Enviva reports strong quarterly results, shares plant expansion updates
The company reported a net revenue of $285 million (€239 million) in Q2 2021, a 70% increase compared to the same period in 2020.
With the commissioning and expansion of pellet facilities in the US underway, Enviva’s chairman and CEO, John Keppler, said the firm is “firmly on track to deliver a strong full-year 2021”.
On 1 July, Enviva completed the previously announced transaction to purchase from Enviva Holdings, LP (its sponsor), a wood pellet production plant in Lucedale, Mississippi, a deep-water marine terminal in Pascagoula, Mississippi, and three long-term, take-or-pay off-take contracts with creditworthy Japanese counterparties.
The acquisition of the Lucedale plant, expected to commence operations in the second half of this year, includes an embedded, fully permitted option to expand production capacity by around 300,000 metric tonnes per year (MTPY) for around $60 million (€50.4 million) in estimated capital costs. This expansion project, if executed by Enviva, is expected to generate incremental annual adjusted EBITDA of around $15 million (€12.6 million).
Enviva also purchased the Pascagoula terminal for $104 million (€87.4 million) and expects to invest a further $26 million (€21.8 million) in remaining construction capital expenditures for the terminal to commence operations during Q3 2021. The Pascagoula terminal is expected to have a total throughput capacity of 3 million MTPY when fully constructed, allowing for throughput from multiple plants.
The three long-term take-or-pay off-take contracts have maturities ranging between 2034 and 2045, represent aggregate annual deliveries of 630,000 MPTY and add a total of $1.9 billion (€1.59 billion) to Enviva’s fully contracted sales backlog.
Production continues to ramp up for the recently constructed projects at Enviva’s Northampton, North Carolina and Southampton, Virginia wood pellet production plants. The company continues to expect each plant to reach its nameplate production capacity of around 750,000 and 760,000 MTPY, respectively, by the end of the year.
New plant in Epes, Alabama
The firm’s sponsor is currently developing a fully contracted wood pellet production plant in Epes, Alabama, designed and permitted to produce more than one million MTPY of pellets, and a potential future site in Bond, Mississippi.
The prospective plant in Bond is being designed to produce between 750,000 and 1 million MTPY of pellets. Given its proximity to the Port of Pascagoula, production from a plant in Bond would be delivered to the Pascagoula terminal by truck for export to customers around the world.
Enviva expects to have the opportunity to acquire the wood pellet production and terminal assets developed by its sponsor, along with associated long-term, take-or-pay off-take contracts, in future drop-down transactions.
“During the second quarter of 2021, Enviva delivered results in line with our expectations for the quarter and laid the foundation for a very strong back half of the year,” said Keppler.
“With the benefit of the commissioning and ramp-up of our Northampton, Southampton, and Greenwood plant expansions, continued progress on our multi-plant expansions, and the substantial contracted cash flow acquired with the drop-downs of the Lucedale plant and Pascagoula terminal, we were pleased to increase our guidance for 2021, announce guidance for 2022, and complete a sizeable equity raise.
“We believe Enviva is firmly on track to deliver a strong full-year 2021 and an even more robust 2022.”