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Loop Industries, Inc. (LOOP)·Q3 2025 Earnings Summary

Executive Summary

  • Closed $20.8M (€20M) Reed Societe Generale transactions: $10.4M (€10M) financing via Series B Convertible Preferred (13% PIK, convertible at $4.75) and $10.4M (€10M) up-front for the first European technology license; proceeds fund India JV and operating needs .
  • Q3 revenue was $0.052M; net loss widened to $(11.9)M, driven by an $8.46M impairment tied to the SK Geo Centric JV termination; EPS was $(0.25) vs $(0.09) a year ago .
  • India project advanced: Gujarat site confirmed; Tata Consulting Engineers and a Big Four engaged; groundbreaking expected in Q2 2025, completion late 2026, commercial operations in 2027 .
  • CFO reduced head office cash expense guidance to ~$10M for next calendar year and reported Q3 cash burn of $2.8M (vs $2.9M in Q2), with run-rate expected at ~$0.9M/month in Q4 and $0.8–$0.9M/month in fiscal 2025 .
  • Potential near-term catalysts: engineering services revenue begins next quarter; EUR 10M per European project recognized over ~24 months; additional license milestone payments targeted around end-2025/early-2026 .

What Went Well and What Went Wrong

What Went Well

  • Sold first European technology license and closed financing with Reed Societe Generale, validating commercial readiness: “sold its first license… for an up-front payment of $10.4 million (€10 million)” .
  • Engineering services revenue set to commence next quarter; per-project engineering scope expected ~EUR 10M through PDP, feasibility, detailed engineering and construction over ~24 months .
  • India JV progressing: land due diligence in Gujarat, feedstock strategy anchored in textile waste for circular fashion; expanded offering to spun polyester fiber to serve brands as a Tier 3 supplier .

What Went Wrong

  • Recorded $8.46M impairment on polymerization equipment following SKGC JV termination, materially increasing Q3 expenses and widening the net loss .
  • SKGC JV canceled; management emphasized strategic shift away from deploying equity in high-cost markets, with European project pacing dependent on PET pricing dynamics and regulation .
  • Liquidity pressure at quarter end: cash and equivalents fell to $0.323M as of November 30, 2024, necessitating reliance on Reed proceeds and expected government support for India .

Financial Results

Core P&L — YoY comparison (three months ended November 30; oldest → newest)

MetricQ3 2024Q3 2025
Revenue ($USD Thousands)$26 $52
Research and Development ($USD Thousands)$1,833 $1,377
General and Administrative ($USD Thousands)$2,458 $2,148
Impairment of machinery & equipment ($USD Thousands)$0 $8,460
Total Expenses ($USD Thousands)$4,422 $12,117
Net Loss ($USD Thousands)$(4,244) $(11,912)
EPS (Basic & Diluted, $USD)$(0.09) $(0.25)

Notes: Gross margin and EBITDA were not disclosed in Q3 materials; net loss and EPS include the impairment impact .

Operating expense and cash burn trajectory (sequential; oldest → newest)

MetricQ1 2025Q2 2025Q3 2025
Total Operating Expenses ($USD Millions)$5.2 $4.5 $12.1 (incl. impairment)
Cash Expenses / Cash Burn ($USD Millions)$3.2 $2.9 $2.8
Stock-Based Compensation ($USD Thousands)$800 SBC included in G&A legal discussion; total SBC not broken out quarterly in narrative $400 Not disclosed
Nonrecurring Legal ($USD Thousands)$800 $800 Not disclosed
Project Costs ($USD Thousands)$600 $500 Excluded from cash burn definition

KPIs and Balance Sheet Highlights

KPI / Balance ItemQ3 2025
Cash & Cash Equivalents ($USD Millions)$0.323
Credit Facility Draw ($USD Millions)$2.372 (nine months)
Net Cash Used in Operating Activities (Nine Months, $USD Millions)$(8.635)
Head Office Cash Expense Run-Rate ($USD Millions/Month)~$0.9 in Q4; $0.8–$0.9 in fiscal 2025

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Head office cash expenseCY2025$12M/year ($1.0M/month) ~$10M/year; ~$0.8–$0.9M/month in fiscal 2025 Lowered
Cash burn run-rateQ4 2025~$1.0M/month ~$0.9M/month Lowered
India groundbreaking2025 start of constructionFirst half 2025, “probably March” Q2 2025 Updated timeline
India construction completion2026Not specifiedLate 2026; commercial operations in 2027 New specificity
Engineering services revenue start2025Not specifiedBegins next quarter New
European license milestone payments2025–2026Not specifiedEnd-2025/early-2026 milestone payments New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2025, Q2 2025)Current Period (Q3 2025)Trend
Reed financing & licenseDetailed terms and closing expectations; $11M CPS + $15M debt; closing targeted for Nov Closed Dec 23; $10.4M CPS + $10.4M license; proceeds fund India and ops Progressed to close
India JV executionSite criteria, CapEx ~$165M, Loop equity ~$25M; feedstock secured; banking syndicate work Gujarat confirmed; Tata engineers and Big Four engaged; groundbreaking Q2’25; completion late ’26; operations ’27 Advancing
Licensing model (high-cost geographies)Strategy to license in Europe; lower Loop equity in high-cost regions First European license sold; EUR 10M engineering per project; milestone payments timing Scaling
SKGC JV statusIndustry pricing/regulatory context; JV still contemplated JV terminated; impairment recognized Exited
Macro/PET pricing & regulationEU 50% recycled content mandate from Jan ’25; premium for high-quality recycled PET Circular fashion demand and textile-to-textile positioning emphasized Supportive narrative
Engineering servicesCost recovery evolution discussed Revenue begins next quarter; per-project scope outlined Ramping

Management Commentary

  • “Loop closed its financing and technology licensing transactions for total cash proceeds of $20.8 million (€20 million)… $10.4 million (€10 million) Series B Convertible Preferred… $10.4 million (€10 million) up-front payment for the technology license” .
  • “Groundbreaking is expected to be in the second quarter of 2025, with construction completion anticipated in late 2026 and commercial operations commencing in 2027” .
  • “We have further expanded our product offerings to include spun polyester fiber, enabling us to become a Tier 3 supplier… we’ve established a global network of spinning partners” .
  • “Research and development costs totaled $1.38 million… G&A… $2.15 million… cash burn rate for the third quarter was $2.8 million… reducing our full year expense… to $10 million… run rate… about $900,000 per month in the fourth quarter… $800,000–$900,000 a month [in fiscal 2025]” .

Q&A Highlights

  • License milestone timing: two attainable milestone payments targeted around end-2025/early-2026; engineering services likely start with PDP near end-2025 .
  • Engineering services magnitude: ~EUR 10M per SocGen project over ~24 months spanning PDP, feasibility, detailed engineering and construction .
  • SKGC vs Europe feasibility: Korean context affected by SK Innovation’s broader restructuring and market dynamics; Europe seen as structurally different with regulatory-driven recycled content demand .
  • India execution milestones: completion of engineering packages (Tata & Loop), DPR and debt syndication (Big Four), customer contracts, feedstock and spinner partnerships ahead of Q2 groundbreaking .
  • Spinner relationships: tolling model to spin chip into fiber under customer specs; material qualified with large spinners; potential for high-volume opportunities in fast fashion .

Estimates Context

  • S&P Global Wall Street consensus for Q3 2025 (EPS, revenue, EBITDA) was unavailable at the time of request due to data access limits. As a result, estimate comparisons could not be performed. When available, comparisons will be anchored to S&P Global consensus.

Key Takeaways for Investors

  • The $20.8M Reed transactions and first European license materially validate Loop’s commercialization strategy and provide funding for the India JV and operations .
  • Q3 results were dominated by a one-off $8.46M impairment tied to SKGC JV termination; excluding that, R&D and G&A trended lower YoY, consistent with cost discipline .
  • India execution is in focus with Q2 2025 groundbreaking and a clear path to completion in late 2026 and operations in 2027, underpinned by circular fashion demand and textile waste feedstock .
  • Engineering services revenue should begin next quarter and can be meaningful (EUR 10M per European project over ~24 months), offering a nearer-term revenue stream ahead of plant commissioning .
  • Run-rate cash burn is being reduced (to ~$0.9M/month in Q4 and $0.8–$0.9M/month in fiscal 2025), lowering financing risk while license and services revenue ramp .
  • European project pacing will hinge on PET pricing and regulatory enforcement (e.g., EU recycled content), with milestone payments expected around end-2025/early-2026 .
  • With SKGC exit complete and Reed partnership established, the narrative shifts to disciplined execution (India build, engineering services, additional licenses) that could drive successive catalysts through 2025–2027 .