Greenlane Renewables: Navigating RNG's Stormy Seas with a Full Tank

The renewable natural gas (RNG) market is on a collision course with explosive global demand, driven by climate mandates, corporate net-zero pledges, and subsidies. Amid this tidal wave, Greenlane Renewables (NASDAQ: GRNL) faces near-term turbulence in its Q1 2025 results—but beneath the choppy surface, a clear picture emerges of a company primed to dominate the high-margin segments of this $50+ billion opportunity.

Financial Resilience in a Volatile Quarter
While Greenlane reported a Q1 2025 adjusted EBITDA loss of $1.1 million—a 450% widening from Q1 2024’s $0.2 million loss—the company’s balance sheet remains an anchor of stability. With $16.2 million in cash reserves unchanged since year-end 2024 and a $21.2 million sales backlog, Greenlane is positioned to weather delays in project execution or macroeconomic headwinds. The backlog, though down slightly from $21.8 million in Q4 2024, reflects contracted system sales for future revenue recognition—a key metric for investors, as it excludes lucrative parts/service and licensing streams.

The critical near-term catalyst? A $3.3 million deferred revenue recognition from its ZEG Biogás licensing deal, set to hit Q2 books with a 40% gross margin. This single transaction alone could swing Q2 results meaningfully upward, potentially erasing Q1’s EBITDA loss entirely. Management’s focus on trimming overhead—G&A expenses down 30% year-over-year—adds to the argument that profitability is within sight.

Brazil’s Biomethane Bonanza: Greenlane’s Secret Weapon
The company’s geographic and technological bets are paying off. Brazil’s Fuel for the Future law, which mandates a 20-fold increase in biomethane production by 2030, is a goldmine for Greenlane’s patented biogas desulfurization systems. These systems are critical to Brazil’s landfill-based RNG projects, which account for 60% of the country’s biomethane potential.

Moreover, Greenlane’s newly filed patents for next-gen landfill gas upgrading technology—targeting 95% methane recovery rates—position it to capture premium margins in a market where operational efficiency defines winners. In North America, the company’s licensing deals and parts/service business (already contributing 40% of gross margin) are further insulated from macroeconomic volatility.

Risks? Yes. But Mitigation is Built In
Skeptics will point to risks: U.S. tariffs on imported components, project delays, and reliance on large biogas contracts. But Greenlane is countering these with proactive moves. Its plan to localize manufacturing in Brazil and the U.S. by late 2025 eliminates tariff exposure and supply chain bottlenecks. Meanwhile, licensing agreements—which generate recurring revenue without upfront capital—are now prioritized over large, lumpy system sales.

The stock’s current valuation—trading at just 2.1x its 2024 revenue run rate—reflects investor skepticism about near-term execution. But this discount ignores the compounding tailwinds: Brazil’s policy megaphone, North American RNG tax credits, and the ZEG payment’s Q2 boost.

Why Act Now?
The arithmetic is compelling. A $3.3 million Q2 revenue pop could add ~$0.05 to EPS, while the backlog’s conversion into 2025 revenue—assuming 50% annualization—could generate $85 million in top-line growth. Add in the 40%+ gross margin from licensing and parts, and Greenlane’s path to EBITDA breakeven in 2025 becomes mathematically feasible.

For income-focused investors, Greenlane’s parts/service business alone offers a 10% annual revenue growth runway. For growth investors, the ZEG-style licensing model—where 40% margins are recurring—is a rarity in capital-intensive industries.

The storm clouds over GRNL’s Q1 are temporary. With a full cash tank, a backlog brimming with high-margin projects, and a first-mover advantage in Brazil’s RNG gold rush, this is a company—and stock—built to thrive as the world turns to RNG. The next wave is coming. Investors who miss this tide won’t see another for years.