Pinnacle reports progress with commissioning at 3 new plants

By Erin Voegele | November 06, 2018

Pinnacle Renewable Holdings Inc. has released third quarter 2018 financial results, reporting strong operations for existing pellets plants. The company also provided an update of ongoing commissioning activities at three new facilities.

During an investor call, Robert McCurdy, CEO of Pinnacle, said the company shipped a record 421,000 metric tons of wood pellets during the quarter. He said the record volume was achieved through strong same facility production growth and 42,000 metric tons of volume from the company’s new pellet plant in Entwistle, Alberta. According to information released by Pinnacle, same-facility production increased by 4.7 percent during the quarter.

The company commenced commercial production at Entwistle in late June, McCurdy said. He said Pinnacle is continuing to ramp up production at the facility, which is expected to achieve its full run rate production of 400,000 metric tons by mid-2019. Once fully operational, the facility will be the largest of Pinnacle’s pellet plants.

According to McCurdy, the Entwistle facility experienced challenges during the third quarter related to fiber quality and transportation issues. Those problems, he said, reduced production at the facility by 31,000 metric tons. A delay in the completion of a storage silo at the facility also contributed to lower than expected production. The storage silo was completed on Nov. 3 he said, noting the company has also worked with fiber suppliers to resolve quality issues. As a result, the production rate at the facility is expected to improve for November and December.

McCurdy also provided an update of operations at its facility in Aliceville, Alabama. On Oct. 15, Pinnacle closed on the acquisition of a 70 percent interest in the Aliceville plant from the Westervelt Co. He said the acquisition marks Pinnacle’s strategic entry into the U.S. fiber basket and the formation of a strong new strategic partnership with Westervelt. To date, performance at the 270,000-metric-ton-per-year facility has been strong, McCurdy added. 

He also provided an update on its pellet plant in Smithers, British Columbia. In May, Pinnacle announced Smithers Pellet Ltd. Partnership would convert an existing particle board plant in Smithers to wood pellet production. Pinnacle holds a 70 percent interest in SPLP, while West Fraser Timber Co. holds the remaining 30 percent. McCurdy said the 125,000-ton-per-year facility is expected to commence initial production during the fourth quarter, with full run rate production expected in the third quarter of next year.

Once the Entwistle, Aliceville and Smithers plants reach full run rate production, McCurdy said Pinnacle will have added almost 800,000 metric tons of capacity, an increase of approximately 56 percent.

Leroy Reitsma, president and chief operating officer of Pinnacle, noted the company continues to be very active in development new projects. He said the company has a “fertile pipeline” of projects, and indicated more information would be released as those projects are developed over the coming years.

Pinnacle reported $87.6 million in revenue for the quarter, up 6.4 percent when compared to the same period of last year. Adjusted EBITDA was $14.5 million, down from $16.8 million during the third quarter of 2017. Pinnacle attributed the decline to Canadian National Railway disruptions, record forest fires in British Columbia, and commissioning issues at the Entwistle facility. Net profit per share was 4 cents.