Livent(LTHM) - 2022 Q3 - Quarterly Report

Glossary of Terms This section defines key terms and abbreviations used throughout the financial report PART I - FINANCIAL INFORMATION 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 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 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][164] - 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][171] Condensed Consolidated Statements of Comprehensive Income/(Loss) 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] Condensed Consolidated Balance Sheets 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] - 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][48] Condensed Consolidated Statements of Cash Flows 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][188][189] - 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][190] Condensed Consolidated Statements of Equity 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][74] - 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] Notes to Condensed Consolidated Financial Statements This section provides detailed explanatory notes to the unaudited condensed consolidated financial statements Note 1: Description of the Business 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] - 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][30] Note 2: Principal Accounting Policies and Related Financial Information 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] - 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] - 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] Note 3: Recently Issued and Adopted Accounting Pronouncements and Regulatory Items 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] - 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] Note 4: Revenue Recognition 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] - 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] Note 5: Inventories, Net 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] Note 6: Investments 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] - 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][53] - 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] Note 7: Restructuring and Other Charges 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][167] Note 8: Income Taxes 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][170] Note 9: Debt 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][66] - 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] - 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] Note 10: Equity 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] - 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] - 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] Note 11: Earnings/(Loss) Per Share 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] - 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][83] Note 12: Financial Instruments, Risk Management and Fair Value Measurements 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][94][102] - 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] - 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] Note 13: Commitments and Contingencies 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][119][120] - 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][124] 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 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] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 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 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] - 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][136] - 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][215] APPLICATION OF CRITICAL ACCOUNTING ESTIMATES 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][141] - 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] 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 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] - Net income for Q3 2022 was $77.6 million, a significant improvement from a net loss of $(12.6) million in Q3 2021[147] - Adjusted EBITDA for Q3 2022 increased by $95.9 million to $110.8 million, primarily due to higher product pricing[147] COVID-19 Impacts 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][146] - The company incurred additional costs for COVID-19 testing, PPE, cleaning, and medical personnel to protect employee health and well-being[148] Business Update 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] - Operations in Argentina face unique challenges due to high inflation, currency weakening, energy price volatility, and government pressure for customs and tax revenues[152] - 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][155] - A long-term supply agreement for battery-grade lithium hydroxide was signed in Q3 2022, including a $198 million advance payment[157] 2022 Business Outlook 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] - 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] RESULTS OF OPERATIONS 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 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] - Gross margin surged by 552% to $119.4 million, driven by higher pricing, despite increased logistics, raw material, and operating costs[165] - 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] Nine Months Ended September 30, 2022 vs. 2021 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] - Gross margin increased by 442% to $281.8 million, driven by higher pricing, despite increased costs and decreased sales volumes[173] - 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] LIQUIDITY AND CAPITAL RESOURCES 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] - 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][189] - 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][185][192] - 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] - 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][195][196] DERIVATIVE FINANCIAL INSTRUMENTS AND MARKET RISKS 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] - 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] 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][208] Item 3. Quantitative and Qualitative Disclosures About Market Risk 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] Item 4. Controls and Procedures 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] - There were no material changes in internal control over financial reporting during the quarter ended September 30, 2022[211] PART II - OTHER INFORMATION This part includes information on legal proceedings, risk factors, equity security sales, exhibits, and signatures Item 1. Legal Proceedings 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] - 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] Item 1A. Risk Factors 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] - Additional unknown or currently immaterial risks may also adversely affect the company's business, financial condition, or future results[214] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 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] - Livent Corporation has no publicly announced stock repurchase programs[218] Item 6. Exhibits 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] 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]