Enviva has reported its financial and operating results for the third quarter of 2020, with chairman and CEO John Keppler declaring the company is “firmly on track” to deliver results within its full-year guidance range.
In Q3, Enviva reported a net income of $1.4 million (€1.18 million), compared to net income of $8.9 million (€7.5 million) in Q3 2019. Adjusted net income was $11.2 million (€9.48 million) for Q3 2020, compared to $17.9 million (€15.1 million) in the same period in 2019.
The lower net income and adjusted net income for Q3 were primarily due to $4.9 million (€4.15 million) of acquisition and integration costs and $9.3 million (€7.87 million) incremental depreciation, amortisation, and interest expenses mainly associated with recent acquisitions, as well as changes in some non-cash expenses.
Enviva generated net revenue of $225.6 million (€191 million), compared to $157.4 million (€133 million) for Q3 2019. The $68.2 million (€57.7 million) increase was mainly attributable to a 40% increase in tonnes sold during Q3, compared to 2019.
‘Other’ revenue was $9.4 million (€7.9 million) for Q3 2020, compared to $2.2 million (€1.8 million) in 2019. Included in the ‘other’ revenue was $8.2 million (€6.9 million) in payments to Enviva for modifying shipments under its take-or-pay off-take contracts, which would otherwise have been included in product sales.
The company generated gross margin of $25.6 million (€21.6 million) compared to $26.5 million (€22.4 million) in 2019, representing a decrease of approximately $0.9 million (€762,000). Adjusted gross margin was $56.8 million (€48.1 million) for Q3 2020, compared to $41 million (€34.7 million) for the same period in 2019. The increase in adjusted gross margin was primarily due to increased tonnes sold and higher ‘other’ revenue.
Adjusted gross margin per tonne was $50.13 (€42.47) on 1,133,000 tonnes sold in Q3 2020, compared to $50.56 (€42.83) on 811,000 tonnes sold in 2019.
As previously announced, Enviva completed acquisitions of a wood pellet production plant in Greenwood, South Carolina (the Greenwood plant) and a wood pellet production plant in Waycross, Georgia (the Waycross plant) in July. The integration of these plants into the company is progressing ‘as expected’, and the operating results for Q3 2020 were consistent with the firm’s expectations prior to the acquisitions.
“Driven by our continued safe and stable operations, we are very pleased to report strong financial performance in line with our expectations for the quarter,” said John Keppler, chairman and CEO of Enviva.
“We believe that the durability of our contracted cash flows, combined with the progress we are making on integrating the recently acquired Greenwood and Waycross production plants, and the processes and procedures we put in place to protect all our people and facilities against the ongoing impact of COVID-19, enabled us to stay firmly on track to deliver results within our full-year guidance range.”