Fourth Quarter Highlights Include:
- Record revenue of $8.8 million, an increase of 167% over the $3.3 million reported in the fourth quarter of 2019,
- Gross margin1 of $2.4 million (27% of revenue),
- Positive Adjusted EBITDA of $0.2 million2,
- Net loss of $1.2 million (or $0.01 per share),
- Record sales order backlog3 of $45.7 million at year end, an increase of over 180% from the $16.2 million reported as at December 31, 2019,
- Sales pipeline4, valued at over $720 million as at December 31, 2020 versus $680 million as at December 31, 2019, reflects both the increase of more than $89 million in new opportunities and the movement of $49.1 million in signed contracts into the sales order backlog. Greenlane has visibility to more than 180 new projects globally,
- Multiple contract wins totalling $18 million: The Company announced in the quarter a new $7.7 million pressure swing adsorption system supply contract for a multi-site dairy farm renewable natural gas ("RNG") project in Florida as part of the Chevron U.S.A and Brightmark LLC joint venture and a $10 million membrane separation system supply contract for a new RNG project in the United States owned by an international energy company.
Fiscal Year 2020 Highlights Include:
- Record revenue of $22.5 million, an increase of 147%, compared to the $9.1 million of revenue generated in 2019 since the PT Biogas acquisition on June 3, 2019. Revenue increased 101% over 2019, after giving effect to the acquisition of the biogas business as if it had occurred on January 1, 2019,
- Gross margin1 of $6.4 million (29% of revenue),
- Adjusted EBITDA loss of $1.7 million2,
- Net loss of $2.5 million (or $0.03 per share),
- Cash and cash equivalents at year end 2020 of $16.4 million,
- Nearly $50 million in new contracts signed: During the year ended December 31, 2020, the Company signed $49.1 million in new system supply contracts, including a $17.1 million system supply contract for an RNG project at a multi-location dairy farm cluster in California and the first commercial scale pipeline injection RNG project in the Brazilian sugarcane industry,
- Advancement of Build, Own and Operate business model: The Company signed a definitive joint venture agreement with SWEN Impact Fund for Transition which enables Greenlane to provide "Upgrading-as-a-Service" to developers and owners of RNG projects in Europe by offering potential customers the opportunity to replace the initial capital outlay for the biogas upgrading equipment, with a monthly fee under long-term contract.
Subsequent To December 31st:
- The Company increased its cash balance with a $26.5 million bought deal offering,
- The Company successfully uplisted to the TSX Exchange from the TSX Venture,
- The Company further strengthened its balance sheet through the early repayment in full, including principal and interest, of its outstanding promissory note in the amount of $6.0 million using funds received from the exercise of warrants.
"Our record revenue in 2020 and continued positive outlook for the business in 2021 is backed by a marked increase in sales activity and the emergence and increased scale of market participants in the RNG sector," said Brad Douville, President and CEO of Greenlane. "We continue to see large energy companies entering the sector seeking to secure supplies of RNG and, as a result, investing in new projects and buying biogas upgrading equipment. Our sales order backlog, which ultimately ends up in revenue, has grown to a record level that is up over 180% year-over-year, in part, because of this trend. Furthermore, we've seen consistent growth in revenue every quarter throughout 2020 and successfully achieved positive Adjusted EBITDA in the fourth quarter. The RNG market, and Greenlane's unique position in it with our product offerings made up of multiple core upgrading technologies, remains robust."
"We've taken great strides to strengthen our balance sheet and position for growth. With over $16 million in cash at December 31st, a bought deal financing closed at the end of January for more than $26 million in gross proceeds, and in February repayment in full of the Company's outstanding promissory note using funds received from the exercise of warrants, we will focus on investing in our next phase of growth. These investments include adding new employees to keep up with demand for our products, engaging in the development of and investment in new RNG projects, as well as evaluating a number of strategic opportunities that we believe may add to the growth of the Company. These opportunities may include but are not limited to pursuing attractive acquisition opportunities as the industry consolidates, adding system capabilities for hydrogen production as markets develop, and creating new strategic alliances to expand upon the Company's upgrading technology solutions."
"Beyond financial results, these last twelve months have reinforced the climate change challenge that we face as a global community and the growing shift in attitudes towards action. There is no doubt that the positive momentum around providing green solutions will continue to increase as the world looks to decarbonize. RNG has a critical role in decarbonizing two of the most difficult sectors to decarbonize - transportation and the gas grid and we are positioning ourselves to take a leadership role."
The Market Outlook
2020 marked a year of uncertainty as the COVID-19 pandemic surfaced and resulted in severe lock downs as health authorities and governments around the world moved to contain the spread of the virus, devastating global markets and economies. As the world now cautiously moves to recovery, what has emerged is the firm foundation of an energy transition rooted in decarbonization, as companies and governments across the globe set net zero emission targets by 2050 or sooner in the effort to combat climate change.
The Biden administration in the U.S. has embarked on its mission to fight climate change, signing executive orders aimed at focusing the climate crisis on foreign policy and national security while shifting the country away from its reliance on fossil fuels toward sources of low or no carbon energy, which is positive for the RNG industry. Despite a volatile year due to the pandemic, the total number of RNG production facilities in the United States increased by over 40% in 2020 according to a recent assessment completed for the U.S. Department of Energy. Strong capacity growth in the U.S. is anticipated to continue this year and into the future, as an estimated 155 new projects are either under construction or in the planning stages.
The transportation industry, one of the most challenging sectors to decarbonize, continues to focus on low carbon fuel sources. Amazon recently announced that it has ordered more than 1,000 compressed natural gas engines, which can operate on both renewable and non-renewable natural gas, as part of its strategy to introduce new sustainable solutions for freight transportation. According to recent data released by the U.S. Environmental Protection Agency, more than 500 million gallons (ethanol equivalent) of RNG were produced for transportation use in 2020, a 25% increase over 2019 volumes. The use of biofuels in marine transportation is beginning to gain traction as well, as the European Commission is launching a legislative proposal on maritime fuels that aims to increase the use of sustainable alternative fuels, including liquefied biomethane, in European shipping and ports. Less than 1% of the world maritime fleet runs on alternative fuels and liquefied biomethane can provide a decarbonization tool for the sector today.
We continue to see the world's largest oil and gas producers shift to net zero emission targets and low carbon energy portfolios. Corporate strategies differ in approach, although a common theme that is emerging is the necessity to increase exposure to low carbon energy sources, including RNG. Chevron, one of the world's leading integrated energy companies, is choosing to concentrate on certain initiatives to achieve a lower carbon intensity where it has existing core competencies and competitive advantages on large, complex projects that it can scale, one of which it believes is RNG. Chevron U.S.A. and Brightmark LLC, an RNG project developer, recently announced an expansion of their RNG joint venture. European supermajor Royal Dutch Shell recently outlined the details of its near and long term cleaner energy transition plans, stating that its oil production and carbon emissions have already peaked and it is now aiming to reduce its net carbon intensity by 100% by 2050. Shell has highlighted a growing focus on RNG and decarbonizing transportation emissions through its Marketing and Integrated Gas segments.
Natural gas utilities in the United States continue to introduce RNG into their grids for residential and commercial customers. Utilities in Minnesota, Michigan and Florida recently announced plans to offer RNG to customers after RNG service tariffs were approved by state utility commissions, a trend that will continue to support the growth of local RNG development and production. RNG is rapidly shifting from a niche fuel to a mainstream substitute for fossil natural gas, allowing natural gas utilities to offer a net zero carbon intensity energy option to customers while remaining competitive with the electric grid.
