Fortress Global Enterprises reports operating EBITDA loss in Q1 2019
By P&PC Staff
By P&PC Staff
May 15, 2019 – Fortress Global Enterprises Inc. has reported its 2019 first-quarter results with an operating EBITDA loss of $9.7 million compared to operating EBITDA of $4.2 million in the previous quarter.
In the prior year comparative period, operating EBITDA loss was $1.4 million.
The dissolving pulp segment incurred operating EBITDA loss of $8.8 million. Development costs incurred in the bioproducts segment were $0.8 million, which were offset by grants and funding. Corporate costs were $0.9 million in the first quarter of 2019.
“Mill stability continued to improve – however, due to a combination of factors, such as unusual multiple region-wide electrical outages as well as extreme weather conditions in excess of normal seasonal patterns, operating results in the first quarter and April of 2019 did not carryforward the positive momentum from the prior three quarters,” says Giovanni Iadeluca, chief executive officer of Fortress Global Enterprises. “However, as we begin the seasonally more productive months, we will be continuing our progress for the remainder of 2019. Repairs and upgrades to the regional grid have been completed in response to the outages. Important cooking process knowledge was gained during a difficult first quarter which will ensure the winter issues are mitigated and throughput increased under diverse conditions.
“Looking mid- to long-term, with support from our partners, we are finalizing plans to modernize the Fortress Specialty Cellulose mill, diversify revenue streams by converting underutilized mill process streams into high-value bioproducts, such as xylitol, and more permanently improve the balance sheet. Investissement Québec has agreed in principle to grant additional interest and principal payment deferrals on our $105.2 million debt, subject to definitive documentation as the company and IQ work towards a longer-term, multi-year moratorium and an extended term. The bioproducts demonstration plant project is a key component of our biorefinery vision. We will provide details of these important plans in the coming months.”
A total of 30,688 air dried metric tonnes (ADMT) of dissolving pulp were produced in the first quarter of 2019 and the FSC mill sold 31,232 ADMT of dissolving pulp in the same period, compared to sales of 37,818 ADMT and 33,144 ADMT of dissolving pulp in the previous quarter and prior year comparative period, respectively.
The requisite permit for the fifth digester required for commercial operation was received during the fourth quarter of 2018. The fifth digester is expected to increase annualized production by approximately 17,000 ADMT once it is operating as projected, which is anticipated to be by the summer once cooking sequence (time, temperature and recipe) has been optimized.
Substantial recent increases in VSF capacity has contributed to inventory buildup and softening of VSF pricing. Near term dissolving pulp pricing will most likely continue to be impacted by VSF market pricing and paper pulp markets. A more positive pricing environment is expected in the second half of the year and looking to the long term, this increased capacity is expected to result in commensurate demand increases in dissolving pulp requirements.
In order to take advantage of the typically stronger pricing in the second half of the year going forward, Fortress will move its annual shutdown to the second quarter from the fourth quarter to capitalize on this dynamic. The planned shutdown has been reduced by a day as Fortress was able to perform some maintenance during the power outages in the first quarter. During the shutdown the company intend to complete modifications to the fifth digester for the extraction of prehydrolysis liquor, an important step for the bioproducts demonstration plant project.
Read the full Fortress Global Enterprises Q1 2019 financial report.