VANCOUVER, British Columbia -- (Business Wire)
Greenlane Renewables Inc. (“Greenlane” or the “Company”) (TSXV: GRN), today announced its interim financial results for the second quarter ended June 30, 2020. For further information on these results, please see Greenlane’s Condensed Consolidated Interim Financial Statements and Management Discussion and Analysis. All amounts are in Canadian dollars and in accordance with IFRS.
Second Quarter Highlights Include:
- Revenue of $4.2 million in the quarter ended June 30, 2020 representing a 45% increase from $2.9 million reported in the first quarter ended March 31, 2020 (note one).
- Gross profit of $1.1 million, or 26% of revenue.
- Sales order backlog (note two) of $41.9 million, a 159% increase from the $16.2 million reported on December 31, 2019. The increase reflects the successful conversion and movement of sales pipeline opportunities into sales contracts.
- Sales pipeline (note three) valued at approximately $694 million as at June 30, 2020, versus $680 million as at December 31, 2019 and $450 million as at December 31, 2018. The sales pipeline reflects both the expansion of the project bid universe and the movement of successful contract wins into the sales order backlog.
- Net loss of $0.9 million and Adjusted EBITDA loss of $0.5 million* in the three month period ended June 30, 2020.
- Cash and cash equivalents of $5.3 million compared with $6.7 million as at March 31, 2020. The cash balance excludes the $1.3 million in gross proceeds from warrant exercises and the framework agreement with Pressure Technologies plc to reduce outstanding debt, both announced subsequent to quarter end.
“We successfully grew our revenue this quarter by 45% on a sequential basis while facing some tough marketplace conditions as a result of the COVID19 backdrop,” said Brad Douville, President and CEO of Greenlane. “We also achieved a third consecutive quarter of rapid growth of our sales order backlog adding $21 million from the recent and significant contract wins for dairy farm projects in California. Our focus remains on a strong second half of 2020. This trend continues so far in the third quarter highlighted by a recent contract win in Brazil, and the launch of our joint venture with SWEN Impact Fund for Transition to accelerate deployment of Greenlane’s biogas upgrading systems and solutions in Europe.”
As a reminder, the Company’s revenues are largely derived from a relatively small number of large 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 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 Market Outlook
The energy transition continues to gain momentum and support as global economies chart a recovery from the COVID-19 pandemic that incorporates varying levels of green initiatives, including from unlikely participants. BP, one of the largest integrated global oil and gas companies, announced this year it intends to be a net zero carbon company by 2050 or sooner by drastically cutting the carbon intensity of the products it sells and increasing the proportion of its investment into non-oil and gas businesses as it reinvents itself. S&P Global Platts Analytics, a global data analytics and research firm, recently highlighted RNG as an emerging tool for the decarbonization of energy production and subsequent consumption in both the transportation and natural gas utility sectors.
RNG continues to gain traction with natural gas utilities in their quest to remain competitive with the electricity grid relative to driving renewable content and decarbonized energy offerings. Several large utilities in the United States have recently made RNG-specific announcements: Xcel Energy has announced an initiative to explore RNG options for up to 1.8 million natural gas customers, Chesapeake Utilities is set to inject RNG directly into its East Coast gas distribution pipeline system, and Duke Energy will be injecting RNG produced from dairy farms in the southeastern United States into its national gas distribution pipeline system.
Greenlane, with visibility to more than 100 new projects, remains well positioned to capture a growing share of the RNG value chain as a leading industry provider of biogas upgrading and project development solutions.
NON-IFRS FINANCIAL MEASURES
Management evaluates the Company’s performance using a variety of measures, including “operating profit” and “Adjusted EBITDA”. The non-IFRS measures should not be considered as an alternative to or more meaningful than revenue or net loss. 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 non-GAAP financial measures provide useful information to both management and investors in measuring the financial performance and financial condition of the Company. Management uses these and other non-IFRS 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.
*Reconciliation of net loss to Adjusted EBITDA loss
| | Three months ended June 30, 2020 $’000s |
| Net loss | (940) |
| Add back: | |
| Share based compensation | 36 |
| Depreciation and amortization | 379 |
| Finance expense | 128 |
| Foreign exchange gain | (113) |
| Adjusted EBITDA loss | (510) |
Note one - Comparison to revenue in the same period of last year is not made because of a partial quarter, with the Company completing its qualifying transaction on June 3, 2019.
Note two - Order backlog refers to the balance of unrecognized revenue from contracted projects, where such revenue is recognized over time as completion of projects progress.
Note three - 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. 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 pipeline is converted to Greenlane’s sales order backlog.
All filings related to the second quarter ended June 30, 2020 are available on SEDAR at www.sedar.com.