Li-Cycle(US:LICY)2022-09-14 19:03Financial Data and Key Metrics Changes - The company ended the quarter with approximately $650 million cash on hand, including $250 million in investment proceeds from LG and Glencore, providing sufficient liquidity for the current project pipeline [10][25] - Revenue from product sales and recycling services was $5.4 million, up from $1.3 million in Q3 2021, while total revenues were negative $2 million compared to a profit of $1.7 million for the same period last year, primarily due to a non-cash fair market value adjustment of $7.3 million [18][20] - Adjusted EBITDA loss was approximately $31.6 million compared to $5.3 million the previous year, reflecting increased operating expenses for ongoing expansion [22] Business Line Data and Key Metrics Changes - Black mass production during the quarter was 961 tons, more than 80% higher than the same quarter last year and up more than 30% from the second quarter [13] - The company updated its full 2022 black mass production guidance from 6,500-7,500 tons to 3,500-3,800 tons due to delays in production targets [15] Market Data and Key Metrics Changes - The total addressable market for lithium-ion batteries available for recycling is projected to grow by more than 5x by 2025 in North America and Europe, driven by increased battery manufacturing investments [31] - Favorable trends from new public policy programs in the U.S. are expected to provide significant benefits to the EV battery recycling industry starting in 2023, including the Inflation Reduction Act [32][34] Company Strategy and Development Direction - The company is focused on executing and rolling out its integrated Spoke & Hub network, aiming to become the long-term preferred recycling partner for lithium-ion battery materials, particularly in North America and Europe [7][8] - The Rochester Hub is expected to be the first commercial battery resource recovery facility in North America, producing key materials like lithium carbonate, nickel sulfate, and cobalt sulfate [46][47] Management Comments on Operating Environment and Future Outlook - Management expressed optimism about the opportunities in the market, driven by strong secular trends and government policies supporting localized supply of critical battery materials [8][57] - The company is exploring additional debt funding opportunities to optimize its structure and meet significant consumer demand beyond the current pipeline [28] Other Important Information - The company completed optimization projects at its Arizona Spoke, which is expected to start operations by the end of Q4 2022 [12] - The company is committed to a balanced approach to operating spend and investing in partner infrastructure to support its expanding network [27] Q&A Session Summary Question: Hub commissioning guidance - Management clarified that commissioning will occur in three stages, with the introduction of black mass expected to follow completion checks and leak testing [61][62] Question: Timing for black mass introduction - Management refrained from providing specific timing but indicated that the introduction of black mass would likely occur in Q1 2024 or spring [68] Question: Fair market value adjustments - Management explained that fair market value adjustments are non-cash and will be less volatile once black mass is processed in hubs [75] Question: Capacity utilization rates - Management indicated that they expect similar utilization rates across new facilities in North America and Europe, with strong demand anticipated [90] Question: Optimization process improvements - Management noted that improvements in Arizona focused on materials handling, which should enhance overall recovery yields without negatively impacting costs [94]