Livent Corp. (NYSE:LTHM) Q3 2019 Earnings Conference Call - Final Transcript

Nov 06, 2019 • 08:00 am ET


Livent Corp. (NYSE:LTHM) Q3 2019 Earnings Conference Call - Final Transcript


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Good morning and welcome to the Third Quarter 2019 Earnings Release Conference Call for Livent Corporation. [Operator Instructions] After the speakers' presentation, there will be a question-and-answer period. I will now turn the conference over to Mr. Daniel Rosen, Manager, Investor Relations for the Livent Corporation. Mr. Rosen, you may begin.

Daniel Rosen

Thank you, Suzanne. Good morning everyone and welcome to Livent's Third Quarter 2019 Earnings Call. Joining me today are Paul Graves, President and Chief Executive Officer and Gilberto Antoniazzi, Chief Financial Officer. The slide presentation that accompanies our results, along with our earnings release, which includes our 2019 outlook can be found in the Investor Relations section of our website.

The prepared remarks from today's discussion will be made available after the call. Following our prepared remarks, Paul and Gilberto will be available to address your questions. We would ask that any questions be limited to two per caller. We'll be happy to address any additional questions directly after the call.

Before we begin, let me remind you that today's discussion will include forward-looking statements that are subject to various risks and uncertainties concerning specific factors, including, but not limited to those factors identified in our release and in our filings with the Securities and Exchange Commission. Information presented represents our best judgment based on today's information. Actual results may vary based upon these risks and uncertainties.

Today's discussion will focus on adjusted earnings for all income statement and EPS references. Reconciliations of these terms as well as other non-GAAP financial terms to which we may refer during today's conference call are provided on our website.

With that, I'll turn the call over to Paul.

Paul W. Graves

Thank you, Dan and good morning everyone. Turning to slide 3, there's a few key points that I would like to highlight. We met our third quarter adjusted EBITDA and adjusted EPS guidance lower than projected revenues. We announced a memorandum of understanding with LG for a multi-year supply agreement for lithium hydroxide, and we're able to provide a first look at our expected production and sales volumes for 2020.

The commitments we're currently making for 2020 customer deliveries form the basis for our decision to build hydroxide inventory in the fourth quarter of 2019. Our aim [Phonetic] is to ensure we have sufficient products in 2020, the year in which we will effectively have no additional production capacity compared to 2019.

A consequence of this fourth quarter inventory build is that we have lowered our expected revenues, adjusted EBITDA and adjusted EPS in the fourth quarter by an amount corresponding to the inventory build and are therefore also lowering our full year guidance for 2019. We remain committed to our previously announced capacity expansion initiatives and we'll provide an update on the progress of our current expansion programs later in this call.

Turning now to slide 4 on Livent's perspective on where the market for lithium carbonate and hydroxide stands today. Clearly, it's a very challenging time for the industry. All lithium producers have