Greenlane Renewables Announces Second Quarter 2024 Financial Results
~Greenlane continues drive for EBITDA results; realigns cost structure; and secures new service contracts~
Second Quarter Highlights from Continuing Operations Include:
- Revenue of
$14.6 million ; - Gross profit of
$3.8 million , Gross Margin1 before amortization of$4.1 million (28% of revenue); - Adjusted EBITDA2 loss of
$0.8 million ; - Net loss and comprehensive loss of
$0.4 million ; -
Biogas upgrading system Sales Order Backlog3 of$14.3 million as atJune 30, 2024 ; - Cash and cash equivalents of
$9.0 million and no debt, other than payables, advance payment / performance bonding and standby letters of credit resulting from normal course operations, as atJune 30, 2024 . - Subsequent to
June 30, 2024 , the Company realigned its resources and reduced its workforce by 18% to realize an estimated reduction in its cost structure of$1.0 million for the remainder of fiscal 2024. - Subsequent to
June 30, 2024 , the Company has been awarded four new service agreements for a number of large US-based RNG facilities.
"We've seen robust sales for both our Airdep division and service business this quarter," said
"The sales cycle for biogas upgrading systems is difficult to forecast which can create a challenge when projecting our results," added
"Greenlane's Gross Margin before amortization for the second quarter of 2024 of 28% of revenue, or
Contract Wins
Greenlane has been awarded four new service contracts for biogas upgrading systems it recently supplied to a number of large US-based RNG facilities. With 25 new biogas upgrading system projects recently completed or nearly completed, the Company is pursuing service contracts from this new installed base by the end of the year. The Company is generating profitable recurring revenue from securing these multi-year, multi-tiered service and maintenance agreements servicing these RNG facilities.
"Securing these new service contracts is a testament to the hard work and dedication of our service team," added
Adding to the increase in service contracts, Greenlane has been able to increase activities in the North American market with its first Cascade H2S deliveries. The Company's ability to consistently deliver high-quality installations and secure long-term service agreements enhances its position as a trusted partner in the biogas upgrading industry. These installations span various locations and sectors, demonstrating the versatility and reliability of Greenlane's products and related services. Each project has been executed with our industry-leading dedication, ensuring optimal performance and customer satisfaction.
The Market Outlook
The Canadian government has recently made positive strides with new measures to regulate methane emissions from Canadian landfills. Minister of Environment and Climate Change,
In
Conference Call
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SPECIFIED FINANCIAL MEASURES
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 RSUs, impairment of intangible assets and goodwill, impairment of notes receivable, strategic initiatives, transaction costs and non-recurring items.
Reconciliation of net loss and comprehensive loss to Adjusted EBITDA from Continuing Operations:
(in $000s) |
Three months ended |
|
2024 |
2023 |
|
Net loss and comprehensive loss from continuing operations |
(416) |
(4,354) |
Add (deduct): |
|
|
Exchange difference on translating foreign operations |
(61) |
(127) |
Provision for income taxes |
(41) |
293 |
Foreign exchange (gain) loss |
(158) |
832 |
Other (income) loss |
(647) |
20 |
Finance income |
(70) |
(131) |
Finance expense |
37 |
15 |
Impairment of notes receivable |
- |
1,068 |
Share-based compensation |
250 |
182 |
Amortization of office equipment |
54 |
86 |
Amortization of property and equipment |
81 |
49 |
Amortization of intangible assets |
142 |
482 |
Adjusted EBITDA |
(829) |
(1,585) |
Note 3 - Greenlane continually provides an update on its biogas upgrading system sales opportunities that successfully convert into contractual agreements in its reported sales order backlog ("Sales Order Backlog"). Sales Order Backlog is a supplementary financial measure that refers to the balance of unrecognized revenue from contracted biogas upgrading system supply projects. The Company's Sales Order Backlog is a snapshot in time which varies from period-to-period. The Sales Order Backlog increases by the value of new biogas upgrader system sales contracts and is drawn down over time as these projects progress towards completion with amounts recognized in revenue (by reference to the stage of completion of each contract). A typical biogas upgrading system sales contract has six stages of completion and a duration of nine to 24 months, and therefore annual and quarterly operating results will fluctuate as a result of the timing of contract related work. Sales Order Backlog does not include unrecognized revenue from contracts in connection with either Airdep or aftercare services, given the smaller individual contract value and shorter delivery duration. Sales Order Backlog also does not include unrecognized royalty revenue due to the inherent variable nature of the agreement.
About
Greenlane is driving change: accelerating the energy transition to a net-zero emissions economy. We are cleaning up two of the largest and most difficult to decarbonize sectors of the global energy system: the natural gas grid and commercial transportation. As a pioneer and leading specialist in biogas upgrading, we have been actively contributing to the decarbonization of our planet for over 35 years. The systems we provide transform biogas generated from organic waste into high-value grid-ready renewable natural gas ("RNG"). Our systems produce clean, low-carbon and carbon-negative RNG from organic waste sources including agriculture (such as dairy and hog manure), water resource recovery facilities, food waste, landfills, and sugar mills. Greenlane is the only biogas upgrading company offering and actively deploying the three main upgrading technologies: waterwash, pressure swing adsorption, and membrane separation, plus proprietary biogas desulfurization technology. Greenlane has delivered over 145 biogas upgrading systems into 19 countries, including some of the largest RNG production facilities in the world, and over 160 biogas desulfurization units. For further information, please visit www.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", "will", "would", "likely", "could", "plan", "expects" or "is expected to","believe", "continue to", "remains" or "continually", "is pursuing", "proposed", "aiming to" 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 the Company continues its drive for EBITDA results; that its Adjusted EBITDA positive goal this year requires refilling of our biogas upgrading system Sales Order Backlog; management's expectations respecting converting project opportunities into purchase orders soon and its estimates that resource realignment will reduce the Company cost structure by
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.
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