LOOP - Earnings call transcript Q1 2023

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Operator

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Loop Industries' First Quarter 2023 Update Call.

During today's presentation, all parties will be on listen-only mode.

Following the presentation, the conference will be opened for questions. XXXX. recorded this XX, issued conference closed July being press and after is yesterday, accompanying release call XX, conference today, XXXX, July the market This will be Chief On Executive Officer, our Hickey; O’Dowd, Investor Communications Kevin [Principal] and is Relations. call Loop Drew Officer, Solomita; Chief today Daniel Financial (ph) and Vice Industries' I Kevin disclaimer the forward-looking statements. to like about turn conference the to now read would call to over the

Kevin O’Dowd

operator. you, Thank

statements events, from within we and uncertainties to, trends may expectations. started, forward-looking these and results meeting me in will Laws. position. financial future affect you the Security and remind industry among results and current plans, relate operating today’s meaning get risks that statements expectations, that future the materially These Before involve let things, differ statements Such activities the of include company’s may forward-looking other

Industries. are from Solomita, risks the these department. I’d the filed of please concerning with our and risk statements time, this the Investor Copies to in in of information our documents of available forward-looking factors ahead. or in Additional uncertainties section SEC press yesterday’s turn At statements Officer Loop over related is Executive release. contained go XX-K like yesterday, annual to at Chief call Daniel Relations these Daniel, sec.gov and

Daniel Solomita

today. to And morning, pleased on Kevin. Loop's share everyone with Very and good us. progress you you, financial for Thank thank you joining to our update

which Loop Geo first to that facility become happened SUEZ. project for formed equal with major Centric the in in items XXXX, European SK manufacturing our build Infinite strategic in on that an announced of One in or XX, that will We Europe. partnership, partner quarter project was the recently our is French June partnership

and SUEZ's having on part SUEZ's SK and of branded -- on ability complements the their manufacturing, Loop’s Geo feedstock technology marketing the on Loop the and resin. sourcing So expertise experience petrochemical branding bring Centric

other. is complementing three together companies each those So really

fantastic moving side for addition of a to seen customer more in on in with partnership Things we're are in that's XXXX recently to permitting project. the to something demand. going all that build that now, scheduled the uptick We're ground an So Europe. We've well. much Right partnership. necessary that break through

I are towards tight for supply really think regulations that recycled government content customers as more driving chains packaging, well.

are sources exactly -- petrochemical And material, of new to obviously, they're industry, with So PET them recycled change from find companies XXX% as quality provides really to same recycled the a a PET. but content. looking virgin Loop’s the make quality the coming

an five which important We that's uptick packaging Also agreement customer in signed in be with Danone in will first bottle stores So content seen recycled, South the Korea. we're be South XXX% (ph) Korea, recently Loop recycled we've chemically the a to sold facility. with activation. launching really [or] in Danone, going evian year Becancour anchor

So us. that's an exciting launch for

into (ph) ONAG. polyester We supply with entered manufacturer fiber polyester exciting to them with agreement resin an shoe be in a application XXX% recycled to a also used provide with Swiss [ONAG]

lot is so of a is coloring, A all source. So new the brand interest companies companies, part able and the Removing the which do. apparel the seen a in on suited to they and what fiber, dyes, the of so all want more more do fiber-to-fiber, perfectly recycle fiber into huge have the space. become players the technology it about to large exciting sustainability waste to additives. that's fiber take moving Loop’s the the one fiber from really to another active We've fiber and

So that's exciting us. really opportunity an for

also Terrebonne. of focusing production big that, we're selling The in sets supplied we've and these from really So type the and to manufacturing here facility ONAG world on anyone being the to in our the else materials our provide to in us customers. all first volumes is -- completed by now Terrebonne supply able apart will of revenues from resin upgrades in the be generate able be and thing facility to

advancing plans well starting as the Becancour for well, detailed with are Our engineering, advancing financing project North American the well. in project is

other So discussions with the governments financial and partners.

there moving The well. well they to of Korean site -- the later start year. plans been our Geo the purchased, for is in Ulsan able South moving our with Ulsan target really part building is major with that's And Our -- to is started do item to Land as ground project advance break projects. us be financing the international all financing this SK Centric to has to preparation well. is

us customers. they'll So to world, project same from Europe important knowing comfort that potential any to get all our that's be fiber facility North the in the on to resin Loop -- that's anywhere and customers the of polyester able facilities America, that in exact manufacturing any really exciting have customers something another really or for and that's able provide our continent, really for really and be to Asia

And on. the so now something we're that's working hard financials. I'll to it turn really you for over that Drew,

Drew Hickey

Daniel. Thanks,

ended of side, was million. quarter by The quarter partially XX, to due change time net $X.X milestone XXXX, million. The a The for XXXX, XX, to lower loss to to was May of increased $X.X million year five the compared increased $X.XX $X.X is May expense $XX.X will the net expense the quarter are RSUs, May achievement million offset expenses in for expenses compensation million loss for was G&A the financial million G&A XX, R&D amounts million. primarily over expenses million, a which $XX Of primarily a ended units. period. On first non-cash to ended X which the of first increase vest increased stock in for as the quarter $X.X attributable which related equal first XXXX based of stock performance restricted for the

attributable first the $X.X a one-time million $X.X million external decrease engineering the of was design in quarter in loss There million at expenses for for RSUs, loss Loop's At And of package primarily would transition and a Terrebonne million. facilities, the milestone the quarter the Infinite completion in the volumes. in Loop balance end, is was performance Excluding in R&D to decrease the for equipment full first $X.XX its purchases our basic quarter. scale manufacturing production million. increasing was facility which expenses and to machinery the be cash following the $XX.X completed a quarter, Daniel? which $XX.X decrease

Daniel Solomita

Thanks Drew.

fiber. We requirements increased are plastics positioned support continue from at government for polyester regulatory our The demand for financing well plans. and pressure recycled PET recycled to advancing

commercializing global a warming strategic waste helps support now and up The meet them to circular our surrounding and by plastic the partners our proceed We customers challenges their the are from strategic Operator? open technology well we partners solution commercialization the global from call have with progress bringing I to our listeners. our be with excited commitment. positions would of our to the growing breakthrough that like made sustainability scale. to global along Loop to a to technology with on question address

Operator

you. our Raymond James. first comes in David [Operator Instructions] Thank question from So Quezada from

go Your ahead. line is open. now Please

David Quezada

starting first you Thanks. the Good here. question Daniel, coming key see with here, and Becancour morning, up maybe developments just everyone. a

what off-take progression the more you see? whether walk to if not, customer agreements And I how wondering detailed customer like see you'd agreements? see off-take are could to you key through for to out would How or engineering? the the like there? from financing more sources engineering just Just walk and through that many guess to detailed us Maybe just milestones the watch speaking you're

Daniel Solomita

Yes.

at need completed have a higher detailed we fully of, the detailed before engineering is engineering on don't the So to just breaking ground a project. function level the

engineering because detailed breaking our keeping just time So on it's ahead of year. the we're ground schedule later advancing for us this

with equipment of to for detailed fabrication. to suppliers moving So there as key have their just big on thing and the and drawings that's before the all scheduled engineering them the is deal

course So the evolution it's of a just of normal project.

We'll side, of yeah, we're have XXX% sign diligently ground the breaking to on customer On working facility. up. before contracted facility this fall the the probably

So all signed finalizing the them customers papered getting different key agreements, on just all with and working off. the

facility. to capacity six of the expect the would we between, So entire customers have eight and say, I for

So to as the strong. for for We're well negotiate starting sales other facilities. are really contracts customers

facility, that more partners discussions all on contract to in the well strong Korea. starting as facility the active have brands especially for French and Asian as contracting the have, South French from European we So the

our Loop in want independent value diligence always really because We have have So, all the here partners most leads see of to them But done. opinions. come marketing. due partners. of own here, the bring We negotiations, in and contracts want technology, customers customer facility to the and we their spend -- some Terrebonne our of

have a the with we very close relationship customer. So

customer Loop where in marketing brings the the So the on always leading that's side activations. and those

contracts more really up, So I with in breaking rest in coming We're definitely on facility the at good provincial be financing. and of are the bringing government months to moving of financing, well. to financing discussions looking able out the signing five both seven the XXX% for the sell like Becancour And ground. governments Also the package. federal another be things said, in to before we'll

would well. I are things say So moving really

David Quezada

now to or Daniel. to but planning Are color. great your building if even in don't right of enter can maybe some you it jurisdictions Thanks, That's know secure there derisk agreement And feedstock? respect I you guess, about start to operations? start into any is feedstock, kind I you move to of commercial word, then of, plants that ahead feedstock any just curious the with before -- your stockpile to just just

Daniel Solomita

Yes, it's a great question.

each their So has strategy. project region each I own in guess feedstock

largest companies in our side, the the so And on at European management one France. waste SUEZ are of partners

the network. be from with And the Also so feedstock, French coming to the project. which in of own a they government secure working lot feedstock their will

project. French that's moving for forward So the

have the the material in visibility done We're contracts material. work in with have de to Feedstock of really into we've because We our to America, some all our allows utilize that suppliers feedstock our feedstock we good Europe. that for amount to Loop’s XX% contamination key PET. on technologies. already facility. what there XX% Because use advantage the reactors, we polymerization, stockpiling typically else partnerships sets us low for of That's apart a in and have is us place it handle. North really we of the temperature is, can getting can nobody because really Europe

a one the wide to that getting of use us So to can variety feedstock non-PET reactors, no allows into about process. else really we're which getting XX% XX%

So we're either into they landfills are all in incineration, today feedstocks leak environments. natural using ending up or in that our the

very sourcing we're a have pool. suppliers the in facility. North for and Becancour feedstock XXX We've So certified over we wide feedstock America different

as we'll of lot a the But, the yes, closer facility, said, to get for of we be I have material, commissioning suppliers material of the like ramping alternative because stockpiling up. we're except landfilling. the So date already no

stockpiling to them. the start will And we in build relationship so those instances with

David Quezada

great. That's just And for maybe Excellent. more Thank for one me. Daniel, you that.

You any mentioned moving permitting I key permits, the out you're I the for looking there that next, months? in six look you're to milestones that through Any guess, guess, that for should Are in Europe. three process there? we

Daniel Solomita

just don't It's As to we the and far there's as the a on the permitting, through milestone. for process think for project. permitting that milestones the for government really I go subsidies have

-- seems so And SK that are SK now involved together. on now just process SK has joined, all it SUEZ, we -- in from working so and LOOP

just that other to just break on mention thing to construction to want on administrative get able one to I more it's work needed of the guess be So feedstock that's I done the side. facility. ground

but didn't talk the one feedstock fiber. I about is the be -- the of going polyester project, to the project of for main Korean of Korean sources One

So in shoes running our and Asia. made are no most surprise, of clothing

waste there's oceans, fiber polyester in incineration. tremendous of Asia so, a the in ends And in that up landfills, amount

that's a amount us. And feedstock huge so of for

of So to the waste the coming post-consumer the have facility waste, we're and fiber polyester waste. industrial for Asian expecting bulk from feedstock

David Quezada

in Daniel. back that That's now. queue for the additional for Thanks great color. I'll hop

Daniel Solomita

you. Thank

Operator

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

open. Please line ahead. Your is go now

Gerry Sweeney

good Hey, for Thanks morning, Daniel taking my call. and Drew.

Daniel Solomita

Hey, Drew.

Gerry Sweeney

Okay. me? hear guys you Could

Daniel Solomita

hear you, Gerry. Yes, we can

Gerry Sweeney

Okay.

some current that the previously? for finance sense you timeline you Do Just have materially with the change these a that had a in some of completing financing? And Becancour on environment and does staying moment.

Daniel Solomita

So still the place to fall. is to the current by ground break fully be plan in on able facility this

a that's the for think we timeline so, project. realistic And really

say, materials has in side discussions project on of a the the with for and There's this downturn even for never for in are changed still of general. market. Our type lot PET outlook inflationary been the would in financing dramatically plastics an even environment. sustainability demand the for economic we though stronger, I in haven't the

price signing of we're that’s stainless transportation, due up, we're signing in of contracts the that but commodities, the So materially is and CapEx to as PET is with the the more well steel prices reflected expensive brand. -- sales being higher

demand product see like or I space from amount so global from from fiber packaging for the of tremendous bottle a space. said, space owners, we And and brand the either the

have economics better. so, been And never

material we the see So financing in don't plan. change any huge

Gerry Sweeney

think of any Got before potential it. mean, wanted process? -- your partners are a just is deliverables this that just was That's finish more asked across the question, clarity. helpful. And in little looking but the Or I are getting there negotiation I mean, financing bit I for to this previous the process of some sort line? that of get

Daniel Solomita

completed, a basically the plans, for to key. the so Well, completed, feasibility has that the of and report be that's financing so engineering which is

the agreements, place the long customer on Third-party more better. another been the agreements agreements, supply That's the in have of Customer milestone. due term technology, that's for diligence you completed. key

that's those contracts. the doubt all about much signing don't it's there's material, we're the agreements way before so finalizing because much finalizing And on think demand. finalizing as of financing working But up important. those selling is so I not where and of out in

now point for terms just to this terms Loop. about the at negotiating would to say it's best I try So the get more

Gerry Sweeney

believe consumption. sense right? materials, give and have other input at. it. you a some You does energy -- more it's And confidence have much you up I mass question, Terrebonne not of it's Terrebonne. running. super for to facility That's know it's of cetera. Becancour? how the have your projections you estimates balances, and reactions, does I appreciate this But know you the is -- about what Becancour, et visibility terms understand the that But projecting – facility, in is visibility helpful. Got you much And How And your that. batch I give or have I'm And makes I you Terrebonne of on and getting

Daniel Solomita

Terrebonne Yes. No, up facility I operational. understand completely and and obviously having the

not the number reactor be so to commercial continuous is where reactor, Terrebonne run happens a continuously large the in we facilities. that that's operation that Terrebonne larger input batch, a So Terrebonne waste at and days is Only then we And right? here facility that during depolarization, facility plastic in we and the section The for way XX/X always the a which And now do the batch batch even for also we facility. facilities. the for the into process, that have continuous at campaigns. a of where to feeds week operate able

to us for with able the to the of So points it all made. provides data needed assumptions data be the different validate

different So that's for really That's all the your you of for them of amount are data from. where amount points you you need, get need, you energy your the drivers facility. where of catalyst get the information

having the in customers ability and which confidence, us us, scale the So important today. the also building in partners, unmatched to up to for can this up. we -- is facility I technology, for the not only execute, is that them because the points, scale it really really, a the our gives but this those have Which quality, scale industry having data to that's is what

capacity. So we're a partners that facility having size, than really be a an dimensions, on scale, these at scale gives times to that larger the you're comfort our built up on built a can equipment X the equipment less

to this facility in as be on provides with exact having are equipment comfort up so, at And the place that all larger scale the that of well. going the

this get of where we data is all points. So our

here. really numbers our come of accuracy the from So

Gerry Sweeney

And it. then one question. Got more

have in there or you a develop you partnership much partnership that And to. third? the some a SK third, that put as technology a mechanism you equity types is came European will SUEZ will -- Can that investment you equity to SK that less details? need you third, a and any of give a Centric, a they sort Is of in since upfront Geo perspective? of You can the from own mentioned where the

Daniel Solomita

I upfront, the Yes, the be licensing equity giving would difference listen away the for you fee. mean,

negotiation a think I to negotiation. have the if that's wanted you

the know back from percentage facility we're or top to as licensing say what, the XX that equity less us over fee get the of that a going revenue next comes you to forgive years I’ll You the as assuming but in be discuss, something That's France subsidies always going facility. we with one-third. well, the for can we're one-third, European we're that the to front end. In it's one-third, working the on governments line

within going is that's the So government's. project very well. very well received The

something that would but So it's XX -- the exists, that fee years. cherish not I probably mean, licensing opportunity over we next we that

we'd something it's be to willing give that not So probably up.

Gerry Sweeney

helpful. it. That's Got

me. for it. it that's I appreciate Okay,

Daniel Solomita

Thanks, Gerry.

Operator

you. Thank

the from Wainwright. comes of Joshi of question next line Our Sameer

Your ahead. Please line go is now open.

Sameer Joshi

morning. taking my Good for thanks. Thanks questions. Yes,

you're for The them Are if first netting being to to in any are, R&D product you Terrebonne. that? that Just -- curious question any the you getting that? produced that is sending that. And is getting about are want for at remuneration the prospective do Are line? customers revenues you you

Daniel Solomita

Yes.

So we material. selling are the

material past, for it R&D was R&D we the in in So the sold purposes, it whenever line. netting

Now, in so that's we way be in it's the sold, understand going have R&D actually then product R&D that, this if if purposes, a accounting South being expense. used the the sending to the difference fall Korea. material for which the or you're If purposes sending it's is in launch in netted trial you're with the evian I for

bottles, So be sold that to of think produced all I bottles revenue. it as online. hundreds going booked was of That thousands of be will were are like those that

be going later in all activations the coming be those and so year, other with have We next marketplace other of are that this sold year products revenue. to will

for purpose the it it's purpose R&D more trials, selling end the -- is. really R&D for is the we line. the for product, it If under on then book If what So sale yes. depends end

Sameer Joshi

Understood. Got it.

something can third the South from the we sales maybe? Korean quarter second maybe expect So fiscal or in quarter

Daniel Solomita

Not only as Korean but products sales, well? South other

Sameer Joshi

Others.

Drew Hickey

primarily other Yes, products.

Sameer Joshi

Okay. Got it.

Drew Hickey

revenues don't but program, specific Korea, you'll from other that new specifically I introduction. see South think

Daniel Solomita

We're not selling yet.

So we're Evian make I not selling bottles. think the one sure, their own bottles, to right? is selling the thing evian

for don't the packaging sell We're bottle So we final the the just product. players.

So an are South that's our it’s Korea, not that sale out sale. evian of coming

Sameer Joshi

Understood. that. for Thanks

operating last the are to think contributions are that also would quarters? you that So be? item quarters your making contributions next what separate ago the -- equity you I quarters, level the you that the expense in be the a over two had line the what And showed at few few next over quarter investment. or expected

wanted quarters. expect few the Just to what to next see over

Drew Hickey

So, I coming mean, from to were they down going the generating facility more the be going operating expenses here. now are revenue to because be

offset facility going been cost in pilot production incurring -- some to we've of sorry, that's So that the on the the today plant Terrebonne.

be of chemistry transferred of over teams the -- and the be part going operation are the engineering all projects. expenses their now teams to -- and the going to to are transferred Secondly,

all those So you put and engineering the normal for of engineering building part CapEx the the the number expense teams CapEx facility. into of get the it's process of kick actual the a in built the once and ground the project actual of fees all off -- breaking for into

cost to we're charging where project. back our going our costs, employees all of that’s to into be engineering So be the going

itself. [indiscernible] increase will burn at that So the Loop

for So of engineering they that's always our for get projects, charged all the that work. for something the future

-- be for a that engineering engineering and Again build paid Loop engineering when also all line back that CapEx the that for So comes packages CapEx we've the there's to revenue of We'll engineering part we from line project. part today. an the is and getting the selling that's good. a

that the we today So projects different we've all distributed incurred develop. engineering costs the get of to

construction out. financed, we're the getting revenue for we're level we breaking having plant of that towards as Obviously, ground the it that's as would As be be move at investments that's projects still them and on and far So fully because working next CapEx? part that's it. something equity, the equity that the at the the another a looking line quarters would

we -- trying equity. to with trying facilities were amount dilutive find are least finance to of the We these

position can issues. bring out to to funded how in needed see we capital equity without have looking dilutive our the having equity So

Sameer Joshi

thanks next million be items, one-time the in was around non-cash and $XX non-cash items your excluding that. do are Actually, money? OpEx how quarters for around With more Yes. to going per $X-ish And over in or you bringing quarter. that my question. Like next see million few cash

Daniel Solomita

Yes.

repayments said, of for get on we're financing ways nature. Part things in or that that could potentially be us, like I non-dilutive the -- at, into tapping For looking tapping for to of material company. customers

that's and financing part we're plan on. of working So that's a our what

Sameer Joshi

Thanks for [Multiple And it. Speakers] that. Got

Drew Hickey

with a quite Tying I comments. at Daniel's machinery Terrebonne. year, equipment of if in add. we bit Last Sameer, money can on spent and

a that's mode. done So and more in production of it's that, mentioned, now as Daniel type

also will -- coming machinery engineering identified engineering So addition the significant there'll money with Daniel a of down last spent the to other expense. We is comments that be be reductions in lot year, equipment and made. design invest completed. Daniel that in in the package well as

And million so, to we are the $X range. range quarterly $X more million more in -- that targeting that lower of in in costs,

Sameer Joshi

Drew. yes, Yes,

we So quarter, or lines. the past quarter expecting to I second that quarter, our this the fiscal understand indeed and but have those managed in expectations in along you happen do maybe were

Thank So you. that. thanks for

Daniel Solomita

expenditures this in the tail of of those Yes, some seeing quarter. end you're like

off tails it it completely, just switch off. So doesn't

Sameer Joshi

Got Yes. it. for Thanks. Thanks that.

Operator

concludes this turn Solomita this like Mr. Thank would for conference the over time, question-and-answer Daniel closing now I our you. to call back to At session. remarks.

Daniel Solomita

to updating you the next everybody Solomita. participating Thank you. Thank and you for much. forward looking quarter. very you Thank

Operator

This concludes call. for update corporate today's your you participation. Thank

your now disconnect may You lines.

Loop Industries (LOOP) 14 Jul 222023 Q1 Earnings call transcript