Enviva Partners LP has released second quarter financial results, discussing increased demand for pellets from the Japanese market and providing an update on the development of pellet production projects.
&ldquo;The Partnership and our sponsor now have long-term, contracted volumes of almost 1.5 million tons per year with high credit quality Japanese counterparties and continue to progress additional off-take contracts supplying the fast-growing Asian market,&rdquo; said John Keppler, chairman and CEO of Enviva. &ldquo;Long-term off-take contracts are expected to underpin substantial investment in new plant and port capacity that, together with the robust operational and production capabilities we demonstrated again this quarter, is the foundation for long-term cash flow growth.&rdquo;
In addition to the more than 730,000 metric tons per year of long-term contracts with Japanese customers that the partnership and its sponsor have previously announced, Enviva said the partnership recently executed a 15-year 180,000 metric ton per year take-or-pay off-take contract commencing in 2022 with a major Japanese trading house to supply pellets to a new power plant, subject to certain conditions precedent, which the partnership expects to be met in 2018. The partnership has also announced that its sponsor executed two new take-or-pay off-take contracts with Sumitomo Corp. to supply 520,000 metric tons per year to new biomass power plants in Japan. One is a 15-year contract for 270,000 metric tons per year beginning in 2022, the other is a 15-year 250,000 ton per year contract commencing in 2021, subject to certain conditions precedent, which the partnership expects to be met this year.
The partnership also announced it recently extended its relationship with Drax Power Ltd. by executing a firm, take-or-pay off-take contract to supply 650,000 metric tons per year of wood pellets starting in 2022 and continuing through 2026.
Regarding the development of new production capacity, Enviva said the initial joint venture between affiliates of its sponsor and John Hancock Life Insurance Co. continues to construct the 600,000 metric ton per year plant in Hamlet, North Carolina. That facility is expected to be operational during the first half of next year.
Enviva also said its sponsor&rsquo;s new joint venture with John Hancock is continuing to investment incremental capital the Greenwood, South Carolina, pellet plant. The facility currently produces wood pellets for the partnership under a take-or-pay off-take contract. The Second Hancock JV expects to increase production capacity at the facility from 500,000 metric tons per year to 600,000 metric tons per year, subject to receiving necessary permits.
The Second Hancock JV is also continuing to progress the development of a deep-water marine terminal in Pascagoula, Mississippi, and a wood pellet plant in Lucedale, Mississippi, to serve growing demand from Asian and European customers. Enviva said the Second Hancock JV expects to make a final investment decision on these facilities later this year or in early 2019.
In addition, Enviva indicated the Second Hancock JV recently executed option agreements to potentially acquire development sites for wood pellet plants in Epes, Alabama, and Taylorsville, Mississippi.
The partnership said it expects to have the opportunity to acquire these assets from its sponsor and its joint ventures with John Hancock.
On June 28, the partnership announced its marine export terminal in Chesapeake, Virginia, returned to operations following a previously reported fire.
For the second quarter, Enviva reported net revenue of $132.1 million, up 3.6 percent when compared to the same period of last year. Included in net revenue were product sales of $129.7 million on a volume of 699,000 metric tons of wood pellets, up from $121.7 million on a volume of 628,000 metric tons of wood pellets during the second quarter of last year.
Gross margin was $16.3 million, consistent with the second quarter of last year. Adjusted gross margin per metric tons was $37.74, down from $45.18 for the second quarter of last year.
Net income was $3.5 million, up from $1.5 million during the second quarter of 2017. Adjusted EBITDA was $21.1 million, down from $23.3 million during the same period of last year.
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Enviva Partners LP has released second quarter financial results, discussing increased demand for pellets from the Japanese market and providing an update on the development of pellet production projects.



Enviva announces new contracts, discusses plans to add capacity

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