from Loop Industries, Inc. (NASDAQ:LOOP)
Loop Industries Reports Third Quarter Fiscal 2024 Results and Provides Updates on Business Developments
- LOOP ANNOUNCES MOU FOR US$66 MILLION OF NON-DILUTIVE FINANCING FROM REED MANAGEMENT AS PART OF A JOINT VENTURE FOR EUROPEAN INFINITE LOOPTM TECHNOLOGY ROLL-OUT
Loop Management to hold update call at 8:30 AM ET on JANUARY 17, 2024
MONTREAL, QC / ACCESSWIRE / JANUARY 16, 2024 / Loop Industries, Inc. (Nasdaq:LOOP) (the "Company" or "Loop"), a clean technology company whose mission is to accelerate a circular plastics economy by manufacturing 100% recycled polyethylene terephthalate ("PET") plastic and polyester fiber, today reported its consolidated financial results for the third quarter for fiscal year 2024 and provided an update on current developments in the business.
Strategic Partnership and Non-Dilutive Financing
On January 16th, 2024 Loop announced that the Company signed a non-binding Memorandum of Understanding ("MOU") with Reed Management ("Reed"), a European investment firm focused on high impact and technology-enabled infrastructure, for US$66 million in non-dilutive financing as part of a joint venture (the "JV") to roll-out Loop's technology in the European market.
Loop and Reed intend to form a strategic long-term partnership through the establishment of a 50/50 JV to commercialize Loop's technology in Europe. Reed intends to provide financing of €60 million (US$66 million) in non-dilutive capital. Of this amount, US$33 million is to be provided to Loop as non-dilutive capital to fund Loop's technology commercialization globally. The remaining US$33 million is to be invested in the JV.
Under the terms of the MOU, Reed will provide capital as follows:
- US$11 million equity investment in the JV to acquire from Loop exclusive rights to co-invest alongside Loop in commercialization projects using Loop's technology in Europe through the planned JV between Loop and Reed;
- US$22 million loan from the JV to Loop in two equal tranches - first tranche paid at closing and second tranche paid in the following 12 months with both tranches having a 10% PIK rate and 3-year term;
- US$33 million commitment to cover initial costs to develop projects in Europe, including Loop's equity contribution to the previously announced JV to construct an Infinite LoopTM plant in Saint-Avold, France;
- Any subsequent capital injections in the JV will be funded on a 50/50 basis between Reed and Loop.
This intended partnership allows for Loop Industries to reduce the funding needs for its equity contributions to support the rollout of an increased number of facilities to be constructed in the European market using the Infinite LoopTM technology. Loop Industries will receive royalty and engineering fees directly from the planned facilities in Europe.
The non-binding MOU is subject to customary due diligence and the fulfillment of certain pre-closing conditions. The transaction is expected to close by the end of March 2024.
Technology and Innovation
On December 13, 2023 Loop announced that its LoopTM branded PET resin meets the requirements and standards outlined by the United States Pharmacopeia (USP <661.1>, Plastic Materials of Construction) and the European Pharmacopeia (Ph.Eur. 3.1.15, Polyethylene Terephthalate for Containers for Preparations not for Parenteral Uses). LoopTM PET resin is compliant for use in pharmaceutical industry packaging applications and offers a sustainable packaging solution for the industry.
Commercialization Update
A groundbreaking ceremony for the Ulsan ARC took place on November 15th, 2023 in South Korea. Daniel Solomita, Loop's Founder and CEO, presented the Infinite LoopTM technology at the ceremony which was attended by the Prime Minister of South Korea Han Duck-soo, Mayor of Ulsan Kim Doo-gyeom, Member of the National Assembly Park Sung Min, Deputy Minister of the Climate Change and Carbon Neutral Policy Office of the Ministry of Environment Geum Han-seung, Director of the Industrial Policy office of the Ministry of Trade, Industry, and Energy Lee Seung-ryeol, Vice Chairman & CEO of SK Innovation Kim Jun, and SK Geo Centric CEO Na Kyung-soo along with 250 other guests.
Construction of the Infinite LoopTM Ulsan facility is anticipated to commence in the first half of 2024 and reach completion in 2026.
Operating Efficiencies
The Company continues to carefully monitor all expenditures and has taken meaningful steps to reduce its cash burn rate. In the current quarter, the Company had total expenses of $4.3 million, including a total of $0.5 million for stock-based compensation and depreciation and amortization (which are non-cash expenses), and includes $0.3 million related to the Ulsan facility and is expected to be recovered after the commencement of construction. The net amount of $3.5 million is in line with expectations.
CEO Comment
Daniel Solomita, Founder and CEO of Loop Industries, commented on the recent updates, saying: "We are delighted to form a partnership with Reed. They bring important experience and relationships for the financing and development of major capital investment projects, and they are committed to Loop's vision for the potential of our groundbreaking technology as global brands adapt to increasingly stringent regulatory requirements for plastic recycling.
Also, the non-dilutive capital being provided by Reed will position Loop to move forward with our planned roll-out of commercial manufacturing in Europe using a more asset-light model, as well as the commercialization of Loop's technology globally."
Corporate Update Call
Senior Management of Loop will host a corporate update call, followed by a question-and-answer session, which can be accessed via the dial-in numbers below. Slides supporting Senior Management's remarks will be available via the Investors section of Loop's website at http://loopindustries.com/en/investors/overview.
Date: Wednesday, January 17, 2024
Time: 8:30 am Eastern Time
Participant joining details (by Telephone):
Joining by Telephone:
United States (Local): +1 404 975 4839
United States (Toll-Free): +1 833 470 1428
Access Code: 786495
OR
Registration Link: https://www.netroadshow.com/events/login?show=f056f3b5&confId=59857
- Avoid wait time - Bypass speaking with an operator to join the call
- Receive a Calendar Invitation with call access details including your unique PIN
Q3 2024 Financial Results
Results of Operations
Three Months Ended November 30, 2023
The following table summarizes our operating results for the three-month periods ended November 30, 2023 and 2022, in thousands of U.S. Dollars.
| Three months ended November 30, | ||||||||||||
| 2023 | 2022 | Change | ||||||||||
Revenue from contracts with customers | $ | 26 | $ | 25 | $ | 1 | ||||||
Expenses | ||||||||||||
Research and development | ||||||||||||
Employee compensation | 1,107 | 1,540 | (433) | |||||||||
Stock-based compensation | 161 | 455 | (294) | |||||||||
Machinery and equipment expenditures | 4 | 1,059 | (1,055) | |||||||||
External engineering | 262 | 707 | (445) | |||||||||
Plant and laboratory operating expenses | 322 | 916 | (594) | |||||||||
Tax credits | (221) | (300) | 79 | |||||||||
Other | 198 | 205 | (7) | |||||||||
Total research and development | 1,833 | 4,582 | (2,749) | |||||||||
General and administrative | ||||||||||||
Employee compensation | 599 | 492 | 107 | |||||||||
Stock-based compensation | 236 | 419 | (183) | |||||||||
Professional fees | 720 | 1,278 | (558) | |||||||||
Insurance | 645 | 710 | (65) | |||||||||
Other | 258 | 284 | (26) | |||||||||
Total general and administrative | 2,458 | 3,183 | (725) | |||||||||
Gain on disposition of assets | - | (6,704) | 6,704 | |||||||||
Depreciation and amortization | 131 | 134 | (3) | |||||||||
Interest and other financial expenses | 42 | 54 | (12) | |||||||||
Interest income | (166) | (13) | (153) | |||||||||
Foreign exchange gain | (28) | (198) | 170 | |||||||||
Total expenses | 4,270 | 1,038 | 3,232 | |||||||||
Net loss | $ | (4,244) | $ | (1,013) | $ | (3,231) | ||||||
Revenues
Revenues for the three-month period ended November 30, 2023 increased $1 to $26, as compared to $25 for the same period in 2022. The revenues resulted from the delivery of initial volumes to customers of LoopTM PET resin produced using monomers manufactured at the Terrebonne Facility.
Research and Development
Research and development expense for the three-month period ended November 30, 2023 decreased $2,749 to $1,833, as compared to $4,582 for the same period in 2022. The decrease was primarily attributable to a $1,055 decrease in purchases of machinery and equipment for the Terrebonne Facility, a $594 decrease in plant and laboratory operating expenses, a $445 decrease in external engineering costs for design work for our Infinite LoopTM manufacturing process, a $433 decrease in employee compensation expenses, and a $294 decrease in stock-based compensation expenses.
General and administrative expenses
General and administrative expenses for the three-month period ended November 30, 2023 decreased $725 to $2,458, as compared to $3,183 for the same period in 2022. The decrease was primarily attributable to a $558 decrease in professional fees, and a $183 decrease in stock-based compensation expenses.
Net Loss
The net loss for the three-month period ended November 30, 2023 increased $3,231 to $4,244, as compared to $1,013 for the same period in 2022. The increase is primarily due to a gain on disposition of assets of $6,704 recorded in the three-month period ended November 30, 2022 related to the Company's sale of land in Bécancour, Québec, partially offset by the $2,749 decrease in research and development expenses, and the decrease in general and administrative expenses of $725.
Nine months Ended November 30, 2023
The following table summarizes our operating results for the nine-month periods ended November 30, 2023 and 2022, in thousands of U.S. Dollars.
| Nine months ended November 30, | ||||||||||||
| 2023 | 2022 | Change | ||||||||||
Revenue from contracts with customers | $ | 108 | $ | 160 | $ | (52) | ||||||
Expenses | ||||||||||||
Research and development | ||||||||||||
Employee compensation | 3,611 | 5,179 | (1,568) | |||||||||
Stock-based compensation | 476 | 1,171 | (695) | |||||||||
Machinery and equipment expenditures | 1,240 | 4,133 | (2,893) | |||||||||
External engineering | 1,558 | 2,914 | (1,356) | |||||||||
Plant and laboratory operating expenses | 1,238 | 2,366 | (1,128) | |||||||||
Tax credits | (269) | (1,207) | 938 | |||||||||
Other | 507 | 577 | (70) | |||||||||
Total research and development | 8,361 | 15,133 | (6,772) | |||||||||
General and administrative | ||||||||||||
Employee compensation | 1,884 | 1,929 | (45) | |||||||||
Stock-based compensation | 664 | 8,799 | (8,135) | |||||||||
Professional fees | 2,251 | 3,841 | (1,590) | |||||||||
Insurance | 2,058 | 2,883 | (825) | |||||||||
Other | 910 | 778 | 132 | |||||||||
Total general and administrative | 7,767 | 18,230 | (10,463) | |||||||||
Gain on disposition of assets | - | (6,704) | 6,704 | |||||||||
Depreciation and amortization | 400 | 411 | (11) | |||||||||
Interest and other financial expenses | 140 | 139 | 1 | |||||||||
Interest income | (484) | (36) | (448) | |||||||||
Foreign exchange gain | (81) | (289) | 208 | |||||||||
Total expenses | 16,103 | 26,884 | (10,781) | |||||||||
Net loss | $ | (15,995) | $ | (26,724) | $ | 10,729 | ||||||
Revenues
Revenues for the nine-month period ended November 30, 2023 decreased $52 to $108, as compared to $160 for the same period in 2022. The revenues resulted from the delivery of initial volumes to customers of LoopTM PET resin produced using monomers manufactured at the Terrebonne Facility.
Research and Development
Research and development expense for the nine-month period ended November 30, 2023 decreased $6,772 to $8,361, as compared to $15,133 for the same period in 2022. The decrease was primarily attributable to a $2,893 decrease in purchases of machinery and equipment for the Terrebonne Facility, a $2,263 decrease in employee compensation expenses, including stock-based compensation, a $1,356 decrease in external engineering costs for design work for our Infinite LoopTM manufacturing process, and a $1,128 decrease in plant and laboratory operating expenses, partially offset by a decrease i