Largo Inc. (NASDAQ:LGO) Q2 2022 Earnings Conference Call August 11, 2022 1:00 PM ET

Company Participants

Alex Guthrie - Senior Manager of External Relations

Paulo Misk - President and CEO

Ernest Cleave - Chief Financial Officer

Paul Vollant - VP of Commercial

Conference Call Participants

Heiko Ihle - HC Wainwright

Lee Cooperman - Omega Family Office

Andrew Wong - RBC Capital Markets

Gordon Lawson - Paradigm Capital

Operator

Good day, and thank you for standing by. Welcome to Largo Second Quarter 2022 Webcast and Conference Call. Today's call is being recorded. At this time, all participants are in a listen-only mode. After the speakers presentation, there will be a question-and-answer session.

I would now like to hand the conference over to your speaker today. Alex Guthrie, Senior Manager of External Relations. Please go ahead.

Alex Guthrie

Good morning, everyone. And thanks for joining our second quarter earnings conference call and webcast. On the call today is Paulo Misk, Largo's President and CEO; Ernest Cleave, Largo's Chief Financial Officer; and Paul Vollant, Largo's VP of Commercial.

To accompany the call today, we have uploaded a supplemental webcast presentation, which is also available on our Web site at largoinc.com. Our Q2 financial statements, related MD&A and most recent AIF are also available on the website, as well as on SEDAR and on EDGAR.

Before continuing the call, I would like to remind you that some of the information you will hear during today's discussion will consist of forward-looking statements, including without limitation, those regarding future business outlook. Please refer to Slide 2 for a full description of our cautionary notes. The agenda for our call this morning is as follows: Paulo will provide an update on the company's second quarter progress; followed by Ernest, who will provide an overview of Largo's Q2 financial results; Paulo will close the call with an update on the company's sales and trading progress and on the vanadium market. Following this, we will then open the call for questions. We note that participants should restrict their questions to two and then requeue if there are additional questions to allow others the opportunity to participate.

And with that, I'll hand the call over to Paulo.

Paulo Misk

Thank you, Alex. And thanks everyone for joining our call today. I'd like to start by providing a brief summary of our second quarter results as it relates to our two pillar business strategy. Let's begin with the profitable vanadium pillar. Our team has worked hard in the face of several challenges at the start of the year. I am pleased to report that our production and sales performance improved in the second quarter. On the production side, we produced 3,084 tonnes of V205 equivalent in Q2, which is a notable increase over Q1. Following an improvement in operational stability, as well as the reestablishment of intermediate inventories. The payers also improved this quarter with 3,291 tonnes of V205 equivalent sold. Q2 was a great quarter for vanadium prices and company's strong financial performance during this quarter reflect this. Revenues were up 56% this quarter and the company achieved net income of $80 million [our] basic earnings per share of $0.28. However, due to the operational impact experienced to date and expected [continue] of global inflationary pressures, the company has revised its production and sales force guidance for 2022. It [revised] equivalent production guidance is now 11,000 to 12,000 tonnes, down from 11,600 to 12,400 tonnes and cash operating costs, excluding guidance has increased to $4.10 to $4.50 per ton sold from $3.90 to $4.30.