Enviva announces new off-take contracts, releases Q4 results

By Erin Voegele | February 27, 2020

Enviva Partners LP released fourth quarter and full year 2019 financial results on Feb. 27, reporting increased annual pellet production and net revenue. The company also discussed future expansion plans and announced new off-take contracts. 

For the fourth quarter, Enviva reported net revenue of $200.5 million, up 18.9 percent when compared to the same period of 2018. Included in net revenue were product sales of $195.3 million on 1.041 million metric tons of wood pellets, compared to $166 million on 874,000 tons of wood pellets sold during the fourth quarter of 2018.

The company generated a gross margin of $28.2 million during the fourth quarter of 2019, compared to $24.5 million for the same period of 2018. Adjusted growth margin was $55 million, up from $31.7 million during fourth quarter of 2018.  Adjusted margin per metric ton was $52.83, up from $36.23. The increase was primarily attributed to higher sales volumes, higher pricing due to the customer contract mix, and lower production and fiber procurement costs.

Fourth quarter net income and adjusted net income were $900,000 and $17.2 million, respectively. For the same period of 2018 Enviva reported $9.4 million in net come and $14.3 million in adjusted net income. Adjusted EBITDA for the fourth quarter was $53.3 million, up from $33.8 million during the same period of 2018.

For the full year 2019, Enviva generated net revenue of $684.4 million, up 19.3 percent. Included in net revenue were product sales of $674.3 million on a volume of 3.564 million metric tons of wood pellets, compared to $564 million on a volume of 2.983 million metric tons in 2018.

Gross margin was $81.1 million for 2019, up from $69.4 million in 2018. Adjusted gross margin was $151.6 million for 2019, up from $115.8 million in 2018. Adjusted gross margin per metric ton was $42.54, up from $38.81 in 2018. The increase is attributed to higher sales volumes, higher pricing due to customer contract mix, and lower production and fiber procurement costs.

Net loss for 2019 was $2.9 million, with adjusted net income of $33.4 million. For 2018, net income was $7 million and adjusted net income was $22.2 million. Adjusted EBITDA for 2019 was $141.3 million, compared to $102.6 million in 2018.

In its financial report, Enviva announced two new contracts with customers in Japan. The company recently signed a 20-year take-or-pay off-take contract for Ichihara Yawatafuto Biomass Power GK, a new biomass power plant project company owned by Equis Bioenergy and sponsored by Equis Group. Enviva expects to deliver 270,000 tons of pellets per year under the contract, beginning in 2023.

Enviva also signed an 18-year take-or-pay off-take contract with a major Japanese trading house to supply pellets to a new biomass power plant. The company is expected to supply the plant with 150,000 tons of pellets annually, beginning in 2023.

Regarding plant operations, Enviva said its Hamlet plant in North Carolina continues to ramp up production. The facility is expected to reach its full nameplate production capacity of approximately 600,000 metric tons per year by the end of 2020.

Enviva also indicated it is awaiting permit approvals that will allow it to expand production the Greenwood, South Carolina, pellet plant to 600,000 metric tons per year. Construction is underway at a wood pellet plant in Lucedale, Mississippi, and a deep-water marine terminal in Pascagoula, Mississippi. Enviva said major equipment is on order and initial foundations are being completed at the Lucedale plant. In addition, the first of two large concrete wood pellet storage domes is being constructed at the Pascagoula terminal. A final investment decision on a proposed wood pellet plant in Epes, Alabama, is expected to be made during the first half of this year. Enviva also noted it is evaluating additional sites for wood pellet production plants in Alabama and Mississippi. Production from those plants would be exported through the Pascagoula terminal.