Ajay Kochhar, President and CEO of Li-Cycle, stated, “During Q2 2024, we worked closely with the U.S. Department of Energy (DOE) on critical technical, financial, and legal initiatives. This collaboration has brought us closer to finalizing financing agreements and satisfying the necessary conditions for loan disbursements.” He also highlighted the company’s progress in refining the strategy for the Rochester Hub project and its growing commercial momentum as a global recycling leader.
Financing and DOE Loan Update
Li-Cycle continues to work with the DOE to finalize key technical, financial, and legal aspects, moving toward an agreement on financing documentation. This process includes securing additional funding needed for the company’s base equity contribution and account requirements before drawing on the DOE loan. The company is also exploring other financing and strategic options to boost short-term liquidity.
Rochester Hub Project
Li-Cycle has made significant progress in reviewing and refining its Rochester Hub project, focusing on the execution plan for the proposed Mixed Hydroxide Precipitate (MHP) scope. The company has updated its cost estimates in line with local market conditions, maintaining the total project cost estimate for the MHP scope at approximately $960 million.
Commercial Highlights
In Q2 2024, Li-Cycle continued to strengthen its commercial position, with a focus on processing electric vehicle (EV) battery packs using the advanced capabilities of its Generation 3 Spokes. EV battery packs accounted for about 40% of the company’s global feedstock during the quarter, and four of its top five customers were major global EV manufacturers.
In the first half of 2024, the largest revenue source for Li-Cycle came from a U.S.-based vertically integrated EV and battery manufacturer with a significant global market share. In Q2, the company announced a recycling partnership with Daimler Truck North America and expanded its commercial operations in Europe, securing feedstock for its Germany Spoke.
Q2 2024 Financial Performance
Li-Cycle reported record total revenue of $8.4 million for Q2 2024, a 133% increase from $3.6 million in the same period of 2023. The revenue growth was driven by a significant rise in recycling services revenue, which increased to $3.2 million from $0.5 million in the previous year. Product revenue also improved, benefiting from favorable fair value pricing adjustments.
The total cost of sales decreased by 4% to $19.4 million, down from $20.2 million in 2023. This reduction was primarily due to an 11% decrease in costs related to product sales, partially offset by higher costs associated with recycling services. The decrease in product sales costs was mainly due to lower black mass production, despite increased operational costs for repairs and maintenance.
Selling, General, and Administrative (SG&A) expenses dropped by 39% to $15.3 million, compared to $24.9 million in 2023, largely due to reduced personnel costs following restructuring initiatives related to the pause in construction at the Rochester Hub.
Other income increased to $18.7 million, up from $10.9 million in the same period last year, primarily due to favorable fair value adjustments of financial instruments, although interest expenses also rose.
Net loss improved significantly to $8.2 million, compared to $31.9 million in 2023, mainly due to lower SG&A and other expenses. Adjusted EBITDA loss also improved to $23.4 million, down from $41.3 million in 2023, driven by increased revenue and reduced SG&A and cost of sales, partially offset by restructuring fees.
Capital expenditures for the first half of 2024 totaled $15.4 million, a significant decrease from $164.9 million in the same period last year, reflecting the pause in construction at the Rochester Hub. These expenditures were primarily related to payments for equipment and materials purchased in previous periods for the Rochester Hub and Germany Spoke.
Balance Sheet Position
As of June 30, 2024, Li-Cycle held $57.0 million in cash and cash equivalents, down from $109.1 million on March 31, 2024. This decline was mainly due to changes in working capital and investment activities, partially offset by lower SG&A expenses.
Webcast and Conference Call Information
Li-Cycle will host a webcast and conference call on Thursday, August 8, 2024, at 8:30 a.m. Eastern Time to discuss its business updates and financial results. Presentation materials will be available on the investor section of the Li-Cycle website: https://investors.li-cycle.com/overview/default.aspx.
Participants can access the call via audio-only webcast or the following dial-in numbers:
- Domestic: (800) 579-2543
- International: (203) 518-9814
- Participant Code: LICYQ224
A replay of the conference call/webcast will be available on the Investor Relations section of the company’s website: https://investors.li-cycle.com.
