Company Announcements

~Cash balance increased to $15.4 million; Streamlined corporate structure creates new foundation for further EBITDA improvement; Increased disclosure for Airdep reflects strength in business unit performance~

VANCOUVER, BC , Nov. 7, 2024 /CNW/ - Greenlane Renewables Inc. ("Greenlane" or the "Company") (TSX: GRN) (FSE: 52G) (OTC: GRNWF) today announced its financial results for the third quarter ended September 30, 2024. For further information on these results please see the Company's Condensed Consolidated Interim Financial Statements and Management's Discussion and Analysis filed under the Company's profile on SEDAR+ at www.sedarplus.ca. All amounts reported are in Canadian dollars and in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS Accounting Standards") unless otherwise stated.

Third Quarter Highlights from Continuing Operations Include:

• Revenue of $10.5 million;
• Gross profit of $3.4 million, Gross Margin¹ before amortization of $3.6 million (34% of revenue);
• Adjusted EBITDA² loss of $0.2 million;
• Net loss and comprehensive loss of $2.0 million;
• Sales Order Backlog³ of $14.3 million as at September 30, 2024;
• Cash and cash equivalents of $15.4 million and no debt, other than payables resulting from normal course operations, as at September 30, 2024.

"Greenlane's third-quarter performance demonstrates our commitment to diligent completion of biogas upgrading system contracts, disciplined cost management and realizing operational efficiencies, leading to an increase in revenue over the same quarter last year and a substantial improvement in our cash balance and Adjusted EBITDA," said Brad Douville, CEO of Greenlane. "We have adapted and implemented changes to our cost structure appropriate for the opportunities in front of us through a reduction in workforce. Our stated goal of achieving positive Adjusted EBITDA for the full year depended upon signing new biogas upgrading system contracts that have experienced delays associated with our customers' final decisions to start construction. As a consequence, while we maintain our goal of positive Adjusted EBITDA, we have determined that it will not be achieved in 2024."

"As recently announced, we have increased our service business by adding maintenance contracts that generate additional opportunities from Greenlane's large installed customer base. Greenlane continued to expand its impact in RNG markets, completing over 20 biogas upgrading system projects in the last two years, over 145 in total. While uncertainties in customer project starts and competitive pressures continue to affect new biogas upgrader system sales, we are excited about Greenlane's future. We are well-positioned to capitalize on the global push towards decarbonization, and our ongoing projects underscore our commitment to supporting a sustainable energy transition. We're confident that our streamlined, agile organization will continue to make meaningful contributions to the RNG industry."

Monty Balderston, CFO of Greenlane noted, "As of September 30, 2024, we had a cash balance of $15.4 million which was a 70% increase from June 30, 2024 driven by the conversion of accounts receivable to cash. We reported revenue of $10.5 million for Q3 2024, a 10% increase over Q3 2023. Our revenue growth was driven by both system sales and aftercare services. System sales contributed $8.5 million, while aftercare services grew to $2.0 million, reflecting increased demand for our support services. Greenlane's Gross Margin before amortization for the third quarter of 2024 of 34% of revenue, or $3.6 million, benefited from the positive impact of $0.4 million related to the release of expired warranty provisions. Excluding the warranty impact, Gross Margin before amortization is 30%, which is higher than our overall third quarter of 2023 comparative period and second quarter 2024 financial performance as a result of higher aftercare service contribution to the revenue mix."

"Furthermore, as we have completed three upgrader projects in Q3 2024 (10 upgrader projects in the first nine months of 2024) and realized operational efficiencies, together with experiencing delays in new system contract awards, we have reduced our general and administrative cost run rate by over 25%. We incurred a $0.5 million restructuring charge in the third quarter of 2024 related to the workforce reduction. We estimate the changes will result in a $5.0 million annual reduction in general and administrative costs. In addition, we incurred an impairment charge of $1.0 million on our outstanding notes receivable."

"For our shareholders, we saw improvement in our Adjusted EBITDA, reducing our loss to $0.2 million from a $4.4 million loss in Q3 2023. Our net loss and comprehensive loss of $2.0 million was a 61% improvement from a net loss of $5.1 million in Q3 2023. Airdep has become a much more prominent part of our business due to its consistent and profitable growth. Accordingly, we are now including Airdep's sales contracts in the Sales Order Backlog. As of September 30, 2024, Airdep contributed $5.9 million to our total Sales Order Backlog of $14.3 million," added Balderston.

The Market Outlook
The International Energy Agency's ("IEA") Renewables report reflects optimism for the global renewables sector and calls for a worldwide effort to realize the potential of bioenergy and biofuels. For the first time in the IEA renewables market report series, the annual report features a special chapter on renewable fuels, including bioenergy, biogases, hydrogen, and e-fuels. The report says that "global demand for biogases (including both biogas and biomethane) is expected to accelerate, climbing an estimated 30% in the period 2024-2030 to reach almost 2,270 PJ (around 59 bcme) per year in 2030."

The Brazilian market continues to advance its RNG directives with a new regulatory framework for biofuels. Brazil recently passed legislation representing a significant milestone for the biofuels sector in Brazil, including biogas and biomethane. Known as the Future Fuels Law ("Lei dos Combustíveis do Futuro"), the new legislation aims to promote the decarbonization of the country's energy matrix, focusing on sectors such as transportation and mobility. The legislation includes programs like the National Program for the Decarbonization of Natural Gas Producers and Importers and Incentives for Biomethane, which are essential to reducing greenhouse gas emissions and fostering sustainable development in the gas sector.

The growth of the overall RNG industry continues. The Coalition for Renewable Natural Gas (or RNG Coalition) announced a major milestone of 433 RNG-producing facilities now operational across North America. This achievement represents a significant leap from just a year ago, when the North American RNG industry celebrated the establishment of 300 facilities, marking a remarkable 44% growth within just one year. In addition to currently operational facilities, there are 436 facilities in various stages of planning or construction, creating a robust pipeline of forthcoming projects.

Conference Call

The public is invited to listen to the conference call in real time by telephone today, November 7^th, at 2:00 p.m. PT (5:00 p.m. ET). The public is invited to listen to the conference call in real time by telephone. To access the conference call by telephone, please dial: 1-800-717-1738 (North America toll-free) or 1-289-514-5100. Callers should dial in 5-10 minutes prior to the scheduled start time and ask to join the Greenlane Renewables conference call. The company is committed to enhancing its communication initiatives moving forward and is pleased to announce that the upcoming Q3 conference call will include an open forum for discussion with all participants.

Shortly after the conference call, the replay will be archived on the Greenlane Renewables website and replay will be available in streaming audio and a downloadable audio file.

SPECIFIED FINANCIAL MEASURES

Management evaluates the Company's performance using a variety of measures, including "Gross Margin before amortization", "Adjusted EBITDA" and "Sales Order Backlog". The specified financial measures, including non-IFRS Accounting Standards measures and supplementary financial measures should not be considered as an alternative to or more meaningful than revenue, gross profit or net income. These measures do not have a standardized meaning prescribed by IFRS Accounting Standards and therefore they may not be comparable to similarly titled measures presented by other publicly traded companies and should not be construed as an alternative to other financial measures determined in accordance with IFRS Accounting Standards. The Company believes these specified financial measures provide useful information to both management and investors in measuring the financial performance and financial condition of the Company. Management uses these specified financial measures to exclude the impact of certain expenses and income that must be recognized under IFRS Accounting Standards when analyzing consolidated underlying operating performance, as the excluded items are not necessarily reflective of the Company's underlying operating performance and make comparisons of underlying financial performance between periods difficult. From time to time, the Company may exclude additional items if it believes doing so would result in a more effective analysis of underlying operating performance. The exclusion of certain items does not imply that they are non-recurring.

Note 1 - Gross Margin before amortization is a non-IFRS Accounting Standard measure and is defined by the Company as gross profit before amortization of intangible assets and property and equipment.

Note 2 - Adjusted EBITDA is a non-IFRS Accounting Standard measure and is defined by the Company as earnings before interest, taxes, foreign exchange, depreciation and amortization, as well as adjustments for other income (expense), value assigned to Options and RSUs, impairment of intangible assets and goodwill, impairment of notes receivable, restructuring charge, strategic initiatives, transaction costs and non-recurring items.

Reconciliation of net loss and comprehensive loss to Adjusted EBITDA from Continuing Operations:

Note 3 - Greenlane continually provides an update on its contracted system sales, which includes both Greenlane and Airdep branded products ("Sales Order Backlog"). Sales Order Backlog is a supplementary financial measure that refers to the balance of unrecognized revenue from sales contracts. The Company's Sales Order Backlog is a snapshot in time which varies from period-to-period. The Sales Order Backlog increases by the value of new system sales contracts and is drawn down over time as these projects progress towards completion with amounts recognized in revenue (by reference to the stage of completion of each contract). Sales Order Backlog does not include deferred revenue from contracts in connection with aftercare services, given the smaller individual contract values, or royalties.

About Greenlane Renewables
Greenlane is driving change: accelerating the energy transition to a net-zero emissions economy. We are cleaning up two of the largest and most difficult to decarbonize sectors of the global energy system: the natural gas grid and commercial transportation. As a pioneer and leading specialist in biogas upgrading, we have been actively contributing to the decarbonization of our planet for over 35 years. The systems we provide transform biogas generated from organic waste into high-value grid-ready renewable natural gas ("RNG"). Our systems produce clean, low-carbon and carbon-negative RNG from organic waste sources including agriculture (such as dairy and hog manure), water resource recovery facilities, food waste, landfills, and sugar mills. Greenlane is the only biogas upgrading company offering and actively deploying the three main upgrading technologies: waterwash, pressure swing adsorption, and membrane separation, plus proprietary biogas desulfurization technology. Greenlane has delivered over 145 biogas upgrading systems into 19 countries, including some of the largest RNG production facilities in the world, and over 160 biogas desulfurization units. For further information, please visit www.greenlanerenewables.com

Forward Looking Information Advisory –
This news release contains "forward-looking information" within the meaning of applicable securities laws. All statements contained herein that are not historical in nature contain forward-looking information. Forward-looking information can be identified by words or phrases such as "may", "expect", "will", "would", "likely", "could", "plan", "expects" or "is expected to", "believe", "continue to", "remains" or "continually", "is pursuing", "proposed", "aiming to" or the negative of these terms, or other similar words, expressions and grammatical variations thereof, or statements that certain events or conditions "may" or "will" happen or that current events or conditions will continue or be repeated. The forward-looking information contained in this press release, includes, but is not limited to: that the addition of maintenance contracts to the service business will generate additional opportunities from Greenlane's installed customer base; management's estimates that workforce reduction will result in a $5.0 million annual reduction in general and administrative costs; IEA's Renewables report forecasts that global demand for biogases is expected to accelerate by 30% in the period 2024-2030; that the Brazilian market continues to advance its RNG directives with new regulatory framework for biofuels and the continuing overall growth of RNG and the renewable RNG industry creating a robust pipeline of forthcoming projects. The forward-looking information contained herein is made as of the date of this press release and is based on assumptions management believes to be reasonable at the time such statements were made, including management's perceptions of future growth, that regulatory developments in Canada, the US and other jurisdictions in which the Company conducts business will be favourable for the RNG industry; results of operations, operational matters, historical trends, current conditions and expected future developments, the state of competition in the RNG industry and competitors' capabilities, that favourable legislative initiatives will have a positive impact on the pace of growth and the availability of financing in the RNG industry and will generate sales opportunities for Greenlane, as well as other considerations that are believed to be appropriate in the circumstances. While management considers these assumptions to be reasonable based on information currently available to management, there is no assurance that such expectations will prove to be correct. By their nature, forward-looking information is subject to inherent risks and uncertainties that may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate, that assumptions may not be correct and that objectives, strategic goals and priorities will not be achieved. A variety of factors, including known and unknown risks, many of which are beyond Greenlane's control, could cause actual results to differ materially from the forward-looking information in this press release. Such factors include, without limitation risks relating to: that customers' final decisions to commence construction may be delayed; the Company's ability to win new contracts, and the timing and profitability of new contracts; the ability to realize anticipated costs savings; management's efforts to monitor the Sales Order Backlog and take proactive steps to manage the business to achieve the desired outcomes; anticipated legislative changes and their implications for biogas upgrading equipment and the ability of legislation to affect the pace of growth and the flow of capital into the RNG industry; the plans, estimates and intentions of third parties in respect of intended transactions and activities to transition to clean energy; Greenlane's financial performance, and impediments in delivering and advancing projects to be able to timely realize revenue reducing the sales backlog; RNG initiatives and projects of natural gas utilities being changed, delayed or canceled, the state of competition in the RNG industry; Greenlane's position as a leading specialist in biogas upgrading and a trusted partner in the biogas upgrading industry. Additional risk factors can also be found in the Company's Management Discussion and Analysis, its Annual Information Form and in its base shelf prospectus dated January 4, 2024, all of which have been filed under the Company's SEDAR+ profile at www.sedarplus.ca. Readers are cautioned not to put undue reliance on forward-looking information. The Company undertakes no obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by applicable law. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement.

FINANCIAL OUTLOOK INFORMATION – This news release contains "financial outlook information" regarding Greenlane's prospective revenue and results, which is subject to the same assumptions, risk factors, limitations, and qualifications as set forth in the above. Revenue and other estimates contained in this news release were made by Greenlane management as of the date of this news release and are provided for the purpose of describing anticipated changes, and are not an estimate of profitability or any other measure of financial performance. Investors are cautioned that the financial outlook information contained in this news release should not be used for purposes other than for which it is disclosed herein. The Company's revenues are largely derived from a relatively small number of 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 contracts contain termination provisions that allow the customer to terminate with no penalty or with minimum prescribed threshold payments based on the length of time since the contract was entered into. 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 COMPANY QUALIFIES ALL THE FORWARD LOOKING STATEMENTS AND FINANCIAL OUTLOOK INFORMATION CONTAINED IN THIS NEWS RELEASE BY THE FOREGOING CAUTIONARY STATEMENTS.

Neither the TSX Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Exchange) accepts responsibility for the adequacy or accuracy of this release or has in any way approved or disapproved of the contents of this news release.

SOURCE Greenlane Renewables Inc.