Livent (LTHM) stock is down 2.4% in Wednesday's premarket trading session as of 7:55 a.m. ET, following the U.S.-based lithium producer's release of its fourth-quarter and full-year 2022 report Tuesday afternoon.

The market's slightly negative initial reaction is likely due to the quarter's revenue growth and 2023 revenue guidance missing Wall Street's expectation. The quarter's earnings, however, surpassed the analyst consensus estimate.

Livent continues to benefit from powerful demand for lithium to make batteries for electric vehicles (EVs).

A white electric car charging at a public station in a parking lot.

Image source: Getty Images.

Livent's key quarterly numbers 

Metric Q4 2021 Q4 2022 Change 
Revenue $122.9 million $219.4 million 79%
GAAP net income $7.5 million $82.7 million 1003%
Adjusted net income $15.6 million $84.2 million 440%
GAAP EPS $0.04 $0.39 875%
Adjusted EPS $0.08 $0.40 400%

Data source: Livent. GAAP = generally accepted accounting principles. EPS = earnings per share.

From the third quarter, revenue and adjusted EPS were down 5% and 2%, respectively.

Wall Street was looking for Q4 adjusted EPS of $0.38 on revenue of $239.8 million, so the company beat the profit expectation but missed on the top line.

Livent provides annual, but not quarterly, guidance. For 2022, the company's revenue of $813.2 million slightly missed its most recent outlook of $815 million to $845 million. Its annual adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $366.7 million came in at the high end of its outlook of $350 million to $370 million.

In 2022, Livent generated cash from operations of $454.7 million, up significantly from $26.4 million in 2021. It ended the year with $189 million in cash and cash equivalents (up from $113 million at the end of 2021) and $241.9 million in long-term debt (roughly flat with the year-ago period). 

For context, in the third quarter, Livent's revenue soared 124% year over year to $231.6 million, and its adjusted EPS skyrocketed 925% to $0.41.

Capacity expansion update

Lithium carbonate in Argentina (italicized bullet points taken verbatim from my Livent Q1 earnings article, which were reiterated in my Q3 earnings article):

  • The [first phase of the] first expansion is on schedule to add 10,000 metric tons of capacity by the first quarter of 2023. Status: On track, with commercial volumes expected in the second half of 2023.
  • The second phase of the first expansion is expected to add 10,000 metric tons of capacity by the end of 2023. Status: On track, with first production expected in early 2024. 
  • At year-end 2023, "the company expects ... lithium carbonate capacity to be double that of 2022, approaching 40,000 metric tons," it said in the earnings release. 

Lithium hydroxide (italicized bullet points taken verbatim from my Q3 earnings article): 

  • The 5,000-metric-ton-capacity expansion in Bessemer City, North Carolina, just began qualifying product with customers. Status: Qualification of product continues, with delivery of commercial volumes slated for 2023.
  • The project to produce another 15,000 metric tons of capacity in China is expected to be mechanically complete by the end of 2023. Status: On track, with first commercial volumes expected in 2024.
  • At year-end 2023, the company "expects to have a total of 45,000 metric tons of global lithium hydroxide capacity, inclusive of the new [China] facility," it said in the release. 

Lithium hydroxide at its 50%-owned Nemaska project (italicized bullet point taken verbatim from my Q3 earnings article):

  • Nemaska is a hard-rock lithium project in Québec, Canada. An entity owned by the Québec government owns the other 50% stake. 
  • The company said that it "expects that Nemaska Lithium will be in a position to announce initial customer agreements in the first half of 2023 and commercial sales are expected to begin in 2025."

2023 guidance

Metric 2022 Result 2023 Guidance  Projected Change
Revenue $813.2 million $1.0 billion to $1.1 billion  23% to 35%
Adjusted EBITDA $366.7 million $510 million to $580 million  39% to 58%

Data source: Livent. 

Livent said the guidance is based on its expectation of 20% higher total volumes sold of lithium carbonate equivalent and higher average realized pricing across its portfolio of lithium products, partially offset by higher costs, relative to 2022.

Going into the report, Wall Street had been looking for 2023 revenue of $1.12 billion, so the company's guidance fell a little short of this estimate. 

In short, Livent topped off a fantastic year with a strong quarter.