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    LOOP
    Earnings call· Feb 2026(Q4 FY26)

    Loop Industries, Inc. LOOP

    May 28, 2026 Source

    Executive summary

    Loop Industries Q4 FY26 — India Project CapEx Reduction and European Site Selection

    Loop Industries is making significant strides in its global expansion strategy, marked by a substantial CapEx reduction for its India facility and the selection of a key site in Germany for its European operations. The company is focused on commercial execution and capital discipline, expecting to generate meaningful engineering revenue soon. While progress on project financing is strong, securing long-term customer offtake agreements remains a key hurdle due to customer contracting norms.

    Highlights

    5

    • Estimated capital cost for the initial Indian facility reduced to approximately $165 million-$170 million from $190 million.

    • Signed a Memorandum of Understanding with the Government of Gujarat, India, to streamline permitting and infrastructure for the India facility.

    • European joint venture selected BASF Industrial Park in Schwarzheide, Germany, as the site for its first facility.

    • Expected to generate meaningful, high-profitability engineering revenue from the European feasibility study starting within weeks/months.

    • Secured up to CAD 2.9 million in non-repayable funding from the National Research Council of Canada through October 2027.

    Concerns

    2

    • Debt financing for the India facility is contingent on securing 50% offtake agreements (minimum 3-year contracts), which are still being negotiated.

    • Customers face challenges signing long-term (5-year) material contracts, preferring shorter 6-month to 1-year commitments.

    Guidance & targets

    5
    CategoryTargetConfidence
    Infinite Loop India Facility Operational Date
    CY2028
    high materiality
    High
    Engineering Contracts Funding
    Fund back-office spend for the next few years
    medium materiality
    Medium
    Engineering Services Revenue (Europe)
    Much more meaningful revenue
    medium materiality
    High
    Royalty Fee from India Facility
    5% royalty fee
    medium materiality
    High
    Milestone Payments from European Licensing Agreement
    Additional milestone payments
    medium materiality
    High

    Operational metrics

    12
    India Facility CapEx
    $165M-$170MReduced from $190M
    Initial facility

    Estimated capital cost for the initial Indian facility, including financing, land, engineering, and construction costs.

    India Facility CapEx Reduction (FX Impact)
    50%
    Initial facility

    Approximately 50% of the CapEx reduction came from favorable foreign exchange movements.

    India Facility Land Cost Savings
    $5M
    Initial facility

    Saved $5 million from land acquisition for the India facility.

    India Facility Construction Cost
    $115M
    Initial facility

    Approximately $115 million of the total $165 million-$170 million CapEx is allocated to construction.

    India Facility Debt-to-Equity Split
    70% debt, 30% equity
    Initial facility

    Loop and Ester Industries split the equity commitment 50-50.

    Engineering Services Revenue (Europe)
    meaningful high profitable
    Upcoming

    Expected from the European feasibility study, anticipated to start shortly.

    Royalty Fee (India)
    5%
    Ongoing

    Loop will receive a 5% royalty fee from the India facility, in addition to its 50% ownership.

    EBITDA Margin (India Facility)
    45%
    Ongoing

    Roughly estimated EBITDA margin for the India plant.

    Payback Period (India Facility)
    1.5-2.5 years
    Initial facility

    Estimated payback period on the build, depending on pricing.

    Non-repayable Funding (Canada)
    CAD 2.9M
    Through October 2027

    Funding received from the National Research Council of Canada Industrial Research Assistance Program.

    PET Prices (Year-to-date)
    30%-50%up
    YTD

    Mainly driven by higher oil prices and supply chain shocks.

    Recycled Content Mandate (India)
    40%
    Current

    India has the strictest rules globally for recycled content in packaging, with a future target of 60%.

    Industry KPIs

    2
    MetricValueDetails
    Volume vs price split30%-50%%
    Productivity cost savings programCAD 2.9MCAD

    Deals & partnerships

    3
    Government of Gujarat, IndiaMemorandum of Understanding (MOU)

    Provides formal alignment to support the development of the first large-scale commercial manufacturing facility in India, streamlining permitting, infrastructure coordination, and administrative processes.

    Reed Societe Generale GroupInfinite Loop Europe JV

    Joint venture that purchased a license to build a European facility using Loop's technology. Site selected in BASF Industrial Park, Schwarzheide, Germany.

    National Research Council of Canada Industrial Research Assistance ProgramNon-repayable fundingCAD 2.9MThrough October 2027

    Receiving advisory services and up to CAD 2.9 million in non-repayable funding through its clean tech initiative.

    Capital programs

    3
    Infinite Loop India Facilityunderway$165M-$170M
    Funding: 70% debt, 30% equity (Loop 15%, Ester 15%)

    Benefit: First large-scale commercial manufacturing facility in India

    Estimated capital cost reduced from $190M. Debt syndication well underway, with technical due diligence expected to complete by mid-July. Site can support multiple facilities for phased expansion.

    European Facility (BASF Industrial Park, Schwarzheide, Germany)engineering and permitting phase

    Benefit: First facility in Europe using Loop's technology

    Site selected in BASF Industrial Park, Germany. Project is moving into the engineering and permitting phase, with a feasibility study expected to begin shortly.

    Corporate Overhead Reduction Initiativesinitiated

    Benefit: Streamlined headcount; material savings in fixed areas such as insurance

    Aggressive review of vendor contracts and strict service audits across key fixed overhead expenses. Strategic shift of resources from technology development to commercial execution.

    Risks & headwinds

    3
    Difficulty securing long-term offtake agreements for new facilities.Prior to debt financing closing for India facility.

    50% offtake agreements (minimum 3-year contracts) required for debt financing of the India facility.

    Mitigation: Negotiating with several large CPG companies and textile companies; existing customers from Terrebonne facility willing to sign LOIs and support discussions with banks.

    Customer reluctance to commit to 5-year contracts.Ongoing

    Brands are used to 6-month or 1-year contracts, not 5-year commitments, making long-term agreements more complicated.

    Mitigation: Offering best quality material at competitive prices; some brands are willing to sign LOIs and support discussions with banks despite corporate governance limitations.

    Supply chain shocks and oil price volatility impacting PET prices.Current

    PET prices up 30%-50% year-to-date due to higher oil prices (e.g., conflict in Iran).

    Mitigation: Long-term fixed price contracts from Loop serve as a valuable hedge for purchasing departments against price volatility.

    What to watch in Q1 FY27

    4

    India Facility Debt Syndication Completion

    Mid-July
    CurrentTechnical due diligence underway
    TargetTechnical due diligence completed, debt terms finalized

    Why it matters

    Crucial for securing financing for the India facility and moving to the construction phase.

    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.

    Q&A highlights

    8

    What is the current status of the debt syndication process for the India facility, what milestones remain, and what is the anticipated debt-equity mix?

    The debt-to-equity split is 70% debt and 30% equity, with Loop and its partner each responsible for 15% of the equity. Several term sheets have been received, and the process is now in the technical due diligence phase, expected to be completed by mid-July.

    “So the anticipated debt-to-equity split is 70% debt, 30% equity, of which Loop would be responsible for 15%. And 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.”

    asked by Brandon B. Rogers · answered by Daniel Solomita

    2 min read5 chapters

    Detailed Narrative

    01

    India Project Advancement

    Loop Industries has achieved significant progress with its Infinite Loop India joint venture. A Memorandum of Understanding was signed with the Government of Gujarat, providing formal support for the first large-scale commercial manufacturing facility. The estimated capital cost for this facility has been reduced to $165 million-$170 million from a prior estimate of $190 million, improving project economics. Debt financing is well underway, with term sheets received and technical due diligence expected to conclude by mid-July, keeping the project on track for operation in CY2028.

    02

    European Expansion and Site Selection

    The European partnership with Reed Societe Generale Group is also advancing, with the selection of BASF Industrial Park in Schwarzheide, Germany, as the site for its first facility. This location offers robust infrastructure and a supportive regulatory environment. The project is now entering the engineering and permitting phase, with Loop's engineering team providing a feasibility study. This phase is expected to generate meaningful, high-profitability revenue for Loop over approximately six months.

    03

    Capital Discipline and Operational Efficiency

    Loop has systematically evaluated and reduced corporate overhead through three key initiatives. These include a strategic shift of resources from technology development to commercial execution, resulting in streamlined headcount. An aggressive review of vendor contracts and service audits has also yielded material savings in fixed overheads like insurance. Additionally, the company secured up to CAD 2.9 million in non-repayable funding from the National Research Council of Canada, supporting operational readiness without shareholder dilution.

    04

    Customer Engagement and Offtake Challenges

    Customer engagement remains strong due to Loop's ability to offer high-quality PET and polyester fiber from 100% recycled content at competitive prices, often similar to lower-quality mechanical recycling PET. However, securing the required 50% long-term offtake agreements (minimum 3-year contracts) for debt financing is challenging, as brands are accustomed to shorter 6-month to 1-year commitments. Despite this, the company is in negotiations with major CPG and textile companies, with some willing to provide LOIs and support bank discussions.

    05

    Project Economics and Future Outlook

    The CapEx reduction for the India facility, combined with competitive pricing and an estimated 45% EBITDA margin, suggests a strong payback period of 1.5 to 2.5 years. Loop plans to build a second, larger facility in India once the first is operational, leveraging the low-cost manufacturing environment. For higher-cost regions like Germany, the strategy involves modular construction in India and shipping to site to reduce CapEx, demonstrating a flexible approach to global deployment.

    AI-generated summary of the company’s earnings call. Not investment advice.