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LOOP Loop Industries

Participants
Kevin O’Dowd Vice President of Communications and Investor Relations
Daniel Solomita Founder and Chief Executive Officer
David Quezada Raymond James
Amit Dayal H.C. Wainwright & Co.
Gerry Sweeney ROTH Capital Partners
Call transcript
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Operator

Good morning, ladies and gentlemen, thank you for standing by. Welcome to Loop Industries Third Quarter 2022 Corporate Update Call.

During today’s presentation, all parties will be in listen-only mode.

Following the presentation, the conference will be open for questions. This conference is being recorded today, January 12, 2022, and the press release accompanying this conference call is issued after market closed yesterday January 11, 2022. Relations. is Officer, Chief O’Dowd, Drew of and today Solomita; Officer, Vice call Communications Financial Chief Hickey; Investor our Loop Executive Industries Daniel President On and Kevin over I’d to about now statements. turn like the forward-looking Kevin read a to to disclaimer conference

Kevin O’Dowd

you, operator. Thank

results statements get These forward-looking forward-looking current to, may other the we operating statements financial will me started, may in plans, you the affect things, from the let statements events, risks relate position. these that and industry involve Before meaning future expectations, meeting of Such today’s trends remind that future include company’s activities within differ expectations. and law. and uncertainties and results security materially among

in the our these turn The factors or press section the of Form the to Loop Founder release, to forward-looking statements Additional report department. our call report like the the go annual Investor the and SEC risk yesterday. sec.gov from over copies please Officer yesterday’s risks concerning Daniel ahead. information statements contained documents and in this of these Form I’d Industries. of Executive filed Relations with on related quarterly XX-K Solomita, available At on XX-Q time, Chief and is and are Daniel, at uncertainties

Daniel Solomita

content polyester carpets resin monomers. the XXX% more monomers repolymerized make is polyester virgin mandating in to the large plastic resin is quality content and its charge and driving that able world you fiber. being the of package value through decarbonization from use purified fiber low for is Industries polyester Thank plastic is a a technology. you, a a PET companies. the packaging, polyester are the XXX% Thank for in then plastic. recycled and climate plastic and a about for depolymerizes blocks really to good PET leading capital Kevin. market. Loop huge Hi, is fiber for one and Governments content building technology on Loop Loop this packaging patented this clothing joining. our more and The to and number and of base everyone. provide recycled consumer around or PET mission demand to recycled change owns address part are polyester fiber large and the for PET

has target Canada’s provinces – action For markers goals waste beverage and chasing plan, example, and least that unless facilities labeling of by of recycling markets plastic products. and symbols XX% to these the for requiring develop Canada the at introducing XX% contain initiatives recycling content as plastic containers in prohibit implement for ambitious Government such reliable have accept of to XXXX enforce Canada which and its that XX% includes of rules zero plastic recycled arrow working with implementing use packaging to XXXX, all continued end

Loop We are with facilities additionally scale our Europe Quebec, with in and Korea pursuing the construction Bécancour, with of SK our in commercial partner with Infinite South Geocentric. SUEZ strategic in – Canada,

off Bécancour, roads, site ready subsequent access been with Loop’s in facilities project am the site venture results polymerization the a update of fossil in November, for third Quebec, an of Loop the technology that the ventures. We’ll have activities our provided building to including gravel flagship Infinite pursue its pads, of retrofitting quarter reported fuel-based joint existing XXXX. we the and drainage and The initial to Additionally, financial consolidated you Loop, facility and I within was phases. fiscal its PET completed Loop realm for Quebec construction Canadian project. inform start work for preparation on landscaping. with pleased has initiated

line at with delivery the that the our signed we Many recycling philosophy Philosophy, the North facility America, also to the has model assisting expected Europe construction become Design In company of allocations Quebec’s equipment target important a brands progressing customer in is volume update. to facility. multi-year Loop designed partners negotiations advancing Quebec more plan. facility’s for study time lead Infinite The facility. Asia. modular Canada committed Bécancour engineering the December, on Infinite we is of facilities plastic Chemtex precise Loop the us Worley. and Timing a government waste engineering its phase into Loop manufacturing in all facilities Engineering Loop construction contract across with and for allows projected obtain entered and includes the company Engineering estimate. on contract a zero feasibility objectives. in believes Additionally, Infinite Loop is cost design. long this The schedule for adopted QX, design focused which for in continues One, an our CPG various to project in infrastructure replicate Global to allow global could XXXX in with This for Infinite of and meeting levels collaborate of with Loop Build a equipment

QX, are we QX. partnership of September a completion manufacturing We announced of Europe of Infinite start strategic end first the Infinite Loop with facility Environmental objective French in Loop build with the Group, on or targeting SUEZ, to calendar Services calendar Europe. the XXXX, XX,

one brand expertise from France, the recycled a of content. growing good meet companies partnership resource virgin Loop’s PET of SUEZ, consumer in management resin beverage largest this who companies from in global technology the for to seeks waste XXX% quality and management combination the made is demand With of and Europe

finalizing on facility the site We currently to on Loop ready Normandy, in are ground break XXXX. are working engineering in France. Both teams selection, selection site and feedstock SUEZ

It world’s of remains opportunity represents fiber the to population, largest is venture is home the SK of the manufacturing the polyester and the world’s market Asia XX% for Geocentric, industry. center global XX% joint consumption Loop nearly of Asian with Industries. PET

its first strategic and be Asia by across memorandum to joint continues million located in XXXX, quarter-end $XX.X results Asian Ulsan, work and which all Geocentric cash. through partner, and quarter. Loop’s currently Loop on the plan $XX.X Financial most running Loop QX SK of – a November and had four to Loop build are to understanding our At commercialize We of venture. this cash shoes the on our – Korea. joint a South tandem venture. in XXXX. minimum will Geocentric, in which of clothing a – manufactured signed XX, the for important facilities All in currently located be technology running will advancing and million Asia. of Together of Loop of of SKGC the XXXX, at are used end shoes of clothing SK

than prior quarter million the to higher Infinite Our for due Loop the work on continued engineering R&D $X.X the expenses – were projects.

on of the expenses We with preparation the proud improvements. Bécancour. Loop announcement Our flat were venture to the made essentially beginning has Geocentric PET In site in XXXX and accomplished quarter. at conclusion, partnership SK of the work $X.X million from in very Loop joint I’m from G&A evian all Bécancour for our site of bottles spent the

We steadfast objectives. commercialization in remained our pursuit of our have

from facilities. now multi-year product We with would focused cementing expect off-take year, the Loop’s be throughout develop production the and to Infinite securing XXXX open our call through to year, listeners. our brands commercial like markets an equally partnership up of across I for commitments different Loop launches commercial the to on CEPG questions transformational technology, accelerating

Operator

Thank you, Daniel.

Instructions] My from – with our our We And from is first question. question there. Quezada apologies begin now question David David, is your question-and-answer [Operator comes David Raymond like will your session. open proceed if first James. you’d line now from to

David Quezada

– I’ve to start Hi, I’d everyone. here. got like just Thanks. few questions a

for that hear phase note, commence kind like see maybe of the encouraging sources construction. next started I’m of a Just that? prep. of color curious status place to you start And to Bécancour, to on just with would want you’ve potential on to certainly could that site provide conditions you the related any of what in funding

Daniel Solomita

David. Thanks,

project So engineering goes, the as the basic engineering QX completing by as the XXXX. facility, have the we’re package to completed package far

We’re Canada part this to for to facility, going to be large waste. XXXX financing in their plastic able them to end critical a going options. be infrastructure goal Government play is different currently to discussing in needed a the with as is accomplish financing

are so financing those side. And negotiations ongoing the on

David Quezada

the is advanced from has the since become to Canadian more little that plan action And was government those XXXX you. bit of the discussions it a fair maybe Thank say that, Excellent. tone released?

Daniel Solomita

recycling a solutions think play does – obviously recycling tone. chemical part. for that I and goal the sets in the in fiber PET action to in polyester Loop needed was that the plan, chemical Because this of and does that play as leader one really accomplish identified

David Quezada

and Thanks, just with Okay, then And excellent. partnerships to That’s Daniel. on SK. to your move color. SUEZ great maybe

SUEZ? with on just for curious your thoughts selection We’re are timing what latest site

Daniel Solomita

be would went So looking yes, over to all the this site Europe what we facility. put off. at best We for started

by of Veolia, SUEZ that largest their or SUEZ, time, acquired During most competitor. was

mainly new SUEZ the So in operates France.

the facility to selection down And having so that choice of kind the in France. narrowed

looking we three So of and across started different France did sites analysis. all our at

selection I would the on timing the selection say, So the imminent. is –

David Quezada

maybe in great. queue. for me get for I then that. Okay, the And one more you thank Great, back before

Just simultaneously? facility a about potentially get curious SK. how breaking see ground and Asia? from breaking both Would you’re thinking that Bécancour some you you these in lessons Or in days before certain want into get And to do the maybe could ground point? to move you Asia with

Daniel Solomita

Yes.

– built. for only mentioning So be because item gating French for leveraged the the basis the quarter is it’s going going XXXX, other completed is to before and facility. the was The the that Korean for right? but South partnership engineering is that for first the have Asian ground facility the of basic Asian all leveraged for will I that be is break of to package package So engineering Bécancour not timing the the to projects, facility that’s Bécancour, really

really the item. the that’s gating So

on very signed, that completing project. all of the detailed, negotiated then all the partnerships, suppliers customer, that us to contract engineering. equipment allows We’re It’s the the execute the getting and

Korea So in break be to would the QX ground South in XXXX. timing

David Quezada

Okay, excellent. Thank for I’ll Daniel. you back get the queue. in that,

Operator

David. you, Thank

Amit Wainwright. proceed Dayal next you’d line from now Amit, with question. open your your H.C. is Our is question if like to from

Amit Dayal

afternoon, Thank everyone. you. Good

CapEx terms should in in your calendar Daniel, XXXX, come expect of we what CapEx to at? So, for

Daniel Solomita

So about facility, for our commercial Facility? or the at about CapEx the talking talking Terrebonne you’re you’re CapEx

Amit Dayal

will efforts…? be put guess, different what these I into overall,

Daniel Solomita

here in XXXX for million. $XXX break ground – would the be Quebec. the estimated that And Bécancour CapEx on on the facility the expected is we facility – the to So for ground breaking year,

Amit Dayal

Right.

spending that going? year, you sort this getting would how year of So much be this

Daniel Solomita

place. Well, that’s the all to of where in put have financing we

leveraging is So, government’s the for infrastructure critical a because the Canada. financing this part of

we’re So items is now are the the that really finalizing all financing those package.

We always project. much $XXX Loop that Korea. as is how of in as financing we’re actually even that, then and as look bring for not much to the equity for is million far that very closely to governments we in the governments responsible see now for and looking number, going Canada, in for package South the in why projects, obviously, So France be as possible the non-dilutive which the work the for with but capital governments, these governments only also we’ll

They’re to this. able be to content. owners to more a have mandating So solution in a governments the enable there goals. they – mandating role are brand these achieve more well, play owners be has and brand going large the recycled to to They’re to

cannot going far country so the means. in to a critical where facilities able will today, these up have recycled every to that Loop’s they’re countries, as recycle need And infrastructure to where to facilities what for plastics be as we through play that’s traditional become role. put be happens similar to

Amit Dayal

of. Honestly, trying that’s was sense get I a to what

in So related items? do year to some these do you announcements sort of XXXX, this of some

Daniel Solomita

Yes. expectation. That’s the

Amit Dayal

Okay.

yet? is have what Thank bottles when – Okay, to getting good. started those respect the – you Or that any going? With supplying timeline you. for of

Daniel Solomita

sorry, the question. I’m I didn’t understand

Amit Dayal

bottles the announced evian are For I’m for you that you to wondering, you’d XXXX. with indicated water guys you it? bottles had has where XXX,XXX the begin evian and in earlier, that yet had supplying guys that we started partnership, the

Daniel Solomita

bottle. So we supply actually the supply We the don’t resin.

supply the bottle. the PET we resin into goes just that So

facility. their And and have has so to it’s to they bottles, shipped already been then – the the their resin blow now on resin schedule going they’re so to material to be And filled ship at the the the evian, Korea. bottles

that. of our we So part fulfilled

Amit Dayal

good. to trying at. Okay, you. what I get Thank That’s was

should bit per what estimates be million the the to I R&D, expected. a million compared that Okay. we to quarter onwards, to expect, were, little And this point is given from for you higher mean, maybe corporate expenses? our is $X that level guys operating higher $XX

Daniel Solomita

the for No, this of of – we facility I going think upgrades in of expenses expense be so or lot quarter it’s the obviously to Terrebonne, a to all operation were a the operation, that. lot because

of able to the our of plant there produce here amount production be Terrebonne. small material And in upgrading out to facility more significant so was a

of to these all But facility So for be And the this sold the to paying or absorbing all traditionally, production Build and projects. of engineering for that’s able there’s much to costs project costs. moving equipment that headquarters or material be given at in, engineering projects. forward, engineering the Whereas will the other would be different piece work. us work, engineering for that, paying upgraded Design Many, Loop it’s to is coming about the After for last circumstances, here, more Loop the one be then it the today, produce that’s One, is going here. the in

the done. all the of some costs being that’s engineering So from we’ll be of recouping

you just have, than costs the the normally today all for expenses would are more much absorbing we there’s currently because engineering. So

Amit Dayal

sense. it. guys. you makes all Thank That’s I you. so Thank had, get much. I No,

Daniel Solomita

you. Thank

Operator

And Thank Gerry our your to you’d will open Sweeney from proceed your from Capital. question. you. is next now question like Gerry, line with be Roth if

Gerry Sweeney

afternoon, good Daniel. my for call. Thanks taking Hey,

Daniel Solomita

Hi, Gerry.

Gerry Sweeney

Question have financing. [Technical strategic to it’s government Or we’ve to going Difficulty] Is there I an it’s – government know financing. started opportunity just queue, know you’re the a well? I on the get as partner Difficulty] [Technical In

Daniel Solomita

possibility operate our does we’re able think, it’s close on we really a on facility, not don’t exist. feel I necessity That always – our think own. at plant for strategic It being But Well, that being getting this in we current facility. a us. don’t for we time, partner to very to don’t comfortable the focusing

Gerry Sweeney

Okay.

to don’t read want columns. I into So too the much

Any additional land sale on obviously Okay, also there. perfect. there update And – bit then capital? some little land I because the we provide were that excess a

Daniel Solomita

had land. on the couple right We’ve The different sale significant land. do like that of now. of it, you’re amount a a that diligence a there’s people their happen is for commercial When for had we’ve are lot all to lot interest doing of due the a people that a Yes. work. and of land selling land And studies of a the diligence of lot have of due lot

whatever that make project to engineering firms want with able the sure So is they to build site it. support on to

discussions the selling ongoing the So of are land. on lands,

Gerry Sweeney

will Any more some that on to updates can maybe Difficulty]? it. some little of the off-take Got out any that a And we facilities be then dependent finalizing of customer production switching expect gears bit or updates agreements. with on plant? [Technical Or the additional updated

Daniel Solomita

I’m starting mean, I relatively we’re very confident Bécancour the Yes. or confident in the of pretty – plant. we’re

negotiating now, product customer the – beverage companies. the tremendous interest equally, we’re there’s So for amount say, with I from of customers. Right would from

users So, fiber the CPG beverage companies as well. polyester from the

six on more off So targets the come as them being they’re past increase companies, more they’re with the polyester clothing interest to sustainability and in users done large we’ve as amount that’s amount their polyester of really big for fiber of until recently, of seen seen – kind to we’ve far fiber a are until going be the brand five industry. for the work polyester fiber. months, is XXXX, real the But providing going a pressure

polyester we’re fiber, doing they us So really the full which that facilities complete opportunity. sure scraps the customers with we of circularity an lot these on materials, make work from exciting to a for the can sometimes their qualifying is send

produce Asia. fiber at are waste those – So, facilities all of these companies mainly in facilities, their mostly Southeast

into putting companies. having is really material holy And the type the and be these repolymerize us for garments, so polymerized us it and back sending of their grail samples, their

site. lot with these on on – a So – this the of on them we’re doing work

Gerry Sweeney

that’s well. suspect Gotcha. pretty I And progressing

Daniel Solomita

Yes, well. very

Gerry Sweeney

it. Got

Daniel Solomita

Yes, very well.

Gerry Sweeney

I’m additional just to the that pricing of just also, fair for formula little pricing. converters terms Obviously, the in one then question And platform Bécancour. rates assume assuming the as well? front conversion on that Is

Daniel Solomita

Sorry.

you of had repeat little the were bit bit. Can You question? a time a hard breaking a you little understanding, up

Daniel Solomita

in I’m sorry, I’m Florida. Sure. car in my

accurate? these with per newer which assuming positive pricing I’m are agreements the the feedback Bécancour version, Is these cost with on that the contracts, With conversion. newer a – is

Daniel Solomita

Yes.

cost formulas start our all with the pricing feedstock. So of feed of

So down we sales price goes price the if And sales the – goes the our goes our price goes price down, sales if the – then of raw vis-à-vis, then up, goes material raw material up. price if down.

little a hedge of have feedstock. versus a we bit the So

So all for of are the those – contracts all be modeled of Bécancour that – way. will

floor that as And can contracts and floor well, a pricing have in in minimum certain so we number. so yes, we so also go we never below a the put pricing,

Gerry Sweeney

obviously Bécancour. construction officially Worley the whatsoever. that actually, and a construction on Got And facility, in hired…? switching you’re firm, working question, the hired But the with – new construction A or, of someone side, final Bécancour is approaching back to with Chemtex, hired it. then how

Daniel Solomita

Yes.

do is comes the we the Chemtex’s it, modular Gerry, So in all piece that way fashion.

and So site. the modules in, they’re on come just connected

with engineering we or a construction the separate by done the same the so work, on the Quebec are local, hired connected technology all doing firm of provide mounted that site. that full We’re company. work, that skid local of the all the have local of suppliers handles And equipment being civil, foundation modules site a and either all parts is all that us other other where of we’ve preparation

then So let’s the – process the say. vendor actually Worley the local packages does company is out, the one The engineering. for equipment entire entire section. manages does engineering provide each the And and that the build construction

Gerry Sweeney

it. Okay, All got right.

as So we saying, you’re to were go set so. all

Daniel Solomita

to Yes, go. we’re set all

and the engineering financing package. just, We’re the like I finalizing said, financing packages

Gerry Sweeney

it. appreciate me. Okay, great. that’s Thank I you. from it And

Operator

concludes be turn registered. the to over now Solomita you, for And question-and-answer his At further closing remarks. back leave this I’ll Instructions] Daniel [Operator Mr. call just for Gerry. moment to I’d to this time, session. questions our any Thank like a

Daniel Solomita

on for quarterly call. everybody, our It’s you, participating Thank update first the call.

be we’ll to much. from have bye. very continuing Bye on. now you So these Thank

Operator

for This corporate concludes your you Thank today’s update participation. call.

your now may disconnect You lines.