Arcadium Lithium plc (NYSE: ALTM, ASX: LTM), a leading global lithium chemicals producer, today announced its second-quarter 2024 results, highlighting strong financial performance and a strategic shift in its expansion plans to align with current market conditions.
The company reported $255 million in revenue for the second quarter, resulting in a GAAP net income of $85.7 million, or 7 cents per diluted share. Adjusted EBITDA reached $99.1 million, and adjusted earnings per diluted share were 5 cents. Arcadium Lithium realized average pricing of $17,200 per product metric ton for combined lithium hydroxide and carbonate volumes during the quarter.
Despite slightly increased total volumes compared to the first quarter, driven by higher carbonate and hydroxide sales, lower spodumene sales due to reduced production at Mt. Cattlin impacted overall performance. Average realized pricing for spodumene saw sequential growth, while other products experienced a decline attributed to lower market prices for lithium chemicals, the lag impact of price indices on a portion of carbonate and hydroxide volumes, and changes in product and customer mix.
Arcadium Lithium is focusing on leveraging its low-cost, high-quality operational footprint and securing long-term contracts with strategic customers to navigate through market fluctuations. This approach helped the company achieve higher realized pricing in the second quarter than it would have under a fully market-based pricing approach, contributing to strong underlying profitability.
The company is expecting to deliver cost savings in 2024 at the higher end of its $60 to $80 million guidance range. These savings result from organizational restructuring, operating and logistics savings, and the elimination of third-party and other services across the two legacy companies. Operating and logistics savings primarily relate to raw materials, energy, and transportation in Argentina, with several key supplier contracts renegotiated for immediate effect.
Recognizing the changing market conditions, Arcadium Lithium is accelerating further cost reduction initiatives. The company previously announced its expectation to achieve total cost savings of $125 million per annum within three years of merger completion and has commenced a program to expedite the delivery of these cost savings.
Arcadium Lithium is projecting a 25% increase in combined lithium hydroxide and lithium carbonate sales volumes for the full year compared to 2023, with a further 25% increase in 2025 compared to 2024. These increases are driven by already-completed expansions in Argentina, where both expansions are currently producing commercial volumes of lithium carbonate, contributing to higher sales volumes of carbonate and hydroxide in the second half of the year.
Further volume growth is anticipated from both Olaroz and Fenix in 2025 as they steadily move towards delivering their total nameplate capacity of 40,000 metric tons and 33,000 metric tons (including lithium chloride), respectively.
For lithium hydroxide, the combined 30,000 metric tons of expansions in Bessemer City (U.S.), Zhejiang (China), and Naraha (Japan) are finalizing qualification with key customers. These expansions are expected to produce increasing commercial volumes as lithium carbonate production in Argentina increases to feed them.
Despite current lithium market prices, Arcadium Lithium maintains a belief in the long-term growth trajectory for lithium demand and expects a return to healthier market fundamentals over time. However, recognizing that the industry does not need to add supply at the same pace as previously anticipated, the company has made strategic decisions to defer investment in two of its four current expansion projects.
While fully committed to developing its highly attractive portfolio of expansion opportunities, each of which is expected to be among the lowest cost lithium operations globally when completed, Arcadium Lithium will proceed on a timeline supported by both the market and its customers.
The company intends to pause current investment in its 40,000 metric ton (LCE) spodumene Galaxy project in Canada (formerly “James Bay”) and is exploring the opportunity to bring in a partner interested in providing capital for the project in return for a long-term strategic investment. The pause in spending will be structured to minimize both cost and timing disruption when the project is ultimately resumed.
Additionally, Arcadium Lithium is revisiting the sequencing of its combined 25,000 metric ton lithium carbonate projects at the Salar del Hombre Muerto in Argentina. Instead of executing Fénix Phase 1B and Sal de Vida Stage 1 simultaneously, the projects will now be completed sequentially.
As a result of these actions, the company will immediately reduce its capital spending and plans to spend approximately $500 million less over the next 24 months. There are no plans to alter the development of Nemaska Lithium, a 32,000 metric ton integrated spodumene to hydroxide project in Canada.
Arcadium Lithium is preparing for an upcoming Investor Day in September, where the company will provide its views on the evolution of the lithium market and how they align with its latest expansion plans and broader strategic objectives for the business.
Arcadium Lithium continues to anticipate higher overall volumes year over year, with a 25% increase in combined lithium hydroxide and lithium carbonate sales offset by lower spodumene concentrate sales. The company provided a table reflecting Revenue and Adjusted EBITDA outcomes based on two different lithium market price scenarios for the second half of 2024.
Arcadium Lithium is a leading global lithium chemicals producer committed to safely and responsibly harnessing the power of lithium to improve people’s lives and accelerate the transition to a clean energy future.
