Pinnacle produces record 587,000 tons of wood pellets in Q3
Pinnacle Renewable Energy Inc. produced a record 587,000 metric tons of wood pellets during the third quarter of 2020 and has announced progress with several projects that will further boost the company’s pellet production capacity. Company officials detailed those projects during a third quarter earnings call, held Nov. 10.
Pinnacle is currently undergoing a leadership transition, with CEO Rob McCurdy retiring and the appointment of Duncan Davies as CEO effective Nov. 1. Both McCurdy and Davies discussed Pinnacle’s operations during the Nov. 10 earnings call.
“It was a good quarter,” McCurdy said, noting that the record-setting 587,000 metric tons of pellets produced by the company was up 13 percent when compared to the second quarter of this year and up 33 percent when compared to the third quarter of 2019.
Pinnacle saw strong performance gains across its fleet of plants during the quarter, McCurdy said. Those performance improvements were led by the company’s Williams Lake facility, which benefited from a recently upgraded dryer and increased production by 47 percent when compared to the previous quarter.
McCurdy said sawmill residues accounted for 84 percent of the company’s feedstock during the third quarter, up from 74 percent during the second quarter. Lumber markets continue to be strong, he said, noting that sawmills are continuing to run at high rates. Overall fiber costs were down 2 percent, McCurdy added.
Davies provided an update of Pinnacle’s growth-related capital projects. Construction of the new 200,000-metric-ton-per-year mill in High Level, Alberta, continued during the third quarter and remains on schedule to begin commercial production in November, Davies said.
Construction is also continuing at Pinnacle’s 360,000-metric-ton-per-year mill in Demopolis, Alabama. The company reported good progress was made during the third quarter on underground services, foundations and structural steel for the hammermill and pellet buildings, hammermill and dryer area mechanical installations, and the domes for pellet storage. Commissioning is expected in the second quarter of next year, Davies said.
Pinnacle completed its phase two project at its pellet plant in Aliceville, Alabama, in October. That project added a truck unloading system to the mill’s infrastructure and broadened access to additional supplies of sawmill residuals on a go-forward basis.
A planned upgrade of Pinnacle’s Meadowbank plant in British Columbia is also underway. Work on the project was temporarily halted during the initial stages of the COVID-19 pandemic but restarted during the third quarter. The project will enhance the operational flexibility of the plant and boost production capacity by an estimated 30,000 tons per year. Commissioning is expected during the fourth quarter of 2020.
On a combined basis, Davies said the four projects are expected boost Pinnacle’s overall production capacity by nearly 20 percent, to 2.9 million metric tons per year.
Pinnacle reported revenues of $131.7 million for the third quarter, up 42 percent when compared to the same period of last year. Adjusted gross margin increased to $31.7 million, a $13.8 million increased when compared to the same period of 2019. Adjusted EBITDA was $26.1 million, up from $16.1 million during the second quarter of 2020 and up from $13.6 million in the third quarter of last year. Net income was $7.7 million, up from $20,000 in the second quarter and up from a net loss of $1.5 million during the third quarter of 2019. Adjusted EBITDA was $23.4 million, up 12.4 percent when compared to the same period of last year.