Li-Cycle reports profits and losses in Q2 2022 financial report

Li-Cycle Holdings Corp., a lithium-ion battery resource recovery and the leading lithium-ion battery recycler in Toronto, has released its financial report for the second quarter of 2022. The report shows an increase in revenues but a net loss for the quarter and earnings before interest, taxation, depreciation and amortization (EBITDA).  

“We continued to successfully implement our spoke and hub network strategy, with significant operational, commercial and financial achievements this quarter,” says Ajay Kochhar, Li-Cycle president and CEO. “The Arizona spoke is now online, doubling our current spoke capacity and a testament to our modular construction approach. We believe this approach is replicable and scalable for our future spokes. Additionally, we made continued contracting and execution strides at the Rochester Hub, which remains on target for commissioning in 2023.”  

The company reports revenues for the quarter ended April 30, increased to $8.7 million, compared with $300,000 in the same quarter last year. This was driven by an increase in product sales volume and metal-based prices.  

Operating expenses for the quarter increased to $30 million, compared with $5.6 million during the same period last year. This increase was primarily related to personnel costs for operational, corporate, commercial and engineering resources and professional fees and administrative costs in support of becoming a public company. In addition, higher costs from raw materials and supplies are attributable to increased black mass production.  

Net loss for the quarter was about $20.7 million, compared with a net loss of about $7.8 million in the prior-year period. This loss included $2.9 million of fair value gains on financial instruments.  

Adjusted EBIDTA loss for the quarter was $19.5 million, compared with $5.1 million for the prior-year period. This was driven by the increase in the operating expenses directly related to the growth and expansion of the business. In addition, noncash stock-based compensation increased to $4.5 million compared with 300,000 thousand in 2021.  

Li-Cycle says it recently achieved significant commercial milestones, entering into long-term agreements with two global strategic partners in the battery material supply chain, thereby closing the loop for lithium-ion battery materials. Both LG and Glencore designated Li-Cycle as a preferred lithium-ion battery recycling partner. These new partnerships complement Li-Cycle’s existing commercial agreements with Traxys North America Inc. and others.  

"Strategically, we are positioning Li-Cycle as a leading and preferred recycler and supplier of critical battery materials, capitalizing on the significant secular growth trends,” Kochhar says. “We executed long-term in-take and off-take commercial agreements with Glencore plc, a leading battery metals provider, and LG Chem, Inc. and LG Energy Solution Inc., leading global electric battery manufacturers. The Glencore agreements are global in nature, focusing primarily on North America and Europe. Glencore will supply battery feedstock for Li-Cycle’s spokes and black mass and sulfuric acid for Li-Cycle’s hubs. Glencore also will provide off-take and marketing of Li-Cycle’s battery-grade end products and certain by-products produced at the company’s spokes and hubs.  

The LG agreements are focused on North America. LG Energy Solutions Inc. will provide Li-Cycle’s spokes with nickel-bearing lithium-ion battery scrap and other lithium-ion battery recycling material. Additionally, Li-Cycle will supply LG with nickel sulfate to be produced at Li-Cycle’s Rochester hub once operational.  

“This collaborative approach provides customers with a global and vertically integrated solution, which we believe places Li-Cycle at the center of the battery supply chain loop in North America and Europe,” Kochhar says. “Finally, these strategic commercial partnership arrangements were combined with a total investment of $250 million in Li-Cycle, further enhancing our balance sheet and enabling additional financial flexibility."   

Li-Cycle says it ended its second quarter with $509.3 million cash on hand. The company further enhanced its balance sheet with additional investment proceeds of $250 million, received upon completion of the commercial agreements in May and June from LG and Glencore. Including the investment proceeds, the company’s pro forma cash balance is approximately $760 million.  

As a result, the company has sufficient liquidity for capital and operating needs to fund its current pipeline of projects in development.