Pinnacle posts record volumes in Q3 report
Nov. 7, 2018 - Pellet producer Pinnacle Renewable Energy increased its third-quarter revenues 6.4 per cent compared to 2017 numbers, and shipped a record 421,000 metric tons thanks to a 4.7 per cent same-facility production volume increase, the company stated in its Q3 report.
"Our 4.7 per cent same-facility production volume increase in Q3 2018 compared to the same period last year, reflects strong production performance despite a challenging environment. Our operations in the quarter were impacted by the record level of forest fires in B.C., rail disruptions and Entwistle facility commissioning issues. With the fire season now over, and our Entwistle storage silo now complete, we expect to realize higher production volumes and lower costs in the fourth quarter," CEO Robert McCurdy said.
"The fourth quarter will also be highlighted by initial production volumes from our new Smithers, B.C. facility and our recently acquired production facility in Aliceville, Alabama, in the important Southeast U.S. fibre basket. During 2018, we will have added 795,000 metric tons of run-rate capacity and we will be well positioned in 2019 to deliver from our nine production facilities," he said.
Here is a snapshot of Pinnacle's outlook from the report:
On Oct. 15, Pinnacle closed the acquisition of a 70 per cent interest in an operating industrial wood pellet production facility located in Aliceville, Ala., from The Westervelt Company, a diversified land resources company, at a purchase price of approximately U.S. US$37.1 million. Westervelt retained a 30 per cent interest in the Aliceville Facility. Run-rate EBITDA per MT is expected to be in line with Pinnacle's other production facilities and the capital cost of the Aliceville Facility, inclusive of the capital spending program, will be within the Company's target range of 4.0x to 5.5x run-rate EBITDA. Pinnacle and Westervelt are currently undertaking a US$10 million capital spending program to improve safety, product quality and plant efficiencies, with 70 per cent of such costs being attributable to Pinnacle.
Pinnacle expects initial pellet production at the Smithers Facility to commence in the middle of November 2018 as the company completes construction.
As a result of the impact on production volumes and costs of CN rail disruptions, record B.C. forest fires, and the Entwistle Facility commissioning issues outlined above, Pinnacle has revised its estimated Adjusted EBITDA range for Fiscal 2018 from $61 to $65 million to $57 to $60 million. The company has now completed the storage silo, improved the quality of the inbound fibre, and advanced the commissioning curve of the Entwistle Facility. The company expects improved performance at the Entwistle Facility in November and December of 2018.
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