LOOP - Earnings call transcript Q4 2024

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Operator

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Loop Industries Fourth Quarter 2024 Corporate Update Call. My name is Carla, and I will be coordinating your call today.[Operator Instructions] This conference call is being recorded today, May 30, 2024, and the press release accompanying this conference call was issued last evening, May 29, 2024.On our call today is Loop Industries' Chief Executive Officer, Daniel Solomita; and Fady Mansour, Chief Financial Officer; and Kevin O'Dowd, Head of Investor Relations.I would now like to turn the conference call over to Kevin to read a disclaimer about the forward-looking statements.

Kevin O'Dowd

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

statements report, these of risks related our are like XX-Q report Form the XX-K, concerning contained section department.At of to filed and documents -- the of sec.gov Copies ahead, Forward-Looking Please by and SEC release. Relations press yesterday's Factors Loop of over Investor or and information these go Statements Officer Daniel. this is yesterday at available Daniel with our Chief in and call from to Executive Additional our uncertainties Industries. Risk Solomita, latest I'd time, and the annual turn quarterly

Daniel Solomita

you, morning, Thank call.It's for been and joining very you our Thank year-end. eventful quarter Good a everyone. Kevin.

business The who on partnership, MEG. towards market morning, if price in supply ton, complementary no with sustainably Loop as abundance underserved an India high-margin polyester get model metric Many offers DMT in technology Industries, and and with and be Reed market Bangladesh. to produced of XX,XXX produced addressing status of extremely is facilities a and for billion facility our outlining depolymerization production of low-cost metric specialty Wood made On commercialization them is opportunity have the our at and DMT huge into This technology than updating that great DMT opportunity production low-cost the MEG sustainability-linked monomer have manufacturing. combines DMT are for a and is I'll tons Infinite not sustainably selling made ton and Infinite for per are Loop's to market waste which products. This Loop's depolymerization need MEG and our the petrochemical countries premium are polyester to at partnership which of large metric and partnership important. product. $XX greater strides petroleum-based the filling petroleum-based can replacements business drop-in modify business is finally, with developed of virgin Indian started our manufacturing. polymer our a monomer been using combines feel model. as companies, shoes monomer and And SKGC, our is depolymerized lot DMT our to we for the The This our is supply.The and worldwide with and Today, PET receiving to selling used In be is and virgin monomer facilities technology. customers fiber will MEG, this replace business. current Loop's textile that is market business Loop of of means This polymers. calls $XXX potential are customers tons can which of We can industries. turned update which the in customers there's Loop's their an the is neighboring how Today, ability companies business automotive, Ulsan We've our Loop's progress petroleum-based asking have do and let's India supply $X,XXX. XX,XXX through the with MEG their industry anything textile produce The the showcases chemicals on financing specialty recycle waste.So MEG intermediate shortage such to and comfortable produced India, be through with DMT technology. the in for from with Loop that chemical applied DMT will global low-cost cosmetics, you I MEG. with packaging manufacturing to other DMT that annually. DMT. a per Ester the a we talking a The XX% premiums. DMT.As combined per MEG for sustainability is $X,XXX Mackenzie, This be Loop's

to products, coupled chemicals, most attractive for MEG. L'Oreal all polymerization. polyester using Ester shoes low-cost Loop in stores with shoe we business owns returns.Our launched on India to -- facility product, Swiss are is fund. On close customer XX%, which with for depolymerize PET the the $XX generated is Terrebonne, estimated million sold our at So It's estimated partnership facility, supply which economics bottles, million brand shareholder Loop brand.The is the $X sold in Evian is which for estimate chain.The receives Examples Therefore, shoes, of million. Ester IRR. the this MEG, in responsible is revenue on agency and DMT $XX a a of the into and all from EBITDA model partners XX% fully the Ester sales it's years. year, million X royalty a $XXX CapEx venture. for partners The India which very Loop are range, commitment South is marketing final with government Today, States. in India, are is and is the Industries, licensing the and We those Therefore, in for some Ester really be for board recently at ship a venture. to of past with monomer we've which DMT Reed and manufacturing, been $XX solely the to the United equity on at for joint our sale provide waste our fee all XX-XX joint water sale Indian to the fee working all the through with the have is Loop be partnership and to the in skincare then products Loop's million unlevered of expected Loop very, X% under Korea the which very and year. per per

So XX-XX the a aligned we joint the partnership are and views fully are execution relationship and fully Ester, with and our and strategy. have future.This on the aligned venture a is long-standing we for the on partners

As equipment monomers need Specialty I any PTT, Loop's Terrebonne the blocks.The the responsible PBT, here project -- we India to there's building is said specialty offer as to Loop base Loop's package allows same polymers, existing of Canadian facility running suppliers Terrebonne. the The the major a as high-margin the leverages engineering DMT in have Infinite specialty all X sustainability today cannot and facility, and polymers used sustainability. that because PETG. past we've has the allowing type been for had to for all such which sales in secure is X as MEG the of DMT, need exclusively those we And Loop the before, reach really and operational equipment be major us business, for of now have polymers, no sustainability be facility. have which for years, available of today years

have of equipment pieces suppliers. experience with we X and our these of therefore, running years of all So had comfortable all very of

be Hyderabad for all local mature of they the the Ester leading So equipment firm this secure global engineering support to project. the engineering existing, land which project, hired suppliers.Loop have area, expecting of package key the be our will and in engineering we're for leverages a project providing and to and our very all

on this ground India year. partnership in end break deploying to expect line -- is This capital fiscal returns. line Loop's facility in is the by enhance countries strategy shareholder of to low-cost to as the with manufacturing this of We such

update, model focused business asset-light more negotiating subsidies a the countries.As to and for government Loop manufacturing grants with higher-cost in on Korean the move Ulsan will as the project. We for our are technology SKGC licensing and far

in studying a monomer the putting plant currently are Ulsan. of We also up possibility

not significance monomer reduces business need In business and it that model, to monomer increases big we other financial the the The section. polymerization is the model CapEx returns. the significantly do

the not selling of because needed chemicals is XX% PET. into about So repolymerizing we rather CapEx than it are the

is are opportunity tremendous the are cheaper in chemical chemical studying a X.X -- growing than specialty underserved markets what presentation I clothing India well, customers the an A their growing. our we're as another are to a solution market in very this thing labor operators rates exists One a that huge with Ulsan finding opportunity, far a stress EY market.The that leaving today. significantly of India. today opportunity China for plant into well. manufacturing manufacturing, less because on as So is Again, the the large Low-cost a as is this textile that something that's this lot labor of billion of on the and companies. people in China is filling and Plus all in economy fastest lot market the India or high-growth and is they was India population moving as in economy where of world, important especially is we're a the China manufacturing, costs so XX% reading India, are and in Indian

to believe us. going is business for demand now of So monomer several so And Korea Asia the very we be is also the to because is which the location.I'll the the exciting Indian why the for decades, switch for main is next potentially financing. important driver project Reed also in

Reed their of countries Loop's diligently diligence several our that low-cost diligence consistent technology with aspects and and independent with business model, due joint independent model Europe. partner. Loop joint hired is business and global mainly nondilutive with and licensing due Loop's on The ESG where all so the past Reed technology, diligence asset-light manufacturing partnership venture concluded our diligence, due completed financial business, invest and to more of thorough the months, our as our completing and Loop of diligence, has of partnership of in specific, fund working venture is due as a capital to on due to have Over technology. such been due Reed Europe successfully.The have manufacturing for firms Reed a to have firms comes our all on including with companies financial diligence, legal several financing conduct Reed expansion all built was higher-cost

funding in So would it Europe, our Reed. will between and any equity technology that Loop we commitments have develop be to XX-XX commitments, split any

So all directly to on the Loop. comes splitting and engineering licensing equity But be with revenue we'll revenue all Reed. side,

we from is very from side, manufacturer. On leaves recycled a of largely confident the equity Terrebonne, the everything the facility fiber XX. office. sales.On We're Loop's So ], financing shoe get our off signing agreements but funds had fund had India starting over and for the announcing we the the final Ester. DMT by here are other our leftover for signed using The and launch fiber, hoped crafted a made -- by this imminent. our equity They commitment it the purified is the we for is sent completion of time shoes, XXX% to of we MEG, polyester call, but again, May will of with DMT where in Swiss more have MEG, the Reed and technology. Loop polyester much a We the fiber that shoe part splits with in agreement It's shoe partner, end need at which waste we into so with and the with week.Lastly, Loop's equity this financing started revenue, capital the the asset-light the a head XXX% on is Canada. to less check, of licensing broke standard [ launched X% an down -- upper nondilutive, of on coupled Cloudeasy Cyclon side, which The with of financing model the business this had quarter,

they upper produced the then which to which at polymer, shoes.The was partners shoes, a Industries part produce sent used program, program. to it's the Our of Ester subscription the On

shoes people And sent so shoe. access we that recycle is over these portion, to remove it When the subscription back send it to monthly they On the the fee, them. upper will send and will pay as for to them us, shoe have a back, and

a recycling footwear textile fiber-to-fiber textiles and by the Fady go I'll markets.With for shoes. and the it and hand launched for first for sets is shows shoe in to financials. sustainability precedent On complete to using the that, This it technology over circularity Loop's through running So the

Fady Mansour

the morning I've profile set, seen risk-return life, in attractive in is mean good you thank migration and the times. lot opportunity India for joining.Exciting specificity opportunity to the excited favorable I their us. growth you done but we're the cases close Dan, profile, demographics, and a the lot see terms India how of a business you, for into about of India. of all, I've of never and my Thank anything to

$XX equity would check, and capital which for more, our million to, of channel is -- supply-demand of almost undertaking, I'm well been synergy we revenue really, alluded dynamics that that and million be financial roles the lot partner, the we've we're of no discussing something monomer EBITDA for a venture share a upon attracting about intensity responsibilities, full Daniel million We're within have as capital. venture.But respective our naturally, as We really the there's $XX for the ratio. level built $XX at that. million The create it's The capital $XXX want So of alignment and a wheelhouse. where part to business conflict. be the excited talking joint more XX about, of our strengths was $XXX X:X about to to is that's It's million that for metrics. consolidated, the of of joint CFO, a XX% of

X.X. terms Daniel mean, on very, -- under to XX% IRR, the very, alluded just economics. payback we're are favorable In equity, it, of north it's years. XX%. over looking our These at X of the EBITDA, I

get in So with our ticks a on if that depending estimate perspective. price From of this.The to did the stock interest that we've lot of done you Ester that tax price million. India, XX%, million earnings $XX million $XX -- how the north of $XX this excited at we're, build a Loop. pro EBITDA, expense Really, enterprise of the the million of let use price, walk us on this to about of earnings just every CapEx million really $XX me is a through that it $XXX rate but we partner, perspective, million. a at -- brings of -- boxes you plant creates metrics the value about forma, impute from from validations both of we We income; a for numbers. after is perspective $X those use, X% our an strikes interest; $X estimating pretax about That you we're and tax

stake, Our XX%. know, as you all is

when for tax.So about the after now, one just and dilutive for over range. we then $X million if you to $X equity net pro you financing million million about factor we're million plant. talking out getting So our we today about of when some there, income a that's that's royalty XX that the out And Daniel that we're million. just need The add kind of XX And if S&P of to then trading use of shares giving of south -- $X [ a north forma the or after raise, And cost number alluded getting tax, of of looking $XX as you the million -- of that for securities we're base, right at effect, million into $XX about $XX you're come have $X.XX we're of ]. to, EPS. at that is

share. per $X about that's So

to longer-term should they price we're XX, $X So to as a XX would our high-tech stock accretion and lot take trade premium rate, think in we high-growth, then they to because closer royalty it's a the think a ] we're be discount, [ from want of if closer at comes itself, $X, $X. that to if $XX. If people a value

range. between and straddling we're a $XX So $X

from thing an $X.Same enterprise Our about estimate is perspective. value

which million. of you just the you look million just at you is S&P get Once subtract almost $XX $X billion [ debt, and value. XX about you enterprise $XXX the apply multiple, of get million, ], of north $XXX If north out

$XXX gives about gives you share. you a the add Our XX% royalty, then about that also and That -- $X that you share million. of is

earnings-based valuation it's India. So an plant share metrics, in price kind it's that value-based, single gravitate of every or for towards whether about whether enterprise both $X price build we

So build is which plan there's to done. version no plants. one We this, of multiple and

line.So have where as for to high-cost asset-heavy it's alluded of well to, it's the low You countries financing, said, and for little it of have asset-light taking it. countries can cost asset-light wanted more longer sorry, model in a for than royalties, this definitely but to, that low bottom we countries Dan reap our an value we see the straight goes the opportunity.In Daniel line with just yes, worth that cost -- accretion

#X into is throes, We priority to the next the to weeks are financial getting final the a for in statements. it through that.Please couple and of allow to finality me come walk

for -- write-down baseline project for a our P&L, did were look which and affect One that. about quarter costs development you of is the $X research ended $XXX,XXX, had some related XX. France total expenses February in at of onetime to we also have project-related the If we million There X our of $XXX,XXX. were and exactly adjustments our

So that's are $X.X million nonrecurring. that

those have a $X over So that the reported million million $X.X if decrease been X you XX% and in the would as items, exclude results prior period. of

for at been that's So focus Loop a Industries. us

focus continue want and not last tune the expenses, that's on integrity quarter, $XXX,XXX. the forfeitures we G&A to to pipeline have also onetime We the preserve going to spend, of for stock-based of adjustment we to comp the comparative Loop.For but continue did R&D only on the in innovation a at

pro forma If have you been normalize G&A that, down perspective, on would XX%. our for a

quarter. reductions cost solid for So the

at guided before our As and previous in that, if the quarter the expenses $X.X million. the they total the quarter, market you I've quarter for look were

million which for of for of the depreciation, Ulsan our costs include a cash is you back total write-down total total $X.X quarter, $XXX,XXX, out rate noncash $XXX,XXX project Europe is If the of and which for of stock-based and expense noncash obviously, the expenses, burn $XXX,XXX the noncash of comp quarter. plus $XXX,XXX

about that month. per $X averages to million So

and a tight statement we liquidity our flow, from $X We're of XX, February our within So, we million total obviously, baseline holding perspective, as million of liquidity. $X.X of cash sight in $X.X $X could.From million. cash. had at target of We million a have well between as a

got of us that the it next financing which, So until is decent as course solved, weeks. sure runway the happening alluded to, we've Daniel on gets that we've got to make the over

respect So we're spent are XXXX, million. year.That's $X and balances, because guide higher towards the Dan on a XXXX that, agreements fiscal agreements. to $X.X Ester us our to I'll cash but the it. from the expenses burn back fees carefully Reed turn getting little monitoring on section, continue enough remarks. more quite a QX I that, to balance $X.X our over I'll my powder with dry for that's -- long-term between bit that Obviously, million.So after to to legal revert got see a we and concluding be of But to $X for to final to calendar cash with rate of million mean going maybe a of finality we've million the it it last and you'll

Daniel Solomita

much, PET. agile market partnership the be questions. the moving price It's very low-cost Thank with we about our the to Reed, you combined to I'll I sold than today DMT Fady.So partnership if able higher within very that, next take market. of really turn opportunity the financing commercialization that's and and constraints much into market something model really Loop excited in and of type MEG total be the phase business in to separately Ester. over conditions.So monomer with it our they We're I the recombined really underserved be of ability company.With excited a Like have we're think with where of the and manufacturing these tremendous for advantage would finalizing And the to conclusion, market. of the is to said, work showcases an of

Operator

Capital Instructions] Gerard ROTH And Partners. from our comes first Sweeney from [Operator question

Gerard Sweeney

presented the quick over the over you for I ton, real or got pounds India that it, to go tons, on DMT, we pound could want how so over however, it, DMT Could I quickly? the just do go plant. pricing XX,XXX could per I say, -- should and metric go many if most you MEG of you -- and economics but

Daniel Solomita

Yes, you. thank

ton DMT metric right model of XX,XXX of is XX,XXX tons and now the MEG. So

the metric of ton selling So that's selling $X,XXX price the facility. the virgin $XXX total a and according Wood is at to -- ton. petroleum-based Mackenzie, DMT per metric MEG Today, at output is

Gerard Sweeney

what that's ], it. $XXX Got missed. I [

Okay. Got it. And...

Daniel Solomita

price And combined that than much higher today. is today, the -- PET combined

Gerard Sweeney

And the from $XX it. looking of EBITDA Got you're Yes. [ ] at correct? million client plant

Daniel Solomita

Correct. Yes.

Gerard Sweeney

it. Got

that's this DMT, cuff, they I'm mean Is these much stable I market. of initially, are maybe -- pricing? sort as is commodities, I and question The are we a if you the going the chemicals. market of just But there pricing could Obviously, even definitely background give Okay. or in on sort the looks this this drivers pricing currently we're behind concerns can higher some little volatility DMT just very in been of on on seeing off the maybe some They a MEG. could have fluctuate. as a Or curious appealing. pricing if the there's you for MEG anything excessive of relatively certain... in is creating if

Daniel Solomita

Yes.

is very So look X MEG the far pricing for at you is where we last X as MEG are past pricing if years. This years, stable. as the

you're the $X,XXX. DMT to the The X-year On average slightly about X-year $X,XXX is average. above side,

earthquake which war online. the was to Russia that right the you're war and above And So with that that -- now DMT damaged plan another down to shut was factory during in there started. there an back is there's in was Europe, major offline a during was no that. facility plant was when no taken plan Germany slightly put There

tremendous of So increased of DMT manufacturing shortage have it's the still MEG and X-year allow the MEG, slightly, in even that the and and the just the have -- averages DMT to coupled with low-cost the MEG, returns. India a bit if of sorry, a but caused you DMT take those not you out price little DMT, global the

Gerard Sweeney

it pricing. concern Got was Got have is other CapEx? it. $XXX you it. believe the I think fair. that said, That's do was CapEx And I number. million the That's helpful. I Obviously, what of

Daniel Solomita

million $XXX CapEx. Yes,

Gerard Sweeney

at India But number. obviously, level started project. we that. any doesn't much much I -- a to Ulsan the project? should project that we escalate as pricing lower the rephrase How Ulsan there with Ulsan concern the Is than that or, with project saw the certain are a CapEx lower Considerably higher

Daniel Solomita

So $XXX million. guess, million. with ended about was the $XXX being initial little I closer -- -- It to project, the estimate a Ulsan bit up

-- we've we've done engineering So the done work, work. the all preliminary good

All of major of can the equipment I of because and all we have pricing all Ulsan, the -- relative technology, pieces the of all the like said, we of from the Loops equipment all apply relative -- to have we pricing that India.

Our in also a experience. of We've plant They relative to partners a up construction at have for have engineering work Ester global put us. all hired firm XXXX. be polymer the engineering doing

So we're are we the on pricing technology, things, pumps, -- all those chemical the there's a distillation of use lot Ulsan for proprietary equipment that for which distillation from the plant. those data -- that that's filtration of from we and have equipment some using costing columns, of plants, standard is relative columns, and of piping, our all very Ulsan which Loop's

I $XXX and I've Like reading, are So they we different. CapEx in down the labor in South world. manufacturing -- labor the million polymerization, Korea to lot been XX% your of India million, from rates a in it dramatically that million, Korea countries bring in if look the then XX% bringing labor total India the be various if of are about bat. off been so relative think XX% is at away And down said, you cost, through rates you reports China of are of take just $XXX total right you you're than like it project, cheaper one higher-cost rates have the a data labor rates all which take for would those.If versus I've is you on $XXX a studying

started a This thinking that done is about lot years. many plant a we been for work. India just of not building recently. We've something we've So in

has -- on have operations really side. side partner in experience We construction the a relative and great who experience on

million with the -- $XXX relatively time. this we're comfortable So number we're very at

Gerard Sweeney

you. Got

DMT, very the the marketing does DMT, previously, side are consumer is you to monomers, ESG fully that. does drop-ins On sort there's If -- a some strategy? tuned to you tuned marketing But change recycled does if a that this change -- headwinds goes you're standards? making that, less, the the correctly, MEG, little maybe, this it be less of maybe markets bonus or markets into totally marketing pure could mean, now -- heard this standard. Does -- are PET. huge I marketing end so. on create But we I were additive this any MEG Obviously, that other that to market front? change understand

Daniel Solomita

like supply the is factories the to lot material said, from sewing textile, product. it the a any No, our companies starting we're No. chain, so final material. because a it any textile in selling doesn't textile Loop little they really need still especially marketing huge change India. in in A and factories of There's lot India efforts. branding Obviously, difference of branding or spinning not our which we're the I chemicals, of customers we're of bit our want of the all textile are as selling a there, and waste, but

secured from already sewing coming for so XX% the factories, we waste. of the over needed facility So the feedstock cutting

So countries. chain that those India supply Bangladesh very is robust in and and

for of And that's customers is wanting very of huge shoes, so go that type and bonus really is material perfect On for saw something feedstock brands. these that's to a They something the exciting them, lot that. And fiber us. this with fiber you a coming feedstock really around can like of there's low-cost and and that's and a that really from that need because branding the we that fit, availability marketing offer can our

Gerard Sweeney

said just you and assuming question, monopolize have ]. and Reed I'm last -- it. I government don't in But I one then financing, have think want [ Got you jump line, everything financing. I'll to And you

said sounds coming the near or as week in though -- was You'd next very or two Reed the future. maybe financing this week,

remaining the hurdles there that's that? are we if, literally one, in -- with -- just two, major what correct; are curious stages? final any there any last Just Or are are

Daniel Solomita

the all the We're I final expecting to the condition, closing binding last fiscal quarter agreement. of There's of have next second said the the closed stages within signing financing we're think -- package entire the of year. a in and we

Operator

further Kevin we back remarks. [Operator O'Dowd no over to final currently Instructions] I As questions, will hand for have

Kevin O'Dowd

Thank we for today I'd your express our and us discuss you, interested fourth to results.Before in joining continued Loop Industries' appreciation for to quarter like support everyone, conclude, Loop.

feel We for questions time great need Have future today. have developments. you please continuing day. look free any updating information, your and additional you you or our reach on dialogue a forward again our Thank any If to to out.

Operator

concludes today's call. joining. Thank you This for

You lines. now your disconnect may

Loop Industries (LOOP) 30 May 242024 Q4 Earnings call transcript