Livent (NYSE: LTHM) The stock fell 5.9% in Tuesday’s after-hours trading session after the lithium producer released its third-quarter report.

The share’s fall is likely due in large part to quarterly revenue falling short of Wall Street’s consensus estimate. That said, revenue growth remained strong, driven by growing demand and soaring prices for lithium, needed to produce lithium-ion batteries for electric vehicles (EVs). Earnings growth, which was meteoric, was a little better than analysts had expected.

Management tightened its full-year revenue forecast, but the midpoint remained unchanged. It also tightened and slightly increased its 2022 outlook for the key profitability measure it provides, adjusted earnings before interest, tax, depreciation and amortization (EBITDA).

It is possible that some investors were disappointed that there was not a larger positive adjustment to forecasts, as in previous quarters of this year.

Livent key figures

Metric Q3 2021 Q3 2022 To change
Revenue $103.6 million $231.6 million 124%
GAAP net income ($12.6 million) $77.6 million Result reversed from negative to positive.
Adjusted net income $6.7 million $85.1 million 1170%
Earnings per share (EPS) GAAP ($0.08) $0.37 Result reversed from negative to positive.
Adjusted EPS $0.04 $0.41 925%

Data source: Livent. GAAP = generally accepted accounting principles.

Revenue growth was driven by both higher realized lithium prices and higher sales volumes.

Sequentially, revenue and adjusted EPS increased 6% and 11%, respectively, from the second quarter.

Wall Street was looking for adjusted EPS of $0.40 on revenue of $251.9 million, so the company beat earnings expectations but missed revenue.

For the first nine months of 2022, Livent generated cash from operations of $328.2 million, up significantly from $41 million a year earlier. It ended the quarter with cash of $211.6 million and long-term debt of $241.6 million.

For context, in the second quarter, Livent’s revenue jumped 114% year-over-year to $218.7 million, and its adjusted EPS was up roughly 9x to $0.37. .

Capacity Expansion Update

Lithium Carbonate in Argentina (bullets taken verbatim from my post on Livent Q1 results):

  • The first expansion is planned to add 10,000 metric tons of capacity by the first quarter of 2023.
  • The second phase of the first expansion is expected to add 10,000 metric tons of capacity by the end of 2023, “which will nearly double Livent’s total available LCEs.” [lithium carbonate equivalents] compared to 2021 levels,” the company said in the earnings release.

Lithium hydroxide (last point taken verbatim from my Livent Q1 results post):

  • The 5,000 metric ton capacity expansion in Bessemer City, NC has just begun qualifying product with customers.
  • The project to produce an additional 15,000 metric tons of capacity in China is expected to be mechanically completed by the end of 2023.
  • As a result of these expansions, Livent expects to have total lithium hydroxide capacity (excluding Nemaska, discussed below) of at least 55,000 metric tons by the end of 2025, compared to its capacity current 25,000 metric tons.

Lithium hydroxide at its 50% owned Nemaska ​​project:

  • Nemaska ​​is a hard rock lithium project in Quebec, Canada. An entity owned by the Quebec government holds the other 50% interest.
  • Construction of the project is expected to begin in early 2023, with significant production expected in 2026.
  • Nemaska ​​is expected “to have a design capacity of 34,000 metric tons of battery-grade lithium hydroxide and over 30 years of mine life,” Livent said in the release.

2022 forecast for EBITDA profitability measure slightly raised

Metric Result 2021 Guidance prior to 2022 2022 Guidance Update Projected change updated mid-term
Revenue $420.4 million $800 million to $860 million ($830 million at midpoint) $815 million to $845 million ($830 million at midpoint) 97%
Adjusted EBITDA $69.5 million $325 million to $375 million ($350 million at midpoint) $350 million to $370 million ($360 million at midpoint) 418%

Data source: Livent.

Another great quarter

In summary, Livent had another excellent quarter. It’s an added bonus that it has slightly improved its full-year profitability forecast, as it has already significantly raised its revenue and adjusted EBITDA outlook several times this year.

The stock’s modest selling in Tuesday’s after-hours trading session was likely driven primarily by short-term traders taking profits. After all, in 2022, Livent shares gained 28.5% in Tuesday’s regular trading session, while the S&P500The return of is under water by 18% over this period.

The electric vehicle revolution is still in its early stages, which should continue to propel some lithium stocks higher over the long term.

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