Press release·04/05/2025 05:13:04

Financial Performance Overview

Li-Cycle, a leading global lithium-ion battery recycling company, reported its financial results for the year ended December 31, 2024. The company’s total revenue increased by $9.7 million to $28.0 million compared to the prior year. However, Li-Cycle continued to experience net losses, with a net loss of $137.7 million in 2024, a slight improvement from the $138.0 million net loss in 2023.

The increase in revenue was primarily driven by a $6.2 million rise in recycling service revenue, as Li-Cycle signed new contracts and expanded existing agreements with electric vehicle (EV) manufacturers and battery producers in North America and Europe. Product revenue also increased due to favorable fair value pricing adjustments, though this was partially offset by lower commodity prices for nickel and cobalt.

On the cost side, Li-Cycle saw a 9% decrease in cost of sales related to product revenue, mainly due to lower inventory write-downs and material costs, offset by higher operating expenses and depreciation. Selling, general and administrative expenses also decreased by 19% as the company implemented its cash preservation plan, which included workforce reductions and other cost-cutting measures.

Operational Highlights

Li-Cycle’s operational activities focused on supporting key OEM and strategic partners in 2024. The company recycled 9,113 tonnes of battery material, producing 5,385 tonnes of Black Mass & Equivalents (BM&E), a decrease of 21% compared to 2023. This was primarily due to the slowdown of operations at the company’s North American Spokes, partially offset by the ramp-up of the Germany Spoke, which began operations in August 2023.

Capital expenditures decreased significantly, from $334.9 million in 2023 to $23.9 million in 2024, as Li-Cycle paused construction on its planned Rochester Hub project. The company is currently reviewing the scope, expected capital cost, financing, and timing for the completion of the Rochester Hub.

Liquidity and Financing

Li-Cycle has financed its operations primarily through proceeds from the Business Combination, private placements, the ATM Program, and government grants. However, the company has incurred net negative operating cash flow since its inception and expects to continue generating negative cash flow from operations.

As of December 31, 2024, Li-Cycle had $22.6 million in cash and cash equivalents, a decrease of $48.0 million from the end of 2023. The company’s cash outflows from operating activities increased by $6.6 million to $106.4 million in 2024.

To address its liquidity needs, Li-Cycle has taken several actions:

1. DOE Loan Facility: On November 7, 2024, the company entered into a loan facility with the U.S. Department of Energy (DOE) for up to $475 million. However, the ability to borrow under this facility is subject to certain conditions, including securing additional financing.

2. ATM Program: In 2024, Li-Cycle raised $15.5 million in net proceeds by issuing common shares under its At-the-Market (ATM) equity offering program. As of December 31, 2024, the company had $58.6 million remaining capacity under the ATM program.

3. Glencore Convertible Notes: Li-Cycle issued a $75 million senior secured convertible note to Glencore in March 2024 and amended the terms of its existing unsecured convertible notes with Glencore.

4. Cost-Cutting Measures: The company implemented its Cash Preservation Plan, which included the closure of the Ontario Spoke, curtailment of operations at the New York Spoke, and other cost-saving initiatives, such as a workforce reduction.

Despite these efforts, Li-Cycle acknowledges that without additional financing in the near term, it will not have adequate liquidity during the 12 months following December 31, 2024, raising substantial doubt about the company’s ability to continue as a going concern.

Strengths and Weaknesses

Strengths:

• Established partnerships and contracts with major EV manufacturers and battery producers in North America and Europe
• Successful ramp-up of the Germany Spoke, which began operations in 2023
• Diversified revenue streams from product sales and recycling services
• Cost-cutting measures implemented through the Cash Preservation Plan

Weaknesses:

• Continued net losses and negative operating cash flow
• Significant funding required to complete the Rochester Hub project
• Reliance on external financing and the ability to secure additional funding
• Operational challenges and slowdown at the North American Spokes

Outlook and Risks

The long-term demand for EVs and lithium-ion batteries remains robust, with Li-Cycle estimating a compound annual growth rate of approximately 23% in the number of EVs sold between 2025 and 2030 in North America and Europe. This is expected to drive significant growth in the amount of battery materials available for recycling, with a potential compound annual growth rate of 30% between 2025 and 2027.

However, current macroeconomic and industry trends, such as inflationary pressures, have reduced project commitments to build EV-related supply chains in North America and Europe. Additionally, Li-Cycle has experienced softness in commodity prices for nickel, cobalt, and lithium, which can impact its product revenue.

The company’s ability to restart and complete the Rochester Hub project is a key risk factor. Li-Cycle has completed a technical review of the project’s modified hydrometallurgical processing (MHP) scope, but it will require significant additional funding before restarting construction. The company is actively exploring financing options and strategic alternatives to secure the necessary funding.

Other risks include the company’s ability to maintain and expand its customer and partner relationships, manage its operational costs, and navigate the regulatory and competitive landscape in the battery recycling industry.

Conclusion

Li-Cycle’s financial performance in 2024 showed some improvements, with an increase in revenue and a slight reduction in net losses. However, the company continues to face significant liquidity challenges and the need for substantial additional funding to complete its planned Rochester Hub project.

While the long-term outlook for the battery recycling industry remains positive, Li-Cycle must address its immediate financing needs, optimize its operational efficiency, and execute its strategic initiatives to position itself for sustainable growth and profitability. Investors and stakeholders will closely monitor the company’s ability to secure the necessary funding and navigate the current industry and macroeconomic headwinds.