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Livent Corp Q2 Results: Year-on-Year Growth & Allkem Merger

By Patricia Miller

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What led to Livent Corp's successful Q2 2023? Uncover secrets of their year-on-year growth, upcoming projects, and a groundbreaking Allkem merger.

Livent Corporation (NYSE: LTHM) unveiled its financial results for Q2 2023, with revenues totaling $235.8 million – a decrease from Q1 but a notable increase Y/Y. The release also highlights the company's progress on several fronts, including sustainability, the Nemaska Lithium Development, and its impending merger with Allkem (ASX: AKE).

Livent reported Q2 revenues of $235.8 million, marking a 7% decline from Q1 2023 but an 8% year-on-year growth. The GAAP net income stood at $90.2 million, or 43 cents per diluted share. This showcases a significant leap from last year's Q2 figures of $60 million. Moreover, the Adjusted EBITDA is $134.5 million – 15% lower than Q1 but 42% higher than Q2 2022.

Paul Graves, Livent's president and CEO remarked:

"We continued to see healthy demand from our customers which helped to support strong financial results in the second quarter. As anticipated, we experienced the lagged impact of lower market prices in certain lithium products and end markets, as well as higher operating costs during the quarter,"

He added that the company anticipates similar financial results in the latter half of 2023, thanks to existing customer contracts and more volume available for sale.

Livent has also confirmed its guidance for 2023, predicting revenues between $1.025 billion and $1.125 billion and an Adjusted EBITDA ranging from $530 million to $600 million. This estimation suggests a growth of 32% and 54% at the midpoints when compared to 2022.

Based on FactSet data, 20 market analysts currently cover LTHM stock, with a mean projected share price target of $32.51, which is 43% higher than its current trading price.

Sustainability Commitment

Livent showcased its commitment to sustainability by releasing its 2022 Sustainability Report. Focusing on environmental stewardship, social responsibility, and transparency, the report emphasizes lithium's crucial role in fostering a low carbon future. The report, titled Reimagining Possibilities, is available on the company's website and includes initial global assessments of Livent's Greenhouse Gas emissions, disclosures on global air pollutants, and a summary of recent environmental studies in Argentina.

Nemaska Lithium Development Update

The company also provided fresh projections for Nemaska Lithium, a project based in Québec, Canada. The capital requirement for the project is estimated at around US$1.6 billion, with most of it projected to be spent in 2024 and 2025. The timeline remains unchanged, with commercial sales starting in 2025 and full lithium hydroxide production commencing by late 2026.

Following Livent's engagement in Nemaska Lithium's sales and marketing, a supply agreement with Ford Motor Company (NYSE: F) was confirmed in May 2023. The 11-year deal stipulates the supply of up to 13,000 metric tons of lithium hydroxide annually.

Impending Merger with Allkem

A significant announcement came from Livent and Allkem on May 10, 2023, regarding their definitive agreement to merge. This multibillion-dollar collaboration, the largest ever in the lithium industry, aims to establish a global lithium chemicals leader. With all required regulatory notifications and applications in place, the merger is set to conclude by the end of 2023.

Feeding the HUGE EV Market

Moving on from mainstream investments, undervalued stocks are brimming with untapped potential.

Eureka Lithium, a mining company listed on the CSE, is a company that recognizes the importance of securing domestic supplies of critical minerals. It is embarking on a notable exploration of lithium-rich deposits in the Nunavik region of Northern Quebec.

Meanwhile, the Canadian federal government's production subsidies to automakers and the Biden administration's new tailpipe emissions standards suggest catalysts for further growth in the electric vehicle (EV) market. EV sales broke the 10-million-unit milestone in 2022, with sales growth of 35% expected this year. 

This rapidly growing market should drive major demand for lithium, presenting a huge opportunity for Eureka Lithium.

Domestic demand for lithium is poised for particular growth too, with German auto-manufacturing giant Volkswagen having announced it is investing CAD$20bn to build one of the largest EV battery plants in the world in Ontario, Canada.

That’s fortunate, because Eureka’s projects in nearby Nunavik are highly prospective and possess lithium concentrations in the 99th percentile of the ENTIRE province of Quebec. 

These territories have been acquired by the company based on extensive research carried out by award-winning Canadian gold prospector Shawn Ryan. These acquisitions mean Eureka is now the largest landowner in an under-explored region that looks like North America’s newest and most prospective lithium district. 

Are you ready to venture beyond the expected and set your sights on small-cap investment opportunities? Don’t let Eureka Lithium pass you by.

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