Loop Industries, Inc. Q3 FY2026 Earnings Call

Good morning, ladies and gentlemen. Thank you for standing by and welcome to Loop Industries' third quarter fiscal 2026 corporate update call. At this time, all participants are in a listen-only mode. Following prepared remarks, we will open the call for questions. Instructions will be provided at that time. This conference call is being recorded today, Thursday, January 15, 2026. The earnings release accompanying this call was issued after the market closed yesterday, Wednesday, January 15, 2026. On the call today are Daniel Solomita, Founder and Chief Executive Officer, Spencer Hart, Chief Financial Officer, and Kevin O'Dowd, Head of Investor Relations. I would now like to turn the call over to Kevin O'Dowd to read the company's forward-looking statements disclaimer.

Thank you, Operator. Before we begin, please note that today's discussion will include forward-looking statements within the meaning of U.S. security laws. These statements relate to our expectations, projections, beliefs, future plans and strategies, anticipated events, and other matters regarding future performance. Forward-looking statements involve known and unknown risks and uncertainties that may cause actual results to differ materially from those expressed or implied. For a discussion of these risks and uncertainties, please refer to the risk factors in forward-looking statement sections of our most recent annual report on Form 10-K, our quarterly report on Form 10-Q filed with the SEC, and the earnings release issued after earlier today. These filings are available on the SEC's website at sec.gov or through our investor relations teams. With that, I'll now turn the call over to Daniel Salamita, founder and chief executive officer of Loop Industries.

Thank you very much, Kevin. It was a busy quarter for Loop as we move towards the construction phase of our Infinite Loop India manufacturing facility and progressing with our partnership with REED SOC, the Associates General Group for our project in Europe. I'm pleased to report on several positive developments. The Infinite Loop India project is on budget and on schedule. Before getting into the details, I want to officially welcome Spencer Hart joining Loop as CFO. I've gotten to know Spencer well over the past year since he joined our board of directors. His leadership and knowledge of the capital markets and financing structures will be a great asset for Loop moving forward. In Q3, we announced that we have executed a supply contract with Nike, the large American sports apparel company, to be an anchor customer for the Infinite Loop India manufacturing facility. The contract is for loop-to-supply Nike with a fixed amount of twist or textile-to-textile polyester resin on an annual basis at a fixed price for multiple years. There's a guaranteed take-or-pay element to the contract as well, which means if Nike does not take the delivery of the material, they still have to pay us a percentage of the sales price. We are currently in discussions with several CPG and apparel brand companies to secure additional off-take agreements. Textile to textile is becoming a very important growth driver as European regulations are being put in place to mandate more recycled content in clothing and recycled content coming from textile to textile, which means starting from a polyester textile waste and producing a new polyester textile with it. They're forcing the apparel companies to find a solution to recycling old clothing at the end of its life. Loop's technology is uniquely suited to recycle post-consumer textile waste. Post-consumer textile waste is difficult to recycle because of the different components that go into making the clothing. You often have polyester mixed with cotton, polyester mixed with nylon, cotton and zippers, et cetera. And all of these components have different monomers or starting components. And for this reason, it poses a tremendous challenge to recycle. typical recycling is done at very high pressure high temperature where you're either forcing the depolymerization to be done under very extreme conditions or you're simply just melting the plastic down into a new form and both of those do not work well for the textile industry because of the different components and where loops technology overcomes that is because of our low temperature depolymerization what we do is at very low temperature we break down the polyester into the DMT and MEG, and because of the low temperature, all of the other components like the cotton, the nylon, the buttons, and the zippers, they stay whole, and we filter them out after the depolymerization, which gives us a huge advantage, and that's why Loop's technology is uniquely suited to be able to process this type of clothing waste. Our project in India is also located next to a free trade zone, so we'd be able to import the waste clothing from Europe or from other parts of the world into that free trade zone and then transport that to our facilities to help the brands in Europe be able to recycle the material that once they've collected it. So, it's a really huge benefit to Loop and this government regulation is starting in 2026 and is going to start being enforced in 2028, which is exactly the right timing for us. You know, Our plant is scheduled to be completed construction at the end of 27. So, 2028 is a perfect timing for us to be able to do this. So, because of all of these regulations, we're really seeing an uptick in the demand for the textile-to-textile side. And, you know, we were on the phone the other day with a very large textile manufacturer and clothing company, and they said textile-to-textile is not nice to have anymore. It's a must-have because of the European regulation. So that's going to be a big driving force in the future. 66% of all of the PET and polyester manufactured in the world, which I believe is about 85 million tons per year, 85 million tons per year is coming from the polyester textile side. So it's a really huge shift in the marketplace, which we are really uniquely suited to be able to capitalize on. and the Indian facility is perfectly located for that. Besides the low-cost manufacturing, like I said, it's near the textile hub in India, the Gujarat province, a lot of textiles. So the main feedstock we'll be using for the process is textile for the textile-to-textile. So it's really perfect timing for us and perfect timing for this Indian project. On the engineering front, we hired Toyo, the large Japanese engineering and construction company to complete the detailed engineering, which started November 1st and runs through the construction of the plant. Toyo has a very large presence in India and has done tremendous work to date. You know, our engineering team is now fully deployed on working for this project and generating revenue for Loop from this project from the joint venture. So we really feel that we're in really good hands with Toyo. They're doing an excellent job and we're excited to be working with them through the construction of the facility. Debt syndication is moving well. We are building a syndicate of lenders for the project debt financing. We've received several term sheets from multilateral development banks, sovereign wealth funds, as well as international and local commercial banks. The terms so far are in line with our expectations and we anticipate closing the debt financing in the coming months in line with our project schedule. So, that's the updates on India. As far as the progress with our partnership with Reed Societe General Group, as you know we've licensed our tech, we sold Reed SofGen a license to our technology to build one plant in Europe. SofGen has spent time working on site selection. I believe they started off with looking at 20 sites across Europe. They've narrowed it down to three. There's one lead site in Germany that is being negotiated right now, and we think that should be finalized very shortly, sometime probably the end of January, beginning of February, at which time we anticipate to begin generating meaningful revenue and profits from providing the engineering for that project. So, the engineering and milestone payments will be, you know, over the next three years for the project. And we believe that that would cover all of Loop's back office expenses for the next several years. Cash operating expenses for the quarter were $2.2 million, reflecting a year over year decrease of $1.1 million. At the end of the third quarter, we had total liquidity available of $7.7 million. In the coming quarters, this number will continue to decrease. The operating cash expenses will continue to decrease as more expenses are transferred to the joint venture and in India and the project in Europe, as well as we've seen some meaningful reductions in other areas of our spend, our annual spend. Our focus is on raising the remaining financing required for our equity contribution to Elite and for the operating expenses until the startup of the Indian facility. We are engaged with multiple parties regarding a financing to fund our investments in Elite. This capital along with anticipated engineering revenues derived from the India and European projects is expected to fund Loop's ongoing operations until its first facility becomes operational. I'd like to turn it over to Spencer Hart now, our new CFO, and let Spencer say a few words.

Thanks, Daniel. It's nice to be on the call with you on one of my first days of being CFO. As a brief introduction, I've spent over 30 years in my career in investment banking, and I've followed Loop for many years. About a year ago, I joined the board of directors, and I'm a big believer in the company, in Daniel, and in the whole management team. I think there's an opportunity here to build a great company and create significant value in the process. During my investment banking career, one of my areas of focus was raising equity and debt capital for my clients. And so I'm going to be very focused on supporting Daniel in raising the capital for Luke to bring us to the next stage of our strategic development. For this quarter, Daniel gave you a good update on the business. The detailed quarterly results are in which were filed last night. I would just point out that the company has managed expenses very well in the third quarter, bringing cash operating expenses down over $1 million from last year's third quarter. We have opportunities to reduce that further, and some of those opportunities have already been locked in. With that, I'll pass it back to Daniel for closing remarks. Mute.

Oh, sorry about that. Thank you very much, Spencer. In conclusion, really pleased with the progress we're making both in India and in Europe, you know, starting to really making meaningful revenue from and profitability from the engineering fees uh in europe and in india are you going to be able to you know sustain our back office spend for the for the many years coming so that's really you know really positive development for us and um you know we're really confident in the financing as well so looking forward to getting all this done in this quarter with that i'll open it up for questions thank you we will now begin the question and answer session If you would like to ask a question today, please do so now by pressing start followed

by the number one on your telephone keypad. If you change your mind or you feel like your question has already been answered, you can press start followed by two to withdraw yourself from the queue. Please ensure that your microphone is unmuted locally before proceeding with your question. Our first question today comes from the line of Gerard Sweeney with Roth Capital Partners. Please go ahead, your line is now open.

Good morning, Daniel, Spencer, and Kevin. Thanks for taking my call. So I had a question on Nike. Sorry, you guys can hear me, correct?

Yes, I can hear you. Thank you.

Got it. So question on Nike, or actually the facility in India, 70,000 metric tons. Nike, obviously, huge global brand, you know, great opportunity for the loop. Just curious, how much of the facility in India is under contract? And you have Nike, and I believe you have a few other people. Maybe you could just delve into, you know, where it sits on the output and who's going to do all takes for the output.

Well, we expect to have – thanks for the question, Jerry. We expect to have probably between five to six customers total for the facility. Today we have Tyro Plus and we have Nike. We're in negotiations with several other CPG brands on the packaging side for Europe. So some of our customers that we've dealt with and we've had longstanding relationships that we produced products for before, that we have products on the shelves with them in different geographical regions today. Either we're finalizing negotiations with them for packaging for the European market and the textile side as well for a few other textile companies. So I would suspect we'll probably have another three to four customers to have the entire capacity of the facility under contract.

Got it. So it's going to be a mix of packaging and textile. and on that front or pricing I know you don't necessarily want to give pricing but maybe in broad strokes or broad terms textile and packaging or is it similar pricing and margins or is there one area better than better than another if you don't want to go into that that's fine yeah no I think it's I think overall we have a target average sales price for the facility and so you know we're really unique in a technology now we're able to play in both sides right we can play on the packaging side create FDA approved food grade plastic

for water bottles and we can also play on the textile side and so we're agnostic we can do both which you know really positions us uniquely in the marketplace to be able to deliver on hey if market is the bottle market is hotter then we can produce more bottle if the fiber market is hotter we can produce more fiber so right now you know we're gauging you know the the different levels i would say right now the textile side is a little there are higher premiums being paid on the textile side because of the textile to textile the regulation coming in and a little bit more of the uniqueness on that side where you know both sides can get so the bottle sides can get mechanical recycling to give them a certain percentage of what they need, but if they want the quality, then they have to come to loop for the virgin quality material. So right now I would say probably textiles, you'll get a little bit of a higher premium there, but it's very comparable. It's really also on the customer's need. It's what does the customer really need and what does the customer's margins look like. Generally the textile companies or the fashion companies work with a little bit higher margin, and we are the finished product. like we are the textile so that polyester fiber that we're making is the actual textile whereas if you think about the packaging side and the bottle players you know we're we're the container that their drink comes in so we're not the actual product you know we're the packaging around the product so it's a little bit of a different mentality um but you know we could play on either market and we're ready to to move as needed gotcha and another question on that front this is maybe on the marketing side and probably something that hasn't been brought up in a while, but I know historically you've always said, even on some of the sort of runs you've done

for Avion, it's like made with loop or loop material. Are you still going to be able to market the textile and packaging with some of that marketing opportunity, like made with loop or cycle products or loop inside, you know, along those Yeah, we definitely want to continue on the marketing side with that, on the packaging side.

You know, we've had that in the past. We expect to continue that in the future. On the textile side, we created a sub-brand for Loops Material called Twist. And so that's a part of the discussions when we talk about this with the textile companies. And one of the big things that the textile companies need from us is to be able to recycle their waste. Because now they're going to be responsible for collecting their waste. and that's going to put a huge pressure on the system. So they're going to have to organize the collection. Once the collection is there, they're going to need our technology to be able to recycle that for them. And so those are really great opportunities to do co-marketing and co-branding around those entire, you know, circularity of the entire product portfolio. So them sending us the way to reprocessing it, sending it back to them, creating that loop, that's something that we think we can really take advantage of on the marketing side.

Gotcha. And then finally, just, you know, last question, just timeline for the India facility, just if you can remind us, you know, groundbreaking and then mechanical and completion and then commissioning and so.

Thanks. Yeah, I mean, groundbreaking is a term that's kind of an outdated term because what is, you know, groundbreaking? Our project is, you know, the project has already been approved. There's not like there's any approval needed. Our project is moving forward. Lupin, our partner, very dedicated focus to get this done. We started all of the detailed engineering, which, you know, feeds into the construction. So the project is on schedule and on budget. We are moving forward and having construction completed in Q4 of 2027. So that was always the goal. And we're on that timeline as well. So, you know, you'll see some meaningful updates on the progress of the facility. We will eventually have, you know, some type of a ceremony on the site. But, you know, the project is greenlit. it's not it's not like the project is not going to be moving forward or there's one event that has to happen we're just moving forward methodically getting this done getting the debt financing in place and then we can move forward with the with the construction of the project got it daniel appreciate it and uh spencer welcome aboard thanks thanks jerry thank you thank you our next question comes from marvin wolf with paradigm capital please go ahead your line is now oh yes good uh yes good morning guys can you hear me okay yeah i just had a question with respect to the uh german uh site selection that's uh going on now um how big a plant would that be once that comes on board so it's the same size it's 70 000 tons capacity exactly the same size as the Indian facility okay and I guess it's too early to talk about customers for that plant but I I would assume you're in early discussions with people yeah so the European plant would mainly be on the packaging side because the supply chain for textiles is mainly in Asia so that but there could be some textiles being recycled at the facility because of this European regulation that's come in, having the facility in Germany, having these textile companies being able to send us the material in Germany to be able to process is going to be a big advantage for them. So it's going to be the regulars, our same customers, you know, the same loop customers that we've always been dealing with are going to be the customers supporting that facility as well. Most of the European packaging and textile brands are going to be customers of the plant. Because of the low-cost nature, you know, what we did is we brought the low-cost mentality of India into Europe by doing modularization. So being able to build our technology in modules in a low-cost country, shipping them on-site, allows us to really reduce Capex, which allows us to offer better pricing to our customers. So, you know, we've seen a reduction of Capex of probably close to 50% by doing it modular versus doing it in stick build. And so that's a big part of our business moving forward. You know, that engineering that I keep on talking about as well, building our – taking our design from India and now building that into modular fashion to be able to, you know, build this in a low-cost country, put together, like, Lego blocks, disassemble it, ship it to Europe, and reassemble the Lego blocks to be able to reduce CapEx and offer better pricing to our customers. So we're really competitive on pricing in the European market, and this project in Europe is going to be very competitive as well.

And if you could just remind us what is the size of the debt package you're looking at?

For India the debt package is a hundred and thirty million dollars.

Okay.

Which is seventy percent. And what is the equity component that Loop is going to have to provide?

The equity component that Loop is going to have to provide is approximately 28 million dollars 28 million okay very good well you're making great progress and it's good to see it uh come along uh with some uh continued uh if you will uh intensity yeah it's a steady progress you know doing everything the right way and uh getting that plant built for the end of 2027 that's that's the goal yeah okay very good well you know the into 27 comes faster than you think right it's only uh less than 24 months away now yeah the

engineering teams and Toyo and the joint ventures engineering team and our partner Esther's engineering teams are working full full out non-stop everyone is fully dedicated to that facility so uh you know the amount of work going on behind the scenes uh is tremendous you don't always see that as uh because there's not a lot of you know press releases or things around that but the amount work being done to get this facility done is tremendous so all hands on deck getting this built and it all starts that's fabulous very good the engineering and the technology right that's the foundation of all these things you can build a plant and then it doesn't work and so that's where you know we've spent the time did it the right way we've had this plant operating in canada for over five years getting all of the knowledge all of the learnings all of the engineering work that's been put into these plants and so now you know we've done it the right way we've done it methodically it hasn't always been the easiest road but you know we're doing it very methodically to get us to where we need to be in 2027 to deliver this product to our customers that's very good and uh congratulations for uh bringing it this far and it uh will continue on i'm sure uh thanks again for taking my questions this morning guys all right thank you so much our next question comes from veric kutnik with divjay capital partners

Eric, please go ahead.

Hey, guys. Thanks for the time this morning. Can you hear me? Yep.

Good to see you, Daniel.

So, in the past, you've talked about the gross capex per pound in India being 61 cents with, you know, maybe net around 75 cents. Does that same number translate to the European facility, especially when you talk about the modularity of it?

So, the European facility will be a little bit more expensive. So, you could take the module cost, you know, the capex that you provided. That would be, let's say, the cost for the modules. So then you have to add the transportation and the reconnection of the modules. So there's a little bit more cost involved. The good thing about the European, and especially, you know, when we go to these site selections, the most important thing, and one of the biggest costs in these plants is all of the utilities, you know, the natural gas, the hot oil, the steam generation, the cooling towers. So, in a chemical plant, the utilities are the most expensive part of the entire project. And the beauty of this project and the beauty of the facility that we have in Germany is that it's a big chemical plant. It's a site that has utilities. And so, instead of us having to put in our boilers, putting in our steam generation, putting in the natural gas connection, putting in the cooling towers, the nitrogen, all of those things that go around the utility package, it's already there on site. So, that's going to be able to offset some of the increased costs for the transportation and the reconnection of the modules. So, we expect the plant to be a little bit more expensive than the Indian project, but not tremendously more expensive because of the offset of the utilities. Where in India, it's a pure green field, we have to put everything on the site, this is a site that has a lot of utilities. So, instead of having to build our own boilers on site, we just connect, you know, into the existing boilers that the site already has. And, you know, so it's more efficient from a CAPEX perspective. And that's a big part of the decision when you choose these sites. If you have utilities on site, it brings down CAPEX tremendously. Energy costs are also very, very important and the ability to transport the modules on the site um so that's uh it will be a little bit more expensive barrick but it's uh still in generally in the same um um numbers right i mean if i look at the rest of the field you guys are about half the cost you know on a capex per pound basis where does that magic come from the magic comes from the learnings that we you know we really have to reinvent ourselves So, what happened, you know, a little bit of going back a little bit, what happened during COVID is the price of building everything went up. So, the price of capex went up if you're building a house, you're building a store, or you're building a chemical plant, the capex went up. And during COVID, that was fine because the capex went up, but the price of plastic went up as well. So, you had a trade-off. You had plastic at very high prices because of very tight supply chains, and you had capex So, the economics still made sense. What happened right after COVID, once China opened up its factories again and Asia opened up its factories, the price of plastic came down. CapEx didn't continue increasing at the same rate, but they leveled off. They still remained high, but the price of plastic came down. And that's why not only plastic, but all commodities, that's why you saw a lot of projects in this space get canceled during that time because there was just a mixed mass of high CapEx and versus lower commodity prices. And so we had to reinvent ourselves as a company. You know, we had a project that, you know, fell into the same path. And that's where we had to reinvent ourselves. So going into India, low-cost manufacturing, lower labor rates. Lower labor rates, you know, translates to lower construction costs. Everything from cement, steel, installation costs. Everything that we're doing now is done in a low-cost industry. industry. We don't have any specialized equipment. In a chemical plant, everything is, you know, tanks, reactors, agitators, heat exchangers, pumps. Those are all equipment that can be sourced locally. So, if I'm building it in India, Indian labor is making those parts rather than, let's say, building it in Germany where German labor, which is significantly higher, builds those projects. And if you look at India right now, India is 80% labor costs are 80% cheaper in India than they are in China today and that's where you know we can do this low-cost manufacturing and that's how we can be so successful.

I appreciate the color on that and obviously is it safe to assume that your return on invested capital obviously you guys hold this at a JV level but your payback period would be significantly better and hopefully that the type of cash you can use to fund future growth, or when we think about more facilities, is it going to come out of the cash flow of India, or is it going to be funded through other means?

It's going to be funded through the cash flows in India 100%. So in India, we have enough space to build 100,000 ton capacity right after the first one is done. So the total capacity of the site is going to be 170,000 tons. You know, we've done multiple feedstock studies. We've hired different third parties to do the studies. You know, easily identified over 500,000 metric tons of textile waste, just textile waste. Forget about the packaging. It's just textile waste available for us to process. Just in India, not counting for, you know, imports from Europe or imports from Vietnam. 500,000. So we have 170,000 capacity on the site. Some of it will be packaging waste for the packaging customers. It won't all be textile waste. but you know we'll be able to all of that is going to be financed through the cash flow the the money that we get the five percent for the royalty fee plus the you know covers all of our back office expenses and more because you know we're really you know being um you know cautious with our cash and and spending and you know a lot like I said a lot of the costs of the R&D and the engineering and everything else is now being paid by the joint venture So it lightens the amount of cash at the head office that our burn is. And so, you know, the licensing fee plus the engineering fees, you know, we're going to be cash flow positive at the corporate level just through those. And so everything else is going to be coming out of the funds from the facility, from the joint venture. The payback is less than three years in India for the plant. So, yeah.

Right, I mean, I'm over in Europe. I came over in Europe then, Reed SG sees this and says, you know, they get to partner with you, they design, license, engineer, collect with minimal balance sheet risk, and it's hopefully, you know, with the payback period under three years, this is a scalable project well past India, into Europe and other places.

Absolutely. So, especially with this.

I don't think people have mentioned that and what a big deal that is. that Nike is huge.

Obviously, if you could choose, you know, if I could look back and choose any customer that I wanted to work with, you know, Nike's right up there as, you know, one of the top companies that anybody wants to have as a customer, right? Such a great organization, such a great, you know, company, such a great brand. And they have, you know, all of these different brands within Nike that are so successful. So, we were really honored to be able to have Nike as our anchor customer and it's just tremendous working with a company that size and they're you know two innovators they need textile to textile and they're really moving quickly to get that done so we couldn't be happier about having nike as the anchor customer here yeah i mean i saw this on the internet so i'm going to throw it in here but i mean obviously nike's nike produces about two billion pounds of plastic and shoes per year i should say clothing they can choose per year.

I mean, if I just use India, which will do 154 million pounds, I mean, you're about 5% of their total capacity. So I think the scale of this, when you actually think and zoom out, especially when you throw in other apparel players, it's bigger than we could ever dream of.

Yeah, like I said, so the entire polyester fiber market is 66% of 85 million tons. so it's a you know a huge number so we have 170 000 tons out of you know we're talking about somewhere 60 million tons so there's a tremendous amount of growth on the textile side and loops technology is uniquely positioned to handle that because of the low temperature methanolysis that's the key to all of this to be able to not contaminate your stream with the cotton with the nylon with with the buttons, with the zippers, with all of the different components that go into these textiles, that's the key to Loop's technology. And that's why we're uniquely positioned to be able to do this.

Awesome, I appreciate the caller. And good luck to you guys, Spencer. Welcome aboard and look forward to following along. I think you guys got a great start to the year. I look forward to seeing what's next.

Thank you, Beric. Thanks, Beric.

Thank you. We have not received any further questions and so I'll hand the call back over to Daniel for any closing comments.

Yeah, nothing further from me. Thank you very much, everybody, and we'll be speaking again soon.

Thank you. This concludes our call. Thank you all for your participation. You may now disconnect your lines.