LOOP

Good morning, ladies and gentlemen. Thank you for standing by. 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.

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.

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.

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.

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

Hi, Brandon. How are you?

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?

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.

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

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.

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?

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.

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

Thank you very much.

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

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?

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.

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

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

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?

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.

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?

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.

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?

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.

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

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.

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

Hey, Daniel.

Hi, Varyk.

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?

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.

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?

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.

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?

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.

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?

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.

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?

Yes. I mean, the numbers just got better by reducing CapEx by $20 million-$25 million.

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

Yeah. I mean, 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.

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

Thank you very much.

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

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.

This concludes today's meeting. You may disconnect.

Good morning, ladies and gentlemen. Thank you for standing by, and welcome to Loop Industries Third Quarter Fiscal 2026 Corporate Update Call. [Operator Instructions] This conference call is being recorded today, Thursday, January 15, 2026. The earnings release accompanying this call was issued after the market close yesterday, Wednesday, January 15, (sic) [ 14 ] 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 statement disclaimer.

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 and Forward-Looking Statements sections of our most recent annual report on Form 10-K, our quarterly report on Form 10-Q filed with the SEC and the earnings release issued after 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.

Thank you very much, Kevin. Q3 was a busy quarter for Loop as we move towards the construction phase of our Infinite Loop India manufacturing facility and progressing with our partnership with Reed Societe Generale 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. 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 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. 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, et cetera. 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. 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 that once they've collected it. So it's a really huge benefit to Loop. And this government regulation starting in 2026 and is going to start being enforced in 2028, which is exactly the right timing for us. Our plant is scheduled to be completed construction at the end of '27. 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 this really a huge shift in the marketplace, which we are really uniquely suited to be able to capitalize on. And 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. So the main feedstock we'll be using for the process is textile for the textile-to-textile. So 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 1 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. So we really feel that we're in really good hands with Toyo. 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 for multilateral development banks, sovereign wealth funds as well as international and local commercial banks. Returns 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 update on India. As far as the progress with our partnership with Reed Societe Generale Group, as you know, we've licensed our -- we licensed -- we sold Reed SocGen, a license to our technology to build 1 plant in Europe. SocGen has spent time working on site selection. I believe they started with looking at 20 sites across Europe. They've narrowed it down to 3. There's 1 lead site in Germany that is being negotiated right now. And we think that should 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 3 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. 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 spend -- 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 start-up of the Indian facility. We are engaged with multiple parties regarding a financing to fund our investments 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.

Thanks, Daniel. It's nice to be on the call with you on my -- one of my first days as 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, 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. The detailed quarterly results are [indiscernible] 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.

Sorry about that. Thank you very much, Spencer. In conclusion, really pleased with the progress we're making both in India and in Europe, starting to really making meaningful revenue from -- and profitability from the engineering fees in Europe and in India, or are you going to be able to sustain our back office spend for the many years coming. So that's all 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 Instructions] Our first question today comes from the line of Gerard Sweeney with ROTH Capital Partners.

So I had a question on Nike. Sorry, you guys can hear me, correct?

Yes, can hear you fine, thank you.

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 -- the offtake for the output?

Yes, we expect to have -- thanks for the question, Gerry. We expect to have following 5 to 6 customers total for the facility. Today, we have Taro Plast 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 produce 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 3 to 4 customers to have the entire capacity of the facility under contract.

Got it. So it's going to be a mix of packaging and textile. And on that front, or 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.

Yes. Yes. 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 market -- 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. I would say right now, the textile side is a little -- 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 customers' 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, like we are the textile. So that polyester fiber that we are 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.

Got you. 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 Avion, it's like 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 like Loop -- made with Loop recycled product or Loop inside along those fronts?

Yes, 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 Loops material called twist. And so that's a part of the discussion when we talk about this with the textile companies. And 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. 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 weight, reprocessing and sending it back to them, creating that loop. That's something that we think we can really take advantage of on the marketing side.

Got you. And then finally, just last question, just time line for the India facility. Just if you can remind us groundbreaking and then mechanical and completion then commissioning so.

Yes. I mean groundbreaking is a term that it'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 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 time line 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 green lit. It's not like the project is not going to be moving forward or there's one event that has to happen. 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.

Our next question comes from Marvin Wolff with Paradigm Capital.

Can you hear me okay?

Marvin, Yes, I can hear you fine.

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

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

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.

Yes. So the European plant would mainly be on the packaging side because the supply chain for textiles is mainly in Asia. So -- 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 -- 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, we bought -- what we did is we brought the low cost mentality of India into Europe by doing modularization. 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, building our -- 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 like 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.

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

For India, the debt package is $130 million.

Okay.

Which is 70% of...

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

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

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

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

Yes. Okay. Very good. Well, at the end of '27 comes faster than you think, right? It's only less than 24 months away now.

Yes, the engineering teams and Toyo and the joint ventures engineering team and our partner, Ester's engineering teams are working full out nonstop. Everyone is fully dedicated to that facility. So the amount of work going on behind the scenes is tremendous. You don't always see that as -- 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. So all hands on deck getting this built. And it all starts...

Yes, it's fabulous, very good...

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. And so that's where we've spent the time, did it the right way. We've had this plant operating in Canada for over 5 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.

Our next question comes from Varyk Kutnick with Divyde Capital Partners.

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?

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 module. 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 duty 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. 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. 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 that's -- it will be a little bit more expensive, Varyk, but it's still in the -- generally in the same numbers.

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?

The magic comes from the learnings that we -- we really had 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 factory, the price of plastic came down, CapEx didn't continue increasing at the same rate, but they leveled off. They still remain 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 and 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 have to reinvent ourselves. So going into India, low-cost manufacturing, lower labor rates, lower labor rates trends translates to lower construction costs, everything from cement, steel, installation cost. 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. So if I'm building 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, India is 80% -- 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.

Got you. 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 when 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?

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 of it, just textile waste, forget about the packaging, just textile waste available for us to process, just in India, not accounting 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. The money that we get the 5% for the royalty fee plus covers all of our back office expenses and more because we're really being cautious with our cash and spending a lot, 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 it 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 3 years in India for the plant. So...

I come over in Europe then Reed [ SGS ] says, they get to partner with you, they design, license, engineer, collect with minimal balance sheet risk. And this hopefully with the payback period under 3 years, this is a scalable project well past India into Europe and other places.

Absolutely. So...

The Nike deal, I don't think people have mentioned that and what a big deal that itself.

Nike is huge. Obviously, if you could choose -- if I could look back and choose any customer that I wanted to work with, Nike is 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 of 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.

Yes. I mean it's just 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, [indiscernible] India, which will do 154 million pounds, I mean, you're 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.

Yes. Like I said, 60 -- 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.

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

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

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