Pinnacle discusses plans for future capacity increases

By Erin Voegele | August 07, 2018

Pinnacle Renewable Holdings Inc. recently released second quarter financial results, reporting progress with the development of new two pellet plants and discussing future plans to expand the company’s production capacity.

"We had a very successful quarter in securing long-term off-take contracts with new customers in Japan and South Korea, thereby diversifying our customer base, significantly growing our contracted backlog and further extending the weighted average remaining life of our contract portfolio," said Robert McCurdy, CEO of Pinnacle. "Our operations performed well in the quarter and we remain on track to meet our target of between $61 to $65 million in Adjusted EBITDA for Fiscal 2018. We continue to excel in safety at our facilities, including the commissioning of our new Entwistle production facility and the construction of the new Smithers facility."

During an investor call, McCurdy said the company’s 400,000-metric-ton-per-year pellet plant in Entwistle, Alberta, is continuing to ramp up operations.

Leroy Reitsma, president and chief operating officer of Pinnacle, said the company is continuing to commission the Entwistle plant to utilize a broad range of fiber sources. The first pellets at the facility were produced in March. The plant is currently expected to reach full production capacity during the second quarter of next year.

Reitsma also discussed the construction of its 125,000-ton-per-year pellet plant in Smithers, British Columbia. The project is being developed in partnership with West Fraser Timber Co. Ltd, which has a 30 percent interest in the project. Pinnacle holds the remaining 70 percent ownership interest. Reitsma said construction of the Smithers facility is proceeding well. The facility is on track to commence initial production during the fourth quarter of this year.

Reitsma noted the production capacity of the Entwistle and Smithers plants is already contracted under long-term agreements. With new long-term supply agreements contracted to date in 2018, he said the company will require additional production capacity. Reitsma said Pinnacle is actively engaged in the evaluation of projects to expand capacity at its existing facilities and to advance the development of new greenfield and brownfield production facilities. In addition, the company is currently reviewing potential acquisition opportunities of existing production facilities in North America.

Pinnacle reported revenue of $85.1 million for the second quarter, up from $69.6 million during the same period of last year.  Net profit was $6.5 million, up from $1.3 million. Adjusted EBITDA of $14.9 million for the second quarter, up from $14.4 million during the same period of last year. Net profit per share increased to 19 cents, up from 13 cents during the second quarter of 2017.