TORONTO, ONTARIO - Li-Cycle Holdings Corp. (NYSE: LICY) ('Li-Cycle' or the 'Company'), a leading global lithium-ion battery resource recovery company, today announced financial results for its fiscal year ended December 31, 2023.
Webcast and Conference Call Information
On Tuesday, March 19, 2024, at 8:15 a.m. Eastern Time, Company management will host a webcast and conference call to provide a business update including a review of these results. The related presentation materials for the webcast and conference call will be made available on the investor section of the Li-Cycle website: https://investors.li-cycle.com/overview/default.aspx
Investors may listen to the conference call live via audio-only webcast or through the following dial-in numbers: Domestic: (800) 579-2543
International: (203) 518-9814
Participant Code: LICYQ423
Webcast: https://investors.li-cycle.com
A replay of the conference call/webcast will also be made available on the Investor Relations section of the Company's website at https://investors.li-cycle.com.
Financial Reporting Transition to US GAAP from IFRS
Li-Cycle previously qualified as a 'foreign private issuer' under applicable U.S. securities laws and on January 1, 2024, became subject to the rules and regulations of the Securities and Exchange Commission applicable to U.S. domestic issuers, including the requirement to report its financial statements in accordance with U.S. Generally Accepted Accounting Principles ('U.S. GAAP'). As a result, Li-Cycle's annual consolidated financial statements for the twelve months ended December 31, 2023, October 31, 2022, and October 31, 2021 and consolidated financial statements for the two-month period ended December 31, 2022 have been prepared in accordance with U.S. GAAP.
Review of Financial Results
On December 31, 2022, the Board approved a change of the Li-Cycle's fiscal year end from October 31 to December 31 to better align with peer group companies. The change resulted in a transition period of November 1, 2022 through December 31, 2022. The Company has calculated the income statement for the year ended December 31, 2022 and has provided a comparison to the year ended December 31, 2023 below.
Twelve Months Ended December 31, 2023 Revenue from product sales and recycling services were $23.6 million, a 34% increase versus the $17.6 million generated in 2022. The increase was primarily attributable to higher value product sales mix and increased recycling service revenue, partially offset by the reduced market prices of cobalt and nickel. Recycling service revenue increased by 338% year-over-year to $5.7 million, driven by new service contracts. Total revenues were $18.3 million versus $16.5 million in 2022, which included an unfavorable non-cash fair market value ('FMV') pricing adjustment of $5.3 million versus $1.1 million in the prior year.
Cost of sales increased to $81.8 million versus $55.2 million in 2022. Variable and fixed costs related to black mass and shredded metal products sold were $29.1 million, compared to $23.2 million in 2022, due to an increase in raw material acquisition costs and other production costs. Fixed and other costs for the Spoke network expensed were $34.9 million, compared to $16.9 million in 2022 driven by higher Spoke costs including personnel costs, leases, and depreciation. Fixed and other costs for the Rochester Hub expensed as incurred were $7.4 million compared to $2.6 million in 2022. Prior to the construction pause and comprehensive review of the Rochester Hub project, Li-Cycle hired operations personnel and incurred costs in anticipation of the Hub commissioning. The balance of $10.4 million, compared to $12.5 million in 2022, was comprised primarily of overhead costs required for operations.
Selling, general & administrative ('SG&A') expenses increased to $93.4 million versus $81.3 million in 2022, primarily driven by higher personnel costs, insurance costs, IT expenses, professional fees, leases, depreciation, and fixed asset write downs coupled with one-time severance costs resulting from a workforce reduction plan. This was partially offset by a decrease in variable compensation of $6.3 million.
Research & development costs increased to $5.7 million versus $2.7 million in 2022 primarily related to personnel costs and professional fees incurred for initial research and development for the Portovesme Hub.
Other income was $24.7 million, a decrease of $27.2 million compared to the prior year, primarily driven by a decrease in fair value gains on the revaluations of the conversion feature of our convertible debt.
Net loss was approximately $138.0 million, including $22.1 million of fair value gains on financial instruments, compared to $70.8 million in 2022. This was driven by higher cost of sales and SG&A partially offset by higher revenue.
Adjusted EBITDA(1) loss was approximately $156.4 million, compared to an Adjusted EBITDA loss of $118.5 million in 2022. This was largely driven by higher cost of sales and SG&A related to the growth and expansion of the business. The primary difference between Adjusted EBITDA and net loss is the exclusion of fair value gains and losses on financial instruments.
Balance Sheet Position
As of December 31, 2023, Li-Cycle had cash and cash equivalents on hand of $70.6 million. The Company incurred capital expenditures of $334.9 million in the period, primarily comprising purchases of equipment and construction related activities for the Rochester Hub project and the Germany Spoke in addition to net cash outflows for operating activities of $99.8 million.
The Company's primary need for liquidity is to fund the working capital requirements of its business during its comprehensive review of the Rochester Hub project and go-forward strategy in addition to funding the project's existing and remaining capital commitments.
Exemption from Filing Restated Interim Financial Reports
Pursuant to subsection 4.3(4) of National Instrument 51-102 - Continuous Disclosure Obligations ('NI 51-102'), in connection with filing its annual financial statements in accordance with U.S. GAAP, Li-Cycle is also required to file with the Ontario Securities Commission restated interim financial reports under U.S. GAAP for the 2023 interim periods (the 'Restated Interim Financial Reports').
Li-Cycle was granted an exemption from the Ontario Securities Commission providing Li-Cycle with an additional 45 days to file the Restated Interim Financial Reports from the deadline otherwise applicable under NI 51-102. Li-Cycle anticipates filing the Restated Interim Financial Reports and related MD&As on or before April 29, 2024. Li-Cycle confirms that its management and other insiders are subject to its Insider Trading Policy which contains an insider trading black-out policy that reflects the principles in Section 9 of National Policy 11-207 - Failure-to-File Cease Trade Orders and Revocations in Multiple Jurisdictions
Adjusted EBITDA is not a recognized measure under U.S. GAAP. See the Non-GAAP Financial Measures section of this press release for a description of how Adjusted EBITDA is calculated and a reconciliation of Adjusted EBITDA to net income (loss)
About Li-Cycle Holdings Corp.
Li-Cycle (NYSE: LICY) is a leading global lithium-ion battery resource recovery company and North America's largest pure-play lithium-ion battery recycler, with a rapidly growing presence across Europe. Established in 2016, and with major customers and partners around the world, Li-Cycle is on a mission to recover critical battery-grade materials to create a domestic closed-loop battery supply chain for a clean energy future. The Company leverages its innovative, sustainable, and patent-protected Spoke & Hub Technologies to provide a safe, scalable, customer-centric solution to recycle all different types of lithium-ion batteries. At our Spokes, or pre-processing facilities, we recycle battery manufacturing scrap and end-of-life batteries to produce black mass, a powder-like substance which contains a number of valuable metals, including lithium, nickel, and cobalt. At our Hubs, or post-processing facilities, we will process black mass to produce critical battery-grade materials, including lithium carbonate, nickel sulphate, and cobalt sulphate.
Contact:
Nahla A. Azmy
Email: investors@li-cycle.com
LI-CYCLE HOLDINGS CORP. 
