The lithium business is hot. Thank electric vehicles. And stock in lithium miner Livent is surging after the company's strong outlook impressed investors.
Livent (ticker: LTHM) shares are up almost 23% in early Wednesday trading. The S&P 500 and Dow Jones Industrial Average are up about 0.4% and 0.3%, respectively.
Livent reported earnings per share of 21 cents on sales of $143.5 million. Wall Street was looking for EPS of 13 cents on sales of about $140 million. Earnings helped, but the outlook is doing more for shares.
For the full year, Livent now expects earnings before interest, taxes, depreciation, and amortization, Ebitda, of about $320 million on sales of almost $800 million. The new guidance is a huge increase from prior guidance and far above Wall Street's expectations.
Prior guidance called for Ebitda of about $180 million on sales of $570 million, while analysts were projecting 2022 Ebitda of about $220 million on sales of $638 million.
"Strong lithium demand growth has continued in 2022," said CEO Paul Graves in the company's news release. "Published lithium prices in all forms have increased rapidly amid very tight market conditions and Livent continues to achieve higher realized prices across its entire product portfolio." Lithium is a key ingredient in lithium-ion batteries used in a host of applications, including EVs.
Benchmark lithium prices are up about are up about 67% year to date. Those are spot prices. Most lithium is sold on contract. But when spot is above contract, contract renewal prices move higher.
Lithium miner Albemarle $(ALB.UK)$ reports earnings after the close on Wednesday.
Coming into Wednesday trading, Livent stock was down about 10% year to date. Albemarle stock has dropped about 16%