Livent Corporation (NYSE:LTHM) shares have jumped more than 9% premarket Wednesday after the company smashed Q1 earnings expectations and raised full-year 2023 revenue and adjusted EBITDA guidance.
The Lithium producer reported Q1 EPS of $0.60, $0.21 better than the analyst estimate of $0.39, while revenue for the quarter also came in above expectations at $253.5 million versus the consensus estimate of $230.24 million.
The company's revenue was boosted by higher realized lithium pricing, higher average realized prices across all products and strong demand.
"We continue to expect strong financial performance in 2023 supported by pricing visibility from existing customer contracts," said Paul Graves, president and chief executive officer of Livent. "The Company remains on schedule to deliver its announced capacity expansions, which will result in an incremental 4,000 metric tons of volume available for sale in 2023, and an incremental 10,000 metrics tons available in 2024 year-over-year."
Livent's share price was buoyed by its guidance, with the company now seeing FY2023 revenue between $1.025B and $1.125B versus the consensus of $1.07B. Revenue guidance was lifted from the previously forecasted range of $1B to $1.1B. In addition, the company now sees adjusted EBITDA for 2023 between $530M and $600M, up from the previously expected $510M to $580M.
Reacting to the report, BMO Capital analysts said it was a "nice start" to the U.S. lithium reporting season.
"LTHM was able to raise FY guidance ~4% as the (minority) variable part of its product mix outperformed on price. The carbonate expansion remains on track though this will take a couple of years to fully ramp still, important as LTHM seeks to qualify additional hydroxide capacity fed by LTHM's own carbonate," they wrote.
"We see higher earnings but also that earnings likely have peaked in Q1/23. We are neutral on risk/reward considering expansion execution risk and potential high Nemaska capex inflation. Our target price remains $30, ~8.5x 2025E EV/EBITDA."
Evercore ISI analysts stated that "if you were looking for lithium producer cash flows to look like the China carbonate price chart, LTHM's 1Q report will disappoint."
They added: "We came away from this update with a clear sense LTHM understands its business (and how to guide) and that if the worst has been seen for non-China price benchmarks then the outlook is significantly de-risked here. We still think the growth potential (Argentina+China+Quebec) and LTHMs long track record and unique franchise in the industry is underappreciated by investors. Maintain Outperform."