Shares of Livent Corp. (LTHM), a lithium miner, surged more than 10% in extended trading on Tuesday. This was after the company reported better-than-expected profit and sales for its first quarter, driven by continued demand for lithium. Livent also raised its guidance for the full year.
For the first quarter, Livent reported earnings of $114.8 million or 55 cents a share, compared with $53.2 million or 28 cents a share in the year-ago period. On an adjusted basis, excluding one-time items, the company earned 60 cents a share. Analysts had been expecting earnings of 57 cents a share, according to FactSet data.
“Continued strength in customer demand supported higher average realized prices across all products in the first quarter,” Livent said in a statement. The company cited strong demand from the lithium-ion battery market and recovery in demand for high-performance and specialty lithium applications. Lithium is a key component in batteries for electric vehicles (EVs), which have been seeing rapidly growing demand in recent years.
Revenue for the first quarter rose 77% to $254 million, beating analysts’ forecasts of $234.9 million. The company said that higher lithium ionomer volumes, improved pricing, and favorable foreign exchange movements all contributed to the revenue growth. Operating income for the quarter came in at $81.1 million, compared to $10.4 million in the first quarter of 2020.
Based on the strong quarter, Livent raised its full-year 2021 guidance. The company now expects revenue to be in the range of $875 million to $925 million, up from the previous guidance of $825 million to $875 million. Livent also increased its adjusted earnings per share forecast for 2021 to $1.85-$2.05, up from the earlier estimate of $1.70-$1.90.
Livent operates lithium production facilities in Argentina, Australia, and the United States. The company is also working on expanding its lithium production capacity in order to meet the growing demand for the metal. Lithium demand is expected to grow significantly in the coming years, driven by the increasing adoption of electric vehicles and the shift to clean energy.
In addition to EVs, lithium is also used in various consumer electronics, including smartphones, laptops, and tablets. Demand for these devices has remained strong throughout the pandemic, further boosting the need for lithium.
The strong demand for lithium has driven up its price in recent months, reflecting tightness in the market. According to Benchmark Mineral Intelligence, the price of lithium carbonate – a key lithium compound used in battery production – has risen by about 90% since the beginning of 2021.
The strength of the lithium market has also led to increased interest in lithium stocks. Shares of other lithium producers, such as Albemarle Corp. (ALB) and Sociedad Química y Minera de Chile (SQM), have also been on an upward trend in recent months.
Livent’s strong quarterly results and raised guidance underscore the positive outlook for the lithium industry. As the world continues to shift towards clean energy and the demand for electric vehicles increases, companies involved in lithium production will likely continue to benefit.
However, it is essential to note that the lithium market is not without its challenges. The rapid increase in demand for lithium and the resulting higher prices have led to concerns about potential oversupply in the market. Lithium production is also associated with significant environmental and social impacts, as well as geopolitical risks due to the concentration of lithium reserves in a few countries, such as Argentina, Australia, and Chile.
Despite these challenges, the outlook for the lithium market remains positive, and companies like Livent are well-positioned to benefit from the growing demand for the metal. With the strong performance in the first quarter, Livent is off to a good start in 2021, and the raised guidance suggests an optimistic view for the remainder of the year.
In summary, Livent’s better-than-expected first-quarter earnings and strong demand for lithium, driven by the growing electric vehicle market and consumer electronics, have led to a sharp increase in the company’s share price. As the global economy continues to transition towards cleaner energy solutions, and demand for electric vehicles and various consumer electronics remains robust, the outlook for lithium miners like Livent appears promising. However, potential challenges such as oversupply and geopolitical risk should be considered by investors when evaluating the lithium market and associated stocks.
