Enviva (EVVAQ) 5 May 222022 Q1 Earnings call transcript

Good morning and welcome to Enviva Incorporated First Quarter of 2022 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. Please note that this event is being recorded. I would now like to turn the conference over to Kate Walsh, Vice President of Investor Relations. ahead. go Please

for morning Chief quarter Good Officer. your welcome Enviva Executive John and thank to in morning’s President On Thank we Vice Officer; call, XXXX everyone and earnings first have you and Enviva of support Chairman appreciate Financial participation conference Inc’s today. and this and you. Keppler, of and your Executive call. Chief interest Even, We Shai

and provide agenda we discuss results Our call be our business current and for will the Then update to Shai an outlook will John up for operations. our questions. on financial and open

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

certain depending important John. release. with to also to a as XXXX presenting the on In financial is historical GAAP other Today, of that relevant we financial GAAP, reflect basis and financial over we or will point. to XXXX, on It would more announced measures the in EBITDA refer Information financial call non-recast were note concerning on recast Form disclosures we a measures the be forecast. comparable in document recast XX, of directly release required non-GAAP will on included our most and our results transaction in basis turn our I results now non-recast completed pertaining non-GAAP earnings these and our earnings discussing their to accordance GAAP details on like to that simplification October accordance discuss our to is recast historical result to XX-Q our as Please and we measures reporting periods reference transaction. adjusted well for presentation. with results addition to as reconciliations the to

morning Good today. for Kate. you joining you, us and everyone thank Thank

saw describe As XX the you fortunate have pressures heard the been and largely during together. on the several the unexpected us global we economy, have have been pandemic a call we affect quarter, but immune. we our confronting geopolitical insulated and past of last first have me previewed been we which economic consistently widespread in impacts months, not to And subset from related of

the Omicron to you’ll also our production level This plants, as which our first curtail As related lower was impacted quarter. several it a of instances. by partners failures us consistently our trucking as well seasonally in required some our plant recall, and rail by workforce absenteeism year softest availability to affecting is quarter to plant due service

supply costs cost also logistics chain such mitigate our disruptions. our and in certain we tower, expenses and work of incremental areas incurred of as workforce cost We as to fiber

behind We’re the pleased now. are that issues to report largely related pandemic us

that issues optimistic we long-term as fuels in the for also the are supply in to delivery translating means that requests abate volatility and due power however, and many by and challenges for permanent, caused soon are urgent to the inputs. is What ones in especially we for produce Ukraine durable largely will hard as and material pricing market and developments mirror of as rearview contracts raw our increases scarcity a firmly inflation some for sales new lower generators on temporary. our execute in making major are are current future exciting logistic sustainably agreements the The their see in deliveries. well. put spend industrials moment, We will challenges chain with the those I that efforts commodities price the war operational signing be and dislocations faced causing partners for carbon we growth Germany. This should momentum supply renewable time into sectors we our agreements same energy

the there, the quarter hold, metrics Before the given we of we XXXX short-term. guidance get revising assessment stock results seven where year we to taking reflect landed and our how are on months next certain see implications first of for of better the

$XXX by million. top from end three in of EBITDA is a we our guidance shift driven of key range of reducing are original primarily to to adjusted release, noted to the XX% million $XXX the for factors. The our EBITDA As million $XXX million range range the $XXX in adjusted

production. production year sold that million lower isolated, This full and negative approximately We estimate volumes is First, have will a short-term issue. impact lower on and EBITDA. an XXXX for $XX adjusted identifiable of

to Russian than third grade supply quarter. being to pellets, exacerbated was impact of year, purchase end the an right Baylor due March, of million approximately up liquidity Second, to a which XXXX a off bit ramp limited is the And our volumes effectively the and wood this is simply a startup month the to date have market. shifted to industrial for more expected closed which by to was Lucedale third, fewer party physical XX we of period expect as Russian by $XX plant delayed

which Additionally, XXXX continue is and the grow further and while $X SG&G well contracted is by we million and plant uplift about fully the about we a new expect to acceleration beyond. should be that million year, believe into to our development of higher offset to $X capacity expected for durable given for year, be pricing

a the of adjusted step to like during back first our EBITDA profile XXXX over half still the lot also years up We the look year prior big with a expect shape being half. the of

expectations. two with our that of be will the earnings are first half one our thirds projecting roughly generating, We of third back half roughly weighted

to solid increase have today by compared still XXXX to to of consensus ton given is the $XXX of in $XXX expected we as for with range this XX% adjusted, given volumes all the business. a metric million our XXXX. EBITDA have of adjusted pricing cost. which EBITDA than also But full contracted to adjusted about We’ve analysts forecasting gross guidance XXXX we most EBITDA million range over FactSet the we we’re covering $XX, also our be look estimates net-net, adjusted year in know the past. growth the higher margin given to to with line and per seeing still year preliminary in of in midpoint roughly for importantly, are So using

XXXX XX% up and balance growth continued of is guidance Given not the which our changing per XXXX. and dividend beyond in $X.XX XXXX over also how the shaping increase a of we represents share, what’s see XXXX

quarter last XX% we For period. a year’s ninety comparable dividend increase of share, the of first represents declared a cents over and one XXXX half which per

we XXXX, to of the quarterly remainder per dividend one the and For intend out to ninety cents flatten share. half

to very combination be dividend high our a a We being of and strong growth rare of pair. company proud continue

We’re our the use the largest cases where rapidly global and to player continue is in an for expanding emerge. market total product industry new addressable

and terms of durable our as the in unmatched date truly of visible and contracted growth fully highly well generates, the business ahead virtually business that the of remarkable as our prospects cash are flow growth us. We

German large German understanding announced its energy, in first to base coal series will This of new have very focused that one renewable is are including on providing be dispatch-able, signed we the power with agreements, yesterday our load, our displace to pellets of memorandum have We a of customer utility. and used plants. pleased

contract, We I year, expect one to tons contract means with as MoU This could within per delivered mentioned, firm months. the XX-year is contract large this which alone volumes this the become to over term, next expected million plant. underwrite the to construction XX new XX- of at least metric a be the

generate with be that completely to green XXX,XXX around serve We letter out new signed with per this new heat for also are start fossil process customer pellets tons manufacturing use a under agreement Germany. industrial yesterday wood metric to intent in deliveries in announced expected XXXX. fuels as new in customer early another a their Enviva’s XX-year to This to Delivered and phase as we volumes to facilities year a us. German vertical intends of

to We we and to we Germany, contract the next logistic wood industrial the logistic within months. generate returns of an terminals To market, leading LOI base throughout quarters few the are customer this convert from of from this delivery emerging partnering [indiscernible] facilitate Germany’s Germany. develop firm in to growing with service port enhance to supply a pellets strategic expect to chain to one inbound providers our

are we coast other of operating the replicate Southeast reception, investment capital the highly with storage, U.S. along a to what plan the consider part agreement, incremental terminals we opportunities our import at to related and will accretive, infrastructure, terminal transloading As export of successfully

increasing back Enviva’s generation, our we for renewable are pellets even exciting both the our and discuss to So base over as security geopolitical again, plans. and growth scale transition supplying key volumes, our the wood With I’d and large more are extremely the also sourcing. as low been contracts But on to is solid the and stocks now today’s stronger. detail power our products for purchasing by urgent substitute deliveries supply an opportunities and base. of never of to Shai, is financial existing equally carbon environment In pretty momentum limited long-term are customer But driver important energy heat fewer customers capacity this new growth energy itself. and complicated by I’ll to carbon highlights. for to fossil supply towards fact they demand there feed net in sustainability further available load attributes security in long that backdrop congruence goals. and volatile facing feed come and only to and a business prices our alternatives now woody sectors. has zero they’re it biomass the companies revisit fuel and not turn Countries abate and hard a need to fuels for while This sustainable for batch-able navigate is like high moment they share asset term to stocks augmented of some

service as provide consistent public of providers is Adjusted pre-pandemic of a gross Omicron as the have on hiring, cost the EBITDA, million [indiscernible] These to in resolve. and for X.X%, the quarter, uplift $X.X was related also loss and that result are us, the EBITDA was of incremental XXXX per uptick issues, for of low industries. sold quarter for as significant providers benefit them as the to quarter a a by our a escalators well. Many $XX.X sold improve contract first a And net to been quarter on the flow the margin XXXX well Net due Similar pricing quarter was X% quite first loss and to million of the morning, Thank planned. $XX first the levels. quarter our $XX.X good everyone. about metric revenue quarter of million seeing the primarily resulted operations revenue XXXX decreased of XXXX. XXXX corresponding war million progress as of that Omicron for due ton to only X.X%. of metric adjusted from Adjusted million was expectation said you, basis. $XX compared for quarter to had with we of not tied in our first rail by When Net they quarter many the million million per and plant a of on of expenses absenteeism as to gross of ton XXXX on from cash first go-forward making for down of logistic related generated loss This the $XX.XX cash continue Ukraine. last as first temporary was quarter costs adjusted tons durable EBITDA being first $XXX compared being Adjusted of We the be number as first to decrease for the compared includes basis. quarter XXXX that an on during are [indiscernible] of a quarter costs app Net which the availability first SG&A XXXX primarily net of X% year XXXX their we $XX.X from John first impact margin margin decreased tons flow metric to $XX.X $XX.XX as a non-recurring mentioned, as track first mainly Metric EVA gross due to up those [indiscernible] into The by the impacted basis. are to price we year-over-year inflation compared should $XXX are basis. the but basis. a for John. XXXX of year-over-year driven simplification cents would brought incurred the impacted transaction million, compared for adjusted absorbing us by of a quarter for in on decrease was is year-over-year generated million the cost XXXX absorbing for $XX.X to of $XX.X announced and is million XXXX. our transaction SG&A million simplification year-over-year to planned. roughly Distributable able

included as availability million. liquidity under credit on cash Our and which our facility March was of XX, hand XXXX, revolving $XXX

in consistently we As prior demonstrated year. have

business. for step from the that a the We two-thirds first up the will the be EBITDA our expect of back significant providing of adjusted half annual year

accretive second guidance metrics, before significantly means with in to million another a million. we look to although, QX guidance up $XXX accelerating XXXX step total we total the lot through our As we like XXXX accelerating expect CapEx range revised is which John thus And reaffirming pointed changing. should the year full expansion our of first quarter are certain QX. out, for CapEx And our $XXX highly plans, are we XXXX for now capacity

back Our XXXX. to spend end the in with CapEx spend be is happening XX% half second around of of the expected weighted

we terms leverage, terms expect within well In the credit of agreement. of stay to our

to unchanged. sheet managing conservatively Our balance commitment Enviva’s is

to of will increasingly do and continue cash update timing John from self-funding construction. transition of dependent cadence generated our fully the business is expect plant on shortly. to And we to an The a our new We will growth transition model so. growth over outlook flow to this time on use give asset

very more to back dividend we protect visible, our potential X.Xx are model. year, big first impact business headlines, fully just financial from going model are a the ratio and Stepping we the coverage the isn’t we the cash shareholders up this new of at dominating rate. flexibility strength of with flow picture. much to contracted over us resilience temporary short-term expect to of Notwithstanding a time. the set a is value dividends most at the company this the recession. of another look encountered during similar Over of that of the proud believe increase I’m have long-term, doable to to of we business challenges and pressure There unlock. targeting our quarter And macro including yet profile have we

John. like would I Now, to turn it back to

Shai. a on of being pick Shai’s up Thanks, point To business. contracted Enviva fully last

over backlog maturity XX weighted revenue contracted Our billion with remains a years. $XX more of than average contract

backlog pipeline billion. complimented revenue $XX excess by customer sales contracted growing Our of a in is

permitted the contracted smaller largest we expected ramping in annualized metric dropdown still incredible contracted conviction and long-term on why former the tons Given expanding position, production approximately is about weeks than five or have on is of we pellet adjusted by construction the aggressively you market, will sponsor demand X.Xx growth year, once our produce be can will in $XX our investment building, we’re an when that the we to next multiple, this generate to on the and you profile. were assets scale improvement a in Lucedale around that’s persistent robust in that At plant industrial Epes X.X year, the begin five capital. multiplying in the remains our buying think plant plants capacity. now structural such fully our our wood And profile accretion. our last also are Epes, understand million fully we With coming times time per production invested a short ramped EBITDA and designed world. growing is from next This multiple fully Alabama. large contracted plant million production, plant better

we are construction for in Epes Lucedale, early the recently first Epes expect in plants facility and and are also next our Mississippi. announced cluster We our development three size underway in growing and similar that Bond greenfield plans begin XXXX. cluster’s be be Pascagoula to will in plant. the will to our fourth Bond, Bond

of the Pascagoula out the terminal as aspects new we Pascagoula we have is building to cluster operational the enhanced generate throughput. and to attractive our One returns and plants we add the leverage increase very expect at terminal

the decision We make for on cluster around a expect year. fourth plant this side of end to our Pascagoula the

over the clusters. per Next Wilmington of tons of on our our year production Savannah, XX to X.X doubling million path Chesapeake per year new metric to is and in plant tons from addition a metric capacity million each

with add the too We forward just lot the of over continue look we’ll likelihood to that. next years I’m started. ahead getting expect as a plants we’re of of A six add but fond saying, five work us, new to after lot to more and that

the Before moment on the of update want we a business, I weeks just to ago. of open questions, an call light sustainability two birthday up our to take being in especially attributes to give

we’ve managing in built communities, by core about on a change and that biomass pioneer trees, values, a As caring industry, business are coal focus ensuring we environment the to displacing that in our climate growing fighting more people our our with U.S. are practices and fiber renewable the that from delivering wood sustainability favorable guidance. ensure our We right IPCC impact in industry-leading source business the energy line we the under

years. Southeast, where have these And the XX private forests primarily over a managed region are owned forests sustainably by XX% over grown owners. by land last

that increased shows years growing by global the of we USDA supplying vibrant, far impact the we our bioenergy, and for responsible fiber buy long-term to that demand the since because positive Further, from sustainability Responsible for ensure adhering forest we XX where forests and keep one most resources, fact, growing. the and depleting Trace® in keeping at XX% Policy strictly wood Track trees. landholdings making in areas their XX% forests and our more of our of robust, in timber have Sourcing technology the sourcing, the in industry-leading Enviva over markets same data healthy, landowners world. products, While began including the leads are and last operations more resources plant forest time, to forest in than & industry creates Enviva our to thriving, and, it

can we timber wood few incentive receive sell for buyers low-value. other price any commercial the eliminating and pays, in traditional times tree pulpwood as after landowner X replanting trunks for the In the occurred. the are, however, for natural form, sold to fiber both are is regardless wood, There of of for be byproducts thinnings our impediments trees, for All regrowth and price. its regions residual us lower neither the X Enviva market there that a competitive sawtimber of than and higher harvest sawtimber more what landowners diseased the value limbs, to to procure, today high-value or high-value are sales that a for tops, have much crooked used the and markets understory, to to

As feedstocks, Earth low-carbon wood well play signed Sheet for including grants the to and wood productive, by products role landowners. a management. wood its are recognizing we Fact for specically climate forest renewable its for products harvest support and in sustainable to forest sector, On wildfire and Day, climate resilience fuels in healthy change mitigation President or that a the wide-ranging with support energy American expand highlighting as Biden innovative the low into forests as delivering an markets economies, unmarketable White value value forest Order Executive economic House tangible result, benets turning from symbiotic broader with the

the and continue privileged climate to company today that a platform at opportunity build real a We unique scale. change benefits are to incredibly have delivers to

fortunate company sources secure and that’s world also relatively We able less quickly exactly simple carbon, effectively offer. more to be to define what cost more in The wants terms. our are from and we

the call open let’s up Now for questions.

you. Thank

ahead. Levy question of from Instructions] the question. begin Truist. question-and-answer session Please Now go [Operator First Jordan comes

and spurred and that’s the events trajectory give out a maybe market for sent side Exciting while see that have combination the you kind if of there Good and utility policy on an mean years. market growth recent in on now wondering action. announcements a morning, that been market to updated been a opportunity the in working both industrial into for all. you’ve geopolitical the your on can rolled I’m the related of coming could what to being that three us that Germany potential developing

Jordan, thank very much. you

about excited the progress Germany. incredibly we’re We’re in that making

of year as type really target existing this of You’re scale infrastructure German about ours that right. the and a consideration a And and has the combined It us, spurred to of expand entry government’s for contract Germany. as biomass repowered million market about that one strong in and coal and utility around excited very, coal continuing is fire conviction utility heat talked transition – been plus power real assets. a initiated point ton exit large has first we’ve key into the we’re an Certainly, energy by power very of customer law. fired for in coal lot the ending per the large past us conversion us foothold opportunity obviously to facilitate gives really both

prominent the decarbonization. question becomes in of we is And as over security do certainly there the And just follow-on many as so several making as the utility partners about of the on decision focus of the next energy course months. expect opportunities our

per guided million generating that market sector, ton the And so to as mature. XX past, heat as within core we year and to look continues a power million would to we’ve the X in at

a pleased segment So haven’t the talked beyond about complimented we’ve it’s before again, historically. contract frankly the [indiscernible] sectors there, that very talked we sector. sector. we’re very, by structured great agreements that And what long-term opportunity lots Frankly of see into we to industrial today in that another announce major about in are

going in benchmark continue yourself to million utilization in displays even Europe, addressable folks multiple estimates about manufacturer if as continue perhaps I is that like that one, today that. shared we’ve There think a to total of evolve number that, sort of steel of on increase. to large new And a customer tons. but you are like So we’re as on, suggest the one coal market is XXX% number. that’s of large wouldn’t the very cases with the XX% you about past, a use in XX a if

prepared our match materials And investor at we some and pricing driven of or and continues a an published year there really historically in decks that that so industries, some tons any have our to you’ve better million of than scarcity our to segment these mitigating what and XX like, as the of both remarks seen to seen is in carbon we in the the for the tend frankly, there opportunity other XX million difficulty per by some of utility aren’t and alternatives. think intensity

about really that, that out we’re export point the us infrastructure the we – very don’t terminal distribution really is leverage reinforce encourage, talk the a from side and frankly capability for would that, So the that our excited that lot I frankly, of good quite opportunity and about. to it, Generally at a business.

for ability people these of it. durable margin Great us replicate of in lots sectors and really expansion runway a we us substantial with Europe volumes. and toehold Our Continental this grow number across some operating business leverage excited margin provide expansion in ahead continue like as greenness Germany potential to that for and of about and to

to right seems for pointed And $X it impact the volumes more million pretty constrained And clear in of third-party that But follow-up you Thanks. pointed of my a is now from as guys positive. on a macro million market. negative maybe $XX you reasons. things, the the side number lack spot John. also a the market to of

second. sounds for lost there Yes. it we you Jordan, a like

– now. The was Jordan back I You’re last back. you heard

here. Yes. I’m

Okay.

certainly the So have war been [indiscernible] dislocations – the near-term supply we’re substantially in Ukraine. the impacted Clearly, by seeing. comments on that the fairly

You’ve Belarusian production the got in and too. region around fiber limitations wood that Russian volumes certainly challenging

broader more challenges short, a incremental that you the pulled now seen per again, already difficult. opportunity I supply if in production that be So we of making us per year tons some of market uplift to drive to plus the and And that and transactions in think, pricing some we the market. those. see this around And metric recently $XXX the forward structurally tackle the opportunity, that year. you’ve half we’ll uplift market that seen The for for certainly some the world looking of of in But out was extent, even back the at try to we’ve the general the forward roughly going million X durable that be guided basis spot look the obviously for gives and us, range, go translating that ton are XXXX reported pricing can to is a on beyond, same substantially. going – durable those look into us same we for QX And uplift forward. monetize challenges quite

anyway. my I didn’t get Thanks. ask And question you even though, of half I cut off, I think to got to second the that

appreciate and the responses. that appreciate So

you to to much, good talk always thank so Jordan, Well, you.

you. Thank

Mackay go Goldman is with from ahead. question Please Next Sachs. John

you You’ve over you on morning. last so don’t couple for MOUs Hey we now? start, couple everyone. Why Good we’ve the timing details had given Thanks some a on announced when us the if time. quarters the give just update maybe SAF. and including some them. the an could where expect Thanks. some of on one, maybe to stand, of them J-Power like others But on us convert big

in we will strong though, saw do of us our host really able number Yes, a the the Japan contract remarkably focused some mean, development partners Even for us Clearly, on key to our directly counterparties. has put Tokyo. the across challenges get relaxation The have to into a we’ve the accelerated are there number really John, we a being face-to-face our frankly too. with level specifics has an and both thank COVID much. I helped now contracting restrictions right that you teams for of so that tell ability be I things under efforts contracting had path. you back underdevelopment plant whole particularly travel acceleration on of face-to-face. team of

certainly, the And look to profile. get has out us really, there, there our people helped we at broader when ability really so the MOU

a number underwrite take it, entering time economics these and most a of things notional first for to pay that. to and value into into customers contracts, who cases, of new take frankly, enter Their that, these or XX, duration. $X know, the As a has long-term of pay at very billion. have the the first XX-year is supply segments, we XX, component step begun the obviously, one known That billion, important ability in and $X some fuel secure or

implement to. and appropriate conversions their, rationalization can consider they in one frankly, how of when really Before each the multi-location the can exactly they then of facilities,

the MOU important And permit the understand for will right or both conversion. each a their timeline these in manufacturing education of so about those undertake. the sheet to benefit biomass. and that paper, pay of converting why parallel of many in many From for, about critical of the So all That obligations, six generally the customers ink There’s on industries processes a or bargain take month a particular of really terms, focus, trade. there, our that the XX on pieces. the to occurs with engineering actually then these parties a to and terms contract lot consume we’re these in one for industries, of that’s step LOIs it’s nature all and the of are of get key course, a

the give a certainty and begin good of really steps result, And the over profile, deliveries. that terms, agreements of really that a entered into pricing, actual sort time then convert our contracting important a as around we then volume, the first so everyone the set and this has

the the Some some incremental of will our end earlier too. with the of for in prepared portfolio as contracts the across about articulated substantial track overall well on over to had year that beginning the margin in deliveries commencing we attractive durable next in are of certainly some XXXX around deliveries pretty pricing opportunities – time, ones expansion of remarks, provide

Maybe now just talked up All last piece, here. was the from year That we’re that. margin pieces you’ve appreciate Maybe Thank thorough. for that there. of helpful. right. kind was on I we if about a to walking next you. where moving gross sit guidance picking couple And

maybe of better now more with is, Thanks. the right getting pricing cost these abating. much If some board comfortable you getting across could break versus up pressures a how little

question. Yes. Great

we’ve when entered, pricing about have each into contracts which So contracted our the portfolio, various talked escalators. we’ve

CPI driven, escalators. are Some fixed and are PPI some

a very margin it, to less are your historically would’ve for we of you’re And little business. a probably roughly But total by price, increase or when of an the reported because the now. them net-net, and headline that. to look what That’s see fully that inflation, metric you increase, a mid-XXs are headline of price. you so XX ton margin fixed of portion That’s attractive inflating XX% big some the headline better get them its obviously guide on through sort inherently given the in pass contracted of is at, a average some full course, in basis, inflating than of

many that the we step first in say inflation tower, increase about don’t and the So we see XX% certainly providing that’s beyond. would similar is the forward which of And XXXX we is, see in that cost going underlying year-over-year. what

All well, just makes if Germany, a more Continental LOI you’ve returns heard that you as costs guess could I about thinking specific for like? you look about that the Maybe could could you’re talk new could what just like? talk of right can Thanks. I itself. seeing and that. could little And more, MOU kind sense. if what – partnership look right. investments, or launched Thanks I Europe in maybe be about squeeze bit the if so and in in the Maybe just if Maybe one you in

very within attractive annualized we adjusted the we’re and about serve sub our EBITDA an plant. This The new Epes plant overall into world. about Xx set investment Look, for capacity, single is building A storage, world. in we’ve development component investment Alabama would for loading asset contract on don’t explicitly that distributed around is that of counterparties aggregating Northern the reception, over operating $XX be absolutely terminaling a million from infrastructure that a Certainly, of through the talk we’re really investment the we in that our margin realize that incremental business to that a as as in delivery as leverage basis fully of announcing that transportation the on perhaps in making cost around hour. our plant we’re ton able own remarkable. profile where generate the contracted asset multiple for the our assets that point investment a we see like every you provides expansion marginal is the cost in in described a to capital fixed on for progress got Yes. durable

replicate seeking be with a would a expect frankly, to reception, there. the and cost fixed because Germany, such is principally like distribution transloading substantial our be that would traditional capture we these customers believe We’re Europe, level of activity downstream customer nature operating our more of forward. to go the what of as set terminals. for in leverage better we that we investment industrial than That us The opportunity in storage, in fragmented because our to margin plant or assets, we consistent see of

today. I right. time for Thanks All that appreciate Interesting. detail. the

Absolutely. so Thank much. you

Thank you.

from comes Please Capital question Scotto, ahead. next Our RBC Elvira Markets. go

morning, the questions a somewhere have here I everyone. on Good guidance. few

So that heart maybe talk height compare at end at XXXX impact or to that can saw about does behind about confidence last And you the us? the gets you the How the of that low also guidance? of the then what COVID quarter And the outlined. the what COVID impact are we talk first your high just you challenges the pandemic? – largely or end versus year gives that you in the the to

company. you. really in We’ve Thank It’s very, good question. privileged very this been

XX forms. the variants as pandemic of months look in of in various the in our we’ve onset at un-dislocated – Delta affected, people uninterrupted, ravage had the the certainly The you operations from plus continued shared as company pandemic, the the to If past.

We’re But the to someone when to Delta fall the people very did And them keep fortunate and quarantine isolate a Omicron, variant in safe. plants. remarkably. which able ill, COVID COVID were certainly of limit get lower to people at much than I’ll that we was weren’t our second. our able quite and transmissibility getting The of we impact were

workforce As infectivity lower than client’s well hit own later or providers which Many workforces would’ve variants, last across contract them, broadly to we But days, to initially that The reported as of in in under We guidance. rail able to with to our provisions some substantial a vaccination our these was workforce the were rates contact fortunately of of when individuals that on production. dislocations us a vaccination general, elsewhere. are challenges, what labor as would oftentimes chain the or supply ultimately production fraction We substantially together, power Southeast as I not curtail of trucking but – similar CGC closely or our in as show variant logging say materially in of some rail that December sidelines. workforce, the more the mirror overtime. would the doesn’t the to portion affected, by which our I XX the call mitigate our of five will hiring quite continued subsided of color the in as facilities, service means a up gave the generally compounded to our have as significant anyone in profile period of with of staffing the dampening major quarantine with Omicron rates certainly in of kept quite face that from and is trucks come railcars late and characterize in only facilities what well the but degraded days our as affected. service. our disruptions and U.S., the several number this impacts have That on

exhausted place trucks, quantify physical to site. The have onsite the on storage because try production, net about of we our impact all to it of resources or if is no tons. having stopping railcars XXX,XXX you So store that to the pellets,

So about didn’t quarter have own in are make. XXX,XXX tons our when you most what tons profitable light production. should think the terms naturally Those about the been, we’re we of

quarter more would’ve that that’s have And neighborhood that closely so we $XX million million from to penciled contribution a the of $XX in margin $XX in which expected. out with line million, the should basis, the much meant

manage capacity investments what the – of providers. forward So is seen in logistics why we’ve QX, the and we we’ve didn’t Omicron view and staffing much confidence position think what gives we with in our in the is, give in about our and the around They we a us deepest about to and the mitigate good other our greater seasonally are most that have as it’s that workforce the in of, the mitigation going do variant of Also to mirror that think our bit mitigate of course I of ability our rear forward? exist going the world health us Certainly, ability fair challenge comfort that challenging trucking shared past, a contracting trough own quarter. which incremental this.

radius for got wider procurement fiber. You’ve a

year. is radius our implications describe we very do balance year we that road that the of the excited some spike the certainly expectations run fairly the to do and resolving the had about are why operations, tie miles back we is But diesel exiting weather are see in as as from the full saw that comfortable war now preview that and seasonal that in on – very for of you the warmer procurement of have our So benefit and rates guide. straightforward well. Ukraine XXXX before. the of together if you sort course That would’ve XXXX And consistent half opportunity we feel the we gave, with shrunk,

plant the And the Lucedale. comments, of the for XXXX right the of for the – start also his change to Lucedale shift reasons one in is of the Elvira, guidance mentioned as to John

impact if the and than higher impact the now COVID-XX we meeting $XXX that if for we from, us well XXXX. see of Ukraine may range well, million think like of as from low So we side think like of XXXX about see better extent about a and we Lucedale as how of lesser production can

is That really, really Great, helpful. thank you.

band or meet you know is follow have there to the contracted able I Just your up a curtailments? volumes your these contracted but curtailments minus you any does that penalty on plus that around how – still did contracted to production for volumes, production your volumes? affect were

for profile Yes. X%-ish, us is, X%. north the $X of of tons ships at on is kind deliveries, is does production look bit of range. our you frankly, capacity, When million that what What a just the aggregate XXX,XXX to

is are some of bit our obligations, able lower the in volumes limit we’ve contracts. those of us what does the compounded some the shifted to by course, That’s end basically of are ranges, lower been certainly certainly of liquidity also the that we’re to environment. to geopolitical so challenges And a challenges our our physical But opportunity that that overdrive means given we third-party of and at right. ranges, the into it the which of within contractual available those it

and And a so you the obviously QX, bit to as of QX is delivery schedule little right, of why fall into into XXXX then moves see full year well. the that out which

your a I so cash? Great. able the that generated What question partnership? be What’s with timeline how would you mean, you that Thank the internally fund regarding add do spend on here? with still this you. spend And sort then plants follow CapEx just up you to incremental developing, Group, this of and partnership and to of Rhenus the XX/XX sort is when see

a No, question. it’s great

as in as window Because of in footprint. I we a well But our points think month overall into Europe. thinking Rhenus the XX as next critical Germany, has both dollars doing are is really or concrete be in infrastructure, an steel the me, deployment we’re because not growing we excuse XX base as that would about to what actual import well identifying distribution a capital, infrastructure from great of continental – such customer putting months. within

right multiple right quantities management form on that their ensures exploring durable bringing right we’re asset knowhow and quality the delivery the existing we that wood what the that’s with customers spec, high pellets alongside have base to evaluate opportunity factor. of for our the in have them the And time to now. in We opportunities

infrastructure a exactly look previous questions as Europe. in mechanisms. in can filling want pellet around, do to okay, We we one a better a than as mentioned it, so think, really it’s And delivery out plant energy frankly in traditional than have to continues investments. do something great dollar the we and different looks the of to logistics port into know or And U.S. the that you response critical world was like the what or at need every opportunities we I a

to basis limitations of now come fill of war and Ukraine, the clearly by that’s Some some driven the west, in things opportunity the us to on that for the a long bunch Southeast east infrastructure the in of challenges those used to resources from with gaps these U.S., both term from on and potential capital a invested renewable contracted into attractive, a new the wood from fundamental very assets. return on

Thank Great. much. you very

Thank you. to Operator, talk have to Good you. we do individual another with you?

ahead. Levine Please comes moment, [Operator Our Ryan question Instructions] of Citi. One next go from please.

customers company to to that impact fiber in given What is for cannot the the of basket QX of suppliers passed based the results outlook the the did be portion year? remaining on and how exposure that diesel relation the price pricing, in

good to to always you. Ryan, Hey, talk

a our was exposure we’ve selection see, severe about really operations. have faced in what partners diesel in and we As saw diesel. QX our we who fiber do within the limited talked in of we and What actually very and spike past, trucking direct a abrupt

country particular into had the As of some lowest you that of coming might that inventories the part know, diesel challenge.

did spike. who altogether. our significant pretty some a actually loggers services, And some saw hauling the that so the and was of out you truckers some our of provide it kept of And what woods

temporary so directly of an delivered diesel, our really needed to but a on subset to quite not pricing, loggers basis in a to tied to increase frankly, we fiber And account provide months. for our the colder have larger procurement much accessible the tracks fact more fiber we radio winter and for QX, drier that get to to in need in loggers as weather

from And our now. rate who partners fixed generally to downstream diesel short-haul tariff The largely implications our trucking of to of a us fixed to to variability But for our exposure period chain mitigates is behind the deliver ports time. around our that. of so under a supply us plants tend a distances that that’s generally or

cover that, QX by some against by that were we so was we Ryan, by that in have capacity the exacerbated limited but unlimited trucking more certainly labor. affected frankly, limited, fact And not

so or expensive And re-contracting or was expect go what opportunities trucking that quarter previous a basis would on source a spot in basis. you either much that on forward more to than

And the customer contract any is from there contracts? a Thanks. Lucedale with then delay higher are there practical the perspective? project CapEx with of cost And implications associated

gave, in tie view we’re final retainage mean, sort construction contracts the our of as guide mean, mean, for there. And which part I reaffirm close out capital and we the that rear the go didn’t and see largely – tick Lucedale out the of completing plant, kind that of the No, I CapEx I the of mirror. change. reaffirmed the you’ll is

the to testing, contractor and the the in is now retainage, to spend year. the flow Lucedale we all on out out we we’re what spend the of upon of expected So of – expected of is the in really balance Lucedale, spend amount you’re releasing our the on things that close guide process depending contract. going for through equipment performance CapEx That

tell on all this not again, of advanced to I that, right plant effectively. facility So steeper that facility quarter the anything certainly – we’re of curve is going, be kind ramping the in the past. early optimistic Lucedale will that and terms ramp terms expectation than we’ve frankly, in first quite The in right What is the production is done is a What more this about is at much we material of in of shift the but to line you basically that. continues is tons.

to the specific for back of That pretty directly our And of tie exciting for implications customer the no don’t to of to potentially half that’s plants that. so any customers through opportunity we some we us. get overdrive as production a But there’s year. us set. to does the no, one Again, to give certainly

through own the and tons portfolio grow So our our approach the ability optimistic but as does shift right, we from quite production that. the describe about schedule short in bit we’re that encouraged to XXX,XXX about a QX delivery to

around expect question limitations me in costs? And you continue the experienced labor, given over of using third-party trend spoke and permanent using labor, some more your Is third-party you prepared in time. a then additional that comments, that to about for that a last more entity you’ve

not all, at at all. not No,

pretty the some admittedly admitted challenging fact In QX. a of

some made here effective One our of the It hiring that was is. of real in bright strategy. the spots we’ve quite really changes overall

actually are an more long in challenges were change very a cross-trained XX one paradigm plants, a effective. rear opening for into to mature we opportunities is these large us, As changed is these of firmly than plants, for them about a incredibly our putting had it’s great folks. a we think four and a completely our our program pretty an tend we’re would which remarkable now really if of hiring number multiple hiring strategy, proven over to we’ve that with filling for XX them portfolio seen on first that or we hiring performance people, of the cohorts employees go spot. individual, opening, It’s really in can talk a we an XX of of recruit believe time. days part mirror. being and what that in hiring across balance about weeks for six seeing training And why it’s bringing, retention whether view better frankly, We what We’ve

you. great. Okay, Thank

Absolutely, you. to talk you. Ryan, good always Thank to

you. Thank

question ahead. from Please Pavel Raymond James. comes Next Molchanov go of

question. taking the for Thanks

have Does European the is very level restarted a for being sector. which way a power headwind or the ask something high a you imports Russian war me about is as years, Let that’s it fired coal a one power reducing of seen tailwind or net gas. represent recent we Since neutral? began, of trend this uncommon in plants

be now. pretty it’s of time of in challenged supply That’s uncertain. war only energy, continue a ultimately We right. coal, host regardless – resolves how gas, commodities of believe not what Pavel, I of sector, is durable and whole Russia into both flows of Europe. industrial commodities I delivery are energy input Europe Commodity but to think in Ukrainian to the for is going, terms sector. the early We’ve a the across probably probably demand some lot right will from period the got dislocation

now. a it’s mixed think I bag so And right

climate I changed around potential change. because think conviction hasn’t mitigating have opportunities is some that we the do what of level

other coal some of time. energy pricing we great net the And ball fired longer that, My augmented that How the mitigate are intensity of period ultimately of and that biomass of shakes that is crystal carbon opportunity that, life suggest do energy incremental the security is so to continuing evolve. is not generation. prospectively assets we the increased tailwind on if out that utilization and renewable have displays is there think but see and over I general a that the to what further supply would opportunity for a set conditions issues by the to resources

that said uncertain have? regulators given with what would’ve this that the did In And power, included context, described just fossil sense way biomass bio there three fuel Okay. months same utilities not more as of always been prospective in that, that Europe an sustainability there supply looking a environment ago? is customers they have That’s helpful. appreciate attributes you are other option attractive perhaps and that the than or at

terms mix. Yes. the customer fossil from perspective answer biomass a to on under think in taxonomy. roadmap absolutely. part on Yes, The context, – absolutely the out a especially fuel gas continue engaged had green folks its I had but been emphatic. before that shift the critical the a you Pavel, what We whatever had resource profile German see we treatment there, of decarbonization in considering is they renewable with who to an also of cut to our folks is in given

clearly places to decarbonization just both a and on is Now that also where alternatives of favorable the focus biomass. focus national environment. policy Poland, discretely sort a will effort are making security like But a really in in critical great. you that as in as and continues the making policy an biomass on the focus play And be exclusively that, mean in in the well. as level not can see role on that paramount, paramount energy a I almost tailwinds well

than And pallets as for then mcf a domestic and not Is prospect that time electricity any utilities there $X, for seen a the more domestically, lastly we look first might gas $X have some at natural source? decade.

U.S. the think past. I market in you the I privileges to shout the and had opportunity

generating not necessarily What U.S. be customer is us, provider. think the sector. have we our first is large the in for power market but ultimately a I sustainable fuels will U.S. aviation

and We of be generating not U.S. from spaces. fossil renewable worldwide convicted are the a to the inquiry There frankly We and actually somewhat pathways the that the sources same by demand the of have the fuel the the alternatives world, sector or power of, a and difficult around secure bio really tremendous agreeing amount of alternatives of Pavel you because perhaps the face driven is right see unfortunately, does same with decarbonize quite without in can of of very I’m have decarbonization reverse pricing available around fuels. and here the that limited benefit sector Europe, energy in now from around fossil urgency significantly you you. see available dynamics substitution construct level methanol that in supply elsewhere even substitutions remain that here. that achieved in clearly I Ultimately that the conviction intensity

We and its operating gas a when in business this haven’t infancy. we while seen actually, started $X

Can along were consumer think things $XX sector. the to will displacing of in Sure. to the $XX, utility that But the we the lines And industrial industrial opposed be I that sector gas And materialize as industrial Europe, Some here? multinationals it that of of that think pretty doing sector the the serve to was applications. the tend more have of in manufacturing I U.S. that, and customers decarbonization. course, are the we they’re assets in high. the here is in for drive serving beginning many also still

about optimistic too. that we’re so And

Thank you very much, guys.

Well, thank you.

Thank you.

will Pollard, be from Energy Kevin Pickering Partners. ahead. question Please Next go

of expansion. Just some a couple quick the on of questions

the release million kind talking in and I times and bit higher it’s I EBITDA what’s is up five which the an little that of of past, a times, in of target. about seem XX S all, multiple wondering the imply press little elaborate future four about talked was the to we closer seems something million economics, approximately adjusted some and that those docket? on, facility investment could once running, driving the to than we’ve you’re noticed apply that expansions And a bit $XX to if First improved could rate you in the on the would the

larger forward contracting we Yes. we that. Kevin, much a picking plant It’s a the is environment. drive large with, return think on price so When going run that a times. penciling assets. certainly benefit are the them again, out These scale, leverage This you cost you from facilities profile higher bigger remarkable. assets about up thank fixed contracts, higher is absolutely in pricing scale couple as for operating mid previously

terms you management give to pull the it and keeping would where two, past the was I forward might in a expansions And if large seem that you, to in how accelerating with could your the kind wondering of you’d, think additional taken in simultaneously. to talk kind And in number three affect about talked ability it position Okay. about steps capability Pascagoula you’re managing of that, of and expansion you about, project around put you’ve the I I is talk you’re you guess, that four, the plan, expansion future.

Yes. question. Super, super

for we’re assets now. counterparties doing we’re our benefited major the sort our standardization critical We of from now One is islands. have working certainly through That’s process right purchases of that is contractor our core of can the leverage multinational engineering approach. and workforce. things of because own mechanical of their right a contracting level contracting three, the plus that bear us same the certainly our scale of across meaning bringing to to the trades give national partners, with more even time perhaps controls of a copy of level frame contracts What equipment counterparties evaluating or civil we’re level building that to at scale that that do same

That’s Great. for Thanks. all me.

much. so Thanks

to That turn Keppler over Thank Mr. session. go concludes ahead. closing Please you. remarks. like the for John to I’d call back our question-and-answer

a it QX workforce. today got excited so displace what again, stable, great good, day we’re excited we’ve we’re making, trees we got track very change. them hard out back that through fighting we’re some to goes transitory, remarks. continuing job work climate at appreciate a They’re about very, safe, doing really prepared in, That’s very They’re in more of a healthy Well, and to day progress day of temporal fossil and difficult saying comes a operating growing through hopefully, next. without many reliably We’ve every and continue the to it These record of amidst issues. that we our gotten very and are fuels.

about We’re the and comes in healthy. again the safe very to and us next over the stay we today. the in coming And excited And time with we’ll meantime, everyone what quarter, next, taking weeks thank look forward appreciate very really you talking much.

today’s concludes This Thank attending you conference. our for presentation.

now may You disconnect.