10-Q 1 lthm-20220930.htm 10-Q lthm-20220930
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________________________________________________
 FORM 10-Q
_______________________________________________________________________
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 2022
or
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from _______ to _______
Commission File Number 001-38694
__________________________________________________________________________
LIVENT CORPORATION
(Exact name of registrant as specified in its charter)
__________________________________________________________________________ 
Delaware 82-4699376
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer
Identification No.)
1818 Market Street
Philadelphia
Pennsylvania
19103
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: 215-299-5900
__________________________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.001 per shareLTHMNew York Stock Exchange
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS.    YES     NO  
INDICATE BY CHECK MARK WHETHER THE REGISTRANT HAS SUBMITTED ELECTRONICALLY EVERY INTERACTIVE DATA FILE REQUIRED TO BE SUBMITTED PURSUANT TO RULE 405 OF REGULATION S-T (§232.405 OF THIS CHAPTER) DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS REQUIRED TO SUBMIT SUCH FILES).    YES      NO  
INDICATE BY CHECK MARK WHETHER THE REGISTRANT IS A LARGE ACCELERATED FILER, AN ACCELERATED FILER, A NON-ACCELERATED FILER, A SMALLER REPORTING COMPANY, OR AN EMERGING GROWTH COMPANY. SEE THE DEFINITIONS OF “LARGE ACCELERATED FILER,” “ACCELERATED FILER,” “SMALLER REPORTING COMPANY,” AND "EMERGING GROWTH COMPANY" IN RULE 12B-2 OF THE EXCHANGE ACT.
LARGE ACCELERATED FILER 

  ACCELERATED FILER 
NON-ACCELERATED FILER 
  SMALLER REPORTING COMPANY 
EMERGING GROWTH COMPANY
IF AN EMERGING GROWTH COMPANY, INDICATE BY CHECK MARK IF THE REGISTRANT HAS ELECTED NOT TO USE THE EXTENDED TRANSITION PERIOD FOR COMPLYING WITH ANY NEW OR REVISED FINANCIAL ACCOUNTING STANDARDS PROVIDED PURSUANT TO SECTION 13(A) OF THE EXCHANGE ACT.


INDICATE BY CHECK MARK WHETHER THE REGISTRANT IS A SHELL COMPANY (AS DEFINED IN RULE 12B-2 OF THE EXCHANGE ACT).    YES      NO  
As of September 30, 2022, there were 179,373,751 shares of Common Stock, $0.001 par value per share, outstanding.



LIVENT CORPORATION
INDEX
 
 Page
No.



2


Glossary of Terms
When the following terms and abbreviations appear in the text of this report, they have the meanings indicated below:
2025 Notes$245.75 million principal amount 4.125% Convertible Senior Notes due 2025.
ASUAccounting Standards Update, under U.S. GAAP.
Credit AgreementThe Original Credit Agreement, as amended.
EAETREstimated annual effective tax rate
ESGEnvironmental, social and governance
EVElectric vehicle
FASBFinancial Accounting Standards Board
FMCFMC Corporation
Livent NQSPLivent Non-Qualified Savings Plan
NemaskaNemaska Lithium Shawinigan Transformation Inc., a subsidiary of Nemaska Lithium Inc., a
Canadian lithium company based in Québec, Canada.
Nemaska Project The ownership and operation of the business previously conducted by Nemaska, through a joint venture in which Livent owns a 50% equity interest through its ownership of QLP.
Offering
On June 15, 2021, the Company closed on the issuance of 14,950,000 shares of its common stock, par value $0.001 per share, at a public offering price of $17.50 per share, in an underwritten public offering. Total net proceeds from the offering were $252.2 million, after deducting underwriters' fees and offering expenses payable by the Company.
OEMOriginal equipment manufacturer
Original Credit AgreementOn September 18, 2018, Livent Corporation entered into the credit agreement, which provided for a $400 million senior secured revolving credit facility.
PRSUPerformance-based restricted stock unit
QLP
Québec Lithium Partners (UK) Limited, a wholly owned subsidiary of Livent. QLP owns a 50% equity interest in the Nemaska Project.
QLP Merger
On June 6, 2022, Livent closed on the Transaction Agreement and Plan of Merger with The Pallinghurst Group to provide Livent with a direct 50% ownership interest in the Nemaska Project. Livent issued 17,500,000 shares of its common stock to acquire the remaining 50% share of Québec Lithium Partners (UK) Limited, previously owned by The Pallinghurst Group and certain of its investors.
QLP NoteOn December 1, 2020, QLP was assigned a deferred payment note, dated November 26, 2020, by Nemaska in favor of OMF (Cayman) Co-VII Ltd., with initial principal amount of $12.5 million.
Revolving Credit FacilityLivent's $500 million senior secured revolving credit facility, amended and restated on September 1, 2022.
RSURestricted stock unit
SECSecurities and Exchange Commission
Securities ActSecurities Act of 1933
SeparationOn October 15, 2018, Livent completed its initial public offering and sold 20 million shares of Livent common stock to the public at a price of $17.00 per share.
SOFRSecured Overnight Financing Rate
TSRTotal Shareholder Return
U.S. GAAPUnited States Generally Accepted Accounting Principles
VATValue-added tax
3



PART I - FINANCIAL INFORMATION
 
ITEM 1.    FINANCIAL STATEMENTS

LIVENT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
(in Millions, Except Per Share Data)(unaudited)
Revenue$231.6 $103.6 $593.8 $297.5 
Cost of sales112.2 85.3 312.0 245.5 
Gross margin119.4 18.3 281.8 52.0 
Selling, general and administrative expenses15.0 11.8 40.6 34.2 
Research and development expenses0.9 0.8 2.6 2.2 
Restructuring and other charges0.7 1.1 4.6 3.4 
Separation-related costs0.1 0.8 0.5 1.3 
Total costs and expenses128.9 99.8 360.3 286.6 
Income from operations before equity in net loss of unconsolidated affiliate, interest expense, net, loss on debt extinguishment and other gain102.7 3.8 233.5 10.9 
Equity in net loss of unconsolidated affiliate3.5 1.0 8.4 3.7 
Interest expense, net   0.3 
Loss on debt extinguishment0.1  0.1  
Other gain  (22.2) 
Income from operations before income taxes99.1 2.8 247.2 6.9 
Income tax expense21.5 15.4 56.4 13.8 
Net income/(loss)$77.6 $(12.6)$190.8 $(6.9)
Net income/(loss) per weighted average share - basic$0.43 $(0.08)$1.13 $(0.05)
Net income/(loss) per weighted average share - diluted$0.37 $(0.08)$0.96 $(0.05)
Weighted average common shares outstanding - basic179.3 161.6 169.3 152.3 
Weighted average common shares outstanding - diluted 209.4 161.6 199.2 152.3 










The accompanying notes are an integral part of these condensed consolidated financial statements.
4


LIVENT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)
 
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
(in Millions)(unaudited)
Net income/(loss)$77.6 $(12.6)$190.8 $(6.9)
Other comprehensive loss, net of tax:
Foreign currency adjustments:
Foreign currency translation loss arising during the period(6.1)(1.1)(11.5)(0.2)
Total foreign currency translation adjustments(6.1)(1.1)(11.5)(0.2)
Derivative instruments:
Unrealized hedging losses, net of tax of less than $0.1, less than $0.1, zero, and zero
(0.1)(0.1)  
Reclassification of deferred losses included in net income/(loss), net of tax of $(0.1), zero, $(0.1) and zero
0.3  0.2  
Total derivative instruments, net of tax of $(0.1), less than $0.1, $(0.1), and zero
0.2 (0.1)0.2  
Other comprehensive loss, net of tax(5.9)(1.2)(11.3)(0.2)
Comprehensive income/(loss)$71.7 $(13.8)$179.5 $(7.1)

































The accompanying notes are an integral part of these condensed consolidated financial statements.
5


LIVENT CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in Millions, Except Share and Par Value Data)September 30, 2022December 31, 2021
ASSETS(unaudited)
Current assets
Cash and cash equivalents$211.6 $113.0 
Trade receivables, net of allowance of approximately $0.3 in 2022 and $0.3 in 2021
164.0 96.4 
Inventories, net141.8 134.6 
Prepaid and other current assets56.5 55.3 
Total current assets573.9 399.3 
Investments433.9 27.2 
Property, plant and equipment, net of accumulated depreciation of $248.3 in 2022 and $243.0 in 2021
882.2 677.9 
Deferred income taxes0.5 0.9 
Right of use assets - operating leases, net 4.9 6.3 
Other assets111.9 90.9 
Total assets$2,007.3 $1,202.5 
LIABILITIES AND EQUITY
Current liabilities
Current portion of long-term debt$13.5 $ 
Accounts payable, trade and other72.2 65.4 
Accrued and other liabilities68.9 61.8 
Operating lease liabilities - current 1.0 1.1 
Income taxes7.4 3.0 
Total current liabilities163.0 131.3 
Long-term debt 241.6 240.4 
Operating lease liabilities - long-term4.1 5.4 
Environmental liabilities5.7 5.6 
Deferred income taxes23.6 12.7 
Contract liability - long-term198.0  
Other long-term liabilities16.7 11.7 
Commitments and contingent liabilities (Note 13)  
Total current and long-term liabilities652.7 407.1 
Equity
Common stock; $0.001 par value; 2 billion shares authorized; 179,476,829 and 161,791,602 shares issued; 179,373,751 and 161,689,984 outstanding as of September 30, 2022 and December 31, 2021, respectively
0.1 0.1 
Capital in excess of par value of common stock 1,157.8 778.1 
Retained earnings 251.7 60.9 
Accumulated other comprehensive loss(54.2)(42.9)
Treasury stock, at cost; 103,078 and 101,618 shares as of September 30, 2022 and December 31, 2021, respectively
(0.8)(0.8)
Total equity1,354.6 795.4 
Total liabilities and equity$2,007.3 $1,202.5 


The accompanying notes are an integral part of these condensed consolidated financial statements.
6


LIVENT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended September 30,
20222021
 (in Millions)
(unaudited)
Cash provided by operating activities:
Net income/(loss)$190.8 $(6.9)
Adjustments to reconcile net income/(loss) to cash provided by operating activities:
Depreciation and amortization19.4 18.7 
Restructuring and other charges/(income)4.4 (0.8)
Deferred income taxes11.3 11.2 
Separation-related income(0.4) 
Share-based compensation5.2 4.0 
Change in investments in trust fund securities0.6 0.4 
Deferred financing fees amortization 0.3 
Equity in net loss of unconsolidated affiliate8.4 3.7 
       Other gain, Blue Chip Swap(22.2) 
       Other non-cash adjustments0.2  
Changes in operating assets and liabilities:
Trade receivables, net(76.7)(6.2)
Inventories(14.4)(4.2)
Accounts payable, trade and other11.1 5.5 
Changes in deferred compensation (0.6)1.2 
Contract liability - long-term198.0  
Income taxes4.8 2.3 
Change in prepaid and other current assets and other assets(25.2)16.6 
Change in accrued and other current and long-term liabilities13.5 (4.8)
Cash provided by operating activities328.2 41.0 
Cash used in investing activities:
Capital expenditures(1)
(228.3)(69.4)
Investments in Livent NQSP securities(0.1)(1.2)
       Proceeds from Blue Chip Swap, net of purchases 22.2  
Investment in unconsolidated affiliate(17.7)(2.5)
Other investing activities(1.8)(1.2)
Cash used in investing activities(225.7)(74.3)
Cash (used in)/provided by financing activities:
Proceeds from Revolving Credit Facility 13.0 39.5 
Repayments of Revolving Credit Facility(13.0)(75.1)
Proceeds from Offering 261.6 
Payments of financing fees - Revolving Credit Facility(2.2) 
Payments of underwriting fees and expenses - Offering  (9.4)
       Proceeds from issuance of common stock - incentive plans 1.2 0.3 
Cash (used in)/provided by financing activities(1.0)216.9 
Effect of exchange rate changes on cash and cash equivalents(2.9)0.1 
Increase in cash and cash equivalents98.6 183.7 
Cash and cash equivalents, beginning of period113.0 11.6 
Cash and cash equivalents, end of period$211.6 $195.3 
7



LIVENT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
Nine Months Ended September 30,
20222021
Supplemental Disclosure for Cash Flow:(unaudited)
Cash payments for income taxes, net of refunds $35.8 $0.5 
Cash payments for interest (1)
$12.1 $12.9 
Cash (receipts)/payments for Restructuring and other charges$(0.1)$4.2 
Cash payments for Separation-related charges$0.9 $1.4 
Accrued capital expenditures$30.7 $17.8 
Accrued investment in unconsolidated affiliate$16.6 $ 
Non-cash investment in unconsolidated affiliates$387.1 $ 
Operating lease right-of-use assets and lease liabilities recorded for ASC 842$ $2.1 
____________________
1.For the nine months ended September 30, 2022, and 2021 $12.0 million and $11.5 million of interest expense was capitalized, respectively.





















The accompanying notes are an integral part of these condensed consolidated financial statements.
8













LIVENT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(UNAUDITED)
(in Millions Except Per Share Data)
Common Stock, $0.001 Per Share Par Value
Capital In Excess of Par Retained Earnings Accumulated Other Comprehensive LossTreasury StockTotal
Balance, December 31, 2020$0.1 $520.9 $60.3 $(44.4)$(0.7)$536.2 
Net loss— — (0.8)— — (0.8)
Stock compensation plans — 1.2 — — — 1.2 
Exercise of stock options— 0.2 — — — 0.2 
Shares withheld for taxes - common stock issuances— (0.8)— — — (0.8)
Net purchases of treasury stock - Livent NQSP— — — — (0.1)(0.1)
Foreign currency translation adjustments— — — (0.3)— (0.3)
Balance, March 31, 2021$0.1 $521.5 $59.5 $(44.7)$(0.8)$535.6 
Net income— — 6.5 — — 6.5 
Stock compensation plans— 1.4 — — — 1.4 
Net hedging gains, net of income tax— — — 0.1 — 0.1 
Foreign currency translation adjustments— — — 1.2 — 1.2 
Issuance of common stock - Offering— 252.3 — — — 252.3 
Balance, June 30, 2021$0.1 $775.2 $66.0 $(43.4)$(0.8)$797.1 
Net loss— — (12.6)— — (12.6)
Stock compensation plans— 1.4 — — — 1.4 
Issuance of common stock - Offering— (0.1)— — — (0.1)
Shares withheld for taxes - common stock issuances— (0.2)— — — (0.2)
Net hedging losses, net of income tax— — — (0.1)(0.1)
Exercise of stock options — 0.1 — — — 0.1 
Foreign currency translation adjustments— — (1.1)— (1.1)
Balance, September 30, 2021$0.1 $776.4 $53.4 $(44.6)$(0.8)$784.5 
Balance, December 31, 2021$0.1 $778.1 $60.9 $(42.9)$(0.8)$795.4 
Net income— — 53.2 — — 53.2 
Stock compensation plans — 1.7 — — — 1.7 
Exercise of stock options — 0.1 — — — 0.1 
Shares withheld for taxes - common stock issuances— (0.5)— — — (0.5)
Net hedging gains, net of income tax— — — 0.1 — 0.1 
Foreign currency translation adjustments— — — (1.0)— (1.0)
Balance, March 31, 2022$0.1 $779.4 $114.1 $(43.8)$(0.8)$849.0 
Net income— — 60.0 — — 60.0 
Stock compensation plans— 1.8 — — — 1.8 
Issuance of common stock - QLP Merger— 373.9 — — — 373.9 
Exercise of stock options— 0.2 — — — 0.2 
Shares withheld for taxes - common stock issuances— (0.2)— — — (0.2)
Reclassification of deferred hedging gains, net of income tax— — — (0.1)— (0.1)
Net purchases of treasury stock - Livent NQSP— — — — (0.1)(0.1)
Foreign currency translation adjustments— — — (4.4) (4.4)
Balance, June 30, 2022$0.1 $1,155.1 $174.1 $(48.3)$(0.9)$1,280.1 
Net income— — 77.6 — — 77.6 
Stock compensation plans— 1.8 — — — 1.8 
Exercise of stock options— 0.9 — — — 0.9 
Net sales of treasury stock - Livent NQSP— — — — 0.1 0.1 
Net hedging losses, net of income tax— — — (0.1)— (0.1)
Reclassification of deferred hedging losses, net of income tax— — — 0.3 — 0.3 
Foreign currency translation adjustments— — — (6.1)— (6.1)
Balance, September 30, 2022$0.1 $1,157.8 $251.7 $(54.2)$(0.8)$1,354.6 
The accompanying notes are an integral part of these condensed consolidated financial statements.
9


LIVENT CORPORATION
Notes to the Condensed Consolidated Financial Statements (unaudited)

Note 1: Description of the Business
Background and Nature of Operations
Livent Corporation (“Livent”, “we”, “us”, "Company" or “our”) manufactures a wide range of lithium products, which are used primarily in lithium-based batteries, specialty polymers and chemical synthesis applications. We serve a diverse group of markets. A major growth driver for lithium in the future will be the increasing adoption of electric vehicles ("EVs") and other energy storage applications.
Most markets for lithium chemicals are global with significant growth occurring in Asia, followed by Europe and North America, primarily driven by the development and manufacture of lithium-ion batteries. We are one of the primary producers of performance lithium compounds.
Note 2: Principal Accounting Policies and Related Financial Information
The accompanying condensed consolidated financial statements were prepared in accordance with the requirements of the Securities and Exchange Commission (“SEC”) for interim reporting. As permitted under those rules, certain notes or other financial information that are normally required by U.S. GAAP have been condensed or omitted from these interim financial statements. The financial statements included in this report reflect all normal and recurring adjustments which, in the opinion of management, are necessary for a fair presentation of our condensed consolidated financial position as of September 30, 2022 and December 31, 2021, the condensed consolidated results of operations, the condensed consolidated statement of comprehensive income/(loss) and the condensed consolidated statement of changes in equity for the three and nine months ended September 30, 2022 and 2021, and the condensed consolidated cash flows for the nine months ended September 30, 2022 and 2021. The unaudited results of operations for the interim periods reported are not necessarily indicative of results to be expected for the full year. These statements, therefore, should be read in conjunction with the annual consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (the "2021 Annual Report on Form 10-K").
Blue Chip Swap. Our wholly owned subsidiary in Argentina uses the U.S. dollar as their functional currency. Argentina peso-denominated monetary assets and liabilities are remeasured at each balance sheet date to the official currency exchange rate then in effect which represents the exchange rate available for external commerce (import payments and export collections) and financial payments, with currency remeasurement and other transaction gains and losses recognized in earnings. In September 2019, the President of Argentina reinstituted exchange controls restricting foreign currency purchases in an attempt to stabilize Argentina’s financial markets. As a result, a legal trading mechanism known as the Blue Chip Swap emerged in Argentina for all individuals or entities to transfer U.S. dollars out of and into Argentina. The Blue Chip Swap rate is the implicit exchange rate resulting from the Blue Chip Swap transaction. Recently, the Blue Chip Swap rate has diverged significantly from Argentina’s official rate due to the economic environment. During the first half of 2022, to support our capital expansion projects, we transferred U.S. dollars into Argentina through the Blue Chip Swap method whereby our wholly owned Delaware subsidiary, MDA Lithium Holdings LLC, realized a gain from the purchase in U.S. dollars and sale in Argentina pesos of Argentina Sovereign U.S. dollar-denominated bonds. The gain of U.S. $22.2 million for the nine months ended September 30, 2022, was recorded to Other gain in our condensed consolidated statement of operations. There were no Blue Chip Swap transactions for the three months ended September 30, 2022.
10


LIVENT CORPORATION
Notes to the Condensed Consolidated Financial Statements (unaudited) — (Continued)
Performance-Based Restricted Stock Unit ("PRSU") Awards. The Company granted approximately sixty-three thousand PRSUs ("2022 PRSUs") to key employees on February 23, 2022, as authorized under the provisions of the Livent Corporation 2018 Incentive Compensation and Stock Plan. The number of PRSUs ultimately earned will be based on Livent's Total Shareholder Return ("TSR") relative to the TSR of the companies in the Russell 3000 Chemical Supersector Index over a three year performance period from January 1, 2022 through December 31, 2024 (the "Performance Period"). The final number of PRSUs earned will range from 0% to 200% of the number of PRSUs granted based on the Company's relative TSR performance over the Performance Period.
Because the value of the 2022 PRSUs is dependent upon the attainment of a level of TSR, it requires the impact of the market condition to be considered when estimating the fair value of the 2022 PRSUs. As a result, the Monte Carlo model is applied and the most significant valuation assumptions used related to the 2022 PRSUs during the year ending December 31, 2022, include:

Valuation date stock price
$21.01
Expected volatility
72.99%
Risk free rate
1.74%

The February 23, 2022 grant date fair value of each PRSU granted was $20.82 per share.
There were no other significant changes to our accounting policies that are set forth in detail in Note 2 to our annual consolidated financial statements in Part II, Item 8 of our 2021 Annual Report on Form 10-K.

Note 3: Recently Issued and Adopted Accounting Pronouncements and Regulatory Items
New accounting guidance and regulatory items
In November 2021, the Financial Accounting Standard Board ("FASB") issued ASU No. 2021-10, Government Assistance (Topic 832). This ASU requires business entities to disclose information about government assistance they receive if the transactions were accounted for by analogy to either a grant or a contribution accounting model. The disclosure requirements include the nature of the transaction and the related accounting policy used, the line items on the balance sheets and statements of operations that are affected and the amounts applicable to each financial statement line item and the significant terms and conditions of the transactions. The ASU is effective for annual periods beginning after December 15, 2021. The disclosure requirements can be applied either retrospectively or prospectively to all transactions in the scope of the amendments that are reflected in the financial statements at the date of initial application and new transactions that are entered into after the date of initial application. We are evaluating the impact of this ASU on our consolidated financial statements.
In April 2020, FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848). The amendments in this ASU provide optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. An entity may optionally elect to apply the amendments effective in the first interim period that includes or is subsequent to March 12, 2020 through December 31, 2022. We do not expect adoption to have material impact on our condensed consolidated financial statements.
















11


LIVENT CORPORATION
Notes to the Condensed Consolidated Financial Statements (unaudited) — (Continued)
Note 4: Revenue Recognition     
Disaggregation of revenue
We disaggregate revenue from contracts with customers by geographical areas (based on product destination) and by product categories. The following table provides information about disaggregated revenue by major geographical region:
(in Millions)Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
North America (1) (2)
$46.8 $15.9 $109.3 $44.2 
Latin America0.7  1.8  
Europe, Middle East & Africa30.1 14.2 76.8 46.0 
Asia Pacific (1) (2)
154.0 73.5 405.9 207.3 
Total Revenue$231.6 $103.6 $593.8 $297.5 
1.During the three months ended September 30, 2022, countries with sales in excess of 10% of combined revenue consisted of Japan, the U.S., and China. Sales for the three months ended September 30, 2022 for Japan, the U.S., and China totaled $39.2 million, $45.1 million, $85.0 million, respectively. During the nine months ended September 30, 2022, countries with sales in excess of 10% of combined revenue consisted of Japan, the U.S., and China. Sales for the nine months ended September 30, 2022 for Japan, the U.S., and China totaled $124.1 million, $105.6 million, $208.8 million, respectively. During the three months ended September 30, 2021, countries with sales in excess of 10% of combined revenue consisted of Japan, the U.S. and China. Sales for the three months ended September 30, 2021 for Japan, the U.S. and China totaled $24.5 million, $15.6 million and $36.6 million, respectively. During the nine months ended September 30, 2021, countries with sales in excess of 10% of combined revenue consisted of Japan, South Korea, the U.S. and China. Sales for the nine months ended September 30, 2021 for Japan, South Korea, the U.S. and China totaled $65.1 million, $38.1 million, $43.5 million and $89.9 million, respectively.
2.In the fourth quarter of 2021, we reclassified certain revenue from the nine months ended September 30, 2021 from North America to Asia Pacific to present revenue based on product destination.

For the three months ended September 30, 2022, one customer accounted for approximately 22% of total revenue and our 10 largest customers accounted in aggregate for approximately 62% of total revenue. For the three months ended September 30, 2021, one customer accounted for approximately 35% of total revenue and our 10 largest customers accounted in aggregate for approximately 69% of total revenue. For the nine months ended September 30, 2022, one customer accounted for approximately 23% of total revenue and our 10 largest customers accounted in aggregate for approximately 61% of total revenue. For the nine months ended September 30, 2021, one customer accounted for approximately 36% of total revenue and our 10 largest customers accounted in aggregate for approximately 68% of total revenue. A loss of any material customer could have a material adverse effect on our business, financial condition and results of operations.

The following table provides information about disaggregated revenue by major product category:
(in Millions)Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Lithium Hydroxide$118.4 $50.7 $299.5 $160.5 
Butyllithium88.2 27.4 203.1 76.1 
High Purity Lithium Metal and Other Specialty Compounds11.9 9.8 42.0 27.6 
Lithium Carbonate and Lithium Chloride13.1 15.7 49.2 33.3 
Total Revenue$231.6 $103.6 $593.8 $297.5 

12


LIVENT CORPORATION
Notes to the Condensed Consolidated Financial Statements (unaudited) — (Continued)
Contract asset and contract liability balances
The following table presents the opening and closing balances of our receivables, net of allowances and contract liabilities from contracts with customers. As of December 31, 2021, there were no significant contract liabilities recorded in the condensed consolidated balance sheets.
(in Millions)Balance as of September 30, 2022 Balance as of December 31, 2021Increase
Receivables from contracts with customers, net of allowances$164.0 $96.4 $67.6 
Contract liability - long-term $198.0 $ $198.0 

The balance of receivables from contracts with customers listed in the table above represents the current trade receivables, net of allowance for doubtful accounts. The allowance for receivables represents our best estimate of the probable losses associated with potential customer defaults. We determine the allowance based on historical experience, current collection trends, and external business factors such as economic factors, including regional bankruptcy rates, and political factors.
Performance obligations
Occasionally, we may enter into multi-year take or pay supply agreements with customers. The aggregate amount of revenue expected to be recognized related to these contracts’ performance obligations that are unsatisfied or partially unsatisfied is approximately $713 million in the next three years. These approximate revenues do not include amounts of variable consideration attributable to contract renewals or contract contingencies. Based on our past experience with the customers under these arrangements, we expect to continue recognizing revenue in accordance with the contracts as we transfer control of the product to the customer. However, in the case a shortfall of volume purchases occurs, we will recognize the amount payable by the customer over the remaining performance obligations in the contract.
On July 25, 2022 we entered into a long-term supply agreement with a customer to deliver battery-grade lithium hydroxide over six years between 2025 and 2030. The contract includes an advance payment from the customer of $198 million, which we received in the third quarter of 2022. Revenue will be recognized as volumes are delivered. Any unrecognized deferred revenue is refundable if the agreement is terminated for any reason specified in the agreement.

Note 5: Inventories, Net
Inventories consisted of the following:
 (in Millions)September 30, 2022December 31, 2021
Finished goods$55.6 $52.2 
Semi-finished goods56.4 43.6 
Raw materials, supplies, and other29.8 38.8 
Inventory, net$141.8 $134.6 

Note 6: Investments    
On June 6, 2022, Livent closed on the Transaction Agreement and Plan of Merger (the "QLP Merger") with The Pallinghurst Group ("Pallinghurst") to provide Livent with a direct 50% ownership interest in the Nemaska Project, a fully integrated lithium chemical asset located in Québec, Canada that is not yet in commercial production. The Company issued 17,500,000 shares of its common stock to acquire the remaining 50% share of Québec Lithium Partners (UK) Limited ("QLP") previously owned by Pallinghurst and certain of its investors. Upon consummation of the QLP Merger, Livent recorded an Investment of $387.1 million, Cash and cash equivalents of $0.3 million and Short-term debt of $13.5 million, representing QLP's equity method investment in the Nemaska Project, cash on hand, and debt, respectively, with a corresponding increase to additional paid in capital of $373.9 million in its condensed consolidated balance sheet. Livent now owns a 50% equity interest in the Nemaska Project through its ownership of QLP. The Canadian government, through Investissement Québec (“IQ”), continues to own the remaining 50% interest in the Nemaska Project.
The Company accounts for the investment in the Nemaska Project as an equity method investment on a one-quarter lag basis and it is included in Investments in our condensed consolidated balance sheets. For the three and nine months ended
13


LIVENT CORPORATION
Notes to the Condensed Consolidated Financial Statements (unaudited) — (Continued)
September 30, 2022, we recorded a $3.5 million and $8.4 million loss, respectively, related to our equity interest in the Nemaska Project to Equity in net loss of unconsolidated affiliate in our condensed consolidated statement of operations. The carrying amount of our equity interest in the Nemaska Project was $431.2 million (representing our 50% direct interest) and $23.8 million (representing our 25% indirect interest) as of September 30, 2022 and December 31, 2021, respectively.

Note 7: Restructuring and Other Charges
The following table shows other charges included in "Restructuring and other charges" in the condensed consolidated statements of operations:
Three Months Ended September 30,Nine Months Ended September 30,
(in Millions)2022202120222021
Restructuring charges:
Severance-related and exit costs (1)
$0.4 $0.1 $0.9 $0.2 
Other charges:
Environmental remediation (2)
0.1 0.1 0.3 0.3 
Other (3)
0.2 0.9 3.4 2.9 
Total Restructuring and other charges$0.7 $1.1 $4.6 $3.4 
___________________ 
1.The three and nine months ended September 30, 2022 includes severance costs for management changes at certain administrative facilities.
2.There is one environmental remediation site in Bessemer City, North Carolina.
3.Three and nine months ended September 30, 2022 and 2021 consists primarily of transaction-related legal fees and miscellaneous nonrecurring transactions.

Note 8: Income Taxes
We determine our interim tax provision using an estimated annual effective tax rate methodology (“EAETR”) in accordance with U.S. GAAP. The EAETR is applied to the year-to-date ordinary income, exclusive of discrete items. The tax effects of discrete items are then included to arrive at the total reported interim tax provision.
The determination of the EAETR is based upon a number of estimates, including the estimated annual pretax ordinary income in each tax jurisdiction in which we operate. As our projections of ordinary income change throughout the year, the EAETR will change period-to-period. The tax effects of discrete items are recognized in the tax provision in the period they occur in accordance with U.S. GAAP. Depending on various factors, such as the item’s significance in relation to total income and the rate of tax applicable in the jurisdiction to which it relates, discrete items in any quarter can materially impact the reported effective tax rate. As a global enterprise, our tax expense can be impacted by changes in tax rates or laws, the finalization of tax audits and reviews, as well as other factors. As a result, there can be significant volatility in interim tax provisions.
Provision for income taxes for the three and nine months ended September 30, 2022 was $21.5 million and $56.4 million resulting in an effective tax rate of 21.7% and 22.8%, respectively. Provision for income taxes for the three and nine months ended September 30, 2021 was an expense of $15.4 million and $13.8 million resulting in an effective tax rate of 540.5% and 198.7%, respectively.

14


LIVENT CORPORATION
Notes to the Condensed Consolidated Financial Statements (unaudited) — (Continued)
Note 9: Debt
Long-term debt
Long-term debt consists of the following:
Interest Rate
Percentage
Maturity
Date
September 30, 2022December 31, 2021
(in Millions)SOFR borrowingsBase rate borrowings
Revolving Credit Facility (1)
4.89%7.0%2027$ $ 
Deferred Payment Note8.0%202213.5  
4.125% Convertible Senior Notes due 2025
4.125%2025245.8 245.8 
Transaction costs - 2025 Notes
(4.2)(5.4)
Subtotal long-term debt (including current maturities)255.1 240.4 
Less current maturities(13.5) 
Total long-term debt$241.6 $240.4 
______________________________
1.As of September 30, 2022 and December 31, 2021, there were $14.5 million in letters of credit outstanding under our Revolving Credit Facility and $485.5 million available funds as of September 30, 2022 and December 31, 2021. Fund availability is subject to the Company meeting its debt covenants.
Deferred Payment Note ("QLP Note")
Prior to becoming our wholly owned subsidiary pursuant to the QLP Merger, on November 26, 2020, QLP entered into the QLP Note to defer $12.5 million of its investment commitment for its 50% share of the Nemaska Project. Upon our acquisition of the remaining share of QLP in June 2022, the QLP Note became the sole liability of Livent. The QLP Note, payable to Nemaska Lithium Shawinigan Transformation Inc., matures on November 26, 2022, is classified as Current portion of long-term debt in our condensed consolidated balance sheets and earns coupon interest at an annual rate of 8%, compounded to the principal monthly, for the first twelve months. This interest is payable at the maturity date, along with the principal. From November 26, 2021, interest on the note accrues and is payable monthly. On October 14, 2022, QLP paid Nemaska Lithium Shawinigan cash of $13.5 million to repay the QLP Note.
2025 Notes
In the third quarter of 2022, the holders of the 2025 Notes were notified that the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on, and including, September 30, 2022 was greater than or equal to 130% of the conversion price on each trading day, and as a result, the holders have the option to convert all or any portion of their 2025 Notes through December 31, 2022. The 2025 Notes are classified as long-term debt.
The Company recognized non-cash interest related to the amortization of transaction costs of $0.4 million and $1.1 million, all of which was capitalized, for the three and nine months ended September 30, 2022, respectively. The Company recorded $2.5 million and $7.6 million of accrued interest expense related to the principal amount for the three and nine months ended September 30, 2022, respectively, all of which was capitalized.
Amended and Restated Credit Agreement, (the "Revolving Credit Facility")
On September 1, 2022, the Company entered into the Revolving Credit Facility among the Company, Livent USA Corp (together with the Company, the “Borrowers”), certain subsidiaries of the Borrowers as guarantors, the lenders (the “Lenders”) and issuing banks and Citibank, N.A., as administrative agent. The Revolving Credit Facility amended and restated the Company’s Original Credit Agreement, as amended (the “Credit Agreement”).
The Revolving Credit Facility provides for a $500 million senior secured revolving credit facility, $50 million of which is available for the issuance of letters of credit for the account of the Borrowers, with an option to request, and subject to each Lender’s sole discretion, that the aggregate revolving credit commitments be increased to up to $700 million. The issuance of letters of credit and the proceeds of revolving credit loans made pursuant to the Revolving Credit Facility may be used for general corporate purposes, including capital expenditures and permitted acquisitions.
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LIVENT CORPORATION
Notes to the Condensed Consolidated Financial Statements (unaudited) — (Continued)
Revolving loans under the Revolving Credit Facility will bear interest at a floating rate, which will be (i) a base rate, (ii) Adjusted Term Secured Overnight Financing Rate (“SOFR”) (defined as the forward-looking SOFR term rate published by CME Group Benchmark Administration Limited plus 0.10% per annum subject to a floor of zero) or (iii) Euro Interbank Offered Rate (“EURIBOR”), plus, in each case, an applicable margin, as determined in accordance with the provisions of the Revolving Credit Facility. The Revolving Credit Facility includes a quarterly commitment fee on the average daily unused amount of each Lender’s revolving credit commitment at a rate equal to an applicable percentage based on the Company’s first lien leverage ratio. The initial commitment fee is 0.25% per annum. Amounts under the Revolving Credit Facility may be borrowed, repaid and re-borrowed from time to time until the final maturity date on September 1, 2027. Voluntary prepayments and commitment reductions are permitted at any time without payment of any prepayment fee upon proper notice and subject to minimum dollar amounts.
The foregoing description of the Revolving Credit Facility does not purport to be complete and is qualified in its entirety by reference to the Amended and Restated Credit Agreement, which is filed as Exhibit 10.1 to this Quarterly Report on Form 10-Q.
We recorded $2.2 million of incremental deferred financing costs in the condensed consolidated balance sheets for the Revolving Credit Facility commitment, arrangement and legal fees and a $0.1 million loss on debt extinguishment in the condensed consolidated statements of operations for the three and nine months ended September 30, 2022 for the write off of existing deferred financing costs to recognize a partial change in syndication related to the Revolving Credit Facility. The carrying value of our deferred financing costs was $3.0 million as of September 30, 2022.
Covenants
The Credit Agreement contains certain affirmative and negative covenants that are binding on us and our subsidiary, Livent USA Corp., as borrowers (the "Borrowers") and their subsidiaries, including, among others, restrictions (subject to exceptions and qualifications) on the ability of the Borrowers and their subsidiaries to create liens, to undertake fundamental changes, to incur debt, to sell or dispose of assets, to make investments, to make restricted payments such as dividends, distributions or equity repurchases, to change the nature of their businesses, to enter into transactions with affiliates and to enter into certain restrictive agreements. Furthermore, the Borrowers are subject to financial covenants regarding leverage (measured as the ratio of debt to adjusted earnings) and interest coverage (measured as the ratio of adjusted earnings to interest expense). Our financial covenants have not changed with the September 1, 2022 amendments to our Credit Agreement. Our maximum allowable first lien leverage ratio is 3.5 as of September 30, 2022. Our minimum allowable interest coverage ratio is 3.5. We were in compliance with all requirements of the covenants as of September 30, 2022.
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LIVENT CORPORATION
Notes to the Condensed Consolidated Financial Statements (unaudited) — (Continued)
Note 10: Equity
As of September 30, 2022 and December 31, 2021, we had 2 billion shares of common stock authorized. The following is a summary of Livent's common stock issued and outstanding:
IssuedTreasuryOutstanding
Balance as of December 31, 2021161,791,602 (101,618)161,689,984 
RSU awards64,539 — 64,539 
Stock option awards120,688 — 120,688 
Net purchases of treasury stock - NQSP— (1,460)(1,460)
Issuance of common stock17,500,000 — 17,500,000 
Balance as of September 30, 2022179,476,829 (103,078)179,373,751 
On June 6, 2022, the Company closed on the QLP Merger and issued 17,500,000 shares of its common stock, par value $0.001 per share, in a private placement as consideration to acquire the remaining 50% share of QLP previously owned by Pallinghurst and certain of its investors. See Note 6 for details.

Accumulated other comprehensive loss

Summarized below is the roll forward of accumulated other comprehensive loss, net of tax.
(in Millions)Foreign currency adjustments
Derivative Instruments (1)
T