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Greenlane Renewables Announces Second Quarter 2023 Financial Results

Vancouver, British Columbia, CanadaAugust 14, 2023 Greenlane Renewables Inc. (“Greenlane” or the “Company”) (TSX: GRN / FSE: 52G / OTC: GRNWF) today announced its financial results for the second quarter ended June 30, 2023. For further information on these results please see the Company’s Condensed Consolidated Interim Financial Statements and Management’s Discussion and Analysis filed under the Company’s profile on SEDAR at www.sedarplus.ca. All amounts reported are in Canadian dollars and in accordance with International Financial Reporting Standards (“IFRS”) unless otherwise stated.

Second Quarter Highlights Include:

  • Revenue of $14.9 million.
  • Gross profit of $3.8 million, Gross Margin1 before amortization of $4.3 million (29% of revenue).
  • Net loss and comprehensive loss of $4.3 million.
  • Adjusted EBITDA2 loss of $1.5 million.
  • Sales Order Backlog3 of $16.3 million as at June 30, 2023.
  • Cash and cash equivalents of $16.1 million and no debt outside the ordinary course of business, as at June 30, 2023.
  • The Company announced a collaborative agreement with ZEG Biogás e Energis SA ("ZEG Biogás"), a company 50% owned by Vibra Energia S.A. (“VIBRA”), previously the fuel distribution unit of Petrobras, to establish industrial scale volume production of Greenlane’s Totara+ Water Wash biogas upgrading product in Brazil. ZEG Biogás’ goal is to deliver 75 Totara+ systems over the next 5 years, for which the Company will earn revenue under a new royalty-like business model together with supply of components from outside of Brazil and ongoing local service contracts.

Subsequent Event:

  • The Company increased its standby letter of credit facility from $20 million to $26.5 million. The facility is secured by a guarantee from Export Development Canada and is used to enhance sales by providing guarantees and letters of credit to the Company's customers who require them.

“During the second quarter we continued to work toward our goal of becoming cash flow and Adjusted EBITDA positive in the next nine months by targeting attractive market segments where Greenlane can realize volume opportunities with a streamlined product portfolio and by investing in systems and processes that will allow us to scale the business,” said Brad Douville, CEO of Greenlane Renewables. “Our agreement with ZEG Biogás is emblematic of the type of opportunity that will help create operating leverage. The second quarter was an extremely busy one for us, as we continued to successfully build and commission over 20 separate upgrading projects. We delivered strong gross margins this quarter. Additionally, our sales team has been active in building relationships with strategic customers interested in placing larger orders.  As I transition into my new role as Vice Chair of the Company I look forward to taking a more focused role in these initiatives. We are looking forward to adding additional sales to our backlog through the remainder of 2023.”

“The market for RNG continues to offer tremendous growth opportunities for Greenlane’s products and services. Not only are we excited about the growing sales opportunities that we see for biogas upgrading equipment, but we believe the expansion of our traditional business model to include a royalty-like structure offering a standardized system will support further sales growth.”

Greenlane’s Gross Margin before amortization for the second quarter of 2023 is 29% of revenue, up from 25% in the second quarter of 2022. The increase is driven by gained efficiencies on project execution and a reversal for warranty provisions that have expired. Excluding the reversal of warranty provisions, Gross Margin before amortization is 26%, in line with our historical range.

During the second quarter, the Company took control of one of the projects in its Deployment of Development Capital (“DoDC”) program as a result of unforeseen circumstances and associated delays. Initially, under its convertible note, the Company had the opportunity to receive a return on its invested funds and to convert the note into a minority equity interest in that renewable natural gas project. As a result of this transaction, the Company has now acquired 100% of this pre-construction project and is advancing the opportunity. Accordingly, the convertible note was canceled, and the Company recorded a corresponding impairment in the note in the amount of $1.1 million. 

Greenlane has also evaluated its DoDC program in the context of the rapidly evolving RNG market and its strategic growth plan and has determined that funds previously allocated to the DoDC program should be re-allocated to working capital. This shift better positions the Company to leverage its product and execution expertise over repeatable, high volume / high value opportunities globally.

Greenlane continually provides an update on its system sales opportunities that successfully convert into contractual agreements in its reported sales order backlog (“Sales Order Backlog”). The Company’s Sales Order Backlog of $16.3 million as at June 30, 2023 is a snapshot in time which varies from quarter-to-quarter. 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. A typical system sales contract (excluding Airdep and ZEG Biogas product sales) has six stages of completion and a duration of nine to 18 months, and therefore annual and quarterly operating results will fluctuate as a result of the timing of contract related work.

The Market Outlook

The U.S. Environmental Protection Agency (EPA) released its final rulemaking for the renewable fuel volumes for 2023-2025 under the Renewable Fuel Standard Program in late June. As noted in industry press, the new rule was published without inclusion of the potentially lucrative but controversial eRIN program and included positive treatment for RNG. eRINs in the EPA’s initial proposal would have offered a substantial new source of revenue for biogas producers in the waste industry, many of which generate electricity and not renewable natural gas. The EPA's deferral of eRINs resulted in a 30% jump in D3 RIN prices. According to EPA data, 99.8% of D3 RIN generation for the first half of 2023 was from RNG.

Additionally, the final EPA rulemaking is supportive of co-digestion projects with mixed waste streams through inclusion of RIN apportionment between D3 and D5 RINs. In a recent publication of its analysis of the EPA’s final rulemaking, BioCycle states that historically anaerobic digesters processing food waste and producing RNG were automatically assigned a lower value D5 RIN, while digestion facilities processing manure and biosolids to generate RNG were allocated the higher value D3 RIN. Through the apportionment mechanism in the EPA’s final rule, mixed waste stream digestion facilities that accept food waste, manure and biosolids will be eligible for D3 RINs, which is a big win for the industry as the separation and processing of food waste is a growing source of feedstock.

The transportation sector continues to turn to RNG as a key driver of its decarbonization strategy. NGVAmerica and the RNG Coalition announced that 69 percent of all U.S. on-road fuel used in natural gas vehicles in calendar year 2022 was RNG, surpassing the previous year’s record-breaking level. RNG use as a transportation fuel grew 17 percent over 2021 volumes, up 218 percent from 2018 levels. And in California, fleets fueled with bio-CNG achieved carbon-negativity in their transportation operations last calendar year for the third straight year.  NGVAmerica also announced that over US$230 million has been awarded by the Biden administration to compressed natural gas transit bus projects across the United States. Natural gas-powered buses offer the most cost-effective emission reduction investment, as operators can affordably achieve carbon-negative transit by refueling with RNG.

Conference Call

The public is invited to listen to the conference call in real time by telephone today, August 14th, at 2:00 p.m. PT (5:00 p.m. ET). To access the conference call by telephone, please dial: 1-800-319-4610 (North America toll-free) or 1-604-638-5340. Callers should dial in 5-10 minutes prior to the scheduled start time and ask to join the Greenlane Renewables conference call. Callers should dial in 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 audio file.


Management evaluates the Company’s performance using a variety of measures, including “Gross Margin before amortization”, “Adjusted EBITDA” and “Sales Order Backlog”. The specified financial measures, including non-IFRS measures and supplementary financial measures should not be considered as an alternative to or more meaningful than revenue, gross profit or net income. 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 specified financial measures provide useful information to both management and investors in measuring the financial performance and financial condition of the Company. Management uses these specified 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.

Note 1 - Gross Margin before amortization is a non-IFRS measure and is defined by the Company as gross profit before amortization of intangible assets and property and equipment.

Note 2 - Adjusted EBITDA is a non-IFRS measure and is defined by the Company as earnings before interest, taxes, foreign exchange, depreciation and amortization, as well as adjustments for other income (expense), value assigned to options and RSU’s granted, and strategic initiatives.

Reconciliation of net loss and comprehensive loss to Adjusted EBITDA:

(in $000s) Three months ended June 30th
2023 2022
Net loss and comprehensive loss (4,339) (2,680)
Add (deduct):    
Exchange difference on translating foreign operations (80) 508
Provisions for income taxes 293 -
Foreign exchange (gain) loss 810 (491)
Other loss 20 -
Finance income (131) (10)
Finance expense 17 20
Impairment of notes receivable 1,068 -
Share-based compensation 182 638
Strategic initiatives - 782
Amortization of office equipment 110 113
Amortization of property and equipment 49 39
Amortization of intangible assets 482 652
Adjusted EBITDA (1,519) (429)

Note 3 - Sales Order Backlog is a supplementary financial measure that refers to the balance of unrecognized revenue from contracted biogas upgrading system supply projects. 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 (by reference to the stage of completion of each contract).

About Greenlane Renewables

Greenlane Renewables is a pioneer in the rapidly growing renewable natural gas (“RNG”) industry. As a leading global provider of biogas upgrading systems, we are helping to clean up two of the largest and most difficult-to-decarbonize sectors of the global energy system: the natural gas grid and the commercial transportation sector. Our systems produce clean, low-carbon and carbon-negative RNG from organic waste sources such as landfills, wastewater treatment plants and agricultural and food waste streams. To the company’s knowledge, Greenlane is the only biogas upgrading company offering and actively deploying the three main technologies: waterwash, pressure swing adsorption, and membrane separation. Greenlane’s business has been built on over 35 years of industry experience, patented and proprietary technology, with over 140 biogas upgrading systems sold into 19 countries, including some of the largest RNG production facilities in the world, and over 140 biogas desulfurization units sold. For further information, please visit www.greenlanerenewables.com.

For more information please contact:
Incite Capital Markets
Eric Negraeff / Darren Seed
Greenlane Renewables Inc.
Brad Douville, CEO
Ph: 604.493.2004
Email: IR@greenlanerenewables.com

Forward Looking Information Advisory –

This news release contains “forward-looking information” within the meaning of applicable securities laws. All statements contained herein that are not historical in nature contain forward-looking information. Forward-looking information can be identified by words or phrases such as “may”, “expect”, “likely”, “could”, “plan”, “expects” or “is expected to”,“believe”, “continues to”, “remains” or “continually” or the negative of these terms, or other similar words, expressions and grammatical variations thereof, or statements that certain events or conditions "may" or "will" happen or that current events or conditions will continue or be repeated. The forward-looking information contained in this press release, includes, but is not limited to: that ZEG Biogás’ goal is to deliver 75 Totara+ systems over the next 5 year,, that the Company will earn revenue under a royalty-like business model, and will supply components and have ongoing service contracts; management’s expectation that the Company will be cash flow and Adjusted EBITDA positive in the next nine months; that the Company will continue to be successful in building and commissioning projects; that strategic customers are interested in placing larger orders and that management is looking forward to additional sales through the remainder of 2023; that the market for RNG continues to offer tremendous growth opportunities for Greenlane’s products and services and management’s belief that the its royalty-like model will support further sales growth; that the shift of funds to working capital better positions the Company to leverage its product and execution expertise over repeatable, high volume / high value opportunities globally; that the regulatory developments outlined under ‘The Market Outlook’ are supportive of new and expanded opportunities in the RNG market; that the sales order backlog will be drawn down and the Company advances and completes projects to realize revenue; that significant capital continues to flow into the RNG sector. The forward-looking information contained herein is made as of the date of this press release and is based on assumptions management believes to be reasonable at the time such statements were made, including management's perceptions of future growth, that regulatory developments in the US and other jurisdictions in which the Company conducts business will be favourable for the RNG industry; results of operations, operational matters, historical trends, current conditions and expected future developments, the state of competition in the RNG industry and competitors’ capabilities, that favourable legislative initiatives will have a positive impact on the pace of growth and the availability of financing in the RNG industry and will generate sales opportunities for Greenlane, as well as other considerations that are believed to be appropriate in the circumstances. While management considers these assumptions to be reasonable based on information currently available to management, there is no assurance that such expectations will prove to be correct. By their nature, forward-looking information is subject to inherent risks and uncertainties that may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate, that assumptions may not be correct and that objectives, strategic goals and priorities will not be achieved. A variety of factors, including known and unknown risks, many of which are beyond Greenlane’s control, could cause actual results to differ materially from the forward-looking information in this press release. Such factors include, without limitation: risks relating to the collaboration with ZEG Biogás not resulting in the volume production of Units or other ancillary benefits to Greenlane as anticipated, risks that ZEG Biogás’ biomethane production goals are not met over the anticipated time period; that strategic customers may not place larger orders as anticipated; the market for RNG may not continue to offer tremendous growth opportunities for Greenlane’s products and services, and the expansion of the Company’s traditional business model to include a royalty-like structure offering a standardized system may not support further sales grow; that legislative changes may not support new opportunities in the RNG industry; risks relating to Greenlane’s financial performance, Greenlane may face impediments in delivering and advancing projects to be able to timely realize revenue reducing the sales backlog; RNG initiatives and projects of natural gas utilities being changed, delayed or canceled, the state of competition in the RNG industry, Greenlane’s position as a leading biogas upgrading and project development solutions provider. Additional risk factors can also be found in the Company's Management Discussion and Analysis, and its Annual Information Form, all of which have been filed under the Company's SEDAR profile at www.sedarplus.ca. Readers are cautioned not to put undue reliance on forward-looking information. The Company undertakes no obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by applicable law. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement.

FINANCIAL OUTLOOK INFORMATION – This news release contains “financial outlook information” regarding Greenlane’s prospective revenue and results, which is subject to the same assumptions, risk factors, limitations, and qualifications as set forth in the above. Revenue and other estimates contained in this news release were made by Greenlane management as of the date of this news release and are provided for the purpose of describing anticipated changes, and are not an estimate of profitability or any other measure of financial performance. Investors are cautioned that the financial outlook information contained in this news release should not be used for purposes other than for which it is disclosed herein. The Company’s revenues are largely derived from a relatively small number of biogas upgrader orders accounted for on a stage of completion basis over typically a nine to eighteen-month period. Timing of new contract awards varies due to customer-related factors such as finalizing technical specifications and securing project funding, permits and RNG off-take and feedstock agreements. Some contracts contain termination provisions that allow the customer to terminate with no penalty or with minimum prescribed threshold payments based on the length of time since the contract was entered into. Some projects have built-in pause periods to allow customers to complete concurrent activities such as civil work. As a result, the Company’s revenue varies from month to month and quarter-to-quarter. THE COMPANY QUALIFIES ALL THE FORWARD LOOKING STATEMENTS AND FINANCIAL OUTLOOK INFORMATION CONTAINED IN THIS NEWS RELEASE BY THE FOREGOING CAUTIONARY STATEMENTS.

Neither the TSX Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Exchange) accepts responsibility for the adequacy or accuracy of this release or has in any way approved or disapproved of the contents of this news release.