Loop Industries Q3 2026 Earnings Report

Loop Industries EPS Results

• Actual EPS: -$0.06
• Consensus EPS: -$0.07
• Beat/Miss: Beat by +$0.01
• One Year Ago EPS: N/A

Loop Industries Revenue Results

• Actual Revenue: $0.09 million
• Expected Revenue: $0.78 million
• Beat/Miss: Missed by -$689.00 thousand
• YoY Revenue Growth: N/A

Loop Industries Announcement Details

• Quarter: Q3 2026
• Date: 1/14/2026
• Time: After Market Closes
• Conference Call Date: Thursday, January 15, 2026
• Conference Call Time: 8:45AM ET

Loop Industries (NASDAQ:LOOP) (NASDAQ:LOOP) is a technology innovator in the sustainable plastics sector. The company has developed a proprietary depolymerization process that breaks down end-of-life polyethylene terephthalate (PET) plastic and polyester fiber into their base molecules. These purified monomers are then repolymerized into virgin-quality PET resin suitable for new packaging applications, creating a closed-loop recycling solution that addresses global plastic waste challenges.

With its headquarters in Terrebonne, Quebec, Loop Industries operates pilot and demonstration facilities to validate and refine its technology. The company’s business model centers on licensing its depolymerization process and establishing joint ventures with material producers and consumer goods firms. Through strategic partnerships with industry leaders, Loop aims to scale its technology across North America, Asia-Pacific and Europe, enabling large-scale production of sustainable PET resin.

Founded in 2014 by CEO Daniel Solomita, Loop Industries has progressed from early research and development to commercial engineering and project development. The company has secured collaborations and offtake agreements with major packaging and beverage brands, reflecting growing demand for recycled content solutions. Loop’s technology is designed to handle various waste streams, including colored and contaminated plastics that are difficult to recycle through conventional mechanical methods.

Under the leadership of Daniel Solomita, the company is focused on executing commercial milestones and expanding its global footprint. Loop Industries continues to invest in engineering, regulatory approvals and supply chain partnerships to accelerate the adoption of its sustainable PET resin. By offering a scalable, closed-loop recycling platform, the company positions itself as a solution provider to the plastics and packaging industry’s long-term sustainability goals.

Loop Industries Q3 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Nike anchor contract — Loop executed a multi-year, fixed-price supply agreement with Nike (including a take-or-pay element) to be an anchor offtaker for the Infinite Loop India facility, validating demand for its Twist textile resin.
• Positive Sentiment: India project on track — The 70,000-ton Infinite Loop India plant is reported on budget and on schedule with Toyo engaged for detailed engineering, construction completion targeted for Q4 2027, and debt syndication underway (project debt ~$130M expected to close soon).
• Positive Sentiment: Europe license and modular strategy — Loop sold a license to Reed/Société Générale for a similar 70,000-ton plant (lead site in Germany), expects meaningful engineering milestone revenue from that project, and says modular construction will materially lower CapEx versus traditional builds.
• Negative Sentiment: Liquidity and funding needs — Q3 cash operating expenses were $2.2M (down YoY) but corporate liquidity stood at $7.7M and is expected to decline; Loop is actively raising equity (approximately $28M equity contribution cited for ELITE) to fund its JV equity and near-term operating needs.
• Positive Sentiment: Technology-market fit and scalability — Loop emphasizes its low-temperature depolymerization as uniquely suited for hard-to-recycle post-consumer textiles, citing regulatory tailwinds in Europe (enforcement from 2028), a sub-three-year payback for the India plant, and plans to scale additional capacity financed by plant cash flows.

Presentation

[Operator]

Good morning, ladies and gentlemen. Thank you for standing by, and welcome to Loop Industries' third quarter fiscal 2026 corporate update call. At this time, all participants are in a listen-only mode. Following prepared remarks, we will open the call for questions. Instructions will be provided at that time. This conference call is being recorded today, Thursday, January 15th, 2026. The earnings release accompanying this call was issued after the market closed yesterday, Wednesday, January 15th, 2026. On the call today are Daniel Solomita, Founder and Chief Executive Officer, Spencer Hart, Chief Financial Officer, and Kevin O'Dowd, Head of Investor Relations. I would now like to turn the call over to Kevin O'Dowd to read the company's forward-looking statements disclaimer.

[Kevin O'Dowd, Head of Investor Relations at Loop Industries]

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, beliefs, future plans and strategies, anticipated events, and other matters regarding future performance. Forward-looking statements involve known and unknown risks and uncertainties that may cause actual results to differ materially from those expressed or implied. For a discussion of these risks and uncertainties, please refer to the risk factors in forward-looking statements sections of our most recent annual report on Form 10-K, our quarterly report on Form 10-Q with the SEC, and the earnings release issued earlier today. These filings are available on the SEC's website at sec.gov or through our investor relations teams. With that, I'll now turn the call over to Daniel Solomita, Founder and Chief Executive Officer of Loop Industries.

[Daniel Solomita, CEO at Loop Industries]

Thank you very much, Kevin. Q3 was a busy quarter for Loop as we moved towards the construction phase of our Infinite Loop India manufacturing facility and progressing with our partnership with Reed Management, Société Générale Group, for our project in Europe. I'm pleased to report on several positive developments. The Infinite Loop India project is on budget and on schedule. Before getting into the details, I want to officially welcome Spencer Hart joining Loop as CFO. I've gotten to know Spencer well over the past year since he joined our board of directors. His leadership and knowledge of the capital markets and financing structures will be a great asset for Loop moving forward. In Q3, we announced that we have executed a supply contract with Nike, the large American sports apparel company, to be an anchor customer for the Infinite Loop India manufacturing facility.

[Daniel Solomita, CEO at Loop Industries]

The contract is for Loop to supply Nike with a fixed amount of Twist, our textile-to-textile polyester resin, on an annual basis at a fixed price for multiple years. There's a guaranteed take-or-pay element to the contract as well, which means if Nike does not take the delivery of the material, they still have to pay us a percentage of the sales price. We are currently in discussions with several CPG and apparel brand companies to secure additional offtake agreements. Textile-to-textile is becoming a very important growth driver as European regulations are being put in place to mandate more recycled content in clothing and recycled content coming from textile-to-textile, which means starting from a polyester textile waste and producing a new polyester textile with it. We're forcing the apparel companies to find a solution to recycling old clothing at the end of its life.

[Daniel Solomita, CEO at Loop Industries]

Loop's technology is uniquely suited to recycle post-consumer textile waste. Post-consumer textile waste is difficult to recycle because of the different components that go into making the clothing. You often have polyester mixed with cotton, polyester mixed with nylon, button, zippers, etc., and all of these components have different monomers or starting components, and for this reason, it poses a tremendous challenge to recycle. Typical recycling is done at very high pressure, high temperature, where you're either forcing the depolymerization to be done under very extreme conditions, or you're simply just melting the plastic down into a new form, and both of those do not work well for the textile industry because of the different components, and where Loop's technology overcomes that is because of our low-temperature depolymerization. What we do is, at very low temperature, we break down the polyester into the DMT and MEG.

[Daniel Solomita, CEO at Loop Industries]

And because of the low temperature, all of the other components, like the cotton, the nylon, the buttons, and the zippers, they stay whole, and we filter them out after the depolymerization, which gives us a huge advantage. And that's why Loop's technology is uniquely suited to be able to process this type of clothing waste. Our project in India is also located next to a free trade zone, so we'd be able to import the waste clothing from Europe or from other parts of the world into that free trade zone and then transport that to our facilities to help the brands in Europe be able to recycle the material once they've collected it. So it's a really huge benefit to Loop. And this government regulation is starting in 2026, and it's going to start being enforced in 2028, which is exactly the right timing for us.

[Daniel Solomita, CEO at Loop Industries]

Our plant is scheduled to complete construction at the end of 2027, so 2028 is a perfect timing for us to be able to do this, so because of all of these regulations, we're really seeing an uptick in the demand for the textile-to-textile side, and we were on the phone the other day with a very large textile manufacturing clothing company, and they said textile-to-textile is not a nice-to-have anymore. It's a must-have because of the European regulation, so that's going to be a big driving force in the future. 66% of all of the PET and polyester manufactured in the world, which I believe is about 85 million tons per year, 85 million tons per year, is coming from the polyester textile side, so it's a really huge shift in the marketplace, which we are really uniquely suited to be able to capitalize on.

[Daniel Solomita, CEO at Loop Industries]

The Indian facility is perfectly located for that. Besides the low-cost manufacturing, like I said, it's near the textile hub in India, the Gujarat province, a lot of textiles. The main feedstock we'll be using for the process is textile for the textile-to-textile. It's really perfect timing for us and perfect timing for this Indian project. On the engineering front, we hired Toyo, the large Japanese engineering and construction company, to complete the detailed engineering, which started November 1st and runs through the construction of the plant. Toyo has a very large presence in India and has done tremendous work to date. Our engineering team is now fully deployed on working for this project and generating revenue for Loop from this project from the joint venture. We really feel that we're in really good hands with Toyo.

[Daniel Solomita, CEO at Loop Industries]

They're doing an excellent job, and we're excited to be working with them through the construction of the facility. Debt syndication is moving well. We are building a syndicate of lenders for the project debt financing. We've received several term sheets from multilateral development banks, sovereign wealth funds, as well as international and local commercial banks. The terms so far are in line with our expectations, and we anticipate closing the debt financing in the coming months in line with our project schedule. So that's really the updates on India. As far as the progress with our partnership with Reed Société Générale Group, as you know, we sold Reed SocGen a license to our technology to build one plant in Europe. SOCGEN has spent time working on site selection. I believe they started off with looking at 20 sites across Europe. They've narrowed it down to three.

[Daniel Solomita, CEO at Loop Industries]

There's one lead site in Germany that is being negotiated right now, and we think that should be finalized very shortly, sometime probably the end of January, beginning of February, at which time we anticipate to begin generating meaningful revenue and profits from providing the engineering for that project. So the engineering and milestone payments will be over the next three years for the project. And we believe that that would cover all of Loop's back office expenses for the next several years. Cash operating expenses for the quarter were $2.2 million, reflecting a year-over-year decrease of $1.1 million. At the end of the third quarter, we had total liquidity available of $7.7 million. In the coming quarters, this number will continue to decrease.

[Daniel Solomita, CEO at Loop Industries]

The operating cash expenses will continue to decrease as more expenses are transferred to the joint venture in India and the project in Europe, as well as we've seen some meaningful reductions in other areas of our annual spend. Our focus is on raising the remaining financing required for our equity contribution to Elite and for the operating expenses until the startup of the Indian facility. We are engaged with multiple parties regarding financing to fund our investment in Elite. This capital, along with anticipated engineering revenues derived from the India and European projects, is expected to fund Loop's ongoing operations until its first facility becomes operational. I'd like to turn it over to Spencer Hart now, our new CFO, and let Spencer say a few words.

[Spencer Hart, CFO at Loop Industries]

Thanks, Daniel. It's nice to be on the call with you on one of my first days of being CFO. As a brief introduction, I've spent over 30 years in my career in investment banking, and I've followed Loop for many years. About a year ago, I joined the board of directors, and I'm a big believer in the company and Daniel and in the whole management team. I think there's an opportunity here to build a great company and create significant value in the process. During my investment banking career, one of my areas of focus was raising equity and debt capital for my clients, and so I'm going to be very focused on supporting Daniel in raising the capital for Loop to bring us to the next stage of our strategic development. For this quarter, Daniel gave you a good update on the business.

[Spencer Hart, CFO at Loop Industries]

The detailed quarterly results are in our report, which were filed last night. I would just point out that the company has managed expenses very well in the third quarter, bringing cash operating expenses down over $1 million from last year's third quarter. We have opportunities to reduce that further, and some of those opportunities have already been locked in. With that, I'll pass it back to Daniel for closing remarks. Mute.

[Daniel Solomita, CEO at Loop Industries]

Oh, sorry about that. Thank you very much, Spencer. In conclusion, I'm really pleased with the progress we're making both in India and in Europe, starting to really make meaningful revenue and profitability from the engineering fees in Europe and in India. Are you going to be able to sustain our back office spend for the many years coming? So that's really a really positive development for us. And we're really confident in the financing as well. So looking forward to getting all this done in this quarter. With that, I'll open it up for questions.

[Operator]

Thank you. We will now begin the question and answer session. 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. Please ensure that your microphone is unmuted locally before proceeding with your question. Our first question today comes from the line of Gerard Sweeney with Roth Capital Partners. Please go ahead. Your line is now open.

[Gerard Sweeney, Analyst at ROTH Capital Partners]

Good morning, Daniel, Spencer, and Kevin. Thanks for taking my call.

[Spencer Hart, CFO at Loop Industries]

Hey, Jerry.

[Gerard Sweeney, Analyst at ROTH Capital Partners]

So I had a question.

[Spencer Hart, CFO at Loop Industries]

Good morning.

[Gerard Sweeney, Analyst at ROTH Capital Partners]

I had a question on Nike.

[Spencer Hart, CFO at Loop Industries]

Hey, Jerry.

[Gerard Sweeney, Analyst at ROTH Capital Partners]

Sorry. You guys can hear me, correct?

[Spencer Hart, CFO at Loop Industries]

Yes, can hear you fine. Thank you.

[Gerard Sweeney, Analyst at ROTH Capital Partners]

Got it. So, question on Nike, or actually the facility in India, 70,000 metric tons. Nike, obviously, huge global brand, great opportunity for Loop. Just curious, how much of the facility in India is under contract? And you have Nike, and I believe you have a few other people. Maybe you could just delve into where it sits on the output and who's going to do offtake for the output.

[Daniel Solomita, CEO at Loop Industries]

Yeah, we expect to have. Thanks for the question, Jerry. We expect to have probably between five to six customers total for the facility. Today, we have Tyrell Plus, and we have Nike. We're in negotiations with several other CPG brands on the packaging side for Europe. So some of our customers that we've dealt with and we've had long-standing relationships that we produced products for before, that we have products on the shelves with them in different geographical regions today. We're finalizing negotiations with them for packaging for the European market and the textile side as well for a few other textile companies. So I would suspect we'll probably have another three to four customers to have the entire capacity of the facility under contract.

[Gerard Sweeney, Analyst at ROTH Capital Partners]

Got it, so it's going to be a mix of packaging and textile, and on that front, are pricing (I know you don't necessarily want to give pricing, but maybe in broad strokes or broad terms) textile and packaging, is it similar pricing and margins, or is there one area better than another, and if you don't want to go into that right now, that's fine. Yeah.

[Daniel Solomita, CEO at Loop Industries]

Yeah. No, I think overall, we have a target average sales price for the facility. And so we're really unique in a technology that we're able to play in both sides, right? We can play on the packaging side, create FDA-approved food-grade plastic for water bottles, and we can also play on the textile side. And so we're agnostic. We can do both, which really positions us uniquely in the marketplace to be able to deliver on, "Hey, if the bottle market is hotter, then we can produce more bottle. If the fiber market is hotter, we can produce more fiber." So right now, we're gauging the different levels.

[Daniel Solomita, CEO at Loop Industries]

I would say right now, the textile side of the Loop, there are higher premiums being paid on the textile side because of the textile-to-textile, the regulation coming in, and a little bit more of the uniqueness on that side where both sides can get, so the bottle sides can get mechanical recycling to give them a certain percentage of what they need. But if they want the quality, then they have to come to Loop for the quality that the virgin quality material. So right now, I would say probably textiles, you'll get a little bit of a higher premium there, but it's very comparable. It's really also on the customer's need. It's what does the customer really need, and what does the customer's margins look like? Generally, the textile companies or the fashion companies work with a little bit higher margin, and we are the finished product.

[Daniel Solomita, CEO at Loop Industries]

We are the textile. So that polyester fiber that we're making is the actual textile. Whereas if you think about the packaging side and the bottle players, we're the container that their drink comes in. So we're not the actual product. We're the packaging around the product. So it's a little bit of a different mentality, but we can play on either market, and we're ready to move as needed.

[Gerard Sweeney, Analyst at ROTH Capital Partners]

Gotcha. And another question on that front. This is maybe on the marketing side and probably something that hasn't been brought up in a while, but I know historically you've always said, even on some of the sort of runs you've done for Evian, it's made with Loop or Loop material. Are you still going to be able to market the textile and packaging with some of that marketing opportunity? So like Loop Made with Loop recycled product or Loop Inside, along those fronts?

[Daniel Solomita, CEO at Loop Industries]

Yeah. We definitely want to continue on the marketing side with that. On the packaging side, we've had that in the past. We expect to continue that in the future. On the textile side, we created a sub-brand for Loop's material called Twist, and so that's a part of the discussions when we talk about this with the textile companies. One of the big things that the textile companies need from us is to be able to recycle their waste because now they're going to be responsible for collecting their waste. And that's going to put a huge pressure on the system, so they're going to have to organize the collection. Once the collection is there, they're going to need our technology to be able to recycle that for them.

[Daniel Solomita, CEO at Loop Industries]

And so those are really great opportunities to do co-marketing and co-branding around those entire circularity of the entire product portfolio. So them sending us the waste, we processing it, sending it back to them, creating that loop, that's something that we think we can really take advantage of on the marketing side.

[Gerard Sweeney, Analyst at ROTH Capital Partners]

Gotcha. And then finally, just last question, just timeline for the India facility. Just if you can remind us, groundbreaking and then mechanical and completion and then commissioning, and so on. Thanks.

[Daniel Solomita, CEO at Loop Industries]

Yeah. I mean, groundbreaking is a term that's kind of an outdated term because what is groundbreaking? Our project is the project has already been approved. There's not like there's any approval needed. Our project is moving forward. Loop and our partner, very dedicated, focused to get this done. We've started all of the detailed engineering, which feeds into the construction. So the project is on schedule and on budget. We are moving forward and having construction completed in Q4 of 2027. So that was always the goal, and we're on that timeline as well. So you'll see some meaningful updates on the progress of the facility. We will eventually have some type of a ceremony on the site. But the project is greenlit. It's not like the project is not going to be moving forward or there's one event that has to happen.

[Daniel Solomita, CEO at Loop Industries]

We're just moving forward methodically, getting this done, getting the debt financing in place, and then we can move forward with the construction of the project.

[Gerard Sweeney, Analyst at ROTH Capital Partners]

Got it. Daniel, appreciate it. And Spencer, welcome aboard. Thanks.

[Spencer Hart, CFO at Loop Industries]

Thanks, Jerry. Thank you.

[Operator]

Thank you. Our next question comes from Marvin Wolff with Paradigm Capital. Please go ahead. Your line is now open.

[Marvin Wolff, Analyst at Paradigm Capital]

Hi. Yes. Good. Yes. Good morning, guys. Can you hear me okay?

[Spencer Hart, CFO at Loop Industries]

Hey, Marvin. Yeah, I can hear you fine.

[Marvin Wolff, Analyst at Paradigm Capital]

Can you hear me okay?

[Spencer Hart, CFO at Loop Industries]

Yeah.

[Marvin Wolff, Analyst at Paradigm Capital]

Okay. Good.

[Spencer Hart, CFO at Loop Industries]

Sounds good.

[Marvin Wolff, Analyst at Paradigm Capital]

Good, good, good. Yeah. I just had a question with respect to the German site selection that's going on now. How big a plant would that be once that comes on board?

[Daniel Solomita, CEO at Loop Industries]

So it's the same size. It's 70,000 tons capacity, exactly the same size as the Indian facility.

[Marvin Wolff, Analyst at Paradigm Capital]

Okay, and I guess it's too early to talk about customers for that plant, but I would assume you're in early discussions with people.

[Daniel Solomita, CEO at Loop Industries]

Yeah, so the European plant would mainly be on the packaging side because the supply chain for textiles is mainly in Asia, but there could be some textiles being recycled at the facility. Because of this European regulation that's come in, having the facility in Germany, having these textile companies being able to send us the material in Germany to be able to process is going to be a big advantage for them, so it's going to be the regular our same customers, the same Loop customers that we've always been dealing with are going to be the customers supporting that facility as well. Most of the European packaging and textile brands are going to be customers of the plant. Because of the low-cost nature, what we did is we brought the low-cost mentality of India into Europe by doing modularization.

[Daniel Solomita, CEO at Loop Industries]

So being able to build our technology in modules in a low-cost country, shipping them on-site allows us to really reduce CapEx, which allows us to offer better pricing to our customers. So we've seen a reduction of CapEx of probably close to 50% by doing it modular versus doing it in stick build. And so that's a big part of our business moving forward. That engineering that I keep on talking about as well, taking our design from India and now building that into modular fashion to be able to build this in a low-cost country, put together Lego blocks, disassemble it, ship it to Europe, and reassemble the Lego blocks to be able to reduce CapEx and offer better pricing to our customers. So we're really competitive on pricing in the European market, and this project in Europe is going to be very competitive as well.

[Marvin Wolff, Analyst at Paradigm Capital]

If you could just remind us, what is the size of the debt package you're looking at?

[Daniel Solomita, CEO at Loop Industries]

For India, the debt package is $130 million, which is 70% of the.

[Marvin Wolff, Analyst at Paradigm Capital]

Okay. And what is the equity component that Loop is going to have to provide?

[Daniel Solomita, CEO at Loop Industries]

The equity component that Loop is going to have to provide is approximately $28 million.

[Marvin Wolff, Analyst at Paradigm Capital]

$28 million. Okay. Very good. Well, you're making great progress, and it's good to see it come along with some continued, if you will, intensity.

[Daniel Solomita, CEO at Loop Industries]

Yep. It's steady progress, doing everything the right way, and getting that plant built for the end of 2027. That's the goal.

[Marvin Wolff, Analyst at Paradigm Capital]

Yeah. Okay. Very good. Well, the end of 2027 comes faster than you think, right? It's only less than 24 months away now.

[Daniel Solomita, CEO at Loop Industries]

Yeah. The engineering teams and Toyo and the joint venture's engineering team and our partner Ester's engineering teams are working full out, nonstop. Everyone is fully dedicated to that facility. The amount of work going on behind the scenes is tremendous. You don't always see that because there's not a lot of press releases or things around that, but the amount of work being done to get this facility done is tremendous. All hands on deck getting this built. It all starts with the engineering and the technology, right? That's the foundation of all these things. You can build a plant, and then it doesn't work. That's where we've spent the time, did it the right way.

[Daniel Solomita, CEO at Loop Industries]

We've had this plant operating in Canada for over five years, getting all of the knowledge, all of the learnings, all of the engineering work that's been put into these plants, and so now we've done it the right way. We've done it methodically. It hasn't always been the easiest road, but we're doing it very methodically to get us to where we need to be in 2027 to deliver this product to our customers.

[Marvin Wolff, Analyst at Paradigm Capital]

That's very good, and congratulations for bringing it this far, and it will continue on, I'm sure. Thanks again for taking my questions this morning, guys.

[Daniel Solomita, CEO at Loop Industries]

All right. Thank you so much.

[Operator]

Our next question comes from Varyk Kutnick with Divyde Capital Partners. Varyk, please go ahead.

[Varyk Kutnick, Analyst at Divyde Capital Partners]

Hey, guys. Thanks for the time this morning. Can you hear me?

[Daniel Solomita, CEO at Loop Industries]

Yep. Hi, Varyk. How are you?

[Varyk Kutnick, Analyst at Divyde Capital Partners]

Cool. Good to see you, Daniel. So in the past, you've talked about the gross CapEx per pound in India being $0.61 with maybe net around $0.75. Does that same number translate to the European facility, especially when you talk about the modularity of it?

[Daniel Solomita, CEO at Loop Industries]

So the European facility will be a little bit more expensive. So you could take the module cost, the CapEx that you provided. That would be, let's say, the cost for the modules. So then you have to add the transportation and the reconnection of the modules. So there's a little bit more cost involved. The good thing about the European, and especially when we go to these site selections, the most important thing, and one of the biggest costs in these plants is all of the utilities: the natural gas, the hot oil, the steam generation, the cooling towers. So in a chemical plant, the utilities are the most expensive part of the entire project. And the beauty of this project and the beauty of the facility that we have in Germany is that it's a big chemical plant. It's a site that has utilities.

[Daniel Solomita, CEO at Loop Industries]

And so, instead of us having to put in our boilers, putting in our steam generation, putting in the natural gas connection, putting in the cooling towers, the nitrogen, all of those things that go around the utility package, it's already there on-site. So that's going to be able to offset some of the increased costs for the transportation and the reconnection of the modules. So we expect the plant to be a little bit more expensive than the Indian project, but not tremendously more expensive because of the offset of the utilities. Where in India, it's a pure greenfield. We have to put everything on the site. This is a site that has a lot of utilities. So instead of having to build our own boilers on-site, we just connect into the existing boilers that the site already has. And so it's more efficient from a CapEx perspective.

[Daniel Solomita, CEO at Loop Industries]

And that's a big part of the decision. When you choose these sites, if you have utilities on-site, it brings down CapEx tremendously. Energy costs are also very, very important, and the ability to transport the modules on the site. So it will be a little bit more expensive, Varyk, but it's still generally in the same numbers.

[Varyk Kutnick, Analyst at Divyde Capital Partners]

Right. I mean, if I look at the rest of the field, you guys are about half the cost on a CapEx per pound basis. Where does that magic come from?

[Daniel Solomita, CEO at Loop Industries]

The magic comes from the learnings that we really have to reinvent ourselves. So what happened a little bit of going back a little bit, what happened during COVID is the price of building everything went up. So the price of CapEx went up if you're building a house, you're building a store, or you're building a chemical plant. The CapEx went up. And during COVID, that was fine because the CapEx went up, but the price of plastic went up as well. So you had a trade-off. You had plastic at very high prices because of very tight supply chains, and you had CapEx going up. So the economics still made sense. What happened right after COVID, once China opened up its factories again and Asia opened up its factories, the price of plastic came down. CapEx didn't continue increasing at the same rate, but they leveled off.

[Daniel Solomita, CEO at Loop Industries]

They still remained high, but the price of plastic came down, and that's why not only plastic, but all commodities. That's why you saw a lot of projects in this space get canceled during that time because there was just a mixed mass of high CapEx versus lower commodity prices, and so we had to reinvent ourselves as a company. We had a project that fell into the same path, and that's where we had to reinvent ourselves, so going into India, low-cost manufacturing, lower labor rates, lower labor rates translates to lower construction costs. Everything from cement, steel, installation costs. Everything that we're doing now is done in a low-cost industry. We don't have any specialized equipment. In a chemical plant, everything is tanks, reactors, agitators, heat exchangers, pumps. Those are all equipment that can be sourced locally.

[Daniel Solomita, CEO at Loop Industries]

So if I'm building it in India, Indian labor is making those parts rather than, let's say, building it in Germany where German labor, which is significantly higher, builds those projects. And if you look at India right now, labor costs are 80% cheaper in India than they are in China today. And that's where we can do this low-cost manufacturing, and that's how we can be so successful.

[Varyk Kutnick, Analyst at Divyde Capital Partners]

Gotcha. I appreciate the color on that. And obviously, is it safe to assume that your return on invested capital? Obviously, you guys hold this at a JV level, but your payback period would be significantly better. And hopefully, that's the type of cash you could use to fund future growth. Or if we think about more facilities, is it going to come out of cash flow of India, or is it going to be funded through other means?

[Daniel Solomita, CEO at Loop Industries]

It's going to be funded through the cash flows in India, 100%. So in India, we have enough space to build a 100,000-ton capacity right after the first one is done. So the total capacity of the site is going to be 170,000 tons. We've done multiple feedstock studies. We've hired different third parties to do the studies, easily identified over 500,000 metric tons of textile waste, just textile waste. Forget about the packaging waste. Just textile waste available for us to process, just in India, not counting for imports from Europe or imports from Vietnam, 500,000. So we have 170,000 capacity on the site. Some of it will be packaging waste for the packaging customers, so it won't all be textile waste. But we'll be able to all of that is going to be financed through the cash flow.

[Daniel Solomita, CEO at Loop Industries]

The money that we get, the 5% for the royalty fee plus the covers all of our back office expenses and more because we're really being cautious with our cash and spending. And like I said, a lot of the cost of the R&D and the engineering and everything else is now being paid by the joint venture. So we've lightened the amount of cash at the head office that our burn is. And so the licensing fee plus the engineering fees, we're going to be cash flow positive at the corporate level just through those. And so everything else is going to be coming out of the funds from the facility, from the joint venture. The payback is less than three years in India for the plant. So yeah, it's financed.

[Varyk Kutnick, Analyst at Divyde Capital Partners]

I came over in Europe then. Reed Management sees this and says, "They get to partner with you. They design, license, engineer, collect with minimal balance sheet risk." And hopefully, with the payback period under three years, this is a scalable project well past India, Europe, and other places.

[Daniel Solomita, CEO at Loop Industries]

Absolutely. So especially.

[Varyk Kutnick, Analyst at Divyde Capital Partners]

Nice. Thanks again for the Nike deal. I don't think people have mentioned that, and what a big deal that is, so.

[Daniel Solomita, CEO at Loop Industries]

Yeah. Nike's huge. Obviously, if you could choose, if I could look back and choose any customer that I wanted to work with, Nike's right up there as one of the top companies that anybody wants to have as a customer, right? Such a great organization, such a great company, such a great brand. And they have all of these different brands within Nike that are so successful. So we were really honored to be able to have Nike as our anchor customer. And it's just tremendous working with a company that size. And they're true innovators. They need textile to textile, and they're really moving quickly to get that done. So we couldn't be happier about having Nike as the anchor customer here.

[Varyk Kutnick, Analyst at Divyde Capital Partners]

Yeah. I mean, it's all this on the internet, so I'm going to throw it in here. But I mean, obviously, Nike produces about 2 billion pounds of plastic and shoes per year. I should say clothing and shoes per year. I mean, if I just use India, which will do 154 million pounds, I'm here about 5% of their total capacity. So I think the scale of this, when you actually think and zoom out, especially when you throw in other apparel players, it's bigger than we could ever dream of.

[Daniel Solomita, CEO at Loop Industries]

Yeah. Like I said, so the entire polyester fiber market is 66% of 85 million tons. So it's a huge number. So we have 170,000 tons out of. We're talking about somewhere 60 million tons. So there's a tremendous amount of growth on the textile side. And Loop's Technology is uniquely positioned to handle that because of the low temperature methanolysis. That's the key to all of this, to be able to not contaminate your stream with the cotton, with the nylon, with the buttons, with the zippers, with all of the different components that go into these textiles. That's the key to Loop's Technology. And that's why we're uniquely positioned to be able to do this.

[Varyk Kutnick, Analyst at Divyde Capital Partners]

Awesome. I appreciate the color. And good luck to you guys. Spencer, welcome aboard and look forward to following along. I think you guys have got a great start to the year. Look forward to seeing what's next.

[Daniel Solomita, CEO at Loop Industries]

Thank you, Varyk.

[Spencer Hart, CFO at Loop Industries]

Thanks, Varick.

[Operator]

Thank you. We have not received any further questions, and so I'll hand the call back over to Daniel for any closing comments.

[Daniel Solomita, CEO at Loop Industries]

Yeah. Nothing further from me. Thank you very much, everybody, and we'll be speaking again soon.

[Operator]

Thank you. This concludes our call. Thank you all for your participation. You may now disconnect your lines.

Participants

Executives

• Daniel Solomita, CEO
• Kevin O'Dowd, Head of Investor Relations
• Spencer Hart, CFO

Analysts

• Gerard Sweeney, Analyst at ROTH Capital Partners
• Marvin Wolff, Analyst at Paradigm Capital
• Varyk Kutnick, Analyst at Divyde Capital Partners