Enviva shares Q4 2020, full-year results and expansion plans
Enviva has reported its financial and operating results for the fourth quarter and full year of 2020.
For Q4 2020, the company generated a net revenue of $277.3 million (€230 million), compared to $200.5 million (€166.4 million) for the same period in 2019.
For the whole of 2020, Enviva generated a net revenue of $875.1 million (€726.4 million), compared to a net revenue of $684.4 million (€568.1 million) for 2019.
John Keppler, chairman and CEO of Enviva, said: “We are very proud of our accomplishments in 2020. Despite the challenges presented by COVID-19, we operated our plant and terminal assets stably and reliably, we made uninterrupted deliveries to our customers, completed two transformative acquisitions, met our increased guidance expectations for adjusted EBITDA, distributable cash flow, and full-year distributions, and we delivered a 30% total return to our unitholders, all while keeping our people safe and healthy.
“As we turn the page to 2021, our ability to generate stable cash flows that grow over time is poised to be more robust than ever, fuelled both by organic growth as we look to replicate the highly accretive expansion projects in our existing portfolio and, against the backdrop of the forthcoming start-up of our sponsor’s fully-contracted Lucedale plant and Pascagoula terminal, coupled with existing and new long-term take-or-pay off-take energy supply contracts with large customers around the world, through additional drop-downs.”
The integration of the wood pellet production plants in Greenwood, South Carolina, and Waycross, Georgia, into Enviva is progressing ‘as expected’. The firm has received the necessary permits to expand the Greenwood plant’s production capacity to 600,000 tonnes per year. Construction is ongoing and the expansion is on track to be completed at the end of the year. Performance at the Waycross facility has ‘consistently met or exceeded’ Enviva’s expectations before the acquisition.
Japanese contracts
Japan’s unveiling of a ‘Green Growth Strategy Towards 2050 Carbon Neutrality’ has set a target for renewable energy sources to make up 50-60% of the nation’s power supply by 2050, and proposes tax incentives and other support to achieve this goal, including a 2 trillion yen ‘Green Innovation Fund’. These continued favourable climate change policy declarations reinforce Enviva’s conviction in its long-term growth profile.
In addition to the approximately 3.5 million metric tonnes per year (MTPY) of long-term off-take contracts with Japanese counterparties already announced by Enviva, the company’s sponsor recently executed several agreements with Japanese counterparties, including:
Other projects
Enviva continues to commission certain assets and ramp-up production from the existing expansion projects (the Mid-Atlantic Expansions) as its wood pellet plants in Northampton, North Carolina, and Southampton, Virginia. The firm expects both plants to reach a nameplate production capacity of around 750,000 MTPY at each plant by the end of the year.
Following the completed construction at the Mid-Atlantic Expansions, Enviva has commenced a series of projects (the Multi-Plant Expansions) at its pellet production plants is Sampson, North Carolina, Hamlet, North Carolina, and Cottondale, Florida, subject to receiving the necessary permits.
Enviva expects to invest around $50 million (€41.5 million) in connection with the Multi-Plant Expansions to de-bottleneck manufacturing processes, eliminate certain cost, and increase production capacity, while reducing greenhouse gas emissions at the same time. The firm expects the Multi-Plant Expansions to generate approximately $20 million (€16.6 million) in total incremental annual adjusted EBITDA. They will be funded using Enviva’s 50/50 equity/debt capital structure and be complete by the end of 2022.
For Q4 2020, the company generated a net revenue of $277.3 million (€230 million), compared to $200.5 million (€166.4 million) for the same period in 2019.
For the whole of 2020, Enviva generated a net revenue of $875.1 million (€726.4 million), compared to a net revenue of $684.4 million (€568.1 million) for 2019.
John Keppler, chairman and CEO of Enviva, said: “We are very proud of our accomplishments in 2020. Despite the challenges presented by COVID-19, we operated our plant and terminal assets stably and reliably, we made uninterrupted deliveries to our customers, completed two transformative acquisitions, met our increased guidance expectations for adjusted EBITDA, distributable cash flow, and full-year distributions, and we delivered a 30% total return to our unitholders, all while keeping our people safe and healthy.
“As we turn the page to 2021, our ability to generate stable cash flows that grow over time is poised to be more robust than ever, fuelled both by organic growth as we look to replicate the highly accretive expansion projects in our existing portfolio and, against the backdrop of the forthcoming start-up of our sponsor’s fully-contracted Lucedale plant and Pascagoula terminal, coupled with existing and new long-term take-or-pay off-take energy supply contracts with large customers around the world, through additional drop-downs.”
The integration of the wood pellet production plants in Greenwood, South Carolina, and Waycross, Georgia, into Enviva is progressing ‘as expected’. The firm has received the necessary permits to expand the Greenwood plant’s production capacity to 600,000 tonnes per year. Construction is ongoing and the expansion is on track to be completed at the end of the year. Performance at the Waycross facility has ‘consistently met or exceeded’ Enviva’s expectations before the acquisition.
Japanese contracts
Japan’s unveiling of a ‘Green Growth Strategy Towards 2050 Carbon Neutrality’ has set a target for renewable energy sources to make up 50-60% of the nation’s power supply by 2050, and proposes tax incentives and other support to achieve this goal, including a 2 trillion yen ‘Green Innovation Fund’. These continued favourable climate change policy declarations reinforce Enviva’s conviction in its long-term growth profile.
In addition to the approximately 3.5 million metric tonnes per year (MTPY) of long-term off-take contracts with Japanese counterparties already announced by Enviva, the company’s sponsor recently executed several agreements with Japanese counterparties, including:
- A new contract with a major Japanese trading house regarding a 20-year take-or-pay off-take supply for a new biomass power plant. The contract is subject to certain conditions, which are expected to be met this year. Sales related to this contract are expected to commence in 2024 with annual deliveries of 240,000 MTPY of wood pellets.
- An amendment to increase the volume from 400,000 MTPY to 420,000 MTPY under an existing 20-year, take-or-pay off-take contract with a major Japanese trading house to supply a new biomass power plant. Deliveries under this contract are expected to commence in 2024. This contract is subject to certain conditions, which are expected to be met in the first half of the year.
- A memorandum of understanding with a major trading house in Japan outlining the terms under which Enviva and its sponsor would supply up to 1 million MTPY to an emerging segment of the Japanese renewable energy market, CHP plants that could be converted from fossil fuels to co-fired or dedicated biomass plants.
Other projects
Enviva continues to commission certain assets and ramp-up production from the existing expansion projects (the Mid-Atlantic Expansions) as its wood pellet plants in Northampton, North Carolina, and Southampton, Virginia. The firm expects both plants to reach a nameplate production capacity of around 750,000 MTPY at each plant by the end of the year.
Following the completed construction at the Mid-Atlantic Expansions, Enviva has commenced a series of projects (the Multi-Plant Expansions) at its pellet production plants is Sampson, North Carolina, Hamlet, North Carolina, and Cottondale, Florida, subject to receiving the necessary permits.
Enviva expects to invest around $50 million (€41.5 million) in connection with the Multi-Plant Expansions to de-bottleneck manufacturing processes, eliminate certain cost, and increase production capacity, while reducing greenhouse gas emissions at the same time. The firm expects the Multi-Plant Expansions to generate approximately $20 million (€16.6 million) in total incremental annual adjusted EBITDA. They will be funded using Enviva’s 50/50 equity/debt capital structure and be complete by the end of 2022.
