Last week our team covered two quarterly earnings calls for publicly held companies in the industry and if you haven’t already read them, you certainly should. Anna Simet covered Rentech’s call and Katie Fletcher covered Enviva’s. For trade publications like ours, earnings calls yield information that simply is not available in any other forum. Because these companies are publicly held, they simply have to answer the questions their large investors and the analysts those institutional investors hire, ask. Privately owned companies are under no obligation to share financial information with anyone, and don’t. 

So what did we learn:

First, pellet producers are making money. More money this year, than last. Enviva generated over $100 million in revenue in Q3, up nearly 60% from lQ3 2014. The financial performance of Rentech’s pellet business is a little more difficult to parse out as Rentech is also engaged in chip production and nitrogen fertilizer. Additionally, Rentech continues to report on its pellet business in silos. The first silo being the pellet operations Rentech acquired when it purchased New England Wood Pellet. CEO Keith Forman told analysts that business unit would likely exceed the $9-10 million EBITDA projections they offered at the beginning of the year, so that’s positive. The other silo contains Rentech’s greenfield pellet facilities in Wawa and Atikokan, Ontario. These facilities have struggled to get up to their rated throughput and I’ll let you dig into the stories for the reasons why.

Second, as far as Enviva is concerned, more market growth should be expected. During the call a number of different big consumers of pellets were discussed in detail. Two facilities owned by DONG Energy (Studstrup and Avedore) have boiler units that will transition to wood pellets in 2016 and combined will require 1 million tons each year. Langerlo, purchased recently by German Pellets was mentioned (1.5 million tpy) as was MGT Teeside (1 million tpy), Drax’s third boiler (when fully ramped up 2 million tpy), and Lynemouth (1.5 million tpy).  

Third, the power and heating markets are continuing their trend towards merging. While it was only a mention, it is worth noting that Enviva talked about utility heating and retail sectors. They’re watching these markets and I would fully expect them to take opportunities when they present themselves. Rentech participates in that market already by virtue of their NEWP acquisition. I’m interested to see how all of this shakes out over the coming years. Consider this, the largest single consumer of wood pellets in the world (Drax) bought Billington Bioenergy, a home heating pellet distribution company. German Pellets, one of the largest pellet producers in the world, bought a power station and Rentech, a diversified company bought a regional pellet producer with an enviable position in the U.S.’s largest pellet market. We’re looking forward to learning how these strategies and decisions will play out in the marketplace and sharing it with our readers.

Finally, the Clean Power Plan is trending right now. Anna wrote a nice piece about the EPA’s interest in putting together a public forum/workshop on what the CPP means for this industry. No date has been set yet and while this might be a long shot, we’re going to invite the EPA to hold that hearing at the International Biomass Conference & Expo in Charlotte in April. It is, after all, the world’s largest gathering of biomass professionals in the world. 

One final note. Our team just sent the last Pellet Mill Magazine of 2015 to the printer, closing the books on an incredible year. We take a lot of pride in the title and look forward to the challenge of raising the bar again in 2016. If you are interested in hearing what we’ve got planned, who reads our publication and the visibility it can bring companies looking for more exposure and opportunity in the industry I’d invite you to sign up for a free webinar I’ll be hosting on Thursday. Fair warning, this webinar is 100% geared toward helping potential advertisers decide if our platform is a fit for them. I’ll be gushing about our team, our coverage and our readers for about 25 minutes. I can’t help myself. We enjoy the heck out of this industry.