Glenn Nunziata Appointed Interim Chief
Executive Officer
Enviva Inc. (NYSE: EVA) (“Enviva” or the “Company”) today
released financial and operating results for third-quarter 2023,
announced a comprehensive review of its capital structure to
improve the Company’s financial position, and announced a
realignment of leadership, including the appointment of Glenn
Nunziata, Chief Financial Officer, as Enviva’s interim Chief
Executive Officer as the Company focuses on executing a
multi-faceted transformation plan.
3Q 2023 Financial and Operational Update:
- Reported a net loss of $85.2 million for third-quarter 2023, as
compared to a net loss of $18.3 million for third-quarter 2022; net
loss for third-quarter 2023 included $21.2 million of asset
impairments, $22.1 million of interest expense on repurchase
accounting, and $6.3 million of restructuring costs that were not
incurred during the same period last year
- Reported adjusted EBITDA for third-quarter 2023 of $36.6
million as compared to $60.6 million for third-quarter 2022;
adjusted EBITDA for third-quarter 2023 is lower than the same
period last year primarily due to lower revenue from commercial
activities
- Progressed operational transformation plan:
- Increased metric tons sold by approximately 14% and 10% during
third-quarter 2023 as compared to third-quarter 2022 and
second-quarter 2023, respectively
- Reduced delivered at port (“DAP”) costs per metric ton (“MT”)
for third-quarter 2023 by $9 per MT to $152, down from $161 for
second-quarter 2023 (DAP costs not adjusted for net calorific value
(“NCV”))
- Realigned leadership positions to strategically focus executive
resources and skill sets on highest impact initiatives to address
the Company’s most important priorities
- Engaged advisors to assist Enviva with a comprehensive review
of alternatives to strengthen its capital structure, augment
liquidity, address contractual liabilities, and increase long-term
profitability
Mr. Nunziata said, “I am deeply honored to become interim CEO of
Enviva. Since joining Enviva approximately two months ago as CFO, I
have devoted my full attention to analyzing our operations,
performance, and financial profile. While we have a great deal of
work to do, we are encouraged by the progress being made through
our cost reduction and productivity initiatives. At the same time,
we are actively addressing the Company’s cash flow and liquidity
challenges as well as working with customers to renegotiate
contracts. The decisive steps we are taking are expected to better
position Enviva to continue leading the industrial biomass sector
through its next leg of growth. We look forward to providing
updates on our progress along the way.”
Thomas Meth, who continues as President, commented “This was a
disappointing quarter as our results came in meaningfully below our
expectations due primarily to weakness in commercial activities.
Given the significant near-term headwinds we’re addressing, I am
focused on engaging with customers to ensure that our contracts
reflect the value our product provides customers and returning to a
business model centered on predictable, profitable take-or-pay
contracts.”
Third-Quarter 2023 Financial Results
The table below outlines reported third-quarter 2023 results as
compared to third-quarter 2022:
$ millions, unless noted
3Q23
3Q22
Change
Net Revenue
320.6
325.7
(5.1
)
Net Loss
(85.2
)
(18.3
)
(66.9
)
Gross Margin
14.2
31.8
(17.6
)
Gross Margin $/Metric Ton
9.90
25.28
(15.38
)
Metric Tons Sold (in millions of tons)
1.433
1.256
0.177
Non-GAAP Metrics
Adjusted Gross Margin*
56.8
75.4
(18.6
)
Adjusted Gross Margin $/Metric Ton*
39.66
59.99
(20.33
)
Adjusted EBITDA*
36.6
60.6
(24.0
)
*Adjusted gross margin, adjusted gross
margin per metric ton, and adjusted EBITDA are non-GAAP financial
measures. For a reconciliation of non-GAAP measures to their most
directly comparable GAAP measure please see the Non-GAAP Financial
Measures section below
Net revenue for third-quarter 2023 was $320.6 million as
compared to $325.7 million for third-quarter 2022, a decrease of
approximately 2% year-over-year.
Metric tons sold during third-quarter 2023 were 1.433 million
MT, as compared to 1.256 million MT during third-quarter 2022,
representing a 14% increase in volumes year-over-year.
Third-quarter 2023 volumes increased by approximately 10% as
compared to second-quarter 2023, with volume uplift being driven by
production improvements being implemented across Enviva’s plant
fleet.
Net revenue for third-quarter 2023 was lower than third-quarter
2022 despite volumes sold being higher due to spot market wood
pellet pricing in 2023 being well below 2022 pricing, with the
average price for the three months and nine months ended September
30, 2023 approximately 51% and 50% lower, respectively, than the
fourth quarter of 2022.
Net loss for third-quarter 2023 was $85.2 million as compared to
$18.3 million for third-quarter 2022. The increase in net loss
year-over-year was primarily attributable to four factors: (i)
$21.2 million of asset impairment charges primarily related to
shutting down a dryer line at Enviva’s Southampton, Virginia plant,
(ii) higher interest expense, including $22.1 million of interest
expense related to repurchase accounting, (iii) restructuring
costs, inclusive of severance expenses, of $6.3 million, and (iv)
higher cost of goods sold as a result of selling more volume.
Gross margin was $14.2 million for third-quarter 2023 as
compared to $31.8 million for third-quarter 2022. The decrease in
gross margin year-over-year was primarily driven by lower revenue
per MT coupled with higher cost of goods sold given more metric
tons sold in third-quarter 2023 as compared to third-quarter
2022.
Gross margin per MT for third-quarter 2023 was $9.90 as compared
to $25.28 for third-quarter 2022, with the decrease year-over-year
attributable to the same factors that impacted gross margin.
Adjusted gross margin for third-quarter 2023 was $56.8 million
as compared to $75.4 million for third-quarter 2022. The decrease
year-over-year in adjusted gross margin was primarily due to a
significant reduction in pricing. During the three months ended
September 30, 2022, biomass spot market prices, as well as the
forward curve pricing of certain European indices, exceeded $400
per MT, representing a substantial premium to the current long-term
contracted pricing of roughly $200 to $220 per MT across Enviva’s
weighted average portfolio, and the Company captured some of this
differential during the three months ended September 30, 2022.
Adjusted gross margin per MT for third-quarter 2023 was $39.66,
as compared to $59.99 for third-quarter 2022, with the reduction
primarily attributable to a 17% decrease in sales price
year-over-year, partially offset by a 9% decrease in fiber
procurement and plant and port operating costs.
DAP cost per MT includes expenses associated with cost of goods
sold excluding port terminaling costs and shipping costs. For
third-quarter 2023, DAP per MT was $152, down $9 per MT from $161
reported for second-quarter 2023. Improvement quarter-over-quarter
was primarily driven by increased production coupled with lower
fixed costs such as repairs and maintenance and contract labor.
These DAP figures are not adjusted for NCV, which is a component of
our sales price related to the energy content of the fiber used in
our product. NCV typically ranges from $6 to $8 per MT in
additional revenue. When DAP figures are reflected on an
NCV-adjusted basis, the cost of fiber reported is typically reduced
by $6 to $8 per MT.
Adjusted EBITDA for third-quarter 2023 was $36.6 million as
compared to $60.6 million for third-quarter 2022. The
year-over-year decrease of $24.0 million was primarily driven by
the reduction in adjusted gross margin of $18.5 million coupled
with higher selling, general, and administrative expenses
associated with financial and legal advisors. Adjusted EBITDA for
third-quarter
2023 excludes $3.8 million of cash-based employee severance
expenses incurred as part of the Company’s corporate restructuring
initiative.
Cash Flow & Liquidity
Enviva’s liquidity was $440.7 million as of September 30, 2023,
which included $315.2 million unrestricted cash and $125.5 million
cash restricted to funding a portion of the costs of the
acquisition, construction, equipping, and financing of its
greenfield plants in Epes, Alabama (“Epes”) and near Bond,
Mississippi (“Bond”). As of September 30, 2023, the Company had
drawn the full amount available under its $570.0 million senior
secured revolving credit facility. As of September 30, 2023, the
Company was in compliance with its covenants under the senior
secured revolving credit facility. The Company’s leverage ratio, as
calculated under the revolving credit facility agreement, was 5.11
times, with an interest coverage ratio of 2.56 times.
As previously disclosed, during the three months ended December
31, 2022, the Company entered into agreements with a customer to
purchase approximately 1.8 million MT of wood pellets between 2023
and 2025 (the “new purchase agreements”). The new purchase
agreements were priced at market prices in effect at the time of
the agreements. At that time, we entered into additional wood
pellet sales contracts that, together with the existing sales
contracts, totaled approximately 2.8 million MT with deliveries
between 2022 and 2026 (these new sales contracts, together with the
new purchase agreements, the “Q4 2022 Transactions”). As detailed
further in Enviva’s quarterly report for third-quarter 2023 on Form
10-Q filed today with U.S. Securities and Exchange Commission, the
Q4 2022 Transactions have had a significant negative impact on the
Company’s profitability, cash flows, and liquidity due to the
negative current spread between the sale and purchase prices of the
agreements and the anticipated loss on resale of those volumes
within an unfavorable pricing environment in the wood pellet spot
market. Absent a significant and near-term increase in wood pellet
market pricing, we expect the Q4 2022 Transactions will continue to
have a negative impact on our profitability, cash flows, and
liquidity through 2025. In addition, as a result of operational
challenges experienced at the Company’s plants during the first and
second quarters of 2023 and a wood pellet market dynamic that has
largely held market prices at levels unsupportive of creating
margin through spot purchases or spot sales, the Company
anticipates that, absent a cure, it may be in breach of certain of
its covenants under its senior secured credit facility as early as
the reporting date for the measurement period ending December 31,
2023. These conditions and events in the aggregate raise
substantial doubt regarding the Company’s ability to continue as a
going concern.
The Company is evaluating a number of potential alternatives to
maintain its compliance with the covenants and restrictions under
the senior secured credit facility and to alleviate the adverse
liquidity impact of the Q4 2022 Transactions, including:
- Negotiating with the existing customer to restructure or
renegotiate the terms of the Q4 2022 Transactions, or to seek other
alternatives to mitigate the potential impact of the Q4 2022
Transactions on the Company’s liquidity
- Renegotiating the terms of existing customer contracts to
improve Enviva’s profitability and to better protect against future
inflation and other cost risks; Enviva is prioritizing
high-quality, long-term contracted relationships with the intention
of returning to a business model of primary cash flow generation
from predictable, profitable take-or-pay contracts
- Continuing to advance cost-reduction and productivity
initiatives designed to improve the financial and operating
performance of the Company’s fully contracted assets
- Engaging with Lazard, Alvarez & Marsal, and Vinson &
Elkins LLP in a comprehensive review of alternatives to enhance
Enviva’s capital structure (including debt maturities in 2026),
augment liquidity, address contractual liabilities, and increase
long-term profitability
Full-Year 2023 Outlook
Due to the liquidity factors and comprehensive review outlined
above, together with lower commercial activity in the third quarter
of 2023 and the first part of the fourth quarter of 2023, the
Company is withdrawing previous sales price per MT, net loss,
adjusted EBITDA, and total capital expenditures guidance for 2023
and future years. Enviva generally experiences an uptick in biomass
consumption in the fourth quarter of each year as winter heating
demand coupled with seasonal impacts to the amount of solar and
wind energy available to power grids drives higher commercial value
and allows the Company to capitalize on increased wood pellet
demand and higher spot prices. This dynamic, which was particularly
pronounced in the fourth quarter of 2022, has not materialized to
date in 2023. The Company is therefore expecting a significantly
lower sales price per MT in the fourth quarter of 2023.
As a result, the Company is expecting a significantly higher net
loss, lower sales price per MT, and lower adjusted EBITDA for
full-year 2023 as compared to full-year 2022, and from what was
included in our prior guidance. Additionally, Enviva anticipates
that fourth-quarter 2023 results, excluding any impacts from the Q4
2022 Transactions, could potentially be weaker than results for
third-quarter 2023, as higher spot prices have not materialized and
the Company expects to incur higher sales, general, and
administrative expenses associated with the engagement of financial
and legal advisors in connection with the comprehensive review
described above.
In terms of total capital expenditures, the Company is being
extremely vigilant with cash management while navigating through
leverage and liquidity headwinds. Enviva remains focused on
investing in the construction of Epes and the development of Bond,
as well as maintaining the health of its current fleet of plants
for optimal production. The Company believes the cash flow
contribution of its greenfield plants is important to its path
forward, and therefore intends to maintain momentum in a
disciplined way; however, it will continually re-evaluate all
material capital expenditures.
Greenfield Construction and Operations Update
Construction of Epes is progressing well, and the Company
continues to expect that the facility will be operational in
mid-2024. Approximately 40% of the total investment has been made
to date, with the remaining investment scheduled throughout the
next seven quarters.
Enviva is evaluating a potential deferral of up to 12 months
related to the construction of Bond in light of ongoing liquidity
management initiatives.
In connection with a broader effort to eliminate operational
inefficiencies, during the third quarter of 2023, the Company
determined that the Southampton plant operated most cost
effectively with a single dryer line. Therefore, it permanently
shut down the second, underperforming dryer line and as a result,
it recognized an impairment expense of $21.2 million in the three
and nine months ended September 30, 2023.
Leadership Realignment
Enviva’s board of directors has appointed Glenn Nunziata as
interim CEO in addition to his role as CFO, succeeding Thomas Meth,
who has served as CEO since November 2022. Mr. Meth will remain
President and, given his deep history contracting Enviva’s
business, will focus his time on renegotiating existing customer
contracts with the intent of improving Enviva’s profitability and
returning the business to one that generates the majority of its
cash flow from predictable, profitable take-or-pay contracts.
Mr. Nunziata will focus primarily on strengthening the Company’s
balance sheet by partnering with advisors to execute strategic and
operational initiatives that ensure sufficient capital to fund
ongoing operations, meet financial covenants, and advance
greenfield projects. Mr. Nunziata will also oversee all aspects of
Enviva’s day-to-day operations.
Mark Coscio, Enviva’s Chief Development Officer, will assume the
role of Chief Operating Officer, and will continue to lead the
Company’s growth projects while taking on responsibility for plant
and port operations.
These leadership changes are effective as of November 9,
2023.
Third-Quarter 2023 Earnings Call Details
Enviva will host a webcast and conference call on Thursday,
November 9, 2023 at 8:30 a.m. Eastern Time to discuss third-quarter
results and the Company’s operations and outlook. The conference
call number for North American participation is +1 (877) 883-0383,
and for international callers is +1 (412) 902-6506. The passcode is
4600445. Alternatively, the call can be accessed online through a
webcast link provided on Enviva’s Events & Presentations
website page, located at ir.envivabiomass.com.
About Enviva
Enviva Inc. (NYSE: EVA) is the world’s largest producer of
industrial wood pellets, a renewable and sustainable energy source
produced by aggregating a natural resource, wood fiber, and
processing it into a transportable form, wood pellets. Enviva owns
and operates ten plants with an expected annual production of
approximately 5.0 million metric tons in Virginia, North Carolina,
South Carolina, Georgia, Florida, and Mississippi, and is
constructing its 11th plant in Epes, Alabama. Additionally, Enviva
is planning construction of its 12th plant, near Bond, Mississippi.
Enviva sells most of its wood pellets through long-term,
take-or-pay off-take contracts with customers located primarily in
the United Kingdom, the European Union, and Japan, helping to
accelerate the energy transition and to defossilize hard-to-abate
sectors like steel, cement, lime, chemicals, and aviation. Enviva
exports its wood pellets to global markets through its deep-water
marine terminals at the Port of Chesapeake, Virginia, the Port of
Wilmington, North Carolina, and the Port of Pascagoula,
Mississippi, and from third-party deep-water marine terminals in
Savannah, Georgia, Mobile, Alabama, and Panama City, Florida.
To learn more about Enviva, please visit our website at
www.envivabiomass.com. Follow Enviva on social media @Enviva.
Financial Statements
ENVIVA INC. AND
SUBSIDIARIES
Condensed Consolidated Balance
Sheets
(In thousands, except par
value and number of shares)
September 30, 2023
December 31, 2022
(Unaudited)
Assets
Current assets:
Cash and cash equivalents
$
315,202
$
3,417
Accounts receivable
200,199
169,847
Other accounts receivable
12,574
8,950
Inventories
192,361
158,884
Short-term customer assets
25,742
21,546
Prepaid expenses and other current
assets
12,369
7,695
Total current assets
758,447
370,339
Property, plant, and equipment, net
1,663,386
1,584,875
Operating lease right-of-use assets
96,079
102,623
Goodwill
103,928
103,928
Long-term restricted cash
125,475
247,660
Long-term customer assets
106,030
118,496
Other long-term assets
40,236
23,519
Total assets
$
2,893,581
$
2,551,440
Liabilities and Shareholders’
Equity
Current liabilities:
Accounts payable
$
47,747
$
37,456
Accrued and other current liabilities
155,606
146,497
Customer liabilities
32,478
75,230
Current portion of interest payable
17,347
32,754
Current portion of long-term debt and
finance lease obligations
16,336
20,993
Deferred revenue
54,120
32,840
Financial liability pursuant to repurchase
accounting
212,119
111,913
Total current liabilities
535,753
457,683
Long-term debt and finance lease
obligations
1,806,091
1,571,766
Long-term operating lease liabilities
108,301
115,294
Deferred tax liabilities, net
2,106
2,107
Long-term deferred revenue
114,962
41,728
Other long-term liabilities
64,050
76,106
Total liabilities
2,631,263
2,264,684
Commitments and contingencies
Shareholders' equity:
Preferred stock, $0.001 par value,
100,000,000 shares authorized, none issued and outstanding as of
September 30, 2023 and December 31, 2022, respectively
—
—
Common stock, $0.001 par value,
600,000,000 shares authorized, 74,496,537 and 66,966,092 issued and
outstanding as of September 30, 2023 and December 31, 2022,
respectively
74
67
Additional paid-in capital
735,882
502,554
Accumulated deficit
(426,245
)
(168,307
)
Accumulated other comprehensive income
219
197
Total Enviva Inc.’s shareholders’
equity
309,930
334,511
Noncontrolling interests
(47,612
)
(47,755
)
Total shareholders’ equity
262,318
286,756
Total liabilities and shareholders’
equity
$
2,893,581
$
2,551,440
ENVIVA INC. AND
SUBSIDIARIES
Condensed Consolidated
Statements of Operations
(In thousands)
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Product sales
$
306,949
$
322,978
$
855,347
$
847,505
Other revenue
13,688
2,682
36,277
7,458
Net revenue
320,637
325,660
891,624
854,963
Operating costs and expenses:
Cost of goods sold, excluding items
below
268,221
257,542
781,579
718,854
Impairment of assets
21,220
—
21,220
—
Loss on disposal of assets
4,384
4,035
11,190
7,218
Selling, general, administrative, and
development expenses
27,582
30,407
80,523
91,802
Restructuring inclusive of related
severance expenses
6,257
—
19,842
—
Depreciation and amortization
36,405
34,930
101,044
86,322
Total operating costs and expenses
364,069
326,914
1,015,398
904,196
Loss from operations
(43,432
)
(1,254
)
(123,774
)
(49,233
)
Other (expense) income:
Interest expense
(21,620
)
(18,704
)
(62,285
)
(42,633
)
Interest expense on repurchase
accounting
(22,143
)
—
(74,074
)
—
Total interest expense
(43,763
)
(18,704
)
(136,359
)
(42,633
)
Other income, net
2,190
1,671
2,516
944
Total other expense, net
(41,573
)
(17,033
)
(133,843
)
(41,689
)
Net loss before income taxes
(85,005
)
(18,287
)
(257,617
)
(90,922
)
Income tax expense
155
12
178
26
Net loss
(85,160
)
(18,299
)
(257,795
)
(90,948
)
Less net (income) loss attributable to
noncontrolling interests
(35
)
43
(143
)
48
Net loss attributable to Enviva Inc.
$
(85,195
)
$
(18,256
)
$
(257,938
)
$
(90,900
)
ENVIVA INC. AND
SUBSIDIARIES
Condensed Consolidated
Statements of Cash Flows
(In thousands)
(Unaudited)
Nine Months Ended September
30,
2023
2022
Cash flows from operating activities:
Net loss
$
(257,795
)
$
(90,948
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization
102,292
86,322
Interest expense pursuant to repurchase
accounting
74,074
—
Amortization of debt issuance costs, debt
premium, and original issue discounts
1,944
2,055
Impairment of assets and loss on disposal
of assets
32,626
7,218
Deferred taxes
178
—
Non-cash equity-based compensation and
other expense
39,759
30,222
Fair value changes in derivatives
1,312
4,673
Unrealized loss (gain) on foreign currency
transactions, net
43
(208
)
Change in operating assets and
liabilities:
Accounts and other receivables
(31,228
)
(9,654
)
Prepaid expenses and other current and
long-term assets
5,000
(32,564
)
Inventories
(781
)
(24,609
)
Finished goods subject to repurchase
accounting
(30,267
)
—
Derivatives
1,391
(3,983
)
Accounts payable, accrued liabilities, and
other current liabilities
(21,854
)
4,144
Deferred revenue
94,514
(180
)
Accrued interest
(15,407
)
(9,045
)
Other long-term liabilities
(21,398
)
(15,953
)
Net cash used in operating activities
(25,597
)
(51,552
)
Cash flows from investing activities:
Purchases of property, plant, and
equipment
(212,529
)
(162,449
)
Payment for acquisition of a business
—
(5,000
)
Net cash used in investing activities
(212,529
)
(167,449
)
Cash flows from financing activities:
Principal proceeds on senior secured
revolving credit facility, net
132,546
1,000
Proceeds from debt issuance
102,900
278,571
Proceeds from capital contribution of New
Market Tax Credit financing
—
12,307
Principal payments on other long-term debt
and finance lease obligations
(20,309
)
(28,134
)
Cash paid related to debt issuance costs
and deferred offering costs
(1,769
)
(5,376
)
Support Payments received
9,821
14,018
Proceeds from sale of finished goods
subject to repurchase accounting, net
30,505
—
Proceeds from issuance of Series A
Preferred Stock, net, which was converted into common stock
247,900
—
Proceeds from issuance of Enviva Inc.
common shares, net
—
332,970
Cash dividends
(57,104
)
(158,356
)
Payment for withholding tax associated
with Long-Term Incentive Plan vesting
(16,764
)
(16,812
)
Net cash provided by financing
activities
427,726
430,188
Net increase in cash, cash equivalents,
and restricted cash
189,600
211,187
Cash, cash equivalents, and restricted
cash, beginning of period
251,077
18,518
Cash, cash equivalents, and restricted
cash, end of period
$
440,677
$
229,705
ENVIVA INC. AND
SUBSIDIARIES
Condensed Consolidated
Statements of Cash Flows (continued)
(In thousands)
(Unaudited)
Nine Months Ended September
30,
2023
2022
Non-cash investing and financing
activities:
Property, plant, and equipment acquired
included in accounts payable and accrued liabilities
$
20,169
$
852
Supplemental information:
Interest paid, net of capitalized
interest
$
76,075
$
48,689
Non-GAAP Financial Measures
In addition to presenting our financial results in accordance
with accounting principles generally accepted in the United States
(“GAAP”), adjusted gross margin, adjusted gross margin per metric
ton, and adjusted EBITDA to measure our financial performance.
Adjusted Gross Margin and Adjusted Gross Margin per Metric
Ton
We define adjusted gross margin as gross margin excluding loss
on disposal of assets and impairment of assets, non-cash
equity-based compensation and other expense, depreciation and
amortization, changes in unrealized derivative instruments related
to hedged items, cash-based restructuring expense, acquisition and
integration costs and other, effects of COVID-19 and the war in
Ukraine, and Support Payments. We define adjusted gross margin per
metric ton as adjusted gross margin per metric ton of wood pellets
sold. We believe adjusted gross margin and adjusted gross margin
per metric ton are meaningful measures because they compare our
revenue-generating activities to our cost of goods sold for a view
of profitability and performance on a total-dollar and a per-metric
ton basis.
Adjusted EBITDA
We define adjusted EBITDA as net income (loss) excluding
depreciation and amortization, total interest expense, income tax
expense (benefit), early retirement of debt obligation, non-cash
equity-based compensation and other expense, loss on disposal of
assets and impairment of assets, changes in unrealized derivative
instruments related to hedged items, cash-based restructuring
inclusive of severance expense, acquisition and integration costs
and other, effects of COVID-19 and the war in Ukraine, Support
Payments, and Executive separation. Adjusted EBITDA is a
supplemental measure used by our management and other users of our
financial statements, such as investors, commercial banks, and
research analysts, to assess the financial performance of our
assets without regard to financing methods or capital
structure.
Limitations of Non-GAAP Financial Measures
Adjusted gross margin, adjusted gross margin per metric ton, and
adjusted EBITDA are not financial measures presented in accordance
with GAAP. We believe that the presentation of these non-GAAP
financial measures provides useful information to investors in
assessing our financial condition and results of operations. Our
non-GAAP financial measures should not be considered as
alternatives to the most directly comparable GAAP financial
measures. Each of these non-GAAP financial measures has important
limitations as an analytical tool because they exclude some, but
not all, items that affect the most directly comparable GAAP
financial measures. You should not consider adjusted gross margin,
adjusted gross margin per metric ton, or adjusted EBITDA in
isolation or as substitutes for analysis of our results as reported
in accordance with GAAP.
Our definitions of these non-GAAP financial measures may not be
comparable to similarly titled measures of other companies, thereby
diminishing their utility.
The following tables present a reconciliation of adjusted gross
margin, adjusted gross margin per metric ton, and adjusted EBITDA
to the most directly comparable GAAP financial measures, as
applicable, for each of the periods indicated.
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
(in thousands, except per
metric ton)
Reconciliation of gross margin to adjusted
gross margin and adjusted gross margin per metric ton:
Gross margin(1)
$
14,187
$
31,750
$
3,896
$
48,305
Loss on disposal of assets
4,384
3,517
11,358
6,700
Non-cash equity-based compensation and
other expense
986
567
4,604
1,868
Depreciation and amortization
33,845
32,849
94,959
81,103
Changes in unrealized derivative
instruments
3,431
710
2,703
1,245
Acquisition and integration costs and
other
—
58
—
2,615
Effects of COVID-19
—
—
—
13,942
Effects of the war in Ukraine
—
—
—
5,051
Support Payments
—
5,900
2,050
19,985
Adjusted gross margin
$
56,833
$
75,351
$
119,570
$
180,814
Metric tons sold
1,433
1,256
3,925
3,627
Gross margin per metric ton
$
9.90
$
25.28
$
0.99
$
13.32
Adjusted gross margin per metric ton
$
39.66
$
59.99
$
30.46
$
49.85
(1)Gross margin is defined as net revenue
less cost of goods sold (including related depreciation and
amortization and loss on disposal of assets).
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
(in thousands)
Reconciliation of net loss to adjusted
EBITDA:
Net loss
$
(85,160
)
$
(18,299
)
$
(257,795
)
$
(90,948
)
Add:
Depreciation and amortization(1)
37,340
34,930
102,292
86,322
Total interest expense
43,763
18,704
136,359
42,633
Income tax expense
155
12
178
26
Non-cash equity-based compensation and
other expense(2)
7,657
10,199
40,886
31,116
Impairment of assets and loss on disposal
of assets(3)
25,604
4,035
32,794
7,218
Changes in unrealized derivative
instruments
3,431
710
2,703
1,245
Cash-based restructuring inclusive of
severance expense
3,828
—
6,553
—
Acquisition and integration costs and
other
—
4,409
—
18,778
Effects of COVID-19
—
—
—
15,189
Effects of the war in Ukraine
—
—
—
5,051
Support Payments
—
5,900
2,050
19,985
Adjusted EBITDA
$
36,618
$
60,600
$
66,020
$
136,615
(1)Includes $0.9 million and $1.2 million
for the three and nine months ended September 30, 2023,
respectively, of accelerated leasehold improvement depreciation in
connection with the restructuring expenses.
(2)Includes $1.5 million and $11.8 million
for the three and nine months ended September 30, 2023,
respectively, of non-cash equity-based compensation in connection
with the restructuring expenses.
(3)Includes $21.2 million of impairment of
the permanent shut down of an underperforming dryer line at the
Southampton plant of the three and nine months ended September 30,
2023 and $0.2 million for the nine months ended September 30, 2023
of impairment of right-of-use assets related to an office lease in
connection with the restructuring expenses.
Cautionary Note Concerning Forward-Looking Statements
The information included herein and in any oral statements made
in connection herewith include “forward-looking statements” within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. All statements, other than statements of present or
historical fact included herein, regarding Enviva’s strategy,
future operations, financial position, estimated revenues and
losses, projected costs, prospects, plans, and objectives of
management are forward-looking statements. When used herein,
including any oral statements made in connection herewith, the
words “could,” “should,” “will,” “may,” “believe,” “anticipate,”
“intend,” “estimate,” “expect,” “project,” the negative of such
terms, and other similar expressions are intended to identify
forward-looking statements, although not all forward-looking
statements contain such identifying words. These forward-looking
statements are based on management’s current expectations and
assumptions about future events and are based on currently
available information as to the outcome and timing of future
events. Except as otherwise required by applicable law, Enviva
disclaims any duty to revise or update any forward-looking
statements, all of which are expressly qualified by the statements
in this section, to reflect events or circumstances after the date
hereof. Enviva cautions you that these forward-looking statements
are subject to risks and uncertainties, most of which are difficult
to predict and many of which are beyond the control of Enviva.
These risks include, but are not limited to: (i) our ability to
continue as a going concern; (ii) our ability to remain in
compliance with the covenants under our senior secured credit
facility and other debt instruments or to otherwise mitigate the
impact of such terms; (iii) our ability to renegotiate, restructure
or mitigate the terms of the Q4 2022 Transactions (as defined
below) or to renegotiate other customer contracts; (iv) our ability
to successfully execute cost-reduction and productivity initiatives
on the anticipated timeline or at all; (v) the outcome and timing
of our comprehensive review; (vi) the volume and quality of
products that we are able to produce or source and sell, which
could be adversely affected by, among other things, operating or
technical difficulties at our wood pellet production plants or
deep-water marine terminals; (vii) the prices at which we are able
to sell our products, including changes in spot prices; (viii) our
ability to capitalize on higher spot prices and contract
flexibility in the future, which is subject to fluctuations in
pricing and demand; (ix) the possibility that current market prices
may not continue and therefore, in the future, we may not be able
to make spot sales and may need to make spot purchases at higher
prices; (x) impairment of goodwill, intangible assets, and other
long-lived assets; (xi) failure of our customers, vendors, and
shipping partners to pay or perform their contractual obligations
to us; (xii) our inability to successfully execute our project
development, capacity expansion, and new facility construction
activities on time and within budget; (xiii) the creditworthiness
of our contract counterparties; the amount of low-cost wood fiber
that we are able to procure and process, which could be adversely
affected by, among other things, disruptions in supply or operating
or financial difficulties suffered by our suppliers; (xiv) our
ability to successfully negotiate, complete, and integrate
third-party acquisitions, or to realize the anticipated benefits of
such acquisitions; (xv) changes in the price and availability of
natural gas, coal, diesel, oil, gasoline, or other sources of
energy; (xvi) changes in prevailing domestic and global economic,
political, and market conditions, including the imposition of
tariffs or trade or other economic sanctions, political instability
or armed conflict, rising inflation levels and government efforts
to reduce inflation, or a prolonged recession; (xvii) inclement or
hazardous environmental conditions, including extreme
precipitation, temperatures, and flooding; (xviii) fires,
explosions, or other accidents; (xix) changes in domestic and
foreign laws and regulations (or the interpretation thereof)
related to renewable or low-carbon energy, the forestry products
industry, the international shipping industry, or power, heat, or
combined heat and power generators; (xx) changes in domestic and
foreign tax laws and regulations affecting the taxation of our
business, and investors; (xxi) changes in the regulatory treatment
of biomass in core and emerging markets; (xxii) our inability to
acquire or maintain necessary permits or rights for our production,
transportation, or terminaling operations; (xxiii) changes in the
price and availability of transportation; (xxiv) changes in foreign
currency exchange or interest rates and the failure of our hedging
arrangements to effectively reduce our exposure to related risks;
(xxv) risks related to our indebtedness, including the levels, and
maturity date of such indebtedness; (xxvi) our failure to maintain
effective quality control systems at our wood pellet production
plants and deep-water marine terminals, which could lead to the
rejection of our products by our customers; (xxvii) changes in the
quality specifications for our products required by our customers;
(xxviii) labor disputes, unionization, or similar collective
actions; (xxix) our inability to hire, train, or retain qualified
personnel to manage and operate our business; (xxx) risks related
to our restructuring plan, the primary components of which are
reductions in our workforce and corporate and other costs; (xxxi)
the possibility of cyber and malware attacks; (xxxii) our inability
to borrow funds and access capital markets; (xxxiii) viral
contagions or pandemic diseases, such as COVID-19; (xxxiv) changes
to our leadership and management team; (xxxv) potential liability
resulting from pending or future litigation, investigations, or
claims; and (xxxvi) governmental actions and actions by other third
parties that are beyond our control.
Should one or more of the risks or uncertainties described
herein and in any oral statements made in connection therewith
occur, or should underlying assumptions prove incorrect, actual
results and plans could differ materially from those expressed in
any forward-looking statements. Additional information concerning
these and other factors that may impact Enviva’s expectations and
projections can be found in Enviva’s periodic filings with the SEC.
Enviva’s SEC filings are available publicly on the SEC’s website at
www.sec.gov.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231108463767/en/
Kate Walsh Senior Vice President, Investor Relations &
Corporate Communications Investor.Relations@envivabiomass.com
Grafico Azioni Enviva (NYSE:EVA)
Storico
Da Gen 2025 a Feb 2025
Grafico Azioni Enviva (NYSE:EVA)
Storico
Da Feb 2024 a Feb 2025
