Loop Industries targets 2027 India facility launch and second plant expansion amid strong demand and new textile partnerships

Earnings Call Insights: Loop Industries (LOOP) Q2 2026

MANAGEMENT VIEW

* CEO Daniel Solomita announced that Q2 marked significant progress toward the Infinite Loop India manufacturing facility, highlighted by a supply contract with a leading global sports apparel company as the anchor customer. He explained, “We have executed a supply contract with a leading sports apparel company in the world to be our anchor customer for the Infinite Loop India manufacturing facility. The contract is that we need to supply our customer with a fixed amount of Twist, our textile-to-textile polyester resin on an annual basis at a fixed price for multiple years. There is a guaranteed take-or-pay element to the contract as well.”
* Solomita also revealed a supply contract with Taro Plast, an Italian specialty polymer manufacturer, to buy DMT produced from the Infinite Loop India facility. He emphasized the significance of DMT, noting Loop is “one of the only companies that can supply virgin quality DMT made from 100% recycled content.”
* The company acquired 93 acres of land in Gujarat, India, for $10.5 million, a $5 million reduction in project cost estimates, and reported the project is trending $6 million under budget toward the $176 million total cost estimate.
* Two textile industry partnerships were executed with Shinkong (Taiwan) and Hyosung (South Korea), expanding the reach of Twist resin. Solomita stated, “These partnerships allow Twist our branded textile-to-textile polyester resin to have an expanded reach beyond our customer base and will be offered by Hyosung and Shinkong to their customers.”
* Solomita indicated progress in Europe, nearing site selection for the first Infinite Loop facility with Societe Generale Group, emphasizing reduced CapEx through modular construction and port access.
* Cash operating expenses for the quarter were $2.43 million, a year-over-year decrease of $1.74 million. Available liquidity at quarter end was $9.86 million. Solomita added, “We will bring that $2.43 million down further every quarter for the foreseeable future.”

OUTLOOK

* Solomita maintained the target for the India facility to be operational by the end of 2027, stating, “Our goal is to have the project up and running by the end of 2027, and that's the goal that we're maintaining.”
* The company expects to finalize additional offtake agreements by year-end.
* Expansion plans include a second facility in India with a targeted 100,000 tons capacity, leveraging the newly acquired land.

FINANCIAL RESULTS

* Cash operating expenses were reported at $2.43 million for the quarter, with a decrease of $1.74 million year-over-year.
* Available liquidity stood at $9.86 million at quarter end.
* The company is currently $6 million under budget relative to its $176 million total project cost estimate for the Infinite Loop India project, with land acquisition savings of $5 million.

Q&A

* Brandon B. Rogers, ROTH Capital Partners, asked about the anchor offtake agreement’s coverage of the 70,000 metric ton capacity and the expectation for further CPG agreements. Solomita responded that while they don’t disclose specific volumes, it is a significant contract and additional agreements are anticipated by year-end.
* Rogers inquired about construction timeline and commissioning for the India facility. Solomita stated, “Our goal is to have the project up and running by the end of 2027, and that's the goal that we're maintaining.”
* Rogers questioned the commercial pipeline for DMT and timing for the sportswear brand’s Twist products. Solomita noted the Indian facility’s output is expected to reach market in 2028, with smaller volumes potentially available from Montreal earlier. He described DMT as a strategic diversification for Loop.
* Varyk Kutnick, DIVYDE Capital Partners, sought clarity on the commercial roles of ShinKong and Hyosung, and diversification strategy. Solomita described the partnerships as enabling both direct and spun fiber sales, and emphasized the importance of a diversified product portfolio spanning apparel, packaging, and chemical sectors.
* Kutnick asked about capacity expansion, to which Solomita replied that the 93-acre land could accommodate a second facility of 100,000 tons, representing a 50% increase in capacity.
* Kutnick referenced the removal of a cash covenant on the line of credit, asking for context. Solomita explained, “It's a vote of confidence in the sense that now I think we can have more predictable revenue streams and profitability coming from the engineering services.”
* Kutnick followed up on debt financing and equity for the India JV. Solomita conveyed strong confidence, citing government funding and other options for equity, with debt syndication led by KPMG progressing well.

SENTIMENT ANALYSIS

* Analysts expressed a positive tone, frequently describing progress as encouraging, referencing removed covenants as a “vote of confidence,” and stating, “Seems like things are finally working out for you guys.”
* Management maintained a confident and optimistic tone throughout, with Solomita stating, “very confident on that side and the debt syndication is going really well,” and describing current progress as “by far the most profitable project we’ve ever seen.”
* Compared to the previous quarter, both analysts and management showed an increase in optimism, with fewer questions about project risk or delays and more focus on execution and expansion.

QUARTER-OVER-QUARTER COMPARISON

* This quarter, Loop announced executed supply contracts with a global sports apparel leader and Taro Plast, while the previous quarter described ongoing negotiations.
* Land acquisition for Infinite Loop India was finalized in Q2, reducing project costs, whereas Q1 was still in the site selection phase.
* Q2 introduced new partnerships with Shinkong and Hyosung, expanding product reach beyond direct customers.
* The company reported lower cash operating expenses in Q2 versus Q1 and provided updated figures on liquidity.
* Management’s tone grew more confident, shifting from cautious optimism to assertive forecasts and highlighting progress on debt financing and project milestones.
* Analysts’ focus shifted from basic project viability and risk to questions about expansion, commercial pipeline, and execution details.

RISKS AND CONCERNS

* Solomita acknowledged that customer contracts are a gating item for debt financing completion, stating, “Customer contracts will be one of the gating items to get the debt financing completed.”
* The company is dependent on finalizing additional supply agreements to secure full financing.
* Management cited diversification as a key strategy to mitigate market-specific risks, aiming to balance exposure across apparel, packaging, and chemical markets.
* Analyst questions probed the predictability of revenues, construction timelines, and the robustness of financing, reflecting ongoing market concerns about execution risk.

FINAL TAKEAWAY

Loop Industries’ second quarter highlighted major strategic achievements, including the establishment of anchor supply contracts, successful partnerships in the textile sector, and progress on project financing and site development for the Infinite Loop India facility. Management remains confident in hitting the 2027 operational target for the new plant, plans a substantial capacity expansion, and continues to drive cost efficiencies and diversified revenue streams. The quarter’s developments underscore strengthened project viability, a maturing commercial pipeline, and increased visibility into the company’s multi-year growth trajectory.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/loop/earnings/transcripts]

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