Loop Industries, Inc. (NASDAQ:LOOP) held a productive earnings call on May 30, 2024, where CEO Daniel Solomita shared significant updates on the company's global expansion and partnerships. Loop Industries announced the upcoming completion of a joint venture in India, named Infinite Loop India, which will focus on producing key chemical components used in polyester production.
The company also highlighted a new product launch with On Shoes and its progress in securing financial support in Europe. With strategic moves in both manufacturing and product development, Loop Industries expressed confidence in the financial prospects of their ventures and their ability to secure necessary funding.
Key Takeaways
- Loop Industries is partnering with Ester Industries to create Infinite Loop India, a facility expected to produce 70,000 metric tons of DMT and 23,000 tons of MEG annually.
- The company will earn a 5% royalty on revenues from the Infinite Loop India facility.
- Negotiations with the Korean government are underway for potential grants and subsidies for a project in Ulsan.
- A joint venture partnership with Reed in Europe is nearing completion, promising financial support.
- Loop Industries and On Shoes have launched a shoe made from Loop's recycled polyester fiber, introducing a subscription model for product use and recycling.
- The India plant's EBITDA is projected at $70 million for a $25 million equity investment.
- Loop Industries has sufficient liquidity to maintain operations until additional financing is finalized.
Company Outlook
- The company is optimistic about finalizing agreements by the end of the week.
- Loop Industries plans to build multiple plants in India, each potentially adding $8 to the stock price.
- The company's cash position stands at $7 million, with enough liquidity to last until the finalization of financing arrangements.
Bearish Highlights
- Loop Industries reported quarterly expenses of $5.1 million with a cash burn rate of $3.1 million.
Bullish Highlights
- Current prices for DMT and MEG are favorable, with DMT at $1,950 per metric ton and MEG at $835 per metric ton.
- The India facility is expected to significantly contribute to the company's EBITDA, with stable MEG pricing and DMT pricing above the five-year average.
Misses
- There were no specific misses outlined in the earnings call transcript summary provided.
Q&A Highlights
- CEO Daniel Solomita discussed the economics of the India plant, emphasizing its potential profitability.
- The stable pricing of MEG and the above-average pricing of DMT contribute positively to the projected revenue.
- The company is comfortable with the projected CapEx of $165 million for the India project, backed by extensive engineering work and relative pricing data from their Ulsan project.
- Loop Industries has secured a robust supply chain for feedstock from sewing factories and over 50% of the feedstock needed for the India project.
- The marketing strategy remains unchanged, focusing on selling the chemical components rather than the final product.
Loop Industries is advancing its global presence with strategic partnerships and innovative product launches, maintaining a positive outlook for its financial future and operational capabilities. The company's leadership is confident in their ability to finalize necessary agreements and secure financing, positioning Loop Industries for continued growth in the sustainable materials sector.
InvestingPro Insights
As Loop Industries, Inc. (LOOP) continues to make strides in its global expansion and partnership endeavors, a closer look at the company's financial health and market performance through InvestingPro data can provide a deeper understanding of its current position.
InvestingPro Tips indicate that while Loop Industries is aggressively pursuing growth, it's important to note that analysts do not expect the company to be profitable this year. Moreover, the stock has recently been under pressure, experiencing a significant decline over the past week. These insights suggest that while the company's strategic initiatives are promising, investors may need to brace for short-term volatility.
From a financial standpoint, the company's market capitalization stands at $119.32M, reflecting its size within the industry. The Price / Book ratio, as of the last twelve months ending Q4 2024, is at 8.44, which could be considered high, indicating that investors are paying a premium for the company's net assets. Additionally, Loop Industries is trading at a substantial discount to its 52-week high, with the price being only 53.4% of the high mark, potentially signaling a buying opportunity for value investors.
Loop Industries' financial metrics and the InvestingPro Tips should be considered by potential investors to gauge the company's future prospects. For a more comprehensive analysis, including additional InvestingPro Tips, visit https://www.investing.com/pro/LOOP. To access these valuable insights, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. There are 9 additional InvestingPro Tips available that can further guide investment decisions regarding Loop Industries.
Full transcript - LoopNet (LOOP) Q4 2024:
Operator: 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.
Kevin O'Dowd: 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.
Daniel Solomita: 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 is extremely important. This means that our customers do not have to modify anything in their production facilities to replace their current supply. The Infinite Loop India facility will produce 70,000 metric tons of DMT and 23,000 tons of MEG made through Loop's depolymerization technology. The Indian market offers an abundance of low-cost waste polyester fiber that can be depolymerized using Loop's technology and turned into the DMT and MEG. Many of our customers in the textile manufacturing industry have production facilities in India and neighboring countries such as Bangladesh. So it's very close to our customer supply chain. The CapEx estimate for India is $165 million. Therefore, the equity commitment for Loop is in the $25 million to $30 million range, which our partners at Reed and a government agency are fully on board to fund. The partnership with Ester is a 50-50 joint venture. Loop receives a 5% royalty fee on all revenue generated from the facility, which is estimated – the licensing fee is estimated to be at $8 million per year. Loop is solely responsible for all sales and marketing of the final product, which is to be sold through the joint venture. It's all sold under Loop's brand. The expected EBITDA for the Indian facility is $70 million per year, which of Loop owns 50%, and a 35% unlevered IRR. Therefore, the economics of low-cost manufacturing, coupled with the monomer business model really provide very, very attractive shareholder returns. Our partners in India, Ester Industries, have been working with Loop for the past five years. Today, in Terrebonne, we depolymerize waste polyester and PET into DMT and MEG. We then ship those chemicals, the DMT and MEG, to Ester in India for polymerization. Examples of some of the products we've launched using this partnership with Ester is most recently our shoes with the Swiss shoe brand On Shoes, Evian water bottles, which are for sale in South Korea and the L'Oreal skincare products, which are on sale at all stores in the United States. So we have a long-standing relationship with Ester, and we are fully aligned on our partnership and views for the future. This is a 50-50 joint venture and the partners are fully aligned on the execution and the strategy. As I said before, Loop is exclusively responsible for all sales of the DMT, MEG and specialty polymers, such as PBT, PTT, PETG. Specialty polymers offer a high-margin business, which today is really in need of sustainability. And Loop's DMT allows for sustainability to now reach the specialty polymers, which today cannot be – have any type of sustainability because there's no monomers available to be used as the base building blocks. The Infinite Loop India project leverages Loop's existing engineering package and has the same major equipment suppliers as the Canadian facility we have running here in Terrebonne. The Terrebonne facility, we've had operational for the past four years, and those four years have been allowing us to secure all of the major equipment that we need for the facility. So we have had four years of experience running all of these pieces of equipment and therefore, very comfortable with all of our suppliers. So this project leverages our existing, very mature engineering package and all of our key equipment suppliers. Loop and Ester have hired a global leading engineering firm to secure land for the project, which we're expecting to be in the Hyderabad area, and they will be providing all of the local engineering support for the project. We expect to break ground on the facility by the end of this fiscal year. This is in line – this partnership is in line with Loop's strategy of deploying capital to low-cost manufacturing countries such as India to enhance shareholder returns. We will move to a more asset-light business model focused on licensing our technology in higher-cost manufacturing countries. As far as the Ulsan update, Loop and SKGC are negotiating with the Korean government for grants and subsidies for the project. We are currently also studying the possibility of putting up a monomer plant in Ulsan. The other big significance to the monomer business model is that it significantly reduces the CapEx and increases financial returns. In the monomer business model, we do not need the polymerization section. So about 40% of the CapEx is not needed because we are selling the chemicals rather than repolymerizing it into PET. So this is something that we're studying in Ulsan as well. Again, this is a huge market opportunity, and we're filling a market opportunity that exists today because of this tremendous underserved market. As far as India as well, another thing that's very important to stress is that India is a high-growth opportunity and the Indian economy is the fastest growing economy in the world, with 1.5 billion people and the population is growing. A lot of our customers are leaving China or finding a China Plus One solution and moving a lot of their manufacturing into India, especially on the textile manufacturing, so all of the large clothing companies. Low-cost manufacturing, labor rates are significantly cheaper in India. I was reading an EY presentation on the specialty chemical markets where labor costs for operators in a chemical plant in India are 80% less than what they are in China today. So we believe Asia is going to be the main driver for demand for the next several decades, which is why the Indian project is so important for us. And also the monomer business potentially in Korea is also very exciting because of the location. I'll switch now to the Reed financing. Over the past several months, Loop and Reed have been working diligently on completing our joint venture partnership and on our mainly non-dilutive financing to fund Loop's global expansion of our technology. Reed has hired several independent firms to conduct a thorough due diligence of all aspects of Loop's business, including technology, so technology due diligence, financial due diligence, legal due diligence, ESG due diligence and all of the independent firms have concluded their due diligence and all of that was completed successfully. The joint venture with Reed is consistent with our business model to invest capital in low-cost manufacturing countries and to have a more asset-light business model, built on licensing and higher-cost manufacturing companies such as Europe. The partnership with Reed is for Europe specific, where Reed comes with Loop as our financial partner. So any equity commitments, any funding commitments that we would have to develop our technology in Europe, it will be split 50-50 between Loop and Reed. So on the equity side, we'll be splitting with Reed. But all licensing revenue and all engineering revenue comes directly to Loop. So again, more of an asset-light business model where Loop splits on the equity side, so much less equity check, but we get the licensing revenue, which is standard at 5% of sales. On the financing side, the financing with Reed, which is largely non-dilutive, coupled with financing from our other partner, will fund 100% of the capital need for our equity commitment for India and leaves leftover funds for Loop's head office. The completion of the agreement is imminent. We had hoped to have everything signed off by the time of this call, but we are very confident in the signing and announcing the final agreements by the end of this week. Lastly, we had a – this quarter, we had a launch with On Shoes, the Swiss shoe manufacturer. They launched a Cloudeasy Cyclon shoe on May 21. The upper part of the shoe is crafted with polyester fiber made from Loop's facility here in Terrebonne, Canada. It's a 100% recycled fiber using our technology. We're starting – we started with waste polyester fiber, broke it down into the DMT and the MEG, purified the DMT and MEG, sent that over to Ester. Our partners at Ester Industries produced the polymer, which was then sent to On Shoes, which they used to produce the upper part of the shoes. The program, it's a subscription program. And so as these people pay a monthly subscription fee, they have access to the shoe. When the shoe is sent back, On Shoes will remove the upper portion, send that over to us, and we will recycle it for them and send it back to them. So it shows the complete circularity for textiles and for running shoes. This is the first shoe launched by On using Loop's fiber-to-fiber recycling technology and sets a precedent for sustainability in the footwear and textile markets. With that, I'll hand it over to Fady to go through the financials.
Fady Mansour: 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 – the validations of how we get to those numbers. We did it both from a price earnings perspective and an enterprise value perspective. From a price earnings perspective, if you use the $70 million EBITDA, impute the interest expense of about – we're, in our pro forma, estimating $11 million of interest; 5% on the CapEx of $165 million is about $8 million. That brings us to just north of $50 million from a pretax income; after tax at a tax rate of 25%, we're at $40 million. Our stake, as you all know, is 50%. So that's about $20 million. And then when you add the royalty that Daniel alluded to of $8 million or $6 million after tax, we're getting into the $26 million range. And then when you factor out the financing cost that we need to – for our equity raise, that's about $3 million after tax. So we're talking about a pro forma of $23 million of net income for one plant. And if you use that over a dilutive number base, we're at just south of 50 million shares right now, you're getting – and giving effect, if we have to, for some of the securities that kind of come out there, we're looking at about $0.40 of EPS. The S&P as of today is trading just north of 21. So that's about $8 per share. So if people want to take a discount, if they think it's closer to 16, 17 as a longer-term rate, then our stock price value accretion would be $6 to $7. If they think we should trade at a premium because we're high-growth, high-tech and a lot of that comes from the royalty in itself, we're closer to $9, $10. So we're straddling between a $7 and $10 range. Our estimate is about $8. Same thing from an enterprise value perspective. If you look at $70 million and apply the S&P multiple, which is just north of 14, you get almost $1 billion of enterprise value. Once you subtract out the debt, just north of $100 million, you get about $900 million. Our share of that 50% is about $450 million. That gives you – and then you add the royalty, that also gives you about $8 a share. So both valuation metrics, whether it's price earnings-based or whether it's enterprise value-based, kind of gravitate towards about an $8 share price for every single plant that we build in India. So there's no version of this, which is one and done. We plan to build multiple plants. You can see the accretion value of this opportunity. In line with Daniel said, asset-light for countries that have low cost – sorry, asset-heavy for countries that have low cost and more of an asset-light model for high-cost countries where we just reap in the royalties, it goes straight to our bottom line. So the financing, as Dan alluded to, yes, it's taking a little longer than we wanted to, but it's definitely well worth it. We are getting into the final throes, and it is a priority number one in the next couple of weeks to come to finality for that. Please allow me to walk through the financial statements. If you look at our P&L, our total research and development costs were $3 million for the quarter ended February 29. There were two adjustments which affect the baseline of that. One is we did have a write-down of about – of exactly $817,000, and we also had some onetime project-related expenses related to our project in France for $500,000. So that's $1.3 million that are non-recurring. So the $3 million as reported would have been $1.7 million if you exclude those two items, and that results in a decrease of 23% over the prior period. So that's been a focus for us at Loop Industries. We continue to focus on not only R&D spend, but we want to also continue to preserve the integrity and the pipeline of innovation that's going on at Loop. For the G&A expenses, in the last comparative quarter, we did have a onetime stock-based comp adjustment for forfeitures to the tune of $200,000. If you normalize for that, on a pro forma perspective, our G&A would have been down 10%. So solid cost reductions for the quarter. As I've guided the market in the previous quarter and the quarter before that, if you look at our total expenses for the quarter, they were $5.1 million. If you back out non-cash expenses, which include the write-down of $800,000, the non-cash stock-based comp expense of a total of $300,000 and obviously, depreciation, which is non-cash of $100,000 plus total project costs for Ulsan and Europe of $800,000 for the quarter, our total cash burn rate is $3.1 million for the quarter. So that averages to about $1 million per month. So, well within sight of our target between $1 million and $1.2 million. We're holding our baseline as tight as we could. From a liquidity perspective, at February 28, obviously, from a statement of cash flow, we have $7 million in cash. We had a total of $9.5 million of liquidity. So we've got decent runway on that to make sure that it gets us until we've got the financing solved, which, as Daniel alluded to, is happening over the course of the next weeks. So we're monitoring carefully our cash balances, but we've got enough dry powder to last us towards the balance of the calendar year. That's it. I continue to guide that our expenses from a cash burn rate for fiscal 2025 are going to be between $1 million and $1.2 million. Obviously, Q1 2025, maybe a little higher because we spent quite a bit on legal fees with respect to the Ester agreements and getting to finality on the Reed agreements. But after that, you'll see it revert to more of a long-term mean of $1 million to $1.2 million. So with that, I'll – that's my section, and I'll turn it back over to Dan for final concluding remarks.
Daniel Solomita: 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.
Operator: Thank you. [Operator Instructions] And our first question comes from Gerard Sweeney from ROTH Capital Partners.
Gerard Sweeney: Good morning, Daniel, Fady. Thanks for taking my call.
Daniel Solomita: Hi, Gerry.
Gerard Sweeney: 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?
Daniel Solomita: 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.
Gerard Sweeney: [$835], that's what I missed. Got it. Okay. Got it. And...
Daniel Solomita: And today, the combined – that combined price is much higher than PET today.
Gerard Sweeney: Yes. Got it. And you're looking at $70 million of EBITDA from their client to plant, correct?
Daniel Solomita: Yes. Correct.
Gerard Sweeney: 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…
Daniel Solomita: 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.
Gerard Sweeney: 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.
Daniel Solomita: Yes, $165 million CapEx.
Gerard Sweeney: 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?
Daniel Solomita: 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.
Gerard Sweeney: 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?
Daniel Solomita: 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.
Gerard Sweeney: 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?
Daniel Solomita: 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.
Gerard Sweeney: Got it. Okay. I appreciate it. Thank you.
Daniel Solomita: Thanks, Gerry.
Operator: [Operator Instructions] As we currently have no further questions, I will hand back over to Kevin O'Dowd for final remarks.
Kevin O'Dowd: 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.
Daniel Solomita: Thank you, everybody.
Operator: This concludes today's call. Thank you for joining. You may now disconnect your lines.
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