August 31, 2020 By Greenlane Renewables
Greenlane Renewables Inc. recently announced its interim financial results for the second quarter ended June 30, 2020.
Second quarter highlights include:
- Revenue of $4.2 million in the quarter ended June 30, 2020 representing a 45 per cent increase from $2.9 million reported in the first quarter ended March 31, 2020.
- Gross profit of $1.1 million, or 26 per cent of revenue.
- Sales order backlog of $41.9 million, a 159 per cent increase from the $16.2 million reported on Dec. 31, 2019. The increase reflects the successful conversion and movement of sales pipeline opportunities into sales contracts.
- Sales pipeline valued at approximately $694 million as at June 30, 2020, versus $680 million as at Dec. 31, 2019 and $450 million as at Dec. 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.
“We successfully grew our revenue this quarter by 45 per cent on a sequential basis while facing some tough marketplace conditions as a result of the COVID-19 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.
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