Greenlane Renewables Inc.

good afternoon ladies and gentlemen welcome to the green lane renewables first quarter 2026 video conference my name is darren seed president of inside capital markets responsible for investor relations at green lane i'm joined today by brad deville green lane's chief executive officer and stephanie mason green lane'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. Green Lane 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 please feel free to submit any questions you may have through our investor email address at ir greenlanerenewables.com now over to brad thank you darren hello everyone thanks for joining today

So on the next slide, what I'll do is I will, Stephanie's going to get into the numbers in just a moment, but let me set the stage 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. 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. 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. 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. 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. So we are doing a couple of things. So one is royalty revenue. I'll come back. I'll come back to that in a bit. But as it relates to third party components at the top, the upper image, that is the Greenland proprietary products before system integration. Greenland 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. 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. We do that by eliminating the low margin revenue associated with the modules for which Greenlane is not design responsible. So 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. So that's one and two. Number three, then we add step change profitable growth potential with Cascade LF. 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. 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. 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? Well, we believe that collaborating with leading industry partners who bring complimentary expertise, focus, and value helps us deliver complete solutions, extends 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 Greenland'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. 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. So firstly, the facility location, it's an existing production facility that Panasonic has in Brazil. It's in San Jose do Campos. It's in the Brazilian state of Sao Paulo. 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 Green Lane products. 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 investments is in the range of 2 to 3 million Canadian or 8 to 10 million Brazilian reais. 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. So why Brazil? So we've talked about Brazil being our launch market for Cascade LF. With Cascade F comes along Cascade MS for the larger size digester projects. 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. 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 there's there's helpful government support as well with with initiatives. So the first one is the government aims to replace all dumps with landfills equipped with biogas production. So that's that's one government initiative. The other one is the the country's new fuel 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, and that's prorated because it's coming into effect mid-year, 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. So hopefully that sets the stage. I'll let Steph take you through the numbers.

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%, compared with $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 $0.8 million, from $1.1 million adjusted EBITDA loss in Q1 of 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 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. 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. The movement in the cash balance from December 31st, 2025 primarily reflects the movement in non-cash working capital and the final payment of the contingent earner. As we flip to the next slide. GreenLane does not present biogas desulfurization results separately from upgrading systems. They're both included and combined in system sales. But if we look back on our pro forma basis, you can see that biogas desulfurization, which is primarily our regenerative H2S removal, saw a three-year growth KGAR 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 KGAR for revenue is 34% over that same period and has a gross margin of around 40%. 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%. 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%. 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. We look forward to keeping you appraised of our progress. And with that, let's go over to you, Darren, for the Q&A.

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?

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, 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. um 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 from our adjusted ebitda we're even in neutral which means that without any contribution from cascade lf we're sitting in an eba neutral position 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.

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

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, 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. So we'll see kind of if that amounts to anything this year.

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

Yeah, let me take that one, Darren. So we're in the sales pipeline process right now with the products, mainly focused on Cascade LF, educating our customers on the new technology, 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. So 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.

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?

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 is it's not easy. 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. 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. So that can be an indicator of what it might look like going forward. 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 contributions so that's indicative of the royalty model and then additionally we'll be making uh there'll be revenue opportunity for green lane 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 green lane continues to take responsibility for so there'll be a number of ways to uh to see revenue contribution from any given Cascade LF or Cascade MS system sale related to our relationship and partnership with Panasonic.

Great. Thanks, Brad. Thanks, Stephanie. And again, please feel free to submit any questions you may have through our investor email address at ir at greenlanerenewables.com. Thanks very much, everyone.