By Greenlane Renewables
By Greenlane Renewables
Greenlane Renewables Inc., today announced its financial results for the fourth quarter and year ended Dec. 31, 2019.
On June 3, 2019, the company successfully completed the acquisition of PT Biogas Holdings Limited (PT Biogas) as its qualifying transaction and changed its name to Greenlane Renewables Inc. For the period prior to June 3, reported results are solely for Creation Capital Corp., the capital pool company that had no operations except for the pursuit of an acquisition. For the period commencing on June 3, the reported results reflect the operating business of Greenlane (through PT Biogas), a leading global provider of biogas upgrading systems that create clean, low-carbon-footprint renewable natural gas (RNG), suitable for injection into the natural gas grid and for direct use as vehicle fuel.
Fiscal year 2019 highlights include:
- Financial results: Greenlane generated revenue of $9.1 million, and a gross profit of $3.3 million or 36 per cent of revenue, a net loss of $5.1 million, and an Adjusted EBITDA loss of $1.3 million. The company’s revenue was generated for the period commencing June 3, 2019 upon completion of its acquisition of PT Biogas. Had the acquisition of PT Biogas occurred on Jan. 1, 2019, the company would have reported revenue for the year of $11.2 million (based on internal estimates).
- Financing: In May 2019, the company successfully closed a private placement of 42 million subscription receipts at $0.20 for gross proceeds of $8.4 million.
- Acquisition: The company successfully completed its qualifying transaction on June 3, 2019 by acquiring 100 per cent ownership of PT Biogas from Pressure Technologies PLC.
- New contract wins: The company was successful in securing $14.4 million in new contracts in the period commencing June 3, 2019 and ending Dec. 31, 2019.
- Order backlog: As of Dec. 31, 2019, the company reports a $16.2 million order backlog, expected to be recognized in revenue through 2020 and beyond, which represents a growth of over 50 per cent from $10.7 million recorded as at June 30.
- Substantial increase in sales pipeline: Valued at over $680 million as at Dec. 31, 2019, representing an increase of over 50 per cent from $450 million as of Jan. 1, 2019.
“In 2019, we created a foundation for the business by successfully launching operations as a public company with sufficient capital and added capacity to invest in our technologies and product lines and to expand our business model,” said Brad Douville, president and CEO of Greenlane. “In 2020, we’ve continued to grow our sales pipeline and have recently seen an increase in sales activity based on the premise that business partners and customers alike are working from home and increasing their focus on our existing and new proposals. Additionally, we’re gaining traction in our new build, own, operate initiatives, together with project equity partners, to scale our capacity to finance projects as we ramp up this new part of the business. In light of current pandemic-related market conditions, we have been fortunate to benefit from an asset-light business model that allows for operational flexibility and an outsourced supply chain. Furthermore, in Feb. 2020, we completed an $11.5 million financing thus strengthening our balance sheet, reducing our outstanding debt and allowing us to navigate potential impacts from market uncertainties.
RNG continues to build its reputation as a viable and attractive alternative to traditional natural gas. A recent example of this is the announcement that Southern California Gas Co. (SoCalGas), the largest gas distribution utility in the U.S., and other stakeholders have filed a proposed plan to offer RNG to customers that, after approval by the California Public Utilities Commission, would allow millions of California customers the option to purchase a portion or all of their natural gas from renewable sources. A 2018 study showed that replacing less than 20 percent of SoCalGas’ traditional natural gas supply with renewable natural gas by 2030 can achieve the same greenhouse gas reductions as converting all homes and commercial buildings to electric-only energy. Greenlane supplied the biogas upgrading system for the first commercial scale project to produce RNG within California to be introduced into SoCalGas’ pipeline system.”
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 pause periods to allow customers to complete concurrent activities such as site infrastructure work. As a result, the company’s revenue varies from month-to-month and quarter-to-quarter.
Fourth quarter highlights include:
- Fourth quarter results: Greenlane generated revenue of $3.3 million, a gross profit of $1.6 million or 49 per cent of revenue, a net loss of $1.0 million, and an Adjusted EBITDA loss of $0.5 million.
- Contract win: The company was successful in securing an $8.3 million biogas upgrading system supply contract with a customer in California for a landfill project.
- Launch of the Integrated Biogas Alliance: The company, together with other founding members, announced the launch of an innovative global partnership amongst internationally-recognized technology companies, who have come together on a non-exclusive basis to provide the global biogas industry with a unique, fully integrated platform solution for turning virtually any organic waste into renewable energy and organic fertilizers.
The market outlook
Management believes that the industry is at an inflection point. Internal estimates based on various market statistics and industry publications suggest that reaching five per cent RNG content in the North American gas distribution network alone could represent approximately U.S. $18 billion in biogas upgrading equipment sales.
On a global scale, increasing demand for RNG is being driven by a universal desire to reduce greenhouse gas emissions, supportive government regulations and incentives, growing penetration in the transportation sector, and better efficiency than other renewable energy resources. As a global leader in the biogas upgrading business, Greenlane expects to benefit from this trend.