Li-Cycle Holdings Corp.

Good day. My name is David, and I will be your conference operator today. At this time, I would like to welcome everyone to the third quarter 2023 Lifecycle Holdings Earnings Call and Webcast. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question at that time, please press star and 1 on your telephone keypad. If you should need operator assistance today, please press star and zero. I'll now turn the call over to Nala Azmeh, Head of Investor Relations. Please go ahead.

Thank you. Good afternoon, and thank you, everyone, for joining us for LifeCycles Business Update and Review Financial Results ended September 30, 2023. We will start today with formal remarks from Ajay Kocher, co-founder, president, and chief executive officer, Tim Johnson, co-founder and executive chair, and Debbie Simpson, chief financial officer. We will then follow with a Q&A session. Ahead of this call, Lifecycle issued a press release and a presentation, which can be found in the investor relations section of our website at investors.lifecycle.com. On this call, management will be making statements based on current expectations, plans, estimates, and assumptions, which are subject to significant risks and uncertainties, most of which are difficult to predict and many of which are beyond the control of lifecycle. Actual results could differ materially from our forward-looking statements if any of our key assumptions are incorrect, including because of factors discussed in today's press release. during this conference call and then our past reports and filings with the U.S. Securities and Exchange Commission and the Ontario Securities Commission in Canada. These documents can be found on our website at investors.lifecycle.com. We do not undertake any duty to update any forward-looking statements, whether written or oral, made during this call or from time to time to reflect new information, future events or otherwise, except as required. These forward-looking statements should not be relied upon as representing life cycles assessments as of any date subsequent to the date of this call. With that, I'm pleased to turn the call to Ajay.

Thank you, Dolla, and good afternoon, everyone. Beginning with slide three, we announced in late October that we were pausing construction at the Rochester Hub to conduct a comprehensive review of the project. Today, I'll discuss the rationale for that decision. Tim will provide an update on the Spoken Up Network, and Debbie will review liquidity management and our financing strategy. Turning to slide four, I'd like to provide context on what drove our decision to pause the construction work for a comprehensive review. At a high level, it came down to the convergence of two factors, namely an escalation in actual construction costs versus prior indicative bids and delayings in complex financings. Let me walk you through some of the details as you can see here by the timeline. Starting with the Rochester Hub construction milestones and costs as shown in the blue part of the timeline. We recently started to recognize actual costs significantly higher than previously estimated based on recent subcontractor agreements for packages of remaining work. This was specifically related to installation costs for mechanical equipment, piping, structural steel, electrical instrumentation for measurement and process control devices. This cost pressure was exacerbated by the timing of nearly $4 billion of other major construction projects in the region starting or wrapping late 2023 and early 2024, driving general contractors to draw construction workers from the larger regional area. Reflecting these escalating construction costs, we arrived at forecasts that will result in the aggregate cost of the current scope of the project substantially higher than the previously disclosed budget of $560 million. For reference, the project capex to date was approximately $301 million on the project for September 30th, 2023. In terms of the financings, as shown in green on the top of the timeline, With our capital growth needs, we've been successful in timing strategic and competitive financings, such as with Koch, LG Chem, LG Energy Solutions, and Glencore, over the course of 2021 and 2022. Also in 2021, we submitted our application and began a rigorous process with the TUE Loan Programs Office. We achieved a significant milestone when we received the conditional loan commitment for gross proceeds of $375 million in late February 2023. While we worked closely with the DOE to progress to the final stage, we were delayed from our initial target close from the end of June to September 2023. Also, at September 30, 2023, the company had contributed approximately $92 million for the construction of process buildings and a warehouse for the Rochester Hub. This spend was incremental to the Hub project budget of $560 million. The company was anticipating a refund of a substantial portion of this contribution upon completion of a building's leasing arrangement. Through the complexities of bringing together arrangements for the DOE loan and the building's lease arrangements, both financings were further delayed into October. Subsequently, we've decided not to pursue the building's lease arrangement, which is expected to simplify the DOE loan closing process for the Rochester Hub. In summary, the escalating construction costs combined with continued delays and closing contemplated financings were leading to lower current and projected cash balances. As we made the swift and prudent determination and announced a pause of the project to complete a comprehensive review. The review is examining expected capital costs, timing of completion, and go-forward construction strategy options for the Rochester Hub project. Turn to slide five for a snapshot of our current portfolio immediately following the Rochester Hub project pause. The company is undergoing a comprehensive review for bringing on additional spoken hub capacity in the near term. Until the go-forward strategy work is completed, the company will be slowing operations at its North American spokes as it reviews the timing and black mass needs of the Rochester Hub. The company is reviewing its plans, bringing on additional spoke capacity in both North America and Europe. And we'll discuss both the hubs and our focus on the Generation 3 spokes in more detail later in the presentation. Turn to slide six for an overview of the key considerations for our ongoing comprehensive review. As already discussed in late October, we announced a pause on the construction work at the Rochester Hub for a comprehensive review of scope, timing, and capital. Additionally, we're evaluating our levers to optimize cash and liquidity, including cost spent initiatives, SPOC optimization strategy, and timing financing needs to support our go-forward plans. Let me now turn it over to Tim for a more detailed update on our SPOC and Hub network.