Pinnacle Renewable Holdings Inc. (TSX: PL) A preliminary prospectus and an amended and restated preliminary prospectus containing important information relating to the securities described in this presentation has been filed with the securities regulatory authorities in each of the provinces and territories of Canada. A copy of the amended and restated preliminary prospectus, and any amendment, is required to be delivered with this presentation. The amended and restated preliminary prospectus is still subject to completion. There will not be any sale or any acceptance of an offer to buy the securities until a receipt for the final prospectus has been issued. This presentation does not provide full disclosure of all material facts Investor Presentation, June 2018 relating to the securities offered. Investors should read the amended and restated preliminary prospectus and the final prospectus and any amendment for disclosure of those facts, especially risk factors relating to the securities offered, before making an investment decision.
Disclaimer FORWARD-LOOKING INFORMATION This presentation may contain “forward-looking information” within the meaning of applicable securities laws in Canada. Forward-looking information may relate to Pinnacle’s future financial outlook and anticipated events or results and may include information regarding its financial position, business strategy, growth strategies, budgets, operations, financial results, taxes, dividend policy, plans and objectives. Particularly, information regarding the Company’s expectations of future results, performance, achievements, prospects or opportunities or the markets in which it operates is forward-looking information. In some cases, forward- looking information can be identified by the use of forward-looking terminology such as “plans”, “targets”, “expects” or “does not expect”, “is expected”, “an opportunity exists”, “budget”, “scheduled”, “estimates”, “outlook”, “forecasts”, “projection”, “prospects”, “strategy”, “intends”, “anticipates”, “does not anticipate”, “believes”, or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might”, “will”, “will be taken”, “occur” or “be achieved”. In addition, any statements that refer to expectations, intentions, projections or other characterizations of future events or circumstances contain forward-looking information. Statements containing forward-looking information are not historical facts but instead represent management’s expectations, estimates and projections regarding future events or circumstances. If any of the opinions, estimates or assumptions underlying the forward-looking information prove incorrect, actual results or future events might vary materially from those expressed in the forward-looking information. The Company has no 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. Actual results and the timing of events may differ materially from those anticipated in the forward-looking information as a result of various factors, including those described in “Risk Factors” which are described in the Company’s Annual Information Form (“AIF”) filed on SEDAR on March 27, 2018. We caution that the list of risk factors and uncertainties is not exhaustive and other factors could also adversely affect our results. Readers are urged to consider the risks, uncertainties and assumptions carefully in evaluating the forward-looking information and are cautioned not to place undue reliance on such information. See “Forward-looking Information” and “Risk Factors” in the Company’s AIF filed on SEDAR for a discussion of the uncertainties, risks and assumptions associated with these statements. NON-IFRS MEASURES This presentation makes reference 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. We use non- IFRS measures including “EBITDA”, “Adjusted EBITDA”, “Adjusted EBITDA per Metric Ton”, “Adjusted Gross Margin”, “Adjusted Gross Margin per Metric Ton”, “Adjusted Gross Margin Percentage” and “Free Cash Flow”. 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. As required by Canadian securities laws, we reconcile these non-IFRS measures to the most comparable IFRS measures in our Management Discussion & Analysis for the fiscal fourth quarter and year ended December 29, 2017. 1
Capital Market Profile TSX: PL IPO issue price (February 6, 2018) $11.25 Recent closing price (June 27, 2018) $14.54 Market Capitalization ~$480 million Quarterly Dividend $0.15 / share Ownership Common Shares Owned ¹ (millions of shares) ONCAP Entities 10.4 Other Shareholders 1.4 Public Shareholders 19.5 Basic Shares Outstanding 31.3 Stock Options 1.7 Fully Diluted Shares Outstanding 33.0 Analyst Coverage 1. As at June 27, 2018 2
Our Company 3 rd largest industrial pellet producer in a rapidly growing global market Facility Network 7 production facilities, 1 facility in development and a wholly-owned port terminal British Columbia Alberta $5.1 billion of contracted backlog under long-term contracts with large utilities (1) Smithers ( 1) Houston Westview Prince George Burns Lake Lowest quartile cost supplier Rail line Meadowbank Entwistle ⁴ Pellet Plant Williams Lake Expansion Facility Annual capacity 3 of approximately 1,947,000 MTPA and Armstrong Port (2 ) Vancouver 2019E Adjusted EBITDA of $77 to $81 million Office (1 ) Lavington Richmond Management team that drives continuous improvements and delivers industry-leading safety 1. The Houston Facility, Lavington Facility and Smithers Facility are partially-owned facilities. 2. Pinnacle is not the owner of the Fibreco Terminal. 3. Includes wholly-owned, partially-owned and in-development facilities (please refer to the Annual Information Form filed March 27, 2018 for further detail). Our mission is to be the world’s most reliable producer and supplier of bioenergy products 3
Industry Growth The industrial wood pellet industry is experiencing an extended period of rapid demand growth • Potential demand for pellets is expected to more than double from 2016 to 2021 • European potential demand expected to be primary growth driver through 2021; Asia forecast to drive potential demand growth beyond 2021, largely driven by Japan • By 2026, Hawkins Wright believes that global production capacity of pellets will need to almost double to meet expected potential demand, requiring 18.6 million MTPA of additional production capacity Global Industrial Wood Pellet Demand (millions of MT per annum) 50 45 Japan 40 36 35 29 6 30 27 3 24 25 21 20.9M MT 20 16 Current 12.9 15 Capacity 12.7 0.4 9.4 10.8 10 5 - 2013A 2014A 2015A 2016A 2017E 2018E 2019E 2020E 2021E 2026E Source: Hawkins Wright —The Outlook for Wood Pellets, No. 13, Quarter 3 2017. Potential demand is significantly higher than current operating capacity 4
Update on Contracts Addition of $2.3 billion to contracted backlog • YTD 2018, we have entered into six new long-term supply agreements in Japan and South Korea totaling $2.3 billion, bringing the Company’s contracted backlog as at June 29, 2018 to $5.1 billion. Counterparty Annual Volume (MTPA) Start Year 70,000 Late 2019 170, 000 2021 30,000 Late Fiscal 2021 315, 000 2021 75,000 Early 2022 75,000 Late 2022 Strong progress in business development in Asia 5
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