~Company delivered 29% year over year revenue
growth and consistent gross margins~
VANCOUVER, BC, March 9,
2023 /CNW/ - Greenlane Renewables Inc.
("Greenlane'' or the "Company") (TSX: GRN) (FSE: 52G)
(OTC: GRNWF) today announced its financial results for the fourth
quarter and fiscal year ended December 31,
2022. For further information on these results please see
the Company's Audited Consolidated 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.
Fiscal Year 2022 Highlights Include:
- Record annual revenue of $71.2
million, an increase of 29% over $55.4 million reported in 2021.
- Gross profit of $14.9 million,
Gross Margin1 before amortization of $16.8 million (24% of revenue).
- Net loss and comprehensive loss of $6.1
million.
- Adjusted EBITDA2 loss of $2.0
million.
- The Company announced $45.3
million in new system sale contract wins, including
$11.4 million in contracts with a
single customer for three new food waste-to-RNG projects across
three US states, and two new contracts with a combined value of
$13.5 million for the supply of its
biogas upgrading technology for two landfill gas-to-RNG projects in
South America.
- The Company committed to two investments totalling $1.8 million under its Deployment of Development
Capital program to companies focused on developing RNG
projects.
- The Company completed the acquisition of 100% of the
outstanding share capital of Airdep for consideration of
$12.1 million.
Fourth Quarter Highlights Include:
- Revenue of $17.0 million, similar
to the $17.1 million reported in the
fourth quarter of 2021.
- Gross profit of $3.2 million,
Gross Margin1 before amortization of $3.3 million (19% of revenue).
- Net loss and comprehensive loss of $1.5
million.
- Adjusted EBITDA2 loss of $2.0
million.
- Sales Order Backlog3 of $27.7
million as at December 31,
2022.
- Sales Pipeline4 valued at over $900 million as at December 31, 2022.
- Cash and cash equivalents of $21.4
million and no debt, other than payables, advance payment /
performance bonding and standby letters of credit resulting from
normal course operations, as at December 31,
2022.
- The Company announced a $4.6
million contract win for the supply of a biogas upgrading
system for a dairy manure RNG project in the western US.
Subsequent Event:
On March 9, 2023, the Company
announced a new contract valued at $7.2
million (US$5.4 million) for a
food waste-to-RNG project in Ohio,
United States. The contract is for
the supply of an integrated sulfur removal and water wash system
for upgrading biogas generated from food waste streams into
pipeline-spec RNG for direct injection into the local natural gas
pipeline network. The project is expected to annually process
approximately 190,000 tons of organic food waste into 250,000
MMBtus (million Btus) of RNG.
|
Three Months Ended
Dec 31
|
Twelve Months Ended
Dec 31
|
(in millions, except as
noted)
|
2022
|
2021
|
%
Change
|
2022
|
2021
|
%
Change
|
Revenue
|
$17.0
|
$17.1
|
(1 %)
|
$71.2
|
$55.4
|
29 %
|
Gross
Margin1 before amortization
|
$3.3
|
$4.3
|
(23 %)
|
$16.8
|
$14.1
|
19 %
|
Gross Margin as % of
revenue
|
19 %
|
25 %
|
|
24 %
|
25 %
|
|
Gross
profit
|
$3.2
|
$3.9
|
(20) %
|
$14.9
|
$12.9
|
16 %
|
Adjusted
EBITDA2
|
($2.0)
|
$0.3
|
(824 %)
|
($2.0)
|
$1.0
|
(282 %)
|
Net loss and
comprehensive loss
|
($1.5)
|
($1.1)
|
(34 %)
|
($6.1)
|
($2.4)
|
(154 %)
|
Sales Order
Backlog3
|
|
|
|
$27.7
|
$43.0
|
(36 %)
|
Sales
Pipeline4
|
|
|
|
$900
|
$850
|
6 %
|
Cash & cash
equivalents
|
|
|
|
$21.4
|
$31.5
|
(32 %)
|
"The Greenlane team delivered another year of record revenue in
2022, a solid accomplishment given some challenges in the RNG
market in the US that emerged during the year," said Brad Douville, CEO of Greenlane. "We see 2023 as
a pivotal year for Greenlane as we actively diversify our global
presence and invest in systems and processes that will allow us to
scale the business. Our investments to grow in key international
markets include strengthening local supply chains, employing local
talent, and partnering with industry participants that have strong
relationships locally within the region."
"Last year began with strong RNG spot prices in the US, but as
2022 progressed, the prices declined. Prices for RNG from US dairy
projects, a significant customer segment for Greenlane in recent
years, were particularly hard hit with falling California LCFS
credit prices due to a surplus of credits. At the beginning of
2022, spot prices for dairy-derived RNG were over $US115 per MMbtu, but by the end of 2022, the
price had dropped to approximately $US70 per MMbtu. These factors, combined with
inflationary pressures, rising interest rates and lack of clarity
respecting the rules not yet issued under the Inflation Reduction
Act ("IRA") impacted our growth in the second half of
2022."
"Having recognized that low LCFS credit prices may not achieve
the GHG reductions they are looking for, the California Air
Resources Board ("CARB") has indicated that they will update
their LCFS program including introducing more aggressive compliance
targets for carbon intensity reduction by 2030 and beyond, with the
objective to support continued investment in low carbon
technologies. While we anticipate that these and other regulatory
developments in the US will support RNG demand with improved
economics for Greenlane's current and future customers, we are also
increasing our focus in other markets where we see growth
opportunities."
"Outside of North America,
Greenlane continues to invest for growth in Europe, building on our acquisition in
Italy in February 2022, and in South America by expanding our local presence.
In 2022, 40% of our system sales revenue was generated outside of
the US, versus only 14% in 2021. Our non-US system sales revenue in
2022 was from Canada (14%),
Brazil (12%), Europe (11%) and other countries (3%)."
During the fourth quarter, Gross Margin before amortization was
adversely impacted as compared to previous quarters on a percentage
basis on one project by commissioning costs that were beyond our
control and on another project scope changes that were not
recoverable. Furthermore, in light of growth in 2022, the Company
added staff, which weighed negatively on Adjusted EBITDA. "We are
well capitalized with more than $21
million in the bank and are debt free," said Monty Balderston, CFO of Greenlane. "We will
continue to prudently manage our cash to maintain a stable
financial footing."
Greenlane continually updates its pipeline of active system
sales opportunities ("Sales Pipeline"), which at
December 31, 2022 was approximately
$900 million. 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 $27.7 million as at
December 31, 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. A typical system sales contract (excluding
Airdep 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
In California, CARB is widely
anticipated to change its greenhouse gas emissions targets this
year, with implementation of the more aggressive decarbonization
targets to take effect in 2024 and drive increased demand for Low
Carbon Fuel Standard (LCFS) credits. Most recently, CARB hosted a
public workshop to discuss those changes, with the majority of
stakeholders that provided feedback supportive of a 30% carbon
intensity reduction compliance target by 2030, a sharp increase
from the current 20%. Based on modeling provided by CARB, the 30%
reduction target could result in a meaningful price recovery of
California's LCFS credit program
starting immediately and hitting its price cap by 2026, providing a
strong catalyst for continued growth in RNG project development in
the state.
Despite overall market turbulence, significant capital continues
to flow into the RNG sector in both North
America and Europe.
Recently, Canadian RNG project developer Green Impact Partners,
announced a strategic partnership with a global infrastructure
investor that could represent up to $545
million in total investment in its development portfolio,
including its flagship project, Future Energy Park in Calgary, Alberta. In Europe, Goldman Sachs has established a new
business targeting biomethane projects across the continent, with
an anticipated investment to exceed €1 billion over the next four
years.
Conference Call
The public is invited to listen to the conference call in real
time by telephone today, March
9th, at 2:00 pm PT
(5:00 pm ET). To access the
conference call by telephone, please dial: 1-888-396-8063
(North America toll-free) or
1-416-764-8652. 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.
SPECIFIED FINANCIAL MEASURES
Management evaluates the Company's performance using a variety
of measures, including "Gross Margin before amortization",
"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 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
Dec 31
|
Twelve months ended
Dec 31
|
2022
|
2021
|
2022
|
2021
|
Net loss and
comprehensive loss
|
(1,490)
|
(1,109)
|
(6,062)
|
(2,382)
|
Add
(deduct):
|
|
|
|
|
Exchange difference on
translating
foreign
operations
|
(347)
|
(86)
|
557
|
(68)
|
Provisions for income
taxes
|
(136)
|
(76)
|
16
|
(76)
|
Foreign exchange (gain)
loss
|
(853)
|
20
|
(2,167)
|
184
|
Other loss
(income)
|
37
|
2
|
37
|
(207)
|
Finance
income
|
(279)
|
(162)
|
(359)
|
(162)
|
Finance
expense
|
40
|
9
|
109
|
87
|
Share-based
compensation
|
421
|
344
|
1,977
|
1,098
|
Strategic
initiatives
|
418
|
935
|
1,592
|
935
|
Amortization of office
equipment
|
79
|
91
|
447
|
329
|
Amortization of
property and
equipment
|
68
|
-
|
146
|
-
|
Amortization of
intangible assets
|
58
|
306
|
1,739
|
1,242
|
Professional fees
related to shelf
prospectus and other matters
|
-
|
-
|
-
|
101
|
Adjusted
EBITDA
|
(1,984)
|
274
|
(1,968)
|
1,081
|
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 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.
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: the contract for the anticipated
supply of an integrated sulfur removal and water wash system, the
fact that order fulfillment will commence immediately and that it
is expected to generate approximately 250,000 MMBtus (million Btus)
of pipeline-quality RNG each year; that the Company is
diversifying globally and investing in systems and processes to
scale the business; management's expectations for regulatory
developments in the US that support RNG demand including that the
California Air Resources Board will introduce more aggressive
decarbonization targets to take effect in 2024 and drive increased
demand for Low Carbon Fuel Standard (LCFS) credits; that a 30%
carbon intensity reduction target could result in a meaningful
price recovery of California's
LCFS credit program starting immediately and hitting its price cap
by 2026; that regulatory developments in the US will support RNG
demand with improved economics for Greenlane's current and future
customers; 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 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 CARB will increase the 2030 carbon intensity reduction
compliance target to at least 30%; that other 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: the
anticipated legislative changes 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,
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.
SOURCE Greenlane Renewables Inc.