March 15, 2022 By Greenlane Renewables
Greenlane Renewables Inc. has announced financial results for the fourth quarter and fiscal year ended December 31, 2021.
Fourth quarter highlights include:
- Record revenue of $17.1 million, an increase of 94 per cent over the $8.8 million reported in the fourth quarter of 2020.
- Gross profit of $3.9 million, gross margin (gross profit excluding amortization) of $4.3 million (25 per cent of revenue).
- Net loss of $1.2 million.
- Adjusted EBITDA of $0.3 million.
- Record sales order backlog of $50.1 million as at December 31, 2021.
- Sales pipeline valued at over $850 million as at December 31, 2021.
- Cash and cash equivalents of $31.5 million and no debt, other than payables and bonding resulting from normal course operations, as at December 31, 2021.
- The company finalized system sales contract wins totalling $19.2 million for renewable natural gas (RNG) projects in Canada, the United States and Brazil.
- The company announced the acquisition of Italian company Airdep S.R.L., to bring in-house an effective and proven technology to remove hydrogen sulfide (H2S) from biogas for integration with the Company’s portfolio of biogas upgrading systems and also to add an attractive line of products for sales into existing and new biogas projects globally. The business acquisition was completed on February 1, 2022.
Fiscal year 2021 highlights include:
- Record revenue of $55.4 million, an increase of 146 per cent over $22.5 million reported in 2020.
- Gross profit of $12.9 million, gross margin (gross profit excluding amortization) of $14.1 million (26 per cent of revenue).
- Net loss of $2.4 million.
- Adjusted EBITDA of $1.1 million.
- Finalized over $57 million in system sales contracts utilizing all three of the core upgrading technologies Greenlane offers. This represents several new RNG projects in Canada, the United States, Brazil, Spain, and the first commercial scale biogas upgrading system deployed in Colombia, marking the 19th country where the company has sold biogas upgrading systems.
- In February 2021, the company’s common shares commenced trading on the TSX after graduation to the senior board from the TSX Venture Exchange.
- In February 2021, the company became debt free4as it repaid early and in full, the $6.0 million balance (including principal and interest) of its promissory note due June 2021.
“2021 was another outstanding year for Greenlane as we advanced our business strategy focused on helping to clean up two of the largest and most difficult-to-decarbonize sectors of the global energy system: the natural gas grid and the commercial transportation sector,” said Brad Douville, president and CEO of Greenlane. “The year was highlighted by the strongest revenue generation in the company’s history. We also generated adjusted EBITDA of over $1 million for the fiscal year, a first for the company. In addition to delivering 2.5 times year over year revenue growth, we achieved several important milestones through the course of the year, including graduating to the TSX, elimination of our outstanding debt, signing of our first acquisition to bring in-house compelling H2S removal technology, and securing new system sales contract wins exceeding $57 million.
“Looking ahead, we remain in a very strong position and are encouraged with the outlook for the RNG industry both in North America and abroad, as we continue to see expansion in both the transportation and natural gas utility sectors. Our sales pipeline remains robust while our order backlog is now over $50 million. Greenlane has strengthened its product offering through the acquisition of Airdep while establishing a footprint in Italy, one of the most dynamic RNG markets, creating new opportunities for sales of our biogas upgrading systems in the region.”
Greenlane continually updates its pipeline of active system sales opportunities, which at December 31, 2021 was over $850 million. For the full year this represented a net increase of more than $190 million in new opportunities and the movement of $57.7 million in signed contracts (including the sales announced on January 4, 2022 of $7.1 million) into the sales order backlog. The sales pipeline at December 31, 2021 is consistent with the sales pipeline as at September 30, 2021 of over $850 million, reflecting both the net increase of approximately $20.0 million in new opportunities and the movement of $19.2 million in signed contracts (including the sales announced on January 4, 2022 of $7.1 million) into the sales order backlog, in the quarter. The sales pipeline represents visibility to a significant number of opportunities that funnel down through our sales process, and those opportunities successfully converted into contract wins move into our sales order backlog. The company’s sales order backlog of $50.1 million as at December 31, 2021 is a snapshot in time which varies from quarter end to quarter end. 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.
The market outlook
Global RNG consumption is poised to continue its strong upward trajectory. In its most recent World Energy Outlook, the International Energy Agency (IEA) highlights the significant potential for biogas and biomethane as countries and industries continue to decarbonize, and projects that global biomethane consumption will increase at a compound annual growth rate exceeding 20 per cent under both its Announced Policies and Sustainable Development scenarios through the end of this decade. Under the IEA’s Announced Policies Scenario, global biomethane volumes are projected to reach approximately four per cent of total 2020 natural gas supply by 2050, or approximately 5.5 trillion cubic feet.
Europe continues to see accelerating biomethane production and consumption in its natural gas grid transportation sector. The number of biomethane plants operating today in Europe increased 40 per cent over 2020 to reach over 1,000 facilities, 87 per cent of which are connected to the natural gas grid, according to the European Biogas Association, which also projects that sustainable biomethane could meet 30 to 40 per cent of the EU’s entire natural gas consumption by 2050.
New data from NGVA Europe, a transportation trade organization, revealed rapid growth in the use of biomethane as a transport fuel in Europe. More than one quarter of the gas used in road transportation in 2020 was renewable, delivered through more than 3,800 CNG stations. With more than 4,500 CNG and LNG stations operating in Europe today, there is a significantly higher amount of biomethane available compared to 2020. The European Commission estimates that renewable gas will represent approximately 40 per cent of overall road fleet fuel consumption in 2030. As a reminder, last spring NGVAmerica and the RNG Coalition announced that for the first time ever more than half of all on-road fuel used in natural gas vehicles in the U.S. in 2020 was RNG at 53 per cent.
Global delivery companies continue the push to decarbonize their fleets, as Amazon announced that its European CNG delivery fleet, which can use 100 per cent bio-CNG, would exceed 1,000 vehicles by the end of 2022, matching its strategy in the U.S. with its previous commitment to purchase 1,000 CNG engines for its delivery fleet. UPS, which has been an industry leader in sustainable transportation, announced that it was converting 25 package delivery vans in Canada to operate on CNG as it continues to reduce emissions from its delivery operations.
Natural gas utilities continue to increase RNG supply within gas supply networks. California’s Pacific Gas & Electric announced that pipeline-spec dairy RNG began flowing into its gas transmission system in late December, with the utility providing the clean renewable gas to its residential and commercial customers. SoCalGas announced a 17 per cent increase of RNG volumes distributed through its pipeline network in 2021 to 14 billion cubic feet, and remains on track to deliver 20 per cent RNG to its core customers by 2030.
Long-time RNG advocate FortisBC tripled its RNG supply to customers in 2021, and expects to triple supply again this year while also forecasting that it will likely exceed its target of 15 per cent renewable and low-carbon gas volumes in its supply by 2030 as it moves toward a 75 per cent renewable and low-carbon gas target by 2050. Oregon gas utility NW Natural, which believes that there is a significant and long-term need for RNG, recently announced an expansion of its role in the growing RNG market through the formation of a subsidiary focused on supplying renewable fuels to utilities and commercial, industrial, and transportation sector customers across the U.S.
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