Enviva Partners anticipates strong Q4 as it unveils Q2 results
Wood pellet giant Enviva has reported strong quarter two results for the period ended 30 June, 2017.
Adjusted earnings before interest, taxes, depreciation, and amortisation (EBITDA) improved to $24.5 million (€20.75 million) for the second quarter of 2017, a 14.8% increase compared to the corresponding period in 2016.
The increase in adjusted EBITDA was driven by increased product sales due to a favourable contract pricing mix and the increase in other revenue.
Net revenue for Q2 2017 was $126.9 million, an increase of 6% compared to the same period last year. Included in net revenue were product sales of $121.7 million on a volume of 628,000 metric tonnes of wood pellets, representing an increase of 45.4 million for the second quarter of last year.
The increase was primarily attributable to more shipments under CIF (cost, insurance and freight) terms and favourable contract pricing mix.
For the second quarter of 2017, gross margin was $18.2 million, as compared to $19.5 million from the corresponding period in 2016, a decrease of $1.3 million.
During an investor call, John Keppler, chairman and CEO of Enviva, said: “There is strong growth in the markets we serve and importantly we along with our sponsor executed a memorandum of understanding to be the sole source supplier to the largest dedicated biomass project in Japan yet announced. But in the second quarter and carrying over for a bit of the third quarter, we are behind where we want to be on production volumes.
“This is principally driven by the decision we made to modify our process, to further improve palette quality, to meet the handling requirements of the increasing variety of discharge systems of our customer set around the world. And it has taken us a bit longer than we initially expected to dial on our set points in some of our plants.
“At this point in the year, we have good visibility into our shipping schedule and contract mix for the balance of 2017, including the commencement of deliveries of two new customers. So here is what we see going forward. The third quarter will likely look a lot like the second quarter, but the fourth quarter is shaping us to be stronger than anything we’ve seen in the past. This is because, although, we further improved and narrowed quality on the backend, we've been able to increase flexibility on the front end of our process.”
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 UK.
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