/NOT FOR DISTRIBUTION IN THE UNITED STATES/
VANCOUVER, Sept. 30, 2019 /CNW/ - Pinnacle Renewable Energy ("Pinnacle" or the "Company") (TSX: PL) today announced that it expects a shortfall in its guidance for adjusted earnings before interest, tax, depreciation, and amortization ("Adjusted EBITDA") for Fiscal 2019. The expected guidance shortfall is driven by the ongoing sawmill curtailments in B.C., which has caused higher fibre and cash conversion costs, including maintenance and repair costs, at Pinnacle's B.C. facilities due to a decreased and intermittent supply of sawmill residuals and a higher supply of more expensive harvest residuals being processed at the facilities.
While the Company has made progress in actively managing the availability and impact of replacement fibre for sawmill residuals in response to sawmill curtailments and expects to make further progress in the fourth quarter of 2019, the higher cost of harvest residuals and related operating costs have continued to impact operating results into the third quarter of 2019. Despite positive production gains at the Smithers and Aliceville facilities, the Company's same facility production in the third quarter of 2019 was down over 14% compared to the third quarter of 2018, primarily as a result of the sawmill curtailments.
Pinnacle continues to make operational changes to mitigate the current impacts of the sawmill curtailments and position the Company to drive adjusted gross margin and production volume improvements in B.C. in the future under this more challenging fibre environment as follows:
- Commenced upgrades at the Williams Lake and Meadowbank facilities to increase dryer capacity to enable processing of a broader array of available fibre sources in the Cariboo region of B.C.;
- Increased harvest residuals processing capabilities by increasing chipping and grinding units from two in 2018 to eight in 2019;
- Increasing fibre deliveries to the Company's B.C. mills by a forecasted 20% in Q4 2019 compared to the same period in 2018 to build strategic inventory to mitigate the potential impact of temporary seasonal or maintenance related sawmill shut-downs going forward; and
- Increasing fibre suppliers in Q4 2019 by over 25% compared to the same period a year ago, significantly improving supplier diversification.
"While the sawmill curtailments have been impactful to the business, we have fibre for continuous operation of our facilities to meet our contracted customer commitments. Our long-term fibre procurement process has developed and strengthened to improve the flow and consistency of fibre to facilities," said Rob McCurdy, CEO of Pinnacle. "Through the remainder of the year we are actively focused on reducing costs related to processing harvest residuals and improving the operating efficiencies of our B.C. facilities. As we continue to execute on operational improvements, optimize our fibre inventories, and benefit from the growing diversification of the Company, we expect margins to improve."
Pinnacle is a rapidly growing industrial wood pellet manufacturer and distributor and the third largest producer in the world. The Company produces sustainable fuel for renewable electricity generation in the form of industrial wood pellets. This fuel is used by large-scale thermal power generators as a greener alternative to coal that allows them to produce reliable baseload renewable power. Pinnacle is a trusted supplier to its customers, who require reliable, high-quality fuel supply to maximize utilization of their facilities. Pinnacle takes pride in its industry leading safety practices. The Company operates eight industrial wood pellet production facilities in western Canada and one in Alabama, with a further plant under construction in Alberta. The Company also owns a port terminal in Prince Rupert, B.C. Pinnacle has entered into long-term take-or-pay contracts with utilities in the U.K., Europe and Asia that represent 103% of its announced production capacity through 2021 and 106% of its announced production capacity through 2026.
This news release may contain "forward-looking information" within the meaning of applicable securities laws in Canada. Forward-looking information may relate to Pinnacle's future financial outlook and anticipated events or results and may include information regarding its financial position, business strategy, growth strategies, budgets, operations, financial results, taxes, dividend policy, plans and objectives. Particularly, information regarding the Company's expectations of future results, performance, achievements, prospects or opportunities or the markets in which it operates is forward-looking information. In some cases, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "targets", "expects" or "does not expect", "is expected", "an opportunity exists", "budget", "scheduled", "estimates", "outlook", "forecasts", "projection", "prospects", "strategy", "intends", "anticipates", "does not anticipate", "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might", "will", "will be taken", "occur" or "be achieved". In addition, any statements that refer to expectations, intentions, projections or other characterizations of future events or circumstances contain forward-looking information. Statements containing forward-looking information are not historical facts but instead represent management's expectations, estimates and projections regarding future events or circumstances. If any of the opinions, estimates or assumptions underlying the forward-looking information prove incorrect, actual results or future events might vary materially from those expressed in the forward-looking information. The Company has no obligation or undertaking to update or revise any forward-looking information whether as a result of new information, future events or otherwise, except as required under applicable securities laws in Canada. Actual results and the timing of events may differ materially from those anticipated in the forward-looking information as a result of various factors, including those described in "Risk Factors" which are described in the Company's most recent Annual Information Form ("AIF") filed on SEDAR (www.sedar.com).
We caution that the list of risk factors and uncertainties is not exhaustive and other factors could also adversely affect our results. Readers are urged to consider the risks, uncertainties and assumptions carefully in evaluating the forward-looking information and are cautioned not to place undue reliance on such information. See "Forward-looking Information" and "Risk Factors" in the Company's most recent AIF and its Management's Discussion & Analysis for Q2 2019 available on SEDAR for a discussion of the uncertainties, risks and assumptions associated with these statements.
SOURCE Pinnacle Renewable Energy Inc.
For further information: Investor Relations, Pinnacle Renewable Energy, Tel: 1-877-737-4344, Email: [email protected], Web: www.pinnaclepellet.com