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

Rhea-AI Summary

Loop Industries reported its Q2 fiscal 2025 results and provided updates on financing and commercialization plans. Key highlights include:

1. Reed financing expected to be finalized in November 2024, providing an initial tranche of €10 million in a Convertible Preferred Security.

2. Progress on Infinite Loop™ India manufacturing facility, with Gujarat province selected as the location.

3. Q2 expenses totaled $4.9 million, with a projected run rate of $1.0 million per month for the balance of fiscal 2025.

4. Revenue decreased to $23,000 from $54,000 in the same period last year.

5. Net loss increased slightly to $4.839 million from $4.750 million year-over-year.

The company aims to accelerate a circular plastics economy by manufacturing 100% recycled PET plastic and polyester fiber.

Positive

• Reed financing expected to provide €10 million initial tranche in November 2024
• Selection of Gujarat province for Infinite Loop™ India manufacturing facility
• Potential to offer textile-to-textile recycling solution for polyester in India
• Decrease in research and development expenses by $93,000 year-over-year
• Decrease in general and administrative expenses by $248,000 year-over-year

Negative

• Revenue decreased from $54,000 to $23,000 year-over-year
• Net loss increased from $4.750 million to $4.839 million year-over-year
• Total expenses increased slightly from $4.804 million to $4.862 million
• Cash and cash equivalents decreased from $6.958 million to $1.395 million

Insights

Financial Analyst

Loop Industries' Q2 FY2025 results and update reveal some positive developments, but also highlight ongoing financial challenges:

• The expected finalization of Reed financing in November 2024 is crucial, potentially providing an initial €10 million tranche and future funding.
• Progress on the Infinite Loop™ India facility is promising, with site selection completed in Gujarat province, offering strategic advantages for textile recycling.
• However, the company reported a net loss of $4.839 million for Q2, slightly higher than the $4.75 million loss in Q2 FY2024.
• Cash position is concerning at only $1.395 million as of August 31, 2024, down from $6.958 million at the fiscal year-end.
• The projected monthly cash burn rate of $1 million for the remainder of FY2025 underscores the urgency of securing additional financing.

While the potential Reed financing and progress in India are positive, Loop's immediate liquidity concerns and ongoing losses make this a high-risk situation for investors. The company's ability to secure funding and move towards commercialization will be critical in the near term.

Environmental Technology Specialist

Loop Industries' technology for producing 100% recycled PET and polyester fiber has significant potential in the circular economy:

• The Infinite Loop™ facility in India is strategically positioned to tap into the massive textile waste stream, with 66% of global PET going into textiles in Asia.
• Offering a true textile-to-textile recycling solution for polyester could be a game-changer for apparel companies seeking sustainable materials.
• The Gujarat location provides access to renewable energy, potentially reducing the carbon footprint of production.
• The ability to use textile waste as the primary feedstock for both apparel and bottle-grade PET resin demonstrates versatility in waste stream utilization.

However, the company faces challenges in scaling up and commercializing its technology. The success of the India project and the ability to deliver cost-competitive recycled materials will be important for Loop's long-term viability in the competitive recycling market. The environmental impact could be substantial if Loop can overcome its financial hurdles and successfully deploy its technology at scale.

• Reed financing expected to be finalized in November 2024

• Continued progress towards groundbreaking of Infinite Loop^TM India manufacturing facility on schedule

Loop management to hold update call at 8:30 AM ET on October 16, 2024

MONTREAL, QC / ACCESSWIRE / October 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 reported its consolidated financial results for the second quarter for fiscal year 2025 and provided an update on its financing and commercialization activities.

Financing Update

On July 31, 2024, Reed Management SAS ("Reed") and Societe Generale announced that Societe Generale has agreed to acquire 75% of Reed and provide funding for Reed initially amounting to €250 million, which can be further increased to €350 million. This transaction, which is subject to customary closing conditions including regulatory approval, would secure Reed's funding for its planned investments, including the financing package for Loop. We are expecting that the remaining closing conditions will have been addressed, and that the financing will be completed, in November 2024. This is expected to provide the initial tranche of €10 million in a Convertible Preferred Security to be issued by Loop, bearing a 13% PIK dividend rate and 5-year term, with further amounts at future dates.

In order to ensure the Company's continuing liquidity in the event of unanticipated timing delays in closing the transaction with Reed, Loop's CEO and an independent director of the Company have committed to provide bridge financing of $2 million if required.

Infinite Loop™ India Update

Loop, in collaboration with its joint venture partner, Ester Industries Ltd. ("Ester"), is steadily advancing the upcoming Infinite Loop™ manufacturing facility in India.

The joint venture hired a leading international engineering firm to conduct a land study to find the optimal location in India for the manufacturing facility, based on several key requirements such as infrastructure, proximity to a seaport for exports, renewable energy for a reduction in CO₂ emissions and close proximity to waste PET and polyester feedstocks. Based on the analysis of the findings, the joint venture has selected the Gujarat province as the location for the facility. The province provides for excellent infrastructure and close proximity to the seaport, the ability to use 100% renewable energy as the primary energy source, and close proximity to the Surat region, which is the main hub for the polyester textile industry in India.

Today, branded apparel companies are in need of a solution to incorporate new materials made from textile-to-textile recycling into their supply chains and to be able to recycle the textile waste from their manufacturing facilities. The polyester textile industry in India will be supplying the Infinite Loop™ manufacturing facility with most of the waste polyester feedstocks required as its raw material input. Using textile waste as the primary feedstock source will allow for Loop to sell polyester resin made from 100% textile waste to the apparel companies. The ability to offer branded apparel companies a true textile-to-textile recycling solution for polyester will be the driving force for the future of our Indian expansion, as 66% of all PET sold globally goes into textiles in Asia.

The facility will also be producing bottle grade PET resin used in the beverage and packaging industries to our global customer base.

Financial Results and Expense Breakdown

The Company's financial results for the quarter ended August 31, 2024 include $4.9 million of total expenses, which includes significant and non-recurring legal expenses incurred for regulatory and other purposes, and project costs related to the deployment of Loop's technology. Excluding these items, and non-cash expenses, the remaining expenses amount to $2.9 million for the current quarter. The Company projects that the prospective run rate for cash expenses will be approximately $1.0 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 are excited about progressing towards the conclusion of our financing with Reed, which will be an excellent and fully aligned strategic and financial partner. This partnership will allow Loop to accelerate the deployment of our technology in Europe.

We have reached an important milestone in Loop's strategic development in India. The selection of the Gujarat province provides Loop with the ability to offer apparel companies with a textile-to-textile solution which is a critical consideration for branded apparel customers. Being in India, and specifically in the Gujarat province, will allow Loop to collaborate with the apparel companies on integrating Loop's material into their supply chains, which are mainly in Asia today. Low-cost manufacturing in India will also allow Loop to be very competitive on pricing at the same time as supplying brands with high quality PET resin and polyester fiber.

The partnership with Ester will also allow for Loop to implement its strategic plan of deploying capital into low-cost manufacturing countries such as India, and to move to more of a licensing model 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: Wednesday, October 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: 377082

OR

Registration Link: https://www.netroadshow.com/events/login?show=777a392f&confId=72283

- 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 August 31, 2024 and 2023, in thousands of U.S. Dollars.

		Three months ended August 31,
		2024				2023				Change favorable / (unfavorable)
Revenue from contracts with customers		$	23			$	54			$	(31	)
Expenses
Research and development
External engineering			651				141				(510	)
Employee compensation			862				1,218				356
Stock-based compensation			131				155				24
Plant and laboratory operating expenses			197				447				250
Tax credits			(49	)			(22	)			27
Other			153				99				(54	)
Total research and development			1,945				2,038				93
General and administrative
Professional fees			1,007				912				(95	)
Employee compensation			585				647				62
Stock-based compensation			231				233				2
Insurance			476				709				233
Other			296				342				46
Total general and administrative			2,595				2,843				248
Depreciation and amortization			129				136				7
Interest and other financial expenses			119				44				(75	)
Interest income			(6	)			(219	)			(213	)
Foreign exchange loss (gain)			80				(38	)			(119	)
Total expenses			4,862				4,804				(58	)
Net loss		$	(4,839	)		$	(4,750	)		$	(88	)

Second Quarter Ended August 31, 2024

Revenues

Revenues for the three-month period ended August 31, 2024 decreased $31 to $23, as compared to $54 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 August 31, 2024 decreased $93 to $1,945, as compared to $2,038 for the same period in 2023. The decrease was primarily attributable to a $356 decrease in employee compensation, and a $250 decrease in plant and laboratory expenses at our Terrebonne Facility. These decreases were partially offset by a $510 increase in external engineering costs for design work for our Infinite Loop^™ manufacturing process.

General and administrative expenses

General and administrative expenses for the three-month period ended August 31, 2024 decreased $248 to $2,595, as compared to $2,843 for the same period in 2023. The decrease was primarily attributable to a $233 decrease in insurance expenses which is mainly attributable to a favourable renewal of D&O insurance.

Net Loss

The net loss for the three-month period ended August 31, 2024 increased $88 to $4,839, as compared to $4,750 for the same period in 2023. The increase is primarily due to the $213 decrease in interest income and the $119 increase in foreign exchange, partially offset by the $248 decrease in general and administrative expenses.

Six Months Ended August 31, 2024

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

		Six months ended August 31,
		2024				2023				Change
Revenue from contracts with customers		$	29			$	81			$	(52	)
Expenses
Research and development
External engineering			1,279				1,297				18
Employee compensation			1,877				2,504				627
Machinery and equipment expenditures			3				1,236				1,233
Stock-based compensation			261				315				54
Plant and laboratory operating expenses			467				916				449
Tax credits			(35	)			(47	)			(12	)
Other			330				307				(23	)
Total research and development			4,182				6,528				2,346
General and administrative
Professional fees			2,262				1,531				(731	)
Employee compensation			1,221				1,285				64
Stock-based compensation			471				428				(43	)
Insurance			968				1,412				444
Other			584				652				68
Total general and administrative			5,506				5,308				(198	)
Depreciation and amortization			266				268				2
Interest and other financial expenses			179				98				(81	)
Interest income			(132	)			(318	)			(186	)
Foreign exchange loss (gain)			56				(52	)			(108	)
Total expenses			10,057				11,832				1,775
Net loss		$	(10,028	)		$	(11,751	)		$	1,723

Revenues

Revenues for the six-month period ended August 31, 2024 decreased $52 to $29, as compared to $81 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 six-month period ended August 31, 2024 decreased $2,346 to $4,182, as compared to $6,528 for the same period in 2023. The decrease was primarily attributable to a $1,233 decrease in purchases of machinery and equipment for the Terrebonne Facility, a $681 decrease in employee compensation expenses, including stock-based compensation, and a $449 decrease in plant and laboratory expenses to operate our Terrebonne Facility.

General and administrative expenses

General and administrative expenses for the six-month period ended August 31, 2024 increased $198 to $5,506, as compared to $5,308 for the same period in 2023. The increase was primarily attributable to a $731 increase in professional fees, partially offset by a decrease in insurance expenses of $444.

Net Loss

The net loss for the six-month period ended August 31, 2024 decreased $1,723 to $10,028, as compared to $11,751 for the same period in 2023. The decrease is primarily due to the decrease in research and development expenses of $2,346, partially offset by $198 increase in research and development expenses, a $186 decrease in interest income, and a $108 increase in foreign exchange.

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								Six Months Ended
		August 31, 2024				August 31, 2023				August 31, 2024				August 31, 2023
Revenue from contracts with customers		$	23			$	54			$	29			$	81
Expenses :
Research and development			1,945				2,038				4,182				6,528
General and administrative			2,595				2,843				5,506				5,308
Depreciation and amortization			129				136				266				268
Total expenses			4,669				5,017				9,954				12,104
Other loss (income) :
Interest and other financial expenses			119				44				179				98
Interest income			(6	)			(219	)			(132	)			(318	)
Foreign exchange loss (gain)			80				(38	)			56				(52	)
Total other loss (income)			193				(213	)			103				(272	)
Net loss			(4,839	)			(4,750	)			(10,028	)			(11,751	)
Other comprehensive loss -
Foreign currency translation adjustment			43				84				(12	)			104
Comprehensive loss		$	(4,796	)		$	(4,666	)		$	(10,040	)		$	(11,647	)
Net loss per share
Basic and diluted		$	(0.10	)		$	(0.10	)		$	(0.21	)		$	(0.25	)
Weighted average common shares outstanding
Basic and diluted			47,573,302				47,521,187				47,554,357				47,518,645

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

(in thousands of U.S. dollars, except per share data)		As at
		August 31, 2024				February 29, 2024
Assets
Current assets
Cash and cash equivalents		$	1,395			$	6,958
Sales tax, tax credits and other receivables			392				351
Inventories			81				102
Prepaid expenses and other deposits			492				577
Total current assets			2,360				7,988
Investment in joint venture			381				381
Property, plant and equipment, net			10,476				10,636
Intangible assets, net			1,786				1,548
Total assets		$	15,003			$	20,553
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable and accrued liabilities		$	4,376			$	2,321
Current portion of long-term debt			393				100
Unearned revenue			101				-
Total current liabilities			4,870				2,421
Due to customer			800				770
Long-term debt			4,499				3,220
Total liabilities			10,169				6,411
Stockholders' Equity
Series A Preferred stock			-				-
Common stock			5				5
Additional paid-in capital			185,868				171,792
Additional paid-in capital - Warrants			7,041				20,385
Accumulated deficit			(186,998	)			(176,970	)
Accumulated other comprehensive loss			(1,082	)			(1,070	)
Total stockholders' equity			4,834				14,142
Total liabilities and stockholders' equity		$	15,003			$	20,553

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

(in thousandsof U.S. dollars)		Six Months Ended August 31,
		2024				2023
Cash Flows from Operating Activities
Net loss		$	(10,028	)		$	(11,751	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization			266				268
Stock-based compensation expense			732				743
Accretion expense			57				36
Changes in operating assets and liabilities:
Sales tax and tax credits receivable			(39	)			(114	)
Inventories			21				(175	)
Prepaid expenses			84				510
Accounts payable and accrued liabilities			2,031				(522	)
Customer deposits			-				(12	)
Unearned revenue			101				-
Net cash used in operating activities			(6,775	)			(11,017	)
Cash Flows from Investing Activities
Deposits on equipment			-				(5,065	)
Additions to intangible assets			(325	)			(225	)
Net cash used in investing activities			(325	)			(5,290	)
Cash Flows from Financing Activities
Borrowings under credit facility			1,587				-
Repayment of long-term debt			(50	)			(32	)
Net cash (used) provided by financing activities			1,537				(32	)
Effect of exchange rate changes			-				113
Net decrease in cash			(5,563	)			(16,226	)
Cash, cash equivalents and restricted cash, beginning of period			6,958				30,591
Cash, cash equivalents and restricted cash, end of period		$	1,395			$	14,365

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 our anticipated consummation of the financing transaction with Reed, the expected benefits of our joint venture with Ester, the expected construction by the joint venture of a manufacturing facility in Gujarat Province, India, the expected benefits of the location of such facility, 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, and market trends. 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) our ability to commercialize our technology and products, (ii) the status of our relationships with our 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) our ability to continue as a going concern, (vii) engineering, contracting, and building our manufacturing facilities, (viii) our ability to scale, manufacture, and sell our products in order to generate revenues, (ix) our proposed business model and our ability to execute it, (x) our ability to obtain the necessary approvals or satisfy any closing conditions in respect of any of our proposed partnerships, (xi) our joint venture projects and our ability to recover certain expenditures in connection them, (xii) adverse effects on the Company's business and operations as a result of increased regulatory, media, or financial reporting scrutiny, practices, rumors, or otherwise, (xiii) public health issues, such as disease epidemics, which may lead to reduced access to capital markets, supply chain disruptions, and government-imposed business closures, (xiv) war, regional tensions, and economic or other conflicts that could impact market stability and our business; (xv) the effect of the continuing worldwide macroeconomic uncertainty and its impacts, including inflation, market volatility and fluctuations in foreign currency exchange and interest rates, (xvi) the outcome of any U.S. Securities and Exchange Commission ("SEC") investigations or class action litigation filed against us, (xvii) our ability to hire and/or retain qualified employees and consultants, (xviii) other events or circumstances over which we have little or no control, and (xix) 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, except as required by law.

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

View the original press release on accesswire.com

FAQ

What was Loop Industries' (LOOP) revenue for Q2 fiscal 2025?

Loop Industries (LOOP) reported revenue of $23,000 for Q2 fiscal 2025, down from $54,000 in the same period last year.

When is the Reed financing for Loop Industries (LOOP) expected to be finalized?

The Reed financing for Loop Industries (LOOP) is expected to be finalized in November 2024.

Where will Loop Industries (LOOP) build its Infinite Loop™ manufacturing facility in India?

Loop Industries (LOOP) has selected the Gujarat province as the location for its Infinite Loop™ manufacturing facility in India.

What was Loop Industries' (LOOP) net loss for Q2 fiscal 2025?

Loop Industries (LOOP) reported a net loss of $4.839 million for Q2 fiscal 2025, compared to $4.750 million in the same period last year.

What is Loop Industries' (LOOP) projected monthly expense run rate for the balance of fiscal 2025?

Loop Industries (LOOP) projects a monthly expense run rate of approximately $1.0 million for the balance of fiscal 2025, excluding project costs.