Loop Industries, Inc. Q2 FY2025 earnings call

• Reed Financing: Concluding transaction with Reed, scheduled to close in November. Societe Generale acquired 75% stake in Reed Management with initial $250M commitment. Regulatory approval on Reed side imminent. CEO and lead director agreed to lend $2M as insurance if Reed deal delayed. • India Project: Ideal location in Gujarat, India for facility due to low-cost manufacturing, skilled labor, petrochemical infrastructure, seaport proximity, green energy (100% biomass from rice husk), and close to polyester fiber supply chain. Partnered with Ester. Hired British engineering firm for land survey. • Financials: Total operating expenses $4.5M for Q2 ended Aug 31, with noncash items like stock-based comp ($400k), legal expenses ($800k), and project costs ($500k) reconciling to baseline cash expenses of $2.9M. • Market Demand: Strong customer demand from fiber-to-fiber and bottle grade segments. European beverage brands facing 50% recycled content regulation in 2025 as a big opportunity. Sustainability trend returning as inflation and interest rates decrease.

No detailed product segment financial performance with revenue contribution percentages provided in the transcript.

• Reed deal expected to close in November. • India project timeline: Final site location expected in November, breaking ground in first half of next year (likely March), customer contracts in Q1 2025. • Anticipates PET prices to move into $2,000-$2,200 range in early 2025 with regulation. • Sees potential for 2 plants operating by October 2027, including Indian facility and possibly a second facility, with Reed's partnership aiding European project deployment.

• Potential delays in Reed deal closure despite imminent regulatory approval. • Market uncertainties related to PET price fluctuations, including overcapacity from China affecting virgin PET and quality issues with mechanical recycling impacting recycled PET pricing. • Regulatory and geopolitical uncertainties, such as potential tariffs on Chinese PET affecting European market dynamics.

Q: Can you share more on the India opportunity, site location, and timelines?

A: Final site location expected in November, breaking ground likely in March 2025, customer contracts in Q1 2025. Feedstock secured from Surat area sewing factories.

Q: What hurdles remain for Reed deal closing?

A: Only final regulatory approval left, expected imminently. Once approved, administrative work will take a few weeks for Loop to get cash.

Q: Any plans for licensing Loop's technology?

A: Interest in licensing exists, with various models like upfront fees, revenue percentages, and involving customer relationships. Depends on PET price dynamics.

Q: Latest on North American projects?

A: Talking to opportunities in North America, with interest in Quebec, but waiting on PET price and market conditions.

Q: Clarification on cash position and working capital for India project?

A: Cash available includes $2.4M plus $2M loan. Working capital needs factored in, with equipment in warehouse potentially for other projects, not directly for India project as Ester provides polymerization equipment.