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About Pinnacle

Pinnacle Renewable Holdings Inc. (TSX: PL) is the parent company of operating company Pinnacle Renewable Energy Inc. (“Pinnacle” or “the Company”). Pinnacle is one of the world’s leading manufacturers and distributors of industrial wood pellets, which are used by global utilities and large-scale power generators as a fuel to produce renewable and reliable baseload power. Pinnacle currently operates six wood pellet production facilities throughout B.C. that process a wide range of wood fibre (primarily forest product residuals) sourced from forestry industry partners that harvest from sustainably certified forests. The Company’s production facilities are all located on major rail lines allowing for efficient rail transport to one of two shipping terminals on the B.C. coast: Pinnacle’s wholly-owned Westview terminal in Prince Rupert, and the Fibreco Terminal at the Port of Vancouver. Pinnacle has entered into long-term take-or-pay contracts with utilities in the UK, Europe and Asia that represent 100% of its production capacity through 2021 and nearly 80% of production capacity through 2026. The Company currently has new production facilities under development in Entwistle, Alberta and Smithers, B.C. to meet growing customer demand.

Why Invest in Pinnacle?

Leading Producer & Global Supplier of Bioenergy Products in a Rapidly Growing Global Market

Pinnacle is the world’s third largest producer of industrial wood pellets. With six production facilities and a large industrial port terminal on the Pacific Coast of North America, Pinnacle is one of the only wood pellet suppliers with the scale and capability to serve major global utilities. Pinnacle is a trusted supplier of these utilities, which are expected to drive future growth in demand. Hawkins Wright, a leading, independent industry research body, forecasts that demand for industrial wood pellets will have a compound annual growth rate of 17.7% from 2016 through 2021.

Vertical Integration & Operational Excellence Result in an Attractive Cost Position

Pinnacle has established vertically-integrated operations throughout the western Canadian fibre basket from wood fibre procurement contracts through to shipping contracts with reputable shippers. Pinnacle’s operating flexibility, strategically located production facilities, terminal operations and constant focus on operational efficiency combine to create a cost advantage relative to competitors. The Company is a lowest-quartile cost supplier to rapidly growing markets in both Europe and Asia.

Long Term Contracted Revenue with Stable Free Cash Flow Characteristics

Pinnacle has signed long-term, take-or-pay contracts with major utilities and power generators that account for 100% of its production capacity through 2021 and nearly 80% through 2026, on an aggregated basis, including production capacity from two facilities in development (Entwistle and Smithers) resulting in highly predictable cash flows. The Company’s contracted backlog totals $3.1 billion, and sales momentum remains strong with $421 million of backlog contracted in 2017, with approximately one third of that total coming from Japanese customers.

Proven Project Development Capabilities and Attractive Project Pipeline

Pinnacle has established a strong track record of developing, constructing, commissioning and operating new production facilities, and expanding / converting existing production facilities, on-time and on-budget. The Company’s most recent production facility development – Lavington – was completed in just 10 months, which was ahead of schedule, and capital costs were at the bottom end of the Company’s 4.0 x to 5.5 x capital cost to run-rate EBITDA target range. Pinnacle’s Entwistle and Smithers production facilities will commence production in Q1 and Q3 2018, respectively, providing significant production growth. Several additional project development opportunities are currently being evaluated by Pinnacle.

Strong Financial Performance with Significant EBITDA Growth

Pinnacle’s financial performance has improved significantly since Fiscal 2014, with growth in profitability exceeding top-line growth due to increased scale. Adjusted EBITDA has increased at a compound annual growth rate (CAGR) of 49% since Fiscal 2014, Adjusted Gross Margin has increased at a 38% CAGR, and Revenue has increased at a 14% CAGR (to LTM Q3 2017).

Experienced Management Team Driving Operational Efficiencies

Pinnacle’s management team has a combined 35 years of experience in the wood pellet industry and more than 125 years of experience in the industrial sector. The team has a track record of driving growth in production, productivity, and profitability while maintaining industry-leading safety standards.

Attractive Future Growth Opportunity

Based on current and near-term production capacity, Pinnacle expects to achieve 27% to 31% growth in the volume of wood pellets it sells by the end of Fiscal 2019, resulting in incremental Adjusted EBITDA of between $77 million and $81 million. The Company has identified and intends to pursue several new market development opportunities in geographies such as Eastern Canada, the U.S. Southeast, the U.S. Pacific Northwest, and Western Canada.

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Production Facilities, Shipping Terminals & Offices

Each of our production facilities is located in close proximity to key fibre suppliers throughout B.C. and they are all located on major rail lines, ensuring efficient bulk transport of our wood pellets to one of two shipping terminals.

Production Facilities
Shipping Terminals
Offices
Plants Under Development