Q1 2026 Greenlane Renewables Inc Earnings Call

May 14, 2026

Speaker #1: Bix video conference. My name is Darren Seed, President of Insight Capital Markets, responsible for investor relations at Greenlane. I'm joined today by Brad Douville, Greenlane's Chief Executive Officer and Stephanie Mason, Greenlane's Chief Financial Officer, who will begin with prepared remarks followed by a Q&A, which I will moderate.

Darren Seed: video conference. My name is Darren Seed, President of Incite Capital Markets, responsible for investor relations at Greenlane. I'm joined today by Brad Douville, Greenlane's Chief Executive Officer, and Steph, Greenlane's Chief Financial Officer. We'll begin with prepared remarks followed by a Q&A, which I will moderate. Before beginning our formal remarks, we'd like to remind listeners that today's discussion may contain forward-looking statements that reflect current views with respect to future events. Any such statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected in these forward-looking statements. Greenlane Renewables does not undertake to update any forward-looking statements except as may be required by applicable laws. Listeners are urged to review the full discussion of risk factors in the company's annual information form, which has been filed with Canadian securities regulators.

Speaker #1: Before beginning our formal remarks, we'd like to remind listeners that today's discussion may contain forward-looking statements that reflect current views with respect to future events.

Speaker #1: Any such statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected in these forward-looking statements. Greenlane Renewables does not undertake to update any forward-looking statements except as may be required by applicable laws.

Speaker #1: Listeners are urged to review the full discussion of risk factors in the company's annual information form. Which has been filed with Canadian Securities Regulators.

Speaker #1: Please feel free to submit any questions you may have through our investor email address at ir@greenlanerenewables.com. Now, over to Brad.

Darren Seed: Please feel free to submit any questions you may have to our investor email address at ir@greenlanerenewables.com. Now, over to Brad.

Speaker #2: Thank you, Darren. Hello, everyone. Thanks for joining today. So in the next slide, what I'll do is I will Stephanie's going to get into the numbers in just a moment, but let's let me set the stage.

Brad Douville: Thank you, Darren. Hello, everyone. Thanks for joining today. On the next slide, what I'll do is, Stephanie's going to get into the numbers in just a moment, but let me set the stage to begin with. You've heard me say this many times, we have three strategic initiatives for the company. They're underpinned by financial discipline and Adjusted EBITDA growth. Our first strategic initiative is continuing sales growth in our most profitable areas of our business. In Q1, we saw strong gross margin contribution, particularly from parts and service and biogas desulfurization. That's going well according to plan. Our second strategic initiative is to reconfigure our upgrading systems business area. Obviously, we're using the gross margin contribution from that while we work through the reconfiguration of our core upgrading business. What does that mean?

Speaker #2: To begin with, and you've heard me say this many times, we have three strategic initiatives. For the company, they're underpinned by financial discipline, and adjusted EBITDA, growth.

Speaker #2: Our first strategic initiative is continuing sales growth in our most profitable areas of our business. In Q1, we saw strong gross margin contribution, particularly from parts and service and biogas to sulfurization.

Speaker #2: So that's going well, according to plan. Our second strategic initiative is to reconfigure our upgrading systems business area. So obviously, we're using the gross margin contribution from that while we work through the reconfiguration of our core upgrading business.

Speaker #2: So what does that mean? So that means we ramp down or we complete the ramp down of our legacy low margin contracts, and then we ramp back up centered on proprietary standard products and royalty revenue.

Brad Douville: That means we ramp down, or we complete the ramp down of our legacy low-margin contracts, and then we ramp back up centered on proprietary standard products and royalty revenue. We'll also undertake our new contracts. They'll be structured for lower risk, higher margin, and lower revenue per system with lower overall cost for customers. Let me pause for a minute. There's a lot there. Let me unpack that for you. We are doing a couple things. One is royalty revenue. I'll come back to that in a bit. As it relates to third-party components, at the top, the upper image, that is the Greenlane proprietary products, before system integration. Greenlane is responsible for system integration. The lower image shows what it looks like after system integration, so there's a number of third-party components in here.

Speaker #2: We'll also undertake our new contracts. They'll be structured for lower risk, higher margin, and lower revenue per system, with lower overall cost for customers.

Speaker #2: Let me pause for a you. So we are doing a couple of things. So one is royalty revenue. I'll come back to that in a bit.

Speaker #2: But as it relates to third-party components, at the top, the upper image, that is the Greenlane proprietary products. Before system integration, Greenlane is responsible for system integration the lower image shows what it looks like after system integration.

Speaker #2: So there's a number of third-party components in here. So what we do going forward to create the situation of lower risk, it does result in some lower revenue per system, but it's higher margin, and it's an overall lower cost for the customer.

Brad Douville: What we do going forward to create the situation of lower risk, it does result in some lower revenue per system, but it's higher margin, and it's an overall lower cost for the customer. We do that by eliminating the low-margin revenue associated with the modules for which Greenlane is not design responsible. Those third-party components, we establish a relationship between the customer and the third party so that direct invoicing can occur. Let me explain now the third strategic initiative. That's one and two. Number three, then we add step change profitable growth potential with Cascade LS. That goes across all the business areas. We complete the plan as of now, complete final development, commence manufacturing in Brazil by the end of 2026, this year, and then also this year, we'll be establishing our manufacturing plan to serve the North American market. Next.

Speaker #2: We do that by eliminating the low margin revenue associated with the modules for which Greenlane is not designed responsible. So those third-party components, we establish a relationship between the customer and the third party so that direct invoicing can occur.

Speaker #2: Let me explain now the third strategic initiative. So that's one and two. Number three, then we add step change profitable growth potential with Cascade LF.

Speaker #2: That goes across all the business areas. So we complete the plan as of now, complete final development, commence manufacturing in Brazil by the end of 2026, this year.

Speaker #2: And then also this year, we'll be establishing our manufacturing plan to serve the North American market. Next. I've also talked about our key strategic success criteria.

Brad Douville: I've also talked about our key strategic success criteria. We always come back to these four criteria often. Today, I want to focus in on the fourth one, partnerships. Why is that important? Well, we believe that collaborating with leading industry partners who bring complementary expertise, focus, and value helps us deliver complete solutions, extend market reach, and allows us to better serve our customers. The partnership with Panasonic that we announced earlier this week is to establish volume production of Greenlane's Cascade LS and MS proprietary standard product lines in Brazil, and it brings not only Panasonic's manufacturing expertise, but also the strength of Panasonic's balance sheet to support sales growth. Next slide. We press released this earlier this week, but let me just say a few words, the summary version of what we announced. Firstly, the facility location.

Speaker #2: We always think about we come back to these four criteria often. Today, I want to focus in on the fourth one. Partnerships. So why is that important?

Speaker #2: What we believe that collaborating with leading industry partners who bring complementary expertise focus and value helps us deliver complete solutions, extends market reach, and allows us to better serve our customers.

Speaker #2: The partnership with Panasonic that we announced earlier this week is to establish volume production of Greenlane's Cascade LF and MS proprietary standard product lines in Brazil and it brings not only Panasonic's manufacturing expertise, but also the strength of Panasonic's balance sheet to support sales growth.

Speaker #2: Next slide. So let me just we press release this earlier this week, but let me just say a few words the summary version of what we announced.

Speaker #2: So firstly, the facility location. This is an existing production facility that Panasonic has in Brazil. It's in San José do Campos. It's in the Brazilian state of São Paulo.

Brad Douville: It's an existing production facility that Panasonic has in Brazil. It's in São José dos Campos. It's in the Brazilian state of São Paulo. Under the agreements, Panasonic has been granted a technology license for fabricating the products in Brazil, with a number of responsibilities. Those responsibilities include the cost and activities related to the facility modifications necessary to produce the Greenlane products, for procuring and installing the tooling, and then very importantly, providing the necessary working capital and advanced payment assurances to meet customer requirements. Panasonic's initial investment is in the range of CAD 2 to 3 million or BRL 8 to 10 million. Under the arrangement, Greenlane retains responsibility for product design, management of the supply chain, including supplier selection, supplier quality assurance, also sales and marketing, and commissioning and servicing of the products. Next slide. Why Brazil?

Speaker #2: And under the agreements, Panasonic has been granted a technology license for fabricating the products in Brazil. With a number of responsibilities. So those responsibilities include the cost and activities related to the facility modifications necessary to produce the Greenlane products.

Speaker #2: For procuring and installing the tooling. And then very importantly, providing the necessary working capital and advance payment assurances to meet customer requirements. So Panasonic's initial investment is in the range of $2 to $3 million Canadian or $8 to $10 million Brazilian reais.

Speaker #2: Under the arrangement, Greenlane retains responsibility for product design, management of the supply chain, including supplier selection, supplier quality assurance, also sales and marketing, and commissioning and servicing of the products.

Speaker #2: Next slide. So why Brazil? So we've talked about Brazil being our launch market for Cascade LF. With Cascade LF comes along Cascade MS for the larger size digester projects.

Brad Douville: We've talked about Brazil being our launch market for Cascade LF. With Cascade LF comes along Cascade MS for the larger size digester projects. In Brazil, they have a vast agricultural sector, also a large landfill sector that produce a lot of biogas. It's been long developed for biogas to power. It's quickly switching from biogas to biomethane. Today, in Brazil, most of the biomethane is produced from landfill gas, probably about 80%. There's helpful government support as well with initiatives. The first one is the government aims to replace all dumps with landfills equipped with biogas production. That's one government initiative. The other one is the country's new Fuel of the Future law. That requires that natural gas importers and suppliers in Brazil have to reduce their greenhouse gas emissions with biomethane, starting at 1% this year.

Speaker #2: In Brazil, they have a vast agricultural sector, but also a large landfill sector that produce a lot of biogas. And it's been long developed for biogas to power.

Speaker #2: It's quickly switching from biogas to biomethane. Today, in Brazil, most of the biomethane is produced from landfill gas, probably about 80%. And there's helpful government support as well with initiatives.

Speaker #2: So the first one is the government aims to replace all dumps with landfills equipped with biogas production. So that's one government initiative. The other one is the country's new fuel of the future law.

Speaker #2: That requires that natural gas importers and suppliers in Brazil have to reduce their greenhouse gas emissions with biomethane starting at 1% this year and that's prorated because it's coming into effect mid-year.

Brad Douville: That's prorated because it's coming into effect midyear. It climbs to 10% by 2034. If we back up and look at the projections, that's roughly a 7X increase to 2035, and that's approximately 21% compound annual growth rate in the market, in the demand side of biomethane. Hopefully that sets the stage. I'll let Steph take you through the numbers.

Speaker #2: And it climbs to 10% by 2034. So if we back up and look at the projections, that's roughly a 7x increase to 2035. And that's approximately 21% annual compound annual growth rate in the market, in the demand side of biomethane.

Speaker #2: So hopefully that sets the stage. I'll let Steph take you through the numbers.

Speaker #1: Thanks, Brad. And good afternoon, everyone. As a reminder, all figures are in Canadian dollars unless otherwise stated. We delivered solid financial results for our first quarter this year with $9.5 million in revenue and a gross margin excluding amortization of 43%.

Stephanie Mason: Thanks, Brad, and good afternoon, everyone. As a reminder, all figures are in CAD unless otherwise stated. We delivered solid financial results for our Q1 this year with CAD 9.5 million in revenue and a gross margin excluding amortization of 43%, compared with CAD 7 million and 40% in the same period last year. A 36% increase in year-over-year revenue at higher gross margins helped improve our Adjusted EBITDA loss to CAD 0.8 million from CAD 1.1 million Adjusted EBITDA loss in Q1 2025. As Brad noted, we are also investing in the final development and production start readiness of our new Cascade LF product line, and our operating expenses in Q1 2026 reflected these investments accordingly. Greenlane's R&D expense increased to CAD 0.8 million in Q1 2026 compared with CAD 0.3 million in Q1 2025.

Speaker #1: Compared with $7 million and 40% in the same period last year. The 36% increase in year-over-year revenue at higher gross margins helped improve our adjusted EBITDA loss to 0.8 million from 1.1 million adjusted EBITDA loss in Q1 of 2025.

Speaker #1: As Brad noted, we are also investing in the final development and production start readiness of our new Cascade LF product line and are operating expenses in Q1 2026 reflected these investments accordingly.

Speaker #1: Greenlane's research and development expense increased to 0.8 million in Q1 2026 compared with 0.3 million in Q1 2025. The general and administrative expenses of $3.9 million in Q1 2026 in comparison to $3.5 million in Q1 2025, mainly represent an increase in operational staffing and preparation for the sale and production of Cascade LF later this year.

Stephanie Mason: The general and administrative expenses of CAD 3.9 million in Q1 2026 in comparison to CAD 3.5 million in Q1 2025 mainly represent an increase in operational staffing in preparation for the sale and production of Cascade LF later this year. We've maintained a solid balance sheet, ending the quarter with a cash balance of CAD 13.5 million, no debt, and a sales order backlog of CAD 31.5 million. The movement in the cash balance from 31 December 2025 primarily reflects the movement in non-cash working capital and the final payment of the contingent earn-out. As we flip to the next slide, Greenlane Renewables does not present biogas desulfurization results separately from upgrading systems. They're both included and combined in system sales.

Speaker #1: We've maintained a solid balance sheet ending the quarter with a cash balance of $13.5 million no debt and a sales order backlog of $31.5 million.

Speaker #1: The movement in the cash balance from December 31, 2025, primarily reflects the movement in non-cash working capital and the final payment of the contingent earn-out.

Speaker #1: As we flip to the next slide, Greenlane does not present biogas de-sulfurization results separately from upgrading systems. They're both included and combined in system sales.

Speaker #1: But if we look back on our pro forma basis, you can see that biogas de-sulfurization, which was primarily our regenerative H2S removal, saw a three-year growth CAGR of revenue of 27% and it has an average gross margin over those three years of roughly 50%.

Stephanie Mason: If we look back on a pro forma basis, you can see that biogas desulfurization, which was primarily our regenerative H2S removal, saw a three-year growth CAGR of revenue of 27%, and it has an average gross margin over those three years of roughly 50%. If you look to parts and service, its CAGR for revenue is 34% over that same period and has a gross margin of around 40%. If you look at our royalty, it has a smaller dollar value of revenue contribution, but an outsized contribution on margin because its gross margin is sitting around 86%. If you look at our upgrading system, it's been seeing a decline in revenue over those three years, and it has an average gross margin of around 20%.

Speaker #1: If you look to parts and service, its CAGR for revenue is 34% over that same period and it has a gross margin of around 40%.

Speaker #1: Now, if you look at our royalty, it has a smaller dollar value of revenue contribution, but an outsized contribution on margin because its gross margin is sitting around 86%.

Speaker #1: And then if you look at our upgrading systems, it's been seeing a decline in revenue over those three years. And it has an average gross margin of around 20%.

Speaker #1: So as Brad noted above, Greenlane has been deliberately ramping down its legacy low margin upgrading system contracts to ramp back up centered on proprietary standard products and royalty revenues.

Stephanie Mason: As Brad noted above, Greenlane has been deliberately ramping down its legacy low-margin upgrading system contracts to ramp back up centered on proprietary standard products and royalty revenue. We look forward to keeping you appraised of our progress. With that, let's go over to you, Darren, for the Q&A.

Speaker #1: We look forward to keeping you appraised of our progress. And with that, let's go over to you, Darren, for the Q&A.

Speaker #2: So looking at today's negative adjusted EBITDA of approximately $800,000, where can we see R&D expenses increase significantly year over year? How should investors think about R&D leading up to Cascade LF's commercialization?

Darren Seed: Looking at today's Adjusted EBITDA of approximately CAD -800,000, where can we see R&D expenses increase significantly year over year? How should investors think about R&D leading up to Cascade LF's commercialization?

Speaker #1: Yeah, so if you looked at our last year's results, R&D started increasing in the second half of last year. We ended with Q4 of around $700,000.

Stephanie Mason: If you looked at our last year's results, R&D started increasing in H2 of last year. We ended with Q4 of around CAD 700,000. You can see in Q1 of this year, we're at around CAD 800,000. We'll continue to make investments throughout the year. We'll probably be roughly at the same rate as what you've seen in the last couple of quarters. Another thing that I want to highlight is that if you're looking at our Adjusted EBITDA results, if you're to exclude R&D from our Adjusted EBITDA, we're EBITDA neutral, which means that without any contribution from Cascade LF, we're sitting in an EBITDA neutral position.

Speaker #1: And then you can see in Q1 of this year, we're at around $800,000. So we're continuing to make investments throughout the year. We'll probably be roughly at the same rate as what you've seen in the last couple of quarters.

Speaker #1: But another thing that I want to highlight is that if you're looking at our adjusted EBITDA results, if you're to exclude R&D from our adjusted EBITDA, we're EBITDA neutral, which means that without any contribution from Cascade LF, we're sitting in an EBITDA neutral position.

Speaker #1: So as Brad was noting, as we get Cascade LF in production, which is a target for later this year, you have the potential to see that growth in our bottom line kind of as soon as that product gets online.

Stephanie Mason: As Brad was noting, as we get Cascade LF in production, which is a target for later this year, you have the potential to see that growth in our bottom line kind of as soon as that product gets online.

Speaker #2: Okay, thank you. Do you anticipate needing additional capital to support the Brazil ramp of global expansion?

Darren Seed: Okay. Thank you. Do you anticipate needing additional capital to support the Brazil ramp of global expansion?

Speaker #1: So no, not at this time. So as you probably have seen, we announced our partnership with Panasonic earlier this week. And with that, they're investing in the facility modification costs.

Stephanie Mason: No, not at this time. As you probably have seen, we announced our partnership with Panasonic earlier this week, and with that, they're investing in the facility modification costs. They're investing in tooling, production equipment, and things needed to set up the manufacturing facility. You also will note, if you looked at our last year's results, we did receive some grants. That's still an avenue that we're pursuing, we'll see if that amounts to anything this year.

Speaker #1: They're investing in tooling, production equipment, and things needed for to set up the manufacturing facility. You also will note if you looked at our last year's results, we did receive some grants.

Speaker #1: That's still an avenue that we're pursuing. So we'll see kind of if that amounts to anything this year.

Speaker #2: Great. Now, what can you say about the Cascade LF launch activities and your plans this year to secure customer orders?

Darren Seed: Great. Now, what can you say about the Cascade LS launch activities and your plans this year to secure customer orders?

Speaker #3: Yeah, let me take that one, Darren. So the we're in the sales pipeline process right now with the products. Mainly focused on Cascade LF.

Brad Douville: Yeah, let me take that one, Darren. We're in the sales pipeline process right now with the products, mainly focused on Cascade LS, educating our customers on the new technology and what we're bringing to market. We're active at industry conferences. We just participated in one last month, a big one in Brazil. We have a large one next week in Detroit. It's in various locations in the US, this year it's in Detroit. We've got a number of opportunities at various stages in our sales pipeline process, and going forward, we'll be announcing those, because they'll be significant as they come in the door.

Speaker #3: Educating our customers on the new technology and what we're bringing to market. We're active at industry conferences. We just participated in one last month, a big one in Brazil.

Speaker #3: We have a large one next week in Detroit. It's in various locations in the US this year. It's in Detroit. So we've got a number of opportunities at various stages in our sales pipeline process.

Speaker #3: And going forward, we'll be announcing those because we'll be significant as they come in the door.

Speaker #2: Great. Thanks, Brad. And how should investors think about the economics of the Panasonic licensing agreement? What does Greenlane capture in terms of margin, royalties, or what are capital requirements?

Darren Seed: Great. Thanks, Brad. How should investors think about the economics of the Panasonic licensing agreement? What does Greenlane capture in terms of margin, royalties, or what are capital requirements?

Speaker #3: Yeah, I guess I'll start off by saying firstly, we're very proud of this partnership that we put together with Panasonic. As you can imagine, working with large multinational companies who have requirements for diligence and internal procedures to navigate through that, it's not easy.

Brad Douville: Yeah, I guess I'll start off by saying, firstly, we're very proud of this partnership that we put together with Panasonic. As you can imagine, working with large multinational companies who have requirements for diligence and internal procedures, to navigate through that, it's not easy. It's been a real pleasure working with the team at Panasonic to be able to put this together. We've been at it, as you can imagine, for quite some time to be able to reach this milestone for us. Now, all that said, going forward in terms of the question that you've asked, how does it reflect in our financials? I mentioned that there's the royalty component of this, or, sorry, the technology license, which results in a royalty. Steph just showed what royalty has looked like in our business in the past.

Speaker #3: It's been a real pleasure working with the team at Panasonic to be able to put this together. And we've been at it, as you can imagine, for quite some time to be able to reach this milestone for us.

Speaker #3: Now, all that said, going forward in terms of the question that you've asked, how does it reflect in our financials? I mentioned that there's the royalty component of this, or sorry, the technology license, which results in a royalty.

Speaker #3: Steph just showed what royalty has looked like in our business in the past. So that can be an indicator of what it might look like going forward.

Brad Douville: That can be an indicator of what it might look like going forward. That's why we've structured a significant portion of this related to royalty revenue, because we see what that looks like for us. In other words, we should expect to see per unit lower revenue, but with greater gross margin contribution. That's indicative of the royalty model. Additionally, there'll be revenue opportunity for Greenlane on other aspects. The field site activities, commissioning, field service, as well as the system integration component of it that I mentioned earlier that Greenlane continues to take responsibility for. There'll be a number of ways to see revenue contribution from any given Cascade LS or Cascade MS system sale related to our relationship and partnership with Panasonic.

Speaker #3: So that's why we've structured a significant portion of this related to royalty revenue because we see what that looks like for us. So in other words, we should expect to see per unit lower revenue, but with greater gross margin contribution.

Speaker #3: So that's indicative of the royalty model. And then additionally, we'll be making there'll be revenue opportunity for Greenlane on other aspects. So the field site activities, so commissioning, field service, as well as the system integration component of it that I mentioned earlier, that Greenlane continues to take responsibility for.

Speaker #3: So there'll be a number of ways to see revenue contribution from any given Cascade LF or Cascade MS system sale related to our relationship and partnership with Panasonic.

Speaker #2: Great. Thanks, Brad. And thanks, Stephanie. And again, please feel free to submit any questions you may have through our investor email address. At ir@greenlanerenewables.com.

Darren Seed: Great. Thanks, Brad, and thanks, Stephanie. Again, please feel free to submit any questions you may have to our investor email address at ir@greenlanerenewables.com. Thanks so much, everyone.