Loop Industries Reports Third Quarter Fiscal 2024 Results and Provides Updates on Business Developments
- Non-binding MOU with Reed Management for US$66 million in non-dilutive financing
- Loop's technology to be rolled out in the European market through a joint venture with Reed
- LoopTM branded PET resin meets USP and Ph.Eur. standards for pharmaceutical industry packaging applications
- Groundbreaking ceremony for the Ulsan ARC took place in South Korea
- Construction of the Infinite LoopTM Ulsan facility is anticipated to commence in the first half of 2024
- Reported financial results for the third quarter of fiscal year 2024 with operating efficiencies
- Net loss of $4,244 for the three-month period ended November 30, 2023
Insights
The Memorandum of Understanding (MOU) between Loop Industries and Reed Management marks a significant stride in Loop's expansion strategy, particularly in the European market. The partnership is poised to leverage Reed's investment capabilities to fuel Loop's global commercialization efforts and European project developments. The provision of non-dilutive financing is crucial since it avoids shareholder dilution, preserving existing investor value while securing necessary capital for growth. The split investment, with half directed towards global technology commercialization and the other half towards European joint venture projects, reflects a balanced approach to scaling operations and market penetration.
The MOU's non-binding nature suggests that while the strategic intent is clear, the deal's closure hinges on due diligence and certain conditions being met. Investors should monitor the progression towards a binding agreement closely, as the successful closure could enhance Loop's financial stability and market positioning. However, should the deal falter, it might raise concerns about Loop's ability to secure necessary funding and execute its strategic plans effectively.
Loop Industries' focus on 100% recycled polyethylene terephthalate (PET) plastic and polyester fiber aligns with the growing global emphasis on sustainability and circular economies. The company's technology, which transforms waste PET into high-purity PET resin, addresses a critical need for sustainable packaging solutions, particularly in the face of stringent regulatory requirements for plastic recycling. This is evident in Loop's compliance with the United States Pharmacopeia and European Pharmacopeia standards for pharmaceutical packaging, which could open new market opportunities and drive demand for Loop's sustainable materials.
As Loop advances its Infinite Loop™ technology in Europe through the proposed joint venture, the environmental impact could be significant. By reducing reliance on virgin plastics and enabling the circular use of PET, Loop's technology contributes to waste reduction and resource efficiency. This not only aligns with environmental objectives but also positions Loop favorably in a market increasingly driven by sustainability mandates and consumer preferences for eco-friendly products.
The announcement of the MOU and the subsequent joint venture could signal to the market that Loop Industries is advancing from a developmental phase towards commercialization, a critical transition for any technology company. The European market presents a strategic opportunity for Loop, given the region's robust regulatory framework supporting recycling and sustainability. The Infinite Loop™ technology's deployment in Europe, starting with the planned facility in Saint-Avold, France, could serve as a model for further international expansion, enhancing Loop's global footprint and brand recognition.
It is important to note the competitive landscape of the recycling and sustainable materials sector. Loop's ability to establish a strong presence in Europe and deliver on its technology promises could influence its market share and competitive edge. Investors should consider the potential for increased revenue streams from royalty and engineering fees and the impact of operating efficiencies on the company's bottom line. The reduction in research and development expenses and the decrease in general and administrative expenses, as reflected in the financial results, are indicative of a strategic shift towards operational streamlining and cost management.
- LOOP ANNOUNCES MOU FOR US
$66 MILLION OF NON-DILUTIVE FINANCING FROM REED MANAGEMENT AS PART OF A JOINT VENTURE FOR EUROPEAN INFINITE LOOPTM TECHNOLOGY ROLL-OUT
Loop Management to hold update call at 8:30 AM ET on JANUARY 17, 2024
MONTREAL, QC / ACCESSWIRE / JANUARY 16, 2024 / Loop Industries, Inc. (Nasdaq:LOOP) (the "Company" or "Loop"), a clean technology company whose mission is to accelerate a circular plastics economy by manufacturing
Strategic Partnership and Non-Dilutive Financing
On January 16th, 2024 Loop announced that the Company signed a non-binding Memorandum of Understanding ("MOU") with Reed Management ("Reed"), a European investment firm focused on high impact and technology-enabled infrastructure, for US
Loop and Reed intend to form a strategic long-term partnership through the establishment of a 50/50 JV to commercialize Loop's technology in Europe. Reed intends to provide financing of €60 million (US
Under the terms of the MOU, Reed will provide capital as follows:
- US
$11 million equity investment in the JV to acquire from Loop exclusive rights to co-invest alongside Loop in commercialization projects using Loop's technology in Europe through the planned JV between Loop and Reed; - US
$22 million loan from the JV to Loop in two equal tranches - first tranche paid at closing and second tranche paid in the following 12 months with both tranches having a10% PIK rate and 3-year term; - US
$33 million commitment to cover initial costs to develop projects in Europe, including Loop's equity contribution to the previously announced JV to construct an Infinite LoopTM plant in Saint-Avold, France; - Any subsequent capital injections in the JV will be funded on a 50/50 basis between Reed and Loop.
This intended partnership allows for Loop Industries to reduce the funding needs for its equity contributions to support the rollout of an increased number of facilities to be constructed in the European market using the Infinite LoopTM technology. Loop Industries will receive royalty and engineering fees directly from the planned facilities in Europe.
The non-binding MOU is subject to customary due diligence and the fulfillment of certain pre-closing conditions. The transaction is expected to close by the end of March 2024.
Technology and Innovation
On December 13, 2023 Loop announced that its LoopTM branded PET resin meets the requirements and standards outlined by the United States Pharmacopeia (USP <661.1>, Plastic Materials of Construction) and the European Pharmacopeia (Ph.Eur. 3.1.15, Polyethylene Terephthalate for Containers for Preparations not for Parenteral Uses). LoopTM PET resin is compliant for use in pharmaceutical industry packaging applications and offers a sustainable packaging solution for the industry.
Commercialization Update
A groundbreaking ceremony for the Ulsan ARC took place on November 15th, 2023 in South Korea. Daniel Solomita, Loop's Founder and CEO, presented the Infinite LoopTM technology at the ceremony which was attended by the Prime Minister of South Korea Han Duck-soo, Mayor of Ulsan Kim Doo-gyeom, Member of the National Assembly Park Sung Min, Deputy Minister of the Climate Change and Carbon Neutral Policy Office of the Ministry of Environment Geum Han-seung, Director of the Industrial Policy office of the Ministry of Trade, Industry, and Energy Lee Seung-ryeol, Vice Chairman & CEO of SK Innovation Kim Jun, and SK Geo Centric CEO Na Kyung-soo along with 250 other guests.
Construction of the Infinite LoopTM Ulsan facility is anticipated to commence in the first half of 2024 and reach completion in 2026.
Operating Efficiencies
The Company continues to carefully monitor all expenditures and has taken meaningful steps to reduce its cash burn rate. In the current quarter, the Company had total expenses of
CEO Comment
Daniel Solomita, Founder and CEO of Loop Industries, commented on the recent updates, saying: "We are delighted to form a partnership with Reed. They bring important experience and relationships for the financing and development of major capital investment projects, and they are committed to Loop's vision for the potential of our groundbreaking technology as global brands adapt to increasingly stringent regulatory requirements for plastic recycling.
Also, the non-dilutive capital being provided by Reed will position Loop to move forward with our planned roll-out of commercial manufacturing in Europe using a more asset-light model, as well as the commercialization of Loop's technology globally."
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, January 17, 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: 786495
OR
Registration Link: https://www.netroadshow.com/events/login?show=f056f3b5&confId=59857
- Avoid wait time - Bypass speaking with an operator to join the call
- Receive a Calendar Invitation with call access details including your unique PIN
Q3 2024 Financial Results
Results of Operations
Three Months Ended November 30, 2023
The following table summarizes our operating results for the three-month periods ended November 30, 2023 and 2022, in thousands of U.S. Dollars.
| Three months ended November 30, | ||||||||||||
| 2023 | 2022 | Change | ||||||||||
Revenue from contracts with customers | $ | 26 | $ | 25 | $ | 1 | ||||||
Expenses | ||||||||||||
Research and development | ||||||||||||
Employee compensation | 1,107 | 1,540 | (433) | |||||||||
Stock-based compensation | 161 | 455 | (294) | |||||||||
Machinery and equipment expenditures | 4 | 1,059 | (1,055) | |||||||||
External engineering | 262 | 707 | (445) | |||||||||
Plant and laboratory operating expenses | 322 | 916 | (594) | |||||||||
Tax credits | (221) | (300) | 79 | |||||||||
Other | 198 | 205 | (7) | |||||||||
Total research and development | 1,833 | 4,582 | (2,749) | |||||||||
General and administrative | ||||||||||||
Employee compensation | 599 | 492 | 107 | |||||||||
Stock-based compensation | 236 | 419 | (183) | |||||||||
Professional fees | 720 | 1,278 | (558) | |||||||||
Insurance | 645 | 710 | (65) | |||||||||
Other | 258 | 284 | (26) | |||||||||
Total general and administrative | 2,458 | 3,183 | (725) | |||||||||
Gain on disposition of assets | - | (6,704) | 6,704 | |||||||||
Depreciation and amortization | 131 | 134 | (3) | |||||||||
Interest and other financial expenses | 42 | 54 | (12) | |||||||||
Interest income | (166) | (13) | (153) | |||||||||
Foreign exchange gain | (28) | (198) | 170 | |||||||||
Total expenses | 4,270 | 1,038 | 3,232 | |||||||||
Net loss | $ | (4,244) | $ | (1,013) | $ | (3,231) | ||||||
Revenues
Revenues for the three-month period ended November 30, 2023 increased
Research and Development
Research and development expense for the three-month period ended November 30, 2023 decreased
General and administrative expenses
General and administrative expenses for the three-month period ended November 30, 2023 decreased
Net Loss
The net loss for the three-month period ended November 30, 2023 increased
Nine months Ended November 30, 2023
The following table summarizes our operating results for the nine-month periods ended November 30, 2023 and 2022, in thousands of U.S. Dollars.
| Nine months ended November 30, | ||||||||||||
| 2023 | 2022 | Change | ||||||||||
Revenue from contracts with customers | $ | 108 | $ | 160 | $ | (52) | ||||||
Expenses | ||||||||||||
Research and development | ||||||||||||
Employee compensation | 3,611 | 5,179 | (1,568) | |||||||||
Stock-based compensation | 476 | 1,171 | (695) | |||||||||
Machinery and equipment expenditures | 1,240 | 4,133 | (2,893) | |||||||||
External engineering | 1,558 | 2,914 | (1,356) | |||||||||
Plant and laboratory operating expenses | 1,238 | 2,366 | (1,128) | |||||||||
Tax credits | (269) | (1,207) | 938 | |||||||||
Other | 507 | 577 | (70) | |||||||||
Total research and development | 8,361 | 15,133 | (6,772) | |||||||||
General and administrative | ||||||||||||
Employee compensation | 1,884 | 1,929 | (45) | |||||||||
Stock-based compensation | 664 | 8,799 | (8,135) | |||||||||
Professional fees | 2,251 | 3,841 | (1,590) | |||||||||
Insurance | 2,058 | 2,883 | (825) | |||||||||
Other | 910 | 778 | 132 | |||||||||
Total general and administrative | 7,767 | 18,230 | (10,463) | |||||||||
Gain on disposition of assets | - | (6,704) | 6,704 | |||||||||
Depreciation and amortization | 400 | 411 | (11) | |||||||||
Interest and other financial expenses | 140 | 139 | 1 | |||||||||
Interest income | (484) | (36) | (448) | |||||||||
Foreign exchange gain | (81) | (289) | 208 | |||||||||
Total expenses | 16,103 | 26,884 | (10,781) | |||||||||
Net loss | $ | (15,995) | $ | (26,724) | $ | 10,729 | ||||||
Revenues
Revenues for the nine-month period ended November 30, 2023 decreased
Research and Development
Research and development expense for the nine-month period ended November 30, 2023 decreased
General and administrative expenses
General and administrative expenses for the nine-month period ended November 30, 2023 decreased
Net Loss
The net loss for the nine-month period ended November 30, 2023 decreased
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 | Nine Months Ended | ||||||||||||||
| November 30, 2023 | November 30, 2022 | November 30, 2023 | November 30, 2022 | |||||||||||||
Revenue from contracts with customers | $ | 26 | $ | 25 | $ | 108 | $ | 160 | ||||||||
Expenses : | ||||||||||||||||
Research and development | 1,833 | 4,582 | 8,361 | 15,133 | ||||||||||||
General and administrative | 2,458 | 3,183 | 7,767 | 18,230 | ||||||||||||
Depreciation and amortization | 131 | 134 | 400 | 411 | ||||||||||||
Total expenses | 4,422 | 7,899 | 16,528 | 33,774 | ||||||||||||
Other (income) loss : | ||||||||||||||||
Gain on disposition of assets | - | (6,704 | ) | - | (6,704 | ) | ||||||||||
Interest and other financial expenses | 42 | 54 | 140 | 139 | ||||||||||||
Interest income | (166 | ) | (13 | ) | (484 | ) | (36 | ) | ||||||||
Foreign exchange gain | (28 | ) | (198 | ) | (81 | ) | (289 | ) | ||||||||
Total other (income) loss | (152 | ) | (6,861 | ) | (425 | ) | (6,890 | ) | ||||||||
Net loss | (4,244 | ) | (1,013 | ) | (15,995 | ) | (26,724 | ) | ||||||||
Other comprehensive income (loss) - | ||||||||||||||||
Foreign currency translation adjustment | (83 | ) | (440 | ) | 21 | (857 | ) | |||||||||
Comprehensive loss | $ | (4,327 | ) | $ | (1,453 | ) | $ | (15,974 | ) | $ | (27,581 | ) | ||||
Net loss per share | ||||||||||||||||
Basic and diluted | $ | (0.09 | ) | $ | (0.02 | ) | $ | (0.34 | ) | $ | (0.56 | ) | ||||
Weighted average common shares outstanding | ||||||||||||||||
Basic and diluted | 47,523,817 | 47,416,340 | 47,520,356 | 47,405,801 | ||||||||||||
Loop Industries, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands of U.S. dollars, except per share data) | As at | |||||||
| November 30, 2023 | February 28, 2023 | |||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 9,366 | $ | 29,591 | ||||
Restricted cash | 1,000 | 1,000 | ||||||
Sales tax, tax credits and other receivables | 411 | 1,075 | ||||||
Inventories | 937 | 727 | ||||||
Deposits on equipment | 8,460 | 3,395 | ||||||
Prepaid expenses and other deposits | 470 | 636 | ||||||
Total current assets | 20,644 | 36,424 | ||||||
Investment in joint venture | 381 | 381 | ||||||
Property, plant and equipment, net | 2,267 | 2,545 | ||||||
Intangible assets, net | 1,485 | 1,210 | ||||||
Total assets | $ | 24,777 | $ | 40,560 | ||||
Liabilities and Stockholders' Equity | ||||||||
Current liabilities | ||||||||
Accounts payable and accrued liabilities | $ | 1,560 | $ | 2,510 | ||||
Customer deposits | 1,000 | 1,012 | ||||||
Current portion of long-term debt | 501 | 62 | ||||||
Total current liabilities | 3,061 | 3,584 | ||||||
Long-term debt | 2,814 | 3,240 | ||||||
Total liabilities | 5,875 | 6,824 | ||||||
Stockholders' Equity | ||||||||
Series A Preferred stock par value | - | - | ||||||
Common stock par value | 5 | 5 | ||||||
Additional paid-in capital | 171,510 | 170,370 | ||||||
Additional paid-in capital - Warrants | 20,385 | 20,385 | ||||||
Accumulated deficit | (171,878) | (155,883) | ||||||
Accumulated other comprehensive loss | (1,120) | (1,141) | ||||||
Total stockholders' equity | 18,902 | 33,736 | ||||||
Total liabilities and stockholders' equity | $ | 24,777 | $ | 40,560 | ||||
Loop Industries, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in thousands of U.S. dollars) | Nine Months Ended November 30, | |||||||
| 2023 | 2022 | |||||||
Cash Flows from Operating Activities | ||||||||
Net loss | $ | (15,995) | $ | (26,724) | ||||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation and amortization | 400 | 411 | ||||||
Stock-based compensation expense | 1,140 | 9,969 | ||||||
Gain on disposition of asset | - | (6,704) | ||||||
Accretion and accrued interest expenses | 53 | 118 | ||||||
Changes in operating assets and liabilities: | ||||||||
Sales tax and tax credits receivable | 670 | 20 | ||||||
Inventories | (210) | (426) | ||||||
Prepaid expenses | 147 | (24) | ||||||
Accounts payable and accrued liabilities | (955) | (2,652) | ||||||
Customer deposits | (12) | 1,000 | ||||||
Net cash used in operating activities | (14,762) | (25,012) | ||||||
Cash Flows from Investing Activities | ||||||||
Proceeds from disposition of assets | - | 8,559 | ||||||
Deposits on equipment | (5,065) | (1,271) | ||||||
Additions to property, plant and equipment | (10) | (68) | ||||||
Additions to intangible assets | (378) | (225) | ||||||
Net cash used in investing activities | (5,453) | 6,995 | ||||||
Cash Flows from Financing Activities | ||||||||
Repayment of long-term debt | (47) | - | ||||||
Net cash (used) provided by financing activities | (47) | |||||||
Effect of exchange rate changes | 37 | (419) | ||||||
Net decrease in cash | (20,225) | (18,436) | ||||||
Cash, cash equivalents and restricted cash, beginning of period | 30,591 | 44,061 | ||||||
Cash, cash equivalents and restricted cash, end of period | $ | 10,366 | $ | 25,625 | ||||
Supplemental Disclosure of Cash Flow Information: | ||||||||
Income tax paid | $ | - | $ | - | ||||
Interest paid | $ | 63 | $ | - | ||||
Interest received | $ | 347 | $ | 36 | ||||
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 LoopTM branded PET resin suitable for use in food-grade packaging and polyester fiber, thus enabling our customers to meet their sustainability objectives. LoopTM 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 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 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, 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.
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FAQ
What is the value of the non-dilutive financing from Reed Management?
What are the standards met by Loop's LoopTM branded PET resin?
Where did the groundbreaking ceremony for the Ulsan ARC take place?
What is the net loss reported by Loop Industries for the three-month period ended November 30, 2023?
