Enviva reports strong third quarter

By Erin Voegele | November 03, 2017

Enviva Partners LP has released third quarter financial results, reporting net income of $131.5 million, up 18.7 percent when compared to the third quarter of last year. Included in the net revenue were product sales of $125.4 million on a volume of 668,000 metric tons of wood pellets, representing an increase of $21.8 million when compared to the same quarter of 2016. The increase is attributed to higher sales volumes.

Gross margin was $21.1 million for the quarter, down from $22.4 million during the same quarter of last year. The decrease is primarily attributed to higher depreciation expense, pricing mix, lower other revenue, and higher production cost, partially offset by higher sales volumes. Adjusted gross margin per metric ton was $46.49, down from $56.88 during the third quarter of last year.

Enviva reported net income of $6.3 million for the quarter, down from $10.3 million during the same quarter of 2016. Adjusted EBITDA reached $26.1 million, up 13.9 percent when compared to the same period of last year.

“With the benefits of the process improvements we undertook in the first half of the year, our facilities are performing at or better than our expectations, generating strong cash flow in the quarter enabling our 9th consecutive quarterly distribution increase,” said John Keppler, chairman and CEO of Enviva. “In addition, we continue to build the foundation for long-term growth with increases to our contracted position and the completion of the Wilmington terminal drop-down acquisition, which adds capacity in the most critical portion of our logistics chain.”

During an earnings call, Keppler noted that process improvements made at Enviva’s pellet plants have pushed production capacity above nameplate capacity. He said that on combined basis, the facilities are now able to produce roughly 2.8 million metric tons of wood pellets per year.

Moving into the fourth quarter, Enviva announced the completion of its drop-down acquisition of Enviva Port of Wilmington LLC from its sponsor’s joint venture with affiliates of John Hancock Life Insurance Co. Keppler noted the Wilmington terminal will handle pellet volumes produced at Enviva’s Sampson plant, a third-party pellet facility, and the pellet plant Enviva’s sponsor is building in Hamlet, North Carolina. With capacity to handle approximately 3 million tons of pellets annually, Keppler noted the terminal could handle pellets produced at other facilities in the future. Terminal capacity is a key platform to support the long-term demand growth expected from Asia and Europe, he added.

In its financial release, Enviva noted that the construction of the 600,000-metric-ton-per-year Hamlet plant continues to progress. The facility is currently expected to be operational during the first quarter of 2019. Production from the Hamlet plant is expected to supply MGT Power’s Teesside Renewable Energy Plant, which is currently under construction in the U.K.