Loop (LOOP) Q4 2026 Earnings Call Transcript

Image source: The Motley Fool.

DATE

Thursday, May 28, 2026 at 8:45 a.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Daniel Solomita
• Chief Financial Officer — Spencer Hart
• Vice President, Communications and Investor Relations — Kevin O'Dowd

Need a quote from a Motley Fool analyst? Email pr@fool.com

TAKEAWAYS

• India Project CapEx -- Estimated capital expenditure for the Infinite Loop India facility is now $165 million-$170 million, down from a prior $190 million projection, due to foreign exchange, procurement, land savings, and engineering optimizations.
• Debt-Equity Structure -- Planned financing for the India facility targets a 70% debt and 30% equity mix, with Loop Industries (NASDAQ:LOOP) responsible for 15% of equity and Ester Industries providing the other 15%.
• Project Timeline -- India facility remains on track to commence operations in 2028, with full funding in progress and technical due diligence on Loop Industries’ technology to finish by mid-July.
• India Offtake Requirement -- The debt financing for the Indian project is contingent on having 50% of output secured in minimum three-year supply contracts, with the remainder covered by letters of intent (LOIs).
• Royalty Structure -- Loop Industries is entitled to a 5% royalty fee from the India joint venture, in addition to 50% facility ownership, with royalty payments expected to start in 2028.
• Customer Agreements -- The Nike (NYSE: NKE) contract for recycled PET in India is three years, fixed price and volume, and carries a 40% take-or-pay clause; other customers show willingness to sign LOIs if unable to execute long-term deals.
• European Expansion -- The joint venture with Société Générale (EPA: GLE) in Europe has purchased a license and selected BASF Industrial Park in Schwarzheide, Germany for Loop Industries’ technology deployment, with feasibility and engineering work to begin imminently.
• Engineering Revenue -- Revenue from engineering contracts related to the European project is expected to become "much more meaningful" within weeks to months as feasibility work starts, with current engineering services already generating revenue from the Indian venture.
• Government Funding -- Loop Industries will receive up to CAD 2.9 million in non-repayable funding from the Canadian National Research Council’s Industrial Research Assistance Program, supporting operations through October 2027.
• Operational Cost Reduction -- The company has executed targeted reductions in headcount, vendor contracts, and fixed expenses, delivering savings in areas such as insurance.
• Pricing and Margins -- PET prices have increased 30%-50% year-to-date, largely attributed to higher oil prices and global conflict, resulting in a pricing environment Loop Industries characterizes as "super competitive," with a claimed EBITDA margin of about 45% for the India facility at current index pricing.
• Liquidity Outlook -- Management expects sufficient liquidity through to the end of calendar 2026, and anticipates that engineering contracts are expected to fund back-office operations for the next few years.
• Longer-term Global Strategy -- Plans call for a second, larger facility in India using the current site’s capacity and modular plant designs produced in India for cost efficiencies in global deployments.
• European Regulatory Incentives -- Loop Industries notes that regulations in Europe create incentives for brands to source recycled PET within the EU, with the India-Europe free trade agreement protecting against certain tariff risks.

SUMMARY

Loop Industries (NASDAQ:LOOP) announced a reduced capex for its Indian facility, revised to $165 million-$170 million, and confirmed that debt financing is advancing with due diligence set to conclude by mid-July. Initial revenue growth is expected from engineering contracts tied to European feasibility work that will begin shortly. The India plant’s financing depends on long-term offtake agreements covering half its output, and the first royalty payments to Loop Industries from this project are scheduled for 2028. Loop Industries received non-dilutive government funding from Canada, and operational cost reductions have been achieved through headcount streamlining and vendor negotiations.

• Loop Industries stated PET prices have risen 30%-50% year-to-date, driven by external oil and conflict influences.
• Management reported that Nike’s take-or-pay contract in India is a fixed term and price, with other major customers in discussions for similar supply commitments.
• Loop Industries highlighted that, for the Germany project, modular construction using Indian manufacturing is expected to cut capital costs relative to typical European builds.
• Management anticipates a 45% EBITDA margin at the India site under current pricing and outlined a payback window of 1.5-2.5 years, contingent on market pricing.
• No customers hold right of first refusal on capacity, although some contracts include purchase option clauses.

INDUSTRY GLOSSARY

• Depolymerization: Chemical process of breaking PET plastics and polyester fibers into base monomers for re-polymerization into new resin.
• Take-or-pay: Contract requiring the buyer to either take delivery or pay for a minimum portion of agreed volume.
• LOI (Letter of Intent): Non-binding document expressing a commitment to enter into a formal agreement under stated terms.
• Offtake Agreement: Contract securing future output from a production facility, often required by project lenders.
• ICIS index: Industry-standard benchmark for pricing recycled PET, widely referenced in supply contracts.

Full Conference Call Transcript

Operator

Welcome to Loop Industries' Fourth Quarter and Full-year Fiscal 2026 Corporate Update Call. This conference is being recorded today, Thursday, May 28th, 2026. The earnings release accompanying this call was issued after the market close yesterday evening, Wednesday, May 27th, 2026. On our call today are Loop Industries' Chief Executive Officer, Daniel Solomita, Chief Financial Officer, Spencer Hart, and Kevin O'Dowd, Vice President, Communications and Investor Relations. I would now like to turn the conference over to Kevin O'Dowd to read a disclaimer regarding forward-looking statements.

Kevin O'Dowd

Thank you, Operator. Before we begin, please note that today's discussion will include forward-looking statements within the meaning of U.S. securities laws. These statements relate to our expectations, projections, future plans and strategies, anticipated events, business developments, project timelines, financing activities, commercial partnerships, and future performance matters. Forward-looking statements involve known and unknown risks and uncertainties that may cause actual results to differ materially from those expressed or implied during this call. For a more complete discussion of these risks and uncertainties, please refer to the risk factors in the forward-looking statement sections included in our most recent annual report on Form 10-K filed with the SEC, as well as last evening's earnings release.

These documents are available through the SEC's website at sec.gov and on the investor relations section of Loop Industries. With that, I'll now turn the call over to Daniel Solomita, Chief Executive Officer of Loop Industries.

Daniel Solomita

Thank you very much, Kevin. Good morning, everyone. Thank you for joining us for today's update call. We are making excellent progress in our global growth strategy by advancing our key partnerships in both India and Europe. Over the last few quarters, our team has focused heavily on commercial execution, capital discipline, and driving our proprietary technology towards large-scale global deployment. Today, we operate leaner, we are executing efficiently, and we have a highly visible path forward. I want to walk you through the major milestones we've recently achieved across our international partnerships and our internal operational efficiency initiatives.

Let's start with Infinite Loop India, where we have seen significant positive momentum on three fronts, government alignment, project economics, and financing. Our India joint venture has officially signed a memorandum of understanding with the government of Gujarat.

This provides us with vital formal alignment to support the development of our first large-scale commercial manufacturing facility in the region. The agreement is a major accomplishment. It is expected to streamline permitting, infrastructure coordination, and administrative processes. Crucially, this site can support multiple manufacturing facilities, enabling a seamless phased expansion strategy. Improved project economics. Through rigorous optimization, ongoing procurement refinements, land cost optimizations, and favorable foreign exchange movements, we have successfully reduced the estimated capital cost for the initial Indian facility. We now expect the CapEx to be approximately $165 million-$170 million, representing significant savings from our prior estimate of approximately $190 million.

This CapEx reduction is meaningful as it increases the overall project economics and lowers Loop's equity commitment. The project timeline has not changed. We expect the Infinite Loop India facility to be operational in calendar year 2028. Project debt financing.

The debt financing for the construction of the Indian facility is progressing well. The debt syndication process is well underway, and we have received several term sheets from international banks. These institutions are now moving into the technical due diligence stage of the process, signaling strong institutional confidence in our business model. The technical due diligence will be done at our plant in Terrebonne, which has successfully completed this type of due diligence several times in the past, most recently by Société Générale Group prior to licensing our technology. Customer engagement is strong. Our value proposition to customers is clear and well-received.

We offer the highest quality PET and polyester fiber made from 100% recycled content, and we are offering our material at similar pricing to what brands are paying for mechanical recycling PET today.

Mechanical recycling PET is significantly lower quality and unable to achieve 100% recycled content without major color and quality issues. Overall, PET prices are up 30%-50% year-to-date, mainly driven by higher oil prices. Shocks to the supply chain, as we have seen due to the conflict in Iran, serves as a reminder to purchasing departments that having long-term fixed price contracts from a reliable partner such as Loop is a valuable hedge to have. Moving on to Europe, our partnership continues to hit key milestones. As we previously announced, Infinite Loop Europe, our European joint venture with Société Générale Group, purchased a license to build a European facility using Loop's technology.

They have officially selected BASF Industrial Park in Schwarzheide, Germany as the site for their first facility.

This location offers world-class industrial infrastructure and benefits from a highly supportive regulatory environment aimed at strengthening the European Union's plastic recycling center. Following the successful site selection, the project is officially moving into the engineering and permitting phase. This phase kicks off with Loop's engineering team, providing the feasibility study, followed by a feasibility study and supply chain testing, which is all done at our Terrebonne facility. The feasibility study is expected to begin shortly and will be generating meaningful, high profitable revenue for Loop, and last approximately six months. Alongside our global commercial deployment, we have systematically evaluated our corporate overhead to ensure we are maximizing every dollar.

We have initiated three key targeted expense reduction initiatives to ensure Loop operates leaner.

Non-dilutive government funding, we are pleased to share that Loop is receiving advisory services and up to CAD 2.9 million in non-repayable funding from the National Research Council of Canada Industrial Research Assistance Program through its clean tech initiative. This funding extends through October 2027 and directly supports our operational readiness and industrial innovation without diluting our shareholders. We are continuing to strategically shift resources away from technology development and directly into commercial execution. This transition has resulted in a streamlined headcount and a meaningful reduction in corporate overhead. We have initiated an aggressive review of vendor contracts and conducted strict service audits across our key fixed overhead expenses.

This has already yielded material savings in fixed areas such as insurance. In summary, our foundational pieces are firmly in place.

Our commercial momentum in India and Europe, combined with our disciplined corporate expense reductions, gives us a clear capital efficient runway. We are uniquely positioned to commercialize our technology globally and create long-term value for our shareholders. Thank you to our partners, our talented team, and our investors for your continued support. With that, I'll turn the call over to the operator and open up the line for any questions. Thank you.

Operator

As a reminder, if you'd like to ask a question in today's call, simply press star followed by the number one on your telephone keypad. We'll take a brief moment to compile the Q&A roster. Your first question comes from the line of Brandon Rogers from ROTH Capital. Your line is now live.

Brandon Rogers

Hello, this is Brandon Rogers on for Gerard Sweeney. Thanks for taking my questions.

Daniel Solomita

Hi, Brandon. How are you?

Brandon Rogers

I'm good. First, where exactly are you in the debt syndication process, and what milestones remain before officially closing that? As it relates to the expected capital structure, what's the anticipated debt equity mix?

Daniel Solomita

The anticipated debt to equity split is 70% debt, 30% equity, of which Loop would be responsible for 15%. Our partner at Ester Industries is responsible for 15%, so we split the equity 50/50. The process, as I mentioned, we've reserved several term sheets from international banks, and now they are moving into the technical due diligence phase, where they do a technical due diligence on Loop's technology, which will be done here at our Terrebonne facility. Terrebonne facility has done several of these technical due diligences in the past.

Most recently, SocGen hired a third-party engineering firm to do a full technical due diligence on the technology prior to them licensing the technology and investing EUR 10 million into Loop. It's pretty standard for us. The banks have selected the engineering firm that will be doing the technical due diligence.

We're just finalizing the scope of work, and we expect that to be completed sometime towards the end of June, mid-July.

Brandon Rogers

Thank you. Taking into consideration the cash burn and with the cash think about liquidity over the next 12 months.

Daniel Solomita

Yeah, we have enough liquidity through to the end of this year. With the engineering contract that we'll be working on, Reid, with the pre-feasibility study and then the feasibility study, those engineering contracts are expected to fund our back-office spend for the next few years.

Brandon Rogers

Thanks. Just one more from me. Can you walk us through how Loop begins generating recurring cash flow from these projects, and when should we expect engineering services revenues to begin becoming more meaningful?

Daniel Solomita

Today, we already get engineering services revenue from the Indian joint venture. Every project where Loop's engineering team is working, we're getting paid for that work. Now with the feasibility study in Europe, that's when we'll start seeing much more meaningful engineering revenue and profitability from that engineering revenue. That's going to be coming up, I would say, within the next few weeks, potentially months. That's very short term. Now that the site has been selected, we're finalizing the engineering contracts, and that's when you'll see much more meaningful revenue from those engineering contracts.

From the projects in India, Loop has a 5% royalty fee on top of owning 50% of the facility, we would expect to start receiving that royalty fee in 2028, once the plant is operational.

As far as the European facility, besides the engineering services, there is also other milestones for the licensing agreement. Prior to construction, Loop would be receiving additional milestone payments from the Société Générale Group.

Brandon Rogers

Awesome. Thanks, Daniel. Appreciate the color. That's it for me.

Daniel Solomita

Thank you very much.

Operator

Your next question comes from the line of JP Geygan from Global Value Investment Corporation. Your line is now live.

JP Geygan

Hey, good morning, Daniel, and thanks for your time. A couple questions from me. You've obviously already announced an offtake agreement with Nike, but talk a little bit about where you are in discussions with other customers, and then how much of the expected volume for the India plant do you need to have offtake agreements for before the debt financing can be finalized?

Daniel Solomita

Yeah. We're aiming to have 50% of the facility signed in long-term contracts, and then the rest would be completed with LOIs. We're in negotiations with several of the large CPG companies for the additional offtakes, and we are in negotiations with several other textile companies or CPG companies for the LOIs as well. One of the challenges with customers is being able to sign these long-term contracts, because for them, it's two years before they can start receiving, let's say approximately two years before they can start receiving material, plus three-year contract after that. It's like a five-year commitment, where these brands are used to buying six months contracts, maybe a one-year contract.

These long-term contracts are a little bit more complicated for some of these brands to be able to sign.

We do have good visibility on being able to complete the goal of having 50% contract signed and then the rest done in LOIs with some of the existing customers that we have from our Terrebonne facility. There's no doubt in my mind whatsoever that if the plant was up and operational, we'd be able to sell 100% of the capacity of the facility because we offer the best quality material on the market for 100% recycled content, and that's been proven over and over again by all of the different CPG companies. Our price point, because of the Indian economics, having a CapEx of $165 million-$170 million, allows us to be super competitive on pricing.

Pricing has never come up as an issue with customers where we're too expensive.

We really have a really good formula where we have the best quality material at prices that the brands are buying a lesser quality material today. The difficulty there is just being able to get these companies, that takes a longer time for them to be able to execute contracts that are five years out.

JP Geygan

Got it. All right, thanks. Is the debt financing contingent on a certain amount of offtake being spoken for?

Daniel Solomita

Yeah, the debt financing is contingent on 50% of the offtakes signed in minimum three-year contracts.

JP Geygan

Okay. Thanks for clarifying that. I'm curious on the CapEx cost reduction from, I think it was $190 million to in the $165 million-$170 million range. Obviously, FX has something to do with that, but was there any other meaningful cost savings, or how do you drive that cost reduction?

Daniel Solomita

Yeah, I would say approximately 50% came from FX because the Indian rupee lost against the US dollar. When I talk about $165 million of CapEx, that's including all of the financing costs, land acquisition costs, engineering costs, and the construction costs. The FX portion would only be on the construction cost. Land acquisition, we saved $5 million from the land acquisition. Then there was other material savings from optimizing the process. We're working with suppliers in India or in other parts of the world that are lower cost than what we had in the initial estimates. It's a combination of purchasing optimization, land cost reduction, FX, and engineering.

JP Geygan

Okay. You announced maybe a week ago that you signed an MOU with the government of Gujarat. Help us understand what that means. Is it symbolic, or is there some sort of tangible benefit in terms of permitting, access, utilities, et cetera?

Daniel Solomita

Yeah, it's really validation. The project is important for the Gujarat government. The Gujarat government has this yearly review of projects and selects projects that they are getting behind. Our project was something that was important for them. Textile recycling, textile waste is a pretty big issue in India. India right now has some of the strictest, actually, the strictest rules on recycled content in packaging in the world. Today they have to have 40% recycled content, and they're going to go to 60% recycled content in packaging, which dwarfs Europe's 25% recycled content in packaging. India is very focused on helping pollution in the country and finding solutions.

Our technology being able to recycle the textiles and the textile hub being in Dahej and the Gujarat province, it's an important project for them to be able to recycle the textile waste.

Today that textile waste is either burnt, sent to landfill, or just discarded basically on the side of the roads. This is where having our project is going to help alleviate some of the pollution in the Gujarat province because of this textile waste, which has no other value today except for a technology like ours.

JP Geygan

Okay. Finally, at the risk of putting the cart in front of the horse, you've got visibility into some of the regulatory mandates coming down the pike, and obviously pretty good input from your customers right now. Have you started to think about what comes after the plant that you own in India and then the technology license in Europe in terms of additional plants and whether that's a build or license model and the timeline for starting to really make meaningful progress on those?

Daniel Solomita

The plan in India is to build a second facility, much larger facility, once this one is up and operating. We've bought enough land to be able to sustain two facilities on that same site. There's enough feedstock in Gujarat to be able to support a second site as well. The joint venture's plan is definitely, once we have six months, a year of stable operations at the plant, to begin the construction on the second plant right away. The engineering was conceived with the view on having that second plant at the site. That's going to be really important for us.

I wouldn't be looking to invest our dollars, our shareholders' dollars in high-cost manufacturing countries once we've seen what India can deliver. It's very rare to see projects go through engineering and go through detailed engineering and have CapEx reductions.

Usually, you're over budget. These are the first projects I've ever seen that are actually under budget. The cost structure in India allows us to be able to compete anywhere worldwide. Our customers, like Nike, they don't really care if the facility is in the U.S., in Canada, in Germany, or in India. What they care about is getting the best quality material at the best price, and that's what India can offer us. For us, investing our dollars, low cost manufacturing, India has huge potential. Potentially other parts, India is definitely somewhere we think we can build a very big base. As far as licensing, SocGen is building the first plant in Germany.

Through the site, through the exercises, they see an opportunity to potentially build more facilities.

European regulation is coming in where, trying to protect the recycling industry in Europe. More material coming from Europe. There's incentives if you're buying your recycled plastic from Europe rather than bringing it in from other parts of the world. Luckily for us, India and Europe have a free trade agreement. We're not affected by any of those type of tariffs or protectionisms. Licensing in other parts of the world is something that we'll definitely explore in other parts of the world. Yeah, for us, low cost manufacturing is our key. Licensing and higher cost manufacturing.

JP Geygan

Great. All right. That's all for me. Thank you.

Daniel Solomita

The last thing I'll add there is probably the way we bring low-cost manufacturing into higher cost countries. Like in Germany, what we're doing is we're taking the experience of India and the low-cost manufacturing of India and building our technology in modules. The modules will be built in India with low-cost labor, low-cost materials, and then shipped on-site to Germany and assembled on-site. You're limiting the amount of high-cost labor that goes into some of these other countries, like in the European countries. That's the way we see significant savings for this project in Germany, where we could see potentially a 50% CapEx reduction rather than if you would build it as a stick-built project in Germany.

Operator

Your next question comes from the line of Varyk Kutnick from DIVYDE Capital Partners. Your line is now live.

Varyk Kutnick

Hey, Daniel.

Daniel Solomita

Hi, Varyk.

Varyk Kutnick

Remind me again on the current offtake agreement with Nike. The terms, is it take or pay? Are there committed minimum volumes? Is everyone else going to follow that same framework for underwriting over in India?

Daniel Solomita

The Nike contract is a three-year term, renewable after three years. It is a fixed price contract, fixed volume contract, and it's a 40% take or pay. If they don't take the material, they pay us 40% of the value of the contract. Nike has pretty ambitious goals to eliminate fossil fuel-based polyester in their supply chain, textiles, and footwear. We see that volume growing bigger over time as our plants become up and running and Nike's commitment to sustainability just increases. Other customers, there are a lot of the fixed price contracts, fixed term contracts are coming from the textile industry. On the beverage side, with the packaging companies, it's more of an index pricing.

We use a, let's say in Europe, you use the ICIS index pricing, which is published monthly on what recycled PET is sold for.

We use a cap and a collar. We have a floor pricing that it can never go lower than a certain price, and a cap, and it can never go higher. It hedges us on the downside, hedges them on the high side, and we trade within a band. It's about EUR 275 per ton band that we trade within. That's typically the way the beverage companies like to price the contracts.

Varyk Kutnick

All right. As far as Nike here, do they have any type of right of first refusal on capacity in the future in India and Europe, et cetera? Is that built into their contract?

Daniel Solomita

First right of refusal, no. We don't give first right of refusals to anybody. They do have an option to purchase more material in their contract, so they can exercise an option to purchase more material. We have some customers that, like I said earlier, they just cannot sign long-term. Their corporate governance doesn't allow them to sign these long-term material contracts, but they're willing to sign LOIs with us. Even the LOIs have a price. They have committed volumes. There are those cases where some brands are just not able to sign these long-term contracts.

Now, they're willing to support us with an LOI, firm LOIs, and they're willing to help us in talking to the banks and things of that nature. Being very supportive.

Varyk Kutnick

Help me with some of these numbers here. Obviously construction costs have gone down, which is excellent. If I think of the 70 million tons, metric tons annually at $170 million to build, we get about $0.44 of CapEx per pound. Does that include polymerization?

Daniel Solomita

Yes. So that's depolymerization and polymerization and all utilities. This site is greenfield, complete greenfield. There is no infrastructure whatsoever. That includes depoly, repolymerization, land, engineering, and all the financing costs through startup and commissioning until the plant is operational. The construction piece, just the construction piece is approximately $115 million out of the $165 million, let's say.

Varyk Kutnick

Got you. Okay. That would put what, if I'm doing rough math in my head here, if you guys are going to do, you've said in the past, your EBITDA margin or EBITDA would be roughly around $50 million, $60 million. Does that still sound right on this plant?

Daniel Solomita

It's an interesting dynamic right now. Some of the dynamic pricing that we see with the ICIS, that index pricing. Index pricing is up about 30%-40% right now, since the beginning of the year, mainly because of the conflict in Iran. That price floats up and down. If you're taking the floor price, that's probably where we would be somewhere at the floor price today. It's a little bit higher than that. We're looking at about 45% EBITDA margin, somewhere roughly around there.

Varyk Kutnick

Right. Either way, though, your payback period on this build all in is about 1.5 year-2.5 year, depending on where pricing falls. Is that number still reasonable?

Daniel Solomita

Yes. One of the numbers just got better by reducing CapEx by $20 million-$25 million.

Varyk Kutnick

Gotcha. We should see some real progress with a serious timeline, second half of this year.

Daniel Solomita

Yeah. Next, now the debt piece has fallen into place. We have great international banks behind the project with their term sheets. Now completing the technical due diligence over the next four-six weeks, is something that Loop is very used to doing. We've done it many times for either customers or other partners. Like I said, most recently for SocGen before they licensed the technology and they made the investment into Loop. That's really what's ongoing there. That's going to be completed, and then we're going to wrap all of the different terms and get everything completed for the debt.

Varyk Kutnick

Cool. Well, good luck with everything. Look forward to following along.

Daniel Solomita

Thank you very much.

Operator

There are no further questions. I'd like to turn the call back to Daniel Solomita for closing remarks.

Daniel Solomita

Yep. Just again, thank you very much for everyone's support. Thank you to the team, and thank you to our international partners. Have a nice day.

Operator

This concludes today's meeting. You may disconnect.

This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. Parts of this article were created using Large Language Models (LLMs) based on The Motley Fool's insights and investing approach. It has been reviewed by our AI quality control systems. Since LLMs cannot (currently) own stocks, it has no positions in any of the stocks mentioned. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.

The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.