Restructuring Charges and Asset Write-Offs

12 Months Ended

Dec. 31, 2024

Restructuring and Related Activities [Abstract]

Restructuring Charges and Asset Write-Offs

Restructuring Charges and Asset Write-offs:

Second Half 2024 Restructuring

In July 2024, the Company announced a comprehensive review of its cost and operating structure to proactively respond to ongoing industry headwinds, particularly in the lithium value chain, and to maintain a competitive position. As part of this review, the Company made the decision to stop construction of Kemerton conversion plant Train 3 in Western Australia and to put Kemerton Train 2 into care and maintenance as the Company determined the current lithium price environment makes it less economical to expand conversion in Australia. Kemerton Train 1 will continue to operate and activity around it is currently focused on commercialization efforts.

The Company’s actions regarding Kemerton are part of a broader effort focused on preserving its world-class resource advantages, optimizing its global conversion network, improving the Company’s cost competitiveness and efficiency by lowering operating costs, reducing capital intensity and enhancing the Company’s financial flexibility. As part of this effort, effective November 1, 2024, the Company transitioned its operating structure to a fully integrated functional model (excluding Ketjen) from a global business unit model. As a result, the Company implemented a global workforce reduction that impacted 6-7% of total headcount during the second half of 2024.

As a result of the above actions, the Company recorded charges in Cost of goods sold and Restructuring charges and asset write-offs for the year ended December 31, 2024 of $16.5 million and $762.6 million, respectively, consisting of the write-off of the carrying value of the Kemerton Train 3 assets less any salvage value, contract cancellation costs, decommissioning, demolition and other associated restructuring costs for both Kemerton Trains 2 and 3. The Company also recorded a loss of $20.7 million in Other income, net for the year ended December 31, 2024 related to the reclassification of the related dedesignated cash flow hedge from Accumulated other comprehensive loss. In addition, the Company recorded severance and employee benefit charges related to the above actions of $3.8 million and $47.5 million in Cost of goods sold and Restructuring charges and asset writeoffs, respectively, for the year ended December 31, 2024.

The Company expects to record additional restructuring costs related to the Second Half 2024 Restructuring in the range of $35 million to $45 million in the year ended December 31, 2025, when the Company expects the actions to be substantially completed.

First Half 2024 Restructuring

In January 2024, the Company announced measures to unlock near-term cash flow and generate long-term financial flexibility by re-phasing organic growth investments and optimizing its cost structure. As part of these measures, during the second quarter of 2024, the Company indefinitely suspended construction of Kemerton Train 4, as well as deferred spending

and investments with respect to certain other capital projects. The Company wrote-off the book value of assets related to these capital projects, which are no longer part of the Company’s modified capital plan, as it determined that these assets will not provide future value or will require significant re-engineering if the related projects are restarted, as well as recorded losses for associated contract cancellation costs. In addition, the Company recorded severance costs for employees in Corporate and each of the businesses as part of these announced measures. These actions resulted in charges of $324.3 million recorded in Restructuring charges and asset write-offs for the year ended December 31, 2024 and a loss of $5.4 million recorded in Other income, net for the year ended December 31, 2024 related to the reclassification of the related dedesignated cash flow hedge from Accumulated other comprehensive loss. No further costs associated with the First Half 2024 Restructuring are expected to be recorded as this restructuring plan was completed in the first half of 2024.

2023 Restructuring

During the year ended December 31, 2023, $9.5 million of separation and other severance costs to employees in Corporate and the Ketjen business were recorded in Restructuring charges and asset write-offs.

Detail of Restructuring Charges and Reserves

The following table provides details of our restructuring related charges for the year ended December 31, 2024, which represent the cumulative amounts incurred to date for these plans (in thousands):

	Year Ended December 31, 2024
	Asset Write-offs(a)		Severance and Employee Benefits(b)		Contract Cancellation Costs(c)		Other(d)		Total
First Half 2024 Restructuring(e)	$	280,596	$	18,856	$	24,887	$	5,374	$	329,713
Second Half 2024 Restructuring(e)	732,907		51,264		37,370		29,552		851,093
	$	1,013,503	$	70,120	$	62,257	$	34,926	$	1,180,806

(a)    Asset write-offs include $16.5 million recorded in Cost of goods sold, primarily related to work in process inventory with no future value as a result of the decomissioning of Kemerton Train 2 that was placed into care and maintenance. The remainder of the asset write-offs primarily relate to property, plant and equipment of the in-construction Kemerton Trains 3 and 4, and Kemerton Train 2 that was placed into care and maintenance. All asset write-off charges not related to inventories were recorded in Restructuring charges and asset write-offs.

(b)    Severance and employee benefit charges include $3.8 million recorded in Cost of goods sold. All other severance and employee benefit charges for global employees terminated during the various restructuring programs were recorded in Restructuring charges and asset write-offs.

(c)    Includes cancellation fees for contractors and required payments under take or pay contracts. All contract cancellation costs were recorded in Restructuring charges and asset write-offs.

(d)    Other includes costs to put Kemerton Train 2 into care and maintenance and similar restructuring costs, and are recorded in Restructuring charges and asset write-offs. In addition, Other also includes the reclassification of the related dedesignated cash flow hedge from Accumulated other comprehensive loss. $20.7 million recorded in Other income, net for the year ended December 31, 2024 related to the Second Half 2024 Restructuring and $5.4 million recorded in Other income, net for the year ended December 31, 2024 related to the First Half 2024 Restructuring.

(e)    Severance and employee benefits related to Corporate and all segments. All other restructuring costs were primarily recorded in the Energy Storage segment.

Restructuring charges related to severance and employee benefits of $9.5 million for the year ended December 31, 2023 were recorded in Restructuring charges and asset write-offs and are reported in Corporate and the Ketjen segment. As of December 31, 2023, there was a liability of $3.3 million related to these severance costs, which was paid during the year ended December 31, 2024.

The following tables summarize the changes in restructuring liabilities for the year ended December 31, 2024 (in thousands):

First Half 2024 Restructuring	Asset Write-offs		Severance and Employee Benefits		Contract Cancellation Costs		Other		Total
Beginning balance at December 31, 2023	$	—	$	—	$	—	$	—	$	—
2024 charges	280,596		19,365		34,510		5,374		339,845
Change in estimate(a)	—		(509)		(9,623)		—		(10,132)
Cash payments	—		(18,883)		(22,120)		—		(41,003)
Asset writedowns/hedge dedesignation	(280,596)		—		—		(5,374)		(285,970)
Foreign currency translation adjustments	—		27		—		—		27
Ending balance at December 31, 2024(b)(c)	$	—	$	—	$	2,767	$	—	$	2,767
Second Half 2024 Restructuring	Asset Write-offs		Severance and Employee Benefits		Contract Cancellation Costs		Other		Total
Beginning balance at December 31, 2023	$	—	$	—	$	—	$	—	$	—
2024 charges	785,005		51,264		46,870		28,883		912,022
Change in estimate(a)	(52,098)		—		(9,500)		669		(60,929)
Cash payments	—		(35,010)		(4,891)		—		(39,901)
Asset writedowns/hedge dedesignation	(732,907)		—		—		(20,741)		(753,648)
Foreign currency translation adjustments	—		(387)		—		—		(387)
Ending balance at December 31, 2024(b)(c)	$	—	$	15,867	$	32,479	$	8,811	$	57,157

(a)    In the fourth quarter of 2024, the Company updated its estimates concerning the progress of construction activities, related contractual obligations and the estimated salvage value of Kemerton equipment, resulting in a favorable adjustment of asset write-offs. Additionally, the Company successfully negotiated revised contract cancellation costs with key suppliers to result in a favorable adjustment of the restructuring related charges.

(b)    Approximately $47.5 million recorded in Accrued expenses and $12.4 million recorded in Other noncurrent liabilities on the consolidated balance sheets as of December 31, 2024.

(c)    The majority of the remaining balances are expected to be paid in the next twelve months. Certain take or pay liabilities will be paid in line with the terms of the original contract through 2027.