Greenlane Renewables Announces Second Quarter 2021 Financial Results

Greenlane Renewables Inc. (“Greenlane`` or the “Company”) (TSX: GRN / FSE: 52G / OTC: GRNWF), today announced financial results for the second quarter ended June 30, 2021. For further information on these results please see the Company’s Condensed Consolidated Interim Financial Statements and Management’s Discussion and Analysis filed on SEDAR at www.sedar.com. All amounts are in Canadian dollars unless otherwise stated and in accordance with IFRS.

Second Quarter Highlights Include:

• Record revenue of $12.6 million, an increase of 200% over the $4.2 million reported in the second quarter of 2020.
• Gross profit of $2.9 million, Gross margin¹ of $3.2 million (26% of revenue).
• Net loss of $1.1 million (or $0.01 per share).
• Adjusted EBITDA of $0.1 million². 
• Sales order backlog³ of $41.9 million as at June 30, 2021.
• Sales pipeline⁴ valued at over $800 million as at June 30, 2021.
• Cash and cash equivalents of $36.5 million and no debt, other than payables and bonding resulting from normal course operations, as at June 30, 2021.
• The Company announced new contract wins totalling $16.0 million in the quarter for the supply of biogas upgrading systems for a wastewater treatment plant and first commercial-scale project in Colombia, the 19th country that Greenlane has sold upgrading equipment into, a project in Spain and a large landfill gas-to-RNG project in the United States.
• Subsequent to June 30, 2021, the Company announced new biogas upgrading system supply contract wins totalling $12.8 million for three more projects in the United States.

“We continue to concentrate on successfully executing our business plan, while experiencing rapid growth and now generating a fourth consecutive record revenue quarter,” said Brad Douville, President and CEO of Greenlane. “With our multi-technology approach that enables us to offer compelling biogas upgrading systems, combined with our relentless focus on the global RNG market, we have positioned Greenlane as the go-to industry partner for upgrading any biogas anywhere for any project size or type. In addition to our core system supply business, we will pursue opportunities to deploy development capital to help accelerate projects that use more Greenlane systems and also explore acquisition opportunities that can broaden our market reach and expand our IP portfolio.”

“From a profitability standpoint, over the last 18 months, our quarterly revenue growth rate has been 3.4 times greater than the quarterly growth rate in operating expense¹, generating positive adjusted EBITDA starting in Q4 2020. This leverage effect highlights the strength of our asset-light business model, which we expect to see continuing as the top line grows. Helping to drive this success is our talented and growing team of subject matter experts and professionals who have been the enablers to the rapid scale up in operations and the progression of new opportunities. It is an exciting environment to be in right now as evidenced by the growth in sales and I remain just as excited about the future growth of Greenlane and the industry more generally as RNG becomes increasingly recognized as an essential and necessary tool to combat climate change by decarbonizing the immense energy systems that we all rely upon.”

Greenlane continually updates its pipeline of active system sales opportunities, which at June 30, 2021 was over $800 million. The sales pipeline represents visibility to a significant number of opportunities that funnel down, through our sales process, and those opportunities successfully converted into contract wins move into our sales order backlog. The Company’s sales order backlog³ of $41.9 million as at June 30, 2021 is a snapshot in time which varies from quarter end to quarter end. The sales order backlog increases by the value of new system sales contracts and is drawn down over time as projects progress towards completion with amounts recognized in revenue. The Company’s gross margin in the quarter was 26% ($3.2 million). Going forward, gross margin is expected to continue to be in the range of 25% to 30% on an annual basis.

The Market Outlook

RNG continues to gain traction and show strong growth in two of the most difficult sectors to decarbonize - transportation and the natural gas pipeline network.  In April 2021, Natural Gas Vehicles for America (NGVAmerica) and Coalition for Renewable Natural Gas (RNG Coalition), industry trade groups, jointly announced that for the first time ever more than half of all on-road fuel used in natural gas vehicles in the U.S. in calendar year 2020 was RNG at 53%.² They also provided data that RNG volumes used in U.S. transportation grew at 29% CAGR from 2015 to 2020. Also for the first time ever, vehicles in California running on RNG removed more carbon dioxide from the atmosphere than they emitted in 2020, according to the California Air Resources Board (CARB), as the carbon intensity of RNG dropped below zero in 2020, the only fuel to be carbon-negative on average.³

Natural gas utilities continue to move forward with RNG initiatives and project announcements in order to offer their customers, residential, commercial and industrial, a greener fuel alternative to fossil natural gas.  Most recently Chesapeake Utilities, a diversified energy company serving customers in the Eastern United States, announced that RNG was one of its five key strategic initiatives that will be undertaken through 2025 as it seeks to decarbonize its business.  Additionally, UGI Corporation, a natural gas transportation and distribution company with operations in the United States and Europe, announced that it expects to spend more than U.S. $1 billion on renewable gas investments over the next five years, building a diversified portfolio of projects.

On the regulatory front, recently introduced bipartisan legislation in the U.S. will encourage investment in anaerobic digesters and nutrient recovery systems by farmers and provide them with a new revenue stream.  The proposed Agricultural Environmental Stewardship Act will help expand the market for renewable biogas by providing a 30% investment tax credit to help offset the upfront costs associated with building digesters.  In the province of British Columbia, Canada, the government has recently amended its Greenhouse Gas Reduction Regulation to increase the production and use of renewable gas, which will provide natural gas utilities with more flexibility and accelerate the growth of renewable gas supply in their gas distribution networks.

Conference Call

The public is invited to listen to the conference call in real time by telephone at 2 pm PT (5 pm ET) today, August 12th. To access the conference call by telephone, please dial: 1-800-319-4610 (Canada & USA toll-free) or 604-638-5340. Callers should dial in 5-10 minutes prior to the scheduled start time and ask to join the Greenlane Renewables conference call.

Shortly after the conference call, the replay will be archived on the Greenlane Renewables website and replay will be available in streaming audio and a downloadable MP3 file.

Non-IFRS Financial Measures

Management evaluates the Company’s performance using a variety of measures, including “Adjusted EBITDA”, “gross margin”, “sales pipeline” and “sales order backlog”. The non-IFRS measures should not be considered as an alternative to or more meaningful than revenue or net loss. These measures do not have a standardized meaning prescribed by IFRS and therefore they may not be comparable to similarly titled measures presented by other publicly traded companies and should not be construed as an alternative to other financial measures determined in accordance with IFRS. The Company believes these non-GAAP financial measures provide useful information to both management and investors in measuring the financial performance and financial condition of the Company. Management uses these and other non-IFRS financial measures to exclude the impact of certain expenses and income that must be recognized under IFRS when analyzing consolidated underlying operating performance, as the excluded items are not necessarily reflective of the Company’s underlying operating performance and make comparisons of underlying financial performance between periods difficult. From time to time, the Company may exclude additional items if it believes doing so would result in a more effective analysis of underlying operating performance. The exclusion of certain items does not imply that they are non-recurring.  During the current quarter, the Company incurred certain non-recurring professional fees that are considered unrelated to the Company’s underlying operating performance and have therefore been excluded from Adjusted EBITDA. The Company has excluded these fees, primarily related to the filing of a Shelf Prospectus which is expected to generate future capital for the Company and does not impact the Company’s current operating performance.