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About Pinnacle

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 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 two additional facilities under construction in Alberta and Alabama. Additionally, Pinnacle 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.

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 eight production facilities in Western Canada linked by rail to ocean shipping terminals on the B.C. coast, as well as one production facility in Alabama with convenient access to ocean shipping via the U.S. Gulf Coast, 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 18% from 2017 through 2021.

Vertical Integration & Operational Excellence Result in an Attractive Cost Position

Pinnacle has established vertically-integrated operations throughout the western Canadian and the U.S. southeastern fibre baskets 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 in the U.K., Europe and Asia that represent 108% of its production capacity through 2026, resulting in highly predictable cash flows. As at September 27, 2019, Pinnacle’s contracted backlog was $7.1 billion, more than double the $3.0 billion of contracted backlog the Company had at the end of Fiscal 2017. During Fiscal 2018 and 2019, Pinnacle entered into 12 new contracts with major customers in Japan and South Korea.

Proven Project Development Capabilities and Attractive Project Pipeline

Pinnacle has established a strong track record of developing, constructing, commissioning and operating new production facilities, as well as expanding or converting existing production facilities, on-time and on-budget. The Company completed the construction of new production facilities in Entwistle, Alberta, and Smithers, B.C. during 2018, that added approximately 525,000 metric tonnes of annual production capacity. Additionally, the Company is constructing new facilities in Alberta and Alabama that will add approximately 530,000 metric tonnes of annual production capacity by mid-2021. Several additional project development opportunities are currently being evaluated by Pinnacle.

Strong Long-Term Financial Performance with Significant EBITDA Growth

Pinnacle’s financial performance has improved significantly since Fiscal 2014, with growth in EBITDA exceeding top-line growth due to increased scale. Adjusted EBITDA has increased at a compound annual growth rate (CAGR) of 32% since Fiscal 2014, Adjusted Gross Margin has increased at a 26% CAGR, and Revenue has increased at a 15% CAGR (to year-end 2018).

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

Hawkins Wright, a leading, independent industry research body, forecasts that demand for industrial wood pellets will have a compound annual growth rate of 18% from 2017 through 2021.

Through increasing capacity at its existing production facilities, as well as the addition of other greenfield and brownfield projects, Pinnacle expects to grow its industrial wood pellet production proportionately with increasing global demand.

In addition to organic growth opportunities, Pinnacle will pursue acquisition opportunities, or other strategic initiatives, in Western Canada or other jurisdictions, such as the U.S. Pacific Northwest, Eastern Canada and the U.S. Southeast, to further diversify its asset base, leverage its strong development and operational expertise, and capture increased market share.

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