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Greenlane Renewables Announces Third Quarter 2022 Financial Results

~Company delivers record revenue, solid bottom line, and consistent gross margins~

Vancouver, British Columbia, CanadaNovember 8, 2022 Greenlane Renewables Inc. (“Greenlane'' or the “Company”) (TSX: GRN / FSE: 52G / OTC: GRNWF) today announced its financial results for the third quarter ended September 30, 2022. 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.sedar.com. All amounts reported are in Canadian dollars and in accordance with International Financial Reporting Standards (“IFRS”) unless otherwise stated.

Third Quarter Highlights

  • Record revenue of $19.9 million, a 48% increase over the $13.4 million reported in the third quarter of 2021;
  • Gross profit of $4.3 million, Gross Margin1 (gross profit excluding amortization) of $4.9 million (25% of revenue);
  • Adjusted EBITDA2 of $0.4 million;
  • Net income of $0.6 million;
  • Sales Order Backlog3 of $36.7 million, as at September 30, 2022;
  • Sales Pipeline4 valued at approximately $900 million, as at September 30, 2022;
  • Cash and cash equivalents of $21.3 million and no debt, other than payables, performance bonding and letters of credit resulting from normal course operations, as at September 30, 2022;
  • The Company announced new contract wins totalling $13.5 million in the quarter for the supply of its biogas upgrading technology for two landfill gas-to-renewable natural gas (“RNG”) projects in South America;
  • The Company announced its second deployment of development capital to a company focused on developing landfill gas-to-RNG projects in the United States; and
  • The Company increased its credit facility with The Toronto Dominion Bank from $12.5 million to $20.0 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.
  Three Months Ended Sep 30th Nine Months Ended Sep 30th
(in millions, except as noted) 2022 2021 % Change 2022 2021 % Change
Revenue $19.9 $13.4 48% $54.3 $38.2 42%
Gross Margin1 $4.9 $3.4 47% $13.5 $9.9 37%
Gross Margin as % of revenue 25% 25%   25% 26%  
Gross Profit $4.3 $3.1 40% $11.9 $8.9 33%
Adjusted EBITDA2 $0.4 $0.1 400% $0.02 $0.8 (98%)
Net Income (Loss) $0.6 $0.05 982% ($3.7) ($1.3) 192%
Sales Order Backlog3       $36.7 $47.1 (22%)
Sales Pipeline4       $900 $850 6%
Cash & Cash Equivalents       $21.3 $35.6 (40%)

“We’ve delivered record quarterly revenue and a solid bottom line, and we maintain our excitement about the growth of the RNG industry and our role in its success,” said Brad Douville, CEO of Greenlane. “We remain driven to grow our business and balance this growth’s impact on our bottom line.”

“With increasing global focus on impactful solutions to decarbonize our planet, the RNG industry has experienced significant consolidation this year together with new supportive regulations and funding, pointing to the scale up of the number of RNG projects. The acquisition by bp of US-based Archaea is particularly noteworthy as several of the energy super majors have announced decarbonization efforts and have both the capital and capacity to amalgamate existing RNG development platforms into their business models. It was never a matter of ‘if’, it was always a matter of ‘when’. We anticipate further consolidation in the sector, which together with supportive regulations and policies such as the Inflation Reduction Act and REPowerEU plan, are expected to provide additional capital to help expedite the RNG industry’s growth. We expect this will have a positive effect on the pace of development for RNG project developers and owners, increasing market strength, project financing and new sales opportunities for Greenlane.”

“We appreciate that macroeconomic events have dominated market headlines in recent months. However, even with this uncertainty, we have maintained a balanced and analytical approach to our business. Our balance sheet is strong and we will continue to be opportunistic as the market for RNG further develops. Looking ahead, we’re excited about what 2023 can bring.”

Greenlane continually updates its pipeline of active system sales opportunities (“Sales Pipeline”), which at September 30, 2022 was approximately $900 million, representing a net increase of $50 million in new opportunities since year-end 2021, and a 6% increase year-over-year versus $850 million at the end of Q3 2021. The Sales Pipeline represents visibility to a significant number of opportunities for which the Company provides a quote, and those opportunities that successfully convert into contract wins move into our sales order backlog (“Sales Order Backlog”). The Company’s Sales Order Backlog of $36.7 million as at September 30, 2022 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. System sales of $18.5 million in the quarter largely reflects revenue from 18 customer upgrader contracts, recognized in accordance with the stage of completion of projects. A typical system sales contract (excluding Airdep product sales) has six stages of completion and a duration of nine to 18 months, and therefore quarterly operating results will fluctuate as a result of the timing of contract related work.

The Market Outlook

The RNG industry has experienced significant consolidation this year as well as new supportive regulations and funding, pointing to the scale up of RNG projects and production. bp’s recently announced acquisition of US-based RNG producer Archaea Energy for US$4.1 billion marks the largest ever RNG transaction, with bp announcing plans to increase Archaea’s current RNG production five-fold by 2030. Global energy supermajor Shell is one of several companies involved in a second bidding round to acquire one of Europe’s largest biomethane producers, Danish-based Nature Energy, in a transaction that could be worth US$2 billion.

Real estate and infrastructure project investor CIM Group announced that it has acquired 100% of the RNG project development platform of MAS Energy LLC, a developer, owner and operator of landfill gas-based RNG in the US and Canada. US renewable energy developer NextEra Energy recently revealed the acquisition of a portfolio of approximately 30 operating landfill gas-to-electric facilities in a US$1.1 billion deal, with plans to spend about US$400 million to convert the portfolio to RNG. Global infrastructure investment firm Macquarie announced that its Green Investment Group has acquired German biogas platform BayWa r.e. Bioenergy.

During the third quarter, the US Inflation Reduction Act was signed into law, which will provide US$369 billion over the next ten years on spending and tax policies to reduce greenhouse gas emissions and spur the expanded production and use of domestic clean energy. This legislation also  contains provisions for biogas property, which includes biogas upgrading equipment, as qualifying equipment for purposes of the Section 48 energy investment tax credit which can reach 40%.

In Canada, revised legislation in Quebec centered on minimum RNG volumes in the natural gas grid now requires gas distributors like Énergir to deliver five per cent RNG volumes by 2025 and 10 percent by 2030, with Énergir subsequently openly asking RNG producers across North America for information about long-term commitments for RNG volumes. In Italy, the European Commission announced that it had approved plans put forward by the Italian government to help increase domestic production of biomethane in the country backed by funding of €4.5 billion. The approval will support ambitions set forth in the REPowerEU plan, under which the EU aims to increase production of biomethane to a share of over 12% of anticipated gas demand by 2030. €1.7 billion is in the form of an investment grant covering up to 40% of eligible project costs to be paid at the end of the construction phase, and €2.8 billion is the estimated budget for incentive tariffs to be paid during the operational phase of the projects, for a 15-year period, covering the difference between the incentive tariffs and the evolving gas prices.

The whiskey industry in the US is also looking to RNG as an important tool to help decarbonize operations, as both Jack Daniels and Jim Beam have announced recent projects involving significant capital.  Jack Daniels has partnered with Canada-based TC Energy to invest US$29 million in a new RNG production facility at the Jack Daniel distillery in Tennessee that will convert waste products from the distillation process into pipeline-quality RNG that will be injected into the local gas grid. And the owners of bourbon producer Jim Beam announced an investment of US$400 million in renewable energy systems and increased bourbon production at its largest Kentucky distillery, with RNG ultimately fueling 65% of the distillery’s operations.

Conference Call

The public is invited to listen to the conference call by telephone at 2 pm PT (5 pm ET) today, November 8th. To access the conference call by telephone, please dial: 1-800-319-4610 (Canada & USA toll-free) or 1-604-638-5340. 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”, “Adjusted EBITDA”, “Sales Pipeline” 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 is a non-IFRS measure and is defined by the Company as gross profit before amortization of intangible assets.

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 income (loss) and comprehensive income (loss) to Adjusted EBITDA:

(in $000s) Three months ended Sep 30 Nine months ended Sep 30
2022 2021 2022 2021
Net income (loss) 176 11 (4,572) (1,273)
Add (deduct):        
Exchange difference on translating foreign operations 387 41 904 18
Current income tax expense 152 - 152 -
Foreign exchange (gain) loss (1,515) (669) (1,314) 164
Other income - - - (209)
Finance income (46) - (80) -
Finance expense 24 9 69 78
Share-based compensation 368 295 1,556 754
Strategic initiatives 71 - 1,174 -
Professional fees for Prospectus - - - 101
Amortization of property and equipment 146 83 446 238
Amortization of intangible assets 652 313 1,681 936
Adjusted EBITDA 415 83 16 807

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).

Note 4 - Greenlane maintains a Sales Pipeline of prospective projects that it updates regularly based on quote activity to ensure that it is reflective of sales opportunities that can convert into orders within approximately a rolling 24 month time horizon. The Sales Pipeline is a supplementary financial measure. Not all of these potential projects will proceed or proceed within the expected timeframe and not all of the projects that do proceed will be awarded to Greenlane. Additions to the amount in the Sales Pipeline come from situations where the Company provides a quote on a prospective project and reductions to the Sales Pipeline arise when the Company loses a prospective project to a competitor, a project does not proceed or, where a quote in the Sales Pipeline is converted to Greenlane’s Sales Order Backlog.

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, dairy farms, and food waste streams. To the company’s knowledge, Greenlane is the only biogas upgrading company offering the three main technologies: waterwash, pressure swing adsorption, and membrane separation. Greenlane’s business has been built on over 30 years of industry experience, patented and proprietary technology, over 100 biogas desulfurization units shipped, and over 135 biogas upgrading systems sold into 19 countries, including some of the largest RNG production facilities in the world. 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”, “is used to”, “potential”, “proposed”, “estimate”, “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 management expects to see further consolidation in the RNG industry, that supportive regulations and policies are expected to provide additional capital to help expedite the RNG industry’s growth, that such consolidations and growth will have a positive effect on the pace of RNG project development, market strength, project financing and new sales opportunities for Greenlane; management’s belief that the sales pipeline represents visibility to a significant number of opportunities that will, through the sales process, convert opportunities into signed contracts and move into the sales order backlog, which will be drawn down and the Company advances and completes projects to realize revenue; that quarterly operating results will fluctuate; that consolidation in the RNG industry as well as new supportive regulations and funding points to the scale up of RNG projects and production; that the potential transaction to acquire Nature Energy could be worth US$2billion management’s expectations and beliefs regarding its ability to maintaining its competitive position going forward. 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, 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 consolidation and 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: the effects of industry consolidation and the ability of legislation to affect the pace of growth and availability of financing in the RNG industry; the plans, estimates and intentions of third parties in respect of intended transactions and activities to transition to clean energy; risks relating to Greenlane’s financial performance in 2022, Greenlane may not be able to convert sales opportunities into contracts as expected, 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, its Annual Information Form and in its base shelf prospectus dated June 24, 2021, all of which have been filed under the Company's SEDAR profile at www.sedar.com. 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.