LOOP - Earnings call 4 2023 | Loop Industries, Inc.

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Operator

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Loop Industries Fourth Quarter 2023 Update Corporate Call. [Operator Instructions] The conference is being recorded today, May 19, 2023, and the press release accompanying this conference call was issued after market close yesterday, May 18, 2023.

On our call today is Loop Industries Chief Executive Officer, Daniel Solomita; Chief Financial Officer; Fady Mansour; and Kevin O'Dowd, VP of Communications and Investor Relations.

to to call disclaimer Kevin statements. like Reed to about now sorry, -- to would turn over the Kevin forward-looking I read a

Kevin O'Dowd

you, Thank operator.

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

concerning yesterday and and Investor is Forward-Looking information yesterday's of Copies in filed annual are risks Factors contained of section and XX-K our latest press at our release. Additional uncertainties from these documents sec.gov statements or Statements report Relations these Risk SEC in available the the department. Form related with

At Fady, this Mansour, to Officer Fady like Financial of the go to over please turn call time, I'd Loop ahead. Industries. Chief

Fady Mansour

more later, results. like go in update to I'll give it Thank I'm so really aggressive so you, today. leadership be technology, X on I'd of part minted an the be I've me have to the team. I me got much. and referred for this to having what are CFO. Dan Kevin. this weeks And forward that a honored here him newly thanks and future. Thank I'm you weeks, It's to of to belt. my financial that all the and roll so to couldn't but pass forward The will four of a milestones excited couldn't rock excited, the the be you business, team going more under the join I working look franchise. company, cutting-edge I and we over through have, amazing we this been with -- Please combination but stellar

the I onto deployment also the commercialization. XX, saw wasn't got going go come our that here, of call caught a going is quarter the I've to and forward. we in on But for we go off the the pivoting happened get the pivot experimentation from down, of But now, as to point design basic through came and I trail of common February theme I highway the XXXX, past. right lot it and 'XX Obviously, as down. expenses ended have to we results. that's what we're will results A future to engineering related be Obviously, R&D package dirt hold and a but up that XXXX,

tremendously. the down came expect that engineering external Our to And into you can future. continue

Our dramatic Terrebonne decrease we Again, of finalized things more to [ a a saw as ] of sign machinery expenses. in come. equipment,

a to of So I'll steady through total than down run come going R&D but at we that saw continue X/X couple to by a more we're minutes. more decreasing to talk and of in look line rate, expenses cost

On the pretty board. were much the costs down perspective, across G&A the

functions. to So a professional employee of for, services, more is another we're back-office of combination that comp looking our area that's optimize which

in of looking the a of $X.X another was XXXX, disposal just reported was that frontline which on at get It the million. There third reduced to happened tranches. X and total gain One in quarter BÃ©cancour. team line obviously, the through was under gain million. we're gain fourth recorded the $XX we So and Obviously, a team, back the from quarter, we was expenses. benefited of the

operations to next to can but of about $XX.X gain for it fund years. we make powder couple brought our the and it million, our more full [indiscernible] our solidified dry importantly, amount just built a So year nice and of sure

I reduced full the a expenses for articulated saw last of you the same reasons amount tremendous that that to theme quarter. same year. Again, over for Turning the

One of a that met related G&A stock-based a comp G&A it was in -- was performance the had to in things we the higher because condition fiscal the perspective, XXXX.

So the exercised. stock-based comp was hasn't It vested. been

was in credit tax related tax a credits, to our Obviously, that addition So Terrebonne that we had of occurred. that, onetimer to kind upgrade. a bigger the

So to our good was expenses. that news served that reduce

expenses. about importantly, I've More and with the look internal looking I told stakeholders forward, our pivot we as going back and pivot in to at time work a to and had you that we're the do I team, to is reduce which office R&D, recurring standpoint, to and proud able that see by of I'm how engineering about run forward, we're G&A. rate say expenses from going our a at current our total a we're looking XX% expenses reducing When

a material revenues taking generate or we of couple that won't -- we we're large to in understand revenues -- able So next years. the be

So we preserve have on on cash hand. lights to it with precious the in have [indiscernible] keep expenses and that our the have we line

takeout, XX% Terrebonne So now. obviously, cost right is complete

the running onto deployment. So commercialization all we're go to of said and as the going like projects are highway I up we trail dirt get and Engineering side before, these obviously -- up are of R&D are off looking because we and costs, expenses and we and looking those they doing to the incremental future but are cross-charging at projects. facilities, the all of

what's on spending, machinery cross theme, a our So and R&D cost-cutting all watching discretionary a really and perspective, equipment, lower of bifurcating back forms from versus the treating what's obviously lower engineering our forward needed and expenses looking expenses charge. office headcount, is from as spend

we we charging from very X, from recovery precious looking So importantly, them perspective. at our more P&L And P&L our time even the get they so we're if that quickly hit get cash. the cost -- preserve we

in us balance current happened fiscal shore able our of our going the need going sure -- year the year, helped minimum to XXXX, dry of X/X to fund that's up finances, fiscal quarter sales fourth or our hand on assets are that expenses forward. to total that third powder make we we're cash to to the the and last over late sheet. Turning Obviously, give

we of have than X we can that more So operation expenses years fund.

we the end [ delivering that pipeline of most on projects in and we're the the and ]. the by So ground year, looking shovels well see terminal get well is we're old which the notably, to the first in that served all time the anchored

really, really a sheet shape perspective. from funding we're perspective in a and So good balance

On latest orders, referred QX down obviously, And flow, are come focused X, QX had obviously, cash sure laser the flow that. making the to. I cash because the land XXXX, positive that we the of XXXX that with X expenses excess sale we on

the the now. said, from that's perspective. where Again, point are So we're right pivot we like P&L I at

minimis on on going cost keeping track we're expenses, expenses is de So perspective. a to obviously project the success. we're are going which to more be spending of and back the office be

to needed projects, happy to I'm money our the level. recoverable So company are spend that on and next get what's to

to Dan Solomita. our over With that, I'll Daniel? turn CEO, it

Daniel Solomita

he's Thank weeks, the know great though here, you he's to been It's ago. only join Fady Fady fantastic. X have a a Got much, Fady. for pleasure us. to X He's about very resource. Even tremendous been been months

So to get and Fady right we that be took each sure to is CEO forward. the to know the time fit going make role the other moving for

So with really us. him to happy on board have

year. high supply XXX% PET the Terrebonne for is better polyester the very from companies well today brands, of think Loop quality supply virgin in brands been a is world. Customer We've products, don't of global being and virgin to responding an big world position we're type ever eventful a lot material resin to have that's difference. been to around virgin material, quality brands able has fiber extremely and around material such really our been that this. to to to I company out demand the milestones supply we quality our this recycled global and there It's facility are a got all to than completed, And are only able brand content,

contracts for the future also facility for facilities the as negotiating We're and Ulsan French other well. facility,

if regulations our more of because most forcing the of today, going more have something to green, And is really recycling for demand mechanical very or could and what the dramatically. quality recycling. So side, is into all the a or we've recycling are been seen really seen get is what to get into, the and the more you a Right bottles they quality dark fiber those like And going to recycled down in really from into the at world, looks has to bottle And mechanical that are through anyone or blue the get what brands recycled is and strong see quality die only the packages worse. global continuously see brands packaging, today a way rPET as the content and going exciting. -- now, with space as PET from let's or is them only customers especially is their stream, gray there's down. with made really it's the the back of that's concerning say, government recycled customer the content packaging strong, which world use

And XXX% from material steps really recycled and content. brings quality industry made in the the where quality so exactly virgin up the that's as Loop petrochemical same

been really plus that's for So a huge us.

exclusively really exciting States. Micellar package, It's Garnier, the States it's last stores in the with L'Oreal We brand a month, the sold water Micellar program launched a water. in United United brand, the Ulta across

facilities. be that tremendous of was cosmetic a a huge so L'Oreal are, to company, the a and going with they customer And brand what brand, working our great achievement they're future

was launch. exciting that So really a

on later year in We York. have things some L'Oreal New this with other

On running makes offtake AG, AG, the we shoe signed exciting for manufacturer an On the Swiss for the shoes. that from facility LOI an Ulsan cloud

fiber. recycling, all virgin of that's something which with to So only get really That's work Again, able fiber-to-fiber is to excited a can start they industry supplying fiber-to-fiber a to the so today with be and application. that quality Loop fibers, textile provide cannot them. with

into So packaging nobody fiber from Loop fiber going can food-grade do and fibers any recycle of polyester those quality or into things. back a polyester can virgin

us that sets from anything really out apart that so And there. exists

So for us. opportunity really exciting that's another

textiles with be really going is Global we're feedstock global so SK the for supply from textile for the we of of factor the all fiber Ulsan is the polyester feedstock partnership Most fiber. XX% the Fiber secured those in that be probably to going be coming polyester Asia. fiber using Most facilities the facility fiber, of the for of to Chemical. Asian chain driving to and is about will polyester industry,

really a that's really So us. exciting for market an

it customers' X.X into expansion, us years quality knowledge important. getting beneficial global the the really X material having operating been is being facility game. the move as hands for get that has the operating, completely up so X facility running, and years, hugely all really getting and has able see really, to for can to running we data facility for that of Operating they this changed Today, to the Terrebonne past

automotive the industry, supply in from industry, and the supply we industry. facility. food-grade we pharmaceutical industry, our industry Today, textile obviously, toy Today, -- the packaging, in the in packaging customers

real facilities. to our have today that we and into customers those X our So segments most to different are larger we're of from translate Terrebonne going facility,

So demand really been and everyone about is excited never the has quality. higher, customer

The years. the X We've with other the SK Chemical SK Global big -- milestone, obviously, them been Geo working partnership. over Centric for is

of the great package, with. maintenance the a which it the not in construction huge the the facilities Loop We Two in branding. facilities, brings brings to venture the of is other brings day-to-day SK companies brand Loop joint and facilities. all always and these logo the operations SK of marketing get all it's brings the but in the complement marketing work -- well. we on of and So of companies technology our branding surprise, finalized. agreements manufacturing of and good that customers, is all the really in the get each Loop the tremendous piece. with

in close for demand really their from So the expertise. partnership existing of Strong lot and partners it's facility. company are to our Asia. customer be a of Ulsan our customers going brings where great all A off-takers each

to the feedstock going earlier, the those be main fiber As for used I facilities. mentioned feedstock is

So facility. for textile coming over secured waste. fibers already of We've from the feedstock that XX%

would be is exciting So the we're at one and Vietnam in multiple another already really at facilities but facilities Ulsan, looking location. SK excited in able first discussing facilities. X Japan. to South partnership least absorb Korea, across other Asia, develop is China to

plans So I a and expansion tremendous SK better Geo couldn't ask them. Centric partner with forward, moving for than

we project, chose we French the in Est As markets in France. our Saint-Avold the Grand for updated

over all decided feedstock. right sites the France near So exhaustive different all for of search and great we location logistics border, which German Saint-Avold, did an is on and the

The us President Franck there. visiting So we're next really to excited be at the Leroy region, of week Loop. be will

CEO I Tremendous So government our going was to SK Choose Suez. as he's our French SK just coming the Mr. there. factory of visit France there; and the to support We're President with Soussan, the the GC on Monday, Macron. facility. and at I well, there tour project. plan Sabrina for talk was CEO expansion there; hosted him from was by about was Na of

together, So government feedstock all with X officials, of all of all we're our suppliers. the us of customers, meeting

was a second the event was Macron. That I've it President So attended. great hosted year by that

tremendous is for the the France from way really for French need project. France solutions support so, And They in government in and sustainability for plastic packaging the the space. leading the

-- So waste project forward has secured Obviously, management France. that for been large that's really projects Suez in through well. company all is the moving Feedstock is Suez. a

they've secured So of the percentage feedstock. a

Loop has feedstock. the also secured a percentage of

for French as -- the from brands, been L'Oreal, and such rest. has L'Occitane So Customer our is secured Danone, feedstock huge project. is demand the

we're through in exciting phases on up facility that for permitting the project. in the right XXXX ground so going XXXX. break to now, really a to So that's be permitting expecting and We're

So been better Loop it's able execute to been it's be year. our has a a on to plan. eventful in said, like really I -- position never business

We have quality best great material coming content, great XXX% customers. partnerships, recycled from the

facilities. Now financing we're for on just finalizing working our the

all land get our to selling head able at to cover in our licensing fees expenses us of line here mentioned before, Fady will enough the gave cash As which top office. to our BÃ©cancour be basically

really different that away into of So now sell -- that's more R&D good a where able from and transitioning the for us was operations being that really and our land all departments. move to company

be always cost So center. R&D a will engineering our and

various the to back projects. charging be will we Now

the purely transforming company. R&D really operating an company we're So from into

financing plants. really we as a that be the on at should couple it's as finance a the well. we're facilities, market on that able for of exciting soon So as future. we're the updating far And exploring And to options different looking being pretty

So that's it me. for

it turn I questions. we'll guess that, to With over

Operator

David today of first is of [Operator James. Instructions] from Our Raymond question Quezada line the

David Quezada

look we'll thinking update you've there. Appreciate is you got and with see, contracting strategy level lot now. start just AG high and Great your there. on question, you're can you Ulsan any from the any and sales about for first My just to Daniel, what customers you Will I demand customers the the facility? there guess, local about to all -- talk you a perspective there's sort it strategy just over for? Just that like I between contract time? Korean broadly a look Is split your and guess Maybe, On international of but about there could -- how thinking that that volumes? from on of how would derisk

Daniel Solomita

you. Great Thanks, talking Yes. David. to

sell So for -- the is the we'll the so Ulsan XX,XXX tons. capacity facility, -- probably about X

under others AG the XX,XXX our will and of so our customers, And about be announcing existing be sell On we'll Danones few we'll probably a with tons the that world, customers contract soon.

to going bottle of and about it's split a even XX,XXX So be fiber XX,XXX pretty grade. probably the XX,XXX,

being more for see brands, in where especially a spot So going as XXXX need tons then it recycled important We for Europe. really content, to probably the they're the other leave XX,XXX will market. year

want everything to long-term locked take swing and that contracts. into have And advantage we price so, of not

pricing there. kind use that's always of We So the anyway. strategy sales formula-based

to inputs our as formula these type that's the sure are So our customers. go of as any working we which to long cost up, cost prices us formulas. used if the then that pass-through raw use or to of allow make a materials go with up indexes-tied of Customers of cost

Choose quality what mechanical recycled when from to And of quality which sacrifice stores you customers. couple differentiating need. The content. industry, to the willing this we coming remove and the huge a like the was from of not was those recycling difference colors, where monomers today recycling. all that's [ interesting. It's down from quality. versus with a customers there's is of And lot for the the a are PET up, bad the get build are And of quality that's big the is that's France chemical need it factor and polymerization it the our bottles customers currently That's virgin really So real industry. all can't where the a because material with color. visually. loops XXX% they what packaging it we're the dark mechanical really and is going we that's brands break brings negotiating and shines. some it just event the what there technology I ] us a looks different really I the -- really really And great of recycling quality back in thing France between see mechanical the Again, technology recycling the that's so gray packaging what our really the for

So the shortage any facility, for yes, facilities. of no shortage demand of our no of demand for

David Quezada

nature I just those you they That's the able it to got, the about Is some again, going contract all wondering guessing of I then maybe great mix well, the contracts between. And well? formula-based talk recycled bottles Excellent. will at you'll of mentioned it. if of like -- as color, it as Or guess, feedstock of you've and all there -- I all And to I'm you're be Ulsan, the Okay. look Daniel. guess to I'm on fiber? are secured. pricing for side, term for just think, XX% contracts, be the that

Daniel Solomita

Yes.

probably the fiber it's -- the to So industry. going from to feedstock going be be is XX% coming of

] coming to able say, supply material that solid cups action chain. trays gone across in Korea either fruit to also our the [ with and type some Asia. is within the goes to government. goes gone into a polyester facilities of working public There's lot from lot equity made from fiber of lot supply SK they've manufacturing, -- and or that really government hard or actually So trays and textile investments A of in they've let's the a be in waste exist able material. which on is right now. in to the feedstock been supply on there's this this They've a supply company be like with is doesn't information the to develop from of Asia polyester companies chain never Asia. The this new can that supply fiber chain able from, chain recycle -- because some kind

material. capture And bottles very for those beer Korea, brown chains is Korean able with beer to hard supply be recycled. up of to XX,XXX on working that can't in the there's so, setting use obviously And SK bottles really be is tons of that good government all those example bottles. their A brown beer PET

And so great that's today recycled us. not are example another great Trays in where another trays feedstock Korea. for is those

So there's management for them. no but go waste really doesn't collection the They exist them. companies, for the to home

are, so technology things those can that And again, Loop's handle.

that's developing SK where the governments. so that supply And is with chain local

David Quezada

facility? Okay. an have do just Or Great. so terms maybe for Or been since construction the of it's X Ulsan think then And that over industrial expectation for is any contained the the budget past, existing that call in the you on costs change somewhat on it, or facility? there of months site?

Daniel Solomita

really higher things Yes, let's to level -- in bit right big increase in probably happened America, We North haven't where little started in XXXX, we we we like these inflation lower an where big jump say, increases. than, Korea Korea costs. now. is too inflation much That's off saw XXXX. of seen numbers. inflation The see have in a definitely

doing and big in there yes, the in the in so CapEx SK of our that's the on Korea. building But infrastructure expectations not of final are CapEx. at you the needed SKEE have no line costs the engineering were. there's site is all Again, sites, some construction. the what surprises And so, there on with is advantage

manage internal that as SK company the costs helps so of And contract. having also the EPC an

is everything in So line.

So happy with we're really that well. as

David Quezada

expenses, then really maybe rate just you you just I'm expense reducing in that about wondering -- expenses. basis And some an have progress guys of if on if expenses total to for kind share obviously, made from a that or good me, last Excellent. you a one Okay. can one already can get could. have run a I you have done think perspective? annual like Thinking

Daniel Solomita

now right million. think I about we're $XX

Fady Mansour

that take can I one. Yes. Yes.

we're So David. right be -- targeting million XXXX, XXXX, what give to we're at the or -- for but if month, not about projection take, to a now, expense we're we're to, look looking XXXX, $XX get -- you maybe going the to ultimately

So see are to mechanism that decrease of major cost related obviously, a mentioned. we're expenses not the going because in recovery project we that

to of it, And going decrease have for XXXX. we're next for call to XX% the XX% So year fiscal then XXXX. fiscal major another, a tune

to that's from currently below less. That's goal end up per to projections, So $XX and so our end accountable for. million we're expenses, we're at our all and what ultimate $X is in million or month going be currently

Daniel Solomita

charging would real say all transition fees now that, or employees making now department -- projects. to is I the company of is every becoming that our back On the is we're the the

it say, when the needed, Montreal. scale, at testing feedstock, let's Ulsan we're project, sent So lab So testing any the right? facility. We're in is that's the for we're testing production feedstock feedstock-related SK to securing

So are engineering going with project charge all that's be benefiting to to is engineering by it's the all the project that costs our those the of We're outsourcing obviously team the be is back. because team. to thing to from work. going you one going our because -- of Same the projects absorbed project now

or are French these other CapEx-related that's testing to the coming to all charged to Any for do back work Same that So us. any project. going that feedstock project are costs we the back project. be getting thing

operational. going to there's up expenses difference. a plant be really big CapEx more as plant It's no far as needed and are things is Obviously, because So running. the the that's here,

off. leveled really that's So

right we're in -- line. getting in costs we So on track really the

wouldn't the in thing running. there's once The Ulsan, is the Terrebonne have running use and finalized -- Quebec smaller no the probably here a in for is once construction you big facilities other large-scale facility facility up

back we be do it a the have available, partner but project. be would wants do some any to if again to trials, this charged trials would this wants or customer So facility to

be So possible able our to really as forward. control focus shifting really costs to -- much going we're as

Operator

it And in no further we Instructions] for questions have [Operator today. appears the queue

for joining Industries XXXX. like I'd Fourth Loop for to thank Thank you for joining. Earnings Quarter So Call everybody

You may lines. your now disconnect

Loop Industries (LOOP) 19 May 232023 Q4 Earnings call transcript