uses risk management programs, including derivative contracts, to minimize cash flow risk[352](index=352&type=chunk)[353](index=353&type=chunk) - Major foreign exchange exposure currencies include EUR, GBP, RMB, ARS, and JPY; the company currently does not hedge ARS due to limited and costly derivative markets[355](index=355&type=chunk) Foreign Exchange Rate Risk Sensitivity Analysis (million USD) | Metric | Net Liability Position as of December 31, 2022 | Net Liability Position with 10% Appreciation in Exchange Rates | Net Asset Position with 10% Depreciation in Exchange Rates | | :--- | :--- | :--- | :--- | | Net Financial Instrument Position | <0.1 | (3.9) | 3.2 | - As of December 31, 2022, the company had no interest rate swap agreements and no outstanding balance under its revolving credit facility[358](index=358&type=chunk)[359](index=359&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=60&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents Livent Corporation's consolidated financial statements for the year ended December 31, 2022, and the preceding two years, including statements of operations, comprehensive income/(loss), balance sheets, cash flows, and equity, along with detailed notes and the independent auditor's report - This section includes consolidated financial statements for the year ended December 31, 2022, and the preceding two years, covering statements of operations, comprehensive income/(loss), balance sheets, cash flows, and equity[360](index=360&type=chunk) - Notes provide detailed information on business description, accounting policies, revenue recognition, investments, debt, equity, and market risks[360](index=360&type=chunk) - KPMG LLP, the independent registered public accounting firm, issued an unqualified opinion on the consolidated financial statements and the effectiveness of internal control[608](index=608&type=chunk)[609](index=609&type=chunk)[626](index=626&type=chunk) [Consolidated Statements of Operations](index=61&type=section&id=Consolidated%20Statements%20of%20Operations) Livent Corporation's revenue significantly increased to $813.2 million in 2022, up from $420.4 million in 2021 and $288.2 million in 2020, resulting in a net income of $273.5 million in 2022, compared to $0.6 million in 2021 and a net loss of $16.3 million in 2020 Consolidated Statements of Operations Summary (million USD, except per share data) | Metric | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Revenue | 813.2 | 420.4 | 288.2 | | Cost of Sales | 417.5 | 332.0 | 251.4 | | Gross Margin | 395.7 | 88.4 | 36.8 | | Selling, General and Administrative Expenses | 55.2 | 49.9 | 44.6 | | Research and Development Expenses | 3.9 | 3.0 | 3.7 | | Restructuring and Other Charges | 7.5 | 3.8 | 10.7 | | Separation-Related Costs/(Income) | 0.7 | 2.0 | (1.1) | | Operating Income/(Loss) | 328.4 | 29.7 | (21.1) | | Equity in Net Loss of Unconsolidated Affiliates | 15.1 | 5.5 | 0.5 | | Interest Expense, Net | — | 0.3 | 0.3 | | Loss on Debt Extinguishment | 0.1 | — | 0.1 | | Other Income | (22.2) | — | — | | Income/(Loss) Before Income Taxes | 335.4 | 23.9 | (22.0) | | Income Tax Expense/(Benefit) | 61.9 | 23.3 | (5.7) | | Net Income/(Loss) | 273.5 | 0.6 | (16.3) | | Net Income/(Loss) Per Share - Basic | 1.59 | — | (0.11) | | Net Income/(Loss) Per Share - Diluted | 1.36 | — | (0.11) | | Weighted Average Shares Outstanding - Basic (million shares) | 171.8 | 154.7 | 146.2 | | Weighted Average Shares Outstanding - Diluted (million shares) | 201.6 | 184.3 | 146.2 | [Consolidated Statements of Comprehensive Income/(Loss)](index=62&type=section&id=Consolidated%20Sta

[Glossary of Terms](index=4&type=section&id=Glossary%20of%20Terms) This section defines key terms and abbreviations used throughout the financial report [PART I - FINANCIAL INFORMATION](index=5&type=section&id=Part%20I%20-%20FINANCIAL%20INFORMATION) This part presents Livent Corporation's unaudited condensed consolidated financial statements and management's discussion and analysis for the reporting period [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents Livent Corporation's unaudited condensed consolidated financial statements, including statements of operations, comprehensive income/(loss), balance sheets, cash flows, and equity, along with detailed notes explaining accounting policies, revenue recognition, investments, debt, equity, and other financial instruments for the three and nine months ended September 30, 2022 and 2021 [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20-%20Three%20and%20Nine%20Months%20Ended%20September%2030%2C%202022%20and%202021) This section provides the unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2022 and 2021 Condensed Consolidated Statements of Operations (in Millions, Except Per Share Data) | Metric | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :--------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Revenue | $231.6 | $103.6 | $593.8 | $297.5 | | Gross margin | $119.4 | $18.3 | $281.8 | $52.0 | | Income from operations | $102.7 | $3.8 | $233.5 | $10.9 | | Net income/(loss) | $77.6 | $(12.6) | $190.8 | $(6.9) | | Net income/(loss) per share - basic | $0.43 | $(0.08) | $1.13 | $(0.05) | | Net income/(loss) per share - diluted | $0.37 | $(0.08) | $0.96 | $(0.05) | - Revenue for the three months ended September 30, 2022, increased by approximately **124%** year-over-year, reaching **$231.6 million**, primarily driven by higher pricing across all products[13](index=13&type=chunk)[164](index=164&type=chunk) - Net income for the three months ended September 30, 2022, was **$77.6 million**, a significant improvement from a net loss of **$(12.6) million** in the prior year period[13](index=13&type=chunk)[171](index=171&type=chunk) [Condensed Consolidated Statements of Comprehensive Income/(Loss)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%2F%28Loss%29%20-%20Three%20and%20Nine%20Months%20Ended%20September%2030%2C%202022%20and%202021) This section presents the unaudited condensed consolidated statements of comprehensive income or loss for the three and nine months ended September 30, 2022 and 2021 Condensed Consolidated Statements of Comprehensive Income/(Loss) (in Millions) | Metric | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net income/(loss) | $77.6 | $(12.6) | $190.8 | $(6.9) | | Other comprehensive loss, net of tax | $(5.9) | $(1.2) | $(11.3) | $(0.2) | | Comprehensive income/(loss) | $71.7 | $(13.8) | $179.5 | $(7.1) | - Comprehensive income for the three months ended September 30, 2022, was **$71.7 million**, a substantial increase from a comprehensive loss of **$(13.8) million** in the same period last year[16](index=16&type=chunk) [Condensed Consolidated Balance Sheets](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20-%20September%2030%2C%202022%20%28unaudited%29%20and%20December%2031%2C%202021) This section details the unaudited condensed consolidated balance sheets as of September 30, 2022, and December 31, 2021 Condensed Consolidated Balance Sheets (in Millions) | Metric | Sep 30, 2022 | Dec 31, 2021 | | :--------------------------------- | :----------- | :----------- | | Cash and cash equivalents | $211.6 | $113.0 | | Total current assets | $573.9 | $399.3 | | Investments | $433.9 | $27.2 | | Property, plant and equipment, net | $882.2 | $677.9 | | Total assets | $2,007.3 | $1,202.5 | | Total current liabilities | $163.0 | $131.3 | | Long-term debt | $241.6 | $240.4 | | Contract liability - long-term | $198.0 | $— | | Total liabilities | $652.7 | $407.1 | | Total equity | $1,354.6 | $795.4 | - Total assets increased significantly to **$2,007.3 million** as of September 30, 2022, from **$1,202.5 million** at December 31, 2021, driven by increases in cash, investments, and property, plant and equipment[20](index=20&type=chunk) - A new long-term contract liability of **$198.0 million** was recorded as of September 30, 2022, reflecting an advance payment from a customer for a long-term supply agreement[20](index=20&type=chunk)[48](index=48&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20-%20Nine%20Months%20Ended%20September%2030%2C%202022%20and%202021) This section presents the unaudited condensed consolidated statements of cash flows for the nine months ended September 30, 2022 and 2021 Condensed Consolidated Statements of Cash Flows (in Millions) | Metric | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :--------------------------------- | :-------------------------- | :-------------------------- | | Cash provided by operating activities | $328.2 | $41.0 | | Cash used in investing activities | $(225.7) | $(74.3) | | Cash (used in)/provided by financing activities | $(1.0) | $216.9 | | Increase in cash and cash equivalents | $98.6 | $183.7 | | Cash and cash equivalents, end of period | $211.6 | $195.3 | - Cash provided by operating activities increased substantially to **$328.2 million** for the nine months ended September 30, 2022, up from **$41.0 million** in the prior year, primarily due to higher net income and a **$198 million** customer advance payment[22](index=22&type=chunk)[188](index=188&type=chunk)[189](index=189&type=chunk) - Cash used in investing activities increased to **$(225.7) million**, reflecting a ramp-up in capital spending for capacity expansion projects in Argentina and the U.S[22](index=22&type=chunk)[190](index=190&type=chunk) [Condensed Consolidated Statements of Equity](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity%20-%20Three%20and%20Nine%20Months%20Ended%20September%2030%2C%202022%20and%202021) This section provides the unaudited condensed consolidated statements of equity for the three and nine months ended September 30, 2022 and 2021 Condensed Consolidated Statements of Equity (in Millions, Except Per Share Data) | Metric | Balance, Dec 31, 2021 | Balance, Sep 30, 2022 | | :--------------------------------- | :-------------------- | :-------------------- | | Common Stock | $0.1 | $0.1 | | Capital in Excess of Par Value | $778.1 | $1,157.8 | | Retained Earnings | $60.9 | $251.7 | | Accumulated Other Comprehensive Loss | $(42.9) | $(54.2) | | Treasury Stock | $(0.8) | $(0.8) | | Total Equity | $795.4 | $1,354.6 | - Total equity increased from **$795.4 million** at December 31, 2021, to **$1,354.6 million** at September 30, 2022, largely due to an increase in capital in excess of par value from the QLP Merger and retained earnings from net income[27](index=27&type=chunk)[74](index=74&type=chunk) - The company issued **17,500,000 shares** of common stock in June 2022 as consideration for the QLP Merger, significantly impacting capital in excess of par value[74](index=74&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20%28unaudited%29) This section provides detailed explanatory notes to the unaudited condensed consolidated financial statements [Note 1: Description of the Business](index=13&type=section&id=Note%201%3A%20Description%20of%20the%20Business) This note describes Livent Corporation's primary business activities, focusing on lithium product manufacturing and market drivers - Livent Corporation manufactures a wide range of lithium products, primarily for lithium-based batteries, specialty polymers, and chemical synthesis applications[29](index=29&type=chunk) - A major growth driver for lithium is the increasing adoption of electric vehicles (EVs) and other energy storage applications, with significant growth in Asia, Europe, and North America[29](index=29&type=chunk)[30](index=30&type=chunk) [Note 2: Principal Accounting Policies and Related Financial Information](index=13&type=section&id=Note%202%3A%20Principal%20Accounting%20Policies%20and%20Related%20Financial%20Information) This note outlines the significant accounting policies and related financial information used in preparing the condensed consolidated financial statements - The condensed consolidated financial statements are prepared in accordance with SEC interim reporting requirements and U.S. GAAP, reflecting all normal and recurring adjustments[31](index=31&type=chunk) - A gain of **$22.2 million** was recorded for the nine months ended September 30, 2022, from Blue Chip Swap transactions in Argentina, where U.S. dollars were transferred into Argentina to support capital expansion projects[32](index=32&type=chunk) - Performance-Based Restricted Stock Unit (PRSU) awards were granted to key employees, with the number earned based on Livent's Total Shareholder Return (TSR) relative to the Russell 3000 Chemical Supersector Index over a three-year period[35](index=35&type=chunk) [Note 3: Recently Issued and Adopted Accounting Pronouncements and Regulatory Items](index=14&type=section&id=Note%203%3A%20Recently%20Issued%20and%20Adopted%20Accounting%20Pronouncements%20and%20Regulatory%20Items) This note discusses the impact of recently issued and adopted accounting pronouncements and regulatory items on the company's financial reporting - The company is evaluating the impact of ASU No. 2021-10, Government Assistance (Topic 832), which requires disclosure of government assistance received[38](index=38&type=chunk) - The adoption of ASU No. 2020-04, Reference Rate Reform (Topic 848), is not expected to have a material impact on the condensed consolidated financial statements[39](index=39&type=chunk) [Note 4: Revenue Recognition](index=16&type=section&id=Note%204%3A%20Revenue%20Recognition) This note details the company's revenue recognition policies and disaggregates revenue by geographical region and product category Disaggregated Revenue by Major Geographical Region (in Millions) | Region | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | North America | $46.8 | $15.9 | $109.3 | $44.2 | | Latin America | $0.7 | $— | $1.8 | $— | | Europe, Middle East & Africa | $30.1 | $14.2 | $76.8 | $46.0 | | Asia Pacific | $154.0 | $73.5 | $405.9 | $207.3 | | **Total Revenue** | **$231.6** | **$103.6** | **$593.8** | **$297.5** | Disaggregated Revenue by Major Product Category (in Millions) | Product Category | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :--------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Lithium Hydroxide | $118.4 | $50.7 | $299.5 | $160.5 | | Butyllithium | $88.2 | $27.4 | $203.1 | $76.1 | | High Purity Lithium Metal and Other Specialty Compounds | $11.9 | $9.8 | $42.0 | $27.6 | | Lithium Carbonate and Lithium Chloride | $13.1 | $15.7 | $49.2 | $33.3 | | **Total Revenue** | **$231.6** | **$103.6** | **$593.8** | **$297.5** | - One customer accounted for approximately **22%** of total revenue for the three months ended September 30, 2022, and the top 10 customers accounted for approximately **62%** of total revenue, indicating significant customer concentration[42](index=42&type=chunk) - A long-term supply agreement was entered into on July 25, 2022, for battery-grade lithium hydroxide, including an advance payment of **$198 million** received in Q3 2022, which is recorded as a long-term contract liability[48](index=48&type=chunk) [Note 5: Inventories, Net](index=17&type=section&id=Note%205%3A%20Inventories%2C%20Net) This note provides a breakdown of the company's inventories, net, by category as of September 30, 2022, and December 31, 2021 Inventories, Net (in Millions) | Category | Sep 30, 2022 | Dec 31, 2021 | | :------------------------ | :----------- | :----------- | | Finished goods | $55.6 | $52.2 | | Semi-finished goods | $56.4 | $43.6 | | Raw materials, supplies, and other | $29.8 | $38.8 | | **Inventory, net** | **$141.8** | **$134.6** | - Total inventories, net, increased to **$141.8 million** as of September 30, 2022, from **$134.6 million** at December 31, 2021, primarily due to increases in semi-finished goods[49](index=49&type=chunk) [Note 6: Investments](index=17&type=section&id=Note%206%3A%20Investments) This note details the company's investments, including the QLP Merger and the equity method investment in the Nemaska Project - Livent closed the QLP Merger on June 6, 2022, acquiring a direct **50%** ownership interest in the Nemaska Project by issuing **17,500,000 shares** of common stock[50](index=50&type=chunk) - The investment in the Nemaska Project is accounted for as an equity method investment, resulting in a **$3.5 million** and **$8.4 million** loss for the three and nine months ended September 30, 2022, respectively[51](index=51&type=chunk)[53](index=53&type=chunk) - The carrying amount of the equity interest in the Nemaska Project increased significantly to **$431.2 million** as of September 30, 2022, from **$23.8 million** at December 31, 2021[53](index=53&type=chunk) [Note 7: Restructuring and Other Charges](index=18&type=section&id=Note%207%3A%20Restructuring%20and%20Other%20Charges) This note outlines the restructuring and other charges incurred for the three and nine months ended September 30, 2022 and 2021 Restructuring and Other Charges (in Millions) | Category | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Severance-related and exit costs | $0.4 | $0.1 | $0.9 | $0.2 | | Environmental remediation | $0.1 | $0.1 | $0.3 | $0.3 | | Other | $0.2 | $0.9 | $3.4 | $2.9 | | **Total** | **$0.7** | **$1.1** | **$4.6** | **$3.4** | - Total restructuring and other charges decreased to **$0.7 million** for the three months ended September 30, 2022, from **$1.1 million** in the prior year, primarily due to lower miscellaneous nonrecurring transactions[54](index=54&type=chunk)[167](index=167&type=chunk) [Note 8: Income Taxes](index=18&type=section&id=Note%208%3A%20Income%20Taxes) This note presents the income tax expense and effective tax rates for the three and nine months ended September 30, 2022 and 2021 Income Tax Expense and Effective Tax Rate (in Millions) | Metric | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Income tax expense | $21.5 | $15.4 | $56.4 | $13.8 | | Effective tax rate | 21.7% | 540.5% | 22.8% | 198.7% | - The effective tax rate for the three months ended September 30, 2022, was **21.7%**, significantly lower than **540.5%** in the prior year, primarily due to increased income from operations and fluctuations in foreign currency impacts in Argentina[58](index=58&type=chunk)[170](index=170&type=chunk) [Note 9: Debt](index=19&type=section&id=Note%209%3A%20Debt) This note provides details on the company's long-term debt, including convertible senior notes and the revolving credit facility Long-term Debt (in Millions) | Debt Type | Interest Rate | Maturity Date | Sep 30, 2022 | Dec 31, 2021 | | :--------------------------------- | :------------ | :------------ | :----------- | :----------- | | Deferred Payment Note | 8.0% | 2022 | $13.5 | $— | | 4.125% Convertible Senior Notes due 2025 | 4.125% | 2025 | $245.8 | $245.8 | | Transaction costs - 2025 Notes | N/A | N/A | $(4.2) | $(5.4) | | **Total long-term debt** | **N/A** | **N/A** | **$241.6** | **$240.4** | - The company amended and restated its Revolving Credit Facility on September 1, 2022, increasing it to **$500 million** with an option to expand to **$700 million**, maturing on September 1, 2027[65](index=65&type=chunk)[66](index=66&type=chunk) - Holders of the 2025 Notes gained the option to convert their notes through December 31, 2022, as the common stock price met the conversion threshold[63](index=63&type=chunk) - Livent was in compliance with all debt covenants as of September 30, 2022, with a maximum allowable first lien leverage ratio of **3.5** and a minimum allowable interest coverage ratio of **3.5**[71](index=71&type=chunk) [Note 10: Equity](index=21&type=section&id=Note%2010%3A%20Equity) This note details changes in the company's equity, including common stock, capital in excess of par value, and accumulated other comprehensive loss Common Stock Issued and Outstanding | Metric | Dec 31, 2021 | Sep 30, 2022 | | :--------------------------------- | :----------- | :----------- | | Issued Shares | 161,791,602 | 179,476,829 | | Treasury Shares | (101,618) | (103,078) | | Outstanding Shares | 161,689,984 | 179,373,751 | - The increase in issued and outstanding common stock is primarily due to the issuance of **17,500,000 shares** for the QLP Merger on June 6, 2022[74](index=74&type=chunk) - Accumulated other comprehensive loss, net of tax, increased to **$(54.2) million** as of September 30, 2022, from **$(42.9) million** at December 31, 2021, mainly due to foreign currency adjustments[76](index=76&type=chunk) - The company paid no dividends for the three and nine months ended September 30, 2022 and 2021, and does not expect to pay any in the foreseeable future[78](index=78&type=chunk) [Note 11: Earnings/(Loss) Per Share](index=21&type=section&id=Note%2011%3A%20Earnings%2F%28Loss%29%20Per%20Share) This note presents the basic and diluted earnings or loss per common share for the three and nine months ended September 30, 2022 and 2021 Earnings/(Loss) Per Common Share (in Millions, Except Share and Per Share Data) | Metric | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :--------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net income/(loss) | $77.6 | $(12.6) | $190.8 | $(6.9) | | Weighted average common shares outstanding - basic | 179.3 | 161.6 | 169.3 | 152.3 | | Weighted average common shares outstanding - diluted | 209.4 | 161.6 | 199.2 | 152.3 | | Basic EPS | $0.43 | $(0.08) | $1.13 | $(0.05) | | Diluted EPS | $0.37 | $(0.08) | $0.96 | $(0.05) | - Diluted EPS for the three months ended September 30, 2022, was **$0.37**, a significant improvement from **$(0.08)** in the prior year, reflecting increased net income and the dilutive effect of share-based plans and 2025 Notes[82](index=82&type=chunk) - For periods with net losses (e.g., Q3 2021), potentially dilutive securities are excluded from diluted EPS calculation as their inclusion would be anti-dilutive[80](index=80&type=chunk)[83](index=83&type=chunk) [Note 12: Financial Instruments, Risk Management and Fair Value Measurements](index=22&type=section&id=Note%2012%3A%20Financial%20Instruments%2C%20Risk%20Management%20and%20Fair%20Value%20Measurements) This note describes the company's use of financial instruments, risk management strategies, and fair value measurements for various assets and liabilities - Livent uses derivative financial instruments, primarily foreign exchange forward contracts, to mitigate currency risk from its global operations, with a net asset position of **$0.5 million** as of September 30, 2022[92](index=92&type=chunk)[94](index=94&type=chunk)[102](index=102&type=chunk) - Changes in the fair value of cash flow hedges are recorded in accumulated other comprehensive loss (AOCL) and reclassified to earnings as the hedged item affects earnings[97](index=97&type=chunk) - The estimated fair value of the 2025 Notes was **$813.2 million** as of September 30, 2022, significantly higher than its carrying amount of **$259.3 million**, and is classified as Level 2 in the fair value hierarchy[91](index=91&type=chunk) [Note 13: Commitments and Contingencies](index=27&type=section&id=Note%2013%3A%20Commitments%20and%20Contingencies) This note outlines the company's commitments and contingencies, including legal proceedings, environmental matters, and operating lease liabilities - Livent records liabilities for estimated losses from contingencies when a loss is probable and estimable, including ongoing customs and transfer pricing audits by Argentine authorities[117](index=117&type=chunk)[119](index=119&type=chunk)[120](index=120&type=chunk) - All leases are operating leases, with a weighted average remaining lease term of **7.7 years** and a weighted average discount rate of **4.9%** as of September 30, 2022[121](index=121&type=chunk)[124](index=124&type=chunk) Operating Lease Liabilities Maturity Analysis (in Millions) | Period | Undiscounted Cash Flows | | :---------------- | :---------------------- | | Remainder of 2022 | $0.3 | | 2023 | $1.1 | | 2024 | $1.0 | | 2025 | $1.1 | | 2026 | $0.2 | | Thereafter | $2.4 | | **Total future minimum lease payments** | **$6.1** | [Note 14: Supplemental Information](index=29&type=section&id=Note%2014%3A%20Supplemental%20Information) This note provides supplemental financial information, including details on prepaid and other current assets, and accrued and other current liabilities Prepaid and Other Current Assets (in Millions) | Category | Sep 30, 2022 | Dec 31, 2021 | | :------------------------ | :----------- | :----------- | | Tax related items | $19.0 | $17.7 | | Prepaid expenses | $6.9 | $12.2 | | Argentina government receivable | $6.3 | $13.3 | | Other receivables | $7.1 | $2.3 | | Bank Acceptance Drafts | $8.7 | $— | | Derivative assets | $1.1 | $0.2 | | Other current assets | $7.4 | $9.6 | | **Total** | **$56.5** | **$55.3** | Accrued and Other Current Liabilities (in Millions) | Category | Sep 30, 2022 | Dec 31, 2021 | | :--------------------------------- | :----------- | :----------- | | Accrued investment in unconsolidated affiliate | $16.6 | $6.2 | | Accrued payroll | $16.5 | $17.1 | | Plant restructuring reserves | $3.0 | $3.2 | | Advance customer payments | $7.3 | $— | | Retirement liability - 401k | $2.0 | $2.5 | | Derivative liabilities | $0.6 | $— | | Environmental reserves, current | $0.5 | $0.5 | | Severance related | $0.2 | $— | | Other accrued and other current liabilities | $22.2 | $32.3 | | **Total** | **$68.9** | **$61.8** | - Argentina government receivables, primarily export tax and rebate receivables, totaled **$39.3 million** as of September 30, 2022, denominated in U.S. dollars[127](index=127&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Livent's financial condition and results of operations, highlighting significant developments, critical accounting estimates, and the impact of global economic factors. It details the company's performance for the three and nine months ended September 30, 2022, compared to 2021, and discusses liquidity, capital resources, and market risks [SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION](index=31&type=section&id=SPECIAL%20NOTE%20REGARDING%20FORWARD-LOOKING%20INFORMATION) This section cautions readers about forward-looking statements, outlining inherent risks and uncertainties that could cause actual results to differ materially - The report contains forward-looking statements based on current views and assumptions, which involve known and unknown risks and uncertainties that could cause actual results to differ materially[134](index=134&type=chunk) - Key factors impacting the company include the continuing effects of COVID-19, supply chain shortages, inflation, rising interest rates, increased energy costs, and geopolitical instability[135](index=135&type=chunk)[136](index=136&type=chunk) - Investors are cautioned not to place undue reliance on forward-looking statements, and the company disclaims any obligation to publicly revise or update them[138](index=138&type=chunk)[215](index=215&type=chunk) [APPLICATION OF CRITICAL ACCOUNTING ESTIMATES](index=32&type=section&id=APPLICATION%20OF%20CRITICAL%20ACCOUNTING%20ESTIMATES) This section discusses the critical accounting estimates that involve significant judgment and measurement uncertainty in the financial statements - Critical accounting estimates involve significant measurement uncertainty and subjectivity, including revenue recognition, collectability of trade receivables, impairment of long-lived assets, and income taxes[139](index=139&type=chunk)[141](index=141&type=chunk) - Despite global economic disruptions, management is not aware of specific events requiring updates to estimates or materially affecting asset/liability carrying values as of the report date[142](index=142&type=chunk) [OVERVIEW](index=33&type=section&id=OVERVIEW) This section provides a general overview of the company's business, including third-quarter highlights, COVID-19 impacts, and the 2022 business outlook [Third Quarter 2022 Highlights](index=33&type=section&id=Third%20Quarter%202022%20Highlights) This section summarizes Livent's key financial and operational achievements during the third quarter of 2022 - Revenue for Q3 2022 increased by approximately **124%** to **$231.6 million**, driven by higher pricing despite decreased sales volumes[147](index=147&type=chunk) - Net income for Q3 2022 was **$77.6 million**, a significant improvement from a net loss of **$(12.6) million** in Q3 2021[147](index=147&type=chunk) - Adjusted EBITDA for Q3 2022 increased by **$95.9 million** to **$110.8 million**, primarily due to higher product pricing[147](index=147&type=chunk) [COVID-19 Impacts](index=33&type=section&id=COVID-19%20Impacts) This section discusses the ongoing negative impacts of the COVID-19 pandemic and China's zero-COVID strategy on the company's operations and financial performance - COVID-19 and China's zero-COVID strategy continued to negatively impact business, operations, and financial performance, causing supply chain disruptions, increased costs, and delays in global expansion work[145](index=145&type=chunk)[146](index=146&type=chunk) - The company incurred additional costs for COVID-19 testing, PPE, cleaning, and medical personnel to protect employee health and well-being[148](index=148&type=chunk) [Business Update](index=34&type=section&id=Business%20Update) This section provides an update on global economic challenges, operational developments, and capacity expansion projects - Global economic challenges, including inflation, high energy costs, supply chain disruptions, and geopolitical conflicts, continue to impact the company's operations[150](index=150&type=chunk) - Operations in Argentina face unique challenges due to high inflation, currency weakening, energy price volatility, and government pressure for customs and tax revenues[152](index=152&type=chunk) - Livent is actively expanding lithium carbonate capacity in Argentina and mechanically completed its lithium hydroxide expansion project in Bessemer City, North Carolina, in Q3 2022[154](index=154&type=chunk)[155](index=155&type=chunk) - A long-term supply agreement for battery-grade lithium hydroxide was signed in Q3 2022, including a **$198 million** advance payment[157](index=157&type=chunk) [2022 Business Outlook](index=35&type=section&id=2022%20Business%20Outlook) This section outlines Livent's updated financial performance outlook for 2022, driven by anticipated higher average pricing for lithium products - Livent significantly increased its 2022 financial performance outlook, driven by even higher average pricing across all lithium products[160](index=160&type=chunk) - The initial outlook projected flat volumes and significantly higher average pricing, leading to increased profitability, offset by higher logistics, raw material, and inflationary costs[159](index=159&type=chunk) [RESULTS OF OPERATIONS](index=36&type=section&id=RESULTS%20OF%20OPERATIONS) This section analyzes Livent's financial performance for the three and nine months ended September 30, 2022, compared to the prior year Key Financial Results (in Millions) | Metric | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :--------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Revenue | $231.6 | $103.6 | $593.8 | $297.5 | | Gross margin | $119.4 | $18.3 | $281.8 | $52.0 | | Selling, general and administrative expenses | $15.0 | $11.8 | $40.6 | $34.2 | | Net income/(loss) | $77.6 | $(12.6) | $190.8 | $(6.9) | | Adjusted EBITDA (Non-GAAP) | $110.8 | $14.9 | $259.1 | $42.0 | [Three Months Ended September 30, 2022 vs. 2021](index=37&type=section&id=Three%20Months%20Ended%20September%2030%2C%202022%20vs.%202021) This section compares Livent's financial results for the third quarter of 2022 against the same period in 2021 - Revenue increased by **124%** to **$231.6 million**, primarily due to higher pricing across all products, partially offset by decreased sales volumes[164](index=164&type=chunk) - Gross margin surged by **552%** to **$119.4 million**, driven by higher pricing, despite increased logistics, raw material, and operating costs[165](index=165&type=chunk) - Net income improved to **$77.6 million** from a **$(12.6) million** loss, benefiting from higher pricing and lower restructuring charges, but partially offset by increased costs and equity in net loss of unconsolidated affiliate[171](index=171&type=chunk) [Nine Months Ended September 30, 2022 vs. 2021](index=38&type=section&id=Nine%20Months%20Ended%20September%2030%2C%202022%20vs.%202021) This section compares Livent's financial results for the nine months ended September 30, 2022, against the same period in 2021 - Revenue for the nine months ended September 30, 2022, doubled to **$593.8 million**, mainly due to higher pricing across all products[172](index=172&type=chunk) - Gross margin increased by **442%** to **$281.8 million**, driven by higher pricing, despite increased costs and decreased sales volumes[173](index=173&type=chunk) - Net income was **$190.8 million**, a significant turnaround from a **$(6.9) million** loss in the prior year, also benefiting from a **$22.2 million** gain from the sale of Argentina Sovereign U.S. dollar-denominated bonds[180](index=180&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=41&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) This section discusses Livent's cash position, operating cash flows, capital expenditures, and financing activities, including its revolving credit facility - Cash and cash equivalents increased to **$211.6 million** as of September 30, 2022, from **$113.0 million** at December 31, 2021[182](index=182&type=chunk) - A **$198 million** advance payment from a customer for a long-term supply agreement significantly boosted cash provided by operating activities for the nine months ended September 30, 2022[183](index=183&type=chunk)[189](index=189&type=chunk) - The company's Revolving Credit Facility was amended and restated on September 1, 2022, providing a **$500 million** senior secured revolving credit facility, with **$485.5 million** remaining borrowing capacity as of September 30, 2022[184](index=184&type=chunk)[185](index=185&type=chunk)[192](index=192&type=chunk) - Total capital spending for 2022 is estimated to be **$300 million** to **$340 million**, reflecting accelerated expansion work in Argentina and the U.S[193](index=193&type=chunk) - Livent expects to meet its liquidity needs through available cash, cash from operations, and borrowings under the Revolving Credit Facility, despite ongoing global economic challenges[192](index=192&type=chunk)[195](index=195&type=chunk)[196](index=196&type=chunk) [DERIVATIVE FINANCIAL INSTRUMENTS AND MARKET RISKS](index=42&type=section&id=DERIVATIVE%20FINANCIAL%20INSTRUMENTS%20AND%20MARKET%20RISKS) This section describes Livent's strategies for managing market risks related to commodity prices, interest rates, and foreign currency exchange rates using derivative instruments - Livent manages market risks related to commodity prices, interest rates, and foreign currency exchange rates through a risk management program utilizing derivative financial instruments[201](index=201&type=chunk) - The company is exposed to foreign currency risk from operations in various countries, primarily Euro, British pound, Chinese yuan, Argentine peso, and Japanese yen, and uses foreign exchange forward contracts to hedge these exposures, except for the Argentine peso due to limited availability of suitable instruments[204](index=204&type=chunk) Foreign Currency Exchange Rate Risk Sensitivity (in Millions) | Metric | Net asset/(liability) position as of Sep 30, 2022 | Net liability position with 10% strengthening | Net asset position with 10% weakening | | :---------------------------------------- | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Net asset/(liability) position | $0.5 | $(3.4) | $2.8 | - As of September 30, 2022, Livent had no interest rate swap agreements and no outstanding balances under its Revolving Credit Facility, which bears floating interest rates[207](index=207&type=chunk)[208](index=208&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=44&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This item refers to the detailed discussion on derivative financial instruments and market risks provided in Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations - Information regarding quantitative and qualitative disclosures about market risk is incorporated by reference from the 'Derivative Financial Instruments and Market Risks' section under Item 2[209](index=209&type=chunk) [Item 4. Controls and Procedures](index=44&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that Livent's disclosure controls and procedures were effective as of September 30, 2022, and reported no material changes in internal control over financial reporting during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of September 30, 2022[210](index=210&type=chunk) - There were no material changes in internal control over financial reporting during the quarter ended September 30, 2022[211](index=211&type=chunk) [PART II - OTHER INFORMATION](index=45&type=section&id=Part%20II%20-%20OTHER%20INFORMATION) This part includes information on legal proceedings, risk factors, equity security sales, exhibits, and signatures [Item 1. Legal Proceedings](index=45&type=section&id=Item%201.%20Legal%20Proceedings) Livent is involved in various legal proceedings in the ordinary course of business, but based on current information and reserves, no known proceeding is expected to have a material adverse effect on financial position, liquidity, or results of operations. Material changes from previously disclosed legal proceedings are referenced to Note 13 - The company is involved in ordinary course legal proceedings, but does not anticipate a material adverse effect on its financial position, liquidity, or results of operations based on current information[213](index=213&type=chunk) - No material changes from legal proceedings previously disclosed in the 2021 Annual Report on Form 10-K, except as set forth in Note 13[213](index=213&type=chunk) [Item 1A. Risk Factors](index=45&type=section&id=Item%201A.%20Risk%20Factors) This section advises readers to carefully consider the risk factors discussed in the company's 2021 Annual Report on Form 10-K, noting that additional unknown or immaterial risks could also adversely affect the business - Readers should carefully consider the risk factors detailed in Part I, Item 1A of the 2021 Annual Report on Form 10-K[214](index=214&type=chunk) - Additional unknown or currently immaterial risks may also adversely affect the company's business, financial condition, or future results[214](index=214&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=45&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This item details the repurchases of Livent's common stock for the three months ended September 30, 2022, which were conducted by the trustee of the Livent NQSP for employee investments, and confirms no publicly announced stock repurchase programs Repurchases of Common Shares (Q3 2022) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | | :-------------------------- | :------------------------------- | :--------------------------- | | July 1 through July 31, 2022 | 161 | $23.17 | | August 1 through August 31, 2022 | 125 | $28.86 | | September 1 through September 30, 2022 | 116 | $31.61 | | **Total Q3 2022** | **402** | **$27.37** | - Shares were reacquired by the trustee of the Livent NQSP through open-market purchases for employee investments, and recorded as Treasury stock[218](index=218&type=chunk) - Livent Corporation has no publicly announced stock repurchase programs[218](index=218&type=chunk) [Item 6. Exhibits](index=46&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including the Amended and Restated Credit Agreement, certifying statements from the CEO and CFO, and interactive data files - Key exhibits include the Amended and Restated Credit Agreement (Exhibit 10.1), Certifying Statements of the CEO and CFO (Exhibits 31.1, 31.2, 32.1, 32.2), and the Interactive Data File (Exhibit 101)[221](index=221&type=chunk) [Signatures](index=47&type=section&id=Signatures) This section contains the signature of Livent Corporation's Vice President and Chief Financial Officer, Gilberto Antoniazzi, certifying the filing of the report on November 3, 2022 - The report was signed by Gilberto Antoniazzi, Vice President and Chief Financial Officer of Livent Corporation, on November 3, 2022[224](index=224&type=chunk)

[Glossary of Terms](index=4&type=section&id=Glossary%20of%20Terms) This section defines key terms and acronyms used throughout the financial report for clarity and understanding Glossary of Terms | Term | Definition | | :--- | :--- | | 2025 Notes | $245.75 million principal amount 4.125% Convertible Senior Notes due 2025 | | ASU | Accounting Standards Update, under U.S. GAAP | | Credit Agreement | The Original Credit Agreement, as amended | | EAETR | Estimated annual effective tax rate | | ESG | Environmental, social and governance | | EV | Electric vehicle | | FASB | Financial Accounting Standards Board | | FMC | FMC Corporation | | Livent NQSP | Livent Non-Qualified Savings Plan | | Nemaska | Nemaska Lithium Shawinigan Transformation Inc., a subsidiary of Nemaska Lithium Inc., a Canadian lithium company based in Québec, Canada | | Nemaska Project | The ownership and operation of the business previously conducted by Nemaska, through a joint venture in which Livent owns a 50% equity interest through its ownership of QLP | | Offering | On June 15, 2021, the Company closed on the issuance of 14,950,000 shares of its common stock, par value $0.001 per share, at a public offering price of $17.50 per share, in an underwritten public offering. Total net proceeds from the offering were $252.2 million, after deducting underwriters' fees and offering expenses payable by the Company | | OEM | Original equipment manufacturer | | Original Credit Agreement | On September 18, 2018 Livent Corporation entered into the credit agreement, which provides for a $400 million senior secured revolving credit facility | | PRSU | Performance-based restricted stock unit | | QLP | Québec Lithium Partners (UK) Limited, a wholly owned subsidiary of Livent. QLP owns a 50% equity interest in the Nemaska Project | | QLP Merger | On June 6, 2022, Livent closed on the Transaction Agreement and Plan of Merger with The Pallinghurst Group to provide Livent with a direct 50% ownership interest in the Nemaska Project. Livent issued 17,500,000 shares of its common stock to acquire the remaining 50% share of Québec Lithium Partners (UK) Limited, previously owned by The Pallinghurst Group and certain of its investors | | Revolving Credit Facility | Livent's $400 million senior secured revolving credit facility | | RSU | Restricted stock unit | | SEC | Securities and Exchange Commission | | Securities Act | Securities Act of 1933 | | Separation | On October 15, 2018, Livent completed its initial public offering and sold 20 million shares of Livent common stock to the public at a price of $17.00 per share | | TSR | Total Shareholder Return | | U.S. GAAP | United States Generally Accepted Accounting Principles | | VAT | Value-added tax | [Part I - Financial Information](index=5&type=section&id=Part%20I%20-%20FINANCIAL%20INFORMATION) This part presents Livent's unaudited condensed consolidated financial statements and management's analysis of financial condition and operations [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents Livent's unaudited condensed consolidated financial statements and notes for the specified periods [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This statement details Livent's revenues, costs, and net income for the three and six months ended June 30, 2022 Condensed Consolidated Statements of Operations Highlights | Metric (in Millions) | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :------------------------------------------------------------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $218.7 | $102.2 | $362.2 | $193.9 | | Gross margin | $102.5 | $20.4 | $162.4 | $33.7 | | Income from operations before equity in net loss of unconsolidated affiliate, interest expense, net and other gain | $84.7 | $5.4 | $130.8 | $7.1 | | Net income | $60.0 | $6.5 | $113.2 | $5.7 | | Net income per weighted average share - basic | $0.36 | $0.04 | $0.69 | $0.04 | | Net income per weighted average share - diluted | $0.31 | $0.04 | $0.58 | $0.03 | [Condensed Consolidated Statements of Comprehensive Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This statement presents Livent's net income and other comprehensive income, including foreign currency translation adjustments Condensed Consolidated Statements of Comprehensive Income Highlights | Metric (in Millions) | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :------------------------------------------------------------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $60.0 | $6.5 | $113.2 | $5.7 | | Foreign currency translation (loss)/gain arising during the period | $(4.4) | $1.2 | $(5.4) | $0.9 | | Unrealized hedging (losses)/gains, net of tax | $(0.1) | — | — | $0.1 | | Comprehensive income | $55.5 | $7.8 | $107.8 | $6.7 | [Condensed Consolidated Balance Sheets](index=9&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This statement provides a snapshot of Livent's assets, liabilities, and equity as of June 30, 2022 and December 31, 2021 Condensed Consolidated Balance Sheets Highlights | Metric (in Millions) | June 30, 2022 | December 31, 2021 | | :------------------------------------------------------------------------------------------------ | :-------------- | :---------------- | | Total current assets | $386.3 | $399.3 | | Investments | $421.3 | $27.2 | | Property, plant and equipment, net | $803.2 | $677.9 | | Total assets | $1,721.4 | $1,202.5 | | Total current liabilities | $148.8 | $131.3 | | Total current and long-term liabilities | $441.3 | $407.1 | | Total equity | $1,280.1 | $795.4 | | Total liabilities and equity | $1,721.4 | $1,202.5 | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement summarizes Livent's cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows Highlights | Metric (in Millions) | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :------------------------------------------------------------------------------------------------ | :----------------------------- | :----------------------------- | | Cash provided by operating activities | $61.2 | $30.6 | | Cash used in investing activities | $(124.1) | $(42.7) | | Cash provided by financing activities | $0.2 | $216.9 | | (Decrease)/increase in cash and cash equivalents | $(64.0) | $205.0 | | Cash and cash equivalents, end of period | $49.0 | $216.6 | - Non-cash investment in unconsolidated affiliates was **$387.1 million** for the six months ended June 30, 2022[23](index=23&type=chunk) [Condensed Consolidated Statements of Equity](index=12&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity) This statement details changes in Livent's equity components, including common stock, retained earnings, and comprehensive loss Condensed Consolidated Statements of Equity Highlights | Metric (in Millions) | Balance, December 31, 2021 | Net Income (Q1 2022) | Issuance of Common Stock - QLP Merger | Balance, June 30, 2022 | | :------------------------------------------------------------------------------------------------ | :------------------------- | :------------------- | :------------------------------------ | :--------------------- | | Common Stock, $0.001 Par Value Per Share | $0.1 | — | — | $0.1 | | Capital In Excess of Par | $778.1 | $1.7 | $373.9 | $1,155.1 | | Retained Earnings | $60.9 | $53.2 | $60.0 | $174.1 | | Accumulated Other Comprehensive Loss | $(42.9) | $(1.0) | $(4.4) | $(48.3) | | Treasury Stock | $(0.8) | $(0.1) | $(0.1) | $(0.9) | | Total Equity | $795.4 | $849.0 (March 31, 2022) | $1,280.1 | $1,280.1 | [Notes to Condensed Consolidated Financial Statements](index=14&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations of Livent's accounting policies, financial items, and other disclosures [Note 1: Description of the Business](index=14&type=section&id=Note%201%3A%20Description%20of%20the%20Business) Livent manufactures lithium products for batteries and specialty applications, driven by EV and energy storage market growth - Livent Corporation manufactures a wide range of lithium products, primarily for **lithium-based batteries**, specialty polymers, and chemical synthesis applications[30](index=30&type=chunk) - A major growth driver for lithium is the increasing adoption of **electric vehicles (EVs)** and other energy storage applications[30](index=30&type=chunk) - Significant growth in lithium chemical markets is occurring in **Asia**, followed by Europe and North America, driven by lithium-ion battery development[31](index=31&type=chunk) [Note 2: Principal Accounting Policies and Related Financial Information](index=14&type=section&id=Note%202%3A%20Principal%20Accounting%20Policies%20and%20Related%20Financial%20Information) This note outlines Livent's key accounting policies, including those for interim reporting, functional currency, and equity awards - The condensed consolidated financial statements were prepared in accordance with **SEC interim reporting requirements** and **U.S. GAAP**[32](index=32&type=chunk) - Livent's Argentina subsidiary uses the **U.S. dollar as its functional currency**, with peso-denominated assets and liabilities remeasured at the official exchange rate[33](index=33&type=chunk) - A cash gain of **$8.2 million** (Q2 2022) and **$22.2 million** (H1 2022) was recorded from transferring U.S. dollars into Argentina via the Blue Chip Swap method[33](index=33&type=chunk) - Performance-Based Restricted Stock Unit (PRSU) awards granted on February 23, 2022, are valued using a **Monte Carlo model**, with the final number of PRSUs earned based on Livent's **Total Shareholder Return (TSR)** relative to the Russell 3000 Chemical Supersector Index[34](index=34&type=chunk)[35](index=35&type=chunk) [Note 3: Recently Issued and Adopted Accounting Pronouncements and Regulatory Items](index=15&type=section&id=Note%203%3A%20Recently%20Issued%20and%20Adopted%20Accounting%20Pronouncements%20and%20Regulatory%20Items) This note discusses the company's evaluation of new accounting standards, including ASU No. 2021-10 and ASU No. 2020-04 - The company is evaluating the impact of **ASU No. 2021-10, Government Assistance (Topic 832)**, effective for annual periods beginning after December 15, 2021[38](index=38&type=chunk) - **ASU No. 2020-04, Reference Rate Reform (Topic 848)**, is not expected to have a material impact on the condensed consolidated financial statements[39](index=39&type=chunk) [Note 4: Revenue Recognition](index=15&type=section&id=Note%204%3A%20Revenue%20Recognition) This note disaggregates Livent's revenue by region and product, discussing customer concentration and supply agreements Disaggregated Revenue by Major Geographical Region (in Millions) | Region | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :---------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | North America | $41.2 | $15.0 | $62.5 | $28.3 | | Latin America | $1.1 | — | $1.1 | — | | Europe, Middle East & Africa | $32.0 | $14.2 | $46.7 | $31.7 | | Asia Pacific | $144.4 | $73.0 | $251.9 | $133.9 | | **Total Revenue** | **$218.7** | **$102.2** | **$362.2** | **$193.9** | Disaggregated Revenue by Major Product Category (in Millions) | Product Category | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Lithium Hydroxide | $113.6 | $59.8 | $181.1 | $109.7 | | Butyllithium | $81.2 | $22.9 | $114.9 | $48.7 | | High Purity Lithium Metal and Other Specialty Compounds | $16.7 | $9.0 | $30.1 | $17.9 | | Lithium Carbonate and Lithium Chloride | $7.2 | $10.5 | $36.1 | $17.6 | | **Total Revenue** | **$218.7** | **$102.2** | **$362.2** | **$193.9** | - For the three months ended June 30, 2022, one customer accounted for approximately **21% of total revenue**, and the 10 largest customers accounted for approximately **63% of total revenue**[42](index=42&type=chunk) - The aggregate amount of revenue expected from unsatisfied or partially unsatisfied multi-year take-or-pay supply agreements is approximately **$763 million** in the next three years[48](index=48&type=chunk) - On July 25, 2022, Livent entered into a long-term supply agreement for battery-grade lithium hydroxide (2025-2030), including a **$198 million advance payment** from the customer[49](index=49&type=chunk) [Note 5: Inventories, Net](index=17&type=section&id=Note%205%3A%20Inventories%2C%20Net) This note provides a breakdown of Livent's inventory components, including finished goods, semi-finished goods, and raw materials Inventories, Net (in Millions) | Category | June 30, 2022 | December 31, 2021 | | :--------------- | :-------------- | :---------------- | | Finished goods | $44.8 | $52.2 | | Semi-finished goods | $62.1 | $43.6 | | Raw materials, supplies, and other | $49.4 | $38.8 | | **Inventory, net** | **$156.3** | **$134.6** | [Note 6: Investments](index=18&type=section&id=Note%206%3A%20Investments) This note details Livent's investment activities, particularly the QLP Merger and its impact on the Nemaska Project ownership - On June 6, 2022, Livent closed the **QLP Merger**, issuing **17,500,000 shares of common stock** to acquire the remaining 50% share of QLP, thereby gaining a direct **50% ownership interest in the Nemaska Project**[52](index=52&type=chunk) - Upon consummation of the QLP Merger, Livent recorded an Investment of **$387.1 million** and a corresponding increase to additional paid-in capital of **$373.9 million**[52](index=52&type=chunk) - Equity in net loss of unconsolidated affiliate related to the Nemaska Project was **$2.7 million** for Q2 2022 and **$4.9 million** for H1 2022[53](index=53&type=chunk) - The carrying amount of Livent's equity interest in the Nemaska Project increased to **$418.0 million** as of June 30, 2022, from **$23.8 million** as of December 31, 2021[53](index=53&type=chunk) [Note 7: Restructuring and Other Charges](index=18&type=section&id=Note%207%3A%20Restructuring%20and%20Other%20Charges) This note outlines Livent's restructuring and other charges, including severance, environmental remediation, and transaction fees Restructuring and Other Charges (in Millions) | Category | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Severance-related and exit costs | — | $0.1 | $0.5 | $0.1 | | Environmental remediation | $0.1 | $0.1 | $0.2 | $0.2 | | Other (primarily transaction-related legal fees) | $2.8 | $1.8 | $3.2 | $2.0 | | **Total** | **$2.9** | **$2.0** | **$3.9** | **$2.3** | [Note 8: Income Taxes](index=18&type=section&id=Note%208%3A%20Income%20Taxes) This note presents Livent's income tax expense and effective tax rates, highlighting factors influencing changes in tax provisions Income Tax Expense/(Benefit) and Effective Tax Rate | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Provision for income taxes (in Millions) | $30.2 | $(2.5) | $34.9 | $(1.6) | | Effective tax rate | 33.5% | (62.5)% | 23.6% | (39.0)% | - The increase in income tax expense was primarily due to **higher income from operations** and fluctuations in **foreign currency impacts in Argentina**, including inflationary adjustments[59](index=59&type=chunk)[159](index=159&type=chunk)[167](index=167&type=chunk) [Note 9: Debt](index=19&type=section&id=Note%209%3A%20Debt) This note details Livent's long-term debt, including convertible senior notes and available funds under its revolving credit facility Long-Term Debt (in Millions) | Debt Instrument | Interest Rate | Maturity Date | June 30, 2022 | December 31, 2021 | | :-------------------------------- | :------------ | :------------ | :-------------- | :---------------- | | Deferred Payment Note (QLP Note) | 8.0% | 2022 | $13.5 | — | | 4.125% Convertible Senior Notes due 2025 | 4.125% | 2025 | $245.8 | $245.8 | | Transaction costs - 2025 Notes | — | — | $(4.6) | $(5.4) | | **Total long-term debt** | **—** | **—** | **$241.2** | **$240.4** | - Holders of the **2025 Notes** have the option to convert through September 30, 2022, as the common stock price exceeded **130% of the conversion price** for at least 20 trading days[62](index=62&type=chunk) - As of June 30, 2022, Livent had **$385.5 million available funds** under its **$400 million senior secured revolving credit facility** and was in compliance with all debt covenants[60](index=60&type=chunk)[67](index=67&type=chunk) [Note 10: Equity](index=21&type=section&id=Note%2010%3A%20Equity) This note outlines changes in Livent's common stock, accumulated other comprehensive loss, and dividend policy Common Stock Issued and Outstanding | Metric | December 31, 2021 | June 30, 2022 | | :-------------------------------- | :------------------ | :------------------ | | Issued Shares | 161,791,602 | 179,374,126 | | Outstanding Shares | 161,689,984 | 179,270,450 | - The increase in issued common stock is primarily due to the issuance of **17,500,000 shares** for the **QLP Merger** on June 6, 2022[70](index=70&type=chunk) - Accumulated other comprehensive loss, net of tax, increased to **$(48.3) million** as of June 30, 2022, from **$(42.9) million** as of December 31, 2021, primarily due to foreign currency translation adjustments[72](index=72&type=chunk) - No dividends were paid for the three and six months ended June 30, 2022 and 2021, and none are expected in the foreseeable future[74](index=74&type=chunk) [Note 11: Earnings Per Share](index=21&type=section&id=Note%2011%3A%20Earnings%20Per%20Share) This note provides detailed calculations for Livent's basic and diluted earnings per share, including potentially dilutive securities Earnings Per Share (EPS) Data | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (in Millions) | $60.0 | $6.5 | $113.2 | $5.7 | | Weighted average common shares outstanding - basic (in Millions) | 166.6 | 148.7 | 164.2 | 147.6 | | Weighted average common shares outstanding - diluted (in Millions) | 196.5 | 178.0 | 194.0 | 177.0 | | Basic earnings per common share | $0.36 | $0.04 | $0.69 | $0.04 | | Diluted earnings per common share | $0.31 | $0.04 | $0.58 | $0.03 | - Potentially dilutive securities include stock options, restricted stock units, performance restricted stock units, and **2025 Notes**[76](index=76&type=chunk) [Note 12: Financial Instruments, Risk Management and Fair Value Measurements](index=23&type=section&id=Note%2012%3A%20Financial%20Instruments%2C%20Risk%20Management%20and%20Fair%20Value%20Measurements) This note describes Livent's use of derivative financial instruments to manage market risks, including foreign currency and interest rates - Livent uses derivative financial instruments, primarily **foreign exchange forward contracts**, to mitigate currency risk from international operations[85](index=85&type=chunk)[87](index=87&type=chunk) - The estimated fair value of the **2025 Notes** was **$756.4 million**, with a carrying amount of **$259.3 million** as of June 30, 2022, classified as Level 2 in the fair value hierarchy[84](index=84&type=chunk) - As of June 30, 2022, the company had open foreign currency forward contracts designated as cash flow hedges in accumulated other comprehensive loss with a net after-tax gain of **$0.2 million**[89](index=89&type=chunk) - The company does not hedge foreign currency risks associated with the **Argentine peso** due to limited availability and high cost of suitable derivative instruments[87](index=87&type=chunk) [Note 13: Commitments and Contingencies](index=27&type=section&id=Note%2013%3A%20Commitments%20and%20Contingencies) This note discusses Livent's legal proceedings, customs and tax audits, and operating lease liabilities, including their maturity analysis - Livent is a party to various legal proceedings, including customs and tax audits by Argentine authorities for 2016-2019, for which a range of reasonably possible liabilities cannot be currently estimated[107](index=107&type=chunk)[111](index=111&type=chunk)[112](index=112&type=chunk) - All leases are operating leases for corporate offices, manufacturing facilities, and land, with a weighted average remaining lease term of **8.0 years** and a weighted average discount rate of **4.9%** as of June 30, 2022[113](index=113&type=chunk)[115](index=115&type=chunk) Maturity Analysis of Operating Lease Liabilities (in Millions) | Period | Undiscounted cash flows | | :--------------- | :---------------------- | | Remainder of 2022 | $0.7 | | 2023 | $1.2 | | 2024 | $1.0 | | 2025 | $1.1 | | 2026 | $0.2 | | Thereafter | $2.6 | | **Total future minimum lease payments** | **$6.8** | | Less: Imputed interest | $(1.2) | | **Total** | **$5.6** | [Note 14: Supplemental Information](index=29&type=section&id=Note%2014%3A%20Supplemental%20Information) This note provides detailed breakdowns of Livent's prepaid and other current assets, other assets, and various accrued and long-term liabilities Prepaid and Other Current Assets (in Millions) | Category | June 30, 2022 | December 31, 2021 | | :-------------------------- | :-------------- | :---------------- | | Tax related items | $21.5 | $17.7 | | Prepaid expenses | $7.3 | $12.2 | | Argentina government receivable | $7.1 | $13.3 | | Other receivables | $3.2 | $2.3 | | Bank Acceptance Drafts | $0.6 | — | | Derivative assets (Note 12) | $0.8 | $0.2 | | Other current assets | $7.7 | $9.6 | | **Total** | **$48.2** | **$55.3** | Other Assets (in Millions) | Category | June 30, 2022 | December 31, 2021 | | :-------------------------- | :-------------- | :---------------- | | Argentina government receivable | $71.5 | $55.8 | | Advance to contract manufacturers | $15.9 | $16.0 | | Long-term raw materials inventory | $1.6 | $4.9 | | Tax related items | $3.8 | $1.3 | | Capitalized software, net | $1.4 | $1.5 | | Other assets | $10.3 | $11.4 | | **Total** | **$104.5** | **$90.9** | Accrued and Other Current Liabilities (in Millions) | Category | June 30, 2022 | December 31, 2021 | | :-------------------------- | :-------------- | :---------------- | | Accrued investment in unconsolidated affiliate | — | $6.2 | | Accrued payroll | $12.7 | $17.1 | | Plant restructuring reserves | $3.2 | $3.2 | | Advance customer payments | $4.0 | — | | Retirement liability - 401k | $1.4 | $2.5 | | Derivative liabilities | $0.6 | — | | Environmental reserves, current | $0.6 | $0.5 | | Severance related | $0.2 | — | | Other accrued and other current liabilities | $26.7 | $32.3 | | **Total** | **$49.4** | **$61.8** | Other Long-Term Liabilities (in Millions) | Category | June 30, 2022 | December 31, 2021 | | :-------------------------- | :-------------- | :---------------- | | Deferred compensation plan obligation | $5.7 | $5.9 | | Contingencies related to uncertain tax positions | $5.9 | $2.3 | | Self-insurance reserves | $1.7 | $1.5 | | Asset retirement obligations | $0.3 | $0.3 | | Other long-term liabilities | $2.6 | $1.7 | | **Total** | **$16.2** | **$11.7** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Livent's financial condition and results, highlighting growth, estimates, outlook, liquidity, and risks [Special Note Regarding Forward-Looking Information](index=31&type=section&id=SPECIAL%20NOTE%20REGARDING%20FORWARD-LOOKING%20INFORMATION) This note cautions that forward-looking statements are subject to risks and uncertainties, including economic instability and supply chain issues - The report contains forward-looking statements based on current views and assumptions, which are subject to known and unknown risks and uncertainties that could cause actual results to differ materially[127](index=127&type=chunk) - Key risk factors include the continuing effects of **COVID-19**, **supply chain shortages**, **inflation**, rising interest rates, increased energy costs, economic and political instability in Argentina, and volatility in lithium prices[128](index=128&type=chunk)[129](index=129&type=chunk) - The company does not undertake any obligation to publicly revise or update forward-looking statements[131](index=131&type=chunk) [Application of Critical Accounting Estimates](index=32&type=section&id=APPLICATION%20OF%20CRITICAL%20ACCOUNTING%20ESTIMATES) This section identifies critical accounting estimates, emphasizing the judgment involved and potential impact of global economic conditions - Critical accounting estimates include **revenue recognition**, **trade and other receivables**, **impairment and valuation of long-lived assets**, and **income taxes**[135](index=135&type=chunk) - These estimates involve significant judgment and are based on historical experience, current conditions, and other reasonable factors, but actual results may differ[133](index=133&type=chunk)[136](index=136&type=chunk) - The company has assessed the impact of the **COVID-19 pandemic**, **inflation**, and **rising interest rates** on these estimates and is not aware of any specific events requiring material updates as of the report date[136](index=136&type=chunk) [Overview](index=33&type=section&id=OVERVIEW) This section provides a high-level summary of Livent's business strategy, recent financial highlights, and ongoing operational challenges [Business Strategy and Products](index=33&type=section&id=Business%20Strategy%20and%20Products) Livent focuses on supplying high-performance lithium compounds to the growing EV and energy storage battery markets - Livent is a pure-play, fully integrated lithium company focused on supplying **high-performance lithium compounds** to the rapidly growing **EV and energy storage battery markets**[137](index=137&type=chunk) - Primary products include **battery-grade lithium hydroxide**, **lithium carbonate**, **butyllithium**, and **high purity lithium metal**[137](index=137&type=chunk) - The company aims to maintain its position as a leading global producer of **butyllithium** and **high purity lithium metal**[137](index=137&type=chunk) [Second Quarter 2022 Highlights](index=33&type=section&id=Second%20Quarter%202022%20Highlights) Livent reported significant revenue and net income growth in Q2 2022, driven by higher pricing across all products - Revenue for Q2 2022 increased by approximately **114% to $218.7 million**, primarily due to higher pricing across all products[141](index=141&type=chunk) - Net income for Q2 2022 was **$60.0 million**, up from **$6.5 million** in Q2 2021, driven by higher pricing and an **$8.2 million gain** from Argentina bond sales, partially offset by increased costs[141](index=141&type=chunk) - Adjusted EBITDA for Q2 2022 increased by **$79.0 million to $95.0 million**, mainly due to higher product pricing[141](index=141&type=chunk) [COVID-19 Impacts](index=33&type=section&id=COVID-19%20Impacts) The COVID-19 pandemic continues to negatively affect Livent's operations through supply chain disruptions and increased costs - The **COVID-19 pandemic** continues to negatively impact Livent's business, operations, and financial performance, particularly due to **China's zero-COVID strategy** causing supply chain disruptions and logistics problems[139](index=139&type=chunk)[140](index=140&type=chunk) - Increased costs were incurred for **COVID-19 testing kits**, personal protective equipment, cleaning, medical personnel, and personnel transportation[141](index=141&type=chunk) - Social distancing measures and health protocols have led to reduced workforce numbers in certain locations, potentially disrupting operations and expansion projects[140](index=140&type=chunk)[142](index=142&type=chunk) [Business Update](index=34&type=section&id=Business%20Update) Livent faces global economic challenges, including inflation, supply chain issues, and unique operational hurdles in Argentina - Global economic challenges, including the **conflict in Ukraine**, **inflation**, and **supply chain disruptions**, continue to impact the business, increasing energy costs and contributing to inflation[144](index=144&type=chunk) - Operations in Argentina face unique challenges such as **high inflation**, high natural gas prices, social/labor unrest, and severe currency restrictions impacting imports and creating exchange rate divergence[146](index=146&type=chunk) - The EV manufacturing industry's supply chain constraints (e.g., **semiconductor chip shortages**) could cause delays in demand for Livent's high-performance lithium compounds[147](index=147&type=chunk) - Management is monitoring key matters including global expansion efforts, the Nemaska Project, lithium supply/demand balance, COVID-19 impacts, inflation, interest rates, recession prospects, and global energy supply concerns[148](index=148&type=chunk) [2022 Business Outlook](index=34&type=section&id=2022%20Business%20Outlook) Livent has significantly raised its 2022 financial outlook due to higher average pricing, despite anticipating increased costs - Livent has significantly increased its **2022 financial performance outlook**, driven by even higher average pricing across all lithium products, with no expected change in sales volumes[150](index=150&type=chunk) - The initial 2022 outlook projected flat volumes and significantly higher average pricing, leading to higher profitability but also higher costs related to logistics, raw materials, and general inflationary pressures[149](index=149&type=chunk) [Results of Operations](index=35&type=section&id=RESULTS%20OF%20OPERATIONS) This section analyzes Livent's financial performance, comparing results for the three and six months ended June 30, 2022, against the prior year [Three Months Ended June 30, 2022 vs. 2021](index=37&type=section&id=Three%20Months%20Ended%20June%2030%2C%202022%20vs.%202021) Livent's Q2 2022 revenue and gross margin significantly increased due to higher pricing, leading to substantial net income growth - Revenue increased by **114% to $218.7 million**, primarily due to higher pricing across all products, partially offset by decreased sales volumes[154](index=154&type=chunk) - Gross margin increased by **402% to $102.5 million**, driven by higher pricing, partially offset by increased logistics, raw material, and other operating costs[155](index=155&type=chunk) - Net income rose to **$60.0 million** from **$6.5 million**, benefiting from higher pricing and an **$8.2 million gain** from Argentina bond sales, despite increased costs and a **$2.7 million equity loss** from the Nemaska Project[161](index=161&type=chunk) - Income tax expense increased to **$30.2 million** from a benefit of **$(2.5) million**, mainly due to higher income from operations and foreign currency impacts in Argentina[159](index=159&type=chunk) [Six Months Ended June 30, 2022 vs. 2021](index=38&type=section&id=Six%20Months%20Ended%20June%2030%2C%202022%20vs.%202021) Livent's H1 2022 revenue and gross margin saw substantial growth, driven by higher pricing, resulting in a significant increase in net income - Revenue increased by **87% to $362.2 million**, primarily due to higher pricing across all products, partially offset by decreased sales volumes[162](index=162&type=chunk) - Gross margin increased by **382% to $162.4 million**, driven by higher pricing, partially offset by increased logistics, raw material, and other operating costs[163](index=163&type=chunk) - Net income rose to **$113.2 million** from **$5.7 million**, benefiting from higher pricing and a **$22.2 million gain** from Argentina bond sales, despite increased costs and a **$4.9 million equity loss** from the Nemaska Project[168](index=168&type=chunk) - Income tax expense increased to **$34.9 million** from a benefit of **$(1.6) million**, mainly due to higher income from operations and foreign currency impacts in Argentina[167](index=167&type=chunk) [Liquidity and Capital Resources](index=39&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) This section assesses Livent's cash position, operating and investing cash flows, capital spending plans, and overall liquidity for future operations - Cash and cash equivalents decreased to **$49.0 million** as of June 30, 2022, from **$113.0 million** at December 31, 2021[169](index=169&type=chunk) - Cash provided by operating activities increased to **$61.2 million** for H1 2022 from **$30.6 million** for H1 2021, driven by higher net income[173](index=173&type=chunk) - Cash used in investing activities significantly increased to **$(124.1) million** for H1 2022 from **$(42.7) million** for H1 2021, primarily due to ramping up capital expansion work in Argentina and the U.S[174](index=174&type=chunk) - Cash provided by financing activities decreased to **$0.2 million** for H1 2022 from **$216.9 million** for H1 2021, as the company did not draw on its Revolving Credit Facility in 2022, unlike the prior year's offering proceeds[175](index=175&type=chunk) - Livent estimates 2022 total capital spending to be **$300 million to $340 million**, an increase from earlier estimates due to accelerating expansion opportunities[178](index=178&type=chunk) - The company believes its available cash, cash from operations, and **$385.5 million remaining borrowing capacity** under the Revolving Credit Facility will provide adequate liquidity for the next 12 months[176](index=176&type=chunk)[179](index=179&type=chunk) [Derivative Financial Instruments and Market Risks](index=40&type=section&id=DERIVATIVE%20FINANCIAL%20INSTRUMENTS%20AND%20MARKET%20RISKS) Livent manages market risks, including commodity, interest rate, and foreign currency exposures, using derivative instruments, excluding the Argentine peso - Livent manages market risks related to **commodity prices**, **interest rates**, and **foreign currency exchange rates** through a controlled program of risk management, including derivative contracts[184](index=184&type=chunk) - The primary foreign currency exposures are the Euro, British pound, Chinese yuan, Argentine peso, and Japanese yen; however, foreign currency risks associated with the **Argentine peso** are not hedged due to limited availability and high cost of suitable derivative instruments[187](index=187&type=chunk) - A sensitivity analysis indicates that an instantaneous **10% weakening in foreign currency exchange rates** would result in a net asset position of **$4.4 million** as of June 30, 2022[189](index=189&type=chunk) - As of June 30, 2022, Livent had no interest rate swap agreements and no outstanding balances under its Revolving Credit Facility for the six months ended June 30, 2022[190](index=190&type=chunk)[191](index=191&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=42&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This item refers to the detailed disclosures regarding quantitative and qualitative aspects of market risk, which are provided in the 'Derivative Financial Instruments and Market Risks' section under Item 2 of this report - Information required by this item is provided in 'Derivative Financial Instruments and Market Risks' under Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations[192](index=192&type=chunk) [Item 4. Controls and Procedures](index=42&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that Livent's disclosure controls and procedures were effective as of June 30, 2022. No material changes in internal control over financial reporting occurred during the quarter - As of June 30, 2022, the company's disclosure controls and procedures were effective to provide reasonable assurance that required information is recorded, processed, summarized, and reported timely[193](index=193&type=chunk) - There were no changes in internal control over financial reporting during the quarter ended June 30, 2022, that materially affected or are reasonably likely to materially affect, internal control over financial reporting[194](index=194&type=chunk) [Part II - Other Information](index=43&type=section&id=Part%20II%20-%20OTHER%20INFORMATION) This part contains additional information not covered in the financial statements, including legal proceedings, risk factors, and equity sales [Item 1. Legal Proceedings](index=43&type=section&id=Item%201.%20Legal%20Proceedings) Livent is involved in various legal proceedings in the ordinary course of business. Based on currently available information and established reserves, the company does not anticipate a material adverse effect on its financial position, liquidity, or results of operations from these known matters - Livent is involved in legal proceedings in the ordinary course of business, including workers' compensation matters[197](index=197&type=chunk) - Based on current information and reserves, no material adverse effect on financial position, liquidity, or results of operations is expected from known legal proceedings[197](index=197&type=chunk) - Further details on legal proceedings are incorporated by reference from Note 13 to the financial statements[197](index=197&type=chunk) [Item 1A. Risk Factors](index=43&type=section&id=Item%201A.%20Risk%20Factors) Investors are advised to carefully consider the risk factors outlined in Livent's 2021 Annual Report on Form 10-K, as well as potential additional unknown or currently immaterial risks that could adversely affect the company's business, financial condition, or future results - Investors should carefully consider the risk factors discussed in Part I, Item 1A of the **2021 Annual Report on Form 10-K**[198](index=198&type=chunk) - Additional risks and uncertainties not currently known or deemed immaterial may also adversely affect the business, financial condition, or future results[198](index=198&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=43&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the repurchases of Livent's common stock by the Livent NQSP trustee through open-market purchases for employee investments, which are recorded as treasury stock. The company confirms it has no publicly announced stock repurchase programs Summary of Common Stock Repurchases (Q2 2022) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | | :-------------------------- | :------------------------------- | :--------------------------- | | April 1 through April 30, 2022 | 152 | $23.30 | | May 1 through May 31, 2022 | 126 | $29.39 | | June 1 through June 30, 2022 | 156 | $23.33 | | **Total Q2 2022** | **434** | **$25.08** | - Shares are reacquired by the trustee of the **Livent NQSP** through open-market purchases for employee investments and are held in a trust fund, recorded as Treasury stock[203](index=203&type=chunk) - Livent Corporation has no publicly announced stock repurchase programs[203](index=203&type=chunk) [Item 6. Exhibits](index=44&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including corporate governance documents, agreements related to the QLP Merger, and certifications required by the Sarbanes-Oxley Act - Exhibits include Livent's Certificate of Incorporation (amended June 2, 2022), Executive Severance Guidelines (amended August 1, 2022), and the Transaction Agreement and Plan of Merger (May 2, 2022) related to the **QLP Merger**[206](index=206&type=chunk) - Certifying Statements of the Chief Executive Officer and Chief Financial Officer pursuant to **Sections 302 and 1350 of the Sarbanes-Oxley Act of 2002** are also included[206](index=206&type=chunk) [Signatures](index=45&type=section&id=Signatures) The Quarterly Report on Form 10-Q is officially signed on behalf of Livent Corporation by Gilberto Antoniazzi, Vice President and Chief Financial Officer, on August 4, 2022 - The report was signed by **Gilberto Antoniazzi, Vice President and Chief Financial Officer**, on August 4, 2022[209](index=209&type=chunk)

[Glossary of Terms](index=4&type=section&id=Glossary%20of%20Terms) The report defines key terms and abbreviations used throughout the document - The report includes a glossary defining key terms and abbreviations used throughout the document, such as '2025 Notes', 'ASU', 'Credit Agreement', 'ESG', 'EV', 'FASB', 'FMC', 'Livent NQSP', 'Nemaska', 'Nemaska Project', 'Nemaska Transaction', 'Offering', 'OEM', 'Original Credit Agreement', 'PRSU', 'QLP', 'Revolving Credit Facility', 'RSU', 'SEC', 'Securities Act', 'Separation', 'TSR', 'U.S. GAAP', and 'VAT'[8](index=8&type=chunk)[9](index=9&type=chunk) [Part I - Financial Information](index=5&type=section&id=Part%20I%20-%20FINANCIAL%20INFORMATION) This part presents the unaudited condensed consolidated financial statements, management's analysis, and disclosures on market risk [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents the company's unaudited condensed consolidated financial statements and accompanying notes for Q1 2022 [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company's revenue grew significantly, leading to a substantial shift from a net loss to a net income in Q1 2022 | Metric (in Millions, Except Per Share Data) | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :------------------------------------------ | :--------------------------------: | :--------------------------------: | | Revenue | $143.5 | $91.7 | | Cost of sales | $83.6 | $78.4 | | Gross margin | $59.9 | $13.3 | | Selling, general and administrative expenses| $11.8 | $10.7 | | Research and development expenses | $0.9 | $0.7 | | Restructuring and other charges | $1.0 | $0.3 | | Separation-related costs/(income) | $0.1 | $(0.1) | | Total costs and expenses | $97.4 | $90.0 | | Income from operations before equity in net loss of unconsolidated affiliate, interest expense, net and other gain | $46.1 | $1.7 | | Equity in net loss of unconsolidated affiliate | $2.2 | $1.3 | | Interest expense, net | — | $0.3 | | Other gain | $(14.0) | — | | Income from operations before income taxes | $57.9 | $0.1 | | Income tax expense | $4.7 | $0.9 | | Net income/(loss) | $53.2 | $(0.8) | | Net income/(loss) per weighted average share - basic | $0.33 | $(0.01) | | Net income/(loss) per weighted average share - diluted | $0.28 | $(0.01) | | Weighted average common shares outstanding - basic | 161.7 | 146.5 | | Weighted average common shares outstanding - diluted | 191.4 | 146.5 | - Revenue increased by **56% to $143.5 million** in Q1 2022 from $91.7 million in Q1 2021, primarily due to higher pricing across all products, partially offset by decreased sales volumes[12](index=12&type=chunk) - Gross margin significantly improved to **$59.9 million** from $13.3 million, a **350% increase**[12](index=12&type=chunk) - The company reported a **net income of $53.2 million** in Q1 2022, a substantial improvement from a net loss of $(0.8) million in Q1 2021, partly due to a **$14.0 million 'Other gain'** in 2022[12](index=12&type=chunk) [Condensed Consolidated Statements of Comprehensive Income/(Loss)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%2F%28Loss%29) Comprehensive income improved significantly, driven by higher net income despite foreign currency translation losses | Metric (in Millions) | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :------------------- | :--------------------------------: | :--------------------------------: | | Net income/(loss) | $53.2 | $(0.8) | | Foreign currency translation loss arising during the period | $(1.0) | $(0.3) | | Unrealized hedging gains, net of tax of $0.1 | $0.1 | — | | Other comprehensive loss, net of tax | $(0.9) | $(0.3) | | Comprehensive income/(loss) | $52.3 | $(1.1) | - **Comprehensive income for Q1 2022 was $52.3 million**, a significant improvement from a comprehensive loss of $(1.1) million in Q1 2021[15](index=15&type=chunk) - This change was primarily driven by the increase in net income, partially offset by foreign currency translation losses and, in 2022, unrealized hedging gains[15](index=15&type=chunk) [Condensed Consolidated Balance Sheets](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets and equity increased, driven by investments in property, plant, and equipment and net income for the period | Metric (in Millions) | March 31, 2022 | December 31, 2021 | | :------------------- | :------------- | :---------------- | | **ASSETS** | | | | Cash and cash equivalents | $68.5 | $113.0 | | Trade receivables, net | $105.5 | $96.4 | | Inventories, net | $150.5 | $134.6 | | Total current assets | $364.5 | $399.3 | | Property, plant and equipment, net | $737.8 | $677.9 | | Total assets | $1,242.6 | $1,202.5 | | **LIABILITIES AND EQUITY** | | | | Accounts payable, trade and other | $62.2 | $65.4 | | Total current liabilities | $120.3 | $131.3 | | Long-term debt | $240.8 | $240.4 | | Total current and long-term liabilities | $393.6 | $407.1 | | Total equity | $849.0 | $795.4 | | Total liabilities and equity | $1,242.6 | $1,202.5 | - **Total assets increased to $1,242.6 million** as of March 31, 2022, from $1,202.5 million at December 31, 2021, driven by an increase in property, plant and equipment[19](index=19&type=chunk) - Cash and cash equivalents decreased by **$44.5 million**, while inventories and trade receivables increased[19](index=19&type=chunk) - **Total equity grew to $849.0 million** from $795.4 million, reflecting the net income for the period[19](index=19&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow decreased while investing cash outflow increased significantly due to capital expansion projects | Metric (in Millions) | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :------------------- | :--------------------------------: | :--------------------------------: | | Cash provided by operating activities | $10.8 | $12.7 | | Cash used in investing activities | $(55.4) | $(27.0) | | Cash provided by financing activities | $0.1 | $24.2 | | (Decrease)/increase in cash and cash equivalents | $(44.5) | $9.9 | | Cash and cash equivalents, beginning of period | $113.0 | $11.6 | | Cash and cash equivalents, end of period | $68.5 | $21.5 | - **Cash provided by operating activities decreased to $10.8 million** in Q1 2022 from $12.7 million in Q1 2021, primarily due to increased inventories and trade receivables[21](index=21&type=chunk)[171](index=171&type=chunk) - **Cash used in investing activities more than doubled to $(55.4) million**, driven by a significant increase in capital expenditures for capacity expansion[21](index=21&type=chunk)[172](index=172&type=chunk) - **Cash provided by financing activities decreased substantially to $0.1 million** from $24.2 million, as the company did not draw on its Revolving Credit Facility in 2022[21](index=21&type=chunk)[173](index=173&type=chunk) [Condensed Consolidated Statements of Equity](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity) Total equity grew, primarily reflecting the period's net income and stock compensation plan activities | Metric (in Millions) | Balance, December 31, 2021 | Net income | Stock compensation plans | Exercise of stock options | Shares withheld for taxes - common stock issuances | Net hedging gains, net of income tax | Foreign currency translation adjustments | Balance, March 31, 2022 | | :------------------- | :------------------------- | :--------- | :----------------------- | :---------------------- | :----------------------------------------- | :----------------------------------- | :--------------------------------------- | :---------------------- | | Common Stock, $0.001 Per Share Par Value | $0.1 | — | — | — | — | — | — | $0.1 | | Capital In Excess of Par | $778.1 | — | $1.7 | $0.1 | $(0.5) | — | — | $779.4 | | Retained Earnings | $60.9 | $53.2 | — | — | — | — | — | $114.1 | | Accumulated Other Comprehensive Loss | $(42.9) | — | — | — | — | $0.1 | $(1.0) | $(43.8) | | Treasury Stock | $(0.8) | — | — | — | — | — | — | $(0.8) | | Total | $795.4 | $53.2 | $1.7 | $0.1 | $(0.5) | $0.1 | $(1.0) | $849.0 | - **Total equity increased from $795.4 million** at December 31, 2021, **to $849.0 million** at March 31, 2022[25](index=25&type=chunk) - This increase was primarily driven by **net income of $53.2 million** and stock compensation plans, partially offset by foreign currency translation adjustments[25](index=25&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed explanations of accounting policies and specific financial statement line items [Note 1: Description of the Business](index=13&type=section&id=Note%201%3A%20Description%20of%20the%20Business) Livent manufactures lithium products for batteries and specialty applications, anticipating growth from the EV market - Livent Corporation manufactures a wide range of lithium products, primarily for lithium-based batteries, specialty polymers, and chemical synthesis[28](index=28&type=chunk) - The company anticipates **significant growth driven by the increasing adoption of electric vehicles (EVs)** and other energy storage applications, particularly in Asia, Europe, and North America[29](index=29&type=chunk) [Note 2: Principal Accounting Policies and Related Financial Information](index=13&type=section&id=Note%202%3A%20Principal%20Accounting%20Policies%20and%20Related%20Financial%20Information) The company recorded a significant gain from a 'Blue Chip Swap' transaction and issued new PRSU awards to key employees - The financial statements are prepared in accordance with SEC interim reporting requirements and U.S. GAAP[30](index=30&type=chunk) - A significant event in Q1 2022 was a **$14.0 million cash gain from a 'Blue Chip Swap' transaction** in Argentina, where the company transferred U.S. dollars into Argentina by purchasing and selling Argentina Sovereign U.S. dollar-denominated bonds[31](index=31&type=chunk) - The company granted approximately **63,000 Performance-Based Restricted Stock Unit (PRSU) awards** to key employees on February 23, 2022, with the number earned dependent on Livent's Total Shareholder Return (TSR) relative to the Russell 3000 Chemical Supersector Index over a three-year period[32](index=32&type=chunk) [Note 3: Recently Issued and Adopted Accounting Pronouncements and Regulatory Items](index=14&type=section&id=Note%203%3A%20Recently%20Issued%20and%20Adopted%20Accounting%20Pronouncements%20and%20Regulatory%20Items) The company is evaluating the impact of a new ASU on government assistance disclosures - The company is evaluating the impact of ASU No. 2021-10, 'Government Assistance (Topic 832)', effective for annual periods beginning after December 15, 2021, which requires disclosures about government assistance[36](index=36&type=chunk) - The adoption of ASU No. 2020-04, 'Reference Rate Reform (Topic 848)', is **not expected to have a material impact** on the condensed consolidated financial statements[37](index=37&type=chunk) [Note 4: Revenue Recognition](index=14&type=section&id=Note%204%3A%20Revenue%20Recognition) Revenue growth was driven by the Asia Pacific region and strong performance in Lithium Hydroxide and Carbonate products **Disaggregated Revenue by Major Geographical Region (in Millions):** | Region | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :---------------------- | :--------------------------------: | :--------------------------------: | | North America | $21.3 | $13.3 | | Europe, Middle East & Africa | $14.7 | $17.5 | | Asia Pacific | $107.5 | $60.9 | | **Total Revenue** | **$143.5** | **$91.7** | **Disaggregated Revenue by Major Product Category (in Millions):** | Product Category | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :------------------------------------ | :--------------------------------: | :--------------------------------: | | Lithium Hydroxide | $67.5 | $49.8 | | Butyllithium | $33.7 | $25.9 | | High Purity Lithium Metal and Other Specialty Compounds | $13.4 | $8.9 | | Lithium Carbonate and Lithium Chloride | $28.9 | $7.1 | | **Total Revenue** | **$143.5** | **$91.7** | - **Asia Pacific remains the largest revenue contributor**, growing to $107.5 million in Q1 2022 from $60.9 million in Q1 2021[38](index=38&type=chunk) - Lithium Hydroxide and Lithium Carbonate/Chloride showed significant revenue growth[42](index=42&type=chunk) - **One customer accounted for approximately 26% of total revenue** in Q1 2022, and the top 10 customers accounted for approximately 69% of total revenue in both periods[39](index=39&type=chunk) - The company has approximately **$557 million in expected revenue from multi-year take-or-pay supply agreements** over the next three years, representing unsatisfied or partially unsatisfied performance obligations[45](index=45&type=chunk) [Note 5: Inventories, Net](index=15&type=section&id=Note%205%3A%20Inventories%2C%20Net) Net inventories increased, driven by higher levels of semi-finished goods and raw materials **Inventories, Net (in Millions):** | Category | March 31, 2022 | December 31, 2021 | | :------------------ | :------------- | :---------------- | | Finished goods | $39.1 | $52.2 | | Semi-finished goods | $58.8 | $43.6 | | Raw materials, supplies, and other | $52.6 | $38.8 | | **Inventory, net** | **$150.5** | **$134.6** | - **Total inventories, net, increased to $150.5 million** as of March 31, 2022, from $134.6 million at December 31, 2021[46](index=46&type=chunk) - This increase was primarily driven by higher semi-finished goods and raw materials, supplies, and other, while finished goods decreased[46](index=46&type=chunk) [Note 6: Investments](index=15&type=section&id=Note%206%3A%20Investments) Livent is set to acquire full ownership of its joint venture partner in the Nemaska Lithium project - Livent holds a 50% equity interest in Québec Lithium Partners (QLP), a joint venture with The Pallinghurst Group, which in turn owns a 50% equity interest in the Nemaska Project[47](index=47&type=chunk) - The carrying amount of this investment was **$29.6 million** as of March 31, 2022, up from $23.8 million at December 31, 2021[49](index=49&type=chunk) - On May 2, 2022, Livent entered an agreement to **acquire Pallinghurst's 50% share of QLP** by issuing 17,500,000 shares of its common stock[50](index=50&type=chunk) - This transaction will make QLP a wholly-owned subsidiary of Livent, giving Livent a direct 50% ownership interest in Nemaska Lithium Inc[50](index=50&type=chunk) [Note 7: Restructuring and Other Charges](index=16&type=section&id=Note%207%3A%20Restructuring%20and%20Other%20Charges) Restructuring charges increased due to severance costs associated with management changes **Restructuring and Other Charges (in Millions):** | Category | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :------------------------ | :--------------------------------: | :--------------------------------: | | Severance-related and exit costs | $0.5 | — | | Environmental remediation | $0.1 | $0.1 | | Other | $0.4 | $0.2 | | **Total** | **$1.0** | **$0.3** | - Total restructuring and other charges increased to **$1.0 million** in Q1 2022 from $0.3 million in Q1 2021, primarily due to **$0.5 million in severance costs** for management changes at administrative facilities[51](index=51&type=chunk) [Note 8: Income Taxes](index=16&type=section&id=Note%208%3A%20Income%20Taxes) The effective tax rate was significantly impacted by foreign currency fluctuations in Argentina - The provision for income taxes increased to **$4.7 million** in Q1 2022 from $0.9 million in Q1 2021, with effective tax rates of **8.1% and 900%**, respectively[55](index=55&type=chunk) - The Q1 2022 rate was primarily impacted by **foreign currency fluctuations in Argentina of $(4.3) million**[55](index=55&type=chunk) [Note 9: Debt](index=17&type=section&id=Note%209%3A%20Debt) Long-term debt remained stable, and holders of the 2025 Notes gained a conversion option **Long-term Debt (in Millions):** | Debt Type | March 31, 2022 | December 31, 2021 | | :-------------------------------- | :------------- | :---------------- | | 4.125% Convertible Senior Notes due 2025 | $245.8 | $245.8 | | Transaction costs - 2025 Notes | $(5.0) | $(5.4) | | **Total long-term debt** | **$240.8** | **$240.4** | - Total long-term debt remained stable at approximately **$240.8 million** as of March 31, 2022, consisting solely of the 2025 Notes[57](index=57&type=chunk) - Holders of the 2025 Notes gained the option to convert their notes through June 30, 2022, due to the common stock price exceeding 130% of the conversion price[59](index=59&type=chunk) - The company was **in compliance with all financial covenants** under its Revolving Credit Facility as of March 31, 2022, with a maximum allowable first lien leverage ratio of 3.5 and a minimum allowable interest coverage ratio of 3.5[62](index=62&type=chunk) [Note 10: Equity](index=18&type=section&id=Note%2010%3A%20Equity) Common shares outstanding increased slightly due to stock awards, and no dividends were paid **Common Stock Issued and Outstanding:** | Metric | Issued | Treasury | Outstanding | | :-------------------------------------- | :------------ | :---------- | :------------ | | Balance as of December 31, 2021 | 161,791,602 | (101,618) | 161,689,984 | | RSU awards | 49,100 | — | 49,100 | | Stock option awards | 7,905 | — | 7,905 | | Purchases of treasury stock - deferred compensation plan | — | (1,624) | (1,624) | | **Balance as of March 31, 2022** | **161,848,607** | **(103,242)** | **161,745,365** | - The number of common shares outstanding increased to **161,745,365** as of March 31, 2022, from 161,689,984 at December 31, 2021, primarily due to RSU and stock option awards[65](index=65&type=chunk) - The accumulated other comprehensive loss increased to **$(43.8) million** from $(42.9) million, mainly due to foreign currency translation adjustments[67](index=67&type=chunk) - The company **paid no dividends** for the three months ended March 31, 2022 and 2021, and does not expect to pay any in the foreseeable future[69](index=69&type=chunk) [Note 11: Earnings/(Loss) Per Share](index=18&type=section&id=Note%2011%3A%20Earnings%2F%28Loss%29%20Per%20Share) The company reported a significant turnaround in earnings per share, from a loss to a profit **Earnings/(Loss) Per Common Share:** | Metric (in Millions, Except Share and Per Share Data) | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :---------------------------------------------------- | :--------------------------------: | :--------------------------------: | | Net income/(loss) | $53.2 | $(0.8) | | Weighted average common shares outstanding - basic | 161.7 | 146.5 | | Dilutive share equivalents from share-based plans | 1.6 | — | | Dilutive share equivalents from 2025 Notes | 28.1 | — | | Weighted average common shares outstanding - diluted | 191.4 | 146.5 | | Basic earnings/(loss) per common share | $0.33 | $(0.01) | | Diluted earnings/(loss) per common share | $0.28 | $(0.01) | - **Basic EPS was $0.33** in Q1 2022, a significant improvement from $(0.01) in Q1 2021[73](index=73&type=chunk) - **Diluted EPS was $0.28** in Q1 2022, also up from $(0.01) in Q1 2021, reflecting the net income and the dilutive effect of share-based plans and 2025 Notes[73](index=73&type=chunk) [Note 12: Financial Instruments, Risk Management and Fair Value Measurements](index=19&type=section&id=Note%2012%3A%20Financial%20Instruments%2C%20Risk%20Management%20and%20Fair%20Value%20Measurements) The company uses foreign exchange forward contracts to mitigate currency risk but does not hedge its Argentine peso exposure - Livent uses derivative financial instruments, primarily foreign exchange forward contracts, to mitigate currency risk from its global operations, particularly for the Euro, British pound, Chinese yuan, and Japanese yen[83](index=83&type=chunk) - The company **does not hedge Argentine peso risks** due to limited availability and high cost of suitable instruments[85](index=85&type=chunk) - As of March 31, 2022, the company had open foreign currency forward contracts designated as cash flow hedges with a **net after-tax gain position of $0.3 million**, and other forward contracts not designated as hedges with a U.S. dollar equivalent of approximately $53.7 million[88](index=88&type=chunk)[91](index=91&type=chunk) **Fair Value of Derivative Instruments (in Millions):** | Derivatives | March 31, 2022 (Gross Amount) | December 31, 2021 (Gross Amount) | | :---------------------- | :-----------------------------: | :------------------------------: | | Foreign exchange contracts | $0.4 | $0.2 | | **Total derivative assets** | **$0.4** | **$0.2** | | **Net derivative assets** | **$0.4** | **$0.2** | [Note 13: Commitments and Contingencies](index=23&type=section&id=Note%2013%3A%20Commitments%20and%20Contingencies) The company is undergoing an audit by Argentine Customs and has future minimum lease payment commitments - Livent is involved in various legal proceedings in the ordinary course of business and records reserves for probable and estimable losses[106](index=106&type=chunk) - The company is currently undergoing an **audit by the Argentine Customs Authority** related to lithium carbonate exports from 2015-2017, for which a range of possible liabilities cannot yet be estimated[110](index=110&type=chunk) **Operating Lease Information (in Millions, except for weighted-average amounts):** | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :-------------------------------------- | :--------------------------------: | :--------------------------------: | | Operating lease cost | $0.4 | $0.2 | | Short-term lease cost | $0.1 | $0.3 | | **Total lease cost** | **$0.5** | **$0.5** | | Cash paid for operating leases | $0.4 | $0.5 | | Weighted average remaining lease term (years) | 8.2 | N/A | | Weighted average discount rate | 4.9% | N/A | **Maturity Analysis of Operating Lease Liabilities (Undiscounted cash flows in Millions):** | Period | Amount | | :---------------- | :----- | | Remainder of 2022 | $1.0 | | 2023 | $1.2 | | 2024 | $1.1 | | 2025 | $1.1 | | 2026 | $0.2 | | Thereafter | $2.8 | | **Total future minimum lease payments** | **$7.4** | | Less: Imputed interest | $(1.3) | | **Total** | **$6.1** | [Note 14: Supplemental Information](index=25&type=section&id=Note%2014%3A%20Supplemental%20Information) This note provides detailed breakdowns of various asset and liability accounts on the balance sheet **Prepaid and Other Current Assets (in Millions):** | Category | March 31, 2022 | December 31, 2021 | | :---------------------------- | :------------- | :---------------- | | Tax related items | $12.6 | $17.7 | | Prepaid expenses | $8.9 | $12.2 | | Argentina government receivable | $6.1 | $13.3 | | Other receivables | $3.3 | $2.3 | | Bank Acceptance Drafts | $1.7 | — | | Derivative assets (Note 12) | $0.4 | $0.2 | | Other current assets | $7.0 | $9.6 | | **Total** | **$40.0** | **$55.3** | **Other Assets (in Millions):** | Category | March 31, 2022 | December 31, 2021 | | :---------------------------- | :------------- | :---------------- | | Argentina government receivable | $65.7 | $55.8 | | Advance to contract manufacturers | $15.5 | $16.0 | | Long-term raw materials inventory | $5.4 | $4.9 | | Tax related items | $2.5 | $1.3 | | Capitalized software, net | $1.4 | $1.5 | | Other assets | $10.4 | $11.4 | | **Total** | **$100.9** | **$90.9** | **Accrued and Other Current Liabilities (in Millions):** | Category | March 31, 2022 | December 31, 2021 | | :-------------------------------------- | :------------- | :---------------- | | Accrued investment in unconsolidated affiliate | $14.2 | $6.2 | | Accrued payroll | $7.8 | $17.1 | | Plant restructuring reserves | $3.2 | $3.2 | | Advance customer payments | $0.7 | — | | Retirement liability - 401k | $0.6 | $2.5 | | Environmental reserves, current | $0.5 | $0.5 | | Severance related | $0.3 | — | | Other accrued and other current liabilities | $26.9 | $32.3 | | **Total** | **$54.2** | **$61.8** | **Other Long-Term Liabilities (in Millions):** | Category | March 31, 2022 | December 31, 2021 | | :-------------------------------------- | :------------- | :---------------- | | Deferred compensation plan obligation | $6.6 | $5.9 | | Contingencies related to uncertain tax positions | $4.0 | $2.3 | | Self-insurance reserves | $1.5 | $1.5 | | Asset retirement obligations | $0.3 | $0.3 | | Other long-term liabilities | $1.7 | $1.7 | | **Total** | **$14.1** | **$11.7** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management provides its perspective on financial condition, operational results, business outlook, and market risks [Special Note Regarding Forward-Looking Information](index=27&type=section&id=SPECIAL%20NOTE%20REGARDING%20FORWARD-LOOKING%20INFORMATION) The report contains forward-looking statements subject to numerous risks, including EV demand, price volatility, and supply chain disruptions - The report contains forward-looking statements based on current views and assumptions, which involve known and unknown risks and uncertainties[125](index=125&type=chunk) - Key risk factors include **declining EV demand, price volatility for lithium compounds, adverse global economic conditions (including inflation), supply chain disruptions, competition**, and risks related to international operations and conflicts like the war in Ukraine[126](index=126&type=chunk)[127](index=127&type=chunk) - The ongoing **COVID-19 pandemic is a significant factor**, causing business and supply chain disruptions, market volatility, and a global economic slowdown, with its full impact remaining uncertain[126](index=126&type=chunk) [Application of Critical Accounting Estimates](index=28&type=section&id=APPLICATION%20OF%20CRITICAL%20ACCOUNTING%20ESTIMATES) Critical accounting estimates involve significant judgment, particularly for revenue recognition, asset valuation, and income taxes - Critical accounting estimates, which involve significant judgment and uncertainty, include **revenue recognition, collectability of trade receivables, impairment and valuation of long-lived assets, and income taxes**[130](index=130&type=chunk)[132](index=132&type=chunk) - While the company assessed no material updates were needed as of the report date due to COVID-19, actual results could differ[134](index=134&type=chunk) [Overview](index=29&type=section&id=OVERVIEW) Livent is a fully integrated lithium company focused on supplying the growing EV and energy storage markets - Livent is a fully integrated lithium company focused on supplying high-performance lithium compounds, particularly **battery-grade lithium hydroxide**, to the rapidly growing EV and energy storage battery markets[135](index=135&type=chunk) - The company also maintains its position as a leading global producer of butyllithium and high purity lithium metal for various performance applications[136](index=136&type=chunk) [First Quarter 2022 Highlights](index=29&type=section&id=First%20Quarter%202022%20Highlights) The company achieved significant growth in revenue, net income, and Adjusted EBITDA in the first quarter of 2022 **First Quarter 2022 Financial Highlights (in Millions, Except Per Share Data):** | Metric | Q1 2022 | Q1 2021 | Change ($) | Change (%) | | :------------- | :------- | :------- | :--------- | :--------- | | Revenue | $143.5 | $91.7 | $51.8 | 56% | | Net income/(loss) | $53.2 | $(0.8) | $54.0 | N/A | | Adjusted EBITDA | $53.3 | $11.1 | $42.2 | 380% | - **Revenue increased by 56% to $143.5 million**, driven by higher pricing across all products[139](index=139&type=chunk) - **Net income significantly improved to $53.2 million** from a net loss of $(0.8) million, partly due to a $14.0 million gain from the sale of Argentina Sovereign U.S. dollar-denominated bonds[139](index=139&type=chunk) - **Adjusted EBITDA surged by $42.2 million to $53.3 million**[139](index=139&type=chunk) [COVID-19 Impacts](index=29&type=section&id=COVID-19%20Impacts) The COVID-19 pandemic continued to disrupt business operations, supply chains, and expansion projects [Business and Operations](index=29&type=section&id=Business%20and%20Operations) COVID-19 measures in China and global supply chain issues negatively impacted business and customer demand - The COVID-19 pandemic continued to negatively impact Livent's business, operations, and financial performance in Q1 2022, particularly due to **government measures in China and global supply chain disruptions** (e.g., port congestion, freight costs, driver shortages)[137](index=137&type=chunk)[138](index=138&type=chunk)[141](index=141&type=chunk) - Customer demand for certain products was flat to slightly lower, and EV manufacturing customers faced their own supply chain constraints (e.g., semiconductor chip shortages), potentially delaying demand for Livent's high-performance lithium compounds[142](index=142&type=chunk) - **Expansion work in Argentina and the U.S. was impacted by COVID-19**, leading to potential delays and increased costs for materials and labor[143](index=143&type=chunk) - The company is monitoring local labor market tightness and economic instability in regions like Argentina and China[144](index=144&type=chunk)[145](index=145&type=chunk) [Liquidity and Financial Resources](index=31&type=section&id=Liquidity%20and%20Financial%20Resources) The pandemic increased cash uses through higher logistical costs and additional health and safety expenses - COVID-19 impacted cash uses through **increased logistical costs** (truck, freight, air shipping) and additional expenses for health and safety measures (testing, PPE, cleaning, medical personnel, transportation)[146](index=146&type=chunk) [Corporate Efforts](index=31&type=section&id=Corporate%20Efforts) The company implemented response teams and adapted production schedules to mitigate pandemic-related challenges - Livent maintained Global and regional Pandemic Response Teams, identified new suppliers and logistics providers, and altered global production schedules to adapt to changing customer demand and supply chain challenges[147](index=147&type=chunk)[148](index=148&type=chunk) [Health & Safety](index=31&type=section&id=Health%20%26%20Safety) Safety procedures remained in place, with social distancing measures affecting workforce numbers at some sites - The company continued to implement safety procedures based on local guidance, including pre-entry screening, mask/glove use, social distancing, and quarantine[149](index=149&type=chunk)[150](index=150&type=chunk) - While no material employee absences occurred, social distancing led to reduced workforce numbers in some locations, such as the Argentina expansion project[151](index=151&type=chunk) [Government Programs](index=32&type=section&id=Government%20Programs) Livent continues to evaluate government support and tax relief programs in its operating countries - Livent continues to evaluate government support and tax relief programs in its operating countries, including grants, loans, tax deferrals, and tax credits[152](index=152&type=chunk) [2022 Business Outlook](index=32&type=section&id=2022%20Business%20Outlook) The company significantly increased its 2022 financial outlook, expecting higher pricing to drive profitability despite rising costs - Livent **significantly increased its 2022 financial performance outlook**, expecting flat volumes but even higher average pricing across all lithium products, leading to higher profitability compared to the prior year[153](index=153&type=chunk) - The company also anticipates **higher costs due to logistics, raw materials, and general inflationary pressures**[154](index=154&type=chunk) [Results of Operations](index=33&type=section&id=RESULTS%20OF%20OPERATIONS) Higher pricing drove a 56% revenue increase and a 350% rise in gross margin, resulting in significant net income growth **Key Financial Performance (in Millions):** | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :----------------------------------------- | :--------------------------------: | :--------------------------------: | | Revenue | $143.5 | $91.7 | | Gross margin | $59.9 | $13.3 | | Net income/(loss) | $53.2 | $(0.8) | | EBITDA (Non-GAAP) | $64.3 | $6.6 | | Adjusted EBITDA (Non-GAAP) | $53.3 | $11.1 | - **Revenue increased by 56%** due to higher pricing, leading to a **350% increase in gross margin**[159](index=159&type=chunk) - **Net income improved significantly from a loss to $53.2 million**, partly due to a $14.0 million 'Other gain' from a Blue Chip Swap[160](index=160&type=chunk) - **Adjusted EBITDA saw a substantial increase to $53.3 million**[166](index=166&type=chunk) - Restructuring and other charges increased to $1.0 million, including $0.5 million for severance costs[161](index=161&type=chunk) - Equity in net loss of unconsolidated affiliate increased to $2.2 million due to project-related costs at the Nemaska Project[162](index=162&type=chunk) - Income tax expense rose to $4.7 million, influenced by increased income and foreign currency impacts in Argentina[164](index=164&type=chunk)[165](index=165&type=chunk) [Liquidity and Capital Resources](index=36&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) Cash decreased due to increased capital spending on expansion projects, but liquidity remains adequate **Cash and Cash Equivalents (in Millions):** | Period | Amount | | :--------------- | :----- | | March 31, 2022 | $68.5 | | December 31, 2021| $113.0 | | Foreign subsidiaries (March 31, 2022) | $22.4 | - **Cash and cash equivalents decreased to $68.5 million** as of March 31, 2022, from $113.0 million at December 31, 2021[168](index=168&type=chunk) - The company had **$385.5 million available under its $400 million Revolving Credit Facility**, subject to debt covenants, and no outstanding debt under this facility[169](index=169&type=chunk)[170](index=170&type=chunk) - Cash provided by operating activities decreased due to increased inventories and trade receivables[171](index=171&type=chunk) - **Cash used in investing activities significantly increased to $(55.4) million**, driven by resumed capital expansion work in Argentina and the U.S[172](index=172&type=chunk) - The company estimates **2022 total capital spending to be $300 million to $340 million**[175](index=175&type=chunk) - Livent believes its available cash, cash from operations, and borrowing capacity under the Revolving Credit Facility will provide **adequate liquidity for the next 12 months**, despite ongoing COVID-19 uncertainties and challenges[177](index=177&type=chunk) [Derivative Financial Instruments and Market Risks](index=37&type=section&id=DERIVATIVE%20FINANCIAL%20INSTRUMENTS%20AND%20MARKET%20RISKS) The company manages foreign currency risk with derivatives but faces unhedged exposure to the Argentine peso - Livent uses derivative contracts to manage market risks from fluctuations in commodity prices, interest rates, and foreign currency exchange rates, aiming to minimize cash flow exposure[182](index=182&type=chunk) - The primary currency exposures are the Euro, British pound, Chinese yuan, Argentine peso, and Japanese yen, though **Argentine peso risks are not hedged**[185](index=185&type=chunk) **Foreign Currency Exchange Rate Sensitivity (in Millions):** | Metric | Net asset position on consolidated balance sheets | Net liability position with 10% strengthening | Net asset position with 10% weakening | | :-------------------------------------- | :----------------------------------------------: | :-------------------------------------------: | :-----------------------------------: | | Net asset/(liability) position as of March 31, 2022 | $0.4 | $(1.7) | $1.4 | - As of March 31, 2022, the company had a **net financial instrument asset position of $0.4 million**[184](index=184&type=chunk) - A sensitivity analysis showed that a 10% strengthening of hedged currencies would result in a $(1.7) million net liability position, while a 10% weakening would result in a $1.4 million net asset position[187](index=187&type=chunk) - The company had **no interest rate swap agreements** as of March 31, 2022, and no outstanding balances under its Revolving Credit Facility, meaning its debt portfolio was primarily fixed-rate from the 2025 Notes[188](index=188&type=chunk)[189](index=189&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=39&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This item refers to the detailed discussion on market risks provided in Management's Discussion and Analysis - The required information for quantitative and qualitative disclosures about market risk is incorporated by reference from the 'Derivative Financial Instruments and Market Risks' section within Item 2 of this report[191](index=191&type=chunk) [Item 4. Controls and Procedures](index=39&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls were effective and reported no material changes in internal financial reporting controls - As of March 31, 2022, the Chief Executive Officer and Chief Financial Officer concluded that the company's **disclosure controls and procedures are effective** in providing reasonable assurance that required information is recorded, processed, summarized, and reported timely[192](index=192&type=chunk) - There were **no changes in internal control over financial reporting** during the quarter ended March 31, 2022, that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[193](index=193&type=chunk) [Part II - Other Information](index=40&type=section&id=Part%20II%20-%20OTHER%20INFORMATION) This part covers legal proceedings, risk factors, equity sales, and filed exhibits [Item 1. Legal Proceedings](index=40&type=section&id=Item%201.%20Legal%20Proceedings) The company reports no material adverse effects are expected from routine legal proceedings - Livent is involved in legal proceedings in the ordinary course of business, including workers' compensation matters[196](index=196&type=chunk) - Based on current information and established reserves, the company **does not believe these will have a material adverse effect** on its financial position, liquidity, or results of operations[196](index=196&type=chunk) - There are **no material changes** from the legal proceedings previously disclosed in the 2021 Annual Report on Form 10-K, except as set forth in Note 13 of the current report[196](index=196&type=chunk) [Item 1A. Risk Factors](index=40&type=section&id=Item%201A.%20Risk%20Factors) This section references the comprehensive risk factors detailed in the 2021 Annual Report on Form 10-K - Readers should carefully consider the risk factors discussed in Part I, Item 1A of the 2021 Annual Report on Form 10-K, as additional unknown or currently immaterial risks may also adversely affect the business, financial condition, or future results[197](index=197&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=40&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company details common share repurchases made for employee investments under the Livent NQSP **Repurchases of Common Shares (Q1 2022):** | Period | Total Number of Shares Purchased | Average Price Paid Per Share | | :--------------------------- | :------------------------------- | :--------------------------- | | January 1 through January 31, 2022 | 146 | $23.11 | | February 1 through February 28, 2022 | 201 | $21.63 | | March 1 through March 31, 2022 | 1,277 | $24.98 | | **Total Q1 2022** | **1,624** | **$24.40** | - The repurchases of common shares totaling **1,624 shares in Q1 2022** were made by the trustee of the Livent NQSP for employee investments and are **not part of any publicly announced stock repurchase programs**[199](index=199&type=chunk)[201](index=201&type=chunk) [Item 6. Exhibits](index=41&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the quarterly report, including certifications and data files - Exhibits include Form of Employee PRSU Award Agreement, Certifying Statements of the CEO and CFO (pursuant to Sections 302 and 1350 of Sarbanes-Oxley Act), Interactive Data File, and the cover page formatted in Inline XBRL[203](index=203&type=chunk) [Signatures](index=42&type=section&id=SIGNATURES) The report is duly signed by the Chief Financial Officer on behalf of the corporation - The report was duly signed on behalf of Livent Corporation by Gilberto Antoniazzi, Vice President and Chief Financial Officer, on May 5, 2022, pursuant to the requirements of the Securities Exchange Act of 1934[205](index=205&type=chunk)[206](index=206&type=chunk)

PART I [Item 1. Business](index=7&type=section&id=Item%201.%20Business) Livent Corporation, an independent, fully integrated lithium company since 2019, specializes in high-performance lithium compounds for EVs and battery markets, while maintaining leadership in butyllithium and high-purity lithium metal - Livent Corporation was formed and incorporated by FMC Corporation in February 2018, conducted its initial public offering in October 2018, and became an independent company in March 2019[18](index=18&type=chunk) - The company is a pure-play, fully integrated lithium company, producing battery-grade lithium hydroxide, lithium carbonate, butyllithium, and high purity lithium metal[20](index=20&type=chunk) - Livent's strategy is to focus on supplying high-performance lithium compounds to the fast-growing electric vehicle (EV) and broader battery markets[20](index=20&type=chunk) - The company is expanding its production capacities with a **5,000 metric ton lithium hydroxide addition** in Bessemer City, North Carolina (online by Q4 2022), and a **20,000 metric ton lithium carbonate expansion** in Argentina (in two phases by Q1 2023 and year-end 2023)[25](index=25&type=chunk) - Engineering work began in Q1 2022 for a second expansion to add an additional **20,000 metric tons of carbonate capacity** in Argentina by the end of 2025, aiming for a total of roughly **60,000 metric tons**[26](index=26&type=chunk) - Livent operates as one reportable segment due to commonalities in products, customer types, and operating performance evaluation[35](index=35&type=chunk) - The company extracts lithium from naturally occurring lithium-rich brines in Salar del Hombre Muerto, Argentina, considered one of the world's most significant and lowest-cost sources of lithium[57](index=57&type=chunk) Capacity and Production by Product Type (2019-2021) | Product Category | Product | 2021 Capacity (MT) | 2021 Production (MT) | 2020 Capacity (MT) | 2020 Production (MT) | 2019 Capacity (MT) | 2019 Production (MT) | |---|---|---|---|---|---|---|---| | Performance Lithium | Lithium Hydroxide | 25,000 | 19,671 | 25,000 | 14,686 | 25,000 | 21,348 | | | Butyllithium | 3,265 | 2,549 | 3,265 | 2,180 | 3,265 | 2,437 | | | High Purity Lithium Metal | 250 | 156 | 250 | 160 | 250 | 167 | | Base Lithium | Lithium Carbonate | 18,000 | 15,542 | 18,000 | 15,589 | 18,000 | 16,785 | | | Lithium Chloride | 9,000 | 3,723 | 9,000 | 4,836 | 9,000 | 4,284 | Revenue by Product Category (2019-2021) | Product Category | 2021 Revenue (Millions) | 2020 Revenue (Millions) | 2019 Revenue (Millions) | |---|---|---|---| | Lithium Hydroxide | $208.0 | $157.5 | $213.8 | | Butyllithium | $105.4 | $87.1 | $99.9 | | High Purity Lithium Metal and Other Specialty Compounds | $36.9 | $31.7 | $52.4 | | Lithium Carbonate and Lithium Chloride | $70.1 | $11.9 | $22.3 | | **Total Revenue** | **$420.4** | **$288.2** | **$388.4** | Revenue by Geographical Region (2019-2021) | Region | 2021 Revenue (Millions) | 2020 Revenue (Millions) | 2019 Revenue (Millions) | |---|---|---|---| | North America | $61.4 | $53.3 | $76.2 | | Latin America | $0.0 | $0.2 | $1.0 | | Europe, Middle East & Africa | $62.2 | $49.2 | $59.0 | | Asia Pacific | $296.8 | $185.5 | $252.2 | | **Total Revenue** | **$420.4** | **$288.2** | **$388.4** | - One customer accounted for approximately **31% of total revenue** in 2021, and the top 10 customers accounted for approximately **69% of revenue** in 2021[387](index=387&type=chunk) - In 2021, Livent experienced a **15% global headcount increase**, driven by expansion efforts in Argentina and the U.S., quality program depth in Asia, and global engineering talent expansion[97](index=97&type=chunk) - As of December 31, 2021, Livent had approximately **1,109 full-time, part-time, temporary, and contract employees** globally, with **38% in Latin America**, **35% in North America**, **19% in Asia**, and **7% in Europe**[108](index=108&type=chunk) [Item 1A. Risk Factors](index=22&type=section&id=Item%201A.%20Risk%20Factors) Livent faces a range of material risks, including the ongoing adverse impacts of the COVID-19 pandemic on operations, supply chains, and customer demand, with growth highly dependent on the continued expansion of the EV market and demand for high-performance lithium compounds - The COVID-19 pandemic continues to adversely impact Livent's business, operations, and financial performance, causing disruptions in supply chains, logistics, and customer demand, and increasing costs[132](index=132&type=chunk)[133](index=133&type=chunk)[134](index=134&type=chunk) - Livent's growth is highly dependent on the continued growth in demand for electric vehicles (EVs) and high-performance lithium compounds; a slower-than-expected EV market development could negatively impact the business[138](index=138&type=chunk) - Lithium prices are volatile, and declines could materially affect Livent's business, financial condition, and results of operations, especially given index-based pricing in some contracts[140](index=140&type=chunk) - Production expansion efforts are complex, require significant capital expenditures, and are subject to risks such as technical difficulties, regulatory hurdles, labor issues, and unforeseen costs, which could delay projects or render them infeasible[145](index=145&type=chunk) - Substantial international operations, particularly in Argentina, expose Livent to political, financial (e.g., high inflation, foreign exchange restrictions), and operational risks (e.g., mining concession changes, water access, natural disasters, civil unrest)[155](index=155&type=chunk)[161](index=161&type=chunk)[163](index=163&type=chunk)[165](index=165&type=chunk) - The company has not established 'proven' or 'probable' reserves for its minerals, as defined by the SEC, leading to greater uncertainty regarding the economic viability of mineral extraction and future production capacity[188](index=188&type=chunk) - Increasing focus on sustainability and ESG matters from stakeholders could negatively impact Livent's business and reputation if it fails to meet or accurately report on its initiatives and goals[189](index=189&type=chunk)[190](index=190&type=chunk) [Item 1B. Unresolved Staff Comments](index=39&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments to report - No unresolved staff comments[215](index=215&type=chunk) [Item 2. Properties](index=40&type=section&id=Item%202.%20Properties) Livent operates six manufacturing facilities across five countries and ten sales/administrative/R&D facilities in eight countries, including its leased corporate headquarters in Philadelphia, Pennsylvania, holding long-term mineral rights to critical lithium reserves in Argentina - Livent operates **six manufacturing facilities in five countries** and **ten facilities for sales, marketing, research and development, and administrative needs in eight countries**[216](index=216&type=chunk) - The company holds long-term mineral rights to the Salar del Hombre Muerto lithium reserves in Argentina, which are essential for its raw material supply[217](index=217&type=chunk) Key Production and Administrative Properties | Location | Function | Leased/Owned | |---|---|---| | United States (Philadelphia, PA) | Corporate Headquarters | Leased | | United States (Bessemer City, NC) | Manufacturing and Research | Owned | | South America (Fénix, Argentina) | Lithium Extraction and Manufacturing | Owned | | South America (Guemes, Argentina) | Manufacturing | Owned | | Europe (Bromborough, United Kingdom) | Manufacturing and Sales | Leased | | Asia Pacific (Zhangjiagang, China) | Manufacturing | Land use right, building owned | | Asia Pacific (Patancheru, India) | Manufacturing | Leased | [Item 3. Legal Proceedings](index=40&type=section&id=Item%203.%20Legal%20Proceedings) Information regarding legal proceedings is incorporated by reference from Note 2, Note 9, and Note 16 of the consolidated financial statements - Legal proceedings information is incorporated by reference from Notes 2, 9, and 16 of the consolidated financial statements[218](index=218&type=chunk) [Item 4. Mine Safety Disclosures](index=40&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to Livent Corporation - Mine Safety Disclosures are not applicable[219](index=219&type=chunk) [Item 4A. Executive Officers of the Registrant](index=41&type=section&id=Item%204A.%20Executive%20Officers%20of%20the%20Registrant) This section lists the executive officers of Livent Corporation, their current offices, business experience, and ages as of December 31, 2021, along with a summary of their diversity characteristics Executive Officers as of December 31, 2021 | Name | Age | Office | |---|---|---| | Paul W. Graves | 50 | President, Chief Executive Officer and Director | | Gilberto Antoniazzi | 55 | Vice President and Chief Financial Officer | | Sara Ponessa | 50 | Vice President, General Counsel and Secretary | Executive Officer Diversity (Gender and National Origin) | Category | Male | Female | |---|---|---| | Number of executive officers | 2 | 1 | | Hispanic or Latinx | 1 | 1 | | White | 1 | — | | National Origin: United Kingdom | 1 | — | | National Origin: Brazil | 1 | — | | National Origin: U.S. (Puerto Rico) | — | 1 | PART II [Item 5. Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=42&type=section&id=Item%205.%20Market%20for%20the%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Livent's common stock trades on the New York Stock Exchange under the symbol LTHM, with 2,283 holders of record and approximately 117,293 beneficial holders as of February 25, 2022, and no cash dividends declared or planned - Livent common stock (Symbol: **LTHM**) is traded on the New York Stock Exchange[225](index=225&type=chunk) - As of February 25, 2022, there were **2,283 holders of record** and approximately **117,293 beneficial holders** of common stock[225](index=225&type=chunk) - The Board of Directors has not declared any quarterly dividends as of December 31, 2021, and does not expect to pay any dividends in the foreseeable future[226](index=226&type=chunk) Issuer Purchases of Equity Securities (Q4 2021) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | |---|---|---| | October 1 - October 31, 2021 | 166 | $25.68 | | November 1 - November 30, 2021 | 148 | $30.17 | | December 1 - December 31, 2021 | 173 | $25.78 | | **Total Q4 2021** | **487** | **$27.08** | - The shares purchased were reacquired by the trustee of the Livent NQSP deferred compensation plan through open-market purchases, not part of publicly announced repurchase programs[230](index=230&type=chunk)[231](index=231&type=chunk) [Item 6. [RESERVED]](index=42&type=section&id=Item%206.%20%5BRESERVED%5D) This item is reserved and contains no information [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=43&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Livent's 2021 financial performance saw significant improvements, with revenue increasing by 46% to $420.4 million and a return to net income of $0.6 million, driven by higher sales volumes and pricing despite increased costs, with liquidity boosted by a public offering of common stock - Livent is a pure-play, fully integrated lithium company focused on high-performance lithium compounds for the rapidly growing EV and energy storage battery markets[234](index=234&type=chunk) - The company completed a public offering of **14,950,000 shares of common stock** in June 2021, generating net proceeds of **$252.2 million**, primarily for growth capital expenditures and debt repayment[236](index=236&type=chunk) - The COVID-19 pandemic continued to negatively impact business, operations, and financial performance in 2021, causing supply chain disruptions, increased costs, and delays in capital expansion work[237](index=237&type=chunk)[239](index=239&type=chunk)[241](index=241&type=chunk) - Livent expects flat volumes but significantly higher average pricing across its lithium products in 2022, leading to higher profitability, but also anticipates higher costs due to logistics, raw materials, and general inflationary pressures[252](index=252&type=chunk) Key Financial Highlights (2021 vs. 2020) | Metric | 2021 (Millions) | 2020 (Millions) | Change (Millions) | Change (%) | |---|---|---|---|---| | Revenue | $420.4 | $288.2 | $132.2 | 45.9% | | Gross Margin | $88.4 | $36.8 | $51.6 | 140.2% | | Net Income/(Loss) | $0.6 | $(16.3) | $16.9 | N/A | | Adjusted EBITDA (Non-GAAP) | $69.5 | $22.3 | $47.2 | 211.7% | - Cash provided by operating activities increased significantly to **$26.4 million** in 2021 from **$6.3 million** in 2020, driven by higher net income and decreased payments of accounts payable[272](index=272&type=chunk) - Cash used in investing activities increased to **$143.3 million** in 2021 from **$131.1 million** in 2020, primarily due to the resumption and significant increase in capital expenditures for lithium carbonate and hydroxide capacity expansion[273](index=273&type=chunk)[274](index=274&type=chunk) - Cash provided by financing activities increased to **$218.0 million** in 2021 from **$119.1 million** in 2020, mainly due to **$252.2 million net proceeds** from the common stock offering, partially offset by Revolving Credit Facility repayment[275](index=275&type=chunk)[276](index=276&type=chunk) - Total capital spending for 2022 is estimated to be in the range of **$280 million to $320 million**[278](index=278&type=chunk) - The company's 2025 Notes are classified as long-term debt, and holders have the option to convert them through March 31, 2022, due to the stock price exceeding 130% of the conversion price[456](index=456&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures about Market Risk](index=53&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Livent is exposed to market risks from fluctuations in commodity prices, interest rates, and foreign currency exchange rates, utilizing derivative contracts to minimize cash flow exposure to interest and currency rate changes, excluding Argentine peso risks - Livent is exposed to market risks from fluctuations in commodity prices, interest rates, and foreign currency exchange rates[300](index=300&type=chunk) - The company uses derivative contracts to hedge exposures and minimize cash flow volatility from interest and currency exchange rates[300](index=300&type=chunk)[303](index=303&type=chunk) - Livent does not hedge foreign currency risks associated with the Argentine peso due to limited availability and high cost of suitable derivative instruments[303](index=303&type=chunk) Foreign Currency Exchange Rate Sensitivity (December 31, 2021) | Metric | Net Asset/(Liability) Position (Millions) | |---|---| | Net asset/(liability) position as of December 31, 2021 | $0.2 | | Net liability position with 10% strengthening | $(2.0) | | Net asset position with 10% weakening | $1.6 | - A **one percentage point increase or decrease** in interest rates would have increased or decreased gross interest expense by **$0.2 million** for the year ended December 31, 2021[308](index=308&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=54&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents Livent Corporation's audited consolidated financial statements for 2019-2021, including statements of operations, comprehensive income/(loss), balance sheets, cash flows, and equity, along with detailed notes and an unqualified audit opinion from KPMG LLP Consolidated Statements of Operations (2019-2021) | (in Millions, Except Per Share Data) | 2021 | 2020 | 2019 | |---|---|---|---| | Revenue | $420.4 | $288.2 | $388.4 | | Gross margin | $88.4 | $36.8 | $114.9 | | Income/(loss) from operations before loss on debt extinguishment, equity in net loss of unconsolidated affiliates and interest expense, net | $29.7 | $(21.1) | $58.6 | | Net income/(loss) | $0.6 | $(16.3) | $50.2 | | Net income/(loss) per weighted average share - basic | $0.00 | $(0.11) | $0.34 | | Net income/(loss) per weighted average share - diluted | $0.00 | $(0.11) | $0.34 | Consolidated Balance Sheets (December 31, 2021 and 2020) | (in Millions) | 2021 | 2020 | |---|---|---| | Cash and cash equivalents | $113.0 | $11.6 | | Total current assets | $399.3 | $249.8 | | Property, plant and equipment, net | $677.9 | $545.3 | | Total assets | $1,202.5 | $936.8 | | Total current liabilities | $131.3 | $82.3 | | Long-term debt | $240.4 | $274.6 | | Total current and long-term liabilities | $407.1 | $400.6 | | Total equity | $795.4 | $536.2 | | Total liabilities and equity | $1,202.5 | $936.8 | Consolidated Statements of Cash Flows (2019-2021) | (in Millions) | 2021 | 2020 | 2019 | |---|---|---|---| | Cash provided by operating activities | $26.4 | $6.3 | $58.1 | | Cash used in investing activities | $(143.3) | $(131.1) | $(190.0) | | Cash provided by financing activities | $218.0 | $119.1 | $120.5 | | Increase/(decrease) in cash and cash equivalents | $101.4 | $(5.2) | $(11.5) | | Cash and cash equivalents, end of period | $113.0 | $11.6 | $16.8 | - Livent early adopted ASU 2020-06 on January 1, 2021, using the full retrospective method, which simplifies accounting for convertible debt instruments by reporting them as a single liability[380](index=380&type=chunk)[381](index=381&type=chunk) - The company's **4.125% Convertible Senior Notes due 2025** (2025 Notes) were issued for **$245.8 million** in 2020, with net proceeds used to finance green projects and repay the Revolving Credit Facility[450](index=450&type=chunk) - The Revolving Credit Facility provides for a **$400 million senior secured revolving credit facility**, with **$385.5 million available funds** as of December 31, 2021[458](index=458&type=chunk)[440](index=440&type=chunk) - Total unrecognized tax benefits were **$2.9 million** as of December 31, 2021, with **$1.0 million** potentially impacting the effective tax rate[435](index=435&type=chunk) - KPMG LLP issued an **unqualified opinion** on the consolidated financial statements and the effectiveness of internal control over financial reporting[564](index=564&type=chunk)[565](index=565&type=chunk) - The assessment of uncertain tax positions, particularly those not indemnified by FMC, was identified as a critical audit matter due to complex judgment in interpreting tax laws and intercompany pricing policies[571](index=571&type=chunk)[572](index=572&type=chunk) [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=98&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) There are no changes in or disagreements with accountants on accounting and financial disclosure to report - No changes in or disagreements with accountants on accounting and financial disclosure[592](index=592&type=chunk) [Item 9A. Controls and Procedures](index=98&type=section&id=Item%209A.%20Controls%20and%20Procedures) Livent's management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of December 31, 2021, with no material changes in internal controls over financial reporting during the fourth quarter of 2021 - Management concluded that Livent's disclosure controls and procedures were **effective** as of December 31, 2021[593](index=593&type=chunk) - No changes in internal controls over financial reporting occurred during Q4 2021 that materially affected or are reasonably likely to materially affect internal control over financial reporting[596](index=596&type=chunk) [Item 9B. Other Information](index=98&type=section&id=Item%209B.%20Other%20Information) This item is not applicable - This item is not applicable[597](index=597&type=chunk) [Item 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections](index=98&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20That%20Prevent%20Inspections) This item is not applicable - This item is not applicable[598](index=598&type=chunk) PART III [Item 10. Directors, Executive Officers and Corporate Governance](index=99&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding directors, executive officers, the Audit Committee, and the Code of Ethics is incorporated by reference from the Proxy Statement and Item 4A of this Form 10-K - Information on directors, executive officers, Audit Committee, and Code of Ethics is incorporated by reference from the Proxy Statement and Item 4A[600](index=600&type=chunk) [Item 11. Executive Compensation](index=99&type=section&id=Item%2011.%20Executive%20Compensation) Information concerning executive compensation, director compensation, and Compensation and Organization Committee interlocks and insider participation is incorporated by reference from the Proxy Statement - Information on executive compensation, director compensation, and Compensation and Organization Committee interlocks is incorporated by reference from the Proxy Statement[601](index=601&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=99&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership of certain beneficial owners and management is incorporated by reference from the Proxy Statement, with details on the company's stockholder-approved equity compensation plans - Security ownership information for beneficial owners and management is incorporated by reference from the Proxy Statement[602](index=602&type=chunk) Equity Compensation Plan Information (December 31, 2021) | Plan Category | Number of Securities to be issued upon exercise of outstanding options and restricted stock units (A) | Weighted-average exercise price of outstanding options awards (B) | Number of Securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (A)) (C) | |---|---|---|---| | Equity Compensation Plans approved by stockholders | 4,360,918 | $14.37 | 6,322,919 | - The Livent Plan's 'evergreen' provision for increasing available shares was not authorized for January 1, 2022[605](index=605&type=chunk) [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=99&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information regarding independent directors and related party transactions, including the related policy, is incorporated by reference from the Proxy Statement - Information on independent directors and related party transactions is incorporated by reference from the Proxy Statement[605](index=605&type=chunk) [Item 14. Principal Accountant Fees and Services](index=100&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information concerning principal accountant fees and services is incorporated by reference from the Proxy Statement, identifying KPMG LLP as the auditor - Information on principal accountant fees and services is incorporated by reference from the Proxy Statement[606](index=606&type=chunk) - Auditor Name: **KPMG LLP**, Auditor Location: **Philadelphia, PA (U.S. firm)**, PCAOB ID: **185**[606](index=606&type=chunk) PART IV [Item 15. Exhibits and Financial Statement Schedules](index=100&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the documents filed with the report, including consolidated financial statements and a comprehensive index of exhibits, many of which are incorporated by reference from previous SEC filings - Consolidated financial statements of Livent Corporation and its subsidiaries are incorporated under Item 8 of this Form 10-K[609](index=609&type=chunk) - A detailed index of exhibits is provided, including the Certificate of Incorporation, By-Laws, Credit Agreement, and various compensation plans, many of which are incorporated by reference[607](index=607&type=chunk)[610](index=610&type=chunk)[612](index=612&type=chunk) [Item 16. Form 10-K Summary](index=101&type=section&id=Item%2016.%20Form%2010-K%20Summary) This is an optional disclosure item and is not included in this report - Form 10-K Summary is an optional disclosure and is not included in this report[612](index=612&type=chunk) [SIGNATURES](index=102&type=section&id=SIGNATURES) This section contains the signatures of Livent Corporation's authorized representatives, including the President, Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer, and members of the Board of Directors, certifying the report as of February 28, 2022 - The report is signed by Paul W. Graves (President, CEO, and Director), Gilberto Antoniazzi (VP and CFO), Ronald Stark (Chief Accounting Officer), and other Directors[615](index=615&type=chunk)[616](index=616&type=chunk) - The report was signed on February 28, 2022[615](index=615&type=chunk)

[Glossary of Terms](index=4&type=section&id=Glossary%20of%20Terms) The glossary defines key financial and business terms and abbreviations used throughout the report - The glossary defines key terms and abbreviations used throughout the report, including financial instruments like '2025 Notes' and 'Credit Agreement', accounting standards like 'ASC' and 'ASU', and business-specific terms such as 'EV' (Electric Vehicle) and 'Nemaska Project'[10](index=10&type=chunk) [Part I - Financial Information](index=5&type=section&id=Part%20I%20-%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents Livent Corporation's unaudited condensed consolidated financial statements for Q3 2021 and 2020, including operations, balance sheets, cash flows, and equity, with detailed accounting notes [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This statement details Livent's revenues, gross margins, and net loss for the specified periods Condensed Consolidated Statements of Operations (in Millions, Except Per Share Data) | Metric | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :---------------------------------------------------------------------------------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Revenue | $103.6 | $72.6 | $297.5 | $206.0 | | Gross margin | $18.3 | $2.8 | $52.0 | $27.6 | | Income/(loss) from operations before income taxes | $2.8 | $(13.6) | $6.9 | $(18.0) | | Income tax expense/(benefit) | $15.4 | $(3.1) | $13.8 | $(5.4) | | Net loss | $(12.6) | $(10.5) | $(6.9) | $(12.6) | | Net loss per weighted average share - basic and diluted | $(0.08) | $(0.07) | $(0.05) | $(0.09) | | Weighted average common shares outstanding - basic and diluted | 161.6 | 146.3 | 152.3 | 146.2 | - Revenue increased by **43%** for the three months ended September 30, 2021, and by **44%** for the nine months ended September 30, 2021, compared to the respective prior periods, primarily due to higher sales volumes of lithium hydroxide, lithium carbonate, and butyllithium[13](index=13&type=chunk)[170](index=170&type=chunk)[178](index=178&type=chunk) - Gross margin significantly increased by **554%** for the three months ended September 30, 2021, and by **88%** for the nine months ended September 30, 2021, driven by higher sales volumes, partially offset by increased logistics, raw material, and other operating costs[13](index=13&type=chunk)[171](index=171&type=chunk)[179](index=179&type=chunk) [Condensed Consolidated Statements of Comprehensive Loss](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) This statement presents Livent's net loss and other comprehensive income/loss components, including foreign currency translation and derivative instruments Condensed Consolidated Statements of Comprehensive Loss (in Millions) | Metric | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :------------------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net loss | $(12.6) | $(10.5) | $(6.9) | $(12.6) | | Foreign currency translation (loss)/gain | $(1.1) | $3.0 | $(0.2) | $1.4 | | Derivative instruments loss, net of tax | $(0.1) | $0.0 | $0.0 | $(0.2) | | Other comprehensive (loss)/income, net of tax | $(1.2) | $3.0 | $(0.2) | $1.2 | | Comprehensive loss | $(13.8) | $(7.5) | $(7.1) | $(11.4) | - Comprehensive loss for the three months ended September 30, 2021, was **$(13.8) million**, an increase from **$(7.5) million** in the prior year, primarily due to foreign currency translation losses and derivative instrument losses[16](index=16&type=chunk) [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This statement provides a snapshot of Livent's assets, liabilities, and equity as of September 30, 2021, and December 31, 2020 Condensed Consolidated Balance Sheets (in Millions) | Metric | September 30, 2021 | December 31, 2020 | | :---------------------------------------------------------------------------------------------------------------- | :----------------- | :---------------- | | **ASSETS** | | | | Cash and cash equivalents | $195.3 | $11.6 | | Total current assets | $432.3 | $249.8 | | Property, plant and equipment, net | $605.3 | $545.3 | | Total assets | $1,151.0 | $936.8 | | **LIABILITIES AND EQUITY** | | | | Total current liabilities | $88.7 | $82.3 | | Long-term debt | $240.1 | $274.6 | | Total current and long-term liabilities | $366.5 | $400.6 | | Total equity | $784.5 | $536.2 | | Total liabilities and equity | $1,151.0 | $936.8 | - Cash and cash equivalents significantly increased to **$195.3 million** as of September 30, 2021, from **$11.6 million** at December 31, 2020, largely due to proceeds from a public offering[19](index=19&type=chunk)[73](index=73&type=chunk)[186](index=186&type=chunk) - Total assets grew to **$1,151.0 million** from **$936.8 million**, while total liabilities decreased to **$366.5 million** from **$400.6 million**, primarily driven by the repayment of the Revolving Credit Facility[19](index=19&type=chunk)[188](index=188&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement details Livent's cash flows from operating, investing, and financing activities for the nine months ended September 30, 2021 and 2020 Condensed Consolidated Statements of Cash Flows (in Millions) | Metric | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :-------------------------------- | :-------------------------- | :-------------------------- | | Cash provided by operating activities | $41.0 | $1.5 | | Cash used in investing activities | $(74.3) | $(111.8) | | Cash provided by financing activities | $216.9 | $108.2 | | Increase/(decrease) in cash and cash equivalents | $183.7 | $(2.0) | | Cash and cash equivalents, end of period | $195.3 | $14.8 | - Cash provided by operating activities increased significantly to **$41.0 million** for the nine months ended September 30, 2021, from **$1.5 million** in the prior year, driven by higher net income and decreased accounts payable payments[21](index=21&type=chunk)[189](index=189&type=chunk) - Cash used in investing activities decreased to **$(74.3) million** from **$(111.8) million**, primarily due to the temporary suspension and subsequent ramp-up of capital expansion work[21](index=21&type=chunk)[191](index=191&type=chunk) - Cash provided by financing activities more than doubled to **$216.9 million**, mainly from **$252.2 million** net proceeds from a public offering, partially offset by Revolving Credit Facility repayments[21](index=21&type=chunk)[192](index=192&type=chunk) [Condensed Consolidated Statements of Equity](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity) This statement outlines changes in Livent's equity components, including common stock, retained earnings, and accumulated other comprehensive loss Condensed Consolidated Statements of Equity (in Millions) | Metric | Balance, Dec 31, 2020 | Balance, Sep 30, 2021 | | :------------------------------------ | :-------------------- | :-------------------- | | Common Stock, $0.001 Per Share Par Value | $0.1 | $0.1 | | Capital In Excess of Par Value | $520.9 | $776.4 | | Retained Earnings | $60.3 | $53.4 | | Accumulated Other Comprehensive Loss | $(44.4) | $(44.6) | | Treasury Stock | $(0.7) | $(0.8) | | Total Equity | $536.2 | $784.5 | - Total equity increased by **$248.3 million** to **$784.5 million** as of September 30, 2021, primarily driven by **$252.2 million** in net proceeds from a common stock offering[27](index=27&type=chunk)[73](index=73&type=chunk) - Retained earnings decreased from **$60.3 million** to **$53.4 million**, reflecting net losses during the period[27](index=27&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [Note 1: Description of the Business](index=11&type=section&id=Note%201%3A%20Description%20of%20the%20Business) This note describes Livent Corporation's business, focusing on its role as a global producer of performance lithium compounds for EVs and batteries - Livent Corporation manufactures lithium for a wide range of products, primarily lithium-based batteries, specialty polymers, and chemical synthesis applications[28](index=28&type=chunk) - The company is a leading global producer of performance lithium compounds, with significant growth driven by the adoption of electric vehicles (EVs) and lithium-ion batteries in Asia, Europe, and North America[28](index=28&type=chunk)[29](index=29&type=chunk) [Note 2: Principal Accounting Policies and Related Financial Information](index=11&type=section&id=Note%202%3A%20Principal%20Accounting%20Policies%20and%20Related%20Financial%20Information) This note outlines Livent's principal accounting policies, including estimates, assumptions, and the early adoption of ASU No. 2020-06 - The condensed consolidated financial statements are prepared in accordance with SEC interim reporting requirements and U.S. GAAP, with certain notes condensed or omitted[30](index=30&type=chunk) - Estimates and assumptions, particularly regarding trade receivables, long-lived assets, income taxes, inventory, and financial instruments, could be impacted by the COVID-19 pandemic, though no material updates were required as of the report date[31](index=31&type=chunk)[32](index=32&type=chunk) - The company early adopted ASU No. 2020-06 for its 2025 Convertible Senior Notes, effective January 1, 2021, using the full retrospective method[33](index=33&type=chunk) [Note 3: Recently Issued and Adopted Accounting Pronouncements and Regulatory Items](index=11&type=section&id=Note%203%3A%20Recently%20Issued%20and%20Adopted%20Accounting%20Pronouncements%20and%20Regulatory%20Items) This note details Livent's early adoption of ASU 2020-06 for convertible debt and ASU 2019-12 for income taxes - Livent early adopted ASU 2020-06 on January 1, 2021, using the full retrospective method, which simplifies accounting for convertible debt instruments by reporting them as a single liability and requiring the if-converted method for EPS calculations[37](index=37&type=chunk) - The adoption of ASU 2020-06 resulted in adjustments to retained earnings, additional paid-in capital, long-term debt, and deferred income taxes on the consolidated balance sheet[37](index=37&type=chunk) - The company also adopted ASU No. 2019-12, Simplifying the Accounting for Income Taxes, as of January 1, 2021, which did not have a material impact on the financial statements[38](index=38&type=chunk) [Note 4: Revenue Recognition](index=12&type=section&id=Note%204%3A%20Revenue%20Recognition) This note provides disaggregated revenue information by major geographical region and product category, highlighting customer concentration Disaggregated Revenue by Major Geographical Region (in Millions) | Region | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :---------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | North America | $20.0 | $11.0 | $63.4 | $40.5 | | Europe, Middle East & Africa | $14.2 | $9.8 | $46.0 | $32.3 | | Asia Pacific | $69.4 | $51.8 | $188.1 | $133.1 | | Total Revenue | $103.6 | $72.6 | $297.5 | $206.0 | Disaggregated Revenue by Major Product Category (in Millions) | Product Category | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :---------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Lithium Hydroxide | $50.7 | $43.9 | $160.5 | $115.4 | | Butyllithium | $27.4 | $19.6 | $76.1 | $62.4 | | High Purity Lithium Metal and Other Specialty Compounds | $9.8 | $7.1 | $27.6 | $23.0 | | Lithium Carbonate and Lithium Chloride | $15.7 | $2.0 | $33.3 | $5.2 | | Total Revenue | $103.6 | $72.6 | $297.5 | $206.0 | - For the three months ended September 30, 2021, one customer accounted for approximately **35%** of total revenue, and the top **10** customers accounted for approximately **69%** of total revenue, indicating significant customer concentration[42](index=42&type=chunk) [Note 5: Inventories, Net](index=13&type=section&id=Note%205%3A%20Inventories%2C%20Net) This note presents the breakdown of Livent's inventories, net, including finished goods, semi-finished goods, and raw materials Inventories, Net (in Millions) | Category | September 30, 2021 | December 31, 2020 | | :------------------------ | :----------------- | :---------------- | | Finished goods | $35.0 | $36.1 | | Semi-finished goods | $41.3 | $46.2 | | Raw materials, supplies and other | $33.9 | $23.3 | | Inventory, net | $110.2 | $105.6 | - Total inventory, net, increased to **$110.2 million** as of September 30, 2021, from **$105.6 million** at December 31, 2020, primarily driven by an increase in raw materials, supplies, and other inventory[47](index=47&type=chunk) [Note 6: Investments](index=14&type=section&id=Note%206%3A%20Investments) This note details Livent's equity interest in Québec Lithium Partners (QLP) and its accounting as an equity method investment - Livent holds a **50%** equity interest in Québec Lithium Partners (QLP), a joint venture for the Nemaska Project, which is accounted for as an equity method investment[49](index=49&type=chunk) - The company recorded a **$1.0 million** loss for the three months and a **$3.7 million** loss for the nine months ended September 30, 2021, from its equity interest in QLP[49](index=49&type=chunk) [Note 7: Restructuring and Other Charges](index=14&type=section&id=Note%207%3A%20Restructuring%20and%20Other%20Charges) This note outlines Livent's restructuring and other charges, including severance-related costs and environmental remediation expenses Restructuring and Other Charges (in Millions) | Category | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Severance-related and exit costs | $0.1 | $0.9 | $0.2 | $5.8 | | Environmental remediation | $0.1 | $0.1 | $0.3 | $0.4 | | Other | $0.9 | $3.4 | $2.9 | $3.9 | | Total | $1.1 | $4.4 | $3.4 | $10.1 | - Total restructuring and other charges decreased to **$1.1 million** for the three months and **$3.4 million** for the nine months ended September 30, 2021, from **$4.4 million** and **$10.1 million** in the prior year periods, respectively[50](index=50&type=chunk) - The decrease was primarily due to lower severance-related costs and the finalization of IPO litigation settlement in Q2 2021, which had incurred a **$2.5 million** accrual in Q3 2020[50](index=50&type=chunk)[172](index=172&type=chunk) [Note 8: Income Taxes](index=15&type=section&id=Note%208%3A%20Income%20Taxes) This note details Livent's income tax expense/benefit and effective tax rate, explaining impacts from foreign currency and tax law changes Income Tax Expense/(Benefit) and Effective Tax Rate | Period | Income Tax Expense/(Benefit) (in Millions) | Effective Tax Rate | | :-------------------------- | :--------------------------------------- | :----------------- | | 3 Months Ended Sep 30, 2021 | $15.4 | 540.5% | | 3 Months Ended Sep 30, 2020 | $(3.1) | 22.8% | | 9 Months Ended Sep 30, 2021 | $13.8 | 198.7% | | 9 Months Ended Sep 30, 2020 | $(5.4) | 30.0% | - The significant increase in income tax expense for Q3 2021 and YTD 2021 was primarily due to foreign currency impacts in Argentina, including inflationary tax adjustments, and an increase in income from operations[54](index=54&type=chunk)[175](index=175&type=chunk)[183](index=183&type=chunk) - An amendment to Argentina's income tax law in June 2021, introducing new progressive corporate income tax rates, resulted in a tax benefit of **$(2.2) million** for the revaluation of Argentina net deferred tax assets for the nine months ended September 30, 2021[183](index=183&type=chunk) [Note 9: Debt](index=15&type=section&id=Note%209%3A%20Debt) This note provides details on Livent's long-term debt, including the Revolving Credit Facility and Convertible Senior Notes due 2025 Long-Term Debt (in Millions) | Debt Type | September 30, 2021 | December 31, 2020 | | :-------------------------------- | :----------------- | :---------------- | | Revolving Credit Facility | $0.0 | $35.6 | | 4.125% Convertible Senior Notes due 2025 | $245.8 | $245.8 | | Transaction costs - 2025 Notes | $(5.7) | $(6.8) | | Total long-term debt | $240.1 | $274.6 | - Total long-term debt decreased to **$240.1 million** as of September 30, 2021, from **$274.6 million** at December 31, 2020, primarily due to the repayment of the Revolving Credit Facility using proceeds from the June 2021 public offering[55](index=55&type=chunk)[68](index=68&type=chunk)[188](index=188&type=chunk) - The company early adopted ASU 2020-06 retrospectively, which now reports the 2025 Notes as a single liability instrument, impacting interest expense and balance sheet classifications[57](index=57&type=chunk)[60](index=60&type=chunk)[62](index=62&type=chunk) - As of September 30, 2021, Livent was in compliance with all debt covenants, including a maximum allowable first lien leverage ratio of **3.5** and a minimum allowable interest coverage ratio of **3.5**[69](index=69&type=chunk)[188](index=188&type=chunk) [Note 10: Equity](index=20&type=section&id=Note%2010%3A%20Equity) This note details Livent's equity components, including common stock issuance, treasury shares, and accumulated other comprehensive loss Common Stock Issued and Outstanding | Metric | Balance at Dec 31, 2020 | Balance at Sep 30, 2021 | | :---------------------------------------- | :---------------------- | :---------------------- | | Issued Shares | 146,461,249 | 161,676,147 | | Treasury Shares | (99,268) | (101,131) | | Outstanding Shares | 146,361,981 | 161,575,016 | - In June 2021, Livent issued **14,950,000** shares of common stock in an underwritten public offering, generating net proceeds of **$252.2 million**, which were recorded to paid-in capital[73](index=73&type=chunk) Accumulated Other Comprehensive Loss (AOCL), Net of Tax (in Millions) | Metric | Dec 31, 2020 | Sep 30, 2021 | | :---------------------------------------- | :----------- | :----------- | | Foreign currency adjustments | $(44.4) | $(44.6) | | Derivative Instruments | $0.0 | $0.0 | | Total AOCL, net of tax | $(44.4) | $(44.6) | - No dividends were paid for the three and nine months ended September 30, 2021 and 2020, and none are expected in the foreseeable future[80](index=80&type=chunk) [Note 11: Loss Per Share](index=21&type=section&id=Note%2011%3A%20Loss%20Per%20Share) This note explains Livent's basic and diluted loss per common share, including the treatment of potentially dilutive securities Basic and Diluted Loss Per Common Share | Metric | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :---------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net loss (in Millions) | $(12.6) | $(10.5) | $(6.9) | $(12.6) | | Weighted average common shares outstanding (in Millions) | 161.6 | 146.3 | 152.3 | 146.2 | | Net loss per weighted average share - basic and diluted | $(0.08) | $(0.07) | $(0.05) | $(0.09) | - Diluted EPS considers potentially dilutive securities (stock options, RSUs, and 2025 Notes) using the if-converted method, but these are excluded when their inclusion would have an anti-dilutive effect due to a net loss[82](index=82&type=chunk) Total Antidilutive Weighted Average Share Equivalents (in Millions) | Period | Share equivalents from share-based plans | Share equivalents from 2025 Notes | Total | | :-------------------------- | :------------------------------------- | :-------------------------------- | :---- | | 3 Months Ended Sep 30, 2021 | 1.5 | 45.3 | 46.8 | | 3 Months Ended Sep 30, 2020 | 0.6 | 28.1 | 28.7 | | 9 Months Ended Sep 30, 2021 | 1.4 | 44.0 | 45.4 | | 9 Months Ended Sep 30, 2020 | 0.6 | 10.1 | 10.7 | [Note 12: Financial Instruments, Risk Management and Fair Value Measurements](index=22&type=section&id=Note%2012%3A%20Financial%20Instruments%2C%20Risk%20Management%20and%20Fair%20Value%20Measurements) This note describes Livent's use of derivative financial instruments for risk management and fair value measurements of debt - Livent uses derivative financial instruments, primarily foreign exchange forward contracts, to mitigate currency risk from international operations in currencies like the Euro, British pound, Chinese yuan, and Japanese yen[93](index=93&type=chunk)[95](index=95&type=chunk) - Changes in the fair value of cash flow hedges are recorded in accumulated other comprehensive loss (AOCL) and reclassified to earnings as the hedged item affects earnings[97](index=97&type=chunk) - As of September 30, 2021, the estimated fair value of debt was **$292.0 million**, with a carrying amount of **$240.1 million**, and the 2025 Notes are classified as Level 2 in the fair value hierarchy[92](index=92&type=chunk) [Note 13: Commitments and Contingencies](index=26&type=section&id=Note%2013%3A%20Commitments%20and%20Contingencies) This note outlines Livent's commitments and contingencies, including legal proceedings, environmental liabilities, and operating lease obligations - Livent records reserves for estimated losses from contingencies when a loss is probable and estimable, adjusting assessments as new information becomes available[115](index=115&type=chunk) - The company is subject to an audit by the Argentine Customs Authority regarding lithium carbonate exports from 2015-2017, with a reasonably possible liability that cannot currently be estimated[118](index=118&type=chunk) Operating Lease Liabilities Maturity Analysis (in Millions) | Period | Undiscounted cash flows | | :---------------- | :---------------------- | | Remainder of 2021 | $0.4 | | 2022 | $1.3 | | 2023 | $1.1 | | 2024 | $1.1 | | 2025 | $1.1 | | Thereafter | $3.0 | | Total future minimum lease payments | $8.0 | | Less: Imputed interest | $(1.5) | | Total | $6.5 | - In Q1 2021, Livent terminated a sublease for its corporate headquarters, removing a **$10.9 million** ROU asset and lease liability, and executed a new five-year sublease in Q2 2021, recording a **$2.1 million** ROU asset and lease liability[124](index=124&type=chunk) [Note 14: Supplemental Information](index=29&type=section&id=Note%2014%3A%20Supplemental%20Information) This note provides supplemental financial details on prepaid assets, other assets, and various accrued and long-term liabilities Prepaid and Other Current Assets (in Millions) | Category | September 30, 2021 | December 31, 2020 | | :-------------------------- | :----------------- | :---------------- | | Argentina government receivable | $11.8 | $10.8 | | Tax related items | $15.4 | $15.7 | | Other receivables | $3.0 | $8.6 | | Prepaid expenses | $7.6 | $8.2 | | Other current assets | $6.0 | $12.8 | | Total | $43.8 | $56.3 | Other Assets (in Millions) | Category | September 30, 2021 | December 31, 2020 | | :-------------------------- | :----------------- | :---------------- | | Argentina government receivable | $51.0 | $55.8 | | Advance to contract manufacturers | $15.6 | $16.3 | | Capitalized software, net | $1.5 | $1.8 | | Tax related items | $2.5 | $2.7 | | Other assets | $11.0 | $11.8 | | Total | $81.6 | $88.4 | Accrued and Other Current Liabilities (in Millions) | Category | September 30, 2021 | December 31, 2020 | | :-------------------------- | :----------------- | :---------------- | | Plant restructuring reserves | $3.2 | $3.2 | | Retirement liability - 401K | $0.6 | $2.6 | | Accrued payroll | $11.5 | $12.5 | | Severance related | $0.2 | $2.5 | | Environmental reserves, current | $0.5 | $0.6 | | Other accrued and other current liabilities | $19.7 | $15.3 | | Total | $35.7 | $36.7 | Other Long-Term Liabilities (in Millions) | Category | September 30, 2021 | December 31, 2020 | | :---------------------------------------- | :----------------- | :---------------- | | Accrued investment in unconsolidated affiliate | $6.2 | $6.2 | | Asset retirement obligations | $0.3 | $0.3 | | Contingencies related to uncertain tax positions | $3.6 | $3.4 | | Deferred compensation plan obligation | $5.5 | $4.5 | | Self-insurance reserves | $1.5 | $1.5 | | Other long-term liabilities | $1.1 | $1.3 | | Total | $18.2 | $17.2 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's analysis of Livent's financial condition, operations, liquidity, and market risks for Q3 2021, including COVID-19 impacts [Special Note Regarding Forward-Looking Information](index=31&type=section&id=SPECIAL%20NOTE%20REGARDING%20FORWARD-LOOKING%20INFORMATION) This note cautions readers about forward-looking statements, highlighting risks from the COVID-19 pandemic, market demand, and supply chain disruptions - The report contains forward-looking statements based on current views and assumptions, which involve known and unknown risks and uncertainties that could cause actual results to differ materially[136](index=136&type=chunk) - A significant factor influencing future results is the potential adverse effect of the COVID-19 pandemic on the company's financial condition, operations, customers, and supply chain, with heightened risks due to ongoing impacts[137](index=137&type=chunk)[139](index=139&type=chunk) - Key risks include declining demand for EV lithium compounds, supply chain disruptions, price volatility, competition, and risks associated with international operations, particularly in Argentina and China[138](index=138&type=chunk) [Application of Critical Accounting Policies](index=32&type=section&id=APPLICATION%20OF%20CRITICAL%20ACCOUNTING%20POLICIES) This note discusses management's critical accounting policies, estimates, and judgments, particularly concerning revenue, assets, and income taxes - The preparation of financial statements requires management to make estimates and judgments, with critical accounting policies including revenue recognition and trade receivables, impairment and valuation of long-lived assets, and income taxes[141](index=141&type=chunk)[143](index=143&type=chunk)[145](index=145&type=chunk) - The COVID-19 pandemic introduces uncertainty to these estimates, but as of the report date, no specific events required material updates to assumptions or asset/liability carrying values[144](index=144&type=chunk)[146](index=146&type=chunk) [Recently Issued and Adopted Accounting Pronouncements and Regulatory Items](index=33&type=section&id=RECENTLY%20ISSUED%20AND%20ADOPTED%20ACCOUNTING%20PRONOUNCEMENTS%20AND%20REGULATORY%20ITEMS) This section refers to Note 3 for details on recently issued and adopted accounting pronouncements and regulatory items - This section refers to Note 3 of the condensed consolidated financial statements for a discussion of recently adopted accounting guidance and other new accounting guidance[147](index=147&type=chunk) [Overview](index=33&type=section&id=OVERVIEW) This section provides an overview of Livent's business, focusing on its role in the EV battery market and the impact of the COVID-19 pandemic - Livent is a fully integrated lithium company focused on supplying high-performance lithium compounds to the growing Electric Vehicle (EV) battery market, while maintaining its position in butyllithium and high-purity lithium metal[148](index=148&type=chunk)[149](index=149&type=chunk) - For Q3 2021, revenue increased by **43%** to **$103.6 million**, and Adjusted EBITDA rose to **$14.9 million** from **$0.9 million** in Q3 2020, driven by higher sales volumes[151](index=151&type=chunk) - The COVID-19 pandemic continued to negatively impact operations, supply chains, and logistics, causing disruptions, increased costs, and delays in capital expansion work in Argentina and the United States[150](index=150&type=chunk)[152](index=152&type=chunk)[154](index=154&type=chunk) - The company expects higher volumes and slightly higher average pricing for lithium products in 2021, with lower unit costs partially offset by increased logistics, solvents, and raw material costs[165](index=165&type=chunk) [Results of Operations](index=36&type=section&id=RESULTS%20OF%20OPERATIONS) This section analyzes Livent's revenue, gross margin, net loss, and Adjusted EBITDA for Q3 2021 and YTD, explaining key drivers and cost pressures Key Financial Highlights (in Millions) | Metric | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :---------------------------------------------------------------------------------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Revenue | $103.6 | $72.6 | $297.5 | $206.0 | | Gross margin | $18.3 | $2.8 | $52.0 | $27.6 | | Net loss | $(12.6) | $(10.5) | $(6.9) | $(12.6) | | EBITDA (Non-GAAP) | $9.0 | $(7.2) | $25.9 | $0.0 | | Adjusted EBITDA (Non-GAAP) | $14.9 | $0.9 | $42.0 | $16.7 | - Revenue increased by **43%** in Q3 2021 and **44%** YTD 2021, driven by higher sales volumes of lithium hydroxide, lithium carbonate, and butyllithium due to increased customer demand[170](index=170&type=chunk)[178](index=178&type=chunk) - Gross margin saw a significant increase of **554%** in Q3 2021 and **88%** YTD 2021, primarily from higher sales volumes, partially offset by increased logistics, raw material, and other operating costs, including COVID-19 related expenses[171](index=171&type=chunk)[179](index=179&type=chunk) - Net loss for Q3 2021 was **$(12.6) million**, compared to **$(10.5) million** in Q3 2020, mainly due to higher Argentina tax expense from inflationary adjustments and increased operating costs, partially offset by higher sales volumes and lower restructuring charges[176](index=176&type=chunk)[177](index=177&type=chunk) - Adjusted EBITDA significantly improved to **$14.9 million** in Q3 2021 and **$42.0 million** YTD 2021, reflecting stronger sales volumes despite cost pressures[168](index=168&type=chunk) [Liquidity and Capital Resources](index=41&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) This section discusses Livent's cash position, debt, operating cash flow, capital expenditures, and overall liquidity for the next 12 months - Cash and cash equivalents increased to **$195.3 million** at September 30, 2021, from **$11.6 million** at December 31, 2020, with **$12.5 million** held by foreign subsidiaries[186](index=186&type=chunk) - The company repaid all outstanding amounts under its **$400 million** Revolving Credit Facility in June 2021 using proceeds from a public offering, resulting in **$385.6 million** remaining borrowing capacity[187](index=187&type=chunk)[188](index=188&type=chunk)[193](index=193&type=chunk) - Cash provided by operating activities was **$41.0 million** YTD 2021, a significant increase from **$1.5 million** YTD 2020, driven by higher net income and decreased accounts payable payments[189](index=189&type=chunk) - Capital expenditures for 2021 are estimated at **$125 million**, as the company resumed capital expansion work in Argentina and the United States in Q2 2021 after a temporary suspension due to COVID-19[191](index=191&type=chunk)[195](index=195&type=chunk) - Livent believes its available cash, cash from operations, and Revolving Credit Facility will provide adequate liquidity for the next **12** months[197](index=197&type=chunk) [Commitments and Contingencies](index=43&type=section&id=Commitments%20and%20Contingencies) This section refers to Note 13 of the condensed consolidated financial statements for details on commitments and contingencies - This section refers to Note 13 of the condensed consolidated financial statements for details on commitments and contingencies[199](index=199&type=chunk) [Contractual Commitments](index=43&type=section&id=Contractual%20Commitments) This section states that there have been no significant changes to contractual commitments since the 2020 Annual Report on Form 10-K - There have been no significant changes to contractual commitments during the period ended September 30, 2021, from those disclosed in the 2020 Annual Report on Form 10-K[200](index=200&type=chunk) [Climate Change](index=43&type=section&id=Climate%20Change) This section refers to the 2020 Annual Report on Form 10-K for a detailed discussion related to climate change - A detailed discussion related to climate change can be found in Part II, Item 7 of the 2020 Annual Report on Form 10-K[201](index=201&type=chunk) [Off-Balance Sheet Arrangements](index=43&type=section&id=Off-Balance%20Sheet%20Arrangements) This section confirms Livent has no material off-balance sheet arrangements impacting its financial condition or liquidity - Livent does not have any off-balance sheet arrangements that are material or reasonably likely to have a current or future effect on its financial condition, results of operations, or liquidity[202](index=202&type=chunk) [Derivative Financial Instruments and Market Risks](index=43&type=section&id=DERIVATIVE%20FINANCIAL%20INSTRUMENTS%20AND%20MARKET%20RISKS) This section details Livent's management of market risks, including commodity prices, interest rates, and foreign currency exchange rates - Livent manages market risks related to commodity prices, interest rates, and foreign currency exchange rates through a controlled risk management program, including derivative contracts with major financial institutions[203](index=203&type=chunk) - The company is exposed to foreign currency risk from operations in various countries, primarily hedging with foreign exchange forward contracts, but does not hedge Argentine peso risks due to limited availability and high cost[205](index=205&type=chunk) - A sensitivity analysis indicates that a **10%** change in foreign currency exchange rates would result in a net liability position of **$(0.6) million** with strengthening and a net asset position of **$0.6 million** with weakening as of September 30, 2021[206](index=206&type=chunk)[207](index=207&type=chunk) - As of September 30, 2021, Livent had no interest rate swap agreements, and a one percentage point increase or decrease in interest rates would have impacted gross interest expense by **$0.2 million** for the nine months ended September 30, 2021[208](index=208&type=chunk)[209](index=209&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=44&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section refers to the 'Derivative Financial Instruments and Market Risks' discussion within Item 2 for market risk disclosures - The required information for this item is provided in the 'Derivative Financial Instruments and Market Risks' section under Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations[210](index=210&type=chunk) [Item 4. Controls and Procedures](index=44&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that Livent's disclosure controls and procedures were effective as of September 30, 2021, and there were no material changes in internal control over financial reporting during the quarter - As of September 30, 2021, the company's disclosure controls and procedures were deemed effective to provide reasonable assurance that required information is recorded, processed, summarized, and reported timely[211](index=211&type=chunk) - There were no changes in internal control over financial reporting during the quarter ended September 30, 2021, that materially affected or are reasonably likely to materially affect, the company's internal control over financial reporting[212](index=212&type=chunk) [Part II - Other Information](index=45&type=section&id=Part%20II%20-%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=45&type=section&id=Item%201.%20Legal%20Proceedings) This section states Livent is involved in ordinary course legal proceedings, with no expected material adverse effect on financial position - The company is involved in legal proceedings, including workers' compensation matters, in the ordinary course of business[214](index=214&type=chunk) - Based on available information and established reserves, the ultimate resolution of any known legal proceeding is not expected to have a material adverse effect on financial position, liquidity, or results of operations[214](index=214&type=chunk) - There are no material changes from legal proceedings previously disclosed in the 2020 Annual Report on Form 10-K, except as noted in Note 13 to the financial statements[214](index=214&type=chunk) [Item 1A. Risk Factors](index=45&type=section&id=Item%201A.%20Risk%20Factors) This section advises readers to consider risk factors from the 2020 Annual Report on Form 10-K and cautions against undue reliance on forward-looking statements - Readers should carefully consider the risk factors discussed in Part I, Item 1A of the 2020 Annual Report on Form 10-K[215](index=215&type=chunk) - Additional risks and uncertainties not currently known or deemed immaterial could also adversely affect the business, financial condition, or future results[215](index=215&type=chunk) - The company cautions against undue reliance on forward-looking statements and does not undertake to publicly revise or update them[216](index=216&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=45&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details common stock repurchases by the Livent NQSP trustee for employee investments, not part of a public program Issuer Purchases of Equity Securities (Q3 2021) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | | :-------------------------- | :------------------------------- | :--------------------------- | | July 1 through July 31, 2021 | 206 | $19.52 | | August 1 through August 31, 2021 | 187 | $24.22 | | September 1 through September 30, 2021 | 172 | $24.64 | | Total Q3 2021 | 565 | $22.64 | - Shares of Livent common stock are reacquired by the trustee of the Livent NQSP through open-market purchases for employee investments and are recorded as Treasury stock[218](index=218&type=chunk) - Livent Corporation does not have any publicly announced stock repurchase programs[219](index=219&type=chunk) [Item 6. Exhibits](index=46&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including interactive data files and certifying statements - Exhibits include Interactive Data Files (101, 104) and Certifying Statements from the CEO and CFO (31.1, 31.2, 32.1, 32.2) as required by the Sarbanes-Oxley Act[221](index=221&type=chunk) [Signatures](index=47&type=section&id=SIGNATURES) This section confirms the report's due signing by Livent Corporation's Vice President and Chief Financial Officer on November 4, 2021 - The report is duly signed on behalf of Livent Corporation by Gilberto Antoniazzi, Vice President and Chief Financial Officer, on November 4, 2021, in accordance with the Securities Exchange Act of 1934[223](index=223&type=chunk)[224](index=224&type=chunk)