Q2 2022 Li-Cycle Holdings Corp Earnings Call
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[laughter] stand by your program is about to begin.
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Good day my name is Britney and I will be your conference operator today at this time I would like to welcome everyone to the second quarter 2022 lifecycle holdings call is webcast all lines have been placed on mute to prevent any background noise.
After the Speakers' remarks, there will be a question and answer session. If you would like to ask a question at that time. Please press star one on your telephone keypad. If you should need operator assistance. Please press star zero.
Q I would now like to turn the call over to now the ASCII head of Investor Relations. Please go ahead.
Thank you Britney good morning, and thank you everyone for joining us today for lifecycle review of our second quarter 2022 results ended April 30.
We will start today with formal remarks from object culture.
Co founder President and Chief Executive Officer, Jim Johnson, Co founder and Executive Chairman and Debbie Simpson Chief Financial Officer.
We will then follow with a Q&A session.
Ahead of this call lifecycle issued a press release on it.
And patients, which can be found on the Investor Relations section of our website at investors felt like they called Dot com.
On this call management will be making statements based on current expectations plans estimates and assumptions, which are subject to significant risks and uncertainties.
Actual results could differ materially from our forward looking statements if any of our key assumptions are incorrect.
Because of factors discussed.
In today's press releases during this conference call and in our past reports and filings with the U S Securities and Exchange Commission and the Ontario Securities Commission in Canada.
These documents can be found on our website at investors thought why he chuckled dot com.
We do not undertake any duty to update any forward looking statements.
Were written or oral made during this call or from time to time to reflect new information future events or otherwise except as required.
With that I'm pleased to turn the call to object.
Thank you Darla and good morning.
We are pleased you could join us students gone through significant achievements during the past quarter.
Strategically we are positioning lifecycle spoke of having an integrated network.
In the long term deferred reflecting partner and supplier.
In battery materials, particularly in North America and Europe .
Beginning on slide three with highlights.
And I will cover in more detail later.
On the commercial side.
We completed a milestone in the long term commercial contracts.
For LG Chem.
All of the entities solution together with LG.
We didn't participate in the global battery supply chain.
On the operational we operationalize, the Arizona show and made advancements on the construction of the Rochester.
And other than that.
We further strengthened our balance sheet to a total of $250 million.
Some of the Glencore notes.
Yes.
Before reviewing our progress in executing on our commercial strategy on slide four per se.
Our gross margin trends, including the supply and demand fundamentals for critical battery materials.
And the growing need for domestic services.
Turning to slide four.
Second word trends and geopolitical concerns are accelerating good movement towards energy independence and to address the global climate change.
Hey, bring faster electrification of transportation system.
As a result, global incumbent and emerging automotive OEM.
Accelerating their production goals for electric vehicles.
They have announced their internal combustion vehicles.
On a global scale.
Trend is driving is projected to grow only Dennis.
And then supply of critical materials this decade.
The pace of enrollment of supply is being noticed by the.
Continued rapid growth in EV demand.
And the accelerating secular trends in this industry.
This underscores the importance.
Recycled metals and of his question.
Augment supply.
Increasingly normalized production.
Our total addressable market of our churn for lithium ion batteries available for recycling continues to grow even from our last quarter.
The Captain America has increased by more than 170%.
Year end 2012 levels in Europe by more than 330% for a combined increase of our freedom to.
Microsoft.
There is a meaningful step change is largely driven by increased battery manufacturer manufacturing investments to keep pace.
Anticipated demand.
Turning to slide five.
Not only our key battery metals.
And a growing supply deficit, but importantly.
All three regions are controlled primary and post and supply sources.
The battery materials are outside of North America and Europe .
Given these dynamics the need to accelerate the domestic development.
<unk> supply chain.
But in my career.
Turning to slide six.
A number of new public policy program in the U S.
The development of domestic supply sources to meet critical materials.
Here, we highlight a couple of significant government programs.
And to provide financial support to consolidate domestic expansion.
Adding to my infrastructure essentially.
A critical industry.
Now, let's shift to lifecycle of commercial strategy and our recently completed global partnerships bolstering our ability to capitalize on these market trends and accelerating our path to sustainable regional causes battery supply chains.
Turning to slide 10.
For high level background on our new partners, and it's critical and growing industry.
On the front lines Glencore is a leading provider of primary metals for lithium ion batteries in electric vehicles.
Importantly, they're a top producer of cobalt.
The top three producers aren't falling nickel.
For context quantify Nicole <unk>.
Kimberly in mind.
On the far right LG Chem is a leading global chemical company with expertise in active battery materials manufacturer.
LNG Henry solution towards battery production sites in the U S. Paul in South Korea, and China is one of the largest global lithium ion battery manufacturers for electric vehicles.
LG had announced multibillion dollar investments to grow the battery business with plans to establish robust battery cell production capacity in North America and Europe .
Glencore lifecycle preferred recycle.
Lifecycle will deliver a closed loop solution for securing LNG growing battery materials combined needs.
Erica.
Hey, Glenn core has the ability to combine these global network as a leading primary producer and recycled metals with lifecycle.
Alrighty.
These partnerships are expected to accelerate.
Circular economy, but lithium ion batteries in North America.
With the strategic partners lifecycle has the opportunity to bring a direct and indirect vertically integrated solution.
Broader and more diversified global customer base.
Supply chain universe.
Turning to slide eight.
The recently completed long term ADT and Allstate personal guarantee from Glencore LG.
Are expected to deliver significant economic value to lifecycle.
These new partnerships complement existing lifecycle of commercial agreements such as with attractive.
I'll provide more color on the Viper Raymond first.
These are long term agreements with a 10 year plus term beginning August one of this year.
Importantly, these agreements enable us to jointly develop opportunities for astellas.
So your incremental whatsapp supply Charterhouse and optimizing bypass sales Commerce service.
Expand the market for battery grade products.
So here I'll take the main byproducts.
And finally.
And a secured supply of sulfuric acid.
The key reason for our house.
Regarding LG, we completed long term and take it off take contracts for battery materials.
Uh huh.
<unk> solution, well supplied lifecycle with lithium ion batteries scrap recycling or silos.
And lifecycle of supply L. G.
Rochester hub.
Turning to slide nine to bring it all together.
Partnering with Glencore, leading primary fuel source.
As a leading battery manufacturing source lifecycle spoken out that we're well positioned at the intersection of the battery materials supply chain.
As depicted here metals mining is currently the primary source battery materials to supply to sell an auto Oems.
As noted earlier the building services are largely outside of North America and Europe .
Secondly in supply deficit overtime.
Sure if I understood it.
<unk> goal primary my network.
The lifecycle of a local items recycled resources.
We are providing an integrated battery materials platform for global platforms.
Predominantly focused on North America here.
I think manufacturing is a key source for recycling feedstock to providing secondary sources of battery grade materials.
Alrighty excellent regions with LG provide lifecycle, where the nickel based feedstock for recycling back into battery grade nickel sulfate for their battery cell production, hence the term.
The supply chain.
Yes.
Importantly, with rich.
Back to our commercial execution.
With these strategic partnerships, we've announced today I couldn't be more excited about our growth prospects essentially it is a recycling solution.
And unique position in the value chain.
Our focus continues to be to stand and operationalize our network to meet this increasing market demand.
Now I'll turn it over to Kevin to provide an operational overview.
Thank you Roger beginning on slides 10, and 11 I will provide an update on our historical hub network.
As we've discussed on prior earnings calls in order to be a reliable second resource on battery grade materials. It is important to secure sustainable intake all battery materials recycling.
To facilitate this we are.
Low trading off is going to close two battery and automotive manufacturers minimizing transportation routes.
<unk>.
Our innovative process designed to the chemistry.
In fact, the agnostic.
In addition, we are positioning the sorts of network to capture growing volumes, our manufacturing staff to provide a strong base load of materials for our operations.
Supplementing this will be end of life battery volumes, which should continue to rise steadily in the coming decade.
As you can see on slide 10, we now have three sports in operation, including the Horizontals.
They are operational at the end of April .
We are going to explore the next generation of that will start the innovation in terms of scale in purchasing capability.
It is double the capacity of the earliest sports.
With a current capability for processing for electric vehicle battery pack without having to do this job.
Sure.
Okay.
He will quickly be followed by the Alabama to start building the same set of situations.
This work is coming online on schedule following the build in process learning from Arizona.
These facilities have been constructively with our proven module approach lifecycle, Ontario applications.
Faster and more cost effective deployment.
As we optimize our sports with a network of facilities.
Second generation innovation.
The two drivers.
And productivity.
This will allow us to the right. The battery was installed to explode in size for optimal processing.
For example, many.
Manufacturing scrap and consumer electronic garage batteries can be flex workforce at all sort of thoughts.
Full EV battery packs for access to our first generational sort of sinus.
Ontario, and New York, requiring manual assembly by trained technicians before being processed.
With expanded capacity of processing capability in Arizona in Alabama.
The battery box can be processed without dismantling drawing to improve efficiency.
This combination of different processing size and capabilities allow a lifecycle to provide a system solution for all of the CMO high value clients and form factors driving to enhance safety and economics.
A final note with the upcoming commissioning of the Alabama story, we continue to expect the second half acceleration to our black mass pilot production for fiscal year 2022.
<unk> 6500 to 7500 tonnes.
More than three times the level of last year.
Turning to slide 11 for an update on our Rochester.
As we mentioned in the first quarter, we obtained Ritchie environmental comments for the launch of the hub enabling.
Enabling us to move forward with the next stage of project development and construction.
During this past quarter, we continued to make progress on several fronts, specifically, we have locked in the delivery schedule and pricing for the majority of our long lead equipment.
And purchasing of the construction material.
Providing enhanced component and material processing.
We continue to monitor and manage material and labor costs and potential supply chain issues to maintain this space of capital cost target.
We continue to expect commissioning as planned in 2023.
In the coming quarters, we look forward to sharing with other exciting construction developments over the last year.
Okay.
Turning to slide 12 for an update on our European build out.
Similar to North America deployment strategy lifecycle is targeting spark locations.
<unk> products with a battery and electric vehicle manufacturers.
Our developmental the Norway and Germany.
And both are expected to come online in 2023 with a total processing capacity of 20000.
Per year upward demand batteries.
Summing it all up on slide 13.
Good color.
Our portfolio all spoken hub projects in North America and Europe .
It could come online in 2022 and 2020, it's right.
I would like to leave you with these key source that underpin our competitive advantages and will drive continued successful rollout.
Okay.
Network strategy.
One we continue to demonstrate the flexibility of that.
Exactly and time tested processes technology.
There's chemistry and pulled back.
With higher recovery rates.
Sure.
Innovative construction technology is scalable and even standard equipment, allowing for expedited deployment in response to customer demand.
Great.
Partnerships.
We're the leading global participant in that.
Battery supply chain, providing optionality for capturing market growth.
By executing efficiently and growing out historically hub integrated network.
<unk> continued commercial expansion.
Serving the market she regional partner for closing the value materials.
That concludes our formal remarks, Debbie will now provide a financial update.
Thank you Kim and good morning, everyone.
I can turn your attention to slide 14.
Question about engineered Kentucky 20 trenching.
Revenues increased to 879 times compared to $300000 in the same quarter last year.
Driven by increases in product sales volume unmentioned based pricing.
Revenue reflected both in cost reflects $4 2 million and the fair market value adjustment of 4 million relating to prior P. M.
By way of background aligning with our contracts on ice ratio question requirements.
Revenue from product sales.
To ensure our customers.
Eastern blockbuster sales volume.
Hearing market.
Our customer you can tie to alkermes, and we retain pricing exposure in children related receivables in Australia.
Wholesale revenue and receivable balances.
We measured at HP Yang from England to metal prices between the mutual recognition of any scale and final central line.
Uh huh.
Hence the fair market value adjustment and an interim coach <unk>.
Blackman produced and the question was more than two times higher than the same quarter last year and slightly higher sequentially.
A significant portion of the bat chasing supply first of all to the second quarter.
Large format to meet Sharon Green chemicals, So I'm sure the utility system and the region.
E Com.
Thanks, Tim Okay, our Iris earnings call, Kevin first of its kind capability changing processes margin pack that discharge Archeage next spring.
In relation to this we made a deliberate choice to build inventory of this large format actually seen supply during the quarter chair for optimal processing at our Arizona facility.
As we expand our sources of supply and Greg spoke anyway, we will increasingly be able to optimize the company Lee and capacity utilization announced the Cherokee by matching noticing this is best suited for process.
Operating expenses for the corn, sorry increased to $30 million compared to $5 6 million, Jamie CMT last year, reflecting ongoing expansion of operations in North America and the early build out in Europe .
The increase was primarily related to personnel cost operational.
As shown in engineering resources, as well as public company costs.
In addition, this reflected the higher costs from raw material and supply that should be true to our increased production.
We are being deliberate and balanced in our operating expense.
Investing in corporate infrastructure system.
Our extended network in 2023.
We'll drive significant revenues and cash flow listen I'll next 10 years to come.
Adjusted EBITDA loss was approximately $19 million compared.
Compared to 5 million <unk> last year.
This should lead to increased costs associated with the planned expansion of our spoken hub network in North America.
As well as becoming a public company, which we did not incur last year given the timing of our listing in August 2021.
I know Thats a question could you share based compensation of $4.
$5 million versus $200000. This time last year.
This non cash cost is primarily associated with the continued buildout of lifecycle of operational technical and corporate Thank you Chen as the company progresses choice commissioning of the Rochester hat.
Turning to slide 15 to cover the balance sheet.
In April and we have more than $509 million of cash on hand.
Subsequently in May and June we received a combined total of $250 million.
An investment for <unk> from LG, and Glencore cleanup Cologuard mccosh to approximately $760 million.
As a result, we have sufficient liquidity for capital and operating needs.
The current pipeline of projects in development.
Having achieved this important strategic and financing milestone.
Turning to the mechanical and the value in multiple sources of capital to optimize the balance sheet and provides future flexibility.
I mentioned before these included debt based financing alternatives, such as traditional cockpit that project financing and governmental economy.
Moving to slide 16, I will discuss our longer term financing strategy.
During our first quarter earnings call I indicated that our financing plan will follow on modular based approach to growing our base.
I would like to add additional context to what we mean by that.
The current network consists of a total of seven books in North America, and Europe , and one have been North America targeted to be operational in 2022.
This phase is fully funded and is expected to lead to sustainable cash flow, particularly following two mission of our Rochester hub in 2020.
And for future growth prospects, we anticipate a modular approach to capital investment and associated operating.
And then Andrew days, we expect to take a modular approach to funding requirements that we support these growth prospects.
To reiterate.
Is it clear delineation between current project pipeline.
So refundings and incremental growth, which is optional and the related financing environment.
This foundation of seem to inherently spoken hub.
Is an important part of our operating Jamie.
Executing on our operating plan will expand the breadth of financing alternatives available to us and enable us to take advantage of additional growth opportunities, while optimizing our future cost of capital.
Turning to slide seven I would like to close with a recap.
The market is anticipated to have a global supply deficit of critical batching here in the coming decades.
This is driving growing momentum for localized or domestic sources of projection.
<unk> in North America and Europe .
Lifecycle is strategically anchoring you've spoken hub network to customer demands.
Executing milestone commercial agreements with key strategic global partners and by whom.
<unk>, our leading position as a preferred partner for recycling and New York <unk> Company of critical battery materials in North America and Europe .
And we are fully funded with cash on hand, and increase both the capital and operating needs to complete the portfolio, who can help with.
Jackson.
That concludes our formal remarks.
Operator, we are ready to take questions.
At this time, if you would like to ask a question. Please press the star and one on your telephone keypad.
I wish to remove yourself from the queue you may do so by pressing the pound key we remind you to please pickup your handset to allow optimal sound quality.
We'll take our first question from Robin Fiedler with BMO capital markets. Your line is open.
Hey, good morning, everyone I wanted to unpack the quarter a bit like three quick key questions. So obviously the black mass production.
<unk> didn't improve much quarter over quarter revenue, obviously more than doubled.
I guess, that's a little bit surprised I guess, the Kingston spoke still experiencing some issues. There if you could talk about that a bit and then.
Obviously, you're benefiting from that just stronger battery metal prices overall, but what was the black mass price specifically in the quarter.
And then.
I'm trying to better understand like fair market adjustment and maybe you can help us understand how to think about that in the context of like Q1, and Q2 or was there some.
How should we think about the shift there like with some of this revenue, obviously, which was really strong despite like the production issues seen in lifestyle I guess some of that forward from Q1 technically like maybe just trying to figure out how to model that a bit better going forward. Thanks.
Yeah, Hey, Ron Good morning, it's Sanjay so needles, putting into Q2 to be temporary as a production partner.
Go ahead your line is open.
Okay, perfect and good morning welcome.
Your question questions.
Sure.
One of the things that we're beating guidance.
Wait a second.
And bush.
With options.
Expecting that Arizona is ramping now.
<unk> come a lot slower.
This will be.
The biggest step change.
Production.
I would also highlight.
We've been doing is.
Focusing on inventory and I'm talking about.
Operator.
In Florida, but it relates to larger mountains rules.
Energy storage system.
TB.
Good morning.
Rochester.
No.
Really restoration plans.
All sorts of things.
Material.
So what we expect.
Now that we're in.
Kris.
Capability, possibly.
Ultimately that worthless.
We will have the ability to correct.
Optimal slot handle that.
Alright.
And also recoveries associated with different spots.
So as always.
Welcome to your expectations.
Okay.
Things running the world's large format.
Which of the future.
Our efforts.
Sure.
Sure.
Increased stability.
Yes.
Bill.
Optimized.
Sure.
Photos of some more buttons rules.
Electric drive.
As a matter of documents.
Okay.
True.
No.
Good.
Statements.
Production.
Or at this point.
Thanks.
Alright.
Yes.
And then maybe David can talk.
You guys were part of the question.
Hi, Robyn.
So I will give you some descriptions and then you tell me if I Miss anything.
Okay.
A little bit of a net.
Hi.
Right.
Susan Mika.
Okay.
With that.
Thank you.
Hello, everyone.
The permit.
You could see that.
Great.
And then <unk>.
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Lou.
Required is that revenue.
Okay.
Obama.
Thank you Eric.
Hello, Michael.
Sure.
Yeah.
Matt actually to rollout.
Yes.
Mark.
In our financial statements.
Thank you.
Okay.
Hum.
Go ahead, Matt.
Yes.
Yeah.
Okay.
Hi, Bonnie.
Adam.
And then the Remoxy.
Ill.
<unk>.
It is.
Yes.
Hi, Randy.
No.
Ben Theurer Barclays.
Sure.
Yeah.
Alright.
Alright.
Yes.
I mean, it's page 14.
The difference in your scripted remarks.
That's where we actually provide that breakdown.
Sure.
Okay.
Got you.
Okay. Thanks.
And gentlemen, if you follow us.
I'm sorry, thank you.
It may be helpful to me.
You bet.
Thank you.
With respect to the bump from that.
Our remarks Q1 exactly mutation.
Thank you.
Thank you.
Yes.
Hi, Paul.
Yeah.
We brought out.
With the eclipse.
Do you have that.
Morning to either northwest.
But that was not the best.
Sure.
Hi.
Okay.
Great.
Yeah.
Okay.
Okay.
Sounds good and everything chocolate more about that in a follow up call but.
Just if I could sneak a second question and you know.
It's been a couple of quarters. Since you guys have actually specified what you used to call. It 2025 network targets I guess at the next leg of growth.
But it is a bit more prudence around that now.
You know somewhat understandably, so but it almost sounded like that stage is even more optional now I think Debbie you might've actually use that term specifically so maybe.
If you're able to provide a bit more specificity on how you're thinking about the next leg of growth in terms of timelines and the size of those plans kind of seems like.
The old 2025 targets.
Are you now.
Unlikely at this stage.
Yeah.
Thank you Sir Robin I really believe so yes.
First the first part of this.
Elusive.
How we think about it.
Financial investment decision.
Sure.
As part of our business and that was really the purpose of cases be anybody that is talking to that.
So.
On the one hand.
You would have occurred in that we're in.
Development of our operating today, so as to satisfy the market.
And.
First I would think of it as a set of stairs right. So the first set of stairs.
Alright.
And then on its own can be providing sustainable cash flows as steady.
So that's the one half of the equation at all that kind of the capital allocation and how we think about what's been approved per se.
The other part of it is and to your question is let's say what's happening in the market out of the customers and how do you pursue a fine with that.
Relatively.
You heard it in my remarks.
No slowdown.
And the pace of development of our customers.
It has to increase.
Lately.
So some of that we have.
Ample opportunity.
And for US, it's really a decision.
Scale siding.
And continue to work with those work streams.
It really confirmed by Matt mentioned.
Part of that one of them achieving their courses for them right. So we just really wanted to delineating between whether it okay.
<unk> elite versus incremental growth.
Thanks.
Yes. Thank you.
I mean, there is advantages.
Yeah.
Thank you Mr <unk>.
Keith.
For the purposes my comments.
Hum.
Right.
Okay.
And then.
Okay.
Understood. Thank you.
Well take our next question from P. J.
Sure.
With Citi. Your line is open.
Hi, This is Patrick Cunningham on for P. J good morning, everyone.
I had a question on the on the Rochester hub. So what are your current expectations for startup production and what can we expect that ramp up to look like and if there's anything any uncertainty there what are the sort of drivers of.
Moving the start date is equipment backlog is it hiring just any more detail on that would be appreciated.
Thanks, Patrick.
Yes, Michael Thank you for your question.
So when it comes to the startup of production.
Uh huh.
So Todd.
Product shipments.
And start up in 2023.
We believe this.
Chi.
Of course, we are.
Or is this all the challenges and below.
Yeah.
See.
Labor shortages.
Etc.
We have been able to address that.
We talked about this a lot.
On this call.
And its support for small children wherever we can.
Okay.
Sure the majority of the world.
Our gross Roadmaps.
Paul.
Our purchasing department.
Why does this Patrick.
Patrick This is really for us.
So where we're less let's say sort of about the real cost.
Sure.
Components and materials available.
Yeah.
Our attention now.
Sorry.
Oh.
Awesome requirements to the construction of our wrap ago not thousands.
When it's finalized.
Got it.
Right.
Yeah.
In terms of ramp up.
Sure.
Got it.
English.
I wanted to follow up.
Hi.
Yes.
Judy.
Forward looking statements.
So the industry.
Cool.
Okay.
So I think that's it.
Right exactly.
Let's say that Lloyds efforts.
Alright.
But our ability.
Yeah.
Yeah.
Great. Thank you and then I just had a second I had a follow up and I saw as part of the Glencore agreement. It looks like there are some arrangements not only for on the supply side, but for off take of Black Knight's and end products is this going to be a substantially large offtake partner and are these volumes.
Contracted through the current attractive agreement or does this involve some sort of other data.
Yeah, Thanks, Patrick and I can address that I mean, maybe.
Maybe two for Steve.
Taking a step back I mean.
This is a very transformative deal for the company.
We announced and closed about two weeks ago, we essentially do today.
Strategic asset no one else. So just one question. Please just take opportunity to answer your question.
Well I mean, we all know.
Raw material is critical zero are the linchpin and will be the rate limiting step right.
For electrification to receive.
Now some of the recycling space, let's say on the recycling consol each and every day.
Of course, the cycle is very important and critical.
Cool.
We're already starting to see that as part of our business.
But we have to get there and primarily supply.
Okay.
So this is what we've announced is a holistic global very strategic about it.
Linked quarter the cost per visit of cobalt.
Thank you Sir.
Our top three police or classify Nicole.
Which is to integrate that goes into my bedroom.
Yeah.
As time go on will be more of that will come through as we continue to but also by four obviously extremely exciting for the business.
Highly validating and a great underpinning our strategic options.
On your question.
You described that maybe there are some questions.
This is a place between track space.
Platform.
We're tracking that optic Brendan and they continue to be great partners.
Exhibit four to Rochester hub.
Which is for the spin off takers lithium nickel cobalt manganese.
And then in North America today for any blockbuster, we do sell.
Through it all.
The linked quarter agreements are actually outside of that jurisdiction.
A longer term basis.
So that pertains to the offtake for all that.
Updates to the Black Knight that myself.
A couple of other very exciting aspect about it created basically byproducts.
Maybe by product.
Felipe.
Okay.
On core key Asia supply and one of the really exciting part fleets working together.
Key supply so supposed to file a black box for us.
Okay.
Question, but just want to take the opportunity to really emphasize how important.
Government systems.
Yeah.
We will take our next question from Brian Dobson with Chardan capital. Your line is open.
Hi, good morning, Thanks for taking my question.
So, let's talk about Europe , a little bit I guess given.
Given the geopolitical issues. There have you found that local governments are becoming more accommodated in terms of approvals in order to secure local battery recycling capabilities.
Yes, thanks, Brian and thanks for joining alternatives.
Good morning, Brian and so.
I guess, the two charts express with let's say.
Around the world.
One is of course increased desire to reach.
It was a material supply networks.
Due to increased focus on this and that's part of our strategy for building out <unk>.
It can be.
Awesome.
Yes.
Close to where the materials.
Right.
We'll continue to develop the market.
The other thing that's happening.
At the same spot.
Increased prudence around environmental regulation.
Which is actually working in hostile stable. So it's one of the benefits obviously about processing technology.
Environmental footprint as it relates to.
Whoa.
So it's natural and so what we're saying is false.
Awesome government bodies looking to regionalize supply chains as well as customers look at the regional level.
Right.
Also call it spot on.
We focus on.
How we're actually doing the work.
So we see both of these in his big aggregates.
Lots of alcohol.
Thanks, very much for that.
And then my follow up question has to do with expenses do you think you could give us a little bit of color on the expected cost cadence for the remainder of the year or certain expense line items to call out as Virginia, Alabama, or having the potential to grow.
Canary environment.
Yes, Thanks, Brian .
And so then just to clarify you were asking around may.
Maybe there are some volatility picks up the year.
Hi, Brian This is Kevin here.
I think Noel Watson. Thank you, thank you ladies and gentlemen.
Good morning, Brian .
Talk to you then.
Is there a Q1 Q2.
Thank you.
Finally for me.
Yeah.
The one thing that I see that I had in my remarks.
Yes.
This is Mike.
Got it.
Sure.
It's Ron.
Sure Greg.
Greg.
Yeah.
Thank you Bob.
Okay.
Thank you very much.
Okay.
We will take our next question from Ben <unk> with Baird. Your line is open.
Hey, good morning.
Thanks for taking my questions.
Maybe first just going back to Europe .
Could you talk to us about the spokes there or the.
The newer version.
Similar to Arizona, Alabama.
Yes.
Yeah.
Good morning.
So youre right to the sweet spot.
Just one in Norway.
In Germany.
Sandeep.
I was on Alabama.
So what we're forecasting.
That's awesome.
Beautiful.
That'd be able to process.
Great.
Got it.
Sure.
The Commission business.
Sure.
And then could you just talk talk to us more about the change that was made.
Oh, that's good news for us, but to be able to process without that this assembly.
When that was developed.
How much has been tested.
Absolutely.
And so this is Tom.
Tom myself, a little bit just because of Arctic sought after development.
The company.
Absolutely.
Perhaps the decline process, probably would be that we'll successfully demonstrated now so it's basically the same fundamental processes silver science approach right.
So as you think about what we were trying to do previously isn't a single stage, we were going to school whatever form factor of Israel.
So you can imagine all trials.
Each year, a little bit he wants that.
You could imagine a module that is.
All right.
I don't know six to 10 inches tall and now we're placing about one.
Cereal and we're breaking it down.
The material as well what sort of niche.
That's a big step change in status of spots reduction that's not how we would do it.
Traditional marketing applications for example, so what we lose about <unk> both of course us.
Absolutely.
Multiple.
Rod.
Slides reduction steps, where we actually can go from these very large format.
Our battery packs now we can take that one too.
As we've said multiple times.
Cool okay.
Battery packs.
This process works is one around the cost of the pack.
So essentially getting larger they're getting.
More integrated into the vehicles.
And so we've seen quite structured possibly about three examples which makes it nearly impossible. This assemble so you can now take everything else, we've got spare parts subprime vehicles et cetera and that.
That's it through the same process through multiple stages.
In theory.
Not much.
Sure.
The slides that were chasing.
<unk> is a black box in Venezuela.
Important things.
Part of that.
Thank you and then my last one.
Have you seen any change in.
Your off take agreements.
From.
So producers of battery producers.
In terms of either length of contract or the details of the contract you know how much.
You have to pay for for the offtake or anything like that it. Thank you guys.
Thanks, Matt I'll take that.
So I think.
It's really a reminder, hyper please go ahead with that.
We're very proud of that.
A couple of your contract would be.
Typically master services agreement.
In that forum.
It looks pretty interesting movement towards longer term.
And our LG agreement as an example of a case of that.
The intake of hearing in that case is actually the same term as we all state which is 10 years. So so.
So that we are wining there wouldn't have been the case, so that's very encouraging for.
For us.
Really helps with that.
Uh huh.
Uh huh.
These are the prepay and what's happening in the market, yes, there are different segments.
And different things like that.
So for example manufacturing scrap.
Has the time to be continuing.
Materials, whereas other materials or other things.
We've been on for its Marc Bitzer so it.
The thing I think in terms of the way our business is continue to see multiple market segments and multiple pricing.
Yes.
Thank you.
We will take our next question from Jeff Osborne with Cowen and co. Your line is open.
Hey, good morning, a couple of questions on my side I might have missed it but did you give the average price of black box in the quarter.
Hey, Josh.
Yeah.
Uh huh.
Please ask your question.
I can tell you this is Dan.
Tom.
Later this month.
And we did actually.
I see.
Yeah.
Occupancy Q1.
One of them.
Got it.
Uh huh.
We have some time.
Yes.
And I think what we can do this in fact exclusionary Noah Kaye.
I think you're calculating per ton number I would actually need.
So the number.
Sure Brian .
And that will continue.
Yes.
Got it and when you answered the question on fair market value.
Your line so.
The speaker phone was tough to hear but given the fair market value adjustments or half year revenue I just wanted to understand that sector better. So can you.
Give us a sense of how many metric tons were subject to fair market value adjustments of that I think in your disclosure you talked about just under 2600 metric tons.
They are subject to future fair value pricing adjustments as of April 30th when would you expect those adjustments to the flow through the P&L.
Yes.
Okay.
Because I still have a separation.
Turns out Tony.
Sure.
So what happens is when you just do that either your loyalty.
So absolutely.
Got it.
They're subject to repricing.
And that lender finance India.
Thanks.
Got it and then maybe the last one is just there was a lot of discussion of larger form factors, which is great. I wanted to understand are you seeing a more pronounced Smith mixed shift in scrap relative to expectations at the time of the merger in regards to scrap versus say recalls.
No I wouldn't say that.
It's still roughly a mom, who always sort of forecast reduction in disposal.
<unk> electronic batteries as a proportion of our rule.
That's been consistent.
We'll see.
We're continually receivables come on the market.
For the I guess the battery Oems.
Do a stupid idea of how much scrap rates.
We are seeing that to continue to accelerate.
In the early days of these b cell manufacturing company.
Call me old what I'd say, the one thing that we probably didn't cost us much more assistance.
Full applications I would also say that we see more and more.
Storage.
Some retooling.
Hello.
Six months.
We would've originally.
12 months ago, but this is all what.
What I would consider all possibilities.
Please.
Got it I appreciate it Tim Thanks, so much.
So.
There appears to be no questions in the queue I will turn the call back over to Andre for his closing remarks.
Thank you.
In closing lifecycle continues to accelerate its position as a leading to further lightweight.
There's also a private partner to global strategic partnerships.
Okay.
We have sufficient liquidity for our capital and operating needs to fund the current pipeline of project development.
And finally, our sloping up technology network is uniquely positioned to capitalize on the accelerating electrification trends that will deliver significant earnings and cash flow.
So thank you. We appreciate your time and interest in lifecycle and we look forward to conciliate update you regarding our ongoing buildout and execution.
This does conclude today's program. Thank you for your participation you may disconnect at any time and have a wonderful day.
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Hum.
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Yeah.
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