Enviva releases Q2 results, discusses expansion plans

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Enviva Partners LP released second quarter financial results on Aug. 5, reporting that the operation of its wood pellet plants and terminals has not been interrupted by the COVID-19 pandemic. The company also outlined its expansion plans.

“While COVID-19 continues to dominate news headlines, we are very proud of what we have been able to accomplish over the past few months here at Enviva,” said John Keppler, chairman and CEO of Enviva, during an Aug. 6 earnings call. “First, we’ve kept our people healthy and safe. This has enabled us to keep our plants and ports running 24/7 and our supply chain humming. The durability and resilience of the business model we have built ensured that we delivered operating and financial results that are right on track with our expectations.”

Regarding plant operations, Enviva said its plant in Hamlet, North Carolina, has proven its expected 600,000 million metric ton per year capacity and is expected to exit 2020 at that run rate. The company also noted that commissioning has begun on certain fully constructed new process islands as part of a project to increase the production capacity of the Northampton, North Carolina, plant. Commissioning on a similar expansion project at the Southampton, Virginia, plant is expected to begin over the next several months.  These expansion projects, collectively referred to as the mid-Atlantic expansions, are expected to increase Enviva’s production capacity by 400,000 metric tons per year next year. Enviva also said that procurement and detailed engineering activities for an expansion at its Greenwood, South Carolina, plant are underway. Subject to receiving the necessary permits, that expansion remains on track to be complete by the end of 2021.

Enviva’s sponsor is also continuing to develop new production capacity. The sponsor announced on July 22 it has completed a recapitalization that includes $300 million in new equity commitments that are available to finance the sponsor’s pipeline of future growth projects. Those projects are expected to be made available to Enviva Partners for drop-down acquisition.

The sponsor is currently constructing a wood pellet production plant in Lucedale, Mississippi, and a deep-water marine terminal in Pascagoula, Mississippi. Civil work continues at both sites with construction work ramping up. Construction of the Lucedale plant and Pascagoula terminal is expected to be complete by mid-2021.

The sponsor is also developing a wood pellet plant in Epes, Alabama. A final investment decision on that project is expected to be made near the end of 2020.

Enviva said its sponsor is also evaluating additional sites for wood pellet production plants in Alabama and Mississippi, the production of which would be exported through the Pascagoula terminal.

Enviva Partners reported net revenue of $167.7 million for the second quarter, compared to $168.1 million during the same period of 2019. Gros margin was $27.7 million, up from $16.5 million. Adjusted gross margin was $42 million, up from $28 million. Adjusted gross margin per metric ton was $49.55, compared to $32.26 during the second quarter of last year.

Net income of $8.5 million for the second quarter, compared to a net loss of $3.8 million reported for same period of last year. Adjusted EBITDA was $37.4 million, up from $27 million during the second quarter of 2019.