Li-Cycle(LICY) - 2024 Q4 - Annual Report

Financial Performance - Total revenue for the three months ended September 30, 2024, was $8.4 million, a 78.7% increase from $4.7 million in the same period of 2023[43]. - Product revenue increased to $4.4 million for the three months ended September 30, 2024, compared to $3.5 million in the same period of 2023, representing a 25.7% growth[43]. - Recycling service revenue rose significantly to $4.0 million for the three months ended September 30, 2024, up from $1.2 million in the same period of 2023, marking a 233.3% increase[43]. - The net loss for the three months ended September 30, 2024, was $56.5 million, an improvement from a net loss of $30.7 million in the same period of 2023[43]. - The company reported a loss from operations of $25.2 million for the three months ended September 30, 2024, compared to a loss of $44.0 million in the same period of 2023, indicating a 42.5% reduction in operational losses[43]. - Total revenue for the nine months ended September 30, 2024, reached $21.0 million, compared to $11.9 million for the same period in 2023, marking a 76.5% increase[71]. - Net loss for the nine months ended September 30, 2024, was $88.4 million, compared to a net loss of $99.1 million for the same period in 2023, representing a 7% improvement[48]. Cash Flow and Liquidity - The company has initiated a cash preservation plan to reduce expenses and slow cash outflows, including staffing reductions and pausing production[15]. - Cash and cash equivalents decreased to $32.2 million as of September 30, 2024, from $70.6 million at December 31, 2023[45]. - The company’s accumulated deficit increased to $360.0 million as of September 30, 2024, compared to $271.6 million at December 31, 2023[45]. - Net cash used in operating activities for the nine months ended September 30, 2024, was $92.5 million, slightly higher than $89.3 million for the same period in 2023[54]. - The company has paused construction on the Rochester Hub project pending a comprehensive review of its future strategy[59]. - The company initiated a Cash Preservation Plan, which includes reducing staffing and suspending development projects to enhance liquidity[62]. Debt and Financing - Li-Cycle has a definitive financing agreement with the U.S. Department of Energy for a loan facility of up to $475 million[17]. - The company entered into a private placement agreement to issue a senior secured convertible note for $75.0 million on March 25, 2024[56]. - The company is actively exploring additional financing options, including a loan facility of up to $475 million from the DOE[56]. - The principal amount of convertible notes increased from $208.1 million on December 31, 2023, to $300.3 million by September 30, 2024, reflecting a growth of approximately 44.2%[108]. - The company has guaranteed all obligations related to the Glencore Senior Secured Convertible Note through its subsidiaries, enhancing security for the debt[111]. Operations and Projects - Li-Cycle's operations at the Ontario Spoke were paused on November 1, 2023, as part of a cash preservation plan[15]. - The planned Rochester Hub project is currently under review, with construction paused[34]. - The company is focused on developing a joint project with Glencore to produce critical battery materials at the planned Portovesme Hub in Italy, although the feasibility study is currently paused[34]. - The company plans to curtail operations at its New York Spoke as part of its Spoke optimization initiatives[151]. - The Germany Spoke expansion plans have been deferred, with Line 2 capacity of 10,000 tonnes per year and ancillary capacity of up to 10,000 tonnes per year previously expected to be operational by the end of 2023[167]. - The France Spoke project, expected to have a main line recycling capacity of 10,000 tonnes per year, has been paused, with the timing being re-evaluated[168]. Assets and Liabilities - Total assets decreased to $870.6 million as of September 30, 2024, down from $886.0 million at December 31, 2023[45]. - Total liabilities increased to $575.3 million as of September 30, 2024, compared to $509.6 million at December 31, 2023[45]. - The company recorded a total of $132.6 million in accounts payable and accrued liabilities as of September 30, 2024, down from $152.1 million at the end of 2023, indicating a reduction of approximately 12.8%[98]. - The company’s accrued compensation increased to $6.8 million as of September 30, 2024, from $3.1 million at the end of 2023, marking an increase of approximately 119.4%[98]. Market and Industry Outlook - Li-Cycle's management estimates the global EV and hybrid market size based on internal and independent industry surveys, though these estimates involve assumptions and limitations[9]. - The long-term demand for EVs and hybrids in North America and Europe is expected to grow at a compound annual growth rate of approximately 21% from 2024 to 2030[157]. Legal and Regulatory Matters - The company is involved in ongoing litigation related to alleged misstatements and has reached a settlement regarding a lawsuit with Pike Conductor DEV 1, LLC[132][133]. - The arbitration proceedings initiated by MasTec seek recovery of $48.7 million related to the Rochester Hub project, with the company defending its interests[133]. - The company has paused construction on the Rochester Hub project as of October 23, 2023, due to uncertainties in litigation[128].