~Regained gross margin, taking action to improve operating leverage~
First Quarter Highlights Include:
- Revenue of
$15.5 million . - Gross profit of
$3.3 million , Gross Margin1 before amortization of$3.8 million (24% of revenue). - Net loss and comprehensive loss of
$2.1 million . - Adjusted EBITDA2 loss of
$1.7 million . - Sales Order Backlog3 of
$25.1 million as atMarch 31, 2023 . - Cash and cash equivalents of
$16.3 million and no debt, other than payables, advance payment / performance bonding and standby letters of credit resulting from normal course operations, as atMarch 31, 2023 . - The Company announced a
$7.2 million contract win for a food waste-to-RNG project inOhio ,United States for the supply of a biogas upgrading system.
Subsequent Event:
- On
April 17, 2023 , the Company announced a collaborative agreement with ZEG Biogás eEnergis SA ("ZEG Biogás"), a company 50% owned by Vibra Energia S.A. ("VIBRA"), previously the fuel distribution unit of Petrobras, to establish industrial scale volume production of Greenlane's Totara+ Water Wash biogas upgrading product locally inBrazil . Under a new royalty-like business model, ZEG Biogás has been granted exclusive rights to localize the supply chain, manufacturing, marketing and sales of the Totara+ inBrazil under the Greenlane brand. Greenlane retains responsibility for the product design, the supply of components not available locally inBrazil , and the local commissioning and servicing of the products. The Totara+ is one of Greenlane's largest and most popular biogas upgrading products. ZEG Biogás' goal is to deliver 75 Totara+ systems over the next 5 years, which would install greater biogas processing capacity than the more than 140 units Greenlane has delivered over the last 30 years. Production capacity inBrazil will be phased in over time, with a minimum volume commitment in the first two years.
"We're focused on our future and expect to be cash flow and Adjusted EBITDA positive in the next twelve months," said
"In support of our focused strategy, we are also investing in systems, processes and infrastructure to sustain the business as it scales, and we are realigning our resources," said
Greenlane continually provides an update on its system sales opportunities that successfully convert into contractual agreements in its reported sales order backlog ("Sales Order Backlog"). The Company's Sales Order Backlog of
The Market Outlook
Global biomethane production continues to reach record levels, as recent data from the
Oil and gas majors bp and Shell are both integrating large RNG acquisitions that were recently completed, with significant plans for growth. bp, through its acquisition of Archaea Energy, is targeting annual biomethane production of 145 mmBtu by 2030 from the current 13 mmBtu through Archaea's significant development pipeline, while Shell, through its acquisition of Nature Energy, is looking to scale up its existing RNG business as part of a strategy to build a global integrated biomethane value chain.
Investment in the RNG sector continues to grow at a rapid pace, with new entrants making significant capital commitments thus far in 2023. Marathon Petroleum Corporation, a large
The Brazilian sugarcane sector is a promising new and immense market opportunity for biomethane. Today, there are more than 330 sugar mills across the country engaged in the production of sugar and ethanol biofuel. The latter produces vast quantities of a liquid byproduct called vinasse, which is an untapped and ideal feedstock for the production of biomethane. The ethanol biofuel production industry in
Conference Call
The public is invited to listen to the conference call in real time by telephone. To access the conference call by telephone, please dial: 1-888-396-8063 (
Shortly after the conference call, the replay will be archived on the
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:
(in $000s) | Three months ended | |
2023 | 2022 | |
Net loss and comprehensive loss | (2,118) | (2,160) |
Add (deduct): | ||
Exchange difference on translating foreign operations | (201) | 9 |
Provisions for income taxes | 82 | - |
Foreign exchange (gain) loss | (286) | 692 |
Other loss | 21 | - |
Finance income | (208) | (24) |
Finance expense | 18 | 25 |
Share-based compensation | 355 | 550 |
Strategic initiatives | - | 321 |
Amortization of office equipment | 111 | 118 |
Amortization of property and equipment | 36 | 30 |
Amortization of intangible assets | 473 | 469 |
Adjusted EBITDA | (1,717) | 30 |
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).
About
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 ZEG Biogás' goal is to deliver 75 Totara+ systems over the next 5 years, that production capacity in
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
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