Loop Industries, Inc. Aktie

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Loop Industries Fourth Quarter and Full Year Fiscal 2026 Corporate Update Call. This conference is being recorded today, Thursday, May 28, 2026. The earnings release accompanying this call was issued after the market closed yesterday evening, Wednesday, May 27, 2026. On our call today are Loop Industries Chief Executive Officer, Daniel Solomita; Chief Financial Officer, Spencer Hart; and Kevin O'Dowd, Vice President, Communications and 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. securities laws. These statements relate to our expectations, projections, future plans and strategies, anticipated events, business developments, project time lines, financing activities, commercial partners and future 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 during this call.

For a more complete discussion of these risks and uncertainties, please refer to the Risk Factors in the -- forward-looking Statements sections included in our most recent annual report on Form 10-K filed with the SEC as well as last evening's earnings release. These documents are available through the SEC's website at SEC and on the Investor Relations section of Loop Industries. With that, I'll now turn the call over to Daniel Solomita, Chief Executive Officer of Loop Industries.

Thank you very much, Kevin, and good morning, everyone. Thank you for joining us for today's update call. We are making excellent progress in our global growth strategy by advancing our key partnerships in both India and Europe. Over the last few quarters, our team has focused heavily on commercial execution, capital discipline and driving our proprietary technology towards large-scale global deployment. Today, we operate -- we operate leaner. We are executing efficiently, and we have a highly visible path forward. I want to walk you through the major milestones we've recently achieved across our international partnerships and our internal operational efficiency initiatives.

Let's start with Infinite Loop India. where we have seen significant positive momentum on 3 fronts: government alignment, project economics and financing. Our India joint venture has officially signed a memorandum of understanding with the government of Gujarat. This provides us with vital formal alignment to support the development of our first large-scale commercial manufacturing facility in the region. The agreement is a major accomplishment. It is expected to streamline permitting, infrastructure coordination and administrative processes. Crucially, this site can support multiple manufacturing facilities, enabling a seamless phased expansion strategy. Improved project economics through rigorous optimization, ongoing procurement refinements, land cost optimizations and favorable foreign exchange movements, we have successfully reduced the estimated capital cost for the initial Indian facility.

We now expect the CapEx to be approximately $165 million to $170 million, representing significant savings from our prior estimate of approximately $190 million. This CapEx reduction is meaningful as it increases the overall project economics and lowers Loop's equity commitment. The project time line has not changed. We expect the Infinite Loop India facility to be operational in calendar year 2028. Project debt financing. The debt financing for the construction of the Indian facility is progressing well. The debt syndication process is well underway, and we have received several term sheets from international banks. These institutions are now moving into the technical due diligence stage of the process, signaling strong institutional confidence in our business model. The technical due diligence will be done at our plant in Terrebonne, which has successfully completed this type of due diligence several times in the past, most recently by Societe Generale Group prior to licensing our technology.

Customer engagement is strong. Our value proposition to customers is clear and well received. We offer the highest quality PET and polyester fiber made from 100% recycled content, and we are offering our material at similar pricing to what brands are paying for mechanical recycling PET today. Mechanical recycling PET is significantly lower quality and unable to achieve 100% recycled content without major color and quality issues. Overall, PET prices are up 30% to 50% year-to-date, mainly driven by higher oil prices. Shocks to the supply chain, as we have seen due to the conflict in Iran serves as a reminder to purchasing departments that having long-term fixed price contracts from a reliable partner such as Loop is a valuable hedge to have.

Moving on to Europe. Our partnership continues to hit key milestones. As we previously announced, Infinite Loop Europe, our European joint venture with Reed Societe Generale Group, purchased a license to build a European facility using Loop's technology. We have officially -- they have officially selected BASF Industrial Park in Schwarzheide, Germany as the site for their first facility. This location offers world-class industrial infrastructure and benefits from a highly supportive regulatory environment aimed at strengthening the European Union's plastic recycling center. Following the successful site selection, the project is officially moving into the engineering and permitting phase. This phase kicks off Loop's engineering team and providing -- this phase kicks off with Loop's engineering team providing the feasibility study followed by a feasibility study and supply chain testing, which is all done at our Terrebonne facility. The feasibility study is expected to begin shortly and will be generating meaningful high profitable revenue for Loop and last approximately 6 months.

Alongside our global commercial deployment, we have systematically evaluated our corporate overhead to ensure we are maximizing every dollar. We have initiated 3 key targeted expense reduction initiatives to ensure Loop operates leaner. Nondilutive government funding, we are pleased to share that Loop is receiving advisory services and up to CAD 2.9 million in nonrepayable funding from the National Research Council of Canada Industrial Research Assistance Program through its clean tech initiative. This funding extends through October 2027 and directly supports our operational readiness and industrial innovation without diluting our shareholders. We are continuing to strategically shift resources away from technology development and directly into commercial execution. This transition has resulted in a streamlined headcount and a meaningful reduction in corporate overhead. We have initiated an aggressive review of vendor contracts and conducted strict service audits across our key fixed overhead expenses. This has already yielded material savings in fixed areas such as insurance.

In summary, our foundational pieces are firmly in place. Our commercial momentum in India and Europe, combined with our disciplined corporate expense reductions gives us a clear capital-efficient runway. We are uniquely positioned to commercialize our technology globally and create long-term value for our shareholders. Thank you to our partners, our talented team and our investors for your continued support. With that, I'll turn the call over to the operator and open up the line for any questions. Thank you.

[Operator Instructions] your first question comes from the line of Brandon Rogers from ROTH Capital.

This is Brandon Rogers on for Gerard Sweeney. So first, so where exactly are you in the debt syndication process? And what milestones remain before officially closing that? And then as it relates to the expected capital structure, what's the anticipated debt equity mix?

So the anticipated debt-to-equity split is 70% debt, 30% equity, of which Loop would be responsible for 15%. And our partner at Ester Industries is responsible for 15%. So we split the equity 50-50. The process, as I mentioned, we've reserved several term sheets from international banks, and now they are moving into the technical due diligence phase where they do a technical due diligence on Loop's technology, which will be done here at our Terrebonne facility.

Terrebonne facility has done several of these technical due diligences in the past. Most recently, SocGen hired a third-party engineering firm to do a full technical due diligence on the technology prior to them licensing the technology and investing EUR 10 million into Loop. So it's pretty standard for us. We've selected -- the banks have selected the engineering firm that will be doing the technical due diligence. We're just finalizing the scope of work, and we expect that to be completed sometime towards the end of June, mid-July.

And then taking into consideration cash burn and with [indiscernible] think about liquidity over the next 12 months?

Yes, we have substantial -- we have enough liquidity through to the end of this year. And with the engineering contract that we'll be working on Reed with the [pre-FEED] feasibility study and then the feasibility study, that capital should -- that -- those engineering contracts are expected to fund our back-office spend for the next few years.

And then just one more for me. Can you walk us through how Loop begins generating recurring cash flow from these projects? And when should we expect engineering services revenues to begin becoming more meaningful?

So today, we already get engineering services revenue from the Indian joint venture. So every project where Loop's engineering team is working, we're getting paid for that work. Now with the feasibility study in Europe, that's when we'll start seeing much more meaningful engineering revenue and profitability from that engineering revenue. So that's going to be coming up, I would say, within the next few weeks, potentially months, but that's very short term. Now that the site has been selected, we're finalizing the engineering contracts, and that's when you'll see much more meaningful revenue from those engineering contracts.

From the projects, in India, Loop has a 5% royalty fee on top of owning 50% of the facility. And so we would expect to start receiving that royalty fee in 2028 once the plant is operational. And as far as the European facility besides the engineering services, there's also other milestones for the licensing agreement. So prior to construction, Loop would be receiving additional milestone payments from the Societe Generale Group.

Your next question comes from the line of JP Geygan from Global Value Investment Corp.

A couple of questions for me. You've obviously already announced an offtake agreement with Nike, but talk a little bit about where you are in discussions with other customers? And then how much of the expected volume for the India plant do you need to have offtake agreements for before the debt financing could be finalized?

Yes, we're aiming to have 50% of the facility signed in long-term contracts and then the rest would be completed with LOIs. We're in negotiations with several of the large CPG companies for the additional offtakes, and we are in negotiations for -- with several other textile companies or CPG companies for the LOIs as well. One of the challenges with customers is being able to sign these long-term contracts because for them, it's 2 years before they can start receiving, let's say, approximately 2 years before they can start receiving material plus 3-year contract after that. So it's like a 5-year commitment where these brands are used to buying 6 months contracts, maybe a 1-year contract. But are these long-term contracts are a little bit more complicated for some of these brands to be able to sign. But we do have good visibility on being able to complete the goal of having 50% contracts signed and then the rest done in LOIs with some of the customers -- existing customers that we have from our Terrebonne facility.

There's no doubt in my mind whatsoever that if the plant was up and operational, we'd be able to sell 100% of the capacity of the facility because we offer the best quality material on the market for 100% recycled content, and that's been proven over and over again by all of the different CPG companies. And our price point because of the Indian economics, having a CapEx of $165 million to $170 million allows us to be super competitive on pricing. So pricing has never come up as an issue with customers where we're too expensive. So we really have a really good formula where we have the best quality material at prices that the brands are buying a lesser quality material today. So it's just the difficulty there is just being able to get these companies that takes a longer time for them to be able to execute contracts that are 5 years out.

Got it. All right. And is the debt financing contingent on a certain amount of offtake being spoken for?

Yes. The debt financing is contingent on 50% of the offtakes signed in minimum 3-year contracts.

Okay. Okay. I'm curious on the CapEx cost reduction from, I think it was $190 million to -- in the $165 million to $170 million range. Obviously, FX has something to do with that. But was there any other meaningful cost savings? Or how do you drive that cost reduction?

Yes. I would say approximately 50% came from FX because the Indian rupee lost against the U.S. dollar. And we're talking about -- so when I talk about $165 million of CapEx, that's including all of the financing costs. Land acquisition costs, engineering costs and the construction costs. So the FX portion would only be on the construction cost. Land acquisition, we saved $5 million from the land acquisition. And then there was other material savings from optimizing the process where working with suppliers in India or in other parts of the world that are lower cost than what we had in the initial estimates. So it's a combination of purchasing optimization, land cost reduction, FX and engineering.

Okay. You announced maybe a week ago that you signed an MOU with the government of Gujarat. Help us understand what that means. Is it symbolic? Or is there some sort of tangible benefit in terms of permitting, access, utilities, et cetera?

Yes. It's really validation that the project is important for the Gujarat government. The Gujarat government here has this yearly review of projects and select projects that they are getting behind. And our project was something that was important for them. Textile recycling and textile waste is a pretty big issue in India. India right now has some of the strictest -- actually the strictest rules on recycled content in packaging in the world. And so today, they have to have 40% recycled content and they're going to go to 60% recycled content in packaging, which dwarfs Europe's 25% recycled content in packaging.

And so India is very focused on helping pollution in the country and finding solutions. And so our technology being able to recycle the textiles and the textile hub being in Dahej and the Gujarat province, it's an important project for them to be able to recycle the textile waste. And today, that textile waste is either burned, sent to landfill or just discarded basically on the side of the roads. And so this is where having our project is going to help alleviate some of the pollution in the Gujarat province because of the textile waste, which has no other value today, except for a technology like ours.

Okay. And finally, the risk of putting the cart in front of the horse, you've got visibility into some of the regulatory mandates coming down the pike. And obviously, pretty good input from your customers right now. Have you started to think about what comes after the plant that you own in India and then the technology license in Europe in terms of additional plants and whether that's a build or license model and the time line for starting to really make meaningful progress on those?

So the plan in India is to build a second facility, much larger facility once this one is up and operating. We bought enough land to be able to sustain 2 facilities on that same site. There's enough feedstock in Gujarat to be able to support a second site as well. So the joint venture's plan is definitely once we have 6 months, a year of stable operations at the plant to begin the construction on the second plant right away. So the engineering was all -- the engineering was conceived with the view on having that second plant at the site. And so that's going to be really important for us.

I wouldn't be looking to invest our dollars, our shareholders' dollars in high-cost manufacturing countries once we've seen what India can deliver. It's very rare to see projects go through engineering and go through detailed engineering and have CapEx reductions. Usually, you're over budget. These are the first projects I've ever seen that are actually under budget. And the cost structure in India allows us to be able to compete anywhere worldwide. Our customers like Nike they don't really care if the facility is in the United States, in Canada, in Germany or in India. What they care about is getting the best quality material at the best price, and that's what India can offer us.

So for us, investing our dollars, low-cost manufacturing, India has huge potential, potentially other parts, but India is definitely somewhere we think we can build a very big base. As far as licensing, SocGen is building the first plant in Germany through the site of the exercises, they see an opportunity to potentially build more facilities. European regulation is coming in where trying to protect the recycling industry in Europe. So more material coming from European. There's incentives if you're buying your recycled plastic from Europe rather than bringing it in from other parts of the world. Luckily for us, India and Europe have a free trade agreement. So we're not affected by any of those type of tariffs or protectionisms. And so licensing in other parts of the world is something that we'll definitely explore in other parts of the world. But yes, for us, low-cost manufacturing is our key and then licensing and higher-cost manufacturing.

The last thing I'll add there is probably the way we bring low-cost manufacturing into higher-cost countries like in Germany, what we're doing is we're taking the experience of India and the low-cost manufacturing of India and building our technology and modules. So the modules will be built in India with low-cost labor, low-cost materials and then shipped on site to Germany and assembled on site. So you're limiting the amount of high-cost labor that goes into these -- some of these other countries like in the European countries. So that's the way we see significant savings for this project in Germany, where we could see potentially a 50% CapEx reduction rather than if you would build it as a stick-built project in Germany.

Your next question comes from the line of Varyk Kutnick from Divyde Capital Partners.

Remind me again on the current offtake agreement with Nike. Is it the terms, is it take-or-pay? Are there committed minimum volumes? And is everyone else going to follow that same framework for underwriting over in India?

Yes. So the Nike contract is a 3-year term for renewable after 3 years. It is a fixed price contract, fixed volume contract, and it's a 40% take-or-pay. So if they don't take the material, they pay us 40% of the value of the contract. Nike has pretty ambitious goals to eliminate fossil fuel-based polyester in their supply chain, textiles and footwear -- and so we see that volume growing bigger over time as our plants become up and running and Nike's commitment to sustainability just increases. Other customers, there are a lot of the fixed price contracts, fixed term contracts are coming from the textile industry.

On the beverage side, with the packaging companies, it's more of an index pricing. So we use a, let's say, in Europe, you use the ICIS index pricing, which is published monthly on what recycled PET is sold for. And then we use a cap and a collar. So we have a floor pricing that it can never go lower than a certain price and a cap and it can never go higher. So it hedges us on the downside, hedges them on the high side, and we trade within a band. It's about EUR 275 per tonne band that we trade within. So that's typically the way the beverage companies like to price the contracts.

And then as far as Nike here, do they have any type of right of first refusal on capacity in the future in India, in Europe, et cetera? Is that built into their contract?

First right of refusal, no, there's no first right. We don't give like first right of refusals to anybody. They do have an option to purchase more material in their contract. So they can exercise an option to purchase more material. We have some customers that -- like I said earlier, we have some customers that they just cannot sign long term -- their corporate governance doesn't allow them to sign these long-term material contracts, but they're willing to sign LOIs with us for -- even the LOIs have a price, they have committed volumes. And so there are those cases where some brands are just not able to sign these long-term contracts. Now they are willing to support us with an LOI, firm LOIs, and they're willing to help us in talking to the banks and things of that nature. So being very, very supportive.

Got it. And help me with some of these numbers here. So obviously, construction costs have gone down, which is excellent. So if I think of the 70 million tons -- metric tons (sic) [70,000 metric tons] annually at $170 million to build, we get about $0.44 of CapEx per pound. Does that include polymerization?

Yes. So that's depolymerization and polymerization and all utilities. So this site is greenfield, complete greenfield. There is no infrastructure whatsoever. So that includes depoly, repolymerization, land, engineering and all the financing costs through start-up and commissioning until the plant is operational. The construction piece, so just the construction piece is approximately $115 million out of the $165 million, let's say.

Got you. That would put what, if I'm doing rough math in my head here, you guys are going to do -- you said in the past, your EBITDA margin or EBITDA would be roughly around $50 million, $60 million. Does that still sound right on this plan?

Pricing -- it's an interesting dynamic right now. So some of those -- some of the dynamic pricing that we see with the ICIS, that index pricing, index pricing is up about 30% to 40% right now since the beginning of the year, mainly because of the conflict in Iran. So that price floats up and down. So if you're taking the floor price, that's probably where we would be somewhere at the floor price today. It's a little bit higher than that. So we're looking at about 45% EBITDA margin, somewhere roughly around there.

Either way, though, you your payback period on this build all in is about 1.5 years to 2.5 years, depending on where pricing falls. Is that number still reasonable?

Yes. Yes. I mean the numbers just got better by reducing CapEx by $20 million to $25 million.

So we should see some real progress with a serious time line second half of this year or so?

Yes. I mean now the debt piece has fallen into place. We have great international banks behind the project with their term sheets. Now completing the technical due diligence over the next 4 to 6 weeks is something that Loop is very used to doing. We've done it many, many times for either customers or other partners, like I said, most recently for SocGen before they licensed the technology and they made the investment into Loop. So that's really what's ongoing there. And then once we have -- that's going to be completed and then we're going to wrap all of the different terms and get everything completed. for the debt.

There are no further questions. I'd like to turn the call back to Daniel Solomita for closing remarks.

Yes. Just again, thank you very much for everyone's support. Thank you to the team, and thank you to our international partners. Have a nice day.

This concludes today's meeting. You may disconnect.

Good morning, ladies and gentlemen. Thank you for standing by, and welcome to Loop Industries Third Quarter Fiscal 2026 Corporate Update Call. [Operator Instructions] This conference call is being recorded today, Thursday, January 15, 2026.

The earnings release accompanying this call was issued after the market close yesterday, Wednesday, January 15, (sic) [ 14 ] 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 statement disclaimer.

Thank you, operator. Before we begin, please note that today's discussion will include forward-looking statements within the meaning of U.S. securities 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 and Forward-Looking Statements 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 Solomita, Founder, and Chief Executive Officer of Loop Industries.

Thank you very much, Kevin. Q3 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 Societe Generale 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, our 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 offtake 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 from textile to textile, which means starting from a polyester textile waste and producing a new polyester textile with it. We'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, button, 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 Loop's 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 starting in 2026 and is going to start being enforced in 2028, which is exactly the right timing for us. 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 we were on the phone the other day with a very large textile manufacturing clothing company, and they said textile-to-textile is not a 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 this really a 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 1 and runs through the construction of the plant. Toyo has a very large presence in India and has done tremendous work to date. 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 for multilateral development banks, sovereign wealth funds as well as international and local commercial banks. Returns 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 really the update on India.

As far as the progress with our partnership with Reed Societe Generale Group, as you know, we've licensed our -- we licensed -- we sold Reed SocGen, a license to our technology to build 1 plant in Europe. SocGen has spent time working on site selection. I believe they started with looking at 20 sites across Europe. They've narrowed it down to 3. There's 1 lead site in Germany that is being negotiated right now. And we think that should 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 over the next 3 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 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 start-up 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 my -- one of my first days as 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 and 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, raising the capital for Loop 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 [indiscernible] 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.

Sorry about that. Thank you very much, Spencer. In conclusion, really pleased with the progress we're making both in India and in Europe, starting to really making meaningful revenue from -- and profitability from the engineering fees in Europe and in India, or are you going to be able to sustain our back office spend for the many years coming. So that's all really positive development for us. And 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.

[Operator Instructions] Our first question today comes from the line of Gerard Sweeney with ROTH Capital Partners.

So I had a question on Nike. Sorry, you guys can hear me, correct?

Yes, can hear you fine, thank you.

Got it. So question on Nike or actually the facility in India, 70,000 metric tons. Nike, obviously, huge global brand, great opportunity for 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 where it sits on the output and who's going to -- the offtake for the output?

Yes, we expect to have -- thanks for the question, Gerry. We expect to have following 5 to 6 customers total for the facility. Today, we have Taro Plast 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 long-standing relationships that we produce products for before, that we have products on the shelves with them in different geographical regions today. 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 3 to 4 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, is it similar pricing and margins? Or is there one area better than another? And if you don't want to go into that right now that's fine.

Yes. Yes. I think overall, we have a target average sales price for the facility. And so we're really unique in a technology that 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 really positions us uniquely in the marketplace to be able to deliver on, hey, if market -- 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, we're gauging 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 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 quality that 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 customers' 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 are making is the actual textile. Whereas if you think about the packaging side and the bottle players, we're the container that their drink comes in. So we're not the actual product. We're the packaging around the product. So it's a little bit of a different mentality. But we can play on either market and we're ready to move as needed.

Got you. 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 Loop -- made with Loop recycled product or Loop inside along those fronts?

Yes, we definitely want to continue on the marketing side with that. On the packaging side, 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 discussion 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 circularity of the entire product portfolio. So them sending us the weight, reprocessing and sending it back to them, creating that loop. That's something that we think we can really take advantage of on the marketing side.

Got you. And then finally, just last question, just time line for the India facility. Just if you can remind us groundbreaking and then mechanical and completion then commissioning so.

Yes. I mean groundbreaking is a term that it's kind of an outdated term because what is groundbreaking. Our project is -- the project has already been approved. There's not like there's any approval needed. Our project is moving forward. Loop our partner, very dedicated, focused to get this done. We've started all of the detailed engineering, which 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 time line as well.

So you'll see some meaningful updates on the progress of the facility. We will eventually have some type of a ceremony on the site. But the project is green lit. 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 construction of the project.

Our next question comes from Marvin Wolff with Paradigm Capital.

Can you hear me okay?

Marvin, Yes, I can hear you fine.

I just had a question with respect to the German site selection that's going on now. How big a plan 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 would assume you're in early discussions with people.

Yes. So the European plant would mainly be on the packaging side because the supply chain for textiles is mainly in Asia. So -- 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 -- our same customers, 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, we bought -- 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 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. 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 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 $130 million.

Okay.

Which is 70% of...

And what is the equity component that Loop is going to have to provide?

The equity components that Loop is going to have to provide is approximately $28 million.

$28 million. Very good. Well, you're making great progress, and it's good to see it come along with some continued, if you will, intensity.

Yes, it's steady progress, doing everything the right way and getting that plant built for the end of 2027. That's the goal.

Yes. Okay. Very good. Well, at the end of '27 comes faster than you think, right? It's only less than 24 months away now.

Yes, the engineering teams and Toyo and the joint ventures engineering team and our partner, Ester's engineering teams are working full out nonstop. Everyone is fully dedicated to that facility. So the amount of work going on behind the scenes is tremendous. You don't always see that as -- because there's not a lot of press releases or things around that. But the amount of work being done to get this facility done is tremendous. So all hands on deck getting this built. And it all starts...

Yes, it'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 we've spent the time, did it the right way. We've had this plant operating in Canada for over 5 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 we've done it the right way. We've done it methodically. It hasn't always been the easiest road, but we're doing it very methodically to get us to where we need to be in 2027 to deliver this product to our customers.

Our next question comes from Varyk Kutnick with Divyde Capital Partners.

So in the past, you've talked about the gross CapEx per pound in India being $0.61 with maybe net around $0.75. 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, 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 module. So there's a little bit more cost involved.

The good thing about the European and especially 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, 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 duty 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 greenfield. 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 into the existing boilers that the site already has. And 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. So that's -- it will be a little bit more expensive, Varyk, but it's still in the -- generally in the same numbers.

Right. I mean, if I look at the rest of the field, you guys are about half the cost on a CapEx per pound basis. Where does that magic come from?

The magic comes from the learnings that we -- we really had to reinvent ourselves. So what happened 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 going up. So the economics still made sense. What happened right after COVID, once China opened up its factories again and Asia opened up its factory, the price of plastic came down, CapEx didn't continue increasing at the same rate, but they leveled off. They still remain 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. We had a project that fell into the same path. And that's where we have to reinvent ourselves.

So going into India, low-cost manufacturing, lower labor rates, lower labor rates trends translates to lower construction costs, everything from cement, steel, installation cost. Everything that we're doing now is done in a low-cost industry. We don't have any specialized equipment. In a chemical plant, everything is tanks, reactors, agitators, heat exchangers, pumps. Those are all equipment that can be sourced locally. So if I'm building 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 we can do this low-cost manufacturing, and that's how we can be so successful.

Got you. 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's the type of cash you could use to fund future growth? Or when we think about more facilities, is it going to come out of 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 a 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. We've done multiple feedstock studies. We've hired different third parties to do the studies, easily identified over 500,000 metric tons of textile waste of it, just textile waste, forget about the packaging, just textile waste available for us to process, just in India, not accounting for 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. So it won't all be textile waste.

But we'll be able to -- all of that is going to be financed through the cash flow. The money that we get the 5% for the royalty fee plus covers all of our back office expenses and more because we're really being cautious with our cash and spending a lot, like I said, a lot of the cost of the R&D and the engineering and everything else is now being paid by the joint venture.

So it lightened the amount of cash at the head office that our burn is. And so the licensing fee plus the engineering fees, 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 3 years in India for the plant. So...

I come over in Europe then Reed [ SGS ] says, they get to partner with you, they design, license, engineer, collect with minimal balance sheet risk. And this hopefully with the payback period under 3 years, this is a scalable project well past India into Europe and other places.

Absolutely. So...

The Nike deal, I don't think people have mentioned that and what a big deal that itself.

Nike is huge. Obviously, if you could choose -- if I could look back and choose any customer that I wanted to work with, Nike is right up there as one of the top companies that anybody wants to have as a customer, right? Such a great organization, such a great company, such a great brand. And they have 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 of that size. And they're true 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.

Yes. I mean it's just on the Internet, so I'm going to throw it in here. But I mean, obviously, Nike produces about 2 billion pounds of plastic and shoes per year, I should say, clothing and shoes per year. I mean, [indiscernible] 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.

Yes. Like I said, 60 -- so the entire polyester fiber market is 66% of 85 million tons. So it's a huge number. So we have 170,000 tons out of -- we're talking about somewhere 60 million tons. So there's a tremendous amount of growth on the textile side, and Loop's 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 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.

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

Yes, 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.

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Loop Industries Second Quarter Fiscal 2026 Corporate Update Call. [Operator Instructions] This conference is being recorded today, Thursday, October 16, 2025.

The earnings release accompanying this call was issued after the market closed yesterday, Wednesday, October 15, 2025. On our call today are Loop Industries' Chief Executive Officer, Daniel Solomita; and Kevin O'Dowd, Head of Investor Relations. I would now like to turn the conference over to Kevin O'Dowd to read the disclaimer regarding forward-looking statements.

Thank you, operator. Before we begin, please note that this morning's discussion will include forward-looking statements within the meaning of the U.S. securities laws. These statements relate to our expectations, beliefs, projections, future plans and strategies, anticipated events and other future performance matters.

Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially. For a more complete discussion of these risks and uncertainties, please refer to the Risk Factors and Forward-Looking Statements sections in our most recent quarterly report on Form 10-Q filed yesterday with the SEC.

Our annual report on Form 10-K filed with the SEC on May 29, 2025, as amended in the Form 10-K/A filed May 30, 2025 in our accompanying press release issued yesterday. These documents are available at www.sec.gov/loopindustries.com or form our Investor Relations team.

With that, I will turn the call over to Daniel Solomita, Chief Executive Officer and Founder of Loop Industries. Go ahead, Dan.

Thank you very much, Kevin. Thank you, everyone, for joining the call this morning. Q2 was an extremely busy quarter for Loop as we move towards the construction phase of the Infinite Loop India manufacturing facility. I'm pleased to report several positive developments. We have executed a supply contract with a leading sports apparel company in the world to be our anchor customer for the Infinite Loop India manufacturing facility.

The contract is that we need to supply our customer with a fixed amount of Twist, our textile-to-textile polyester resin on an annual basis at a fixed price for multiple years. There is a guaranteed take-or-pay element to the contract as well. This means if their customer doesn't pay-or-take delivery of the material, they still pay us a percentage of the sales price.

So it's a very strong contract, very bankable contract. We also executed a supply contract with Taro Plast an Italian specialty polymer manufacturer to buy DMT produced from the Infinite Loop India. DMT is a very interesting market for Loop, as we are one of the only companies that can supply virgin quality DMT made from 100% recycled content, and it allows us to have a diversified portfolio.

Today, we offer textile-to-textile polyester resin for the apparel and home goods companies. FDA-approved bottle grade resin for the packaging industry and DMT monomer or MEG monomer. We are currently in discussion with several CPG and apparel brand companies to secure additional offtake agreements for the Infinite Loop India project. ELITe our JV in India with Ester industries executed an agreement for the acquisition of approximately 93 acres of land in Gujarat India for a total consideration of $10.5 million.

This represents a $5 million reduction in the amount included in our project cost estimates. The site has excellent strategic access to textile waste for feedstock, renewable energy and industrial infrastructure. As a reminder, the total cost estimates produced by after consulting engineers was $176 million. We are currently trending to complete construction below this number as we are $6 million under budget at this stage.

KPMG has done a great job so far in building a syndicate of lenders for the project debt financing. We have begun to receive term sheets from multilateral development banks, sovereign wealth funds as well as international and local commercial banks. The proposed terms we have seen so far are in line with our expectations.

In Q2, we executed 2 textile industry partnerships, 1 with Shinkong from Taiwan and 1 with Hyosung from South Korea. Both companies are industry leaders in textile spinning and have long-standing relationships with all of the apparel companies and fabric mills. Most apparel companies are not used buying polyester resin. They buy spun fiber or rolls of fabric or even completed garments.

Integrating into the supply chains can be difficult, which is why we executed these partnerships. These partnerships allow Twist our branded textile-to-textile polyester resin to have an expanded reach beyond our customer base and will be offered by Hyosung and Shinkong to their customers, who buy spun fiber from them today.

In our partnership with Reed Societe Generale Group, we are coming close to completing the site selection process in Europe for the initial Infinite Loop Facility. The final remaining sites all have most or in some cases, all of the utilities needed for our technology. This will significantly reduce the project's overall CapEx. All of the sites have direct access to a port, which allows for Loop's technology to be modularized, again driving down CapEx.

The standardized modules will be built in a low-cost manufacturing company, country and then shipped and assembled on site. Once the site is acquired, we anticipate to begin generating meaningful revenues and profits from engineering and milestone payments, which will cover all of group's back office expenses for the next several years.

Cash operating expenses for the quarter were $2.43 million, reflecting a year-over-year decrease of $1.74 million. At the end of the second quarter, we had total available liquidity of $9.86 million. We will bring that $2.43 million down further every quarter for the foreseeable future.

In conclusion, I am very pleased with the progress being made on both projects. We are hitting all of our milestones needed to ensure successful projects. With that, I'll open it up to any questions.

[Operator Instructions] Our first question today comes from Brandon Rogers with ROTH Capital Partners.

Kevin and Dan. I'm on for Gerry Sweeney. So I just had a couple of questions for -- I was wondering, if you could expand on the anchor offtake agreement with the global sports brand. I know you said pricing is fixed with the take-or-pay aspect of the contract. What percentage of the 70 metric ton capacity is now covered by the contracted offtake agreements? And then also -- sorry.

Well go ahead with the second part.

And then the second part, do you expect any additional CPG offtake agreements expected before year-end?

Okay. So the first part of your question is we don't get into specific volumes of the contract for negotiation reasons with other customers, but it's a significant contract for Loop having our anchor customer in place.

And the second part of your question, yes, we do anticipate having other supply being finalized by the end of the year.

And another question. Where does the India projects been in terms of the construction time line and clinical path -- the time line for groundbreaking and commissioning on that site?

The work stream done by KPMG on that syndication has been really fantastic. They've done a great job. We're starting to receive several term fees from different multilateral development banks, sovereign wealth funds as well as international and the local commercial banks. So we're going through the terms right now, and there's a negotiation going on and there's some good competitive tension for the debt syndication.

And so that work stream is doing really well. Construction side, we are finalizing a detailed engineering contract with an engineering firm to begin the detailed engineering. So the project is trending on time. Our goal is to have the project up and running by the end of 2027, and that's the goal that we're maintaining.

Customer contracts will be one of the gating items to get the debt financing completed. So we're -- we're on schedule with the project to have the project built by the end of 2027.

Awesome. And then 1 more for me. The Taro Plast offtake is a key milestone. Can you talk about the commercial pipeline for DMT and polymers beyond automotive? And then on the sportswear brand, should we expect their Twist products in the market in 2026 or beyond that?

So for the sports brand, this contract is for the Indian facility. So the facility will be up by the end of 2027. So you can expect that to be starting in 2028. The customer is an existing customer of our facility in Montreal, Canada today. So, we do supply them with material today, so there could be small amounts of material that are used in 2026 and 2027 prior to the larger commercial facility in India being up and running.

DMT is an interesting monomer. Today, it's made from fossil fuels, starts off from crude oil. There's only a handful of companies in the world. Eastman and SK Chemical that produced DMT today and ship it around the world. It's mainly used for specialty polymers in computer chips, some specialty chemicals, the automotive industry, the textile industry. So there's a lot of uses of DMT. We're the only -- we're one of the only ones and maybe we are the only one, I'm not sure if there's any competition out there for virgin quality DMT made from 100% recycled content.

And so we've been working with certain chemical companies on qualifying our material and seeing -- and looking at engaging that market. It's just interesting for us to be able to diversify our portfolio to have the FDA-approved bottle grade resin, the textile-to-textile resin for the apparel brands, DMT for Specialty Polymers and MEG, which is widely used by many different companies.

So we can play in many different segments because of the flexibility that our technology has -- so bringing on DMT customers is really interesting for us. We have excess DMT at our facility and selling that off to the chemical companies is fantastic. So it's something we look forward to doing more of.

The chemical market is more of a spot market, so we'll be mainly using that on the spot market, but some companies do want to get access to the material and lock in some supply. So that was the reasoning for the Taro Plast contract.

Our next question comes from Varyk Kutnick with DIVYDE Capital Partners.

So ShinKong and Hyosung contract, could you maybe unpack what the commercial roles actually look like? Are we talking co-branded yarn, integrated fabric production? Just trying to get a sense of how the economics will work with them?

So the economics is it's a great question. So -- the big thing with the textile and the apparel industry is the brands are not used to buying resin because that resin has to get spun into a fiber, then the fiber needs to get put into a fabric and the fabric gets died and treated. So some companies just buy garments ready made. Some people buy spun fiber or the fabric roles.

So certain customers are more -- more used or would prefer to buy spun fiber rather than buying the resin and having to figure out the supply chain of who to send the resin to. And so what we've done is we've partnered with the 2 biggest and most respected spinning companies in the world Hyosung and ShinKong, which work with all of the different players in the marketplace.

So now that there's 2 ways this relationship works is we can bring our customers and say, if you prefer to have a spun fiber we can work with Hyosung or we can work with Shinkong and they can spend the fiber for you and we can sell you the fiber directly.

On the other side, for some -- there's a lot of different smaller players out there that don't buy huge volumes. And those are usually the ones that have trouble buying resin, Hyosung and Shinkong can now offer Loop's material to their customers and say, we can offer you this material spun into a fiber or made into a fabric, and this is the underlying technology.

So for larger customers, Loop -- we will always have the relationship with the customers, so we'll be selling the material to them. For smaller players, that's where ShinKong can come in and aggregate maybe 10 different small suppliers together to make enough volume to purchase directly from us. So it's really on a customer-specific kind of scenario. But we're working really well. We just did a trade show in Paris for the apparel company with Hyosung. It was very, very well received by a bunch of smaller in a lot of these different smaller fashion brands that are looking for sustainability and they already have the relationship with Hyosung or Shinkong and so this brings our material into those mixes.

Awesome. For the color on that. And then I'm reading between the lines here and what you said and others, demand outweighs supply by multiple orders of magnitude. You've got the luxury being selective with customers here. How are you thinking about diversification, one? And then India's 70 (sic) [ 70,000 ] metric tons at nameplate capacity. Is there room for expansion there? Or would you rather allocate incremental demand to other sites?

Great question again. So for us, it's about having a more diversified portfolio. So that's why we have the textile-to-textile for the apparel industry. We have the packaging side for -- mainly on the bottles. So we're working with some of the beverage companies, especially for the European market, where there is significant regulation in Europe, where they have to use a percentage of recycled content in their packaging.

And so those brands are looking for really high-quality PET resin. So all of our packaging customers so far that we're discussing with would be taking the material from India, shipping it into Europe and using it within their European packaging. So that diversifies the portfolio there. And then the DMT and the MEG are really interesting markets, depending on pricing and what the market is looking like. Sometimes you get the squeezes in the market when people are really need DMT or MEG, we'll be able to supply them with that material.

So really having a diversified portfolio is really important for us. We want to do some packaging, some textile and some on the chemical side, which I think covers us no matter what the market comes in 2 years from now, we'll be ready to play in each 1 of those markets, and we'll always allocate a certain amount of material for the spot markets.

The second part of your question, yes, 70,000 tons is the first facility. Now the land we bought the 93 acres of land, that's enough for 2 facilities. So we are planning an expansion quite rapidly after the first facility is up and constructive.

The second facility that's being planned is 100,000 tons. So we would have approximately a 50% increase in capacity for the second facility on the same existing sites, which again will bring down CapEx because we'll be able to reuse part of the utilities that are on the site.

So we are planning to have a second expansion in India. India right now from everything I've seen, I don't think there's a better place in the world right now to be putting up one of these facilities as it's the lowest cost structure that we can see. And that goes a long way with being able to offer our customers with a very high-quality product without the need for significant green premiums.

And that's the key to having a long-term successful project here. But we are working with Societe Generale, the French bank in Europe. There are certain regulations in Europe that are driving brands to buy European sourced material. So there's significant incentives right now in France to be able to source material from within the European Union, which is really making the accelerated time line on the front on the project in Europe.

That's really important for us. Like I said, we anticipate as soon as these -- I think we're down to 4 different sites in Europe, that the teams are looking at. All of the sites comes with full utilities or almost all of the utilities, which will drive down CapEx. They're all close to a port, which allows us to bring in modules, which again brings down CapEx -- and for us, it brings in meaningful engineering revenue, and it brings in meaningful those 2 other milestone payments of $5 million each.

So the sooner that we could tap start getting that engineering revenue and tapping into those 2 milestone payments. I mean that covers all of our back office expenses for several years out. So that would be a fantastic achievement.

Okay. And then I'll just sneak 1 more in right here. I saw in the -- you guys just put out that the cash covenant or I don't know, if it's a cash covenant, but on your line of credit was removed in October. That's a good vote of confidence right there. Was there anything that triggered that?

Well, we ask for the covenant to be removed.

It's a vote of confidence.

It's a vote of confidence in the sense that now I think we can have more predictable revenue streams and profitability coming from the engineering services, and that gives banks the confidence to be able to give us more leeway on and flexibility on those type of instruments.

[Operator Instructions] Our next question is a follow-up from Varyk Kutnick with DIVYDE Capital Partners.

I've been back on so quickly. So, this was probably listening to your comments in the beginning. The update on the debt financing for India, the syndication is probably the most confident I've ever heard you guys sound. So you have no worries about the equity contribution for the India JV, even though it's somewhat unfunded right now, you're confident you guys will be able to reach that and liquidity will be strong moving into 2026?

Yes. We have several different options. As we've said in the past, we have the government funding in place for a portion of the equity. We have other options for the remaining equity that's needed for Loop's position. So very confident on that side and the debt syndication is going really well.

They started the process, I believe, in August, end of August. So within maybe 1.5 months, 2 months, we've seen a lot of interest for this project. A lot of sovereign wealth funds and these multilateral development banks are looking for projects in India, sustainability link. So really, really happy with the work stream with KPMG so far. They're bringing top quality players to the table and the terms that we've seen proposed so far are in line with our expectations. So that financing work stream is working really, really well.

Got it. And then 1 more. The $1.5 million engineering services agreement, remind me, is that recognized upfront? Or is that spread across a couple of quarters. Yes, some color on that.

Yes, that's going to start. I would assume in the beginning of November. Once we kick off the detailed engineering phase. So there's a detailed engineering firm that's going to be contracted by the joint venture, so an external firm, and then we work side by side with that firm. So that revenue will be starting next -- next month.

Seems like things are finally working out for you guys. I'm excited. So good luck with everything. I look forward to hearing about next quarter.

Yes, it sounds likely the most progress we've ever had on a project so far, again, testament to low-cost manufacturing, the shift and the transition to becoming a low-cost producer in the world we live in today. It was really the right decision for us, being able to offer our product to our customers at prices that they're used to paying things at, and there's no need for significant green premiums. I think that's a key decision factor.

And we have a fantastic partner in India, who's really hit all of the markets, the construction, the cost estimates, the whole India factor, the feedstock, we've locked in feedstock. We have 2 independent studies on the feedstock confirming the amount of feedstock available, the pricing of the feedstock. So we've really done a great job in preparing this project and it shows the confidence that KPMG and the lenders have for the project to be sending us term sheets shows how solid of a project this is.

I can give you some runway here because you mentioned something I've always thought about the green premium people have always prioritize sustainability, but have always forgot about the second piece about profitability. It seems from our conversations, you've always talked about without sustainability, you can't have products here or you can't have profitability. So talk about that equation right there, sustainability with profitability. Do you think every project you guys go into your set to keep that equation in balance.

I mean, sustainability is still very important, and we see a shift maybe in which brands are more or less committed to sustainability. So I think that there's -- that's a cyclical type of a market, where sustainability could become more important or less important, the underlying factors all companies right now are looking for bringing down costs and being cost competitive and having a good product on the market at a good price.

So for us, the ability to offer our customers the highest quality material with the sustainability angle is fantastic and then being able to bring that in a cost that they're very comfortable with or the same that they're buying other lesser quality material for really allows for them to make an easier decision on signing a contract with us. It's not super easy to sign contracts, but you're able to really have really in-depth discussions with these companies because they can see the quality, they know the quality, they know the sustainability angle and now they have it at a price that makes a lot of sense to them.

So that's really refreshing and a testament to the low-cost nature in India. On the textile side, there's a lot of interest in getting more and more textile-to-textile material into the marketplace. And for us being able to offer that at a really competitive price is great for the apparel companies.

On the flip side, at that competitive pricing, we're still making really strong returns for our investors and for our project. And so, if I compare this to things that I've seen in the past, this is by far the most profitable project we've ever seen and being able to offer it at a good price to the customers.

Good luck with the rest of the year here.

[Operator Instructions] We have not received any further questions until I'll turn the talk over to the management team for any closing remarks.

Well, thank you all very much for attending the conference call. It's been a really exciting quarter for us as we move down the path towards construction. So looking forward to updating you at our next call. Thank you.

Thank you.

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

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Loop Industries First Quarter Fiscal 2026 Corporate Update Call. My name is Emily, and I'll be coordinating your call today. [Operator Instructions].

This conference is being recorded today, Wednesday, July 16, 2025. The earnings release accompanying this call was issued after the market close yesterday, Tuesday, July 15, 2025. On our [indiscernible] are Loop Industries Chief Executive Officer, Daniel Solomita; Interim Chief Financial Officer, Nicolas Lafond; and Kevin O'Dowd, Head of Investor Relations. I would now like to turn the conference over to Kevin O'Dowd to read the 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 our performance matters.

Forward-looking statements involve known and unknown risks and uncertainties that may cause actual results to differ materially from those expressed or [indiscernible]. For a complete discussion of these risks and uncertainties, please refer to the risk factors and forward-looking statements sections and our most annual Form 10-K or our quarterly report and 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 Solomita, 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 Infinite Loop India. Offtake 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 [ hero ] 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 models and turning that into fibers, but that's the way of the past. [ Models ] need to stay within the bottles and the 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 companies 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 [ ARPA ] 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 Loop's technology steps in. Loop's technology obviously provides virgin quality, top quality PET resin, 2 of the brands coming from waste material. So no matter what the incoming feedstock quality is, we always produce the top quality output.

So European beverage [ guys ] 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, nature of 100% recycled content. And today, because of this 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 FEED study. That CapEx number includes a polymerization unit to recombine the [ DMT ] and the MEG into [ PT ] land acquisition and all financing costs through start-up.

If we remove all of those costs, the total installed cost of the technology [ wood of ] Loop's technology is $95 million, which is by far the lowest cost of the industry. Site selection has been narrowed to 2 locations in Gujarat, and we'll be finalizing which land we'll be choosing very shortly.

The economics for Loop on the project, in addition to the JV returns of which we own 50% will be further enhanced by licensing fees 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 detailed engineering and construction.

Infinite Loop in Europe, [indiscernible] [ General ] is seeking to advance the timing of the project under their newly appointed CEO of [indiscernible] 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 CapEx 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 Loop's technology will be built in India and shipped to Europe or any -- we could ship them to any location in the world, and they're assembled like LEGO blocks on site. This will significantly decrease CapEx for these projects for Loop's technology anywhere in the world. The initial estimate is that the CapEx would be a 50% reduction versus if we would be doing it as build.

So that's a significant savings. So again, it perfectly positions Loop's technology to deliver highest quality PET resin or polyester fiber to the customers with extremely competitive prices. So I 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 solutions from engineering services and 2 other milestone payments coming from that first European facility. With that, I'll turn it over to Nicolas Lafond for some update on the financials.

Thank you, Daniel. There are 2 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 Loop's equity contribution for India at our operating cash burn through to the start-up 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, and we have a great JV partner.

The modularization, it brings a really a differentiating factor where because of the lower cost CapEx, how we can see an acceleration of the amount of projects that can be built because we 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 lockstep.

The long-term vision is to drive significant shareholder value creation so continuing rolling out these manufacturing facilities. As we said, we have licensing revenue, engineering revenue, modularization revenue and then obviously a share in the project economics. 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.

[Operator Instructions]. Our first question today comes from the line of Gerry Sweeney with ROTH Capital.

I wanted to see if you could touch upon the offtake 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 need to coincide with any stages of the India project moving forward?

So the customer contracts, we've been advanced in 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 it. So things are going really well on the customer side.

Signing off on contracts is taking sometimes a little bit longer as there's a lot of steps internally in today's world. 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 CPG brands by either spot price or 1-year contracts. We're asking for longer length contracts between 3 to 5 years in length. So those are certain things that internally they have to have acceptance from senior management for these type of things.

The pricing because we are really competitive in pricing because of the low cost structure in India pricing really is not an issue where the pricing is well aligned with the needs of the customer. So that's a big advantage that we have.

And then there's a take-or-pay element to our contracts. So if the customer would not take the volume for any [indiscernible], they would be penalized to a certain amount. Could be 40% of the value of the contract, could be 100% value of the contract. So that's another thing. We 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. Securing 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. Yes, and we have line of sight on that. So we're very confident in being able to execute on that.

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

So actually, the one advantage that we're giving to customers, customers like predictability. Customers like to now that for 3 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 our 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 [ app ] and we're [ locking ] 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 to offset some of the longer term or offset the liabilities they have to pay, we offer them fixed price for, let's say, 3 years or 5 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 appreciate that.

Got it. One more question. Just maybe next key steps, obviously, [ CPG ] contracts or apparel. And that helps drive the financing aspect. So maybe next key steps to -- would be contract financing and then what would be some other areas that we should keep an eye on going forward?

Well, the JV has hired [ KPMG ] to syndicate out the debt financing. So they've already prepared what they call as a detailed project report, and they're already presenting this to Indian banks and other banks, EDC in Canada is Export Development Bank of 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, it just brings more credibility to the story, and it proves out the economics that we've shown the banks. So that's well underway.

The land selection, we have 2 pieces of land that we've zeroed in on in Gujarat, in the Dahej region, which is where 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 those 2 pieces, and we should have a conclusion of that very shortly.

So that's another milestone. But yes, 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.

Just maybe one more thing on the customer contract 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 to 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.

Our next question comes from Varyk Kutnick with [indiscernible] Capital Partners.

I wanted to get some direction on Loop's capital intensity. A public dissolution recycle or recently said the 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 Loop fall from a gross, which means excluding financing and land and net CapEx per pound on the facility you guys are building?

So for Loop's technology -- so if we exclude land acquisition, if we exclude financing cost and we exclude the polymerization, which is putting the monomers back together, our cost per pound at 100 -- so our facilities are GBP 154 million per year capacity, we would be at $0.61 per pound.

Wow. Okay, that's pretty helpful.

So that's CapEx for the pound would be $0.61 per pound produced.

And as upon on that basis, is that on a net basis, just to be clear?

Yes, that's on [indiscernible] exactly. That's excluding financing costs, excluding land costs and excluding the polymerization cost. If you would add in the polymerization unit, then we would be at $0.75 per pound. But Loop's sole technology is $0.61 per pound. So if you're plugging into an existing facility that has polymerization, we're at $0.61 per pound.

And that's a -- 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 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 the 50% increase in capacity. So that $0.61 would even come down further from there as we scale to bigger facilities. But yes, $0.61 per pound is today's number.

Our next question comes from [ Jonathan Norwood ] with [ friends and family of BMO].

Sorry, I was just muted there. Just a couple of follow-ups here on the question that Gerry asked about the offtake agreement. So I mean these are obviously long-lead agreements because you're probably say, 3 years away from being able to -- I mean, maybe you can correct me on that. But by the time you get this -- the facility up and running and producing product, we're probably looking at about 3 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 Loop not meeting milestones from a construction perspective? Or what sort of out do you have in the event that the environment changes such that selling to this particular company would not be economic?

So 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, 6 months of start-up. So we're 24 months away from, let's say, this fall.

So the [indiscernible] 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 different with every customer. If [ NEP ] is unable to deliver the material to the customer, there is no financial penalty to lose.

Okay. So if you guys -- let's just say for whatever reason you were able to like have this thing up and running in 18 months. So let's just say it's the end of '28 instead of the end '27. Could these guys -- could they back out of the agreement? Like is there anything that's tied to your ability to get the plant 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 we were essentially -- I think initially, it was sort of like bottle to bottle. And we've seen like Coke and Pepsi sign up and then subsequently drop off.

And I'm just wondering, like I just want to be mindful of that and how 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 -- they don't have the ability to pull the plug sort of halfway through construction or anything of that nature. But that's fine.

So -- just let me clarify that point, I think, Jonathan, you invest when you had a contract with Coke and Pepsi. It was for Coke -- Coke and Pepsi didn't pull the contract. It is that Loop that it was unable to deliver the facility, which we're talking about was 2018, which was a facility in 2018 that we were looking at doing in [ Spartanburg, South Carolina]. So no contract was ever pulled. It was that Loop cannot [indiscernible] project.

We're talking about 7 years ago, right? So this is a completely different project and completely different economics. So -- and a very different customer base. So yes, I understand your [indiscernible], but the facts of the matter was that we did not build the [ Platt ] in Spartanburg and that's why the contracts fell off. If you have a certain contract for some 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. No, 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 time line 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 a previous project. So 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 yes, sometime towards the fall time frame. So like we 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 is for that facility is about $15 million. So we have several different opportunities right now that we're evaluating $4 million to $15 million. The one thing I'm really excited about is the acceleration of the [ SocGen ] project because that will be touching engineering and modularization revenue earlier. And that will definitely help with the cash flow going forward for the Loop's cash position. So the amount needed right now is $15 million.

Okay. And just on licensing, Dan, 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? Or are there any sort of hopefuls or more people that are interested in that?

Yes. I think with the -- 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 to a lot more potential projects. [ SocGen ] 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 arm. 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 a potential opportunity in North America. So we're looking at a whole bunch of different opportunities right now.

India is going to be still the lowest cost facility we'll ever build is going to be India and economics are tremendous for us. And the customer appetite for Indian material is strong, shipping it to Europe or using other -- 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 were 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 a 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.

Yes. Well, no question. I mean, on paper anyway, [ Andy], it seems to be the optimal place to locate one of these plants. So I guess just one last question on the debt piece has to come up with. It sounds like KPMG has been engaged to put together a syndicate. That's -- 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 a [ syndicate -- ] you'd have a bank that would be doing that. So what's the -- yes, I'm not used to hearing KPMG like organizing a syndicate. Is that like a pretty standard thing in Asia? Maybe Kevin or Nick can answer that.

Our partner at [ Ester ] have built -- they have 3 operating 3 PET operating facilities the latest that they've built was in 2021. And this is the same -- KPMG was the person they used for that 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.

Our next question comes from Marvin Wolff with [ Paradigm Capital].

Can you hear me all right, guys?

We can hear you fine, Marvin.

Yes. Okay. Very good. Yes. I was wondering could you give us more color on things surrounding the 2 sites you're looking at, things like lead time on permits, are these fully greenfield sites, all that kind of stuff because here in Canada, you could choose the site today and not be allowed to break ground for maybe a couple of years between -- by the time you got through all the local regulations and whatnot. So a little more color on 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 acquired the land through this process, we acquired 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 like utilities in our process is steam generation, electricity. So those types of things you'll have to bring in a substation for the electricity connected to the electrical outlet in the area. So some of it will have some industrial parks, have some utilities, some don't. That's a big 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 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 CapEx 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 like they'll 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 the facility?

Less than 5.

Okay. And is that like a standard number you can easily get from the hydro or electricity provider?

Yes. Our technology is -- 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 #1 energy source is going to be for the steam generation is going to be rice host. So in India, it's -- so very good for the environment. It's not coming from a [ pole ] plant or not coming from other higher polluting sources. It's actually the appeal of the [ rice ] that's used their 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 the [ thought long ] lead equipment. Have you ordered any yet? Or is there any that you got order soon here?

Well, the longest leader -- no, actually, they're real long lead equipment in -- for our technology because all of our technology is all -- it's a chemical plant. So it's reactors, stainless steel piping heat exchangers, pumps, distillation columns, which are all fabricated within an 8-month lead time.

So there's no real 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 on start-up 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?

To be approximately $5 million.

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

Site selection and customers, I would say, are the big announcements coming. Customers are very, very important to have those top-quality CPG brands or apparel brands, so customers is going to be key for this.

Definitely. And they will let you use their name in a press release?

Yes, we've got in the past 2 contracts with CPG brands, and we've always announced them. So I anticipate the same.

And the same with the athletic company?

Yes.

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.

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Loop Industries Fourth Quarter 2024 (sic) [ 2025 ] Corporate Update Call. [Operator Instructions] This conference is being recorded today, Friday, May 30, 2025. The earnings release accompanying this call was issued after the market closed yesterday, Thursday, May 29, 2025.

On our call today are Loop Industries Chief Executive Officer, Daniel Solomita; Nick Lafond, Interim Chief Financial Officer; and Kevin O'Dowd, Head of Investor Relations.

I would now like to turn the conference over to Kevin to read a disclaimer regarding forward-looking statements.

Thank you, operator. Before we begin, please note that this morning's discussion will include forward-looking statements within the meaning of U.S. securities laws. These statements relate to our expectations, beliefs, projections, future plans and strategies, anticipated events and other future performance matters. Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially. For a more complete discussion of these risks and uncertainties, please refer to the Risks and Factors in Forward-Looking Statements sections in our most recent annual report on Form 10-K filed yesterday with the SEC and our press release issued yesterday. These documents are available at www.sec.gov or from our Investor Relations team.

With that, I'll now turn the call over to Daniel Solomita, Chief Executive Officer of Loop Industries.

Thank you, Kevin. Good morning, everyone. I'm pleased to report several positive developments as we continue to progress towards commercialization of our unique technology and the construction of our manufacturing facilities in India in partnership with Ester Industries and in Europe with our partnership with Reed Societe Generale Group.

Q4 was an important milestone quarter for Loop. It marks our first quarter of reporting material revenues due mostly to the sale of our first technology license to Reed Societe Generale Group for $10.4 million. We also executed an engineering services agreement with our India joint venture, ELITe, for $600,000 to support the FEED engineering study, which was concluded by TATA Engineering Consultants. We expect to generate an additional $750,000 in engineering revenue to the end of the year.

In Q4, we also closed a $10.4 million financing from Reed Societe Generale Group. It's a convertible debt instrument that converts into Loop shares at $4.75 a share in 2030. It's a 13% interest -- [ PIK ] interest.

Updating now on the Infinite Loop India. TATA Consulting Engineers completed the FEED engineering study, confirming the initial CapEx estimates. The CapEx came in slightly below the original estimate, which further validates our strategy of manufacturing in low-cost countries. We decided to add a continuous polymerization line, which further reduces OpEx and allows us to offer highly competitive pricing to our customers while maintaining robust financial profitability for the joint venture.

The conclusion of the FEED study from TATA really confirmed and crystallized what we thought about moving into a low-cost manufacturing country, where you see the CapEx significantly lower than if you would be building the same project in other parts of the world. So we're really excited and happy with the outcome. Being to come in a little bit below the original estimate is really a testament to our team, our engineering team, TATA and our partners at Ester Industries.

The Infinite Loop India facility will output both virgin quality polyester fiber-grade PET, a sustainable solution for apparel and home furnishing industries, enabling textile-to-textile recycling and circular fashion. It will also produce virgin quality bottle-grade PET resin for packaging applications. The ability for Loop's technology to offer virgin quality textile-to-textile fiber grade and bottle-grade resin provides significant customer and segment diversification. So we're able to produce the polyester fiber, textile to textile and the bottle-grade material for our customers. So we really work in all of the different spaces in the polyester industry.

So as different sectors have different needs, our facilities and our technology is able to respond to both of those needs. For the Infinite Loop facility in India, we are currently in advanced discussions with several brand companies to secure offtake supply agreements for the Indian facility. The customer contracts are required for KPMG to complete the debt syndication for the project. Executing customer contracts are the key for the timing of the groundbreaking, which is scheduled for the second half of this year.

On to our partnership with Reed Societe Generale Group. The time line for executing this project in Europe has advanced significantly as Societe Generale Group has moved up the time line to be able to execute the project earlier and get product to the markets in Europe earlier. The companies are currently focusing on site selection for the inaugural European facility, where Loop is playing more of a supporting role to Societe Generale as they're looking across Europe for different site locations, dealing with different governments, incentive programs and seeing where is the best fit for the project. And we are starting to kick off the required engineering studies, of which Loop will be heading that activity to be able to provide the engineering for this European facility.

Loop will be executing the engineering for this project at its first using modular construction, which will reduce overall CapEx and shorten construction time lines. The standardized modules will be built in a low-cost manufacturing country and then shipped and assembled on site. This is really, for us, a key focus moving forward is being able to deliver these plants in modular form. Building in low-cost countries as we saw with the CapEx estimate completed by TATA in India, the reduction in CapEx is significant, mainly due to labor costs. And so being able to build these modules in low-cost manufacturing, ship them on site to different countries around the world and assemble them there, really reduces the CapEx and reduces the time to build these facilities. And so those are 2 really important factors for us to be able to execute on these projects quicker and build them around the world and have better overall performance and IRR for the projects.

So some of the main advantages of building Loop's technology in the modules are taking advantage of the reduced labor cost and low-cost manufacturing company, their cost predictability because once you have the modules done, it's like an EPC contract, you have a fixed price for the modules. So there's no surprises on site, minimized waste and lower indirect costs because everything is done in a fabrication shop, no weather to deal with. It's all done indoors. So it's very -- much more predictable and shorter schedules and faster time line to market because you don't have to wait, let's say, for the civil work to be done, where in a typical construction, you have to wait for the foundations to be done, site work to be done and then you can start erecting the structures. Well, here, both can be done in parallel as you're doing the civil work, you can be building your modules.

So it's a really exciting opportunity for us, and this is really the future of building up these facilities anywhere in the world and starting with these modules in a low-cost manufacturing country.

With that, I'll pass the call over to Nick for the financial results.

Thank you, Daniel. My name is Nick Lafond, and I'm very pleased to have the opportunity to support Daniel and our leadership team in the role of Interim CFO.

There are 3 items that I'd like to highlight in our financial statements filed last night. Firstly, as mentioned by Daniel, this was the first quarter in which we reported material income on the revenue line. We recorded $10.8 million in revenue in the quarter as we recognized the upfront royalty payment from Reed Societe Generale Group of $10.4 million as well as $0.4 million in engineering revenue from services related to the India JV.

Secondly, we significantly reduced our operating expenses and cash burn compared to fourth quarter of last year. Cash operating expenses were $2.6 million for the quarter, a decrease of $2.1 million over -- or 44% year-over-year. This reduction is in part because we're using the Terrebonne production facility to qualify waste PET and polyester fiber feedstock suppliers in India rather than 24% -- 24/7 operation. The Terrebonne facility has fulfilled its purpose of establishing that we can scale up our technology, and we've produced first quality products for our customers here.

Thirdly, in Q4, we enhanced our liquidity position as a result of receiving initial proceeds of $20.8 million from the transaction with Reed Societe Generale Group, in which we sold our first license and issued $10.4 million of convertible preferred stock. Our main uses of cash in the quarter were the repayment of our credit facility for $2.4 million, $1.9 million in equity contribution to the India JV and cash operating expenses of $2.6 million, resulting in a cash balance of approximately $13 million at quarter's end. In addition, our line of credit of $2.4 million remains available and undrawn.

I'll now return the call to Daniel for his closing remarks before going to Q&A.

Thank you very much, Nick. In conclusion, before the questions, we are really excited about the future. For the first time ever, we have a project that fits the financial metrics to be successful, delivering top quality material to our customers at a super competitive price to the market as well as maintaining robust profitability for the joint venture and Loop's licensing revenue that comes from the joint venture as well.

So all of these -- this project in India really fits the mold of what we need to do and executing on our low-cost manufacturing strategy. And the modularization is really going to be benefiting projects around the world, building in Europe with Reed Societe Generale Group, having those modules built, bringing down the CapEx, bringing the cost in line will allow us to accelerate construction in that region as well.

So with that, I'll open up the call to questions.

[Operator Instructions] Our first question comes from the line of Gerry Sweeney of ROTH Capital.

This is Brandon Rogers on for Gerry Sweeney. I just had a few questions. One pertains to the India JV execution time line. Can you walk us through the latest time line for the India JV? And then do you have any binding offtake agreements that have been finalized yet? And also, what are the key risks that could delay your 2027 target for commercial operations?

So the timing for the facility is to break ground in the second half of this year. The gating item like now we have all of the engineering is complete. We have the feedstock sourced. We have all of the land selection finalized. Now it's really the gating item would be the securing of the offtake agreements, which allows us to go and have the debt syndication piece done for the project finance. So we don't have any binding agreements today. We have several LOIs that we are converting into binding agreements, and that's going to be really the gating item there. There's no danger in the 2027 operation date. So we fully expect to be able to respect that date.

And then one more question. Just on cash burn and liquidity outlook, you had $2.6 million in the quarter. You've indicated $8 million to $9 million in annual cash burn. How many quarters of runway do you currently have? And then what portion of your Quebec government financing is still untapped? And what's the trigger for access? Will you need to raise any incremental capital to fund your $25 million equity commitment to the India JV?

So we have, I guess, 5 quarters of -- 5 or 6 quarters of liquidity on hand today as we'll be further reducing our cash burn in the second half of this year. So no liquidity concerns at this time whatsoever. The Quebec facility is available to us at the time of the equity commitment check. So for them, once the debt syndication -- once the debt piece is in place and the entire project is wrapped, that's when the financing comes in. We do have a little bit of a financing gap that we are looking to close. So we're discussing with several strategic partners on filling that financing gap.

We have a question from Nick Boychuk of Cormark Securities.

Can you comment a little bit on the land selection process and whether or not that actually has been finalized and the terms and everything have agreed to? Do you own the land? Is it being leased? That seems like a big gating item before you're able to start construction.

Land selection in the province of Gujarat. So we have the land selected. The land is available to us. It's really not the gating item for construction because of the way the India -- can be built, all of the engineering being completed and such. So we don't really have to have the land finalized, but the land can be finalized at any time for us. It's just to have the final contracts done to be able to secure the purchase of the land. I would say the gating item is really the customer contracts to be able to access the debt financing for it. So there are several parcels of land that we were looking at. We've narrowed it down to one piece of land, and now we're finalizing the negotiations with the owners of the land. It's a government project -- government land, so -- sorry, go ahead.

Okay. No, that makes sense. It's government land and so you're currently negotiating with the local government to purchase it?

Yes. So the government has these like special economic or industrial zones in India, where they have several parcels of land. So it fits with the type of industry that we're -- this type of industry that we are in. And so we're just choosing the right parcel. Now we have the parcel. Now it's about finalizing the contract with the government. The government is very supportive of us. They really like the project. India is very focused on the textile recycling and bringing that polyester fiber waste to now be recycled is an important step for them as well. So the project is well accepted in India.

Okay. That makes sense. And when we're looking at Europe, can you comment at all about how the process is going with Reed in terms of you guys finding new land packages, what it is exactly you're looking for, countries of focus, areas and time lines of when we could think that some of those agreements might be announced with Reed?

Yes. So Reed has started advancing their circular plastic strategy, of which Loop's technology is the centerpiece. And so they have hired a CEO for this plastics company, and he's mandated with getting this project moving quickly. And so we have regular meetings with Reed. Right now, site selection on their side is the gate is an important step for them. So they'd like to be able to have a site selected, I would say, in the third quarter, maybe beginning of the fourth quarter of this year to have the site selected. It's really looking all across Europe. I would say there's no country that's being excluded.

Obviously, government incentives could be very helpful as Europe leads the way in regulations on plastics for consumer goods companies. So there's a lot of companies -- countries that offer different regulations -- sorry, a lot of different countries. Europe has the regulations. A lot of different countries offer subsidies for these type of projects. So that's one interesting aspect to actually bring down enhance returns on the project is to have subsidies for the different governments.

Site location, another gating item now that we're looking at more of the modular construction being close to a seaport to be able to transport the modules. That's another important item. So they're going through the checklist. We've identified probably 5 different countries and different sites. So the work is being done now to be able to locate that site. So I think by like I said, by early -- late third quarter, early fourth quarter, we'll have the site selected. And in the meantime, now Loop is going to start executing on the engineering studies. So doing a PDP package and then a FEED study for the modular construction. So that will be bringing pretty significant additional licensing revenue to Loop by providing those studies to the partnership in Europe.

Okay. That's awesome. And my last question was on that incremental engineering and service revenue that you'll be earning while you're doing these projects. Can you remind us again from an annual expectation, how we should be thinking of the magnitude of what that looks like? Like how much could you be earning this year, next year kind of thing?

For the coming year, we have -- like we said, we executed a $600,000 contract. We have about another -- approximately another $750,000 coming in from the India joint venture where we're more playing a support role, where TATA is doing all of the heavy lifting. For the European partnership, Loop will be doing more of the core engineering because it's being done in the modular fashion. So I would expect something in the magnitude of $5 million to $10 million of additional licensing revenue next year.

We have a question from Marvin Wolff of Paradigm Capital.

Congratulations on getting the Reed technology license across the line. It's nice to see a number like $10 million on the revenue hit for the quarter. That's great. Just had a couple of questions. Number one, remind us again of what the CapEx has come in at under the TATA engineering study for the India plant?

So the complete CapEx, so we've added the polymerization section. So initially, it was just going to be a de poly plant. We've added the polymerization section, a, because we saw the cost was coming in under our initial estimate. So it gave us a little bit more flexibility on the overall CapEx. So we added a significant portion to be able to do the continuous polymerization rather than using a batch asset. And that brings down the overall OpEx, which allows us to be super competitive on pricing. So the overall CapEx for the India project is $176 million.

You're still looking at a [ 730 ] debt equity?

So that's including all total installed costs. So the entire plant installed that also -- that includes the land, that includes all financing costs, the interest on the debt during construction. So that's all-in, complete package is $176 million.

What about the -- okay. You're still looking at [ 730 ]. Okay. And so what would the output be per year for the India plant now? Is it still 70,000 tonnes?

70,000 tonnes, that's correct.

Okay. And you're saying -- okay. And so would you get to full output capacity in '27? Or will that be a '28 kind of thing?

For full ramp-up, I would say it's probably going to be early ' 28 for full ramp-up.

[Operator Instructions] We have a question from Varyk Kutnick of DIVYDE Capital Partners.

Daniel, can you hear me?

Yes I can hear you, Varyk.

Nice job with everything. Exciting to see the progress here. Can you remind us again what the CapEx would have been in some of the earlier site selections?

Yes. Well, the reduction is pretty staggering. So if I would have taken -- let's say, I could take the Korean project in Ulsan, which was the most recent project prior to India. So if you want to compare just total installed cost without the financing costs, without the interest and financing and everything, you're comparing $115 million in India to $575 million in Korea. So it's a very significant. It's like an 80% reduction in CapEx.

Pretty amazing to see that. And obviously, good on you guys for not jumping at the first thing that came your way and being patient. Then I would obviously go to the next piece right here. We've talked a little bit about -- you said in your prepared comments, KPMG was looking at the structure of offtake agreements. Could you maybe describe those and how they're going to be structured, whether they're fixed, volume dependent? And then maybe some of the unit economics of the pricing versus maybe conventional? How competitive are you in a world where things continue to get cheaper or more expensive?

Yes. Well, the good news on the competitive side is having, let's say, an 80% reduction in CapEx allows us to be very competitive to the marketplace, right? When you're stuck with a very high CapEx and you need to generate that return, you have to sell this product at extremely high price. Today, in the market we are, we can really compete with even, let's say, the mechanical recycling industry, which provides a much lower quality product, usually not even 100% recycled content, but we can provide that type of -- we can provide competitive pricing to that, but also having the quality that our customers need, so the virgin quality material.

And we've seen that time and time again, if it's on the packaging side with customers like Evian, L'Oréal, L'OCCITANE, the packaging side, we always have the top quality. There's no coloration issues, no quality issues whatsoever. And we see the same thing on the fiber side. When you're dealing, let's say, with the mechanical recycling industry for fibers where they take water bottles and turn that into fibers, through all of the testing we've done with all of these different brands. We've tested our material with dozens and dozens of apparel brands and home furnishing brands. And everyone tells us the quality of our material is second to none.

So all of the applications that you're going into is the high-quality material, the high tensile strength material. They actually see even a 30% increase in the spinnability of our material where mechanical recycling, you have a lot of breakage and color defects. Our material is perfect. So we can compete with the mechanical recycling industry on price, but we're providing a superior quality to our customers. So those are really interesting for us.

As far as customer contracts, they're guaranteed volume, so a set volume, set price. Most of them have a take-or-pay feature. So if the customer doesn't pay us, they still have -- the customer doesn't take the material. They still have to pay us a certain amount. So let's say, if it would be a 40%. So they would pay us 40% of the value of the contract even if they wouldn't take the material. So we're making sure that the contracts are very bankable for us to be able to achieve that 70% debt. So that's the key for us. Having these contracts be bankable for the debt piece.

That's really helpful, Daniel. I guess my last piece would be, obviously, this is far still -- we're talking 2027 here. But what are you guys -- knowing what you know now, what do you expect the margins on from an EBITDA or cash flow standpoint to be from day 1 on this? And will they -- is this something that you expect to grow over time? Or are we going to see kind of margins from day 1 where we want them to be?

I think we're going to see margins from day 1 that are robust for the joint venture. Don't forget the joint venture, we also get a 5% licensing fee off the top. So Loop gets a 5% licensing fee for the sales piece and for delivering the technology. So that comes right off the top to us. And minus that 5% royalty, which comes to Loop, that 5% pays for more than 100% of all of our back-office expenses.

So we'll go from right now losing money to being profitable at Loop to head office just with the licensing fee. And then bringing in the robust profitability for the joint venture, that equity pickup just further enhances the cash flow to the joint venture and then coming back to Loop. So we would be able to reinvest all of that money into future facilities. So once this facility is up off the ground, we don't expect to ever have to -- we'll be using that cash flow to be able to cover all of our expenses plus reinvest into more facilities. I would say that the modular construction is going to be probably the biggest opportunity for us outside of low-cost manufacturing in our licensing model.

So when you're licensing, let's say, to Societe Generale Group, who wants to build many of these facilities across Europe in partnership with us by being able to deliver these modules and bringing down the cost of those plants, that's going to be a huge thing for the future because we're able to build the plants quicker. Be more cost effective and like, again, being able to bring tremendous value to the customers, high quality and competitive pricing no matter where we are in the world.

Okay. And then quick math here. I'm just writing, so tell me if I'm wrong on this. But based off of the equity in the India facility from you guys, call it, $25 million to $30 million, your payback should be between 1.5 and 2.5 years based off a 50-50 split, not including the licensing stuff. Is that correct?

That's correct.

We currently have no further questions. So I will hand back to Daniel Solomita for closing remarks.

So yes, in closing, thank you very much, everyone, for joining. Super excited about the projects. It's coming in line with the schedule and really the cost. So we couldn't be happier right now with the status of everything. Thank you very much.

This concludes today's call. Thank you all for joining. You may now disconnect your lines.