Greenlane Renewables (TSE:GRN) said first-quarter revenue rose year over year as higher-margin parts and service and biogas desulfurization work helped offset the continued wind-down of legacy low-margin upgrading system contracts.
On the company’s first-quarter 2026 conference call, Chief Financial Officer Stephanie Mason said Greenlane generated revenue of CAD 9.5 million, up 36% from CAD 7.0 million in the same period last year. Gross margin excluding amortization was 43%, compared with 40% in Q1 2025.
Greenlane Emphasizes Higher-Margin Business Lines
Chief Executive Officer Brad Douville said the quarter’s results reflected Greenlane’s three strategic priorities: growing its most profitable business areas, reconfiguring its upgrading systems business, and adding growth potential through Cascade LF.
Douville said the company continued to drive “strong gross margin contribution” from parts and service and biogas desulfurization during the quarter. Mason provided additional context on the company’s business mix, saying that, on a pro forma basis, biogas desulfurization revenue had grown at a 27% compound annual growth rate over a three-year period, with gross margins around 50%.
Parts and service achieved a 34% compound annual growth rate over the same period, with gross margins around 40%, Mason said. Royalty revenue has represented a smaller contribution to revenue, but has delivered gross margins around 86%. By contrast, biogas upgrading systems revenue has been declining and has produced gross margins around 20%, she said.
Douville said Greenlane is deliberately ramping down legacy, low-margin upgrading system contracts and intends to ramp back up with “proprietary standard products and royalty revenues.” He said new contracts are expected to be structured for lower risk, higher margin and more revenue per system, while reducing overall costs for customers.
Panasonic Partnership to Support Brazil Production
A key focus of management’s prepared remarks was Greenlane’s recently announced partnership with Panasonic to establish volume production of the company’s Cascade LF and Cascade MS proprietary standard product lines in Brazil.
Douville said the facility will be located in São José dos Campos in the state of São Paulo. Under the agreement, Panasonic has been granted a technology license to fabricate the products in Brazil. Panasonic will be responsible for modifying its existing facility, procuring and installing tooling and production equipment, and providing working capital and advance payment assurances to meet customer requirements.
Greenlane will retain responsibility for product design, supply chain management, supplier selection and supplier quality assurance, as well as marketing, sales, commissioning and servicing of the products.
During the Q&A portion of the call, Mason said Greenlane does not anticipate needing additional capital at this time to support the Brazil ramp or global expansion. She pointed to Panasonic’s responsibility for manufacturing-related costs, including facility modifications, tooling and production equipment. Mason also said the company has received some funding to date and is pursuing other opportunities.
Brazil Identified as Launch Market for Cascade LF
Douville said Brazil is Greenlane’s launch market for Cascade LF, citing the country’s agricultural sector and significant biomethane potential. He said most of Brazil’s current biomethane production comes from landfills, which aligns with Greenlane’s focus on Cascade LF as a next-generation landfill gas upgrading product.
Management also pointed to potential demand from sugar mills and vinasse, as well as government initiatives. Douville said one Brazilian government objective is to replace dumps with landfills equipped for biogas production. He also cited the country’s Fuel of the Future law, which includes biomethane quota obligations for natural gas distributors and importers.
Douville said the obligation starts at 1% prorated in 2026 and rises to 10% in 2034. He described that as a sevenfold increase from 2023 levels, equivalent to an approximately 21% compound annual growth rate over the next decade.
Expenses Rise as Cascade LF Development Continues
Mason said research and development expense increased to CAD 0.8 million in Q1 2026 from CAD 0.3 million in Q1 2025. In response to an investor question, she said R&D was a major focus in the first quarter and will remain so for the rest of the year as the company works toward Cascade LF production later in 2026.
General and administrative expenses were CAD 3.9 million, compared with CAD 3.5 million in the prior-year period. Mason said the increase mainly reflected additional operational staffing in preparation for Cascade LF sales and production.
Greenlane ended the quarter with CAD 13.5 million in cash, no debt and a sales order backlog of CAD 31.5 million. Mason said the change in cash from Dec. 31, 2025 primarily reflected non-cash working capital movements and the final payment of a contingent earn-out.
Management Discusses Sales Pipeline and Economics
Asked about Cascade LF launch activities, Douville said customer engagement is ongoing, with opportunities in the sales pipeline at different stages. He said Greenlane has been attending industry conferences in Brazil and meeting with key customers, while also introducing the product to North America, including through a conference in Detroit.
On the economics of the Panasonic agreement and the company’s Brazil model, Douville said the arrangement should be viewed more broadly than just the Panasonic component. He said the technology license with Panasonic means royalty revenue for Greenlane.
Douville also said Greenlane is changing how third-party system modules are handled in Brazil. Under the new approach, customers will be invoiced directly by third-party vendors, removing low-margin revenue associated with modules for which Greenlane is not design responsible. He said the model transitions Greenlane toward higher-margin revenue, largely but not entirely from royalties, with additional revenue opportunities from commissioning, field service and full-system integration.
About Greenlane Renewables (TSE:GRN)
Greenlane is driving change: accelerating the energy transition. 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 global specialist in biogas desulfurization and upgrading, we have been actively contributing to the decarbonization of our planet for over 35 years with more than 355 systems supplied into 28 countries. We transform biogas generated from organic waste into high-value grid-ready renewable natural gas (‘RNG’) from a wide range of sources such as landfills, sugar mills, dairy farms, wastewater, and food waste.
