Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Loop Industries' Third Quarter 2025 Corporate Update Call. [Operator Instructions] This conference is being recorded today, January 15, 2025, and the press release accompanying this conference call was issued last evening, January 14, 2025. On our call today is Loop Industries' Chief Executive Officer, Daniel Solomita; Fady Mansour, Chief Financial Officer; and Kevin O'Dowd, Investor Relations. I would now like to turn the conference over to Kevin to read the 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 the securities laws. These forward-looking statements related 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 and 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 annual report on Form 10-K and our quarterly report on Form 10-Q filed with the SEC yesterday and yesterday's press release. Copies of these statements are available 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.

Thanks, Kevin. Good morning, everyone. Thank you for attending our call. We had a significant obvious milestone that was accomplished in late December just before the quarter end, where we finalized the Reed transaction with Societe Generale. So that was a big milestone that we had been working on for many months to be able to complete it. The transaction is EUR 20 million financing to Loop, EUR 10 million in convertible preferred security, which converts into Loop shares at $4.75 a share 5 years from now, can be repaid in cash or in stock. The other part of the transaction, which is very significant, is we've sold the first license to our technology to Societe Generale, where Societe Generale will be able to now develop a project in Europe with Loop to be able to build an Infinite Loop manufacturing facility in the Continent of Europe. That's a very significant milestone. Our -- we -- our focus and our strategy has been to be able to license our technology into higher-cost manufacturing countries such as Europe, some parts of Asia. And we want to really deploy our capital into low-cost manufacturing countries such as our partnership with Ester in India. So that's a really key milestone that really accomplishes where we see the future of the company. Being able to license the technology to Societe Generale is a big milestone, EUR 10 million upfront payment. There's 2 other milestone payments as the project advances. And another big part of the revenue stream from this for Loop will be selling engineering packages and engineering services. So with every license that we sell, Loop's engineering services teams are obviously involved in doing all of the process engineering work that's needed to be able to build these facilities. That work starts right…

Thank you, Daniel. Good morning, everybody. Please allow me to go through the financial results for the quarter. Obviously, the biggest transaction that happened -- didn't happen in the quarter, it was the financing that Daniel alluded to for USD 20.8 million. So obviously, that's not reflected in our Q3 financial statements. It will be reflected in our fourth quarter financial statements when we issue in 2025. The proceeds from the transactions provide us with liquidity for our upcoming equity contribution in India and for our head office spend into 2025. Going through our income statement. As you see, there's been a continued decrease in our expenses. Research and development costs totaled $1.38 million. That's a reduction of 25%. And that's really a natural evolution of the production facility. The production facility, we're not testing it anymore. It's prime for showtime. So we're not spending any of those costs that we did in the past. So we continue to have those reductions in spend. And obviously, as the production facility goes, our company goes. So we're just in a natural evolution of our life cycle. In G&A, the expense went to $2.15 million. That's a reduction of 13%. The biggest item, about 2/3 of those savings come from a reduced insurance claims that we have. And then looking forward to that, those numbers are going to continue to draw down looking into fiscal 2025. The cash burn rate for the third quarter was $2.8 million. So we're below our $1 million a month or $3 million per quarter. It was $2.9 million in the second quarter, and now it's $2.8 million. Just to define what we mean by cash burn expenses, it's really our cash expenses. So it doesn't include depreciation expense or stock-based comp, which are noncash, and it…

[Operator Instructions] Our first question today comes from the line of Nick Boychuk with Cormark Securities.

On the Reed financing, can you please remind us what the terms for the additional licensing payments are? What those milestones really are and when we should expect them to be hit?

Nick, so the milestone payments are related to customer contracts and other things that are normal for FID. So there's 2 very attainable milestone payments that are going to be available to Loop. The timing for those milestone payments are probably going to be in end of 2025, end of 2026, really depending on how fast Societe Generale moves on developing the project. We're in discussions with them on finding a location. So those 2 payments are probably going to be at the end of 2025, beginning of 2026. Engineering services would probably start a little bit earlier than that. As soon as the site is selected, then our engineers will start with a process design package, a PDP package for the project, which probably towards the end of '25 as well. But it really depends on the speed that Societe Generale is going to want to work at on the project. So we are beginning discussions with them. We have some interesting opportunities in Europe. And so those are going to be the key milestones there.

And sorry, on the engineering services, I think you've mentioned this before. But can you remind us, on a project like this, roughly, what that would quantify as now?

The engineering services on a project such as the one at Societe Generale would probably be about $10 million (sic) [ EUR 10 million ] coming back to Loop going through to the construction.

Okay. So recognized over a period of about 12 months?

Through construction, it's probably over 24 months. It takes about 18 months to build the facility. So the engineering services go through PDP package, which is the primary engineering package or process design package. Then you have your feasibility study, which is the second study. And then you have detailed engineering and construction. So through those 3 phases, you're talking about $10 million -- EUR 10 million, sorry. So each project...

Understood. Moving to -- okay. On the SKGC partnership, can you kind of provide a little bit more color, Daniel, on what read-through there might be from the Societe Generale building a project in France versus SKGC in South Korea. The fact that SKGC determined that it was unviable in South Korea, does that have any read-through to France? Or is the cost of developing a project in France so much different that Societe Generale likely is to not fall into a similar situation?

Well, the SK scenario was completely different because SK was trying to build this very large project, which they call the Ulsan ARC, which had 3 different companies, 3 different projects on 1 big site with the shared utilities, and SK canceled that project. So it wasn't only with Loop's project, it was with the other companies as well. And one of the big problems there is more SKGC's parent company, SK Innovation, which got into financial trouble because of the electric car battery market. So SK Innovation had invested heavily into the electric car battery business, which is very, very tough right now. And so there was a lot of financial strain put on the company. This is all public information. So there's nothing here that I'm telling you that you can't find on the Internet. SK Innovation has been bought by another SK company, their LNG division or their LNG company now bought SK Innovation to shore up the balance sheet. The management has been -- a complete change in the management. And therefore, their priority right now has been to focus more on shoring up the balance sheet and understanding what they need to do in the electric car battery business. So it's not a real reflection to our technology. It's an overall shift in strategy there. And so Loop, we own 49% of the joint venture. There's no way that I feel comfortable putting in 49% of a project that was hundreds of millions of dollars. We just didn't want to put that equity into that project. When you look at that versus a project in India, where a significant -- a fraction of the cost, you can build the same facility in India and lower cost manufacturing as well, not only the CapEx, but also…

Our next question comes from Mahaut Arnaud with Bryan Garnier & Co.

Could you remind us what is the timeline for CapEx deployment for your different projects over the next month? And in particular, if you have any indications of CapEx deployment timing in India, that would be welcome.

I'm sorry, I didn't hear the second part of your question, the CapEx deployment...?

In India with Ester.

Yes, in India. So we're expected to break ground in the second quarter of 2025. So we've contributed capital to the joint venture to -- we've hired -- so the joint venture has hired Tata Engineers, a very large engineering firm based out of India, to do all of the local engineering work supported by Loop's engineering services team who handles all of the process side. So they've been hired. They're providing all of the information needed to break ground on the facility. We've also hired a big-4 accounting firm, KPMG, to handle the debt syndication to be able to go and get the debt for the project. And they're also doing the DPR, which is a detailed project report, which is needed for the Indian banking syndicate to provide the debt. So KPMG is hired for that and Tata is hired for the engineering side, supported by Loop's engineers. CapEx, the big CapEx spend, we'll start spending CapEx for the project in the second quarter of 2025 for our breaking ground the construction. As for Europe, Societe Generale, it's a license deal. So the licensing deal Societe Generale's responsibility for the equity position. Loop can. We own it -- we have a 10% ownership stake in the project development company. If we wish to invest more, we can increase that 10% up to 50% in the project company. But for right now, we see it as a licensing opportunity. The capital will be -- the CapEx will be -- Societe Generale would be the one responsible with their banking syndicates and their partners to be able to do the CapEx there. That would be simply a licensing revenue for Loop.

Our next question comes from Gerard Sweeney with ROTH Capital Partners.

Daniel and Fady, so when -- we talked a little bit about the engineering and some revenue coming back to Loop. When should we start to see this? I mean, especially it sounds like the India plant with Ester is moving in that direction?

Yes. So when you start seeing the revenue from engineering, you'll start seeing it in next quarter -- in the next quarter filing. So we're starting to receive that revenue now.

Got it. And then obviously, well, it sounded as though you're going to -- the plan is to break ground on the India plant with Ester sometime in 2Q. I mean what are some milestones between now and breaking ground and then post breaking ground that we should watch just to track the project?

Yes. So the completion of the engineering package by Tata and Loop's engineers, that's one key item. We hired KPMG for the debt syndication and for the DPR, which is this detailed project report that's needed for the Indian banks. So those are 2 milestones. Customer contracts, like I said, the circular fashion industry is really the focus of this facility because of the low-cost and plentiful availability of polyester fiber scrap that's available in India, which is going to be the primary feedstock for it. So it's really off cuts from the sewing factories that we're going to be using as our primary feedstock. So customer contracts are going to be a big important piece, you'll start -- we'll start finalizing those contracts within the next few months because those are obviously going to be important for the debt financing. And we've already started to securing the waste feedstock. So that's underway. And then also, probably you'll see some partnerships with these spinning partners that we've developed to be able to sell spun fiber now instead of actual chip. We're actually selling spools of fiber for certain customers who needed us to move up into the supply chain. So that's another development. So those are the big items that we're going to -- you're going to be seeing in the next few months.

That's very helpful. I really appreciate that, especially the detail. And then final question. Obviously, the Reed SG licensing is awesome, moves you down that path. And I don't want to get the cart before the horse, but obviously, the licensing is one of your key strategies going forward. I'm just curious if there is -- your thoughts on additional opportunities that may be potentially out there, maybe outside of Europe or what have you?

Yes, there's definitely opportunities for licensing. We are discussing with other potential partners on licensing outside of Europe. It would be more in higher-cost manufacturing countries in Asia. So those are opportunities as well. We're really happy that we sold our first license to Societe Generale for Europe because that's a really important market that we want to penetrate in to supply our customers with the materials. But there are other opportunities. We're working on them. The pace of these things, it's a little bit difficult to judge, but we do see opportunities in other high-cost countries in Asia.

The next question comes from Marvin Wolff with Paradigm Capital.

Congratulations on getting the Reed financing across the table. That was very, very important, obviously. My question surrounds the relationship you will have with the spinners. Is it going to be a tolling relationship? Or could you give us more color there?

Yes. It's going to be a tolling relationship where we'll send the chip from India to the spinner, they'll spin it into the fibers under the spec that's required for the customers. And then we'll sell that -- send that from the spinner to the customer. So we've qualified our material with all of the large spinners who already supply our customers with this material. So a lot of the big fashion brands, they all buy either spun fiber or they buy fabric or some of them just buy the garments already done. And that supply chain is mainly done in Asia. And so working with the customers, they've introduced -- the customers, the fashion companies have introduced Loop to their spinning partners and then Loop had to go out and develop the relationship with the spinning partners. We've tested our material, qualified the material, the material meets all of the qualifications that are needed, especially the quality, which is always Loop's hallmark, having the top quality material, which is needed for a lot of these big fashion brands and home goods brands that need quality materials coming from a recycled source, and that's what Loop can provide. A lot of the whites, white clothing or white curtains or white fabrics, you can't get that from recycled material. And so that's a big boom for what Loop can provide to these companies. And so we've gone out, we've now had to qualify the material. We've built those relationships with the spinners and it's going to be more of a tolling agreement. Some spinners are interested in buying material from us to sell it to some of their other customers. So that could be another opportunity having -- selling them material and they sell it to certain customers that we don't have relationships with. But this is really all came down from the customer side where some customers just said, we don't know how to buy chip we -- or the resin, we need to be able to buy fabric, so that our purchasing teams can buy the fabric from you. And so we've had to really develop that supply chain with our partners.

Okay. That sounds like a very interesting opportunity and one that could be potentially very high volume.

Yes, very high volume. These fast fashion and the fashion companies they use a tremendous amount of polyester fiber and that market is growing. Out of the entire PET market, if you take the entire market, which is about 90 million tons per year, over 66% of that is the textile industry and the fiber industry. There's no real viable solution to be able to recycle this material, which Loop has the best technology out there for this industry. And so it's a growing opportunity. And that's why the India joint venture is perfectly situated by using the waste scrap, turning it into new fibers for the customers. So that's definitely the growth engine on the customer side, it's coming from the circular fashion industry.

[Operator Instructions] At this time, we have no further questions registered. And so I will hand the call back to the management team for any closing comments.

Thank you very much for joining the call.

Have a nice day. If you have any questions, you can contact IR at Loop Industries. Have a nice day.

Thank you, everyone. Bye-bye.

Thank you, everyone, for joining us. This concludes our call, and you may now disconnect your lines.