Loop Industries - Earnings Call - Q2 2026

Executive Summary

• Q2 FY26 delivered zero revenue and a narrower net loss as cost controls took hold; cash operating expenses declined to $2.43M and available liquidity ended at $9.86M, which management believes is sufficient to fund operations while securing project financing for India and covering operating needs until start-up.
• Commercial momentum improved: Loop signed a multi‑year anchor offtake with a leading global sports apparel brand for Twist polyester from Infinite Loop India and an offtake with Taro Plast for DMT; alliances with Shinkong and Hyosung TNC broaden textile reach.
• Project execution advanced: ELITe (India JV) executed an agreement to acquire a 93‑acre site in Gujarat (reducing project cost estimate by $5M), KPMG is syndicating project debt with positive lender engagement, and Europe site selection neared final stage with engineering revenues expected to begin in 2026.
• Versus S&P Global consensus, Q2 revenue missed ($0.00M vs $0.78M est*) while EPS was in‑line (−$0.07 vs −$0.07 est*); prior two quarters showed a large revenue beat in Q4 FY25 on license income and a revenue miss in Q1 FY26 on timing of engineering revenue*.

Note: Estimates marked * are retrieved from S&P Global.

What Went Well and What Went Wrong

• What Went Well

  • Anchor offtake secured with a world‑leading sports apparel brand for Infinite Loop India; take‑or‑pay construct supports bankability.
  • Additional commercial traction: DMT offtake with Taro Plast; strategic alliances with Shinkong (Taiwan) and Hyosung TNC (Korea) extend distribution into textile spinning networks.
  • India execution milestones: agreement to acquire 93 acres in Gujarat (−$5M vs plan), KPMG‑led debt syndication generating term sheets from multilateral and commercial lenders; management highlighted “landmark quarter” progress.

• What Went Wrong

  • No revenue in Q2 (vs $0.023M YoY) as Loop remains pre‑commercial; net loss narrowed but persists (−$3.204M).
  • Interest expense increased due to accrued 13% PIK dividend on Series B Convertible Preferred Stock ($0.341M in Q2), pressuring “other expense” line until commercial cash flows ramp.
  • Stockholders’ equity turned negative (−$5.468M) by end‑Q2; liquidity declined to $7.31M cash and total available liquidity $9.86M, elevating importance of timely project financing and engineering revenue start in 2026.

Transcript

Operator (participant)

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Loop Industries' Second Quarter Fiscal 2026 Corporate Update Call. After the presentation, you will have the opportunity to ask any questions, which you can do so by pressing star, followed by the number one on your telephone keypad at any time. This conference is being recorded today, Thursday, October 16th, 2025. The earnings release accompanying this call was issued yesterday. The earnings release accompanying this call was issued after the market closed yesterday, Wednesday, October 15th, 2025. On our call today are Loop Industries' Chief Executive Officer, Daniel Solomita, and Kevin O'Dowd, Head of Investor Relations. I would now like to turn the conference over to Kevin O'Dowd to read the disclaimer regarding forward-looking statements.

Kevin O'Dowd (VP of Communications and Investor Relations)

Thank you, Operator. Before we begin, please note that this morning's discussion will include forward-looking statements within the meaning of U.S. securities laws. These statements relate to our expectations, beliefs, projections, future plans and strategies, anticipated events, and other future performance matters. Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially. For a more complete discussion of these risks and uncertainties, please refer to the risk factors and forward-looking statement sections in our most recent quarterly report on Form 10-Q filed yesterday with the SEC. Our annual report on Form 10-K filed with the SEC on May 29th, 2025, as amended in the Form 10-K/A filed May 30th, 2025, and our accompanying press release issued yesterday. These documents are available at www.sec.gov, loopindustries.com, or from our Investor Relations team.

With that, I'll turn the call over to Daniel Solomita, Chief Executive Officer and Founder of Loop Industries. Go ahead, Kevin.

Daniel Solomita (Founder and CEO)

Thank you very much, Kevin. Thank you, everyone, for joining the call this morning. Q2 was an extremely busy quarter for Loop as we moved towards the construction phase of the Infinite Loop India manufacturing facility. I'm pleased to report several positive developments. We have executed a supply contract with a leading sports apparel company in the world to be our anchor customer for the Infinite Loop India manufacturing facility. The contract is for Loop to supply our customer with a fixed amount of Twist, our textile-to-textile polyester resin on an annual basis at a fixed price for multiple years. There is a guaranteed take-or-pay element to the contract as well. This means if the customer does not take delivery of the material, they still pay us a percentage of the sales price. So it's a very strong contract, a very bankable contract.

We also executed a supply contract with Taro Plast, an Italian specialty polymer manufacturer, to buy DMT produced from the Infinite Loop India. DMT is a very interesting market for Loop as we are one of the only companies that can supply virgin quality DMT made from 100% recycled content, and it allows us to have a diversified portfolio. Today, we offer textile-to-textile polyester resin for the apparel and home goods companies, FDA-approved bottle-grade resin for the packaging industry, and a DMT monomer or MEG monomer. We are currently in discussion with several CPG and apparel brand companies to secure additional offtake agreements for the Infinite Loop India project. ELITe, our JV in India with Ester Industries, executed an agreement for the acquisition of approximately 93 acres of land in Gujarat, India, for a total consideration of $10.5 million.

This represents a $5 million reduction in the amount included in our project cost estimate. The site has excellent strategic access to textile waste for feedstock, renewable energy, and industrial infrastructure. As a reminder, the total cost estimate produced by Tata Consulting Engineers was $176 million. We are currently intending to complete construction below this number as we are $6 million under budget at this date. KPMG has done a great job so far in building a syndicate of lenders for the project debt financing. We have begun to receive term sheets from multilateral development banks, sovereign wealth funds, as well as international and local commercial banks. The proposed terms we have seen so far are in line with our expectations. In Q2, we executed two textile industry partnerships, one with Shinkong from Taiwan and one with Hyosung from South Korea.

Both companies are industry leaders in textile spinning and have long-standing relationships with all of the apparel companies and fabric mills. Most apparel companies are not used to buying polyester resin. They buy spun fiber or rolls of fabric or even completed garments. Integrating into these supply chains can be difficult, which is why we executed these partnerships. These partnerships allow Twist, our branded textile-to-textile polyester resin, to have an expanded reach beyond our customer base and will be offered by Hyosung and Shinkong to their customers who buy spun fiber from them today. In our partnership with Société Générale Group, we are coming close to completing the site selection process in Europe for the initial Infinite Loop facility. The final remaining sites all have most, or in some cases, all of the utilities needed for our technology. This will significantly reduce the project's overall CapEx.

All of the sites have direct access to a port, which allows for Loop's technology to be modularized, again driving down CapEx. The standardized modules will be built in a low-cost manufacturing country and then shipped and assembled on-site. Once the site is acquired, we anticipate to begin generating meaningful revenues and profits from engineering and milestone payments, which will cover all of Loop's back-office expenses for the next several years. Cash operating expenses for the quarter were $2.43 million, reflecting a year-over-year decrease of $1.74 million. At the end of the second quarter, we had total available liquidity of $9.86 million. We will bring that $2.43 million down further every quarter for the foreseeable future. In conclusion, I am very pleased with the progress being made on both projects. We are hitting all of our milestones needed to ensure successful projects.

With that, I'll open it up to any questions.

Operator (participant)

Thank you. We will now begin the question and answer session. As a reminder, if you would like to ask a question today, please do so now by pressing star, followed by the number one on your telephone keypad. If you change your mind or you feel like your question has already been answered, you can press star, followed by two, to withdraw yourself from the queue. We will just take a brief pause to allow any questions to come in. Our first question today comes from Brandon Rogers with Roth Capital Partners. Brandon, please go ahead.

Brandon Rogers (Analyst)

Sure. Kevin, Daniel, thanks for taking my question. I'm on for Gerry Sweeney.

Daniel Solomita (Founder and CEO)

Hi, good morning.

Brandon Rogers (Analyst)

Good morning. So I just had a couple of questions. I was wondering if you could expand on the anchor offtake agreement with the Global Sports brand. I know you said pricing is fixed with the take-or-pay aspect of the contract. What percentage of the 70 metric ton capacity is now covered by the contracted offtake agreements? And then also.

Daniel Solomita (Founder and CEO)

Yeah, we're not using the.

Brandon Rogers (Analyst)

Oh, sorry.

Daniel Solomita (Founder and CEO)

No, go ahead with the second part.

Brandon Rogers (Analyst)

And then the second part, do you expect any additional CPG offtake agreements expected before year-end?

Daniel Solomita (Founder and CEO)

Okay. So the first part of your question, we don't get into specific volumes of the contract for negotiation reasons with other customers, but it's a significant contract for Loop having our anchor customer in place. And the second part of your question, yes, we do anticipate having other supply agreements finalized by the end of the year.

Brandon Rogers (Analyst)

Thank you. And then another question. Where does the India project stand in terms of the construction timeline and critical path, the timeline for groundbreaking and commissioning on that site?

Daniel Solomita (Founder and CEO)

So the work stream done by KPMG on the debt syndication has been really fantastic. They've done a great job. We've started to receive several term sheets from different multilateral development banks, sovereign wealth funds, as well as international and local commercial banks. So we're going through the terms right now, and there's a negotiation going on, and there's some good competitive tension for the debt syndication. And so that work stream is going really well. Construction side, we are finalizing a detailed engineering contract with an engineering firm to begin the detailed engineering. So the project is trending on time. Our goal is to have the project up and running by the end of 2027, and that's the goal that we're maintaining. Customer contracts will be one of the gating items to get the debt financing completed.

So we're on schedule with the project to have the project built by the end of 2027.

Brandon Rogers (Analyst)

Awesome. Thank you. And then one more for me. The Taro Plast offtake is a key milestone. Can you talk about the commercial pipeline for DMT and polymers beyond automotive? And then on the sportswear brand, should we expect their Twist products in the market in 2026 or beyond that?

Daniel Solomita (Founder and CEO)

For the sports brand, this contract is for the Indian facility. The facility will be up by the end of 2027, so you can expect that to be starting in 2028. The customer is an existing customer of our facility in Montreal, Canada today. We do supply them with material today, so there could be small amounts of material that are used in 2026 and 2027 prior to the larger commercial facility in India being up and running. DMT is an interesting monomer. Today, it's made from fossil fuels, starts off from crude oil. There's only a handful of companies in the world, Eastman and SK Chemicals, that produce DMT today and ship it around the world. It's mainly used for specialty polymers in computer chips, some specialty chemicals, the automotive industry, the textile industry. There's a lot of uses for DMT.

We're one of the only ones, maybe the only one. I'm not sure if there's any competition out there for virgin quality DMT made from 100% recycled content, and so we've been working with certain chemical companies on qualifying our material and looking at engaging that market. It's just interesting for us to be able to diversify our portfolio to have the FDA-approved bottle-grade resin, the textile-to-textile resin for the apparel brands, DMT for specialty polymers, and MEG, which is widely used by many different companies, so we can play in many different segments because of the flexibility that our technology has, so bringing on DMT customers is really interesting for us. We have access to DMT at our facility, and selling that off to the chemical companies is fantastic, so it's something we look forward to doing more of.

The chemical market is more of a spot market, so we'll be mainly using that on the spot market, but some companies do want to get access to the material and lock in some supply, so that was the reasoning for the Taro Plast contract.

Brandon Rogers (Analyst)

Awesome. Thank you, Daniel. I appreciate it. I'm going to jump back in line.

Daniel Solomita (Founder and CEO)

Thank you.

Operator (participant)

Thank you. Our next question comes from Barrett Kutnick with Gagnon Securities. Please go ahead. Your line is now open.

Morning, Daniel. Morning, Kevin. How are you guys?

Daniel Solomita (Founder and CEO)

Fantastic. Thank you, Barrett.

Thanks. Let's get into it. So Shinkong and the Hyosung contract, could you maybe unpack what the commercial roles actually look like? Are we talking co-branded yarn, integrated fabric production, just trying to get a sense of how the economics will work with them?

So the economics, that's a great question. So the big thing with the textile and the apparel industry is the brands are not used to buying resin because that resin has to get spun into a fiber, then the fiber needs to get put into a fabric, then the fabric gets dyed and treated. So some companies just buy garments ready-made. Some people buy spun fiber or the fabric rolls. So certain customers are more used or would prefer to buy spun fiber rather than buying the resin and having to figure out the supply chain of who to send the resin to. And so what we've done is we've partnered with the two biggest and most respected spinning companies in the world, Hyosung and Shinkong, which work with all of the different players in the marketplace.

So now that there's two ways this relationship works, is we can bring our customers and say, "If you prefer to have a spun fiber, we can work with Hyosung or we can work with Shinkong, and they can spin the fiber for you, and we can sell you the fiber directly." On the other side, there's a lot of different smaller players out there that don't buy huge volumes, and those are usually the ones that have trouble buying resin. Hyosung and Shinkong can now offer Loop's material to their customers and say, "We can offer you this material spun into a fiber or made into a fabric, and this is the underlying technology." So for larger customers, Loop will always have the relationship with the customers, so we'll be selling the material to them.

For smaller players, that's where Shinkong can come in and aggregate maybe 10 different small suppliers together to make enough volume to purchase directly from us. So it's really on a customer-specific kind of scenario, but we're working really well. We just did a trade show in Paris for the apparel company with Hyosung. It was very, very well received by a bunch of smaller and a lot of these different smaller fashion brands that are looking for sustainability, and they already have the relationship with Hyosung or Shinkong, and so this brings our material into those mixes.

Awesome. Thank you for the color on that. And then I'm reading between the lines here from what you've said and others, demand outweighs supply by multiple orders of magnitude. You've got the luxury of being selective with customers here. How are you thinking about diversification, one? And then India is 70 metric tons at nameplate capacity. Is there room for expansion there, or would you rather allocate incremental demand to other sites?

Great question again. So for us, it's about having a more diversified portfolio. So that's why we have the textile-to-textile for the apparel industry. We have the packaging side mainly on the bottles. So we're working with some of the beverage companies, especially for the European market, where there is significant regulation in Europe where they have to use a percentage of recycled content in their packaging. And so those brands are looking for really high-quality PET resin. So all of our packaging customers so far that we're discussing with would be taking the material from India, shipping it into Europe, and using it within their European packaging. So that diversifies the portfolio there. And then the DMT and the MEG are really interesting markets depending on pricing and what the market is looking like.

Sometimes you get these squeezes in the market when people really need DMT or MEG, we'll be able to supply them with that material. So really having a diversified portfolio is really important for us. So we want to do some packaging, some textile, and some on the chemical side, which I think covers us no matter what the market comes in two years from now. We'll be ready to play in each one of those markets, and we'll always allocate a certain amount of material for the spot markets. The second part of your question, yes, 70,000 tons is the first facility. Now, the land we bought, the 93 acres of land, that's enough for two facilities. So we are planning an expansion quite rapidly after the first facility is up and constructed. The second facility that's being planned is 100,000 tons.

So we would have approximately a 50% increase in capacity for the second facility on the same existing site, which again will bring down CapEx because we'll be able to reuse part of the utilities that are on the site. So we are planning to have a second expansion in India. India right now, for me, from everything I've seen, I don't think there's a better place in the world right now to be putting up one of these facilities as it's the lowest-cost structure that we can see. And that goes a long way with being able to offer our customers a very high-quality product without the need for significant green premiums. And that's the key to having a long-term successful project here. But we are working with Société Générale, the French bank in Europe. There are certain regulations in Europe that are driving brands to buy European-sourced material.

So there's significant incentives right now in France to be able to source material from within the European Union, which is really making the accelerated timeline on the project in Europe. That's really important for us. Like I said, we anticipate as soon as these, I think we're down to four different sites in Europe that the teams are looking at. All of the sites come with full utilities or almost all of the utilities, which will drive down CapEx. They're all close to a port, which allows us to bring in modules, which again brings down CapEx. And for us, it brings in meaningful engineering revenue, and it brings in meaningful, those two other milestone payments of $5 million each. So the sooner that we can start getting that engineering revenue and tapping into those two milestone payments, I mean, that covers all of our back-office expenses for several years out.

That would be a fantastic achievement.

Okay. Thanks for that. And then I'm going to sneak one more in right here. I saw in the two you guys just put out that the cash covenant, or I don't know if it was a cash covenant, but on your line of credit was removed in October. That's a good vote of confidence right there. Was there anything that triggered that?

We asked for the covenant to be removed. I think.

According to vote of confidence?

It's a vote of confidence in the sense that now I think we can have more predictable revenue streams and profitability coming from the engineering services, and that gives banks the confidence to be able to give us more leeway and flexibility on those types of instruments.

Cool. I'll jump back in the queue. Thanks, guys.

Thank you, Barrett.

Operator (participant)

Thank you. As a reminder, if you would like to ask a question today, please do so now by pressing star, followed by the number one on your telephone keypad. Our next question is a follow-up from Barrett Kutnik with Gagnon Securities. Please go ahead, Barrett.

Back on so quickly. So this was probably, listening to your comments in the beginning, the update on the debt financing for India, this indication is probably the most confident I've ever heard you guys sound. So you have no worries about the equity contribution for the India JV, even though it's somewhat unfunded right now. You're confident you guys will be able to reach that, and liquidity will be strong moving into 2026?

Daniel Solomita (Founder and CEO)

Yeah. We have several different options. As we've said in the past, we have the government funding in place for a portion of the equity. We have other options for the remaining equity that's needed for Loop's position. So very confident on that side. And the debt syndication is going really well. They started the process, I believe, in August, end of August. So within maybe a month and a half, two months, we've seen a lot of interest for this project. A lot of sovereign wealth funds and these multilateral development banks are looking for projects in India, sustainability-linked. So really, really happy with the workstream with KPMG so far. They're bringing top-quality players to the table, and the terms that we've seen proposed so far are in line with our expectations. So that financing workstream is working really, really well.

Okay. And then one more. The $1.5 million engineering services agreement, remind me, is that recognized upfront, or is that spread across a couple of quarters? Yeah. Color on that.

Yeah. That's going to start, I would assume, in the beginning of November, once we kick off the detailed engineering phase. So there's a detailed engineering firm that's going to be contracted by the joint venture, so an external firm, and then we work side by side with that firm. So that revenue will be starting next month.

Okay. Seems like things are finally working out for you guys. I'm excited. So good luck with everything. Look forward to hearing about next quarter.

Yeah. It's definitely the most progress we've ever had on a project so far. Again, testament to low-cost manufacturing. The shift and the transition to becoming a low-cost producer in the world we live in today was really the right decision for us, being able to offer our product to our customers at prices that they're used to paying things at, and there's no need for significant green premiums. I think that's a key decision factor. And we have a fantastic partner in India who's really hit all of the marks: the construction, the cost estimates, the whole India factor, the feedstock. We've locked in feedstock. We have two independent studies on the feedstock confirming the amount of feedstock available, the pricing of the feedstock.

So we've really done a great job in preparing this project, and it shows the confidence that KPMG and the lenders have for the project to be sending us term sheets, shows how solid of a project this is.

Yeah. I'm actually going to give you some runway here because you mentioned something I've always thought about. The green premium, people have always prioritized sustainability, but have always forgotten about the second piece, about profitability. It seems from our conversations you've always talked about, "Without sustainability, you can't have a product here, or you can't have profitability." So talk about that equation right there. Sustainability with profitability. Do you think every project you guys go into, you're set to keep that equation in balance?

I mean, sustainability is still very important, and we see a shift maybe in which brands are more or less committed to sustainability. So I think that that's a cyclical type of a market where sustainability can become more important or less important. The underlying factor is all companies right now are looking for bringing down costs and being cost-competitive and having a good product on the market at a good price. So for us, the ability to offer our customers the highest quality material with a sustainability angle is fantastic. And then being able to bring that in at a cost that they're very comfortable with or the same that they're buying other lesser quality material for really allows for them to make an easier decision on signing a contract with us.

It's not super easy to sign contracts, but you're able to really have really in-depth discussions with these companies because they can see the quality, they know the quality, they know the sustainability angle, and now they have it at a price that makes a lot of sense to them. So that's really refreshing and a testament to the low-cost nature in India. On the textile side, there's a lot of interest in getting more and more textile-to-textile material into the marketplace. And for us, being able to offer that at a really competitive price is great for the apparel companies. On the flip side, at that competitive pricing, we're still making really strong returns for our investors and for our project.

And so, if I compare this to things that I've seen in the past, this is by far the most profitable project we've ever seen, and being able to offer it at a good price to the customers.

Awesome. Thanks for all the color on it, Daniel, and good luck with the rest of the year here.

Thank you very much.

Operator (participant)

Thank you. At this time, we do not have any further questions registered, and so as a final reminder, if you would like to ask a question today, please do so now by pressing star, followed by the number one on your telephone keypad. We have not received any further questions. Until I turn the clock over to the management team for any closing remarks.

Daniel Solomita (Founder and CEO)

Thank you all very much for attending the conference call. It's been a really exciting quarter for us as we move down the path towards construction. Looking forward to updating you at our next call. Thank you.

Kevin O'Dowd (VP of Communications and Investor Relations)

Thank you.

Operator (participant)

Thank you, everyone, for joining us today. This concludes our call, and you may now disconnect your line.