Livent Corporation (NYSE: LTHM) Announces Third Quarter 2018 Results Above Prior Guidance and Reaffirms Full Year Guidance for 2018
PHILADELPHIA, Nov. 5, 2018 /PRNewswire/ --
Third Quarter Highlights
-- Completed Initial Public Offering of ~15 percent of Livent, which began
trading on October 11, 2018; FMC Corporation has confirmed it intends to
distribute all remaining shares of Livent to FMC's shareholders on March
1, 2019
-- Revenue of $112 million, and net income of $30 million
-- Pro Forma EBITDA up 25 percent versus Q3 '17
-- Full Year 2018 Revenue and Pro Forma EBITDA reaffirmed in line with
prior guidance
Livent Corporation (NYSE: LTHM) today reported third quarter 2018 revenue of $112 million, an increase of 19 percent over the prior year, and net income of $30 million. Third quarter 2018 Pro Forma EBITDA( (1)) was $50.3 million, above the high end of FMC's prior guidance provided on August 1, 2018. FMC Segment EBITDA( (1)) was $48.6 million, which includes $1.7 million of standalone costs incurred during the quarter and is the basis on which FMC Corporation is reporting FMC Lithium segment results. Third quarter Livent Standalone Adjusted EBITDA( (1)), which includes approximately $6 million of additional carve-out accounting-related adjustments, was $42.8 million.
"We delivered 25 percent growth in Pro Forma EBITDA( (1)) versus the same period in 2017 and our guidance for full year 2018 Pro Forma EBITDA( (1)) is unchanged from FMC's prior guidance for the lithium segment," said Paul Graves, president and chief executive officer of Livent Corporation. "We are excited about our future as a standalone publicly listed company and we are focused on executing our strategy and seizing the opportunities that lie ahead. We will continue to focus on strengthening partnerships with our customers through increased investment in additional capacity and developing new lithium-based technologies, as we seek to deliver double digit earnings growth."
FMC Corporation announced earlier today that it intends to distribute the remaining shares it owns in Livent Corporation to FMC's shareholders on March 1, 2019. FMC Lithium will remain a reporting segment of FMC in the fourth quarter of this year but will be reported as discontinued operations when FMC reports first quarter results next year.
2018 Outlook( (2))
Livent expects full year 2018 revenue in a range of $440 million to $450 million, an increase of 28 percent above full year 2017 results at the mid-point, which is unchanged from prior mid-point of guidance as a segment of FMC.
The outlook for full year 2018 FMC Segment EBITDA( (1)) is expected in a range of $193 million to $197 million, which assumes approximately $5 million of full year standalone costs that were excluded from prior guidance. This is unchanged at the mid-point from prior Pro Forma EBITDA( (1)) guidance of $200 million at the mid-point, provided on August 1, 2018. This implies an increase of 41 percent at the mid-point versus 2017 on a comparable basis.
The outlook for full year 2018 Livent Standalone Adjusted EBITDA( (1)) is expected in a range of $180 million to $184 million. This includes carve-out accounting-related adjustments for the nine months ended September 30, 2018 of approximately $13 million and standalone costs incurred in the third quarter and projected in the fourth quarter of approximately $5 million in total.
Fourth quarter 2018 FMC Segment EBITDA( (1)) and Livent Standalone Adjusted EBITDA( (1)) are expected to be in a range of $43 million to $47 million. This is inclusive of Livent projected standalone costs of approximately $4 million in the quarter.
In the table below Livent is providing additional estimates for select financial items:
Full-Year
2018
- Adjusted tax rate
19 - 22
percent
-Adjusted average common shares
outstanding
~143.5 (3)
million
-Depreciation & amortization
~$19
million
-Adjusted cash from operations
$100 - $120
million
-Capital additions and other
investing activities
$80 - $90
million
Supplemental Information
Livent has posted supplemental information on the web at www.livent.com, including reconciliations of non-GAAP financial measures to the most directly comparable financial measure calculated and presented in accordance with GAAP.
About Livent
For more than six decades, Livent has partnered with its customers to safely and sustainably use lithium to power the world. Livent is one of only a small number of companies with the capability, reputation, and know-how to produce high-quality finished lithium compounds that are helping meet the growing demand for lithium. The company has one of the broadest product portfolios in the industry, powering demand for green energy, modern mobility, the mobile economy, and specialized innovations, including light alloys and lubricants. Livent employs approximately 700 people throughout the world and operates manufacturing sites in the United States, England, India, China and Argentina. For more information, visit Livent.com.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: Certain statements in this news release are forward-looking statements. In some cases, you can identify these statements by forward-looking words such as "may," "might," "will," "should," "expects," "intends," "plans," "anticipates," "believes," "estimates," "predicts," "potential," or "continue," the negative of these terms and other comparable terminology. These forward-looking statements, which are subject to risks, uncertainties and assumptions about us, may include projections of our future financial performance, our anticipated growth strategies and anticipated trends in our business. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements, including a decline in the growth in demand for electric vehicles; adverse global economic conditions; the success of our research and development efforts; volatility in the price for performance lithium compounds; risks relating to our planned production expansion and related capital expenditures; the potential development and adoption of battery technologies that do not rely on performance lithium compounds as an input; risks inherent in international operations and sales, including political, financial and operational risks specific to Argentina and other countries where we have active operations, including China; customer concentration and the possible loss of, or significant reduction in orders from, large customers; failure to satisfy customer quality standards; fluctuations in the price of energy and certain raw materials; failure to achieve the expected benefits of our separation from FMC as well as the other factors described under the caption entitled "Risk Factors" in our prospectus dated October 10, 2018 filed with the Securities and Exchange Commission on October 12, 2018. Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. We are under no duty to update any of these forward-looking statements after the date of this news release to conform our prior statements to actual results or revised expectations.
1. Refer to Definition of Referenced Terms on slide 3 of Livent Q3 2018
Earnings Presentation for further detail - available at livent.com.
2. Although we provide forecasts for various EBITDA measures and adjusted
cash from operations (all of which are non-GAAP financial measures), we
are not able to forecast the most directly comparable measures calculated
and presented in accordance with GAAP. Certain elements of the
composition of the GAAP amounts are not predictable, making it
impractical for us to forecast. Such elements include, but are not
limited to, restructuring, transaction related charges, and related cash
activity. As a result, no GAAP outlook is provided.
3. Reflects option provided to underwriters to purchase up to an aggregate
of 3,000,000 additional shares of common stock to cover over-allotments
at initial public offering price, which the underwriters may exercise
until November 9, 2018.
LIVENT CORPORATION
CONDENSED COMBINED STATEMENTS OF OPERATIONS
(Unaudited, in millions)
---
Three Months Ended Nine Months Ended
September 30, September 30,
2018 2017 2018 2017
---
Revenue $
112.0 $
94.4 $
322.7 $
234.0
Costs of sales 62.5 52.3 167.2 135.0
Gross margin $
49.5 $
42.1 $
155.5 $
99.0
Selling, general and administrative expenses 4.7 3.2 12.7 10.1
Corporate allocations 5.6 4.8 15.7 15.5
Research and development expenses 0.9 0.9 2.9 2.3
Restructuring and other charges 0.4 0.4 2.7 3.5
Separation-related costs 2.4 2.4
Total costs and expenses $
76.5 $
61.6 $
203.6 $
166.4
Income from operations before non-operating pension benefit $
35.5 $
32.8 $
119.1 $
67.6
and settlement charges and income taxes
Non-operating pension benefit and settlement charges (0.4) (0.4) (0.2) (1.7)
Income from operations before income taxes $
35.9 $
33.2 $
119.3 $
69.3
Provision for income taxes 5.9 7.7 19.1 16.2
Net income $
30.0 $
25.5 $
100.2 $
53.1
LIVENT CORPORATION
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
---
RECONCILIATION OF NET INCOME (GAAP) TO LIVENT STANDALONE ADJUSTED EBITDA (NON-GAAP),
FMC SEGMENT EBITDA (GAAP), AND PRO FORMA EBITDA (NON-GAAP)
(Unaudited, in millions)
Livent was historically considered a segment of FMC as it functioned as part of the larger group of businesses controlled by FMC. Results for Livent were presented as FMC Segment EBITDA, defined by FMC as segment operating profit excluding depreciation and amortization expense.
The table below provides a reconciliation of Net income to Livent Standalone Adjusted EBITDA, on a standalone company basis, to FMC Segment EBITDA, as defined by FMC. Pro Forma EBITDA represents FMC Segment EBITDA excluding incremental standalone costs in connection with
operations as an independent company. It is being provided to allow investors and securities analysts a comparison of historical performance on a like-for-like basis.
Three Months Ended Nine Months Ended
September 30, September 30,
2018 2017 2018 2017
---
Net income (GAAP) $
30.0 $
25.5 $
100.2 $
53.1
Add back:
Provision for income taxes 5.9 7.7 19.1 16.2
Depreciation and amortization 4.5 3.9 13.1 11.7
EBITDA (Non-GAAP) (1) $
40.4 $
37.1 $
132.4 $
81.0
Add back:
Restructuring and other charges (a) 0.4 0.4 2.7 3.5
Non-operating pension benefit and settlement charges (b) (0.4) (0.4) (0.2) (1.7)
Separation-related costs (c) 2.4 2.4
Livent Standalone Adjusted EBITDA (Non-GAAP) (1) $
42.8 $
37.1 $
137.3 $
82.8
Carve out adjustments:
FMC Corporate shared service costs allocated to Livent 0.9 0.2 1.9 1.8
Stock compensation expense (d) 0.9 0.6 2.7 2.0
FMC Corporate expense allocation (e) 2.2 2.8 6.5 7.8
Other carve-out adjustments (f) 1.8 (0.5) 1.7 (0.7)
FMC Segment EBITDA (GAAP) $
48.6 $
40.2 $
150.1 $
93.7
Standalone costs 1.7 1.7
Pro Forma EBITDA (Non-GAAP) $
50.3 $
40.2 $
151.8 $
93.7
(1) In addition to
net income,
as determined
in accordance
with U.S.
GAAP, we
evaluate
operating
performance
using certain
non-GAAP
measures such
as EBITDA,
which we
define as net
income plus
interest
expense, net,
income tax
expense
(benefit),
depreciation,
and
amortization,
and Livent
Standalone
Adjusted
EBITDA, which
we define as
EBITDA
adjusted for
restructuring
and other
charges
(income),
non-
operating
pension
expense
(benefit) and
settlement
charges, and
separation-
related
costs.
Management
believes the
use of these
non-GAAP
measures
allows
management
and investors
to compare
more easily
the financial
performance
of its
underlying
business from
period to
period. The
non-GAAP
information
provided may
not be
comparable to
similar
measures
disclosed by
other
companies
because of
differing
methods used
by other
companies in
calculating
EBITDA and
Livent
Standalone
Adjusted
EBITDA. This
measure
should not be
considered as
a substitute
for net
income or
other
measures of
performance
or liquidity
reported in
accordance
with U.S.
GAAP. The
above table
reconciles
EBITDA and
Livent
Standalone
Adjusted
EBITDA from
net income.
(a) We continually
perform
strategic
reviews and
assess the
return on our
business.
This
sometimes
results in a
plan to
restructure
the
operations of
our business.
As part of
these
restructuring
plans,
demolition
costs and
write-downs
of long-
lived assets
may occur.
(b) Our non-
operating
pension
expense
(benefit) and
settlement
charges are
defined as
those costs
(benefits)
related to
interest,
expected
return on
plan assets,
amortized
actuarial
gains and
losses and
the impacts
of any plan
curtailments
or
settlements.
These are
excluded from
our segments
results and
are primarily
related to
changes in
pension plan
assets and
liabilities
which are
tied to
financial
market
performance
and we
consider
these costs
to be outside
our
operational
performance.
We continue
to include
the service
cost and
amortization
of prior
service cost
in our Livent
Standalone
Adjusted
EBITDA
results noted
above. These
elements
reflect the
current year
operating
costs to our
businesses
for the
employment
benefits
provided to
active
employees.
(c) Represents
legal,
professional
or
transaction
related fees
primarily
associated
with the
initial
public
offering and
other
separation
related
activities.
(d) Stock
compensation
expense
represents
the
allocation of
the Parent's
Corporate
stock
compensation
expense and
the costs
specifically
identifiable
to Livent
employees.
These amounts
exclude the
previously
allocated
portion
included
within
Livent's
shared
service costs
of $0.2
million and
$0.6 million
for the three
and nine
months ended
September 30,
2018 and $0.2
million and
$0.6 million
for the three
and nine
months ended
September 30,
2017.
Represents the
additional
costs of the
centralized
functions of
the Parent
allocated to
(e) Livent.
(f) Other carve-
out
adjustments
primarily
consists of
charges
associated
with changes
in the LIFO
inventory
reserve.
RECONCILIATION OF NET INCOME (GAAP) TO
ADJUSTED AFTER-TAX EARNINGS (NON-GAAP)
(Unaudited, in millions)
Three Months Ended Nine Months Ended
September 30, September 30,
2018 2017 2018 2017
---
Net income (GAAP) $
30.0 $
25.5 $
100.2 $
53.1
Corporate special charges (income):
Restructuring and other charges (a) 0.4 0.4 2.7 3.5
Non-operating pension benefit and settlement charges (b) (0.4) (0.4) (0.2) (1.7)
Separation-related costs (c) 2.4 2.4
Income tax expense (benefit) on Corporate special charges (d) (0.5) (1.1) (0.7)
Tax adjustment (e) (1.0) (0.5) (5.7) (0.8)
Adjusted after-tax earnings (Non-GAAP) (1) (2) $
30.9 $
25.0 $
98.3 $
53.4
(1) The company
believes that
the non-GAAP
financial
measure
"Adjusted
after-tax
earnings"
provides
useful
information
about the
company's
operating
results to
management,
investors and
securities
analysts.
Adjusted
earnings
excludes the
effects of
corporate
special
charges and
tax-related
adjustments.
The company
also believes
that excluding
the effects of
these items
from operating
results allows
management and
investors to
compare more
easily the
financial
performance of
its underlying
business from
period to
period.
(2) The weighted
average common
shares
outstanding
(GAAP) for
both basic and
diluted
earnings per
share for all
periods
presented on
the condensed
combined
statements of
operations was
calculated, in
accordance
with ASC 260,
Earnings Per
Share, using
123.0 million
shares of
common stock
outstanding,
which reflects
the number of
shares held by
FMC prior to
the IPO. This
results in
both basic and
diluted
earnings per
share (GAAP)
of $0.24 and
$0.21 for the
three months
ended
September 30,
2018 and 2017,
respectively,
and $0.81 and
$0.43 for the
nine months
ended
September 30,
2018 and 2017,
respectively.
Assuming
adjusted
weighted
average shares
outstanding of
143.0 million,
which was the
total number
of shares
outstanding
immediately
following the
completion of
the IPO,
adjusted
after-tax
earnings per
share would be
$0.22 and
$0.17 for the
three months
ended
September 30,
2018, and
2017,
respectively,
and $0.69 and
$0.37 for the
nine months
ended
September 30,
2018 and 2017,
respectively.
(a) We continually
perform
strategic
reviews and
assess the
return on our
business. This
sometimes
results in a
plan to
restructure
the operations
of our
business. As
part of these
restructuring
plans,
demolition
costs and
write-downs
of long-lived
assets may
occur.
(b) Our non-
operating
pension
expense
(benefit) and
settlement
charges are
defined as
those costs
(benefits)
related to
interest,
expected
return on plan
assets,
amortized
actuarial
gains and
losses and the
impacts of any
plan
curtailments
or
settlements.
These are
excluded from
our segments
results and
are primarily
related to
changes in
pension plan
assets and
liabilities
which are tied
to financial
market
performance
and we
consider these
costs to be
outside our
operational
performance.
We continue to
include the
service cost
and
amortization
of prior
service cost
in our Livent
Standalone
Adjusted
EBITDA
results. These
elements
reflect the
current year
operating
costs to our
businesses for
the employment
benefits
provided to
active
employees.
(c) Represents
legal,
professional
or transaction
related fees
primarily
associated
with the
initial public
offering and
other
separation
related
activities.
(d) The income tax
expense
(benefit) on
Corporate
special
charges
(income) is
determined
using the
applicable
rates in the
taxing
jurisdictions
in which the
corporate
special charge
or income
occurred and
includes both
current and
deferred
income tax
expense
(benefit)
based on the
nature of the
non-GAAP
performance
measure.
(e) The company
excludes the
GAAP tax
provision,
including
discrete
items, from
the non-GAAP
measure of
income, and
includes a
non-GAAP tax
provision
based upon the
projected
annual non-
GAAP effective
tax rate. The
GAAP tax
provision
includes
certain
discrete tax
items
including, but
not limited
to: income tax
expenses or
benefits that
are not
related to
operating
results in the
current year;
tax
adjustments
associated
with
fluctuations
in foreign
currency
remeasurement
of certain
foreign
operations;
certain
changes in
estimates of
tax matters
related to
prior fiscal
years; certain
changes in the
realizability
of deferred
tax assets and
related
interim
accounting
impacts; and
changes in tax
law.
Management
believes
excluding
these discrete
tax items
assists
investors and
securities
analysts in
understanding
the tax
provision and
the effective
tax rate
related to
operating
results
thereby
providing
investors with
useful
supplemental
information
about the
company's
operational
performance.
RECONCILIATION OF CASH PROVIDED BY OPERATING ACTIVITIES (GAAP) TO
ADJUSTED CASH FROM OPERATIONS (NON-GAAP)
(Unaudited, in millions)
Nine Months Ended
September 30,
2018 2017
---
Cash provided by operating activities (GAAP) $
62.5 $
33.9
Separation-related costs (a) 4.5
Adjusted cash from operations (Non-GAAP) (1) $
67.0 $
33.9
(1) The company
believes that
the non-GAAP
financial
measure
"Adjusted
cash from
operations"
provides
useful
information
about the
company's
cash flows to
investors and
securities
analysts.
Adjusted cash
from
operations
excludes the
effects of
transaction-
related cash
flows. The
company also
believes that
excluding the
effects of
these items
from cash
provided by
operating
activities
allows
management
and investors
to compare
more easily
the cash
flows from
period to
period.
(a) Represents
legal,
professional
or
transaction
related fees
primarily
associated
with the
initial
public
offering and
other
separation
related
activities.
LIVENT CORPORATION
CONDENSED COMBINED BALANCE SHEETS
(Unaudited, in millions)
---
September 30, 2018 December 31, 2017
---
Cash and cash equivalents $
14.7 $
1.2
Trade receivables, net of allowance of $0.1 in 2018 and $0.1 in 2017 144.1 122.7
Inventories, net 47.3 49.6
Prepaid and other current assets 35.4 32.6
Total current assets $
241.5 $
206.1
Property, plant and equipment, net 251.7 220.7
Intangible assets, net 0.1 0.1
Deferred income taxes 1.2 2.4
Other assets 71.6 66.9
Total assets $
566.1 $
496.2
Accounts payable, trade and other $
49.6 $
59.7
Advanced payments from customers - 1.8
Accrued and other current liabilities 17.7 21.3
Income taxes 1.0 3.2
Total current liabilities $
68.3 $
86.0
Long-term liabilities 18.3 24.8
Net parent investment 479.5 385.4
Total liabilities and net parent investment $
566.1 $
496.2
LIVENT CORPORATION
CONDENSED COMBINED STATEMENTS OF CASH FLOWS
(Unaudited, in millions)
---
Nine Months Ended September 30,
2018 2017
---
Cash provided by
operating activities $
62.5 $
33.9
Cash required by
investing activities (47.0) (38.8)
Cash provided (required) by
financing activities:
Net change in net
parent investment (3.1) 1.1
Cash provided
(required) by
financing activities $
(3.1) $
1.1
Effect of exchange
rate changes on cash 1.1
Increase (decrease) in
cash and cash
equivalents $
13.5 $
(3.8)
Cash and cash
equivalents,
beginning of year 1.2 4.0
Cash and cash
equivalents, end of
period $
14.7 $
0.2
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SOURCE Livent Corporation
