Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Loop Industries Fourth Quarter 2024 Corporate Update Call. My name is Carla, and I will be coordinating your call today. [Operator Instructions] This conference call is being recorded today, May 30, 2024, and the press release accompanying this conference call was issued last evening, May 29, 2024. On our call today is Loop Industries' Chief Executive Officer, Daniel Solomita; and Fady Mansour, Chief Financial Officer; and Kevin O'Dowd, Head of Investor Relations. I would now like to turn the conference call over to Kevin to read a disclaimer about the forward-looking statements.

Thank you, operator. Before we get started, let me remind you that today's meeting will include forward-looking statements within the meaning of security laws. These forward-looking statements relate to, among other things, current plans, expectations, events and industry trends that may affect the company's future operating results and financial position. Such statements involve risks and uncertainties in future activities and results may differ materially from these expectations. Additional information concerning these statements and related risks and uncertainties is contained in the Risk Factors and Forward-Looking Statements section of our latest annual report, Form 10-K, of our quarterly report and 10-Q filed with the SEC yesterday and yesterday's press release. Copies of these documents are available by – at sec.gov or from our Investor Relations department. At this time, I'd like to turn the call over to Daniel Solomita, Chief Executive Officer of Loop Industries. Please go ahead, Daniel.

Thank you, Kevin. Good morning, everyone. Thank you for joining our call. It's been a very eventful quarter and year-end. We have made great strides towards the commercialization of our technology. This morning, I will be outlining our partnership with Ester Industries, which combines Loop's monomer and specialty polymer business with low-cost manufacturing. I'll be updating you on our progress at Ulsan with our partnership with SKGC, an update on our status of the Reed financing and finally, our On Shoes partnership, which showcases Loop's ability to recycle polyester textile waste. So let's get started with the Infinite Loop India, which combines the monomer business opportunity with low-cost manufacturing. The monomer business model is filling a market need for sustainably produced DMT and MEG and high-margin specialty polymers. This is complementary to our PET business. The monomer business is addressing a huge underserved market for sustainably produced DMT and MEG. Today, the market opportunity is greater than $20 billion annually. DMT and MEG are used worldwide as intermediate chemicals to supply the automotive, cosmetics, packaging and other industries. Today, there's a global shortage in DMT. And this is how we developed the business model. We've been receiving a lot of calls from chemical companies asking if Loop can supply them with DMT. As per Wood Mackenzie, virgin petroleum-based DMT is selling for $1,950 per metric ton, and MEG is selling at $835 per metric ton for a combined price of $2,785. This is with no sustainability-linked premiums. This is for virgin petroleum-based products. In talking to potential customers who are the large petrochemical companies, we feel comfortable that a 15% premium can be applied for sustainability and Loop's product. The DMT and MEG that are produced through Loop's depolymerization technology are drop-in replacements to the petroleum-based DMT and MEG, which…

Thank you, Dan, and good morning to all, and thank you for joining. Exciting times. I've done a lot of business cases in my life, but I've never seen anything close to the risk-return profile and how attractive the India opportunity is for us. I mean we're excited about the opportunity set, the specificity of India in terms of their favorable demographics, the growth profile, you see a lot of migration into India. So it's attracting a lot of capital. We want to be part of that. The supply-demand dynamics of the monomer business that we're undertaking, the partner, where we have full alignment of roles and responsibilities, there's no channel conflict. It's built upon our respective strengths to create synergy to the joint venture. But really, and naturally, as the CFO, I'm really excited about the financial metrics. We're talking about, as Daniel alluded to, $70 million of EBITDA at the joint venture level for a 25 – that's consolidated, our share would be 50% of that for about $35 million for a $25 million equity check, which is well within our wheelhouse. The capital intensity is something that we've been discussing more and more, $165 million of capital for $160 million of revenue was almost a 1:1 ratio. In terms of EBITDA, it's just over 2.3. These are very, very, favorable economics. Daniel alluded to it, our IRR, north of 30%, 35%. I mean, the payback on the equity, we're looking at under two years. So this strikes – this ticks a lot of boxes for Loop. Really, really excited about this. The estimate that we've done is that every plant that we build with our partner, Ester India, creates $8 of stock price, depending on the metrics you use, but let me walk you through that –…

Thank you very much, Fady. So in conclusion, I think the monomer business and the low-cost manufacturing model really showcases the ability of Loop to be agile and really be able to work within the constraints of the market. It's a tremendous market opportunity in an underserved market. Like I said, the total combined price of DMT and MEG sold separately today is much higher than if they would be recombined into PET. And that's something where we have to take advantage of these type of market conditions. So we're really excited about our partnership with Ester. We're very excited with our partnership with Reed, finalizing the financing and moving to the next phase of commercialization for the company. With that, I'll turn it over to questions.

Thank you. [Operator Instructions] And our first question comes from Gerard Sweeney from ROTH Capital Partners.

Good morning, Daniel, Fady. Thanks for taking my call.

Hi, Gerry.

Thanks. Thanks for having. Could we go over – I just want to go over the economics real quick on the India plant. I got most of it, but – so 70,000 metric tons, DMT, could you go over how many pounds for DMT and MEG and the pricing per pound or ton, I should say, however, you presented it, if you could do that quickly?

So today – yes, thank you. So the model right now is 70,000 metric ton of DMT and 23,000 tons of MEG. So that's the total output of the facility. Today, according to Wood Mackenzie, the price – virgin petroleum-based DMT is selling at $1,950 per metric ton and MEG is selling at $835 a metric ton.

[$835], that's what I missed. Got it. Okay. Got it. And...

And today, the combined – that combined price is much higher than PET today.

Yes. Got it. And you're looking at $70 million of EBITDA from their client to plant, correct?

Yes. Correct.

Got it. Okay. The question I have is on DMT and MEG. They are commodities, they fluctuate. Obviously, this looks very appealing. But I'm just curious if we could maybe even – if you could maybe give a little background as much as you can on some of the drivers behind the pricing of these chemicals. I mean just initially, off the cuff, some concerns are if there's definitely a volatility in this market. Is there anything currently going on in the market that's creating excessive pricing or higher pricing? Or is this sort of the pricing we're seeing for DMT, MEG sort of been relatively stable in a certain range…

Yes. So if you look at the last five years, MEG pricing is very stable. This is where we are as far as MEG pricing for the past five years. On the DMT side, you're slightly above the five year average. The five year average is about $1,550 to $1,600. So you're slightly above that. There was a major DMT plant that was taken offline in Europe, which was damaged during an earthquake and there's no plan to – there is no plan right now to put that facility back online. And there was another factory that was shut down in Germany during the war when the war with Russia started. So it's caused a little bit of a global shortage and those have increased the price of the DMT and MEG – the DMT, sorry, not the MEG, the DMT slightly, but even if you just take out the five-year averages of DMT and MEG, that coupled with the low-cost manufacturing in India still allow you to have tremendous returns.

Got it. That's helpful. That's fair. Got it. And the other concern I do have is CapEx pricing. Obviously, I think what you said, was it $165 million of CapEx? I believe that was the number.

Yes, $165 million CapEx.

Considerably lower than the Ulsan project. But obviously, the Ulsan project started at a much lower number. Is there any concern that – or, I should rephrase that. How are we certain that CapEx pricing doesn't escalate to a much higher level with the India project as we saw with the Ulsan project?

So with the Ulsan project, I guess, the initial estimate was about $400 million. It ended up being closer to – a little bit – $500 million. So the good – we've done engineering work, we've done all the preliminary work. All of the equipment and all of the – like I said, all of the major equipment pieces from Loops technology, we have all the relative pricing – because of Ulsan, we have all of the relative pricing that we can apply to India. Our partners at Ester have also have relative construction experience. They put up a polymer plant in 2021. We've hired a global engineering firm to be doing all of the engineering work for us. So distillation columns, pumps, piping, all of those things, which are very standard for chemical plants, there's a lot of relative data on the costing of those equipment and all of the proprietary equipment that we use for Loop's technology, which is some filtration and distillation columns, that's – we're using pricing that we have from our Ulsan – from the Ulsan plant. So we have a lot of relative data for all of those. If you think about total cost, if you take a $500 million, which would be a total project, take away 40% of it just on the polymerization, so you're bringing down your CapEx from $500 million, you bring it down to $300 million right off the bat. And then if you look at labor rates like I've been studying through various reports that I've been reading, the labor rates in India versus labor rates in South Korea are dramatically different. Like I said, India is 80% – labor rates are 80% cheaper than they are in China and Korea is one of the higher-cost manufacturing countries in the world. So we've done a lot of work. This is not something that we just started recently. We've been thinking about building a plant in India for many years. We have a really great partner who has experience in operations side and on – relative experience on the construction side. So we're relatively – we're very comfortable with the $165 million number at this time.

Got you. On the – now you're making monomers, DMT, MEG, does this change the marketing strategy? I mean, previously, we – you were marketing fully recycled PET. If I heard you correctly, DMT, MEG could be – pure drop-ins totally understand that, there's a huge additive bonus to that. But does this change the marketing side if it goes into end markets that maybe are a little less, maybe, tuned to some ESG standards? Obviously, the consumer market is very tuned to that sort of standard. But does this – other markets are less so. Does this change marketing or create any headwinds on that front?

No. No, it doesn't really change any of our marketing or any of our branding efforts. Obviously, we're selling the chemicals, and we're not selling the final product. There's a little bit of a difference there, but we're still branding it as Loop material. A lot of customers in our supply chain, especially like I said, the textile companies need textile to textile, so they want material starting from the textile waste, which is huge in India because a lot of the sewing factories and spinning factories are all in India. So we already secured over 50% of the feedstock needed for the facility coming from sewing factories, so the cutting waste. So that supply chain is very robust in India and Bangladesh and those countries. And so the availability of very low-cost feedstock and our customers wanting the material coming from that type of feedstock is really a perfect fit, and there's a lot of marketing and branding that can go around that because like you saw with On Shoes, this fiber to fiber is something that's really exciting for these brands. They really need that. And that's something that we can offer them, and that's a huge bonus for us.

Got it. And then just one last question, and I'll jump in line, I don't want to monopolize everything. But financing, I think you said – I'm assuming you have Reed and you have government financing. You'd said – not as though the Reed financing was coming this week, maybe next week or two or in the very near future. Just curious if, one, that's correct; two, what are – are there any major – are there any hurdles remaining with that? Or are we literally just in the last final stages?

We're in the last final stages of signing all of the binding agreement. There's a closing condition, and we're expecting to have the entire financing package closed within the next – I think we said the second quarter of the fiscal year.

Got it. Okay. I appreciate it. Thank you.

Thanks, Gerry.

[Operator Instructions] As we currently have no further questions, I will hand back over to Kevin O'Dowd for final remarks.

Thank you, everyone, for joining us today to discuss Loop Industries' fourth quarter results. Before we conclude, I'd like to express our appreciation for your continued support and interested in Loop. If you have any questions or need any additional information, please feel free to reach out. Thank you again for your time today. We look forward to continuing our dialogue and updating you on our future developments. Have a great day.

Thank you, everybody.

This concludes today's call. Thank you for joining. You may now disconnect your lines.