Livent topped Q4 estimates, while offering bullish pricing guidance that was partly offset by cost pressures. LTHM stock bounced after-hours, following a brutal session for lithium stocks after Albemarle offered a mixed 2022 outlook.
Livent offered guidance for flat volumes, "significantly higher average realized prices and higher anticipated costs related to logistics, raw materials and general inflationary pressures."
KeyBanc analyst Aleksey Yefremov wrote that some investors may have been hoping for higher guidance from Albemarle, given the rise in spot lithium prices. Albemarle said that only 10% of its supply is sold at Chinese spot market prices. Another 50% of contracts are variable, with floors and ceilings limiting the volatility of spot markets. Pricing for the other 40% is fixed, based on contracts reached before lithium prices surged in 2021.
"Capital expenditures are anticipated to be higher than previously planned as the company invests to accelerate conversion capacity additions and meet evolving industry standards, as well as continued inflationary pressures," Albemarle said in its earnings statement.
Other lithium plays, including Lithium Americas and Sociedad Quimica y Minera de Chile, also have been acting well but traded lower following ALB earnings.
With automakers accelerating their EV plans as much as possible, and surging oil prices only creating more appetite for EVs, lithium companies are enjoying a pretty ideal supply-demand backdrop. That's especially true for proven and profitable operators such as ALB, LTHM and SQM. Lithium Americas is still a development-stage company but is targeting first production this year and expects key approvals for its Thacker Pass project by the end of March. Yet the reports from Albemarle and Livent offered a reminder that inflation pressures are pervasive.
Albemarle Earnings
Analysts expected Albemarle earnings to slip 18% to 96 cents per share, according to Zacks Investment Research. Adjulsted EPS came in at $1.01. Revenue rose 2% to $894 million, vs. forecasts for a less than 1% gain, to $884.2 million.
Albemarle offered 2022 guidance for adjusted EPS of $5.65-$6.65, with the $6.15 midpoint modestly below views of $6.24, according to Zacks. Albemarle's range implies 40%-60% growth EPS growth in 2022. Revenue guidance of $4.2-$4.5 billion was well ahead of $3.91 billion estimates.
Here's the outlook for Albemarle's lithium business, which accounted for 55% of the full company's adjusted EBITDA in Q4: volume growth of 20-30% and average price increase of 40%-45%. That should translate to adjusted EBITDA growth for lithium operations of 62%-85%.
ALB Stock
ALB stock crashed just under 20% to 197.02 in Thursday's stock market action, diving below its 200-day line. Ahead of earnings, ALB stock rose 1.9% Wednesday and 6% Tuesday, pushing it above its 50-day moving average.
Albemarle's relative strength line, which tracks its progress vs. the S&P 500, has come down from its November peak, when ALB stock hit an all-time high 291.48. But ALB stock had outperformed in recent weeks as oil prices and inflation concerns have loomed large.
Livent Earnings
Estimates: Analysts saw Livent earnings per share of 7 cents in Q4 vs. a year-earlier loss of 2 cents. Revenue was expected to grow 27% to $104.47 million.
Results: Livent posted EPS of 8 cents as revenue rose 50% to $122.9 million.
Outlook: Livent projected 2022 revenue of $540 million to $600 million, up 28%-43% from 2021. Analysts were expecting $502.6 million, according to Zacks. Adjusted EBITDA will range from $160 million to $200 million, up 36% to 159%.
Livent says it remains on schedule to deliver on previously announced 2023 capacity expansions in Argentina and Bessemer City, N.C. The company also announced a second capacity expansion in Argentina by 2025.
LTHM Stock
LTHM stock skidded 11.5% to 22.20 on Thursday, then surged nearly 11% early Friday. That would put LTHM stock back above its 50-day line.
A move past last week's high to 25.35 would offer an early entry point, while breaking a down-sloping trend line from LTHM stock's 33.04 November peak.
Amid up and downs, LTHM stock has basically moved sideways over the 13 months. Like ALB, LTHM stock surged in the run-up to Q3 earnings, breaking above a 27.37 buy point, and sprinting higher. But lithium stocks quickly ran out of steam, undercutting their prior bases amid skepticism over the lithium price outlook. Yet that skepticism seems to have faded as prices of the battery metal keep pushing higher and the EV race among automakers intensifies.
Be sure to read IBD's daily afternoon The Big Picture column to get the latest analysis of the market's prevailing trend and what it means for your trading decisions.
