Loop Industries Reports First Quarter Fiscal 2025 Results and Provides Update on Commercialization Plans

Rhea-AI Summary

Loop Industries reported its Q1 fiscal 2025 results and provided an update on commercialization plans. The company is making progress on its Infinite Loop™ manufacturing facility in India with partner Ester Industries. They are securing offtake agreements and selecting an optimal site. Loop expects to close a financing transaction with Reed Management by Q2 end, but is reviewing contingency plans for bridge financing.

Financial highlights:

• Total expenses: $5.2 million
• Net loss: $5.189 million (decreased from $7.001 million in Q1 2024)
• Cash and cash equivalents: $5.291 million

Loop projects a cash expense run rate of approximately $1 million per month for the rest of fiscal 2025, excluding project costs.

Positive

• Progress on Infinite Loop™ manufacturing facility in India with Ester Industries
• Securing offtake agreements for the India facility
• Expected closing of Reed Management financing transaction by Q2 end
• Decreased net loss from $7.001 million to $5.189 million year-over-year
• Reduced research and development expenses by $2.253 million

Negative

• Total expenses of $5.2 million, including significant legal expenses
• Decreased revenue from $27,000 to $6,000 year-over-year
• Increased general and administrative expenses by $446,000
• Potential need for bridge financing if Reed transaction closing extends beyond Q2
• Cash and cash equivalents decreased from $6.958 million to $5.291 million

Financial Analyst

Loop Industries' first quarter fiscal 2025 financial results and commercialization update present a mixed bag of developments relevant to investors. The company's net loss of -5.19 million is an improvement compared to -7.00 million from the same period last year. This reduction is primarily due to a significant cut in research and development (R&D) expenses by -2.25 million.

The revenue remains minimal at just 6,000, highlighting the ongoing challenge in achieving substantial sales from their recycled PET resin. Investors should note the high general and administrative expenses, which increased to 2.91 million, largely due to legal costs related to partnerships with Ester and Reed. This raises questions about the efficiency of cost management moving forward.

The company’s cash position has decreased, with cash and equivalents now at 5.29 million, down from 6.96 million at the beginning of the period. Given the company's current liquidity position, the dependence on the Reed financing closing is critical. If this financing does not close on time, the need for bridge financing could lead to further dilution of equity or additional debt.

Overall, while there are positive signs in cost reduction and strategic partnerships, the financial performance remains a concern for the short-term. Investors should closely monitor the progression of the Reed financing and the company’s ability to secure offtake agreements for their new facility in India.

Market Research Analyst

The partnership with Ester Industries for the Infinite Loop™ India facility represents a strategic move into a potentially lucrative market. India’s abundant low-cost polyester fiber waste from the textile industry provides a significant feedstock advantage, which Loop can leverage to produce recycled polyester at competitive prices. This aligns well with the increasing global demand for sustainable recycling solutions and regulations pushing for more recycled content in products.

However, the success of this venture hinges on several factors. Securing offtake agreements with global customers is important for ensuring steady demand and revenue growth. The competitive landscape in India’s recycling market and potential regulatory hurdles should also be considered. Additionally, the effective execution of this project with the retained engineering firm and securing clean renewable energy sources for the facility are critical for its sustainability credentials.

While the strategic direction is promising, the execution risks and the market dynamics in India could impact the long-term viability and profitability of the project. Investors should weigh these factors when evaluating Loop's potential for growth in the circular economy segment.

Loop Management to hold update call at 8:30 am ET on July 16, 2024

MONTREAL, QC / ACCESSWIRE / July 15, 2024 / Loop Industries, Inc. (Nasdaq:LOOP) (the "Company," "Loop," "we," "us," or "our"), a clean technology company whose mission is to accelerate a circular plastics economy by manufacturing 100% recycled polyethylene terephthalate ("PET") plastic and polyester fiber, today provided an update on its activities and reported its consolidated financial results for the first quarter for fiscal year 2025.

Commercialization Update

Loop and its joint venture partner, Ester Industries Ltd. ("Ester"), continue to make significant progress towards the planned Infinite Loop™ manufacturing facility in India. The joint venture has identified an abundance of low-cost polyester fiber waste from the textile industry in India, which we believe will enable Loop to sell polyester to its customers in need of a solution for textile-to-textile recycling. We have begun the process of securing offtake agreements with our global customers for the Infinite Loop™ India facility. The joint venture has retained a leading engineering firm to secure the optimal site for the facility, in proximity to the polyester fiber waste and the availability of clean renewable energy.

The Company continues to be confident with the progress being made towards fulfilling the closing conditions in the agreement with Reed Management SAS ("Reed") previously announced on May 30^th, 2024, and continues to expect this financing transaction to close by the end of the second quarter of the current fiscal year. Due to the Company's current liquidity position, Loop is reviewing contingency plans for bridge financing in the event that the closing extends beyond the end of the second quarter.

Financial Results and Expense Breakdown

The Company's financial results for the quarter ended May 31, 2024 include $5.2 million of total expenses, which include the significant legal expenses incurred to execute the final agreements with Ester and Reed, and project costs related to the deployment of Loop's technology. Excluding these items, and non-cash expenses, the remaining expenses amount to $3.2 million for the current quarter. The Company projects that the prospective run rate for cash expenses will be approximately $1 million per month for the balance of fiscal 2025, excluding project costs.

CEO Comment

Daniel Solomita, Founder and CEO of Loop, commented on the recent updates, saying: "We continue to be highly positive about our ongoing communications with Reed management and our shared vision for the future of Loop. We look forward to consummating the Reed financing, along with the parallel government financing, and breaking ground on the India project at the end of the fiscal year. The planned Infinite Loop™ India facility combines an experienced like-minded chemical manufacturing partner with low capital investment and low-cost manufacturing, with a plentiful supply of waste plastics which today cannot be recycled and is in close proximity to our customer's supply chain.

The partnership with Ester reflects a strategic focus going forward to concentrate capital investments in global low-cost manufacturing environments, and the Infinite Loop™ India facility is expected to provide very attractive economic returns. As recycling is eventually needed in all countries to tackle the ongoing plastic waste crisis, Loop intends to license its technology to partners in higher cost manufacturing countries"

Corporate Update Call

Senior Management of Loop will host a corporate update call, followed by a question-and-answer session, which can be accessed via the dial-in numbers below. Slides supporting Senior Management's remarks will be available via the Investors section of Loop's website at http://loopindustries.com/en/investors/overview.

Date: Tuesday, July 16, 2024
Time: 8:30 am Eastern Time

Participant joining details (by Telephone):

Joining by Telephone:

United States (Local): +1 404 975 4839

United States (Toll-Free): +1 833 470 1428

Access Code: 978353

OR

Registration Link: https://www.netroadshow.com/events/login?show=96a88ec2&confId=68199

- Avoid wait time - Bypass speaking with an operator to join the call

- Receive a Calendar Invitation with call access details including your unique PIN

Results of Operations

The following table summarizes our operating results for the three-month periods ended May 31, 2024 and 2023, in thousands of U.S. Dollars.

		Three months ended May 31,
		2024				2023				Change favorable / (unfavorable)
Revenue from contracts with customers		$	6			$	27			$	(21	)
Expenses
Research and development
Machinery and equipment expenditures			3				1,236				1,233
External engineering			628				1,155				527
Employee compensation			1,015				1,286				271
Stock-based compensation			129				160				31
Plant and laboratory operating expenses			270				469				199
Other			192				184				(8	)
Total research and development			2,237				4,490				2,253
General and administrative
Professional fees			1,255				619				(636	)
Employee compensation			635				637				2
Stock-based compensation			241				196				(45	)
Insurance			492				703				211
Other			288				310				22
Total general and administrative			2,911				2,465				(446	)
Depreciation and amortization			137				133				(4	)
Interest and other financial expenses			60				54				(6	)
Interest income			(126	)			(99	)			27
Foreign exchange gain			(24	)			(15	)			9
Total expenses			5,195				7,028				1,833
Net loss		$	(5,189	)		$	(7,001	)		$	1,812

First Quarter Ended May 31, 2024

Revenues

Revenues for the three-month period ended May 31, 2024 decreased $21 to $6, as compared to $27 for the same period in 2023. The revenues resulted from the delivery of initial volumes to customers of Loop^™ PET resin produced using monomers manufactured at the Terrebonne Facility.

Research and Development

Research and development expense for the three-month period ended May 31, 2024 decreased $2,253 to $2,237, as compared to $4,490 for the same period in 2023. The decrease was primarily attributable to a $1,233 decrease in purchases of machinery and equipment used at the Terrebonne Facility, a $527 decrease in external engineering costs for design work for our Infinite Loop^™ manufacturing process, a $271 decrease in employee compensation expenses, and a $199 decrease in plant and laboratory expenses at our Terrebonne Facility.

General and administrative expenses

General and administrative expenses for the three-month period ended May 31, 2024 increased $446 to $2,911, as compared to $2,465 for the same period in 2023. The increase was primarily attributable to a $636 increase in professional fees which is mainly attributable to legal costs related to our partnerships with Reed and Ester. This increase was partially offset by a $211 decrease in insurance costs.

Net Loss

The net loss for the three-month period ended May 31, 2024 decreased $1,812 to $5,189, as compared to $7,001 for the same period in 2023. The decrease was primarily due to the decrease of $2,253 in research and development expenses and partially offset by increased general and administrative expenses of $446.

Loop Industries, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)

(in thousands of U.S. dollars, except per share data)		Three Months Ended
		May 31, 2024				May 31, 2023
Revenue from contracts with customers		$	6			$	27
Expenses :
Research and development			2,237				4,490
General and administrative			2,911				2,465
Depreciation and amortization			137				133
Total expenses			5,285				7,088
Other (income) loss :
Interest and other financial expenses			60				54
Interest income			(126	)			(99	)
Foreign exchange gain			(24	)			(15	)
Total other income			(90	)			(60	)
Net loss			(5,189	)			(7,001	)
Other comprehensive (loss) income -
Foreign currency translation adjustment			(55	)			20
Comprehensive loss		$	(5,244	)		$	(6,981	)
Net loss per share
Basic and diluted		$	(0.11	)		$	(0.15	)
Weighted average common shares outstanding
Basic and diluted			47,535,413				47,516,104

Loop Industries, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)

(in thousands of U.S. dollars, except per share data)		As at
		May 31, 2024				February 29, 2024
Assets
Current assets
Cash and cash equivalents		$	5,291			$	6,958
Sales tax, tax credits and other receivables			242				351
Inventories			99				102
Prepaid expenses and other deposits			525				577
Total current assets			6,157				7,988
Investment in joint venture			381				381
Property, plant and equipment, net			10,533				10,636
Intangible assets, net			1,671				1,548
Total assets		$	18,742			$	20,553
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable and accrued liabilities		$	2,891			$	2,321
Current portion of long-term debt			244				100
Total current liabilities			3,135				2,421
Due to customer			784				770
Long-term debt			5,555				3,220
Total liabilities			9,474				6,411
Stockholders' Equity
Series A Preferred stock			-				-
Common stock			5				5
Additional paid-in capital			172,162				171,792
Additional paid-in capital - Warrants			20,385				20,385
Accumulated deficit			(182,159	)			(176,970	)
Accumulated other comprehensive loss			(1,125	)			(1,070	)
Total stockholders' equity			9,268				14,142
Total liabilities and stockholders' equity		$	18,742			$	20,553

Loop Industries, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)

(in thousands of U.S. dollars)		Three Months Ended May 31,
		2024				2023
Cash Flows from Operating Activities
Net loss		$	(5,189	)		$	(7,001	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization			137				133
Stock-based compensation expense			370				355
Accretion expense			28				17
Changes in operating assets and liabilities:
Sales tax and tax credits receivable			108				(83	)
Inventories			3				(144	)
Prepaid expenses			51				(90	)
Accounts payable and accrued liabilities			577				1,321
Customer deposits			-				(12	)
Net cash used in operating activities			(3,915	)			(5,504	)
Cash Flows from Investing Activities
Deposits on machinery and equipment			-				(2,023	)
Additions to intangible assets			(176	)			(99	)
Net cash used in investing activities			(176	)			(2,122	)
Cash Flows from Financing Activities
Borrowings under credit facility			2,517				-
Repayment of long-term debt			(25	)			(16	)
Net cash (used) provided by financing activities			2,492				(16	)
Effect of exchange rate changes			(68	)			21
Net decrease in cash			(1,667	)			(7,621	)
Cash, cash equivalents and restricted cash, beginning of period			6,958				30,591
Cash, cash equivalents and restricted cash, end of period		$	5,291			$	22,970
Supplemental Disclosure of Cash Flow Information:
Income tax paid		$	-			$	-
Interest paid		$	42			$	21
Interest received		$	195			$	99

About Loop Industries

Loop Industries is a technology company whose mission is to accelerate the world's shift toward sustainable PET plastic and polyester fiber and away from our dependence on fossil fuels. Loop Industries owns patented and proprietary technology that depolymerizes no and low-value waste PET plastic and polyester fiber, including plastic bottles and packaging, carpets and textiles of any color, transparency or condition and even ocean plastics that have been degraded by the sun and salt, to its base building blocks (monomers). The monomers are filtered, purified and polymerized to create virgin-quality Loop™ branded PET resin suitable for use in food-grade packaging and polyester fiber, thus enabling our customers to meet their sustainability objectives. Loop™ PET plastic and polyester fiber can be recycled infinitely without degradation of quality, successfully closing the plastic loop. Loop Industries is contributing to the global movement towards a circular economy by reducing plastic waste and recovering waste plastic for a sustainable future.

Common shares of the Company are listed on the NASDAQ Global Market under the symbol "LOOP."

For more information, please visit www.loopindustries.com. Follow Loop on Twitter: @loopindustries, Instagram: loopindustries, Facebook: Loop Industries and LinkedIn: Loop Industries

Forward-Looking Statements

This news release contains "forward-looking statements" as defined in the U.S. Private Securities Litigation Reform Act of 1995. Such statements may be preceded by the words "intends," "may," "will," "plans," "expects," "anticipates," "should," "could," "projects," "predicts," "estimates," "aims," "believes," "hopes," "potential" or "continue," the negative of such terms or similar words. These forward-looking statements include, without limitation, statements about Loop's market opportunity, its strategies, ability to improve and expand its capabilities, competition, expected activities and expenditures as Loop pursues its business plan, the adequacy of its available cash resources, regulatory compliance, plans for future growth and future operations, the size of Loop's addressable market, market trends, and the effectiveness of Loop's internal control over financial reporting. Forward-looking statements are not guarantees of future performance, are based on certain assumptions and are subject to various known and unknown risks and uncertainties, many of which are beyond Loop's control, and cannot be predicted or quantified and consequently, actual results may differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties include, without limitation, risks and uncertainties associated with among other things: (i) commercialization of our technology and products, (ii) our status of relationship with partners, (iii) development and protection of our intellectual property and products, (iv) industry competition, (v) our need for and ability to obtain additional funding relative to our current and future financial commitments, (vi) engineering, contracting, and building our manufacturing facilities, (vii) our ability to scale, manufacture, and sell our products in order to generate revenues, (viii) our proposed business model and our ability to execute thereon, (ix) the ability to obtain the necessary approvals or satisfy any closing conditions in respect of any of our proposed partnerships, (x) our joint venture projects and our ability to recover certain expenditures in connection therewith, (xi) adverse effects on the Company's business and operations as a result of increased regulatory, media, or financial reporting scrutiny, practices, rumors, or otherwise, (xii) disease epidemics and other health-related concerns and crises, which could result in reduced access to capital markets, supply chain disruptions and scrutiny, embargoing of goods produced in affected areas, government-imposed mandatory business closures and any resulting furloughs of our employees, government employment subsidy programs, travel restrictions or the like to prevent the spread of disease, or market or other changes that could result in non-cash impairments of our intangible assets, and property, plant and equipment, (xiii) the effect of the continuing worldwide macroeconomic uncertainty and its impacts, including inflation, market volatility and fluctuations in foreign currency exchange and interest rates, (xiv) the outcome of any U.S. Securities and Exchange Commission ("SEC") investigations or class action litigation filed against us, (xv) our ability to hire and/or retain qualified employees and consultants, (xvi) other events or circumstances over which we have little or no control, and (xvii) other factors discussed in Loop's Annual Report on Form 10-K for the fiscal year ended February 29, 2024 filed with the SEC and in Loop's subsequent filings with the SEC. More detailed information about Loop and the risk factors that may affect the realization of forward-looking statements is set forth in Loop's filings with the SEC. Investors and security holders are urged to read these documents free of charge on the SEC's web site at http://www.sec.gov. Loop assumes no obligation to publicly update or revise its forward-looking statements as a result of new information, future events or otherwise.

For More Information:
Investor Relations:
Kevin C. O'Dowd, Investor Relations
Loop Industries, Inc.
+1 617-755-4602
kodowd@loopindustries.com

Media Inquiries:
Andrea Kostiuk, VP Marketing & Communications
Loop Industries, Inc.
+1 (450) 951-8555
akostiuk@loopindustries.com

SOURCE: Loop Industries, Inc.

View the original press release on accesswire.com

FAQ

What were Loop Industries' (LOOP) Q1 fiscal 2025 financial results?

Loop Industries reported a net loss of $5.189 million for Q1 fiscal 2025, down from $7.001 million in the same period last year. Total expenses were $5.2 million, and revenue decreased from $27,000 to $6,000 year-over-year.

What progress has Loop Industries (LOOP) made on its Infinite Loop™ facility in India?

Loop Industries and Ester Industries are making significant progress on the planned Infinite Loop™ manufacturing facility in India. They have identified low-cost polyester fiber waste sources, begun securing offtake agreements, and retained an engineering firm to select an optimal site.

When does Loop Industries (LOOP) expect to close its financing transaction with Reed Management?

Loop Industries expects to close the financing transaction with Reed Management by the end of the second quarter of fiscal 2025. However, they are reviewing contingency plans for bridge financing in case the closing extends beyond this timeframe.

What is Loop Industries' (LOOP) projected cash expense run rate for fiscal 2025?

Loop Industries projects a cash expense run rate of approximately $1 million per month for the balance of fiscal 2025, excluding project costs.