Loop Industries, Inc. Aktie

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Loop Industries First Quarter Fiscal 2027 Corporate Update Call. [Operator Instructions] Please note, this conference is being recorded today, Wednesday, July 15, 2026. The earnings release accompanying today's call was issued after the market closed yesterday, Tuesday, July 14, 2026.

Joining us on today's call are Daniel Solomita, Founder and Chief Executive Officer; Spencer Hart, Chief Financial Officer; and Kevin O'Dowd, Vice President, Communications and Investor Relations.

I would now like to turn the call over to Kevin O'Dowd to read the disclaimer regarding forward-looking statements. Kevin, please go ahead.

Thank you, operator. Before we begin, I'd like to remind everyone that today's discussion will include forward-looking statements within the meaning of U.S. securities laws. These statements reflects management's current expectations, beliefs, estimates and projections regarding future events and operating performance, including in our commercialization activities, project development, financing initiatives and other matters that are not historical facts. Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those expressed or implied.

For a more complete 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 and our quarterly report on Form 10-Q filed yesterday with the Securities and Exchange Commission and our earnings release issued yesterday. These documents are available on the SEC's website at www.sec.gov and on our Investor Relations section in our website.

With that, I'll turn the call over to Founder and Chief Executive Officer, Daniel Solomita. Daniel?

Good morning, everyone. Thank you for taking the call or being on the call. We had our Q4 results not too long ago. So we'll give all updates we can on the Q1 release. We continue to make meaningful progress on our Infinite Loop India project with our joint venture partner, Ester Industries. As we've said in the past, the JV hired KPMG to arrange the project debt for the joint venture. That process is going extremely well. We have received additional term sheets from new lenders. The consortium of debt lenders are now beginning the next phase of the debt process, which includes the technical due diligence. So the debt is well underway and very confident that we'll be able to conclude the debt financing in the allotted time.

We continue to advance on customer contracts. We have signed an LOI for 15,000 tonnes at a fixed price. The customer is a leading textile apparel brand company. They do not sign forward contracts. There were spot buyers and maybe 6 months contracts. They just do not sign long-term supply agreements, but they have agreed to sign an LOI with us to show support for the project and their intent to buy from the material from the project. Their total appetite is 90,000 KTA per year. This is an LOI for $15,000 at a fixed price. Like I said, they want to be helpful to the project, and therefore, they have even said that they're willing to talk to lenders if needed for the debt to help people understand their position and why they're signing an LOI rather than a full-blown offtake agreement. But we fully expect them to be a very meaningful customer for the project in the long term and to grow their volume larger over time.

We are very confident in being able to execute additional customer contracts in the time required to complete debt financing. Our engineering is very far advanced. We recently have applied for subsidies from the state of Gujarat. The state of Gujarat just announced subsidies for clean technology projects in the area. So we have applied for the subsidy program. and our project would be eligible for approximately $28 million to be returned to the joint venture by the state of Gujarat over an 8-year period. So that just further enhances the financial viability and the financial returns for the project. So very encouraging sign for the project, being able to secure the subsidies from the state of Gujarat.

As far as our other project with the Reed Societe Generale group licensing project, as you know, as we have mentioned in the past, Societe Generale has chosen a site in Schwarzheide, Germany, which is owned by BASF, that's where they will be implementing the first Infinite Loop Europe project. We are currently in final negotiations with SocGen for the first phase of the engineering contract, which is scheduled to begin in September of this year. Loop's engineering team will deliver a pre-FEED engineering package for a 70,000-tonne Infinite Loop plant built with modular construction.

This is our first modular construction project, but this is definitely the road map for the future on how we bring low-cost manufacturing to the rest of the world. So what we've learned from our Indian project, how to bring down costs, we're going to be doing that in modular construction by building these plants in modules from India and then ship them on site to different regions of the world, which minimizes local labor rates. The engineering contract -- this engineering contract and the next phase of engineering, which would follow in the middle of 2027 will provide sufficient cash flow to fund Loop's back office expenses for the foreseeable future. We are continuing to evaluate options for the financing of Loop's equity for the Indian joint venture. As always, we prioritize capital, which is non-dilutive in nature, and we aim to have this financing completed in the next few months. in line with closing the debt financing.

With that, I'll turn it over to Spencer Hart.

Thanks, Daniel. On the expense side, we've continued to make good progress at lowering our cash overhead. So it's now running at approximately $500,000 per month. Two of the areas that the savings have come from are a reduction in employee compensation and lower insurance costs. We've also benefited from the funding that we received from the National Research Council of Canada, which is approximately CAD 2.9 million in aggregate and which began funding on a monthly basis earlier this year. As of the end of the quarter, May 31, we had approximately $3.6 million of liquidity, which includes our credit facility. As Daniel discussed, we're focused on various approaches towards raising capital, and we will provide additional information as soon as there is a material update.

Now I'll pass it back to Daniel to make some closing remarks, followed by Q&A.

Thank you, Spencer. Yes, we continue to make meaningful progress in all projects, the project in Europe and the project in India. So we're very optimistic and looking forward to getting this project built. I'll turn it over to questions now.

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

Two questions. The first question really is around the debt financing. What are the major steps remaining? Is it just the technology due diligence? And then -- so what are the major steps remaining? And what -- can you remind us of the time line to close the debt facility as well as the remaining sort of a 70-30, 80-20 sort of debt-to-equity opportunity with the package?

Thanks, Gerry. So the term sheets that we've received from multiple international and local Indian lenders have all harmonized the terms. The terms are going to be 70-30 debt-to-equity split, of which Loop is responsible for 15% because our joint venture partner, Ester has 15%, and then we have 15%. So that's the major terms, SOFR plus approximately 3%. That's kind of what we're looking at. So very fair interest rate. So those are the major -- those are like the major terms of the debt -- as far as next steps, there's the technical due diligence. The consortium is being formed, the technical due diligence is being done, which we've done countless amount of technical due diligence, independent technical due diligence at our facility in Montreal, Canada, most recently by Societe Generale.

They hired a third-party specialist engineering firm to do a full due diligence of Loop technology prior to purchasing the first license for a down payment of EUR 10 million plus the investment of EUR 10 million. So that was done. Us, obviously, SK Global Chemical did a full technical due diligence as well on the technology. So we have no concerns whatsoever on the technical viability of the technology. We also have commercial products for sales such as our shoes with on shoes and Evian water bottles. So we're very confident in that process. Once that is done, then it's final negotiations on all of the different terms and then closing of the debt. The timing is going to be in the fall of this year, which falls in line with the project breaking ground. So those are really the next steps.

Obviously, the customer contracts is a piece of the debt. So debt lenders want to see visibility and comfort that the customer contracts will be there. And so far, we're making good progress. We have customer contracts, obviously, with Nike and Taro Plast. Now we have an LOI with another leading firm on the textile side and more to come.

Got it. Actually, that was a good lead-in for my second question. I just wanted to get an update on the pipeline for your customers. Obviously, you've already sold some products, as you mentioned, on shoes and you had Nike, taro Plast and then this new 15,000 ton LOI, how much material or capacity is left to sell or put under LOIs? And what does that pipeline look like?

Yes. We're in negotiations with several different leading brands on the textile side and on the consumer packaging side, and so we have -- once we finalize those agreements, which are very well advanced, we will have the required amount of volumes sold in either contracts or LOIs to begin construction. So we're doing very well. It just takes a little bit longer. The real issue is that, especially on the textile side, it's a very complicated supply chain for the textile companies. Companies are used to buying either garments, like you want to buy 1,000 pairs of jeans, they go to the manufacturer and they buy the jeans in a certain color with a certain style or they buy maybe rolls of fabric, going back to buying PET polyester chips is a little bit foreign for some of these customers.

They all want to buy the material once it's available and put it into their supply chain. The problem they have is trying to figure out if they sign a contract today, where are they going to send those chips? Who's going to spin the fiber for them? Who's going to take the fiber and make it [indiscernible] so it complicates the supply chain, which is why it takes a little bit longer to sign these offtakes. The appetite for the material is there. Our pricing is very competitive because of the low-cost nature of India. So with the customers that we are in negotiations with now, we'll have enough of the capacity sold to begin the project.

Your next question comes from the line of Marvin Wolff from Paradigm.

Look, that sounds like a very good progress on the LOI side. So could you give us an idea of what percent of the 70,000 capacity of the plant is either covered under the Nike and LOI contracts? Or if you want to make it wider, even how much of the 70,000 tons would be covered by all the contracts you're talking with at this time?

So with -- if we execute on the contracts that we have and the other contracts that we're in, let's say, final negotiations for, we would have most of the facility locked in either full contracts and LOIs. So that's our aim. A lot of our contracts always have an option for the customer to buy additional volumes. So if you have a 15,000 tonne contract, usually, there's a provision in the contract. They have an option for an additional 15,000. So that's the way we structure most of our contracts. So far, they're all fixed pricing. On the consumer goods side, the packaging side, we use more of an index-based pricing model where we use -- we have like an ICIS index pricing. So it's a little bit of volatility.

There's always a floor pricing, a cap and a collar in there. So we're protected on the downside and the customer is protected on the upside. So that's the way those pricing contracts work. But we will have the -- enough of the volume secured with the contracts that we are -- have and the contracts that are being negotiated to be able to begin the construction.

And if I understood correctly, the LOI is kind of like a contract in this case. You're not going to continue negotiation to a final contract. Is that right?

Yes, the final -- once the plant is up and running, then the LOI can be converted into spot market buying. They don't -- most of these companies and customers don't side forward-looking contracts. They don't sign a contract for today that the plant is going to be built in construction for 18 months and then startup and commissioning plus another 3-year term on the contract, you're looking out, let's say, 4.5, 5 years which for most customers is too far. The plastic and chemical industry is basically spot market or 6 months by. So a lot of customers have just said to us, listen, when you guys have the material up and running, the price is good, quality is excellent. We want to buy the material. And so that's why. So the LOI is not going to be renegotiated into a final contract. We have the volume. We have the price, and now it's going to be bought in the spot market for the plant once the plant is open. They've already qualified our material. They've tested our material. They like the price, they like the quality. So everything is in line. Now they can start buying the material. They just need to have the plant up and running before they can actually start purchasing.

Okay. That's good. If I heard you correctly, this particular customer on the LOI could take up to 90,000 tonnes a year in sort of the best case scenario. Is that correct?

Yes. That's the total appetite over time. That's the opportunity with this one customer is 90,000 tonnes. So that would be the total opportunity. We do have a plan to build a second facility on the same site for 100,000 tons, maybe more, and therefore, having customers that have that type of appetite is fantastic.

No, that is. That's super. Very good. Okay. Well, congratulations on the progress made so far, and it sounds like things are moving along nicely.

Your next question comes from the line of Connor Norwood from Viking Capital.

And I know you touched on this earlier, but just to clarify, how long is the new LOI expected to take to convert into a firm order? And does the banking syndicate for the India JV, you acquire that firm order to be in place to complete financing?

So no, the banking syndicate does not require that to be -- it's not going to be converted into a contract. It's going to be converted into a contract for spot buying once the plant is operational. The LOI gives comfort to the debt lenders that the appetite is there and the customer has offered to speak to the debt lenders to give them comfort as well that they value the material. They value our proposition, which is best quality material at great pricing. And so that's why there's an actual fixed price in the LOI. So it's not going to be converted into a contract and it's not going to be -- it's going to be just a spot buying once the plant is open.

Got it. And then my second question here is, can you walk us through how you plan to fund operating expenses and any remaining CapEx over the next 12 months? Specifically the current cash runway and to what extent the plan relies on additional equity or debt issuance?

So as far as our operating expenses at the back office with the liquidity we have, on hand plus our engineering contracts that I mentioned during the call, we will have sufficient cash for ongoing operations for the foreseeable future from those 2 sources, our existing liquidity plus the engineering contracts. There's also an additional EUR 10 million licensing payment that would be due to loop sometime at the end of 2027 from the Societe Generale Group when the next milestone is reached. So those are all things that are going to be coming into place that is going to fund all the back office.

We do have a remaining equity requirement for the Indian joint venture which today we're evaluating different opportunities to fund that. As I mentioned, our priority is to do that in a dilutive equity, not a dilutive equity issuance, but some type of a structured debt facility. And so that's what our priority is, and that's what we're working towards.

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

Most of my questions have been addressed thus far, but I'd like to revisit the topic of the conditions around the debt issuance with respect to offtake agreements and LOIs and taken together, how -- where does the bank stand in terms of checking that box that you have enough offtake or intention to offtake from this plant in order to extend credit or how much longer do you have to go until that condition is satisfied?

Yes. I believe with the customer, the visibility on the customer contracts that we have today under negotiation, that will get us to the target that's required. I mean the banks would like to see the most material under contract as possible, having an LOI with a really big respected company and the company is willing to speak to the debt lenders really helps the process. So it gives the debt lenders comfort. We've continued to attract debt lenders to the project. We've received additional LOIs since our last call, I guess, 6 weeks ago for the project, and there's still -- we still expect additional LOIs to come in.

So there's a significant amount of interest in the debt, and we're very confident that we'll be able to get that debt secured and the customer contracts in line for that to happen in the time this fall when we're going to be breaking ground.

Got it. And so if you break ground in the fall, walk us through the additional steps to get to the point where you're actually constructing this the plan?

Yes, it's an 18-month construction period, and then you have a start-up and commissioning phase, which there's no real hard science on how long it takes to do the start-up and commissioning but we'll be -- we'll have the plant up and operational in 2028.

Okay. And same question, but with respect to the Euro plant and I realize the dynamics there are somewhat different, but what should our expectation be on timing and milestones?

For the European plant?

Correct.

Yes. So that's a completely different -- that's just a licensing agreement, right? So we're not expecting to put any capital into the project. So we're not going to be injecting any money to get any equity in the project at this time. So for us, the road map there is we've received the first EUR 10 million down payment from SocGen. We also received a EUR 10 million investment from them, which is a structured debt piece. Now the next phase is the pre-FEED and the feed engineering. So those are 2 separate engineering packages that come from Loop's engineering team and our partners where we do the modularization from. So those 2 contracts, the first one starting in September of this year. It's about a 6-month contract. So you could say by Q1 2027. That contract is completed.

Then in the middle of the year, we'll start the second contract, which is an additional 6 months of work, potentially 8 months of work. And then once that is completed, the expectation is at the end of 2027, beginning of 2028, FID happens for the project, at which time at FID receives an additional EUR 10 million licensing payment from the European partnership from SocGen and the consortium there? Once that happens, then the modularization construction piece happens. So we're working with our partners on doing the modularization and selling the modules to the project for the project to be up and operational, let's say, in 2030.

That time line is helpful.

Loop gets paid in advance, right? We get paid for engineering, Phase 1, engineering Phase 2, additional licensing payments on the milestones and then the sale of the module. So that's how we generate cash from this project. So we're making money throughout the entire process.

So there's really 3 separate revenue streams here. One is the licensing revenue. Two is the engineering packages. And then 3 would be the economic benefit you derive from selling of the modularized structures. Can you talk a little bit about the third bucket?

Yes. The third bucket is still something that we're finalizing. Obviously, we put a lot of work into the modules. It's all our equipment, all our design. So that's part of our business model. So yes, that's something that we're still working out. But the full entire package is that funds all of our cash needs for the foreseeable future and potentially also the repayment of the structured debt to SocGen when it comes to.

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

I wanted to jump in. What is the total available liquidity today if we include undrawn lines of credit along with cash balance?

You want it in like a time line?

No. Today, like what is the line of credit, [ is it all ] U.S. dollars?

Yes, we have additional liquidity through to the end of the year.

But without the engineering, I'm just trying to get an idea.

Yes, that's without the engineering contracts through the end of the year, the end of the calendar year. And then the engineering contract is going to begin in September, of which we're going to be generating significant revenue and profitability from it.

On the liquidity side for the back office, that's something that we fully expect to be funded through the engineering contracts and our available liquidity.

And there are no further questions at this time. I will now turn the call back over to Daniel Solomita for some final closing comments.

Thank you, everybody, for assisting the call. Like I said, we're making significant progress and meaningful progress on all fronts and really looking forward to getting the engineering contracts done and the project in India breaking ground. Thank you very much.

This concludes today's conference call. Thank you for your participation. You may now disconnect.

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.