August 2 (Renewables Now) - Canadian industrial wood pellet manufacturer Pinnacle Renewable Holdings Inc (TSE:PL) saw its contracted backlog rise to CAD 5.1 billion (USD 3.9bn/EUR 3.4bn) at the end of its second fiscal quarter on June 29, 2018 from CAD 3 billion as at March 30, 2018.
"We had a very successful quarter in securing long-term off-take contracts with new customers in Japan and South Korea, thereby diversifying our customer base, significantly growing our contracted backlog and further extending the weighted average remaining life of our contract portfolio," said chief executive Robert McCurdy.
Given the long-term supply deals secured so far in the fiscal year, the company said it now focused on increasing its industrial wood pellet production capacity.
In the second quarter, Pinnacle's net profit and comprehensive income rose to CAD 6.5 million from CAD 1.3 million a year ago, mainly due to non-recurring costs after completing the company's initial public offering (IPO).
Adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) climbed to CAD 14.9 million from CAD 14.4 million as increased revenue made up for higher production and selling, general and administrative costs.
Adjusted gross margin, however, declined to 21.3% from 24.4%, which was attributed to higher production costs as the company managed the timing of the ramp-up of sales contracts and new production facilities by buying higher cost, third-party pellets. This was offset in part by increased average sales prices.
Revenue grew 22.3% to CAD 85.1 million due to higher sales volume, more cost, insurance, freight (CIF) contracts and higher-priced UK and European contracts. Industrial wood pellet sales volumes were up 16% to about 385,000 tonnes.
The CEO said the company stays on track to meet its target of between CAD 61 million and CAD 65 million in adjusted EBITDA for fiscal 2018.
(CAD 1 = USD 0.768/EUR 0.661)