Greenlane Renewables Announces Third Quarter 2023 Financial Results
VANCOUVER, BC, Nov. 9, 2023 /CNW/ - 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, 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.
Third Quarter Highlights Include:
"In 2023, we've taken action and have been investing toward making the business scalable and creating operating leverage through the implementation of new systems and related processes," said Ian Kane, President & CEO of Greenlane. "We've also rebranded and launched our new line of sector-focused standard products in September that will contribute to streamlined processes and cost efficiencies. Our standard products are configured-to-order and will result in reduced engineering time and a repeatable, simplified and faster sales process. We're building and optimizing the business to achieve sustainable positive Adjusted EBITDA results. We expect the actions we are taking to drive positive Adjusted EBITDA for fiscal 2024, recognizing that the timing of new purchase orders for our biogas upgrading equipment can vary from quarter to quarter."
"We have the drive to succeed and will continue to focus on efficiencies and overall cost reductions through key programs such as enterprise resource planning (ERP) and product lifecycle management (PLM). These efforts will continue into 2024, but at a lower spending level, with much of the initial investments having been made in 2023. These initiatives coupled with our focused efforts to increase our system sales have already benefited Greenlane with the largest sales contract in the company's history announced last month. The changes underway will take some time to show in our financial results, but are expected to reflect our resilience, adaptability, and commitment to deliver on our overall long term results as we grow our product sales into existing and exciting new markets. I look forward to keeping the public informed of our progress."
Greenlane's Gross Margin before amortization for the third quarter of 2023 is 31% of revenue, up from 25% in the third quarter of 2022. The increase in Gross Margin before amortization percentage was largely driven by a higher proportion of service and component revenue versus system revenue in the quarter. Adjusted EBITDA was a loss of $4.5 million for the third quarter of 2023 compared to an income of $0.4 million in the third quarter of 2022. The loss was driven by a lower contribution from Gross Margin as a result of lower revenue, bad debt expenses for provisions on projects, and an increase in professional fees, insurance, and system implementation costs.
The public is invited to listen to the conference call in real time by telephone today, November 9th, 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.
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 RSU's granted, and strategic initiatives.
Reconciliation of net loss and comprehensive loss to Adjusted EBITDA:
Note 3 - Greenlane provides regular updates on its upgrader 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 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). A typical biogas upgrading system sales contract 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. Note that Sales Order Backlog does not include Cascade H2S sales, service revenue, or revenue from the Company's agreement with ZEG Biogás.
About Greenlane Renewables
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 140 biogas upgrading systems into 19 countries, including some of the largest RNG production facilities in the world. 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", "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 the Company will supply its Cascade PSA LF product to be deployed in one of the largest landfills in Brazil; that the Company's new line of standard products will contribute to streamlined processes and cost efficiencies, and will result in reduced engineering time and a faster sales process; that initiatives taken by the Company to make the business scalable and create operating leverage will optimize the business and achieve sustainable positive Adjusted EBITDA results for fiscal 2024; and that the sales order backlog will be drawn down and the Company advances and completes projects to realize revenue. 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 that the investment in systems and processes to make the business scalable and the benefits of standardized products will optimizing the business to achieve positive Adjusted EBITDA; management's perceptions of future growth, that regulatory developments in the 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 related to the realization of the benefits of investing in scaling the business and standardizing products; risks relating to the timing of new sales; 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; risks relating to the collection receivables; 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.
SOURCE Greenlane Renewables Inc.