Release Date: August 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Greenlane Renewables Inc (GRNWF, Financial) reported an increase in revenue to $14.6 million for the second quarter of 2024, compared to $13.8 million in the same period of 2023.
- The company has successfully delivered the first Cascade H2S units in North America, expanding its product reach.
- Greenlane Renewables Inc (GRNWF) has been awarded four new service contracts for biogas upgrading systems in large US-based RNG facilities.
- The company is generating profitable recurring revenue from securing multiyear, multi-tier service and maintenance agreements.
- Greenlane Renewables Inc (GRNWF) exited the quarter with a strong cash balance of $9 million and no debt, indicating financial stability.
Negative Points
- The company reported an adjusted EBITDA loss of $0.8 million for the quarter, indicating ongoing financial challenges.
- The biogas upgrade market has been challenging, with delays in customer final decisions affecting sales order backlog.
- Greenlane Renewables Inc (GRNWF) had to realign resources and reduce its workforce by 18% to manage costs.
- The sales cycle for biogas upgrading systems is difficult to forecast, creating challenges in projecting results.
- Despite improvements, the company still reported a net loss of $400,000 for the second quarter of 2024.
Q & A Highlights
Q: Can you expand on the current demand dynamics for biogas systems and what might be needed to turn these developments into backlog?
A: Ian Kane, President and CEO, explained that final investment decisions by customers are being delayed, but they are getting closer as financial agreements are becoming more visible. The backlog has several projects nearing finalization, including opportunities in Brazil. Interest rates and securing finance are key factors, but some opportunities are expected to materialize in the short term.
Q: Is there any update on the situation in Brazil, particularly with ZEG, and when might we see more repeat sales?
A: Ian Kane noted that further royalty opportunities are anticipated in the latter half of the year, contingent on closing deals, which can be time-consuming. Based on ZEG's feedback, some deals are expected to close this year.
Q: What actions have been taken to manage costs given the current market challenges?
A: Monty Balderston, CFO, stated that the company has realigned resources and reduced the workforce by 18% post-June 30, aiming to cut costs by $1 million for the remainder of 2024, after accounting for severance costs.
Q: How did the company perform financially in the second quarter of 2024?
A: Monty Balderston reported $14.6 million in revenue, a gross margin of 28%, and an adjusted EBITDA loss of $800,000. The net loss was $400,000, an improvement from a $4.3 million loss in the same quarter of 2023. The company ended the quarter with $9 million in cash and no debt.
Q: What is the status of the sales order backlog and its impact on future projections?
A: The sales order backlog stands at $14.3 million, excluding unrecognized revenue from Airdep subsidiary, aftercare services, and royalties. The asset-light business model allows the company to adapt its cost structure to align with business activity levels.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
