Loop Industries Earnings Call: Big Wins, Big Risks

Loop Industries ((LOOP)) has held its Q3 earnings call. Read on for the main highlights of the call.

Loop Industries Balances Major Project Wins With Funding Pressures in Latest Earnings Call

Loop Industries’ latest earnings call struck a cautiously optimistic tone, highlighting tangible progress on its flagship India project, a new blue-chip supply agreement with Nike, and a promising European licensing deal. Management emphasized that its core technology and commercial strategy are gaining traction, supported by engineering revenues and sharply reduced operating costs. At the same time, executives were candid about the company’s tight liquidity, sizable remaining equity requirements, and the need to lock in more offtake contracts and project financing over the next several months to fully de-risk its growth plan.

India Flagship Plant On Budget and On Schedule

Loop’s 70,000-metric-ton Infinite Loop facility in India is now moving from planning to construction, with detailed engineering formally underway after Toyo began work on November 1. Management reiterated that the project remains both on budget and on schedule, with construction completion targeted for the fourth quarter of 2027. This plant is positioned as the company’s first large-scale commercialization of its depolymerization technology for textile-to-textile and PET recycling, and is central to Loop’s long-term growth thesis.

Nike Take-or-Pay Deal Anchors India Offtake

A key milestone this quarter was a multiyear supply contract with Nike for Loop’s “twist” textile-to-textile polyester resin. The deal features a fixed annual volume, fixed pricing, and a take-or-pay structure, offering Loop a high-quality, creditworthy anchor customer for the India facility. This contract helps derisk a portion of the plant’s output and gives investors greater revenue visibility, although management noted that several more customers will be needed to fully utilize the site’s capacity.

European License Moves Forward With German Lead Site

Loop also advanced its European strategy by selling a license to Reed Societe Generale for a 70,000-metric-ton plant in Europe. Site selection has narrowed from 20 locations to three, with a lead site identified in Germany and final selection expected around late January or early February. The European license will not only extend Loop’s geographic footprint but is also structured to generate engineering and milestone payments over approximately three years, providing a material revenue stream alongside longer-term royalties once operational.

Engineering Revenues Provide Near-Term Cash Support

With large plants still several years from commercial operations, Loop is leaning on engineering and milestone payments as an interim revenue and cash source. Payments from the India joint venture and the Reed SocGen European project are expected to cover back-office expenses for several years. This model allows Loop to support its corporate overhead while it builds out its asset base and waits for the India and European facilities to come online.

Operating Cost Discipline Strengthens Financial Profile

The company reported Q3 cash operating expenses of $2.2 million, a decline of $1.1 million year over year—roughly a 33% reduction. Management expects further declines as more costs are absorbed by the India joint venture and the European project, rather than by Loop’s corporate entity. This tighter cost structure improves the company’s resilience as it navigates near-term liquidity constraints and works to secure additional capital.

Debt Syndication for India Nearing Completion

Loop is making progress on project financing for its India plant, targeting a roughly $130 million debt package that would cover about 70% of the facility’s total funding needs. Management reported multiple term sheets from multilateral development banks, sovereign wealth funds, and commercial lenders, with syndication expected to close in the coming months. Successful closure of this debt package is critical for keeping the 2027 delivery timeline intact.

Modular Construction Slashes Capital Intensity

A major strategic advantage highlighted on the call is Loop’s modular construction approach, which management said cuts capital expenditures by around 50% versus traditional stick-built plants. This reduction materially improves the economics of both the India and European projects, helping achieve lower per-pound capital costs (prior benchmarks suggested roughly $0.61 per pound) and enhancing competitiveness in markets where cost and scalability are key.

Textile Waste Scale Supports Expansion Potential

Management underscored the vast size of the addressable textile waste market—around 85 million tons of PET/polyester produced annually, with roughly 66% derived from textiles. Third-party assessments have identified more than 500,000 metric tons of textile waste available in India alone. Loop’s India site is being designed with the ability to expand capacity from 70,000 metric tons to up to 170,000 metric tons, with the company aiming to use project cash flows to fund subsequent expansions once the initial facility is operating.

Tight Liquidity Highlights Near-Term Funding Risk

Despite operational momentum, Loop’s balance sheet remains constrained. Total liquidity at quarter-end stood at just $7.7 million, and management cautioned that this figure will decline over the coming quarters. The company faces ongoing corporate cash burn and needs sufficient runway to reach key financing and milestone events, making near-term funding a critical watchpoint for investors.

Equity Contribution Still to Be Secured

Alongside the targeted $130 million in project debt, Loop estimates it must provide approximately $28 million in equity to the India joint venture. Management said it is actively engaged with several potential capital providers, but this equity financing has not yet closed. The ability to raise this capital on acceptable terms will be pivotal for maintaining the project schedule and avoiding dilution or structural compromises.

Offtake Coverage Remains Incomplete

While Nike and existing partner Taro Plast represent meaningful offtake commitments, management noted that the India plant will ultimately require around five to six anchor customers. Discussions are underway with additional consumer packaged goods and textile firms, but substantial capacity remains uncontracted. Until more long-term agreements are signed, revenue visibility and project de-risking will remain partial rather than complete.

Corporate Model Still Dependent on Financing and Milestones

Loop’s strategy relies on engineering revenues and a roughly 5% royalty stream to cover its corporate back-office costs over time. However, until the India and European projects are fully financed and reach their key engineering and construction milestones, the company’s liquidity and operations remain heavily dependent on timely financing and milestone payments. Any delays on these fronts could pressure the company’s cash position, making execution discipline critical.

European Project Carries Cost and Execution Uncertainties

The European plant, while promising, still faces several open variables. The lead site in Germany has not yet been finalized, and management acknowledged that European capital costs are likely to be higher than for India due to module transport and reconnection expenses. Until site agreements are signed and detailed budgets are locked, the project carries execution and cost risk that investors will need to monitor.

Ambitious Timeline Raises Execution Risk

Loop aims for the India plant to be commercially ready by late 2027, leaving less than two years from financial close to complete construction and commissioning once financing is finalized. This is an aggressive timeline given the scope of the project and the remaining financing, offtake, and regulatory milestones. While modularization and strong partners help, the company’s growth narrative is highly contingent on hitting these deadlines.

Guidance Highlights: On-Track Projects, Tight Cash, Big Market

During the call, management reaffirmed guidance that the 70,000-ton India plant is on budget and on schedule, with detailed engineering underway and construction targeted for completion in Q4 2027. The company expects to close a roughly $130 million debt package “in the coming months,” alongside an approximate $28 million equity contribution. The licensed 70,000-ton European plant is expected to generate engineering and milestone revenues over the next three years, which management believes will cover corporate back-office costs for several years. Guidance also pointed to a sub-three-year payback period for the India plant, a site capacity expandable to 170,000 tons, and more than 500,000 metric tons of available textile waste in India. Management framed these metrics within a broader market of roughly 85 million tons of PET/polyester annually, and highlighted the multi-year, fixed-price Nike contract as a cornerstone of its commercialization roadmap.

In closing, Loop Industries’ earnings call painted a picture of a company at an inflection point: major commercial and project milestones are falling into place, and cost discipline is improving, but the balance sheet remains thin and execution risk is high. Investors will likely focus on the next few quarters for concrete progress on India project financing, equity funding, further offtake deals, and European site finalization. If management delivers on these fronts, the long-term growth story rooted in large-scale textile recycling could gain significant credibility; if not, liquidity pressures could overshadow otherwise strong operational momentum.