Livent Releases Third Quarter 2019 Results

Full-Year 2019

-  Interest expense

$0 - $1

million

-  Adjusted tax rate

21 - 23

percent

-  Full-year weighted average diluted shares outstanding

~146.5

million

-  Depreciation & Amortization

$20 - $22

million

-  Adjusted cash from operations

$80 - $90

million

-  Capital additions and other investing activities

$210 - $240

million

1.

Although we provide forecasts for adjusted earnings per share, Adjusted EBITDA and adjusted cash from operations, we are not able to forecast the most directly comparable measures calculated and presented in accordance with GAAP.  Certain elements of the composition of the GAAP amounts are not predictable, making it impractical for us to forecast such GAAP measures or to reconcile corresponding non-GAAP financial measures to such GAAP measures without unreasonable efforts. For the same reason, we are unable to address the probable significance of the unavailable information. Such elements include, but are not limited to, restructuring, transaction related charges, and related cash activity.  As a result, no GAAP outlook is provided.

LIVENT CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in millions, except per share data)

Three Months Ended
September 30,

Nine Months Ended
September 30,

2019

2018

2019

2018

Revenue

$

97.7

$

112.0

$

310.0

$

322.7

Cost of sales

69.4

62.5

215.2

167.2

Gross margin

28.3

49.5

94.8

155.5

Selling, general and administrative expenses

10.2

4.7

29.2

12.7

Corporate allocations

—

5.6

—

15.7

Research and development expenses

0.9

0.9

2.5

2.9

Restructuring and other charges

0.9

0.4

4.8

2.7

Separation-related costs

2.5

2.4

5.4

2.4

Total costs and expenses

83.9

76.5

257.1

203.6

Income from operations before non-operating pension benefit and
settlement charges and income taxes

13.8

35.5

52.9

119.1

Non-operating pension benefit and settlement charges

—

(0.4)

—

(0.2)

Income from operations before income taxes

13.8

35.9

52.9

119.3

Income tax (benefit)/expense

(4.2)

5.9

2.5

19.1

Net income

$

18.0

$

30.0

$

50.4

$

100.2

Weighted average common shares outstanding - basic ⁽¹⁾

146.0

123.0

146.0

123.0

Net income per weighted average share - basic

$

0.12

$

0.24

$

0.35

$

0.81

Weighted average common shares outstanding - diluted ⁽¹⁾

146.5

123.0

146.4

123.0

Net income per weighted average share - diluted

$

0.12

$

0.24

$

0.34

$

0.81

____________________

(1)

For the prior periods presented, the weighted average shares outstanding for both basic and diluted earnings per share was calculated, in accordance with ASC 260, Earnings Per Share, using 123.0 million shares of common stock outstanding, which was the number of shares issued to FMC in part in exchange for the asset contribution by FMC to us. Weighted average shares outstanding for the prior periods excludes the 23.0 million shares of common stock subsequently issued as part of the public offering and over-allotment option exercise.

LIVENT CORPORATION

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

RECONCILIATION OF NET INCOME (GAAP) TO ADJUSTED EBITDA (NON-GAAP)

(Unaudited)

The table below provides a reconciliation of Net income to Adjusted EBITDA.

Three Months Ended
September 30,

Nine Months Ended
September 30,

(In Millions)

2019

2018

2019

2018

Net income (GAAP)

$

18.0

$

30.0

$

50.4

$

100.2

Add back:

Income tax (benefit)/expense

(4.2)

5.9

2.5

19.1

Depreciation and amortization

5.8

4.5

15.5

13.1

EBITDA (Non-GAAP) ⁽¹⁾

$

19.6

$

40.4

$

68.4

$

132.4

Add back:

Certain Argentina remeasurement losses/(gains) ^(a)

5.2

(1.0)

5.2

(0.6)

Restructuring and other charges ^(b)

0.9

0.4

4.8

2.7

Non-operating pension benefit and settlement charges ^(c)

—

(0.4)

—

(0.2)

Separation-related costs ^(d)

2.5

2.4

5.4

2.4

Adjusted EBITDA (Non-GAAP) ⁽¹⁾

$

28.2

$

41.8

$

83.8

$

136.7

___________________

(1)

In addition to net income, as determined in accordance with U.S. GAAP, we evaluate operating performance using certain non-GAAP measures such as EBITDA, which we define as net income plus interest expense, net, income tax expense/(benefit), depreciation, and amortization, and Adjusted EBITDA, which we define as EBITDA adjusted for certain Argentina remeasurement losses/(gains), restructuring and other charges/(income), non-operating pension expense/(benefit) and settlement charges, and separation-related costs. Management believes the use of these non-GAAP measures allows management and investors to compare more easily the financial performance of its underlying business from period to period. The non-GAAP information provided may not be comparable to similar measures disclosed by other companies because of differing methods used by other companies in calculating EBITDA and Adjusted EBITDA. This measure should not be considered as a substitute for net income or other measures of performance or liquidity reported in accordance with U.S. GAAP. The above table reconciles EBITDA and Adjusted EBITDA from net income.

(a)

Represents charges related to currency fluctuations on tax assets and liabilities and on long-term monetary assets associated with our capital expansion, as well as significant currency devaluations. The remeasurement charges are included within "Cost of sales" in our condensed consolidated statement of operations but are excluded from our calculation of Adjusted EBITDA because of: i.) their nature as income tax related; ii.) their association with long-term capital projects which will not be operational until future periods; or iii.) the severity of the devaluations and their immediate impact on our operations in the country.

(b)  

We continually perform strategic reviews and assess the return on our business. This sometimes results in management changes or in a plan to restructure the operations of our business. As part of these restructuring plans, demolition costs and write-downs of long-lived assets may occur.

(c)

Our non-operating pension expense/(benefit) and settlement charges are defined as those costs/(benefits) related to interest, expected return on plan assets, amortized actuarial gains and losses and the impacts of any plan curtailments or settlements. These are excluded from our results and are primarily related to changes in pension plan assets and liabilities which are tied to financial market performance and we consider these costs to be outside our operational performance. We continue to include the service cost and amortization of prior service cost in our Adjusted EBITDA results noted above. These elements reflect operating costs to our businesses for the employment benefits provided to active employees.

(d)

Represents legal, professional, transaction related fees and other separation related activity.

RECONCILIATION OF NET INCOME (GAAP) TO

ADJUSTED AFTER-TAX EARNINGS (NON-GAAP)

(Unaudited)

(In Millions, Except Per Share Data)

Three Months Ended
September 30,

Nine Months Ended
September 30,

2019

2018

2019

2018

Net income (GAAP)

$

18.0

$

30.0

$

50.4

$

100.2

Special charges:

Certain Argentina remeasurement losses/(gains) ^(a)

5.2

(1.0)

5.2

(0.6)

Restructuring and other charges ^(b)

0.9

0.4

4.8

2.7

Non-operating pension benefit and settlement charges ^(c)

—

(0.4)

—

(0.2)

Separation-related costs ^(d)

2.5

2.4

5.4

2.4

Tax adjustment ^(e)

(9.4)

(1.5)

(12.6)

(6.8)

Adjusted after-tax earnings (Non-GAAP) ^{(1) (2)}

$

17.2

$

29.9

$

53.2

$

97.7

Diluted earnings per common share (GAAP)

$

0.12

$

0.24

$

0.34

$

0.81

Adjustment from GAAP to Non-GAAP average number of shares outstanding ⁽²⁾

—

(0.04)

—

(0.13)

Special charges per diluted share, before tax:

Certain Argentina remeasurement losses/(gains), per diluted share

0.03

(0.01)

0.04

—

Restructuring and other charges, per diluted share

0.01

—

0.03

0.02

Separation-related costs per diluted share

0.02

0