Q4 2020 Revenue of $116.9 million; Adjusted EBITDA of $15.4 million
$28 million Contributed to Growth-Related Projects
VANCOUVER, BC, Feb. 24, 2021 /CNW/ - Pinnacle Renewable Energy ("Pinnacle" or the "Company") (TSX: PL) today announced its financial results for the 13-week ("Q4 2020") and 52-week ("Fiscal 2020") periods ended December 25, 2020.
SUMMARY OF FOURTH QUARTER 2020 FINANCIAL PERFORMANCE:
SUMMARY OF FISCAL 2020 FINANCIAL PERFORMANCE:
FACTORS IMPACTING FOURTH QUARTER, 2020
Houston Incident and Other Issues Impact Production Volumes
Lower Production and Inclement Weather Impact Shipments
Reduced Supply of Sawmill Residuals Impacts Fibre Costs
Commencement of Production at High Level
PROGRESS ON GROWTH-RELATED CAPITAL PROJECTS
High Level Construction Completed
Demopolis Construction Proceeds as Planned
Other Growth Capital Projects
ARRANGEMENT AGREEMENT
OUTLOOK
FINANCIAL AND OPERATING HIGHLIGHTS
Q4 2020 | Q4 2019 | Q4 2020 | Q4 2019 | ||
Unit | 13 weeks | 13 weeks | 52 weeks | 52 weeks | |
Revenue | $000's | 116,911 | 91,465 | 490,505 | 377,808 |
Income before finance costs and other income | $000's | 3,070 | 2,187 | 19,137 | 6,748 |
Net loss(1) | $000's | (2,497) | (3,055) | (3,876) | (9,974) |
Net loss attributable to owners | $000's | (1,965) | (3,661) | (5,041) | (10,807) |
Basic and diluted loss per share | $/share | (0.06) | (0.09) | (0.15) | (0.30) |
Adjusted Gross Margin (2)(3) | $000's | 19,826 | 16,417 | 80,521 | 64,980 |
Adjusted Gross Margin per MT (2)(3) | $/MT | 37.69 | 38.54 | 35.60 | 37.34 |
Adjusted Gross Margin Percentage (2)(3) | % | 17.0% | 17.9% | 16.4% | 17.2% |
Adjusted EBITDA (4)(2) | $000's | 15,441 | 11,282 | 61,646 | 47,173 |
Adjusted EBITDA per MT (4)(2) | $/MT | 29.35 | 26.48 | 27.25 | 27.11 |
Adjusted EBITDA Percentage (4)(2) | % | 13.2% | 12.3% | 12.6% | 12.5% |
Free Cash Flow (2) | $000's | 6,117 | 2,951 | 30,837 | 17,170 |
Annualized Return on Invested Capital (2) | % | 11.2% | 8.8% | 11.6% | 10.1% |
Annualized Cash Flow Return on Assets (2) | % | 11.5% | 10.6% | 11.0% | 9.9% |
December 25, | December 27, | ||||
Total assets | $000's | 766,922 | 629,391 | ||
Total debt | $000's | 379,770 | 316,014 | ||
Q4 2020 | Q4 2019 | Q4 2020 | Q4 2019 | ||
Operating Highlights | 13 weeks | 13 weeks | 52 weeks | 52 weeks | |
Industrial wood pellets produced (5) | MT ('000) | 489 | 442 | 2,046 | 1,741 |
Industrial wood pellets purchased (6) | MT ('000) | 39 | 16 | 160 | 91 |
Industrial wood pellets sold | MT ('000) | 526 | 426 | 2,262 | 1,740 |
Contracted Backlog (7) |
December 25, | December 27, | |||
Fiscal 2021 | $ billions | 0.6 | 0.4 | ||
Fiscal 2022 | $ billions | 0.7 | 0.5 | ||
Fiscal 2023 and thereafter | $ billions | 5.4 | 6.0 | ||
Total product sales under Contracted Backlog | $ billions | 6.7 | 6.9 |
Notes | |
(1) | For the 13-week and 52-week period ended December 25, 2020, net loss included $nil million and $4.5 million respectively of net insurance recoverable related to the Entwistle incident (13-week and 52-week periods ended December 27, 2019 - $3.0 million and $2.5 million). For the 13-week and 52-week period ended December 25, 2020, net loss included $0.2 million of net insurance recoverable related to the Houston incident ($nil for 2019). |
(2) | 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. |
(3) | For the 13-week and 52-week period ended December 25, 2020, AGM included $nil million and $3.1 million respectively of net insurance recoverable related to the Entwistle incident (13-week and 52-week periods ended December 27, 2019 - $3.4 million and $5.7 million). For the 13-week and 52-week period ended December 25, 2020, AGM included $0.3 million of net insurance recoverable related to the Houston incident ($nil for 2019). |
(4) | For the 13-week and 52-week period ended December 25, 2020, Adjusted EBITDA included $nil million and $2.6 million respectively of net insurance recoverable related to the Entwistle incident (13-week and 52-week periods ended December 27, 2019 - $3.2 million and $3.9 million). For the 13-week and 52-week period ended December 25, 2020, Adjusted EBITDA included $0.5 million of net insurance recoverable related to the Houston incident ($nil for 2019). |
(5) | Includes MT produced by all facilities managed by Pinnacle, including Houston Pellet LP ("HPLP") and Northern Pellet LP ("NPLP"). |
(6) | Includes MT sold that were purchased from third parties, excluding HPLP. |
(7) | We enter into long-term, take-or-pay offtake 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 period. |
LIQUIDITY AND CAPITAL RESOURCES
Net debt (current and long term debt, current and long term lease liabilities (excluding charter vessel), offset by cash and cash equivalents) at December 25, 2020 was $411.2 million, while available liquidity (cash and cash equivalents and unused credit capacity) was $153.3 million. This compares with net debt of $389.4 million and liquidity of $169.6 on September 25, 2020. Net debt includes $84.7 million relating to capital expenditures on growth-related projects not yet commissioned, as well as $34.7 million associated with the recently completed High Level mill. As at December 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 December 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 | - | 5,600 | - | 5,600 |
Drawings | 6,000 | 280,000 | 102,200 | 388,200 |
Unused portion of facility | 59,000 | - | 82,800 | 141,800 |
Add: | ||||
Cash and cash equivalents | - | - | - | 11,510 |
Available liquidity at December 25, 2020 | 59,000 | - | 82,800 | 153,310 |
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 fifty-two week periods ended December 25, 2020.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
FOR THE FISCAL 2020 YEAR ENDED DECEMBER 25, 2020
Fiscal year ended | Note | December 25, 2020 | December 27, 2019 |
Revenue | 23 | 490,505 | 377,808 |
Costs and expenses | |||
Production | 346,266 | 258,547 | |
Distribution | 62,223 | 54,021 | |
Selling, general and administration | 13 | 20,049 | 18,495 |
Amortization of equipment and intangible assets | 42,830 | 39,997 | |
471,368 | 371,060 | ||
Operating income | 19,137 | 6,748 | |
Other income/(expense) | |||
Equity earnings in Houston Pellet Limited Partnership | 8 | (330) | 573 |
Loss on disposal of property, plant and equipment | (1,058) | (1,103) | |
Impairment of Entwistle | - | (9,417) | |
Impairment of intangibles | - | (278) | |
Insurance recovery for property loss at Entwistle | 3,643 | 9,000 | |
Finance costs | 14 | (26,534) | (24,178) |
Other income | 157 | 6,376 | |
(24,122) | (19,027) | ||
Net loss before income taxes | (4,985) | (12,279) | |
Income tax recovery | |||
Deferred | 15 | 1,109 | 2,305 |
1,109 | 2,305 | ||
Net loss | (3,876) | (9,974) | |
Net (loss)/income attributable to: | |||
Owners of the Company | (5,041) | (10,807) | |
Non-controlling interests | 12 | 1,165 | 833 |
(3,876) | (9,974) | ||
Net loss per share attributable to owners (basic and diluted): | 16 | (0.15) | (0.33) |
Weighted average of number of shares outstanding (thousands): | 16 | 33,359 | 33,238 |
Fiscal year ended | December 25, 2020 | December 27, 2019 | |
Net loss | (3,876) | (9,974) | |
Items that may be recycled through net income: | |||
Foreign exchange translation of foreign operations, net of tax | (4,506) | (940) | |
Comprehensive loss for the period | (8,382) | (10,914) | |
Comprehensive (loss)/income attributable to: | |||
Owners of the Company | (8,195) | (12,127) | |
Non-controlling interests | (187) | 1,213 | |
(8,382) | (10,914) |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE FISCAL 2020 YEAR ENDED DECEMBER 25, 2020
Fiscal year ended | Note | December 25, 2020 | December 27, 2019 |
Cash provided by (used in) | |||
Operating activities | |||
Net loss | (3,876) | (9,974) | |
Financing costs, net | 14 | 26,534 | 24,178 |
Distributions from Houston Pellet Limited Partnership | - | 2,400 | |
Insurance received for business interruption at Entwistle | 22 | 9,516 | 7,100 |
Realized gain on derivatives and foreign exchange | 14 | 2,095 | 2,189 |
Items not involving cash: | |||
Amortization of equipment and intangible assets | 42,830 | 39,997 | |
Equity loss/(earnings) in Houston Pellet Limited Partnership | 8 | 330 | (573) |
Loss on disposal of equipment | 1,058 | 1,103 | |
Stock-based compensation | 11 | 642 | 1,020 |
Inventory write down | 5 | 688 | 181 |
Impairment of Entwistle plant | - | 9,417 | |
Impairment of intangible assets | - | 278 | |
Insurance recoverable recorded in income related to Entwistle | 22 | (7,259) | (22,000) |
Business interruption insurance recorded in income related to Houston | 22 | (490) | - |
Deferred income tax recovery | 15 | (1,109) | (2,305) |
Cash flow from operating activities | 70,959 | 53,011 | |
Net change in non-cash operating working capital | 17 | 15,317 | (20,049) |
86,276 | 32,962 | ||
Financing activities | |||
Drawings on revolver loan | 9 | 278,200 | 199,600 |
Repayment of revolver loan | 9 | (291,400) | (198,850) |
Drawings on term debt | 9 | - | 277,944 |
Repayment of term debt | 9 | (5,600) | (194,000) |
Drawings on delayed draw loan | 9 | 82,200 | 20,000 |
Repayment of delayed draw loan | 9 | - | (49,760) |
Principal payment of leases | 25 | (9,253) | (7,550) |
Proceeds from exercise of stock options | 11 | 243 | 332 |
Dividends paid during the period | 11 | (8,757) | (19,939) |
Investment from non-controlling interest | 18,689 | 5,652 | |
Distributions to non-controlling interest | (487) | (1,100) | |
Finance costs paid | 14 | (19,817) | (19,215) |
44,018 | 13,115 | ||
Investing activities | |||
Insurance recovery for property loss at Entwistle | 22 | 4,643 | 8,000 |
Increase in restricted cash | (1,325) | - | |
Purchase of intangible assets | 7 | (71) | - |
Purchase of property, plant and equipment | 17 | (133,361) | (61,032) |
Proceeds from sale of property, plant and equipment | 400 | 157 | |
(129,714) | (52,875) | ||
Foreign exchange gain on cash position held in foreign currency | (337) | 37 | |
Increase/(decrease) in cash and cash equivalents | 243 | (6,761) | |
Cash and cash equivalents, beginning of the period | 11,267 | 18,028 | |
Cash and cash equivalents, end of the period | 11,510 | 11,267 |
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As at | Note | December 25, 2020 | December 27, 2019 |
ASSETS | |||
Current assets | |||
Cash and cash equivalents | 11,510 | 11,267 | |
Restricted cash | 1,325 | - | |
Accounts receivable | 4 | 30,941 | 36,764 |
Inventory | 5 | 42,679 | 46,938 |
Receivable against NMTC debt | 26 | - | 12,774 |
Other current assets | 4,308 | 10,916 | |
Total current assets | 90,763 | 118,659 | |
Property, plant and equipment | 6 | 565,442 | 399,181 |
Goodwill and intangible assets | 7 | 98,795 | 100,191 |
Investment in Houston Pellet Limited Partnership | 8 | 7,217 | 7,548 |
Deferred income tax assets | 15 | 4,468 | 2,448 |
Other long-term assets | 17 | 1,364 | |
Total assets | 766,922 | 629,391 | |
LIABILITIES AND EQUITY | |||
Current liabilities | |||
Accounts payable and accrued liabilities | 64,737 | 50,663 | |
Revolver loan | 9 | 6,000 | 19,200 |
Current portion of long-term debt | 9 | 21,700 | 3,128 |
Current portion of NMTC debt | 26 | - | 12,774 |
Current portion of lease liabilities | 25 | 10,879 | 7,424 |
Other current liabilities | 315 | 1,786 | |
Total current liabilities | 103,631 | 94,975 | |
Long-term debt | 9 | 352,070 | 293,686 |
Lease liabilities | 25 | 92,765 | 29,551 |
Other long-term liabilities | 10 | 6,857 | 2,462 |
Deferred income tax liabilities | 15 | 1,130 | - |
Total liabilities | 556,453 | 420,674 | |
EQUITY | |||
Shareholders' equity | |||
Common shares | 11 | 278,076 | 277,619 |
Contributed surplus | 4,377 | 4,145 | |
Accumulated other comprehensive loss | (4,474) | (1,320) | |
Deficit | (130,989) | (117,191) | |
Total equity attributable to owners of the Company | 146,990 | 163,253 | |
Non-controlling interest | 12 | 63,479 | 45,464 |
Total equity | 210,469 | 208,717 | |
Total liabilities and equity | 766,922 | 629,391 |
Pinnacle's audited consolidated financial statements and Management's Discussion & Analysis for Fiscal Year ended December 25, 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 second 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. The Company operates nine production facilities in Western Canada and one in Alabama, with one additional facility under construction in 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.
(1) NON-IFRS FINANCIAL MEASURES
This news release makes reference to certain non-IFRS measures. Please see page 14 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.