Loop Energy Provides Corporate Update, Announces Further Cost Reduction, 65% Headcount Reduction and Updates to Strategic Review Process

Monday, September 25, 2023

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Announces Further Costing Reduction Activities and Updates to Strategic Review Process

Burnaby, BC, September 25, 2023--(T-Net)--Loop Energy (TSX: LPEN), a leading hydrogen fuel cell manufacturer, has provided an update on its previously announced review and evaluation of strategic alternatives.

As previously disclosed on March 29, 2023, Loop conducted its review of strategic alternatives, including investigating strategic partnerships, licensing opportunities, joint development and outsourcing opportunities, and other ways to bring new capital, expertise and resources to the business and to identify growth opportunities and ways to support Loop's expansion plan.

Following the public announcement of the strategic review and at the direction of the Board of Directors of the Company, Loop conducted a comprehensive outreach to over 130 potential counterparties and while discussions are ongoing with certain parties, no offer or proposal is currently under consideration.

Due to challenging capital market conditions, including significant stock price declines in the hydrogen fuel cell sector since the beginning of the year, and after careful consideration of its alternatives, the Board has determined that it is in the best interests of the Company to immediately execute an additional operating cost reduction program.

This program includes, among other things, an approximate 65% global headcount reduction by the end of the year and the closing of production in China.

Going forward, the Company will be focusing its staffing and business development efforts on fuel cell stack design, development, production and testing based on the Company's proprietary eFlow technology.

Business development efforts will include finding potential partners to support the existing install base and exploring options for its fuel cell modules and systems business.

The Company estimates that the implementation of the operating cost reduction program will extend the Company's cash runway to the end of the first quarter, 2024. This will allow the continuation of the strategic review process and outreach to potential counterparties and engagement with parties that previously expressed interest.

In addition, as part of the operating cost reduction program, the Company will be reducing product shipments through to the end of the year and accordingly may not meet prior year revenues.

About Loop Energy Inc.

Loop Energy is a leading designer and manufacturer of hydrogen fuel cell systems targeted for the electrification of commercial vehicles such as buses and trucks, as well as stationary power applications. Loop Energy's products feature the company's proprietary eFlow technology in the fuel cell stack's bipolar plates. eFlow™ technology enables customers to achieve superior performance and higher fuel efficiency when using Loop Energy's fuel cells, which lowers operating cost for end users while enabling OEMs to achieve lower capital cost and faster time to market. Loop Energy works closely with OEMs and major vehicle sub-system suppliers to enable the production of hydrogen electric solutions with our global network and integration support.

Forward Looking Information

This press release may contain forward-looking statements with respect to us and the fuel cell industry. Such statements reflect our current expectations and projections regarding future events. Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond the Company's control and could cause actual results and events to vary materially from those that are disclosed, or implied, by such forward-looking information. [ MORE ]

Forward Looking Information

Such risks and uncertainties include, but are not limited to, the ability of the Company to execute on its strategy and the factors discussed under "Risk Factors Company's Annual Information Form dated March 30, 2021. Also refer to the section entitled "Cautionary Statement Regarding Forward Looking Information" in our current Management's Discussion and Analysis for more information. Loop does not undertake to update, correct, or revise any forward-looking statements as a result of any new information, future events or otherwise, except as may be required by applicable law.

Non-IFRS Financial Measures

Product back-log is a non-IFRS financial measure intended to provide additional information and should not be considered a substitute for measures of performance prepared in accordance with IFRS. In addition, this measure does not have a standardized meaning under IFRS and therefore may not be comparable to a similar measure presented by other companies. This non-IFRS measure is used by management, and we believe that it assists investors and other users of our financial reports in assessing our financial performance and monitoring our ongoing financial position.

Our product backlog represents the estimated aggregate value of all future conditional orders, binding and non-binding commitments and memorandums of understanding from customers who have placed at least one committed purchase order with us for at least one fuel cell stack or module with written intention (including binding and non-binding commitments) of follow-on unit orders. Our product backlog is currently comprised of a relatively limited number of contracts and a relatively limited number of customers and there can be no assurance that any such conditions will be fulfilled, or that our product backlog will be equal to our future revenues.

Given the relative immaturity of our industry and customer deployment programs, our product backlog is potentially vulnerable to risk of cancellation, deferral or non-performance by our customers for a variety of reasons, including: risks related to continued customer commitment to a fuel cell program; risks related to customer liquidity; credit risks; risks related to changes, reductions or eliminations in government policies, subsidies and incentives; risks related to macro-economic conditions including trade, public health (including the ongoing impact of the COVID-19 pandemic), and other geopolitical risks; risks related to slower market adoption; risks related to vehicle integration challenges; risks related to the development of effective hydrogen refueling infrastructure; risks related to the ability of our products to meet evolving market requirements; and supplier-related risks.

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Company Snapshot

Loop Energy

Vancouver (CleanTech & Energy)
20-49 Employees In BC (20-49 Employees Total)
Founded: 2001

Loop Energy provides zero-emission fuel cell power solutions for medium-to-heavy-duty transport applications.

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