Livent(LTHM) - 2022 Q4 - Annual Report

Report Information 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 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] - The company is incorporated in Delaware, with its principal executive offices in Philadelphia, and phone number 215-299-5900[2] 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 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 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] Note Regarding Industry and Market Data 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] - Projections and other forward-looking information involve uncertainties and should not be unduly relied upon by investors[23] 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][21] PART I 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 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] - Key products include battery-grade lithium hydroxide, lithium carbonate, butyllithium, and high-purity lithium metal, used in electric vehicles, batteries, polymers, and pharmaceuticals[26][27] - The company's strategy focuses on the electric vehicle and broader battery markets while maintaining leadership in butyllithium and high-purity lithium metal[26] Company Formation and Core Business 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] - 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] - 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][27] Livent Strategy 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][30] - 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][32] - 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] - 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][37] - 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] - 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][40] Financial Information About Our Business 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] - 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] Business Overview and Competitive Advantages 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] - 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] - 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][46] Capacity and Production 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 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] 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 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] - Market entry barriers include lithium raw material supply, ability to produce quality and quantity, technical expertise, and development timelines[56] - 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] - Key competitors include Albemarle Corporation and Ganfeng Lithium[58] Growth Drivers 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] - 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] - The combination of solar and wind installations with lithium-ion battery energy storage systems also presents growth opportunities for the company[62] Raw Materials 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] 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][74][76] - 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] 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] - Unusually heavy rains in late 2021 resulted in a reduction of approximately 500 metric tons of lithium carbonate production[81] Argentine Law and Regulation 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][86] - 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][87] - 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] - 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] Environmental Laws and Regulations 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][90][91][92] - REACH and K-REACH regulations may lead to increased raw material and product sales costs, potentially reducing product demand[91] - 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] - The company accrues for environmental liabilities based on the probability and reasonably estimable amount of contingent environmental matters[95][96] Human Capital Management 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] - 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][116] - Employee safety, health, and well-being are core company values, with two recordable injuries reported globally in 2022[101][104] - 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] - The company offers competitive compensation and benefits, conducting regular pay equity analyses, which found no systemic gender or racial pay gaps in 2022[119][110] Social Responsibility and Sustainability 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] - 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] - 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] - 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][129] Code of Ethics and Business Conduct 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] Item 1A. Risk Factors 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][134] Growth Strategy Risks 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] - 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] - 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][139][141] Market Risks 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] - Deterioration in global economic conditions or downturns in customer end markets could negatively impact the company's sales and profitability[144][145] - 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] - 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][148] Financial Risks 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][150] - 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][153] - 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] - 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][158] Operational Risks 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][160][161][163] - 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][166][167] - 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][169][172][173][175] - 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][180][182][184][185] - 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] Regulatory and Governmental Risks 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][198] - 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][200][201] - Regulations such as REACH and K-REACH may lead to increased compliance costs and reduced product demand[205] - 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][208] Risks Related to Ownership of Our Common Stock 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][210] - 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] - 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] SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION 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][217] - 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][218] Item 1B. Unresolved Staff Comments There are no unresolved staff comments in this report - There are no unresolved staff comments in this report[219] Item 2. Properties 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][222] - 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][273] Operational Facilities 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] - 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] 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 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] - The Nemaska Lithium asset includes the Whabouchi mine and a lithium hydroxide conversion facility in Bécancour, as part of the Nemaska Lithium project[226] Argentina Lithium Brine Production at SdHM 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 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][248] - 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] Mineral Concession Rights and Royalties 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] - 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] 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] Operations, Accessibility and Infrastructure 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][260][261] - 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][263] - 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] Exploration and Expansion Activities 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] - 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] - Phase 3 expansion aims to leverage existing infrastructure to increase total lithium capacity to approximately 100,000 metric tons LCE by 2030[270] Other Property—Nemaska Lithium 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][275] - 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] - Livent is expected to provide technical advisory, marketing, and sales support to NLI[276] Internal Controls for Mineral Estimates 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] - 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][280] - 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] Item 3. Legal Proceedings 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] Item 4. Mine Safety Disclosures This section on mine safety disclosures is not applicable - Mine safety disclosures are not applicable[283] Item 4A. Information About Our Executive Officers 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] 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 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 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] - 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] 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] Item 6. [RESERVED] This section is reserved Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 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] - 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][307] - 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][301] - 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] - 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][331] 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] - 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][299] - 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] 2022 Highlights 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] - 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] COVID-19 Impacts 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] - 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] - 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][302] 2023 Outlook 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] - 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] Results of Operations — Years Ended December 31, 2022 and 2021 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] - 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] - 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] - Net income significantly increased, partly due to a $22.2 million gain from the sale of Argentine sovereign dollar-denominated bonds in 2022[318] Liquidity and Capital Resources 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] - In Q3 2022, the company received $198 million in customer prepayments under long-term supply agreements for battery-grade lithium hydroxide deliveries[321] - 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][330] - 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][327][328] - 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] - 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] Contractual Obligations and Commercial Commitments 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 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] - 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] - 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][340] Recently Issued and Adopted Accounting Pronouncements and Regulatory Items 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] - The company adopted FASB ASU No. 2020-04 (Reference Rate Reform), which had no material impact on the consolidated financial statements[429] Off-Balance Sheet Arrangements 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] Critical Accounting Estimates 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][345][346][347][348] - 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][344] Item 7A. Quantitative and Qualitative Disclosures about Market Risk 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][353] - 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] 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][359] Item 8. Financial Statements and Supplementary Data 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] - Notes provide detailed information on business description, accounting policies, revenue recognition, investments, debt, equity, and market risks[360] - KPMG LLP, the independent registered public accounting firm, issued an unqualified opinion on the consolidated financial statements and the effectiveness of internal control[608][609][626] Consolidated Statements of Operations 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