Arcadium Lithium Releases First Quarter 2024 Results

¹

Lithium Carbonate Equivalent.

²

Corresponds to Diluted adjusted after-tax earnings per share in the accompanying financial tables.

ARCADIUM LITHIUM PLC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in millions, except per share data)

Three Months Ended March 31,

2024

2023 ⁽¹⁾

Revenue

$                    261.2

$                    253.5

Costs of sales

116.8

87.5

Gross margin

144.4

166.0

Selling, general and administrative expenses

39.9

16.3

Research and development expenses

1.1

1.0

Restructuring and other charges

83.6

1.9

Total costs and expenses

241.4

106.7

Income from operations before equity in net loss of unconsolidated affiliate, interest income, net, loss on debt extinguishment and other gain

19.8

146.8

Equity in net loss of unconsolidated affiliate

—

8.1

Interest income, net

(11.0)

—

Loss on debt extinguishment

0.2

—

Other gain

(43.1)

—

Income from operations before income taxes

73.7

138.7

Income tax expense

53.8

23.9

Net income

$                       19.9

$                     114.8

Net income attributable to noncontrolling interests

4.3

—

Net income attributable to Arcadium Lithium plc

$                       15.6

$                     114.8

Basic earnings per ordinary share

$                       0.01

$                       0.27

Diluted earnings per ordinary share

$                       0.01

$                       0.23

Weighted average ordinary shares outstanding - basic

1,053.4

432.0

Weighted average ordinary shares outstanding - diluted

1,122.1

503.3

_______________________

1.

For the three months ended March 31, 2023, basic and diluted earnings per ordinary share and weighted average ordinary shares outstanding - basic and diluted amounts represent predecessor Livent and have been adjusted to reflect the 2.406 Exchange Ratio. Represents the results of predecessor Livent's operations for three months ended March 31, 2023 which do not include the operations of Allkem.

ARCADIUM LITHIUM PLC

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

RECONCILIATION OF NET INCOME ATTRIBUTABLE TO ARCADIUM LITHIUM PLC (GAAP) TO ADJUSTED EBITDA (NON-GAAP)

(Unaudited)

Three Months Ended March 31,

(in Millions)

2024

2023 ⁽¹⁾

Net income attributable to Arcadium Lithium plc

$                       15.6

$                    114.8

Add back:

Net income attributable to noncontrolling interests 

4.3

—

Interest income, net

(11.0)

—

Income tax expense

53.8

23.9

Depreciation and amortization

17.2

6.8

EBITDA (Non-GAAP) ⁽²⁾

79.9

145.5

Add back:

Argentina remeasurement (gains)/losses ^(a)

(38.6)

4.1

Restructuring and other charges ^(b)

83.6

1.9

Loss on debt extinguishment ^(c)

0.2

—

Inventory step-up, Allkem Livent Merger ^(d)

15.8

—

Other (gain)/loss ^(e)

(12.4)

5.9

Subtract:

Blue Chip Swap gain ^(f)

(19.7)

—

Adjusted EBITDA (Non-GAAP) ⁽²⁾

$                    108.8

$                    157.4

__________________

1.

Represents the results of predecessor Livent's operations for three months ended March 31, 2023 which do not include the operations of Allkem.

2.

We evaluate operating performance using certain Non-GAAP measures such as EBITDA, which we define as net income attributable to Arcadium Lithium plc plus noncontrolling interests, interest expense, net, income tax expense and depreciation and amortization; and Adjusted EBITDA, which we define as EBITDA adjusted for Argentina remeasurement losses, restructuring and other charges, Merger-related inventory step-up, certain Blue Chip Swap gains and other losses/(gains). Management believes the use of these Non-GAAP measures allows management and investors to compare more easily the financial performance of its underlying business from period to period. The Non-GAAP information provided may not be comparable to similar measures disclosed by other companies because of differing methods used by other companies in calculating EBITDA and Adjusted EBITDA. This measure should not be considered as a substitute for net income or other measures of performance or liquidity reported in accordance with U.S. GAAP. The above table reconciles EBITDA and Adjusted EBITDA from net income.

a.       

Represents impact of currency fluctuations on tax assets and liabilities and long-term monetary assets associated with our capital expansion as well as foreign currency devaluations. The remeasurement losses are included within "Cost of sales" in our condensed consolidated statements of operations but are excluded from our calculation of Adjusted EBITDA because of: i.) their nature as income tax related; ii.) their association with long-term capital projects which will not be operational until future periods; or iii.) the severity of the devaluations and their immediate impact on our operations in the country.

b.       

We continually perform strategic reviews and assess the return on our business. This sometimes results in management changes or in a plan to restructure the operations of our business. As part of these restructuring plans, demolition costs and write-downs of long-lived assets may occur. Severance-related and exit costs were $10.9 million and $1.7 million for the three months ended March 31, 2024 and 2023, respectively. The three months ended March 31, 2024 also includes integration costs related to the Allkem Livent Merger of $67.0 million.

c.  

Represents the partial write-off of deferred financing costs for amendments to the Revolving Credit Facility excluded from our calculation of Adjusted EBITDA because the loss is nonrecurring.

d.  

Relates to the step-up in inventory recorded for Allkem Livent Merger for the three months ended March 31, 2024 as a result of purchase accounting, excluded from Adjusted EBITDA as the step-up is considered a one-time, non-recurring cost.

e.       

The three months ended March 31, 2024 primarily represents foreign currency remeasurement gains related to U.S. dollar denominated cash balances temporarily held at a foreign currency-functional subsidiary. The three months ended March 31, 2023, prior to consolidation of Nemaska Lithium Inc. ("NLI") on October 18, 2023, represents our 50% ownership interest in costs incurred for certain project-related costs to align NLI's reported results with Arcadium's capitalization policies and interest expense incurred by NLI, all included in Equity in net loss of unconsolidated affiliate in our condensed consolidated statements of operations. The Company consolidates NLI on a one-quarter lag basis and prior to October 18, 2023, accounted for its equity method investment in NLI on a one-quarter lag basis.

f.  

Represents non-recurring gain from the sale in Argentina pesos of Argentina Sovereign U.S. dollar-denominated bonds.

RECONCILIATION OF NET INCOME ATTRIBUTABLE TO ARCADIUM LITHIUM PLC (GAAP) TO

ADJUSTED AFTER-TAX EARNINGS (NON-GAAP)

(Unaudited) 

(in Millions, Except Per Share Data)

Three Months Ended March 31,

2024

2023 ⁽¹⁾

Net income attributable to Arcadium Lithium plc

$                       15.6

$                    114.8

Special charges:

Argentina remeasurement (gains)/losses ^(a)

(38.6)

4.1

Restructuring and other charges ^(b)

83.6

1.9

Loss on debt extinguishment ^(c)

0.2

—

Inventory step-up, Allkem Livent Merger ^(d)

15.8

—

Other (gain)/loss ^(e)

(12.4)

5.9

Blue Chip Swap gain ^(f)

(19.7)

—

Non-GAAP tax adjustments ^(g)

28.2

(0.7)

Adjusted after-tax earnings (Non-GAAP) ⁽²⁾

$                       72.7

$                    126.0

Diluted earnings per ordinary share (GAAP)

$                       0.01

$                       0.23

Special charges per diluted share, before tax:

Argentina remeasurement losses, per diluted share

(0.03)

0.01

Restructuring and other charges, per diluted share

0.07

—

Inventory step-up, Allkem Livent Merger, per diluted share

0.01

—

Other loss, per diluted share

(0.01)

0.01

Blue Chip Swap gain, per diluted share

(0.02)

—

Non-GAAP tax adjustments, per diluted share

0.03

—

Diluted adjusted after-tax earnings per share (Non-GAAP) ⁽²⁾

$                       0.06

$                       0.25

Weighted average ordinary shares outstanding - diluted (Non-GAAP) used in diluted adjusted after-tax earnings per share computations

1,122.1

503.3

___________________

1.

For the three months ended March 31, 2023,  diluted earnings per ordinary share (GAAP), weighted average ordinary shares outstanding - diluted (Non-GAAP) and all per diluted share amounts represent predecessor Livent and have been adjusted to reflect the 2.406 Exchange Ratio. Represents the results of predecessor Livent's operations for three months ended March 31, 2023 which do not include the operations of Allkem.

2.

The Company believes that the Non-GAAP financial measures "Adjusted after-tax earnings" and "Diluted adjusted after-tax earnings per share" provide useful information about the Company's operating results to management, investors and securities analysts. Adjusted after-tax earnings excludes the effects of, nonrecurring charges/(income) and tax-related adjustments. The Company also believes that excluding the effects of these items from operating results allows management and investors to compare more easily the financial performance of its underlying business from period to period. Diluted adjusted after-tax earnings per share (Non-GAAP) is calculated using weighted average common shares outstanding - diluted.                 

a.        

Represents impact of currency fluctuations on tax assets and liabilities and long-term monetary assets associated with our capital expansion as well as foreign currency devaluations. The remeasurement losses are included within "Cost of sales" in our condensed consolidated statements of operations but are excluded from our calculation of Adjusted EBITDA because of: i.) their nature as income tax related; ii.) their association with long-term capital projects which will not be operational until future periods; or iii.) the severity of the devaluations and their immediate impact on our operations in the country.

b.        

We continually perform strategic reviews and assess the return on our business. This sometimes results in management changes or in a plan to restructure the operations of our business. As part of these restructuring plans, demolition costs and write-downs of long-lived assets may occur. Severance-related and exit costs were $10.9 million and $1.7 million for the three months ended March 31, 2024 and 2023, respectively. The three months ended March 31, 2024 also includes integration costs related to the Alkem Livent Merger of $67.0 million.

c. 

Represents the partial write-off of deferred financing costs for amendments to the Revolving Credit Facility excluded from our calculation of Adjusted EBITDA because the loss is nonrecurring.

d. 

Relates to the step-up in inventory recorded for Allkem Livent Merger for the three months ended March 31, 2024 as a result of purchase accounting, excluded from Adjusted EBITDA as the step-up is considered a one-time, non-recurring item.

e.        

The three months ended March 31, 2024 primarily represents foreign currency remeasurement gains related to U.S. dollar-denominated cash balances temporarily held at a foreign currency-functional subsidiary. The three months ended March 31, 2023, prior to consolidation of Nemaska Lithium Inc. ("NLI") on October 18, 2023, represents our 50% ownership interest in costs incurred for certain project-related costs to align NLI's reported results with Arcadium's capitalization policies and interest expense incurred by NLI, all included in Equity in net loss of unconsolidated affiliate in our condensed consolidated statements of operations. The Company consolidates NLI on a one-quarter lag basis and prior to October 18, 2023, accounted for its equity method investment in NLI on a one-quarter lag basis.

f. 

Represents the non-recurring gain from the sale in Argentina pesos of Argentina Sovereign U.S. dollar-denominated bonds. 

g.        

The company excludes the GAAP tax provision, including discrete items, from the Non-GAAP measure "Diluted adjusted after-tax earnings per share", and instead includes a Non-GAAP tax provision based upon the annual Non-GAAP effective tax rate. The GAAP tax provision includes certain discrete tax items including, but not limited to: income tax expenses or benefits that are not related to operating results in the current year; tax adjustments associated with fluctuations in foreign currency remeasurement of certain foreign operations; certain changes in estimates of tax matters related to prior fiscal years; certain changes in the realizability of deferred tax assets and related accounting impacts; and changes in tax law. Management believes excluding these discrete tax items assists investors and securities analysts in understanding the tax provision and the effective tax rate related to operating results thereby providing investors with useful supplemental information about the company's operational performance. The income tax expense/(benefit) on special charges/(income) is determined using the applicable rates in the taxing jurisdictions in which the special charge or income occurred and includes both current and deferred income tax expense/(benefit) based on the nature of the Non-GAAP performance measure.

Three Months Ended March 31,

(in Millions)

2024

2023

Non-GAAP tax adjustments:

Income tax benefit on restructuring and other charges and other corporate costs

$                      (17.5)

$                        (0.5)

Revisions to our tax liabilities due to finalization of prior year tax returns

1.0

—

Foreign currency remeasurement (net of valuation allowance) and other discrete items

38.3

1.2

Blue Chip Swap gain

4.6

—

Other discrete items

1.8

(1.4)

Total Non-GAAP tax adjustments

$                        28.2

$                        (0.7)

RECONCILIATION OF CASH (USED IN)/PROVIDED BY OPERATING ACTIVITIES (GAAP) TO

ADJUSTED CASH PROVIDED BY OPERATIONS (NON-GAAP)

(Unaudited)

Three Months Ended March 31,

(in Millions)

2024

2023 ⁽¹⁾

Cash (used in)/provided by operating activities (GAAP)

$                     (91.9)

$                    102.9

Restructuring and other charges

126.7

1.3

Adjusted cash provided by operations (Non-GAAP) ⁽²⁾

$                       34.8

$                    104.2

___________________

1.

Represents the results of predecessor Livent's operations for three months ended March 31, 2023 which do not include the operations of Allkem.

2.

The Company believes that the Non-GAAP financial measure "Adjusted cash provided by operations" provides useful information about the Company's cash flows to investors and securities analysts. Adjusted cash provided by operations excludes the effects of transaction-related cash flows. The Company also believes that excluding the effects of these items from cash (used in)/provided by operating activities allows management and investors to compare more easily the cash flows from period to period.

RECONCILIATION OF LONG-TERM DEBT (GAAP) AND CASH AND CASH EQUIVALENTS (GAAP) TO

NET DEBT (NON-GAAP)

(Unaudited)

(in Millions)

March 31, 2024

December 31, 2023 ⁽¹⁾

Long-term debt (including current maturities) (GAAP) ^(a)

$                       583.3

$                        302.0

Less: Cash and cash equivalents (GAAP)

(472.7)

(237.6)

Net debt (Non-GAAP) ⁽²⁾

$                       110.6

$                          64.4

___________________

1.

Represents the financial position of predecessor Livent as of December 31, 2023, which does not include the financial position of Allkem.

2.

The Company believes that the Non-GAAP financial measure "Net debt" provides useful information about the Company's cash flows and liquidity to investors and securities analysts.

a.   

Presented net of unamortized discounts of  $22.2 million as of March 31, 2024 and December 31, 2023.

ARCADIUM LITHIUM PLC

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in Millions)

March 31, 2024

December 31, 2023 ⁽¹⁾

Cash and cash equivalents

$                    472.7

$                           237.6

Trade receivables, net of allowance of approximately $0.1 in 2024 and $0.3 in 2023

93.5

106.7

Inventories

328.8

217.5

Other current assets

165.7

86.4

Total current assets

1,060.7

648.2

Investments

38.6

34.8

Property, plant and equipment, net of accumulated depreciation of $279.1 in 2024 and $269.1 in 2023

6,793.7

2,237.1

Right of use assets - operating leases, net

55.6

6.8

Goodwill

1,309.9

120.7

Other intangibles, net

56.8

53.4

Deferred income taxes

35.9

1.4

Other assets

442.1

127.7

Total assets

$                 9,793.3

$                        3,230.1

Total current liabilities

534.5

268.6

Long-term debt

502.7

299.6

Contract liabilities - long-term

218.3

217.8

Other long-term liabilities

1,575.5

160.3

Total Arcadium Lithium plc shareholders' equity

6,183.4

1,784.2

Noncontrolling interests

778.9

499.6

Total liabilities and equity

$                 9,793.3

$                        3,230.1

___________________

1.

Represents the financial position of predecessor Livent as of December 31, 2023, which does not include the financial position of Allkem.

ARCADIUM LITHIUM PLC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Three Months Ended March 31,

(in Millions)

2024

2023 ⁽¹⁾

Cash (used in)/provided by operating activities

$                  (91.9)

$                  102.9

Cash provided by/(used in) investing activities

365.3

(98.1)

Cash used in financing activities

(21.6)

(0.1)

Effect of exchange rate changes on cash

(16.7)

0.4

Increase in cash and cash equivalents

235.1

5.1

Cash and cash equivalents, beginning of period

237.6

189.0

Cash and cash equivalents, end of period

$                  472.7

$                  194.1

___________________

1.

Represents the results of predecessor Livent's operations for three months ended March 31, 2023 which do not include the operations of Allkem.