Arcadium Lithium Releases Fourth Quarter and Full Year 2023 Results and Provides 2024 Full Year Outlook

Metric

Units

2023

2022

YoY %

Q4 23

Revenue

$M

883

813

9 %

182

GAAP Net Income

$M

330

274

21 %

38

Adj. EBITDA¹

$M

503

367

37 %

91

GAAP EPS

$/share

1.58

1.36

16 %

0.18

Adjusted EPS¹

$/share

1.89

1.40

35 %

0.34

Adj. cash from operations^1,2

$M

326

262

24 %

52

Capital spending³

$M

329

327

— %

90

1. Denotes non-GAAP financial term.

2. Excludes customer advanced payment of $198 million.

3. Capital expenditures and other investing activities; excludes capitalized interest.

Lithium Carbonate 

Jujuy Province, Argentina

Metric

Units

CY-23

Dec Q-23

Sep Q-23

QoQ %

Total Revenue

US$M

511

96

123

(22) %

Production

metric tons

17,758

4,144

4,453

(7) %

Sales

metric tons

17,879

6,991

4,554

54 %

Average price received¹

US$/mt

27,788

13,564

25,981

(48) %

1.

Excludes lithium carbonate by-product revenue of $14M, $2M and $5M in CY-23, Dec Q-23 and Sep Q-23, respectively, which amounts are included in Total Revenue.

Spodumene concentrate

Ravensthorpe, Western Australia

Metric¹

Units

CY-23

Dec Q-23

Sep Q-23

QoQ %

Spodumene Revenue

US$M

571

46

201

(77) %

Realized price

US$/dmt CIF

2,785

763

2,625

(71) %

Recovery

%

68

72

68

6 %

Concentrate produced

dmt

239,312

69,789

72,549

(4) %

Grade of concentrate produced

% Li₂O

5.3

5.4

5.3

2 %

Concentrate shipped

dmt

204,979

60,008

76,631

(22) %

Grade of concentrate shipped

% Li₂O

5.3

5.3

5.3

— %

1.

Table includes metrics for spodumene only and does not reflect production, sales or revenue figures for low-grade material (which is sold irregularly) or immaterial amounts of other products. Sales of these excluded products totaled $38M, $0M and $3M in CY-23, Dec Q-23 and Sep Q-23, respectively.

Average Lithium Market Price (LCE Basis)

Metric

Units

$15/kg LCE

$25/kg LCE

Revenue

$ million

~1,250

~1,900

Adjusted EBITDA¹

$ million

~420

~1,000

34 %

53 %

1.

Although Arcadium Lithium provides an outlook for Adjusted EBITDA and Adjusted tax rate, the Company is not able to do so for the most directly comparable measures calculated and presented in accordance with GAAP.  Certain elements of the composition of the GAAP amounts are not predictable, making it impractical for the Company to provide an outlook for such GAAP measures or to reconcile corresponding non-GAAP financial measures to such GAAP measures without unreasonable efforts.  For the same reason, the Company is unable to address the probable significance of the unavailable information.  Such elements include, but are not limited to, restructuring and transaction related charges.  As a result, no GAAP equivalent outlook is provided for these metrics.

Metric

Units

Full Year 2024

Selling, general and administrative expenses¹

$ million

~115

Depreciation & amortization

$ million

~145

Adjusted tax rate²

25 %

33 %

Full-year weighted average diluted shares outstanding³

million

~1,150

Capital spending

$ million

550

750

1.

Includes Research and development expenses.

2.

Although Arcadium Lithium provides an outlook for Adjusted EBITDA and Adjusted tax rate, the Company is not able to do so for the most directly comparable measures calculated and presented in accordance with GAAP.  Certain elements of the composition of the GAAP amounts are not predictable, making it impractical for the Company to provide an outlook for such GAAP measures or to reconcile corresponding non-GAAP financial measures to such GAAP measures without unreasonable efforts.  For the same reason, the Company is unable to address the probable significance of the unavailable information.  Such elements include, but are not limited to, restructuring and transaction related charges.  As a result, no GAAP equivalent outlook is provided for these metrics.

3.

Inclusive of 67.7 million dilutive share equivalents attributable to potential conversion of 2025 Notes.

ARCADIUM LITHIUM PLC

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in millions, except per share data)

Three Months Ended

Twelve Months Ended

 December 31,

 December 31,

2023

2022

2023

2022

Revenue

$       181.8

$       219.4

$       882.5

$       813.2

Costs of sales

138.4

105.5

413.2

417.5

Gross margin

43.4

113.9

469.3

395.7

Selling, general and administrative expenses

16.1

14.6

63.2

55.2

Research and development expenses

2.5

1.3

5.8

3.9

Restructuring and other charges

22.0

2.9

56.7

7.5

Separation-related costs

—

0.2

—

0.7

Total costs and expenses

179.0

124.5

538.9

484.8

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

2.8

94.9

343.6

328.4

Equity in net loss of unconsolidated affiliate

1.1

6.7

23.1

15.1

Loss on debt extinguishment

—

—

—

0.1

Other gain

(47.1)

—

(68.5)

(22.2)

Income from operations before income taxes

48.8

88.2

389.0

335.4

Income tax expense

11.1

5.5

58.9

61.9

Net income

$         37.7

$         82.7

$       330.1

$       273.5

Net income per weighted average share - basic

$         0.21

$         0.46

$         1.84

$         1.59

Net income per weighted average share - diluted

$         0.18

$         0.39

$         1.58

$         1.36

Weighted average common shares outstanding - basic

179.8

179.5

179.7

171.8

Weighted average common shares outstanding - diluted

209.0

209.4

209.2

201.6

ARCADIUM LITHIUM PLC

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

RECONCILIATION OF NET INCOME TO EBITDA (NON-GAAP) AND ADJUSTED EBITDA (NON-GAAP)

(Unaudited)

Three Months Ended

Twelve Months Ended

 December 31,

 December 31,

(In Millions)

2023

2022

2023

2022

Net income

$           37.7

$           82.7

$         330.1

$         273.5

Add back:

Income tax expense

11.1

5.5

58.9

61.9

Depreciation and amortization

8.1

8.3

29.6

27.7

EBITDA (Non-GAAP) ⁽¹⁾

56.9

96.5

418.6

363.1

Add back:

Argentina remeasurement losses ^(a)

53.4

3.7

73.9

6.7

Restructuring and other charges ^(b)

22.0

2.9

56.7

7.5

Separation-related costs ^(c)

—

0.2

—

0.7

COVID-19 related costs ^(d)

—

0.3

—

2.4

Loss on debt extinguishment ^(e)

—

—

—

0.1

Other loss ^(f)

0.8

4.0

16.9

9.9

Subtract:

Blue Chip Swap gain ^(g)

(42.2)

—

(63.6)

(22.2)

Argentina interest income ^(h)

—

—

—

(1.5)

Adjusted EBITDA (Non-GAAP) ⁽¹⁾

$           90.9

$         107.6

$         502.5

$         366.7

1.

We evaluate operating performance using certain Non-GAAP measures such as EBITDA, which we define as net income plus interest expense, net, income tax (benefit)/expense, depreciation, and amortization, and Adjusted EBITDA, which we define as EBITDA adjusted for Argentina remeasurement losses, restructuring and other charges, separation-related costs, COVID-19 related costs 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. These measures 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 on long-term monetary assets associated with our capital expansion, as well as significant currency devaluations. The remeasurement losses are included within "Cost of sales" in our consolidated statement 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. The three and twelve months ended December 31, 2023 includes costs related to the Transaction of $21.8 million and $54.1 million, respectively. The three and twelve months ended December 31, 2022 includes costs related to the Transaction of $0.6 million and $2.9 million, respectively.

c.

Represents legal and professional fees and other separation-related activity.

d.

Represents incremental costs associated with COVID-19 recorded in "Cost of sales" in the consolidated statements of operations, including but not limited to, incremental quarantine related absenteeism, incremental facility cleaning costs, COVID-19 testing, pandemic related supplies and personal protective equipment for employees, among other costs; offset by economic relief provided by foreign governments.

e.

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

f.

Prior to consolidation of Nemaska Lithium Inc. ("NLI") on October 18, 2023, represents our 50% ownership interest (which was 25% prior to June 6, 2022) in costs incurred for certain project-related costs to align NLI's reported results with Arcadium Lithium's capitalization policies and interest expense incurred by NLI, all included in Equity in net loss of unconsolidated affiliate in our consolidated statement of operations. The Company accounts for its investment in NLI on a one-quarter lag basis.

g.

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

h.

Represents interest income received from the Argentina government for the period beginning when the recoverability of certain of our expansion-related VAT receivables were approved by the Argentina government and ending on the date when the reimbursements were paid by the Argentina government but is excluded from our calculation of Adjusted EBITDA because of its association with long-term capital projects which will not be operational until future periods.

RECONCILIATION OF NET INCOME TO ADJUSTED AFTER-TAX EARNINGS (NON-GAAP)

(Unaudited)

Three Months Ended

Twelve Months Ended

 December 31,

 December 31,

(In Millions, except per share amounts)

2023

2022

2023

2022

Net income

$         37.7

$         82.7

$       330.1

$       273.5

Special charges:

Argentina remeasurement losses^(a)

53.4

3.7

73.9

6.7

Restructuring and other charges ^(b)

22.0

2.9

56.7

7.5

Separation-related costs^(c)

—

0.2

—

0.7

COVID-19 related costs ^(d)

—

0.3

—

2.4

Loss on debt extinguishment ^(e)

—

—

—

0.1

Other loss ^(f)

0.8

4.0

16.9

9.9

Blue Chip Swap gain ^(g)

(42.2)

—

(63.6)

(22.2)

Argentina interest income ^(h)

—

—

—

(1.5)

Non-GAAP tax adjustments ⁽ⁱ⁾

(0.9)

(9.6)

(18.0)

5.5

Adjusted after-tax earnings (Non-GAAP) ⁽¹⁾

$         70.8

$         84.2

$       396.0

$       282.6

Diluted earnings per common share

$         0.18

$         0.39

$         1.58

$         1.36

Special charges per diluted share, before tax:

Argentina remeasurement losses, per diluted share

0.26

0.02

0.35

0.03

Restructuring and other charges, per diluted share

0.11

0.02

0.27

0.04

COVID-19 related costs, per diluted share

—

—

—

0.01

Other loss, per diluted share

—

0.02

0.08

0.05

Blue Chip Swap gain, per diluted share

(0.20)

—

(0.30)

(0.11)

Argentina interest income, per diluted share

—

—

—

(0.01)

Non-GAAP tax adjustments per diluted share

(0.01)

(0.05)

(0.09)

0.03

Diluted adjusted after-tax earnings per share (Non-GAAP) ⁽¹⁾

$         0.34

$         0.40

$         1.89

$         1.40

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

209.0

209.4

209.2

201.6

1.

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 charges related to currency fluctuations on tax assets and liabilities and on long-term monetary assets associated with our capital expansion, as well as significant currency devaluations. The remeasurement losses are included within "Cost of sales" in our consolidated statement 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. The three and twelve months ended December 31, 2023 includes costs related to the Transaction of $21.8 million and $54.1 million, respectively. The three and twelve months ended December 31, 2022 includes costs related to the Transaction of $0.6 million and $2.9 million, respectively.

c.

Represents legal and professional fees and other separation-related activity.

d.

Represents incremental costs associated with COVID-19 recorded in "Cost of sales" in the consolidated statement of operations, including but not limited to, incremental quarantine related absenteeism, incremental facility cleaning costs, COVID-19 testing, pandemic related supplies and personal protective equipment for employees, among other costs; offset by economic relief provided by foreign governments.

e.

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

f.

Prior to consolidation of NLI on October 18, 2023, represents our 50% ownership interest (which was 25% prior to June 6, 2022) in costs incurred for certain project-related costs to align NLI's reported results with Arcadium Lithium's capitalization policies and interest expense incurred by NLI, all included in Equity in net loss of unconsolidated affiliate in our consolidated statement of operations. The Company accounts for its investment in NLI on a one-quarter lag basis.

g.

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

h.

Represents interest income received from the Argentina government for the period beginning when the recoverability of certain of our expansion-related VAT receivables were approved by the Argentina government and ending on the date when the reimbursements were paid by the Argentina government but is excluded from our calculation of Adjusted EBITDA because of its association with long-term capital projects which will not be operational until future periods.

i.

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

Twelve Months Ended

December 31,

December 31,

(in Millions)

2023

2022

2023

2022

Non-GAAP tax adjustments:

Income tax benefit on restructuring, separation-related and other corporate costs

$       (3.4)

$       (0.7)

$       (7.0)

$       (2.0)

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

—

—

(0.4)

—

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

(1.1)

(7.1)

(16.2)

7.6

Blue Chip Swap gain

4.5

—

6.7

2.3

Other discrete items

(0.9)

(1.8)

(1.1)

(2.4)

Total Non-GAAP tax adjustments

$       (0.9)

$       (9.6)

$     (18.0)

$         5.5

RECONCILIATION OF CASH PROVIDED BY OPERATING ACTIVITIES TO ADJUSTED CASH FROM OPERATIONS (NON-GAAP)

(Unaudited)

Twelve Months Ended

 December 31,

(In Millions)

2023

2022

Cash provided by operating activities

$           297.3

$           454.7

Restructuring and other charges

28.7

3.5

Separation-related costs

—

0.9

COVID-19 related costs ^(a)

—

2.4

Argentina interest income ^(b)

—

(1.5)

Adjusted cash from operations (Non-GAAP) ⁽¹⁾

$           326.0

$           460.0

1.

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

a.

Represents incremental costs associated with COVID-19 recorded in "Cost of sales" in the consolidated statement of operations, including but not limited to, incremental quarantine related absenteeism, incremental facility cleaning costs, COVID-19 testing, pandemic related supplies and personal protective equipment for employees, among other costs; offset by economic relief provided by foreign governments.

b.

Represents interest income received from the Argentina government for the period beginning when the recoverability of certain of our expansion-related VAT receivables were approved by the Argentina government and ending on the date when the reimbursements were paid by the Argentina government but is excluded from our calculation of Adjusted EBITDA because of its association with long-term capital projects which will not be operational until future periods.

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

NET DEBT (NON-GAAP)

(Unaudited)

(In Millions)

December 31, 2023

December 31, 2022

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

$                    302.0

$                    241.9

Less: Cash and cash equivalents (GAAP)

(237.6)

(189.0)

Net debt (Non-GAAP) ⁽¹⁾

$                       64.4

$                       52.9

1.

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 transaction costs of $2.4 million and $3.9 million as of December 31, 2023 and 2022, respectively.

ARCADIUM LITHIUM PLC

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In Millions)

December 31, 2023

December 31, 2022

Cash and cash equivalents

$                    237.6

$                    189.0

Trade receivables, net of allowance of approximately $0.3 in 2023 and 2022

106.7

141.6

Inventories

217.5

152.3

Other current assets

86.4

61.1

Total current assets

648.2

544.0

Investments

34.8

440.3

Property, plant and equipment, net of accumulated depreciation of $269.1 in 2023
and $253.1 in 2022

2,237.1

968.3

Right of use assets - operating leases, net

6.8

4.8

Goodwill

120.7

—

Other intangibles, net

53.4

—

Deferred income taxes

1.4

0.4

Other assets

127.7

116.4

Total assets

$                 3,230.1

$                 2,074.2

Total current liabilities

268.6

Long-term debt

299.6

241.9

Contract liabilities - long term

217.8

198.0

Other long-term liabilities

160.3

42.6

Equity

2,283.8

1,443.0

Total liabilities and equity

$                 3,230.1

$                 2,074.2

ARCADIUM LITHIUM PLC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Twelve Months Ended December 31,

(In Millions)

2023

2022

Cash provided by operating activities

$                    297.3

$                    454.7

Cash used in investing activities

(228.3)

(364.7)

Cash used in financing activities

(20.4)

(12.5)

Effect of exchange rate changes on cash

—

(1.5)

Increase in cash and cash equivalents

48.6

76.0

Cash and cash equivalents, beginning of period

189.0

113.0

Cash and cash equivalents, end of period

$                    237.6

$                    189.0

1

Allkem's select results include property-level financial measures reported according to International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board, except as otherwise indicated. These select results for Allkem's properties are not intended to be reported regularly in this manner by Arcadium Lithium moving forward and may not be comparable with Arcadium Lithium's results for future periods, which will be reported under U.S. generally accepted accounting principles.

2

All figures on a 100% Olaroz Project basis, in which Allkem had a 66.5% economic interest.

3

"FOB" (Free On Board) excludes insurance and freight charges included in "CIF" (Cost, Insurance, Freight) pricing. Therefore, the Company's FOB reported prices are net of freight (shipping), insurance and sales commission.

4

Lithium Carbonate Equivalents. Includes 100% of Olaroz, in which Arcadium Lithium has a 66.5% economic interest.

5

Cash and debt of the combined company shown on an unaudited basis. Includes $44M of cash and cash equivalents and $59M of debt at Nemaska Lithium.

6

Reflects 100% consolidation of Olaroz and Nemaska Lithium, in which Arcadium Lithium has current economic interest of 66.5% and 50%, respectively.