Loop Industries, Inc.

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Loop Industry's first quarter fiscal 2026 corporate update call. My name is Emily and I'll be coordinating your call today. After the presentation, you'll have the opportunity to ask any questions, which you can do so by pressing star followed by the number one on your telephone keypad. This conference is being recorded today, Wednesday, July 16th, 2025. The earnings release accompanying this call was issued after the market closed yesterday, Tuesday, July 15, 2025. On our call today are Loop Industries Chief Executive Officer Daniel Solomita, Interim Chief Financial Officer Nick LaFond, and Kevin O'Dowd, Head of Investor Relations. I would now like to turn the conference over to Kevin O'Dowd to read a disclaimer regarding forward-looking statements.

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 performance matters. 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 complete discussion of these risks and uncertainties, please refer to the risk factors and forward-looking statement sections in our most annual Form 10-K or our report in the 10-Q filed yesterday with the SEC in our earnings press release issued yesterday. These documents are available at www.sec.gov or directly from our investor relations team. 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. Good morning, everyone. We continue to make steady progress towards groundbreaking of infinite loop manufacturing facilities in both India and Europe, both regions working with excellent local JV partners with whom we are fully aligned as we advance to the next stage of strategic development. Let's start with Internet Group India. Our off-site discussions are progressing well with leading global apparel brands and CPG brands. For the apparel company, we are offering a textile-to-textile solution, meaning we recycle waste textiles and turn that into brand-new polyester fiber, which they then incorporate into their clothing. Most of these apparel brands need a solution to be able to incorporate more sustainable materials into their clothing. Today, they're using mechanical recycling, which is basically coming from water bottles and turning that into fibers. But that's a way of the past. Bottles need to stay within the bottles, and these textile companies recognize that they need a solution for textile-to-textile recycling. And that's where Loop comes in. The ability for us to recycle textile waste, removing all coloring, dyes, all other types of impurities, and providing them with virgin-quality polyester fiber is a huge advantage for the apparel brands. There's a plentiful of waste polyester fiber available in India for us to be processing at the facility due to India's textile industry. On the CPG side, the Consumer Packaging Goods Company, today European beverage brands are in need of high-quality recycled PET. The quality of the mechanical recycled PET that they're using today is getting worse and the quality is very low affecting their packaging. And so they really need to find a solution for being able to incorporate more recycled material but getting high-quality material. And this is a trend that we're going to continue to see. As more mechanical recycling comes on board, the quality of the artifacts that they're producing is getting worse and worse. And eventually, because there's only a certain amount of cycles that a bottle can go through until that bottle is no longer usable through mechanical recycling. And that's where Looch Technology steps in. Looch Technology obviously provides virgin quality, top quality PET resin to the brands coming from waste materials. So no matter what the incoming food stock quality is, we always produce the top quality output. So a lot of European beverage brands are looking to Loop to be able to provide them with that high-quality PET made from 100% recycled content. The advantage of India's low-cost structure is that it allows us to provide the highest-quality PET made from 100% recycled content to our customers at very competitive prices while achieving attractive economic returns for Loop and generating strong cash flow to fund future capacity. So, those are really the key elements for this, is providing the customers with the highest quality PET, made from 100% recycled content. And today, because of India's low cost structure, we can provide them at a very competitive pricing. The $176 million CapEx was confirmed by Tata, the engineering firm who did the seed study. That CapEx number includes a polymerization unit to recombine the DMT and the MEG into PET. land acquisition, and all financing costs for each startup. If we remove all of those costs, the total install cost of the technology, of Looch technology, is $95 million, which is by far the lowest cost of the industry. Site selection has been narrowed to two locations in Gujarat, and we'll be finalizing which land we'll be choosing very shortly. The economics for Luke on the project, in addition to the JV returns, of which we own 50%, will be further enhanced by licensing fees. So Luke receives a 5% licensing fee for technology and customer sales, and as well as engineering fees. We signed a $1.5 million engineering contract with the Indian Joint Venture to provide engineering support for the next stage of engineering, the details engineering and construction. Incidentally for Europe, Sophie C. Jarrell is seeking to advance the timing of the project under their newly appointed CEO of Weed for the Economy and his dedication to advancing the project. Right now, we are supporting them in the site selection, which is the immediate focus. Right now, the site selection is focusing mainly on Western Europe. And so our team is supporting them as we look through the different pieces of land to find the optimal piece of land. Once that piece of land is identified, then we'll start working on the engineering for the project and the modularization. So the engineering is going to be done in a modular fashion, where the modules are going to be built in India. So we're bringing India's low-cost manufacturing, low-tafex, and exporting that to other parts of the world. In this case, it's going to be Europe. So we are working with a leading company in India for modularization with significant experience in the chemical industry. The modules for Looch technology will be built in India and shipped to Europe, or we can ship them to any location in the world. And they're assembled like Lego blocks on site. This will significantly decrease cafe for these projects, for Looch technology anywhere in the world. the initial estimates is that the capex would be a 50% reduction versus if we would be doing it as a thick build. So that's a significant savings. So again, it perfectly positions which technology to deliver highest quality PET resin or polyester fiber to the customers with extremely competitive prices. So it couldn't be more happy with the modularization progress that's going on right now. In addition to the shared project economics in Europe, we will generate additional revenues from providing the modular solution from engineering services and two other milestone payments coming from that first European facility. With that, I'll turn it over to Niklas Holm for some update on the financials.

Thank you, Daniel. There are two key items I'd like to highlight from our Q1 fiscal 2026 financial results filed last evening. First, we continued our disciplined approach to managing expenses and preserving cash. Cash operating expenses for the quarter were 2.6 million, representing a reduction of 2.2 million, or 46%, compared to the same quarter last year. Cash used in operating activities for the quarter was 3.1 million, including working capital outflows of 0.8 million. These outflows reflect the timing of certain payments early in the fiscal year from which we will benefit later on. Second, we ended the quarter with available liquidity of $12.3 million. Our objective is to secure sufficient financing to fund Luke's equity contribution for India at our operating cash burn through to the startup of the Indian facility. Anticipated sources include government funding and engineering revenues in addition to new capital. I'll now return the call to Daniel for his closing remarks before we open the line for questions.

Thank you, Nick. So in conclusion, we're in excellent position to move to the next stage of strategic development of the Infinite Loop manufacturing facilities. The first facility in India has by far the most attractive economics of any project we've considered. We have a great JV partner. The modularization, it brings a really differentiating factor where because of the lower cost capex, now you can see an acceleration of the amount of projects that can be built because you can offer really competitive prices and maintain high returns, which is key to all of these projects. We have a great partner and a great relationship with our European partners, so advancing together in long steps. The long-term vision is to drive significant shareholder value creation through continuing rolling out these manufacturing facilities. As you said, we have licensing revenue, engineering revenue, modularization revenue, and then obviously a share in the project economics. And we have very strong relationships with all of the different customers that are looking for high-quality PET resin and polyester fiber coming from Loop's technology. So I couldn't be more excited about the future of Loop. With that, I'll open up the line to questions.

Thank you. We will now begin the question and answer session. As a reminder, if you would like to ask a question today, please do so now by pressing star 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 star followed by two to withdraw yourself from the queue. Our first question today comes from the line of Jerry Sweeney with Roth Capital. Please go ahead.

Daniel, thanks for taking my call.

Hey, Jerry.

I wanted to see if you could touch upon, you know, the all-take agreements, maybe go into a little bit more detail. Do you have an idea of maybe potential timing and what we should think about that? And then secondarily, does signing any of the CPG agreements Do you need to coincide with any stages of the Indian project moving forward?

So the customer contracts, you know, we've been advancing discussions with customers steadily over the past few months, especially since the capex number was confirmed. So we have a confirmed profitability range that we want to maintain with this. So things are going really well on the customer side. signing off on contracts are taking sometimes a little bit longer as there's a lot of steps internally in today's world. You know, with higher inflation, people are a little bit more not cautious, but I'd say there's more internal steps that have to be done to get contracts fully executed and fully signed, especially for contracts that we are negotiating, which is longer-term contracts. So it's not usually these TPG brands buy either spot price or one-year contracts. We're asking for longer-length contracts between three to five years in length. So, you know, those are certain things that internally they have to have acceptance from senior management for these type of things. The pricing, because we're really competitive in pricing, because it's a low-cost structure in India, pricing really is not an issue where, you know, the pricing is well aligned with the needs of the customers. So that's a big advantage that we have. And then there's the take-or-pay element to our contracts. So, if the customer would not take the volume for any reason, it would be penalized to a certain amount. It could be 40% of the value of the contract. It could be 100% value of the contract. So, that's another thing. You want to make sure that these contracts are very bankable. So, we are looking to sell out a certain portion of the facility prior to starting up the facility. the debt financing for the facility, it's easier to have, the terms would be better on the debt financing when you have a certain percentage of the contracts secured. And so that's our immediate goal. Yeah, and we have line of sight on that. So we're very confident in being able to execute on that.

Gotcha. A couple more, maybe a little bit more detailed questions on the contract. Historically, previously looked at contracts I don't know if cost plus was the right term to use, but with the previous contracts that you discussed, you would have your input cost plus, we'll say the conversion cost plus the markup. So you had some stability on the margins. Were the contracts of a similar structure as that?

So actually... The one advantage that we're giving to customers, customers like predictability. Customers like to know that for three years, this is how much they're going to pay and not have the ups and downs of the cycles, potential wars or oil disruption or whatever it can be that's going to affect the prices. So because of the Indian low-cost structure and the security on power supply, so those variations are important when your raw materials can fluctuate tremendously. And so that's where you would put in a cost-plus structure or an index-plus structure. Because in India there's plentiful waste available and we're lucky because no one else can recycle the type of material that we're recycling, We can lock in fixed prices on our feedstock. Then we can lock in fixed prices for the customers. So today we're actually offering customers fixed price contracts, which is a huge benefit. So, you know, to offset some of the longer term or offset the liabilities they have to pay, we offer them a fixed price for, let's say, three years or five years. So it's a big advantage to them that evens out their predictability of their costs. So that's the way we're selling the material in India. In Europe, you may go back to that cost plus because there could be more variations, but in India, fixed price contracts, and the customers really appreciate that.

Got it. One more question, just maybe next few steps. Obviously, CPT contracts are apparel, and that helps drive the financing aspect. So maybe next few steps, there would be you know, contract, financing, and then what would be some other areas that we should keep an eye on going forward?

Well, the JC has hired KPMG to syndicate out the debt financing, so they've already prepared what they call a detailed project report, and they're already presenting this to Indian banks and other banks, you know, EBC in Canada, the expert development bank in Canada is interested in supporting because of Loop's technology and bringing that worldwide. So we've already begun that debt financing work stream. And now as the customer contracts come in, you know, it just brings more credibility to the story and improves out the economics that we've shown the banks. So that's well underway. The land selection, we have two pieces of land that we've zeroed in on in Gujarat, in the Dahez region, which is a plentiful amount of waste textile feedstock and waste bottle feedstock. And so now we're just looking at negotiating the final terms for either or of those two pieces, and we should have a conclusion of that very shortly. So that's another milestone. But, yeah, the biggest milestones are going to be the customer contracts in place for the facility. So those are going to be the big ones for us.

Got it. Okay, great. I'll jump back in line. Thank you very much.

Just maybe one more thing on the customer contracts so that everybody is clear. The customer contract is between Loop and the CPG or the apparel company. So, we make the sale, and then there's a back-to-back contract that goes through the joint venture. So, the actual sale is between Loop and that company, and then Loop and the joint venture will have a back-to-back contract.

Thank you. Our next question comes from Eric Kutnick with 50 Capital Partners. Please go ahead. Your line is now open.

Hey, Daniel. Thanks for the question. I wanted to get some direction on Luke's capital intensity. A public dissolution recycler recently said that their facility in Thailand will have a gross capex per pound of approximately $1.40 to $1.70. That's based off, I think, 130,000 tons per year. Where does Luke fall from a gross, which means excluding financing and land, and net capex per pound on the facility that you're building?

So for loops technology only, so if you exclude land acquisition, if you exclude financing costs, and if you exclude the polymerization, which is putting the monomers back together, our cost per pound at 100, so our facilities are 154 million pounds per year capacity, we would be at 61 cents per pound.

Wow, you guys, that's pretty helpful.

Yeah. Now, half extra pound would be $0.61 per pound produced.

And as... Is that in that basis? Is that in that basis? Just to be clear? Yeah, that's on the... That's on that basis, exactly.

That's excluding financing costs, excluding land costs, and excluding the polymerization costs. If you had added the polymerization unit, then we would be at 75 cents per pound. But Loop's whole technology is 61 cents per pound. So if you're plugging into an existing facility that has polymerization, we're at 61 cents per pound. And that's at the current capacity. The beauty of Loop's technology is because there's really no proprietary equipment in the technology. It's basically, you know, reactors, filters, and distillation columns. The technology lends itself very well to scale. So future facilities like our India 2 facility, we're looking at, you know, 50% increase in capacity. So that 61 cents would even come down further from there as we scale to bigger facilities. But yeah, 61 cents per pound is today's number.

Thank you. Appreciate the call. Thanks, Daniel. Come back in the queue.

Thank you very much.

Thank you. Our next question comes from Jonathan Norwood with Friends and Family at BMO. Please go ahead, Jonathan.

Jonathan, your line is open.

Please proceed with your question.

Sorry, I was just muted there. Thanks for letting me have some questions here. Just a couple follow-ups here on the question that Jerry asked about the off-take agreements. So, I mean, these are obviously long-lead agreements because you're probably – say, three years away from being able to, I mean, maybe you can correct me on that, but by the time you get the facility up and running and producing products, you're probably looking at about three years out. So how do you, like, what sort of out, I guess, do you have or does the CPG company have or the apparel company have in terms of not meeting milestones from a construction perspective? Or what sort of outs do you have in the event that the environment changes such that selling to a particular company would not be economic?

So, yeah, a couple of different points there to discuss. So, the facility would be up at the end of 27. It's 18 months construction time plus, let's say, six months of startups. We're 24 months away from, let's say, this fall. So, the plan is to have the facility up by the end of 2027. Customer contracts. There's a take-or-pay element, so if we're producing the material, shipping it to them, if they do not want to accept the material, they have to pay us a penalty on the material, like I said, ranging between 40% of the contract up to 100% of the contract. It's a negotiation difference with every customer. If Loop is unable to deliver the material to the customer, there's no financial penalty to Loop.

Okay. Okay. So if you guys, let's just say for whatever reason you were unable to, like, have this thing up and running in 18 months, let's just say it's the end of 28 instead of the end of 27, could these guys, could they back out of the green? Like, is there anything that's tied to your ability to get the plan up and running by the end of 2027?

No, there's nothing tied to it.

Okay. All right. Just making sure on that. Because, I mean, we've seen in the past, and I know that, you know, we've essentially, I think initially it was sort of like bottle to bottle. And we, you know, we've seen like Coke and Pepsi sign up and then subsequently drop off. And I'm just wondering, like I, you know, just want to be mindful of that. that and how you know a delay in the construction of the project could potentially because it's been a long time to get this thing up and running and just want to make sure that these guys you know they don't have the ability to pull the plug sort of halfway through construction or anything of that nature.

Just let me clarify that. Go ahead. I think, Jonathan, you know, in the past when you had a contract with Coke and Pepsi, it was for – Coke and Pepsi didn't pull the contract. It is that Luke didn't – wasn't able to deliver the facility, which we're talking about was 2018, which was a facility in 2018 that we were looking and doing in Spartanburg, South Carolina. So – No contract was ever pulled. It was that Loobs was unable to do it. That was seven years ago, right? So it's a completely different project and completely different economics. And a very different customer base. So, yeah, I understand your concern, but the facts of the matter was that we did not build the practice in Spartanburg, and that's why the contract fell off. If you have a certain contract for a person's facility and it doesn't get built, If the facility is built and operating, then the customers are locked in to buying the volumes.

Okay, now that makes sense. And so on the equity contribution that's required by loop for the India facility, can you remind us of how much that is and what the timelines for having to inject that amount is?

So the total amount would be $25 million. Part of it will be paid for with polymerization equipment that we had bought for previous projects. We'll be able to reuse that equipment. We also have a certain portion of that committed by a government entity here in Quebec. And the timing for that is probably sometime in the fall once we have the land selected So, sometimes towards the fall timeframe. So, like you said, by the end of the year, breaking ground. So, at the time of breaking ground, that's when we would be needing all of the capital in place for the project.

So, what's the funding gap then between, I guess, the amount of cash that you will have on hand at that time? the amount of capital that the government entity will be putting up, and then the amount that you have to effectively put in. What's that funding gap, and how do you anticipate coming up with that capital?

The funding gap for that facility is about $15 million. So we have several different opportunities right now that we're evaluating for the $15 million. The one thing I'm really excited about is the acceleration of the SockGen project because we'll be touching engineering and modularization revenue earlier. And that will definitely help with the cash flow going forward for Loop's cash position. So the amount needed right now is $15 million. Okay.

Okay. And just on licensing, Daniel, can you give us an update on what I guess the pipeline looks like for potential companies to license your IP? Like how active is that pipeline? Are there any sort of hopefuls or people that are interested in that?

Yeah, I think with the, you know, once we've confirmed the CapEx number in India, and the modularization work that we've done, it really allows projects where before you were looking at these very capital-intensive projects of somewhere north of $500 million for a plant. Now that we're able to cut that number in half, let's say for the Western world or North America or other higher-cost manufacturing companies, I think that opens the door for a lot more potential projects. StockChain is very interested in building multiple of these facilities, so we want to start with one in Europe, but they have a plan to roll out several of these facilities through their private equity arc. They have a new CEO, they have a CEO that's been hired just for this. So he's working diligently with my team on finding the optimal location and then bringing in the facility, bringing in the modules. So that modularization, I can't stress how much that modularization is going to help rapidly expand future facilities. So there's other potential opportunities in Asia. There's potential opportunity in North America. So we're looking at a whole bunch of different opportunities right now. India is going to be, you know, still the lowest cost facility we'll ever build. It's going to be India and economics are tremendous for us. And the customer appetite for Indian material is strong. You know, shipping it to Europe or using it in other – you know, the textile supply chain is all done in either China, South Korea, Vietnam, or – Taiwan, and so having a facility in India supplying those countries is really important for us. So we are definitely planning, we're buying enough land to have a second facility on site in India. So the plan there is after the first facility, we have a year of operation to expand to the second facility, which would be 100,000 tons, which is about 50% capacity more than the current facility. So that's going to be another really exciting opportunity, having that low-cost structure in India and continue building off of that

Yeah. Well, no question. I mean, you know, on paper anyway, India seems to be the optimal place to locate one of these plants. Just one last question on the deck piece that your Indian partner has to come up with. It sounds like KPMG has been engaged to put together a syndicate. I mean, is that an Indian-based thing? Because typically in North America, like, you wouldn't expect to see an accounting firm putting together you know a syndicate you know the bank that would be doing that so what what's the uh yeah i'm not i'm not used to hearing kpmg like organizing a syndicate because that is like a pretty standard thing in in asia

Our partner at Esker has built, they have three operating facilities, three PEP operating facilities. The latest that they built was in 2021. And this is the same, KPMG was the person they used for that debt syndication as well. So we're following their lead as they have the experience in that. We're following their lead, especially with the Indian banks.

Okay. Okay. Okay.

Thanks for that. Let me ask questions, guys. Thank you.

Thank you. Our next question comes from Marvin Wolf with Paradigm Capital. Marvin, please go ahead.

Yeah, can you hear me all right, guys? Yeah, we can hear you fine, Marvin. Yeah, okay. Very good. Yes, and thanks for taking the questions this morning. I was wondering, could you give us more color on things surrounding the two sites you're looking at? Things like, you know, lead time on permits, are these fully greenfield sites, you know, all that kind of stuff. Because, you know, here in Canada, you could choose a site today and not be allowed to break ground for maybe a couple of years by the time you got through all the local regulations and whatnot. So a little more color in that would be helpful if you could.

Yes, so the permitting comes with the purchase of the facility. So they're in industrial zones already zoned for this type of an activity. So we'll be with other chemical companies in the park. And so when you acquire the land through this process, we acquire the permitting as well. So once the land is acquired, we're ready to start construction.

Very good. And so that includes everything. That includes like utilities and everything.

Well, utilities depends, you know, like the utilities in our process is, you know, steam generation, electricity. So those types of things will have to bring in a substation for the electricity connected to the electrical system. you know, outlets in the area. So, some of this will have some industrial parks, have some utilities, some don't. That's a big, you know, part in deciding which location to use. A lot of that has to do with what utilities are available. In India, the utilities are mainly just, you know, roads and there's nothing that would be for our process specifically. So all of the utilities at these facilities in India, Loop would be providing all of the utilities. That traffic number has all the utilities costed into that. In Europe, it's a little bit different. You can find industrial parks or industrial areas that have certain utilities that will have a common steam generation or they'll have a common wastewater treatment plant. That's not the case in India.

Okay. And how many megawatts of power do you need to operate this facility? Less than five. Okay, and is that like a standard number you can easily get from the hydro or electricity provider?

Yeah, our technology is, you know, so the main source of energy use for our process is steam. So the steam is used to heat and cool reactors, distillation columns. Our technology is low energy, right, because we have a very low operating temperature in our reactors, below 85 degrees Celsius. So we don't use a lot of power consumption. And the number one energy source is going to be, for the steam generation, is going to be rice husk. So in India, it's a biomass. So very good for the environment. It's not coming from a coal plant or not coming from other higher polluting sources. It's actually the peel of the rice that's used or pelletized and they're used to generate the steam. So it's going to be 100% biomass coming into the facility.

Okay, that sounds great. What about our long lead equipment? Have you ordered any yet, or is there any that you've got orders to do here?

Well, the longest lead, no, actually, there's no real long lead equipment for our technology, because basically all of our technology is all, you know, it's a chemical plant. So it's reactors, stainless steel piping, heat exchangers, pumps, distillation columns, which are all fabricated within an eight-month lead time. So there's no real true long, long lead time equipment. The longest lead time equipment would be the reactors for the polymerization, but we already have those in stock that we bought for a past project. And so we already have those ready and they're already produced. So there's really no long lead time equipment that we need to be mindful of to meet our deadline requirements. on startup of the facility at the end of 27.

On the polymerization unit you have sitting around somewhere, what's the dollar value that's being attributed to that for your contribution towards the $25 million in equity?

That's going to be approximately $5 million.

Okay. Listen, thanks very much for the color. Appreciate it. Waiting to see an announcement shortly on the site selection, because I think that'll really get this ball rolling.

Yeah, site selection and customers, I would say, are the big announcements coming. You know, customers are very, very important to have those, you know, top quality CPG brands or apparel brands. So, customers is going to be key for us.

Definitely. Whenever we use their name in a press release,

We've gotten in the past these kind of contracts with CPG brands, and we've always announced them, so I anticipate the same.

And the same with the athletic company? Yeah. Yeah. Good. Because that helps a lot too, right? Sure. Thanks very much, Samuel. Thank you.

Thank you. At this time, we have no further questions, and so I'll turn the call back to the management team for any closing comments.

There's no further questions. Thank you all very much for participating, and looking forward to giving the market further updates as soon as they're available. Thank you very much.

Thank you, everyone, for joining us today. This concludes our call, and you may now disconnect your lines.