Loop Industries Inc (LOOP) 2023 Q4 法說會逐字稿

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Loop Industries Fourth Quarter 2023 Update Corporate Call. (Operator Instructions) The conference is being recorded today, May 19, 2023, and the press release accompanying this conference call was issued after market close yesterday, May 18, 2023.

早上好，女士們，先生們。謝謝你的支持。歡迎參加 Loop Industries 2023 年第四季度更新公司電話會議。 （操作員說明）本次會議於今天（2023 年 5 月 19 日）進行錄製，本次電話會議隨附的新聞稿於昨天（2023 年 5 月 18 日）收盤後發布。

On our call today is Loop Industries Chief Executive Officer, Daniel Solomita; Chief Financial Officer; Fady Mansour; and Kevin O'Dowd, VP of Communications and Investor Relations.

今天與我們通話的是 Loop Industries 首席執行官 Daniel Solomita；首席財務官;法迪·曼蘇爾；以及通訊和投資者關係副總裁 Kevin O'Dowd。

I would now like to turn the call over to Kevin Reed -- sorry, to Kevin to read a disclaimer about forward-looking statements.

我現在想把電話轉給凱文·里德——抱歉，請凱文閱讀有關前瞻性陳述的免責聲明。

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 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 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 latest annual report Form 10-K filed with the SEC yesterday in yesterday's press release. Copies of these documents are available at sec.gov or from our Investor Relations department.

謝謝你，接線員。在我們開始之前，讓我提醒您，今天的會議將包括安全法含義內的前瞻性陳述。這些前瞻性陳述涉及可能影響公司未來經營業績和財務狀況的當前計劃、預期、事件和行業趨勢等。此類陳述涉及風險和不確定性，未來的活動和結果可能與這些預期存在重大差異。有關這些聲明以及相關風險和不確定性的更多信息包含在我們昨天向 SEC 提交的最新年度報告 10-K 表格的風險因素和前瞻性聲明部分。這些文件的副本可在 sec.gov 或我們的投資者關係部門獲取。

At this time, I'd like to turn the call over to Fady Mansour, Chief Financial Officer of Loop Industries. Fady, please go ahead.

現在，我想將電話轉給 Loop Industries 首席財務官 Fady Mansour。法迪，請繼續。

Thank you, Kevin. Thank you so much. And thanks for having me here today. I'm so honored to be part of this leadership team. I'm a newly minted CFO. I've got 4 weeks under my belt. It's been a rock and roll four weeks, but I couldn't be more excited to join this amazing franchise. The combination of the stellar team that we have, the cutting-edge technology, and the aggressive milestones that we have going forward are really what referred me to this company, so I couldn't be more excited, and I look forward to working with all of you in the future. Please -- Dan will give an update on the business, and I'll pass it over to him later, but I'd like to go through the financial results.

謝謝你，凱文。太感謝了。感謝您今天邀請我來到這裡。我很榮幸成為這個領導團隊的一員。我是新上任的首席財務官。我已經用了 4 個星期了。這是搖滾樂般的四個星期，但我對加入這個令人驚嘆的系列感到無比興奮。我們擁有的一流團隊、尖端技術以及我們所取得的積極里程碑的結合，正是我選擇這家公司的真正原因，所以我非常興奮，我期待著與他們合作你們所有人的未來。請——丹將提供有關業務的最新情況，我稍後會將其轉交給他，但我想查看一下財務業績。

Obviously, I wasn't here, but I've got caught up on the results that have happened in the past. But also what I call it a pivot point right now, we're pivoting from 2022, '23 to the future as we get off the dirt trail of experimentation and R&D and onto the highway of deployment and commercialization. But I will go through the results. Obviously, for the quarter ended February 28, 2023, we saw our expenses come down, and that's going to be a common theme that is going to hold as we go forward. A lot of engineering related to basic design package came down. Our external engineering came down tremendously. And you can expect that to continue into the future. Our machinery equipment, as we finalized [Terrebonne] saw a dramatic decrease in expenses. Again, more of a sign of things to come. So we saw total R&D expenses come down by more than 2/3 to more of a steady line run rate, but we're going to continue to look at cost decreasing and I'll talk through that in a couple of minutes.

顯然，我不在這裡，但我已經了解了過去發生的結果。但我現在稱之為一個樞軸點，我們將從 2022 年、23 年轉向未來，因為我們擺脫了實驗和研發的泥濘道路，走上了部署和商業化的高速公路。但我會仔細查看結果。顯然，在截至 2023 年 2 月 28 日的季度中，我們的支出有所下降，這將成為我們前進過程中的一個共同主題。很多與基本設計包相關的工程都下來了。我們的外部工程大幅下降。您可以預期這種情況將持續到未來。當我們最終確定[Terrebonne]時，我們的機械設備的費用大幅減少。再次，更多的跡象表明即將發生的事情。因此，我們看到總研發費用下降了 2/3 以上，生產線運行率更加穩定，但我們將繼續考慮降低成本，我將在幾分鐘內討論這一點。

On the G&A perspective, the costs were down pretty much across the board. So that's another area that we're looking to optimize for, which is a combination of professional services, employee comp more of our back-office functions. So we're looking at the frontline team, and obviously, the back line team to get through a total of reduced expenses. Obviously, we benefited from the gain on the disposal of Bécancour. It was 2 tranches. One happened in the fourth quarter of 2023, and we reported a gain just under $10 million. There was another gain that was recorded in the third quarter, which was $6.7 million. So it brought our full year gain to about $16.7 million, but more importantly, it solidified our (inaudible) and built a nice amount of dry powder and just to make sure we can fund our operations for the next couple of years.

從一般行政費用的角度來看，成本幾乎全面下降。這是我們尋求優化的另一個領域，它是專業服務、員工薪酬和更多後台職能的結合。因此，我們正在關注前線團隊，顯然，後線團隊也正在考慮減少總費用。顯然，我們從出售貝坎庫爾的收益中受益。這是 2 批。其中一次發生在 2023 年第四季度，我們報告的收益接近 1000 萬美元。第三季度還有一項收益，為 670 萬美元。因此，它使我們的全年收益達到約 1670 萬美元，但更重要的是，它鞏固了我們的（聽不清）並積累了大量的干粉，只是為了確保我們能夠為未來幾年的運營提供資金。

Turning over to the full year. Again, same theme that you saw a tremendous amount of reduced expenses for the same reasons that I articulated for the last quarter. One of the things in the G&A -- the G&A perspective, we had a higher stock-based comp because it was related to a performance condition that was met in fiscal 2023. So the stock-based comp was vested. It hasn't been exercised. So that was kind of a onetimer that occurred. Obviously, in addition to that, our tax credits, we had a bigger tax credit related to the Terrebonne upgrade. So that was good news that served to reduce our expenses.

翻到全年。同樣的主題，您看到費用大幅減少，原因與我在上個季度闡述的原因相同。 G&A 中的一件事 - 從 G&A 的角度來看，我們擁有更高的基於股票的補償，因為它與 2023 財年滿足的業績條件有關。因此，基於股票的補償是既定的。還沒有被行使過。所以這就是一次性發生的事情。顯然，除了我們的稅收抵免之外，我們還獲得了與 Terrebonne 升級相關的更大稅收抵免。所以這是一個好消息，有助於減少我們的開支。

More importantly, as we pivot forward, and I told you about the pivot that we're going to do in looking at our back office expenses. When I look and I've had a time to work with the team, internal stakeholders and see how we're able to reduce our expenses going forward, I'm proud to say that from a recurring expenses standpoint, we're looking at reducing our current run rate by about 50% which is a total of R&D, engineering and G&A. So we're taking a large -- we understand that we won't be able to generate revenues -- or material revenues in the next couple of years. So we have to have it keep the lights on (inaudible) and preserve our precious expenses in line with the cash that we have on hand. So 50% cost takeout, obviously, Terrebonne is complete right now. So like I said before, we're off the dirt trail of R&D and onto the highway of commercialization and deployment. Engineering projects are going to obviously go up as we get all side up and running and the future facilities, but those costs, we are looking at -- we are looking and doing cross-charging all of these expenses because they are incremental to the projects. So the theme, looking forward from our expenses is lower headcount, lower spend on machinery and equipment, cost-cutting from a back office perspective, watching all forms of spending, really bifurcating what's discretionary versus what's needed and obviously treating our R&D and engineering expenses as a cross charge. So even if they hit our P&L from time 0, we're looking at cost charging them very quickly so that we get the recovery from the P&L perspective. And more importantly, we get -- we preserve our precious cash.

更重要的是，當我們向前邁進時，我告訴過你們我們將在後台支出方面進行的轉變。當我花時間與團隊、內部利益相關者合作並了解我們如何能夠減少未來的開支時，我很自豪地說，從經常性開支的角度來看，我們正在考慮將我們當前的運行率降低約 50%，即研發、工程和一般管理費用的總計。因此，我們正在採取大量措施——我們知道，在未來幾年內我們將無法產生收入——或物質收入。因此，我們必須讓它保持亮燈（聽不清），並根據我們手頭的現金保留我們寶貴的開支。所以 50% 的成本外賣，顯然，Terrebonne 現在已經完成了。正如我之前所說，我們已經脫離了研發的泥沼，走上了商業化和部署的高速公路。隨著我們全面啟動並運行未來的設施，工程項目顯然會增加，但我們正在考慮這些成本——我們正在考慮並交叉收取所有這些費用，因為它們是項目的增量。因此，從我們的支出來看，主題是減少員工人數，減少機械和設備支出，從後台角度削減成本，觀察各種形式的支出，真正將可自由支配的支出與需要的支出分開，並明顯地對待我們的研發和工程支出作為交叉電荷。因此，即使他們從時間 0 開始就達到了我們的損益，我們也會很快地對他們收取成本，以便我們從損益角度獲得恢復。更重要的是，我們保留了寶貴的現金。

Turning over to the balance sheet. Obviously, the sales that happened in late 2022, third and fourth quarter of the current fiscal year -- or last fiscal year, helped to shore up our finances, 3/4 of our total assets are cash on hand that's going to give us the dry powder that we need to make sure we're able to fund our minimum expenses going forward. So we have more than 2 years of operation expenses that we can fund. So we're well served and well anchored on delivering all the projects that we see in the pipeline and most notably, the first terminal that we're looking to get shovels in the ground by the end of the year, which is the [old time]. So we're really, really in good shape from a balance sheet perspective and a funding perspective.

轉到資產負債表。顯然，2022 年底、本財年（或上一財年）第三和第四季度發生的銷售有助於支撐我們的財務狀況，我們總資產的 3/4 是手頭現金，這將為我們提供我們需要確保我們能夠為未來的最低開支提供資金。所以我們有兩年多的運營費用可以資助。因此，我們在交付我們在管道中看到的所有項目方面得到了良好的服務和良好的錨定，最值得注意的是，我們希望在今年年底之前將鏟子投入地下的第一個航站樓，這是[舊時間]。因此，從資產負債表和融資角度來看，我們的狀況確實非常好。

On the cash flow, obviously, we had 2 positive cash flow orders, the latest 2, Q3 2023, Q4 2023 because of the excess land sale that I referred to. And obviously, we are laser focused on making sure that the expenses come down with that. So that's where we are from the P&L perspective. Again, like I said, we're at the pivot point right now. So we're keeping track back office expenses are going to be on a de minimis perspective. and we're going to be more spending on the project expenses, which is obviously the cost of success. So I'm happy to spend money on projects, that are recoverable and what's needed to get our company to the next level.

在現金流方面，顯然，我們有 2 個正現金流訂單，最近的 2 個是 2023 年第三季度和 2023 年第四季度，因為我提到的土地銷售過多。顯然，我們專注於確保費用隨之下降。這就是我們從損益角度來看的情況。正如我所說，我們現在正處於關鍵點。因此，我們將從最低限度的角度跟踪後台支出。我們將在項目費用上投入更多，這顯然是成功的成本。因此，我很樂意把錢花在可恢復的項目上，以及讓我們的公司更上一層樓所需的項目。

With that, I'll turn it over to our CEO, Dan Solomita. Daniel?

接下來，我會將其交給我們的首席執行官丹·索洛米塔 (Dan Solomita)。丹尼爾？

Thank you very much, Fady. It's a great pleasure to have Fady join us. He's been a tremendous resource. Even though for the only 4 weeks, he's been here, he's been fantastic. Got to know Fady about 6 months ago. So we took the time to get to know each other and make sure that Fady is going to be the right fit for the CEO role moving forward. So really happy to have him on board with us.

非常感謝你，法迪。很高興 Fady 加入我們。他是一個巨大的資源。儘管他來到這裡只有四個星期，但他表現得非常出色。大約六個月前認識Fady。因此，我們花時間相互了解，並確保 Fady 能夠成為未來首席執行官職位的合適人選。非常高興他能加入我們。

It's been an eventful year. We've got a lot of milestones that have been completed, and I don't think Loop has ever been in a better position than we are today to supply virgin quality PET resin and polyester fiber to global brand companies around the world. Customer demand is extremely high for our products, being able to supply virgin quality material from our Terrebonne facility to global brands all around the world is such a big difference. And we're the only company out there that's able to supply this type of material to brands, 100% recycled content, virgin quality material, and brands are really responding very well to this.

這是多事的一年。我們已經完成了許多里程碑，我認為 Loop 從未處於比今天更好的位置，可以向世界各地的全球品牌公司提供原生品質的 PET 樹脂和聚酯纖維。客戶對我們產品的需求非常高，能夠從我們的 Terrebonne 工廠向世界各地的全球品牌提供原始優質材料是一個巨大的差異。我們是唯一一家能夠向品牌供應此類材料的公司，100% 回收成分，原始優質材料，品牌對此反應非常好。

We're negotiating contracts for the Ulsan facility, also for the French facility and other future facilities as well. So there's really been a strong, strong demand from the customer side, which is really exciting. Right now, in the world, the only way to get recycled content into, let's say, packaging today or with the fiber space is through mechanical recycling. And what we've seen and what the world has seen and especially what our customers see is as government regulations are forcing more and more brands to use more recycled content into their packaging, the quality of the recycled PET or rPET is going down dramatically. And you could see that if anyone looks at a bottle made from -- with mechanical recycling today, most of the bottles are like a very dark gray or they have to die them blue or green, and it's really something that's really concerning for all of the global brands because the quality is continuously going down. And as those packages get back into the recycling stream, the quality is only going to get worse. And so that's really where Loop steps up and brings in the virgin quality material exactly the same quality as the petrochemical industry made from 100% recycled content. So that's really been a huge plus for us.

我們正在就蔚山工廠、法國工廠和其他未來工廠的合同進行談判。所以客戶方面確實有非常強烈的需求，這真的很令人興奮。目前，在世界範圍內，將回收內容納入當今的包裝或纖維空間的唯一方法是通過機械回收。我們和全世界所看到的，尤其是我們的客戶所看到的是，隨著政府法規迫使越來越多的品牌在其包裝中使用更多的回收材料，回收 PET 或 rPET 的質量正在急劇下降。你可以看到，如果有人看到今天通過機械回收製成的瓶子，大多數瓶子都是深灰色的，或者必須將其染成藍色或綠色，這確實是所有人都非常關心的事情。全球品牌，因為質量不斷下降。隨著這些包裝重新進入回收流程，質量只會變得更糟。這就是 Loop 真正發揮作用的地方，引入了與石化行業 100% 回收材料製成的質量完全相同的原始優質材料。所以這對我們來說確實是一個巨大的優勢。

We launched a really exciting program with Garnier, L'Oreal brand, the Micellar water brand in the United States last month, the package, it's a Micellar water. It's sold exclusively in Ulta stores across the United States. And so that was a tremendous achievement working with the L'Oreal brand, what a great brand they are, huge cosmetic company, and they're going to be a future customer of our facilities. So that was a really exciting launch. We have some other things with L'Oreal later on this year in New York.

上個月我們與卡尼爾、歐萊雅品牌、美國的膠束水品牌一起推出了一個非常令人興奮的計劃，包裝，它是膠束水。它僅在美國各地的 Ulta 商店出售。因此，與歐萊雅品牌合作是一項巨大的成就，他們是一個多麼偉大的品牌，一個巨大的化妝品公司，他們將成為我們設施的未來客戶。所以這是一次非常令人興奮的發布。今年晚些時候，我們與歐萊雅在紐約還有其他一些合作。

On AG, we signed an LOI for an offtake for the Ulsan facility from On AG, the exciting Swiss shoe manufacturer that makes the cloud running shoes. So really excited to work with them. That's a fiber-to-fiber application. Again, that's only Loop that can provide fiber-to-fiber recycling, so supplying all of the textile industry with virgin quality fibers, which is something they cannot get today and to be able to start with a fiber. So nobody can recycle polyester fibers back into virgin quality polyester fiber or going from a fiber into food-grade packaging and Loop can do any of those things. And so that really sets us apart from anything that exists out there. So that's another really exciting opportunity for us.

On AG 與 On AG 簽署了承購蔚山工廠的意向書，On AG 是一家令人興奮的瑞士鞋類製造商，生產雲跑鞋。與他們合作真的很興奮。這是光纖到光纖的應用。再說一遍，只有 Loop 可以提供纖維到​​纖維的回收，因此可以為所有紡織行業提供原始優質纖維，這是他們今天無法獲得的，也無法從纖維開始。因此，沒有人可以將聚酯纖維回收成原始品質的聚酯纖維，或者將纖維轉化為食品級包裝，而 Loop 可以做到這些事情。因此，這確實使我們與現有的任何事物區分開來。所以這對我們來說是另一個非常令人興奮的機會。

Fiber to fiber is really going to be the driving factor for the Asian partnership with SK Global Chemical. Most of the global supply chain of textiles and polyester fiber is all in Asia. Most of the feedstock that we're going to be using for those facilities is polyester fiber, so we probably secured about 60% of the feedstock for the Ulsan facility will be coming from the textile industry, polyester fiber. So that's really a really an exciting market for us.

纖維對纖維確實將成為與 SK Global Chemical 亞洲合作夥伴關係的驅動因素。全球紡織品和聚酯纖維供應鏈大部分都在亞洲。我們將用於這些設施的大部分原料是聚酯纖維，因此我們可能確保蔚山工廠約 60% 的原料將來自紡織工業聚酯纖維。所以這對我們來說確實是一個非常令人興奮的市場。

Today, having the Terrebonne facility up and running, operating, getting material into customers' hands so they can see the quality has completely changed the game. Operating this facility for the past 2.5 to 3 years has really been hugely beneficial for us as we move to global expansion, being able to get that knowledge of running the facility for 3 years, operating it and getting all that data is really, really important.

如今，Terrebonne 工廠的啟動和運行、運營、將材料送到客戶手中，讓他們看到質量，已經徹底改變了遊戲規則。在過去 2.5 到 3 年裡運營該設施對我們來說確實非常有益，因為我們正在走向全球擴張，能夠獲得運行該設施 3 年的知識、操作它並獲取所有數據真的非常重要。

Today, we supply from our facility. Today, we supply customers in the -- obviously, in the packaging, food-grade packaging industry, in the automotive industry, textile industry, pharmaceutical industry and the toy industry. So we have 5 different real segments that we're into today from our Terrebonne facility, and most of those customers are going to translate to our larger facilities. So customer demand has never been higher, and everyone is really excited about the quality.

今天，我們從我們的工廠供應。今天，我們為包裝、食品級包裝行業、汽車行業、紡織行業、製藥行業和玩具行業的客戶提供服務。因此，我們今天從 Terrebonne 工廠進入了 5 個不同的實際細分市場，其中大多數客戶將轉移到我們更大的工廠。因此，客戶的需求從未如此之高，每個人都對質量感到非常興奮。

The other big milestone, obviously, is the SK Global Chemical -- the SK Geo Centric partnership. We've been working with them for over 2 years. So it's not a huge surprise, but it is good to get the joint venture agreements finalized. Two companies complement each other really well. Loop brings in the technology piece. Loop brings in the customers, the marketing and the branding. We always get our Loop logo on the package, which is tremendous branding and marketing with all of these great brand companies that we work with. SK brings in -- SK brings in all of the construction of the facilities, the operations of the facilities and all of the day-to-day manufacturing and maintenance of the facilities. So it's a really great partnership where each company brings in their expertise. Strong customer demand for Asia. A lot of our existing customers and all of our close partners are going to be off-takers from the Ulsan facility.

顯然，另一個重大里程碑是 SK Global Chemical——SK Geo Centric 合作夥伴關係。我們已經與他們合作了兩年多。因此，這並不是一個巨大的驚喜，但最終敲定合資協議是件好事。兩家公司互補性非常好。 Loop 引入了技術部分。 Loop 帶來了客戶、營銷和品牌。我們總是在包裝上印有我們的 Loop 標誌，這對於我們合作的所有這些偉大的品牌公司來說都是巨大的品牌和營銷。 SK 引進——SK 引進所有設施的建設、設施的運營以及設施的所有日常製造和維護。所以這是一個非常好的合作夥伴關係，每家公司都帶來了他們的專業知識。亞洲客戶需求強勁。我們的許多現有客戶和我們所有的密切合作夥伴都將成為蔚山工廠的承購商。

As I mentioned earlier, the fiber feedstock is going to be the main feedstock used for those facilities. So textile waste. We've already secured over 60% of the feedstock coming from fibers for that facility. So really excited the SK partnership is to develop multiple facilities across Asia, first one in Ulsan, South Korea, but we're already discussing and looking at other facilities in Japan. China would be able to absorb at least 2 facilities. Vietnam is another exciting location. So tremendous expansion plans with SK Geo Centric moving forward, and I couldn't ask for a better partner than them.

正如我之前提到的，纖維原料將成為這些設施使用的主要原料。所以紡織廢料。我們已經為該工廠確保了超過 60% 的原料來自纖維。非常令人興奮的是，SK 的合作夥伴關係是在亞洲開發多個設施，第一個設施位於韓國蔚山，但我們已經在討論和考慮日本的其他設施。中國將能夠吸收至少兩個設施。越南是另一個令人興奮的地方。 SK Geo Centric 正在推進如此巨大的擴張計劃，我找不到比他們更好的合作夥伴了。

As for our French project, we updated the markets we chose Saint-Avold in the Grand Est in France. So we did an exhaustive search of all the different sites all over France and decided on Saint-Avold, which is right near the German border, great location for logistics and feedstock. So we're really excited to be there. The President of the region, Franck Leroy will be visiting us next week at Loop. So he's coming to visit our facility. We're going to tour the factory with him and talk about our expansion plan there. Tremendous government support for the French project. I was just at Choose France on Monday, hosted by President Macron. I was there; Mr. Na from SK was there as well, the CEO of SK GC was there; and Sabrina Soussan, the CEO of Suez. So all 3 of us together, we're meeting with all of the government officials, all of our customers, feedstock suppliers. So it was a great event hosted by President Macron. That was the second year that I've attended. And so, the tremendous support from the French government for the project. They need solutions in France for packaging and France is really leading the way for sustainability in the plastic space. So that's -- that project is really moving forward well. Feedstock has all been secured for the projects through Suez. Obviously, Suez is a large waste management company in France. So they've secured a percentage of the feedstock.

至於我們的法國項目，我們更新了我們選擇的法國大東部地區聖阿沃爾德的市場。因此，我們對法國各地的所有不同地點進行了詳盡的搜索，最後決定選擇聖阿沃爾德，它靠近德國邊境，是物流和原料的絕佳地點。所以我們很高興能在那裡。該地區總統 Franck Leroy 將於下週在 Loop 拜訪我們。所以他要來參觀我們的工廠。我們將和他一起參觀工廠並討論我們在那裡的擴張計劃。政府對法國項目的大力支持。週一我剛剛參加了馬克龍總統主持的“選擇法國”活動。我在那裡; SK的Na先生也在，SK GC的CEO也在；以及蘇伊士集團首席執行官薩布麗娜·蘇桑（Sabrina Soussan）。因此，我們三個人一起會見所有政府官員、所有客戶、原料供應商。這是馬克龍總統主持的一次盛會。那是我參加的第二年。因此，法國政府對該項目的大力支持。他們需要法國的包裝解決方案，而法國在塑料領域的可持續發展方面確實處於領先地位。所以說——這個項目確實進展順利。這些項目的原料均已通過蘇伊士獲得。顯然，蘇伊士是法國一家大型廢物管理公司。所以他們已經獲得了一定比例的原料。

Loop has also secured a percentage of the feedstock. So feedstock is -- has been secured for the project. Customer demand is huge from our French brands, such as Danone, L'Oreal, L'Occitane and the rest. So that's a really exciting project. We're in the permitting phases right now, so we're going through the permitting and expecting to break ground on that facility in 2025 to be up for 2027. So it's -- like I said, it's been a really eventful year. Loop has never been in a better position to be able to execute on our business plan.

Loop還獲得了一定比例的原料。因此，該項目的原料已經得到保障。我們的法國品牌，如達能、歐萊雅、歐舒丹等，客戶需求巨大。所以這是一個非常令人興奮的項目。我們現在正處於許可階段，因此我們正在辦理許可手續，預計該設施將於 2025 年破土動工，並持續到 2027 年。所以，就像我說的，這是非常多事的一年。 Loop 從未處於比以往更好的位置來執行我們的業務計劃。

We have the best quality material coming from 100% recycled content, great partnerships, great customers. Now we're just working on finalizing our financing for the facilities. As Fady mentioned before, selling the land in Bécancour gave us enough cash to be able to get to our licensing fees which will basically cover all of our top line expenses here at our head office. So that's really -- that was a really good move for us being able to sell that land and now transitioning the company away from R&D and more into operations where all of our different departments. So R&D and our engineering will be always a cost center. Now we will be charging back to the various projects. So we're really transforming the company from purely R&D into an operating company. So it's a really exciting future. And as far as financing for the facilities, we're exploring a couple of different options that we're looking at on being able to finance the plants. And we should be updating the market pretty soon on that as well. So that's it for me.

我們擁有來自 100% 回收成分的最優質材料、良好的合作夥伴關係和優秀的客戶。現在我們正在努力完成這些設施的融資工作。正如法迪之前提到的，出售貝坎庫爾的土地給了我們足夠的現金，足以支付我們的許可費，這基本上可以覆蓋我們總部的所有頂線費用。所以這對我們來說真的是一個很好的舉措，我們能夠出售那塊土地，現在將公司從研發轉向運營，我們所有不同的部門都在運營。因此，研發和我們的工程將始終是成本中心。現在我們將重新投入到各個項目中。因此，我們確實正在將公司從純粹的研發公司轉變為運營公司。所以這是一個非常令人興奮的未來。就設施融資而言，我們正在探索幾種不同的選擇，以便能夠為工廠提供融資。我們也應該很快更新市場的情況。我就是這樣。

With that, I guess we'll turn it over to questions.

至此，我想我們將把它轉為問題。

(Operator Instructions) Our first question today is from the line of David Quezada of Raymond James.

（操作員說明）我們今天的第一個問題來自 Raymond James 的 David Quezada。

Appreciate the update there. My first question, just on -- I guess we'll start with Ulsan and just thinking about the contracting strategy there. Great to see, but there's a lot of demand and you've got On AG on there now. Maybe, Daniel, could you just talk high level about what your strategy is for that facility? Will you look to contract all the volumes? Is there any split between sort of local Korean customers and your international customers that you would look for? Just any like broadly how you're thinking about it and how you can derisk that from -- I guess, from a sales perspective over time?

感謝那裡的更新。我的第一個問題是——我想我們將從蔚山開始，考慮那裡的承包策略。很高興看到，但需求很大，現在 On AG 就在那裡。也許，丹尼爾，你能從高層次上談談你對該設施的戰略是什麼嗎？您會考慮承包所有數量嗎？您尋找的韓國本地客戶和國際客戶之間是否存在分歧？就像您一般如何思考它以及如何從 - 我想，隨著時間的推移從銷售角度消除這種風險？

Yes. Thanks, David. Great talking to you. So for the Ulsan facility, we'll probably sell about 5 -- so the -- the capacity is 70,000 tons. And so we'll probably sell under contract about 50,000 tons with our existing customers, the Danones of the world, On AG will be our customers and a few others that we'll be announcing soon. So it's going to be probably a split pretty even of the 50,000, about 25,000 fiber and 25,000 bottle grade. So then the other 20,000 tons will probably leave it for the spot market. We see 2025 as being a really important year for brands, where they're going to need more recycled content, especially in Europe. And so, we want to take advantage of that price swing and not have everything locked into long-term contracts. So that's kind of the sales strategy there. We always use formula-based pricing anyway. So as long as we use indexes-tied formula prices which allow us to make sure that if the cost of raw materials go up or the cost of any of our inputs go up, then that's a pass-through cost to our customers. Customers are used to working with these type of formulas. So this is what we're currently negotiating with all the different customers. Again, the real differentiating factor for us is the quality. And that's really what the customers need. The customers need virgin quality material coming from 100% recycled content. And a lot of the really great brands are not willing to sacrifice quality which they can't get today from the mechanical recycling industry. It's really interesting. I was going a couple of stores in France when I was there for the Choose France event and you see some packaging from the mechanical recycling industry, and the bottles are like a really dark gray and it just looks so bad visually. And that's a really big thing with PET is the color. That's where -- that's what chemical recycling [loops] the polymerization technology that's what it brings because we break it down to the monomers and build it back up, we remove all of those colors, that's where our technology really shines. And there's a huge difference between the quality of our packaging versus the quality of the mechanical recycling. So yes, no shortage of demand for the facility, no shortage of demand for any of our facilities.

是的。謝謝，大衛。很高興跟你說話。因此，對於蔚山工廠，我們可能會出售大約 5 台，因此產能為 7 萬噸。因此，我們可能會根據合同向現有客戶出售約 50,000 噸，世界各地的達能、On AG 將是我們的客戶，以及我們很快將宣布的其他一些客戶。因此，它可能會是 50,000、大約 25,000 纖維和 25,000 瓶級別的相當一部分。那麼剩下的2萬噸可能會留在現貨市場。我們認為 2025 年對於品牌來說是非常重要的一年，他們將需要更多的可回收材料，尤其是在歐洲。因此，我們希望利用價格波動的優勢，而不是把所有東西都鎖定在長期合同中。這就是那裡的銷售策略。無論如何，我們總是使用基於公式的定價。因此，只要我們使用與指數掛鉤的公式價格，這使我們能夠確保，如果原材料成本上漲或我們任何投入的成本上漲，那麼這就是我們客戶的轉嫁成本。客戶習慣於使用這些類型的公式。這就是我們目前正在與所有不同客戶談判的內容。同樣，對我們來說真正的差異化因素是質量。這正是客戶所需要的。客戶需要來自 100% 回收成分的原始優質材料。許多真正偉大的品牌不願意犧牲今天從機械回收行業無法獲得的質量。這真的很有趣。當我參加“選擇法國”活動時，我去了法國的幾家商店，你看到了一些來自機械回收行業的包裝，瓶子就像深灰色的，看起來很糟糕。 PET 的一大特點是顏色。這就是化學回收[循環]聚合技術所帶來的，因為我們將其分解為單體並將其重新構建，我們去除了所有這些顏色，這就是我們的技術真正閃耀的地方。我們的包裝質量與機械回收的質量之間存在巨大差異。所以，是的，對設施的需求不缺，對我們任何設施的需求都不缺。

Okay. Excellent. That's great color, Daniel. And then maybe just on the feedstock side, I guess, for -- again, for Ulsan, you mentioned that you've got, I think, 60% of it secured. I'm guessing you'll look to contract all of it. And just I'm wondering if you're able to talk at all about the nature of those contracts, like -- are they formula-based pricing as well, the term of the contracts and I guess the mix between. Is it going to be all fiber? Or will there be some recycled bottles as well?

好的。出色的。那顏色真棒，丹尼爾。然後也許只是在原料方面，我想，對於蔚山來說，你提到你已經得到了，我認為，60% 的安全。我猜你會想把這一切都承包下來。我只是想知道您是否能夠談論這些合同的性質，例如它們是否也是基於公式的定價、合同條款以及我猜它們之間的組合。是全纖維嗎？或者還會有一些回收的瓶子嗎？

Yes. So it's going to be -- 60% of the feedstock is going to be probably coming from the fiber industry. So textile waste from the polyester fiber manufacturing, which goes on a lot in Asia. SK is really working hard on the supply chain in Asia. They've actually gone in -- and this is public information they've gone in and they've made some equity investments into some companies across Asia to be able to supply our facilities with feedstock coming from either like the trays from, let's say, solid trays or [fruit] cups or that type of material and also from the polyester fiber supply chain. A lot of that goes with the government. There's a lot of government action within Korea to be able to develop this new supply chain because there's never been a company that can -- is able to recycle this material. The supply chain kind of doesn't exist right now. And so, SK is working very hard with the Korean government on setting up those supply chains to be able to capture all of that material. A really good example is there's 20,000 tons of brown beer bottles in Korea, that use PET for their beer bottles. And those brown beer bottles obviously can't be recycled. And so that's another great feedstock for us. Trays is another great example where those trays are not recycled today in Korea. So the collection doesn't really exist for them. They go to the waste management companies, but there's no home for them. And so those are, again, things that Loop's technology can handle. And so that's where SK is developing that supply chain with the local governments.

是的。因此，60% 的原料可能來自纖維行業。聚酯纖維製造過程中產生的紡織廢料在亞洲大量存在。 SK在亞洲的供應鏈上確實很努力。他們實際上已經介入了——這是他們介入的公開信息，他們對亞洲的一些公司進行了一些股權投資，以便能夠為我們的設施提供來自托盤的原料，比方說、實心托盤或[水果]杯或此類材料，也來自聚酯纖維供應鏈。其中很多都與政府有關。韓國政府採取了很多行動來開發這種新的供應鏈，因為從來沒有一家公司能夠回收這種材料。供應鏈目前還不存在。因此，SK 正在與韓國政府努力建立供應鏈，以便能夠捕獲所有這些材料。一個很好的例子是韓國有 20,000 噸棕色啤酒瓶，其啤酒瓶使用 PET。而那些棕色啤酒瓶顯然無法回收。所以這對我們來說是另一個很好的原料。托盤是另一個很好的例子，如今這些托盤在韓國沒有被回收。所以這個收藏對他們來說並不真正存在。他們去了廢物管理公司，但那裡沒有他們的家。因此，這些都是 Loop 技術可以處理的事情。這就是 SK 與地方政府共同開發供應鏈的地方。

Okay. Great. And then maybe just on construction costs for the Ulsan facility? Or do you think there have been any change over the past, call it, 6 months or so in terms of the expectation of the budget for that facility? Or is that somewhat contained since it's on an existing industrial site?

好的。偉大的。然後也許只是蔚山工廠的建設成本？或者您認為過去 6 個月左右對該設施的預算預期有任何變化嗎？或者因為它位於現有的工業場地上而受到一定程度的限制？

Yes, we haven't seen too much of an increase in costs. Korea -- inflation in Korea is a little bit lower than, let's say, in North America, where we have these higher inflation numbers. The big jump in inflation happened probably like 2021, 2022. That's where we saw really big increases. We started to see things level off definitely right now. And so, there's no big surprises on the CapEx in Korea. Again, you have the advantage of building on SK sites, so there is some infrastructure there at the site that's not needed in the CapEx. But yes, costs are in line with what our expectations were. SKEE is doing all of the final engineering and the construction. And so having that as an internal SK company also helps manage the costs of the EPC contract. So everything is in line. So we're really happy with that as well.

是的，我們沒有看到成本增加太多。韓國——韓國的通貨膨脹率比北美低一些，而北美的通貨膨脹率較高。通貨膨脹的大幅上漲可能發生在 2021 年、2022 年。那是我們看到真正大幅增長的地方。我們現在開始看到事情確實趨於平穩。因此，韓國的資本支出並不令人意外。同樣，您具有在 SK 站點上進行構建的優勢，因此該站點上有一些資本支出不需要的基礎設施。但是，是的，成本符合我們的預期。 SKEE 負責所有最終工程和施工。因此，將其作為一家內部 SK 公司也有助於管理 EPC 合同的成本。所以一切都順理成章。所以我們對此也非常滿意。

Okay. Excellent. And then maybe just one last one for me, if I could. Thinking about expenses, obviously, you guys have done -- or have made some really good progress already in reducing expenses. I'm wondering if you have a kind of like a run rate that you think expenses can get to on an annual basis that you can share just from a total expense perspective?

好的。出色的。如果可以的話，也許只是給我最後一張。考慮到開支，顯然，你們已經在減少開支方面做到了，或者已經取得了一些非常好的進展。我想知道您是否有一種類似的運行率，您認為每年的費用可以達到，您可以從總費用的角度分享？

I think right now we're about $12 million.

我想現在我們的收入約為 1200 萬美元。

I can take that one. Yes. Yes. So right now, we're -- the expense -- the projection for 2024, we're going to be -- what we're ultimately targeting to, if you look at maybe not 2024, but 2025, we're looking to get to about $12 million a month, give or take, David. So obviously, we're going to see a major decrease in expenses that are not project related because of the cost recovery mechanism that we mentioned. So we're going to have a major decrease to the tune of 50% next year for fiscal 2024. And then another, call it, 20% for fiscal 2025. So our ultimate end goal is to end up at $12 million or below from expenses, so $1 million per month and less. That's what we're currently in our projections, and that's currently we're all going to be accountable for.

我可以接受那個。是的。是的。所以現在，我們的費用——2024 年的預測，我們將——我們最終的目標，如果你看的可能不是 2024 年，而是 2025 年，我們希望大衛，每個月達到 1200 萬美元左右，無論給予還是接受。顯然，由於我們提到的成本回收機制，我們將看到與項目無關的費用大幅減少。因此，明年我們將在 2024 財年大幅削減 50%。然後，在 2025 財年削減 20%。因此，我們的最終目標是從費用，因此每月 100 萬美元或更少。這就是我們目前的預測，也是我們目前要承擔的責任。

On that, I would say the real transition that the company is making is now all of our employees or every department is now becoming -- we're charging back the fees to the projects. So let's say, for the SK Ulsan project, any feedstock-related testing that's needed, right? So when we're securing feedstock, feedstock is sent to Montreal. We're testing it at the lab scale, we're testing in the production facility. So all of those costs are now going to be absorbed by the project because it's -- obviously the project is the one that's benefiting from that work. Same thing with our engineering team. We're going to be outsourcing all of our engineering team to the projects because the project is going to charge you back. So these are all going to be CapEx-related project costs that are coming back to us. Same thing for the French project. Any feedstock testing or any other work that we do that's getting charged back to the project. So that's going to be a really big difference. Obviously, the plant here, there's no more expenses as far as CapEx are things needed because the plant is up and running. It's operational. So that's really leveled off. So we really -- we're on the right track in getting costs in line.

對此，我想說的是，公司正在做出的真正轉變是我們所有的員工或每個部門現在正在轉變——我們正在向項目收取費用。那麼，對於 SK 蔚山項目來說，需要進行任何與原料相關的測試，對吧？因此，當我們獲得原料時，原料就會被送往蒙特利爾。我們正在實驗室規模上進行測試，我們正在生產設施中進行測試。因此，所有這些成本現在都將由該項目吸收，因為顯然該項目是從這項工作中受益的項目。我們的工程團隊也是如此。我們將把我們所有的工程團隊外包給這些項目，因為該項目會向您收取費用。因此，這些都將是與資本支出相關的項目成本返回給我們。法國項目也是如此。我們所做的任何原料測試或任何其他工作都會被計入項目。所以這將是一個非常大的差異。顯然，這裡的工廠沒有更多的資本支出費用，因為工廠已經建成並正在運行。它可以運行了。所以這真的很穩定。因此，我們確實在控製成本方面走在正確的軌道上。

The other big thing is once the construction is finalized for Ulsan, the Quebec facility here in Terrebonne probably wouldn't -- there's no use in running a smaller facility once you have the large-scale facilities up and running. So this again would be if any customer wants to do some trials or a partner wants to do trials, we have this facility available, but it would be charged back to the project. So really -- we're really shifting our focus to be able to control costs as much as possible going forward.

另一件大事是，一旦蔚山的建設完成，位於泰雷博訥的魁北克工廠可能不會——一旦大型設施建成並運行，再運行較小的設施是沒有用的。因此，如果任何客戶想要進行一些試驗或合作夥伴想要進行試驗，我們可以使用此設施，但費用將計入項目。所以，我們確實正在將注意力轉移到能夠盡可能地控制未來的成本。

(Operator Instructions) And it appears we have no further questions in the queue for today. So I'd like to thank everybody for joining Loop Industries Fourth Quarter Earnings Call for 2023. Thank you for joining. You may now disconnect your lines.

（操作員說明）今天的隊列中似乎沒有其他問題了。因此，我要感謝大家參加 Loop Industries 2023 年第四季度收益電話會議。感謝您的加入。您現在可以斷開線路。