Enviva Inc (EVA) 2023 Q3 法說會逐字稿

Good morning, and welcome to Enviva Inc.'s Third Quarter of 2023 Earnings Conference Call. (Operator Instructions) Please note, this event is being recorded.

早安，歡迎參加 Enviva Inc. 2023 年第三季財報電話會議。 （操作員指示）請注意，此事件正在記錄中。

I would now like to turn the call over to Kate Walsh, Senior Vice President of Investor Relations and Corporate Communications. Please go ahead.

現在，我想將電話轉給投資者關係和企業傳播高級副總裁凱特沃爾什 (Kate Walsh)。請繼續。

Good morning, everyone, and welcome to Enviva's Third Quarter of 2023 Earnings Conference Call. We appreciate your interest in and support of Enviva, and thank you for your participation today.

大家早安，歡迎參加 Enviva 2023 年第三季財報電話會議。我們感謝您對Enviva的關注和支持，並感謝您今天的參與。

On this morning's call, we have Glenn Nunziata, our Interim Chief Executive Officer and Chief Financial Officer. Our agenda will be for Glenn to discuss our financial and operating results and to provide an update on our current business outlook and operations. Then, we will close the call.

今天早上的電話會議由我們的臨時執行長兼財務長 Glenn Nunziata 主持。我們的議程將是讓格倫討論我們的財務和營運結果並提供我們當前業務前景和營運的最新資訊。然後，我們將結束通話。

Today, we will not be having a live question-and-answer session.

今天，我們將不會進行現場問答環節。

During the course of our remarks, we will be making forward-looking statements, which are subject to a variety of uncertainties and risks. Information concerning these risks and uncertainties that could cause our actual results to differ materially from those in our forward-looking statements can be found in our earnings release as well as in our other SEC filings. We assume no obligation to update any forward-looking statements to reflect new or changed events or circumstances.

在我們發表評論的過程中，我們將做出前瞻性的陳述，這些陳述會受到各種不確定性和風險的影響。有關這些風險和不確定性的資訊可能會導致我們的實際結果與前瞻性陳述中的結果有重大差異，這些資訊可以在我們的收益報告以及其他 SEC 文件中找到。我們不承擔更新任何前瞻性陳述以反映新的或變更的事件或情況的義務。

In addition to presenting our financial results in accordance with GAAP, we will also be discussing adjusted EBITDA and certain other non-GAAP financial measures pertaining to completed reporting periods as well as our forecast. Information concerning the reconciliations of these non-GAAP measures to their most directly comparable GAAP measures and other relevant disclosures is included in our earnings release. Our SEC reports, earnings release and most recent investor presentation, which contain reconciliations of non-GAAP financial measures that we use, can be found on our website at envivabiomass.com.

除了根據 GAAP 展示我們的財務結果外，我們還將討論調整後的 EBITDA 和與已完成報告期間相關的某些其他非 GAAP 財務指標以及我們的預測。我們的收益報告中包含了這些非 GAAP 指標與最直接可比較的 GAAP 指標的調整以及其他相關揭露的資訊。我們的 SEC 報告、收益報告和最新的投資者介紹（包含我們使用的非 GAAP 財務指標的對帳）可在我們的網站 envivabiomass.com 上找到。

I would now like to turn the call over to Glenn.

現在我想把電話轉給格倫。

Good morning, everyone, and thank you for joining us.

大家早安，感謝大家的收看。

By way of quick background, I joined Enviva a little less than 3 months ago as CFO. And today, I'm honored to be speaking to you as both CFO and the interim CEO. For the past few months, I have fully immersed myself in all aspects of the company's operations and performance, including, of course, its financial processes and capital structure.

簡單介紹一下我的背景，我加入 Enviva 還不到三個月，擔任財務長。今天，我很榮幸能夠以財務長和臨時執行長的身份與大家交談。過去幾個月裡，我全心投入公司營運和績效的各個方面，當然包括財務流程和資本結構。

Unfortunately, as you read in our press release and 10-Q filed this morning, this was a very disappointing quarter overall for the company. Spot market prices for wood pellets this year have not evolved in the way we anticipated, and that weakness in the spot market caused us to significantly miss our expectations for the third quarter as well as materially reduce our expectations for the fourth quarter of this year. As a result, our profitability and cash flows are meaningfully lower than we had expected, putting pressure on our covenants under our bank facility and overall liquidity.

不幸的是，正如您在我們的新聞稿和今天早上提交的 10-Q 文件中看到的那樣，這對該公司來說總體來說是一個非常令人失望的季度。今年木屑顆粒現貨市場的價格並未按照我們預期的方式發展，現貨市場的疲軟導致我們對第三季的預期大大未達到，並大幅降低了對今年第四季的預期。因此，我們的獲利能力和現金流明顯低於預期，對我們的銀行信貸契約和整體流動性造成壓力。

To address these near-term headwinds, we are moving with urgency to execute a multifaceted transformation plan, consisting of three key undertakings. First, we have launched a very focused effort on improving the profitability of our contracts, with the intention of returning to a business model, which generates the vast majority of cash flow from predictable, profitable take-or-pay contracts.

為了應對這些短期阻力，我們正在緊急實施一項多方面的轉型計劃，其中包括三項關鍵工作。首先，我們非常集中精力提高合約的獲利能力，目的是回歸一種商業模式，即從可預測的、有利可圖的照付不議合約中產生絕大部分現金流。

The single most important lever we have to ensure the long-term success of the business is improving the profitability of our current portfolio of contracts and ensuring that the value of those contracts more appropriately reflects the value we provide to customers.

我們要確保業務的長期成功，最重要的手段就是提高我們目前合約組合的獲利能力，並確保這些合約的價值更適當地反映我們為客戶提供的價值。

Second, we have engaged leading advisory firms, specifically Lazard, Alvarez & Marsal and Vinson & Elkins, to perform a comprehensive review of our capital structure, with the intent of improving our financial position and strengthening our balance sheet.

其次，我們聘請了領先的顧問公司，特別是 Lazard、Alvarez & Marsal 和 Vinson & Elkins，對我們的資本結構進行全面審查，旨在改善我們的財務狀況並加強我們的資產負債表。

And third, we announced a realignment of senior leadership to strategically focus our resources on those first two pivotal undertakings.

第三，我們宣布對高階領導進行調整，策略性地將資源集中在前兩項關鍵任務。

The leadership realignment is primarily comprised of two key changes. First, the Board of Directors has appointed me interim CEO. In this expanded role, I will lead all facets of the important initiatives we are taking to ensure the turnaround of Enviva. And very importantly, I will work diligently to restore credibility among our key stakeholders, including our valued shareholders, lenders, bondholders, customers, vendors and employees.

領導階層調整主要包含兩項重要變更。首先，董事會任命我為臨時執行長。在這個擴大的職位上，我將領導我們採取的所有重要舉措，以確保 Enviva 的扭虧為盈。而且非常重要的是，我將努力恢復我們主要利害關係人之間的信譽，包括我們尊貴的股東、貸款人、債券持有人、客戶、供應商和員工。

As we execute with urgency on these important steps, we have asked Thomas Meth to focus his energies almost exclusively on renegotiating our existing customer contracts, given his long-standing relationships and understanding of each customer.

在我們緊急執行這些重要步驟時，我們要求托馬斯·梅斯將他的精力幾乎全部集中在重新談判我們現有的客戶合約上，因為他與每個客戶都有長期的合作關係並且非常了解。

And second, Mark Coscio, previously our Chief Development Officer, is taking on the role of Chief Operating Officer, providing oversight of our plants and ports, in addition to our capital investment program.

第二，先前擔任我們首席開發官的馬克·科西奧 (Mark Coscio) 將擔任首席營運官，負責監督我們的工廠和港口以及資本投資計劃。

It's important to note that we are also evaluating a number of potential alternatives with the help of our advisers to alleviate the adverse liquidity impact of a series of transactions we're calling the Q4 2022 transactions. As many of you are aware, during the fourth quarter of last year, we entered into agreements with a customer to purchase approximately 1.8 million metric tons of wood pellets between 2023 and 2025. These purchase agreements were priced at market prices in effect at the time of the agreements.

值得注意的是，我們還在顧問的幫助下評估了一些潛在的替代方案，以減輕我們稱之為 2022 年第四季交易的一系列交易帶來的不利流動性影響。大家可能都知道，去年第四季度，我們與一位客戶達成了協議，將在 2023 年至 2025 年期間購買約 180 萬公噸木質顆粒。

And roughly at the same time, we entered into additional wood pellet sales contracts with that same customer. That together with the existing sales contracts we had with that customer, totaled approximately 2.8 million metric tons, with deliveries between 2022 and 2026.

大約在同一時間，我們與同一客戶簽訂了額外的木質顆粒銷售合約。加上我們與該客戶現有的銷售合同，總量約為 280 萬公噸，交貨時間為 2022 年至 2026 年之間。

As described in much further detail in our Form 10-Q filed today, the Q4 2022 transactions have had a significant negative impact on our profitability, cash flows and liquidity, due to the negative current spread between the sale and purchase prices of the agreements and the anticipated loss on resale of those volumes given the current unfavorable spot market pricing environment.

正如我們今天提交的 10-Q 表中更詳細地描述的那樣，2022 年第四季度的交易對我們的盈利能力、現金流和流動性產生了重大負面影響，原因是協議的買賣價格之間存在負的當前價差，並且考慮到當前不利的現貨市場定價環境，預計轉售這些數量的損失。

Absent a significant and near-term increase in wood pellet market pricing, we expect the Q4 2022 transactions will continue to have a negative impact on our profitability, cash flows and liquidity through 2025. Compounding these challenges are the operational challenges we reported during the first half of 2023, and the wood pellet spot market, that has largely held market prices at levels unsupportive of creating margin through spot purchases or spot sales. As such, we anticipate that, absent a cure, we may be in breach of certain of our covenants under our senior secured credit facility as early as the end of the fourth quarter of 2023.

如果木屑顆粒市場價格在短期內沒有大幅上漲，我們預計 2022 年第四季度的交易將繼續對我們的盈利能力、現金流和流動性產生負面影響，直至 2025 年。因此，我們預計，如果不採取措施，我們可能最早在 2023 年第四季末就會違反優先擔保信貸安排下的某些契約。

Because of these conditions and events in the aggregate, you will see going concern language noted in our press release and Form 10-Q. As I noted earlier, we are moving forward with a sense of urgency to develop and execute a successful path through the near-term challenges.

由於這些條件和事件的整體情況，您將在我們的新聞稿和 10-Q 表中看到持續經營的語言。正如我之前提到的，我們正帶著緊迫感向前邁進，並制定並執行一條成功應對近期挑戰的道路。

Importantly, as we look beyond the next few quarters, we remain optimistic regarding the long-term value inherent in this business and in this industry. We have a lot of work to accomplish in the near term, but once we navigate through these challenges, we believe Enviva will be in a stronger position to continue to lead the industrial biomass sector through this next significant leg of growth.

重要的是，展望未來幾個季度，我們仍然對該業務和該行業固有的長期價值保持樂觀。我們短期內還有很多工作要做，但一旦我們克服這些挑戰，我們相信 Enviva 將處於更有利的地位，繼續引領工業生物質產業度過下一個重要的成長階段。

Let's turn now to discuss the details of our third quarter results. There are two key highlights I'd like to acknowledge upfront because they are a real testament to the focus, talent and resilience of our entire team.

現在讓我們來討論一下第三季業績的具體細節。我想先承認兩個關鍵亮點，因為它們真正證明了我們整個團隊的專注、才華和韌性。

First, production improvements across our plant fleet helped increase sales volumes by 14% year-over-year and 10% sequentially versus the second quarter of 2023. And second, our delivered at port costs were $152 per metric ton during the third quarter, down $9 per metric ton from $161 per metric ton in the second quarter. Improvement quarter-over-quarter was primarily driven by increased production, coupled with lower fixed costs such as repairs and maintenance and contract labor. While we acknowledge the progress that these continued operational improvements represent, our overall results came in well below our expectations.

首先，我們整個工廠的生產改善幫助銷售量年增 14%，與 2023 年第二季相比季增 10% 其次，第三季我們的港口交貨成本為每公噸 152 美元，比第二季的每公噸 161 美元下降了 9 美元。季度環比改善主要得益於產量增加，以及維修、維護和合約工等固定成本的降低。雖然我們承認這些持續的營運改善所代表的進步，但我們的整體績效遠低於我們的預期。

Net revenue decreased approximately 2% year-over-year, as lower commercial services activity dampened revenue per metric ton, which more than offset volume improvements. Net loss for the third quarter of 2023 was $85 million as compared to $18 million for the third quarter of 2022.

淨收入年減約 2%，因為商業服務活動的減少抑制了每公噸的收入，但超過了銷售量的成長。 2023 年第三季淨虧損為 8,500 萬美元，而 2022 年第三季淨虧損為 1,800 萬美元。

The increase in net loss year-over-year was primarily attributable to four factors: First, during the third quarter, we determined that the Southampton, Virginia plant had improved operating production costs by operating with a single dryer line and decided to permanently shut down the second underperforming dryer line. As a result, we recognized $21 million of asset impairment charges in the quarter.

淨虧損年增率主要歸因於四個因素：首先，第三季度，我們確定弗吉尼亞州南安普敦工廠通過採用單一乾燥機生產線改善了運營生產成本，因此決定永久關閉第二條表現不佳的干燥機生產線。因此，我們在本季確認了 2,100 萬美元的資產減損費用。

Second, we incurred higher interest expense, including $22 million of interest expense on repurchase account. Third, the corporate restructuring program we've been executing since the second quarter of 2023, resulted in restructuring costs recorded in the third quarter, inclusive of $6 million of severance expenses. And fourth, we simply had higher cost of goods sold because we sold more volume during the quarter.

其次，我們產生了更高的利息支出，其中包括 2,200 萬美元的回購帳戶利息支出。第三，我們自 2023 年第二季以來一直在執行的公司重組計劃導致第三季記錄了重組成本，其中包括 600 萬美元的遣散費。第四，由於本季我們的銷售量增加，因此銷售成本有所上升。

Adjusted EBITDA for the third quarter of 2023 was $36.6 million as compared to $60.6 million for the third quarter of 2022. The year-over-year decrease of $24 million was primarily driven by revenue per metric ton being 17% lower year-over-year, coupled with higher SG&A expenses as a result of us engaging financial and legal advisers in connection with a comprehensive review of our capital structure and negotiations with customers. The lower sales price per metric ton year-over-year was again primarily due to the weak spot market dynamics this year versus 2022.

2023 年第三季的調整後 EBITDA 為 3,660 萬美元，而 2022 年第三季為 6,060 萬美元。每公噸銷售價格年減主要還是由於今年現貨市場動態較 2022 年疲軟。

During the third quarter 2022, biomass spot market prices as well as the forward curve pricing of certain European indices exceeded $400 per metric ton. That's a substantial premium to our current long-term contracted pricing of roughly $200 to $220 per metric ton across our portfolio. Said another way, average spot market prices for the third quarter of 2023 and year-to-date are both approximately 50% lower than the fourth quarter of 2022.

2022 年第三季度，生物質現貨市場價格以及某些歐洲指數的遠期曲線定價超過每公噸 400 美元。這比我們目前的整個投資組合中每公噸約 200 至 220 美元的長期合約價格有大幅溢價。換句話說，2023 年第三季和年初至今的現貨市場平均價格都比 2022 年第四季低約 50%。

In August 2023, when we reaffirmed our expectations for third quarter, including an adjusted EBITDA range of $60 million to $80 million, we factored in a significant volume of spot sales. We assumed an average sales price on this volume that was much higher than our contracted book. Our liquidity at the end of third quarter 2023 was $440 million, which included $315 million of unrestricted cash and approximately $125 million of cash restricted to funding a portion of our greenfield plants in Epes, Alabama and near Bond, Mississippi. As of the end of September 2023, we had drawn the full amount available under our $570 million senior secured revolving credit facility.

2023 年 8 月，當我們重申對第三季的預期時，包括調整後的 EBITDA 範圍為 6,000 萬美元至 8,000 萬美元，我們考慮了大量現貨銷售。我們假設這本書的平均售價將比我們合約上的售價高得多。截至 2023 年第三季末，我們的流動資金為 4.4 億美元，其中包括 3.15 億美元的非限制現金和約 1.25 億美元的限制現金，用於資助我們位於阿拉巴馬州埃佩斯和密西西比州邦德附近的部分綠地工廠。截至 2023 年 9 月底，我們已提取 5.7 億美元優先擔保循環信貸額度下的全部可用金額。

As we look ahead to the end of the fourth quarter of 2023, due to the liquidity factors and comprehensive review I've discussed, together with lower expected commercial activity, we have decided to withdraw our forward-looking guidance, including our previous sales price per metric ton, net loss, adjusted EBITDA and total capital expenditures guidance for 2023 and future years.

展望 2023 年第四季末，由於我所討論的流動性因素和全面審查，再加上預期商業活動減少，我們決定撤回前瞻性指引，包括之前的每公噸銷售價格、淨虧損、調整後的 EBITDA 和 2023 年及未來幾年的總資本支出指引。

However, we did want to share some of our assumptions for the fourth quarter based on what we know today. We are anticipating that fourth quarter results, excluding any impacts from the Q4 2022 transactions, could potentially be weaker than the results for the third quarter of 2023. While we generally experienced an uptick in biomass consumption in the fourth quarter of each year, as winter heating demand drives higher commercial value and allows us to capitalize on increased wood pellet demand and higher spot prices, that dynamic has not yet materialized this year. It is also important to note that we are incurring higher SG&A expenses associated with the important work we are doing with our financial and legal advisers.

然而，我們確實想根據目前所知的情況分享我們對第四季的一些假設。我們預計，不包括 2022 年第四季度交易的影響，第四季度的業績可能會弱於 2023 年第三季度的業績。值得注意的是，我們與財務和法律顧問合作的重要工作產生了更高的銷售、一般和行政費用。

With respect to total capital expenditures for the year, we are being extremely vigilant with cash management, while navigating through our leverage and liquidity headwinds. We remain keenly focused on investing in the construction of the Epes facility and have made approximately 40% of that total investment to date. Getting Epes up and running on time and on budget is one of our top priorities given its expected impact on our production capacity and ultimate profitability.

對於今年的總資本支出，我們在現金管理方面極為警惕，同時應對槓桿和流動性方面的不利因素。我們仍然熱衷於投資 Epes 工廠的建設，迄今已完成總投資的約 40%。鑑於其對我們的生產能力和最終盈利能力的預期影響，讓 Epes 按時並在預算內投入運作是我們的首要任務之一。

Additionally, we are progressing with the development of our Bond facility, although we are evaluating a potential deferral of 6 to 12 months related to the construction of the Bond plant in light of ongoing liquidity management initiatives. We continue to invest in Epes and Bond because we believe the cash flow contribution of these two plants is important to our successful path forward, and we want to maintain momentum with our production growth in a disciplined way. However, we will continually reevaluate our material capital expenditures.

此外，我們正在推進債券設施的開發，儘管考慮到正在進行的流動性管理舉措，我們正在評估債券工廠建設可能延期 6 至 12 個月。我們繼續投資 Epes 和 Bond，因為我們相信這兩家工廠的現金流貢獻對於我們未來的成功至關重要，並且我們希望以有紀律的方式保持生產成長的勢頭。然而，我們將不斷重新評估我們的重大資本支出。

While we recognize you may have questions after the news we've shared this morning, the fact of the matter is we have a great deal of work ahead of us before we will be in a position to provide satisfactory answers to many of those questions.

雖然我們認識到你們在今天早上分享新聞後可能會有疑問，但事實上我們還有很多工作要做，才能對其中的許多問題給出令人滿意的答案。

As a result, we will not be holding a live Q&A session today. I'm sure that's disappointing to many of you, but please know we are committed to coming back to the market in due time with more concrete updates, and we will be happy to address your questions at that time.

因此，我們今天將不會舉行現場問答環節。我確信這對你們中的許多人來說都是令人失望的，但請知道我們致力於及時重返市場並提供更具體的更新，我們將很樂意在那時解答您的問題。

As I wrap up our call, I'll conclude with a few key takeaways. First, our recent operational turnaround efforts are yielding results, as evidenced by higher production at a lower cost this quarter. As we expand our focus to tackle improvements in our revenue generation and capital structure, I am encouraged and motivated by what I see our team being able to accomplish.

在結束我們的通話時，我將總結幾個關鍵要點。首先，我們最近的營運轉型努力正在取得成效，本季產量增加且成本降低就是明證。隨著我們擴大關注範圍以解決創收和資本結構的改善問題，我看到我們團隊所取得的成就感到鼓舞和激勵。

Second, while we are navigating significant near-term headwinds, we are taking decisive steps to strategically refocus executive skill sets, strengthen our capital structure and liquidity and ultimately, better position Enviva to be a strong leader in the industrial biomass sector through this next leg of growth.

其次，在我們應對短期重大阻力的同時，我們正在採取果斷措施，從戰略上重新調整高管技能，加強我們的資本結構和流動性，並最終使 Enviva 在下一階段的增長中成為工業生物質領域的強大領導者。

Finally, the long-term outlook for our business and our industry is compelling, and I look forward to providing updates on our progress in the coming months. Thank you.

最後，我們業務和行業的長期前景令人信服，我期待在未來幾個月內提供有關我們進展的最新資訊。謝謝。

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

會議現已結束。感謝您參加今天的演講。您現在可以斷開連線。