Record Production Volumes Contribute to Best Quarterly Performance
$24 million Contributed to Growth-Related Projects
Dividend of $0.0375 Per Share Declared
VANCOUVER, BC, Nov. 9, 2020 /CNW/ - Pinnacle Renewable Energy ("Pinnacle" or the "Company") (TSX: PL) today reported revenues of $131.7 million in Q3 2020, $39.1 million or 42% higher than Q3 2019 revenues of $92.6 million.
The increase in revenues in Q3 2020 versus the comparable quarter in 2019 results from higher production volumes at a number of the Company's facilities during the quarter.
The Company's Adjusted Gross Margin(1) ("AGM") increased by $13.8 million to $31.7 million in Q3 2020 compared to Q3 2019 or 24.1% of revenue in Q3 2020 (19.3% of revenue in Q3 2019). AGM was $20.0 million or 15.1% of revenue in Q2 2020 and $17.9 million or 19.3% of revenue in Q3 2019. Excluding the net insurance benefits relating to the Entwistle incident, AGM in Q3 2020 was $29.1 million or 22.1% of revenue versus $15.8 million or 17.1% of revenue in Q3 2019.
Adjusted EBITDA(1) was $10.0 million higher in Q3 2020, coming in at $26.1 million, versus $16.1 million in Q2 2020 and $13.6 million in Q3 2019, while net income was $7.7 million compared with net income of $0.02 million in Q2 2020 and a net loss of $1.5 million in Q3 2019. Excluding the net insurance benefits of the Entwistle incident, Adjusted EBITDA was $23.4 million or 17.8% of revenue compared with $11.5 million or 12.4% in Q3 2019. Excluding the net insurance benefits related to the Entwistle incident net income would have been $5.0 million in Q3 2020 compared to a net loss of $3.0 million in Q3 2019.
STRATEGIC CONTEXT
The positive momentum we experienced in the second quarter of 2020 ("Q2 2020") continued into Q3 2020 in spite of the many challenges associated with the on-going COVID-19 pandemic, resulting in the best quarterly performance in the Company's history. Pinnacle's strategy of investing in both new capacity and production efficiency has delivered strong gains in productivity and cost reductions while setting the stage for the Company to grow its revenue base and profitability.
Pinnacle has earned its position in the top tier of the global wood pellet industry through consistent attention to quality, reliability of supply and service to our customers. These priorities, along with the goals of delivering outstanding returns to our shareholders, safe and rewarding careers for our employees, and economic and environmental benefits for the communities in which we operate, will continue to guide our business strategy into the future. We also gain comfort knowing that our products play a role in addressing the challenges of global climate change.
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1 See "Non-IFRS Measures" for definition of the items discussed below and as well as reconciliations of non-IFRS measure with the most directly comparable IFRS measures. |
FACTORS IMPACTING THIRD QUARTER, 2020
Warmer Weather, Lower Fibre Costs and Returns From Capital Investments Drive Record Production and Profitability
The combination of warmer and drier weather, lower fibre costs and the returns associated with the Company's capital investment activities contributed to record production and profitability in Q3 2020. Pellet production in Q3 2020 was 587 kMT, 69 kMT or 13% above our previous record of 518 kMT in Q2 2020, and 145 kMT or 33% higher than Q3 2019. Viewed on a per day basis, production in Q3 2020 was 6,449 MT versus 5,694 MT in Q2 2020 and 4,852 MT in Q3 2019.
Strong performance gains were recorded at a number of plants in Q3 2020 led by Williams Lake which benefited from the completion of its dryer upgrade project in the prior quarter, increasing production by more than 47% quarter over quarter. The Entwistle mill continued its ramp up process during the quarter, increasing production by more than 6% quarter-over-quarter.
Sawmill residuals increased to 84% of the Company's feedstock in Q3 2020 compared with 74% in Q2 2020 as the strong lumber market resulted in higher operating rates in that sector. Overall, our fibre costs were down 2% quarter-over-quarter. During the quarter, we reduced our fibre inventories by 10% due to our increased confidence regarding the availability of sawmill residuals.
The combination of lower fibre costs, higher mill-level productivity and the benefits of warmer and drier weather contributed to a 7% reduction in our unit production costs quarter-over-quarter. This reduction in production costs contributed to a 46% increase in AGM in Q3 2020, net of the influences of insurance proceeds, versus Q2 2020 and a similar increase in Adjusted EBITDA, the highest recorded by the Company.
Logistics Issues Negatively Impact Results
The Company's results in Q3 2020 were achieved in spite of service failures at CN Rail ("CN") and the Fibreco Terminal ("Fibreco") in North Vancouver that negatively impacted production in Q3 2020 by an estimated 20 kMT and resulted in approximately $0.6 million in additional rail, distribution and demurrage costs during the quarter. Significant time and attention is being directed to the CN service issue with the goal of improving service levels. The issue at Fibreco was caused by a structural failure of a recently constructed grain silo which required us to re-route a ship that was originally scheduled to load at Fibreco to our wholly-owned port facility in Prince Rupert. It also required us to re-route rail cars from Fibreco to Prince Rupert. Fibreco resumed operations in mid-October.
Entwistle Insurance Settlement Completed
In Q3 2020, we reached a final settlement with respect to an insurance claim related to the previously disclosed incident that occurred at the dryer area of our Entwistle facility in February 2019. We settled the claim for a total of $29.2 million (net of $1 million deductible). As a result, $2.6 million of additional business interruption insurance recoveries were booked as an offset of production costs and $1.1 million of additional capital cost recoveries were booked as other income in Q3 2020. A total of $4.3 million was recorded in accounts receivable at the end of Q3 2020 and is anticipated to be received in Q4 2020. In Q3 2019, $4.0 million of business interruption insurance recoveries were recorded as an offset of production costs.
PROGRESS ON GROWTH-RELATED CAPITAL PROJECTS
Capital expenditures net of non-controlling interests on growth-related projects amounted to $27.0 million in Q3 2020 as the Company continued to drive forward with initiatives to build out and diversify its operating platform. These figures compare to spending on growth-related projects of $9.7 million in Q3 2019.
High Level Construction Advancing; Capital for Rail Infrastructure Authorized
- Construction of the new 200k MT mill at High Level, Alberta advanced during Q3 2020. The 200k MT per year mill will be 50% owned by Pinnacle and 50% owned by Tolko Industries Inc. ("Tolko").
- The project remains on schedule for commissioning in the fourth quarter of 2020.
- Production readiness processes are well advanced including staff training.
- Additional costs incurred to advance the project during periods of significant rain, improve engineering design and enhanced safety will add an additional $6.8 million to the project which will be split evenly between Pinnacle and Tolko. Despite the extra costs incurred in the construction of High Level, management is confident that this project will generate acceptable returns.
- The total cost of the project, including associated rail infrastructure, is $70.6 million, with Pinnacle's 50% share amounting to $35.3 million. Pinnacle contributed $7.9 million to the project in Q3 2020, bringing the Company's total project expenditures to $23.4 million or approximately 66% of budgeted costs.
Demopolis Construction Proceeds as Planned
- Construction also continued during the quarter on the 360 kMT per year mill in Demopolis, Alabama. The mill will be owned and operated by Alabama Pellets LLC, in which Pinnacle has a 70% interest.
- Good progress was made in the 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. The project is progressing as planned, with commissioning expected in the second quarter of 2021.
- The total authorized capital spend for the project is $135.0 million, with Pinnacle's 70% share amounting to $94.6 million. Pinnacle contributed $13.1 million to the project in Q3 2020, bringing total project expenditures to $39.9 million or approximately 42% of budgeted costs.
Aliceville Phase 2 Project Nearing Completion
- The Company completed the Phase 2 Project at its mill in Aliceville, Alabama in early October. The mill is owned and operated by Alabama Pellets LLC, in which Pinnacle has a 70% interest. This project adds a truck unloading system to the mill's infrastructure and broadens access to additional supplies of sawmill residuals on a go-forward basis, supporting the Company's goal of boosting production volumes at the mill. Pinnacle contributed $2.0 million on the Aliceville project in Q3 2020, bringing total expenditures to approximately $3.9 million or 78% of budget at quarter-end.
Meadowbank WESP Upgrade Restarted
- The Meadowbank WESP upgrade, which was halted temporarily during the initial stages of the COVID-19 outbreak, was restarted during the quarter. This upgrade will enhance the operating flexibility of the facility and allow Pinnacle to continue to adapt to cyclical changes in wood fibre supply within the B.C. Interior. The upgrade is expected to increase the mill's production capacity by 30 kMT per annum.
- The project is progressing as planned and is on-budget, with commissioning expected in the fourth quarter of 2020 ("Q4 2020").
- The total authorized capital spend for the project is $9.5 million. Pinnacle spent $2.4 million on the project in Q3 2020, bringing total project expenditures to-date to $5.6 million or approximately 59% of budgeted costs.
Completion of these projects is expected to increase Pinnacle's overall production capacity by almost 20% to 2.8 million MT, and increase the production comprised by facilities located in jurisdictions outside of B.C. to approximately 44%.
NEW CEO APPOINTED
On October 14, 2020 Pinnacle announced the appointment of Duncan Davies as Chief Executive Officer effective November 1, 2020, replacing the current CEO, Rob McCurdy, whose retirement plans were announced earlier this year. From 2000 to 2019, Mr. Davies served as President & CEO of Interfor Corporation, a growth-oriented, publicly-traded forest products company with operations in Canada and the United States. Mr. Davies will be based at Pinnacle's headquarters in Richmond, B.C. and will continue to serve on the Company's Board of Directors, which he joined in April 2020.
OUTLOOK
Customer demand for wood pellets remains strong. In Q4 2020 we expect to see positive year-over-year production increases as the Entwistle Facility operates at full capacity, benefits are realized from the upgrades at Williams Lake, Meadowbank, and Aliceville and the facility at High Level is completed and starts commissioning. However, cooler weather in the upcoming months is expected to moderate production and increase fibre drying costs, which is typical during the winter months. In addition, the spillover of the Fibreco incident impacted loading operations at the port in the early part of Q4 2020 which may continue through the balance of the quarter and possibly longer, with additional impacts on rail service and production. Pinnacle expects to increase its fibre inventories in the coming months as a hedge against seasonal factors and other potential disruptions in the supply of traditional feedstock. Pinnacle's order backlog remains strong at $6.7 billion.
With respect to the COVID-19 pandemic, on-going uncertainties including reports of higher positive test results in areas in which we operate, have the potential to impact our operations and the availability and cost of feedstock. Barring a deterioration in the business environment due to COVID-19 or other factors, the construction of the Company's growth-related projects will continue as planned.
DIVIDEND
The Company's Board of Directors today approved the payment of a dividend of $0.0375 per Common Share. Payment will be made on December 3, 2020 to shareholders of record as at November 20, 2020.
FINANCIAL AND OPERATING HIGHLIGHTS
Unit | Q3 2020 13 weeks | Q3 2019 13 weeks | Q3 2020 39 weeks | Q3 2019 39 weeks | ||
Revenue | $000's | 131,674 | 92,552 | 373,594 | 286,343 | |
Profit before finance costs and other income (expense) | $000's | 15,409 | 3,031 | 16,064 | 4,561 | |
Net income (loss)(5) | $000's | 7,740 | (1,459) | (1,377) | (6,919) | |
Net profit (loss) attributable to owners | $000's | 6,946 | (1,695) | (3,076) | (7,146) | |
Basic and diluted earnings/(loss) per share | $/share | 0.21 | (0.05) | (0.09) | (0.21) | |
Adjusted Gross Margin (1)(6) | $000's | 31,744 | 17,851 | 60,693 | 48,563 | |
Adjusted Gross Margin per MT (1)(6) | $/MT | 52.91 | 42.20 | 35.08 | 37.27 | |
Adjusted Gross Margin Percentage (1)(6) | % | 24.1% | 19.3% | 16.2% | 17.0% | |
Adjusted EBITDA (1)(7) | $000's | 26,054 | 13,553 | 46,205 | 35,891 | |
Adjusted EBITDA per MT (1)(7) | $/MT | 43.42 | 32.04 | 26.71 | 27.54 | |
Adjusted EBITDA Percentage (1)(7) | % | 19.8% | 14.6% | 12.4% | 12.5% | |
Free Cash Flow (1)(7) | $000's | 18,392 | 7,310 | 26,015 | 18,410 | |
Annualized Return on Invested Capital (1)(7) | % | 19.6% | 11.3% | 11.5% | 10.1% | |
Annualized Cash Flow Return on Assets (1) | % | 16.7% | 9.8% | 12.4% | 10.3% | |
September 25, | December 27, | |||||
Total Assets | $000's | 703,390 | 629,911 | |||
Total Debt | $000's | 374,796 | 316,014 | |||
Q3 2020 13 weeks | Q3 2019 13 weeks | Q3 2020 39 weeks | Q3 2019 39 weeks | |||
Operating Highlights | ||||||
Industrial wood pellets produced (2) | MT ('000) | 587 | 422 | 1,557 | 1,299 | |
Industrial wood pellets purchased (3) | MT ('000) | 15 | 33 | 121 | 62 | |
Industrial wood pellets sold | MT ('000) | 600 | 423 | 1,730 | 1,303 | |
September 25, | December 27, | ||||||||||||
Contracted Backlog (4) | |||||||||||||
Fiscal 2020 (remainder of Fiscal year) | $ billions | 0.1 | 0.4 | ||||||||||
Fiscal 2021 | $ billions | 0.6 | 0.5 | ||||||||||
Fiscal 2022 and thereafter | $ billions | 6.0 | 6.0 | ||||||||||
Total product sales under Contracted Backlog | $ billions | 6.7 | 6.9 |
Notes | |||||||
(1) See "Non-IFRS Measures" for definition of the items discussed below and as well as reconciliations of non-IFRS measure with the most directly comparable IFRS measures. (2) Includes MT produced by all facilities managed by Pinnacle, including Houston Pellet LP ("HPLP"). (3) Includes MT sold the quarter that were purchased from third parties, excluding HPLP. (4) We enter into long-term, take-or-pay-off-take contracts with large and well capitalized counterparties or their affiliates. "Contracted Backlog" represents the revenue to be recognized under existing contracts assuming deliveries occur as specified in the contracts. As a result of customer preferences or logistics management, there can be movement in the timing of deliveries that may result in revenue being recognized in either a preceding or following interim fiscal period. (5) For the 13- week and 39-week period ended September 25, 2020, Net Income included $2.7 million and $4.5 million respectively of net insurance benefit related to the Entwistle Incident (13-week and 39-week periods ended September 27, 2019 - $1.5 million and ($0.6) million). (6) For the 13- week and 39-week period ended September 25, 2020, Adjusted Gross Margin included $2.6 million and $3.1 million respectively of net insurance benefits related to the Entwistle Incident (13-week and 39-week periods ended September 27, 2019 - $2.0 million and $2.3 million). For the 13- week and 39-week period ended September 25, 2020 without the Entwistle Incident Adjusted Gross Margin per MT would have been $49.62 and $36.98 respectively (13-week and 39-week periods ended September 27, 2019 - $37.54 and $35.62). Adjusted Gross Margin Percentage would have been 22.1% and 15.4% respectively (13-week and 39-week periods ended September 27, 2019 - 17.1% and 16.2%). (7) For the 13- week and 39-week period ended September 25, 2020, Adjusted EBITDA included $2.6 million of net insurance benefit (cost) related to the Entwistle Incident (13-week and 39-week periods ended September 27, 2019 – ($0.7) million). For the 13- week and 39-week period ended September 25, 2020 without the Entwistle Incident Adjusted EBITDA per MT would have been $39.06 and $25.23 respectively (13-week and 39-week periods ended September 27, 2019 - $33.72 and $23.77). Adjusted EBITDA Percentage would have been 17.8% and 11.7% respectively (13-week and 39-week periods ended September 27, 2019 - 15.4% and 12.3%). | |||||||
LIQUIDITY AND CAPITAL RESOURCES
Net debt (current and long term debt, current and long term lease liabilities, offset by cash and cash equivalents) at September 25, 2020 was $389.4 million, while available liquidity (cash and cash equivalents and unused credit capacity) was $169.6 million. This compares with net debt of $372.4 million and liquidity of $188.9 on June 26, 2020. Net debt includes $89.7 million relating to capital expenditures on growth-related projects not yet commissioned. As at September 25, 2020 the Company had sufficient liquidity and was in compliance with all debt covenants.
The following table summarizes the Company's credit facilities and availability as of September 25, 2020:
Revolver | Term Loan | Delayed | Total | ||
Available line of credit and maximum borrowing available | 65,000 | 280,000 | 185,000 | 530,000 | |
Mandatory Amortization | - | 4,200 | - | 4,200 | |
Drawings | - | 280,000 | 102,200 | 378,200 | |
Unused portion of facility | 65,000 | - | 82,800 | 147,800 | |
Add: | |||||
Cash and cash equivalents | - | - | - | 21,762 | |
Available liquidity at September 25, 2020 | 65,000 | - | 82,800 | 169,562 |
The revolver loan, term loan and delayed draw loan each have a maturity date of June 14, 2024.
NON-IFRS MEASURES
This release refers to certain non-IFRS measures. These measures are not recognized measures under IFRS, and do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of our results of operations from management's perspective. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS. These non-IFRS measures are used to provide investors with supplemental measures of our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS measures. We also believe that securities analysts, investors and other interested parties frequently use non-IFRS measures in the evaluation of issuers. Our management also uses non-IFRS measures in order to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and forecasts and to determine components of management compensation.
The following measures are used by management as key performance indicators for our business: Adjusted Gross Margin Percentage, Adjusted EBITDA, Free Cash Flow, Net Debt to Invested Capital, Annualized Return on Invested Capital and Annualized Cash Flow Return on Assets. Please refer to Management's Discussion and Analysis for the thirteen and thirty-nine week periods ended September 25, 2020.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
FOR THE 13-WEEK AND 39-WEEK PERIODS ENDED SEPTEMBER 25, 2020
Note | 13-week periods ended | 39-week periods ended | |||
September 25, | September 27, | September 25, | September 27, | ||
Revenue | 14 | 131,674 | 92,552 | 373,594 | 286,343 |
Costs and expenses | |||||
Production | 83,500 | 60,189 | 265,517 | 198,213 | |
Distribution | 15,970 | 14,457 | 45,462 | 40,228 | |
Selling, general and administration | 7 | 5,342 | 4,808 | 14,511 | 13,748 |
Amortization of equipment and intangible assets | 11,453 | 10,067 | 32,040 | 29,593 | |
116,265 | 89,521 | 357,530 | 281,782 | ||
Operating income | 15,409 | 3,031 | 16,064 | 4,561 | |
Other income/(expense) | |||||
Equity earnings/(loss) in Houston Pellet Limited Partnership | 334 | 181 | (223) | 888 | |
Gain/(loss) on disposal of property, plant and equipment | 149 | (188) | (727) | (285) | |
Impairment of Entwistle plant | - | - | - | (9,417) | |
Impairment of Intangibles | - | - | - | (278) | |
Insurance recovery for property loss at Entwistle plant | 1,143 | - | 3,643 | 8,000 | |
Finance costs | 8 | (5,965) | (4,813) | (20,558) | (19,339) |
Other (expense)/income | (425) | (64) | 15 | 6,892 | |
(4,764) | (4,884) | (17,850) | (13,539) | ||
Net profit/(loss) before income taxes | 10,645 | (1,853) | (1,786) | (8,978) | |
Income tax (expense)/recovery | |||||
Deferred | 9 | (2,905) | 394 | 409 | 2,059 |
(2,905) | 394 | 409 | 2,059 | ||
Net profit/(loss) | 7,740 | (1,459) | (1,377) | (6,919) | |
Net profit/(loss) attributable to: | |||||
Owners of the Company | 6,946 | (1,695) | (3,076) | (7,146) | |
Non-controlling interests | 794 | 236 | 1,699 | 227 | |
7,740 | (1,459) | (1,377) | (6,919) | ||
Net profit/(loss) per share attributable to owners (basic and diluted): | 10 | 0.21 | (0.05) | (0.09) | (0.21) |
Weighted average of number of shares outstanding (thousands): |
10 | 33,357 | 33,307 | 33,358 | 33,220 |
13-week periods ended | 39-week periods ended | ||||
September 25, | September 27, | September 25, | September 27, | ||
Net profit/(loss) | 7,740 | (1,459) | (1,377) | (6,919) | |
Items that may be recycled through net income: | |||||
Foreign exchange translation of foreign operations, net of tax | (2,297) | 754 | 423 | (493) | |
Comprehensive income/(loss) for the period | 5,443 | (705) | (954) | (7,412) | |
Comprehensive income/(loss) attributable to: | |||||
Owners of the Company | 5,338 | (1,169) | (2,780) | (8,002) | |
Non-controlling interests | 105 | 464 | 1,826 | 590 | |
5,443 | (705) | (954) | (7,412) | ||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE 13-WEEK AND 39-WEEK PERIODS ENDED SEPTEMBER 25, 2020
13-week periods ended | 39-week periods ended | ||||
Note | September 25, | September 27, | September 25, | September 27, | |
Cash provided by (used in) | |||||
Operating activities | |||||
Net profit/(loss) | 7,740 | (1,459) | (1,377) | (6,919) | |
Financing costs, net | 8 | 5,965 | 4,813 | 20,558 | 19,339 |
Distributions from Houston Pellet Limited Partnership | - | - | - | 2,400 | |
Insurance received for business interruption at Entwistle plant | 13 | - | 4,500 | 6,400 | 4,500 |
Realized gain on derivatives and foreign exchange | 8 | 510 | 499 | 1,631 | 1,496 |
Items not involving cash: | |||||
Amortization of equipment and intangible assets | 11,453 | 10,067 | 32,040 | 29,593 | |
Equity (earnings)/loss in Houston Pellet Limited Partnership | (334) | (181) | 223 | (888) | |
(Gain)/loss on disposal of equipment | (149) | 188 | 727 | 285 | |
Stock-based compensation | 6 | 173 | 255 | 404 | 884 |
Inventory write (up)/down | 3 | (92) | 677 | 3,346 | 1,267 |
Impairment of Entwistle plant | - | - | - | 9,417 | |
Impairment of intangible assets | - | - | - | 278 | |
Insurance recoverable recorded in income for Entwistle plant | 13 | (3,759) | (4,000) | (7,259) | (16,500) |
Deferred income tax expense/(recovery) | 9 | 2,905 | (394) | (409) | (2,059) |
Cash flow from operating activities | 24,412 | 14,965 | 56,284 | 43,093 | |
Net change in non-cash operating working capital | 11 | (18,453) | (6,216) | (2,373) | (19,014) |
5,959 | 8,749 | 53,911 | 24,079 | ||
Financing activities | |||||
Drawings on revolver loan | 74,200 | 12,000 | 197,200 | 12,000 | |
Repayment of revolver loan | (74,200) | - | (216,400) | (18,450) | |
Payment of finance leases | (2,333) | (2,648) | (7,372) | (7,363) | |
Drawings on term debt | - | - | - | 277,973 | |
Repayment of term debt | (2,800) | - | (4,200) | (194,000) | |
Drawings on delayed draw loan | 19,900 | - | 82,200 | (49,760) | |
Proceeds from exercise of stock options | - | 47 | 243 | 268 | |
Dividends paid during the period | (1,251) | (4,996) | (7,506) | (14,942) | |
Investment from non-controlling interest | 6,834 | 666 | 14,444 | 2,016 | |
Distributions to non-controlling interest | - | (175) | (362) | (725) | |
Finance costs paid | 8 | (4,681) | (4,082) | (13,581) | (12,671) |
15,669 | 812 | 44,666 | (5,654) | ||
Investing activities | |||||
Insurance recovery for property loss at Entwistle plant | 13 | - | 5,000 | 3,500 | 8,000 |
Decrease/(increase) in restricted cash | 57 | - | (2,713) | - | |
Purchase of property, plant and equipment | 11 | (19,942) | (16,113) | (89,037) | (36,349) |
Proceeds from sale of property, plant and equipment | 88 | 70 | 112 | 156 | |
(19,797) | (11,043) | (88,138) | (28,193) | ||
Foreign exchange gain/(loss) on cash held in foreign currency | 86 | (10) | 56 | 75 | |
Increase/(decrease) in cash and cash equivalents | 1,917 | (1,492) | 10,495 | (9,693) | |
Cash and cash equivalents, beginning of the period | 19,845 | 9,827 | 11,267 | 18,028 | |
Cash and cash equivalents, end of the period | 21,762 | 8,335 | 21,762 | 8,335 | |
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As at | Note | September 25, 2020 | December 27, 2019 | ||
ASSETS | |||||
Current assets | |||||
Cash and cash equivalents | 21,762 | 11,267 | |||
Restricted cash | 2,713 | - | |||
Accounts receivable | 53,936 | 36,764 | |||
Inventory | 3 | 38,853 | 46,938 | ||
Receivable against NMTC debt | - | 12,774 | |||
Other current assets | 6,233 | 11,436 | |||
Total current assets | 123,497 | 119,179 | |||
Property, plant and equipment | 4 | 470,864 | 399,181 | ||
Goodwill and intangible assets | 98,829 | 100,191 | |||
Investment in Houston Pellet Limited Partnership | 7,324 | 7,548 | |||
Other long-term assets | 20 | 1,364 | |||
Deferred income taxes | 9 | 2,856 | 2,448 | ||
Total assets | 703,390 | 629,911 | |||
LIABILITIES AND EQUITY | |||||
Current liabilities | |||||
Revolver loan | 5 | - | 19,200 | ||
Accounts payable and accrued liabilities | 69,610 | 51,183 | |||
Current portion of long-term debt | 5 | 17,236 | 3,128 | ||
Current portion of NMTC debt | - | 12,774 | |||
Current portion of lease liabilities | 7,716 | 7,424 | |||
Other current liabilities | 1,132 | 1,786 | |||
Total current liabilities | 95,694 | 95,495 | |||
Long-term debt | 5 | 357,560 | 293,686 | ||
Other long-term liabilities | 6,548 | 2,462 | |||
Lease liabilities | 28,602 | 29,551 | |||
Total liabilities | 488,404 | 421,194 | |||
EQUITY | |||||
Shareholders' equity | |||||
Common shares | 6 | 278,076 | 277,619 | ||
Contributed surplus | 4,335 | 4,145 | |||
Accumulated other comprehensive loss | (1,024) | (1,320) | |||
Deficit | (127,773) | (117,191) | |||
Total equity attributable to owners of the Company | 153,614 | 163,253 | |||
Non-controlling interest | 61,372 | 45,464 | |||
Total equity | 214,986 | 208,717 | |||
Total liabilities and equity | 703,390 | 629,911 |
Pinnacle's unaudited interim consolidated financial statements and Management's Discussion & Analysis for Q3 2020 and its Annual Information Form for the Fiscal Year ended December 27, 2019 are available on the Company's website at pinnaclepellet.com or on SEDAR at www.sedar.com.
ABOUT PINNACLE
Pinnacle is the third largest producer of industrial wood pellets in the world. The Company's products are used to displace fossil fuels in the production of baseload electrical power in key markets around the world. Pinnacle is a trusted supplier to its customers who require reliable, high quality fuels to maximize the utilization of their facilities. The Company operates eight production facilities in Western Canada and one in Alabama, with two additional facilities under construction in Alberta and Alabama and more in development. 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 an average of 99% of its production capacity through 2026.
CONFERENCE CALL
Pinnacle will host a conference call for investors and analysts on Tuesday, November 10, 2020 at 11:00 am (ET) / 8:00 am (PT). The dial-in numbers for the conference call are 416-764-8688 or 1-888-390-0546. A live webcast of the call will be accessible via Pinnacle's website at:
http://pinnaclepellet.com/investors/presentations-events
To access a replay of the conference call dial 416-764-8677 or 1-888-390-0541, passcode: 662261#. The replay will be available until November 17, 2020. The webcast will be archived following conclusion of the call.
(1) NON-IFRS FINANCIAL MEASURES
This news release makes reference to certain non-IFRS measures. Please see page 12 of the Management's Discussion and Analysis for definition.
FORWARD-LOOKING INFORMATION
This news release includes "forward-looking information" within the meaning of applicable securities laws in Canada. Forward-looking information may relate to our future financial outlook and anticipated events or results and may include information regarding our financial position, business strategy, growth strategies, budgets, operations, financial results, taxes, dividend policy, plans and objectives. Particularly, information regarding our expectations of future results, performance, achievements, prospects or opportunities or the markets in which we operate is forward-looking information. Some of the specific forward-looking information contained herein include, but are not limited to, statements with respect to: our expectations regarding growth in biomass-based fuel sources within the European and Asian power generating portfolio; growth in global demand for wood pellets; anticipated supply delivery times under our off-take contracts; anticipated capital cost and maintenance capital expenditures required by our facilities; COVID-19 and anticipated production from our facilities.
Many factors could cause our actual results, level of activity, performance or achievements or future events or developments to differ materially from those expressed or implied by forward-looking statements, including, without limitation, the factors discussed in the "Financial Risk Factors" section of the MD&A and in the "Risk Factors" section of our Annual Information Form ("AIF") dated March 31, 2020, which can be accessed under the Company's profile on SEDAR at www.sedar.com. The Company cautions that the list of risk factors and uncertainties described herein and in the AIF are not intended to represent a complete list of the factors that could affect us. Readers are urged to consider such risks, uncertainties and factors carefully in evaluating the forward-looking information, and are cautioned to not place undue reliance on such information.
The forward-looking information contained in this news release represents our expectations as of the date of this press release (or as of the date they are otherwise stated to be made) and are subject to change after such date. We disclaim any intention or 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.
Future-oriented financial information ("FOFI") contained in this document was made as of the date hereof and was provided for the purpose of providing shareholders with information on Pinnacle's financial outlook. Pinnacle disclaims any intention or obligation to update or revise any FOFI contained in this document, whether as a result of new information, future events or otherwise, unless required pursuant to applicable securities laws in Canada. Readers are cautioned that the FOFI contained in this document should not be used for purposes other than for which it is disclosed herein.
SOURCE Pinnacle Renewable Energy Inc.
