Loop Industries Reports Third Quarter Fiscal 2023 Results

Rhea-AI Summary

Loop Industries (NASDAQ: LOOP) provided an update on its operations and reported Q3 fiscal 2023 results. The company plans to sell its Bécancour, Quebec property for CDN $18.5 million (US $13.9 million) to enhance liquidity. Loop is also focusing on its commercialization efforts in partnership with SK Geo Centric, aiming for lower investment and higher returns. Q3 revenues reached $24,924, with a net loss of $1.01 million, a significant decrease from $10.1 million in the same period last year. Research and development expenses fell by $2.25 million, reflecting cost reduction measures.

Positive

• Completion of Bécancour property sale expected to enhance liquidity by CDN $18.5 million.
• Focus on lower-investment projects with SK Geo Centric for higher returns.
• Significant reduction in net loss from $10.1 million in Q3 2022 to $1.01 million in Q3 2023.
• Revenue of $24,924 established in Q3 2023, marking first revenues recorded.

Negative

• Continued high operating costs and general administrative expenses of $3.18 million.
• General and administrative expenses increased by $0.09 million year over year.
• Stock-based compensation remains high at $455,013 for Q3 2023.

Loop Management to hold update call: 11:00am et, on Friday January 13^th, 2023

MONTREAL, QC / ACCESSWIRE / January 12, 2023 / Loop Industries, Inc. (NASDAQ:LOOP) (the "Company" or "Loop"), 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 third quarter of fiscal year 2023.

Agreement to Sell Bécancour Site and Cost Reduction Measures to Ensure Ongoing Liquidity

On December 22, 2022, Loop announced it had entered into an agreement to sell all of its remaining property in Bécancour, Quebec for CDN $18.5 million (US $13.9 million). The sale transaction is expected to close on February 24, 2023, subject to final due diligence and fulfillment of certain customary closing conditions.

Loop announced on the same day that it has reduced the hours of operation at its Terrebonne, Quebec production facility in order to reduce operating costs. This facility was constructed primarily to demonstrate that Loop's breakthrough depolymerization technology was scalable and to produce commercial quantities of virgin quality PET resin and polyester fiber for global brands. The technology is now proven at scale. The Company will continue to fulfill its existing sales contracts.

The proceeds of the land sale combined with the cost reduction measures are expected to ensure Loop's ongoing liquidity to finance its current activities as the Company advances towards the commercialization of its technology.

Company to Focus Current Commercialization Efforts on SK Geo Centric "SKGC" Partnership

In conjunction with the agreement to sell its Bécancour property, Loop also announced on December 22, 2022 that the Company will for now focus its commercialization strategy on its planned projects with SKGC in Asia and Europe. These joint venture projects have a lower requirement for Loop equity investment and higher return on capital, provide Loop with an annual technology licensing fee and leverage SKGC's expertise in plant operations and maintenance. Loop and SKGC are also collaborating closely with SK ecoengineering "SKEE," a subsidiary of the SK Group, on providing the engineering related to the construction of the planned Infinite Loop™ manufacturing facility in Ulsan, South Korea. SKEE is an experienced EPC contractor with a proven track record in the construction of large scale projects internationally.

SKGC is committed to commercializing Loop's technology as the underpinning of its sustainable plastics strategy. The manufacturing facility in Ulsan, South Korea, is expected to break ground in 2023. Loop is working collaboratively with SKGC to put in place a financing plan for the construction of this facility.

Corporate Update Call

Senior Management of Loop Industries, will host a corporate update call, followed by a question-and-answer session, which can be accessed via the dial-in numbers below.

Date: Friday January 13, 2023
Time: 11:00 a.m. Eastern Time

Participant joining details (by Telephone):

Canada (Toll Free): 1 833 950 0062
Canada (Local): 1 226 828 7575
United States (Toll Free): 1 833 927 1758
United States: 1 844 200 6205
United States (Local): 1 646 904 5544
United Kingdom (Toll Free): 44 808 189 6484
All other locations: +1 929 526 1599

Access code: 757317

Press *1 to ask a question, *2 to withdraw your question, or *0 for operator assistance.

Accessing the telephone replay
A recording will be available until Friday, January 27 2023

UK (Local): 0204 525 0658
US (Local): 1 929 458 6194
US Toll Free: 1 866 813 9403
Canada: 1 226 828 7578
All other locations: +44 204 525 0658

Access Code: 130471

Third Quarter Fiscal 2023 Financial Results

The following table summarizes our operating results for the three-month periods ended November 30, 2022 and 2021, in U.S. Dollars.

		Three months ended November 30,
		2022				2021				Change
Revenues		$	24,924			$	-			$	24,924
Expenses
Research and development
Machinery and equipment expenditures			1,059,266				2,599,758				(1,540,492	)
External engineering			707,113				1,585,512				(878,399	)
Employee compensation			1,539,581				1,424,330				115,251
Stock-based compensation			455,013				362,435				92,578
Plant and laboratory operating expenses			915,951				665,893				250,058
Tax credits			(299,793	)			97,480				(397,273	)
Other			204,421				99,896				104,525
Total research and development			4,581,552				6,835,304				(2,253,752	)
General and administrative
Professional fees			1,278,478				650,164				628,314
Employee compensation			492,178				748,668				(256,490	)
Stock-based compensation			419,153				279,574				139,579
Insurance			709,952				1,193,554				(483,602	)
Other			283,166				219,295				63,871
Total general and administrative			3,182,927				3,091,255				91,672
Gain on disposition of assets			(6,703,558	)			-				(6,703,558	)
Depreciation and amortization			133,902				135,035				(1,133	)
Interest and other financial expenses			54,402				49,655				4,747
Interest income			(13,315	)			(23,654	)			10,339
Foreign exchange loss (gain)			(197,913	)			10,648				(208,561	)
Total expenses			1,037,997				10,098,243				(9,060,246	)
Net loss		$	(1,013,073	)		$	(10,098,243	)		$	9,085,170

Revenues

Revenues for the three-month period ended November 30, 2022 were $0.02 million. For the same period in 2021, there were no revenues. 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 November 30, 2022 decreased $2.25 million to $4.58 million, as compared to $6.84 million for the same period in 2021. The decrease was primarily attributable to a $1.54 million decrease in purchases of machinery and equipment used at the Terrebonne facility, a $0.88 million decrease in external engineering costs for ongoing design work for our Infinite Loop^™ manufacturing process, and a $0.40 million increase in tax credits recorded as a reduction of research and development expenses.

General and administrative expenses

General and administrative expenses for the three-month period ended November 30, 2022 increased $0.09 million to $3.18 million, as compared to $3.09 million for the same period in 2021. The increase was primarily attributable to a $0.63 million increase in expenses for legal and professional fees due to costs principally associated with the SEC investigation and class action suits described in "Part II, Item 1. Legal Proceedings" of our 10-Q and the Company's commercialization plans, and a $0.14 million increase in stock-based compensation expenses. These increases were partially offset by a $0.48 million decrease in insurance costs, and a $0.26 million decrease in employee compensation costs.

Net Loss

The net loss for the three-month period ended November 30, 2022 decreased $9.09 million to $1.01 million, as compared to $10.10 million for the same period in 2021. The decrease is primarily due to a gain on disposition of assets of $6.70 million recorded in the three-month period ended November 30, 2022 related to the Company's sale of land in Bécancour, Québec, and the decreased research and development expenses of $2.25 million, partially offset by the increased general and administrative expenses of $0.09 million.

Nine Months Ended November 30, 2022 and 2021

The following table summarizes our operating results for the nine-month periods ended November 30, 2022 and 2021, in U.S. Dollars.

		Nine months ended November 30,
		2022				2021				Change
Revenues		$	160,352			$	-			$	160,352
Expenses
Research and development
Machinery and equipment expenditures			4,132,575				7,707,882				(3,575,307	)
External engineering			2,913,567				5,040,342				(2,126,775	)
Employee compensation			5,179,105				4,213,075				966,030
Stock-based compensation			1,170,554				1,512,506				18,048
Plant and laboratory operating expenses			2,365,643				2,064,403				301,240
Tax credits			(1,207,415	)			(54,911	)			(1,152,504	)
Other			579,162				634,640				(55,478	)
Total research and development			15,133,191				20,757,937				(5,624,746	)
General and administrative
Professional fees			3,840,844				3,138,611				702,233
Employee compensation			1,929,581				2,148,533				(218,952	)
Stock-based compensation			8,798,601				209,236				8,589,365
Insurance			2,883,333				3,121,353				(238,020	)
Other			777,896				750,319				27,577
Total general and administrative			18,230,255				9,368,052				8,862,203
Gain on disposition of assets			(6,703,558	)			-				(6,703,558	)
Depreciation and amortization			410,544				407,806				2,738
Interest and other financial expenses			138,962				113,344				25,618
Interest income			(35,842	)			(41,828	)			5,986
Foreign exchange loss (gain)			(289,022	)			42,712				(331,734	)
Total expenses			26,884,530				30,648,023				(3,763,493	)
Net loss		$	(26,724,178	)		$	(30,648,023	)		$	3,923,845

Revenues

Revenues for the nine-month period ended November 30, 2022 were $0.16 million. For the same period in 2021, there were no revenues. 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 nine-month period ended November 30, 2022 decreased $5.62 million to $15.13 million, as compared to $20.76 million for the same period in 2021. The decrease was primarily attributable to a $3.58 million decrease in purchases of machinery and equipment used at the Terrebonne facility, a $2.13 million decrease in external engineering expenses for ongoing design work for our Infinite Loop^™ manufacturing process, and a $1.15 million increase in tax credits recorded as a reduction of research and development expenses. These decreases were partially offset by a $0.97 million increase in employee compensation expenses related increased headcount in our in-house engineering and commercial project teams.

General and administrative expenses

General and administrative expenses for the nine-month period ended November 30, 2022 increased $8.86 to $18.23 million, as compared to $9.37 million for the same period in 2021. The increase was primarily attributable to an increased stock-based compensation expense of $8.59 million, of which $7.74 million was related to the achievement of a performance milestone for 1,000,000 RSUs following the execution of a supply agreement with a customer and $0.94 million was attributable to RSU forfeitures in the same period in 2021 accounted for as a reversal of stock-based compensation, and increased professional fees of $0.70 million, mainly related to legal fees principally associated with the SEC investigation and class action suits described in "Part II, Item 1. Legal Proceedings" of our 10-Q and the Company's commercialization plans. These increases were partially offset by decreased insurance costs of $0.24 million, and a $0.22 million decrease in employee compensation costs.

Net Loss

The net loss for the nine-month period ended November 30, 2022 decreased $3.92 million to $26.72 million, as compared to $30.65 million for the same period in 2021. The decrease is primarily due to a gain on disposition of assets of $6.70 million recorded in the nine-month period ended November 30, 2022 related to the Company's sale of land in Bécancour, Québec, and the decreased research and development expenses of $5.62 million, partially offset by the increased general and administrative expenses of $8.86 million.

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

		Three Months Ended November 30								Nine Months Ended November 30
		2022				2021				2022				2021
Revenue		$	24,924			$	-			$	160,352			$	-
Expenses
Research and development			4,581,552				6,835,304				15,133,191				20,757,937
General and administrative			3,182,927				3,091,255				18,230,255				9,368,052
Gain on disposition of assets			(6,703,558	)			-				(6,703,558	)			-
Depreciation and amortization			133,902				135,035				410,544				407,806
Interest and other financial expenses			54,402				49,655				138,962				113,344
Interest income			(13,315	)			(23,654	)			(35,842	)			(41,828	)
Foreign exchange loss (gain)			(197,913	)			10,648				(289,022	)			42,712
Total expenses			1,037,997				10,098,243				26,884,530				30,648,023
Net Loss			(1,013,073	)			(10,098,243	)			(26,724,178	)			(30,648,023	)
Other comprehensive income (loss)
Foreign currency translation adjustment			(439,297	)			(13,473	)			(856,567	)			(160,371	)
Comprehensive income (loss)		$	(1,452,370	)		$	(10,111,716	)		$	(27,580,745	)		$	(30,808,394	)
Loss per share
Basic and Diluted		$	(0.02	)		$	(0.21	)		$	(0.56	)		$	(0.69	)
Weighted average common shares outstanding
Basic and Diluted			47,416,340				47,264,646				47,405,801				44,600,557

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

		As at
		November 30, 2022				February 28, 2022
Assets
Current assets
Cash and cash equivalents		$	21,524,993			$	44,061,427
Restricted cash			4,100,000				-
Sales tax, tax credits and other receivables			1,605,856				1,716,262
Inventories			426,278				-
Prepaid expenses and deposits			4,055,453				2,965,646
Assets held for sale			3,758,314				3,389,279
Total current assets			35,470,894				52,132,614
Investment in joint venture			380,922				380,922
Property, plant and equipment, net			2,677,982				5,692,862
Intangible assets, net			1,110,932				1,013,801
Total assets		$	39,640,730			$	59,220,199
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable and accrued liabilities		$	6,968,219			$	9,846,815
Customer deposits			1,000,000				-
Current portion of long-term debt			46,891				-
Total current liabilities			8,015,110				9,846,815
Long-term debt			3,242,231				3,378,403
Total liabilities			11,257,341				13,225,218
Stockholders' Equity
Series A Preferred stock par value $0.0001; 25,000,000 shares authorized; one share issued and outstanding			-				-
Common stock par value $0.0001; 250,000,000 shares authorized; 47,439,587 shares issued and outstanding (February 28, 2022 - 47,388,056)			4,745				4,740
Additional paid-in capital			170,174,884				150,396,704
Additional paid-in capital - Warrants			20,463,464				30,272,496
Accumulated deficit			(161,307,104	)			(134,582,926	)
Accumulated other comprehensive loss			(952,600	)			(96,033	)
Total stockholders' equity			28,383,389				45,994,981
Total liabilities and stockholders' equity		$	39,640,730			$	59,220,199

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

		Nine Months Ended November 30,
		2022				2021
Cash Flows from Operating Activities
Net loss		$	(26,724,178	)		$	(30,648,023	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization			410,544				407,806
Stock-based compensation expense			9,969,153				1,361,744
Gain on disposition of assets			(6,703,558	)			-
Accretion and accrued interest expenses			117,504				82,393
Changes in operating assets and liabilities:
Sales tax and tax credits receivable			20,301				948,328
Inventory			(426,278	)			-
Prepaid expenses and deposits			(1,294,520	)			(1,394,272	)
Accounts payable and accrued liabilities			(2,652,171	)			(3,587,932	)
Customer deposits			1,000,000				-
Net cash used in operating activities			(26,283,203	)			(32,829,956	)
Cash Flows from Investing Activities
Proceeds from disposition of assets			8,559,490				-
Additions to property, plant and equipment			(68,097	)			(5,022,255	)
Additions to intangible assets			(225,047	)			(348,017	)
Net cash used in investing activities			8,266,346				(5,370,272	)
Cash Flows from Financing Activities
Proceeds from sale of common shares and warrants, net of share issuance costs			-				56,087,746
Proceeds from issuance of long-term debt			-				1,868,954
Repayment of long-term debt			-				(41,041	)
Net cash (used) provided by financing activities			-				57,915,659
Effect of exchange rate changes			(419,577	)			(77,336	)
Net increase (decrease) in cash			(18,436,434	)			19,638,095
Cash and restricted cash, beginning of period			44,061,427				35,221,951
Cash and restricted cash, end of period		$	25,624,993			$	54,860,046
Supplemental Disclosure of Cash Flow Information:
Income tax paid		$	-			$	-
Interest paid		$	-			$	30,506
Interest received		$	35,842			$	23,654

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 Loop's technology and products, (ii) Loop's status of relationship with partners, (iii) development and protection of Loop's intellectual property and products, (iv) industry competition, (v) Loop's need for and ability to obtain additional funding relative to its current and future financial commitments, (vi) engineering, contracting and building Loop's planned manufacturing facilities, (vii) Loop's ability to scale, manufacture and sell its products in order to generate revenues, (viii) Loop's proposed business model and its ability to execute thereon, (ix) adverse effects on Loop's business and operations as a result of increased regulatory, media or financial reporting scrutiny and practices, rumors or otherwise, (x) disease epidemics and health related concerns, such as the current outbreak of additional variants of coronavirus (COVID-19), which could result in (and, in the case of the COVID-19 outbreak, has resulted in some of the following) reduced access to capital markets, supply chain disruptions and scrutiny or embargoing of goods produced in affected areas, government-imposed mandatory business closures and resulting furloughs of Loop's employees, government employment subsidy programs, travel restrictions or the like to prevent the spread of disease, and market or other changes that could result in noncash impairments of our intangible assets, and property, plant and equipment, (xi) the outcome of the ongoing SEC investigation or the class action litigation filed against Loop, (xii) Loop's ability to hire and/or retain qualified employees and consultants and (xiii) other factors discussed in Loop's subsequent filings with the Securities and Exchange Commission ("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, Vice-President Communications & 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 source version on accesswire.com:
https://www.accesswire.com/734982/Loop-Industries-Reports-Third-Quarter-Fiscal-2023-Results

FAQ

What were Loop Industries' revenues for Q3 2023?

Loop Industries reported revenues of $24,924 for the third quarter of fiscal year 2023.

What was the net loss for Loop Industries in Q3 2023?

The net loss for Loop Industries in Q3 2023 was $1.01 million, a substantial reduction from $10.1 million in Q3 2022.

What actions is Loop Industries taking to improve liquidity?

Loop Industries plans to sell its Bécancour property for CDN $18.5 million and has implemented cost reduction measures.

What is the focus of Loop's commercialization strategy?

Loop is focusing its commercialization efforts on projects with SK Geo Centric, which require lower equity investment.