Enviva increases capacity, announces new customer agreements

Enviva Inc. discussed plans to double its wood pellet production capacity to approximately 13 million metric tons per year over the next five years and announced new customer agreements related to power, heat and industrial applications in its fourth quarter financial report, released Feb. 28.

Regarding the development of new wood pellet production capacity, Enviva announced that commissioning is underway at its Lucedale, Mississippi, facility. The Lucedale facility is the first plant in the company’s Pascagoula cluster and is expected to ramp production throughout the year, reaching full capacity of 750,000 metric tons per year by the end of 2022. Pellet shipments from the Port of Pascagoula terminal are expected to begin during the second quarter of this year.

During the first half of 2022, Enviva also plans to begin construction of a 1.1 million metric ton per year pellet plant in Epes, Alabama. That facility will be the second plant in the Pascagoula cluster. Construction on the third plant in the cluster is currently expected to begin in 2023.

Enviva also reported that the company is continuing to make progress in its evaluation of a new potential plant site in Bond, Mississippi. That facility could have the capacity to produce more than 1 million metric tons per year and feed into the terminal at the Port of Pascagoula. Enviva expects to make a decision on that project by the middle of 2022.

Expansion projects are underway at the company’s Sampson and Hamlet facilities, both located in North Carolina, and the plant located in Cottondale, Florida. Enviva said those expansion projects, referred to as “multi-plant expansions,” are expected to be complete by the end of the year.

In its fourth quarter report, Enviva announced it has signed a new 15-year take-or-pay memorandum of understanding (MOU) to supply a new European industrial customer seeking to displace lignite coal usage with wood pellets across production facilities in continental Europe and the U.K. Delivered annual volumes are expected to ramp up to approximately 600,000 metric tons per year by 2030, with initial deliveries starting in 2023.

Enviva also announced the signing of a new five-year take-or-pay off-take contract with an existing customer for the delivery of 90,000 metric tons in 2022 and 180,000 metric tons per year from 2023 through 2026.

As a result of the simplification transaction Enviva announced in October 2021, the company was required to recast its historical financial results in accordance with GAAP. On a recast basis, the company reported $276.3 million in net revenue for the fourth quarter, compared to $277.8 million during the same period of 2020. Adjusted gross margin was $73.3 million, up from $68.6 million. Net loss was $61.4 million, compared to a net loss of $28.1 million in the fourth quarter of 2020. Adjusted net loss was $3.1 million, compared to an adjusted net loss of $24.2 million. Adjusted gross margin was $54.47 per metric ton, up from $50.89 per metric ton.