Pinnacle reports progress with plant improvement projects

By Erin Voegele | November 15, 2019

Pinnacle Renewable Energy released third quarter financial results on Nov. 12, reporting progress with upgrades at several existing wood pellet plants. Revenue also increased despite issues with ongoing sawmill curtailments in British Columbia.

“The third quarter of 2019 was a challenging period as a number of our B.C. fiber suppliers curtailed operations, resulting in a transition to an increased use of harvest residuals in our production process, driving higher costs,” said Rob McCurdy, CEO of Pinnacle. “Our team continues to actively focus on reducing costs and improving the operating efficiencies of our B.C. facilities, as well as transitioning of our fiber procurement strategy by leveraging more harvest residuals, developing enhanced processing strategies, and working with First Nations and the B.C. government to diversify our fiber suppliers. While we are laser focused on fiber management and processing in B.C. we are also encouraged by the ongoing development 2 and diversification of the business with the re-start of the Entwistle facility, recently announced contracts in Japan, and the construction of the High Level facility in Alberta.”

During an earnings call, McCurdy said that sawmill curtailments in British Columbia resulted in lower pellet production volumes for several of the company’s plants.  The mix and fiber supply, however, began to stabilize near the end of the third quarter, he added, allowing for increased production volumes.

Upgrades to the fiber drying and air filtration equipment at the Williams Lake, British Columbia, facility are progressing on schedule and are expected to be complete during the first quarter of 2020, McCurdy said. Planning and design work is also underway for similar upgrades the Meadowbank, British Columbia, facility. McCurdy said the upgrades will allow both facilities to process a broader array of available fiber sources and will result in a combined annual production capacity increase of approximately 80,000 metric tons.

The Aliceville, Alabama, pellet plant is also undergoing improvements McCrudy said. Projects at that facility aim to improve fiber flow, processing and operating efficiency. As a result of the improvement projects, McCurdy said the plant began experiencing ongoing operating improvements beginning in September that allowed it to set several new production records. A second phase of improvements is expected to begin during the second quarter. The upcoming projects aim to further improve flow and processing at the plant in order to continue to drive down costs and improve the production capability of the facility.  

Pinnacle’s pellet plant in Smithers, British Columbia, reached full run rate capacity of 125,000 metric tons per year during the third quarter and is performing very well, McCurdy said.

He also discussed operations at the Entwistle, Alberta, pellet plant, which was damaged in a fire in February 2019. The resumed processing dry fiber in March 2019. According to Pinnacle, the company has finished the rebuild of the dryer, and restarted the furnace and dryer in early November. The facility is currently in the process of commissioning the new equipment.

McCurdy closed his discussion in the earnings call by noting Pinnacle is continuing to evaluate brownfield, greenfield, and merger and acquisition opportunities for new pellet facilities. However, no specific details on those plans were shared.

Pinnacle reported third quarter revenue of $92.6 million for the fiscal third quarter, which is the 13-week period ending Sept. 28, up 5.6 percent from the same period of last year. The increase was primarily attributed to higher selling price per metric tons and a higher proportion of cost, insurance and freight contracts.

The company reported a third quarter net loss of $700,000, compared to a net profit of $1.5 million for the same quarter of 2018. Adjusted EBITDA was $14.3 million, compared to $14.5 million reported for the third quarter of last year.