Enviva reports increased productivity from modified plants

By Erin Voegele | August 03, 2017

On Aug. 3, Enviva Partners LP released second quarter financial results, providing an update on efforts to modify it pellet production process to improve pellet quality.

During an investor call, John Keppler, chairman and CEO of Enviva, noted that during the second quarter—and carrying over a bit into the third—the company is not where it wants to be in terms of production volumes. “This is principally driven by the decision we made to modify our process to further improve pellet quality to meet the handling requirements of the increasing variety of discharge systems of our customers around the world.”

The process, he said, has taken a bit longer than originally expected. The fourth quarter, however, is shaping up to be stronger than anything the company has seen in the past, Keppler added. As the company has further improved and narrowed quality on the backend, he said it has also been able to increase flexibility on the front end of its process. For the plants that have completed these improvements, he said the company is seeing higher productivity.

During the second quarter, Enviva and its sponsor announced the execution of a memorandum of understanding for a take-or-pay off-take contract as the sole source supplier of 650,000 metric tons per year of wood pellets to the largest dedicated biomass project announced to date in Japan. Subject to definitive agreement documentation and certain conditions precedent, deliveries under the contract are expected to begin in 2022 and continue for at least 15 years.

Enviva reported that construction of the 600,000 million-to-per-year pellet plant in Hamlet, North Carolina, continues to progress. The company’s sponsor currently expects construction to be complete late next year. Pellets produced at the facility are expected to supply MGT Power’s Teesside Renewable Energy Plant, which is currently under construction in the U.K.

As announced during the second quarter, Enviva Partners has also agreed to purchase Enviva Port of Wilmington LLC from Enviva Wilmington Holdings LLC, a joint venture of the company’s sponsor and affiliates of John Hancock Life Insurance Co. The acquisition is expected to close in early October.

Enviva reported net revenue of $12.6.9 million for the second quarter, up 6 percent or $7.2 million when compared to the same three-month period of 2016. Gross margin was $18.2 million, down from $19.5 million. The company generated net income of $3.9 million during the quarter, down from $9.9 million during the same period of last year. Adjusted EBITDA reached $24.5 million, up 14.8 percent from the second quarter of 2016.