Pinnacle provides update of Entwistle, Smithers pellet plants

By Erin Voegele | March 16, 2018

On March 15, Pinnacle Renewable Holdings Inc. released fiscal year 2017 financial results and provided an update of its planned expansion and acquisition projects. The company completed an initial public offering (IPO) on Feb. 6.

"2017 was a record year for Pinnacle on all our key metrics, reflecting growing demand from our customers in Europe and Asia, continued operating efficiencies, and the exceptional performance of our people,” said Robert, McCurdy, CEO of Pinnacle.

During an investor call, McCurdy explained that Pinnacle set new records for production, shipment volumes, revenue, adjusted EBITDA and cash flows last year.

He said Pinnacle entered for new major offtake agreements last year, including two in Japan and two in Europe. “We are now advancing the development and commissioning of our two next production facilities—Entwistle and Smithers—to further expand our production capacity to meet the increasing demand from our global customers.

Leroy Reitsma, president and chief operating officer of Pinnacle, said pinnacle has begun initial operations at its 400,000-metric-ton-per-year Entwistle, Alberta, pellet plant. The facility is currently using dry shavings as feedstock, but plans to begin using additional fiber sources during the second quarter as it ramps up production. The company expects the facility to be producing at full capacity by the second quarter of 2019.

Reitsma also spoke about the Smithers, British Columbia, project, which is being developed in partnership with West Forest Timber Co. Ltd. The Smithers project was officially approved by Pinnacle on March 13. Once complete, the plant will have an annual production capacity of 125,000 metric tons. The facility is currently expected to begin operations during the fourth quarter of this year.

McCurdy also indicated that Pinnacle is exploring additional projects to expand its production capacity. He said the company is considering opportunities in eastern Canada, the U.S. Southeast and the U.S. Pacific Northwest. In addition, the company is evaluating strategic acquisitions.

Pinnacle reported $292.7 million in revenue for fiscal year 2017, up 9.9 percent from fiscal 2016. Revenue growth was primarily attributed to an additional 69,000 metric tons of industrial wood pellets sold, as well as a higher average sales price per metric ton. Industrial wood pellet sales volumes were approximately 1.4 million metric tons, up from 1.3 million metric tons during the previous year.

Adjusted gross margin was $66.9 million, or 22.9 percent of revenue in fiscal 2017, compared to $53.1 million, or 19.9 percent of revenue in fiscal 2016. Adjusted EBITDA was $56.1 million, up 27.7 percent when compared to fiscal 2016.