Will Lithium Giant Livent's Earnings Crush Expectations Again?

Livent (LTHM) is slated to report its second-quarter 2022 results after the market close on Tuesday, Aug. 2. An analyst conference call is scheduled for the same day at 4:30 p.m. ET.

The pure-play lithium producer's report will precede that of lithium industry goliath Albemarle, which plans to release its quarterly report after the market close on Wednesday, Aug. 3.

Investors will probably be approaching Livent's report with a solid dose of optimism. Last quarter, the Philadelphia-based company's revenue comfortably beat the Wall Street consensus estimate, and earnings crushed it. 

Moreover, management significantly raised its full-year guidance for both the top line and the key profitability metric for which it provides an outlook. These boosts were due to management expecting higher realized lithium prices than it previously projected. Prices have soared because supply has been tight for the metal that's needed to produce the lithium-ion batteries that power electric vehicles (EV). 

Last quarter's report thrilled investors, who propelled shares up 30%. In 2022, Livent stock is down 8.7% as of July 8, but it is still notably outperforming the broader market, as the S&P 500's return is underwater by 17.5% over this period. Moving our lens further out, shares are up 19.3% over the last year, whereas the S&P 500's return is 8.4% in the red.

Image source: Getty Images.

Livent's key numbers

Here are the year-ago period's results and Wall Street's estimates to use as benchmarks.

Data sources: Livent and Yahoo! Finance. YOY = year over year.

Thanks to surging lithium prices, analysts expect Livent's second-quarter year-over-year growth on the bottom line, adjusted for one-time items, to be about six times its revenue growth. 

For context, in the first quarter, Livent's revenue jumped 56% year over year to $143.5 million, topping the $140.2 million Wall Street consensus estimate. On an adjusted basis, net income soared 1,011% to $40 million, which translated to earnings per share rocketing 950% to $0.21. This result sped by the $0.14 analysts had projected.

Capacity expansion update

Investors can expect an update on Livent's capacity expansion. The company has several projects underway to expand the quantities of lithium carbonate and lithium hydroxide it's able to produce.

The project that's closest to coming on line is a 5,000-metric-ton hydroxide capacity expansion in Bessemer City, North Carolina. Last quarter, the company said it expected commercial production to start in the second half of this year.

Full-year 2022 guidance

Last quarter, management raised its annual guidance for both revenue and adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization). These increases were due entirely to higher expected realized prices across all its lithium products. There were no changes in its projected sales volumes.

The stock will likely react favorably if management notably increases its guidance again. 

Data source: Livent. YOY = year over year.